While other companies continue to feel the painful aftereffects of a punch-drunk economy, Beacon Roofing Supply has gotten off to a strong start in 2009.
The Peabody, Mass.-based roofing and building products distributor reported today its first-quarter 2009 sales reached $463.3 million for the period ended Dec. 31, 2008. That's a 16.3% increase from the year-earlier fiscal first quarter for the No. 6 company on the 2008 ProSales 100 list of America's biggest LBM operations.
Residential roofing sales increased 58.5%, the company reported. Non-residential (commercial) roofing and complementary product sales declined 4.7% and 17.5%, respectively. In a statement, Beacon Roofing said residential roofing sales benefited from year-over-year price increases as well as from strong re-roofing activity in markets that were affected by Hurricane Ike.
Non-residential sales slowed, due in part to early winter conditions in the company's markets that have the largest concentration of commercial business. Complementary product sales continued to be negatively impacted by both the slowdown in the economy and lower levels of new construction.
The company's net income for the first quarter was $18.6 million compared to $5.2 million in 2007, an increase of 256%. Gross profit in the first quarter was $116 million, up $24.3 million from the equivalent months in 2007.
The gross margin rate increased to 25% from 23%, primarily due to the sales mix shift to more residential roofing products, which have substantially higher gross margins than the more competitive non-residential market. Additionally, the company said it realized a benefit from "lower weighted-average costs" of residential roofing products in comparison to the price levels of those products in the marketplace.
Operating expenses increased $2.4 million, or 3.2%, primarily due to an increase in payroll and related costs resulting from higher incentive-based pay accruals and less favorable medical insurance claims experience, the company said.
"We had an excellent first quarter, which included some short-term benefits and provided a good start to fiscal 2009, during which we expect to continue to face difficult economic conditions," said Robert Buck, Beacon Roofing chairman and CEO.
"We have managed our working capital effectively and continue to pay down our debt, further strengthening our balance sheet," Buck added. "We believe we will be in very good shape once the economy begins to turn>"
Beacon Roofing operates 171 branches in 35 states in the United States and Eastern Canada. The company had total sales for 2008 of $1.78 billion, up more than 8% from sales of $1.65 billion in 2007.