Exhibit 99.1
| | |
Contact: | | Norman C. Chambers |
| | | President & Chief Operating Officer |
| | | (281) 897-7788 |
NCI BUILDING SYSTEMS REPORTS FOURTH-QUARTER EARNINGS OF
$0.96 PER DILUTED SHARE
EXPECTS STRENGTHENING INDUSTRY ENVIRONMENT TO DRIVE GROWTH
FOR THE FIRST QUARTER OF FISCAL 2006
HOUSTON (December 7, 2005) – NCI Building Systems, Inc. (NYSE: NCS) today announced financial results for the fourth quarter and year ended October 29, 2005. Sales increased 7.1% to a quarterly record $341.5 million for the fourth quarter of fiscal 2005 from $319.0 million for the fourth quarter of fiscal 2004. Net income for the fourth quarter of fiscal 2005 was $19.8 million, or $0.96 per diluted share, compared with $23.0 million, or $1.13 per diluted share, for the fourth quarter of fiscal 2004.
Sales for fiscal 2005 were a record $1,130.1 million compared with $1,084.9 million for fiscal 2004. Net income increased to a record $56.0 million, or $2.68 per diluted share, for fiscal 2005 from $44.9 million, or $2.24 per diluted share, for fiscal 2004. Net income for fiscal 2005 included the effect of an after-tax benefit of $1.1 million, or $0.05 per diluted share, related to more favorable group medical claims experience than expected, and for fiscal 2004 included the effect of an after-tax charge of $5.8 million, or $0.29 per diluted share, related to debt refinancing costs.
“In addition to meeting our earnings guidance for the fourth quarter of fiscal 2005, we are pleased to report new fiscal-year records for sales, net income and earnings per diluted share for the first time since our record year of fiscal 2000,” said A. R. Ginn, Chairman and Chief Executive Officer of NCI. “Achieving these record annual results in a period of soft industry conditions demonstrates both the success and ongoing potential of our strategies to leverage our leading industry position with the goal of consistently increasing our market share and improving our operating efficiency.
“As anticipated, we benefited during the fourth quarter from firmer industry conditions after experiencing soft industry conditions for much of the first nine months of fiscal 2005. As a result, our segment operating margins improved sequentially from the third quarter, and we increased total tons shipped for the fourth quarter of fiscal 2005 by 8.2% over the fourth quarter of fiscal 2004. Our results for the fourth quarter of 2005 also reflected the impact of a full-year tax rate of 41.8%, which was higher than the rate assumed in our annual guidance of approximately 40%. The difference between our actual and assumed tax rate totaled approximately $0.06 per diluted share for the year.
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10943 N. Sam Houston Parkway W. • Houston, Texas 77064
P.O. Box 692055 • Houston, Texas 77269-2055 • Telephone: (281) 897-7788 • Fax: (281) 477-9675
NCI Building Systems Reports Fourth-Quarter Results
Page 2
December 7, 2005
“Our performance improved month over month throughout the fourth quarter, with October ending the quarter significantly stronger than August and September. As a result of the ramp-up in demand, our plants experienced high capacity utilization by the end of the quarter and substantial operating leverage. Because capacity utilization rose significantly only in October, full-quarter operating margins for our buildings and components groups did not match the fourth quarter last year, while operating income as a percentage of sales for the coatings group increased to 26% for the latest quarter from 18% for the fourth quarter of fiscal 2004.
“We expect comparable-quarter operating margins for all three of our business segments to improve for the first quarter of fiscal 2006, as the sales momentum evident late in the fourth quarter of fiscal 2005 has been sustained to date in the current quarter. Supporting this expectation, our buildings group ended fiscal 2005 with a backlog of approximately $200 million, up 39% from the end of fiscal 2004. In addition, our coatings business is being driven not only by the growth in components sales and quote activity, but also by rising commercial demand for coatings products. Based on this momentum, we today have established our guidance for earnings per diluted share for the first quarter of fiscal 2006 in a range of $0.50 to $0.55, which includes expected expenses of approximately $0.05 related to the adoption of FAS 123(R). Earnings per diluted share for the first quarter of fiscal 2005 were $0.52, which included the after-tax benefit of $0.06 per diluted share related to more favorable group medical claims experience.
