Exhibit 99.1

 

 

NCI Building Systems Reports
Third Quarter Fiscal 2013 Results

 

 

HOUSTON, September 4, 2013 -- NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the third quarter ended July 28, 2013.

 

Third Quarter Highlights:

·

Sales rose 6% to $317.2 million, compared to the same quarter last fiscal year, and increased 8%, sequentially.

·

Gross profit increased 2% to $67.0 million from $65.6 million in the comparable quarter last year, and rose 10% from $60.8 million in the previous quarter.

·

Adjusted EBITDA was $17.0 million, declining from $18.9 million in the third quarter of last fiscal year, but increasing from $10.6 million in the second quarter of 2013.

·

Adjusted net income, which excludes the impact of the cost related to the early extinguishment of the previous term loan, was $0.02 per diluted common share.

·

Quarter-end backlog, adjusted to include Metl-Span, was up slightly to $319.2 million compared to $311.7 million for the same period in fiscal 2012 and $317.1 million in the second quarter of 2013.

 

Norman C. Chambers, Chairman, President and Chief Executive, commented, "We generated sequential improvement in our operating results in the third quarter despite a lack of meaningful pick-up in demand for nonresidential construction. The absence of any strong economic momentum continues to delay many projects from moving to the construction phase. As a result, our overall volumes are lagging our internal expectations as most segments of nonresidential construction continue to be impacted by flat-to-lower demand.

 

"Results across our end-markets and product categories continue to be mixed. We produced strong year-over-year gains in component sales to the commercial and industrial markets. However, they were more than offset by continued soft demand in the agricultural market. Our Coatings group once again performed well, delivering top-line growth and improved profitability both sequentially and compared to last year’s third quarter. The Buildings group was impacted by continued pricing pressure, lower margin product mix and low fixed cost leverage.

 

"With ten consecutive months of growth, the Architecture Billings C&I Index and McGraw-Hill data continue to point toward a pick-up in nonresidential construction activity over the next six to nine months. However, our backlog is up only slightly both sequentially and compared to last year’s third quarter. We believe that as demand picks up, we will benefit from increasing levels of operating leverage and improved product mix. However, we are not waiting for market tailwinds to improve our performance. The ongoing process of improving efficiencies that began in 2009 with the rationalization of our manufacturing plants has improved our visibility of areas that require attention. We are taking additional actions to strengthen our customer service efforts and to improve the productivity and quality of our manufacturing operations."

 

 

Third Quarter 2013 Results

 

For the third quarter, sales grew 6.3% to $317.2 million from $298.5 million in last year's third quarter mainly due to the full quarter contribution from the Company’s June 2012 Metl-Span acquisition. On a sequential basis, revenues were up 8.1% from $293.4 million in the second quarter.

 

Gross profit increased 2.2% to $67.0 million from $65.6 million in the third quarter of 2012. Gross profit margin narrowed to 21.1% from 22.0% in the third quarter of last year due to continued pricing pressure and increased manufacturing costs due to ongoing investments in strategic initiatives, including upgrading systems and manufacturing processes. The Company also incurred ramp-up costs at the Middletown, Ohio coating and Mattoon, Illinois insulated metal panel facilities.

 

 

Engineering, selling, general and administrative (ESG&A) expenses were $62.8 million, up from $55.6 million in the third quarter of 2012, primarily due to the acquisition effect of Metl-Span and investments in strategic initiatives. As a percentage of revenues, ESG&A was 19.8% in the 2013 third quarter compared to 18.6% in the prior year’s period and 21.4% in the 2013 second quarter. The increase in expenditures was concentrated on improvements in our distribution channels, manufacturing capabilities and customer responsiveness as well as the incremental costs associated with the ramp-up of Middletown and totaled approximately $2.3 million of ESG&A expenses this quarter with the effect of the Metl-Span acquisition adding another $3.9 million.

 

Due to lower than anticipated volumes, competitive pricing and the incremental costs associated with strategic initiatives, operating income declined to $4.3 million in the 2013 third quarter compared to $7.0 million in last year’s third quarter.

