PEABODY, Mass., Aug 11, 2005 (BUSINESS WIRE) -- Beacon Roofing Supply, Inc. (Nasdaq: BECN) (the
"Company") announced today record performance for the third quarter
and year-to-date period (nine months) ended June 30, 2005 of the
fiscal year ending September 24, 2005.
Third Quarter
Sales increased 38.0% to $248.4 million in the third quarter of
fiscal 2005 ("2005") from $180.0 million in fiscal 2004 ("2004"),
reflecting strong internal growth of 19.5% or $35.2 million, with the
strongest sales increase occurring in non-residential roofing. The
Company opened three new branches during the third quarter that also
contributed to the internal growth. JGA Corp. ("JGA"), acquired in
mid-December, and Insulation Systems of Virginia, Inc. ("ISI"),
acquired in late April, contributed the remaining sales increase of
$33.2 million.
Gross profit increased 31.5% to $59.7 million in 2005 from $45.4
million in 2004. Gross margin as a percentage of net sales declined
from 25.2% to 24.0% due primarily to the inclusion of JGA and ISI with
their lower-margin product mixes. However, existing markets' gross
margin stayed constant with 2004 at 25.2% despite the large increase
in generally lower-gross margin non-residential roofing sales.
Selling, general and administrative (SG&A) expenses increased $7.5
million or 23.7% in 2005 compared to 2004 but declined as a percentage
of net sales to 15.8% in 2005 from 17.7% in 2004. The dollar increase
was primarily due to the inclusion of JGA and ISI expenses, higher
payroll costs to handle the sales volume increase and the newly-opened
branches, and higher professional fees that now include the costs of
public-company reporting and implementing the provisions of the
Sarbanes-Oxley Act.
Operating income increased 50.9% to $20.2 million in 2005 from
$13.4 million in 2004. As a percentage of net sales, operating income
increased to 8.1% from 7.4%. Interest expense declined $0.8 million to
$1.5 million in 2005, primarily resulting from a lower debt level
after the Company's initial public offering ("IPO").
The Company achieved third-quarter net income of $11.3 million in
2005 compared to a net loss of $3.0 million in 2004. The Company
provided for income taxes at a lower rate (39.6%) in 2005 than in 2004
(43.9%) primarily due to strong earnings from our Canadian subsidiary
that will allow the Company to use a more favorable tax credit
treatment for foreign taxes. In addition, the net loss in 2004
included a $9.3 million non-deductible 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 third quarter was $0.41 in
2005 compared to a loss of $0.17 per share in 2004.
Year-to-Date
Sales increased 31.1% to $619.8 million in 2005 from $472.7
million in 2004, reflecting strong internal growth of 17.5% or $82.9
million, with the strongest sales increase occurring in
non-residential roofing and with the opening of six new branches
compared to the prior year. JGA and ISI contributed the remaining
sales increase of $64.1 million.
Gross profit increased 25.3% to $151.4 million in 2005 from $120.8
million in 2004. Gross margin as a percentage of net sales declined
from 25.5% to 24.4% due primarily to the inclusion of JGA and ISI and
their lower-margin product mixes. However, existing markets' gross
margin dropped only slightly from 25.5% to 25.4% despite the large
increase in generally lower-margin non-residential roofing sales.
SG&A expenses increased $19.0 million or 21.4% in 2005 compared to
2004 but declined as a percentage of net sales to 17.4% in 2005 from
18.8% in 2004. The dollar increase was primarily due to the inclusion
of JGA and ISI expenses since mid-December and late April,
respectively; higher transportation expenses due to higher fuel costs
and the higher sales volume; higher payroll costs to handle the sales
volume increase; and higher professional fees due to the factors
mentioned above for the third quarter.
Operating income increased 38.5% to $43.0 million in 2005 from
$31.1 million in 2004. As a percentage of net sales, operating income
increased to 6.9% from 6.5%. Interest expense declined $5.7 million to
$3.5 million in 2005, primarily resulting from the lower debt level
after the Company's IPO.
The Company achieved year-to-date net income of $22.5 million in
2005 compared to a net loss of $9.9 million in 2004. The net loss in
2004 included a $3.3 million charge ($2.0 million net of tax) for the
early retirement of debt, compared to a charge of $0.9 million ($0.5
million net of tax) this year, and a $20.3 million non-deductible
charge for the change in the value of the Company's warrant
derivatives.
Diluted net income per share for the year-to-date period was $0.82
in 2005 compared to a loss of $0.56 per share in 2004.
