BEACON ROOFING SUPPLY INC [BECN] Filings

10-Q 1 becn-20220930.htm 10-Q becn-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _________ to __________

Commission File Number 000-50924

BEACON ROOFING SUPPLY, INC.

(Exact name of registrant as specified in its charter)


Delaware			36-4173371
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

505 Huntmar Park Drive, Suite 300, Herndon, VA 20170

(Address of principal executive offices) (Zip Code)

(571) 323-3939

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	BECN	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2022, 65,061,944 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

BEACON ROOFING SUPPLY, INC.

FORM 10-Q

For the Quarter Ended September 30, 2022

TABLE OF CONTENTS

PART I.

Financial Information (unaudited)

Item 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Stockholders’ Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

PART I. FINANCIAL INFORMATION (UNAUDITED)

Item 1. Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Condensed Consolidated Balance Sheets

(In millions, except per share amounts)


	September 30,		December 31,		September 30,
	2022		2021		2021
	(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	84.9	$	225.8	$	260.0
Accounts receivable, less allowance of $15.7, $16.1 and $16.3 as of September 30, 2022, December 31, 2021 and September 30, 2021, respectively	1,352.5		855.2		978.3
Inventories, net	1,388.9		1,161.7		1,084.5
Prepaid expenses and other current assets	415.3		367.2		345.9

Total current assets	3,241.6		2,609.9		2,668.7
Property and equipment, net	306.2		256.3		236.6
Goodwill	1,782.7		1,777.4		1,760.9
Intangibles, net	361.4		421.0		414.8
Operating lease right-of-use assets, net	432.1		413.9		399.2
Deferred income taxes, net	56.4		61.9		64.5
Other assets, net	4.0		8.9		9.8

Total assets	$	6,184.4	$	5,549.3	$	5,554.5

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,062.2	$	794.2	$	812.9
Accrued expenses	512.9		472.1		546.7
Current portion of operating lease liabilities	89.6		89.0		88.5
Current portion of finance lease liabilities	14.0		6.4		5.0
Current portion of long-term debt/obligations	10.0		10.0		10.0

Total current liabilities	1,688.7		1,371.7		1,463.1
Borrowings under revolving lines of credit, net	246.1		—		—
Long-term debt, net	1,608.0		1,612.9		1,614.5
Deferred income taxes, net	0.1		0.8		0.7
Operating lease liabilities	349.8		326.3		311.3
Finance lease liabilities	60.3		26.0		22.9



Total liabilities	3,953.0		3,337.7		3,412.5
Commitments and contingencies (Note 12)
Convertible Preferred Stock (voting); $0.01 par value; aggregate liquidation preference $400.0; 0.4 shares authorized, issued and outstanding as of September 30, 2022, December 31, 2021 and September 30, 2021 (Note 6)	399.2		399.2		399.2
Stockholders' equity:
Common stock (voting); $0.01 par value; 100.0 shares authorized; 65.1, 70.4 and 70.1 shares issued and outstanding as of September 30, 2022, December 31, 2021 and September 30, 2021, respectively	0.7		0.7		0.7
Undesignated preferred stock; 5.0 shares authorized, none issued or outstanding	—		—		—
Additional paid-in capital	1,133.6		1,148.6		1,145.0
Retained earnings	711.6		682.5		620.5
Accumulated other comprehensive income (loss)	(13.7)		(19.4)		(23.4)
Total stockholders' equity	1,832.2		1,812.4		1,742.8
Total liabilities and stockholders' equity	$	6,184.4	$	5,549.3	$	5,554.5

See accompanying Notes to Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Condensed Consolidated Statements of Operations

(Unaudited; in millions, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net sales	$	2,415.2	$	1,875.4	$	6,460.3	$	5,065.5
Cost of products sold	1,785.0		1,367.6		4,740.4		3,707.5
Gross profit	630.2		507.8		1,719.9		1,358.0
Operating expense:
Selling, general and administrative	357.9		309.4		1,022.6		873.5
Depreciation	19.0		15.3		55.4		45.0
Amortization	21.9		25.0		64.8		77.8

