NCI Building Systems Reports Fourth Quarter and Full Year Fiscal 2012 Results Fourth Quarter 2012 Highlights -- Operating Income Doubled to $15.4 million on 28% Revenue Growth-- Adjusted EBITDA up 68% to $29.5 million -- Net Income was $6.3 million, or $0.08 per diluted common share -- Bookings Increased 6% in Dollars and 11% in Tonnage

Fiscal 2012 Highlights -- Revenues Increased 20% to $1.2 billion -- Adjusted EBITDA was $76.5 million, up 115% -- Cash Flow from Operations Reached $47.7 million -- Backlog at Fiscal Year-end was $262.2 million, up 22% from 2011 Levels

HOUSTON, Dec. 4, 2012 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the fourth quarter and fiscal year ended October 28, 2012.

Fourth Quarter 2012 Financial Results

"Our fourth quarter performance demonstrated the strength of NCI's market positions across key segments of the metal building industry and the significant operating leverage that has resulted from our restructuring and companywide efficiency programs," said Norman C. Chambers, Chairman, President and Chief Executive Officer. "In the fourth quarter, our total external volume was up 21% on a year-over-year basis, which drove revenue growth of 28%. Over the same time period, new starts in the nonresidential construction market measured in square footage declined 2%, based on McGraw-Hill data. Adjusted EBITDA increased 68% and operating income was up 98%, reflecting the positive impact of increased volume, our ability to leverage prior investments in equipment, systems, and training and a full quarter contribution from Metl-Span, which we acquired in mid-June 2012. While the overall nonresidential construction market remains lackluster, NCI continues to benefit from the competitive advantages of steel versus other building products as well as improved demand from certain sectors of our addressable market, specifically energy, manufacturing, agriculture and retail."

"Each of our business units posted double-digit year-over-year increases in operating profitability, thanks to higher utilization rates and a more efficient infrastructure. Consolidated ESG&A as a percentage of sales declined to 17.5%, the lowest level in the last 16 quarters. In our Buildings group, engineering costs per ton declined 15.6% from last year's levels, emblematic of the progress we have made in increasing this segment's productivity. Bookings increased 6% in dollars and 11% in tonnage in the fourth quarter, and our backlog at the end of the period was $262.2 million, up 22% on a year-over-year basis.

"As expected, our fourth quarter results outpaced those of the third quarter, representing the second consecutive year that we have seen a return to historical shipment patterns. On a sequential basis, fourth quarter revenues increased 21.2%, adjusted EBITDA was up 55.9% and operating income increased 119.3%. Additionally, our seasonally-stronger second half fiscal 2012 performance was markedly better than the comparable period last year, with revenues up 21%, adjusted EBITDA up 50% and operating income up 56.5%."

For the fourth fiscal quarter, sales were $362 million, up 28.4% from the $282 million reported in last year's fourth quarter. Gross profit margin increased to 21.8%, from the 21.0% reported in the year-ago fourth quarter.

Engineering, selling, general and administrative expenses were $63 million, or 17.5% of revenues, compared to $51 million, or 18.1% of revenues in last year's fourth quarter. Operating income reached $15.4 million, nearly twice the $7.8 million reported last year. Adjusted operating income, which excludes restructuring, impairment and acquisition charges, was $15.6 million compared to last year's fourth quarter adjusted operating income of $9.3 million.

Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and other cash and non-cash items, in accordance with the Company's bank credit agreement was $29.5 million compared to $17.5 million in last year's fourth quarter.

For the fourth fiscal quarter, the Company reported net income of $6.3 million. In last year's fourth quarter, the Company reported net income of $3.4 million, but incurred a net loss applicable to common shares of $4.4 million, which included the accrual of preferred stock dividends and accretion of $6.5 million and a non-cash beneficial conversion feature charge of $1.4 million.

For this year's fourth fiscal quarter, the Company reported earnings of $0.08 per diluted common share. This compares to an adjusted net loss per diluted common share, excluding the non-cash convertible preferred stock amendment charge and other special items, of $0.11 and a reported net loss per diluted common share of $0.24 in last year's fourth quarter.

The weighted average number of common shares used in the calculation of fourth fiscal quarter 2012 per share amounts was 19.5 million compared to 18.6 million last year. 

Inventory levels increased 19.7% over last year's fourth quarter to $106 million, due to the acquisition of Metl-Span. Annualized inventory turnover improved to 10.1 turns for the fourth quarter compared to 8.9 turns for the fourth quarter last year.

For full year 2012, capital expenditures were $28.2 million; net cash from operating activities was positive $47.7 million.

Fourth Quarter Segment Performance

"Each of our business segments generated year-over-year increases in volumes, revenues, and operating income," Mr. Chambers said.

The Coatings group grew their third party sales in the fourth quarter, as well as substantially completed the refurbishment of their Middletown, Ohio facility, which is expected to begin production in mid to late December 2012. Despite modest sales growth of 2.7%, operating income increased 43% year-over-year as a result of increased operating leverage on intercompany volume, supporting the growth of the Components and Buildings groups. 

