NCI Building Systems Reports Fourth Quarter Fiscal 2008 Results
- Operating Income Up 6.7% to
- Earnings per Diluted Share of
- Recently-Implemented Cost Reductions to Produce Annualized Savings of Approximately
Sales for the fourth quarter increased 9.8% to
Commenting on fourth quarter results,
“Within a period of very difficult market conditions for the nonresidential construction industry and record high steel prices, NCI’s solid financial performance speaks to the size and scope of our operations, the benefits of our integrated business model, our ability to effectively serve a broad range of markets, and our focus on cost reductions,” Mr. Chambers noted.
Fourth Quarter Segment Performance
The Coatings group’s external sales declined 2.9% on a year-over-year basis, but operating profit increased 31.3%, as a result of the mix shift from tolling to package sales, the Company’s disciplined approach to steel pricing and supply, and the benefits of higher intercompany sales related to the RCC acquisitions.
The Components group posted a 32.3% increase in operating profit on 5.1% external sales growth. This substantial operating leverage resulted from both continued commercial discipline and the successful implementation of operating efficiencies.
The Buildings group’s external sales increased 13.5%, reflecting the effect of higher steel prices, but operating profit decreased 12.5%, resulting from margin compression caused by rapidly rising raw material costs. Backlog for the Buildings group was
Full Year Fiscal 2008 Results
For the year, sales increased 8.6% to
Mr. Chambers noted, “We completed a difficult year with record earnings results, gaining share by growing our customer base across multiple end markets, while implementing continuous improvements in our production processes and reducing companywide costs.”
Outlook
“Uncertain economic conditions combined with recent steel price declines and production curtailments have caused a significant reduction in visibility. As a result, we have taken important measures to ensure NCI’s continued leadership and reasonable profitability levels,” Mr. Chambers said.
A combination of cost reduction initiatives taken from late October through mid-November, which included an approximate 20% reduction in NCI’s workforce as well as four plant closings, are expected to result in annualized cost savings of approximately
“The seasonality that historically affects our first quarter results will be exacerbated in fiscal 2009 by the continued impact of the economic downturn on our markets and order push-outs in anticipation of steel price reductions. Based upon current projections of an approximate 40% sequential decline in volume of tonnage shipped, we expect to report a modest loss for the first quarter of fiscal 2009, exclusive of special charges. EBITDA and cash flow from operations, however, is expected to be positive, benefiting from the shift in seasonality that occurred in fiscal 2008 as well as lower steel prices.
“NCI’s market leadership, effective business model and built-in flexibility position us to weather the current economic storm and emerge in a stronger position than most,” Mr. Chambers noted. “While causing some short term dislocation, lower steel prices increase the cost effectiveness of our products compared to the traditional building materials against which we compete. Importantly, we continue to effectively execute on our strategic plan, which includes further implementation of technological advances, increasing manufacturing efficiencies and extending our hub-and-spoke delivery system.”
