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, 2015
________________
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, 2015, 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 1, 2015. A copy of the Press Release is attached as Exhibit 99.1.
NCI’s Press Release includes Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares, Adjusted Net Income (Loss) Per Diluted Common Share and Pre-Tax Free Cash Flow, which are non-GAAP financial measures. Adjusted EBITDA excludes restructuring and impairment charges, strategic development and acquisition related costs, gain on legal settlements, fair value adjustment of acquired inventory, share-based compensation, gain on insurance recovery and secondary offering costs. Adjusted Operating Income (Loss) excludes restructuring and impairment charges, strategic development and acquisition related costs, gain on legal settlements, fair value adjustment of acquired inventory, amortization of short lived acquired intangibles, gain on insurance recovery and secondary offering costs. Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Common Share exclude restructuring and impairment charges, net of taxes; strategic development and acquisition related costs, net of taxes; fair value adjustment of acquired inventory, net of taxes; amortization of short lived acquired intangibles, net of taxes; gain on legal settlements, net of taxes; reversal of Canadian deferred tax valuation allowance; foreign exchange loss, net of taxes; gain on insurance recovery, net of taxes; and secondary offering costs, net of taxes. Adjusted EBITDA is calculated based on the terms contained in NCI’s term loan credit agreement. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by sales. Pre-tax free cash flow is defined as Adjusted EBITDA less capital expenditures plus changes in net working capital. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares, Adjusted Net Income (Loss) Per Diluted Common Share and Pre-Tax Free Cash Flow are measures used by management and, therefore, provided to investors to provide comparability between periods of underlying operational results. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) Applicable to Common Shares, Adjusted Net Income (Loss) Per Diluted Common Share and Pre-Tax Free Cash Flow should not be considered in isolation or as substitutes for net income (loss), operating income (loss), net income (loss) applicable to common shares or net income (loss) per diluted common share determined in accordance with generally accepted accounting principles in the United States. The non-GAAP financial measures and reconciliations thereof to the most directly comparable measures prepared in accordance with generally accepted accounting principles are included in the Press Release furnished as Exhibit 99.1 hereto.
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 1, 2015 and forward-looking statements relating to the fiscal first quarter ending January 31, 2016 (the “CFO Commentary”). The CFO Commentary will be posted on the company’s website, www.ncibuildingsystems.com, on December 10, 2015.
The CFO Commentary includes Adjusted EBITDA and Adjusted Operating Income (Loss), which are non-GAAP financial measures. Adjusted EBITDA excludes restructuring and impairment charges, strategic development and acquisition related costs, gain on legal settlements, fair value adjustment of acquired inventory, share-based compensation, gain on insurance recovery and secondary offering costs. Adjusted Operating Income (Loss) restructuring and impairment charges, strategic developments and acquisition related costs, gain on legal settlements and amortization of short lived acquired intangibles. Adjusted EBITDA and Adjusted Operating Income (Loss) are measures used by management and, therefore, provided to investors to provide comparability between periods of underlying operational results. Adjusted EBITDA and Adjusted Operating Income (Loss) should not be considered in isolation or as a substitute for net income (loss) or operating income (loss) determined in accordance with generally accepted accounting principles in the United States. The non-GAAP financial measures and reconciliations thereof to the most directly comparable measures prepared in accordance with generally accepted accounting principles are included in the CFO Commentary furnished as Exhibit 99.2 hereto.
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 in the event that 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, 2015 | |
99.2 | CFO Commentary dated December 10, 2015 |
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, 2015
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated December 10, 2015 | |
99.2 | CFO Commentary dated December 10, 2015 |
Exhibit 99.1
NEWS RELEASE |
NCI Building Systems Reports Strong
Fourth Quarter and 2015 Fiscal Year End Results
HOUSTON, December 10, 2015 – NCI Building Systems, Inc. (NYSE: NCS) (“NCI” or the “Company”) today reported financial results for the fourth quarter and fiscal year ended November 1, 2015.
Fourth Quarter 2015 Financial and Operational Highlights:
· | Sales rose 17.2% to $459.8 million, compared to $392.4 million in last year’s fourth quarter, primarily driven by the acquisition of CENTRIA that closed in January 2015. |
· | Gross profit increased 32.3% to $123.6 million and gross margin expanded 310 basis points year-over-year to 26.9%. |
· | Net income per diluted common share was $0.25, which included net charges of $0.06 for special items. |
· | Adjusted for special items, net income per diluted common share increased to $0.31 from $0.19 in last year’s fourth quarter. |
· | Adjusted EBITDA increased 55.6% to $56.4 million and Adjusted EBITDA margin expanded 310 basis points to 12.3% compared to the prior year’s fourth quarter. |
· | Buildings backlog grew 13.2% year-over-year and the consolidated backlog increased 48.1% to $494.5 million, which now includes CENTRIA’s backlog of $115.2 million. |
Fiscal 2015 Financial and Operational Highlights:
· | Sales rose 14.1% to $1.56 billion from $1.37 billion in the prior year. |
· | Gross profit increased 27.6% to $372.3 million from $291.8 million in fiscal 2014. |
· | Net income per diluted common share was $0.24, which included $0.18 of special items. |
· | Adjusted for special items, net income per diluted common share was $0.42, up from $0.16 in fiscal 2014. |
· | Adjusted EBITDA rose 72.2% to $130.1 million and Adjusted EBITDA margin expanded 280 basis points to 8.3% in the current fiscal year. |
· | Pre-tax free cash flow* more than tripled to $125 million from $38 million in the prior year. |
*Defined as Adjusted EBITDA – net capital expenditures + changes in net working capital
Norman C. Chambers, Chairman, President and Chief Executive Officer, commented, “We are pleased to have delivered on our commitment to increase gross profit margin and Adjusted EBITDA, marking the sixth consecutive quarter of year-over-year improvement. Our solid fourth quarter results helped us achieve the best second half and full year performance since 2008. The improved performance across all three operating segments is a direct result of the reorganization of our business and strategic initiatives implemented over the past few years. Specifically, our fiscal 2015 performance delivered a 59% increase in net income and a 72% increase in Adjusted EBITDA. In addition, despite continued choppy market conditions, we have been able to deliver earnings growth over the prior several quarters through increased volumes, commercial discipline, and manufacturing improvements.”
Fourth Quarter 2015 Results
Fourth quarter 2015 sales increased to $459.8 million, or 17.2%, from $392.4 million in last year's fourth quarter, due mainly to increased volumes across all three segments and the impact of the CENTRIA acquisition. The legacy single skin and insulated metal panel (IMP) product lines, as well as the Buildings group, delivered strong results.
Gross profit increased 32.3% to $123.6 million from $93.4 million in the fourth quarter of 2014, while gross profit margin expanded 310 basis points to 26.9%, compared to 23.8% in the prior year period. The improved margin performance was driven largely by a combination of commercial discipline, effective supply chain initiatives and the impact of the operating leverage created by increased utilization.
Engineering, selling, general and administrative (ESG&A) expenses increased 13.5% to $76.4 million from $67.3 million in the fourth quarter of 2014 due largely to the CENTRIA acquisition and, to a lesser extent, increased incentive compensation. As a percentage of revenues, ESG&A expenses decreased approximately 60 basis points to 16.6% in the 2015 fourth quarter compared to 17.2% in the prior year’s period.
