EX-99.1 2 v426680_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

  NEWS RELEASE

 

NCI Building Systems Reports Strong

Fourth Quarter and 2015 Fiscal Year End Results

 

HOUSTON, December 10, 2015 – NCI Building Systems, Inc. (NYSE: NCS) (“NCI” or the “Company”) today reported financial results for the fourth quarter and fiscal year ended November 1, 2015.

 

Fourth Quarter 2015 Financial and Operational Highlights:

·Sales rose 17.2% to $459.8 million, compared to $392.4 million in last year’s fourth quarter, primarily driven by the acquisition of CENTRIA that closed in January 2015.
·Gross profit increased 32.3% to $123.6 million and gross margin expanded 310 basis points year-over-year to 26.9%.
·Net income per diluted common share was $0.25, which included net charges of $0.06 for special items.
·Adjusted for special items, net income per diluted common share increased to $0.31 from $0.19 in last year’s fourth quarter.
·Adjusted EBITDA increased 55.6% to $56.4 million and Adjusted EBITDA margin expanded 310 basis points to 12.3% compared to the prior year’s fourth quarter.
·Buildings backlog grew 13.2% year-over-year and the consolidated backlog increased 48.1% to $494.5 million, which now includes CENTRIA’s backlog of $115.2 million.

 

Fiscal 2015 Financial and Operational Highlights:

·Sales rose 14.1% to $1.56 billion from $1.37 billion in the prior year.
·Gross profit increased 27.6% to $372.3 million from $291.8 million in fiscal 2014.
·Net income per diluted common share was $0.24, which included $0.18 of special items.
·Adjusted for special items, net income per diluted common share was $0.42, up from $0.16 in fiscal 2014.
·Adjusted EBITDA rose 72.2% to $130.1 million and Adjusted EBITDA margin expanded 280 basis points to 8.3% in the current fiscal year.
·Pre-tax free cash flow* more than tripled to $125 million from $38 million in the prior year.

 

*Defined as Adjusted EBITDA – net capital expenditures + changes in net working capital

 

 

Norman C. Chambers, Chairman, President and Chief Executive Officer, commented, “We are pleased to have delivered on our commitment to increase gross profit margin and Adjusted EBITDA, marking the sixth consecutive quarter of year-over-year improvement. Our solid fourth quarter results helped us achieve the best second half and full year performance since 2008. The improved performance across all three operating segments is a direct result of the reorganization of our business and strategic initiatives implemented over the past few years. Specifically, our fiscal 2015 performance delivered a 59% increase in net income and a 72% increase in Adjusted EBITDA. In addition, despite continued choppy market conditions, we have been able to deliver earnings growth over the prior several quarters through increased volumes, commercial discipline, and manufacturing improvements.”

 

 

 

 

 

Fourth Quarter 2015 Results

 

Fourth quarter 2015 sales increased to $459.8 million, or 17.2%, from $392.4 million in last year's fourth quarter, due mainly to increased volumes across all three segments and the impact of the CENTRIA acquisition. The legacy single skin and insulated metal panel (IMP) product lines, as well as the Buildings group, delivered strong results.

 

Gross profit increased 32.3% to $123.6 million from $93.4 million in the fourth quarter of 2014, while gross profit margin expanded 310 basis points to 26.9%, compared to 23.8% in the prior year period. The improved margin performance was driven largely by a combination of commercial discipline, effective supply chain initiatives and the impact of the operating leverage created by increased utilization.

 

Engineering, selling, general and administrative (ESG&A) expenses increased 13.5% to $76.4 million from $67.3 million in the fourth quarter of 2014 due largely to the CENTRIA acquisition and, to a lesser extent, increased incentive compensation. As a percentage of revenues, ESG&A expenses decreased approximately 60 basis points to 16.6% in the 2015 fourth quarter compared to 17.2% in the prior year’s period.

