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Beacon Roofing Supply Reports Fourth Quarter and Fiscal Year 2019 Results

November 25, 2019

HERNDON, Va.--(BUSINESS WIRE)--Nov 25, 2019--

Beacon Roofing Supply, Inc. (Nasdaq: BECN) (“Beacon” or the “Company”) announced results today for its fourth quarter and fiscal year ended September 30, 2019 (“2019”). The Company also announced that Executive Vice President and Chief Financial Officer Joseph Nowicki will leave the Company later this fiscal year to shift focus to his family, charitable work and Board service. Mr. Nowicki will remain CFO during the Company’s nationwide search for his successor and will support the transition of his duties until his departure.

Julian Francis, Beacon’s new President and Chief Executive Officer, stated: “In joining Beacon, I recognize the great opportunity offered by this industry and the Company’s demonstrated long-term growth, EBITDA margins and operating cash flow. We are now pivoting from a growth run via acquisitions to a focus on organic growth, gross margin expansion and operating expense rigor. Several positive elements are evident in our fourth quarter performance, including 11.5% organic daily sales growth in residential roofing, continued strong operating cash flow, and positive SG&A expense leverage. I see tremendous opportunities to substantially improve upon Beacon’s financial performance. Operationally, I am turning immediate focus to growing our customer base, differentiating e-commerce capabilities through our digital platform, and enhancing the productivity of our branch network. We are just getting started, and I am proud to lead Beacon forward into this exciting next stage of growth.”

Fourth Quarter

Net sales increased 4.9% to $2.03 billion in 2019, from $1.94 billion in 2018. Consolidated residential roofing product sales increased 12.7%, consolidated non-residential roofing product sales increased 2.4%, and consolidated complementary product sales decreased 3.2% compared to the prior year. Existing markets net sales increased 4.8% compared to the prior year, driven mainly by 13.2% growth in residential roofing. The fourth quarter of fiscal years 2019 and 2018 had 64 and 63 business days, respectively.

Net income was $27.4 million, compared to $48.3 million in 2018. Net income attributable to common shareholders was $21.4 million, compared to $42.3 million in 2018. Diluted net income (loss) per share (“EPS”) was $0.27, compared to $0.54 in 2018. Fourth quarter results were negatively impacted by lower gross margins and higher acquisition-related costs compared to 2018. Fourth quarter results were positively impacted by existing market sales growth in residential roofing.

Adjusted Net Income (Loss) was $82.0 million, compared to $84.1 million in 2018. Adjusted EPS was $1.04, compared to $1.07 in 2018. Adjusted EBITDA was $169.1 million, compared to $178.3 million in 2018. (Please see the included financial tables for a reconciliation of “Adjusted” financial measures to the most directly comparable GAAP financial measures, as well as further detail on the components driving the net changes over the comparative periods.)

Fiscal Year

Net sales increased 10.7% to $7.11 billion, from $6.42 billion in 2018. Consolidated residential roofing product sales increased 10.0%, consolidated non-residential roofing product sales increased 4.2%, and consolidated complementary product sales increased 17.0% compared to the prior year. Existing markets net sales increased 3.3% compared to the prior year, driven mainly by 7.0% growth in residential roofing and improved pricing. Fiscal years 2019 and 2018 had 253 and 252 business days, respectively.

Net income (loss) was $(10.6) million, compared to $98.6 million in 2018. Net income (loss) attributable to common shareholders was $(34.6) million, compared to $80.6 million in 2018. EPS was $(0.51), compared to $1.05 in 2018. Fiscal year 2019 results were negatively impacted by higher acquisition-related costs compared to 2018 as well as increase in interest expense directly tied to the financing of the Allied acquisition. In addition, 2018 results include a $48.8 million net tax benefit resulting from the enactment of the Tax Cuts and Jobs Act of 2017. Fiscal year 2019 results were positively impacted by existing market sales growth in residential roofing.

