Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Cornerstone Building Brands, Inc. | q42016exhibit992.htm |
| 8-K - 8-K - Cornerstone Building Brands, Inc. | ncs201612088-k.htm |
Exhibit 99.1
NEWS RELEASE
NCI Building Systems Reports
Fourth Fiscal Quarter and 2016 Fiscal Year End Results
HOUSTON, December 8, 2016 – NCI Building Systems, Inc. (NYSE: NCS) (“NCI” or the “Company”) today reported financial results for the fourth fiscal quarter and fiscal year ended October 30, 2016.
Fourth Fiscal Quarter 2016 Financial and Operational Highlights:
• | Sales rose 4.5% to $480.3 million, compared to $459.8 million in last year’s fourth quarter, driven by an 3.0% improvement in underlying tonnage volumes |
• | Gross profit for the quarter was $120.8 million or 25.2% of revenues compared to $123.6 million or 26.9% of revenues in the prior year’s fourth quarter |
• | Net income increased 3.2% to $19.0 million from $18.4 million in last year’s fourth quarter |
• | Net income per diluted common share was $0.27, which included $0.01 of special items, and Adjusted Net Income was $0.28 per diluted common share compared to Adjusted Net Income of $0.31 per diluted common share in last year’s fourth quarter |
• | Adjusted EBITDA was $53.7 million or 11.2% of revenue for the period compared to the prior year’s fourth quarter Adjusted EBITDA of $56.4 million or 12.3% of revenue |
• | Total consolidated backlog increased to $515.9 million, up 3.9% year-over-year |
Fiscal 2016 Financial and Operational Highlights:
• | Sales rose 7.8% to $1.68 billion from $1.56 billion in the prior year, driven by an 11.8% improvement in underlying tonnage volumes |
• | Gross profit was $427.9 million, an increase of 14.9%, compared to $372.3 million in fiscal 2015 and gross margins improved to 25.4% from 23.8% in the prior year |
• | Net income increased 186.4% to $51.0 million from $17.8 million in fiscal 2015 |
• | Net income per diluted common share was $0.70, which included $0.01 of special items, and Adjusted Net Income was $0.71 per diluted common share compared to Adjusted Net Income of $0.42 per diluted share in fiscal 2015 |
• | Adjusted EBITDA rose 27.7% to $166.1 million or 9.9% of revenue in the current fiscal year compared to Adjusted EBITDA of $130.0 million or 8.3% of revenue in fiscal 2015 |
Norman C. Chambers, Chairman and Chief Executive Officer, commented, “We are very pleased that fiscal 2016 delivered revenue, gross margins and Adjusted EBITDA growth. NCI’s performance was the direct result of the strategic realignment of our commercial, manufacturing and supply chain groups that improved operating leverage across the company. During fiscal 2016, we also completed the integration of our insulated metal panels (IMP) businesses, and we were able to generate double-digit growth and higher margin opportunities in our IMP product portfolio. In addition, we have remained prudent stewards of our capital by utilizing free cash flow to pay down debt and buy back our common stock.
“Looking ahead to fiscal 2017, and based on the evaluation of our leading market indicators, we expect to see a range of 3.0% - 6.0% growth in low rise nonresidential construction markets. Furthermore, we remain committed to the implementation of our cost savings initiatives and plan to take advantage of significant IMP growth opportunities. We believe NCI is well positioned to exceed low rise nonresidential growth expectations and deliver on year-over-year top-line and bottom-line growth.”
Fourth Quarter 2016 Results
Fourth quarter 2016 sales increased to $480.3 million, or 4.5%, from $459.8 million in last year's fourth quarter, due mainly to increased volumes across all three segments and continued commercial discipline in a period of rapidly rising input costs. The
Components segment, which includes both our legacy single skin and IMP product lines, as well as the Coatings segment, delivered strong results.
Gross profit decreased slightly by 2.2% to $120.8 million from $123.6 million in the fourth quarter of 2015, while gross profit margin contracted 170 basis points to 25.2%, compared to 26.9% in the prior year period. The decline in margin performance was driven largely by a combination of rapidly rising input costs (versus rapidly declining input costs in the prior year period) combined with lower manufacturing efficiency, primarily related to the transitional impact of the ongoing manufacturing consolidation and reorganization.
Engineering, selling, general and administrative (ESG&A) expenses increased to $77.6 million from $76.4 million in the fourth quarter of 2015 due largely to increased short term and long term incentive compensation costs related to the increased annual financial performance. As a percentage of revenues, ESG&A expenses decreased approximately 40 basis points to 16.2% in the 2016 fourth quarter compared to 16.6% in the prior year’s period.
Operating income increased to $39.4 million, or 7.9%, compared to $36.5 million in the prior year’s fourth quarter. Adjusted operating income, a non-GAAP measure which excludes identified special items, decreased 6.8% to $40.9 million in the current quarter from $43.8 million in the fourth quarter of 2015.
