Beacon Roofing Supply Notes Rating Impact

Respiratory System Case Study
Trudy, a home health respiratory therapist, especially enjoys her
older patients, and her Tuesday morning patient is one of her
favorites. Jonas Hershel, a 79-year-old former respiratory
therapist himself, has been hospitalized over the weekend for
extreme difficulty with breathing from emphysema. Jonas'
physical examination has noted crackles, clubbing, and DOE.
Blood gases reveal hypoxemia and hypercapnia. Jonas'
emphysema has now progressed to COPD.
After being stabilized, Jonas has been released to his home with
home health care visits. Trudy has treated Jonas in the hospital
and is now his home health care professional. Tracking Jonas'
breathing capacity using spirometry is part of her duties.
However, today Jonas is too tired to sit up; therefore Trudy
performs the spirometry while Jonas is reclining.
1. Give another name for crackles and define it.
2. What does spirometry measure?
3. Define emphysema. What is destroyed in emphysema?
4. What do the terms hypoxemia and hypercapnia stand for?
5. What do the abbreviations DOE and COPD stand for? Define
and explain.
Beacon Roofing Supply Inc.'s Proposed $300 Million
Senior Secured Notes Rated 'BB', Unsecured Notes
Lowered to 'B-'
September 25, 2019

FARMERS BRANCH (S&P Global Ratings) Sept. 25, 2019--
S&P Global Ratings assigned its 'BB'
issue-level rating and '1' recovery rating to Beacon Roofing
Supply Inc.'s proposed $300 million
senior secured notes issuance. The proposed senior secured
notes will rank equally with the
company's $970 million term loan, which is unchanged and
carries a 'BB' issue-level rating, with a
'1' recovery rating. Beacon plans to use the proceeds from the
notes offering to pre-fund the
company's redemption of its $300 million senior unsecured
notes due 2023 on Oct. 1, 2019.
However, the increased amount of senior secured debt will
result in diminished recovery available
to unsecured lenders. As a result, we have lowered the issue-
level rating on Beacon's $1.3 billion
senior unsecured notes due 2025 to 'B-' from 'B' and revised the
recovery rating to '6' from '5'.
The '1' recovery rating on the Beacon's secured debt indicates
our expectation for very high
(90%-100%; rounded estimate: 90%) recovery in a default
scenario. Our '6' recovery rating on the
unsecured notes reflects our expectation of negligible recovery
(0%-10%; rounded estimate: 0%)
in the event of a default.
For more information on Beacon Roofing Supply Inc., see our
research update published on Aug.
30, 2019.
Key analytical factors
- Our assessment of recovery prospects contemplates a
reorganization value for the company of

about $2.07 billion, reflecting emergence EBITDA of about
$345 million and a 6x multiple. Our
emergence EBITDA assumption contemplates a rebound in
profitability following the sharp
cyclical downturn that we believe is required for the company
to default with the present
capital structure. As a result, our EBITDA assumption does not
purport to represent a
default-level EBITDA, which we think could be substantially
lower. The 6x multiple is within the
5x-6x range that we generally use for building products
companies.
- Our simulated default scenario contemplates a default in 2023,
stemming from a downturn in
the company's end markets (U.S. residential and nonresidential
roofing and reroofing),
heightened competition, and significant price increases imposed
by suppliers that cannot be
passed on to customers. These adverse developments hamper
margins and cash flow,
pressuring Beacon's ability to meet its financial obligations and
prompting the need for a
bankruptcy filing or restructuring.
Beacon Roofing Supply Inc.'s Proposed $300 Million
Senior Secured Notes Rated 'BB', Unsecured Notes
Lowered to 'B-'
September 25, 2019
PRIMARY CREDIT ANALYST
Pablo A Garces
Farmers Branch

+ 1 (214) 765 5884
pablo.garces
@spglobal.com
SECONDARY CONTACT
Thomas J Nadramia
New York
+ 1 (212) 438 3944
thomas.nadramia
@spglobal.com
www.spglobal.com/ratingsdirect September 25, 2019 1
THIS WAS PREPARED EXCLUSIVELY FOR USER RONALD
SALINAS.
NOT FOR REDISTRIBUTION UNLESS OTHERWISE
PERMITTED.
mailto: [email protected]
- For purposes of our default scenario, we assumed aggregate
borrowings of about $725 million
under the asset-based loan (ABL) facility, representing usage of
about 60% of the $1.2 billion
U.S. commitment amount.
- We assume the collateral package for Beacon's secured debt
will encompass all of the

