UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10, 2013
NCI BUILDING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 1-14315 | 76-0127701 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
10943 North Sam Houston Parkway West Houston, Texas |
77064 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (281) 897-7788
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On December 10, 2013, NCI Building Systems, Inc. (“NCI”) issued a press release (the “Press Release”) announcing NCI’s financial results for the fourth quarter and fiscal year ended November 3, 2013. A copy of the Press Release is attached as Exhibit 99.1.
NCI’s Press Release includes Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Common Share which are non-GAAP financial measures. Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Common Share exclude acquisition-related costs, actuarial determined general liability self-insurance charges (recovery), executive retirement charges, convertible preferred stock beneficial conversion feature and amendment charges, stock-based compensation costs, gain on embedded derivative, asset impairments (recoveries), debt extinguishment costs, gain on insurance recovery and unreimbursed business interruption costs. Adjusted EBITDA is calculated based on the terms contained in NCI’s term loan credit agreement. Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Common Share are measures used by management and, therefore, provided to investors to provide comparability between periods of underlying operational results. Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Common Share should not be considered in isolation or as substitutes for operating income (loss), net income (loss), net income (loss) per diluted common share or net income (loss) applicable to common shares determined in accordance with generally accepted accounting principles in the United States. The non-GAAP financial measures are included in the Press Release furnished hereto as Exhibit 99.1.
Attached hereto as Exhibit 99.2 is financial information and commentary by Mark E. Johnson, Executive Vice President, Chief Financial Officer and Treasurer of NCI, regarding results for the fiscal fourth quarter ended November 3, 2013 and forward-looking statements relating to the fiscal first quarter ended February 2, 2014 (the “CFO Commentary”). The CFO Commentary will be posted on the company’s website, www.ncigroup.com, on December 10, 2013.
The CFO Commentary includes Adjusted Operating Income which is a non-GAAP financial measure. Adjusted Operating Income excludes gain on insurance recovery and unreimbursed business interruption costs. Adjusted Operating Income is a measure used by management and, therefore, provided to investors to provide comparability between periods of underlying operational results. Adjusted Operating Income should not be considered in isolation or as a substitute for Operating Income (Loss) determined in accordance with generally accepted accounting principles in the United States. The non-GAAP financial measure is included in the CFO Commentary furnished hereto as Exhibit 99.2.
The information in this Item 2.02, and in Exhibit 99.1 and Exhibit 99.2 which are attached to this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall they be deemed incorporated by reference in any registration statement or other filing under the Securities Act of 1933, as amended, or the Exchange Act, except if NCI expressly states that such information is to be considered “filed” under the Exchange Act or incorporates it by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) | Exhibits. |
Exhibit Number |
Description | |
99.1 | Press Release dated December 10, 2013. | |
99.2 | CFO Commentary dated December 10, 2013. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NCI BUILDING SYSTEMS, INC. | |||
By: | /s/ Mark E. Johnson | ||
Name: | Mark E. Johnson | ||
Title: | Executive Vice President, Chief Financial Officer and Treasurer | ||
Dated: December 10, 2013
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated December 10, 2013. | |
99.2 | CFO Commentary dated December 10, 2013. |
NCI Building
Systems Reports
Fourth Quarter and 2013 Fiscal Year End Results
HOUSTON, December 10, 2013 -- NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the fourth quarter and fiscal year ended November 3, 2013. The 2013 fourth quarter and fiscal year included an extra week versus the 2012 fourth quarter and fiscal year.
Fourth Quarter Highlights:
· | Sales rose 10.7% to $400.2 million, compared to the prior year’s fourth quarter, and increased 26%, sequentially. |
· | Gross profit increased 10.8% to $87.3 million from $78.8 million in the comparable quarter last year, and rose 30% from $67.0 million in the previous quarter. |
· | Adjusted EBITDA was $30.1 million up slightly from the prior fiscal year, but rose 77% from $17.0 million in the third quarter of 2013. |
· | Net income per diluted common share was $0.11, up from $0.08 per diluted share in the prior fiscal year and a net loss of $0.19 per diluted common share in the prior quarter. |
· | Quarter-end backlog increased by 6% to $322.2 million compared to $303.6 million for the same period in fiscal 2012 and $319.2 million in the third quarter of 2013. |
Fiscal 2013 Highlights:
· | Sales rose 13% to $1.3 billion from $1.2 billion in the prior year. |
· | Gross profit increased 8% to $276.0 million from $256.0 million in fiscal 2012. |
· | Adjusted EBITDA was $70.9 million declining from last fiscal year’s $76.5 million. |
· | Adjusted net income applicable to diluted common shares was $0.03 million or $0.00 per diluted common share, up from an adjusted net loss of $0.25 per diluted common share in the prior fiscal year. |
· | Stockholders’ equity increased $623.3 million to $252.8 million from negative $370.5 million primarily due to the conversion of all preferred shares to common shares in May 2013. |
· | Net cash provided by operating activities increased to $64 million from $48 million in fiscal 2012. |
Norman C. Chambers, Chairman, President and Chief Executive, commented, "We generated sequential and more importantly year-over-year improvement in our operating results in the fourth quarter. Results across our end-markets and product categories are starting to show positive momentum. We delivered strong sequential and year-over-year gains in Components sales driven largely by legacy single skin products, for which demand had lagged until the fourth quarter. Insulated metal panels continued to outpace all other products in commercial and industrial applications. That segment also benefitted from improved pricing and margins. Our Coatings group continued to perform well, delivering top-line growth and improved profitability both sequentially and compared to last year’s fourth quarter due to strong demand for heavy gauge package shipments. The Buildings group posted increased sales, but its operating profitability was negatively affected by lower pricing earlier in the year and higher manufacturing costs.