 

Adjusted operating income, a non-GAAP measure, increased 74.7% to $43.8 million in the current quarter from $25.1 million in the fourth quarter of 2014, driven by the expansion in gross profit margin. On a GAAP basis, operating income increased to $36.5 million, or 69.2%, compared to $21.6 million in the prior year’s fourth quarter and increased 88.4% sequentially from the third quarter of fiscal 2015.

 

Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's term loan credit agreement as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, was $56.4 million, up 55.6% from $36.3 million in the prior year’s fourth quarter. This performance marks a continuation from the third quarter, in which Adjusted EBITDA increased 53.0% year-over-year.

 

Fourth quarter 2015 net income was $18.4 million, or $0.25 per diluted common share, and was impacted by the following items: $7.6 million of restructuring and impairment charges; $1.1 million of strategic development and acquisition related costs pertaining to acquisitions that have been completed; $2.3 million of amortization of short lived intangibles and $3.8 million gain on legal settlements. Excluding the impact of these special items, the Company reported adjusted net income applicable to common shares, a non-GAAP measure, of $22.7 million, or $0.31 per diluted common share, compared to $13.8 million, or $0.19 per diluted common share, in the fourth quarter of 2014.

 

During the fourth quarter, NCI developed plans to improve cost efficiency by optimizing our manufacturing footprint through the integration of operations from our recent acquisitions, which resulted in the recognition of certain asset impairment charges. The Company believes that the successful execution of these improvement plans over the next 12-36 months will result in annualized cost savings of $15-20 million.

 

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

 

Interest expense increased to $8.0 million in the fourth quarter of 2015, compared to $3.1 million in last year’s fourth quarter as a result of the $250 million, 8.25% senior notes, issued to finance the CENTRIA acquisition.

 

 

 

 

Cash and cash equivalents at quarter’s end was $99.7 million compared to $66.7 million in the comparable period in fiscal 2014 and grew sequentially from $48.3 million at the end of the third quarter of fiscal 2015. The Company paid down an additional $10 million under its term loan in the fourth quarter of fiscal 2015, bringing the total debt repayments to $40 million during the fiscal year. NCI’s proforma net debt leverage ratio at the end of the fourth fiscal quarter improved to 2.7x, moving closer to the previous pre-Centria acquisition leverage of 2.2x. In addition, the Company’s $150.0 million ABL facility remained undrawn as of November 1, 2015.

 

Fourth Quarter 2015 Segment Performance

 

Third party sales in the Buildings group increased slightly to $192.5 million in the fourth quarter from $189.7 million in the prior year quarter, primarily due to higher volumes from an improved product portfolio mix. Gross profit increased to $58.9 million from $51.4 million in the fourth quarter 2014, and gross profit margin expanded 330 basis points to 29.8%. Adjusted operating income increased 36.3% to $26.4 million in the current quarter, compared to $19.4 million in the fourth quarter of fiscal 2014. The improved margins in the Buildings segment were driven by improvements in commercial discipline, supply chain management and manufacturing efficiencies.

 

The Components group generated $240.6 million in third-party sales during the quarter, an increase of 41.3% from $170.3 million in the fourth quarter of fiscal 2014, led by CENTRIA’s contribution as well as continued strength of the legacy single skin and roll-up door product lines. Gross profit increased to $56.2 million from $33.9 million in the fourth quarter 2014, while gross profit margin expanded 310 basis points to 20.3%. Adjusted operating income increased to $26.9 million from $14.3 million in the same quarter last fiscal year. The Components segment’s profitability benefited from CENTRIA’s contribution, improved product mix and commercial discipline. During the fourth quarter, CENTRIA contributed $58.3 million in sales and $6.2 million in Adjusted EBITDA.

 

Third party sales in the Coatings group were $26.7 million, a 17.6% decline from $32.4 million in last year’s fourth quarter. Gross profit decreased slightly to $8.8 million from $8.9 million in the fourth quarter 2014, while gross profit margin increased 110 basis points to 13.8%. Adjusted operating income increased 4.0% to $7.2 million in the fourth quarter of fiscal 2015, compared to $6.9 million reported in the same period last year.

