Shelter in the storm
Beacon stays steady in a housing crisis by relying on a brisk repair business
Beacon Roofing Supply dates back to 1928 and is as conventional as they come. Its products don't change. It's the kind of company that seems particularly vulnerable in a downturn.
But a deeper look at Beacon's fundamentals reveals a simple fact that keeps company executives sleeping well. "If your roof leaks, you're going to fix it or replace it," said David Grace, chief financial officer. "There have only been three years since World War II when roofing business actually went down."
Beacon has proved a master at harnessing that unceasing demand. Net sales at the company, which was founded in Charlestown but is now based in Peabody, have nearly doubled during the past four years, from $950 million in 2005 to $1.8 billion last year.
It has also earned steady profits. Although the first quarter of this year was in general a time of extreme economic distress, Beacon recorded record sales and net income of $54 million in 2008.
During the last decade, Beacon has rapidly expanded, acquiring a slew of roofing companies in the Southeast, the Midwest, and three Canadian provinces. It now has 170 branches and more than 2,400 employees.
Beacon chief executive Robert R. Buck said the company's acquisition strategy was focused on boosting its core business. Instead of moving into electrical products or moving into new construction, Beacon almost exclusively acquired companies whose business was roofing and related products.
"We don't feel pressure to make acquisitions because it would make a nice news release," Buck said. "We have tried to stick to the products that we know best, and it's paid off nicely for us."
The acquisitions have stopped during the past two years - especially during the economic downturn - but Beacon has been aided by strong demand following several tough hurricane seasons and increasing prices for asphalt shingles, a core product in its residential business.
Grace said the recent downturn in residential building is taking a toll, but the company is using the slowdown as an opportunity to sharpen its focus on roof replacements and hone customer service operations. He said the company has worked to standardize operations across all its branches, from the products to the computer systems to the delivery trucks.
"It comes down to how well you serve the customer," Grace said. "There are some days when we have a guy on a roof with a Nextel saying he needs materials for a job the next morning, and we have to be ready to service them."
Casey Ross can be reached at email@example.com.