Exhibit 99.1
Beacon Roofing Supply Reports Third Quarter 2014 Results
| · | Record third quarter sales up 5.8% to $663.4 million vs. $627.2 million in prior year |
| · | Third quarter diluted EPS of $0.54 vs. $0.55 in prior year |
| · | Record nine month sales of $1.60 billion vs. $1.56 billion in prior year |
| · | Nine month diluted EPS of $0.59 vs. $0.92 in prior year ($0.90 adjusted) |
| · | 17 new greenfield openings in fiscal 2014 YTD and 24 new greenfield openings in the last twelve months |
HERNDON, VA. — (BUSINESS WIRE) — August 8, 2014 — Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its third quarter and nine months ended June 30, 2014 (“2014”) of the fiscal year ending September 30, 2014 (“Fiscal 2014”).
Paul Isabella, the Company’s President and Chief Executive Officer, stated: “We delivered a solid 5.8% growth for the quarter, even in the face of continued soft residential roofing demand. Our diversified product offering allowed us to take advantage of the strength of the current commercial roofing market. In addition, our investment in new branch openings continues to fuel our growth. Approximately half of our growth in the quarter came from new branch openings and we expect these to add even more volume in the future. Although our gross margins improved slightly from the second quarter, they still are down from the prior year and continue to be our challenge. The soft residential market, coupled with heightened competition, has driven pricing down. Our gross margins this quarter also were unfavorably impacted by our increased percentage of commercial and direct ship business that typically have lower margins. We maintained our focus on cost control and managed our operating expenses to a flat percentage of sales with the prior year, even while investing almost $5 million in our new branches. We believe we are well positioned to capitalize on the high seasonal demand this time of the year, in addition to continuing to make the right investments to support our long term growth strategy.”
Third Quarter
Total sales increased 5.8% to a third quarter record $663.4 million in 2014 from $627.2 million in 2013. On an overall consolidated basis, residential roofing product sales increased 2.7%, non-residential roofing product sales increased 9.7%, and complementary product sales increased 6.4% over the prior year. During the third quarter, the Company had no branches classified as acquired markets and as such, consolidated sales are representative of existing market sales. In addition, the third quarters of 2014 and 2013 both had the same number of business days.
Net income for the third quarter was $26.8 million, compared to net income of $27.2 million in 2013. The third quarter diluted income per share was $0.54, compared to $0.55 in 2013. This decline was due primarily to lower gross margins from reduced selling prices as a result of a soft demand environment, and a continued unfavorable shift in sales mix to lower margin direct shipment and commercial business. Although operating expenses were up in total, they were level as a percentage of sales, reflecting continued cost controls and sales base growth. In addition, the Company incurred increased operating expenses of $4.9 million this quarter related to new stores (greenfield locations not open last year) as the Company continued to expand its footprint in existing and new markets.
Nine Months
Total sales increased 2.8% to a nine month record $1.60 billion in 2014 from $1.56 billion in 2013. Existing market (organic) sales, which exclude branches acquired after the beginning of last year, increased 1.5%. The nine months of 2014 and 2013 both had the same number of business days. In existing markets, residential roofing product sales decreased 2.3%, non-residential roofing product sales increased 6.3%, and complementary product sales decreased 2.0%. While our sales results were much stronger during the third quarter of 2014, the comparison of the 2014 nine months sales to 2013 was unfavorably impacted by the severity of winter storms and prolonged colder temperatures in most of our markets during the first half of 2014.
Net income for the nine months of 2014 was $29.6 million compared to $45.2 million in 2013, a decrease of 34.4%. Diluted net income per share for the nine months of 2014 was $0.59, compared to $0.92 in 2013. Adjusted net income, after removing the impact of certain non-recurring items, was $44.2 million in 2013, with adjusted diluted net income per share of $0.90 (see included financial tables for a reconciliation of adjusted net income and adjusted earnings per share). The lower net income was due to continued lower overall gross margins which were pressured by a difficult first half of 2014 due to the adverse and extended weather conditions we experienced which has resulted in softer overall demand, compounded by an unfavorable shift in sales mix during the nine months of 2014. In addition, the Company incurred incremental operating expenses of $9.7 million for the nine months of 2014 related to new stores (greenfield locations not open last year) as the Company continued to expand its footprint in existing and new markets. The nine months of 2013 included a $2.6 million credit to interest expense ($1.5 million, net of taxes), $0.03 per share, resulting from adjustments in the fair values of certain interest rate derivatives, and a $0.9 million charge ($0.5 million, net of taxes), $0.01 per share, for termination benefits.
