10-Q

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 December 31, 2018

OR

☐ 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)

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 and 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 January 31, 2019, 68,438,361 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 December 31, 2018

TABLE OF CONTENTS

PART I.	Financial Information (unaudited)
	Item 1.	Condensed Consolidated Financial Statements
		Consolidated Balance Sheets	3
		Consolidated Statements of Operations	4
		Consolidated Statements of Comprehensive Income	5
		Consolidated Statements of Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
	Item 4.	Controls and Procedures	38
PART II.	Other Information
	Item 6.	Exhibits	39
Signatures			40

2

PART I.Financial Information (Unaudited)

Item 1. Condensed Consolidated Financial Statements

BEACON ROOFING SUPPLY, INC.

Consolidated Balance Sheets

(Unaudited; In thousands, except share and per share amounts)

	December 31,			September 30,			December 31,
	2018			2018			2017
Assets
Current assets:
Cash and cash equivalents	$	18,423		$	129,927		$	63,827
Restricted cash		-			-			1,300,000
Accounts receivable, less allowance of $21,353, $17,584 and $13,470 as of December 31, 2018, September 30, 2018 and December 31, 2017, respectively		881,749			1,090,533			552,703
Inventories, net		1,025,310			936,047			603,793
Prepaid expenses and other current assets		375,598			244,360			218,718
Total current assets		2,301,080			2,400,867			2,739,041
Property and equipment, net		273,742			280,407			154,687
Goodwill		2,489,730			2,491,779			1,251,825
Intangibles, net		1,282,242			1,334,366			410,857
Other assets, net		1,243			1,243			8,868
Total assets	$	6,348,037		$	6,508,662		$	4,565,278
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	551,940		$	880,872		$	315,442
Accrued expenses		375,672			611,539			266,049
Current portions of long-term debt/obligations		20,315			19,661			14,239
Total current liabilities		947,927			1,512,072			595,730
Borrowings under revolving lines of credit, net		503,216			92,442			-
Long-term debt, net		2,497,123			2,494,725			2,000,059
Deferred income taxes, net		110,179			106,994			93,451
Long-term obligations under equipment financing and other, net		10,689			13,639			20,951
Other long-term liabilities		5,532			5,290			2,743
Total liabilities	$	4,074,666		$	4,225,162		$	2,712,934
Commitments and contingencies (Note 9)
Convertible preferred stock; $0.01 par value; aggregate liquidation preference $400,000; 400,000 shares authorized, issued and outstanding as of December 31, 2018 and September 30, 2018; none authorized, issued or outstanding as of December 31, 2017	$	399,195		$	399,195		$	-
Stockholders' equity:
Common stock (voting); $0.01 par value; 100,000,000 shares authorized; 68,432,707, 68,135,790, and 67,972,383 shares issued and outstanding as of December 31, 2018, September 30, 2018 and December 31, 2017, respectively	$	684		$	681		$	679
Undesignated preferred stock; 5,000,000 shares authorized, none issued or outstanding		-			-			-
Additional paid-in capital		1,067,711			1,067,040			1,050,389
Retained earnings		826,941			833,834			815,782
Accumulated other comprehensive income (loss)		(21,160	)		(17,250	)		(14,506	)
Total stockholders' equity		1,874,176			1,884,305			1,852,344
Total liabilities and stockholders' equity	$	6,348,037		$	6,508,662		$	4,565,278

See accompanying Notes to Condensed Consolidated Financial Statements

3

BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Operations

(Unaudited; In thousands, except share and per share amounts)

	Three Months Ended December 31,
	2018			2017
Net sales	$	1,721,676		$	1,121,979
Cost of products sold		1,286,107			852,226
Gross profit		435,569			269,753
Operating expense:
Selling, general and administrative		327,693			193,753
Depreciation		17,601			8,709
Amortization		52,021			18,195
Total operating expense		397,315			220,657
Income (loss) from operations		38,254			49,096
Interest expense, financing costs, and other		38,361			22,568
Income (loss) before provision for income taxes		(107	)		26,528
Provision for (benefit from) income taxes1		786			(41,068	)
Net income (loss)	$	(893	)	$	67,596
Dividends on preferred shares2		6,000			-
Net income (loss) attributable to common shareholders	$	(6,893	)	$	67,596
Weighted-average common stock outstanding:
Basic		68,248,020			67,825,430
Diluted		68,248,020			69,244,678
Net income (loss) per share3:
Basic	$	(0.10	)	$	1.00
Diluted	$	(0.10	)	$	0.98

________________________________________

¹ Three months ended December 31, 2017 amount includes a $46.5 million non-recurring net tax benefit resulting from the enactment of the 2017 Tax Cuts and Jobs Act (“TCJA”). As of December 31, 2018, the Company had completed its analysis of the impact of the TCJA in accordance with SEC Staff Accounting Bulletin No. 118. There were no adjustments to the provisional amounts during the three months ended December 31, 2018.

² Three months ended December 31, 2018 amount is composed of $5.0 million in undeclared cumulative Preferred Stock dividends as well as an additional $1.0 million of Preferred Stock dividends that had been declared and paid as of period end. See Note 3 for further discussion.

³ See Note 5 for detailed calculations and further discussion.

See accompanying Notes to Condensed Consolidated Financial Statements

 6.0

4

BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Comprehensive Income

(Unaudited; In thousands)

	Three Months Ended December 31,
	2018			2017
Net income (loss)	$	(893	)	$	67,596
Other comprehensive income (loss):
Foreign currency translation adjustment		(3,910	)		57
Total other comprehensive income (loss)		(3,910	)		57
Comprehensive income (loss)	$	(4,803	)	$	67,653

See accompanying Notes to Condensed Consolidated Financial Statements

5

BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

											Accumulated
					Additional						Other			Total
	Common Stock				Paid-in			Retained			Comprehensive			Stockholders'
	Shares		Amount		Capital			Earnings			Income (Loss)			Equity
Balance as of September 30, 2017		67,700,858	$	677	$	1,047,506		$	748,186		$	(14,563	)	$	1,781,806
Issuance of common stock, net of shares withheld for taxes		271,525		2		(147	)		-			-			(145	)
Issuance costs related to secondary offering of common stock						(429	)								(429	)
Stock-based compensation		-		-		3,459			-			-			3,459
Other comprehensive income (loss)		-		-		-			-			57			57
Net income (loss)		-		-		-			67,596			-			67,596
Balance as of December 31, 2017		67,972,383	$	679	$	1,050,389		$	815,782		$	(14,506	)	$	1,852,344
											Accumulated
					Additional						Other			Total
	Common Stock				Paid-in			Retained			Comprehensive			Stockholders'
	Shares		Amount		Capital			Earnings			Income (Loss)			Equity
Balance as of September 30, 2018		68,135,790	$	681	$	1,067,040		$	833,834		$	(17,250	)	$	1,884,305
Issuance of common stock, net of shares withheld for taxes		296,917		3		(2,786	)		-			-			(2,783	)
Stock-based compensation		-		-		3,457			-			-			3,457
Other comprehensive income (loss)		-		-		-			-			(3,910	)		(3,910	)
Net income (loss)		-		-		-			(893	)		-			(893	)
Dividends on preferred shares1		-		-		-			(6,000	)		-			(6,000	)
Balance as of December 31, 2018		68,432,707	$	684	$	1,067,711		$	826,941		$	(21,160	)	$	1,874,176

¹ Amount represents dividends that have been declared and paid during the three months ended December 31, 2018.

See accompanying Notes to Condensed Consolidated Financial Statements

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BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31,
	2018			2017
Operating Activities
Net income (loss)	$	(893	)	$	67,596
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		69,622			26,904
Stock-based compensation		3,457			3,459
Certain interest expense and other financing costs		3,024			707
Beneficial lease amortization		572			-
Gain on sale of fixed assets		(265	)		(319	)
Deferred income taxes		3,201			(44,923	)
Changes in operating assets and liabilities, net of the effects of businesses acquired:
Accounts receivable		207,119			151,365
Inventories		(90,712	)		(52,024	)
Prepaid expenses and other assets		(131,638	)		(1,421	)
Accounts payable and accrued expenses		(400,616	)		(191,800	)
Other liabilities		246			-
Net cash provided by (used in) operating activities		(336,883	)		(40,456	)
Investing Activities
Purchases of property and equipment		(11,688	)		(7,416	)
Acquisition of businesses, net		(163,973	)		-
Proceeds from the sale of assets		401			413
Net cash provided by (used in) investing activities		(175,260	)		(7,003	)
Financing Activities
Borrowings under revolving lines of credit		1,298,654			17,402
Repayments under revolving lines of credit		(888,225	)		(20,548	)
Borrowings under senior notes		-			1,300,000
Payment of debt issuance costs		-			(21,917	)
Repayments under equipment financing facilities and other		(1,465	)		(1,968	)
Payment of stock issuance costs		-			(429	)
Payment of dividends on preferred stock		(6,000	)		-
Proceeds from issuance of common stock related to equity awards		834			3,781
Taxes paid related to net share settlement of equity awards		(3,617	)		(3,925	)
Net cash provided by (used in) financing activities		400,181			1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		458			640
Net increase (decrease) in cash, cash equivalents, and restricted cash		(111,504	)		1,225,577
Cash, cash equivalents, and restricted cash, beginning of period		129,927			138,250
Cash, cash equivalents, and restricted cash, end of period	$	18,423		$	1,363,827
Supplemental Cash Flow Information
Cash paid during the period for:
Interest	$	57,732		$	26,781
Income taxes, net of tax refunds		1,239			22,130

See accompanying Notes to Condensed Consolidated Financial Statements

7

BEACON ROOFING SUPPLY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Company Overview

Beacon Roofing Supply, Inc. (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 United States and Canada.

On January 2, 2018, the Company completed the acquisition of all the outstanding capital stock of Allied Building Products Corp. (“Allied”), a New Jersey corporation, for $2.625 billion, subject to certain working capital and other adjustments. Allied engages in the distribution of roofing materials, drywall, ceiling tile, and related accessories in the United States and was a wholly-owned subsidiary of Oldcastle Distribution, Inc. (see Note 3 for further discussion).

The Company operates its business under regional and local trade names and, as of December 31, 2018, the Company serviced customers in all 50 states within the United States 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. Certain prior period amounts have been reclassified to conform to current period presentation. The balance sheet as of December 31, 2017 has been presented for a better understanding of the impact of seasonal fluctuations on the Company’s financial condition.

In management’s opinion, the 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 months ended December 31, 2018 are not necessarily indicative of the results to be expected for the twelve months ending September 30, 2019 (“fiscal year 2019” or “2019”).

The three-month periods ended December 31, 2018 and 2017 had 62 and 61 business days, respectively.

These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s fiscal year 2018 (“2018”) Annual Report on Form 10-K for the year ended September 30, 2018.

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 consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates.

Recent Accounting Pronouncements—Adopted

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most previously issued revenue recognition guidance. The new standard is effective for public business entities for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted for annual reporting periods beginning after December 15, 2016. The standard permits the use of either the full retrospective or modified retrospective adoption methods. The Company elected the modified retrospective method and adopted the standard as of October 1, 2018 utilizing the portfolio practical expedient. The adoption of this guidance did not impact the Company’s retained earnings and did not have a material impact on the Company’s net sales recognition practices, income from operations, or net income per share amounts. The adoption of this guidance did result in certain balance sheet reclassifications to record estimated customer returns, specifically the recognition of a current liability for the gross amount of estimated returns and a current asset for the value of the related products. These reclassifications did not have a material impact on the Company’s consolidated balance sheet as of December 31, 2018. In addition, the adoption of this guidance resulted in additional quantitative disclosures to disaggregate net sales balances by product line and geography. See Note 4 to the Consolidated Financial Statements for further discussion.

8

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business.” This guidance is intended to assist entities when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted. The Company adopted the standard as of October 1, 2018and the standard did not have a material impact on the Company’s financial statement and related disclosures.

In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting.” This guidance is intended to provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted. The Company adopted the standard as of October 1, 2018 and the standard did not have a material impact on the Company’s financial statement and related disclosures.

Recent Accounting Pronouncements—Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance will replace most existing accounting for lease guidance when it becomes effective. This new standard is effective using the modified retrospective approach for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2018, and early adoption is permitted. In July 2018, the FASB amended the new lease standard which, among other changes, allows a company to elect to adopt ASU 2016-02 using a transition option whereby a cumulative effect adjustment is recorded to the opening balance of its retained earnings on the adoption date. The guidance will require the Company to record a right of use asset and a lease liability for most of the Company’s leases, including those currently treated as operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial statements and related disclosures is still being quantified.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Accounting for Goodwill Impairment.” This guidance is intended to introduce a simplified approach to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2019, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income.” This guidance is intended to address the accounting treatment for the tax effects on items within accumulated other comprehensive income as a result of the adoption of the Tax Cuts and Jobs Act of 2017. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2018, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.

3. Acquisitions

Allied Building Products Corp.

On January 2, 2018 (the “Closing Date”), the Company completed its acquisition of all the outstanding capital stock of Allied (the “Allied Acquisition”), pursuant to a certain stock purchase agreement dated August 24, 2017 (the “Stock Purchase Agreement”), among the Company, Oldcastle, Inc., as parent, and Oldcastle Distribution, Inc., as seller, for approximately $2.625 billion in cash, subject to a working capital and certain other adjustments as set forth in the Stock Purchase Agreement (the “Purchase Price”). As of December 31, 2018, the adjusted Purchase Price for Allied was $2.88 billion, including increases of (i) $164.0 million related to the impact of the Section 338(h)(10) election under the current U.S. tax code and (ii) $88.1 million from a recorded net working capital adjustment.

In connection with the Allied Acquisition, on the Closing Date the Company entered into (i) a new term loan agreement with Citibank, N.A., providing for a term loan B facility with an initial commitment of $970.0 million and (ii) an amended and restated credit agreement with Wells Fargo Bank, N.A., providing for a senior secured asset-based revolving credit facility with an initial commitment of $1.30 billion. Base borrowing rates on these facilities are at LIBOR plus 1.25% and LIBOR plus 2.25%, respectively.

9

In connection with the Allied Acquisition, on the Closing Date, 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., pursuant to a certain investment agreement, dated as of August 24, 2017, with CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P. (solely for the purpose of limited provisions therein) (the “Convertible Preferred Stock Purchase”). The $400.0 million in proceeds from the Convertible Preferred Stock Purchase were used to finance, in part, the Purchase Price. 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. The Preferred Stock accumulates dividends at a rate of 6.0% per annum (payable in cash or in-kind, subject to certain conditions). The Preferred Stock is not mandatorily redeemable; therefore, it is classified as mezzanine equity on the Company’s consolidated balance sheets and has a balance of $399.2 million (the $400.0 million proceeds received on the Closing Date, net of $0.8 million of unamortized issuance costs) as of December 31, 2018.

Allied’s results of operations have been included with Company’s consolidated results beginning January 2, 2018. Allied distributed products in 208 locations across 31 states as of the date of the close.

The Allied Acquisition has been accounted for as a business combination in accordance with the requirements of ASC 805, “Business Combinations.” The acquisition price has been allocated among assets acquired and liabilities assumed at fair value based on information currently available, with the excess recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies from the Allied assembled workforce operating the branches as part of a larger network and the value stemming from the addition of both new customers and an established new line of business (interiors). As of December 31, 2018, the Company had finalized the purchase accounting entries for the Allied Acquisition, detailed as follows (in thousands):

	January 2, 2018						January 2, 2018
	(as reported at March 31, 2018)			Adjustments			(as adjusted at December 31, 2018)
Cash	$	19,322		$	(19,153	)	$	169
Accounts receivable		315,485			22,064			337,549
Inventory		322,705			(7,920	)		314,785
Prepaid and other current assets		59,279			16,161			75,440
Property, plant, and equipment		139,528			(168	)		139,360
Goodwill		1,130,635			102,145			1,232,780
Intangible assets		1,037,000			-			1,037,000
Current liabilities		(271,252	)		11,963			(259,289	)
Non-current liabilities		(6,820	)		6,097			(723	)
Total purchase price	$	2,745,882		$	131,189		$	2,877,071

The purchase accounting entries above include the impact of the Section 338(h)(10) election under the current U.S. tax code. The Company made this election on October 15, 2018 and has reflected the $164.0 million impact of this election in the purchase price and its fiscal year 2018 tax provision accordingly. The Company determined that $1.16 billion of goodwill related to the acquisition of Allied is deductible for tax purposes as of December 31, 2018.

The Company’s goodwill and indefinite-lived trade name are tested for impairment annually, and all acquired goodwill and intangible assets are subject to review for impairment should future indicators of impairment develop. There were no material contingencies assumed as part of the Allied acquisition.

The following table represents the unaudited pro forma consolidated net sales and net income (loss) for the Company for the periods indicated (in thousands):

	Three Months Ended
	December 31, 2017
	(unaudited)
Net sales	$	1,787,628
Net income (loss)		32,257

The above pro forma results have been calculated by combining the historical results of the Company and Allied as if the Allied Acquisition had occurred on the first day of the fiscal year (October 1) for the period presented. The income tax provision used to calculate net income (loss) for the respective periods presented has been adjusted to reflect the effective tax rate for the annual periods as if it had been based on the resulting, combined results. The pro forma results include estimates for intangible asset amortization, depreciation, interest expense and debt issuance costs and are subject to change once final asset values have been determined. No other material pro forma adjustments were deemed necessary to conform to the Company’s accounting policies or for any other

10

situation. The pro forma information is not necessarily indicative of the results that would have been achieved had the transactions occurred on the first day of the fiscal years presented or that may be achieved in the future.

Additional Acquisitions – Fiscal Year 2018

During fiscal year 2018, the Company acquired 7 branches from the following acquisitions:

• On May 1, 2018, the Company acquired Tri-State Builder’s Supply, a wholesale supplier of roofing, siding, windows, doors and related building products with 1 branch located in Duluth, Minnesota and annual sales of approximately $6 million.

• On July 16, 2018, the Company acquired Atlas Supply, Inc., the Pacific Northwest’s leading distributor of sealants, coatings, adhesives and related waterproofing products, with 6 branches operating in Seattle, Tacoma, Spokane, and Mountlake Terrace in Washington, as well as locations in Portland, Oregon and Boise, Idaho, and annual sales of approximately $37 million.

The Company has recorded purchase accounting entries on a preliminary basis for these transactions that recognized the acquired assets and liabilities at their estimated fair values as of the respective acquisition dates. These transactions resulted in goodwill of $7.6 million ($7.4 million of which is deductible for tax purposes as of December 31, 2018) and $11.4 million in intangible assets.

For those acquisitions where the acquisition accounting entries have yet to be finalized, the Company’s allocation of the purchase price is subject to change on receipt of additional information, including, but not limited to, the finalization of asset valuations (intangible and fixed) and income tax accounting, as well as the Company’s continued review of the assumed liabilities that may result in the recognition of changes to the carrying amounts on the opening balance sheet and a related adjustment to goodwill.

4. Net Sales

The Company records net sales when performance obligations with our customer are satisfied. A performance obligation is a promise to transfer a distinct good to the customer and is the unit of account. The transaction price is allocated to each distinct performance obligation and recognized as net sales when, or as, the performance obligation is satisfied. All contracts have a single performance obligation as the promise to transfer the individual good is not separately identifiable from other promises and is, therefore, not distinct. Performance obligations are satisfied at a point in time and net sales are recognized when the customer accepts the delivery of a product or takes possession of a product with rights and rewards of ownership.

The Company enters into agreements with customers to offer rebates, generally based on achievement of specified sales levels and various marketing allowances that are common industry practice. Reductions to net sales for customer programs and incentive offerings, including promotions and other volume-based incentives, are estimated using the most likely amount method and recorded in the period in which the sale occurs. Provisions for early payment discounts are accrued in the same period in which the sale occurs. The Company does not have any material payment terms as payment is received shortly after the transfer of control of the products to the customer. Commissions to internal sales teams are paid to obtain contracts. As these contracts are less than one year, these costs are expensed as incurred.

The Company includes shipping and handling costs billed to customers in net sales. Related costs are accounted for as fulfillment activities and are recognized as cost of products sold when control of the products transfers to the customer.

The following table presents the Company’s net sales by product line and geography for the three months ended December 31, 2018 (in thousands):

	Three Months Ended December 31, 2018
	U.S.		Canada		Total
Residential roofing products	$	720,511	$	11,679	$	732,190
Non-residential roofing products		390,268		29,641		419,909
Complementary building products		568,116		1,461		569,577
Total net sales	$	1,678,895	$	42,781	$	1,721,676

5. Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents or

11

the conversion of Preferred Stock. 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 shareholders by the fully diluted weighted-average number of common shares outstanding during the period.

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 shareholders 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 shareholders 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 for each period presented (in thousands, except share and per share amounts):

	Three Months Ended December 31,
	2018			2017
Net income (loss)	$	(893	)	$	67,596
Dividends on preferred shares		(6,000	)		-
Net income (loss) attributable to common shareholders	$	(6,893	)	$	67,596
Undistributed income allocated to participating securities		-			-
Net income (loss) attributable to common shareholders - basic and diluted	$	(6,893	)	$	67,596
Weighted-average common shares outstanding - basic		68,248,020			67,825,430
Effect of common share equivalents		-			1,419,248
Weighted-average common shares outstanding - diluted		68,248,020			69,244,678
Net income (loss) per share - basic	$	(0.10	)	$	1.00
Net income (loss) per share - diluted	$	(0.10	)	$	0.98

The following table includes the number of shares that may be dilutive common shares in the future. These shares were not included in the computation of diluted net income (loss) per share because the effect was either anti-dilutive or the requisite performance conditions were not met:

	Three Months Ended December 31,
	2018		2017
Stock options		1,554,518		288,275
Restricted stock units		318,229		-
Preferred Stock		9,694,619		-

6. Stock-based Compensation

On February 9, 2016, the shareholders of the Company approved the Amended and Restated Beacon Roofing Supply, Inc. 2014 Stock Plan (the “2014 Plan”). The 2014 Plan provides for discretionary awards of stock options, stock awards, restricted stock units, and stock appreciation rights for up to 5,000,000 shares of common stock to selected employees and non-employee directors. The 2014 Plan mandates that all forfeited, expired, and withheld shares, including those from the predecessor plans, be returned to the 2014 Plan and made available for issuance. As of December 31, 2018, there were 1,772,191 shares of common stock available for issuance.

Prior to the 2014 Plan, the Company maintained the amended and restated Beacon Roofing Supply, Inc. 2004 Stock Plan (the “2004 Plan”). Upon shareholder approval of the 2014 Plan, the Company ceased issuing equity awards from the 2004 Plan and mandated that all future equity awards will be issued from the 2014 Plan.

For all equity awards granted prior to October 1, 2014, in the event of a change in control of the Company, all awards are immediately vested. Beginning in fiscal 2015, equity awards contained a “double trigger” change in control mechanism. Unless an award is continued or assumed by a public company in an equitable manner, an award shall become fully vested immediately prior to a change in control (at 100% of the grant target in the case of a performance-based restricted stock unit award). If an award is so continued or assumed, vesting will continue in accordance with the terms of the award, unless there is a qualifying termination within

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one-year following the change in control, in which event the award shall immediately become fully vested (at 100% of the grant target in the case of a performance-based restricted stock unit award).

Stock Options

Non-qualified stock options granted to employees generally expire 10 years after the grant date and are subject to continued employment and vest evenly in three annual installments over the three-year period following the grant date.

The fair value of the options granted during the three months ended December 31, 2018 were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate		3.00	%
Expected volatility		29.34	%
Expected life (in years)		5.18
Dividend yield	-

The following table summarizes all stock option activity for the three months ended December 31, 2018 (in thousands, except share, per share, and time period amounts):

	Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value1
Balance as of September 30, 2018		1,969,037		$	33.08		5.7	$	14,088
Granted		605,184			27.26
Exercised		(48,800	)		17.11
Canceled/Forfeited		(12,967	)		41.12
Expired		(950	)		12.25
Balance as of December 31, 2018		2,511,504		$	31.96		6.6	$	11,478
Vested and expected to vest after December 31, 2018		2,455,082		$	31.94		6.5	$	11,275
Exercisable as of December 31, 2018		1,645,162		$	30.75		5.1	$	8,511

________________________________________________________________

¹ Aggregate intrinsic value as represents the difference between the closing fair value of the underlying common stock and the exercise price of outstanding, in-the-money options on the date of measurement.

During the three months ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense related to stock options of $1.0 million and $1.1 million, respectively. As of December 31, 2018, there was $8.1 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.3 years.

The following table summarizes additional information on stock options for the periods presented (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018		2017
Weighted-average fair value of stock options granted	$	8.75	$	15.86
Total grant date fair value of stock options vested		3,680		3,773
Total intrinsic value of stock options exercised		712		5,448

Restricted Stock Units

Restricted stock unit (“RSU”) awards granted to employees are subject to continued employment and generally vest on the third anniversary of the grant date. The Company also grants certain RSU awards to management that contain one or more additional vesting conditions tied directly to a defined performance metric for the Company. The actual number of RSUs that will vest can range from 0% to 200% of the original grant amount, depending upon the terms of the award and actual Company performance above or below the established performance metric targets. The Company estimates performance in relation to the defined targets when determining the projected number of RSUs that are expected to vest and calculating the related stock-based compensation expense.

RSUs granted to non-employee directors are subject to continued service and vest on the first anniversary of the grant date (except under certain conditions). Generally, the common shares underlying the RSUs are not eligible for distribution until the non-employee director’s service on the Board has terminated, and for non-employee director RSU grants made prior to fiscal year 2014, the share distribution date is six months after the director’s termination of service on the board. Beginning in fiscal year 2016, the

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Company enacted a policy that allows any non-employee directors who have Beacon equity holdings (defined as common stock and outstanding vested equity awards) with a total fair value that is greater than or equal to five times the annual Board cash retainer to elect to have any future RSU grants settle simultaneously with vesting.

The following table summarizes all restricted stock unit activity for the three months ended December 31, 2018:

	RSUs Outstanding			Weighted-Average Grant Date Fair Value
Balance as of September 30, 2018		934,023		$	47.00
Granted		630,745			27.28
Released		(366,779	)		40.46
Canceled/Forfeited		(77,455	)		47.52
Balance as of December 31, 2018		1,120,534		$	38.00
Vested and expected to vest after December 31, 2018		1,040,181		$	37.78

During the three months ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense related to restricted stock units of $2.4 million and $2.4 million, respectively. As of December 31, 2018, there was $27.2 million of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.3 years.

The following table summarizes additional information on RSUs for the periods presented (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018		2017
Weighted-average fair value of RSUs granted	$	27.28	$	55.17
Total grant date fair value of RSUs vested		14,840		5,786
Total intrinsic value of RSUs released		11,160		10,683

7. Goodwill and Intangible Assets

Goodwill

The following table sets forth the change in the carrying amount of goodwill during the three months ended December 31, 2018 and 2017, respectively (in thousands):

Balance as of September 30, 2017	$	1,251,986
Translation and other adjustments		(161	)
Balance as of December 31, 2017	$	1,251,825
Balance as of September 30, 2018	$	2,491,779
Acquisitions1		(513	)
Translation and other adjustments		(1,536	)
Balance as of December 31, 2018	$	2,489,730

_____________________________

¹ Reflects purchase accounting adjustments related to fiscal year 2018 acquisition of Atlas Supply, Inc. (see Note 3 for further discussion).

The changes in the carrying amount of goodwill for the three months ended December 31, 2018 and 2017 were driven primarily by purchase accounting and foreign currency translation adjustments.

Intangible Assets

In connection with transactions finalized during fiscal year 2018, the Company recorded intangible assets of $1.05 billion ($920.8 million of customer relationships, $120.0 million of indefinite-lived trademarks, and $7.0 million of beneficial lease arrangements).

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The following table summarizes intangible assets by category (in thousands, except time period amounts):

	December 31, 2018			September 30, 2018			December 31, 2017			Weighted-Average Remaining Life1 (Years)
Amortizable intangible assets:
Non-compete agreements	$	2,824		$	2,824		$	2,824			2.47
Customer relationships		1,530,748			1,530,565			609,984			18.38
Trademarks		10,500			10,500			10,500			7.41
Beneficial lease arrangements		8,060			8,060			1,060			4.24
Total amortizable intangible assets		1,552,132			1,551,949			624,368
Accumulated amortization		(462,940	)		(410,633	)		(286,561	)
Total amortizable intangible assets, net	$	1,089,192		$	1,141,316		$	337,807
Indefinite lived trademarks		193,050			193,050			73,050
Total intangibles, net	$	1,282,242		$	1,334,366		$	410,857

_________________________________________________________________

¹ As of December 31, 2018.

