EX-99.1 2 h70090exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(NCI LOGO)
NCI Building Systems Reports
First Quarter Fiscal 2010 Results
— Q1 Performance in Line with Management Expectations —
—Year-Over-Year Improvement in Gross Margin —
— Coatings and Components Groups Post Operating Profits —
— Buildings Group’s Backlog was $242 million —
HOUSTON, TX — (MARKET WIRE) — 03/09/10 — NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the first quarter ended January 31, 2010.
First Quarter Financial Results
“As expected, first quarter fiscal 2010 results reflected the impact of both continued soft market demand and a 37% year-over-year decrease in steel prices in what has traditionally been our seasonally weakest quarter,” said Norman C. Chambers, NCI’s Chairman, President and Chief Executive Officer. “According to McGraw-Hill, nonresidential construction starts declined by over 40% in square footage terms compared to the prior year. Despite those trends, we are pleased to report that our tonnage volume in the first quarter of fiscal 2010 remained stable compared to the same period last year, declining by only one percent. Combined volumes in our Components and Buildings groups were down 9% year-over-year, but this decline was mostly offset by increases in tolling volume in our Coaters group.”
“Gross margin, exclusive of special charges in both years, improved to 18.2% in the first quarter of 2010 from 17.9% in the same period in 2009. Strong pricing discipline and a rising steel price environment yielded year-over-year improvement in our spread over material costs. In addition, our gross margin benefitted from the cost reduction actions we took in late fiscal 2008 and 2009, reducing the level of negative absorption in non-material cost of goods sold,” Mr. Chambers noted.
“Both our Coatings group and our Components group, which tend to respond more quickly to changes in the market, produced operating profits for the period. As anticipated, our Buildings group generated an operating loss for the quarter, driven largely by the completion of orders booked during the last few months of fiscal 2009. The profitability on those bookings reflected both the difficult external market environment as well as aggressive marketing by the Buildings group to maintain market share despite customer concerns over the completion of our recapitalization.”
“Following its normal seasonal pattern, the Buildings group’s backlog at the end of the first quarter was stable as compared to the prior quarter. Quoting activity modestly increased, and we improved our pricing discipline. These positive indications, in combination with our new sales initiatives and our continuous engineering and manufacturing improvements, give us confidence in the profitable growth prospects for this segment,” Mr. Chambers said.
“The recapitalization has significantly strengthened NCI’s balance sheet, and we believe it has made us one of the financially strongest companies in our industry, giving us important flexibility to make investments in technology, processes and opportunistic raw material purchases to support our customers in this very tough business climate,” Mr. Chambers noted.
For the first quarter, sales were $182.9 million, down 29.8% from the $260.4 million reported for last year’s first quarter. Cost of sales declined 30% to $149.7 million from $213.8 million, reflecting the decline in material costs and the major cost reduction programs we implemented in late 2008 and 2009. Gross margin was 17.6%

 


 