Cash flow from operations was a net use of $46.8 million for the nine months of 2014 compared to cash source of $49.4 million in 2013. This decrease in operating cash flows was influenced primarily by seasonal increases in our accounts receivable balances driven by the increased sales during the third quarter of 2014, as well as increased inventory levels. While cash on hand was the same at $26.4 million as of June 30, 2014 and June 30, 2013, our net working capital has improved $71.2 million since June 30, 2013, to $431.0 million as of June 30, 2014. This increase was due primarily to continued robust operating cash flow and a reduction of cash used in investing activities over the past four quarters. As of June 30, 2014, we had available borrowings under our revolving credit facilities of $242.6 million.
The Company will host a webcast and conference call today at 10:00 a.m. (EDT) 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) 325-2420. To assure timely access, call participants should call in before 10:00 a.m.
Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products, with 254 branches in 40 states in the United States and six provinces in Canada as of June 30, 2014.
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 June 30, | Nine
Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2014 | %
of Net Sales | 2013 | %
of Net Sales | 2014 | %
of Net Sales | 2013 | %
of Net Sales | |||||||||||||||||||||||||
| Net sales | $ | 663,397 | 100.0% | $ | 627,168 | 100.0% | $ | 1,600,411 | 100.0% | $ | 1,557,155 | 100.0% | ||||||||||||||||||||
| Cost of products sold | 512,584 | 77.3% | 479,835 | 76.5% | 1,235,901 | 77.2% | 1,183,417 | 76.0% | ||||||||||||||||||||||||
| Gross profit | 150,813 | 22.7% | 147,333 | 23.5% | 364,510 | 22.8% | 373,738 | 24.0% | ||||||||||||||||||||||||
| Operating expenses | 105,004 | 15.8% | 99,380 | 15.8% | 308,826 | 19.3% | 291,588 | 18.7% | ||||||||||||||||||||||||
| Income from operations | 45,809 | 6.9% | 47,953 | 7.6% | 55,684 | 3.5% | 82,150 | 5.3% | ||||||||||||||||||||||||
| Interest expense, financing costs and other | 2,510 | 0.4% | 2,701 | 0.4% | 7,707 | 0.5% | 6,597 | 0.4% | ||||||||||||||||||||||||
| Income (loss) before provision for income taxes | 43,299 | 6.5% | 45,252 | 7.2% | 47,977 | 3.0% | 75,553 | 4.9% | ||||||||||||||||||||||||
| Provision (benefit) for income taxes | 16,500 | 2.5% | 18,094 | 2.9% | 18,338 | 1.1% | 30,350 | 1.9% | ||||||||||||||||||||||||
| Net income (loss) | $ | 26,799 | 4.0% | $ | 27,158 | 4.3% | $ | 29,639 | 1.9% | $ | 45,203 | 2.9% | ||||||||||||||||||||
| Net income (loss) per share: | ||||||||||||||||||||||||||||||||
| Basic | $ | 0.54 | $ | 0.56 | $ | 0.60 | $ | 0.93 | ||||||||||||||||||||||||
| Diluted | $ | 0.54 | $ | 0.55 | $ | 0.59 | $ | 0.92 | ||||||||||||||||||||||||
| Weighted average shares used in computing net income (loss) per share: | ||||||||||||||||||||||||||||||||
| Basic | 49,315,892 | 48,717,686 | 49,185,893 | 48,355,285 | ||||||||||||||||||||||||||||
| Diluted | 50,027,240 | 49,585,152 | 49,946,381 | 49,298,902 | ||||||||||||||||||||||||||||
| BEACON ROOFING SUPPLY, INC |
| Consolidated Balance Sheets |
