SOURCE: NCI Building Systems, Inc.

NCI Building Systems, Inc.

December 07, 2010 16:01 ET

NCI Building Systems Reports Fourth Quarter Fiscal 2010 Results

Company Posts Q4 Revenues of $241.5 Million; Adjusted EBITDA of $7.5 Million

Coatings and Components Groups Continued to Post Operating Profits

Cash Generated From Operations Was $27.1 Million

HOUSTON, TX--(Marketwire - December 7, 2010) - NCI Building Systems, Inc. (NYSE: NCS) today reported financial results for the fourth quarter ended October 31, 2010.

Fourth Quarter 2010 Financial Results

"Fourth quarter revenues were comparable to prior quarter and year-ago levels, despite declines of 15% and 18%, respectively, in nonresidential construction activity measured in square feet, as reported by McGraw-Hill," said Norman C. Chambers, NCI's Chairman, President and Chief Executive Officer. "Within this difficult business environment, we maintained our leading market share positions in each of our operating segments, and we continued to take actions to strengthen our prospects for future growth when our markets recover."

"Both our Components and Coatings groups again posted operating profits. As expected, operating margins narrowed as we held prices stable for our customers while we worked through higher priced steel inventory in the quarter," Mr. Chambers noted. "Our Buildings group's adjusted operating results improved sequentially as a result of better pricing discipline but did not reach breakeven due to rescheduling of certain projects to the first and second quarters of 2011. The Buildings group's backlog at the end of the fourth quarter was $193 million, which in tonnage terms was down 12.4% sequentially, typical of our seasonal trends. The current backlog reflects our improved pricing discipline, and an increased proportion of work from the commercial/industrial market."

Mr. Chambers added, "For the third consecutive year, industry-wide demand was significantly reduced by weak economic conditions, and our traditionally strongest markets, commercial and industrial, were among the hardest hit. Within this challenging environment, we have moved ahead with a strategy to expand and better support our builder network, invest in technology and systems to shorten delivery times and reduce costs, develop new products and expand our end markets. We are pleased to report that NCI made important progress in each of these key initiatives in fiscal 2010."

For the fourth quarter, sales were $241.5 million, down 1% from the $243.3 million reported in last year's fourth quarter and 1.6% below the $245.3 million reported in the prior quarter. Gross profit margin was 19.2% compared to 24.8% in the year-ago fourth quarter and 20.5% in the prior quarter.

Selling, general and administrative expenses were $48.5 million, or 20.1% of revenues. This compares to $51.2 million, or 21.1% of revenues in last year's fourth quarter, and $48.7 million, or 19.9% of revenues in the prior quarter. The Company posted an operating loss of $3.8 million this quarter compared to an operating loss of $3.7 million in the prior year period and an operating profit of $1.1 million for the third quarter of 2010. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and cash and other non-cash items, in accordance with the Company's bank credit agreement, was $7.5 million compared to $18.5 million in last year's fourth quarter and $10.2 million for the 2010 third quarter.

For the fourth quarter, the Company reported a net loss applicable to common shares of $18.6 million, which included the accrual of preferred stock dividends and accretion of $8.9 million and a non-cash beneficial conversion feature charge of $4.2 million. This compares to a net loss of $113.6 million in the 2009 fourth quarter. In the 2010 third quarter, the net loss applicable to common shares was $16.5 million, which included the accrual of convertible preferred stock dividends and accretion of $8.6 million and a non-cash beneficial conversion feature charge of $4.6 million.

The adjusted loss per diluted share, excluding the non-cash beneficial conversion charge and other special charges presented in the table below, was $0.72; the reported net loss per diluted share was $1.01. This compares to adjusted earnings per diluted share of $1.86 and a reported net loss per diluted share of $17.66 in last year's fourth quarter and an adjusted net loss per diluted share of $0.64 and a reported net loss per diluted share of $0.90 in the 2010 third quarter, each adjusted for the 1-for-5 reverse split that was effective at the close of market on March 5, 2010.

The weighted average number of common shares used in the calculation of fourth quarter 2010 per share amounts was 18.4 million compared to 5.9 million last year and 18.3 million in the prior quarter.

Inventory levels declined 22.7% sequentially to $81.4 million, reflecting seasonal factors. Annualized inventory turnover was 8.6 turns for the fourth quarter compared to 7.2 turns for the third quarter.

Capital expenditures were $14 million for fiscal year 2010, inclusive of $4.9 million for the recently acquired Middletown, Ohio coating facility, consistent with the Company's forecast.

Additional Corporate Developments

NCI also announced today that it has finalized an amendment of its undrawn $125 million asset based revolving credit facility ("ABL") that cuts the unused commitment fee in half from 1% to 0.50%, reduces the effective interest rate on borrowings, if any, by nearly 40% or 175 basis points, and relaxes the prohibitions against paying cash dividends on the convertible preferred stock.

