NCI Building Systems Reports Second Quarter 2017 Results
HOUSTON, June 6, 2017 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE: NCS) ("NCI" or the "Company") today reported financial results for the second fiscal quarter ended April 30, 2017.
Second Quarter 2017 Financial and Operational Highlights:
-- Sales rose 13.0% to $420.5 million for the quarter compared to $372.2
million in the prior year's second quarter, driven by an improvement in
underlying tonnage volumes and increased pricing
-- Gross profit for the quarter was $100.8 million or 24.0% of revenues
compared to $89.4 million or 24.0% of revenues in the prior year's
second quarter
-- Net income increased to $17.0 million for the quarter, up from $2.4
million in last year's second quarter. Adjusted Net Income rose to $11.5
million this quarter, up from $2.9 million in the prior year's second
quarter
-- Net income per diluted common share for the quarter was $0.24, up from
$0.03 in the prior year's second quarter. Adjusted Net Income was $0.16
per diluted common share compared to $0.04 in the prior year's second
quarter
-- Adjusted EBITDA was $37.0 million or 8.8% of revenue for the quarter, up
from Adjusted EBITDA of $25.5 million or 6.8% of revenue in the prior
year's second quarter
-- Total consolidated backlog increased to $552.3 million, up 3.2%
year-over-year
Norman C. Chambers, Chairman and Chief Executive Officer, commented, "We are pleased with our solid second quarter performance, which culminated in a stronger first half of fiscal 2017 compared to the first half of last year. We achieved year-over-year growth in both our insulated metal panel and legacy Components products in a slowly recovering economy with higher steel input costs."
"We continue to be encouraged by key forward looking indicators that show increased momentum over the next twelve months. We expect the second half of fiscal 2017 to deliver another significant improvement in year-over-year performance. We are confident that market conditions and the positive impact of our ongoing manufacturing efficiencies and cost reduction initiatives should set the stage for another year of top-line and bottom-line growth in 2018," Mr. Chambers concluded.
Second Quarter 2017 Results
Second quarter 2017 sales increased to $420.5 million, up 13.0% from $372.2 million in last year's second quarter, due to an increase in tonnage volumes, most notably in the Buildings and Components segments, as well as continued commercial discipline in the pass-through of higher costs in a rising steel price environment, predominately in the Components segment.
Gross profit increased 12.8% to $100.8 million this quarter, up from $89.4 million in the second quarter of 2016 and gross profit margins were comparable during both periods. Margins in the current period were driven primarily by a combination of manufacturing efficiencies and improved segment and product mix, particularly in insulated metal panels (IMP) as the result of higher architectural panel sales.
Engineering, selling, general and administrative (ESG&A) expenses were $75.1 million this quarter compared to $74.6 million in the second quarter of 2016. As a percentage of revenues, ESG&A expenses decreased approximately 220 basis points to 17.9% in the 2017 second quarter compared to 20.1% in the prior year's second quarter due primarily to the Company's cost reduction initiatives.
Operating income increased to $32.5 million this quarter, up from $10.6 million in the prior year's second quarter. Part of this quarter's operating income increase was related to a gain of $9.6 million in insurance proceeds received as a result of property damages claims. Adjusted Operating Income, a non-GAAP measure which excludes certain identified items, increased to $23.6 million in the current quarter up from $11.4 million in the second quarter of 2016. Cash from the majority of these insurance proceeds will be received in the third quarter of 2017.
Net income applicable to common shares in this quarter was $16.9 million, or $0.24 per diluted common share, compared $2.4 million, or $0.03 per diluted common share in the prior year's second quarter. Net income was primarily impacted by the following special items: a $9.6 million gain on insurance proceeds partially offset by $0.3 million of impairment charges and restructuring charges primarily attributable to severance costs and $3.4 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 $11.5 million, or $0.16 per diluted common share, compared to $2.9 million, or $0.04 per diluted common share, in the second 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 $37.0 million this quarter, up 45.2% from $25.5 million in the prior year's second quarter.