NCI will provide an online, real-time webcast and rebroadcast of its conference call tomorrow to discuss this announcement. The live broadcast of this conference call will be available online at www.ncilp.com beginning at
This release contains forward-looking statements concerning NCI’s business and operations and industry conditions, including among others industry trends, steel pricing, growth expectations and margin expansion. These statements and other statements identified by words such as “guidance,” “potential,” “expect,” “should” and similar expressions are forward looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties that may cause NCI’s actual performance to differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially are the possibility that the anticipated benefits from the RCC acquisition cannot be fully realized; the possibility that costs or difficulties related to the integration of the RCC operations into the Company’s operations will be greater than expected; industry cyclicality and seasonality; fluctuations in demand and prices for steel; the financial condition of NCI’s raw material suppliers; competitive activity and pricing pressure; ability to execute NCI’s acquisition strategy; and general economic conditions affecting the construction industry. Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended
NCI Building Systems, Inc. is one of
NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(In thousands, except per share data)
For the For the
Three Months Ended Year Ended
November 2, October 28, November 2, October 28,
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Sales $508,931 $463,574 $1,764,159 $1,625,068
Cost of sales 384,792 343,454 1,325,624 1,221,463
------- ------- --------- ---------
Gross profit 124,139 120,120 438,535 403,605
24.4% 25.9% 24.9% 24.8%
Selling, general
and administrative
expenses 73,152 72,341 283,825 271,871
------ ------ ------- -------
Income from
operations 50,987 47,779 154,710 131,734
Interest income 168 492 1,085 725
Interest expense (5,676) (6,911) (23,535) (28,829)
Other income
(expense), net (2,902) 391 (1,880) 1,195
------ --- ------ -----
Income before income
taxes 42,577 41,751 130,380 104,825
Provision for income
taxes 17,963 16,313 51,499 41,096
------ ------ ------ ------
42.2% 39.1% 39.5% 39.2%
Net income $24,614 $25,438 $78,881 $63,729
======= ======= ======= =======
Net income per share:
Basic $1.27 $1.31 $4.08 $3.25
Diluted $1.26 $1.27 $4.05 $3.06
Average shares outstanding:
Basic 19,404 19,345 19,332 19,582
Diluted 19,594 20,077 19,486 20,793
Depreciation/
amortization expense 8,535 9,514 35,588 35,535
Increase in sales 9.8% 8.6%
Increase (decrease) in
diluted earnings per
share -0.8% 32.4%
Gross profit
percentage 24.4% 25.9% 24.9% 24.8%
Selling, general and
administrative
expenses percentage 14.4% 15.6% 16.1% 16.7%
Income from operations
percentage 10.0% 10.3% 8.8% 8.1%
NCI BUILDING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(In thousands)
November 2, October 28,
2008 2007
(Unaudited)
ASSETS
Cash and cash equivalents $68,201 $75,054
Accounts receivable, net 163,005 158,967
Inventories 192,011 137,725
Deferred income taxes 24,259 23,439
Prepaid expenses and other 18,374 15,727
------ ------
Total current assets 465,850 410,912
------- -------
Property and equipment, net 251,163 261,994
Goodwill 616,626 616,400
Other assets 47,062 53,752
------ ------
Total assets $1,380,701 $1,343,058
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt $920 $22,312
Accounts payable 104,348 130,161
Accrued expenses 128,745 129,298
------- -------
Total current liabilities 234,013 281,771
------- -------
Long-term debt 473,480 474,725
Deferred income taxes 45,451 43,638
Other long-term liabilities 3,928 3,228
Shareholders' equity 623,829 539,696
------- -------
Total liabilities and
shareholders' equity $1,380,701 $1,343,058
========== ==========
NCI BUILDING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
November 2, 2008 October 28, 2007
---------------- ----------------
(Unaudited)
Net cash provided by operating
activities $39,355 $137,625
------- --------
Cash flows from investing activities:
Acquisitions, net of cash acquired - (20,086)
Capital expenditures (24,803) (42,041)
Other 6,113 5,764
----- -----
Net cash used in investing activities (18,690) (56,363)
------- -------
Cash flows from financing activities:
Payments on revolving line of credit - (90,500)
Borrowings on revolving line
of credit - 90,500
Payments on long-term debt (22,637) (947)
Payments on note payable (3,892) -
Proceeds from stock option
exercises 698 3,923
Excess tax benefits from
stock-based compensation
arrangements 215 1,596
Payment of financing costs (75) (75)
Purchase of treasury stock (2,226) (36,122)
------ -------
Net cash used in financing activities (27,917) (31,625)
------- -------
Effect of exchange rate changes on
cash and cash equivalents 399 379
--- ---
Net (decrease) increase in cash (6,853) 50,016
Cash at beginning of period 75,054 25,038
------ ------
Cash at end of period $68,201 $75,054
======= =======
NCI Building Systems, Inc.
