Stock under Consideration: Beacon Roofing Supply Inc. (NASDAQ: BECN)

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HERNDON, Va., July 30, 2019 – Shares of Beacon Roofing Supply Inc. (NASDAQ: BECN) declined -2.46% to $36.52. The stock traded total volume of 364.047K shares lower than the average volume of 598.96K shares.

Beacon Roofing Supply Inc. (BECN) reported a loss of $68.10M in its fiscal second quarter. On a per-share basis, the Herndon, Virginia-based Company said it had a loss of $1.08. Losses, adjusted for costs related to mergers and acquisitions, were 45 cents per share. The results beat Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for a loss of 51 cents per share.

Second Quarter:

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Net sales increased 0.2% to $1.43B in 2019, a level similar to 2018. Residential roofing product sales increased 2.9%, non-residential roofing product sales reduced 5.7% and complementary product sales increased 1.1% over the prior year. Existing markets net sales reduced 0.4% contrast to the prior year period, mainly because of weather related events; however, sales by business day increased by 1.2% contrast to the prior year period. The second quarter of fiscal years 2019 and 2018 had 63 and 64 business days, respectively.

Net income (loss) attributable to common shareholders was $(74.10)M, contrast to $(72.70)M in 2018. Net income (loss) per share (“EPS”) was $(1.08), contrast to $(1.07) in 2018. Second quarter results were positively influenced by strong sales in geographies less influenced by the unfavorable weather and lower operating expense. Second quarter results were negatively influenced by lower gross margins.

Adjusted Net Income (Loss) was $(30.90)M, contrast to $(23.50)M in 2018. Adjusted EPS was $(0.45), contrast to $(0.35) in 2018. Adjusted EBITDA was $27.40M, contrast to $31.70M in 2018.

ABS REPORT

Six Months:

Net sales increased 23.7% to $3.15B, up from $2.55B in the comparative 2018 period. Residential roofing product sales increased 13.5%, non-residential roofing product sales increased 10.7% and complementary product sales increased 52.0% over the prior year. Existing markets net sales increased 0.8% contrast to the prior year period, mainly because of price gains across all product lines. The first six months of fiscal years 2019 and 2018 each had 125 business days.

Net income (loss) attributable to common shareholders was $(81.0)M, contrast to $(5.10)M in 2018. Net income (loss) per share (“EPS”) was $(1.18), contrast to $(0.07) in 2018. The six-month results were positively influenced by price gains across all product lines and improved gross margin performance. The six-month results were negatively influenced by higher operating expenses and increase in interest expense and preferred dividend payments that were both related to the acquisition of Allied. In addition, 2018 results include a $48.00M non-recurring net tax benefit resulting from the enactment of the Tax Cuts and Jobs Act of 2017.

Adjusted Net Income (Loss) was $9.60M, contrast to $23.20M in 2018. Adjusted EPS was $0.14, contrast to $0.34 in 2018. Adjusted EBITDA was $149.10M, contrast to $117.60M in 2018.

BECN has the market capitalization of $2.51B and its EPS growth ratio for the past five years was -20.70%. The return on assets ratio of the Company was 0.10% while its return on investment ratio stands at 4.10%. Price to sales ratio was 0.36.

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