PEABODY, Mass.--(BUSINESS WIRE)--Feb. 8, 2007--Beacon Roofing
Supply, Inc. ("Beacon" or the "Company") (Nasdaq: BECN) announced
results today for its fiscal year 2007 first quarter ended December
31, 2006 ("2007").
Sales increased 11.9% to a record $380.2 million in 2007 from
$339.9 million in fiscal year 2006 that ended December 31, 2005
("2006"), reflecting acquisitions made during fiscal year 2006,
partially offset by the negative impact from having five fewer
business days in 2007. Internal ("existing market") sales declined
5.5% in 2007 but increased 2.3% when calculated on a per business day
basis. This existing market growth rate was still below the high pace
of recent quarters and can possibly be attributed, at least in part,
to a significant slowdown in new residential construction, a
flattening of inflation and the prior-year extensive re-roofing and
reconstruction activities in some of the Company's markets following
Hurricanes Katrina and Rita. A negative sales trend continued into the
first month of the second quarter of this year, which may not be
reflective of the entire quarter's sales results due to the
seasonality of our second quarter.
Existing markets exclude branches acquired in the four quarters
prior to the start of the reporting period. During fiscal year 2006,
Beacon made several major acquisitions, including the purchase of
Shelter Distribution, Inc. which currently operates 58 branches, and
opened six new branches. In 2007, Beacon opened two new branches and
closed two branches.
Gross profit in the first quarter increased 9.6% to $91.7 million
from $83.7 million a year ago, while the overall gross margin rate was
24.1% compared to 24.6% last year. The existing market gross margin
rate declined to 23.8% in 2007 from 24.4% in 2006. The declines in the
gross margin rates were caused partly by a product mix shift towards
more non-residential roofing products, which generally have lower
gross margins, and also by an increase in general competitive
conditions in certain markets. The overall gross margin rate was
beneficially impacted by the influence of the acquired companies'
higher gross margins.
Operating expenses increased $12.7 million, or 21.9%, compared to
last year, due primarily to the fiscal year 2006 acquisitions. As a
percentage of net sales, overall operating expenses increased to 18.6%
from 17.0%, as the acquired companies had higher expenses as a rate of
their sales, including amortization expense that increased
approximately $1.2 million resulting from the amortization of the
intangible assets recorded for acquired companies' customer
relationships.
Existing market operating expenses decreased $1.9 million, or
4.6%, due primarily to reductions in bad debt and group insurance
expenses, along with lower payroll and related costs that resulted
from having one less payroll week in 2007 than in 2006. These factors
were partially offset by increased salary expense for new corporate
and regional support positions to help manage the Company's rapid
growth and increased warehouse expenses principally from five new
branches opened in existing markets since last year's first quarter.
Stock-based compensation (option) expense also increased $0.7 million
in 2007 from 2006. As a percentage of net sales, existing market
operating expenses increased slightly to 16.1% from 16.0% due
primarily to the lower sales.
Operating income declined 18.1% to $21.1 million in 2007 compared
to $25.7 million in 2006 due to all of the factors mentioned above. As
a percentage of net sales, operating income declined to 5.5% in 2007
from 7.6% in 2006. Existing market operating income decreased to 7.7%
from 8.4% of net sales.
Interest expense increased $2.3 million due primarily to the
additional borrowings associated with the acquisitions in fiscal year
2006. In addition, the Company refinanced its credit facilities in
2007, which also increased its debt level while providing additional
funds for future acquisitions and working capital requirements. The
new credit facility provides the Company with lower interest rates
than the prior credit facilities.
The Company's net income for the first quarter was $8.8 million
compared to $12.9 million in 2006. Diluted net income per share was
$0.20 in 2007 compared to $0.31 in 2006, a decrease of 35%.
Cash flow from operations was $3.6 million in 2007 compared to
$19.6 million in 2006. This decline mostly resulted from the decline
of $4.6 million in operating income and a $51.0 million decrease in
accounts payable and accrued expenses, due, in part, to early payment
discounts offered to the Company in 2007 and seasonal changes in
purchase volume. Partially offsetting these factors was a decrease of
$42.5 million in accounts receivable in 2007, mostly due to seasonal
changes in our sales volume and an improvement in the number of days
outstanding.