In addition, on December 6th, 2010, the Preferred Dividend Committee of the Board of Directors elected to pay the $5.55 million preferred dividend in cash on December 15, 2010. The determination of cash payment versus payment in-kind or "PIK" of the preferred dividends hereafter will be made each quarter adhering to the limitations of the Company's term loan and ABL credit facilities as well as the Company's intermediate and long term cash flow requirements. The Company's term loan currently restricts the payment of cash dividends to 50% of cumulative earnings beginning with the fourth quarter of 2009, and in the absence of accumulated earnings, cash dividends and other restricted payments are limited to $14.5 million in the aggregate during the term of the loan.

Fourth Quarter Segment Performance

The Company reported an adjusted operating loss of $1.7 million, which is reconciled with the reported GAAP operating loss in the table below.

                        NCI BUILDING SYSTEMS, INC.
                            BUSINESS SEGMENTS
              NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
  RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
                     (LOSS) EXCLUDING SPECIAL CHARGES
                FOR THE THREE MONTHS ENDED OCTOBER 31, 2010
                                (Unaudited)
                              (In thousands)




                                         Engineered
                   Metal Coil   Metal     Building
                    Coating   Components  Systems   Corporate  Consolidated
                   ---------- ---------- ---------  -----------  ---------

Operating income
 (loss), GAAP
 basis             $    3,754 $    8,820 $  (3,859) $   (12,489) $  (3,774)
Asset impairments           -        221         -            -        221
Restructuring
 charges                    -         95     1,533            -      1,628
Pre-acquisition
 contingency
 adjustment                 -          -       178            -        178
                   ---------- ---------- ---------  -----------  ---------
"Adjusted"
 operating income
 (loss) (1)        $    3,754 $    9,136 $  (2,148) $   (12,489) $  (1,747)
                   ========== ========== =========  ===========  =========



(1) The Company discloses a tabular comparison of "Adjusted" operating
    income (loss), which is a non-GAAP measure because it is referred to
    in the text of our press release and is instrumental in comparing the
    results from period to period. "Adjusted" operating income (loss)
    should not be considered in isolation or as a substitute for
    operating income (loss) as reported on the face of our statement
    of income.

"Each of our business segments has been significantly affected by the economic downturn. In the face of substantially lower volumes, each business segment has succeeded in reducing costs, while increasing service levels to customers," noted Mr. Chambers.

The Components group's revenues declined 3.3% from last year's fourth quarter levels. Lower volume and lower selling prices caused margin compression compared to last year's fourth quarter. For the year, the Components group improved outbound freight efficiency by 13% and reduced scrap cost per ton by 6%. In addition, the Components group increased sales of retrofit roofing products and introduced a new line of energy-efficient insulated metal panels, supplementing its core metal components sales to both third parties and our Buildings group.

Revenues for the Coatings group increased 5% year-over-year, but profitability was reduced as a result of lower internal volume and lower selling prices relative to material costs. For the year, the Coatings group reduced manufacturing costs per ton by 6%, while reducing yield loss per ton by 18%. For fiscal 2010, the Coatings group increased capacity, including the purchase of its sixth plant (Middletown, Ohio) to support both the future growth in third party sales and internal demand from the Components and Buildings groups.

The Buildings group's revenues increased 4.3% from fourth quarter 2009 levels. Operating results were significantly impacted, by lower volume combined with higher material costs per ton. For the year, the Buildings group reduced engineering and drafting costs by 12% per ton and manufacturing costs by 16% per ton while increasing shipped volumes through process, systems and technological advances across all of its brands.

Market Commentary

Nonresidential construction activity measured in square feet declined significantly from the comparable period in 2009. McGraw-Hill reported that new construction activity measured in square feet was down to 635 million square feet in fiscal 2010, 24% below fiscal 2009 levels, and NCI's traditionally strong commercial and industrial markets declined approximately 29%.

The American Institute of Architect's Architectural Billing Index published for October was 48.7. While below 50 for all sectors combined, the commercial and industrial component of the Index remained above 50 for the sixth consecutive month. McGraw-Hill is currently forecasting that nonresidential construction activity measured in square feet will be 18% lower in calendar 2010 compared to calendar 2009.

Outlook

"In fiscal 2010, NCI executed effectively on all aspects of our strategy to optimize the Company's positioning once our markets recover," Mr. Chambers noted. "Specifically, we:

--  Enhanced our builder network through selective recruitment;
--  Increased the capacity of our Coatings group through an opportunistic
    facility acquisition;
--  Invested $3.3 million in technology and systems, which shortened
    delivery times and reduced engineering, drafting and manufacturing
    costs;
--  Moved to full production at our energy-efficient insulated panels
    plant;
--  Expanded our "Express Buildings" offerings to address the market for
    lower complexity, small building projects;
--  Developed an export business that makes our turnkey steel buildings
    cost effective solutions for commercial and industrial customers in
    Latin America; and
--  Significantly improved our operating leverage by successfully
    containing fixed costs, which we reduced dramatically in 2008 and
    2009."

