PEABODY, Mass.--(BUSINESS WIRE)--Dec. 17, 2004--Beacon Roofing
Supply, Inc. (Nasdaq: BECN) announced today record performance for the
fiscal year ended September 25, 2004.
2004 Annual Results
Sales increased 16.7% to a record $652.9 million in fiscal year
2004 from $559.5 million in fiscal year 2003, reflecting strong
internal growth across all three major product groups: residential
roofing, non-residential roofing and complementary building products.
Gross profit increased 17.6% to $165.7 million in 2004 compared with
$140.9 million in 2003, with gross profit margin increasing to 25.4%
from 25.2% in 2003. Selling, general and administrative (SG&A)
expenses increased $11.2 million or 10.2% in 2004 compared to 2003.
The increase was primarily due to higher transportation costs and
payroll associated with the sales volume increase. The Company
continues to closely manage its SG&A expenses.
Operating income increased 10.8% to $34.7 million in 2004 from
$31.3 million in 2003 despite a charge of $10.3 million for
stock-based compensation in 2004 primarily related to the lapse of
certain restrictions on employee stock and stock options at the time
of the Company's initial public offering (IPO).
The Company incurred a net loss of ($15.4) million in 2004
compared to net income of $7.1 million in 2003 due principally to the
$10.3 million charge for stock-based compensation and a $25.0 million
charge for the change in the value of the Company's warrant derivative
liabilities. The derivatives were recorded at their redemption value
at September 25, 2004 and paid in full on September 28, 2004 upon the
receipt of the IPO proceeds. In 2004, the Company also incurred a $3.3
million loss on early extinguishment of debt associated with a debt
refinancing. Interest expense declined 17.3% or $2.4 million in 2004
from 2003, primarily from the refinancing of high-interest debt.
Reported loss per share was ($0.86) in 2004 compared to $0.39
diluted net income per share in 2003. Pro forma diluted net income per
share was $0.84, assuming the IPO had occurred before the start of
fiscal year 2004 (see attached pro forma statements and associated
notes).
Cash flow from operations was $23.1 million during 2004 as
compared to $21.9 million during 2003. The Company used a portion of
its cash from operations to increase inventories by $13.2 million,
partially in anticipation of price increases. 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 receivable for the IPO proceeds is included in
stockholders' equity at September 25, 2004.
Fourth Quarter Results
Sales increased 9.7% to a record $180.2 million in the fourth
quarter of fiscal year 2004 from $164.3 million in the fourth quarter
of fiscal year 2003, reflecting strong internal growth primarily in
non-residential roofing materials. Gross profit increased 9.8% to
$45.0 million from $40.9 million a year ago, with gross profit margin
staying steady at 24.9%. SG&A expenses increased $3.1 million or 10.6%
compared to 2003 due primarily to higher transportation costs and
payroll associated with the sales volume increase.
Operating income declined 70.2% to $3.6 million in the fourth
quarter of 2004 compared to $12.1 million a year ago due primarily to
a charge of $9.4 million for stock-based compensation as discussed
above.
The Company's net loss was ($5.5) million in the fourth quarter of
2004 compared to net income of $4.1 million in the fourth quarter of
2003. The loss was due principally to the $9.4 million charge for
stock-based compensation and a $4.7 million charge associated with the
change in the value of the Company's warrant derivative liabilities
discussed above. Interest expense, however declined 34.0% or $1.2
million primarily from lower-average interest rates on our debt.
Reported net loss per share was $(0.30) compared to diluted net income
per share of $0.22 in 2003.
Robert Buck, the Company's President & Chief Executive Officer,
stated "2004's record sales and operating income reflect several
consistent themes that were achieved throughout the year -- strong
sales growth across all product lines, higher gross margins and
containment of operating costs. These achievements took place while we
were also preparing for, and then succeeding with, our September IPO,
which has provided us with a stronger balance sheet and increased
liquidity to aggressively pursue growth opportunities such as the JGA
acquisition announced yesterday. We are very excited about the
future."
Beacon Roofing Supply will be holding its investor conference call
today, December 17, 2004, at 11:00 a.m. Eastern Time. Internet users
can listen to a live webcast of the conference call on the Investors
section of the Company's website at
http://www.beaconroofingsupply.com. For those unable to connect to the
Internet, the dial-in-number is 800-901-5241 (Participant Passcode
44839939). Please call five to ten minutes prior to the scheduled
start-time, as the number of telephone connections is limited.