Fourth quarter 2016 net income applicable to common shares was $18.9 million, or $0.27 per diluted common share compared to the prior year’s $18.2 million, or $0.25 per diluted common share. Net income was impacted by the following special items: $0.8 million of restructuring and impairment charges; $0.6 million of strategic development and acquisition integration and $0.1 million from the loss on the sale of assets, offset by the related tax benefit of $0.6 million. Excluding the impact of these special items, the Company reported adjusted net income applicable to common shares, a non-GAAP measure, of $19.8 million, or $0.28 per diluted common share, compared to $22.7 million, or $0.31 per diluted common share, in the fourth quarter of 2015.
Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's Credit Agreement as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, was $53.7 million, down 4.9% from $56.4 million in the prior year’s fourth quarter.
Please see the reconciliation of Adjusted Operating Income, Adjusted EBITDA and Adjusted Net Income in the accompanying financial tables.
Interest expense decreased to $7.6 million in the fourth quarter of 2016, compared to $8.0 million in last year’s fourth quarter as a result of the Company’s voluntary debt repayment on its Term Loan.
Cash and cash equivalents at quarter’s end was $65.4 million compared to $99.7 million in the comparable period in fiscal 2015 and grew sequentially from $50.7 million at the end of the third quarter of fiscal 2016. The Company paid down an additional $10 million under its term loan in the fourth quarter of fiscal 2016, bringing the total debt repayments to $40 million during the fiscal year. Additionally, the Company utilized $62.9 million to repurchase over 4.5 million shares during fiscal 2016 at an average purchase price of $13.96 per share. NCI’s net debt leverage ratio at the end of the fourth fiscal quarter improved to 2.0x from 2.6x at the end of the prior year. In addition, the Company’s $150.0 million ABL facility remained undrawn as of October 30, 2016.
Fourth Quarter 2016 Segment Performance
Third party sales in the Buildings group increased 2.1% to $196.6 million in the fourth quarter from $192.5 million in the prior year quarter, primarily due to commercial discipline in passing through higher year-over year material input costs, while underlying volumes increased less than 1%. Operating income was $22.8 million for the quarter compared to $25.5 million in the fourth quarter of 2015. Adjusted operating income decreased 12.6% to $23.1 million in the current quarter, compared to $26.4 million in the fourth quarter of fiscal 2015. The decrease in the segment’s operating margins relates primarily to the rapidly increasing material input costs (as compared to the rapid decline in input costs in the prior year period) and transitional operating inefficiencies related to the ongoing manufacturing reorganization and consolidation.
The Components group generated $255.1 million in third-party sales during the quarter, an increase of 6.0% from $240.6 million in the fourth quarter of fiscal 2015, led by growth in the IMP product lines, as well as continued strength in the legacy metal component products. Operating income was $31.1 million for the quarter compared to $18.2 million in the fourth quarter of 2015. Adjusted operating income increased to $31.6 million from $26.9 million in the same quarter last fiscal year. The Components segment’s profitability benefited from a greater contribution from IMP growth and commercial discipline in passing through rising material input costs.
Third party sales in the Coatings group were $28.6 million, a 7.2% increase from $26.7 million in last year’s fourth quarter. Operating income was $7.0 million for the quarter compared to $7.2 million in the fourth quarter of 2015.Adjusted operating income decreased 2.6% to $7.0 million in the fourth quarter of fiscal 2016, compared to $7.2 million reported in the same period last year. Operating margins in the Coatings group were lower than the prior year primarily as a result of recent insourcing of the IMP coating requirements, which are less efficient to produce due to smaller order sizes, and require more technically complex specifications.
Market Commentary
Based on the combination of leading market indicators that the Company tracks, which includes Dodge residential single family starts (a 12-14 month lag); the American Institute of Architects Architecture Mixed Use Index (a 10-12 month lag) and the Conference Board’s Leading Economic Index (a 9-month lag), the Company continues to expect positive growth of 3.0% - 6.0% in low-rise nonresidential new construction starts during fiscal year 2017. These indicators, as a group, have historically had a very strong correlation with Dodge (low-rise) nonresidential new construction starts.
Current market data from internal bookings reflects several end-market segments showing year-over-year positive growth including agricultural, industrial equipment storage and manufacturing warehouses, offices and residential. Geographic markets demonstrating year-over-year growth include New England, the Pacific, Mid-Atlantic and the Northern Central area of the United States.
Outlook and Guidance
For the full year, NCI expects 2017 to be a better year than 2016 in terms of revenues and Adjusted EBITDA, driven primarily by the Company’s ability to leverage expected market growth, the ongoing cost savings initiatives and opportunities to expand the IMP businesses. The Company’s two key cost savings initiatives in manufacturing consolidation and ESG&A are expected to generate $30 to $40 million in cost savings by the end of 2018, of which $12 million was realized in 2016. In fiscal 2017, these two initiatives are expected to drive an incremental cost savings of $10.0 million.
