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Beacon Roofing (BECN) Q4 Earnings & Revenues Miss, Up Y/Y
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Beacon Roofing Supply, Inc. (BECN - Free Report) reported fourth-quarter fiscal 2018 results, wherein earnings and revenues missed the Zacks Consensus Estimate.
Adjusted earnings of $1.07 per share missed the consensus estimate of $1.36 by 21.3%. However, the reported figure increased 0.9% from $1.06 a year ago.
The year-over-year improvement was primarily driven by solid segmental performances, favorable contributions from acquired operations along with positive price-cost performance. However, significant volume challenges across the historical hail markets and unfavorable weather partly offset the positives.
On a reported basis, the company recorded earnings of 54 cents per share compared with 73 cents a year ago.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing, one of the largest distributors of residential as well as commercial roofing materials and complementary building products, posted a record sale of $1.94 billion, up 50.1% year over year. However, the reported figure missed the consensus mark of $2.01 billion by 3.9%.
The record sales were positively impacted by strategic acquisitions of Allied, Tri-State and Atlas. That said, organic sales declined 5.6% year over year due to significant volume challenges across the historical hail markets.The downside was partially offset by mid-to-high single-digit price increases along with strong contribution in Florida as a result of hurricane Irma.
Sales in the Residential roofing product segment grew 17.8% and that of Non-residential roofing product increased 33.8% from a year ago. Complementary product’s sales surged a whopping 170.6% year over year. However, existing markets sales (excluding acquisitions) decreased 5.6% as a result of bad weather conditions.
Cost of goods sold (accounting for 74.6% of net sales) of $1,444.5 million climbed 49.3% year over year. Gross profit came in at $491.3 million, which was significantly up 52.3% from a year ago. Also, gross margin expanded 40 basis points (bps) to 25.4%. However, operating expenses grew 62.8% year over year during the quarter.
Although Beacon Roofing reported operating income of $108.1 million, up from the prior-year figure of $87.3 million, operating margin contracted 130 bps to 5.5% in the quarter. Additionally, adjusted EBITDA margin declined 110 bps in the reported quarter.
Cash Position
As of Sep 30, 2018, Beacon Roofing reported cash and cash equivalents of $129.9 million, down from $138.3 million reported on Sep 30, 2017. The company generated $539.4 million cash from operating activities in fiscal 2018 compared with $315.2 million in fiscal 2017.
Fiscal 2018 Review
Beacon Roofing reported adjusted earnings of $2.70 per share, which inched up 0.7% year over year. Also, revenues of $6.42 billion in fiscal 2018 were up 46.6% year over year. Notably, both the top and bottom lines marked annual record performances for the company. However, both the reported figures lagged the consensus mark by 1.2% and 10.3%, respectively.
On a reported basis, the company recorded fiscal 2018 earnings of $1.05 per share compared with $1.64 a year ago. However, adjusted EBITDA margin in fiscal 2018 contracted 80 bps from a year ago.
2019 Guidance
For fiscal 2019, the company projects total sales in the range of $7-$7.35 billion. While Allied is expected to contribute approximately $600 million during the fiscal first quarter of 2019, Tri-State and Atlas are likely to add nearly $30 million during fiscal 2019. Organically, sales are anticipated to grow in the mid-single-digit range.
Adjusted EBITDA is expected in the range of $540-$610 million, and adjusted earnings per share are likely to be between $2.90 and $3.35.
Share Price Performance
Shares of Beacon Roofing have declined 56.5% compared with its industry’s fall of 6.5% year to date. Earnings estimates for fiscal 2019 have also trended downward by 0.3% over the past seven days.
Zacks Rank and Stocks to Consider
Beacon Roofing currently carries a Zacks Rank #4 (Sell).
Tecnoglass, GMS and Darden’s EPS growth rate for the current year is expected to be 134.4%, 64.2% and 16.8%, respectively.