Adjusted operating income, a non-GAAP measure, increased 74.7% to $43.8 million in the current quarter from $25.1 million in the fourth quarter of 2014, driven by the expansion in gross profit margin. On a GAAP basis, operating income increased to $36.5 million, or 69.2%, compared to $21.6 million in the prior year’s fourth quarter and increased 88.4% sequentially from the third quarter of fiscal 2015.
Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's term loan credit agreement as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, was $56.4 million, up 55.6% from $36.3 million in the prior year’s fourth quarter. This performance marks a continuation from the third quarter, in which Adjusted EBITDA increased 53.0% year-over-year.
Fourth quarter 2015 net income was $18.4 million, or $0.25 per diluted common share, and was impacted by the following items: $7.6 million of restructuring and impairment charges; $1.1 million of strategic development and acquisition related costs pertaining to acquisitions that have been completed; $2.3 million of amortization of short lived intangibles and $3.8 million gain on legal settlements. Excluding the impact of these special items, the Company reported adjusted net income applicable to common shares, a non-GAAP measure, of $22.7 million, or $0.31 per diluted common share, compared to $13.8 million, or $0.19 per diluted common share, in the fourth quarter of 2014.
During the fourth quarter, NCI developed plans to improve cost efficiency by optimizing our manufacturing footprint through the integration of operations from our recent acquisitions, which resulted in the recognition of certain asset impairment charges. The Company believes that the successful execution of these improvement plans over the next 12-36 months will result in annualized cost savings of $15-20 million.
Please see the reconciliation of Adjusted Operating Income and Adjusted EBITDA and Adjusted Net Income in the accompanying financial tables
Interest expense increased to $8.0 million in the fourth quarter of 2015, compared to $3.1 million in last year’s fourth quarter as a result of the $250 million, 8.25% senior notes, issued to finance the CENTRIA acquisition.
Cash and cash equivalents at quarter’s end was $99.7 million compared to $66.7 million in the comparable period in fiscal 2014 and grew sequentially from $48.3 million at the end of the third quarter of fiscal 2015. The Company paid down an additional $10 million under its term loan in the fourth quarter of fiscal 2015, bringing the total debt repayments to $40 million during the fiscal year. NCI’s proforma net debt leverage ratio at the end of the fourth fiscal quarter improved to 2.7x, moving closer to the previous pre-Centria acquisition leverage of 2.2x. In addition, the Company’s $150.0 million ABL facility remained undrawn as of November 1, 2015.
Fourth Quarter 2015 Segment Performance
Third party sales in the Buildings group increased slightly to $192.5 million in the fourth quarter from $189.7 million in the prior year quarter, primarily due to higher volumes from an improved product portfolio mix. Gross profit increased to $58.9 million from $51.4 million in the fourth quarter 2014, and gross profit margin expanded 330 basis points to 29.8%. Adjusted operating income increased 36.3% to $26.4 million in the current quarter, compared to $19.4 million in the fourth quarter of fiscal 2014. The improved margins in the Buildings segment were driven by improvements in commercial discipline, supply chain management and manufacturing efficiencies.
The Components group generated $240.6 million in third-party sales during the quarter, an increase of 41.3% from $170.3 million in the fourth quarter of fiscal 2014, led by CENTRIA’s contribution as well as continued strength of the legacy single skin and roll-up door product lines. Gross profit increased to $56.2 million from $33.9 million in the fourth quarter 2014, while gross profit margin expanded 310 basis points to 20.3%. Adjusted operating income increased to $26.9 million from $14.3 million in the same quarter last fiscal year. The Components segment’s profitability benefited from CENTRIA’s contribution, improved product mix and commercial discipline. During the fourth quarter, CENTRIA contributed $58.3 million in sales and $6.2 million in Adjusted EBITDA.
Third party sales in the Coatings group were $26.7 million, a 17.6% decline from $32.4 million in last year’s fourth quarter. Gross profit decreased slightly to $8.8 million from $8.9 million in the fourth quarter 2014, while gross profit margin increased 110 basis points to 13.8%. Adjusted operating income increased 4.0% to $7.2 million in the fourth quarter of fiscal 2015, compared to $6.9 million reported in the same period last year.
Market Commentary
Current market estimates continue to show subdued activity in nonresidential markets. Nonresidential construction starts, as measured in square feet, were down 7% in fiscal 2015 according to Dodge Data & Analytics. Low-rise starts, comprising buildings one to five stories, were down 6% for fiscal 2015. However, leading indicators for low-rise, nonresidential construction activity continue to indicate positive momentum moving into fiscal year 2016.
The leading indicators with the most meaningful correlation to nonresidential low-rise construction starts are The American Institute of Architects’ (AIA) Architecture Mixed Use Index, Dodge Residential single family starts and the Conference Board Leading Economic Index (LEI). Historically, there has been a very high correlation to the Dodge low-rise nonresidential starts when the three leading indicators are combined and then seasonally adjusted. Currently, the forward projection of these metrics indicates modest growth for the first half of fiscal 2016.
Outlook and Guidance
Mr. Chambers remarked, “Over the last 18 months, we generated substantial improvements in both gross profit margin and Adjusted EBITDA, which was the direct result of a very deliberate strategy led by commercial discipline, effective supply chain management and enhanced manufacturing efficiencies. We will continue to execute on our strategic initiatives to further optimize our manufacturing footprint and decrease our cost structure over the next several quarters as we anticipate low to mid-single digit nonresidential market growth rates in calendar 2016.”
“Our strong backlog includes a greater proportion of higher-complexity projects that have a longer lead time for production, providing us with good visibility through the first half of fiscal 2016. We expect our investments in IMP products over the past several years will help us to further unlock the anticipated growth potential of the underpenetrated North American market. We currently anticipate delivering year-over-year improvement in fiscal 2016. Similar to past years and due to the seasonal nature of our business, we expect our second half performance of fiscal 2016 to be stronger than the first half.”
For additional information, please see the CFO Commentary at www.ncibuildingsystems.com under the “Investors” section.
Conference Call Information
The NCI Building Systems, Inc. fourth quarter and fiscal year end 2015 conference call is scheduled for Friday, December 11, 2015, at 9:00 a.m. ET (8:00 a.m. CT). Please dial 1-412-902-0003 or 1-877-407-0672 (toll-free) to participate in the call. To listen to a live broadcast of the call over the Internet or to review the archived call, please visit the Company's website at www.ncibuildingsystems.com. To access the taped replay, please dial 1-201-612-7415 or 1-877-660-6853 (toll-free) and the passcode 13624068# when prompted. The taped replay will be available two hours after the call through December 28, 2015.
About NCI Building Systems
NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. NCI is comprised of a family of companies operating manufacturing facilities across the United States, Mexico and China with additional sales and distribution offices throughout the United States and Canada. For more information visit www.ncibuildingsystems.com.