Similar to past years’ seasonal trends, the Company expects the second half performance in 2017 to be stronger than the first half. For the first quarter of fiscal 2017, NCI expects revenues to be in the range of $370 to $390 million and gross profit margins to be in the range of 21.0% to 23.5%. For the full year fiscal 2017, the Company expects revenues to be in the range of $1.75 to $1.85 billion and Adjusted EBITDA to be in the range of $175 to $205 million.
The Company has provided additional detailed financial guidance in the quarterly supplemental presentation at www.ncibuildingsystems.com under the “Investors” section.
Conference Call Information
The NCI Building Systems, Inc. fourth quarter and fiscal year end 2016 conference call is scheduled for Friday, December 9, 2016, 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 23, 2016.
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, Canada, Mexico and China with additional sales and distribution offices throughout the United States and Canada. For more information visit www.ncibuildingsystems.com.
Contact:
K. Darcey Matthews
Vice President, Investor Relations
281-897-7785
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," "anticipate," "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 of a 3.0% - 6.0% year-over-year increase in low-rise nonresidential new construction starts, the Company’s belief that it is well positioned to exceed nonresidential growth expectations and deliver on year-over year top-line and bottom-line growth, the Company’s expectation of year-over-year improvement in revenue and Adjusted EBITDA, the Company’s belief that its two key cost initiatives in manufacturing consolidation and ESG&A are expected to generate $10 million in cost savings in fiscal 2017, and between $30 to $40 million in cost savings by the end of fiscal 2018, the Company’s expectation that the second half performance in fiscal 2017 will be stronger than the first half, the Company’s expectation that for first quarter fiscal 2017, NCI expects revenues to be in the range of $370 to $390 million and gross profit margins to be in the range of 21.0% to 23.5%,
and the Company’s expectation that for the full year fiscal 2017, NCI expects revenues to be in the range of $1.75 to $1.85 billion and Adjusted EBITDA to be in the range of $175 to $205 million. Among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality and adverse weather conditions; challenging economic conditions affecting the nonresidential construction industry; volatility in the U.S. economy and abroad, generally, and in the credit markets; substantial indebtedness and our ability to incur substantially more indebtedness; our ability to generate significant cash flow required to service or refinance our existing debt, including the 8.25% senior notes due 2023, and obtain future financing; our ability to comply with the financial tests and covenants in our existing and future debt obligations; operational limitations or restrictions in connection with our debt; increases in interest rates; recognition of asset impairment charges; commodity price increases and/or limited availability of raw materials, including steel; our 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; costs related to environmental clean-ups and liabilities; competitive activity and pricing pressure; increases in energy prices; volatility of the Company's stock price; 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 us to liabilities and possible losses, which may not be covered by insurance; changes in laws or regulations, including the Dodd-Frank Act; the timing and amount of our stock repurchases; and costs and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters. See also the “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2015, which 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. 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.
NCI BUILDING SYSTEMS, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share data) |
(Unaudited) |
