Beacon Roofing Supply Reports Record Results for the Fourth Quarter and for Fiscal 2005.PEABODY Peabody (pē`bədē, –bädē), city (1990 pop. 47,039), Essex co., NE Mass., a suburb of Boston, on the Danvers River; settled c.1633, inc. as South Danvers 1855, name changed 1868. , Mass. -- Beacon Beacon, city (1990 pop. 13,243), Dutchess co., SE N.Y., on the E bank of the Hudson River; settled 1663, inc. in 1913 when Fishkill Landing and Matteawan villages were united. Roofing Supply, Inc. (Nasdaq: BECN (Backward Explicit Congestion Notification) A frame relay message that notifies the sending device that a congestion avoidance procedure should be initiated. See FECN. ) announced today record performance for the fourth quarter and fiscal year ended September September: see month. 24, 2005. Fourth Quarter Results Sales increased 28.3% to a record $231.2 million in the fourth quarter of 2005 from $180.2 million in the fourth quarter of fiscal year 2004, reflecting acquisitions made in 2005 and strong internal growth across all three major product groups: residential roofing, non-residential roofing and complementary building products. The internal sales ("existing markets") growth rate was 10.9% in the fourth quarter of 2005 while our acquired companies contributed the remaining sales increase. There was one less business day in the fourth quarter of 2005 compared to 2004. In 2005, Beacon acquired three companies, including one late in the fourth quarter; announced the acquisition of Shelter A general term used in statutes that relates to the provision of food, clothing, and housing for specified individuals; a home with a proper environment that affords protection from the weather. Distribution, Inc. which currently has 53 branches; and opened six new branches. Gross profit increased 24.1% to $55.8 million from $44.9 million a year ago while our overall gross margin rate was 24.1% compared to 24.9% last year. However, our existing markets' gross margin rate increased 0.3% from 24.9% to 25.2%. Due to their product mix, the acquired branches have lower gross margin rates than our existing markets. SG&A expenses increased $6.0 million or 18.8% compared to 2004 due primarily to the acquisitions. Existing markets' SG&A expenses increased $1.3 million or 4.1% due primarily to higher professional fees for the reasons discussed below for the full year and a higher provision for bad debts. As a percentage of net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight , SG&A expenses declined to 16.4% from 17.7%. Stock-based compensation declined from $9.4 million to $0.2 million in the fourth quarter of 2005. In 2004, the Company incurred significant stock-based compensation expense primarily due to a lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine. ["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978]. of certain restrictions on employee stock and stock options at the time of the Company's initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ). Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 391% to $17.7 million in the fourth quarter of 2005 compared to $3.6 million in 2004. Even after exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of the benefit from the decrease in stock-based compensation discussed above, operating income increased by 36.9%. As a percentage of net sales, operating income increased to 7.6% in the fourth quarter of 2005. The Company's net income for the fourth quarter was a record $10.4 million compared to a net loss of ($5.5) million in the fourth quarter of 2004. The 2004 loss was due principally to a $9.4 million charge for stock-based compensation and a $4.7 million non-deductible charge associated with the change in the value of the Company's warrant derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. liabilities discussed below. Interest expense declined 43.0% or $1.0 million primarily from the payoff of high-interest Adj. 1. high-interest - (used of loans) charging a relatively large percentage of the amount borrowed low-interest - (used of loans) charging a relatively small percentage of the amount borrowed debt following the IPO. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per share was $0.38 in the fourth quarter of 2005 compared to a net loss per share of $(0.30) in 2004. 