NCI Building Systems Reports Third Quarter 2017 Results
HOUSTON, Sept. 6, 2017 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE: NCS) ("NCI" or the "Company") today reported financial results for the third fiscal quarter ended July 30, 2017.
Third Quarter 2017 Financial and Operational Highlights:
-- Sales rose 1.5% to $469.4 million for the quarter, compared to $462.4
million in the prior year's third quarter, driven by the successful
pass-through of higher materials costs
-- Gross profit for the quarter was $115.0 million or 24.5% of revenues,
compared to $128.0 million or 27.7% of revenues in the prior year's
third quarter
-- Net income was $18.2 million for the quarter, compared to $23.7 million
in last year's third quarter. Adjusted Net Income was $19.6 million this
quarter, compared to $24.5 million in the prior year's third quarter
-- Net income per diluted common share for the quarter was $0.25 compared
to $0.32 in the prior year's third quarter. Adjusted Net Income was
$0.27 per diluted common share, compared to $0.33 in the prior year's
third quarter
-- Adjusted EBITDA was $50.4 million or 10.7% of revenue for the quarter,
compared to Adjusted EBITDA of $57.8 million or 12.5% of revenue in the
prior year's third quarter
-- Total consolidated backlog increased to $580.7 million, up 4.2%
year-over-year
"We are pleased to have advanced important aspects of our growth plans during a quarter that also reflects challenging and abnormal year-over-year comparisons. We achieved key objectives in the quarter managing ESG&A and manufacturing cost down, passing through higher materials costs and delivering double-digit growth in our IMP business line. While the market hesitancy has lasted longer than originally expected, we continue to see growth trends in quoting and order activity across all of our markets and positive key forward-looking indicators," said Donald R. Riley, President and Chief Executive Officer. "We remain focused on maintaining our commercial discipline, controlling costs and improving manufacturing efficiencies that will enable us to generate year-over-year earnings growth."
Third Quarter 2017 Results
Third quarter 2017 sales increased to $469.4 million, up 1.5% from $462.4 million in last year's third quarter, due to continued commercial discipline in the pass-through of higher costs in a rising steel price environment predominately in the Buildings and Components segments. On a year-over-year basis, tonnage volumes were lower in all three segments. The second half of 2017 is expected to reflect a more normalized seasonal pattern where the fourth quarter is anticipated to be stronger than the third quarter's performance. The year-over-year comparisons in most of the Company's financial metrics reflect the abnormal seasonal pattern in 2016, where the third quarter volumes and financial results were stronger than the fourth quarter. The third quarter of 2016 benefited from the pull forward of work, particularly in the legacy Components segment and a favorable material cost environment.
Gross profit was $115.0 million this quarter, down from $128.0 million in the third quarter of 2016 and gross profit margins were 24.5% for the this year's third quarter compared to 27.7% in the third quarter of 2016. Gross margins improved sequentially from 24.0% in the second quarter of the year as a result of improved pass-through of higher material cost. However, margins were lower than the prior year period due to lower plant utilization levels and a less favorable material cost environment.
Engineering, selling, general and administrative ("ESG&A") expenses were $76.3 million this quarter, compared to $80.4 million in the third quarter of 2016. As a percentage of revenues, ESG&A expenses decreased approximately 110 basis points to 16.3% in the 2017 third quarter compared to 17.4% in the prior year's third quarter, primarily driven by the Company's cost reduction initiatives and lower incentive compensation costs.
Operating income for the quarter was $34.1 million, compared to $43.5 million in the prior year's third quarter. Adjusted Operating Income, a non-GAAP measure which excludes certain identified items, was $36.5 million in the current quarter, compared to $45.1 million in the third quarter of 2016.
Net income applicable to common shares in this quarter was $18.1 million, or $0.25 per diluted common share, compared to $23.6 million, or $0.32 per diluted common share in the prior year's third quarter. Net income was impacted by the following special items: $1.0 million of restructuring and impairment charges predominately attributable to severance costs, $1.3 million of strategic development and acquisition related costs related to the refinancing of the Company's Term Loan and Asset Backed Lending Facility offset by $0.9 million from the related tax effect of these items. Excluding the impact of these special items, the Company reported Adjusted Net Income, a non-GAAP measure, of $19.6 million, or $0.27 per diluted common share, compared to $24.5 million, or $0.33 per diluted common share, in the third quarter of 2016.
Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's Credit Agreement as earnings before interest, taxes, depreciation and amortization, and certain other cash and non-cash items, was $50.4 million this quarter, compared to $57.8 million in the prior year's third quarter. The lower Adjusted EBITDA in this year's third quarter is partially the result of the return to a more normalized seasonal pattern in fiscal 2017.
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 third quarter was $45.9 million, compared to $50.7 million at the end of the third quarter of fiscal 2016. Cash and cash equivalents decreased sequentially from $49.7 million at the end of the second quarter of fiscal 2017 as a result of an increase in inventories. NCI's net debt leverage ratio (net debt/EBITDA) at the end of the third quarter was 2.0x. In addition, the Company's $150.0 million ABL facility remained undrawn as of July 30, 2017.
Third Quarter 2017 Segment Performance
Third party sales in the Buildings segment increased 3.8% to $182.2 million in the third quarter, up from $175.5 million in the prior year period, primarily as a result of the pass-through of higher costs and improved pricing. Operating income decreased to $14.9 million this quarter compared to $19.6 million in the third quarter of 2016. Adjusted Operating Income decreased to $15.9 million in the current quarter, compared to $19.6 million in the third quarter of fiscal 2016. The year-over-year decrease in the Building segment's operating margins relates largely to a less favorable material cost environment compared to the third quarter of 2016 and lower plant utilization during the period.
The Components segment generated $258.5 million in third-party sales during the quarter, an increase of 0.9% from $256.2 million in the third quarter of fiscal 2016, led by growth in the insulated panel product lines, as well as commercial pricing discipline across the segment. Operating income was $35.3 million for the quarter compared to $37.5 million in the third quarter of 2016. Adjusted Operating Income was $35.4 million, compared to $37.8 million in the third quarter fiscal 2016. The Components segment's profitability was impacted by lower volumes and capacity utilization across the legacy single skin product lines, offset by improved insulated panel sales.
Third party sales in the Coatings segment were $28.7 million compared, to $30.7 million in last year's third quarter. Operating income was $6.6 million for the quarter compared to $8.7 million in the third quarter of 2016. Operating margins in the Coatings group were impacted by lower external and internal volumes resulting in lower plant utilization.
Market Commentary
The key leading indicators that NCI follows and that typically have the most meaningful correlation to nonresidential low-rise construction starts are the American Institute of Architects' ("AIA") Architecture Mixed Use Index, the Dodge Residential single family starts and the Conference Board Leading Economic Index ("LEI"). Historically, there has been a very high correlation to low-rise nonresidential starts when the three leading indicators are combined and then seasonally adjusted. The combined forward projection of these metrics, based on a 9 to 14-month historical lag for each metric, indicates an expected positive growth of 3.0% to 6.0% for low-rise new construction starts in fiscal 2017.
Internal bookings and quoting activity indicates a continuation of low single digit growth as compared to the prior year. Offices and banks, government and recreational end-markets have shown positive year-over-year growth. In NCI's geographic markets New England and the Pacific regions showed the strongest growth during the quarter.
Outlook and Guidance
The Company's two ongoing cost savings initiatives in manufacturing consolidation and ESG&A are expected to generate $30 to $40 million in cost savings by the end of 2018, of which $12 million was realized in fiscal 2016. During fiscal 2017, these two initiatives are anticipated to generate an incremental $10.0 million in realized cost savings. During the fourth quarter of fiscal 2017, management accelerated $7 to $9 million in annualized cost savings originally planned for fiscal 2018, both accelerating and further ensuring the achievement of the total cost savings range anticipated for these programs.
For the fourth quarter of fiscal 2017, NCI expects revenues to be in the range of $470 to $500 million and Adjusted EBITDA to be in the range of $48 - $62 million. The fourth quarter EBITDA range includes an estimated impact of $3 to $8 million related to potential temporary disruptions from Hurricane Harvey, primarily resulting from the impact to customer job sites and their readiness for product delivery. For the full year fiscal 2017, the Company is revising its expected revenue range to $1.75 to $1.78 billion and expects fiscal 2017 Adjusted EBITDA to be $162 to $176 million for the year. The downward revisions to the fourth quarter, as well as annual revenues and Adjusted EBITDA are a result of the softer market activity seen in the third quarter, which is expected to continue into the fourth quarter, particularly in the legacy Components segment and the impact of Hurricane Harvey.
