Beacon Provides Business & COVID-19 Updates
Beacon (the “Company”) announced preliminary financial results for its fiscal year 2020 second quarter and provided a COVID-19 business update. The COVID-19 update addresses recent business trends, management’s rapid action to reduce costs and increase financial flexibility, and the Company’s continued efforts to assist its customers in the current environment. A supplemental presentation to the COVID-19 business update is available within the Investor Relations section of the Company’s website.
Preliminary Financial Results for Three Months Ended March 31, 2020
Net sales are expected to be approximately $1.46 billion, representing overall sales growth of 2% and a daily sales increase of 0.5%, as compared to the prior year period. Net income (loss), including the impact of non-cash accelerated intangible asset amortization of approximately $143.0 million stemming from the Company’s previously announced rebranding, is estimated to range between $(120.0) and $(130.0) million. Adjusted EBITDA is estimated to range between $30.0 and $40.0 million. A reconciliation of the Company’s estimated Adjusted EBITDA range to the most directly comparable GAAP financial measure may be found attached to this press release.
COVID-19 Business Update from Julian Francis, Beacon’s President and Chief Executive Officer
“In this unprecedented time, Beacon continues to emphasize the health and safety of our employees, customers and communities. Amid the current COVID-19 backdrop, our employees are practicing social distancing and are handwashing and cleaning in accordance with CDC standards. Nearly all our 500+ branches remain open and have been designated essential businesses in the local markets we serve. We continue to deliver products to all areas of the construction market, both residential and commercial. Repair and replacement of damaged or aging roofs represents more than 80% of total roofing demand and clearly contributes to the health and well-being of the community, particularly those hit by damaging storms these past few weeks. While we continue to serve customers in every way possible, our online platform has stood out as an increasingly valuable tool in this operating environment.
“We are pleased with preliminary second quarter sales that broadly met our internal expectations and continued the momentum from Q1, even as COVID-19 began to impact our daily sales in March. We made progress against each of our strategic priorities: seeing positive organic growth; improving our operating efficiency; increasing use of our digital solution; and extending our branch On Time & Complete (“OTC”) network by opening a custom-built location in the important Denver market. I continue to believe our strategy will deliver improved operating results over time.
“During April, most of our markets have experienced modest negative impacts with mid-to-high single digit daily sales decreases when compared to last year. In a select number of states, including California, New York, New Jersey and Pennsylvania, that have stronger restrictions in place, we have experienced more significant year-over-year headwinds and have not seen the typical seasonal improvement we would expect this time of year. As a result, overall April daily sales are down ~20% year-over-year. While we are taking significant near-term actions and are fully prepared to leverage the economic recovery, given the heightened uncertainty about the timing and extent of that recovery, we are withdrawing our fiscal 2020 full-year expectations.
“Our long-term strategies remain intact, and we are accelerating many of them given the urgency of the COVID-19 environment. We have implemented a series of swift and decisive operational and financial actions to combat the effects of the COVID-19 induced slowdown. We immediately responded to changes in localized demand through aggressive cost-cutting actions, including a reduction in seasonal and temporary hiring, cuts in overtime hours and reduced hourly schedules. We have also implemented furloughs in both operating and non-operating functions, reduced salaries, significantly restricted capital expenditures and required a heightened organizational focus on tightly managing all expenses. We have taken meaningful action to improve our cost structure and are prepared to take additional steps to appropriately manage the business through this uncertain period. We are also monitoring input costs to ensure we are well-positioned to take advantage of any opportunities that present themselves over the next several quarters. We are confident these actions will make Beacon a stronger company, with many of these benefits extending beyond the COVID-19 disruption.
“As previously announced, we proactively drew down our revolver to improve our financial flexibility. Even so, we continue to evaluate additional actions to ensure we have the liquidity and flexibility to manage through an elongated downturn. Beacon has historically delivered strong levels of operating cash flow through all types of business cycles, and we anticipate positive operating cash flow during the second half of fiscal year 2020. By safeguarding our people, our business, and our finances, Beacon is well-prepared to weather the challenging weeks or months ahead.”
Founded in 1928, Beacon is a Fortune 500, publicly-traded distributor of residential and commercial building products in North America, operating over 500 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 110,000 customers, utilizing its vast branch network and diverse service offerings to provide high-quality products and support throughout the entire business lifecycle. Beacon offers its own private label brand, TRI-BUILT, and has a proprietary digital account management suite, Beacon Pro+, which allows customers to manage their businesses online. Beacon’s stock is traded on the Nasdaq Global Select Market under the ticker symbol BECN. To learn more about Beacon, please visit www.becn.com.
Joseph Nowicki – Executive Vice President & CFO – Joseph.Nowicki@becn.com – (571) 323-3939
Source: Beacon Roofing Supply, Inc.