“We see an opportunity to further distinguish the value of our products and services by strengthening the integration of our manufacturing platform across all three business segments and rapidly incorporating the benefits of lean manufacturing best practices and efficiencies across all our production facilities. To drive this initiative, we have selected John Kuzdal, formerly president of our Coatings group, to be the President of NCI Manufacturing, and he will have responsibility for all of NCI’s manufacturing operations and activities.”
Fourth Quarter 2013 Results
For the fourth quarter, sales grew 10.7% to $400.2 million from $361.7 million in last year's fourth quarter, due to higher volumes in each of our operating segments, as well as the contribution from the extra week this fiscal quarter. On a sequential basis, sales were up 26.2% from $317.2 million in the third quarter.
Gross profit increased 10.8% to $87.3 million from $78.8 million in the fourth quarter of 2012 while gross profit margin was flat at 21.8%. Our August price increases materialized quickly in the results for both the Coatings group and the Components group because of their shorter sales cycles compared to the Buildings group. We expect to realize the benefit of the price increases in our Buildings group during the first half of fiscal year 2014 and beyond. Approximately 90% of the Buildings group’s shipments in the fourth quarter were from work that was booked prior to the August price increases.
Engineering, selling, general and administrative (ESG&A) expenses rose 12.0% to $70.8 million from $63.2 million in the fourth quarter of 2012. As a percentage of revenues, ESG&A increased approximately 20 basis points to 17.7% in the 2013 fourth quarter compared to 17.5% in the prior year’s period and was down from 19.8% in the 2013 third quarter. The increase in costs over the prior year was comprised of $2.0 million for the extra week in 2013, $1.3 million higher non-cash stock compensation charges, $3.4 million related to unique expenditures to improve our distribution channels, manufacturing capabilities and customer responsiveness, and the remainder related to variable costs on the increased activity levels.
Operating income increased to $16.5 million and included a $1.0 million insurance recovery and $0.5 million for unreimbursed business interruption costs associated with the fire at our Jackson, Mississippi coating plant that occurred in the fourth quarter. Excluding those items, adjusted operating income was $15.9 million, slightly higher than the prior year’s results.
As noted above, Adjusted EBITDA, a non-GAAP measure, defined as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, in accordance with the Company's credit agreement was $30.1 million, up slightly from $29.5 million in the prior year’s fourth quarter and 77% higher than the $17.0 million of Adjusted EBITDA in this year’s third quarter. Please see the reconciliation of Adjusted EBITDA to net income (loss) in the Company’s financial statements.
For the fourth quarter of 2013, the Company reported net income of $8.3 million, or $0.11 per diluted common share. Excluding the gain associated with the insurance recovery and the unreimbursed business interruption costs, NCI generated adjusted net income of $8.0 million, or $0.10 per diluted common share. The weighted average number of common shares used in the calculation of fourth quarter 2013 earnings per diluted common share was 74.9 million. In last year's fourth quarter, the Company reported net income of $6.3 million, or $0.08 per diluted common share. Under the two class method in place before the May 2013 conversion of preferred shares to common, the weighted average number of common shares used in the calculation of fourth quarter 2012 net income per diluted common share was 19.5 million.
Inventory levels increased 15% over the same period of the prior year to $122.1 million due to anticipated higher volume levels associated with the rising backlog. Annualized inventory turnover was 9.2 turns for the fourth quarter compared to 10.1 turns in last year's fourth quarter and 7.5 turns in the third quarter of fiscal 2013.
Capital expenditures were $24.4 million for fiscal year 2013. The majority of our expenditures were targeted at upgrading facilities and systems. The projects included refurbishing the Middletown, Ohio coating facility, consolidating chemical processes within insulated metal panels, enhancing the Coatings group’s manufacturing capabilities and launching system improvements in the Buildings group. During fiscal 2013, NCI generated $64.1 million in net cash provided by operating activities due to operating earnings and effective working capital management.
Fourth Quarter 2013 Segment Performance
The Coatings group third party sales grew 31.8% year-over-year and 25.2% sequentially. Operating income increased to $8.2 million in the fourth quarter of 2013 from $7.0 million in the fourth quarter of last fiscal year and $5.5 million in the 2013 third quarter. This group continued to generate strong external sales gains in HVAC, lighting fixtures and appliance sales, along with increased shipments of heavy gauge packages to construction markets. The Jackson, Mississippi plant was back online in September after a fire at the facility on August 6. During the six weeks the facility was offline while we repaired the damaged ovens, we utilized capacity at our other coatings plants to ensure that customers did not experience delays in their scheduled deliveries. However, as a result of these efforts, our freight and manufacturing costs were slightly higher than expected and unreimbursed costs related to the business interruption were approximately $0.5 million. The $1.0 million insurance recovery was spent on reconstructing the damaged ovens and we anticipate receiving additional insurance funds over the next several quarters. The total received for the reconstructed ovens will be depreciated over ten years beginning in fiscal 2014.
The Components group produced a 13.8% increase in third-party sales versus the prior year’s fourth quarter and a 25.1% increase sequentially. Operating income rose to $16.9 million from $10.2 million in the same quarter last fiscal year and $8.1 million in the third quarter of 2013. The year-over-year increase in operating income was due to higher volumes of legacy products and improving sales margins. Sales of higher margin insulated metal panels continued to gain momentum, growing 30% year-over year as they further penetrated the commercial and industrial segments.
