Beacon Roofing Supply, Inc.
) reported second-quarter 2013 adjusted loss per share of 2
cents, compared with earnings per share of 7 cents earned in the
year-ago quarter, falling short of the Zacks Consensus Estimate
of $0.00 per share or break even result.
The quarter results were affected by tough weather conditions
in many of Beacons' markets and higher operating expenses,
partially offset by the impact from higher gross profit and lower
The adjusted loss for the second quarter came after consideration
of the $1.3 million credit to interest expense (or $0.8 million
net of taxes) resulting from adjustments in the fair values of
certain interest rate derivatives. Without this the second
quarter loss per share was 0 cents compared to income per share
of 7 cents in 2012.
Total revenue increased 5% year over year to $416.3 million, a
second quarter record though it missed the Zacks Consensus
Estimate of $429 million. Organic sales declined 5.1% in the
quarter. In existing markets, non-residential roofing product
sales declined 11.5%, complementary product sales increased 3.2%
and residential roofing products dipped 1.4%. The current quarter
benefited from the positive impact of several acquisitions
completed since the start of last year.
Cost of goods sold increased 5% to $316 million in the quarter.
Gross profit rose 6% to $99.6 million. Gross margin expanded 20
basis points to 23.9% from the year-ago quarter. Operating income
in the reported quarter decreased 80% to $1.9 million with
operating margin sliding 200 basis points to 0.5%.
Cash and cash equivalents declined to $16 million as of Mar 31,
2013 from $171 million as of Mar 31, 2012, mainly due to debt
repayments this year and acquisitions. Total debt amounted to
$221 million as of Mar 31, 2013, compared with $310 million as of
Mar 31, 2012. Debt-to-capitalization ratio improved to 29.6% as
of Mar 31, 2013 from 35.3% as of Mar 31, 2012.
Cash flow from operating activities declined to $20.6 million
during the quarter from $80.3 million in the prior-year quarter
due to less favorable changes in working capital, including
additional inventory purchases made in 2013 ahead of announced
For 2013, Beacon Roofing estimates earnings per share to lie in
the range of $1.75 to $1.85. Re-roofing continues to dominate a
large share of the roofing market, amounting to over 80%.
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.
Furthermore, over 80% of expenditures in the roofing market
are for re-roofing projects, with the balance being for new
construction. Demand for re-roofing is also on the rise providing
ample scope for Beacon to expand in this market. Furthermore, the
company will benefit from the pent up repair work for both
residential and non-residential demand and due to the harsher
BEACON ROOFING (BECN): Free Stock Analysis
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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 Roofing currently maintains a short
term Zacks Rank #3 (Hold).
Oher stocks in the same industry with a favorable Zacks Rank are
Lumber Liquidators Holdings, Inc.
) with a Zacks Rank #1 (Strong Buy) while
Builders FirstSource, Inc.
The Home Depot, Inc.
) both carry Zacks Rank #2 (Buy).