NCI Building Systems Inc.
) reported loss per share of 19 cents in the first quarter of
2013, ending Jan 27, 2013, missing the Zacks Consensus Estimate
of break-even results and narrower than the adjusted loss of 31
cents a share incurred in the year-ago quarter. Including
acquisition related costs, loss in the year-ago quarter was 54
cents per share.
Sales increased 22% year over year to $297.6 million in the
quarter, in line with the Zacks Consensus Estimate. The
year-over-year growth was driven mainly by the Metal Components
segment, followed by the Engineered Building systems segment.
Cost of sales during the quarter increased 25% to $237
million. Gross profit increased 14% to $60.9 million. However,
gross margin contracted 150 basis points to 20.5% in the quarter.
This was due to higher shipment of lower-margin structural
products in the engineered buildings segment, additional costs
associated with the ramp-up of the new Middletown, Ohio plant;
and increase in expenses to retain and train skilled
manufacturing workers in order to capture additional
Engineering, selling, general and administrative expenses
increased 24% to $60 million, mainly due to the Metl-Span
acquisition. Adjusted operating income was $0.4 million, a 91%
decline from the year-ago quarter's operating income of $4.7
million. Operating margin plunged 180 basis points to 0.1% in the
Revenue at Engineered Building Systems increased 5% year over
year to $148 million in the quarter. The segment reported
operating income of $4 million in the quarter, down 47 % from the
year-ago quarter's adjusted income of $7.6 million, due to the
combination of less favorable project mix and higher labor costs
incurred in anticipation of higher volumes in the seasonally
stronger second half of the year.
Revenue from the Metal Coil Coating segment remained flat year
over year at $49 million. Operating profit was $5.5 million in
the quarter, up 5% from the prior-year quarter.
The Metal Component segment generated revenues of $154
million, up 46% year over year. The segment benefited from the
contribution from the company's recent Metl-Span acquisition well
as modest organic growth.
Operating profit for the segment increased 10% to $6.1 million
in the quarter as higher margin insulated metal panel products
offset some of the impact of pricing pressure in the core
commercial and industrial components business and higher
operating expense to support growth in the second half of
As of Jan 27, 2013, NCI Building Systems had cash and cash
equivalents of $25.8 million, down from $55 million as of Oct 28,
2012. Long-term debt decreased to $226 million as of Jan 27, 2013
from $234 million as of Oct 28, 2012. Cash used in operating
activities was $13.1 million in the quarter compared with $4.2
million in the prior-year quarter.
Management did not provide any specific guidance for fiscal
2013. However, the company expects the second half of 2013 to
benefit from improving market conditions and strong operating
leverage, which has been further enhanced by first quarter
investments to expand gross margin.
NCI Building Systems has acquired Metl-Span LLC for $145
million. Metl-Span is a leader in the advancement of insulated
panel technology and serves the architectural, commercial,
industrial and cold Storage industries (non-residential building
products market) with energy efficient and cost effective
insulated metal wall and roof panels.
The acquisition will position NCI Building as a leader in the
insulated metal panel business by diversifying and expanding its
existing product range. In addition, NCI Building will also be
benefited by a growing customer base as well as distribution
network in North America.
In the first quarter, low-rise non-residential construction
activity, measured in square feet, increased 4.4% from the
comparable period in fiscal 2012. The American Institute of
Architect's Architectural Billing Index published for January
2013 was 54.2 and the commercial and industrial component of the
Index remained above 50 for the fourth consecutive month.
According to the current forecast of
), nonresidential construction activity measured in square
feet will be 8% higher in calendar 2013 compared to calendar
2012. The non-residential construction is showing signs of a
turnaround, which will benefit NCI Building Systems.
Based in Texas, NCI Building Systems is one of the largest
integrated manufacturers of metal products for the North American
non-residential construction industry. Currently, the shares of
NCI Building Systems retain a short-term Zacks #3 Rank
Other stocks to consider in the same industry with a favorable
Zacks Rank are
Drew Industries Inc.
James Hardie Industries plc
), which carry a Zacks Rank#2 (Buy).
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