Please see the reconciliation of Adjusted Operating Income, Adjusted Net Income and Adjusted EBITDA in the accompanying financial tables.
Cash and cash equivalents at the end of the second quarter was $49.7 million, down from $77.9 million at the end of the second quarter of fiscal 2016. Cash and cash equivalents increased sequentially from $15.8 million at the end of the first quarter of fiscal 2017 as a result of strong operating cash flow in the second quarter. On May 2, 2017, the Company amended and extended its Existing Term Loan Facility. Benefits to NCI included the extension of the final maturity to June 24, 2022 and a 25 basis point reduction in the interest rate margin on LIBOR borrowings from 3.25% to 3.00% (LIBOR, not less than 1.00%.) NCI's net debt leverage ratio (net debt/EBITDA) at the end of the second fiscal quarter was 2.0x compared to 2.3x at the end of the first quarter of 2017. In addition, the Company's $150.0 million ABL facility remained undrawn as of April 30, 2017.
Second Quarter 2017 Segment Performance
Third party sales in the Buildings segment increased 14.9% to $154.5 million in the second quarter, up from $134.5 million in the second quarter of 2016, primarily as a result of the increased sales volumes and the pass-through of higher costs in a rising steel price environment. Operating income decreased to $6.9 million this quarter compared to $7.2 million in the second quarter of 2016. Adjusted Operating Income increased to $7.2 million in the current quarter, compared to $6.4 million in the second quarter of fiscal 2016. The year-over-year decrease in the segment's operating margins relates primarily to increases in steel prices for the period compared to the second quarter of 2016 when steel prices were declining.
The Components segment generated $239.6 million in third-party sales during the quarter, an increase of 13.2% from $211.7 million in the second quarter of fiscal 2016, led by growth in the IMP product lines, as well as continued strength in the legacy metal component products. Operating income was $40.1 million for the quarter compared to $17.8 million in the second quarter of 2016. Adjusted Operating Income increased 66.8% to $30.8 million from $18.5 million in the second quarter fiscal 2016. The Components segment's profitability benefited from the improved mix of IMP sales moving towards higher margin IMP products and commercial discipline in the pass-through of higher steel input costs across the legacy single skin product lines.
Third party sales in the Coatings segment were $26.4 million, a 1.1% increase from $26.1 million in last year's second quarter. Operating income was $5.5 million for the quarter compared to $4.7 million in the second quarter of 2016. Operating margins in the Coatings group were consistent on a year-over-year basis.
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, 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% - 6.0% for low-rise new construction starts in fiscal 2017.
Internal bookings indicate a return to a more normalized seasonal pattern as compared to the prior year, exhibiting a modest year-over-year slowdown of NCI's primary markets at the end of the second quarter. Offices and banks, equipment storage, religious buildings and hangars have shown positive year-over-year growth. In NCI's geographic markets New England and the West North Central showed the strongest growth during the quarter.
Outlook and Guidance
NCI reported a first half of fiscal 2017 which was better than the first half of fiscal 2016 and the Company continues to expect fiscal 2017 to be a better year than fiscal 2016 in terms of revenues and Adjusted EBITDA, driven primarily by the Company's ability to leverage expected market growth, its ongoing cost savings initiatives and opportunities to expand its IMP product lines. The Company's two on-going 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. During fiscal 2017, these two initiatives are anticipated to generate an incremental $10.0 million in cost savings.
Similar to past years' trends, the Company expects the second half performance in fiscal 2017 to be stronger than the second half of fiscal 2016, with a more normalized seasonal pattern in which the fourth quarter is stronger than the third quarter, that contrasts what occurred in the third and fourth quarters of fiscal 2016. For the third quarter of fiscal 2017, NCI expects revenues to be in the range of $480 to $505 million and Adjusted EBITDA to be in the range of $48 - $58 million. For the full year fiscal 2017, the Company is revising its expected revenue range upwards from $1.75 to $1.85 billion to $1.80 - $1.86 billion and expects fiscal 2017 Adjusted EBITDA to be in the range of $180 to $200 million for the year.
