Press Releases Details

PEABODY, Mass., May 08, 2009 (BUSINESS WIRE) -- Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its fiscal year 2009 second quarter and six-month period (first half) ended March 31, 2009 ("2009").

Second Quarter

Sales increased 4.9% to $319.3 million in 2009 from $304.3 million in last year's second quarter ended March 31, 2008 ("2008"). Residential roofing sales increased 37.2% while non-residential (commercial) roofing and complementary product sales declined 12.6% and 27.1%, respectively. Residential roofing sales benefited from year-over-year price increases as well as from strong, although diminishing, re-roofing activity in markets that were affected by Hurricane Ike. Non-residential sales slowed due, in part, to adverse winter conditions in the Company's markets that have the largest concentration of commercial business. Complementary product sales continued to be negatively impacted by both the slowdown in the economy and lower levels of new construction. In addition, the Company operated eight fewer branches at the end of this period compared to the end of the prior-year second quarter and there was one less business day in the second quarter of this year. On a same-day basis, sales increased 6.6%.

The Company's net loss for the second quarter was $2.4 million compared to $8.1 million in 2008, a 70% improvement. Net loss per share decreased 72% to $0.05 compared to $0.18 in 2008.

Gross profit in the second quarter was $74.3 million, up $5.9 million from 2008. The gross margin rate increased to 23.3% from 22.5% last year primarily due to the sales mix shift to more residential roofing products, which have substantially higher gross margins than the more competitive non-residential market.

Operating expenses decreased $2.5 million, or 3.3%, primarily due to reductions in selling expenses and general and administrative expenses, mostly from lower fuel costs and insurance costs, respectively. As a percentage of net sales, operating expenses declined to 22.8% from 24.8% due to tight controls over variable costs and the leveraging of fixed costs over the higher sales.

The Company realized operating income of $1.5 million in the second quarter compared to an operating loss of $6.9 million in 2008, an $8.4 million improvement. As a percentage of net sales, operating income was 0.5% compared to a negative 2.3% last year.

Interest expense decreased $1.1 million, or 16.9%, due primarily to a paydown of debt since 2008 and lower average interest rates. The income tax provision rate was 40.9% compared to 40.5% last year.

Earnings before interest, taxes, depreciation and amortization, and stock-based compensation, or "Adjusted EBITDA," was $10.2 million in the second quarter compared to $2.9 million in 2008. Adjusted EBITDA is reconciled to net income in this press release.

First Half

Sales increased 11.4% to $782.6 million in 2009 from $702.6 million in last year's first half. Residential roofing sales increased 48.7% while non-residential roofing and complementary product sales declined 7.8% and 21.7%, respectively. First-half sales were principally influenced by the same factors as in the second quarter.

The Company's net income for the six months was $16.2 million compared to a net loss of $2.9 million in 2008. Diluted net income per share was $0.36 compared to a net loss per share of $0.07 in 2008.

Gross profit was $190.3 million, up $30.2 million from 2008. The gross margin rate increased to 24.3% from 22.8% last year primarily due to the sales mix shift to more residential roofing products and the first-quarter benefit of having lower weighted-average costs of residential roofing products.

As a percentage of net sales, operating expenses declined to 19.3% from 21.5% due to the same factors as in the second quarter.

The Company realized operating income of $39.1 million in the first half compared to $8.8 million in 2008, a $30.3 million improvement. As a percentage of net sales, operating income was 5.0% compared to 1.3% last year.

Interest expense decreased $2.0 million, or 14.6%, due to the same factors as in the second quarter. The income tax provision rate was 40.9% compared to 41.0% last year.

Adjusted EBITDA was $56.8 million in the first half compared to $28.9 million in 2008.

Cash flow from operations was $84.8 million in 2009 compared to $29.5 million in 2008. This increase was primarily attributable to the increase in operating income, a seasonal decline of accounts receivable and tight control over inventories, partially offset by the impact of higher income tax payments in the first half of the current year. Although there was $98.1 million of cash on hand at the end of the period, some of that build-up was due to temporary seasonal factors.

Robert Buck, the Company's Chairman & Chief Executive Officer, stated: "We are very pleased with our financial performance in this challenging economic environment, including our ability to generate significant cash flow. We continue to emphasize customer service and tight controls over expenses and inventories. Our focus in these areas resulted in a solid second quarter and a favorable start to the fiscal year. We also are pleased that our balance sheet has strengthened further in 2009, which should position us to take advantage of future growth opportunities."

There will be a conference call to discuss the second-quarter and first-half results this morning at 10 a.m. EDT. The dial-in number is 877-719-9795 (international dial-in number 719-325-4756). To assure timely access, participants should call in before 10:00 a.m.

Within two hours after the call, a webcast of the call will be available on the "Events & Presentations" page of the "Investor Relations" section of the Company's web site at http://www.beaconroofingsupply.com. A replay of the conference call will also be available at 888-203-1112 (participant passcode 7614623) (international dial-in number 719-457-0820 with same passcode) for a week following the call.

Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products operating 169 branches in 35 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

(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, Inc.
Dave Grace, CFO, 978-535-7668 x14
dgrace@beaconroofingsupply.com

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