HERNDON, Va. — Beacon Roofing Supply, Inc. (NASDAQ: BECN) announced results Tuesday for its fourth quarter and fiscal year ended Sept. 30.
Paul Isabella, the company’s President and Chief Executive Officer, stated: “Again this quarter we were able to demonstrate our focus on driving top line revenue growth with a 6.3 percent increase in sales. Almost two-thirds of that growth was due to the success of our 26 new greenfields that we opened in the current year. In addition, we completed three acquisitions in August and October that, for next year, will add over $88 million to our revenue base."
Fourth Quarter
Total sales increased 6.3 percent to a fourth quarter record $726.5 million in 2014 from $683.6 million in 2013. On an overall consolidated basis, residential roofing product sales increased 5.1 percent, non-residential roofing product sales increased 4.9 percent, and complementary product sales increased 14.5 percent over the prior year. During the fourth quarter, the company opened nine new greenfield branches and made one acquisition with three branches. Sales from greenfield branches totaled $28.4 million. The fourth quarters of 2014 and 2013 both had the same number of business days.
Net income for the fourth quarter was $24.2 million, compared to net income of $27.4 million in 2013. The fourth quarter diluted income per share was $0.48, compared to $0.55 in 2013. This decline was due primarily to lower gross margins from reduced selling prices as a result of a soft demand environment, and a continued unfavorable shift in sales mix to lower margin direct shipment and commercial business. During the fourth quarter, the company incurred increased operating expenses of $6.1 million related to new stores (greenfield locations not open last year) as the company continued to expand its footprint in existing and new markets.
Fiscal Year
Total sales increased 3.8 percent to an annual record $2.33 billion in 2014, from $2.24 billion in 2013. Existing market (organic) sales, which exclude branches acquired after the beginning of last year, increased 2.9 percent. Fiscal years 2014 and 2013 both had the same number of business days. In existing markets, residential roofing product sales increased 0.2 percent, non-residential roofing product sales increased 6.0 percent, and complementary product sales increased 4.7 percent. Sales from greenfields were $43.6 million for the year. 2014 was unfavorably impacted by the severity of winter storms and prolonged colder temperatures in most markets during the first half of the year.
Net income in 2014 was $53.8 million, compared to $72.6 million in 2013, a decrease of 25.8 percent. Diluted net income per share for 2014 was $1.08, compared to $1.47 in 2013. Adjusted net income, after removing the impact of certain non-recurring items, was $71.8 million in 2013, with adjusted diluted net income per share of $1.45. The lower net income was due to continued lower overall gross margins which were pressured by softer overall demand following the adverse and extended weather conditions during the first half of 2014. The weather related impacts were compounded by an unfavorable shift in sales mix in 2014. Additionally in 2014, the company incurred incremental operating expenses of $12.1 million related to new stores (greenfield locations not open last year) as the company continued to expand its footprint in existing and new markets. Included in the company’s operating results for 2013 were a $2.6 million credit to interest expense ($1.5 million, net of taxes), $0.03 per share, resulting from adjustments in the fair values of certain interest rate derivatives, and a $1.2 million charge ($0.7 million, net of taxes), $0.01 per share, for termination benefits.
