A Bellwether Report?

The story of winter’s hangover impact on U.S. construction-related activity is reflected in disappointing second quarter sales at Beacon Roofing Supply. Could the roofer’s report be a bellwether indicator of results in wider building related activity this year?

“The Northeast and Midwest were well off last year’s sales numbers and had a combined sales miss nearly equal to the entire company miss year over year,” president and CEO Paul Isabella said during a May 9 earnings call with analysts. “This kind of sales miss has a major impact on competitive pricing and cost leveraging in those markets.”

From a gross margin perspective, the Northern and Midwest regions made up nearly 60% of Beacon’s overall gross margin miss for the quarter compared to the year-ago period. The Mid-Atlantic region had a 15% miss compared to prior year. The combined impact of the three regions contributed to the company’s total gross margin miss year over year.

However, there were some bright spots in the quarter. Gross margins were up 12% year to year in the Pacific region, 9% in the Southeast, and 4% in the Southwest.

“While weather can impact the timing of work being done, we believe it does not impact the overall demand over the course of the year,” Isabella said. “In general, the work still needs to be done and based on the severity of this winter, we feel it will translate into additional work besides the pent up demand. As a result, we believe the demand for both residential and commercial work will be strong for the remainder of the year.”

– from Severe Winter Chills Beacon Roofing Supply’s 2Q Sales, posted today at Pro Sales Magazine

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