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Beacon Roofing Supply, Inc. Reports Record First-Quarter 2005 Results

Press Releases

Feb 14, 2005
Beacon Roofing Supply, Inc. Reports Record First-Quarter 2005 Results

PEABODY, Mass.--(BUSINESS WIRE)--Feb. 14, 2005--Beacon Roofing Supply, Inc. (Nasdaq: BECN) announced today record performance for the first fiscal 2005 quarter ended December 31, 2004.

Sales increased 18.2% to a record $199.2 million in the first quarter of fiscal 2005 ("2005") from $168.6 million in fiscal 2004 ("2004"), reflecting strong internal growth of 15.8%, with especially robust sales of non-residential roofing and complementary building products. JGA Corp. ("JGA"), acquired in mid-December, contributed the remaining sales increase.

Gross profit increased 17.6% to $50.3 million in 2005 from $42.8 million in 2004. Gross margin as a percentage of net sales declined slightly from 25.4% to 25.3% due to the inclusion of JGA and its product mix. Importantly, the Company's gross margins in existing markets improved to 25.5% in 2005 from 25.4% in 2004.

Selling, general and administrative (SG&A) expenses increased $4.4 million or 15.5% in 2005 compared to 2004. The increase was primarily due to higher transportation and payroll costs associated with the sales volume increase. As a percentage of net sales, SG&A expenses declined to 16.5% in 2005 from 16.9% in 2004. The Company continues to be diligent in controlling its SG&A expenses.

Operating income increased 20.5% to a record $17.3 million in 2005 from $14.4 million in 2004. As a percentage of net sales, operating income increased to 8.7% from 8.5%. Interest expense declined $2.6 million to $0.9 million in 2005, primarily from a lower debt level after the Company's initial public offering ("IPO").

The Company achieved record first-quarter net income of $8.7 million in 2005 compared to net income of $3.1 million in 2004. Net income in 2005 included a $0.9 million charge for the early of retirement of debt, while the 2004 net income included a $2.9 million charge for the change in the value of the Company's warrant derivatives. All of the warrants were redeemed with the proceeds of our IPO on September 28, 2004 and we will not incur future charges for these derivatives.

Diluted net income per share for the first quarter was $0.32 in 2005 compared to $0.17 per share in 2004.

Cash flow from operations was $12.8 million in the first quarter of 2005 compared to $7.5 million in 2004. The Company used a portion of its cash from operations to increase inventories by $7.2 million, partially in anticipation of some price increases and temporary product shortages.

The Company's IPO was completed on September 22, 2004 and the proceeds were received on September 28, 2004, a few days after the Company's fiscal 2004 year-end. The IPO proceeds were utilized to pay off notes payable, redeem the warrants and pay down revolving lines of credit. In December, the Company borrowed approximately $30 million under its revolving lines of credit to acquire JGA.

Robert Buck, the Company's President & Chief Executive Officer, stated, "We had a terrific first quarter that exceeded our expectations and included the successful acquisition of JGA that has provided us access to the strong Florida and Georgia markets. Our employees' focus on providing our customers with high-quality services and products continues to be the foundation of our operational success. We will also continue to look for opportunistic business acquisitions such as JGA. We believe there is substantial room for growth."

Beacon Roofing Supply will be holding its investor conference call today, February 14, 2005, at 11:30 a.m. Eastern Time. The dial-in-number is 800-638-4930 (Participant Passcode 31727549). Please call five to ten minutes prior to the scheduled start-time to assure timely access to the call.

About Beacon Roofing Supply Inc.:

Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products in key metropolitan markets in the Northeast, Mid-Atlantic, Southeast and Southwest regions of the United States and in Eastern 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 "Risks Relating to Our Business and Industry" 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.
Consolidated Statements of Income
----------------------------------------------------------------------
                                           Three Months Ended
                                  ------------------------------------
Unaudited
(Dollars in thousands, except per    December 31,      December 31,
 share data)                             2004              2003
---------------------------------- ----------------- -----------------


Net sales $ 199,190 100.0%$ 168,586 100.0% Cost of products sold 148,844 74.7% 125,783 74.6% ----------------- -----------------

Gross profit 50,346 25.3% 42,803 25.4% Operating expenses: Selling, general and administrative expenses 32,840 16.5% 28,422 16.9% Stock-based compensation 173 0.1% - - ----------------- -----------------

33,013 16.6% 28,422 16.9%

Income from operations 17,333 8.7% 14,381 8.5%

Other expense: Interest expense 866 0.4% 2,799 1.7% Interest expense-related party 26 - 742 0.4% Change in value of warrant derivatives - - 2,920 1.7% Loss on early retirement of debt 915 0.5% - - ----------------- -----------------

1,807 0.9% 6,461 3.8%

Income before income taxes 15,526 7.8% 7,920 4.7% Income taxes 6,783 3.4% 4,774 2.8% ----------------- -----------------