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 "Risk Factors"
section of the Company's S-1 Registration Statement. 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
Fourth Quarter Ended Fiscal Year Ended
----------------------- -----------------------
(Dollars in September September September September
thousands, except 27, 25, 27, 25,
per share data) 2003 2004 2003 2004
--------------------- ----------- ----------- ----------- -----------
Net sales $164,271 $180,195 $559,540 $652,909
Cost of products sold 123,350 135,245 418,662 487,200
----------- ----------- ----------- -----------
Gross profit 40,921 44,950 140,878 165,709
----------- ----------- ----------- -----------
Operating expenses:
Selling, general
and administrative
expenses 28,847 31,912 109,586 120,738
Stock-based
compensation -- 9,440 -- 10,299
----------- ----------- ----------- -----------
Total operating
expenses 28,847 41,352 109,586 131,037
----------- ----------- ----------- -----------
Income from
operations 12,074 3,598 31,292 34,672
----------- ----------- ----------- -----------
Other expense
Interest expense 2,991 1,687 11,345 8,667
Interest expense-
related party 671 729 2,707 2,954
Change in value of
warrant
derivatives 704 4,690 2,614 24,992
Loss on early
retirement of debt -- -- -- 3,285
----------- ----------- ----------- -----------
Total other expenses 4,366 7,106 16,666 39,898
----------- ----------- ----------- -----------
Income (loss) before
income taxes 7,708 (3,508) 14,626 (5,226)
Income taxes 3,666 1,951 7,521 10,129
----------- ----------- ----------- -----------
Net income (loss) $ 4,042 $ (5,459) $ 7,105 $(15,355)
=========== =========== =========== ===========
Net income (loss) per
share:
Basic $ 0.23 $ (0.30) $ 0.40 $ (0.86)
=========== =========== =========== ===========
Diluted $ 0.22 $ (0.30) $ 0.39 $ (0.86)
=========== =========== =========== ===========
Weighted average
shares used in
computing net income
(loss) per share:
Basic 17,824,490 18,152,231 17,841,976 17,905,203
=========== =========== =========== ===========
Diluted 18,161,093 18,152,231 18,230,455 17,905,203
=========== =========== =========== ===========
BEACON ROOFING SUPPLY INC
Condensed Consolidated Balance Sheets
September 27, September 25,
(Dollars in thousands) 2003 2004
------------------------------------ -------------- --------------
Assets
Current assets:
Cash $ 64 $ --
Accounts receivable, net 86,964 93,824
Inventories 55,077 68,573
Prepaid expenses and other assets 9,834 14,974
Deferred income taxes 2,317 3,223
-------------- --------------
Total current assets 154,256 180,594
Property and equipment, net 24,955 25,101
Goodwill, net 93,564 94,162
Other assets 2,933 1,641
-------------- --------------
Total assets $ 275,708 $ 301,498
============== ==============
Liabilities and stockholders' equity
Current liabilities:
Cash overdraft $ -- $ 3,694
Borrowings under revolving lines
of credit 59,831 44,592
Accounts payable 56,151 74,043
Accrued expenses 25,133 21,524
Warrant derivative liabilities 3,683 34,335
Current portion of long-term
obligations 9,200 6,152
-------------- --------------
Total current liabilities 153,998 184,340
Senior notes payable and other
obligations, net of current 149 22,660
Junior subordinated notes payable 35,171 17,071
Subordinated notes payable to
related parties 27,087 29,442
Deferred income taxes 8,797 8,764
Long-term obligations under capital
leases, net of current 497 976
Warrant derivative liabilities 8,243 --
Stockholders' equity:
Common stock 180 266
Additional paid-in capital 26,033 140,067
Deferred compensation -- (690)
Treasury stock (515) (515)
Retained earnings (accumulated
deficit) 14,488 (867)
Common stock subscription
receivable -- (102,765)
Accumulated other comprehensive
income 1,580 2,749
-------------- --------------
Total stockholders' equity 41,766 38,245
-------------- --------------
Total liabilities and stockholders'
equity $ 275,708 $ 301,498
============== ==============
BEACON ROOFING SUPPLY INC
Condensed Consolidated Statements of Cash Flows
Fiscal Year Ended
------------------------------
September 27, September 25,
(In thousands) 2003 2004
------------------------------------- -------------- --------------
Operating activities:
Net income (loss) $ 7,105 $ (15,355)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 6,047 6,922
