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NCI Building (NCS) Completes Merger Agreement With Ply Gem

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NCI Building Systems, Inc. has completed the proposed merger of Ply Gem Parent, LLC, thereby bolstering scale, as well as expanding product offerings and customer base across all channels of its construction markets, namely residential, repair & remodel, and commercial.

Under the terms of the transaction, Ply Gem shareholders received approximately 58.7 million shares of NCI common stock. Meanwhile, NCI Building shareholders retained 53% ownership of the combined entity, with Ply Gem shareholders holding the remaining 47%.

Benefits of NCI

Headquartered in Cary, NC, Ply Gem sells and manufactures home exterior products for single and multi-family homes. Its key products include windows, doors, siding, roofing, metal accessories, stone and other adjacent products. On the other hand, Houston, TX-based NCI Building is one of the major integrated manufacturers of metal products for the North American non-residential construction industry.

The combined entity is expected to possess strength in advanced manufacturing, product innovation and cost efficiency, coupled with shared acquisition integration and cross-selling capabilities. The new bigger entity will be headquartered in Cary, NC, with a major presence in Houston, TX. However, the name of the combined company is yet to be finalized.

NCI Building had earlier highlighted that the new company, as a vertically-integrated manufacturer with enhanced growth opportunities, will be able to serve its clients with a broader product portfolio across multiple end markets. It is expected to generate approximately $4.5 billion of revenues on a combined basis in 2018.

Meanwhile, greater diversification of end markets and raw materials is expected to decrease the company’s earnings volatility. Also, ongoing cost-saving initiatives undertaken by both NCI and Ply Gem, along with identified near-term cost synergies are expected to generate more than $150 million savings annually. The combined entity is expected to generate adjusted EBITDA of $660-$680 million on a pro-forma basis in 2018.

Notably, NCI Building, which is slated to report fourth-quarter fiscal 2018 (ending Oct 29) results on Dec 12, will change its reporting period. Following its fiscal fourth-quarter earnings release, the combined company will move to a calendar year-end fiscal reporting schedule. Consolidated results during the transition period from Oct 29 through Dec 31, 2018 (that will include the results of Ply Gem beginning Nov 16, 2018) will be reported in February 2019.

Share Price Performance


NCI Building, which shares space with Armstrong World Industries, Inc. (AWI - Free Report) , United Rentals, Inc. (URI - Free Report) and TopBuild Corp. (BLD - Free Report) in the Zacks Building Products – Miscellaneous industry, has declined 25.4% in the past year. Restructuring charges, raw-material cost inflation and strong competition are pressing concerns for the company. Currently, NCI Building carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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