Good day, ladies and gentlemen, and welcome to the Beacon Roofing Supply Fiscal Year 2009 First Quarter Conference Call. My name is Connie, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session towards the end of the conference. At that time, I will give you instructions on how to ask a question. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. 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 factor section as 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, Connie. Welcome everyone to our first quarter earnings call for fiscal year 2009. We are obviously very pleased to announce these results, and it's always satisfying to exceed the expectations of our analysts, which intern is very good for our loyal shareholders and fellow employees. A lot of hard work by our employees made these results possible. As usual David Grace, our CFO, will present the financial details, and when David is finished; Paul Isabella, our President and COO, will answer prepared questions. When Paul is finished, we will open the call for additional questions that you may have. And let me just say that our new fiscal year, fiscal '09 is of to a very strong start. Our growth was solid, gross margins improved and expenses were well controlled. In addition, you can quickly see the quality of our balance sheet and in particular the quality of the receivables and a continued reduction of our debt ratios. Again the fiscal year is of to a strong start and we were looking, working hard to keep it going that way. We have a good -- very good tactical and strategic plans in place that are being executed very well by our officers under Paul's leadership. I will now turn the call over to David, and he will present the financial details of this performance and then Paul will take over. Thank you. David?

Thank you, Bob. And just as a reminder, all of our results for the quarter are now from existing markets. Sales increased 16.3% to $463.3 million from $398.4 million in 2007 with residential roofing sales increasing 58.4% as we benefited from higher year-over-year prices combined with strong demand from the damage caused by Hurricane Ike. Non-residential roofing products declined 14.7%, as activity -- 4.7%, as activity slowed especially in the regions which experienced an early onset of winter. Complimentary products, which we believe are more discretionary in nature than our roofing products were down 17.3% and continue to be negatively impacted by both the slowdown in the economy, in the lower levels of residential construction. We estimate inflation in product cost base upon our current inventory product mix in the invoice cost, as compared to the invoice cost of the same products a year ago. Based upon this estimate, our product cost were up 12% to 14% compared to 2007 months, or pricing to our customers increase slight ahead of the product cost increases. In addition, we have 62 business days in 2008, as compared to 61 days in 2007, which we estimate further boosted up sales flow by 1.9%. Almost all of our overall sales growth on a sales based basis in the quarter gain from price increases. Volume gains and residential roofing were offset by volume losses in non-residential and complementary products. We close four branches and did not open any during the quarter compared to one new branch opening and one closing during the first quarter of 2007. Today, we operate a total of 170 branches as of the end of the quarter, compared to 178 last year. First quarter gross profit was 116.0 million for 2008, as compared to 91.7 million in 2007, a 26.5% increase,…

Thank you, David. As we've done in the past, Paul now has prepared questions and these questions, we give a lot of thought to, because we know these are topics that you really want to hear about. And Paul is going to read the question, go through the answers which we'll give you some insight into very key points. When that is finished, I think we'll have a quite bit of time for questions from all of you so far more -- I'm going to turn it over Paul, and he'll go through the questions-and-answers.

Good morning. Let's jump right into 13 questions and answers. Number one; we know gross margin continue to expand, please explain the causes of the improvement and at what levels we can expect them to be in the future? Due to the price increases over the last year and some solid demand from Hurricane Ike, a mix of residential roofing increased dramatically in the quarter from 37% in '07 to 51% in '08 and as you may know those are highest gross margin products. We estimated that the higher residential mix contributed about a 130 basis points of the gain, and our overall margin gain with another 70 basis points coming from having lower average cost inventories in the current market price. We expect that the inventory cost advantage will take off within the next quarters, as David say and we expect that our gross margins to level off in the near future to 23% to 24.5%, again mostly depended upon our product mix. Number two, can you give us an update on pricing in the industry after the recent drop in petroleum prices? Vendor prices seem to have stabilized that the high levels they reached in our fourth quarter of last year. We have not seen any indication of price decreases from our suppliers yet. But we're cognizant of that possibility, and we will be prepared if it happens. No, we cannot predict or control the future our vascular pricing. Some of our suppliers have already announced price increases for the spring. Number three; how much of the growth in the quarters from pricing and how much is from unit growth? It's always a difficult question to answer, but we're happy to give our perspective as we have in the past. We possibly get through this question by comparing…