2005 Annual Results Sales increased 30.3% to a record $850.9 million in fiscal year 2005 from $652.9 million in fiscal year 2004, reflecting the 2005 acquisitions and strong internal growth across all three major product groups. The internal sales growth rate was 15.7% in 2005 while our acquisitions contributed the remaining sales increase. Gross profit increased 25.0% to $207.2 million in 2005 compared with $165.7 million in 2004, with our overall gross margin rate at 24.3% compared to 25.4% in 2004. Existing markets' gross margin rate dropped only 0.1% from 25.4% to 25.3%. As mentioned above, the acquired branches have lower gross margin rates than our existing markets, which has lowered our overall rate. Selling, general and administrative (SG&A) expenses increased $25.0 million or 20.7% in 2005 compared to 2004, mostly due to the impact of the 2005 acquisitions. However, as a percentage of net sales, SG&A expenses declined to 17.1% from 18.5%. Existing markets' SG&A expenses increased $12.0 million primarily due to higher payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. costs associated with the sales volume increase, six new branches opened in 2005, higher transportation costs, and higher professional fees for public-company reporting and complying with Sarbanes-Oxley regulations. Stock-based compensation declined from $10.3 million to $0.7 million in 2005 due to the reason mentioned above for the fourth quarter. Operating income increased 75.1% to $60.7 million in 2005 from $34.7 million in 2004. Even after exclusion of the benefit from the decrease in stock-based compensation discussed above, operating income increased by 36.6% in 2005. As a percentage of net sales, operating income increased to 7.1% in 2005. The Company had record net income of $32.9 million in 2005 compared to a net loss of ($15.4) million in 2004 due principally to the $26.0 million increase in operating income and a $25.0 million non-deductible charge incurred in 2004 for the change in the value of the Company's warrant derivative liabilities. The derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. were paid in full on September 28, 2004 upon the receipt of the IPO proceeds. In 2004, the Company also incurred a $3.3 million loss on early retirement of debt associated with a debt refinancing Refinancing An extension and/or increase in amount of existing debt. compared to a $0.9 million loss in 2005. Interest expense declined 57.7% or $6.7 million in 2005 from 2004, primarily from the payoff of high-interest debt following the IPO. The Company also experienced a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. drop in its effective income tax rate. Diluted net income per share was $1.20 in 2005 compared to a net loss per share of ($0.86) in 2004. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $8.7 million during 2005 compared to $23.1 million during 2004. While accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying increased in line with the sales increase, the Company curtailed its purchases in the fourth quarter of 2005 and paid down its accounts payable accordingly. The Company had built up its inventories prior to the fourth quarter to counteract some price increases and temporary shortages. The Company's IPO was completed on September 22, 2004 and the proceeds were received on September 28, 2004, a few days after the Company's fiscal 2004 year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Robert Buck Robert Buck can refer to:
credit facilities npl → facilités fpl de paiement credit facilities and continue to manage our balance sheet and liquidity to aggressively pursue additional growth opportunities. We continue to be very excited about our future as we spread our presence across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ." The Company will be holding its investor conference call tomorrow, December December: see month. 8, 2005, at 9:00 a.m. Eastern Time. The dial-in-number is 800.901.5231 (participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. passcode 34334860) (international dial-in-number 617.786.2961). Please call five to ten minutes prior to the scheduled start-time to assure timely access to the call. About Beacon Roofing Supply, Inc. Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products operating 138 branches in 29 states in the Northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. , Mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic , Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians , Central Plains, Southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: Southwest or south west may also refer to:
Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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.
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Operations
Fourth Quarter Ended
-------------------------------------------------
(Dollars in
thousands, except
per share data) September 24, % of September 25, % of
2005 Net Sales 2004 Net Sales
