10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Beacon Roofing Supply Inc. Reports Operating Results (10-K)

December 01, 2009 | About:
10qk

10qk

18 followers
Beacon Roofing Supply Inc. (BECN) filed Annual Report for the period ended 2009-09-30.

Beacon Roofing Supply, Inc. is one of the largest distributors of residential and non-residential roofing materials in the United States and Canada. It also distributes other complementary exterior building products. It operate in several states and three Canadian provinces and is a leading distributor of roofing materials in key metropolitan markets in the Northeast, Mid-Atlantic, Southeast and Southwest regions of the United States and in Eastern Canada. Beacon Roofing Supply Inc. has a market cap of $693.6 million; its shares were traded at around $15.37 with a P/E ratio of 11.9 and P/S ratio of 0.4.

Highlight of Business Operations:

We have achieved our growth through a combination of sixteen strategic and complementary acquisitions between 1999 and 2009, opening new branch locations, acquiring branches and broadening our product offering. We have grown from $127.0 million in sales in fiscal year 1999 to $1.734 billion in sales in fiscal year 2009, which represents a compound annual growth rate of 29.9%. Our internal growth, which includes growth from existing and newly opened branches but excludes growth from acquired branches, was 4.1% per annum over the same period. Acquired branches are excluded from internal growth measures until they have been under our ownership for at least four full fiscal quarters at the start of the reporting period. During this eleven-year period, we opened thirty-five new branch locations (of which we have only closed one), while our same store sales increased an average of 0.7%

per annum. Same store sales are defined as the aggregate sales from branches open for the entire comparable annual periods within the eleven-year period. Income from operations has increased from $8.5 million in fiscal year 1999 to $109.2 million in fiscal year 2009, which represents a compound annual growth rate of 29.1%. We believe that our proven business model can deliver industry-leading growth and operating profit margins.

Our predecessor, Beacon Sales Company, Inc., was founded in Charlestown, Massachusetts (a part of Boston) in 1928. In 1984, when our former Chairman Andrew Logie acquired Beacon Sales Company with other investors, Beacon operated three distribution facilities and generated approximately $16 million in annual revenue. In August 1997, Code, Hennessy & Simmons III, L.P., a Chicago-based private equity fund, and certain members of management, purchased Beacon Sales Company to use it as a platform to acquire leading regional roofing materials distributors throughout the United States and Canada. At the time of the purchase by Code Hennessy and management, Beacon Sales Company operated seven branches in New England and generated approximately $72 million of revenue annually, primarily from the sale of non-residential roofing products. Since 1997, we have made seventeen strategic and complementary acquisitions. Also since 1997, we have opened a total of thirty-six new branches (of which we have only closed one). We have also expanded our product offerings to offer more residential roofing products and complementary exterior building materials and related services. Our strategic acquisitions, branch expansions, and product line extensions have increased the diversity of both our customer base and local market focus and generated cost savings through increased purchasing power and reduced overhead expenses as a percentage of net sales. We completed an initial public offering ("IPO") and became a public company in September 2004, and completed a follow-on stock offering in December 2005.

The U.S. roofing market, based upon manufacturer sales to distributors and others, was estimated to be approximately $13.7 billion in 2007, which is the latest industry information available to us, and is projected to grow 2.6% annually through 2012 to $15.6 billion. We believe this rate of growth is within the range the stable long-term growth rates in the industry over the past 40 years.

These complementary products also significantly contribute to the overall building products market. In 2007, the U.S. siding market was approximately $10.5 billion and the U.S. window and door industry was approximately $34.9 billion. Both of these markets have been negatively impacted by the decline in new housing starts in recent years but are are expected to grow in line with that of the roofing industry over the next several years.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.9/5 (9 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK