Good day, ladies and gentlemen, and welcome to Beacon Roofing Supply fiscal year 2008 third quarter earnings conference call. My name is Teresa and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. (Operator instructions) On this call, Beacon Roofing Supply may make forward-looking statements, including statements about its plans and objectives and future economic performance. Forward-looking statements are subject to a number of risks and uncertainties. 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. On the call today for Beacon Roofing Supply will be Mr. Robert Buck, Chairman and CEO; Mr. Paul Isabella, President and COO; and Mr. David Grace, Chief Financial Officer. I would now like to turn the call over to Mr. Robert Buck, Chairman and CEO. Please proceed, Mr. Buck.

Thank you, Teresa. And welcome everyone to our third quarter 2008 earnings call. As you might imagine, we are very excited to announce these results and we are particularly excited for our fellow shareholders and employees. I will begin the call with a few summary comments and then David Grace, our CFO, will present the financial details for the quarter. When David is finished, Paul Isabella, our President and COO, will cover several questions and answers of important topics that we know you want addressed during this call. When Paul has completed his comments, we will then open the call for other questions you might have. If you recall, I concluded our last earnings call by stating that our third quarter was off to a strong start. And I’m very excited now to report that the third quarter stayed strong the entire time. You can see from our just released financial results that we posted good organic growth, particularly for residential products, our gross margins increase, and our good expense controls, saving price as well. Earnings per share for the quarter came in approximately $0.10 above the highest estimates. And you can imagine that we are grateful for that, as you are too I’m sure. I’m also pleased to report that the fourth quarter is off to a very good start and there is general optimism throughout our company. And at this time, I will turn the call over to David, who will present the financial details for the quarter. And let’s go a little easy on him today, the man from (inaudible). He has been a little bit under weather. So, David, it’s your floor at this point.

Thanks, Bob. In the third quarter of fiscal 2008, our net sales increased by 6.1% to $514.6 million from $484.9 million in 2007. Existing markets, which for the quarter now only include one branch, saw a sales growth of $28.5 million or 5.9%, while our acquired markets increased net sales by $1.3 million. Towards the end of our second quarter, we began raising our prices to our customers in response to price increases we see from some of our vendors. We estimate our inflation by our product cost based upon our current inventory’s product mix and the invoice cost as compared to the invoice cost of the same products a year ago. Based upon this method, our product costs are up about 4.4% to 6% compared to 2007 levels. The price increases for many of our products range from 5% to 25%, the higher beginning in February. But many of these did not become effective to our customers immediately. Thus we feel our average price increases to our customers have been 5% to 7%, but were higher in residential products. In our existing markets, residential roofing products grew by 12.4% during 2008, with regions affected by hailstorms especially strong. Our non-residential roofing sales grew by 7.4% with most markets still seeing good activity. Complementary products, which have been slightly high amidst of new construction, continue to struggle, down 11.3% in across most of the markets we sell those products in. We did not open or close any branches during the current quarter compared to one branch opening during the third quarter of 2007. We operated a total 177 branches as of the end of this quarter compared to 178 last year. We had 64 business days in both 2008 and 2007. Our overall third quarter gross profit was $120.2 million…

Thank you, Dave, very much. Paul now will handle some prepared questions and I’ll be back when he is finished to open up the call to questions.

Thanks, Bob. Good morning. I have about 12 questions that I’ll run through and then we’ll open it up to the floor. I’ll jump right in. Question number one. Would you please explain further your improvement in gross margins? We use a weighted average cost method to value our inventory. This means that we average our lower cost on hand inventory with higher cost purchases. Therefore it’s natural to experience some gross margin gains at times of rising prices if we are able to pass through price increases in a timely manner. Additionally, we employed our traditional business practice of buying ahead of the price increases. Our contractors expect us to have product readily available, which is a key component of the value-added service we provide. Question two. How much of the 12% growth in residentials from price and how much is from unit growth? That’s always a difficult question to answer, but we are happy to give our perspectives. In the past, we’ve answered this question by comparing nature skews over the same period of time for the prior year. Using this consistent method to answer this question, we believe about half of the growth was from inflation or price increases and the other half from volume or unit growth. There is a very good volume growth in the southeast and southwest due to hailstorms, but we also recorded good growth in Shelter Midwest, which is doing well without as much storm activity in the quarter. Number three. David mentioned in his comments that residential roofing products enjoyed increased margins. Can you comment on your other two product groups? Non-residential or commercial roofing gross margins were basically flat as compared to last year, down less than 10 basis points. We don’t believe that price increases announced mainly in June…

Thank you, Paul. Teresa, you could open up now for questions from the audience.

