Exhibit 99.1
NEWS RELEASE
NCI Building Systems Reports Strong
Second Fiscal Quarter 2016 Results
HOUSTON, May 31, 2016 – NCI Building Systems, Inc. (NYSE: NCS) (“NCI” or the “Company”) today reported financial results for its second fiscal quarter ended May 1, 2016.
Second Quarter 2016 Financial and Operational Highlights:
| |
| • | Sales rose 3.4% to $372.2 million, compared to $360.1 million in last year’s second quarter, on a 15.8% improvement in tonnage volumes |
| |
| • | Gross profit increased 17.8% to $89.4 million year-over-year and gross margin expanded 290 basis points year-over-year to 24.0%. |
| |
| • | Net income was $2.4 million and net income per diluted common share was $0.03, which included several offsetting special items that had a $0.01 negative net impact on results. |
| |
| • | Adjusted EBITDA increased 60.8% to $25.5 million and Adjusted EBITDA margin of 6.8% expanded 240 basis points compared to the prior year’s second quarter. |
| |
| • | Total consolidated backlog increased to $533.4 million, up 5.7% year-over-year. |
Norman C. Chambers, Chairman and Chief Executive Officer, commented, “We are pleased to deliver second quarter results that continue to reflect the internal improvements we have made in our commercial, manufacturing and supply chain groups. In a quarter that is, historically one of the company’s most volatile due to seasonal patterns, NCI has delivered another solid result of year-over-year improvement in gross margins and Adjusted EBITDA. Each of our three business segments have experienced year-over-year gross profit improvements based on a 15.8% increase in underlying total tonnage volumes during the quarter. While the non-residential market continues an uneven and slow recovery, NCI’s customer sentiment is strengthening and we are benefiting from improving quoting and bookings activity.”
Second Quarter 2016 Results
Second quarter 2016 sales increased to $372.2 million, or 3.4%, from $360.1 million in last year's second quarter, due mainly to increased volumes across all three segments. With steel costs lower on a year-over-year basis, each segment maintained its commercial discipline. The pass-through of lower steel costs resulted in lower revenue growth while underlying volumes and margins improved.
Gross profit increased 17.8% to $89.4 million from $75.9 million in the second quarter of 2015, while gross profit margin expanded 290 basis points to 24.0%, compared to 21.1% in the prior year period. Improved margin performance during the quarter was driven largely by a continued focus on commercial discipline, supply chain effectiveness and higher plant utilization. In addition, approximately 25 basis points of the improvement resulted from a gain of $0.9 million related to the sale of a previously idled manufacturing facility as part of the Company’s manufacturing restructuring program.
Engineering, selling, general and administrative (ESG&A) expenses increased 2.2% to $74.6 million from $73.0 million in the second quarter of 2015 due largely to increased volume which led to higher selling cost and higher incentive compensation charges on improved operating results. As a percentage of revenues, ESG&A expenses decreased approximately 20 basis points to 20.1% in the 2016 second quarter compared to 20.3 % in the prior year’s period.
Operating income increased to $10.6 million, compared to a loss of $3.6 million in the prior year’s second quarter. Adjusted operating income, a non-GAAP measure, increased 618% to $11.4 million in the current quarter from $1.6 million in the second quarter of 2015 due to the expansion in gross profit margin. Please see the reconciliation of Adjusted Operating Income, Adjusted EBITDA and Adjusted Net Income in the accompanying financial tables.
Second quarter 2016 net income was $2.4 million, or $0.03 per diluted common share, which included $0.5 million of special charges related to $1.1 million of restructuring and severance costs and $0.6 million of strategic development and acquisition
related costs pertaining to completed acquisitions. Offsetting these charges was a gain of $0.9 million from the sale of a previously idled Buildings group industrial facility and the tax effect associated with the special charges of $0.3 million. On a year-over-year basis, net income increased $9.9 million, or $0.13 per diluted common share. The second quarter of 2015 included $3.2 million of similar special charges, net of tax.
Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's term loan credit agreement as earnings before interest, taxes, depreciation and amortization, and other cash and non-cash items, was $25.5 million, up 60.8% from $15.8 million in the prior year’s second quarter. This performance marks a continuation from the first quarter 2016, in which Adjusted EBITDA increased 48.4% year-over-year.
