NCI Building Systems Reports Fourth Quarter and 2018 Fiscal Year End Results
CARY, N.C., Dec. 19, 2018 /PRNewswire/ -- NCI Building Systems, Inc. (NYSE: NCS) ("NCI" or the "Company") today reported financial results for the fourth fiscal quarter and fiscal year ended October 28, 2018.
Fourth Quarter Fiscal 2018 Financial and Operational Highlights:
-- Sales rose 17.4% to $573.6 million for the quarter, compared to $488.7
million in the prior year's fourth quarter
-- Gross profit was $133.3 million or 23.2% of sales for the quarter,
compared to $116.3 million or 23.8% of sales, in the prior year's fourth
quarter
-- Net income was $27.6 million for the quarter, compared to $17.5 million
in the prior year's fourth quarter. Adjusted Net Income was $36.4
million this quarter, compared to $22.3 million in the prior year's
fourth quarter
-- Net income per diluted common share for the quarter was $0.41, compared
to $0.25 in the prior year's fourth quarter. Adjusted Net Income was
$0.55 per diluted common share, compared to $0.32 in the prior year's
fourth quarter
-- Adjusted EBITDA increased 22.0% to $65.8 million, or 11.5% of sales, for
the quarter, compared to Adjusted EBITDA of $53.9 million, or 11.0% of
sales, in the prior year's fourth quarter
-- Total consolidated backlog increased to $557.0 million as of October 28,
2018, up 2.1% year-over-year
Commenting on the quarter, Donald R. Riley, Chief Executive Officer of the NCI Business Unit, said, "We are pleased with our fourth quarter performance that demonstrated our successful focus on commercial discipline and operational excellence across all of our segments. We remain committed to our key initiatives in advanced manufacturing, continuous improvement and product adjacency, which remain on track and, once implemented, are expected to drive further benefits to the organization in 2019 and beyond."
"During the quarter, NCI continued to demonstrate improved operating performance serving as a testament to the hard work that Don and the NCI employees have done to deliver on their key initiatives," said the Company's Chairman and Chief Executive Officer James S. Metcalf. "Following the merger of Ply Gem into NCI, we are excited about the expansive set of building solutions we are able to offer our residential, commercial and repair & remodel customers and the broader opportunities ahead of the new organization. As we enter 2019, we are focused on the execution of the combined Company's strategy which includes cost initiatives and de-levering the capital structure, while investing in growth initiatives."
Fourth Quarter Fiscal 2018 Results
Sales in the fourth quarter of fiscal 2018 increased to $573.6 million, up 17.4%, from $488.7 million in last year's fourth fiscal quarter, primarily due to continued commercial discipline in the pass-through of higher material costs across all the segments, combined with volume growth in both the Engineered Building Systems and Insulated Metal Panels ("IMP") segments.
Gross profit increased 14.6% to $133.3 million in the quarter, compared to $116.3 million in the fourth quarter of fiscal 2017. Gross profit margins were 23.2% for the fourth quarter of fiscal 2018, compared to 23.8% in the fourth quarter of fiscal 2017. Gross margins in the fourth quarter were lower than the fourth quarter of the prior fiscal year primarily as a result of lower manufacturing utilization due to weather, predominately in the Metal Components segment and product mix in the IMP segment.
Engineering, selling, general and administrative ("ESG&A") expenses were $78.9 million for the fourth quarter, compared to $72.7 million in the prior year's fourth fiscal quarter. The year-over-year increase in ESG&A expenses is primarily in support of increased sales volumes and wage inflation during the period. As a percentage of sales, ESG&A expenses were down 110 basis point to 13.8% in the fiscal 2018 fourth quarter, compared to 14.9% in the prior year's fourth fiscal quarter as a result of the Company's ongoing cost reduction initiatives.
Operating income for the quarter was $39.6 million, compared to $33.3 million in the fourth quarter of fiscal 2017. Adjusted Operating Income, a non-GAAP financial measure which excludes certain special items, increased 26.0% to $52.0 million in the fourth quarter of fiscal 2018, compared to $41.3 million in the same period of fiscal 2017.
Net income applicable to common shares in the fourth quarter was $27.4 million, or $0.41 per diluted common share, compared to net income of $17.4 million, or $0.25 per diluted common share in the prior fiscal year's fourth quarter. Net income was impacted by the following special items: an $11.7 million charge related to strategic development and acquisition related costs and $0.8 million of restructuring and impairment charges, partially offset by $3.4 million associated tax effect of these items. Excluding the impact of these special items, Adjusted Net Income, a non-GAAP measure, was $36.4 million, or $0.55 per diluted common share in the fourth quarter of fiscal 2018, compared to $22.3 million, or $0.32 per diluted common share, in the prior fiscal year's fourth quarter.
Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's credit agreement as earnings before interest, taxes, depreciation and amortization, and certain other cash and non-cash items, was $65.8 million this quarter, compared to $53.9 million in the prior fiscal year's fourth 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 fourth quarter of fiscal 2018 were $54.3 million, compared to $65.7 million at the end of the fourth quarter of fiscal 2017. Cash and cash equivalents increased sequentially by $11.0 million from $43.3 million at the end of the third quarter of fiscal 2018 due to seasonal working capital management and profitability. NCI's net debt leverage ratio (net debt/Adjusted EBITDA) at the end of the fourth quarter of fiscal 2018 was 1.8x. As of October 28, 2018, the Company's $150.0 million asset-based lending (ABL) facility remained undrawn. See "Recent Developments" for a discussion of the Company's debt facilities following the Merger (as defined below).
