Cornerstone Building Brands, Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - Cornerstone Building Brands, Inc.	d265778d8k.htm

Exhibit 99.1

LOGO

NCI Building Systems Reports

Fourth Quarter Fiscal 2011 Results

Fourth Quarter Highlights

Operating Income and EBITDA More than Doubled on a 17% Revenue Increase

Broad-based Revenue Growth and Profitability Led By Engineered Building Systems

Net Income was $3.4 million

Bookings Increased 35%

Fiscal 2011 Highlights

Revenues Increased 10% to $960 million

Adjusted EBITDA was $35.6 million, up 121%

Cash Flow From Operations Reached $42 million

Backlog at Fiscal Year-end was $215 million

HOUSTON, December 6, 2011 /PRNewswire/ — NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the fourth quarter and fiscal year ended October 30, 2011.

Fourth Quarter 2011 Financial Results

“Our fourth quarter results clearly demonstrate the significant operating leverage that is built into our business model as a result of the restructuring we have executed in our manufacturing, engineering and supply-chain operations over the past three years. These internal improvements have enabled us to post increases in profitability that far outpace revenue and volume gains, benefiting from even modestly better business conditions,” said Norman C. Chambers, Chairman, President and Chief Executive Officer. “In the fourth fiscal quarter, our total volume was up 6.4% on a year-over-year basis, while new starts in the nonresidential construction market measured in square footage declined 4.1% as reported by McGraw-Hill. This outperformance reflected improved demand from certain sectors of our addressable market as well as our ability to maintain or increase market share across all of our business segments.”

“Each of our business units contributed to operating profitability in the fourth quarter, led again this quarter by our Engineered Buildings group, which moved to an operating profit of $10.7 million from a year-ago operating loss of $3.9 million, on a 21% revenue increase. Similar to the third quarter, bookings increased substantially, up 35% year-over-year. For the third consecutive quarter, we experienced a significant increase in the rate of converting our backlog into production, a metric that was up nearly 30% this period compared to the last several years. This was due to the continued greater proportion of “book for production” business in our backlog and our shortened delivery times, both changes largely driven by the success of our Express Buildings program.”

“As expected, second half fiscal 2011 performance was significantly better than that of the first half, reflecting the combination of improved conditions in markets such as manufacturing, energy and mining, which have historically accounted for a large portion of our business, and the increased efficiency of our operating footprint. In the last six months of the fiscal year, we achieved year-over-year growth in revenues and adjusted EBITDA of 11.7%, and 82.6%, respectively, and revenues for the second half of the fiscal year were 145% higher than our backlog at April 30, 2011, representing a return to more normalized performance levels.”

For the fourth fiscal quarter, sales were $282 million, up 17% from the $241 million reported in last year’s fourth quarter and a 7.5% sequential increase over the $262 million reported in the prior quarter. Gross profit margin was 21% compared to 19.2% in the year-ago fourth quarter and 21.7% in the prior quarter. Excluding the asset impairment charge of $1.2 million, gross profit margin would have been 21.4% for this year’s fourth quarter.

Engineering, selling, general and administrative expenses were $51.1 million, or 18.1% of revenues. This compares to $48.5 million, or 20.1% of revenues in last year’s fourth quarter, and $50.9 million, or 19.4% of revenues in the prior quarter. The Company posted an adjusted operating profit of $9.3 million compared to last year’s fourth quarter adjusted operating loss of $1.7 million and an adjusted operating profit of $5.9 million in the third quarter of fiscal 2011. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, in accordance with the Company’s bank credit agreement was $17.5 million compared to $7.5 million in last year’s fourth quarter and $14.7 million for the 2011 third quarter.

For the fourth fiscal quarter, the Company reported net income of $3.4 million. Including the accrual of preferred stock dividends and accretion of $6.5 million and a non-cash beneficial conversion feature charge of $1.4 million, the net loss applicable to common shares was $4.4 million. In last year’s fourth quarter, the Company incurred a net loss of $5.4 million and net loss applicable to common shares of $18.6 million, which included the accrual of preferred stock dividends and accretion of $8.9 million and a non-cash beneficial conversion feature charge of $4.2 million. In the 2011 third quarter, the Company reported net income of $2.6 million. The net loss applicable to common shares was $13.1 million, which included the accrual of convertible preferred stock dividends and accretion of $9.2 million and a non-cash beneficial conversion feature benefit of $6.5 million.