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. second quarter 2017 conference call is scheduled for Wednesday, June 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 13661275# when prompted. The taped replay will be available two hours after the call through June 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, which 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. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise.
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Fiscal Three Months Ended Fiscal Six Months Ended
------------------------- -----------------------
April 30, May 1, April 30, May 1,
2017 2016 2017 2016
---- ---- ---- ----
Sales $420,464 $372,247 $812,167 $742,261
Cost of sales 319,488 283,799 627,240 564,822
Loss (gain) on sale of assets and asset recovery 137 (927) 137 (1,652)
--- ---- --- ------
Gross profit 100,839 89,375 184,790 179,091
24.0% 24.0% 22.8% 24.1%
Engineering, selling, general and administrative
expenses 75,124 74,648 144,164 144,498
Intangible asset amortization 2,405 2,405 4,810 4,821
Strategic development and acquisition related costs 124 579 481 1,260
Restructuring and impairment charges 315 1,149 2,578 2,659
Gain on insurance recovery (9,601) - (9,601) -
Income from operations 32,472 10,594 42,358 25,853
Interest income 138 52 144 74
Interest expense (7,479) (7,844) (14,365) (15,713)
Foreign exchange gain (loss) 127 576 50 (166)
Gain from bargain purchase - - - 1,864
Other income, net 322 251 708 62
--- --- --- ---
Income before income taxes 25,580 3,629 28,895 11,974
Provision for income taxes 8,606 1,209 9,882 3,662
----- ----- ----- -----
33.6% 33.3% 34.2% 30.6%
Net income $16,974 $2,420 19,013 $8,312
======= ====== ====== ======
Net income allocated to participating securities (115) (23) (131) (79)
Net income applicable to common shares $16,859 $2,397 $18,882 $8,233
======= ====== ======= ======
Income per common share:
Basic $0.24 $0.03 $0.27 $0.11
Diluted $0.24 $0.03 $0.27 $0.11
Weighted average number of common shares
outstanding:
Basic 70,988 72,352 70,933 72,806
Diluted 71,122 72,886 71,107 73,321
Increase in sales 13.0% 3.4% 9.4% 8.7%
Engineering, selling, general and administrative
expenses percentage
17.9% 20.1% 17.8% 19.5%
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, October 30,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $49,682 $65,403
Restricted cash 70 310
Accounts receivable, net 168,625 182,258
Inventories, net 195,441 186,824
Income taxes receivable - 982
Deferred income taxes 26,126 29,104
Investments in debt and
equity securities, at
market 6,469 5,748
Prepaid expenses and other 39,452 29,971
Assets held for sale 5,044 4,256
Total current assets 490,909 504,856
------- -------
Property, plant and equipment, net 234,831 242,212
Goodwill 154,291 154,271
Intangible assets, net 141,958 146,769
Other assets, net 1,824 2,092
Total assets $1,023,813 $1,050,200
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $1,373 $460
Accounts payable 121,177 142,913
Accrued compensation and
benefits 55,760 72,612
Accrued interest 6,156 7,165
Accrued income taxes 1,119 -
Other accrued expenses 102,580 103,384
Total current liabilities 288,165 326,534
------- -------
Long-term debt, net of
deferred financing costs
of $7,341 and $8,096 386,806 396,051
on January 29, 2017 and
October 30, 2016,
respectively
Deferred income taxes 24,701 24,804
Other long-term liabilities 21,267 21,494
Total long-term liabilities 432,774 442,349
------- -------
Common stock 712 715
Additional paid-in capital 598,670 603,120