(Operator instructions) We will go first to Michael Rehaut, JP Morgan. Ray Horner – JP Morgan: Hi guys. This is Ray Horner [ph] for Mike.

Hi, Ray.

Hello, Ray. Ray Horner – JP Morgan: Congratulations on a nice quarter. A couple of questions. First of all, deferral margins on the gross margins, you may start buying the lower cost inventory, but as oil continues to remain at a relatively high level and some of the higher cost inventories start to get put into your inventory, how sustainable do you think the gross margin improvement could be from here over the next couple of quarters?

I think the dollars would improve. Percentages would be difficult to predict, but inflation is a good thing for distributors and we continue to work hard on pass-throughs. So we’ll watch that very closely and react to it. But I think our – we are pretty optimistic for margins going forward. And David, if you want to add to that, or Paul – having three people in the call, I don’t want to answer all these questions. So, go ahead.

Yes. I would just reaffirm that our people have worked very hard to make sure that our customers are pretty much in line with the price increases we see from our vendors. We do have an advantage that we hold inventory unlike our customers. We do not take great advantage of that, but we need to be paid for our services and feel that going forward prices certainly don’t expect to drop in prices. So those will either be maintained, and as that average inventory, as you mentioned, Ray, creeps up a little bit, we just need to stay on top of that with our customers. Ray Horner – JP Morgan: Right. What about on the (inaudible) continue to decline? I mean, there was up to 140 and [ph] 120 or so. I mean, how long would that take to kind of reverse out, or historically have the price increases been able to stick through some period of time or do they kind of reverse out as oil comes down?

Our opinion would be that prices would stake up mainly based upon our manufacturers who indicated that their price increases haven’t fully covered their costs. So, we’ve talked about this among ourselves and believe that they still need to raise prices even at the 120 level, because it got up so fast, so quickly. Even today, it’s almost double from year ago. So, it still is historic. So I think they still need to pass on based upon their conversations. And Dave or Paul, you want to add to that?

I agree. I mean, that’s exactly what we hear.

Okay. Ray Horner – JP Morgan: Okay. And then just lastly if I could, just wondering what the visibility on the storm related activity is in the fourth quarter and into ’09, just given I guess the recent storms over the past six months, what the pipeline is for that and how much the storm activity contributed to sales this quarter?

We’ve studied that and I’ll give you some facts and hope it (inaudible) roll out of the storm. I think even Owens Corning mentioned that would be throughout the calendar year. So we would agree with them. It takes a long time to fix the damages. And so we think the rest of the calendar year we’ll see the benefit. We’ve also looked at how many branches were affected. And it’s actually less than 10% of our branches were in the path of all those storms and we’ve done hypotheticals about growth rate with or without storms and we would still – still would have a very good quarter with growth without the storms. So we do not open new branches. We don’t redeploy equipments or anything like that. We react to the storms in the locations they are located there. The manufacturers however can ship products from all over the country into the storm area to help with supply. But as a distributor, we have chosen not to do that. We stay in our locations, take care of our longstanding contractors in New England and mid-Atlantic and do the best job we can helping folks who are affected by the storms in those locations. But it’s less than 10% of our locations. Storms do happen. Last year was unusual. This industry most of the time annually will have storm volume. Hurricane season is coming up, or I guess we are in it. And our business plan doesn’t change according to storms. We really continue to run the business fundamentally the same with or without storms. But unfortunately the storms cause damage and we are glad that we are in a business that provides the product needed to get people back on their feet. So, Owens Corning believes that the rest of the year is just for the storms that occur. Ray Horner – JP Morgan: Great. Do you guys have that number without the storm activity, the organic growth rate?

No, no, we haven’t done that. Ray Horner – JP Morgan: Okay. Thanks guys.

Thank you. Appreciate it.

