Beacon Roofing Supply (BECN) 8-K Beacon Roofing Supply Reports Second Quarter 2015 Results

Exhibit 99.1

 

Beacon Roofing Supply Reports Second Quarter 2015 Results

· Second quarter sales of $413.2 million vs. $384.9 million in prior year (7.4% growth)

· Second quarter EPS of $(0.20) vs. $(0.25) in prior year

· Record first half sales of $1,009.2 million vs. $937.0 million in prior year (7.7% growth)

· First half EPS of $0.06 vs. $0.06 in prior year

· Opened five greenfield locations in 2015

HERNDON, VA. — (BUSINESS WIRE) — May 8, 2015 — Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its second quarter ended March 31, 2015 of the fiscal year ending September 30, 2015 (“Fiscal 2015”).

Paul Isabella, the Company’s President and Chief Executive Officer, stated: “I am pleased to report 7.4% sales growth in the quarter and 7.7% sales growth year-to-date, which resulted in Beacon surpassing the $1 billion mark in first half sales for the first time in Company history. This achievement underscores our continued focus on growth through existing markets, acquisitions and greenfields. We already have opened five new branches in 2015, with more to come this year. Although our second quarter always is challenging due to winter weather conditions, and despite record snowfalls in our Northeast market, we saw growth in our residential product line of 9.7%. Complementary product sales remain a bright spot, with 13.7% growth in the quarter, and commercial product sales also grew in the quarter and year-to-date. Just as important was our 80 basis point improvement in gross margins. Our team also did an excellent job driving cost out of our business. Excluding the incremental costs from greenfields and acquisitions, our operating expense is down year-over-year. This cost reduction positions us well to achieve lower year over year operating expenses as a percentage of sales and greater profitability as demand increases through our third and fourth quarters.”

Second Quarter

Total sales increased 7.4% to $413.2 million in 2015, from $384.9 million in 2014. On an overall consolidated basis, residential roofing product sales increased 9.7%, non-residential roofing product sales increased 1.2%, and complementary product sales increased 13.7% over the prior year. Existing market sales, excluding acquisitions, increased 4.4% for the quarter. The second quarter of 2015 and 2014 both had the same number of business days.

The net loss for the second quarter was $9.8 million, compared to $12.1 million in 2014. The second quarter net loss per share was $0.20, compared to $0.25 in 2014. The net loss for the quarter was favorably impacted by gross margins which improved by 80 basis points over the prior year. This was partially offset by increased operating expenses driven by the incremental costs associated with the two acquisitions made in the first quarter and the greenfields opened in the last 18 months.

First Half

Total sales increased 7.7% to a first half record of $1,009.2 million in 2015, from $937.0 million in 2014. On an overall consolidated basis, residential roofing product sales increased 10.5%, non-residential roofing product sales increased 0.5%, and complementary product sales increased 16.7% over the prior year. Existing market sales, excluding acquisitions, increased 4.4% year to date. The first half of 2015 and 2014 both had the same number of business days.

Net income for the first half was $3.1 million, compared to $2.8 million in 2014. First half diluted net income per share was $0.06, compared to $0.06 in 2014. Net income for the half was favorably impacted by gross margins which improved by 40 bps over the prior year, and unfavorably impacted by increased operating expenses which were primarily driven by the incremental costs associated with the two acquisitions made in the first quarter and the greenfields opened in the last 18 months.

Cash flow from operations was $62.5 million in 2015, compared to $36.1 million in 2014. This increase in operating cash flow was primarily impacted by changes in working capital and higher net income in the current year. Cash on hand decreased by $11.1 million due primarily to an increase in cash used for acquisition activities in 2015. Through positive working capital management and higher net income, the Company was able to fund two acquisitions, while improving its leverage ratio from 1.68 as compared to 1.96 at the end of the first quarter.

The Company will host a webcast and conference call today at 10:00 a.m. (EST) to discuss these results. The live webcast of the call, along with a webcast replay after the call, can be accessed at http://ir.beaconroofingsupply.com/events.cfm (the “Events & Presentations” page of the “Investor Relations” section of the Company’s web site). There will be a slide presentation of the results available on that page of the website as well. For those unable to connect to the Internet or who may wish to ask questions, the conference call dial-in number is 719-325-2281. To assure timely access, call participants should call in before 10:00 a.m.

About Beacon Roofing Supply

Founded in 1928, Beacon Roofing Supply, Inc. (NASDAQ: BECN) is the largest publicly traded distributor of residential and commercial roofing materials and complementary building products, operating 271 branches throughout 42 states in the U.S. and six provinces in Canada. In fiscal 2014, Beacon had sales of $2.3 billion. The company employs more than 3,000 associates. To learn more about Beacon and its family of regional brands, please visit www.becn.com.