Accumulated deficit (283,757) (302,706)
Accumulated other
comprehensive loss, net (10,611) (10,553)
Treasury stock, at cost (2,140) (9,259)
Total stockholders' equity 302,874 281,317
------- -------
Total liabilities and
stockholders' equity $1,023,813 $1,050,200
========== ==========
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fiscal Six Months Ended
-----------------------
April 30, May 1,
2017 2016
---- ----
Cash flows from operating
activities:
Net income $19,013 $8,312
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 20,378 21,512
Amortization of deferred
financing costs 954 954
Share-based compensation
expense 5,862 5,050
Gain on insurance recovery (9,601) -
Losses (gains) on assets, net 262 (3,516)
Provision for doubtful accounts 1,406 1,898
Provision for deferred income
taxes (113) 1,668
Excess tax (benefits)
shortfalls from share-based
compensation arrangements (1,515) 390
Changes in operating assets and
liabilities, net of effect of
acquisitions:
Accounts receivable 12,232 25,299
Inventories (8,617) 6,555
Income taxes receivable 982 (4,140)
Prepaid expenses and other (1,875) 3,699
Accounts payable (21,737) (24,633)
Accrued expenses (11,068) (22,976)
Other, net (189) (59)
---- ---
Net cash provided by operating
activities 6,374 20,013
----- ------
Cash flows from investing
activities:
Acquisitions, net of cash
acquired - (4,343)
Capital expenditures (11,556) (10,280)
Proceeds from sale of property,
plant and equipment 2,533 4,663
Proceeds from insurance 420 -
--- ---
Net cash used in investing
activities (8,603) (9,960)
------ ------
Cash flows from financing
activities:
Refund (deposit) of restricted
cash 240 (49)
Proceeds from stock options
exercised 1,196 1,401
Excess tax benefits
(shortfalls) from share-based
compensation arrangements 1,515 (390)
Proceeds from Amended ABL
facility 35,000 -
Payments on Amended ABL
facility (35,000) -
Payments on term loan (10,000) (20,000)
Payments on note payable (458) (531)
Purchases of treasury stock (5,922) (12,381)
------ -------
Net cash used in financing
activities (13,429) (31,950)
------- -------
Effect of exchange rate changes
on cash and cash equivalents (63) 151
Net decrease in cash and cash
equivalents (15,721) (21,746)
Cash and cash equivalents at
beginning of period 65,403 99,662
------ ------
Cash and cash equivalents at
end of period $49,682 $77,916
======= =======
NCI Building Systems, Inc
Business Segments
(In thousands)
(Unaudited)
Fiscal Three Months Ended Fiscal Three Months Ended $ %
April 30, 2017 May 1, 2016 Inc/(Dec) Change
-------------- ----------- --------- ------
% of % of
Total Total
Sales: Sales Sales
Engineered building systems $162,624 33 $138,023 32 $24,601 17.8%
Metal components 270,621 54 234,637 55 35,984 15.3%
Metal coil coating 63,317 13 55,178 13 8,139 14.8%
------ --- ------ --- ----- ----
Total sales 496,562 100 427,838 100 68,724 16.1%
Less: Intersegment sales 76,098 15 55,591 13 20,507 36.9%
------ ----
Total net sales $420,464 85 $372,247 87 $48,217 13.0%
======== === ======== === ======= ====
% of % of
Operating income (loss): Sales Sales
Engineered building systems $6,894 4 $7,193 5 $(299) -4.2%
Metal components 40,087 15 17,835 8 22,252 124.8%
Metal coil coating 5,514 9 4,704 9 810 17.2%
Corporate (20,023) - (19,138) - (885) -4.6%
Total operating income $32,472 8 $10,594 3 $21,878 206.5%
======= === ======= === ======= =====
% of % of
Adjusted operating income (loss) (1): Sales Sales
Engineered building systems $7,217 4 $6,415 5 $802 12.5%
Metal components 30,806 11 18,471 8 12,335 66.8%
