NCI Building Systems Inc.
) posted adjusted loss per share of 7 cents in the second quarter
of fiscal 2014. The adjusted loss was wider than the Zacks
Consensus Estimate of a loss of 4 cents per share. However, it was
narrower than the prior-year quarter loss of 28 cents per share.
The loss was mainly due to adverse weather and spending on growth
Sales climbed 4.2% year over year to $305.8 million in the second
quarter although it lagged the Zacks Consensus Estimate of $309
million. The improvement was mainly driven by sales growth in each
of the operating segments. Backlog at the end of the quarter was
$335 million, up 6% year over year.
Cost of sales during the quarter increased 6% to $246.5 million.
Adjusted gross profit fell 1.5% to $59.9 million from $60.8 million
in the year-ago quarter. Consequently, gross margin contracted 120
basis points to 19.5% in the quarter. The decrease was largely due
to rough weather conditions, which resulted in 22 plant closure
Engineering, selling, general and administrative expenses increased
3.7% to $65.1 million. The company reported an adjusted operating
loss of $5.5 million, compared with an operating loss of $1.9
million the prior-year quarter.
Revenues at the
Engineered Building Systems
segment increased 1.6% year over year to $144.6 million. The
benefits from value pricing, improvement in sales margin and
product mix were offset by weather induced lower volumes and
increased freight expenses. The segment reported an adjusted
operating income of $0.4 million, down from the year-ago quarter
income of $4.2 million.
Metal Coil Coating
segment's revenues climbed 16.5% year over year to $25.5 million as
coating and tolling sales increased for both the light gauge and
heavy gauge product lines. In addition, volume improvement
was enhanced by favorable mix but offset by elevated steel costs,
increased marketing expenditures and high utility expenses.
Adjusted operating profit declined 18% year over year to $3.9
million as compared with the prior-year quarter.
segment generated revenues of $135.7 million, up 5.1% year over
year driven by growth in the legacy single skin products and
favorable pricing. Adjusted operating profit for the segment
decreased 11% to $4.6 million due to increased costs, weather
related decline in commercial and industrial insulated panel
volumes and costs associated with the ramp-up of architectural
insulated metal panel plant in Richmond, VA.
As of May 4, 2014, the company had cash and cash equivalents of
$12.5 million, down from $77.4 million as of Nov 3, 2013. Long-term
debt was $234 million as of May 4, 2014 compared with $235 million
as of Nov 3, 2013.
Cash flow used in operating activities was $30.5 million for the
period of six months ended May 4, 2014 compared with $3.8 million
for the period of six months ended April 28, 2013.
Management did not provide any specific guidance for fiscal
2014. However, NCI Building is optimistic about the fact that
it has historically generated approximately 60% to 90% of its
annual EBITDA in the second half of the year. The company sees no
exception to this trend in 2014 as well. The company also expects
mid-single digit growth in low rise new non-residential starts in
The main indicators for non-residential construction activity
continue to trend positive. Furthermore, the recent booking trends
seem to support this momentum. The company anticipates improved
margins in fiscal 2014 guided by greater commercial discipline,
manufacturing efficiencies and volume-driven operating leverage.
Headquartered in Texas, NCI Building Systems is a leading
integrated manufacturer of metal products in the North American
non-residential construction industry.
Currently, NCI Building Systems carries a Zacks Rank #5 (Strong
Sell). Some better-ranked stocks in the same sector include
Gibraltar Industries, Inc.
Simpson Manufacturing Co., Inc.
United Rentals, Inc.
). All these carry a Zacks Rank #1 (Strong Buy).
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