Beacon Roofing Supply, Inc.
) reported first-quarter 2013 adjusted earnings per share (EPS)
of 37 cents, down 5% from 39 cents earned in the year-ago quarter
and below the Zacks Consensus Estimate of 41 cents.
Total revenue increased 5% year over year to $513.7 million
but missed the Zacks Consensus Estimate of $531 million. Organic
sales declined 4.6% in the quarter. In existing markets,
complementary product sales increased 2.9% but both residential
and non-residential roofing product sales decreased 5.4% and
The current quarter benefited from the positive impact of
several acquisitions completed since the start of last year,
offset by lower average residential roofing selling prices. The
quarter was pitted against a strong year-ago quarter, which saw a
very high level of re-roofing activity, including the beneficial
impact from mild weather in Dec 2011 and strong business in
several markets that experienced significant storms in 2011.
Cost of goods sold increased 4% to $387 million in the
quarter. Gross profit rose 8% to $127 million. Gross margin
expanded 70 basis points to 25% from the year-ago quarter.
Operating income in the reported quarter decreased 6% to $32
million with operating margin contracting 70 basis points to
Cash and cash equivalents declined to $34 million as of Dec
30, 2012 from 155 million as of Dec 31, 2011, mainly due to debt
repayments this year and acquisitions. Total debt amounted to
$62.8 million as of Dec 30, 2012, compared with $15 million as of
Dec 30, 2011. Debt-to-capitalization ratio increased to 22.1% as
of Dec 31, 2012 from 4.7% as of Dec 31, 2011.
Cash flow from operating activities improved to $47.3 million
during the quarter from $59 million in the prior-year quarter due
to less favorable changes in working capital, including
additional inventory purchases made in 2013 ahead of announced
Beacon Roofing's acquisition pipeline remains active and we
expect the acquisitions to continue at an accelerated pace in the
near term. Moreover, both residential and non-residential
construction sectors are showing signs of improvement, which
bodes well for the company.
The company has recently acquired Structural Materials Company
in Southern California, Contractors Roofing & Supply Co. in
St. Louis and Pennsylvania-based McClure-Johnston Company. Its
main acquisition strategy is to target market leaders in
geographic areas that it does not have a presence. Beacon Roofing
also acquires companies to supplement branch openings within
Furthermore, over 70% of expenditures in the roofing market
are for re-roofing projects, with the balance being for new
construction. Re-roofing projects are generally considered
maintenance and repair expenditures and are less likely to be
postponed during periods of recession or slow economic growth. As
a result, demand for roofing products is less volatile than
overall demand for construction products. Demand for re-roofing
is also on the rise providing ample scope for Beacon to expand in
Beacon is one of 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
Inc. Beacon Roofing currently maintains a short term Zacks Rank
Material supplies rival
) reported diluted earnings of 33 cents per share in the fourth
quarter of 2012, up 10.0% on the back of decent margin growth,
and in line with the Zacks Consensus Estimate. Its other peers
Builders FirstSource, Inc.
Lowe's Companies Inc.
) are yet to announce their fourth quarter results.
BEACON ROOFING (BECN): Free Stock Analysis
BUILDERS FIRSTS (BLDR): Free Stock Analysis
FASTENAL (FAST): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
To read this article on Zacks.com click here.