Earlier today, Beacon Roofing Supply, Inc. (BECN) reported results for the fourth quarter and full-year fiscal 2009. The company reported earnings of 42 cents per share, above the Zacks Consensus Estimate of 38 cents. However, the reported earnings were down 23.6% from 55 cents in the fourth quarter of fiscal 2008.
Quarterly sales declined 14.0% to $487.7 million from $567.2 million last year. Sales were down in all the three major product lines. Residential roofing sales dropped 6.7% as lower volumes more than offset the increase in selling prices. Sales in the non-residential roofing and complementary building products declined 21.2% and 17.8% respectively, due to a significant decline in new construction and remodeling.
The company reported operating income of $36.5 million for the quarter, compared to $48.9 million in the fourth quarter of fiscal 2008. The decline in sales was partially offset by lower operating expenses. Operating expenses as a percentage of sales were down to 15.7% compared to 16.0% in the year-ago period.
For the full year, Beacon reported earnings of $1.15 per share, above the Zacks Consensus Estimate of $1.09 and up 27.8% year over year. The earnings growth was driven by the company’s strong performance in the first half of the year.
Fiscal 2009 sales of $1.73 billion were 2.8% lower compared to $1.78 billion posted in the previous year. Sales across the three major product lines were as follows: up 18.3% in residential roofing, down 17.1% in non-residential roofing and down 21.6% in complementary building products. The growth in residential roofing sales was driven by higher selling prices, partially offset by lower volumes in most of the regions. In the residential roofing market, a large part of demand came from maintenance (re-roofing) activity.
Non-residential roofing sales were down due to a significant slowdown in commercial activity. Complementary product sales, which are more discretionary in nature than roofing products, continue to be negatively impacted by both the slowdown in the economy and lower levels of new residential construction.
With significant declines in housing prices and less equity to tap for repair, end-users are delaying project repair work on items outside of roofing such as doors, windows and siding. We see continued weakness in the company’s end markets for the next couple of quarters.
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