 

Market Commentary

  

Current market estimates continue to show subdued activity in nonresidential markets. Nonresidential construction starts, as measured in square feet, were down 7% in fiscal 2015 according to Dodge Data & Analytics. Low-rise starts, comprising buildings one to five stories, were down 6% for fiscal 2015. However, leading indicators for low-rise, nonresidential construction activity continue to indicate positive momentum moving into fiscal year 2016.

 

The leading indicators with the most meaningful correlation to nonresidential low-rise construction starts are The American Institute of Architects’ (AIA) Architecture Mixed Use Index, Dodge Residential single family starts and the Conference Board Leading Economic Index (LEI). Historically, there has been a very high correlation to the Dodge low-rise nonresidential starts when the three leading indicators are combined and then seasonally adjusted. Currently, the forward projection of these metrics indicates modest growth for the first half of fiscal 2016.

 

 

 

 

Outlook and Guidance

 

Mr. Chambers remarked, “Over the last 18 months, we generated substantial improvements in both gross profit margin and Adjusted EBITDA, which was the direct result of a very deliberate strategy led by commercial discipline, effective supply chain management and enhanced manufacturing efficiencies. We will continue to execute on our strategic initiatives to further optimize our manufacturing footprint and decrease our cost structure over the next several quarters as we anticipate low to mid-single digit nonresidential market growth rates in calendar 2016.”

 

“Our strong backlog includes a greater proportion of higher-complexity projects that have a longer lead time for production, providing us with good visibility through the first half of fiscal 2016. We expect our investments in IMP products over the past several years will help us to further unlock the anticipated growth potential of the underpenetrated North American market. We currently anticipate delivering year-over-year improvement in fiscal 2016. Similar to past years and due to the seasonal nature of our business, we expect our second half performance of fiscal 2016 to be stronger than the first half.”

 

For additional information, please see the CFO Commentary at www.ncibuildingsystems.com under the “Investors” section.

 

Conference Call Information

 

The NCI Building Systems, Inc. fourth quarter and fiscal year end 2015 conference call is scheduled for Friday, December 11, 2015, 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 replay, please dial 1-201-612-7415 or 1-877-660-6853 (toll-free) and the passcode 13624068# when prompted. The taped replay will be available two hours after the call through December 28, 2015.

 

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

 

Contact:

Layne de Alvarez

Vice President, Investor Relations

281-897-7710

 

 

 

 

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," "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 include, but are not limited to, the Company’s expectation for the current growth trend for construction spending in the next six to twelve months and the expectation for U.S. nonresidential construction growth to accelerate in 2016, and the Company’s summary/outlook for the full year of 2016. Among the factors that could cause actual results to differ materially include, but are not limited to, the Company’s ability to integrate CENTRIA with the Company’s business and realize anticipated benefits of such acquisition; industry cyclicality and seasonality and adverse weather conditions; ability to service or refinance the Company's debt, including its 8.250% Senior Notes due 2023, and obtain future financing; the Company’s ability to comply with the financial tests and covenants in its existing and future debt obligations; operational limitations or restrictions in connection with our debt; recognition of asset impairment charges; the ability to make strategic acquisitions accretive to earnings; retention and replacement of key personnel; enforcement and obsolescence of intellectual property rights; fluctuations in customer demand; commodity price increases and/or limited availability of raw materials, including steel; increases in energy prices, competitive activity and pricing pressure; challenging economic conditions affecting the non-residential construction industry; volatility in the U.S. economy and abroad generally, and in the credit markets; costs related to environmental clean-ups and liabilities; changes in laws or regulations, including the Dodd-Frank Act; the dilutive effect on the Company’s common stockholders of potential 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 the Company to liabilities and possible losses, which may not be covered by insurance; costs and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters; and the volatility of the Company's stock price. The Company's SEC filings, including our most recent reports on Form 10-K, particularly under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2014 and in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015, identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in its expectations.

