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Beacon Roofing (BECN) Q1 Earnings Lag Estimates, Down Y/Y

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Beacon Roofing Supply, Inc. (BECN - Free Report) reported lower-than-expected earnings and net sales during the quarter. Also, its bottom line declined from the prior-year quarter’s figure due to increased depreciation expenses along with high costs in the fleet repairs, health care and customer-specific event expenses. Shares of the company fell slightly in the after-hour trading session on Feb 3, following news release.

Beacon Roofing reported adjusted earnings of 32 cents per share, which missed the Zacks Consensus Estimate of 43 cents by 25.6%. The reported figure declined 46.7% from 60 cents in the year-ago quarter.

Net sales of $1,675 billion lagged the consensus mark of $1,715 billion by 2.3%. The figure also declined 2.7% year over year. Lower hurricane-related demand impacted the results. Residential roofing product sales and complementary product sales declined 4.1% and 3.1%, respectively. However, non-residential roofing product sales inched up 0.2% year over year.

However, organic growth in regions, unaffected by hurricane, was flat year over year during the quarter.

Operating Hghlights

Cost of goods sold (contributing 75.5% to net sales) totaled $1,264.4 million, up 0.8% year over year. Gross margin expanded 20 basis points (bps) to 24.5% but contracted 80 bps year over year.

Adjusted EBITDA margin contracted 150 bps to 5.6%.

Segment Details

Sales in the Residential roofing product segment (contributing 41.9% to total first-quarter fiscal 2020 sales) fell 4.1% year over year to $702.2 million. Sales in the Non-residential roofing product unit (25.1% to total sales) inched up 0.2% year over year to $420.9 million.

Moreover, sales in the Complementary products (33% to total sales) declined 3.1% year over year to $552 million. The decline was mainly due to modest volume declines in deflationary pricing in select categories, including steel studs, lumber and wallboard.

Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise

 

Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise

Beacon Roofing Supply, Inc. price-consensus-eps-surprise-chart | Beacon Roofing Supply, Inc. Quote

 

Cash Position

As of Dec 31, 2019, Beacon Roofing had cash and cash equivalents of $43.7 million, up from $18.4 million at 2018-end. Cash used in operations was reported at $125.3 million compared with $336.9 million reported a year ago.

Zacks Rank & Stocks to Consider

Beacon Roofing currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Retail And Wholesale sector include MarineMax, Inc. (HZO - Free Report) , Dillard's, Inc. (DDS - Free Report) and Lowe's Companies, Inc. (LOW - Free Report) . MarineMax and Dillard's sport a Zacks Rank #1, while Lowe's Companies carries a Zacks Rank #2 (Buy).

MarineMax 2020 earnings are expected to rise 17.2%.

Dillard's has trailing four-quarter positive earnings surprise of 7.7%, on average. The company’s earnings beat estimates in two of the last four quarters.

Lowe's Companies has three-five year expected earnings per share growth rate of 14%.

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