Business Segments
(Unaudited)
(In thousands)
Three Months Ended
Three Months Ended October 28, 2007 $ %
November 2, 2008 * (As reclassified) * Inc/(Dec) Change
% of % of
Total Total
Sales: Sales Sales
Metal coil
coating $72,479 14 $77,205 16 $(4,726) -6.1%
Metal components 201,878 40 189,242 41 12,636 6.7%
Engineered
building systems 331,767 65 291,363 63 40,404 13.9%
Intersegment
Sales (97,193) (19) (94,236) (20) (2,957) 3.1%
------- --- ------- --- ------ ---
Total net
sales $508,931 100 $463,574 100 $45,357 9.8%
-------- --- -------- --- ------- ---
% of % of
Sales Sales
Operating income:
Metal coil
coating $8,621 12 $6,567 9 $2,054 31.3%
Metal
Components 25,227 12 19,069 10 6,158 32.3%
Engineered
building systems 33,607 10 38,427 13 (4,820) -12.5%
Corporate (16,468) - (16,284) - (184) 1.1%
------- ------- ---- ---
Total operating
income
(% of sales) $50,987 10 $47,779 10 $3,208 6.7%
------- ------- ------ ---
Year Ended
Year Ended October 28, 2007 $ %
November 2, 2008 * (As reclassified) * Inc/(Dec) Change
% of % of
Total Total
Sales: Sales Sales
Metal coil
coating $305,657 17 $272,543 16 $33,114 12.2%
Metal
Components 715,255 41 663,331 41 51,924 7.8%
Engineered
building
systems 1,110,534 63 1,021,544 63 88,990 8.7%
Intersegment
Sales (367,287) (21) (332,350) (20) (34,937) 10.5%
-------- --- -------- --- ------- ----
Total
net
sales $1,764,159 100 $1,625,068 100 $139,091 8.6%
---------- --- ---------- --- -------- ---
% of % of
Operating income: Sales Sales
Metal coil
Coating $29,381 10 $25,136 9 $4,245 16.9%
Metal
Components 82,094 11 49,609 7 32,485 65.5%
Engineered
building
systems 107,851 10 113,265 11 (5,414) -4.8%
Corporate (64,616) - (56,276) - (8,340) 14.8%
------- ------- ------ ----
Total operating
income (% of
sales) $154,710 9 $131,734 8 $22,976 17.4%
-------- -------- ------- ----
* During the fourth quarter of fiscal 2008, we changed reporting structure
and management team responsibilities to better align certain of NCI's
products to respond effectively to current market opportunities. As a
result of the change, we have transferred certain segment activities
within the Metal components and Engineered building systems segments in
fiscal 2008. Segment information for fiscal 2007 has been reclassified to
conform to the fiscal 2008 segment designations.
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS COMPUTATION
OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION
AND OTHER NONCASH ITEMS ("ADJUSTED EBITDA")
(Unaudited)
(In thousands)
Trailing 12 Months
November 2, October 28,
2008 2007
---- ----
Net income $78,881 $63,729
Add:
Provision for income taxes 51,499 41,096
Interest expense 23,307 28,600
Depreciation and amortization 34,736 34,683
Non-cash FAS 123(R) 9,504 8,610
----- -----
Adjusted EBITDA (1) $197,927 $176,718
-------- --------
(1) The Company discloses adjusted EBITDA, which is a non-GAAP measure,
because it is a widely accepted financial indicator in the metal
construction industry of a company's profitability, ability to finance its
operations, and meet its growth plans. This measure is also used by NCI
internally to make acquisition and investment decisions. Adjusted EBITDA
is calculated based on the terms contained in the Company's credit
agreement at the respective dates presented herein. Results of operations
of businesses acquired are included in this measure for periods subsequent
to the acquisition and are not included on a pro forma basis. Adjusted
EBITDA should not be considered in isolation or as a substitute for net
income determined in accordance with generally accepted accounting
principles in the United States.
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
"ADJUSTED" EARNINGS PER SHARE COMPARISON
(Unaudited)
Fiscal Three Months Ended
November 2, October 28,
2008 2007
---- ----
Earnings per diluted share, GAAP basis $1.26 $1.27
Effect of convertible notes - (1) 0.03 (1)
----- -----
"Adjusted" diluted earnings per share (A) $1.26 $1.30
===== =====
Fiscal Year Ended
November 2, October 28,
2008 2007
---- ----
Earnings per diluted share, GAAP basis $4.05 $3.06
Effect of convertible notes - (1) 0.15 (1)
----- -----
"Adjusted" diluted earnings per share (A) $4.05 $3.21
===== =====
(A) The Company discloses a tabular comparison of "Adjusted" earnings per
diluted share, which is a non-GAAP measure because it is referred to in
the text of our press releases and is instrumental in comparing the
results from period to period. "Adjusted" earnings per share should not
be considered in isolation or as a substitute for earnings per share as
reported on the face of our statement of income.