compared to 6.3% in last year’s first quarter. In this year’s period, the Company incurred an asset impairment charge of $1.0 million. First quarter 2009 results included a lower of cost or market adjustment of $29.4 million and an asset impairment charge of $623,000.
Selling, general and administrative expenses declined 18.2% to $44.4 million from $54.3 million in the similar period last year.
The Company incurred an adjusted operating loss, exclusive of special charges, of $11.2 million. On a reported basis, the operating loss was $12.7 million, inclusive of an asset impairment and restructuring charge of $1.5 million. In last year’s first quarter, the Company incurred an operating loss of $557.9 million, which included a $517.6 million charge related to goodwill and other intangible asset impairments and a restructuring charge of $2.5 million.
Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and cash and other non-cash items in accordance with the Company’s bank credit agreement, was a loss of $2.6 million for the 2010 first quarter compared with earnings of $1.6 million in last year’s first quarter.
For the first quarter, the Company reported a net loss applicable to common shares of $18.8 million, which included the accrual of convertible preferred stock dividends and accretion and a beneficial conversion feature of $8.3 million. This compares to a net loss applicable to common shares of $530 million in the 2009 first quarter. The loss per diluted share in this year’s first quarter was $1.04 compared to $136.32 in last year’s first quarter, each adjusted for the 1-for-5 reverse split that was effective at the close of market on March 5, 2010. In addition, the Company’s results for the first quarter of 2009 have been revised to reflect a new accounting standard, which became effective on November 2, 2009, related to convertible debt.
The weighted number of common shares outstanding used in the calculation of first quarter 2010 per share amounts, adjusted for the reverse stock split, was 18.1 million compared to 3.9 million last year. The per share amounts for the first quarter were calculated after giving effect to the 1-for-5 reverse stock split.
Inventory levels increased 25.8% sequentially to $90 million, reflecting restocking after significant draw downs in 2009. Annualized inventory turnover was 7.3 turns for the first quarter, compared to 5.0 turns in the first quarter of 2009.
Net cash used in operating activities was $19.2 million for the first quarter. Capital expenditures were $1.3 million; fiscal 2010 capital expenditures are expected to be between $11 million and $12 million.
First Quarter Segment Performance
The Company reported an adjusted operating loss of $11.2 million, which is reconciled with the reported GAAP operating loss in the table below.
NCI BUILDING SYSTEMS, INC.
BUSINESS SEGMENTS
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
EXCLUDING SPECIAL CHARGES FOR THE THREE MONTHS ENDED JANUARY 31, 2010
(Unaudited)
(In thousands)
                                         
    For the Three Months Ended January 31, 2010  
                    Engineered              
    Metal Coil     Metal     Building              
    Coating     Components     Systems     Corporate     Consolidated  
Operating income (loss), GAAP basis
  $ 3,119     $ 1,791     $ (5,829 )   $ (11,824 )   $ (12,743 )
Asset impairment
                1,029             1,029  
Restructuring charges
          109       415             524  
 
                             
“Adjusted” operating income (loss)(1)
  $ 3,119     $ 1,900     $ (4,385 )   $ ( 11,824 )   $ ( 11,190 )
 
                             
 
(1)   The Company discloses a tabular comparison of “Adjusted” operating income (loss), which is a non-GAAP measure because it is referred to in the text of our press release and is instrumental in comparing the results from period to period. “Adjusted” operating income (loss) should not be considered in isolation or as a substitute for operating income (loss) as reported on the face of our statement of income.

 


 

The Components group maintained operating profitability in the face of lower volume and pricing, benefitting from operating efficiencies, growing opportunities in retro-fit projects and the ramp up of our new insulated panel plant.
The Coatings group processed higher volume than in the 2009 first quarter, when there was significant de-stocking affecting both intersegment and external sales. This group is effectively adding work outside of its traditional metal building markets.
The Buildings group was the segment most impacted by the uncertainty surrounding NCI’s refinancing. With that resolved, there has been a slight pick-up in quoting activity and additional opportunities with Leadership in Energy and Environmental Design (LEED) green building certification system projects, but pricing remains competitive.
Market Environment
Nonresidential construction activity measured in square feet declined significantly from the comparable period in 2009. McGraw-Hill reported that low-rise new construction activity measured in square feet was down 42% in our fiscal first quarter year over year, and NCI’s traditionally strong commercial and industrial markets were off approximately 53% as reflected in McGraw-Hill’s January report.
The American Institute of Architect’s Architectural Billing Index published for January indicated that both billings and inquiry levels are down sharply from prior month levels. McGraw-Hill is now forecasting that nonresidential construction activity measured in square feet will be 5% lower in calendar 2010 compared to calendar 2009.
Recent Corporate Developments
    On February 19, 2010, NCI’s board of directors authorized a reverse stock split at a 1-for-5 ratio of its outstanding common stock. The reverse stock split was approved by stockholders at the Company’s annual meeting, held immediately before the meeting of the board of directors on February 19, 2010, and was effective at the close of market on March 5, 2010.
 