available reorganization value. Only a small portion of the
reorganization value is
unencumbered under our analysis, representing the equity value
of foreign subsidiaries not
pledged to secure the term loan.
Simulated default assumptions
- Year of default: 2023
- EBITDA at emergence: $345 million
- Implied enterprise value (EV) multiple: 6x
- Gross EV: $2.07 billion
Simplified waterfall
- Obligor (U.S. operations)/nonobligor (Canadian operations)
valuation split: roughly 95%/5%
($1.97 billion/$105 million)
- Valuation split (net 5% administrative costs): $1.87
billion/$100 million
- Priority claims and adjustments (60% usage of the $1.2 billion
U.S. ABL facility): $725 million
- Priority nonobligors claims: $60 million
- Collateral from nonobligor (65% stock pledge of remaining
$35 million net EV at nonobligors
after subtracting secured nonobligors claims): $25 million
- Total collateral value for secured claims ($1.14 billion U.S.
value remaining after coverage of

ABL facility plus $25 million remaining collateral from
nonobligor): $1.17 billion
- Secured claims (Total term loan claim*: $950 million,
proposed senior secured notes: $305
million): $1.25 billion
- --Recovery expectation for term loan: 90%-100% (rounded
estimate: 90%)
- Unpledged value available to unsecured claims: $15 million
- Estimated unsecured claims: $1.31 billion
- --Recovery expectation for senior notes: 0%-10% (rounded
estimate: 0%)
*Senior secured claim amount reflects $925 million of term loan
principal, less payment of
scheduled amortization of 1% per year through 2022, plus an
assumption for accrued but unpaid
interest outstanding at default.
Related Criteria
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Corporates | General: Corporate Methodology:
Ratios And Adjustments, April 1, 2019
- Criteria | Corporates | General: Recovery Rating Criteria For
Speculative-Grade Corporate
Issuers, Dec. 7, 2016

SALINAS.
PERMITTED.
Beacon Roofing Supply Inc.'s Proposed $300 Million Senior
Secured Notes Rated 'BB', Unsecured Notes Lowered to 'B-'
- Criteria | Corporates | General: Methodology And
Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Dec. 16, 2014
- Criteria | Corporates | Industrials: Key Credit Factors For The
Building Materials Industry, Dec.
19, 2013
- General Criteria: Country Risk Assessment Methodology And
Assumptions, Nov. 19, 2013
- Criteria | Corporates | General: Corporate Methodology, Nov.
19, 2013
- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
- General Criteria: Methodology: Management And Governance
Credit Factors For Corporate
Entities, Nov. 13, 2012
- General Criteria: Use Of CreditWatch And Outlooks, Sept. 14,
2009
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used to express our view on rating relevant factors,
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should therefore be read in conjunction with such

criteria. Please see Ratings Criteria at
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www.capitaliq.com. All ratings affected by this rating
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Research:Key analytical factorsRelated Criteria

Chapter 12
The Respiratory System
Copyright © 2008, 2005 by Saunders, an imprint of Elsevier
Inc. All rights reserved.
*
Learning ObjectivesName the organs of the respiratory system
and describe their location and function.Identify various
pathological conditions that affect the system.Recognize
medical terms that pertain to respiration.
*
Learning Objectives (cont’d.)Describe important clinical
procedures related to the respiratory system and recognize
relevant abbreviations.Apply your new knowledge to

understanding medical terms in their proper contexts, such as
medical reports and records.
*
Chapter 12
Lesson 12.1
Copyright © 2005 by Elsevier Inc. All rights reserved.
*
Introduction
External respiration: exchange of air in lung capillariesoxygen
inhaled into the air sacs of the lungsimmediately passes into
capillariescarbon dioxide passes from capillaries into air sacs,
to be exhaled
*What percent of oxygen does inhaled air contain? (about 21
%)What percent of oxygen does exhaled air contain? (about 16

%)What is the medical term for air sacs?
Introduction (cont’d.)
Internal respiration: exchange of gases in the cells occurs
simultaneously between cells and capillariesoxygen passes out
of the bloodstream into the tissuescarbon dioxide passes out of
tissues back into the bloodstream to travel to the lungs
*
Respiratory AnatomyMediastinum: middle of chest where
trachea divides into two branchesBronchi: each leads to a
separate lungLungs: not mirror images, have lobesHilum: blood
vessels, nerves, lymphatic tissue, and bronchial tubes enter and
exit
*What is the singular form of bronchi? (bronchus)Which lung is
larger? (right)How many lobes does each lung have? (right:
three, left: two)

Anatomy of Respiration
*Engage the class to identify the organs of the respiratory
system. Trace the path of a breath of air.
Anatomy of Respiration
*Engage the class to identify the organs of the respiratory
system. Trace the path of a breath of air.
Respiratory Structures
Conduct airNoseNasal cavities and paranasal
sinusesPharynxLarynxTrachea
Exchange gasesBronchiolesAlveoliLung capillaries