| (in thousands) |
| June 30, 2014 | September 30, 2013 | June 30, 2013 | ||||||||||
| ASSETS | (unaudited) | (audited) | (unaudited) | |||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 26,405 | $ | 47,027 | $ | 26,375 | ||||||
| Accounts receivable, net | 352,554 | 329,673 | 313,698 | |||||||||
| Inventories | 399,619 | 251,370 | 335,438 | |||||||||
| Prepaid expenses and other assets | 72,048 | 62,422 | 82,166 | |||||||||
| Deferred income taxes | 14,376 | 14,591 | 14,424 | |||||||||
| Total current assets | 865,002 | 705,083 | 772,101 | |||||||||
| Property and equipment, net | 81,433 | 67,659 | 64,022 | |||||||||
| Goodwill | 467,916 | 469,203 | 468,388 | |||||||||
| Other assets, net | 84,841 | 96,751 | 100,852 | |||||||||
| TOTAL ASSETS | $ | 1,499,192 | $ | 1,338,696 | $ | 1,405,363 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 227,630 | $ | 182,914 | $ | 253,262 | ||||||
| Accrued expenses | 102,539 | 68,298 | 98,425 | |||||||||
| Borrowings under revolving lines of credit | 88,331 | 47,426 | 45,006 | |||||||||
| Current portion of long-term obligations | 15,466 | 15,098 | 15,585 | |||||||||
| Total current liabilities | 433,966 | 313,736 | 412,278 | |||||||||
| Senior notes payable, net of current portion | 188,437 | 196,875 | 199,688 | |||||||||
| Deferred income taxes | 60,024 | 61,003 | 57,618 | |||||||||
| Long-term obligations under equipment financing and other, | ||||||||||||
| net of current portion | 23,153 | 12,726 | 13,930 | |||||||||
| Total liabilities | 705,580 | 584,340 | 683,514 | |||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders' equity: | ||||||||||||
| Common stock | 493 | 488 | 488 | |||||||||
| Undesignated preferred stock | - | - | - | |||||||||
| Additional paid-in capital | 325,086 | 312,962 | 308,422 | |||||||||
| Retained earnings | 470,921 | 441,282 | 413,876 | |||||||||
| Accumulated other comprehensive income (loss) | (2,888 | ) | (376 | ) | (937 | ) | ||||||
| Total stockholders' equity | 793,612 | 754,356 | 721,849 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,499,191 | $ | 1,338,696 | $ | 1,405,363 | ||||||
| BEACON ROOFING SUPPLY, INC |
| Consolidated Statements of Cash Flows |
| (unaudited; in thousands) |
| Nine Months Ended June 30, |
||||||||
| 2014 | 2013 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 29,639 | $ | 45,203 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating | ||||||||
| activities: | ||||||||
| Depreciation and amortization | 22,609 | 22,429 | ||||||
| Stock-based compensation | 5,239 | 6,886 | ||||||
| Certain interest expense and other financing costs | 816 | (1,816 | ) | |||||
| Gain on sale of fixed assets | (660 | ) | (729 | ) | ||||
| Deferred income taxes | 793 | 1,441 | ||||||
| Other | 177 | - | ||||||
| Changes in assets and liabilities, net of the effects of businesses acquired: | ||||||||
| Accounts receivable | (23,789 | ) | (7,485 | ) | ||||
| Inventories | (148,384 | ) | (102,893 | ) | ||||
| Prepaid expenses and other assets | (12,697 | ) | (10,041 | ) | ||||
| Accounts payable and accrued expenses | 79,475 | 96,399 | ||||||
