Peabody, MA - Beacon Roofing Supply, Inc. 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.”
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):
Company adjustments, net of income taxes:
Change in fair value of certain interest rate derivatives
Change in tax status of foreign entity
Adjusted net 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.
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.