• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

NCI Building Systems Reports First Quarter Fiscal 2009 Results

Posted on: Tuesday, 10 March 2009, 15:05 CDT

-Operating Results in Line with Most Recent Guidance-

-Net Cash from Operating Activities Reached $30 million-

-Non Cash Impairment Charges Penalize Reported Results-

-Buildings group's Backlog Stabilizes at $302 million-

HOUSTON, March 10 /PRNewswire-FirstCall/ -- NCI Building Systems, Inc., (NYSE: NCS) today announced financial results for the first quarter ended February 1, 2009.

First Quarter 2009 Financial Results

"As previously reported, the effects of worsening economic conditions on our end markets and the rapid decline in steel prices caused tonnage volume shipped in the first quarter to decline 45% sequentially and 40% year-over-year," said Norman C. Chambers, Chairman, President and Chief Executive Officer. "As a result of substantially lower utilization rates and high inventory costs, NCI reported an operating loss for the period that was significantly increased by non-cash impairment charges. These non-cash charges do not impact the Company's cash flow or liquidity."

"Initial benefits of cost reduction programs implemented from late October through mid-November and the shift in seasonality that occurred in fiscal 2008 enabled the Company to report positive cash flow from operations of approximately $30 million for the period," Mr. Chambers said. "Further expense cuts were implemented in the 2009 first quarter, which significantly reduce our operating costs and increase annualized cost savings to $59 million, and we anticipate seeing most of a full quarterly benefit from these savings in the 2009 second quarter."

First quarter sales were $260.4 million compared to $361.5 million reported for last year's first quarter. The Company incurred a net loss of $528.6 million, or $27.20 per diluted share, which included a non cash goodwill and other intangible asset impairment charge of $517.6 million, a $29.4 million charge to cost of goods sold related to an inventory markdown to net realizable value in all three of NCI's business segments, a $2.5 million charge related to severance and plant closings, and a $623,000 non cash asset impairment charge also related to plant closings. Exclusive of these charges, the net loss would have been $8.0 million, or $0.42 per diluted share. For last year's first quarter, the Company reported net income of $7.5 million, or $0.39 per diluted share.

First Quarter 2009 Segment Performance

The Company reported an adjusted operating loss of $7.8 million, which is reconciled with the reported GAAP operating loss in the table below.

NCI BUILDING SYSTEMS, INC. BUSINESS SEGMENTS NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS RECONCILIATION OF OPERATING LOSS TO ADJUSTED OPERATING LOSS EXCLUDING SPECIAL CHARGES FOR THE THREE MONTHS ENDED FEBRUARY 1, 2009 (Unaudited) (In thousands) Goodwill Lower and of Operating Other Cost "Adjusted" Loss, Intangible or Operating GAAP Asset Market Restructuring Asset Loss Basis Impairment Adj. Charges Impairment (A) --------- -------- ------- ------------------------------- Metal coil coating $(63,753) $59,854 $5,657 $44 $- $1,802 Metal components (128,603) 116,131 14,484 582 - 2,594 Engineered building systems (352,279) 341,643 9,237 1,835 623 1,059 Corporate (13,252) - - 18 - (13,234) --------- -------- ------- ------ ---- ------- Total operating loss $(557,887) $517,628 $29,378 $2,479 $623 $(7,779) ========= ======== ======= ====== ==== ======= (A) The Company discloses a tabular comparison of "Adjusted" operating loss, which is a non-GAAP measure because it is referred to in the text of our press release and is instrumental in comparing the results from period to period. "Adjusted" operating loss should not be considered in isolation or as a substitute for operating loss as reported on the face of our statement of income.

First quarter 2009 adjusted operating results only include the initial benefits of phase one of the Company's cost reduction programs and only a modest benefit of phase two, which was implemented in late January and early February 2009.

"After declining for seven consecutive months, NCI's Buildings group's backlog stabilized at $302 million in December and January, which may indicate a modest firming of demand, driven by the sharp decline in steel prices coming into a seasonally stronger period," Mr. Chambers said.

Balance Sheet

At the end of the 2009 first quarter, cash and cash equivalents were $91 million, up from $68 million at the end of the 2008 fourth quarter. NCI continues to discuss its financing requirements with its key relationship banks. The Company has retained J.P. Morgan Securities Inc. to assist with these discussions and on a comprehensive range of potential alternatives to strengthen its balance sheet and enhance its long term financial and competitive position, including but not limited to capital raises and strategic investments.

Outlook

"We are working closely with our builder network and key customers, who serve 19 different end markets, to provide efficient solutions during this difficult period for non residential construction businesses. Lower steel prices have historically promoted greater utilization of steel as compared to other traditional building products, and the energy savings and recyclability attributes of steel should enhance its competitive attractiveness. Additionally, we are moving ahead carefully with certain strategic initiatives that would extend our reach to new markets," Mr. Chambers noted.

