UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
May 26, 2004
(Date of Report)
NCI BUILDING SYSTEMS, INC.
| Delaware | 1-14315 | 76-0127701 | ||
| (State or other | (Commission | (I.R.S. Employer | ||
| jurisdiction of | File Number) | Identification No.) | ||
| incorporation) |
10943 North Sam Houston Parkway West
Houston, Texas 77064
(Address of principal executive offices)
(281) 897-7788
(Registrant’s telephone number,
including area code)
| Item 12. Results of Operations and Financial Condition. | ||||||||
| SIGNATURES | ||||||||
| Attachment I | ||||||||
Item 12. Results of Operations and Financial Condition.
The information in this Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
On May 26, 2004, NCI Building Systems, Inc. issued a press release announcing its financial results for its second quarter ended May 1, 2004. A copy of the press release is included herewith as Attachment I.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NCI BUILDING SYSTEMS, INC. (Registrant) |
||||
| By: | /s/ Robert J. Medlock | |||
| Robert J. Medlock, Executive Vice President | ||||
| and Chief Financial Officer | ||||
| Dated: May 26, 2004 | ||||
Attachment I
[NCI letterhead]
Contact:
|
Robert J. Medlock | |
| Executive Vice President & | ||
| Chief Financial Officer | ||
| (281) 897-7788 |
NCI BUILDING SYSTEMS REPORTS SECOND QUARTER EARNINGS OF $0.39 PER
DILUTED SHARE, UP FROM $0.11 FOR THE SECOND QUARTER OF FISCAL 2003
HOUSTON (May 26, 2004) – NCI Building Systems, Inc. (NYSE: NCS) today announced its financial results for its second quarter ended May 1, 2004. Sales for the quarter increased 28% to $254.7 million from $199.2 million for the second quarter of fiscal 2003. Net income rose 281% to $7.7 million from $2.0 million. Net income per diluted share for the second quarter of fiscal 2004 was $0.39, an increase of 255% from $0.11 for the second quarter of fiscal 2003.
Sales for the first six months of fiscal 2004 rose 16% to $470.1 million from $407.1 million for the same period in fiscal 2003. Net income increased 130% to $13.5 million for first half of fiscal 2004 from $5.9 million for the first half of fiscal 2003, while net income per diluted share grew 119% to $0.68 from $0.31.
“NCI produced strong profitable growth for the second quarter, primarily due to better-than-expected volume in our metal components and coil coating businesses,” said A.R. Ginn, Chairman and Chief Executive Officer. “Our volume expansion was driven by an improving market for repairs and retrofit products and increasing new non-residential construction, both of which reflect a stronger economic environment relative to fiscal 2003.
“We achieved these results at a time when our industry faced rapidly increasing steel prices and scarcity of steel supplies. While we believe that our second quarter volume was positively affected by customers ordering in advance of announced price increases, steel availability limited our ability to respond fully to every opportunity for incremental sales during the quarter. As we discussed in our first quarter earnings release, we worked closely with our existing customers during the second quarter to mitigate the impact of rising steel prices. With the exception of our Buildings Group, we have been able to pass most of the steel price increases through to customers. Although volume-related operating leverage in the Components Group generated expansion in our operating profit for the quarter, our gross profit percentage declined from the first quarter of 2004 because of our efforts to assist our customers in weathering the rising steel prices. The Buildings Group profitability was negatively impacted by the workout of lower priced backlog during our second fiscal quarter, which limited our ability to pass through steel price increases except on isolated buildings. We believe we completed approximately 50% of the lower-priced backlog during the quarter. Due to contract renegotiations of the remaining backlog and new orders with current pricing now in production, buildings margins should improve during the third quarter. Second quarter volume increased in this business on a comparable-quarter basis, but the growth rate was lower than our component business because of our project selectivity and our refusal to chase incremental business through price concessions.
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NCI Building Systems Reports Second Quarter Results
Page 2
May 26, 2004
“We are encouraged by signs that steel price increases are abating. Thus far, these higher prices do not appear to have had a material negative impact on demand for steel for non-residential construction, and a more stable pricing environment will produce more normalized pricing risk for NCI. Consequently, as we begin the seasonally strongest part of our fiscal year, our primary concern remains the availability of steel, which, because of worldwide supply and demand pressures, may remain tight for a significant period. However, due to our strong position of industry leadership and our long-term supplier relationships, we continue to expect to procure the steel we need to fulfill our customer obligations.
