Exhibit 99.1

Beacon Roofing Supply Reports Second Quarter 2016 Results

 

·

Record second quarter sales of $823.5 million, nearly doubling prior year at 99.3% growth

 

·

Organic growth of 27.7% in existing markets (31.4% growth in residential roofing)

 

·

Adjusted EPS of $0.03 (GAAP EPS of ($0.10)) vs. ($0.20) in prior year

 

·

Second quarter adjusted EBITDA grew to $36.9 million from ($3.6) million in the prior year

 

·

Record first half sales of $1.8 billion vs. $1.0 billion in prior year (78.4% growth)

 

 

HERNDON, VA. — (BUSINESS WIRE) — May 2, 2016 — Beacon Roofing Supply, Inc. (the "Company") (NASDAQ: BECN) announced results today for its second quarter ended March 31, 2016 and first half ended March 31, 2016 of the fiscal year ending September 30, 2016 ("fiscal 2016").

 

Paul Isabella, the Company’s President and Chief Executive Officer, stated: “I am pleased to announce our outstanding second quarter and first half 2016 results that have Beacon well positioned to achieve another record breaking year. We had record second quarter sales of $823.5 million, nearly doubling the prior year at 99.3% growth. Growth came from our acquisitions, led by RSG, and organically through same-store sales and maturing greenfield operations. Gross margin grew in the quarter by 40 basis points over the prior year, mainly driven from a strong residential mix increase. We also saw very good cost leverage during the quarter. Our balance sheet is strong and we have been able to pay down approximately $50 million of revolving debt while funding approximately $100 million in acquisitions. Inventory has been managed effectively and inventory turns increased to 4.1 compared to 2.9 last year. Our strong cash flow generation and solid EBITDA has helped to reduce our net debt leverage ratio to 3.6 times. Adjusted earnings per share of $0.03 were positive in our historically toughest quarter for the first time since 2012 and were $0.23 better than last year. We are tracking to plan on the RSG synergy attainment, with integration progressing ahead of schedule. The acquisition pipeline is more robust than ever, and we already have made three great acquisitions to start the third quarter. I am enthusiastic about the second half of the year and we will continue to push hard to achieve strong results for our shareholders.”

 

Second Quarter

 

Total sales increased 99.3% to a second quarter record of $823.5 million in 2016, from $413.2 million in 2015. Residential roofing product sales increased 113.1%, non-residential roofing product sales increased 95.3%, and complementary product sales increased 67.2% over the prior year. Existing market sales, excluding acquisitions, increased 27.7% for the quarter. The second quarter of 2016 and 2015 had 64 and 63 business days, respectively.

 

The net loss for the second quarter was ($5.7) million, compared to ($9.8) million in 2015. The second quarter net loss per share was ($0.10), compared to ($0.20) in 2015. Adjusted net income, after removing the impact of non-recurring RSG Acquisition-related costs, was $1.7 million in the second quarter 2016, with adjusted diluted net income per share of $0.03 (see included financial tables for a reconciliation of adjusted net income and adjusted earnings per share). The net income for the quarter was favorably impacted by warmer than normal weather, allowing for higher volumes and gross margins which improved by 40 basis points over the prior year. This was offset by increased operating expenses driven by the incremental costs associated with the RSG acquisition made this fiscal year.

 

 

First Half

 

Total sales increased 78.4% to a first half record of $1.8 billion in 2016, from $1.0 billion in 2015. Residential roofing product sales increased 92.1%, non-residential roofing product sales increased 73.1%, and complementary product sales increased 49.9% over the prior year. Existing market sales, excluding acquisitions, increased 18.3% for the first half. The first half of 2016 and 2015 had 126 and 125 business days, respectively.

 

Net income for the first half was $1.4 million, compared to $3.1 million in 2015. The first half net income per share was $0.02, compared to $0.06 in 2015. Adjusted net income, after removing the impact of non-recurring RSG Acquisition-related costs, was $26.4 million in the second quarter 2016, with adjusted diluted net income per share of $0.44 (see included financial tables for a reconciliation of adjusted net income and adjusted earnings per share). The net income for the first half was favorably impacted by higher volume and gross margins which improved by 60 basis points over the prior year. This was offset by increased operating expenses driven by the incremental costs associated with the RSG acquisition made this fiscal year.

