NOTE 1619 — 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.~~nature. The Company regularly reviews the status of ongoing 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.

Environmental

The Company is subject to United States and Canadian federal, state, provincial and local laws and regulations relating to pollution and the protection of the environment, including those governing emissions to air, discharges to water, use, storage, treatment, disposal and transport of hazardous waste and other materials, investigation and remediation of contaminated sites, and protection of worker health and safety. From time to time, the Company’s facilities are subject to investigation by governmental authorities. In addition, the Company has been identified as one of many potentially responsible parties for contamination present at certain offsite locations to which it or its predecessors are alleged to have sent hazardous materials for recycling or disposal. The Company may be held liable, or incur fines or penalties, in connection with such requirements or liabilities for, among other things, releases of hazardous substances occurring on or emanating from current or formerly owned or operated properties or any associated offsite disposal location, or for known or newly-discovered contamination at any of the Company’s properties from activities conducted by it or previous occupants. The amount of any liability, fine or penalty may be material, and certain environmental laws impose strict, and under certain circumstances joint and several, liability for the cost of addressing releases of hazardous substances upon certain classes of persons, including site owners or operators and persons that disposed or arranged for the disposal of hazardous substances at contaminated sites.

One of the Company’s subsidiaries entered into an Administrative Order on Consent (the “Consent Order”), effective September 12, 2011, with the United States Environmental Protection Agency (“EPA”), under the Resource Conservation and Recovery Act (“RCRA”), with respect to its Rocky Mount, Virginia property. During 2011, as part of the Consent Order, the Company provided the EPA, among other things, a RCRA Facility Investigation Workplan (the “Workplan”). In 2012, the EPA approved the Workplan, which the Company is currently implementing. Current estimates of remaining costs for predicted assessment, remediation and monitoring activities as of March 30, 2019 are $4.6 million. The Company has recorded approximately $0.3 million of this environmental liability within current liabilities at March 30, 2019 and approximately $4.3 million within other long-term liabilities in the Company’s consolidated balance sheets at March 30, 2019. The Company may incur costs that exceed its recorded environmental liability. The Company will adjust its environmental remediation liability in future periods, if necessary, as further information develops or circumstances change.

The EPA is investigating groundwater contamination at a Superfund site in York, Nebraska referred to as the “PCE/TCE Northeast Contamination Site”. A subsidiary of the Company has been named a potentially responsible party (“PRP”) with respect to the PCE/TCE Northeast Contamination Site. As a PRP, the Company could have liability for investigation and remediation costs associated with the contamination. Given the current status of this matter, the Company has recorded a liability of $5.0 million within other long-term liabilities in its consolidated balance sheets as of March 30, 2019.

The Company is a party to various acquisition and other agreements pursuant to which third parties agreed to indemnify the Company for certain costs relating to environmental liabilities. For example, the Company may be able to recover some of its Rocky Mount, Virginia investigation and remediation costs from U.S. Industries, Inc. and may be able to recover a portion of costs incurred in connection with the York, Nebraska contamination matter from Novelis Corporation as successor to Alcan Aluminum Corporation, the former owner of the York, Nebraska location. The Company’s ability to seek indemnification from parties that have agreed to indemnify it may be limited. There can be no assurance that the Company would receive any funds from these parties, and any related environmental liabilities or costs could have a material adverse effect on our financial condition and results of operations.

Based on current information, the Company is not aware of any environmental compliance obligations, claims or investigations that will have a material adverse effect on its results of operations, cash flows or financial position except as otherwise disclosed in the Company’s consolidated financial statements. However, there can be no guarantee that previously known or newly-discovered matters will not result in material costs or liabilities.

Litigation

The Company believes it has valid defenses to the outstanding claims discussed below and will vigorously defend all such claims; however, litigation is subject to many uncertainties and there cannot be any assurance that the Company will ultimately prevail or, in the event of an unfavorable outcome or settlement of litigation, that the ultimate liability would not be material and would not have a material adverse effect on the business, results of operations, cash flows or financial position of the Company.

In November 2018, Aurora Plastics, LLC (“Aurora”) initiated an arbitration demand against Atrium Windows and Doors, Inc., Atrium Extrusion Systems, Inc., and North Star Manufacturing (London) Ltd. (collectively, “Atrium”) pursuant to a Third Amended and Restated Vinyl Compound and Supply Agreement dated as of December 22, 2016. Aurora alleges that Atrium’s breach of the Agreement has resulted in damages in excess of $48.0 million. Arbitration of the matter is currently expected to occur in 2019.

On November 14, 2018, an individual stockholder, Gary D. Voigt, filed a putative class action complaint in the Delaware Court of Chancery against CD&R, CD&R Fund VIII, and certain directors of the Company. Voigt purports to assert claims on behalf of himself, on behalf of a class of other similarly situated stockholders of the Company, and derivatively on behalf of the Company, the nominal defendant. An amended complaint was filed on April 11, 2019. The amended complaint asserts claims for breach of fiduciary duty and unjust enrichment against CD&R Fund VIII and CD&R, and for breach of fiduciary duty against the director defendants in connection with the Merger. Voigt seeks damages in an amount to be determined at trial. The Company intends to vigorously defend the litigation.

Other contingencies

The Company is subject to other contingencies, including legal proceedings and claims arising out of its operations and businesses that cover a wide range of matters, including, among others, environmental, contract, employment, intellectual property, securities, personal injury, property damage, product liability, warranty, and modification, adjustment or replacement of component parts or units sold, which may include product recalls. Product liability, environmental and other legal proceedings also include matters with respect to businesses previously owned. The Company has used various substances in products and manufacturing operations, which have been or may be deemed to be hazardous or dangerous, and the extent of its potential liability, if any, under environmental, product liability and workers’ compensation statutes, rules, regulations and case law is unclear. Further, due to the lack of adequate information and the potential impact of present regulations and any future regulations, there are certain circumstances in which no range of potential exposure may be reasonably estimated. Also, it is not possible to ascertain the ultimate legal and financial liability with respect to certain contingent liabilities, including lawsuits, and therefore no such estimate has been made as of March 30, 2019.

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 October ~~29, 2017.~~

28, 2018.

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;

downturns in the residential new construction and repair and remodeling end markets, or the economy or the availability of consumer credit;

volatility in the United States (“U.S.”) economy and abroad, generally, and in the credit markets;

~~substantial indebtedness~~inability to successfully develop new products or improve existing products;

the effects of manufacturing or assembly realignments;

changes in laws or regulations;

the effects of certain external domestic or international factors that we may not be able to control, including war, civil conflict, terrorism, natural disasters and ~~our ability to incur substantially more indebtedness;~~public health issues;

our ability to ~~generate significant cash flow required to service or refinance our existing debt, 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;~~

~~increases in interest rates;~~financing on acceptable terms;

recognition of goodwill or asset impairment charges;

commodity price ~~increases~~volatility and/or limited availability of raw materials, including ~~steel;~~steel, PVC resin and aluminum;

retention and replacement of key personnel;

increases in union organizing activity and work stoppages at our facilities or the facilities of our suppliers;

our ability to employ, train and retain qualified personnel at a competitive cost;

enforcement and obsolescence of our intellectual property rights;

changes in foreign currency exchange and interest rates;

costs and liabilities related to compliance with environmental laws and environmental clean-ups;

changes in building codes and standards;

potential product liability claims, including class action claims and warranties, relating to products we manufacture;

competitive activity and pricing pressure in our industry;

the credit risk of our customers;

the dependence on a core group of significant customers in our Windows and Siding segments;

operational problems or disruptions at any of our facilities, including natural disasters;

volatility of the Company’s stock price;

our ability to make strategic acquisitions accretive to earnings;

~~retention and replacement of key personnel;~~

our ability to carry out our restructuring plans and to fully realize the expected cost savings;

~~enforcement~~significant changes in factors and ~~obsolescence~~assumptions used to measure certain of ~~intellectual~~Ply Gem’s defined benefit plan obligations and the effect of actual investment returns on pension assets;

volatility in transportation, energy and freight prices;

the adoption of climate change legislation;

limitations on our net operating losses and payments under the tax receivable agreement;

breaches of our information system security measures;

damage to our major information management systems;

necessary maintenance or replacements to our enterprise resource planning technologies;

potential personal injury, property ~~rights;~~damage or product liability claims or other types of litigation;

~~fluctuations in customer demand;~~

~~costs~~compliance with certain laws related to ~~environmental clean-ups~~our international business operations;

the effect of tariffs on steel imports;

the cost and ~~liabilities;~~difficulty associated with integrating and combining the businesses of NCI and Ply Gem;

~~competitive activity~~potential write-downs or write-offs, restructuring and ~~pricing pressure;~~impairment or other charges required in connection with the Merger;

~~increases in energy prices;~~

~~volatility~~potential claims arising from the operations of our various businesses arising from periods prior to the ~~Company’s stock price;~~

~~dilutive effect on the Company’s common stockholders of potential future sales of the Company’s Common Stock held by our sponsor;~~dates they were acquired;

substantial governance and other rights held by the Investors;

the effect on our ~~sponsor;~~common stock price caused by transactions engaged in by the Investors, our directors or executives;

our substantial indebtedness and our ability to incur substantially more indebtedness;

limitations that our debt agreements place on our ability to engage in certain business and financial transactions;

~~breaches~~the effect of increased interest rates on our ability to service our debt;

downgrades of our ~~information system security measures and damage to our major information management systems;~~credit ratings;

~~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;~~

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

~~timing and amount of any stock repurchases;~~the Company’s shareholder vote on May 23, 2019; and

other risks detailed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q, and in Part I, Item 1A in our ~~most recent~~ Annual Report on Form 10-K ~~as filed~~for the fiscal year ended October 28, 2018 (the “2018 Form 10-K”), our Transition Report on Form 10-Q for the Transition Period and other filings we make 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~~the 2018 Form 10-K ~~as filed with the SEC~~ and other risks described in documents subsequently filed by the Company from time to time 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~~external building products for the ~~nonresidential~~commercial, residential, and repair & remodel construction ~~industry.~~industries. We design, engineer, manufacture and market ~~Engineered~~external building products through our three operating segments, Commercial, Siding, and Windows.

On April 11, 2019, we announced that our name will be changing to Cornerstone Building ~~Systems, Metal Components and Insulated Metal Panels primarily for nonresidential construction use. We~~Brands, Inc., which is expected to become effective following shareholder approval at the annual shareholder meeting being held on May 23, 2019.

In our Commercial segment, 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. We also provide Metal Coil Coating services for commercial and construction applications, servicing both internal and external customers.

~~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. ~~Similarly, Metal Components~~Our Commercial segment also provides metal coil coating services for commercial and ~~Insulated Metal Panels offer builders, designers, architects~~construction applications, servicing both internal and ~~end-users several advantages, including lower long-term costs, longer life, attractive aesthetics~~external customers. We sell our products for both new construction and ~~design flexibility.~~ repair and retrofit applications.

In our Siding segment, our principal products include vinyl siding and skirting, steel siding, vinyl and aluminum soffit, aluminum trim coil, aluminum gutter coil, aluminum gutters, aluminum and steel roofing accessories, cellular PVC trim and mouldings, J-channels, wide crown molding, window and door trim, F-channels, H-molds, fascia, undersill trims, outside/inside corner posts, rain removal systems, injection molded designer accents such as shakes, shingles, scallops, shutters, vents and mounts, vinyl fence, vinyl railing, engineered slate and cedar shake roofing, and stone veneer in the United States and Canada. The breadth of our product lines and our multiple brand and price point strategy enable us to target multiple distribution channels (wholesale and specialty distributors, retailers and manufactured housing) and end users (new construction and home repair and remodeling).

In our Windows segment, our principal products include vinyl, aluminum-clad vinyl, aluminum, wood and clad-wood windows and patio doors and steel, wood, and fiberglass entry doors that serve both the new construction and the home repair and remodeling sectors in the United States and Canada. We ~~use a 52/53 week year with~~continue introducing new products to the portfolio which allow us to enter or further penetrate new distribution channels and customers. The breadth of our ~~fiscal year~~product lines and our multiple price point strategy enable us to target multiple distribution channels (wholesale and specialty distributors, retailers and manufactured housing) and end ~~on the Sunday closest to October 31. In fiscal 2018, our year end will be October 28, 2018.~~ user markets (new construction and home repair and remodeling).

We assess performance across our operating segments by analyzing and evaluating, among other indicators, gross profit and operating income, as well as whether 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.

~~Change in Operating Segments~~Reporting Periods

On ~~February 22,~~November 16, 2018, the Board of Directors of NCI Building Systems, Inc., or the "Company", approved a change to the Company's fiscal year end from a 52/53 week year with the Company’s fiscal year end on the Sunday closest to October 31 to a calendar year of the 12 month period from January 1 to December 31. The Company ~~announced changes~~elected to ~~NCI’s reportable business segments, effective January~~change its fiscal year end in connection with the Merger to align both Companies’ fiscal year ends. As a result of this change, the Company filed a Transition Report on Form 10-Q that included the financial information for the transition period from October 29, 2018 to December 31, 2018, which period is referred to herein as the "Transition Period". References in this Quarterly Report on Form 10-Q to “fiscal year 2018” or “fiscal 2018” refer to the period from October 30, 2017 through October 28, ~~2018 for~~2018. The results of operations of the first quarter of fiscal 2018 are presented herein as the comparable period to the period from January 1, 2019 through March 30, 2019. The Company did not recast the consolidated financial statements for the period from January 1, 2018 to March 30, 2018 because the financial reporting processes in place at that time included certain procedures that were completed only on a quarterly basis. Consequently, to recast this period would have been impractical and would not have been cost-justified.

The Company’s current fiscal quarters are based on a four-four-five week calendar with periods ending on the Saturday of the last week in the quarter except for December 31st which will always be the year-end date. Therefore, the financial results of certain fiscal quarters may not be comparable to prior fiscal quarters.

Environmental Stoneworks Acquisition

On January 12, 2019, the Company entered into a Unit Purchase Agreement (the “Purchase Agreement”) with Environmental Materials, LLC, a Delaware limited liability company (“Environmental Stoneworks” or “ESW”), the Members of Environmental Materials, LLC (the “Sellers”) and Charles P. Gallagher and Wayne C. Kocourek, solely in their capacity as the Seller Representative (as defined in the Purchase Agreement), pursuant to which, on February 20, 2019, NCI’s wholly-owned subsidiary, Ply Gem Industries, Inc., purchased from the Sellers 100% of the outstanding limited liability company interests of Environmental Stoneworks (the “Environmental Stoneworks Acquisition”) for total consideration of $182.6 million, subject to post-closing adjustments. The transaction was financed through borrowings under the Company’s asset-based revolving credit facility.

Merger with Ply Gem

At the Special Shareholder Meeting on November 15, 2018, NCI’s shareholders approved (i) the Merger Agreement and (ii) the Stock Issuance. NCI’s shareholders also approved the three additional proposals described in the Company’s proxy statement relating to the Special Shareholder Meeting. The Merger was consummated on November 16, 2018 in accordance with the Merger Agreement.

Pursuant to the terms of the Merger Agreement, on November 16, 2018, the Company entered into (i) the New Stockholders Agreement between the Company and each of the Investors, pursuant to which the Company granted to the Investors certain governance, preemptive and subscription rights and (ii) the New Registration Rights Agreement with the Investors, pursuant to which the Company granted the Investors customary demand and piggyback registration rights, including rights to demand registrations and underwritten shelf registration statement offerings with respect to the shares of NCI Common Stock that are held by the Investors following the consummation of the Merger. Pursuant to the terms of the New Stockholders Agreement, the Company and the CD&R Fund VIII Investor Group terminated the Old Stockholders Agreement. Pursuant to the terms of the New Registration Rights Agreement, the Company and the CD&R Fund VIII Investor Group terminated the Old Registration Rights Agreement.

In connection with the Merger, on November 16, 2018, NCI assumed (i) the obligations of Ply Gem Midco, a subsidiary of Ply Gem immediately prior to the consummation of the Merger, as borrower under the Current Cash Flow Credit Agreement, (ii) the obligations of Ply Gem Midco as parent borrower under the Current ABL Credit Agreement and (iii) the obligations of Ply Gem Midco as issuer under the Current Indenture.

