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Beacon Roofing Supply, Inc. (BECN - Free Report) reported adjusted earnings of 93 cents per share for fourth-quarter fiscal 2017, falling behind the Zacks Consensus Estimate of 94 cents. Earnings increased 6% on a year-over-year basis, driven by strong sales growth within each of the three product lines — residential roofing, non-residential roofing and complementary products. It was further aided by strong organic sales trends across the majority of geographies. However, higher operating expenses acted as a dampener on the margins.
Including acquisition-related items, the company reported a profit of 73 cents per share in the quarter compared with 78 cents in the prior-year quarter.
Operational Update
This distributor of residential and non-residential roofing materials posted record sales of $1.29 billion, exhibiting a 9.8% year-over-year rise. This also marked the fifth consecutive quarter of sales exceeding $1 billion. Revenues also beat the Zacks Consensus Estimate of $1.26 billion.
Residential roofing product sales increased 9.3%, delivering its 14th consecutive quarter of sales growth. Non-residential roofing product sales registered a rise of 5.3% and complementary product sales were up 20.7%. Existing markets same day sales, excluding acquisitions, increased 8.2% for the quarter.
Cost of goods sold increased 11% to $967 million. Gross profit was $322.6 million, up 7% from $302 million in the year-ago quarter. Gross margin contracted 70 basis points (bps) to 25%.
Operating expenses for the quarter increased 14% year over year to $235 million. Higher operating expense was driven by variable cost tied to the stronger expected sales and gross margins. Further, escalating diesel cost led to the increase in operating expenses. Operating income in the quarter was $87.3 million, a 9% drop from $95.9 million in the prior-year quarter due to higher operating expenses. Operating margin contracted 140 bps to 6.8% in the reported quarter.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing reported cash and cash equivalents of $138 million as of Sep 30, 2017, compared with $31.4 million as of Sep 30, 2016. The company generated $315 million in cash from operating activities in fiscal 2017, compared with $120.6 million in the prior fiscal.
Acquisitions
Beacon Roofing completed five acquisitions for a combined sales run rate greater than $130 million during fiscal 2017. These buyouts will be accretive to margins and also improve its geographic penetration and product portfolios across the United States. The company has also announced the acquisition of CRH plc's (CRH - Free Report) U.S. distribution business, Allied Building Products Corp. for $2.625 billion in cash. The acquisition is expected to close in early January. The buyout will not only expand product offerings, but also increase geographical reach in both existing and new markets. Further, it will lead to significant cost synergies.
Fiscal 2017 Performance
Beacon Roofing reported adjusted earnings of $2.18 per share in fiscal 2017 which improved 6% year over year but lagged the Zacks Consensus Estimate of $2.19. Including one-time items, the company reported earnings per share of $1.64 compared with $1.49 in the prior fiscal. Sales for fiscal 2017 were at $4.38 billion, up 6% year over year and ahead of the Zacks Consensus Estimate of $4.35. Both revenues and earnings per share marked annual record performances for the company.
2018 Outlook
For fiscal 2018, the company projects total sales in the range of $6.6-$6.9 billion, adjusted EBITDA of $560-$600 million, and adjusted earnings per between $2.95 and $3.25. This includes a nine month contribution from Allied Building Products.
Beacon Roofing has outperformed the industry year-to-date. The stock has gained 22.1% compared with the 21.3% rise recorded by the industry. Zacks Rank & Key Picks
Beacon Roofing currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the sector include Groupon, Inc. (GRPN - Free Report) and The Home Depot, Inc. (HD - Free Report) . Groupon has delivered an average positive earnings surprise history of 150.00% in the trailing four quarters. The stock has gained 38.4% in the past year. Groupon sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Home Depot has delivered an average positive earnings surprise history of 3.87% in the trailing four quarters. The stock has rallied 32.9% in the past year. The Home Depot carries the same rank as Beacon Roofing.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Beacon Roofing (BECN) Q4 Earnings Lag, Initiates '18 View
Beacon Roofing Supply, Inc. (BECN - Free Report) reported adjusted earnings of 93 cents per share for fourth-quarter fiscal 2017, falling behind the Zacks Consensus Estimate of 94 cents. Earnings increased 6% on a year-over-year basis, driven by strong sales growth within each of the three product lines — residential roofing, non-residential roofing and complementary products. It was further aided by strong organic sales trends across the majority of geographies. However, higher operating expenses acted as a dampener on the margins.
