Beacon Roofing Supply Reports Record Results for the Fourth Quarter and for Fiscal 2005

December 7, 2005

PEABODY, Mass., Dec 07, 2005 (BUSINESS WIRE) -- Beacon Roofing Supply, Inc. (Nasdaq: BECN) announced today record performance for the fourth quarter and fiscal year ended September 24, 2005.

Fourth Quarter Results

Sales increased 28.3% to a record $231.2 million in the fourth quarter of 2005 from $180.2 million in the fourth quarter of fiscal year 2004, reflecting acquisitions made in 2005 and strong internal growth across all three major product groups: residential roofing, non-residential roofing and complementary building products. The internal sales ("existing markets") growth rate was 10.9% in the fourth quarter of 2005 while our acquired companies contributed the remaining sales increase. There was one less business day in the fourth quarter of 2005 compared to 2004.

In 2005, Beacon acquired three companies, including one late in the fourth quarter; announced the acquisition of Shelter Distribution, Inc. which currently has 53 branches; and opened six new branches.

Gross profit increased 24.1% to $55.8 million from $44.9 million a year ago while our overall gross margin rate was 24.1% compared to 24.9% last year. However, our existing markets' gross margin rate increased 0.3% from 24.9% to 25.2%. Due to their product mix, the acquired branches have lower gross margin rates than our existing markets.

SG&A expenses increased $6.0 million or 18.8% compared to 2004 due primarily to the acquisitions. Existing markets' SG&A expenses increased $1.3 million or 4.1% due primarily to higher professional fees for the reasons discussed below for the full year and a higher provision for bad debts. As a percentage of net sales, SG&A expenses declined to 16.4% from 17.7%.

Stock-based compensation declined from $9.4 million to $0.2 million in the fourth quarter of 2005. In 2004, the Company incurred significant stock-based compensation expense primarily due to a lapse of certain restrictions on employee stock and stock options at the time of the Company's initial public offering (IPO).

Operating income increased 391% to $17.7 million in the fourth quarter of 2005 compared to $3.6 million in 2004. Even after exclusion of the benefit from the decrease in stock-based compensation discussed above, operating income increased by 36.9%. As a percentage of net sales, operating income increased to 7.6% in the fourth quarter of 2005.

The Company's net income for the fourth quarter was a record $10.4 million compared to a net loss of ($5.5) million in the fourth quarter of 2004. The 2004 loss was due principally to a $9.4 million charge for stock-based compensation and a $4.7 million non-deductible charge associated with the change in the value of the Company's warrant derivative liabilities discussed below. Interest expense declined 43.0% or $1.0 million primarily from the payoff of high-interest debt following the IPO.

Diluted net income per share was $0.38 in the fourth quarter of 2005 compared to a net loss per share of $(0.30) in 2004.

2005 Annual Results

Sales increased 30.3% to a record $850.9 million in fiscal year 2005 from $652.9 million in fiscal year 2004, reflecting the 2005 acquisitions and strong internal growth across all three major product groups. The internal sales growth rate was 15.7% in 2005 while our acquisitions contributed the remaining sales increase.

Gross profit increased 25.0% to $207.2 million in 2005 compared with $165.7 million in 2004, with our overall gross margin rate at 24.3% compared to 25.4% in 2004. Existing markets' gross margin rate dropped only 0.1% from 25.4% to 25.3%. As mentioned above, the acquired branches have lower gross margin rates than our existing markets, which has lowered our overall rate.

Selling, general and administrative (SG&A) expenses increased $25.0 million or 20.7% in 2005 compared to 2004, mostly due to the impact of the 2005 acquisitions. However, as a percentage of net sales, SG&A expenses declined to 17.1% from 18.5%. Existing markets' SG&A expenses increased $12.0 million primarily due to higher payroll costs associated with the sales volume increase, six new branches opened in 2005, higher transportation costs, and higher professional fees for public-company reporting and complying with Sarbanes-Oxley regulations.