For the three months ended December 31, 2018 and 2017, the Company recorded $52.0 million and $18.2 million of amortization expense relating to the above-listed intangible assets, respectively. The intangible asset lives range from 5 to 20 years and have a weighted-average remaining life of 18.2 years as of December 31, 2018.

The following table summarizes the estimated future amortization expense for intangible assets (in thousands):

Year Ending September 30,
2019 (Jan - Sept)	$	156,534
2020		179,541
2021		149,974
2022		121,426
2023		97,517
Thereafter		384,200
Total future amortization expense	$	1,089,192

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8. Financing Arrangements

The following table summarizes all financing arrangements from the respective periods presented (in thousands):

	December 31, 2018			September 30, 2018			December 31, 2017
Revolving Lines of Credit
2023 ABL:
U.S. Revolver, expires January 20231	$	496,619		$	89,352		$	-
Canada Revolver, expires January 20232		6,597			3,090			-
Current portion		-			-			-
Borrowings under revolving lines of credit, net	$	503,216		$	92,442		$	-
Long-term Debt, net
Term Loans:
Term Loan, matures October 20223	$	-		$	-		$	433,828
Term Loan, matures January 20254		932,102			930,726			-
Current portion		(9,700	)		(9,700	)		(4,500	)
Long-term borrowings under term loans		922,402			921,026			429,328
Senior Notes:
Senior Notes, mature October 20235		293,926			293,607			292,648
Senior Notes, mature November 20256		1,280,795			1,280,092			1,278,083
Current portion		-			-			-
Long-term borrowings under senior notes		1,574,721			1,573,699			1,570,731
Long-term debt, net	$	2,497,123		$	2,494,725		$	2,000,059
Equipment Financing Facilities and Other
Equipment financing facilities, various maturities through September 20217	$	10,148		$	11,222		$	11,657
Capital lease obligations, various maturities through November 20218		11,156			12,378			19,033
Current portion		(10,615	)		(9,961	)		(9,739	)
Long-term obligations under equipment financing and other, net	$	10,689		$	13,639		$	20,951

____________________________________________________________ 

¹ Effective rate on borrowings of 4.37% and 3.36% as of December 31, 2018 and September 30, 2018, respectively.

² Effective rate on borrowings of 4.45% and 3.95% as of December 31, 2018 and September 30, 2018, respectively.

³ Extinguished on January 2, 2018; Interest rate of 4.06% as of December 31, 2017. 

⁴ Interest rate of 4.77% and 4.53% as of December 31, 2018 and September 30, 2018, respectively.

⁵ Interest rate of 6.38% as of December 31, 2018, September 30, 2017 and December 31, 2017.

⁶ Interest rate of 4.88% as of December 31, 2018, September 30, 2017 and December 31, 2017.

⁷ Fixed interest rates ranging from 2.33% to 3.25% as of December 31, 2018, September 30, 2017, and December 31, 2017.

⁸ Fixed interest rates ranging from 2.72% to 10.39% as of December 31, 2018 , September 30, 2017, and December 31, 2017.

Financing - Allied Acquisition

In connection with the Allied Acquisition, the Company entered into various financing arrangements totaling $3.57 billion, including an asset-based revolving line of credit of $1.30 billion (“2023 ABL”), $525.0 million of which was drawn at closing, and a $970.0 million term loan (“2025 Term Loan”). The Company also raised an additional $1.30 billion through the issuance of senior notes (the “2025 Senior Notes”).

The proceeds from these financing arrangements were used to finance the Allied Acquisition, to refinance or otherwise extinguish all third-party indebtedness, to pay fees and expenses associated with the acquisition, and to provide working capital and funds for other general corporate purposes. The Company capitalized new debt issuance costs totaling approximately $65.3 million related to the 2023 ABL, the 2025 Term Loan and the 2025 Senior Notes.

Since the financing arrangements entered into in connection with the Allied Acquisition had certain lenders who also participated in previous financing arrangements entered into by the Company, portions of the transactions were accounted for as either a debt modification or a debt extinguishment. In accordance with the accounting for debt modification, the Company expensed $2.0 million of debt issuance costs related to the Allied financing arrangements and recognized a loss on debt extinguishment of $1.7 million. The remainder of the debt issuance costs will be amortized over the term of the Allied financing arrangements.

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2023 ABL

On January 2, 2018, the Company entered into a $1.30 billion asset-based revolving line of credit with Wells Fargo Bank, N.A. and a syndicate of other lenders. The 2023 ABL consists of revolving loans in both the United States (“2023 U.S. Revolver”) in the amount of $1.20 billion and Canada (“2023 Canada Revolver”) in the amount of $100.0 million. The 2023 ABL has a maturity date of January 2, 2023. The 2023 ABL has various borrowing tranches with an interest rate based on a LIBOR rate (with a floor) plus a fixed spread. The current unused commitment fees on the 2023 ABL are 0.25% per annum.

There is one financial covenant under the 2023 ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (both as defined in the agreement). Per the covenant, the Company’s Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis.

The 2023 ABL is secured by a first priority lien over substantially all of the Company’s and each guarantor’s accounts, chattel paper, deposit accounts, books, records and inventory (as well as intangibles related thereto), subject to certain customary exceptions (the “ABL Priority Collateral”), and a second priority lien over substantially all of the Company’s and each guarantor’s other assets, including all of the equity interests of any subsidiary held by the Company or any guarantor, subject to certain customary exceptions (the “Term Priority Collateral”). The 2023 ABL is guaranteed jointly, severally, fully and unconditionally by the Company’s active United States subsidiaries.

As of December 31, 2018, the total balance outstanding on the 2023 ABL, net of $10.0 million of unamortized debt issuance costs, was $503.2 million. The Company also has outstanding standby letters of credit related to the 2023 U.S. Revolver in the amount of $13.4 million as of December 31, 2018.

2025 Term Loan

On January 2, 2018, the Company entered into a $970.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The 2025 Term Loan requires quarterly principal payments in the amount of $2.4 million, with the remaining outstanding principal to be paid on its January 2, 2025 maturity date. The interest rate is based on a LIBOR rate (with a floor) plus a fixed spread. The Company has the option of selecting a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments are made.

The 2025 Term Loan is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the ABL Priority Collateral. Certain excluded assets will not be included in the Term Priority Collateral and the ABL Priority Collateral. The Term Loan is guaranteed jointly, severally, fully and unconditionally by the Company’s active United States subsidiaries.

As of December 31, 2018, the outstanding balance on the 2025 Term Loan, net of $33.0 million of unamortized debt issuance costs, was $932.1 million.

2025 Senior Notes

On October 25, 2017, Beacon Escrow Corporation, a wholly owned subsidiary of the Company (the “Escrow Issuer”), completed a private offering of $1.30 billion aggregate principal amount of 4.875% Senior Notes due 2025 at an issue price of 100%. The 2025 Senior Notes bear interest at a rate of 4.875% per annum, payable semi-annually in arrears, beginning May 1, 2018. The Company anticipates repaying the 2025 Senior Notes at the maturity date of November 1, 2025. Per the terms of the Escrow Agreement, the net proceeds from the 2025 Senior Notes remained in escrow until they were used to fund a portion of the purchase price of the Allied Acquisition payable at closing on January 2, 2018.

Upon closing of the Allied Acquisition on January 2, 2018, (i) the Escrow Issuer merged with and into the Company, and the Company assumed all obligations under the 2025 Senior Notes; and (ii) all existing domestic subsidiaries of the Company (including the entities acquired in the Allied Acquisition) became guarantors of the 2025 Senior Notes.

As of December 31, 2018, the outstanding balance on the 2025 Senior Notes, net of $19.2 million of unamortized debt issuance costs, was $1.28 billion.

Financing - RSG Acquisition

In connection with the Roofing Supply Group (“RSG”) acquisition in fiscal year 2016, the Company entered into various financing arrangements totaling $1.45 billion, including an asset-based revolving line of credit (“2020 ABL”) of $700.0 million ($350.0 million of which was drawn at closing) and a $450.0 million term loan (“2022 Term Loan”). The Company also raised an additional $300.0 million through the issuance of senior notes (the “2023 Senior Notes”).

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The proceeds from these financing arrangements were used to provide working capital and funds for other general corporate purposes, to refinance or otherwise extinguish all third-party indebtedness for borrowed money under Company’s and RSG’s existing senior secured credit facilities and RSG’s unsecured senior notes due 2020, to finance the acquisition, and to pay fees and expenses associated with the RSG acquisition. The Company incurred debt issuance costs totaling approximately $31.3 million related to the 2020 ABL, 2022 Term Loan and 2023 Senior Notes.

2020 ABL

On October 1, 2015, the Company entered into a $700.0 million asset-based revolving line of credit with Wells Fargo Bank, N.A. and a syndicate of other lenders. The 2020 ABL had an original maturity date of October 1, 2020 and consisted of revolving loans in both the United States, in the amount of $670.0 million, and Canada, in the amount of $30.0 million. The 2020 ABL had various borrowing tranches with an interest rate based on a LIBOR rate (with a floor) plus a fixed spread. The full balance of the 2020 ABL was paid on January 2, 2018 in conjunction with the Allied Acquisition.

2022 Term Loan

On October 1, 2015, the Company entered into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The 2022 Term Loan required quarterly principal payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its original maturity date of October 1, 2022. The interest rate was based on a LIBOR rate (with a floor) plus a fixed spread. The Company had the option of selecting a LIBOR period that determined the rate at which interest would accrue, as well as the period in which interest payments are made. The full balance of the 2022 Term Loan was paid on January 2, 2018 in conjunction with the Allied Acquisition, including the write-off of $0.7 million in debt issuance costs.  

2023 Senior Notes

On October 1, 2015, the Company raised $300.0 million by issuing senior notes due 2023. The 2023 Senior Notes have a coupon rate of 6.38% per annum and are payable semi-annually in arrears, beginning April 1, 2016. There are early payment provisions in the indenture in which the Company would be subject to “make whole” provisions. The Company anticipates repaying the notes at the maturity date of October 1, 2023.

The 2023 Senior Notes are guaranteed jointly, severally, fully and unconditionally by the Company’s active United States subsidiaries.

As of December 31, 2018, the outstanding balance on the 2023 Senior Notes, net of $6.1 million of unamortized debt issuance costs, was $293.9 million.

Equipment Financing Facilities and Other

As of December 31, 2018, the Company had a $10.1 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments due through September 2021.

As of December 31, 2018, the Company had $11.2 million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due through November 2021.

9. Commitments and Contingencies

Operating Leases

The Company mostly operates in leased facilities, which are accounted for as operating leases. The leases typically provide for a base rent plus real estate taxes. Certain of the leases provide for escalating rents over the lives of the leases and rent expense is recognized over the terms of those leases on a straight-line basis.

At December 31, 2018, the minimum rental commitments under all non-cancelable operating leases with initial or remaining terms of more than one year were as follows (in thousands):

Year Ending September 30,
2019 (Jan - Sept)	$	110,514
2020		101,743
2021		90,734
2022		71,869
2023		55,048
Thereafter		146,410
Total minimum lease payments	$	576,318

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For the three months ended December 31, 2018 and 2017, rent expense was $27.5 million and $15.2 million, respectively. Sublet income was immaterial for each of these periods.

Contingencies

The Company is subject to loss contingencies pursuant to various federal, state and local environmental laws and regulations; however, the Company is not aware of any reasonably possible losses that would have a material impact on its results of operations, financial position, or liquidity. Potential loss contingencies include possible obligations to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical or other substances by the Company or by other parties. In connection with its acquisitions, the Company’s practice is to request indemnification for any and all known material liabilities of significance as of the respective dates of acquisition. Historically, environmental liabilities have not had a material impact on the Company’s results of operations, financial position or liquidity.

The Company is subject to litigation from time to time in the ordinary course of business; however, the Company does not expect the results, if any, to have a material adverse impact on its results of operations, financial position or liquidity.

10. Geographic Data

The following table summarizes certain geographic information for the periods presented (in thousands):

	December 31, 2018		September 30, 2018		December 31, 2017
Long-lived assets:
U.S.	$	1,352,081	$	1,409,742	$	488,137
Canada		12,096		13,224		13,225
Total long-lived assets	$	1,364,177	$	1,422,966	$	501,362

11. Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss) is composed of certain gains and losses that are excluded from net income under GAAP and instead recorded as a separate element of stockholders’ equity. For the three months ended December 31, 2018, the change in accumulated other comprehensive income (loss) was $(3.9) million and composed solely of foreign currency translation effects. There were no reclassifications out of accumulated other comprehensive income (loss) for the three months ended December 31, 2018.

12. Fair Value Measurement

As of December 31, 2018, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1).

As of December 31, 2018, based upon recent trading prices (Level 2), the fair value of the Company’s $300.0 million Senior Notes due in 2023 was $299.3 million and the fair value of the $1.30 billion Senior Notes due 2025 was $1.15 billion.

As of December 31, 2018, the fair value of the Company’s term loan and revolving asset-based line of credit approximated the amount outstanding. The Company estimates the fair value of its Senior Secured Credit Facility by discounting the future cash flows of each instrument using estimated market rates of debt instruments with similar maturities and credit profiles (Level 3).

13. Supplemental Guarantor Information

The 2023 Senior Notes and 2025 Senior Notes are guaranteed jointly and severally by all the United States subsidiaries of the Company (collectively, the “Guarantors”), and not by the Canadian subsidiaries of the Company. Such guarantees are full and unconditional. Supplemental condensed consolidating financial information of the Company, including such information for the Guarantors, is presented below. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements of the Guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by, and the operations of, the combined groups.

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BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	December 31, 2018
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	30,877	$	2,775	$	(15,229	)	$	18,423
Accounts receivable, net		-		856,373		26,516		(1,140	)		881,749
Inventories, net		-		998,450		26,860		-			1,025,310
Prepaid expenses and other current assets		6,065		361,431		8,102		-			375,598
Total current assets		6,065		2,247,131		64,253		(16,369	)		2,301,080
Intercompany receivable, net		-		1,526,435		-		(1,526,435	)		-
Investments in consolidated subsidiaries		6,289,626		-		-		(6,289,626	)		-
Deferred income taxes, net		20,767		-		-		(20,767	)		-
Property and equipment, net		19,775		243,911		10,056		-			273,742
Goodwill		-		2,461,212		28,518		-			2,489,730
Intangibles, net		-		1,280,202		2,040		-			1,282,242
Other assets, net		1,243		-		-		-			1,243
Total assets	$	6,337,476	$	7,758,891	$	104,867	$	(7,853,197	)	$	6,348,037
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	28,808	$	532,526	$	6,975	$	(16,369	)	$	551,940
Accrued expenses		40,834		327,027		7,811		-			375,672
Current portions of long-term debt/obligations		9,700		10,615		-		-			20,315
Total current liabilities		79,342		870,168		14,786		(16,369	)		947,927
Intercompany payable, net		1,487,640		-		38,795		(1,526,435	)		-
Borrowings under revolving lines of credit, net		-		496,619		6,597		-			503,216
Long-term debt, net		2,497,123		-		-		-			2,497,123
Deferred income taxes, net		-		130,847		99		(20,767	)		110,179
Long-term obligations under equipment financing and other, net		-		10,689		-		-			10,689
Other long-term liabilities		-		5,453		79		-			5,532
Total liabilities	$	4,064,105	$	1,513,776	$	60,356	$	(1,563,571	)	$	4,074,666
Convertible preferred stock	$	399,195	$	-	$	-	$	-		$	399,195
Total stockholders' equity	$	1,874,176	$	6,245,115	$	44,511	$	(6,289,626	)	$	1,874,176
Total liabilities and stockholders' equity	$	6,337,476	$	7,758,891	$	104,867	$	(7,853,197	)	$	6,348,037

20

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	September 30, 2018
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	136,499	$	1,959	$	(8,531	)	$	129,927
Accounts receivable, net		-		1,051,410		40,262		(1,139	)		1,090,533
Inventories, net		-		907,605		28,442		-			936,047
Prepaid expenses and other current assets		23,711		214,011		6,638		-			244,360
Total current assets		23,711		2,309,525		77,301		(9,670	)		2,400,867
Intercompany receivable, net		-		1,361,615		-		(1,361,615	)		-
Investments in consolidated subsidiaries		6,109,325		-		-		(6,109,325	)		-
Deferred income taxes, net		22,475		-		-		(22,475	)		-
Property and equipment, net		18,929		250,517		10,961		-			280,407
Goodwill		-		2,461,725		30,054		-			2,491,779
Intangibles, net		-		1,332,104		2,262		-			1,334,366
Other assets, net		1,243		-		-		-			1,243
Total assets	$	6,175,683	$	7,715,486	$	120,578	$	(7,503,085	)	$	6,508,662
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	24,154	$	843,907	$	22,482	$	(9,671	)	$	880,872
Accrued expenses		41,448		564,331		5,760		-			611,539
Current portions of long-term debt/obligations		9,700		9,961		-		-			19,661
Total current liabilities		75,302		1,418,199		28,242		(9,671	)		1,512,072
Intercompany payable, net		1,322,156		-		39,459		(1,361,615	)		-
Borrowings under revolving lines of credit, net		-		89,352		3,090		-			92,442
Long-term debt, net		2,494,725		-		-		-			2,494,725
Deferred income taxes, net		-		128,846		622		(22,474	)		106,994
Long-term obligations under equipment financing and other, net		-		13,639		-		-			13,639
Other long-term liabilities		-		5,207		83		-			5,290
Total liabilities	$	3,892,183	$	1,655,243	$	71,496	$	(1,393,760	)	$	4,225,162
Convertible preferred stock	$	399,195	$	-	$	-	$	-		$	399,195
Total stockholders' equity	$	1,884,305	$	6,060,243	$	49,082	$	(6,109,325	)	$	1,884,305
Total liabilities and stockholders' equity	$	6,175,683	$	7,715,486	$	120,578	$	(7,503,085	)	$	6,508,662

21

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	December 31, 2017
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	70,698	$	2,122	$	(8,993	)	$	63,827
Restricted cash		-		-		1,300,000		-			1,300,000
Accounts receivable, net		-		526,068		27,775		(1,140	)		552,703
Inventories, net		-		581,288		22,505		-			603,793
Prepaid expenses and other current assets		17,713		194,007		6,998		-			218,718
Total current assets		17,713		1,372,061		1,359,400		(10,133	)		2,739,041
Intercompany receivable, net		-		730,364		-		(730,364	)		-
Investments in consolidated subsidiaries		3,239,031		-		-		(3,239,031	)		-
Deferred income taxes, net		18,286		-		-		(18,286	)		-
Property and equipment, net		8,271		135,925		10,491		-			154,687
Goodwill		-		1,220,813		31,012		-			1,251,825
Intangibles, net		-		408,123		2,734		-			410,857
Other assets, net		3,341		5,527		-		-			8,868
Total assets	$	3,286,642	$	3,872,813	$	1,403,637	$	(3,997,814	)	$	4,565,278
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	21,511	$	296,547	$	7,517	$	(10,133	)	$	315,442
Accrued expenses		27,467		232,131		6,451		-			266,049
Current portions of long-term debt/obligations		4,500		9,739		-		-			14,239
Total current liabilities		53,478		538,417		13,968		(10,133	)		595,730
Intercompany payable, net		680,761		-		49,603		(730,364	)		-
Long-term debt, net		700,059		-		1,300,000		-			2,000,059
Deferred income taxes, net		-		111,066		671		(18,286	)		93,451
Long-term obligations under equipment financing and other, net		-		20,881		70		-			20,951
Other long-term liabilities		-		2,743		-		-			2,743
Total liabilities	$	1,434,298	$	673,107	$	1,364,312	$	(758,783	)	$	2,712,934
Total stockholders' equity	$	1,852,344	$	3,199,706	$	39,325	$	(3,239,031	)	$	1,852,344
Total liabilities and stockholders' equity	$	3,286,642	$	3,872,813	$	1,403,637	$	(3,997,814	)	$	4,565,278

22

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Operations

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net sales	$	-		$	1,678,895	$	42,781		$	-		$	1,721,676
Cost of products sold		-			1,252,295		33,812			-			1,286,107
Gross profit		-			426,600		8,969			-			435,569
Operating expense:
Selling, general and administrative		9,775			309,548		8,370			-			327,693
Depreciation		764			16,372		465			-			17,601
Amortization		-			51,911		110			-			52,021
Total operating expense		10,539			377,831		8,945			-			397,315
Intercompany charges (income)		(6,687	)		6,687		-			-			-
Income (loss) from operations		(3,852	)		42,082		24			-			38,254
Interest expense, financing costs, and other		34,313			3,485		563			-			38,361
Intercompany interest expense (income)		(9,680	)		9,298		382			-			-
Income (loss) before provision for income taxes		(28,485	)		29,299		(921	)		-			(107	)
Provision for (benefit from) income taxes		(7,354	)		8,400		(260	)		-			786
Income (loss) before equity in net income of subsidiaries		(21,131	)		20,899		(661	)		-			(893	)
Equity in net income of subsidiaries		20,238			-		-			(20,238	)		-
Net income (loss)	$	(893	)	$	20,899	$	(661	)	$	(20,238	)	$	(893	)

	Three Months Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net sales	$	-		$	1,076,262		$	45,717		$	-		$	1,121,979
Cost of products sold		-			816,436			35,790			-			852,226
Gross profit		-			259,826			9,927			-			269,753
Operating expense:
Selling, general and administrative		(133	)		184,881			9,005			-			193,753
Depreciation		456			7,810			443			-			8,709
Amortization		-			18,064			131			-			18,195
Total operating expense		323			210,755			9,579			-			220,657
Intercompany charges (income)		893			(893	)		-			-			-
Income (loss) from operations		(1,216	)		49,964			348			-			49,096
Interest expense, financing costs, and other		10,076			825			11,667			-			22,568
Intercompany interest expense (income)		(5,708	)		5,321			387			-			-
Income (loss) before provision for income taxes		(5,584	)		43,818			(11,706	)		-			26,528
Provision for (benefit from) income taxes		5,521			(46,672	)		83			-			(41,068	)
Income (loss) before equity in net income of subsidiaries		(11,105	)		90,490			(11,789	)		-			67,596
Equity in net income of subsidiaries		78,701			-			-			(78,701	)		-
Net income (loss)	$	67,596		$	90,490		$	(11,789	)	$	(78,701	)	$	67,596

23

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Comprehensive Income

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	(893	)	$	20,899	$	(661	)	$	(20,238	)	$	(893	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(3,910	)		-		(3,910	)		3,910			(3,910	)
Total other comprehensive income (loss)		(3,910	)		-		(3,910	)		3,910			(3,910	)
Comprehensive income (loss)	$	(4,803	)	$	20,899	$	(4,571	)	$	(16,328	)	$	(4,803	)

	Three Months Ended December 31, 2017
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	67,596	$	90,490	$	(11,789	)	$	(78,701	)	$	67,596
Other comprehensive income (loss):
Foreign currency translation adjustment		57		-		57			(57	)		57
Total other comprehensive income (loss)		57		-		57			(57	)		57
Comprehensive income (loss)	$	67,653	$	90,490	$	(11,732	)	$	(78,758	)	$	67,653

24

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	12,792		$	(336,407	)	$	(2,659	)	$	(10,609	)	$	(336,883	)
Investing Activities
Purchases of property and equipment		(1,610	)		(9,971	)		(107	)		-			(11,688	)
Acquisition of businesses, net		-			(163,973	)		-			-			(163,973	)
Proceeds from the sale of assets		-			400			1			-			401
Intercompany activity		(2,399	)		-			-			2,399			-
Net cash provided by (used in) investing activities		(4,009	)		(173,544	)		(106	)		2,399			(175,260	)
Financing Activities
Borrowings under revolving lines of credit		-			1,285,017			13,637			-			1,298,654
Repayments under revolving lines of credit		-			(878,376	)		(9,849	)		-			(888,225	)
Payment of debt issuance costs		-			-			-			-			-
Repayments under equipment financing facilities and other		-			(1,465	)		-			-			(1,465	)
Payment of dividends on preferred stock		(6,000	)		-			-			-			(6,000	)
Proceeds from issuance of common stock related to equity awards		834			-			-			-			834
Taxes paid related to net share settlement of equity awards		(3,617	)		-			-			-			(3,617	)
Intercompany activity		-			(847	)		(561	)		1,408			-
Net cash provided by (used in) financing activities		(8,783	)		404,329			3,227			1,408			400,181
Effect of exchange rate changes on cash and cash equivalents		-			-			354			104			458
Net increase (decrease) in cash and cash equivalents		-			(105,622	)		816			(6,698	)		(111,504	)
Cash and cash equivalents, beginning of period		-			136,499			1,959			(8,531	)		129,927
Cash and cash equivalents, end of period	$	-		$	30,877		$	2,775		$	(15,229	)	$	18,423

25

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	(37,331	)	$	2,338		$	(9,658	)	$	4,195		$	(40,456	)
Investing Activities
Purchases of property and equipment		(2,117	)		(4,874	)		(425	)		-			(7,416	)
Acquisition of businesses		-			-			-			-			-
Proceeds from the sale of assets		-			398			15			-			413
Intercompany activity		61,938			-			-			(61,938	)		-
Net cash provided by (used in) investing activities		59,821			(4,476	)		(410	)		(61,938	)		(7,003	)
Financing Activities
Borrowings under revolving lines of credit		-			878			16,524			-			17,402
Repayments under revolving lines of credit		-			(877	)		(19,671	)		-			(20,548	)
Repayments under term loan		-			-			-			-			-
Borrowings under Senior Notes		-			-			1,300,000			-			1,300,000
Payment of debt issuance costs		(21,917	)		-			-			-			(21,917	)
Repayments under equipment financing facilities and other		-			(1,973	)		5			-			(1,968	)
Payment of issuance costs from secondary offering of common stock		(429	)		-			-			-			(429	)
Proceeds from issuance of common stock related to equity awards		3,781			-			-			-			3,781
Taxes paid related to net share settlement of equity awards		(3,925	)		-			-			-			(3,925	)
Intercompany activity		-			(74,991	)		13,110			61,881			-
Net cash provided by (used in) financing activities		(22,490	)		(76,963	)		1,309,968			61,881			1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		-			-			640			-			640
Net increase (decrease) in cash, cash equivalents, and restricted cash		-			(79,101	)		1,300,540			4,138			1,225,577
Cash, cash equivalents, and restricted cash, beginning of period		-			149,799			1,582			(13,131	)		138,250
Cash, cash equivalents, and restricted cash, end of period	$	-		$	70,698		$	1,302,122		$	(8,993	)	$	1,363,827

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis included in our 2018 Annual Report on Form 10-K and our Condensed Consolidated Financial Statements and the notes thereto included elsewhere in this document. Unless otherwise indicated, references to “2019” refer to the three months ended December 31, 2018being discussed and references to “2018” refer to the three months ended December 31, 2017being discussed. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

Overview

We are the largest publicly traded distributor of residential and non-residential roofing materials in the United States and Canada. We also distribute complementary building products, including siding, windows, specialty exterior building products, insulation, waterproofing systems, wallboard and acoustical ceiling tiles. We are among the oldest and most established distributors in the industry. We purchase products from a large number of manufacturers and then distribute these goods to a customer base consisting of contractors and, to a lesser extent, general contractors, retailers, and building materials suppliers.

As of December 31, 2018, we operated544 branches in50 states throughout the United States and 6 provinces in Canada. We stock one of the most extensive assortments of high-quality branded products in the industry with approximately 90,000 SKUs available across our branch network, enabling us to deliver products to serve over 100,000 customers on a timely basis.