Metal coil coating 5,514 9 4,743 9 771 16.3%
Corporate (19,899) - (18,234) - (1,665) -9.1%
Total adjusted operating income $23,638 6 $11,395 3 $12,243 107.4%
======= === ======= === ======= =====
Fiscal Six Months Ended Fiscal Six Months Ended $ %
April 30, 2017 May 1, 2016 Inc/(Dec) Change
-------------- ----------- --------- ------
% of % of
Total Total
Sales: Sales Sales
Engineered building systems $313,887 33 $286,998 33 $26,889 9.4%
Metal components 515,922 54 464,303 55 51,619 11.1%
Metal coil coating 127,519 13 106,383 12 21,136 19.9%
------- --- ------- --- ------ ----
Total sales 957,328 100 857,684 100 99,644 11.6%
Less: Intersegment sales 145,161 15 115,423 13 29,738 25.8%
------ ----
Total net sales $812,167 85 $742,261 87 $69,906 9.4%
======== === ======== === ======= ===
% of % of
Operating income (loss): Sales Sales
Engineered building systems $13,398 4 $19,655 7 $(6,257) -31.8%
Metal components 56,117 11 33,938 7 22,179 65.4%
Metal coil coating 10,758 8 9,525 9 1,233 12.9%
Corporate (37,915) - (37,265) - (650) -1.7%
----
Total operating income $42,358 5 $25,853 3 $16,505 63.8%
======= === ======= === ======= ====
% of % of
Adjusted operating income (loss) (1): Sales Sales
Engineered building systems $15,630 5 $18,652 6 $(3,022) -16.2%
Metal components 47,141 9 35,227 8 11,914 33.8%
Metal coil coating 10,758 8 9,564 9 1,194 12.5%
Corporate (37,385) - (35,323) - (2,062) -5.8%
Total adjusted operating income $36,144 4 $28,120 4 $8,024 28.5%
======= === ======= === ====== ====
(1) The Company discloses a
tabular comparison of Adjusted
operating income (loss), which
is a non-GAAP measure, because
it is instrumental in comparing
the results from period to
period. Adjusted operating
income (loss) should not be
considered in isolation or as a
substitute for operating income
(loss) as reported on the face
of our statements of
operations. See the
reconciliation of Adjusted
operating income (loss) to
operating income (loss) on the
following page.
NCI BUILDING SYSTEMS, INC.
BUSINESS SEGMENTS
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) EXCLUDING SPECIAL CHARGES
FISCAL THREE MONTHS ENDED APRIL 30, 2017 AND MAY 1, 2016
(In thousands)
(Unaudited)
Fiscal Three Months Ended April 30, 2017
----------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP basis $6,894 $40,087 $5,514 $(20,023) $32,472
Restructuring and impairment charges 186 129 - - 315
Strategic development and acquisition related costs - - - 124 124
Loss on sale of assets 137 - - - 137
(Gain) on insurance recovery - (9,601) - - (9,601)
Unreimbursed business interruption costs - 191 - - 191
Adjusted operating income (loss) (1) $7,217 $30,806 $5,514 $(19,899) $23,638
====== ======= ====== ======== =======
Fiscal Three Months Ended May 1, 2016
-------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP basis $7,193 $17,835 $4,704 $(19,138) $10,594
Restructuring and impairment charges 149 608 39 353 1,149
Strategic development and acquisition related cost - 28 - 551 579
(Gain) on sale of assets and asset recovery (927) - - - (927)
Adjusted operating income (loss) (1) $6,415 $18,471 $4,743 $(18,234) $11,395
====== ======= ====== ======== =======
(1) The Company discloses a tabular
comparison of Adjusted operating
income (loss), which is a non-GAAP
measure, because it is instrumental in
comparing the results from period to
period. Adjusted operating income
(loss) should not be considered in
isolation or as a substitute for
operating income (loss) as reported on
the face of our statements of
operations.
NCI BUILDING SYSTEMS, INC.