“We also today established our guidance for earnings per diluted share for fiscal 2006. Among the assumptions on which this guidance is based, we expect better industry conditions for fiscal 2006 will produce 5% growth in square footage in the nonresidential construction industry. Consistent with both our history and our growth strategies, we expect to continue outperforming the overall industry with 6% growth in total tons shipped for fiscal 2006. The impact of this growth on our financial results will also reflect an assumed increase in the weighted average cost of our steel supplies of approximately 9% for fiscal 2006, as well as an income tax rate of 40%. As a result, our guidance for earnings per diluted share for fiscal 2006 is in a range of $3.02 to $3.27, which includes expected expenses of approximately $0.18 related to FAS 123(R). Pro forma earnings per diluted share for fiscal 2005 reflecting the impact of FAS 123 for the year were $2.43.”
Mr. Ginn concluded, “During the fourth quarter of fiscal 2005 we tangibly demonstrated our confidence in both the short- and long-term growth prospects of NCI by repurchasing 1,063,000 shares of the Company’s common stock. In spite of this investment of more than $38 million, our net debt (debt minus cash) to total capitalization (net debt plus shareholders’ equity) improved to 27.9% at the end of fiscal 2005 from 28.0% at the end of the third quarter of fiscal 2005 and 34.2% at the end of fiscal 2004. Because of our strong financial position, as well as our continuing substantial adjusted EBITDA and cash flow from operations, which for fiscal 2005 totaled $141.1 million and $118.3, respectively, we are well positioned to continue implementing our proven organic and acquisition growth strategies.”
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. Forward-looking statements involve a number of risks and uncertainties, and NCI’s actual performance may differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially are 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
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NCI Building Systems Reports Fourth-Quarter Results
Page 3
December 7, 2005
acquisition strategy and general economic conditions affecting the construction industry. These and other factors that could affect NCI’s financial position and results of operations are described in further detail in NCI’s filings with the Securities and Exchange Commission. 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. The Company operates manufacturing and distribution facilities located in 16 states and Mexico.
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NCI Building Systems Reports Fourth-Quarter Results
Page 4
December 7, 2005
NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended
| | | For the Year Ended
| |
| | | October 29,
2005
| | | October 30,
2004
| | | October 29,
2005
| | | October 30,
2004
| |
Sales | | $ | 341,522 | | | $ | 318,957 | | | $ | 1,130,066 | | | $ | 1,084,863 | |
Cost of sales | | | 253,586 | | | | 232,887 | | | | 850,699 | | | | 822,722 | |
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Gross profit | | | 87,936 | | | | 86,070 | | | | 279,367 | | | | 262,141 | |
| | | | 25.7 | % | | | 27.0 | % | | | 24.7 | % | | | 24.2 | % |
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Selling, general and administrative expenses | | | 50,699 | | | | 47,499 | | | | 174,897 | | | | 165,165 | |
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Income from operations | | | 37,237 | | | | 38,571 | | | | 104,470 | | | | 96,976 | |
Interest expense | | | (3,747 | ) | | | (2,508 | ) | | | (14,459 | ) | | | (15,126 | ) |
Loss on debt extinguishment | | | — | | | | — | | | | — | | | | (9,879 | ) |
Other income, net | | | 2,009 | | | | 747 | | | | 6,200 | | | | 2,686 | |
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Income before income taxes | | | 35,499 | | | | 36,810 | | | | 96,211 | | | | 74,657 | |
Provision for income taxes | | | 15,691 | | | | 13,776 | | | | 40,260 | | | | 29,767 | |
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| | | | 44.2 | % | | | 37.4 | % | | | 41.8 | % | | | 39.9 | % |
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Net income | | $ | 19,808 | | | $ | 23,034 | | | $ | 55,951 | | | $ | 44,890 | |