On January 2, 2018, we completed the acquisition of all the outstanding capital stock of Allied Building Products Corp. (“Allied”), a New Jersey Corporation (the “Allied Acquisition”), for approximately $2.625 billion, subject to working capital and other adjustments (the “Purchase Price”). As of December 31, 2018, the adjusted Purchase Price for Allied was $2.88 billion and purchase accounting entries were finalized. Headquartered in East Rutherford, New Jersey, Allied was one of the country’s largest exterior and interior building products distributors, distributing products across 208 locations in 31 states in the U.S. with a strong presence in New York, New Jersey, Florida, California, Hawaii and the upper Midwest at the time of the acquisition. We believe the acquisition of Allied was a strategically and financially compelling transaction that expanded our geographic footprint, enhanced our scale and market presence, diversified our product offerings, and positioned us to provide new growth opportunities that will increase our long-term profitability.

Effective execution of both the sales and operating plans enables us to grow beyond the relative strength of the markets we serve. Our business model is a bottom-up approach, where each of our branches uses its regional knowledge and experience to assist with the development of a marketing plan and stocking a product mix that is best suited for its respective market. Local alignment with overall strategic goals provides the foundation for significant ownership of results at the branch level.

Our distinctive operational model combined with significant branch level autonomy differentiates us from the competition. We provide our customers with value-added services, including, but not limited to, job site delivery, custom designed tapered roofing systems, metal fabrication, and trade credit. We consider customer relations and our employees’ knowledge of roofing and building materials to be vital to our ability to increase customer loyalty and maintain customer satisfaction. Our customers’ business success can be enhanced when they are supported by our efficient and effective distribution network. We invest significant resources in professional development, management skills, product knowledge and operational proficiency. We pride ourselves on providing these capabilities developed on a foundation of continuous improvement driving service excellence, productivity and efficiencies.

We seek opportunities to expand our business operations through both acquisitions and organic growth (opening branches, growing sales with existing customers, adding new customers and introducing new products). Our main acquisition strategy is to target market leaders that do business in geographic areas that we currently do not service or that complement our existing regional operations. In addition to our acquisition of Allied, our recent success in delivering on our growth strategy is highlighted by the following:

• On May 1, 2018, we acquired Tri-State Builder’s Supply, a wholesale supplier of roofing, siding, windows, doors and related building products with 1 branch located in Duluth, Minnesota and annual sales of approximately $6 million.

• On July 16, 2018, we acquired Atlas Supply, Inc., the Pacific Northwest’s leading distributor of sealants, coatings, adhesives and related waterproofing products, with 6 branches operating in Seattle, Tacoma, and Mountlake Terrace in Washington, as well as locations in Portland, Oregon and Boise, Idaho, and annual sales of approximately $37 million.

In addition, we opened one new branch in fiscal year 2019. New branch locations allow us to penetrate deeper into our existing markets and establish a greater presence.

27

Results of Operations

Comparison of the Three Months Ended December 31, 2018 and 2017

The following tables set forth consolidated statement of operations data and such data as a percentage of total net sales for the periods presented (in thousands):

	Three Months Ended December 31,
	2018			2017
Net sales	$	1,721,676		$	1,121,979
Cost of products sold		1,286,107			852,226
Gross profit		435,569			269,753
Operating expense:
Selling, general and administrative		327,693			193,753
Depreciation		17,601			8,709
Amortization		52,021			18,195
Total operating expense		397,315			220,657
Income (loss) from operations		38,254			49,096
Interest expense, financing costs, and other		38,361			22,568
Income (loss) before provision for income taxes		(107	)		26,528
Provision for (benefit from) income taxes		786			(41,068	)
Net income (loss)	$	(893	)	$	67,596
Dividends on preferred shares		6,000			-
Net income (loss) attributable to common shareholders	$	(6,893	)	$	67,596

	Three Months Ended December 31,
	2018			2017
Net sales		100.0	%		100.0	%
Cost of products sold		74.7	%		76.0	%
Gross profit		25.3	%		24.0	%
Operating expense:
Selling, general and administrative		19.1	%		17.3	%
Depreciation		1.0	%		0.8	%
Amortization		3.1	%		1.6	%
Total operating expense		23.2	%		19.7	%
Income (loss) from operations		2.1	%		4.3	%
Interest expense, financing costs, and other		2.2	%		2.0	%
Income (loss) before provision for income taxes		(0.1	%)		2.3	%
Provision for (benefit from) income taxes		0.0	%		(3.7	%)
Net income (loss)		(0.1	%)		6.0	%
Dividends on preferred shares		0.3	%		0.0	%
Net income (loss) attributable to common shareholders		(0.4	%)		6.0	%

In managing our business, we consider all growth, including the opening of new branches, to be organic growth unless it results from an acquisition. When we refer to growth in existing markets or organic growth, we include growth from existing and newly opened branches but exclude growth from acquired branches until they have been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting period. We believe the existing market information is useful to investors because it helps explain organic growth or decline. When combined, our existing market information and acquired market information equal our consolidated company totals. When we refer to regions, we are referring to our geographic regions. When we refer to our net product costs, we are referring to our invoice cost less the impact of short-term buying programs (also referred to as “special buys”).

As of December 31, 2018, we had a total of 544 branches in operation. Our existing market calculations include the operating results of the 330 branches that meet our definition (214 branches were excluded because they were acquired after the start of the first quarter of fiscal year 2018).

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The following table summarizes our results of operations by market type (existing and acquired) for the periods presented (in thousands):

	Existing Markets						Acquired Markets						Consolidated
	Three Months Ended December 31,
	2018			2017			2018			2017			2018			2017
Net sales	$	997,009		$	1,016,628		$	724,667		$	105,351		$	1,721,676		$	1,121,979
Gross profit	$	240,037		$	243,221		$	195,532		$	26,532		$	435,569		$	269,753
Gross margin		24.1	%		23.9	%		27.0	%		25.2	%		25.3	%		24.0	%
Operating expense:
Selling, general, and administrative	$	185,635		$	176,509		$	142,058		$	17,244		$	327,693		$	193,753
Depreciation		8,360			7,815			9,241			894			17,601			8,709
Amortization		12,841			15,519			39,180			2,676			52,021			18,195
Operating expense1	$	206,836		$	199,843		$	190,479		$	20,814		$	397,315		$	220,657
Operating expense as a % of net sales		20.7	%		19.7	%		26.3	%		19.8	%		23.2	%		19.7	%
Operating income (loss)	$	33,202		$	43,378		$	5,052		$	5,718		$	38,254		$	49,096
Operating margin		3.3	%		4.3	%		0.7	%		5.4	%		2.1	%		4.3	%

___________________________________________

¹ Existing market operating expense for 2019 and 2018 includes $8.9 million and $5.6 million of non-recurring acquisition costs, respectively.

Net Sales

Consolidated net sales increased $599.7 million, or 53.4%, to $1.72 billion in 2019, up from $1.12 billion in 2018. Existing market net sales decreased $19.6 million, or 1.9%, over the comparative 2018 period. The year-over-year decrease in existing market net sales was mainly influenced by the following factors:

• decreased storm activity compared to the prior year; and

• high rainfall levels in November and December;

partially offset by:

• higher pricing across all product lines; and

• double-digit net sales growth in the Northeast and Mid-Atlantic.

Existing markets net sales by geographical region increased (decreased) from 2019 to 2018 as follows: Northeast 12.7%; Mid-Atlantic 20.2%; Southeast (1.7%); Southwest (14.6%); Midwest (6.7%); West (19.9%); and Canada (6.4%).

We estimate the impact of inflation or deflation on our sales and gross profit by looking at changes in our average selling prices and gross margins (discussed below).

Product line net sales for our existing markets were as follows (in thousands):

	Three Months Ended December 31,
	2018					2017					Change
	Net Sales		%			Net Sales		%			$			%
Residential roofing products	$	515,896		51.7	%	$	525,115		51.7	%	$	(9,219	)		(1.8	%)
Non-residential roofing products		296,700		29.8	%		302,882		29.8	%		(6,182	)		(2.0	%)
Complementary building products		184,413		18.5	%		188,631		18.5	%		(4,218	)		(2.2	%)
Total existing market sales	$	997,009		100.0	%	$	1,016,628		100.0	%	$	(19,619	)		(1.9	%)

Acquired market net sales were $724.7 million in 2019. We recognized acquired market product line net sales of $216.3 million in residential roofing products, $123.2 million in non-residential roofing products and $385.2 million in complementary building products.

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Gross Profit

Gross profit and gross margin for our consolidated and existing markets were as follows (in thousands):

	Three Months Ended December 31,						Change1
	2018			2017			$			%
Gross profit - consolidated	$	435,569		$	269,753		$	165,816			61.5	%
Gross profit - existing markets		240,037			243,221			(3,184	)		(1.3	%)
Gross margin - consolidated		25.3	%		24.0	%	N/A				1.3	%
Gross margin - existing markets		24.1	%		23.9	%	N/A				0.2	%

 ___________________________________________________________

¹ Percentage changes for dollar amounts represent the ratable increase or decrease from period-to-period. Percentage changes for percentages represent the net period-to-period change in basis points.

Consolidated gross profit increased $165.8 million, or 61.5%, to $435.6 million in 2019, up from $269.8 million in 2018. Existing market gross profit decreased $3.2 million, or 1.3%, over the comparative 2018 period.

Consolidated gross margin was 25.3% in 2019, up 1.3% from 24.0% in 2018. Existing market gross margin increased 0.2% over the comparative 2018 period, to 24.1%. The year-over-year increase in existing market gross margin was mainly influenced by a price increase of approximately 7%, partially offset by a product cost increase of approximately 6-7% across all products and a shift in mix to product lines with lower gross margins over the comparative period.

Consolidated gross margin was slightly higher than existing market gross margin due to the positive impact of recent acquisitions. Consolidated direct sales (products shipped by our vendors directly to our customers), which typically have substantially lower gross margins (and operating expense) compared to our warehouse sales, represented 11.3% and 13.5% of our net sales in 2019 and 2018, respectively.

Operating Expense

Operating expense for consolidated and existing markets was as follows (in thousands):

	Three Months Ended December 31,						Change1
	2018			2017			$		%
Operating expense - consolidated	$	397,315		$	220,657		$	176,658		80.1	%
Operating expense - existing markets		206,836			199,843			6,993		3.5	%
% of net sales - consolidated		23.2	%		19.7	%	N/A			3.5	%
% of net sales - existing markets		20.7	%		19.7	%	N/A			1.0	%

 _________________________________________________________________

¹ Percentage changes for dollar amounts represent the ratable increase or decrease from period-to-period. Percentage changes for percentages represent the net period-to-period change in basis points.

Consolidated operating expense increased $176.7 million, or 80.1%, to $397.3 million in 2019, up from $220.7 million in 2018. Existing market operating expense increased $7.0 million, or 3.5% in 2019, to $206.8 million, compared to $199.8 million in 2018. The year-over-year increase in existing market operating expense was mainly influenced by the following factors:

• a net increase in general and administrative expense of $5.4 million, mainly due to one-time costs incurred as part of the Allied acquisition;

• a net increase in payroll and employee benefit costs of $1.4 million, mainly due to higher salaries and wages from annual merit increases; and

• an increase in bad debt expense of $1.4 million, mainly due to a slowdown in collections stemming from seasonal payment cycles;

partially offset by:

• a decrease in amortization expense of $2.7 million due to the scheduled declining run-rate of intangible asset amortization related to the fiscal year 2016 acquisition of Roofing Supply Group.

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During 2019 and 2018, we recorded amortization expense related to the intangible assets recorded under purchase accounting within our existing markets of $12.8 millionand$15.5 million, respectively. Our existing markets operating expense as a percentage of the related net sales in 2019 was20.7%, compared to 19.7% in 2018.

Interest Expense, Financing Costs and Other

Interest expense, financing costs and other expense was $38.4 million in 2019, compared to $22.6 million in 2018. The increase was mainly driven by the additional interest costs related to a higher average outstanding debt balance over the comparative periods as a direct result of the Allied Acquisition.

Income Taxes

There was an income tax provision of $0.8 million in 2019, compared to an income tax benefit of $41.1 million in 2018. The increase in income tax provision was mainly driven by the impact of the Tax Cuts and Jobs Act of 2017. In 2018, the Company remeasured its deferred tax assets and liabilities based on the revised corporate tax rate, resulting in a $46.5 million non-recurring net tax benefit. The first quarter effective tax rate, excluding any discrete items, was 26.9% in 2019, compared to 29.0% in 2018. Discrete items in 2019 totaled $0.8 million and were composed solely of tax shortfall amounts related to restricted stock unit awards that vested during the period. We expect our fiscal year 2019 effective tax rate, excluding any discrete items, will range from approximately 27.0% to 28.0%.

Net Income (Loss)/Net Income (Loss) Per Share

Net income (loss) was $(0.9) million in 2019, compared to $67.6 million in 2018. There were $6.0 million of dividends on preferred shares in 2019 and none in 2018, making net income (loss) attributable to common shareholders of $(6.9) million in 2019, compared to $67.6 million in 2018. We calculate net income (loss) per share by dividing net income (loss), less dividends on preferred shares and adjustments for participating securities, by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by utilizing the most dilutive result after applying and comparing the two-class method and if-converted method (see Note 5 in the Notes to Condensed Consolidated Financial Statements for further discussion).

The following table presents the all the components utilized to calculate basic and diluted net income (loss) per share (in thousands, except share and per share amounts):

	Three Months Ended December 31,
	2018			2017
Net income (loss)	$	(893	)	$	67,596
Dividends on preferred shares		(6,000	)		-
Net income (loss) attributable to common shareholders		(6,893	)		67,596
Undistributed income allocated to participating securities		-			-
Net income (loss) attributable to common shareholders - basic and diluted (if-converted method)	$	(6,893	)	$	67,596
Undistributed income allocated to participating securities		-			-
Re-allocation of undistributed income to preferred shares		-			-
Net income (loss) attributable to common shareholders - diluted (two-class method)	$	(6,893	)	$	67,596
Weighted-average common shares outstanding, basic		68,248,020			67,825,430
Effect of common share equivalents		-			1,419,248
Weighted-average common shares outstanding - diluted (if-converted and two-class method)		68,248,020			69,244,678
Net income (loss) per share - basic	$	(0.10	)	$	1.00
Net income (loss) per share - diluted (two-class method)		(0.10	)		0.98
Net income (loss) per share - diluted (if-converted method)		(0.10	)		0.98

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, we prepare certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), specifically:

• Adjusted Net Income (Loss)/Adjusted EPS

• Adjusted EBITDA

We define Adjusted Net Income (Loss) as net income that excludes non-recurring acquisition costs, the amortization of intangibles, business restructuring costs, and the non-recurring effects of tax reform. Adjusted net income per share (“Adjusted EPS”)

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is calculated by dividing the Adjusted Net Income (Loss) for the period by the weighted-average diluted shares outstanding for the period after assuming the full conversion of the participating Preferred Stock.

We define Adjusted EBITDA as net income plus interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, non-recurring acquisition costs, and business restructuring costs. EBITDA is a measure commonly used in the distribution industry, and we present Adjusted EBITDA to enhance your understanding of our operating performance.

We use these supplemental non-GAAP measures to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute our non-GAAP financial measures consistently using the same methods each period.

We believe these non-GAAP measures are useful measures because they allow investors to better understand changes in underlying operating performance over comparative periods by providing investors with financial results that are unaffected by cyclical variances that can be driven by items such as investment activity or purchase accounting adjustments.

While we believe that these non-GAAP measures are useful to investors when evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared and presented in accordance with GAAP. You should not consider any of these measures as a substitute alongside other financial performance measures presented in accordance with GAAP. In addition, these non-GAAP measures may have material limitations and may differ from similarly titled measures presented by other companies.

Adjusted Net Income (Loss)/Adjusted EPS

The following table presents a reconciliation of net income, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted Net Income (Loss)/Adjusted EPS for each of the periods indicated (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018						2017
	Amount			Per Share1			Amount			Per Share1
Net income (loss)	$	(893	)	$	(0.01	)	$	67,596		$	0.98
Acquisition costs2		47,393			0.61			25,633			0.37
Effects of tax reform3		-			-			(46,492	)		(0.67	)
Adjusted Net Income (Loss)	$	46,500		$	0.60		$	46,737		$	0.68

___________________________________________________

¹ The weighted-average share count utilized in the calculation of Adjusted EPS for the three months ended December 31, 2018 is 77,942,639. This amount is the 68,248,020 diluted weighted-average shares outstanding plus the assumed conversion of 9,694,619 weighted-average shares of participating Preferred Stock, which were excluded from the GAAP net income (loss) per share calculation for the period due to their anti-dilutive nature. The weighted-average share count utilized in the calculation of Adjusted EPS for the three months ended December 31, 2017 is 69,244,678.

² Three months ended December 31, 2018 amount is composed of $11.9 million of non-recurring acquisition costs ($8.8 million, net of tax) and $52.0 million of amortization expense related to intangibles ($38.5 million, net of tax). Three months ended December 31, 2017 amount is composed of $17.8 million of non-recurring acquisition costs ($12.7 million, net of tax) and $18.2 million of amortization expense related to intangibles ($12.9 million, net of tax).

³ Impact of the Tax Cuts and Jobs Act of 2017.

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Adjusted EBITDA

The following table presents a reconciliation of net income, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA for each of the periods indicated (in thousands):

	Three Months Ended December 31,
	2018			2017
Net income (loss)	$	(893	)	$	67,596
Acquisition costs1		8,917			5,569
Interest expense, net		39,816			23,516
Income taxes		786			(41,068	)
Depreciation and amortization		69,622			26,904
Stock-based compensation		3,457			3,459
Adjusted EBITDA	$	121,705		$	85,976
Adjusted EBITDA as a % of net sales		7.1	%		7.7	%

 ____________________________________________

¹ Represents non-recurring acquisition costs (excluding the impact of tax) that are included in operating expense and not embedded in other balances of the table.

Seasonality and Quarterly Fluctuations

In general, sales and net income are highest during our first, third and fourth fiscal quarters, which represent the peak months of construction and re-roofing, especially in our branches in the northern and mid-western U.S. and in Canada. We have historically incurred low net income levels or net losses during the second quarter when our sales are substantially lower.

We generally experience an increase in inventory, accounts receivable and accounts payable during the third and fourth quarters of the year as a result of the seasonality of our business. Our peak cash usage generally occurs during the third quarter, primarily because accounts payable terms offered by our suppliers typically have due dates in April, May and June, while our peak accounts receivable collections typically occur from June through November.

We generally experience a slowing of our accounts receivable collections during our second quarter, mainly due to the inability of some of our customers to conduct their businesses effectively in inclement weather in certain divisions. We continue to attempt to collect those receivables, which require payment under our standard terms. We do not provide material concessions to our customers during this quarter of the year.

We generally experience our peak working capital needs during the third quarter after we build our inventories following the winter season but before we begin collecting on most of our spring receivables.

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Certain Quarterly Financial Data

The following table sets forth certain unaudited quarterly data for the first quarter of 2019 and fiscal year 2018, which, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of this data. Results of any one or more quarters are not necessarily indicative of results for an entire fiscal year or of continuing trends (in thousands, except per share amounts):

	2019			2018
	Qtr 1			Qtr 4			Qtr 3			Qtr 2			Qtr 11
Net sales	$	1,721,676		$	1,935,756		$	1,934,951		$	1,425,625		$	1,121,979
% of fiscal year’s net sales		100.0	%		30.2	%		30.1	%		22.2	%		17.5	%
Gross profit		435,569			491,297			493,894			338,377			269,753
% of fiscal year’s gross profit		100.0	%		30.8	%		31.0	%		21.2	%		16.9	%
Income (loss) from operations		38,254			108,115			104,813			(57,398	)		49,096
% of fiscal year’s income (loss) from operations		100.0	%		52.8	%		51.2	%		(28.1	%)		24.0	%
Net income (loss)	$	(893	)	$	48,310		$	49,375		$	(66,655	)	$	67,596
Dividends on preferred shares		6,000			6,000			6,000			6,000			-
Net income (loss) attributable to common shareholders	$	(6,893	)	$	42,310		$	43,375		$	(72,655	)	$	67,596
Net income (loss) per share - basic	$	(0.10	)	$	0.54		$	0.56		$	(1.07	)	$	1.00
Net income (loss) per share - diluted	$	(0.10	)	$	0.54		$	0.55		$	(1.07	)	$	0.98

 _____________________________________________________________________

¹ Results from the first quarter of fiscal year 2018 do not include the impact of the Allied Acquisition (see Note 3 in the Notes to Condensed Consolidated Financial Statements for further discussion).

Liquidity

Liquidity is defined as the current amount of readily available cash and the ability to generate adequate amounts of cash to meet the current needs for cash. We assess our liquidity in terms of our cash and cash equivalents on hand and the ability to generate cash to fund our operating activities, taking into consideration available borrowings and the seasonal nature of our business.

Our principal sources of liquidity as of December 31, 2018were our cash and cash equivalents of $18.4 million and our available borrowings of $680.0 million under our asset-based lending revolving credit facility.

Significant factors which could affect future liquidity include the following:

• the adequacy of available bank lines of credit;

• the ability to attract long-term capital with satisfactory terms;

• cash flows generated from operating activities;

• acquisitions; and

• capital expenditures.

Our primary capital needs are for working capital obligations and other general corporate purposes, including acquisitions and capital expenditures. Our primary sources of working capital are cash from operations and bank borrowings. We have financed large acquisitions through increased bank borrowings and the issuance of long-term debt and common or preferred stock. We then repay any such borrowings with cash flows from operations. We have funded most of our capital expenditures with cash on hand, increased bank borrowings, or equipment financing, and then reduced those obligations with cash flows from operations.

We believe we currently have adequate liquidity and availability of capital to fund our present operations, meet our commitments on our existing debt and fund anticipated growth, including expansion in existing and targeted market areas. We seek potential acquisitions from time to time and hold discussions with certain acquisition candidates. If suitable acquisition opportunities or working capital needs arise that require additional financing, we believe that our financial position and earnings history provide a

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sufficient base for obtaining additional financing resources at reasonable rates and terms. We may also choose to issue additional shares of common stock or preferred stock in order to raise funds.

The following table summarizes our cash flows for the periods indicated (in thousands):

	Three Months Ended December 31,
	2018			2017
Net cash provided by (used in) operating activities	$	(336,883	)	$	(40,456	)
Net cash provided by (used in) investing activities		(175,260	)		(7,003	)
Net cash provided by (used in) financing activities		400,181			1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		458			640
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(111,504	)	$	1,225,577

Operating Activities

Net cash used in operating activities was $336.9 million in 2019, compared to $40.5 million in 2018. Cash from operations decreased $296.4 million due to an incremental cash outflow of $321.7 million stemming from changes to our net working capital, mainly driven by decreases in accounts payable and accrued expenses. This decrease was partially offset by an increase in net income after adjustments for non-cash items of $25.3 million.

Investing Activities

Net cash used in investing activities was $175.3 million in 2019, compared to $7.0 million in 2018. The $168.3 million of additional investing cash spend was primarily due to the $164.0 million payment resulting from the 338(h)(10) election made in October 2018 (see Note 3 in the Notes to Condensed Consolidated Financial Statements).

Financing Activities

Net cash provided by financing activities was $400.2 million in 2019, compared to $1.27 billion in 2018. The financing cash flow decrease of $872.2 million was primarily due to the $1.30 billion impact of the 2025 Senior Notes that we entered into in 2018 in connection with the Allied Acquisition (see Note 8 in the Notes to Condensed Consolidated Financial Statements for further discussion), partially offset by a $413.6 million net increase in borrowings from our revolving lines of credit in 2019.

Capital Resources

As of December 31, 2018, we had access to the following financing arrangements:

• an asset-based revolving line of credit in the United States;

• an asset-based revolving line of credit in Canada;

• a term loan; and

• two separate senior notes instruments

Financing - Allied Acquisition

In connection with the Allied Acquisition, we entered into various financing arrangements totaling $3.57 billion, including an asset-based revolving line of credit of $1.30 billion (“2023 ABL”), $525.0 million of which was drawn at closing, and a $970.0 million term loan (“2025 Term Loan”). We also raised an additional $1.30 billion through the issuance of senior notes (the “2025 Senior Notes”).

The proceeds from these financing arrangements were used to finance the Allied Acquisition, to refinance or otherwise extinguish all third-party indebtedness, to pay fees and expenses associated with the acquisition, and to provide working capital and funds for other general corporate purposes. We capitalized new debt issuance costs totaling approximately $65.3 million related to the 2023 ABL, the 2025 Term Loan and the 2025 Senior Notes.

Since the financing arrangements entered into in connection with the Allied Acquisition had certain lenders who also participated in our previous financing arrangements, portions of the transactions were accounted for as either a debt modification or a debt extinguishment. In accordance with the accounting for debt modification, we expensed $2.0 million of debt issuance costs related to the Allied financing arrangements and recognized a loss on debt extinguishment of $1.7 million. The remainder of the debt issuance costs will be amortized over the term of the Allied financing arrangements.

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2023 ABL

On January 2, 2018, we entered into a $1.30 billion asset-based revolving line of credit with Wells Fargo Bank, N.A. and a syndicate of other lenders. The 2023 ABL consists of revolving loans in both the United States (“2023 U.S. Revolver”) in the amount of $1.20 billion and Canada (“2023 Canada Revolver”) in the amount of $100.0 million. The 2023 ABL has a maturity date of January 2, 2023. The 2023 ABL has various borrowing tranches with an interest rate based on a LIBOR rate (with a floor) plus a fixed spread. The current unused commitment fees on the 2023 ABL are 0.25% per annum.

There is one financial covenant under the 2023 ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (both as defined in the agreement). Per the covenant, our Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis.

The 2023 ABL is secured by a first priority lien over substantially all of our and each guarantor’s accounts, chattel paper, deposit accounts, books, records and inventory (as well as intangibles related thereto), subject to certain customary exceptions (the “ABL Priority Collateral”), and a second priority lien over substantially all of our and each guarantor’s other assets, including all of the equity interests of any subsidiary held by us or any guarantor, subject to certain customary exceptions (the “Term Priority Collateral”). The 2023 ABL is guaranteed jointly, severally, fully and unconditionally by our active United States subsidiaries.

As of December 31, 2018, the total balance outstanding on the 2023 ABL, net of $10.0 million of unamortized debt issuance costs, was $503.2 million. We also have outstanding standby letters of credit related to the 2023 U.S. Revolver in the amount of $13.4 million as of December 31, 2018.

2025 Term Loan

On January 2, 2018, we entered into a $970.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The 2025 Term Loan requires quarterly principal payments in the amount of $2.4 million, with the remaining outstanding principal to be paid on its maturity date of January 2, 2025. The interest rate is based on a LIBOR rate (with a floor) plus a fixed spread. We have the option of selecting a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments are made.

The 2025 Term Loan is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the ABL Priority Collateral. Certain excluded assets will not be included in the Term Priority Collateral and the ABL Priority Collateral. The Term Loan is guaranteed jointly, severally, fully and unconditionally by our active United States subsidiaries.

As of December 31, 2018, the outstanding balance on the 2025 Term Loan, net of $33.0 million of unamortized debt issuance costs, was $932.1 million.

2025 Senior Notes

On October 25, 2017, Beacon Escrow Corporation, our wholly-owned subsidiary (the “Escrow Issuer”), completed a private offering of $1.30 billion aggregate principal amount of 4.875% Senior Notes due 2025 at an issue price of 100%. The 2025 Senior Notes bear interest at a rate of 4.875% per annum, payable semi-annually in arrears, beginning May 1, 2018. We anticipate repaying the 2025 Senior Notes at the maturity date of November 1, 2025. Per the terms of the Escrow Agreement, the net proceeds from the 2025 Senior Notes remained in escrow until they were used to fund a portion of the purchase price of the Allied Acquisition payable at closing on January 2, 2018.

Upon closing of the Allied Acquisition on January 2, 2018, (i) the Escrow Issuer merged with and into us, and we assumed all obligations under the 2025 Senior Notes; and (ii) all our existing domestic subsidiaries (including the entities acquired in the Allied Acquisition) became guarantors of the 2025 Senior Notes.

As of December 31, 2018, the outstanding balance on the 2025 Senior Notes, net of $19.2 million of debt issuance costs, was $1.28 billion.

Financing - RSG Acquisition

In connection with the Roofing Supply Group (“RSG”) acquisition in fiscal year 2016, we entered into various financing arrangements totaling $1.45 billion, including an asset-based revolving line of credit (“2020 ABL”) of $700.0 million ($350.0 million of which was drawn at closing) and a $450.0 million term loan (“2022 Term Loan”). We also raised an additional $300.0 million through the issuance of senior notes (the “2023 Senior Notes”).