Forward-Looking Statements: This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's latest Form 10-K. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

BECN-F

Beacon Roofing Supply, Inc.
Joseph Nowicki, 571-323-3940
Executive Vice President & Chief Financial Officer
JNowicki@becn.com

Source: Beacon Roofing Supply, Inc.

News Provided by Acquire Media

BEACON ROOFING SUPPLY, INC

Consolidated Statements of Operations

(unaudited; in thousands, except share and per share amounts)

	Three Months Ended March 31,										Six Months Ended March 31,
	2015			% of Net Sales		2014			% of Net Sales		2015		% of Net Sales		2014		% of Net Sales
Net sales	$	413,184			100.0%	$	384,885			100.0%	$	1,009,226		100.0%	$	937,014		100.0%
Cost of products sold		316,411			76.6%		298,093			77.4%		774,888		76.8%		723,317		77.2%
Gross profit		96,773			23.4%		86,792			22.6%		234,338		23.2%		213,697		22.8%
Operating expenses		110,979			26.9%		104,004			27.0%		224,724		22.3%		203,822		21.8%
Income (loss) from operations		(14,206	)		-3.4%		(17,212	)		-4.4%		9,614		1.0%		9,875		1.0%
Interest expense, financing costs and other		2,522			0.6%		2,532			0.7%		5,177		0.5%		5,197		0.6%
Income (loss) before provision for income taxes		(16,728	)		-4.0%		(19,744	)		-5.1%		4,437		0.4%		4,678		0.5%
Provision (benefit) for income taxes		(6,942	)		-1.7%		(7,627	)		-2.0%		1,316		0.1%		1,838		0.2%
Net income (loss)	$	(9,786	)		-2.4%	$	(12,117	)		-3.1%	$	3,121		0.3%	$	2,840		0.3%
Net income (loss) per share:
Basic	$	(0.20	)			$	(0.25	)			$	0.06			$	0.06
Diluted	$	(0.20	)			$	(0.25	)			$	0.06			$	0.06
Weighted average shares used in computing net income (loss) per share:
Basic		49,513,141					49,260,044					49,470,528				49,120,893
Diluted		49,513,141					49,260,044					50,029,935				49,956,072

BEACON ROOFING SUPPLY, INC

Consolidated Balance Sheets

(in thousands)

	March 31, 2015			September 30, 2014			March 31, 2014
ASSETS	(unaudited)			(audited)			(unaudited)
Current assets:
Cash and cash equivalents	$	22,956		$	54,472		$	34,041
Accounts receivable, net		248,154			360,802			230,379
Inventories, net		361,317			301,626			421,756
Prepaid expenses and other current assets		73,490			66,828			105,401
Deferred income taxes		14,789			14,610			14,226
Total current assets		720,706			798,338			805,803
Property and equipment, net		85,054			88,565			70,759
Goodwill		488,324			466,206			466,658
Intangible assets, net		91,650			72,266			79,207
Other assets, net		4,771			8,521			9,120
TOTAL ASSETS	$	1,390,505		$	1,433,896		$	1,431,547
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	202,713		$	220,834		$	308,209
Accrued expenses		80,546			80,285			72,445
Borrowings under revolving lines of credit		3,948			18,514			-
Current portion of long-term obligations		16,612			16,602			15,346
Total current liabilities		303,819			336,235			396,000
Senior notes payable, net of current portion		180,000			185,625			191,250
Deferred income taxes		63,426			64,100			60,350
Long-term obligations under equipment financing and other,
net of current portion		24,779			30,835			20,591
Total liabilities		572,024			616,795			668,191
Commitments and contingencies
Stockholders' equity:
Common stock		495			493			492
Undesignated preferred stock		-			-			-
Additional paid-in capital		335,972			328,059			324,504
Retained earnings		498,249			495,128			444,122
Accumulated other comprehensive loss		(16,235	)		(6,579	)		(5,762	)
Total stockholders' equity		818,481			817,101			763,356
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,390,505		$	1,433,896		$	1,431,547

BEACON ROOFING SUPPLY, INC

Consolidated Statements of Cash Flows

(unaudited; in thousands)

