Huttig Building Products Announces Q3 2019 Results
Company has net sales of $215.7 million and gross margin increases to 20.7% for quarter.
Huttig Building Products, Inc., a leading domestic distributor of millwork, building materials and wood products, has reported financial results for the third quarter ended September 30, 2019.
“Our sales for the third quarter were slightly below last year’s pace as a result of our continued focus on higher margin, strategic product categories and our de-emphasis of more commoditized, lower margin categories,” said Jon Vrabely, Huttig’s President and Chief Executive Officer. “We believe the challenges of our enterprise resource planning system upgrade, which caused some temporary sales erosion in our second and third quarters, are now behind us."
"Our focus on growing higher margin fastener product sales contributed to our gross margin improvement in the quarter, while our capital and cost management efforts have allowed us to reduce debt by nearly $15 million and improve available liquidity by over $9 million as compared to the prior year period.”
Results of Operations
Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018
Net sales were $215.7 million in the third quarter of 2019, which was $6.3 million, or 2.8%, lower than the third quarter of 2018. The decrease in net sales was primarily attributed to a modest softening in certain market segments served as well as a competitive pricing environment, particularly among commodity products. During the third quarter of 2019, Huttig continued to experience carryover effect of the temporary disruption which impacted sales subsequent to its major enterprise system upgrade during the second quarter.
Millwork product sales decreased 5.0% in the third quarter of 2019 to $99.6 million, compared to $104.8 million in the third quarter of 2018,
building products sales increased 3.6% in the third quarter of 2019 to $100.4 million, compared to $96.9 million in the third quarter of 2018, and
wood product sales decreased 22.7% in the third quarter of 2019 to $15.7 million, compared to $20.3 million in the third quarter of 2018.
Gross margin was $44.7 million in the third quarter of 2019, compared to $44.6 million in the third quarter of 2018. As a percentage of sales, gross margin was 20.7% in the third quarter of 2019, compared to 20.1% in the third quarter of 2018. Gross margin improvement was generally related to product mix as well as a concerted effort to focus on higher margin opportunities.
Operating expenses increased $0.3 million to $41.4 million in the third quarter of 2019, compared to $41.1 million in the third quarter of 2018. Personnel costs decreased $0.3 million as lower compensation and contract labor costs were partially offset by higher medical expenses.
Non-personnel costs increased $0.6 million for the quarter primarily due to maintenance costs and depreciation, including software depreciation from our recent enterprise resource planning system upgrade. Other decreases in non-personnel expenses were offset by higher rent from our operating facilities, including expansion efforts. As a percentage of sales, operating expenses were 19.2% in the third quarter of 2019 compared to 18.5% in 2018.
Net interest expense was $1.7 million in the third quarter of 2019 and $1.8 million in the third quarter of 2018 as the impact of lower average borrowing was offset by higher interest rates.
Income tax expense was zero for the quarter ended September 30, 2019, as compared to $0.5 million for the quarter ended September 30, 2018.
For more information, visit www.huttig.com.
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