The proceeds from these financing arrangements were used to provide working capital and funds for other general corporate purposes, to refinance or otherwise extinguish all third-party indebtedness, to finance the acquisition, and to pay fees and expenses

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associated with the RSG acquisition. We incurred debt issuance costs totaling approximately $31.3 million related to the 2020 ABL, 2022 Term Loan, and 2023 Senior Notes.

2020 ABL

On October 1, 2015, we entered into a $700.0 million asset-based revolving line of credit with Wells Fargo Bank, N.A. and a syndicate of other lenders. The 2020 ABL had an original maturity date of October 1, 2020 and consisted of revolving loans in both the United States, in the amount of $670.0 million, and Canada, in the amount of $30.0 million. The 2020 ABL had various borrowing tranches with an interest rate based on a LIBOR rate (with a floor) plus a fixed spread. The full balance of the 2020 ABL was paid on January 2, 2018 in conjunction with the Allied Acquisition.

2022 Term Loan

On October 1, 2015, we entered into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The 2022 Term Loan required quarterly principal payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its original maturity date of October 1, 2022. The interest rate was based on a LIBOR rate (with a floor) plus a fixed spread. We had the option of selecting a LIBOR period that determines the rate at which interest would accrue, as well as the period in which interest payments are made. The full balance of the 2022 Term Loan was paid on January 2, 2018 in conjunction with the Allied Acquisition, including the write-off of $0.7 million in debt issuance costs.

2023 Senior Notes

On October 1, 2015, we raised $300.0 million by issuing senior notes due 2023. The 2023 Senior Notes have a coupon rate of 6.38% per annum and are payable semi-annually in arrears, beginning April 1, 2016. There are early payment provisions in the indenture in which we would be subject to “make whole” provisions. We anticipate repaying the notes at the maturity date of October 1, 2023.

The 2023 Senior Notes are guaranteed jointly, severally, fully and unconditionally by our active United States subsidiaries.

As of December 31, 2018, the outstanding balance on the 2023 Senior Notes, net of $6.1 million of unamortized debt issuance costs, was $293.9 million.

Equipment Financing Facilities and Other

As of December 31, 2018, we had $10.1 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments due through September 2021.

As of December 31, 2018, we had $11.2 million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due through November 2021.

37

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

Our disclosure and analysis in this report contains forward-looking information that involves risks and uncertainties. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management’s plans and objectives, future contracts, and forecasts of trends and other matters. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “believe,” “will likely result,” “outlook,” “project” and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.

Certain factors that may affect our business and could cause actual results to differ materially from those expressed in any forward-looking statements include those set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of its 2017 Annual Report on Form 10-K have not changed materially during the three-month period ended December 31, 2018.

Item 4. Controls and Procedures

As of December 31, 2018, management, including the CEO and CFO, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Act”)). Based on that evaluation, management, including the CEO and CFO, concluded that as of December 31, 2018, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States.

On January 2, 2018, we completed our acquisition of Allied Building Products Corp. ("Allied"). As permitted under existing SEC staff guidance, management elected to exclude Allied from our internal controls assessment for fiscal year 2018. However, for fiscal year 2019, the acquired Allied business is within the scope of management’s assessment of internal controls. Although management has not fully integrated all of the acquired Allied branches, the internal controls at the Allied branches were part of management’s assessment of internal controls for effectiveness as of December 31, 2018. The full integration of the remaining Allied branches may lead to changes in future periods, but we do not expect these changes to materially affect our internal controls over financial reporting.

Including the Allied acquisition, there has been no change to our internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

38

PART II.OTHER INFORMATION

Item 6. Exhibits

			Incorporated by Reference
Exhibit Number		Description		Form		File No.		Exhibit	Filing Date
10.1+*	Description of Executive Annual Incentive Plan
10.2	Letter Agreement, dated as of November 20, 2018, by and among Beacon Roofing Supply, Inc., CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P. (solely for the purposes described therein)		8-K		000-50924		10.1			November 21, 2018
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
32.1*	Certification pursuant to 18 U.S.C. Section 1350
101*		101.INS XBRL Instance
		101.SCH XBRL Taxonomy Extension Schema
		101.CAL XBRL Taxonomy Extension Calculation
		101.LAB XBRL Taxonomy Extension Labels
		101.CAL XBRL Taxonomy Extension Calculation
		101.PRE XBRL Taxonomy Extension Presentation
		101.LAB XBRL Taxonomy Extension Labels
		101.DEF XBRL Taxonomy Extension Definition

________________________________________________

+ Management contract or compensatory plan/arrangement

* Filed herewith

Pursuant to Rule 405 of Regulation S-T, the following interactive data files formatted in Extensible Business Reporting Language (XBRL) are attached as Exhibit 101 to this Quarterly Report on Form 10-Q: (i) the Consolidated Balance Sheets as of December 31, 2018; September 30, 2018; and December 31, 2017, (ii) the Consolidated Statements of Operations for the three months ended December 31, 2018 and December 31, 2017, (iii) the Consolidated Statements of Comprehensive Income for the three months ended December 31, 2018 and December 31, 2017, (iv) the Consolidated Statements of Stockholders’ Equity for the three months ended December 31, 2018 and December 31, 2017, (v) the Consolidated Statements of Cash Flows for the three months ended December 31, 2018 and December 31, 2017, and (vi) the Notes to Condensed Consolidated Financial Statements.

39

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BEACON ROOFING SUPPLY, INC.
Date: February 8, 2019	BY:	/s/ JOSEPH M. NOWICKI
		Joseph M. Nowicki
		Executive Vice President & Chief Financial Officer

40

EX-10.1

EXHIBIT 10.1

BEACON ROOFING SUPPLY, INC. EXECUTIVE ANNUAL INCENTIVE PLAN

The following is a description of the Beacon Roofing Supply, Inc. Executive Annual Incentive Plan:

The Beacon Roofing Supply, Inc. Executive Annual Incentive Plan (the “Plan”) provides for the payment of annual cash incentives to employees who are considered Executive Officers. The Plan is administered by the Board of Directors, which has full authority to select participants, set incentive targets, fix performance targets, and, when deemed appropriate under the totality of the circumstances, pay discretionary incentives. The Board receives recommendations from the Compensation Committee.

A target incentive amount is set for each Executive Officer.Of this target incentive amount, 80% is earned if the Company achieves the Company-wide wide adjusted earnings before taxes (AEBT) target and 20% is earned on qualitative performance evaluations of strategic performance goals by the Compensation Committee of our Chairman and our Chief Executive Officer and by our Chief Executive Officer of the other Executive Officers, as presented to the Compensation Committee. (AEBT means income before taxes, as reported in the Company’s consolidated financial statements, adjusted to exclude amortization and stock compensation expense and the impact of significant: gains (losses) on the disposal of assets; asset impairments, retirements or write-downs; gains (losses) associated with legal, insurance or tax settlements/adjustments; restructuring, severance or pension-related charges; or other similar items out of the ordinary course of business.) The qualitative performance evaluations of the strategic performance goals consider such factors as leadership and skills demonstrated in the individual’s role with the Company, long-range planning and vision, departmental and staff development and professionalism.

If the AEBT target is not met at the 100% level, the participant’s incentive with respect to that target is prorated on a straight‑line basis if the participant achieves a range of 80% to 100% of target, with no incentive paid at or less than 80% of target. In addition, each Executive Officer (excluding our Chairman) can receive an additional incentive above the target incentive amount if: (i) actual AEBT exceeds 100% of AEBT target (in an amount up to 100% of the AEBT portion of the target incentive on a straight-line basis if actual AEBT performance is 120% of the AEBT target); and/or (ii) an additional incentive if qualitative performance goals are exceeded (in an amount up to 20% of the qualitative portion of the target incentive if actual qualitative goals performance is 120% of target performance In addition, a participant will receive an additional 1% payout for each 1% of Company-wide operating expense reduction above a target up to a maximum payout of 20%, provided that a participant’s total annual incentive payment may not exceed 200% of target.

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul M. Isabella, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Beacon Roofing Supply, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 8, 2019	/s/ PAUL M. ISABELLA
	Paul M. Isabella
	President & Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph M. Nowicki, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Beacon Roofing Supply, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 8, 2019	/s/ JOSEPH M. NOWICKI
	Joseph M. Nowicki
	Executive Vice President & Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q of Beacon Roofing Supply, Inc. (the “Company”) for the period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Paul M. Isabella, as President & Chief Executive Officer of the Company, and Joseph M. Nowicki, as Executive Vice President & Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 8, 2019	/s/ PAUL M. ISABELLA
	Paul M. Isabella
	President & Chief Executive Officer
	/s/ JOSEPH M. NOWICKI
	Joseph M. Nowicki
	Executive Vice President & Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to Beacon Roofing Supply, Inc. and will be retained by Beacon Roofing Supply, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Dec. 31, 2018	Jan. 31, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	BECN
Entity Registrant Name	BEACON ROOFING SUPPLY INC
Entity Central Index Key	0001124941
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		68,438,361

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 18,423	$ 129,927	$ 63,827
Restricted cash			1,300,000
Accounts receivable, less allowance of $21,353, $17,584 and $13,470 as of December 31, 2018, September 30, 2018 and December 31, 2017, respectively	881,749	1,090,533	552,703
Inventories, net	1,025,310	936,047	603,793
Prepaid expenses and other current assets	375,598	244,360	218,718
Total current assets	2,301,080	2,400,867	2,739,041
Property and equipment, net	273,742	280,407	154,687
Goodwill	2,489,730	2,491,779	1,251,825
Intangibles, net	1,282,242	1,334,366	410,857
Other assets, net	1,243	1,243	8,868
Total assets	6,348,037	6,508,662	4,565,278
Current liabilities:
Accounts payable	551,940	880,872	315,442
Accrued expenses	375,672	611,539	266,049
Current portions of long-term debt/obligations	20,315	19,661	14,239
Total current liabilities	947,927	1,512,072	595,730
Borrowings under revolving lines of credit, net	503,216	92,442
Long-term debt, net	2,497,123	2,494,725	2,000,059
Deferred income taxes, net	110,179	106,994	93,451
Long-term obligations under equipment financing and other, net	10,689	13,639	20,951
Other long-term liabilities	5,532	5,290	2,743
Total liabilities	4,074,666	4,225,162	2,712,934
Commitments and contingencies (Note 9)
Convertible preferred stock; $0.01 par value; aggregate liquidation preference $400,000; 400,000 shares authorized, issued and outstanding as of December 31, 2018 and September 30, 2018; none authorized, issued or outstanding as of December 31, 2017	399,195	399,195
Stockholders' equity:
Common stock (voting); $0.01 par value; 100,000,000 shares authorized; 68,432,707, 68,135,790, and 67,972,383 shares issued and outstanding as of December 31, 2018, September 30, 2018 and December 31, 2017, respectively	684	681	679
Undesignated preferred stock; 5,000,000 shares authorized, none issued or outstanding	0	0	0
Additional paid-in capital	1,067,711	1,067,040	1,050,389
Retained earnings	826,941	833,834	815,782
Accumulated other comprehensive income (loss)	(21,160)	(17,250)	(14,506)
Total stockholders' equity	1,874,176	1,884,305	1,852,344
Total liabilities and stockholders' equity	$ 6,348,037	$ 6,508,662	$ 4,565,278

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Accounts receivable, allowances	$ 21,353	$ 17,584	$ 13,470
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock. aggregate liquidation preference	$ 400,000	$ 400,000
Convertible preferred stock, shares authorized	400,000	400,000	0
Convertible preferred stock, shares issued	400,000	400,000	0
Convertible preferred stock, shares outstanding	400,000	400,000	0
Common stock (voting), par value	$ 0.01	$ 0.01	$ 0.01
Common stock (voting), shares authorized	100,000,000	100,000,000	100,000,000
Common Stock (Voting), issued	68,432,707	68,135,790	67,972,383
Common Stock (voting), outstanding	68,432,707	68,135,790	67,972,383
Undesignated Preferred Stock, shares authorized	5,000,000	5,000,000	5,000,000
Undesignated Preferred Stock, issued	0	0	0
Undesignated Preferred Stock, outstanding	0	0	0

XML

Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended
		Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Net sales		$ 1,721,676	$ 1,121,979
Cost of products sold		1,286,107	852,226
Gross profit		435,569	269,753
Operating expense:
Selling, general and administrative		327,693	193,753
Depreciation		17,601	8,709
Amortization		52,021	18,195
Total operating expense		397,315	220,657
Income (loss) from operations		38,254	49,096
Interest expense, financing costs, and other		38,361	22,568
Income (loss) before provision for income taxes		(107)	26,528
Provision for (benefit from) income taxes	[1]	786	(41,068)
Net income (loss)		(893)	67,596
Dividends on preferred shares	[2]	6,000	0
Net income (loss) attributable to common shareholders		$ (6,893)	$ 67,596
Weighted-average common stock outstanding:
Basic		68,248,020	67,825,430
Diluted		68,248,020	69,244,678
Net income (loss) per share:
Basic	[3]	$ (0.10)	$ 1.00
Diluted	[3]	$ (0.10)	$ 0.98

[1] Three months ended December 31, 2017 amount includes a $46.5 million non-recurring net tax benefit resulting from the enactment of the 2017 Tax Cuts and Jobs Act (“TCJA”). As of December 31, 2018, the Company had completed its analysis of the impact of the TCJA in accordance with SEC Staff Accounting Bulletin No. 118. There were no adjustments to the provisional amounts during the three months ended December 31, 2018.

[2] Three months ended December 31, 2018 amount is composed of $5.0 million in undeclared cumulative Preferred Stock dividends as well as an additional $1.0 million of Preferred Stock dividends that had been declared and paid as of period end. See Note 3 for further discussion.

[3] See Note 5 for detailed calculations and further discussion.

XML

Consolidated Statements of Operations (Parenthetical) - USD ($)	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Cumulative preferred stock dividends undeclared	$ 5,000,000
Adjustments to provisional amounts	0
Preferred stock dividends declared and paid	$ 1,000,000
Net income tax benefit,non recurring		$ 46,500,000

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ (893)	$ 67,596
Other comprehensive income (loss):
Foreign currency translation adjustment	(3,910)	57
Total other comprehensive income (loss)	(3,910)	57
Comprehensive income (loss)	$ (4,803)	$ 67,653

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands		Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Sep. 30, 2017		$ 1,781,806	$ 677	$ 1,047,506	$ 748,186	$ (14,563)
Balance (in shares) at Sep. 30, 2017			67,700,858
Issuance of common stock, net of shares withheld for taxes		(145)	$ 2	(147)
Issuance of common stock, net of shares withheld for taxes (Shares)			271,525
Issuance costs related to secondary offering of common stock		(429)		(429)
Stock-based compensation		3,459		3,459
Other comprehensive income (loss)		57				57
Net income (loss)		67,596			67,596
Balance at Dec. 31, 2017		1,852,344	$ 679	1,050,389	815,782	(14,506)
Balance (in shares) at Dec. 31, 2017			67,972,383
Balance at Sep. 30, 2018		1,884,305	$ 681	1,067,040	833,834	(17,250)
Balance (in shares) at Sep. 30, 2018			68,135,790
Issuance of common stock, net of shares withheld for taxes		(2,783)	$ 3	(2,786)
Issuance of common stock, net of shares withheld for taxes (Shares)			296,917
Stock-based compensation		3,457		3,457
Other comprehensive income (loss)		(3,910)				(3,910)
Net income (loss)		(893)			(893)
Dividends on preferred shares	[1]	(6,000)			(6,000)
Balance at Dec. 31, 2018		$ 1,874,176	$ 684	$ 1,067,711	$ 826,941	$ (21,160)
Balance (in shares) at Dec. 31, 2018			68,432,707

[1] Amount represents dividends that have been declared and paid during the three months ended December 31, 2018.

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Operating Activities
Net income (loss)	$ (893)	$ 67,596
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	69,622	26,904
Stock-based compensation	3,457	3,459
Certain interest expense and other financing costs	3,024	707
Beneficial lease amortization	572	0
Gain on sale of fixed assets	(265)	(319)
Deferred income taxes	3,201	(44,923)
Changes in operating assets and liabilities, net of the effects of businesses acquired:
Accounts receivable	207,119	151,365
Inventories	(90,712)	(52,024)
Prepaid expenses and other assets	(131,638)	(1,421)
Accounts payable and accrued expenses	(400,616)	(191,800)
Other liabilities	246	0
Net cash provided by (used in) operating activities	(336,883)	(40,456)
Investing Activities
Purchases of property and equipment	(11,688)	(7,416)
Acquisition of businesses, net	(163,973)	0
Proceeds from the sale of assets	401	413
Net cash provided by (used in) investing activities	(175,260)	(7,003)
Financing Activities
Borrowings under revolving lines of credit	1,298,654	17,402
Repayments under revolving lines of credit	(888,225)	(20,548)
Borrowings under senior notes	0	1,300,000
Payment of debt issuance costs	0	(21,917)
Repayments under equipment financing facilities and other	(1,465)	(1,968)
Payment of stock issuance costs	0	(429)
Payment of dividends on preferred stock	(6,000)	0
Proceeds from issuance of common stock related to equity awards	834	3,781
Taxes paid related to net share settlement of equity awards	(3,617)	(3,925)
Net cash provided by (used in) financing activities	400,181	1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	458	640
Net increase (decrease) in cash, cash equivalents, and restricted cash	(111,504)	1,225,577
Cash, cash equivalents, and restricted cash, beginning of period	129,927	138,250
Cash, cash equivalents, and restricted cash, end of period	18,423	1,363,827
Cash paid during the period for:
Interest	57,732	26,781
Income taxes, net of tax refunds	$ 1,239	$ 22,130

XML

Company Overview

3 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Company Overview

1. Company Overview

Beacon Roofing Supply, Inc. (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 United States and Canada.

On January 2, 2018, the Company completed the acquisition of all the outstanding capital stock of Allied Building Products Corp. (“Allied”), a New Jersey corporation, for $2.625 billion, subject to certain working capital and other adjustments. Allied engages in the distribution of roofing materials, drywall, ceiling tile, and related accessories in the United States and was a wholly-owned subsidiary of Oldcastle Distribution, Inc. (see Note 3 for further discussion).

The Company operates its business under regional and local trade names and, as of December 31, 2018, the Company serviced customers in all 50 states within the United States and 6 provinces in Canada. The Company’s material subsidiaries are Beacon Sales Acquisition, Inc., and Beacon Roofing Supply Canada Company.

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Summary of Significant Accounting Policies

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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. Certain prior period amounts have been reclassified to conform to current period presentation. The balance sheet as of December 31, 2017 has been presented for a better understanding of the impact of seasonal fluctuations on the Company’s financial condition.

In management’s opinion, the 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 months ended December 31, 2018 are not necessarily indicative of the results to be expected for the twelve months ending September 30, 2019 (“fiscal year 2019” or “2019”).

The three-month periods ended December 31, 2018 and 2017 had 62 and 61 business days, respectively.

These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s fiscal year 2018 (“2018”) Annual Report on Form 10-K for the year ended September 30, 2018.

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 consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates.

Recent Accounting Pronouncements—Adopted

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most previously issued revenue recognition guidance. The new standard is effective for public business entities for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted for annual reporting periods beginning after December 15, 2016. The standard permits the use of either the full retrospective or modified retrospective adoption methods. The Company elected the modified retrospective method and adopted the standard as of October 1, 2018 utilizing the portfolio practical expedient. The adoption of this guidance did not impact the Company’s retained earnings and did not have a material impact on the Company’s net sales recognition practices, income from operations, or net income per share amounts. The adoption of this guidance did result in certain balance sheet reclassifications to record estimated customer returns, specifically the recognition of a current liability for the gross amount of estimated returns and a current asset for the value of the related products. These reclassifications did not have a material impact on the Company’s consolidated balance sheet as of December 31, 2018. In addition, the adoption of this guidance resulted in additional quantitative disclosures to disaggregate net sales balances by product line and geography. See Note 4 to the Consolidated Financial Statements for further discussion.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business.” This guidance is intended to assist entities when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted. The Company adopted the standard as of October 1, 2018 and the standard did not have a material impact on the Company’s financial statement and related disclosures.

In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting.” This guidance is intended to provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted. The Company adopted the standard as of October 1, 2018 and the standard did not have a material impact on the Company’s financial statement and related disclosures.

Recent Accounting Pronouncements—Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance will replace most existing accounting for lease guidance when it becomes effective. This new standard is effective using the modified retrospective approach for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2018, and early adoption is permitted. In July 2018, the FASB amended the new lease standard which, among other changes, allows a company to elect to adopt ASU 2016-02 using a transition option whereby a cumulative effect adjustment is recorded to the opening balance of its retained earnings on the adoption date. The guidance will require the Company to record a right of use asset and a lease liability for most of the Company’s leases, including those currently treated as operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial statements and related disclosures is still being quantified.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Accounting for Goodwill Impairment.” This guidance is intended to introduce a simplified approach to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2019, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income.” This guidance is intended to address the accounting treatment for the tax effects on items within accumulated other comprehensive income as a result of the adoption of the Tax Cuts and Jobs Act of 2017. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2018, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.

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Acquisitions

3 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

Allied Building Products Corp.

On January 2, 2018 (the “Closing Date”), the Company completed its acquisition of all the outstanding capital stock of Allied (the “Allied Acquisition”), pursuant to a certain stock purchase agreement dated August 24, 2017 (the “Stock Purchase Agreement”), among the Company, Oldcastle, Inc., as parent, and Oldcastle Distribution, Inc., as seller, for approximately $2.625 billion in cash, subject to a working capital and certain other adjustments as set forth in the Stock Purchase Agreement (the “Purchase Price”). As of December 31, 2018, the adjusted Purchase Price for Allied was $2.88 billion, including increases of (i) $164.0 million related to the impact of the Section 338(h)(10) election under the current U.S. tax code and (ii) $88.1 million from a recorded net working capital adjustment.

In connection with the Allied Acquisition, on the Closing Date the Company entered into (i) a new term loan agreement with Citibank, N.A., providing for a term loan B facility with an initial commitment of $970.0 million and (ii) an amended and restated credit agreement with Wells Fargo Bank, N.A., providing for a senior secured asset-based revolving credit facility with an initial commitment of $1.30 billion. Base borrowing rates on these facilities are at LIBOR plus 1.25% and LIBOR plus 2.25%, respectively.

In connection with the Allied Acquisition, on the Closing Date, 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., pursuant to a certain investment agreement, dated as of August 24, 2017, with CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P. (solely for the purpose of limited provisions therein) (the “Convertible Preferred Stock Purchase”). The $400.0 million in proceeds from the Convertible Preferred Stock Purchase were used to finance, in part, the Purchase Price. 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. The Preferred Stock accumulates dividends at a rate of 6.0% per annum (payable in cash or in-kind, subject to certain conditions). The Preferred Stock is not mandatorily redeemable; therefore, it is classified as mezzanine equity on the Company’s consolidated balance sheets and has a balance of $399.2 million (the $400.0 million proceeds received on the Closing Date, net of $0.8 million of unamortized issuance costs) as of December 31, 2018.

Allied’s results of operations have been included with Company’s consolidated results beginning January 2, 2018. Allied distributed products in 208 locations across 31 states as of the date of the close.

The Allied Acquisition has been accounted for as a business combination in accordance with the requirements of ASC 805, “Business Combinations.” The acquisition price has been allocated among assets acquired and liabilities assumed at fair value based on information currently available, with the excess recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies from the Allied assembled workforce operating the branches as part of a larger network and the value stemming from the addition of both new customers and an established new line of business (interiors). As of December 31, 2018, the Company had finalized the purchase accounting entries for the Allied Acquisition, detailed as follows (in thousands):

	January 2, 2018						January 2, 2018
	(as reported at March 31, 2018)			Adjustments			(as adjusted at December 31, 2018)
Cash	$	19,322		$	(19,153	)	$	169
Accounts receivable		315,485			22,064			337,549
Inventory		322,705			(7,920	)		314,785
Prepaid and other current assets		59,279			16,161			75,440
Property, plant, and equipment		139,528			(168	)		139,360
Goodwill		1,130,635			102,145			1,232,780
Intangible assets		1,037,000			-			1,037,000
Current liabilities		(271,252	)		11,963			(259,289	)
Non-current liabilities		(6,820	)		6,097			(723	)
Total purchase price	$	2,745,882		$	131,189		$	2,877,071

The purchase accounting entries above include the impact of the Section 338(h)(10) election under the current U.S. tax code. The Company made this election on October 15, 2018 and has reflected the $164.0 million impact of this election in the purchase price and its fiscal year 2018 tax provision accordingly. The Company determined that $1.16 billion of goodwill related to the acquisition of Allied is deductible for tax purposes as of December 31, 2018.

The Company’s goodwill and indefinite-lived trade name are tested for impairment annually, and all acquired goodwill and intangible assets are subject to review for impairment should future indicators of impairment develop. There were no material contingencies assumed as part of the Allied acquisition.

The following table represents the unaudited pro forma consolidated net sales and net income (loss) for the Company for the periods indicated (in thousands):

	Three Months Ended
	December 31, 2017
	(unaudited)
Net sales	$	1,787,628
Net income (loss)		32,257

The above pro forma results have been calculated by combining the historical results of the Company and Allied as if the Allied Acquisition had occurred on the first day of the fiscal year (October 1) for the period presented. The income tax provision used to calculate net income (loss) for the respective periods presented has been adjusted to reflect the effective tax rate for the annual periods as if it had been based on the resulting, combined results. The pro forma results include estimates for intangible asset amortization, depreciation, interest expense and debt issuance costs and are subject to change once final asset values have been determined. No other material pro forma adjustments were deemed necessary to conform to the Company’s accounting policies or for any other situation. The pro forma information is not necessarily indicative of the results that would have been achieved had the transactions occurred on the first day of the fiscal years presented or that may be achieved in the future.

Additional Acquisitions – Fiscal Year 2018

During fiscal year 2018, the Company acquired 7 branches from the following acquisitions:

• On May 1, 2018, the Company acquired Tri-State Builder’s Supply, a wholesale supplier of roofing, siding, windows, doors and related building products with 1 branch located in Duluth, Minnesota and annual sales of approximately $6 million.

• On July 16, 2018, the Company acquired Atlas Supply, Inc., the Pacific Northwest’s leading distributor of sealants, coatings, adhesives and related waterproofing products, with 6 branches operating in Seattle, Tacoma, Spokane, and Mountlake Terrace in Washington, as well as locations in Portland, Oregon and Boise, Idaho, and annual sales of approximately $37 million.

The Company has recorded purchase accounting entries on a preliminary basis for these transactions that recognized the acquired assets and liabilities at their estimated fair values as of the respective acquisition dates. These transactions resulted in goodwill of $7.6 million ($7.4 million of which is deductible for tax purposes as of December 31, 2018) and $11.4 million in intangible assets.

For those acquisitions where the acquisition accounting entries have yet to be finalized, the Company’s allocation of the purchase price is subject to change on receipt of additional information, including, but not limited to, the finalization of asset valuations (intangible and fixed) and income tax accounting, as well as the Company’s continued review of the assumed liabilities that may result in the recognition of changes to the carrying amounts on the opening balance sheet and a related adjustment to goodwill.

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Net Sales

3 Months Ended

Dec. 31, 2018

Revenue From Contract With Customer [Abstract]

Net Sales

4. Net Sales

The Company records net sales when performance obligations with our customer are satisfied. A performance obligation is a promise to transfer a distinct good to the customer and is the unit of account. The transaction price is allocated to each distinct performance obligation and recognized as net sales when, or as, the performance obligation is satisfied. All contracts have a single performance obligation as the promise to transfer the individual good is not separately identifiable from other promises and is, therefore, not distinct. Performance obligations are satisfied at a point in time and net sales are recognized when the customer accepts the delivery of a product or takes possession of a product with rights and rewards of ownership.

The Company enters into agreements with customers to offer rebates, generally based on achievement of specified sales levels and various marketing allowances that are common industry practice. Reductions to net sales for customer programs and incentive offerings, including promotions and other volume-based incentives, are estimated using the most likely amount method and recorded in the period in which the sale occurs. Provisions for early payment discounts are accrued in the same period in which the sale occurs. The Company does not have any material payment terms as payment is received shortly after the transfer of control of the products to the customer. Commissions to internal sales teams are paid to obtain contracts. As these contracts are less than one year, these costs are expensed as incurred.