Fiscal Three Months Ended | Fiscal Year Ended | ||||||||||||||
October 30, 2016 | November 1, 2015 | October 30, 2016 | November 1, 2015 | ||||||||||||
Sales | $ | 480,314 | $ | 459,831 | $ | 1,684,928 | $ | 1,563,693 | |||||||
Cost of sales | 359,403 | 336,230 | 1,258,680 | 1,189,019 | |||||||||||
Fair value adjustment of acquired inventory | — | — | — | 2,358 | |||||||||||
Loss (gain) on sale of assets and asset recovery | 62 | — | (1,642 | ) | — | ||||||||||
Gross profit | 120,849 | 123,601 | 427,890 | 372,316 | |||||||||||
25.2 | % | 26.9 | % | 25.4 | % | 23.8 | % | ||||||||
Engineering, selling, general and administrative expenses | 77,640 | 76,416 | 302,551 | 286,840 | |||||||||||
Intangible asset amortization | 2,412 | 5,697 | 9,638 | 16,903 | |||||||||||
Strategic development and acquisition related costs | 590 | 1,143 | 2,670 | 4,201 | |||||||||||
Restructuring and impairment charges | 815 | 7,611 | 4,252 | 11,306 | |||||||||||
Gain on legal settlements | — | (3,765 | ) | — | (3,765 | ) | |||||||||
Income from operations | 39,392 | 36,499 | 108,779 | 56,831 | |||||||||||
Gain from bargain purchase | — | — | 1,864 | — | |||||||||||
Interest income | 11 | 19 | 146 | 72 | |||||||||||
Interest expense | (7,559 | ) | (8,012 | ) | (31,019 | ) | (28,460 | ) | |||||||
Foreign exchange loss | (312 | ) | (130 | ) | (1,401 | ) | (2,152 | ) | |||||||
Other income, net | 118 | 60 | 595 | 499 | |||||||||||
Income before income taxes | 31,650 | 28,436 | 78,964 | 26,790 | |||||||||||
Provision for income taxes | 12,649 | 10,029 | 27,937 | 8,972 | |||||||||||
40.0 | % | 35.3 | % | 35.4 | % | 33.5 | % | ||||||||
Net income | $ | 19,001 | $ | 18,407 | $ | 51,027 | $ | 17,818 | |||||||
Net income allocated to participating securities | (105 | ) | (221 | ) | (389 | ) | (172 | ) | |||||||
Net income applicable to common shares | $ | 18,896 | $ | 18,186 | $ | 50,638 | $ | 17,646 | |||||||
Income per common share: | |||||||||||||||
Basic | $ | 0.27 | $ | 0.25 | $ | 0.70 | $ | 0.24 | |||||||
Diluted | $ | 0.27 | $ | 0.25 | $ | 0.70 | $ | 0.24 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 70,845 | 73,337 | 72,411 | 73,271 | |||||||||||
Diluted | 71,020 | 73,831 | 72,857 | 73,923 | |||||||||||
Increase in sales | 4.5 | % | 17.2 | % | 7.8 | % | 14.1 | % | |||||||
Engineering, selling, general and administrative expenses percentage | 16.2 | % | 16.6 | % | 18.0 | % | 18.3 | % | |||||||
NCI BUILDING SYSTEMS, INC. |
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
October 30, 2016 | November 1, 2015 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 65,403 | $ | 99,662 | |||
Restricted cash | 310 | 682 | |||||
Accounts receivable, net | 182,258 | 166,800 | |||||
Inventories, net | 186,824 | 157,828 | |||||
Deferred income taxes | 29,940 | 27,390 | |||||
Income taxes receivable | 1,382 | — | |||||
Prepaid expenses and other | 29,972 | 31,834 | |||||
Investments in debt and equity securities, at market | 5,748 | 5,890 | |||||
Assets held for sale | 4,256 | 6,261 | |||||
Total current assets | 506,093 | 496,347 | |||||
Property, plant and equipment, net | 242,212 | 257,892 | |||||
Goodwill | 153,271 | 158,026 | |||||
Intangible assets, net | 146,769 | 156,395 | |||||
Other assets, net | 10,188 | 11,069 | |||||
Total assets | $ | 1,058,533 | $ | 1,079,729 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Note payable | $ | 460 | $ | 513 | |||
Accounts payable | 142,913 | 145,917 | |||||
Accrued compensation and benefits | 72,536 | 62,200 | |||||
Accrued interest | 7,165 | 6,389 | |||||
Accrued income taxes | — | 9,296 | |||||
Other accrued expenses | 102,384 | 97,309 | |||||
Total current liabilities | 325,458 | 321,624 | |||||
Long-term debt, net | 404,147 | 444,147 | |||||
Deferred income taxes | 25,338 | 20,807 | |||||
Other long-term liabilities | 20,200 | 21,175 | |||||
Total long-term liabilities | 449,685 | 486,129 | |||||
Common stock | 715 | 745 | |||||
Additional paid-in capital | 604,357 | 640,767 | |||||
Accumulated deficit | (302,706 | ) | (353,733 | ) | |||
Accumulated other comprehensive loss, net | (9,716 | ) | (8,280 | ) | |||