Fourth Quarter Fiscal 2018 Segment Performance
Sales in the Engineered Building Systems segment were $244.0 million in the fourth quarter of fiscal 2018, compared to $188.2 million in the prior year period, increasing primarily as a result of commercial discipline passing through higher input costs and increased tonnage volumes. Operating income increased 90.6% to $24.9 million this quarter, compared to $13.0 million in the prior fiscal year's fourth quarter. Adjusted Operating Income, a non-GAAP measure, increased 83.8% to $25.3 million this quarter, compared to $13.7 million in the fourth quarter of fiscal 2017. Operating margins increased as a result of reduced ESG&A costs.
The Metal Components segment generated $187.6 million in sales during the quarter, an increase of 3.5% from $181.3 million in the prior fiscal year's fourth quarter, led by the disciplined pass-through of increasing input costs. Operating income was $19.7 million in the fourth quarter of fiscal 2018, compared to $23.1 million in the same period last year. Adjusted Operating Income was $19.7 million in the quarter, compared to $23.2 million in the prior fiscal year's fourth quarter. The Metal Components segment's operating margins decreased as a result of lower operating leverage on external volumes due to the extreme wet weather in the significant areas of the Southeast and Texas.
The IMP segment generated $146.5 million in sales during the quarter, an increase of 18.6% from $123.5 million in the prior fiscal year's fourth quarter, as a result of higher external volumes and commercial discipline, offset by the impact of the segment's product mix. Operating income was $21.0 million for the quarter, compared to $14.9 million in the fourth quarter of fiscal 2017. Adjusted Operating Income was $21.4 million during the fourth quarter of fiscal 2018, compared to $15.7 million in the same period last fiscal year. The IMP segment's operating margins increased from the prior year primarily as a result of better leverage on higher volumes.
Sales in the Metal Coil Coating segment were $117.3 million during the fourth quarter of fiscal 2018, an increase of 19.0% from $98.6 million in the prior year's fourth quarter, as a result of the pass-through of rising material costs and higher internal revenues. Operating income was $7.0 million in the fourth fiscal quarter of 2018, compared to $1.4 million in the same period last year. Adjusted Operating Income was $7.0 million in the fourth quarter of fiscal 2018, compared to $7.4 million in the prior fiscal year's fourth quarter. Adjusted operating margins in the Metal Coil Coating segment decreased as a result of lower external volumes and product mix.
Recent Developments
As previously announced, at a Special Meeting of shareholders of NCI held on November 15, 2018, NCI's shareholders approved, in relevant part, (i) the Agreement and Plan of Merger (the "Merger Agreement") among NCI, Ply Gem Parent, LLC, a Delaware limited liability company ("Ply Gem"), and for certain limited purposes set forth in the Merger Agreement, Clayton, Dubilier & Rice, LLC, a Delaware limited liability company ("CD&R"), pursuant to which, at the closing of the merger, Ply Gem, a leading manufacturer of exterior building products for residential construction, was merged with and into the Company, with the Company continuing its existence as a corporation organized under the laws of the State of Delaware (the "Merger") and (ii) the issuance in the Merger of 58,709,067 shares of NCI common stock, par value $0.01 per share (the "NCI Common Stock") in the aggregate, on a pro rata basis, to the holders of all of the equity interests in Ply Gem. The Merger was consummated on November 16, 2018.
NCI shareholders retained 53% ownership of the issued and outstanding NCI Common Stock, with Ply Gem shareholders now owning 47%. Investment funds associated with CD&R now own approximately 49% of the issued and outstanding NCI Common Stock.
On November 16, 2018, in connection with the consummation of the Merger, the Company assumed (i) the obligations of the company formerly known as Ply Gem Midco, Inc. ("Ply Gem Midco"), a subsidiary of Ply Gem immediately prior to the consummation of the Merger, as borrower under its Cash Flow Credit Agreement, (ii) the obligations of Ply Gem Midco as parent borrower under its ABL Credit Agreement and (iii) the obligations of Ply Gem Midco as issuer under its Indenture governing the 8.00% Senior Notes due 2026.
On November 16, 2018, in connection with the incurrence by Ply Gem Midco of incremental term loans and the obtaining by Ply Gem Midco of incremental ABL commitments, following consummation of the Merger, the Company (a) terminated all outstanding commitments and repaid all outstanding amounts under the Term Loan Credit Agreement, dated as of February 8, 2018 (the "Pre-Merger Term Loan Credit Agreement"), by and among the Company, as borrower, the several banks and other financial institutions from time to time party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and (b) terminated all outstanding commitments and repaid all outstanding amounts under the ABL Credit Agreement, dated as of February 8, 2018 (the "Pre-Merger ABL Credit Agreement"), by and among NCI Group, Inc. and Robertson-Ceco II Corporation, as borrowers, the Company, as a guarantor, the other borrowers from time to time party thereto, the several banks and other financial institutions from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent. Outstanding letters of credit under the Pre-merger ABL Credit Agreement were cash collateralized.
