Commodities: NCI Building Systems 4Q EPS 25c >NCS

Press Release: NCI Building Systems Reports Fourth Quarter and 2017 Fiscal Year End Results

NCI Building Systems Reports Fourth Quarter and 2017 Fiscal Year End Results

PR Newswire

HOUSTON, Dec. 6, 2017

HOUSTON, Dec. 6, 2017 /PRNewswire/ — NCI Building Systems, Inc. (NYSE: NCS) (“NCI” or the “Company”) today reported financial results for the fourth fiscal quarter and fiscal year ended October 29, 2017.

Fourth Quarter 2017 Financial and Operational Highlights:

   -- Sales rose 1.8% to $488.7 million for the quarter, compared to $480.3 
      million in the prior year's fourth quarter 
 
   -- Gross profit for the quarter was $116.3 million or 23.8% of revenues, 
      compared to $120.8 million or 25.2% of revenues in the prior year's 
      fourth quarter 
 
   -- Net income was $17.5 million for the quarter, compared to $19.0 million 
      in last year's fourth quarter. Adjusted Net Income was $22.3 million this 
      quarter, compared to $19.8 million in the prior year's fourth quarter 
 
   -- Net income per diluted common share for the quarter was $0.25, compared 
      to $0.27 in the prior year's fourth quarter. Adjusted Net Income was 
      $0.32 per diluted common share, compared to $0.28 in the prior year's 
      fourth quarter 
 
   -- Adjusted EBITDA was $53.9 million or 11.0% of revenues for the quarter, 
      compared to Adjusted EBITDA of $53.7 million or 11.2% of revenues in the 
      prior year's fourth quarter. 
 
   -- Repurchased over 2.6 million shares at an average purchase price of 
      $14.73 per share using $37.6 million. For fiscal 2017, the Company 
      repurchased 2.8 million shares at an average purchase price of $14.68 
 
   -- Total consolidated backlog increased to $545.6 million, up 5.8% 
      year-over-year 
 
   -- For the period, the Company estimated the hurricanes negatively impacted 
      sales by approximately $16.0 million, gross profit by approximately $8.3 
      million and Adjusted EBITDA by approximately $8.5 million 
 

“While 2017 was a demanding year, in spite of the overall challenges we finished the year on a strong note in terms of bookings and shipments,” said Donald R. Riley, President and Chief Executive Officer. “In closing out the year, we achieved many goals critical to realizing our long-term vision for NCI. We completed the rationalization of our manufacturing footprint, met our cost reduction initiative goals a year ahead of schedule, resulting in a combined annual savings of $31.9 million, and produced double digit growth in our Insulated Metal Panels business.”

“As we look towards fiscal 2018, we are excited and optimistic about our opportunities to continue driving NCI forward. The next phase of the Company’s evolution will be focused on implementing continuous improvement processes throughout the entire company with an emphasis on customer service and efficiency, expanding our sales through further product adjacencies, incorporating advanced automation across our manufacturing facilities and taking additional costs out of the business. We believe these efforts will position us to realize our long range goals,” concluded Riley.

Fourth Quarter 2017 Results

Fourth quarter 2017 sales increased to $488.7 million, up 1.8% from $480.3 million in last year’s fourth quarter, primarily due to continued commercial discipline in the pass-through of higher material costs. On a year-over-year basis, tonnage volumes were significantly lower in the Buildings segment resulting from the impact of hurricane related disruptions, customers access to job sites and transportation delays. The Company estimated the hurricanes reduced sales by approximately $16.0 million for the quarter.

Gross profit was $116.3 million this quarter, down from $120.8 million in the fourth quarter of 2016 and gross profit margins were 23.8% for the this year’s fourth quarter compared to 25.2% in the fourth quarter of 2016. Gross margins in the fourth quarter of the year declined primarily as a result of lower volumes in the Buildings segment, uneven production flow and increased transportation costs. The Company estimated the hurricanes impacted gross profits by approximately $8.3 million for the quarter.

Engineering, selling, general and administrative (“ESG&A”) expenses were $72.7 million for the quarter, compared to $77.6 million in the fourth quarter of 2016. As a percentage of revenues, ESG&A expenses decreased approximately 130 basis points to 14.9% in the 2017 fourth quarter compared to 16.2% in the prior year’s fourth quarter, primarily driven by the Company’s cost reduction initiatives, integration activities and lower incentive compensation costs.

Operating income for the quarter was $33.3 million, compared to $39.4 million in the prior year’s fourth quarter. Adjusted Operating Income, a non-GAAP measure which excludes certain identified items, was $41.3 million in the current quarter, compared to $40.9 million in the fourth quarter of 2016. The Company estimated the hurricanes impacted Adjusted Operating Income by approximately $8.5 million for the quarter.

