Ladies and gentlemen, thank you for standing by, and welcome to the NCI Building Systems, Inc First Quarter Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, March 12, 2014. I would now like to turn the call over to Layne de Alvarez, Vice President of Investor Relations. Please go ahead, Layne.

Thank you. Good morning and welcome to the NCI Building Systems' call to review the company's results for the first quarter of fiscal 2014. To access the taped replay of this call, please dial 1 (800) 406-7325 and enter the pass code 4668423 and the # sign when prompted. The replay will be available approximately two hours after this call and will remain accessible through March 19. The replay will also be available at the company's website at ncigroup.com. The company's first quarter results were issued last night in a press release that was covered by the financial media. In keeping with SEC requirements, I advise that during this call be will be making forward-looking statements that involve risks and uncertainties. Actual outcomes may differ materially from those expected or implied. For more detailed discussion of the risks and uncertainties that may affect NCI, please review our SEC filing, including the 8-K filed last night. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements to beyond what is required by applicable securities laws. In addition, our discussion of operating performance will include non-GAAP financial measures. A reconciliation of these measures with the most directly comparable GAAP measures is included in the earnings release and the CFO commentary, both of which are available on our website. At this time, I would like to turn the call over to NCI's Chairman, President and Chief Executive Officer, Norm Chambers.

Thank you, Layne, and good morning everyone and welcome to our first quarter 2014 conference call. Joining me this morning are, Mark Johnson, our Chief Financial Officer; Todd Moore, General Counsel, and Layne de Alvarez, our Vice President of Investor Relations. Our first quarter earnings were released last night, so hopefully you all had time to review the numbers. We would like to spend most of our time this morning answering your questions, but first I am going to briefly comment on the quarter, and Mark will provide some additional color on our financial details. After the impact of the most severe winter the country has experienced in decades, we are in much stronger position today than we were this time last year. First, we continue to outpace the market. During the first quarter, our sales were up 4.4% while low-rise non-residential new construction starts declined 5.5% on a year-over-year basis. The market where our sales have been historically the most robust, two-story and less declined 10.6% year-over-year according to McGraw-Hill data. These declines in new construction starts have been largely attributed to the winter weather. Our performance reflects our customer support as we worked to provide the highest quality products, combined with exceptional customer service during even the most challenging seasons. We appreciate our customer support of our, in fact of our initiatives to improve the value of products provided to them. Our first quarter bookings for our Buildings group were up 11%, and the Buildings backlog was up 4% on a year-over-year basis. You will recall that both, bookings and backlog had unfavorable year-over-year comparisons from November 2012 through July of 2013. Bookings and backlog have improved year-over-year in both, fiscal fourth quarter 2013 and fiscal first quarter 2014. Additionally and indicative of the success of our value…

Thanks, Norm, and good morning all. In our press release and in the CFO commentary both, of which are available on our website, we have provided discussion of the key elements of our financial results. I would like to take a few minutes to provide some additional color. We were pleased to report a 4.4% increase in revenue during the quarter, despite the fact that non-residential construction was down during that period, particularly for low-rise construction. However, we were unable to drive more profits to our bottom-line. Unfortunately, weather and mix were the biggest culprits combined with continued investment in some key growth initiatives. Let me walk through some of the impacts that the severe weather conditions had on our operations. First, during the quarter, we had 17 plant closure days versus only seven last year. These disruptions, combined with the mid-week holidays, resulted in inefficient production schedules throughout December and January. Second, our supply chain was disrupted. Material costs and production efficiency were impacted by shortages caused by waterway and road transportation issues associated with the weather. Also, just like our operations, our suppliers experienced difficulties in meeting production and delivery commitments. Third, extended cold temperatures resulted in higher utility expenses and impacted the efficiency with which chemicals are utilized in our insulated panel facilities. The unusual temperature variations increased the amount of scrap and rejected material related to the insulated metal panels. Fourth, our transportation costs were higher due to the disruption in traffic caused by the major snowstorms as well as the impact of manufacturing delays. In some cases, we were able to ship production within our geographic footprint to meet customer requirements, but incurred higher transportation costs as a result. Fifth and possibly most important, our product mix and volume of business was negatively impacted. Poor…

Thank you, sir. (Operator Instructions) First question is from the line of Bob Wetenhall with RBC Capital Markets. Please go ahead.