    As previously disclosed, the completion of the reverse stock split eliminated the contingencies regarding the convertibility of our convertible preferred stock to investment funds managed by Clayton, Dubilier & Rice (CD&R) and will result in the recognition of the previously-deferred non-cash beneficial conversion charge of $231 million in the second quarter of fiscal 2010.
Outlook
“As we noted last quarter, neither industry forecasts nor our field intelligence points to any meaningful pick-up in nonresidential construction activity in 2010, although we do expect a seasonal increase in demand similar to what we experienced in 2009,” noted Mr. Chambers. “Within this environment, however, we believe that NCI has important opportunities to achieve profitable operating results. Our focus remains on retaining and building upon our market leadership positions in our three business segments.
    Our Coaters group is positioned to gain market share resulting from its production efficiencies, entry into new markets and the contraction of its competitive universe.
 
    Our Components group is benefitting from the investments we have made in insulated metal panels, which support its IPS and Eco-ficient® brands; re-roofing initiatives; and its exposure to the retrofit market.
 
    Our Buildings group is set to increase its market penetration as a result of our strong financial position. Additionally, our hub-and-spoke delivery systems, shorter design and delivery times and sustainable building products set us apart in the marketplace,” Mr. Chambers said.
NCI Building Systems, Inc. is one of North America’s largest integrated manufacturers of metal products for the nonresidential building industry. NCI is comprised of a family of companies operating manufacturing facilities across the United States and Mexico, with additional sales and distribution offices throughout the United States and Canada.

 


 

Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act. These statements and other statements identified by words such as “believe,” “guidance,” “potential,” “expect,” “should,” “will” 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 are subject to a number of risks and uncertainties that may cause the Company’s actual performance to differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially include, but are not limited to industry cyclicality and seasonality and adverse weather conditions; ability to service the Company’s debt; fluctuations in customer demand and other patterns; raw material pricing and supply; competitive activity and pricing pressure; general economic conditions affecting the construction industry; the current financial crisis and U.S. recession; changes in laws or regulations; and the volatility of the Company’s stock price. Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended November 1, 2009, identifies other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in its expectations.

 


 

NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
(2009 as Adjusted (1))
                 
    For the Three Months Ended  
    January 31,     February 1,  
    2010     2009  
 
               
Sales
  $ 182,887     $ 260,364  
Cost of sales
    149,669       213,842  
Lower of cost or market adjustment
          29,378  
Asset impairment
    1,029       623  
 
           
Gross profit
    32,189       16,521  
 
    17.6 %     6.3 %
 
               
Selling, general and administrative expenses
    44,408       54,316  
Goodwill and other intangible asset impairment
          517,628  
Restructuring charge
    524       2,479  
 
           
Loss from operations
    (12,743 )     (557,902 )
 
               
Interest income
    25       195  
Interest expense
    (4,532 )     (6,818 )
Debt extinguishment and refinancing costs
    (174 )      
Other income (expense), net
    1,159       (317 )
 
           
 
               
Loss before income taxes
    (16,265 )     (564,842 )
Benefit for income taxes
    (5,779 )     (34,861 )
 
           
 
    35.5 %     6.2 %
 
               
Net loss
  $ (10,486 )   $ (529,981 )
Convertible preferred stock dividends and accretion
    8,134        
Convertible preferred stock beneficial conversion feature
    187        
 
           
Net loss applicable to common shares
  $ (18,807 )   $ (529,981 )
 
           
 
               
Loss per share:
               
Basic
  $ (1.04 )   $ (136.32 )
Diluted
  $ (1.04 )   $ (136.32 )
 
               
Weight average number of common shares outstanding:
               
