NCI BUILDING SYSTEMS INC (Form: 10-Q, Received: 09/04/2015 16:58:42)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 2, 2015



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-14315

NCI BUILDING SYSTEMS, INC.

(Exact name of registrant as specified in its charter)



Delaware	76-0127701
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



10943 North Sam Houston Parkway West, Houston, TX	77064
(Address of principal executive offices)	(Zip Code)

(281) 897-7788

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ý No

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value - 74,082,045 shares as of August 31, 2015 .

TABLE OF CONTENTS



		PAGE
	Part I — Financial Information
Item 1.	Unaudited Consolidated Financial Statements	1
	Consolidated Balance Sheets as of August 2, 2015 and November 2, 2014	1
	Consolidated Statements of Operations for the Fiscal Three and Nine Month Periods Ended August 2, 2015 and August 3, 2014	2
	Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Three and Nine Month Periods Ended August 2, 2015 and August 3, 2014	3
	Consolidated Statements of Stockholders’ Equity for the Fiscal Nine Month Period Ended August 2, 2015	4
	Consolidated Statements of Cash Flows for the Fiscal Nine Month Periods Ended August 2, 2015 and August 3, 2014	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

	Part II — Other Information
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	49

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements.

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



	August 2, 2015			November 2, 2014
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	48,277		$	66,651
Restricted cash	980			—
Accounts receivable, net	161,546			136,923
Inventories, net	164,251			131,497
Deferred income taxes	24,134			21,447
Income tax receivable	3,698			—
Prepaid expenses and other	32,051			22,773
Investments in debt and equity securities, at market	5,821			5,549
Assets held for sale	6,261			5,690
Total current assets	447,019			390,530
Property, plant and equipment, net	266,239			244,714
Goodwill	193,569			75,226
Intangible assets, net	126,823			44,923
Deferred financing costs, net	11,545			3,290
Total assets	$	1,045,195		$	758,683
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—		$	2,384
Note payable	1,026			418
Accounts payable	146,563			118,164
Accrued compensation and benefits	58,639			50,666
Accrued interest	2,041			1,820
Other accrued expenses	85,649			72,259
Total current liabilities	293,918			245,711
Long-term debt, net	454,147			233,003
Deferred income taxes	23,856			20,219
Other long-term liabilities	22,262			13,208
Total long-term liabilities	500,265			266,430
Stockholders’ equity:
Common stock, $.01 par value, 100,000,000 shares authorized; 74,526,431 and 73,769,095 shares issued at August 2, 2015 and November 2, 2014, respectively; 74,082,045 and 73,530,295 shares outstanding at August 2, 2015 and November 2, 2014, respectively	745			737
Additional paid-in capital	639,051			630,297
Accumulated deficit	(372,138		)	(371,550		)
Accumulated other comprehensive loss, net	(9,170		)	(8,739		)
Treasury stock, at cost (444,386 and 238,800 shares at August 2, 2015 and November 2, 2014, respectively)	(7,476		)	(4,203		)
Total stockholders’ equity	251,012			246,542
Total liabilities and stockholders’ equity	$	1,045,195		$	758,683

See accompanying notes to consolidated financial statements.

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



	Fiscal Three Months Ended						Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014			August 2, 2015			August 3, 2014
Sales	$	420,789		$	361,626		$	1,103,862		$	978,092
Cost of sales	319,102			282,061			852,789			781,016
Fair value adjustment of acquired inventory	1,000			—			2,358			—
Gain on insurance recovery	—			—			—			(1,311		)
Gross profit	100,687			79,565			248,715			198,387
Engineering, selling, general and administrative expenses	74,520			64,864			210,424			190,340
Intangible asset amortization (including amortization of short lived acquired intangibles)	5,338			1,013			11,206			3,040
Strategic development and acquisition related costs	701			1,486			3,058			1,486
Restructuring costs	750			—			3,695			—
Income from operations	19,378			12,202			20,332			3,521
Interest income	14			60			53			110
Interest expense	(8,149		)	(3,203		)	(20,448		)	(9,388		)
Foreign exchange loss	(610		)	(360		)	(2,021		)	(799		)
Other income, net	107			227			439			756
Income (loss) before income taxes	10,740			8,926			(1,645		)	(5,800		)
Provision (benefit) from income taxes	3,520			2,837			(1,057		)	(2,726		)
Net income (loss)	$	7,220		$	6,089		$	(588	)	$	(3,074	)
Net income allocated to participating securities	(60		)	(50		)	—			—
Net income (loss) applicable to common shares	$	7,160		$	6,039		$	(588	)	$	(3,074	)

Income (loss) per common share:
Basic	$	0.10		$	0.08		$	(0.01	)	$	(0.04	)
Diluted	$	0.10		$	0.08		$	(0.01	)	$	(0.04	)
Weighted average number of common shares outstanding:
Basic	73,341			72,928			73,170			73,093
Diluted	74,336			74,393			73,170			73,093

See accompanying notes to consolidated financial statements.

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)



	Fiscal Three Months Ended						Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014			August 2, 2015			August 3, 2014
Comprehensive income (loss):
Net income (loss)	$	7,220		$	6,089		$	(588	)	$	(3,074	)
Other comprehensive income (loss), net of tax:
Foreign exchange translation losses and other, net of taxes ⁽¹⁾	(431		)	(6		)	(431		)	(227		)
Other comprehensive loss	(431		)	(6		)	(431		)	(227		)
Comprehensive income (loss)	$	6,789		$	6,083		$	(1,019	)	$	(3,301	)


(1)	Foreign exchange translation losses and other are presented net of taxes of $0 in both the three months ended August 2, 2015 and August 3, 2014 and $0 in both the nine months ended August 2, 2015 and August 3, 2014 .

See accompanying notes to the consolidated financial statements.

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)



				Additional						Accumulated Other
	Common Stock			Paid-In			Accumulated			Comprehensive			Treasury Stock					Stockholders’
	Shares	Amount		Capital			Deficit			Loss			Shares		Amount			Equity
Balance, November 2, 2014	73,769,095	$	737	$	630,297		$	(371,550	)	$	(8,739	)	(238,800	)	$	(4,203	)	$	246,542
Treasury stock purchases	—	—		—			—			—			(205,586	)	(3,273		)	(3,273		)
Issuance of stock awards	396,383	4		(4		)	—			—			—		—			—
Issuance of restricted stock	320,953	3		(3		)	—			—			—		—			—
Stock options exercised	40,000	1		353			—			—			—		—			354
Excess tax benefits from share-based compensation arrangements	—	—		706			—			—			—		—			706
Foreign exchange translation loss and other, net of taxes	—	—		—			—			(431		)	—		—			(431		)
Share-based compensation	—	—		7,702			—			—			—		—			7,702
Net loss	—	—		—			(588		)	—			—		—			(588		)
Balance, August 2, 2015	74,526,431	$	745	$	639,051		$	(372,138	)	$	(9,170	)	(444,386	)	$	(7,476	)	$	251,012

See accompanying notes to the consolidated financial statements.

NCI BUILDING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014
Cash flows from operating activities:
Net loss	$	(588	)	$	(3,074	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	38,038			26,702
Deferred financing cost amortization	1,006			830
Share-based compensation expense	7,702			8,146
Gain on insurance recovery	—			(1,311		)
(Gain) loss on sale of property, plant and equipment	(15		)	41
(Recovery of) provision for doubtful accounts	(645		)	334
Provision for (benefit from) deferred income taxes	5,625			(3,109		)
Excess tax benefits from share-based compensation arrangements	(706		)	(549		)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	13,254			1,503
Inventories	(1,910		)	(14,474		)
Income tax receivable	(2,634		)	(2		)
Prepaid expenses and other	1,071			(1,287		)
Accounts payable	493			(29,367		)
Accrued expenses	(22,106		)	5,529
Other, net	6			34
Net cash provided by (used in) operating activities	38,591			(10,054		)
Cash flows from investing activities:
Acquisition, net of cash acquired	(247,123		)	—
Capital expenditures	(15,330		)	(14,529		)
Proceeds from sale of property, plant and equipment	28			—
Proceeds from insurance	—			1,311
Net cash used in investing activities	(262,425		)	(13,218		)
Cash flows from financing activities:
Proceeds from stock options exercised	354			—
Issuance of debt	250,000			—
Payments on term loan	(31,240		)	(1,792		)
Payments on note payable	(1,103		)	(1,172		)
Proceeds from Amended ABL Facility	—			72,000
Payments on Amended ABL Facility	—			(72,000		)
Payment of financing costs	(9,218		)	(67		)
Excess tax benefits from share-based compensation arrangements	706			549
Purchase of treasury stock	(3,273		)	(23,791		)
Net cash provided by (used in) financing activities	206,226			(26,273		)
Effect of exchange rate changes on cash and cash equivalents	(766		)	(227		)
Net decrease in cash and cash equivalents	(18,374		)	(49,772		)
Cash and cash equivalents at beginning of period	66,651			77,436
Cash and cash equivalents at end of period	$	48,277		$	27,664

See accompanying notes to consolidated financial statements.

NCI BUILDING SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 2, 2015

(Unaudited)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements for NCI Building Systems, Inc. (together with its subsidiaries, unless otherwise indicated, the “Company,” “NCI,” “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements included herein contain all adjustments, which consist of normal recurring adjustments, necessary to fairly present our financial position, results of operations and cash flows for the periods indicated. Operating results for the fiscal three and nine month periods ended August 2, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending November 1, 2015 . Our sales and earnings are subject to both seasonal and cyclical trends and are influenced by general economic conditions, interest rates, the price of steel relative to other building materials, the level of nonresidential construction activity, roof repair and retrofit demand and the availability and cost of financing for construction projects.

For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended November 2, 2014 filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2014.

Reporting Periods

We use a four-four-five week calendar each quarter with our fiscal year end being on the Sunday closest to October 31. The year end for fiscal 2015 is November 1, 2015 .

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to the current presentation. The net effect of these reclassifications was not material to our consolidated financial statements.

Revenue Recognition

We recognize revenues when the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. Generally, these criteria are met at the time product is shipped or services are complete. A portion of our revenue, exclusively within our engineered building systems segment, includes multiple-element revenue arrangements due to multiple deliverables. Each deliverable is generally determined based on customer-specific manufacturing and delivery requirements.

Because the separate deliverables have value to the customer on a stand-alone basis, they are typically considered separate units of accounting. A portion of the entire job order value is allocated to each unit of accounting. Revenue allocated to each deliverable is recognized upon shipment. We use estimated selling price (“ESP”) based on underlying cost plus a reasonable margin to determine how to separate multiple-element revenue arrangements into separate units of accounting, and how to allocate the arrangement consideration among those separate units of accounting. We determine ESP based on our normal pricing and discounting practices.

Our sales arrangements do not include a general right of return of the delivered product(s). In certain cases, the cancellation terms of a job order provide us with the opportunity to bill for certain incurred costs. In those instances, revenue is not recognized until all revenue recognition criteria are met, including reasonable assurance of collectability.

In our metal coil coating segment, our revenue activities broadly consist of cleaning, treating, painting and packaging various flat rolled metals as well as slitting and/or embossing the metal. We enter into two types of sales arrangements with our customers: toll processing sales and package sales. The primary distinction between these two arrangements relates to ownership of the underlying metal coil during treatment. In toll processing arrangements, we do not maintain ownership of the underlying metal coil during treatment and only recognize revenue for the toll processing activities, typically, cleaning, painting, slitting, embossing

and packaging. In package sales arrangements, we have ownership of the metal coil during treatment and recognize revenue on both the toll processing activities and the sale of the underlying metal coil. Under either arrangement, revenue and the related direct and indirect costs are recognized when all of the recognition criteria are met, which is generally when the products are shipped to the customer.

NOTE 2 — ACQUISITION

On January 16, 2015, NCI Group, Inc., a wholly-owned subsidiary of the Company, and Steelbuilding.com, LLC, a wholly owned subsidiary of NCI Group, Inc., completed the acquisition of CENTRIA (the “CENTRIA Acquisition”), a Pennsylvania general partnership (“CENTRIA”), pursuant to the terms of the Interest Purchase Agreement, dated November 7, 2014 (“Interest Purchase Agreement”) with SMST Management Corp., a Pennsylvania corporation, Riverfront Capital Fund, a Pennsylvania limited partnership, and CENTRIA. NCI acquired all of the general partnership interests of CENTRIA in exchange for $255.8 million in cash. The purchase price is subject to a post-closing adjustment to net working capital as provided in the Interest Purchase Agreement. The purchase price was funded through the issuance of $250.0 million of new indebtedness. See Note 12 — Long-Term Debt and Note Payable. CENTRIA is now an indirect, wholly-owned subsidiary of NCI.

Accordingly, the results of CENTRIA’s operations from January 16, 2015 are included in our consolidated financial statements. For the period from January 16, 2015 to August 2, 2015 , CENTRIA contributed revenue of $121.1 million and operating loss of $3.7 million . CENTRIA is a leader in the design, engineering and manufacturing of architectural insulated metal panel (“IMP”) wall and roof systems and a provider of integrated coil coating services for the nonresidential construction industry. CENTRIA operates four production facilities in the United States and a manufacturing facility in China.

We report on a fiscal year that ends on the Sunday closest to October 31. CENTRIA previously reported on a calendar year that ended December 31. In accordance with ASC Topic 805, "Business Combinations" , the unaudited pro forma financial information for the three and nine month periods ended August 2, 2015 and August 3, 2014 assumes the acquisition was completed on November 4, 2013, the first day of fiscal year 2014.

This unaudited pro forma financial information does not necessarily represent what would have occurred if the transaction had taken place on the dates presented and should not be taken as representative of our future consolidated results of operations. The unaudited pro forma financial information includes adjustments for interest expense to match the new capital structure and amortization expense for identified intangibles. In addition, acquisition related costs and $16.1 million of transaction costs incurred by the seller are excluded from the unaudited pro forma financial information. We expect to realize operating synergies from supply chain optimization, cost reductions, alignment of purchase terms and logistics and pricing optimization. The pro forma information does not reflect these potential synergies or expense reductions.

The following table shows our unaudited pro forma financial information for the three and nine month periods ended August 2, 2015 and August 3, 2014 (in thousands, except per share amounts):



	Unaudited Pro Forma
	Fiscal Three Months Ended				Fiscal Nine Months Ended
	August 2, 2015		August 3, 2014		August 2, 2015			August 3, 2014
Sales	$	420,789	$	425,000	$	1,148,348		$	1,145,484
Net income (loss) applicable to common shares	7,547		3,368		(3,727		)	(11,718		)
Income (loss) per common share
Basic	0.10		0.05		(0.05		)	(0.16		)
Diluted	$	0.10	$	0.05	$	(0.05	)	$	(0.16	)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as part of the CENTRIA Acquisition as of January 16, 2015. The fair value of all assets acquired and liabilities assumed are preliminary and the final determination of any required acquisition method adjustments will be made upon the completion of our fair value assessments. As a result, the initial purchase price allocations may be adjusted for changes in estimates of the fair value of assets acquired and liabilities assumed.



(In thousands)	January 16, 2015
Current assets	$	83,453
Property, plant and equipment	34,127
Intangible assets	93,030
Assets acquired	$	210,610
Current liabilities	$	64,331
Other liabilities	8,893
Liabilities assumed	$	73,224
Fair value of net assets acquired	$	137,386
Total consideration paid	255,841
Goodwill	$	118,455

The amount allocated to intangible assets was attributed to the following categories (in thousands):



			Useful Lives
Backlog	$	8,000	9 months
Trade names	15,620		15 years
Customer lists and relationships	69,410		20 years
	$	93,030

These intangible assets are amortized on a straight-line basis.

The excess of the purchase price over the fair values of assets acquired and liabilities assumed was allocated to goodwill. We include the results of the CENTRIA Acquisition in the metal components segment. Goodwill of $118.5 million was recorded in our metal components segment. Additionally, because the entity acquired was treated as a partnership for tax purposes, the tax basis of the acquired assets and liabilities has been adjusted to their fair value and goodwill will be deductible for tax purposes.

For all of our intangibles, including those recently acquired as part of the CENTRIA Acquisition and from prior acquisitions, the weighted average estimated useful life is 17.5 years. We recognized $11.2 million in amortization expense for all intangibles during the nine months ended August 2, 2015 . Total accumulated amortization was $31.7 million at August 2, 2015 . We expect to recognize amortization expense over the next five fiscal years as follows (in millions):



August 3, 2015 to November 1, 2015	$	3,921
2016	7,905
2017	7,905
2018	7,905
2019	7,905

NOTE 3 — ACCOUNTING PRONOUNCEMENTS

Adopted Accounting Pronouncements

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, A Similar Tax Loss, or a Tax Credit Carryforward Exists (A Consensus of the FASB Emerging Issues Task Force) . ASU 2013-11 requires an entity to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss carryforward, or similar tax loss or tax credit carryforward, rather than as a liability when the uncertain tax position would reduce the net operating loss or other carryforward under the tax law of the applicable jurisdiction and the

entity intends to use the deferred tax asset for that purpose. We adopted ASU 2013-11 prospectively for our first quarter in fiscal 2015. The adoption of ASU 2013-11 did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 changes the requirement for reporting discontinued operations. A disposal of a component of an entity or a group of components of an entity will be required to be reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on an entity’s operations and financial results when the entity or group of components of an entity meets the criteria to be classified as held for sale or when it is disposed of by sale or other than by sale. The update also requires additional disclosures about discontinued operations, a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements, and an entity’s significant continuing involvement with a discontinued operation. This update is effective prospectively for our first quarter in fiscal 2016. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in previously issued financial statements. We are currently evaluating the potential impact of this authoritative guidance on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for our first quarter in fiscal 2018 under either full or modified retrospective adoption. Early application is not permitted. On July 9, 2015, the FASB deferred the effective date by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Entities can still adopt the amendments as of the original effective date. We are currently assessing the potential effects of these changes to our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in FASB Accounting Standards Codification 718, Compensation — Stock Compensation , as it relates to such awards. ASU 2014-12 is effective for our first quarter in fiscal 2017, with early adoption permitted. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items . ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items. The guidance is effective for our fiscal year ended October 29, 2017. A reporting entity may apply the amendments prospectively. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . ASU 2015-03 requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as a separate asset. In circumstances where the costs are incurred before the debt liability is recorded, the costs will be reported on the balance sheet as an asset until the debt liability is recorded. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and is effective for our fiscal year ended October 29, 2017. Early adoption is permitted for financial statements that have not been previously issued. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the guidance specifies that the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. ASU 2015-05 further specifies that the customer should account for a cloud computing arrangement as a service contract if the arrangement does not include a software license. The guidance is effective for our fiscal year ended October 29, 2017. We are currently assessing the impact of this guidance on our consolidated financial statements.

disclosures. The update requires retrospective application and is effective for our fiscal year ended October 29, 2017. Early adoption is permitted for financial statements that have not been previously issued. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

In July 2015, the FASB issues ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU 2015-11 requires that inventory that has historically been measured using first-in, first-out (FIFO) or average cost method should now be measured at the lower of cost and net realizable value. The update requires prospective application and is effective for our fiscal year ended October 28, 2018. Early adoption is permitted for financial statements that have not been previously issued. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

NOTE 4 —RESTRUCTURING

During the first quarter of fiscal 2015, we approved a plan to consolidate our three engineered buildings systems manufacturing facilities in Tennessee, closing the Caryville facility. We have incurred severance and facility costs at the Caryville facility of approximately $1.6 million during the first nine months of fiscal 2015. We completed the closing of the Caryville facility during March 2015 . In addition, during the first nine months of fiscal 2015, we incurred severance related costs of $1.5 million , $0.2 million and $0.2 million in the metal components segment, engineered building systems segment and metal coil coating segment, respectively, primarily in an effort to streamline our management and manufacturing structure to better serve our customers. The following table summarizes our restructuring plan costs and charges related to the restructuring plan during the fiscal nine months ended August 2, 2015 (in thousands):



	Fiscal Three Months Ended
	February 1, 2015		May 3, 2015		August 2, 2015		Cost Incurred To Date		Remaining Anticipated Cost		Total Anticipated Cost
General severance	$	606	$	764	$	750	$	2,120	$	669	$	2,789
Plant closing severance	$	871	$	704	$	—	$	1,575	$	—	$	1,575
Total restructuring costs	$	1,477	$	1,468	$	750	$	3,695	$	669	$	4,364

The following table summarizes our restructuring liability and cash payments made related to the restructuring plan (in thousands):



	General Severance			Plant Closing Severance			Total
Balance at February 1, 2015	$	—		$	999		$	999
Costs incurred	1,875			300			2,175
Cash payments	(2,230		)	(1,238		)	(3,468		)
Accrued severance ⁽¹⁾	535			—			535
Balance at August 2, 2015	$	180		$	61		$	241

(1)

During the second quarter of fiscal 2015, we entered into transition and separation agreements with certain executive officers. Each terminated executive officer is entitled to severance benefit payments issuable in two installments. The termination benefits were measured initially at the separation date based on the fair value of the liability as of the termination date, and recognized ratably over the future service period.