The Buildings group’s total third party sales were up 5.5% compared to last year’s fourth quarter and rose 27.3% sequentially. This group produced operating income of $9.0 million in the 2013 fourth quarter, declining from $14.2 million in the prior year’s fourth quarter, but rebounding from $6.1 million in the prior quarter. The profitability of the Buildings group was impacted by increased manufacturing costs and shipments of lower margin projects resulting from pricing pressure earlier in our fiscal year. We anticipate that the benefit of improved pricing from our August increase will be reflected in orders shipped in the first half of 2014.
For additional information, please see the CFO Commentary at www.ncigroup.com under the investors tab.
Market Commentary
Leading indicators for nonresidential construction activity continue to trend positive. The American Institute of Architects’ Architecture Billing Index (ABI) remained in growth mode in October at 51.6, but was down sequentially from 54.3 in September. The index has now been above 50 for 14 of the past 15 months, which is a very positive sign for U.S. construction spending going into 2014. In addition, the new projects inquiry index was up sharply in October to 61.5 from 58.6 in September.
Economic activity in the manufacturing sector expanded for the sixth consecutive month as the Institute for Supply Management (ISM) survey registered the highest level since April 2011 at 57.3, up from 56.4 in October. The ISM data, which leads GDP, has been in a range over the last two quarters consistent with 3-4% real GDP growth. The ISM’s New Orders Index registered 63.6 and represents growth in new orders for the sixth consecutive month.
Summary/Outlook
“Our performance in fiscal 2013 was hampered by economic uncertainty, which resulted in lower than expected volumes and pricing pressure earlier in our fiscal year,” noted Mr. Chambers. “Beginning in August, we experienced a pick-up in demand mainly coming from the commercial, industrial and agricultural sectors. The recent additions to our Buildings backlog in the period continue to reflect a number of larger projects and projects with higher margins. Operationally, the Components group delivered significant growth in commercial and industrial sector sales to NCI’s largest OEM customers and in insulated metal panels. The Coatings group continues to benefit from higher volumes and improving product mix and margins. In addition, the Middletown, Ohio light gauge paint line has substantially increased production, and the facility, as previously anticipated, was profitable in the fourth fiscal quarter of 2013.
“We expect the market will support 800 million square feet of nonresidential construction starts in calendar 2013, a very modest improvement from the 772 million square feet realized in 2012. Business conditions at architectural firms have steadily improved in the past several quarters, suggesting the potential for upper single digit year-over-year growth in nonresidential new construction in 2014. Recent bookings trends and discussions with our customers appear to support this momentum. In addition, we currently anticipate improved margins in fiscal 2014 as we fully benefit from greater commercial discipline, manufacturing efficiencies and volume-driven operating leverage,” Mr. Chambers concluded.
Conference Call Information
The NCI Building Systems, Inc. fourth quarter conference call is scheduled for Tuesday, December 10, 2013, at 5:00 PM ET. Please dial 1-480-629-9835 or 1-877-941-0844 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.ncigroup.com. To access the taped replay, please dial 1-303-590-3030 or 1-800-406-7325 and the passcode 4650930# when prompted. The taped replay will be available two hours after the call through December 17, 2013.
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 and Mexico, with additional sales and distribution offices throughout the United States and Canada.
Contact:
Layne de Alvarez
Director, Investor Relations
281-897-7710
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," "guidance," "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, as a result, 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. 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; ability to service the Company's debt; ability to integrate Metl-Span with the Company's business or to realize the anticipated benefits of such acquisition; fluctuations in customer demand and other patterns; raw material pricing and supply; competitive activity and pricing pressure; general economic conditions affecting the construction industry; financial crises or fluctuations in the U.S. and abroad; changes in laws or regulations; and the volatility of the Company's stock price. The Company's SEC filings, including our most recent reports on Form 10-K, particularly under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2012, identify 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Fiscal Three Months Ended | Fiscal Year Ended | |||||||||||||||
November 3, | October 28, | November 3, | October 28, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Sales | $ | 400,211 | $ | 361,688 | $ | 1,308,395 | $ | 1,154,010 | ||||||||
Cost of sales, excluding gain on insurance recovery | 313,934 | 282,879 | 1,033,374 | 897,992 | ||||||||||||
Gain on insurance recovery | (1,023 | ) | - | (1,023 | ) | - | ||||||||||
Gross profit | 87,300 | 78,809 | 276,044 | 256,018 | ||||||||||||
21.8 | % | 21.8 | % | 21.1 | % | 22.2 | % | |||||||||
Engineering, selling, general and administrative expenses | 70,842 | 63,230 | 256,856 | 219,340 | ||||||||||||
Acquisition-related costs | - | 153 | - | 4,989 | ||||||||||||
Income from operations | 16,458 | 15,426 | 19,188 | 31,689 | ||||||||||||
Interest income | 30 | 12 | 131 | 112 | ||||||||||||
Interest expense | (3,364 | ) | (6,238 | ) | (20,988 | ) | (16,827 | ) | ||||||||
Debt extinguishment costs, net | - | - | (21,491 | ) | (6,437 | ) | ||||||||||
