Beacon Roofing Supply Reports Second Quarter 2013 Results

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Beacon Roofing Supply Reports Second Quarter 2013 Results

  • Record second quarter net sales up 5% to $416 million vs. $395 million.
  • Second quarter breakeven EPS ($0.02 adjusted loss) vs. $0.07 income.
  • Record first half net sales up 5% to $930 million vs. $885 million.
  • First half EPS of $0.37 ($0.35 adjusted) vs. $0.47 ($0.45 adjusted).
  • Nineteen branches acquired in the first half.

PEABODY, Mass.--(BUSINESS WIRE)-- Beacon Roofing Supply, Inc. (the "Company") (NAS: BECN) announced results today for its second quarter and first half ended March 31, 2013 of the fiscal year ending September 30, 2013 ("fiscal 2013").

Paul Isabella, the Company's President & Chief Executive Officer, stated: "The second quarter of fiscal 2013 was challenging for us as we experienced harsh weather conditions in many of our markets and we were up against a very strong second quarter last year when our existing market sales were up 28%. Our total sales benefited from the positive impact of several acquisitions made since the start of last year and our gross margin continued to improve over the prior year. In addition, the trend of our residential roofing sales was more favorable in the second quarter compared to the first quarter. During the first half, we took advantage of our financial capacity and flexibility to purchase key products ahead of announced industry-wide price increases. We believe we are well positioned for a successful back half of fiscal 2013 and expect to experience a business rebound following the tough Winter and early Spring conditions."


Second Quarter

Total sales increased 5.3% to $416.3 million in 2013 from $395.2 million in 2012. Existing market (organic) sales, which exclude branches acquired after the beginning of last year's second quarter, declined 5.1%. There was one less business day in this year's second quarter. In existing markets, residential and non-residential roofing product sales decreased 1.4% and 11.2%, respectively, while complementary product sales decreased 3.2%. The 2013 sales performance was unfavorably affected by adverse weather conditions this year, especially compared to last year's mild weather that boosted sales during the normal slow Winter period.

The net loss for the second quarter was $0.2 million compared to net income of $3.1 million in 2012. The second quarter loss per share was $0.00 compared to diluted income per share of $0.07 in 2012. The decline in net income was due to higher operating expenses, including acquired branch expenses, partially offset by the impact from higher gross profit and lower interest expense. The second quarter adjusted loss per share was $0.02 after consideration of the $1.3 million credit to interest expense ($0.8 million net of taxes) resulting from adjustments in the fair values of certain interest rate derivatives.

Earnings before interest, taxes, depreciation and amortization, and stock-based compensation ("Adjusted EBITDA"), which is reconciled to the net income in this press release, was $11.6 million in 2013 compared to $17.8 million in 2012, a decrease of 34.6%.

First Half

Total sales increased 5.1% to $930.0 million in 2013 from $885.0 million in 2012. Existing market (organic) sales, which exclude branches acquired after the beginning of last year, declined 4.5%. There was one additional business day in this year's first half. In existing markets, residential and non-residential roofing product sales decreased 3.5% and 8.2%, respectively, while complementary product sales increased 2.0%. The comparison of the 2013 first half sales to 2012 was unfavorably affected by last year's very high level of re-roofing activities, including the beneficial impact from mild weather in 2012 and strong business in several markets in the first quarter of 2012 that experienced significant storms in 2011.

Net income for the first half was $18.0 million compared to $22.3 million in 2012, a decrease of 18.9%. First half diluted net income per share was $0.37 compared to $0.47 in 2012. The lower net income was due to the same factors mentioned above for the second quarter decline in net income. First half adjusted diluted net income per share was $0.35 compared to an adjusted $0.45 in 2012. The first half of this year included a $2.6 million credit to interest expense ($1.5 million net of taxes), $0.03 per share, resulting from adjustments in the fair values of certain interest rate derivatives, and a $0.9 million charge ($0.5 million net of taxes), $0.01 per share, for termination benefits. Last year's net income included a benefit of $1.0 million, $0.02 per share, from a reduction in a liability for contingent consideration related to the acquisition of Enercon Products.

Adjusted EBITDA for the first half was $53.4 million in 2013 compared to $58.9 million in 2012, a decrease of 9.3%.

Cash flow from operations was $20.6 million compared to $80.3 million in 2012. This comparison in operating cash flows was influenced mostly by less favorable changes in working capital, including additional inventory purchases made in 2013 ahead of announced price increases. Cash on hand decreased by $154.4 million to $16.7 million at March 31, 2013 compared to $171.1 million at March 31, 2012, due primarily to a significant paydown of debt (net of new borrowings) since last year's second quarter and the costs of the acquisitions made since that time.