Net income $ 8,743 4.4%$ 3,146 1.9% ================= =================

Net income per share: Basic $ 0.33 $ 0.18 =========== ===========

Diluted $ 0.32 $ 0.17 =========== ===========

Weighted average shares used in computing net income per share: Basic 26,359,127 17,787,583 =========== ===========

Diluted 27,303,725 18,184,984 =========== ===========





BEACON ROOFING SUPPLY, INC. Condensed Consolidated Balance Sheets ---------------------------------------------------------------------- (Unaudited) (Unaudited) (Dollars in thousands, December 31, December 31, September 25, except per share data) 2004 2003 2004 --------------------------- ------------------------------------------

Assets Current assets: Cash $ 4,900 $ 6,195 $ - Accounts receivable, less allowance of $3,511 at 12/04, $2,995 at 12/03 and $2,958 at 9/04 for doubtful accounts 93,194 72,382 93,824 Inventories 82,750 60,604 68,573 Prepaid expenses and other assets 22,140 14,102 14,974 Deferred income taxes 3,228 2,317 3,223 -------------- -------------- ------------ Total current assets 206,212 155,600 180,594

Property and equipment, net 27,367 23,847 25,101 Goodwill, net 104,375 93,991 94,162 Other assets 13,196 2,805 1,641 -------------- -------------- ------------

Total assets $ 351,150 $ 276,243 $ 301,498 ============== ============== ============

Liabilities and stockholders' equity Current liabilities: Cash overdraft $ - $ - $ 3,694 Borrowings under revolving lines of credit 52,178 60,286 44,592 Accounts payable 83,595 50,068 74,043 Accrued expenses 26,487 23,777 21,524 Warrant derivative liability - 4,557 34,335 Current portions of long-term debt and capital lease obligations 6,158 7,950 6,152 -------------- -------------- ------------ Total current liabilities 168,418 146,638 184,340

Senior notes payable and other obligations, net of current portion 21,825 68 22,660 Junior subordinated notes payable - 35,914 17,071 Subordinated notes payable to related parties - 27,689 29,442 Deferred income taxes 8,819 8,829 8,764 Long-term obligations under capital leases, net of current portions 895 1,105 976 Warrant derivative liabilities - 10,291 -

Commitments and contingencies

Stockholders' equity: Class A Common Stock - 180 - Class B Common Stock 266 - 266 Additional paid-in capital 140,067 26,033 140,067 Deferred compensation (517) - (690) Treasury stock (515) (515) (515) Retained earnings (deficit) 7,876 17,633 (867) Common Stock subscription receivable - - (102,765) Accumulated other comprehensive income 4,016 2,378 2,749 -------------- -------------- ------------

Total stockholders' equity 151,193 45,709 38,245 -------------- -------------- ------------

Total liabilities and stockholders' equity $ 351,150 $ 276,243 $ 301,498 ============== ============== ============





BEACON ROOFING SUPPLY, INC. Consolidated Statements of Cash Flows ----------------------------------------------------------------------

Three Months Ended ---------------------------

Unaudited December 31, December 31, (In thousands) 2004 2003 ------------------------------------------ --------------------------

Operating activities Net income $ 8,743 $ 3,146 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,810 1,651 Deferred interest - 1,261 Stock-based compensation 173 - Change in value of warrant derivatives - 2,920 Loss on early retirement of debt 915 - Changes in operating assets and liabilities, net of the effects of businesses acquired: Accounts receivable 12,215 15,174 Inventories (7,167) (5,294) Prepaid expenses and other assets (3,526) (3,480) Accounts payable and accrued expenses (408) (7,908) ---------------------------

Net cash provided by operating activities 12,755 7,470

Investing activities Purchases of property and equipment, net of sale proceeds (910) (109) Acquisition of business, net of cash acquired (30,357) - ---------------------------

Net cash used in investing activities (31,267) (109)

Financing activities Net borrowings under revolving lines of credit 7,278 132 Repayment under senior notes payable, and other (912) (1,370) Redemption of warrants (34,335) - Repayment of junior subordinated notes (17,986) - Repayment of subordinated notes payable to related parties (29,442) - Proceeds from IPO 102,765 - Deferred financing costs (238) - ---------------------------

Net cash provided by (used in) financing activities 27,130 (1,238)

Effect of exchange rate changes on cash (24) 8 ---------------------------

Net increase in cash 8,594 6,131 Cash (overdraft)at beginning of year (3,694) 64 ---------------------------

Cash at end of period $ 4,900 $ 6,195 ===========================

Non-cash transactions Capital lease additions $ - $ 703



CONTACT: Beacon Roofing Supply, Inc.
Dave Grace, 978-535-7668

SOURCE: Beacon Roofing Supply, Inc.

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About Beacon Roofing Supply

  • North America’s largest publicly traded roofing distributor, with annual sales run-rate of ~$7 billion
  • 589 locations across all 50 U.S. states and 6 Canadian provinces
  • A FORTUNE 500 Company
    (Based upon revenues from June 2017 list)
  • Traded on NASDAQ under the symbol “BECN”