NCI Building Systems Inc. (NCS) posted a net loss of $3.59 per share for the fourth quarter of fiscal 2009. This includes non cash debt extinguishment and refinancing costs of $99.2 million. Excluding these costs and other special charges, the company posted net income of 4 cents per share for the reported quarter, compared to a net income of $1.26 per share in the fourth quarter of fiscal 2008.
Quarterly sales of $244.4 million were off by 52.0% compared to the comparable period in 2008, driven by double digit declines in volume as well as sales price. Decline in sales prices was primarily due to lower cost of steel. All the three segments reported significant declines in sales. Engineered Building Systems sales fell 60.9%, while Metal Components and Metal Coil Coatings segments reported sales declines of 39.3% and 38.4%, respectively.
With the global economic slowdown, commercial projects are either being delayed or cancelled. This is adversely impacting the company’s sales. According to a McGraw Hill report, construction activity in NCI’s primary end markets (commercial and industrial) was down 60% in the first ten months of 2009, compared to last year. We do not expect any substantial recovery in these markets in fiscal 2010.
NCI Building is focused on minimizing costs. The company has closed 25% of its manufacturing plants and reduced its workforce by almost 40%. It has eliminated overlapping and less efficient operations. Moreover, the company started utilizing more automation and lean manufacturing tools. According to the company, these measures resulted in $560 million annualized reduction in direct variable costs and $120 million annualized reduction in fixed costs.
Also, during the reported quarter, NCI Building completed the recapitalization transaction with Clayton, Dubilier & Rice Inc. managed funds. With this, the company managed to reduce its debt from $474 million to $150 million. At the end of the quarter, it had $90 million in cash and an additional $12.9 million in restricted cash. Also, the company had $125 million asset based lending facility that has not been drawn down.
The company said that though the equity investment has resulted in a significant dilution, it avoided potential bankruptcy and positioned NCI Building to weather the tough market conditions.
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