Mixed results for Beacon Roofing Supply
Beacon Roofing Supply reported fourth quarter 2019 net sales increased 4.9% to $2.03 billion from fourth quarter 2018 net sales of $1.94 billion.
The Herndon, Va.-based company reported that consolidated residential roofing product sales were up 12.7% for the quarter while non-residential roofing product sales rose 2.4% for the period. Complementary product sales fell 3.2%
For the full year, net sales increased 10.7% to $7.11 billion from net sales of $6.42 billion in 2018. Consolidated residential roofing product sales increased 10%, consolidated non-residential roofing product sales increased 4.2%, and consolidated complementary product sales increased 17% in 2019 compared to the prior year.
Beacon posted a net income of $27.4 million, compared to $48.3 million in 2018. Fourth quarter results were negatively impacted by lower gross margins and higher acquisition-related costs compared to 2018, the company said. Fourth quarter results were positively impacted by existing market sales growth in residential roofing.
Profits for the year slipped dramatically, however, as Beacon reported a net loss of $10.6 million for the full year compared to a net income of $98.6 million in 2018.
Beacon said that fiscal year 2019 results were negatively impacted by higher acquisition-related costs compared to 2018 as well as an increase in interest expenses directly tied to the financing of the Allied Building Products acquisition. In addition, 2018 results include a $48.8 million net tax benefit resulting from the enactment of the Tax Cuts and Jobs Act of 2017.
In other news, the company announced that Executive Vice President and CFO Joseph Nowicki will leave the company later this fiscal year to shift focus to his family, charitable work and board service. Nowicki will remain CFO during the company’s nationwide search for his successor and will support the transition of his duties until his departure, Beacon said.
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The bottom line: Beacon profits slip in Q4 by more than 43% while acquisition costs mount and the distributor reports a loss for 2019.
What the CEO said: “In joining Beacon, I recognize the great opportunity offered by this industry and the company’s demonstrated long-term growth, EBITDA margins and operating cash flow," said Julian Francis, Beacon Roofing Supply’s new president and CEO. "We are now pivoting from a growth run via acquisitions to a focus on organic growth, gross margin expansion and operating expense rigor. Several positive elements are evident in our fourth quarter performance, including 11.5% organic daily sales growth in residential roofing, continued strong operating cash flow, and positive SG&A expense leverage. I see tremendous opportunities to substantially improve upon Beacon’s financial performance. Operationally, I am turning immediate focus to growing our customer base, differentiating e-commerce capabilities through our digital platform, and enhancing the productivity of our branch network. We are just getting started, and I am proud to lead Beacon forward into this exciting next stage of growth.”
Francis succeeds former CEO Paul Isabella who retired earlier this year after 12 years at the company.
Company Info: The complete fourth quarter and fiscal 2019 report from Beacon Roofing Supply can be read here.
The Herndon, Va.-based company reported that consolidated residential roofing product sales were up 12.7% for the quarter while non-residential roofing product sales rose 2.4% for the period. Complementary product sales fell 3.2%
For the full year, net sales increased 10.7% to $7.11 billion from net sales of $6.42 billion in 2018. Consolidated residential roofing product sales increased 10%, consolidated non-residential roofing product sales increased 4.2%, and consolidated complementary product sales increased 17% in 2019 compared to the prior year.Beacon posted a net income of $27.4 million, compared to $48.3 million in 2018. Fourth quarter results were negatively impacted by lower gross margins and higher acquisition-related costs compared to 2018, the company said. Fourth quarter results were positively impacted by existing market sales growth in residential roofing.
Profits for the year slipped dramatically, however, as Beacon reported a net loss of $10.6 million for the full year compared to a net income of $98.6 million in 2018.
Beacon said that fiscal year 2019 results were negatively impacted by higher acquisition-related costs compared to 2018 as well as an increase in interest expenses directly tied to the financing of the Allied Building Products acquisition. In addition, 2018 results include a $48.8 million net tax benefit resulting from the enactment of the Tax Cuts and Jobs Act of 2017.
In other news, the company announced that Executive Vice President and CFO Joseph Nowicki will leave the company later this fiscal year to shift focus to his family, charitable work and board service. Nowicki will remain CFO during the company’s nationwide search for his successor and will support the transition of his duties until his departure, Beacon said.
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The bottom line: Beacon profits slip in Q4 by more than 43% while acquisition costs mount and the distributor reports a loss for 2019.
What the CEO said: “In joining Beacon, I recognize the great opportunity offered by this industry and the company’s demonstrated long-term growth, EBITDA margins and operating cash flow," said Julian Francis, Beacon Roofing Supply’s new president and CEO. "We are now pivoting from a growth run via acquisitions to a focus on organic growth, gross margin expansion and operating expense rigor. Several positive elements are evident in our fourth quarter performance, including 11.5% organic daily sales growth in residential roofing, continued strong operating cash flow, and positive SG&A expense leverage. I see tremendous opportunities to substantially improve upon Beacon’s financial performance. Operationally, I am turning immediate focus to growing our customer base, differentiating e-commerce capabilities through our digital platform, and enhancing the productivity of our branch network. We are just getting started, and I am proud to lead Beacon forward into this exciting next stage of growth.”
Francis succeeds former CEO Paul Isabella who retired earlier this year after 12 years at the company.
Company Info: The complete fourth quarter and fiscal 2019 report from Beacon Roofing Supply can be read here.