Beacon Roofing Supply Reports Fourth Quarter and Annual 2009 Results

December 1, 2009

PEABODY, Mass., Dec 01, 2009 (BUSINESS WIRE) -- Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its fourth quarter and fiscal year ended September 30, 2009.

Robert Buck, the Company's Chairman & Chief Executive Officer, stated: "We are very pleased to deliver record annual earnings for our shareholders in a still very difficult economic climate, and I congratulate our employees for their hard work and dedication in achieving these results. Our focus on cost controls, exceptional customer service and working capital management during 2009 has positioned us well to continue to deliver solid results, grow our Company, and increase shareholder value in 2010 even amidst the continuing softness in new residential and commercial construction."

Fourth Quarter

Fourth quarter sales declined 14.0% to $487.7 million in 2009 from $567.2 million in 2008. Residential roofing sales decreased 6.7% while non-residential roofing and complementary product sales declined 21.2% and 17.8%, respectively. All three major product lines were impacted by economic conditions this year and lower levels of new construction and remodeling. Residential roofing sales also faced a 36.8% increase in last year's fourth quarter, which resulted from significant manufacturer price increases and strong re-roofing activity in storm-affected regions. The Company also operated six fewer branches for most of 2009. This year's fourth quarter residential roofing sales benefited only slightly from price increases.

The Company's net income for the fourth quarter was $19.0 million compared to $24.9 million in 2008, down 23.7%. Diluted net income per share declined 23.6% to $0.42 compared to $0.55 in 2008.

Fiscal Year

Net income in 2009 was a record $52.4 million compared to $40.3 million in 2008, up 30.1%. Diluted net income per share increased by 27.8% to a record $1.15 from $0.90 in 2008.

Annual sales declined 2.8% to $1.73 billion in 2009 from $1.78 billion in 2008. Residential roofing sales increased 18.3% while non-residential roofing and complementary product sales declined 17.1% and 21.6%, respectively. Annual 2009 sales were subject to the same influences as fourth quarter sales, although sales in the first part of 2009 benefited more from estimated inflation and business from Hurricane Ike.

Earnings before interest, taxes, depreciation and amortization, and stock-based compensation or "Adjusted EBITDA," which is reconciled to net income in this press release, was $144.4 million in 2009 compared to $133.8 million in 2008, an increase of 7.9%.

Cash flow from operations increased to $87.6 million from $49.6 million in 2008. This increase was attributable, in part, to the increase in operating income and declines in accounts receivable and inventories. These factors were partially offset by reductions in accounts payable and accrued expenses, including the impact of lower purchases, some early payments made on accounts payable to certain vendors for discounted terms, and higher income tax payments. There was $82.7 million of cash on hand at the end of 2009 compared to $26.0 million at the end of 2008.

The Company will host a webcast and conference call today at 10:00 a.m. ET to discuss these results. The live webcast of the call, along with a webcast replay after the call, can be accessed at http://ir.beaconroofingsupply.com/events.cfm (the "Events & Presentations" page of the "Investor Relations" section of the Company's web site). There will be a slide presentation of the results available on that page of the website as well. For those unable to connect to the Internet or who may wish to ask questions, the conference call dial-in number is 800-390-5108 (international dial-in number 719-325-2479). To assure timely access, call participants should call in before 10:00 a.m.

Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products operating 172 branches in 37 states in the United States and in three provinces 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.

BECN-F

BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
                                   
      Fourth Quarter Ended   Fiscal Year Ended
      September 30, 2009   % of Net Sales   September 30, 2008   % of Net Sales   September 30, 2009   % of Net Sales   September 30, 2008   % of Net Sales
                                   
Net sales   $ 487,749   100.0 %   $ 567,201   100.0 %   $ 1,733,967   100.0 %   $ 1,784,495   100.0 %
Cost of products sold     374,728   76.8 %     427,452   75.4 %     1,322,845   76.3 %     1,364,487   76.5 %
Gross profit     113,021   23.2 %     139,749   24.6 %     411,122   23.7 %     420,008   23.5 %
                                   
Operating expenses     76,531   15.7 %     90,809   16.0 %     301,913   17.4 %     325,298   18.2 %
                                   