 

As noted above, Adjusted EBITDA, a non-GAAP measure, defined as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, in accordance with the Company's credit agreement fell to $17.0 million compared to $18.9 million reported in last year’s third quarter but increased 61% from $10.6 million in this year’s second quarter. Please see the reconciliation of Adjusted EBITDA to net income in the Company’s financial statements.

 

During the quarter, we incurred a predominantly non-cash charge of $21.5 million in debt extinguishment costs ($13.2 million after tax, or $0.21 per diluted common share) associated with amending and extending our credit agreement. The amendment extends the maturity until June 2019 and substantially reduces our borrowing costs, which should result in annual savings of nearly $12.0 million.

 

For the third quarter of 2013, the Company reported a net loss of $12.2 million, or $0.19 per diluted common share. Excluding the impact of the debt extinguishment costs, NCI generated adjusted net income of $1.0 million, or $0.02 per diluted common share. The weighted average number of common shares used in the calculation of third quarter 2013 loss per diluted common share was 64.2 million. In last year's third quarter, the Company reported a net loss applicable to common shares of $52.1 million, which included a non-cash, one-time convertible preferred stock amendment charge of $48.8 million related to the elimination of NCI’s quarterly dividend on its convertible preferred shares, as well as $2.7 million in net acquisition related expenses and $4.0 million in net debt extinguishment costs associated with the Metl-Span acquisition. Exclusive of these charges, net income applicable to common shares would have been $0.9 million, or $0.05 per diluted common share. The weighted average number of common shares used in the calculation of third quarter 2012 loss per diluted common share was 19.0 million.

 

Inventory levels increased 19.4% over the same period of the prior year to $135.2 million due to lower demand than anticipated in the third quarter and increased purchases ahead of announced steel price increases. Annualized inventory turnover was 7.5 turns for the third quarter compared to 8.3 turns in last year's third quarter and 7.5 turns in the second quarter of fiscal 2013.

 

Capital expenditures were $17.5 million for the first nine months of 2013. The majority of our expenditures were targeted at upgrading facilities and systems. The projects include refurbishing the Middletown coating facility, integrating Metl-Span, enhancing the Coatings group’s manufacturing capabilities and launching system improvements in the Buildings group. Year-to-date, the net cash used in operating activities was $9.1 million.

 

 

Third Quarter 2013 Segment Performance

 

The Coatings group third party sales grew 18.6% year-over-year and 5.2% sequentially. Operating income increased to $5.5 million in the third quarter of 2013 from $5.1 million in the third quarter of last fiscal year and $4.8 million in the 2013 second quarter. The performance of the group was led by HVAC, lighting fixtures, and appliance sales and strong shipments of heavy gauge packages to construction markets. On August 6, two ovens in our Jackson, Mississippi plant were damaged in a fire caused by an exhaust fan failure. There were no injuries or damage to the high value assets in the plant. Customer orders were transferred to our Ohio and Georgia facilities and we did not experience meaningful delays in the scheduled deliveries. In the fiscal fourth quarter, we anticipate incurring between $0.5 and $1.0 million for incremental operating costs as we temporarily re-route customer and internal orders. Over the next year, we anticipate recouping the majority of those costs from our insurance carrier.

 

 

The Components group produced a 17.2% increase in third-party sales and an 8.7% increase sequentially. Operating income declined to $8.1 million from $9.4 million in the same quarter last fiscal year and rose from $5.1 million in the second quarter of 2013. The year-over-year decline in operating income was due to the added costs associated with the integration of Metl-Span, the ramping-up of the recently renovated Mattoon, Illinois plant, as well as identifiable costs associated with investments in sales and marketing resources and systems. These costs were partially offset by increased volume in insulated metal panels as a result of the Metl-Span acquisition.

 

The Buildings group’s total sales were down 3.6% compared to last year’s third quarter, and third-party sales declined 3.5%. Sequentially, third party sales grew 8.0%. Operating income declined to $6.1 million in the 2013 third quarter, compared to $9.1 million in the comparable quarter last year and rose from $4.2 million in the 2013 second quarter. The performance of the Buildings group was impacted by continued pricing pressures in the low demand environment as well as lower leverage on fixed costs.

 

For additional information please see the CFO Commentary at www.ncigroup.com under the investors tab.