(1) Dilutive impact for the three months ended October 28, 2007 of
489,336 shares and for the year ended October 28, 2007 of 922,123 shares
of the Company's convertible notes as if they were converted during the
period.
NCI Building Systems, Inc.
Reconciliation of Segment Sales to
Third Party Segment Sales (Internal Information)
(Unaudited)
(In thousands)
4th Qtr
2007
4th Qtr (As %
2008 * reclassified) * Inc/(Dec) Change
-------- -------------
Metal Coil Coating
Total Sales 72,479 12% 77,205 14% (4,726) -6%
Intersegment (50,082) (54,140) 4,058 -7%
------- -------
Third Party Sales 22,397 4% 23,065 5% (668) -3%
Operating Income 8,621 38% 6,567 28% 2,054 31%
Metal Components
Total 201,878 33% 189,242 34% 12,636 7%
Intersegment (33,043) (28,646) (4,397) 15%
------- -------
Third Party
Sales 168,835 33% 160,596 35% 8,239 5%
Operating
Income 25,227 15% 19,069 12% 6,158 32%
Engineered Building Systems
Total 331,767 55% 291,363 52% 40,404 14%
Intersegment (14,068) (11,450) (2,618) 23%
------- -------
Third Party
Sales 317,699 63% 279,913 60% 37,786 13%
Operating
Income 33,607 11% 38,427 14% (4,820) -13%
Consolidated
Total 606,124 100% 557,810 100% 48,314 9%
Intersegment (97,193) (94,236) (2,957) 3%
------- -------
Third Party
Sales 508,931 100% 463,574 100% 45,357 10%
Operating
Income 50,987 10% 47,779 10% 3,208 7%
YTD
4th Qtr
YTD 2007
4th Qtr (As %
2008 * reclassified) * Inc/(Dec) Change
-------- -------------
Metal Coil Coating
Total Sales 305,657 14% 272,543 14% 33,114 12%
Intersegment (208,700) (188,960) (19,740) 10%
-------- --------
Third Party
Sales 96,957 5% 83,583 5% 13,374 16%
Operating
Income 29,381 30% 25,136 30% 4,245 17%
Metal Components
Total 715,255 34% 663,331 34% 51,924 8%
Intersegment (115,245) (101,709) (13,536) 13%
-------- --------
Third Party
Sales 600,010 34% 561,622 35% 38,388 7%
Operating
Income 82,094 14% 49,609 9% 32,485 65%
Engineered Building Systems
Total 1,110,534 52% 1,021,544 52% 88,990 9%
Intersegment (43,342) (41,681) (1,661) 4%
------- -------
Third Party
Sales 1,067,192 61% 979,863 60% 87,329 9%
Operating
Income 107,851 10% 113,265 12% (5,414) -5%
Consolidated
Total 2,131,446 100% 1,957,418 100% 174,028 9%
Intersegment (367,287) (332,350) (34,937) 11%
-------- --------
Third Party
Sales 1,764,159 100% 1,625,068 100% 139,091 9%
Operating
Income 154,710 9% 131,734 8% 22,976 17%
* During the fourth quarter of fiscal 2008, we changed reporting structure
and management team responsibilities to better align certain of NCI's
products to respond effectively to current market opportunities. As a
result of the change, we have transferred certain segment activities
within the Metal components and Engineered building systems segments in
fiscal 2008. Segment information for fiscal 2007 has been reclassified to
conform to the fiscal 2008 segment designations.
NCI Building Systems, Inc.
