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: May 31, 2006

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 May 31, 2006, NCI Building Systems, Inc. (“NCI”) issued a press release announcing NCI’s financial results for the second quarter of fiscal 2006. A copy of the press release is attached as Exhibit 99.1.

NCI’s press release included adjusted EBITDA and adjusted Earnings Per Share, which are non-GAAP financial measures. NCI reports these measures because they are widely accepted financial indicators in the metal construction industry of a company’s profitability, ability to finance its operations, and meet its growth plans. Adjusted EBITDA 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 Earnings Per Share is used by management and is provided to investors to provide comparability between periods by showing the pro forma effect of FAS 123 had NCI been subject to it in the 2005 period and the dilutive impact of NCI’s convertible notes as if they were converted in the 2006 period, and to exclude the effect of a gain in the 2005 related to more favorable group medical claims experience than expected. Adjusted EBITDA and adjusted Earnings Per Share should not be considered in isolation or as substitutes for net income or earnings per share 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.

(d) Exhibits.

Exhibit Number	Description
99.1	Press Release dated May 31, 2006.

2

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: May 31, 2006

3

EX-99.1

Exhibit 99.1

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

NCI BUILDING SYSTEMS SECOND-QUARTER EARNINGS EXCEED GUIDANCE

EXPECTS MORE THAN 40% GROWTH IN THIRD-QUARTER

EARNINGS PER DILUTED SHARE

HOUSTON (May 31, 2006) – NCI Building Systems, Inc. (NYSE: NCS) today announced financial results for the second quarter ended April 30, 2006. Sales increased 31% for the quarter to $329.4 million from $250.6 million for the second quarter of fiscal 2005. Net income for the second quarter of fiscal 2006 was $11.2 million, or $0.51 per diluted share, which included a $0.02 expense related to the adoption of FAS 123(R) and a $0.03 dilutive impact from NCI’s 2.125% Convertible Senior Subordinated Notes (the “Notes”). Excluding the impact of the Notes, net income per diluted share was $0.54, compared with NCI’s guidance in a range of $0.48 to $0.53. Net income for the second quarter last year was $10.7 million, or $0.51 per diluted share. Pro forma earnings per diluted share for the second quarter last year, reflecting the impact of FAS 123 (R) had it been applicable, were $0.47.

“Our second-quarter results continued to reflect the strengthening of the nonresidential construction industry, positioning us well for stronger growth in the second half of fiscal 2006,” remarked A. R. Ginn, Chairman and Chief Executive Officer of NCI. “While we were pleased to have exceeded the high end of our earnings guidance for the second quarter, our results were generally in line with our expectations.

“Our Buildings segment drove our growth for the quarter with a 46% increase in sales to $154 million compared with the second quarter of 2005. We achieved this increase through the addition of Robertson-Ceco (“RCC”) and the shipment of large building projects. With the completion of the RCC acquisition on April 7, 2006, our Buildings segment backlog more than doubled to $383 million at the quarter’s end from $185 million at the end of the first quarter of 2006.

“NCI’s Component segment sales also grew significantly, up 20% for the second quarter to $174 million, as we continued our efforts to strengthen our market share. This increase, as well as continued growth in third-party demand, contributed to a 13% increase in Coatings segment sales for the quarter compared with the second quarter of fiscal 2005.

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

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

NCI Building Systems Reports Second-Quarter Results

Page 2

May 31, 2006

“Based on our strong results for the second quarter and first half of fiscal 2006, with a 34% increase in adjusted earnings per diluted share, as well as our expectations for continued momentum in the second half of our fiscal year, we are today affirming the guidance we established on May 9, 2006, for fiscal 2006 earnings in a range of $3.50 to $3.60 per diluted share, which is up from our original guidance in a range of $3.02 to $3.27. Our guidance includes an expense of $0.10 related to the adoption of FAS 123(R) but excludes any potential share dilution related to NCI’s Notes, because that amount, if any, will be dependent upon the future price of the Company’s stock. Among the other assumptions on which this guidance is based, we expect 5% growth in square footage in the nonresidential construction industry for 2006, which, combined with the RCC acquisition, is expected to produce 25% growth in our total tons shipped for fiscal 2006. Our guidance for fiscal 2006 also assumes an increase in the weighted average cost of our steel supplies of approximately 12%, as well as an estimated income tax rate of 40%.