In the Components group, third party sales increased 48%, while operating income improved 61%, benefiting from both the Metl-Span acquisition and organic year-over-year growth.

The Buildings group produced a 33% increase in operating profit on third party sales growth of 19% in the fourth quarter, benefiting from higher plant utilization and improved engineering efficiency.

Full Year 2012 Highlights

  • Revenues increased 20% to $1.2 billion from $960 million
  • Adjusted EBITDA was $76.5 million, more than twice the $35.6 million in fiscal 2011
  • Operating Profit was $31.7 million compared to an operating loss of $1.6 million in fiscal 2011
  • Cash Flow from Operations was $47.7 million up from $41.4 million
  • Net debt increased to $193.6 million, following the Metl-Span acquisition

"All three of our operating groups, Coatings, Components and Buildings, generated substantial year-over-year increases across key financial metrics, demonstrating the success of business development initiatives, the returns on investments to improve efficiencies and strength of our integrated business model," Mr. Chambers noted.

Market Commentary

In the fourth quarter of fiscal 2012, low-rise nonresidential construction starts measured in square feet declined by 2% from the comparable period in fiscal 2011, as reported by McGraw-Hill, which is net of an 11% increase in starts in the commercial and industrial sectors.

McGraw-Hill forecasts that nonresidential construction activity measured in square feet will be 744 million in calendar 2013, compared to 703 million in calendar 2012, including commercial and industrial sector growth of 11%. The American Institute of Architect's Architectural Billing Index published for October 2012 was 52.8 and the commercial and industrial component of the Index was 48.0.

Summary/Outlook

"NCI's performance in fiscal 2012 demonstrated the significant operating leverage that is built into our business model as a result of the streamlining of our manufacturing, engineering and supply chain operations that we have implemented over the past four years," Mr. Chambers said.

"Looking ahead, we are confident that NCI will continue to outperform the industry average, benefiting from the forecasted upturn in nonresidential construction starts, as well as company-specific growth initiatives and ongoing efficiencies in each of our business units.

"Based on industry indicators, our backlog levels and the strength of current quoting activity, fiscal 2013 should be a year of significant growth for NCI across all key financial metrics. We expect to report solid year-on-year growth in revenues, adjusted EBITDA, operating income and net income in both the first half and second half of fiscal 2013, despite the near-term effects of Hurricane Sandy, higher costs in our Coatings group during the ramp-up of production at Middletown and a temporary mix shift on our seasonally slowest first quarter performance," Mr. Chambers concluded.

The NCI Building Systems, Inc. fourth quarter conference call is scheduled for December 4, 2012, at 5:00 PM ET. Please call 1-800-860-2442 (International: 412-858-4600) 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 1-877-344-7529 or 412-317-0088 and the passcode 10020411# when prompted. The Webcast archive and taped replay will both be available two hours after the call through December 11, 2012.

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. The words "believe," "guidance," "potential," "anticipate," "plan," "expect," "should," "will," "forecast" or similar expressions are intended to identify forward-looking statements in this press release. These forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. However, 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, our ability to integrate the acquisition of Metl-Span L.L.C. with the Company's business or to realize the anticipated benefits of such acquisition, industry cyclicality and seasonality and adverse weather conditions; ability to service the Company's debt; 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. See also the risk factors in the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2011 and in its subsequent quarterly reports on Form 10-Q, which 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, whether as a result of new information, future events, or otherwise.










 NCI BUILDING SYSTEMS, INC. 

 CONSOLIDATED STATEMENTS OF OPERATIONS 

 (Unaudited) 

 (In thousands, except per share data) 





















 For the Three Months Ended 


 For the Fiscal Year Ended 



 October 28, 


 October 30, 


 October 28, 


 October 30, 



2012


2011


2012


2011










 Sales 


$        361,688


$        281,788


$     1,154,010


$        959,577

 Cost of sales, excluding asset impairments (recoveries) 


282,866


221,382


898,001


758,023

 Asset impairments (recoveries) 


13


1,214


(9)


1,121

      Gross profit 


78,809


59,192


256,018


200,433



21.8%


21.0%


22.2%


20.9%










 Engineering, selling, general and administrative expenses 


63,230


51,125


219,340


202,352

 Acquisition-related costs 


153


-


4,989


-

 Restructuring charges (recovery) 


-


283


-


(292)

      Income (loss) from operations 


15,426


7,784


31,689


(1,627)










 Interest income 


12


24


112


127

 Interest expense 


(6,238)


(3,709)


(16,827)


(15,723)

 Debt extinguishment costs, net 


-


-


(6,437)


-

 Other income (expense), net 


449


(290)


460


876










 Income (loss) before income taxes 


9,649


3,809


8,997


(16,347)

 Provision (benefit) for income taxes 


3,379


398


4,084


(6,397)



35.0%


10.4%


45.4%


39.1%










 Net income (loss) 


$            6,270


$            3,411


$            4,913


$           (9,950)

 Convertible preferred stock dividends and accretion 


-


6,454


16,352


28,120

 Convertible preferred stock beneficial conversion feature 


-


1,356


11,878


9,396

 Convertible preferred stock amendment  


-


-


48,803


-

 Net income (loss) applicable to common shares 


$            6,270


$           (4,399)