Cash and cash equivalents at quarter’s end was $77.9 million compared to $25.3 million at the comparable period in fiscal 2015 and sequentially was $73.8 million at the end of the first quarter of fiscal 2016. The Company paid down an additional $10 million under its term loan in the second quarter of fiscal 2016, and expects to make total debt repayments of $40 million during the current fiscal year. NCI’s net debt leverage ratio at the end of the second fiscal quarter improved to 2.3x, moving closer to the pre- CENTRIA acquisition net leverage of 2.2x. In addition, the Company’s $150.0 million asset based lending facility remained undrawn as of May 1, 2016.
Second Quarter 2016 Segment Performance
Third party sales in the Buildings group decreased slightly to $134.5 million in the second quarter from $138.7 million in the prior year quarter, primarily due to modestly increased volumes offset by lower steel cost pass-through. Operating income increased 151.9% to $7.2 million in the current quarter, compared to $2.9 million in the second quarter of fiscal 2015. Adjusted operating income increased 75.9% to $6.4 million in the current quarter, compared to $3.6 million in the second quarter of fiscal 2015. The improved margins in the Buildings segment were driven by lower material costs, primarily from lower steel prices and effective supply chain management.
The Components group generated $211.7 million in third-party sales during the quarter, an increase of 6.5% from $198.7 million in the second quarter of fiscal 2015, led by the continued strength of the legacy metal component product lines. Operating income increased 156.9% to $17.8 million in the current quarter, compared to $6.9 million in the second quarter of fiscal 2015. Adjusted operating income increased to $18.5 million from $10.7 million in the same quarter last fiscal year. The Components segment’s profitability benefited from a combination of effective supply chain management and commercial discipline, as well as greater efficiencies as a result of the manufacturing reorganization.
Third party sales in the Coatings group were $26.1 million, a 14.6% increase from $22.8 million in last year’s second quarter. Operating income increased 96.3% to $4.7 million in the current quarter, compared to $2.4 million in the second quarter of fiscal 2015. Adjusted operating income increased 78.9% to $4.7 million in the second quarter of fiscal 2016, compared to $2.7 million reported in the same period last year. The Coatings segment’s adjusted operating income improvement was driven primarily by increased operating leverage on higher total volumes processed, combined with cost reductions from restructuring efforts.
Market Commentary
Current market data from internal bookings reflects several positive end-market segments showing year-over-year growth including agricultural, commercial warehouse, government, healthcare, recreational and transportation. Geographic markets reflecting year-over-year growth include Eastern Central, Mid-Atlantic, Mountain, New England and Pacific areas.
The combination of leading indicators that the Company continues to track include residential starts (a 13-month lag), the American Institute of Architects Billings Index for mixed practices (a 13-month lag) and the Conference Board’s Leading Economic Index (a 9-month lag) has 96.7% correlation with Dodge (low-rise) new construction starts. Based on these leading indicators, the Company is expecting positive growth of 4.0% - 6.0% in low-rise new construction starts during fiscal year 2016.
Outlook
For the full year, NCI continues to expect 2016 to be a better year than 2015 in terms of both gross margin and Adjusted EBITDA. Similar to past years’ seasonal trends, the Company expects the second half performance in fiscal 2016 to be stronger than the first half.
For additional information and a more detailed outlook on the second quarter, please see the CFO Commentary at www.ncibuildingsystems.com under the “Investors” section.
Conference Call Information
The NCI Building Systems, Inc. second quarter 2016 conference call is scheduled for Wednesday, June 1, 2016, 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. In conjunction with the earnings release, the CFO Commentary and supporting supplement slide deck will be posted on the NCI website in the Quarterly Earnings & Transcripts section of the Investor Relations page. To access the taped replay, please dial
1-201-612-7415 or 1-877-660-6853 (toll-free) and the passcode 13637119# when prompted. The taped replay will be available two hours after the call through June 8, 2016.