Adjusted Net Income (Loss) was $176.2 million, compared to $206.7 million in 2018. Adjusted EPS was $2.26, compared to $2.70 in 2018. Adjusted EBITDA was $476.0 million, compared to $483.6 million in 2018. (Please see the included financial tables for a reconciliation of “Adjusted” financial measures to the most directly comparable GAAP financial measures as well as further detail on the components driving the net changes over the comparative periods).

The Company will host a webcast and conference call today at 5:00 p.m. ET to discuss these results. The webcast link and call-in details are as follows:

 

What:

Beacon Roofing Supply Fourth Quarter 2019 Earnings Conference Call

When

Monday, November 25, 2019

Time:

5:00 p.m. ET

Webcast:

http://ir.beaconroofingsupply.com/events-presentations (live and replay)

Live Call:

720-634-9063; Conf. ID #3964617

 

To assure timely access, conference call participants should dial in prior to the 5:00 p.m. ET start time.

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.

About Beacon Roofing Supply

Founded in 1928, Beacon Roofing Supply is the largest publicly traded distributor of residential and commercial roofing materials and complementary building products in North America, operating over 500 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 100,000 customers, utilizing its vast branch network and diverse service offerings to provide high-quality products and support throughout the entire business lifecycle. Beacon also offers its own private label brand, TRI-BUILT, and has a proprietary digital account management suite, Beacon Pro+, which allows customers to manage their businesses online. A Fortune 500 company, Beacon’s stock is traded on the Nasdaq Global Select Market under the ticker symbol BECN. To learn more about Beacon and its brands, please visit www.becn.com.

 

BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Operations

(In thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Year Ended September 30,

 

 

2019

 

% of

Net

Sales

 

2018

 

% of

Net

Sales

 

2019

 

% of

Net

Sales

 

2018

 

% of

Net

Sales

Net sales

$

2,029,913

 

 

100.0

%

 

$

1,935,756

 

 

100.0

%

 

$

7,105,160

 

 

100.0

%

 

$

6,418,311

 

 

100.0

%

Cost of products sold

 

1,536,451

 

 

75.7

%

 

 

1,444,459

 

 

74.6

%

 

 

5,368,605

 

 

75.6

%

 

 

4,824,990

 

 

75.2

%

Gross profit

 

493,462

 

 

24.3

%

 

 

491,297

 

 

25.4

%

 

 

1,736,555

 

 

24.4

%

 

 

1,593,321

 

 

24.8

%

Operating expense 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

334,115

 

 

16.5

%

 

 

328,658

 

 

17.0

%

 

 

1,311,043

 

 

18.4

%

 

 

1,187,192

 

 

18.5

%

Depreciation

 

17,916

 

 

0.9

%

 

 

18,678

 

 

1.0

%

 

 

70,695

 

 

1.0

%

 

 

60,318

 

 

0.9

%

Amortization

 

51,557

 

 

2.5

%

 

 

35,846

 

 

1.9

%

 

 

207,065

 

 

2.9

%

 

 

141,185

 

 

2.2

%

Total operating expense

 

403,588

 

 

19.9

%

 

 

383,182

 

 

19.9

%

 

 

1,588,803

 

 

22.3

%

 

 

1,388,695

 

 

21.6

%

Income (loss) from operations

 

89,874

 

 

4.4

%

 

 

108,115

 

 

5.5

%

 

 

147,752

 

 

2.1

%

 

 

204,626

 

 

3.2

%

Interest expense, financing costs, and other 2

 

41,632

 

 

2.1

%

 

 

37,058

 

 

1.9

%

 

 

158,534

 

 

2.2

%

 

 

136,544

 

 

2.1

%

Income (loss) before provision for income taxes

 

48,242

 

 

2.3

%

 

 

71,057

 

 

3.6

%

 

 

(10,782

)

 

(0.1

%)

 

 

68,082

 

 

1.1

%

Provision for (benefit from) income taxes

 

