Peabody, MA - Beacon Roofing Supply, Inc. announced results today for its second quarter and first half ended March 31, 2013 of the fiscal year ending September 30, 2013.
Paul Isabella, the Company’s President & Chief Executive Officer, stated: “The second quarter of fiscal 2013 was challenging for us as we experienced harsh weather conditions in many of our markets and we were up against a very strong second quarter last year when our existing market sales were up 28%. Our total sales benefited from the positive impact of several acquisitions made since the start of last year and our gross margin continued to improve over the prior year. In addition, the trend of our residential roofing sales was more favorable in the second quarter compared to the first quarter. During the first half, we took advantage of our financial capacity and flexibility to purchase key products ahead of announced industry-wide price increases. We believe we are well positioned for a successful back half of fiscal 2013 and expect to experience a business rebound following the tough Winter and early Spring conditions.”
Total sales increased 5.3% to $416.3 million in 2013 from $395.2 million in 2012. Existing market (organic) sales, which exclude branches acquired after the beginning of last year’s second quarter, declined 5.1%. There was one less business day in this year’s second quarter. In existing markets, residential and non-residential roofing product sales decreased 1.4% and 11.2%, respectively, while complementary product sales decreased 3.2%. The 2013 sales performance was unfavorably affected by adverse weather conditions this year, especially compared to last year’s mild weather that boosted sales during the normal slow Winter period.
The net loss for the second quarter was $0.2 million compared to net income of $3.1 million in 2012. The second quarter loss per share was $0.00 compared to diluted income per share of $0.07 in 2012. The decline in net income was due to higher operating expenses, including acquired branch expenses, partially offset by the impact from higher gross profit and lower interest expense. The second quarter adjusted loss per share was $0.02 after consideration of the $1.3 million credit to interest expense ($0.8 million net of taxes) resulting from adjustments in the fair values of certain interest rate derivatives.
Earnings before interest, taxes, depreciation and amortization, and stock-based compensation (“Adjusted EBITDA”), which is reconciled to the net income in this press release, was $11.6 million in 2013 compared to $17.8 million in 2012, a decrease of 34.6%.
Total sales increased 5.1% to $930.0 million in 2013 from $885.0 million in 2012. Existing market (organic) sales, which exclude branches acquired after the beginning of last year, declined 4.5%. There was one additional business day in this year’s first half. In existing markets, residential and non-residential roofing product sales decreased 3.5% and 8.2%, respectively, while complementary product sales increased 2.0%. The comparison of the 2013 first half sales to 2012 was unfavorably affected by last year’s very high level of re-roofing activities, including the beneficial impact from mild weather in 2012 and strong business in several markets in the first quarter of 2012 that experienced significant storms in 2011.
Net income for the first half was $18.0 million compared to $22.3 million in 2012, a decrease of 18.9%. First half diluted net income per share was $0.37 compared to $0.47 in 2012. The lower net income was due to the same factors mentioned above for the second quarter decline in net income. First half adjusted diluted net income per share was $0.35 compared to an adjusted $0.45 in 2012. The first half of this year included 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 $0.9 million charge ($0.5 million net of taxes), $0.01 per share, for termination benefits. Last year’s net income included a benefit of $1.0 million, $0.02 per share, from a reduction in a liability for contingent consideration related to the acquisition of Enercon Products.
Adjusted EBITDA for the first half was $53.4 million in 2013 compared to $58.9 million in 2012, a decrease of 9.3%.
Cash flow from operations was $20.6 million compared to $80.3 million in 2012. This comparison in operating cash flows was influenced mostly by less favorable changes in working capital, including additional inventory purchases made in 2013 ahead of announced price increases. Cash on hand decreased by $154.4 million to $16.7 million at March 31, 2013 compared to $171.1 million at March 31, 2012, due primarily to a significant paydown of debt (net of new borrowings) since last year’s second quarter and the costs of the acquisitions made since that time.