Other income, net | 562 | 449 | 1,421 | 460 | ||||||||||||
Income (loss) before income taxes | 13,686 | 9,649 | (21,739 | ) | 8,997 | |||||||||||
Provision (benefit) for income taxes | 5,410 | 3,379 | (8,854 | ) | 4,084 | |||||||||||
39.5 | % | 35.0 | % | 40.7 | % | 45.4 | % | |||||||||
Net income (loss) | $ | 8,276 | $ | 6,270 | $ | (12,885 | ) | $ | 4,913 | |||||||
Convertible preferred stock dividends and accretion | - | - | - | 16,352 | ||||||||||||
Convertible preferred stock beneficial conversion feature | - | - | - | 11,878 | ||||||||||||
Convertible preferred stock amendment | - | - | - | 48,803 | ||||||||||||
Net income (loss) applicable to common shares | $ | 8,276 | $ | 6,270 | $ | (12,885 | ) | $ | (72,120 | ) | ||||||
Earnings (loss) per common share: | ||||||||||||||||
Basic | $ | 0.11 | $ | 0.08 | $ | (0.29 | ) | $ | (3.81 | ) | ||||||
Diluted | $ | 0.11 | $ | 0.08 | $ | (0.29 | ) | $ | (3.81 | ) | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 73,931 | 19,159 | 44,761 | 18,932 | ||||||||||||
Diluted | 74,924 | 19,481 | 44,761 | 18,932 | ||||||||||||
Increase in sales | 10.7 | % | 13.4 | % | ||||||||||||
Gross profit percentage | 21.8 | % | 21.8 | % | 21.1 | % | 22.2 | % | ||||||||
Engineering, selling, general and administrative | ||||||||||||||||
expenses percentage | 17.7 | % | 17.5 | % | 19.6 | % | 19.0 | % |
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
November 3, | October 28, | |||||||
2013 | 2012 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 77,436 | $ | 55,158 | ||||
Restricted cash | - | 1,375 | ||||||
Accounts receivable, net | 135,368 | 133,475 | ||||||
Inventories, net | 122,105 | 106,015 | ||||||
Deferred income taxes | 27,736 | 21,926 | ||||||
Income tax receivable | 1,112 | 549 | ||||||
Prepaid expenses and other | 19,300 | 16,864 | ||||||
Investments in debt and equity securities, at market | 4,892 | 4,076 | ||||||
Assets held for sale | 2,879 | 2,397 | ||||||
Total current assets | 390,828 | 341,835 | ||||||
Property, plant and equipment, net | 260,918 | 268,875 | ||||||
Goodwill | 75,226 | 76,746 | ||||||
Intangible assets, net | 48,975 | 53,028 | ||||||
Deferred financing costs, net | 4,316 | 11,000 | ||||||
Total assets | $ | 780,263 | $ | 751,484 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current portion of long-term debt | $ | 2,384 | $ | 2,500 | ||||
Note payable | 613 | 515 | ||||||
Accounts payable | 144,553 | 113,177 | ||||||
Accrued compensation and benefits | 40,954 | 41,586 | ||||||
Accrued interest | 1,844 | 345 | ||||||
Other accrued expenses | 61,266 | 61,935 | ||||||
Total current liabilities | 251,614 | 220,058 | ||||||
Long-term debt, net | 235,391 | 234,444 | ||||||
Deferred income taxes | 32,185 | 35,565 | ||||||
Other long-term liabilities | 8,315 | 11,995 | ||||||
Total long-term liabilities | 275,891 | 282,004 | ||||||
Series B cumulative convertible participating preferred stock | - | 619,950 | ||||||
Common stock | 1,471 | 925 | ||||||
Additional paid-in capital | 638,574 | 4,991 | ||||||
Accumulated deficit | (382,735 | ) | (369,850 | ) | ||||
Accumulated other comprehensive loss | (4,436 | ) | (6,568 | ) | ||||
Treasury stock, at cost | (116 | ) | (26 | ) | ||||
Stockholders' equity (deficit) | 252,758 | (370,528 | ) | |||||
Total liabilities and stockholders' equity (deficit) | $ | 780,263 | $ | 751,484 |
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Fiscal Year Ended | ||||||||
November 3, 2013 | October 28, 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (12,885 | ) | $ | 4,913 | |||
Adjustments to reconcile net income (loss) to net cash provided by | ||||||||
operating activities: | ||||||||
Depreciation and amortization | 36,009 | 29,602 | ||||||
Amortization of deferred financing costs and debt discount | 3,266 | 4,238 | ||||||
Share-based compensation expense | 14,900 | 9,298 | ||||||
Non-cash debt extinguishment costs | 17,582 | 6,437 | ||||||
Gain on sale of property, plant and equipment | (3 | ) | (556 | ) | ||||
Provision (benefit) for doubtful accounts | 1,679 | (109 | ) | |||||
Provision (benefit) from deferred income taxes | (10,589 | ) | 2,177 | |||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable | (3,572 | ) | (16,719 | ) | ||||
Inventories | (16,090 | ) | (9,108 | ) | ||||
Income tax receivable | (724 | ) | 1,082 | |||||
Prepaid expenses and other | (1,720 | ) | (2,075 | ) | ||||
Accounts payable | 34,559 | 12,047 | ||||||
Accrued expenses | 2,121 | 6,506 | ||||||
Other, net | (391 | ) | (11 | ) | ||||
Net cash provided by operating activities | 64,142 | 47,722 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition, net of cash acquired | - | (140,991 | ) | |||||
Capital expenditures | (24,426 | ) | (28,151 | ) | ||||
Proceeds from insurance | 1,023 | - | ||||||
Proceeds from sale of property, plant and equipment | 74 | 2,992 | ||||||
Net cash used in investing activities | (23,329 | ) | (166,150 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from stock options exercised | 674 | - | ||||||
Decrease in restricted cash | 1,375 | 1,461 | ||||||
Proceeds on term loan | - | 237,499 | ||||||
Payments on term loan | (10,975 | ) | (131,950 | ) | ||||
Payments on note payable | (1,722 | ) | (1,536 | ) | ||||
Proceeds from Amended ABL Facility | 5,000 | 2 | ||||||
Payments on Amended ABL Facility | (5,000 | ) | - | |||||
Payment of financing costs | (6,265 | ) | (9,399 | ) | ||||
Excess tax benefits from share-based compensation arrangements | 977 | 2 | ||||||
Purchase of treasury stock | (2,462 | ) | (1,529 | ) | ||||
Net cash (used in) provided by financing activities | (18,398 | ) | 94,550 | |||||
Effect of exchange rate changes on cash and cash equivalents | (137 | ) | 54 | |||||
Net increase (decrease) in cash and cash equivalents | 22,278 | (23,824 | ) | |||||
Cash and cash equivalents at beginning of period | 55,158 | 78,982 | ||||||
Cash and cash equivalents at end of period | $ | 77,436 | $ | 55,158 |
NCI Building Systems, Inc.