Total operating expense	398.8		349.7		1,142.8		996.3
Income (loss) from operations	231.4		158.1		577.1		361.7
Interest expense, financing costs and other	22.8		16.3		58.3		68.1
Loss on debt extinguishment	—		—		—		60.2
Income (loss) from continuing operations before income taxes	208.6		141.8		518.8		233.4
Provision for (benefit from) income taxes	53.8		37.3		133.7		59.6
Net income (loss) from continuing operations	154.8		104.5		385.1		173.8
Net income (loss) from discontinued operations1	—		0.3		—		1.2
Net income (loss)	154.8		104.8		385.1		175.0
Dividends on Preferred Stock	6.0		6.0		18.0		18.0
Net income (loss) attributable to common stockholders	$	148.8	$	98.8	$	367.1	$	157.0

Weighted-average common stock outstanding:2
Basic	65.0		70.1		67.7		69.9
Diluted	66.4		71.4		69.1		71.1

Net income (loss) per share:2
Basic - Continuing operations	$	1.99	$	1.23	$	4.74	$	1.96
Basic - Discontinued operations	—		0.01		—		0.01
Basic net income (loss) per share	$	1.99	$	1.24	$	4.74	$	1.97

Diluted - Continuing operations	$	1.95	$	1.21	$	4.65	$	1.93
Diluted - Discontinued operations	—		0.01		—		0.01
Diluted net income (loss) per share	$	1.95	$	1.22	$	4.65	$	1.94

1.See Note 4 for additional information.

2.See Note 6 for detailed calculations and further discussion.

See accompanying Notes to Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited; in millions)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss)	$	154.8	$	104.8	$	385.1	$	175.0
Other comprehensive income (loss):
Foreign currency translation adjustment	(6.6)		(2.1)		(8.2)		0.2
Unrealized gain (loss) due to change in fair value of derivatives, net of tax	3.5		1.2		13.9		5.6
Total other comprehensive income (loss)	(3.1)		(0.9)		5.7		5.8
Comprehensive income (loss)	$	151.7	$	103.9	$	390.8	$	180.8

See accompanying Notes to Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited; in millions)


	Common Stock					Retained
	Shares	Amount		APIC1		Earnings		AOCI2		Total
Three Months Ended September 30, 2022
Balance as of June 30, 2022	65.0	$	0.6	$	1,123.5	$	562.8	$	(10.6)	$	1,676.3


Issuance of common stock, net of shares withheld for taxes	0.1	0.1		2.2		—		—		2.3
Stock-based compensation	—	—		7.9		—		—		7.9
Other comprehensive income (loss)	—	—		—		—		(3.1)		(3.1)
Net income (loss)	—	—		—		154.8		—		154.8
Dividends on Preferred Stock	—	—		—		(6.0)		—		(6.0)
Balance as of September 30, 2022	65.1	$	0.7	$	1,133.6	$	711.6	$	(13.7)	$	1,832.2

Three Months Ended September 30, 2021
Balance as of June 30, 2021	70.0	$	0.7	$	1,138.5	$	521.7	$	(22.5)	$	1,638.4
Issuance of common stock, net of shares withheld for taxes	0.1	—		1.6		—		—		1.6
Stock-based compensation	—	—		4.9		—		—		4.9
Other comprehensive income (loss)	—	—		—		—		(0.9)		(0.9)
Net income (loss)	—	—		—		104.8		—		104.8
Dividends on Preferred Stock	—	—		—		(6.0)		—		(6.0)
Balance as of September 30, 2021	70.1	$	0.7	$	1,145.0	$	620.5	$	(23.4)	$	1,742.8


Nine Months Ended September 30, 2022
Balance as of December 31, 2021	70.4	$	0.7	$	1,148.6	$	682.5	$	(19.4)	$	1,812.4
Repurchase and retirement of common stock, net3	(5.8)	(0.1)		—		(338.0)		—		(338.1)
Net change in equity forward contracts3	—	—		(50.0)		—		—		(50.0)
Issuance of common stock, net of shares withheld for taxes	0.5	0.1		14.0		—		—		14.1
Stock-based compensation	—	—		21.0		—		—		21.0
Other comprehensive income (loss)	—	—		—		—		5.7		5.7
Net income (loss)	—	—		—		385.1		—		385.1
Dividends on Preferred Stock	—	—		—		(18.0)		—		(18.0)
Balance as of September 30, 2022	65.1	$	0.7	$	1,133.6	$	711.6	$	(13.7)	$	1,832.2