“Consistent with this guidance, we have today established our guidance for earnings per diluted share for the third quarter of fiscal 2006 in a range of $1.00 to $1.05, which includes an expense of $0.02 related to the adoption of FAS 123(R) but excludes any potential share dilution related to NCI’s Notes. Earnings per diluted share for the third quarter of 2005 were $0.70, and pro forma earnings per diluted share for the third quarter of 2005, reflecting the impact of FAS 123 (R) had it been applicable, were $0.66.”

Mr. Ginn concluded, “As indicated by our guidance for accelerated earnings per diluted share growth for the second half of fiscal 2006 compared with the first half, we are confident our near-term growth prospects are compelling. Longer-term, we expect to continue to leverage our position of industry leadership both to grow our sales at a rate in excess of industry growth through increased market share and to expand our profit margins through increased economies of scale and enhanced productivity and operating efficiency. In addition to our ongoing long-term initiatives to accomplish these goals, we are also focused on the multi-year opportunity to achieve synergies from the acquisition of Robertson-Ceco that, as described in detail in our press release on May 9, 2006, we expect will add a minimum of $6.0 million to our normalized annual operating income and as much as $25.0 million per annum when they are fully realized.”

NCI will provide an online, real-time webcast and rebroadcast of its conference call tomorrow to discuss this announcement. The live broadcast of this conference call will be available online at www.ncilp.com or www.earnings.com beginning at 10:30 a.m. (Eastern Time) on Thursday, June 1, 2006. The online replay will be available at approximately 12:30 p.m. (Eastern Time) and continue for one week.

This release contains forward-looking statements concerning NCI’s business and operations and industry conditions, including among others industry trends, steel pricing, growth expectations and margin expansion. These statements and other statements identified by words such as “guidance,” “potential,” “expect,” “should” 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 are subject to a number of risks and uncertainties that may cause NCI’s actual performance to differ materially from that projected in

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May 31, 2006

such statements. Among the factors that could cause actual results to differ materially are the possibility that the anticipated benefits from the RCC acquisition cannot be fully realized; the possibility that costs or difficulties related to the integration of the RCC operations into the Company’s operations will be greater than expected; 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. Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended October 29, 2005, identifies 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. is one of North America’s largest integrated manufacturers of metal products for the nonresidential building industry. The Company operates 44 manufacturing and distribution facilities located in 17 states, as well as Mexico and Canada.

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May 31, 2006

NCI BUILDING SYSTEMS, INC.

STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	For the Three Months Ended						For the Six Months Ended
	April 30, 2006			April 30, 2005			April 30, 2006			April 30, 2005
Sales	$	329,362		$	250,571		$	622,614		$	495,810
Cost of sales		253,812			189,013			474,655			375,541
Gross profit		75,550			61,558			147,959			120,269
		22.9	%		24.6	%		23.8	%		24.3	%
Selling, general and administrative expenses		53,689			41,447			103,387			80,068
Income from operations		21,861			20,111			44,572			40,201
Interest income		1,822			1,004			4,007			1,764
Interest expense		(5,425	)		(3,583	)		(9,601	)		(6,719	)
Other income, net		107			349			532			690
Income before income taxes		18,365			17,881			39,510			35,936
Provision for income taxes		7,186			7,149			15,438			14,482
		39.1	%		40.0	%		39.1	%		40.3	%
Net income	$	11,179		$	10,732		$	24,072		$	21,454
Net income per share:
Basic	$	0.55		$	0.52		$	1.20		$	1.05
Diluted	$	0.51		$	0.51		$	1.13		$	1.03
Average shares outstanding:
Basic		20,179			20,623			20,086			20,480
Diluted		21,892			21,013			21,342			20,875
Increase in sales		31.4	%					25.6	%
Increase in diluted earnings per share		0.0	%					9.7	%
Gross profit percentage		22.9	%		24.6	%		23.8	%		24.3	%
Selling, general and administrative expenses percentage		16.3	%		16.5	%		16.6	%		16.1	%
Income from operations percentage		6.6	%		8.0	%		7.2	%		8.1	%

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May 31, 2006

NCI BUILDING SYSTEMS, INC.