The Company has provided additional detailed financial guidance in the quarterly supplemental presentation at www.ncibuildingsystems.com under the "Investors" section.
Conference Call Information
The NCI Building Systems, Inc. third quarter 2017 conference call is scheduled for Thursday, September 7, 2017, at 9:00 a.m. ET (8:00 a.m. CT). Please dial 1-412-902-0003 or 1-877-407-0672 (toll-free) to participate in the call. To listen to a live broadcast of the call over the Internet or to review the archived call, please visit the Company's website at www.ncibuildingsystems.com. To access the taped telephone replay, please dial 1-201-612-7415 or 1-877-660-6853 (toll-free) and the passcode 13668657# when prompted. The taped replay will be available two hours after the call through September 21, 2017. A replay of the webcast will be available on the Company's website under the Event Calendar, Calls & Webcast section of the Investor Relations page of the NCI website for approximately 90 days.
About NCI Building Systems
NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. NCI is comprised of a family of companies operating manufacturing facilities across the United States, Canada, Mexico and China with additional sales and distribution offices throughout the United States and Canada. For more information visit www.ncibuildingsystems.com.
Contact:
K. Darcey Matthews
Vice President, Investor Relations
281-897-7785
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate," "guidance," "plan," "potential," "expect," "should," "will," "forecast" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Such forward-looking statements may include, but are not limited to, statements concerning our market commentary and expectations for new construction starts in fiscal 2017 and our financial outlook and guidance, including our fiscal 2017 forecasted gross profit, 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 and adverse weather conditions; challenging economic conditions affecting the nonresidential construction industry; volatility in the U.S. economy and abroad, generally, and in the credit markets; substantial indebtedness and our ability to incur substantially more indebtedness; our ability to generate significant cash flow required to service or refinance our existing debt, including the 8.25% senior notes due 2023, and obtain future financing; our ability to comply with the financial tests and covenants in our existing and future debt obligations; operational limitations or restrictions in connection with our debt; increases in interest rates; recognition of asset impairment charges; commodity price increases and/or limited availability of raw materials, including steel; interruptions in our supply chain; our ability to make strategic acquisitions accretive to earnings; retention and replacement of key personnel; our ability to carry out our restructuring plans and to fully realize the expected cost savings, enforcement and obsolescence of intellectual property rights; fluctuations in customer demand; costs related to environmental clean-ups and liabilities; competitive activity and pricing pressure; increases in energy prices; volatility of the Company's stock price; 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 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 30, 2016, 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 Nine Months Ended
------------------------- ------------------------
July 30, July 31, July 30, July 31,
2017 2016 2017 2016
---- ---- ---- ----
Sales $469,385 $462,353 $1,281,552 $1,204,614
Cost of sales 354,416 334,454 981,656 899,277
(Gain) loss on sale of assets
and asset recovery - (52) 137 (1,704)
--- --- --- ------
Gross profit 114,969 127,951 299,759 307,041
24.5% 27.7% 23.4% 25.5%
Engineering, selling, general
and administrative expenses 76,309 80,414 220,473 224,912
Intangible asset amortization 2,405 2,405 7,215 7,226
Strategic development and
acquisition related costs 1,297 819 1,778 2,080
Restructuring and impairment
charges 1,009 778 3,587 3,437
Gain on insurance recovery (148) - (9,749) -
