NCI Building Systems Reports First Quarter Fiscal 2013 Results -- Revenues Increased 22.2% to $298 Million --

-- Adjusted EBITDA was $13.4 Million --

-- Backlog Increased 17% to $260 Million --

-- More Favorable Mix to Drive Improved Sequential Adjusted EBITDA Performance in the Second Quarter --

-- Second Half 2013 Profitability to Benefit from Investments in Gross Margin Expansion --

HOUSTON, March 5, 2013 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the first quarter ended January 27, 2013.

First Quarter 2013 Financial Results

"First quarter results were mixed as the impact of previously-disclosed items together with investments made in manufacturing capabilities resulted in a net loss for our seasonally weak first quarter. Revenue growth in the period was driven by mid-single-digit improvements in the organic performance of our Components and Buildings groups and the benefits of our June 2012 Metl-Span acquisition. Customer demand from end markets including retail, commercial, warehouses and industrial improved year-over-year. Gross profit increased 13.5% year-on-year, however gross profit margin declined 156 bps, primarily as a result of three factors: the mix of projects shipped by our Buildings group, which included a large proportion of lower-margin structural products; the additional costs associated with the ramp-up of the new Middletown, Ohio plant; and our decision to retain and train skilled manufacturing workers in order to capture additional efficiencies in the seasonally stronger second half of the fiscal year. While the latter reduced first quarter profitability and will impact the second quarter, although to a lesser extent, we believe it will strengthen the Buildings group's positioning as a leader in quality, efficiency and shorter lead times," commented Norman C. Chambers, Chairman, President and Chief Executive Officer.

"Our Buildings group's backlog at the end of the quarter reached $260 million, up 17% year-over-year. Overall booking trends were similar to the levels achieved in last year's first quarter, which had increased 16% over the comparable fiscal 2011 period. In addition, we have seen improved pricing coincident with first quarter booking trends," Mr. Chambers said.

For the first quarter, sales were $297.6 million, up 22.2% from the $243.6 million reported in last year's first quarter. Gross profit increased 13.5% to $60.9 million from $53.6 million, but gross profit margin declined to 20.5% from 22.0% in the year-ago first quarter.

Engineering, selling, general and administrative expenses were $60.5 million up from $48.9 million, primarily as a result of our Metl-Span acquisition. As a percentage of revenues, however, ESG&A remained relatively constant at 20.3% in this year's first quarter compared to 20.1% last year. The Company reported an adjusted operating profit of $0.4 million compared to an adjusted operating profit of $4.7 million in the similar 2012 period. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, in accordance with the Company's bank credit agreement, was $13.4 million compared to $12.8 million in last year's first quarter.

For the first quarter of 2013, the Company reported a net loss of $3.6 million. In last year's first quarter, the Company reported net income of $0.6 million, but incurred a net loss applicable to common shares of $10.0 million, which included the accrual of preferred stock dividends and accretion of $6.6 million and a non-cash beneficial conversion feature charge of $4.0 million.

The net loss per diluted common share was $0.19 for the 2013 first quarter. This compares to an adjusted net loss per diluted common share of $0.31 and a reported net loss per diluted common share of $0.54 in last year's first quarter. The weighted average number of common shares used in the calculation of first quarter 2013 per share amounts was 19.2 million compared to 18.7 million last year.

Inventory levels increased 11.5% over the same period of the prior year to $113.8 million, mostly due to the acquisition of Metl-Span. Annualized inventory turnover was 8.5 turns for the first quarter compared to 7.9 turns in last year's first quarter and 10.1 turns in the fourth quarter of fiscal 2012.

Capital expenditures were $6.1 million which included the refurbishment of our Middletown Ohio coating facility which became operational during the quarter. Net cash used in operating activities was $13.2 million, consistent with our normal seasonal working capital and cash flow cycle.

First Quarter Segment Performance

The Company reported operating income of $0.4 million, compared to operating income of $4.3 million in last year's first quarter.

The strongest performer in the first quarter was the Components group, which produced a 56.4% increase in third-party revenues driven by the acquisition of Metl-Span and modest organic growth. Operating income increased 9.6% year-over-year as higher margin insulated metal panel products offset some of the impact of pricing pressure in the core commercial and industrial components business and higher operating expense to support growth in the second half of 2013.

