Press Releases Details

• Record fourth quarter net sales of $1.17 billion (49.1% growth)
• Record fourth quarter net income of $47.4 million vs. $30.8 million in the prior year
• Record fourth quarter EPS of $0.78 ($0.88 Adjusted) vs. $0.61 in the prior year
• Fourth quarter Adjusted EBITDA grew 64% to $127.5 million vs. $77.7 million in the prior year
• Record full-year net sales of $4.13 billion vs. $2.52 billion in the prior year (64.1% growth)
• Completed 8 acquisitions during 2016, increasing current branch count to 369

HERNDON, Va.--(BUSINESS WIRE)-- Beacon Roofing Supply, Inc. (NASDAQ:BECN) announced results today for its fourth quarter and fiscal year ended September 30, 2016 ("2016").

Paul Isabella, the Company's President and Chief Executive Officer, stated: "2016 was a landmark year for Beacon. We capitalized on the momentum of our transformational acquisition of RSG on the first day of the year to close on seven additional acquisitions and deliver record revenue and strong earnings for our shareholders. Gross margins were excellent, and we achieved growth in residential, commercial and complementary products, with residential roofing sales growth leading the way and remaining particularly strong through the end of the year. We are ahead on our attainment of the RSG synergies, and I am pleased that existing market operating expenses as a percentage of revenue decreased this year, demonstrating that our team is making great progress in achieving operating leverage. Our balance sheet has improved steadily, and we remain focused on reaching our goal of a 2.0x debt leverage ratio, while not sacrificing growth opportunities through additional strategic acquisitions. In 2017, we will continue to focus on revenue growth, both organically and through acquisitions and new branch openings, while improving gross margins and operating expense leverage. I am confident in our ability to build on our successful 2016 and continue to deliver outstanding performance and returns for our shareholders."

Fourth Quarter

Total sales increased 49.1% to a fourth quarter record of $1.17 billion in 2016, from $787.7 million in 2015. Residential roofing product sales increased 63.0%, non-residential roofing product sales increased 29.7%, and complementary product sales increased 47.8% over the prior year. Organic sales, excluding acquisitions, increased 2.4% for the quarter. The fourth quarters of 2016 and 2015 each had 64 business days.

Net income for the fourth quarter was $47.4 million, compared to $30.8 million in 2015. Fourth quarter EPS was $0.78, compared to $0.61 in 2015. Adjusted Net Income, after removing the impact of non-recurring RSG acquisition-related costs and other current year acquisition costs, was $53.6 million in the fourth quarter 2016, with Adjusted EPS of $0.88 (see included financial tables for a definition and reconciliation of "Adjusted" balances). Net income for the quarter was favorably impacted by strong volume growth within residential roofing and a significant improvement in gross margins which increased 140 basis points over the prior year. This was partially offset by declining organic sales of our other two product lines.

Fiscal Year

Total sales increased 64.1% to an annual record of $4.13 billion in 2016, from $2.52 billion in 2015. Residential roofing product sales increased 76.9%, non-residential roofing product sales increased 51.3%, and complementary product sales increased 52.6% over the prior year. Organic sales, excluding acquisitions, increased 9.9% in 2016. The 2016 and 2015 fiscal years had 254 and 253 business days, respectively.

Net income for the full-year was $89.9 million, compared to $62.3 million in 2015. 2016 EPS was $1.49, compared to $1.24 in 2015. Adjusted Net Income, after removing the impact of non-recurring RSG acquisition-related costs and other current year acquisition costs, was $126.5 million in 2016, with Adjusted EPS of $2.10 (see included financial tables for a definition and reconciliation of "Adjusted" balances). Net income for 2016 was favorably impacted by higher levels of storm demand, particularly in Texas, as well as a significant 80 bps year-to-year improvement in gross margins. This was partially offset by increased operating expenses driven by the incremental costs associated with the RSG acquisition made at the beginning of this fiscal year.

The Company will host a webcast and conference call today at 5:00 p.m. (EST) to discuss these results. The webcast link and call-in details are as follows:

To assure timely access, conference call participants should call in prior to the 5:00pm start time.

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.

About Beacon Roofing Supply

Founded in 1928, Beacon Roofing Supply, Inc. is the largest publicly traded distributor of residential and commercial roofing materials and complementary building products, operating 369 branches throughout 46 states in the U.S. and 6 provinces in Canada. To learn more about Beacon and its family of regional brands, please visit www.becn.com.

BECN-F

¹ The fourth quarter 2016 operating results include $1.4 million ($1.2 million net of taxes) of non-recurring charges, $5.7 million ($3.6 million net of taxes) of additional amortization for acquired intangibles, and $2.1 million ($1.4 million net of taxes) of interest expense, financing costs and other for the recognition of certain costs related to acquisitions made in fiscal year 2016. Fiscal year 2016 operating results include $29.1 million ($17.9 million net of taxes) of non-recurring charges, $22.8 million ($14.0 million net of taxes) of additional amortization for acquired intangibles, and $7.6 million ($4.7 million net of taxes) of interest expense, financing costs and other for the recognition of certain costs related to acquisitions made in fiscal year 2016. See "Adjusted Net Income and Adjusted EPS" table for further details.

² The fourth quarter 2015 and fiscal year 2015 operating results include $7.3 million ($7.0 million net of taxes) of non-recurring charges related to the RSG acquisition. See "Adjusted Net Income and Adjusted EPS" table for further details.

¹ Adjusted Net Income is defined as net income excluding non-recurring costs related to the acquisitions incurred in fiscal years 2015 and 2016 as well as the incremental amortization of acquired intangibles. We believe that Adjusted Net Income is an operating performance metric that is useful to investors because it permits investors to better understand year-over-year changes in underlying operating performance. Adjusted net income per share or "Adjusted EPS" is calculated by dividing the Adjusted Net Income for the period by the weighted-average diluted shares outstanding for the period (see "Consolidated Statements of Operations for amounts).

² Acquisition costs reflect total non-recurring charges related to acquisitions completed, net of $22.9 million and $0.3 million in tax for the years ended 2016 and 2015, respectively and $3.1 million and $0.3 million in tax for the three months ended September 30, 2016 and 2015, respectively.

While we believe Adjusted Net Income and Adjusted EPS are useful measures for investors, these are not measurements presented in accordance with United States generally accepted accounting principles ("GAAP"). You should not consider Adjusted Net Income or Adjusted EPS in isolation or as a substitute for net income and net loss per share or diluted earnings per share calculated in accordance with GAAP.

¹ Adjusted EBITDA is defined as net income plus interest expense (net of interest income), income taxes, depreciation and amortization, adjustments to contingent consideration, stock-based compensation and non-recurring acquisition costs incurred in fiscal years 2015 and 2016. 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. We use these supplemental measures to evaluate performance period over period and to analyze the underlying trends in our 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.

² Acquisition costs reflect all non-recurring charges related to acquisitions completed (excluding the impact of tax) that are not embedded in other balances of the table. Certain portions of the total acquisition costs incurred are included in interest expense, income taxes, depreciation and amortization, and stock-based compensation.

While we believe Adjusted EBITDA is a useful measure for investors, it is not a measurement presented in accordance 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, 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 make 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. We separately monitor 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20161121006135/en/

Beacon Roofing Supply, Inc.
Joseph Nowicki, Executive VP & CFO
571-323-3940
JNowicki@becn.com

Source: Beacon Roofing Supply, Inc.

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