Basic
    18,093       3,888  
Diluted
    18,093       3,888  
 
               
Decrease in sales
    -29.8 %        
 
               
Gross profit percentage
    17.6 %     6.3 %
 
               
Selling, general and administrative expenses percentage
    24.3 %     20.9 %
 
(1)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options”, and ASC Subtopic 260-10, “Earnings per Share.” In addition, on March 5, 2010, the Company filed an amendment to its Certificate of Incorporation to effect the Reverse Stock Split at an exchange ratio of 1-for-5. As such, we have retrospectively adjusted basic and diluted earnings per share, common stock, stock options and common stock equivalents for the reverse stock split in all periods presented.
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NCI BUILDING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(In thousands)
(2009 as Adjusted (1))
                 
    January 31,     November 1,  
    2010     2009  
    (Unaudited)          
ASSETS
               
Cash and cash equivalents
  $ 77,666     $ 90,419  
Restricted cash
    4,207       5,154  
Accounts receivable, net
    61,085       82,889  
Inventories
    89,980       71,537  
Deferred income taxes
    18,989       18,787  
Income taxes receivable
    33,592       27,622  
Investments in debt and equity securities, at market
    3,529       3,359  
Prepaid expenses and other
    13,081       14,494  
Assets held for sale
    3,930       4,963  
 
           
Total current assets
    306,059       319,224  
 
           
 
               
Property and equipment, net
    225,933       232,510  
Goodwill
    5,200       5,200  
Other assets
    47,721       57,584  
 
           
Total assets
  $ 584,913     $ 614,518  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current portion of long-term debt
  $ 14,434     $ 14,164  
Note payable
          481  
Accounts payable
    71,313       73,594  
Accrued expenses
    74,928       90,446  
 
           
Total current liabilities
    160,675       178,685  
 
           
 
               
Long-term debt
    135,569       136,085  
Deferred income taxes
    18,891       18,848  
Other long-term liabilities
    7,785       8,007  
 
               
Series B cumulative convertible participating preferred stock
    230,949       222,815  
 
               
Shareholders’ equity
    31,044       50,078  
 
           
Total liabilities and shareholders’ equity
  $ 584,913     $ 614,518  
 
           
 
(1)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options.”
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NCI BUILDING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(2009 as Adjusted (1))
(In thousands)
                 
    For the Three Months Ended  
    January 31, 2010     February 1, 2009  
 
               
Cash flows from operating activities:
               
Net loss
  $ (10,486 )   $ (529,981 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
               
Depreciation and amortization
    8,701       8,649  
Non-cash interest expense on convertible notes
          2,099  
Share-based compensation expense
    801       1,372  
Gain on embedded derivative
    (919 )      
Loss on sale of property, plant and equipment
    103       11  
Lower of cost or market reserve
          29,378  
Provision for doubtful accounts
    (416 )     975  
Provision (benefit) for deferred income taxes
    45       (17,380 )
Asset impairments
    1,029       623  
Impairment of goodwill and intangible assets
          517,628  
Changes in operating assets and liabilities, net of effect of acquisitions:
               
Accounts receivable
    22,231       76,865  
Inventories
    (18,443 )     19,725  
Income tax receivable
    (4,253 )     (1,608 )
Prepaid expenses and other
    (233 )     (376 )
Accounts payable
    (1,468 )     (21,028 )
Accrued expenses
    (15,836 )     (55,778 )
Other, net
    (32 )     (1,002 )
 
           
 
               
Net cash (used in) provided by operating activities
    (19,176 )     30,172  
 
           
 
               
Cash flows from investing activities:
               
Capital expenditures
    (1,287 )     (7,016 )
Proceeds from the sale of property, plant and equipment
    52       51  
Other
          67  
 
           
 
               
Net cash used in investing activities
    (1,235 )     (6,898 )
 
           
 
               
Cash flows from financing activities:
               
Refund of restricted cash
    8,772        
Proceeds from ABL facility
    3        
Payment of convertible notes
    (59 )      
Payments on long-term debt
    (190 )     (230 )
Payments of financing costs
          (18 )
Payments on note payable
    (481 )      
Proceeds from stock option exercises
          12  
Purchase of treasury stock
    (379 )     (413 )
 
