Beacon Roofing Posts 50% Net Sales Increase
Originally published by: ProSales — November 20, 2018
by Vincent Salandro
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Despite the challenges posed by weather in the fourth quarter, Beacon Roofing Supply's net sales rose 50% year-over-year, according to a news release. Fourth quarter net sales rose to a record $1.9 billion according to the company.
Most of the boost in sales came from the acquisition of Allied Building Products, a deal that was closed in January. Excluding the impact of acquisition related costs and the non-recurring tax reform, Beacon's net income grew 27.8% year-over-year to $84.1 million in the fourth quarter.
Sales in the residential roofing product market grew 17.8% in the quarter, while complementary product sales grew 170.6% over the prior year. Excluding acquisitions, though, Beacon's sales decreased 5.6% in the quarter. The company attributed the decrease to weather-related events.
Beacon said fourth quarter results were positively impacted by price gains across all product lines and improved gross margin performance. Fourth quarter gross margins expanded by 40 basis points compared to the year-earlier period to 25.4%. Gross profit increased 52.3% year over year to $491.3 million.
The quarter results were negatively impacted by existing market sales declines, higher operating costs, and an increase in interest expense and preferred dividend payments that were both primarily related to the acquisition of Allied, according to the company. While the Allied acquisition helped boosted Beacon's sales numbers, it also impacted the firm's costs. Selling, general, and administrative fees went up 60.3% to $328.7 million. Selling, general, and administrative fees as a percentage of revenues climbed up from 15.8% to 17.0% in the July-to-September 2018 quarter. Depreciation jumped 110.3% to 18.7 million and amortization swelled nearly 68%.
Hendron, Va.-based Beacon, the 3rd largest company in the ProSales 100, recorded a fourth quarter adjusted EBITDA—income before interest, taxes, depreciation, and amortization—of $178.3 million, a 34.4% year-over-year increase.
"Despite significant weather impact top-line challenges, we are encouraged by our fourth quarter and fiscal 2018 progress," Beacon president and CEO Paul Isabella said in the news release. "Synergies from the Allied acquisition are exceeding expectations. We will build upon these successes in 2019 by leveraging our 2,000 person salesforce and vast network of over 500 branches to drive top-line growth, supported by the ongoing expansion of our robust digital platform."
Below the operating line, interest expense rose 174% to $37.1 million. The company's balance sheet lists goodwill as making up $2.5 billion of its $6.5 billion in assets. On the liabilities side, long-term debt totals $2.5 billion.