On April 12, 2018, Ply Gem Midco entered into a Cash Flow Credit Agreement (the “Current Cash Flow Credit Agreement”), by and among Ply Gem Midco, JP Morgan Chase Bank, N.A., as administrative agent and collateral agent (the “Cash Flow Agent”), and the several banks and other financial institutions from time to time party thereto. As of November 16, 2018, immediately prior to the consummation of the Merger, the Current Cash Flow Credit Agreement provided for (i) a term loan facility (the “Current Term Loan Facility”) in an original aggregate principal amount of $1,755.0 million and (ii) a cash flow-based revolving credit facility (the “Current Cash Flow Revolver” and together with the Current Term Loan Facility, the “Current Cash Flow Facilities”) of up to $115.0 million. On November 16, 2018, Ply Gem Midco entered into a Lender Joinder Agreement, by and among Ply Gem Midco, the additional commitment lender party thereto and the Cash Flow Agent, which amended the Current Cash Flow Credit Agreement in order to, among other things, increase the aggregate principal amount of the Current Term Loan Facility by $805.0 million (the “Incremental Term Loans”). Proceeds of the Incremental Term Loans were used to, among other things, (a) finance the Merger and to pay certain fees, premiums and expenses incurred in connection therewith, (b) repay in full amounts outstanding under the Pre-merger Term Loan Credit Agreement and the Pre-merger ABL Credit Agreement (each as defined below) and (c) repay $325.0 million of borrowings outstanding under the Current ABL Facility (as defined below). On November 16, 2018, in connection with the consummation of the Merger, NCI and Ply Gem Midco entered into a joinder agreement with respect to the Current Cash Flow Facilities, and NCI became the Borrower (as defined in the Current Cash Flow Credit Agreement) under the Current Cash Flow Facilities. The Current Term Loan Facility amortizes in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the Current Term Loan Facility on April 12, 2025. There are no amortization payments under the Current Cash Flow Revolver, and all borrowings under the Current Cash Flow Revolver mature on April 12, 2023. At November 16, 2018, following consummation of the Merger, there was $2,555.6 million outstanding under the Current Term Loan Facility and there were no amounts drawn on the Current Cash Flow Revolver.

On April 12, 2018, Ply Gem Midco and certain subsidiaries of Ply Gem Midco entered into an ABL Credit Agreement (the “Current ABL Credit Agreement”), by and among Ply Gem Midco, the subsidiary borrowers from time to time party thereto, UBS AG, Stamford Branch, as administrative agent and collateral agent (the “ABL Agent”), and the several banks and other financial institutions from time to time party thereto, which provided for an asset-based revolving credit facility (the “Current ABL Facility”) of up to $360.0 million, consisting of (i) $285.0 million available to U.S. borrowers (subject to U.S. borrowing base availability) (the “ABL U.S. Facility”) and (ii) $75.0 million available to both U.S. borrowers and Canadian borrowers (subject to U.S. borrowing base and Canadian borrowing base availability) (the “ABL Canadian Facility”). On October 15, 2018, Ply Gem Midco entered into Amendment No. 2 to the Current ABL Credit Agreement, by and among Ply Gem Midco, the incremental lender party thereto and the ABL Agent, which amended the Current ABL Credit Agreement in order to, among other things, increase the aggregate commitments under the Current ABL Facility by $36.0 million to $396.0 million overall, and with the (x) ABL U.S. Facility being increased from $285.0 million to $313.5 million and (y) the ABL Canadian Facility being increased from $75.0 million to $82.5 million. On November 16, 2018, Ply Gem Midco entered into Amendment No. 4 to the Current ABL Credit Agreement, by and among Ply Gem Midco, the incremental lenders party thereto and the ABL Agent, which amended the Current ABL Credit Agreement in order to, among other things, increase the aggregate commitments under the Current ABL Facility by $215.0 million (the “Incremental ABL Commitments”) to $611.0 million overall, and with the (x) ABL U.S. Facility being increased from $313.5 million to approximately $483.7 million and (y) the ABL Canadian Facility being increased from $82.5 million to approximately $127.3 million. On November 16, 2018, in connection with the consummation of the Merger, NCI and Ply Gem Midco entered into a joinder agreement with respect to the Current ABL Facility, and NCI became the Parent Borrower (as defined in the Current ABL Credit Agreement) under the Current ABL Facility. The Company and, at the Company’s option, certain of the Company’s subsidiaries are the borrowers under the Current ABL Facility. As of November 16, 2018, and following consummation of the Merger, (a) Ply Gem Industries, Inc., Atrium Windows and Doors, Inc., NCI Group, Inc. and Robertson-Ceco II Corporation were U.S. subsidiary borrowers under the Current ABL Facility, and (b) Gienow Canada Inc., Mitten Inc., North Star Manufacturing (London) Ltd. and Robertson Building Systems Limited were Canadian borrowers under the Current ABL Facility. All borrowings under the Current ABL Facility mature on April 12, 2023. At November 16, 2018, following consummation of the Merger, there were no amounts drawn and $24.7 million of letters of credit issued under the Current ABL Facility.

On April 12, 2018, Ply Gem Midco issued $645.0 million aggregate principal amount of 8.00% Senior Notes due 2026 (the “8.00% Senior Notes”). The 8.00% Senior Notes were issued pursuant to an Indenture, dated as of April 12, 2018 (as supplemented from time to time, the “Current Indenture”), by and among Ply Gem Midco, as issuer, the subsidiary guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee. On November 16, 2018, in connection with the consummation of the Merger, the Company entered into a supplemental indenture and assumed the obligations of Ply Gem Midco as issuer under the Current Indenture and the 8.00% Senior Notes. The 8.00% Senior Notes bear interest at 8.00% per annum and will mature on April 15, 2026. Interest is payable semi-annually in arrears on April 15 and October 15.

On November 16, 2018, in connection with the incurrence by Ply Gem Midco of the Incremental Term Loans and the obtaining by Ply Gem Midco of the Incremental ABL Commitments, following consummation of the Merger, the Company (a) terminated all outstanding commitments and repaid all outstanding amounts under the Term Loan Credit Agreement, dated as of February 8, 2018 (the “Pre-merger Term Loan Credit Agreement”), by and among the Company, as borrower, the several banks and other financial institutions from time to time party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and (b) terminated all outstanding commitments and repaid all outstanding amounts under the ABL Credit Agreement, dated as of February 8, 2018 (the “Pre-merger ABL Credit Agreement”), by and among NCI Group, Inc. and Robertson-Ceco II Corporation, as borrowers, the Company, as a guarantor, the other borrowers from time to time party thereto, the several banks and other financial institutions from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent. Outstanding letters of credit under the Pre-merger ABL Credit Agreement were cash collateralized.

In connection with the termination and repayment of the Pre-merger Term Loan Credit Agreement and the Pre-merger ABL Credit Agreement, the Company also terminated (i) the Term Loan Guarantee and Collateral Agreement, dated as of February 8, 2018, made by the Company and certain of its subsidiaries, in favor of Credit Suisse AG, Cayman Islands Branch, as collateral agent, (ii) the ABL Guarantee and Collateral Agreement, dated as of February 8, 2018, made by the Company and certain of its subsidiaries, in favor of Wells Fargo Bank, National Association, as collateral agent, and (iii) the Intercreditor Agreement, dated as of February 8, 2018, between Credit Suisse AG, Cayman Islands Branch and Wells Fargo Bank, National Association, and acknowledged by the Company and certain of its subsidiaries.

The Company incurred approximately $14.1 million of acquisition expenses during the three months ended March 30, 2019 related to the Merger, primarily for integration expenses, various third-party consulting and due-diligence services, and financial advisors’ fees, which are recorded in strategic development and acquisition related costs in the Company’s consolidated statements of operations.

Change in Operating Segments

For the Transition Period, the Company began reporting results under three reportable segments: (i) Commercial, (ii) Siding, and (iii) Windows to align with ~~changes in~~ how the Company manages its business, reviews operating performance and allocates ~~resources.~~

~~During~~resources following the ~~first quarter of fiscal 2018,~~Merger. The Commercial segment will include the ~~Company began reporting results under four reportable segments, which are Engineered Building Systems, Metal Components, Insulated Metal Panels and Metal Coil Coating. Previously,~~aggregate operating results ~~for~~of the ~~Insulated Metal Panel product line were included in~~legacy NCI businesses, and the ~~Metal Components segment. In addition, CENTRIA’s coil coating operations, which had been included in~~Siding and Windows segments will include the ~~Metal Components segment since~~operating results of the ~~Company’s acquisition of CENTRIA in January 2015, are now reported within the Metal Coil Coating segment.~~legacy Ply Gem operating segments. Prior periods have been ~~restated~~recasted to conform to the current segment presentation.

~~Second Fiscal Quarter~~Three Months Ended March 30, 2019

During the second quarter of fiscal 2018, the Company has continued to realize the benefits of our focus on commercial discipline in the pass-through of material costs and the Company’s ongoing cost reduction initiatives.

Overall, year-over-year comparisons in most of our financial metrics reflect the pass-through of higher material input costs, as well as operational improvements over the previous three years to better leverage our fixed cost structure. We achieved year-over-year growth in both consolidated sales and gross profit.

Consolidated ~~revenues~~sales increased by approximately ~~9% from~~152.7% for the ~~same period in the prior year.~~three months ended March 30, 2019. The ~~year-over-year~~ improvement was primarily driven by ~~continued commercial discipline in~~ the ~~pass-through of higher costs in a rising cost environment predominantly in~~Ply Gem sales addition for the ~~Engineered Building Systems, Metal Components, and Insulated Metal Panels segments, and underlying volume growth in the Metal Components and Insulated Metal Panels segments.~~three months ended March 30, 2019.

The Company’s gross margin in the current period was 22.8% as compared to 24.0% in the second quarter of 2017. The lower margins in the current period were primarily driven by less favorable product mix in the Insulated Metal Panels segment and increased manufacturing costs in the Metal Coil Coating segment in preparationprofit percentage for higher activity levels. Engineering, selling, general and administrative expenses as a percentage of revenues decreased by 160 basis points to 16.3% of sales compared to the same period last year, as we continue to execute on our strategic initiatives and restructuring activities.

~~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. Following a significant downturn in 2008 and 2009, the current recovery of low-rise construction has been uneven and slow but is now showing some signs of steady growth. The annual volume of new construction starts remains below previous cyclical average trough levels of activity from the last 50 years. However, we believe that the economy is recovering and that the nonresidential construction industry will return to mid-cycle levels of activity over the next several years. The graph below shows the annual nonresidential new construction starts, measured in square feet, since 1968, as compiled and reported by Dodge Data & Analytics:

Current market data continues to show uneven activity across the nonresidential construction markets. According to Dodge Data & Analytics, low-rise nonresidential new construction starts, as measured in square feet and comprising buildings of up to five stories, were up approximately 1% during fiscal 2017 as compared to fiscal 2016. Even though this measure tends to be revised upward in succeeding periods, we believe the underlying growth we are achieving is outpacing market activity. Leading indicators for low-rise, nonresidential construction activity indicate continued positive momentum in fiscal 2018.

The leading indicators that we follow and that typically have the most meaningful correlation to nonresidential low-rise construction starts are the American Institute of Architects’ (“AIA”) Architecture Mixed Use Index, Dodge Residential single family starts and the Conference Board Leading Economic Index (“LEI”). Historically, there has been a very high correlation to the Dodge low-rise nonresidential starts when the three leading indicators are combined and then seasonally adjusted. The combined forward projection of these metrics, based on a 9- to 14-month historical lag for each metric, indicates low single-digit growth for low-rise new construction starts in fiscal 2018.

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, see “Item 3. Quantitative and Qualitative Disclosures About Market Risk — Steel Prices.”

~~Restructuring~~

We continue to execute on our plans to improve cost efficiency through the optimization of our combined manufacturing plant footprint and the elimination of certain fixed and indirect ESG&A costs. During the three months ended ~~April 29, 2018, we incurred charges~~March 30, 2019 was 17.5% as compared to 21.8% in the first quarter of ~~$0.5 million, including $0.3 million, $0.1 million and $0.1~~fiscal 2018. The lower gross margin was primarily caused by the Company incurring approximately $16.2 million in additional cost of goods sold related to the ~~Engineered Building Systems segment, Metal Components segment~~fair value premium of the Ply Gem and ~~Insulated Metal Panels segment, respectively.~~

~~We are currently unable~~ESW inventory on the respective acquisition dates. Excluding the inventory premium impact, the Company’s gross margin would have been 19.0%. The remaining decrease in gross profit percentage relates to ~~make a good faith determination~~the Merger and the inclusion of ~~cost estimates, or range of cost estimates, for actions associated with the plans. Restructuring charges will be recorded~~Ply Gem in our operating results for the ~~plans as they become estimable~~three months ended March 30, 2019. Since our residential building products are intended for exterior use, Ply Gem’s sales and ~~probable. See Note~~ 3 ~~— Restructuring~~operating earnings tend to be lower during periods of inclement weather. As a result, weather conditions in the ~~notes to~~first and fourth quarters of each calendar year will result in these quarters producing significantly less sales revenue and profitability than our second and third quarters of the ~~unaudited consolidated financial statements for additional information.~~year.

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 ~~four~~three operating segments: (i) ~~Engineered Building Systems;~~Commercial, (ii) ~~Metal Components;~~Siding, and (iii) ~~Insulated Metal Panels; and (iv) Metal Coil Coating. All~~Windows. Our operating segments operate ~~primarily~~ in the ~~nonresidential~~commercial and residential new construction, ~~market.~~and repair & remodel construction markets. Sales and earnings are influenced by general economic conditions, the level of residential and nonresidential construction activity, ~~metal roof repair~~commodity costs, such as steel, aluminum, and ~~retrofit demand~~PVC, other input costs such as labor and freight, 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, and other related accessories. The Insulated Metal Panels segment produces panels consisting of rigid foam encased between two sheets of coated metal in a variety of modules, lengths and reveal combinations which are used in architectural, commercial, industrial and cold storage market applications. The Engineered Building Systems segment manufactures custom designed and engineered products such as structural frames, Long Bay® Systems, metal roofing and wall systems, and the related value-added engineering and drafting, to provide customers a complete building envelope solution. The operating segments follow the same accounting policies used for our consolidated financial statements.

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) structural framing provided by the Engineered Building Systems segment to the Metal Components segment; (ii) building components provided by the Metal Components and Insulated Metal Panels segments to the Engineered Building Systems segment; and (iii) hot-rolled, light gauge painted, and slit material and other services provided by the Metal Coil Coating segment to the Engineered Building Systems, Metal Components and Insulated Metal Panels.

Corporate assets consist primarily of cash, ~~and~~ investments, ~~but also include~~prepaid expenses, current and deferred taxes and property, plant and equipment associated with our headquarters in Cary, North Carolina and office 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, acquisition costs and other expenses related to executive, legal, finance, tax, treasury, human resources, information technology ~~purchasing, marketing~~and strategic sourcing, and corporate travel expenses. Additional unallocated amounts primarily include non-operating items such as interest income, interest expense and other (expense) income. See Note 1518 — ~~Operating Segments~~Segment Information in the notes to the unaudited consolidated financial statements for more information on our segments.

We have revised our segment reporting to represent how we now manage our business, ~~restating~~recasting prior periods to conform to the current segment presentation. The following table represents sales and operating income (loss) attributable to these operating segments for the periods indicated (in thousands):

Fiscal Three Months Ended Fiscal Six Months Ended
April 29,
2018 April 30,
2017 April 29,
2018 April 30,
2017
Total sales:

Engineered Building Systems $ 167,240
$ 162,624
$ 324,204
$ 313,887
Metal Components 168,456
154,895
315,288
289,068
Insulated Metal Panels 113,413
102,937
224,207
198,132
Metal Coil Coating 95,190
86,729
183,533
175,069
Intersegment sales (87,230 ) (86,721 ) (168,814 ) (163,989 )
Total sales $ 457,069
$ 420,464
$ 878,418
$ 812,167
External sales:

Engineered Building Systems $ 157,136
$ 154,456
$ 305,424
$ 299,477
Metal Components 147,661
133,290
275,189
248,847
Insulated Metal Panels 99,792
86,773
$ 197,305
169,214
Metal Coil Coating 52,480
45,945
100,500
94,629
Total sales $ 457,069
$ 420,464
$ 878,418
$ 812,167
Operating income (loss):

Engineered Building Systems $ 9,271
$ 6,894
$ 17,534
$ 13,397
Metal Components 22,082
19,997
39,171
32,373
Insulated Metal Panels 1,540
19,377
8,611
21,569
Metal Coil Coating 7,129
6,227
12,505
12,933
Corporate (21,066 ) (20,023 ) (45,967 ) (37,914 )
Total operating income $ 18,956
$ 32,472
$ 31,854
$ 42,358
Unallocated other expense (26,722 ) (6,892 ) (33,253 ) (13,463 )
Income before income taxes $ (7,766 ) $ 25,580
$ (1,399 ) $ 28,895



	Three Months Ended
	March 30, 2019			January 28, 2018
Net sales:
Commercial	$	424,961		$	421,349
Siding	218,277			—
Windows	421,594			—
Total net sales	$	1,064,832		$	421,349
Operating income (loss):
Commercial	$	32,628		$	37,799
Siding	(11,654		)	—
Windows	(4,319		)	—
Corporate	(44,020		)	(24,901		)
Total operating income (loss)	(27,365		)	12,898
Unallocated other expense, net	(56,549		)	(6,531		)
Income (loss) before income taxes	$	(83,914	)	$	6,367

~~FISCAL~~ Following the Merger completed on November 16, 2018, the Company determined that it would have three reportable segments: (i) Commercial, (ii) Siding and (iii) Windows. These reportable segments were derived out of the legacy segments for NCI Buildings Systems Inc.- Engineered Building Systems; Metal Components; Insulated Metal Panels; and Metal Coil Coating which under the post-Merger segment structure will be contained within the Commercial segment. The legacy segments for Ply Gem Holdings, Siding, Fencing, and Stone will be within the Siding segment under the post-Merger segment structure while Windows and Doors will be within the Windows segment.