Thanks Paul. These are a very positive numbers, and so we have an earnings call like this, just let you know despite a great quarter, my office renovation has been put on hold and the Falcon or whatever that 7X is being delayed just my small tip and humor here to -- it's a tough environment. So let's use that humor to launch the questions. So far away. Thank you.

(Operator Instructions) And we'll take our first question from Tom Hayes from Piper Jaffray.

Great. Thank you. Good morning.

Good morning.

I guess in regards to the pricing expectation, and I guess specifically with the March increase it's kind of been further on the street. What are your thoughts as far as realization of that increase and then thoughts on the holding the prices through back half of the year?

I, like last year there was some skepticism in the beginning when prices started coming out because demand was low. And everyone was very pessimistic, so it's going to happen again maybe even three have been announce, that could be two. But, I think they'll be there, it could be wrong but I think it'll stay and good reason for it. I believe the manufacturers needed. We'll try very hard to keep it and we will certainly try very hard to implement it. I think necessary.

Okay. Is this is the follow-up that you indicated both on the call and in the queue that gross margin trends in the 23% to 24.5% range, which was about 50 basis points higher than previously range. Could you just comment on your thinking for the higher end of your guidance?

Yes. At the time we made that announcement in November, we had not -- in December, I'm sorry. We had not seen that rapid dramatic spike in the gross margins from the product mix change that happens when we have more residential. I hope people know that we've told them in the past that commercial products actually have 700 to 900 basis point lower gross margins. And as a residential product mix changes that affects the overall margin rate, which puts us into that 24.5% range.

Great. Thank you.

Thank you.

And we'll take our next question from Michael Rehaut from JP Morgan.

Hi, guys. This is actually is Ray Horn for Mike.

Hey, Ray.

Just a couple questions. I was wondering if you guys were able to, I think last quarter you did announce as on what the EPS benefit from the price increases on the storm related activity was, I was wondering if you have that for this quarter.

We had not done that for this quarter. What happened Ray that we saw as far as the affect on the weighted average cost is that, we started a very strong in October and lost probably 40 basis points in November and then a couple -- 10 or 20 basis further in December. We think the effect on the weighted average cost is actually gone now. As far as the hurricane and margins, there are no price fields in the hurricane area, we don't think they're substantially higher than the margins, we have across the rest of the country. And nor should they be, just because there's a hurricane. So we haven't seen much effect on gross margins from the hurricane.

Did you guys' breakout on what the storm related activity, in terms of like sales benefit was this quarter?

We do not and again it's a little difficult to tell. We have 10 branches in around Houston, and if you take the average that we have per branch of $10 million. The most -- I think, they could exceed there on a year would be, maybe 30% to 40% increase of revenues. So that puts it in the $30 to $40 million range, and we've told folks in the past that we think that the hurricanes might last over the nine months depending on the severity. And as you know, the only part of it has the most of it, if that gives you some ideas. Our Houston locations were doing well before the storms hit; so it's very difficult for us to tell where the total revenue growth is coming from.

Also I want to add if I can jump. I think there is also a feeling that fiscal '08 has hurricane volume, and it really didn't. So, as we go into the second quarter there is no hurricane volume that we need to -- no one wants to see another hurricane, but I just want to one know on the call, we didn't have any hurricane volume in '08. Ike happened in the first quarter and actually probably causes a good after a slow start in the first quarter because the first couple weeks of our fiscal year, everyone was trying to figure out what was going on in that part of the country trying to get back to their homes and so forth. So, no hurricanes was very unusual. But no hurricanes in fiscal '08 that obviously will be -- there are now, in '09 and still wait and see whether August or September of fiscal '09 has an additional hurricane. History would say that there will be but who knows where and how much. So just wanted to clarify that. So take the next question. Permian, please ask next question.