$         (72,120)


$         (47,466)



















 Net Income (Loss) per common share: 









    Basic 


$              0.08


$             (0.24)


$             (3.81)


$             (2.58)

    Diluted 


$              0.08


$             (0.24)


$             (3.81)


$             (2.58)










 Weighted average number of common shares outstanding: 









    Basic 


19,159


18,632


18,932


18,369

    Diluted 


19,481


18,632


18,932


18,369










 Increase in sales 


28.4%




20.3%












 Gross profit percentage 


21.8%


21.0%


22.2%


20.9%










 Engineering, selling, general and administrative 









    expenses percentage 


17.5%


18.1%


19.0%


21.1%










 




 NCI BUILDING SYSTEMS, INC. 

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 
















 October 28, 


 October 30, 




2012


2011




 (Unaudited) 



 ASSETS 






 Cash and cash equivalents 


$           55,158


$           78,982


 Restricted cash 


1,375


2,836


 Accounts receivable, net 


133,475


95,381


 Inventories, net 


106,015


88,531


 Deferred income taxes 


20,741


20,405


 Income tax receivable 


549


1,272


 Prepaid expenses and other 


16,864


14,847


 Investments in debt and equity securities, at market 


4,076


4,483


 Assets held for sale 


2,397


4,874



Total current assets


340,650


311,611









 Property plant and equipment, net 


268,875


208,514


 Goodwill  


74,844


5,200


 Intangible assets, net 


53,028


24,254


 Other assets 


11,000


11,575



 Total assets 


$         748,397


$         561,154








 LIABILITIES AND STOCKHOLDERS' DEFICIT  






 Current portion of long-term debt 


$             2,500


$                    -


 Note payable 


515


292


 Accounts payable 


113,177


88,158


 Accrued compensation and benefits 


43,066


34,616


 Accrued interest 


345


1,309


 Other accrued expenses 


57,368


49,668



 Total current liabilities 


216,971


174,043









 Long-term debt, net of current portion (and unamortized discount of $11,806 for 2012) 


234,444


130,699


 Deferred income taxes 


35,565


7,312


 Other long-term liabilities 


11,995


10,081



 Total long-term liabilities 


282,004


148,092








 Series B cumulative convertible participating preferred stock 


619,950


273,950








 Redeemable common stock  


-


759








 Common stock 


924


924


 Additional paid-in capital 


4,992


237,244


 Accumulated deficit 


(369,850)


(266,896)


 Accumulated other comprehensive loss 


(6,568)


(5,485)


 Treasury stock, at cost 


(26)


(1,477)



 Total stockholders' deficit 


(370,528)


(35,690)









 Total liabilities and stockholders' deficit 


$         748,397


$         561,154






 






NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)













For the Fiscal Year Ended



 October 28, 2012 


 October 30, 2011 






Cash flows from operating activities:





      Net income (loss)


$                    4,913


$                   (9,950)

      Adjustments to reconcile net income (loss) to net cash provided by 





            operating activities:





            Depreciation and amortization


33,840


33,214

            Share-based compensation expense


9,297


6,908

            Non-cash debt extinguishment costs


6,437


-

            (Gain) loss on sale of property, plant and equipment


(556)


50

            Provision for doubtful accounts


270


1,844

            Provision (benefit) for deferred income taxes


2,177


(6,397)

            Asset impairments (recoveries)


(9)


1,121

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





            Accounts receivable


(17,098)


(15,329)

            Inventories


(9,108)


(7,145)

            Income tax receivable


1,082


14,382

            Prepaid expenses and other


(2,075)


(247)

            Accounts payable


12,047


17,569

            Accrued expenses


6,255


5,668

            Other, net


250


(251)






Net cash provided by operating activities


47,722


41,437






Cash flows from investing activities:





      Acquisition, net of cash acquired


(140,991)


-

      Capital expenditures


(28,151)


(21,040)

      Proceeds from sale of property, plant and equipment


2,992


583






Net cash used in investing activities


(166,150)


(20,457)






Cash flows from financing activities:





Decrease in restricted cash


1,461


3

Proceeds from ABL Facility


15,098


43

Payments on ABL Facility


(15,096)


(43)

Excess tax benefits from share-based compensation arrangements


2


464

Proceeds from term loan


237,499


-

Payments on term loan


(131,950)


(5,605)

Payments on note payable


(1,536)


(1,543)

Payment of financing costs


(9,399)


(200)

Payment of cash dividends on Convertible Preferred Stock


-


(11,039)

Purchase of treasury stock


(1,529)


(1,477)






Net cash provided by (used in) financing activities


94,550


(19,397)






Effect of exchange rate changes on cash and cash equivalents


54


(20)






Net (decrease) increase in cash and cash equivalents


(23,824)


1,563






Cash and cash equivalents at beginning of period


78,982


77,419






Cash and cash equivalents at end of period


$                  55,158


$                  78,982



-








 











NCI BUILDING SYSTEMS, INC