For the three months ended March 30, 2019, the Commercial segment will contain operating segment results for the period with a comparison to the three months ended January 28, 2018. The Siding and Windows segments will contain operating segment results for the three months ended March 30, 2019 with no comparative information included as these operating segments did not exist within NCI for the three months ended January 28, 2018.

THREE MONTHS ENDED ~~APRIL 29, 2018~~MARCH 30, 2019 COMPARED TO ~~FISCAL~~ THREE MONTHS ENDED ~~APRIL 30, 2017~~JANUARY 28, 2018

~~Consolidated~~Commercial



	Three Months Ended
(Amounts in thousands)	March 30, 2019				January 28, 2018
Statement of operations data:
Net sales	$	424,961	100.0	%	$	421,349	100.0	%
Gross profit	90,401		21.3	%	91,917		21.8	%
SG&A expense (including acquisition costs)	54,942		12.9	%	51,706		12.3	%
Amortization of intangible assets	2,831		0.7	%	2,412		0.6	%
Operating income	32,628		7.7	%	37,799		9.0	%

Net sales increased $3.6 million, or 0.9% for the three months ended March 30, 2019 compared to the three months ended January 28, 2018. During the three months ended March 30, 2019 we continued to benefit from the pass through of higher material input costs, offset by ~~8.7%~~lower tonnage volumes. The decrease in volume is primarily attributed to an acceleration of shipments in the prior year as customers were motivated to take receipt of materials in advance of material and price increases. In addition to the pull-forward, poor job site conditions in late 2018 and early 2019, caused by extreme wet weather across the southern and southeastern portions of the United States, resulted in longer than usual lead times from our customers to the end users of our products.

Gross profit decreased $1.5 million or 1.6% for the three months ended March 30, 2019 compared to the three months ended January 28, 2018. As a percent of net sales, gross profit decreased 50 basis points due to lower leverage of fixed cost structure as a result of the decreased tonnage volume, partially offset by commercial discipline across all divisions.

Selling, general, and administrative expenses (“SG&A”) increased $3.2 million or 6.3% for the three months ended March 30, 2019, compared to the three months ended January 28, 2018 primarily due to project-related expenses in support of Commercial segment initiatives. As a percent of net sales, SG&A increased by 60 basis points as a result of the aforementioned items.

Amortization expense for the three months ended March 30, 2019 was $2.8 million or 0.7% of net sales compared to $2.4 million or 0.6% of net sales for the three months ended January 28, 2018. The amortization expense as a percentage of net sales is higher due to the amortization of trade names which were previously classified as indefinite lived.

Siding



	Three Months Ended
(Amounts in thousands)	March 30, 2019					January 28, 2018
Statement of operations data:
Net sales	$	218,277		100.0	%	$	—	—	%
Gross profit	33,176			15.2	%	—		—	%
SG&A expense (including acquisition costs)	23,444			10.7	%	—		—	%
Amortization of intangible assets	21,386			9.8	%	—		—	%
Operating loss	(11,654		)	(5.3	)%	—		—	%

Net sales for the three months ended March 30, 2019 were $218.3 million. Net sales for the three months ended March 31, 2019 were favorably impacted by the inclusion of $19.4 million of sales for Environmental Stoneworks (“ESW”), ~~or $36.6~~which closed on February 20, 2019. Excluding ESW, our net sales were $198.9 million for the three months ended March 30, 2019. Our net sales for the U.S. and Canadian markets were approximately $206.9 million and $11.4 million, respectively, for the three months ended March 30, 2019. Our building products are typically installed on a new construction home 90 to 120 days after the start of the home, therefore, there is a lag between the timing of the single-family housing start date and the time in which our products are installed on a home. From an industry perspective, we evaluate the new construction environment by reviewing the U.S. Census Bureau single family housing start statistics to assess the performance of the new construction market for a normal quarterly period. For the three months ended March 30, 2019, we evaluated single family housing starts in the period from September 2018 to December 2018 to assess the demand impacts for our products for the three months ended March 30, 2019 noting that single family housing starts decreased 4.1% due to inclement wet weather that existing during the period and a general softening in overall economic conditions specifically for new construction. For new construction, we also examine where these single-family housing starts occur geographically as the Northeast and Midwest are significant vinyl siding concentrated areas relative to the South and the West. In addition to new construction, we also evaluate the repair and remodeling market to assess market conditions by evaluating the Leading Indicator of Remodeling Activity (“LIRA”). For the first quarter of 2019, LIRA reflected that the trailing 12 months of remodeling activity increased from 6.5% for the first quarter of 2018 to 7.0% indicating a slight increase in the repair and remodeling market. Finally, we assess our performance relative to our competitors and the overall siding industry by evaluating the marketing indicators produced by the Vinyl Siding Institute, a third party which summarizes vinyl siding unit sales for the industry. As of March 30, 2019, our U.S. market position in vinyl siding was 39.5% while our share of the Canadian vinyl siding market was 29.1%. Overall, our Siding segment is heavily weighted to the repair and remodeling market with approximately 62% of our net sales being attributed to repair and remodeling with the remaining 38% attributed to the new construction market.

Gross profit for the three months ended March 30, 2019 was $33.2 million. Gross profit was negatively impacted $14.4 million by the non-cash inventory fair value step-up associated with the Merger and by $1.9 million for the non-cash inventory fair value step-up associated with the Environmental Stoneworks Acquisition that closed on February 20, 2019 both of which increased costs of goods sold during the three months ended March 30, 2019. Gross profit for the three months ended March 30, 2019 includes ESW gross profit of $3.4 million. Excluding ESW and the impact of these inventory step-ups, our gross profit would have been $44.2 million for the three months ended March 30, 2019. Historically, our gross profit is impacted significantly by raw material costs specifically PVC resin and aluminum. For the three months ended March 30, 2019 relative to Ply Gem’s legacy first quarter of 2018, PVC resin increased 3.3% while the Midwest Ingot price of aluminum decreased 7.8%. We have typically attempted to pass along increases in raw material input costs to our customers but normally there is a lag period of approximately 90-120 days between the impact of higher raw material costs and customer pricing actions. In addition to raw material costs, we closely monitor freight costs which due to industry driver and lane shortages and fuel costs have been trending higher than recent years.

As a percentage of net sales, our gross profit percentage was 22.2% excluding ESW and this fair value step-up as our net sales and profitability are normally lower during the first and fourth quarters due to inclement weather in the winter months which reduces building activity in both the new construction and repair and remodeling markets.

Selling, general, and administrative expenses were $23.4 million for the three months ended March 30, 2019 including $1.8 million of SG&A expenses attributed to ESW. Included within SG&A expenses are sales and marketing expenses, research and development costs, and legal and professional fees and non-manufacturing personnel costs. As a percentage of net sales, SG&A expenses were 10.9% for the three months ended March 30, 2019 excluding ESW.

Amortization expense for the three months ended March 30, 2019 was $21.4 million or 9.8% of net sales. The amortization expense is directly attributed to the Merger and the Environmental Stoneworks Acquisition and the resulting fair values assigned to our intangible assets including trade names and customer lists which both have finite amortization periods.

Windows



	Three Months Ended
(Amounts in thousands)	March 30, 2019					January 28, 2018
Statement of operations data:
Net sales	$	421,594		100.0	%	—	—	%
Gross profit	62,340			14.8	%	—	—	%
SG&A expense (including acquisition costs)	49,413			11.7	%	—	—	%
Amortization of intangible assets	17,246			4.1	%	—	—	%
Operating loss	(4,319		)	(1.0	)%	—	—	%

Net sales for the three months ended March 30, 2019 were $421.6 million. Net sales for the three months ended March 30, 2019 included net sales of $90.6 million and $81.9 million for Silver Line and Atrium, respectively. Ply Gem’s acquisition of a portfolio of products sold under the Silver Line and American Craftsman brands, certain manufacturing plants and associated distribution and support services (the “Silver Line acquisition”) was completed on October 14, 2018 while the Atrium acquisition was completed on April ~~29,~~12, 2018 with both entities net sales included for the Company within the Windows segment for the three months ended March 30, 2019. Excluding these 2018 acquisitions, our net sales would have been $249.1 million for the three months ended March 30, 2019. Historically, we evaluate our net sales performance within the Windows segment by evaluating our net sales for the new construction market and the repair and remodeling market. For the three months ended March 30, 2019, we evaluated single family housing starts in the period from September 2018 to December 2018 to assess the demand impacts for our products for the three months ended March 30, 2019 noting that single family housing starts decreased 4.1% due to inclement wet weather that existing during the period and a general softening in overall economic conditions specifically for new construction. In addition to new construction, we also evaluate the repair and remodeling market to assess market conditions by evaluating LIRA. For the first quarter of 2019, LIRA reflected that the trailing 12 months of remodeling activity increased from 6.5% for the first quarter of 2018 to 7.0% indicating a slight increase in the repair and remodeling market. Overall, our Windows segment is weighted to the new construction market with approximately 60% of our net sales attributed to new construction with the remaining 40% attributed to the repair and remodeling market. Our building products are typically installed on a new construction home 90 to 120 days after the start of the home, therefore, there is a lag between the timing of the single-family housing start date and the time in which our products are installed on a home.

Gross profit for the three months ended March 30, 2019 was $62.3 million. Gross profit for the three months ended March 30, 2019 includes Silver Line gross profit of $6.2 million and Atrium gross profit of $18.6 million. The Silver Line acquisition was completed on October 14, 2018 while the Atrium acquisition was completed on April 12, 2018 with both entities’ gross profit included for the Company within the Windows segment for the three months ended March 30, 2019. Excluding the impact of the Silver Line and Atrium acquisitions, our gross profit would have been $37.5 million for the three months ended March 30, 2019. Historically, our gross profit is impacted significantly by raw material costs specifically PVC resin, aluminum, and glass. For the three months ended March 30, 2019 relative to Ply Gem’s legacy first quarter of 2018, PVC resin increased 3.3% while the Midwest Ingot price of aluminum decreased 7.8%. We have typically attempted to pass along increases in raw material input costs to our customers but normally there is a lag period of approximately 90-120 days between the impact of higher raw material costs and customer pricing actions. In addition to raw material costs, we closely monitor freight costs which due to industry driver and lane shortages and fuel costs have been trending higher than recent years.

As a percentage of net sales, our gross profit percentage was 15.1% excluding the Silver Line and Atrium acquisitions. Our net sales and profitability are normally lower during the first and fourth quarters due to inclement weather in the winter months which reduces building activity in both the new construction and repair and remodeling markets. With lower production volumes during the winter months, our gross profit trends lower during the first quarter.

Selling, general, and administrative expenses were $49.4 million for the three months ended March 30, 2019. SG&A expenses for the three months ended March 30, 2019 includes $5.0 million and $10.3 million of Silver Line and Atrium SG&A expenses, respectively. Excluding the impact of Silver Line and Atrium, SG&A expenses would have been $34.2 million. Included within SG&A expenses are sales and marketing expenses, research and development costs, and legal and professional fees and non-manufacturing personnel costs. As a percentage of net sales, SG&A expenses were 13.7% for the three months ended March 30, 2019 excluding Silver Line and Atrium.

Amortization expense for the three months ended March 30, 2019 was $17.2 million or 6.9% of net sales excluding Silver Line and Atrium. The amortization expense is directly attributed to the Merger and the fair values assigned to our intangible assets including trade names and customer lists which both have finite amortization periods.

Unallocated Operating Earnings, Interest, and Provision (Benefit) for Income Taxes



	Three Months Ended
(Amounts in thousands)	March 30, 2019			January 28, 2018
Statement of operations data:
SG&A expense	$	(34,064	)	$	(24,647	)
Acquisition related expenses	(9,956		)	(254		)
Operating loss	(44,020		)	(24,901		)
Interest expense	(58,286		)	(7,492		)
Interest income	215			33
Currency transaction gain	1,177			471
Other income, net	345			457
Income tax provision (benefit)	(23,897		)	1,118

Unallocated operating losses include items that are not directly attributed to or allocated to our reporting segments. Such items include legal costs, corporate payroll, and unallocated finance and accounting expenses. The unallocated operating loss for the three months ended March 30, 2019 increased by $19.1 million or 76.8% compared to the three months ended ~~April 30, 2017. The increase in revenue resulted from continued commercial discipline, as well as~~January 28, 2018 due primarily to the ~~pass-through~~addition of ~~material~~the Ply Gem corporate cost center, increased stock-based compensation and ~~other input~~$10.0 million of costs ~~in an inflationary environment, predominantly in~~associated with the ~~Engineered Building Systems, Metal Components, and Insulated Metal Panels segments, and underlying volume growth in the Engineered Building Systems and Metal Components segments.~~Merger.

Consolidated ~~cost of sales~~interest expense increased ~~by 10.4%, or $33.4~~to $58.3 million for the three months ended ~~April 29, 2018,~~March 30, 2019 compared to ~~the three months ended April 30, 2017. The increase in cost of sales resulted primarily from higher input costs, including transportation, materials and skilled labor.~~

~~Gross margin~~ percentage was 22.8% for the three months ended April 29, 2018, compared to 24.0% for the same period in the prior year. The lower margins in the current period were primarily driven by less favorable product mix in both the Insulated Metal Panels segment and doors products and increased manufacturing costs in the Metal Coil Coating segment in preparation for higher activity levels.

~~Engineered Building Systems sales~~ increased by 2.8%, or $4.6 million, to $167.2 million in the three months ended April 29, 2018, from $162.6 million in the same period in the prior year. Sales to third parties for the three months ended April 29, 2018 increased by $2.7 million to $157.1 million from $154.5 million in the same period in the prior year, primarily due to the pass-through of higher input costs and improved product mix. Engineered Building Systems third-party sales accounted for 34.4% of total consolidated third-party sales in the three months ended April 29, 2018, compared to 36.7% in the three months ended April 30, 2017.

Operating income of the Engineered Building Systems segment increased to $9.3 million in the three months ended April 29, 2018, from $6.9 million in the same period in the prior year. The $2.4 million, or 34.5%, increase resulted primarily from improved

~~product mix and lower engineering, selling, general and administrative expenses resulting from the execution of prior year cost reduction initiatives.~~

~~Metal Components sales~~ increased by 8.8%, or $13.6 million, to $168.5 million in the three months ended April 29, 2018, from $154.9 million in the same period in the prior year. Sales to third parties for the three months ended April 29, 2018 increased by $14.4 million to $147.7 million from $133.3 million in the same period in the prior year, primarily driven by higher external volumes and the pass-through of increasing materials costs. The increase in external volume was driven mostly by an increase in the demand for our commercial doors products as we continue to execute on our adjacency growth initiatives. Metal Components third-party sales accounted for 32.3% of total consolidated third-party sales in the three months ended April 29, 2018, compared to 31.7% in the three months ended April 30, 2017.

Operating income of the Metal Components segment increased to $22.1 million in the three months ended April 29, 2018, compared to $20.0 million in the same period in the prior year. The $2.1 million, or 10.4%, increase was driven primarily by an improvement in product mix and improved operating leverage across the cost structure on higher volumes. Prior period operating income includes $0.4 million of gain on insurance recovery for settlements on damaged plant and equipment. There was no corresponding gain in the current period.

~~Insulated Metal Panels sales~~ increased by 10.2%, or $10.5 million, to $113.4 million in the three months ended April 29, 2018, compared to $102.9 million in the same period in the prior year. Sales to third parties for the three months ended April 29, 2018 increased by $13.0 million to $99.8 million from $86.8 million in the same period in the prior year, primarily as a result of commercial discipline emphasizing project profitability over volume in a period of increasing input costs. The increase in volume was driven by strong demand for our cold storage products. Insulated Metal Panel third-party sales accounted for 21.8% of total consolidated third-party sales in the three months ended April 29, 2018, compared to 20.6% in the three months ended April 30, 2017

Operating income of the Insulated Metal Panels segment decreased to $1.5 million in the three months ended April 29, 2018, from $19.4 million in the same period in the prior year. The $17.8 million, or 92.1%, decrease was primarily due to items present in both fiscal years that are not representative of our ongoing operations and a change in product mix away from the unusually high prior year mix of architectural panels. The three months ended April 29, 2018 includes a $6.7 million loss recognized on the sale of the China manufacturing facility. Prior period operating income includes a $9.2 million gain related to the settlement of property claims with insurers for damage caused by a fire in one of the facilities.

~~Metal Coil Coating sales~~ were $95.2 million and $86.7 million in the three months ended April 29, 2018 and April 30, 2017, respectively. Sales to third parties for the three months ended April 29, 2018 increased by $6.5 million to $52.5 million from $45.9 million in the same period in the prior year, primarily as a result of higher tonnage volume in package sales. Metal Coil Coating third-party sales accounted for 11.5% of total consolidated third-party sales in the three months ended April 29, 2018, compared to 10.9% in the three months ended April 30, 2017.

