Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Cornerstone Building Brands, Inc. | ncs201712078-k.htm |
| EX-99.2 - EXHIBIT 99.2 - Cornerstone Building Brands, Inc. | q42017exhibit992.htm |
Exhibit 99.1
NEWS RELEASE
NCI Building Systems Reports
Fourth Quarter and 2017 Fiscal Year End Results
HOUSTON, December 6, 2017 – NCI Building Systems, Inc. (NYSE: NCS) (“NCI” or the “Company”) today reported financial results for the fourth fiscal quarter and fiscal year ended October 29, 2017.
Fourth Quarter 2017 Financial and Operational Highlights:
• | Sales rose 1.8% to $488.7 million for the quarter, compared to $480.3 million in the prior year’s fourth quarter |
• | Gross profit for the quarter was $116.3 million or 23.8% of revenues, compared to $120.8 million or 25.2% of revenues in the prior year’s fourth quarter |
• | Net income was $17.5 million for the quarter, compared to $19.0 million in last year’s fourth quarter. Adjusted Net Income was $22.3 million this quarter, compared to $19.8 million in the prior year’s fourth quarter |
• | Net income per diluted common share for the quarter was $0.25, compared to $0.27 in the prior year’s fourth quarter. Adjusted Net Income was $0.32 per diluted common share, compared to $0.28 in the prior year’s fourth quarter |
• | Adjusted EBITDA was $53.9 million or 11.0% of revenues for the quarter, compared to Adjusted EBITDA of $53.7 million or 11.2% of revenues in the prior year’s fourth quarter. |
• | Repurchased over 2.6 million shares at an average purchase price of $14.73 per share using $37.6 million. For fiscal 2017, the Company repurchased 2.8 million shares at an average purchase price of $14.68 |
• | Total consolidated backlog increased to $545.6 million, up 5.8% year-over-year |
• | For the period, the Company estimated the hurricanes negatively impacted sales by approximately $16.0 million, gross profit by approximately $8.3 million and Adjusted EBITDA by approximately $8.5 million |
“While 2017 was a demanding year and in spite of the overall challenges, we finished the year on a strong note in terms of bookings and shipments,” said Donald R. Riley, President and Chief Executive Officer. “In closing out the year, we achieved many goals critical to realizing our long-term vision for NCI. We completed the rationalization of our manufacturing footprint, met our cost reduction initiative goals a year ahead of schedule, resulting in a combined annual savings of $31.9 million, and produced record double digit growth in our Insulated Metal Panels business.
As we look towards fiscal 2018, we are excited and optimistic about our opportunities to continue driving NCI forward. The next phase of the Company’s evolution will be focused on implementing continuous improvement processes throughout the entire company with an emphasis on customer service and efficiency, expanding our sales through further product adjacencies, incorporating advanced automation across our manufacturing facilities and taking additional costs out of the business. We believe these efforts will position us to realize our long range goals,” concluded Riley.
Fourth Quarter 2017 Results
Fourth quarter 2017 sales increased to $488.7 million, up 1.8% from $480.3 million in last year's fourth quarter, primarily due to continued commercial discipline in the pass-through of higher material costs. On a year-over-year basis, tonnage volumes were significantly lower in the Buildings segment resulting from the impact of hurricane related disruptions, customers access to job sites and transportation delays. The Company estimated the hurricanes reduced sales by approximately $16.0 million for the quarter.
Gross profit was $116.3 million this quarter, down from $120.8 million in the fourth quarter of 2016 and gross profit margins were 23.8% for the this year’s fourth quarter compared to 25.2% in the fourth quarter of 2016. Gross margins in the fourth quarter of the year declined primarily as a result of lower volumes in the Buildings segment, uneven production flow and increased transportation costs. The Company estimated the hurricanes impacted gross profits by approximately $8.3 million for the quarter.
Engineering, selling, general and administrative (“ESG&A”) expenses were $72.7 million for the quarter, compared to $77.6 million in the fourth quarter of 2016. As a percentage of revenues, ESG&A expenses decreased approximately 130 basis points to 14.9% in the 2017 fourth quarter compared to 16.2% in the prior year’s fourth quarter, primarily driven by the Company’s cost reduction initiatives, integration activities and lower incentive compensation costs.
Operating income for the quarter was $33.3 million, compared to $39.4 million in the prior year’s fourth quarter. Adjusted Operating Income, a non-GAAP measure which excludes certain identified items, was $41.3 million in the current quarter, compared to $40.9 million in the fourth quarter of 2016. The Company estimated the hurricanes impacted Adjusted Operating Income by approximately $8.5 million for the quarter.
