Exhibit 99.1
| | |
| Contact: | | Norman C. Chambers |
| | President & Chief Operating Officer |
| | (281) 897-7788 |
NCI BUILDING SYSTEMS REPORTS FIRST-QUARTER EARNINGS OF
$0.62 PER DILUTED SHARE ON 20% GROWTH IN SALES
AFFIRMS ESTABLISHED FULL-YEAR EARNINGS GUIDANCE
HOUSTON (March 1, 2006) – NCI Building Systems, Inc. (NYSE: NCS) today announced financial results for the first quarter ended January 29, 2006. For the quarter, sales were $293.3 million, an increase of 20% from $245.2 million for the first quarter of fiscal 2005. Net income increased 20% for the first quarter of fiscal 2006 to $12.9 million from $10.7 million for the first quarter of fiscal 2005. Earnings per diluted share rose 19% to $0.62 for the latest quarter from $0.52 for the same prior-year quarter. Earnings per diluted share for the first quarter of fiscal 2006 included an expense of $0.03 related to the adoption of FAS 123(R). For the first quarter of fiscal 2005, earnings per diluted share included a benefit of $0.06 related to more favorable group medical claims experience than expected. Earnings per diluted share for the first quarter of 2005, reflecting the pro forma impact of FAS 123 (R) had it been applicable and excluding this $0.06 benefit, would have been $0.41.
A. R. Ginn, Chairman and Chief Executive Officer of NCI, remarked, “We are pleased with our results for the first quarter of fiscal 2006, which, compared with the first quarter of fiscal 2005, reflected an industry environment that strengthened in the last quarter of calendar 2005. As a result, we experienced significant sales momentum during our first fiscal quarter, especially in Components sales which increased 25%. Our first-quarter sales were also positively affected by earlier than expected shipments of buildings from our backlog originally scheduled for the second quarter. Order flow for our Buildings segment remained on target for the first quarter, increasing our backlog to $185.1 million at the end of the first quarter from $170.4 million at the end of the first quarter of fiscal 2005, even with the impact of greater than expected first-quarter shipments. Sales growth in our Components and Building segments was also primarily accountable for a 20% increase in Coatings sales for the first quarter of fiscal 2006 compared with the first quarter of fiscal 2005.
“Our first quarter results and our outlook for fiscal 2006 are consistent with broad industry trends, although, with a 21% increase in tons shipped for the first quarter, we have continued to grow in excess of the industry’s growth rate through increased market share. The Dodge Report indicated square footage in the nonresidential construction industry increased 2% for calendar 2005, after projecting flat results in August, which is indicative of growing momentum in the latter months of the year. The Dodge Report also anticipates square footage growth of 4% for 2006. Our guidance for fiscal 2006 is based on our expectations for continuing to outperform the rate of industry growth for the fiscal year. Our guidance also reflects our
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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 First-Quarter Results
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March 1, 2006
expectation that, because of earlier than expected product shipments in the first quarter and the anticipated movement of other shipments to the third quarter from the second, our results for the second quarter will be behind those of the first quarter.
“As a result, we today have established our guidance for earnings per diluted share for the second quarter of fiscal 2006 in a range of $0.48 to $0.53, which includes an expense of $0.02 related to the adoption of FAS 123(R). Pro forma earnings per diluted share for the second quarter of 2005, reflecting the impact of FAS 123 (R) had it been applicable, were $0.47.
“We also today affirmed our established guidance for earnings per diluted share for fiscal 2006 in a range of $3.02 to $3.27. This guidance includes an expense of $0.10 related to the adoption of FAS 123(R) and excludes any impact of our pending acquisition of Robertson CECO Corporation. Among the other assumptions on which this guidance is based, we expect 5% growth in square footage in the nonresidential construction industry for 2006, driving 6% growth in our total tons shipped for fiscal 2006. Our guidance for fiscal 2006 also assumes an increase in the weighted average cost of our steel supplies of approximately 9%, as well as an estimated income tax rate of 40%.
