PEABODY, Mass.--(BUSINESS WIRE)--May 10, 2006--Beacon Roofing
Supply, Inc. (Nasdaq: BECN) (the "Company") announced today record
performance for its fiscal 2006 second-quarter and year-to-date
periods ended March 31, 2006.
Second Quarter
Sales increased 87.3% to a record $322.4 million in the second
quarter of fiscal 2006 ("2006") from $172.1 million in the second
quarter of fiscal 2005("2005"), reflecting robust internal growth of
24.1%, with strong sales in all three major product lines: residential
roofing, non-residential roofing and complementary building products.
Shelter Distribution ("Shelter"), acquired in mid-October 2005, along
with the other companies acquired since the second quarter of 2005,
contributed the remaining sales increase. The Company also opened nine
new branches since last year's second quarter.
Gross profit increased 87.9% to $77.8 million in 2006 from $41.4
million in 2005. Gross margin increased slightly from 24.0% to 24.1%,
helped by a 24.3% gross margin from the acquired companies. The
Company's gross margin in existing markets was unchanged at 24.0%.
Existing markets exclude branches acquired in the year prior to the
start of the reporting period.
Operating expenses increased $29.5 million, or 82.2%, in 2006
compared to 2005, reflecting increases of $26.8 million from the
acquired companies and $2.7 million, or an increase of 7.6%, in
existing markets. The existing market increase was primarily due to
higher payroll costs and other expenses associated with the sales
volume increase, partially offset by lower insurance claim costs and
lower professional fees. As a percentage of net sales, overall
operating expenses fell to 20.3% in 2006 from 20.8% in 2005 primarily
due to the leveraging of fixed costs over the higher sales volume. The
operating expense rate in existing markets declined to 18.1% from
20.8%, also mostly as a result of the leveraging of fixed costs over
the higher sales volume.
Operating income increased 125.6% to a record $12.4 million in
2006 from $5.5 million in 2005. As a percentage of net sales,
operating income increased to 3.8% from 3.2%, reflecting the lower
expense rate. Due to the higher sales, stable gross margin and lower
expense rate discussed above, existing market operating margin rose to
6.0% from 3.2%.
Interest expense increased $3.1 million to $4.3 million in 2006
due to higher borrowings (utilized to finance our acquisitions) and
higher interest rates, partially offset by the benefit from the
successful public sale of two million shares of our common stock in
December 2005. In connection with the acquisitions in January 2006,
the Company and its lenders amended the Company's revolving lines of
credit and term loans to, among other things, increase the revolving
lines of credit and term loans to totals of $280 and $90 million,
respectively. The net proceeds from the December public offering
totaled $51.6 million, which were used to pay down our revolver
borrowings.
The Company achieved record second-quarter net income of $4.8
million in 2006 compared to net income of $2.4 million in 2005, an
increase of 97.5%. The Company has estimated an annual income tax rate
of 40.5% for fiscal 2006 compared to the rate of 43.6% provided for in
last year's second quarter. The annual fiscal 2005 income tax rate was
40.0%.
Diluted net income per share for the second quarter was $0.16 in
2006 compared to $0.09 per share in 2005, a 77.8% increase.
Year-to-Date
Year-to-date (first-half) sales increased 78.4% to a record $662.3
million in 2006 from $371.3 million in 2005, reflecting internal
growth of 19.1%, with strong sales in all three major product lines.
The acquired companies contributed the remaining sales increase. The
Company also opened nine new branches since last year's first half.
Gross profit increased 76.1% to $161.5 million in 2006 from $91.7
million in 2005. Gross margin declined from 24.7% to 24.4% due to a
lower gross margin from the acquired companies. However, the Company's
gross margin in existing markets was unchanged at 25.5%.
Operating expenses increased $54.5 million, or 79.1%, in 2006
compared to 2005, reflecting increases of $48.9 million from our
acquired companies and $5.6 million, or an increase of 8.6%, in
existing markets. The existing market increase was primarily due to
higher payroll costs and other expenses associated with the sales
volume increase. As a percentage of net sales, overall operating
expenses were unchanged at 18.6%. The operating expense rate in
existing markets declined to 17.3% from 19.0%, mostly as a result of
the leveraging of fixed costs over the higher sales volume.