And we'll go next to David Manthey from Robert W. Baird.

Hi, thanks. Where ever that hurricane is so hopefully not Tampa. Could you talk about -- let see maybe for Paul. I'm wondering what the profit improvement at SBI in North Coast, and do you talk about what the profitability there is in EBIT basis, today versus what it was a year ago at those two business units?

As we've said in the past we've recognized and we of course drive overall improvement in every region but we also specifically talked about those two regions and we placed a lot of emphasis, we're pleased to say they have made good progress over the last 12 months but probably their rating procedures, processes just about everything. And if you look at the comparisons against the other regions we've always said our goal is to get them up to company averages from an operating income statement [inaudible]. Frankly, somehow for instances shelters are further the company from overall measurement perspective.

Okay. Thanks, and North Coast also on track?

Yeah, as far as North Coast state goes, we continue to help those states, it takes three to five year period to make improvements. North Coast is a very strong commercial company, probably the best in the industry at commercial work that I've seen since I've been here. But they need a better product-mix to make improvements in their EBIT line, and we're starting to introduce some of those products in some areas two to three branches at a time, we may add some branches at our residential only to give them some leverage on their SG&A. But they have come a long way from where they started from, it's a very good acquisition, we just need some time. And I hope to be able to tell you in two years time that much like shelter when we told folks we could do that, there's going to be at that level too.

David, this is Bob. In a different perspective, North Coast attention to the fundamentals has been very encouraging; in particular their focus on receivables and inventory, and all those kind of things that a good distributor. So we're not only happy with their continued improvement and operations and income; but specifically, just getting into the details and those branches, they're doing really well. And we like that, so that always goes well for continued improvement. They have to first stick to the fundamentals and then everything else comes along, so. The other thing too, with North Coast, is not only are they jumping out, all the great practices that the other regions have to offer, but we've been able to extract the number of key things from that business, because it is an extremely strong business, especially on the selling side, that we've been able to translate to the commercial businesses of the other regions. So, it's really been a kind of a double positive hit for us as we've introduced the Beacon practices and then taken away some of the best North Coast practices to the other regions.

And we'll take our next question from Brent Rakers for Morgan Keegan.

Yeah, Good morning. I guess let me start with some of the head count reductions and the branch closings. It looks like the level of head count reductions on the year-over-year basis is starting to taper off. I guess for maybe for Paul, do you feel comfortable now where that the total head count reductions are and then maybe as you could elaborate a little bit more on the strategy behind the branch closings and maybe even and what regions those were affected?

Yeah I think, Brent, we're in the current we're in our current winter period. Sure so you see how good the weather was seen and it continue adjust. So there comes of a strategy which we look at these number everyday, we're very cognizant of our efficiency level, our first concern is always to serve our contract base. So by no means are we finished. Let say I was going materialize to the levels we expect. You will make adjustments and we can pretty consistent I think quarter-to-quarter considering the amount of sales we generated. [Technical difficult].

If I could ask the monitor to check the static, we're hearing some static here. Connie are you there?

Yes, give me just one moment.

Okay.

Yeah, we don't interrupt the accent from roster here with any static, so let's move.

Its pretty quiet here.

And we'll take our next question from Robert Kelly from Sidoti. Robert Kelly - Sidoti & Company: Good morning, Thanks for taking my call.

Good morning. Robert Kelly - Sidoti & Company: The question that I had in share pricing using stabilization assuming that you do have some threat of deflation in the second half of the year, you mentioned you're prepared for it, how do you actually try to come back that, just start off within ...?