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:
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 include, but are not limited to, the Company’s expectation of a stronger second half performance as compared to the first half in fiscal 2016, the Company’s expectation for positive growth of 4.0%-6.0% in low-rise new construction starts during fiscal 2016, the Company’s expectation of year-over-year improvement in gross profit margin and Adjusted EBITDA, and the Company’s expectation to reduce its debt by $40 million in fiscal 2016. 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; our ability to make strategic acquisitions accretive to earnings; retention and replacement of key personnel; 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; our ability to integrate the acquisition of CENTRIA with our business and to realize the anticipated benefits of such acquisition; 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 November 1, 2015, 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 |
| | May 1,
2016 | | May 3,
2015 | | May 1,
2016 | | May 3,
2015 |
| Sales | $ | 372,247 |
| | $ | 360,147 |
| | $ | 742,261 |
| | $ | 683,073 |
|
| Cost of sales | 283,799 |
| | 284,258 |
| | 564,822 |
| | 535,045 |
|
| Gain on sale of assets and asset recovery | (927 | ) | | — |
| | (1,652 | ) | | — |
|
| Gross profit | 89,375 |
| | 75,889 |
| | 179,091 |
| | 148,028 |
|
| | 24.0 | % | | 21.1 | % | | 24.1 | % | | 21.7 | % |
| | | | | | | | |
| Engineering, selling, general and administrative expenses | 74,648 |
| | 73,035 |
| | 144,498 |
| | 135,904 |
|
| Intangible asset amortization | 2,405 |
| | 4,375 |
| | 4,821 |
| | 5,868 |
|
| Strategic development and acquisition related costs | 579 |
| | 628 |
| | 1,260 |
| | 2,357 |
|
| Restructuring and impairment charges | 1,149 |
| | 1,468 |
| | 2,659 |
| | 2,945 |
|
| Income (loss) from operations | 10,594 |
| | (3,617 | ) | | 25,853 |
| | 954 |
|
| Gain from bargain purchase | — |
| | — |
| | 1,864 |
| | — |
|
| Interest income | 52 |
| | 32 |
| | 74 |
| | 39 |
|
| Interest expense | (7,844 | ) | | (8,312 | ) | | (15,713 | ) | | (12,299 | ) |
| Foreign exchange gain (loss) | 576 |
| | (10 | ) | | (166 | ) | | (1,411 | ) |
| Other income, net | 251 |
| | 332 |
| | 62 |
| | 332 |
|
| Income (loss) before income taxes | 3,629 |
| | (11,575 | ) | | 11,974 |
| | (12,385 | ) |
| Provision (benefit) from income taxes | 1,209 |
| | (4,087 | ) | | 3,662 |
| | (4,577 | ) |
| | 33.3 | % | | 35.3 | % | | 30.6 | % | | 37.0 | % |
| | | | | | | | |
| Net income (loss) | $ | 2,420 |
| | $ | (7,488 | ) | | $ | 8,312 |
| | $ | (7,808 | ) |
| Net income allocated to participating securities | (23 | ) | | — |
| | (79 | ) | | — |
|
| Net income (loss) applicable to common shares | $ | 2,397 |
| | $ | (7,488 | ) | | $ | 8,233 |
| | $ | (7,808 | ) |
| | | | | | | | |
| Income (loss) per common share: | |
| | |
| | | | |
| Basic | $ | 0.03 |
| | $ | (0.10 | ) | | $ | 0.11 |
| | $ | (0.11 | ) |
| Diluted | $ | 0.03 |
| | $ | (0.10 | ) | | $ | 0.11 |
| | $ | (0.11 | ) |
| | | | | | | | |
| Weighted average number of common shares outstanding: | |
| | |
| | | | |
| Basic | 72,352 |
| | 73,133 |
| | 72,806 |
| | 73,102 |
|
| Diluted | 72,886 |
| | 73,133 |
| | 73,321 |
| | 73,102 |
|
| | | | | | | | |
| Increase in sales | 3.4 | % | | 17.8 | % | | 8.7 | % | | 10.8 | % |
| | |
| | |
| | | | |
| Engineering, selling, general and administrative expenses percentage | 20.1 | % | | 20.3 | % | | 19.5 | % | | 19.9 | % |
|
|