For this year’s fourth fiscal quarter, the adjusted loss per diluted share, excluding the non-cash beneficial conversion charge and other special items, was $0.11; the reported net loss per diluted share was $0.24. This compares to an adjusted net loss per diluted share of $0.72 and a reported net loss per diluted share of $1.01 in last year’s fourth quarter, and an adjusted net loss per diluted share of $0.38 and a reported net loss per diluted share of $0.71 in the 2011 third quarter.

The weighted average number of common shares used in the calculation of fourth fiscal quarter 2011 per share amounts was 18.6 million compared to 18.4 million last year.

Inventory levels increased 8.8% over last year’s fourth quarter to $88.5 million, as higher per unit costs more than offset the benefit of having lower quantities of steel on hand than in the year-ago period. Annualized inventory turnover was 8.9 turns for the fourth quarter compared to 8.6 turns for the fourth quarter last year.

For full year 2011, capital expenditures were $21 million; net cash from operating activities was positive $42 million.

Recent Development

As previously reported, the Company’s ability to pay cash dividends on its Series B Cumulative Convertible Participating Preferred Stock is limited by the terms of the Company’s credit facility. If not paid in cash at an 8% rate, the Company has the option to pay the dividend in-kind (or “PIK”) at 12%. For the second consecutive quarter, the Company has reached an agreement with the holders of the preferred stock to pay the dividend due on December 15, 2011 in-kind, but at the lower rate of 8%. The determination of cash payment versus PIK of the preferred dividends will be made each quarter, and there is no assurance that the holders of preferred stock will agree to this lower rate of 8% in future periods.

Fourth Quarter Segment Performance

The Company reported an adjusted operating profit of $9.3 million, which is reconciled with the reported GAAP operating income (loss) in the table 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

(Unaudited)

(In thousands)


	For the Three Months Ended October 30, 2011
	Metal Coil Coating		Metal Components		Engineered Building Systems		Corporate			Consolidated
Operating income (loss), GAAP basis	$	4,903	$	6,345	$	10,698	$	(14,162	)	$	7,784
Asset impairments		—		9		958		247			1,214
Restructuring charges		—		—		283		—			283

“Adjusted” operating income (loss) (1)	$	4,903	$	6,354	$	11,939	$	(13,915	)	$	9,281

(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 consolidated statement of operations.

“Each of our three business segments contributed to the strong improvement in operating results in the 2011 fourth quarter,” Mr. Chambers said.

The Components group’s third-party sales increased 11% in the fourth quarter as compared to the year-ago period on a modest increase in volume. Similar to the third quarter, higher raw material costs reduced the unit’s profitability. Cost containment initiatives, however, enabled the segment to maintain a reasonable operating margin.

The Coatings group continued to successfully sell its products to end users outside of the nonresidential construction industry and posted a 23% increase in third-party sales. Operating income increased 31% compared to the prior year as a result of higher volumes, which was reflected in double-digit increases in both third-party and intersegment sales.

The Buildings group’s third-party revenues increased 20% year-over-year, and operating profit was $10.7 million, representing a $14.6 million improvement over the prior year. Improved demand for “design and build” projects, effective brand marketing, superior execution and commercial discipline all contributed to the significantly improved results.

Full Year 2011 Highlights

Revenues increased 10% to $960 million from $871 million

Adjusted EBITDA was $35.6 million, up 121% from $16.1 million

Cash Flow from Operations was $42 million up from $6.3 million

Net debt was reduced to $51.7 million from $58.9 million at last year’s fiscal year-end

Market Commentary

McGraw-Hill reported that new construction activity measured in square feet was down 4.1% in the fourth quarter of the Company’s fiscal 2011 compared to the same period of 2010. For fiscal year 2011, NCI’s traditionally strong manufacturing and warehousing market increased 11% compared to a 5% decline for the overall nonresidential market, as reported in McGraw-Hill’s October data.

The American Institute of Architect’s Architectural Billing Index published for October was somewhat improved but still below the benchmark level that indicates expansion. However, the commercial and industrial sector of the index posted its second consecutive month of growth in October.