Financial Reporting
On November 16, 2018, NCI's board of directors approved a change to the Company's fiscal year from a 52/53 week year with the Company's fiscal year end on the Sunday closest to October 31 to a fiscal year of the 12 month period of January 1 to December 31 of each calendar year, to commence with the fiscal year ending December 31, 2019. Consolidated results for the transition period from October 29, 2018 through December 31, 2018, which will include the results of Ply Gem beginning November 16, 2018, will be reported in February 2019.
Ply Gem Third Quarter 2018 Financial Results
On December 19, 2018, the Company filed an amendment to its current report on Form 8-K, which included, in relevant part, the unaudited financial statements for Ply Gem Midco and its subsidiaries for the quarterly period ended September 29, 2018. On a consolidated basis, Ply Gem's net sales increased $119.7 million or 21.2% during the three months ended September 29, 2018 compared to the three months ended September 30, 2017. The increase in net sales was largely due to the merger of Atrium Corporation ("Atrium") with Ply Gem Holdings Inc. on April 12, 2018 (the "Ply-Gem-Atrium Merger"), which increased net sales by $105.0 million for the third quarter of 2018. Ply Gem's gross profit increased $36.1 million or 27.3% during the three months ended September 29, 2018 relative to the three months ended September 30, 2017. The increase in gross profit was also largely due to the Ply-Gem-Atrium Merger, which increased gross profit by $30.5 million for the third quarter of 2018.
Adjusted EBITDA for the three months ended September 29, 2018 was $101.1 million, an increase of $20.3 million from the three months ended September 30, 2017. The increase in Adjusted EBITDA was largely driven by the inclusion of Atrium in the 2018 period. Please see the reconciliation of Ply Gem's Adjusted EBITDA at the end of this news release.
Conference Call Information
The NCI Building Systems, Inc. fourth quarter fiscal 2018 conference call is scheduled for Wednesday, December 19, 2018, at 10:00 a.m. ET (9:00 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 13685508# when prompted. The taped replay will be available two hours after the call through January 2, 2019. 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 and Ply Gem Holdings, Inc.
The combination of NCI and Ply Gem, headquartered in Cary, NC, establishes a leading exterior building products manufacturer with a broad range of products to residential and commercial customers for both new construction and repair & remodel. With a portfolio of key products which includes windows, doors, siding, metal wall and roof systems, engineered commercial buildings, insulated metal panels, stone and other adjacent products, the Company has more than 20,000 employees across 80 manufacturing, distribution and office locations throughout North America. For more information, visit www.ncibuildingsystems.com or www.plygem.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 performance expectations. Among the factors that could cause actual results to differ materially include, but are not limited to, risks and uncertainties relating to industry cyclicality and seasonality and adverse weather conditions; challenging economic conditions affecting the nonresidential construction industry; volatility in the United States ("U.S.") economy and abroad, generally, and in the credit markets; changes in laws or regulations; the effects of certain external domestic or international factors that we may not be able to control, including war, civil conflict, terrorism, natural disasters and public health issues; our ability to obtain financing on acceptable terms; recognition of goodwill or asset impairment charges; commodity price volatility and/or limited availability of raw materials, including steel; retention and replacement of key personnel; enforcement and obsolescence of our intellectual property rights; costs and liabilities related to compliance with environmental laws and environmental clean-ups; competitive activity and pricing pressure in our industry; volatility of the Company's stock price; our ability to make strategic acquisitions accretive to earnings; our ability to carry out our restructuring plans and to fully realize the expected cost savings; volatility in energy prices; the adoption of climate change legislation; breaches of our information system security measures; damage to our major information management systems; necessary maintenance or replacements to our enterprise resource planning technologies; potential personal injury, property damage or product liability claims or other types of litigation; compliance with certain laws related to our international business operations; the effect of tariffs on steel imports; the cost and difficulty associated with integrating and combining the businesses of NCI and Ply Gem; potential write-downs or write-offs, restructuring and impairment or other charges required in connection with the Merger; substantial governance and other rights held by our sponsor investors; the effect on our common stock price caused by transactions engaged in by our sponsor investors, our directors or executives; our substantial indebtedness and our ability to incur substantially more indebtedness; limitations that our debt agreements place on our ability to engage in certain business and financial transactions; the effect of increased interest rates on our ability to service our debt. See also the "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2018, 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 Year Ended