“Our guidance for the second quarter and for fiscal 2006 does not include the impact of potential dilution related to NCI’s 2.125% Convertible Senior Subordinated Notes, because that amount, if any, will be dependent upon the future price of the Company’s stock. For the first quarter, dilution related to the convertible notes totaled $0.01 per diluted share.”
Mr. Ginn added, “Our strong first-quarter results position us to achieve our goals for the seasonally slow first half of our fiscal year and to prepare for anticipated growth in the second half of the fiscal year. In addition to stronger industry conditions for fiscal 2006, we also expect to benefit from the completion of our previously announced definitive agreement to acquire Robertson-Ceco Corporation, which produced revenues for calendar 2005 of approximately $430 million. We expect this transaction to be accretive to our fiscal 2006 earnings, assuming its completion, which is scheduled for early April and is subject to a number of closing conditions including the termination of expiration of any applicable waiting period under the Hart-Scott-Rodino Act. We intend to revise our earnings guidance for fiscal 2006 to address the impact of this transaction after it is completed.”
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 atwww.ncilp.com orwww.earnings.com beginning at 10:30 a.m. (Eastern Time) on Thursday, March 2, 2006. The online replay will be available at approximately 12:30 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. 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 the completion of the Robertson-Ceco Corporation acquisition, subject to a number of closing
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NCI Building Systems Reports First-Quarter Results
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March 1, 2006
conditions, including expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act; 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. 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 First-Quarter Results
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March 1, 2006
NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
| | | | | | | | |
| | | For the Three Months Ended | |
| | | January 29,
2006 | | | January 29,
2005 | |
Sales | | $ | 293,252 | | | $ | 245,239 | |
Cost of sales | | | 220,843 | | | | 186,528 | |
| | | | | | | | |
Gross profit | | | 72,409 | | | | 58,711 | |
| | | 24.7 | % | | | 23.9 | % |
Selling, general and administrative expenses | | | 49,698 | | | | 38,621 | |
| | | | | | | | |
Income from operations | | | 22,711 | | | | 20,090 | |
Interest income | | | 2,185 | | | | 760 | |
Interest expense | | | (4,176 | ) | | | (3,136 | ) |
Other income, net | | | 425 | | | | 341 | |
| | | | | | | | |
Income before income taxes | | | 21,145 | | | | 18,055 | |
Provision for income taxes | | | 8,252 | | | | 7,333 | |
| | | | | | | | |
| | | 39.0 | % | | | 40.6 | % |
Net income | | $ | 12,893 | | | $ | 10,722 | |
| | | | | | | | |
Net income per share: | | | | | | | | |
Basic | | $ | 0.64 | | | $ | 0.53 | |
Diluted | | $ | 0.62 | | | $ | 0.52 | |
| | |
Average shares outstanding: | | | | | | | | |
Basic | | | 19,993 | | | | 20,336 | |
Diluted | | | 20,652 | | | | 20,736 | |
| | |
Increase in sales | | | 19.6 | % | | | | |
| | |
Increase in diluted earnings per share | | | 19.2 | % | | | | |
| | |
Gross profit percentage | | | 24.7 | % | | | 23.9 | % |
| | |
Selling, general and administrative expenses percentage | | | 17.0 | % | | | 15.7 | % |
| | |
Income from operations percentage | | | 7.7 | % | | | 8.2 | % |
