Beacon Roofing Supply Reports Fourth-Quarter Sales of $494 Million and EPS of $0.25

Beacon Roofing Supply, Inc. ("Beacon" or the "Company") (NASDAQ: BECN) announced results today for its fiscal 2007 fourth quarter and twelve months ended September 30, 2007.

Fourth Quarter

Sales increased 14.5% to $493.8 million in 2007 from $431.3 million in the fourth quarter of last year that ended September 30, 2006. This increase was due to the acquisitions completed since last year's fourth quarter, including North Coast Commercial Roofing Systems ("North Coast") acquired at the start of this year's third quarter. The positive impact from the acquisitions was partially offset by a decline of 8.3% in internal ("existing market") sales that was primarily caused by a 16.4% decline in residential roofing sales, with non-residential (commercial) roofing and complementary product sales in existing markets unchanged and down only 1.6%, respectively. On a per business day basis, existing market sales were off 9.7% compared to last year's fourth quarter, which had one less business day. Existing market sales grew 14.3% in last year's fourth quarter. There have been continued lower levels of new home construction activities in most markets this year and flat-to-declining material prices. In addition, there has been a significant slowdown in reconstruction and reroofing activities in the markets that experienced damages from Hurricanes Katrina and Rita. Six new branches helped to offset a portion of these negative influences on sales.

Existing markets include new branches opened in existing markets, but exclude branches acquired in the four quarters prior to the start of the reporting period. In addition to the 2007 acquisition of North Coast, Beacon made several major acquisitions during the fiscal year ended September 30, 2006, including the October 2005 purchase of Shelter Distribution, Inc. ("Shelter"), which operated 57 branches at the end of 2007. Shelter is included in existing markets for the fourth-quarter comparisons but in acquired markets for the annual comparisons. Six new branches were opened in existing markets and two new branches were opened and two closed in acquired markets since September 30, 2006. In the fourth quarter of 2007, Beacon opened one new branch.

Gross profit in the fourth quarter increased 5.7% to $108.2 million from $102.4 million a year ago due to the acquisitions and the new branches, while the gross margin rate decreased to 21.9% from 23.7% last year. The existing market gross margin rate declined to 23.0% in 2007 from 23.7% in 2006. The declines in the gross margin rates were caused primarily by an increase in competitive conditions due to the business slowdown in the industry and a higher mix of non-residential roofing sales, which traditionally have lower gross margin rates. The overall gross margin rate was also impacted by a lower gross margin rate in acquired markets, primarily North Coast, compared to existing markets. North Coast's product mix is comprised of over 95% non-residential roofing products. The fourth quarter of 2006 included some unfavorable physical inventory adjustments.

Operating expenses increased $9.3 million, or 12.7%, due to the impact of the companies acquired since last year's fourth quarter and the new branches, partially offset by lower payroll costs and other cost-saving steps implemented as a result of the sales slowdown. Operating expenses in 2007 included $4.6 million for the amortization of intangible assets recorded under purchase accounting compared to $2.7 million in 2006. As a percentage of net sales, overall operating expenses decreased to 16.6% from 16.8%, mostly due to lower operating costs as a percentage of sales at North Coast, partially offset by the impact of the lower existing market sales and the relatively fixed nature of the Company's expenses.

Existing market operating expenses dropped $4.6 million but increased as a percentage of sales by 0.4% due primarily to the new branches and lower existing market sales. These factors were partially offset by lower bad debts, favorable insurance claims experience, expense reduction efforts and an increased allocation of expenses to acquired markets.

The Company realized operating income of $26.3 million in 2007 compared to $29.8 million in 2006, reflecting the higher expenses partially offset by the higher gross profit. As a percentage of net sales, operating income was 5.3% compared to the prior-year rate of 6.9%. The existing market operating income was 5.9% of net sales compared to an operating income rate of 6.9% in 2006.

Interest expense increased $1.0 million due primarily to the additional borrowings associated with the acquisitions. In addition, the Company refinanced its credit facilities in the first quarter of 2007, which also increased the debt level while providing additional funds for future acquisitions and working capital requirements. The new credit facility also provides the Company with lower interest rates than the prior credit facilities.

The Company's net income for the fourth quarter was $11.3 million compared to net income of $14.6 million in 2006. Diluted net income per share was $0.25 compared to $0.32 in 2006. Income tax expense was $7.7 million in the fourth quarter of 2007, an effective tax rate of 40.5%, compared to $8.9 million last year, an effective tax rate of 37.9%. Last year's fourth quarter included a reversal of an income tax reserve related to previously filed tax returns.