Robert Buck, the Company's President & Chief Executive Officer,
stated, "Although below our expectations, we had another record
quarter for sales despite five fewer business days this year and
comparisons to unusually strong sales in the first quarter of fiscal
2006. The prior-year quarter benefited from hurricane business in some
of our markets, higher inflation rates and an elevated level of new
residential construction that has slowed considerably since that time.
I am proud of the fact that we were able to reduce our existing market
operating expenses in 2007 under challenging circumstances. We
recently also successfully converted the remaining region of Shelter
on to our enterprise-wide resource planning (ERP) computer system,
which we regard as a competitive advantage. In addition, the
first-quarter refinancing has provided us with available cash and
borrowing capacity to continue our aggressive pursuit of
acquisitions."
The Company will be holding its investor conference call today,
February 8, 2007, at 10:00 a.m. Eastern Time. The dial-in-number is
866.202.4683 (participant passcode 96330772) (international
dial-in-number 617.213.8846). 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 157 branches
in 31 states in the United States and 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
First Quarter Ended
---------------------------------------
% of % of
(Dollars in thousands, except December 31, Net December 31, Net
per share data) 2006 (a) Sales 2005 Sales
------------------- -------------------
Net sales $ 380,209 100.0% $ 339,885 100.0%
Cost of products sold 288,475 75.9% 256,178 75.4%
------------------- -------------------
Gross profit 91,734 24.1% 83,707 24.6%
Operating expenses 70,672 18.6% 57,995 17.0%
------------------- -------------------
Income from operations 21,062 5.5% 25,712 7.6%
Interest expense 6,328 1.6% 4,019 1.2%
------------------- -------------------
Income before income taxes 14,734 3.9% 21,693 6.4%
Income taxes 5,929 1.6% 8,785 2.6%
------------------- -------------------
Net income $ 8,805 2.3% $ 12,908 3.8%
=================== ===================
Net income per share:
Basic $ 0.20 $ 0.32
============ ============
Diluted $ 0.20 $ 0.31
============ ============
Weighted average shares used
in computing net income per
share:
Basic 43,869,559 40,582,107
============ ============
Diluted 45,088,380 41,921,325
============ ============
(a) The first quarter of fiscal year 2007 had five fewer business days
as compared to the first quarter of fiscal year 2006.
Note: All share and per share data reflect the June 2006 three-for-two
stock split.
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Balance Sheets
December 31, December 31, September 30,
(Dollars in thousands) 2006 2005 2006
------------------------------ ---------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 42,576 $ 4,006 $ 1,847
Accounts receivable, net 167,338 155,414 210,676
Inventories 165,036 152,376 164,285
Prepaid expenses and other
assets 41,161 38,623 38,133
Deferred income taxes 11,238 10,686 10,704
---------------------------------------
Total current assets 427,349 361,105 425,645
Property and equipment, net 66,530 48,826 59,291
Goodwill 288,667 182,333 289,282
Other assets, net 65,676 42,242 65,672
---------------------------------------
Total assets $ 848,222 $ 634,506 $ 839,890
=======================================
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $ 98,024 $ 109,541 $ 154,878
Accrued expenses 63,906 54,013 58,719
Current portion of long-term
obligations 6,564 24,823 6,657
---------------------------------------
Total current liabilities 168,494 188,377 220,254
Borrowings under revolving
lines of credit - 118,981 229,752
Senior notes payable and other
obligations, net of current
portion 360,996 60,501 79,892
Deferred income taxes 18,801 20,149 18,823
Stockholders' equity:
Common stock 439 437 439
Additional paid-in capital 204,842 196,662 203,433
Treasury stock - (515) -
Retained earnings 90,166 44,958 81,361
Accumulated other
comprehensive income 4,484 4,956 5,936
---------------------------------------
Total stockholders' equity 299,931 246,498 291,169
---------------------------------------
Total liabilities and
stockholders' equity $ 848,222 $ 634,506 $ 839,890
=======================================