Outlook

“For the first time since 2007, we returned to our historical seasonal pattern of fourth quarter results outpacing those of the third quarter, which we believe points to positive momentum as we enter fiscal 2012. There is still little evidence of a sustained U.S. economic recovery that would benefit all of our businesses, and global economic conditions remain a concern. Our Buildings group’s bookings and backlog continues to point to a much improved start of 2012. Stronger first half comparisons coupled with our expectations for improved performance resulting from our operating leverage and business unit growth initiatives should enable us to deliver another year of significant improvement in EBITDA,” Mr. Chambers concluded.

The NCI Building Systems, Inc. fourth quarter conference call is scheduled for December 6, 2011, at 5:00 PM ET. Please call 1-800-860-2442 (International: 412-858-4600) 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.ncilp.com. To access the taped replay, please dial 1-877-344-7529 or 412-317-0088 and the passcode 10007046# when prompted. The Webcast archive and taped replay will both be available two hours after the call through December 13, 2011.

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 and Mexico, with additional sales and distribution offices throughout the United States and Canada.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “guidance,” “potential,” “anticipate,” “plan,” “expect,” “should,” “will” or similar expressions are intended to identify forward-looking statements in this press release. These forward-looking statements reflect our current expectations and/or beliefs concerning future events. However, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company’s actual performance to differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality and adverse weather conditions; ability to service the Company’s debt; fluctuations in customer demand and other patterns; raw material pricing and supply; competitive activity and pricing pressure; general economic conditions affecting the construction industry; financial crises or fluctuations in the U.S. and abroad; changes in laws or regulations; and the volatility of the Company’s stock price. See also the risk factors in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2010 and in its subsequent quarterly reports on Form 10-Q, 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. NCI 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

(Unaudited)

(In thousands, except per share data)


	For the Three Months Ended						For the Year Ended
	October 30, 2011			October 31, 2010			October 30, 2011			October 31, 2010
Sales	$	281,788		$	241,454		$	959,577		$	870,526
Cost of sales, excluding asset impairments, net		221,382			194,876			758,023			699,641
Asset impairments, net		1,214			221			1,121			1,070

Gross profit		59,192			46,357			200,433			169,815
		21.0	%		19.2	%		20.9	%		19.5	%
Engineering, selling, general and administrative expenses		51,125			48,503			202,352			190,870
Restructuring charges (recovery)		283			1,628			(292	)		3,532

Income (loss) from operations		7,784			(3,774	)		(1,627	)		(24,587	)

Interest income		24			22			127			91
Interest expense		(3,709	)		(4,280	)		(15,723	)		(17,918	)
Refinancing costs		—			250			—			76
Other income (expense), net		(290	)		552			876			2,131

Income (loss) before income taxes		3,809			(7,230	)		(16,347	)		(40,207	)
Provision (benefit) from income taxes		398			(1,794	)		(6,397	)		(13,330	)

		10.4	%		24.8	%		39.1	%		33.2	%
Net income (loss)	$	3,411		$	(5,436	)	$	(9,950	)	$	(26,877	)
Convertible preferred stock dividends and accretion		6,454			8,877			28,120			34,055
Convertible preferred stock beneficial conversion feature		1,356			4,243			9,396			250,295

Net loss applicable to common shares	$	(4,399	)	$	(18,556	)	$	(47,466	)	$	(311,227	)

Loss per common share:
Basic	$	(0.24	)	$	(1.01	)	$	(2.58	)	$	(17.07	)
Diluted	$	(0.24	)	$	(1.01	)	$	(2.58	)	$	(17.07	)
Weighted average number of common shares outstanding:
Basic		18,632			18,365			18,369			18,229
Diluted		18,632			18,365			18,369			18,229
Increase in sales		16.7	%					10.2	%
Gross profit percentage		21.0	%		19.2	%		20.9	%		19.5	%
Engineering, selling, general and administrative expenses percentage		18.1	%		20.1	%		21.1	%		21.9	%

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)