 

###

 

 

 

 

 

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

   Fiscal Three Months Ended   Fiscal Year Ended 
   November 1,   November 2,   November 1,   November 2, 
   2015   2014   2015   2014 
                 
Sales  $459,831   $392,448   $1,563,693   $1,370,540 
Cost of sales   336,230    299,011    1,189,019    1,080,027 
Fair value adjustment of acquired inventory   -    -    2,358    - 
Gain on insurance recovery   -    -    -    (1,311)
Gross profit   123,601    93,437    372,316    291,824 
    26.9%   23.8%   23.8%   21.3%
                     
Engineering, selling, general and administrative expenses   76,416    67,337    286,840    257,677 
Intangible asset amortization (including amortization of short lived acquired intangibles)   5,697    1,013    16,903    4,053 
Strategic development and acquisition related costs   1,143    3,512    4,201    4,998 
Restructuring and impairment charges   7,611    -    11,306    - 
Gain on legal settlements   (3,765)   -    (3,765)   - 
Income from operations   36,499    21,575    56,831    25,096 
                     
Interest income   19    16    72    126 
Interest expense   (8,012)   (3,067)   (28,460)   (12,455)
Foreign exchange loss   (130)   (298)   (2,152)   (1,097)
Other income, net   60    249    499    1,005 
                     
Income before income taxes   28,436    18,475    26,790    12,675 
Provision for income taxes   10,029    4,216    8,972    1,490 
    35.3%   22.8%   33.5%   11.8%
                     
Net income  $18,407   $14,259   $17,818   $11,185 
                     
Net income allocated to participating securities   (221)   (128)   (178)   (101)
                     
Net income applicable to common shares  $18,186   $14,131   $17,640   $11,084 
                     
Income per common share:                    
Basic  $0.25   $0.19   $0.24   $0.15 
Diluted  $0.25   $0.19   $0.24   $0.15 
                     
Weighted average number of common shares outstanding:                    
Basic   73,337    73,036    73,271    73,079 
Diluted   73,831    74,713    73,923    74,709 
                     
Increase in sales   17.2%   -1.9%   14.1%   4.7%
                     
Gross profit percentage   26.9%   23.8%   23.8%   21.3%
                     
Engineering, selling, general and administrative expenses percentage   16.6%   17.2%   18.3%   18.8%

 

 

 

  

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

   November 1,   November 2, 
   2015   2014 
        
ASSETS          
Cash and cash equivalents  $99,662   $66,651 
Restricted cash   682    - 
Accounts receivable, net   166,800    136,923 
Inventories, net   157,828    131,497 
Deferred income taxes   27,390    21,447 
Income tax receivable   3,698    - 
Prepaid expenses and other   31,344    22,773 
Investments in debt and equity securities, at market   6,380    5,549 
Assets held for sale   6,261    5,690 
Total current assets   500,045    390,530 
           
Property, plant and equipment, net   257,892    244,714 
Goodwill   158,026    75,226 
Intangible assets, net   156,395    44,923 
Deferred financing costs, net   11,069    3,290 
Total assets  $1,083,427   $758,683 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current portion of long-term debt  $-   $2,384 
Note payable   513    418 
Accounts payable   145,917    118,164 
Accrued compensation and benefits   62,200    50,666 
Accrued interest   6,389    1,820 
Accrued income taxes   12,994    - 
Other accrued expenses   97,309    72,259 
Total current liabilities   325,322    245,711 
           
Long-term debt, net   444,147    233,003 
Deferred income taxes   20,807    20,219 
Other long-term liabilities   21,175    13,208 
Total long-term liabilities   486,129    266,430 
           
Common stock   745    737 
Additional paid-in capital   640,767    630,297 
Accumulated deficit   (353,733)   (371,550)
Accumulated other comprehensive loss   (8,280)   (8,739)
Treasury stock, at cost   (7,523)   (4,203)
Total stockholders' equity   271,976    246,542 
           