NOTE 5 — RESTRICTED CASH

We have entered into a cash collateral agreement with PNC Bank to backstop existing CENTRIA letters of credit until they expire. The restricted cash is held in a bank account with PNC Bank as the secured party. As of August 2, 2015 , we had restricted cash in the amount of approximately $1.0 million as collateral related to our letters of credit for international projects with CENTRIA, exclusive of letters of credit under our Amended ABL Facility. See Note 12 — Long-Term Debt and Note Payable to the consolidated financial statements for more information on the material terms of our Amended ABL Facility. Restricted cash as of August 2, 2015 is classified as current as the underlying letters of credit expire within one year of the respective balance sheet date. Any renewal or replacement of the CENTRIA letters of credit is expected to occur under our Amended ABL Facility.

NOTE 6 — INVENTORIES

The components of inventory are as follows (in thousands):



	August 2, 2015		November 2, 2014
Raw materials	$	114,928	$	93,367
Work in process and finished goods	49,323		38,130
	$	164,251	$	131,497

NOTE 7 — ASSETS HELD FOR SALE

We record assets held for sale at the lower of the carrying value or fair value less costs to sell. The following criteria are used to determine if property is held for sale: (i) management has the authority and commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition; (iii) there is an active program to locate a buyer and the plan to sell the property has been initiated; (iv) the sale of the property is probable within one year; (v) the property is being actively marketed at a reasonable sale price relative to its current fair value; and (vi) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.

In determining the fair value of the assets less cost to sell, we considered factors including current sales prices for comparable assets in the area, recent market analysis studies, appraisals and any recent legitimate offers. If the estimated fair value less cost to sell of an asset is less than its current carrying value, the asset is written down to its estimated fair value less cost to sell. The carrying value of assets held for sale (representing idled facilities) is $6.3 million and $5.7 million at August 2, 2015 and November 2, 2014 , respectively, and these amounts are included in the engineered building systems segment. All of these assets continue to be actively marketed for sale at August 2, 2015 .

Due to uncertainties in the estimation process, it is reasonably possible that actual results could differ from the estimates used in our historical analysis. Our assumptions about property sales prices require significant judgment because the current market is highly sensitive to changes in economic conditions. We calculated the estimated fair values of assets held for sale based on current market conditions and assumptions made by management, which may differ from actual results and may result in additional impairments if market conditions deteriorate.

NOTE 8 — SHARE-BASED COMPENSATION

Restricted Stock and Performance Awards

Our 2003 Long-Term Stock Incentive Plan (“Incentive Plan”) is an equity-based compensation plan that allows us to grant a variety of types of awards, including stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units (“PSUs”), phantom stock awards, long-term incentive awards with performance conditions (“Performance Share Awards”) and cash awards. As of August 2, 2015 and August 3, 2014 , and for all periods presented, our share-based awards under this plan have consisted of restricted stock grants, PSUs and stock option grants, none of which can be settled through cash payments, and Performance Share Awards. Both our stock options and restricted stock awards are subject only to vesting requirements based on continued employment at the end of a specified time period and typically vest over three to four years or earlier upon death, disability or a change of control. However, our annual restricted stock awards issued prior to December 15, 2013 also vest upon attainment of age 65 and, only in the case of certain special one-time restricted stock awards, a portion vest on termination without cause or for good reason, as defined by the agreements governing such awards. Restricted stock awards issued after December 15, 2013 do not vest upon attainment of age 65, as provided by the agreements governing such awards. The vesting of our Performance Share Awards is described below.

In December 2014, we granted long-term incentive awards with a three -year performance period to our senior executives (“2014 Executive Awards”). 40% of the value of the long-term incentive awards will consist of time-based restricted stock and 60% of the value of the award will consist of PSUs. The restricted stock is time-vesting based on continued employment, with two-thirds of the restricted stock vesting on December 15, 2016 and one-third vesting on December 15, 2017. The PSUs vest based on the achievement of performance goals and continued employment, with one-half of the award vesting on December 15, 2016 and the remaining one-half vesting on December 15, 2017. The PSU performance goals will be based on three metrics: (1) cumulative free cash flow (weighted 40% ); (2) cumulative earnings per share (weighted 40% ); and (3) total shareholder return (weighted 20% ), in each case during the performance period. The number of shares that may be received on vesting of the PSUs will depend upon the satisfaction of the performance goals, up to a maximum of 200% of the target number of the PSUs. The

PSUs vest pro rata if an executive’s employment terminates prior to the end of the performance period due to death, disability, or termination by NCI without cause or by the executive for good reason. If an executive’s employment terminates for any other reason prior to the end of the performance period, all outstanding unvested PSUs, whether earned or unearned, are forfeited and cancelled. If a change in control of NCI occurs prior to the end of the performance period, the PSU payout is calculated and paid assuming that the maximum benefit had been achieved. If an executive’s employment terminates due to death or disability while any of the restricted stock is unvested, then all of the unvested restricted stock shall become vested. If an executive’s employment is terminated by NCI without cause or after reaching normal retirement age, the unvested restricted stock is forfeited. If a change in control of NCI occurs prior to the end of the performance period, the restricted stock fully vests.

The fair value of the 2014 Executive Awards is based on the Company’s stock price as of the date of grant. A portion of the compensation cost of the 2014 Executive Awards is based on the probable outcome of the performance conditions associated with the respective shares, as determined by management. During the nine months ended August 2, 2015 , we granted PSUs with a fair value of approximately $3.7 million .

On August 1, 2012, we granted performance stock unit awards with a fair value of $12.0 million or 1,027,500 units. The performance period ended June 30, 2015 and earned PSU shares vested on July 15, 2015 with an actual payout of 52.675% or 541,240 units. 281,842 shares, net of 114,541 shares withheld for taxes, were issued in July 2015. The remaining 144,857 shares were deferred under the Company's Deferred Compensation Plan. See Deferred Compensation below.

The fair value of restricted stock awards classified as equity awards is based on the Company’s stock price as of the date of grant. During the nine months ended August 2, 2015 and August 3, 2014 , we granted time-based restricted stock awards with a fair value of $6.6 million , representing 389,323 shares, and $2.6 million , representing 147,424 shares, respectively.

Also in December 2014, we granted Performance Share Awards to our key employees that will be paid 50% in cash and 50% in stock (“2014 Key Employee Awards”). The final number of 2014 Key Employee Awards earned for these awards granted in December 2014 will be based on the achievement of free cash flow and earnings per share targets over a three -year performance period. These 2014 Key Employee Awards cliff vest three years from the date of grant and will be earned based on the performance against the pre-established targets for the requisite service period. The 2014 Key Employee Awards also vest earlier upon death, disability or a change of control. However, a portion of the awards may vest on termination without cause or after reaching normal retirement age prior to the vesting date, as defined by the agreements governing such awards. The fair value of the 2014 Key Employee Awards is based on the Company’s stock price as of the date of grant. Compensation cost is recorded based on the probable outcome of the performance conditions associated with the respective shares, as determined by management. During the nine months ended August 2, 2015 , we granted 2014 Key Employee Awards with an equity fair value of $1.5 million and a cash value of $1.7 million .

During the nine month periods ended August 2, 2015 and August 3, 2014 , we recorded stock-based compensation expense for all awards of $7.7 million and $8.1 million , respectively. During the nine month periods ended August 2, 2015 and August 3, 2014 , we granted 10,543 and 5,058 stock options, respectively, and the grant-date fair value of options granted during the nine month periods ended August 2, 2015 and August 3, 2014 was $7.91 and $9.09 , respectively. There were 40,000 options exercised during the nine months ended August 2, 2015 . Cash received from the option exercises was $0.4 million during the nine months ended August 2, 2015 . The actual tax benefit realized for the tax deductions from option exercises totaled $0.1 million for the nine months ended August 2, 2015 .

Deferred Compensation

The Company amended its Deferred Compensation Plan to allow deferral of vested 2012 PSU awards. In connection with this amendment, the Company will hold 144,857 shares in its treasury shares until participants are eligible to receive benefits under the terms of the plan. In accordance with the terms of the plan, the deferred compensation obligation related to the Company’s stock may only be settled by the delivery of a fixed number of shares held on the participant’s behalf.

NOTE 9 — EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share is computed by dividing net income (loss) allocated to common shares by the weighted average number of common shares outstanding. Diluted earnings per common share, if applicable, considers the dilutive effect of common stock equivalents. The reconciliation of the numerator and denominator used for the computation of basic and diluted earnings (loss) per common share is as follows (in thousands, except per share data):



	Fiscal Three Months Ended						Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014			August 2, 2015			August 3, 2014
Numerator for Basic and Diluted Income (Loss) Per Common Share ⁽¹⁾
Net income (loss)	$	7,220		$	6,089		$	(588	)	$	(3,074	)
Less net income allocated to participating securities	(60		)	(50		)	—			—
Net income (loss) allocated to common shares	$	7,160		$	6,039		$	(588	)	$	(3,074	)
Denominator for Basic and Diluted Income (Loss) Per Common Share
Weighted average basic number of common shares outstanding	73,341			72,928			73,170			73,093
Common stock equivalents:
Employee stock options	650			756			—			—
PSUs and Performance Share Awards	345			709			—			—
Weighted average diluted number of common shares outstanding	74,336			74,393			73,170			73,093
Basic income (loss) per common share	$	0.10		$	0.08		$	(0.01	)	$	(0.04	)
Diluted income (loss) per common share	$	0.10		$	0.08		$	(0.01	)	$	(0.04	)


(1)	Participating securities consist of the unvested restricted Common Stock related to our Incentive Plan. These participating securities do not have a contractual obligation to share in losses; therefore, no losses were allocated in the nine months ended August 2, 2015 and August 3, 2014 . The unvested Common Stock related to our Incentive Plan will be allocated earnings when applicable.

We calculate earnings (loss) per share using the “two-class” method, whereby unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are “participating securities” and, therefore, these participating securities are treated as a separate class in computing earnings (loss) per share. There was no income amount attributable to unvested restricted stock for the nine month period ended August 2, 2015 and August 3, 2014 , as the unvested restricted stock does not contractually share in the net losses. However, in periods of net income allocated to common shares, a portion of this income will be allocable to the unvested restricted stock.

For the nine month period ended August 2, 2015 and August 3, 2014 , all outstanding options, PSUs and Performance Share Awards were anti-dilutive and, therefore, not included in the diluted loss per common share calculation.

NOTE 10 — WARRANTY

We sell weathertightness warranties to our customers for protection from leaks in our roofing systems related to weather. These warranties range from two years to 20 years. We sell two types of warranties, standard and Single Source™, and three grades of coverage for each. The type and grade of coverage determines the price to the customer. For standard warranties, our responsibility for leaks in a roofing system begins after 24 consecutive leak-free months. For Single Source™ warranties, the roofing system must pass our inspection before warranty coverage will be issued. Inspections are typically performed at three stages of the roofing project: (i) at the project start-up; (ii) at the project mid-point; and (iii) at the project completion. These inspections are included in the cost of the warranty. If the project requires or the customer requests additional inspections, those inspections are billed to the customer. Upon the sale of a warranty, we record the resulting revenue as deferred revenue, which is included in other accrued expenses in our consolidated balance sheets.

The following table represents the rollforward of our acquired accrued warranty obligation and deferred warranty revenue activity for each of the fiscal nine months ended (in thousands):



	Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014
Beginning balance	$	23,685		$	22,673
Warranties sold	2,022			2,178
Revenue recognized	(2,025		)	(1,540		)
Other ⁽¹⁾	1,609			—
Ending balance	$	25,291		$	23,311

(1)

Represents the preliminary fair value of accrued warranty obligations in the amount of $1.6 million assumed in the CENTRIA Acquisition. CENTRIA offers weathertightness warranties to certain customers. Weathertightness warranties are offered in various configurations for terms from five to twenty years, prorated or non-prorated and on both a dollar limit or no dollar limit basis, as required by the buyer. These warranties are available only if certain conditions, some of which relate to installation, are met.

NOTE 11 — DEFINED BENEFIT PLANS

RCC Pension Plan — With the acquisition of Robertson-Ceco II Corporation (“RCC”) on April 7, 2006, we assumed a defined benefit plan (the “RCC Pension Plan”). Benefits under the RCC Pension Plan are primarily based on years of service and the employee’s compensation. The RCC Pension Plan is frozen and, therefore, employees do not accrue additional service benefits. Plan assets of the RCC Pension Plan are invested in broadly diversified portfolios of government obligations, mutual funds, stocks, bonds, fixed income securities and master limited partnerships. In accordance with ASC 805, we quantified the projected benefit obligation and fair value of the plan assets of the RCC Pension Plan and recorded the difference between these two amounts as an assumed liability.

The following table sets forth the components of the net periodic benefit cost (in thousands):



	Fiscal Nine Months Ended August 2, 2015
Interest cost	$	1,450
Expected return on assets	(1,653		)
Prior service cost amortization	(7		)
Unrecognized net loss	1,082
Net periodic benefit cost	$	872

During the nine months ended August 2, 2015 , we contributed $0.8 million to the RCC Pension Plan. We expect to contribute an additional $0.4 million to the RCC Pension Plan for the remainder of fiscal 2015.

CENTRIA Benefit Plans — As a result of the CENTRIA Acquisition on January 16, 2015, we assumed noncontributory defined benefit plans covering certain hourly employees (the “CENTRIA Benefit Plans”). Benefits under the CENTRIA Benefit Plans are calculated based on fixed amounts for each year of service rendered. CENTRIA has historically sponsored postretirement medical and life insurance plans that cover certain of its employees and their spouses. The contributions to the plans by retirees vary from none to 25% of the total premiums paid. Plan assets of the CENTRIA Benefit Plans are invested in broadly diversified portfolios of equity mutual funds, international equity mutual funds, bonds, mortgages and other funds.

Currently, our policy is to fund the CENTRIA Benefit Plans as required by minimum funding standards of the Internal Revenue Code.

In accordance with ASC Topic 805, Business Combinations , we are in the process of remeasuring the projected benefit obligation and fair value of the plan assets of the CENTRIA Benefit Plans. The difference between these two amounts will be recorded as an assumed liability in the allocation of the purchase price. We have preliminarily used the December 31, 2014 actuarial reports to estimate the fair value of the projected benefit obligation and plan assets. The recognition of the net pension asset or

liability in the allocation of the purchase price eliminates any previously unrecognized gain or loss and prior service cost. Actuarial assumptions below are based on the December 31, 2014 actuarial report.

The following table sets forth the preliminary funded status of the CENTRIA Benefit Plans and the amounts recognized in the condensed consolidated balance sheet (in thousands):



	Pension Benefits			Other Benefits
	December 31, 2014			December 31, 2014
Fair value of assets	$	14,137		$	—
Benefit obligation	14,427			8,153
Funded status and net amount recognized	$	(290	)	$	(8,153	)

Actuarial assumptions used for the CENTRIA Benefit Plans were as follows:



	Pension Benefits		Other Benefits
	December 31, 2014		December 31, 2014
Assumed discount rate	3.85	%	3.50	%
Expected rate of return on plan assets	7.75	%	N/A

The CENTRIA Benefit Plans weighted-average asset allocations by asset category are as follows:



	December 31, 2014
Equity mutual funds	83	%
Debt securities	17	%
Total	100	%

We expect the following benefit payments to be made, which reflect expected future service, as appropriate (in thousands):



Years Ended December 31	Pension Benefits		Other Benefits
2015	$	764	$	675
2016	702		646
2017	699		694
2018	738		722
2019	780		678
Thereafter	4,263		2,600

Employer contributions – Since January 16, 2015, we have contributed $0.3 million in fiscal 2015 to fund the CENTRIA Benefit Plans.

In addition to the CENTRIA Benefit Plans, CENTRIA contributes to a multi-employer plan, Steelworkers Pension Trust. The minimum required annual contribution to this plan is $0.3 million and the current contract expires on June 1, 2016. If we were to withdraw our participation from this multi-employer plan, we would have a complete withdrawal liability in the amount of $0.7 million .

NOTE 12 — LONG-TERM DEBT AND NOTE PAYABLE

Debt is comprised of the following (in thousands):



	August 2, 2015		November 2, 2014
Credit Agreement, due June 2019 (variable interest, at 4.25% on August 2, 2015 and November 2, 2014)	$	204,147	$	235,387
8.25% senior notes, due January 2023	250,000		—
Amended Asset-Based lending facility, due June 2019 (interest at 4.00% on August 2, 2015 and 4.75% on November 2, 2014)	—		—
Current portion of long-term debt	—		(2,384		)
Total long-term debt, less current portion	$	454,147	$	233,003

8.25% Senior Notes Due January 2023

On January 16, 2015, the Company issued $250.0 million in aggregate principal amount of 8.25% senior notes due 2023 (the “Notes”) to fund the CENTRIA Acquisition. Interest on the Notes accrues at the rate of 8.25% per annum and is payable semi-annually in arrears on January 15 and July 15, commencing on July 15, 2015. The Notes are guaranteed on a senior unsecured basis by all of the Company’s existing and future domestic subsidiaries that guarantee the Company’s obligations (including by reason of being a borrower under the senior secured asset-based revolving credit facility on a joint and several basis with the Company or a guarantor subsidiary) under the senior secured credit facilities. The Notes are unsecured senior indebtedness and rank equally in right of payment with all of the Company’s existing and future senior indebtedness and senior in right of payment to all of its future subordinated obligations. In addition, the Notes and guarantees are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries.

