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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Beacon Roofing Supply Inc | NASDAQ:BECN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.43 | -0.45% | 95.46 | 82.00 | 103.75 | 97.96 | 95.26 | 96.86 | 801,138 | 22:30:00 |
Beacon Roofing Supply, Inc. (Nasdaq: BECN) (“Beacon” or the “Company”) announced results today for its third quarter and nine-month period ended June 30, 2019 (“2019”).
Paul Isabella, the Company's President and Chief Executive Officer, stated: “Although our fiscal third quarter results fell short of expectations, there were several positives supporting optimism for the fourth quarter and fiscal year 2020. Most notably, we saw a 3% organic sales increase within our residential product line, our 2nd consecutive quarter of positive growth. In addition, we reduced our debt and our digital platform performance was exceptional; Beacon Pro+ is unquestionably continuing to evolve as a differentiator in the marketplace. July results also were favorable on a daily sales basis, suggesting underlying demand remains healthy. Overall, third quarter results were hampered by persistent weather challenges, resulting primarily from 25-30% more rain days compared to the prior year. This translates into approximately $85 million of sales and 20 cents of Adjusted EPS impact, affecting both gross margins and operating expense leverage. To further right size our fixed cost structure, we have taken specific company-wide actions that will generate annualized savings of approximately $25 million. These efforts will result in greater operating leverage when volumes increase, as expected in Q4 and next year. Beacon will remain focused on our growth initiatives and cost reduction in order to maximize performance for our shareholders.”
Third Quarter
Net sales decreased 0.5% to $1.92 billion in 2019, from $1.93 billion in 2018. Residential roofing product sales increased 2.9%, non-residential roofing product sales decreased 2.4% and complementary product sales decreased 3.6% over the prior year. Existing markets net sales decreased 1.1% compared to the prior year period, primarily due to higher rainfall levels across the U.S. in the current period, which negatively impacted contractor installations. The third quarter of fiscal years 2019 and 2018 each had 64 business days.
Net income (loss) attributable to common shareholders was $25.0 million, compared to $43.4 million in 2018. Diluted net income (loss) per share (“EPS”) was $0.32, compared to $0.55 in 2018. Third quarter results were negatively impacted by reduced gross margins and higher operating costs. The Company implemented actions at the end of the quarter to significantly reduce its cost structure to align with its long-term goals.
Adjusted Net Income (Loss) was $72.6 million, compared to $93.4 million in 2018. Adjusted EPS was $0.92, compared to $1.18 in 2018. Adjusted EBITDA was $157.8 million, compared to $187.7 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.)
Nine Months
Net sales increased 13.2% to $5.08 billion, up from $4.48 billion in the comparative 2018 period. Residential roofing product sales increased 8.7%, non-residential roofing product sales increased 4.8% and complementary product sales increased 27.1% over the prior year. Existing markets net sales increased 0.9% compared to the prior year period, primarily due to sales gains in our Northeast and Mid-Atlantic markets. The first nine months of fiscal years 2019 and 2018 each had 189 business days.
Net income (loss) attributable to common shareholders was $(56.0) million, compared to $38.3 million in 2018. EPS was $(0.82), compared to $0.51 in 2018. The nine-month results were negatively impacted by higher operating costs and increases in interest expense and preferred dividend payments that were both related to the acquisition of Allied. In addition, 2018 results include a $49.2 million net tax benefit resulting from the enactment of the Tax Cuts and Jobs Act of 2017. The nine-month results were positively impacted by price gains across all product lines.
Adjusted Net Income (Loss) was $94.2 million, compared to $122.6 million in 2018. Adjusted EPS was $1.21, compared to $1.62 in 2018. Adjusted EBITDA was $307.0 million, compared to $305.3 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).
