NCI Building Systems, Inc.
NCI Building Systems, Inc.
Sales: $1.13 billion (2005)
Stock Exchanges: New York
Ticker Symbol: NCS
NAIC: 332311 Prefabricated Metal Building and Component Manufacturing; 332321 Metal Window and Door Manufacturing; 332322 Sheet Metal Work Manufacturing; 332323 Ornamental and Architectural Metal Work Manufacturing; 332990 All Other Miscellaneous Fabricated Metal Product Manufacturing; 444110 Home Centers; 441900 Other Building Material Dealers
NCI Building Systems, Inc., designs, manufactures, and markets metal building systems and components for the nonresidential construction industry in North America. It operates three principal business segments: Metal Building Components; Engineered Building Systems; and Metal Coil Coating.
NCI’s Metal Building Components segment designs, produces, distributes, and sells a range of metal component products, including metal roof and wall systems, interior partition systems, flashings and accessories, and new construction and roll-up doors for selfstorage facilities.
The company’s Engineered Building Systems segment designs, produces, and markets engineered building systems, self storage buildings, and metal home framing systems. The Metal Coil Coating segment provides products and services, including cleaning, coating, and painting continuous steel coils before the steel is fabricated for use by construction and industrial users. NCI’s products are marketed to regional engineered building systems manufacturers, general contractors, subcontractors, roofing installers, and architects.
The company sells metal components, accessories, and metal building packages directly to the public through its NCI retail NCI Metal Depot outlets. Its Able Door Manufacturing subsidiary makes and distributes metal sectional doors for the commercial and residential markets. NCI sells its engineered building products under the brand names A&S Building Systems, Mid-West Steel Building, Mesco, and STEELOX. Its metal coating brands consist of DOUBLECOTE and Metal Prep. NCI operates 19 companies and 44 manufacturing plants in the United States, Canada, and Mexico.
NCI Building Systems was founded in 1984 by Johnie Schulte, Jr., who began his career in the mid-1950s punching and shearing metal building pieces in Houston. The company produced only metal building components until 1987, when it also began making preengineered metal buildings. That year, NCI earned about two million in sales. The company went public in 1992, and a year later its sales soared to more than $130 million. NCI’s growth was fueled in the economic downturn of the early 1990s by acquiring companies when competitors were closing plants. In 1992, NCI purchased A&S Building Systems, a manufacturer of metal buildings based in Caryville, Tennessee. By 1993, NCI was aggressively marketing its products nationwide under a series of trade names, including Metallic Buildings, Mid-West Steel Buildings, NCI All American Systems, Steel Systems, Economaster, and A&S Building Systems. In addition to expanding its product line into self-storage buildings, the company entered the market for roll-up steel overhead doors in 1995 with the purchase of Doors & Building Components, which also produced interior steel parts. The acquisition allowed NCI to start its own line of steel-frame homes.
NCI GROWS AND PROSPERS
NCI continued to expand through acquisitions and new construction in 1996, when it bought Mesco Metal Buildings of Dallas, Texas, and opened up a new plant in California. The company’s profitable performance, stemming from a combination of strategic acquisitions and new facilities, came at a time when the construction industry was still experiencing a soft market. In 1997, NCI purchased real estate, machinery, equipment, and inventories at the Houston, Texas, and Jemison, Alabama, facilities of Carlisle Engineered Metals Inc. for about $6.2 million. NCI aimed to use these facilities to manufacture and market architectural and insulated panel components under the name ECI Building Systems. That same year, the company began a 51 percent owned joint venture in Mexico to produce framing systems, and entered into a joint venture with Precoat Metals, a division of Sequa Corporation, to build a heavy gauge coil coating line in the St. Louis, Missouri, area. The joint venture operated under the name Midwest Metal Coatings LLC. By the end of 1997, it was clear that NCI’s growth strategy was paying off. Net sales had increased to $407.8 million, a 22 percent increase over 1996 net sales of approximately $332.9 million.
In May 1998, NCI acquired Metal Building Components, Inc. (MBCI), from the British industrial company BTR plc for $550 million in cash and 700,000 shares of NCI common stock. Based in Houston, Texas, MBCI was the leading producer of metal roof and wall systems in the United States and a major provider of coating and finishing services. With this acquisition, NCI became one of the world’s largest integrated suppliers to the construction industry, providing metal buildings, roof and wall systems, commercial door and metal coil coatings, with 39 facilities located in 19 states and Mexico. Although NCI had completed seven acquisitions since 1992, the buy out of MBCI with 1997 revenues of $408 million in a single stroke doubled the company’s size, almost putting it on par in terms of revenues with the nation’s largest metal building company, Butler Manufacturing of Kansas City, Missouri. Also in May, NCI acquired the operations of Metal Coaters of California for $15 million, further expanding its metal coating and painting capacity.
