During the six month period ended March 31, 2016, the Company
issued Common Stock with a value of $302 million and replacement awards with a value of $5 million in connection with the acquisition
of Roofing Supply Group, LLC, which are accounted for as a non-cash investing activity.
Notes to Condensed Consolidated Financial
Statements
(Unaudited; In thousands, except share and
per share data or otherwise indicated)
Beacon Roofing Supply, Inc. (the
“Company”) was incorporated in the state of Delaware on August 22, 1997 and is the largest publicly traded
distributor of residential and non-residential roofing materials and complementary building products in the United States and
Canada. The Company operates its business under regional and local trade names and as of March 31, 2017 the Company serviced
customers in 47 states within the United States and 6 provinces in Canada. The Company’s current material subsidiaries
are Beacon Sales Acquisition, Inc., Beacon Canada, Inc. and Beacon Roofing Supply Canada Company.
2.
|
Summary of Significant Accounting Policies
|
Basis of Presentation
Beacon Roofing Supply, Inc. (the “Company”)
prepared the condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”)
for interim financial information and the requirements of the Securities and Exchange Commission (“SEC”). As permitted under those
rules, certain footnotes or other financial information have been condensed or omitted. The balance sheet as of March 31, 2016
has been presented for a better understanding of the impact of seasonal fluctuations on the Company's financial condition.
In management's opinion, the financial statements
include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company's financial
position and operating results. The results for the three and six-month periods ended March 31, 2017 are not necessarily indicative
of the results to be expected for the twelve months ending September 30, 2017 (“fiscal year 2017” or “2017”).
The three-month periods ended March 31,
2017 and 2016 each had 64 business days and the six-month periods ended March 31, 2017 and March 31, 2016 had 125 and 126 business
days, respectively.
These interim Condensed Consolidated Financial
Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the
Company’s fiscal year 2016 (“2016”) Annual Report on Form 10-K for the year ended September 30, 2016.
Use of Estimates
The preparation of consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these
consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase
price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates.
Recent Accounting Pronouncements - Adopted
In April 2015, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “
Simplifying the
Presentation of Debt Issuance Costs
” to simplify the presentation of debt issuance costs. This guidance requires that
debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying
amount of the associated debt liability, consistent with the required presentation for debt discounts. This new standard is effective
for financial statements issued for annual and interim reporting periods beginning after December 15, 2015 and early adoption is
permitted. The Company elected to early adopt this new guidance effective October 1, 2015 and applied the new guidance retrospectively
to all prior periods presented in the financial statements. The adoption of this standard changed the Company’s previous
practice of presenting debt issuance costs as an asset and resulted in the reduction of total assets and total liabilities in an
amount equal to the balance of unamortized debt issuance costs at each balance sheet date presented. Debt issuance costs that are
now presented as a direct reduction from the carrying amount of the associated debt liability amounted to $22.9 million as of March
31, 2017, $25.2 million as of September 30, 2016, and $28.7 million as of March 31, 2016.
In September 2015, the FASB issued ASU 2015-16,
“
Simplifying the Accounting for Measurement-Period Adjustments
.” This guidance eliminates the requirement to
restate prior period financial statements for measurement period adjustments related to business combinations. It requires that
the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting
period in which the adjustment is identified. In addition, the portion of the adjustment recorded in the current period that would
have been recognized in prior periods had the adjustment been identified at that time must be presented, by line item, either on
the face of the income statement or in the accompanying notes. This new standard is effective for annual and interim reporting
periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance
effective January 1, 2016 and the impact on the financial statements and related disclosures through the quarter ended March 31,
2017 was immaterial.
In November 2015, the FASB issued ASU 2015-17,
"
Balance Sheet Classification of Deferred Taxes
." This guidance requires entities to present deferred tax assets
and deferred tax liabilities as noncurrent in a classified balance sheet. This new standard is effective for annual and interim
reporting periods beginning after December 15, 2016 and early adoption is permitted. Entities are permitted to apply this guidance
either prospectively or retrospectively. The Company adopted the guidance as of March 31, 2016 and applied it retrospectively to
all prior periods. As a result, the Company reclassified its current deferred tax balances of $31.9 million to non-current deferred
taxes as of September 30, 2015.
Recent Accounting Pronouncements - Not Yet Adopted
In May 2014, the FASB issued
ASU 2014-09, “
Revenue from Contracts with Customers
.” This guidance requires an entity to recognize the
amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers, and will
replace most existing revenue recognition guidance when it becomes effective. This new standard is effective for public
business entities for fiscal years beginning on or after January 1, 2018, and early adoption is permitted for annual periods
beginning after December 31, 2016. The standard permits the use of either the full retrospective or modified retrospective
adoption methods. The Company is continuing to perform a detailed evaluation, using a five-step model specified in the
guidance, to assess the impacts of the new standard and expects to apply the guidance using the modified retrospective
method. Based on the Company’s knowledge of its revenue transactions, the Company does not expect the adoption of this new guidance
to have a material impact on its financial statements, but does expect that it will result in additional disclosures
regarding revenue recognition policies.
In August 2014, the FASB issued ASU No.
2014-15, “
Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity's Ability
to Continue as a Going Concern
.” The guidance updates management's responsibility to evaluate whether there is substantial
doubt about an entity's ability to continue as a going concern and provide related footnote disclosures. For each reporting period,
management is required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability
to continue as a going concern within one year from when the financial statements are issued. This new standard is effective for
the annual reporting period ending after December 15, 2016 as well as all annual and interim reporting periods thereafter, and
early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial
statements and related disclosures.
In July 2015, the FASB issued ASU 2015-11,
“
Inventory: Simplifying the Measurement of Inventory.
” This guidance applies to inventory valued at first-in,
first-out (FIFO) or average cost and requires inventory to be measured at the lower of cost and net realizable value, rather than
at the lower of cost or market. This new standard is effective on a prospective basis for annual and interim reporting periods
beginning after December 15, 2016. The Company does not expect the adoption of this new guidance to have a material impact on its
financial statements and related disclosures.
In February 2016, the FASB issued ASU
2016-02, “
Leases
.” This guidance will replace most existing accounting for lease guidance when it becomes
effective. This new standard is effective using the modified retrospective approach for annual and interim and reporting
periods beginning after December 15, 2018 and early adoption is permitted. The guidance will require the Company to record a
right of use asset and a lease liability for most of the Company’s leases, including those currently treated as
operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the
practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial
statements and related disclosures is still being quantified.
In March 2016, the FASB issued ASU
2016-09, “
Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting.”
This guidance is intended to simplify several aspects of the accounting for share-based payment transactions, including the
accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the
statement of cash flows. The provisions of this standard are effective for reporting periods beginning after December 15,
2016 and early adoption is permitted in any interim or annual period, but the Company is not early adopting this guidance.
The adoption of this guidance will likely have a positive impact on the Company’s income tax provision, net income and
operating cash flows in periods in which employees elect to exercise their vested stock options or when restrictions on
share-based awards lapse (based on our comparison of our deferred tax assets for share-based compensation to the current
intrinsic value of the underlying awards).
In June 2016, the FASB issued ASU 2016-13,
“
Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.”
This guidance
is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based
on expected losses rather than incurred losses. This new standard is effective for annual and interim reporting periods beginning
after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the impact that this guidance may
have on its financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-01,
“
Business Combinations: Clarifying the Definition of a Business”
This guidance is intended to assist entities
when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual
and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. Based on the Company’s current
business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and
related disclosures.
In January 2017, the FASB issued ASU 2017-04,
“
Simplifying the Accounting for Goodwill Impairment.”
This guidance is intended to introduce a simplified approach
to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring
impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual
and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. Based on the Company’s current
business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and
related disclosures.
Roofing Supply Group
On October 1, 2015, the Company acquired
100% of the equity of Roofing Supply Group, LLC ("RSG”), a leading roofing products distributor owned by investment
firm Clayton, Dubilier & Rice ("CD&R"). RSG’s results of operations have been included with Company’s
consolidated results beginning October 1, 2015. RSG distributed roofing supplies and related materials from 85 locations across
25 states as of October 1, 2015.
Total consideration paid for RSG was approximately
$1.17 billion, out of which $288.2 million was in cash, $306.8 million of Company’s common stock and option replacement awards,
and $574.4 million in refinancing of RSG’s debt. The RSG long-term debt was repaid simultaneously with the proceeds of a
new ABL Revolver, Term Loan and Senior Notes (see Note 8).