The Company may redeem the Notes at any time prior to January 15, 2018, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium. On or after January 15, 2018, the Company may redeem all or a part of the Notes at redemption prices (expressed as percentages of principal amount thereof) equal to 106.188% for the twelve-month period beginning on January 15, 2018, 104.125% for the twelve-month period beginning on January 15, 2019, 102.063% for the twelve-month period beginning on January 15, 2020 and 100.000% for the twelve-month period beginning on January 15, 2021 and at any time thereafter, plus accrued and unpaid interest, if any, to the applicable redemption date of the Notes. In addition, prior to January 15, 2018, the Company may redeem the Notes in an aggregate principal amount equal to up to 40.0% of the original aggregate principal amount of the Notes with funds in an equal aggregate amount not exceeding the aggregate proceeds of one or more equity offerings, at a redemption price of 108.250% , plus accrued and unpaid interest, if any, to the applicable redemption date of the Notes. The Company incurred $9.2 million in transaction costs related to this issuance, which will be amortized over 8 years.

Credit Agreement

On June 22, 2012, in connection with the acquisition of Metl-Span LLC (the “Metl-Span Acquisition”), a Texas limited liability company, the Company entered into a Credit Agreement among the Company, as Borrower, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent (the “Term Agent”), and the lenders party thereto. The Credit Agreement provided for a term loan credit facility in an aggregate principal amount of $250.0 million .

The Credit Agreement contains a number of covenants that, among other things, will limit or restrict the ability of the Company and its subsidiaries to dispose of assets, incur additional indebtedness, make dividends and other restricted payments, create liens securing indebtedness, engage in mergers and other fundamental transactions, enter into restrictive agreements, amend certain documents in respect of other indebtedness, change the nature of their business and engage in certain transactions with affiliates.

On June 24, 2013, the Company entered into Amendment No. 1 (the “Amendment”) to its existing Credit Agreement (the “Credit Agreement”), dated as of June 22, 2012, between the Company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent and the other financial institutions party thereto from time to time (the “Term Loan Facility”), primarily to extend the maturity date and reduce the interest rate applicable to all of the outstanding term loans under the Term Loan Facility.

Pursuant to the Amendment, the maturity date of $238 million of outstanding term loans (the “Initial Term Loans”) was extended and such loans were converted into a new tranche of term loans (the “Tranche B Term Loans”) that will mature on June 24, 2019 and, prior to such date, will amortize in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum. Pursuant to the Amendment, the Tranche B Term Loans will bear interest at a floating rate measured by reference to, at the Company’s option, either (i) an adjusted LIBOR not less than 1.00% plus a borrowing margin of 3.25% per annum or (ii) an alternate base rate plus a borrowing margin of 2.25% per annum. At both August 2, 2015 and November 2, 2014 , the interest rate on the term loan under the Credit Agreement was 4.25% . Overdue amounts will bear interest at a rate that is 2% higher than the rate otherwise applicable.

The Tranche B Term Loans are secured by the same collateral and guaranteed by the same guarantors as the Initial Term Loans under the Term Loan Facility. Voluntary prepayments of the Tranche B Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty, subject to a 1.00% premium payable in connection with certain repricing transactions within the first six months.

Pursuant to the Amendment, the Company will no longer be subject to a financial covenant requiring the Company to maintain a specified consolidated secured debt to EBITDA leverage ratio for specified periods. The Amendment also includes certain other changes to the Term Loan Facility.

Subject to certain exceptions, the term loan under the Amendment will be subject to mandatory prepayment in an amount equal to:

• the net cash proceeds of (1) certain asset sales, (2) certain debt offerings, and (3) certain insurance recovery and condemnation events; and

• 50% of annual excess cash flow (as defined in the Amendment), subject to reduction to 0% if specified leverage ratio targets are met.

Amended ABL Facility

On May 2, 2012, the Company entered into an Amended Asset-Based Lending Facility (“Amended ABL Facility”) to (i) permit the Metl-Span Acquisition, the entry by the Company into the Credit Agreement and the incurrence of debt thereunder and the repayment of existing indebtedness under NCI’s existing term loan, (ii) increase the amount available for borrowing thereunder to $150 million (subject to a borrowing base), (iii) increase the amount available for letters of credit thereunder to $30 million , and (iv) extend the final maturity thereunder to May 2, 2017.

On November 7, 2014, the Company, Steelbuilding.com, LLC (together with the Company, the “Guarantors”) and the Company’s subsidiaries NCI Group, Inc. and Robertson-Ceco II Corporation (each a “Borrower” and collectively, the “Borrowers”) entered into Amendment No. 3 to the Loan and Security Agreement (the “ABL Loan and Security Agreement”) among the Borrowers, the Guarantors, Wells Fargo Capital Finance, LLC as administrative agent and co-collateral agent, Bank of America, N.A. as co-collateral agent and syndication agent and certain other lenders under the ABL Loan and Security Agreement, in order to amend the ABL Loan and Security Agreement to (i) permit the CENTRIA Acquisition, (ii) permit the entry by the Company into documentation with respect to certain debt financing to be incurred in connection with the CENTRIA Acquisition and the incurrence of debt with respect thereto, (iii) extend the maturity date to June 24, 2019, (iv) decrease the applicable margin with respect to borrowings thereunder and (v) make certain other amendments and modifications to provide greater operational and financial flexibility.

Borrowing availability under the Amended ABL Facility is determined by a monthly borrowing base collateral calculation that is based on specified percentages of the value of qualified cash, eligible inventory and eligible accounts receivable, less certain reserves and subject to certain other adjustments. At August 2, 2015 and November 2, 2014 , the Company’s excess availability under the Amended ABL Facility was $121.8 million and $135.4 million , respectively. At both August 2, 2015 and November 2, 2014 , the Company had no revolving loans outstanding under the Amended ABL Facility. In addition, at August 2, 2015 and November 2, 2014 , standby letters of credit related to certain insurance policies totaling approximately $8.9 million and $8.1 million , respectively, were outstanding but undrawn under the Amended ABL Facility.

The Amended ABL Facility contains a number of covenants that, among other things, limit or restrict the Company’s ability to dispose of assets, incur additional indebtedness, incur guarantee obligations, engage in sale and leaseback transactions, prepay other indebtedness, modify organizational documents and certain other agreements, create restrictions affecting subsidiaries, make dividends and other restricted payments, create liens, make investments, make acquisitions, engage in mergers, change the nature of our business and engage in certain transactions with affiliates.

The Amended ABL Facility includes a minimum fixed charge coverage ratio of one to one, which will apply if we fail to maintain a specified minimum borrowing capacity. The minimum level of borrowing capacity as of August 2, 2015 and November 2, 2014 was $18.3 million and $20.3 million , respectively. Although the Amended ABL Facility did not require any financial covenant compliance, at August 2, 2015 and November 2, 2014 , NCI’s fixed charge coverage ratio as of those dates, which is calculated on a trailing twelve month basis, was 4.90 :1.00 and 3.46 :1.00, respectively. These ratios include the pro forma impact of the CENTRIA Acquisition.

Loans under the Amended ABL Facility bear interest, at NCI’s option, as follows:


(1)	Base Rate loans at the Base Rate plus a margin. The margin ranges from 0.75% to 1.25% depending on the quarterly average excess availability under such facility, and


(2)	LIBOR loans at LIBOR plus a margin. The margin ranges from 1.75% to 2.25% depending on the quarterly average excess availability under such facility.

At August 2, 2015 and November 2, 2014 , the interest rate on the Amended ABL Facility was 4.00% and 4.75% , respectively. During an event of default, loans under the Amended ABL Facility will bear interest at a rate that is 2% higher than the rate otherwise applicable. “Base Rate” is defined as the higher of the Wells Fargo Bank, N.A. prime rate and the overnight Federal Funds rate plus 0.5% and “LIBOR” is defined as the applicable London Interbank Offered Rate adjusted for reserves.

Deferred Financing Costs

At August 2, 2015 and November 2, 2014 , the unamortized balance in deferred financing costs related to the Credit Agreement, the Amended ABL Facility and the Notes was $11.5 million and $3.3 million , respectively.

Insurance Note Payable

As of August 2, 2015 and November 2, 2014 , the Company had an outstanding note payable in the amount of $1.0 million and $0.4 million , respectively, related to financed insurance premiums. Insurance premium financings are generally secured by the unearned premiums under such policies.

NOTE 13 — CD&R FUNDS

On August 14, 2009, the Company entered into an Investment Agreement (as amended, the “Investment Agreement”), by and between the Company and Clayton, Dubilier & Rice Fund VIII, L.P. (“CD&R Fund VIII”), pursuant to which the Company agreed to issue and sell to CD&R Fund VIII, and CD&R Fund VIII agreed to purchase from the Company, for an aggregate purchase price of $250 million (less reimbursement to CD&R Fund VIII or direct payment to its service providers of up to $14.5 million in the aggregate of transaction expenses and a deal fee, paid to Clayton, Dubilier & Rice, Inc., the manager of CD&R Fund VIII, of $8.25 million ), 250,000 shares of convertible preferred stock (the “Convertible Preferred Stock” and shares thereof, the “Preferred Shares”). Pursuant to the Investment Agreement, on October 20, 2009 (the “Closing Date”), the Company issued and sold to CD&R Fund VIII and Clayton, Dubilier & Rice Friends & Family Fund VIII, L.P. (collectively, the “CD&R Funds”), and the CD&R Funds purchased from the Company, an aggregate of 250,000 Preferred Shares, representing approximately 39.2 million shares of Common Stock or 68.4% of the voting power and Common Stock of the Company on an as-converted basis as of the Closing Date (such purchase and sale, the “CD&R Equity Investment”).

In connection with the consummation of the CD&R Equity Investment, on October 19, 2009, the Company filed the Certificate of Designations of the Convertible Preferred Stock (the “Certificate of Designations”) setting forth the terms, rights, powers, and preferences, and the qualifications, limitations and restrictions thereof, of the Convertible Preferred Stock.

On May 14, 2013, the CD&R Funds, the holders of 339,293 Preferred Shares, delivered a formal notice requesting the conversion (“Conversion”) of all of their Preferred Shares into shares of the Company’s Common Stock. In connection with the Conversion request, we issued the CD&R Funds 54,136,817 shares of our Common Stock, representing 72.4% of the Common Stock of the Company then outstanding. Under the terms of the Preferred Shares, no consideration was required to be paid by the CD&R Funds to the Company in connection with the Conversion of the Preferred Shares. As a result of the Conversion, the CD&R Funds no longer have rights to default dividends as specified in the Certificate of Designations. The Conversion on May 14, 2013 eliminated all the outstanding Convertible Preferred Stock and increased stockholders’ equity by nearly $620.0 million , returning the Company’s stockholders’ equity to a positive balance during our third quarter of fiscal 2013.

On January 15, 2014, the CD&R Funds completed a registered underwritten offering, in which the CD&R Funds offered 8.5 million shares of Common Stock at a price to the public of $18.00 per share (the “Secondary Offering”). The underwriters also exercised their option to purchase 1.275 million additional shares of Common Stock. The aggregate offering price for the 9.775 million shares sold in the Secondary Offering was approximately $167.6 million , net of underwriting discounts and commissions. The CD&R Funds received all of the proceeds from the Secondary Offering and no shares in the Secondary Offering were sold by NCI or any of its officers or directors (although certain of our directors are affiliated with the CD&R Funds). In connection with this Secondary Offering, we incurred approximately $0.8 million in expenses, which were included in engineering, selling, general and administrative expenses in the consolidated statement of operations for the nine months ended August 3, 2014 . At August 2, 2015 and November 2, 2014 , the CD&R Funds owned 58.7% and 58.8% , respectively, of the voting power and Common Stock of the Company.

On January 6, 2014, the Company entered into an agreement with the CD&R Funds to repurchase 1.15 million shares of its Common Stock at the price per share equal to the price per share paid by the underwriters to the CD&R Funds in the underwritten offering (the “Stock Repurchase”). The Stock Repurchase, which was completed at the same time as the Secondary Offering, represented a private, non-underwritten transaction between NCI and the CD&R Funds that was approved and recommended by the Affiliate Transactions Committee of NCI’s board of directors. Following completion of the Stock Repurchase, NCI canceled the shares repurchased from the CD&R Funds, resulting in a $19.7 million decrease in both additional paid in capital and treasury stock.

NOTE 14 — FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, trade accounts receivable and accounts payable approximate fair value as of August 2, 2015 and November 2, 2014 because of the relatively short maturity of these instruments. The fair values of the remaining financial instruments not currently recognized at fair value on our consolidated balance sheets at the respective fiscal period ends were (in thousands):



	August 2, 2015				November 2, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Credit Agreement, due June 2019	$	204,147	$	203,637	$	235,387	$	230,091
8.25% senior notes, due January 2023	250,000		263,750		—		—

The fair value of the Credit Agreement and the Notes were based on recent trading activities of comparable market instruments which are level 2 inputs.

Fair Value Measurements

ASC Subtopic 820-10, Fair Value Measurements and Disclosures , requires us to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs.

Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the assets or liabilities.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value. There have been no changes in the methodologies used at August 2, 2015 and November 2, 2014

Money market: Money market funds have original maturities of three months or less. The original cost of these assets approximates fair value due to their short-term maturity.

Mutual funds: Mutual funds are valued at the closing price reported in the active market in which the mutual fund is traded.

Assets held for sale: Assets held for sale are valued based on current market conditions, prices of similar assets in similar condition and expected proceeds from the sale of the assets.

Deferred compensation plan liability: Deferred compensation plan liability is comprised of phantom investments in the deferred compensation plan and is valued at the closing price reported in the active market in which the money market, mutual fund or NCI stock phantom investments are traded.

The following table summarizes information regarding our financial assets and liabilities that are measured at fair value on a recurring basis as of August 2, 2015 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):



	Level 1		Level 2			Level 3		Total
Assets:
Short-term investments in deferred compensation plan ⁽¹⁾ :
Money market	$	562	$	—		$	—	$	562
Mutual funds – Growth	826		—			—		826
Mutual funds – Blend	3,003		—			—		3,003
Mutual funds – Foreign blend	760		—			—		760
Mutual funds – Fixed income	—		669			—		669
Total short-term investments in deferred compensation plan	5,151		669			—		5,820
Total assets	$	5,151	$	669		$	—	$	5,820
Liabilities:
Deferred compensation plan liability	$	—	$	(5,474	)	$	—	$	(5,474	)
Total liabilities	$	—	$	(5,474	)	$	—	$	(5,474	)


(1)	Unrealized holding losses for the three months ended August 2, 2015 and August 3, 2014 were insignificant and $(0.1) million , respectively. Unrealized holding gains for both the nine months ended August 2, 2015 and August 3, 2014 were $0.1 million . These unrealized holding gains (losses) are primarily offset by changes in the deferred compensation plan liability.

The following table summarizes information regarding our financial assets that are measured at fair value on a nonrecurring basis as of August 2, 2015 , segregated by level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):



	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale ⁽¹⁾	$	—	$	—	$	2,280	$	2,280
Total assets	$	—	$	—	$	2,280	$	2,280

(1)

Certain assets held for sale are valued at fair value and are measured at fair value on a nonrecurring basis. Assets held for sale are reported at fair value, if, on an individual basis, the fair value of the asset is less than cost. The fair value of assets held for sale is estimated using level 3 inputs, such as broker quotes for like-kind assets or other market indications of a potential selling value which approximates fair value.

The following table summarizes information regarding our financial assets and liabilities that are measured at fair value on a recurring basis as of November 2, 2014 , segregated by level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):



	Level 1		Level 2			Level 3		Total
Assets:
Short-term investments in deferred compensation plan ⁽¹⁾ :
Money market	$	731	$	—		$	—	$	731
Mutual funds – Growth	791		—			—		791
Mutual funds – Blend	2,743		—			—		2,743
Mutual funds – Foreign blend	723		—			—		723
Mutual funds – Fixed income	—		561			—		561
Total short-term investments in deferred compensation plan	$	4,988	$	561		$	—	$	5,549
Total assets	$	4,988	$	561		$	—	$	5,549
Liabilities:
Deferred compensation plan liability	$	—	$	(6,093	)	$	—	$	(6,093	)
Total liabilities	$	—	$	(6,093	)	$	—	$	(6,093	)


(1)	The unrealized holding gain for the fiscal year ended November 2, 2014 was $0.2 million . This unrealized holding gain was primarily offset by changes in the deferred compensation plan liability.

The following table summarizes information regarding our financial assets that are measured at fair value on a nonrecurring basis as of November 2, 2014 , segregated by level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):



	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale ⁽¹⁾	$	—	$	—	$	2,280	$	2,280
Total assets	$	—	$	—	$	2,280	$	2,280

(1)

NOTE 15 — OPERATING SEGMENTS

Operating segments are defined as components of an enterprise that engage in business activities and by which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker to make decisions about how to allocate resources to the segment and assess the performance of the segment. We have three operating segments: metal coil coating; metal components; and engineered building systems. All operating segments operate primarily in the nonresidential construction market. Sales and earnings are influenced by general economic conditions, the level of nonresidential construction activity, metal roof repair and retrofit demand and the availability and terms of financing available for construction. Products of our operating segments use similar basic raw materials. The metal coil coating segment consists of cleaning, treating, painting and slitting continuous steel coils before the steel is fabricated for use by construction and industrial users. The metal components segment products include metal roof and wall panels, doors, metal partitions, metal trim, insulated panels and other related accessories. Metl-Span is included in the metal components segment. The engineered building systems segment includes the manufacturing of main frames, Long Bay® Systems and value-added engineering and drafting, which are typically not part of metal components or metal coil coating products or services. The operating segments follow the same accounting policies used for our consolidated financial statements. We include the results of the CENTRIA Acquisition in the metal components segment.

light gauge painted and slit material and other services provided by the metal coil coating segment to both the metal components and engineered building systems segments; (ii) building components provided by the metal components segment to the engineered building systems segment; and (iii) structural framing provided by the engineered building systems segment to the metal components segment.

Corporate assets consist primarily of cash but also include deferred financing costs, deferred taxes and property, plant and equipment associated with our headquarters in Houston, Texas. These items (and income and expenses related to these items) are not allocated to the operating segments. Corporate unallocated expenses include share-based compensation expenses, and executive, legal, finance, tax, treasury, human resources, information technology, purchasing, marketing and corporate travel expenses. Additional unallocated expenses include interest income, interest expense, strategic development and acquisition related costs and other (expense) income.