| NCI BUILDING SYSTEMS, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (In thousands) |
|
| | | | | | | |
| | May 1,
2016 | | November 1,
2015 |
| | (Unaudited) | | |
| ASSETS | |
| | |
|
| Cash and cash equivalents | $ | 77,916 |
| | $ | 99,662 |
|
| Restricted cash | 731 |
| | 682 |
|
| Accounts receivable, net | 139,603 |
| | 166,800 |
|
| Inventories, net | 151,477 |
| | 157,828 |
|
| Deferred income taxes | 28,254 |
| | 27,390 |
|
| Income taxes receivable | 4,140 |
| | — |
|
| Prepaid expenses and other | 29,229 |
| | 31,834 |
|
| Investments in debt and equity securities, at market | 5,726 |
| | 5,890 |
|
| Assets held for sale | 3,378 |
| | 6,261 |
|
| Total current assets | 440,454 |
| | 496,347 |
|
| Property, plant and equipment, net | 255,972 |
| | 257,892 |
|
| Goodwill | 158,106 |
| | 158,026 |
|
| Intangible assets, net | 151,586 |
| | 156,395 |
|
| Other assets | 10,624 |
| | 11,069 |
|
| Total assets | $ | 1,016,742 |
| | $ | 1,079,729 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | |
|
| Note payable | $ | 1,379 |
| | $ | 513 |
|
| Accounts payable | 121,284 |
| | 145,917 |
|
| Accrued compensation and benefits | 53,589 |
| | 62,200 |
|
| Accrued interest | 6,515 |
| | 6,389 |
|
| Accrued income taxes | — |
| | 9,296 |
|
| Other accrued expenses | 89,804 |
| | 97,309 |
|
| Total current liabilities | 272,571 |
| | 321,624 |
|
| Long-term debt, net | 424,147 |
| | 444,147 |
|
| Deferred income taxes | 23,573 |
| | 20,807 |
|
| Other long-term liabilities | 20,945 |
| | 21,175 |
|
| Total long-term liabilities | 468,665 |
| | 486,129 |
|
| Common stock | 732 |
| | 745 |
|
| Additional paid-in capital | 630,951 |
| | 640,767 |
|
| Accumulated deficit | (345,421 | ) | | (353,733 | ) |
| Accumulated other comprehensive loss | (8,129 | ) | | (8,280 | ) |
| Treasury stock, at cost | (2,627 | ) | | (7,523 | ) |
| Total stockholders' equity | 275,506 |
| | 271,976 |
|
| Total liabilities and stockholders' equity | $ | 1,016,742 |
| | $ | 1,079,729 |
|
|
|
| NCI BUILDING SYSTEMS, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In thousands) |
| (Unaudited) |
|
| | | | | | | |
| | Fiscal Six Months Ended |
| | May 1,
2016 | | May 3,
2015 |
| Cash flows from operating activities: | |
| | |
|
| Net income (loss) | $ | 8,312 |
| | $ | (7,808 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |
| | |
|
| Depreciation and amortization | 21,512 |
| | 23,497 |
|
| Deferred financing cost amortization | 954 |
| | 118 |
|
| Share-based compensation expense | 5,050 |
| | 5,134 |
|
| Gain from bargain purchase | (1,864 | ) | | — |
|
| Gain on sale of assets and asset recovery | (1,652 | ) | | (26 | ) |
| (Recovery of) provision for doubtful accounts | 1,898 |
| | (129 | ) |
| Provision for (benefit from) deferred income taxes | 1,668 |
| | 5,506 |
|
| Excess tax shortfalls (benefits) from share-based compensation arrangements | 390 |
| | (384 | ) |
| Changes in operating assets and liabilities, net of effect of acquisitions: | |
| | |
|
| Accounts receivable | 25,299 |
| | 30,268 |
|
| Inventories | 6,555 |
| | 1,660 |
|
| Income taxes receivable | (4,140 | ) | | (6,373 | ) |
| Prepaid expenses and other | 3,699 |
| | (176 | ) |
| Accounts payable | (24,633 | ) | | (25,044 | ) |
| Accrued expenses | (22,976 | ) | | (28,910 | ) |
| Other, net | (59 | ) | | (634 | ) |
| Net cash provided by (used in) operating activities | 20,013 |
| | (3,301 | ) |
| Cash flows from investing activities: | |
| | |
|
| Acquisitions, net of cash acquired | (4,343 | ) | | (247,123 | ) |