*
Respiratory Flow Chart
*Trace the flow and then conduct the class activity in the lesson
plan by dividing the class into two groups and assigning each a
gas. (see LP 12.1)
Respiratory Flow Chart
*Trace the flow and then conduct the class activity in the lesson
plan by dividing the class into two groups and assigning each a
gas. (see LP 12.1)
VOCABULARYadenoidsalveolus (alveoli)apex of the
lungbase of the lungbrochiolesbronchus (bronchi)carbon dioxide

*
Reference pages 260-262 for definitions of vocabulary terms
VOCABULARYciliadiaphragmepiglottisexpirationglottishilumi
nspirationlarynx
*
VOCABULARYlobemediastinumnaresoxygenpalatine
tonsilparanasal sinusparietal pleura
*

VOCABULARYpharynxpleurapleural cavitypulmonary
parenchymarespirationtracheavisceral pleura
*
QUICK QUIZ:
1. What is the tip or uppermost portion of the lung?
base
lobe
apex
nares
*
CORRECT Answer is C, apex
COMBINING FORMS

AND TERMINOLOGY
adenoid/o adenoidsalveol/o alveolus, air sacbronch/o
bronchial tubebronchi/o bronchusbronchiol/o
bronchiole, small bronchuscapn/o carbon dioxide
Combining Form Meaning
*
COMBINING FORMS
AND TERMINOLOGY
coni/o dustcyan/o blueepiglott/o
epiglottislaryng/o larynx, voice boxlob/o
lobe of the lungmediastin/o mediastinum
*

COMBINING FORMS
AND TERMINOLOGY
nas/o noseorth/o straight, uprightox/o
oxygenpector/o chestpharyng/o pharynx, throatphon/o
voice
*
COMBINING FORMS
AND TERMINOLOGY
phren/o diaphragmpleur/o pleurapneum/o
air, lungpneumon/o lungpulmon/o lungrhin/o
nose
*

COMBINING FORMS
AND TERMINOLOGY
sinus/o sinus cavityspir/o breathingtel/o
completethorac/o chesttonsill/o
tonsilstrache/o trachea, windpipe
*
COMBINING FORMS, SUFFIXES, AND TERMINOLOGY
SUFFIXES
-ema condition
-osmia smell
-pnea breathing
-ptysis spitting
-sphyxia pulse
-thorax pleural cavity, chest
Suffix Meaning
*

Chapter 12
Lesson 12.2
*
Diagnostic Termsauscultationpercussionpleural rubrale
(crackle)rhonchussputumstridorwheeze
*Many of these terms are ways to help identify respiratory
abnormalities that can be heard.Discuss the fact that
auscultation, though not high tech, is still a very effective way
to uncover disease.
Pathologic Terms

Upper Respiratory
Disorderscroupdiphtheriaepistaxispertussis
*Distinguish between disorders arising from infectious agents,
trauma, neoplasms, or genetic disorders. Which are most often
caused by smoking?Epistaxis is also known as rhinorrhagia, but
epistaxis is the more commonly used term for nosebleed.
Pathologic Terms
Bronchial Tube
Disordersasthmabronchiectasischronic bronchitiscystic fibrosis
trauma, neoplasms, or genetic disorders. Which are most often
caused by smoking?Epistaxis is also known as rhinorrhagia, but
epistaxis is the more commonly used term for nosebleed.
Pathologic Terms (cont’d.)
Lung Disordersatelectasisemphysemalung
cancerpneumoconiosispneumoniapulmonary abscesspulmonary
edemapulmonary embolism (PE)pulmonary
fibrosissarcoidosistuberculosis (TB)

trauma, neoplasms, or genetic disorders.What are the types of
pneumoconiosis?
Pathologic Terms, Lung Disorders (cont’d.)
Atelectasis
Two forms
Proximal obstruction of distal airways
Accumulations of fluid, blood, or air in pleural cavity
*Distinguish between atelectasis and pneumothorax.
Pathologic Terms Pleural Disordersmesotheliomapleural
effusionpleurisy (pleuritis)pneumothorax
trauma, neoplasms, or genetic disorders.Use slides to discuss

definitions, context, spelling, and derivations.
Pathologic Terms,
Pleural Disorders
Pneumothorax: Air gathers in the pleural cavity
*Explain collapsed lung.What conditions may cause a lung to
collapse?What are some examples of trauma- and disease-
induced collapsed lung?
STUDY SECTIONanthracosisasbestosisbacillichronic
obstructive pulmonary disease (COPD)cor
pulmonaleexudatehydrothoraxpalliativeparoxysmalpulmonary
infarctionpurulentsilicosis
trauma, neoplasms or genetic disorders.

