Shares of NCI Building Systems Inc. (NCS) gained nearly 2% and closed at $16.05 after the completion of its earlier announced acquisition of Pittsburgh-based CENTRIA for $245 million. The acquisition will reinforce NCI Building as a primary manufacturer of architectural metal panel products.
On Nov 10, 2014, NCI Building agreed to acquire CENTRIA, a global 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.
The deal is a strategic fit as CENTRIA, like NCI Building, operates an integrated coil coating business that offers a selection of high-quality coatings that meet similar aesthetic and performance criteria. Hence, NCI Building will benefit from CENTRIA’s command in the high-end IMP segment of the nonresidential wall and roof systems market and its highly experienced and proprietary dealer network.
On Jan 6, 2015, NCI Building launched a private offering of $250 million worth of Senior Notes, due 2023, to finance the acquisition of all of the general partnership interests of CENTRIA, inclusive of repayment of third party debt of CENTRIA and subject to working capital adjustment, and to pay fees and expenses associated with the acquisition. The notes will bear an interest rate of 8.25% and will mature in 2023.
CENTRIA is expected to be accretive to NCI Building's earnings from the fourth quarter of fiscal 2015, excluding transaction related charges and amortization of short-lived intangibles. The buyout is also expected to yield annualized run-rate synergies of approximately $7 million within 18 to 24 months of closing.
In addition, NCI Building will receive incremental tax basis in the assets of CENTRIA estimated to be $200 million, resulting in the reduction to NCI Building's cash payments for income taxes over the next several years.
The CENTRIA acquisition will augment NCI Building’s leadership position while expanding the range of its cutting edge proprietary product offerings in the architectural metal panel market. NCI will capitalize on the immense growth opportunity offered by architectural insulated panels given their unique appeal in architectural applications that call for attractive aesthetics, high performance, environmental sustainability and economic value.
NCI Building intends to continue investing in growth initiatives. In addition, the recent booking trends are expected to drive growth. As growth in the nonresidential construction market continues to gain traction, the company remains committed to maintaining commercial discipline and operational efficiency.
Headquartered in Texas, NCI Building Systems is a leading integrated manufacturer of metal products in the North American non-residential construction industry.
Currently, NCI Building Systems carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Headwaters Inc. (HW), Ply Gem Holdings, Inc (PGEM) and USG Corp. (USG). All of these stocks carry a Zacks Rank #1 (Strong Buy).
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