Net income applicable to common shares in the quarter was $17.4 million, or $0.25 per diluted common share, compared to $19.0 million, or $0.27 per diluted common share in the prior year’s fourth quarter. Net income was impacted by the following special items: $6.0 million non-cash goodwill impairment charge related to the coil coating operations of CENTRIA, $1.1 million of restructuring charges predominately attributable to severance costs, $0.6 million for asset impairments and $0.2 million of strategic development and acquisition related costs, partially offset by $3.1 million from the associated tax effect of these items. Excluding the impact of these special items, the Company reported Adjusted Net Income, a non-GAAP measure, of $22.3 million, or $0.32 per diluted common share, compared to $19.8 million, or $0.28 per diluted common share, in the fourth quarter of 2016.
Adjusted EBITDA, a non-GAAP measure, defined in accordance with the Company's Credit Agreement as earnings before interest, taxes, depreciation and amortization, and certain other cash and non-cash items, was $53.9 million this quarter, compared to $53.7 million in the prior year’s fourth quarter. The Company estimated that the fourth quarter of fiscal 2017 was impacted by $8.5 million as a result of job site disruptions, uneven production flow and increased transportation costs related to the various hurricanes during the period.
Please see the reconciliation of Adjusted Operating Income, Adjusted Net Income and Adjusted EBITDA in the accompanying financial tables.
Cash and cash equivalents at the end of the fourth quarter were $65.7 million, compared to $65.4 million at the end of the fourth quarter of fiscal 2016. Cash and cash equivalents increased sequentially from $45.9 million at the end of the third quarter of fiscal 2017 as a result of strong operating cash flow offset by $37.6 million of share repurchases during the period. NCI’s net debt leverage ratio (net debt/EBITDA) at the end of the fourth quarter was 2.0x. In addition, the Company’s $150.0 million ABL facility remained undrawn as of October 29, 2017.
Fourth Quarter 2017 Segment Performance
Third party sales in the Buildings segment were $178.2 million in the fourth quarter compared to $196.6 million in the prior year period, as a result of significantly lower volumes during the period, largely driven by hurricane related disruptions. Operating income decreased to $13.0 million this quarter, compared to $22.8 million in the fourth quarter of 2016. Adjusted Operating Income decreased to $13.7 million in the current quarter, compared to $23.1 million in the fourth quarter of fiscal 2016. The year-over-year decrease in the Building segment’s operating margins relates largely to lower plant utilization driven by lower volumes during the period, uneven production flow and increased transportation costs. The hurricanes had a disproportionate effect on the Buildings segment due to the larger transaction size and longer lead times from order to delivery.
The Components segment generated $281.3 million in third party sales during the quarter, an increase of 10.3% from $255.1 million in the fourth quarter of fiscal 2016, led by growth in the insulated panel product lines, as well as commercial pricing discipline and higher volumes across the segment. Operating income was $32.8 million for the quarter compared to $31.1 million in the fourth quarter of 2016. Adjusted Operating Income was $39.7 million, compared to $31.6 million in the fourth quarter of fiscal 2016. The Components segment’s profitability was improved by higher volumes and capacity utilization across the legacy single skin product lines and a strong product mix in insulated panel sales.
Third party sales in the Coatings segment were $29.2 million, compared to $28.6 million in the fourth quarter of fiscal 2016. Operating income was $6.6 million for the quarter, compared to $7.0 million in the fourth quarter of 2016. Operating margins in the Coatings group were impacted by lower third party volumes offset by improved commercial discipline and higher internal volumes.
Market Commentary
The key leading indicators that NCI follows and that typically have the most meaningful correlation to nonresidential low-rise construction starts are the American Institute of Architects’ (“AIA”) Architecture Mixed Use Index, the Dodge Residential single family starts and the Conference Board Leading Economic Index (“LEI”). Historically, there has been a very high correlation to low-rise nonresidential starts when the three leading indicators are combined and then seasonally adjusted. The combined forward projection of these metrics, based on a 9- to 14-month historical lag for each metric, indicates an expected positive growth of 2.0% to 4.0% for low-rise new construction starts for the Company’s addressable market in fiscal 2018.
Internal bookings and quoting activity indicates a continuation of low single digit growth as compared to the prior year. Offices and banks, educational and governmental end-markets have shown positive year-over-year growth. In NCI’s geographic markets South Atlantic, New England and East North Central regions showed the strongest growth year-over-year.