We’ll go next to Tom Hayes, Piper Jaffray. Tom Hayes – Piper Jaffray: Good morning. Thank you. Great quarter and I appreciate the prepared questions, surely helped out a lot. I guess looking forward, could you just give a little visibility on what you saw as far as across the regions, are there any strengths or weaknesses that you saw in the quarter that you kind of looking forward, going forward to the fourth quarter?

Yes, we can do that. Actually, David, those numbers are in front of you. We saw strength residentially in all regions except Southern California. But go ahead, Paul and David, why don’t you–?

Yes. Just a comment, and going through really the East Coast, we saw some strengthening, as we mentioned in the call, in the Carolinas and also in the mid-Atlantic states, and certainly not a booming time in those states because they do have more new construction than our other regions. Down through the Atlanta area, JGA has done very well. They do have a little bit of storm damage, but they are just doing pretty well in overall. The storm areas such as in Texas and Oklahoma, I mean up to some of the Midwest states, those were the strongest. There’s no question. I would also point out particularly though that our commercial markets, and we are strongest in the Ohio area with North Coast in New England and in Canada. Those are still going very well. We have not seen a drop-off, as Bob mentioned in his comments. And we also feel that there is still some strength there. How long that commercial market lasts is another question. Again, we don’t have great insight into the future there, 30 to 60 days, but Kaala [ph] who is our largest supplier is pretty bullish on the rest of the year. And we think that we’ll be all right for the next couple quarters there. Tom Hayes – Piper Jaffray: Okay, great. And then I guess just a last question to follow up, as far as the debt level or the leverage, as far as the year-end level, can you please provide a little visibility as to what you expect year-end yet?

Well, one, we hit our marks as far as what we’ve said we would do with our earnings per share and the related adjusted EBITDA. That would naturally come down somewhat compared to last year. We are holding eventually to get it down in the 3:1 range, which we were at before we bought North Coast. And in that aspect, we would see debt may be maintained at the same level because that inventory, like we’ve mentioned during the call, was valuable to maintain at higher level right now. But we see EBITDA crawling upwards, which would help the ratio. Tom Hayes – Piper Jaffray: Okay, I appreciate it. Thank you.

Thank you.

We’ll go next to David Manthey, Robert W. Baird. David Manthey – Robert W. Baird: Hi, guys, good morning.

Good morning. David Manthey – Robert W. Baird: I was wondering if you could talk about the sales impact from having lower cost products to sell. Ostensibly if your input price is lower, you’d be able to price more aggressively in the market. I’m just wondering if that was the case or if you feel that you are not gaining inordinate amount of share, they having lower cost inventory to sell.

I can answer that, Bob, if you like. In reality, the larger of our competitors would also have a bit of that advantage if they did indeed buy inventories, but [ph] we don’t know whether they did or not. I would say towards the other end is that we maintained our price into our customers because that’s what was happening in the marketplace I think the share gains that we have are from the service we provide. It’s because our employees can perhaps get a little bit better price from our customers because they expect that the service that we give them, the product availability and the things that we’ve talked about in the past. So I don’t think we had a dramatic effect on market share, David. David Manthey – Robert W. Baird: Okay. And second, could you talk about what percentage of your total revenues are shingles specifically today and then also what percentage of your residential roofing is new versus re-roof, if you have an estimate for that? I know you don’t know specifically, but if you have an estimate.

Overall, approximately about 30% of our sales are from shingles. And that’s assuming that on a basic job that about half the cost would be shingles – half the two-thirds would be the shingle portion of it. And on that, we still think we are probably in the 70% range for residential roofing products and re-roofing. It’s probably climbed a couple basis points higher – couple tens of basis points higher because the new construction has gone down, but the base level of the re-roofing has maintained. In the storm regions, of course, the re-roofing is much higher. And it could be upwards to 90%, because some of the new construction obviously can be put off, but the re-roofing has to be done almost immediately. And that’s what gets done in those areas. David Manthey – Robert W. Baird: Okay, thanks. And then finally one more data if I can just (inaudible) here, in terms of the SG&A, do you have an idea of what the increase in SG&A was due to the increase in variable comp, and I may have missed [ph] what the catch-up accrual was sort of the current period increase due to the better results?