Operating income of the Metal Coil Coating segment increased to $7.1 million in the three months ended April 29, 2018, from $6.2 million in the same period in the prior year. The $0.9 million, or 14.5%, increase was primarily due to lower manufacturing efficiency due to ramping up additional shifts in preparation for increasing activity levels.

~~Consolidated engineering, selling, general and administrative expenses~~ decreased to $74.4 million in the three months ended April 29, 2018, compared to $75.1 million in the same period in the prior year primarily resulting from the continued execution of cost reduction initiatives discussed herein. As a percentage of sales, engineering, selling, general and administrative expenses decreased 160 basis points to 16.3% for the three months ended April 29, 2018, as compared to 17.9% for the three months ended April 30, 2017.

~~Consolidated intangible amortization~~ ~~remained consistent period over period at $2.4 million in the three months ended April 29, 2018, compared to $2.4 million in the same period in the prior year.~~

~~Consolidated restructuring and impairment charges~~ for the three months ended April 29, 2018 and April 30, 2017 were $0.5 million and $0.3 million, respectively. These charges, primarily consisting of severance related costs, relate to our actions taken to streamline our management and engineering and drafting activities, and also to optimize our overall manufacturing structure and footprint.

~~Consolidated strategic development and acquisition related costs~~ ~~for the three months ended April 29, 2018 were $1.1 million, compared to $0.1~~$7.5 million for the three months ended ~~April 30, 2017. These non-operational costs include external legal, financial and due diligence costs incurred to deliver on our strategic initiatives.~~

~~Loss on disposition of business~~ ~~for the three months ended April 29, 2018 was $6.7 million, related to the disposal of our China manufacturing facility in the Insulated Metal Panels segment.~~

~~Consolidated gain on insurance recovery~~ for the three months ended April 30, 2017 was $9.6 million, which related to settlements with the Company’s insurers for property damage to two facilities in the Metal Components and Insulated Metal Panels segments. There was no corresponding gain in the three months ended April 29,January 28, 2018.

~~Consolidated~~ The 678.0% interest expense ~~decreased to $4.8 million for the three months ended April 29, 2018, compared to $7.5 million for the same period of the prior year. The 35.2% decrease in interest expense~~ increase is a primarily due to debt obligations assumed in the ~~redemption~~Merger. Following the consummation of the Merger, our ~~8.25% Senior Notes and lower variable rates on our Term Loan Credit Facility, both results of activities~~consolidated debt balance increased to ~~strengthen our capital structure that were completed in February~~$3.3 billion at March 30, 2019 as compared to $407.2 million at October 28, 2018.

Consolidated foreign exchange gain (loss) for the three months ended ~~April 29, 2018~~March 30, 2019 was a ~~$0.3~~$1.2 million ~~loss,~~gain, compared to a gain of ~~$0.1~~$0.5 million for the ~~same period of the prior year,~~three months ended January 28, 2018, due to exchange rate fluctuations in the Canadian dollar and Mexican peso ~~and Canadian dollar~~ relative to the U.S. dollar.

~~Loss on debt extinguishment~~ for the three months ended April 29, 2018 was $21.9 million. There was no corresponding amount recorded in the same period of the prior year. During our second quarter of fiscal 2018, we recognized a pretax loss, primarily on the extinguishment of our 8.25% senior notes due 2023, of $21.9 million, of which approximately $15.5 million represented the call premium paid on the redemption of the notes.

Consolidated ~~benefit~~provision (benefit) for income taxes was ~~$2.1~~a benefit of $23.9 million for the three months ended ~~April 29, 2018,~~March 30, 2019 compared to an expense of ~~$8.6~~$1.1 million for the ~~same period in the prior year.~~three months ended January 28, 2018. The effective tax rate for the three months ended ~~April 29, 2018~~March 30, 2019 was ~~26.8%,~~28.5% compared to ~~33.6%~~17.6% for the ~~same period in the prior year.~~three months ended January 28, 2018. The change in the effective tax rate was primarily driven by ~~net loss recorded during the three months ended April 29, 2018 and~~ the continuing effects associated with the enactment of the U.S. Tax ~~Reform.~~

~~FISCAL SIX MONTHS ENDED APRIL 29, 2018 COMPARED TO FISCAL SIX MONTHS ENDED APRIL 30, 2017~~

~~Consolidated sales~~ ~~increased by 8.2%, or $66.3 million, for~~Cuts and Jobs Act and the ~~six months ended April 29, 2018, compared to the six months ended April 30, 2017. The increase in revenue resulted from continued commercial discipline, as well as the pass-through~~inclusion of ~~material and other input costs in an inflationary environment, predominantly in the Engineered Building Systems, Metal Components and Insulated Metal Panels segments.~~

~~Consolidated cost of sales~~ increased by 8.8%, or $55.0 million, for the six months ended April 29, 2018, compared to the six months ended April 30, 2017. The increase in cost of sales resulted primarily from higher input costs, including transportation, materials and skilled labor.

~~Gross margin~~ ~~percentage was 22.3% for the six months ended April 29, 2018, compared to 22.8% for the same period in the prior year. The lower margins~~Ply Gem operations in the current period were primarily driven by material and supply chain disruptions from severe winter weather during the late first quarter and early second quarter of fiscal 2018, which resulted in higher freight costs and lower manufacturing efficiencies.

~~Engineered Building Systems sales~~ increased by 3.3%, or $10.3 million, to $324.2 million in the six months ended April 29, 2018, from $313.9 million in the same period in the prior year. Sales to third parties for the six months ended April 29, 2018 increased by $5.9 million to $305.4 million from $299.5 million in the same period in the prior year, primarily due to commercial discipline and the pass through of higher materials costs. Engineered Building Systems third-party sales accounted for 34.8% of total consolidated third-party sales in the six months ended April 29, 2018, compared to 36.9% in the six months ended April 30, 2017. period.

Operating income of the Engineered Building Systems segment increased to $17.5 million in the six months ended April 29, 2018, from $13.4 million in the same period in the prior year. The $4.1 million, or 30.9%, increase resulted primarily from commercial discipline, improved product mix and lower engineering, selling, general and administrative expenses resulting from the execution of prior year cost reduction initiatives.

~~Metal Components sales~~ increased by 9.1%, or $26.2 million, to $315.3 million in the six months ended April 29, 2018, from $289.1 million in the same period in the prior year, primarily driven by higher external volumes and the pass-through of increasing materials costs. The increase in sales was primarily driven by higher external volumes due to higher demand for our commercial doors products as we continue to execute on our adjacency growth initiatives. Sales to third parties for the six months ended April 29, 2018 increased by $26.3 million to $275.2 million from $248.8 million in the same period in the prior year. Metal Components third-party sales accounted for 31.3% of total consolidated third-party sales in the six months ended April 29, 2018, compared to 30.6% in the six months ended April 30, 2017.

Operating income of the Metal Components segment increased to $39.2 million in the six months ended April 29, 2018, compared to $32.4 million in the same period in the prior year. The $6.8 million, or 21.0%, increase was driven primarily by commercial discipline improved operating leverage across the cost structure on higher volumes, offset by higher transportation costs. Prior period operating income includes $0.4 million of gain on insurance recovery for settlements on damaged or destroyed plant and equipment. There was no corresponding gain in the six months ended April 29, 2018.

~~Insulated Metal Panels sales~~ increased by 13.2%, or $26.1 million, to $224.2 million in the six months ended April 29, 2018, compared to $198.1 million in the same period in the prior year. Sales to third parties for the six months ended April 29, 2018 increased by $28.1 million to $197.3 million from $169.2 million in the same period in the prior year due to continued high demand, predominantly within our cold storage and industrial, commercial, and institutional products. Insulated Metal Panel third-party sales accounted for 22.5% of total consolidated third-party sales in the six months ended April 29, 2018, compared to 20.8% in the six months ended April 30, 2017.

Operating income of the Insulated Metal Panels segment decreased to $8.6 million in the six months ended April 29, 2018, from $21.6 million in the same period in the prior year. The $13.0 million, or 60.1%, decrease was primarily due to lower manufacturing leverage due to lower volumes and higher material costs, and a $6.7 million loss recognized on the sale of the China manufacturing facility. Prior period operating income includes $9.2 million of gain on insurance recovery for settlements on damaged or destroyed plant and equipment. There was no corresponding gain in the six months ended April 29, 2018.

~~Metal Coil Coating sales~~ increased by 4.8%, or $8.5 million, to $183.5 million in the six months ended April 29, 2018, compared to $175.1 million in the same period in the prior year. Sales to third parties for the six months ended April 29, 2018 increased by $5.9 million to $100.5 million from $94.6 million in the same period in the prior year, primarily as a result of an increase in tonnage volume. Metal Coil Coating third-party sales remained consistent and accounted for 11.4% and 11.7% of total consolidated third-party sales in the six month periods ended April 29, 2018 and April 30, 2017, respectively.

Operating income of the Metal Coil Coating segment decreased to $12.5 million in the six months ended April 29, 2018, from $12.9 million in the same period in the prior year. The $0.4 million, or 3.3%, decrease was primarily due to unfavorable product mix and lower manufacturing efficiencies commensurate with the processing of higher mix of insulated metal panel products.

~~Consolidated engineering, selling, general and administrative expenses~~ increased $5.0 million, or 3.5%, to $149.2 million in the six months ended April 29, 2018, compared to $144.2 million in the same period in the prior year. Consolidated engineering, selling, general and administrative expenses for the six months ended April 29, 2018 includes a charge related to the acceleration of retirement benefits of our former CEO. Excluding the effects of the acceleration of CEO retirement benefits, as a percentage of sales, engineering, selling, general and administrative expenses were 16.5% for the six months ended April 29, 2018, as compared to 17.8% for the six months ended April 30, 2017. The decrease was primarily due to continued execution of our cost reduction integration initiatives.

~~Consolidated intangible amortization~~ ~~remained consistent period over period at $4.8 million in the six months ended April 29, 2018, compared to $4.8 million in the six months ended April 30, 2017.~~

~~Consolidated restructuring and impairment charges~~ for the six months ended April 29, 2018 and April 30, 2017 were $1.6 million and $2.6 million, respectively. These charges relate to our actions taken to streamline our management and engineering and drafting activities, and also to optimize our overall manufacturing structure and footprint.

~~Consolidated strategic development and acquisition related costs~~ for the six months ended April 29, 2018 were $1.9 million, compared to $0.5 million for the six months ended April 30, 2017. These non-operational costs include external legal, financial and due diligence costs incurred to pursue specific acquisition targets or costs directly associated with integrating previous acquisitions.

~~Loss on disposition of business~~ ~~for the six months ended April 29, 2018 was $6.7 million, related to the disposal of our China manufacturing facility included in the Insulated Metal Panels segment.~~

~~Consolidated gain on insurance recovery~~ for the six months ended April 30, 2017 was $9.6 million, which related to settlements with the Company’s insurers for property damage to two facilities in the Metal Components and Insulated Metal Panels segment. There was no corresponding gain in the six months ended April 29, 2018.

~~Consolidated interest expense~~ decreased to $12.3 million for the six months ended April 29, 2018, compared to $14.4 million for the same period of the prior year. The 14.1% decrease in interest expense is a primarily due to the redemption of our 8.25% Senior Notes and lower variable rates on our Term Loan Credit Facility, both results of activities to strengthen our capital structure that were completed in February 2018.

~~Consolidated foreign exchange gain (loss)~~ for the six months ended April 29, 2018 was a $0.2 million gain, compared to $0.1 million gain for the same period of the prior year, due to exchange rate fluctuations in the Mexican peso and Canadian dollar relative to the U.S. dollar.

~~Loss on debt extinguishment~~ for the six months ended April 29, 2018 was $21.9 million. There was no corresponding amount recorded in the same period of the prior year. During our second quarter of fiscal 2018, we recognized a pretax loss, primarily on the extinguishment of our 8.25% senior notes due 2023, of $21.9 million, of which approximately $15.5 million represented the call premium paid on the redemption of the notes.

~~Consolidated benefit for income taxes~~ was $1.0 million for the six months ended April 29, 2018, compared to expense of $9.9 million for the same period in the prior year. The effective tax rate for the six months ended April 29, 2018 was 68.9%, compared to 34.2% for the same period in the prior year. The change in the effective tax rate was primarily driven by net loss recorded during the six months ended April 29, 2018 and the effects associated with the enactment of U.S. Tax Reform, including the remeasurement of existing deferred tax assets and liabilities under lower statutory tax rates.

LIQUIDITY AND CAPITAL RESOURCES

General

Our cash, ~~and~~ cash equivalents and restricted cash decreased from ~~$65.7~~$147.6 million as of ~~October 29, 2017~~December 31, 2018 to ~~$35.3~~$103.6 million as of ~~April 29, 2018.~~March 30, 2019. The following table summarizes our consolidated cash flows for the ~~six~~three months ended ~~April 29,~~March 30, 2019 and January 28, 2018, ~~and April 30, 2017~~respectively (in thousands):

Fiscal Six Months Ended
April 29,
2018 April 30,
2017
Net cash provided by operating activities $ 39,986
$ 7,889
Net cash used in investing activities (18,634 ) (8,603 )
Net cash used in financing activities (51,651 ) (14,944 )
Effect of exchange rate changes on cash and cash equivalents (24 ) (63 )
Net decrease in cash and cash equivalents (30,323 ) (15,721 )
Cash and cash equivalents at beginning of period 65,658
65,403
Cash and cash equivalents at end of period $ 35,335
$ 49,682



	Three Months Ended
	March 30, 2019			January 28, 2018
Net cash used in operating activities	$	(48,722	)	$	(6,580	)
Net cash used in investing activities	(209,608		)	(5,860		)
Net cash provided by (used in) financing activities	213,439			(40,991		)
Effect of exchange rate changes on cash and cash equivalents	911			237
Net decrease in cash, cash equivalents and restricted cash	(43,980		)	(53,194		)
Cash, cash equivalents and restricted cash at beginning of period	147,607			65,794
Cash, cash equivalents and restricted cash at end of period	$	103,627		$	12,600

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, when needed, 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. Working capital needs also fluctuate based on raw material prices.

Net cash ~~provided by~~used in operating activities was ~~$40.0~~$48.7 million during the ~~six~~three months ended ~~April 29, 2018~~March 30, 2019 compared to net cash ~~provided by~~used in operating activities of ~~$7.9~~$6.6 million in the ~~six~~three months ended ~~April 30, 2017.~~January 28, 2018. The ~~improved~~increase in cash flow ~~from~~used in operations is due to the inclusion of current period operations from Ply Gem subsequent to the Merger on November 16, 2018 and normal seasonal trends in the timing of working ~~capital turns in the first half of fiscal 2018.~~capital.

Net cash ~~provided by~~used in accounts receivable was ~~$17.1~~$43.6 million for the ~~six~~three months ended ~~April 29, 2018,~~March 30, 2019 compared to ~~$12.2~~$30.9 million provided for the three months ended January 28, 2018. There was $33.6 million used by the Ply Gem business during the three months ended March 30, 2019 which drove a large part of this change period over period resulting from the seasonality of our business as we reach the peak building season in our second and third quarters. Net sales in the final months of each respective quarter drove the receivables increase. Net sales for March 2019 were approximately $452.7 million versus approximately $433.5 million for December 2018, an increase of $19.2 million. The improvement in March's net sales reflects the ~~six months ended April 30, 2017.~~Company’s normal seasonal business as the weather in March is generally improved compared to December, which allows for further construction activity, increasing the Company’s sales with a corresponding increase in accounts receivable. The remaining changes in accounts receivable period over period relates to seasonal trends in working capital and timing of collections given the change in fiscal year. Our days sales outstanding as of ~~April 29,~~March 30, 2019 and January 28, 2018 ~~and April 30, 2017~~ were ~~33.6~~39.9 days and ~~34.7~~38.2 days, respectively.

For the ~~six~~three months ended ~~April 29, 2018,~~March 30, 2019, the change in cash flows relating to inventory was ~~$24.9~~an increase of $16.7 million compared to a decrease of $2.2 million for the three months ended January 28, 2018. We experienced a $38.7 million decrease in inventory in the Commercial segment as a result of strategic purchasing during our seasonally slower months and ~~resulted primarily from the continued~~decreasing material costs that was partially offset by a $22.0 million inventory increase in ~~material costs, particularly steel.~~the Ply Gem and ESW businesses during the three months ended March 30, 2019 which is typical as we progress towards warm weather and our stronger selling seasons. Our days inventory on-hand ~~decreased~~increased to ~~54.1~~59.2 days as of ~~April 29, 2018 from 55.2~~March 30, 2019 as compared to 55.5 days as of ~~April 30, 2017.~~January 28, 2018.

Net cash ~~provided by~~used in accounts payable for the ~~six~~three months ended ~~April 29, 2018~~March 30, 2019 was ~~$12.7~~$7.2 million ~~whereas~~compared to net cash used byin accounts payable ~~was $21.7~~of $31.2 million infor the ~~six~~three months ended ~~April 30, 2017.~~January 28, 2018. Our vendor payments can significantly fluctuate based on the timing of disbursements, inventory purchases and vendor payment terms. Additionally, there was $10.0 million provided by accounts payable for Ply Gem during the three months ended March 30, 2019 consistent with the seasonal inventory build. Our days payable outstanding as of ~~April 29, 2018 increased~~March 30, 2019 decreased to ~~33.4~~23.6 days from ~~32.3~~32.5 days as of ~~April 30, 2017.~~January 28, 2018.