In connection with the RSG acquisition,
the Company was required to issue equity awards to certain RSG employees in replacement of RSG equity awards that were cancelled
at closing. The replacement awards consisted of options to purchase 661,349 shares of the Company’s common stock. The terms
and fair value of these awards approximated the cancelled RSG awards on the issuance date. The fair value of the replacement awards
associated with services rendered through the date of the RSG acquisition was recognized as a component of the total acquisition
consideration, and the remaining fair value of the replaced awards associated with post RSG acquisition services will be recognized
as an expense on a straight-line basis over the remaining service period.
The RSG acquisition has been accounted for
as a business combination in accordance with the requirements of
ASC 805 Business Combinations
. The acquisition price has
been allocated among assets acquired and liabilities assumed at fair value based on information currently available, with the excess
recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of RSG.
These come from the synergies that are obtained in operating the branches as part of a larger network, and from an experienced
employee base skilled at managing a distribution business. As of September 30, 2016, the Company had finalized the acquisition
accounting entries for the RSG acquisition, detailed as follows (in thousands):
Cash
|
|
$
|
16,451
|
|
Accounts receivable
|
|
|
177,251
|
|
Inventory
|
|
|
179,651
|
|
Other current assets
|
|
|
50,000
|
|
Property, plant, and equipment
|
|
|
55,159
|
|
Other intangible assets
|
|
|
382,600
|
|
Goodwill
|
|
|
617,477
|
|
Current liabilities
|
|
|
(252,190
|
)
|
Non-current liabilities
|
|
|
(56,949
|
)
|
Total purchase price
|
|
$
|
1,169,450
|
|
RSG’s future growth attributable to
new customers, geographic market presence and assembled workforce are additional assets that are not separable and which contributed
to recorded goodwill, of which $86.1 million was tax deductible as of the October 1, 2015 RSG acquisition date. All of the Company’s
goodwill plus the indefinite-lived trade name are tested for impairment annually, and all acquired goodwill and intangible assets
are subject to review for impairment should future indicators of impairment develop. The fair value of acquired RSG accounts receivables
was $177.3 million, with the gross contractual amount being $185.9 million.
Additional Acquisitions – Fiscal
Year 2017
During the six months
ended March 31, 2017, the Company acquired 12 branches from the following four acquisitions:
|
·
|
On December 16, 2016, the Company purchased
certain assets of BJ Supply Company, a distributor of roofing and related building products with 1 branch serving Pennsylvania
and New Jersey and annual sales of approximately $4 million.
|
|
·
|
On January 3, 2017, the Company acquired
American Building & Roofing, Inc., a distributor of mainly residential roofing and related building products with 7 branches
around Washington State and annual sales of approximately $36 million.
|
|
·
|
On January 9, 2017, the Company acquired
Eco Insulation Supply, a distributor of insulation and related accessories with 1 branch serving Connecticut, Southern New England
and the New York City metropolitan area and annual sales of approximately $8 million.
|
|
·
|
On March 1, 2017, the Company acquired
Acme Building Materials, Inc., a distributor of residential roofing and related building products with 3 branches in Eastern Michigan
and annual sales of approximately $13 million.
|
The Company recorded the acquired assets
and liabilities related to these transactions at their estimated fair values as of the respective acquisition dates, with resulting
goodwill of $31.0 million (all of which is deductible for tax purposes) and $15.9 million in intangible assets associated with
these other acquisitions as of March 31, 2017.
Additional Acquisitions – Fiscal
Year 2016
During fiscal year 2016, the Company acquired
42 branches from the following seven additional acquisitions:
|
·
|
On December 1, 2015, the Company purchased certain assets of RCI Roofing Supply, a distributor of residential and commercial roofing and related products with 5 branches operating in Nebraska, Iowa and Colorado and annual sales of approximately $23 million. The Company has finalized the acquisition accounting entries for this acquisition.
|
|
·
|
On December 18, 2015, the Company acquired 100% of the equity interests of Roofing and Insulation Supply, a distributor primarily of residential and commercial insulation along with roofing and related products with 20 branches spanning 13 states operating across New England, the Mid-Atlantic, the Southeast, the Upper Midwest, Texas and Colorado and annual sales of approximately $70 million. The Company has finalized the acquisition accounting entries for this acquisition.
|
|
·
|
On December 29, 2015, the Company purchased certain assets of Statewide Wholesale, a distributor of residential and commercial roofing and related products with 1 branch located in Denver, Colorado and annual sales of approximately $15 million. The Company has finalized the acquisition accounting entries for this acquisition.
|
|
·
|
On April 1, 2016, the Company purchased certain assets of Atlantic Building Products, a distributor of decking, windows, siding, and related products with 2 branches operating in eastern Pennsylvania and annual sales of approximately $5 million.
|
|
·
|
On April 1, 2016, the Company purchased certain assets of Lyf-Tym Building Products, a distributor of siding, windows, gutters, vinyl railings, and related products with 6 branches operating in North Carolina and Virginia and annual sales of approximately $20 million.
|
|
·
|
On May 2, 2016, the Company purchased certain assets of Fox Brothers Company, a distributor of roofing, siding, windows, doors, and related products with 4 branches operating in Michigan and annual sales of approximately $35 million.
|
|
·
|
On June 1, 2016, the Company acquired 100% of the equity interests of Woodfeathers, Inc., a distributor of primarily residential roofing and related products with 4 branches operating in Oregon and Washington and annual sales of approximately $30 million.
|
The Company recorded the acquired assets
and liabilities related to these transactions at their estimated fair values as of the respective acquisition dates, with resulting
goodwill of $84.8 million ($59.8 million of which is deductible for tax purposes) and $60.8 million in intangible assets associated
with these other acquisitions.
Acquisitions – Additional Information
For those acquisitions where the acquisition
accounting entries have yet to be finalized, the Company’s allocation of the purchase price is subject to change on receipt
of additional information, including, but not limited to, the finalization of asset valuations (intangible and fixed) and income
tax accounting.
4.
|
Net Income
(Loss) per Share
|
Basic net income per common share is computed
by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common
share is computed by dividing net income by the weighted-average number of common shares and dilutive common share equivalents
then outstanding using the treasury stock method. Common share equivalents consist of the incremental common shares issuable upon
the exercise of stock options and vesting of restricted stock awards.
The following table presents the basic and
diluted weighted-average shares outstanding for each period presented:
|
|
Three Months Ended
March 31,
|
|
|
Six Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic
|
|
|
60,141,580
|
|
|
|
59,295,990
|
|
|
|
60,041,332
|
|
|
|
59,133,569
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
633,007
|
|
|
|
696,112
|
|
Restricted stock units
|
|
|
-
|
|
|
|
-
|
|
|
|
395,599
|
|
|
|
248,171
|
|
Weighted-average common shares outstanding, diluted
|
|
|
60,141,580
|
|
|
|
59,295,990
|
|
|
|
61,069,938
|
|
|
|
60,077,852
|
|
The following table includes the number
of shares that may be dilutive common shares in the future. These shares were not included in the computation of diluted net income
per share because the effect was either anti-dilutive or the requisite performance conditions were not met.
|
|
Three Months Ended
March 31,
|
|
|
Six Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Stock options
|
|
|
270,428
|
|
|
|
665,281
|
|
|
|
416,085
|
|
|
|
667,251
|
|
Restricted stock units
|
|
|
-
|
|
|
|
88,407
|
|
|
|
123,780
|
|
|
|
88,407
|
|
The following table presents the activity
included in stockholders’ equity during the six months ended March 31, 2017 (in thousands, except share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Loss
|
|
|
Equity
|
|
Balance at September 30, 2016
|
|
|
59,890,885
|
|
|
$
|
598
|
|
|
$
|
694,564
|
|
|
$
|
647,322
|
|
|
$
|
(18,657
|
)
|
|
$
|
1,323,827
|
|
Issuance of common stock, net of shares withheld for taxes
|
|
|
364,435
|
|
|
|
4
|
|
|
|
7,140
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,144
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
7,574
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,574
|
|
Other comprehensive income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(451
|
)
|
|
|
(451
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,074
|
|
|
|
-
|
|
|
|
11,074
|
|
Balance at March 31, 2017
|
|
|
60,255,320
|
|
|
$
|
602
|
|
|
$
|
709,278
|
|
|
$
|
658,396
|
|
|
$
|
(19,108
|
)
|
|
$
|
1,349,168
|
|
Common and Preferred Stock
The Company is authorized to issue 100 million
shares of common stock and 5 million shares of preferred stock. As of March 31, 2017, September 30, 2016, and March 31, 2016 there
were 60,255,320, 59,890,885 and 59,521,648 shares of common stock issued and outstanding, respectively, and no preferred stock
outstanding as of any period end.
Accumulated Other Comprehensive Loss
Other comprehensive income (loss) is comprised
of certain gains and losses that are excluded from net income under GAAP and instead recorded as a separate element of stockholders’
equity. The Company’s other comprehensive income (loss) consists of foreign currency translation adjustments as well as
unrealized gains or losses on the Company’s derivative contracts.
