Beacon Roofing Supply Inc.
has entered into a new five-year senior secured credit facility
that includes a $550 million U.S. credit facility and a C$15
million ($15.1 million) Canadian credit facility with Wells Fargo
Bank, National Association (
The $550 million U.S credit facility consists of a revolving
credit facility of $325 million, which includes a sub-facility of
$20 million for letters of credit and a $225 million term loan. The
term loan has amortization of 5% per year that is payable in
quarterly installments, with the balance due on March 31, 2017.
The credit facility also includes a C$15 million senior secured
revolving credit facility provided by a syndicate of lenders. The
company stated that it may also increase the credit facility by up
to $200 million under certain conditions.
The credit facility refinanced the company's prior $515 million
credit facilities that were provided through GE Antares and an
affiliate. The new credit facility's interest rates are at
historically low levels. Borrowings under the Credit Facility carry
interest at a margin above the LIBOR (London Interbank Offered
Rate). The margin will be 1.75% per annum at the beginning and can
range from 1.50% to 2.50% per annum depending upon the company's
total leverage ratio.
Initial unused commitment fees on the revolving credit
facilities are 0.375% per annum. The unused commitment fees can
range from 0.35% to 0.50% per annum, again depending upon the
company's total leverage ratio. Beacon Roofing paid back its
prior-term debt of approximately $80 million and has additional
cash and cash equivalents of approximately $85 million on its
balance sheet pursuant to the closing and funding of the credit
The credit facility is subject to customary restrictive
covenants for credit facilities of this type relating to the
operations and management of the company, which includes
limitations on indebtedness, liens, investments, mergers and
acquisitions, dispositions of assets, dividends and transactions
Beacon Roofing reported adjusted earnings per share (
) of 39 cents in the first quarter of fiscal 2012, way ahead of the
Zacks Consensus Estimate of 29 cents, improving from the prior-year
figure of 22 cents. Reported EPS excluded a tax benefit in the
reported quarter, including which EPS stood at 41 cents compared
with 22 cents in the year-ago quarter.
Net sales in the quarter increased 21% year over year to gross
$489.9 million, outpacing the Zacks Consensus Estimate of $475
million. Organic growth in the quarter was 17.0%. Higher sales
leading to elevated gross margins benefited the quarter. However,
the positives were somewhat diluted by higher operating expenses
and a steeper income tax provision.
Beacon Roofing continues to focus on cost controls to improve
its margins. The company also remains active on the acquisition
front. The company's strategy is to buy market leaders in different
geographic areas and thus expand into unexplored markets with
The new credit facility provides attractive LIBOR margin
pricing, low interest rates, reasonable financial covenants, as
well as substantial liquidity and financial flexibility for Beacon
to pursue acquisitions and growth opportunities.
Currently, the shares of Beacon Roofing retain a Zacks #1 Rank
(short-term Strong Buy recommendation).
Beacon numbers among the three largest roofing material
distributors in the United States and Canada, with more than 90% of
sales coming from the U.S. Beacon competes with privately held
American Builders & Contractors Supply Co Inc., Guardian
Building Products Distribution Inc. and Stock Building Supply
BEACON ROOFING (
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