Well, the biggest thing that we do ahead in times, are inventory, which we are in good shape. Will take down those singles which we turn very quickly usually its at least six to nine times per year, depending on the season that we turned in. And that's where we've seen the vast majorities of price increases. So it's very controllable. Now if we do see a drop, we hope that its not in droppable which would probably be harder to react too, but as the manufacture is have come out with some price increases even if things drop off a little bit, the perception is that [inaudible] slower if they need to.

What I would say is that, I haven't seen the drop in asphalt pricing that maybe some people perceive as out there. And then so that happens, that... Robert Kelly - Sidoti & Company: And then, as far as you talked about business, sustainable gross margin rate 23% to 24.5%, does that assume stabilization at these levels, the current level evaluated pricing?

Yes, if we saw a big decrease in prices that would affect us in the downward, and if we see price increases, it may rise above that. But, we'll have to wait, it happens in the market. Robert Kelly - Sidoti & Company: Thanks, again.

Thank you.

And we'll go next to Scott Ciccarelli with RBC Capital Markets.

Hi guys. How are you?

How are you, Scott?

Good. Question, are you guys, just in terms of the pace of business, particularly on the commercial side, I am assuming business that you're doing now is kind of been pre-booked if you will because you knew there are certain projects going on, but given what's going on the commercial side, are you guys expecting a material drop-off in those -- as we get to your second half?

We talked to our VPs all the time is recently as yesterday. And those jobs are not pre-booked some will be re-roofing jobs caused by when our weather issues, some could be scheduled for months ahead because of projects are underway. But re-roofing is not as scheduled kind of event. And we still, and we tempered, but we're hearing that -- Paul you had this conversion, does it -- optimistic and contractors are, our VP's are that we take that listen to all but we tempered and we are tactical plans, are pretty real time everyday, every week. So, the re-roofing aspect of commercial is awfully strong, its 80% of the business. And given that amount that gives us even more optimism, giving the strength in the -- I guess harshness of this winter, probably you certainly can't predict anything and we don't like even talk about weather. But the reality is that present that's been very difficult through contractors even get on the roofing and northern climate. But as Bob said that there is some tempered optimism coming out of our regions that are strong commercially about prospects over the next six months once they can actually start working.

Okay. That's helpful and then any kind of color regarding year specific competitive situation would be helpful just in terms there is a lot businesses both large and small under a tremendous amount of pressure given what's going on and obviously the real estate market as well as the broader economy I know roofing is obviously a lot more insulated, but any kind of feel or color would be helpful.

All regarding our competitors?

Yes.

That'd be hard for me, most of my private. So I really couldn't give you a lot of information on that.

I guess on, looking for -- are you seeing people kind a close stores, close shops that kind of stuffs or because of the stability of the industry, you're not really seeing that?

You're right, it is just stable, stable industry and if there are private companies, well run 5 to 10 and 15 locations probably own the real estate, do a good job of inventory management, receivable management, people I know, good cash flow in this environment. These are good companies.

Okay, that's helpful. All right, thanks guys.

And ladies and gentlemen, we have time for couple more questions. We'll go next San Taylor with MJXXF Management (ph).

Yeah, thanks for taking the call. And I had a question, if -- I heard and I think you mentioned it on previous calls. Not a huge interest in going by acquisition but more by organically. And looking at the cash flow statement and maybe I can't make 18 million in net income every quarter. But I'm just doing some quick math that if you keep receivables inventory under control you could well generate north of $40 or $50 million of free cash flow this year. And where would you say the demands on that cash flow go, Will it go to debt repayment or possibly share repurchase or might you change your tune on acquisitions?

Yeah, well start with per day which is our attitude on acquisitions.

Okay.

We still -- our long-term growth objective is to grow organically 5 to 10, and acquisitions 10 to 15, we've exceeded both those numbers, since going public. So, the acquisition strategy is still very key to what we do.

Okay.