Nine Months Ended September 30, 2021
Balance as of December 31, 2020	69.4	$	0.7	$	1,109.8	$	463.5	$	(29.2)	$	1,544.8
Issuance of common stock, net of shares withheld for taxes	0.7	—		17.5		—		—		17.5
Stock-based compensation	—	—		17.7		—		—		17.7
Other comprehensive income (loss)	—	—		—		—		5.8		5.8
Net income (loss)	—	—		—		175.0		—		175.0
Dividends on Preferred Stock	—	—		—		(18.0)		—		(18.0)
Balance as of September 30, 2021	70.1	$	0.7	$	1,145.0	$	620.5	$	(23.4)	$	1,742.8

1.Additional Paid-in Capital (“APIC”).

2.Accumulated Other Comprehensive Income (Loss) ("AOCI").

3.See Note 8 for additional information.

See accompanying Notes to Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Condensed Consolidated Statements of Cash Flows1

(Unaudited; in millions)


	Nine Months Ended September 30,
	2022		2021
Operating Activities
Net income (loss)	$	385.1	$	175.0
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	120.2		122.9
Stock-based compensation	21.0		17.7
Certain interest expense and other financing costs	3.9		5.8
Loss on debt extinguishment	—		60.2
Gain on sale of fixed assets and other	(4.3)		(3.2)
Deferred income taxes	0.6		(53.3)

Loss on sale of business	—		5.2

Changes in operating assets and liabilities:
Accounts receivable	(500.0)		(230.9)
Inventories	(228.3)		(135.7)
Prepaid expenses and other current assets	(28.4)		(8.4)
Accounts payable and accrued expenses	305.6		171.5
Other assets and liabilities	5.8		(9.7)
Net cash provided by (used in) operating activities	81.2		117.1

Investing Activities
Purchases of property and equipment	(54.5)		(48.5)
Acquisition of business, net	(16.5)		—
Proceeds from sale of business	—		836.0
Proceeds from sale of assets	4.5		3.7
Net cash provided by (used in) investing activities	(66.5)		791.2

Financing Activities
Borrowings under revolving lines of credit	2,046.4		250.0
Payments under revolving lines of credit	(1,793.9)		(407.0)
Borrowings under term loan	—		1,000.0
Payments under term loan	(7.5)		(945.9)
Borrowings under senior notes	—		350.0
Payment under senior notes	—		(1,300.0)
Payment of debt issuance costs	—		(20.3)
Payment of call premium	—		(31.7)
Payments under equipment financing facilities and finance leases	(8.2)		(4.8)
Repurchase and retirement of common stock, net	(338.1)		—
Advance payment for equity forward contract	(50.0)		—
Payment of dividends on Preferred Stock	(18.0)		(18.0)
Proceeds from issuance of common stock related to equity awards	14.5		19.2
Payment of taxes related to net share settlement of equity awards	(0.4)		(1.7)
Net cash provided by (used in) financing activities	(155.2)		(1,110.2)

Effect of exchange rate changes on cash and cash equivalents	(0.4)		0.5

Net increase (decrease) in cash and cash equivalents	(140.9)		(201.4)
Cash and cash equivalents, beginning of period	225.8		461.4
Cash and cash equivalents, end of period	$	84.9	$	260.0

Supplemental Cash Flow Information
Operating cash flows provided by (used in) discontinued operations	$	—	$	(21.8)

Cash paid during the period for:
Interest	$	52.3	$	72.9
Income taxes, net of refunds2	$	113.2	$	83.2

1.Unless otherwise noted, amounts include both continuing and discontinued operations.

2.Nine months ended September 30, 2022 amount includes $18.6 million related to the transition period from October 1, 2021 to December 31, 2021. Nine months ended September 30, 2021 amount includes $63.3 million related to the Interior Products divestiture.