	October 30,			October 31,
	2011			2010
	(Unaudited)
ASSETS
Cash and cash equivalents	$	78,982		$	77,419
Restricted cash		2,836			2,839
Accounts receivable, net		95,381			81,896
Inventories, net		88,531			81,386
Deferred income taxes		20,405			15,101
Income tax receivable		1,272			15,919
Prepaid expenses and other		14,847			13,923
Investments in debt and equity securities, at market		4,483			3,738
Assets held for sale		4,874			6,114

Total current assets		311,611			298,335

Property plant and equipment, net		208,514			214,453
Goodwill		5,200			5,200
Intangible assets, net		24,254			26,312
Other assets		11,575			16,224

Total assets	$	561,154		$	560,524

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Note payable	$	292		$	289
Accounts payable		88,158			70,589
Accrued compensation and benefits		34,616			31,731
Accrued interest		1,309			1,546
Other accrued expenses		49,668			46,723

Total current liabilities		174,043			150,878

Long-term debt		130,699			136,305
Deferred income taxes		7,312			10,947
Other long-term liabilities		10,081			4,820

Total long-term liabilities		148,092			152,072

Series B cumulative convertible participating preferred stock		273,950			256,870

Redeemable common stock		759			3,418

Common stock		924			921
Additional paid-in capital		235,767			255,248
Accumulated deficit		(266,896	)		(256,946	)
Accumulated other comprehensive loss		(5,485	)		(1,937	)

Total stockholders’ deficit		(35,690	)		(2,714	)

Total liabilities and stockholders’ deficit	$	561,154		$	560,524

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Year Ended
	October 30, 2011			October 31, 2010
Cash flows from operating activities:
Net loss	$	(9,950	)	$	(26,877	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		33,214			34,504
Share-based compensation expense		6,908			4,953
Gain on embedded derivative		(25	)		(937	)
Loss on sale of property, plant and equipment		50			180
Refinancing costs		—			(76	)
Provision for doubtful accounts		1,844			78
Asset impairments, net		1,121			1,070
Provision (benefit) from deferred income taxes		(6,397	)		43
Changes in working capital:
Accounts receivable		(15,329	)		915
Inventories		(7,145	)		(9,849	)
Income tax receivable		14,382			12,434
Prepaid expenses and other		(247	)		1,736
Accounts payable		17,569			150
Accrued expenses		5,668			(12,975	)
Other, net		238			957

Net cash provided by operating activities		41,901			6,306

Cash flows from investing activities:
Capital expenditures		(21,040	)		(14,030	)
Proceeds from sale of property, plant and equipment		583			767

Net cash used in investing activities		(20,457	)		(13,263	)

Cash flows from financing activities:
Payment of convertible notes		—			(59	)
Proceeds from ABL Facility		43			245
Payments on ABL Facility		(43	)		(246	)
Decrease of restricted cash		3			10,140
Payment of cash dividends on Convertible Preferred Stock		(11,039	)		—
Payments on term loan		(5,250	)		(13,695	)
Payments on note payable		(1,543	)		(1,724	)
Payments on other long-term debt		(355	)		(190	)
Payment of financing costs		(200	)		(125	)
Purchase of treasury stock		(1,477	)		(381	)

Net cash used in financing activities		(19,861	)		(6,035	)

Effect of exchange rate changes on cash and cash equivalents		(20	)		(8	)
Net increase (decrease) in cash and cash equivalents		1,563			(13,000	)
Cash and cash equivalents at beginning of period		77,419			90,419

Cash and cash equivalents at end of period	$	78,982		$	77,419

NCI BUILDING SYSTEMS, INC.

BUSINESS SEGMENTS

(Unaudited)

(In thousands)


	Three Months Ended					Three Months Ended						$			%
	October 30, 2011					October 31, 2010						Inc/(Dec)			Change
				% of					% of
				Total					Total
Sales:				Sales					Sales
Metal coil coating	$	56,425			16	$	46,884			16		$	9,541			20.4	%
Metal components		127,925			37		118,475			39			9,450			8.0	%
Engineered building systems		162,346			47		133,959			45			28,387			21.2	%

Total sales		346,696			100		299,318			100			47,378			15.8	%
Less: Intersegment sales		64,908			19		57,864			19			7,044			12.2	%