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Net income per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.98 | | | $ | 1.15 | | | $ | 2.73 | | | $ | 2.28 | |
Diluted | | $ | 0.96 | | | $ | 1.13 | | | $ | 2.68 | | | $ | 2.24 | |
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Average shares outstanding: | | | | | | | | | | | | | | | | |
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Basic | | | 20,306 | | | | 20,069 | | | | 20,501 | | | | 19,709 | |
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Diluted | | | 20,655 | | | | 20,389 | | | | 20,857 | | | | 19,996 | |
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Increase in sales | | | 7.1 | % | | | | | | | 4.2 | % | | | | |
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Increase (decrease) in diluted earnings per share | | | -15.0 | % | | | | | | | 19.6 | % | | | | |
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Gross profit percentage | | | 25.7 | % | | | 27.0 | % | | | 24.7 | % | | | 24.2 | % |
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Selling, general and administrative expenses percentage | | | 14.8 | % | | | 14.9 | % | | | 15.5 | % | | | 15.3 | % |
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Income from operations percentage | | | 10.9 | % | | | 12.1 | % | | | 9.2 | % | | | 8.9 | % |
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NCI Building Systems Reports Fourth-Quarter Results
Page 5
December 7, 2005
NCI BUILDING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands)
| | | | | | |
| | | October 29,
2005
| | October 30,
2004
|
ASSETS | | | | | | |
Cash and cash equivalents | | $ | 200,716 | | $ | 8,222 |
Accounts receivable, net | | | 110,094 | | | 108,869 |
Inventories | | | 113,421 | | | 138,363 |
Deferred income taxes | | | 11,112 | | | 12,873 |
Prepaid expenses | | | 2,963 | | | 6,491 |
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Total current assets | | | 438,306 | | | 274,818 |
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Property and equipment, net | | | 185,278 | | | 185,687 |
Goodwill | | | 339,157 | | | 318,247 |
Other assets | | | 23,120 | | | 4,105 |
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Total assets | | $ | 985,861 | | $ | 782,857 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current portion of long-term debt | | $ | 2,000 | | $ | 2,000 |
Accounts payable | | | 55,874 | | | 57,569 |
Accrued expenses | | | 91,739 | | | 88,012 |
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Total current liabilities | | | 149,613 | | | 147,581 |
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Long-term debt | | | 371,000 | | | 214,700 |
Deferred income taxes | | | 21,104 | | | 19,399 |
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Shareholders’ equity | | | 444,144 | | | 401,177 |
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Total liabilities and shareholders’ equity | | $ | 985,861 | | $ | 782,857 |
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NCI Building Systems Reports Fourth-Quarter Results
Page 6
December 7, 2005
NCI BUILDING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | | | | | | |
| | | For the Year Ended
| |
| | | October 29,
2005
| | | October 30,
2004
| |
Net income | | $ | 55,951 | | | $ | 44,890 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Loss on debt refinancing | | | — | | | | 9,879 | |
Depreciation and amortization | | | 24,488 | | | | 22,974 | |
Loss on sale of fixed assets | | | 134 | | | | 202 | |
Provision for doubtful accounts | | | 273 | | | | 2,769 | |
Deferred income tax provision (benefit) | | | 3,466 | | | | (4,759 | ) |
(Increase)/decrease in current assets | | | 39,393 | | | | (94,295 | ) |
Increase/(decrease) in current liabilities | | | (5,438 | ) | | | 42,070 | |
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Net cash provided by operating activities | | | 118,267 | | | | 23,730 | |
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Cash flows from investing activities: | | | | | | | | |
Acquisitions | | | (27,399 | ) | | | — | |
Capital expenditures | | | (19,524 | ) | | | (9,327 | ) |
Proceeds from sale of fixed assets | | | 2,196 | | | | 1,458 | |
Other | | | (1,078 | ) | | | 1,858 | |
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Net cash used in investing activities | | | (45,805 | ) | | | (6,011 | ) |
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Cash flows from financing activities: | | | | | | | | |