It’s a blended amount because obviously some of those were earned during the quarter. And I did not go back and segregate out the catch-up. But we went up by 1.7. The catch-up was higher than that, because towards the Q2 we obviously had a loss year-to-date and the incentive based pay would have been quite well. So if you put it in the $2 million range, that would be about correct. As far as the selling expense increase, almost all of that is variable, David. So it’s truly the petroleum cost increase and diesel fuel that we have to pay, that we have been paying more for this year than last. Some of that is mitigated because we charge up in sales and gross profit, some charges to our customers much like our vendors charge us for fuel surcharges.

Our next question comes from Jeff Germanotta, William Blair. Jeff Germanotta – William Blair: Hi, good morning gentlemen and congratulations on a really nice quarter.

Thank you, Jeff. Jeff Germanotta – William Blair: Two quick ones. You’ve done a lot in terms of cost control, headcount reduction, etc. Had that program largely run its course or benefits from that continue to accrue in the quarters ahead?

Yes. Jeff, they will continuously fall. They will continue to accrue at somewhat of a lower rate, but the teams are constantly refreshing their actions to find better ways of doing things. So year-over-year, as I said earlier, we had a headcount reduction of over 8.5%, which is about 240. And from the beginning of the year, about 200 or so, which is 8%. So we’ll continue to see some of that, and that as we get into next year, obviously that will lap. And but the guys continue to focus – the regional teams continue to focus on the cost-out lists and refresh those on a weekly, monthly basis.

And Jeff, just to add to what Paul said, we will run the business according to the business we have. So, if headcount is inappropriate, we will put it back where it needs to be because it is – I like the phrase refreshed every week. And with the experience we have in the field, we can get on top of it pretty fast. Jeff Germanotta – William Blair: And then just last question. Of the 6% growth, organic growth that you posted this quarter, can you talk about how much came from new locations? Is it possible to quantify that?

Maybe a little, Jeff. We actually – we have one new branch that we opened last October down in New Jersey. Other than that, it’s all from the existing branch structure. We’ve actually closed a couple, as you know, too. So, today we have 176. We closed one more after the quarter-end. So there is actually less branches than last year. Jeff Germanotta – William Blair: Okay. Thank you very much.

Thank you, Jeff.

Thanks.

We’ll go next to Tek Tens [ph], Needham & Co. Tek Tens – Needham & Co.: Hello everyone. Could you guys share your thoughts on the outlook for new construction both on the residential and the commercial side?

Well, we could – I’ll do that, probably not worth much, but – Tek Tens – Needham & Co.: Just kind of what you are seeing out there.

Yes. We are seeing like in the mid-Atlantic, which is this area, is firming up. Southern California is not. So those are basically the only two areas where we have a lot of exposure to new construction. Here in Washington, some in Atlanta, but that business is doing well. I would say Southern California is still weak. We are not in Arizona, we are not in Florida. So, our only outlook would be in those places where we exist. And so the impact won’t be that much. Even commercial, re-roofing is even a bigger part of commercial business than residential. So we really do monitor more our own sales process, making sure that we have the proper product mix in all the locations and grow. The idea is to grow through all the cycles because we are not so tied just to new construction. But I’d say other than Southern California, it’s not as bad as it was. Tek Tens – Needham & Co.: Okay. It’s good to hear. Second one was, your plans for opening new branches going forward and your acquisition kind of pipeline that you are looking at?

Okay. We are about to start our budget process. And our process for that is that Paul and David will establish guidelines for all the regions, guidelines for growth and profit. And those officers will take those objectives and look at their regions to determine if they have the proper capacity in the branches that they are operating to accomplish that. My guess would be there would not be many branches planned for opening in the next fiscal year, but a lot depends, because we have not even gone through the first series of meetings. I think regarding acquisitions, the plan hasn’t changed, the industry will consolidate. We will be a big player in that. There are a lot of good companies out there we are aware of. So that hasn’t changed either. Right now, it’s grow organically, improve margins, make sure your costs are in line. As Paul said, those are our plays going into the new fiscal year. David? Paul?

I agree with your statement. I think that we will continue to pick the places that we are doing very well in to add those branches. I think that there may be some opportunities and we just need to see what the field thinks about next year and where they think the opportunities are. Tek Tens – Needham & Co.: Just wanted to – yes, if you are going to become more aggressive moving out west, more further west, is that in the plan?