Net income applicable to common shares in the quarter was $17.4 million, or $0.25 per diluted common share, compared to $19.0 million, or $0.27 per diluted common share in the prior year’s fourth quarter. Net income was impacted by the following special items: $6.0 million non-cash goodwill impairment charge related to the coil coating operations of CENTRIA, $1.1 million of restructuring charges predominately attributable to severance costs, $0.6 million for asset impairments and $0.2 million of strategic development and acquisition related costs, partially offset by $3.1 million from the associated tax effect of these items. Excluding the impact of these special items, the Company reported Adjusted Net Income, a non-GAAP measure, of $22.3 million, or $0.32 per diluted common share, compared to $19.8 million, or $0.28 per diluted common share, in the fourth quarter of 2016.

Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company’s Credit Agreement as earnings before interest, taxes, depreciation and amortization, and certain other cash and non-cash items, was $53.9 million this quarter, compared to $53.7 million in the prior year’s fourth quarter. The Company estimated that the fourth quarter of fiscal 2017 was impacted by $8.5 million as a result of job site disruptions, uneven production flow and increased transportation costs related to the various hurricanes during the period.

Please see the reconciliation of Adjusted Operating Income, Adjusted Net Income and Adjusted EBITDA in the accompanying financial tables.

Cash and cash equivalents at the end of the fourth quarter were $65.7 million, compared to $65.4 million at the end of the fourth quarter of fiscal 2016. Cash and cash equivalents increased sequentially from $45.9 million at the end of the third quarter of fiscal 2017 as a result of strong operating cash flow offset by $37.6 million of share repurchases during the period. NCI’s net debt leverage ratio (net debt/EBITDA) at the end of the fourth quarter was 2.0x. In addition, the Company’s $150.0 million ABL facility remained undrawn as of October 29, 2017.

Fourth Quarter 2017 Segment Performance

Third party sales in the Buildings segment were $178.2 million in the fourth quarter compared to $196.6 million in the prior year period, as a result of significantly lower volumes during the period, largely driven by hurricane related disruptions. Operating income decreased to $13.0 million this quarter, compared to $22.8 million in the fourth quarter of 2016. Adjusted Operating Income decreased to $13.7 million in the current quarter, compared to $23.1 million in the fourth quarter of fiscal 2016. The year-over-year decrease in the Building segment’s operating margins relates largely to lower plant utilization driven by lower volumes during the period, uneven production flow and increased transportation costs. The hurricanes had a disproportionate effect on the Buildings segment due to the larger transaction size and longer lead times from order to delivery.

The Components segment generated $281.3 million in third party sales during the quarter, an increase of 10.3% from $255.1 million in the fourth quarter of fiscal 2016, led by growth in the insulated panel product lines, as well as commercial pricing discipline and higher volumes across the segment. Operating income was $32.8 million for the quarter compared to $31.1 million in the fourth quarter of 2016. Adjusted Operating Income was $39.7 million, compared to $31.6 million in the fourth quarter of fiscal 2016. The Components segment’s profitability was improved by higher volumes and capacity utilization across the legacy single skin product lines and a strong product mix in insulated panel sales.

Third party sales in the Coatings segment were $29.2 million, compared to $28.6 million in the fourth quarter of fiscal 2016. Operating income was $6.6 million for the quarter, compared to $7.0 million in the fourth quarter of 2016. Operating margins in the Coatings group were impacted by lower third party volumes offset by improved commercial discipline and higher internal volumes.

Market Commentary

The key leading indicators that NCI follows and that typically have the most meaningful correlation to nonresidential low-rise construction starts are the American Institute of Architects’ (“AIA”) Architecture Mixed Use Index, the Dodge Residential single family starts and the Conference Board Leading Economic Index (“LEI”). Historically, there has been a very high correlation to low-rise nonresidential starts when the three leading indicators are combined and then seasonally adjusted. The combined forward projection of these metrics, based on a 9- to 14-month historical lag for each metric, indicates an expected positive growth of 2.0% to 4.0% for low-rise new construction starts for the Company’s addressable market in fiscal 2018.

Press Release: NCI Building Systems Reports -2-

Internal bookings and quoting activity indicates a continuation of low single digit growth as compared to the prior year. Offices and banks, educational and governmental end-markets have shown positive year-over-year growth. In NCI’s geographic markets South Atlantic, New England and East North Central regions showed the strongest growth year-over-year.

Cost Initiatives and Guidance

The Company’s two cost savings initiatives in manufacturing and ESG&A were ahead of schedule at the end of the fourth quarter. The Company is targeting an additional $40 – $50 million in cost savings reductions and efficiencies by the end of 2020.

For the first quarter of fiscal 2018, NCI expects revenues to be in the range of $390 to $410 million and Adjusted EBITDA to be in the range of $24 to $34 million.