BUSINESS SEGMENTS
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) EXCLUDING SPECIAL CHARGES
FISCAL SIX MONTHS ENDED APRIL 30, 2017 AND MAY 1, 2016
(In thousands)
(Unaudited)
Fiscal Six Months Ended April 30, 2017
--------------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP basis $13,398 $56,117 $10,758 $(37,915) $42,358
Restructuring and impairment charges 2,095 434 - 49 2,578
Strategic development and acquisition related costs - - - 481 481
Loss on sale of assets 137 - - - 137
(Gain) on insurance recovery - (9,601) - - (9,601)
Unreimbursed business interruption costs - 191 - - 191
Adjusted operating income (loss) (1) $15,630 $47,141 $10,758 $(37,385) $36,144
======= ======= ======= ======== =======
Fiscal Six Months Ended May 1, 2016
-----------------------------------
Engineered Metal Metal Coil Corporate Consolidated
Building Components Coating
Systems
-------
Operating income (loss), GAAP basis $19,655 $33,938 $9,525 $(37,265) $25,853
Restructuring and impairment charges 649 889 39 1,082 2,659
Strategic development and acquisition related costs - 400 - 860 1,260
(Gain) on sale of assets and asset recovery (1,652) - - - (1,652)
Adjusted operating income (loss) (1) $18,652 $35,227 $9,564 $(35,323) $28,120
======= ======= ====== ======== =======
(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)
3rd Qtr 4th Qtr 1st Qtr 2nd Qtr Trailing 12 Months
July 31, October 30, January 29, April 30, April 30,
2016 2016 2017 2017 2017
---- ---- ---- ---- ----
Net income $23,715 $19,001 $2,039 $16,974 $61,729
Add:
Depreciation and amortization 10,595 9,817 10,315 10,062 40,789
Consolidated interest expense,
net 7,685 7,548 6,881 7,341 29,455
Provision for income taxes 11,627 12,649 1,275 8,606 34,157
Restructuring and impairment
charges 778 815 2,264 315 4,172
Strategic development and
acquisition related costs 819 590 357 124 1,890
Share-based compensation 2,661 3,181 3,042 2,820 11,704
(Gain) loss on sale of assets
and asset recovery (52) 62 - 137 147
(Gain) on insurance recovery - - - (9,601) (9,601)
Unreimbursed business
interruption costs - - - 191 191
--- --- --- --- ---
Adjusted EBITDA(1) $57,828 $53,663 $26,173 $36,969 $174,633
======= ======= ======= ======= ========
3rd Qtr 4th Qtr 1st Qtr 2nd Qtr Trailing 12 Months
August 2, November 1, January 31, May 1, May 1,
2015 2015 2016 2016 2016
---- ---- ---- ---- ----
Net income $7,220 $18,407 $5,892 $2,420 $33,939
Add:
Depreciation and amortization 14,541 13,354 10,747 10,765 49,407
Consolidated interest expense,
net 8,135 7,993 7,847 7,792 31,767
Provision for income taxes 3,520 10,029 2,453 1,209 17,211
Restructuring and impairment
charges 504 7,611 1,510 1,149 10,774
(Gain) from bargain purchase - - (1,864) - (1,864)
Strategic development and
acquisition related costs 701 1,143 681 579 3,104
(Gain) on legal settlements - (3,765) - - (3,765)
Fair value adjustment of
acquired inventory 1,000 - - - 1,000
Share-based compensation 2,568 1,677 2,582 2,468 9,295
(Gain) on sale of assets and
asset recovery - - (725) (927) (1,652)
--- --- ---- ---- ------
Adjusted EBITDA (1) $38,189 $56,449 $29,123 $25,455 $149,216
======= ======= ======= ======= ========
(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.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON
(Unaudited)
Fiscal Three Months Ended Fiscal Six Months Ended
------------------------- -----------------------
April 30, May 1, April 30, May 1,
2017 2016 2017 2016
---- ---- ---- ----
Net income per diluted common share, GAAP basis $0.24 $0.03 $0.27 $0.11
Restructuring and impairment charges 0.00 0.02 0.04 0.04
Strategic development and acquisition related costs 0.00 0.01 0.01 0.02
(Gain) on insurance recovery (0.13) - (0.14) -
Unreimbursed business interruption costs 0.00 - 0.00 -
Other losses (gains), net 0.00 (0.01) 0.00 (0.05)
Tax effect of applicable non-GAAP adjustments (1) 0.05 (0.01) 0.03 (0.01)
Adjusted net income per diluted common share (2) $0.16 $0.04 $0.21 $0.11
===== ===== ===== =====
Fiscal Three Months Ended Fiscal Six Months Ended
------------------------- -----------------------
April 30, May 1, April 30, May 1,
2017 2016 2017 2016
---- ---- ---- ----
Net income applicable to common shares, GAAP basis $16,859 $2,397 $18,882 $8,233
Restructuring and impairment charges 315 1,149 2,578 2,659
Strategic development and acquisition related costs 124 579 481 1,260
(Gain) on insurance recovery (9,601) - (9,601) -
Unreimbursed business interruption costs 191 - 191 -
Other losses (gains), net 137 (927) 137 (3,516)
Tax effect of applicable non-GAAP adjustments (1) 3,445 (312) 2,423 (884)
Adjusted net income applicable to common shares (2) $11,470 $2,886 $15,091 $7,752
======= ====== ======= ======
(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.