Total net sales	$	281,788			81	$	241,454			81		$	40,334			16.7	%


				% of					% of
				Total					Total
Operating income (loss):				Sales					Sales
Metal coil coating	$	4,903			9	$	3,754			8		$	1,149			30.6	%
Metal components		6,345			5		8,820			7			(2,475	)		-28.1	%
Engineered building systems		10,698			7		(3,859	)		(3	)		14,557			377.2	%
Corporate		(14,162	)		—		(12,489	)		—			(1,673	)		-13.4	%

Total operating income (loss) (% of net sales)	$	7,784			3	$	(3,774	)		(2	)	$	11,558			306.3	%


	Fiscal Year Ended						Fiscal Year Ended						$			%
	October 30, 2011						October 31, 2010						Inc/(Dec)			Change
				% of						% of
				Total						Total
Sales:				Sales						Sales
Metal coil coating	$	201,098			17		$	181,874			17		$	19,224			10.6	%
Metal components		437,655			37			415,857			38			21,798			5.2	%
Engineered building systems		548,594			46			490,746			45			57,848			11.8	%

Total sales		1,187,347			100			1,088,477			100			98,870			9.1	%
Less: Intersegment sales		227,770			19			217,951			20			9,819			4.5	%

Total net sales	$	959,577			81		$	870,526			80		$	89,051			10.2	%


				% of						% of
				Total						Total
Operating income (loss):				Sales						Sales
Metal coil coating	$	17,944			9		$	16,166			9		$	1,778			11.0	%
Metal components		20,643			5			26,791			6			(6,148	)		-22.9	%
Engineered building systems		13,011			2			(18,438	)		(4	)		31,449			170.6	%
Corporate		(53,225	)		—			(49,106	)		—			(4,119	)		-8.4	%

Total operating income (loss) (% of net sales)	$	(1,627	)		(0	)	$	(24,587	)		(3	)	$	22,960			93.4	%

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

FOR THE THREE MONTHS ENDED October 30, 2011 AND October 31, 2010

(Unaudited)

(In thousands)


	For the Three Months Ended October 30, 2011
	Metal Coil Coating		Metal Components		Engineered Building Systems		Corporate			Consolidated
Operating income (loss), GAAP basis	$	4,903	$	6,345	$	10,698	$	(14,162	)	$	7,784
Asset impairments		—		9		958		247			1,214
Restructuring charges		—		—		283		—			283

“Adjusted” operating income (loss) (1)	$	4,903	$	6,354	$	11,939	$	(13,915	)	$	9,281


	For the Three Months Ended October 31, 2010
	Metal Coil Coating		Metal Components		Engineered Building Systems			Corporate			Consolidated
Operating income (loss), GAAP basis	$	3,754	$	8,820	$	(3,859	)	$	(12,489	)	$	(3,774	)
Asset impairments		—		221		—			—			221
Restructuring charges		—		95		1,533			—			1,628
Environmental and other contingency adjustments		—		—		178			—			178

“Adjusted” operating income (loss) (1)	$	3,754	$	9,136	$	(2,148	)	$	(12,489	)	$	(1,747	)

(1)

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

FOR THE FISCAL YEAR ENDED OCTOBER 30, 2011 AND OCTOBER 31, 2010

(Unaudited)

(In thousands)


	For the Fiscal Year Ended October 30, 2011
	Metal Coil Coating		Metal Components			Engineered Building Systems			Corporate			Consolidated
Operating income (loss), GAAP basis	$	17,944	$	20,643		$	13,011		$	(53,225	)	$	(1,627	)
Asset impairments (recoveries)		—		(84	)		958			247			1,121
Restructuring recovery		—		—			(292	)		—			(292	)
Pre-acquisition contingency adjustment		—		—			252			—			252
Increase in actuarial determined general liability self-insurance reserve		—		2,398			—			—			2,398

“Adjusted” operating income (loss) (1)	$	17,944	$	22,957		$	13,929		$	(52,978	)	$	1,852


	For the Fiscal Year Ended October 31, 2010
	Metal Coil Coating		Metal Components		Engineered Building Systems			Corporate			Consolidated
Operating income (loss), GAAP basis	$	16,166	$	26,791	$	(18,438	)	$	(49,106	)	$	(24,587	)
Asset impairments		—		147		923			—			1,070
Restructuring charges		—		510		3,022			—			3,532
Environmental and other contingency adjustments		—		—		178			—			178

