Beacon Roofing Supply, Inc. (Nasdaq:BECN) reported mixed results for first-quarter 2023 with revenues surpassing Wall Street estimates but showing earnings declined year-over-year, leading to a large sell-off during after-hours trading.

Shares of the company plunged almost 4% in the after-hours trading session on May 4, post the earnings release. On Monday, May 8, shares closed up 2.29% in moderate trading and mostly recovered from the post-report fire sale last week. 

The distributor of building products reported adjusted earnings of 67 cents per share, which topped the consensus mark of 61 cents by 9.8%. However, adjusted earnings were down 24.7% from 89 cents per share reported in the prior-year quarter.

For the quarter, net sales of $1,732.3 million missed the consensus mark of $1,776.6 million by 2.5%, as outlined by Zach’s Equity Research, a Wall Street analytics firm. The top line grew 2.7% year-over-year, driven by solid execution on the company’s “Ambition 2025 growth program,” including acquisitions, the opening of new greenfield locations, and strong pricing.

During the quarter, the weighted-average selling price increased by approximately 10%, but volumes declined by nearly 12%.

Residential roofing product sales increased 0.4%, non-residential roofing product sales decreased 7.8% and complementary product sales increased 22.7% compared to the prior year. According to analysts, the increase in complementary product sales was largely due to the November 2022 acquisition of Coastal Construction Products. The three-month periods ending March 31, 2023 and 2022 had 64 and 63 business days, respectively.

Net income was $24.8 million, compared to $55.8 million in the prior year. Adjusted EBITDA was $113.0 million, compared to $139.5 million in the prior year. EPS was $0.25, compared to $0.61 in the prior year. First quarter results compared to the prior year period were impacted by higher operating expenses, according to Beacon.

In the second quarter of 2023, the company expects net sales to decrease approximately 2% on a year-over-year basis. The gross margin is expected to be in the mid-to-high 25%.

“Record first-quarter net sales demonstrated the strength of our business model and the multiple levers of growth we laid out at our Investor Day last year,” Julian Francis, Beacon's president & CEO, said on the May 4 earnings call. “Our growth and customer experience initiatives helped drive the 13th straight quarter of year-over-year sales improvement; we made strategic investments, both organic and inorganic, expanding our branch footprint and customer reach.

“More importantly, we remain focused on driving the initiatives that are within our control to deliver value for our shareholders and customers,” Francis added. “I am pleased with the team’s achievements in the first quarter of the year and look forward to helping our customers build more as we enter a key part of the construction season.”