Beacon reported a net loss of $6.7 million during the company’s fiscal third quarter, a significant drop from the net income of $31.0 million during the previous year’s third quarter. The company said quarterly results were impacted by reduced sales and lower gross margins, largely attributable to a softer demand environment brought on by the coronavirus (COVID-19) pandemic.
Beacon also said the net loss was impacted by a net $32.8 million tax provision stemming from the adjustment of a prior quarter deferred tax benefit related to Beacon’s application of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The distributor did implement cost-cutting actions, including reductions in hours worked and headcount, to partially offset the negative impacts, according to Beacon’s quarterly earnings report.
The distributor also reported net sales decreased 6.9% on a year-over-year (YOY) basis to $1.79 billion during the fiscal third quarter. Softer demand early in the quarter resulting from COVID-19-related government restrictions contributed to the sales decrease. Residential roofing product sales decreased 1.3% YOY in the third quarter, non-residential roofing product sales decreased 9.6% YOY, and complementary product sales decreased 12.5% compared to the prior year. While sales were down YOY, Beacon said sales improved throughout the quarter, with June daily sales flat compared to the prior year.
As a result of cost-cutting actions, Beacon’s operating expense declined to $357.2 million from $398.3 million in the prior year’s third quarter, including a 10.2% YOY decrease in selling, general, and administrative expenses.
“Fiscal third quarter results were highlighted by exceptional operating cost and cash flow performance,” Julian Francis, Beacon’s president and CEO, said in a news release. “Our team rapidly implemented a broad-based cost reduction strategy beginning in March, resulting in meaningful sequential and year-over-year expense decreases, as well as an adjusted EBITDA margin that was consistent with the prior year period. Although certain cost actions were temporary in nature, we remain focussed on improving our expense structure to produce permanent efficiency gains and foster attractive levels of operating leverage as demand improves.”
Beacon reported an adjusted EBITDA of $146.5 million for the fiscal third quarter, compared to $157.8 million in the prior year third quarter. The distributor’s adjusted EBITDA margin remained flat YOY at 8.2%.
Herndon, Va.-based Beacon distributes roofing materials and complementary building products. The company operates over 500 branches throughout all 50 U.S. states and six Canadian provinces. The distributor was the second largest company on the 2020 ProSales 100 list.
