Press Releases Details

• Fourth quarter net sales of $483 million vs. $488 million.
• Fourth quarter EPS of $0.37 vs. $0.42.
• Fourth quarter existing market operating expenses down 6%.
• Cash on hand builds to $117 million from $83 million last year.

PEABODY, Mass.--(BUSINESS WIRE)-- Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its fourth quarter and fiscal year ended September 30, 2010.

Robert Buck, the Company's Chairman & Chief Executive Officer, stated: "Our fourth quarter and fiscal 2010 results were disappointing as industry and economic conditions remained more challenging than anticipated. We were also up against a year that had significant storm business and record annual earnings. Despite these factors, our total sales declined only 1% in the fourth quarter due, in part, to the positive impact from our current year acquisitions. In addition, our non-residential roofing and complementary product sales continued to rebound. We started to see some gains in residential business later in the year in a few of our regions that did not benefit from storms last year. Our operating expenses were well-controlled and we achieved a substantial build-up of cash in the fourth quarter. We believe the favorable long-term industry growth factors remain in place and we are in a good position to expand our Company in 2011."

Fourth Quarter

Total sales declined 1.1% to $482.6 million in 2010 from $487.7 million in 2009, while existing market (organic) sales declined 3.8%. Excluded from the existing market results were seven additional branches in operation at the end of this year compared to September 30, 2009. Residential roofing sales in existing markets decreased 16.8%, while non-residential roofing and complementary product sales increased 11.5% and 3.3%, respectively. Residential roofing sales and gross margin were unfavorably impacted by lower average selling prices in 2010 and less re-roofing activity in post storm-affected regions.

Net income for the fourth quarter was $16.9 million compared to $19.0 million in 2009, a decline of 11.4%. Diluted net income per share was $0.37 compared to $0.42 in 2009, a decline of 11.9%. The lower net income was primarily due to a lower gross margin rate, partially offset by the benefit from reduced expenses, including lower interest expense and income taxes.

Earnings before interest, taxes, depreciation and amortization, and stock-based compensation ("Adjusted EBITDA"), which is reconciled to the net income in this press release, was $38.9 million in 2010 compared to $45.2 million in 2009, a decline of 13.9%.

Fiscal Year

Sales declined 7.2% to $1.61 billion in 2010 from $1.73 billion in 2009, while existing market sales decreased 8.7%. Residential roofing sales in existing markets decreased 18.0%, while non-residential roofing sales and complementary product sales increased 1.2% and 2.1%, respectively. Residential roofing sales and gross margin were unfavorably impacted by the same factors mentioned above for the fourth quarter and especially in the areas affected by Hurricane Ike in the first half of 2009.

Net income was $34.5 million compared to $52.4 million in 2009, a decline of 34.1%. Diluted net income per share was $0.75 compared to $1.15 in 2009, a decline of 34.8%. The lower net income was due to the decline in sales and a lower gross margin rate, partially offset by reduced expenses.

Adjusted EBITDA was $106.3 million in 2010 compared to $144.4 million in 2009, a decline of 26.4%.

Cash flow from operations was $74.5 million compared to $87.6 million in 2009. This year's cash flows were influenced mostly by the lower net income and an increase in accounts receivable, partially offset by the benefits from a lower reduction in accounts payable and accrued expenses, a much larger decrease in inventories, and a decrease in prepaid expenses and other assets. The Company spent $19.3 million on acquisitions this year and continued to pay down debt. Cash on hand increased by $34.4 million in 2010 to $117.1 million at the end of this year compared to $82.7 million at September 30, 2009.

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 720-545-0063. 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 179 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.

(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.

BECN-F

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

Source: Beacon Roofing Supply, Inc.

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