           
 
               
Net cash provided by (used in) financing activities
    7,666       (649 )
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    (8 )     16  
 
           
 
               
Net (decrease) increase in cash
    (12,753 )     22,641  
 
               
Cash at beginning of period
    90,419       68,201  
 
           
 
               
Cash at end of period
  $ 77,666     $ 90,842  
 
           
 
(1)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options.”
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NCI Building Systems, Inc.
Business Segments
(Unaudited)
(In thousands)
(2009 as Adjusted (1))
                                                 
    Three Months Ended   Three Months Ended   $   %
    January 31, 2010   February 1, 2009   Inc/(Dec)   Change
            % of           % of                
            Total           Total                
            Sales           Sales                
Sales:
                                               
Metal coil coating
  $ 39,031       21     $ 41,501       16     $ (2,470 )     -6.0 %
Metal components
    86,806       48       121,480       46       (34,674 )     -28.5 %
Engineered building systems
    102,618       56       152,409       59       (49,791 )     -32.7 %
Intersegment sales
    (45,568 )     (25 )     (55,026 )     (21 )     9,458       -17.2 %
             
Total net sales
  $ 182,887       100     $ 260,364       100     $ (77,477 )     -29.8 %
             
                                                 
            % of           % of                
            Sales           Sales                
Operating income (loss):
                                               
Metal coil coating
  $ 3,119       8     $ (63,760 )     (154 )   $ 66,879       104.9 %
Metal components
    1,791       2       (128,607 )     (106 )     130,398       101.4 %
Engineered building systems
    (5,829 )     (6 )     (352,283 )     (231 )     346,454       98.3 %
Corporate
    (11,824 )           (13,252 )           1,428       10.8 %
             
Total operating income (loss) (% of sales)
  $ (12,743 )     (7 )   $ (557,902 )     (214 )   $ 545,159       97.7 %
             
 
(1)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options.”
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NCI BUILDING SYSTEMS, INC.
BUSINESS SEGMENTS
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) EXCLUDING SPECIAL CHARGES
FOR THE THREE MONTHS ENDED JANUARY 31, 2010 and FEBRUARY 1, 2009
(Unaudited)
(In thousands)
(2009 as Adjusted (2))
                                         
    For the Three Months Ended January 31, 2010  
    Metal Coil
Coating
    Metal
Components
    Engineered
Building
Systems
    Corporate     Consolidated  
 
                                       
Operating income (loss), GAAP basis
  $ 3,119     $ 1,791     $ (5,829 )   $ (11,824 )   $ (12,743 )
Goodwill impairment
                             
Lower of cost or market charge
                             
Asset impairment
                1,029             1,029  
Restructuring charges
          109       415             524  
 
                             
“Adjusted operating income (loss) (1)
  $ 3,119     $ 1,900     $ (4,385 )   $ (11,824 )   $ (11,190 )
 
                             
                                         
    For the Three Months Ended February 1, 2009  
    Metal Coil
Coating
    Metal
Components
    Engineered
Building
Systems
    Corporate     Consolidated  
 
                                       
Operating income (loss), GAAP basis
  $ (63,760 )   $ (128,607 )   $ (352,283 )   $ (13,252 )   $ (557,902 )
Goodwill impairment
    59,854       116,131       341,643             517,628  
Lower of cost or market charge
    5,657       14,484       9,237             29,378  
Asset impairment
                623             623  
Restructuring charges
    44       582       1,835       18       2,479  
 
                             
“Adjusted operating income (loss) (1)
  $ 1,795     $ 2,590     $ 1,055     $ (13,234 )   $ (7,794 )
 
                             
 
(1)   The Company discloses a tabular comparison of “Adjusted” operating income (loss), which is a non-GAAP measure because it is referred to in the text of our press release and is instrumental in comparing the results from period to period. “Adjusted” operating income (loss) should not be considered in isolation or as a substitute for operating income (loss) as reported on the face of our statement of income.
 
