NCI Building Systems, Inc. (NYSE:NCS)

CAPS Rating: 1 out of 5

Integrated manufacturer and marketer of metal products for the building industry. The Company operates a number of manufacturing and distribution facilities in the United States and Mexico.

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Player Avatar 86army (< 20) Submitted: 2/10/2010 9:38:09 PM : Outperform Start Price: $9.40 NCS Score: +24.38

This stock has been beaten down, but this company has a huge presence in our area. It has flushed out overpriced inventory and is poised to fly!

Member Avatar rkjoyce59 (< 20) Submitted: 2/11/2010 2:21:26 PM
Recs: 0

Overpriced inventory has not been the problem for some time. NCI went from $200M in inventory to $50M in 2 quarters. So they have worked through 2008 inventory some time ago. The inventory was the trick to showing the $4M profit just prior to the CD&R investment in October. They just quit buying steel to so a false profit. NCI does have vaste coverage. They have consolidated and ruined some of the best brands in this industry. However, right now they want $0.85 - $0.95 per pound for their steel. Nucor is taking $0.65 - $0.75 per pound for their steel. Nucor is devoted to bankrupting NCI with price and they have been since CD&R did not allow them to die a natural death. This is exactly what Nucor did in the joist market years ago. (Read "American Steel", a book about Nucor) Plus, the steel building market remains at 50% the size it was pre-melt down and it will not be back this year. The small companies are surviving in their regions and they are not folding the way Norm Chambers predicted in the last conference call. So on top of all that...how do you think NCI is going to make that first dividend payment to CD&R for 8% on $250M or $20M. They have not cleared $20M in 3 or 4 years. I would direct you to Amendment #2 filed with the SEC just prior to the CD&R deal. That is the one that says CD&R owns all of the PPE and can sell it, as needed. They will try to sell off plants but there are zero buyers...I am just interested to see if they adjust the PPE valuation on the balance sheet, once they try to sell. That number is as far fetched as the Goodwill they had on the books in 2008. MBCI can be sold right now but that will be selling the only profit center. So, I think there is a little more to it than inventory.

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