Beacon's (BECN) Stock Dips Despite Q3 Earnings & Sales Beat
Beacon Roofing Supply, Inc.’s BECN shares fell 3% in the after-hours trading session on Aug 6, despite impressive third-quarter fiscal 2020 results. The top and bottom lines surpassed the Zacks Consensus Estimate, mainly backed by exceptional operating cost and cash flow performance for the quarter.
Julian Francis, Beacon’s president and chief executive officer said, “Our limited reliance on discretionary product categories and our diverse mix of residential and non-residential markets provides our business with stability in this challenging environment.”
Quarter in Detail
Beacon reported adjusted earnings of 93 cents per share, which topped the consensus mark of 61 cents by 52.5% and grew 1.1% from the year-ago figure of 92 cents. Despite low revenues, aggressive cost-cutting actions — including reduction in both hours worked and headcount, as well as decrease in fleet costs and other discretionary expenditures — aided the bottom line.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing Supply, Inc. price-consensus-eps-surprise-chart | Beacon Roofing Supply, Inc. Quote
Net sales of $1.79 billion surpassed the consensus mark of $1.76 billion by 1.9% but fell 6.9% year over year due to soft demand — especially in April — owing to government mandates, partially offset by stable sales in states/provinces.
Sales of residential roofing products (accounting for 46.7% of net sales), non-residential roofing products (23.8%) and complementary products (29.5%) declined 1.3%, 9.6% and 12.5%, respectively.
Operating Highlights
Cost of goods sold, as a percentage of net sales, surged 50 basis points (bps) to 75.9%.
SG&A expenses decreased 10.2% year over year. As a percentage of net sales, SG&A improved 60 bps year over year. Adjusted EBITDA declined 6.5% and margin remained flat year over year, reflecting strong operating cost-control measures.
Cash Position
At fiscal third quarter-end, Beacon had cash and cash equivalents of $1,018.4 million, significantly up from $72.3 million at fiscal 2019-end. Long-term debt — net of current portion — was $2.5 billion, almost in line with the last reported quarter and the year-ago figure.
Cash provided to operations was reported at $250.4 million in the first nine months of fiscal 2020 versus $194.9 million cash used in operations a year ago.
Zacks Rank & Peer Release
Beacon Roofing — which shares space with Builders FirstSource, Inc. BLDR and BMC Stock Holdings, Inc. BMCH in the Zacks Building Products – Retail industry — currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fastenal Company FAST reported strong second-quarter 2020 results. The top and bottom lines topped the respective Zacks Consensus Estimate, courtesy of higher demand for personal protective equipment products.
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