If we did anymore out west, it would be acquisitions. And in Southern California, it would be branch openings. There are probably 50 competitors on this call. So, I’ll just leave it at that. But it’s based upon budgeting and what we think the future looks like.

Our next question is from Robert Kelly, Sidoti. Robert Kelly – Sidoti: Good morning. Thanks for taking my questions. I’m surprised this year that 3Q only benefited from about 6% pricing just based on what your suppliers are saying. Does the pricing begin to kick in, in 4Q? Is that how big the lag is?

Remember, what you are hearing, by playing [ph] from our competitors is Kaala basically said they went up in June 1st about 5% to 6%. I don’t believe any of those prices hit our marketplace during the quarter. So that leaves us with the residential products, which make up above 40% of our business. So, 6% is from an average over all of the products. And if you would look at the shingle prices, you would see that they are much higher. We think maybe in the high-single digits to little bit higher than that, I mean it’s effective rate. Some of those price increases still on in the marketplace is yet to [ph] come in the fourth quarter. Robert Kelly – Sidoti: So, maybe what is like for residential shingles, the cumulative in ’08?

Through the third quarter? Robert Kelly – Sidoti: Through – yes, through July maybe?

It’s in that 8% to 10% range. Robert Kelly – Sidoti: And the expectations are for higher. Got it.

Yes. Robert Kelly – Sidoti: And then just your balance – I’m sorry, the cash flow, the run rate for CapEx, is fiscal ’08 going to come in around $4 million to $5 million?

It probably would be slightly higher than that. We have some stuff we are going to spend in Q4. It’s pretty high just to turn on and speck it with transportation equipment, because these could be higher [ph] and in some instances built to our specifications, but less than maybe $2 million to $3 million in the fourth quarter. Robert Kelly – Sidoti: Can we expect for ’09 a similar level of spending for CapEx?

It depends again upon what we see in the marketplace for volumes. We do need to do some maintenance stuff, not that we put it off. But if we have some stuff coming up from earlier purchases, anyways between 0.75% of sales to 1% is a good estimate for next year. Robert Kelly – Sidoti: Okay, thanks.

Thank you.

We’ll go next to Ashwin Reddy [ph], Manor Capital [ph]. Ashwin Reddy – Manor Capital: Hi guys, congrats on a good quarter and thanks for taking my questions. Two quick questions for you. The first one, I wanted to see if I can drill down a little bit more on the residential side of the business and specifically kind of what would be both the number and the magnitude of the cost increases you saw across those products in the past quarter?

They really started happening at the end of Q2. For some products, it’s about 25%. But remember, that’s mainly on the asphalt shingles, do not make up the entire portion of even a job for a residential roofing job. And they, like I said, only make up about 30% of our total product mix. We have seen other price increases in commercial in the 5% to 6% range mainly after June. And in our complementary products we have seen some vinyl price increases, but that was early on in January and February. We truly are expecting some of those prices to come up in the fourth quarter or Q1 of our next year. Ashwin Reddy – Manor Capital: Okay. So Q2 is basically just the very end it looks like on the residential side?

Yes. Ashwin Reddy – Manor Capital:

We’ve seen price increases in all the quarters announced. And again, it somewhat depends on what happens with petroleum. I think you are absolutely right. The price of asphalt continues to climb up even though petroleum has come down slightly though there is a direct correlation there between asphalt and petroleum pricing anyways and it remains to be seen. We have price increases on the horizon. We’ve had them in the past. And we will continue to monitor on a weighted cost basis. Ashwin Reddy – Manor Capital: Are there any kind of specific geographic pockets where you guys are seeing any outside strength that we use those within the residential side?

I think again like we’ve pointed out in the Midwest and somewhere down towards the south Midwest where we are seeing the storm activities especially strong. But in general we see a bit of a strengthening of re-roofing everywhere. Again, some of it is from the price increases, but at least we think we were only down in the single low digits in unit volume compared to being down almost 10% since – in the first two quarters on average.

We’ll go next to Brent Rakers, Morgan Keegan. Brent Rakers – Morgan Keegan: Good morning. Just to try it again, get a little bit more clarity on the pricing side, so Dave, what you are saying it the current quarter, you realized roughly 8% to 10% benefit on the residential side. And then what would be the number in the current quarter for the non-res and the complementary products inflation contributions?

