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NCI Building Systems Reports Second Quarter 2018 Results

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NCI Building Systems Reports Second Quarter 2018 Results

PR Newswire

HOUSTON, June 5, 2018 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE:NCS) ("NCI" or the "Company") today reported financial results for its second fiscal quarter ended April 29, 2018.

Second Quarter 2018 Financial and Operational Highlights:  

  • Sales rose 8.7% to $457.1 million for the quarter, compared to $420.5 million in the prior year's second quarter
  • Gross profit was $104.1 million or 22.8% of sales, compared to $100.8 million or 24.0% of sales in the second quarter of 2017
  • The Company improved and replaced its debt structure, reducing its current effective cash interest rate from approximately 7.0% to 3.6% and extending the term to 2025
  • Net income was a loss of $5.7 million for the quarter, compared to net income of $17.0 million in the prior year's second quarter. Adjusted Net Income was $16.4 million this quarter, compared to $11.5 million in the prior year's second quarter
  • Net income per diluted common share for the quarter was a loss of $0.09, compared to income of $0.24 in the second quarter of fiscal 2017. There were several previously announced special items, which while positive for future operations including the debt refinancing and the sale of CENTRIA's China operations, resulted in charges during the quarter. Adjusted Net Income was $0.25 per diluted common share, an increase of 56.3%, compared to $0.16 in the prior year's second quarter

 


Fiscal Three Months Ended


April 29, 2018


April 30, 2017

Net income (loss) per diluted common share, GAAP basis

$ (0.09)


$0.24

   Loss on extinguishment of debt

0.33


0.00

   Loss on disposition of a business

0.10


0.00

   Gain on insurance recovery

0.00


(0.13)

   Other items and related tax effect of adjustments

(0.09)


0.05

Adjusted net income per diluted common share

$0.25


$0.16

 

  • Adjusted EBITDA was $39.7 million, or 8.7% of revenues, for the quarter, compared to $37.0 million, or 8.8% of revenues, in the prior year's second quarter
  • Total consolidated backlog increased to $631.6 million at quarter end, up 10.8% year-over-year

"We are pleased with the strong second quarter performance of all our business segments, as we successfully maintained our commercial discipline in a rising cost environment," said Donald R. Riley, President and Chief Executive Officer. "NCI's solid backlog and bookings continue to support our favorable outlook for 2018, and our key economic indicators continue to track to our expectations for year-over-year growth.

"We are making good progress executing on our advanced manufacturing and continuous improvement initiatives. We believe the successful execution of these initiatives and the visibility provided by our backlog will position NCI well for the remainder of this fiscal year. Additionally during the quarter, we executed on two key priorities for the Company in improving our capital structure and completing the sale of our CENTRIA China business. These actions have simplified our operations, reduced risk and strengthened our balance sheet."

Second Quarter 2018 Results

Second quarter of fiscal 2018 sales increased to $457.1 million, up 8.7%, from $420.5 million in last year's second fiscal quarter, primarily due to continued commercial discipline in the pass-through of higher material costs across our segments, combined with volume growth in both the Metal Components and Insulated Metal Panel segments and growth in package volumes in the Metal Coil Coating segment.  

Gross profit increased 3.2% to $104.1 million this quarter, compared to $100.8 million in the second quarter of fiscal 2017 and was up sequentially from $91.9 million in the first quarter of fiscal 2018. Gross profit margins were 22.8% for the second quarter of fiscal 2018, compared to 24.0% in the second quarter of fiscal 2017 and was up sequentially 100 basis points from 21.8% in the first quarter of fiscal 2018. Gross margins in the second quarter were lower than the second quarter of the prior year primarily as a result of less favorable product mix in the IMP segment and incremental manufacturing costs in the Metal Coil Coating segment related to ramping-up additional shifts in preparation for higher volumes expected in the second half of fiscal 2018.  

Engineering, selling, general and administrative ("ESG&A") expenses were $74.4 million for the quarter, compared to $75.1 million in the prior year's second fiscal quarter. As a percentage of revenues, ESG&A expenses were 16.3% in the fiscal 2018 second quarter compared to 17.9% in the prior year's second fiscal quarter. The year-over-year decline in ESG&A expenses reflected the Company's ongoing cost reduction initiatives, partially offset by the impact of wage and information technology cost increases.

Operating income for the quarter was $19.0 million, including a previously disclosed $6.7 million charge related to the sale of CENTRIA's manufacturing facility in China, compared to $32.5 million in the second quarter 2017. Adjusted Operating Income, a non-GAAP financial measure which excludes certain special items, increased 15.3% to $27.3 million in the current quarter, compared to $23.6 million in the same period last year.