“Adjusted” operating income (loss) (1)	$	16,166	$	27,448	$	(14,315	)	$	(49,106	)	$	(19,807	)

(1)

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)


	1st Qtr January 30, 2011			2nd Qtr May 1, 2011			3rd Qtr July 31, 2011			4th Qtr October 30, 2011			Trailing 12 Months October 30, 2011
Net income (loss)	$	(12,725	)	$	(3,229	)	$	2,593		$	3,411		$	(9,950	)
Add:
Depreciation and amortization		7,236			7,187			7,187			6,753			28,363
Consolidated interest expense, net		4,177			3,870			3,864			3,685			15,596
Provision (benefit) from income taxes		(5,009	)		(1,786	)		—			398			(6,397	)
Non-cash charges:
Stock-based compensation		1,685			1,671			1,776			1,776			6,908
Asset impairments (recoveries)		—			—			(93	)		1,214			1,121
Embedded derivative		(7	)		(6	)		(6	)		(6	)		(25	)
Pre-acquisition contingency adjustment		252			—			—			—			252
Cash restructuring charges (recoveries)		—			—			(575	)		283			(292	)
Transaction costs		—			—			—			—			—

Adjusted EBITDA (1)	$	(4,391	)	$	7,707		$	14,746		$	17,514		$	35,576


	1st Qtr January 31, 2010			2nd Qtr May 2nd, 2010			3rd Qtr August 1, 2010			4th Qtr October 31, 2010			Trailing 12 Months October 31, 2010
Net income (loss)	$	(10,486	)	$	(7,656	)	$	(3,299	)	$	(5,436	)	$	(26,877	)
Add:
Depreciation and amortization		7,521			7,480			7,457			7,309			29,767
Consolidated interest expense, net		4,507			4,670			4,392			4,258			17,827
Benefit from income taxes		(5,779	)		(5,536	)		(221	)		(1,794	)		(13,330	)
Non-cash charges:
Stock-based compensation		801			1,403			1,374			1,375			4,953
Asset impairments (recoveries)		1,029			(116	)		(64	)		221			1,070
Embedded derivative		(919	)		(4	)		(7	)		(7	)		(937	)
Pre-acquisition contingency adjustment		—			—			—			178			178
Cash restructuring charges		524			829			551			1,628			3,532
Transaction costs		174			—			—			(250	)		(76	)

Adjusted EBITDA (1)	$	(2,628	)	$	1,070		$	10,183		$	7,482		$	16,107

(1)

On October 20, 2009, the Company amended and restated its Term Note facility which defines adjusted EBITDA. Adjusted EBITDA excludes non-cash charges for goodwill and other asset impairments, lower of cost or market charges and stock compensation as well as certain non-recurring charges. As such, the historical information is presented in accordance with the definition above. Concurrent with the amendment and restatement of the Term Note facility, the Company entered into an Asset-Backed 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” LOSS PER DILUTED COMMON SHARE AND NET LOSS COMPARISON

(Unaudited)


	Fiscal Three Months Ended						Fiscal Year Ended
	October 30,			October 31,			October 30,			October 31,
	2011			2010			2011			2010
Loss per diluted common share, GAAP basis	$	(0.24	)	$	(1.01	)	$	(2.58	)	$	(17.07	)
Refinancing costs, net of taxes		—			(0.01	)		—			(0.00	)
Convertible preferred stock beneficial conversion feature		0.07			0.23			0.51			13.73
Restructuring charges (recovery), net of taxes		0.01			0.05			(0.01	)		0.12
Asset impairments, net of taxes		0.04			0.01			0.04			0.03
Gain on embedded derivative, net of taxes		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Increase in actuarial determined general liability self-insurance reserve, net of taxes		—			—			0.08			—
Pre-acquisition contingency adjustment, net of taxes		—			0.01			0.01			0.01

“Adjusted” loss per diluted common share (1)	$	(0.11	)	$	(0.72	)	$	(1.96	)	$	(3.21	)