Business Segments
(Unaudited)
(In thousands)
Three Months Ended | Three Months Ended | $ | % | |||||||||||||||||||||
November 3, 2013 | October 28, 2012 | Inc/(Dec) | Change | |||||||||||||||||||||
% of | % of | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
Sales: | Sales | Sales | ||||||||||||||||||||||
Metal coil coating | $ | 66,525 | 14 | $ | 57,963 | 14 | $ | 8,562 | 14.8 | % | ||||||||||||||
Metal components | 201,019 | 43 | 180,267 | 42 | 20,752 | 11.5 | % | |||||||||||||||||
Engineered building systems | 201,737 | 43 | 190,195 | 44 | 11,542 | 6.1 | % | |||||||||||||||||
Total sales | 469,281 | 100 | 428,425 | 100 | 40,856 | 9.5 | % | |||||||||||||||||
Less: Intersegment sales | 69,070 | 15 | 66,737 | 16 | 2,333 | 3.5 | % | |||||||||||||||||
Total net sales | $ | 400,211 | 85 | $ | 361,688 | 84 | $ | 38,523 | 10.7 | % | ||||||||||||||
- | - |
% of | % of | |||||||||||||||||||||||
Operating income (loss): | Sales | Sales | ||||||||||||||||||||||
Metal coil coating | $ | 8,209 | 12 | $ | 7,018 | 12 | $ | 1,191 | 17.0 | % | ||||||||||||||
Metal components | 16,904 | 8 | 10,216 | 6 | 6,688 | 65.5 | % | |||||||||||||||||
Engineered building systems | 9,045 | 4 | 14,182 | 7 | (5,137 | ) | -36.2 | % | ||||||||||||||||
Corporate | (17,700 | ) | - | (15,990 | ) | - | (1,710 | ) | -10.7 | % | ||||||||||||||
Total operating income (loss) (% of sales) | $ | 16,458 | 4 | $ | 15,426 | 4 | $ | 1,032 | 6.7 | % | ||||||||||||||
- | - |
Fiscal Year Ended | Fiscal Year Ended | $ | % | |||||||||||||||||||||
November 3, 2013 | October 28, 2012 | Inc/(Dec) | Change | |||||||||||||||||||||
% of | % of | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
Sales: | Sales | Sales | ||||||||||||||||||||||
Metal coil coating | $ | 222,064 | 14 | $ | 210,227 | 15 | $ | 11,837 | 5.6 | % | ||||||||||||||
Metal components | 663,094 | 43 | 534,853 | 39 | 128,241 | 24.0 | % | |||||||||||||||||
Engineered building systems | 655,767 | 43 | 643,473 | 46 | 12,294 | 1.9 | % | |||||||||||||||||
Total sales | 1,540,925 | 100 | 1,388,553 | 100 | 152,372 | 11.0 | % | |||||||||||||||||
Intersegment sales | 232,530 | 15 | 234,543 | 17 | (2,013 | ) | -0.9 | % | ||||||||||||||||
Total net sales | $ | 1,308,395 | 85 | $ | 1,154,010 | 83 | $ | 154,385 | 13.4 | % | ||||||||||||||
- | - | - |
% of | % of | |||||||||||||||||||||||
Operating income (loss): | Sales | Sales | ||||||||||||||||||||||
Metal coil coating | $ | 24,027 | 11 | $ | 22,322 | 11 | $ | 1,705 | 7.6 | % | ||||||||||||||
Metal components | 36,167 | 5 | 34,147 | 6 | 2,020 | 5.9 | % | |||||||||||||||||
Engineered building systems | 23,405 | 4 | 37,596 | 6 | (14,191 | ) | -37.7 | % | ||||||||||||||||
Corporate | (64,411 | ) | - | (62,376 | ) | - | (2,035 | ) | -3.3 | % | ||||||||||||||
Total operating income (loss) (% of sales) | $ | 19,188 | 1 | $ | 31,689 | 3 | $ | (12,501 | ) | -39.4 | % |
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
FOR THE THREE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012
(Unaudited)
(In thousands)
For the Three Months Ended November 3, 2013 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 8,209 | $ | 16,904 | $ | 9,045 | $ | (17,700 | ) | $ | 16,458 | |||||||||
Gain on insurance recovery | (1,023 | ) | - | - | - | (1,023 | ) | |||||||||||||
Unreimbursed business interruption costs | 500 | - | - | - | 500 | |||||||||||||||
"Adjusted" operating income (loss) (1) | $ | 7,686 | $ | 16,904 | $ | 9,045 | $ | (17,700 | ) | $ | 15,935 |
For the Three Months Ended October 28, 2012 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 7,018 | $ | 10,216 | $ | 14,182 | $ | (15,990 | ) | $ | 15,426 | |||||||||
Acquisition-related costs | - | - | - | 153 | 153 | |||||||||||||||
"Adjusted" operating income (loss) (1) | $ | 7,018 | $ | 10,216 | $ | 14,182 | $ | (15,837 | ) | $ | 15,579 |
(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 statement 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
FOR THE FISCAL YEAR ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012
(Unaudited)
(In thousands)
For the Fiscal Year Ended November 3, 2013 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 24,027 | $ | 36,167 | $ | 23,405 | $ | (64,411 | ) | $ | 19,188 | |||||||||
Gain on insurance recovery | (1,023 | ) | - | - | - | (1,023 | ) | |||||||||||||
Unreimbursed business interruption costs | 500 | - | - | - | 500 | |||||||||||||||
"Adjusted" operating income (loss) (1) | $ | 23,504 | $ | 36,167 | $ | 23,405 | $ | (64,411 | ) | $ | 18,665 |
For the Fiscal Year Ended October 28, 2012 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 22,322 | $ | 34,147 | $ | 37,596 | $ | (62,376 | ) | $ | 31,689 | |||||||||
Acquisition-related costs | - | - | - | 4,989 | 4,989 | |||||||||||||||
Actuarial determined general liability self-insurance | ||||||||||||||||||||
charges (recovery) | - | (1,929 | ) | - | - | (1,929 | ) | |||||||||||||
Executive retirement | - | - | - | 508 | 508 | |||||||||||||||
"Adjusted" operating income (loss) (1) | $ | 22,322 | $ | 32,218 | $ | 37,596 | $ | (56,879 | ) | $ | 35,257 |