Net loss applicable to common shares in the quarter was $5.7 million, or $0.09 per diluted common share, compared to net income of $16.9 million, or $0.24 per diluted common share in the prior year's second quarter. Income was impacted by the following special items: a $21.9 million charge related to the extinguishment and refinancing of a portion of the Company's debt; a $6.7 million charge on the disposition of CENTRIA's China operations; a $1.1 million charge for strategic development and acquisition related costs and $0.5 million of restructuring and impairment charges, partially offset by the associated tax effect of these items. The second quarter of fiscal 2017 included a $9.6 million special gain on an insurance recovery, partially offset by the related tax effects. Excluding the impact of these special items, second quarter 2018 Adjusted Net Income, a non-GAAP measure, was $16.4 million, or $0.25 per diluted common share, compared to $11.5 million, or $0.16 per diluted common share, in the prior year's second quarter.

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 $39.7 million this quarter, compared to $37.0 million in the prior year's second quarter. 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 second quarter were $35.3 million, compared to $49.7 million at the end of the second quarter of fiscal 2017. Cash and cash equivalents increased sequentially $22.9 million from $12.4 million at the end of the first quarter of fiscal 2018 due to operating earnings and improved utilization of accounts payable. NCI's net debt leverage ratio (net debt/EBITDA) at the end of the second quarter was 2.2x. As of April 29, 2018, the Company's $150.0 million asset based lending (ABL) facility remained undrawn.

Second Quarter 2018 Segment Performance

Sales in the Engineered Building Systems segment were $167.2 million in the second quarter of fiscal 2018, compared to $162.6 million in the prior year period, primarily as a result of commercial discipline passing through higher input costs, partially offset by lower tonnage volumes. Operating income increased 34.5% to $9.3 million this quarter, compared to $6.9 million in the prior year's second quarter. Adjusted Operating Income, a non-GAAP measure, increased 32.3% to $9.6 million this quarter, compared to $7.2 million in the second quarter 2017. Operating margins increased as a result of reduced ESG&A costs and an emphasis on order profitability over volumes.

The Metal Components segment generated $168.5 million in sales during the quarter, an increase of 8.8% from $154.9 million in the prior year's second quarter, led by higher external volumes across the segment and the disciplined pass-through of increasing input costs, despite a less favorable mix in the overhead doors product lines. Operating income was $22.1 million in the second fiscal quarter of 2018 compared to $20.0 million in the same period last year. Adjusted Operating Income was $22.2 million in the quarter, compared to $19.7 million in the prior year's second quarter. The Metal Components segment's operating margins increased as a result of improved operating leverage on higher volumes.

The Insulated Metal Panels segment generated $113.4 million in sales during the quarter, an increase of 10.2% from $102.9 million in the prior year's second quarter, as a result of commercial discipline emphasizing project profitability over volume in a period of increasing input costs. Operating income was $1.5 million for the quarter compared to $19.4 million in the second quarter of 2017. The second quarter of fiscal 2018 had a $6.7 million special charge for the disposition of the CENTRIA's China business and the second quarter of fiscal 2017 had a special gain of $9.2 million for an insurance recovery.  Adjusted Operating Income was $8.4 million, compared to $10.4 million in the same period last year. The IMP segment's operating margins decreased from the prior year as a result of the special items noted above and a change in product mix. The reduction in year-over-year margins was expected due to the unusually large amount of higher margin architectural panels shipped in the prior year quarter.

Sales in the Metal Coil Coating segment were $95.2 million during the second quarter of fiscal 2018, an increase of 9.8% from $86.7 million in the prior year's second quarter, as a result of higher volumes in package sales and the pass-through of rising material costs. Operating income and Adjusted Operating Income were both $7.1 million in the second quarter of fiscal 2018 compared to $6.2 million in the second quarter of fiscal 2017, respectively. Operating margins in the Metal Coil Coating segment improved as a result of lower ESG&A costs, partially offset by lower manufacturing efficiency due to ramping-up additional shifts to support increasing activity levels.

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 the volume of nonresidential low-rise construction starts when the three leading indicators are combined and then seasonally adjusted. Based on the combined forward projection of these metrics, and assuming a 9- to 14-month historical lag for each metric, the Company continues to expect new nonresidential low-rise construction starts in the Company's addressable market for its legacy businesses to grow 2.0% to 4.0% in fiscal 2018.

Guidance

Looking ahead, NCI's key economic indicators are tracking to expectation and year-over-year growth in both bookings and backlog support the Company's favorable outlook for fiscal 2018. For the third quarter of fiscal 2018, NCI expects revenues to be in the range of $525 to $545 million and Adjusted EBITDA to be in the range of $56 to $66 million.

The Company has provided additional detailed financial guidance in the quarterly supplemental presentation that can be found at www.ncibuildingsystems.com under the "Investors" section.