Income from operations 34,097 43,535 76,455 69,386
Interest income 20 62 164 136
Interest expense (7,373) (7,747) (21,738) (23,460)
Foreign exchange gain (loss) 985 (922) 1,035 (1,088)
Gain from bargain purchase - - - 1,864
Other income, net 337 414 1,045 476
--- --- ----- ---
Income before income taxes 28,066 35,342 56,961 47,314
Provision for income taxes 9,845 11,627 19,727 15,288
----- ------ ------ ------
35.1% 32.9% 34.6% 32.3%
Net income $18,221 $23,715 $37,234 $32,026
======= ======= ======= =======
Net income allocated to
participating securities (102) (165) (240) (265)
Net income applicable to
common shares $18,119 $23,550 $36,994 $31,761
======= ======= ======= =======
Income per common share:
Basic $0.26 $0.32 $0.52 $0.44
Diluted $0.25 $0.32 $0.52 $0.43
Weighted average number of
common shares outstanding:
Basic 71,047 73,104 70,973 72,932
Diluted 71,183 73,552 71,134 73,460
Increase in sales 1.5% 9.9% 6.4% 9.1%
Engineering, selling, general
and administrative expenses
percentage 16.3% 17.4% 17.2% 18.7%
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 30, October 30,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $45,923 $65,403
Restricted cash 213 310
Accounts receivable, net 189,677 182,258
Inventories, net 212,733 186,824
Income taxes receivable 2,266 982
Deferred income taxes 25,942 29,104
Investments in debt and
equity securities, at
market 6,423 5,748
Prepaid expenses and other 29,734 29,971
Assets held for sale 6,145 4,256
Total current assets 519,056 504,856
------- -------
Property, plant and equipment, net 230,042 242,212
Goodwill 154,291 154,271
Intangible assets, net 139,553 146,769
Other assets, net 1,920 2,092
Total assets $1,044,862 $1,050,200
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $880 $460
Accounts payable 120,702 142,913
Accrued compensation and benefits 62,488 72,612
Accrued interest 1,401 7,165
Other accrued expenses 104,280 103,384
Total current liabilities 289,751 326,534
------- -------
Long-term debt, net of
deferred financing costs
of $7,178 and $8,096 386,969 396,051
Deferred income taxes 23,116 24,804
Other long-term liabilities 21,251 21,494
Total long-term liabilities 431,336 442,349
------- -------
Common stock 712 715
Additional paid-in capital 600,954 603,120
Accumulated deficit (265,535) (302,706)
Accumulated other
comprehensive loss, net (10,216) (10,553)
Treasury stock, at cost (2,140) (9,259)
Total stockholders' equity 323,775 281,317
------- -------
Total liabilities and
stockholders' equity $1,044,862 $1,050,200
========== ==========
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fiscal Nine Months Ended
------------------------
July 30, July 31,
2017 2016
---- ----
Cash flows from operating
activities:
Net income $37,234 $32,026
Adjustments to reconcile net
income to net cash from
operating activities
Depreciation and amortization 30,656 32,107
Amortization of deferred
financing costs 1,398 1,431
Share-based compensation
expense 8,146 7,711
Gain on insurance recovery (9,749) -
Loss (gains) on assets, net 438 (3,568)
Provision for doubtful accounts 1,145 1,515
Provision for deferred income
taxes 70 1,573
Excess tax (benefits) from
share-based compensation
arrangements (1,515) (867)
Changes in operating assets and
liabilities, net of effect of
acquisitions:
Accounts receivable (8,559) (10,102)
Inventories (25,909) (25,309)
Income taxes (1,284) -
Prepaid expenses and other 1,069 1,150
Accounts payable (22,212) 499
Accrued expenses (10,499) 2,550
Other, net (1,347) (117)
------ ----
Net cash (used in) provided by
operating activities (918) 40,599
---- ------
Cash flows from investing
activities:
Acquisitions, net of cash
acquired - (4,343)
Capital expenditures (15,629) (15,140)
Proceeds from sale of property,
plant and equipment 2,533 5,479
Proceeds from insurance 8,593 -
----- ---
Net cash used in investing
activities (4,503) (14,004)
------ -------
Cash flows from financing
activities:
Refund (deposit) of restricted
cash 96 (44)
Proceeds from stock options
exercised 1,195 12,055
Excess tax benefits from share-
based compensation arrangements 1,515 867