20,862

 

 

1.0

%

 

 

22,747

 

 

1.2

%

 

 

(170

)

 

0.0

%

 

 

(30,544

)

 

(0.4

%)

Net income (loss)

 

27,380

 

 

1.3

%

 

 

48,310

 

 

2.4

%

 

 

(10,612

)

 

(0.1

%)

 

 

98,626

 

 

1.5

%

Dividends on preferred shares 3

 

6,000

 

 

0.3

%

 

 

6,000

 

 

0.4

%

 

 

24,000

 

 

0.4

%

 

 

18,000

 

 

0.2

%

Net income (loss) attributable to common shareholders

$

21,380

 

 

1.0

%

 

$

42,310

 

 

2.0

%

 

$

(34,612

)

 

(0.5

%)

 

$

80,626

 

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

68,520,451

 

 

 

 

 

 

68,119,406

 

 

 

 

 

 

68,424,288

 

 

 

 

 

 

68,012,879

 

 

 

 

Diluted

 

69,253,100

 

 

 

 

 

 

69,042,868

 

 

 

 

 

 

68,424,288

 

 

 

 

 

 

69,191,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share 4:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.27

 

 

 

 

 

$

0.54

 

 

 

 

 

$

(0.51

)

 

 

 

 

$

1.07

 

 

 

 

Diluted

$

0.27

 

 

 

 

 

$

0.54

 

 

 

 

 

$

(0.51

)

 

 

 

 

$

1.05

 

 

 

 

 

1

Operating expense for the three months ended September 30, 2019 and 2018 includes acquisition and business restructuring costs of $6.2 million and $10.6 million, respectively. Operating expense for the years ended September 30, 2019 and 2018 includes acquisition and business restructuring costs of $29.2 million and $54.4 million, respectively.

2

Interest expense, financing costs, and other for the three months ended September 30, 2019 and 2018 includes acquisition costs of $6.3 million and $2.7 million, respectively. Interest expense, financing costs, and other for the years ended September 30, 2019 and 2018 includes acquisition costs of $15.4 million and $24.8 million, respectively.

3

Three months ended September 30, 2019 and 2018 amounts are composed of $5.0 million in undeclared cumulative Preferred Stock dividends, as well as an additional $1.0 million of Preferred Stock dividends that had been declared and paid as of period end. Year ended September 30, 2019 amount is composed of $5.0 million in undeclared cumulative Preferred Stock dividends, as well as an additional $19.0 million of Preferred Stock dividends that had been declared and paid as of period end. Year ended September 30, 2018 amount is composed of $5.0 million in undeclared cumulative Preferred Stock dividends, as well as an additional $13.0 million of Preferred Stock dividends that had been declared and paid as of period end.

4

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents or the conversion of Preferred Stock. Common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock unit awards. Diluted net income (loss) per common share is calculated by dividing net income (loss) attributable to common shareholders by the fully diluted weighted-average number of common shares outstanding during the period. The following table presents the components and calculations of basic and diluted net income (loss) per share for each period presented (in thousands, except share and per share amounts):

 

 

Three Months Ended

September 30,

 

Year Ended

September 30,

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

27,380

 

 

$

48,310

 

 

$

(10,612

)

 

$

98,626

 

Dividends on preferred shares

 

6,000

 

 

 

6,000

 

 

 

24,000

 

 

 

18,000

 

Net income (loss) attributable to common shareholders

$

21,380

 

 

$

42,310

 

 

$

(34,612

)

 

$

80,626

 

Undistributed income allocated to participating securities

 

(2,650

)

 

 

(5,406

)

 

 

-

 

 

 

(7,742

)

Net income (loss) attributable to common shareholders - basic and diluted

$

18,730

 

 

$

36,904

 

 

$

(34,612

)

 

$

72,884

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding - basic

 

68,520,451

 

 

 

68,119,406

 

 

 

68,424,288

 

 

 

68,012,879

 

Effect of common share equivalents

 

732,649

 

 

 

1,061,756

 

 

 

-

 

 

 

1,178,160

 

Weighted-average common shares outstanding - diluted

 

69,253,100

 

 

 

69,181,162

 

 

 

68,424,288

 

 

 

69,191,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

$

0.27

 

 

$

0.54

 

 

$

(0.51

)

 

$

1.07

 

Net income (loss) per share - diluted

$

0.27

 

 

$

0.54

 

 

$

(0.51

)

 

$

1.05

 

 
 

BEACON ROOFING SUPPLY, INC.

