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The Story Behind Beacon Roofing Supply's Steady Growth

The Story Behind Beacon Roofing Supply's Steady Growth

September 28, 2010

Beacon Roofing Supply CEO Robert Buck spoke this month at the Morgan Keegan Industrial/Transportation Conference about the roofing supplies distributor's growth from 66 branches in 2004 to 179 branches now. The distributor, No. 4 on MDM's list of top 10 building material/construction distributors, has grown into 37 states and three provinces. It has completed 12 major acquisitions since its IPO in 2004.

In 2009, Beacon (NASDAQ: BECN) had sales of $1.73 billion, mostly to contractors. The distributor's product mix breaks down like this: 34 percent nonresidential roofing, 52 percent residential roofing, and 14 percent complementary building products.

While it certainly saw sales declines throughout the recession and over the past year, Beacon has not fallen as far as other distributors connected to residential and commercial construction. It has benefited from seasonal re-roofing demand after storms. Beacon's main source of sales is re-roofing, which makes up nearly three-quarters of the demand in the roofing industry, according to some estimates quoted by Buck. What's more, re-roofing is usually a non-discretionary expense.

"Roofing demand has grown every year since 1993, even when building construction expenditures were down," Buck said.

Beacon Roofing Supply plans to continue on the acquisition trail, he said, targeting family businesses that have between $60 million to $120 million in sales, with six to 12 branches. "We have a pipeline that is quite full," Buck said. The best way to expand into a new geography, he said, is through acquisition. The distributor then adds branches to that area post-acquisition.

"Density adds to our service capability," Buck said.

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