Proceeds from Amended ABL
facility 35,000 -
Payments on Amended ABL facility (35,000) -
Payments on term loan (10,180) (30,000)
Payments on note payable (1,096) (974)
Purchases of treasury stock (5,922) (57,401)
------ -------
Net cash used in financing
activities (14,392) (75,497)
------- -------
Effect of exchange rate changes
on cash and cash equivalents 333 (50)
Net decrease in cash and cash
equivalents (19,480) (48,952)
Cash and cash equivalents at
beginning of period 65,403 99,662
------ ------
Cash and cash equivalents at end
of period $45,923 $50,710
======= =======
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON
(Unaudited)
Fiscal Three Months Ended Fiscal Nine Months Ended
------------------------- ------------------------
July 30, July 31, July 30, July 31,
2017 2016 2017 2016
---- ---- ---- ----
Net income per diluted
common share, GAAP basis $0.25 $0.32 $0.52 $0.43
Restructuring and impairment
charges 0.01 0.01 0.05 0.05
Strategic development and
acquisition related costs 0.02 0.01 0.02 0.03
(Gain) on insurance recovery 0.00 - (0.14) -
Unreimbursed business
interruption costs 0.00 - 0.01 -
Other losses (gains), net - (0.00) 0.00 (0.05)
Tax effect of applicable
non-GAAP adjustments (1) (0.01) (0.01) 0.02 (0.02)
Adjusted net income per
diluted common share (2) $0.27 $0.33 $0.48 $0.44
===== ===== ===== =====
Fiscal Three Months Ended Fiscal Nine Months Ended
------------------------- ------------------------
July 30, July 31, July 30, July 31,
2017 2016 2017 2016
---- ---- ---- ----
Net income applicable to
common shares, GAAP basis $18,119 $23,550 $36,994 $31,761
Restructuring and impairment
charges 1,009 778 3,587 3,437
Strategic development and
acquisition related costs 1,297 819 1,778 2,080
(Gain) on insurance recovery (148) - (9,749) -
Unreimbursed business
interruption costs 235 - 426 -
Other losses (gains), net - (52) 137 (3,568)
Tax effect of applicable
non-GAAP adjustments (1) (933) (603) 1,490 (1,487)
Adjusted net income
applicable to common shares
(2) $19,579 $24,492 $34,663 $32,223
======= ======= ======= =======
(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 Three Months Ended $ %
July 30, 2017 July 31, 2016 Inc/(Dec) Change
------------- ------------- --------- ------
% of % of
Total Total
Sales: Sales Sales
Engineered building systems $191,910 34 $181,029 34 $10,881 6.0%
Metal components 297,006 53 287,307 53 9,699 3.4%
Metal coil coating 70,559 13 72,069 13 (1,510) -2.1%
------ --- ------ --- ------ ----
Total sales 559,475 100 540,405 100 19,070 3.5%
Less: Intersegment sales 90,090 16 78,052 14 12,038 15.4%
------ ----
Total net sales $469,385 84 $462,353 86 $7,032 1.5%
-------- --- -------- --- ------ ---
% of % of
Operating income (loss): Sales Sales
Engineered building systems $14,948 8 $19,561 11 $(4,613) -23.6%
Metal components 35,289 12 37,497 13 (2,208) -5.9%
Metal coil coating 6,562 9 8,748 12 (2,186) -25.0%
Corporate (22,702) - (22,271) - (431) -1.9%
Total operating income $34,097 7 $43,535 9 $(9,438) -21.7%
------- --- ------- --- ------- -----
% of % of
Adjusted operating income
(loss) (1): Sales Sales
Engineered building systems $15,889 8 $19,615 11 $(3,726) -19.0%
Metal components 35,444 12 37,767 13 (2,323) -6.2%
Metal coil coating 6,562 9 8,748 12 (2,186) -25.0%
Corporate (21,405) - (21,050) - (355) -1.7%
Total adjusted operating
income $36,490 8 $45,080 10 $(8,590) -19.1%
------- --- ------- --- ------- -----
Fiscal Nine Months Ended Fiscal Nine Months Ended $ %
July 30, 2017 July 31, 2016 Inc/(Dec) Change
------------- ------------- --------- ------
% of % of
Total Total
Sales: Sales Sales
Engineered building systems $505,797 33 $468,028 33 $37,769 8.1%
Metal components 813,100 54 751,610 54 61,490 8.2%
Metal coil coating 198,078 13 178,452 13 19,626 11.0%
------- --- ------- --- ------ ----
Total sales 1,516,975 100 1,398,090 100 118,885 8.5%
Less: Intersegment sales 235,423 16 193,476 14 41,947 21.7%
------ ----
Total net sales $1,281,552 84 $1,204,614 86 $76,938 6.4%
---------- --- ---------- --- ------- ---
% of % of
Sales
Operating income (loss): Sales