The Company has provided additional detailed financial guidance in the quarterly supplemental presentation at www.ncibuildingsystems.com under the “Investors” section.

Conference Call Information

The NCI Building Systems, Inc. fourth quarter 2017 conference call is scheduled for Thursday, December 7, 2017, at 9:00 a.m. ET (8:00 a.m. CT). Please dial 1-412-902-0003 or 1-877-407-0672 (toll-free) 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.ncibuildingsystems.com. To access the taped telephone replay, please dial 1-201-612-7415 or 1-877-660-6853 (toll-free) and the passcode 13673308# when prompted. The taped replay will be available two hours after the call through December 21, 2017. A replay of the webcast will be available on the Company’s website under the Event Calendar, Calls & Webcast section of the Investor Relations page of the NCI website for approximately 90 days.

About NCI Building Systems

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, Canada, Mexico and China with additional sales and distribution offices throughout the United States and Canada. For more information visit www.ncibuildingsystems.com.

Contact:

K. Darcey Matthews

Vice President, Investor Relations

281-897-7785

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,” “anticipate,” “guidance,” “plan,” “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, therefore, 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. Such forward-looking statements may include, but are not limited to, statements concerning our market commentary and expectations for new nonresidential low-rise construction starts in fiscal 2018 and our financial outlook and guidance, including our first quarter fiscal 2018 forecasted revenues and Adjusted EBITDA, long term targets with respect to cost savings and other consolidated financial performance guidance. Among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality; adverse weather conditions; challenging economic conditions affecting the nonresidential construction industry; volatility in the U.S. economy and abroad, generally, and in the credit markets; substantial indebtedness and our ability to incur substantially more or refinance indebtedness; our ability to generate significant cash flow required to service or refinance our existing debt, including the 8.25% senior notes due 2023, and obtain future financing; our ability to comply with the financial tests and covenants in our existing and future debt obligations; operational limitations or restrictions in connection with our debt; increases in interest rates; recognition of asset impairment charges; commodity price increases and/or limited availability of raw materials, including steel; interruptions in our supply chain; our ability to make strategic acquisitions accretive to earnings; retention and replacement of key personnel; our ability to carry out our restructuring plans and to fully realize expected cost savings; enforcement and obsolescence of intellectual property rights; fluctuations in customer demand; costs related to environmental clean-ups and liabilities; competitive activity and pricing pressure; increases in energy prices; volatility of the Company’s stock price; effect on the price of the Company’s common stock of future sales of the Company’s common stock held by our sponsor; substantial governance and other rights held by our sponsor; breaches of our information system security measures and damage to our major information management systems; hazards that may cause personal injury or property damage, thereby subjecting us to liabilities and possible losses, which may not be covered by insurance; changes in laws or regulations, including the Dodd-Frank Act; the timing and amount of our stock repurchases; and costs and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters. See also the “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended October 29, 2017, and other risks described in documents subsequently filed by the Company from time to time with the SEC, 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. The Company 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 
 (In thousands, except per share data) 
(Unaudited) 
 
 
                             Fiscal Three Months 
                             Ended                     Fiscal Year Ended 
                             October      October      October      October 
                             29,          30,          29,          30, 
                            2017         2016         2017         2016 
 
 Sales                      $   488,726  $   480,314  $ 1,770,278  $ 1,684,928 
 Cost of sales              372,421      359,403      1,354,077    1,258,680 
 Loss (gain) on sale of 
  assets and asset 
  recovery                  -            62           137          (1,642) 
     Gross profit           116,305      120,849      416,064      427,890 
                            23.8%        25.2%        23.5%        25.4% 
 
 Engineering, selling, 
  general and 
  administrative expenses   72,671       77,640       293,145      302,551 
 Intangible asset 
  amortization              2,405        2,412        9,620        9,638 
 Goodwill impairment        6,000        -            6,000        - 
 Strategic development and 
  acquisition related 
  costs                     193          590          1,971        2,670 
 Restructuring and 
  impairment charges        1,710        815          5,297        4,252 
 Gain on insurance 
  recovery                  -            -            (9,749)      - 
     Income from 
      operations            33,326       39,392       109,780      108,779 
 
 Interest income            74           11           238          146 
 Interest expense           (7,161)      (7,559)      (28,899)     (31,019) 
 Foreign exchange (loss) 
  gain                      (488)        (312)        547          (1,401) 
 Gain from bargain 
  purchase                  -            -            -            1,864 
 Other income, net          427          118          1,472        595 
 
     Income before income 
      taxes                 26,178       31,650       83,138       78,964 
 Provision for income 
  taxes                     8,688        12,649       28,414       27,937 
                            33.2%        40.0%        34.2%        35.4% 
 