 

 

Market Commentary

 

Leading indicators for nonresidential construction activity remain positive. The economy has been experiencing a strong residential recovery, which usually precedes a nonresidential recovery, as nonresidential vacancy rates decline and the labor markets continue to improve. However, the construction economy in the third quarter was suppressed by the sluggishness of the broader economy. In the third quarter of NCI’s fiscal 2013, low-rise nonresidential construction starts (measured in square feet) decreased 10.7% from the comparable period in fiscal 2012, as reported by McGraw-Hill.

 

The American Institute of Architects’ Architecture Billing Index (ABI) remained in growth mode in July at 52.7, jumping one full point from 51.6 in June and essentially flat with May at 52.9. The new projects inquiry index was up sharply in July to 66.4 from 62.6 in June.

 

The latest Fed Senior Loan Officer Survey shows the demand for nonresidential loans strengthening in combination with the continued easing of lending standards. This favorable environment supports the improved growth in real nonresidential investment that for the last calendar quarter grew 4.6% year-over-year.

 

 

Summary/Outlook

 

“Our performance so far this year has been challenged mainly due to lower volumes and pricing,” noted Mr. Chambers. “The recent additions to backlog in the period continue to reflect a number of larger projects and an increased level of design/build projects with better margins. Operationally, the Components group delivered significant growth in Commercial/Industrial sector sales to NCI’s largest OEM customers and insulated metal panels. The Coatings group continues to benefit from higher volumes and expanding margins. In addition, the Middletown, Ohio light gauge paint line has ramped production and the facility remains on track to become profitable in the fourth fiscal quarter of 2013. We have also announced a price increase for several of our product lines.

 

Given that low-rise nonresidential construction starts have declined in the first nine months of fiscal 2013, we think it is unlikely the market will recover sufficiently to post annual growth in volume. We remain positive that the industry, during the next few years, will return to the 40 year trend of 1.3 billion square feet of new construction starts. It is for that reason that we continue to invest in our business during the early stage of economic recovery to enhance our earnings and growth as the economy recovers,” Mr. Chambers concluded.

 

 

Conference Call Information

 

The NCI Building Systems, Inc. third quarter conference call is scheduled for Wednesday, September 4, 2013, at 5:00 PM ET. Please dial 1-480-629-9692 or 1-877-941-8609 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.ncigroup.com. To access the taped replay, please dial 1-303-590-3030 or 1-800-406-7325 and the passcode 4636317# when prompted. The taped replay will be available two hours after the call through September 18, 2013.

 

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.

 

 

Contact:

 

Layne de Alvarez

Director, Investor Relations

281-897-7710

 

 

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," "guidance," "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, as a result, 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; ability to integrate Metl-Span with the Company's business or to realize the anticipated benefits of such acquisition; 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. The Company's SEC filings, including our most recent reports on Form 10-K, particularly under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2012, 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 to reflect any changes in its expectations.

 

 

 

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

		Fiscal Three Months Ended								Fiscal Nine Months Ended
		July 28,				July 29,				July 28,				July 29,
		2013				2012				2013				2012
Sales		$	317,201			$	298,488			$	908,184			$	792,322
Cost of sales			250,163				232,903				719,440				615,113
Gross profit			67,038				65,585				188,744				177,209
			21.1%				22.0%				20.8%				22.4%
Engineering, selling, general and administrative expenses			62,761				55,605				186,014				156,110
Acquisition-related costs			-				2,946				-				4,836
Income from operations			4,277				7,034				2,730				16,263
Interest income			29				44				101				100
Interest expense			(5,159	)			(4,203	)			(17,624	)			(10,589	)
Debt extinguishment costs, net			(21,491	)			(6,437	)			(21,491	)			(6,437	)
Other income (expense), net			219				(368	)			859				11
Loss before income taxes			(22,125	)			(3,930	)			(35,425	)			(652	)
Provision (benefit) for income taxes			(9,933	)			(663	)			(14,264	)			705
			44.9%				16.9%				40.3%				-108.1%
Net loss		$	(12,192	)		$	(3,267	)		$	(21,161	)		$	(1,357	)
Convertible preferred stock dividends and accretion			-				-				-				16,352
Convertible preferred stock beneficial conversion feature			-				-				-				11,878
Convertible preferred stock amendment			-				48,803				-				48,803
Net loss applicable to common shares		$	(12,192	)		$	(52,070	)		$	(21,161	)		$	(78,390	)
Loss per common share:
Basic		$	(0.19	)		$	(2.74	)		$	(0.62	)		$	(4.16	)
Diluted		$	(0.19	)		$	(2.74	)		$	(0.62	)		$	(4.16	)
Weighted average number of common shares outstanding:
Basic			64,217				18,997				34,290				18,830
Diluted			64,217				18,997				34,290				18,830
Increase in sales			6.3%								14.6%
Gross profit percentage			21.1%				22.0%				20.8%				22.4%
Engineering, selling, general and administrative
expenses percentage			19.8%				18.6%				20.5%				19.7%

