Huttig Building Products announces Q2 results
Company delivers 21.2 percent gross margin on sales of $198.7 million.
Second Quarter 2017 Highlights:
- Net sales of $198.7 million
- Gross margin of 21.2 percent
- Total available liquidity of $57.1 million
Huttig Building Products, Inc. (NASDAQ: HBP), a leading domestic distributor of millwork, building materials and wood products, today reported financial results for the second quarter ended June 30, 2017.
“During the second quarter of 2017 we continued to make significant investments in the execution of our comprehensive strategic plan,” said Jon P. Vrabely, President and CEO of Huttig Building Products. “These investments in capital and operating expenses are required to fundamentally transform our business to consistently deliver profitable growth in the intermediate and long term.”
Results of Operations
Three Months Ended June 30, 2017
Compared to Three Months Ended June 30, 2016
Net sales were $198.7 million, which was $0.8 million, or less than 1 percent, higher than in 2016. The modest change in net sales was due to the general increase in housing activity offset in part by the effect of our special promotional winter buy sales which drove sales into the first quarter of 2017 from the second quarter of 2017.
Millwork sales increased 4 percent to $100.4 million, primarily due to increased construction activity. Building products sales decreased 1percent to $79.9 million primarily due to our special promotional winter buy sales which drove sales in the first quarter of 2017 from the second quarter of 2017.
Wood product sales decreased 12 percent in 2017 to $18.4 million as we continue to de-emphasize this lower margin category.
Gross margin was $42.2 million in both 2017 and 2016. As a percentage of sales, gross margin was 21.2 percent in 2017, compared to 21.3 percent in 2016.
Operating expenses increased $5.9 million to $38.1 million in 2017, compared to $32.2 million in 2016. The increase was primarily due to higher costs as a result of hiring additional sales and warehouse personnel related to our Huttig-Grip and Repair and Remodel growth initiatives. The increase was also impacted by legal fees incurred defending our Huttig-Grip division’s right to compete in the fastener market as well as personnel and non-personnel costs which outpaced sales growth for the quarter. As a percentage of sales, operating expenses increased to 19.2 percent in 2017 compared to 16.3 percent in 2016.
Net interest expense was $0.7 million in 2017 and $0.6 million in 2016. The increase was primarily due to higher average debt and higher borrowing rates in 2017 compared to 2016 resulting from higher LIBOR rates.
Income tax expense of $1.1 million was recognized for the quarter ended June 30, 2017. Income tax expense of $3.5 million was recognized in the second quarter of 2016.
As a result of the foregoing factors, we reported income from continuing operations of $2.3 million in the second quarter of 2017 compared to income of $5.9 million in the second quarter of 2016.
Adjusted EBITDA was $5.9 million in the second quarter of 2017 compared to $11.5 million in the second quarter of 2016. Adjusted EBITDA is a non-GAAP measurement. See attached reconciliation of Non-GAAP Financial Measures.
Balance Sheet
Total available liquidity was $57.1 million at June 30, 2017, representing a 23 percent decrease over total liquidity of $74.7 million at June 30, 2016. At June 30, 2017, total available liquidity included $1.0 million of cash plus $56.1 million of availability under our credit facility, while at June 30, 2016, total available liquidity included $0.8 million of cash plus $73.9 million of availability under our credit facility.
Huttig, currently in its 133rd year of business, is one of the largest domestic distributors of millwork, building materials and wood products used principally in new residential construction and in home improvement, remodeling and repair work. Huttig distributes its products through 27 distribution centers serving 41 states. Huttig's wholesale distribution centers sell principally to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes.
For more information, contact: www.huttig.com
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