Cost Initiatives and Guidance
The Company’s two cost savings initiatives in manufacturing and ESG&A were ahead of schedule at the end of the fourth quarter. The Company is targeting an additional $40 - $50 million in cost savings reductions and efficiencies by the end of 2020.
For the first quarter of fiscal 2018, NCI expects revenues to be in the range of $390 to $410 million and Adjusted EBITDA to be in the range of $24 to $34 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 2017 conference call is scheduled for Thursday, December 7, 2017, 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 telephone replay, please dial 1-201-612-7415 or 1-877-660-6853 (toll-free) and the passcode 13673308# when prompted. The taped replay will be available two hours after the call through December 21, 2017. A replay of the webcast will be available on the Company’s website under the Event Calendar, Calls & Webcast section of the Investor Relations page of the NCI website for approximately 90 days.
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 may include, but are not limited to, statements concerning our market commentary and expectations for new nonresidential low-rise construction starts in fiscal 2018 and our financial outlook and guidance, including our first quarter fiscal 2018 forecasted revenues and Adjusted EBITDA, long term targets with respect to cost savings and other consolidated financial performance guidance. Among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality; 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 or refinance 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; interruptions in our supply chain; our ability to make strategic acquisitions accretive to earnings; retention and replacement of key personnel; our ability to carry out our restructuring plans and to fully realize expected cost savings; 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; effect on the price of the Company's common stock of 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 October 29, 2017, and other risks described in documents subsequently filed by the Company from time to time 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.
NCI BUILDING SYSTEMS, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share data) |
(Unaudited) |
Fiscal Three Months Ended | Fiscal Year Ended | ||||||||||||||
October 29, 2017 | October 30, 2016 | October 29, 2017 | October 30, 2016 | ||||||||||||
Sales | $ | 488,726 | $ | 480,314 | $ | 1,770,278 | $ | 1,684,928 | |||||||
Cost of sales | 372,421 | 359,403 | 1,354,077 | 1,258,680 | |||||||||||
Loss (gain) on sale of assets and asset recovery | — | 62 | 137 | (1,642 | ) | ||||||||||
Gross profit | 116,305 | 120,849 | 416,064 | 427,890 | |||||||||||
23.8 | % | 25.2 | % | 23.5 | % | 25.4 | % | ||||||||
Engineering, selling, general and administrative expenses | 72,671 | 77,640 | 293,145 | 302,551 | |||||||||||
Intangible asset amortization | 2,405 | 2,412 | 9,620 | 9,638 | |||||||||||
Goodwill impairment | 6,000 | — | 6,000 | — | |||||||||||
Strategic development and acquisition related costs | 193 | 590 | 1,971 | 2,670 | |||||||||||
Restructuring and impairment charges | 1,710 | 815 | 5,297 | 4,252 | |||||||||||
Gain on insurance recovery | — | — | (9,749 | ) | — | ||||||||||
Income from operations | 33,326 | 39,392 | 109,780 | 108,779 | |||||||||||
Interest income | 74 | 11 | 238 | 146 | |||||||||||
Interest expense | (7,161 | ) | (7,559 | ) | (28,899 | ) | (31,019 | ) | |||||||
Foreign exchange (loss) gain | (488 | ) | (312 | ) | 547 | (1,401 | ) | ||||||||
Gain from bargain purchase | — | — | — | 1,864 | |||||||||||
Other income, net | 427 | 118 | 1,472 | 595 | |||||||||||