Income from operations     36,490   7.5 %     48,940   8.6 %     109,209   6.3 %     94,710   5.3 %
                                   
Interest expense     5,583   1.1 %     6,190   1.1 %     22,887   1.3 %     25,904   1.5 %
                                   
Income before income taxes     30,907   6.3 %     42,750   7.5 %     86,322   5.0 %     68,806   3.9 %
Income taxes     11,875   2.4 %     17,817   3.1 %     33,904   2.0 %     28,500   1.6 %
                                   
Net income   $ 19,032   3.9 %   $ 24,933   4.4 %   $ 52,418   3.0 %   $ 40,306   2.3 %
                                   
Net income per share:                                
  Basic   $ 0.42       $ 0.56       $ 1.16       $ 0.91    
  Diluted   $ 0.42       $ 0.55       $ 1.15       $ 0.90    
                                   
Weighted average shares used in computing                                
net income per share:                                
  Basic     45,165,603         44,346,293         45,007,313         44,346,293    
  Diluted     45,640,450         44,959,357         45,493,786         44,959,357    
                                   
                                   
 

Note: Percentages may not total due to rounding.

 

 
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Balance Sheets
           
           
      September 30, 2009   September 30, 2008

(In thousands)

       
           
Assets        
Current assets:        
  Cash and cash equivalents   $ 82,742     $ 26,038  
  Accounts receivable, net     227,379       283,652  
  Inventories     195,011       209,255  
  Prepaid expenses and other assets     52,714       45,799  
  Deferred income taxes     19,323       18,126  
Total current assets     577,169       582,870  
           
Property and equipment, net     52,965       56,712  
Goodwill     354,193       354,269  
Other assets, net     56,459       73,965  
           
Total assets   $ 1,040,786     $ 1,067,816  
           
           
Liabilities and stockholders' equity        
Current liabilities:        
  Accounts payable   $ 151,683     $ 198,429  
  Accrued expenses     75,536       89,755  
  Current portion of long-term obligations     15,092       19,926  
Total current liabilities     242,311       308,110  
           
Senior notes payable and other obligations, net of current portion     338,347       357,643  
Deferred income taxes     36,555       35,362  
           
Common stock     452       448  
Additional paid-in capital     226,793       219,669  
Retained earnings     199,364       146,946  
Accumulated other comprehensive loss     (3,036 )     (362 )
Total stockholders' equity     423,573       366,701  
           
Total liabilities and stockholders' equity   $ 1,040,786     $ 1,067,816  

 

 
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Cash Flows
         
         
    Fiscal Year Ended
    September 30, 2009   September 30, 2008
(In thousands)        
         
Operating activities:        
Net income   $ 52,418     $ 40,306  
Adjustments to reconcile net income        
to net cash provided by operating activities:        
Depreciation and amortization     30,389       34,240  
Stock-based compensation     4,780       4,861  
Deferred income taxes     (599 )     (2,838 )
Changes in assets and liabilities, net of the effects of acquisitions:        
Accounts receivable     56,143       (17,434 )
Inventories     14,168       (44,050 )
Prepaid expenses and other assets     (2,256 )     (9,645 )
Accounts payable and accrued expenses     (67,467 )     44,127  
Net cash provided by operating activities     87,576       49,567  
         
Investing activities:        
Purchases of property and equipment     (13,656 )     (5,739 )
         
Financing activities:        
Repayments under revolving lines of credit     (4,955 )     (20,899 )
Repayments under senior notes & other     (14,969 )     (6,131 )
Proceeds from exercise of options     1,717       1,302  
Income tax benefit from stock-based compensation deductions in excess of        
the associated compensation cost     631       1,944  
Net cash used by financing activities     (17,576 )     (23,784 )
         
Effect of exchange rate changes on cash     360       (475 )
Net increase in cash and cash equivalents     56,704       19,569  
Cash and cash equivalents at beginning of period     26,038       6,469  
Cash and cash equivalents at end of period   $ 82,742     $ 26,038  

 

 
BEACON ROOFING SUPPLY, INC
Consolidated Sales by Product Line-Unaudited
                         
    For the Fourth Quarter Ended:                
                         
    September 30, 2009   September 30, 2008        
(dollars in millions)  

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

Change

Residential roofing products   $ 244.8   50.2 %   $ 262.3   46.2 %   $ (17.5 )   -6.7 %
Non-residential roofing products     176.8   36.3 %     224.5   39.6 %     (47.7 )   -21.2 %
Complementary building products     66.1   13.6 %     80.4   14.2 %     (14.3 )   -17.8 %
                         
    $ 487.7   100.0 %   $ 567.2   100.0 %   $ (79.5 )   -14.0 %
                         

Note: Percentages may not total due to rounding.

