PEABODY, Mass., May 11, 2005 (BUSINESS WIRE) -- Beacon Roofing Supply, Inc. (Nasdaq: BECN) (the
"Company") announced today record performance for the second quarter
and first half (six months) ended March 31, 2005 of the fiscal year
ending September 24, 2005.
Second Quarter
Sales increased 38.7% to $172.1 million in the second quarter of
fiscal 2005 ("2005") from $124.1 million in fiscal 2004 ("2004"),
reflecting strong internal growth of 17.0% or $21.1 million, with the
strongest sales occurring in non-residential roofing. The Company also
opened two new branches during the second quarter. JGA Corp. ("JGA"),
acquired in mid-December, contributed the remaining sales increase of
$26.9 million.
Gross profit increased 27.1% to $41.4 million in 2005 from $32.6
million in 2004. Gross margin as a percentage of net sales declined
from 26.2% to 24.0% due primarily to the substantial increase in
lower-margin non-residential roofing sales and the inclusion of JGA
and its product mix.
Selling, general and administrative (SG&A) expenses increased $7.1
million or 24.7% in 2005 compared to 2004 but declined as a percentage
of net sales to 20.7% in 2005 from 23.1% in 2004. The dollar increase
was primarily due to the inclusion of JGA's expenses for the full
second quarter, higher transportation and payroll costs associated
with higher fuel costs and the sales volume increase, and higher
professional fees that now incorporate the costs of public-company
reporting and implementing the provisions of the Sarbanes-Oxley Act.
Operating income increased 66.7% to $5.5 million in 2005 from $3.3
million in 2004. As a percentage of net sales, operating income
increased to 3.2% from 2.6%. Interest expense declined $2.2 million to
$1.2 million in 2005, primarily from a lower debt level after the
Company's initial public offering ("IPO").
The Company achieved second-quarter net income of $2.4 million in
2005 compared to a net loss of $10.0 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 and an $8.1 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 second quarter was $0.09 in
2005 compared to a loss of $0.56 per share in 2004.
First Half
Sales increased 26.9% to $371.3 million in the first half of 2005
from $292.7 million in 2004, reflecting strong internal growth of
16.3% or $47.7 million, with the strongest sales occurring in
non-residential roofing and three new branches opened since last year.
JGA contributed the remaining sales increase of $30.9 million.
Gross profit increased 21.7% to $91.7 million in 2005 from $75.4
million in 2004. Gross margin as a percentage of net sales declined
from 25.8% to 24.7% due primarily to the substantial increase in
lower-margin non-residential roofing sales and the inclusion of JGA
and its product mix.
SG&A expenses increased $11.5 million or 20.2% in 2005 compared to
2004 but declined as a percentage of net sales to 18.5% in 2005 from
19.6% in 2004. The dollar increase was primarily due to the inclusion
of JGA's expenses since mid-December, higher transportation and
payroll costs associated with higher fuel costs and the sales volume
increase, and higher professional fees for the factors mentioned above
for the second quarter.
Operating income increased 29.1% to $22.8 million in 2005 from
$17.7 million in 2004. As a percentage of net sales, operating income
increased to 6.1% from 6.0%. Interest expense declined $4.9 million to
$2.1 million in 2005, primarily from a lower debt level after the
Company's IPO.
The Company achieved first-half net income of $11.2 million in
2005 compared to a net loss of $6.9 million in 2004. The net loss in
2004 included the $3.3 million charge ($2.0 million net of tax) for
the early retirement of debt and an $11.0 million non-deductible
charge for the change in the value of the Company's warrant
derivatives.
Diluted net income per share for the first half was $0.41 in 2005
compared to a loss of $0.39 per share in 2004.
Cash flow from operations was $5.4 million in the first half of
2005 compared to $12.3 million in 2004. Cash flow from operations in
2005 was impacted by an increase of $20.4 million in inventories,
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 another strong quarter that again exceeded our
expectations even though the second quarter is traditionally our low
point for sales for the year. We were also very pleased with JGA's
performance in the second quarter, the first full quarter that they
were part of the Beacon family. We will continue to look for similar
opportunistic business acquisitions."