 Net income                 $    17,490  $    19,001  $    54,724  $    51,027 
 
 Net income allocated to 
  participating 
  securities                (78)         (105)        (325)        (389) 
 
 Net income applicable to 
  common shares             $    17,412  $    18,896  $    54,399  $    50,638 
 
 Check 
 Income per common share: 
   Basic                    $      0.25  $      0.27  $      0.77  $      0.70 
   Diluted                  $      0.25  $      0.27  $      0.77  $      0.70 
 
 Weighted average number 
 of common shares 
 outstanding: 
   Basic                    69,629       70,845       70,629       72,411 
   Diluted                  69,741       71,020       70,778       72,857 
 
 Increase in sales          1.8%         4.5%         5.1%         7.8% 
 
 
 Engineering, selling, 
  general and 
  administrative expenses 
  percentage                14.9%        16.2%        16.6%        18.0% 
 
 
 NCI BUILDING SYSTEMS, INC. 
 CONSOLIDATED BALANCE SHEETS 
 (In thousands) 
 (Unaudited) 
 
                                            October 29,  October 30, 
                                           2017          2016 
 
 ASSETS 
    Current assets: 
  Cash and cash equivalents                $    65,658   $   65,403 
  Restricted cash                          136           310 
  Accounts receivable, net                 199,897       182,258 
  Inventories, net                         198,296       186,824 
  Income taxes receivable                  3,617         982 
 

Press Release: NCI Building Systems Reports -3-

  Deferred income taxes                    22,605        29,104 
  Investments in debt and equity 
   securities, at market                   6,481         5,748 
  Prepaid expenses and other               33,086        29,971 
  Assets held for sale                     5,582         4,256 
   Total current assets                    535,358       504,856 
 
  Property, plant and equipment, net       226,995       242,212 
  Goodwill                                 148,291       154,271 
  Intangible assets, net                   137,148       146,769 
  Other assets, net                        1,875         2,092 
   Total assets                            $ 1,049,667   $ 1,050,200 
 
 LIABILITIES AND STOCKHOLDERS' EQUITY 
    Current liabilities: 
  Note payable                             $      440    $     460 
  Accounts payable                         147,772       142,913 
  Accrued compensation and benefits        58,408        72,612 
  Accrued interest                         6,414         7,165 
  Other accrued expenses                   103,253       103,384 
   Total current liabilities               316,287       326,534 
 
  Long-term debt, net of deferred 
   financing costs of $6,857 and $8,096    387,290       396,051 
 
  Deferred income taxes                    23,396        24,804 
  Other long-term liabilities              18,953        21,494 
   Total long-term liabilities             429,639       442,349 
 
 
  Common stock                             687           715 
  Additional paid-in capital               562,277       603,120 
  Accumulated deficit                      (248,046)     (302,706) 
  Accumulated other comprehensive loss, 
   net                                     (9,037)       (10,553) 
  Treasury stock, at cost                  (2,140)       (9,259) 
   Total stockholders' equity              303,741       281,317 
 
   Total liabilities and stockholders' 
    equity                                 $ 1,049,667   $ 1,050,200 
 
 
NCI BUILDING SYSTEMS, INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands) 
(Unaudited) 
 
 
                                                 Fiscal Year Ended 
                                                 October 29,   October 30, 
                                                2017          2016 
 
Cash flows from operating activities: 
     Net income                                 $    54,724   $    51,027 
     Adjustments to reconcile net income to 
     net cash from operating activities 
           Depreciation and amortization        41,318        41,924 
           Amortization of deferred financing 
            costs                               1,819         1,908 
           Share-based compensation expense     10,230        10,892 
           Losses (gains) on assets, net        1,371         (2,673) 
           Goodwill impairment                  6,000         - 
           Gain on insurance recovery           (9,749)       - 
           Provision for doubtful accounts      1,948         1,343 
           Provision for deferred income taxes  866           1,318 
           Excess tax (benefits) shortfalls 
            from share-based compensation 
            arrangements                        (1,515)       289 
     Changes in operating assets and 
     liabilities, net of effect of 
     acquisitions: 
           Accounts receivable                  (19,582)      (18,141) 
           Inventories                          (11,473)      (29,054) 
           Income taxes                         (2,637)       (1,953) 
           Prepaid expenses and other           (3,293)       671 
           Accounts payable                     4,858         (1,598) 
           Accrued expenses                     (11,299)      12,656 
           Other, net                           (1,227)       159 
 
Net cash provided by operating activities       62,359        68,768 
 
Cash flows from investing activities: 
     Acquisitions, net of cash acquired         -             (4,343) 
     Capital expenditures                       (22,074)      (21,024) 
     Proceeds from sale of property, plant and 
      equipment                                 3,197         5,417 
     Proceeds from insurance                    8,593         10,000 
 