The following table represents sales, operating income and total assets attributable to these operating segments for the periods indicated (in thousands):



	Fiscal Three Months Ended						Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014			August 2, 2015			August 3, 2014
Total sales:
Metal coil coating	$	62,383		$	68,324		$	167,991		$	176,898
Metal components	251,191			184,321			645,098			497,599
Engineered building systems	176,519			174,186			469,564			475,834
Intersegment sales	(69,304		)	(65,205		)	(178,791		)	(172,239		)
Total sales	$	420,789		$	361,626		$	1,103,862		$	978,092
External sales:
Metal coil coating	$	26,608		$	31,132		$	73,816		$	81,230
Metal components	221,958			162,180			574,667			437,259
Engineered building systems	172,223			168,314			455,379			459,603
Total sales	$	420,789		$	361,626		$	1,103,862		$	978,092
Operating income (loss):
Metal coil coating	$	5,497		$	6,665		$	11,872		$	17,053
Metal components	17,025			10,437			32,302			19,107
Engineered building systems	14,363			11,454			25,937			13,129
Corporate	(17,507		)	(16,354		)	(49,779		)	(45,768		)
Total operating income	$	19,378		$	12,202		$	20,332		$	3,521
Unallocated other expense	(8,638		)	(3,276		)	(21,977		)	(9,321		)
Income (loss) before income taxes	$	10,740		$	8,926		$	(1,645	)	$	(5,800	)



	August 2, 2015		November 2, 2014
Total assets:
Metal coil coating	$	87,432	$	84,519
Metal components	408,021		365,874
Engineered building systems	217,388		209,281
Corporate	332,354		99,009
Total assets	$	1,045,195	$	758,683

NOTE 16 — CONTINGENCIES

As a manufacturer of products primarily for use in nonresidential building construction, the Company is inherently exposed to various types of contingent claims, both asserted and unasserted, in the ordinary course of business. As a result, from time to time, the Company and/or its subsidiaries become involved in various legal proceedings or other contingent matters arising from claims, or potential claims. The Company insures against these risks to the extent deemed prudent by its management and to the extent insurance is available. Many of these insurance policies contain deductibles or self-insured retentions in amounts the

Company deems prudent and for which the Company is responsible for payment. In determining the amount of self-insurance, it is the Company’s policy to self-insure those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability and general liability. The Company regularly reviews the status of on-going proceedings and other contingent matters along with legal counsel. Liabilities for such items are recorded when it is probable that the liability has been incurred and when the amount of the liability can be reasonably estimated. Liabilities are adjusted when additional information becomes available. Management believes that the ultimate disposition of these matters will not have a material adverse effect on the Company’s results of operations, financial position or cash flows. However, such matters are subject to many uncertainties and outcomes are not predictable with assurance.

NCI BUILDING SYSTEMS, INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with the unaudited consolidated financial statements included herein under “Item 1. Unaudited Consolidated Financial Statements” and the audited consolidated financial statements and the notes thereto and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended November 2, 2014 .

FORWARD LOOKING STATEMENTS

This Quarterly Report includes statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. In some cases, our forward-looking statements can be identified by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will” or other similar words. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking information, including any earnings guidance, if applicable. Although we believe that the expectations reflected in the forward-looking statements are reasonable, these expectations and the related statements are subject to risks, uncertainties, and other factors that could cause the actual results to differ materially from those projected. These risks, uncertainties, and other factors include, but are not limited to:

• industry cyclicality and seasonality and adverse weather conditions;

• challenging economic conditions affecting the nonresidential construction industry;

• volatility in the U.S. economy and abroad, generally, and in the credit markets;

• our ability to service or refinance our existing debt, including the Notes, and obtain future financing;

• our ability to comply with the financial tests and covenants in our existing and future debt obligations;

• operational limitations or restrictions in connection with our debt;

• recognition of asset impairment charges;

• commodity price increases and/or limited availability of raw materials, including steel;

• our ability to make strategic acquisitions accretive to earnings;

• our ability to integrate CENTRIA with the Company's business and to realize the anticipate benefits of such acquisition;

• retention and replacement of key personnel;

• enforcement and obsolescence of intellectual property rights;

• fluctuations in customer demand;

• costs related to environmental clean-ups and liabilities;

• competitive activity and pricing pressure;

• increases in energy prices;

• the volatility of the Company’s stock price;


•	the dilutive effect on the Company’s common stockholders of potential future sales of the Company’s Common Stock held by our sponsor;

• substantial governance and other rights held by our sponsor;

• breaches of our information system security measures and damage to our major information management systems;


•	hazards that may cause personal injury or property damage, thereby subjecting us to liabilities and possible losses, which may not be covered by insurance;

• changes in laws or regulations, including the Dodd–Frank Act;


•	our ability to integrate the acquisition of CENTRIA with the Company’s business and to realize the anticipated benefits of such acquisition;

• costs and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters; and


•	other risks detailed under the caption “Risk Factors” in Part II, Item 1A in our Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015 and in Part I, Item 1A in our most recent Annual Report on Form 10-K as filed with the SEC.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, we caution you

that assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report, including those described under the caption “Risk Factors” in our most recent Annual Report on Form 10-K as filed with the SEC. We expressly disclaim any obligations to release publicly any updates or revisions to these forward-looking statements to reflect any changes in our expectations unless the securities laws require us to do so.

OVERVIEW

NCI Building Systems, Inc. (together with its subsidiaries, unless the context requires otherwise, the “Company,” “NCI,” “we,” “us” or “our”) is one of North America’s largest integrated manufacturers and marketers of metal products for the nonresidential construction industry. We provide metal coil coating services and design, engineer, manufacture and market metal components and engineered building systems primarily for nonresidential construction use. We manufacture and distribute extensive lines of metal products for the nonresidential construction market under multiple brand names through a nationwide network of plants and distribution centers. We sell our products for both new construction and repair and retrofit applications.

Metal components offer builders, designers, architects and end-users several advantages, including lower long-term costs, longer life, attractive aesthetics and design flexibility. Similarly, engineered building systems offer a number of advantages over traditional construction alternatives, including shorter construction time, more efficient use of materials, lower construction costs, greater ease of expansion and lower maintenance costs.

We use a 52/53 week year with our fiscal year end on the Sunday closest to October 31. In fiscal 2015 , our year end will be November 1, 2015 which is the Sunday closest to October 31.

We assess performance across our operating segments by analyzing and evaluating, among other indicators, gross profit, operating income and whether or not each segment has achieved its projected sales goals. In assessing our overall financial performance, we regard return on adjusted operating assets, as well as growth in earnings, as key indicators of shareholder value.

Third Fiscal Quarter

Our third quarter results marked the fifth consecutive quarter of meaningful year-over-year improvement in gross margin and Adjusted EBITDA. Our earnings growth in the quarter is driven equally by increases in our legacy businesses as well as incremental contribution from our CENTRIA acquisition. Our focus on growing and integrating insulated panel products into our building and components businesses as well as improvements we have been making in our production and cost efficiency are resulting in increasing gross margins.

Consolidated revenues increased by approximately 16% from the same period last year. The year-over-year improvement was driven by underlying volume growth in both our legacy engineered building systems and metal components segments, combined with the incremental contribution from CENTRIA, which added approximately $59.3 million to total sales. Our metal components and engineered building systems segments are achieving underlying growth despite headwinds from unusually high precipitation from March through early June, which had a larger negative impact than initially anticipated. These disruptions had a cascading impact on construction schedules and the ability of our customers to accept job site deliveries. In addition, our underlying volume of activity has been offset by the pass through of declining steel prices and due to the $4.5 million decline in third-party revenue in our coatings business.

For market context, low rise new construction starts measured in square feet as reported by Dodge Data & Analytics are down 8% calendar year to date. Even though these measures tend to be revised upward in succeeding periods, we believe the underlying growth we are achieving is outpacing market activity.

All said, we delivered adjusted EBITDA and adjusted diluted earnings per share in the 2015 third quarter that has exceeded prior year’s results by a meaningful amount. With the near term top-line headwinds described earlier, the key driver continues to be margin improvement, not top line growth, as we continue to realize the positive results of our focus on improving our product mix, supply chain management and streamlining our operational efficiency. Gross margin in the third quarter increased by 190 basis points to 23.9% of sales from the same period last year. This is the 5th consecutive quarter demonstrating meaningful year over year improvement in gross margins. We have also kept our engineering, selling, general and administrative expenses relatively flat considering the inclusion of CENTRIA, despite organizational additions and incentive compensation increases.

Industry Conditions

Our sales and earnings are subject to both seasonal and cyclical trends and are influenced by general economic conditions, interest rates, the price of steel relative to other building materials, the level of nonresidential construction activity, roof repair and retrofit demand and the availability and cost of financing for construction projects. Our sales are normally lower in the first half of each fiscal year compared to the second half because of unfavorable weather conditions for construction and typical business planning cycles affecting construction.

The nonresidential construction industry is highly sensitive to national and regional macroeconomic conditions. One of the primary challenges we face is that the United States economy is recovering from a recession and historically low nonresidential construction activity, which began in the third quarter of 2008 and reduced demand for our products and adversely affected our business. In addition, the tightening of credit in financial markets over the same period adversely affected the ability of our customers to obtain financing for construction projects. As a result, we experienced decreases in orders and cancellations of orders for our products. While economic growth has remained relatively flat, nonresidential construction starts continue to be below previous cyclical troughs. The graph below shows the annual nonresidential new construction starts, measured in square feet, since 1967 as compiled and reported by McGraw-Hill:

When assessing the state of the metal construction market, we review information from various industry associations, third-party research, and various government reports such as industrial production and capacity utilization. One such industry association is the Metal Building Manufacturers Association (“MBMA”), which provides summary member sales information and promotes the design and construction of metal buildings and metal roofing systems. Another is McGraw-Hill Construction Information Group (“McGraw Hill Construction”), which we review for information regarding actual and forecasted growth in various construction related industries, including the overall nonresidential construction market. McGraw-Hill Construction’s nonresidential construction forecast for calendar 2015, published in July 2015, indicates an expected increase of 5% in square footage as compared to the prior calendar year. This represented a revision of the 2015 forecast published in April 2015, which indicated an expected increase of 10% in square footage as compared to the prior calendar year. Additionally, we review the American Institute of Architects’ (“AIA”) survey for inquiry and billing activity for the industrial, commercial and institutional sectors. AIA’s architectural billing index (“ABI”) is a closely watched metric, as billings growth for architecture services generally leads to construction spending growth in the following 9 to 12 months. An ABI reading above 50 indicates an increase in month-to-month seasonally adjusted billings and a reading below 50 indicates a decrease in month-to-month seasonally adjusted billings. AIA’s ABI published for July 2015 was above 50 at 54.7 and the mixed use component of the index was at 56.8 for July 2015. The mixed use component of the index represents an improvement from April 2015, when the index was 52.0 .

We normally do not maintain an inventory of steel in excess of our current production requirements. However, from time to time, we may purchase steel in advance of announced steel price increases. We can give no assurance that steel will be readily available or that prices will not continue to be volatile. While most of our sales contracts have escalation clauses that allow us, under certain circumstances, to pass along all or a portion of increases in the price of steel after the date of the contract but prior to delivery, for competitive or other reasons we may not be able to pass such price increases along. If the available supply of steel

declines, we could experience price increases that we are not able to pass on to the end users, a deterioration of service from our suppliers or interruptions or delays that may cause us not to meet delivery schedules to our customers. Any of these problems could adversely affect our results of operations and financial condition. For additional discussion please see “Item 3. Quantitative and Qualitative Disclosures About Market Risk — Steel Prices.”

RESULTS OF OPERATIONS

Operating segments are defined as components of an enterprise that engage in business activities and by which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker to make decisions about how to allocate resources to the segment and assess the performance of the segment. We have three operating segments: (i) metal coil coating; (ii) metal components; and (iii) engineered building systems. All operating segments operate primarily in the nonresidential construction market. Sales and earnings are influenced by general economic conditions, the level of nonresidential construction activity, metal roof repair and retrofit demand and the availability and terms of financing available for construction. Our operating segments are vertically integrated and benefit from similar basic raw materials. The metal coil coating segment consists of cleaning, treating, painting and slitting continuous steel coils before the steel is fabricated for use by construction and industrial users. The metal components segment products include metal roof and wall panels, doors, metal partitions, metal trim, insulated panels and other related accessories. Metl-Span is included in the metal components segment. The engineered building systems segment includes the manufacturing of main frames, Long-Bay® Systems and value-added engineering and drafting, which are typically not part of metal components or metal coil coating products or services. The manufacturing and distribution activities of our segments are effectively coupled through the use of our nationwide hub-and-spoke manufacturing and distribution system, which supports and enhances our vertical integration. The operating segments follow the same accounting policies used for our consolidated financial statements. We include the results of the CENTRIA Acquisition in the metal components segment.

We evaluate a segment’s performance based primarily upon operating income before corporate expenses. Intersegment sales are recorded based on standard material costs plus a standard markup to cover labor and overhead and consist of: (i) hot-rolled, light gauge painted, and slit material and other services provided by the metal coil coating segment to both the metal components and engineered building systems segments; (ii) building components provided by the metal components segment to the engineered building systems segment; and (iii) structural framing provided by the engineered building systems segment to the metal components segment.

The following table represents sales and operating income attributable to these operating segments for the periods indicated (in thousands):



	Fiscal Three Months Ended						Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014			August 2, 2015			August 3, 2014
Total sales:
Metal coil coating	$	62,383		$	68,324		$	167,991		$	176,898
Metal components	251,191			184,321			645,098			497,599
Engineered building systems	176,519			174,186			469,564			475,834
Intersegment sales	(69,304		)	(65,205		)	(178,791		)	(172,239		)
Total sales	$	420,789		$	361,626		$	1,103,862		$	978,092
External sales:
Metal coil coating	$	26,608		$	31,132		$	73,816		$	81,230
Metal components	221,958			162,180			574,667			437,259
Engineered building systems	172,223			168,314			455,379			459,603
Total sales	$	420,789		$	361,626		$	1,103,862		$	978,092
Operating income (loss):
Metal coil coating	$	5,497		$	6,665		$	11,872		$	17,053
Metal components	17,025			10,437			32,302			19,107
Engineered building systems	14,363			11,454			25,937			13,129
Corporate	(17,507		)	(16,354		)	(49,779		)	(45,768		)
Total operating income	$	19,378		$	12,202		$	20,332		$	3,521
Unallocated other expense	(8,638		)	(3,276		)	(21,977		)	(9,321		)
Income (loss) before income taxes	$	10,740		$	8,926		$	(1,645	)	$	(5,800	)

FISCAL THREE MONTHS ENDED AUGUST 2, 2015 COMPARED TO FISCAL THREE MONTHS ENDED AUGUST 3, 2014

Consolidated sales increased by 16.4% , or $59.2 million for the three months ended August 2, 2015 , compared to the three months ended August 3, 2014 . These results were driven by the inclusion of CENTRIA, which contributed $59.3 million of external sales during the three months ended August 2, 2015 . This increase also resulted from higher tonnage volumes in both our engineered building systems and our metal components segments partially offset by lower tonnage volumes in our metal coil coating segment during the current period. In general, this increase was partially offset by the continued decline in steel prices experienced during fiscal 2015 which has had an unfavorable impact on our consolidated sales.

Consolidated cost of sales increased by 13.1% , or $37.0 million for the three months ended August 2, 2015 , compared to the three months ended August 3, 2014 . This increase resulted from the inclusion of CENTRIA which contributed $45.9 million of cost of sales during the three months ended August 2, 2015 . This increase was partially offset by lower underlying material costs driven in part by the continued decrease in steel prices experienced during fiscal 2015.

Fair value adjustment of acquired inventory for the three months ended August 2, 2015 was $1.0 million . There was no corresponding amount recorded for the three months ended August 3, 2014 .

Gross margin was 23.9% for the three months ended August 2, 2015 , compared to 22.0% for the same period in the prior year. The increase in gross margin was the result of continued commercial discipline in the engineered building systems segment, higher margin product mix within our metal components segment, and the inclusion of CENTRIA.

Metal coil coating sales decreased by 8.7% , or $5.9 million , to $62.4 million in the three months ended August 2, 2015 , compared to $68.3 million in the same period in the prior year. Sales to third parties for the three months ended August 2, 2015 decreased $4.5 million to $26.6 million from $31.1 million in the same period in the prior year, primarily as a result of a decrease in external tons shipped. Metal coil coating third-party sales accounted for 6.3% of total consolidated third-party sales in the three months ended August 2, 2015 , compared to 8.6% in the three months ended August 3, 2014 .

Operating income of the metal coil coating segment decreased to $5.5 million in the three months ended August 2, 2015 , compared to $6.7 million in the same period in the prior year. The $1.2 million decrease was primarily due to the lower sales to third parties as noted above.

Metal components sales increased 36.3% , or $66.9 million , to $251.2 million in the three months ended August 2, 2015 , compared to $184.3 million in the same period in the prior year. The results were driven in part by the inclusion of CENTRIA, which contributed $59.3 million of external sales during the three months ended August 2, 2015 . This increase was also due to higher volume of single skin products shipped and higher margin product mix, primarily in our insulated metal panel products. Sales to third parties for the three months ended August 2, 2015 increased $59.8 million to $222.0 million from $162.2 million in the same period in the prior year. Metal components third-party sales accounted for 52.7% of total consolidated third-party sales in the three months ended August 2, 2015 , compared to 44.8% in the three months ended August 3, 2014 .

Operating income of the metal components segment increased to $17.0 million in the three months ended August 2, 2015 , compared to $ 10.4 million in the same period in the prior year. The $6.6 million increase was driven by the increased sales discussed above, as well as improved product mix.

Engineered building systems sales increased 1.3% , or $2.3 million , to $176.5 million in the three months ended August 2, 2015 , compared to $174.2 million in the same period in the prior year. This increase was primarily driven by higher external tonnage volume. Sales to third parties for the three months ended August 2, 2015 increased $3.9 million to $172.2 million from $168.3 million in the same period in the prior year. The remaining $1.6 million represents a decrease in intersegment sales. Engineered building systems third-party sales accounted for 40.9% of total consolidated third-party sales in the three months ended August 2, 2015 , compared to 46.5% in the three months ended August 3, 2014 .

Operating income of the engineered building systems segment increased to $14.4 million in the three months ended August 2, 2015 , compared to $11.5 million in the same period in the prior year. This $2.9 million increase resulted from higher tonnage volumes noted above as well as improved product mix.