 

BEACON ROOFING SUPPLY, INC
Consolidated Sales by Product Line-Unaudited
                         
    For the Fiscal Years Ended:                
                         
    September 30, 2009   September 30, 2008        
(dollars in millions)   Net Sales   Mix %   Net Sales   Mix %   Change
Residential roofing products   $ 897.4   51.8 %   $ 758.5   42.5 %   $ 138.9     18.3 %
Non-residential roofing products     599.6   34.6 %     723.7   40.6 %     (124.1 )   -17.1 %
Complementary building products     237.0   13.7 %     302.3   16.9 %     (65.3 )   -21.6 %
                         
    $ 1,734.0   100.0 %   $ 1,784.5   100.0 %   $ (50.5 )   -2.8 %
                         

Note: Percentages may not total due to rounding.

 

Beacon Roofing Supply, Inc.
Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation ("Adjusted EBITDA")
Unaudited                
(Dollars in thousands)                
                   
      Three Months Ended September 30,   Fiscal Year Ended September 30,
      2009   2008   2009   2008
                   
                   
Net income   $ 19,032   $ 24,933   $ 52,418   $ 40,306
Interest expense, net     5,583     6,190     22,887     25,904
Income taxes     11,875     17,817     33,904     28,500
Depreciation and amortization     7,554     8,486     30,389     34,240
Stock-based compensation     1,154     1,089     4,780     4,861
                   
Adjusted EBITDA (1)   $ 45,198   $ 58,515   $ 144,378   $ 133,811

 

(1) Adjusted EBITDA is defined as net income plus interest expense (net of interest income), income taxes, depreciation and amortization and stock-based compensation (i.e. stock option expense). EBITDA is a measure commonly used in the distribution industry, and we present Adjusted EBITDA to enhance your understanding of our operating performance. Adjusted EBITDA is used in our bank covenants and we use Adjusted EBITDA as an internal performance measurement and as one criterion for evaluating our performance relative to that of our peers. We believe that Adjusted EBITDA is an operating performance measure that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies. Further, we believe that Adjusted EBITDA is a useful measure because it improves comparability of results of operations, since purchase accounting used for acquisitions can render depreciation and amortization non-comparable between periods. Management uses these supplemental measures to evaluate performance period over period and to analyze the underlying trends in the Company's business and to establish operational goals and forecasts that are used in allocating resources. We expect to compute our non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.
While we believe Adjusted EBITDA is a useful measure for investors, it is not a measurement presented in accordance with United States generally accepted accounting principles, or GAAP. You should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operations, or any other items calculated in accordance with GAAP. In addition, Adjusted EBITDA has inherent material limitations as a performance measure. It does not include interest expense and, because we have borrowed money, interest expense is a necessary element of our costs. In addition, Adjusted EBITDA does not include depreciation and amortization expense. Because we have capital and intangible assets, depreciation and amortization expense is a necessary element of our costs. Adjusted EBITDA also does not include stock-based compensation, which is a necessary element of our costs since we provide stock options to key members of management as an important incentive to maximize overall company performance and as a benefit. Moreover, Adjusted EBITDA does not include taxes, and payment of taxes is a necessary element of our operations. Accordingly, since Adjusted EBITDA excludes these items, it has material limitations as a performance measure. The Company's management separately monitors capital expenditures, which impact depreciation expense, as well as amortization expense, interest expense, and income tax expense. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

SOURCE: Beacon Roofing Supply, Inc.

Beacon Roofing Supply
Dave Grace, 978-535-7668 x14
CFO
dgrace@beaconroofingsupply.com

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