Net cash used in investing activities           (10,284)      (9,950) 
 
Cash flows from financing activities: 
   Refund of restricted cash                    173           370 
   Proceeds from stock options exercised        1,651         12,612 
   Excess tax benefits (shortfalls) from 
    share-based compensation arrangements       1,515         (289) 
   Proceeds from Amended ABL facility           35,000        - 
   Payments on Amended ABL facility             (35,000)      - 
   Payments on term loan                        (10,180)      (40,000) 
   Payments on note payable                     (1,570)       (1,430) 
   Purchases of treasury stock                  (43,603)      (64,015) 
 
Net cash used in financing activities           (52,014)      (92,752) 
Effect of exchange rate changes on cash and 
 cash equivalents                               194           (325) 
Net increase (decrease) in cash and cash 
 equivalents                                    255           (34,259) 
 
Cash and cash equivalents at beginning of 
 period                                         65,403        99,662 
 
Cash and cash equivalents at end of period      $    65,658   $    65,403 
 
 
NCI BUILDING SYSTEMS, INC. 
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS 
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON 
(Unaudited) 
 
 
                   Fiscal Three Months Ended   Fiscal Year Ended 
                   October 29,   October 30,   October 29,   October 30, 
                  2017          2016          2017          2016 
Net income per 
 diluted common 
 share, GAAP 
 basis            $      0.25   $      0.27   $      0.77   $      0.70 
 Goodwill 
  impairment      0.09          -             0.08          - 
 Restructuring 
  and impairment 
  charges         0.02          0.01          0.07          0.06 
 Strategic 
  development 
  and 
  acquisition 
  related costs   0.00          0.01          0.03          0.04 
 (Gain) on 
  insurance 
  recovery        -             -             (0.14)        - 
 Unreimbursed 
  business 
  interruption 
  costs           0.00          -             0.01          - 
 Other losses 
  (gains), net    -             0.00          0.00          (0.06) 
 Tax effect of 
  applicable 
  non-GAAP 
  adjustments 
  (1)             (0.04)        (0.01)        (0.02)        (0.03) 
Adjusted net 
 income per 
 diluted common 
 share (2)        $      0.32   $      0.28   $      0.80   $      0.71 
 
 
                   Fiscal Three Months Ended  Fiscal Year Ended 
                   October 29,   October 30,   October 29,   October 30, 
                  2017          2016          2017          2016 
Net income 
 applicable to 
 common shares, 
 GAAP basis       $    17,412   $    18,896   $    54,399   $    50,638 
 Goodwill 
  impairment      6,000         -             6,000         - 
 Restructuring 
  and impairment 
  charges         1,710         815           5,297         4,252 
 Strategic 
  development 
  and 
  acquisition 
  related costs   193           590           1,971         2,670 
 (Gain) on 
  insurance 
  recovery        -             -             (9,749)       - 
 Unreimbursed 
  business 
  interruption 
  costs           28            -             454           - 
 Other losses 
  (gains), net    -             62            137           (3,506) 
 Tax effect of 
  applicable 
  non-GAAP 
  adjustments 
  (1)             (3,093)       (572)         (1,603)       (2,059) 
Adjusted net 
 income 
 applicable to 
 common shares 
 (2)              $    22,250   $    19,791   $    56,906   $    51,995 
 
 
 
(1)                  The Company calculated the tax effect of non-GAAP 
                     adjustments by applying the applicable statutory tax rate 
                     for the period to each applicable non-GAAP item. 
 
(2)                  The Company discloses a tabular comparison of Adjusted 
                     net income per diluted common share and Adjusted net 
                     income 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 net 
                     income per diluted common share and Adjusted net income 
                     applicable to common shares should not be considered in 
                     isolation or as a substitute for net income per diluted 
                     common share and net income applicable to common shares 
                     as reported on the face of our consolidated statements of 
                     operations. 
 
 
NCI Building Systems, Inc 
Business Segments 
(In thousands) 
(Unaudited) 
 
 
                       Fiscal Three Months   Fiscal Three Months 
                       Ended                 Ended                $          % 
                      October 29, 2017      October 30, 2016      Inc/(Dec)  Change 
                                   % of                  % of 
                                   Total                 Total 
Sales:                             Sales                 Sales 
    Engineered 
     building 
     systems          $  188,183   32       $  204,208   36       $(16,025)  -7.8% 
    Metal components  316,716      55       292,430      52       24,286     8.3% 
    Metal coil 
     coating          73,007       13       69,283       12       3,724      5.4% 
         Total sales  577,906      100      565,921      100      11,985     2.1% 
    Less: 
     Intersegment 
     sales            89,180       15       85,607       15       3,573      4.2% 
         Total net 
          sales       $  488,726   85       $  480,314   85       $  8,412   1.8% 
 