Contact:
Layne de Alvarez
Vice President, 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," “plan,” "potential," "expect," "should," "will," "forecast" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Such forward-looking statements include, but are not limited to, the Company’s expectation for the current growth trend for construction spending in the next six to twelve months and the expectation for U.S. nonresidential construction growth to accelerate in 2016, and the Company’s summary/outlook for the full year of 2016. Among the factors that could cause actual results to differ materially include, but are not limited to, the Company’s ability to integrate CENTRIA with the Company’s business and realize anticipated benefits of such acquisition; industry cyclicality and seasonality and adverse weather conditions; ability to service or refinance the Company's debt, including its 8.250% Senior Notes due 2023, and obtain future financing; the Company’s ability to comply with the financial tests and covenants in its existing and future debt obligations; operational limitations or restrictions in connection with our debt; recognition of asset impairment charges; the ability to make strategic acquisitions accretive to earnings; retention and replacement of key personnel; enforcement and obsolescence of intellectual property rights; fluctuations in customer demand; commodity price increases and/or limited availability of raw materials, including steel; increases in energy prices, competitive activity and pricing pressure; challenging economic conditions affecting the non-residential construction industry; volatility in the U.S. economy and abroad generally, and in the credit markets; costs related to environmental clean-ups and liabilities; changes in laws or regulations, including the Dodd-Frank Act; the dilutive effect on the Company’s common stockholders of potential future sales of the Company’s common stock held by our sponsor; substantial governance and other rights held by our sponsor; breaches of our information system security measures and damage to our major information management systems; hazards that may cause personal injury or property damage, thereby subjecting the Company to liabilities and possible losses, which may not be covered by insurance; costs and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters; 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 November 2, 2014 and in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015, 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
(In thousands, except per share data)
(Unaudited)
Fiscal Three Months Ended | Fiscal Year Ended | |||||||||||||||
November 1, | November 2, | November 1, | November 2, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Sales | $ | 459,831 | $ | 392,448 | $ | 1,563,693 | $ | 1,370,540 | ||||||||
Cost of sales | 336,230 | 299,011 | 1,189,019 | 1,080,027 | ||||||||||||
Fair value adjustment of acquired inventory | - | - | 2,358 | - | ||||||||||||
Gain on insurance recovery | - | - | - | (1,311 | ) | |||||||||||
Gross profit | 123,601 | 93,437 | 372,316 | 291,824 | ||||||||||||
26.9 | % | 23.8 | % | 23.8 | % | 21.3 | % | |||||||||
Engineering, selling, general and administrative expenses | 76,416 | 67,337 | 286,840 | 257,677 | ||||||||||||
Intangible asset amortization (including amortization of short lived acquired intangibles) | 5,697 | 1,013 | 16,903 | 4,053 | ||||||||||||
Strategic development and acquisition related costs | 1,143 | 3,512 | 4,201 | 4,998 | ||||||||||||
Restructuring and impairment charges | 7,611 | - | 11,306 | - | ||||||||||||
Gain on legal settlements | (3,765 | ) | - | (3,765 | ) | - | ||||||||||
Income from operations | 36,499 | 21,575 | 56,831 | 25,096 | ||||||||||||
Interest income | 19 | 16 | 72 | 126 | ||||||||||||
Interest expense | (8,012 | ) | (3,067 | ) | (28,460 | ) | (12,455 | ) | ||||||||
Foreign exchange loss | (130 | ) | (298 | ) | (2,152 | ) | (1,097 | ) | ||||||||
Other income, net | 60 | 249 | 499 | 1,005 | ||||||||||||
Income before income taxes | 28,436 | 18,475 | 26,790 | 12,675 | ||||||||||||
Provision for income taxes | 10,029 | 4,216 | 8,972 | 1,490 | ||||||||||||
35.3 | % | 22.8 | % | 33.5 | % | 11.8 | % | |||||||||
Net income | $ | 18,407 | $ | 14,259 | $ | 17,818 | $ | 11,185 | ||||||||
Net income allocated to participating securities | (221 | ) | (128 | ) | (178 | ) | (101 | ) | ||||||||
Net income applicable to common shares | $ | 18,186 | $ | 14,131 | $ | 17,640 | $ | 11,084 | ||||||||
Income per common share: | ||||||||||||||||
Basic | $ | 0.25 | $ | 0.19 | $ | 0.24 | $ | 0.15 | ||||||||
Diluted | $ | 0.25 | $ | 0.19 | $ | 0.24 | $ | 0.15 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 73,337 | 73,036 | 73,271 | 73,079 | ||||||||||||
Diluted | 73,831 | 74,713 | 73,923 | 74,709 | ||||||||||||
Increase in sales | 17.2 | % | -1.9 | % | 14.1 | % | 4.7 | % | ||||||||
Gross profit percentage | 26.9 | % | 23.8 | % | 23.8 | % | 21.3 | % | ||||||||
Engineering, selling, general and administrative expenses percentage | 16.6 | % | 17.2 | % | 18.3 | % | 18.8 | % |
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
November 1, | November 2, | |||||||
2015 | 2014 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 99,662 | $ | 66,651 | ||||
Restricted cash | 682 | - | ||||||
Accounts receivable, net | 166,800 | 136,923 | ||||||
Inventories, net | 157,828 | 131,497 | ||||||
Deferred income taxes | 27,390 | 21,447 | ||||||
Income tax receivable | 3,698 | - | ||||||
Prepaid expenses and other | 31,344 | 22,773 | ||||||
Investments in debt and equity securities, at market | 6,380 | 5,549 | ||||||
Assets held for sale | 6,261 | 5,690 | ||||||
Total current assets | 500,045 | 390,530 | ||||||
Property, plant and equipment, net | 257,892 | 244,714 | ||||||
Goodwill | 158,026 | 75,226 | ||||||
Intangible assets, net | 156,395 | 44,923 | ||||||
Deferred financing costs, net | 11,069 | 3,290 | ||||||
Total assets | $ | 1,083,427 | $ | 758,683 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current portion of long-term debt | $ | - | $ | 2,384 | ||||
Note payable | 513 | 418 | ||||||
Accounts payable | 145,917 | 118,164 | ||||||
Accrued compensation and benefits | 62,200 | 50,666 | ||||||
Accrued interest | 6,389 | 1,820 | ||||||