Total liabilities and stockholders' equity  $1,083,427   $758,683 

 

 

 

  

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

   Fiscal Year Ended 
   November 1,   November 2, 
   2015   2014 
         
Cash flows from operating activities:          
Net Income  $17,818   $11,185 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   51,392    35,876 
Deferred financing cost amortization   1,483    1,076 
Share-based compensation expense   9,379    10,168 
(Gain) loss on sale of property   (15)   123 
Asset impairment   5,876    - 
Gain on insurance recovery   -    (1,311)
(Recovery of) provision for doubtful accounts   (788)   (18)
Provision for (benefit from) deferred income taxes   5,368    (6,785)
Excess tax benefits from share-based compensation arrangements   (746)   (538)
Changes in operating assets and liabilities:          
Accounts receivable   8,508    (1,537)
Inventories   4,604    (9,391)
Income tax receivable   (2,634)   1,599 
Prepaid expenses and other   (267)   (4,762)
Accounts payable   11,475    (26,394)
Accrued expenses   (6,052)   24,210 
Other, net   (361)   65 
           
Net cash provided by (used in) operating activities   105,040    33,567 
           
Cash flows from investing activities:          
Acquisition, net of cash acquired   (247,123)   - 
Proceeds from sale of property, plant and equipment   28    14 
Proceeds from insurance   -    1,311 
Capital expenditures   (20,683)   (18,020)
    -      
Net cash used in investing activities   (267,778)   (16,695)
           
Cash flows from financing activities:          
Proceeds from stock options exercised   354    - 
Decrease in restricted cash   298      
Issuance of debt   250,000    - 
Payments on term loan   (41,240)   (2,388)
Payments on note payable   (1,616)   (1,590)
Proceeds from Amended ABL Facility   -    72,000 
Payments on Amended ABL Facility   -    (72,000)
Borrowings on term loan   -    - 
Payment of financing costs   (9,217)   (51)
Purchase of treasury stock   (3,320)   (23,798)
Excess tax benefits from share-based compensation arrangements   745    538 
           
Net cash provided by (used in) financing activities   196,004    (27,289)
Effect of exchange rate changes on cash and cash equivalents   (255)   (367)
Net decrease in cash and cash equivalents   33,011    (10,785)
           
Cash and cash equivalents at beginning of period   66,651    77,436 
           
Cash and cash equivalents at end of period  $99,662   $66,651 

 

 

 

  

NCI Building Systems, Inc.

Business Segments

(In thousands)

(Unaudited)

 

   Fiscal Three Months Ended   Fiscal Three Months Ended   $   % 
   November 1, 2015   November 2, 2014   Inc/(Dec)   Change 
       % of       % of         
       Total       Total         
       Sales       Sales         
Sales:                              
Engineered building systems  $197,600    37   $194,009    42   $3,591    1.9%
Metal components   275,747    51    197,264    43    78,483    39.8%
Metal coil coating   63,742    12    69,684    15    (5,942)   -8.5%
Total sales   537,089    100    460,957    100    76,132    16.5%
Less: Intersegment sales   77,258    14    68,509    15    8,749    12.8%
Total net sales  $459,831    86   $392,448    85   $67,383    17.2%
                               
         % of         % of           
        Sales         Sales           
Operating income (loss):                              
Engineered building systems  $25,473    13   $19,397    10   $6,076    31.3%
Metal components   18,239    7    14,198    7    4,041    28.5%
Metal coil coating   7,208    11    6,929    10    279    4.0%
Corporate   (14,421)   -    (18,949)   -   4,528    23.9%
Total operating income (loss) (% of sales)  $36,499    8   $21,575    5   $14,924    69.2%

 