 

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                                    % of                  % of 
Operating income 
(loss):                            Sales                 Sales 
    Engineered 
     building 
     systems          $   13,043   7        $   22,830   11       $ (9,787)  -42.9% 
    Metal components  32,818       10       31,059       11       1,759      5.7% 
    Metal coil 
     coating          6,615        9        7,018        10       (403)      -5.7% 
    Corporate         (19,150)     -        (21,515)     -        2,365      11.0% 
         Total 
          operating 
          income      $   33,326   7        $   39,392   8        $ (6,066)  -15.4% 
 
                                    % of                  % of 
Adjusted operating 
income (loss) (1) 
:                                  Sales                 Sales 
    Engineered 
     building 
     systems          $   13,738   7        $   23,103   11       $ (9,365)  -40.5% 
    Metal components  39,689       13       31,565       11       8,124      25.7% 
    Metal coil 
     coating          6,615        9        7,018        10       (403)      -5.7% 
    Corporate         (18,785)     -        (20,827)     -        2,042      9.8% 
         Total 
          adjusted 
          operating 
          income      $   41,257   8        $   40,859   9        $   398    1.0% 
 
                       Fiscal Year Ended     Fiscal Year Ended    $        % 
                       October 29, 2017      October 30, 2016     Inc/(Dec)  Change 
                                   % of                  % of 
                                   Total                 Total 
Sales:                             Sales                 Sales 
    Engineered 
     building 
     systems          $  693,980   33       $  672,235   34       $ 21,745   3.2% 
    Metal components  1,129,816    54       1,044,040    53       85,776     8.2% 
    Metal coil 
     coating          271,085      13       247,736      13       23,349     9.4% 
         Total sales  2,094,881    100      1,964,011    100      130,870    6.7% 
    Less: 
     Intersegment 
     sales            324,603      15       279,083      14       45,520     16.3% 
         Total net 
          sales       $ 1,770,278  85       $ 1,684,928  86       $ 85,350   5.1% 
 
                                    % of                  % of 
Operating income 
(loss):                            Sales                 Sales 
    Engineered 
     building 
     systems          $   41,388   6        $   62,046   9        $(20,658)  -33.3% 
    Metal components  124,224      11       102,495      10       21,729     21.2% 
    Metal coil 
     coating          23,935       9        25,289       10       (1,354)    -5.4% 
    Corporate         (79,767)     -        (81,051)     -        1,284      1.6% 
         Total 
          operating 
          income      $  109,780   6        $  108,779   6        $  1,001   0.9% 
 
                                    % of                  % of 
Adjusted operating 
income (loss) (1) 
:                                  Sales                 Sales 
    Engineered 
     building 
     systems          $   45,257   7        $   61,370   9        $(16,113)  -26.3% 
    Metal components  122,273      11       104,559      10       17,714     16.9% 
    Metal coil 
     coating          23,935       9        25,328       10       (1,393)    -5.5% 
    Corporate         (77,575)     -        (77,198)     -        (377)      -0.5% 
         Total 
          adjusted 
          operating 
          income      $  113,890   6        $  114,059   7        $  (169)   -0.1% 
 
 
 
(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 statements of operations. See the 
                             reconciliation of Adjusted operating income 
                             (loss) to operating income (loss) on the 
                             following page. 
 
 
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 
FISCAL THREE MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016 
(In thousands) 
(Unaudited) 
 
 
                   Fiscal Three Months Ended October 29, 2017 
                   Engineered                    Metal 
                   Building         Metal        Coil 
                   Systems          Components   Coating    Corporate   Consolidated 
 
Operating income 
 (loss), GAAP 
 basis            $        13,043  $   32,818   $   6,615  $ (19,150)  $    33,326 
 Goodwill 
  impairment      -                6,000        -          -           6,000 
 Restructuring 
  and impairment 
  charges         695              753          -          262         1,710 
 Strategic 
  development 
  and 
  acquisition 
  related costs   -                90           -          103         193 
 Unreimbursed 
  business 
  interruption 
  costs           -                28           -          -           28 
Adjusted 
 operating 
 income (loss) 
 (1)              $        13,738  $   39,689   $   6,615  $ (18,785)  $    41,257 
 
 
                   Fiscal Three Months Ended October 30, 2016 
                   Engineered                    Metal 
                   Building         Metal        Coil 
                   Systems          Components   Coating    Corporate   Consolidated 
 
Operating income 
 (loss), GAAP 
 basis            $        22,830  $   31,059   $   7,018  $ (21,515)  $    39,392 
 Restructuring 
  and impairment 
  charges         211              506          -          98          815 
 Strategic 
  development 
  and 
  acquisition 
  related costs   -                -            -          590         590 
 Loss on sale of 
  assets and 
  asset 
  recovery        62               -            -          -           62 
Adjusted 
 operating 
 income (loss) 
 (1)              $        23,103  $   31,565   $   7,018  $ (20,827)  $    40,859 
 
 
 
(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 statements of 
                         operations. 
 