"At the end of the fourth quarter, we began to see a pick-up in quoting activity from the commercial/industrial sector of the market, which prior to the economic downturn had accounted for 70% of our business. In fact, October was the sixth consecutive month that the commercial/industrial sector of AIA's Architectural Billing Index has been in positive territory, which points to construction activity in these markets increasing in the next nine to twelve months on a year-over-year basis. NCI would be a prime beneficiary of a sustained upturn in this sector as we have retained the capacity to serve a much larger marketplace with significantly reduced infrastructure costs, as a result of our previous investments in technology and automation."

"In fiscal 2011 we will continue to improve our positioning by:

--  Launching new sales initiatives targeting specific markets and the
    roll-out of new products and services;
--  Moving ahead with technical system upgrades to further reduce order
    processing time; and
--  Implementing logistics systems to reduce transportation costs and
    improve scheduling."

"McGraw-Hill and others are forecasting improvement in the nonresidential construction market during the second half of calendar 2011. We expect the advancements we have made in 2010 to continue into 2011 and, therefore, any improvement in demand would benefit our near term results."

The NCI Building Systems, Inc. fourth quarter conference call is scheduled for December 7, 2010, at 5:00 PM ET. Please call 1-412-858-4600 to participate in the call. To listen to a live broadcast of the call over the Internet or to review the archived call, please visit the Company's website at www.ncilp.com. To access the taped replay, please dial 1-412-317-0088 and the passcode 419727# when prompted. The Webcast archive and taped replay will both be available two hours after the call through December 14, 2010.

NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. NCI is comprised of a family of companies operating manufacturing facilities across the United States and Mexico, with additional sales and distribution offices throughout the United States and Canada.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act. These statements and other statements identified by words such as "believe," "guidance," "potential," "expect," "should," "will" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations and/or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, as a result, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Among the factors that could cause actual results to differ materially include, but are not limited to industry cyclicality and seasonality and adverse weather conditions; ability to service the Company's debt; fluctuations in customer demand and other patterns; raw material pricing and supply; competitive activity and pricing pressure; general economic conditions affecting the construction industry; financial crises or fluctuations in the U.S. and abroad; changes in laws or regulations; and the volatility of the Company's stock price. Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2009, identifies other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in its expectations.

                        NCI BUILDING SYSTEMS, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)                                
                  (In thousands, except per share data)


                          For the Three Months           For the
                                  Ended                 Year Ended
                        October 31,  November 1,  October 31,  November 1,
                            2010       2009 (1)       2010         2009
                        -----------  -----------  -----------  -----------
Sales                   $   241,454  $   243,308  $   870,526  $   965,252
Cost of sales,
 excluding lower of
 cost or market
 adjustment and
 asset impairments          194,876      182,703      699,641      748,756
Lower of cost or
 market adjustment                -            -            -       39,986
Asset impairments               221          347        1,070        6,291
                        -----------  -----------  -----------  -----------
     Gross profit            46,357       60,258      169,815      170,219
                               19.2%        24.8%        19.5%        17.6%

Selling, general and
 administrative
 expenses                    48,503       51,220      190,870      210,753
Goodwill and other
 intangible asset
 impairment                       -            -            -      622,564
Restructuring charge          1,628        1,564        3,532        9,052
Change of control
 charges                          -       11,168            -       11,168
                        -----------  -----------  -----------  -----------
     Loss from operations    (3,774)      (3,694)     (24,587)    (683,318)

Interest income                  22           33           91          393
Interest expense             (4,280)      (9,611)     (17,918)     (29,249)
Debt extinguishment
 and refinancing
 costs, net                     250      (96,550)          76      (97,580)
Other income, net               552          476        2,131        2,045
                        -----------  -----------  -----------  -----------

Loss before income
 taxes                       (7,230)    (109,346)     (40,207)    (807,709)
Benefit for income
 taxes                       (1,794)      (7,495)     (13,330)     (56,913)
                        -----------  -----------  -----------  -----------
                               24.8%         6.9%        33.2%         7.0%

Net loss                $    (5,436) $  (101,851) $   (26,877) $  (750,796)
Convertible preferred
 stock dividends and
 accretion                    8,877        1,187       34,055        1,187
Convertible preferred
 stock beneficial
 conversion feature           4,243       10,526      250,295       10,526
                        -----------  -----------  -----------  -----------
Net loss applicable to
 common shares          $   (18,556) $  (113,564) $  (311,227) $  (762,509)
                        ===========  ===========  ===========  ===========


Loss per share:
  Basic                 $     (1.01) $    (17.66) $    (17.07) $   (171.18)
  Diluted               $     (1.01) $    (17.66) $    (17.07) $   (171.18)

Weighted average number
 of common shares
 outstanding:
  Basic                      18,365        5,929       18,229        4,403
  Diluted                    18,365        5,929       18,229        4,403

Decrease in sales              -0.8%                     -9.8%

Gross profit percentage        19.2%        24.8%        19.5%        17.6%

Selling, general and
 administrative expenses
 percentage                    20.1%        21.1%        21.9%        21.8%

(1) Amounts have been retrospectively adjusted as a result of the
    adoption, effective November 2, 2009, of ASC Subtopic 470-20, "Debt
    with Conversion and Other Options", and ASC Subtopic 260-10, "Earnings
    per Share." In addition, on March 5, 2010, the Company filed an
    amendment to its Certificate of Incorporation to effect the
    Reverse Stock Split at an exchange ratio of 1-for-5. As such, we have
    retrospectively adjusted basic and diluted earnings per share, common
    stock, stock options and common stock equivalents for the reverse stock
    split in all periods presented.