Proceeds from stock option exercises | | | 9,362 | | | | 16,409 | |
Issuance of convertible debt | | | 180,000 | | | | — | |
Net borrowings/(payments) on revolving lines of credit | | | (16,700 | ) | | | 11,700 | |
Borrowing of long-term debt | | | — | | | | 200,000 | |
Payments on long-term debt | | | (7,000 | ) | | | (243,750 | ) |
Payment of refinancing costs | | | (4,954 | ) | | | (8,060 | ) |
Purchase of treasury stock | | | (40,676 | ) | | | — | |
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Net cash provided by (used in) financing activities | | | 120,032 | | | | (23,701 | ) |
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Net increase (decrease) in cash | | | 192,494 | | | | (5,982 | ) |
Cash at beginning of period | | | 8,222 | | | | 14,204 | |
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Cash at end of period | | $ | 200,716 | | | $ | 8,222 | |
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NCI Building Systems Reports Fourth-Quarter Results
Page 7
December 7, 2005
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
October 29, 2005
| | | Three Months Ended
October 30, 2004
| | | Year Ended
October 29, 2005
| | | Year Ended
October 30, 2004
| |
| | | | | | | % of
Total
Sales |
| | | | | | % of
Total
Sales |
| | | | | | % of
Total
Sales |
| | | | | | % of
Total
Sales |
|
Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Metal components | | $ | 181,648 | | | 53 | | | $ | 160,044 | | | 50 | | | $ | 595,066 | | | 53 | | | $ | 576,808 | | | 53 | |
Engineered building systems | | | 127,310 | | | 37 | | | | 125,716 | | | 40 | | | | 424,242 | | | 37 | | | | 385,246 | | | 36 | |
Metal coil coating | | | 32,564 | | | 10 | | | | 33,197 | | | 10 | | | | 110,758 | | | 10 | | | | 122,809 | | | 11 | |
Intersegment sales | | | 70,670 | | | 21 | | | | 57,146 | | | 18 | | | | 230,667 | | | 20 | | | | 195,191 | | | 18 | |
Eliminations | | | (70,670 | ) | | (21 | ) | | | (57,146 | ) | | (18 | ) | | | (230,667 | ) | | (20 | ) | | | (195,191 | ) | | (18 | ) |
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Total net sales | | $ | 341,522 | | | 99 | | | $ | 318,957 | | | 100 | | | $ | 1,130,066 | | | 100 | | | $ | 1,084,863 | | | 100 | |
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| | | | | | | % of
Sales |
| | | | | | % of
Sales |
| | | | | | % of
Sales |
| | | | | | % of
Sales |
|
Operating income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Metal components | | $ | 25,166 | | | 14 | | | $ | 26,539 | | | 17 | | | $ | 79,223 | | | 13 | | | $ | 76,724 | | | 13 | |
Engineered building systems | | | 15,186 | | | 12 | | | | 18,605 | | | 15 | | | | 44,865 | | | 11 | | | | 31,340 | | | 8 | |
Metal coil coating | | | 8,620 | | | 26 | | | | 5,822 | | | 18 | | | | 20,157 | | | 18 | | | | 26,444 | | | 22 | |
Corporate | | | (11,735 | ) | | — | | | | (12,395 | ) | | — | | | | (39,775 | ) | | — | | | | (37,532 | ) | | — | |
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Total operating income (% of sales) | | $ | 37,237 | | | 11 | | | $ | 38,571 | | | 12 | | | $ | 104,470 | | | 9 | | | $ | 96,976 | | | 9 | |
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NCI Building Systems Reports Fourth-Quarter Results
Page 8
December 7, 2005
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
|
| | | October 29, | | October 30, |
| | | 2005
| | 2004
|
Net income | | $ | 55,951 | | $ | 44,890 |
Add: | | | | | | |
Provision for income taxes | | | 40,260 | | | 29,767 |
Interest expense | | | 14,459 | | | 15,126 |
Depreciation and amortization | | | 24,488 | | | 22,974 |
401(k) noncash contributions | | | 5,977 | | | 5,080 |
Loss on debt refinancing | | | — | | | 9,879 |
Non-cash real estate | | | — | | | — |
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Adjusted EBITDA (1) | | $ | 141,135 | | $ | 127,716 |
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| (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. 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
RECONCILIATION OF TOTAL DEBT TO NET DEBT
(Unaudited)
(In thousands)
| | | | | | | | |
| | | October 29,
2005
| | | October 30,
2004
| |
Total debt | | $ | 373,000 | | | $ | 216,700 | |
Less: cash | | | (200,716 | ) | | | (8,222 | ) |
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Total net debt | | $ | 172,284 | | | $ | 208,478 | |
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