"While we have seen an uptick in quoting activity, visibility remains limited," Mr. Chambers said. "The benefits of recent cost cutting, however, and reduced capital and working capital spending, should enable us to report positive cash flow from operations in the second quarter of fiscal 2009."

NCI will provide an online, real-time webcast and rebroadcast of its conference call today to discuss this announcement. The live broadcast of this conference call will be available online at www.ncilp.com beginning at 5:00 p.m. (Eastern Time) on Tuesday, March 10, 2009. The online replay will be available at approximately 6:00 p.m. (Eastern Time) and continue for one week.

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; ability to service or refinance our debt; fluctuations in demand and prices for steel; raw material pricing and supply; competitive activity and pricing pressure; ability to execute NCI's acquisition strategy; general economic conditions affecting the construction industry; the current financial crisis and U.S. recession; and changes in laws or regulations. Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2008, 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. NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in its expectations.

NCI Building Systems, Inc. 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 39 manufacturing facilities across the United States and Mexico, with additional sales and distribution offices throughout the nation and Canada.

NCI BUILDING SYSTEMS, INC. STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) For the Three Months Ended February 1, January 27, 2009 2008 ----------- ----------- Sales $260,364 $361,489 Cost of sales 213,836 279,058 Lower of cost or market adjustment 29,378 - Asset impairment 623 - --------- ------ Gross profit 16,527 82,431 6.3% 22.8% Selling, general and administrative expenses 54,307 63,935 Goodwill and other intangible asset impairment 517,628 - Restructuring charge 2,479 - --------- ------ Income (loss) from operations (557,887) 18,496 Interest income 195 658 Interest expense (4,608) (6,904) Other expense, net (317) (38) --------- ------ Income (loss) before income taxes (562,617) 12,212 Provision (benefit) for income taxes (34,007) 4,702 --------- ------ 6.0% 38.5% Net income (loss) $(528,610) $7,510 ========= ====== Net income (loss) per share: Basic $(27.20) $0.39 Diluted $(27.20) $0.39 Average shares outstanding: Basic 19,438 19,250 Diluted 19,438 19,402 Depreciation/amortization expense 8,523 9,344 Decrease in sales -28.0% Decrease in diluted earnings per share n/a Gross profit percentage 6.3% 22.8% Selling, general and administrative expenses percentage 20.9% 17.7% NCI BUILDING SYSTEMS, INC. CONDENSED BALANCE SHEETS (In thousands) February 1, November 2, 2009 2008 ----------- ----------- (Unaudited) ASSETS Cash and cash equivalents $90,842 $68,201 Accounts receivable, net 85,165 163,005 Inventories 142,815 192,011 Deferred income taxes 24,259 24,259 Income taxes receivable 18,096 - Prepaid expenses and other 18,768 18,374 -------- ---------- Total current assets 379,945 465,850 -------- ---------- Property and equipment, net 249,795 251,163 Goodwill 107,736 616,626 Other assets 37,529 47,062 -------- ---------- Total assets $775,005 $1,380,701 ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt $180,880 $920 Accounts payable 83,320 104,348 Accrued expenses 90,574 129,864 -------- ---------- Total current liabilities 354,774 235,132 -------- ---------- Long-term debt 293,290 473,480 Deferred income taxes 27,466 44,332 Other long-term liabilities 4,828 3,928 Shareholders' equity 94,647 623,829 -------- ---------- Total liabilities and shareholders' equity $775,005 $1,380,701 ======== ========== NCI BUILDING SYSTEMS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) For the Three Months Ended February 1, 2009 January 27, 2008 ---------------- ---------------- Net cash provided by (used in) operating activities $30,172 $(19,986) ------- -------- Cash flows from investing activities: Capital expenditures (7,016) (5,803) Other 118 299 ------- -------- Net cash used in investing activities (6,898) (5,504) ------- -------- Cash flows from financing activities: Payments on long-term debt (230) (21,947) Proceeds from stock option exercises 12 327 Excess tax benefits from stock- based compensation arrangements - 128 Payment of financing costs (18) - Purchase of treasury stock (413) (1,513) ------- -------- Net cash used in financing activities (649) (23,005) ------- -------- Effect of exchange rate changes on cash and cash equivalents 16 (157) ------- -------- Net (decrease) increase in cash 22,641 (48,652) Cash at