“Our financial guidance for the third quarter of fiscal 2004 recognizes the potential that customer orders in advance of second quarter price increases will affect our volume for the third quarter. While we clearly expect to benefit during the third quarter from the seasonal increase in construction activity relative to the first half of fiscal 2004, our earnings visibility continues to be clouded by the uncertain impact of steel price volatility. In addition, our guidance assumes we complete our previously announced refinancing of our senior credit facility, and the subsequent redemption of our senior subordinated notes, and, as a result, will incur costs of approximately $9.8 million, or $0.28 per diluted share after-tax, for the third quarter. At today’s interest rates, the restructuring of NCI’s debt will reduce our interest payments by approximately $8 million annually, depending on our average loan balance. Based on these and other assumptions, we are establishing our guidance for earnings per diluted share for the third quarter of fiscal 2004, including the impact of the proposed refinancing, in a range of $0.14 to $0.18.” Without the impact of the debt refinancing the guidance for the third quarter earnings per diluted share would have been $0.42 to $0.46 as compared to $0.36 per diluted share in the third quarter of fiscal 2003.
Mr. Ginn concluded, “Our confidence in achieving our financial targets for the remainder of fiscal 2004 is supported by increasing steel price stability and the ongoing economic recovery. We believe our second quarter results provide clear evidence of our ability in such an environment to leverage our strong market position to achieve additional significant profitable growth.”
NCI Building Systems, Inc. is one of North America’s largest integrated manufacturers of metal products for the nonresidential building industry. The Company operates manufacturing and distribution facilities located in 16 states and Mexico.
Some statements contained in this release are “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Actual performance of the Company may differ from that projected in such statements as a result of factors such as industry cyclicality and seasonality, adverse weather conditions, fluctuations in customer demand and order patterns, raw material pricing, competitive activity and pricing pressure and general economic conditions affecting the construction industry. Investors should refer to statements regularly filed by the Company in its annual report to the Securities and Exchange Commission on Form 10-K, its quarterly reports to the SEC on Form 10-Q and its current reports to the SEC on Form 8-K and other filings with the SEC for a discussion of factors which could affect the Company’s operations and forward-looking statements made in this communication. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in expectations.
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NCI Building Systems Reports Second Quarter Results
Page 3
May 26, 2004
NCI BUILDING SYSTEMS, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| May 1, | May 3, | May 1, | May 3, | |||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Sales |
$ | 254,686 | $ | 199,198 | $ | 470,092 | $ | 407,062 | ||||||||
Cost of sales |
197,068 | 157,598 | 362,257 | 321,581 | ||||||||||||
Gross profit |
57,618 | 41,600 | 107,835 | 85,481 | ||||||||||||
Selling, general and administrative
expenses |
40,668 | 34,052 | 76,939 | 66,429 | ||||||||||||
Income from operations |
16,950 | 7,548 | 30,896 | 19,052 | ||||||||||||
Interest expense |
(4,304 | ) | (4,632 | ) | (8,882 | ) | (9,759 | ) | ||||||||
Other income, net |
314 | 622 | 755 | 703 | ||||||||||||
Income before income taxes |
12,960 | 3,538 | 22,769 | 9,996 | ||||||||||||
Provision for income taxes |
5,267 | 1,520 | 9,308 | 4,136 | ||||||||||||
Net income |
$ | 7,693 | $ | 2,018 | $ | 13,461 | $ | 5,860 | ||||||||
Net income per share: |
||||||||||||||||
Basic |
$ | 0.39 | $ | 0.11 | $ | 0.69 | $ | 0.31 | ||||||||
Diluted |
$ | 0.39 | $ | 0.11 | $ | 0.68 | $ | 0.31 | ||||||||
Average shares outstanding: |
||||||||||||||||
Basic |
19,675 | 18,778 | 19,487 | 18,736 | ||||||||||||
Diluted |
19,920 | 18,881 | 19,744 | 18,907 | ||||||||||||
Increase in sales |
27.9 | % | 15.5 | % | ||||||||||||
Increase in diluted earnings
per share |
254.5 | % | 119.4 | % | ||||||||||||
Gross profit percentage |
22.6 | % | 20.9 | % | 22.9 | % | 21.0 | % | ||||||||
Selling, general and administrative
expense percentage |
15.9 | % | 17.1 | % | 16.3 | % | 16.3 | % | ||||||||
Income from operations percentage |
6.7 | % | 3.8 | % | 6.6 | % | 4.7 | % | ||||||||
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NCI Building Systems Reports Second Quarter Results
Page 4
May 26, 2004
NCI BUILDING SYSTEMS, INC.
