Beacon Roofing Supply, Inc. (BECN) recently reported results for the third quarter of fiscal 2009. The company reported earnings of 38 cents per share, above the Zacks Consensus Estimate of 34 cents. However, the reported earnings were down 17.1% from 41 cents in the third quarter of fiscal 2008.
Quarterly sales declined 9.9% to $463.6 million from $514.6 million last year. An increase in residential roofing sales was more than offset by lower sales in non-residential and complementary building products.
The company reported operating income of $33.6 million for the quarter, compared to $36.9 million in the third quarter of fiscal 2008. The decline in sales was partially offset by a 10.8% decline in operating expenses. Operating expenses as a percentage of sales were down at 16.0% compared to 16.2% in the year-ago period.
Sales across the three major product lines are as follows: up 10.4% in residential roofing, down 25.6% in non-residential roofing and down 25.1% 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 comes from maintenance (re-roofing) than it does from new home construction.
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 further 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 non-residential roofing and complementary building products for the next couple of quarters.
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