Accrued income taxes | 12,994 | - | ||||||
Other accrued expenses | 97,309 | 72,259 | ||||||
Total current liabilities | 325,322 | 245,711 | ||||||
Long-term debt, net | 444,147 | 233,003 | ||||||
Deferred income taxes | 20,807 | 20,219 | ||||||
Other long-term liabilities | 21,175 | 13,208 | ||||||
Total long-term liabilities | 486,129 | 266,430 | ||||||
Common stock | 745 | 737 | ||||||
Additional paid-in capital | 640,767 | 630,297 | ||||||
Accumulated deficit | (353,733 | ) | (371,550 | ) | ||||
Accumulated other comprehensive loss | (8,280 | ) | (8,739 | ) | ||||
Treasury stock, at cost | (7,523 | ) | (4,203 | ) | ||||
Total stockholders' equity | 271,976 | 246,542 | ||||||
Total liabilities and stockholders' equity | $ | 1,083,427 | $ | 758,683 |
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fiscal Year Ended | ||||||||
November 1, | November 2, | |||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net Income | $ | 17,818 | $ | 11,185 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 51,392 | 35,876 | ||||||
Deferred financing cost amortization | 1,483 | 1,076 | ||||||
Share-based compensation expense | 9,379 | 10,168 | ||||||
(Gain) loss on sale of property | (15 | ) | 123 | |||||
Asset impairment | 5,876 | - | ||||||
Gain on insurance recovery | - | (1,311 | ) | |||||
(Recovery of) provision for doubtful accounts | (788 | ) | (18 | ) | ||||
Provision for (benefit from) deferred income taxes | 5,368 | (6,785 | ) | |||||
Excess tax benefits from share-based compensation arrangements | (746 | ) | (538 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 8,508 | (1,537 | ) | |||||
Inventories | 4,604 | (9,391 | ) | |||||
Income tax receivable | (2,634 | ) | 1,599 | |||||
Prepaid expenses and other | (267 | ) | (4,762 | ) | ||||
Accounts payable | 11,475 | (26,394 | ) | |||||
Accrued expenses | (6,052 | ) | 24,210 | |||||
Other, net | (361 | ) | 65 | |||||
Net cash provided by (used in) operating activities | 105,040 | 33,567 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition, net of cash acquired | (247,123 | ) | - | |||||
Proceeds from sale of property, plant and equipment | 28 | 14 | ||||||
Proceeds from insurance | - | 1,311 | ||||||
Capital expenditures | (20,683 | ) | (18,020 | ) | ||||
- | ||||||||
Net cash used in investing activities | (267,778 | ) | (16,695 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from stock options exercised | 354 | - | ||||||
Decrease in restricted cash | 298 | |||||||
Issuance of debt | 250,000 | - | ||||||
Payments on term loan | (41,240 | ) | (2,388 | ) | ||||
Payments on note payable | (1,616 | ) | (1,590 | ) | ||||
Proceeds from Amended ABL Facility | - | 72,000 | ||||||
Payments on Amended ABL Facility | - | (72,000 | ) | |||||
Borrowings on term loan | - | - | ||||||
Payment of financing costs | (9,217 | ) | (51 | ) | ||||
Purchase of treasury stock | (3,320 | ) | (23,798 | ) | ||||
Excess tax benefits from share-based compensation arrangements | 745 | 538 | ||||||
Net cash provided by (used in) financing activities | 196,004 | (27,289 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (255 | ) | (367 | ) | ||||
Net decrease in cash and cash equivalents | 33,011 | (10,785 | ) | |||||
Cash and cash equivalents at beginning of period | 66,651 | 77,436 | ||||||
Cash and cash equivalents at end of period | $ | 99,662 | $ | 66,651 |
NCI Building Systems, Inc.
Business Segments
(In thousands)
(Unaudited)
Fiscal Three Months Ended | Fiscal Three Months Ended | $ | % | |||||||||||||||||||||
November 1, 2015 | November 2, 2014 | Inc/(Dec) | Change | |||||||||||||||||||||
% of | % of | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
Sales | Sales | |||||||||||||||||||||||
Sales: | ||||||||||||||||||||||||
Engineered building systems | $ | 197,600 | 37 | $ | 194,009 | 42 | $ | 3,591 | 1.9 | % | ||||||||||||||
Metal components | 275,747 | 51 | 197,264 | 43 | 78,483 | 39.8 | % | |||||||||||||||||
Metal coil coating | 63,742 | 12 | 69,684 | 15 | (5,942 | ) | -8.5 | % | ||||||||||||||||
Total sales | 537,089 | 100 | 460,957 | 100 | 76,132 | 16.5 | % | |||||||||||||||||
Less: Intersegment sales | 77,258 | 14 | 68,509 | 15 | 8,749 | 12.8 | % | |||||||||||||||||
Total net sales | $ | 459,831 | 86 | $ | 392,448 | 85 | $ | 67,383 | 17.2 | % | ||||||||||||||
% of | % of | |||||||||||||||||||||||
Sales | Sales | |||||||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||
Engineered building systems | $ | 25,473 | 13 | $ | 19,397 | 10 | $ | 6,076 | 31.3 | % | ||||||||||||||
Metal components | 18,239 | 7 | 14,198 | 7 | 4,041 | 28.5 | % | |||||||||||||||||
Metal coil coating | 7,208 | 11 | 6,929 | 10 | 279 | 4.0 | % | |||||||||||||||||
Corporate | (14,421 | ) | - | (18,949 | ) | - | 4,528 | 23.9 | % | |||||||||||||||
Total operating income (loss) (% of sales) | $ | 36,499 | 8 | $ | 21,575 | 5 | $ | 14,924 | 69.2 | % |
Fiscal Year Ended | Fiscal Year Ended | $ | % | |||||||||||||||||||||
November 1, 2015 | November 2, 2014 | Inc/(Dec) | Change | |||||||||||||||||||||
% of | % of | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
Sales | Sales | |||||||||||||||||||||||
Sales: | ||||||||||||||||||||||||
Engineered building systems | $ | 667,165 | 37 | $ | 669,843 | 42 | $ | (2,678 | ) | -0.4 | % | |||||||||||||
Metal components | 920,845 | 50 | 694,858 | 43 | 225,987 | 32.5 | % | |||||||||||||||||
Metal coil coating | 231,732 | 13 | 246,582 | 15 | (14,850 | ) | -6.0 | % | ||||||||||||||||
Total sales | 1,819,743 | 100 | 1,611,283 | 100 | 208,460 | 12.9 | % | |||||||||||||||||
Less: Intersegment sales | 256,050 | 14 | 240,743 | 15 | 15,307 | 6.4 | % | |||||||||||||||||
Total net sales | $ | 1,563,693 | 86 | $ | 1,370,540 | 85 | $ | 193,153 | 14.1 | % | ||||||||||||||
% of | % of | |||||||||||||||||||||||
Sales | Sales | |||||||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||
Engineered building systems | $ | 51,410 | 8 | $ | 32,525 | 5 | $ | 18,885 | 58.1 | % | ||||||||||||||
Metal components | 50,541 | 5 | 33,306 | 5 | 17,235 | 51.7 | % | |||||||||||||||||
Metal coil coating | 19,080 | 8 | 23,982 | 10 | (4,902 | ) | -20.4 | % | ||||||||||||||||
Corporate | (64,200 | ) | - | (64,717 | ) | - | 517 | 0.8 | % | |||||||||||||||
Total operating income (loss) (% of sales) | $ | 56,831 | 4 | $ | 25,096 | 2 | $ | 31,735 | 126.5 | % |
NCI BUILDING SYSTEMS, INC.