Operating income increased 66.9% to a record $38.1 million in 2006
from $22.8 million in 2005. As a percentage of net sales, operating
income declined to 5.7% from 6.1%, reflecting a higher overall expense
rate from the acquired companies, mostly at Shelter. Due to the higher
sales, stable gross margin and lower expense rate discussed above,
existing market operating margin rose to 8.2% from 6.5%.
Interest expense increased $6.2 million to $8.3 million in 2006
due to higher borrowings and higher interest rates, partially offset
by the benefit from the sale of common stock mentioned above.
The Company achieved record first-half net income of $17.7 million
in 2006 compared to net income of $11.2 million in 2005, an increase
of 58.5%. Net income in 2005 included a $0.9 million charge for the
early of retirement of debt. The Company has estimated an annual
income tax rate of 40.5% for fiscal 2006 compared to the rate of 43.7%
provided for in last year's first half.
Diluted net income per share for the first half was $0.61 in 2006
compared to $0.41 per share in 2005, an increase of 48.8%.
Cash flow from operations was $35.7 million in the first half of
2006 compared to $2.8 million in 2005. The Company used a portion of
its 2006 cash from operations to increase inventories by $32.8
million, exclusive of the effects of businesses acquired, in
anticipation of a continued strong sales growth rate.
Robert Buck, the Company's President & Chief Executive Officer,
stated, "Our second quarter year-over-year performance was even
stronger than what we achieved in our first quarter. Historically, our
second quarter has been our lowest sales quarter and we have typically
incurred net losses. Although we believe our sales benefited somewhat
from the milder East Coast weather and Gulf Coast rebuilding, each of
our regions performed very well. In addition, our overall expense
performance was encouraging. We continue to work on the integration of
our recent acquisitions while we look for further opportunistic
acquisitions such as the ones we completed in the second quarter. We
also know that our continued success is dependent upon having the most
talented people working in a highly motivating environment, and we are
focused on that goal throughout the year."
Beacon Roofing Supply will be holding its investor conference call
today, May 10, 2006, at 11:00 a.m. Eastern Time. The dial-in-number is
866.770.7129 (participant passcode 48654296). 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 148 branches
in 30 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.
Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------------------
Three Months Ended
------------------------------------------
(Dollars in thousands,
except per share March 31, % of March 31, % of
data) 2006 Sales 2005 Sales
----------------------------------------------------------------------
Net sales $322,396 100.0% $172,116 100.0%
Cost of products sold 244,637 75.9% 130,746 76.0%
------------------------------------------
Gross profit 77,759 24.1% 41,370 24.0%
Operating expenses (include
stock-based compensation
expense of $735 and $172
for the three months
ended in 2006 and 2005,
respectively) 65,403 20.3% 35,894 20.9%
------------------------------------------
Income from operations 12,356 3.8% 5,476 3.2%
Other expenses:
Interest expense 4,294 1.3% 1,185 0.7%
------------------------------------------
Income before income taxes 8,062 2.5% 4,291 2.5%
Income taxes 3,286 0.9% 1,873 1.1%
------------------------------------------
Net income $4,776 1.5% $2,418 1.4%
==========================================
Net income per share:
Basic $0.16 $0.09
=========== ===========
Diluted $0.16 $0.09
=========== ===========
Weighted average shares used
in computing net income per
share:
Basic 29,053,876 26,384,001
=========== ===========
Diluted 29,873,185 27,344,123
=========== ===========
BEACON ROOFING SUPPLY, INC.
Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------------------
Six Months Ended
------------------------------------------
(Dollars in thousands,
except per share March 31, % of March 31, % of
data) 2006 Sales 2005 Sales
----------------------------------------------------------------------
Net sales $662,282 100.0% $371,306 100.0%
Cost of products sold 500,815 75.6% 279,590 75.3%
------------------------------------------
Gross profit 161,467 24.4% 91,716 24.7%
Operating expenses
(include stock-based
compensation expense of
$1,333 and $346 for the
six months ended in 2006
and 2005, respectively) 123,399 18.6% 68,907 18.6%
------------------------------------------
Income from operations 38,068 5.7% 22,809 6.1%
Other expenses:
Interest expense 8,312 1.3% 2,077 0.6%
Loss on early
retirement of debt - - 915 0.2%
------------------------------------------
Income before income taxes 29,756 4.5% 19,817 5.3%
Income taxes 12,071 1.7% 8,656 2.3%
------------------------------------------
Net income $17,685 2.7% $11,161 3.0%
==========================================
Net income per share:
Basic $0.63 $0.42
=========== ===========
Diluted $0.61 $0.41
=========== ===========
Weighted average shares
used in computing net
income per share:
Basic 28,011,772 26,371,317
=========== ===========
Diluted 28,924,347 27,323,528
=========== ===========
BEACON ROOFING SUPPLY, INC.
Condensed Consolidated Balance Sheets
-------------------------------------------- ---------- --------------
(Unaudited) (Unaudited)
(Dollars in thousands) March 31, March 31, September 24,
2006 2005 2005
--------------------------------- ---------- --------- -------------
Assets
Current assets:
Cash $ - $ 5,886 $ -
Accounts receivable, net 160,807 91,117 123,345
Inventories 178,494 95,980 82,423
Prepaid expenses and other
assets 35,346 19,135 22,656
Deferred income taxes 10,983 3,227 4,339
---------- --------- -------------
Total current assets 385,630 215,345 232,763
Property and equipment, net 52,862 29,392 31,767
Goodwill, net 258,445 104,375 108,553
Other assets, net 61,298 12,988 13,904
---------- --------- -------------
Total assets $ 758,235 $ 362,100 $ 386,987
========== ========= =============
Liabilities and stockholders'
equity
Current liabilities:
Cash overdraft $ 1,257 $ - $ 6,107
Borrowings under revolving
lines of credit - 67,859 -
Accounts payable 135,789 74,197 70,158
Accrued expenses 48,467 29,320 29,146
Current portions of long-
term debt and capital lease
obligations 28,370 6,161 6,348
---------- --------- -------------
Total current liabilities 213,883 177,537 111,759
Borrowings under revolving lines
of credit 208,605 - 63,769
Senior notes payable and other
obligations, net of current
portion 52,453 20,990 20,156
Deferred income taxes 20,473 9,045 10,890
Long-term obligations under
capital leases and other, net
of current portion 7,057 814 1,668
Stockholders' equity:
Common stock 294 266 269
Additional paid-in capital 201,368 140,135 142,173
Deferred compensation - (344) -
Treasury stock (515) (515) (515)
Retained earnings 49,735 10,295 32,050
Accumulated other comprehensive
income 4,882 3,877 4,768
---------- --------- -------------
Total stockholders' equity 255,764 153,714 178,745
---------- --------- -------------
Total liabilities and
stockholders' equity $ 758,235 $ 362,100 $ 386,987
========== ========= =============
BEACON ROOFING SUPPLY, INC.