Consolidated engineering, selling, general and administrative expenses , consisting of engineering, drafting, selling and administrative costs, increased to $74.5 million in the three months ended August 2, 2015 , compared to $64.9 million in the same period in the prior year. As a percentage of sales, engineering, selling, general and administrative expenses were 17.7% for the three months ended August 2, 2015 , as compared to 17.9% for the three months ended August 3, 2014 . The $9.7 million increase was primarily due to the inclusion of CENTRIA, which contributed $13.2 million during the three months ended August 2, 2015 . Engineering, selling, general and administrative costs excluding the impact of CENTRIA decreased $3.6 million during the three months ended August 2, 2015 compared to the same period in the prior year.

Consolidated intangible amortization increased to $5.3 million in the three months ended August 2, 2015 , compared to $1.0 million in the same period in the prior year. This increase is directly related to the valuation of intangible assets related to the CENTRIA Acquisition on January 16, 2015. Intangible amortization amounts for the three months ended August 3, 2014 related to prior acquisitions, including Metl-Span.

Consolidated strategic development and acquisition related costs for the three months ended August 2, 2015 were $0.7 million compared to $1.5 million for the three months ended August 3, 2014 . These non-operational costs are related to acquisition-related activities that support our future growth targets and performance goals and generally include external legal, financial and due diligence costs incurred to pursue specific acquisition targets.

Consolidated restructuring charges for the three months ended August 2, 2015 were $0.8 million . These severance related costs primarily relate to actions taken during the second quarter of 2015 in an effort to streamline our management and manufacturing structure to better serve our customers. There was no corresponding amount recorded for the three months ended August 3, 2014 .

Consolidated interest expense increased to $8.1 million for the three months ended August 2, 2015 , compared to $3.2 million for the same period of the prior year. On January 16, 2015, we issued $250.0 million in aggregate principal amount of 8.25% senior notes due 2023 to fund the CENTRIA Acquisition, which increased our consolidated interest expense.

Consolidated foreign exchange loss, increased to a $0.6 million loss for the three months ended August 2, 2015 , compared to a $0.4 million loss for the same period of the prior year, primarily due to foreign currency losses in both Mexico and Canada related to fluctuations in the Mexican Peso and Canadian Dollar, relative to the U.S. Dollar exchange rate in the current period.

Consolidated provision from income taxes was $3.5 million for the three months ended August 2, 2015 , compared to $2.8 million for the same period in the prior year. The effective tax rate for the three months ended August 2, 2015 was 32.8% , compared to 31.8% for the same period in the prior year.

Diluted income per common share increased to $0.10 per diluted common share for the three months ended August 2, 2015 , compared to $0.08 per diluted common share for the same period in the prior year. The increase in diluted income per common share was primarily due to the $1.1 million increase in net income resulting from the factors described above in this section.

FISCAL NINE MONTHS ENDED AUGUST 2, 2015 COMPARED TO FISCAL NINE MONTHS ENDED AUGUST 3, 2014

Consolidated sales increased by 12.9% , or $125.8 million for the nine months ended August 2, 2015 , compared to the nine months ended August 3, 2014 . These results were driven by the inclusion of CENTRIA, which contributed $121.1 million of external sales since January 16, 2015 when CENTRIA was acquired. This increase also resulted from higher tonnage volumes in our metal components segments, specifically for our single-skin products. In general, this increase was partially offset by the continued decline in steel prices experienced during fiscal 2015, which has had an unfavorable impact on our consolidated sales.

Consolidated cost of sales increased by 9.2% , or $71.8 million for the nine months ended August 2, 2015 , compared to the nine months ended August 3, 2014 . This increase resulted from the inclusion of CENTRIA which contributed $97.6 million of cost of sales since January 16, 2015 when CENTRIA was acquired. This increase was partially offset by lower underlying material costs driven in part by the continued decrease in steel prices experienced during fiscal 2015.

Fair value adjustment of acquired inventory for the nine months ended August 2, 2015 was $2.4 million . There was no corresponding amount recorded for the three months ended nine months ended August 3, 2014 .

Consolidated gain on insurance recovery for the nine months ended August 3, 2014 was $1.3 million . On August 6, 2013, our metal coil coating segment facility in Jackson, Mississippi experienced a fire caused by an exhaust fan failure that damaged the roof and walls of two curing ovens. During the fourth quarter of fiscal 2013, the ovens were repaired. We received insurance proceeds of approximately $1.3 million during the nine months ended August 3, 2014 from claims submitted. These insurance proceeds have been classified as a “gain on insurance recovery” in the consolidated statement of operations. There was no corresponding amount recorded for the nine months ended August 2, 2015 .

Gross margin, including the gain on insurance recovery , was 22.5% for the nine months ended August 2, 2015 , compared to 20.3% for the same period in the prior year. The increase in gross margin was the result of continued commercial discipline in both the metal components and engineered building systems segments and higher margin product mix as well as the inclusion of CENTRIA.

Metal coil coating sales decreased by 5.0% , or $8.9 million , to $168.0 million in the nine months ended August 2, 2015 , compared to $176.9 million in the same period in the prior year. Sales to third parties for the nine months ended August 2, 2015 decreased $7.4 million to $73.8 million from $81.2 million in the same period in the prior year, primarily as a result of a decrease in external tons shipped. The remaining $1.5 million represents a decrease in intersegment sales for the nine months ended August 2, 2015 , compared to the same period in the prior year. Metal coil coating third-party sales accounted for 6.7% of total consolidated third-party sales in the nine months ended August 2, 2015 , compared to 8.3% in the nine months ended August 3, 2014 .

Operating income of the metal coil coating segment decreased to $11.9 million in the nine months ended August 2, 2015 , compared to $17.1 million in the same period in the prior year. The prior year included insurance proceeds of approximately $1.3 million as noted above. The remaining decrease was primarily due to the lower sales to third parties as noted above.

Metal components sales increased 29.6% , or $147.5 million , to $645.1 million in the nine months ended August 2, 2015 , compared to $497.6 million in the same period in the prior year. The results were driven in part by the inclusion of CENTRIA, which contributed $121.1 million of external sales since January 16, 2015 when CENTRIA was acquired. This increase was also due to higher volume of single skin products shipped and higher margin product mix, primarily in our insulated metal panel products. Sales to third parties for the nine months ended August 2, 2015 increased $137.4 million to $574.7 million from $437.3 million in the same period in the prior year. The remaining $10.1 million represents an increase in intersegment sales. Metal components third-party sales accounted for 52.1% of total consolidated third-party sales in the nine months ended August 2, 2015 , compared to 44.7% in the nine months ended August 3, 2014 .

Operating income of the metal components segment increased to $32.3 million in the nine months ended August 2, 2015 , compared to $19.1 million in the same period in the prior year. The $13.2 million increase was driven by the increased sales discussed above, as well as improved product mix.

Engineered building systems sales decreased 1.3% , or $6.3 million , to $469.6 million in the nine months ended August 2, 2015 , compared to $475.8 million in the same period in the prior year. This decrease resulted from a decrease in external tons shipped, partially offset by improved product mix. Sales to third parties for the nine months ended August 2, 2015 decreased $4.2 million to $455.4 million from $459.6 million in the same period in the prior year. The remaining $2.0 million represents a decrease in intersegment sales. Engineered building systems third-party sales accounted for 41.3% of total consolidated third-party sales in the nine months ended August 2, 2015 , compared to 47.0% in the nine months ended August 3, 2014 .

Operating income of the engineered building systems segment increased to $25.9 million in the nine months ended August 2, 2015 , compared to $13.1 million in the same period in the prior year. This $12.8 million increase resulted from improved product mix noted above, lower material costs and lower transportation costs, partially offset by lower volumes in the nine months ended August 2, 2015 .

Consolidated engineering, selling, general and administrative expenses , consisting of engineering, drafting, selling and administrative costs, increased to $210.4 million in the nine months ended August 2, 2015 , compared to $190.3 million in the same period in the prior year. As a percentage of sales, engineering, selling, general and administrative expenses were 19.1% for the nine months ended August 2, 2015 , as compared to 19.5% for the nine months ended August 3, 2014 . The $20.1 million increase in engineering, selling and administrative expenses was primarily due to the inclusion of CENTRIA, which contributed $27.2 million of engineering, selling, general and administrative expenses since January 16, 2015 when CENTRIA was acquired. Engineering, selling, general and administrative costs excluding the impact of CENTRIA decreased $7.1 million during the nine months ended August 2, 2015 compared to the same period in the prior year.

Consolidated intangible amortization increased to $11.2 million in the nine months ended August 2, 2015 , compared to $3.0 million in the same period in the prior year. This increase is directly related to the valuation of intangible assets related to the CENTRIA Acquisition on January 16, 2015. Intangible amortization amounts for the nine months ended August 3, 2014 related to prior acquisitions, including Metl-Span.

Consolidated strategic development and acquisition related costs for the nine months ended August 2, 2015 were $3.1 million compared to $1.5 million for the nine months ended August 3, 2014 . These non-operational costs are related to acquisition-related activities that support our future growth targets and performance goals and generally include external legal, financial, and due diligence costs incurred to pursue specific acquisition targets.

Consolidated restructuring charges for the nine months ended August 2, 2015 were $3.7 million . In January 2015, we announced plans to consolidate our three Tennessee manufacturing facilities in our engineered building systems segment, closing the Caryville operation. Our Lexington and Elizabethton facilities, both located approximately 125 miles from Caryville, will continue to serve our family of brands within the segment. We believe the leaner footprint will maximize efficiencies and improve supply chain management while increasing the concentration of product and service capabilities at the existing facilities. We have incurred severance and facility costs at the Caryville facility of approximately $1.6 million during the nine months ended August 2, 2015 . We completed the closing of the Caryville facility during March 2015. In addition, we incurred general severance costs of approximately $2.1 million, primarily in an effort to streamline our management and manufacturing structure to better serve our customers. There was no corresponding amount recorded for the nine months ended August 3, 2014 .

Consolidated interest expense increased to $20.4 million for the nine months ended August 2, 2015 , compared to $9.4 million for the same period of the prior year. On January 16, 2015, we issued $250.0 million in aggregate principal amount of 8.25% senior notes due 2023 to fund the CENTRIA Acquisition, which increased our consolidated interest expense.

Consolidated foreign exchange loss, increased to a $2.0 million loss for the nine months ended August 2, 2015 , compared to a $0.8 million loss for the same period of the prior year, primarily due to foreign currency losses in both Mexico and Canada related to fluctuations in the Mexican Peso and Canadian Dollar, relative to the U.S. Dollar exchange rate in the current period.

Consolidated benefit from income taxes was $1.1 million for the nine months ended August 2, 2015 , compared to $2.7 million for the same period in the prior year. The effective tax rate for the nine months ended August 2, 2015 was 64.3% , compared to 47.0% for the same period in the prior year. The increase in the effective tax rate was primarily the result of an increase in the benefit related to the domestic production activities deduction and a decrease in the detriment related to non-deductible expenses partially offset by a true-up to the fiscal 2014 income tax provision as a result of the Tax Increase Prevention Act of 2014 that changed our fiscal 2014 tax calculation but was not signed into law until after our fiscal year had ended.

Diluted loss per common share improved to $(0.01) per diluted common share for the nine months ended August 2, 2015 , compared to a loss of $(0.04) per diluted common share for the same period in the prior year. The improvement in diluted loss per common share was primarily due to the $2.5 million improvement in net loss resulting from the factors described above in this section.

LIQUIDITY AND CAPITAL RESOURCES

General

Our cash and cash equivalents declined from $66.7 million to $48.3 million during the nine months ended August 2, 2015 . The following table summarizes our consolidated cash flows for the nine months ended August 2, 2015 and August 3, 2014 (dollars in thousands):



	Fiscal Nine Months Ended
	August 2, 2015			August 3, 2014
Net cash provided by (used in) operating activities	38,591			$	(10,054	)
Net cash used in investing activities	(262,425		)	(13,218		)
Net cash provided by (used in) financing activities	206,226			(26,273		)
Effect of exchange rate changes on cash and cash equivalents	(766		)	(227		)
Net decrease in cash and cash equivalents	(18,374		)	(49,772		)
Cash and cash equivalents at beginning of period	66,651			77,436
Cash and cash equivalents at end of period	$	48,277		$	27,664

Operating Activities

Our business is both seasonal and cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic conditions. We rely on cash and short-term borrowings to meet cyclical and seasonal increases in working capital needs. These needs generally rise during periods of increased economic activity or increasing raw material prices due to higher levels of inventory and accounts receivable. During economic slowdowns, or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.

Net cash provided by operating activities was $38.6 million during the nine months ended August 2, 2015 compared to $10.1 million of net cash used in operating activities in the comparable period of fiscal 2014. The increase is primarily due to the improvement in net loss in the current nine months ended August 2, 2015 compared to the same period of 2014. Our primary use of cash in operating activities was for working capital needs.

The primary driver for our decreased use of cash for working capital needs was the result of a reduction in cash used for inventory purchases compared to the comparable period in prior year as well as improved accounts receivables collections in the current period compared to prior year.

Our vendor payments can significantly fluctuate based on the timing of disbursements, inventory purchases and vendor payment terms. Our days payable outstanding as of August 2, 2015 increased to 37.5 days compared to 32.0 days at August 3, 2014 . Our days inventory on-hand was 47.6 days as of August 2, 2015 as compared to 44.4 days at August 3, 2014 . Our days sales outstanding increased to 35.2 days as of August 2, 2015 from 33.1 days at August 3, 2014 as a result of slower timing of customer payments during the current nine month period.

Investing Activities

Cash used in investing activities increased during the nine months ended August 2, 2015 to $ 262.4 million from $ 13.2 million in the comparable period of the prior year. The increase is primarily attributable to the CENTRIA Acquisition in the current period.

Financing Activities

Cash provided by financing activities increased during the nine months ended August 2, 2015 to $ 206.2 million from $ 26.3 million of cash used in financing activities in the comparable prior year period. The increase is primarily due to the issuance of $250.0 million in aggregate principal amount of 8.25% senior notes due 2023 to fund the CENTRIA Acquisition, partially offset

by $31.2 million of payments of principal and interest on our term loan and $9.2 million of payments for financing costs. During the nine months ended August 3, 2014 cash used in financing activities was primarily attributable to the purchase of Common Stock in the amount of $23.8 million paid to the CD&R Funds (as defined below) in connection with the Stock Repurchase (as defined below).

We invest our excess cash in various overnight investments which are issued or guaranteed by the U.S. federal government.

CD&R Funds

The CD&R Funds own 43,211,817 of our shares as of August 2, 2015 , representing approximately 58.7% of our outstanding Common Stock.

On January 15, 2014, the CD&R Funds completed a registered underwritten offering, in which the CD&R Funds offered 8.5 million shares of Common Stock at a price to the public of $18.00 per share (the “Secondary Offering”). The underwriters for the Secondary Offering also exercised their option to purchase 1.275 million additional shares of Common Stock. The aggregate offering price for the 9.775 million shares sold in the Secondary Offering was approximately $167.6 million , net of underwriting discounts and commissions. The CD&R Funds received all of the proceeds from the Secondary Offering and no shares in the Secondary Offering were sold by NCI or any of its officers or directors (although certain of our directors are affiliated with the CD&R Funds). In connection with this Secondary Offering, we incurred approximately $0.8 million in expenses, which were included in engineering, selling, general and administrative expenses in the consolidated statement of operations for fiscal 2014. At August 2, 2015 and November 2, 2014 , the CD&R Funds beneficially owned 58.7% and 58.8% , respectively, of the voting power and Common Stock of the Company.

On January 6, 2014, NCI entered into an agreement with the CD&R Funds to repurchase 1.15 million shares of its Common Stock at the price per share equal to the price per share paid by the underwriters to the CD&R Funds in the underwritten offering (the “Stock Repurchase”). The Stock Repurchase, which was completed at the same time as the Secondary Offering, represented a private, non-underwritten transaction between NCI and the CD&R Funds that was approved and recommended by the Affiliate Transactions Committee of NCI’s board of directors. Following completion of the Stock Repurchase, NCI canceled the shares repurchased from the CD&R Funds, resulting in a $19.7 million decrease in both additional paid in capital and treasury stock. For a description of the CD&R Funds’ investment in our Common Stock, see Note 13 — CD&R Funds to the consolidated financial statements.

Debt

On June 24, 2013, the Company entered into Amendment No. 1 (the “Amendment”) to its existing Credit Agreement (the “Credit Agreement”), dated as of June 22, 2012, between NCI, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent and the other financial institutions party thereto from time to time (the “Term Loan Facility”), primarily to extend the maturity date and reduce the interest rate applicable to all of the outstanding term loans under the Term Loan Facility. At August 2, 2015 and November 2, 2014 , amounts outstanding under the Credit Agreement were $204.1 million and $235.4 million , respectively.

Pursuant to the Amendment, the maturity date of the $238 million of outstanding term loans (the “Initial Term Loans”) was extended and such loans were converted into a new tranche of term loans (the “Tranche B Term Loans”) that will mature on June 24, 2019 and, prior to such date, will amortize in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum. At both August 2, 2015 and November 2, 2014 , the interest rate on the term loan under our Credit Agreement was 4.25% .

In addition to our Credit Agreement, we have entered into the Amended ABL Facility which allows aggregate maximum borrowings of up to $150.0 million . Borrowing availability on the Amended ABL Facility is determined by a monthly borrowing base collateral calculation that is based on specified percentages of the value of qualified cash, eligible inventory and eligible accounts receivable, less certain reserves and subject to certain other adjustments. The Amended ABL Facility has a maturity of

June 24, 2019 and includes borrowing capacity of up to $30 million for letters of credit and up to $10 million for swingline borrowings.

8.25% Senior Notes Due January 2023. On January 16, 2015, the Company issued $250.0 million in aggregate principal amount of 8.25% senior notes due 2023 to fund the CENTRIA Acquisition. Interest on the Notes will accrue at the rate of 8.25% per annum and will be payable semi-annually in arrears on January 15 and July 15, commencing on July 15, 2015. The Notes are guaranteed on a senior unsecured basis by all of the Company’s existing and future domestic subsidiaries that guarantee the Company’s obligations (including by reason of being a borrower under the senior secured asset-based revolving credit facility on a joint and several basis with the Company or a guarantor subsidiary) under the senior secured credit facilities. The Notes are unsecured senior indebtedness and rank equally in right of payment with all of the Company’s existing and future senior indebtedness and senior in right of payment to all of its future subordinated obligations. In addition, the Notes and guarantees are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries.

Credit Agreement. On June 22, 2012, in connection with the acquisition of Metl-Span LLC, a Texas limited liability company (the “Metl-Span Acquisition”), the Company entered into a Credit Agreement among the Company, as Borrower, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent (the “Term Agent”), and the lenders party thereto. The Credit Agreement provided for a term loan credit facility in an aggregate principal amount of $250.0 million . The Credit Agreement was issued at 95% of face value, which resulted in a note discount of $12.5 million . Prior to the Amendment, the note discount was amortized over the life of the loan through May 2, 2018 using the effective interest method.