Deferred interest 4,825 4,445
Stock-based compensation -- 10,299
Change in value of warrant
derivatives 2,614 24,992
Loss on early retirement of debt -- 3,285
Unrealized gain (loss) on interest
rate collar (619) (182)
Deferred income taxes 2,596 (940)
Changes in assets and liabilities:
Accounts receivable (7,201) (6,034)
Inventories (5,265) (13,166)
Prepaid expenses and other
assets (801) (4,815)
Accounts payable and accrued
expenses 12,577 13,635
-------------- --------------
Net cash provided by operating
activities 21,878 23,086
-------------- --------------
Investing activities:
Purchases of property and equipment (4,978) (5,127)
Net proceeds from sale of property
and equipment 314 --
Acquisition of businesses, net of
cash acquired -- --
-------------- --------------
Net cash used in investing activities (4,664) (5,127)
-------------- --------------
Financing activities:
Borrowings (repayments) under
revolver (7,219) 43,040
Borrowings (repayments) under senior
notes & other (9,873) 26,934
Early extinguishment of debt -- (66,556)
Repayment of junior subordinated
notes -- (21,500)
Repayments on subordinated notes to
related parties (43) (47)
Proceeds from sale of common stock -- 250
Repurchase of treasury stock (115) --
Initial public offering costs -- (2,468)
Deferred financing costs -- (1,525)
-------------- --------------
Net cash used in financing activities (17,250) (21,872)
-------------- --------------
Effect of exchange rate changes on
cash 31 155
-------------- --------------
Net decrease in cash (5) (3,758)
Cash at beginning of period 69 64
-------------- --------------
Cash (overdraft) at end of period $ 64 $ (3,694)
============== ==============
Non-cash financing and investing
activities:
Capital lease transactions $ 690 $ 982
Common stock subscription
receivable $ -- $ (102,765)
Beacon Roofing Supply, Inc.
Unaudited pro forma consolidated financial data
The following unaudited pro forma consolidated financial
statements have been derived by the application of pro forma
adjustments to our historical consolidated financial statements. We
are providing the following unaudited pro forma consolidated financial
information because the financial impact of our initial public
offering and associated recapitalization was material.
The unaudited pro forma consolidated balance sheet assumes that
each of the following events occurred on September 25, 2004, while the
unaudited pro forma consolidated statement of operations for the year
ended September 25, 2004 (2004) assumes that each of the following
events occurred prior to the start of 2004:
-- the receipt of the proceeds of our initial public
offering of common stock;
-- the repayment of certain of our existing debt;
-- the redemption of all of our outstanding warrants; and
-- certain additional expenses related to public reporting.
In the first quarter of fiscal year 2005, we expect to incur a
loss on early extinguishment of debt of $915, which is not reflected
as a pro forma adjustment to the unaudited consolidated statement of
operations for the year ended September 25, 2004. However, it is
reflected as an adjustment to retained earnings, net of taxes, in the
unaudited pro forma consolidated balance sheet at September 25, 2004,
since it represents a loss that is directly attributable to the
offering and recapitalization.
The unaudited pro forma consolidated financial information is for
informational purposes only and is not necessarily indicative of
either the financial position or the results of operations that would
have been achieved had the offering and recapitalization for which we
are giving pro forma effect actually occurred on the dates or for the
periods described in the accompanying notes, nor is such unaudited pro
forma consolidated financial information necessarily indicative of the
results to be expected for the full year or any future period.
The pro forma adjustments are based on estimates and currently
available information and assumptions that management believes are
reasonable. The notes to the unaudited pro forma consolidated
statement of operations and balance sheet provide a detailed
discussion of how such adjustments were derived and are presented in
the unaudited pro forma consolidated financial information.
