Beacon Roofing Supply Inc.
( BECN) recently completed the acquisition of Braddock,
Pennsylvania-based McClure-Johnston Company, a distributor of
residential and commercial roofing products and related
accessories. McClure-Johnston has a presence in 14 locations -
eight in Pennsylvania, three in West Virginia, one in Western
Maryland and two in Georgia.
In the third quarter of fiscal 2012, Beacon Roofing Supply
reported record adjusted earnings per share (EPS) of 62 cents,
comfortably beating the Zacks Consensus Estimate of 56 cents and
22% higher than the year-ago quarter level. Higher sales on the
back of acquisitions, and gross margin contributed to the growth.
However, the positives were partially offset by higher operating
expenses and income tax provision compared with 2011.
Total revenue increased 4% year over year to $560.5 million,
benefiting from acquisitions. However, reported revenue lagged
the Zacks Consensus Estimate of $584 million. Organic growth
declined 1.5% in the quarter.
Beacon Roofing's growth strategy includes both internal growth
through opening branches, growing sales with existing customers,
adding new customers and introducing new products as well as
through acquisitions. Since 1997 through 2011, the company has
made 25 strategic and complementary acquisitions. 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 existing
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
U.S. residential construction is finally stabilizing and is on
the road to a much-awaited recovery, which bodes well for the
Beacon Roofing. Furthermore, the company will stand to benefit
from the rebuilding and repair activities following the
devastating Hurricane Sandy.
Beacon Roofing is a leading distributor of residential and
non-residential roofing materials in the United States and
Canada. The company also distributes other complementary building
products, including siding, windows, specialty lumber products
and waterproofing systems for residential and non-residential
building exteriors. Beacon Roofing currently maintains a Zacks #4
Rank (Sell) over the short term.
BEACON ROOFING (BECN): Free Stock Analysis
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