The Company’s obligations under the Credit Agreement and designated cash management arrangements and hedging agreements, if any, will be irrevocably and unconditionally guaranteed on a joint and several basis by each direct and indirect wholly owned domestic subsidiary of the Company (other than any domestic subsidiary that is a foreign subsidiary holding company or a subsidiary of a foreign subsidiary and certain other excluded subsidiaries).

The obligations under the Credit Agreement and the designated cash management arrangements and hedging agreements, if any, and the guarantees thereof are secured pursuant to a guarantee and collateral agreement, dated as of June 22, 2012 (the “Guarantee and Collateral Agreement”), made by the Company and other Grantors (as defined therein), in favor of the Term Agent, by (i) all of the capital stock of all direct domestic subsidiaries owned by the Company and the guarantors, (ii) up to 65% of the capital stock of certain direct foreign subsidiaries owned by the Company or any guarantor (it being understood that a foreign subsidiary holding company or a domestic subsidiary of a foreign subsidiary will be deemed a foreign subsidiary), and (iii) substantially all other tangible and intangible assets owned by the Company and each guarantor, in each case to the extent permitted by applicable law and subject to certain exceptions.

On June 24, 2013, the Company entered into the Amendment to the Credit Agreement, dated as of June 22, 2012, between NCI, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent and the other financial institutions party thereto from time to time (the “Term Loan Facility”), primarily to extend the maturity date and reduce the interest rate applicable to all of the outstanding term loans under the Term Loan Facility. At August 2, 2015 and November 2, 2014 , amounts outstanding under the Credit Agreement were $204.1 million and $235.4 million , respectively. As a result of the Amendment, in fiscal 2013, we recognized a one-time debt extinguishment charge of approximately $21.5 million related to the write-off of non-cash existing deferred issuance costs, non-cash initial debt discount write-off, pre-payment penalty and fees to the creditors.

Pursuant to the Amendment, the maturity date of the $238 million of outstanding Initial Term Loans was extended and such loans were converted into the Tranche B Term Loans that will mature on June 24, 2019 and, prior to such date, will amortize in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum. Pursuant to the Amendment, the Tranche B Term Loans will bear interest at a floating rate measured by reference to, at the Company’s option, either (i) an adjusted LIBOR not less than 1.00% plus a borrowing margin of 3.25% per annum or (ii) an alternate base rate plus a borrowing margin of 2.25% per annum. At both August 2, 2015 and November 2, 2014, the interest rate on the term loan under our Credit Agreement was 4.25% . Overdue amounts will bear interest at a rate that is 2% higher than the rate otherwise applicable.

Pursuant to the Amendment, the Company will no longer be subject to a financial covenant requiring us to maintain a specified consolidated secured debt to EBITDA leverage ratio for specified periods. The Amendment also includes certain other changes to the Term Loan Facility.

Subject to certain exceptions, the term loan under the Amendment will be subject to mandatory prepayment in an amount equal to:


•	the net cash proceeds of (1) certain asset sales, (2) certain debt offerings, and (3) certain insurance recovery and condemnation events; and


•	50% of annual excess cash flow (as defined in the Amendment), subject to reduction to 0% if specified leverage ratio targets are met.

The Credit Agreement contains customary events of default, including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, cross default and cross acceleration to certain other material indebtedness, certain bankruptcy events, certain ERISA events, material invalidity of security interest, material judgments, and change of control.

The Credit Agreement also provides that the Company has the right at any time to request incremental commitments under one or more incremental term loan facilities or incremental revolving loan facilities, subject to compliance with a pro forma consolidated secured net debt to EBITDA leverage ratio. The lenders under the Credit Agreement will not be under any obligation to provide any such incremental commitments, and any such addition of or increase in commitments will be subject to pro forma compliance with customary conditions.

In connection with the execution of the Credit Agreement the Company, certain of the Company’s subsidiaries, Wells Fargo Capital Finance, LLC, as administrative agent (the “ABL Agent”) under the Company’s Amended ABL Facility (as defined below), and the Term Agent entered into an amendment (the “Intercreditor Agreement Amendment”) to the Company’s existing Intercreditor Agreement, dated as of October 20, 2009, providing for, among other things, the obligations under the Credit Agreement to become subject to the provisions of the Intercreditor Agreement.

Amended ABL Facility. On May 2, 2012, we entered into the Amended Asset-Based Lending Facility (the “Amended ABL Facility”) to (i) permit the acquisition, the entry by the Company into the Credit Agreement and the incurrence of debt thereunder and the repayment of existing indebtedness under NCI’s existing Term Loan, (ii) increase the amount available for borrowing thereunder to $150 million (subject to a borrowing base), (iii) increase the amount available for letters of credit thereunder to $30 million, and (iv) extend the final maturity thereunder.

respect to borrowings thereunder and (v) make certain other amendments and modifications to provide greater operational and financial flexibility.

The Amended ABL Facility provides for an asset-based revolving credit facility which allows aggregate maximum borrowings by NCI Group, Inc. and Robertson-Ceco II Corporation of up to $150.0 million . Borrowing availability under the Amended ABL Facility is determined by a monthly borrowing base collateral calculation that is based on specified percentages of the value of qualified cash, eligible inventory and eligible accounts receivable, less certain reserves and subject to certain other adjustments. At August 2, 2015 and November 2, 2014 , our excess availability under the Amended ABL Facility was $121.8 million and $135.4 million , respectively. At both August 2, 2015 and November 2, 2014 , we had no revolving loans outstanding under the Amended ABL Facility. In addition, at August 2, 2015 and November 2, 2014 , standby letters of credit related to certain insurance policies totaling approximately $8.9 million and $8.1 million were outstanding but undrawn under the Amended ABL Facility.

An unused commitment fee is paid monthly on the Amended ABL Facility at an annual rate of 0.50% based on the amount by which the maximum credit exceeds the average daily principal balance of outstanding loans and letter of credit obligations. Additional customary fees in connection with the Amended ABL Facility also apply.

The obligations of the borrowers under the Amended ABL Facility are guaranteed by the Company and each direct and indirect domestic subsidiary of the Company (other than any domestic subsidiary that is a foreign subsidiary holding company or a subsidiary of a foreign subsidiary that is insignificant) that is not a borrower under the Amended ABL Facility. The obligations of the Company under certain specified bank products agreements are guaranteed by each borrower and each other direct and indirect domestic subsidiary of the Company and the other guarantors. These guarantees are made pursuant to a guarantee agreement, dated as of October 20, 2009, entered into by the Company and each other guarantor with Wells Fargo Capital Finance, LLC (formerly known as Wells Fargo Foothill, LLC), as administrative agent. In connection with the Metl-Span Acquisition, Metl-Span became a borrower under the ABL Facility, and the Company, certain subsidiaries of the Company, and the ABL Agent entered into an amendment (the “ABL Guaranty Amendment”) to the Company’s existing Guaranty Agreement, dated as of October 20, 2009, providing for, among other things, the guarantee of the obligations of Metl-Span under the Amended ABL Facility.

The obligations under the Amended ABL Facility, and the guarantees thereof, are secured by a first priority lien on our accounts receivable, inventory, certain deposit accounts, associated intangibles and certain other specified assets of the Company and a second priority lien on the assets securing the term loan under the Credit Agreement on a first-lien basis, in each case subject to certain exceptions.

The Amended ABL Facility contains a number of covenants that, among other things, limit or restrict our ability to dispose of assets, incur additional indebtedness, incur guarantee obligations, engage in sale and leaseback transactions, prepay other indebtedness, modify organizational documents and certain other agreements, create restrictions affecting subsidiaries, make dividends and other restricted payments, create liens, make investments, make acquisitions, engage in mergers, change the nature of our business and engage in certain transactions with affiliates.

Under the Amended ABL Facility, a “Dominion Event” occurs if either an event of default is continuing or excess availability falls below certain levels, during which period, and for certain periods thereafter, the administrative agent may apply all amounts in the Company’s, the borrowers’ and the other guarantors’ concentration accounts to the repayment of the loans outstanding under the Amended ABL Facility, subject to the Intercreditor Agreement and certain specified exceptions. In addition, during such Dominion Event, we are required to make mandatory payments on our Amended ABL Facility upon the occurrence of certain events, including the sale of assets and the issuance of debt, in each case subject to certain limitations and conditions set forth in the Amended ABL Facility.

The Amended ABL Facility includes a minimum fixed charge coverage ratio of one to one, which will apply if we fail to maintain a specified minimum borrowing capacity. The minimum level of borrowing capacity as of August 2, 2015 and November 2, 2014 was $18.3 million and $20.3 million , respectively. Although our Amended ABL Facility did not require any financial covenant compliance, at August 2, 2015 and November 2, 2014 , our fixed charge coverage ratio as of those dates, which is calculated on a trailing twelve month basis, was 4.90 and 3.46 , respectively. These ratios include the pro forma impact of the CENTRIA Acquisition.

Loans under the Amended ABL Facility bear interest, at our option, as follows:


(1)	Base Rate loans at the Base Rate plus a margin. “Base Rate” is defined as the higher of the Wells Fargo Bank, N.A. prime rate and the overnight Federal Funds rate plus 0.5% and “LIBOR” is defined as the applicable London Interbank Offered Rate adjusted for reserves. The margin ranges from 0.75% to 1.25% depending on the quarterly average excess availability under such facility, and


(2)	LIBOR loans at LIBOR plus a margin. The margin ranges from 1.75% to 2.25% depending on the quarterly average excess availability under such facility.

At August 2, 2015 and November 2, 2014 , the interest rate on our Amended ABL Facility was 4.00% and 4.75% , respectively. During an event of default, loans under the Amended ABL Facility will bear interest at a rate that is 2% higher than the rate otherwise applicable.

Cash Flow

We periodically evaluate our liquidity requirements, capital needs and availability of resources in view of inventory levels, expansion plans, debt service requirements and other operating cash needs. To meet our short- and long-term liquidity requirements, including payment of operating expenses and repaying debt, we rely primarily on cash from operations. Beyond cash generated from operations, most of our Amended ABL Facility is undrawn with $121.8 million available at August 2, 2015 and $48.3 million of cash at August 2, 2015 . However, we have in the past, sought to raise additional capital.

We expect that, for the next 12 months, cash generated from operations and our Amended ABL Facility will be sufficient to provide us the ability to fund our operations, provide the increased working capital necessary to support our strategy and fund planned capital expenditures of between approximately $24 million and $28 million for the remainder of fiscal 2015 and expansion when needed.

In the past, we have used available funds to repurchase shares of our Common Stock under our stock repurchase program. Although we did not purchase any Common Stock during the third quarter of fiscal 2015 under our stock repurchase program, we did withhold shares of restricted stock to satisfy minimum tax withholding obligations arising in connection with the vesting of awards of restricted stock related to our 2003 Long-Term Stock Incentive Plan.

Our corporate strategy seeks potential acquisitions that would provide additional synergies in our metal coil coating, metal components and engineered building systems segments. From time to time, we may enter into letters of intent or agreements to acquire assets or companies in these business lines. The consummation of these transactions could require substantial cash payments and/or issuance of additional debt. See “— Acquisition of CENTRIA” below.

The Company may repurchase or otherwise retire the Company’s debt and take other steps to reduce the Company’s debt or otherwise improve the Company’s financial position. These actions could include open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt. The amount of debt that may be repurchased or otherwise retired, if any, will depend on market conditions, trading levels of the Company’s debt, the Company’s cash position, compliance with debt covenants and other considerations. Affiliates of the Company may also purchase the Company’s debt from time to time, through open market purchases or other transactions. In such cases, the Company’s debt may not be retired, in which case the Company would continue to pay interest in accordance with the terms of the debt, and the Company would continue to reflect the debt as outstanding in its consolidated balance sheets.

Acquisition of CENTRIA

million in cash. The purchase price is subject to a post-closing adjustment to net working capital as provided in the Interest Purchase Agreement. The purchase price was funded through the issuance of $250.0 million of net indebtedness. CENTRIA is now an indirect, wholly-owned subsidiary of NCI.

Accordingly, the results of CENTRIA’s operations from January 16, 2015 are included in our consolidated financial statements. CENTRIA is a leader in the design, engineering and manufacturing of architectural insulated metal panel (“IMP”) wall and roof systems and a provider of integrated coil coating services for the nonresidential construction industry. CENTRIA operates four production facilities in the United States and a manufacturing facility in China. See Note 2 — Acquisition to the consolidated financial statements for more information on the CENTRIA Acquisition.

NON-GAAP MEASURES

Set forth below are certain non-GAAP measures which include “adjusted” operating income (loss), Adjusted EBITDA, adjusted net income (loss) per diluted common share and “adjusted” net income (loss) applicable to common shares. We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit) and depreciation and amortization, adjusted for items broadly consisting of selected items which management does not consider representative of our ongoing operations and certain non-cash items of the Company. Such measurements are not prepared in accordance with U.S. GAAP and should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. Management believes the use of such non-GAAP measures on a consolidated and operating segment basis assists investors in understanding the ongoing operating performance by presenting the financial results between periods on a more comparable basis. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating these measures, you should be aware that in the future we may incur expenses that are the same as, or similar to, some of the adjustments in these non-GAAP measures. In addition, certain financial calculations under our Credit Agreement, Amended ABL Facility and the Notes are based on similar non-GAAP measures. The non-GAAP information provided is unique to the Company and may not be consistent with the methodologies used by other companies. The following tables reconcile adjusted operating income (loss) to operating income (loss) for the periods indicated (in thousands):



	Three Months Ended August 2, 2015
	Metal Coil Coating		Metal Components		Engineered Building Systems		Corporate			Consolidated
Operating income (loss), GAAP basis	$	5,497	$	17,025	$	14,363	$	(17,507	)	$	19,378
Restructuring charges	—		262		138		350			750
Strategic development and acquisition related costs	—		—		—		701			701
Fair value adjustment of acquired inventory	—		1,000		—		—			1,000
Amortization of short lived acquisition intangibles	—		3,334		—		—			3,334
Adjusted operating income (loss)	$	5,497	$	21,621	$	14,501	$	(16,456	)	$	25,163



	Three Months Ended August 3, 2014
					Engineered
	Metal Coil Coating		Metal Components		Building Systems		Corporate			Consolidated
Operating income (loss), GAAP basis	$	6,665	$	10,437	$	11,454	$	(16,354	)	$	12,202
Strategic development costs	—		—		—		1,486			1,486
Adjusted operating income (loss)	$	6,665	$	10,437	$	11,454	$	(14,868	)	$	13,688



	Nine Months Ended August 2, 2015
					Engineered
	Metal Coil Coating		Metal Components		Building Systems		Corporate			Consolidated
Operating income (loss), GAAP basis	$	11,872	$	32,302	$	25,937	$	(49,779	)	$	20,332
Restructuring charges	254		1,500		1,797		144			3,695
Strategic development and acquisition related costs	—		—		—		3,058			3,058
Fair value adjustment of acquired inventory	—		2,358		—		—			2,358
Short lived acquisition method related fair value adjustments	—		6,057		—		—			6,057
Adjusted operating income (loss)	$	12,126	$	42,217	$	27,734	$	(46,577	)	$	35,500



	Nine Months Ended August 3, 2014
						Engineered
	Metal Coil Coating			Metal Components		Building Systems		Corporate			Consolidated
Operating income (loss), GAAP basis	$	17,053		$	19,107	$	13,129	$	(45,768	)	$	3,521
Gain on insurance recovery	(1,311		)	—		—		—			(1,311		)
Secondary offering costs	—			—		—		754			754
Strategic development costs	—			—		—		1,486			1,486
Adjusted operating income (loss)	$	15,742		$	19,107	$	13,129	$	(43,528	)	$	4,450

The following tables reconcile Adjusted EBITDA to net income (loss) for the periods indicated (in thousands):



	4th Quarter November 2, 2014		1st Quarter February 1, 2015			2nd Quarter May 3, 2015			3rd Quarter August 2, 2015		Trailing 12 Months August 2, 2015
Net income (loss)	$	14,259	$	(320	)	$	(7,488	)	$	7,220	$	13,671
Add:
Depreciation and amortization	9,220		9,731			13,766			14,541		47,258
Consolidated interest expense, net	3,053		3,980			8,280			8,135		23,448
Provision (benefit) for income taxes	4,215		(490		)	(4,087		)	3,520		3,158
Restructuring charges	—		1,477			1,759			504		3,740
Strategic development and acquisition related costs	3,512		1,729			628			701		6,570
Fair value adjustment of acquired inventory	—		583			775			1,000		2,358
Non-cash charges:
Stock-based compensation	2,022		2,933			2,201			2,568		9,724
Adjusted EBITDA	$	36,281	$	19,623		$	15,834		$	38,189	$	109,927



	4th Quarter November 3, 2013			1st Quarter February 2, 2014			2nd Quarter May 4, 2014			3rd Quarter August 3, 2014		Trailing 12 Months August 3, 2014
Net income (loss)	$	8,276		$	(4,258	)	$	(4,905	)	$	6,089	$	5,202
Add:
Depreciation and amortization	9,012			8,767			8,941			8,994		35,714
Consolidated interest expense, net	3,334			3,100			3,035			3,142		12,611
Provision (benefit) for income taxes	5,410			(2,506		)	(3,057		)	2,837		2,684
Gain on insurance recovery	(1,023		)	(987		)	(324		)	—		(2,334		)
Unreimbursed business interruption costs	500			—			—			—		500
Secondary offering costs	—			704			50			—		754
Strategic development costs	—			—			—			1,486		1,486
Non-cash charges:
Stock-based compensation	4,565			3,179			2,563			2,404		12,711
Adjusted EBITDA	$	30,074		$	7,999		$	6,303		$	24,952	$	69,328

The following tables reconcile adjusted diluted income (loss) per common share, a non-GAAP measure to income (loss) per diluted common share and adjusted income (loss) applicable to common shares, a non-GAAP measure, to income (loss) applicable to common shares for the periods indicated (in thousands):



	Fiscal Three Months Ended				Fiscal Nine Months Ended
	August 2, 2015		August 3, 2014		August 2, 2015			August 3, 2014
Net income (loss) per diluted common share, GAAP basis	$	0.10	$	0.08	$	(0.01	)	$	(0.04	)
Gain on insurance recovery, net of taxes	—		—		—			(0.01		)
Secondary offering costs, net of taxes	—		—		—			—
Foreign exchange loss, net of taxes	—		—		—			0.01
Strategic development and acquisition related costs, net of taxes	—		0.02		0.03			0.01
Restructuring charges, net of taxes	0.01		—		0.03			—
Fair value adjustment of acquired inventory, net of taxes	0.01		—		0.02			—
Amortization of short lived acquisition intangibles, net of taxes	0.03		—		0.05			—
Adjusted net income (loss) per diluted common share	$	0.15	$	0.10	$	0.12		$	(0.03	)



	Fiscal Three Months Ended				Fiscal Nine Months Ended
	August 2, 2015		August 3, 2014		August 2, 2015			August 3, 2014
Net income (loss) applicable to common shares, GAAP basis	$	7,160	$	6,039	$	(588	)	$	(3,074	)
Gain on insurance recovery, net of taxes	—		—		—			(808		)
Secondary offering costs, net of taxes	—		—		—			464
Foreign exchange loss, net of taxes	—		183		—			508
Strategic development and acquisition related costs, net of taxes	432		915		1,884			915
Restructuring charges, net of taxes	462		—		2,276			—
Fair value adjustment of acquired inventory, net of taxes	650				1,487
Amortization of short lived acquisition intangibles, net of taxes	2,088		—		3,765			—
Adjusted net income (loss) applicable to common shares	$	10,792	$	7,137	$	8,824		$	(1,995	)

OFF-BALANCE SHEET ARRANGEMENTS

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of August 2, 2015 , we were not involved in any material unconsolidated SPE transactions.

