Beacon Issues Prelim. Q2 Results; To Repurchase Series A Convertible Participating Preferred Stock

Beacon (BECN) said it expects second quarter net income in a range between $147 and $154 million. Net income per share is expected to range between $1.88 and $1.97 per share. Adjusted EBITDA is estimated to range between $280 and $290 million. Net sales are expected to be approximately $2.5 billion.

Beacon now expects full year 2023 adjusted EBITDA results to range between $840 and $870 million, which represents the upper half of prior guidance range.

Beacon has reached an agreement with Clayton, Dubilier & Rice, LLC or CD&R to repurchase all of the outstanding shares of its Series A Cumulative Convertible Participating Preferred Stock held by CD&R’s affiliate. The 400,000 outstanding shares of Series A Preferred Stock will be repurchased from CD&R for an aggregate amount equal to $804.5 million plus aggregate accrued and unpaid dividends. The deal is expected to be financed by a mix of new and existing debt funding and cash on hand, the company noted. Upon closing, Nathan Sleeper, CD&R’s CEO will resign from the company’s board; and Philip Knisely, an Operating Partner of CD&R, will remain on the board but will step down as non-executive board chair. Stuart Randle, lead independent director, will be named non-executive board chair.

Beacon expects the transaction to: reduce diluted share count on an as converted basis by 9.69 million shares; provide immediate accretion to earnings per share; eliminate preferred dividends of $24.0 million per year; and simplify capital structure.

Beacon expects its total gross debt less cash and cash equivalents to be approximately $1.7 billion at June 30, 2023. Giving pro forma effect to the repurchase of the Series A Preferred Stock and the expected debt funding related to the repurchase, the company expects its total gross debt less cash and cash equivalents to be approximately $2.5 billion at June 30, 2023. The company said pro forma liquidity continues to support its Ambition 2025 growth objectives.

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