Beacon Roofing Reports In Line – Analyst Blog

Beacon Roofing Supply, Inc. (BECN) reported fourth-quarter 2012 adjusted earnings per share (EPS) of 60 cents, in line with the Zacks Consensus Estimate and 7% higher than the year-ago quarter. Higher sales on the back of accretive acquisitions and gross margin expansion contributed to the growth, partially offset by higher operating expenses. Including special items, EPS in the quarter stood at 58 cents, down 13% year over year from 67 cents.

Operational Update

Total revenue increased 4% year over year to $598 million, falling short of the Zacks Consensus Estimate of $600 million. Organic sales declined 5.6% in the quarter. In existing markets, complementary product sales increased 1.2% while both residential and non-residential roofing product sales decreased 3.3% and 10.5%, respectively. The year-ago quarter included the benefit from substantial roofing activities due to the hail storms in spring 2011.

Cost of goods sold increased 1.3% to $448 million in the quarter. Gross profit rose 13% to $150 million. Gross margin contracted 190 basis points to 25% from the year-ago quarter. Operating income in the reported quarter inched up 1% to $48 million with operating margin dipping 20 basis points to 8.1%.

Fiscal 2012 Performance

Beacon Roofing's adjusted EPS in fiscal 2012 jumped 44% year over year to $1.67, helped by increased sales and gross margins, somewhat offset by higher operating expenses and a higher income tax provision. EPS was in line with the Zacks Consensus Estimate. Including special items, EPS stood at $1.58 compared with $1.27 in the prior year.

Total revenue increased 12% year over year to $2.04 million, in line with the Zacks Consensus Estimate. Revenues benefited from increased re-roofing and remodeling activities in the first half, including the impact from improved weather conditions and stronger business in several markets that experienced storms last year and by higher average selling prices.

Financial Position

Cash and cash equivalents declined to $40.2 million as of September 30, 2012 from $143 million as of September 30, 2012, mainly due to payback of debt this year and acquisitions. Total debt amounted to $277.8 million as of September 30, 2012, compared with $327.1 million as of September 30, 2012. Debt-to-capitalization ratio improved to 30% as of September 30, 2012 from 38% as of September 30, 2012.

Cash flow from operating activities improved to $85 million during the year compared with $79 million in the prior year due to higher net income and from higher non-cash charges this year, partially offset by the impact from less favorable changes in working capital.

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Beacon Roofing Reports In Line - Analyst Blog