Condensed Consolidated Cash Flows (Unaudited)
----------------------------------------------- --------------------
Six Months Ended
March 31,
(Dollars In thousands) 2006 2005
----------------------------------------------- ----------- ---------
Operating activities:
Net income $ 17,685 $ 11,161
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 10,816 3,940
Stock-based compensation 1,333 346
Loss on early retirement of debt - 915
Unrealized gain on interest rate collar (286) -
Deferred income taxes 289 232
Changes in assets and liabilities, net
of the effects of businesses acquired:
Accounts receivable 24,099 14,195
Inventories (32,768) (20,441)
Prepaid expenses and other assets (1,130) (811)
Accounts payable and accrued expenses 15,666 (6,738)
----------- ---------
Net cash provided by operating activities 35,704 2,799
Investing activities:
Purchases of property and equipment, net of
sales proceeds (4,160) (4,791)
Acquisition of businesses, net of cash acquired (279,588) (30,334)
----------- ---------
Net cash used in investing activities (283,748) (35,125)
Financing activities:
Borrowings under revolving lines of credit 144,825 22,994
Borrowings (repayments) under senior notes
payable, and other 52,295 (1,791)
Repurchase of warrants - (34,335)
Repayments of junior subordinated notes - (17,986)
Repayments of subordinated notes payable to
related parties - (29,442)
Proceeds from exercises of options 1,421 -
Net proceeds from sale of common stock 51,576 102,833
Income tax benefit from stock-based
compensation deductions in excess of recognized
compensation cost 4,890 -
Deferred financing costs (2,167) (342)
----------- ---------
Net cash provided by financing activities 252,840 41,931
Effect of exchange rate changes on cash 54 (25)
----------- ---------
Net increase in cash 4,850 9,580
Cash (overdraft) at beginning of year (6,107) (3,694)
----------- ---------
Cash (overdraft) at end of period $ (1,257) $ 5,886
=========== =========
Non-cash transactions:
Capital lease additions $ 3,518 $ -
BEACON ROOFING SUPPLY, INC
Consolidated Sales by Product Line
For the Three Months Ended:
March 31, 2006 March 31, 2005
-------------- --------------
Net Net
(dollars in millions) Sales Mix % Sales Mix % Growth
------------------------- ------- ------ ------- ------ --------------
Residential roofing
products $155.3 48.2% $71.0 41.2% $ 84.3 118.7%
Non-residential roofing
products 100.8 31.3% 57.1 34.2% 43.7 76.5%
Complementary building
products 66.3 20.6% 44.0 24.6% 22.3 50.7%
------- ------ ------- ------ -------
$322.4 100.0% $172.1 100.0% $150.3 87.3%
======= ====== ======= ====== =======
Consolidated Sales by Product Line for Existing Markets(a)
For the Three Months Ended:
March 31, 2006 March 31, 2005
-------------- --------------
Net Net
(dollars in millions) Sales Mix % Sales Mix % Growth
------------------------- ------- ------ ------- ------ --------------
Residential roofing
products $95.8 44.8% $71.0 41.2% $ 24.8 34.9%
Non-residential roofing
products 65.5 30.7% 57.1 33.2% 8.4 14.7%
Complementary building
products 52.3 24.5% 44.0 25.6% 8.3 18.9%
------- ------ ------- ------ -------
$213.6 100.0% $172.1 100.0% $ 41.5 24.1%
======= ====== ======= ====== =======
(a) Excludes branches from markets acquired since the beginning of the
second quarter of fiscal 2005.
Consolidated Sales by Product Line
For the Six Months Ended:
March 31, 2006 March 31, 2005
-------------- --------------
Net Net
(dollars in millions) Sales Mix % Sales Mix % Growth
------------------------- ------- ------ ------- ------ --------------
Residential roofing
products $317.6 48.0% $151.8 40.9% $165.8 109.2%
Non-residential roofing
products 199.0 30.0% 129.2 34.8% 69.8 54.0%
Complementary building
products 145.7 22.0% 90.3 24.3% 55.4 61.4%
------- ------ ------- ------ -------
$662.3 100.0% $371.3 100.0% $291.0 78.4%
======= ====== ======= ====== =======
Consolidated Sales by Product Line for Existing Markets(b)
For the Six Months Ended:
March 31, 2006 March 31, 2005
-------------- --------------
Net Net
(dollars in millions) Sales Mix % Sales Mix % Growth
------------------------- ------- ------ ------- ------ --------------
Residential roofing
products $167.9 41.4% $134.7 39.6% $ 33.2 24.6%
Non-residential roofing
products 141.9 35.0% 123.3 36.2% 18.6 15.1%
Complementary building
products 95.6 23.6% 82.4 24.2% 13.2 16.0%
------- ------ ------- ------ -------
$405.4 100.0% $340.4 100.0% $ 65.0 19.1%
======= ====== ======= ====== =======
(b) Excludes branches from markets acquired during fiscal 2006 and
2005.
CONTACT:
Beacon Roofing Supply, Inc.
Dave Grace, CFO,
978-535-7668 x14
SOURCE: Beacon Roofing Supply, Inc.