BUSINESS SEGMENTS
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) EXCLUDING SPECIAL CHARGES
FISCAL THREE MONTHS ENDED NOVEMBER 1, 2015 AND NOVEMBER 2, 2014
(In thousands)
(Unaudited)
Fiscal Three Months Ended November 1, 2015 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 7,208 | $ | 18,239 | $ | 25,473 | $ | (14,421 | ) | $ | 36,499 | |||||||||
Restructuring and impairment charges | - | 6,365 | 959 | 287 | 7,611 | |||||||||||||||
Strategic development and acquisition related costs | - | - | - | 1,143 | 1,143 | |||||||||||||||
Gain on legal settlements | - | - | - | (3,765 | ) | (3,765 | ) | |||||||||||||
Amortization of short lived acquired intangibles | - | 2,343 | - | - | 2,343 | |||||||||||||||
Adjusted operating income (loss) (1) | $ | 7,208 | $ | 26,947 | $ | 26,432 | $ | (16,756 | ) | $ | 43,831 |
Fiscal Three Months Ended November 2, 2014 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 6,929 | $ | 14,198 | $ | 19,397 | $ | (18,949 | ) | $ | 21,575 | |||||||||
Strategic development and acquisition related costs | - | 109 | - | 3,403 | 3,512 | |||||||||||||||
Adjusted operating income (loss) (1) | $ | 6,929 | $ | 14,307 | $ | 19,397 | $ | (15,546 | ) | $ | 25,087 |
(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
FISCAL YEAR ENDED NOVEMBER 1, 2015 AND NOVEMBER 2, 2014
(In thousands)
(Unaudited)
Fiscal Year Ended November 1, 2015 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 19,080 | $ | 50,541 | $ | 51,410 | $ | (64,200 | ) | $ | 56,831 | |||||||||
Restructuring and impairment charges | 254 | 7,866 | 2,756 | 430 | 11,306 | |||||||||||||||
Strategic development and acquisition related costs | - | - | - | 4,201 | 4,201 | |||||||||||||||
Gain on legal settlements | - | - | - | (3,765 | ) | (3,765 | ) | |||||||||||||
Fair value adjustment of acquired inventory | - | 2,358 | - | - | 2,358 | |||||||||||||||
Amortization of short lived acquired intangibles | - | 8,400 | - | - | 8,400 | |||||||||||||||
Adjusted operating income (loss) (1) | $ | 19,334 | $ | 69,165 | $ | 54,166 | $ | (63,334 | ) | $ | 79,331 |
Fiscal Year Ended November 2, 2014 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 23,982 | $ | 33,306 | $ | 32,525 | $ | (64,717 | ) | $ | 25,096 | |||||||||
Gain on insurance recovery | (1,311 | ) | - | - | - | (1,311 | ) | |||||||||||||
Secondary offering costs | - | - | - | 754 | 754 | |||||||||||||||
Strategic development and acquisition related costs | - | 109 | - | 4,889 | 4,998 | |||||||||||||||
Adjusted operating income (loss) (1) | $ | 22,671 | $ | 33,415 | $ | 32,525 | $ | (59,074 | ) | $ | 29,537 |
(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)
(In thousands)
(Unaudited)
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Trailing 12 Months | ||||||||||||||||
February 1, | May 3, | August 2, | November 1, | November 1, | ||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||
Net income (loss) | $ | (320 | ) | $ | (7,488 | ) | $ | 7,220 | $ | 18,407 | $ | 17,819 | ||||||||
Add: | ||||||||||||||||||||
Depreciation and amortization | 9,731 | 13,766 | 14,541 | 13,354 | 51,392 | |||||||||||||||
Consolidated interest expense, net | 3,980 | 8,280 | 8,135 | 7,993 | 28,388 | |||||||||||||||
Provision for (benefit from) income taxes | (490 | ) | (4,087 | ) | 3,520 | 10,029 | 8,972 | |||||||||||||
Restructuring and impairment charges | 1,477 | 1,759 | 504 | 7,611 | 11,351 | |||||||||||||||
Strategic development and acquisition related costs | 1,729 | 628 | 701 | 1,143 | 4,201 | |||||||||||||||
Gain on legal settlements | - | - | - | (3,765 | ) | (3,765 | ) | |||||||||||||
Fair value adjustment of acquired inventory | 583 | 775 | 1,000 | - | 2,358 | |||||||||||||||
Share-based compensation | 2,933 | 2,201 | 2,568 | 1,677 | 9,379 | |||||||||||||||
Adjusted EBITDA (1) | $ | 19,623 | $ | 15,834 | $ | 38,189 | $ | 56,449 | $ | 130,095 |
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Trailing 12 Months | ||||||||||||||||
February 2, | May 4, | August 3, | November 2, | November 2, | ||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2014 | ||||||||||||||||
Net income (loss) | $ | (4,258 | ) | $ | (4,905 | ) | $ | 6,089 | $ | 14,259 | $ | 11,185 | ||||||||
Add: | ||||||||||||||||||||
Depreciation and amortization | 8,767 | 8,941 | 8,994 | 9,220 | 35,922 | |||||||||||||||
Consolidated interest expense, net | 3,100 | 3,035 | 3,142 | 3,053 | 12,330 | |||||||||||||||
Provision for (benefit from) income taxes | (2,506 | ) | (3,057 | ) | 2,837 | 4,215 | 1,489 | |||||||||||||
Gain on insurance recovery | (987 | ) | (324 | ) | - | - | (1,311 | ) | ||||||||||||
Secondary offering costs | 704 | 50 | - | - | 754 | |||||||||||||||
Strategic development and acquisition related costs | - | - | 1,486 | 3,512 | 4,998 | |||||||||||||||
Share-based compensation | 3,179 | 2,563 | 2,404 | 2,022 | 10,168 | |||||||||||||||
Adjusted EBITDA (1) | $ | 7,999 | $ | 6,303 | $ | 24,952 | $ | 36,281 | $ | 75,535 |
(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 Loan facility, the Company entered into an Asset-Based Lending facility which has substantially the same definition of Adjusted EBITDA except that the ABL Facility caps certain non-recurring charges. The Company is disclosing Adjusted EBITDA, which is a non-GAAP measure, because it is used by management and provided to investors to provide comparability of underlying operational results. |
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME (LOSS) PER DILUTED COMMON SHARE AND NET INCOME (LOSS) COMPARISON
(In thousands, except per share data)
(Unaudited)
Fiscal Three Months Ended | Fiscal Year Ended | |||||||||||||||
November 1, | November 2, | November 1, | November 2, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income (loss) per diluted common share, GAAP basis | $ | 0.25 | $ | 0.19 | $ | 0.24 | $ | 0.15 | ||||||||
Restructuring and impairment charges, net of taxes | 0.06 | - | 0.09 | - | ||||||||||||
Strategic development and acquisition related costs, net of taxes | 0.01 | 0.03 | 0.03 | 0.04 | ||||||||||||
Fair value adjustment of acquired inventory, net of taxes | - | - | 0.01 | - | ||||||||||||
Amortization of short lived acquired intangibles, net of taxes | 0.02 | - | 0.07 | - | ||||||||||||
Gain on legal settlements, net of taxes | (0.03 | ) | - | (0.03 | ) | - | ||||||||||
Reversal of Canadian deferred tax valuation allowance | - | (0.03 | ) | - | (0.03 | ) | ||||||||||
Foreign exchange loss, net of taxes | - | 0.00 | - | 0.01 | ||||||||||||
Gain on insurance recovery, net of taxes | - | - | - | (0.01 | ) | |||||||||||
Secondary offering costs, net of taxes | - | - | - | 0.00 | ||||||||||||
Adjusted net income (loss) per diluted common share (1) | $ | 0.31 | $ | 0.19 | $ | 0.42 | $ | 0.16 |
Fiscal Three Months Ended | Fiscal Year Ended | |||||||||||||||
November 1, | November 2, | November 1, | November 2, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income (loss) applicable to common shares, GAAP basis | $ | 18,186 | $ | 14,131 | $ | 17,640 | $ | 11,185 | ||||||||
Restructuring and impairment charges, net of taxes | 4,643 | - | 6,897 | - | ||||||||||||
Strategic development and acquisition related costs, net of taxes | 697 | 2,163 | 2,563 | 3,079 | ||||||||||||
Fair value adjustment of acquired inventory, net of taxes | - | - | 1,438 | - | ||||||||||||
Amortization of short lived acquired intangibles, net of taxes | 1,429 | - | 5,124 | - | ||||||||||||
Gain on legal settlements, net of taxes | (2,297 | ) | - | (2,297 | ) | - | ||||||||||
Reversal of Canadian deferred tax valuation allowance | - | (2,718 | ) | - | (2,718 | ) | ||||||||||
Foreign exchange loss, net of taxes | - | 178 | - | 676 | ||||||||||||
Gain on insurance recovery, net of taxes | - | - | - | (808 | ) | |||||||||||
Secondary offering costs, net of taxes | - | - | - | 464 | ||||||||||||
Adjusted net income (loss) applicable to common shares (1) | $ | 22,659 | $ | 13,753 | $ | 31,366 | $ | 11,878 |
(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 income (loss) per diluted common share and net income (loss) applicable to common shares as reported on the face of our consolidated statement of operations. |
NCI Building Systems, Inc.