CONTRACTUAL OBLIGATIONS

In general, purchase orders issued in the normal course of business can be terminated in whole or in part for any reason without liability until the product is received.

During the nine months ended August 2, 2015 , we committed to a natural gas purchase obligation at volumes expected to be used and based on a market index at one of our metal coil coating facilities totaling $0.5 million over the next year. There have been no other material changes in our future contractual obligations since the end of fiscal 2014 other than the normal expiration of existing contractual obligations and the changes to our contractual obligations as a result of the CENTRIA Acquisition on January 16, 2015 including $1.5 million for natural gas purchase obligations. See Part 2, Item 7 of our Annual Report on Form 10-K for the fiscal year ended November 2, 2014 and Part I, Item 2 of our Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015 for more information on our contractual obligations. See Note 12 — Long-Term Debt and Note Payable to the consolidated financial statements for more information on the material terms of our Notes, Credit Agreement and Amended ABL Facility.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those that are most important to the portrayal of our financial position and results of operations. These policies require our most subjective judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies include those that pertain to revenue recognition, insurance accruals, share-based compensation, income taxes, accounting for acquisitions, intangible assets and goodwill, allowance for doubtful accounts, inventory valuation, property, plant and equipment valuation, contingencies, beneficial conversion features and dividend policy and convertible preferred stock extinguishment policy, which are described in Item 7 of our Annual Report on Form 10-K for the year ended November 2, 2014 .

RECENT ACCOUNTING PRONOUNCEMENTS

as it relates to such awards. ASU 2014-12 is effective for our first quarter in fiscal 2017, with early adoption permitted. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820); Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share. ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which is measured using the net asset value per share practical expedient and certain related disclosures. The update requires retrospective application and is effective for our fiscal year ended October 29, 2017. Early adoption is permitted for financial statements that have not been previously issued. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Steel Prices

We are subject to market risk exposure related to volatility in the price of steel. For the fiscal nine months ended August 2, 2015 , steel constituted approximately 70% of our cost of sales. Our business is heavily dependent on the price and supply of steel. Our various products are fabricated from steel produced by mills to forms including bars, plates, structural shapes, sheets, hot-rolled coils and galvanized or Galvalume ® — coated coils 1 . The steel industry is highly cyclical in nature, and steel prices have been volatile in recent years and may remain volatile in the future. Steel prices are influenced by numerous factors beyond our control, including general economic conditions, domestically and internationally, the availability of raw materials, competition, labor costs, freight and transportation costs, production costs, import duties and other trade restrictions. Based on the cyclical nature of the steel industry, we expect steel prices will continue to be volatile. Although we have the ability to purchase steel from a number of suppliers, a production cutback by one or more of our current suppliers could create challenges in meeting delivery schedules to our customers. Because we have periodically adjusted our contract prices, particularly in the engineered building systems segment, we have generally been able to pass increases in our raw material costs through to our customers. The graph below shows the monthly CRU Index data for the North American Steel Price Index over the historical five-year period. The CRU North American Steel Price Index has been published by the CRU Group since 1994 and we believe this index appropriately depicts the volatility we have experienced in steel prices. The index, based on a CRU survey of industry participants, is now commonly used in the settlement of physical and financial contracts in the steel industry. The prices surveyed are purchases for forward delivery, according to lead time, which will vary. For example, the January index would likely approximate our fiscal March steel purchase deliveries based on current lead-times. The volatility in this steel price index is comparable to the volatility we experience in our average cost of steel.


¹	Galvalume ® is a registered trademark of Biec International, Inc.

Source: www.crugroup.com

We normally do not maintain an inventory of steel in excess of our current production requirements. However, from time to time, we may purchase steel in advance of announced steel price increases. In addition, it is our current practice to purchase all steel inventory that has been ordered but is not in our possession. Therefore, our inventory may increase if demand for our products declines. We can give no assurance that steel will remain available or that prices will not continue to be volatile.

With steel accounting for approximately 70% of our cost of sales for the fiscal nine months ended August 2, 2015 , a one percent change in the cost of steel would have resulted in a pre-tax impact on cost of sales of approximately $6.0 million for the nine months ended August 2, 2015 , if such costs were not passed on to our customers. The impact to our financial results of operations would be significantly dependent on the competitive environment and the costs of other alternative building products, which could impact our ability to pass on these higher costs.

Other Commodity Risks

In addition to market risk exposure related to the volatility in the price of steel, we are subject to market risk exposure related to volatility in the price of natural gas. As a result, we occasionally enter into both index-priced and fixed-price contracts for the purchase of natural gas. We have evaluated these contracts to determine whether the contracts are derivative instruments. Certain contracts that meet the criteria for characterization as a derivative instrument may be exempted from hedge accounting treatment

as normal purchases and normal sales and, therefore, these forward contracts are not marked to market. At August 2, 2015 , all of our contracts for the purchase of natural gas met the scope exemption for normal purchases and normal sales.

Interest Rates

We are subject to market risk exposure related to changes in interest rates on our Credit Agreement and the Amended ABL Facility. These instruments bear interest at an agreed upon percentage point spread from either the prime interest rate or LIBOR. Under our Credit Agreement, we may, at our option, fix the interest rate for certain borrowings based on a spread over LIBOR for 30 days to six months. At August 2, 2015 , we had $204.1 million outstanding under our Credit Agreement. Based on this balance, an immediate change of one percent in the interest rate would cause a change in interest expense of approximately $2.0 million on an annual basis. The fair value of our Credit Agreement, due June 2019, at August 2, 2015 was approximately $203.6 million compared to the face value of $204.1 million . The fair value of our Credit Agreement at November 2, 2014 was approximately $230.1 million compared to the face value of $235.4 million . The fair value of the Notes, due January 2023, at August 2, 2015 was approximately $263.8 million compared to the face value of $250.0 million .

See Note 12 — Long-Term Debt and Note Payable to the consolidated financial statements for more information on the material terms of our long-term debt.

Foreign Currency Exchange Rates

We are exposed to the effect of exchange rate fluctuations on the U.S. dollar value of foreign currency denominated operating revenue and expenses. The functional currency for our Mexico operations is the U.S. dollar. Adjustments resulting from the re-measurement of the local currency financial statements into the U.S. dollar functional currency, which uses a combination of current and historical exchange rates, are included in net income (loss) in the current period. Net foreign currency re-measurement losses for the three month period ended August 2, 2015 were $(0.5) million and $(1.7) million for the nine month period ending August 2, 2015 . Net foreign currency re-measurement losses for the three and nine month periods ended August 3, 2014 were $(0.4) million and $(0.6) million , respectively.

The functional currency for our Canada operations is the Canadian dollar. Translation adjustments resulting from translating the functional currency financial statements into U.S. dollar equivalents are reported separately in accumulated other comprehensive income in stockholders’ equity. The net foreign currency exchange gains (losses) included in net income (loss) for the three month period ended August 2, 2015 and August 3, 2014 was $(0.2) million and $0.1 million , respectively. The net foreign currency exchange gains (losses) included in net income (loss) for the nine month period ended August 2, 2015 and August 3, 2014 was $(0.4) million and $(0.2) million , respectively. The net foreign currency translation adjustment, net of tax, and included in other comprehensive income (loss) for the three month period ended August 2, 2015 and August 3, 2014 was $(0.4) million and insignificant , respectively. The net foreign currency translation adjustment, net of tax, and included in other comprehensive income (loss) for the nine month period ended August 2, 2015 and August 3, 2014 was $(0.4) million and $0.9 million , respectively.

With the CENTRIA Acquisition, we now have operations in China and will be exposed to fluctuations in the foreign currency exchange rate between the U.S. dollar and Chinese Yuan. The functional currency for our China operations is the Chinese Yuan.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of August 2, 2015 . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management believes that our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and based on the evaluation of our disclosure controls and procedures as of August 2, 2015 , our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at such reasonable assurance level.

Internal Control over Financial Reporting

The SEC’s rules permit the exclusion of an assessment of the effectiveness of a registrant’s disclosure controls and procedures as they relate to its internal controls over financial reporting for an acquired business during the first year following such acquisition, if among other circumstances and factors there is not adequate time between the acquisition date and the date of assessment. As previously noted in this Form 10-Q, we completed the CENTRIA Acquisition, on January 16, 2015. CENTRIA represents approximately 5.0% of our total assets as of August 2, 2015 and 11.0% and 630.4% of revenues and net loss, respectively, for the nine month period then ended. The CENTRIA Acquisition had a material impact on internal control over financial reporting. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of August 2, 2015 excluded an assessment of the internal control over financial reporting of CENTRIA.

We are now in the process of integrating CENTRIA’s operations including internal controls and processes. We are in the process of extending to CENTRIA our Section 404 compliance program under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations under such Act.

Except for the CENTRIA Acquisition, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

NCI BUILDING SYSTEMS, INC.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See Part I, Item 1, “Unaudited Consolidated Financial Statements”, Note 16, which is incorporated herein by reference.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended November 2, 2014 and the factors discussed in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015. The risks disclosed in our previous Annual Report on Form 10-K, Quarterly Report on Form 10-Q and information provided elsewhere in this report, could materially adversely affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known or we currently deem to be immaterial may materially adversely affect our business, financial condition or results of operations. We believe there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended November 2, 2014 and in our Quarterly Report on Form 10-Q for the quarterly period ended February 1, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table shows our purchases of our Common Stock during the third quarter of fiscal 2015:

ISSUER PURCHASES OF EQUITY SECURITIES



Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (2)
May 4, 2015 to May 31, 2015	—	—		—	129,218
June 1, 2015 to June 28, 2015	2,149	$	15.66	—	129,218
June 29, 2015 to August 2, 2015	117,925	15.86		—	129,218
Total	120,074	$	15.86	—	129,218


(1)	Represents shares of restricted stock that were withheld to satisfy minimum tax withholding obligations arising in connection with the vesting of awards of restricted stock. The required withholding is calculated using the closing sales price on the previous business day prior to the vesting date as reported by the NYSE.

(2)

Our board of directors has authorized a stock repurchase program. Subject to applicable federal securities law, such purchases may occur, if at all, at times and in amounts that we deem appropriate. Shares repurchased are usually retired. On February 28, 2007, we publicly announced that our board of directors authorized the repurchase of an additional 0.2 million shares of our Common Stock. There is no time limit on the duration of the program. At August 2, 2015 , there were 129,218 shares of Common Stock remaining authorized for repurchase under the program.

Item 5. Other Information.

On August 18, 2015, the Company’s non-employee director compensation policy was modified to increase (1) the annual cash retainer payable to each Board member by $15,000 (from $35,000 to $50,000), and (2) the value of the annual equity award to each Board member by $20,000 (from $60,000 to $80,000). In addition, the policy has been modified to provide that Board committee meeting fees will be paid for committee meetings held on the same day as Board meetings. (Previously, committee meeting fees would only be paid for meetings held on days that the Board did not also meet.)

Item 6. Exhibits.

Exhibits

Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Index to Exhibits immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	NCI BUILDING SYSTEMS, INC.
	(Registrant)


Date: September 4, 2015	By:	/s/ Mark E. Johnson
		Mark E. Johnson
		Executive Vice President,
		Chief Financial Officer and Treasurer

Index to Exhibits



*10.1		Employment Agreement, dated September 1, 2015, by and between the Company and Norman C. Chambers.
*31.1		Rule 13a-14(a)/15d-14(a) Certifications (Section 302 of the Sarbanes-Oxley Act of 2002).

*31.2		Rule 13a-14(a)/15d-14(a) Certifications (Section 302 of the Sarbanes-Oxley Act of 2002).

**32.1		Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (Section 906 of the Sarbanes-Oxley Act of 2002).

**32.2		Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (Section 906 of the Sarbanes-Oxley Act of 2002).

*101.INS		XBRL Instance Document

*101.SCH		XBRL Taxonomy Extension Schema Document

*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

*101.DEF		XBRL Taxonomy Definition Linkbase Document

*101.LAB		XBRL Taxonomy Extension Label Linkbase Document

*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



	*	Filed herewith



	**	Furnished herewith

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “ Agreement ”) is entered into on this 1 ^st day of September, 2015, by and between NCI Building Systems, Inc., a Delaware corporation (“ NCI ”), and Norman C. Chambers (“ Executive ”).

WHEREAS, Executive currently serves as the President and Chief Executive Officer (“CEO”) of NCI and the Chairman of NCI’s Board of Directors (the “ Board ”); and

WHEREAS, NCI and Executive intend for Executive to continue in such roles for the periods set forth herein, and also desire to set forth certain agreed-to succession matters with respect to these roles.

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the adequacy and sufficiency of which are hereby acknowledged, NCI and Executive hereby agree as follows:

1. Term; Duties and Responsibilities .

(a) Service as President and CEO . Executive shall continue in his current position of President and CEO of NCI through March 31, 2018 or such earlier date as the Board determines with respect to either or both of such positions (March 31, 2018, or such earlier date, the “ Transition Date ”). In such capacity, Executive shall have such duties and responsibilities as are commensurate with such roles and consistent with his historic duties and responsibilities in such roles. On the Transition Date, Executive shall relinquish the title and duties of President or CEO of NCI (or both) and any positions held by Executive in any subsidiaries or affiliates of NCI and, if the Transition Date is prior to March 31, 2018, shall serve as NCI’s Executive Chairman until March 31, 2018, subject to the discretion of the Board and his re-election by NCI’s stockholders at the 2017 annual meeting. If the Board determines that Executive shall relinquish the President position prior to March 31, 2018 but not the CEO position, the Transition Date shall not occur until the Board determines that Executive shall relinquish the CEO position (or March 31, 2018, if Executive is still serving as CEO on such date). NCI and Executive agree that, while serving as NCI’s Executive Chairman, Executive shall remain an employee of NCI. Executive’s continued service as Executive Chairman during the period after March 31, 2018 shall be subject to the mutual agreement of the parties and any required action of NCI’s stockholders. Executive agrees to relinquish the title of President of NCI prior to the Transition Date if the Board approves the appointment of a new President of NCI prior to the Transition Date.

(b) Services as Executive Chairman . During the period between the Transition Date and March 31, 2018, Executive shall hold the position solely of Executive Chairman, subject to the discretion of the Board and provided that Executive is re-elected by NCI’s stockholders at the 2017 annual meeting, and shall perform such duties as are customarily associated with such position and shall also perform such other duties as may be reasonably requested by NCI’s President and CEO and/or the Board. NCI and Executive agree that Executive’s time commitment during the period Executive serves as Executive Chairman will be less than that required from Executive during the period Executive serves as CEO, but both NCI and Executive expect that Executive’s level of services at all times Executive serves as Executive Chairman will not be less than twenty percent (20%) of the average level of bona fide services performed by Executive over the immediately preceding 36-month period.

2. Compensation .

(a) From the date of this Agreement through the 90-day period following the Transition Date (but not beyond March 31, 2018), Executive shall continue to receive compensation and benefits at levels that are not less than the levels in effect as of the date of this Agreement. The fiscal year during which such 90-day (or shorter) period ends is referred to herein as the “ Transition Fiscal Year .” For avoidance of doubt, in respect of Executive’s service prior to such 90 ^th day:

(i) NCI shall pay to Executive base salary at an annual rate of not less than $825,000 (“ Base Salary ”), less normal withholdings, payable under NCI’s payroll practices from time to time.

(ii) Executive shall have a target annual bonus of not less than one hundred percent (100%) of his Base Salary for each full fiscal year performance period prior to the Transition Fiscal Year and a pro-rated target annual bonus for the Transition Fiscal Year (reflecting the different amounts of Base Salary and/or target annual bonus in effect during the fiscal year), the payment of which shall be dependent on the attainment of such NCI and individual performance goals as shall be established for Executive by the Compensation Committee of the Board (the “ Compensation Committee ”) pursuant to the terms of NCI’s annual bonus program.

(iii) Executive shall be eligible to receive long-term incentive awards, as determined by the Compensation Committee in its sole discretion, provided that he is employed by NCI on the date of grant of any such award. Any such long-term incentive awards shall be granted pursuant to, and subject to the terms and conditions of, NCI’s Amended and Restated 2003 Long-Term Incentive Plan (the “ 2003 Plan ”) and such other terms and conditions set forth in the applicable award agreement, which award agreement shall be consistent with the terms of the Restricted Stock and Performance Share Award Agreement 2014 Award dated as of December 15, 2014, to which Executive is a party (the “ 2014 LTI Award Agreement ”), and shall also include the Transition Vesting Provisions set forth in clause (iv) below. For clarity, an award agreement shall be “consistent with the 2014 LTI Award Agreement”, (x) with respect to awards the vesting of which is based solely on continued service (a “ Service Award ”), if the effect of a termination of employment or the occurrence of a Change in Control is consistent with Exhibit A to the 2014 LTI Award Agreement and (y) with respect to awards the vesting of which is based on continued service and the achievement of a “Performance Objective” (as defined in the 2003 Plan or any successor thereto) (a “ Performance Award ”), if the effect of a termination of employment or the occurrence of a Change in Control is consistent with Exhibit B to the 2014 LTI Award Agreement.

(iv) Each long-term incentive award granted to Executive that is either granted after the date of this Agreement or is outstanding on the date of this Agreement, including, without limitation, Executive’s 2014 LTI Award Agreement, shall include or is hereby amended to incorporate, in addition to any other vesting rights in such awards, the Transition Vesting Provisions described in this clause (iv). The “ Transition Vesting Provisions ” shall provide that (A) the definitions of “Cause” and “Good Reason” under this Agreement shall apply to such award; (B) NCI’s termination of Executive’s employment other than for Cause or Executive’s resignation with Good Reason, in each case prior to March 31, 2018, shall not cause a forfeiture with respect to the award and (x) any unvested Service Award that is not in the form of restricted stock shall continue to vest without respect to any future service requirements for three years following the date of termination (with any remainder being forfeited), (y) any unvested Service Award that is in the form of restricted stock shall vest in full as of the date of termination and (z) any Performance Award shall be entitled to the earned portion of such Performance Award as determined by the Compensation Committee, without pro-ration, as if Executive remained employed until the scheduled payment date of such Performance Award or until the third anniversary of the date of termination, whichever is earlier (with any remainder being forfeited); and (C) on March 31, 2018, Executive’s employment shall be deemed to be terminated in a termination to which the foregoing clause (B) applies; provided, however, that upon a breach by Executive of Executive’s covenants set forth in the award agreement, any Performance Awards or Service Awards as to which the period of service (determined without regard to this paragraph) or performance has not yet ended at the time of such breach shall be forfeited. Upon any termination of employment other than a termination covered by this Section 2(a)(iv), the terms of this Section 2(a)(iv) shall be in addition to any other vesting rights in the applicable award agreement.