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 Third Quarter 2019 Earnings Conference Call
When
Tuesday, August 6, 2019
Time:
5:00 p.m. ET
Webcast:
http://ir.beaconroofingsupply.com/events.cfm (live and replay)
Live Call:
720-634-9063; Conf. ID #2640209
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
(Unaudited; In thousands, except share and per share amounts)
Three Months Ended June 30,
Nine Months Ended June 30,
2019
% of Net Sales
2018
% of Net Sales
2019
% of Net Sales
2018
% of Net Sales
Net sales
$
1,924,534
100.0
%
$
1,934,951
100.0
%
$
5,075,247
100.0
%
$
4,482,555
100.0
%
Cost of products sold
1,451,998
75.4
%
1,441,057
74.5
%
3,832,154
75.5
%
3,380,531
75.4
%
Gross profit
472,536
24.6
%
493,894
25.5
%
1,243,093
24.5
%
1,102,024
24.6
%
Operating expense1:
Selling, general and administrative
328,827
17.1
%
323,194
16.7
%
976,928
19.3
%
858,534
19.2
%
Depreciation
17,731
0.9
%
15,811
0.8
%
52,779
1.0
%
41,640
0.9
%
Amortization
51,724
2.7
%
50,076
2.6
%
155,508
3.1
%
105,339
2.3
%
Total operating expense
398,282
20.7
%
389,081
20.1
%
1,185,215
23.4
%
1,005,513
22.4
%
Income (loss) from operations
74,254
3.9
%
104,813
5.4
%
57,878
1.1
%
96,511
2.2
%
Interest expense, financing costs, and other2
38,089
2.0
%
37,348
1.9
%
116,902
2.3
%
99,486
2.2
%
Income (loss) before provision for income taxes
36,165
1.9
%
67,465
3.5
%
(59,024
)
(1.2
%)
(2,975
)
0.0
%
Provision for (benefit from) income taxes
5,178
0.3
%
18,090
0.9
%
(21,032
)
(0.5
%)
(53,291
)
(1.1
%)
Net income (loss)
30,987
1.6
%
49,375
2.6
%
(37,992
)
(0.7
%)
50,316
1.1
%
Dividends on preferred shares3
6,000
0.3
%
6,000
0.4
%
18,000
0.4
%
12,000
0.2
%
Net income (loss) attributable to common shareholders
$
24,987
1.3
%
$
43,375
2.2
%
$
(55,992
)
(1.1
%)
$
38,316
0.9
%
Weighted-average common stock outstanding:
Basic
68,477,946
68,086,387
68,391,882
67,976,980
Diluted
69,265,384
69,148,143
68,391,882
69,240,040
Net income (loss) per share4:
Basic
$
0.32
$
0.56
$
(0.82
)
$
0.52
Diluted
$
0.32
$
0.55
$
(0.82
)
$
0.51
______________________________________________
1
Operating expense for the three months ended June 30, 2019 and 2018 includes acquisition and business restructuring costs of $7.4 million ($4.9 million, net of taxes) and $10.0 million ($7.1 million, net of taxes), respectively. Operating expense for the nine months ended June 30, 2019 and 2018 includes acquisition and business restructuring costs of $23.0 million ($16.3 million, net of taxes) and $43.8 million ($31.0 million, net of taxes), respectively.
2
Interest expense, financing costs, and other for the three months ended June 30, 2019 and 2018 includes acquisition costs of $3.0 million ($2.0 million, net of taxes) and $3.5 million ($2.5 million, net of taxes), respectively. Interest expense, financing costs, and other for the nine months ended June 30, 2019 and 2018 includes acquisition costs of $9.1 million ($6.4 million, net of taxes) and $22.1 million ($15.7 million, net of taxes), respectively.
3
Three months ended June 30, 2019 amount is 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. Three months ended June 30, 2018 amount is composed of $6.0 million in undeclared cumulative Preferred Stock dividends. Nine months ended June 30, 2019 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. Nine months ended June 30, 2018 amount is composed of $6.0 million in undeclared cumulative Preferred Stock dividends, as well as an additional $6.0 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 June 30,
Nine Months Ended June 30,
2019
2018
2019
2018
Net income (loss)
$
30,987
$
49,375
$
(37,992
)
$
50,316
Dividends on preferred shares
6,000
6,000
18,000
12,000
Net income (loss) attributable to common shareholders
$
24,987
$
43,375
$
(55,992
)
$
38,316
Undistributed income allocated to participating securities
(3,099
)
(5,406
)
-
(3,293
)
Net income (loss) attributable to common shareholders - basic and diluted
$
21,888
$
37,969
$
(55,992
)
$
35,023
Weighted-average common shares outstanding - basic
68,477,946
68,086,387
68,391,882
67,976,980
Effect of common share equivalents
787,438
1,061,756
-
1,263,060
Weighted-average common shares outstanding - diluted
69,265,384
69,148,143
68,391,882
69,240,040
Net income (loss) per share - basic
$
0.32
$
0.56
$
(0.82
)
$
0.52
Net income (loss) per share - diluted
$
0.32
$
0.55
$
(0.82
)
$
0.51
BEACON ROOFING SUPPLY, INC.
