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Founded in 1928, Beacon Roofing Supply, Inc. ... Contractors not capable of dealing directly with manufacturer. Over 40,000 roofing contractors ... – PowerPoint PPT presentation

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Title: Screenshow US template

Financials for YTD Q2 ended March 2007
Investor Presentation Robert Buck Chief
Executive Officer David Grace Chief Financial
Officer Spring / Summer 2007
Forward looking statements
  • This presentation contains forward-looking
    statements. These statements relate to future
    events or our future financial performance and
    involve known and unknown risks, uncertainties
    and other factors that may cause our actual
    results, levels of activity, performance or
    achievements expressed or implied by these
    forward-looking statements. Although we believe
    that the expectations reflected in the
    forward-looking statements are reasonable, we
    cannot guarantee future results, levels of
    activity, performance or achievements. We
    caution you not to place undue reliance on
    forward-looking statements, which reflect our
    analysis only and speak only as of the date of
    this presentation, and you should refer to the
    Risk Factors section of our latest Form 10K.
    We undertake no obligation to update the
    forward-looking statements to reflect subsequent
    events or circumstances.

Company Overview Robert Buck Chief Executive
Beacon overview
Founded in 1928, Beacon Roofing Supply, Inc. has
grown to be one of the largest distributors of
residential and non-residential roofing materials
in the United States and Canada
  • A leader in key metropolitan markets in the
    Northeast, Mid-Atlantic, Midwest, Central Plains,
    Southeast and Southwest regions in the United
    States and in Eastern Canada
  • 176 branches across 34 U.S. states and 3 Canadian
  • Over 40,000 customers
  • Broad product offering of up to 10,000 SKUs
  • Strong historical performance
  • FY 2006 Sales of 1,500.6 million (8-year CAGR
  • FY 2006 Operating Income of 100.3 million
    (8-year CAGR 44)
  • FY 2006 Sales growth of 76, organic growth of
  • FY 2006 Operating income growth of 65.2
  • Successfully completed 16 acquisitions since 1997

Significant strategic accomplishments
Key accomplishments since IPO
Through fiscal 2006
  • Beacon successfully completed 11 strategic
    acquisitions since our IPO
  • Opened 18 new greenfield locations since the IPO

March across North America
Comprehensive assortment of products for all
external residential and commercial building needs
Complete product offering
Revenue product mix1
1 Steep Slope Roofing System 2 Underlayment 3 Cust
om Metals 4 Substrates 5 Wood vinyl
Siding 6 Flat Roof Systems 7 Rigid
Insulations 8 Air Vapor Barriers 9 Pressure
Treated Lumber 10 Cavity Wall Air Vapor Barrier
Systems 11 Doors Windows 12 Through Wall
Flashings 13 Expansion Joints 14 Below Grade
Waterproofing System 15 Below Grade Drainage
Systems 16 Waterstop 17 Concrete Sealers
Coatings 18 Ground Barriers
Non-residential roofing 36
Complementary building products 23
Residential roofing 41
1 Reflects existing market net revenue for FY 2006
  • 10,000 SKUs offered
  • Selected relationships with manufacturers to
    achieve substantial volume discounts
  • Re-roofing makes up approximately 67 and 79 of
    residential and non-residential demand

source Freedonia October 2006
Why invest in Beacon?
  • High value-added distributor performing a
    critical role in the roofing supply chain
  • Market leader in an attractive, growing and
    fragmented industry
  • Highly scalable platform and proven business
    model with minimal capital expenditures
  • Superior financial performance highlighted by
    attractive growth and margins
  • Historical 8-year sales CAGR 45 (1998-2006)
  • FY2006 internal sales growth 14.7
  • Industry leading operating income margins 6.7
  • Results-oriented management, corporate culture
    and controls

Critical role in roofing materials supply chain
  • Manufacturers not capable of servicing tens of
    thousands of specialized contractors
  • On-site and on-time delivery
  • Technical support
  • Credit to contractors
  • Inventory, multiple product lines
  • Contractors not capable of dealing directly with

Over 40,000 roofing contractors
Roofing product distributors will continue to be
a critical component of the roofing material
supply chain
reinforced by high value service offerings to
the contractor
  • Beacons reliability and contractor focus saves
    its customers time and money
  • Reliability of distributor is crucial to
    contractor profitability
  • Delivering on time Delay on a commercial site
    can cost a contractor 100s per hour
  • Product availability Lack of specified product
    can add substantial cost to contract
  • Our contractor focus allows strong product
    knowledge and expertise
  • Goal is to partner with the contractor rather
    than just supply
  • Customers support Beacons value proposition
  • Big box retailers less of a factor
  • Limited product selection
  • Retail oriented service and support
  • Basic to no product expertise

Recent customer survey results

Large and attractive market
U.S. roofing materials market
  • 12.7 billion industry in the U.S. with a
    projected growth rate of 1.9 annually through
  • Re-roofing (vs. new construction) accounts for
    approximately 70 of roofing expenditures
  • Re-roofing makes up approximately 67 and 79 of
    residential and non-residential demand,
  • Roofing demand has grown every year since 1993
  • Grown through three years of declining building
    construction expenditures (1995, 2001, 2002)
  • Almost two-thirds of the U.S. housing stock was
    built prior to 1980, with a median age of 30 years

Non-residential 35
Residential 65
2005 Total 12.7bn
Source The Freedonia Group October 2006
represents sales by manufacturers
Roofing market is somewhat insulated from swings
in the overall building cycle
Re-roofing Concentration Drives Stable Growth
Roofing Demand Compared to Interest Rates
  • Total roofing demand is very stable
  • Installed base of existing homes and commercial
    buildings is large and growing
  • Re-roofing is not a luxury expenditure, and it is
    not discretionary
  • There is virtually no correlation between
    interest rates and demand for roofing