 
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 
FISCAL YEAR ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016 
(In thousands) 
(Unaudited) 
 
 
                   Fiscal Year Ended October 29, 2017 
                   Engineered                    Metal 
                   Building         Metal        Coil 
                   Systems          Components   Coating    Corporate   Consolidated 
 
Operating income 
 (loss), GAAP 
 basis            $        41,388  $  124,224   $  23,935  $ (79,767)  $   109,780 
 Goodwill 
  impairment      -                6,000        -          -           6,000 
 Restructuring 
  and impairment 
  charges         3,732            1,254        -          311         5,297 
 Strategic 
  development 
  and 
  acquisition 
  related costs   -                90           -          1,881       1,971 
 Loss on sale of 
  assets and 
  assets 
  recovery        137              -            -          -           137 
 (Gain) on 
  insurance 
  recovery        -                (9,749)      -          -           (9,749) 
 Unreimbursed 
  business 
  interruption 
  costs           -                454          -          -           454 
Adjusted 
 operating 
 income (loss) 
 (1)              $        45,257  $  122,273   $  23,935  $ (77,575)  $   113,890 
 
 
                   Fiscal Year Ended October 30, 2016 
                   Engineered                    Metal 
                   Building         Metal        Coil 
                   Systems          Components   Coating    Corporate   Consolidated 
 
Operating income 
 (loss), GAAP 
 basis            $        62,046  $  102,495   $  25,289  $ (81,051)  $   108,779 
 Restructuring 
  and impairment 
  charges         966              1,661        39         1,586       4,252 
 Strategic 
  development 
  and 
  acquisition 
  related costs   -                403          -          2,267       2,670 
 (Gain) on sale 
  of assets and 
  asset 
  recovery        (1,642)          -            -          -           (1,642) 
Adjusted 
 operating 
 income (loss) 
 (1)              $        61,370  $  104,559   $  25,328  $ (77,198)  $   114,059 
 
 
 
(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 statements 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) 
(In thousands) 
 

Press Release: NCI Building Systems Reports -5-

(Unaudited) 
 
 
                                                                   Fiscal Year 
                     1st Qtr      2nd Qtr   3rd Qtr   4th Qtr      Ended 
                      January      April     July      October 
                      29,          30,       30,       29,          October 29, 
                     2017         2017      2017      2017         2017 
Net income           $     2,039  $ 16,974  $ 18,221  $    17,490  $        54,724 
Add: 
    Depreciation 
     and 
     amortization    10,315       10,062    10,278    10,663       41,318 
    Consolidated 
     interest 
     expense, net    6,881        7,341     7,353     7,086        28,661 
    Provision for 
     income taxes    1,275        8,606     9,845     8,688        28,414 
    Restructuring 
     and impairment 
     charges         2,264        315       1,009     1,709        5,297 
    Strategic 
     development 
     and 
     acquisition 
     related costs   357          124       1,297     193          1,971 
    Share-based 
     compensation    3,042        2,820     2,284     2,084        10,230 
    Goodwill 
     impairment      -            -         -         6,000        6,000 
    Loss on sale of 
     assets and 
     asset 
     recovery        -            137       -         -            137 
    (Gain) on 
     insurance 
     recovery        -            (9,601)   (148)     -            (9,749) 
    Unreimbursed 
     business 
     interruption 
     costs           -            191       235       28           454 
 
    Adjusted 
     EBITDA(1)       $    26,173  $ 36,969  $ 50,374  $    53,941  $       167,457 
 
 
 
                                                                   Fiscal Year 
                     1st Qtr      2nd Qtr   3rd Qtr   4th Qtr      Ended 
                      January                July      October 
                      31,          May 1,    31,       30,          October 30, 
                     2016         2016      2016      2016         2016 
Net income           $     5,892  $  2,420  $ 23,715  $    19,001  $        51,028 
Add: 
    Depreciation 
     and 
     amortization    10,747       10,765    10,595    9,817        41,924 
    Consolidated 
     interest 
     expense, net    7,847        7,792     7,685     7,548        30,872 
    Provision for 
     income taxes    2,453        1,209     11,627    12,649       27,938 
    Restructuring 
     and impairment 
     charges         1,510        1,149     778       815          4,252 
    (Gain) from 
     bargain 
     purchase        (1,864)      -         -         -            (1,864) 
    Strategic 
     development 
     and 
     acquisition 
     related costs   681          579       819       590          2,669 
    Share-based 
     compensation    2,582        2,468     2,661     3,181        10,892 
    (Gain) loss on 
     sale of assets 
     and asset 
     recovery        (725)        (927)     (52)      62           (1,642) 
 