(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 statement of operations. |
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)
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Trailing 12 Months | ||||||||||||||||
January 27, | April 28, | July 28, | November 3, | November 3, | ||||||||||||||||
2013 | 2013 | 2013 | 2013 | 2013 | ||||||||||||||||
Net income (loss) | $ | (3,627 | ) | $ | (5,342 | ) | $ | (12,192 | ) | $ | 8,276 | $ | (12,885 | ) | ||||||
Add: | ||||||||||||||||||||
Depreciation and amortization | 9,122 | 8,809 | 9,066 | 9,012 | 36,009 | |||||||||||||||
Consolidated interest expense, net | 6,244 | 6,149 | 5,130 | 3,334 | 20,857 | |||||||||||||||
Provision (benefit) for income taxes | (1,825 | ) | (2,506 | ) | (9,933 | ) | 5,410 | (8,854 | ) | |||||||||||
Debt extinguishment costs, net | - | - | 21,491 | - | 21,491 | |||||||||||||||
Gain on insurance recovery | - | - | - | (1,023 | ) | (1,023 | ) | |||||||||||||
Unreimbursed business interruption costs | - | - | - | 500 | 500 | |||||||||||||||
Non-cash charges: | ||||||||||||||||||||
Share-based compensation | 3,442 | 3,445 | 3,448 | 4,565 | 14,900 | |||||||||||||||
Embedded derivative | (5 | ) | (4 | ) | (50 | ) | - | (59 | ) | |||||||||||
Adjusted EBITDA (1) | $ | 13,351 | $ | 10,551 | $ | 16,960 | $ | 30,074 | $ | 70,936 |
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Trailing 12 Months | ||||||||||||||||
January 29, | April 29, | July 29, | October 28, | October 28, | ||||||||||||||||
2012 | 2012 | 2012 | 2012 | 2012 | ||||||||||||||||
Net income (loss) | $ | 589 | $ | 1,321 | $ | (3,267 | ) | $ | 6,270 | $ | 4,913 | |||||||||
Add: | ||||||||||||||||||||
Depreciation and amortization | 6,158 | 5,841 | 7,248 | 10,355 | 29,602 | |||||||||||||||
Consolidated interest expense, net | 3,296 | 3,034 | 4,159 | 6,226 | 16,715 | |||||||||||||||
Provision (benefit) for income taxes | 426 | 942 | (663 | ) | 3,379 | 4,084 | ||||||||||||||
Acquisition-related costs | 396 | 1,494 | 2,946 | 153 | 4,989 | |||||||||||||||
Debt extinguishment costs, net | - | - | 6,437 | - | 6,437 | |||||||||||||||
Executive retirement | - | 508 | - | - | 508 | |||||||||||||||
Non-cash charges: | ||||||||||||||||||||
Share-based compensation | 1,972 | 2,119 | 2,090 | 3,117 | 9,298 | |||||||||||||||
Asset impairments (recoveries) | - | - | (22 | ) | 13 | (9 | ) | |||||||||||||
Embedded derivative | (5 | ) | (6 | ) | (5 | ) | (6 | ) | (22 | ) | ||||||||||
Adjusted EBITDA (1) | $ | 12,832 | $ | 15,253 | $ | 18,923 | $ | 29,507 | $ | 76,515 |
(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 non-recurring charges. As such, the historical information is presented in accordance with the definition above. Concurrent with the amendment and restatement of the Term Note facility, the Company entered into an Asset-Backed 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 Year Ended | |||||||||||||||
November 3, | October 28, | November 3, | October 28, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income (loss) per diluted common share, GAAP basis | $ | 0.11 | $ | 0.08 | $ | (0.29 | ) | $ | (3.81 | ) | ||||||
Convertible preferred stock beneficial conversion feature and amendment | - | - | - | 3.20 | ||||||||||||
Debt extinguishment costs, net of taxes | - | - | 0.30 | 0.21 | ||||||||||||
Gain on insurance recovery, net of unreimbursed business interruption costs and taxes | (0.01 | ) | - | (0.01 | ) | - | ||||||||||
Acquisition-related costs, net of taxes | - | 0.00 | - | 0.19 | ||||||||||||
Actuarial determined general liability self-insurance charges (recovery), net of taxes | - | - | - | (0.06 | ) | |||||||||||
Executive retirement, net of taxes | - | - | - | 0.02 | ||||||||||||
"Adjusted" net income (loss) per diluted common share (1) | $ | 0.10 | $ | 0.08 | $ | 0.00 | $ | (0.25 | ) |
Fiscal Three Months Ended | Fiscal Year Ended | |||||||||||||||
November 3, | October 28, | November 3, | October 28, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income (loss) applicable to common shares, GAAP basis | $ | 8,276 | $ | 6,270 | $ | (12,885 | ) | $ | (72,120 | ) | ||||||
Convertible preferred stock beneficial conversion feature and amendment | - | - | - | 60,681 | ||||||||||||
Debt extinguishment costs, net of taxes | - | - | 13,238 | 3,965 | ||||||||||||
Gain on insurance recovery, net of unreimbursed business interruption costs and taxes | (322 | ) | - | (322 | ) | - | ||||||||||
Acquisition-related costs, net of taxes | - | 94 | - | 3,690 | ||||||||||||
Actuarial determined general liability self-insurance charges (recovery), net of taxes | - | - | - | (1,188 | ) | |||||||||||
Executive retirement, net of taxes | - | - | - | 313 | ||||||||||||
"Adjusted" net income (loss) applicable to common shares (1) | $ | 7,954 | $ | 6,364 | $ | 31 | $ | (4,659 | ) |
(1) | 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 loss per diluted common share and net loss applicable to common shares as reported on the face of our statement of operations. |
NCI Building Systems, Inc.