 

The Company will host a webcast and conference call today at 5:00 p.m. (EST) 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 720-634-9063. To assure timely access, call participants should call in before 5:00 p.m.

 

About Beacon Roofing Supply

 

Founded in 1928, Beacon Roofing Supply, Inc. (NASDAQ: BECN) is the largest publicly traded distributor of residential and commercial roofing materials and complementary building products, operating 369 branches throughout 45 states in the U.S. and six provinces in Canada. To learn more about Beacon and its family of regional brands, please visit www.becn.com.

 

Forward-Looking Statements: This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's latest Form 10-K. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

 

BECN-F

 

Beacon Roofing Supply, Inc.
Joseph Nowicki, 571-323-3940
Executive Vice President & Chief Financial Officer
JNowicki@becn.com

  

Source: Beacon Roofing Supply, Inc.

 

 

  

BEACON ROOFING SUPPLY, INC
Consolidated Statements of Operations
(unaudited; in thousands, except share and per share amounts)
		Three Months Ended March 31,																Six Months Ended March 31,
			2016*				% of Net Sales				2015				% of Net Sales				2016*				% of Net Sales				2015				% of Net Sales
Net sales		$	823,537				100.0	%		$	413,184				100.0	%		$	1,800,017				100.0	%		$	1,009,226				100.0	%
Cost of products sold			627,773				76.2	%			316,411				76.6	%			1,371,065				76.2	%			774,888				76.8	%
Gross profit			195,764				23.8	%			96,773				23.4	%			428,952				23.8	%			234,338				23.2	%
Operating expenses			191,881				23.3	%			110,979				26.9	%			398,225				22.1	%			224,724				22.3	%
Income from operations			3,883				0.5	%			(14,206	)			-3.4	%			30,727				1.7	%			9,614				1.0	%
Interest expense, financing costs and other			13,026				1.6	%			2,522				0.6	%			29,282				1.6	%			5,177				0.5	%
Income (loss) before provision for income taxes			(9,143	)			-1.1	%			(16,728	)			-4.0	%			1,445				0.1	%			4,437				0.4	%
Provision (benefit) for income taxes			(3,424	)			-0.4	%			(6,942	)			-1.7	%			46				0.0	%			1,316				0.1	%
Net income (loss)		$	(5,719	)			-0.7	%		$	(9,786	)			-2.4	%		$	1,399				0.1	%		$	3,121				0.3	%
Net income (loss) per share:
Basic		$	(0.10	)						$	(0.20	)						$	0.02							$	0.06
Diluted		$	(0.10	)						$	(0.20	)						$	0.02							$	0.06
Weighted average shares used in computing net income (loss) per share:
Basic			59,295,990								49,513,141								59,133,569								49,470,528
Diluted			59,295,990								49,513,141								60,077,852								50,029,935

  

*

The second quarter 2016 Consolidated Statements of Operations includes $5.5 million of non-recurring charges, $5.7 million of additional amortization for acquired intangibles, and $1.2 million of interest expense, financing costs and other for the recognition of certain costs related to the RSG acquisition. For the six months ended March 31, 2016 Consolidated Statements of Operations includes $25.5 million of non-recurring charges, $11.4 million of additional amortization for acquired intangibles, and $5.0 million of interest expense, financing costs and other for the recognition of certain costs related to the RSG acquisition Management believes the Adjusted Net Income for second quarter 2016 and 6 months ended March 31, 2016 provides a meaningful comparison to prior periods operating results as it adjusts for the impact of the RSG Acquisition.

