Beacon Roofing Supply Reports Fourth Quarter and Annual 2012 Results

  Beacon Roofing Supply Reports Fourth Quarter and Annual 2012 Results

  *Record fourth quarter sales of $598 million vs. $576 million.
  *Fourth quarter EPS of $0.58 ($0.60 adjusted) vs. $0.67 ($0.56 adjusted).
  *Record annual EPS of $1.58 ($1.67 adjusted) vs. $1.27 ($1.16 adjusted).
  *Record annual sales of $2.04 billion vs. $1.82 billion.
  *Annual existing market sales up 6%.

Business Wire

PEABODY, Mass. -- November 29, 2012

Beacon Roofing Supply, Inc. (the “Company”) (NASDAQ: BECN) announced results
today for its fourth quarter and fiscal year ended September 30, 2012.

Paul Isabella, the Company’s President and Chief Executive Officer, stated:
“We are very pleased with our record quarter and annual 2012 results, which
exceeded our expectations. Our total sales benefited from the positive impact
of acquisitions and from a 6% increase in existing market sales for the year.
The adjusted fourth quarter net income exceeded last year’s adjusted net
income, even though we were facing a very challenging comparison to last
year’s fourth quarter, when there were substantial roofing activities from
hail storms. Our gross margin continued to improve over the prior year, and
our annual operating margin was significantly higher than in 2011. We are
confident in the long-term growth opportunities available in our industry and
are actively investing to realize those opportunities, such as with our most
recent acquisition of McClure-Johnston.”

                                Fourth Quarter

Total sales increased 3.9% to $598.1 million in 2012 from $575.6 million in
2011. Existing market (organic) sales, which exclude branches acquired after
the beginning of last year’s fourth quarter, declined 5.6% (4.1% based on the
same number of business days). In existing markets, residential and
non-residential roofing product sales decreased 3.3% and 10.5%, respectively,
while complementary product sales increased 1.2%. This year’s fourth quarter
sales were primarily impacted by lower roofing activity in the markets
affected by last year’s hail storms, partially offset by the benefit of
slightly higher overall average selling prices.

Net income for the fourth quarter was $27.9 million compared to $31.3 million
in 2011. Fourth quarter diluted net income per share was $0.58 compared to
$0.67 in 2011. The lower net income was due primarily to a one-time income tax
benefit of $5.1 million, or $0.11 diluted income per share, realized in 2011.
The benefit in 2012 from the higher sales and gross margin rate and lower
interest expense was partially offset by the impact from higher operating
expenses compared to 2011. Earnings in the fourth quarter of fiscal 2012 were
also impacted by the following items: a charge of $3.0 million ($1.8 million
net of tax), or approximately $0.04 diluted earnings per share, for the
recognition of termination benefits in operating expenses associated with an
acquisition and the announced retirement of our CFO; and a benefit of $1.1
million ($0.7 million net of tax), or approximately $0.01 diluted earnings per
share, for the recognition of the change in the fair value of certain interest
rate derivatives in interest expense and other financing costs. Below is a
recap of the calculation of our adjusted diluted income per share for the
fourth quarter of this year and last year (in thousands except per share
amounts):

                                                     
                                      Diluted                  Diluted
                          2012        EPS            2011        EPS
Net income               $ 27,891       $ 0.58        $ 31,257       $ 0.67
Company
adjustments,
net of
income
taxes:
Change in
fair value
of certain                 (656   )       (0.01 )       -              -
interest
rate
derivatives
Termination                1,775          0.04          -              -
benefits
Change in
tax status                -            -           (5,060 )      (0.11 )
of foreign
entity
Adjusted net             $ 29,009      $ 0.60       $ 26,197      $ 0.56  
income
                                                                             
The calculations of the adjusted diluted income and income per share for 2012
do not add down due to rounding.

Earnings before interest, taxes, depreciation and amortization, and
stock-based compensation (“Adjusted EBITDA”), which are reconciled to the net
income in this press release, were $57.1 million in 2012 compared to $55.4
million in 2011, a 3.1% increase.

