HOUSTON, May 9 /PRNewswire-FirstCall/ -- NCI Building Systems, Inc. today announced that it has increased its guidance for fiscal 2006 as a result of its previously announced acquisition of Robertson-Ceco Corporation (RCC). The new guidance for earnings per diluted share for fiscal 2006 is in a range of $3.50 to $3.60, up from the previous range of $3.02 to $3.27. NCI's guidance includes an expense of $0.10 related to the adoption of FAS 123(R) but excludes any potential share dilution related to NCI's 2.125% Convertible Senior Subordinated Notes, because that amount, if any, will be dependent upon the future price of the Company's stock.
"Since closing the purchase of RCC on April 7, 2006, we have been focused on integrating RCC's workforce into the NCI family," remarked A. R. Ginn, Chairman and Chief Executive Officer of NCI. "We have visited every location several times and spoken to almost all the employees. We have shared our vision for the Company and spoken about health care and other benefits. A large part of the discussions have centered on aligning best practices and capturing potential synergies between NCI and RCC.
"In addition to RCC's continuing business, which produced revenues for 2005 of approximately $430 million, we have identified operating synergies throughout RCC's and NCI's Engineered Buildings group. We expect each identified synergy will provide a positive impact to earnings and will be realized over differing time periods depending on the complexity of the synergy. However, once the synergy has been achieved, it should continue to add value for many years. We believe that, as these synergies are achieved over time, they will initially add a minimum of $6.0 million to NCI's normalized annual operating income and as much as $25.0 million per annum when they are fully realized.
"The first synergy on which we have focused is mitigating the potential lost revenue that we had factored into our pre-acquisition RCC financial analysis. While it is early in the process of integration, we are pleased with the positive response from both RCC's builders and our own. We shall continue to focus on retaining and expanding our customer base through this and future years.
"The second synergy is consolidating RCC's and NCI's procurement activities. Achieving this should provide benefits across the organization by improving our purchasing economies of scale in steel, paint and fasteners. We expect to implement this before the end of fiscal 2006, with benefits being realized in fiscal 2007.
"The third synergy will entail moving RCC's currently outsourced light gauge painting requirements to our coil painting plants. This will add an annualized potential of 35,000 tons to our coil paint lines, increasing utilization levels at our light gauge paint lines. We expect to complete this before fiscal year end with benefits being realized in fiscal 2007.
"The fourth synergy will be to suspend RCC's post painting of the purlins and girts (secondary steel framing) in favor of our pre-painted system. This will require some upgrading of rollformers in RCC's U.S. plants. We will be working on this throughout fiscal 2006, but would not expect to realize benefits until fiscal 2007.
"The fifth area of synergies is to provide all of RCC's architectural component requirements, including high-strength standing seam roof systems, the Long Bay System (LBS) and the Insulated Panel System (IPS), from NCI's plants. This is a longer-term synergy, which will require demonstrating to RCC's builders the advantages of NCI's components and products. We will be working on this in fiscal 2006 but would expect benefits to be realized in fiscal 2007.
"The sixth synergy will be in moving RCC to our 'hub and spoke' delivery system, which will enable us to ship all our brands from any of our 39 plants. This system has provided us with great flexibility and significantly improved our ability to service all our customers. We expect to achieve benefits from completing this process in fiscal 2009.
"Finally, we are excited about the potential to improve both the quality and speed of our engineering by migrating the RCC engineering systems to NCI's Buildings group. We see the potential of improving NCI's Buildings group's profitability by as much as 300 basis points over time. To achieve this increase, we will have to upgrade our five Engineered Buildings plants and adapt our current system and customer interface to fully benefit from RCC's engineering systems. While benefits will accrue during the transition, it is likely that full benefits from the completely integrated systems will not be realized until the end of fiscal 2008."
Mr. Ginn concluded, "While this is an ambitious multi-year plan, we take comfort in the fact that many of these synergies are similar to those we captured when we merged NCI (engineered buildings) with MBCI (coil painting and components) in 1998. We have established functional teams to start analyzing and implementing best practices in each of the seven areas for synergies. We are committed to delivering the benefits from these synergies, even as we further expand our combined business."
NCI will provide an online, real-time webcast and rebroadcast of its conference call tomorrow to discuss this announcement. The live broadcast of this conference call will be available online at http://www.ncilp.com/ or http://www.earnings.com/ beginning at 10:30 a.m. (Eastern Time) on Wednesday, May 10, 2006. The online replay will be available at approximately 12:30 p.m. (Eastern Time) and continue for one week.
Except for the historical and factual information contained herein, the matters set forth in this press release, including statements as to the expected benefits of the RCC acquisition such as efficiencies, cost savings, market profile and financial strength, and the competitive ability and position of the combined company, and other statements identified by words such as "guidance," "potential," "expect," "should," 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 are subject to a number of risks and uncertainties that may cause actual results to differ materially, including the possibility that the anticipated benefits from the RCC acquisition cannot be fully realized, the possibility that costs or difficulties related to the integration of the RCC operations into the Company's operations will be greater than expected, industry cyclicality and seasonality, fluctuations in demand and prices for steel, the financial condition of NCI's raw material suppliers, competitive activity and pricing pressure and general economic conditions affecting the construction industry. Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 29, 2005 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. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. The Company operates 44 manufacturing and distribution facilities located in 17 states, as well as Mexico and Canada.