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Beacon Roofing (BECN) Q4 Earnings & Revenues Miss, Up Y/Y
Beacon Roofing Supply, Inc. (BECN - Free Report) reported fourth-quarter fiscal 2018 results, wherein earnings and revenues missed the Zacks Consensus Estimate.
Adjusted earnings of $1.07 per share missed the consensus estimate of $1.36 by 21.3%. However, the reported figure increased 0.9% from $1.06 a year ago.
The year-over-year improvement was primarily driven by solid segmental performances, favorable contributions from acquired operations along with positive price-cost performance. However, significant volume challenges across the historical hail markets and unfavorable weather partly offset the positives.
On a reported basis, the company recorded earnings of 54 cents per share compared with 73 cents a year ago.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise | Beacon Roofing Supply, Inc. Quote
Operational Update
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Beacon Roofing, one of the largest distributors of residential as well as commercial roofing materials and complementary building products, posted a record sale of $1.94 billion, up 50.1% year over year. However, the reported figure missed the consensus mark of $2.01 billion by 3.9%.
The record sales were positively impacted by strategic acquisitions of Allied, Tri-State and Atlas. That said, organic sales declined 5.6% year over year due to significant volume challenges across the historical hail markets.The downside was partially offset by mid-to-high single-digit price increases along with strong contribution in Florida as a result of hurricane Irma.
Sales in the Residential roofing product segment grew 17.8% and that of Non-residential roofing product increased 33.8% from a year ago. Complementary product’s sales surged a whopping 170.6% year over year. However, existing markets sales (excluding acquisitions) decreased 5.6% as a result of bad weather conditions.
Cost of goods sold (accounting for 74.6% of net sales) of $1,444.5 million climbed 49.3% year over year. Gross profit came in at $491.3 million, which was significantly up 52.3% from a year ago. Also, gross margin expanded 40 basis points (bps) to 25.4%. However, operating expenses grew 62.8% year over year during the quarter.
Although Beacon Roofing reported operating income of $108.1 million, up from the prior-year figure of $87.3 million, operating margin contracted 130 bps to 5.5% in the quarter. Additionally, adjusted EBITDA margin declined 110 bps in the reported quarter.
Cash Position
As of Sep 30, 2018, Beacon Roofing reported cash and cash equivalents of $129.9 million, down from $138.3 million reported on Sep 30, 2017. The company generated $539.4 million cash from operating activities in fiscal 2018 compared with $315.2 million in fiscal 2017.
Fiscal 2018 Review
Beacon Roofing reported adjusted earnings of $2.70 per share, which inched up 0.7% year over year. Also, revenues of $6.42 billion in fiscal 2018 were up 46.6% year over year. Notably, both the top and bottom lines marked annual record performances for the company. However, both the reported figures lagged the consensus mark by 1.2% and 10.3%, respectively.
On a reported basis, the company recorded fiscal 2018 earnings of $1.05 per share compared with $1.64 a year ago. However, adjusted EBITDA margin in fiscal 2018 contracted 80 bps from a year ago.
2019 Guidance
For fiscal 2019, the company projects total sales in the range of $7-$7.35 billion. While Allied is expected to contribute approximately $600 million during the fiscal first quarter of 2019, Tri-State and Atlas are likely to add nearly $30 million during fiscal 2019. Organically, sales are anticipated to grow in the mid-single-digit range.
Adjusted EBITDA is expected in the range of $540-$610 million, and adjusted earnings per share are likely to be between $2.90 and $3.35.
Share Price Performance
Shares of Beacon Roofing have declined 56.5% compared with its industry’s fall of 6.5% year to date. Earnings estimates for fiscal 2019 have also trended downward by 0.3% over the past seven days.
Zacks Rank and Stocks to Consider
Beacon Roofing currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include Tecnoglass Inc. (TGLS - Free Report) , GMS Inc. (GMS - Free Report) , and Darden Restaurants, Inc. (DRI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tecnoglass, GMS and Darden’s EPS growth rate for the current year is expected to be 134.4%, 64.2% and 16.8%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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