Consolidated Balance Sheets
(Unaudited; In thousands)
June 30,
September 30,
June 30,
2019
2018
2018
Assets
Current assets:
Cash and cash equivalents
$
27,729
$
129,927
$
27,551
Accounts receivable, net
1,079,091
1,090,533
1,077,888
Inventories, net
1,124,063
936,047
1,165,389
Prepaid expenses and other current assets
361,831
244,360
337,589
Total current assets
2,592,714
2,400,867
2,608,417
Property and equipment, net
269,041
280,407
288,708
Goodwill
2,490,940
2,491,779
2,321,180
Intangibles, net
1,177,694
1,334,366
1,371,005
Other assets, net
1,243
1,243
1,511
Total assets
$
6,531,632
$
6,508,662
$
6,590,821
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
643,411
$
880,872
$
719,686
Accrued expenses
590,756
611,539
520,952
Current portions of long-term debt/obligations
19,366
19,661
19,714
Total current liabilities
1,253,533
1,512,072
1,260,352
Borrowings under revolving lines of credit, net
424,011
92,442
482,489
Long-term debt, net
2,494,648
2,494,725
2,494,308
Deferred income taxes, net
110,180
106,994
93,928
Long-term obligations under equipment financing and other, net
6,332
13,639
15,979
Other long-term liabilities
5,352
5,290
6,319
Total liabilities
4,294,056
4,225,162
4,353,375
Convertible preferred stock
399,195
399,195
399,195
Stockholders' equity:
Common stock
684
681
681
Undesignated preferred stock
-
-
-
Additional paid-in capital
1,077,953
1,067,040
1,063,137
Retained earnings
777,842
833,834
792,502
Accumulated other comprehensive income (loss)
(18,098
)
(17,250
)
(18,069
)
Total stockholders' equity
1,838,381
1,884,305
1,838,251
Total liabilities and stockholders' equity
$
6,531,632
$
6,508,662
$
6,590,821
BEACON ROOFING SUPPLY, INC.
Consolidated Statements of Cash Flows
(Unaudited; In thousands)
Nine Months Ended June 30,
2019
2018
Operating Activities
Net income (loss)
$
(37,992
)
$
50,316
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
208,287
146,979
Stock-based compensation
12,901
13,133
Certain interest expense and other financing costs
9,077
11,549
Beneficial lease amortization
1,714
-
Loss on debt extinguishment
-
1,726
Gain on sale of fixed assets
(3,470
)
(1,131
)
Deferred income taxes
3,195
(48,855
)
Changes in operating assets and liabilities, net of the effects of businesses acquired in the period:
Accounts receivable
10,970
(52,024
)
Inventories
(188,213
)
(299,881
)
Prepaid expenses and other assets
(117,520
)
(19,511
)
Accounts payable and accrued expenses
(93,908
)
195,948
Other liabilities
62
732
Net cash provided by (used in) operating activities
(194,897
)
(1,019
)
Investing Activities
Purchases of property and equipment
(44,337
)
(34,978
)
Acquisition of businesses, net
(163,973
)
(2,715,429
)
Proceeds from the sale of assets
6,200
750
Net cash provided by (used in) investing activities
(202,110
)
(2,749,657
)
Financing Activities
Borrowings under revolving lines of credit
1,734,476
2,122,949
Repayments under revolving lines of credit
(1,404,836
)
(1,631,978
)
Borrowings under term loan
-
970,000
Repayments under term loan
(7,275
)
(443,425
)
Borrowings under senior notes
-
1,300,000
Payment of debt issuance costs
-
(65,788
)
Repayments under equipment financing facilities and other
(7,602
)
(8,604
)
Proceeds from issuance of convertible preferred stock
-
400,000
Payment of stock issuance costs
-
(1,279
)
Payment of dividends on preferred stock
(18,000
)
(6,000
)
Proceeds from issuance of common stock related to equity awards
1,654
6,950
Taxes paid related to net share settlement of equity awards
(3,639
)
(3,975
)
Net cash provided by (used in) financing activities
294,778
2,638,850
Effect of exchange rate changes on cash and cash equivalents
31
1,127
Net increase (decrease) in cash and cash equivalents
(102,198
)
(110,699
)
Cash and cash equivalents, beginning of period
129,927
138,250
Cash and cash equivalents, end of period
$
27,729
$
27,551
BEACON ROOFING SUPPLY, INC.