   Fiscal Year Ended   Fiscal Year Ended   $   % 
   November 1, 2015   November 2, 2014   Inc/(Dec)   Change 
       % of       % of         
       Total       Total         
       Sales       Sales         
Sales:                              
Engineered building systems  $667,165    37   $669,843    42   $(2,678)   -0.4%
Metal components   920,845    50    694,858    43    225,987    32.5%
Metal coil coating   231,732    13    246,582    15    (14,850)   -6.0%
Total sales   1,819,743    100    1,611,283    100    208,460    12.9%
Less: Intersegment sales   256,050    14    240,743    15    15,307    6.4%
Total net sales  $1,563,693    86   $1,370,540    85   $193,153    14.1%
                               
         % of         % of           
        Sales         Sales           
Operating income (loss):                              
Engineered building systems  $51,410    8   $32,525    5   $18,885    58.1%
Metal components   50,541    5    33,306    5    17,235    51.7%
Metal coil coating   19,080    8    23,982    10    (4,902)   -20.4%
Corporate   (64,200)   -    (64,717)   -    517    0.8%
Total operating income (loss) (% of sales)  $56,831    4   $25,096    2   $31,735    126.5%

 

 

 

  

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 NOVEMBER 1, 2015 AND NOVEMBER 2, 2014

(In thousands)

(Unaudited)

 

   Fiscal Three Months Ended November 1, 2015 
   Metal Coil
Coating
   Metal
Components
   Engineered
Building
Systems
   Corporate   Consolidated 
                     
Operating income (loss), GAAP basis  $7,208   $18,239   $25,473   $(14,421)  $36,499 
Restructuring and impairment charges   -    6,365    959    287    7,611 
Strategic development and acquisition related costs   -    -    -    1,143    1,143 
Gain on legal settlements   -    -    -    (3,765)   (3,765)
Amortization of short lived acquired intangibles   -    2,343    -    -    2,343 
Adjusted operating income (loss) (1)  $7,208   $26,947   $26,432   $(16,756)  $43,831 

  

   Fiscal Three Months Ended November 2, 2014 
   Metal Coil
Coating
   Metal
Components
   Engineered
Building
Systems
   Corporate   Consolidated 
                     
Operating income (loss), GAAP basis  $6,929   $14,198   $19,397   $(18,949)  $21,575 
Strategic development and acquisition related costs   -    109    -    3,403    3,512 
Adjusted operating income (loss) (1)  $6,929   $14,307   $19,397   $(15,546)  $25,087 

 

(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 statement 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 NOVEMBER 1, 2015 AND NOVEMBER 2, 2014

(In thousands)

(Unaudited)

 

   Fiscal Year Ended November 1, 2015 
   Metal Coil
Coating
   Metal
Components
   Engineered
Building
Systems
   Corporate   Consolidated 
                     
Operating income (loss), GAAP basis  $19,080   $50,541   $51,410   $(64,200)  $56,831 
Restructuring and impairment charges   254    7,866    2,756    430    11,306 
Strategic development and acquisition related costs   -    -    -    4,201    4,201 
Gain on legal settlements   -    -    -    (3,765)   (3,765)
Fair value adjustment of acquired inventory   -    2,358    -    -    2,358 
Amortization of short lived acquired intangibles   -    8,400    -    -    8,400 
Adjusted operating income (loss) (1)  $19,334   $69,165   $54,166   $(63,334)  $79,331 

  

   Fiscal Year Ended November 2, 2014 
   Metal Coil
Coating
   Metal
Components
   Engineered
Building
Systems
   Corporate   Consolidated 
                     
Operating income (loss), GAAP basis  $23,982   $33,306   $32,525   $(64,717)  $25,096 
Gain on insurance recovery   (1,311)   -    -    -    (1,311)
Secondary offering costs   -    -    -    754    754 
Strategic development and acquisition related costs   -    109    -    4,889    4,998 
Adjusted operating income (loss) (1)  $22,671   $33,415   $32,525   $(59,074)  $29,537 

 

(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 statement 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)

(Unaudited)

 

