Acquisitions Boost Beacon Roofing Over $1B in 3Q - Modern Distribution Management

Acquisitions Boost Beacon Roofing Over $1B in 3Q

The building materials distributors has completed eight acquisitions through the third quarter.
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Beacon Roofing Supply (NASDAQ: BECN), Peabody, MA, reached a new milestone in its fiscal third quarter, with 3Q sales surpassing $1 billion for the first time in the company's history. The 60.5-percent sales increase was primarily driven by acquisitions completed throughout the year, but Beacon's focus on internal growth drove organic sales to climb 8.7 percent.

Beacon Roofing Supply has completed eight acquisition so far this fiscal year, most notably the acquisition of Roofing Supply Group, which had 83 locations in 24 states and was Beacon's first expansion into the Pacific Northwest. Since then, Beacon has also added Woodfeathers Inc., which brought the company into Oregon.

While the acquisition pipeline remains "very full," the company isn't ignoring greenfield expansions. "Legacy Beacon greenfields contributed approximately 24 percent of our existing growth in this quarter," said President and CEO Paul Isabella in a call to discuss the third-quarter results.

And it remains a key part of the company's growth strategy, even though acquisitions have slowed that type of expansion. Beacon has opened one new branch so far this fiscal year and expects to add "one or two" in fiscal 2017, Isabella said.

"This number will vary year-to-year based on our acquired business loan and business conditions," he said. "But there are many markets we want to expand into."

Five of the distributor's seven regions reported growth in the third quarter, Isabella said. The Southwest region led the growth, "fueled by storm demand in the North Texas and San Antonio markets," he said.

Canada and the Northeast posted single-digit declines.

But it's not all about expansion for Beacon. The company consolidated three branches in the third quarter, bringing its fiscal year-to-date closures to 29. And the company is considering other locations for closure, as well, "if the economics are right," CFO Joseph Nowicki said.

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