Beacon Roofing Supply posted first quarter net sales of $1.72 billion, up 53.4% from the first quarter of last year, according to news release from the company. Despite strong sales for the Herndon, Va.-based dealer, Beacon reported a net loss of $893,000 in the quarter after reporting a net income of $67.6 million in the first quarter last year.
Beacon said the first quarter results were negatively impacted by higher operating expenses and an increase in interest expense and preferred dividend payments related to its acquisition of Allied Building Products in August 2017. The firm’s costs also grew steadily in the first quarter. Selling, general, and administrative fees for Beacon increased 69.1% year over year to $327.7 million. Selling, general, and administrative fees as a percentage of revenues increased nearly 2.0% from the year-earlier period. Depreciation climbed over 100% and amortization swelled nearly doubled year over year.
Conversely, the company said first quarter results were positively impacted by price gains across all Beacon product lines and improved gross margin performance. First quarter gross margins increased 130 basis points to 25.3%. Beacon attributed the gross margin growth to existing market improvement and benefits from its Allied acquisition. Gross profit increased 61.5% year over year to $435.6 million.
Residential roofing product sales for Beacon increased 24.4% year over year, non-residential roofing product sales increased 27.6%, and complementary product sales increased 178.9% from the year-earlier period. Beacon said existing market net sales, excluding acquisitions, declined 1.9% year over year—which the dealer primarily attributed to weather-related events.
“The [Allied] integration continues to go well, and cost synergies remain on track with current expectations,” Beacon president and CEO Paul Isabella said in a public statement. “The positive outcomes are underpinned by the fact that our business remains composed of 70-75% repair and remodeling, which is largely demand that is non-discretionary in nature. We remain focused on returning to positive organic sales growth during 2019 by leveraging our industry leading digital platform and key growth initiatives to drive market outperformance.”
Beacon recorded a first quarter adjusted EBITDA—income before interest, taxes, depreciation, and amortization—of $121.7 million, a 41.5% increase year over year.
Below the operating line, interest expense rose 70% year over year to $38.3 million. The company’s balance sheet lists goodwill as $2.5 billion of its $6.3 billion in total assets. On the liabilities side, long-term debt totals $2.5 billion.
Beacon Roofing Supply was the 3rd largest company on the most recent ProSales 100 list. It operates over 500 branches throughout all 50 U.S. states and six Canadian provinces.
