Press Releases Details

• Record third quarter net sales of $541 million vs. $474 million, up 14%.
• Record third quarter net income per share of $0.51 vs. $0.35, up 46%.
• Third quarter existing market sales up 11.6%.
• Cash on hand at $108 million.

PEABODY, Mass.--(BUSINESS WIRE)-- Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its fiscal 2011 third quarter and nine months ended June 30, 2011.

Paul Isabella, the Company's President & Chief Executive Officer, stated: "We had a record third quarter, with most of our regions achieving strong year-over-year results and beating our expectations. Both our residential and non-residential product sales showed double-digit percentage increases, while our complementary product sales were up against business that was favorably impacted by short-term tax incentives last year. Our roofing businesses benefited from a pick-up in volume during the quarter, including some hail storm business, and from industry-wide price increases, although our commercial business has remained consistently strong throughout this year. We were able to use our strong financial position to increase inventories ahead of some vendor price increases, which enabled us to achieve more normal gross margins that were significantly above last year's low rates. We also were able to leverage our expenses to further improve our operating margin. Our cash holdings have increased since last year's third quarter despite two acquisitions made since that time, including the purchase of Enercon Products completed during this year's third quarter. We believe our fourth quarter will remain strong, and we continue to pursue growth opportunities while we focus on maximizing current profitability."

Third Quarter

Total sales increased 14.0% to $540.7 million in 2011, a record for a third quarter, from $474.3 million in 2010. Existing market (organic) sales increased 11.6%. Existing market results exclude branches acquired after the beginning of last year's third quarter. In existing markets, residential and non-residential roofing product sales increased 14.6% and 15.4%, respectively, while complementary product sales decreased 6.6% due, in part, to lower remodeling activity resulting from the expiration of last year's short-term tax incentives. Our third quarter roofing sales this year were favorably impacted by higher average selling prices and business in several markets that experienced significant spring hail storms.

Net income for the third quarter was $24.1 million, also a record for a third quarter, compared to $16.3 million in 2010, an improvement of 47.9%. Diluted net income per share was $0.51 compared to $0.35 in 2010. The higher net income was due to the higher sales and gross margin rate, as well as lower interest expense, partially offset by the impact from higher operating expenses and a higher income tax provision.

Earnings before interest, taxes, depreciation and amortization, and stock-based compensation ("Adjusted EBITDA"), which are reconciled to the net income in this press release, were $50.8 million in 2011 compared to $38.2 million in 2010, an increase of 32.9%.

Nine Months

Total sales increased 10.2% to $1.24 billion in 2011 from $1.13 billion in 2010, while existing market (organic) sales increased 6.9%. Existing market results exclude branches acquired after the start of fiscal year 2010. In existing markets, residential roofing, non-residential roofing and complementary product sales increased 2.7%, 13.8% and 3.1%, respectively.

Year-to-date net income was $28.0 million compared to $17.7 million in 2010, an improvement of 58.3%. Diluted net income per share was $0.60 compared to $0.38 in 2010. The higher net income was due to the higher sales, a higher gross margin and lower interest expense, partially offset by the impact from higher operating expenses and a higher income tax provision.

Adjusted EBITDA was $79.4 million in 2011 compared to $67.4 million in 2010, an increase of 17.9%.

Cash flow from operations was $37.7 million compared to $26.0 million in 2010. This year's operating cash flows were influenced mostly by the higher operating income and a higher increase in accounts payable and accrued expenses compared to last year, partially offset by an unfavorable impact from larger increases in inventories and accounts receivable this year. Cash on hand decreased by $9.2 million to $108.0 million at June 30, 2011 compared to $117.1 million at September 30, 2010 due, in part, to the Enercon acquisition.

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 719-457-2695. 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 185 branches in 37 states in the United States and in five 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 (loss) plus interest expense (net of interest income), income taxes, depreciation and amortization and stock-based compensation. 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 awards 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.

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

Source: Beacon Roofing Supply, Inc.

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