Conference Call Information

The NCI Building Systems, Inc. second quarter fiscal 2018 conference call is scheduled for Wednesday, June 6, 2018, 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 13680060# when prompted. The taped replay will be available two hours after the call through June 20, 2018. 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 and Mexico 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 third quarter fiscal 2018 forecasted revenues and Adjusted EBITDA 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; our substantial indebtedness and our ability to incur substantially more indebtedness; our ability to generate the significant cash flow required to service our existing debt, including our secured term loan facility, 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 management and other key personnel; 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 Six Months Ended



 April 29, 


 April 30, 


 April 29, 


 April 30, 



2018


2017


2018


2017










 Sales 


$ 457,069


$ 420,464


$ 878,418


$ 812,167

 Cost of sales 


352,986


319,625


682,418


627,377

      Gross profit 


104,083


100,839


196,000


184,790



22.8%


24.0%


22.3%


22.8%










 Engineering, selling, general and administrative expenses 


74,406


75,124


149,192


144,164

 Intangible asset amortization 


2,413


2,405


4,825


4,810

 Restructuring and impairment charges 


488


315


1,582


2,578

 Strategic development and acquisition related costs 


1,134


124


1,861


481

 Loss on disposition of business 


6,686


-


6,686


-

 Gain on insurance recovery 


-


(9,601)


-


(9,601)

      Income from operations 


18,956


32,472


31,854


42,358










 Interest income 


37


138


70


144

 Interest expense 


(4,849)


(7,479)


(12,341)


(14,365)

 Foreign exchange (loss) gain 


(305)


127


166


50

 Loss on extinguishment of debt 


(21,875)


-


(21,875)


-

 Other income, net 


270


322


727


708










      Income (loss) before income taxes 


(7,766)


25,580


(1,399)


28,895

 (Benefit) provision for income taxes 


(2,082)


8,606


(964)


9,882



26.8%


33.6%


68.9%


34.2%










 Net income (loss) 


(5,684)


16,974


(435)


19,013










 Net income allocated to participating securities 


-


(115)


-


(131)










 Net income (loss) applicable to common shares 


$    (5,684)


$   16,859


$       (435)


$   18,882










 Check 









 Income (loss) per common share: 









    Basic 


$      (0.09)


$       0.24


$      (0.01)


$       0.27

    Diluted 


$      (0.09)


$       0.24


$      (0.01)


$       0.27










 Weighted average number of common shares outstanding: 









    Basic 


66,210


70,988


66,311


70,933

    Diluted 


66,210


71,122


66,311


71,107










 Increase in sales 


8.7%


13.0%


8.2%


9.4%










 Engineering, selling, general and administrative expenses percentage 


 

16.3%


 

17.9%


 

17.0%


 

17.8%

 

 NCI BUILDING SYSTEMS, INC. 

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 

 (Unaudited) 












 April 29, 


October 29,





2018


2017








 ASSETS 





     Current assets: 






 Cash and cash equivalents 


$      35,335


$      65,658


 Restricted cash 


177


136


 Accounts receivable, net 


180,393


199,897


 Inventories, net 


221,369


198,296


 Income taxes receivable 


6,439


3,617


 Investments in debt and equity securities, at market 


6,332


6,481


 Prepaid expenses and other 


36,551


31,359


 Assets held for sale 


10,102


5,582



 Total current assets 


496,698


511,026









 Property, plant and equipment, net 


221,398


226,995


 Goodwill  


148,291


148,291


 Intangible assets, net 


132,338


137,148


 Deferred income taxes 


2,513


2,544


 Other assets, net 


5,369


5,108



 Total assets 


$ 1,006,607


$ 1,031,112








 LIABILITIES AND STOCKHOLDERS' EQUITY 





     Current liabilities: 






 Note payable 


$        1,656


$           440


 Accounts payable 


157,819


147,772


 Accrued compensation and benefits 


49,850


59,189


 Accrued interest 


1,464


6,414


 Other accrued expenses 


104,475


102,233



 Total current liabilities 


315,264


316,048









 Long-term debt, net of deferred financing costs of $6,043 and $6,857 


408,957


387,290


 Deferred income taxes 


1,928


4,297


 Other long-term liabilities 


18,134


18,230



 Total long-term liabilities 


429,019


409,817
















 Common stock 


663


687


 Additional paid-in capital 


521,190


562,277


 Accumulated deficit 


(249,832)


(248,046)


 Accumulated other comprehensive loss, net 


(7,555)


(7,531)


 Treasury stock, at cost 


(2,142)


(2,140)



 Total stockholders' equity  


262,324


305,247










 Total liabilities and stockholders' equity  


$ 1,006,607


$ 1,031,112

 

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)








Fiscal Six Months Ended



 April 29, 


 April 30, 



2018


2017






Cash flows from operating activities:





      Net income (loss)


$       (435)


$   19,013

      Adjustments to reconcile net income (loss) to net cash from operating activities





            Depreciation and amortization


20,800


20,378

            Amortization of deferred financing costs


781


954

            Loss on extinguishment of debt


21,875


-

            Share-based compensation expense


7,868


5,862

            Gain on insurance recovery


-


(9,601)

            Loss on disposition of business


6,192


-

            (Gains) losses on assets, net


(250)


262

            Provision for doubtful accounts


(44)


1,406

            Benefit for deferred income taxes


(1,676)


(113)

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





            Accounts receivable


17,060


12,232

            Inventories


(24,920)


(8,617)

            Income taxes


(2,822)


982

            Prepaid expenses and other


(4,182)