Income before income taxes | 26,178 | 31,650 | 83,138 | 78,964 | |||||||||||
Provision for income taxes | 8,688 | 12,649 | 28,414 | 27,937 | |||||||||||
33.2 | % | 40.0 | % | 34.2 | % | 35.4 | % | ||||||||
Net income | $ | 17,490 | $ | 19,001 | $ | 54,724 | $ | 51,027 | |||||||
Net income allocated to participating securities | (78 | ) | (105 | ) | (325 | ) | (389 | ) | |||||||
Net income applicable to common shares | $ | 17,412 | $ | 18,896 | $ | 54,399 | $ | 50,638 | |||||||
Income per common share: | |||||||||||||||
Basic | $ | 0.25 | $ | 0.27 | $ | 0.77 | $ | 0.70 | |||||||
Diluted | $ | 0.25 | $ | 0.27 | $ | 0.77 | $ | 0.70 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 69,629 | 70,845 | 70,629 | 72,411 | |||||||||||
Diluted | 69,741 | 71,020 | 70,778 | 72,857 | |||||||||||
Increase in sales | 1.8 | % | 4.5 | % | 5.1 | % | 7.8 | % | |||||||
Engineering, selling, general and administrative expenses percentage | 14.9 | % | 16.2 | % | 16.6 | % | 18.0 | % | |||||||
NCI BUILDING SYSTEMS, INC. |
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
October 29, 2017 | October 30, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 65,658 | $ | 65,403 | |||
Restricted cash | 136 | 310 | |||||
Accounts receivable, net | 199,897 | 182,258 | |||||
Inventories, net | 198,296 | 186,824 | |||||
Income taxes receivable | 3,617 | 982 | |||||
Deferred income taxes | 22,605 | 29,104 | |||||
Investments in debt and equity securities, at market | 6,481 | 5,748 | |||||
Prepaid expenses and other | 33,086 | 29,971 | |||||
Assets held for sale | 5,582 | 4,256 | |||||
Total current assets | 535,358 | 504,856 | |||||
Property, plant and equipment, net | 226,995 | 242,212 | |||||
Goodwill | 148,291 | 154,271 | |||||
Intangible assets, net | 137,148 | 146,769 | |||||
Other assets, net | 1,875 | 2,092 | |||||
Total assets | $ | 1,049,667 | $ | 1,050,200 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Note payable | $ | 440 | $ | 460 | |||
Accounts payable | 147,772 | 142,913 | |||||
Accrued compensation and benefits | 58,408 | 72,612 | |||||
Accrued interest | 6,414 | 7,165 | |||||
Other accrued expenses | 103,253 | 103,384 | |||||
Total current liabilities | 316,287 | 326,534 | |||||
Long-term debt, net of deferred financing costs of $6,857 and $8,096 | 387,290 | 396,051 | |||||
Deferred income taxes | 23,396 | 24,804 | |||||
Other long-term liabilities | 18,953 | 21,494 | |||||
Total long-term liabilities | 429,639 | 442,349 | |||||
Common stock | 687 | 715 | |||||
Additional paid-in capital | 562,277 | 603,120 | |||||
Accumulated deficit | (248,046 | ) | (302,706 | ) | |||
Accumulated other comprehensive loss, net | (9,037 | ) | (10,553 | ) | |||
Treasury stock, at cost | (2,140 | ) | (9,259 | ) | |||
Total stockholders’ equity | 303,741 | 281,317 | |||||
Total liabilities and stockholders’ equity | $ | 1,049,667 | $ | 1,050,200 | |||
NCI BUILDING SYSTEMS, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
(Unaudited) |
Fiscal Year Ended | |||||||
October 29, 2017 | October 30, 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 54,724 | $ | 51,027 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation and amortization | 41,318 | 41,924 | |||||
Amortization of deferred financing costs | 1,819 | 1,908 | |||||
Share-based compensation expense | 10,230 | 10,892 | |||||
Losses (gains) on assets, net | 1,371 | (2,673 | ) | ||||
Goodwill impairment | 6,000 | — | |||||
Gain on insurance recovery | (9,749 | ) | — | ||||
Provision for doubtful accounts | 1,948 | 1,343 | |||||
Provision for deferred income taxes | 866 | 1,318 | |||||
Excess tax (benefits) shortfalls from share-based compensation arrangements | (1,515 | ) | 289 | ||||
Changes in operating assets and liabilities, net of effect of acquisitions: | |||||||