(2)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options.”

 


 

NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
“ADJUSTED” LOSS PER DILUTED COMMON SHARE AND NET LOSS COMPARISON
(Unaudited)
(2009 as Adjusted (2))
                 
    Fiscal Three Months Ended  
    January 31,     February 1,  
    2010     2009  
Loss per diluted common share, GAAP basis
  $ (1.04 )   $ (136.32 )
Goodwill and other intangible asset impairment
          128.57  
Debt extinguishment and refinancing costs
    0.01        
Lower of cost or market adjustment
          4.82  
Convertible preferred stock beneficial conversion feature
    0.01        
Restructuring charge
    0.02       0.41  
Asset impairment
    0.04       0.10  
Gain on embedded derivative
    (0.03 )      
 
           
“Adjusted” diluted loss per common share (1)
  $ (0.99 )   $ (2.42 )
 
           
                 
    Fiscal Three Months Ended  
    January 31,     February 1,  
    2010     2009  
Net loss applicable to common shares, GAAP basis
  $ (18,807 )   $ (529,981 )
Goodwill and other intangible asset impairment
          499,883  
Debt extinguishment and refinancing costs
    113        
Lower of cost or market adjustment
          18,740  
Convertible preferred stock beneficial conversion feature
    187        
Restructuring charge
    340       1,581  
Asset impairment
    669       397  
Gain on embedded derivative
    (597 )      
 
           
“Adjusted” net loss applicable to common shares (1)
  $ (18,095 )   $ (9,380 )
 
           
 
(1)   The Company discloses a tabular comparison of “Adjusted” loss per diluted common share and net income (loss), 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” diluted earnings (loss) per share and net income (loss) should not be considered in isolation or as a substitute for earnings (loss) per diluted share and net income (loss) as reported on the face of our statement of income.
 
(2)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options”, and ASC Subtopic 260-10, “Earnings per Share.” In addition, on March 5, 2010, the Company filed an amendment to its Certificate of Incorporation to effect the Reverse Stock Split at an exchange ratio of 1-for-5. As such, we have retrospectively adjusted basic and diluted earnings per share, common stock, stock options, and common stock equivalents for the reverse stock split in all periods presented.

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NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,
AMORTIZATION AND OTHER NONCASH ITEMS (“ADJUSTED EBITDA”)
(Unaudited)
(In thousands)
(2009 as Adjusted (2))
                                         
    2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     Trailing 12 Months  
    May 3,     August 2,     November 1,     January 31,     January 31,  
    2009     2009     2009     2010     2010  
Net income (loss)
  $ (121,571 )   $ 2,607     (101,851 )   $ (10,486 )   $ (231,301 )
Add:
                                       
Depreciation and amortization
    8,436       7,586       7,640       7,522       31,184  
Consolidated interest expense, net
    6,168       6,487       9,578       4,507       26,740  
Provision for taxes
    (16,382 )     1,825       (7,495 )     (5,779)       (27,831 )
Non-cash charges:
                                       
Stock-based compensation
    1,177       1,241       1,045       801       4,264  
Goodwill and intangible impairment
    104,936                         104,936  
Asset impairment
    5,295       26       347       1,029       6,697  
Lower of cost or market charges
    10,608                         10,608  
Embedded derivative
                      (919 )     (919 )
Cash restructuring charges
    3,796       1,213       1,564       524       7,097  
Transaction costs
    629       401       107,718       174       108,922  
 
                             
 
                                       
Adjusted EBITDA (1)
  $ 3,092     $ 21,386     $ 18,546     $ (2,627 )   $ 40,397  
 
                             
                                         
    2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     Trailing 12 Months  
    April 27,     July 27,     November 2,     February 1,     February 1,  
    2008     2008     2008     2009     2009  
Net income (loss)
  $ 13,466     $ 30,494     $ 23,218     $ (529,981 )   $ (462,803 )
Add:
                                       