 

 

 

BEACON ROOFING SUPPLY, INC
Consolidated Balance Sheets
(in thousands)
		March 31,  2016				September 30, 2015				March 31, 2015
ASSETS		(unaudited)				(audited)				(unaudited)
Current assets
Cash and cash equivalents		$	14,841			$	45,661			$	22,956
Accounts receivable, net			490,850				399,732				248,154
Inventories			513,750				320,999				361,317
Prepaid expenses and other current assets			164,624				97,928				73,490
Total current assets			1,184,065				864,320				705,917
Property and equipment, net			147,995				90,405				85,054
Goodwill			1,160,775				496,415				488,324
Intangible assets, net			472,582				87,055				91,650
Other assets, net			1,430				1,233				3,012
TOTAL ASSETS		$	2,966,847			$	1,539,428			$	1,373,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	417,994			$	244,891			$	202,713
Accrued expenses			152,691				124,794				80,546
Borrowings under revolver lines of credit			-				11,240				3,948
Current portion of long-term obligations			12,159				16,320				16,612
Total current liabilities			582,844				397,245				303,819
Borrowings under revolving lines of credit			295,690				-				-
Long-term debt, net of current			722,542				170,200				178,241
Deferred income taxes			102,878				66,500				48,637
Long-term obligations under equipment financing and other,
net of current portion			42,907				22,367				24,779
Total  liabilities			1,746,861				656,312				555,476
Commitments and contingencies
Stockholders' equity:
Common stock			595				497				495
Undesignated preferred stock			-				-				-
Additional paid-in capital			678,749				345,934				335,972
Retained earnings			558,804				557,405				498,249
Accumulated other comprehensive loss			(18,162	)			(20,720	)			(16,235	)
Total stockholders' equity			1,219,986				883,116				818,481
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	2,966,847			$	1,539,428			$	1,373,957

 

 

BEACON ROOFING SUPPLY, INC
Consolidated Statements of Cash Flows
(unaudited; in thousands)
		Six Months Ended March 31,
		2016				2015
Operating activities:
Net income		$	1,399			$	3,121
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			47,644				16,430
Stock-based compensation			10,696				4,744
Certain interest expense and other financing costs			4,053				543
Gain on sale of fixed assets			(411	)			(273	)
Deferred income taxes			1,741				287
Adjustment of liability for contingent consideration and other			(280	)			181
Changes in assets and liabilities, net of the effects of
businesses acquired:
Accounts receivable			95,150				118,564
Inventories			(2,519	)			(50,305	)
Prepaid expenses and other assets			(15,815	)			(5,007	)
Accounts payable and accrued expenses			(61,006	)			(25,800	)
Net cash provided by operating activities			80,652				62,485
Investing activities:
Purchases of property and equipment			(11,059	)			(5,384	)
Acquisition of businesses			(941,156	)			(69,745	)
Proceeds from sales of assets			377				367
Net cash used in investing activities			(951,838	)			(74,762	)
Financing activities:
Borrowings under revolving lines of credit, net of repayments			292,273				(13,632	)
Borrowings under term loan, net of repayments			262,125				(5,625	)
Borrowings under Senior Notes			300,000				-
Borrowings/(Repayments) under equipment financing facilities and other			(2,633	)			(2,758	)
Payment of deferred financing costs			(27,813	)			-
Proceeds from exercise of options			15,391				3,171
Excess tax benefit from stock-based compensation			1,630				262
Net cash provided by (used in) financing activities			840,973				(18,582	)
Effect of exchange rate changes on cash			(607	)			(657	)
Net decrease in cash and cash equivalents			(30,820	)			(31,516	)
Cash and cash equivalents, beginning of period			45,661				54,472
Cash and cash equivalents, end of period		$	14,841			$	22,956

 

 

 

BEACON ROOFING SUPPLY, INC
Consolidated Sales by Product Line
(unaudited; dollars in thousands)
Consolidated Sales by Product Line
		Three Months Ended March 31,
		2016								2015								Change
			Net Sales				Mix %				Net Sales				Mix %				$				%
Residential roofing products		$	436,153				53.0	%		$	204,714				49.5	%		$	231,439				113.1	%
Non-residential roofing products			269,469				32.7	%			138,004				33.4	%			131,465				95.3	%
Complementary building products			117,915				14.3	%			70,467				17.1	%			47,448				67.2	%
		$	823,537				100.0	%		$	413,185				100.0	%		$	410,352				99.3	%