Reconciliation of Segment Sales to Third Party Segment Sales
(In thousands)
(Unaudited)
Fiscal | Fiscal | $ | % | |||||||||||||||||||||
4th Qtr 2015 | 4th Qtr 2014 | Inc/(Dec) | Change | |||||||||||||||||||||
Engineered Building Systems | ||||||||||||||||||||||||
Total Sales | $ | 197,600 | 37 | % | $ | 194,009 | 42 | % | $ | 3,591 | 1.9 | % | ||||||||||||
Less: Intersegment sales | 5,100 | 4,266 | 834 | 19.5 | % | |||||||||||||||||||
Third Party Sales | $ | 192,500 | 42 | % | $ | 189,743 | 48 | % | $ | 2,757 | 1.5 | % | ||||||||||||
Operating Income | $ | 25,473 | 13 | % | $ | 19,397 | 10 | % | $ | 6,076 | 31.3 | % | ||||||||||||
Metal Components | ||||||||||||||||||||||||
Total Sales | $ | 275,747 | 51 | % | $ | 197,264 | 43 | % | $ | 78,483 | 39.8 | % | ||||||||||||
Less: Intersegment sales | 35,104 | 26,931 | 8,173 | 30.3 | % | |||||||||||||||||||
Third Party Sales | $ | 240,643 | 52 | % | $ | 170,333 | 43 | % | $ | 70,310 | 41.3 | % | ||||||||||||
Operating Income | $ | 18,239 | 8 | % | $ | 14,198 | 8 | % | $ | 4,041 | 28.5 | % | ||||||||||||
Metal Coil Coating | ||||||||||||||||||||||||
Total Sales | $ | 63,742 | 12 | % | $ | 69,684 | 15 | % | $ | (5,942 | ) | -8.5 | % | |||||||||||
Less: Intersegment sales | 37,055 | 37,312 | (257 | ) | -0.7 | % | ||||||||||||||||||
Third Party Sales | $ | 26,687 | 6 | % | $ | 32,372 | 8 | % | $ | (5,685 | ) | -17.6 | % | |||||||||||
Operating Income | $ | 7,208 | 27 | % | $ | 6,929 | 21 | % | $ | 279 | 4.0 | % | ||||||||||||
Consolidated | ||||||||||||||||||||||||
Total Sales | $ | 537,089 | 100 | % | $ | 460,957 | 100 | % | $ | 76,132 | 16.5 | % | ||||||||||||
Less: Intersegment | 77,259 | 68,509 | 8,750 | 12.8 | % | |||||||||||||||||||
Third Party Sales | $ | 459,830 | 100 | % | $ | 392,448 | 100 | % | $ | 67,382 | 17.2 | % | ||||||||||||
Operating Income | $ | 36,499 | 8 | % | $ | 21,575 | 5 | % | $ | 14,924 | 69.2 | % |
Fiscal YTD | Fiscal YTD | $ | % | |||||||||||||||||||||
4th Qtr 2015 | 4th Qtr 2014 | Inc/(Dec) | Change | |||||||||||||||||||||
Engineered Building Systems | ||||||||||||||||||||||||
Total Sales | $ | 667,165 | 37 | % | $ | 669,843 | 42 | % | $ | (2,678 | ) | -0.4 | % | |||||||||||
Less: Intersegment sales | 19,285 | 20,499 | (1,214 | ) | -5.9 | % | ||||||||||||||||||
Third Party Sales | $ | 647,880 | 42 | % | $ | 649,344 | 48 | % | $ | (1,464 | ) | -0.2 | % | |||||||||||
Operating Income | $ | 51,410 | 8 | % | $ | 32,525 | 5 | % | $ | 18,885 | 58.1 | % | ||||||||||||
Metal Components | ||||||||||||||||||||||||
Total Sales | $ | 920,845 | 50 | % | $ | 694,858 | 43 | % | $ | 225,987 | 32.5 | % | ||||||||||||
Less: Intersegment sales | 105,535 | 87,264 | 18,271 | 20.9 | % | |||||||||||||||||||
Third Party Sales | $ | 815,310 | 52 | % | $ | 607,594 | 44 | % | $ | 207,716 | 34.2 | % | ||||||||||||
Operating Income | $ | 50,541 | 6 | % | $ | 33,306 | 5 | % | $ | 17,235 | 51.7 | % | ||||||||||||
Metal Coil Coating | ||||||||||||||||||||||||
Total Sales | $ | 231,732 | 13 | % | $ | 246,582 | 15 | % | $ | (14,850 | ) | -6.0 | % | |||||||||||
Less: Intersegment sales | 131,230 | 132,980 | (1,750 | ) | -1.3 | % | ||||||||||||||||||
Third Party Sales | $ | 100,502 | 6 | % | $ | 113,602 | 8 | % | $ | (13,100 | ) | -11.5 | % | |||||||||||
Operating Income | $ | 19,080 | 19 | % | $ | 23,982 | 21 | % | $ | (4,902 | ) | -20.4 | % | |||||||||||
Consolidated | ||||||||||||||||||||||||
Total Sales | $ | 1,819,743 | 99 | % | $ | 1,611,283 | 100 | % | $ | 208,460 | 12.9 | % | ||||||||||||
Less: Intersegment sales | 256,050 | 240,743 | 15,307 | 6.4 | % | |||||||||||||||||||
Third Party Sales | $ | 1,563,693 | 100 | % | $ | 1,370,540 | 100 | % | $ | 193,153 | 14.1 | % | ||||||||||||
Operating Income | $ | 56,831 | 4 | % | $ | 25,096 | 2 | % | $ | 31,735 | 126.5 | % |
Exhibit 99.2
NCI Building Systems
CFO Commentary on Fourth Quarter 2015 Fiscal Year Results
Summary
The fourth quarter 2015 results compared to last year’s fourth quarter were as follows:
· | Revenue of $459.8 million increased 17.2% from $392.4 million, primarily driven by the recent acquisition of CENTRIA |
· | Gross profit margin of 26.9% increased over the comparable prior year period by 310 basis points |
· | Operating income was $36.5 million compared to $21.6 million in the prior year period. *Adjusted for special items, operating income was $43.8 million compared to $25.1 million in the prior year period |
· | Net income was $18.4 million compared to the prior year period’s $14.3 million |
· | *Adjusted EBITDA grew 55.6% to $56.4 million from the prior year period’s $36.3 million |
* Reconciliations of non-GAAP financial measures to the nearest GAAP measure are included in the Company’s financial tables accompanying this CFO Commentary.