-------- ------------- --------- ------------- -----------
Net
sales $231,170 100.0% $180,195 100.0%
Cost of products sold 175,405 75.9% 135,245 75.1%
------------- --------- ------------- -----------
Gross
profit 55,765 24.1% 44,950 24.9%
------------- --------- ------------- -----------
Operating expenses:
Selling, general and
administrative
expenses 37,917 16.4% 31,912 17.7%
Stock-based
compensation 170 0.1% 9,440 5.2%
------------- --------- ------------- -----------
Total operating
expenses 38,087 16.5% 41,352 22.9%
------------- --------- ------------- -----------
Income from
operations 17,678 7.6% 3,598 2.0%
------------- --------- ------------- -----------
Other
Expense:
Interest expense 1,376 0.5% 2,416 1.3%
Change in value of
warrant derivatives - - 4,690 2.6%
------------- --------- ------------- -----------
Total other expenses 1,376 0.5% 7,106 3.9%
------------- --------- ------------- -----------
Income (loss) before
income taxes 16,302 7.1% (3,508) -1.9%
Income
taxes 5,877 2.7% 1,951 1.1%
------------- --------- ------------- -----------
Net income (loss) $10,425 4.5% $(5,459) -3.0%
============= ========= ============= ===========
Net income (loss) per
share:
Basic $0.39 $(0.30)
============= =============
Diluted $0.38 $(0.30)
============= =============
Weighted average
shares used in
computing net income
(loss) per share:
Basic 26,661,859 18,152,231
============= =============
Diluted 27,565,829 18,152,231
============= =============
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Operations
Fiscal Year Ended
-----------------------------------------------
(Dollars in thousands,
except per share
data) September 24, % of September 25, % of
2005 Net Sales 2004 Net Sales
--------------- ------------- --------- ------------- ---------
Net sales $850,928 100.0% $652,909 100.0%
Cost of products sold 643,733 75.7% 487,200 74.6%
------------- --------- ------------- ---------
Gross profit 207,195 24.3% 165,709 25.4%
------------- --------- ------------- ---------
Operating expenses:
Selling, general and
administrative
expenses 145,786 17.1% 120,738 18.5%
Stock-based
compensation 690 0.1% 10,299 1.6%
------------- --------- ------------- ---------
Total operating
expenses 146,476 17.2% 131,037 20.1%
------------- --------- ------------- ---------
Income from operations 60,719 7.1% 34,672 5.3%
------------- --------- ------------- ---------
Other expense:
Interest expense 4,911 0.5% 11,621 1.8%
Change in value of
warrant derivatives - - 24,992 3.8%
Loss on early
retirement of debt 915 0.1% 3,285 0.5%
------------- --------- ------------- ---------
Total other expenses 5,826 0.6% 39,898 6.1%
------------- --------- ------------- ---------
Income (loss) before
income taxes 54,893 6.5% (5,226) -0.8%
Income taxes 21,976 2.6% 10,129 1.6%
------------- --------- ------------- ---------
Net income
(loss) $32,917 3.9% $(15,355) -2.4%
============= ========= ============= =========
Net income (loss) per
share:
Basic $1.24 $(0.86)
============= =============
Diluted $1.20 $(0.86)
============= =============
Weighted average
shares used in
computing net income
(loss) per share:
Basic 26,477,955 17,905,203
============= =============
Diluted 27,412,629 17,905,203
============= =============
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Balance Sheets
September 24, September 25,
(Dollars in thousands) 2005 2004
--------------------------------------- -------------- ---------------
Assets
Current assets:
Accounts receivable, net $123,345 $93,824
Inventories 82,423 68,573
Prepaid expenses and other assets 20,106 14,974
Deferred income taxes 4,339 3,223
-------------- ---------------
Total current assets 230,213 180,594
Property and equipment, net 31,767 25,101
Goodwill, net 108,553 94,162
Other assets 13,904 1,641
-------------- ---------------
Total assets $384,437 $301,498
============== ===============
Liabilities and stockholders' equity
Current liabilities:
Cash overdraft $3,557 $3,694
Borrowings under revolving lines of
credit - 44,592
Accounts payable 70,158 74,043
Accrued expenses 29,146 21,524
Warrant derivative liabilities - 34,335
Current portion of long-term
obligations 6,348 6,152
-------------- ---------------
Total current liabilities 109,209 184,340
Borrowings under revolving lines of
credit 63,769 -
Senior notes payable and other
obligations, net of current 20,156 22,660
Junior subordinated notes payable - 17,071
Subordinated notes payable to related
parties - 29,442
Deferred income taxes 10,890 8,764
Long-term obligations under capital
leases, net of current 1,668 976
Stockholders' equity:
Common stock 269 266
Additional paid-in capital 142,173 140,067
