NCI Building Systems Reports Fourth Quarter Fiscal 2011 Results Fourth Quarter Highlights -- Operating Income and EBITDA More than Doubled on a 17% Revenue Increase-- Broad-based Revenue Growth and Profitability Led By Engineered Building Systems-- Net Income was $3.4 million-- Bookings Increased 35%

Fiscal 2011 Highlights -- Revenues Increased 10% to $960 million-- Adjusted EBITDA was $35.6 million, up 121%-- Cash Flow From Operations Reached $42 million-- Backlog at Fiscal Year-end was $215 million

HOUSTON, Dec. 6, 2011 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the fourth quarter and fiscal year ended October 30, 2011.

Fourth Quarter 2011 Financial Results

"Our fourth quarter results clearly demonstrate the significant operating leverage that is built into our business model as a result of the restructuring we have executed in our manufacturing, engineering and supply-chain operations over the past three years. These internal improvements have enabled us to post increases in profitability that far outpace revenue and volume gains, benefiting from even modestly better business conditions," said Norman C. Chambers, Chairman, President and Chief Executive Officer. "In the fourth fiscal quarter, our total volume was up 6.4% on a year-over-year basis, while new starts in the nonresidential construction market measured in square footage declined 4.1% as reported by McGraw-Hill. This outperformance reflected improved demand from certain sectors of our addressable market as well as our ability to maintain or increase market share across all of our business segments."

"Each of our business units contributed to operating profitability in the fourth quarter, led again this quarter by our Engineered Buildings group, which moved to an operating profit of $10.7 million from a year-ago operating loss of $3.9 million, on a 21% revenue increase. Similar to the third quarter, bookings increased substantially, up 35% year-over-year. For the third consecutive quarter, we experienced a significant increase in the rate of converting our backlog into production, a metric that was up nearly 30% this period compared to the last several years. This was due to the continued greater proportion of "book for production" business in our backlog and our shortened delivery times, both changes largely driven by the success of our Express Buildings program."

"As expected, second half fiscal 2011 performance was significantly better than that of the first half, reflecting the combination of improved conditions in markets such as manufacturing, energy and mining, which have historically accounted for a large portion of our business, and the increased efficiency of our operating footprint. In the last six months of the fiscal year, we achieved year-over-year growth in revenues and adjusted EBITDA of 11.7%, and 82.6%, respectively, and revenues for the second half of the fiscal year were 145% higher than our backlog at April 30, 2011, representing a return to more normalized performance levels."

For the fourth fiscal quarter, sales were $282 million, up 17% from the $241 million reported in last year's fourth quarter and a 7.5% sequential increase over the $262 million reported in the prior quarter. Gross profit margin was 21% compared to 19.2% in the year-ago fourth quarter and 21.7% in the prior quarter. Excluding the asset impairment charge of $1.2 million, gross profit margin would have been 21.4% for this year's fourth quarter.

Engineering, selling, general and administrative expenses were $51.1 million, or 18.1% of revenues. This compares to $48.5 million, or 20.1% of revenues in last year's fourth quarter, and $50.9 million, or 19.4% of revenues in the prior quarter. The Company posted an adjusted operating profit of $9.3 million compared to last year's fourth quarter adjusted operating loss of $1.7 million and an adjusted operating profit of $5.9 million in the third quarter of fiscal 2011. 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 $17.5 million compared to $7.5 million in last year's fourth quarter and $14.7 million for the 2011 third quarter.

For the fourth fiscal quarter, the Company reported net income of $3.4 million. Including the accrual of preferred stock dividends and accretion of $6.5 million and a non-cash beneficial conversion feature charge of $1.4 million, the net loss applicable to common shares was $4.4 million. In last year's fourth quarter, the Company incurred a net loss of $5.4 million and net loss applicable to common shares of $18.6 million, which included the accrual of preferred stock dividends and accretion of $8.9 million and a non-cash beneficial conversion feature charge of $4.2 million. In the 2011 third quarter, the Company reported net income of $2.6 million. The net loss applicable to common shares was $13.1 million, which included the accrual of convertible preferred stock dividends and accretion of $9.2 million and a non-cash beneficial conversion feature benefit of $6.5 million.

For this year's fourth fiscal quarter, the adjusted loss per diluted share, excluding the non-cash beneficial conversion charge and other special items, was $0.11; the reported net loss per diluted share was $0.24. This compares to an adjusted net loss per diluted share of $0.72 and a reported net loss per diluted share of $1.01 in last year's fourth quarter, and an adjusted net loss per diluted share of $0.38 and a reported net loss per diluted share of $0.71 in the 2011 third quarter.