Including acquisition-related items, the company reported a profit of 73 cents per share in the quarter compared with 78 cents in the prior-year quarter.
Operational Update
This distributor of residential and non-residential roofing materials posted record sales of $1.29 billion, exhibiting a 9.8% year-over-year rise. This also marked the fifth consecutive quarter of sales exceeding $1 billion. Revenues also beat the Zacks Consensus Estimate of $1.26 billion.
Residential roofing product sales increased 9.3%, delivering its 14th consecutive quarter of sales growth. Non-residential roofing product sales registered a rise of 5.3% and complementary product sales were up 20.7%. Existing markets same day sales, excluding acquisitions, increased 8.2% for the quarter.
Cost of goods sold increased 11% to $967 million. Gross profit was $322.6 million, up 7% from $302 million in the year-ago quarter. Gross margin contracted 70 basis points (bps) to 25%.
Operating expenses for the quarter increased 14% year over year to $235 million. Higher operating expense was driven by variable cost tied to the stronger expected sales and gross margins. Further, escalating diesel cost led to the increase in operating expenses. Operating income in the quarter was $87.3 million, a 9% drop from $95.9 million in the prior-year quarter due to higher operating expenses. Operating margin contracted 140 bps to 6.8% in the reported quarter.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise | Beacon Roofing Supply, Inc. Quote
Cash Position
Beacon Roofing reported cash and cash equivalents of $138 million as of Sep 30, 2017, compared with $31.4 million as of Sep 30, 2016. The company generated $315 million in cash from operating activities in fiscal 2017, compared with $120.6 million in the prior fiscal.
Acquisitions
Beacon Roofing completed five acquisitions for a combined sales run rate greater than $130 million during fiscal 2017. These buyouts will be accretive to margins and also improve its geographic penetration and product portfolios across the United States. The company has also announced the acquisition of CRH plc's (CRH - Free Report) U.S. distribution business, Allied Building Products Corp. for $2.625 billion in cash. The acquisition is expected to close in early January. The buyout will not only expand product offerings, but also increase geographical reach in both existing and new markets. Further, it will lead to significant cost synergies.
Fiscal 2017 Performance
Beacon Roofing reported adjusted earnings of $2.18 per share in fiscal 2017 which improved 6% year over year but lagged the Zacks Consensus Estimate of $2.19. Including one-time items, the company reported earnings per share of $1.64 compared with $1.49 in the prior fiscal. Sales for fiscal 2017 were at $4.38 billion, up 6% year over year and ahead of the Zacks Consensus Estimate of $4.35. Both revenues and earnings per share marked annual record performances for the company.
2018 Outlook
For fiscal 2018, the company projects total sales in the range of $6.6-$6.9 billion, adjusted EBITDA of $560-$600 million, and adjusted earnings per between $2.95 and $3.25. This includes a nine month contribution from Allied Building Products.
Beacon Roofing has outperformed the industry year-to-date. The stock has gained 22.1% compared with the 21.3% rise recorded by the industry.
Zacks Rank & Key Picks
Beacon Roofing currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the sector include Groupon, Inc. (GRPN - Free Report) and The Home Depot, Inc. (HD - Free Report) . Groupon has delivered an average positive earnings surprise history of 150.00% in the trailing four quarters. The stock has gained 38.4% in the past year. Groupon sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Home Depot has delivered an average positive earnings surprise history of 3.87% in the trailing four quarters. The stock has rallied 32.9% in the past year. The Home Depot carries the same rank as Beacon Roofing.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>