See accompanying Notes to Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited; in millions, except per share amounts or otherwise indicated)

1. Company Overview

Beacon Roofing Supply, Inc. (“Beacon” or the “Company”) was incorporated in the state of Delaware on August 22, 1997 and is the largest publicly traded distributor of residential and non-residential roofing materials and complementary building products in the U.S. and Canada.

On February 10, 2021, the Company completed the sale of its interior products and insulation businesses (“Interior Products”) to Foundation Building Materials Holding Company LLC (“FBM”), pursuant to that certain Equity Purchase Agreement, dated as of December 20, 2020 (the “Purchase Agreement”), by and between the Company and ASP Sailor Acquisition Corp. (“ASP”), for approximately $850 million in cash (subject to a working capital and certain other adjustments as set forth in the Purchase Agreement). On January 29, 2021, ASP assigned the Purchase Agreement to FBM. Unless otherwise noted, the Company has reflected Interior Products as discontinued operations for the three and nine months ended September 30, 2021. For additional information, see Notes 2 and 4.

The Company operates its business primarily under the trade name "Beacon Building Products" and services customers in all 50 states throughout the U.S. and 6 provinces in Canada. The Company’s material subsidiaries are Beacon Sales Acquisition, Inc. and Beacon Roofing Supply Canada Company.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company prepared the condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (“SEC”). As permitted under those rules, certain footnotes or other financial information have been condensed or omitted. Additionally, the Company has reflected Interior Products as discontinued operations for the three and nine months ended September 30, 2021. Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to the Company's continuing operations. Certain prior period amounts have been reclassified to conform to current period presentation.

The balance sheet as of September 30, 2021 has been presented for a better understanding of the impact of seasonal fluctuations on the Company’s financial condition. The three-month periods ended September 30, 2022 and 2021 each had 64 business days. The nine-month periods ended September 30, 2022 and 2021 each had 191 business days.

On August 11, 2021, the Company’s Board of Directors approved a change in its fiscal year end from September 30 to December 31. The Company’s 2022 fiscal year began on January 1, 2022 and will end on December 31, 2022. This change better aligns the Company’s financial reporting calendar with many of its industry peers and provides internal benefits by shifting the timing of the budgeting, physical inventory, and performance review cycles away from the Company’s busiest time of year.

In management’s opinion, the condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the twelve months ending December 31, 2022.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2021 as well as the unaudited Condensed Consolidated Financial Statements and Notes thereto contained in the Company’s Transition Report on Form 10-Q for the period from October 1, 2021 to December 31, 2021.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Significant items subject to such estimates include accounts receivable, vendor incentives, inventories, purchase price allocations, goodwill and intangibles, and income taxes. Assumptions made in the development of these estimates contemplate the impact of the novel coronavirus (“COVID‑19”) on the economy and the Company’s anticipated results. Actual amounts could differ materially from these estimates.

Business Combinations

The Company records acquisitions resulting in the consolidation of a business using the acquisition method of accounting. Under this method, the Company records the assets acquired, including intangible assets that can be identified and named, and liabilities assumed based on their estimated fair values at the date of acquisition. The Company uses an income approach to determine the fair value of acquired intangible assets, specifically the multi-period excess earnings method for customer relationships and the relief from royalty method for trade names. Various Level 3 fair value assumptions are used in the determination of these estimated fair values, including items such as sales growth rates, cost synergies, customer attrition rates, discount rates, and other prospective financial information. The purchase price in excess of the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Transaction costs associated with acquisitions are expensed as incurred and are included as a component of selling, general and administrative expense within the condensed consolidated statements of operations.

Recent Accounting Pronouncements—Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU 2021-08, “Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The guidance is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606 as if the acquirer had originated the contracts, as opposed to recognizing and measuring such contract assets and liabilities at fair value on the acquisition date. The standard will be effective for business combinations that occur after January 1, 2023. Early adoption is permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. The Company will continue to evaluate the impact of this guidance, which would depend on the contract assets and liabilities assumed in any future business combinations.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional practical expedients to ease the potential burden in accounting for contract modifications and hedge accounting related to reference rate reform. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848), Scope,” to clarify the scope of the guidance and reduce potential diversity in practice. The standard is effective as of March 12, 2020 through December 31, 2022. However, the standard is not applicable to contract modifications made, and hedging relationships entered into or evaluated after, December 31, 2022. The Company will evaluate and disclose the impact of this guidance in the period of election, as well as the nature and reason for doing so.