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Cash Flows
First Quarter Ended
-----------------------------------
(In thousands) December 31, 2006 December 31, 2005
-----------------------------------
Operating activities:
Net income $ 8,805 $ 12,908
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 6,795 4,708
Stock-based compensation 1,330 598
Unrealized (gain) loss on
interest rate collars (106) 244
Deferred income taxes (516) 258
Changes in assets and liabilities,
net of the effects of
acquisitions:
Accounts receivable 42,548 18,558
Inventories (1,192) (15,591)
Prepaid expenses and other
assets (3,084) (8,063)
Accounts payable and accrued
expenses (50,982) 6,004
-----------------------------------
Net cash provided by operating
activities 3,598 19,624
-----------------------------------
Investing activities:
Purchases of property and
equipment (11,390) (3,435)
Acquisition of businesses, net of
cash acquired 129 (173,130)
-----------------------------------
Net cash used in investing
activities (11,261) (176,565)
-----------------------------------
Financing activities:
Borrowings (repayments) under
revolving lines of credit (229,752) 55,182
Borrowings under senior notes &
other 287,208 57,947
Repayments of senior notes payable (5,943) (835)
Net proceeds from sale of common
stock - 51,569
Proceeds from exercise of options 79 754
Deferred financing costs (2,954) (1,856)
Income tax benefit from stock-
based compensation deductions in
excess of the associated
recognized compensation cost - 1,736
-----------------------------------
Net cash provided by financing
activities 48,638 164,497
Effect of exchange rate changes on
cash (246) 7
-----------------------------------
Net increase in cash and cash
equivalents 40,729 7,563
Cash and cash equivalents
(overdraft) at beginning of
period 1,847 (3,557)
-----------------------------------
Cash and cash equivalents at end
of period $ 42,576 $ 4,006
===================================
Non-cash financing and investing
activities:
Conversion of senior notes payable
to new senior notes $ 66,839 $ 25,160
BEACON ROOFING SUPPLY INC
Consolidated Sales by Product Line
For the First Quarter Ended:
December 31, December 31,
2006 (a) 2005
Net Net
(dollars in millions) Sales Mix % Sales Mix % Change
-------------- ------- ------ --------------
Residential roofing
products $179.2 47.1% $161.4 47.5% $ 17.8 11.0%
Non-residential roofing
products 120.4 31.7% 98.0 28.8% 22.4 22.9%
Complementary building
products 80.6 21.2% 80.5 23.7% 0.1 0.1%
------- ------ ------- ------ -------
$380.2 100.0% $339.9 100.0% $ 40.3 11.9%
======= ====== ======= ====== =======
Consolidated Sales by Product Line for Existing Markets*
For the First Quarter Ended:
December 31, December 31,
2006 (a) 2005
Net Net
(dollars in millions) Sales Mix % Sales Mix % Change
-------------- ------- ------ --------------
Residential roofing
products $ 99.7 40.5% $111.5 42.8% $(11.8) -10.6%
Non-residential roofing
products 94.1 38.2% 91.0 34.9% 3.1 3.4%
Complementary building
products 52.4 21.3% 58.0 22.3% (5.6) -9.7%
------- ------ ------- ------ -------
$246.2 100.0% $260.5 100.0% $(14.3) -5.5%
======= ====== ======= ====== =======
Existing Market Sales By Business Day (b) during the First Quarter
Ended:
December 31, December 31,
2006 2005
Net Net
(dollars in millions) Sales Mix % Sales Mix % Change
-------------- ------- ------ --------------
Residential roofing
products $1.635 40.5% $1.689 42.8% $(0.05) -3.2%
Non-residential roofing
products 1.543 38.2% 1.379 34.9% 0.16 11.9%
Complementary building
products 0.859 21.3% 0.878 22.3% (0.02) -2.2%
------- ------ ------- ------ -------
$4.037 100.0% $3.946 100.0% $ 0.09 2.3%
======= ====== ======= ====== =======
*Excludes branches, such as Shelter branches, acquired during fiscal
2006.
(a) The first quarter of fiscal year 2007 had five fewer business days
as compared to the first quarter of fiscal year 2006.
(b) Calculated by dividing the total first-quarter existing market
sales above by the number of business days in the respective quarter.
This table is being presented since there was a significant difference
in the number of business days between this year and last year's
first quarter and we therefore believe this information may be useful
to investors.
CONTACT:
Beacon Roofing Supply, Inc.
Dave Grace
978-535-7668 x14
CFO
SOURCE:
Beacon Roofing Supply, Inc.