Home Builder Developer - Interior Renovation and Design

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Beacon Roofing Supply (Nasdaq: BECN) .

Let's break this down In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Beacon Roofing Supply for the trailing 12 months is 58.9.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Beacon Roofing Supply, consult the quarterly-period chart below.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

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Is Beacon Roofing Supply's Cash Machine Slowing Down?

DALLAS, July 16, 2013 /PRNewswire/ --Roofing Supply Group, LLC ("RSG"), a national leader in the wholesale distribution of roofing supplies and related materials, announced today the grand opening of a new location in PinellasPark, FL, set for August 2013. This location will service the Tampa Bay area, including the counties of Pinellas, Pasco, Manatee, and Sarasota.

This location will be led by Ms. Donna Glisson, Managing Partner, a 30-year industry veteran who brings a wealth of expertise in manufacturing, distribution, product knowledge, and customer service. Ms. Glisson is building a winning team that shares her commitment to excellence in bringing unsurpassed service and support to local roofing contractors, remodelers and homebuilders. This location is the 16th branch in the Southeast Region under the direction of Mr. Tim Perryman, Regional Vice President.

Mr. Jack Gill, Florida District Manager, commented, "We are excited to announce the opening of this Greenfield in Pinellas Park, FL. This new location will allow us to significantly expand our footprint in the Tampa Bay area under the very capable direction of one of RSG's top talents, Donna Glisson."

The opening of this latest branch in the Pinellas Park, FL area aligns strategically with RSG's overall expansion initiative which includes organic growth, opening of new locations and strategic acquisitions.

About Roofing Supply GroupOwned by parent company Clayton, Dubilier & Rice, LLC, Roofing Supply Group, LLC ("RSG") is headquartered in Dallas, Texas, and is one of the largest wholesale distributors of roofing supplies and related materials in the United States. Through its network of 64 locations in 24 states nationwide, RSG provides one-step distribution services from roofing product manufacturers to roofing contractors and homebuilders. Each branch carries a complete line of roofing products for residential and commercial roofing, including composition asphalt shingles, underlayment and associated ancillary products. For more information regarding Greenfields & Acquisitions, please contact Mr. Jeff Clay at jclay@rsgroof.com | 214.956.5184 VP Strategic Planning & Corporate Development.

About Clayton, Dubilier & RiceFounded in 1978, Clayton, Dubilier & Rice is a private equity firm with an investment strategy predicated on producing financial returns through building stronger, more profitable businesses. The Firm's partners and advisors include a combination of skilled investment decision-makers and seasoned corporate leaders from major global enterprises. Since inception, CD&R has managed the investment of more than $18 billion in 56 businesses with an aggregate transaction value of approximately $90 billion. The Firm has offices in New York and London. For more information, please visit http://www.cdr-inc.com.

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LA CROSSE, WI--(Marketwired - Jul 16, 2013) - Kitchen remodeling franchise Kitchen Solvers, which pioneered high-quality cabinet refacing and has locations throughout the United States and Canada, has lowered its startup costs by as much as $14,615.

Costs to open the franchise now start as low as $37,920, compared to $52,535 a year ago. Most of the savings can be attributed to aggressive online marketing support that Kitchen Solvers now offers franchisees, which negated the need for a lot of initial print marketing expenses.

"We've made it much easier for kitchen remodelers to have a big impact online, which is where customers do most of their shopping and research," says Kitchen Solvers President Gerry Henley. "We help our franchisees build a robust local web presence, creating and managing accounts on major local business listing websites, as well as specialty sites that homeowners use when researching home improvement projects. A lot of these resources aren't expensive -- but they do require expertise, marketing savvy and strategy. By offering our expertise to franchisees, we're able to boost their local marketing while allowing them to focus on the day-to-day tasks of running a great business."

Kitchen Solvers' marketing research and outreach helps franchisees find customers, gather testimonials and share content designed to engage more customers.

The remodeling industry is growing fast. Remodeling spending began to accelerate in the second half of 2012 as rising home prices and a stable economy encouraged homeowners to tackle long-delayed improvements. Harvard University's Joint Center for Housing Studies released its Leading Indicator of Remodeling Activity in April, showing homeowners are expected to spend 19.7% more in the third quarter, compared to a year ago, and 20.2% more by year end.

Kitchen Solvers handles full remodels as well as refacing. Franchisees typically save customers thousands of dollars. While an average kitchen remodel is $19,802, according to a recent Consumer Reports survey, Kitchen Solvers customers pay an average of $7,162.88 -- and they deliver those savings while enjoying a gross profit margin of nearly 40%.

To learn more about the kitchen remodeling industry and Kitchen Solvers, visit http://www.kitchensolversfranchise.com.

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