The Coatings group reported a 4.5% year-on-year increase in operating income on flat sales, as higher internal revenue enabled manufacturing efficiencies and offset part of the impact of weather-related shipment delays. In January 2013, the new coatings plant in Middletown, OH, was officially opened and is expected to benefit all three of NCI's business segments and provide the Company with both additional capacity and broader geographic reach. The new plant is expected to increase the Coatings group's revenues progressively in fiscal 2013 and be incremental to profits in the fourth quarter of this fiscal year.

The Buildings group's third-party revenues increased 4.2% year-over-year, but operating profit declined to $4.0 million from $7.6 million in last year's first quarter due to the combination of less favorable project mix and higher labor costs incurred in anticipation of higher volumes in the seasonally stronger second half of the year.

Market Commentary

In the first quarter of our fiscal 2013, low-rise nonresidential construction activity measured in square feet increased 4.4% from the comparable period in fiscal 2012, as reported by McGraw-Hill.

The American Institute of Architect's Architectural Billing Index published for January 2013 was 54.2 and the commercial and industrial component of the Index remained above 50 for the fourth consecutive month.

McGraw-Hill is currently forecasting that nonresidential construction activity measured in square feet will be 8% higher in calendar 2013 compared to calendar 2012. McGraw-Hill projects calendar 2013 square footage at 800 million, up from 743 million in 2012, with most of the increase taking place in the second half of the calendar year. 

Summary and Outlook

"Each of our business units produced operating profits in the first quarter despite weather-related plant closures and shipment delays, product mix issues, and higher personnel-related manufacturing costs," Mr. Chambers said. "Based on our current visibility, we expect second quarter adjusted EBITDA to be ahead of first quarter results on a sequential basis, driven by a more favorable project mix in our Buildings group, and to be in line with last year's reported levels. We expect our first half 2013 results to show positive year-on-year comparisons across key financial metrics, including revenues and adjusted EBITDA."

"Our outlook for full year 2013 remains unchanged. Although the impact of sequestration on market demand remains uncertain, we believe that second half performance will benefit from improving market conditions and our strong operating leverage, which has been further enhanced by first quarter investments to expand gross margin. Thus, we expect to report second half results that are significantly ahead of the comparable period last year," Mr. Chambers concluded.

Conference Call Information

The NCI Building Systems, Inc. first quarter conference call is scheduled for Tuesday, March 5, 2013, at 5:00 PM ET. Please call 1-412-858-4600 or 1-800-860-2442 to participate in the call. To listen to a live broadcast of the call over the Internet or to review the archived call, please visit the Company's website at www.ncigroup.com. To access the taped replay, please dial 1-412-317-0088 or 1-877-344-7529 and the passcode 10025274# when prompted. The Webcast archive and taped replay will both be available two hours after the call through March 12, 2013.

NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. NCI is comprised of a family of companies operating manufacturing facilities across the United States and Mexico, with additional sales and distribution offices throughout the United States and Canada.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "guidance," "potential," "expect," "should," "will," "forecast" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, as a result, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially include, but are not limited to industry cyclicality and seasonality and adverse weather conditions; ability to service the Company's debt; ability to integrate Metl-Span with the Company's business or to realize the anticipated benefits of such acquisition; fluctuations in customer demand and other patterns; raw material pricing and supply; competitive activity and pricing pressure; general economic conditions affecting the construction industry; financial crises or fluctuations in the U.S. and abroad; changes in laws or regulations; and the volatility of the Company's stock price. The Company's SEC filings, including our most recent reports on Form 10-K, particularly under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2012, identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in its expectations.

 

 NCI BUILDING SYSTEMS, INC. 

 CONSOLIDATED STATEMENTS OF OPERATIONS 

 (Unaudited) 

 (In thousands, except per share data) 






 For the Three Months Ended 


 January 27, 


 January 29, 


2013


2012





 Sales 

$          297,584


$      243,603

 Cost of sales 

236,715


189,981

      Gross profit 

60,869


53,622


20.5%


22.0%





 Engineering, selling, general and administrative expenses 

60,471


48,941

 Acquisition-related costs 

-


396

      Income from operations 

398


4,285





 Interest income 

30


28

 Interest expense 

(6,274)


(3,324)

 Other income, net 

394


26





 Income (loss) before income taxes 

(5,452)


1,015

 Provision (benefit) from income taxes 

(1,825)


426


33.5%


42.0%





 Net income (loss) 

(3,627)


589

 Convertible preferred stock dividends and accretion 

-


6,608

 Convertible preferred stock beneficial conversion feature 

-


4,020

 Net loss applicable to common shares 

$             (3,627)


$       (10,039)









 Loss per common share: 




    Basic 

$               (0.19)


$           (0.54)

    Diluted 

$               (0.19)


$           (0.54)





 Weighted average number of common shares outstanding: 




    Basic 

19,237


18,693

    Diluted 

19,237


18,693





 Increase in sales 

22.2%







 Gross profit percentage 

20.5%


22.0%





 Engineering, selling, general and administrative 




    expenses percentage 

20.3%


20.1%

 

 

 NCI BUILDING SYSTEMS, INC. 