                        NCI BUILDING SYSTEMS, INC.
                        CONSOLIDATED BALANCE SHEETS
                              (In thousands)

                                                October 31,   November 1,
                                                    2010          2009
                                                ------------  ------------
                                                (Unaudited)
ASSETS
     Cash and cash equivalents                  $     77,419  $     90,419
     Restricted cash                                   2,839         5,154
     Accounts receivable, net                         81,896        82,889
     Inventories                                      81,386        71,537
     Deferred income taxes                            15,101        18,787
     Income taxes receivable                          15,432        27,622
     Investments in debt and equity securities,
      at market                                        3,738         3,359
     Prepaid expenses and other                       13,923        14,494
     Assets held for sale                              6,114         4,963
                                                ------------  ------------
         Total current assets                        297,848       319,224
                                                ------------  ------------

     Property and equipment, net                     214,453       232,510
     Goodwill                                          5,200         5,200
     Intangible assets, net                           26,312        28,370
     Restricted cash, net of current portion               -         7,825
     Other assets                                     16,224        21,039
                                                ------------  ------------

         Total assets                           $    560,037  $    614,168
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
     Current portion of long-term debt          $          -  $     14,164
     Note payable                                        289           481
     Accounts payable                                 70,589        71,252
     Accrued compensation and benefits                31,569        37,215
     Accrued interest                                  1,536           776
     Other accrued expenses                           46,723        54,797
                                                ------------  ------------
         Total current liabilities                   150,706       178,685
                                                ------------  ------------

     Long-term debt                                  136,305       136,085
     Deferred income taxes                            14,095        18,848
     Other long-term liabilities                       4,820         7,657
                                                ------------  ------------
         Total long-term liabilities                 155,220       162,590
                                                ------------  ------------

     Series B cumulative convertible
      participating preferred stock                  256,870       222,815

     Common stock                                        924           904
     Additional paid-in capital                      258,826       288,093
     Accumulated deficit                            (256,937)     (230,060)
     Accumulated other comprehensive loss             (5,572)       (8,859)
                                                ------------  ------------
         Total stockholders' equity (deficit)         (2,759)       50,078
                                                ------------  ------------

         Total liabilities and stockholders'
          equity (deficit)                      $    560,037  $    614,168
                                                ============  ============




                        NCI BUILDING SYSTEMS, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)
                              (In thousands)


                                                    For the Year Ended
                                                October 31,   November 1,
                                                    2010          2009
                                                ------------  ------------
Cash flows from operating activities:
      Net loss                                  $    (26,877) $   (750,796)
      Adjustments to reconcile net loss to net
       cash provided by operating
       activities:
         Depreciation and amortization                34,504        33,531
         Non-cash interest expense on
          convertible notes                                -         8,394
         Share-based compensation expense              4,953         4,835
         Debt extinguishment and refinancing
          costs, net                                     (76)       91,937
         Gain on embedded derivative                    (937)            -
         (Gain) loss on sale of property, plant
          and equipment                                  180          (928)
         Lower of cost or market reserve                   -        39,986
         Provision for doubtful accounts                  78         1,221
         Provision (benefit) for deferred
          income taxes                                    43       (26,841)
         Asset impairments, net                        1,070         6,291
         Impairment of goodwill and intangible
          assets                                           -       622,564
         Accelerated vesting of share-based
          compensation                                     -         9,066
         Interest rate swap ineffectiveness                -         3,072
Changes in operating assets and liabilities,
 net of effect of acquisitions:
         Accounts receivable                             915        78,895
         Inventories                                  (9,849)       79,362
         Income tax receivable                        12,434       (32,332)
         Prepaid expenses and other                    1,736        (1,423)
         Accounts payable                                150       (30,754)
         Accrued expenses                            (12,975)      (41,599)
         Other, net                                      957           855
                                                ------------  ------------

Net cash provided by operating activities              6,306        95,336
                                                ------------  ------------

Cash flows from investing activities:
      Capital expenditures                           (14,030)      (21,657)
      Proceeds from the sale of property, plant
       and equipment                                     767         2,589
                                                ------------  ------------

Net cash used in investing activities                (13,263)      (19,068)
                                                ------------  ------------

Cash flows from financing activities:
      Decrease (increase) in restricted cash          10,140       (12,979)
      Proceeds from ABL facility                         245             -
      Payments on ABL facility                          (246)            -
      Payment of convertible notes                       (59)      (89,971)
      Payments on term loan                          (13,695)     (143,300)
      Payments on other long-term debt                  (190)         (910)
      Payments of financing costs                       (125)      (54,659)
      Payments on note payable                        (1,724)       (1,693)
      Proceeds from stock option exercises                 -            12
      Issuance of convertible preferred stock              -       250,000
      Purchase of treasury stock                        (381)         (451)
                                                ------------  ------------