The Company will host a webcast and conference call today at 10:00 a.m. ET to discuss these results. The live webcast of the call, along with a webcast replay after the call, can be accessed at http://ir.beaconroofingsupply.com/events.cfm (the "Events & Presentations" page of the "Investor Relations" section of the Company's web site). There will be a slide presentation of the results available on that page of the website as well. For those unable to connect to the Internet or who may wish to ask questions, the conference call dial-in number is 719-785-1765. To assure timely access, call participants should call in before 10:00 a.m.

Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products, operating 229 branches in 38 states in the United States and across Canada.

Forward-Looking Statements: This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's latest Form 10-K. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

 
 
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Operations
         
 
UnauditedThree Months EndedSix Months Ended
(Dollars in thousands, except per share data)March 31, 2013

% of Net
Sales

March 30, 2012

% of Net
Sales

March 31, 2013

% of Net
Sales

March 30, 2012

% of Net
Sales

 
Net sales$416,277100.0%$395,161100.0%$929,987100.0%$885,011100.0%
Cost of products sold 316,626 76.1% 301,44576.3% 703,58275.7% 673,97076.2%
Gross profit99,65123.9%93,71623.7%226,40524.3%211,04123.8%
 
Operating expenses 97,705 23.5% 83,96321.2% 192,20820.7% 166,94818.9%
 
Income from operations1,9460.5%9,7532.5%34,1973.7%44,0935.0%
 
Interest expense 1,986 0.5% 3,2790.8% 3,8960.4% 6,5590.7%
 
Income (loss) before income taxes(40)0.0%6,4741.6%30,3013.3%37,5344.2%
Income tax expense 121 0.0% 3,3300.8% 12,2561.3% 15,2751.7%
 
Net income (loss)$(161)0.0% 3,1440.8%$18,0451.9%$22,2592.5%
 
Net income (loss) per share:
Basic$(0.00)$0.07$0.37$0.48
Diluted$(0.00)$0.07$0.37$0.47
 
Weighted average shares used in computing
 
Basic 48,496,554  46,529,109 48,174,085 46,359,075
Diluted 48,496,554  47,600,215 49,148,923 47,252,547
 
 
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Balance Sheets
    
 

Unaudited

(Dollars in thousands)

March 31, 2013March 30, 2012September 30, 2012
 
Assets
Current assets:
Cash and cash equivalents$16,728$171,129$40,205
Accounts receivable, net227,810210,594291,456
Inventories322,939262,767222,740
Prepaid expenses and other assets72,79981,99360,287
Deferred income taxes 15,576 14,586 16,087
Total current assets655,852741,069630,775
 
Property and equipment, net61,57651,20757,376
Goodwill469,587401,079443,161
Income (loss) before income taxes 105,026 58,835 85,670
 
Total assets$1,292,041$1,252,190$1,216,982
Net income (loss)
 

Liabilities & Stockholders' Equity

Current liabilities:
Accounts payable$185,134$239,080$167,390
Accrued expenses68,62475,81371,627
Borrowings under revolving lines of credit61,000-41,300
Current portion of long-term obligations 15,171 86,714 15,632
Total current liabilities329,929401,607295,949
 
Senior notes payable and other obligations, net of current portion213,994229,830220,875
Deferred income taxes58,00540,29448,196
 
Stockholders' equity:
Common stock487468477
Additional paid-in capital302,496261,857280,184
Retained earnings386,720315,369368,675
Accumulated other comprehensive income 410 2,765 2,626
Total stockholders' equity 690,113 580,459 651,962
 
Total liabilities and stockholders' equity$1,292,041$1,252,190$1,216,982
 
 
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Cash Flows
  
 
Six Months Ended

Unaudited

(In thousands)

March 31, 2013March 30, 2012
 
Operating activities:
Net income$18,045$22,259

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization14,59512,034
Stock-based compensation4,6563,777
Adjustment of liability for contingent consideration-(1,000)
Certain interest expense and other financing costs(2,169)-
Gain on sale of assets(576)(702)
Deferred income taxes527(921)

Changes in assets and liabilities, net of the effects of businesses acquired:

Accounts receivable78,95182,802
Inventories(87,308)(48,675)
Prepaid expenses and other assets

(2,095

)(43,976)
Accounts payable and accrued expenses 

(4,035

) 54,683 
Net cash provided by operating activities 

20,591

  80,281 
 
Investing activities:
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