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