Consolidated Balance Sheets

(In thousands)

 

September 30,

 

2019

 

2018

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

72,287

 

 

$

129,927

 

Accounts receivable, net

 

1,108,134

 

 

 

1,090,533

 

Inventories, net

 

1,018,183

 

 

 

936,047

 

Prepaid expenses and other current assets

 

315,643

 

 

 

244,360

 

Total current assets

 

2,514,247

 

 

 

2,400,867

 

Property and equipment, net

 

260,376

 

 

 

280,407

 

Goodwill

 

2,490,590

 

 

 

2,491,779

 

Intangibles, net

 

1,125,540

 

 

 

1,334,366

 

Other assets, net

 

2,059

 

 

 

1,243

 

Total assets

$

6,392,812

 

 

$

6,508,662

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

822,931

 

 

$

880,872

 

Accrued expenses

 

599,155

 

 

 

611,539

 

Current portions of long-term debt/obligations

 

18,689

 

 

 

19,661

 

Total current liabilities

 

1,440,775

 

 

 

1,512,072

 

Borrowings under revolving lines of credit, net

 

80,961

 

 

 

92,442

 

Long-term debt, net

 

2,494,623

 

 

 

2,494,725

 

Deferred income taxes, net

 

103,913

 

 

 

106,994

 

Long-term obligations under equipment financing and other, net

 

4,609

 

 

 

13,639

 

Other long-term liabilities

 

6,383

 

 

 

5,290

 

Total liabilities

 

4,131,264

 

 

 

4,225,162

 

 

 

 

 

 

 

 

 

Convertible preferred stock

 

399,195

 

 

 

399,195

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock

 

685

 

 

 

681

 

Undesignated preferred stock

 

-

 

 

 

-

 

Additional paid-in capital

 

1,083,042

 

 

 

1,067,040

 

Retained earnings

 

799,222

 

 

 

833,834

 

Accumulated other comprehensive income (loss)

 

(20,596

)

 

 

(17,250

)

Total stockholders' equity

 

1,862,353

 

 

 

1,884,305

 

Total liabilities and stockholders' equity

$

6,392,812

 

 

$

6,508,662

 

 

BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Year Ended September 30,

 

 

2019

 

2018

Operating Activities

 

 

 

 

 

 

 

Net income (loss)

$

(10,612

)

 

$

98,626

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

277,761

 

 

 

201,503

 

Stock-based compensation

 

16,360

 

 

 

16,473

 

Certain interest expense and other financing costs

 

12,102

 

 

 

17,338

 

Beneficial lease amortization

 

2,290

 

 

 

-

 

Loss on debt extinguishment

 

-

 

 

 

1,248

 

Gain on sale of fixed assets

 

(3,830

)

 

 

(1,294

)

Deferred income taxes

 

(2,555

)

 

 

(30,118

)

Changes in operating assets and liabilities, net of the effects of businesses acquired in the period:

 

 

 

 

 

 

 

Accounts receivable

 

(18,501

)

 

 

(45,093

)

Inventories

 

(82,774

)

 

 

(65,069

)

Prepaid expenses and other assets

 

(70,815

)

 

 

57,554

 

Accounts payable and accrued expenses

 

92,133

 

 

 

287,428

 

Other liabilities

 

1,094

 

 

 

785

 

Net cash provided by (used in) operating activities

 