The Company includes shipping and handling costs billed to customers in net sales. Related costs are accounted for as fulfillment activities and are recognized as cost of products sold when control of the products transfers to the customer.

The following table presents the Company’s net sales by product line and geography for the three months ended December 31, 2018 (in thousands):

	Three Months Ended December 31, 2018
	U.S.		Canada		Total
Residential roofing products	$	720,511	$	11,679	$	732,190
Non-residential roofing products		390,268		29,641		419,909
Complementary building products		568,116		1,461		569,577
Total net sales	$	1,678,895	$	42,781	$	1,721,676

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Net Income (Loss) Per Share

3 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

5. Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents or the conversion of Preferred Stock. 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 shareholders by the fully diluted weighted-average number of common shares outstanding during the period.

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 shareholders 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 shareholders 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 for each period presented (in thousands, except share and per share amounts):

	Three Months Ended December 31,
	2018			2017
Net income (loss)	$	(893	)	$	67,596
Dividends on preferred shares		(6,000	)		-
Net income (loss) attributable to common shareholders	$	(6,893	)	$	67,596
Undistributed income allocated to participating securities		-			-
Net income (loss) attributable to common shareholders - basic and diluted	$	(6,893	)	$	67,596
Weighted-average common shares outstanding - basic		68,248,020			67,825,430
Effect of common share equivalents		-			1,419,248
Weighted-average common shares outstanding - diluted		68,248,020			69,244,678
Net income (loss) per share - basic	$	(0.10	)	$	1.00
Net income (loss) per share - diluted	$	(0.10	)	$	0.98

The following table includes the number of shares that may be dilutive common shares in the future. These shares were not included in the computation of diluted net income (loss) per share because the effect was either anti-dilutive or the requisite performance conditions were not met:

	Three Months Ended December 31,
	2018		2017
Stock options		1,554,518		288,275
Restricted stock units		318,229		-
Preferred Stock		9,694,619		-

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Stock-based Compensation

3 Months Ended

Dec. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

6. Stock-based Compensation

On February 9, 2016, the shareholders of the Company approved the Amended and Restated Beacon Roofing Supply, Inc. 2014 Stock Plan (the “2014 Plan”). The 2014 Plan provides for discretionary awards of stock options, stock awards, restricted stock units, and stock appreciation rights for up to 5,000,000 shares of common stock to selected employees and non-employee directors. The 2014 Plan mandates that all forfeited, expired, and withheld shares, including those from the predecessor plans, be returned to the 2014 Plan and made available for issuance. As of December 31, 2018, there were 1,772,191 shares of common stock available for issuance.

Prior to the 2014 Plan, the Company maintained the amended and restated Beacon Roofing Supply, Inc. 2004 Stock Plan (the “2004 Plan”). Upon shareholder approval of the 2014 Plan, the Company ceased issuing equity awards from the 2004 Plan and mandated that all future equity awards will be issued from the 2014 Plan.

For all equity awards granted prior to October 1, 2014, in the event of a change in control of the Company, all awards are immediately vested. Beginning in fiscal 2015, equity awards contained a “double trigger” change in control mechanism. Unless an award is continued or assumed by a public company in an equitable manner, an award shall become fully vested immediately prior to a change in control (at 100% of the grant target in the case of a performance-based restricted stock unit award). If an award is so continued or assumed, vesting will continue in accordance with the terms of the award, unless there is a qualifying termination within one-year following the change in control, in which event the award shall immediately become fully vested (at 100% of the grant target in the case of a performance-based restricted stock unit award).

Stock Options

Non-qualified stock options granted to employees generally expire 10 years after the grant date and are subject to continued employment and vest evenly in three annual installments over the three-year period following the grant date.

The fair value of the options granted during the three months ended December 31, 2018 were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate		3.00	%
Expected volatility		29.34	%
Expected life (in years)		5.18
Dividend yield	-

The following table summarizes all stock option activity for the three months ended December 31, 2018 (in thousands, except share, per share, and time period amounts):

	Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value1
Balance as of September 30, 2018		1,969,037		$	33.08		5.7	$	14,088
Granted		605,184			27.26
Exercised		(48,800	)		17.11
Canceled/Forfeited		(12,967	)		41.12
Expired		(950	)		12.25
Balance as of December 31, 2018		2,511,504		$	31.96		6.6	$	11,478
Vested and expected to vest after December 31, 2018		2,455,082		$	31.94		6.5	$	11,275
Exercisable as of December 31, 2018		1,645,162		$	30.75		5.1	$	8,511

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¹ Aggregate intrinsic value as represents the difference between the closing fair value of the underlying common stock and the exercise price of outstanding, in-the-money options on the date of measurement.

During the three months ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense related to stock options of $1.0 million and $1.1 million, respectively. As of December 31, 2018, there was $8.1 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.3 years.

The following table summarizes additional information on stock options for the periods presented (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018		2017
Weighted-average fair value of stock options granted	$	8.75	$	15.86
Total grant date fair value of stock options vested		3,680		3,773
Total intrinsic value of stock options exercised		712		5,448

Restricted Stock Units

Restricted stock unit (“RSU”) awards granted to employees are subject to continued employment and generally vest on the third anniversary of the grant date. The Company also grants certain RSU awards to management that contain one or more additional vesting conditions tied directly to a defined performance metric for the Company. The actual number of RSUs that will vest can range from 0% to 200% of the original grant amount, depending upon the terms of the award and actual Company performance above or below the established performance metric targets. The Company estimates performance in relation to the defined targets when determining the projected number of RSUs that are expected to vest and calculating the related stock-based compensation expense.

RSUs granted to non-employee directors are subject to continued service and vest on the first anniversary of the grant date (except under certain conditions). Generally, the common shares underlying the RSUs are not eligible for distribution until the non-employee director’s service on the Board has terminated, and for non-employee director RSU grants made prior to fiscal year 2014, the share distribution date is six months after the director’s termination of service on the board. Beginning in fiscal year 2016, the Company enacted a policy that allows any non-employee directors who have Beacon equity holdings (defined as common stock and outstanding vested equity awards) with a total fair value that is greater than or equal to five times the annual Board cash retainer to elect to have any future RSU grants settle simultaneously with vesting.

The following table summarizes all restricted stock unit activity for the three months ended December 31, 2018:

	RSUs Outstanding			Weighted-Average Grant Date Fair Value
Balance as of September 30, 2018		934,023		$	47.00
Granted		630,745			27.28
Released		(366,779	)		40.46
Canceled/Forfeited		(77,455	)		47.52
Balance as of December 31, 2018		1,120,534		$	38.00
Vested and expected to vest after December 31, 2018		1,040,181		$	37.78

During the three months ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense related to restricted stock units of $2.4 million and $2.4 million, respectively. As of December 31, 2018, there was $27.2 million of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.3 years.

The following table summarizes additional information on RSUs for the periods presented (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018		2017
Weighted-average fair value of RSUs granted	$	27.28	$	55.17
Total grant date fair value of RSUs vested		14,840		5,786
Total intrinsic value of RSUs released		11,160		10,683

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Goodwill and Intangible Assets

3 Months Ended

Dec. 31, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

Goodwill

The following table sets forth the change in the carrying amount of goodwill during the three months ended December 31, 2018 and 2017, respectively (in thousands):

Balance as of September 30, 2017	$	1,251,986
Translation and other adjustments		(161	)
Balance as of December 31, 2017	$	1,251,825
Balance as of September 30, 2018	$	2,491,779
Acquisitions1		(513	)
Translation and other adjustments		(1,536	)
Balance as of December 31, 2018	$	2,489,730

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¹ Reflects purchase accounting adjustments related to fiscal year 2018 acquisition of Atlas Supply, Inc. (see Note 3 for further discussion).

The changes in the carrying amount of goodwill for the three months ended December 31, 2018 and 2017 were driven primarily by purchase accounting and foreign currency translation adjustments.

Intangible Assets

In connection with transactions finalized during fiscal year 2018, the Company recorded intangible assets of $1.05 billion ($920.8 million of customer relationships, $120.0 million of indefinite-lived trademarks, and $7.0 million of beneficial lease arrangements).

The following table summarizes intangible assets by category (in thousands, except time period amounts):

	December 31, 2018			September 30, 2018			December 31, 2017			Weighted-Average Remaining Life1 (Years)
Amortizable intangible assets:
Non-compete agreements	$	2,824		$	2,824		$	2,824			2.47
Customer relationships		1,530,748			1,530,565			609,984			18.38
Trademarks		10,500			10,500			10,500			7.41
Beneficial lease arrangements		8,060			8,060			1,060			4.24
Total amortizable intangible assets		1,552,132			1,551,949			624,368
Accumulated amortization		(462,940	)		(410,633	)		(286,561	)
Total amortizable intangible assets, net	$	1,089,192		$	1,141,316		$	337,807
Indefinite lived trademarks		193,050			193,050			73,050
Total intangibles, net	$	1,282,242		$	1,334,366		$	410,857

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¹ As of December 31, 2018.

For the three months ended December 31, 2018 and 2017, the Company recorded $52.0 million and $18.2 million of amortization expense relating to the above-listed intangible assets, respectively. The intangible asset lives range from 5 to 20 years and have a weighted-average remaining life of 18.2 years as of December 31, 2018.

The following table summarizes the estimated future amortization expense for intangible assets (in thousands):

Year Ending September 30,
2019 (Jan - Sept)	$	156,534
2020		179,541
2021		149,974
2022		121,426
2023		97,517
Thereafter		384,200
Total future amortization expense	$	1,089,192

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Financing Arrangements

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Financing Arrangements

8. Financing Arrangements

The following table summarizes all financing arrangements from the respective periods presented (in thousands):

	December 31, 2018			September 30, 2018			December 31, 2017
Revolving Lines of Credit
2023 ABL:
U.S. Revolver, expires January 20231	$	496,619		$	89,352		$	-
Canada Revolver, expires January 20232		6,597			3,090			-
Current portion		-			-			-
Borrowings under revolving lines of credit, net	$	503,216		$	92,442		$	-
Long-term Debt, net
Term Loans:
Term Loan, matures October 20223	$	-		$	-		$	433,828
Term Loan, matures January 20254		932,102			930,726			-
Current portion		(9,700	)		(9,700	)		(4,500	)
Long-term borrowings under term loans		922,402			921,026			429,328
Senior Notes:
Senior Notes, mature October 20235		293,926			293,607			292,648
Senior Notes, mature November 20256		1,280,795			1,280,092			1,278,083
Current portion		-			-			-
Long-term borrowings under senior notes		1,574,721			1,573,699			1,570,731
Long-term debt, net	$	2,497,123		$	2,494,725		$	2,000,059
Equipment Financing Facilities and Other
Equipment financing facilities, various maturities through September 20217	$	10,148		$	11,222		$	11,657
Capital lease obligations, various maturities through November 20218		11,156			12,378			19,033
Current portion		(10,615	)		(9,961	)		(9,739	)
Long-term obligations under equipment financing and other, net	$	10,689		$	13,639		$	20,951

____________________________________________________________ 

¹ Effective rate on borrowings of 4.37% and 3.36% as of December 31, 2018 and September 30, 2018, respectively.

² Effective rate on borrowings of 4.45% and 3.95% as of December 31, 2018 and September 30, 2018, respectively.

³ Extinguished on January 2, 2018; Interest rate of 4.06% as of December 31, 2017. 

⁴ Interest rate of 4.77% and 4.53% as of December 31, 2018 and September 30, 2018, respectively.

⁵ Interest rate of 6.38% as of December 31, 2018, September 30, 2017 and December 31, 2017.

⁶ Interest rate of 4.88% as of December 31, 2018, September 30, 2017 and December 31, 2017.

⁷ Fixed interest rates ranging from 2.33% to 3.25% as of December 31, 2018, September 30, 2017, and December 31, 2017.

⁸ Fixed interest rates ranging from 2.72% to 10.39% as of December 31, 2018 , September 30, 2017, and December 31, 2017.

Financing - Allied Acquisition

In connection with the Allied Acquisition, the Company entered into various financing arrangements totaling $3.57 billion, including an asset-based revolving line of credit of $1.30 billion (“2023 ABL”), $525.0 million of which was drawn at closing, and a $970.0 million term loan (“2025 Term Loan”). The Company also raised an additional $1.30 billion through the issuance of senior notes (the “2025 Senior Notes”).

The proceeds from these financing arrangements were used to finance the Allied Acquisition, to refinance or otherwise extinguish all third-party indebtedness, to pay fees and expenses associated with the acquisition, and to provide working capital and funds for other general corporate purposes. The Company capitalized new debt issuance costs totaling approximately $65.3 million related to the 2023 ABL, the 2025 Term Loan and the 2025 Senior Notes.

Since the financing arrangements entered into in connection with the Allied Acquisition had certain lenders who also participated in previous financing arrangements entered into by the Company, portions of the transactions were accounted for as either a debt modification or a debt extinguishment. In accordance with the accounting for debt modification, the Company expensed $2.0 million of debt issuance costs related to the Allied financing arrangements and recognized a loss on debt extinguishment of $1.7 million. The remainder of the debt issuance costs will be amortized over the term of the Allied financing arrangements.

2023 ABL

On January 2, 2018, the Company entered into a $1.30 billion asset-based revolving line of credit with Wells Fargo Bank, N.A. and a syndicate of other lenders. The 2023 ABL consists of revolving loans in both the United States (“2023 U.S. Revolver”) in the amount of $1.20 billion and Canada (“2023 Canada Revolver”) in the amount of $100.0 million. The 2023 ABL has a maturity date of January 2, 2023. The 2023 ABL has various borrowing tranches with an interest rate based on a LIBOR rate (with a floor) plus a fixed spread. The current unused commitment fees on the 2023 ABL are 0.25% per annum.

There is one financial covenant under the 2023 ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (both as defined in the agreement). Per the covenant, the Company’s Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis.

The 2023 ABL is secured by a first priority lien over substantially all of the Company’s and each guarantor’s accounts, chattel paper, deposit accounts, books, records and inventory (as well as intangibles related thereto), subject to certain customary exceptions (the “ABL Priority Collateral”), and a second priority lien over substantially all of the Company’s and each guarantor’s other assets, including all of the equity interests of any subsidiary held by the Company or any guarantor, subject to certain customary exceptions (the “Term Priority Collateral”). The 2023 ABL is guaranteed jointly, severally, fully and unconditionally by the Company’s active United States subsidiaries.

As of December 31, 2018, the total balance outstanding on the 2023 ABL, net of $10.0 million of unamortized debt issuance costs, was $503.2 million. The Company also has outstanding standby letters of credit related to the 2023 U.S. Revolver in the amount of $13.4 million as of December 31, 2018.

2025 Term Loan

On January 2, 2018, the Company entered into a $970.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The 2025 Term Loan requires quarterly principal payments in the amount of $2.4 million, with the remaining outstanding principal to be paid on its January 2, 2025 maturity date. The interest rate is based on a LIBOR rate (with a floor) plus a fixed spread. The Company has the option of selecting a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments are made.

The 2025 Term Loan is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the ABL Priority Collateral. Certain excluded assets will not be included in the Term Priority Collateral and the ABL Priority Collateral. The Term Loan is guaranteed jointly, severally, fully and unconditionally by the Company’s active United States subsidiaries.

As of December 31, 2018, the outstanding balance on the 2025 Term Loan, net of $33.0 million of unamortized debt issuance costs, was $932.1 million.

2025 Senior Notes

On October 25, 2017, Beacon Escrow Corporation, a wholly owned subsidiary of the Company (the “Escrow Issuer”), completed a private offering of $1.30 billion aggregate principal amount of 4.875% Senior Notes due 2025 at an issue price of 100%. The 2025 Senior Notes bear interest at a rate of 4.875% per annum, payable semi-annually in arrears, beginning May 1, 2018. The Company anticipates repaying the 2025 Senior Notes at the maturity date of November 1, 2025. Per the terms of the Escrow Agreement, the net proceeds from the 2025 Senior Notes remained in escrow until they were used to fund a portion of the purchase price of the Allied Acquisition payable at closing on January 2, 2018.

Upon closing of the Allied Acquisition on January 2, 2018, (i) the Escrow Issuer merged with and into the Company, and the Company assumed all obligations under the 2025 Senior Notes; and (ii) all existing domestic subsidiaries of the Company (including the entities acquired in the Allied Acquisition) became guarantors of the 2025 Senior Notes.

As of December 31, 2018, the outstanding balance on the 2025 Senior Notes, net of $19.2 million of unamortized debt issuance costs, was $1.28 billion.

Financing - RSG Acquisition

In connection with the Roofing Supply Group (“RSG”) acquisition in fiscal year 2016, the Company entered into various financing arrangements totaling $1.45 billion, including an asset-based revolving line of credit (“2020 ABL”) of $700.0 million ($350.0 million of which was drawn at closing) and a $450.0 million term loan (“2022 Term Loan”). The Company also raised an additional $300.0 million through the issuance of senior notes (the “2023 Senior Notes”).

The proceeds from these financing arrangements were used to provide working capital and funds for other general corporate purposes, to refinance or otherwise extinguish all third-party indebtedness for borrowed money under Company’s and RSG’s existing senior secured credit facilities and RSG’s unsecured senior notes due 2020, to finance the acquisition, and to pay fees and expenses associated with the RSG acquisition. The Company incurred debt issuance costs totaling approximately $31.3 million related to the 2020 ABL, 2022 Term Loan and 2023 Senior Notes.

2020 ABL

On October 1, 2015, the Company entered into a $700.0 million asset-based revolving line of credit with Wells Fargo Bank, N.A. and a syndicate of other lenders. The 2020 ABL had an original maturity date of October 1, 2020 and consisted of revolving loans in both the United States, in the amount of $670.0 million, and Canada, in the amount of $30.0 million. The 2020 ABL had various borrowing tranches with an interest rate based on a LIBOR rate (with a floor) plus a fixed spread. The full balance of the 2020 ABL was paid on January 2, 2018 in conjunction with the Allied Acquisition.

2022 Term Loan

On October 1, 2015, the Company entered into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The 2022 Term Loan required quarterly principal payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its original maturity date of October 1, 2022. The interest rate was based on a LIBOR rate (with a floor) plus a fixed spread. The Company had the option of selecting a LIBOR period that determined the rate at which interest would accrue, as well as the period in which interest payments are made. The full balance of the 2022 Term Loan was paid on January 2, 2018 in conjunction with the Allied Acquisition, including the write-off of $0.7 million in debt issuance costs.  

2023 Senior Notes

On October 1, 2015, the Company raised $300.0 million by issuing senior notes due 2023. The 2023 Senior Notes have a coupon rate of 6.38% per annum and are payable semi-annually in arrears, beginning April 1, 2016. There are early payment provisions in the indenture in which the Company would be subject to “make whole” provisions. The Company anticipates repaying the notes at the maturity date of October 1, 2023.

The 2023 Senior Notes are guaranteed jointly, severally, fully and unconditionally by the Company’s active United States subsidiaries.

As of December 31, 2018, the outstanding balance on the 2023 Senior Notes, net of $6.1 million of unamortized debt issuance costs, was $293.9 million.

Equipment Financing Facilities and Other

As of December 31, 2018, the Company had a $10.1 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments due through September 2021.

As of December 31, 2018, the Company had $11.2 million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due through November 2021.

XML

Commitments and Contingencies

3 Months Ended

Dec. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Operating Leases

The Company mostly operates in leased facilities, which are accounted for as operating leases. The leases typically provide for a base rent plus real estate taxes. Certain of the leases provide for escalating rents over the lives of the leases and rent expense is recognized over the terms of those leases on a straight-line basis.

At December 31, 2018, the minimum rental commitments under all non-cancelable operating leases with initial or remaining terms of more than one year were as follows (in thousands):

Year Ending September 30,
2019 (Jan - Sept)	$	110,514
2020		101,743
2021		90,734
2022		71,869
2023		55,048
Thereafter		146,410
Total minimum lease payments	$	576,318

For the three months ended December 31, 2018 and 2017, rent expense was $27.5 million and $15.2 million, respectively. Sublet income was immaterial for each of these periods.

Contingencies

The Company is subject to loss contingencies pursuant to various federal, state and local environmental laws and regulations; however, the Company is not aware of any reasonably possible losses that would have a material impact on its results of operations, financial position, or liquidity. Potential loss contingencies include possible obligations to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical or other substances by the Company or by other parties. In connection with its acquisitions, the Company’s practice is to request indemnification for any and all known material liabilities of significance as of the respective dates of acquisition. Historically, environmental liabilities have not had a material impact on the Company’s results of operations, financial position or liquidity.

The Company is subject to litigation from time to time in the ordinary course of business; however, the Company does not expect the results, if any, to have a material adverse impact on its results of operations, financial position or liquidity.

XML

Geographic Data

3 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Geographic Data

10. Geographic Data

The following table summarizes certain geographic information for the periods presented (in thousands):

	December 31, 2018		September 30, 2018		December 31, 2017
Long-lived assets:
U.S.	$	1,352,081	$	1,409,742	$	488,137
Canada		12,096		13,224		13,225
Total long-lived assets	$	1,364,177	$	1,422,966	$	501,362

XML

Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Dec. 31, 2018

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

11. Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss) is composed of certain gains and losses that are excluded from net income under GAAP and instead recorded as a separate element of stockholders’ equity. For the three months ended December 31, 2018, the change in accumulated other comprehensive income (loss) was $(3.9) million and composed solely of foreign currency translation effects. There were no reclassifications out of accumulated other comprehensive income (loss) for the three months ended December 31, 2018.

XML

Fair Value Measurement

3 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurement

12. Fair Value Measurement

As of December 31, 2018, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1).

As of December 31, 2018, based upon recent trading prices (Level 2), the fair value of the Company’s $300.0 million Senior Notes due in 2023 was $299.3 million and the fair value of the $1.30 billion Senior Notes due 2025 was $1.15 billion.

As of December 31, 2018, the fair value of the Company’s term loan and revolving asset-based line of credit approximated the amount outstanding. The Company estimates the fair value of its Senior Secured Credit Facility by discounting the future cash flows of each instrument using estimated market rates of debt instruments with similar maturities and credit profiles (Level 3).

XML

Supplemental Guarantor Information

3 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Supplemental Guarantor Information

13. Supplemental Guarantor Information

The 2023 Senior Notes and 2025 Senior Notes are guaranteed jointly and severally by all the United States subsidiaries of the Company (collectively, the “Guarantors”), and not by the Canadian subsidiaries of the Company. Such guarantees are full and unconditional. Supplemental condensed consolidating financial information of the Company, including such information for the Guarantors, is presented below. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements of the Guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by, and the operations of, the combined groups.

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	December 31, 2018
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	30,877	$	2,775	$	(15,229	)	$	18,423
Accounts receivable, net		-		856,373		26,516		(1,140	)		881,749
Inventories, net		-		998,450		26,860		-			1,025,310
Prepaid expenses and other current assets		6,065		361,431		8,102		-			375,598
Total current assets		6,065		2,247,131		64,253		(16,369	)		2,301,080
Intercompany receivable, net		-		1,526,435		-		(1,526,435	)		-
Investments in consolidated subsidiaries		6,289,626		-		-		(6,289,626	)		-
Deferred income taxes, net		20,767		-		-		(20,767	)		-
Property and equipment, net		19,775		243,911		10,056		-			273,742
Goodwill		-		2,461,212		28,518		-			2,489,730
Intangibles, net		-		1,280,202		2,040		-			1,282,242
Other assets, net		1,243		-		-		-			1,243
Total assets	$	6,337,476	$	7,758,891	$	104,867	$	(7,853,197	)	$	6,348,037
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	28,808	$	532,526	$	6,975	$	(16,369	)	$	551,940
Accrued expenses		40,834		327,027		7,811		-			375,672
Current portions of long-term debt/obligations		9,700		10,615		-		-			20,315
Total current liabilities		79,342		870,168		14,786		(16,369	)		947,927
Intercompany payable, net		1,487,640		-		38,795		(1,526,435	)		-
Borrowings under revolving lines of credit, net		-		496,619		6,597		-			503,216
Long-term debt, net		2,497,123		-		-		-			2,497,123
Deferred income taxes, net		-		130,847		99		(20,767	)		110,179
Long-term obligations under equipment financing and other, net		-		10,689		-		-			10,689
Other long-term liabilities		-		5,453		79		-			5,532
Total liabilities	$	4,064,105	$	1,513,776	$	60,356	$	(1,563,571	)	$	4,074,666
Convertible preferred stock	$	399,195	$	-	$	-	$	-		$	399,195
Total stockholders' equity	$	1,874,176	$	6,245,115	$	44,511	$	(6,289,626	)	$	1,874,176
Total liabilities and stockholders' equity	$	6,337,476	$	7,758,891	$	104,867	$	(7,853,197	)	$	6,348,037

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	September 30, 2018
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	136,499	$	1,959	$	(8,531	)	$	129,927
Accounts receivable, net		-		1,051,410		40,262		(1,139	)		1,090,533
Inventories, net		-		907,605		28,442		-			936,047
Prepaid expenses and other current assets		23,711		214,011		6,638		-			244,360
Total current assets		23,711		2,309,525		77,301		(9,670	)		2,400,867
Intercompany receivable, net		-		1,361,615		-		(1,361,615	)		-
Investments in consolidated subsidiaries		6,109,325		-		-		(6,109,325	)		-
Deferred income taxes, net		22,475		-		-		(22,475	)		-
Property and equipment, net		18,929		250,517		10,961		-			280,407
Goodwill		-		2,461,725		30,054		-			2,491,779
Intangibles, net		-		1,332,104		2,262		-			1,334,366
Other assets, net		1,243		-		-		-			1,243
Total assets	$	6,175,683	$	7,715,486	$	120,578	$	(7,503,085	)	$	6,508,662
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	24,154	$	843,907	$	22,482	$	(9,671	)	$	880,872
Accrued expenses		41,448		564,331		5,760		-			611,539
Current portions of long-term debt/obligations		9,700		9,961		-		-			19,661
Total current liabilities		75,302		1,418,199		28,242		(9,671	)		1,512,072
Intercompany payable, net		1,322,156		-		39,459		(1,361,615	)		-
Borrowings under revolving lines of credit, net		-		89,352		3,090		-			92,442
Long-term debt, net		2,494,725		-		-		-			2,494,725
Deferred income taxes, net		-		128,846		622		(22,474	)		106,994
Long-term obligations under equipment financing and other, net		-		13,639		-		-			13,639
Other long-term liabilities		-		5,207		83		-			5,290
Total liabilities	$	3,892,183	$	1,655,243	$	71,496	$	(1,393,760	)	$	4,225,162
Convertible preferred stock	$	399,195	$	-	$	-	$	-		$	399,195
Total stockholders' equity	$	1,884,305	$	6,060,243	$	49,082	$	(6,109,325	)	$	1,884,305
Total liabilities and stockholders' equity	$	6,175,683	$	7,715,486	$	120,578	$	(7,503,085	)	$	6,508,662

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	December 31, 2017
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	70,698	$	2,122	$	(8,993	)	$	63,827
Restricted cash		-		-		1,300,000		-			1,300,000
Accounts receivable, net		-		526,068		27,775		(1,140	)		552,703
Inventories, net		-		581,288		22,505		-			603,793
Prepaid expenses and other current assets		17,713		194,007		6,998		-			218,718
Total current assets		17,713		1,372,061		1,359,400		(10,133	)		2,739,041
Intercompany receivable, net		-		730,364		-		(730,364	)		-
Investments in consolidated subsidiaries		3,239,031		-		-		(3,239,031	)		-
Deferred income taxes, net		18,286		-		-		(18,286	)		-
Property and equipment, net		8,271		135,925		10,491		-			154,687
Goodwill		-		1,220,813		31,012		-			1,251,825
Intangibles, net		-		408,123		2,734		-			410,857
Other assets, net		3,341		5,527		-		-			8,868
Total assets	$	3,286,642	$	3,872,813	$	1,403,637	$	(3,997,814	)	$	4,565,278
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	21,511	$	296,547	$	7,517	$	(10,133	)	$	315,442
Accrued expenses		27,467		232,131		6,451		-			266,049
Current portions of long-term debt/obligations		4,500		9,739		-		-			14,239
Total current liabilities		53,478		538,417		13,968		(10,133	)		595,730
Intercompany payable, net		680,761		-		49,603		(730,364	)		-
Long-term debt, net		700,059		-		1,300,000		-			2,000,059
Deferred income taxes, net		-		111,066		671		(18,286	)		93,451
Long-term obligations under equipment financing and other, net		-		20,881		70		-			20,951
Other long-term liabilities		-		2,743		-		-			2,743
Total liabilities	$	1,434,298	$	673,107	$	1,364,312	$	(758,783	)	$	2,712,934
Total stockholders' equity	$	1,852,344	$	3,199,706	$	39,325	$	(3,239,031	)	$	1,852,344
Total liabilities and stockholders' equity	$	3,286,642	$	3,872,813	$	1,403,637	$	(3,997,814	)	$	4,565,278