| Capital expenditures | (10,280 | ) | | (9,307 | ) |
| Proceeds from sale of property, plant and equipment | 4,663 |
| | 26 |
|
| Net cash used in investing activities | (9,960 | ) | | (256,404 | ) |
| Cash flows from financing activities: | |
| | |
|
| Proceeds from stock options exercised | 1,401 |
| | 354 |
|
| Deposit of restricted cash | (49 | ) | | — |
|
| Issuance of debt | — |
| | 250,000 |
|
| Payments on term loan | (20,000 | ) | | (21,239 | ) |
| Payments on note payable | (531 | ) | | (417 | ) |
| Payment of financing costs | — |
| | (8,879 | ) |
| Purchases of treasury stock | (12,381 | ) | | (1,539 | ) |
| Excess tax benefits (shortfalls) from share-based compensation arrangements | (390 | ) | | 384 |
|
| Net cash provided by (used in) financing activities | (31,950 | ) | | 218,664 |
|
| Effect of exchange rate changes on cash and cash equivalents | 151 |
| | (334 | ) |
| Net decrease in cash and cash equivalents | (21,746 | ) | | (41,375 | ) |
| Cash and cash equivalents at beginning of period | 99,662 |
| | 66,651 |
|
| Cash and cash equivalents at end of period | $ | 77,916 |
| | $ | 25,276 |
|
|
|
| NCI Building Systems, Inc. |
| Business Segments |
| (In thousands) |
| (Unaudited) |
|
| | | | | | | | | | | | | | | | | | | | |
| | Fiscal Three Months Ended | | Fiscal Three Months Ended | | $ | | % |
| | May 1, 2016 | | May 3, 2015 | | Inc/(Dec) | | Change |
| | | | % of
Total
Sales | | | | % of
Total
Sales | | | | |
| Sales: | | | | | | | | | | | |
| Engineered building systems | $ | 138,023 |
| | 32 |
| | $ | 143,245 |
| | 35 |
| | $ | (5,222 | ) | | -3.6 | % |
| Metal components | 234,637 |
| | 55 |
| | 221,118 |
| | 53 |
| | 13,519 |
| | 6.1 | % |
| Metal coil coating | 55,178 |
| | 13 |
| | 49,998 |
| | 12 |
| | 5,180 |
| | 10.4 | % |
| Total sales | 427,838 |
| | 100 |
| | 414,361 |
| | 100 |
| | 13,477 |
| | 3.3 | % |
| Less: Intersegment sales | 55,591 |
| | 13 |
| | 54,214 |
| | 13 |
| | 1,377 |
| | 2.5 | % |
| Total net sales | $ | 372,247 |
| | 87 |
| | $ | 360,147 |
| | 87 |
| | $ | 12,100 |
| | 3.4 | % |
| | | | | | | | | | | | |
| | |
| | % of
Sales | | |
| | % of
Sales | | |
| | |
|
| Operating income (loss): | |
| | | | |
| | | | |
| | |
|
| Engineered building systems | $ | 7,193 |
| | 5 |
| | $ | 2,855 |
| | 2 |
| | $ | 4,338 |
| | 151.9 | % |
| Metal components | 17,835 |
| | 8 |
| | 6,941 |
| | 3 |
| | 10,894 |
| | 157.0 | % |
| Metal coil coating | 4,704 |
| | 9 |
| | 2,397 |
| | 5 |
| | 2,307 |
| | 96.2 | % |
| Corporate | (19,138 | ) | | — |
| | (15,810 | ) | | — |
| | (3,328 | ) | | -21.1 | % |
Total operating income (loss)
(% of sales) | $ | 10,594 |
| | 3 |
| | $ | (3,617 | ) | | (1 | ) | | $ | 14,211 |
| | 392.9 | % |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Fiscal Six Months Ended | | Fiscal Six Months Ended | | $ | | % |
| | May 1, 2016 | | May 3, 2015 | | Inc/(Dec) | | Change |
| | | | % of
Total
Sales | | | | % of
Total
Sales | | | | |
| Sales: | | | | | | | | | | | |
| Engineered building systems | $ | 286,998 |
| | 34 |
| | $ | 293,045 |
| | 37 |
| | $ | (6,047 | ) | | -2.1 | % |
| Metal components | 464,303 |
| | 54 |
| | 393,907 |
| | 50 |
| | 70,396 |
| | 17.9 | % |
| Metal coil coating | 106,383 |
| | 12 |
| | 105,608 |
| | 13 |
| | 775 |
| | 0.7 | % |
| Total sales | 857,684 |
| | 100 |
| | 792,560 |
| | 100 |
| | 65,124 |
| | 8.2 | % |
| Less: Intersegment sales | 115,423 |
| | 13 |
| | 109,487 |
| | 14 |
| | 5,936 |
| | 5.4 | % |
| Total net sales | $ | 742,261 |
| | 87 |
| | $ | 683,073 |
| | 86 |
| | $ | 59,188 |
| | 8.7 | % |