Hi. Good morning.

Good morning, Bob.

Morning.

I was hoping, Mark, maybe you could provide a little bit of color in helping us think about gross margin performance in 2Q. Obviously it sounds like you are overall bullish on the backend and the full-year outlook, but how do we think about absorption in a low-volume environment in second quarter?

That's a great question. I think the primary challenge to our margins in the first quarter was that level of disruption we had associated with weather and we have seen that continue through February and into the early part of March, so we do anticipate that despite the fact that we have had price increases throughout all of our segments, we expect the product mix to still be challenged in our second quarter and some of those disruptions to also continue to occur, so we look to our margins being in the neighborhood of the margin that we had in the prior year, but do not expect that we will see meaningful improvement.

Bob, one of the things that I think that is encouraging is that we actually have had more disruption in February than we did in February last year. From one standpoint of, if we can stay in the range of the margins that we had in the second quarter last year than that would mean we really made some recovery.

Got it. That makes sense, and I was also hoping you could give us a little bit of color. It seems like you guys are outpacing the market which is great, taking some share, but hopefully what's going on in terms of pricing? You spoke a lot about pricing trends in response to offsetting raw material costs, just kind of the traditional paradigm, but you are also trying to cover some other expenses. What's your full year outlook by segment for pricing improvement? Thanks a lot and good luck.

Thanks Bob. Yes, so I think that the 190 basis points that I talked about in terms of the growth in the value in our bookings over the growth in volume in our bookings which is really inverse to last year. In a positive way it is also as I think I said reflected in our backlog, meaning, our margins are up, so at the end of the day, if we can continue to keep that level of spread going forward then that would indicate meaningful improvement in our Buildings group. Now, that's the only place we have this measurable situation because the bookings and backlog, but I'll tell you that all the both, our Coatings group and Our Components group are equally focused on their margins and profitability and pricing, and they are trying to do in a very thoughtful way, but nevertheless as we all understand the importance, so we are looking for improvement throughout the year both in our pricing as well as in our margins that will be reflected in the earnings in Q3 and Q4, in particular and it will help to some extent overcome the weather disruption in Q2.

Thank you. Our next question is from the line of Winnie Clark with UBS. Please go ahead.

Good morning. I was hoping that you could give us some color on what you are seeing by end market? Are there any particular segments that seem to be driving the improvement you are seeing and particularly relative to the outperformance that you realized in the quarter, which was pretty meaningful versus the underlying end market?

Yes. We definitely have seen a meaningful improvement in the warehousing and the storage facilities and I think that this is in part a growing representation of the improvement in overall in the commercial part of the economy, right. The warehousing piece is up about 40%, which is a good indication.

Okay. Great. That's helpful. Then just specifically in terms of the lost work that you have realized or you have seen due to the weather what would you say - and I know you might not expect to see it all this year, but is there some way you could quantify what portion of that you think could be recaptured in the second half of the year. Then, would you expect to recover all of it or is there a portion of that business that could potentially be gone more permanently?

Okay. When we broadly think about this, we think about that we probably saw an erosion of $10 million in revenue in the quarter from our expectations. I know that our teams are working diligently to stay on plan, which means to work to recover that, but from experience I can tell you that that I know that that's a really difficult task, not because the work isn't there, but in part because we have a situation where the people that distribute and build our products kind of can only do a finite amount of work without adding lots of people, so there is a number of aspects that go into whether or not we can capture that, but I will say that I think that we will be able to give more indication at the end of our second quarter call, because we would expect to see some evidence if we are able to start to recover that and we can talk about that in the second quarter call.

Okay. Great. Thanks so much.

Thank you. Our next question is from the line of Trey Grooms with Stephens. Please go ahead.

Yes. Good morning, Norm. This is actually [Mike] [ph] stepping in for Trey this morning. My first question is on the top line which actually exceeded our expectations in the tough winter environment this quarter and we understand that February was rough at all, but considering the decent booking, should we expect any level of pent-up demand and therefore a year-over-year increase in the top line for the second quarter or more or like you have kind of alluded to is that all back half weighted?

