Beacon Roofing Supply Inc.
) reported record adjusted EPS of 56 cents in the fourth quarter of
fiscal 2011, ahead of the Zacks Consensus Estimate of 53 cents and
a remarkable improvement of 51% over the prior year quarter's EPS
of 37 cents.
Reported EPS excluded a tax benefit, including which the EPS in
the quarter stood at 67 cents compared with 37 cents in the
Higher sales leading to elevated gross margins, coupled with
lower interest expense, benefited the quarter. However, these
positives were somewhat offset by higher operating expenses and a
higher income tax provision.
Net sales in the quarter under review increased 19% year over
year to gross $575.6 million, outpacing the Zacks Consensus
Estimate of $547 million. Organic growth in the quarter was
Residential roofing product sales improved 32% while
non-residential roofing product sales increased 12% over the
prior-year quarter. Both the businesses benefited from a pick-up in
volume, including some storm related business, besides higher
average selling prices. A 1% dip in complementary product sales was
a minor offset.
Cost of goods sold in the reported quarter increased 17.7% year
over year to $442.7 million, and operating expenses also rose 12.7%
to $85.3 million. Operating income of $47.6 million improved 55%
over the year-ago quarter.
Fiscal Year Results
In fiscal 2011, EPS was a record $1.16, up 55% from the year-ago
EPS of 75 cents and above the Zacks Consensus Estimate of $1.14.
Including the tax benefit recorded in the fourth quarter, EPS stood
at $1.27 for fiscal 2011. Net sales surged 13% year over year to a
record $1.8 billion, nominally falling short of the Zacks Consensus
Estimate of $1.9 billion. Organic growth was 9.3%.
The company ended the year with cash and cash equivalents of
$143 million, improving substantially from $117 million as of 2010
Cash from operating activities also improved to $79.3 million
during the year from $73.9 million in the last fiscal. Higher
operating income along with the increase in accounts payable and
accrued expenses, partially offset by an unfavorable impact from
larger increases in inventories and accounts receivable, fueled the
Beacon Roofing continues to focus on cost controls to improve
its margins. The company also remains active on the acquisition
front. Notwithstanding the strong numbers reported in the quarter
and the fiscal year we remain cautious on the stock due to the
continued weakness in the housing industry.
We maintain our Neutral recommendation on Beacon Roofing. The
quantitative Zacks #3 Rank (short-term hold rating) for the company
indicates no clear directional pressure on the stock over the near
Beacon numbers among the three largest roofing materials
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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