Beacon Roofing Supply Inc. (BECN) has acquired two Canadian companies, Posi-Slope Enterprises Inc. and its sister company Posi-Pentes. Both engage in the design and fabrication of tapered roof insulation systems. The terms of the deals have yet to be disclosed.
Posi-Slope Enterprises Inc., a tapered roof manufacturer and designer, has two locations in Ontario and Quebec and serves customers throughout Canada. Beacon has chosen to retain the top management and the employees of the acquired companies to better serve its customers, both existing and those of the acquired companies.
Beacon’s historical growth is driven by acquisitions and new branch openings. In a span of nine years (i.e. starting from 1998 to 2007), Beacon has successfully integrated seventeen strategic and complementary acquisitions.
We appreciate the strategy adopted by the company to acquire market leaders in different geographic areas and thus expand into as yet unexplored markets.
We believe the acquisition of Posi-Slope’s complements Beacon’s existing tapered insulation business in Eastern Canada and will also help Beacon to expand its business in the Province of Ontario and Quebec.
Beacon witnessed sluggish result in the first quarter of fiscal 2010 with reported earnings of 17 cents per share, which fell below the Zacks Consensus Estimate of 19 cents and dipped 58.5% compared with the prior-year quarter.
The company is witnessing lower residential and non-residential roofing sales volumes in most regions, due to a significant decline in housing starts and weak commercial construction activity in these markets.
With a decline in housing prices and less equity to tap for repair, end-users are likely to delay project repair work on items such as doors, windows, siding, etc. Therefore, the company might see some downturn if weakness persists in the company’s end markets.
After the announcement of the acquisition, the closing share price of the company dipped by 32 cents to $17.76 on July 16, 2010.
Based in Peabody, Massachusetts, Beacon is a premier distributor of residential and non-residential roofing materials. The company has 180 branches in the U.S. and three provinces in Eastern Canada.
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