The following table summarizes the components
of and changes in accumulated other comprehensive loss (in thousands):
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Foreign
|
|
|
Derivative
|
|
|
Other
|
|
|
|
Currency
|
|
|
Financial
|
|
|
Comprehensive
|
|
|
|
Translation
|
|
|
Instruments
|
|
|
Loss
|
|
Balance as of September 30, 2016
|
|
$
|
(18,269
|
)
|
|
$
|
(388
|
)
|
|
$
|
(18,657
|
)
|
Other comprehensive loss before reclassifications
|
|
|
(839
|
)
|
|
|
-
|
|
|
|
(839
|
)
|
Reclassifications out of other comprehensive loss
|
|
|
-
|
|
|
|
388
|
|
|
|
388
|
|
Balance as of March 31, 2017
|
|
$
|
(19,108
|
)
|
|
$
|
-
|
|
|
$
|
(19,108
|
)
|
6.
|
Stock-based Compensation
|
On February 9, 2016, the shareholders of
the Company approved the Amended and Restated Beacon Roofing Supply, Inc. 2014 Stock Plan (the “2014 Plan”). The 2014
Plan provides for discretionary awards of stock options, stock awards, restricted stock units, and stock appreciation rights (“SARs”)
for up to 5,000,000 shares of common stock to selected employees and non-employee directors. The 2014 Plan mandates that all forfeited,
expired, and withheld shares, including those from the predecessor plans, be returned to the 2014 Plan and made available for issuance.
As of March 31, 2017, there were 4,051,683 shares of common stock available for issuance.
Prior to the 2014 Plan, the Company maintained
the amended and restated Beacon Roofing Supply, Inc. 2004 Stock Plan (the “2004 Plan”). Upon shareholder approval of
the 2014 Plan, the Company ceased issuing equity awards from the 2004 Plan and mandated that all future equity awards will be issued
from the 2014 Plan.
For all equity awards granted prior to October
1, 2014, in the event of a change in control of the Company, all awards are immediately vested. Beginning in fiscal 2015, equity
awards contain a “double trigger” change in control mechanism. Unless an award is continued or assumed by a public
company in an equitable manner, an award shall become fully vested immediately prior to a change in control (at 100% in the case
of a performance-based restricted stock award). If an award is so continued or assumed, vesting will continue in accordance with
the terms of the award, unless there is a qualifying termination within one-year following the change in control, in which event
the award shall become fully vested immediately (at 100% in the case of a performance-based restricted stock award).
Stock Options
Non-qualified stock options generally expire
10 years after the grant date and, except under certain conditions, the options are subject to continued employment and vest in
one-third increments over a three-year period following the grant dates.
The fair values of the options granted during
the six months ended March 31, 2017 were estimated on the dates of grants using the Black-Scholes option-pricing model with the
following weighted-average assumptions:
|
|
|
|
Risk-free interest rate
|
|
|
1.97
|
%
|
Expected volatility
|
|
|
28.83
|
%
|
Expected life (in years)
|
|
|
5.30
|
|
Dividend yield
|
|
|
—
|
|
The following table summarizes all stock
option activity for the period presented (in thousands, except share, per share, and time period amounts):
|
|
Options
Outstanding
|
|
|
Weighted-
Average
Exercise Price
|
|
|
Weighted-Average
Remaining
Contractual Term
(Years)
|
|
|
Aggregate
Intrinsic
Value
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2016
|
|
|
2,312,789
|
|
|
$
|
25.55
|
|
|
|
6.3
|
|
|
$
|
38,225
|
|
Granted
|
|
|
245,818
|
|
|
|
47.40
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(316,827
|
)
|
|
|
21.20
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(22,271
|
)
|
|
|
24.19
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2017
|
|
|
2,219,509
|
|
|
$
|
28.60
|
|
|
|
6.5
|
|
|
$
|
45,630
|
|
Vested and expected to vest after March 31, 2017
|
|
|
2,167,911
|
|
|
$
|
28.51
|
|
|
|
6.5
|
|
|
$
|
44,759
|
|
Exercisable as of March 31, 2017
|
|
|
1,487,885
|
|
|
$
|
25.40
|
|
|
|
5.4
|
|
|
$
|
35,350
|
|
|
1
|
Aggregate intrinsic value as represents the difference
between the closing fair value of the underlying common stock and the exercise price of outstanding, in-the-money options on the
date of measurement
|
During the three months ended March 31,
2017 and 2016, the Company recorded stock-based compensation expense related to stock options of $1.3 million and $1.6 million,
respectively. During the six months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related
to stock options of $2.6 million and $7.7 million, respectively. As of March 31, 2017, there was $7.0 million of total unrecognized
compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.1 years.
The following table summarizes additional
information on stock options for the period presented (in thousands, except per share amounts):
|
|
Six Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Weighted-average fair value of stock options granted
|
|
$
|
14.21
|
|
|
$
|
12.89
|
|
Total fair value of stock options vested
|
|
|
4,998
|
|
|
|
11,020
|
|
Total intrinsic value of stock options exercised
|
|
|
7,906
|
|
|
|
14,415
|
|
Restricted Stock Units
Restricted stock unit (“RSU”)
awards granted to employees are subject to continued employment and generally vest after three years. The Company also grants certain
RSU awards to management that contain an additional vesting condition tied directly to a defined performance metric for the Company.
The actual number of RSUs that will vest can range from 0% to 150% of the grant, depending upon actual Company performance below
or above the target level. The Company estimates performance in relation to the established target when determining the projected
number of RSUs that will vest and calculating the compensation cost related to these awards.
RSUs granted to non-employee directors are
subject to continued service and vest after one year (except under certain conditions). Generally, the common shares underlying
the RSUs are not eligible for distribution until the director’s service on the Board has terminated. For non-employee director
RSU grants made prior to fiscal year 2014, the share distribution date is six months after the director’s termination of
service on the board. RSU grants made in fiscal year 2014 and thereafter have no such holding period requirement. Additionally,
beginning in fiscal year 2016 non-employee directors holding common stock and outstanding vested unexercised/unsettled equity awards
with a fair value that is greater than or equal to five times the annual cash retainer may elect to have future grants settle simultaneously
with vesting.
The following table summarizes all restricted
stock unit activity for the period presented:
|
|
RSUs
Outstanding
|
|
|
Weighted-Average
Grant Date Fair Value
|
|
Balance at September 30, 2016
|
|
|
705,434
|
|
|
$
|
34.55
|
|
Granted
|
|
|
267,042
|
|
|
|
47.28
|
|
Released
|
|
|
(65,651
|
)
|
|
|
36.33
|
|
Forfeited
|
|
|
(7,463
|
)
|
|
|
44.53
|
|
Balance at March 31, 2017
|
|
|
899,362
|
|
|
$
|
38.27
|
|
Vested and expected to vest after March 31,2017
|
|
|
832,557
|
|
|
$
|
38.27
|
|
During the three months ended March
31, 2017 and 2016, the Company recorded stock-based compensation expense related to restricted stock units of $2.5 million and
$1.9 million, respectively. During the six months ended March 31, 2017 and 2016, the Company recorded stock-based compensation
expense related to restricted stock units of $5.0 million and $3.0 million, respectively. As of March 31, 2017, there was $17.5
million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized
over a weighted-average period of 2.1 years.
The following table summarizes additional
information on RSUs for the period presented (in thousands):
|
|
Six Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Total fair value of RSUs released
|
|
$
|
2,385
|
|
|
$
|
369
|
|
Total intrinsic value of RSUs released
|
|
|
3,071
|
|
|
|
403
|
|
7.
|
Goodwill and Intangible Assets
|
Goodwill
The following table sets forth the change
in the carrying amount of goodwill for the Company during the six months ended March 31, 2017 and 2016, respectively (in thousands):
Balance at September 30, 2015
|
|
$
|
496,415
|
|
Acquisition of RSG
|
|
|
617,634
|
|
Other acquisitions
|
|
|
47,608
|
|
Translation and other adjustments
|
|
|
(882
|
)
|
Balance at March 31, 2016
|
|
$
|
1,160,775
|
|
|
|
|
|
|
Balance at September 30, 2016
|
|
$
|
1,197,565
|
|
Acquisitions
|
|
|
31,005
|
|
Translation and other adjustments
|
|
|
(511
|
)
|
Balance at March 31, 2017
|
|
$
|
1,228,059
|
|
The change in the carrying amount of goodwill
for the six months ended March 31, 2017 and 2016 is primarily attributable to the Company’s acquisitions finalized during
the respective periods presented (see Note 3).