 

 

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		July 28,				October 28,
		2013				2012
		(Unaudited)
ASSETS
Cash and cash equivalents		$	16,149			$	55,158
Restricted cash			-				1,375
Accounts receivable, net			118,905				133,475
Inventories, net			135,201				106,015
Deferred income taxes			36,933				21,926
Income tax receivable			2,068				549
Prepaid expenses and other			21,709				16,864
Investments in debt and equity securities, at market			4,601				4,076
Assets held for sale			2,879				2,397
Total current assets			338,445				341,835
Property, plant and equipment, net			262,118				268,875
Goodwill			75,226				76,746
Intangible assets, net			49,989				53,028
Deferred financing costs, net			4,538				11,000
Total assets		$	730,316			$	751,484
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current portion of long-term debt		$	2,384			$	2,500
Note payable			835				515
Accounts payable			103,707				113,177
Accrued compensation and benefits			40,641				43,066
Accrued interest			255				345
Other accrued expenses			56,316				60,455
Total current liabilities			204,138				220,058
Long-term debt, net			240,991				234,444
Deferred income taxes			35,592				35,565
Other long-term liabilities			11,866				11,995
Total long-term liabilities			288,449				282,004
Series B cumulative convertible participating preferred stock			-				619,950
Common stock			1,466				925
Additional paid-in capital			634,011				4,991
Accumulated deficit			(391,011	)			(369,850	)
Accumulated other comprehensive loss			(6,645	)			(6,568	)
Treasury stock, at cost			(92	)			(26	)
Stockholders' equity (deficit)			237,729				(370,528	)
Total liabilities and stockholders' equity (deficit)		$	730,316			$	751,484

 

 

 

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

		Fiscal Nine Months Ended
		July 28, 2013				July 29, 2012
Cash flows from operating activities:
Net loss		$	(21,161	)		$	(1,357	)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization			29,991				21,992
Share-based compensation expense			10,335				6,183
Non-cash debt extinguishment costs			17,582				6,436
(Gain) loss on sale of property, plant and equipment			(38	)			20
Provision for doubtful accounts			1,424				(409	)
Provision (benefit) from deferred income taxes			(14,865	)			86
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable			13,146				5,143
Inventories			(29,186	)			(16,330	)
Income tax receivable			(1,859	)			(146	)
Prepaid expenses and other			(2,624	)			(1,610	)
Accounts payable			(5,561	)			(3,072	)
Accrued expenses			(5,160	)			3,281
Other, net			(1,167	)			28
Net cash (used in) provided by operating activities			(9,143	)			20,245
Cash flows from investing activities:
Acquisition, net of cash acquired			-				(140,991	)
Capital expenditures			(17,545	)			(22,288	)
Proceeds from sale of property, plant and equipment			-				55
Net cash used in investing activities			(17,545	)			(163,224	)
Cash flows from financing activities:
Proceeds from stock options exercised			674				-
Decrease in restricted cash			1,375				1,461
Proceeds on term loan			-				237,499
Payments on term loan			(10,375	)			(131,325	)
Payments on note payable			(1,239	)			(1,193	)
Proceeds from Amended ABL Facility			5,000				-
Payment of financing costs			(6,215	)			(8,679	)
Excess tax benefits from share-based compensation arrangements			974				1
Purchase of treasury stock			(2,438	)			(1,524	)
Net cash (used in) provided by financing activities			(12,244	)			96,240
Effect of exchange rate changes on cash and cash equivalents			(77	)			75
Net decrease in cash and cash equivalents			(39,009	)			(46,664	)
Cash and cash equivalents at beginning of period			55,158				78,982
Cash and cash equivalents at end of period		$	16,149			$	32,318

 

 

 

NCI Building Systems, Inc.