                                 Fiscal Year

Total sales increased 12.5% to $2.04 billion in 2012 from $1.82 billion in
2011. Existing market sales increased 6.3% (7.6% based on the same number of
business days). In existing markets, residential and non-residential roofing
product sales increased 11.8% and 2.3%, respectively, while complementary
product sales declined 0.4%. Annual sales were favorably impacted by increased
re-roofing and remodeling activities in the first half of the this year,
including the impact from improved weather conditions and stronger business in
several markets that experienced significant storms during the course of last
fiscal year, and by higher average selling prices.

Annual net income was $75.6 million in 2012 compared to $59.2 million in 2011.
Annual diluted net income per share was $1.58 compared to $1.27 per share in
2011. The higher net income was due to the higher sales and gross margin rate,
partially offset by the impact from certain charges discussed below, higher
operating expenses and a higher income tax provision. Earnings in fiscal 2012
were impacted by the following items: the fourth quarter charge of $3.0
million ($1.8 million net of tax), or approximately $0.04 diluted earnings per
share, for the recognition of the termination benefits mentioned above; a
charge of $3.8 million ($2.3 million net of tax), or approximately $0.05
diluted earnings per share, for the recognition of the fair value of certain
interest rate derivatives and other charge in interest expense and other
financing costs resulting from the Company’s refinancing in April 2012; and a
charge of $0.3 million, or approximately $0.01 diluted earnings per share,
from the increase in the liability for consideration due for the Enercon
acquisition. As mentioned above, there was a one-time income tax benefit of
$5.1 million, or $0.11 diluted income per share, realized in the fourth
quarter of 2011.

Adjusted EBITDA for fiscal 2012 was $176.1 million compared to $134.9 million
for fiscal 2011, an increase of 30.6%.

Cash flow from operations was $85.4 million in 2012 compared to $79.3 million
in 2011. This increase in operating cash flows was influenced mostly by the
positive impact from the higher net income and from higher non-cash charges
this year, partially offset by the impact from less favorable changes in
working capital. Cash on hand decreased by $102.8 million to $40.2 million at
September 30, 2012 compared to $143.0 million at September 30, 2011, due
primarily to a significant paydown of debt this year (net of new borrowings)
and the costs of the acquisitions made since last year.

The Company will host a webcast and conference call today at 10:00 a.m. ET 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 719-325-2329. 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, operating 224 branches in 38 states in the
United States and across Canada.

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.

                                                                                                
                                                                                                           
                Beacon Roofing Supply, Inc.
                Condensed Consolidated Statements of
                Operations
(Dollars in
thousands,
except per
share data)
                Fiscal Quarter Ended                                Fiscal Year Ended
                September      % of     September      % of         September      % of     September      % of
                30, 2012      Net      30, 2011      Net          30, 2012      Net      30, 2011      Net
                               Sales                   Sales                       Sales                   Sales
                                                                                                           
Net sales       $ 598,121      100.0%   $ 575,562      100.0%       $ 2,043,658    100.0%   $ 1,817,423    100.0%
Cost of          448,494     75.0%     442,691     76.9%         1,542,254   75.5%     1,397,798   76.9%
products sold
Gross profit      149,627      25.0%      132,871      23.1%          501,404      24.5%      419,625      23.1%
                                                                                                           
Operating        101,325     16.9%     85,269      14.8%         357,732     17.5%     315,883     17.4%
expenses
                                                                                                           
Income from       48,302       8.1%       47,602       8.3%           143,672      7.0%       103,742      5.7%
operations
Changes in
assets and
liabilities,
excluding the
effects of
acquisitions:
Interest
expense and
other            2,456       0.3%      3,383       0.6%          17,173      0.8%      13,364      0.7%
financing
costs
                                                                                                           