	Fiscal Three Months Ended						Fiscal Year Ended
	October 30,			October 31,			October 30,			October 31,
	2011			2010			2011			2010
Net loss applicable to common shares, GAAP basis	$	(4,399	)	$	(18,556	)	$	(47,466	)	$	(311,227	)
Refinancing costs, net of taxes		—			(163	)		—			(49	)
Convertible preferred stock beneficial conversion feature		1,356			4,242			9,396			250,294
Restructuring charges (recovery), net of taxes		174			1,058			(180	)		2,296
Asset impairments, net of taxes		748			144			691			696
Gain on embedded derivative, net of taxes		(4	)		(4	)		(16	)		(609	)
Increase in actuarial determined general liability self-insurance reserve, net of taxes		—			—			1,477			—
Pre-acquisition contingency adjustment, net of taxes		—			116			181			116

“Adjusted” net loss applicable to common shares (1)	$	(2,125	)	$	(13,163	)	$	(35,917	)	$	(58,483	)

(1)

The Company discloses a tabular comparison of “Adjusted” loss per diluted common share and net loss, 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” loss per diluted common share and net loss should not be considered in isolation or as a substitute for loss per diluted common share and net loss as reported on the face of our consolidated statement of operations.

NCI Building Systems, Inc.

Reconciliation of Segment Sales to Third Party Segment Sales (Internal Information)

(Unaudited)

(In thousands)


	4th Qtr 2011				4th Qtr 2010					Inc/(Dec)			% Change
Metal Coil Coating
Total Sales		56,425	16	%		46,884		16	%		9,541			20	%
Less: Intersegment sales		35,030				29,433					5,597			19	%

Third Party Sales		21,395	8	%		17,451		7	%		3,944			23	%

Operating Income (Loss)		4,903	23	%		3,754		22	%		1,149			31	%

Metal Components
Total		127,925	36	%		118,475		39	%		9,450			8	%
Less: Intersegment sales		23,758				24,329					(571	)		-2	%

Third Party Sales		104,167	35	%		94,146		39	%		10,021			11	%

Operating Income (Loss)		6,345	6	%		8,820		9	%		(2,475	)		-28	%

Engineered Building Systems
Total		162,346	48	%		133,959		45	%		28,387			21	%
Less: Intersegment sales		6,120				4,102					2,018			49	%

Third Party Sales		156,226	57	%		129,857		54	%		26,369			20	%

Operating Income (Loss)		10,698	7	%		(3,859	)	-3	%		14,557			377	%

Consolidated
Total		346,696	100	%		299,318		100	%		47,378			16	%
Less: Intersegment sales		64,908				57,864					7,044			12	%

Third Party Sales		281,788	100	%		241,454		100	%		40,334			17	%
		—
Operating Income (Loss)		7,784	3	%		(3,774	)	-2	%		11,558			306	%


	YTD 4th Qtr 2011					YTD 4th Qtr 2010					Inc/(Dec)			% Change
Metal Coil Coating
Total Sales		201,098		17	%		181,874		17	%		19,224			11	%
Less: Intersegment sales		125,704					116,634					9,070			8	%

Third Party Sales		75,394		8	%		65,240		7	%		10,154			16	%

Operating Income (Loss)		17,944		24	%		16,166		25	%		1,778			11	%

Metal Components
Total		437,655		37	%		415,857		38	%		21,798			5	%
Less: Intersegment sales		83,858					87,780					(3,922	)		-4	%

Third Party Sales		353,797		37	%		328,077		38	%		25,720			8	%

Operating Income (Loss)		20,643		6	%		26,791		8	%		(6,148	)		-23	%

Engineered Building Systems
Total		548,594		46	%		490,746		45	%		57,848			12	%
Less: Intersegment sales		18,208					13,537					4,671			35	%

Third Party Sales		530,386		55	%		477,209		55	%		53,177			11	%

Operating Income (Loss)		13,011		2	%		(18,438	)	-4	%		31,449			171	%

Consolidated
Total		1,187,347		100	%		1,088,477		100	%		98,870			9	%
Less: Intersegment sales		227,770					217,951					9,819			5	%

Third Party Sales		959,577		100	%		870,526		100	%		89,051			10	%
		—
Operating Income (Loss)		(1,627	)	0	%		(24,587	)	-3	%		22,960			93	%

CONTACT:

NCI Building Systems, Inc. Investor Relations

281-897-7788

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