Unfortunately, you were breaking up a fair amount on that question, but I think you were asking whether we are going to see in the second quarter an improvement. Is that correct? In the top line?

Yes. That's right.

Yes. I mean, we are expecting to see some growth in the top line, I mean, in fact on a sequential basis.

Then lastly, with your expectation for demand to be up mid-to-high single digits for the full-year, should we start to see any improvement in March and April if the weather cooperates? I was just trying to get a feel for how quickly any pent-up demand could be flowing through. That's all I got. Thanks.

Yes. I mean, as I think I said, - well, I tried to say with some clarity that I think if you take the fact that February is completed, and if you take into account the fact that we've had much worse weather than a year ago, but yet are still saying that we will be around not materially below or above our second quarter 2013 margins then that means we are getting some improvement and that's the point I tried to make to Bob as well. I mean, we are seeing some improvement and we are seeing improvement in pricing, we are seeing improvement in our margins as well.

All right. Thank you.

Thank you. Our next question is from the line of Lee. Lee just dropped off.

Okay.

We have Alex Rygiel with FBR. Please go ahead.

Good morning, gentlemen. Norm, can you help us to gauge the pent-up demand out there? Also, help us to better understand your confidence that backlog will be improving?

Well, so my confidence that backlog will be improving is fundamentally in relationship to bookings. As I think you know, the way that bookings work with backlog, is that we start with our backlog at the beginning of the period, we subtract what we have shipped, we track what we have canceled and that's usually older jobs that are in our backlog that we try to take out and then we add what we have booked, and that gives us the relationship between bookings and backlog. Our view is that that with the increase in the last the last seven months and we have had, with all the necessary adjustments, adjusting meaning the smoothing, that we would see as a result of periods that were slower. I mean, we still ended up with a 9.3% improvement in bookings, in the seven-month period, in value and about a 7.4% improvement in volume, so my point is that we continue to see improvement in spread, we continue to see improvement in backlog. Now I will tell you, as I said before I think that we are still at a modest level of recovery. Anything in the 4s, 5s and 6s is a modest annual growth. If we see bookings materially increase and backlog increase, something on the order of the 7%, 8% or 9% or 10%, would, for me, be a robust recovery and we are not there yet, so we think that the modest recovery will be the case, but as you can imagine, we are probably a tad more conservative than McGraw-Hill. If McGraw-Hill, and view which is about 12%, you know, that would be a beneficial deal for us in the second half.

Secondly, based upon your historical experience and what now, do you have any concerns that there is going to be oversupply possibly due to a lot of these - the winter weather and if that could lead to any kind of pricing erosion in the very short-term?

Well, I mean, the markets are competitive, but I'll say that what you generally find is that, that if the opportunities are in the pipeline and those opportunities are growing, which is the case of a recovering market, you find that pricing pressure often times it takes. What you find is that when it goes the other way and there is a slowness in the growth in the market, then you can see some aggressiveness. That's what we saw in last year's point and that was kind of the fundamental point we tried to make is that gee, this year is so much different than last year, because last year we were still seeing a decline in both, opportunities, and booking and backlog and that is not the case today. It was not the case last week. We saw our bookings for last week. You know, we are quite pleased with what we are seeing.

One of the other things we see with disruptions like this is compression in schedule, because of the disruptions that we are seeing in the first half, it will compress schedules into the second half of the year and therefore meeting timelines and delivery commitments becomes that much more important and much more of a value add for our customers.

Very helpful. Thank you.

Thank you. Our next question is from the line of Lee Jagoda with CJS Securities. Please go ahead.

Thanks. I think all my questions have been answered.

Okay, Lee.

Thank you. Next question is from the line of Robert Kelly with Sidoti. Please go ahead.

Hi, everyone. I might have missed this. The bookings growth year-on-year, how much was pricing responsible for the growth?

What we said was that the weather to bookings, we are up, I'd say 11%?

Yes. 11%.

11% in the Buildings group, which drove a 4% increase in their backlog.

How much was price responsible for the 11% growth?

We saw about a 200-basis point improvement in price, so it drives a portion of the growth, but the majority of the growth is volume.

Okay. By the time we hit the second half given the price increases that you implemented in 4Q, what will be the benefit to top line from price?

In the second half or the?