| | | | | | | | | | | | |
| | | | % of
Sales | | |
| | % of
Sales | | |
| | |
|
| Operating income (loss): | | | | | |
| | | | |
| | |
|
| Engineered building systems | $ | 19,655 |
| | 7 |
| | $ | 11,574 |
| | 4 |
| | $ | 8,081 |
| | 69.8 | % |
| Metal components | 33,938 |
| | 7 |
| | 15,277 |
| | 4 |
| | 18,661 |
| | 122.2 | % |
| Metal coil coating | 9,525 |
| | 9 |
| | 6,375 |
| | 6 |
| | 3,150 |
| | 49.4 | % |
| Corporate | (37,265 | ) | | — |
| | (32,272 | ) | | — |
| | (4,993 | ) | | -15.5 | % |
Total operating income (loss)
(% of sales) | $ | 25,853 |
| | 3 |
| | $ | 954 |
| | — |
| | $ | 24,899 |
| | 2,610.0 | % |
|
|
| 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 MAY 1, 2016 AND MAY 3, 2015 |
| (In thousands) |
| (Unaudited) |
|
| | | | | | | | | | | | | | | | | | | |
| | Fiscal Three Months Ended May 1, 2016 |
| | Engineered Building Systems | | Metal Components | | Metal Coil Coating | | Corporate | | Consolidated |
| 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 costs | — |
| | 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 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Fiscal Three Months Ended May 3, 2015 |
| | Engineered Building Systems | | Metal Components | | Metal Coil Coating | | Corporate | | Consolidated |
| Operating income (loss), GAAP basis | $ | 2,855 |
| | $ | 6,941 |
| | $ | 2,397 |
| | $ | (15,810 | ) | | $ | (3,617 | ) |
| Restructuring and impairment charges | 792 |
| | 629 |
| | 254 |
| | (207 | ) | | 1,468 |
|
| Strategic development and acquisition related costs | — |
| | — |
| | — |
| | 628 |
| | 628 |
|
| Short lived acquisition method fair value adjustments | — |
| | 3,109 |
| | — |
| | — |
| | 3,109 |
|
Adjusted operating income (loss)(1) | $ | 3,647 |
| | $ | 10,679 |
| | $ | 2,651 |
| | $ | (15,389 | ) | | $ | 1,588 |
|
| |
| (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 MAY 1, 2016 AND MAY 3, 2015 |
| (In thousands) |
| (Unaudited) |
|
| | | | | | | | | | | | | | | | | | | |
| | Fiscal Six Months Ended May 1, 2016 |
| | Engineered Building Systems | | Metal Components | | Metal Coil Coating | | Corporate | | Consolidated |
| 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) | $ | 18,652 |
| | $ | 35,227 |
| | $ | 9,564 |
| | $ | (35,323 | ) | | $ | 28,120 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Fiscal Six Months Ended May 3, 2015 |
| | Engineered Building Systems | | Metal Components | | Metal Coil Coating | | Corporate | | Consolidated |
| Operating income (loss), GAAP basis | $ | 11,574 |
| | $ | 15,277 |
| | $ | 6,375 |
| | $ | (32,272 | ) | | $ | 954 |
|
| Restructuring and impairment charges | 1,661 |
| | 1,237 |
| | 254 |
| | (207 | ) | | 2,945 |
|
| Strategic development and acquisition related costs | — |
| | — |
| | — |
| | 2,357 |
| | 2,357 |
|
| Short lived acquisition method fair value adjustments | — |
| | 4,081 |
| | — |
| | — |
| | 4,081 |
|
| Adjusted operating income (loss) | $ | 13,235 |
| | $ | 20,595 |
| | $ | 6,629 |
| | $ | (30,122 | ) | | $ | 10,337 |
|
| |
| (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 ITEMS (ADJUSTED EBITDA) |
| (In thousands) |
| (Unaudited) |
|
| | | | | | | | | | | | | | | | | | | |
| | 3rd Quarter
August 2,
2015 | | 4th Quarter
November 1,
2015 | | 1st Quarter
January 31,
2016 | | 2nd Quarter
May 1,
2016 | | Trailing
12 Months
May 1,
2016 |
| Net income (loss) | $ | 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 (benefit) 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 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | 3rd Quarter