Intangible Assets
In connection with transactions finalized
during the six months ended March 31, 2017 and fiscal year 2016, the Company recorded intangible assets of $15.9 million (mostly
customer relationships) and $442.6 million ($375.0 million of customer relationships, $4.3 million of amortizable trademarks, and
$63.3 million of indefinite-lived trademarks), respectively. Intangible assets consisted of the following (in thousands, except
time period amounts):
|
|
March 31,
2017
|
|
|
September 30,
2016
|
|
|
March 31,
2016
|
|
|
Weighted-
Average
Remaining
Life
1
(Years)
|
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compete agreements
|
|
$
|
2,824
|
|
|
$
|
3,324
|
|
|
$
|
2,824
|
|
|
|
3.61
|
|
Customer relationships
|
|
|
582,028
|
|
|
|
566,964
|
|
|
|
541,161
|
|
|
|
17.91
|
|
Trademarks
|
|
|
6,670
|
|
|
|
5,400
|
|
|
|
4,600
|
|
|
|
6.60
|
|
Beneficial lease arrangements
|
|
|
960
|
|
|
|
960
|
|
|
|
610
|
|
|
|
10.40
|
|
Total amortizable intangible assets
|
|
|
592,482
|
|
|
|
576,648
|
|
|
|
549,195
|
|
|
|
|
|
Less: Accumulated amortization
|
|
|
(226,025
|
)
|
|
|
(185,674
|
)
|
|
|
(149,663
|
)
|
|
|
|
|
Total amortizable intangible assets, net
|
|
$
|
366,457
|
|
|
$
|
390,974
|
|
|
$
|
399,532
|
|
|
|
|
|
Indefinite lived trademarks
|
|
|
73,050
|
|
|
|
73,050
|
|
|
|
73,050
|
|
|
|
|
|
Total intangibles, net
|
|
$
|
439,507
|
|
|
$
|
464,024
|
|
|
$
|
472,582
|
|
|
|
|
|
For the three month periods ended March
31, 2017 and 2016, we recorded $20.3 million and $17.1 million of amortization expense relating to the above-listed intangible
assets, respectively. For the six month periods ended March 31, 2017 and 2016, we recorded $40.4 million and $32.3 million of amortization
expense relating to the above-listed intangible assets, respectively. The intangible asset lives range from 1 to 20 years and have
a weighted-average remaining life of 17.7 years as of March 31, 2017.
The following table presents the estimated
annual amortization expense for these intangible assets (in thousands):
Year Ending September 30,
|
|
|
|
2017 (Apr - Sept)
|
|
$
|
40,750
|
|
2018
|
|
|
67,713
|
|
2019
|
|
|
55,112
|
|
2020
|
|
|
44,527
|
|
2021
|
|
|
35,378
|
|
Thereafter
|
|
|
122,977
|
|
|
|
$
|
366,457
|
|
8.
|
Financing Arrangements
|
In connection with the RSG Acquisition on
October 1, 2015, the Company entered into various financing arrangements totaling $1.45 billion. A “Senior Secured Credit
Facility” was entered into that is comprised of an asset-based revolving line of credit (“ABL”) of $700.0 million
($350.0 million of which was drawn at closing) and a new $450.0 million term loan (“Term Loan”). The Company also raised
an additional $300.0 million through the issuance of senior notes (the “Senior Notes”).
The proceeds from the Senior Secured Credit
Facility and Senior Notes were used to provide working capital and funds for other general corporate purposes, to refinance or
otherwise extinguish all third-party indebtedness for borrowed money under Company’s and RSG’s existing senior secured
credit facilities and RSG’s unsecured senior notes due 2020, to finance the acquisition, and to pay fees and expenses associated
with the RSG acquisition. The Company incurred financing costs totaling approximately $31.3 million.
The following table summarizes all financing
arrangements the Company has entered into (in thousands):
|
|
March 31,
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Senior Secured Credit Facility
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Lines of Credit:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Revolver, expires October 1, 2020
1
|
|
$
|
269,124
|
|
|
$
|
355,087
|
|
|
$
|
295,690
|
|
Canadian Revolver, expires October 1, 2020
2
|
|
|
-
|
|
|
|
4,574
|
|
|
|
-
|
|
Term Loan, matures October 1, 2022
3
|
|
|
434,912
|
|
|
|
436,380
|
|
|
|
436,632
|
|
Total borrowings under Senior Secured Credit Facility
|
|
|
704,036
|
|
|
|
796,041
|
|
|
|
732,322
|
|
Less: current portion
|
|
|
(4,500
|
)
|
|
|
(4,500
|
)
|
|
|
(4,500
|
)
|
Total long-term borrowings under Senior Secured Credit Facility
|
|
$
|
699,536
|
|
|
$
|
791,541
|
|
|
$
|
727,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Notes, matures October 2023
4
|
|
|
291,689
|
|
|
|
291,049
|
|
|
|
290,410
|
|
Less: current portion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total long-term borrowings under Senior Notes
|
|
$
|
291,689
|
|
|
$
|
291,049
|
|
|
$
|
290,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment Financing Facilities and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment financing facilities, various maturities through September 2021
5
|
|
$
|
17,949
|
|
|
$
|
20,419
|
|
|
$
|
22,855
|
|
Capital lease obligations, various maturities through November 2021
6
|
|
|
22,204
|
|
|
|
25,013
|
|
|
|
25,130
|
|
Total obligations under equipment financing facilities and other
|
|
|
40,153
|
|
|
|
45,432
|
|
|
|
47,985
|
|
Less: current portion
|
|
|
(9,514
|
)
|
|
|
(10,311
|
)
|
|
|
(7,659
|
)
|
Total long-term obligations under equipment financing facilities and other
|
|
$
|
30,639
|
|
|
$
|
35,121
|
|
|
$
|
40,326
|
|
|
1
|
-
|
Effective rates on borrowings are 2.97% as of March 31, 2017; 2.90% as of September 30, 2016; and 2.58% as of March 31, 2016
|
|
2
|
-
|
Effective rates on borrowings are 3.20% as of March 31, 2017, September 30, 2016 and March 31, 2016
|
|
3
|
-
|
Interest rate of 3.50% as of March 31, 2017; 3.50% as of September 30, 2016; 4.00% as of March 31, 2016
|
|
4
|
-
|
Interest rate of 6.38% as of March 31, 2017, September 30, 2016 and March 31, 2016
|
|
5
|
-
|
Fixed interest rates ranging from 2.33% to 3.25% as of March 31, 2017 and September 30, 2016; 2.33% to 4.49% as of March 31, 2016
|
|
6
|
-
|
Fixed interest rates ranging from 2.72% to 10.39% as of March 31, 2017, September 30, 2016, and March 31, 2016
|
Asset-based Line of Credit (“ABL”)
On October 1, 2015, the Company entered
into a $700 million ABL with Wells Fargo Bank, N.A. and a syndicate of other lenders. This ABL consists of revolving loans in both
the United States (“U.S. Revolver”) in the amount of $670.0 million and Canada (“Canada Revolver”) in the
amount of $30.0 million.
The ABL has a maturity date of October 1,
2020. The U.S. Revolver has various tranches of borrowings, bearing interest at rates ranging from 2.39% to 4.50%. The effective
rate of these borrowings is 2.97% and is paid monthly. As of March 31, 2017, the outstanding balance on the U.S. Revolver and Canada
Revolvers, net of debt issuance fees, was $269.1 million. The U.S. Revolver also has outstanding standby letters of credit in the
amount of $10.4 million as of March 31, 2017. Current unused commitment fees on the revolving credit facilities are 0.25% per annum.
There is one financial covenant under the
ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings
before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (as defined in the agreement). Per
the covenant, the Company’s Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter,
calculated on a trailing four quarter basis. The covenant is only applicable when the borrowing availability is less than 10% of
the maximum loan cap or $60.0 million. The ABL is guaranteed jointly and severally and fully and unconditionally by the Company’s
active United States subsidiary.
Term Loan
On October 1, 2015, the Company entered
into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The Term Loan requires quarterly principal
payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its maturity date of October 1,
2022. The interest rate paid is based on a LIBOR rate (with a floor) plus a fixed spread. The Company has the option of selecting
a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments
are made.
On September 16, 2016, the Company refinanced
its Term Loan, lowering the LIBOR floor by 25 basis points and lowering the spread by 25 basis points. As a result of the refinancing,
the Company wrote off $1.6 million of debt issuance costs in interest expense. As of March 31, 2017, the outstanding balance on
the Term Loan, net of debt issuance fees, was $434.9 million. The Term Loan is guaranteed jointly and severally and fully and unconditionally
by the Company’s active United States subsidiary.