212,653

 

 

 

539,381

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

(57,031

)

 

 

(46,010

)

Acquisition of businesses, net

 

(163,973

)

 

 

(2,740,480

)

Proceeds from the sale of assets

 

9,269

 

 

 

2,149

 

Net cash provided by (used in) investing activities

 

(211,735

)

 

 

(2,784,341

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Borrowings under revolving lines of credit

 

2,100,085

 

 

 

2,807,741

 

Repayments under revolving lines of credit

 

(2,113,982

)

 

 

(2,707,741

)

Borrowings under term loan

 

-

 

 

 

970,000

 

Repayments under term loan

 

(9,700

)

 

 

(445,850

)

Borrowings under senior notes

 

-

 

 

 

1,300,000

 

Payment of debt issuance costs

 

(817

)

 

 

(65,788

)

Repayments under equipment financing facilities and other

 

(10,001

)

 

 

(11,593

)

Proceeds from issuance of convertible preferred stock

 

-

 

 

 

400,000

 

Payment of stock issuance costs

 

-

 

 

 

(1,279

)

Payment of dividends on preferred stock

 

(24,000

)

 

 

(12,978

)

Proceeds from issuance of common stock related to equity awards

 

3,314

 

 

 

7,514

 

Taxes paid related to net share settlement of equity awards

 

(3,668

)

 

 

(3,975

)

Net cash provided by (used in) financing activities

 

(58,769

)

 

 

2,236,051

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

211

 

 

 

586

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(57,640

)

 

 

(8,323

)

Cash and cash equivalents, beginning of period

 

129,927

 

 

 

138,250

 

Cash and cash equivalents, end of period

$

72,287

 

 

$

129,927

 

 
 

BEACON ROOFING SUPPLY, INC.

Consolidated Sales by Product Line

(In thousands)

 

Consolidated Sales by Product Line

 

Three Months Ended September 30,

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

912,201

 

44.9

%

 

$

809,498

 

41.8

%

 

$

102,703

 

 

12.7

%

Non-residential roofing products

 

505,160

 

24.9

%

 

 

493,438

 

25.5

%

 

 

11,722

 

 

2.4

%

Complementary building products

 

612,552

 

30.2

%

 

 

632,820

 

32.7

%

 

 

(20,268

)

 

(3.2

%)

 

$

2,029,913

 

100.0

%

 

$

1,935,756

 

100.0

%

 

$

94,157

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Existing Market 1 Sales by Product Line

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

911,693

 

45.1

%

 

$

805,044

 

41.8

%

 

$

106,649

 

 

13.2

%

Non-residential roofing products

 

504,097

 

25.0

%

 

 

492,085

 

25.6

%

 

 

12,012

 

 

2.4

%

Complementary building products

 

602,705

 

29.9

%

 

 

628,693

 

32.6

%

 

 

(25,988

)

 

(4.1

%)

 

$

2,018,495

 

100.0

%

 

$

1,925,822

 

100.0

%

 

$

92,673

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Existing Market 1 Sales by Business Day 2

 

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

14,245

 

45.1

%

 

$

12,778

 

41.8

%

 

$

1,467

 

 

11.5

%

Non-residential roofing products

 

7,877

 

25.0

%

 

 

7,811

 

25.6

%

 

 

66

 

 

0.8

%

Complementary building products

 

9,417

 

29.9

%

 

 

9,979

 

32.6

%

 

 

(562

)

 

(5.6

%)

 

$

31,539

 

100.0

%

 

$

30,568

 

100.0

%

 

$

971

 

 

3.2

%

 

1

Excludes acquired branches that have not been under ownership for at least four fiscal quarters prior to the start of the fourth quarter of fiscal year 2019.

2

There were 64 and 63 business days in the quarters ended September 30, 2019 and 2018, respectively.

 

BEACON ROOFING SUPPLY, INC.