August 3,
2014 | | 4th Quarter
November 2,
2014 | | 1st Quarter
February 1,
2015 | | 2nd Quarter
May 3,
2015 | | Trailing
12 Months
May 3,
2015 |
| Net income (loss) | $ | 6,089 |
| | $ | 14,259 |
| | $ | (320 | ) | | $ | (7,488 | ) | | $ | 12,540 |
|
| Add: | |
| | |
| | |
| | |
| | |
| Depreciation and amortization | 8,994 |
| | 9,220 |
| | 9,731 |
| | 13,766 |
| | 41,711 |
|
| Consolidated interest expense, net | 3,142 |
| | 3,053 |
| | 3,980 |
| | 8,280 |
| | 18,455 |
|
| Provision (benefit) for income taxes | 2,837 |
| | 4,215 |
| | (490 | ) | | (4,087 | ) | | 2,475 |
|
| Restructuring and impairment charges | — |
| | — |
| | 1,477 |
| | 1,759 |
| | 3,236 |
|
| Strategic development and acquisition related costs | 1,486 |
| | 3,512 |
| | 1,729 |
| | 628 |
| | 7,355 |
|
| Fair value adjustments of acquired inventory | — |
| | — |
| | 583 |
| | 775 |
| | 1,358 |
|
| Share-based compensation | 2,404 |
| | 2,022 |
| | 2,933 |
| | 2,201 |
| | 9,560 |
|
Adjusted EBITDA(1) | $ | 24,952 |
| | $ | 36,281 |
| | $ | 19,623 |
| | $ | 15,834 |
| | $ | 96,690 |
|
| |
| (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 non-recurring 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 (LOSS) PER DILUTED COMMON SHARE AND NET INCOME (LOSS) COMPARISON |
| (Unaudited) |
|
| | | | | | | | | | | | | | | |
| | Fiscal Three Months Ended | | Fiscal Six Months Ended |
| | May 1,
2016 | | May 3,
2015 | | May 1,
2016 | | May 3,
2015 |
| Net income (loss) per diluted common share, GAAP basis | $ | 0.03 |
| | $ | (0.10 | ) | | $ | 0.11 |
| | $ | (0.11 | ) |
| Restructuring and impairment charges | 0.02 |
| | 0.02 |
| | 0.04 |
| | 0.04 |
|
| Strategic development and acquisition related costs | 0.01 |
| | 0.01 |
| | 0.02 |
| | 0.03 |
|
| Gain on sale of assets and asset recovery | (0.01 | ) | | — |
| | (0.02 | ) | | — |
|
| Gain from bargain purchase | — |
| | — |
| | (0.03 | ) | | — |
|
| Short lived acquisition method fair value adjustments | — |
| | 0.04 |
| | — |
| | 0.06 |
|
Tax effect of applicable non-GAAP adjustments(1) | (0.01 | ) | | (0.03 | ) | | (0.01 | ) | | (0.05 | ) |
Adjusted net income (loss) per diluted common share(2) | $ | 0.04 |
| | $ | (0.06 | ) | | $ | 0.11 |
| | $ | (0.03 | ) |
|
| | | | | | | | | | | | | | | |
| | Fiscal Three Months Ended | | Fiscal Six Months Ended |
| | May 1,
2016 | | May 3,
2015 | | May 1,
2016 | | May 3,
2015 |
| Net loss per diluted common share, GAAP basis | $ | 2,397 |
| | $ | (7,488 | ) | | $ | 8,233 |
| | $ | (7,808 | ) |
| Restructuring and impairment charges | 1,149 |
| | 1,468 |
| | 2,659 |
| | 2,945 |
|
| Strategic development and acquisition related costs | 579 |
| | 628 |
| | 1,260 |
| | 2,357 |
|
| Gain on sale of assets and asset recovery | (927 | ) | | — |
| | (1,652 | ) | | — |
|
| Gain from bargain purchase | — |
| | — |
| | (1,864 | ) | | — |
|
| Short lived acquisition method fair value adjustments | — |
| | 3,109 |
| | — |
| | 4,081 |
|
Tax effect of applicable non-GAAP adjustments(1) | (312 | ) | | (1,999 | ) | | (884 | ) | | (3,603 | ) |
Adjusted net income (loss) applicable to common shares(2) | $ | 2,886 |
| | $ | (4,282 | ) | | $ | 7,752 |
| | $ | (2,028 | ) |
| |
| (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 (loss) per diluted common share and Adjusted net income (loss) 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 (loss) per diluted common share and Adjusted net income (loss) applicable to common shares should not be considered in isolation or as a substitute for net income (loss) per diluted common share and net income (loss) 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