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NCI Building Systems Reports First-Quarter Results
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March 1, 2006
NCI BUILDING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands)
| | | | | | |
| | | January 29,
2006 | | October 29,
2005 |
ASSETS | | | | | | |
Cash and cash equivalents | | $ | 216,865 | | $ | 200,716 |
Accounts receivable, net | | | 90,302 | | | 110,094 |
Inventories | | | 120,866 | | | 113,421 |
Deferred income taxes | | | 16,190 | | | 15,470 |
Prepaid expenses | | | 3,436 | | | 2,963 |
| | | | | | |
Total current assets | | | 447,659 | | | 442,664 |
| | | | | | |
Property and equipment, net | | | 183,246 | | | 185,278 |
| | |
Goodwill | | | 339,114 | | | 339,157 |
Other assets | | | 22,591 | | | 23,120 |
| | | | | | |
Total assets | | $ | 992,610 | | $ | 990,219 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current portion of long-term debt | | $ | 2,000 | | $ | 2,000 |
Accounts payable | | | 59,058 | | | 55,874 |
Accrued expenses | | | 75,262 | | | 91,739 |
| | | | | | |
Total current liabilities | | | 136,320 | | | 149,613 |
| | | | | | |
Long-term debt | | | 370,500 | | | 371,000 |
Deferred income taxes | | | 25,462 | | | 25,462 |
| | |
Shareholders’ equity | | | 460,328 | | | 444,144 |
| | | | | | |
Total liabilities and shareholders’ equity | | $ | 992,610 | | $ | 990,219 |
| | | | | | |
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March 1, 2006
NCI BUILDING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | | | | | | |
| | | For the Three Months Ended | |
| | | January 29,
2006 | | | January 29,
2005 | |
Net income | | $ | 12,893 | | | $ | 10,722 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 6,448 | | | | 5,803 | |
Stock-based compensation expense | | | 1,895 | | | | 705 | |
(Gain) loss on sale of fixed assets | | | (42 | ) | | | 77 | |
Inventory obsolescence | | | 358 | | | | — | |
Provision for doubtful accounts | | | 915 | | | | 1,448 | |
Deferred income tax benefit | | | (720 | ) | | | (338 | ) |
Decrease in current assets | | | 10,601 | | | | 22,776 | |
Decrease in current liabilities | | | (13,250 | ) | | | (26,817 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 19,098 | | | | 14,376 | |
| | | �� | | | | | |
Cash flows from investing activities: | | | | | | | | |
Acquisitions | | | — | | | | (22,590 | ) |
Capital expenditures | | | (4,097 | ) | | | (3,075 | ) |
Proceeds from sale of fixed assets | | | 194 | | | | 33 | |
Other | | | 58 | | | | (533 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (3,845 | ) | | | (26,165 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from stock option exercises | | | 1,272 | | | | 1,970 | |
Excess tax benefits from stock-based compensation arrangements | | | 769 | | | | — | |
Issuance of convertible debt | | | — | | | | 180,000 | |
Net payments on revolving lines of credit | | | — | | | | (16,700 | ) |
Payments on long-term debt | | | (500 | ) | | | (5,500 | ) |
Payment of refinancing costs | | | — | | | | (4,369 | ) |
Purchase of treasury stock | | | (645 | ) | | | — | |
| | | | | | | | |
Net cash provided by financing activities | | | 896 | | | | 155,401 | |
| | | | | | | | |
Net increase in cash | | | 16,149 | | | | 143,612 | |
| | |
Cash at beginning of period | | | 200,716 | | | | 8,222 | |
| | | | | | | | |
Cash at end of period | | $ | 216,865 | | | $ | 151,834 | |
| | | | | | | | |
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NCI Building Systems Reports First-Quarter Results
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March 1, 2006
NCI BUILDING SYSTEMS, INC.