Beacon Roofing Supply will be holding its investor conference call
today, May 11, 2005, at 11:00 a.m. Eastern Time. The dial-in-number is
800.638.5439 (Participant Passcode 53255908). 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 79 branches 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 Operations (Unaudited)
---------------------------------------------------------------------
Three Months Ended
------------------------------------------
(Dollars in thousands, March 31, % of March 31, % of
except per share data) 2005 Sales 2004 Sales
---------------------------------------------------------------------
Net sales $172,116 100.0% $124,081 100.0%
Cost of products sold 130,746 76.0% 91,520 73.8%
----------------------------------------
Gross profit 41,370 24.0% 32,561 26.2%
----------------------------------------
Operating expenses:
Selling, general and
administrative expenses 35,722 20.7% 28,635 23.1%
Stock-based compensation 172 0.1% 642 0.5%
----------------------------------------
35,894 20.8% 29,277 23.6%
----------------------------------------
Income from operations 5,476 3.2% 3,284 2.6%
----------------------------------------
Other expenses:
Interest expense 1,185 0.7% 2,682 2.2%
Interest expense-related
party - - 741 0.6%
Change in value of
warrant derivatives - - 8,081 6.5%
Loss on early retirement
of debt - - 3,285 2.6%
----------------------------------------
1,185 0.7% 14,789 11.9%
----------------------------------------
Income (loss) before income
taxes 4,291 2.5% (11,505) -9.3%
Income taxes 1,873 1.1% (1,502) -1.2%
----------------------------------------
Net income (loss) $2,418 1.4% $(10,003) -8.1%
========================================
Net income (loss) per
share:
Basic $0.09 $(0.56)
=========== ===========
Diluted $0.09 $(0.56)
=========== ===========
Weighted average shares
used in computing net
income (loss) per share:
Basic 26,384,001 17,838,459
=========== ===========
Diluted 27,344,123 17,838,459
=========== ===========
BEACON ROOFING SUPPLY, INC.
Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------------------
Six Months Ended
------------------------------------------
(Dollars in thousands, March 31, % of March 31, % of
except per share data) 2005 Sales 2004 Sales
----------------------------------------------------------------------
Net sales $371,306 100.0% $292,667 100.0%
Cost of products sold 279,590 75.3% 217,303 74.2%
----------------------------------------
Gross profit 91,716 24.7% 75,364 25.8%
----------------------------------------
Operating expenses:
Selling, general and
administrative expenses 68,561 18.5% 57,057 19.6%
Stock-based compensation 346 0.1% 642 0.2%
----------------------------------------
68,907 18.6% 57,699 19.8%
----------------------------------------
Income from operations 22,809 6.1% 17,665 6.0%
----------------------------------------
Other expenses:
Interest expense 2,051 0.6% 5,482 1.8%
Interest expense-related
party 26 - 1,483 0.5%
Change in value of warrant
derivatives - - 11,000 3.8%
Loss on early retirement of
debt 915 0.2% 3,285 1.1%
----------------------------------------
2,992 0.8% 21,250 7.3%
----------------------------------------
Income (loss) before income
taxes 19,817 5.3% (3,585) -1.2%
Income taxes 8,656 2.3% 3,272 1.1%
----------------------------------------
Net income (loss) $11,161 3.0% $(6,857) -2.3%
========================================
Net income (loss) per share:
Basic $0.42 $(0.39)
=========== ===========
Diluted $0.41 $(0.39)
=========== ===========
Weighted average shares used
in computing net income
(loss) per share:
Basic 26,371,317 17,805,460
=========== ===========
Diluted 27,323,528 17,805,460
=========== ===========
BEACON ROOFING SUPPLY, INC.