So, that we'll continue, what we have said is we are on the sidelines accumulating cash, as I say keeping our powder dry, and that's what we're doing. And we are accumulating cash, and I think your free cash flow estimates probably low.

Yeah.

For the year. So, we would continue to build that cash, as we speak today, we are -- we do look at acquisitions and that's part of our gross strategy. But, we're also very conservative company. I think, we're in great shape now probably as good as shape to make acquisitions running when I know, and so -- does that answer your question?

It does and just a follow-up. I agree I will borrow the cash flow as well and I think it'll be more. We have the rating agencies had a chance to digest this quarter's numbers, you might be chatting with them.

We don't have rated debt. We had one-time rating on our debt.

Right.

They don't even look at it.

That's all I had. Thank you.

Thank you.

Appreciate it.

And we'll go next to Ted Kundtz with Needham & Company. Theodor Kundtz - Needham &Company: Yeah, hello everyone.

Hi. Theodor Kundtz - Needham &Company: Bob, could you comment on the outlook for new construction? And not -- we know its awful but its worse now that it was year ago and how much of an impact would that have on you guys going forward in terms of your volumes. It's a year-over-year change I'm looking for. Is it -- do you see it as a lot worst than last year or is it kind of comparable to last summer?

Ted that's excellent question, I'm not a builder. So, they would probably have a better sense of where they think calendar year '09 is going to be. My personal opinion and again I'm not a builder, the personal opinion is housing starts at a low point. And for us with our product mix, we will benefit from an increase in housing starts, inventory levels are going down, I think the governments going to get mortgage rates down, foreclosures are going to stabilize, because people going to be supported, lot of things happening that will be very good for housing. Even in January, existing home sales went up, and I'm sure some of those, home sales of existing, the seller was possibly buying a new homes in place. So, I think its cyclical bottom, could bounce along at these rates for several months and then get a lot better later in the year mainly because everything is aligned that way, people are saving more, mortgage rates are down and homes are more affordable. So that's how I see. Theodor Kundtz - Needham &Company: Just wondering I your mix of the residential business is it still roughly 70% kind of re-roofing and 30% new construction related or is that mix changed where its really much more re-roofing now than it had been, because of this economy.

Theodor, this is David. I don't think there's any question especially in the markets that we're that has client above that. I couldn't give you an exact percentage, we use very rely on in industry research company to provide us for that. But think if where we are in the North East along the East Coast, and we're not in Florida and Nevada and although big home buildings states which calculate the most. So there's no question in my mind that the re-roofing is probably declines above 75% but I couldn't prove it yet, my personal opinion. Theodor Kundtz - Needham &Company: Okay, I'm just trying to get the delta there from last year to this year. Okay.

Great. Theodor Kundtz - Needham &Company: Thank you

Thank you

And we'll take our last question from Garvin Buchanan with Boston Capital (ph).

Yeah, I apologies all my questions have been answered.

All that are answered well.

And that's concludes the question, now I'd like turn the call back over to Mr. Buck for his closing comments.

Okay. I appreciated. Thanks again for your questions and again David, Paul and I will be available for additional questions immediately following this call and as usual I'd like to close a call by emphasizing several points comment both point traction. Number one; we are really pleased with this with our double-digit organic growth of around 16% for the quarter. Gross margins were up for the quarter both in dollars and a percentage to sales. Operating margins has a percent to sales actually doubled from 4.0% to 8.1 and this is some thing we talk about all the time, our balanced product mix couple with the diversified geographic footprint that we have, it serves us so well and we'll continue service well in the future as deal with economic situations. Our balance sheet very strong and we want to always be known and we've said this before in -- always be known as good towards of the assets interested to us. And we believe our results and all these areas are pleasing to our employees, our suppliers and our shareholders. So thanks very much for your continued interest in support of Beacon and speaking at behalf of our employees, we all truly appreciate it and we look forward to seen you in the coming months. Thanks very much.

Thank you.

Thank you.