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 










 January 27, 


 October 28, 




2013


2012




 (Unaudited) 



 ASSETS 






 Cash and cash equivalents 

$             25,827


$          55,158


 Restricted cash 

1,376


1,375


 Accounts receivable, net 

108,953


133,475


 Inventories, net 

113,770


106,015


 Deferred income taxes 

25,941


21,926


 Income tax receivable 

964


549


 Prepaid expenses and other 

17,189


16,864


 Investments in debt and equity securities, at market 

4,118


4,076


 Assets held for sale 

2,397


2,397



 Total current assets 

300,535


341,835








 Property, plant and equipment, net 

266,812


268,875


 Goodwill  

76,856


76,746


 Intangible assets, net 

52,015


53,028


 Other assets, net 

10,505


11,000



 Total assets 

$           706,723


$        751,484







 LIABILITIES AND STOCKHOLDERS' DEFICIT 





 Current portion of long-term debt 

$               2,500


$            2,500


 Note payable 

-


515


 Accounts payable 

84,208


113,177


 Accrued compensation and benefits 

37,571


43,066


 Accrued interest 

3,535


345


 Other accrued expenses 

55,620


60,455



 Total current liabilities 

183,434


220,058








 Long-term debt 

226,215


234,444


 Deferred income taxes 

36,579


35,565


 Other long-term liabilities 

12,013


11,995



 Total long-term liabilities 

274,807


282,004








 Series B cumulative convertible participating preferred stock 

619,950


619,950








 Common stock 

925


925


 Additional paid-in capital 

7,676


4,991


 Accumulated deficit 

(373,477)


(369,850)


 Accumulated other comprehensive loss 

(6,592)


(6,568)


 Treasury stock, at cost 

-


(26)



 Stockholders' deficit 

(371,468)


(370,528)









 Total liabilities and stockholders' deficit 

$           706,723


$        751,484

 

 

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)






 For the Three Months Ended 


January 27, 2013


 January 29, 2012 





Cash flows from operating activities:




      Net income (loss)

$               (3,627)


$                    589

      Adjustments to reconcile net income (loss) to net cash used in




            operating activities:




            Depreciation and amortization

10,206


7,371

            Share-based compensation expense

3,442


1,972

            Loss on sale of property, plant and equipment

-


2

            Provision for doubtful accounts

1,305


(6)

            Provision (benefit) from deferred income taxes

(1,990)


292

      Changes in operating assets and liabilities, net of effect of acquisitions:




            Accounts receivable

23,217


15,204

            Inventories

(7,755)


(13,524)

            Income tax receivable

(415)


174

            Prepaid expenses and other

(615)


591

            Accounts payable

(28,969)


(8,836)

            Accrued expenses

(7,181)


(7,987)

            Other, net

(790)


(47)





Net cash used in operating activities

(13,172)


(4,205)





Cash flows from investing activities:




      Capital expenditures

(6,071)


(5,770)

      Proceeds from sale of property, plant and equipment

-


25





Net cash used in investing activities

(6,071)


(5,745)





Cash flows from financing activities:




Proceeds from stock options exercised

674


-

Excess tax benefits from share-based compensation arrangements

941


-

Increase in restricted cash

(1)


(1)

Proceeds from Amended ABL Facility

5,001


-

Payments on Amended ABL Facility

(5,000)


-

Payments on term loan

(8,750)


(500)

Payments on note payable

(515)


(292)

Payment of financing costs

(68)


(25)

Purchase of treasury stock

(2,346)


(1,503)





Net cash used in financing activities

(10,064)


(2,321)

Effect of exchange rate changes on cash and cash equivalents

(24)


(5)

Net decrease in cash and cash equivalents

(29,331)


(12,276)





Cash and cash equivalents at beginning of period

55,158


78,982





Cash and cash equivalents at end of period

$               25,827


$               66,706

 

 

NCI Building Systems, Inc.