Accounts receivable | (19,582 | ) | (18,141 | ) | |||
Inventories | (11,473 | ) | (29,054 | ) | |||
Income taxes | (2,637 | ) | (1,953 | ) | |||
Prepaid expenses and other | (3,293 | ) | 671 | ||||
Accounts payable | 4,858 | (1,598 | ) | ||||
Accrued expenses | (11,299 | ) | 12,656 | ||||
Other, net | (1,227 | ) | 159 | ||||
Net cash provided by operating activities | 62,359 | 68,768 | |||||
Cash flows from investing activities: | |||||||
Acquisitions, net of cash acquired | — | (4,343 | ) | ||||
Capital expenditures | (22,074 | ) | (21,024 | ) | |||
Proceeds from sale of property, plant and equipment | 3,197 | 5,417 | |||||
Proceeds from insurance | 8,593 | 10,000 | |||||
Net cash used in investing activities | (10,284 | ) | (9,950 | ) | |||
Cash flows from financing activities: | |||||||
Refund of restricted cash | 173 | 370 | |||||
Proceeds from stock options exercised | 1,651 | 12,612 | |||||
Excess tax benefits (shortfalls) from share-based compensation arrangements | 1,515 | (289 | ) | ||||
Proceeds from Amended ABL facility | 35,000 | — | |||||
Payments on Amended ABL facility | (35,000 | ) | — | ||||
Payments on term loan | (10,180 | ) | (40,000 | ) | |||
Payments on note payable | (1,570 | ) | (1,430 | ) | |||
Purchases of treasury stock | (43,603 | ) | (64,015 | ) | |||
Net cash used in financing activities | (52,014 | ) | (92,752 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 194 | (325 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 255 | (34,259 | ) | ||||
Cash and cash equivalents at beginning of period | 65,403 | 99,662 | |||||
Cash and cash equivalents at end of period | $ | 65,658 | $ | 65,403 | |||
NCI BUILDING SYSTEMS, INC. |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS |
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON |
(Unaudited) |
Fiscal Three Months Ended | Fiscal Year Ended | ||||||||||||||
October 29, 2017 | October 30, 2016 | October 29, 2017 | October 30, 2016 | ||||||||||||
Net income per diluted common share, GAAP basis | $ | 0.25 | $ | 0.27 | $ | 0.77 | $ | 0.70 | |||||||
Goodwill impairment | 0.09 | — | 0.08 | — | |||||||||||
Restructuring and impairment charges | 0.02 | 0.01 | 0.07 | 0.06 | |||||||||||
Strategic development and acquisition related costs | 0.00 | 0.01 | 0.03 | 0.04 | |||||||||||
(Gain) on insurance recovery | — | — | (0.14 | ) | — | ||||||||||
Unreimbursed business interruption costs | 0.00 | — | 0.01 | — | |||||||||||
Other losses (gains), net | — | 0.00 | 0.00 | (0.06 | ) | ||||||||||
Tax effect of applicable non-GAAP adjustments(1) | (0.04 | ) | (0.01 | ) | (0.02 | ) | (0.03 | ) | |||||||
Adjusted net income per diluted common share(2) | $ | 0.32 | $ | 0.28 | $ | 0.80 | $ | 0.71 | |||||||
Fiscal Three Months Ended | Fiscal Year Ended | ||||||||||||||
October 29, 2017 | October 30, 2016 | October 29, 2017 | October 30, 2016 | ||||||||||||
Net income applicable to common shares, GAAP basis | $ | 17,412 | $ | 18,896 | $ | 54,399 | $ | 50,638 | |||||||
Goodwill impairment | 6,000 | — | 6,000 | — | |||||||||||
Restructuring and impairment charges | 1,710 | 815 | 5,297 | 4,252 | |||||||||||
Strategic development and acquisition related costs | 193 | 590 | 1,971 | 2,670 | |||||||||||
(Gain) on insurance recovery | — | — | (9,749 | ) | — | ||||||||||
Unreimbursed business interruption costs | 28 | — | 454 | — | |||||||||||
Other losses (gains), net | — | 62 | 137 | (3,506 | ) | ||||||||||
Tax effect of applicable non-GAAP adjustments(1) | (3,093 | ) | (572 | ) | (1,603 | ) | (2,059 | ) | |||||||
Adjusted net income applicable to common shares(2) | $ | 22,250 | $ | 19,791 | $ | 56,906 | $ | 51,995 | |||||||
(1) | 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. |