 

 

Consolidated Sales by Product Line for Existing Markets*
		Three Months Ended March 31,
		2016								2015								Change
			Net Sales				Mix %				Net Sales				Mix %				$				%
Residential roofing products		$	253,613				51.4	%		$	192,991				50.0	%		$	60,622				31.4	%
Non-residential roofing products			155,305				31.5	%			123,817				32.0	%			31,488				25.4	%
Complementary building products			84,514				17.1	%			69,529				18.0	%			14,985				21.5	%
		$	493,432				100.0	%		$	386,337				100.0	%		$	107,095				27.7	%

 

 

Existing Market Sales By Business Day**
		Three Months Ended March 31,
		2016								2015								Change
			Net Sales				Mix %				Net Sales				Mix %				$				%
Residential roofing products		$	3,963				51.4	%		$	3,063				50.0	%		$	900				29.4	%
Non-residential roofing products			2,427				31.5	%			1,965				32.0	%			462				23.5	%
Complementary building products			1,321				17.1	%			1,104				18.0	%			217				19.7	%
		$	7,711				100.0	%		$	6,132				100.0	%		$	1,579				25.7	%

 

*Excludes branches acquired during the four quarters prior to the start of the second quarter of Fiscal 2016.
**There were 64 and 63 business days in the quarters ended March 31, 2016 and 2015, respectively.

 

 

BEACON ROOFING SUPPLY, INC
Consolidated Sales by Product Line
(unaudited; dollars in thousands)
Consolidated Sales by Product Line
		Six Months Ended March 31,
		2016								2015								Change
			Net Sales				Mix %				Net Sales				Mix %				$				%
Residential roofing products		$	930,100				51.7	%		$	484,239				48.0	%		$	445,861				92.1	%
Non-residential roofing products			617,704				34.3	%			356,778				35.4	%			260,926				73.1	%
Complementary building products			252,213				14.0	%			168,209				16.6	%			84,004				49.9	%
		$	1,800,017				100.0	%		$	1,009,226				100.0	%		$	790,791				78.4	%

 

Consolidated Sales by Product Line for Existing Markets*
		Six Months Ended March 31,
		2016								2015								Change
			Net Sales				Mix %				Net Sales				Mix %				$				%
Residential roofing products		$	549,691				49.5	%		$	448,002				47.8	%		$	101,689				22.7	%
Non-residential roofing products			372,983				33.7	%			325,106				34.7	%			47,877				14.7	%
Complementary building products			185,704				16.8	%			164,190				17.5	%			21,514				13.0	%
		$	1,108,378				100.0	%		$	937,298				100.0	%		$	171,080				18.3	%

 

Existing Market Sales By Business Day**
		Six Months Ended March 31,
		2016								2015								Change
			Net Sales				Mix %				Net Sales				Mix %				$				%
Residential roofing products		$	4,363				49.6	%		$	3,584				47.8	%		$	779				21.7	%
Non-residential roofing products			2,960				33.6	%			2,601				34.7	%			359				13.9	%
Complementary building products			1,474				16.8	%			1,314				17.5	%			160				12.2	%
		$	8,797				100.0	%		$	7,499				100.0	%		$	1,298				17.3	%

 

*Excludes branches acquired during the four quarters prior to the start of the second quarter of Fiscal 2016.
**There were 126 and 125 business days for the six months ended March 31, 2016 and 2015, respectively.

