8-K

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: September 1, 2005

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 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 September 1, 2005, NCI Building Systems, Inc. (“NCI”) issued a press release announcing NCI’s financial results for the second quarter ended July 30, 2005. A copy of the press release is attached as Exhibit 99.1.

NCI reported that trailing twelve month adjusted EBITDA increased by 28.9% to $140.3 million over the same period in fiscal 2004. NCI defines adjusted EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization, 401(k) non-cash contributions, loss on debt refinancing, cumulative effect of change in accounting principle and non-cash real estate write down. NCI discloses adjusted EBITDA, which is a non-GAAP financial measure, because it is a widely accepted financial indicator in the metal construction industry of a company’s profitability, ability to finance its operations, and meet its growth plans. This measure is also used by NCI internally to make acquisition and investment decisions. Adjusted EBITDA is calculated based on the terms contained in NCI’s senior credit agreement. Adjusted EBITDA should not be considered in isolation or as a substitute for net income determined in accordance with generally accepted accounting principles in the United States.

The information in this Form 8-K and the Exhibit attached to this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall it 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.

(c) Exhibits.

Exhibit Number	Description
99.1	Press Release dated September 1, 2005.

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/ Frances R. Powell
Name:	Frances R. Powell
Title:	Executive Vice President, Chief Financial
	Officer and Treasurer

Dated: September 1, 2005

EX-99.1

Exhibit 99.1

Contact:	Norman C. Chambers
	President & Chief Operating Officer
	(281) 897-7788

NCI BUILDING SYSTEMS REPORTS THIRD-QUARTER RESULTS

HOUSTON (August 31, 2005) – NCI Building Systems, Inc. (NYSE: NCS) today announced financial results for the third quarter and nine months ended July 30, 2005. Sales were $292.7 million for the third quarter compared with $295.8 million for the third quarter of fiscal 2004. Net income for the third quarter of fiscal 2005 was $14.7 million, or $0.70 per diluted share, up from $8.4 million, or $0.41 per diluted share, for the third quarter of fiscal 2004. Results for the third quarter of fiscal 2004 include a charge for debt refinancing costs of $9.9 million ($5.8 million, or $0.28 per diluted share, after tax).

Sales for the first nine months of fiscal 2005 were $788.5 million compared with $765.9 million for the first nine months of fiscal 2004. Net income increased to $36.1 million, or $1.73 per diluted share, for the latest nine-month period from $21.9 million, or $1.09 per diluted share, for the comparable period in fiscal 2004. Net income for the first nine months of 2005 includes the effect of an after-tax benefit of $1.1 million, or $0.06 per diluted share, related to more favorable group medical claims experience than expected, which was recognized in the first quarter of fiscal 2005.

A.R. Ginn, Chairman and Chief Executive Officer of NCI, commented, “Our third-quarter results met our earnings guidance in an environment that remains challenging. Our performance is attributable to the continued expansion of both the sales and operating profit margin of our Engineered Buildings business compared with the comparable prior-year quarter. We were also pleased that even with the seasonal increase in Buildings sales from the second quarter of 2005, our bookings for the quarter enabled us to record modest growth in our backlog of 4.3%, which ended the third quarter at $204 million. Third-quarter results for our components business and, consequently, our coatings business, continued to reflect our adherence to a disciplined pricing strategy in a period of less-than-anticipated industry demand.

“Illustrating the overall industry environment, McGraw-Hill’s Dodge Report indicates that square footage of new nonresidential construction projects in our industry segments declined 8.3% for calendar 2005 through July compared with the same period in 2004. The Dodge Report notes sequential improvements in square footage for the months of June and July and anticipates that growth in square footage throughout the second half of calendar 2005 will bring total square footage for the year to a level approximating the total for 2004. Our results remained stronger than general industry trends, although the year-to-date decline in industry square footage, as well as the improvements as the third quarter progressed, were relatively consistent with our experience.

-MORE-

10943 N. Sam Houston Parkway W. Ÿ Houston, Texas 77064

P.O. Box 692055 Ÿ Houston, Texas 77269-2055 Ÿ Telephone: (281) 897-7788 Ÿ Fax: (281) 477-9675

NCI Building Systems Reports Third-Quarter Results

Page 2

August 31, 2005

“The profitability of our operations produced a further strengthening of our financial position during the third quarter. Our cash flow from operations for the nine months ending July 30, 2005 was up $46.3 million to $70.2 million compared to $23.9 million for the nine months ending July 31, 2004. Furthermore, our trailing twelve months adjusted EBITDA increased by 28.9% to 140.3 million over the same period in 2004. As a result, although we completed the third quarter with debt to total capitalization of 44.9% compared with 35.1% at October 30, 2004, our net debt (debt minus cash) to total capitalization (net debt plus shareholders’ equity) has improved to 28.0% at the end of the third quarter compared with 30.9% at the end of the second quarter of fiscal 2005 and 34.2% at the end of fiscal 2004.