Reconciliation of Segment Sales to Third Party Segment Sales (Internal Information)
(Unaudited)
(In thousands)
% | ||||||||||||||||||
4th Qtr 2013 | 4th Qtr 2012 | Inc/(Dec) | Change | |||||||||||||||
Metal Coil Coating | ||||||||||||||||||
Total Sales | 66,525 | 14% | 57,963 | 14% | 8,562 | 14.8% | ||||||||||||
Less: Intersegment sales | 37,691 | 36,082 | 1,609 | 4.5% | ||||||||||||||
Third Party Sales | 28,834 | 7% | 21,881 | 6% | 6,953 | 31.8% | ||||||||||||
Operating Income (Loss) | 8,209 | 28% | 7,018 | 32% | 1,191 | 17.0% | ||||||||||||
- | ||||||||||||||||||
Metal Components | ||||||||||||||||||
Total Sales | 201,019 | 43% | 180,267 | 42% | 20,752 | 11.5% | ||||||||||||
Less: Intersegment sales | 25,397 | 25,981 | (584 | ) | -2.2% | |||||||||||||
Third Party Sales | 175,622 | 44% | 154,286 | 43% | 21,336 | 13.8% | ||||||||||||
Operating Income (Loss) | 16,904 | 10% | 10,216 | 7% | 6,688 | 65.5% | ||||||||||||
- | ||||||||||||||||||
Engineered Building Systems | ||||||||||||||||||
Total Sales | 201,737 | 43% | 190,195 | 44% | 11,542 | 6.1% | ||||||||||||
Less: Intersegment sales | 5,982 | 4,674 | 1,308 | 28.0% | ||||||||||||||
Third Party Sales | 195,755 | 49% | 185,521 | 51% | 10,234 | 5.5% | ||||||||||||
Operating Income (Loss) | 9,045 | 5% | 14,182 | 8% | (5,137 | ) | -36.2% | |||||||||||
- | ||||||||||||||||||
Consolidated | ||||||||||||||||||
Total Sales | 469,281 | 100% | 428,425 | 100% | 40,856 | 9.5% | ||||||||||||
Intersegment | 69,070 | 66,737 | 2,333 | 3.5% | ||||||||||||||
Third Party Sales | 400,211 | 100% | 361,688 | 100% | 38,523 | 10.7% | ||||||||||||
Operating Income (Loss) | 16,458 | 4% | 15,426 | 4% | 1,032 | 6.7% | ||||||||||||
- |
YTD | YTD | % | ||||||||||||||||
4th Qtr 2013 | 4th Qtr 2012 | Inc/(Dec) | Change | |||||||||||||||
Metal Coil Coating | ||||||||||||||||||
Total Sales | 222,064 | 14% | 210,227 | 15% | 11,837 | 5.6% | ||||||||||||
Less: Intersegment sales | 129,094 | 129,121 | (27 | ) | 0.0% | |||||||||||||
Third Party Sales | 92,970 | 7% | 81,106 | 7% | 11,864 | 14.6% | ||||||||||||
Operating Income (Loss) | 24,027 | 26% | 22,322 | 28% | 1,705 | 7.6% | ||||||||||||
- | ||||||||||||||||||
Metal Components | ||||||||||||||||||
Total Sales | 663,094 | 43% | 534,853 | 39% | 128,241 | 24.0% | ||||||||||||
Less: Intersegment sales | 81,322 | 88,133 | (6,811 | ) | -7.7% | |||||||||||||
Third Party Sales | 581,772 | 44% | 446,720 | 39% | 135,052 | 30.2% | ||||||||||||
Operating Income (Loss) | 36,167 | 6% | 34,147 | 8% | 2,020 | 5.9% | ||||||||||||
- | ||||||||||||||||||
Engineered Building Systems | ||||||||||||||||||
Total Sales | 655,767 | 43% | 643,473 | 46% | 12,294 | 1.9% | ||||||||||||
Less: Intersegment sales | 22,114 | 17,289 | 4,825 | 27.9% | ||||||||||||||
Third Party Sales | 633,653 | 49% | 626,184 | 54% | 7,469 | 1.2% | ||||||||||||
Operating Income (Loss) | 23,405 | 4% | 37,596 | 6% | (14,191 | ) | -37.7% | |||||||||||
- | ||||||||||||||||||
Consolidated | ||||||||||||||||||
Total Sales | 1,540,925 | 100% | 1,388,553 | 100% | 152,372 | 11.0% | ||||||||||||
Less: Intersegment sales | 232,530 | 234,543 | (2,013 | ) | -0.9% | |||||||||||||
Third Party Sales | 1,308,395 | 100% | 1,154,010 | 100% | 154,385 | 13.4% | ||||||||||||
Operating Income (Loss) | 19,188 | 1% | 31,689 | 3% | (12,501 | ) | -39.4% |
CFO Commentary on Fourth-Quarter 2013 Results
Summary
The fourth quarter 2013 results compared to last year’s fourth quarter were as follows:
· | Revenue of $400.2 million, up 10.7% from $361.7 million |
· | Gross margin of 21.8% is flat |
· | *Adjusted Operating Income of $15.9 million was up 2% from $15.6 million |
· | Operating income of $16.5 million was up 6.7% from $15.4 million |
· | Net income applicable to common shares increased 32.0% to $8.3 million |
· | Net earnings per diluted common share of $0.11 was up from $0.08 |
* Reconciliations of non-GAAP financial measures to the nearest GAAP measure are included in the Company’s financial tables accompanying today’s earnings release.