Treasury stock, at cost | (9,260 | ) | (7,523 | ) | |||
Total stockholders’ equity | 283,390 | 271,976 | |||||
Total liabilities and stockholders’ equity | $ | 1,058,533 | $ | 1,079,729 | |||
NCI BUILDING SYSTEMS, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
(Unaudited) |
Fiscal Year Ended | |||||||
October 30, 2016 | November 1, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 51,027 | $ | 17,818 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 41,924 | 51,392 | |||||
Amortization of deferred financing costs and debt discount | 1,908 | 1,483 | |||||
Share-based compensation expense | 10,892 | 9,379 | |||||
(Gains) on non-operating assets, net | (1,673 | ) | (15 | ) | |||
Asset impairment | — | 5,876 | |||||
Provision for doubtful accounts | 1,341 | 110 | |||||
Provision for deferred income taxes | 5,973 | 5,368 | |||||
Excess tax benefits from share-based compensation arrangements | (947 | ) | (745 | ) | |||
Changes in operating assets and liabilities, net of effect of acquisitions: | |||||||
Accounts receivable | (18,139 | ) | 7,610 | ||||
Inventories | (29,054 | ) | 4,604 | ||||
Income tax receivable | (2,353 | ) | (2,634 | ) | |||
Prepaid expenses and other | 671 | (267 | ) | ||||
Accounts payable | (1,598 | ) | 11,475 | ||||
Accrued expenses | 7,205 | (6,052 | ) | ||||
Other, net | 355 | (362 | ) | ||||
Net cash provided by operating activities | 67,532 | 105,040 | |||||
Cash flows from investing activities: | |||||||
Acquisitions, net of cash acquired | (4,343 | ) | (247,123 | ) | |||
Capital expenditures | (21,024 | ) | (20,683 | ) | |||
Proceeds from sale of property, plant and equipment | 5,417 | 28 | |||||
Proceeds from insurance | 10,000 | — | |||||
Net cash used in investing activities | (9,950 | ) | (267,778 | ) | |||
Cash flows from financing activities: | |||||||
Refund of restricted cash, net | 370 | 298 | |||||
Proceeds from stock options exercised | 12,613 | 354 | |||||
Issuance of debt | — | 250,000 | |||||
Payments on term loan | (40,000 | ) | (41,240 | ) | |||
Payments on note payable | (1,433 | ) | (1,616 | ) | |||
Payment of financing costs | — | (9,217 | ) | ||||
Excess tax benefits from share-based compensation arrangements | 947 | 745 | |||||
Purchases of treasury stock | (64,013 | ) | (3,320 | ) | |||
Net cash (used in) provided by financing activities | (91,516 | ) | 196,004 | ||||
Effect of exchange rate changes on cash and cash equivalents | (325 | ) | (255 | ) | |||
Net (decrease) increase in cash and cash equivalents | (34,259 | ) | 33,011 | ||||
Cash and cash equivalents at beginning of period | 99,662 | 66,651 | |||||
Cash and cash equivalents at end of period | $ | 65,403 | $ | 99,662 | |||
NCI Building Systems, Inc. |
Business Segments |
(In thousands) |
(Unaudited) |
Fiscal Three Months Ended | Fiscal Three Months Ended | $ | % | |||||||||||||||
October 30, 2016 | November 1, 2015 | Inc/(Dec) | Change | |||||||||||||||
% of Total Sales | % of Total Sales | |||||||||||||||||
Sales: | ||||||||||||||||||
Engineered building systems | $ | 204,208 | 36 | $ | 197,600 | 37 | $ | 6,608 | 3.3 | % | ||||||||
Metal components | 292,430 | 52 | 275,747 | 51 | 16,683 | 6.1 | % | |||||||||||
Metal coil coating | 69,283 | 12 | 63,742 | 12 | 5,541 | 8.7 | % | |||||||||||
Total sales | 565,921 | 100 | 537,089 | 100 | 28,832 | 5.4 | % | |||||||||||
Less: Intersegment sales | 85,607 | 15 | 77,258 | 14 | 8,349 | 10.8 | % | |||||||||||
Total net sales | $ | 480,314 | 85 | $ | 459,831 | 86 | $ | 20,483 | 4.5 | % | ||||||||
% of Sales | % of Sales | |||||||||||||||||
Operating income (loss): | ||||||||||||||||||
Engineered building systems | $ | 22,830 | 11 | $ | 25,473 | 13 | $ | (2,643 | ) | -10.4 | % | |||||||
Metal components | 31,059 | 11 | 18,239 | 7 | 12,820 | 70.3 | % | |||||||||||
Metal coil coating | 7,018 | 10 | 7,208 | 11 | (190 | ) | -2.6 | % | ||||||||||
Corporate | (21,515 | ) | — | (14,421 | ) | — | (7,094 | ) | -49.2 | % | ||||||||
Total operating income (% of sales) | $ | 39,392 | 8 | $ | 36,499 | 8 | $ | 2,893 | 7.9 | % | ||||||||