Yes. Second half third quarter, once the price increases anniversary, what's the benefit to the top line?

So, where we saw the price increases impact was in approximately the 150-basis point to 250-basis point, depending on which segment you are speaking to, so we expect to see that level of improvement coming in our second half.

So, 2% [pricing] across the board?

Yes.

Okay. Thanks.

Go ahead.

Then just as far as, I mean, you seem pretty optimistic on the second half based on what you are signing up. What's the margin trend for the second half of the year? You have given us pretty decent color around where you think 2Q will be, but given what you signed up; you have about six to nine months of visibility with your backlog. Where do you see margin shaken out for the second half of the year whether it'd be EBIT or gross?

Well, we expect to see that we have our margins improved and we would like to see as much of the margin improvement if its 200 points is embedded in the backlog, won't see as much of that come up at tailpipe as we can and that's primarily why we made the changes in manufacturing. Particularly in the Buildings group, we are seeing some good improvement, but that's the game that we have to play in the second half and that's capturing the margin that's in the backlog and getting it to the bottom line.

What would preclude you from capturing the margins that are in the backlog, in the second half?

Poor performance, things that are in our care, custody and control then that we [decide] what weather or hurricane or anything like that, we have Bob, I think the point I am trying to make is that we have in our care, custody and control everything we need to do to get this done, so short of a disruption to a plant or fire or something like that, then we will be working to get as much as that that improvement as I said that we see is embedded in the backlog.

Just one final one, I believe the buyback related to the offering, what was around $18 million $19 million. On the cash flow statement, you are showing $23 million of treasury stock purchase. Are you buying over and above what you did with in conjunction with the CD&R offering?

Now, what you see there that we had a similar amount in the prior year $2 million of stock that's withheld from vesting of shares for employees, so it's where shares are withheld to pay taxes, so it's not an open market purchase.

Okay. At what price point would something like that be triggered or is that even in the plans in the near-term?

The buybacks happen typically on the vesting date and 99% of our vesting days are in December of each year, so it's based on market price at the time that the time that the vesting occurs.

Thanks, guys.

Thank you.

Thank you. Our next question is from the line of Jack Kasprzak with BB&T. Please go ahead. Jack Kasprzak - BB&T: Thanks. Good morning, everyone.

Good morning, Jack. Jack Kasprzak - BB&T: Just on pricing so there were price increases last year that will benefit you this year, are there more price increases, prospective price increases out in the market, and if so, do they figure into the 150 basis points to 250 basis points of expected benefit?

The benefit that we have now that we have said it is embedded in our backlog is consistent with the pricing improvements we've had since the middle of August of last year. There are currently pricing improvements going on in each of our three business groups and we would like to see that continue that improvement in margin, in the backlog through remainder this year and that's our goal. If we can maintain the 200-basis point spread or improve it a bit, that would be very good thing for us.

Retrospectively, there were price increases in August of last year. Then across our segments December and January had price increases as well. Jack Kasprzak - BB&T: Okay. Great and just big picture, if the 12% McGraw-Hill forecast proves out and obviously that's a calendar 14 forecast, I guess.

Yes. Jack Kasprzak - BB&T: You are more conservative than that right now in your outlook, but if the 12% proves out. I mean, just big picture, is that given your market share gains are growing faster than market right now, you would expect to grow faster than that number?

That without certainly be a very nice market growth and we have historically performed better the McGraw-Hill on both, the upside and downside, so it would be a market that that unless it was in a high-rise, that would be a market that would be beneficial for us, so no question about it. When you think about that usually call from our filings in and in our report, I mean, we talk about what we believe incremental 100million square feet of new construction does. In addition to that, we have the initiatives, so we continue to work in a way that is consistent with the model and the goals we have spoken about. Jack Kasprzak - BB&T: Great. Okay. Thanks very much, guys. Appreciate it.

Thank you.

Thank you. (Operator Instructions) Our next question is from the line of Brent Thielman with D.A. Davidson. Please go ahead.

Good morning.

Good morning.

Was the Components group more adversely impacted by weather this quarter than the other segments, because I am surprised by the margin erosion there even as you had, I think you had some of the price increases flowing through.