Reconciliation of Segment Sales to
Third Party Segment Sales (Internal Information)
(Unaudited)
(In thousands)
3rd Qtr 3rd Qtr
2008 2007
(As (As %
reclassified) * reclassified) * Inc/(Dec) Change
------------- -------------
Metal Coil Coating
Total Sales 90,732 15% 72,275 14% 18,457 26%
Intersegment (62,842) (49,013) (13,829) 28%
------- -------
Third Party Sales 27,890 6% 23,262 5% 4,628 20%
Operating Income 11,360 41% 8,165 35% 3,195 39%
Metal Components
Total 202,826 35% 178,312 34% 24,514 14%
Intersegment (34,367) (26,849) (7,518) 28%
------- -------
Third Party Sales 168,459 35% 151,463 35% 16,996 11%
Operating Income 32,174 19% 14,153 9% 18,021 127%
Engineered Building Systems
Total 292,715 50% 271,151 52% 21,564 8%
Intersegment (11,468) (11,795) 327 -3%
------- -------
Third Party Sales 281,247 59% 259,356 60% 21,891 8%
Operating Income 28,514 10% 33,575 13% (5,061) -15%
Consolidated
Total 586,273 100% 521,738 100% 64,535 12%
Intersegment (108,677) (87,657) (21,020) 24%
-------- -------
Third Party Sales 477,596 100% 434,081 100% 43,515 10%
Operating Income 55,715 12% 42,247 10% 13,468 32%
YTD YTD
3rd Qtr 3rd Qtr
2008 2007
(As (As %
reclassified) * reclassified) * Inc/(Dec) Change
------------- -------------
Metal Coil Coating
Total Sales 233,178 15% 195,338 14% 37,840 19%
Intersegment (158,618) (134,820) (23,798) 18%
-------- --------
Third Party Sales 74,560 6% 60,518 5% 14,042 23%
Operating Income 20,760 28% 18,569 31% 2,191 12%
Metal Components
Total 513,377 34% 474,089 34% 39,288 8%
Intersegment (82,202) (73,063) (9,139) 13%
------- -------
Third Party Sales 431,175 34% 401,026 35% 30,149 8%
Operating Income 56,867 13% 30,540 8% 26,327 86%
Engineered Building Systems
Total 778,767 51% 730,181 52% 48,586 7%
Intersegment (29,274) (30,231) 957 -3%
------- -------
Third Party Sales 749,493 60% 699,950 60% 49,543 7%
Operating Income 74,244 10% 74,838 11% (594) -1%
Consolidated
Total 1,525,322 100% 1,399,608 100% 125,714 9%
Intersegment (270,094) (238,114) (31,980) 13%
-------- --------
Third Party
Sales 1,255,228 100% 1,161,494 100% 93,734 8%
Operating Income 103,723 8% 83,955 7% 19,768 24%
* During the fourth quarter of fiscal 2008, we changed reporting structure
and management team responsibilities to better align certain of NCI's
products to respond effectively to current market opportunities. As a
result of the change, we have transferred certain segment activities
within the Metal components and Engineered building systems segments in
fiscal 2008. Segment information for fiscal 2007 has been reclassified to
conform to the fiscal 2008 segment designations.
NCI Building Systems, Inc.