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Operations

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net sales	$	-		$	1,678,895	$	42,781		$	-		$	1,721,676
Cost of products sold		-			1,252,295		33,812			-			1,286,107
Gross profit		-			426,600		8,969			-			435,569
Operating expense:
Selling, general and administrative		9,775			309,548		8,370			-			327,693
Depreciation		764			16,372		465			-			17,601
Amortization		-			51,911		110			-			52,021
Total operating expense		10,539			377,831		8,945			-			397,315
Intercompany charges (income)		(6,687	)		6,687		-			-			-
Income (loss) from operations		(3,852	)		42,082		24			-			38,254
Interest expense, financing costs, and other		34,313			3,485		563			-			38,361
Intercompany interest expense (income)		(9,680	)		9,298		382			-			-
Income (loss) before provision for income taxes		(28,485	)		29,299		(921	)		-			(107	)
Provision for (benefit from) income taxes		(7,354	)		8,400		(260	)		-			786
Income (loss) before equity in net income of subsidiaries		(21,131	)		20,899		(661	)		-			(893	)
Equity in net income of subsidiaries		20,238			-		-			(20,238	)		-
Net income (loss)	$	(893	)	$	20,899	$	(661	)	$	(20,238	)	$	(893	)

	Three Months Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net sales	$	-		$	1,076,262		$	45,717		$	-		$	1,121,979
Cost of products sold		-			816,436			35,790			-			852,226
Gross profit		-			259,826			9,927			-			269,753
Operating expense:
Selling, general and administrative		(133	)		184,881			9,005			-			193,753
Depreciation		456			7,810			443			-			8,709
Amortization		-			18,064			131			-			18,195
Total operating expense		323			210,755			9,579			-			220,657
Intercompany charges (income)		893			(893	)		-			-			-
Income (loss) from operations		(1,216	)		49,964			348			-			49,096
Interest expense, financing costs, and other		10,076			825			11,667			-			22,568
Intercompany interest expense (income)		(5,708	)		5,321			387			-			-
Income (loss) before provision for income taxes		(5,584	)		43,818			(11,706	)		-			26,528
Provision for (benefit from) income taxes		5,521			(46,672	)		83			-			(41,068	)
Income (loss) before equity in net income of subsidiaries		(11,105	)		90,490			(11,789	)		-			67,596
Equity in net income of subsidiaries		78,701			-			-			(78,701	)		-
Net income (loss)	$	67,596		$	90,490		$	(11,789	)	$	(78,701	)	$	67,596

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Comprehensive Income

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	(893	)	$	20,899	$	(661	)	$	(20,238	)	$	(893	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(3,910	)		-		(3,910	)		3,910			(3,910	)
Total other comprehensive income (loss)		(3,910	)		-		(3,910	)		3,910			(3,910	)
Comprehensive income (loss)	$	(4,803	)	$	20,899	$	(4,571	)	$	(16,328	)	$	(4,803	)

	Three Months Ended December 31, 2017
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	67,596	$	90,490	$	(11,789	)	$	(78,701	)	$	67,596
Other comprehensive income (loss):
Foreign currency translation adjustment		57		-		57			(57	)		57
Total other comprehensive income (loss)		57		-		57			(57	)		57
Comprehensive income (loss)	$	67,653	$	90,490	$	(11,732	)	$	(78,758	)	$	67,653

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	12,792		$	(336,407	)	$	(2,659	)	$	(10,609	)	$	(336,883	)
Investing Activities
Purchases of property and equipment		(1,610	)		(9,971	)		(107	)		-			(11,688	)
Acquisition of businesses, net		-			(163,973	)		-			-			(163,973	)
Proceeds from the sale of assets		-			400			1			-			401
Intercompany activity		(2,399	)		-			-			2,399			-
Net cash provided by (used in) investing activities		(4,009	)		(173,544	)		(106	)		2,399			(175,260	)
Financing Activities
Borrowings under revolving lines of credit		-			1,285,017			13,637			-			1,298,654
Repayments under revolving lines of credit		-			(878,376	)		(9,849	)		-			(888,225	)
Payment of debt issuance costs		-			-			-			-			-
Repayments under equipment financing facilities and other		-			(1,465	)		-			-			(1,465	)
Payment of dividends on preferred stock		(6,000	)		-			-			-			(6,000	)
Proceeds from issuance of common stock related to equity awards		834			-			-			-			834
Taxes paid related to net share settlement of equity awards		(3,617	)		-			-			-			(3,617	)
Intercompany activity		-			(847	)		(561	)		1,408			-
Net cash provided by (used in) financing activities		(8,783	)		404,329			3,227			1,408			400,181
Effect of exchange rate changes on cash and cash equivalents		-			-			354			104			458
Net increase (decrease) in cash and cash equivalents		-			(105,622	)		816			(6,698	)		(111,504	)
Cash and cash equivalents, beginning of period		-			136,499			1,959			(8,531	)		129,927
Cash and cash equivalents, end of period	$	-		$	30,877		$	2,775		$	(15,229	)	$	18,423

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	(37,331	)	$	2,338		$	(9,658	)	$	4,195		$	(40,456	)
Investing Activities
Purchases of property and equipment		(2,117	)		(4,874	)		(425	)		-			(7,416	)
Acquisition of businesses		-			-			-			-			-
Proceeds from the sale of assets		-			398			15			-			413
Intercompany activity		61,938			-			-			(61,938	)		-
Net cash provided by (used in) investing activities		59,821			(4,476	)		(410	)		(61,938	)		(7,003	)
Financing Activities
Borrowings under revolving lines of credit		-			878			16,524			-			17,402
Repayments under revolving lines of credit		-			(877	)		(19,671	)		-			(20,548	)
Repayments under term loan		-			-			-			-			-
Borrowings under Senior Notes		-			-			1,300,000			-			1,300,000
Payment of debt issuance costs		(21,917	)		-			-			-			(21,917	)
Repayments under equipment financing facilities and other		-			(1,973	)		5			-			(1,968	)
Payment of issuance costs from secondary offering of common stock		(429	)		-			-			-			(429	)
Proceeds from issuance of common stock related to equity awards		3,781			-			-			-			3,781
Taxes paid related to net share settlement of equity awards		(3,925	)		-			-			-			(3,925	)
Intercompany activity		-			(74,991	)		13,110			61,881			-
Net cash provided by (used in) financing activities		(22,490	)		(76,963	)		1,309,968			61,881			1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		-			-			640			-			640
Net increase (decrease) in cash, cash equivalents, and restricted cash		-			(79,101	)		1,300,540			4,138			1,225,577
Cash, cash equivalents, and restricted cash, beginning of period		-			149,799			1,582			(13,131	)		138,250
Cash, cash equivalents, and restricted cash, end of period	$	-		$	70,698		$	1,302,122		$	(8,993	)	$	1,363,827

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

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. Certain prior period amounts have been reclassified to conform to current period presentation. The balance sheet as of December 31, 2017 has been presented for a better understanding of the impact of seasonal fluctuations on the Company’s financial condition.

In management’s opinion, the 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 months ended December 31, 2018 are not necessarily indicative of the results to be expected for the twelve months ending September 30, 2019 (“fiscal year 2019” or “2019”).

The three-month periods ended December 31, 2018 and 2017 had 62 and 61 business days, respectively.

These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s fiscal year 2018 (“2018”) Annual Report on Form 10-K for the year ended September 30, 2018.

Use of Estimates

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 consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates.

Recent Accounting Pronouncements - Adopted and Not Yet Adopted

Recent Accounting Pronouncements—Adopted

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most previously issued revenue recognition guidance. The new standard is effective for public business entities for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted for annual reporting periods beginning after December 15, 2016. The standard permits the use of either the full retrospective or modified retrospective adoption methods. The Company elected the modified retrospective method and adopted the standard as of October 1, 2018 utilizing the portfolio practical expedient. The adoption of this guidance did not impact the Company’s retained earnings and did not have a material impact on the Company’s net sales recognition practices, income from operations, or net income per share amounts. The adoption of this guidance did result in certain balance sheet reclassifications to record estimated customer returns, specifically the recognition of a current liability for the gross amount of estimated returns and a current asset for the value of the related products. These reclassifications did not have a material impact on the Company’s consolidated balance sheet as of December 31, 2018. In addition, the adoption of this guidance resulted in additional quantitative disclosures to disaggregate net sales balances by product line and geography. See Note 4 to the Consolidated Financial Statements for further discussion.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business.” This guidance is intended to assist entities when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted. The Company adopted the standard as of October 1, 2018 and the standard did not have a material impact on the Company’s financial statement and related disclosures.

In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting.” This guidance is intended to provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2017, and early adoption is permitted. The Company adopted the standard as of October 1, 2018 and the standard did not have a material impact on the Company’s financial statement and related disclosures.

Recent Accounting Pronouncements—Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance will replace most existing accounting for lease guidance when it becomes effective. This new standard is effective using the modified retrospective approach for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2018, and early adoption is permitted. In July 2018, the FASB amended the new lease standard which, among other changes, allows a company to elect to adopt ASU 2016-02 using a transition option whereby a cumulative effect adjustment is recorded to the opening balance of its retained earnings on the adoption date. The guidance will require the Company to record a right of use asset and a lease liability for most of the Company’s leases, including those currently treated as operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial statements and related disclosures is still being quantified.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Accounting for Goodwill Impairment.” This guidance is intended to introduce a simplified approach to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2019, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income.” This guidance is intended to address the accounting treatment for the tax effects on items within accumulated other comprehensive income as a result of the adoption of the Tax Cuts and Jobs Act of 2017. This new standard is effective for annual reporting periods, and interim reporting periods contained therein, beginning after December 15, 2018, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.

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Acquisitions (Tables)

3 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

As of December 31, 2018, the Company had finalized the purchase accounting entries for the Allied Acquisition, detailed as follows (in thousands):

	January 2, 2018						January 2, 2018
	(as reported at March 31, 2018)			Adjustments			(as adjusted at December 31, 2018)
Cash	$	19,322		$	(19,153	)	$	169
Accounts receivable		315,485			22,064			337,549
Inventory		322,705			(7,920	)		314,785
Prepaid and other current assets		59,279			16,161			75,440
Property, plant, and equipment		139,528			(168	)		139,360
Goodwill		1,130,635			102,145			1,232,780
Intangible assets		1,037,000			-			1,037,000
Current liabilities		(271,252	)		11,963			(259,289	)
Non-current liabilities		(6,820	)		6,097			(723	)
Total purchase price	$	2,745,882		$	131,189		$	2,877,071

Business Acquisition, Pro Forma Information

The following table represents the unaudited pro forma consolidated net sales and net income (loss) for the Company for the periods indicated (in thousands):

	Three Months Ended
	December 31, 2017
	(unaudited)
Net sales	$	1,787,628
Net income (loss)		32,257

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Net Sales (Tables)

3 Months Ended

Dec. 31, 2018

Revenue From Contract With Customer [Abstract]

Summary of Net Sales by Product Line and Geography

The following table presents the Company’s net sales by product line and geography for the three months ended December 31, 2018 (in thousands):

	Three Months Ended December 31, 2018
	U.S.		Canada		Total
Residential roofing products	$	720,511	$	11,679	$	732,190
Non-residential roofing products		390,268		29,641		419,909
Complementary building products		568,116		1,461		569,577
Total net sales	$	1,678,895	$	42,781	$	1,721,676

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Net Income (Loss) Per Share (Tables)

3 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Components and Calculation of Basic and Diluted Net Income (Loss) Per Share

The following table presents the components and calculations of basic and diluted net income (loss) per share for each period presented (in thousands, except share and per share amounts):

	Three Months Ended December 31,
	2018			2017
Net income (loss)	$	(893	)	$	67,596
Dividends on preferred shares		(6,000	)		-
Net income (loss) attributable to common shareholders	$	(6,893	)	$	67,596
Undistributed income allocated to participating securities		-			-
Net income (loss) attributable to common shareholders - basic and diluted	$	(6,893	)	$	67,596
Weighted-average common shares outstanding - basic		68,248,020			67,825,430
Effect of common share equivalents		-			1,419,248
Weighted-average common shares outstanding - diluted		68,248,020			69,244,678
Net income (loss) per share - basic	$	(0.10	)	$	1.00
Net income (loss) per share - diluted	$	(0.10	)	$	0.98

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table includes the number of shares that may be dilutive common shares in the future. These shares were not included in the computation of diluted net income (loss) per share because the effect was either anti-dilutive or the requisite performance conditions were not met:

	Three Months Ended December 31,
	2018		2017
Stock options		1,554,518		288,275
Restricted stock units		318,229		-
Preferred Stock		9,694,619		-

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Stock-based Compensation (Tables)

3 Months Ended

Dec. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Fair Value of Options, Black-Scholes Option-Pricing Model, Assumptions

The fair value of the options granted during the three months ended December 31, 2018 were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate		3.00	%
Expected volatility		29.34	%
Expected life (in years)		5.18
Dividend yield	-

Stock Options Outstanding and Activity During the Period

The following table summarizes all stock option activity for the three months ended December 31, 2018 (in thousands, except share, per share, and time period amounts):

	Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value1
Balance as of September 30, 2018		1,969,037		$	33.08		5.7	$	14,088
Granted		605,184			27.26
Exercised		(48,800	)		17.11
Canceled/Forfeited		(12,967	)		41.12
Expired		(950	)		12.25
Balance as of December 31, 2018		2,511,504		$	31.96		6.6	$	11,478
Vested and expected to vest after December 31, 2018		2,455,082		$	31.94		6.5	$	11,275
Exercisable as of December 31, 2018		1,645,162		$	30.75		5.1	$	8,511

________________________________________________________________

¹ Aggregate intrinsic value as represents the difference between the closing fair value of the underlying common stock and the exercise price of outstanding, in-the-money options on the date of measurement.

Stock Option Grants, Vesting, and Exercises

The following table summarizes additional information on stock options for the periods presented (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018		2017
Weighted-average fair value of stock options granted	$	8.75	$	15.86
Total grant date fair value of stock options vested		3,680		3,773
Total intrinsic value of stock options exercised		712		5,448

Restricted Shares and Units Outstanding and Activity During the Period

The following table summarizes all restricted stock unit activity for the three months ended December 31, 2018:

	RSUs Outstanding			Weighted-Average Grant Date Fair Value
Balance as of September 30, 2018		934,023		$	47.00
Granted		630,745			27.28
Released		(366,779	)		40.46
Canceled/Forfeited		(77,455	)		47.52
Balance as of December 31, 2018		1,120,534		$	38.00
Vested and expected to vest after December 31, 2018		1,040,181		$	37.78

Schedule Of Restricted Stock Units Additional Information

The following table summarizes additional information on RSUs for the periods presented (in thousands, except per share amounts):

	Three Months Ended December 31,
	2018		2017
Weighted-average fair value of RSUs granted	$	27.28	$	55.17
Total grant date fair value of RSUs vested		14,840		5,786
Total intrinsic value of RSUs released		11,160		10,683

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Dec. 31, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Changes in goodwill

The following table sets forth the change in the carrying amount of goodwill during the three months ended December 31, 2018 and 2017, respectively (in thousands):

Balance as of September 30, 2017	$	1,251,986
Translation and other adjustments		(161	)
Balance as of December 31, 2017	$	1,251,825
Balance as of September 30, 2018	$	2,491,779
Acquisitions1		(513	)
Translation and other adjustments		(1,536	)
Balance as of December 31, 2018	$	2,489,730

_____________________________

¹ Reflects purchase accounting adjustments related to fiscal year 2018 acquisition of Atlas Supply, Inc. (see Note 3 for further discussion).

Summary of Intangible Assets

The following table summarizes intangible assets by category (in thousands, except time period amounts):

	December 31, 2018			September 30, 2018			December 31, 2017			Weighted-Average Remaining Life1 (Years)
Amortizable intangible assets:
Non-compete agreements	$	2,824		$	2,824		$	2,824			2.47
Customer relationships		1,530,748			1,530,565			609,984			18.38
Trademarks		10,500			10,500			10,500			7.41
Beneficial lease arrangements		8,060			8,060			1,060			4.24
Total amortizable intangible assets		1,552,132			1,551,949			624,368
Accumulated amortization		(462,940	)		(410,633	)		(286,561	)
Total amortizable intangible assets, net	$	1,089,192		$	1,141,316		$	337,807
Indefinite lived trademarks		193,050			193,050			73,050
Total intangibles, net	$	1,282,242		$	1,334,366		$	410,857

_________________________________________________________________

¹ As of December 31, 2018.

Summary of Estimated Future Amortization

The following table summarizes the estimated future amortization expense for intangible assets (in thousands):

Year Ending September 30,
2019 (Jan - Sept)	$	156,534
2020		179,541
2021		149,974
2022		121,426
2023		97,517
Thereafter		384,200
Total future amortization expense	$	1,089,192

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Financing Arrangements (Tables)

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The following table summarizes all financing arrangements from the respective periods presented (in thousands):

	December 31, 2018			September 30, 2018			December 31, 2017
Revolving Lines of Credit
2023 ABL:
U.S. Revolver, expires January 20231	$	496,619		$	89,352		$	-
Canada Revolver, expires January 20232		6,597			3,090			-
Current portion		-			-			-
Borrowings under revolving lines of credit, net	$	503,216		$	92,442		$	-
Long-term Debt, net
Term Loans:
Term Loan, matures October 20223	$	-		$	-		$	433,828
Term Loan, matures January 20254		932,102			930,726			-
Current portion		(9,700	)		(9,700	)		(4,500	)
Long-term borrowings under term loans		922,402			921,026			429,328
Senior Notes:
Senior Notes, mature October 20235		293,926			293,607			292,648
Senior Notes, mature November 20256		1,280,795			1,280,092			1,278,083
Current portion		-			-			-
Long-term borrowings under senior notes		1,574,721			1,573,699			1,570,731
Long-term debt, net	$	2,497,123		$	2,494,725		$	2,000,059
Equipment Financing Facilities and Other
Equipment financing facilities, various maturities through September 20217	$	10,148		$	11,222		$	11,657
Capital lease obligations, various maturities through November 20218		11,156			12,378			19,033
Current portion		(10,615	)		(9,961	)		(9,739	)
Long-term obligations under equipment financing and other, net	$	10,689		$	13,639		$	20,951

____________________________________________________________ 

¹ Effective rate on borrowings of 4.37% and 3.36% as of December 31, 2018 and September 30, 2018, respectively.

² Effective rate on borrowings of 4.45% and 3.95% as of December 31, 2018 and September 30, 2018, respectively.

³ Extinguished on January 2, 2018; Interest rate of 4.06% as of December 31, 2017. 

⁴ Interest rate of 4.77% and 4.53% as of December 31, 2018 and September 30, 2018, respectively.

⁵ Interest rate of 6.38% as of December 31, 2018, September 30, 2017 and December 31, 2017.

⁶ Interest rate of 4.88% as of December 31, 2018, September 30, 2017 and December 31, 2017.

⁷ Fixed interest rates ranging from 2.33% to 3.25% as of December 31, 2018, September 30, 2017, and December 31, 2017.

⁸ Fixed interest rates ranging from 2.72% to 10.39% as of December 31, 2018 , September 30, 2017, and December 31, 2017.

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Commitments and Contingencies (Tables)

3 Months Ended

Dec. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Schedule of Minimum Rental Commitments under Non-cancelable Operating Leases

At December 31, 2018, the minimum rental commitments under all non-cancelable operating leases with initial or remaining terms of more than one year were as follows (in thousands):

Year Ending September 30,
2019 (Jan - Sept)	$	110,514
2020		101,743
2021		90,734
2022		71,869
2023		55,048
Thereafter		146,410
Total minimum lease payments	$	576,318

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Geographic Data (Tables)

3 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Schedule of Geographic Information

The following table summarizes certain geographic information for the periods presented (in thousands):

	December 31, 2018		September 30, 2018		December 31, 2017
Long-lived assets:
U.S.	$	1,352,081	$	1,409,742	$	488,137
Canada		12,096		13,224		13,225
Total long-lived assets	$	1,364,177	$	1,422,966	$	501,362

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Supplemental Guarantor Information (Tables)

3 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Condensed Consolidating Balance Sheets

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	December 31, 2018
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	30,877	$	2,775	$	(15,229	)	$	18,423
Accounts receivable, net		-		856,373		26,516		(1,140	)		881,749
Inventories, net		-		998,450		26,860		-			1,025,310
Prepaid expenses and other current assets		6,065		361,431		8,102		-			375,598
Total current assets		6,065		2,247,131		64,253		(16,369	)		2,301,080
Intercompany receivable, net		-		1,526,435		-		(1,526,435	)		-
Investments in consolidated subsidiaries		6,289,626		-		-		(6,289,626	)		-
Deferred income taxes, net		20,767		-		-		(20,767	)		-
Property and equipment, net		19,775		243,911		10,056		-			273,742
Goodwill		-		2,461,212		28,518		-			2,489,730
Intangibles, net		-		1,280,202		2,040		-			1,282,242
Other assets, net		1,243		-		-		-			1,243
Total assets	$	6,337,476	$	7,758,891	$	104,867	$	(7,853,197	)	$	6,348,037
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	28,808	$	532,526	$	6,975	$	(16,369	)	$	551,940
Accrued expenses		40,834		327,027		7,811		-			375,672
Current portions of long-term debt/obligations		9,700		10,615		-		-			20,315
Total current liabilities		79,342		870,168		14,786		(16,369	)		947,927
Intercompany payable, net		1,487,640		-		38,795		(1,526,435	)		-
Borrowings under revolving lines of credit, net		-		496,619		6,597		-			503,216
Long-term debt, net		2,497,123		-		-		-			2,497,123
Deferred income taxes, net		-		130,847		99		(20,767	)		110,179
Long-term obligations under equipment financing and other, net		-		10,689		-		-			10,689
Other long-term liabilities		-		5,453		79		-			5,532
Total liabilities	$	4,064,105	$	1,513,776	$	60,356	$	(1,563,571	)	$	4,074,666
Convertible preferred stock	$	399,195	$	-	$	-	$	-		$	399,195
Total stockholders' equity	$	1,874,176	$	6,245,115	$	44,511	$	(6,289,626	)	$	1,874,176
Total liabilities and stockholders' equity	$	6,337,476	$	7,758,891	$	104,867	$	(7,853,197	)	$	6,348,037

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	September 30, 2018
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	136,499	$	1,959	$	(8,531	)	$	129,927
Accounts receivable, net		-		1,051,410		40,262		(1,139	)		1,090,533
Inventories, net		-		907,605		28,442		-			936,047
Prepaid expenses and other current assets		23,711		214,011		6,638		-			244,360
Total current assets		23,711		2,309,525		77,301		(9,670	)		2,400,867
Intercompany receivable, net		-		1,361,615		-		(1,361,615	)		-
Investments in consolidated subsidiaries		6,109,325		-		-		(6,109,325	)		-
Deferred income taxes, net		22,475		-		-		(22,475	)		-
Property and equipment, net		18,929		250,517		10,961		-			280,407
Goodwill		-		2,461,725		30,054		-			2,491,779
Intangibles, net		-		1,332,104		2,262		-			1,334,366
Other assets, net		1,243		-		-		-			1,243
Total assets	$	6,175,683	$	7,715,486	$	120,578	$	(7,503,085	)	$	6,508,662
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	24,154	$	843,907	$	22,482	$	(9,671	)	$	880,872
Accrued expenses		41,448		564,331		5,760		-			611,539
Current portions of long-term debt/obligations		9,700		9,961		-		-			19,661
Total current liabilities		75,302		1,418,199		28,242		(9,671	)		1,512,072
Intercompany payable, net		1,322,156		-		39,459		(1,361,615	)		-
Borrowings under revolving lines of credit, net		-		89,352		3,090		-			92,442
Long-term debt, net		2,494,725		-		-		-			2,494,725
Deferred income taxes, net		-		128,846		622		(22,474	)		106,994
Long-term obligations under equipment financing and other, net		-		13,639		-		-			13,639
Other long-term liabilities		-		5,207		83		-			5,290
Total liabilities	$	3,892,183	$	1,655,243	$	71,496	$	(1,393,760	)	$	4,225,162
Convertible preferred stock	$	399,195	$	-	$	-	$	-		$	399,195
Total stockholders' equity	$	1,884,305	$	6,060,243	$	49,082	$	(6,109,325	)	$	1,884,305
Total liabilities and stockholders' equity	$	6,175,683	$	7,715,486	$	120,578	$	(7,503,085	)	$	6,508,662

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Balance Sheets

(Unaudited; In thousands)

	December 31, 2017
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations and Other			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	70,698	$	2,122	$	(8,993	)	$	63,827
Restricted cash		-		-		1,300,000		-			1,300,000
Accounts receivable, net		-		526,068		27,775		(1,140	)		552,703
Inventories, net		-		581,288		22,505		-			603,793
Prepaid expenses and other current assets		17,713		194,007		6,998		-			218,718
Total current assets		17,713		1,372,061		1,359,400		(10,133	)		2,739,041
Intercompany receivable, net		-		730,364		-		(730,364	)		-
Investments in consolidated subsidiaries		3,239,031		-		-		(3,239,031	)		-
Deferred income taxes, net		18,286		-		-		(18,286	)		-
Property and equipment, net		8,271		135,925		10,491		-			154,687
Goodwill		-		1,220,813		31,012		-			1,251,825
Intangibles, net		-		408,123		2,734		-			410,857
Other assets, net		3,341		5,527		-		-			8,868
Total assets	$	3,286,642	$	3,872,813	$	1,403,637	$	(3,997,814	)	$	4,565,278
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	21,511	$	296,547	$	7,517	$	(10,133	)	$	315,442
Accrued expenses		27,467		232,131		6,451		-			266,049
Current portions of long-term debt/obligations		4,500		9,739		-		-			14,239
Total current liabilities		53,478		538,417		13,968		(10,133	)		595,730
Intercompany payable, net		680,761		-		49,603		(730,364	)		-
Long-term debt, net		700,059		-		1,300,000		-			2,000,059
Deferred income taxes, net		-		111,066		671		(18,286	)		93,451
Long-term obligations under equipment financing and other, net		-		20,881		70		-			20,951
Other long-term liabilities		-		2,743		-		-			2,743
Total liabilities	$	1,434,298	$	673,107	$	1,364,312	$	(758,783	)	$	2,712,934
Total stockholders' equity	$	1,852,344	$	3,199,706	$	39,325	$	(3,239,031	)	$	1,852,344
Total liabilities and stockholders' equity	$	3,286,642	$	3,872,813	$	1,403,637	$	(3,997,814	)	$	4,565,278

Condensed Consolidating Statements of Operations

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Operations

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net sales	$	-		$	1,678,895	$	42,781		$	-		$	1,721,676
Cost of products sold		-			1,252,295		33,812			-			1,286,107
Gross profit		-			426,600		8,969			-			435,569
Operating expense:
Selling, general and administrative		9,775			309,548		8,370			-			327,693
Depreciation		764			16,372		465			-			17,601
Amortization		-			51,911		110			-			52,021
Total operating expense		10,539			377,831		8,945			-			397,315
Intercompany charges (income)		(6,687	)		6,687		-			-			-
Income (loss) from operations		(3,852	)		42,082		24			-			38,254
Interest expense, financing costs, and other		34,313			3,485		563			-			38,361
Intercompany interest expense (income)		(9,680	)		9,298		382			-			-
Income (loss) before provision for income taxes		(28,485	)		29,299		(921	)		-			(107	)
Provision for (benefit from) income taxes		(7,354	)		8,400		(260	)		-			786
Income (loss) before equity in net income of subsidiaries		(21,131	)		20,899		(661	)		-			(893	)
Equity in net income of subsidiaries		20,238			-		-			(20,238	)		-
Net income (loss)	$	(893	)	$	20,899	$	(661	)	$	(20,238	)	$	(893	)