| Net cash (used in) provided by operating activities | (46,782 | ) | 49,394 | |||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (26,090 | ) | (17,933 | ) | ||||
| Acquisition of businesses | - | (64,484 | ) | |||||
| Proceeds from sales of assets | 760 | 885 | ||||||
| Net cash used in investing activities | (25,330 | ) | (81,532 | ) | ||||
| Financing activities: | ||||||||
| Borrowings under revolving lines of credit, net of repayments | 40,647 | 3,706 | ||||||
| Repayments under term loan | (8,437 | ) | (8,437 | ) | ||||
| Borrowings under equipment financing facilities, net of repayments | 11,450 | 525 | ||||||
| Proceeds from exercises of options | 6,890 | 17,259 | ||||||
| Excess tax benefit from equity-based compensation | 949 | 4,093 | ||||||
| Net cash provided by financing activities | 51,499 | 17,146 | ||||||
| Effect of exchange rate changes on cash | (9 | ) | 1,162 | |||||
| Net decrease in cash and cash equivalents | (20,622 | ) | (13,830 | ) | ||||
| Cash and cash equivalents at beginning of period | 47,027 | 40,205 | ||||||
| Cash and cash equivalents at end of period | $ | 26,405 | $ | 26,375 | ||||
| BEACON ROOFING SUPPLY, INC | ||||||||||
| (unaudited; dollars in millions) | ||||||||||
| Consolidated Sales by Product Line | ||||||||||
| Three Months Ended | ||||||||||
| June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
| Net Sales | Mix % | Net Sales | Mix % | Change | ||||||||||||||||||||
| Residential roofing products | $ | 317.5 | 47.9% | $ | 309.2 | 49.3% | $ | 8.3 | 2.7% | |||||||||||||||
| Non-residential roofing products | 249.4 | 37.6% | 227.2 | 36.2% | 22.1 | 9.7% | ||||||||||||||||||
| Complementary building products | 96.5 | 14.5% | 90.7 | 14.5% | 5.8 | 6.4% | ||||||||||||||||||
| $ | 663.4 | 100.0% | $ | 627.2 | 100.0% | $ | 36.2 | 5.8% | ||||||||||||||||
| Consolidated Sales by Product Line for Existing Markets* |
| Three Months Ended |
| June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
| Net Sales | Mix % | Net Sales | Mix % | Change | ||||||||||||||||||||
| Residential roofing products | $ | 317.5 | 47.9% | $ | 309.2 | 49.3% | $ | 8.3 | 2.7% | |||||||||||||||
| Non-residential roofing products | 249.4 | 37.6% | 227.2 | 36.2% | 22.1 | 9.7% | ||||||||||||||||||
| Complementary building products | 96.5 | 14.5% | 90.7 | 14.5% | 5.8 | 6.4% | ||||||||||||||||||
| $ | 663.4 | 100.0% | $ | 627.2 | 100.0% | $ | 36.2 | 5.8% | ||||||||||||||||
| Existing Market Sales By Business Day** |
| Three Months Ended |
| June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
| Net Sales | Mix % | Net Sales | Mix % | Change | ||||||||||||||||||||
| Residential roofing products | $ | 4.961 | 47.9% | $ | 4.832 | 49.3% | $ | 0.130 | 2.7% | |||||||||||||||
| Non-residential roofing products | 3.896 | 37.6% | 3.551 | 36.2% | 0.346 | 9.7% | ||||||||||||||||||
| Complementary building products | 1.508 | 14.5% | 1.417 | 14.5% | 0.091 | 6.4% | ||||||||||||||||||
| $ | 10.366 | 100.0% | $ | 9.800 | 100.0% | $ | 0.566 | 5.8% | ||||||||||||||||
Note: Some totals above may not foot due to rounding.
*Excludes branches acquired during the four quarters prior to the start of the third quarter of Fiscal 2014.