Business Segments

(Unaudited)

(In thousands)

 

		Three Months Ended								Three Months Ended								$				%
		July 28, 2013								July 29, 2012								Inc/(Dec)				Change
						% of								% of
						Total								Total
Sales:						Sales								Sales
Metal coil coating		$	56,478				15			$	54,342				15			$	2,136				3.9%
Metal components			161,008				43				142,092				39				18,916				13.3%
Engineered building systems			158,369				42				164,265				46				(5,896	)			-3.6%
Total sales			375,855				100				360,699				100				15,156				4.2%
Less: Intersegment sales			58,654				16				62,211				17				(3,557	)			-5.7%
Total net sales		$	317,201				84			$	298,488				83			$	18,713				6.3%

 

						% of								% of
Operating income (loss):						Sales								Sales
Metal coil coating		$	5,521				10			$	5,112				9			$	409				8.0%
Metal components			8,054				5				9,372				7				(1,318	)			-14.1%
Engineered building systems			6,123				4				9,078				6				(2,955	)			-32.6%
Corporate			(15,421	)			-				(16,528	)			-				1,107				6.7%
Total operating income (loss) (% of sales)		$	4,277				1			$	7,034				2			$	(2,757	)			-39.2%

 

		Nine Months Ended								Nine Months Ended								$				%
		July 28, 2013								July 29, 2012								Inc/(Dec)				Change
						% of								% of
						Total								Total
Sales:						Sales								Sales
Metal coil coating		$	155,539				15			$	152,264				16			$	3,275				2.2%
Metal components			462,075				43				354,586				37				107,489				30.3%
Engineered building systems			454,030				42				453,278				47				752				0.2%
Total sales			1,071,644				100				960,128				100				111,516				11.6%
Intersegment sales			163,460				15				167,806				17				(4,346	)			-2.6%
Total net sales		$	908,184				85			$	792,322				83			$	115,862				14.6%

 

						% of								% of
Operating income (loss):						Sales								Sales
Metal coil coating		$	15,818				10			$	15,304				10			$	514				3.4%
Metal components			19,263				4				23,931				7				(4,668	)			-19.5%
Engineered building systems			14,360				3				23,414				5				(9,054	)			-38.7%
Corporate			(46,711	)			-				(46,386	)			-				(325	)			-0.7%
Total operating income (loss) (% of sales)		$	2,730				0			$	16,263				2			$	(13,533	)			-83.2%

 

 

 

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 JULY 28, 2013 AND JULY 29, 2012

(Unaudited)

(In thousands)

 

 

		For the Three Months Ended July 28, 2013
		Metal Coil Coating				Metal Components				Engineered Building Systems				Corporate				Consolidated
Operating income (loss), GAAP basis (2)		$	5,521			$	8,054			$	6,123			$	(15,421	)		$	4,277

 

 

		For the Three Months Ended July 29, 2012
		Metal Coil Coating				Metal Components				Engineered Building Systems				Corporate				Consolidated
Operating income (loss), GAAP basis		$	5,112			$	9,372			$	9,078			$	(16,528	)		$	7,034
Acquisition-related costs			-				-				-				2,946				2,946
"Adjusted" operating income (loss) (1)		$	5,112			$	9,372			$	9,078			$	(13,582	)		$	9,980

 

(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 statement of operations.

(2)

The Company did not incur any special charges during the three months ended July 28, 2013.