 

 

 

 

BEACON ROOFING SUPPLY INC
Adjusted Net Income and Adjusted Net Income Per Share1
(unaudited; in thousands except per share amounts)
		Three Months Ended March 31,																Six Months Ended March 31,
		2016								2015								2016								2015
		Amount				Per Share				Amount				Per Share				Amount				Per Share				Amount				Per Share
Net income		$	(5,719	)		$	(0.10	)		$	(9,786	)		$	(0.20	)		$	1,399			$	0.02			$	3,121			$	0.06
Company adjustments, net of income taxes:
RSG Acquisition costs			7,401				0.12				-				-				24,961				0.42				-				-
Adjusted Net Income		$	1,682			$	0.03			$	(9,786	)		$	(0.20	)		$	26,360			$	0.44			$	3,121			$	0.06

 

(1)

The Company’s management believes that “Adjusted Net Income” and “Adjusted Net Income Per Share”, which excludes non-recurring costs related to the RSG acquisition, and incremental amortization of acquired intangibles, are useful to investors because it permits investors to better understand year-over-year changes in underlying operating performance. While management believes Adjusted Net Income and Adjusted Net Income Per Share are useful measures for investors, these are not measurements presented in accordance with United States generally accepted accounting principles (“GAAP”). You should not consider Adjusted Net Income or Adjusted Net Income Per Share in isolation or as a substitute for net income and net loss per share or diluted earnings per share calculated in accordance with GAAP.

    

 

BEACON ROOFING SUPPLY, INC.
Adjusted EBITDA1
(unaudited; in thousands)
		Three Months Ended March 31,								Six Months Ended March 31,
		2016				2015				2016				2015
Net Income		$	(5,719	)		$	(9,786	)		$	1,399			$	3,121
RSG Acquisition costs2			5,452				-				21,154				-
Interest expense, net			13,128				2,522				29,328				5,177
Income taxes			(3,424	)			(6,942	)			46				1,316
Depreciation and amortization			23,966				8,188				47,637				16,430
Stock-based compensation			3,516				2,389				10,696				4,744
Adjusted EBITDA		$	36,918			$	(3,630	)		$	110,261			$	30,788

  

(1)

Adjusted EBITDA is defined as net income plus interest expense (net of interest income), income taxes, depreciation and amortization, adjustments to contingent consideration, stock-based compensation and non-recurring costs related to the RSG acquisition. EBITDA is a measure commonly used in the distribution industry, and we present Adjusted EBITDA to enhance your understanding of our operating performance. Adjusted EBITDA is used in our bank covenants and we use Adjusted EBITDA as an internal performance measurement and as one criterion for evaluating our performance relative to that of our peers. We believe that Adjusted EBITDA is an operating performance measure that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies. Further, we believe that Adjusted EBITDA is a useful measure because it improves comparability of results of operations, since purchase accounting used for acquisitions can render depreciation and amortization non-comparable between periods. Management uses these supplemental measures to evaluate performance period over period and to analyze the underlying trends in the Company’s business and to establish operational goals and forecasts that are used in allocating resources. We expect to compute our non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.

 

While we believe Adjusted EBITDA is a useful measure for investors, it is not a measurement presented in accordance with United States generally accepted accounting principles, or GAAP. You should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operations, or any other items calculated in accordance with GAAP. In addition, Adjusted EBITDA has inherent material limitations as a performance measure. It does not include interest expense, because we have borrowed money, interest expense is a necessary element of our costs. In addition, Adjusted EBITDA does not include depreciation and amortization expense. Because we have capital and intangible assets, depreciation and amortization expense is a necessary element of our costs. Adjusted EBITDA also does not include stock-based compensation, which is a necessary element of our costs since we make stock awards to key members of management as an important incentive to maximize overall company performance and as a benefit. Moreover, Adjusted EBITDA does not include taxes, and payment of taxes is a necessary element of our operations. Accordingly, since Adjusted EBITDA excludes these items, it has material limitations as a performance measure. The Company’s management separately monitors capital expenditures, which impact depreciation expense, as well as amortization expense, interest expense, and income tax expense. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

 

(2)

RSG Acquisition costs reflect all non-recurring charges related to the acquisition (excluding the impact of tax) that are not embedded in other balances of the table. Additional RSG Acquisition costs are included in interest expense, income taxes, depreciation and amortization, and stock-based compensation in the table above.