Senior Notes
On October 1, 2015, the Company raised $300.0
million by issuing senior notes due 2023 (the “Senior Notes”). The Senior Notes have a coupon rate of 6.38% per annum
and are payable semi-annually in arrears beginning April 1, 2016. There are early payment provisions in the Senior Note indenture
in which the Company would be subject to “make whole” provisions. Management anticipates repaying the notes at the
maturity date of October 1, 2023. As of March 31, 2017 the outstanding balance on the Senior Notes, net of debt issuance fees,
was $291.7 million. The Senior Notes are guaranteed jointly and severally and fully and unconditionally by the Company’s
active United States subsidiary.
Other Information
The Senior Secured Credit Facility and
the previous credit facility it replaced had certain lenders who participated in both arrangements, therefore management accounted
for a portion of this transaction as a debt modification and a portion as a debt extinguishment. In accordance with the accounting
for debt modification, the Company expensed $2.2 million of direct issuance costs incurred and will amortize the previously capitalized
issuance costs over the term of the Senior Secured Credit Facility. The remainder of the settlement of the Company’s previous
financing arrangements was accounted for as debt extinguishment, for which the Company recognized a loss of $0.8 million in the
first quarter of fiscal year 2016.
Equipment Financing Facilities and Other
As of March 31, 2017, the Company had a
$17.9 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments
due through September 2021.
As of March 31, 2017 the Company had $22.2
million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due
through November 2021.
9.
|
Commitments and Contingencies
|
Operating Leases
The Company mostly operates in leased facilities,
which are accounted for as operating leases. The leases typically provide for a base rent plus real estate taxes. Certain of the
leases provide for escalating rents over the lives of the leases and rent expense is recognized over the terms of those leases
on a straight-line basis.
For the three months ended March 31, 2017
and 2016, rent expense was $14.7 million and $14.6 million, respectively. For the six months ended March 31, 2017 and 2016, rent
expense was $28.9 million and $30.6 million, respectively. Sublet income was immaterial for each of these periods.
Contingencies
The Company is subject to loss contingencies
pursuant to various federal, state and local environmental laws and regulations; however, the Company is not aware of any reasonably
possible losses that would have a material impact on its results of operations, financial position, or liquidity. Potential loss
contingencies include possible obligations to remove or mitigate the effects on the environment of the placement, storage, disposal
or release of certain chemical or other substances by the Company or by other parties. In connection with its acquisitions, the
Company’s practice is to request indemnification for any and all known material liabilities of significance as of the respective
dates of acquisition. Historically, environmental liabilities have not had a material impact on the Company's results of operations,
financial position or liquidity.
The Company is subject to litigation from
time to time in the ordinary course of business; however the Company does not expect the results, if any, to have a material adverse
impact on its results of operations, financial position or liquidity.
The following tables summarize certain geographic
information for the periods presented (in thousands):
|
|
Three Months Ended March 31,
|
|
|
Six Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
849,226
|
|
|
$
|
803,675
|
|
|
$
|
1,809,461
|
|
|
$
|
1,735,018
|
|
Canada
|
|
|
21,498
|
|
|
|
19,862
|
|
|
|
63,447
|
|
|
|
64,999
|
|
Total net sales
|
|
$
|
870,724
|
|
|
$
|
823,537
|
|
|
$
|
1,872,908
|
|
|
$
|
1,800,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
Long-lived assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
511,507
|
|
|
$
|
527,680
|
|
|
$
|
536,512
|
|
|
|
|
|
Canada
|
|
|
12,841
|
|
|
|
13,374
|
|
|
|
12,444
|
|
|
|
|
|
Total long-lived assets
|
|
$
|
524,348
|
|
|
$
|
541,054
|
|
|
$
|
548,956
|
|
|
|
|
|
11.
|
Fair Value Measurement
|
As of March 31, 2017, the carrying amount
of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated
fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost,
which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 —
market approach) as of March 31, 2017, the fair value of the Company’s $300.0 million Senior Notes was $321.0 million.
As of March 31, 2017, the fair value of the Company’s Senior Secured Credit Facility approximated the amount outstanding.
The Company estimates the fair value of its Senior Secured Credit Facility by discounting the future cash flows of each instrument
using estimated market rates of debt instruments with similar maturities and credit profiles (Level 3).
12.
|
Supplemental Guarantor Information
|
All of the Senior Notes issued on October
1, 2015 are guaranteed jointly and severally by all of the United States subsidiaries of the Company (collectively, the “Guarantors”),
and not by the Canadian subsidiaries of the Company. Such guarantees are full and unconditional. Supplemental condensed consolidating
financial information of the Company, including such information for the Guarantors, is presented below. The information is presented
in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily
be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent
entities. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions. Separate financial statements of the Guarantors are not
provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors
to determine the nature of the assets held by, and the operations of, the combined groups.
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Balance Sheets
(Unaudited; In thousands)
|
|
March 31, 2017
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
and Other
|
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
24,181
|
|
|
$
|
1,946
|
|
|
$
|
(16,115
|
)
|
|
$
|
10,012
|
|
Accounts receivable, net
|
|
|
-
|
|
|
|
490,724
|
|
|
|
15,437
|
|
|
|
225
|
|
|
|
506,386
|
|
Inventories, net
|
|
|
-
|
|
|
|
556,463
|
|
|
|
24,426
|
|
|
|
-
|
|
|
|
580,889
|
|
Prepaid expenses and other current assets
|
|
|
28,952
|
|
|
|
184,764
|
|
|
|
3,673
|
|
|
|
-
|
|
|
|
217,389
|
|
Total current assets
|
|
|
28,952
|
|
|
|
1,256,132
|
|
|
|
45,482
|
|
|
|
(15,890
|
)
|
|
|
1,314,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany receivable, net
|
|
|
-
|
|
|
|
961,450
|
|
|
|
-
|
|
|
|
(961,450
|
)
|
|
|
-
|
|
Investments in consolidated subsidiaries
|
|
|
2,959,542
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,959,542
|
)
|
|
|
-
|
|
Deferred income taxes, net
|
|
|
57,419
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(57,419
|
)
|
|
|
-
|
|
Property and equipment, net
|
|
|
5,614
|
|
|
|
140,918
|
|
|
|
9,848
|
|
|
|
-
|
|
|
|
156,380
|
|
Goodwill
|
|
|
-
|
|
|
|
1,198,805
|
|
|
|
29,254
|
|
|
|
-
|
|
|
|
1,228,059
|
|
Intangibles, net
|
|
|
-
|
|
|
|
436,513
|
|
|
|
2,994
|
|
|
|
-
|
|
|
|
439,507
|
|
Other assets, net
|
|
|
1,242
|
|
|
|
269
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