Income before     45,846       7.7%       44,219       7.7%           126,499      6.2%       90,378       5.0%
income taxes
Income taxes     17,955       3.0%      12,962       2.3%          50,934       2.5%      31,158      1.7%
                                                                                                           
Net income      $ 27,891       4.7%     $ 31,257       5.4%         $ 75,565       3.7%     $ 59,220      3.3%
                                                                                                           
Net income
per share:
Basic           $ 0.59                  $ 0.68                      $ 1.62                  $ 1.29       
Diluted         $ 0.58                  $ 0.67                      $ 1.58                  $ 1.27       
                                                                                                           
Weighted
average
shares used
in computing
net income
per share:
Basic            47,245,476             46,129,848                 46,718,948             45,919,198
Diluted          48,302,368             46,959,634                 47,840,967             46,753,152
                                                                                                           

                                                       
BEACON ROOFING SUPPLY, INC
Condensed Consolidated Balance Sheets
                                                            
                                                           
(In thousands)                       September 30, 2012     September 30, 2011
                                                            
Assets
Current assets:
Cash and cash equivalents            $     40,205           $   143,027
Accounts receivable, net                   291,456              280,322
Inventories                                222,740              202,474
Prepaid expenses and other                 60,287               37,573
assets
Deferred income taxes                     16,087              15,469      
Total current assets                       630,775              678,865
Changes in assets and
liabilities, excluding the
effects of acquisitions:
Property and equipment, net                57,376               47,427
Goodwill                                   443,161              380,916
Other assets, net                         85,670              49,756      
                                                            
Total assets                         $     1,216,982        $   1,156,964   
                                                            
                                                            
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable                     $     167,390          $   182,523
Accrued expenses                           71,627               69,906
Current portions of long-term             56,932              15,605      
obligations
Total current liabilities                  295,949              268,034
                                                            
Senior notes payable and other
obligations, net of current                220,875              311,511
portion
Deferred income taxes                      48,196               38,992
                                                            
Common stock                               477                  462
Additional paid-in capital                 280,184              248,260
Retained earnings                          368,675              293,110
Accumulated other comprehensive           2,626               (3,405      )
income (loss)
Total stockholders' equity                651,962             538,427     
                                                            
Total liabilities and                $     1,216,982        $   1,156,964   
stockholders' equity
                                                            


BEACON ROOFING SUPPLY, INC
Condensed Consolidated Statements of Cash Flows
                                                       
                                     Fiscal Year Ended
                                                           
(In thousands)                       September 30, 2012     September 30, 2011
                                                            
Operating activities:
Net income                           $   75,565             $    59,220
Adjustments to reconcile net
income
to net cash provided by
operating activities:
Depreciation and amortization            24,353                  25,060
Stock-based compensation                 7,873                   6,073
Adjustment of liability for              250                     -
contingent consideration
Certain interest expense and             4,359                   -
other financing costs
Gain on sale of fixed assets             (1,278     )            (750      )
Deferred income taxes                    7,700                   (465      )
Changes in assets and
liabilities, excluding the
effects of acquisitions:
Accounts receivable                      19,804                  (35,314   )
Inventories                              13,338                  (35,016   )
Prepaid expenses and other               (22,448    )            7,470
assets
Accounts payable and accrued            (44,155    )           53,012    
expenses
Net cash provided by operating          85,361                79,290    
activities
                                                            
Investing activities:
Purchases of property and                (17,404    )            (14,433   )
equipment
Acquisition of businesses                (141,049   )            (34,942   )
Proceeds from sales of assets           1,418                 1,543     
Net cash used in investing              (157,035   )           (47,832   )
activities
                                                            
Financing activities:
Borrowings (repayments) under            41,272                  (50       )
revolving lines of credit, net
Repayments under senior notes &          (91,785    )            (11,053   )
other, net
Payment of deferred financing            (5,377     )            -
costs
Proceeds from exercise of                21,478                  5,302
options
Income tax benefit from
stock-based compensation                                         -
deductions in excess of
the associated compensation cost        2,588                 756       
Net cash used by financing               (31,824    )            (5,045    )
activities
                                                            