Consolidated Sales by Product Line
(Unaudited; In thousands)
Consolidated Sales by Product Line
Three Months Ended June 30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
848,259
44.1
%
$
824,461
42.6
%
$
23,798
2.9
%
Non-residential roofing products
472,105
24.5
%
483,524
25.0
%
(11,419
)
(2.4
%)
Complementary building products
604,170
31.4
%
626,966
32.4
%
(22,796
)
(3.6
%)
$
1,924,534
100.0
%
$
1,934,951
100.0
%
$
(10,417
)
(0.5
%)
Existing Market1 Sales by Product Line
Three Months Ended June 30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
846,944
44.3
%
$
821,827
42.5
%
$
25,117
3.1
%
Non-residential roofing products
471,661
24.7
%
483,335
25.0
%
(11,674
)
(2.4
%)
Complementary building products
592,020
31.0
%
627,301
32.5
%
(35,281
)
(5.6
%)
$
1,910,625
100.0
%
$
1,932,463
100.0
%
$
(21,838
)
(1.1
%)
Existing Market1 Sales by Business Day2
Three Months Ended June 30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
13,234
44.3
%
$
12,841
42.5
%
$
393
3.1
%
Non-residential roofing products
7,370
24.7
%
7,552
25.0
%
(182
)
(2.4
%)
Complementary building products
9,250
31.0
%
9,802
32.5
%
(552
)
(5.6
%)
$
29,854
100.0
%
$
30,195
100.0
%
$
(341
)
(1.1
%)
__________________________________________________
1
Excludes acquired branches that have not been under ownership for at least four fiscal quarters prior to the start of the third quarter of fiscal year 2019.
2
There were 64 business days in each of the quarters ended June 30, 2019 and 2018.
BEACON ROOFING SUPPLY, INC.
Consolidated Sales by Product Line
(Unaudited; In thousands)
Consolidated Sales by Product Line
Nine Months Ended June 30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
2,168,755
42.7
%
$
1,995,193
44.6
%
$
173,562
8.7
%
Non-residential roofing products
1,200,546
23.7
%
1,145,064
25.5
%
55,482
4.8
%
Complementary building products
1,705,946
33.6
%
1,342,298
29.9
%
363,648
27.1
%
$
5,075,247
100.0
%
$
4,482,555
100.0
%
$
592,692
13.2
%
Existing Market1 Sales by Product Line
Nine Months Ended June 30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
1,571,512
53.0
%
$
1,513,880
51.6
%
$
57,632
3.8
%
Non-residential roofing products
843,062
28.5
%
868,354
29.6
%
(25,292
)
(2.9
%)
Complementary building products
546,818
18.5
%
551,366
18.8
%
(4,548
)
(0.8
%)
$
2,961,392
100.0
%
$
2,933,600
100.0
%
$
27,792
0.9
%
Existing Market1 Sales by Business Day2
Nine Months Ended June 30,
2019
2018
Change
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
8,315
53.0
%
$
8,010
51.6
%
$
305
3.8
%
Non-residential roofing products
4,461
28.5
%
4,594
29.6
%
(133
)
(2.9
%)
Complementary building products
2,893
18.5
%
2,917
18.8
%
(24
)
(0.8
%)
$
15,669
100.0
%
$
15,521
100.0
%
$
148
0.9
%
__________________________________________________
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 189 business days in each of the nine-month periods ended June 30, 2019 and 2018.