2nd Qtr 2016 | | | | Fiscal
2nd Qtr 2015 | | | | Inc/(Dec) | | %
Change |
| Engineered Building Systems | |
| | | | |
| | | | |
| | |
| Total Sales | $ | 138,023 |
| | 32% | | $ | 143,245 |
| | 35% | | (5,222 | ) | | -3.6% |
| Less: Intersegment sales | 3,569 |
| | | | 4,583 |
| | | | (1,014 | ) | | -22.1% |
| Third Party Sales | $ | 134,454 |
| | 36% | | $ | 138,662 |
| | 39% | | (4,208 | ) | | -3.0% |
| Operating Income | $ | 7,193 |
| | 5% | | $ | 2,855 |
| | 2% | | 4,338 |
| | 151.9% |
| Metal Components | |
| | | | |
| | | | |
| | |
| Total Sales | $ | 234,637 |
| | 55% | | $ | 221,118 |
| | 53% | | 13,519 |
| | 6.1% |
| Less: Intersegment sales | 22,976 |
| | | | 22,437 |
| | | | 539 |
| | 2.4% |
| Third Party Sales | $ | 211,661 |
| | 57% | | $ | 198,681 |
| | 55% | | 12,980 |
| | 6.5% |
| Operating Income | $ | 17,835 |
| | 8% | | $ | 6,941 |
| | 3% | | 10,894 |
| | 156.9% |
| Metal Coil Coating | |
| | | | |
| | | | |
| | |
| Total Sales | $ | 55,178 |
| | 13% | | $ | 49,998 |
| | 12% | | 5,180 |
| | 10.4% |
| Less: Intersegment sales | 29,046 |
| | | | 27,194 |
| | | | 1,852 |
| | 6.8% |
| Third Party Sales | $ | 26,132 |
| | 7% | | $ | 22,804 |
| | 6% | | 3,328 |
| | 14.6% |
| Operating Income | $ | 4,704 |
| | 18% | | $ | 2,397 |
| | 11% | | 2,307 |
| | 96.3% |
| Consolidated | |
| | | | |
| | | | |
| | |
| Total Sales | $ | 427,838 |
| | 100% | | $ | 414,361 |
| | 100% | | 13,477 |
| | 3.3% |
| Less: Intersegment | 55,591 |
| | | | 54,214 |
| | | | 1,377 |
| | 2.5% |
| Third Party Sales | $ | 372,247 |
| | 100% | | $ | 360,147 |
| | 100% | | 12,100 |
| | 3.4% |
| Operating Income | $ | 10,594 |
| | 3% | | $ | (3,617 | ) | | -1% | | 14,211 |
| | 392.9% |
| | | | | | | | | | | | |
| | Fiscal YTD
2nd Qtr 2016 | | | | Fiscal YTD
2nd Qtr 2015 | | | | Inc/(Dec) | | %
Change |
| Engineered Building Systems | |
| | | | |
| | | | |
| | |
| Total Sales | $ | 286,998 |
| | 34% | | $ | 293,045 |
| | 37% | | (6,047 | ) | | -2.1% |
| Less: Intersegment sales | 6,593 |
| | | | 9,889 |
| | | | (3,296 | ) | | -33.3% |
| Third Party Sales | $ | 280,405 |
| | 38% | | $ | 283,156 |
| | 41% | | (2,751 | ) | | -1.0% |
| Operating Income | $ | 19,655 |
| | 7% | | $ | 11,574 |
| | 4% | | 8,081 |
| | 69.8% |
| Metal Components | |
| | | | |
| | | | | | |
| Total Sales | $ | 464,303 |
| | 53% | | $ | 393,907 |
| | 50% | | 70,396 |
| | 17.9% |
| Less: Intersegment sales | 49,741 |
| | | | 41,198 |
| | | | 8,543 |
| | 20.7% |
| Third Party Sales | $ | 414,562 |
| | 56% | | $ | 352,709 |
| | 52% | | 61,853 |
| | 17.5% |
| Operating Income | $ | 33,938 |
| | 8% | | $ | 15,277 |
| | 4% | | 18,661 |
| | 122.2% |
| Metal Coil Coating | |
| | | | |
| | | | | | |
| Total Sales | $ | 106,383 |
| | 13% | | $ | 105,608 |
| | 13% | | 775 |
| | 0.7% |
| Less: Intersegment sales | 59,089 |
| | | | 58,400 |
| | | | 689 |
| | 1.2% |
| Third Party Sales | $ | 47,294 |
| | 6% | | $ | 47,208 |
| | 7% | | 86 |
| | 0.2% |
| Operating Income | $ | 9,525 |
| | 20% | | $ | 6,375 |
| | 14% | | 3,150 |
| | 49.4% |
| Consolidated | |
| | | | |
| | | | | | |
| Total Sales | $ | 857,684 |
| | 100% | | $ | 792,560 |
| | 100% | | 65,124 |
| | 8.2% |
| Less: Intersegment | 115,423 |
| | | | 109,487 |
| | | | 5,936 |
| | 5.4% |
| Third Party Sales | $ | 742,261 |
| | 100% | | $ | 683,073 |
| | 100% | | 59,188 |
| | 8.7% |
| Operating Income | $ | 25,853 |
| | 3% | | $ | 954 |
| | 0% | | 24,899 |
| | 2,610.0% |