Stock-based compensation declined from $10.3 million to $0.7 million in 2005 due to the reason mentioned above for the fourth quarter.

Operating income increased 75.1% to $60.7 million in 2005 from $34.7 million in 2004. Even after exclusion of the benefit from the decrease in stock-based compensation discussed above, operating income increased by 36.6% in 2005. As a percentage of net sales, operating income increased to 7.1% in 2005.

The Company had record net income of $32.9 million in 2005 compared to a net loss of ($15.4) million in 2004 due principally to the $26.0 million increase in operating income and a $25.0 million non-deductible charge incurred in 2004 for the change in the value of the Company's warrant derivative liabilities. The derivatives were 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 retirement of debt associated with a debt refinancing compared to a $0.9 million loss in 2005. Interest expense declined 57.7% or $6.7 million in 2005 from 2004, primarily from the payoff of high-interest debt following the IPO. The Company also experienced a favorable drop in its effective income tax rate.

Diluted net income per share was $1.20 in 2005 compared to a net loss per share of ($0.86) in 2004.

Cash flow from operations was $8.7 million during 2005 compared to $23.1 million during 2004. While accounts receivable increased in line with the sales increase, the Company curtailed its purchases in the fourth quarter of 2005 and paid down its accounts payable accordingly. The Company had built up its inventories prior to the fourth quarter to counteract some price increases and temporary 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.

Robert Buck, the Company's President & Chief Executive Officer, stated, "We are very pleased with our fourth quarter and annual 2005 results that exceeded our expectations. Our business was very strong all year and we were able to add some terrific new companies and open six new branches. These achievements took place while we were wrapping up our acquisition of Shelter, which closed in October 2005. We also refinanced our credit facilities and continue to manage our balance sheet and liquidity to aggressively pursue additional growth opportunities. We continue to be very excited about our future as we spread our presence across the United States and Canada."

The Company will be holding its investor conference call tomorrow, December 8, 2005, at 9:00 a.m. Eastern Time. The dial-in-number is 800.901.5231 (participant passcode 34334860) (international dial-in-number 617.786.2961). 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 138 branches in 29 states in the Northeast, Mid-Atlantic, Midwest, Central Plains, 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 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
            Condensed Consolidated Statements of Operations


Fourth Quarter Ended ------------------------------------------------- (Dollars in thousands, except per share data) September 24, % of September 25, % of 2005 Net Sales 2004 Net Sales -------- ------------- --------- ------------- -----------

Net sales $231,170 100.0% $180,195 100.0% Cost of products sold 175,405 75.9% 135,245 75.1% ------------- --------- ------------- ----------- Gross profit 55,765 24.1% 44,950 24.9% ------------- --------- ------------- -----------

Operating expenses: Selling, general and administrative expenses 37,917 16.4% 31,912 17.7% Stock-based compensation 170 0.1% 9,440 5.2% ------------- --------- ------------- ----------- Total operating expenses 38,087 16.5% 41,352 22.9% ------------- --------- ------------- -----------

Income from operations 17,678 7.6% 3,598 2.0% ------------- --------- ------------- -----------

Other Expense: Interest expense 1,376 0.5% 2,416 1.3% Change in value of warrant derivatives - - 4,690 2.6% ------------- --------- ------------- ----------- Total other expenses 1,376 0.5% 7,106 3.9% ------------- --------- ------------- -----------

Income (loss) before income taxes 16,302 7.1% (3,508) -1.9% Income taxes 5,877 2.7% 1,951 1.1% ------------- --------- ------------- -----------

Net income (loss) $10,425 4.5% $(5,459) -3.0% ============= ========= ============= ===========

Net income (loss) per share: Basic $0.39 $(0.30) ============= ============= Diluted $0.38 $(0.30) ============= =============



Weighted average shares used in computing net income (loss) per share: Basic 26,661,859 18,152,231 ============= ============= Diluted 27,565,829 18,152,231 ============= =============



