Fourth quarter highlighted by strong
residential roofing growth and robust operating cash
performance
Executive Vice President and Chief Financial
Officer Joseph Nowicki to depart later this fiscal year
- Record fourth quarter net sales of $2.03 billion, including
11.5% daily sales growth in organic residential roofing vs. prior
year
- Fourth quarter operating cash flow of $407.6 million,
driving total debt reduction of approximately $345 million
- Three-year cumulative annual operating cash flow of over $1
billion
- Fourth quarter net income of $27.4 million; Adjusted EBITDA
of $169.1 million
- Refinanced $300 million senior notes in October 2019,
extending maturity to 2026 and lowering interest rate from 6.375%
to 4.5%
Beacon Roofing Supply, Inc. (Nasdaq: BECN) (“Beacon” or the
“Company”) announced results today for its fourth quarter and
fiscal year ended September 30, 2019 (“2019”). The Company also
announced that Executive Vice President and Chief Financial Officer
Joseph Nowicki will leave the Company later this fiscal year to
shift focus to his family, charitable work and Board service. Mr.
Nowicki will remain CFO during the Company’s nationwide search for
his successor and will support the transition of his duties until
his departure.
Julian Francis, Beacon’s new President and Chief Executive
Officer, stated: “In joining Beacon, I recognize the great
opportunity offered by this industry and the Company’s demonstrated
long-term growth, EBITDA margins and operating cash flow. We are
now pivoting from a growth run via acquisitions to a focus on
organic growth, gross margin expansion and operating expense rigor.
Several positive elements are evident in our fourth quarter
performance, including 11.5% organic daily sales growth in
residential roofing, continued strong operating cash flow, and
positive SG&A expense leverage. I see tremendous opportunities
to substantially improve upon Beacon’s financial performance.
Operationally, I am turning immediate focus to growing our customer
base, differentiating e-commerce capabilities through our digital
platform, and enhancing the productivity of our branch network. We
are just getting started, and I am proud to lead Beacon forward
into this exciting next stage of growth.”
Fourth Quarter
Net sales increased 4.9% to $2.03 billion in 2019, from $1.94
billion in 2018. Consolidated residential roofing product sales
increased 12.7%, consolidated non-residential roofing product sales
increased 2.4%, and consolidated complementary product sales
decreased 3.2% compared to the prior year. Existing markets net
sales increased 4.8% compared to the prior year, driven mainly by
13.2% growth in residential roofing. The fourth quarter of fiscal
years 2019 and 2018 had 64 and 63 business days, respectively.
Net income was $27.4 million, compared to $48.3 million in 2018.
Net income attributable to common shareholders was $21.4 million,
compared to $42.3 million in 2018. Diluted net income (loss) per
share (“EPS”) was $0.27, compared to $0.54 in 2018. Fourth quarter
results were negatively impacted by lower gross margins and higher
acquisition-related costs compared to 2018. Fourth quarter results
were positively impacted by existing market sales growth in
residential roofing.
Adjusted Net Income (Loss) was $82.0 million, compared to $84.1
million in 2018. Adjusted EPS was $1.04, compared to $1.07 in 2018.
Adjusted EBITDA was $169.1 million, compared to $178.3 million in
2018. (Please see the included financial tables for a
reconciliation of “Adjusted” financial measures to the most
directly comparable GAAP financial measures, as well as further
detail on the components driving the net changes over the
comparative periods.)
Fiscal Year
Net sales increased 10.7% to $7.11 billion, from $6.42 billion
in 2018. Consolidated residential roofing product sales increased
10.0%, consolidated non-residential roofing product sales increased
4.2%, and consolidated complementary product sales increased 17.0%
compared to the prior year. Existing markets net sales increased
3.3% compared to the prior year, driven mainly by 7.0% growth in
residential roofing and improved pricing. Fiscal years 2019 and
2018 had 253 and 252 business days, respectively.
