EXHIBIT 99
[NCI Letterhead]
Contact: Robert J. Medlock
Executive Vice President &
Chief Financial Officer
(281) 897-7788
NCI BUILDING SYSTEMS REPORTS THIRD-QUARTER EARNINGS AHEAD OF
GUIDANCE AT $0.36 PER DILUTED SHARE
----------
ESTABLISHES EARNINGS GUIDANCE FOR THE FOURTH QUARTER
HOUSTON (AUGUST 27, 2003) - NCI Building Systems, Inc. (NYSE: NCS) today
announced earnings of $0.36 per diluted share for the three months ended August
2, 2003, compared with the Company's established guidance for the quarter in a
range of $0.32 to $0.35 per diluted share. NCI's sales for the third quarter of
fiscal 2003 were $236.3 million versus $257.8 million for the third quarter of
fiscal 2002, and net income was $6.8 million for the latest quarter compared
with $12.6 million, or $0.67 per diluted share, for the same period in fiscal
2002.
Sales for the first nine months of fiscal 2003 were $643.3 million
compared with $699.6 million for the first nine months of fiscal 2002. Net
income was $12.7 million, or $0.67 per diluted share, for the first nine months
of fiscal 2003 versus a net loss of $44.6 million, or $2.39 per diluted share,
for the comparable period in fiscal 2002, which included a charge to earnings
resulting from a change in accounting principle of $65.1 million or $3.49 per
diluted share.
Johnie Schulte, Jr., President and Chief Executive Officer, commented,
"We were again pleased with NCI's relative financial and operating performance
for the third quarter of fiscal 2003, which slightly exceeded our expectations.
Although our comparable-quarter results demonstrate that demand has remained
slow in the nonresidential construction business, NCI benefited from the
expected seasonal increase in construction activity. This increase enabled the
Company to improve its operating results compared with the second quarter of
fiscal 2003, more than tripling the second quarter's net income of $2.0 million
or $0.11 per diluted share. As we have experienced throughout fiscal 2003, our
profitable operations and substantial cash flow are in contrast to many of our
industry peers. In addition, we continued to strengthen our financial position
through a further reduction in long-term debt of nearly $25 million during the
third quarter, improving our debt to total capital at the quarter's end to 45.0%
from 49.0% at the end of fiscal 2002."
A.R. Ginn, Chairman of the Board, added, "While NCI is not immune to
the impact of the lackluster nonresidential construction market, it has
performed well compared with its industry peers because of its continuing focus
on low cost operations, outstanding customer service, product innovations and
broad product line. As a result, we have consistently increased our market share
in spite of the difficult operating environment of the past two years, which we
expect will position the Company well for any market recovery.
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NCI Building Systems Reports Third-Quarter Results
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August 27, 2003
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"In addition to debt reduction, we have used our cash flow to launch
new initiatives both to enhance our sales and improve our efficiency. The
investment in our new frame plant in Lexington, Tennessee, which is on schedule
for a fourth-quarter opening, is an example of the latter category, not only
because of the increased operating efficiencies we expect it to provide, but
also because it will enable us to close a less efficient plant. Recent
initiatives to improve sales include the acquisition of our fifth NCI Metal
Depot retail store in Baytown, Texas. In addition we opened our sixth retail
store during July, which is our flagship store located in Waller, Texas. A
logical extension of our leadership position in the metal construction industry,
NCI Metal Depot stores enable us to provide a wide range of commercial and
residential metal components and accessories, as well as a variety of small
metal building packages, directly to do-it-yourselfers, farmers and small
contractors, which are markets not normally served by our other distribution
channels.
"While we believe that NCI's fourth-quarter results will again benefit
from seasonal volume, industry data and our experience indicate the
nonresidential construction market continued to contract through the first half
of calendar 2003 compared with the prior year. Based on NCI's performance to
date for fiscal 2003, we are confident of the Company's ability to continue
outperforming the metal construction segment of the overall industry during our
fourth quarter. However, with no sustained signs of improved industry demand, we
continue to temper our guidance, with expectations of earnings per diluted share
in a range of $0.40 to $0.43 for our last quarter of fiscal 2003. Although our
short-term earnings visibility beyond the current fiscal year is limited, we
remain well positioned to withstand the continuing challenges of this economic
cycle, both on an absolute basis and relative to our industry peers, and to
profitably leverage any significant improvement in the cycle."
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.
Some statements contained in this release are "forward-looking"
statements, as defined in the Private Securities Litigation Reform Act of 1995.
Actual performance of the Company may differ from that projected in such
statements as a result of factors such as industry cyclicality and seasonality,
adverse weather conditions, fluctuations in customer demand and order patterns,
raw material pricing, competitive activity and pricing pressure and general
economic conditions affecting the construction industry. Investors should refer
to statements regularly filed by the Company in its annual report to the
Securities and Exchange Commission on Form 10-K, its quarterly reports to the
SEC on Form 10-Q and its current reports to the SEC on Form 8-K and other
filings with the SEC for a discussion of factors which could affect the
Company's operations and forward-looking statements made in this communication.
The Company expressly disclaims any obligation to release publicly any updates
or revisions to these forward-looking statements to reflect any changes in
expectations.