(1,875)

            Accounts payable


12,686


(21,737)

            Accrued expenses


(12,016)


(11,068)

            Other, net


(931)


(189)






Net cash provided by operating activities


39,986


7,889






Cash flows from investing activities:





    Capital expenditures


(16,897)


(11,556)

    Proceeds from sale of property, plant and equipment


2,678


2,533

    Business disposition, net


(4,415)


-

    Proceeds from insurance


-


420






Net cash used in investing activities


(18,634)


(8,603)






Cash flows from financing activities:





  (Deposit) refund of restricted cash


(41)


240

  Proceeds from stock options exercised


1,040


1,196

  Proceeds from ABL facility 


65,000


35,000

  Payments on ABL facility


(65,000)


(35,000)

  Proceeds from term loan


415,000


-

  Payments on term loan


(144,147)


(10,000)

  Payments on senior notes


(265,470)


-

  Payments on note payable


(441)


(458)

  Payments of financing costs


(6,275)


-

  Payments related to tax withholding for share-based compensation


(4,612)


(2,389)

  Purchases of treasury stock


(46,705)


(3,533)






Net cash used in financing activities


(51,651)


(14,944)

Effect of exchange rate changes on cash and cash equivalents


(24)


(63)

Net decrease in cash and cash equivalents


(30,323)


(15,721)






Cash and cash equivalents at beginning of period


65,658


65,403






Cash and cash equivalents at end of period


$   35,335


$   49,682

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME (LOSS) COMPARISON 

(In thousands, except per share data)

(Unaudited)





 Fiscal Three Months Ended 


 Fiscal Six Months Ended 




 April 29, 

 April 30, 


 April 29, 

 April 30, 




2018

2017


2018

2017

Net income (loss) per diluted common share, GAAP basis



$      (0.09)

$       0.24


$      (0.01)

$       0.27

  Loss on extinguishment of debt



0.33

0.00


0.33

-

  Loss on disposition of business



0.10

0.00


0.10

-

  Restructuring and impairment charges



0.01

0.00


0.02

0.04

  Strategic development and acquisition related costs



0.02

0.00


0.03

0.01

  Acceleration of CEO retirement benefits



-

-


0.07

-

  Gain on insurance recovery



-

(0.13)


-

(0.14)

  Tax effect of applicable non-GAAP adjustments (1)



(0.12)

0.05


(0.15)

0.03

Adjusted net income per diluted common share (2)



$       0.25

$       0.16


$       0.39

$       0.21




















 Fiscal Three Months Ended 


Fiscal Six Months Ended




 April 29, 

 April 30, 


 April 29, 

 April 30, 




2018

2017


2018

2017

Net income (loss) applicable to common shares, GAAP basis



$    (5,684)

$   16,859


$       (435)

$   18,882

  Loss on extinguishment of debt



21,875

-


21,875

-

  Loss on disposition of business



6,686

-


6,686

-

  Restructuring and impairment charges



488

315


1,582

2,578

  Strategic development and acquisition related costs



1,134

124


1,861

481

  Acceleration of CEO retirement benefits



-

-


4,600

-

  Gain on insurance recovery



-

(9,601)


-

(9,601)

  Other, net



-

328


(323)

328

  Tax effect of applicable non-GAAP adjustments (1)



(8,059)

3,445


(9,883)

2,423

Adjusted net income applicable to common shares (2)



$   16,440

$   11,470


$   25,963

$   15,091


 (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 Ended 





Fiscal Six Months Ended







 April 29, 



 April 30, 





 April 29, 



 April 30, 







2018



2017





2018



2017


























% of
Total
Sales



% of
Total
Sales


%
Change



% of
Total
Sales



% of
Total
Sales


%
Change


Total Sales


















Engineered Building Systems


$  167,240

31


$  162,624

32


2.8%


$   324,204

31


$  313,887

32


3.3%


Metal Components


168,456

31


154,895

31


8.8%


315,288

30


289,068

30


9.1%


Insulated Metal Panels


113,413

21


102,937

20


10.2%


224,207

21


198,132

20


13.2%


Metal Coil Coating


95,190

17


86,729

17


9.8%


183,533

18


175,069

18


4.8%


Total sales


544,299

100


507,185

100


7.3%


1,047,232

100


976,156

100


7.3%


Less: Intersegment sales


(87,230)

16


(86,721)

17


0.6%


(168,814)

16


(163,989)