Net cash used in financing activities                 (6,035)      (53,951)
                                                ------------  ------------

Effect of exchange rate changes on cash and
 cash equivalents                                         (8)          (99)
                                                ------------  ------------

Net (decrease) increase in cash                      (13,000)       22,218

Cash at beginning of period                           90,419        68,201
                                                ------------  ------------

Cash at end of period                           $     77,419  $     90,419
                                                ============  ============




                        NCI Building Systems, Inc.
                            Business Segments
                                (Unaudited)
                              (In thousands)

                        Three Months      Three Months
                            Ended             Ended           $       %
                      October 31, 2010 November 1, 2009(1)Inc/(Dec) Change
                      ----------------  ----------------  --------  ------
                                 % of              % of
                                 Total             Total
Sales:                           Sales             Sales
  Metal coil coating  $  46,884     19  $  44,614     18  $  2,270     5.1%
  Metal components      118,475     49    122,484     50    (4,009)   -3.3%
  Engineered building
   systems              133,959     56    128,476     53     5,483     4.3%
  Intersegment sales    (57,864)   (24)   (52,266)   (21)   (5,598)   10.7%
                      ---------  -----  ---------  -----  --------  ------
    Total net sales   $ 241,454    100  $ 243,308    100  $ (1,854)   -0.8%
                      =========  =====  =========  =====  ========  ======

                                 % of              % of
Operating income (loss):         Sales             Sales
  Metal coil coating  $   3,754      8  $   6,037     14  $ (2,283)  -37.8%
  Metal components        8,820      7     13,557     11    (4,737)  -34.9%
  Engineered building
   systems               (3,859)    (3)       515      0    (4,374) -849.3%
  Corporate             (12,489)     -    (23,803)     -    11,314    47.5%
                      ---------  -----  ---------  -----  --------  ------
    Total operating
     income (loss)
     (% of sales)     $  (3,774)    (2) $  (3,694)    (2) $    (80)   -2.2%
                      =========  =====  =========  =====  ========  ======

                     Fiscal Year Ended  Fiscal Year Ended     $       %
                      October 31, 2010  November 1, 2009  Inc/(Dec) Change
                      ----------------  ----------------  --------  ------
                                 % of              % of
                                 Total             Total
Sales:                           Sales             Sales
  Metal coil coating  $ 181,874     21  $ 169,897     18  $ 11,977     7.0%
  Metal components      415,857     48    458,734     47   (42,877)   -9.3%
  Engineered building
   systems              490,746     56    538,938     56   (48,192)   -8.9%
  Intersegment sales   (217,951)   (25)  (202,317)   (21)  (15,634)    7.7%
                      ---------  -----  ---------  -----  --------  ------
    Total net sales   $ 870,526    100  $ 965,252    100  $(94,726)   -9.8%
                      =========  =====  =========  =====  ========  ======

                                  % of              % of
Operating income (loss):         Sales             Sales
  Metal coil coating  $  16,166      9  $ (99,689)   (59) $115,855   116.2%
  Metal components       26,791      6   (130,039)   (28)  156,830   120.6%
  Engineered building
   systems              (18,438)    (4)  (389,007)   (72)  370,569    95.3%
  Corporate             (49,106)     -    (64,583)     -    15,477    24.0%
                      ---------  -----  ---------  -----  --------  ------
    Total operating
     income (loss)
     (% of sales)     $ (24,587)    (3) $(683,318)   (71) $658,731    96.4%
                      =========  =====  =========  =====  ========  ======

(1) Amounts have been retrospectively adjusted as a result of the
    adoption, effective November 2, 2009, of ASC Subtopic 470-20, "Debt
    with Conversion and Other Options."




                        NCI BUILDING SYSTEMS, INC.
                            BUSINESS SEGMENTS
              NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
  RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
                     (LOSS) EXCLUDING SPECIAL CHARGES
     FOR THE THREE MONTHS ENDED OCTOBER 31, 2010 and NOVEMBER 1, 2009
                                (Unaudited)
                              (In thousands)

                          For the Three Months Ended October 31, 2010
                    -------------------------------------------------------
                      Metal             Engineered
                      Coil      Metal    Building
                    Coating  Components  Systems    Corporate  Consolidated
                   --------- --------- ----------  ----------  -----------

Operating income
 (loss), GAAP
 basis             $   3,754 $   8,820 $   (3,859) $  (12,489) $    (3,774)
Asset impairments          -       221          -           -          221
Restructuring
 charges                   -        95      1,533           -        1,628
Pre-acquisition
 contingency
 adjustment                -         -        178           -          178
                   --------- --------- ----------  ----------  -----------
"Adjusted" operating
 income (loss) (1) $   3,754 $   9,136 $   (2,148) $  (12,489) $    (1,747)
                   ========= ========= ==========  ==========  ===========


                        For the Three Months Ended November 1, 2009 (2)
                    -------------------------------------------------------
                      Metal             Engineered
                      Coil      Metal    Building
                    Coating  Components  Systems    Corporate  Consolidated
                   --------- --------- ----------  ----------  -----------

Operating income
 (loss), GAAP
 basis             $   6,037 $  13,557 $      515  $  (23,803) $    (3,694)
Change of control
 charges                   -         -          -      11,168       11,168
Asset impairments          -         -        347           -          347
Restructuring
 charges                   -        74      1,469          21        1,564
Environmental and
 other contingency
 adjustments               -         -      1,115           -        1,115
                   --------- --------- ----------  ----------  -----------
"Adjusted" operating
 income (loss) (1) $   6,037 $  13,631 $    3,446  $  (12,614) $    10,500
                   ========= ========= ==========  ==========  ===========

(1) The Company discloses a tabular comparison of "Adjusted" operating
    income (loss), which is a non-GAAP measure because it is referred to in
    the text of our press release and is instrumental in comparing the
    results from period to period.  "Adjusted" operating income (loss)
    should not be considered in isolation or as a substitute for operating
    income (loss) as reported on the face of our statement of income.

(2) Amounts have been retrospectively adjusted as a result of the
    adoption, effective November 2, 2009, of  ASC Subtopic 470-20, "Debt
    with Conversion and Other Options."




                        NCI BUILDING SYSTEMS, INC.
                            BUSINESS SEGMENTS
              NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
  RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
                     (LOSS) EXCLUDING SPECIAL CHARGES
     FOR THE FISCAL YEARS ENDED OCTOBER 31, 2010 and NOVEMBER 1, 2009
                                (Unaudited)
                              (In thousands)


                            For the Year Ended October 31, 2010
                ----------------------------------------------------------
                                        Engineered
                Metal Coil    Metal      Building
                  Coating   Components    Systems   Corporate  Consolidated
                ----------  ----------  ----------  ---------- ------------

Operating
 income (loss),
 GAAP basis     $   16,166  $   26,791  $  (18,438) $  (49,106) $  (24,587)
Asset
 impairments             -         147         923           -       1,070
Restructuring
 charges                 -         510       3,022           -       3,532
Pre-acquisition
 contingency
 adjustment              -           -         178           -         178
                ----------  ----------  ----------  ----------  ----------
"Adjusted"
 operating
 income (loss)
 (1)            $   16,166  $   27,448  $  (14,315) $  (49,106) $  (19,807)
                ==========  ==========  ==========  ==========  ==========


                            For the Year Ended November 1, 2009
                ----------------------------------------------------------
                                        Engineered
                Metal Coil    Metal      Building
                  Coating   Components    Systems   Corporate  Consolidated
                ----------  ----------  ----------  ---------- ------------

Operating
 income (loss),
 GAAP basis     $  (99,689) $ (130,039) $ (389,007) $  (64,583) $ (683,318)
Goodwill and
 other
 intangible
 asset
 impairment         98,959     147,239     376,366           -     622,564
Lower of cost
 or market
 charge              8,102      17,152      14,732           -      39,986
Change of
 control
 charges                 -           -           -      11,168      11,168
Asset
 impairments             -         714       4,368       1,209       6,291
Restructuring
 charges               103       1,306       7,440         203       9,052
Environmental
 and other
 contingency
 adjustments             -           -       1,115           -       1,115
                ----------  ----------  ----------  ----------  ----------
"Adjusted"
 operating
 income (loss)
 (1)            $    7,475  $   36,372  $   15,014  $  (52,003) $    6,858
                ==========  ==========  ==========  ==========  ==========


(1) The Company discloses a tabular comparison of "Adjusted" operating
    income (loss), which is a non-GAAP measure because it is referred to in
    the text of our press release and is instrumental in comparing the
    results from period to period.  "Adjusted" operating income (loss)
    should not be considered in isolation or as a substitute for operating
    income (loss) as reported on the face of our statement of income.




                        NCI BUILDING SYSTEMS, INC.
              NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
"ADJUSTED" EARNINGS (LOSS) PER DILUTED COMMON SHARE AND NET LOSS COMPARISON
                                (Unaudited)


                         Fiscal Three Months Ended    Fiscal Years Ended
                          October 31,  November 1,  October 31, November 1,
                              2010       2009 (2)      2010        2009
                          -----------  -----------  ----------  ----------
Net loss per diluted
 common share, GAAP basis $     (1.01) $    (17.66) $   (17.07) $  (171.18)
Goodwill and other
 intangible asset
 impairment                         -            -           -      136.26
Debt extinguishment and
 refinancing costs              (0.01)       16.01           -       21.70
Lower of cost or market
 adjustment                         -            -           -        5.85
Convertible preferred
 stock beneficial
 conversion feature              0.23         1.78       13.73        2.39
Change of control                   -         1.16           -        1.56
Restructuring charge             0.05         0.12        0.12        1.27
Asset impairments                0.01         0.01        0.03        0.88
Gain on embedded
 derivative                         -            -       (0.03)          -
Interest rate swap                  -         0.32           -        0.43
Pre-acquisition
 contingency adjustment          0.01            -        0.01           -
Environmental and other
 contingency adjustments            -         0.12           -        0.16
                          -----------  -----------  ----------  ----------
"Adjusted" diluted
 earnings (loss) per
 common share (1)         $     (0.72) $      1.86  $    (3.21) $    (0.68)
                          ===========  ===========  ==========  ==========