The weighted average number of common shares used in the calculation of fourth fiscal quarter 2011 per share amounts was 18.6 million compared to 18.4 million last year.

Inventory levels increased 8.8% over last year's fourth quarter to $88.5 million, as higher per unit costs more than offset the benefit of having lower quantities of steel on hand than in the year-ago period. Annualized inventory turnover was 8.9 turns for the fourth quarter compared to 8.6 turns for the fourth quarter last year.

For full year 2011, capital expenditures were $21 million; net cash from operating activities was positive $42 million.

Recent Development

As previously reported, the Company's ability to pay cash dividends on its Series B Cumulative Convertible Participating Preferred Stock is limited by the terms of the Company's credit facility. If not paid in cash at an 8% rate, the Company has the option to pay the dividend in-kind (or "PIK") at 12%.  For the second consecutive quarter, the Company has reached an agreement with the holders of the preferred stock to pay the dividend due on December 15, 2011 in-kind, but at the lower rate of 8%. The determination of cash payment versus PIK of the preferred dividends will be made each quarter, and there is no assurance that the holders of preferred stock will agree to this lower rate of 8% in future periods.

Fourth Quarter Segment Performance

The Company reported an adjusted operating profit of $9.3 million, which is reconciled with the reported GAAP operating income (loss) in the table below.







(In thousands)




















 For the Three Months Ended October 30, 2011 



 Metal Coil





















Operating income (loss), GAAP basis  

$     4,903


$      6,345


$     10,698


$   (14,162)


$      7,784


Asset impairments











Restructuring charges











"Adjusted" operating income (loss) (1)

$     4,903


$      6,354


$     11,939


$   (13,915)


$      9,281













(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 consolidated statement of operations.
















"Each of our three business segments contributed to the strong improvement in operating results in the 2011 fourth quarter," Mr. Chambers said.

The Components group's third-party sales increased 11% in the fourth quarter as compared to the year-ago period on a modest increase in volume. Similar to the third quarter, higher raw material costs reduced the unit's profitability. Cost containment initiatives, however, enabled the segment to maintain a reasonable operating margin.

The Coatings group continued to successfully sell its products to end users outside of the nonresidential construction industry and posted a 23% increase in third-party sales. Operating income increased 31% compared to the prior year as a result of higher volumes, which was reflected in double-digit increases in both third-party and intersegment sales.

The Buildings group's third-party revenues increased 20% year-over-year, and operating profit was $10.7 million, representing a $14.6 million improvement over the prior year. Improved demand for "design and build" projects, effective brand marketing, superior execution and commercial discipline all contributed to the significantly improved results.

Full Year 2011 Highlights

  • Revenues increased 10% to $960 million from $871 million
  • Adjusted EBITDA was $35.6 million, up 121% from $16.1 million
  • Cash Flow from Operations was $42 million up from $6.3 million
  • Net debt was reduced to $51.7 million from $58.9 million at last year's fiscal year-end

Market Commentary

McGraw-Hill reported that new construction activity measured in square feet was down 4.1% in the fourth quarter of the Company's fiscal 2011 compared to the same period of 2010. For fiscal year 2011, NCI's traditionally strong manufacturing and warehousing market increased 11% compared to a 5% decline for the overall nonresidential market, as reported in McGraw-Hill's October data.

The American Institute of Architect's Architectural Billing Index published for October was somewhat improved but still below the benchmark level that indicates expansion. However, the commercial and industrial sector of the index posted its second consecutive month of growth in October.


"For the first time since 2007, we returned to our historical seasonal pattern of fourth quarter results outpacing those of the third quarter, which we believe points to positive momentum as we enter fiscal 2012. There is still little evidence of a sustained U.S. economic recovery that would benefit all of our businesses, and global economic conditions remain a concern. Our Buildings group's bookings and backlog continues to point to a much improved start of 2012. Stronger first half comparisons coupled with our expectations for improved performance resulting from our operating leverage and business unit growth initiatives should enable us to deliver another year of significant improvement in EBITDA," Mr. Chambers concluded.

The NCI Building Systems, Inc. fourth quarter conference call is scheduled for December 6, 2011, 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 To access the taped replay, please dial 1-877-344-7529 or 412-317-0088 and the passcode 10007046# when prompted. The Webcast archive and taped replay will both be available two hours after the call through December 13, 2011.

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