(2) | 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. |
NCI Building Systems, Inc. |
Business Segments |
(In thousands) |
(Unaudited) |
Fiscal Three Months Ended | Fiscal Three Months Ended | $ | % | |||||||||||||||
October 29, 2017 | October 30, 2016 | Inc/(Dec) | Change | |||||||||||||||
% of Total Sales | % of Total Sales | |||||||||||||||||
Sales: | ||||||||||||||||||
Engineered building systems | $ | 188,183 | 32 | $ | 204,208 | 36 | $ | (16,025 | ) | -7.8 | % | |||||||
Metal components | 316,716 | 55 | 292,430 | 52 | 24,286 | 8.3 | % | |||||||||||
Metal coil coating | 73,007 | 13 | 69,283 | 12 | 3,724 | 5.4 | % | |||||||||||
Total sales | 577,906 | 100 | 565,921 | 100 | 11,985 | 2.1 | % | |||||||||||
Less: Intersegment sales | 89,180 | 15 | 85,607 | 15 | 3,573 | 4.2 | % | |||||||||||
Total net sales | $ | 488,726 | 85 | $ | 480,314 | 85 | $ | 8,412 | 1.8 | % | ||||||||
% of Sales | % of Sales | |||||||||||||||||
Operating income (loss): | ||||||||||||||||||
Engineered building systems | $ | 13,043 | 7 | $ | 22,830 | 11 | $ | (9,787 | ) | -42.9 | % | |||||||
Metal components | 32,818 | 10 | 31,059 | 11 | 1,759 | 5.7 | % | |||||||||||
Metal coil coating | 6,615 | 9 | 7,018 | 10 | (403 | ) | -5.7 | % | ||||||||||
Corporate | (19,150 | ) | — | (21,515 | ) | — | 2,365 | 11.0 | % | |||||||||
Total operating income | $ | 33,326 | 7 | $ | 39,392 | 8 | $ | (6,066 | ) | -15.4 | % | |||||||
% of Sales | % of Sales | |||||||||||||||||
Adjusted operating income (loss)(1): | ||||||||||||||||||
Engineered building systems | $ | 13,738 | 7 | $ | 23,103 | 11 | $ | (9,365 | ) | -40.5 | % | |||||||
Metal components | 39,689 | 13 | 31,565 | 11 | 8,124 | 25.7 | % | |||||||||||
Metal coil coating | 6,615 | 9 | 7,018 | 10 | (403 | ) | -5.7 | % | ||||||||||
Corporate | (18,785 | ) | — | (20,827 | ) | — | 2,042 | 9.8 | % | |||||||||
Total adjusted operating income | $ | 41,257 | 8 | $ | 40,859 | 9 | $ | 398 | 1.0 | % | ||||||||
(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. See the reconciliation of Adjusted operating income (loss) to operating income (loss) below. |
NCI Building Systems, Inc. |
Business Segments |
(In thousands) |
(Unaudited) |
Fiscal Year Ended | Fiscal Year Ended | $ | % | |||||||||||||||
October 29, 2017 | October 30, 2016 | Inc/(Dec) | Change | |||||||||||||||
% of Total Sales | % of Total Sales | |||||||||||||||||
Sales: | ||||||||||||||||||
Engineered building systems | $ | 693,980 | 33 | $ | 672,235 | 34 | $ | 21,745 | 3.2 | % | ||||||||
Metal components | 1,129,816 | 54 | 1,044,040 | 53 | 85,776 | 8.2 | % | |||||||||||
Metal coil coating | 271,085 | 13 | 247,736 | 13 | 23,349 | 9.4 | % | |||||||||||
Total sales | 2,094,881 | 100 | 1,964,011 | 100 | 130,870 | 6.7 | % | |||||||||||
Less: Intersegment sales | 324,603 | 15 | 279,083 | 14 | 45,520 | 16.3 | % | |||||||||||
Total net sales | $ | 1,770,278 | 85 | $ | 1,684,928 | 86 | $ | 85,350 | 5.1 | % | ||||||||
% of Sales | % of Sales | |||||||||||||||||
Operating income (loss): | ||||||||||||||||||
Engineered building systems | $ | 41,388 | 6 | $ | 62,046 | 9 | $ | (20,658 | ) | -33.3 | % | |||||||
Metal components | 124,224 | 11 | 102,495 | 10 | 21,729 | 21.2 | % | |||||||||||
Metal coil coating | 23,935 | 9 | 25,289 | 10 | (1,354 | ) | -5.4 | % | ||||||||||
Corporate | (79,767 | ) | — | (81,051 | ) | — | 1,284 | 1.6 | % | |||||||||
Total operating income | $ | 109,780 | 6 | $ | 108,779 | 6 | $ | 1,001 | 0.9 | % | ||||||||
% of Sales | % of Sales | |||||||||||||||||
Adjusted operating income (loss)(1): | ||||||||||||||||||
Engineered building systems | $ | 45,257 | 7 | $ | 61,370 | 9 | $ | (16,113 | ) | -26.3 | % | |||||||
Metal components | 122,273 | 11 | 104,559 | 10 | 17,714 | 16.9 | % | |||||||||||