We feel that the commercial products are all almost flat to last year and that we have slight increases maybe in the 1% to 2% range in the complementary. And again, just to explain that is that the complementary products is the one that have seen the biggest increases on things like vinyl siding and synthetic decking, which are petroleum based products. There has actually been some deflation in some things like building insulation, which we have in that category, and some of the windows because the new commercial stuff has dropped off so far that they have lowered their prices. Brent Rakers – Morgan Keegan: Great. And then I guess the follow-up question to that, as you look at the September quarter and you focus just on, let’s say, the announced price increases for res, non-res, and complementary products, can you give us maybe a feel for what those price contributions might be in the September period? I mean, if you take 8 to 10 in res, is that 15 to 20, is it more than 20? I mean, what kind of numbers we are talking about for each of those categories?

I certainly think it will be a few hundred basis points higher than we saw in the June quarter. And then remember, we are probably also going to see kick in some of the price increases in commercial and in some of the complementary products. We cannot absorb price increases in our industry. As you know, we are relatively low gross margin industry and a relatively low operating margin industry. So, as the prices come through from the bend is we need to increase those. So if you had in the range of 200 to 500 basis points above the increases for June, that’s a guess, Brent. That’s all it is.

(Operator instructions) And we do have time for one more question. We’ll go to Justin Harrison [ph], Ramsey Asset Management. Justin Harrison – Ramsey Asset Management: Good morning, guys. Great quarter. Quick question, I just wanted to get your thoughts on the difference in the trends between the residential and the complementary. Historically they seem to have kind of tracked together. And this quarter, the June quarter bit different was residential was strong. Is this a reflection of the re-roofing business being more cyclical and the complementary being more regular construction or what do you make of that?

I think that it’s an indication that re-roofing is what controls the roofing industry. And that base of business is always going to be there. Storms do help. But you take one of our products such as vinyl siding, obviously a hurricane would affect it, but hailstorms really might not affect vinyl siding. The areas that we are strongest in the complementary products, mainly the Mid-Atlantic states down through Georgia, in those areas is more new construction. There is no question. We do have some products that are purely remodeling such as the synthetic decking that we sell in some of the replacement windows, but those are certainly more discretionary items. There’s no question as we go through this period and we (inaudible) the housing bubble, I think people are going to learn that roofing is pretty much a very consistent industry that re-roofing provides a base of business and is not going away. It happens very consistently and that’s why we love our industry. Justin Harrison – Ramsey Asset Management: Got it, yes. Excellent, that’s kind of what I figured. All right. Well, again thanks. That’s all I had. Have a nice quarter guys.

Thank you.

Thank you.

Appreciate it. Okay, I appreciate – that was the last call?

That was. I would like to turn the call back over to Mr. Buck for closing comments.

Thank you. David and Paul and I will be available for additional post-call questions. And let me now just close with few comments and make several points before we close out. First is, the commercial business is still strong in most regions, including the Northeast, Mid-Atlantic, Southwest, and the Carolinas. North Coast, which all of you know was acquired a little bit over a year ago, is doing very well. That is a very strong team of folks that are with us now. Residential, which I’m sure (inaudible) enjoyed a big rebound in the third quarter with 12% growth, with again almost all regions recording strong growth except Southern California. Gross margins improved as we worked hard to justify price increases to our customers. Again, that’s not an easy thing to do. There are other industries that I’ve read about that distributors haven’t done as well, but we did a very good job. And I think that’s attributed to the service element of our business. And maybe more importantly, the strong relationships we have with our contractors in the field. And those contractors understand the importance of what we do for them. Our officers continue to execute our cost reduction programs and that’s evidenced truly by the reduction of SG&A from 16.7% to 16.2%. And remember that we have to cover fuel costs and a lot of things that are a little bit out of our control. So we had some headwinds, but with Paul’s efforts and everyone else, we got at the low last year. And finally, our fourth quarter looks very strong. We are working extremely hard to close out a successful fiscal year ’08. We thank you so much for your interests and support at Beacon. Our employees appreciate it and they are working hard to continue to earn your confidence. So, thank you for dialing in. We look forward to seeing you and talking to you in the near future. Thanks very much.

That does conclude today’s conference. Thank you for your participation. You may disconnect at this time.