Beacon Roofing (BECN) Falls on Dismal Q4 & 2014 Earnings – Analyst Blog

Beacon Roofing Supply, Inc. ( BECN ) tumbled around 9.8% and closed at $26.25 on Nov 25 after reporting dismal fourth-quarter and fiscal 2014 (ended Sep 30, 2014) earnings. Fourth-quarter adjusted earnings declined over 14% year over year to 48 cents per share owing to lower gross margins from reduced selling prices due to weak demand and a continued unfavorable shift in sales mix to lower margin direct shipment and commercial business. Earnings also fell short of the Zacks Consensus Estimate of 61 cents.

The company's reported earnings came in at 48 cents per share, decreasing 12.7% from 55 cents reported in the year-ago quarter.

Beacon Roofing Supply, Inc - Earnings Surprise | FindTheBest

Operational Update

The distributor of residential and non-residential roofing materials posted record fourth quarter and fiscal 2014 sales, driven by the success of 26 new greenfields opened in the current year.

Total revenue increased 6.3% year over year to a record $726.5 million and came ahead of the Zacks Consensus Estimate of $732 million. Complementary product sales increased 14.5% followed by a 5.1% rise in residential roofing products while Non-residential roofing product sales went up 4.9%.

Geographically, Beacon Roofing witnessed organic growth in five out of the seven reported regions in the quarter. The Midwest and Northeast led the way with double-digit gains fueled by storm and greenfield volume from the 2013 and 2014 openings. The company also viewed solid growth in the West, Canada and mid-Atlantic regions, whereas the Southeast and Southwest regions, both down double digits in the quarter, continued to struggle with volume as a lack of normal storm volume, lower residential reroof and new construction work has impacted overall demand and pricing.

Cost of goods sold went up 7% year over year to $563 million. Gross profit was $163 million, compared with $157.7 million in the year-ago quarter. Gross margin contracted 60 basis points (bps) from the prior-year quarter to 22.5% primarily due to decline in total pricing, mainly seen across the residential roofing products and commercial roofing products.

Operating expenses for the quarter increased 9% year over year to $120 million. The company posted an operating profit of $43.2 million, down 9% from $47.6 million in the prior-year quarter.

Fiscal 2014 Performance

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Beacon Roofing (BECN) Falls on Dismal Q4 & 2014 Earnings - Analyst Blog