Net income (loss) was $(10.6) million, compared to $98.6 million
in 2018. Net income (loss) attributable to common shareholders was
$(34.6) million, compared to $80.6 million in 2018. EPS was
$(0.51), compared to $1.05 in 2018. Fiscal year 2019 results were
negatively impacted by higher acquisition-related costs compared to
2018 as well as increase in interest expense directly tied to the
financing of the Allied acquisition. In addition, 2018 results
include a $48.8 million net tax benefit resulting from the
enactment of the Tax Cuts and Jobs Act of 2017. Fiscal year 2019
results were positively impacted by existing market sales growth in
residential roofing.
Adjusted Net Income (Loss) was $176.2 million, compared to
$206.7 million in 2018. Adjusted EPS was $2.26, compared to $2.70
in 2018. Adjusted EBITDA was $476.0 million, compared to $483.6
million in 2018. (Please see the included financial tables for a
reconciliation of “Adjusted” financial measures to the most
directly comparable GAAP financial measures as well as further
detail on the components driving the net changes over the
comparative periods).
The Company will host a webcast and conference call today at
5:00 p.m. ET to discuss these results. The webcast link and call-in
details are as follows:
What:
Beacon Roofing Supply Fourth Quarter 2019
Earnings Conference Call
When
Monday, November 25, 2019
Time:
5:00 p.m. ET
Webcast:
http://ir.beaconroofingsupply.com/events-presentations (live and
replay)
Live Call:
720-634-9063; Conf. ID #3964617
To assure timely access, conference call participants should
dial in prior to the 5:00 p.m. ET start time.
Forward-Looking
Statements
This release contains information about management's view of the
Company's future expectations, plans and prospects that constitute
forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those indicated by
such forward-looking statements as a result of various important
factors, including, but not limited to, those set forth in the
"Risk Factors" section of the Company's latest Form 10-K. In
addition, the forward-looking statements included in this press
release represent the Company's views as of the date of this press
release and these views could change. However, while the Company
may elect to update these forward-looking statements at some point,
the Company specifically disclaims any obligation to do so, other
than as required by federal securities laws. These forward-looking
statements should not be relied upon as representing the Company's
views as of any date subsequent to the date of this press
release.
About Beacon Roofing
Supply
Founded in 1928, Beacon Roofing Supply is the largest publicly
traded distributor of residential and commercial roofing materials
and complementary building products in North America, operating
over 500 branches throughout all 50 states in the U.S. and 6
provinces in Canada. Beacon serves an extensive base of over
100,000 customers, utilizing its vast branch network and diverse
service offerings to provide high-quality products and support
throughout the entire business lifecycle. Beacon also offers its
own private label brand, TRI-BUILT, and has a proprietary digital
account management suite, Beacon Pro+, which allows customers to
manage their businesses online. A Fortune 500 company, Beacon’s
stock is traded on the Nasdaq Global Select Market under the ticker
symbol BECN. To learn more about Beacon and its brands, please
visit www.becn.com.