Depreciation and amortization
    8,645       8,665       8,334       8,324       33,968  
Consolidated interest expense, net
    7,748       7,463       7,761       6,623       29,595  
Provision for taxes
    8,537       18,554       17,092       (34,861 )     9,322  
Non-cash charges:
                                       
Stock-based compensation
    3,442       1,563       1,628       1,372       8,005  
Goodwill and intangible impairment
                      517,628       517,628  
Asset impairment
                157       623       780  
Lower of cost or market charges
                2,739       29,378       32,117  
Embedded derivative
                             
Cash restructuring charges
    640       43       150       2,479       3,312  
Transaction costs
                             
 
                             
 
Adjusted EBITDA (1)
  $ 42,478     $ 66,782     $ 61,079     $ 1,585     $ 171,924  
 
                             
 
(1)   On October 20, 2009, the Company amended and restated its Term Note facility which defines adjusted EBITDA. Adjusted EBITDA excludes non-cash charges for goodwill and other asset impairments, lower of cost or market charges and stock compensation as well as certain non-recurring charges. As such, the historical information is presented in accordance with the definition above. Concurrent with the amendment and restatement of the term note facility, the Company entered into an Asset-Backed Lending facility which has substantially the same definition of adjusted EBITDA except that the ABL facility caps certain non-recurring charges. The Company is disclosing adjusted EBITDA, which is a non-GAAP measure, because it is used by management and provided to investors to provide comparability of underlying operational results.
 
(2)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt with Conversion and Other Options.”
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NCI Building Systems, Inc.
Reconciliation of Segment Sales to Third Party Segment Sales (Internal Information)
(Unaudited)
(In thousands)
(2009 as Adjusted (1))
                                                 
                                            %  
    1st Qtr 2010             1st Qtr 2009             Inc/(Dec)     Change  
Metal Coil Coating
                                               
Total Sales
    39,031       17 %     41,501       13 %     (2,470 )     -6 %
Intersegment
    (26,223 )             (30,077 )             3,854       -13 %
 
                                           
Third Party Sales
    12,808       7 %     11,424       4 %     1,384       12 %
 
                                               
Operating Income (Loss)
    3,119       24 %     (63,760 )     -558 %     66,879       105 %
 
                                               
Metal Components
                                               
Total
    86,806       38 %     121,480       39 %     (34,674 )     -29 %
Intersegment
    (16,668 )             (20,438 )             3,770       -18 %
 
                                           
Third Party Sales
    70,138       38 %     101,042       39 %     (30,904 )     -31 %
 
                                               
Operating Income (Loss)
    1,791       3 %     (128,607 )     -127 %     130,398       101 %
 
                                               
Engineered Building Systems
                                               
Total
    102,618       45 %     152,409       48 %     (49,791 )     -33 %
Intersegment
    (2,677 )             (4,511 )             1,834       -41 %
 
                                           
Third Party Sales
    99,941       55 %     147,898       57 %     (47,957 )     -32 %
 
                                               
Operating Income (Loss)
    (5,829 )     -6 %     (352,283 )     -238 %     346,454       98 %
 
                                               
Consolidated
                                               
Total
    228,455       100 %     315,390       100 %     (86,935 )     -28 %
Intersegment
    (45,568 )             (55,026 )             9,458       -17 %
 
                                           
Third Party Sales
    182,887       100 %     260,364       100 %     (77,477 )     -30 %
 
                                               
Operating Income (Loss)
    (12,743 )     -7 %     (557,902 )     -214 %     545,159       98 %
 
(1)   Amounts have been retrospectively adjusted as a result of the adoption, effective November 2, 2009, of ASC Subtopic 470-20, “Debt
 
    with Conversion and Other Options.”

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CONTACT:
Betsy Brod or Lynn Morgen
MBS Value Partners
+1-212-750-5800
for NCI Building Systems, Inc.