NCI Building's (NCS) Shares Decline 14% On Q4 Earnings Miss
Zacks Investment Research | Dec 19, 2018 10:02PM ET
NCI Building Systems, Inc.’s (NYSE:NCS) shares tumbled 14.3% in yesterday’s trading session, after the company reported lower-than-expected earnings in the fourth quarter of fiscal 2018 (ended Oct 28, 2018). It reported adjusted earnings of 55 cents per share in the quarter, marginally missing the Zacks Consensus Estimate of 56 cents. The reported figure, however, surged 71.9% from 32 cents recorded in the prior-year quarter.
Including one-time items, the company posted earnings of 41 cents per share compared with 25 cents reported in the year-ago quarter.
Operational Highlights
Sales rose 17.4% year over year to $573.6 million in the quarter. The top line also surpassed the Zacks Consensus Estimate of $566 million. This year-over-year improvement was driven by ongoing strategic discipline, combined with volume growth in both Engineered Metal Building and Insulated Metal Panels segments.
Cost of sales rose 18.2% year over year to $440.4 million in the quarter. Also, gross profit grew 14.6% year over year to $133.3 million. However, gross margin contracted 60 basis points (bps) to 23.2% in the quarter due to lower manufacturing utilization owing to bad weather, primarily in the Metal Components segment, and product mix in the IMP segment.
Engineering, selling, general and administrative or ESG&A expenses grew 8.5% year over year to $78.9 million, primarily to support higher sales volumes and due to wage inflation. As a percentage of sales, ESG&A expenses decreased 110 bps to 13.8% in the quarter. This improvement was mainly due to the company’s ongoing cost-reduction initiatives. It reported adjusted operating income of $52 million, reflecting an increase of 26% from the year-ago quarter. Adjusted operating margin came in at 9.1%, expanding 70 bps year over year.
Adjusted EBITDA came in at $65.8 million, reflecting an 22.1% year-over-year improvement. Adjusted EBITDA margin also rose 50 bps year over year to 11.5% in the quarter.
NCI Building Systems, Inc. Price, Consensus and EPS Surprise
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