Business Segments

(Unaudited)

(In thousands)












Three Months Ended


Three Months Ended


$

%


January 27, 2013


January 29, 2012


Inc/(Dec)

Change



% of 



% of 






Total



Total




Sales:


Sales



Sales




     Metal coil coating

$            49,271

14


$        49,083

16


$            188

0.4%

     Metal components

153,904

44


105,752

36


48,152

45.5%

     Engineered building systems

147,566

42


140,298

48


7,268

5.2%

          Total sales

350,741

100


295,133

100


55,608

18.8%

     Less: Intersegment sales

53,157

15


51,530

17


1,627

3.2%

          Total net sales

$          297,584

85


$      243,603

83


$       53,981

22.2%












 % of 



 % of 




Operating income (loss):


Sales



Sales




     Metal coil coating

$              5,542

11


$          5,302

11


$            240

4.5%

     Metal components

6,072

4


5,541

5


531

9.6%

     Engineered building systems

4,041

3


7,596

5


(3,555)

-46.8%

     Corporate

(15,257)

-


(14,154)

-


(1,103)

-7.8%

          Total operating income (loss) (% of sales)

$                 398

0


$          4,285

2


$        (3,887)

-90.7%

 

 

NCI BUILDING SYSTEMS, INC.

BUSINESS SEGMENTS

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) EXCLUDING SPECIAL CHARGES

For the Three Months Ended January 27, 2013 and January 29, 2012

(Unaudited)

(In thousands)



 For the Three Months Ended January 27, 2013 


 Metal Coil Coating 


 Metal

Components 


 Engineered
Building
Systems 


 Corporate 


 Consolidated 











Operating income (loss), GAAP basis

$          5,542


$            6,072


$      4,041


$      (15,257)


$               398

Acquisition-related costs

-


-


-


-


-

"Adjusted" operating income (loss) (1)

$          5,542


$            6,072


$      4,041


$      (15,257)


$               398






















 For the Three Months Ended January 29, 2012 


 Metal Coil Coating 


 Metal

Components 


 Engineered
Building
Systems 


 Corporate 


 Consolidated 











Operating income (loss), GAAP basis

$          5,302


$            5,541


$      7,596


$      (14,154)


$            4,285

Acquisition-related costs

-


-


-


396


396

"Adjusted" operating income (loss) (1)

$          5,302


$            5,541


$      7,596


$      (13,758)


$            4,681





















(1)  The Company discloses a tabular comparison of "Adjusted" operating income (loss), which is a non-GAAP measure because it is  instrumental in comparing the results from period to period. "Adjusted" operating income (loss) should not be considered in isolation or as a substitute for operating income (loss) as reported on the face of our statement of operations.

 

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,

AMORTIZATION AND OTHER NONCASH ITEMS ("ADJUSTED EBITDA")

(Unaudited)

(In thousands)






2nd Qtr


3rd Qtr


4th Qtr


1st Qtr


Trailing 12 Months


 April 29, 


 July 29, 


 October 28, 


 January 27, 


 January 27, 


2012


2012


2012


2013


2013

Net income (loss)

$              1,321


$       (3,267)


$         6,270


$            (3,627)


$                      697

Add:










     Depreciation and amortization

5,841


7,248


10,355


9,122


32,566

     Consolidated interest expense, net

3,034


4,159


6,226


6,244


19,663

     Provision (benefit) for taxes

942


(663)


3,379


(1,825)


1,833

     Acquisition-related costs, net

1,494


2,946


153


-


4,593

     Transaction costs

-


6,437


-


-


6,437

     Executive retirement

508


-


-


-


508

     Non-cash charges:










          Stock-based compensation

2,119


2,090


3,116


3,442


10,767

          Asset recovery

-


(22)


13


-


(9)

          Embedded derivative

(6)


(5)


(5)


(5)


(21)











     Adjusted EBITDA (1)

$            15,253


$       18,923


$       29,507


$           13,351


$                 77,034
































2nd Qtr


3rd Qtr


4th Qtr


1st Qtr


Trailing 12 Months


 May 1, 


 July 31, 


 October 30, 


 January 29, 


 January 29, 


2011


2011


2011


2012


2012

Net income (loss)

$             (3,229)


$         2,593


$         3,411


$                589


$                   3,364

Add:










     Depreciation and amortization

7,187


7,187


6,753


6,158


27,285

     Consolidated interest expense, net

3,870


3,864


3,685


3,296


14,715

     Benefit from income taxes

(1,786)


-


398


426


(962)

     Acquisition-related costs, net

-


-


-


396


396

     Cash restructuring charges (recovery)

-


(575)


283


-


(292)

     Non-cash charges:










          Stock-based compensation

1,671


1,776


1,776


1,972


7,195

          Asset impairments (recoveries)

-


(93)


1,214


-


1,121

          Embedded derivative

(6)


(6)


(6)


(5)


(23)











     Adjusted EBITDA (1)

$              7,707


$       14,746


$       17,514


$           12,832


$                 52,799





















(1)  The Company's Credit Agreement defines adjusted EBITDA.  Adjusted EBITDA excludes non-cash charges for goodwill and other asset impairments and stock compensation as well as certain non-recurring charges. As such, the historical information is presented in accordance with the definition above. Concurrent with the amendment and restatement of the Term Note facility, the Company entered into an Asset-Backed Lending facility which has substantially the same definition of adjusted EBITDA except that the ABL facility caps certain non-recurring charges. The Company is disclosing adjusted EBITDA, which is a non-GAAP measure, because it is used by management and provided to investors to provide comparability of underlying operational results.

 

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

"ADJUSTED" LOSS PER DILUTED COMMON SHARE AND NET LOSS COMPARISON 

(Unaudited)











Fiscal Three Months Ended





 January 27, 

 January 29, 





2013

2012


Net loss per diluted common share, GAAP basis

$          (0.19)

$           (0.54)


Convertible preferred stock beneficial conversion feature and amendment

-

0.22


Acquisition-related costs, net of taxes


-

0.01


"Adjusted" net loss per diluted common share (1)

$          (0.19)

$           (0.31)

















Fiscal Three Months Ended





 January 27, 

 January 29, 





2013

2012


Net loss applicable to common shares, GAAP basis

$        (3,627)

$       (10,039)


Convertible preferred stock beneficial conversion feature and amendment

-

4,020


Acquisition-related costs, net of taxes


-

244


"Adjusted" net loss applicable to common shares (1)

$        (3,627)

$         (5,775)




















 (1) The Company discloses a tabular comparison of "Adjusted" loss per diluted common share and net loss applicable to common shares, which are non-GAAP measures, because they are referred to in the text of our press releases and are instrumental in comparing the results from period to period. "Adjusted" loss per diluted common share and net loss applicable to common shares should not be considered in isolation or as a substitute for loss per diluted common share and net loss applicable to common shares as reported on the face of our statement of operations.

 

 

 NCI Building Systems, Inc. 

 Reconciliation of Segment Sales to Third Party Segment Sales (Internal Information) 

(Unaudited)

(In thousands)












 1st Qtr 2013 



 1st Qtr 2012 


 Inc/(Dec) 

 Change 

 Metal Coil Coating 









 Total Sales 

$          49,271

14%


$         49,083

16%

$          188

0%


 Less: Intersegment sales 

30,050



28,845


1,205

4%


 Third Party Sales 

19,221

6%


20,238

8%

(1,017)

-5%











 Operating Income (Loss) 

5,542

29%


5,302

26%

240

5%










 Metal Components 









 Total Sales 

153,904

44%


105,752

36%

48,152

46%


 Less: Intersegment sales 

17,376



18,456


(1,080)

-6%


 Third Party Sales 

136,528

46%


87,296

36%

49,232

56%











 Operating Income (Loss) 

6,072

4%


5,541

6%

531

10%










 Engineered Building Systems 









 Total Sales 

147,566

42%


140,298

48%

7,268

5%


 Less: Intersegment sales 

5,731



4,229


1,502

36%


 Third Party Sales 

141,835

48%


136,069

56%

5,766

4%











 Operating Income (Loss) 

4,041

3%


7,596

6%

(3,555)

-47%










 Consolidated 









 Total Sales 

350,741

100%


295,133

100%

55,608

19%


 Intersegment 

53,157



51,530


1,627

3%


 Third Party Sales 

297,584

100%


243,603

100%

53,981

22%











 Operating Income (Loss) 

$               398

0%


$           4,285

2%

$      (3,887)

-91%

 

SOURCE NCI Building Systems, Inc.



RELATED LINKS
http://www.ncigroup.com

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