Investing Activities

Net cash used in investing activities increased to ~~$18.6~~$209.6 million during the ~~six~~three months ended ~~April 29, 2018~~March 30, 2019 compared to ~~$8.6~~$5.9 million used in investing activities during the ~~six~~three months ended ~~April 30, 2017. In~~January 28, 2018. During the ~~six~~three months ended ~~April 29, 2018,~~March 30, 2019, we paid approximately $182.4 million, net of cash acquired, for the acquisition of Environmental Stoneworks and we used ~~$16.9~~$27.2 million for capital expenditures. We used $8.1 million for capital expenditures ~~and sold a business~~ in ~~China, resulting~~the three months ended January 28, 2018. These cash outflows in ~~a net use~~the three months ended January 28, 2018 were partially offset by $2.2 million in proceeds from the sale of ~~$4.4 million~~one of ~~cash. Additionally, we sold two manufacturing facilities in~~ our ~~Metal Components segment for total~~facilities.

Financing Activities

Net cash ~~consideration of $2.7 million. We used $11.6 million for capital expenditures and sold assets that had been classified as held for sale for $2.5~~provided by financing activities was $213.4 million in the ~~six~~three months ended ~~April~~March 30, ~~2017.~~

~~Financing Activities~~

~~Net cash~~2019 compared to $41.0 million used in ~~financing activities was $51.7 million during~~ the ~~six~~three months ended ~~April 29, 2018 compared to $14.9 million in the comparable prior year period.~~January 28, 2018. During the ~~six~~three months ended ~~April 29,~~March 30, 2019, we borrowed $220.0 million under our Current ABL Facility, a portion of which was used to finance the Environmental Stoneworks Acquisition, paid a $6.4 million nominal quarterly installment on our Current Term Loan and used $0.2 million for the purchases of shares related to restricted stock that were withheld to satisfy minimum tax withholding obligations arising in connection with the vesting of restricted stock awards and units.

During the three months ended January 28, 2018, we borrowed ~~$65.0~~$43.0 million under our then-existing ABL ~~Facility~~facility and repaid ~~$65.0~~$33.0 million of that amount, ~~as of the end of the period,~~ used $51.3 million to repurchase shares of our outstanding common stock under programs approved by the Board of Directors in September 2016 and October 2017 and for the ~~purchase~~

spurchases of shares related to restricted stock that were withheld to satisfy minimum tax withholding obligations arising in connection with the vesting of restricted stock awards and units. ~~Net cash used in the redemption of our Senior Notes and refinancing of long-term debt, including payments of financing costs was $0.9 million.~~ We also received $1.0 ~~million in cash proceeds from the exercises of stock options.~~

During the six months ended April 30, 2017, we used $5.9 million to repurchase shares of our outstanding common stock under the program approved by the Board of Directors in September 2016, as well as shares of restricted stock that were withheld to satisfy minimum tax withholding obligations arising in connection with the vesting of awards of restricted stock, and $10.0 million to make a voluntary principal prepayment on borrowings under our Credit Agreement. We received $1.2 million in cash proceeds from the exercises of stock options.

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

Debt

~~On February 8, 2018, the Company entered into a~~Our outstanding indebtedness will mature in 2023 (Current ABL Facility and Current Cash Flow Revolver), 2025 (Current Term Loan ~~Credit Agreement~~Facility), and ~~ABL Credit Agreement,~~2026 (8.00% Senior Notes). We may not be successful in refinancing, extending the ~~proceeds~~maturity or otherwise amending the terms of ~~which, together, were used~~such indebtedness because of market conditions, disruptions in the debt markets, our financial performance or other reasons. Furthermore, the terms of any refinancing, extension or amendment may not be as favorable as the current terms of our indebtedness. If we are not successful in refinancing our indebtedness or extending its maturity, we and our subsidiaries could face substantial liquidity problems and may be forced to ~~redeem~~reduce or delay capital expenditures, sell assets, seek additional capital or restructure our indebtedness. Following consummation of the ~~8.25% senior notes and to refinance~~Merger, the ~~Company’s existing term loan credit facility and the Company’s existing asset-based revolving credit facility.~~

~~The~~Current Term Loan ~~Credit Agreement provides~~Facility provided for an aggregate principal amount of $415.0 million (the “Term Loan Credit Facility”). Proceeds from borrowings under the Term Loan Credit Facility were used, together with cash on hand, (i) to refinance the existing term loan credit agreement, (ii) to redeem and repay the Notes (the foregoing, collectively, the “Refinancing”) and (iii) to pay any fees, premiums and expenses incurred in connection with the Refinancing.$2,560.0 million.

The Current ABL Credit Agreement provides for an asset-based revolving credit facility which allows aggregate maximum borrowings by the ABL ~~Borrowers~~borrowers of up to ~~$150.0 million (the “ABL Credit Facility”).~~$611.0 million. As set forth in the Current ABL Credit Agreement, extensions of credit under the Current ABL ~~Credit~~ Facility are ~~limited by~~subject to a monthly borrowing base ~~calculated periodically~~calculation that is based on specified percentages of the value of eligible inventory, eligible accounts receivable and eligible credit card receivables, ~~and eligible inventory,~~ less certain reserves and subject to certain other adjustments. Availability under the Current ABL Facility will be reduced by issuance of letters of credit as well as any ~~borrowings.~~borrowings outstanding thereunder.

As of ~~April 29, 2018,~~March 30, 2019, we had an aggregate principal amount of ~~$415.0~~$3,407.8 million of outstanding indebtedness, comprising ~~$415.0~~$220.0 million of borrowings under the Current ABL Facility, $2,542.8 million of borrowings under our Current Term Loan ~~Credit Facility.~~Facility and $645.0 million of 8.00% Senior Notes outstanding. We had no of revolving loans outstanding under the ~~ABL Credit Facility.~~Current Cash Flow Revolver. Our excess availability under the Current ABL ~~Credit~~ Facility was ~~$141.1~~$327.0 million as of ~~April 29, 2018.~~March 30, 2019. In addition, standby letters of credit ~~related to certain insurance policies~~ totaling approximately ~~$8.9~~$34.4 million were outstanding but undrawn under the ABL ~~Credit~~ Facility.

For additional information, see Note 1013 — Long-Term Debt and Note Payable in the notes to the unaudited consolidated financial statements.

Equity Investment

On August 14, 2009, the Company entered into anthe Investment ~~Agreement (as amended, the “Investment Agreement”), by and between the Company and Clayton, Dubilier & Rice Fund VIII, L.P. (“CD&R Fund VIII”).~~Agreement. In connection with the Investment Agreement and the Old Stockholders Agreement, ~~dated October 20, 2009 (the “Stockholders Agreement”),~~ the CD&R Fund VIII ~~and the Clayton, Dubilier & Rice Friends & Family Fund VIII, L.P. (collectively, the “CD&R Funds”)~~Investor Group purchased convertible preferred stock, which was converted into shares of our ~~Common Stock~~common stock on May 14, 2013. Among other provisions, the Stockholders Agreement entitles the CD&R Funds to certain nomination or designation rights with respect to our board of directors; subscription rights with respect to future issuances of common stock by us; corporate governance rights; and consent rights with respect to certain types of transactions we may enter into in the future.

On December 11, 2017, the CD&R ~~Funds~~Fund VIII Investor Group completed a registered underwritten offering of 7,150,000 shares of the Company’s Common Stock at a price to the public of $19.36 per share (the “2017 Secondary Offering”). Pursuant to the underwriting agreement, at the CD&R Funds request, the Company purchased 1.15 million of the 7.15 million shares of the Common Stock from the underwriters in the 2017 Secondary Offering at a price per share equal to the price at which the underwriters purchased the shares from the CD&R ~~Funds.~~Fund VIII Investor Group. The total amount the Company spent on these repurchases was $22.3 million.

~~At April 29,~~

Pursuant to the terms of the Merger Agreement, on November 16, 2018, the Company entered into (i) the New Stockholders Agreement between the Company and ~~October 29, 2017,~~each of the Investors, pursuant to which the Company granted the Investors certain governance, preemptive and subscription rights and (ii) the New Registration Rights Agreement between the Company and each of the Investors, pursuant to which the Company granted the Investors customary demand and piggyback registration rights, including rights to demand registrations and underwritten shelf registration statement offerings with respect to the shares of NCI Common Stock that are held by the Investors following the consummation of the Merger.

Pursuant to the terms of the New Stockholders Agreement, the Company and the CD&R ~~Funds~~Fund VIII Investor Group terminated the Old Stockholders Agreement. Pursuant to the terms of the New Registration Rights Agreement, the Company and the CD&R Fund VIII Investor Group terminated the Old Registration Rights Agreement.

As of March 30, 2019, the CD&R Investor Group owned approximately ~~34.5% and 43.8%, respectively,~~49.3% of the outstanding shares of our common stock. At October 28, 2018, the CD&R Fund VIII Investor Group owned approximately 34.4% of the outstanding shares of our common stock.

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-term and long-term liquidity requirements, including payment of operating expenses and repayment of debt, we rely primarily on cash from operations. Beyond cash generated from operations, ~~$141.1~~$327.0 million is available with our Current ABL ~~Credit~~ Facility at ~~April 29, 2018~~March 30, 2019, $115.0 million is available with our Current Cash Flow Revolver and we have aan unrestricted cash balance of ~~$35.3~~$99.6 million as of ~~April 29, 2018.~~

March 30, 2019.

We expect to contribute ~~$1.6~~$2.3 million to ~~our defined benefit plans during~~ the ~~remainder of fiscal 2018.~~ Defined Benefit Plans in the year ending December 31, 2019.

We expect that cash generated from operations and our availability under the ABL Credit Facility will be sufficient to provide us the ability to fund our operations and to provide the increased working capital necessary to support our strategy and fund planned capital expenditures of ~~between~~ approximately ~~$45 million and $55 million~~2% of net sales for fiscal ~~2018~~2019 and expansion when needed.

Our corporate strategy seeks potential acquisitions that would provide additional synergies in our ~~Engineered Building Systems, Metal Components, Insulated Metal Panels~~Commercial, Siding and ~~Metal Coil Coating~~Windows 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.

From time to time, we have used available funds to repurchase shares of our common stock under our stock repurchase programs. ~~On September 8, 2016, our Board of Directors authorized a stock repurchase program for the repurchase of up to an aggregate of $50.0 million of the Company’s outstanding Common Stock.~~ On October 10, 2017 and March 7, 2018, the Company announced that its Board of Directors authorized new stock repurchase programs for the repurchase of up to an aggregate of $50.0 million and $50.0 million, respectively, of the Company’s outstanding Common Stock. Under these repurchase programs, the Company is authorized to repurchase shares, if at all, at times and in amounts that we deem appropriate in accordance with all applicable securities laws and regulations. Shares repurchased are usually retired. There is no time limit on the duration of the program. During the ~~six~~three months ended ~~April 29, 2018, the Company repurchased approximately 2.7 million shares for $46.7 million~~March 30, 2019, there were no repurchases under the stock repurchase ~~programs, which included 1.15 million shares for $22.3 million purchased pursuant to the CD&R Funds 2017 Secondary Offering.~~programs. As of ~~April 29, 2018,~~March 30, 2019, approximately $55.6 million remained available for stock repurchases, all under the ~~program~~programs announced on October 10, 2017 and March 7, 2018. In addition to the common stock repurchased during the ~~six~~three months ended ~~April 29, 2018,~~March 30, 2019, we also withheld 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.

The Company may from time to time take steps to reduce the Company’s debt or otherwise improve the Company’s financial position. These actions could include prepayments, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, opportunistic refinancing of debt and raising additional capital. The amount of prepayments or the amount of debt that may be refinanced, 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.

~~NON-GAAP MEASURES~~

Set forth below are certain non-GAAP measures which include adjusted operating income (loss), adjusted EBITDA, adjusted net income per diluted common share and adjusted net income applicable to common shares. We define adjusted operating income (loss) as operating income (loss) adjusted for items broadly consisting of selected items which management does not consider representative of our ongoing operations. 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 Affiliates of the ~~Company. Such measurements are~~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 ~~prepared~~be retired, in which case the Company would continue to pay interest 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~~terms 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~~debt, and the ~~reasons we consider them appropriate for supplemental analysis. In evaluating these measures, you should be aware that in~~Company would continue to reflect the ~~future we may incur expenses that are the same~~debt as ~~or similar to, some of the adjustments in these non-GAAP measures. In addition, certain financial covenants related to our term loan and asset-based lending credit agreements are based~~outstanding 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.~~its consolidated balance sheets.

The following tables reconcile adjusted net income per diluted common share to net income (loss) per diluted common share and adjusted net income applicable to common shares to net income (loss) applicable to common shares for the periods indicated (in thousands):

Fiscal Three Months Ended Fiscal Six Months Ended
April 29,
2018 April 30,
2017 April 29,
2018 April 30,
2017
Net income (loss) per diluted common share, GAAP basis $ (0.09 ) $ 0.24
$ (0.01 ) $ 0.27
Loss on extinguishment of debt 0.33
—
0.33
—
Loss on disposition of business 0.10
—
0.10
—
Restructuring and impairment charges 0.01
0.00
0.02
0.04
Strategic development and acquisition related costs 0.02
0.00
0.03
0.01
Acceleration of CEO retirement benefits —
—
0.07
—
Gain on insurance recovery —
(0.13 ) —
(0.14 )
Tax effect of applicable non-GAAP adjustments⁽¹⁾
(0.12 ) 0.05
(0.15 ) 0.03
Adjusted net income per diluted common share $ 0.25
$ 0.16
$ 0.39
$ 0.21

Fiscal Three Months Ended Fiscal Six Months Ended
April 29,
2018 April 30,
2017 April 29,
2018 April 30,
2017
Net income (loss) applicable to common shares, GAAP basis $ (5,684 ) $ 16,859
$ (435 ) $ 18,882
Loss on extinguishment of debt 21,875
—
21,875
—
Loss on disposition of business 6,686
—
6,686
—
Restructuring and impairment charges 488
315
1,582
2,578
Strategic development and acquisition related costs 1,134
124
1,861
481
Acceleration of CEO retirement benefits —
—
4,600
—
Gain on insurance recovery —
(9,601 ) —
(9,601 )
Other, net —
328
(323 ) 328
Tax effect of applicable non-GAAP adjustments⁽¹⁾
(8,059 ) 3,445
(9,883 ) 2,423
Adjusted net income applicable to common shares $ 16,440
$ 11,470
$ 25,963
$ 15,091


~~(1)~~	~~The Company calculated the tax effect of non-GAAP adjustments by applying the applicable combined federal and state statutory tax rate for the period to each applicable non-GAAP item.~~

~~The following tables reconcile adjusted operating income (loss) and adjusted EBITDA to operating income (loss) for the periods indicated below:~~

Consolidated

(In thousands) Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 30,
2017 October 29,
2017 January 28,
2018 April 29,
2018 April 29,
2018 April 29,
2018
Total Net Sales $ 469,385
$ 488,726
$ 421,349
$ 457,069
$ 878,418
$ 1,836,529

Operating Income, GAAP 34,097
33,325
12,898
18,956
31,854
99,276
Restructuring and impairment 1,009
1,709
1,094
488
1,582
4,300
Strategic development and acquisition related costs 1,297
193
727
1,134
1,861
3,351
Loss on disposition of business —
—
—
6,686
6,686
6,686
Acceleration of CEO retirement benefits —
—
4,600
—
4,600
4,600
Gain on insurance recovery (148 ) —
—
—
—
(148 )
Unreimbursed business interruption costs 235
28
—
—
—
263
Goodwill impairment —
6,000
—
—
—
6,000
Adjusted Operating Income 36,490
41,255
19,319
27,264
46,583
124,328

Other income and expense 1,322
(62 ) 928
(34 ) 894
2,154
Depreciation and amortization 10,278
10,664
10,358
10,442
20,800
41,742
Share-based compensation expense 2,284
2,084
2,270
1,998
4,268
8,636
Adjusted EBITDA $ 50,374
$ 53,941
$ 32,875
$ 39,670
$ 72,545
$ 176,860

Year over year growth, Total Net Sales 1.5 % 1.8 % 7.6 % 8.7 % 8.2 % 4.7 %
Operating Income Margin 7.3 % 6.8 % 3.1 % 4.1 % 3.6 % 5.4 %
Adjusted Operating Income Margin 7.8 % 8.4 % 4.6 % 6.0 % 5.3 % 6.8 %
Adjusted EBITDA Margin 10.7 % 11.0 % 7.8 % 8.7 % 8.3 % 9.6 %

Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 31,
2016 October 30,
2016 January 29,
2017 April 30,
2017 April 30,
2017 April 30,
2017
Total Net Sales $ 462,353
$ 480,314
$ 391,703
$ 420,464
$ 812,167
$ 1,754,834