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NCI Building Systems Reports Third-Quarter Results
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August 27, 2003
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NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Sales $ 236,262 $ 257,837 $ 643,324 $ 699,626
Cost of sales 182,954 196,422 504,535 547,147
------------ ------------ ------------ ------------
Gross profit 53,308 61,415 138,789 152,479
Selling, general and administrative expenses 37,107 37,094 103,536 103,943
------------ ------------ ------------ ------------
Income from operations 16,201 24,321 35,253 48,536
Interest expense (4,939) (5,137) (14,698) (16,846)
Other income, net 36 1,229 739 1,665
------------ ------------ ------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 11,298 20,413 21,294 33,355
Provision for income taxes 4,470 7,843 8,606 12,878
------------ ------------ ------------ ------------
Income before cumulative effect of change in
accounting principle 6,828 12,570 12,688 20,477
Cumulative effect of change in
accounting principle, net of tax -- -- -- (65,087)
------------ ------------ ------------ ------------
Net income (loss) $ 6,828 $ 12,570 $ 12,688 $ (44,610)
============ ============ ============ ============
Basic:
Income before cumulative effect of
change in accounting principle $ 0.36 $ 0.68 $ 0.68 $ 1.11
Cumulative effect of change in
accounting principle, net of tax -- -- -- (3.53)
------------ ------------ ------------ ------------
Net income (loss) $ 0.36 $ 0.68 $ 0.68 $ (2.42)
============ ============ ============ ============
Diluted:
Income before cumulative effect of
change in accounting principle $ 0.36 $ 0.67 $ 0.67 $ 1.10
Cumulative effect of change in
accounting principle, net of tax -- -- -- (3.49)
------------ ------------ ------------ ------------
Net income (loss) $ 0.36 $ 0.67 $ 0.67 $ (2.39)
============ ============ ============ ============
Average shares outstanding
Basic 18,836 18,603 18,769 18,466
Diluted 18,951 18,780 18,921 18,651
</Table>
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NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(CONTINUED)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
2003 2002 2003 2002
---------- ---------- ---------- ----------
Decrease in sales (8.4)% (8.0)%
Decrease in diluted earnings per share
before cumulative effect of
change in accounting principle (46.3)% (39.1)%
Gross profit percentage 22.6% 23.8% 21.6% 21.8%
Selling, general and administrative
expense percentage 15.7% 14.4% 16.1% 14.9%
Income from operations percentage 6.9% 9.4% 5.5% 6.9%
</Table>
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NCI BUILDING SYSTEMS, INC.
COMPUTATION OF EARNINGS BEFORE TAXES, INTEREST, DEPRECIATION,
AMORTIZATION AND OTHER NONCASH ITEMS ("ADJUSTED EBITDA")
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
TRAILING 12 MONTHS
-----------------------------
AUGUST 2, AUGUST 3,
2003 2002
------------ ------------
Net income (loss) $ 24,057 $ (39,270)
Add:
Provision for income taxes 15,698 18,937
Interest expense 18,491 23,583
Depreciation and amortization 23,072 27,312
401(k) noncash contributions 3,697 3,452
Cumulative effect of change in accounting
principle, net of tax -- 65,087
Noncash writedown of real estate, net of tax -- 1,330
------------ ------------
Adjusted EBITDA(1) $ 85,015 $ 100,431
============ ============
</Table>
(1) The Company discloses adjusted EBITDA because it is a widely accepted
financial indicator in the metal construction industry of a company's ability to
finance its operations and meet its growth plans. This measure is also used by
NCI internally to make acquisition and investment decisions.
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NCI BUILDING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
AUGUST 2, NOVEMBER 2,
2003 2002
------------ ------------
ASSETS
Cash $ 4,272 $ 9,530
Accounts receivable, net 90,807 94,956
Inventories 65,125 68,445
Deferred taxes 7,448 7,448
Prepaids 7,184 6,129
------------ ------------
Total current assets 174,836 186,508
------------ ------------
Property, net 204,193 205,334
Excess of cash over fair value of acquired net assets 318,247 318,247
Other assets 9,512 11,176
------------ ------------
Total assets $ 706,788 $ 721,265
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt $ 6,250 $ 6,250
Accounts payable 49,338 49,012
Accrued expenses 49,689 51,089
------------ ------------
Total current liabilities 105,277 106,351
------------ ------------
Long-term debt, noncurrent portion 261,463 291,050
Deferred income taxes 20,405 20,405
Equity 319,643 303,459
------------ ------------
Total liabilities and shareholders' equity $ 706,788 $ 721,265
============ ============
</Table>
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NCI BUILDING SYSTEMS, INC.
STATEMENT OF CONDENSED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
NINE MONTHS ENDED
AUGUST 2, AUGUST 3,
2003 2002
------------ ------------
Cash flows from operating activities:
Net income (loss) $ 12,688 $ (44,610)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Cumulative effect of change in accounting
principle, net of tax -- 65,087
Depreciation and amortization 17,106 17,148
(Gain) loss on sale of fixed assets 57 (1,241)
Provisions for doubtful accounts 3,289 2,361
Deferred income tax provision -- (47)
(Increase) decrease in current assets 4,079 (210)
Increase (decrease) in current liabilities (1,076) 15,347
------------ ------------
Net cash provided by operating activities 36,143 53,835
------------ ------------
Cash flows from investing activities:
Proceeds from sale of fixed assets 86 5,779
Capital expenditures (12,518) (7,145)
Acquisitions of Able Door and Baytown Depot (4,310) --
Other 1,664 3,074
------------ ------------
Net cash provided by (used in) investing activities (15,078) 1,708
------------ ------------
Cash flows from financing activities:
Proceeds from stock options exercised 3,378 2,904
Net payments on revolving lines of credit (24,900) (39,850)
Payment on long-term debt (4,687) (33,750)
Purchase of treasury stock (114) (175)
------------ ------------
Net cash used in financing activities (26,323) (70,871)
------------ ------------
Net decrease in cash (5,258) (15,328)
Cash at beginning of period 9,530 21,125
------------ ------------
Cash at end of period $ 4,272 $ 5,797
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</Table>
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