3,052,769
|
|
|
$
|
3,994,087
|
|
|
$
|
87,578
|
|
|
$
|
(3,994,301
|
)
|
|
$
|
3,140,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
27,209
|
|
|
$
|
468,144
|
|
|
$
|
6,865
|
|
|
$
|
(15,890
|
)
|
|
$
|
486,328
|
|
Accrued expenses
|
|
|
26,226
|
|
|
|
103,045
|
|
|
|
1,993
|
|
|
|
-
|
|
|
|
131,264
|
|
Current portions of long-term debt
|
|
|
4,500
|
|
|
|
9,514
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,014
|
|
Total current liabilities
|
|
|
57,935
|
|
|
|
580,703
|
|
|
|
8,858
|
|
|
|
(15,890
|
)
|
|
|
631,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany payable, net
|
|
|
923,565
|
|
|
|
-
|
|
|
|
37,885
|
|
|
|
(961,450
|
)
|
|
|
-
|
|
Borrowings under revolving lines of credit, net
|
|
|
-
|
|
|
|
269,124
|
|
|
|
-
|
|
|
|
-
|
|
|
|
269,124
|
|
Long-term debt, net
|
|
|
722,101
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
722,101
|
|
Deferred income taxes, net
|
|
|
-
|
|
|
|
194,556
|
|
|
|
358
|
|
|
|
(57,419
|
)
|
|
|
137,495
|
|
Long-term obligations under equipment financing and other, net
|
|
|
-
|
|
|
|
30,593
|
|
|
|
46
|
|
|
|
-
|
|
|
|
30,639
|
|
Total liabilities
|
|
|
1,703,601
|
|
|
|
1,074,976
|
|
|
|
47,147
|
|
|
|
(1,034,759
|
)
|
|
|
1,790,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
1,349,168
|
|
|
|
2,919,111
|
|
|
|
40,431
|
|
|
|
(2,959,542
|
)
|
|
|
1,349,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
3,052,769
|
|
|
$
|
3,994,087
|
|
|
$
|
87,578
|
|
|
$
|
(3,994,301
|
)
|
|
$
|
3,140,133
|
|
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Balance Sheets
(Unaudited; In thousands)
|
|
September 30, 2016
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
and Other
|
|
|
Consolidated
|
|
Assets
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
37,447
|
|
|
$
|
2,876
|
|
|
$
|
(8,937
|
)
|
|
$
|
31,386
|
|
Accounts receivable, net
|
|
|
-
|
|
|
|
593,395
|
|
|
|
34,710
|
|
|
|
(1,140
|
)
|
|
|
626,965
|
|
Inventories, net
|
|
|
-
|
|
|
|
460,516
|
|
|
|
20,220
|
|
|
|
-
|
|
|
|
480,736
|
|
Prepaid expenses and other current assets
|
|
|
3,527
|
|
|
|
153,681
|
|
|
|
5,895
|
|
|
|
-
|
|
|
|
163,103
|
|
Total current assets
|
|
|
3,527
|
|
|
|
1,245,039
|
|
|
|
63,701
|
|
|
|
(10,077
|
)
|
|
|
1,302,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany receivable, net
|
|
|
-
|
|
|
|
878,931
|
|
|
|
-
|
|
|
|
(878,931
|
)
|
|
|
-
|
|
Investments in consolidated subsidiaries
|
|
|
2,891,677
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,891,677
|
)
|
|
|
-
|
|
Deferred income taxes, net
|
|
|
59,567
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(59,567
|
)
|
|
|
-
|
|
Property and equipment, net
|
|
|
4,626
|
|
|
|
133,897
|
|
|
|
10,046
|
|
|
|
-
|
|
|
|
148,569
|
|
Goodwill
|
|
|
-
|
|
|
|
1,167,905
|
|
|
|
29,660
|
|
|
|
-
|
|
|
|
1,197,565
|
|
Intangibles, net
|
|
|
-
|
|
|
|
460,696
|
|
|
|
3,328
|
|
|
|
-
|
|
|
|
464,024
|
|
Other assets, net
|
|
|
1,242
|
|
|
|
269
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,960,639
|
|
|
$
|
3,886,737
|
|
|
$
|
106,735
|
|
|
$
|
(3,840,252
|
)
|
|
$
|
3,113,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
26,630
|
|
|
$
|
329,895
|
|
|
$
|
14,467
|
|
|
$
|
(10,077
|
)
|
|
$
|
360,915
|
|
Accrued expenses
|
|
|
42,594
|
|
|
|
114,016
|
|
|
|
4,503
|
|
|
|
-
|
|
|
|
161,113
|
|
Current portions of long-term obligations
|
|
|
4,500
|
|
|
|
10,311
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,811
|
|
Total current liabilities
|
|
|
73,724
|
|
|
|
454,222
|
|
|
|
18,970
|
|
|
|
(10,077
|
)
|
|
|
536,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany payable, net
|
|
|
840,159
|
|
|
|
-
|
|
|
|
38,772
|
|
|
|
(878,931
|
)
|
|
|
-
|
|
Borrowings under revolving lines of credit, net
|
|
|
-
|
|
|
|
355,087
|
|
|
|
4,574
|
|
|
|
-
|
|
|
|
359,661
|
|
Long-term debt, net
|
|
|
722,929
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
722,929
|
|
Deferred income taxes, net
|
|
|
-
|
|
|
|
194,556
|
|
|
|
493
|
|
|
|
(59,567
|
)
|
|
|
135,482
|
|
Long-term obligations under equipment financing and other, net
|
|
|
-
|
|
|
|
35,074
|
|
|
|
47
|
|
|
|
-
|
|
|
|
35,121
|
|
Total liabilities
|
|
|
1,636,812
|
|
|
|
1,038,939
|
|
|
|
62,856
|
|
|
|
(948,575
|
)
|
|
|
1,790,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
1,323,827
|
|
|
|
2,847,798
|
|
|
|
43,879
|
|
|
|
(2,891,677
|
)
|
|
|
1,323,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
2,960,639
|
|
|
$
|
3,886,737
|
|
|
$
|
106,735
|
|
|
$
|
(3,840,252
|
)
|
|
$
|
3,113,859
|
|
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Balance Sheets
(Unaudited; In thousands)
|
|
March 31, 2016
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
and Other
|
|
|
Consolidated
|
|
Assets
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
28,831
|
|
|
$
|
4,689
|
|
|
$
|
(18,679
|
)
|
|
$
|
14,841
|
|
Accounts receivable, net
|
|
|
-
|
|
|
|
476,860
|
|
|
|
15,130
|
|
|
|
(1,140
|
)
|
|
|
490,850
|
|
Inventories, net
|
|
|
-
|
|
|
|
483,582
|
|
|
|
30,168
|
|
|
|
-
|
|
|
|
513,750
|
|
Prepaid expenses and other current assets
|
|
|
16,474
|
|
|
|
145,102
|
|
|
|
3,049
|
|
|
|
-
|
|
|
|
164,625
|
|
Total current assets
|
|
|
16,474
|
|
|
|
1,134,375
|
|
|
|
53,036
|
|
|
|
(19,819
|
)
|
|
|
1,184,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany receivable, net
|
|
|
|
|
|
|
802,015
|
|
|
|
-
|
|
|
|
(802,015
|
)
|
|
|
-
|
|
Investments in consolidated subsidiaries
|
|
|
2,716,780
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,716,780
|
)
|
|
|
-
|
|
Deferred income taxes, net
|
|
|
17,403
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,403
|
)
|
|
|
-
|
|
Property and equipment, net
|
|
|
3,740
|
|
|
|
135,511
|
|
|
|
8,743
|
|
|
|
-
|
|
|
|
147,994
|
|
Goodwill
|
|
|
-
|
|
|
|
1,130,818
|
|
|
|
29,957
|
|
|
|
-
|
|
|
|
1,160,775
|
|
Intangibles, net
|
|
|
-
|
|
|
|
468,881
|
|
|
|
3,701
|
|
|
|
-
|
|
|
|
472,582
|
|
Other assets, net
|
|
|
1,233
|
|
|
|
197
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,755,630
|
|
|
$
|
3,671,797
|
|
|
$
|
95,437
|
|
|
$
|
(3,556,017
|
)
|
|
$
|
2,966,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
34,045
|
|
|
$
|
392,032
|
|
|
$
|
11,736
|
|
|
$
|
(19,819
|
)
|
|
$
|
417,994
|
|
Accrued expenses
|
|
|
10,390
|
|
|
|
137,378
|
|
|
|
4,924
|
|
|
|
-
|
|
|
|
152,692
|
|
Current portions of long-term obligations
|
|
|
4,500
|
|
|
|
7,659
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,159
|
|
Total current liabilities
|
|
|
48,935
|
|
|
|
537,069
|
|
|
|
16,660
|
|
|
|
(19,819
|
)
|
|
|
582,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany payable, net
|
|
|
764,168
|
|
|
|
-
|
|
|
|
37,847
|
|
|
|
(802,015
|
)
|
|
|
-
|
|
Borrowings under revolving lines of credit
|
|
|
-
|
|
|
|
295,690
|
|
|
|
-
|
|
|
|
-
|
|
|
|
295,690
|
|
Long-term debt, net
|
|
|
722,542
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
722,542
|
|
Deferred income taxes, net
|
|
|
-
|
|
|
|
119,855
|
|
|
|
426
|
|
|
|
(17,403
|
)
|
|
|
102,878
|
|
Long-term obligations under equipment financing and other, net
|
|
|
-
|
|
|
|
42,860
|
|
|
|
47
|
|
|
|
-
|
|
|
|
42,907
|
|
Total liabilities
|
|
|
1,535,645
|
|
|
|
995,474
|
|
|
|
54,980
|
|
|
|
(839,237
|
)
|
|
|
1,746,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
1,219,985
|
|
|
|
2,676,323
|
|
|
|
40,457
|
|
|
|
(2,716,780
|
)
|
|
