Huttig Building Products sales grow 12.4 percent in Q2
Net sales run $223.4 million for quarter.
Huttig Building Products, Inc. (“Huttig” or the “Company”) (NASDAQ: HBP), a leading domestic distributor of millwork, building materials and wood products, today reported financial results for the second quarter ended June 30, 2018.
“I am pleased with the continued growth trend we achieved through the execution of our strategic growth initiatives in the quarter,” said Jon Vrabely, Huttig’s President and Chief Executive Officer.
“While still in the very early stages of executing our sales growth initiatives, we estimate that our growth during the quarter, based on our current sales mix by market segment, was nearly 6% above that of the growth in the national housing market. Looking forward, we will remain focused on executing our growth plans, improving our gross margins, and managing our working capital.”
Results of Operations
Q2 2018 compared to Q2 2017
Net sales were $223.4 million in the second quarter of 2018, which was $24.7 million, or 12.4%, higher than the second quarter of 2017. The increase in net sales was primarily attributed to an approximate 7.7% increase in new residential construction activity as well as organic growth derived from the execution of our strategies.
- Millwork product sales increased 3% in the second quarter of 2018 to $103.5 million, compared to $100.4 million in the second quarter of 2017.
- Building products sales increased 24% in the second quarter of 2018 to $99.4 million, compared to $79.9 million in the second quarter of 2017.
- Wood product sales increased 11% in the second quarter of 2018 to $20.5 million, compared to $18.4 million in the second quarter of 2017.
Gross margin was $45.1 million in the second quarter of 2018, compared to $42.2 million in the second quarter of 2017. The increase in gross margin was largely due to higher overall sales volumes. As a percentage of sales, gross margin was 20.2% in the second quarter of 2018, compared to 21.2% in the second quarter of 2017. The reduction in gross margin percent was primarily attributed to an increase in direct sales volumes, as well as the proportional increase in building product sales as compared to the growth of other higher margin product categories.
Operating expenses increased $4.9 million to $43.0 million in the second quarter of 2018, compared to $38.1 million in the second quarter of 2017. Personnel costs increased approximately $2.2 million, primarily as a result of wage increases, higher variable compensation, higher healthcare costs, and hiring additional sales and warehouse personnel related to the execution of our strategic growth initiatives.
Non-personnel costs increased approximately $2.7 million, primarily as a result of higher fuel prices, increased contract hauling costs, and expenses associated with the PrimeSource litigation and settlement.
As a percentage of sales, operating expenses were 19.2% in the second quarters of 2018 and 2017, respectively. Excluding expenses associated with the PrimeSource litigation and settlement, operating expenses would have been approximately $40.5 million, or 18.1% of sales for the quarter ended June 30, 2018.
Adjusted EBITDA was $6.5 million for the second quarter 2018 compared to $6.4 million for the second quarter 2017.
Learn more at www.huttig.com
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