BUSINESS SEGMENTS
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
January 29, 2006 | | | Three Months Ended
January 29, 2005 | | | $ Inc/(Dec) | | | %
Change | |
| | | | | | % of
Total Sales | | | | | | % of
Total Sales | | | | | | | |
| Sales: | | | | | | | | | | | | | | | | | | | | | |
Metal components | | $ | 174,819 | | | 60 | | | $ | 139,406 | | | 57 | | | $ | 35,413 | | | 25.4 | % |
Engineered building systems | | | 118,825 | | | 40 | | | | 98,930 | | | 40 | | | | 19,895 | | | 20.1 | % |
Metal coil coating | | | 63,301 | | | 22 | | | | 52,707 | | | 22 | | | | 10,594 | | | 20.1 | % |
Intersegment sales | | | (63,693 | ) | | (22 | ) | | | (45,804 | ) | | (19 | ) | | | (17,889 | ) | | 39.1 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total net sales | | $ | 293,252 | | | 100 | | | $ | 245,239 | | | 100 | | | $ | 48,013 | | | 19.6 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | % of
Sales | | | | | | % of
Sales | | | | | | | |
| Operating income: | | | | | | | | | | | | | | | | | | | | | |
Metal components | | $ | 21,215 | | | 12 | | | $ | 16,453 | | | 12 | | | $ | 4,762 | | | 28.9 | % |
Engineered building systems | | | 9,843 | | | 8 | | | | 7,777 | | | 8 | | | | 2,066 | | | 26.6 | % |
Metal coil coating | | | 4,421 | | | 7 | | | | 4,485 | | | 9 | | | | (64 | ) | | -1.4 | % |
Corporate | | | (12,768 | ) | | — | | | | (8,625 | ) | | — | | | | (4,143 | ) | | 48.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total operating income (% of sales) | | $ | 22,711 | | | 8 | | | $ | 20,090 | | | 8 | | | $ | 2,621 | | | 13.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
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NCI Building Systems Reports First-Quarter Results
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March 1, 2006
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 |
| | | January 29,
2006 | | January 29,
2005 |
Net income | | $ | 58,122 | | $ | 49,844 |
Add: | | | | | | |
Provision for income taxes | | | 41,179 | | | 33,059 |
Interest expense | | | 15,180 | | | 13,684 |
Depreciation and amortization | | | 24,952 | | | 23,104 |
401(k) noncash contributions | | | 2,401 | | | 5,735 |
Loss on debt refinancing | | | — | | | 9,879 |
Non-cash real estate | | | — | | | — |
| | | | | | |
Adjusted EBITDA (1) | | $ | 141,834 | | $ | 135,305 |
| | | | | | |
| (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)
| | | | | | | | |
| | | January 29,
2006 | | | October 29,
2005 | |
Total debt | | $ | 372,500 | | | $ | 373,000 | |
Less: cash | | | (216,865 | ) | | | (200,716 | ) |
| | | | | | | | |
Total net debt | | $ | 155,635 | | | $ | 172,284 | |
| | | | | | | | |
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NCI Building Systems Reports First-Quarter Results
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March 1, 2006
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
PRO FORMA EARNINGS PER SHARE COMPARISON
(Unaudited)
| | | | | | | | |
| | | Fiscal Three Months Ended | |
| | | January 29,
2006 | | | January 29,
2005 | |
Earnings per diluted share, excluding impact of FAS 123R | | $ | 0.65 | | | $ | 0.52 | (1) |
FAS 123R Expense | | | (0.03 | ) | | | (0.05 | )(2) |
| | | | | | | | |
Earnings per diluted share, including impact of FAS 123R | | $ | 0.62 | (1) | | $ | 0.47 | |
Gain on health care cost | | | | | | $ | (0.06 | )(3) |
| | | | | | | | |
“Adjusted” diluted earnings per share (A) | | $ | 0.62 | | | $ | 0.41 | |
| | | | | | | | |
| |
| | | Estimated Six Months | |
| | | April 30, 2006
(Guidance) | | | April 30,
2005 | |
Earnings per diluted share, excluding impact of FAS 123R | | $ | 1.15 -$1.20 | | | $ | 1.03 | (1) |
FAS 123R Expense | | | (0.05 | ) | | | (0.09 | )(2) |
| | | | | | | | |
Earnings per diluted share, including impact of FAS 123R | | $ | 1.10 -$1.15 | (1) | | $ | 0.94 | |
Gain on health care cost | | | | | | $ | (0.06 | )(3) |
| | | | | | | | |
“Adjusted” diluted earnings per share (A) | | $ | 1.10 -$1.15 | | | $ | 0.88 | |
| | | | | | | | |
| (A) | The company discloses a tabular comparison of Pro forma 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) | Earnings per diluted share, GAAP basis |
| (2) | Pro forma share-based compensation expense, as if the company had adopted FAS 123R in 2005 |
| (3) | In the first quarter of 2005, the company recognized a benefit related to health care costs which did not occur in 2006. |
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