|
1,219,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
2,755,630
|
|
|
$
|
3,671,797
|
|
|
$
|
95,437
|
|
|
$
|
(3,556,017
|
)
|
|
$
|
2,966,847
|
|
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of
Operations
(Unaudited; In thousands,
except share and per share amounts)
|
|
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
849,226
|
|
|
$
|
21,498
|
|
|
$
|
-
|
|
|
$
|
870,724
|
|
Cost of products sold
|
|
|
-
|
|
|
|
649,595
|
|
|
|
16,652
|
|
|
|
-
|
|
|
|
666,247
|
|
Gross profit
|
|
|
-
|
|
|
|
199,631
|
|
|
|
4,846
|
|
|
|
-
|
|
|
|
204,477
|
|
Operating expense
|
|
|
7,010
|
|
|
|
193,448
|
|
|
|
7,075
|
|
|
|
-
|
|
|
|
207,533
|
|
Intercompany charges (income)
|
|
|
(12,555
|
)
|
|
|
11,993
|
|
|
|
562
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) from operations
|
|
|
5,545
|
|
|
|
(5,810
|
)
|
|
|
(2,791
|
)
|
|
|
-
|
|
|
|
(3,056
|
)
|
Interest expense, financing costs, and other
|
|
|
3,983
|
|
|
|
8,003
|
|
|
|
282
|
|
|
|
-
|
|
|
|
12,268
|
|
Intercompany interest expense (income)
|
|
|
(5,089
|
)
|
|
|
5,089
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) before provision for income taxes
|
|
|
6,651
|
|
|
|
(18,902
|
)
|
|
|
(3,073
|
)
|
|
|
-
|
|
|
|
(15,324
|
)
|
Provision
for (benefit from) income taxes
|
|
|
2,444
|
|
|
|
(7,568
|
)
|
|
|
(844
|
)
|
|
|
-
|
|
|
|
(5,968
|
)
|
Income (loss) before equity in net income of subsidiaries
|
|
|
4,207
|
|
|
|
(11,334
|
)
|
|
|
(2,229
|
)
|
|
|
-
|
|
|
|
(9,356
|
)
|
Equity
in net loss of subsidiaries
|
|
|
(13,563
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
13,563
|
|
|
|
-
|
|
Net
loss
|
|
$
|
(9,356
|
)
|
|
$
|
(11,334
|
)
|
|
$
|
(2,229
|
)
|
|
$
|
13,563
|
|
|
$
|
(9,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,141,580
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,141,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.16
|
)
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
803,781
|
|
|
$
|
19,862
|
|
|
$
|
(106
|
)
|
|
$
|
823,537
|
|
Cost of products sold
|
|
|
-
|
|
|
|
612,646
|
|
|
|
15,233
|
|
|
|
(106
|
)
|
|
|
627,773
|
|
Gross profit
|
|
|
-
|
|
|
|
191,135
|
|
|
|
4,629
|
|
|
|
-
|
|
|
|
195,764
|
|
Operating expenses
|
|
|
27,987
|
|
|
|
157,398
|
|
|
|
6,496
|
|
|
|
-
|
|
|
|
191,881
|
|
Intercompany charges (income)
|
|
|
(17,593
|
)
|
|
|
16,270
|
|
|
|
1,323
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) from operations
|
|
|
(10,394
|
)
|
|
|
17,467
|
|
|
|
(3,190
|
)
|
|
|
-
|
|
|
|
3,883
|
|
Interest expense, financing costs, and other
|
|
|
4,763
|
|
|
|
8,267
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
13,026
|
|
Intercompany interest expense (income)
|
|
|
(4,795
|
)
|
|
|
4,412
|
|
|
|
383
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) before provision for income taxes
|
|
|
(10,362
|
)
|
|
|
4,788
|
|
|
|
(3,569
|
)
|
|
|
-
|
|
|
|
(9,143
|
)
|
Provision
for (benefit from) income taxes
|
|
|
(11,141
|
)
|
|
|
8,663
|
|
|
|
(946
|
)
|
|
|
-
|
|
|
|
(3,424
|
)
|
Income (loss) before equity in net income of subsidiaries
|
|
|
779
|
|
|
|
(3,875
|
)
|
|
|
(2,623
|
)
|
|
|
-
|
|
|
|
(5,719
|
)
|
Equity
in net loss of subsidiaries
|
|
|
(6,498
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
6,498
|
|
|
|
-
|
|
Net
loss
|
|
$
|
(5,719
|
)
|
|
$
|
(3,875
|
)
|
|
$
|
(2,623
|
)
|
|
$
|
6,498
|
|
|
$
|
(5,719
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,295,990
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,295,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.10
|
)
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.10
|
)
|
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of
Operations
(Unaudited; In thousands, except share
and per share amounts)
|
|
Six Months Ended March 31, 2017
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
1,809,461
|
|
|
$
|
63,447
|
|
|
$
|
-
|
|
|
$
|
1,872,908
|
|
Cost of products sold
|
|
|
-
|
|
|
|
1,368,129
|
|
|
|
49,235
|
|
|
|
-
|
|
|
|
1,417,364
|
|
Gross profit
|
|
|
-
|
|
|
|
441,332
|
|
|
|
14,212
|
|
|
|
-
|
|
|
|
455,544
|
|
Operating expense
|
|
|
15,656
|
|
|
|
380,521
|
|
|
|
15,466
|
|
|
|
-
|
|
|
|
411,643
|
|
Intercompany charges (income)
|
|
|
(24,508
|
)
|
|
|
23,392
|
|
|
|
1,116
|
|
|
|
-
|
|
|
|
-
|
|
Income from operations
|
|
|
8,852
|
|
|
|
37,419
|
|
|
|
(2,370
|
)
|
|
|
-
|
|
|
|
43,901
|
|
Interest expense, financing costs, and other
|
|
|
19,337
|
|
|
|
5,458
|
|
|
|
1,047
|
|
|
|
-
|
|
|
|
25,842
|
|
Intercompany interest expense (income)
|
|
|
(10,682
|
)
|
|
|
10,682
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) before provision for income taxes
|
|
|
197
|
|
|
|
21,279
|
|
|
|
(3,417
|
)
|
|
|
-
|
|
|
|
18,059
|
|
Provision for (benefit from) income taxes
|
|
|
(410
|
)
|
|
|
8,334
|
|
|
|
(939
|
)
|
|
|
-
|
|
|
|
6,985
|
|
Income (loss) before equity in net income of subsidiaries
|
|
|
607
|
|
|
|
12,945
|
|
|
|
(2,478
|
)
|
|
|
-
|
|
|
|
11,074
|
|
Equity in net income of subsidiaries
|
|
|
10,467
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,467
|
)
|
|
|
-
|
|
Net
income (loss)
|
|
$
|
11,074
|
|
|
$
|
12,945
|
|
|
$
|
(2,478
|
)
|
|
$
|
(10,467
|
)
|
|
$
|
11,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,041,332
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,069,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.18
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended March 31, 2016
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
1,735,265
|
|
|
$
|
64,999
|
|
|
$
|
(247
|
)
|
|
$
|
1,800,017
|
|
Cost of products sold
|
|
|
-
|
|
|
|
1,321,029
|
|
|
|
50,283
|
|
|
|
(247
|
)
|
|
|
1,371,065
|
|
Gross profit
|
|
|
-
|
|
|
|
414,236
|
|
|
|
14,716
|
|
|
|
-
|
|
|
|
428,952
|
|
Operating expenses
|
|
|
59,159
|
|
|
|
324,412
|
|
|
|
14,654
|
|
|
|
-
|
|
|
|
398,225
|
|
Intercompany charges (income)
|
|
|
(25,440
|
)
|
|
|
23,456
|
|
|
|
1,984
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) from operations
|
|
|
(33,719
|
)
|
|
|
66,368
|
|
|
|
(1,922
|
)
|
|
|
-
|
|
|
|
30,727
|
|
Interest expense, financing costs, and other
|
|
|
14,637
|
|
|
|
14,505
|
|
|
|
140
|
|
|
|
-
|
|
|
|
29,282
|
|
Intercompany interest expense (income)
|
|
|
(8,721
|
)
|
|
|
7,949
|
|
|
|
772
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) before provision for income taxes
|
|
|
(39,635
|
)
|
|
|
43,914
|
|
|
|
(2,834
|
)
|
|
|
-
|
|
|
|
1,445
|
|
Provision for (benefit from) income taxes
|
|
|
(20,873
|
)
|
|
|
21,670
|
|
|
|
(751
|
)
|
|
|
-
|
|
|
|
46
|
|
Income (loss) before equity in net income of subsidiaries
|
|
|
(18,762
|
)
|
|
|
22,244
|
|
|
|
(2,083
|
)
|
|
|
-
|
|
|
|
1,399
|
|
Equity in net income of subsidiaries
|
|
|
20,161
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,161
|
)
|
|
|
-
|
|
Net income (loss)
|
|
$
|
1,399
|
|
|
$
|
22,244
|
|
|
$
|
(2,083
|
)
|
|
$
|
(20,161
|
)
|
|
$
|
1,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,133,569
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,077,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.02
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.02
|
|
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of
Comprehensive Income
(Unaudited; In thousands)
|
|
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net loss
|
|
$
|
(9,356
|
)
|
|
$
|
(11,334
|
)
|
|
$
|
(2,229
|
)
|
|
$
|
13,563
|