COMPUTATION OF EARNINGS BEFORE TAXES, INTEREST, DEPRECIATION,
AMORTIZATION AND OTHER NONCASH ITEMS (“ADJUSTED EBITDA”)
(Unaudited)
(In thousands)
| Trailing 12 Months |
||||||||
| May 1, 2004 |
May 3, 2003 |
|||||||
Net income |
$ | 30,401 | $ | 29,267 | ||||
Add (deduct): |
||||||||
Provision for income taxes |
19,930 | 19,071 | ||||||
Interest expense, net of interest income and
amortization on deferred financing costs |
17,480 | 18,686 | ||||||
Depreciation and amortization |
22,829 | 22,934 | ||||||
401(k) noncash contributions |
4,219 | 3,562 | ||||||
Loss on debt refinancing |
— | 808 | (1) | |||||
Noncash real estate, net of tax |
391 | — | ||||||
Adjusted EBITDA(2) |
$ | 95,250 | $ | 94,328 | ||||
| (1) | The loss on debt refinancing was treated as extraordinary per the provisions of SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt,” which were applicable during fiscal year 2002. | |||
| (2) | The Company discloses adjusted EBITDA, which is a non-GAAP measure, because it is a widely accepted financial indicator of a company’s ability to finance its operations and meet its growth plans. This measure is also used by NCI internally to make acquisition and investment decisions. Adjusted EBITDA should not be considered in isolation or as a substitute for net income determined in accordance with generally accepted accounting principles in the United States. | |||
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NCI Building Systems Reports Second Quarter Results
Page 5
May 26, 2004
NCI BUILDING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands)
| May 1, | November 1, | |||||||
| 2004 |
2003 |
|||||||
ASSETS |
||||||||
Cash |
$ | 10,250 | $ | 14,204 | ||||
Accounts receivable, net |
85,424 | 96,620 | ||||||
Inventories |
90,258 | 59,334 | ||||||
Deferred taxes |
8,904 | 8,904 | ||||||
Prepaids |
9,451 | 6,243 | ||||||
Total current assets |
204,287 | 185,305 | ||||||
Property, net |
192,843 | 201,826 | ||||||
Excess of cash over fair value of acquired
net assets |
318,247 | 318,247 | ||||||
Other assets |
7,521 | 7,782 | ||||||
Total assets |
$ | 722,898 | $ | 713,160 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current portion of long-term debt |
$ | 6,250 | $ | 6,250 | ||||
Accounts payable |
61,765 | 55,106 | ||||||
Accrued expenses |
63,340 | 57,364 | ||||||
Total current liabilities |
131,355 | 118,720 | ||||||
Long-term debt, noncurrent portion |
207,463 | 242,500 | ||||||
Deferred income taxes |
20,015 | 20,189 | ||||||
Equity |
364,065 | 331,751 | ||||||
Total liabilities and shareholders’ equity |
$ | 722,898 | $ | 713,160 | ||||
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NCI Building Systems Reports Second Quarter Results
Page 6
May 26, 2004
NCI BUILDING SYSTEMS, INC.
STATEMENT OF CONDENSED CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended |
||||||||
| May 1, | May 3, | |||||||
| 2004 |
2003 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 13,461 | $ | 5,860 | ||||
Adjustments to reconcile net income to net
cash provided by operating activities: |
||||||||
Depreciation and amortization |
11,460 | 11,351 | ||||||
(Gain) loss on sale of fixed assets |
304 | (10 | ) | |||||
Provisions for doubtful accounts |
1,282 | 965 | ||||||
Deferred income tax provision |
(174 | ) | — | |||||
Change in working capital: |
||||||||
(Increase) decrease in current assets |
(24,218 | ) | 9,840 | |||||
Increase (decrease) in current liabilities |
18,414 | (17,565 | ) | |||||
Net cash provided by operating activities |
20,529 | 10,441 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(3,699 | ) | (7,518 | ) | ||||
Other |
347 | (363 | ) | |||||
Net cash used in investing activities |
(3,352 | ) | (7,881 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from stock options exercised |
13,906 | 1,704 | ||||||
Net borrowings (payments) on revolving lines of credit |
3,400 | (2,100 | ) | |||||
Payments on long-term debt |
(38,437 | ) | (3,125 | ) | ||||
Purchase of treasury stock |
— | (114 | ) | |||||
Net cash used in financing activities |
(21,131 | ) | (3,635 | ) | ||||
Net decrease in cash |
(3,954 | ) | (1,075 | ) | ||||
Cash at beginning of period |
14,204 | 9,530 | ||||||
Cash at end of period |
$ | 10,250 | $ | 8,455 | ||||
- END -