Annual

Fiscal 2007 sales increased 9.7% to $1.65 billion in 2007 from $1.50 billion in 2006, reflecting the positive impact from the acquisitions, partially offset by a decline of 4.8% in existing market sales, with decreases in residential roofing and complementary building product sales. Existing market non-residential sales increased 2.7%. The existing market sales decline can be attributed to the same factors mentioned above for the fourth-quarter decline along with harsher winter conditions in some of our markets and four fewer business days in 2007, partially offset by the new branch sales. When calculated on a per business day basis, existing market sales declined 3.3% in 2007 from 2006.

Annual gross profit increased 2.7% to $373.9 million in 2007 from $364.1 million in 2006 due to the acquisitions, partially offset by a decline in existing market gross profit. Gross margin declined from 24.3% to 22.7%, while gross margin in existing markets declined from 24.2% to 23.4%. These declines were due primarily to an increase in competitive conditions, an increased mix of non-residential roofing sales, and the inclusion of North Coast's lower gross margin rate in the overall gross profit beginning in this year's third quarter.

Annual operating expenses increased $40.3 million, or 15.3%, reflecting an increase of $44.5 million from the acquired companies, partially offset by a decrease of $4.2 million or 2.6% in existing markets. Amortization of intangible assets recorded under purchase accounting increased $5.3 million. Stock option expense increased $1.8 million. The existing market decrease was primarily due to lower payroll costs and other cost-saving steps associated with the sales decline, favorable insurance claims experience and an increased allocation of expenses to acquired markets, partially offset by expenses at the new branches. Existing market depreciation and amortization expense increased $1.4 million.

As a percentage of net sales, operating expenses increased to 18.5% from 17.6% due primarily to the lower existing market sales and a higher expense rate from the acquired companies, including the increase in amortization of intangible assets recorded under purchase accounting. The operating expense rate in existing markets increased to 16.3% from 15.9% due to the lower sales, partially offset by the expense reductions.

Annual operating income decreased 30.4% to $69.8 million in 2007 from $100.3 million in 2006. As a percentage of net sales, operating income declined to 4.2% from 6.7%, reflecting the lower gross margin rate and higher expense rate. Existing market operating margin fell to 7.1% from 8.3%.

Annual interest expense increased $8.0 million to $27.4 million in 2007 due primarily to the additional borrowings associated with the acquisitions. Income tax expense of $17.1 million was recorded in 2007 compared to $31.5 million in 2006. The Company's effective tax rate is 40.3% for 2007 compared to a rate of 39.0% for 2006 that included reversals of certain income tax reserves related to previously filed tax returns.

Fiscal 2007 net income was $25.3 million in 2007, down from $49.3 million in 2006, a decrease of 48.7%. Diluted net income per share for the year was $0.56 in 2007 compared to $1.12 per share in 2006, a decline of 50.0%.

Cash flow from operations was $63.8 million in 2007 compared to $82.8 million in 2006. This decrease was primarily due to the lower net income, partially offset by higher non-cash charges for depreciation and amortization and stock option expenses. Also impacting the decline in cash from operations was a larger increase in accounts receivable and a small decrease in accounts payable and accrued expenses, mostly offset by reductions in inventories and prepaid expenses and other assets this year. These changes in assets and liabilities exclude the effects of businesses acquired.

Robert Buck, the Company's Chairman & Chief Executive Officer, stated: "Fiscal 2007 was a challenging year for us after several years of strong sales and profit growth and we are disappointed in our overall financial results, although we did achieve higher levels of sales from our acquisitions and newly opened branches. The continuing decline of new residential construction in most of our markets has had an adverse impact on both demand and profitability for our residential roofing and complementary building products, as have the significant and continuing slowdowns in the markets affected by Hurricanes Katrina and Rita. Our commercial business, however, was stronger and helped to offset some of the negative residential impact."

"One of the highlights of fiscal 2007 was our third-quarter acquisition of North Coast, which added both new geography and strengthened our position as a leader in the commercial roofing supply industry. In addition, Paul Isabella recently joined Beacon as our new President and Chief Operating Officer and we're excited about the improvements he can bring to our Company as we seek to improve our profitability, especially in our acquired markets, and better position ourselves for future growth. Although fiscal 2008 may also present a challenging environment for us, we remain confident in our business model and optimistic about our future."

There will be a conference call this morning at 10:00 a.m. EST to discuss these results. The conference call dial-in number is 888-221-9542 (international dial-in number 913-312-1393). To assure timely access, participants should call in before 10:00 a.m.

Within two hours after the call, a webcast of the call will be available on the "Events & Presentations" page of the "Investor Relations" section of the Company's web site at http://www.beaconroofingsupply.com. A replay of the conference call will also be available at 888-203-1112 (participant passcode 2493293) (international dial-in number 719-457-0820 with same passcode) for a week following the call.

Beacon Roofing Supply, Inc. is a leading distributor of roofing materials and complementary building products operating 178 branches in 34 states in the United States and Eastern Canada.

Forward-Looking Statements:

This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's latest Form 10-K. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

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