Revenue
Revenue of $459.8 million was up by 17.2% from a year ago. This quarter includes the results of operations for recently acquired CENTRIA, which produced revenue during the period of $58.3 million. The performance of our three operating segments was as follows:
· | Building’s revenue of $197.6 million increased by 1.9%, with volumes up by 9.4% versus last year’s comparable quarter. For the period, third party revenue increased 1.5% with volumes up by 9.0%. |
· | Component’s revenue of $275.7 million increased by 39.8% versus last year’s fourth quarter. Adjusted to exclude CENTRIA, revenue increased by 10.2% and volumes increased by 19% over last year’s fourth quarter. Similarly adjusted for the period, third party revenue increased 7.0% with volumes up by 15.2%. |
· | Coater’s revenue of $63.7 million decreased by 8.5%, however total volume processed (including intercompany activity) increased by 0.9% versus last year’s fourth quarter results. For the period, third party revenue decreased 17.6% with volumes down by 13.8%. |
As discussed in the prior quarter, steel costs have decreased precipitously during the last half of fiscal 2015. The market-driven pass-through of these lower input costs to our customers reduces our revenue at all three segments and, along with shifting product mix, accounts for the divergence between underlying volume and revenue. While it is not possible to precisely measure this impact, we estimate that declining steel costs reduced our fourth quarter reported revenue by between $20 million and $23 million.
1 |
Gross Margin
Gross margin increased to $123.6 million, up $30.2 million from last year’s fourth quarter. Our investments to expand our insulated metal panel offering, improve our manufacturing responsiveness, and our focus on value oriented commercial discipline combined with effective supply chain management are reflected in our improving gross margins.
Gross Margin Reconciliation: Q4’14 to Q4’15
(23.8% to 26.9%, up 310 basis points)
[note: point attributions are approximate]
· | + 240 bps: | Supply chain effectiveness and commercial discipline |
· | + 54 bps: | Production and logistic efficiency improvements, net |
· | + 49 bps: | Improving product mix, including increased insulated metal panels |
· | - 33 bps: | Business segment mix and other |
ESG&A Expenses
ESG&A expenses were $76.4 million, up $9.1 million from prior year fourth quarter. ESG&A expenses as a percent of revenues decreased from 17.2% last year to 16.6% in the current quarter. The change in ESG&A expenses over the prior year is attributable primarily to the following:
· | approximately $6.4 million increase due to the inclusion of CENTRIA in the current year period |
· | remaining variance of $2.2 million primarily related to incentive compensation |
ESG&A expenses were within our previous guidance range of $76.0 million to $79.0 million.
Intangible Asset Amortization
Intangible asset amortization costs were $5.7 million compared to $1.0 million in the prior year fourth quarter. This year’s quarter included $2.3 million related to the final amortization of short-lived intangibles from the CENTRIA acquisition.
Intangible asset amortization expenses were within our previous guidance range of $4.0 million to $6.0 million. This range was unusually wide due to the fact that the purchase price allocation for the CENTRIA acquisition is not yet finalized.
Restructuring and Impairment Charges
Restructuring and impairment charges were $7.6 million during the fourth quarter, bringing the total costs incurred for the year to $11.3 million. These costs are summarized as follows (in millions):
Description | 4th Quarter | FY 2015 | ||||||
Non-cash asset impairment charges | $ | 5.8 | $ | 5.8 | ||||
Restructuring charges (predominantly severance for employees separated during fiscal 2015) | 1.8 | 5.5 | ||||||
Total restructuring and impairment charges | $ | 7.6 | $ | 11.3 |
The non-cash asset impairment costs included above relate to recently completed plans to improve cost efficiency and optimize our combined manufacturing plant footprint considering our recent acquisitions and restructuring efforts. The Company believes that the successful execution of these plans in phases over the next 12-36 months will result in annual cost savings ranging between $15.0 million and $20.0 million when complete.
2 |
*Adjusted EBITDA
*Adjusted EBITDA increased $20.1 million from $36.3 million last year to $56.4 million in the current quarter. The increase in Adjusted EBITDA is attributable to the following:
· | + $9.4 | million margin expansion from improvements in product mix, production and logistic efficiencies, commercial discipline and supply chain effectiveness |
· | + $ 7.7 | million net effect of higher volumes in our Components and Buildings segments |
· | + $ 6.2 | million contribution from recently acquired CENTRIA |
· | - $ 2.4 | million higher incentive compensation due to higher operating results |
· | - $0.3 | million from foreign currency transaction losses and other income/expense items |
· | - $0.5 | million from other operating items |
Working Capital
We have experienced nominal increases in our working capital metrics over the prior year, primarily as the result of including CENTRIA in our consolidated numbers in 2015. Our average days sales outstanding for the quarter increased to 34.8 days, compared to 31.2 days in the prior year same period. Our average days in inventory outstanding increased to 44.5 days, compared to 42.1 days in the prior year. And finally, our average days in payables outstanding increased to 38.3 days compared to 32.5 days from the same period of the prior year. We expect that over time CENTRIA’s metrics will converge with our historical levels.
Q1 2016 Outlook
The following are our current expectations for certain financial items for our first fiscal quarter of 2016, which include the activities of CENTRIA for the full quarter.
ESG&A Expenses
We expect our ESG&A expenses to range between $73 million and $76 million. This amount excludes the amortization of intangible assets, which are shown on a separate line item on the statement of operations and discussed below.
Intangible asset amortization
We expect our intangible asset amortization to range between $2.0 million and $3.0 million. This quarterly estimate is lower than previous guidance since the short-lived intangibles related to the CENTRIA acquisition became fully amortized in the fourth quarter of 2015. Once the purchase price allocation for the CENTRIA acquisition is final, the recurring amortization cost will become less volatile with a tighter expected range.
3 |
Interest Expense
We expect our interest expense, related to our new $250 million 8.25% Senior Notes, our Term Loan Facility, amortization of deferred financing costs and costs from our ABL Facility, to range between $7.6 million and $8.0 million.