17


2.9%


Total net sales


$  457,069

84


$  420,464

83


8.7%


$   878,418

84


$  812,167

83


8.2%




















External Sales



% of
Sales



% of
Sales





% of
Sales



% of
Sales




Engineered Building Systems


$  157,136

34


$  154,456

37


1.7%


$   305,424

35


$  299,477

37


2.0%


Metal Components


147,661

32


133,290

31


10.8%


275,189

31


248,847

30


10.6%


Insulated Metal Panels


99,792

22


86,773

21


15.0%


197,305

23


169,214

21


16.6%


Metal Coil Coating


52,480

12


45,945

11


14.2%


100,500

11


94,629

12


6.2%


Total external sales


$  457,069

100


$  420,464

100


8.7%


$   878,418

100


$  812,167

100


8.2%




















Operating Income



% of
Sales



% of
Sales





% of
Sales



% of
Sales




Engineered Building Systems


$      9,271

6


$      6,894

4


34.5%


$     17,534

5


$    13,397

4


30.9%


Metal Components


22,082

13


19,997

13


10.4%


39,171

12


32,373

11


21.0%


Insulated Metal Panels


1,540

1


19,377

19


-92.1%


8,611

4


21,569

11


-60.1%


Metal Coil Coating


7,129

7


6,227

7


14.5%


12,505

7


12,933

7


-3.3%


Corporate


(21,066)

-


(20,023)

-


5.2%


(45,967)

-


(37,914)

-


21.2%


Total operating income


$    18,956

4


$    32,472

8


-41.6%


$     31,854

4


$    42,358

5


-24.8%




















Adjusted Operating Income (1)



% of
Sales



% of
Sales





% of
Sales



% of
Sales




Engineered Building Systems


$      9,551

6


$      7,217

4


32.3%


$     19,123

6


$    15,630

5


22.3%


Metal Components


22,202

13


19,706

13


12.7%


37,888

12


32,387

11


17.0%


Insulated Metal Panels


8,375

7


10,387

10


-19.4%


17,030

8


12,579

6


35.4%


Metal Coil Coating


7,129

7


6,227

7


14.5%


12,505

7


12,933

7


-3.3%


Corporate


(19,993)

-


(19,899)

-


0.5%


(39,963)

-


(37,384)

-


6.9%


Total adjusted operating income


$    27,264

6


$    23,638

6


15.3%


$     46,583

5


$    36,145

4


28.9%




















Adjusted EBITDA (2)



% of
Sales



% of
Sales





% of
Sales



% of
Sales




Engineered Building Systems


$    11,786

7


$      9,377

6


25.7%


$     24,168

7


$    20,025

6


20.7%


Metal Components


23,713

14


21,060

14


12.6%


41,028

13


35,103

12


16.9%


Insulated Metal Panels


12,933

11


14,985

15


-13.7%


25,703

11


21,604

11


19.0%


Metal Coil Coating


9,214

10


8,236

9


11.9%


16,648

9


17,079

10


-2.5%


Corporate


(17,976)

-


(16,689)

-


7.7%


(35,002)

-


(30,669)

-


14.1%


Total adjusted EBITDA


$    39,670

9


$    36,969

9


7.3%


$     72,545

8


$    63,142

8


14.9%



 (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. 


 (2) The Company's Term Loan 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. The Company's Asset-Based Lending facility has substantially the same definition of Adjusted EBITDA. 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

(In thousands)

(Unaudited)











Consolidated


















Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 30, 

 October 29, 

 January 28, 

 April 29, 


 April 29, 


 April 29, 



2017

2017

2018

2018


2018


2018

Total Net Sales


$ 469,385

$      488,726

$       421,349

$ 457,069


$        878,418


$      1,836,529











Operating Income, GAAP


34,097

33,325

12,898

18,956


31,854


99,276

 Restructuring and impairment 


1,009

1,709

1,094

488


1,582


4,300

 Strategic development and acquisition related costs 


1,297

193

727

1,134


1,861


3,351

 Loss on disposition of business 


-

-

-

6,686


6,686


6,686

 Acceleration of CEO retirement benefits 


-

-

4,600

-


4,600


4,600

 Gain on insurance recovery 


(148)

-

-

-


-


(148)

 Unreimbursed business interruption costs 


235

28

-

-


-


263

 Goodwill impairment 


-

6,000

-

-


-


6,000

Adjusted Operating Income


36,490

41,255

19,319

27,264


46,583


124,328











 Other income and expense 


1,322

(62)

928

(34)


894


2,154

 Depreciation and amortization 


10,278

10,664

10,358

10,442


20,800


41,742

 Share-based compensation expense 


2,284

2,084

2,270

1,998


4,268


8,636

Adjusted EBITDA


$   50,374

$        53,941

$         32,875

$   39,670


$          72,545


$         176,860











Year over year growth, Total Net Sales


1.5 %

1.8 %

7.6 %

8.7 %


8.2 %


4.7 %

Operating Income Margin


7.3 %

6.8 %

3.1 %

4.1 %


3.6 %


5.4 %

Adjusted Operating Income Margin


7.8 %

8.4 %

4.6 %

6.0 %


5.3 %


6.8 %

Adjusted EBITDA Margin


10.7 %

11.0 %

7.8 %

8.7 %


8.3 %


9.6 %




























Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 31, 

 October 30, 

 January 29, 

 April 30, 


 April 30, 


 April 30, 



2016

2016

2017

2017


2017


2017

Total Net Sales


$ 462,353

$      480,314

$       391,703

$ 420,464


$        812,167


$      1,754,834











Operating Income, GAAP


43,535

39,391

9,886

32,472


42,358


125,284

 Restructuring and impairment 


778

815

2,264

315


2,579


4,172

 Strategic development and acquisition related costs 


819

590

357

124


481


1,890

 (Gain) loss on sale of assets and asset recovery 


(52)