October 28,
October 29,
October 28,
October 29,
2018 2017 2018 2017
Sales $573,634 $488,726 $2,000,577 $1,770,278
Cost of sales 440,353 372,421 1,537,895 1,354,214
Gross profit 133,281 116,305 462,682 416,064
23.2% 23.8% 23.1% 23.5%
Engineering, selling,
general and
administrative
expenses 78,875 72,671 307,106 293,145
Intangible asset
amortization 2,411 2,405 9,648 9,620
Goodwill Impairment - 6,000 6,000
Restructuring and
impairment charges,
net 769 1,710 1,912 5,297
Strategic development
and acquisition
related costs 11,661 193 17,164 1,971
Loss on disposition of
business - 5,673
Gain on insurance
recovery - (4,741) (9,749)
Income from operations 39,565 33,326 125,920 109,780
Interest income 22 74 140 238
Interest expense (4,895) (7,161) (21,808) (28,899)
Foreign exchange
(loss) gain (152) (488) (244) 547
Loss on extinguishment
of debt - (21,875)
Other income, net (110) 427 962 1,472
Income before income
taxes 34,430 26,178 83,095 83,138
Provision for income
taxes 6,875 8,688 19,989 28,414
20.0% 33.2% 24.1% 34.2%
Net income 27,555 17,490 63,106 54,724
Net income allocated
to participating
securities (138) (78) (412) (325)
Net income applicable
to common shares $27,417 $17,412 $62,694 $54,399
===
Check
Income per common share:
Basic $0.41 $0.25 $0.95 $0.77
Diluted $0.41 $0.25 $0.94 $0.77
Weighted average number of common shares outstanding:
Basic 66,262 69,629 66,260 70,629
Diluted 66,326 69,741 66,362 70,778
Increase in sales 17.4% 1.8% 13.0% 5.1%
Engineering, selling,
general and
administrative
expenses percentage 13.8% 14.9% 15.4% 16.6%
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 28, October 29,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $54,272 $65,658
Restricted cash 245 136
Accounts receivable, net 233,297 199,897
Inventories, net 254,531 198,296
Income taxes receivable 1,012 3,617
Investments in debt and equity securities, at
market 5,285 6,481
Prepaid expenses and other 34,821 31,359
Assets held for sale 7,272 5,582
Total current assets 590,735 511,026
Property, plant and equipment, net 236,240 226,995
Goodwill 148,291 148,291
Intangible assets, net 127,529 137,148
Deferred income taxes 982 2,544
Other assets, net 6,598 5,108
Total assets $1,110,375 $1,031,112
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $4,150
$ -
Note payable 497 440
Accounts payable 170,663 147,772
Accrued compensation and benefits 65,136 59,189
Accrued interest 1,684 6,414
Accrued income taxes 11,685
Other accrued expenses 81,884 76,897
Total current liabilities 335,699 290,712
Long-term debt, net of deferred financing
costs of $5,699 and $6,857 403,076 387,290
Deferred income taxes 2,250 4,297
Other long-term liabilities 39,085 43,566
Total long-term liabilities 444,411 435,153
Common stock 663 687
Additional paid-in capital 523,788 562,277
Accumulated deficit (186,291) (248,046)
Accumulated other comprehensive loss, net (6,708) (7,531)
Treasury stock, at cost (1,187) (2,140)
Total stockholders' equity 330,265 305,247
Total liabilities and
stockholders' equity $1,110,375 $1,031,112
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fiscal Year Ended
October 28, October 29,
2018 2017
Cash flows from operating activities:
Net income $63,106 $54,724
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and
amortization 42,325 41,318
Amortization of deferred
financing costs 1,501 1,819
Loss on extinguishment
of debt 21,875 -
Share-based
compensation expense 11,638 10,230
Loss on disposition of
business, net 5,092 -
(Gains) losses on
assets, net (502) 1,371
Goodwill impairment - 6,000
Gain on insurance
recovery (4,741) (9,749)
Provision for doubtful
accounts (491) 1,948
(Benefit) provision for
deferred income taxes (889) 866
Changes in operating assets and liabilities, net of effect
of acquisitions and dispositions:
Accounts receivable (35,397) (19,582)
Inventories (58,534) (11,473)
Income taxes 2,605 (2,637)
Prepaid expenses and
other (5,479) (2,271)
Accounts payable 24,465 4,858
Accrued expenses 16,284 (12,320)
Other, net (395) (1,228)
Net cash provided by
operating activities 82,463 63,874
Cash flows from investing activities:
Capital expenditures (47,827) (22,074)
Proceeds from sale of
property, plant and
equipment 6,338 3,197
Business disposition,
net (1,426) -
Proceeds from insurance 4,741 8,593
Net cash used in
investing activities (38,174) (10,284)
Cash flows from financing activities:
(Deposit) refund of
restricted cash (109) 173
Proceeds from stock
options exercised 1,279 1,651
Proceeds from ABL
facility 100,000 35,000
Payments on ABL facility (100,000) (35,000)
Proceeds from term loan 415,000 -
Payments on term loan (146,221) (10,180)