BEACON ROOFING SUPPLY, INC Condensed Consolidated Statements of Operations

Fiscal Year Ended ----------------------------------------------- (Dollars in thousands, except per share data) September 24, % of September 25, % of 2005 Net Sales 2004 Net Sales --------------- ------------- --------- ------------- ---------

Net sales $850,928 100.0% $652,909 100.0% Cost of products sold 643,733 75.7% 487,200 74.6% ------------- --------- ------------- --------- Gross profit 207,195 24.3% 165,709 25.4% ------------- --------- ------------- ---------

Operating expenses: Selling, general and administrative expenses 145,786 17.1% 120,738 18.5% Stock-based compensation 690 0.1% 10,299 1.6% ------------- --------- ------------- --------- Total operating expenses 146,476 17.2% 131,037 20.1% ------------- --------- ------------- ---------

Income from operations 60,719 7.1% 34,672 5.3% ------------- --------- ------------- ---------

Other expense: Interest expense 4,911 0.5% 11,621 1.8% Change in value of warrant derivatives - - 24,992 3.8% Loss on early retirement of debt 915 0.1% 3,285 0.5% ------------- --------- ------------- --------- Total other expenses 5,826 0.6% 39,898 6.1% ------------- --------- ------------- ---------

Income (loss) before income taxes 54,893 6.5% (5,226) -0.8% Income taxes 21,976 2.6% 10,129 1.6% ------------- --------- ------------- ---------

Net income (loss) $32,917 3.9% $(15,355) -2.4% ============= ========= ============= =========

Net income (loss) per share: Basic $1.24 $(0.86) ============= ============= Diluted $1.20 $(0.86) ============= =============



Weighted average shares used in computing net income (loss) per share: Basic 26,477,955 17,905,203 ============= ============= Diluted 27,412,629 17,905,203 ============= =============



BEACON ROOFING SUPPLY, INC Condensed Consolidated Balance Sheets

September 24, September 25, (Dollars in thousands) 2005 2004 --------------------------------------- -------------- --------------- Assets Current assets: Accounts receivable, net $123,345 $93,824 Inventories 82,423 68,573 Prepaid expenses and other assets 20,106 14,974 Deferred income taxes 4,339 3,223 -------------- --------------- Total current assets 230,213 180,594

Property and equipment, net 31,767 25,101 Goodwill, net 108,553 94,162 Other assets 13,904 1,641 -------------- ---------------

Total assets $384,437 $301,498 ============== ===============



Liabilities and stockholders' equity Current liabilities: Cash overdraft $3,557 $3,694 Borrowings under revolving lines of credit - 44,592 Accounts payable 70,158 74,043 Accrued expenses 29,146 21,524 Warrant derivative liabilities - 34,335 Current portion of long-term obligations 6,348 6,152 -------------- --------------- Total current liabilities 109,209 184,340

Borrowings under revolving lines of credit 63,769 - Senior notes payable and other obligations, net of current 20,156 22,660 Junior subordinated notes payable - 17,071 Subordinated notes payable to related parties - 29,442 Deferred income taxes 10,890 8,764 Long-term obligations under capital leases, net of current 1,668 976

Stockholders' equity: Common stock 269 266 Additional paid-in capital 142,173 140,067 Deferred compensation - (690) Treasury stock (515) (515) Retained earnings (accumulated deficit) 32,050 (867) Common stock subscription receivable - (102,765) Accumulated other comprehensive income 4,768 2,749 -------------- --------------- Total stockholders' equity 178,745 38,245 -------------- ---------------

Total liabilities and stockholders' equity $384,437 $301,498 ============== ===============