Effect of exchange rate changes         676                   (522      )
on cash
Net increase (decrease) in cash          (102,822   )            25,891
and cash equivalents
Cash and cash equivalents at            143,027               117,136   
beginning of period
Cash and cash equivalents at end     $   40,205            $    143,027   
of period
                                                            

                                                                       
BEACON ROOFING SUPPLY, INC
Unaudited        
Consolidated Sales by Product Line
Three Months Ended

                    September 30, 2012      September 30, 2011
(dollars in         Net         Mix %       Net         Mix %       Change
millions)           Sales                   Sales
Residential
roofing             $ 301.9     50.5  %     $ 278.0     48.3  %     $ 23.9        8.6   %
products
Non-residential
roofing               219.6     36.7  %       229.4     39.9  %       (9.8  )     -4.3  %
products
Complementary
building             76.6      12.8  %      68.1      11.8  %      8.5        12.5  %
products
                                                                                  
                    $ 598.1     100.0 %     $ 575.6     100.0 %     $ 22.6       3.9   %
                                                                                  
Consolidated Sales by Product Line for Existing Markets*
Three Months Ended

                    September 30, 2012      September 30, 2011
(dollars in         Net         Mix %       Net         Mix %       Change
millions)           Sales                   Sales
Residential
roofing             $ 268.8     49.5  %     $ 278.0     48.3  %     $ (9.2  )     -3.3  %
products
Non-residential
roofing               205.4     37.8  %       229.4     39.9  %       (24.0 )     -10.5 %
products
Complementary
building             68.9      12.7  %      68.1      11.8  %      0.8        1.2   %
products
                                                                                  
                    $ 543.1     100.0 %     $ 575.6     100.0 %     $ (32.4 )     -5.6  %
                                                                                  
Existing Market Sales by Business Day**
Three Months Ended

                    September 30, 2012      September 30, 2011
(dollars in         Net         Mix %       Net         Mix %       Change
millions)           Sales                   Sales
Residential
roofing             $ 4.267     49.5  %     $ 4.344     48.3  %     $ (0.1  )     -1.8  %
products
Non-residential
roofing               3.260     37.8  %       3.584     39.9  %       (0.3  )     -9.0  %
products
Complementary
building             1.094     12.7  %      1.064     11.8  %      0.0        2.8   %
products
                                                                                  
                    $ 8.621     100.0 %     $ 8.992     100.0 %     $ (0.4  )     -4.1  %
                                                                                  
                                                                                  
Note: Some totals above may not foot due to rounding.
*Excludes branches acquired during the four quarters prior to the start of the fourth
quarter of fiscal 2012.
**There were 63 business days in this year's fourth quarter compared to 64 business days
in last year's fourth quarter.
                                                                                  

                                                                                  
BEACON ROOFING SUPPLY, INC
Unaudited
Consolidated Sales by Product Line
Fiscal Years Ended
                  
                      September 30, 2012            September 30, 2011
(dollars in           Net Sales       Mix %         Net Sales       Mix %         Change
millions)
Residential
roofing               $ 1,023.5       50.1  %       $ 850.0         46.8  %       $ 173.5         20.4 %
products
Non-residential
roofing                 757.9         37.1  %         718.1         39.5  %         39.8          5.5  %
products
Complementary
building               262.2         12.8  %        249.3         13.7  %        12.9         5.2  %
products
                                                                                                  
                      $ 2,043.6       100.0 %       $ 1,817.4       100.0 %       $ 226.2        12.4 %
                                                                                                  