Consolidated Sales by Product Line

(In thousands)

 

Consolidated Sales by Product Line

 

 

Year Ended September 30,

 

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

3,079,628

 

43.3

%

 

$

2,798,756

 

43.6

%

 

$

280,872

 

 

10.0

%

Non-residential roofing products

 

1,705,178

 

24.0

%

 

 

1,635,963

 

25.5

%

 

 

69,215

 

 

4.2

%

Complementary building products

 

2,320,354

 

32.7

%

 

 

1,983,592

 

30.9

%

 

 

336,762

 

 

17.0

%

 

$

7,105,160

 

100.0

%

 

$

6,418,311

 

100.0

%

 

$

686,849

 

 

10.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Existing Market 1 Sales by Product Line

 

 

Year Ended September 30,

 

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

2,207,851

 

53.2

%

 

$

2,063,800

 

51.3

%

 

$

144,051

 

 

7.0

%

Non-residential roofing products

 

1,183,422

 

28.5

%

 

 

1,200,934

 

29.9

%

 

 

(17,512

)

 

(1.5

%)

Complementary building products

 

759,906

 

18.3

%

 

 

755,454

 

18.8

%

 

 

4,452

 

 

0.6

%

 

$

4,151,179

 

100.0

%

 

$

4,020,188

 

100.0

%

 

$

130,991

 

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Existing Market 1 Sales by Business Day 2

 

 

 

Year Ended September 30,

 

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

8,727

 

53.2

%

 

$

8,190

 

51.3

%

 

$

537

 

 

6.6

%

Non-residential roofing products

 

4,678

 

28.5

%

 

 

4,766

 

29.9

%

 

 

(88

)

 

(1.8

%)

Complementary building products

 

3,004

 

18.3

%

 

 

2,998

 

18.8

%

 

 

6

 

 

0.2

%

 

$

16,409

 

100.0

%

 

$

15,954

 

100.0

%

 

$

455

 

 

2.9

%

 

1

Excludes acquired branches that have not been under ownership for at least four fiscal quarters prior to the start of fiscal year 2019.

2

There were 253 and 252 business days in the years ended September 30, 2019 and 2018, respectively.

 
 

BEACON ROOFING SUPPLY, INC.

Adjusted Net Income (Loss) and Adjusted EPS 1

(In thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

Year Ended September 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

Amount

 

Per

Share 2

 

Amount

 

Per

Share 2

 

Amount

 

Per

Share 3

 

Amount

 

Per

Share 3

Net income (loss)

$

27,380

 

 

$

0.35

 

 

$

48,310

 

 

$

0.61

 

 

$

(10,612

)

 

$

(0.14

)

 

$

98,626

 

 

$

1.29

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs 4

 

58,340

 

 

 

0.74

 

 

 

49,177

 

 

 

0.63

 

 

 

244,262

 

 

 

3.13

 

 

 

220,466

 

 

 

2.89

 

Business restructuring costs 5

 

5,689

 

 

 

0.07

 

 

 

-

 

 

 

-

 

 

 

7,354

 

 

 

0.09

 

 

 

-

 

 

 

-

 

Effects of tax reform 6

 

-

 

 

 

-

 

 

 

344

 

 

 

-

 

 

 

(462

)

 

 

(0.01

)

 

 

(48,805

)

 

 

(0.64

)

Total adjustments

 

64,029

 

 

 

0.81

 

 

 

49,521

 

 

 

0.63

 

 

 

251,154

 

 

 

3.21

 

 

 

171,661

 

 

 

2.25

 

Tax impact of total adjustments 7

 

(9,379

)

 

 

(0.12

)

 

 

(13,747

)

 

 

(0.17

)

 

 

(64,326

)

 

 

(0.81

)

 

 

(63,607

)

 

 

(0.84

)

Total adjustments, net of tax

 

54,650

 

 

 

0.69

 

 

 

35,774

 

 

 

0.46

 

 

 

186,828

 

 

 

2.40

 

 

 