Metal coil coating | 23,935 | 9 | 25,328 | 10 | (1,393 | ) | -5.5 | % | ||||||||||
Corporate | (77,575 | ) | — | (77,198 | ) | — | (377 | ) | -0.5 | % | ||||||||
Total adjusted operating income | $ | 113,890 | 6 | $ | 114,059 | 7 | $ | (169 | ) | -0.1 | % | |||||||
(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. See the reconciliation of Adjusted operating income (loss) to operating income (loss) below. |
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 29, 2017 AND OCTOBER 30, 2016 |
(In thousands) |
(Unaudited) |
Fiscal Three Months Ended October 29, 2017 | |||||||||||||||||||
Engineered Building Systems | Metal Components | Metal Coil Coating | Corporate | Consolidated | |||||||||||||||
Operating income (loss), GAAP basis | $ | 13,043 | $ | 32,818 | $ | 6,615 | $ | (19,150 | ) | $ | 33,326 | ||||||||
Goodwill impairment | — | 6,000 | — | — | 6,000 | ||||||||||||||
Restructuring and impairment charges | 695 | 753 | — | 262 | 1,710 | ||||||||||||||
Strategic development and acquisition related costs | — | 90 | — | 103 | 193 | ||||||||||||||
Unreimbursed business interruption costs | — | 28 | — | — | 28 | ||||||||||||||
Adjusted operating income (loss)(1) | $ | 13,738 | $ | 39,689 | $ | 6,615 | $ | (18,785 | ) | $ | 41,257 | ||||||||
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 | ||||||||
(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 29, 2017 AND OCTOBER 30, 2016 |
(In thousands) |
(Unaudited) |
Fiscal Year Ended October 29, 2017 | |||||||||||||||||||
Engineered Building Systems | Metal Components | Metal Coil Coating | Corporate | Consolidated | |||||||||||||||
Operating income (loss), GAAP basis | $ | 41,388 | $ | 124,224 | $ | 23,935 | $ | (79,767 | ) | $ | 109,780 | ||||||||
Goodwill impairment | — | 6,000 | — | — | 6,000 | ||||||||||||||
Restructuring and impairment charges | 3,732 | 1,254 | — | 311 | 5,297 | ||||||||||||||
Strategic development and acquisition related costs | — | 90 | — | 1,881 | 1,971 | ||||||||||||||
Loss on sale of assets and asset recovery | 137 | — | — | — | 137 | ||||||||||||||
(Gain) on insurance recovery | — | (9,749 | ) | — | — | (9,749 | ) | ||||||||||||
Unreimbursed business interruption costs | — | 454 | — | — | 454 | ||||||||||||||
Adjusted operating income (loss)(1) | $ | 45,257 | $ | 122,273 | $ | 23,935 | $ | (77,575 | ) | $ | 113,890 | ||||||||
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 | ||||||||
(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 29, 2017 | 2nd Quarter April 30, 2017 | 3rd Quarter July 30, 2017 | 4th Quarter October 29, 2017 | Fiscal Year Ended October 29, 2017 | |||||||||||||||
Net income | $ | 2,039 | $ | 16,974 | $ | 18,221 | $ | 17,490 | $ | 54,724 | |||||||||
Depreciation and amortization | 10,315 | 10,062 | 10,278 | 10,663 | 41,318 | ||||||||||||||
Consolidated interest expense, net | 6,881 | 7,341 | 7,353 | 7,086 | 28,661 | ||||||||||||||
Provision for income taxes | 1,275 | 8,606 | 9,845 | 8,688 | 28,414 | ||||||||||||||
Restructuring and impairment charges | 2,264 | 315 | 1,009 | 1,709 | 5,297 | ||||||||||||||
Strategic development and acquisition related costs | 357 | 124 | 1,297 | 193 | 1,971 | ||||||||||||||
Share-based compensation | 3,042 | 2,820 | 2,284 | 2,084 | 10,230 | ||||||||||||||
Goodwill impairment | — | — | — | 6,000 | 6,000 | ||||||||||||||
Loss on sale of assets and asset recovery | — | 137 | — | — | 137 | ||||||||||||||
(Gain) on insurance recovery | — | (9,601 | ) | (148 | ) | — | (9,749 | ) | |||||||||||
Unreimbursed business interruption costs | — | 191 | 235 | 28 | 454 | ||||||||||||||
Adjusted EBITDA(1) | $ | 26,173 | $ | 36,969 | $ | 50,374 | $ | 53,941 | $ | 167,457 | |||||||||
