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Beacon Roofing (BECN) Q3 Earnings & Sales Miss Estimates

Zacks Equity Research

Beacon Roofing Supply, Inc. BECN reported lower-than-expected results in third-quarter fiscal 2019. The top and bottom lines declined from the prior-year period, thanks to persistent weather challenges.

Beacon Roofing reported adjusted earnings of 92 cents per share, missing the Zacks Consensus Estimate of $1.24 by 25.8%. The reported figure decreased 22% from $1.18 per share a year ago. Fiscal third-quarter results were impacted by weather challenges, primarily resulting from 25-30% more rain days than the prior year. This translates to an adverse impact of approximately $85 million on sales and 20 cents on adjusted EPS.

Sales & Operating Highlights

Net sales of $1.92 billion lagged the consensus mark of $1.99 billion by 3.4% and decreased 0.5% year over year. The decline was due to lower sales of non-residential roofing products (down 2.4%) and complementary products (declining 3.6%). This was partly offset by higher residential roofing product sales (up 2.9%).

Meanwhile, net sales from existing markets were down 1.1% from the year-ago period, mainly due to higher rainfall across the United States that impacted contractor installations.

Gross margin contracted 90 basis points (bps) to 24.6%.

Operating expenses increased 60 bps to 20.7% of total net sales during the quarter. Adjusted EBITDA declined 15.9% year over year to $157.8 million.

Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise

 

Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise

Beacon Roofing Supply, Inc. price-consensus-eps-surprise-chart | Beacon Roofing Supply, Inc. Quote

Cash Position

As of Jun 30, 2019, Beacon Roofing had cash and cash equivalents of $27.7 million, up from $27.6 million reported in the corresponding period of 2018. Cash used in operations was $194.9 million in the first nine months of fiscal 2019 versus $1 million in the comparable year-ago period.

Zacks Rank and Stocks to Consider

Beacon Roofing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Retail-Wholesale sector include Builders FirstSource, Inc. BLDR, Williams-Sonoma, Inc. WSM and RH RH, each carrying a Zacks Rank #2 (Buy).

Builders FirstSource surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average positive earnings surprise of 26.6%.

Williams-Sonoma and RH have a three-five year expected EPS growth rate of 7.2% and 12.5%, respectively.

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