                         Fiscal Three Months Ended    Fiscal Years Ended
                          October 31,  November 1,  October 31, November 1,
                              2010       2009 (2)      2010        2009
                          -----------  -----------  ----------  ----------
Net loss applicable to
 common shares, GAAP
 basis                    $   (18,556) $  (104,688) $ (311,227) $ (753,633)
Goodwill and other
 intangible asset
 impairment                         -            -           -     599,966
Debt extinguishment and
 refinancing costs               (163)      94,925         (49)     95,559
Lower of cost or market
 adjustment                         -            -           -      25,773
Convertible preferred
 stock beneficial
 conversion feature             4,242       10,526     250,294      10,526
Change of control                   -        6,880           -       6,880
Restructuring charge            1,058          716       2,296       5,576
Asset impairments                 144           35         696       3,875
Gain on embedded
 derivative                        (4)           -        (609)          -
Interest rate swap                  -        1,893           -       1,893
Pre-acquisition
 contingency adjustment           116            -         116           -
Environmental and other
 contingency adjustments            -          687           -         687
                          -----------  -----------  ----------  ----------
"Adjusted" net earnings
 (loss) applicable to
 common shares (1)        $   (13,163) $    10,974  $  (58,483) $   (2,898)
                          ===========  ===========  ==========  ==========

(1) The Company discloses a tabular comparison of "Adjusted" earnings
    (loss) per diluted common share and net loss, which are non-GAAP
    measures because they are referred to in the text of our press releases
    and are instrumental in comparing the results from period to period.
    "Adjusted" diluted earnings (loss) per share and net loss should not be
    considered in isolation or as a substitute for earnings (loss) per
    diluted share and net loss as reported on the face of our statement of
    operations.

(2) Amounts have been retrospectively adjusted as a result of the adoption,
    effective November 2, 2009, of  ASC Subtopic 470-20, "Debt with
    Conversion and Other Options," and ASC Subtopic 260-10, "Earnings per
    Share."  In addition, on March 5, 2010, the Company filed an amendment
    to its Certificate of Incorporation to effect the Reverse Stock Split
    at an exchange ratio of 1-for-5.  As such, we have retrospectively
    adjusted basic and diluted earnings (loss) per share, common stock,
    stock options, and common stock equivalents for the reverse stock split
    in all periods presented.




                        NCI BUILDING SYSTEMS, INC.
              NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
      COMPUTATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,
        AMORTIZATION AND OTHER NON-CASH ITEMS ("ADJUSTED EBITDA")
                                (Unaudited)
                              (In thousands)


                                                                 Trailing
                  1st Qtr    2nd Qtr     3rd Qtr     4th Qtr     12 Months
                January 31,   May 2,     August 1,  October 31, October 31,
                   2010        2010        2010        2010        2010
                ----------  ----------  ----------  ----------  ----------
Net loss        $  (10,486) $   (7,656) $   (3,299) $   (5,436) $  (26,877)
Add:
  Depreciation
   and
   amortization      7,521       7,480       7,457       7,309      29,767
  Consolidated
   interest
   expense, net      4,507       4,670       4,392       4,258      17,827
  Provision for
   taxes            (5,779)     (5,536)       (221)     (1,794)    (13,330)
  Non-cash
   charges:
    Stock-based
     compensation      801       1,403       1,374       1,375       4,953
    Asset impairments
     (recovery)      1,029        (116)        (64)        221       1,070
    Embedded
     derivative       (919)         (4)         (7)         (7)       (937)
    Pre-acquisition
     contingency
     adjustment          -           -           -         178         178
  Cash restructuring
     charges           524         829         551       1,628       3,532
  Transaction
   costs               174           -           -        (250)        (76)
                ----------  ----------  ----------  ----------  ----------

  Adjusted
   EBITDA(1)    $   (2,628) $    1,070  $   10,183  $    7,482  $   16,107
                ----------  ----------  ----------  ----------  ----------


                                                                 Trailing
                  1st Qtr    2nd Qtr     3rd Qtr     4th Qtr     12 Months
                February 1,   May 3,     August 2,  November 1, November 1,
                   2009        2009        2009        2009(2)     2009
                ----------  ----------  ----------  ----------  ----------
Net income
 (loss)         $ (529,981) $ (121,571) $    2,607  $ (101,851) $ (750,796)
Add:
  Depreciation
   and
   amortization      8,324       8,436       7,586       7,640      31,986
  Consolidated
   interest
   expense, net      6,623       6,168       6,487       9,578      28,856
  Provision for
   taxes           (34,861)    (16,382)      1,825      (7,495)    (56,913)
  Non-cash
   charges:
    Stock-based
     compensation    1,372       1,177       1,241       1,045       4,835
    Goodwill and
     other
     intangible
     asset
     impairment    517,628     104,936           -           -     622,564
    Asset impair-
     ments
     (recovery)        623       5,295          26         347       6,291
    Lower of cost
     or market
     charges        29,378      10,608           -           -      39,986
  Cash restructuring
   charges           2,479       3,796       1,213       1,564       9,052
  Transaction
   costs                 -         629         401     107,718     108,748
                ----------  ----------  ----------  ----------  ----------