Payments on senior notes (265,470) -
Payments on note payable (1,742) (1,570)
Payments of financing
costs (6,546) -
Payments related to tax
withholding for share-
based compensation (5,068) (2,389)
Purchases of treasury
stock (46,705) (41,214)
Net cash used in
financing activities (55,582) (53,529)
Effect of exchange rate
changes on cash and
cash equivalents (93) 194
Net (decrease) increase
in cash and cash
equivalents (11,386) 255
Cash and cash
equivalents at
beginning of period 65,658 65,403
Cash and cash
equivalents at end of
period $54,272 $65,658
===
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON
(In thousands, except per share data)
(Unaudited)
Fiscal Three Months Ended Fiscal Year Ended
October 28,
October 29, October 28,
October 29,
2018 2017 2018 2017
Net income per diluted common share,
GAAP basis $0.41 $0.25 $0.94 $0.77
Loss on extinguishment of debt - 0.33
Loss on disposition of business - 0.08
Goodwill impairment - 0.09 0.08
Restructuring and impairment charges,
net 0.01 0.02 0.03 0.07
Strategic development and acquisition
related costs 0.18 0.00 0.26 0.03
Acceleration of CEO retirement benefits - 0.07
Gain on insurance recovery - (0.07) (0.14)
Other, net - 0.00 0.00 0.01
Tax effect of applicable non-GAAP
adjustments (1) (0.05) (0.04) (0.19) (0.02)
Adjusted net income per diluted common
share (2) $0.55 $0.32 $1.45 $0.80
===
Fiscal Three Months Ended Fiscal Year Ended
October 28,
October 29, October 28,
October 29,
2018 2017 2018 2017
Net income applicable to common shares,
GAAP basis $27,417 $17,412 $62,694 $54,399
Loss on extinguishment of debt - 21,875
Loss on disposition of business - 5,673
Goodwill impairment - 6,000 6,000
Restructuring and impairment charges,
net 769 1,710 1,912 5,297
Strategic development and acquisition
related costs 11,661 193 17,164 1,971
Acceleration of CEO retirement benefits - 4,600
Gain on insurance recovery - (4,741) (9,749)
Other, net - 28 (323) 591
Tax effect of applicable non-GAAP
adjustments (1) (3,418) (3,093) (12,783) (1,603)
Adjusted net income applicable to common
shares (2) $36,429 $22,250 $96,071 $56,906
===
(1) The Company calculated the
tax effect of non-GAAP
adjustments by applying the
combined federal and state
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 Year Ended
October 28,
October 29,
October 28,
October 29,
2018 2017 2018 2017
% of
% of
%
% of
% of
% Change
Total Total Change Total Total
Sales Sales Sales Sales
Total Sales
Engineered Building Systems $243,997 35 $188,183 32 29.7% $798,299 33 $693,980 32 15.0%
Metal Components 187,635 27 181,288 30 3.5% 689,344 29 636,661 30 8.3%
Insulated Metal Panels 146,466 21 123,542 21 18.6% 504,413 21 441,404 21 14.3%
Metal Coil Coating 117,323 17 98,550 17 19.0% 417,296 17 368,880 17 13.1%
Total sales 695,421 100 591,563 100 17.6% 2,409,352 100 2,140,925 100 12.5%
Less: Intersegment sales (121,787) 18 (102,837) 17 18.4% (408,775) 17 (370,647) 17 10.3%
Total net sales $573,634 82 $488,726 83 17.4% $2,000,577 83 $1,770,278 83 13.0%
External Sales
% of
% of
% of
% of
Sales Sales Sales Sales
Engineered Building Systems $231,315 40 $178,222 36 29.8% $755,353 38 $659,863 37 14.5%
Metal Components 171,759 30 155,183 32 10.7% 612,645 31 544,669 31 12.5%
Insulated Metal Panels 120,852 21 105,064 22 15.0% 424,762 21 372,304 21 14.1%
Metal Coil Coating 49,708 9 50,257 10 -1.1% 207,817 10 193,442 11 7.4%
Total external sales $573,634 100 $488,726 100 17.4% $2,000,577 100 $1,770,278 100 13.0%
Operating Income
% of
% of
% of
% of
Sales Sales Sales Sales
Engineered Building Systems $24,859 10 $13,043 7 90.6% $66,689 8 $41,388 6 61.1%
Metal Components 19,734 11 23,119 13 -14.6% 87,593 13 78,768 12 11.2%
Insulated Metal Panels 21,025 14 14,895 12 41.2% 47,495 9 47,932 11 -0.9%
Metal Coil Coating 6,962 6 1,419 1 390.6% 28,588 7 21,459 6 33.2%
Corporate (33,015) (19,150) 72.4% (104,445) (79,767) 30.9%
Total operating income $39,565 7 $33,326 7 18.7% $125,920 6 $109,780 6 14.7%
Adjusted Operating Income (1)
% of
% of
% of
% of
Sales Sales Sales Sales
Engineered Building Systems $25,256 10 $13,738 7 83.8% $68,211 9 $45,257 7 50.7%
Metal Components 19,734 11 23,188 13 -14.9% 86,335 13 78,763 12 9.6%
Insulated Metal Panels 21,374 15 15,696 13 36.2% 50,509 10 39,986 9 26.3%
Metal Coil Coating 6,962 6 7,419 8 -6.2% 28,588 7 27,459 7 4.1%
Corporate (21,331) (18,786) 13.5% (83,115) (77,575) 7.1%
Total adjusted operating income $51,995 9 $41,255 8 26.0% $150,528 8 $113,890 6 32.2%
Adjusted EBITDA (2)
% of
% of
% of
% of
Sales Sales Sales Sales
Engineered Building Systems $27,422 11 $15,242 8 79.9% $77,148 10 $54,702 8 41.0%
Metal Components 21,256 11 24,694 14 -13.9% 92,408 13 84,306 13 9.6%
Insulated Metal Panels 26,023 18 20,794 17 25.1% 68,104 14 58,414 13 16.6%
Metal Coil Coating 9,210 8 9,484 10 -2.9% 37,076 9 35,733 10 3.8%
Corporate (18,097) (16,273) 11.2% (73,125) (65,698) 11.3%
Total adjusted EBITDA $65,814 11 $53,941 11 22.0% $201,611 10 $167,457 9 20.4%
(1) The Company discloses a tabular
comparison of Adjusted operating
income (loss), which is a non-
GAAP measure, because it is
instrumental in comparing the
results from period to period.