Deferred compensation - (690)
Treasury stock (515) (515)
Retained earnings (accumulated deficit) 32,050 (867)
Common stock subscription receivable - (102,765)
Accumulated other comprehensive income 4,768 2,749
-------------- ---------------
Total stockholders' equity 178,745 38,245
-------------- ---------------
Total liabilities and stockholders'
equity $384,437 $301,498
============== ===============
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Cash Flows
Fiscal Year Ended
------------------------------
September 24, September 25,
(In thousands) 2005 2004
-------------------------------------- --------------- --------------
Operating activities:
Net income (loss) $ 32,917 $ (15,355)
Adjustments to reconcile net income
(loss)
to net cash provided by operating
activities:
Depreciation and amortization 8,748 6,922
Deferred interest - 4,445
Stock-based compensation 690 10,299
Change in value of warrant
derivatives - 24,992
Loss on early retirement of debt 915 3,285
Unrealized gain on interest rate
collar - (182)
Deferred income taxes 896 (940)
Changes in assets and liabilities,
net of the effects of acquisitions:
Accounts receivable (17,384) (6,034)
Inventories (4,828) (13,166)
Prepaid expenses and other assets (1,716) (4,815)
Accounts payable and accrued
expenses (11,569) 13,635
--------------- --------------
Net cash provided by operating
activities 8,669 23,086
--------------- --------------
Investing activities:
Purchases of property and equipment (9,583) (5,127)
Acquisition of businesses, net of cash
acquired (37,705) -
--------------- --------------
Net cash used in investing activities (47,288) (5,127)
--------------- --------------
Financing activities:
Borrowings under revolving lines of
credit 18,726 43,040
Borrowings (repayments) under senior
notes & other (2,817) 26,934
Early extinguishment of debt (18,015) (66,556)
Repayment of junior subordinated notes
and warrants (34,335) (21,500)
Repayments on subordinated notes to
related parties (29,442) (47)
Proceeds from sale of common stock 104,874 250
Initial public offering costs - (2,468)
Deferred financing costs (342) (1,525)
--------------- --------------
Net cash provided by (used in)
financing activities 38,649 (21,872)
--------------- --------------
Effect of exchange rate changes on
cash 107 155
--------------- --------------
Net increase (decrease) in cash 137 (3,758)
Cash (overdraft) at beginning of
period (3,694) 64
--------------- --------------
Cash overdraft at end of period $ (3,557) $ (3,694)
=============== ==============
Non-cash financing and investing
activities:
Capital lease transactions $ 1,228 $ 982
Common stock subscription receivable $ - $ 102,765
Reimbursement of offering costs by
warrant holders $ - $ 2,583
BEACON ROOFING SUPPLY INC
Consolidated Sales by Product Line
For the Fiscal
Year Ended:
September 24, September 25,
2005 2004
-------------- --------------
(dollars in millions) Net Net
Sales Mix % Sales Mix % Growth
---------------------------------- ------ ------- ------ -------------
Residential roofing
products $346.3 40.7% $268.8 41.2% $ 77.5 28.8 %
Non-residential roofing
products 305.6 35.9% 223.2 34.2% 82.4 36.9 %
Complementary building
products 199.0 23.4% 160.9 24.6% 38.1 23.7 %
------- ------ ------- ------ -------------
$850.9 100.0% $652.9 100.0% $198.0 30.3 %
======= ====== ======= ====== =============
Consolidated Sales by Product Line
for Existing Markets(a)
For the Three
Months Ended:
September 24, September 25,
2005 2004
-------------- --------------
(dollars in millions) Net Net
Sales Mix % Sales Mix % Growth
----------------------------------- ------ ------- ------ ------------
Residential roofing products $73.9 37.0% $68.3 37.9% $ 5.6 8.2 %
Non-residential roofing
products 79.7 39.9% 68.9 38.2% 10.8 15.7 %
Complementary building
products 46.2 23.1% 43.0 23.9% 3.2 7.4 %
------- ------ ------- ------ ------------
$199.8 100.0% $180.2 100.0% $19.6 10.9 %
======= ====== ======= ====== ============
For the Fiscal
Year Ended:
September 24, September 25,
2005 2004
-------------- --------------
(dollars in millions) Net Net
Sales Mix % Sales Mix % Growth
---------------------------------- ------ ------- ------ -------------
Residential roofing
products $292.9 38.8% $268.8 41.2% $ 24.1 9.0 %
Non-residential roofing
products 284.1 37.6% 223.2 34.2% 60.9 27.3 %
Complementary building
products 178.5 23.6% 160.9 24.6% 17.6 10.9 %
------- ------ ------- ------ -------------
$755.5 100.0% $652.9 100.0% $102.6 15.7 %
======= ====== ======= ====== =============
(a) Excludes branches, such as JGA Corp. branches, acquired during
fiscal 2005.
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