108,054

 

 

 

1.41

 

Adjusted Net Income (Loss)

$

82,030

 

 

$

1.04

 

 

$

84,084

 

 

$

1.07

 

 

$

176,216

 

 

$

2.26

 

 

$

206,680

 

 

$

2.70

 

 
1

Adjusted Net Income (Loss) is defined as net income that excludes acquisition costs, business restructuring costs, and the effects of tax reform. Adjusted net income (loss) per share or "Adjusted EPS" is calculated by dividing the Adjusted Net Income (Loss) for the period by the weighted-average diluted shares outstanding for the period after assuming the full conversion of the participating Preferred Stock.

2

The weighted-average share count utilized in the calculation of Adjusted EPS for the quarter ended September 30, 2019 is 78,947,719, which is equal to the 69,253,100 diluted weighted-average shares outstanding plus the assumed conversion of 9,694,619 weighted-average shares of participating Preferred Stock. The weighted-average share count utilized in the calculation of Adjusted EPS for the quarter ended September 30, 2018 is 78,737,487, which is equal to the 69,042,868 diluted weighted-average shares outstanding plus the assumed conversion of 9,694,619 weighted-average shares of participating Preferred Stock. The shares of participating Preferred Stock were excluded from the GAAP net income (loss) per share calculations for both periods due to their anti-dilutive nature.

3

The weighted-average share count utilized in the calculation of Adjusted EPS for the year ended September 30, 2019 is 78,118,907, which is equal to the 68,424,288 diluted weighted-average shares outstanding plus the assumed conversion of 9,694,619 weighted-average shares of participating Preferred Stock. The weighted-average share count utilized in the calculation of Adjusted EPS for the year ended September 30, 2018 is 76,415,522, which is equal to the 69,191,039 diluted weighted-average shares outstanding plus the assumed conversion of 7,224,483 weighted-average shares of participating Preferred Stock. The shares of participating Preferred Stock were excluded from the GAAP net income (loss) per share calculations for both periods due to their anti-dilutive nature.

4

The following table presents a breakout of the components of acquisition costs for each of the periods indicated:

 

 

Three Months Ended

September 30,

 

Year Ended

September 30,

 

2019

 

2018

 

2019

 

2018

Amortization of intangible assets

$

51,557

 

$

35,847

 

$

207,065

 

$

141,185

Costs classified as selling, general, and administrative a

 

3,757

 

 

10,614

 

 

25,095

 

 

54,442

Amortization of debt issuance costs

 

3,026

 

 

2,716

 

 

12,102

 

 

24,839

Total acquisition costs

 

58,340

 

 

49,177

 

 

244,262

 

 

220,466

 
  1. Selling, general, and administrative costs related to acquisitions are mainly composed of professional fees, branch integration expenses, travel expenses, employee severance and retention costs, and other personnel expenses.
 
5

Business restructuring costs are composed of costs stemming from headcount rationalization efforts and accrued estimated costs related to employee benefit restructuring.

6

Impact of the Tax Cuts and Jobs Act of 2017.

7

The effective tax rate applied to these adjustments is calculated by using adjusted pre-tax income while factoring in discrete tax adjustments for the fiscal year. The tax impact of adjustments for the quarter ended September 30, 2019 and 2018 were calculated using an effective tax rate of 14.6% and 28.0%, respectively. The tax impact of adjustments for the year ended September 30, 2019 and 2018 were calculated using an effective tax rate of 25.8% and 28.9%, respectively.

 

We use Adjusted Net Income (Loss) and Adjusted EPS to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources.

We believe that Adjusted Net Income (Loss) and Adjusted EPS are useful measures because they permit investors to better understand changes in underlying operating performance over comparative periods by providing financial results that are unaffected by cyclical variances that can be driven by items such as investment activity or purchase accounting adjustments.