62

-

137


137


147

 Gain on insurance recovery 


-

-

-

(9,601)


(9,601)


(9,601)

 Unreimbursed business interruption costs 


-

-

-

191


191


191

Adjusted Operating Income


45,080

40,858

12,507

23,638


36,145


122,083











 Other income and expense 


(508)

(192)

309

449


758


58

 Depreciation and amortization 


10,595

9,815

10,315

10,062


20,377


40,787

 Share-based compensation expense 


2,661

3,181

3,042

2,820


5,862


11,704

Adjusted EBITDA


$   57,828

$        53,662

$         26,173

$   36,969


$          63,142


$         174,632











Operating Income Margin


9.4 %

8.2 %

2.5 %

7.7 %


5.2 %


7.1 %

Adjusted Operating Income Margin


9.8 %

8.5 %

3.2 %

5.6 %


4.5 %


7.0 %

Adjusted EBITDA Margin


12.5 %

11.2 %

6.7 %

8.8 %


7.8 %


10.0 %

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)











Engineered Building Systems


















Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 30, 

 October 29, 

 January 28, 

 April 29, 


 April 29, 


 April 29, 



2017

2017

2018

2018


2018


2018

Total Sales


$ 191,910

$      188,183

$       156,964

$ 167,240


$        324,204


$         704,297

External Sales


182,164

178,222

148,288

157,136


305,424


665,810











Operating Income, GAAP


14,948

13,043

8,263

9,271


17,534


45,525

 Restructuring and impairment 


941

695

1,136

280


1,416


3,052

 Strategic development and acquisition related costs 


-

-

173

-


173


173

Adjusted Operating Income


15,889

13,738

9,572

9,551


19,123


48,750











 Other income and expense 


1,291

(694)

733

(88)


645


1,242

 Depreciation and amortization 


2,255

2,198

2,077

2,323


4,400


8,853

Adjusted EBITDA


$   19,435

$        15,242

$         12,382

$   11,786


$          24,168


$           58,845











Year over year growth, Total sales


6.0 %

(7.8)%

3.8 %

2.8 %


3.3 %


0.7 %

Year over year growth, External Sales


3.8 %

(9.3)%

2.3 %

1.7 %


2.0 %


(0.9)%

Operating Income Margin


7.8 %

6.9 %

5.3 %

5.5 %


5.4 %


6.5 %

Adjusted Operating Income Margin


8.3 %

7.3 %

6.1 %

5.7 %


5.9 %


6.9 %

Adjusted EBITDA Margin


10.1 %

8.1 %

7.9 %

7.0 %


7.5 %


8.4 %




























Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 31, 

 October 30, 

 January 29, 

 April 30, 


 April 30, 


 April 30, 



2016

2016

2017

2017


2017


2017

Total Sales


$ 181,029

$      204,208

$       151,263

$ 162,624


313,887


$         699,124

External Sales


175,471

196,596

145,021

154,456


299,477


671,544











Operating Income, GAAP


19,561

22,830

6,503

6,894


13,397


55,788

 Restructuring and impairment 


106

211

1,910

186


2,096


2,413

 (Gain) loss on sale of assets and asset recovery 


(52)

62

-

137


137


147

Adjusted Operating Income


19,615

23,103

8,413

7,217


15,630


58,348











 Other income and expense 


(931)

(362)

(41)

(125)


(166)


(1,459)

 Depreciation and amortization 


2,438

2,399

2,276

2,285


4,561


9,398

Adjusted EBITDA


$   21,122

$        25,140

$         10,648

$     9,377


$          20,025


$           66,287











Operating Income Margin


10.8 %

11.2 %

4.3 %

4.2 %


4.3 %


8.0 %

Adjusted Operating Income Margin


10.8 %

11.3 %

5.6 %

4.4 %


5.0 %


8.3 %

Adjusted EBITDA Margin


11.7 %

12.3 %

7.0 %

5.8 %


6.4 %


9.5 %

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)











Metal Components


















Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 30, 

 October 29, 

 January 28, 

 April 29, 


 April 29, 


 April 29, 



2017

2017

2018

2018


2018


2018

Total Sales


$ 166,305

$      181,288

$       146,832

$ 168,456


$        315,288


$         662,881

External Sales


140,639

155,183

127,528

147,661


275,189


571,011











Operating Income, GAAP


23,276

23,119

17,089

22,082


39,171


85,566

 Restructuring and impairment 


60

69

(1,403)

120


(1,283)


(1,154)

 Gain on insurance recovery 


(148)

-

-

-


-


(148)