CONDENSED BALANCE SHEETS

(In thousands)

	April 30, 2006		October 29, 2005
	(Unaudited)
ASSETS
Cash and cash equivalents	$	39,769	$	200,716
Accounts receivable, net		139,752		110,094
Inventories		154,323		113,421
Deferred income taxes		22,760		15,470
Prepaid expenses		7,579		2,963
Total current assets		364,183		442,664
Property and equipment, net		245,450		185,278
Goodwill		609,693		339,157
Other assets		60,214		23,120
Total assets	$	1,279,540	$	990,219
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of long-term debt	$	5,044	$	2,000
Accounts payable		76,753		55,874
Accrued expenses		88,265		91,739
Total current liabilities		170,062		149,613
Long-term debt		570,447		371,000
Deferred income taxes		48,475		25,462
Pension liability		10,640		—
Shareholders’ equity		479,916		444,144
Total liabilities and shareholders’ equity	$	1,279,540	$	990,219

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NCI BUILDING SYSTEMS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Six Months Ended
	April 30, 2006			April 30, 2005
Net income	$	24,072		$	21,454
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,416			11,609
Stock-based compensation expense		4,033			1,657
(Gain) loss on sale of fixed assets		(30	)		109
Inventory obsolescence		(85	)		129
Provision for doubtful accounts		1,632			163
Deferred income tax benefit		(1,532	)		—
Decrease in current assets		4,949			34,327
Decrease in current liabilities		(40,880	)		(21,901	)
Net cash provided by operating activities		5,575			47,547
Cash flows from investing activities:
Acquisitions		(361,653	)		(27,145	)
Capital expenditures		(9,632	)		(7,796	)
Other		(1,187	)		(221	)
Net cash used in investing activities		(372,472	)		(35,162	)
Cash flows from financing activities:
Proceeds from stock option exercises		5,279			4,410
Excess tax benefits from stock-based compensation arrangements		3,164			—
Issuance of convertible debt		—			180,000
Issuance of long-term debt		200,000			—
Net payments on revolving lines of credit		—			(16,700	)
Payments on long-term debt		(1,004	)		(6,000	)
Payment of refinancing costs		(519	)		(4,639	)
Purchase of treasury stock		(970	)		—
Net cash provided by financing activities		205,950			157,071
Net increase (decrease) in cash		(160,947	)		169,456
Cash at beginning of period		200,716			8,222
Cash at end of period	$	39,769		$	177,678

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May 31, 2006

NCI BUILDING SYSTEMS, INC.

BUSINESS SEGMENTS

(Unaudited)

(In thousands)