beginning of period 68,201 75,054 ------- -------- Cash at end of period $90,842 $26,402 ======= ======== NCI BUILDING SYSTEMS, INC. BUSINESS SEGMENTS (Unaudited) (In thousands) Three Months Three Months Ended Ended February 1, January 27, $ % 2009 2008 Inc/(Dec) Change ------------- ------------- --------- ------ % of % of Total Total Sales: Sales Sales Metal coil coating $41,501 16 $62,275 17 $(20,774) -33.4% Metal components 121,480 46 145,167 40 (23,687) -16.3% Engineered building systems 152,409 59 226,399 63 (73,990) -32.7% Intersegment sales (55,026) (21) (72,352) (20) 17,326 -23.9% -------- --- -------- --- --------- ----- Total net sales $260,364 100 $361,489 100 $(101,125) -28.0% ======== === ======== === ========= ===== Operating income % of % of (loss): Sales Sales Metal coil coating $(63,753) (154) $2,695 4 $(66,448) n/a Metal components (128,603) (106) 9,522 7 (138,125) n/a Engineered building systems (352,279) (231) 20,438 9 (372,717) n/a Corporate (13,252) - (14,159) - 907 n/a --------- ------- --------- --- Total operating income (loss) (% of sales) $(557,887) (214) $18,496 5 $(576,383) n/a ========= ======= ========= === NCI BUILDING SYSTEMS, INC. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS "ADJUSTED" EARNINGS (LOSS) PER DILUTED SHARE AND NET INCOME (LOSS) COMPARISON (Unaudited) Fiscal Three Months Ended February 1, January 27, 2009 2008 ----------- ----------- Earnings (loss) per diluted share, GAAP basis $(27.20) $0.39 Goodwill and other intangible asset impairment 25.72 - Lower of cost or market adjustment 0.96 - Restructuring charges 0.08 - Asset impairment 0.02 - ------ ----- "Adjusted" diluted earnings (loss) per share (A) $(0.42) $0.39 ====== ===== Fiscal Three Months Ended February 1, January 27, 2009 2008 ----------- ----------- Net income (loss), GAAP basis $(528,610) $7,510 Goodwill and other intangible asset impairment 499,883 - Lower of cost or market adjustment 18,740 - Restructuring charges 1,581 - Asset impairment 397 - ------- ------ "Adjusted" net income (loss) (A) $(8,009) $7,510 ======= ====== (A) The Company discloses a tabular comparison of "Adjusted" earnings (loss) per diluted share and net income (loss), 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" diluted earnings (loss) per share and net income (loss) should not be considered in isolation or as a substitute for earnings (loss) per diluted share and net income (loss) as reported on the face of our statement of income. 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 February 1, January 27, 2009 2008 ----------- ----------- Net income (loss) $(457,239) $60,786 Add: Provision for income taxes 12,790 39,170 Interest expense 21,011 28,212 Depreciation and amortization 33,914 35,658 Non-cash FAS 123(R) 8,005 9,621 Goodwill and other intangible asset impairment 517,628 - Lower of cost or market adjustment 32,117 - Asset impairment 816 - -------- -------- Adjusted EBITDA (1) $169,042 $173,447 -------- -------- (1) Adjusted EBITDA is calculated based on the terms contained in the Company's credit agreement at the respective dates presented herein. Adjusted EBITDA excludes non-cash charges for goodwill and other asset impairments, a lower of cost or market adjustment and stock compensation. The Company is disclosing adjusted EBITDA, which is a non-GAAP measure, because it is used by management and provided to investors to provide comparability of underlying operational results. NCI BUILDING SYSTEMS, INC. RECONCILIATION OF SEGMENT SALES TO THIRD PARTY SEGMENT SALES (INTERNAL INFORMATION) (Unaudited) (In thousands) 1st Qtr 1st Qtr % 2009 2008 Inc/(Dec) Change ------- ------- Metal Coil Coating Total Sales 41,501 13% 62,275 14% (20,774) -33% Intersegment (30,077) (42,893) 12,816 -30% ------- ------- Third Party Sales 11,424 4% 19,382 5% (7,958) -41% Operating Income (Loss) (63,753) -558% 2,695 14% (66,448) n/a Metal Components Total 121,480 39% 145,167 34% (23,687) -16% Intersegment (20,438) (21,804) 1,366 -6% ------- ------- Third Party Sales 101,042 39% 123,363 34% (22,321) -18% Operating Income (Loss) (128,603) -127% 9,522 8% (138,125) n/a Engineered Building Systems Total 152,409 48% 226,399 52% (73,990) -33% Intersegment (4,511) (7,655) 3,144 -41% ------- ------- Third Party Sales 147,898 57% 218,744 61% (70,846) -32% Operating Income (Loss) (352,279) -238% 20,438 9% (372,717) n/a Consolidated Total 315,390 100% 433,841 100% (118,451) -27% Intersegment (55,026) (72,352) 17,326 -24% ------- ------- Third Party Sales 260,364 100% 361,489 100% (101,125) -28% Operating Income (Loss) (557,887) -214% 18,496 5% (576,383) n/a

SOURCE NCI Building Systems, Inc.

Source: PR Newswire

More News in this Category