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Beacon Roofing (BECN) Q1 Earnings & Revenues Top, Shares Up
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Beacon Roofing Supply, Inc. (BECN - Free Report) reported first-quarter fiscal 2019 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate, given higher revenues and gross margin. Shares of the company gained more than 6% in the after-hour trading session following the earnings release.
Adjusted earnings of 60 cents per share surpassed the consensus estimate of 56 cents by 7.1%. However, the reported figure decreased 11.8% from 68 cents a year ago. The year-over-year downside was primarily due to higher operating expenses. Also, increased interest expenses along with preferred dividend payments associated with the acquisition of Allied added to the woes.
On a reported basis, the company incurred a loss of 10 cents per share against earnings of 98 cents a year ago.
Beacon Roofing, one of the largest distributors of residential as well as commercial roofing materials and complementary building products, posted record sales of $1.72 billion, up 53.4% year over year. Also, the reported figure topped the consensus mark of $1.66 billion by 3.6%.
The record sales were positively impacted by strategic acquisitions of Allied, Tri-State and Atlas. That said, organic sales declined 3.5% year over year. Pricing was up about 7%, with gains across all the three product categories.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Sales in the Residential roofing product segment grew 24.4% and that of Non-residential roofing product segment increased 27.6% from a year ago. Complementary products’ sales surged a whopping 178.9% year over year. However, existing markets sales (excluding acquisitions) decreased 1.9% as a result of bad weather conditions.
Cost of goods sold (accounting for 74.7% of net sales) of $1,286.1 million climbed 50.9% year over year. Gross profit came in at $435.6 million, which was significantly up 61.5% from a year ago. Also, gross margin expanded 130 basis points (bps) to 25.3%, benefiting from the favorable margin profile of acquired businesses as well as synergy contributions related to Allied.
However, operating expenses grew 80.1% year over year during the quarter.
Resultantly, Beacon Roofing’s operating income of $38.3 million declined from the prior-year figure of $49.1 million. Operating margin contracted 220 bps to 2.1% in the quarter.
Adjusted EBITDA increased 41.6% but EBITDA margin declined 60 bps in the reported quarter.
Cash Position
As of Dec 31, 2018, Beacon Roofing reported cash and cash equivalents of $18.4 million, down from $63.8 million reported in the corresponding period of 2017. The company used $336.9 million cash from operating activities in the fiscal first quarter compared with $40.5 million a year ago.
2019 Guidance Reiterated
For fiscal 2019, the company projects total sales in the range of $7-$7.35 billion. 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. Free cash flow is expected in the $200-$300 million range.
Other top-ranked stocks in the Zacks Retail-Wholesale sector include Fastenal Company (FAST - Free Report) , Lowe's Companies, Inc. (LOW - Free Report) and Lumber Liquidators Holdings, Inc. (LL - Free Report) , each carrying a Zacks Rank #2.
Fastenal and Lowe's EPS growth rate for the current year is expected to be 7.6% and 18.5%, respectively.
Lumber Liquidators’ three-five year expected EPS growth rate is pegged at 27.5%.
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Beacon Roofing (BECN) Q1 Earnings & Revenues Top, Shares Up
Beacon Roofing Supply, Inc. (BECN - Free Report) reported first-quarter fiscal 2019 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate, given higher revenues and gross margin. Shares of the company gained more than 6% in the after-hour trading session following the earnings release.
Adjusted earnings of 60 cents per share surpassed the consensus estimate of 56 cents by 7.1%. However, the reported figure decreased 11.8% from 68 cents a year ago. The year-over-year downside was primarily due to higher operating expenses. Also, increased interest expenses along with preferred dividend payments associated with the acquisition of Allied added to the woes.
On a reported basis, the company incurred a loss of 10 cents per share against earnings of 98 cents a year ago.
Beacon Roofing, one of the largest distributors of residential as well as commercial roofing materials and complementary building products, posted record sales of $1.72 billion, up 53.4% year over year. Also, the reported figure topped the consensus mark of $1.66 billion by 3.6%.
The record sales were positively impacted by strategic acquisitions of Allied, Tri-State and Atlas. That said, organic sales declined 3.5% year over year. Pricing was up about 7%, with gains across all the three product categories.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise | Beacon Roofing Supply, Inc. Quote
Segment Details
Sales in the Residential roofing product segment grew 24.4% and that of Non-residential roofing product segment increased 27.6% from a year ago. Complementary products’ sales surged a whopping 178.9% year over year. However, existing markets sales (excluding acquisitions) decreased 1.9% as a result of bad weather conditions.
Cost of goods sold (accounting for 74.7% of net sales) of $1,286.1 million climbed 50.9% year over year. Gross profit came in at $435.6 million, which was significantly up 61.5% from a year ago. Also, gross margin expanded 130 basis points (bps) to 25.3%, benefiting from the favorable margin profile of acquired businesses as well as synergy contributions related to Allied.
However, operating expenses grew 80.1% year over year during the quarter.
Resultantly, Beacon Roofing’s operating income of $38.3 million declined from the prior-year figure of $49.1 million. Operating margin contracted 220 bps to 2.1% in the quarter.
Adjusted EBITDA increased 41.6% but EBITDA margin declined 60 bps in the reported quarter.
Cash Position
As of Dec 31, 2018, Beacon Roofing reported cash and cash equivalents of $18.4 million, down from $63.8 million reported in the corresponding period of 2017. The company used $336.9 million cash from operating activities in the fiscal first quarter compared with $40.5 million a year ago.
2019 Guidance Reiterated
For fiscal 2019, the company projects total sales in the range of $7-$7.35 billion. 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. Free cash flow is expected in the $200-$300 million range.
Zacks Rank and Other Stocks to Consider
Beacon Roofing currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the Zacks Retail-Wholesale sector include Fastenal Company (FAST - Free Report) , Lowe's Companies, Inc. (LOW - Free Report) and Lumber Liquidators Holdings, Inc. (LL - Free Report) , each carrying a Zacks Rank #2.
Fastenal and Lowe's EPS growth rate for the current year is expected to be 7.6% and 18.5%, respectively.
Lumber Liquidators’ three-five year expected EPS growth rate is pegged at 27.5%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>