1st Quarter January 31, 2016 | 2nd Quarter May 1, 2016 | 3rd Quarter July 31, 2016 | 4th Quarter October 30, 2016 | Fiscal Year Ended October 30, 2016 | |||||||||||||||
Net income | $ | 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 | |||||||||
(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 special 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. |
Reconciliation of Segment Sales to Third Party Segment Sales |
(In thousands) |
(Unaudited) |
Fiscal 4th Qtr 2017 | Fiscal 4th Qtr 2016 | $ Inc/(Dec) | % Change | |||||||||||||||
Engineered Building Systems | ||||||||||||||||||
Total Sales | $ | 188,183 | 32% | $ | 204,208 | 36% | $ | (16,025 | ) | -7.8 | % | |||||||
Less: Intersegment sales | 9,961 | 7,612 | 2,349 | 30.9 | % | |||||||||||||
Third Party Sales | $ | 178,222 | 36% | $ | 196,596 | 41% | $ | (18,374 | ) | -9.3 | % | |||||||
Operating Income | $ | 13,043 | 7% | $ | 22,830 | 12% | $ | (9,787 | ) | -42.9 | % | |||||||
Metal Components | ||||||||||||||||||
Total Sales | $ | 316,716 | 55% | $ | 292,430 | 52% | $ | 24,286 | 8.3 | % | ||||||||
Less: Intersegment sales | 35,458 | 37,324 | (1,866 | ) | -5.0 | % | ||||||||||||
Third Party Sales | $ | 281,258 | 58% | $ | 255,106 | 53% | $ | 26,152 | 10.3 | % | ||||||||
Operating Income | $ | 32,818 | 12% | $ | 31,059 | 12% | $ | 1,759 | 5.7 | % | ||||||||
Metal Coil Coating | ||||||||||||||||||
Total Sales | $ | 73,007 | 13% | $ | 69,283 | 12% | $ | 3,724 | 5.4 | % | ||||||||
Less: Intersegment sales | 43,761 | 40,671 | 3,090 | 7.6 | % | |||||||||||||
Third Party Sales | $ | 29,246 | 6% | $ | 28,612 | 6% | $ | 634 | 2.2 | % | ||||||||
Operating Income | $ | 6,615 | 23% | $ | 7,018 | 25% | $ | (403 | ) | -5.7 | % | |||||||
Consolidated | ||||||||||||||||||
Total Sales | $ | 577,906 | 100% | $ | 565,921 | 100% | $ | 11,985 | 2.1 | % | ||||||||
Less: Intersegment | 89,180 | 85,607 | 3,573 | 4.2 | % | |||||||||||||
Third Party Sales | $ | 488,726 | 100% | $ | 480,314 | 100% | $ | 8,412 | 1.8 | % | ||||||||
Operating Income | $ | 33,326 | 7% | $ | 39,392 | 8% | $ | (6,066 | ) | -15.4 | % | |||||||
Fiscal YTD 4th Qtr 2017 | Fiscal YTD 4th Qtr 2016 | $ Inc/(Dec) | % Change | |||||||||||||||
Engineered Building Systems | ||||||||||||||||||
Total Sales | $ | 693,980 | 33% | $ | 672,235 | 34% | $ | 21,745 | 3.2 | % | ||||||||
Less: Intersegment sales | 34,117 | 19,764 | 14,353 | 72.6 | % | |||||||||||||
Third Party Sales | $ | 659,863 | 37% | $ | 652,471 | 39% | $ | 7,392 | 1.1 | % | ||||||||
Operating Income | $ | 41,388 | 6% | $ | 62,046 | 10% | $ | (20,658 | ) | -33.3 | % | |||||||
Metal Components | ||||||||||||||||||
Total Sales | $ | 1,129,816 | 54% | $ | 1,044,040 | 53% | $ | 85,776 | 8.2 | % | ||||||||
Less: Intersegment sales | 131,537 | 118,177 | 13,360 | 11.3 | % | |||||||||||||
Third Party Sales | $ | 998,279 | 57% | $ | 925,863 | 55% | $ | 72,416 | 7.8 | % | ||||||||
Operating Income | $ | 124,224 | 12% | $ | 102,495 | 11% | $ | 21,729 | 21.2 | % | ||||||||
Metal Coil Coating | ||||||||||||||||||
Total Sales | $ | 271,085 | 13% | $ | 247,736 | 13% | $ | 23,349 | 9.4 | % | ||||||||
Less: Intersegment sales | 158,949 | 141,142 | 17,807 | 12.6 | % | |||||||||||||
Third Party Sales | $ | 112,136 | 6% | $ | 106,594 | 6% | $ | 5,542 | 5.2 | % | ||||||||
Operating Income | $ | 23,935 | 21% | $ | 25,289 | 24% | $ | (1,354 | ) | -5.4 | % | |||||||
Consolidated | ||||||||||||||||||
Total Sales | $ | 2,094,881 | 100% | $ | 1,964,011 | 100% | $ | 130,870 | 6.7 | % | ||||||||
Less: Intersegment | 324,603 | 279,083 | 45,520 | 16.3 | % | |||||||||||||
Third Party Sales | $ | 1,770,278 | 100% | $ | 1,684,928 | 100% | $ | 85,350 | 5.1 | % | ||||||||
Operating Income | $ | 109,780 | 6% | $ | 108,779 | 6% | $ | 1,001 | 0.9 | % | ||||||||