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Operations
(In thousands, except share
and per share amounts)
Three Months Ended September
30,
Year Ended September
30,
2019
% of
Net
Sales
2018
% of
Net
Sales
2019
% of
Net
Sales
2018
% of
Net
Sales
Net sales
$
2,029,913
100.0
%
$
1,935,756
100.0
%
$
7,105,160
100.0
%
$
6,418,311
100.0
%
Cost of products sold
1,536,451
75.7
%
1,444,459
74.6
%
5,368,605
75.6
%
4,824,990
75.2
%
Gross profit
493,462
24.3
%
491,297
25.4
%
1,736,555
24.4
%
1,593,321
24.8
%
Operating expense1:
Selling, general and administrative
334,115
16.5
%
328,658
17.0
%
1,311,043
18.4
%
1,187,192
18.5
%
Depreciation
17,916
0.9
%
18,678
1.0
%
70,695
1.0
%
60,318
0.9
%
Amortization
51,557
2.5
%
35,846
1.9
%
207,065
2.9
%
141,185
2.2
%
Total operating expense
403,588
19.9
%
383,182
19.9
%
1,588,803
22.3
%
1,388,695
21.6
%
Income (loss) from operations
89,874
4.4
%
108,115
5.5
%
147,752
2.1
%
204,626
3.2
%
Interest expense, financing costs, and
other2
41,632
2.1
%
37,058
1.9
%
158,534
2.2
%
136,544
2.1
%
Income (loss) before provision for income
taxes
48,242
2.3
%
71,057
3.6
%
(10,782
)
(0.1
%)
68,082
1.1
%
Provision for (benefit from) income
taxes
20,862
1.0
%
22,747
1.2
%
(170
)
0.0
%
(30,544
)
(0.4
%)
Net income (loss)
27,380
1.3
%
48,310
2.4
%
(10,612
)
(0.1
%)
98,626
1.5
%
Dividends on preferred shares3
6,000
0.3
%
6,000
0.4
%
24,000
0.4
%
18,000
0.2
%
Net income (loss) attributable to common
shareholders
$
21,380
1.0
%
$
42,310
2.0
%
$
(34,612
)
(0.5
%)
$
80,626
1.3
%
Weighted-average common stock
outstanding:
Basic
68,520,451
68,119,406
68,424,288
68,012,879
Diluted
69,253,100
69,042,868
68,424,288
69,191,039
Net income (loss) per share4:
Basic
$
0.27
$
0.54
$
(0.51
)
$
1.07
Diluted
$
0.27
$
0.54
$
(0.51
)
$
1.05
1
Operating expense for the three months
ended September 30, 2019 and 2018 includes acquisition and business
restructuring costs of $6.2 million and $10.6 million,
respectively. Operating expense for the years ended September 30,
2019 and 2018 includes acquisition and business restructuring costs
of $29.2 million and $54.4 million, respectively.
2
Interest expense, financing costs, and
other for the three months ended September 30, 2019 and 2018
includes acquisition costs of $6.3 million and $2.7 million,
respectively. Interest expense, financing costs, and other for the
years ended September 30, 2019 and 2018 includes acquisition costs
of $15.4 million and $24.8 million, respectively.
3
Three months ended September 30, 2019 and
2018 amounts are composed of $5.0 million in undeclared cumulative
Preferred Stock dividends, as well as an additional $1.0 million of
Preferred Stock dividends that had been declared and paid as of
period end. Year ended September 30, 2019 amount is composed of
$5.0 million in undeclared cumulative Preferred Stock dividends, as
well as an additional $19.0 million of Preferred Stock dividends
that had been declared and paid as of period end. Year ended
September 30, 2018 amount is composed of $5.0 million in undeclared
cumulative Preferred Stock dividends, as well as an additional
$13.0 million of Preferred Stock dividends that had been declared
and paid as of period end.
4
Basic net income (loss) per share is
calculated by dividing net income (loss) attributable to common
shareholders by the weighted-average number of common shares
outstanding during the period, without consideration for common
share equivalents or the conversion of Preferred Stock. Common
share equivalents consist of the incremental common shares issuable
upon the exercise of stock options and vesting of restricted stock
unit awards. Diluted net income (loss) per common share is
calculated by dividing net income (loss) attributable to common
shareholders by the fully diluted weighted-average number of common
shares outstanding during the period. The following table presents
the components and calculations of basic and diluted net income
(loss) per share for each period presented (in thousands, except
share and per share amounts):
Three Months Ended
September 30,
Year Ended
September 30,
2019
2018
2019
2018
Net income (loss)
$
27,380
$
48,310
$
(10,612
)
$
98,626
Dividends on preferred shares
6,000
6,000
24,000
18,000
Net income (loss) attributable to common
shareholders
$
21,380
$
42,310
$
(34,612
)
$
80,626
Undistributed income allocated to
participating securities
(2,650
)
(5,406
)
-
(7,742
)
Net income (loss) attributable to common
shareholders - basic and diluted
$
18,730
$
36,904
$
(34,612
)
$
72,884
Weighted-average common shares outstanding
- basic
68,520,451
68,119,406
68,424,288
68,012,879
Effect of common share equivalents
732,649
1,061,756
-
1,178,160
Weighted-average common shares outstanding
- diluted
69,253,100
69,181,162
68,424,288
69,191,039
Net income (loss) per share - basic
$
0.27
$
0.54
$
(0.51
)
$
1.07
Net income (loss) per share - diluted
$
0.27
$
0.54
$
(0.51
)
$
1.05
BEACON ROOFING SUPPLY,
INC.