Revenue
Revenue of $400.2 million was up 26.2% sequentially and up 10.7% from a year ago. Revenue growth was driven by increases in volume of 14%. This growth was offset by declining prices due to the pass-through of lower steel costs and competitive pricing pressure. The impact of lower steel prices reduced revenue by an estimated $9.4 million.
· | Coaters third-party revenue of $28.8 million increased by 32% with third-party volumes up by 21% versus last year’s fourth quarter results; |
· | Components third-party revenue of $175.6 million increased by 14% with third-party volumes up by 16% compared to last year’s fourth quarter; |
· | Buildings third-party revenue of $195.8 million increased by 6% with third-party volumes up by 6% versus the comparable quarter last year; |
Gross Margin
Gross profit grew to $87.3 million, up $20.3 million from the third quarter, and up $8.5 million from a year ago. Gross margin of 21.8% was up by 0.7 points from the third quarter, and was flat from a year ago.
ESG&A Expenses
ESG&A expenses were $70.8 million, an increase of $8.1 million from the third quarter, and up $7.6 million from a year ago. The increase in ESG&A expenses over the prior year is attributable to the following:
· | ~$4.3 million related to volume growth and the additional operating week this quarter vs. last year fourth quarter |
· | ~$3.4 million related to growth initiatives (Middletown coating facility, enhancements and expansions of our distribution channels, marketing effectiveness and customer responsiveness.) |
· | ~$1.3 million related to the non-cash amortization of stock compensation |
· | The above items were offset by ~$1.4 million reduction in acquisition-related depreciation and amortization and other items. |
1 |
Other Income Statement Items
On August 6th, our coil coating facility in Jackson, MS experienced a fire caused by an exhaust fan failure that damaged the roof and walls of two curing ovens. We incurred and capitalized costs of approximately $1.9 million to rebuild the ovens. To date, we have received cash reimbursement for these expenditures of $1.0 from our insurance carrier. Because the affected assets were fully depreciated, the cash received from our insurance carriers has been reflected as a "gain on insurance recovery" in our Q4 2013 income statement. We have submitted claims for the remaining $0.9 and expect to have these settled during fiscal 2014. Also related to this incident, the Coating group recognized approximately $0.5 million in incremental operating expenses during the quarter which have not been reimbursed by insurance carriers at this time. If and when reimbursements are received, they will be recognized as reductions of expense in the Coaters group.
Diluted Shares
As previously disclosed, all of the outstanding shares of Series B Cumulative Convertible Participating Preferred Stock were converted into common shares during the third quarter. These shares are now included in our weighted average shares outstanding for purposes of computing earnings per share. For fiscal 2013, considering the conversion date of May 14, 2013, our weighted average diluted common shares outstanding were 44.8 million.
Q1 2014 Outlook
The following are our current expectations for certain financial items for our next fiscal quarter:
ESG&A Expenses
We expect our ESG&A expenses to range between $63 million and $66 million.
Interest Expense
We expect our interest expense, including the amortization of deferred financing costs and costs from our revolving asset-based lending facility, to range between $2.8 and $3.0 million.
Effective Tax Rate
We expect our tax rate for the upcoming quarter to range between 37% and 40%. However, we continue to expect volatility in our quarterly tax rate as slight changes in earnings will have an outsized impact on the effective tax rate given the seasonal variation in earning levels that typically occur. Our effective tax rate percentage can and has varied significantly from expectations as a result.
Diluted Shares
We expect our weighted average diluted common share count used in calculating our earnings per share to be approximately 75.0 million for the upcoming quarter and 75.8 million for fiscal 2014.
2 |
Balance Sheet and Cash Flow Items
We expect our capital expenditures in fiscal 2014 to range between $24 and $28 million.
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," "guidance," "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, as a result, 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. 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; ability to service the Company's debt; ability to integrate Metl-Span with the Company's business or to realize the anticipated benefits of such acquisition; fluctuations in customer demand and other patterns; raw material pricing and supply; competitive activity and pricing pressure; general economic conditions affecting the construction industry; financial crises or fluctuations in the U.S. and abroad; changes in laws or regulations; and the volatility of the Company's stock price. The Company's SEC filings, including our most recent reports on Form 10-K, particularly under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2012, identify 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.
###
3 |