Adjusted Operating Income


23,188

23,188

15,686

22,202


37,888


84,264











 Other income and expense 


55

84

53

67


120


259

 Depreciation and amortization 


1,266

1,422

1,576

1,444


3,020


5,708

Adjusted EBITDA


$   24,509

$        24,694

$         17,315

$   23,713


$          41,028


$           90,231











Year over year growth, Total sales


(0.1)%

8.9 %

9.4 %

8.8 %


9.1 %


6.6 %

Year over year growth, External Sales


0.1 %

10.9 %

10.4 %

10.8 %


10.6 %


7.9 %

Operating Income Margin


14.0 %

12.8 %

11.6 %

13.1 %


12.4 %


12.9 %

Adjusted Operating Income Margin


13.9 %

12.8 %

10.7 %

13.2 %


12.0 %


12.7 %

Adjusted EBITDA Margin


14.7 %

13.6 %

11.8 %

14.1 %


13.0 %


13.6 %




























Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 31, 

 October 30, 

 January 29, 

 April 30, 


 April 30, 


 April 30, 



2016

2016

2017

2017


2017


2017

Total Sales


$ 166,512

$      166,532

$       134,173

$ 154,895


$        289,068


$         622,112

External Sales


140,560

139,968

115,557

133,290


248,847


529,375











Operating Income, GAAP


26,803

21,254

12,376

19,997


32,373


80,430

 Restructuring and impairment 


202

103

305

129


434


739

 Gain on insurance recovery 


-

-

-

(420)


(420)


(420)

Adjusted Operating Income


27,005

21,357

12,681

19,706


32,387


80,749











 Other income and expense 


92

(27)

28

52


80


145

 Depreciation and amortization 


1,365

1,406

1,334

1,302


2,636


5,407

Adjusted EBITDA


$   28,462

$        22,736

$         14,043

$   21,060


$          35,103


$           86,301











Operating Income Margin


16.1 %

12.8 %

9.2 %

12.9 %


11.2 %


12.9 %

Adjusted Operating Income Margin


16.2 %

12.8 %

9.5 %

12.7 %


11.2 %


13.0 %

Adjusted EBITDA Margin


17.1 %

13.7 %

10.5 %

13.6 %


12.1 %


13.9 %

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)











Insulated Metal Panels


















Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 30, 

 October 29, 

 January 28, 

 April 29, 


 April 29, 


 April 29, 



2017

2017

2018

2018


2018


2018

Total Sales


$ 119,730

$      123,542

$       110,794

$ 113,413


$        224,207


$         467,479

External Sales


98,026

105,064

97,513

99,792


197,305


400,395











Operating Income, GAAP


11,468

14,895

7,071

1,540


8,611


34,974

 Restructuring and impairment 


8

683

1,284

88


1,372


2,063

 Strategic development and acquisition related costs 


-

90

300

61


361


451

 Loss on disposition of business 


-

-

-

6,686


6,686


6,686

 Unreimbursed business interruption costs 


235

28

-

-


-


263

Adjusted Operating Income


11,711

15,696

8,655

8,375


17,030


44,437











 Other income and expense 


(211)

356

(273)

223


(50)


95

 Depreciation and amortization 


4,516

4,742

4,388

4,335


8,723


17,981

Adjusted EBITDA


$   16,016

$        20,794

$         12,770

$   12,933


$          25,703


$           62,513











Year over year growth, Total sales


13.3 %

12.3 %

16.4 %

10.2 %


13.2 %


13.0 %

Year over year growth, External Sales


4.2 %

13.4 %

18.3 %

15.0 %


16.6 %


12.5 %

Operating Income Margin


9.6 %

12.1 %

6.4 %

1.4 %


3.8 %


7.5 %

Adjusted Operating Income Margin


9.8 %

12.7 %

7.8 %

7.4 %


7.6 %


9.5 %

Adjusted EBITDA Margin


13.4 %

16.8 %

11.5 %

11.4 %


11.5 %


13.4 %




























Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 31, 

 October 30, 

 January 29, 

 April 30, 


 April 30, 


 April 30, 



2016

2016

2017

2017


2017


2017

Total Sales


$ 105,694

$      110,001

$         95,195

$ 102,937


$        198,132


$         413,827

External Sales


94,059

92,648

82,441

86,773


169,214


355,921











Operating Income, GAAP


8,911

7,513

2,192

19,377


21,569


37,993

 Restructuring and impairment 


59

404

-

-


-


463

 Strategic development and acquisition related costs 


9

-

-

-


-


9

 Gain on insurance recovery 


-

-

-

(9,181)


(9,181)


(9,181)

 Unreimbursed business interruption costs 


-

-

-

191


191


191

Adjusted Operating Income


8,979

7,917

2,192

10,387


12,579


29,475











 Other income and expense 


32

270

35

340


375


677

 Depreciation and amortization 


4,357

3,926

4,392

4,258


8,650


16,933

Adjusted EBITDA


$   13,368

$        12,113

$           6,619

$   14,985


$          21,604


$           47,085











Operating Income Margin


8.4 %

6.8 %

2.3 %

18.8 %


10.9 %


9.2 %

Adjusted Operating Income Margin


8.5 %

7.2 %

2.3 %

10.1 %


6.3 %


7.1 %

Adjusted EBITDA Margin


12.6 %

11.0 %

7.0 %

14.6 %


10.9 %


11.4 %

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)