Consolidated Balance
Sheets
(In thousands)
September 30,
2019
2018
Assets
Current assets:
Cash and cash equivalents
$
72,287
$
129,927
Accounts receivable, net
1,108,134
1,090,533
Inventories, net
1,018,183
936,047
Prepaid expenses and other current
assets
315,643
244,360
Total current assets
2,514,247
2,400,867
Property and equipment, net
260,376
280,407
Goodwill
2,490,590
2,491,779
Intangibles, net
1,125,540
1,334,366
Other assets, net
2,059
1,243
Total assets
$
6,392,812
$
6,508,662
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
822,931
$
880,872
Accrued expenses
599,155
611,539
Current portions of long-term
debt/obligations
18,689
19,661
Total current liabilities
1,440,775
1,512,072
Borrowings under revolving lines of
credit, net
80,961
92,442
Long-term debt, net
2,494,623
2,494,725
Deferred income taxes, net
103,913
106,994
Long-term obligations under equipment
financing and other, net
4,609
13,639
Other long-term liabilities
6,383
5,290
Total liabilities
4,131,264
4,225,162
Convertible preferred stock
399,195
399,195
Stockholders' equity:
Common stock
685
681
Undesignated preferred stock
-
-
Additional paid-in capital
1,083,042
1,067,040
Retained earnings
799,222
833,834
Accumulated other comprehensive income
(loss)
(20,596
)
(17,250
)
Total stockholders' equity
1,862,353
1,884,305
Total liabilities and stockholders'
equity
$
6,392,812
$
6,508,662
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Cash Flows
(In thousands)
Year Ended September
30,
2019
2018
Operating Activities
Net income (loss)
$
(10,612
)
$
98,626
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
277,761
201,503
Stock-based compensation
16,360
16,473
Certain interest expense and other
financing costs
12,102
17,338
Beneficial lease amortization
2,290
-
Loss on debt extinguishment
-
1,248
Gain on sale of fixed assets
(3,830
)
(1,294
)
Deferred income taxes
(2,555
)
(30,118
)
Changes in operating assets and
liabilities, net of the effects of businesses acquired in the
period:
Accounts receivable
(18,501
)
(45,093
)
Inventories
(82,774
)
(65,069
)
Prepaid expenses and other assets
(70,815
)
57,554
Accounts payable and accrued expenses
92,133
287,428
Other liabilities
1,094
785
Net cash provided by (used in) operating
activities
212,653
539,381
Investing Activities
Purchases of property and equipment
(57,031
)
(46,010
)
Acquisition of businesses, net
(163,973
)
(2,740,480
)
Proceeds from the sale of assets
9,269
2,149
Net cash provided by (used in) investing
activities
(211,735
)
(2,784,341
)
Financing Activities
Borrowings under revolving lines of
credit
2,100,085
2,807,741
Repayments under revolving lines of
credit
(2,113,982
)
(2,707,741
)
Borrowings under term loan
-
970,000
Repayments under term loan
(9,700
)
(445,850
)
Borrowings under senior notes
-
1,300,000
Payment of debt issuance costs
(817
)
(65,788
)
Repayments under equipment financing
facilities and other
(10,001
)
(11,593
)
Proceeds from issuance of convertible
preferred stock
-
400,000
Payment of stock issuance costs
-
(1,279
)
Payment of dividends on preferred
stock
(24,000
)
(12,978
)
Proceeds from issuance of common stock
related to equity awards
3,314
7,514
Taxes paid related to net share settlement
of equity awards
(3,668
)
(3,975
)
Net cash provided by (used in) financing
activities
(58,769
)
2,236,051
Effect of exchange rate changes on cash
and cash equivalents
211
586
Net increase (decrease) in cash and cash
equivalents
(57,640
)
(8,323
)
Cash and cash equivalents, beginning of
period
129,927
138,250
Cash and cash equivalents, end of
period
$
72,287
$
129,927
BEACON ROOFING SUPPLY,
INC.
