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Beacon Roofing (BECN) Q2 Loss In Line, Margins Increase Y/Y

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Beacon Roofing Supply, Inc. (BECN - Free Report) reported second-quarter fiscal 2020 results, wherein the bottom line met the Zacks Consensus Estimate and improved from the prior-year quarter. The improved results were mainly backed by strong sales (particularly until mid-March), stable margins and cost-control measures.

Despite being declared an essential business in all markets served, the company witnessed significant disruption post the declaration of the coronavirus outbreak as pandemic in mid-March. In April, daily sales declined nearly 20% from the prior-year period.

Nonetheless, it is looking for opportunities to improve productivity and enhance customer service through its industry-leading digital platform. Also, the company has implemented various cost-saving actions in response to the COVID-19 outbreak.

Quarter in Detail

Beacon Roofing reported adjusted loss of 27 cents per share, narrower than the year-ago loss of 45 cents per share.

Beacon Roofing Supply Inc Price, Consensus and EPS Surprise

Net sales of $1.46 billion marginally surpassed the consensus mark of $1.45 billion. The figure also grew 2.1% year over year, backed by certain contractor conversion initiatives, national account sales and continued support from industry-leading digital platform. However, these positives were partially offset by comparatively lower hurricane-related demand.

Residential roofing product sales and complementary product sales declined 1.3% and 0.4%, respectively. However, non-residential roofing product sales improved 2.6% year over year.

Daily sales were up 0.5% year over year. The metric was up 5% year over year before the COVID-19 outbreak in mid-March. Non-residential roofing daily sales grew 10.8% from the prior year.

Operating Highlights

Cost of goods sold (contributing 76.5% to net sales) totaled $1,116.1 million, up 2% year over year. Gross margin expanded 10 basis points (bps) to 23.5%.

Adjusted EBITDA surged 42% year over year and margin grew 80 bps to 2.7%, reflecting strong operating cost-control measures.

Segment Details

Sales in the Residential roofing product segment (contributing 40.5% to total sales) fell 1.3% year over year to $591.2 million. That in Complementary products (35.3%) slipped 0.4% year over year to $514.3 million. Nonetheless, sales in the Non-residential roofing product unit (24.2%) increased 12.6% year over year to $353 million.
Cash Position

As of Mar 31, 2020, Beacon Roofing had cash and cash equivalents of $781.2 million, significantly up from $72.3 million at fiscal 2019-end. Long-term debt was $2.5 billion, almost in line with the last reported quarter and the year-ago figure.

Cash used in operations was reported at $150.8 million in the first six months of fiscal 2020 compared with $242.1 million a year ago.

Zacks Rank & Peer Release

Beacon Roofing — which shares space with Builders FirstSource, Inc. (BLDR - Free Report) and BMC Stock Holdings, Inc. (BMCH - Free Report) in the Zacks Building Products – Retail industry — currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fastenal Company (FAST - Free Report) reported impressive first-quarter 2020 results. The top and bottom lines surpassed the respective Zacks Consensus Estimate despite persistent decline in activity levels. Moreover, activity levels weakened significantly in the second half of March, in response to societal actions that were undertaken to address the coronavirus pandemic.

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