NCI Building Systems Inc. (NCS) announced that it has agreed to acquire Pittsburgh-based CENTRIA for approximately $245 million. On completion, the acquisition will be accretive to NCI's earnings from the fourth quarter of fiscal 2015. Shares of NCI Building went up 2% following the announcement on Nov 10.
CENTRIA is 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. Over 85% of CENTRIA’s revenue is generated from North America. CENTRIA has four production facilities in the United States, 36 satellite sales locations and a new manufacturing facility in China and a workforce of around 700 people.
CENTRIA generated trailing twelve months revenue of approximately $230 million as of Sep 2014. EBITDA margins, excluding synergies, for the acquired business are expected to be approximately 10% in 2014. As nonresidential construction markets are on the path to recovery, normalized margins are expected to be in the 12—14% range.
NCI Building will pay $245 million in cash for the acquisition. To fund the acquisition, NCI Building will issue $250 million of new senior unsecured notes. The transaction, pursuant to customary closing conditions, is expected to close during the first quarter of fiscal 2015.
The acquisition is in line with NCI Building's strategic objective to target above-market growth through organic initiatives as well as synergistic and complementary acquisitions. 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 will benefit from CENTRIA’s command in the high-end IMP segment of the nonresidential wall and roof systems market by leveraging its exceptional engineering and manufacturing capabilities and its highly experienced and proprietary dealer network. The acquisition is a strategic fit as CENTRIA, like NCI Building, operates an integrated coil coating business that offers a high quality selection of coatings that meet similar aesthetic and performance criteria.
Headquartered in Texas, NCI Building Systems is a leading integrated manufacturer of metal products in the North American non-residential construction industry. NCI Building currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industry include CaesarStone Sdot-Yam Ltd. (CSTE), Headwaters Incorporated (HW) and Trex Co. Inc. (TREX). While CaesarStone Sdot-Yam Ltd. sports a Zacks Rank #1 (Strong Buy), Headwaters and Trex hold a Zacks Rank #2 (Buy).
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