NCI Building Systems Inc(NYSE: NCS) stock lost over 13.4% on September 7th, 2017 pre market session (as of 5:45AM EDT; Source: Google finance). They reported a weak bottom line which fell to $18.2 million during the third quarter of 2017 from $23.7 million in prior corresponding period. They reported a sales rise of 1.5% yoy to $469.4 million, during the period. But tonnage volumes were under pressure for all three segments as compared to the same period last year. The second half of 2017 is expected to reflect a more normalized seasonal pattern where the fourth quarter is anticipated to be stronger than the third quarter’s performance. Gross profit fell to $115.0 million during the quarter, against $128.0 million in the third quarter of 2016 leading to weak gross profit margins which fell to 24.5% from 27.7% in the third quarter of 2016. Decline in plant utilization levels coupled with a less favorable material cost environment hurt the stock sentiment. Moreover, internal bookings and quoting activity shows the ongoing low single digit growth against the prior corresponding period.
On the other side, the group controlled their ESG&A and manufacturing costs to offset the higher materials costs leading to a double-digit growth of their IMP business line. Management sees growth trends in quoting and order activity across all of their markets. The groups end markets- Offices and banks, government and recreational sectors have shown positive growth while New England and the Pacific regions showed the strongest growth during the quarter.
NCI Building Systems cost savings initiatives in manufacturing and ESG&A would generate $30 to $40 million in cost savings by the end of 2018. The group already realized $12 million in fiscal 2016. The group forecasts revenues to be in the range of $470 to $500 million for the fourth quarter of 2017 while expects Adjusted EBITDA to be in the range of $48 – $62 million. The fourth quarter EBITDA range includes Hurricane Harvey estimated impact of $3 to $8 million. Accordingly the group also downgraded their revenue range to $1.75 to $1.78 billion for fourth quarter of 2017 while Adjusted EBITDA would be $162 to $176 million for the year. Legacy Components segment impact coupled with Hurricane Harvey pressure led to this downgrade.
The shares of NCI Building Systems lost 5.4% in the last four weeks (as of September 7th, 2017; Source: Google finance)