Consolidated Sales by Product Line for Existing Markets*
Fiscal Years Ended
                                                                                                  
                      September 30, 2012            September 30, 2011
(dollars in           Net Sales       Mix %         Net Sales       Mix %         Change
millions)
Residential
roofing               $ 923.5         48.5  %       $ 826.2         46.1  %       $ 97.3          11.8 %
products
Non-residential
roofing                 734.0         38.5  %         717.4         40.0  %         16.6          2.3  %
products
Complementary
building               247.9         13.0  %        248.8         13.9  %        (0.9  )       -0.4 %
products
                                                                                                  
                      $ 1,905.4       100.0 %       $ 1,792.4       100.0 %       $ 113.0        6.3  %
                                                                                                  
Existing Market Sales By Business Day**
Fiscal Years Ended
                                                                                                  
                      September 30, 2012            September 30, 2011
(dollars in           Net Sales       Mix %         Net Sales       Mix %         Change
millions)
Residential
roofing               $ 3.679         48.5  %       $ 3.253         46.1  %       $ 0.427         13.1 %
products
Non-residential
roofing                 2.924         38.5  %         2.824         40.0  %         0.100         3.5  %
products
Complementary
building               0.988         13.0  %        0.980         13.9  %        0.008        0.8  %
products
                                                                                                  
                      $ 7.591         100.0 %       $ 7.057         100.0 %       $ 0.535        7.6  %
                                                                                                  
Note: Some totals above may not foot due to rounding.
*Excludes branches acquired during the four quarters prior to the start of fiscal 2012.
**There were 251 business days in fiscal year 2012 compared to 254 business days in fiscal year 2011.
                                                                                                  

                                                                              
BEACON ROOFING SUPPLY, INC
Results in Existing Markets-Unaudited
                                                                                                
For the
Fourth
Quarter
Ended:
                 Existing Markets              Acquired Markets                 Consolidated
                 September 30,                 September 30,                    September 30,
(in              2012            2011          2012           2011              2012            2011
thousands)
                                                                                                
Net Sales        $ 543,094       $ 575,562     $ 55,027       $     -       $ 598,121       $ 575,562
                                                                                                
Gross              134,986         132,871     $ 14,641                 -         149,627         132,871
Profit
Gross              24.9%           23.1%         26.6%                            25.0%           23.1%
Margin
                                                                                                
Operating          87,023          85,269        14,302                 -         101,325         85,269
Expenses
Operating
Expenses           16.0%           14.8%         26.0%                            16.9%           14.8%
as a % of
Net Sales
                                                                                                
Operating        $ 47,963        $ 47,602      $ 339          $         -       $ 48,302        $ 47,602
Income
Operating          8.8%            8.3%          0.6%                             8.1%            8.3%
Margin
                                                                                                

                                                            
Beacon Roofing Supply, Inc.
Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based
Compensation ("Adjusted EBITDA")
Unaudited
(Dollars in thousands)
                                                                     
                    Three Months Ended              Fiscal Year Ended
                    September 30,                   September 30,
                      2012            2011          2012           2011
                                                                     
Net income          $  27,891        $  31,257      $  75,565        $ 59,220
Interest
expense and            2,456            3,383          17,173          13,364
other financing
costs, net
Income taxes           17,955           12,962         50,934          31,158
Depreciation
and                    6,607            6,265          24,353          25,060
amortization
Adjustment of
liability for          -                -              250             -
contingent
consideration
Stock-based           2,222           1,562         7,873          6,073
compensation
                                                                     
Adjusted EBITDA     $  57,131        $  55,429      $  176,148       $ 134,875
(1)
                                                                     


(1) Adjusted EBITDA is defined as net income plus interest expense and other
financing costs (net of interest income), income taxes, depreciation and
amortization and stock-based compensation. EBITDA is a measure commonly used
in the distribution industry, and we present Adjusted EBITDA to enhance your
understanding of our operating performance. Adjusted EBITDA is used in our
bank covenants and we use Adjusted EBITDA as an internal performance
measurement and as one criterion for evaluating our performance relative to
that of our peers. We believe that Adjusted EBITDA is an operating performance
measure that provides investors and analysts with a measure of operating
results unaffected by differences in capital structures, capital investment
cycles, and ages of related assets among otherwise comparable companies.
Further, we believe that Adjusted EBITDA is a useful measure because it
improves comparability of results of operations, since purchase accounting
used for acquisitions can render depreciation and amortization non-comparable
between periods. Management uses these supplemental measures to evaluate
performance period over period and to analyze the underlying trends in the
Company’s business and to establish operational goals and forecasts that are
used in allocating resources. We expect to compute our non-GAAP financial
measures using the same consistent method from quarter to quarter and year to
year.