Operating Income, GAAP 43,535
39,391
9,886
32,472
42,358
125,284
Restructuring and impairment 778
815
2,264
315
2,579
4,172
Strategic development and acquisition related costs 819
590
357
124
481
1,890
(Gain) loss on sale of assets and asset recovery (52 ) 62
—
137
137
147
Gain on insurance recovery —
—
—
(9,601 ) (9,601 ) (9,601 )
Unreimbursed business interruption costs —
—
—
191
191
191
Adjusted Operating Income 45,080
40,858
12,507
23,638
36,145
122,083

Other income and expense (508 ) (192 ) 309
449
758
58
Depreciation and amortization 10,595
9,815
10,315
10,062
20,377
40,787
Share-based compensation expense 2,661
3,181
3,042
2,820
5,862
11,704
Adjusted EBITDA $ 57,828
$ 53,662
$ 26,173
$ 36,969
$ 63,142
$ 174,632

Operating Income Margin 9.4 % 8.2 % 2.5 % 7.7 % 5.2 % 7.1 %
Adjusted Operating Income Margin 9.8 % 8.5 % 3.2 % 5.6 % 4.5 % 7.0 %
Adjusted EBITDA Margin 12.5 % 11.2 % 6.7 % 8.8 % 7.8 % 10.0 %

Engineered Building Systems

(In thousands) Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 30,
2017 October 29,
2017 January 28,
2018 April 29,
2018 April 29,
2018 April 29,
2018
Total Sales $ 191,910
$ 188,183
$ 156,964
$ 167,240
$ 324,204
$ 704,297
External Sales 182,164
178,222
148,288
157,136
305,424
665,810

Operating Income, GAAP 14,948
13,043
8,263
9,271
17,534
45,525
Restructuring and impairment 941
695
1,136
280
1,416
3,052
Strategic development and acquisition related costs —
—
173
—
173
173
Adjusted Operating Income 15,889
13,738
9,572
9,551
19,123
48,750

Other income and expense 1,291
(694 ) 733
(88 ) 645
1,242
Depreciation and amortization 2,255
2,198
2,077
2,323
4,400
8,853
Adjusted EBITDA $ 19,435
$ 15,242
$ 12,382
$ 11,786
$ 24,168
$ 58,845

Year over year growth, Total sales 6.0 % (7.8 )% 3.8 % 2.8 % 3.3 % 0.7 %
Year over year growth, External Sales 3.8 % (9.3 )% 2.3 % 1.7 % 2.0 % (0.9 )%
Operating Income Margin 7.8 % 6.9 % 5.3 % 5.5 % 5.4 % 6.5 %
Adjusted Operating Income Margin 8.3 % 7.3 % 6.1 % 5.7 % 5.9 % 6.9 %
Adjusted EBITDA Margin 10.1 % 8.1 % 7.9 % 7.0 % 7.5 % 8.4 %

Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 31,
2016 October 30,
2016 January 29,
2017 April 30,
2017 April 30,
2017 April 30,
2017
Total Sales $ 181,029
$ 204,208
$ 151,263
$ 162,624
$ 313,887
$ 699,124
External Sales 175,471
196,596
145,021
154,456
299,477
671,544

Operating Income, GAAP 19,561
22,830
6,503
6,894
13,397
55,788
Restructuring and impairment 106
211
1,910
186
2,096
2,413
(Gain) loss on sale of assets and asset recovery (52 ) 62
—
137
137
147
Adjusted Operating Income 19,615
23,103
8,413
7,217
15,630
58,348

Other income and expense (931 ) (362 ) (41 ) (125 ) (166 ) (1,459 )
Depreciation and amortization 2,438
2,399
2,276
2,285
4,561
9,398
Adjusted EBITDA $ 21,122
$ 25,140
$ 10,648
$ 9,377
$ 20,025
$ 66,287

Operating Income Margin 10.8 % 11.2 % 4.3 % 4.2 % 4.3 % 8.0 %
Adjusted Operating Income Margin 10.8 % 11.3 % 5.6 % 4.4 % 5.0 % 8.3 %
Adjusted EBITDA Margin 11.7 % 12.3 % 7.0 % 5.8 % 6.4 % 9.5 %

Metal Components

(In thousands) Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 30,
2017 October 29,
2017 January 28,
2018 April 29,
2018 April 29,
2018 April 29,
2018
Total Sales $ 166,305
$ 181,288
$ 146,832
$ 168,456
$ 315,288
$ 662,881
External Sales 140,639
155,183
127,528
147,661
275,189
571,011

Operating Income, GAAP 23,276
23,119
17,089
22,082
39,171
85,566
Restructuring and impairment 60
69
(1,403 ) 120
(1,283 ) (1,154 )
Gain on insurance recovery (148 ) —
—
—
—
(148 )
Adjusted Operating Income 23,188
23,188
15,686
22,202
37,888
84,264

Other income and expense 55
84
53
67
120
259
Depreciation and amortization 1,266
1,422
1,576
1,444
3,020
5,708
Adjusted EBITDA $ 24,509
$ 24,694
$ 17,315
$ 23,713
$ 41,028
$ 90,231

Year over year growth, Total sales (0.1 )% 8.9 % 9.4 % 8.8 % 9.1 % 6.6 %
Year over year growth, External Sales 0.1 % 10.9 % 10.4 % 10.8 % 10.6 % 7.9 %
Operating Income Margin 14.0 % 12.8 % 11.6 % 13.1 % 12.4 % 12.9 %
Adjusted Operating Income Margin 13.9 % 12.8 % 10.7 % 13.2 % 12.0 % 12.7 %
Adjusted EBITDA Margin 14.7 % 13.6 % 11.8 % 14.1 % 13.0 % 13.6 %

Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 31,
2016 October 30,
2016 January 29,
2017 April 30,
2017 April 30,
2017 April 30,
2017
Total Sales $ 166,512
$ 166,532
$ 134,173
$ 154,895
$ 289,068
$ 622,112
External Sales 140,560
139,968
115,557
133,290
248,847
529,375

Operating Income, GAAP 26,803
21,254
12,376
19,997
32,373
80,430
Restructuring and impairment 202
103
305
129
434
739
Gain on insurance recovery —
—
—
(420 ) (420 ) (420 )
Adjusted Operating Income 27,005
21,357
12,681
19,706
32,387
80,749

Other income and expense 92
(27 ) 28
52
80
145
Depreciation and amortization 1,365
1,406
1,334
1,302
2,636
5,407
Adjusted EBITDA $ 28,462
$ 22,736
$ 14,043
$ 21,060
$ 35,103
$ 86,301

Operating Income Margin 16.1 % 12.8 % 9.2 % 12.9 % 11.2 % 12.9 %
Adjusted Operating Income Margin 16.2 % 12.8 % 9.5 % 12.7 % 11.2 % 13.0 %
Adjusted EBITDA Margin 17.1 % 13.7 % 10.5 % 13.6 % 12.1 % 13.9 %

Insulated Metal Panels

(In thousands) Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 30,
2017 October 29,
2017 January 28,
2018 April 29,
2018 April 29,
2018 April 29,
2018
Total Sales $ 119,730
$ 123,542
$ 110,794
$ 113,413
$ 224,207
$ 467,479
External Sales 98,026
105,064
97,513
99,792
197,305
400,395

Operating Income, GAAP 11,468
14,895
7,071
1,540
8,611
34,974
Restructuring and impairment 8
683
1,284
88
1,372
2,063
Strategic development and acquisition related costs —
90
300
61
361
451
Loss on disposition of business —
—
—
6,686
6,686
6,686
Unreimbursed business interruption costs 235
28
—
—
—
263
Adjusted Operating Income 11,711
15,696
8,655
8,375
17,030
44,437

Other income and expense (211 ) 356
(273 ) 223
(50 ) 95
Depreciation and amortization 4,516
4,742
4,388
4,335
8,723
17,981
Adjusted EBITDA $ 16,016
$ 20,794
$ 12,770
$ 12,933
$ 25,703
$ 62,513

Year over year growth, Total sales 13.3 % 12.3 % 16.4 % 10.2 % 13.2 % 13.0 %
Year over year growth, External Sales 4.2 % 13.4 % 18.3 % 15.0 % 16.6 % 12.5 %
Operating Income Margin 9.6 % 12.1 % 6.4 % 1.4 % 3.8 % 7.5 %
Adjusted Operating Income Margin 9.8 % 12.7 % 7.8 % 7.4 % 7.6 % 9.5 %
Adjusted EBITDA Margin 13.4 % 16.8 % 11.5 % 11.4 % 11.5 % 13.4 %

Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 31,
2016 October 30,
2016 January 29,
2017 April 30,
2017 April 30,
2017 April 30,
2017
Total Sales $ 105,694
$ 110,001
$ 95,195
$ 102,937
$ 198,132
$ 413,827
External Sales 94,059
92,648
82,441
86,773
169,214
355,921
—

Operating Income, GAAP 8,911
7,513
2,192
19,377
21,569
37,993
Restructuring and impairment 59
404
—
—
—
463
Strategic development and acquisition related costs 9
—
—
—
—
9
Gain on insurance recovery —
—
—
(9,181 ) (9,181 ) (9,181 )
Unreimbursed business interruption costs —
—
—
191
191
191
Adjusted Operating Income 8,979
7,917
2,192
10,387
12,579
29,475

Other income and expense 32
270
35
340
375
677
Depreciation and amortization 4,357
3,926
4,392
4,258
8,650
16,933
Adjusted EBITDA $ 13,368
$ 12,113
$ 6,619
$ 14,985
$ 21,604
$ 47,085

Operating Income Margin 8.4 % 6.8 % 2.3 % 18.8 % 10.9 % 9.2 %
Adjusted Operating Income Margin 8.5 % 7.2 % 2.3 % 10.1 % 6.3 % 7.1 %
Adjusted EBITDA Margin 12.6 % 11.0 % 7.0 % 14.6 % 10.9 % 11.4 %

Metal Coil Coating

(In thousands) Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 30,
2017 October 29,
2017 January 28,
2018 April 29,
2018 April 29,
2018 April 29,
2018
Total Sales $ 95,261
$ 98,550
$ 88,343
$ 95,190
$ 183,533
$ 377,344
External Sales 48,556
50,257
48,020
52,480
100,500
199,313

Operating Income, GAAP 7,107
1,419
5,376
7,129
12,505
21,031
Goodwill impairment —
6,000
—
—
—
6,000
Adjusted Operating Income 7,107
7,419
5,376
7,129
12,505
27,031

Depreciation and amortization 2,063
2,065
2,058
2,085
4,143
8,271
Adjusted EBITDA $ 9,170
$ 9,484
$ 7,434
$ 9,214
$ 16,648
$ 35,302

Year over year growth, Total sales (1.5 )% 2.7 % 0.0 % 9.8 % 4.8 % 2.6 %
Year over year growth, External Sales (7.1 )% (1.7 )% (1.4 )% 14.2 % 6.2 % 0.7 %
Operating Income Margin 7.5 % 1.4 % 6.1 % 7.5 % 6.8 % 5.6 %
Adjusted Operating Income Margin 7.5 % 7.5 % 6.1 % 7.5 % 6.8 % 7.2 %
Adjusted EBITDA Margin 9.6 % 9.6 % 8.4 % 9.7 % 9.1 % 9.4 %

Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 31,
2016 October 30,
2016 January 29,
2017 April 30,
2017 April 30,
2017 April 30,
2017
Total Sales $ 96,684
$ 95,987
$ 88,340
$ 86,729
$ 175,069
$ 367,740
External Sales 52,263
51,102
48,684
45,945
94,629
197,994

Operating Income, GAAP 10,531
9,310
6,706
6,227
12,933
32,774
Adjusted Operating Income 10,531
9,310
6,706
6,227
12,933
32,774

Other income and expense 2
—
31
—
31
33
Depreciation and amortization 2,214
1,849
2,106
2,009
4,115
8,178
Adjusted EBITDA $ 12,747
$ 11,159
$ 8,843
$ 8,236
$ 17,079
$ 40,985

Operating Income Margin 10.9 % 9.7 % 7.6 % 7.2 % 7.4 % 8.9 %
Adjusted Operating Income Margin 10.9 % 9.7 % 7.6 % 7.2 % 7.4 % 8.9 %
Adjusted EBITDA Margin 13.2 % 11.6 % 10.0 % 9.5 % 9.8 % 11.1 %

Corporate

(In thousands) Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 30,
2017 October 29,
2017 January 28,
2018 April 29,
2018 April 29,
2018 April 29,
2018
Operating Loss, GAAP $ (22,702 ) $ (19,151 ) $ (24,901 ) $ (21,066 ) $ (45,967 ) $ (87,820 )
Restructuring and impairment —
262
77
—
77
339
Strategic development and acquisition related costs 1,297
103
254
1,073
1,327
2,727
Acceleration of CEO retirement benefits —
—
4,600
—
4,600
4,600
Adjusted Operating Loss (21,405 ) (18,786 ) (19,970 ) (19,993 ) (39,963 ) (80,154 )

Other income and expense 187
192
415
(236 ) 179
558
Depreciation and amortization 178
237
259
255
514
929
Share-based compensation expense 2,284
2,084
2,270
1,998
4,268
8,636
Adjusted EBITDA $ (18,756 ) $ (16,273 ) $ (17,026 ) $ (17,976 ) $ (35,002 ) $ (70,031 )

Fiscal Three Months Ended Fiscal Six
Months Ended Trailing
Twelve Months
July 31,
2016 October 30,
2016 January 29,
2017 April 30,
2017 April 30,
2017 April 30,
2017
Operating Loss, GAAP $ (22,271 ) $ (21,516 ) $ (17,891 ) $ (20,023 ) $ (37,914 ) $ (81,701 )
Restructuring and impairment 411
97
49
—
49
557
Strategic development and acquisition related costs 810
590
357
124
481
1,881
Adjusted Operating Loss (21,050 ) (20,829 ) (17,485 ) (19,899 ) (37,384 ) (79,263 )

Other income and expense 297
(73 ) 256
182
438
662
Depreciation and amortization 221
235
207
208
415
871
Share-based compensation expense 2,661
3,181
3,042
2,820
5,862
11,704
Adjusted EBITDA $ (17,871 ) $ (17,486 ) $ (13,980 ) $ (16,689 ) $ (30,669 ) $ (66,026 )

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 ~~April 29, 2018,~~March 30, 2019, 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.

~~On February 8,~~In connection with the Merger, on November 16, 2018, NCI assumed (i) the ~~Company entered into~~obligations of Ply Gem Midco, a ~~Term Loan~~subsidiary of Ply Gem immediately prior to the consummation of the Merger, as borrower under the Current Cash Flow Credit Agreement, (ii) the obligations of Ply Gem Midco as parent borrower under the Current ABL Credit Agreement and ~~ABL Credit Agreement. Proceeds from~~(iii) the ~~borrowing~~obligations of Ply Gem Midco as issuer under the Term Loan Credit Facility, together with cash on hand, was used to refinance the Company’s existing term loan credit facility, redeem and repay the Notes and pay any fees, premiums and expenses incurred in connection with the refinancing.Current Indenture.

The following table shows our debt contractual obligations as of ~~April 29, 2018~~March 30, 2019 (in thousands):


	Payments due by period										Payments due by period
Contractual Obligation	Total		Less than 1 year		1 – 3 years		4 – 5 years		More than 5 years		Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Total debt⁽¹⁾	$	415,000	$	—	$	—	$	—	$	415,000	$	3,407,802	$	245,620	$	51,240	$	51,240	$	3,059,702
Interest payments on debt⁽²⁾	112,714		11,558		48,306		32,204		20,646		1,366,557		226,665		429,861		423,152		286,879
Operating lease liabilities⁽³⁾											378,728		66,205		142,353		77,196		92,974
Purchase obligations⁽⁴⁾											112,275		112,275		—		—		—
Total	$	527,714	$	11,558	$	48,306	$	32,204	$	435,646	$	5,265,362	$	650,765	$	623,454	$	551,588	$	3,439,555


(1)	Reflects amounts outstanding under the Current ABL Facility, Current Term Loan ~~Credit~~Facility and the 8.00% Senior Notes and excludes any amounts potentially due under the excess cash flow provisions within the Current Term Loan Facility.


(2)	Interest payments were calculated based on the variable rate in effect at ~~April 29, 2018~~March 30, 2019 for the Current ABL Facility (applied to the outstanding ABL balance as of March 30, 2019) and Current Term Loan ~~Credit Facility.~~Facility, and at 8.00% on the 8.00% Senior Notes.


(3)	Lease liabilities are stated at gross payment obligations under the terms of existing lease agreements and are not reduced for the discount rate applied to the minimum lease payments that was used to calculate the minimum lease liabilities recorded under ASC 842, as represented in our consolidated balances sheets.


(4)	Purchase obligations are defined as purchase agreements that are enforceable and legally binding and that specify all significant terms, including quantity, price and the approximate timing of the transaction. These obligations are related primarily to inventory purchases under three 2019 contracts that were finalized during 2018.