After these acquisitions and with confidence in its future growth prospects, NCI announced a two-for-one stock split with the aim of keeping the price of its stock within a comfortable trading range for investors and enhancing trading liquidity by increasing the total number of shares available without any dilution. In August 1998, the company took the next step in its evolution by winning approval to list its stock on the New York Stock Exchange in order to increase its worldwide visibility and liquidity. Citing primarily the effect of the midyear acquisition of MBCI, the company announced 66 percent revenue growth and 92 percent growth in income from operations during fiscal year 1998. NCI also benefited from its joint venture with Precoat Metals and from its Mexican manufacturing venture becoming fully operational in late 1998, providing additional heavy production capacity.
NCI is a corporation with a clear vision of the future. From the beginning, our philosophy has concentrated on growing our business from the inside out. Through internal growth, accretive acquisitions and the astute management of assets, NCI has emerged as a leader of our industry, with an impressive portfolio encompassing 19 companies and 44 manufacturing facilities across the United States.
NCI continued to see considerable growth in 1999. The company not only achieved new highs in net sales and net income, but also substantially concluded the successful assimilation of MBCI that had been acquired in May 1998. NCI’s record sales of $936.6 million for fiscal 1999 represented more than a fivefold increase in NCI’s size over the previous five years. Shortly after the close of fiscal year 1999, the board of directors approved the repurchase of approximately one million shares of common stock of the company out of 19.1 million shares outstanding. NCI’s board of directors believed that the repurchase would offer a sound long-term return to shareholders and would provide an immediate benefit by increasing the company’s earnings per share.
NCI bought out the privately held Consolidated Systems share in their DOUBLECOTE metal coilcoating joint venture for $26 million in 2000. Later that year, the company acquired Midland Metals, a producer of metal building components. The acquisition strengthened NCI’s geographical presence in the Midwest. In April, NCI moved into new and larger corporate headquarters in Houston, resulting from its 1998 acquisition of MBCI, and announced the additional repurchase of 1.5 million shares of common stock of the company. The company reported that net sales for 2000 crossed the $1 billion mark for the first time to $1.02 billion, up 8.7 percent from the previous year, prompting Johnie Schulte, Jr., president and chief executive officer, to note that NCI had set new records in virtually every category.
ENTERING THE 21ST CENTURY: NCI EXPERIENCES HARDER TIMES
In 2001, numerous class action lawsuits were filed against NCI, alleging stock fraud in connection with the restatement of the company’s financial statements for the last half of fiscal 1999, all of fiscal 2000, and the first quarter of fiscal 2001. NCI blamed the accounting errors on a computer system installed in 1999 that routinely processed some accounting entries incorrectly, and on employees who later altered the company’s books manually to mask the errors made by the automated system. News of the accounting errors sent NCI’s share price plummeting 32 percent, from a closing price of $18.30 a share on April 12, 2001, to $12.45 a share at the close of the next trading day, April 16, 2001. NCI reached a settlement of the lawsuits in 1994, without admitting any of the allegations against the company or its officers, by agreeing to pay $7 million for the dismissal of all claims.
With the economic recession and uncertainty in the economy following the September 11, 2001, terrorist attacks on the United States, NCI experienced a fall-off in orders, leading it to close five plants in the first quarter of fiscal 2002. The company closed its components plants in Houston and Grand Prairie, Texas; Tampa, Florida; and Nampa, Idaho; as well as a building systems plant in Chester, South Carolina. NCI also sold its 50 percent stake in Midwest Metal Coatings to its joint venture partner. NCI began direct selling to the public by opening several NCI Metal Depot retail factory outlets, offering metal roof and wall panels, light structural and tubing shapes, and accessories, as well as a variety of other products, including carports, storage sheds, and other metal buildings. The company’s restructuring and new sales strategy, however, could not stem a sales decline for fiscal 2001 to $954.9 million from more than $1 billion in the previous year.
NCI RENEWS GROWTH AND EXPANSION
Despite the persistence of the economic recession in the construction industry in 2002, NCI renewed its expansion by opening a new plant in Big Rapids, Michigan, to produce light gauge metal roof and wall panels for residential, commercial, and agricultural markets. The new plant was anticipated to serve new and existing customers in Michigan and parts of Indiana, Ohio, and Wisconsin. Nevertheless, overall sales for fiscal year 2002 declined slightly from the previous year to $953.4 million. NCI fared better than most of the competition in the metal construction business, which showed greater declines or were forced to make serious cutbacks in their operations and services.