Engineered building systems $28,346 6 $39,216 8 $(10,870) -27.7%
Metal components 91,406 11 71,436 10 19,970 28.0%
Metal coil coating 17,320 9 18,272 10 (952) -5.2%
Corporate (60,617) - (59,538) - (1,079) -1.8%
------
Total operating income $76,455 6 $69,386 6 $7,069 10.2%
------- --- ------- --- ------ ----
% of % of
Sales
Adjusted operating income
(loss) (1): Sales
Engineered building systems $31,520 6 $38,267 8 $(6,747) -17.6%
Metal components 82,584 10 72,994 10 9,590 13.1%
Metal coil coating 17,320 9 18,311 10 (991) -5.4%
Corporate (58,790) - (56,373) - (2,417) -4.3%
Total adjusted operating
income $72,634 6 $73,199 6 $(565) -0.8%
------- --- ------- --- ----- ----
(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
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 JULY 30, 2017 AND JULY 31, 2016
(In thousands)
(Unaudited)
Fiscal Three Months Ended July 30, 2017
---------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP
basis $14,948 $35,289 $6,562 $(22,702) $34,097
Restructuring and impairment
charges 941 68 - - 1,009
Strategic development and
acquisition related costs - - - 1,297 1,297
(Gain) on insurance recovery - (148) - - (148)
Unreimbursed business
interruption costs - 235 - - 235
Adjusted operating income
(loss) (1) $15,889 $35,444 $6,562 $(21,405) $36,490
======= ======= ====== ======== =======
Fiscal Three Months Ended July 31, 2016
---------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP
basis $19,561 $37,497 $8,748 $(22,271) $43,535
Restructuring and impairment
charges 106 261 - 411 778
Strategic development and
acquisition related costs - 9 - 810 819
(Gain) on sale of assets and
asset recovery (52) - - - (52)
Adjusted operating income
(loss) (1) $19,615 $37,767 $8,748 $(21,050) $45,080
======= ======= ====== ======== =======
(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
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 NINE MONTHS ENDED JULY 30, 2017 AND JULY 31, 2016
(In thousands)
(Unaudited)
Fiscal Nine Months Ended July 30, 2017
--------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP
basis $28,346 $91,406 $17,320 $(60,617) $76,455
Restructuring and impairment
charges 3,037 501 - 49 3,587
Strategic development and
acquisition related costs - - - 1,778 1,778
Loss on sale of assets 137 - - - 137
(Gain) on insurance recovery - (9,749) - - (9,749)
Unreimbursed business
interruption costs - 426 - - 426
Adjusted operating income
(loss) (1) $31,520 $82,584 $17,320 $(58,790) $72,634
======= ======= ======= ======== =======
Fiscal Nine Months Ended July 31, 2016
--------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP
basis $39,216 $71,436 $18,272 $(59,538) $69,386
Restructuring and impairment
charges 755 1,155 39 1,488 3,437
Strategic development and
acquisition related costs - 403 - 1,677 2,080
(Gain) on sale of assets and
asset recovery (1,704) - - - (1,704)
Adjusted operating income
(loss) (1) $38,267 $72,994 $18,311 $(56,373) $73,199
======= ======= ======= ======== =======
(1) The Company discloses a tabular
comparison of Adjusted operating
income (loss), which is a non-GAAP
measure because it is instrumental
in comparing the results from period
to period. Adjusted operating
income (loss) should not be
considered in isolation or as a
substitute for operating income
(loss) as reported on the face of
our statements of operations.
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,
AMORTIZATION AND OTHER NONCASH ITEMS (ADJUSTED EBITDA)
(In thousands)
(Unaudited)
4th Qtr 1st Qtr 2nd Qtr 3rd Qtr Trailing 12 Months
October 30, January 29, April 30, July 30, July 30,
2016 2017 2017 2017 2017
---- ---- ---- ---- ----
Net income $19,001 $2,039 $16,974 $18,221 $56,235
Add:
Depreciation and amortization 9,817 10,315 10,062 10,278 40,472
Consolidated interest
expense, net 7,548 6,881 7,341 7,353 29,123
Provision for income taxes 12,649 1,275 8,606 9,845 32,375
Restructuring and impairment
charges 815 2,264 315 1,009 4,403
Strategic development and
acquisition related costs 590 357 124 1,297 2,368
Share-based compensation 3,181 3,042 2,820 2,284 11,327
Loss on sale of assets and