BEACON ROOFING SUPPLY, INC.
Adjusted Net Income (Loss) and Adjusted EPS1
(Unaudited; In thousands, except per share amounts)
Three Months Ended June 30,
Nine Months Ended June 30,
2019
2018
2019
2018
Amount
Per
Share2
Amount
Per
Share2
Amount
Per
Share3
Amount
Per
Share3
Net income (loss)
$
30,987
$
0.39
$
49,375
$
0.63
$
(37,992
)
$
(0.49
)
$
50,316
$
0.67
Adjustments:
Acquisition costs4
60,482
0.77
63,561
0.80
185,922
2.38
171,289
2.26
Business restructuring costs5
1,664
0.02
-
-
1,664
0.02
-
-
Effects of tax reform6
-
-
(1,166
)
(0.02
)
(462
)
(0.01
)
(49,149
)
(0.65
)
Total adjustments
62,146
0.79
62,395
0.78
187,124
2.39
122,140
1.61
Tax impact of total adjustments7
(20,563
)
(0.26
)
(18,370
)
(0.23
)
(54,946
)
(0.69
)
(49,860
)
(0.66
)
Total adjustments, net of tax
41,583
0.53
44,025
0.55
132,178
1.70
72,280
0.95
Adjusted Net Income (Loss)
$
72,570
$
0.92
$
93,400
$
1.18
$
94,186
$
1.21
$
122,596
$
1.62
____________________________________________
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 three months ended June 30, 2019 is 78,960,003, which is equal to the 69,265,384 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 three months ended June 30, 2018 is 78,842,762, which is equal to the 69,148,143 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 nine months ended June 30, 2019 is 78,086,501, which is equal to the 68,391,882 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 nine months ended June 30, 2018 is 75,632,096, which is equal to the 69,240,040 diluted weighted-average shares outstanding plus the assumed conversion of 6,392,056 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 June 30
Nine Months Ended June 30
2019
2018
2019
2018
Amortization of intangible assets
$
51,723
$
50,075
$
155,508
$
105,339
Costs classified as selling, general, and administrativea
5,733
9,957
21,337
43,827
Amortization of debt issuance costs
3,026
3,529
9,077
22,123
Total acquisition costs
60,482
63,561
185,922
171,289
__________________________________________________
5
Business restructuring costs are mainly composed of costs stemming from headcount rationalization efforts.
6
Impact of the Tax Cuts and Jobs Act of 2017.
7
The effective tax rate applied to these adjustments is calculated by using forecasted adjusted pre-tax income while factoring in estimated discrete tax adjustments for the fiscal year. The tax impact of adjustments for the three months ended June 30, 2019 and 2018 were calculated using an effective tax rate of 33.1% and 29.5%, respectively. The tax impact of adjustments for the nine months ended June 30, 2019 and 2018 were calculated using an effective tax rate of 29.3% and 29.5%, 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
(Unaudited; In thousands)
Three Months Ended June 30,
Nine Months Ended June 30,
2019
2018
2019
2018
Net income (loss)
$
30,987
$
49,375
$
(37,992
)
$
50,316
Interest expense, net
40,169
39,055
121,800
104,334
Income taxes
5,178
18,090
(21,032
)
(53,291
)
Depreciation and amortization
69,455
65,887
208,287
146,979
Stock-based compensation
4,637
5,298
12,901
13,133
Acquisition costs2
5,733
9,957
21,337
43,827
Business restructuring costs3
1,664
-
1,664
-
Adjusted EBITDA
$
157,823
$
187,662
$
306,965
$
305,298
Adjusted EBITDA as a % of net sales
8.2
%
9.7
%
6.0
%
6.8
%
__________________________________________________
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 mainly composed of costs stemming from headcount rationalization efforts.
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/20190806005858/en/
Beacon Roofing Supply, Inc. Joseph Nowicki, Executive VP & CFO 571-323-3939 JNowicki@becn.com
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