Consolidated Sales by Product
Line
(In thousands)
Consolidated Sales by Product
Line
Three Months Ended September
30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
912,201
44.9
%
$
809,498
41.8
%
$
102,703
12.7
%
Non-residential roofing products
505,160
24.9
%
493,438
25.5
%
11,722
2.4
%
Complementary building products
612,552
30.2
%
632,820
32.7
%
(20,268
)
(3.2
%)
$
2,029,913
100.0
%
$
1,935,756
100.0
%
$
94,157
4.9
%
Existing Market1 Sales by
Product Line
Three Months Ended September
30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
911,693
45.1
%
$
805,044
41.8
%
$
106,649
13.2
%
Non-residential roofing products
504,097
25.0
%
492,085
25.6
%
12,012
2.4
%
Complementary building products
602,705
29.9
%
628,693
32.6
%
(25,988
)
(4.1
%)
$
2,018,495
100.0
%
$
1,925,822
100.0
%
$
92,673
4.8
%
Existing Market1 Sales by
Business Day2
Three Months Ended September
30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
14,245
45.1
%
$
12,778
41.8
%
$
1,467
11.5
%
Non-residential roofing products
7,877
25.0
%
7,811
25.6
%
66
0.8
%
Complementary building products
9,417
29.9
%
9,979
32.6
%
(562
)
(5.6
%)
$
31,539
100.0
%
$
30,568
100.0
%
$
971
3.2
%
1
Excludes acquired branches that have not
been under ownership for at least four fiscal quarters prior to the
start of the fourth quarter of fiscal year 2019.
2
There were 64 and 63 business days in the
quarters ended September 30, 2019 and 2018, respectively.
BEACON ROOFING SUPPLY,
INC.
Consolidated Sales by Product
Line
(In thousands)
Consolidated Sales by Product
Line
Year Ended September
30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
3,079,628
43.3
%
$
2,798,756
43.6
%
$
280,872
10.0
%
Non-residential roofing products
1,705,178
24.0
%
1,635,963
25.5
%
69,215
4.2
%
Complementary building products
2,320,354
32.7
%
1,983,592
30.9
%
336,762
17.0
%
$
7,105,160
100.0
%
$
6,418,311
100.0
%
$
686,849
10.7
%
Existing Market1 Sales by
Product Line
Year Ended September
30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
2,207,851
53.2
%
$
2,063,800
51.3
%
$
144,051
7.0
%
Non-residential roofing products
1,183,422
28.5
%
1,200,934
29.9
%
(17,512
)
(1.5
%)
Complementary building products
759,906
18.3
%
755,454
18.8
%
4,452
0.6
%
$
4,151,179
100.0
%
$
4,020,188
100.0
%
$
130,991
3.3
%
Existing Market1 Sales by
Business Day2
Year Ended September
30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
8,727
53.2
%
$
8,190
51.3
%
$
537
6.6
%
Non-residential roofing products
4,678
28.5
%
4,766
29.9
%
(88
)
(1.8
%)
Complementary building products
3,004
18.3
%
2,998
18.8
%
6
0.2
%
$
16,409
100.0
%
$
15,954
100.0
%
$
455
2.9
%
1
Excludes acquired branches that have not
been under ownership for at least four fiscal quarters prior to the
start of fiscal year 2019.
2
There were 253 and 252 business days in
the years ended September 30, 2019 and 2018, respectively.
BEACON ROOFING SUPPLY,
INC.