**There were 64 business days in each of the quarters ended June 30, 2014 and 2013.
| BEACON ROOFING SUPPLY, INC | ||||||||||
| (unaudited; dollars in millions) | ||||||||||
| Consolidated Sales by Product Line | ||||||||||
| Nine Months Ended | ||||||||||
| June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
| Net Sales | Mix % | Net Sales | Mix % | Change | ||||||||||||||||||||
| Residential roofing products | $ | 755.6 | 47.2% | $ | 763.6 | 49.0% | $ | (8.0 | ) | -1.1% | ||||||||||||||
| Non-residential roofing products | 604.7 | 37.8% | 563.0 | 36.2% | 41.7 | 7.4% | ||||||||||||||||||
| Complementary building products | 240.1 | 15.0% | 230.5 | 14.8% | 9.6 | 4.2% | ||||||||||||||||||
| $ | 1,600.4 | 100.0% | $ | 1,557.2 | 100.0% | $ | 43.3 | 2.8% | ||||||||||||||||
| Consolidated Sales by Product Line for Existing Markets* |
| Nine Months Ended |
| June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
| Net Sales | Mix % | Net Sales | Mix % | Change | ||||||||||||||||||||
| Residential roofing products | $ | 724.5 | 47.9% | $ | 741.2 | 49.8% | $ | (16.7 | ) | -2.3% | ||||||||||||||
| Non-residential roofing products | 574.1 | 38.0% | 540.0 | 36.2% | $ | 34.1 | 6.3% | |||||||||||||||||
| Complementary building products | 212.8 | 14.1% | 208.6 | 14.0% | $ | 4.3 | 2.0% | |||||||||||||||||
| $ | 1,511.4 | 100.0% | $ | 1,489.8 | 100.0% | $ | 21.6 | 1.5% | ||||||||||||||||
| Existing Market Sales By Business Day** |
| Nine Months Ended |
| June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
| Net Sales | Mix % | Net Sales | Mix % | Change | ||||||||||||||||||||
| Residential roofing products | $ | 3.833 | 47.9% | $ | 3.922 | 49.8% | $ | (0.089 | ) | -2.3% | ||||||||||||||
| Non-residential roofing products | 3.038 | 38.0% | 2.857 | 36.2% | 0.180 | 6.3% | ||||||||||||||||||
| Complementary building products | 1.126 | 14.1% | 1.103 | 14.0% | 0.022 | 2.0% | ||||||||||||||||||
| $ | 7.997 | 100.0% | $ | 7.882 | 100.0% | $ | 0.114 | 1.5% | ||||||||||||||||
Note: Some totals above may not foot due to rounding.
*Excludes branches acquired during the four quarters prior to the start of Fiscal 2014.
**There were 189 business days in each of the nine months ended June 30, 2014 and 2013.
| BEACON ROOFING SUPPLY INC |
| Adjusted Diluted Net Income per Share ("Adjusted Earnings per Share") |
| (unaudited; in thousands except per share amounts) |
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2014 | EPS | 2013 | EPS | 2014 | EPS | 2013 | EPS | |||||||||||||||||||||||||
| Net income & diluted earnings per share | $ | 26,799 | $ | 0.54 | $ | 27,158 | $ | 0.55 | $ | 29,639 | $ | 0.59 | $ | 45,203 | $ | 0.92 | ||||||||||||||||
| Company adjustments, net of income taxes: | ||||||||||||||||||||||||||||||||
| Fair value of certain interest rate derivatives and charge associated with refinancing | - | - | - | - | - | - | (1,536 | ) | (0.03 | ) | ||||||||||||||||||||||
| Termination benefits | - | - | - | - | - | - | 542 | 0.01 | ||||||||||||||||||||||||
| Adjusted net income & diluted earnings per share | $ | 26,799 | $ | 0.54 | $ | 27,158 | $ | 0.55 | $ | 29,639 | $ | 0.59 | $ | 44,209 | $ | 0.90 | ||||||||||||||||
Note: Some totals above may not foot due to rounding.
The Company’s management believes that "Adjusted Earnings per Share," which excludes certain events such as the recognition of changes in the fair value of certain interest rate derivatives and termination benefits is useful to investors because it permits investors to better understand year-over-year changes in underlying operating performance.
The majority of the above termination benefits are associated with the retirement of our former CFO. While management believes Adjusted Earnings per Share (EPS) is a useful measure for investors, it is not a measurement presented in accordance with United States generally accepted accounting principles (GAAP). You should not consider Adjusted Earnings per Share in isolation or as a substitute for net loss per share or diluted earnings per share calculated in accordance with GAAP.