It was actually, the legacy products did very well in the quarter. The sole impact was the fact that we had shifted in an inordinate amount of cold storage material and the insulated metal panels and that's what's really what brought their margins down in the Components group.

The other thing that's worth talking about briefly is, a new architectural line that's being built for our Components group which should be operational next quarter are actually the start of our third quarter and it's very similar to the way the Middletown, Ohio new facility began in January of last year, where it had a drag on margins and earnings as it was ramping up and then was a contributor four quarters later. We expect something very similar to occur for our Components division on the insulated metal panel side. That new plant is a drag on earnings in the first two quarters of this year in the neighborhood of $1 million and then it begins to dissipate each quarter thereafter and becomes a contributor, although not fully leveraged, but a contributor to earnings in the first quarter of 2015.

Got you. Okay. Thank you. Then I think I heard you mentioned you had some unfavorable comparisons on backlog in bookings at least on a year-on-year perspective and I was hoping if you can kind of elaborate there, because when I think back a year ago, we had fiscal uncertainty, lack of clarity around tax consequences and as I recall that was kind of weighing on decisions to proceed with the projects, so I mean as the comments around unfavorable comparisons more just around the weather? A little bit more color there would be helpful.

Okay. Just to be clear, what we said is that the last seven months have produced growth in bookings and in backlog and that the growth in the value mean that dollars in both, the bookings and our backlog have shown a spread over volume of about 190 basis points to 200 basis points and that's a positive thing. We want to see our value increase disproportionately to our volume. That's a positive and this is exact opposite where we sat this time last year. That's the point we are trying to make. Last year was negative, because everything was trending down; I think the biggest old guy for us, Hey, this year is different. Things are trending up and it's reflected in our bookings and our backlog.

Okay. Thank you.

Okay.

Thank you. Our next question is from the line of Bob Wetenhall with RBC Capital Markets. Please go ahead.

Thanks very much. Norm, you mentioned that two-story and lower construction was up by nearly 11% and the overall market was down by 5.5%, while you guys are up 4.5%. Can you explain what's going on there and if you see a big difference between five-story below and two-story and below and kind of your strategy in the category. Thanks.

Yes. The two-story and below has been our sweet spot for many, many, many years, and if you think about manufacturing plants and warehousing, they can be very high, but oftentimes their classed as two-story, okay? At the end of the day, smaller buildings are more disrupted by the weather than a high-rise or mid-rise, which is just structural steel and I think it's as simple as that. New construction starts meaning, means the ground is being broken and the construct starting. I think, what we saw was that the weather adversely impacted a very large portion of the of the low-rise construction reflected in McGraw-Hill's two-stories and less and it was pretty much across the board. On the same token, we saw some growth, and while I'm bemoaning the margins in the cold storage, the heck of it is. We shipped a lot of coal storage and it was right - I mean, it was profitable, just wasn't as profitable as it is when we have a commercial industrial part of the market. Because those panels can be used internally, so they are not external. The buildings are already up.

Is part of what you are saying, I am just trying to understand this. The fact that 10% obviously speaks to your point about there being really disruptive weather. Is there any reason why when the ground pause you won't see a big reversal of this going into 2H? I mean, a maybe market, if you could speak to that, because I am just trying to understand. In terms your CFO Commentary and soft guidance, we have a lot of downward pressure on the overall McGraw-Hill statistics. Should we get a recovery in 2H from a low comparison sequentially?

Yes, so we will see some recovery, and the way we are trying to explain this, is that we have already seen the negative impact in February. Okay? We have had vastly more disruption this February than we did in February of last year. Even with that disruption, we are still saying that margins for the second quarter this year will be on or around what we experience in the second quarter of last year. Meaning that in March and April, we expect to recover and to improve whatever the damage was - February as a result of weather, so we are going to see improvement. When I look at shipping schedules and what not, there has been some encouragement. As our teams are doing a good job, there is clearly demand, but I would rather speak about retrospectively say gee, "We really did see some recovery from what we lost in the first quarter here it is what it was rather than speak to you now about what I think that number may or may not be. That's the point we are trying to make, Bob.

Totally understood. Thanks for the clarification.

Thank you.

I am showing no further questions. I will turn the call back to management for closing comments.

Thank you very much for attending the call, on our morning opening call, and look forward to reporting next quarter. Thank you.