While we believe Adjusted Net Income (Loss) and Adjusted EPS are useful to investors when evaluating our business, they are not prepared and presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), and therefore should be considered supplemental in nature. You should not consider Adjusted Net Income (Loss) or Adjusted EPS in isolation or as a substitute for net income and net income per share or diluted earnings per share calculated in accordance with GAAP. Adjusted Net Income (Loss) and Adjusted EPS may have material limitations including, but not limited to, the exclusion of certain costs without a corresponding reduction of net income for the income generated by the assets to which the excluded costs are related. In addition, Adjusted Net Income (Loss) and Adjusted EPS may differ from similarly titled measures presented by other companies.

 

BEACON ROOFING SUPPLY, INC.

Adjusted EBITDA 1

(In thousands)

 

 

 

Three Months Ended

September 30,

 

Year Ended

September 30,

 

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

27,380

 

 

$

48,310

 

 

$

(10,612

)

 

$

98,626

 

Interest expense, net

 

38,446

 

 

 

38,740

 

 

 

160,246

 

 

 

143,074

 

Income taxes

 

20,862

 

 

 

22,747

 

 

 

(170

)

 

 

(30,544

)

Depreciation and amortization

 

69,473

 

 

 

54,524

 

 

 

277,760

 

 

 

201,503

 

Stock-based compensation

 

3,459

 

 

 

3,340

 

 

 

16,360

 

 

 

16,473

 

Acquisition costs 2

 

3,757

 

 

 

10,614

 

 

 

25,095

 

 

 

54,441

 

Business restructuring costs 3

 

5,689

 

 

 

-

 

 

 

7,354

 

 

 

-

 

Adjusted EBITDA

$

169,066

 

 

$

178,275

 

 

$

476,033

 

 

$

483,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA as a % of net sales

 

8.3

%

 

 

9.2

%

 

 

6.7

%

 

 

7.5

%

 

1

Adjusted EBITDA is defined as net income plus interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, acquisition costs, and business restructuring costs. EBITDA is a measure commonly used in the distribution industry, and we present Adjusted EBITDA to enhance your understanding of our operating performance.

2

Represents selling, general, and administrative costs related to acquisitions (excluding the impact of tax). Other items the Company classifies as acquisition costs are embedded in other balances of the table.

3

Business restructuring costs are composed of costs stemming from headcount rationalization efforts and accrued estimated costs related to employee benefit restructuring.

 

We use Adjusted EBITDA to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute Adjusted EBITDA consistently using the same methods each period.

We believe that Adjusted EBITDA is a useful measure because it permits investors to better understand changes in underlying operating performance over comparative periods by providing financial results that are unaffected by cyclical variances that can be driven by items such as investment activity or purchase accounting adjustments.

While we believe Adjusted EBITDA is useful to investors when evaluating our business, it is not prepared and presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), and therefore should be considered supplemental in nature. Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operations, or any other items calculated in accordance with GAAP. Adjusted EBITDA may have material limitationsincluding, but not limited to, the exclusion of certain costs without a corresponding reduction of net income for the income generated by the assets to which the excluded costs are related. In addition, Adjusted EBITDA may differ from similarly titled measures presented by other companies.

View source version on businesswire.com:https://www.businesswire.com/news/home/20191125005758/en/

CONTACT: Beacon Roofing Supply, Inc.

Joseph Nowicki, Executive VP & CFO

571-323-3939

Joseph.Nowicki@becn.com

KEYWORD: DISTRICT OF COLUMBIA VIRGINIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: OTHER CONSTRUCTION & PROPERTY RESIDENTIAL BUILDING & REAL ESTATE MANUFACTURING COMMERCIAL BUILDING & REAL ESTATE CONSTRUCTION & PROPERTY OTHER MANUFACTURING

SOURCE: Beacon Roofing Supply, Inc.

Copyright Business Wire 2019.

PUB: 11/25/2019 04:01 PM/DISC: 11/25/2019 04:01 PM

http://www.businesswire.com/news/home/20191125005758/en