  Adjusted
   EBITDA(1)    $    1,585  $    3,092  $   21,386  $   18,546  $   44,609
                ----------  ----------  ----------  ----------  ----------


(1) On October 20, 2009, the Company amended and restated its Term Note
    facility which defines adjusted EBITDA.  Adjusted EBITDA excludes
    non-cash charges for goodwill and other asset impairments, lower of
    cost or market charges and stock compensation as well as certain
    non-recurring charges. As such, the historical information is
    presented in accordance with the definition above.  Concurrent with the
    amendment and restatement of the term note facility, the Company
    entered into an Asset-Backed Lending facility which has substantially
    the same definition of adjusted EBITDA, except that the ABL facility
    caps certain non-recurring charges.  The Company is disclosing
    adjusted EBITDA, which is a non-GAAP measure, because it is used by
    management and provided to investors to provide comparability of
    underlying operational results.

(2) Amounts have been retrospectively adjusted as a result of the adoption,
    effective November 2, 2009, of  ASC Subtopic 470-20, "Debt with
    Conversion and Other Options."




                        NCI Building Systems, Inc.
         Reconciliation of Segment Sales to Third Party Segment Sales
                           (Internal Information)
                                (Unaudited)
                              (In thousands)
                          (2009 as Adjusted (1))



                            QTD              QTD
                          4th Qtr          4th Qtr                     %
                           2010             2009           Inc/(Dec) Change
                         ---------        ---------
 Metal Coil Coating
     Total Sales            46,884    16%    44,614    15%     2,270     5%
     Intersegment          (29,433)         (31,122)           1,689    -5%
                         ---------        ---------
     Third Party Sales      17,451     7%    13,492     6%     3,959    29%

     Operating Income
      (Loss)                 3,754    22%     6,037    45%    (2,283)  -38%

 Metal Components
     Total Sales           118,475    39%   122,484    42%    (4,009)   -3%
     Intersegment          (24,329)         (17,156)          (7,173)   42%
                         ---------        ---------
     Third Party Sales      94,146    39%   105,328    43%   (11,182)  -11%

     Operating Income
      (Loss)                 8,820     9%    13,557    13%    (4,737)  -35%

 Engineered Building
  Systems
     Total Sales           133,959    45%   128,476    43%     5,483     4%
     Intersegment           (4,102)          (3,988)            (114)    3%
                         ---------        ---------
     Third Party Sales     129,857    54%   124,488    51%     5,369     4%

     Operating Income
      (Loss)                (3,859)   -3%       515     0%    (4,374) -849%

 Consolidated
     Total Sales           299,318   100%   295,574   100%     3,744     1%
     Intersegment          (57,864)         (52,266)          (5,598)   11%
                         ---------        ---------
     Third Party Sales     241,454   100%   243,308   100%    (1,854)   -1%

     Operating Income
      (Loss)                (3,774)   -2%    (3,694)   -2%       (80)    2%


                           YTD              YTD                        %
                           2010             2009           Inc/(Dec) Change
                         ---------        ---------
Metal Coil Coating
     Total Sales           181,874    17%   169,897    15%    11,977     7%
     Intersegment         (116,634)        (116,708)              74     0%
                         ---------        ---------
     Third Party Sales      65,240     7%    53,189     6%    12,051    23%

     Operating Income
      (Loss)                16,166    25%   (99,689) -187%   115,855   116%

 Metal Components
     Total Sales           415,857    38%   458,734    39%   (42,877)   -9%
     Intersegment          (87,780)         (69,602)         (18,178)   26%
                         ---------        ---------
     Third Party Sales     328,077    38%   389,132    40%   (61,055)  -16%

     Operating Income
      (Loss)                26,791     8%  (130,039)  -33%   156,830   121%

 Engineered Building
  Systems
     Total Sales           490,746    45%   538,938    46%   (48,192)   -9%
     Intersegment          (13,537)         (16,007)           2,470   -15%
                         ---------        ---------
     Third Party Sales     477,209    55%   522,931    54%   (45,722)   -9%

     Operating Income
      (Loss)               (18,438)   -4%  (389,007)  -74%   370,569    95%

 Consolidated
     Total Sales         1,088,477   100% 1,167,569   100%   (79,092)   -7%
     Intersegment         (217,951)        (202,317)         (15,634)    8%
                         ---------        ---------
     Third Party Sales     870,526   100%   965,252   100%   (94,726)  -10%

     Operating Income
      (Loss)               (24,587)   -3%  (683,318)  -71%   658,731    96%


(1) Amounts have been retrospectively adjusted as a result of the adoption,
    effective November 2, 2009, of  ASC Subtopic 470-20, "Debt with
    Conversion and Other Options."