- Company is founded.
- NCI issues stock to public investors; begins series of acquisitions.
- Company lists its stock on the New York Stock Exchange.
- NCI buys out Consolidated Systems share in their DOUBLECOTE metal coil-coating venture.
- Company shutters five plants due to economic recession.
- NCI founder, president, and chief executive officer, Johnie Schulte, Jr., retires.
- NCI acquires Robertson-Ceco Corporation.
In 2003, NCI announced that it was building another new plant in Lexington, Tennessee, for manufacturing frames for metal buildings, and added two retail factory stores in Texas. The company also entered the garage door market by buying Texas-based Able Manufacturing and Wholesale Garage Door Company for approximately $3.3 million in cash. Prior to its takeover, the firm, which produced and distributed metal sectional doors for the commercial and residential markets, had filed for bankruptcy under Chapter 11. NCI founder, president, and chief executive officer, Johnie Schulte, Jr., retired in November 2003 and retired as a member of the board of directors in March 2004. A. R. Ginn assumed his position as chief executive officer, and in April 2004, NCI named Norman C. Chambers as president and chief operating officer. Chambers had been a director of NCI since June 2002 and was previously president and chief operating officer of Comfort Systems USA, Inc., a provider of comprehensive HVAC services in 51 cities throughout the United States. In September 2004, the company sued Schulte alleging violations of noncompete provisions contained in Schulte’s employment and retirement agreements, prompting Schulte to file counterclaims against NCI. A confidential settlement was reached in August 2005 with neither party admitting wrongdoing.
In December 2004, NCI expanded its retail and builder distribution channels by buying Heritage Building Systems and Steelbuilding.com based in North Little Rock, Arkansas, for $30 million and approximately 200,000 shares of NCI common stock. Heritage marketed general purpose, engineered steel buildings, including for the fast-growing agricultural market. Founded in 2000, Steelbuilding.com operated as the largest marketer of engineered steel buildings via the Internet. NCI expected the two companies to produce annual sales revenues of approximately $50 million.
In 2005, NCI bought the intellectual property rights to rival STEELOX Systems, LLC, a metal buildings and components producer headquartered in Mason, Ohio. The purchase gave NCI the rights to any and all of STEELOX’s property rights, including trademarks, copyrights, patents, common law rights, names, logos, web sites, and customer lists of the 70-year-old company. NCI then acquired the Robertson-Ceco Corporation, a leader in the metal buildings industry, for $370 million in cash in April 2006. One of the largest metal building operations in the United States with 2005 revenues of about $450 million, Robertson-Ceco operated the Robertson Building Systems, Ceco Building Systems, Star Building Systems, and Steelspec divisions. The acquisition was expected to bolster NCI’s position as a supplier to the construction industry, providing metal buildings, roof and wall systems, and metal coil coatings from 42 operating facilities in the United States and Canada, as well as one in Mexico. With these acquisitions, NCI continued to pursue a successful growth strategy of buying other companies and expanding its marketing presence in North America.
Bruce P. Montgomery
Metal Building Components; Engineered Building Systems; Metal Coil Coaters.
Butler Manufacturing; GI-Holdings.
“Company News: NCI Building Systems in $550 Million Deal for Rival,” New York Times, March 27, 1998.
Elkins, Ken, “Chester Plant Will Close, Eliminating 114 Workers,” Business Journal Serving Charlotte and the Metropolitan Area, October 26, 2001.
Haflich, Frank, “Major W. Coast Coil Coater Sold,” American Metal Market, June 9, 1998.
Pybus, Kenneth R., “NCI Building Systems Bucks Trend with Rising Sales,” Houston Business Journal, August 30, 1996.
Sarnoff, Nancy, “MCI Building Systems Inc.,” Houston Business Journal, April 28, 2000.
“Two Houston-Based Building Companies to Merge,” Knight-Ridder/Tribune Business News, March 27, 1998.
"NCI Building Systems, Inc.." International Directory of Company Histories. . Encyclopedia.com. (October 20, 2016). http://www.encyclopedia.com/books/politics-and-business-magazines/nci-building-systems-inc
"NCI Building Systems, Inc.." International Directory of Company Histories. . Retrieved October 20, 2016 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/nci-building-systems-inc
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