   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Trailing 12 Months 
   February 1,   May 3,   August 2,   November 1,   November 1, 
   2015   2015   2015   2015   2015 
Net income (loss)  $(320)  $(7,488)  $7,220   $18,407   $17,819 
Add:                         
Depreciation and amortization   9,731    13,766    14,541    13,354    51,392 
Consolidated interest expense, net   3,980    8,280    8,135    7,993    28,388 
Provision for (benefit from) income taxes   (490)   (4,087)   3,520    10,029    8,972 
Restructuring and impairment charges   1,477    1,759    504    7,611    11,351 
Strategic development and acquisition related costs   1,729    628    701    1,143    4,201 
Gain on legal settlements   -    -    -    (3,765)   (3,765)
Fair value adjustment of acquired inventory   583    775    1,000    -    2,358 
Share-based compensation   2,933    2,201    2,568    1,677    9,379 
                          
Adjusted EBITDA (1)  $19,623   $15,834   $38,189   $56,449   $130,095 

 

   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Trailing 12 Months 
   February 2,   May 4,   August 3,   November 2,   November 2, 
   2014   2014   2014   2014   2014 
Net income (loss)  $(4,258)  $(4,905)  $6,089   $14,259   $11,185 
Add:                         
Depreciation and amortization   8,767    8,941    8,994    9,220    35,922 
Consolidated interest expense, net   3,100    3,035    3,142    3,053    12,330 
Provision for (benefit from) income taxes   (2,506)   (3,057)   2,837    4,215    1,489 
Gain on insurance recovery   (987)   (324)   -    -    (1,311)
Secondary offering costs   704    50    -    -    754 
Strategic development and acquisition related costs   -    -    1,486    3,512    4,998 
Share-based compensation   3,179    2,563    2,404    2,022    10,168 
                          
Adjusted EBITDA (1)  $7,999   $6,303   $24,952   $36,281   $75,535 

 

(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 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 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 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.

 

 

 

   

NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

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

(In thousands, except per share data)

(Unaudited)

 

   Fiscal Three Months Ended   Fiscal Year Ended 
   November 1,   November 2,   November 1,   November 2, 
   2015   2014   2015   2014 
Net income (loss) per diluted common share, GAAP basis  $0.25   $0.19   $0.24   $0.15 
Restructuring and impairment charges, net of taxes   0.06    -    0.09    - 
Strategic development and acquisition related costs, net of taxes   0.01    0.03    0.03    0.04 
Fair value adjustment of acquired inventory, net of taxes   -    -    0.01    - 
Amortization of short lived acquired intangibles, net of taxes   0.02    -    0.07    - 
Gain on legal settlements, net of taxes   (0.03)   -    (0.03)   - 
Reversal of Canadian deferred tax valuation allowance   -    (0.03)   -    (0.03)
Foreign exchange loss, net of taxes   -    0.00    -    0.01 
Gain on insurance recovery, net of taxes   -    -    -    (0.01)
Secondary offering costs, net of taxes   -    -    -    0.00 
Adjusted net income (loss) per diluted common share (1)  $0.31   $0.19   $0.42   $0.16 

  

   Fiscal Three Months Ended   Fiscal Year Ended 
   November 1,   November 2,   November 1,   November 2, 
   2015   2014   2015   2014 
Net income (loss) applicable to common shares, GAAP basis  $18,186   $14,131   $17,640   $11,185 
Restructuring and impairment charges, net of taxes   4,643    -    6,897    - 
Strategic development and acquisition related costs, net of taxes   697    2,163    2,563    3,079 
Fair value adjustment of acquired inventory, net of taxes   -    -    1,438    - 
Amortization of short lived acquired intangibles, net of taxes   1,429    -    5,124    - 
Gain on legal settlements, net of taxes   (2,297)   -    (2,297)   - 
Reversal of Canadian deferred tax valuation allowance   -    (2,718)   -    (2,718)
Foreign exchange loss, net of taxes   -    178    -    676 
Gain on insurance recovery, net of taxes   -    -    -    (808)
Secondary offering costs, net of taxes   -    -    -    464 
Adjusted net income (loss) applicable to common shares (1)  $22,659   $13,753   $31,366   $11,878 

 

(1)The Company discloses a tabular comparison of Adjusted net income (loss) per diluted common share and Adjusted net income (loss) 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 (loss) per diluted common share and Adjusted net income (loss) applicable to common shares should not be considered in isolation or as a substitute for net income (loss) per diluted common share and net income (loss) applicable to common shares as reported on the face of our consolidated statement of operations.