Unaudited pro forma consolidated balance sheet
as of September 25, 2004
Pro Forma
Adjustments
to Pro Forma
(dollars in thousands, September Adjustment Reflect the September
except per share data) 25, reference Transaction 25,
2004 2004
----------------------- --------- ------------- ----------- ---------
Assets
Current assets:
Cash $ -- $ --
Accounts receivable,
less allowance of
$2,958 for doubtful
accounts 93,824 93,824
Inventories 68,573 68,573
Prepaid expenses and
other assets 14,974 14,974
Deferred income
taxes 3,223 3,223
--------- ---------
Total current assets 180,594 180,594
Property and equipment,
net 25,101 25,101
Goodwill, net 94,162 94,162
Other assets 1,641 1,641
--------- ---------
Total assets $301,498 $301,498
========= =========
Liabilities and
stockholders' equity
Current liabilities:
Cash overdraft $ 3,694 $ 3,694
Borrowings under
revolving lines of
credit 44,592 (b)(4) $(21,002) 23,590
Accounts payable 74,043 74,043
Accrued expenses 21,524 (l) (393) 21,131
Warrant derivative
liabilities 34,335 © (34,335) --
Current portions of
long-term debt and
capital lease
obligations 6,152 6,152
--------- ----------- ---------
Total current
liabilities 184,340 (55,730) 128,610
Senior notes payable,
net of current portion 22,660 22,660
Junior subordinated
notes payable 17,071 (b)(2) (17,071) --
Subordinated notes
payable to related
parties 29,442 (b)(1),(b)(3) (29,442) --
Deferred income taxes 8,764 8,764
Long-term obligations
under capital leases,
net of current
portions 976 976
Warrant derivative
liabilities -- --
Stockholders' equity:
Common Stock
(voting); $.01 par
value; 100,000,000
shares authorized;
26,591,988 issued 266 266
Undesignated
preferred stock;
5,000,000 shares
authorized, none
issued or
outstanding -- --
Additional paid-in
capital 140,067 140,067
Deferred
compensation (690) (690)
Treasury stock
(232,861 share of
common stock), at
cost (515) (515)
Retained deficit (867) (l) (522) (1,389)
Stock subscription
receivable (102,765) (a) 102,765 --
Accumulated other
comprehensive income 2,749 2,749
--------- ----------- ---------
Total stockholders'
equity 38,245 102,243 140,488
--------- ----------- ---------
Total liabilities and
stockholders' equity $301,498 $ -- $301,498
========= =========== =========
The accompanying notes are an integral part of these unaudited pro
forma consolidated financial statements.
Unaudited pro forma
consolidated statement of operations
for the year ended September 25, 2004
Pro Forma
Adjustments
(dollars in thousands, to Pro Forma
except per share September Adjustment Reflect the September
data) 25, reference Transaction 25,
2004 2004
---------------------- ----------- ---------- ------------ -----------
Net sales $652,909 $ -- $652,909
Cost of products sold 487,200 -- 487,200
----------- ------------ -----------
Gross profit 165,709 -- 165,709
Operating expenses:
Selling, general
and administrative
expenses 120,738 (f) 1,350 122,088
Stock-based
compensation 10,299 (k) (9,023) 1,276
----------- ------------ -----------
131,037 (7,673) 123,364
----------- ------------ -----------
Income from operations 34,672 7,673 42,345
Other expense:
Interest expense 8,667 (d)(e) (6,190) 2,477
Interest expense,
related party 2,954 (e) (2,954)
Change in value of
warrant derivatives 24,992 (h) (24,992) --
Loss on early
retirement of debt 3,285 (j) (3,285) --
----------- ------------ -----------
39,898 (37,421) 2,477
----------- ------------ -----------
Income (loss) before
income taxes (5,226) 45,094 39,868
Income taxes 10,129 (g) 7,214 17,343
=========== ============ ===========
Net income (loss) $(15,355) $37,880 $ 22,525
=========== ============ ===========
Net income (loss) per
share:
Basic $ (0.86) (i) $ 0.86
=========== ===========
Diluted $ (0.86) (i) $ 0.84
=========== ===========
Weighted average
shares used in
computing net income
(loss) per share:
Basic 17,905,203 (i) 26,335,148
=========== ===========
Diluted 17,905,203 (i) 26,961,652
=========== ===========
The accompanying notes are an integral part of these unaudited pro
forma consolidated financial statements
Notes to unaudited pro forma
consolidated financial data
(dollars in thousands, except per share data)
1. Basis of presentation
The unaudited pro forma condensed consolidated balance sheet at
September 25, 2004 presents our consolidated financial position
assuming the offering of common stock, the repayment of certain of our
existing debt with proceeds from the offering, the redemption of all
of our outstanding warrants, and the incurrence of certain losses that
are directly attributable to our initial public offering had been
settled on that date rather than on September 28, 2004. Our unaudited
pro forma condensed consolidated statement of operations for the year
ended September 25, 2004 presents our consolidated results of
operations assuming that our initial public offering and the
recapitalization had been completed on September 27, 2003. In our
opinion, these statements include all material adjustments necessary
to reflect, on a pro forma basis, the impact of our initial public
offering and the recapitalization on our historical financial
information. The pro forma adjustments set forth in the unaudited pro
forma consolidated balance sheet and unaudited pro forma consolidated
statement of operations are described more fully in Note 2, "Pro forma
assumptions and adjustments" below.