|
|
$
|
(9,356
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
813
|
|
|
|
-
|
|
|
|
813
|
|
|
|
(813
|
)
|
|
|
813
|
|
Total other comprehensive income
|
|
|
813
|
|
|
|
-
|
|
|
|
813
|
|
|
|
(813
|
)
|
|
|
813
|
|
Comprehensive
loss
|
|
$
|
(8,543
|
)
|
|
$
|
(11,334
|
)
|
|
$
|
(1,416
|
)
|
|
$
|
12,750
|
|
|
$
|
(8,543
|
)
|
|
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net loss
|
|
$
|
(5,719
|
)
|
|
$
|
(3,875
|
)
|
|
$
|
(2,623
|
)
|
|
$
|
6,498
|
|
|
$
|
(5,719
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
4,226
|
|
|
|
-
|
|
|
|
4,226
|
|
|
|
(4,226
|
)
|
|
|
4,226
|
|
Total other comprehensive income
|
|
|
4,226
|
|
|
|
-
|
|
|
|
4,226
|
|
|
|
(4,226
|
)
|
|
|
4,226
|
|
Comprehensive income (loss)
|
|
$
|
(1,493
|
)
|
|
$
|
(3,875
|
)
|
|
$
|
1,603
|
|
|
$
|
2,272
|
|
|
$
|
(1,493
|
)
|
|
|
Six Months Ended March 31, 2017
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net income (loss)
|
|
$
|
11,074
|
|
|
$
|
12,945
|
|
|
$
|
(2,478
|
)
|
|
$
|
(10,467
|
)
|
|
$
|
11,074
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(839
|
)
|
|
|
-
|
|
|
|
(839
|
)
|
|
|
839
|
|
|
|
(839
|
)
|
Total other comprehensive loss
|
|
|
(839
|
)
|
|
|
-
|
|
|
|
(839
|
)
|
|
|
839
|
|
|
|
(839
|
)
|
Comprehensive income (loss)
|
|
$
|
10,235
|
|
|
$
|
12,945
|
|
|
$
|
(3,317
|
)
|
|
$
|
(9,628
|
)
|
|
$
|
10,235
|
|
|
|
Six Months Ended March 31, 2016
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminations
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
and Other
|
|
|
Consolidated
|
|
Net income (loss)
|
|
$
|
1,399
|
|
|
$
|
22,244
|
|
|
$
|
(2,083
|
)
|
|
$
|
(20,161
|
)
|
|
$
|
1,399
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
1,757
|
|
|
|
-
|
|
|
|
1,757
|
|
|
|
(1,757
|
)
|
|
|
1,757
|
|
Total other comprehensive income
|
|
|
1,757
|
|
|
|
-
|
|
|
|
1,757
|
|
|
|
(1,757
|
)
|
|
|
1,757
|
|
Comprehensive income (loss)
|
|
$
|
3,156
|
|
|
$
|
22,244
|
|
|
$
|
(326
|
)
|
|
$
|
(21,918
|
)
|
|
$
|
3,156
|
|
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of
Cash Flows
(Unaudited; In thousands)
|
|
Six Months Ended March 31, 2017
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
and Other
|
|
|
Consolidated
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(29,347
|
)
|
|
$
|
181,847
|
|
|
$
|
5,121
|
|
|
$
|
(7,178
|
)
|
|
$
|
150,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(1,709
|
)
|
|
|
(21,742
|
)
|
|
|
(780
|
)
|
|
|
-
|
|
|
|
(24,231
|
)
|
Acquisition of businesses
|
|
|
(58,359
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(58,359
|
)
|
Proceeds from the sale of assets
|
|
|
-
|
|
|
|
1,274
|
|
|
|
11
|
|
|
|
-
|
|
|
|
1,285
|
|
Intercompany activity
|
|
|
83,397
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(83,397
|
)
|
|
|
-
|
|
Net cash provided by (used in) investing activities
|
|
|
23,329
|
|
|
|
(20,468
|
)
|
|
|
(769
|
)
|
|
|
(83,397
|
)
|
|
|
(81,305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under revolving lines of credit
|
|
|
-
|
|
|
|
852,583
|
|
|
|
4,516
|
|
|
|
-
|
|
|
|
857,099
|
|
Repayments under revolving lines of credit
|
|
|
-
|
|
|
|
(939,438
|
)
|
|
|
(9,032
|
)
|
|
|
-
|
|
|
|
(948,470
|
)
|
Repayments under term loan
|
|
|
(1,125
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,125
|
)
|
Borrowings under equipment financing facilities and other
|
|
|
-
|
|
|
|
1,579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,579
|
|
Repayments under equipment financing facilities and other
|
|
|
-
|
|
|
|
(6,857
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,857
|
)
|
Proceeds from issuance of common stock
|
|
|
7,840
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,840
|
|
Taxes paid related to net share settelement of equity awards
|
|
|
(697
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(697
|
)
|
Intercompany activity
|
|
|
-
|
|
|
|
(82,512
|
)
|
|
|
(885
|
)
|
|
|
83,397
|
|
|
|
-
|
|
Net cash provided by (used in) financing activities
|
|
|
6,018
|
|
|
|
(174,645
|
)
|
|
|
(5,401
|
)
|
|
|
83,397
|
|
|
|
(90,631
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
119
|
|
|
|
-
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
-
|
|
|
|
(13,266
|
)
|
|
|
(930
|
)
|
|
|
(7,178
|
)
|
|
|
(21,374
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
-
|
|
|
|
37,447
|
|
|
|
2,876
|
|
|
|
(8,937
|
)
|
|
|
31,386
|
|
Cash and cash equivalents, end of period
|
|
$
|
-
|
|
|
$
|
24,181
|
|
|
$
|
1,946
|
|
|
$
|
(16,115
|
)
|
|
$
|
10,012
|
|
|
|
Six Months Ended March 31, 2016
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
and Other
|
|
|
Consolidated
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(41,213
|
)
|
|
$
|
127,076
|
|
|
$
|
9,262
|
|
|
$
|
(14,473
|
)
|
|
$
|
80,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(1,507
|
)
|
|
|
(9,093
|
)
|
|
|
(459
|
)
|
|
|
-
|
|
|
|
(11,059
|
)
|
Acquisition of businesses
|
|
|
(941,156
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(941,156
|
)
|
Proceeds from the sale of assets
|
|
|
-
|
|
|
|
377
|
|
|
|
-
|
|
|
|
-
|
|
|
|
377
|
|
Intercompany activity
|
|
|
423,620
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(423,620
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(519,043
|
)
|
|
|
(8,716
|
)
|
|
|
(459
|
)
|
|
|
(423,620
|
)
|
|
|
(951,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under revolving lines of credit
|
|
|
-
|
|
|
|
1,017,128
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,017,128
|
|
Repayments under revolving lines of credit
|
|
|
-
|
|
|
|
(713,407
|
)
|
|
|
(11,448
|
)
|
|
|
-
|
|
|
|
(724,855
|
)
|
Borrowings under term loan
|
|
|
450,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
450,000
|
|
Repayments under term loan
|
|
|
(187,875
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(187,875
|
)
|
Borrowings under Senior Notes
|
|
|
300,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300,000
|
|
Repayments under equipment financing facilities and other
|
|
|
-
|
|
|
|
(2,633
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,633
|
)
|
Payment of deferred financing costs
|
|
|
(18,890
|
)
|
|
|
(8,923
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(27,813
|
)
|
Proceeds from issuance of common stock
|
|
|
15,391
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,391
|
|
Excess tax benefit from stock-based compensation
|
|
|
1,630
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,630
|
|
Intercompany activity
|
|
|
-
|
|
|
|
(424,510
|
)
|
|
|
890
|
|
|
|
423,620
|
|
|
|
-
|
|
Net cash provided by (used in) financing activities
|
|
|
560,256
|
|
|
|
(132,345
|
)
|
|
|
(10,558
|
)
|
|
|
423,620
|
|
|
|
840,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
(607
|
)
|
|
|
-
|
|
|
|
(607
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
-
|
|
|
|
(13,985
|
)
|
|
|
(2,362
|
)
|
|
|
(14,473
|
)
|
|
|
(30,820
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
-
|
|
|
|
42,816
|
|
|
|
7,051
|
|
|
|
(4,206
|
)
|
|
|
45,661
|
|
Cash and cash equivalents, end of period
|
|
$
|
-
|
|
|
$
|
28,831
|
|
|
$
|
4,689
|
|
|
$
|
(18,679
|
)
|
|
$
|
14,841
|
|
On May 1, 2017, the Company purchased certain
assets of Lowry’s Inc., a distributor of waterproofing and concrete restoration materials with 11 branches operating in
California, Arizona, Utah and Hawaii and annual sales of approximately $76 million.