Adjusted operating income (loss)
should not be considered in
isolation or as a substitute for
operating income (loss) as
reported on the face of our
statements of operations.
(2) The Company's Pre-Merger Term
Loan Credit Agreement defines
Adjusted EBITDA. Adjusted EBITDA
excludes non-cash charges for
goodwill and other asset
impairments and stock compensation
as well as certain special
charges. As such, the historical
information is presented in
accordance with the definition
above. The Company's Pre-Merger
ABL facility has substantially the
same definition of Adjusted
EBITDA. The Company is disclosing
Adjusted EBITDA, which is a non-
GAAP measure, because it is used
by management and provided to
investors to provide comparability
of underlying operational results.
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Consolidated
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 28, April 29, July 29,
October 28,
October 28,
2018 2018 2018 2018 2018
Total Net Sales $421,349 $457,069 $548,525 $573,634 $2,000,577
Operating Income,
GAAP 12,898 18,956 54,501 39,565 125,920
Restructuring and
impairment charges,
net 1,094 488 (439) 769 1,912
Strategic development
and acquisition
related costs 727 1,134 3,642 11,661 17,164
Loss (gain) on
disposition of
business - 6,686 (1,013) 5,673
Acceleration of CEO
retirement benefits 4,600 4,600
Gain on insurance
recovery - (4,741) (4,741)
Adjusted Operating
Income 19,319 27,264 51,950 51,995 150,528
Other income and
expense 928 (34) 87 (261) 720
Depreciation and
amortization 10,358 10,442 10,174 11,351 42,325
Share-based
compensation expense 2,270 1,998 1,041 2,729 8,038
Adjusted EBITDA $32,875 $39,670 $63,252 $65,814 $201,611
Year over year growth,
Total Net Sales 7.6 % 8.7 % 16.9 % 17.4 % 13.0 %
Operating Income
Margin 3.1 % 4.1 % 9.9 % 6.9 % 6.3 %
Adjusted Operating
Income Margin 4.6 % 6.0 % 9.5 % 9.1 % 7.5 %
Adjusted EBITDA
Margin 7.8 % 8.7 % 11.5 % 11.5 % 10.1 %
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 29, April 30, July 30,
October 29,
October 29,
2017 2017 2017 2017 2017
Total Net Sales $391,703 $420,464 $469,385 $488,726 $1,770,278
Operating Income,
GAAP 9,886 32,472 34,097 33,325 109,780
Restructuring and
impairment charges,
net 2,264 315 1,009 1,709 5,297
Strategic development
and acquisition
related costs 357 124 1,297 193 1,971
Loss on sale of
assets and asset
recovery - 137 137
Gain on insurance
recovery - (9,601) (148) (9,749)
Unreimbursed business
interruption costs - 191 235 28 454
Goodwill impairment - 6,000 6,000
Adjusted Operating
Income 12,507 23,638 36,490 41,255 113,890
Other income and
expense 309 449 1,322 (62) 2,018
Depreciation and
amortization 10,315 10,062 10,278 10,664 41,319
Share-based
compensation expense 3,042 2,820 2,284 2,084 10,230
Adjusted EBITDA $26,173 $36,969 $50,374 $53,941 $167,457
Operating Income
Margin 2.5 % 7.7 % 7.3 % 6.8 % 6.2 %
Adjusted Operating
Income Margin 3.2 % 5.6 % 7.8 % 8.4 % 6.4 %
Adjusted EBITDA
Margin 6.7 % 8.8 % 10.7 % 11.0 % 9.5 %
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Engineered Building Systems
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 28, April 29, July 29,
October 28,
October 28,
2018 2018 2018 2018 2018
Total Sales $156,964 $167,240 $230,098 $243,997 $798,299
External Sales 148,288 157,136 218,614 231,315 755,353
Operating Income,
GAAP 8,263 9,271 24,296 24,859 66,689
Restructuring and
impairment charges,
net 1,136 280 (464) 397 1,349
Strategic
development and
acquisition related
costs 173 173
Adjusted Operating
Income 9,572 9,551 23,832 25,256 68,211
Other income and
expense 733 (88) (179) (156) 310
Depreciation and
amortization 2,077 2,323 1,905 2,322 8,627
Adjusted EBITDA $12,382 $11,786 $25,558 $27,422 $77,148
Year over year
growth, Total sales 3.8 % 2.8 % 19.9 % 29.7 % 15.0 %
Year over year
growth, External
Sales 2.3 % 1.7 % 20.0 % 29.8 % 14.5 %
Operating Income
Margin 5.3 % 5.5 % 10.6 % 10.2 % 8.4 %
Adjusted Operating
Income Margin 6.1 % 5.7 % 10.4 % 10.4 % 8.5 %
Adjusted EBITDA
Margin 7.9 % 7.0 % 11.1 % 11.2 % 9.7 %
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 29, April 30, July 30,
October 29,
October 29,
2017 2017 2017 2017 2017