While we believe Adjusted EBITDA is a useful measure for investors, it is not
a measurement presented in accordance with United States generally accepted
accounting principles, or GAAP. You should not consider Adjusted EBITDA in
isolation or as a substitute for net income, cash flows from operations, or
any other items calculated in accordance with GAAP. In addition, Adjusted
EBITDA has inherent material limitations as a performance measure. It does not
include interest expense and other financing costs and, because we have
borrowed money, interest expense is a necessary element of our costs. In
addition, Adjusted EBITDA does not include depreciation and amortization
expense. Because we have capital and intangible assets, depreciation and
amortization expense is a necessary element of our costs. Adjusted EBITDA also
does not include stock-based compensation, which is a necessary element of our
costs since we make stock awards to key members of management as an important
incentive to maximize overall company performance and as a benefit. Moreover,
Adjusted EBITDA does not include taxes, and payment of taxes is a necessary
element of our operations. Accordingly, since Adjusted EBITDA excludes these
items, it has material limitations as a performance measure. The Company’s
management separately monitors capital expenditures, which impact depreciation
expense, as well as amortization expense, interest expense, and income tax
expense. Because not all companies use identical calculations, our
presentation of Adjusted EBITDA may not be comparable to other similarly
titled measures of other companies.


                                                                                                   
BEACON ROOFING SUPPLY, INC.
Adjusted Diluted Net Income per Share ("Adjusted Earnings per Share")
Unaudited
(Dollars in thousands except per share amounts)
                                                                                                                    
                                                                                                                    
                  Three Months Ended September 30,                          Fiscal Years Ended September 30,
                                 Diluted                      Diluted                    Diluted                    Diluted
                   2012        EPS            2011        EPS            2012       EPS          2011        EPS
                                                                                                                    
Net income        $ 27,891       $ 0.58        $ 31,257       $ 0.67        $ 75,565     $  1.58     $ 59,220       $ 1.27
                                                                                                                    
Company
adjustments,
net of income
taxes:
Fair value of
certain
interest rate
derivatives
and
charge
associated          (656   )       (0.01 )       -              -             2,293         0.05       -              -
with
refinancing
Termination         1,775          0.04          -              -             1,775         0.04       -              -
benefits
Increase in
liability for       -              -             -              -             250           0.01       -              -
purchase
consideration
                                                                                                                    
Change in tax
status of          -            -           (5,060 )      (0.11 )      -            -         (5,060 )      (0.11 )
foreign
entity
                                                                                                                    
Adjusted net      $ 29,009      $ 0.60       $ 26,197      $ 0.56       $ 79,882     $  1.67     $ 54,160      $ 1.16  
income
                                                                                                                    

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

Note: The Company’s management believes that "Adjusted Earnings per Share,"
which excludes certain events such as the recognition of the fair value of
certain interest rate derivatives in interest expense and other financing
costs, the Company’s refinancing charge in April 2012, termination benefits,
and the increase in the liability for consideration due for the Enercon
acquisition, is useful to investors because it permits investors to better
understand year-over-year changes in underlying operating performance. The
above termination benefits are associated with an acquisition and the
announced retirement of our 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 diluted earnings per share calculated in
accordance with GAAP.


BECN-F

Contact:

Beacon Roofing Supply, Inc.
Dave Grace, 978-535-7668 x14
CFO
dgrace@beaconroofingsupply.com
 
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