Cash flow from operations was $11.9 million in the year-to-date
2005 period compared to $17.8 million in 2004. Cash flow from
operations in 2005 was impacted by an increase of $22.8 million in
inventories, exclusive of the effects of businesses acquired, which
resulted partially from anticipation of some price increases and
temporary product shortages but also to accommodate strong demand.
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. During 2005, the Company borrowed approximately $37 million
under its revolving lines of credit to acquire JGA and ISI.
Robert Buck, the Company's President & Chief Executive Officer,
stated, "We had yet another terrific quarter that exceeded our
expectations in our first year as a public company. Non-residential
roofing sales continued to be very strong while we experienced
stronger residential roofing sales in the third quarter than in the
first half of the year and continued strong growth of complementary
building product sales in line with our long-term objectives. We have
also been opening new branches and successfully integrated JGA and ISI
into the Beacon family. We will continue to look for similar
opportunistic business acquisitions, even while we complete the
acquisition of Shelter Distribution, Inc. announced yesterday."
The Company will be holding its investor conference call today,
August 11, 2005, at 11:00 a.m. Eastern Time. The dial-in-number is
800.510.9834 (participant passcode 72133177) (international
dial-in-number 617.614.3669). 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 operating 82 branches in
16 states 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 Operations (Unaudited)
------------------------------------------------------
Three Months Ended
-------------------------------------
(Dollars in
thousands,
except per
share June 30, % of June 30, % of
data) 2005 Sales 2004 Sales
----------- ------ ----------- ------
Net sales $248,451 100.0% $180,047 100.0%
Cost of products
sold 188,738 76.0% 134,652 74.8%
----------- ------ ----------- ------
Gross profit 59,713 24.0% 45,395 25.2%
----------- ------ ----------- ------
Operating expenses:
Selling,
general and
administrative
expenses 39,307 15.8% 31,769 17.7%
Stock-based
compensation 175 0.1% 217 0.1%
----------- ------ ----------- ------
39,482 15.9% 31,986 17.8%
----------- ------ ----------- ------
Income from
operations 20,231 8.1% 13,409 7.4%
----------- ------ ----------- ------
Other expenses:
Interest expense 1,459 0.6% 1,498 0.8%
Interest expense-
related party - - 742 0.4%
Change in value
of warrant derivatives - - 9,302 5.2%
Loss on early
retirement of debt - - - -
----------- ------ ----------- ------
1,459 0.6% 11,542 6.4%
----------- ------ ----------- ------
Income (loss)
before income taxes 18,772 7.5% 1,867 1.0%
Income taxes 7,443 2.9% 4,906 2.7%
----------- ------ ----------- ------
Net income (loss) $11,329 4.6% $(3,039) -1.7%
=========== ====== =========== ======
Net income (loss)
per share:
Basic $0.43 $(0.17)
=========== ===========
Diluted $0.41 $(0.17)
=========== ===========
Weighted average
shares used in
computing net
income (loss)
per share:
Basic 26,523,291 17,859,127
=========== ===========
Diluted 27,451,002 17,859,127
=========== ===========
Nine Months Ended
-------------------------------------
(Dollars in
thousands,
except per
share June 30, % of June 30, % of
data) 2005 Sales 2004 Sales
----------- ------ ----------- ------
Net sales $619,757 100.0% $472,714 100.0%
Cost of products
sold 468,328 75.6% 351,955 74.5%
----------- ------ ----------- ------
Gross profit 151,429 24.4% 120,759 25.5%
----------- ------ ----------- ------
Operating expenses:
Selling,
general and
administrative
expenses 107,869 17.4% 88,826 18.8%
Stock-based
compensation 520 0.1% 859 0.2%
----------- ------ ----------- ------
108,389 17.5% 89,685 19.0%
----------- ------ ----------- ------
Income from
operations 43,040 6.9% 31,074 6.5%
----------- ------ ----------- ------
Other expenses:
Interest expense 3,509 0.6% 6,980 1.4%
Interest expense-
related party 26 - 2,225 0.5%
Change in value
of warrant
derivatives - - 20,302 4.3%
Loss on early
retirement of debt 915 0.1% 3,285 0.7%
----------- ------ ----------- ------
4,450 0.7% 32,792 6.9%
----------- ------ ----------- ------
Income (loss)
before income taxes 38,590 6.2% (1,718) -0.4%
Income taxes 16,099 2.7% 8,178 1.7%
----------- ------ ----------- ------
Net income (loss) $22,491 3.5% $(9,896) -2.1%
=========== ====== =========== ======
Net income (loss)
per share:
Basic $0.85 $(0.56)
=========== ===========
Diluted $0.82 $(0.56)
=========== ===========
Weighted average
shares used in
computing net
income (loss)
per share:
Basic 26,421,064 17,823,346
=========== ===========
Diluted 27,365,236 17,823,346
=========== ===========
BEACON ROOFING SUPPLY, INC.