Total Sales $151,263 $162,624 $191,910 $188,183 693,980
External Sales 145,021 154,456 182,164 178,222 659,863
Operating Income,
GAAP 6,503 6,894 14,948 13,043 41,388
Restructuring and
impairment charges,
net 1,910 186 941 695 3,732
Loss on sale of
assets and asset
recovery - 137 137
Adjusted Operating
Income 8,413 7,217 15,889 13,738 45,257
Other income and
expense (41) (125) 1,291 (694) 431
Depreciation and
amortization 2,276 2,285 2,255 2,198 9,014
Adjusted EBITDA $10,648 $9,377 $19,435 $15,242 $54,702
Operating Income
Margin 4.3 % 4.2 % 7.8 % 6.9 % 6.0 %
Adjusted Operating
Income Margin 5.6 % 4.4 % 8.3 % 7.3 % 6.5 %
Adjusted EBITDA
Margin 7.0 % 5.8 % 10.1 % 8.1 % 7.9 %
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Metal Components
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 28, April 29, July 29,
October 28,
October 28,
2018 2018 2018 2018 2018
Total Sales $146,832 $168,456 $186,421 $187,635 $689,344
External Sales 127,528 147,661 165,697 171,759 612,645
Operating Income,
GAAP 17,089 22,082 28,688 19,734 87,593
Restructuring and
impairment charges,
net (1,403) 120 25 (1,258)
Adjusted Operating
Income 15,686 22,202 28,713 19,734 86,335
Other income and
expense 53 67 54 82 256
Depreciation and
amortization 1,576 1,444 1,357 1,440 5,817
Adjusted EBITDA $17,315 $23,713 $30,124 $21,256 $92,408
Year over year
growth, Total sales 9.4 % 8.8 % 12.1 % 3.5 % 8.3 %
Year over year
growth, External
Sales 10.4 % 10.8 % 17.8 % 10.7 % 12.5 %
Operating Income
Margin 11.6 % 13.1 % 15.4 % 10.5 % 12.7 %
Adjusted Operating
Income Margin 10.7 % 13.2 % 15.4 % 10.5 % 12.5 %
Adjusted EBITDA
Margin 11.8 % 14.1 % 16.2 % 11.3 % 13.4 %
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 29, April 30, July 30,
October 29,
October 29,
2017 2017 2017 2017 2017
Total Sales $134,173 $154,895 $166,305 $181,288 $636,661
External Sales 115,557 133,290 140,639 155,183 544,669
Operating Income,
GAAP 12,376 19,997 23,276 23,119 78,768
Restructuring and
impairment charges,
net 305 129 60 69 563
Gain on insurance
recovery - (420) (148) (568)
---
Adjusted Operating
Income 12,681 19,706 23,188 23,188 78,763
Other income and
expense 28 52 55 84 219
Depreciation and
amortization 1,334 1,302 1,266 1,422 5,324
Adjusted EBITDA $14,043 $21,060 $24,509 $24,694 $84,306
Operating Income
Margin 9.2 % 12.9 % 14.0 % 12.8 % 12.4 %
Adjusted Operating
Income Margin 9.5 % 12.7 % 13.9 % 12.8 % 12.4 %
Adjusted EBITDA
Margin 10.5 % 13.6 % 14.7 % 13.6 % 13.2 %
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Insulated Metal Panels
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 28, April 29, July 29,
October 28,
October 28,
2018 2018 2018 2018 2018
Total Sales $110,794 $113,413 $133,740 $146,466 $504,413
External Sales 97,513 99,792 106,605 120,852 424,762
Operating Income,
GAAP 7,071 1,540 17,859 21,025 47,495
Restructuring and
impairment charges,
net 1,284 88 372 1,744
Strategic development
and acquisition
related costs 300 61 (23) 338
Loss (gain) on
disposition of
business - 6,686 (1,013) 5,673
Gain on insurance
recovery - (4,741) (4,741)
Adjusted Operating
Income 8,655 8,375 12,105 21,374 50,509
Other income and
expense (273) 223 (51) 92 (9)
Depreciation and
amortization 4,388 4,335 4,324 4,557 17,604
Adjusted EBITDA $12,770 $12,933 $16,378 $26,023 $68,104
Year over year growth,
Total sales 16.4 % 10.2 % 11.7 % 18.6 % 14.3 %
Year over year growth,
External Sales 18.3 % 15.0 % 8.8 % 15.0 % 14.1 %
Operating Income
Margin 6.4 % 1.4 % 13.4 % 14.4 % 9.4 %
Adjusted Operating
Income Margin 7.8 % 7.4 % 9.1 % 14.6 % 10.0 %
Adjusted EBITDA
Margin 11.5 % 11.4 % 12.2 % 17.8 % 13.5 %
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 29, April 30, July 30,
October 29,
October 29,
2017 2017 2017 2017 2017
Total Sales $95,195 $102,937 $119,730 $123,542 $441,404
External Sales 82,441 86,773 98,026 105,064 372,304
Operating Income,
GAAP 2,192 19,377 11,468 14,895 47,932
Restructuring and
impairment charges,
net - 8 683 691
Strategic development
and acquisition
related costs - 90 90
Gain on insurance
recovery - (9,181) (9,181)
Unreimbursed business
interruption costs - 191 235 28 454
Adjusted Operating
Income 2,192 10,387 11,711 15,696 39,986
Other income and
expense 35 340 (211) 356 520