Reconciliation of Segment Sales to
Third Party Segment Sales (Internal Information)
(Unaudited)
(In thousands)
2nd Qtr 2nd Qtr
2008 2007
(As (As %
reclassified) * reclassified) * Inc/(Dec) Change
------------- -------------
Metal Coil Coating
Total Sales 80,171 16% 63,844 14% 16,327 26%
Intersegment (52,883) (43,019) (9,864) 23%
------- -------
Third Party Sales 27,288 7% 20,825 6% 6,463 31%
Operating Income 6,705 25% 5,761 28% 944 16%
Metal Components
Total 165,384 33% 149,684 34% 15,700 10%
Intersegment (26,031) (23,376) (2,655) 11%
------- -------
Third Party Sales 139,353 33% 126,308 34% 13,045 10%
Operating Income 15,171 11% 7,548 6% 7,623 101%
Engineered Building Systems
Total 259,653 51% 229,861 52% 29,792 13%
Intersegment (10,151) (9,082) (1,069) 12%
------- ------
Third Party Sales 249,502 60% 220,779 60% 28,723 13%
Operating Income 25,292 10% 17,315 8% 7,977 46%
Consolidated
Total 505,208 100% 443,389 100% 61,819 14%
Intersegment (89,065) (75,477) (13,588) 18%
------- -------
Third Party Sales 416,143 100% 367,912 100% 48,231 13%
Operating Income 29,512 7% 17,475 5% 12,037 69%
YTD YTD
2nd Qtr 2nd Qtr
2008 2007
(As (As %
reclassified) * reclassified) * Inc/(Dec) Change
------------- -------------
Metal Coil Coating
Total Sales 142,446 15% 123,063 14% 19,383 16%
Intersegment (95,776) (85,807) (9,969) 12%
------- -------
Third Party Sales 46,670 6% 37,256 5% 9,414 25%
Operating Income 9,400 20% 10,404 28% (1,004) -10%
Metal Components
Total 310,551 33% 295,777 34% 14,774 5%
Intersegment (47,835) (46,214) (1,621) 4%
------- -------
Third Party Sales 262,716 34% 249,563 34% 13,153 5%
Operating Income 24,693 9% 16,387 7% 8,306 51%
Engineered Building Systems
Total 486,052 52% 459,030 52% 27,022 6%
Intersegment (17,806) (18,436) 630 -3%
------- -------
Third Party
Sales 468,246 60% 440,594 61% 27,652 6%
Operating Income 45,730 10% 41,263 9% 4,467 11%
Consolidated
Total 939,049 100% 877,870 100% 61,179 7%
Intersegment (161,417) (150,457) (10,960) 7%
-------- --------
Third Party
Sales 777,632 100% 727,413 100% 50,219 7%
Operating Income 48,008 6% 41,708 6% 6,300 15%
* During the fourth quarter of fiscal 2008, we changed reporting structure
and management team responsibilities to better align certain of NCI's
products to respond effectively to current market opportunities. As a
result of the change, we have transferred certain segment activities
within the Metal components and Engineered building systems segments in
fiscal 2008. Segment information for fiscal 2007 has been reclassified
to conform to the fiscal 2008 segment designations.
NCI Building Systems, Inc.
Reconciliation of Segment Sales to Third Party Segment Sales
(Internal Information)
(Unaudited)
(In thousands)
1st Qtr 1st Qtr
2008 2007
(As (As %
reclassified) * reclassified) * Inc/(Dec) Change
------------- -------------
Metal Coil Coating
Total Sales 62,275 14% 59,219 14% 3,056 5%
Intersegment (42,893) (42,788) (105) 0%
------- -------
Third Party Sales 19,382 5% 16,431 5% 2,951 18%
Operating Income 2,695 14% 4,643 28% (1,948) -42%
Metal Components
Total 145,167 34% 146,093 33% (926) -1%
Intersegment (21,804) (22,838) 1,034 -5%
------- -------
Third Party Sales 123,363 34% 123,255 34% 108 0%
Operating Income 9,522 8% 8,839 7% 683 8%
Engineered Building Systems
Total 226,399 52% 229,169 53% (2,770) -1%
Intersegment (7,655) (9,354) 1,699 -18%
------ ------
Third Party Sales 218,744 61% 219,815 61% (1,071) 0%
Operating Income 20,438 9% 23,948 11% (3,510) -15%
Consolidated
Total 433,841 100% 434,481 100% (640) 0%
Intersegment (72,352) (74,980) 2,628 -4%
------- -------
Third Party Sales 361,489 100% 359,501 100% 1,988 1%
Operating Income 18,496 5% 24,233 7% (5,737) -24%
* During the fourth quarter of fiscal 2008, we changed reporting structure
and management team responsibilities to better align certain of NCI's
products to respond effectively to current market opportunities. As a
result of the change, we have transferred certain segment activities
within the Metal components and Engineered building systems segments in
fiscal 2008. Segment information for fiscal 2007 has been reclassified
to conform to the fiscal 2008 segment designations.
SOURCE NCI Building Systems, Inc.