 

 

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 NINE MONTHS ENDED JULY 28, 2013 AND JULY 29, 2012

(Unaudited)

(In thousands)

 

		For the Nine Months Ended July 28, 2013
		Metal Coil Coating				Metal Components				Engineered Building Systems				Corporate				Consolidated
Operating income (loss), GAAP basis (2)		$	15,818			$	19,263			$	14,360			$	(46,711	)		$	2,730

 

 

		For the Nine Months Ended July 29, 2012
		Metal Coil Coating				Metal Components				Engineered Building Systems				Corporate				Consolidated
Operating income (loss), GAAP basis		$	15,304			$	23,931			$	23,414			$	(46,386	)		$	16,263
Acquisition-related costs			-				-				-				4,836				4,836
Actuarial determined general liability self-insurance charges (recovery)			-				(1,929	)			-				-				(1,929	)
Executive retirement			-				-				-				508				508
"Adjusted" operating income (loss) (1)		$	15,304			$	22,002			$	23,414			$	(41,042	)		$	19,678

 

(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 statement of operations.

(2)

The Company did not incur any special charges during the nine months ended July 28, 2013.

 

 

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)

 

		4th Qtr				1st Qtr				2nd Qtr				3rd Qtr				Trailing 12 Months
		October 28,				January 27,				April 28,				July 28,				July 28,
		2012				2013				2013				2013				2013
Net income (loss)		$	6,270			$	(3,627	)		$	(5,342	)		$	(12,192	)		$	(14,891	)
Add:
Depreciation and amortization			10,355				9,122				8,809				9,066				37,352
Consolidated interest expense, net			6,226				6,244				6,149				5,130				23,749
Provision (benefit) for income taxes			3,379				(1,825	)			(2,506	)			(9,933	)			(10,885	)
Acquisition-related costs			153				-				-				-				153
Debt extinguishment costs, net			-				-				-				21,491				21,491
Non-cash charges:
Stock-based compensation			3,116				3,442				3,445				3,448				13,451
Asset impairments			13				-				-				-				13
Embedded derivative			(5	)			(5	)			(4	)			(50	)			(64	)
Adjusted EBITDA (1)		$	29,507			$	13,351			$	10,551			$	16,960			$	70,369

 

 

		4th Qtr				1st Qtr				2nd Qtr				3rd Qtr				Trailing 12 Months
		October 30,				January 29,				April 29,				July 29,				July 29,
		2011				2012				2012				2012				2012
Net income (loss)		$	3,411			$	589			$	1,321			$	(3,267	)		$	2,054
Add:
Depreciation and amortization			6,753				6,158				5,841				7,248				26,000
Consolidated interest expense, net			3,685				3,296				3,034				4,159				14,174
Provision (benefit) for income taxes			398				426				942				(663	)			1,103
Acquisition-related costs			-				396				1,494				2,946				4,836
Debt extinguishment costs, net			-				-				-				6,437				6,437
Cash restructuring charges			283				-				-				-				283
Executive retirement			-				-				508				-				508
Non-cash charges:
Stock-based compensation			1,776				1,972				2,119				2,090				7,957
Asset impairments (recoveries)			1,214				-				-				(22	)			1,192
Embedded derivative			(6	)			(5	)			(6	)			(5	)			(22	)
Adjusted EBITDA (1)		$	17,514			$	12,832			$	15,253			$	18,923			$	64,522

 

(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 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 Nine Months Ended
		July 28,				July 29,				July 28,				July 29,
		2013				2012				2013				2012
Net loss per diluted common share, GAAP basis			(0.19	)			(2.74	)			(0.62	)			(4.16	)
Convertible preferred stock beneficial conversion feature and amendment			-				2.57				-				3.22
Acquisition-related costs, net of taxes			-				0.14				-				0.20
Debt extinguishment costs, net of taxes			0.21				0.21				0.39				0.21
Actuarial determined general liability self-insurance charges (recovery), net of taxes			-				-				-				(0.06	)
Executive retirement, net of taxes			-				-				-				0.02
Adjustment for participating securities interest in earnings, net of taxes			-				(0.13	)			-				-
"Adjusted" net income (loss) per diluted common share (1)			0.02				0.05				(0.23	)			(0.57	)

 

 