Depreciation and
amortization 4,392 4,258 4,516 4,742 17,908
Adjusted EBITDA $6,619 $14,985 $16,016 $20,794 $58,414
Operating Income
Margin 2.3 % 18.8 % 9.6 % 12.1 % 10.9 %
Adjusted Operating
Income Margin 2.3 % 10.1 % 9.8 % 12.7 % 9.1 %
Adjusted EBITDA
Margin 7.0 % 14.6 % 13.4 % 16.8 % 13.2 %
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Metal Coil Coating
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 28, April 29, July 29,
October 28,
October 28,
2018 2018 2018 2018 2018
Total Sales $88,343 $95,190 $116,440 $117,323 $417,296
External Sales 48,020 52,480 57,609 49,708 207,817
Operating Income,
GAAP 5,376 7,129 9,121 6,962 28,588
Adjusted Operating
Income 5,376 7,129 9,121 6,962 28,588
Depreciation and
amortization 2,058 2,085 2,097 2,248 8,488
Adjusted EBITDA $7,434 $9,214 $11,218 $9,210 $37,076
Year over year
growth, Total
sales 0.0 % 9.8 % 22.2% 19.0 % 13.1 %
Year over year
growth, External
Sales (1.4)% 14.2 % 18.6 % (1.1)% 7.4 %
Operating Income
Margin 6.1 % 7.5 % 7.8 % 5.9 % 6.9 %
Adjusted Operating
Income Margin 6.1 % 7.5 % 7.8 % 5.9 % 6.9 %
Adjusted EBITDA
Margin 8.4 % 9.7 % 9.6 % 7.9 % 8.9 %
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 29, April 30, July 30,
October 29,
October 29,
2017 2017 2017 2017 2017
Total Sales $88,340 $86,729 $95,261 $98,550 $368,880
External Sales 48,684 45,945 48,556 50,257 193,442
Operating Income,
GAAP 6,706 6,227 7,107 1,419 21,459
Goodwill
impairment - 6,000 6,000
Adjusted Operating
Income 6,706 6,227 7,107 7,419 27,459
Other income and
expense 31 31
Depreciation and
amortization 2,106 2,009 2,063 2,065 8,243
Adjusted EBITDA $8,843 $8,236 $9,170 $9,484 $35,733
Operating Income
Margin 7.6 % 7.2 % 7.5 % 1.4 % 5.8 %
Adjusted Operating
Income Margin 7.6 % 7.2 % 7.5 % 7.5 % 7.4 %
Adjusted EBITDA
Margin 10.0 % 9.5 % 9.6 % 9.6 % 9.7 %
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Corporate
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 28, April 29, July 29, October 28, October 28,
2018 2018 2018 2018 2018
Operating Loss, GAAP $(24,901) $(21,066) $(25,463) $(33,015) $(104,445)
Restructuring and
impairment charges,
net 77 77
Strategic
development and
acquisition related
costs 254 1,073 3,642 11,684 16,653
Acceleration of CEO
retirement benefits 4,600 4,600
Adjusted Operating
Loss (19,970) (19,993) (21,821) (21,331) (83,115)
Other income and
expense 415 (236) 263 (279) 163
Depreciation and
amortization 259 255 491 784 1,789
Share-based
compensation
expense 2,270 1,998 1,041 2,729 8,038
Adjusted EBITDA $(17,026) $(17,976) $(20,026) $(18,097) $(73,125)
Fiscal Year
Fiscal Three Months Ended
Ended
---
January 29, April 30, July 30, October 29, October 29,
2017 2017 2017 2017 2017
Operating Loss, GAAP $(17,891) $(20,023) $(22,702) $(19,151) $(79,767)
Restructuring and
impairment charges,
net 49 262 311
Strategic
development and
acquisition related
costs 357 124 1,297 103 1,881
Adjusted Operating
Loss (17,485) (19,899) (21,405) (18,786) (77,575)
Other income and
expense 256 182 187 192 817
Depreciation and
amortization 207 208 178 237 830
Share-based
compensation
expense 3,042 2,820 2,284 2,084 10,230
Adjusted EBITDA $(13,980) $(16,689) $(18,756) $(16,273) $(65,698)
PLY GEM HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
For the Three Months Ended
September 29,
September 30,
2018 2017
Net income (loss) $(3,242) $27,534
Interest expense, net 45,331 17,518
Provision for income taxes 13,087 17,659
Depreciation and amortization 37,080 13,237
EBITDA 92,256 75,948
Non cash gain on foreign currency transactions (612) (810)
Acquisition costs 8,602 -
Customer inventory buybacks 519 1,089
Restructuring/integration expense 960 134
Non cash charge of purchase price allocated to inventories -
Initial public offering costs -
Litigation - class action charges, net - 757
Public company costs - 1,137
Retention expense 316 445
Long term incentive plan compensation - 1,306
Stock option expense - 92
Tax receivable agreement liability adjustment (901) -
Hurricane freight impact - 725
Loss on modification or extinguishment of debt -
Adjusted EBITDA $101,140 $80,823
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SOURCE NCI Building Systems, Inc.