Our unaudited pro forma consolidated financial information has
been presented for informational purposes only and does not
necessarily reflect our results of operations or financial position
had we operated with the offering and the recapitalization for the
periods presented and should not be relied upon as being indicative of
our future results after the offering and the recapitalization.
2. Pro forma assumptions and adjustments
(a) Entry to recognize receipt of the net proceeds of $102,765
from the initial public offering, which represents the gross
proceeds of $110,500 less $7,735 for the underwriting
discounts. Additional transaction costs of $2,468 were
prepaid.
(b) Entries have been made to the consolidated balance sheet to
adjust for the repayment of the following indebtedness:
(1) all of our outstanding 12% subordinated notes payable
to related parties of $22,442 as of September 25,
2004, including accrued interest thereon;
(2) all of our 18% junior subordinated notes payable of
$17,986 (including the $915 debt discount) as of
September 25, 2004, including accrued interest
thereon;
(3) all of our 8% subordinated promissory notes payable to
related parties of $7,000 as of September 25, 2004;
and
(4) a portion of our borrowings under revolving lines of
credit of approximately $21,002.
© An entry has been made to the unaudited pro forma
consolidated balance sheet to adjust for the redemption of all
of our outstanding warrants, net of a reimbursement to us of
$2,584 of costs related to the proceeds raised to settle such
warrant liabilities.
(d) An entry has been made to the unaudited pro forma
consolidated statement of operations for the year ended
September 25, 2004 to adjust for the accretion of warrant
discount of $388, in connection with repayment of the junior
subordinated notes payable.
(e) An entry has been made to the unaudited pro forma
consolidated statement of operations for the year ended
September 25, 2004 to adjust for elimination of interest
expense of $8,756 on the repaid indebtedness referenced in
notes (b)(1)-(4) above.
(f) An entry has been made to the statement of operations for
the year ended September 25, 2004 to increase certain
administrative costs related to public reporting of $1,350.
(g) An entry has been made to the unaudited pro forma
consolidated statement of operations for the year ended
September 25, 2004 to adjust the tax provision for the pro
forma adjustments.
(h) An entry has been made to the statement of operations for
the years ended September 25, 2004 to eliminate the change in
value of warrant derivative charge of $24,992.
(i) Pro forma diluted earnings per share is calculated using
the weighted average number of common shares assumed
outstanding plus the effect of outstanding options using the
treasury stock method.
(j) An entry has been made to the unaudited pro forma
consolidated statement of operations for the year ended
September 25, 2004 to eliminate the charge for the early
extinguishment of debt of $3,285 during the period since the
pro forma consolidated statement of operations assumes the
associated debt is repaid as a direct result of the offering
and recapitalization and is already included in retained
earnings.
(k) An entry has been made to the unaudited pro forma
consolidated statement of operations for the year ended
September 25, 2004 to eliminate the charge for the performance
based awards to employees due to the termination of repurchase
rights under certain securities agreements of $9,023 during
the period.
(l) An entry has been made to the unaudited pro forma
consolidated balance sheet to retained earnings to adjust for
the early extinguishment of debt for $522. As a result of
repaying the junior subordinated notes payable upon the
settlement of the IPO, a charge of $915 ($522 net of taxes of
$393) is expected to be incurred from the early extinguishment
of debt in the first quarter of fiscal year 2005.
CONTACT: Beacon Roofing Supply, Inc.
Dave Grace, 978-535-7668
CFO
SOURCE: Beacon Roofing Supply, Inc.