3. Acquisitions

The following table presents the Company’s acquisitions since the start of 2021 through September 30, 2022. The Company acquired 100% of the interests in each case. The Company has not provided pro forma results of operations for the transactions below, as the transactions individually and in the aggregate are not material to the Company. The results of operations for these transactions are included in the Company’s condensed consolidated statements of operations from the date of the acquisition (dollars in millions):


Date Acquired	Company Name	Region	Branches	Goodwill Recognized1		Intangible Assets Acquired1
June 1, 2022	Complete Supply, Inc.	Illinois	1	$	8.4	$	4.6
April 29, 2022	Wichita Falls Builders Wholesale, Inc.	Texas	1	$	0.2	$	0.5
January 1, 2022	Crabtree Siding and Supply	Tennessee	1	$	0.1	$	0.1
November 1, 2021	Midway Sales & Distributing, Inc.	Kansas, Missouri, Nebraska	10	$	28.8	$	38.5

1.Based on provisional estimates of the fair value of assets acquired and liabilities assumed as of September 30, 2022.

Prior to the acquisitions, the acquired companies listed above produced aggregate annual sales of approximately $145 million. The total transaction costs incurred by the Company for these acquisitions for the three and nine months ended September 30, 2022 were $0.3 million and $1.5 million, respectively. Of the $37.5 million of goodwill recognized for these acquisitions, $37.3 million is deductible for tax purposes.

See Note 18, "Subsequent Events" below regarding the acquisition of Coastal Construction Products that closed on November 1, 2022.

Lowry’s

In connection with the May 1, 2017 acquisition of Lowry’s Inc., the Company recorded an indemnity holdback liability, which was remeasured to fair value at each reporting period until the contingency was resolved. During the first quarter of 2022, the contingency

was resolved and the Company released the indemnity holdback liability, resulting in a gain of $0.9 million, which is included as a component of and reduction to selling, general and administrative expense within the condensed consolidated statements of operations for the nine months ended September 30, 2022.

4. Divestitures

Solar Products

On December 1, 2021, the Company completed the divestiture of its solar products business ("Solar Products") in order to focus on the Company’s core exteriors business. The Company recorded a loss on sale of $22.3 million for the three months ended December 31, 2021. The results of operations from Solar Products were included within income from continuing operations for the three and nine months ended September 30, 2021 and were not material to the Company’s overall results.

Interior Products

On February 10, 2021, the Company completed the sale of Interior Products to FBM pursuant to the Purchase Agreement for approximately $850 million in cash (subject to a working capital and certain other adjustments as set forth in the Purchase Agreement). The final adjusted purchase price for Interior Products was $842.7 million. During the three months ended December 31, 2021, the Company received $6.6 million of final purchase consideration from FBM.

The Company completed this divestiture of net assets previously acquired in 2018 as part of the Allied Acquisition (as defined in Note 6) to enhance leadership focus, reduce net leverage, strengthen its balance sheet, and provide the financial flexibility to pursue strategic growth initiatives in its core exteriors business.

The following table reconciles major line items constituting pre-tax income (loss) from discontinued operations to net income (loss) from discontinued operations as presented in the condensed consolidated statements of operations (in millions):


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Net sales	$	—	$	109.1
Cost of products sold	—		(80.3)
Selling, general and administrative	(1.0)		(22.2)
Depreciation and amortization	—		(0.2)
Other income	0.1		—
Loss on sale	1.4		(5.2)
Pre-tax income (loss) from discontinued operations	0.5		1.2
Provision for (benefit from) income taxes	0.2		—
Net income (loss) from discontinued operations	$	0.3	$	1.2

There were no results from discontinued operations in the three or nine months ended September 30, 2022. There were no assets or liabilities held for sale as of September 30, 2022, December 31, 2021 or September 30, 2021.