“Based on NCI’s results of operations for the third quarter and first nine months of fiscal 2005, as well as lower expectations for industry performance during the full fiscal year, we today established our guidance for fourth-quarter net income per diluted share in a range of $0.93 to $1.03. As a result of this guidance, we have reduced our guidance for full-year fiscal 2005 to a range of $2.60 to $2.70. Our guidance excludes the effect of the first-quarter after-tax benefit of $1.1 million, or $0.06 per diluted share.”

Mr. Ginn concluded, “We continue to expect to achieve record sales, net income and net income per share for fiscal 2005. In spite of the weakness in the nonresidential construction industry for the first seven months of calendar 2005, combined with reduced visibility for our fiscal fourth quarter, we remain cautiously optimistic that our fourth-quarter results will improve significantly on a sequential-quarter basis over the third quarter just ended. Supporting these expectations, the strengths that underlie NCI’s position of industry leadership – the broadest line of innovative metal construction products; commitment to customer service; an integrated, nationwide network of plants and distribution centers; and state-of-the-art design and manufacturing capabilities producing the highest quality products and the lowest cost infrastructure – have positioned us well to continue outperforming the industry.”

This release contains forward-looking statements concerning NCI’s business and operations and industry conditions, including among others industry trends, steel pricing, growth expectations and margin expansion. Forward-looking statements involve a number of risks and uncertainties, and NCI’s actual performance may differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially are industry cyclicality and seasonality, fluctuations in demand and prices for steel, the financial condition of NCI’s raw material suppliers, competitive activity and pricing pressure, ability to execute NCI’s acquisition strategy and general economic conditions affecting the construction industry. These and other factors that could affect NCI’s financial position and results of operations are described in further detail in NCI’s filings with the Securities and Exchange Commission. NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in its expectations.

NCI Building Systems, Inc. is one of North America’s largest integrated manufacturers of metal products for the nonresidential building industry. The Company operates manufacturing and distribution facilities located in 16 states and Mexico.

-MORE-

NCI Building Systems Reports Third-Quarter Results

Page 3

August 31, 2005

NCI BUILDING SYSTEMS, INC.

STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	For the Three Months Ended						For the Nine Months Ended
	July 30, 2005			July 31, 2004			July 30, 2005			July 31, 2004
Sales	$	292,734		$	295,814		$	788,544		$	765,906
Cost of sales		221,572			227,578			597,113			589,835
Gross profit		71,162			68,236			191,431			176,071
		24.3	%		23.1	%		24.3	%		23.0	%
Selling, general and administrative expenses		44,130			40,727			124,198			117,666
Income from operations		27,032			27,509			67,233			58,405
Interest expense		(3,993	)		(3,736	)		(10,712	)		(12,618	)
Loss on debt refinancing		—			(9,879	)		—			(9,879	)
Other income, net		1,737			1,184			4,191			1,939
Income before income taxes		24,776			15,078			60,712			37,847
Provision for income taxes		10,087			6,683			24,569			15,991
		40.7	%		44.3	%		40.5	%		42.3	%
Net income	$	14,689		$	8,395		$	36,143		$	21,856
Net income per share:
Basic	$	0.71		$	0.42		$	1.76		$	1.11
Diluted	$	0.70		$	0.41		$	1.73		$	1.09
Average shares outstanding:
Basic		20,738			19,937			20,565			19,589
Diluted		21,012			20,236			20,919			19,863
Increase (decrease) in sales		-1.0	%					3.0	%
Increase in diluted earnings per share		70.7	%					58.7	%
Gross profit percentage		24.3	%		23.1	%		24.3	%		23.0	%
Selling, general and administrative expenses percentage		15.1	%		13.8	%		15.8	%		15.4	%
Income from operations percentage		9.2	%		9.3	%		8.5	%		7.6	%

-MORE-

NCI Building Systems Reports Third-Quarter Results

Page 4

August 31, 2005

NCI BUILDING SYSTEMS, INC.

