Beacon Roofing Supply Reports First Quarter 2013 Results

Beacon Roofing Supply Reports First Quarter 2013 Results

  • Record first quarter net sales up 5% to $514 million vs. $490 million.

  • First quarter EPS of $0.37 vs. $0.41 ($0.39 adjusted).

  • Nineteen branches acquired in the first quarter.

PEABODY, Mass.--(BUSINESS WIRE)-- Beacon Roofing Supply, Inc. (the "Company") (NAS: BECN) announced results today for its first quarter ended December 31, 2012 ("2013") of the fiscal year ending September 30, 2013 ("fiscal 2013").

Paul Isabella, the Company's President & Chief Executive Officer, stated: "We began fiscal 2013 with a solid first quarter performance despite being up against a very strong quarter last year when our existing market sales were up 17%. 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. The trend of our complementary product sales has been encouraging, considering the more discretionary nature of those products. Towards the end of the first quarter, we took advantage of our financial capacity and flexibility to purchase key products ahead of announced industry-wide price increases scheduled mostly for February and April. We believe we are well positioned for a successful fiscal 2013 and expect to continue our steady growth. We continue aggressively to seek quality companies that fit our target acquisition profile, such as McClure-Johnston and Ford Wholesale, which we acquired in the first quarter."


Total sales increased 4.9% to $513.7 million in 2013 from $489.9 million in 2012. Existing market (organic) sales, which exclude branches acquired after the beginning of last year's first quarter, declined 4.6% (7.7% based on the same number of business days). In existing markets, residential and non-residential roofing product sales decreased 5.4% and 6.1%, respectively, while complementary product sales increased 2.9%. The 2013 sales performance was unfavorably affected by the comparison to last year's very high level of re-roofing activities, including the beneficial impact from mild weather in December 2011 and strong business in several markets that experienced significant storms in 2011, and lower average residential roofing selling prices this year.

Net income for the first quarter was $18.2 million compared to $19.1 million in 2012, a decrease of 4.8%. 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. First quarter diluted net income per share was $0.37 compared to an adjusted $0.39 in 2012. The lower net income was primarily due to higher operating expenses, including acquired branch expenses, mostly offset by the impact from higher gross profit and lower interest expense.

Earnings before interest, taxes, depreciation and amortization, and stock-based compensation ("Adjusted EBITDA"), which are reconciled to the net income in this press release, were $41.8 million in 2013 compared to $41.1 million in 2012, an increase of 1.7%.

Cash flow from operations was $47.3 million compared to $59.0 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 $121.2 million to $34.0 million at December 31, 2012 compared to $155.2 million at December 31, 2011, due primarily to a significant paydown of debt (net of new borrowings) since last year's first 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 719-325-2452. 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 228 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.

BECN-F

BEACON ROOFING SUPPLY, INC

Condensed Consolidated Statements of Operations

Unaudited

Three Months Ended

(Dollars in thousands, except per share data)

December 31, 2012

% of Net
Sales

December 31, 2011

% of Net
Sales

Net sales

$

513,710

100.0

%

$

489,850

100.0

%

Cost of products sold

386,956

75.3

%

372,525

76.0

%

Gross profit

126,754

24.7

%

117,325

24.0

%

Operating expenses

94,503

18.4

%

82,985

16.9

%

Income from operations

32,251

6.3

%

34,340

7.0

%

Interest expense

1,910

0.4

%

3,280

0.7

%

Income before income taxes

30,341

5.9

%

31,060

6.3

%

Income tax expense

12,135

2.4

%

11,945

2.4

%

Net income

$

18,206

3.5

%

19,115

3.9

%

Net income per share:

Basic

$

0.38

$

0.41

Diluted

$

0.37

$

0.41

Weighted average shares used in computing net income per share:

Basic

47,858,626

46,190,888

Diluted

48,865,099

46,830,178

BEACON ROOFING SUPPLY, INC

Condensed Consolidated Balance Sheets

Unaudited

(Dollars in thousands)

December 31, 2012

December 31, 2011

September 30, 2012

Assets

Current assets:

Cash and cash equivalents

$

34,025

$

155,171

$

40,205

Accounts receivable, net

231,500

221,665

291,456

Inventories

270,363

193,020

222,740

Prepaid expenses and other assets

94,605

57,083

60,287

Deferred income taxes

15,793

14,881

16,087

Total current assets

646,286

641,820

630,775

Property and equipment, net

58,246

48,537

57,376

Goodwill

468,757

400,140

443,161

Other assets, net

113,739

61,008

85,670

Total assets

$

1,287,028

$

1,151,505

$

1,216,982

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

176,322

$

149,699

$

167,390

Accrued expenses

84,519

73,101

71,627

Borrowings under revolving lines of credit

47,400

-

41,300

Current portion of long-term obligations

15,430

15,201

15,632

Total current liabilities

323,671

238,001

295,949

Senior notes payable and other obligations, net of current portion

221,122

309,632

220,875

Deferred income taxes

58,037

39,145

48,196

Stockholders' equity:

Common stock

483

463

477

Additional paid-in capital

294,507

251,623

280,184

Retained earnings

386,881

312,225

368,675

Accumulated other comprehensive income

2,327

416

2,626

Total stockholders' equity

684,198

564,727

651,962

Total liabilities and stockholders' equity

$

1,287,028

$

1,151,505

$

1,216,982

BEACON ROOFING SUPPLY, INC

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Unaudited

(In thousands)

December 31, 2012

December 31, 2011

Operating activities:

Net income

$

18,206

$

19,115

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

Depreciation and amortization

7,057

6,055

Stock-based compensation

2,524

1,747

Adjustment of liability for contingent consideration

-

(1,000

)

Certain interest expense and other financing costs

(1,051

)

-

Gain on sale of assets

(226

)

(209

)

Deferred income taxes

(133

)

(662

)

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

Accounts receivable

76,209

71,446

Inventories

(34,257

)

20,805

Prepaid expenses and other assets

(28,370

)

(19,126

)

Accounts payable and accrued expenses

7,326

(39,195

)

Net cash provided by operating activities

47,285

58,976

Investing activities:

Purchases of property and equipment

(3,092

)

(2,434

)

Acquisition of business

(64,484

)

(44,396

)

Proceeds from sales of assets

291

223

Net cash used by investing activities

(67,285

)

(46,607

)

Financing activities:

Borrowings (repayments) under revolving lines of credit, net

6,100

(13

)

Repayments under senior notes payable and other, net

(3,807

)

(2,315

)

Proceeds from exercises of options

9,915

1,534

Income tax benefit from stock-based compensation deductions in excess of the associated compensation costs

1,755

82

Net cash provided (used) by financing activities

13,963

(712

)

Effect of exchange rate changes on cash

(143

)

487

Net increase (decrease) in cash and cash equivalents

(6,180

)

12,144