		Fiscal Three Months Ended								Fiscal Nine Months Ended
		July 28,				July 29,				July 28,				July 29,
		2013				2012				2013				2012
Net loss applicable to common shares, GAAP basis		$	(12,192	)		$	(52,070	)		$	(21,161	)		$	(78,390	)
Convertible preferred stock beneficial conversion feature and amendment			-				48,803				-				60,681
Acquisition-related costs, net of taxes			-				2,683				-				3,847
Debt extinguishment costs, net of taxes			13,238				3,965				13,238				3,965
Actuarial determined general liability self-insurance charges (recovery), net of taxes			-				-				-				(1,188	)
Executive retirement, net of taxes			-				-				-				313
Adjustment for participating securities interest in earnings, net of taxes			-				(2,458	)			-				-
"Adjusted" net income (loss) applicable to common shares (1)		$	1,046			$	923			$	(7,923	)		$	(10,772	)

 

(1)

The Company discloses a tabular comparison of "Adjusted" net income (loss) per diluted common share and "Adjusted" net income (loss) 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 (loss) per diluted common share and "Adjusted" net income (loss) applicable to common shares should not be considered in isolation or as a substitute for net loss per diluted common share and net loss applicable to common shares as reported on the face of our statement of operations.

 

 

 

NCI Building Systems, Inc.

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

(Unaudited)

(In thousands)

 

																						%
		3rd Qtr 2013								3rd Qtr 2012								Inc/(Dec)				Change
Metal Coil Coating
Total Sales			56,478				15%				54,342				15%				2,136				3.9%
Less: Intersegment sales			33,450								34,927								(1,477	)			-4.2%
Third Party Sales			23,028				7%				19,415				7%				3,613				18.6%
Operating Income (Loss)			5,521				24%				5,112				26%				409				8.0%
Metal Components
Total Sales			161,008				43%				142,092				39%				18,916				13.3%
Less: Intersegment sales			20,567								22,278								(1,711	)			-7.7%
Third Party Sales			140,441				44%				119,814				40%				20,627				17.2%
Operating Income (Loss)			8,054				6%				9,372				8%				(1,318	)			-14.1%
Engineered Building Systems
Total Sales			158,369				42%				164,265				46%				(5,896	)			-3.6%
Less: Intersegment sales			4,637								5,006								(369	)			-7.4%
Third Party Sales			153,732				49%				159,259				53%				(5,527	)			-3.5%
Operating Income (Loss)			6,123				4%				9,078				6%				(2,955	)			-32.6%
Consolidated
Total Sales			375,855				100%				360,699				100%				15,156				4.2%
Intersegment			58,654								62,211								(3,557	)			-5.7%
Third Party Sales			317,201				100%				298,488				100%				18,713				6.3%
Operating Income (Loss)			4,277				1%				7,034				2%				(2,757	)			-39.2%

 

 

		YTD								YTD												%
		3rd Qtr 2013								3rd Qtr 2012								Inc/(Dec)				Change
Metal Coil Coating
Total Sales			155,539				15%				152,264				16%				3,275				2.2%
Less: Intersegment sales			91,403								93,039								(1,636	)			-1.8%
Third Party Sales			64,136				7%				59,225				7%				4,911				8.3%
Operating Income (Loss)			15,818				25%				15,304				26%				514				3.4%
Metal Components
Total Sales			462,075				43%				354,586				37%				107,489				30.3%
Less: Intersegment sales			55,925								62,152								(6,227	)			-10.0%
Third Party Sales			406,150				45%				292,434				37%				113,716				38.9%
Operating Income (Loss)			19,263				5%				23,931				8%				(4,668	)			-19.5%
Engineered Building Systems
Total Sales			454,030				42%				453,278				47%				752				0.2%
Less: Intersegment sales			16,132								12,615								3,517				27.9%
Third Party Sales			437,898				48%				440,663				56%				(2,765	)			-0.6%
Operating Income (Loss)			14,360				3%				23,414				5%				(9,054	)			-38.7%
Consolidated
Total Sales			1,071,644				100%				960,128				100%				111,516				11.6%
Less: Intersegment sales			163,460								167,806								(4,346	)			-2.6%
Third Party Sales			908,184				100%				792,322				100%				115,862				14.6%
Operating Income (Loss)			2,730				0%				16,263				2%				(13,533	)			-83.2%