(v) With respect to the Service Award of restricted stock units made to Executive in the first quarter of 2015, in addition to the Transition Vesting Provisions, such Service Award shall vest on a daily basis during the three-year vesting period applicable thereto.

(b) For the period commencing upon expiration of the 90-day post-Transition Date period described in Section 2(a) during which Executive serves as Executive Chairman, Executive shall be entitled to the following compensation and benefits: (i) NCI shall pay to Executive a base salary at a rate determined by the Compensation Committee taking into account Executive’s duties, agreed upon time commitment and competitive practice (“ Post-Transition Base Salary ”), less normal withholdings, payable under NCI’s payroll practices from time to time, provided, however, in no event shall the sum of the Post-Transition Base Salary plus the target annual bonus determined pursuant to clause (ii) below be less than fifty percent (50%) of the sum of Executive’s Base Salary and target annual bonus in effect under Section 2(a)(i) and (ii) immediately prior to the Transition Date;

(ii) Executive shall have a target annual bonus of such percentage (not to exceed 100%) of the Post-Transition Base Salary as determined by the Compensation Committee taking into account Executive’s duties, time commitment and competitive practice for the applicable fiscal performance period (prorated for the Transition Fiscal Year), the payment of which shall be dependent on the attainment of such NCI and individual performance goals as shall be established for Executive by the Compensation Committee in its sole discretion and pursuant to the terms of NCI’s annual bonus program; and

(iii) Executive shall be eligible to receive long-term incentive awards under the 2003 Plan (or any successor thereto) with respect to the Transition Fiscal Year and each fiscal year Executive serves as Executive Chairman, in an amount as determined by the Compensation Committee in its sole discretion, provided that he is employed by NCI on the date of grant of any such award. Any such long-term incentive award shall be granted pursuant to, and subject to the terms and conditions of, the 2003 Plan (or any successor thereto) and such other terms and conditions set forth in the applicable award agreement, which award agreement shall be consistent with the 2014 LTI Award Agreement and shall also include the Transition Vesting Provisions.

(c) NCI shall provide Executive with appropriate office space and administrative assistance through the earlier of (i) March 31, 2018, or (ii) the date of his termination of employment for any reason. In addition, during his period of employment pursuant to this Agreement, Executive shall continue to participate in the benefit plans and policies made available to the senior executives of the Company, including those related to accrual of vacation time, reimbursement of expenses and retirement benefits.

3. Termination of Employment .

(a) If prior to March 31, 2018, NCI terminates Executive’s employment other than for Cause (as defined in subsection (g) hereof), death or Disability (as defined in the 2003 Plan) or Executive resigns from employment with Good Reason (as defined in subsection (h) below) then (1) NCI shall pay to Executive an amount equal to the greater of (A) one times the annual rate of Executive’s then‑current base salary or (B) if Section 2(a)(i) is in effect on the date of termination, based on the highest rate of Executive’s base salary paid under Section 2(a)(i), or if Section 2(b)(i) is in effect on the date of termination, based on the highest rate of Executive’s base salary paid under Section 2(b)(i), the sum of (X) the balance of such base salary that would have been paid to him during the fiscal year in which such termination occurs (the “ Fiscal Year of Termination ”), plus (Y) such base salary for each subsequent fiscal year ending prior to March 31, 2018, plus (Z) such base salary through March 31, 2018, in each case payable in a single lump sum in cash within sixty (60) days following the date of termination, or such later date as may be required pursuant to Section 4(j) hereof; and (2) Executive shall be eligible to receive a prorated annual bonus for the Fiscal Year of Termination based upon the elapsed number of days in the Fiscal Year of Termination through the date of termination applied to the bonus, if any, that would have been earned by Executive for such fiscal year if he had remained employed on the normal payment date of such bonus, based on actual performance under applicable financial metrics, payable at the time that annual bonuses are paid to employees, or such later date as may be required pursuant to Section 4(j) hereof.

(b) If Executive’s employment with NCI terminates under circumstances entitling Executive to payments under subsection (a) above or subsection (d) below, then for a period of eighteen (18) months commencing on Executive’s date of termination (the “ Initial Coverage Period ”), NCI shall continue to keep in full force and effect all policies of medical and dental insurance with respect to Executive and his dependents with the same level of coverage, upon the same terms and otherwise to the same extent as Executive and his dependents were participating in such policies as in effect immediately prior to the date of termination (such coverage, the “ Date of Termination Coverage ”) or, if more favorable to Executive, as provided generally with respect to other peer executives of NCI, and NCI and Executive shall share the costs of the continuation of such insurance coverage in the same proportion as such costs were shared immediately prior to Executive’s date of termination. The coverage provided hereunder shall be applied toward the satisfaction of, and shall not supplement, Executive’s right to continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or any similar state law. Notwithstanding the foregoing: (i) during the period of coverage, the benefits provided in any one calendar year shall not affect the amount of benefits provided in any other calendar year (other than any life-time coverage limits under the applicable medical plans); (ii) the reimbursement of an eligible expense shall be made on or before December 31 of the year following the year in which the expense was incurred; and (iii) Executive’s rights pursuant to this paragraph shall not be subject to liquidation or exchange for another benefit.

(c) If Executive’s employment is terminated by reason of Executive’s death or Disability, then this Agreement shall terminate and NCI shall pay to Executive (or to Executive’s estate in the event of his death) an amount equal to one times the annual rate of Executive’s then‑current base salary in a single lump sum in cash within sixty (60) days following the date of termination, or such later date as may be required pursuant to Section 4(j) hereof. If Executive’s employment is terminated (1) by NCI for Cause prior to the Transition Date or (2) by Executive for any reason other than Good Reason prior to the Transition Date, then this Agreement shall terminate and NCI shall have no further obligations to Executive or Executive’s legal representatives under this Agreement. Any resignation by Executive from all positions with the Company and its subsidiaries prior to March 31, 2018 shall be evidenced by a written resignation letter to which Executive and the Company are parties, and which specifies the extent to which the payments and benefits under this Agreement are to be paid and/or are not to be paid, and in the absence of such a written resignation letter, the Executive shall not be deemed to have so resigned; provided, that the requirement of such written resignation letter shall no longer apply if Executive shall have accepted full-time employment with a third party.

(d) If a Change in Control shall occur (which, for avoidance of doubt, shall have the meaning set forth in the 2003 Plan as modified by the 2014 LTI Award Agreement but shall not be deemed to have occurred solely as a result of investment funds affiliated with Clayton, Dubilier & Rice, LLC selling equity securities currently held by them as of the date of this Agreement in the public market) prior to March 31, 2018 and Executive’s employment is terminated by NCI without Cause or by the Executive with Good Reason upon or following the Change in Control and prior to March 31, 2018, Executive shall be entitled to be paid, as severance pay, two times the annual rate of Executive’s then-current base salary.

(e) For avoidance of doubt, no severance pay or termination benefits shall be paid to Executive by reason of a termination of employment occurring on or following March 31, 2018 unless triggered prior to March 31, 2018 by reason of Section 3(a), (c) or (d), except that Executive shall be eligible to receive a prorated annual bonus for the 2018 fiscal year based upon the elapsed number of days in such fiscal year through the date of termination applied to the bonus, if any, that would have been earned by Executive for such fiscal year if he had remained employed on the normal payment date of such bonus, based on actual performance under applicable financial metrics, payable at the time that annual bonuses are paid to employees, or such later date as may be required pursuant to Section 4(j) hereof.

(f) Notwithstanding the foregoing, NCI shall be obligated to provide the payments described in Sections 3(a) through (d) only if within forty-five (45) days after the date of termination Executive (or his estate) shall have executed a release of claims/covenant not to sue agreement in customary form provided by NCI (the “ Release Agreement ”) and such Release Agreement shall not have been subsequently revoked within the revocation period specified in the Release Agreement. For avoidance of doubt, the Release Agreement shall not impose any additional post-employment obligations on Executive and shall not require Executive to waive or release any rights to indemnification and/or insurance coverage, vested benefits or any benefits under this Agreement.

(g) For purposes of this Agreement, “ Cause ” shall have the following meaning:

(i) Executive’s willful failure to substantially perform his duties or the reasonable and lawful instructions of the Board or NCI’s President and Chief Executive Officer (vacation time and absence

due to sickness or disability being excepted herefrom) and such failure continues for a period of thirty (30) days after written notice by NCI of the existence of such failure; provided, however , that only one such notice by NCI need be sent and, if such failure re-occurs thereafter, no further notice and opportunity to cure such failure shall be required;

(ii) conviction of, or plea of nolo contendere to, a felony, other than a felony involving the operation of a motor vehicle which does not result in serious bodily harm to any person;

(iii) a willful act committed by Executive which results in material and demonstrable harm to NCI or any of its subsidiaries, which, if curable, remains uncured for a period of thirty (30) days after written notice by NCI of the existence of such harm; or

(iv) breach or failure by Executive to comply in any material respect with NCI’s Corporate Governance Guidelines, Code of Business Conduct and Ethics or Employee Policy Manual (as the same may be amended, restated, extended, supplemented or otherwise modified in writing from time to time in the sole discretion of the Board) that is not cured within thirty (30) days after written notice by NCI of the breach or failure to perform; provided, however, that only one such notice by NCI need be sent and, if such breach or failure reoccurs thereafter, no further notice and opportunity to cure such breach or failure shall be required.

For purposes of this definition, no act, or failure to act, on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of NCI. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for NCI shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of NCI. The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board at which at least a quorum is present (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board) finding that, in the good faith opinion of the Board, Executive is guilty of the conduct described in this definition, and specifying the particulars thereof in detail.

(h) For purposes of this Agreement, “ Good Reason ” means any of the following events that occurs without Executive’s prior written consent:

(i) any reduction in the amount of Executive’s then-current base salary other than as permitted by the Agreement in connection with the occurrence of the Transition Date;

(ii) (A) a material reduction in Executive’s title; or (B) a material, adverse reduction in the duties or responsibilities of Executive relative to Executive’s duties and responsibilities as described in the Agreement, in the case of each of (A) and (B) other than as permitted by the Agreement;

(iii) the breach or failure by NCI or its subsidiaries to perform any of its material covenants contained in the Agreement;

(iv) the breach or failure by a successor to NCI to assume the Agreement or to perform any of its materials covenants contained in the Agreement;

(v) the failure of the stockholders to re-elect Executive to the Board at the 2017 annual meeting, whether due to failure of NCI to nominate Executive or failure of the stockholders to approve any such nomination; or

(vi) any relocation of Executive’s principal place of employment outside the Houston, Texas metropolitan area.

In order for a termination by Executive to constitute a termination for Good Reason, Executive must notify NCI of the circumstances claimed to constitute Good Reason in writing not later than the thirtieth (30th) day after such circumstances have arisen or occurred and must provide NCI with at least thirty (30) days within which to cure such circumstances before terminating employment, and, failing a cure, Executive must terminate his employment within thirty (30) days following the expiration of such cure period. Notwithstanding the foregoing, Executive acknowledges his prior written consent to any relinquishment of his title of President or Chief Executive Officer or to the actions relating to the transition to the role of Executive Chairman in accordance with Section 1 and the related changes in Executive’s compensation and benefits in accordance with Section 2(b), and NCI and Executive agree that such actions and changes shall not constitute “Good Reason.”

4. Miscellaneous .

(a) Expiration of Agreement . This Agreement shall automatically expire and shall cease to be of force or effect on March 31, 2018, and, if Executive is employed on such date, Executive’s employment shall be deemed to have terminated at such time, in each case in the absence of a mutual agreement of the parties that Executive’s employment should continue following such date; provided, however, that any obligation to Executive that is due and owing as of March 31, 2018 shall survive the termination of this Agreement and shall be payable in accordance with its terms.

(b) Coordination of Severance Provisions . If there shall occur a situation in which Executive is or becomes entitled to more than one of the severance provisions in this Agreement, such provisions shall be applied without duplication and Executive shall be entitled to the most favorable of such provisions. The severance payments to be provided Executive pursuant to this Agreement upon termination of the Executive’s employment as provided herein shall constitute the exclusive payments in the nature of severance or termination pay or salary continuation which shall be due to the Executive upon a termination of employment and shall be in lieu of any other such payments under any plan, program, policy or other arrangement which has heretofore been or shall hereafter be established by NCI or any of its affiliates, including Executive’s employment agreement.

(c) Modification of Restrictive Covenants . In the event that NCI shall favorably modify the restrictive covenants to which the senior leadership team of NCI is subject (excluding, for avoidance of doubt, individually negotiated modifications agreed to by NCI in connection with executive departures where such modifications are not extended to the senior leadership team generally), NCI shall also favorably modify the restrictive covenants to which Executive is subject to the same extent.

(d) Assignment . Neither NCI nor Executive may assign this Agreement, except that NCI’s obligations hereunder shall be binding legal obligations of any successor to all or substantially all of NCI’s business by purchase, merger, consolidation, or otherwise, and NCI will require any such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that NCI would be required to perform it if no such succession had taken place.

(e) Executive Assignment . No interest of Executive or his spouse or any other beneficiary under this Agreement, or any right to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims against, NCI or his spouse or any other beneficiary, including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings.

(f) Benefits Unfunded . All rights of Executive and his spouse or any other beneficiary under this Agreement shall at all times be entirely unfunded and no provision shall at any time be made with respect to

segregating any assets of Executive for payment of any amounts due hereunder, and neither Executive nor his spouse or any other beneficiary shall have any interest in or rights against any specific assets of NCI, and Executive and his spouse or any other beneficiary shall have only the rights of a general unsecured creditor of NCI.

(g) Entire Agreement . This Agreement constitutes the entire agreement and understanding between the parties with respect to Executive’s CEO employment with the Company and the succession matters set forth herein and supersedes and preempts any other understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner thereto. For avoidance of doubt and except as expressly provided herein, nothing in this Agreement amends, modifies or alters Executive’s rights under any employee benefit, long-term or other incentive plan in which Executive participates or has received awards or any rights Executive may have to indemnification, advancement of expenses and/or insurance coverage under any indemnification agreement, NCI’s charter or by-laws or insurance policy applicable to Executive.

(h) Waiver . No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of any other provisions or conditions at the same time or at any prior or subsequent time.

(i) Governing Law; Validity . The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which other provisions shall remain in full force and effect.

(j) Section 409A Compliance .

(i) This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither NCI nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of the application of Section 409A of the Code.

(ii) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“ Non-Exempt Deferred Compensation ”) would otherwise be payable or distributable hereunder by reason of Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service,” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not affect the dollar amount or prohibit the vesting of any Non-Exempt Deferred Compensation upon a termination of employment, however defined. If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made at the time and in the form that would have applied absent the non-409A-conforming event.

(iii) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by NCI under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes): (A) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service

will be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within 30 days after Executive’s death) (in either case, the “ Required Delay Period ”); and (B) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period. For purposes of this Agreement, the term “ Specified Employee ” has the meaning given such term in Section 409A of the Code and the final regulations thereunder; provided, however , that NCI’s Specified Employees and its application of the six-month delay rule of Section 409A(a)(2)(B)(i) of the Code shall be determined in accordance with rules adopted by the Board or a committee thereof, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of NCI.

(iv) Each payment of termination benefits under this Agreement shall be considered a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

(v) Whenever in this Agreement a payment or benefit is conditioned on Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within sixty (60) days after the date of termination of employment; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then, subject to subsection (iii) above, such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60 ^th day after the date of termination of employment provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, NCI may elect to make or commence payment at any time during such period.

(vi) If Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.

(vii) NCI shall have the sole authority to make any accelerated distribution permissible under Treas. Reg. Section 1.409A-3(j)(4) to Executive of deferred amounts, provided that such distribution meets the requirements of Treas. Reg. Section 1.409A-3(j)(4).

(viii) NCI and Executive agree that Executive shall not have a “separation from service” within the meaning of Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder with respect any compensation subject to Section 409A of the Code, unless and until Executive’s level of services provided to NCI are less than twenty percent (20%) of the average level of bona fide services performed by Executive over the immediately preceding 36-month period.

(k) Amendment . No amendment or modification of the terms of this Agreement shall be binding upon either of the parties hereto unless reduced to writing and signed by each of the parties hereto.

(l) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original.

(m) Successors . This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective heirs, representatives and successors.

(n) Notices . Notices required under this Agreement shall be in writing and sent by registered U.S. mail, return receipt requested, and email to the following addresses or to such other address as the party being notified may have previously furnished to the other by written notice:



If to NCI : Todd R. Moore Executive Vice President, General Counsel and Secretary NCI Building Systems, Inc. 10943 North Sam Houston Parkway West Houston, TX 77064	If to Executive : At the most recent address on file with NCI

(o) Headings . The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

(Signatures on following page)

IN WITNESS WHEREOF , Executive has hereunto set his hand, and NCI has caused these presents to be executed in its name on its behalf, all as of the date first above written.



NCI BUILDING SYSTEMS, INC. /s/ Todd R. Moore By: Todd R. Moore Its: EVP & General Counsel
EXECUTIVE /s/ Norman C. Chambers Norman C. Chambers

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(b)/15d-14(a)

I, Norman C. Chambers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NCI Building Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 4, 2015



	/s/ Norman C. Chambers
	Norman C. Chambers
	Chairman of the Board,
	President and Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(b)/15d-14(a)

I, Mark E. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NCI Building Systems, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 4, 2015



	/s/ Mark E. Johnson
	Mark E. Johnson
	Executive Vice President,
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT

In connection with the quarterly report of NCI Building Systems, Inc. (the “Company”) for the quarter ended August 2, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Norman C. Chambers, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



	1.	I have reviewed this Report of the Company;



	2.	This Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



	3.	The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 4, 2015



	/s/ Norman C. Chambers
	Norman C. Chambers
	Chairman of the Board,
	President and Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to NCI Building Systems, Inc. and will be retained by NCI Building Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification shall not be deemed to be “filed” or part of the Report or incorporated by reference into any of the registrant’s filings with the Securities and Exchange Commission by implication or by any reference in any such filing to the Report.

Exhibit 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT

In connection with the quarterly report of NCI Building Systems, Inc. (the “Company”) for the quarter ended August 2, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Johnson, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



	1.	I have reviewed this Report of the Company;



	2.	This Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



	3.	The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 4, 2015



	/s/ Mark E. Johnson
	Mark E. Johnson
	Executive Vice President,
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)