Adjusted Net Income (Loss) and
Adjusted EPS1
(In thousands, except per
share amounts)
Three Months Ended September
30,
Year Ended September
30,
2019
2018
2019
2018
Amount
Per
Share2
Amount
Per
Share2
Amount
Per
Share3
Amount
Per
Share3
Net income (loss)
$
27,380
$
0.35
$
48,310
$
0.61
$
(10,612
)
$
(0.14
)
$
98,626
$
1.29
Adjustments:
Acquisition costs4
58,340
0.74
49,177
0.63
244,262
3.13
220,466
2.89
Business restructuring costs5
5,689
0.07
-
-
7,354
0.09
-
-
Effects of tax reform6
-
-
344
-
(462
)
(0.01
)
(48,805
)
(0.64
)
Total adjustments
64,029
0.81
49,521
0.63
251,154
3.21
171,661
2.25
Tax impact of total adjustments7
(9,379
)
(0.12
)
(13,747
)
(0.17
)
(64,326
)
(0.81
)
(63,607
)
(0.84
)
Total adjustments, net of tax
54,650
0.69
35,774
0.46
186,828
2.40
108,054
1.41
Adjusted Net Income (Loss)
$
82,030
$
1.04
$
84,084
$
1.07
$
176,216
$
2.26
$
206,680
$
2.70
1
Adjusted Net Income (Loss) is defined as
net income that excludes acquisition costs, business restructuring
costs, and the effects of tax reform. Adjusted net income (loss)
per share or "Adjusted EPS" is calculated by dividing the Adjusted
Net Income (Loss) for the period by the weighted-average diluted
shares outstanding for the period after assuming the full
conversion of the participating Preferred Stock.
2
The weighted-average share count utilized
in the calculation of Adjusted EPS for the quarter ended September
30, 2019 is 78,947,719, which is equal to the 69,253,100 diluted
weighted-average shares outstanding plus the assumed conversion of
9,694,619 weighted-average shares of participating Preferred Stock.
The weighted-average share count utilized in the calculation of
Adjusted EPS for the quarter ended September 30, 2018 is
78,737,487, which is equal to the 69,042,868 diluted
weighted-average shares outstanding plus the assumed conversion of
9,694,619 weighted-average shares of participating Preferred Stock.
The shares of participating Preferred Stock were excluded from the
GAAP net income (loss) per share calculations for both periods due
to their anti-dilutive nature.
3
The weighted-average share count utilized
in the calculation of Adjusted EPS for the year ended September 30,
2019 is 78,118,907, which is equal to the 68,424,288 diluted
weighted-average shares outstanding plus the assumed conversion of
9,694,619 weighted-average shares of participating Preferred Stock.
The weighted-average share count utilized in the calculation of
Adjusted EPS for the year ended September 30, 2018 is 76,415,522,
which is equal to the 69,191,039 diluted weighted-average shares
outstanding plus the assumed conversion of 7,224,483
weighted-average shares of participating Preferred Stock. The
shares of participating Preferred Stock were excluded from the GAAP
net income (loss) per share calculations for both periods due to
their anti-dilutive nature.
4
The following table presents a breakout of
the components of acquisition costs for each of the periods
indicated:
Three Months Ended
September 30,
Year Ended
September 30,
2019
2018
2019
2018
Amortization of intangible assets
$
51,557
$
35,847
$
207,065
$
141,185
Costs classified as selling, general, and
administrativea
3,757
10,614
25,095
54,442
Amortization of debt issuance costs
3,026
2,716
12,102
24,839
Total acquisition costs
58,340
49,177
244,262
220,466
- Selling, general, and administrative costs related to
acquisitions are mainly composed of professional fees, branch
integration expenses, travel expenses, employee severance and
retention costs, and other personnel expenses.
5
Business restructuring costs are composed
of costs stemming from headcount rationalization efforts and
accrued estimated costs related to employee benefit
restructuring.
6
Impact of the Tax Cuts and Jobs Act of
2017.
7
The effective tax rate applied to these
adjustments is calculated by using adjusted pre-tax income while
factoring in discrete tax adjustments for the fiscal year. The tax
impact of adjustments for the quarter ended September 30, 2019 and
2018 were calculated using an effective tax rate of 14.6% and
28.0%, respectively. The tax impact of adjustments for the year
ended September 30, 2019 and 2018 were calculated using an
effective tax rate of 25.8% and 28.9%, respectively.