Condensed Consolidated Balance Sheets
---------------------------------------------------------------------
(Unaudited)(Unaudited)
(Dollars in thousands) June 30, June 30, Sept. 25,
2005 2004 2004
---------------------------------------------- --------- ------------
Assets
Current assets:
Cash $5,860 $473 $-
Accounts receivable, net 122,412 88,105 93,824
Inventories 99,852 67,544 68,573
Prepaid expenses and other
assets 18,257 13,139 14,974
Deferred income taxes 3,226 2,318 3,223
-------------- --------- ------------
Total current assets 249,607 171,579 180,594
Property and equipment, net 30,924 25,402 25,101
Goodwill 107,631 93,705 94,162
Other assets, net 13,881 1,706 1,641
-------------- --------- ------------
Total assets $402,043 $292,392 $301,498
============== ========= ============
Liabilities and stockholders' equity
Current liabilities:
Cash overdraft $- $- $3,694
Borrowings under revolving
lines of credit 66,912 49,798 44,592
Accounts payable 92,147 67,649 74,043
Accrued expenses 39,204 25,454 21,524
Warrant derivative liability - 9,592 34,335
Current portions of long-
term debt and capital lease
obligations 6,341 6,308 6,152
-------------- --------- ------------
Total current liabilities 204,604 158,801 184,340
Senior notes payable and other
obligations, net of current portion 20,156 22,500 22,660
Junior subordinated notes payable - 16,756 17,071
Subordinated notes payable to
related parties - 28,844 29,442
Deferred income taxes 9,182 8,532 8,764
Long-term obligations under
capital leases, net of current portion 1,782 1,056 976
Warrant derivative liabilities - 22,636 -
Stockholders' equity:
Common stock 268 181 266
Additional paid-in capital 141,512 28,248 140,067
Deferred compensation (172) (1,107) (690)
Treasury stock (515) (515) (515)
Retained earnings (deficit) 21,624 4,592 (867)
Common stock subscription receivable - - (102,765)
Accumulated other comprehensive income 3,602 1,868 2,749
-------------- --------- ------------
Total stockholders' equity 166,319 33,267 38,245
-------------- --------- ------------
Total liabilities and
stockholders' equity $402,043 $292,392 $301,498
============== ========= ============
BEACON ROOFING SUPPLY, INC.
Condensed Consolidated Cash Flows
---------------------------------------------------------------------
Unaudited Nine Months Ended
June 30,
(Dollars In thousands) 2005 2004
---------------------------------------------------------------------
Operating activities:
Net income (loss) $22,491 $(9,896)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 6,354 5,033
Deferred interest - 3,536
Stock-based compensation 520 859
Change in value of warrant derivatives - 20,302
Loss on early retirement of debt 915 3,285
Unrealized loss on interest rate collar - (203)
Deferred income taxes 381 (265)
Changes in assets and liabilities, net
of the effects of businesses acquired:
Accounts receivable (17,299) (688)
Inventories (22,767) (12,409)
Prepaid expenses and other assets 41 (3,195)
Accounts payable and accrued
expenses 21,303 11,468
-----------------------
Net cash provided by operating activities 11,939 17,827
Investing activities:
Purchases of property and equipment, net of
sale proceeds (6,974) (3,848)
Acquisition of businesses, net of cash
acquired (36,880) -
-----------------------
Net cash used in investing activities (43,854) (3,848)
Financing activities:
Net borrowings under revolving lines of credit 22,114 48,506
Borrowings (repayments) under senior notes
payable, and other (2,737) 27,169
Repurchase of warrants (34,335) -
Early retirement of debt - (66,556)
Repayments of junior subordinated notes and
warrants (17,986) (21,500)
Repayments of subordinated notes payable to
related parties (29,442) -
Proceeds from sale of common stock 104,212 250
Deferred financing costs (342) (1,461)
-----------------------
Net cash provided by (used in) financing
activities 41,484 (13,592)
Effect of exchange rate changes on cash (15) 22
-----------------------
Net increase in cash 9,554 409
Cash (overdraft) at beginning of year (3,694) 64
-----------------------
Cash at end of period $5,860 $473
=======================
Non-cash transactions:
Capital lease additions $1,228 $982
SOURCE: Beacon Roofing Supply, Inc.
Beacon Roofing Supply, Inc.
Dave Grace, CFO 978-535-7668 x14