Metal Coil Coating


















Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 30, 

 October 29, 

 January 28, 

 April 29, 


 April 29, 


 April 29, 



2017

2017

2018

2018


2018


2018

Total Sales


$  95,261

$        98,550

$         88,343

$   95,190


$        183,533


$         377,344

External Sales


48,556

50,257

48,020

52,480


100,500


199,313











Operating Income, GAAP


7,107

1,419

5,376

7,129


12,505


21,031

 Goodwill impairment 


-

6,000

-

-


-


6,000

Adjusted Operating Income


7,107

7,419

5,376

7,129


12,505


27,031











 Depreciation and amortization 


2,063

2,065

2,058

2,085


4,143


8,271

Adjusted EBITDA


$    9,170

$          9,484

$           7,434

$     9,214


$          16,648


$           35,302











Year over year growth, Total sales


(1.5)%

2.7 %

0.0%

9.8 %


4.8 %


2.6 %

Year over year growth, External Sales


(7.1)%

(1.7)%

(1.4)%

14.2 %


6.2 %


0.7 %

Operating Income Margin


7.5 %

1.4 %

6.1 %

7.5 %


6.8 %


5.6 %

Adjusted Operating Income Margin


7.5 %

7.5 %

6.1 %

7.5 %


6.8 %


7.2 %

Adjusted EBITDA Margin


9.6 %

9.6 %

8.4 %

9.7 %


9.1 %


9.4 %




























Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 31, 

 October 30, 

 January 29, 

 April 30, 


 April 30, 


 April 30, 



2016

2016

2017

2017


2017


2017

Total Sales


$  96,684

$        95,987

$         88,340

$   86,729


$        175,069


$         367,740

External Sales


52,263

51,102

48,684

45,945


94,629


197,994











Operating Income, GAAP


10,531

9,310

6,706

6,227


12,933


32,774

Adjusted Operating Income


10,531

9,310

6,706

6,227


12,933


32,774











 Other income and expense 


2

-

31

-


31


33

 Depreciation and amortization 


2,214

1,849

2,106

2,009


4,115


8,178

Adjusted EBITDA


$  12,747

$        11,159

$           8,843

$     8,236


$          17,079


$           40,985











Operating Income Margin


10.9 %

9.7 %

7.6 %

7.2 %


7.4 %


8.9 %

Adjusted Operating Income Margin


10.9 %

9.7 %

7.6 %

7.2 %


7.4 %


8.9 %

Adjusted EBITDA Margin


13.2 %

11.6 %

10.0 %

9.5 %


9.8 %


11.1 %

 

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)











Corporate


















Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 30, 

 October 29, 

 January 28, 

 April 29, 


 April 29, 


 April 29, 



2017

2017

2018

2018


2018


2018

Operating Loss, GAAP


$  (22,702)

$       (19,151)

$       (24,901)

$  (21,066)


$        (45,967)


$          (87,820)

 Restructuring and impairment 


-

262

77

-


77


339

 Strategic development and acquisition related costs 


1,297

103

254

1,073


1,327


2,727

 Acceleration of CEO retirement benefits 


-

-

4,600

-


4,600


4,600

Adjusted Operating Loss


(21,405)

(18,786)

(19,970)

(19,993)


(39,963)


(80,154)











 Other income and expense 


187

192

415

(236)


179


558

 Depreciation and amortization 


178

237

259

255


514


929

 Share-based compensation expense 


2,284

2,084

2,270

1,998


4,268


8,636

Adjusted EBITDA


$  (18,756)

$       (16,273)

$       (17,026)

$  (17,976)


$        (35,002)


$          (70,031)




























Fiscal Six 


Trailing



 Fiscal Three Months Ended 


Months Ended


Twelve Months



 July 31, 

 October 30, 

 January 29, 

 April 30, 


 April 30, 


 April 30, 



2016

2016

2017

2017


2017


2017

Operating Loss, GAAP


$  (22,271)

$       (21,516)

$       (17,891)

$  (20,023)


$        (37,914)


$          (81,701)

 Restructuring and impairment 


411

97

49

-


49


557

 Strategic development and acquisition related costs 


810

590

357

124


481


1,881

Adjusted Operating Loss


(21,050)

(20,829)

(17,485)

(19,899)


(37,384)


(79,263)











 Other income and expense 


297

(73)

256

182


438


662

 Depreciation and amortization 


221

235

207

208


415


871

 Share-based compensation expense 


2,661

3,181

3,042

2,820


5,862


11,704

Adjusted EBITDA


$  (17,871)

$       (17,486)

$       (13,980)

$  (16,689)


$        (30,669)


$          (66,026)

 

Cision View original content:http://www.prnewswire.com/news-releases/building-systems-reports-second-quarter-2018-results-300660352.html

SOURCE NCI Building Systems, Inc.

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