	Three Months Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net sales	$	-		$	1,076,262		$	45,717		$	-		$	1,121,979
Cost of products sold		-			816,436			35,790			-			852,226
Gross profit		-			259,826			9,927			-			269,753
Operating expense:
Selling, general and administrative		(133	)		184,881			9,005			-			193,753
Depreciation		456			7,810			443			-			8,709
Amortization		-			18,064			131			-			18,195
Total operating expense		323			210,755			9,579			-			220,657
Intercompany charges (income)		893			(893	)		-			-			-
Income (loss) from operations		(1,216	)		49,964			348			-			49,096
Interest expense, financing costs, and other		10,076			825			11,667			-			22,568
Intercompany interest expense (income)		(5,708	)		5,321			387			-			-
Income (loss) before provision for income taxes		(5,584	)		43,818			(11,706	)		-			26,528
Provision for (benefit from) income taxes		5,521			(46,672	)		83			-			(41,068	)
Income (loss) before equity in net income of subsidiaries		(11,105	)		90,490			(11,789	)		-			67,596
Equity in net income of subsidiaries		78,701			-			-			(78,701	)		-
Net income (loss)	$	67,596		$	90,490		$	(11,789	)	$	(78,701	)	$	67,596

Condensed Consolidating Statements of Comprehensive Income

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Comprehensive Income

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	(893	)	$	20,899	$	(661	)	$	(20,238	)	$	(893	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(3,910	)		-		(3,910	)		3,910			(3,910	)
Total other comprehensive income (loss)		(3,910	)		-		(3,910	)		3,910			(3,910	)
Comprehensive income (loss)	$	(4,803	)	$	20,899	$	(4,571	)	$	(16,328	)	$	(4,803	)

	Three Months Ended December 31, 2017
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net income (loss)	$	67,596	$	90,490	$	(11,789	)	$	(78,701	)	$	67,596
Other comprehensive income (loss):
Foreign currency translation adjustment		57		-		57			(57	)		57
Total other comprehensive income (loss)		57		-		57			(57	)		57
Comprehensive income (loss)	$	67,653	$	90,490	$	(11,732	)	$	(78,758	)	$	67,653

Condensed Consolidating Statements of Cash Flows

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31, 2018
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	12,792		$	(336,407	)	$	(2,659	)	$	(10,609	)	$	(336,883	)
Investing Activities
Purchases of property and equipment		(1,610	)		(9,971	)		(107	)		-			(11,688	)
Acquisition of businesses, net		-			(163,973	)		-			-			(163,973	)
Proceeds from the sale of assets		-			400			1			-			401
Intercompany activity		(2,399	)		-			-			2,399			-
Net cash provided by (used in) investing activities		(4,009	)		(173,544	)		(106	)		2,399			(175,260	)
Financing Activities
Borrowings under revolving lines of credit		-			1,285,017			13,637			-			1,298,654
Repayments under revolving lines of credit		-			(878,376	)		(9,849	)		-			(888,225	)
Payment of debt issuance costs		-			-			-			-			-
Repayments under equipment financing facilities and other		-			(1,465	)		-			-			(1,465	)
Payment of dividends on preferred stock		(6,000	)		-			-			-			(6,000	)
Proceeds from issuance of common stock related to equity awards		834			-			-			-			834
Taxes paid related to net share settlement of equity awards		(3,617	)		-			-			-			(3,617	)
Intercompany activity		-			(847	)		(561	)		1,408			-
Net cash provided by (used in) financing activities		(8,783	)		404,329			3,227			1,408			400,181
Effect of exchange rate changes on cash and cash equivalents		-			-			354			104			458
Net increase (decrease) in cash and cash equivalents		-			(105,622	)		816			(6,698	)		(111,504	)
Cash and cash equivalents, beginning of period		-			136,499			1,959			(8,531	)		129,927
Cash and cash equivalents, end of period	$	-		$	30,877		$	2,775		$	(15,229	)	$	18,423

BEACON ROOFING SUPPLY, INC.

Condensed Consolidating Statements of Cash Flows

(Unaudited; In thousands)

	Three Months Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations and Other			Consolidated
Net cash provided by (used in) operating activities	$	(37,331	)	$	2,338		$	(9,658	)	$	4,195		$	(40,456	)
Investing Activities
Purchases of property and equipment		(2,117	)		(4,874	)		(425	)		-			(7,416	)
Acquisition of businesses		-			-			-			-			-
Proceeds from the sale of assets		-			398			15			-			413
Intercompany activity		61,938			-			-			(61,938	)		-
Net cash provided by (used in) investing activities		59,821			(4,476	)		(410	)		(61,938	)		(7,003	)
Financing Activities
Borrowings under revolving lines of credit		-			878			16,524			-			17,402
Repayments under revolving lines of credit		-			(877	)		(19,671	)		-			(20,548	)
Repayments under term loan		-			-			-			-			-
Borrowings under Senior Notes		-			-			1,300,000			-			1,300,000
Payment of debt issuance costs		(21,917	)		-			-			-			(21,917	)
Repayments under equipment financing facilities and other		-			(1,973	)		5			-			(1,968	)
Payment of issuance costs from secondary offering of common stock		(429	)		-			-			-			(429	)
Proceeds from issuance of common stock related to equity awards		3,781			-			-			-			3,781
Taxes paid related to net share settlement of equity awards		(3,925	)		-			-			-			(3,925	)
Intercompany activity		-			(74,991	)		13,110			61,881			-
Net cash provided by (used in) financing activities		(22,490	)		(76,963	)		1,309,968			61,881			1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		-			-			640			-			640
Net increase (decrease) in cash, cash equivalents, and restricted cash		-			(79,101	)		1,300,540			4,138			1,225,577
Cash, cash equivalents, and restricted cash, beginning of period		-			149,799			1,582			(13,131	)		138,250
Cash, cash equivalents, and restricted cash, end of period	$	-		$	70,698		$	1,302,122		$	(8,993	)	$	1,363,827

XML

Company Overview - Additional Information (Detail) $ in Millions		3 Months Ended
	Jan. 02, 2018 USD ($)	Dec. 31, 2018 State Province
Company Overview [Line Items]
Date of incorporation		Aug. 22, 1997
Allied Acquisition [Member]
Company Overview [Line Items]
Acquisition purchase price in cash | $	$ 2,625
United States [Member]
Company Overview [Line Items]
Number of states in which entity operates | State		50
Canada [Member]
Company Overview [Line Items]
Number of provinces in which entity operates | Province		6

XML

Acquisitions - Additional Information (Detail)				3 Months Ended
	Jul. 16, 2018 USD ($) Location	May 01, 2018 USD ($) Location	Jan. 02, 2018 USD ($) State Location $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Sep. 30, 2018 USD ($) Branch $ / shares shares	Mar. 31, 2018 USD ($)	Oct. 25, 2017 USD ($)	Sep. 30, 2017 USD ($)
Business Acquisition [Line Items]
Preferred stock, issuance | shares				0	0	0
Mezzanine equity				$ 399,195,000		$ 399,195,000
Common stock, par value | $ / shares				$ 0.01	$ 0.01	$ 0.01
Number of business locations acquired | Branch						7
Business acquisition, sales reported by acquired entity for last annual period					$ 1,787,628,000
Business acquisitions purchase price allocation goodwill amount				$ 2,489,730,000	$ 1,251,825,000	$ 2,491,779,000			$ 1,251,986,000
Senior Notes, Matures November 2025 [Member]
Business Acquisition [Line Items]
Debt instrument, aggregate principal amount								$ 1,300,000,000
Allied Acquisition [Member]
Business Acquisition [Line Items]
Acquisition purchase price in cash			$ 2,625,000,000
Adjusted purchase price				2,877,071,000			$ 2,745,882,000
Net working capital adjustment				88,100,000
Business acquisition purchase price and tax position				164,000,000
Number of business locations acquired | Location			208
Number of states business location acquired | State			31
Business acquisition, goodwill, tax deductible amount				1,160,000,000
Business acquisitions purchase price allocation goodwill amount				1,232,780,000			1,130,635,000
Business acquisitions purchase price allocation intangible assets other than goodwill				1,037,000,000			$ 1,037,000,000
Allied Acquisition [Member] | Investment Agreement [Member] | Series A Cumulative Convertible Participating Preferred Stock [Member]
Business Acquisition [Line Items]
Preferred stock, issuance | shares			400,000
Preferred stock, par value | $ / shares			$ 0.01
Preferred stock, liquidation preference value			$ 400,000,000
Preferred stock, liquidation purchase price per share | $ / shares			$ 1,000
Proceeds from convertible preferred stock			$ 400,000,000
Preferred stock conversion price per share | $ / shares			$ 41.26
Preferred stock dividend rate			6.00%
Mezzanine equity				399,200,000
Unamortized issuance costs				800,000
Allied Acquisition [Member] | Secured Term Loan B Facility [Member]
Business Acquisition [Line Items]
Long-term line of credit			$ 970,000,000
Allied Acquisition [Member] | Secured Term Loan B Facility [Member] | LIBOR [Member]
Business Acquisition [Line Items]
Base borrowing rates			1.25%
Allied Acquisition [Member] | Senior Notes, Matures November 2025 [Member]
Business Acquisition [Line Items]
Debt instrument, aggregate principal amount			$ 1,300,000,000
Allied Acquisition [Member] | Senior-secured Asset-based Revolving Line Of Credit [Member] | LIBOR [Member]
Business Acquisition [Line Items]
Base borrowing rates			2.25%
Allied Acquisition [Member] | Stock Purchase Agreement [Member]
Business Acquisition [Line Items]
Acquisition purchase price in cash			$ 2,625,000,000
Tri-State Builder Supply [Member]
Business Acquisition [Line Items]
Number of business locations acquired | Location		1
Business acquisition, sales reported by acquired entity for last annual period		$ 6,000,000
Atlas Supply, Inc. [Member]
Business Acquisition [Line Items]
Number of business locations acquired | Location	6
Business acquisition, sales reported by acquired entity for last annual period	$ 37,000,000
Series of Individually Immaterial Business Acquisitions [Member]
Business Acquisition [Line Items]
Business acquisition, goodwill, tax deductible amount				$ 7,400,000
Business acquisitions purchase price allocation goodwill amount						7,600,000
Business acquisitions purchase price allocation intangible assets other than goodwill						$ 11,400,000

XML

Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017
Business Combination Separately Recognized Transactions [Line Items]
Goodwill	$ 2,489,730	$ 2,491,779		$ 1,251,825	$ 1,251,986
Goodwill	(513)
Allied Acquisition [Member]
Business Combination Separately Recognized Transactions [Line Items]
Cash	169		$ 19,322
Accounts receivable	337,549		315,485
Inventory	314,785		322,705
Prepaid and other current assets	75,440		59,279
Property, plant, and equipment	139,360		139,528
Goodwill	1,232,780		1,130,635
Intangible assets	1,037,000		1,037,000
Current liabilities	(259,289)		(271,252)
Non-current liabilities	(723)		(6,820)
Total purchase price	2,877,071		$ 2,745,882
Cash	(19,153)
Accounts receivable	22,064
Inventory	(7,920)
Prepaid and other current assets	16,161
Property, plant, and equipment	(168)
Goodwill	102,145
Current liabilities	11,963
Non-current liabilities	6,097
Total purchase price	$ 131,189

XML

Acquisitions - Business Acquisition, Pro Forma Information (Detail) $ in Thousands	3 Months Ended
	Dec. 31, 2017 USD ($)
Business Acquisition Pro Forma Information [Abstract]
Net sales	$ 1,787,628
Net income (loss)	$ 32,257

XML

Net Sales - Summary of Net Sales by Product Line and Geography (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disaggregation Of Revenue [Line Items]
Net sales	$ 1,721,676	$ 1,121,979
Residential Roofing Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	732,190
Non-Residential Roofing Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	419,909
Complementary Building Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	569,577
U.S. [Member]
Disaggregation Of Revenue [Line Items]
Net sales	1,678,895
U.S. [Member] | Residential Roofing Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	720,511
U.S. [Member] | Non-Residential Roofing Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	390,268
U.S. [Member] | Complementary Building Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	568,116
Canada [Member]
Disaggregation Of Revenue [Line Items]
Net sales	42,781
Canada [Member] | Residential Roofing Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	11,679
Canada [Member] | Non-Residential Roofing Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	29,641
Canada [Member] | Complementary Building Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	$ 1,461

XML

Net Income (Loss) Per Share - Components and Calculation of Basic and Diluted Net Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Net income (loss)		$ (893)	$ 67,596
Dividends on preferred shares	[1]	(6,000)	0
Net income (loss) attributable to common shareholders		(6,893)	67,596
Net income (loss) attributable to common shareholders - basic and diluted		$ (6,893)	$ 67,596
Weighted-average common shares outstanding - basic		68,248,020	67,825,430
Effect of common share equivalents			1,419,248
Weighted-average common shares outstanding - diluted		68,248,020	69,244,678
Net income (loss) per share - basic	[2]	$ (0.10)	$ 1.00
Net income (loss) per share - diluted	[2]	$ (0.10)	$ 0.98

[1] Three months ended December 31, 2018 amount is composed of $5.0 million in undeclared cumulative Preferred Stock dividends as well as an additional $1.0 million of Preferred Stock dividends that had been declared and paid as of period end. See Note 3 for further discussion.

[2] See Note 5 for detailed calculations and further discussion.

XML

Net Income (Loss) Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted net income (loss) per share	9,694,619
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted net income (loss) per share	1,554,518	288,275
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted net income (loss) per share	318,229

XML

Stock-based Compensation - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Feb. 09, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation number of shares authorized			5,000,000
Stock-based compensation number of shares available for awards	1,772,191
Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares that will vest	100.00%
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-qualified options granted expiration period	10 years
Vesting period	3 years
Allocated stock-based compensation expense	$ 1.0	$ 1.1
Unrecognized compensation cost related to unvested stock	$ 8.1
Unrecognized compensation cost related to unvested stock, expected weighted-average period of recognition	2 years 3 months 18 days
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated stock-based compensation expense	$ 2.4	$ 2.4
Unrecognized compensation cost related to unvested stock	$ 27.2
Unrecognized compensation cost related to unvested stock, expected weighted-average period of recognition	2 years 3 months 18 days
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares that will vest	0.00%
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares that will vest	200.00%

XML

Stock-based Compensation - Fair Value of Options, Black-Scholes Option-Pricing Model, Assumptions (Detail)	3 Months Ended
	Dec. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Risk-free interest rate	3.00%
Expected volatility	29.34%
Expected life (in years)	5 years 2 months 4 days
Dividend yield	0.00%

XML

Stock-based compensation - Stock Options Outstanding and Activity During the Period (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018
Options Outstanding
Balance as of September 30, 2018	1,969,037
Granted	605,184
Exercised	(48,800)
Canceled/Forfeited	(12,967)
Expired	(950)
Balance as of December 31, 2018	2,511,504	1,969,037
Vested and expected to vest after December 31, 2018	2,455,082
Exercisable as of December 31, 2018	1,645,162
Weighted-Average Exercise Price
Beginning Balance	$ 33.08
Granted	27.26
Exercised	17.11
Canceled/Forfeited	41.12
Expired	12.25
Ending Balance	31.96	$ 33.08
Vested and expected to vest after December 31, 2018	31.94
Exercisable as of December 31, 2018	$ 30.75
Weighted-Average Remaining Contractual Life
Balance	6 years 7 months 6 days	5 years 8 months 12 days
Vested and expected to vest after December 31, 2018	6 years 6 months
Exercisable as of December 31, 2018	5 years 1 month 6 days
Aggregate Intrinsic Value
Balance	$ 11,478	$ 14,088
Vested and expected to vest after December 31, 2018	11,275
Exercisable as of December 31, 2018	$ 8,511

XML

Stock-based compensation - Stock Option Grants, Vesting, and Exercises (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted-average fair value of stock options granted	$ 8.75	$ 15.86
Total grant date fair value of stock options vested	$ 3,680	$ 3,773
Total intrinsic value of stock options exercised	$ 712	$ 5,448

XML

Stock-based Compensation - Restricted Shares and Units Outstanding and Activity During the Period (Detail) - $ / shares	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Weighted - Average Grant Date Fair Value
Granted	$ 27.28	$ 55.17
Restricted Stock Units (RSUs) [Member]
Outstanding
Balance as of September 30, 2018	934,023
Granted	630,745
Released	(366,779)
Canceled/Forfeited	(77,455)
Balance as of December 31, 2018	1,120,534
Vested and expected to vest after December 31, 2018	1,040,181
Weighted - Average Grant Date Fair Value
Balance as of September 30, 2018	$ 47.00
Granted	27.28
Released	40.46
Canceled/Forfeited	47.52
Balance as of December 31, 2018	38.00
Vested and expected to vest after December 31, 2018	$ 37.78

XML

Stock-based Compensation - Schedule Of Restricted Stock Units Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted-average fair value of RSUs granted	$ 27.28	$ 55.17
Total grant date fair value of RSUs vested	$ 14,840	$ 5,786
Total intrinsic value of RSUs released	$ 11,160	$ 10,683

XML

Goodwill and Intangible Assets - Summary of Changes in goodwill (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]
Beginning balance	$ 2,491,779	$ 1,251,986
Acquisitions	(513)
Translation and other adjustments	(1,536)	(161)
Ending balance	$ 2,489,730	$ 1,251,825

XML

Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Goodwill And Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 1,050,000
Amortization of Intangible Assets	$ 52,021	$ 18,195
Minimum [Member]
Goodwill And Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	5 years
Maximum [Member]
Goodwill And Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	20 years
Weighted Average [Member]
Goodwill And Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	18 years 2 months 12 days
Trademarks [Member]
Goodwill And Intangible Assets [Line Items]
Indefinite-lived Intangible Assets Acquired			120,000
Customer Relationships [Member]
Goodwill And Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			920,800
Customer Relationships [Member] | Weighted Average [Member]
Goodwill And Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	18 years 4 months 17 days
Beneficial Lease Arrangements [Member]
Goodwill And Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 7,000
Beneficial Lease Arrangements [Member] | Weighted Average [Member]
Goodwill And Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	4 years 2 months 26 days

XML

Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Finite Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 1,552,132	$ 1,551,949	$ 624,368
Accumulated amortization	(462,940)	(410,633)	(286,561)
Total amortizable intangible assets, net	1,089,192	1,141,316	337,807
Indefinite lived trademarks	193,050	193,050	73,050
Total intangibles, net	$ 1,282,242	1,334,366	410,857
Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	18 years 2 months 12 days
Minimum [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	5 years
Maximum [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	20 years
Noncompete Agreements [Member]
Finite Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 2,824	2,824	2,824
Noncompete Agreements [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	2 years 5 months 19 days
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 1,530,748	1,530,565	609,984
Customer Relationships [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	18 years 4 months 17 days
Trademarks [Member]
Finite Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 10,500	10,500	10,500
Trademarks [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	7 years 4 months 28 days
Beneficial Lease Arrangements [Member]
Finite Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 8,060	$ 8,060	$ 1,060
Beneficial Lease Arrangements [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	4 years 2 months 26 days

XML

Goodwill and Intangible Assets - Summary of Estimated Future Amortization (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]
2019 (Jan - Sept)	$ 156,534
2020	179,541
2021	149,974
2022	121,426
2023	97,517
Thereafter	384,200
Total amortizable intangible assets, net	$ 1,089,192	$ 1,141,316	$ 337,807

XML

Financing Arrangements - Long-term Debt Instruments (Detail) - USD ($)		Dec. 31, 2018		Sep. 30, 2018		Jan. 02, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Borrowings under revolving lines of credit/term loans, net		$ 503,216,000		$ 92,442,000
Current portion		0		0			$ 0
Long-term borrowings under senior notes		1,574,721,000		1,573,699,000			1,570,731,000
Long-term debt, net		2,497,123,000		2,494,725,000			2,000,059,000
Equipment financing facilities, various maturities through September 2021	[1]	10,148,000		11,222,000			11,657,000
Capital lease obligations, various maturities through November 2021	[2]	11,156,000		12,378,000			19,033,000
Long-term obligations under equipment financing and other, net		10,689,000		13,639,000			20,951,000
Senior Notes, Matures October 2023 [Member]
Debt Instrument [Line Items]
Senior Notes	[3]	293,926,000		293,607,000			292,648,000
Senior Notes, Matures November 2025 [Member]
Debt Instrument [Line Items]
Senior Notes	[4]	1,280,795,000		1,280,092,000			1,278,083,000
Equipment Financing Facilities and Other [Member]
Debt Instrument [Line Items]
Current portion		(10,615,000)		(9,961,000)			(9,739,000)
Long-term obligations under equipment financing and other, net		10,689,000		13,639,000			20,951,000
Revolving Lines of Credit [Member]
Debt Instrument [Line Items]
Borrowings under revolving lines of credit/term loans, net		503,216,000		92,442,000
Revolving Lines of Credit [Member] | 2023 ABL [Member]
Debt Instrument [Line Items]
Borrowings under revolving lines of credit/term loans, net		503,200,000
Revolving Lines of Credit [Member] | 2023 ABL [Member] | U.S. [Member]
Debt Instrument [Line Items]
Total Borrowings under revolving lines of credit/term loans	[5]	496,619,000		89,352,000
Revolving Lines of Credit [Member] | 2023 ABL [Member] | Canada [Member]
Debt Instrument [Line Items]
Total Borrowings under revolving lines of credit/term loans	[6]	6,597,000		3,090,000
Term Loan [Member]
Debt Instrument [Line Items]
Current portion		(9,700,000)		(9,700,000)			(4,500,000)
Borrowings under revolving lines of credit/term loans, net		922,402,000		921,026,000			429,328,000
Term Loan [Member] | Term Loan, Matures October 2022 [Member]
Debt Instrument [Line Items]
Total Borrowings under revolving lines of credit/term loans	[7]						$ 433,828,000
Term Loan [Member] | Term Loan, Matures January 2025 [Member]
Debt Instrument [Line Items]
Total Borrowings under revolving lines of credit/term loans		$ 932,102,000	[8]	$ 930,726,000	[8]	$ 970,000,000

[1] Fixed interest rates ranging from 2.33% to 3.25% as of December 31, 2018, September 30, 2017, and December 31, 2017.

[2] Fixed interest rates ranging from 2.72% to 10.39% as of December 31, 2018 , September 30, 2017, and December 31, 2017.

[3] Interest rate of 6.38% as of December 31, 2018, September 30, 2017 and December 31, 2017.

[4] Interest rate of 4.88% as of December 31, 2018, September 30, 2017 and December 31, 2017.

[5] Effective rate on borrowings of 4.37% and 3.36% as of December 31, 2018 and September 30, 2018, respectively.

[6] Effective rate on borrowings of 4.45% and 3.95% as of December 31, 2018 and September 30, 2018, respectively.

[7] Extinguished on January 2, 2018; Interest rate of 4.06% as of December 31, 2017.

[8] Interest rate of 4.77% and 4.53% as of December 31, 2018 and September 30, 2018, respectively.

XML

Financing Arrangements - Long-term Debt Instruments (Parenthetical) (Detail)			3 Months Ended		12 Months Ended
	Jan. 02, 2018	Oct. 01, 2015	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018	Sep. 30, 2017
Equipment Financing Facilities [Member]
Debt Instrument [Line Items]
Debt instrument maturity date			Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2021
Equipment Financing Facilities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Equipment financing facilities, fixed interest rate percentage			2.33%	2.33%		2.33%
Equipment Financing Facilities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Equipment financing facilities, fixed interest rate percentage			3.25%	3.25%		3.25%
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Debt instrument maturity date			Nov. 30, 2021	Nov. 30, 2021	Nov. 30, 2021
Capital Lease Obligations [Member] | Minimum [Member]
Debt Instrument [Line Items]
Capital lease obligations, fixed interest rate percentage			2.72%	2.72%		2.72%
Capital Lease Obligations [Member] | Maximum [Member]
Debt Instrument [Line Items]
Capital lease obligations, fixed interest rate percentage			10.39%	10.39%		10.39%
Senior Notes, Matures October 2023 [Member]
Debt Instrument [Line Items]
Debt interest rate at period end			6.38%	6.38%		6.38%
Debt instrument maturity date		Oct. 01, 2023	Oct. 01, 2023	Oct. 01, 2023	Oct. 01, 2023
Senior Notes, Matures November 2025 [Member]
Debt Instrument [Line Items]
Debt interest rate at period end			4.88%	4.88%		4.88%
Debt instrument maturity date			Nov. 01, 2025	Nov. 01, 2025	Nov. 01, 2025
Revolving Lines of Credit [Member] | 2023 ABL [Member]
Debt Instrument [Line Items]
Debt instrument maturity date	Jan. 02, 2023
Revolving Lines of Credit [Member] | 2023 ABL [Member] | U.S. [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate at Period End			4.37%		3.36%
Line of Credit Facility, Expiration Date			Jan. 02, 2023	Jan. 02, 2023	Jan. 02, 2023
Revolving Lines of Credit [Member] | 2023 ABL [Member] | Canada [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate at Period End			4.45%		3.95%
Line of Credit Facility, Expiration Date			Jan. 02, 2023	Jan. 02, 2023	Jan. 02, 2023
Term Loan [Member] | Term Loan, Matures October 2022 [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate at Period End				4.06%
Line of Credit Facility, Expiration Date			Oct. 01, 2022	Oct. 01, 2022	Oct. 01, 2022
Debt extinguishment date				Jan. 02, 2018
Term Loan [Member] | Term Loan, Matures January 2025 [Member]
Debt Instrument [Line Items]
Debt interest rate at period end			4.77%		4.53%
Debt instrument maturity date	Jan. 02, 2025		Jan. 02, 2025	Jan. 02, 2025	Jan. 02, 2025

XML

Financing Arrangements - Financing - Allied Acquisition - Additional Information (Detail) - USD ($)		3 Months Ended
	Jan. 02, 2018	Dec. 31, 2018		Dec. 31, 2017	Sep. 30, 2018	[1]	Oct. 01, 2015
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,570,000,000						$ 1,450,000,000
Borrowings under senior notes		$ 0		$ 1,300,000,000
Payments of debt issuance costs	65,300,000	0		$ 21,917,000
Allied Financing Arrangements [Member]
Debt Instrument [Line Items]
Payments of debt issuance costs	2,000,000
Gains (Losses) on Extinguishment of Debt	(1,700,000)
Senior Notes, Matures November 2025 [Member]
Debt Instrument [Line Items]
Borrowings under senior notes	1,300,000,000
Revolving Lines of Credit [Member] | 2023 ABL [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	1,300,000,000
Proceeds from Lines of Credit	525,000,000
Term Loan [Member] | Term Loan, Matures January 2025 [Member]
Debt Instrument [Line Items]
Long-term line of credit	$ 970,000,000	$ 932,102,000	[1]		$ 930,726,000

[1] Interest rate of 4.77% and 4.53% as of December 31, 2018 and September 30, 2018, respectively.