	Six Months Ended March 31,
	2015			2014
Operating activities:
Net income	$	3,121		$	2,840
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization		16,430			15,281
Stock-based compensation		4,744			5,489
Certain interest expense and other financing costs		543			545
Gain on sale of fixed assets		(273	)		(480	)
Deferred income taxes		287			(1,418	)
Other, net		181			(3	)
Changes in assets and liabilities, net of the effects of
businesses acquired:
Accounts receivable		118,564			97,706
Inventories		(50,305	)		(171,748	)
Prepaid expenses and other assets		(5,007	)		(43,252	)
Accounts payable and accrued expenses		(25,800	)		131,113
Net cash provided by operating activities		62,485			36,073
Investing activities:
Purchases of property and equipment		(5,384	)		(11,773	)
Acquisition of businesses		(69,745	)		-
Proceeds from sales of assets		367			394
Net cash used in investing activities		(74,762	)		(11,379	)
Financing activities:
Repayments under revolving lines of credit, net of borrowings		(13,632	)		(47,398	)
Borrowings under equipment financing facilities and other		-			10,971
Repayments under equipment financing facilities and other		(2,758	)		(2,441	)
Repayments under senior term loan		(5,625	)		(5,625	)
Proceeds from exercise of options		3,171			6,057
Excess tax benefit from stock-based compensation		262			876
Net cash used in financing activities		(18,582	)		(37,560	)
Effect of exchange rate changes on cash		(657	)		(120	)
Net decrease in cash and cash equivalents		(31,516	)		(12,986	)
Cash and cash equivalents, beginning of period		54,472			47,027
Cash and cash equivalents, end of period	$	22,956		$	34,041

BEACON ROOFING SUPPLY, INC

(unaudited; dollars in millions)

Consolidated Sales by Product Line

Three Months Ended

	March 31, 2015				March 31, 2014
	Net Sales		Mix %		Net Sales		Mix %		Change
Residential roofing products	$	204.7		49.5%	$	186.6		48.5%	$	18.1	9.7%
Non-residential roofing products		138.0		33.4%		136.3		35.4%		1.7	1.2%
Complementary building products		70.5		17.1%		62.0		16.1%		8.5	13.7%
	$	413.2		100.0%	$	384.9		100.0%	$	28.3	7.4%

Consolidated Sales by Product Line for Existing Markets*

Three Months Ended

	March 31, 2015				March 31, 2014
	Net Sales		Mix %		Net Sales		Mix %		Change
Residential roofing products	$	197.4		49.1%	$	186.6		48.5%	$	10.8	5.8%
Non-residential roofing products		137.4		34.2%		136.3		35.4%		1.1	0.8%
Complementary building products		66.9		16.7%		62.0		16.1%		4.9	7.9%
	$	401.7		100.0%	$	384.9		100.0%	$	16.8	4.4%

Existing Market Sales By Business Day**

Three Months Ended

	March 31, 2015				March 31, 2014
	Net Sales		Mix %		Net Sales		Mix %		Change
Residential roofing products	$	3.133		49.1%	$	2.962		48.5%	$	0.171	5.8%
Non-residential roofing products		2.181		34.2%		2.164		35.4%		0.017	0.8%
Complementary building products		1.062		16.7%		0.984		16.1%		0.078	7.9%
	$	6.376		100.0%	$	6.110		100.0%	$	0.266	4.4%

Note: Some totals above may not foot due to rounding.

*Excludes branches acquired during the four quarters prior to the start of the second quarter of Fiscal 2015.

**There were 63 business days in each of the quarters ended March 31, 2015 and 2014.

BEACON ROOFING SUPPLY, INC

(unaudited; dollars in millions)

Consolidated Sales by Product Line

Six Months Ended

	March 31, 2015				March 31, 2014
	Net Sales		Mix %		Net Sales		Mix %		Change
Residential roofing products	$	484.2		48.0%	$	438.0		46.7%	$	46.2	10.5%
Non-residential roofing products		356.8		35.4%		354.9		37.9%		1.9	0.5%
Complementary building products		168.2		16.6%		144.1		15.4%		24.1	16.7%
	$	1,009.2		100.0%	$	937.0		100.0%	$	72.2	7.7%

Consolidated Sales by Product Line for Existing Markets*

Six Months Ended

	March 31, 2015				March 31, 2014
	Net Sales		Mix %		Net Sales		Mix %		Change
Residential roofing products	$	467.1		47.8%	$	438.0		46.7%	$	29.2	6.7%
Non-residential roofing products		355.2		36.3%		354.9		37.9%		0.3	0.0%
Complementary building products		155.8		15.9%		144.1		15.4%		11.6	8.1%
	$	978.1		100.0%	$	937.0		100.0%	$	41.1	4.4%

Existing Market Sales By Business Day**

Six Months Ended

	March 31, 2015				March 31, 2014
	Net Sales		Mix %		Net Sales		Mix %		Change
Residential roofing products	$	3.737		47.8%	$	3.504		46.7%	$	0.233	6.7%
Non-residential roofing products		2.842		36.3%		2.839		37.9%		0.002	0.0%
Complementary building products		1.246		15.9%		1.153		15.4%		0.093	8.1%
	$	7.825		100.0%	$	7.496		100.0%	$	0.328	4.4%

Note: Some totals above may not foot due to rounding.

*Excludes branches acquired during the four quarters prior to the start of Fiscal 2015.

**There were 125 business days in each of the six months ended March 31, 2015 and 2014.