Fiscal Year Ended | Fiscal Year Ended | $ | % | |||||||||||||||
October 30, 2016 | November 1, 2015 | Inc/(Dec) | Change | |||||||||||||||
% of Total Sales | % of Total Sales | |||||||||||||||||
Sales: | ||||||||||||||||||
Engineered building systems | $ | 672,235 | 34 | $ | 667,165 | 37 | $ | 5,070 | 0.8 | % | ||||||||
Metal components | 1,044,040 | 53 | 920,845 | 50 | 123,195 | 13.4 | % | |||||||||||
Metal coil coating | 247,736 | 13 | 231,732 | 13 | 16,004 | 6.9 | % | |||||||||||
Total sales | 1,964,011 | 100 | 1,819,743 | 100 | 144,269 | 7.9 | % | |||||||||||
Less: Intersegment sales | 279,083 | 14 | 256,050 | 14 | 23,033 | 9.0 | % | |||||||||||
Total net sales | $ | 1,684,928 | 86 | $ | 1,563,693 | 86 | $ | 121,236 | 7.8 | % | ||||||||
% of Sales | % of Sales | |||||||||||||||||
Operating income (loss): | ||||||||||||||||||
Engineered building systems | $ | 62,046 | 9 | $ | 51,410 | 8 | $ | 10,636 | 20.7 | % | ||||||||
Metal components | 102,495 | 10 | 50,541 | 5 | 51,954 | 102.8 | % | |||||||||||
Metal coil coating | 25,289 | 10 | 19,080 | 8 | 6,209 | 32.5 | % | |||||||||||
Corporate | (81,051 | ) | — | (64,200 | ) | — | (16,851 | ) | -26.2 | % | ||||||||
Total operating income (% of sales) | $ | 108,779 | 6 | $ | 56,831 | 4 | $ | 51,948 | 91.4 | % | ||||||||
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 OCTOBER 30, 2016 AND NOVEMBER 1, 2015 |
(In thousands) |
(Unaudited) |
Fiscal Three Months Ended October 30, 2016 | |||||||||||||||||||
Engineered Building Systems | Metal Components | Metal Coil Coating | Corporate | Consolidated | |||||||||||||||
Operating income (loss), GAAP basis | $ | 22,830 | $ | 31,059 | $ | 7,018 | $ | (21,515 | ) | $ | 39,392 | ||||||||
Restructuring and impairment charges | 211 | 506 | — | 98 | 815 | ||||||||||||||
Strategic development and acquisition related costs | — | — | — | 590 | 590 | ||||||||||||||
Loss on sale of assets and asset recovery | 62 | — | — | — | 62 | ||||||||||||||
Adjusted operating income (loss)(1) | $ | 23,103 | $ | 31,565 | $ | 7,018 | $ | (20,827 | ) | $ | 40,859 | ||||||||
Fiscal Three Months Ended November 1, 2015 | |||||||||||||||||||
Engineered Building Systems | Metal Components | Metal Coil Coating | Corporate | Consolidated | |||||||||||||||
Operating income (loss), GAAP basis | $ | 25,473 | $ | 18,239 | $ | 7,208 | $ | (14,421 | ) | $ | 36,499 | ||||||||
Restructuring and impairment charges | 959 | 6,365 | — | 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) | $ | 26,432 | $ | 26,947 | $ | 7,208 | $ | (16,756 | ) | $ | 43,831 | ||||||||
(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 statements 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 OCTOBER 30, 2016 AND NOVEMBER 1, 2015 |
(In thousands) |
(Unaudited) |
Fiscal Year Ended October 30, 2016 | |||||||||||||||||||
Engineered Building Systems | Metal Components | Metal Coil Coating | Corporate | Consolidated | |||||||||||||||
Operating income (loss), GAAP basis | $ | 62,046 | $ | 102,495 | $ | 25,289 | $ | (81,051 | ) | $ | 108,779 | ||||||||
Restructuring and impairment charges | 966 | 1,661 | 39 | 1,586 | 4,252 | ||||||||||||||
Strategic development and acquisition related costs | — | 403 | — | 2,267 | 2,670 | ||||||||||||||
(Gain) on sale of assets and asset recovery | (1,642 | ) | — | — | — | (1,642 | ) | ||||||||||||
Adjusted operating income (loss)(1) | $ | 61,370 | $ | 104,559 | $ | 25,328 | $ | (77,198 | ) | $ | 114,059 | ||||||||
Fiscal Year Ended November 1, 2015 | |||||||||||||||||||
Engineered Building Systems | Metal Components | Metal Coil Coating | Corporate | Consolidated | |||||||||||||||
Operating income (loss), GAAP basis | $ | 51,410 | $ | 50,541 | $ | 19,080 | $ | (64,200 | ) | $ | 56,831 | ||||||||
Restructuring and impairment charges | 2,756 | 7,866 | 254 | 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) | $ | 54,166 | $ | 69,165 | $ | 19,334 | $ | (63,334 | ) | $ | 79,331 | ||||||||
(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 statements of operations. |
NCI BUILDING SYSTEMS, INC. |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS |
COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, |
AMORTIZATION AND OTHER ITEMS (ADJUSTED EBITDA) |
(In thousands) |
(Unaudited) |
1st Quarter January 31, 2016 | 2nd Quarter May 1, 2016 | 3rd Quarter July 31, 2016 | 4th Quarter October 30, 2016 | Trailing 12 Months October 30, 2016 | |||||||||||||||
Net income (loss) | $ | 5,892 | $ | 2,420 | $ | 23,715 | $ | 19,001 | $ | 51,028 | |||||||||
Depreciation and amortization | 10,747 | 10,765 | 10,595 | 9,817 | 41,924 | ||||||||||||||
Consolidated interest expense, net | 7,847 | 7,792 | 7,685 | 7,548 | 30,872 | ||||||||||||||
Provision for income taxes | 2,453 | 1,209 | 11,627 | 12,649 | 27,938 | ||||||||||||||
Restructuring and impairment charges | 1,510 | 1,149 | 778 | 815 | 4,252 | ||||||||||||||
(Gain) from bargain purchase | (1,864 | ) | — | — | — | (1,864 | ) | ||||||||||||
Strategic development and acquisition related costs | 681 | 579 | 819 | 590 | 2,669 | ||||||||||||||
Share-based compensation | 2,582 | 2,468 | 2,661 | 3,181 | 10,892 | ||||||||||||||
(Gain) loss on sale of assets and asset recovery | (725 | ) | (927 | ) | (52 | ) | 62 | (1,642 | ) | ||||||||||
Adjusted EBITDA(1) | $ | 29,123 | $ | 25,455 | $ | 57,828 | $ | 53,663 | $ | 166,069 | |||||||||
1st Quarter February 1, 2015 | 2nd Quarter May 3, 2015 | 3rd Quarter August 2, 2015 | 4th Quarter November 1, 2015 | Trailing 12 Months November 1, 2015 | |||||||||||||||
Net income (loss) | $ | (320 | ) | $ | (7,489 | ) | $ | 7,220 | $ | 18,407 | $ | 17,818 | |||||||
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 (benefit) for income taxes | (490 | ) | (4,087 | ) | 3,520 | 10,029 | 8,972 | ||||||||||||
Restructuring and impairment charges | 1,477 | 1,714 | 504 | 7,611 | 11,306 | ||||||||||||||
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 | $ | 15,788 | $ | 38,189 | $ | 56,449 | $ | 130,049 | |||||||||
(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 special 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 |
(Unaudited) |
Fiscal Three Months Ended | Fiscal Year Ended | ||||||||||||||
October 30, 2016 | November 1, 2015 | October 30, 2016 | November 1, 2015 | ||||||||||||
Net income per diluted common share, GAAP basis | $ | 0.27 | $ | 0.25 | $ | 0.70 | $ | 0.24 | |||||||
Restructuring and impairment charges | 0.01 | 0.10 | 0.06 | 0.15 | |||||||||||
Strategic development and acquisition related costs | 0.01 | 0.02 | 0.04 | 0.06 | |||||||||||
Loss (gain) on sale of assets and asset recovery | 0.00 | — | (0.02 | ) | — | ||||||||||
(Gain) from bargain purchase | — | — | (0.03 | ) | — | ||||||||||
(Gain) on legal settlements | — | (0.05 | ) | — | (0.05 | ) | |||||||||
Fair value adjustment of acquired inventory | — | — | — | 0.03 | |||||||||||
Amortization of short lived acquired intangible | — | 0.03 | — | 0.11 | |||||||||||
Tax effect of applicable non-GAAP adjustments(2) | (0.01 | ) | (0.04 | ) | (0.03 | ) | (0.12 | ) | |||||||
Adjusted net income per diluted common share(1) | $ | 0.28 | $ | 0.31 | $ | 0.71 | $ | 0.42 | |||||||
Fiscal Three Months Ended | Fiscal Year Ended | ||||||||||||||
October 30, 2016 | November 1, 2015 | October 30, 2016 | November 1, 2015 | ||||||||||||
Net income applicable to common shares, GAAP basis | $ | 18,896 | $ | 18,186 | $ | 50,638 | $ | 17,646 | |||||||
Restructuring and impairment charges | 815 | 7,611 | 4,252 | 11,306 | |||||||||||
Strategic development and acquisition related costs | 590 | 1,143 | 2,670 | 4,201 | |||||||||||
Loss (gain) on sale of assets and asset recovery | 62 | — | (1,642 | ) | — | ||||||||||
(Gain) from bargain purchase | — | — | (1,864 | ) | — | ||||||||||
(Gain) on legal settlements | — | (3,765 | ) | — | (3,765 | ) | |||||||||
Fair value adjustment of acquired inventory | — | — | — | 2,358 | |||||||||||
Amortization of short lived acquired intangible | — | 2,343 | — | 8,400 | |||||||||||
Tax effect of applicable non-GAAP adjustments(2) | (572 | ) | (2,859 | ) | (2,059 | ) | (8,775 | ) | |||||||
Adjusted net income applicable to common shares(1) | $ | 19,791 | $ | 22,659 | $ | 51,995 | $ | 31,371 | |||||||