5. Net Sales

The following table presents the Company’s net sales by line of business and geography (in millions):


	U.S.		Canada		Total
Three Months Ended September 30, 2022
Residential roofing products	$	1,180.7	$	27.6	$	1,208.3
Non-residential roofing products	676.2		54.9		731.1
Complementary building products	472.6		3.2		475.8
Total net sales	$	2,329.5	$	85.7	$	2,415.2

Three Months Ended September 30, 2021
Residential roofing products	$	970.0	$	24.8	$	994.8
Non-residential roofing products	433.3		40.7		474.0
Complementary building products	403.5		3.1		406.6
Total net sales	$	1,806.8	$	68.6	$	1,875.4


Nine Months Ended September 30, 2022
Residential roofing products	$	3,185.1	$	65.8	$	3,250.9
Non-residential roofing products	1,768.5		133.0		1,901.5
Complementary building products	1,299.4		8.5		1,307.9
Total net sales	$	6,253.0	$	207.3	$	6,460.3

Nine Months Ended September 30, 2021
Residential roofing products	$	2,612.1	$	59.4	$	2,671.5
Non-residential roofing products	1,185.6		104.8		1,290.4
Complementary building products	1,095.5		8.1		1,103.6
Total net sales	$	4,893.2	$	172.3	$	5,065.5

6. Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents or the conversion of Preferred Stock (as defined below). Common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock unit awards. Diluted net income (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the fully diluted weighted-average number of common shares outstanding during the period.

In connection with the acquisition of Allied Building Products Corp. on January 2, 2018 (the “Allied Acquisition”), the Company completed the sale of 400,000 shares of Series A Cumulative Convertible Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), with an aggregate liquidation preference of $400.0 million, at a purchase price of $1,000 per share, to CD&R Boulder Holdings, L.P. The Preferred Stock is convertible perpetual participating preferred stock of the Company, and conversion of the Preferred Stock into $0.01 par value shares of the Company’s common stock will be at a conversion price of $41.26 per share (or 9,694,619 shares of common stock). The Preferred Stock accumulates dividends at a rate of 6.0% per annum (payable quarterly in cash or in-kind, subject to certain conditions). The Preferred Stock is not mandatorily redeemable; therefore, it is classified as mezzanine equity in the Company’s condensed consolidated balance sheets. Holders of Preferred Stock participate in dividends on an as-converted basis when declared on common shares. As a result, Preferred Stock is classified as a participating security and thereby requires the allocation of income that would have otherwise been available to common stockholders when calculating net income (loss) per share.

Diluted net income (loss) per share is calculated by utilizing the most dilutive result of the if-converted and two-class methods. In both methods, net income (loss) attributable to common stockholders and the weighted-average common shares outstanding are adjusted to account for the impact of the assumed issuance of potential common shares that are dilutive, subject to dilution sequencing rules.

The following table presents the components and calculations of basic and diluted net income (loss) per share (in millions, except per share amounts; certain amounts may not recalculate due to rounding):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net income (loss) from continuing operations	$	154.8	$	104.5	$	385.1	$	173.8
Dividends on Preferred Stock	(6.0)		(6.0)		(18.0)		(18.0)
Undistributed income from continuing operations allocated to participating securities	(19.3)		(12.0)		(46.0)		(18.9)


Net income (loss) from continuing operations attributable to common stockholders – Basic and Diluted	129.5		86.5		321.1		136.9

Net income (loss) from discontinued operations – Basic	—		0.3		—		1.2
Undistributed income from discontinued operations allocated to participating securities	—		—		—		(0.2)
Net income (loss) from discontinued operations attributable to common stockholders – Basic and Diluted	—		0.3		—		1.0
Net income (loss) attributable to common stockholders – Basic and Diluted	$	129.5	$	86.8	$	321.1	$	137.9


Denominator:
Weighted-average common shares outstanding – Basic	65.0		70.1		67.7		69.9
Effect of common share equivalents	1.4		1.3		1.4		1.2

Weighted-average common shares outstanding – Diluted	66.4		71.4		69.1		71.1

Net income (loss) per share:
Basic – Continuing operations	$	1.99	$	1.23	$	4.74	$	1.96
Basic – Discontinued operations	—		0.01		—		0.01
Basic net income (loss) per share	$	1.99	$	1.24	$	4.74	$	1.97