asset recovery 62 - 137 - 199
(Gain) on insurance recovery - - (9,601) (148) (9,749)
Unreimbursed business
interruption costs - - 191 235 426
Adjusted EBITDA(1) $53,663 $26,173 $36,969 $50,374 $167,179
======= ======= ======= ======= ========
4th Qtr 1st Qtr 2nd Qtr 3rd Qtr Trailing 12 Months
November 1, January 31, May 1, July 31, July 31,
2015 2016 2016 2016 2016
---- ---- ---- ---- ----
Net income $18,407 $5,892 $2,420 $23,715 $50,434
Add:
Depreciation and amortization 13,354 10,747 10,765 10,595 45,461
Consolidated interest
expense, net 7,993 7,847 7,792 7,685 31,317
Provision for income taxes 10,029 2,453 1,209 11,627 25,318
Restructuring and impairment
charges 7,611 1,510 1,149 778 11,048
(Gain) from bargain purchase - (1,864) - - (1,864)
Strategic development and
acquisition related costs 1,143 681 579 819 3,222
(Gain) on legal settlements (3,765) - - - (3,765)
Share-based compensation 1,677 2,582 2,468 2,661 9,388
(Gain) on sale of assets and
asset recovery - (725) (927) (52) (1,704)
Adjusted EBITDA (1) $56,449 $29,123 $25,455 $57,828 $168,855
======= ======= ======= ======= ========
(1) The Company's Credit Agreement defines Adjusted
EBITDA. Adjusted EBITDA excludes non-cash
charges for goodwill and other asset impairments
and stock compensation as well as certain special
charges. As such, the historical information is
presented in accordance with the definition
above. Concurrent with the amendment and
restatement of the Term Loan facility, the
Company entered into an Asset-Based Lending
facility which has substantially the same
definition of Adjusted EBITDA except that the ABL
facility caps certain special charges. The
Company is disclosing Adjusted EBITDA, which is a
non-GAAP measure, because it is used by
management and provided to investors to provide
comparability of underlying operational results.
NCI Building Systems, Inc.
Reconciliation of Segment Sales to Third Party Segment Sales
(In thousands)
(Unaudited)
Fiscal Fiscal $ %
3rd Qtr 2017 3rd Qtr 2016 Inc/(Dec) Change
------------ ------------ ----------
Engineered Building Systems
Total Sales $191,910 34% $181,029 34% $10,881 6.0%
Less: Intersegment sales 9,746 5,558 4,188 75.4%
Third Party Sales $182,164 39% $175,471 38% $6,693 3.8%
Operating Income $14,948 8% $19,561 11% $(4,613) -23.6%
Metal Components
Total Sales $297,006 53% $287,307 53% $9,699 3.4%
Less: Intersegment sales 38,520 31,112 7,408 23.8%
Third Party Sales $258,486 55% $256,195 55% $2,291 0.9%
Operating Income $35,289 14% $37,497 15% $(2,208) -5.9%
Metal Coil Coating
Total Sales $70,559 13% $72,069 13% $(1,510) -2.1%
Less: Intersegment sales 41,824 41,382 442 1.1%
Third Party Sales $28,735 6% $30,687 7% $(1,952) -6.4%
Operating Income $6,562 23% $8,748 29% $(2,186) -25.0%
Consolidated
Total Sales $559,475 100% $540,405 100% $19,070 3.5%
Less: Intersegment 90,090 78,052 12,038 15.4%
Third Party Sales $469,385 100% $462,353 100% $7,032 1.5%
Operating Income $34,097 7% $43,535 9% $(9,438) -21.7%
Fiscal YTD Fiscal YTD $ %
3rd Qtr 2017 3rd Qtr 2016 Inc/(Dec) Change
------------ ------------ ----------
Engineered Building Systems
Total Sales $505,797 33% $468,028 33% $37,769 8.1%
Less: Intersegment sales 24,156 12,152 12,004 98.8%
Third Party Sales $481,641 38% $455,876 38% $25,765 5.7%
Operating Income $28,346 6% $39,216 9% $(10,870) -27.7%
Metal Components
Total Sales $813,100 54% $751,610 54% $61,490 8.2%
Less: Intersegment sales 96,079 80,853 15,226 18.8%
Third Party Sales $717,021 56% $670,757 56% $46,264 6.9%
Operating Income $91,406 13% $71,436 11% $19,970 28.0%
Metal Coil Coating
Total Sales $198,078 13% $178,452 13% $19,626 11.0%
Less: Intersegment sales 115,188 100,471 14,717 14.6%
Third Party Sales $82,890 6% $77,981 6% $4,909 6.3%
Operating Income $17,320 21% $18,272 23% $(952) -5.2%
Consolidated
Total Sales $1,516,975 100% $1,398,090 100% $118,885 8.5%
Less: Intersegment sales 235,423 193,476 41,947 21.7%
Third Party Sales $1,281,552 100% $1,204,614 100% $76,938 6.4%
Operating Income $76,455 6% $69,386 6% $7,069 10.2%
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SOURCE NCI Building Systems, Inc.