(1) | The Company discloses a tabular comparison of Adjusted net income per diluted common share and Adjusted net income 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 per diluted common share and Adjusted net income applicable to common shares should not be considered in isolation or as a substitute for net income per diluted common share and net income applicable to common shares as reported on the face of our consolidated statements of operations. |
(2) | The Company calculated the tax effect of non-GAAP adjustments by applying the applicable statutory tax rate for the period to each applicable non-GAAP item. |
NCI Building Systems, Inc. |
Reconciliation of Segment Sales to Third Party Segment Sales |
(In thousands) |
(Unaudited) |
Fiscal 4th Qtr 2016 | Fiscal 4th Qtr 2015 | $ Inc/(Dec) | % Change | |||||||||||||||
Engineered Building Systems | ||||||||||||||||||
Total Sales | $ | 204,208 | 36% | $ | 197,600 | 37% | $ | 6,608 | 3.3 | % | ||||||||
Less: Intersegment sales | 7,612 | 5,100 | 2,512 | 49.3 | % | |||||||||||||
Third Party Sales | $ | 196,596 | 41% | $ | 192,500 | 42% | $ | 4,096 | 2.1 | % | ||||||||
Operating Income | $ | 22,830 | 12% | $ | 25,473 | 13% | $ | (2,643 | ) | -10.4 | % | |||||||
Metal Components | ||||||||||||||||||
Total Sales | $ | 292,430 | 52% | $ | 275,747 | 51% | $ | 16,683 | 6.1 | % | ||||||||
Less: Intersegment sales | 37,324 | 35,104 | 2,220 | 6.3 | % | |||||||||||||
Third Party Sales | $ | 255,106 | 53% | $ | 240,643 | 52% | $ | 14,463 | 6.0 | % | ||||||||
Operating Income | $ | 31,059 | 12% | $ | 18,239 | 8% | $ | 12,820 | 70.2 | % | ||||||||
Metal Coil Coating | ||||||||||||||||||
Total Sales | $ | 69,283 | 12% | $ | 63,742 | 12% | $ | 5,541 | 8.7 | % | ||||||||
Less: Intersegment sales | 40,671 | 37,055 | 3,616 | 9.8 | % | |||||||||||||
Third Party Sales | $ | 28,612 | 6% | $ | 26,687 | 6% | $ | 1,925 | 7.2 | % | ||||||||
Operating Income | $ | 7,018 | 25% | $ | 7,208 | 27% | $ | (190 | ) | -2.6 | % | |||||||
Consolidated | ||||||||||||||||||
Total Sales | $ | 565,921 | 100% | $ | 537,089 | 100% | $ | 28,832 | 5.4 | % | ||||||||
Less: Intersegment | 85,607 | 77,259 | 8,348 | 10.8 | % | |||||||||||||
Third Party Sales | $ | 480,314 | 100% | $ | 459,830 | 100% | $ | 20,484 | 4.5 | % | ||||||||
Operating Income | $ | 39,392 | 8% | $ | 36,499 | 8% | $ | 2,893 | 7.9 | % | ||||||||
Fiscal YTD 4th Qtr 2016 | Fiscal YTD 4th Qtr 2015 | $ Inc/(Dec) | % Change | |||||||||||||||
Engineered Building Systems | ||||||||||||||||||
Total Sales | $ | 672,235 | 34% | $ | 667,165 | 37% | $ | 5,070 | 0.8 | % | ||||||||
Less: Intersegment sales | 19,764 | 19,285 | 479 | 2.5 | % | |||||||||||||
Third Party Sales | $ | 652,471 | 39% | $ | 647,880 | 41% | $ | 4,591 | 0.7 | % | ||||||||
Operating Income | $ | 62,046 | 10% | $ | 51,410 | 8% | $ | 10,636 | 20.7 | % | ||||||||
Metal Components | ||||||||||||||||||
Total Sales | $ | 1,044,040 | 53% | $ | 920,845 | 51% | $ | 123,195 | 13.4 | % | ||||||||
Less: Intersegment sales | 118,177 | 105,535 | 12,642 | 12.0 | % | |||||||||||||
Third Party Sales | $ | 925,863 | 55% | $ | 815,310 | 52% | $ | 110,553 | 13.6 | % | ||||||||
Operating Income | $ | 102,495 | 11% | $ | 50,541 | 6% | $ | 51,954 | 102.8 | % | ||||||||
Metal Coil Coating | ||||||||||||||||||
Total Sales | $ | 247,736 | 13% | $ | 231,732 | 13% | $ | 16,004 | 6.9 | % | ||||||||
Less: Intersegment sales | 141,142 | 131,230 | 9,912 | 7.6 | % | |||||||||||||
Third Party Sales | $ | 106,594 | 6% | $ | 100,502 | 6% | $ | 6,092 | 6.1 | % | ||||||||
Operating Income | $ | 25,289 | 24% | $ | 19,080 | 19% | $ | 6,209 | 32.5 | % | ||||||||
Consolidated | ||||||||||||||||||
Total Sales | $ | 1,964,011 | 100% | $ | 1,819,743 | 100% | $ | 144,268 | 7.9 | % | ||||||||
Less: Intersegment | 279,083 | 256,050 | 23,033 | 9.0 | % | |||||||||||||
Third Party Sales | $ | 1,684,928 | 100% | $ | 1,563,693 | 100% | $ | 121,235 | 7.8 | % | ||||||||
Operating Income | $ | 108,779 | 6% | $ | 56,831 | 4% | $ | 51,948 | 91.4 | % | ||||||||