We use Adjusted Net Income (Loss) and Adjusted EPS to evaluate
financial performance, analyze the underlying trends in our
business and establish operational goals and forecasts that are
used when allocating resources.
We believe that Adjusted Net Income (Loss) and Adjusted EPS are
useful measures because they permit investors to better understand
changes in underlying operating performance over comparative
periods by providing financial results that are unaffected by
cyclical variances that can be driven by items such as investment
activity or purchase accounting adjustments.
While we believe Adjusted Net Income (Loss) and Adjusted EPS are
useful to investors when evaluating our business, they are not
prepared and presented in accordance with United States Generally
Accepted Accounting Principles (“GAAP”), and therefore should be
considered supplemental in nature. You should not consider Adjusted
Net Income (Loss) or Adjusted EPS in isolation or as a substitute
for net income and net income per share or diluted earnings per
share calculated in accordance with GAAP. Adjusted Net Income
(Loss) and Adjusted EPS may have material limitations including,
but not limited to, the exclusion of certain costs without a
corresponding reduction of net income for the income generated by
the assets to which the excluded costs are related. In addition,
Adjusted Net Income (Loss) and Adjusted EPS may differ from
similarly titled measures presented by other companies.
BEACON ROOFING SUPPLY,
INC.
Adjusted EBITDA1
(In thousands)
Three Months Ended
September 30,
Year Ended
September 30,
2019
2018
2019
2018
Net income (loss)
$
27,380
$
48,310
$
(10,612
)
$
98,626
Interest expense, net
38,446
38,740
160,246
143,074
Income taxes
20,862
22,747
(170
)
(30,544
)
Depreciation and amortization
69,473
54,524
277,760
201,503
Stock-based compensation
3,459
3,340
16,360
16,473
Acquisition costs2
3,757
10,614
25,095
54,441
Business restructuring costs3
5,689
-
7,354
-
Adjusted EBITDA
$
169,066
$
178,275
$
476,033
$
483,573
Adjusted EBITDA as a % of net sales
8.3
%
9.2
%
6.7
%
7.5
%
1
Adjusted EBITDA is defined as net income
plus interest expense (net of interest income), income taxes,
depreciation and amortization, stock-based compensation,
acquisition costs, and business restructuring costs. EBITDA is a
measure commonly used in the distribution industry, and we present
Adjusted EBITDA to enhance your understanding of our operating
performance.
2
Represents selling, general, and
administrative costs related to acquisitions (excluding the impact
of tax). Other items the Company classifies as acquisition costs
are embedded in other balances of the table.
3
Business restructuring costs are composed
of costs stemming from headcount rationalization efforts and
accrued estimated costs related to employee benefit
restructuring.
We use Adjusted EBITDA to evaluate financial performance,
analyze the underlying trends in our business and establish
operational goals and forecasts that are used when allocating
resources. We expect to compute Adjusted EBITDA consistently using
the same methods each period.
We believe that Adjusted EBITDA is a useful measure because it
permits investors to better understand changes in underlying
operating performance over comparative periods by providing
financial results that are unaffected by cyclical variances that
can be driven by items such as investment activity or purchase
accounting adjustments.
While we believe Adjusted EBITDA is useful to investors when
evaluating our business, it is not prepared and presented in
accordance with United States Generally Accepted Accounting
Principles (“GAAP”), and therefore should be considered
supplemental in nature. Adjusted EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from
operations, or any other items calculated in accordance with GAAP.
Adjusted EBITDA may have material limitations including, but not
limited to, the exclusion of certain costs without a corresponding
reduction of net income for the income generated by the assets to
which the excluded costs are related. In addition, Adjusted EBITDA
may differ from similarly titled measures presented by other
companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191125005758/en/
Beacon Roofing Supply, Inc. Joseph Nowicki, Executive VP &
CFO 571-323-3939 Joseph.Nowicki@becn.com
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