Source Global Industry Analysts
Re-roofing Concentration Drives Stable Growth
Construction Spending Growth by Category
  • Residential new construction activity has been
  • Commercial new construction is also volatile and
    closely follows economic cycles
  • Demand for roofing, due to the large installed
    base of aging structures, remains very stable and
    consistent despite the construction cycles

Source Global Industry Analysts
Highly fragmented market is ripe for consolidation
Key considerations
Roofing distributors
  • Beacon is among the three largest roofing
    distributors in North America
  • Although over 1,500 distributors serve the
    roofing materials market, fewer than 5 are
  • Consolidation driven by customer demands and needs

lt 5 are regional
Market Share by Revenue
Total number of roofing distributors gt 1,500
Source IBIS World Pty Ltd.
Source Company estimate
Strong platform for growth and acquisitions
510 organic average annual growth potential
New branch openings (e.g., Boston/ Houston)
Existing market growth
Acquisitions 1,500 distributors
Potential average annual growth

  • Actual sales 8-year CAGR 45
  • Targeted number 6-12 locations per year
  • Incremental sales effect 1225mm
  • EBITDA impact Typically breakeven in year one
  • Compelling customer-driven rationale for industry
  • Acquisition opportunities are identified and
  • Highly fragmented market
  • Over 1,500 players
  • Long history of successful integration
  • Margin and revenue improvement
  • Scalable platform
  • Market plans by location
  • Sales rep productivity
  • Identify new prospects
  • New product offerings

Growth through new branch openings
Selective geographic expansion through new branch
  • Disciplined approach to new branch openings in
    contiguous markets
  • All branches opened by Beacon have been
  • 28 branches opened since 1997
  • Low initial investment 600,000 1,000,000
  • Rapid breakeven typically cash flow positive
    within one year
  • New markets are consistently being identified and
  • 18 branches have been opened since the IPO
  • Others in location identification stage
  • Branch managers have been identified

Branch opening actual results
Manchester, NH branch opening
Net sales ( in 000s)
  • Date Opened September 1997

10.7 CAGR
  • 6,579

Incremental sales
  • Estimated sales transferred

Operating income ( in 000s)
  • Cash flow positive within 8 months

8.2 CAGR

Incremental income
Estimated income transferred
Knowledgeable and experienced sales and marketing
321 sales and business developers
656 branch managers and contractor service
47 manufacturer representatives and product
  • Extensive coverage of/visits to local players
  • Prospect for new customers while increasing sales
    to existing customers
  • Manages contractor logistics including delivery
    and product placement
  • Provides value-added technical advice and product
  • Product specialists who liaise between
    manufacturers and contractors
  • Instrumental in specifying Beacon-sold products
    in construction products

Existing market growth
  • Significant opportunity to continue leveraging
    customer relationships to increase sales
  • Sales growth to existing customers of over 10 in
    2006 as compared to 2005
  • Strong track record of increasing the size and
    profitability of its customer base
  • Over 4,000 new customers added in 2006
  • Over 54 million of incremental sales from these
    new customers in 2006

Selective product offering and services expansion

Represents FY 2006 sales in U.S. existing
Acquisitions come with significant synergy
Revenue expansion
Best practices
Sophisticated uniform IT platform
Large operational scale
Beacon has a highly scalable business model
Acquisition performance
  • The Roof Center and West End Lumber Acquisitions
    Acquired June 2001 (000s)

Twelve month results at close
Fiscal 2006 results
Sales 195,868 Gross margin 26.6 Operating
income 4,953 margin 2.5
Sales 345,033 Gross margin 26.5 Operating
income 30,889 margin 8.95
Growth Synergies
  • Sales CAGR of 11.4
  • Operating income increased by 524 and operating
    margin expanded by 645 bps
  • 41.7 CAGR

Financial overview David Grace Chief Financial
Significant sales growth
Net Sales ( in millions)
Fiscal years
19992006 45 CAGR
0.7 Growth
Consistent annual growth in profitability and
cash flow
Operating income ( in millions)
Fiscal years
19992006 44 CAGR
56 Contraction
Note Operating income for pro forma 2004
excludes certain stock-based-compensation of
Margin Analysis
Gross profit margin
Operating income margin
Note Operating income for pro forma 2004
excludes certain stock-based-compensation of
Financial performance review
( millions)
Financially positioned to deliver on growth
  • Ample liquidity
  • 150 million U.S. revolving line of credit and
    CDN 15 million Canadian revolving line of
    credit, with initial term loans totaling 350
    million, through October 2013
  • 119 million available at March 31, 2007 plus
    approximately 43 million in cash
  • Conservative capital structure
  • Strong free cash flow
  • Net debt/equity ratio of 108 at March 31, 2007
  • Robust financial controls
  • Systems integrated
  • Sarbanes-Oxley compliant
  • Disciplined financial approach
  • Average bad debt expense of 0.3 of net sales
    over the past 5 fiscal years
  • Minimal capital expenditures of less than 2 of
  • 10.8 million in 2005, 19.1 million for FY 2006

Strong and consistent annual financial performance
  • Average annual sales growth goal of 5-10
    (excluding acquisitions)
  • Gross margin goals between 2325
  • Operating margin goals between 7-8
  • Capital expenditure goals less than 2 of sales
  • FY 2006 highlights
  • Sales up 76 YoY
  • Operating income up 65 YoY
  • Net income up 50 YoY


Company of substance
Forecasting Accountability
Excellent Track Record