XML

Financing Arrangements - 2023 ABL - Additional Information (Detail)		3 Months Ended
	Jan. 02, 2018 USD ($)	Dec. 31, 2018 USD ($) Covenant	Sep. 30, 2018 USD ($)	Oct. 01, 2015 USD ($)
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,570,000,000			$ 1,450,000,000
Borrowings under revolving lines of credit/term loans, net		$ 503,216,000	$ 92,442,000
Revolving Lines of Credit [Member]
Debt Instrument [Line Items]
Borrowings under revolving lines of credit/term loans, net		$ 503,216,000	$ 92,442,000
Revolving Lines of Credit [Member] | 2023 ABL [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,300,000,000
Debt instrument maturity date	Jan. 02, 2023
Line of credit facility, unused fees		0.25%
Number of financial covenants | Covenant		1
Fixed charge coverage ratio		100.00%
Borrowings under revolving lines of credit/term loans, net		$ 503,200,000
Unamortized debt issuance costs		10,000,000
U.S. [Member] | Revolving Lines of Credit [Member] | 2023 ABL [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,200,000,000
Standby letters of credit outstanding		$ 13,400,000
Canada [Member] | Revolving Lines of Credit [Member] | 2023 ABL [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000,000

XML

Financing Arrangements - 2025 Term Loan - Additional Information (Detail) - Term Loan [Member] - Term Loan, Matures January 2025 [Member] - USD ($)		3 Months Ended			12 Months Ended
	Jan. 02, 2018	Dec. 31, 2018		Dec. 31, 2017	Sep. 30, 2018
Debt Instrument [Line Items]
Long-term line of credit	$ 970,000,000	$ 932,102,000	[1]		$ 930,726,000	[1]
Debt Instrument, Frequency of Periodic Payment		quarterly
Debt Instrument, Periodic Payment	$ 2,400,000
Debt instrument maturity date	Jan. 02, 2025	Jan. 02, 2025		Jan. 02, 2025	Jan. 02, 2025
Unamortized debt issuance costs		$ 33,000,000

[1] Interest rate of 4.77% and 4.53% as of December 31, 2018 and September 30, 2018, respectively.

XML

Financing Arrangements - 2025 Senior Notes - Additional Information (Detail) - Senior Notes, Matures November 2025 [Member] - USD ($)		3 Months Ended		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018	Oct. 25, 2017	Sep. 30, 2017
Debt Instrument [Line Items]
Debt instrument, aggregate principal amount					$ 1,300,000,000
Debt instrument interest rate		4.88%	4.88%			4.88%
Debt instrument, issue price percentage					100.00%
Debt instrument maturity date		Nov. 01, 2025	Nov. 01, 2025	Nov. 01, 2025
Senior Notes Payable	[1]	$ 1,280,795,000	$ 1,278,083,000	$ 1,280,092,000
Unamortized debt issuance costs		$ 19,200,000

[1] Interest rate of 4.88% as of December 31, 2018, September 30, 2017 and December 31, 2017.

XML

Financing Arrangements - Financing - RSG Acquisition - Additional Information (Detail) - USD ($)			3 Months Ended
	Jan. 02, 2018	Oct. 01, 2015	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,570,000,000	$ 1,450,000,000
Borrowings under senior notes			$ 0	$ 1,300,000,000
Payments of debt issuance costs	$ 65,300,000		0	$ 21,917,000
Roofing Supply Group [Member]
Debt Instrument [Line Items]
Payments of debt issuance costs			$ 31,300,000
Roofing Supply Group [Member] | Unsecured Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument maturity year			2020
2020 ABL [Member] | Revolving Lines of Credit [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		700,000,000
Proceeds from Lines of Credit		350,000,000
2022 Term Loan [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Long-term line of credit		450,000,000
Senior Notes, Matures October 2023 [Member]
Debt Instrument [Line Items]
Borrowings under senior notes		$ 300,000,000

XML

Financing Arrangements - 2020 ABL - Additional Information (Detail) - USD ($)	Oct. 01, 2015	Jan. 02, 2018
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,450,000,000	$ 3,570,000,000
Revolving Lines of Credit [Member] | 2020 ABL [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 700,000,000
Debt instrument maturity date	Oct. 01, 2020
Debt instrument paid off date	Jan. 02, 2018
U.S. [Member] | Revolving Lines of Credit [Member] | 2020 ABL [Member]
Debt Instrument [Line Items]
Long-term line of credit	$ 670,000,000
Canada [Member] | Revolving Lines of Credit [Member] | 2020 ABL [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 30,000,000

XML

Financing Arrangements - 2022 Term Loan - Additional Information (Detail) - Term Loan [Member] - 2022 Term Loan [Member] - USD ($) $ in Millions		3 Months Ended
	Oct. 01, 2015	Dec. 31, 2018
Debt Instrument [Line Items]
Long-term line of credit	$ 450.0
Debt instrument paid off date	Jan. 02, 2018
Write off of debt issuance costs	$ 0.7
Debt Instrument, Frequency of Periodic Payment		quarterly
Debt Instrument, Periodic Payment	$ 1.1
Debt instrument maturity date	Oct. 01, 2022

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Financing Arrangements - 2023 Senior Notes - Additional Information (Detail) - USD ($) $ in Thousands			3 Months Ended		12 Months Ended
		Oct. 01, 2015	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Debt Instrument [Line Items]
Borrowings under senior notes			$ 0	$ 1,300,000
Senior Notes, Matures October 2023 [Member]
Debt Instrument [Line Items]
Borrowings under senior notes		$ 300,000
Debt instrument maturity date		Oct. 01, 2023	Oct. 01, 2023	Oct. 01, 2023	Oct. 01, 2023
Debt instrument, coupon rate		6.38%
Unamortized debt issuance costs			$ 6,100
Senior Notes Payable	[1]		$ 293,926	$ 292,648	$ 293,607

[1] Interest rate of 6.38% as of December 31, 2018, September 30, 2017 and December 31, 2017.

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Financing Arrangements - Equipment Financing Facilities and Other - Additional Information (Detail) - USD ($)		3 Months Ended		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Debt Instrument [Line Items]
Equipment financing facilities, various maturities through September 2021	[1]	$ 10,148,000	$ 11,657,000	$ 11,222,000
Capital lease obligations, various maturities through November 2021	[2]	$ 11,156,000	$ 19,033,000	$ 12,378,000
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Debt instrument maturity date		Nov. 30, 2021	Nov. 30, 2021	Nov. 30, 2021
Capital lease obligations, various maturities through November 2021		$ 11,200,000
Equipment Financing Facilities and Other [Member]
Debt Instrument [Line Items]
Equipment financing facilities, various maturities through September 2021		$ 10,100,000
Debt instrument maturity date		Sep. 30, 2021
Minimum [Member] | Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Capital Leases of Lessor, Contingent Rentals, Basis Spread on Variable Rate		2.72%
Minimum [Member] | Equipment Financing Facilities and Other [Member]
Debt Instrument [Line Items]
Percentage of Fixed Interest Rate of Equipment Financing Facilities		2.33%
Maximum [Member] | Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Capital Leases of Lessor, Contingent Rentals, Basis Spread on Variable Rate		10.39%
Maximum [Member] | Equipment Financing Facilities and Other [Member]
Debt Instrument [Line Items]
Percentage of Fixed Interest Rate of Equipment Financing Facilities		3.25%

[1] Fixed interest rates ranging from 2.33% to 3.25% as of December 31, 2018, September 30, 2017, and December 31, 2017.

[2] Fixed interest rates ranging from 2.72% to 10.39% as of December 31, 2018 , September 30, 2017, and December 31, 2017.

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Commitments and Contingencies - Schedule of Minimum Rental Commitments under Non-cancelable Operating Leases (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2019 (Jan - Sept)	$ 110,514
2020	101,743
2021	90,734
2022	71,869
2023	55,048
Thereafter	146,410
Total minimum lease payments	$ 576,318

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Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Commitments And Contingencies Disclosure [Abstract]
Operating Leases, Rent Expense, Net, Total	$ 27.5	$ 15.2

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Geographic Data - Schedule Of Geographic Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Long-lived assets	$ 1,364,177	$ 1,422,966	$ 501,362
U.S. [Member]
Segment Reporting Information [Line Items]
Long-lived assets	1,352,081	1,409,742	488,137
Canada [Member]
Segment Reporting Information [Line Items]
Long-lived assets	$ 12,096	$ 13,224	$ 13,225

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Accumulated Other Comprehensive Income (Loss) - (Additional Information) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income Loss [Line Items]
Change in accumulated other comprehensive income (loss)	$ (3,910)	$ 57
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Change in accumulated other comprehensive income (loss)	(3,900)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Reclassifications out of other comprehensive income (loss)	$ 0

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Fair Value Measurement - Additional Information (Detail) - Fair Value, Inputs, Level 2 [Member] $ in Millions	3 Months Ended
	Dec. 31, 2018 USD ($)
Senior Notes Due in 2023 [Member]
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Debt instrument maturity year	2023
Senior Notes Due in 2025 [Member]
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Debt instrument maturity year	2025
Carrying Value [Member] | Senior Notes Due in 2023 [Member]
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Senior notes	$ 300.0
Carrying Value [Member] | Senior Notes Due in 2025 [Member]
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Senior notes	1,300.0
Fair Value [Member] | Senior Notes Due in 2023 [Member]
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Senior notes	299.3
Fair Value [Member] | Senior Notes Due in 2025 [Member]
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Senior notes	$ 1,150.0

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Supplemental Guarantor Information - Condensed Consolidating Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Current assets:
Cash and cash equivalents	$ 18,423	$ 129,927	$ 63,827
Restricted cash			1,300,000
Accounts receivable, net	881,749	1,090,533	552,703
Inventories, net	1,025,310	936,047	603,793
Prepaid expenses and other current assets	375,598	244,360	218,718
Total current assets	2,301,080	2,400,867	2,739,041
Intercompany receivable, net	0	0	0
Investments in consolidated subsidiaries	0	0	0
Deferred income taxes, net	0	0	0
Property and equipment, net	273,742	280,407	154,687
Goodwill	2,489,730	2,491,779	1,251,825	$ 1,251,986
Intangibles, net	1,282,242	1,334,366	410,857
Other assets, net	1,243	1,243	8,868
Total assets	6,348,037	6,508,662	4,565,278
Current liabilities:
Accounts payable	551,940	880,872	315,442
Accrued expenses	375,672	611,539	266,049
Current portions of long-term debt/obligations	20,315	19,661	14,239
Total current liabilities	947,927	1,512,072	595,730
Intercompany payable, net	0	0	0
Borrowings under revolving lines of credit, net	503,216	92,442
Long-term debt, net	2,497,123	2,494,725	2,000,059
Deferred income taxes, net	110,179	106,994	93,451
Long-term obligations under equipment financing and other, net	10,689	13,639	20,951
Other long-term liabilities	5,532	5,290	2,743
Total liabilities	4,074,666	4,225,162	2,712,934
Convertible preferred stock	399,195	399,195
Total stockholders' equity	1,874,176	1,884,305	1,852,344	$ 1,781,806
Total liabilities and stockholders' equity	6,348,037	6,508,662	4,565,278
Reportable Legal Entities [Member] | Parent Company [Member]
Current assets:
Cash and cash equivalents	0	0	0
Restricted cash			0
Accounts receivable, net	0	0	0
Inventories, net	0	0	0
Prepaid expenses and other current assets	6,065	23,711	17,713
Total current assets	6,065	23,711	17,713
Intercompany receivable, net	0	0	0
Investments in consolidated subsidiaries	6,289,626	6,109,325	3,239,031
Deferred income taxes, net	20,767	22,475	18,286
Property and equipment, net	19,775	18,929	8,271
Goodwill	0	0	0
Intangibles, net	0	0	0
Other assets, net	1,243	1,243	3,341
Total assets	6,337,476	6,175,683	3,286,642
Current liabilities:
Accounts payable	28,808	24,154	21,511
Accrued expenses	40,834	41,448	27,467
Current portions of long-term debt/obligations	9,700	9,700	4,500
Total current liabilities	79,342	75,302	53,478
Intercompany payable, net	1,487,640	1,322,156	680,761
Borrowings under revolving lines of credit, net	0	0
Long-term debt, net	2,497,123	2,494,725	700,059
Deferred income taxes, net	0	0	0
Long-term obligations under equipment financing and other, net	0	0	0
Other long-term liabilities	0	0	0
Total liabilities	4,064,105	3,892,183	1,434,298
Convertible preferred stock	399,195	399,195
Total stockholders' equity	1,874,176	1,884,305	1,852,344
Total liabilities and stockholders' equity	6,337,476	6,175,683	3,286,642
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	30,877	136,499	70,698
Restricted cash			0
Accounts receivable, net	856,373	1,051,410	526,068
Inventories, net	998,450	907,605	581,288
Prepaid expenses and other current assets	361,431	214,011	194,007
Total current assets	2,247,131	2,309,525	1,372,061
Intercompany receivable, net	1,526,435	1,361,615	730,364
Investments in consolidated subsidiaries	0	0	0
Deferred income taxes, net	0	0	0
Property and equipment, net	243,911	250,517	135,925
Goodwill	2,461,212	2,461,725	1,220,813
Intangibles, net	1,280,202	1,332,104	408,123
Other assets, net	0	0	5,527
Total assets	7,758,891	7,715,486	3,872,813
Current liabilities:
Accounts payable	532,526	843,907	296,547
Accrued expenses	327,027	564,331	232,131
Current portions of long-term debt/obligations	10,615	9,961	9,739
Total current liabilities	870,168	1,418,199	538,417
Intercompany payable, net	0	0	0
Borrowings under revolving lines of credit, net	496,619	89,352
Long-term debt, net	0	0	0
Deferred income taxes, net	130,847	128,846	111,066
Long-term obligations under equipment financing and other, net	10,689	13,639	20,881
Other long-term liabilities	5,453	5,207	2,743
Total liabilities	1,513,776	1,655,243	673,107
Convertible preferred stock	0	0
Total stockholders' equity	6,245,115	6,060,243	3,199,706
Total liabilities and stockholders' equity	7,758,891	7,715,486	3,872,813
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	2,775	1,959	2,122
Restricted cash			1,300,000
Accounts receivable, net	26,516	40,262	27,775
Inventories, net	26,860	28,442	22,505
Prepaid expenses and other current assets	8,102	6,638	6,998
Total current assets	64,253	77,301	1,359,400
Intercompany receivable, net	0	0	0
Investments in consolidated subsidiaries	0	0	0
Deferred income taxes, net	0	0	0
Property and equipment, net	10,056	10,961	10,491
Goodwill	28,518	30,054	31,012
Intangibles, net	2,040	2,262	2,734
Other assets, net	0	0	0
Total assets	104,867	120,578	1,403,637
Current liabilities:
Accounts payable	6,975	22,482	7,517
Accrued expenses	7,811	5,760	6,451
Current portions of long-term debt/obligations	0	0	0
Total current liabilities	14,786	28,242	13,968
Intercompany payable, net	38,795	39,459	49,603
Borrowings under revolving lines of credit, net	6,597	3,090
Long-term debt, net	0	0	1,300,000
Deferred income taxes, net	99	622	671
Long-term obligations under equipment financing and other, net	0	0	70
Other long-term liabilities	79	83	0
Total liabilities	60,356	71,496	1,364,312
Convertible preferred stock	0	0
Total stockholders' equity	44,511	49,082	39,325
Total liabilities and stockholders' equity	104,867	120,578	1,403,637
Eliminations and Other [Member]
Current assets:
Cash and cash equivalents	(15,229)	(8,531)	(8,993)
Restricted cash			0
Accounts receivable, net	(1,140)	(1,139)	(1,140)
Inventories, net	0	0	0
Prepaid expenses and other current assets	0	0	0
Total current assets	(16,369)	(9,670)	(10,133)
Intercompany receivable, net	(1,526,435)	(1,361,615)	(730,364)
Investments in consolidated subsidiaries	(6,289,626)	(6,109,325)	(3,239,031)
Deferred income taxes, net	(20,767)	(22,475)	(18,286)
Property and equipment, net	0	0	0
Goodwill	0	0	0
Intangibles, net	0	0	0
Other assets, net	0	0	0
Total assets	(7,853,197)	(7,503,085)	(3,997,814)
Current liabilities:
Accounts payable	(16,369)	(9,671)	(10,133)
Accrued expenses	0	0	0
Current portions of long-term debt/obligations	0	0	0
Total current liabilities	(16,369)	(9,671)	(10,133)
Intercompany payable, net	(1,526,435)	(1,361,615)	(730,364)
Borrowings under revolving lines of credit, net	0	0
Long-term debt, net	0	0	0
Deferred income taxes, net	(20,767)	(22,474)	(18,286)
Long-term obligations under equipment financing and other, net	0	0	0
Other long-term liabilities	0	0	0
Total liabilities	(1,563,571)	(1,393,760)	(758,783)
Convertible preferred stock	0	0
Total stockholders' equity	(6,289,626)	(6,109,325)	(3,239,031)
Total liabilities and stockholders' equity	$ (7,853,197)	$ (7,503,085)	$ (3,997,814)

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Supplemental Guarantor Information - Condensed Consolidating Statements of Operations (Detail) - USD ($) $ in Thousands		3 Months Ended
		Dec. 31, 2018	Dec. 31, 2017
Net sales		$ 1,721,676	$ 1,121,979
Cost of products sold		1,286,107	852,226
Gross profit		435,569	269,753
Operating expense:
Selling, general and administrative		327,693	193,753
Depreciation		17,601	8,709
Amortization		52,021	18,195
Total operating expense		397,315	220,657
Intercompany charges (income)		0	0
Income (loss) from operations		38,254	49,096
Interest expense, financing costs, and other		38,361	22,568
Intercompany interest expense (income)		0	0
Income (loss) before provision for income taxes		(107)	26,528
Provision for (benefit from) income taxes	[1]	786	(41,068)
Income (loss) before equity in net income of subsidiaries		(893)	67,596
Equity in net income of subsidiaries		0	0
Net income (loss)		(893)	67,596
Reportable Legal Entities [Member] | Parent Company [Member]
Net sales		0	0
Cost of products sold		0	0
Gross profit		0	0
Operating expense:
Selling, general and administrative		9,775	(133)
Depreciation		764	456
Amortization		0	0
Total operating expense		10,539	323
Intercompany charges (income)		(6,687)	893
Income (loss) from operations		(3,852)	(1,216)
Interest expense, financing costs, and other		34,313	10,076
Intercompany interest expense (income)		(9,680)	(5,708)
Income (loss) before provision for income taxes		(28,485)	(5,584)
Provision for (benefit from) income taxes		(7,354)	5,521
Income (loss) before equity in net income of subsidiaries		(21,131)	(11,105)
Equity in net income of subsidiaries		20,238	78,701
Net income (loss)		(893)	67,596
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Net sales		1,678,895	1,076,262
Cost of products sold		1,252,295	816,436
Gross profit		426,600	259,826
Operating expense:
Selling, general and administrative		309,548	184,881
Depreciation		16,372	7,810
Amortization		51,911	18,064
Total operating expense		377,831	210,755
Intercompany charges (income)		6,687	(893)
Income (loss) from operations		42,082	49,964
Interest expense, financing costs, and other		3,485	825
Intercompany interest expense (income)		9,298	5,321
Income (loss) before provision for income taxes		29,299	43,818
Provision for (benefit from) income taxes		8,400	(46,672)
Income (loss) before equity in net income of subsidiaries		20,899	90,490
Equity in net income of subsidiaries		0	0
Net income (loss)		20,899	90,490
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Net sales		42,781	45,717
Cost of products sold		33,812	35,790
Gross profit		8,969	9,927
Operating expense:
Selling, general and administrative		8,370	9,005
Depreciation		465	443
Amortization		110	131
Total operating expense		8,945	9,579
Intercompany charges (income)		0	0
Income (loss) from operations		24	348
Interest expense, financing costs, and other		563	11,667
Intercompany interest expense (income)		382	387
Income (loss) before provision for income taxes		(921)	(11,706)
Provision for (benefit from) income taxes		(260)	83
Income (loss) before equity in net income of subsidiaries		(661)	(11,789)
Equity in net income of subsidiaries		0	0
Net income (loss)		(661)	(11,789)
Eliminations and Other [Member]
Net sales		0	0
Cost of products sold		0	0
Gross profit		0	0
Operating expense:
Selling, general and administrative		0	0
Depreciation		0	0
Amortization		0	0
Total operating expense		0	0
Intercompany charges (income)		0	0
Income (loss) from operations		0	0
Interest expense, financing costs, and other		0	0
Intercompany interest expense (income)		0	0
Income (loss) before provision for income taxes		0	0
Provision for (benefit from) income taxes		0	0
Income (loss) before equity in net income of subsidiaries		0	0
Equity in net income of subsidiaries		(20,238)	(78,701)
Net income (loss)		$ (20,238)	$ (78,701)

[1] Three months ended December 31, 2017 amount includes a $46.5 million non-recurring net tax benefit resulting from the enactment of the 2017 Tax Cuts and Jobs Act (“TCJA”). As of December 31, 2018, the Company had completed its analysis of the impact of the TCJA in accordance with SEC Staff Accounting Bulletin No. 118. There were no adjustments to the provisional amounts during the three months ended December 31, 2018.

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Supplemental Guarantor Information - Condensed Consolidating Statements of Comprehensive Income (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Net income (loss)	$ (893)	$ 67,596
Other comprehensive income (loss):
Foreign currency translation adjustment	(3,910)	57
Total other comprehensive income (loss)	(3,910)	57
Comprehensive income (loss)	(4,803)	67,653
Reportable Legal Entities [Member] | Parent Company [Member]
Net income (loss)	(893)	67,596
Other comprehensive income (loss):
Foreign currency translation adjustment	(3,910)	57
Total other comprehensive income (loss)	(3,910)	57
Comprehensive income (loss)	(4,803)	67,653
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Net income (loss)	20,899	90,490
Other comprehensive income (loss):
Foreign currency translation adjustment	0	0
Total other comprehensive income (loss)	0	0
Comprehensive income (loss)	20,899	90,490
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Net income (loss)	(661)	(11,789)
Other comprehensive income (loss):
Foreign currency translation adjustment	(3,910)	57
Total other comprehensive income (loss)	(3,910)	57
Comprehensive income (loss)	(4,571)	(11,732)
Eliminations and Other [Member]
Net income (loss)	(20,238)	(78,701)
Other comprehensive income (loss):
Foreign currency translation adjustment	3,910	(57)
Total other comprehensive income (loss)	3,910	(57)
Comprehensive income (loss)	$ (16,328)	$ (78,758)

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Supplemental Guarantor Information - Condensed Consolidating Statements of Cash Flows (Detail) - USD ($) $ in Thousands		3 Months Ended
	Jan. 02, 2018	Dec. 31, 2018	Dec. 31, 2017
Net cash provided by (used in) operating activities		$ (336,883)	$ (40,456)
Investing Activities
Purchases of property and equipment		(11,688)	(7,416)
Acquisition of businesses, net		(163,973)	0
Proceeds from the sale of assets		401	413
Intercompany activity		0	0
Net cash provided by (used in) investing activities		(175,260)	(7,003)
Financing Activities
Borrowings under revolving lines of credit		1,298,654	17,402
Repayments under revolving lines of credit		(888,225)	(20,548)
Repayments under term loan			0
Borrowings under senior notes		0	1,300,000
Payment of debt issuance costs	$ (65,300)	0	(21,917)
Repayments under equipment financing facilities and other		(1,465)	(1,968)
Payment of dividends on preferred stock		(6,000)	0
Payment of issuance costs from secondary offering of common stock			(429)
Proceeds from issuance of common stock related to equity awards		834	3,781
Taxes paid related to net share settlement of equity awards		(3,617)	(3,925)
Intercompany activity		0	0
Net cash provided by (used in) financing activities		400,181	1,272,396
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		458	640
Net increase (decrease) in cash, cash equivalents, and restricted cash		(111,504)	1,225,577
Cash, cash equivalents, and restricted cash, beginning of period		129,927	138,250
Cash, cash equivalents, and restricted cash, end of period		18,423	1,363,827
Reportable Legal Entities [Member] | Parent Company [Member]
Net cash provided by (used in) operating activities		12,792	(37,331)
Investing Activities
Purchases of property and equipment		(1,610)	(2,117)
Acquisition of businesses, net		0	0
Proceeds from the sale of assets		0	0
Intercompany activity		(2,399)	61,938
Net cash provided by (used in) investing activities		(4,009)	59,821
Financing Activities
Repayments under term loan			0
Borrowings under senior notes			0
Payment of debt issuance costs		0	(21,917)
Repayments under equipment financing facilities and other		0	0
Payment of dividends on preferred stock		(6,000)
Payment of issuance costs from secondary offering of common stock			(429)
Proceeds from issuance of common stock related to equity awards		834	3,781
Taxes paid related to net share settlement of equity awards		(3,617)	(3,925)
Intercompany activity		0	0
Net cash provided by (used in) financing activities		(8,783)	(22,490)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		0	0
Net increase (decrease) in cash, cash equivalents, and restricted cash		0	0
Cash, cash equivalents, and restricted cash, beginning of period		0	0
Cash, cash equivalents, and restricted cash, end of period		0	0
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Net cash provided by (used in) operating activities		(336,407)	2,338
Investing Activities
Purchases of property and equipment		(9,971)	(4,874)
Acquisition of businesses, net		(163,973)	0
Proceeds from the sale of assets		400	398
Intercompany activity		0	0
Net cash provided by (used in) investing activities		(173,544)	(4,476)
Financing Activities
Repayments under term loan			0
Borrowings under senior notes			0
Payment of debt issuance costs		0	0
Repayments under equipment financing facilities and other		(1,465)	(1,973)
Payment of dividends on preferred stock		0
Payment of issuance costs from secondary offering of common stock			0
Proceeds from issuance of common stock related to equity awards		0	0
Taxes paid related to net share settlement of equity awards		0	0
Intercompany activity		(847)	(74,991)
Net cash provided by (used in) financing activities		404,329	(76,963)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		0	0
Net increase (decrease) in cash, cash equivalents, and restricted cash		(105,622)	(79,101)
Cash, cash equivalents, and restricted cash, beginning of period		136,499	149,799
Cash, cash equivalents, and restricted cash, end of period		30,877	70,698
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Net cash provided by (used in) operating activities		(2,659)	(9,658)
Investing Activities
Purchases of property and equipment		(107)	(425)
Acquisition of businesses, net		0	0
Proceeds from the sale of assets		1	15
Intercompany activity		0	0
Net cash provided by (used in) investing activities		(106)	(410)
Financing Activities
Repayments under term loan			0
Borrowings under senior notes			1,300,000
Payment of debt issuance costs		0	0
Repayments under equipment financing facilities and other		0	5
Payment of dividends on preferred stock		0
Payment of issuance costs from secondary offering of common stock			0
Proceeds from issuance of common stock related to equity awards		0	0
Taxes paid related to net share settlement of equity awards		0	0
Intercompany activity		(561)	13,110
Net cash provided by (used in) financing activities		3,227	1,309,968
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		354	640
Net increase (decrease) in cash, cash equivalents, and restricted cash		816	1,300,540
Cash, cash equivalents, and restricted cash, beginning of period		1,959	1,582
Cash, cash equivalents, and restricted cash, end of period		2,775	1,302,122
Eliminations and Other [Member]
Net cash provided by (used in) operating activities		(10,609)	4,195
Investing Activities
Purchases of property and equipment		0	0
Acquisition of businesses, net		0	0
Proceeds from the sale of assets		0	0
Intercompany activity		2,399	(61,938)
Net cash provided by (used in) investing activities		2,399	(61,938)
Financing Activities
Repayments under term loan			0
Borrowings under senior notes			0
Payment of debt issuance costs		0	0
Repayments under equipment financing facilities and other		0	0
Payment of dividends on preferred stock		0
Payment of issuance costs from secondary offering of common stock			0
Proceeds from issuance of common stock related to equity awards		0	0
Taxes paid related to net share settlement of equity awards		0	0
Intercompany activity		1,408	61,881
Net cash provided by (used in) financing activities		1,408	61,881
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		104	0
Net increase (decrease) in cash, cash equivalents, and restricted cash		(6,698)	4,138
Cash, cash equivalents, and restricted cash, beginning of period		(8,531)	(13,131)
Cash, cash equivalents, and restricted cash, end of period		(15,229)	(8,993)
Revolving Lines of Credit [Member]
Financing Activities
Borrowings under revolving lines of credit		1,298,654	17,402
Repayments under revolving lines of credit		(888,225)	(20,548)
Revolving Lines of Credit [Member] | Reportable Legal Entities [Member] | Parent Company [Member]
Financing Activities
Borrowings under revolving lines of credit		0	0
Repayments under revolving lines of credit		0	0
Revolving Lines of Credit [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Financing Activities
Borrowings under revolving lines of credit		1,285,017	878
Repayments under revolving lines of credit		(878,376)	(877)
Revolving Lines of Credit [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Financing Activities
Borrowings under revolving lines of credit		13,637	16,524
Repayments under revolving lines of credit		(9,849)	(19,671)
Revolving Lines of Credit [Member] | Eliminations and Other [Member]
Financing Activities
Borrowings under revolving lines of credit		0	0
Repayments under revolving lines of credit		$ 0	$ 0