    Adjusted EBITDA 
     (1)             $    29,123  $ 25,455  $ 57,828  $    53,663  $       166,069 
 
 
 
 
(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 special charges. As 
                           such, the historical information is presented in 
                           accordance with the definition above. Concurrent 
                           with the amendment and restatement of the Term Loan 
                           facility, the Company entered into an 
                           Asset-Based Lending facility which has 
                           substantially the same definition of Adjusted 
                           EBITDA except that the ABL facility caps certain 
                           special 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. 
 Reconciliation of Segment Sales to Third Party Segment Sales 
(In thousands) 
(Unaudited) 
 
 
                   Fiscal               Fiscal              $           % 
                   4th Qtr 2017         4th Qtr 2016         Inc/(Dec)   Change 
 Engineered 
 Building 
 Systems 
  Total Sales     $    188,183   32%   $    204,208   36%   $ (16,025)  -7.8% 
  Less: 
   Intersegment 
   sales          9,961                7,612                2,349       30.9% 
  Third Party 
   Sales          $    178,222   36%   $    196,596   41%   $ (18,374)  -9.3% 
 
  Operating 
   Income         $     13,043   7%    $     22,830   12%   $  (9,787)  -42.9% 
 
 Metal 
 Components 
  Total Sales     $    316,716   55%   $    292,430   52%   $  24,286   8.3% 
  Less: 
   Intersegment 
   sales          35,458               37,324               (1,866)     -5.0% 
  Third Party 
   Sales          $    281,258   58%   $    255,106   53%   $  26,152   10.3% 
 
  Operating 
   Income         $     32,818   12%   $     31,059   12%   $   1,759   5.7% 
 
 Metal Coil 
 Coating 
  Total Sales     $     73,007   13%   $     69,283   12%   $   3,724   5.4% 
  Less: 
   Intersegment 
   sales          43,761               40,671               3,090       7.6% 
  Third Party 
   Sales          $     29,246   6%    $     28,612   6%    $    634    2.2% 
 
  Operating 
   Income         $      6,615   23%   $      7,018   25%   $   (403)   -5.7% 
 
 Consolidated 
  Total Sales     $    577,906   100%  $    565,921   100%  $  11,985   2.1% 
  Less: 
   Intersegment   89,180               85,607               3,573       4.2% 
  Third Party 
   Sales          $    488,726   100%  $    480,314   100%  $   8,412   1.8% 
 
  Operating 
   Income         $     33,326   7%    $     39,392   8%    $  (6,066)  -15.4% 
 
 
                   Fiscal YTD           Fiscal YTD          $         % 
                   4th Qtr 2017         4th Qtr 2016         Inc/(Dec)  Change 
 Engineered 
 Building 
 Systems 
  Total Sales     $    693,980   33%   $    672,235   34%   $  21,745   3.2% 
  Less: 
   Intersegment 
   sales          34,117               19,764               14,353      72.6% 
  Third Party 
   Sales          $    659,863   37%   $    652,471   39%   $   7,392   1.1% 
 
  Operating 
   Income         $     41,388   6%    $     62,046   10%   $ (20,658)  -33.3% 
 
 Metal 
 Components 
  Total Sales     $   1,129,816  54%   $   1,044,040  53%   $  85,776   8.2% 
  Less: 
   Intersegment 
   sales          131,537              118,177              13,360      11.3% 
  Third Party 
   Sales          $    998,279   57%   $    925,863   55%   $  72,416   7.8% 
 
  Operating 
   Income         $    124,224   12%   $    102,495   11%   $  21,729   21.2% 
 
 Metal Coil 
 Coating 
  Total Sales     $    271,085   13%   $    247,736   13%   $  23,349   9.4% 
  Less: 
   Intersegment 
   sales          158,949              141,142              17,807      12.6% 
  Third Party 
   Sales          $    112,136   6%    $    106,594   6%    $   5,542   5.2% 
 
  Operating 
   Income         $     23,935   21%   $     25,289   24%   $  (1,354)  -5.4% 
 
 Consolidated 
  Total Sales     $   2,094,881  100%  $   1,964,011  100%  $ 130,870   6.7% 
  Less: 
   Intersegment 
   sales          324,603              279,083              45,520      16.3% 
  Third Party 
   Sales          $   1,770,278  100%  $   1,684,928  100%  $  85,350   5.1% 
 
  Operating 
   Income         $    109,780   6%    $    108,779   6%    $   1,001   0.9% 
 
 

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SOURCE NCI Building Systems, Inc.

/Web site: http://www.ncibuildingsystems.com