Condensed Consolidated Balance Sheets
----------------------------------------------------------------------
(Unaudited)(Unaudited)
(Dollars in thousands) March 31, March 31, September 25,
2005 2004 2004
----------------------------------------------------------------------
Assets
Current assets:
Cash $8,522 $1,595 $-
Accounts receivable, net 91,117 68,740 93,824
Inventories 95,980 69,877 68,573
Prepaid expenses and other
assets 16,499 8,508 14,974
Deferred income taxes 3,227 2,320 3,223
----------------------------------
Total current assets 215,345 151,040 180,594
Property and equipment, net 29,392 24,146 25,101
Goodwill 104,375 93,876 94,162
Other assets, net 12,988 1,870 1,641
----------------------------------
Total assets $362,100 $270,932 $301,498
==================================
Liabilities and stockholders'
equity
Current liabilities:
Cash overdraft $- $- $3,694
Borrowings under revolving
lines of credit 67,859 52,392 44,592
Accounts payable 74,197 53,105 74,043
Accrued expenses 29,320 21,590 21,524
Warrant derivative
liability - 6,942 34,335
Current portions of long-
term debt and capital
lease obligations 6,161 6,125 6,152
----------------------------------
Total current liabilities 177,537 140,154 184,340
Senior notes payable and other
obligations,
net of current portion 20,990 24,149 22,660
Junior subordinated notes
payable - 16,432 17,071
Subordinated notes payable to
related parties - 28,243 29,442
Deferred income taxes 9,045 8,547 8,764
Long-term obligations under
capital leases, net of current
portion 814 1,045 976
Warrant derivative liabilities - 15,984 -
Stockholders' equity:
Common stock 266 181 266
Additional paid-in capital 140,135 28,248 140,067
Deferred compensation (344) (1,324) (690)
Treasury stock (515) (515) (515)
Retained earnings (deficit) 10,295 7,630 (867)
Common stock subscription
receivable - - (102,765)
Accumulated other comprehensive
income 3,877 2,158 2,749
----------------------------------
Total stockholders' equity 153,714 36,378 38,245
----------------------------------
Total liabilities and
stockholders' equity $362,100 $270,932 $301,498
==================================
BEACON ROOFING SUPPLY, INC.
Condensed Consolidated Cash Flows
---------------------------------------------------------------------
Unaudited Six Months Ended March 31,
(Dollars In thousands) 2005 2004
---------------------------------------------------------------------
Operating activities:
Net income (loss) $11,161 $(6,857)
Adjustments to reconcile net income
(loss)to net cash provided by
operating activities:
Depreciation and amortization 3,940 3,427
Deferred interest - 2,545
Stock-based compensation 345 642
Change in value of warrant
derivatives - 11,000
Loss on early retirement of debt 915 3,285
Deferred income taxes 232 (201)
Changes in assets and liabilities,
net of the effects of business
acquired:
Accounts receivable 14,195 18,696
Inventories (20,441) (14,618)
Prepaid expenses and other
assets 1,826 1,239
Accounts payable and accrued
expenses (6,738) (6,842)
----------------------------
Net cash provided by operating activities 5,435 12,316
Investing activities:
Purchases of property and equipment, net
of sale proceeds (4,791) (1,228)
Acquisition of business, net of cash
acquired (30,334) -
----------------------------
Net cash used in investing activities (35,125) (1,228)
Financing activities:
Borrowings under revolving lines of
credit 22,994 49,786
Borrowings (repayments) under senior
notes payable, and other (1,791) 29,846
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 102,833 250
Deferred financing costs (342) (1,400)
----------------------------
Net cash provided by (used in) financing
activities 41,931 (9,574)
Effect of exchange rate changes on cash (25) 17
----------------------------
Net increase in cash 12,216 1,531
Cash (overdraft) at beginning of year (3,694) 64
----------------------------
Cash at end of period $8,522 $1,595
============================
Non-cash transactions:
Capital lease additions $- $703
SOURCE: Beacon Roofing Supply, Inc.
Beacon Roofing Supply, Inc.
Dave Grace, 978-535-7668 x14
CFO