Effective Tax Rate
We expect our tax rate for the upcoming quarter to range between 35% and 37%. 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 quarterly 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 74.2 million for the first quarter of 2016 and 74.7 million for fiscal 2016. This compares to the 74.1 million shares used in the calculation of diluted EPS for the fourth quarter of 2015.
Balance Sheet and Cash Flow Items
We expect our total capital expenditures in fiscal 2016 to range between $27 million and $30 million.
Forward-Looking Statements
Certain statements and information in this CFO Commentary may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “anticipate,” “plan,” “intend,” “foresee,” “guidance,” “potential,” “expect,” “should,” “will” “continue,” “could,” “estimate,” “forecast,” “goal,” “may,” “objective,” “predict,” “projection,” or similar expressions are intended to identify forward-looking statements (including those contained in certain visual depictions) in this CFO Commentary. These forward-looking statements reflect the Company's current expectations and/or beliefs concerning future events. The Company has made every reasonable effort to ensure that the information, estimates, forecasts and assumptions on which these statements are based are current, reasonable and complete. However, 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, our ability to integrate CENTRIA with the Company’s business and to realize the anticipated benefits of such acquisition, ability to make strategic acquisitions accretive to earnings; industry cyclicality and seasonality and adverse weather conditions; ability to service or refinance the Company's existing debt, including its 8.250% Senior Notes due 2023, and ability to obtain future financing; ability to comply with financial tests and covenants contained in the Company’s existing and future debt obligations; operational limitations or restrictions in connection with the Company’s debt; recognition of asset impairment charges; fluctuations in customer demand; retention and replacement of key personnel; enforcement and obsolescence of intellectual property rights; commodity price increases and/or limited availability of raw materials, including steel; competitive activity and pricing pressure; increases in energy prices; challenging economic conditions affecting the nonresidential construction industry; volatility in the U.S. economy and abroad generally, and in the credit markets; hazards that may cause personal injury or property damage, thereby subjecting the Company to liabilities and possible losses, which may not be covered by insurance; breaches of the Company’s information system security measures and damage to our major information management systems; costs and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters; costs related to environmental cleanups and liabilities; changes in laws or regulations, including the Dodd-Frank Act; the volatility of the Company's stock price, the dilutive effect on the Company’s common stockholders of potential future sales of the Company’s common stock held by our sponsor; and substantial governance and other rights held by our sponsor. See also the “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2014 and in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015 and in other reports we file with the SEC, which 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. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise.
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
FISCAL THREE MONTHS ENDED NOVEMBER 1, 2015 AND NOVEMBER 2, 2014
(In thousands)
(Unaudited)
Fiscal Three Months Ended November 1, 2015 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 7,208 | $ | 18,239 | $ | 25,473 | $ | (14,421 | ) | $ | 36,499 | |||||||||
Restructuring and impairment charges | - | 6,365 | 959 | 287 | 7,611 | |||||||||||||||
Strategic development and acquisition related costs | - | - | - | 1,143 | 1,143 | |||||||||||||||
Gain on legal settlements | - | - | - | (3,765 | ) | (3,765 | ) | |||||||||||||
Amortization of short lived acquired intangibles | - | 2,343 | - | - | 2,343 | |||||||||||||||
Adjusted operating income (loss) (1) | $ | 7,208 | $ | 26,947 | $ | 26,432 | $ | (16,756 | ) | $ | 43,831 |
Fiscal Three Months Ended November 2, 2014 | ||||||||||||||||||||
Metal Coil Coating | Metal Components | Engineered Building Systems | Corporate | Consolidated | ||||||||||||||||
Operating income (loss), GAAP basis | $ | 6,929 | $ | 14,198 | $ | 19,397 | $ | (18,949 | ) | $ | 21,575 | |||||||||
Strategic development and acquisition related costs | - | 109 | - | 3,403 | 3,512 | |||||||||||||||
Adjusted operating income (loss) (1) | $ | 6,929 | $ | 14,307 | $ | 19,397 | $ | (15,546 | ) | $ | 25,087 |
(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. |
5 |
NCI BUILDING SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,
AMORTIZATION AND OTHER NONCASH ITEMS (ADJUSTED EBITDA)
(In thousands)
(Unaudited)
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Trailing 12 Months | ||||||||||||||||
February 1, | May 3, | August 2, | November 1, | November 1, | ||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||
Net income (loss) | $ | (320 | ) | $ | (7,488 | ) | $ | 7,220 | $ | 18,407 | $ | 17,819 | ||||||||
Add: | ||||||||||||||||||||
Depreciation and amortization | 9,731 | 13,766 | 14,541 | 13,354 | 51,392 | |||||||||||||||
Consolidated interest expense, net | 3,980 | 8,280 | 8,135 | 7,993 | 28,388 | |||||||||||||||
Provision for (benefit from) income taxes | (490 | ) | (4,087 | ) | 3,520 | 10,029 | 8,972 | |||||||||||||
Restructuring and impairment charges | 1,477 | 1,759 | 504 | 7,611 | 11,351 | |||||||||||||||
Strategic development and acquisition related costs | 1,729 | 628 | 701 | 1,143 | 4,201 | |||||||||||||||
Gain from legal settlements | - | - | - | (3,765 | ) | (3,765 | ) | |||||||||||||
Fair value adjustment of acquired inventory | 583 | 775 | 1,000 | - | 2,358 | |||||||||||||||
Share-based compensation | 2,933 | 2,201 | 2,568 | 1,677 | 9,379 | |||||||||||||||
Adjusted EBITDA (1) | $ | 19,623 | $ | 15,834 | $ | 38,189 | $ | 56,449 | $ | 130,095 |
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Trailing 12 Months | ||||||||||||||||
February 2, | May 4, | August 3, | November 2, | November 2, | ||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2014 | ||||||||||||||||
Net income (loss) | $ | (4,258 | ) | $ | (4,905 | ) | $ | 6,089 | $ | 14,259 | $ | 11,185 | ||||||||
Add: | ||||||||||||||||||||
Depreciation and amortization | 8,767 | 8,941 | 8,994 | 9,220 | 35,922 | |||||||||||||||
Consolidated interest expense, net | 3,100 | 3,035 | 3,142 | 3,053 | 12,330 | |||||||||||||||
Provision for (benefit from) income taxes | (2,506 | ) | (3,057 | ) | 2,837 | 4,215 | 1,489 | |||||||||||||
Gain on insurance recovery | (987 | ) | (324 | ) | - | - | (1,311 | ) | ||||||||||||
Secondary offering costs | 704 | 50 | - | - | 754 | |||||||||||||||
Strategic development and acquisition related costs | - | - | 1,486 | 3,512 | 4,998 | |||||||||||||||
Share-based compensation | 3,179 | 2,563 | 2,404 | 2,022 | 10,168 | |||||||||||||||
Adjusted EBITDA (1) | $ | 7,999 | $ | 6,303 | $ | 24,952 | $ | 36,281 | $ | 75,535 |
(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 Loan facility, the Company entered into an Asset-Based Lending facility which has substantially the same definition of Adjusted EBITDA except that the ABL Facility caps certain non-recurring charges. The Company is disclosing Adjusted EBITDA, which is a non-GAAP measure, because it is used by management and provided to investors to provide comparability of underlying operational results. |
6 |
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