	Three Months Ended April 30, 2006					Three Months Ended April 30, 2005					$ Inc/(Dec)			% Change
				% of Total Sales					% of Total Sales
Sales:
Metal components	$	174,078		53		$	145,146		58		$	28,932		20	%
Engineered building systems		154,489		47			105,709		42			48,780		46	%
Metal coil coating		61,055		19			54,193		22			6,862		13	%
Intersegment sales		(60,260	)	(18	)		(54,477	)	(22	)		(5,783	)	11	%
Total net sales	$	329,362		100		$	250,571		100		$	78,791		31	%
				% of Sales					% of Sales
Operating income:
Metal components	$	18,324		11		$	17,717		12		$	607		3	%
Engineered building systems		10,149		7			9,272		9			877		9	%
Metal coil coating		5,564		9			3,622		7			1,942		54	%
Corporate		(12,176	)	—			(10,500	)	—			(1,676	)	16	%
Total operating income (% of sales)	$	21,861		7		$	20,111		8		$	1,750		9	%
	Six Months Ended April 30, 2006					Six Months Ended April 30, 2005					$ Inc/(Dec)			% Change
				% of Total Sales					% of Total Sales
Sales:
Metal components	$	348,897		56		$	284,552		57		$	64,345		23	%
Engineered building systems		273,314		44			204,639		41			68,675		34	%
Metal coil coating		124,356		20			106,900		22			17,456		16	%
Intersegment sales		(123,953	)	(20	)		(100,281	)	(20	)		(23,672	)	24	%
Total net sales	$	622,614		100		$	495,810		100		$	126,804		26	%
				% of Sales					% of Sales
Operating income:
Metal components	$	39,540		11		$	34,170		12		$	5,370		16	%
Engineered building systems		19,990		7			17,049		8			2,941		17	%
Metal coil coating		9,986		8			8,107		8			1,879		23	%
Corporate		(24,944	)	—			(19,125	)	—			(5,819	)	30	%
Total operating income (% of sales)	$	44,572		7		$	40,201		8		$	4,371		11	%

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NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,

AMORTIZATION AND OTHER NONCASH ITEMS (“ADJUSTED EBITDA”)

(Unaudited)

(In thousands)

	Trailing 12 Months
	April 30, 2006		April 30, 2005
Net income	$	58,569	$	52,883
Add:
Provision for income taxes		41,218		34,941
Interest expense		17,021		12,859
Depreciation and amortization		25,922		23,123
401(k) noncash contributions		907		6,020
Loss on debt refinancing		—		9,879
Non-cash FAS 123(R)		6,060		2,340
Adjusted EBITDA (1)	$	149,697	$	142,045

(1) The Company discloses adjusted EBITDA, which is a non-GAAP measure, because it is a widely accepted financial indicator in the metal construction industry of a company’s profitability, ability to finance its operations, and meet its growth plans. This measure is also used by NCI internally to make acquisition and investment decisions. Adjusted EBITDA is calculated based on the terms contained in the Company’s credit agreement. Results of operations of businesses acquired are included in this measure for periods subsequent to the acquisition and are not included on a pro forma basis. 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.

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NCI BUILDING SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

“ADJUSTED” EARNINGS PER SHARE COMPARISON

(Unaudited)

	Fiscal Three Months Ended
	April 30, 2006			April 30, 2005
Earnings per diluted share, excluding impact of FAS 123R	$	0.53		$	0.51	(1)
FAS 123R Expense		(0.02	)		(0.04	)(2)
Earnings per diluted share, including impact of FAS 123R	$	0.51	(1)	$	0.47
Effect of convertible notes	$	0.03	(3)		—
“Adjusted” diluted earnings per share (A)	$	0.54		$	0.47
	Fiscal Six Months Ended
	April 30, 2006			April 30, 2005
Earnings per diluted share, excluding impact of FAS 123R	$	1.18		$	1.03	(1)
FAS 123R Expense		(0.05	)		(0.09	)(2)
Earnings per diluted share, including impact of FAS 123R	$	1.13	(1)	$	0.94
Effect of convertible notes		0.05	(3)		—
Gain on health care cost		—			(0.06	) (4)
“Adjusted” diluted earnings per share (A)	$	1.18		$	0.88

(A) The company discloses a tabular comparison of “Adjusted” earnings per diluted share, which is a non-GAAP measure because it is referred to in the text of our press releases and is instrumental in comparing the results from period to period. “Adjusted” earnings per share should not be considered in isolation or as a substitute for earnings per share as reported on the face of our statement of income.

(1) Earnings per diluted share, GAAP basis

(2) Pro forma share-based compensation expense, as if the company had adopted FAS 123R in 2005

(3) Dilutive impact of the Company’s convertible notes as if they were converted during the period.

(4) In the first quarter of 2005, the Company recognized a benefit related to health care costs which did not occur in 2006.

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