Reconciliation of Segment Sales to Third Party Segment Sales
(In thousands)
(Unaudited)
Fiscal Fiscal $ %
2nd Qtr 2017 2nd Qtr 2016 Inc/(Dec) Change
------------ ------------ ----------
Engineered Building Systems
Total Sales $162,624 33% $138,023 32% $24,601 17.8%
Less: Intersegment sales 8,168 3,569 4,599 128.9%
Third Party Sales $154,456 37% $134,454 36% $20,002 14.9%
Operating Income $6,894 4% $7,193 5% $(299) -4.2%
Metal Components
Total Sales $270,621 54% $234,637 55% $35,984 15.3%
Less: Intersegment sales 31,045 22,976 8,069 35.1%
Third Party Sales $239,576 57% $211,661 57% $27,915 13.2%
Operating Income $40,087 17% $17,835 8% $22,252 124.8%
Metal Coil Coating
Total Sales $63,317 13% $55,178 13% $8,139 14.8%
Less: Intersegment sales 36,885 29,046 7,839 27.0%
Third Party Sales $26,432 6% $26,132 7% $300 1.1%
Operating Income $5,514 21% $4,704 18% $810 17.2%
Consolidated
Total Sales $496,562 100% $427,838 100% $68,724 16.1%
Less: Intersegment 76,098 55,591 20,507 36.9%
Third Party Sales $420,464 100% $372,247 100% $48,217 13.0%
Operating Income $32,472 8% $10,594 3% $21,878 206.5%
Fiscal YTD Fiscal YTD $ %
2nd Qtr 2017 2nd Qtr 2016 Inc/(Dec) Change
------------ ------------ ----------
Engineered Building Systems
Total Sales $313,887 33% $286,998 33% $26,889 9.4%
Less: Intersegment sales 14,410 6,593 7,817 118.6%
Third Party Sales $299,477 37% $280,405 38% $19,072 6.8%
Operating Income $13,398 4% $19,655 7% $(6,257) -31.8%
Metal Components
Total Sales $515,922 54% $464,303 54% $51,619 11.1%
Less: Intersegment sales 57,387 49,741 7,646 15.4%
Third Party Sales $458,535 56% $414,562 56% $43,973 10.6%
Operating Income $56,117 12% $33,938 8% $22,179 65.4%
Metal Coil Coating
Total Sales $127,519 13% $106,383 13% $21,136 19.9%
Less: Intersegment sales 73,364 59,089 14,275 24.2%
Third Party Sales $54,155 7% $47,294 6% $6,861 14.5%
Operating Income $10,758 20% $9,525 20% $1,233 12.9%
Consolidated
Total Sales $957,328 100% $857,684 100% $99,644 11.6%
Less: Intersegment sales 145,161 115,423 29,738 25.8%
Third Party Sales $812,167 100% $742,261 100% $69,906 9.4%
Operating Income $42,358 5% $25,853 3% $16,505 63.8%
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nci-building-systems-reports-second-quarter-2017-results-300469800.html
SOURCE NCI Building Systems, Inc.