CONDENSED BALANCE SHEETS

(In thousands)

	July 30, 2005		October 30, 2004
	(Unaudited)
ASSETS
Cash	$	195,085	$	8,222
Accounts receivable, net		96,062		108,869
Inventories		110,753		138,363
Deferred taxes		13,352		12,873
Prepaids		3,744		6,491
Total current assets		418,996		274,818
Property, net		186,997		185,687
Excess of cash over fair value of acquired net assets		337,244		318,247
Other assets		21,417		4,105
Total assets	$	964,654	$	782,857
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of long-term debt	$	2,000	$	2,000
Accounts payable		40,374		57,569
Accrued expenses		68,606		88,012
Total current liabilities		110,980		147,581
Long-term debt, noncurrent portion		371,500		214,700
Deferred income taxes		23,942		19,399
Equity		458,232		401,177
Total Liabilities and Shareholders’ Equity	$	964,654	$	782,857

-MORE-

NCI Building Systems Reports Third-Quarter Results

Page 5

August 31, 2005

NCI BUILDING SYSTEMS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Nine Months Ended
	July 30, 2005			July 31, 2004
Net income	$	36,143		$	21,856
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on debt refinancing					9,879
Depreciation and amortization		18,115			17,209
Loss on sale of fixed assets		135			156
Provision for doubtful accounts		27			2,026
Deferred income tax benefit		—			(170	)
(Increase)/decrease in current assets		54,082			(73,210	)
Increase/(decrease) in current liabilities		(38,324	)		46,128
Net cash provided by operating activities		70,178			23,874
Cash flows from investing activities:
Acquisitions		(27,145	)		—
Capital expenditures		(14,555	)		(6,715	)
Proceeds from sale of fixed assets		1,580			558
Other		(162	)		1,729
Net cash used in investing activities		(40,282	)		(4,428	)
Cash flows from financing activities:
Proceeds from stock option exercises		4,957			15,988
Issuance of convertible debt		180,000			—
Net borrowings/(payments) on revolving lines of credit		(16,700	)		10,600
Borrowing of long-term debt		—			200,000
Payments on long-term debt		(6,500	)		(243,750	)
Payment of refinancing costs		(4,790	)		(8,060	)
Net cash provided by (used in) financing activities		156,967			(25,222	)
Net increase (decrease) in cash		186,863			(5,776	)
Cash at beginning of period		8,222			14,204
Cash at end of period	$	195,085		$	8,428

-MORE-

NCI Building Systems Reports Third-Quarter Results

Page 6

August 31, 2005

NCI BUILDING SYSTEMS, INC.

COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,

AMORTIZATION AND OTHER NONCASH ITEMS ("ADJUSTED EBITDA")

(Unaudited)

(In thousands)

	Trailing 12 Months
	July 30, 2005		July 31, 2004
Net income	$	59,177	$	31,968
Add:
Provision for income taxes		38,345		22,143
Interest expense, net of interest income and amortization on deferred financing costs		13,220		17,697
Depreciation and amortization		23,838		23,110
401(k) noncash contributions		5,754		3,723
Loss on debt refinancing		—		9,879	(1)
Non-cash real estate		—		391
Adjusted EBITDA (2)	$	140,334	$	108,911

(1) The loss on debt refinancing was treated as extraordinary per the provisions of SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," which were applicable during fiscal year 2002.

(2) The Company discloses adjusted EBITDA, which is a non-GAAP measure, because it is a widely accepted financial indicator in the metal construction industry of a company's profitability, ability to finance its operations, and meet its growth plans. This measure is also used by NCI internally to make acquisition and investment decisions. Adjusted EBITDA is calculated based on the terms contained in the Company's credit agreement. Adjusted EBITDA should not be considered in isolation or as a substitute for net income determined in accordance with generally accepted accounting principles in the United States.

RECONCILIATION OF ADJUSTED NET INCOME AND NET INCOME PER DILUTED SHARE

TO NET INCOME AND NET INCOME PER DILUTED SHARE

(Unaudited)

(In thousands)

	For the Nine Months Ended
	July 30, 2005			July 31, 2004
Net income	$	36,143		$	21,856
Add loss on debt refinancing		—			5,769
Subtract gain on group medical claims experience		(1,114	)		—
Adjusted net income	$	35,029		$	27,625
Net income per diluted share	$	1.73		$	1.09
Adjusted net income per diluted share	$	1.67		$	1.39
Diluted shares outstanding		20,919			19,863

Adjusted net earnings and adjusted earnings per diluted share (the “adjusted items”) are non-GAAP financial measures. The Company excludes the loss on debt refinancing and the gain on group medical claims experience to improve the comparability of the results and because both management and most industry analysts rely on the adjusted items as a primary measure to review and assess the ongoing operating performance of the Company. The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management and most industry analysts. The adjusted items should not be considered in isolation or as a substitute for net earnings or earnings per diluted share determined in accordance with generally accepted accounting principles in the United States.