 

 

 

  

NCI Building Systems, Inc.

Reconciliation of Segment Sales to Third Party Segment Sales

(In thousands)

(Unaudited)

 

   Fiscal       Fiscal       $   % 
   4th Qtr 2015       4th Qtr 2014       Inc/(Dec)   Change 
Engineered Building Systems                              
Total Sales  $197,600    37%  $194,009    42%  $3,591    1.9%
Less: Intersegment sales   5,100         4,266         834    19.5%
Third Party Sales  $192,500    42%  $189,743    48%  $2,757    1.5%
                               
Operating Income  $25,473    13%  $19,397    10%  $6,076    31.3%
                               
Metal Components                              
Total Sales  $275,747    51%  $197,264    43%  $78,483    39.8%
Less: Intersegment sales   35,104         26,931         8,173    30.3%
Third Party Sales  $240,643    52%  $170,333    43%  $70,310    41.3%
                               
Operating Income  $18,239    8%  $14,198    8%  $4,041    28.5%
                               
Metal Coil Coating                              
Total Sales  $63,742    12%  $69,684    15%  $(5,942)   -8.5%
Less: Intersegment sales   37,055         37,312         (257)   -0.7%
Third Party Sales  $26,687    6%  $32,372    8%  $(5,685)   -17.6%
                               
Operating Income  $7,208    27%  $6,929    21%  $279    4.0%
                               
Consolidated                              
Total Sales  $537,089    100%  $460,957    100%  $76,132    16.5%
Less: Intersegment   77,259         68,509         8,750    12.8%
Third Party Sales  $459,830    100%  $392,448    100%  $67,382    17.2%
                               
Operating Income  $36,499    8%  $21,575    5%  $14,924    69.2%

  

   Fiscal YTD       Fiscal YTD       $   % 
   4th Qtr 2015       4th Qtr 2014       Inc/(Dec)   Change 
Engineered Building Systems                              
Total Sales  $667,165    37%  $669,843    42%  $(2,678)   -0.4%
Less: Intersegment sales   19,285         20,499         (1,214)   -5.9%
Third Party Sales  $647,880    42%  $649,344    48%  $(1,464)   -0.2%
                               
Operating Income  $51,410    8%  $32,525    5%  $18,885    58.1%
                               
Metal Components                              
Total Sales  $920,845    50%  $694,858    43%  $225,987    32.5%
Less: Intersegment sales   105,535         87,264         18,271    20.9%
Third Party Sales  $815,310    52%  $607,594    44%  $207,716    34.2%
                               
Operating Income  $50,541    6%  $33,306    5%  $17,235    51.7%
                               
Metal Coil Coating                              
Total Sales  $231,732    13%  $246,582    15%  $(14,850)   -6.0%
Less: Intersegment sales   131,230         132,980         (1,750)   -1.3%
Third Party Sales  $100,502    6%  $113,602    8%  $(13,100)   -11.5%
                               
Operating Income  $19,080    19%  $23,982    21%  $(4,902)   -20.4%
                               
Consolidated                              
Total Sales  $1,819,743    99%  $1,611,283    100%  $208,460    12.9%
Less: Intersegment sales   256,050         240,743         15,307    6.4%
Third Party Sales  $1,563,693    100%  $1,370,540    100%  $193,153    14.1%
                               
Operating Income  $56,831    4%  $25,096    2%  $31,735    126.5%