BEACON ROOFING SUPPLY, INC Condensed Consolidated Statements of Cash Flows

Fiscal Year Ended ------------------------------ September 24, September 25, (In thousands) 2005 2004 -------------------------------------- --------------- -------------- Operating activities: Net income (loss) $ 32,917 $ (15,355) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 8,748 6,922 Deferred interest - 4,445 Stock-based compensation 690 10,299 Change in value of warrant derivatives - 24,992 Loss on early retirement of debt 915 3,285 Unrealized gain on interest rate collar - (182) Deferred income taxes 896 (940) Changes in assets and liabilities, net of the effects of acquisitions: Accounts receivable (17,384) (6,034) Inventories (4,828) (13,166) Prepaid expenses and other assets (1,716) (4,815) Accounts payable and accrued expenses (11,569) 13,635 --------------- -------------- Net cash provided by operating activities 8,669 23,086 --------------- -------------- Investing activities: Purchases of property and equipment (9,583) (5,127) Acquisition of businesses, net of cash acquired (37,705) - --------------- -------------- Net cash used in investing activities (47,288) (5,127) --------------- -------------- Financing activities: Borrowings under revolving lines of credit 18,726 43,040 Borrowings (repayments) under senior notes & other (2,817) 26,934 Early extinguishment of debt (18,015) (66,556) Repayment of junior subordinated notes and warrants (34,335) (21,500) Repayments on subordinated notes to related parties (29,442) (47) Proceeds from sale of common stock 104,874 250 Initial public offering costs - (2,468) Deferred financing costs (342) (1,525) --------------- -------------- Net cash provided by (used in) financing activities 38,649 (21,872) --------------- -------------- Effect of exchange rate changes on cash 107 155 --------------- -------------- Net increase (decrease) in cash 137 (3,758) Cash (overdraft) at beginning of period (3,694) 64 --------------- -------------- Cash overdraft at end of period $ (3,557) $ (3,694) =============== ============== Non-cash financing and investing activities: Capital lease transactions $ 1,228 $ 982 Common stock subscription receivable $ - $ 102,765 Reimbursement of offering costs by warrant holders $ - $ 2,583





BEACON ROOFING SUPPLY INC Consolidated Sales by Product Line

For the Fiscal Year Ended:

September 24, September 25, 2005 2004 -------------- -------------- (dollars in millions) Net Net Sales Mix % Sales Mix % Growth ---------------------------------- ------ ------- ------ ------------- Residential roofing products $346.3 40.7% $268.8 41.2% $ 77.5 28.8 % Non-residential roofing products 305.6 35.9% 223.2 34.2% 82.4 36.9 % Complementary building products 199.0 23.4% 160.9 24.6% 38.1 23.7 % ------- ------ ------- ------ -------------

$850.9 100.0% $652.9 100.0% $198.0 30.3 % ======= ====== ======= ====== =============



Consolidated Sales by Product Line for Existing Markets(a)

For the Three Months Ended:

September 24, September 25, 2005 2004 -------------- -------------- (dollars in millions) Net Net Sales Mix % Sales Mix % Growth ----------------------------------- ------ ------- ------ ------------ Residential roofing products $73.9 37.0% $68.3 37.9% $ 5.6 8.2 % Non-residential roofing products 79.7 39.9% 68.9 38.2% 10.8 15.7 % Complementary building products 46.2 23.1% 43.0 23.9% 3.2 7.4 % ------- ------ ------- ------ ------------

$199.8 100.0% $180.2 100.0% $19.6 10.9 % ======= ====== ======= ====== ============

For the Fiscal Year Ended:

September 24, September 25, 2005 2004 -------------- -------------- (dollars in millions) Net Net Sales Mix % Sales Mix % Growth ---------------------------------- ------ ------- ------ ------------- Residential roofing products $292.9 38.8% $268.8 41.2% $ 24.1 9.0 % Non-residential roofing products 284.1 37.6% 223.2 34.2% 60.9 27.3 % Complementary building products 178.5 23.6% 160.9 24.6% 17.6 10.9 % ------- ------ ------- ------ -------------

$755.5 100.0% $652.9 100.0% $102.6 15.7 % ======= ====== ======= ====== =============

(a) Excludes branches, such as JGA Corp. branches, acquired during fiscal 2005.

SOURCE: Beacon Roofing Supply, Inc.

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