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NCI Building (NCS) Shares Rise on Q3 Earnings & Sales Beat

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NCI Building Systems, Inc.’s (NCS - Free Report) shares jumped 4.5% in the after-hour trading session yesterday, after the company reported better-than-expected results in the third quarter of fiscal 2018 (ended Jul 29, 2018). It reported adjusted earnings of 51 cents per share in the quarter, comfortably beating the Zacks Consensus Estimate of 48 cents. The reported figure also surged 88.9% from 27 cents recorded in the prior-year quarter.

Including one-time items, the company posted earnings of 54 cents per share compared with 25 cents a share reported in the year-ago quarter.

Operational Highlights

Sales rose 16.9% year over year to $548.5 million in the quarter. The bottom line surpassed the Zacks Consensus Estimate of $538 million and also came ahead of management’s guided range of $525-$545 million. This year-over-year improvement was driven by ongoing strategic discipline, combined with volume growth in both Engineered Metal Building and Metal Components segments.

Cost of sales rose 17.1% year over year to $415.1 million in the quarter. Gross profit grew 16% year over year to $133.4 million. However, gross margin contracted 20 basis points (bps) to 24.3% in the quarter due to unfavorable product mix in the IMP segment.

Engineering, selling, general and administrative expenses grew 3.5% year over year to $79 million. The uptick has primarily resulted due to an increase in sales volume during the quarter. The company reported adjusted operating income of $52 million, reflecting an increase of 42.4% from the year-ago quarter. Adjusted operating margin came in at 9.5%, expanding 170 bps year over year.

Adjusted EBITDA came in at $63.3 million, showing an improvement of 25.6% year over year. Adjusted EBITDA margin rose 80 bps year over year to 11.5% in the quarter.

NCI Building Systems, Inc. Price, Consensus and EPS Surprise

 

NCI Building Systems, Inc. Price, Consensus and EPS Surprise | NCI Building Systems, Inc. Quote

Segment Performance

Revenues in the Engineered Building Systems segment rose 19.9% to $230.1 million from $191.9 million generated in the year-earlier quarter. The segment reported adjusted operating income of $23.8 million, up 50% from $15.9 million in the year-ago quarter.

The Metal Component segment revenues moved up 12.1% year over year to $186.4 million. On an adjusted basis, operating profit improved 23.8% year over year to $28.7 million.

The Insulated Metal Panels or IMP segment reported revenues of $133.7 million, up 11.7% year over year. Adjusted operating profit improved 3.4% year over year to $12.1 million.

The Metal Coil Coating segment reported revenues of $116.4 million, which improved 22.2% year over year. Adjusted operating profit grew 28.3% year over year to $9.1 million.

Financial Update

NCI Building ended the quarter with cash and cash equivalents of $43.3 million compared with $45.9 million recorded in the year-ago quarter. Cash flow from operations came in at $56.9 million during the nine-month period ended Jul 29, 2018 compared with $0.6 million reported in the comparable period last year. Its long-term debt was $403.8 million as of Jul 29, 2018 compared with $387.3 million on Oct 29, 2017.

NCI Building’s consolidated backlog advanced 12.1% year over year to $650.9 million at the end of the reported quarter. Its net debt leverage ratio at the end of fiscal third quarter was 1.95.

Guidance

NCI Building remains optimistic about fiscal 2018, supported by bookings and backlog strength, as well as encouraging economic indicators. For fourth-quarter fiscal 2018, the company projects revenues within $550-$570 million and adjusted EBITDA in the range of $60-$70 million. NCI Building is poised to gain from its focus on executing advanced manufacturing and improvement initiatives.

Zacks Rank & Other Key Picks

NCI Building currently holds a Zacks Rank #2 (Buy).

Other top-ranked stocks in the same industry include Continental Building Products, Inc. (CBPX - Free Report) , PGT, Inc. (PGTI - Free Report) and Patrick Industries, Inc. (PATK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Building, PGT and Patrick Industries’ earnings per share are expected to increase 50.4%, 78.7% and 49.4%, respectively, for the current year.

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