Chapter 12
Lesson 12.3
*
Clinical ProceduresX-rayschest x-ray (CXR)computed
tomography (CT) scan of the chestpulmonary angiography
*Briefly discuss the technology of each type of x-ray.For what
kinds of information (hard tissues, soft tissue, etc.) and which
conditions is each type best-suited?
Clinical Procedures (cont’d.)
X-rays: radiographic imaging

*Use this slide to discuss point of view, right and left, dorsal
and ventral, and landmarks.
Magnetic resonance imaging (MRI): Magnetic waves create
images
*
Clinical Procedures (cont’d.)Radioactive TestsPositron emission
tomography (PET) scan of the lung: Ventilation-perfusion
(V/Q) scan: inhalation of radioactive gas for imaging, followed
by injection of different radioactive material for imaging
*

Bronchioscopy: Fiberoptic or rigid endoscope inserted into the
bronchial tubes for diagnosis, biopsy, or collection of
specimens
*Why would a physician recommend this invasive diagnostic
procedure? What are the pros and cons? What can the physician
expect to learn?
Endotracheal intubation: placement of tube from mouth to
trachea to establish airway
*Watch an episode of ER and count how many times they do
this procedure in the ER. Why do many people coming into the
emergency room need this procedure?Why is this done for
surgical patients?
Clinical Procedures (cont’d.)laryngoscopylung
biopsymediastinoscopypulmonary function tests
(PFTs)thoracotomythorascopytracheostomytuberculin testtube
thoracostomy

*Why do many of these procedures start with “thor”?What is the
difference between laryngoscopy, mediastinoscopy, and
thorascopy?
Thoracentesis: surgical puncture to
remove fluid from pleural space
*
Tracheostomy: Surgical creation of opening into the trachea
through
the neck
*Under what conditions would a physician perform this invasive
procedure? Explain advantages and disadvantages.

REVIEW SHEET
COMBINING FORMS
adenoid/o ____________
alveol/o ____________
bronch/o ____________
bronchi/o ____________
bronchiol/o ____________
capn/o ____________
CF Meaning
*
REVIEW SHEET
COMBINING FORMS
adenoid/o adenoidsalveol/o alveolus; air sac; small
sacbronch/o bronchial tubebronchi/o bronchial
tubebronchiol/o bronchiolecapn/o carbon dioxide
Suffix Meaning

*
COMBINING FORMS
coni/o ___________
cyan/o ___________
epiglott/o ___________
laryng/o ___________
lob/o ___________
mediastin/o ___________
Suffix Meaning
REVIEW SHEET
*
COMBINING FORMS
coni/o dustcyan/o blueepiglott/o
epiglottislaryng/o larynx (voice box)lob/o
lobemediastin/o mediastinum

Suffix Meaning
REVIEW SHEET
*
COMBINING FORMS
nas/o __________
orth/o __________
ox/o __________
pector/o __________
pharyng/o __________
phon/o __________
Suffix Meaning
REVIEW SHEET
*
COMBINING FORMS

nas/o noseorth/o straightox/o
oxygenpector/o chestpharyng/o throat
(pharynx)phon/o voice; sound
Suffix Meaning
REVIEW SHEET
*
COMBINING FORMS
phren/o ___________
pleur/o ___________
pneum/o ___________
pneumon/o ___________
pulmon/o ___________
rhin/o ___________
Suffix Meaning
REVIEW SHEET
*

COMBINING FORMS
phren/o diaphragm; mindpleur/o pleurapneum/o
lung; air; gaspneumon/o lung; air; gaspulmon/o
lungrhin/o nose
Suffix Meaning
REVIEW SHEET
*
COMBINING FORMS
sinus/o ___________
spir/o ___________
tel/o ___________
thorac/o ___________
tonsill/o ___________
trache/o ___________
Suffix Meaning
REVIEW SHEET

*
COMBINING FORMS
sinus/o sinusspir/o to breathetel/o
completethorac/o chesttonsill/o tonsiltrache/o
trachea (windpipe)
Suffix Meaning
REVIEW SHEET
*
SUFFIXES
-ema ___________
-osmia ___________
-pnea ___________
-ptysis ___________
-sphyxia ___________
-thorax ___________
Suffix Meaning
REVIEW SHEET

*
SUFFIXES
-ema condition-osmia smell-pnea
breathing-ptysis spitting-sphyxia pulse-
thorax chest; pleural cavity
Suffix Meaning
REVIEW SHEET
*

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