There have been no other material changes in our future contractual obligations since the end of fiscal ~~2017. See Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended October 29, 2017 for more information on our contractual obligations.~~ 2018.

See Note 1013 — Long-Term Debt and Note Payable in the notes to the unaudited consolidated financial statements for more information on the material terms of our ~~Term Loan Credit Agreement~~Current Cash Flow Facilities, 8.00% Senior Notes, and Current 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 and contingencies, which are described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended October 28, 2018.

We adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, as of October 29, ~~2017.~~ 2018 for the Transition Period. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported. See Note 1 — Summary of Significant Accounting Policies in the notes to the unaudited consolidated financial statements for an update on the description of our revenue recognition policies as a result of the adoption of ASU 2014-09.

We adopted ASU No. 2016-02, Leases, as of January 1, 2019 for the three months ended March 30, 2019. ASU 2016-02 provides enhancements to increase transparency to lease obligations by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. See Note 1 — Summary of Significant Accounting Policies in the notes to the unaudited consolidated financial statements for an update on the description of our lease accounting policies as a result of the adoption of ASU 2016-02.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 — Accounting Pronouncements in the notes to the unaudited consolidated financial statements for information on recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~Steel Prices~~Commercial Business

We are subject to market risk exposure related to volatility in the price of steel. For the ~~fiscal six~~three months ended ~~April 29, 2018,~~March 30, 2019, material costs (predominantly steel costs) constituted approximately ~~64%~~65% of our Commercial segment 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(Galvalume® is a registered trademark of BIEC International, Inc.). 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.

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 material costs (predominantly steel costs) accounting for approximately 64%~~Siding and Windows Businesses

We are subject to significant market risk with respect to the pricing of our principal raw materials, which include PVC resin, aluminum and glass. If prices of these raw materials were to increase dramatically, we may not be able to pass such increases on to our customers and, as a result, gross margins could decline significantly. We manage the exposure to commodity pricing risk by increasing our selling prices for corresponding material cost ~~of sales~~increases, continuing to diversify our product mix, strategic buying programs and vendor partnering. The average market price for PVC resin was estimated to have increased approximately 3.3% for the ~~six~~three months ended ~~April 29, 2018, a one percent change in~~March 30, 2019 compared to the ~~cost of steel would have resulted in a pre-tax impact on cost of sales of approximately $4.4 million for the six~~three months ended ~~April 29,~~March 31, 2018. The impact to our financial results of operations of such an increase 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, aluminum, PVC resin, and glass, 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 ~~April 29, 2018,~~March 30, 2019, all of our contracts for the purchase of natural gas and aluminum 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 ~~Term Loan Credit~~Current Cash Flow Facilities and Current ABL Facility, which provides for borrowings of up to $2,675.0 million on the Current Cash Flow Facilities and up to $611.0 million on the Current ABL ~~Credit~~ Facility. These instruments bear interest at an agreed upon percentage point spread from either the prime interest rate or LIBOR. ~~Under our Term Loan Credit Facility, we may, at our option, fix~~Assuming the interest rate for certain borrowings based on a spread over LIBOR for 30 days to 6 months. At April 29, 2018, we had $415.0 million outstanding under our Term Loan Credit Facility. Based on this balance, an immediate change of one percentCurrent Cash Flow Revolver is fully drawn, each quarter point increase or decrease in the interest rate would ~~cause a~~ change inour interest expense ofby approximately ~~$4.2~~$6.7 million ~~on an annual basis.~~per year for the Current Cash Flow Facilities. Assuming the Current ABL Facility is fully drawn, each quarter point increase or decrease in the interest rate would change our interest expense by approximately $1.5 million per year. The fair value of our term loan credit ~~facility~~facilities at ~~April 29, 2018~~March 30, 2019 and October ~~29, 2017~~28, 2018 was approximately ~~$415.5~~$2,431.6 million and ~~$144.1~~$412.4 million, respectively, compared to a face value of approximately ~~$415.0~~$2,542.8 million and ~~$144.1~~$412.9 million, respectively. At March 30, 2019, we were not party to any interest rate swaps or caps to manage our interest rate risk. In the future, we may enter into interest rate swaps or interest rate caps, involving exchange of floating for fixed rate interest payments, to reduce our exposure to interest rate volatility.

See Note 1013 — Long-Term Debt and Note Payable in the notes to the unaudited consolidated financial statements for information on the material terms of our long-term debt.

Labor Force Risk

Our manufacturing process is highly engineered but involves manual assembly, fabrication, and manufacturing processes. We believe that our success depends upon our ability to employ, train, and retain qualified personnel with the ability to design, utilize and enhance these processes and our products. In addition, our ability to expand our operations depends in part on our ability to minimize labor inefficiencies and increase our labor force to meet the U.S. housing market demand. A significant increase in the wages paid by competing employers could result in a reduction of our labor force, increases in the wage rates that we must pay, or both. If either of these events were to occur, our cost structure could increase, our margins could decrease and any growth potential could be impaired. Historically, the Company has believed that the lag period between breaking ground on a new housing start and the utilization of our products on the exterior of a home is between 90 to 120 days.

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 in the current period. Net foreign currency re-measurement ~~(loss)~~ gain was ~~$(0.1)~~$0.5 million and ~~$0.4~~$0.2 million for the ~~three-month periods~~three months ended ~~April 29,~~March 30, 2019 and January 28, 2018, ~~and April 30, 2017, respectively. Net foreign currency re-measurement gain (loss) was $0.1 million and $(0.1) million, for the six-month periods ended April 29, 2018 and April 30, 2017,~~ 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 (loss) ~~income~~ in stockholders’ equity. ~~The net foreign currency exchange loss included in net income for the three month periods ended April 29, 2018 and April 30, 2017 was $0.2 million and $0.3 million, respectively.~~ The net foreign currency exchange gain included in net income (loss) for the ~~six month periods~~three months ended ~~April 29,~~March 30, 2019 and January 28, 2018 ~~and April 30, 2017~~ was ~~$0.1~~$0.6 million and ~~$0.1~~$0.3 million, respectively. Net foreign currency translation adjustment, net of tax, and included in other comprehensive income (loss) for the ~~three-month periods~~three months ended ~~April 29,~~March 30, 2019 and January 28, 2018 ~~and April 30, 2017~~ was ~~$(0.3)~~$2.5 million and ~~$(0.1)~~$0.2 million, respectively. ~~Net~~

In the future, we may enter into foreign currency ~~translation adjustment, net~~hedging contracts, to mitigate the exposure risk of ~~tax, and included in other comprehensive income (loss) for~~currency fluctuation against the ~~six-month period ended April 30, 2017 was $(0.1) million. Net foreign currency translation adjustment, net of tax, and included in other comprehensive income (loss) for~~Canadian dollar and/or the ~~six-month period ended April 29, 2018 was insignificant.~~

On January 29, 2018, we closed on the sale of CENTRIA International LLC, which owned our China manufacturing facility and are therefore no longer exposed to fluctuations in the foreign currency exchange rate between the U.S. dollar and Chinese yuan. The functional currency for our China operations was the Chinese yuan. The net foreign currency translation adjustment was insignificant for the three and six-month periods ended April 29, 2018 and April 30, 2017. Mexican Peso.

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 ~~April 29, 2018.~~March 30, 2019. 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 ~~April 29, 2018,~~March 30, 2019, 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

~~There~~During the three months ended March 30, 2019, we implemented updated processes, including a new lease accounting system in response to the adoption of ASU No. 2016-02, Leases, effective January 1, 2019. These updated processes and system resulted in a material change in a component of our internal control over financial reporting. During the three months ended March 30, 2019, we acquired Environmental Stoneworks and are in the process of integrating Environmental Stoneworks into our overall internal control over financial reporting framework. Except as described herein, 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 the quarter ended ~~April 29, 2018~~March 30, 2019 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 1619, 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,~~under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 28, 2018 and our Transition Report on Form 10-Q for the transition period from October 29, ~~2017.~~2018 to December 31, 2018 (the “Transition Report”). The risks disclosed in our previous Annual Report on Form 10-K, our Transition Report and information provided elsewhere in this report, could materially 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 are providing the following information regarding changes that have occurred to previously disclosed risk factors from our Annual Report on Form 10-K for the year ended October 29, 2017. Except for such additional information, 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 October ~~29, 2017.~~

~~New tariffs on steel imports could result in increased steel prices~~28, 2018 and ~~adversely affect~~ our ~~results of operations~~

On March 1, 2018, President Trump announced his administration’s intention to place a 25% tariff on imports of steel into the United States. Although the parameters and timing of any such tariff are not known as of the date of this filing, such a tariff, if enacted, could result in both increased steel prices and a decreased available supply of steel. We may not be able to pass such price increases on to our customers and may not be able to secure adequate alternative sources of steel on a timely basis. Either of these occurrences could adversely affect our results of operations and financial condition.Transition Report.

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

The following table shows our purchases of our Common Stock during the ~~second quarter of fiscal 2018:~~three months ended March 30, 2019:

Period
(a)
Total Number of
Shares
Purchased⁽¹⁾

(b)
Average Price
Paid per Share

(c)
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Programs

(d)
Maximum Dollar
Value of
Shares that
May Yet be
Purchased Under
Publicly
Programs⁽²⁾
(in thousands)
January 29, 2018 to February 25, 2018 104
$ 17.10
—
$ 5,573
February 26, 2018 to March 25, 2018 —
$ —
—
55,573
March 26, 2018 to April 29, 2018 —
$ —
—
55,573
Total 104
$ 17.10
—



Period	(a) Total Number of Shares Purchased⁽¹⁾	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Programs	(d) Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Programs⁽²⁾ (in thousands)
January 1, 2019 to January 26, 2019	5,624	$	7.64	—	$	55,573
January 27, 2019 to February 23, 2019	12,355	$	8.14	—	55,573
February 24, 2019 to March 30, 2019	1,734	$	7.02	—	55,573
Total	19,713	$	7.90	—

(1)

The total number of shares purchased includes our Common Stock repurchased under the programs described below as well as 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)

On October 10, 2017 ~~the Company announced that its Board of Directors authorized a stock repurchase program for the repurchase of up to an aggregate of $50.0 million of the Company’s outstanding Common Stock. On~~and March 7, 2018, the Company announced that its Board of Directors authorized a new stock repurchase ~~program~~programs for ~~the repurchase of~~ up to an aggregate of $50.0 million and $50.0 million, respectively, of the Company’s ~~outstanding~~ Common Stock. Under these repurchase programs, the Company is authorized to repurchase shares, if at all, at times and in amounts that we deem appropriate in accordance with all applicable securities laws and regulations. Shares repurchased are usually retired. There is no time limit on the duration of these programs. As of ~~April 29, 2018,~~March 30, 2019, approximately $55.6 million remained available for stock repurchases under the programs announced on October 10, 2017 and March 7, 2018.

Item 6. Exhibits.

Index to Exhibits



Exhibit Number		Description
*2.1		Unit Purchase Agreement, dated January 12, 2019 (the “Purchase Agreement”), by and among Environmental Materials, LLC, the Members of Environmental Materials, LLC, Charles P. Gallagher and Wayne C. Kocourek, solely in their capacity as the Seller Representative, and NCI Building Systems, Inc. (filed as Exhibit 2.1 to NCI’s Current Report on Form 8-K dated January 17, 2019 and incorporated by reference herein).
4.1		Sixth Supplemental Indenture, dated as of February 20, 2019, by and among NCI, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1 to NCI’s Current Report on Form 8-K dated February 20, 2019 and incorporated by reference herein).
**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



	*	The schedules to the Purchase Agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish copies of such schedules to the Securities and Exchange Commission upon request by the Commission.



	**	Filed herewith



	***	Furnished herewith



	†	~~Management contracts or compensatory plans or arrangements~~

SIGNATURE

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.

Date: ~~June 6, 2018~~May 8, 2019	By:	/s/ ~~Mark E. Johnson~~James S. Metcalf
		~~Mark E. Johnson~~James S. Metcalf
		Chairman of the Board and Chief Executive Officer


Date: May 8, 2019	By:	/s/ Shawn K. Poe
		Shawn K. Poe
		Executive Vice President and Chief Financial Officer
		~~and Treasurer~~

4752



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



~~10943 North Sam Houston~~5020 Weston Parkway, ~~West~~ ~~Houston, TX~~ Suite 400, Cary, NC	~~77064~~27513
(Address of principal executive offices)	(Zip Code)



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



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock $.01 par value per share	NCS	New York Stock Exchange



	Fiscal Three Months Ended						Fiscal Six Months Ended
	April 29, 2018			April 30, 2017			April 29, 2018			April 30, 2017
Comprehensive income (loss):
Net income (loss)	$	(5,684	)	$	16,974		$	(435	)	$	19,013
Other comprehensive income, net of tax:
Foreign exchange translation losses and other⁽¹⁾	(261		)	(144		)	(24		)	(58		)
Other comprehensive loss	(261		)	(144		)	(24		)	(58		)
Comprehensive (loss) income	$	(5,945	)	$	16,830		$	(459	)	$	18,955



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



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



		PAGE
	Part I — Financial Information
Item 1.	Unaudited Consolidated Financial Statements	1
	Consolidated Statements of Operations for the ~~Fiscal~~ Three Months Ended March 30, 2019 and ~~Six Month Periods Ended April 29,~~January 28, 2018 ~~and April 30, 2017~~	1
	Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for the ~~Fiscal~~ Three Months Ended March 30, 2019 and ~~Six Month Periods Ended April 29,~~January 28, 2018 ~~and April 30, 2017~~	2
	Consolidated Balance Sheets as of ~~April 29, 2018~~March 30, 2019 and October ~~29, 2017~~28, 2018	3
	Consolidated Statements of Cash Flows for the ~~Fiscal Six Month Periods~~Three Months Ended ~~April 29,~~March 30, 2019 and January 28, 2018 ~~and April 30, 2017~~	4
	Consolidated ~~Statement~~Statements of Stockholders’ Equity for the ~~Fiscal Six Month~~Three Months Ended March 30, 2019 and January 28, 2018, and the Transition Period ~~Ended April 29,~~ended December 31, 2018	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2332
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4247
Item 4.	Controls and Procedures	4449

	Part II — Other Information
Item 1.	Legal Proceedings	4550
Item 1A.	Risk Factors	4550
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4550
Item 6.	Exhibits	4651



	Three Months Ended
	March 30, 2019			January 28, 2018
Comprehensive income (loss):
Net income (loss)	$	(60,017	)	$	5,249
Other comprehensive income, net of tax:
Foreign exchange translation gains	2,472			237
Other comprehensive income	2,472			237
Comprehensive income (loss)	$	(57,545	)	$	5,486


	April 29, 2018			October 29, 2017			March 30, 2019			October 28, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	35,335		$	65,658		$	99,588		$	54,272
Restricted cash	177			136			4,039			245
Accounts receivable, net	180,393			199,897
Accounts receivable, less allowances of $10,449 and $6,249, respectively							499,438			233,297
Inventories, net	221,369			198,296			516,957			254,531
Income taxes receivable	6,439			3,617			13,597			1,012
Investments in debt and equity securities, at market	6,332			6,481			3,722			5,285
Prepaid expenses and other	36,551			31,359			78,926			34,821
Assets held for sale	10,102			5,582			7,272			7,272
Total current assets	496,698			511,026			1,223,539			590,735
Property, plant and equipment, net	221,398			226,995
Property, plant and equipment, less accumulated depreciation of $487,251 and $459,931, respectively							638,172			236,240
Lease right-of-use assets							292,927			—
Goodwill	148,291			148,291			1,702,182			148,291
Intangible assets, net	132,338			137,148			1,721,054			127,529
Deferred income taxes	2,513			2,544			—			982
Other assets, net	5,369			5,108			11,980			6,598
Total assets	$	1,006,607		$	1,031,112		$	5,589,854		$	1,110,375
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt							$	25,600		$	4,150
Note payable	$	1,656		$	440		—			497
Payable pursuant to a tax receivable agreement							24,760			—
Accounts payable	157,819			147,772			216,306			170,663
Accrued compensation and benefits	49,850			59,189			73,955			65,136
Accrued interest	1,464			6,414			59,814			1,684
Accrued income taxes							5,824			11,685
Current portion of lease liabilities							69,718			—
Other accrued expenses	104,475			102,233			236,067			81,884
Total current liabilities	315,264			316,048			712,044			335,699
Long-term debt, net of deferred financing costs of $6,043 and $6,857 on April 29, 2018 and October 29, 2017, respectively	408,957			387,290
Long-term debt							3,301,248			403,076
Deferred income taxes	1,928			4,297			282,886			2,250
Long-term lease liabilities							228,010			—
Other long-term liabilities	18,134			18,230			159,380			39,085
Total long-term liabilities	429,019			409,817			3,971,524			444,411
Stockholders’ equity:
Common stock, $.01 par value, 100,000,000 shares authorized; 66,252,112 and 68,677,684 shares issued at April 29, 2018 and October 29, 2017, respectively; 66,142,319 and 68,386,556 shares outstanding at April 29, 2018 and October 29, 2017, respectively	663			687
Common stock, $.01 par value; 200,000,000, 125,581,009 and 125,514,093 shares authorized, issued and outstanding at March 30, 2019, respectively; and 100,000,000, 66,264,654 and 66,203,841 shares authorized, issued and outstanding at October 28, 2018, respectively							1,256			663
Additional paid-in capital	521,190			562,277			1,240,423			523,788
Accumulated deficit	(249,832		)	(248,046		)	(325,856		)	(186,291		)
Accumulated other comprehensive loss, net	(7,555		)	(7,531		)	(8,341		)	(6,708		)
Treasury stock, at cost (109,793 and 291,128 shares at April 29, 2018 and October 29, 2017, respectively)	(2,142		)	(2,140		)
Treasury stock, at cost (66,916 and 60,813 shares at March 30, 2019 and October 28, 2018, respectively)							(1,196		)	(1,187		)
Total stockholders’ equity	262,324			305,247			906,286			330,265
Total liabilities and stockholders’ equity	$	1,006,607		$	1,031,112		$	5,589,854		$	1,110,375



NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended
	March 30, 2019			January 28, 2018
Cash flows from operating activities:
Net income (loss)	$	(60,017	)	$	5,249
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	59,947			10,358
Non-cash interest expense	2,672			435
Share-based compensation expense	4,005			5,870
Non-cash fair value premium on purchased inventory	16,249			—
Gains on asset sales, net	—			(320		)
Provision for doubtful accounts	(189		)	(20		)
Deferred income taxes	(7,434		)	(1,676		)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(43,635		)	30,858
Inventories	16,704			(2,237		)
Income taxes	(34,090		)	2,373
Prepaid expenses and other	18,524			(2,567		)
Accounts payable	(7,216		)	(31,205		)
Accrued expenses	(12,373		)	(23,183		)
Other, net	(1,869		)	(515		)
Net cash used in operating activities	(48,722		)	(6,580		)
Cash flows from investing activities:
Acquisitions, net of cash acquired	(182,418		)	—
Capital expenditures	(27,190		)	(8,109		)
Proceeds from sale of property, plant and equipment	—			2,249
Net cash used in investing activities	(209,608		)	(5,860		)
Cash flows from financing activities:
Proceeds from stock options exercised	—			1,040
Proceeds from ABL facility	220,000			43,000
Payments on ABL facilities	—			(33,000		)
Payments on term loan	(6,405		)	—
Payments on note payable	—			(441		)
Payments of financing costs	—			(275		)
Payments related to tax withholding for share-based compensation	(156		)	(4,610		)
Purchases of treasury stock	—			(46,705		)
Net cash provided by (used in) financing activities	213,439			(40,991		)
Effect of exchange rate changes on cash and cash equivalents	911			237
Net decrease in cash, cash equivalents and restricted cash	(43,980		)	(53,194		)
Cash, cash equivalents and restricted cash at beginning of period	147,607			65,794
Cash, cash equivalents and restricted cash at end of period	$	103,627		$	12,600



NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)

	Common Stock					Additional Paid-In Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Treasury Stock					Stockholders’ Equity
	Shares		Amount			Additional Paid-In Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Shares		Amount			Stockholders’ Equity
Balance, October 28, 2018	66,264,654		$	663		$	523,788		$	(186,291	)	$	(6,708	)	(60,813	)	$	(1,187	)	$	330,265
Treasury stock purchases	—		—			—			—			—			(347,040	)	(4,128		)	(4,128		)
Retirement of treasury shares	(296,954	)	(3		)	(3,634		)	—			—			296,954		3,637			—
Issuance of restricted stock	977,226		10			(10		)	—			—			—		—			—
Issuance of common stock for the Ply Gem merger	58,638,233		586			712,455			—			—			—		—			713,041
Other comprehensive income (loss)	—		—			—			—			(4,105		)	—		—			(4,105		)
Share-based compensation	—		—			4,457			—			—			—		—			4,457
Cumulative effect of accounting change	—		—			—			(3,358		)	—			—		—			(3,358		)
Net loss	—		—			—			(76,190		)	—			—		—			(76,190		)
Balance, December 31, 2018	125,583,159		$	1,256		$	1,237,056		$	(265,839	)	$	(10,813	)	(110,899	)	$	(1,678	)	$	959,982
Treasury stock purchases	—		—			—			—			—			(19,713	)	(156		)	(156		)
Retirement of treasury shares	(57,984	)	(1		)	(551		)	—			—			57,984		552			—
Issuance of restricted stock	55,834		1			(1		)	—			—			—		—			—
Other comprehensive income (loss)	—		—			—			—			2,472			—		—			2,472
Deferred compensation obligation	—		—			(86		)	—			—			5,712		86			—
Share-based compensation	—		—			4,005			—			—			—		—			4,005
Net loss	—		—			—			(60,017		)	—			—		—			(60,017		)
Balance, March 30, 2019	125,581,009		$	1,256		$	1,240,423		$	(325,856	)	$	(8,341	)	(66,916	)	$	(1,196	)	$	906,286

Balance, October 29, 2017	68,677,684		$	687		$	562,277		$	(248,046	)	$	(7,531	)	(291,128	)	$	(2,140	)	$	305,247
Treasury stock purchases	—		—			—			—			—			(2,916,930	)	(51,315		)	(51,315		)
Retirement of treasury shares	(2,916,930	)	(29		)	(51,286		)	—			—			2,916,930		51,315			—
Issuance of restricted stock	397,406		4			(4		)	—			—			181,439		—			—
Stock options exercised	93,636		1			1,039			—			—			—		—			1,040
Other comprehensive income (loss)	—		—			(23		)	—			237			—		—			214
Share-based compensation	—		—			5,870			—			—			—		—			5,870
Cumulative effect of accounting change	—		—			1,351			(1,351		)	—			—		—			—
Net income	—		—			—			5,249			—			—		—			5,249
Balance, January 28, 2018	66,251,796		$	663		$	519,224		$	(244,148	)	$	(7,294	)	(109,689	)	$	(2,140	)	$	266,305



						Additional			Retained			Accumulated Other
	Common Stock					Paid-In			Earnings			Comprehensive			Treasury Stock					Stockholders’
	Shares		Amount			Capital			(Deficit)			(Loss) Income			Shares		Amount			Equity
Balance, October 29, 2017	68,677,684		$	687		$	562,277		$	(248,046	)	$	(7,531	)	(291,128	)	$	(2,140	)	$	305,247
Treasury stock purchases	—		—			—			—			—			(2,917,034	)	(51,317		)	(51,317		)
Retirement of treasury shares	(2,916,930	)	(29		)	(51,286		)	—			—			2,916,930		51,315			—
Issuance of restricted stock	397,722		4			(4		)	—			—			181,439		—			—
Stock options exercised	93,636		1			1,039			—			—			—		—			1,040
Foreign exchange translation loss and other, net of taxes	—		—			(55		)	—			(24		)	—		—			(79		)
Share-based compensation	—		—			7,868			—			—			—		—			7,868
Cumulative effect of accounting change	—		—			1,351			(1,351		)	—			—		—			—
Net loss	—		—			—			(435		)	—			—		—			(435		)
Balance, April 29, 2018	66,252,112		$	663		$	521,190		$	(249,832	)	$	(7,555	)	(109,793	)	$	(2,142	)	$	262,324


(1)	Restricted cash at March 30, 2019 relates to an escrow balance held for an outstanding earnout agreement.



Assets acquired:
Restricted cash	$	145
Accounts receivable	17,134
Inventories	13,362
Prepaid expenses and other current assets	1,581
Property, plant and equipment	14,295
Lease right of use assets	11,372
Intangible assets (trade names/customer relationships)	91,170
Goodwill	62,214
Other assets	157
Total assets acquired	211,430
Liabilities assumed:
Accounts payable	2,676
Other accrued expenses	11,376
Lease liabilities	11,365
Other long-term liabilities	3,450
Total liabilities assumed	28,867
Net assets acquired	$	182,563



	General Severance			Plant Closing Severance			Total
Balance at November 2, 2014	$	—		$	—		$	—
Costs incurred	3,887			1,575			5,462
Cash payments	(2,941		)	(1,575		)	(4,516		)
Accrued severance⁽¹⁾	739			—			739
Balance at November 1, 2015	$	1,685		$	—		$	1,685
Costs incurred⁽¹⁾	2,725			165			2,890
Cash payments	(3,928		)	(165		)	(4,093		)
Balance at October 30, 2016	$	482		$	—		$	482
Costs incurred	2,350			1,539			3,889
Cash payments	(2,549		)	(1,539		)	(4,088		)
Balance at October 29, 2017	$	283		$	—		$	283
Costs incurred	1,733			—			1,733
Cash payments	(1,782		)	—			(1,782		)
Balance at April 29, 2018	$	234		$	—		$	234



	Fiscal Three Months Ended		Fiscal Six Months Ended			Cost Incurred To Date (since inception)
	April 29, 2018		April 29, 2018			Cost Incurred To Date (since inception)
General severance	$	417	$	1,733		$	10,695
Plant closing severance	—		—			3,279
Asset impairments	71		1,171			7,140
Gain on sale of facility	—		(1,424		)	(1,424		)
Other restructuring costs	—		102			1,415
Total restructuring costs	$	488	$	1,582		$	21,105



Assets acquired:
Cash	$	102,121
Accounts receivable	345,544
Inventories	303,735
Prepaid expenses and other current assets	51,841
Property, plant and equipment	377,383
Intangible assets (trade names/customer relationships)	1,565,000
Goodwill	1,492,611
Other assets	3,262
Total assets acquired	4,241,497
Liabilities assumed:
Accounts payable	139,955
Tax receivable agreement liability	47,355
Other accrued expenses (inclusive of $27.5 million for current warranty liabilities)	245,050
Debt (inclusive of current portion)	2,655,159
Other long-term liabilities (accrued long-term warranty)	78,552
Deferred income taxes	316,647
Other long-term liabilities	29,834
Total liabilities assumed	3,512,552
Net assets acquired	$	728,945



	Range of Life (Years)			Cost		Accumulated Amortization			Net Carrying Value
As of March 30, 2019
Amortized intangible assets:
Trademarks/Trade names⁽¹⁾	6	–	15	$	252,942	$	(21,606	)	$	231,336
Customer lists and relationships	5	–	20	1,582,060		(92,342		)	1,489,718
Total intangible assets				$	1,835,002	$	(113,948	)	$	1,721,054
(1) During the three months ended March 30, 2019, the Company began amortization of trade names previously classified as indefinite-lived over an eight-year period.

	Range of Life (Years)			Cost		Accumulated Amortization			Net Carrying Value
As of October 28, 2018
Amortized intangible assets:
Trademarks/Trade names		15		$	29,167	$	(12,657	)	$	16,510
Customer lists and relationships	12	–	20	136,210		(38,646		)	97,564

Indefinite-lived intangible assets:
Trade names				13,455		—			13,455
Total intangible assets				$	178,832	$	(51,303	)	$	127,529



Weighted-average remaining lease term	6.5 years
Weighted-average IBR	6.09	%



	Three months ended
	March 30, 2019
Operating lease costs
Fixed lease costs	$	21,050
Variable lease costs (a)	10,554

^(a) Includes short-term lease costs, which are immaterial.



	Three months ended
	March 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	21,663

Right-of-use assets obtained in exchange for new operating lease liabilities	$	304,056



	Operating Leases
2019 (excluding the three months ended March 30, 2019)	$	66,205
2020	77,720
2021	64,633
2022	50,669
2023	26,527
Thereafter	92,974
Total future minimum lease payments	378,728
Less: interest	81,000
Present value of future minimum lease payments	$	297,728

As of March 30, 2019
Current portion of lease liabilities	$	69,718
Long-term portion of lease liabilities	228,010
Total	$	297,728


(1)	Represents securities not included in the computation of diluted earnings ~~(loss)~~ per common share because their effect would have been anti-dilutive.



	Fiscal Three Months Ended April 29, 2018								Fiscal Three Months Ended April 30, 2017
	Defined Benefit Plans			OPEB Plans		Total			Defined Benefit Plans			OPEB Plans		Total
Service cost	$	22		$	7	$	29		$	24		$	9	$	33
Interest cost	494			62		556			513			64		577
Expected return on assets	(729		)	—		(729		)	(700		)	—		(700		)
Amortization of prior service credit	15			—		15			(2		)	—		(2		)
Amortization of net actuarial loss	248			—		248			344			—		344
Net periodic benefit cost	$	50		$	69	$	119		$	179		$	73	$	252

Funding contributions	$	639		$	—	$	639		$	591		$	—	$	591


	Fiscal Six Months Ended April 29, 2018								Fiscal Six Months Ended April 30, 2017								Three Months Ended March 30, 2019								Three Months Ended January 28, 2018
	Defined Benefit Plans			OPEB Plans		Total			Defined Benefit Plans			OPEB Plans		Total			Defined Benefit Plans			OPEB Plans		Total			Defined Benefit Plans			OPEB Plans		Total
Service cost	$	44		$	14	$	58		$	49		$	18	$	67		$	11		$	6	$	17		$	22		$	7	$	29
Interest cost	988			124		1,112			1,027			129		1,156			974			66		1,040			494			62		556
Expected return on assets	(1,458		)	—		(1,458		)	(1,399		)	—		(1,399		)	(1,234		)	—		(1,234		)	(729		)	—		(729		)
Amortization of prior service credit	28			—		28			(5		)	—		(5		)
Amortization of prior service cost																	15			—		15			15			—		15
Amortization of net actuarial loss	496			—		496			687			—		687			704			—		704			248			—		248
Net periodic benefit cost	$	98		$	138	$	236		$	359		$	147	$	506		$	470		$	72	$	542		$	50		$	69	$	119

Funding contributions	$	910		$	—	$	910		$	825		$	—	$	825



	April 29, 2018		October 29, 2017
Term loan credit facility, due February 2025 and June 2022, respectively	$	415,000	$	144,147
8.25% senior notes, due January 2023	—		250,000
Asset-based lending credit facility, due February 2023 and June 2019, respectively	—		—
Less: unamortized deferred financing costs⁽¹⁾	6,043		6,857
Total long-term debt, net of deferred financing costs	$	408,957	$	387,290



	March 30, 2019			October 28, 2018
Asset-based revolving credit facility due April 2023	$	220,000		$	—
Asset-based revolving credit facility due February 2023	—			—
Term loan facility due April 2025	2,542,802			—
Term loan facility due February 2025	—			412,925
Cash flow revolver due April 2023	—			—
8.00% senior notes due April 2026	645,000			—
Less: unamortized discounts and unamortized deferred financing costs⁽¹⁾	(80,954		)	(5,699		)
Total long-term debt, net of unamortized discounts and unamortized deferred financing costs	3,326,848			407,226
Less: current portion of long-term debt	25,600			4,150
Total long-term debt, less current portion	$	3,301,248		$	403,076



	March 30, 2019
Interest rate	6.55	%
Effective interest rate	6.51	%



	March 30, 2019
Excess availability	$	326,994
Revolving loans outstanding	220,000
Letters of credit outstanding	34,410


~~(1)~~	~~Base Rate loans at the Base Rate plus a margin. The margin ranges from 0.25% to 0.75% depending on the quarterly average excess availability under such facility; and~~


~~(2)~~	~~LIBOR loans at LIBOR plus a margin. The margin ranges from 1.25% to 1.75% depending on the quarterly average excess availability under such facility.~~



	April 29, 2018				October 29, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan Credit Facility, due February 2025	$	415,000	$	415,519	$	—	$	—
Credit Agreement, due June 2022	—		—		144,147		144,147
8.25% senior notes, due January 2023	—		—		250,000		267,500



	March 30, 2019				October 28, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan Facilities	$	2,542,802	$	2,431,554	$	412,925	$	412,409
8.00% Senior Notes	645,000		580,500		—		—


	April 29, 2018								March 30, 2019
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Short-term investments in deferred compensation plan:⁽¹⁾
Short-term investments in deferred compensation plan⁽¹⁾:
Money market	$	790	$	—	$	—	$	790	$	146	$	—	$	—	$	146
Mutual funds – Growth	1,057		—		—		1,057		1,041		—		—		1,041
Mutual funds – Blend	2,018		—		—		2,018		1,573		—		—		1,573
Mutual funds – Foreign blend	946		—		—		946		561		—		—		561
Mutual funds – Fixed income	—		1,521		—		1,521		—		401		—		401
Total short-term investments in deferred compensation plan(2)	4,811		1,521		—		6,332		3,321		401		—		3,722
Total assets	$	4,811	$	1,521	$	—	$	6,332	$	3,321	$	401	$	—	$	3,722

Liabilities:
Deferred compensation plan liability(2)	$	—	$	5,310	$	—	$	5,310	$	—	$	3,499	$	—	$	3,499
Total liabilities	$	—	$	5,310	$	—	$	5,310	$	—	$	3,499	$	—	$	3,499


(2)	The Company records the short-term investments in deferred compensation plan within investments in debt and equity securities, at market, and the deferred compensation plan liability within accrued compensation and benefits on the consolidated balance sheets.