May 7, 2010 / 12:41 PM / 8 years ago

UPDATE 2-Beacon Roofing posts wider-than-expected Q2 loss

* Q2 loss $0.14/shr vs est. -$0.09/shr

* Q2 sales $285.4 mln vs est. $280.9 mln

* Sees strong H2

* Shares fall as much as 5 pct (Recasts; adds conference call details, analyst comments, share movement)

By Megha Mandavia

BANGALORE, May 7 (Reuters) - Roofing products distributor Beacon Roofing Supply Inc (BECN.O) posted a wider-than-expected quarterly loss, hurt by severe winter conditions that saw sales of residential roofing products drop sharply.

The company, which gets majority of its revenue from residential construction, said sales in the first two months of 2010 were severely affected by winter conditions and the improvement in March could not offset the drop.

The winter quarter, when most construction pauses, is always the weakest for building companies. The snowiest winter in 20 years in Europe and the United States, together with the economic crisis, made this quarter exceptionally bad.

Sales in March and April were up 8 percent, compared with the drop of 14 percent in January and 28 percent in February.

The company expects the rest of the year to be strong as market conditions improve, it said on a conference call.

“Probably the pent-up demand has been left over from the harsh winter that we had -- a lot of work was postponed. So they get benefit from the postponement of the work in the spring,” Needham & Co analyst Theodor Kundtz said.

The economic recovery is also helping the company, he added.

Beacon Roofing said it was also seeing some signs of growth in six of its regions in the residential segment.

    While non-residential construction is still struggling under tepid demand and frozen markets, housing starts have seen an uptick, to touch their highest levels since November 2008.

    The company expects gross margins to increase to between 23 percent and 24.5 percent for the year, helped by price increases. Second-quarter gross margin dropped to 21.4 percent from 23.3 percent a year ago.


    For the second quarter, Beacon reported a net loss of $6.5 million, or 14 cents a share, compared with a net loss of $2.4 million, or 5 cents a share, a year earlier.

    Net sales fell 11 percent to $285.4 million. Sales of residential roofing products dropped 17 percent to $143 million.

    Analysts on average were expecting a loss of 9 cents per share on revenue of $280.9 million, according to Thomson Reuters I/B/E/S.

    Shares of the Peabody, Massachusetts-based company fell as much as 5 percent to $18.91, but pared some losses and were trading almost flat at $19.89 Friday afternoon on Nasdaq. (Reporting by Megha Mandavia; Editing by Unnikrishnan Nair)

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