Huttig Building Products announces Q4 and full year 2020 results
Company sales grow 2.3 percent in Q4 but slip 2.4 percent YOY.
Fourth Quarter 2020 Highlights (as compared to prior year quarter):
- Net sales of $184.6 million compared to $180.4 million
- Reduced operating expenses by 17.2% to $36.1 million
- Operating income increased to $1.0 million compared to a loss of $8.0 million
- Total liquidity increased to $59.3 million compared to $33.7 million a year ago
- Reduced indebtedness by $42.7 million compared to a year ago
- Adjusted EBITDA increased to $2.4 million compared to a negative $4.9 million
- Full year adjusted EBITDA increased to $20.1 million compared to $5.2 million
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 fourth quarter and year ended December 31, 2020.
“The momentum we generated through the third quarter of 2020 continued and contributed to our solid fourth quarter results,” said Jon Vrabely, President and CEO of Huttig. “In light of the headwinds of restructuring activities and continued supply chain challenges across several key product categories, we were able to grow fourth quarter sales over the prior year and significantly improve our operating results and profitability."
"Combined with effective working capital management, we ended the year with our highest liquidity and lowest debt levels in several years. I am very proud of our entire organization and look forward to continuing our progress in 2021 as we build on the foundation we established in 2020.”
Results of Operations
Fourth Quarter 2020 Compared to Fourth Quarter 2019
Net sales were $184.6 million in the fourth quarter of 2020, which were $4.2 million, or 2.3%, higher than the fourth quarter of 2019. The increase was attributable to higher levels of residential construction activity offset by a number of factors, including pandemic-induced changes to the operating environment resulting in supply chain disruption and labor shortages, which have increased lead times to our customers for value-add production sales, and the execution of planned restructuring activities, including the closure of two branches in the third quarter of 2020. We also commenced a broader product rationalization project in the third quarter designed to strengthen our focus on core and strategic products. This project, while initially resulting in lower sales as we forgo replenishment or promotion of these items, is expected to ultimately generate higher gross margins and higher sales of focused product categories.
Due primarily to restructuring activities and supply chain disruption and labor shortages, which lengthened lead times to our customers, millwork sales decreased 1.9% to $88.3 million in the fourth quarter, compared to $90.0 million in the fourth quarter of 2019. Building products sales increased 7.5% in the fourth quarter of 2020 to $82.9 million, compared to $77.1 million in the fourth quarter of 2019 as sales benefitted from consistent high levels of demand for certain product lines within the category, including certain strategic product lines. The sales growth in this category was also offset by supply chain disruption as well as product rationalization activities related to our objective of focusing on higher-margin, non-commoditized products. Wood product sales increased 0.8% in the fourth quarter of 2020 to $13.4 million, compared to $13.3 million in the fourth quarter of 2019.
Gross margin was $37.1 million in the fourth quarter of 2020, compared to $35.6 million in the fourth quarter of 2019. As a percentage of sales, gross margin was 20.1% in the fourth quarter of 2020, compared to 19.7% in the fourth quarter of 2019.
Operating expenses decreased $7.5 million, or 17.2%, to $36.1 million, or 19.6% of net sales, in the fourth quarter of 2020, compared to $43.6 million, or 24.2%, of net sales in the fourth quarter of 2019.
As a result of the foregoing factors, we reported net income from continuing operations of $0.3 million for the quarter ended December 31, 2020, compared to net loss of $9.4 million for the quarter ended December 31, 2019.
Adjusted EBITDA was $2.4 million for the fourth quarter of 2020, compared to $(4.9) million for the fourth quarter of 2019.
Fiscal 2020 Compared to Fiscal 2019
Net sales from continuing operations were $792.3 million in 2020, a decrease of $19.7 million, or approximately 2.4%, compared to $812.0 million in 2019.
Net sales in our major product categories changed as follows in 2020 from 2019:
- Millwork sales decreased 7.2% to $357.0 million,
- Building product sales increased 3.4% to $379.0 million, and
- Wood products decreased 7.4% to $56.3 million.
Gross margin decreased $2.6 million, or 1.6%, to $159.4 million in 2020 as compared to $162.0 million in 2019.
Operating expenses, excluding a restructuring charge of $1.5 million and goodwill impairment charge of $9.5 million, decreased $20.0 million, or 12.1%, to $145.6 million, or 18.4% of net sales, in 2020, compared to $165.6 million, or 20.4% of net sales, in 2019.
As a result of the foregoing factors, we reported a net loss from continuing operations of $0.9 million in 2020 as compared to a net loss of $21.3 million in 2019.
Adjusted EBITDA was $20.1 million in 2020 and $5.2 million in 2019. Adjusted EBITDA is a non-GAAP measurement. See below reconciliation of Non-GAAP Financial Measures.
About Huttig
Huttig, currently in its 137th 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 25 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: investor@huttig.com
Learn more at www.huttig.com
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