Huttig Building Products, Inc. Announces Record First Quarter Net Earnings
Company sees net sales of $214.7 million for quarter.
First Quarter 2021 Highlights (as compared to prior year quarter):
- Net sales of $214.7 million compared to $203.0 million
- Gross margins increased to 21.3% compared to 20.1%
- Net earnings increased to $8.1 million compared to a loss of $8.9 million, which included a $9.5 million goodwill impairment charge
- Total liquidity increased to $85.4 million compared to $55.4 million
- Reduced indebtedness by $34.7 million
- Adjusted EBITDA increased to $10.5 million compared to $3.5 million
Huttig Building Products, Inc. (“Huttig” or the “Company”) (NASDAQ: HBP), a
leading domestic distributor of millwork, building materials and wood products, has reported financial results for the first quarter ended March 31, 2021.
“The continued execution of our strategy combined with strong demand in residential construction resulted in substantial gains in our first quarter operating results,” said Jon Vrabely, President and CEO of Huttig. “Our focus on profitable sales growth of our
strategic product categories and disciplined management of the expense structure contributed to record first quarter operating results as a public company. Our performance would not be possible without the commitment and dedication of our entire team of
associates. I am proud of the entire organization as our collective efforts have created a very bright future for our company and our stakeholders.”
Results of Operations
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Net sales were $214.7 million in the first quarter of 2021, which were $11.7 million, or 5.8%, higher than the first quarter of 2020. The increase in net sales was primarily attributable to an increase in residential construction activity. Income growth in the first quarter of 2021 was moderated in comparison to the first quarter of 2020 by restructuring activities announced in the second quarter of last year, and by our 2020 product rationalization program. We also continued to experience supply chain disruption across several key product categories which mitigated revenue growth, although first quarter sales were favorably impacted by pricing for certain products we sell.
Millwork sales of $96.2 million in the first quarter were unchanged from the first quarter of last year. Millwork is the category most impacted by supply chain disruption and was also impacted by 2020 restructuring and product rationalization activities. Building products sales increased 10.0% in the first quarter of 2021 to $101.9 million, compared to $92.6 million in the first quarter of 2020, with first quarter 2021 sales benefitting from consistent high levels of demand for certain product lines within the category, including certain strategic product lines.
The year-over-year sales growth in this category was mitigated by supply chain disruption and by product rationalization activities related to our objective of focusing on higher-margin, non-commoditized products. Wood product sales increased 16.9% in the first quarter of 2021 to $16.6 million, compared to $14.2 million in the first quarter of 2020.
Gross margin was $45.7 million in the first quarter of 2021, compared to $40.9 million in the first quarter of 2020. As a percentage of sales, gross margin was 21.3% in the first quarter of 2021, compared to 20.1% in the first quarter of 2020. Gross margins were favorably impacted by our continued focus on non-commoditized strategic product lines, which carry higher margins, as well as improved pricing management.
The increase in our gross margin percentage from these actions was more pronounced considering we had a disproportionate increase in direct sales in the first quarter of 2021 as compared to 2020. These sales were at lower margins as compared to warehouse shipments.
Operating expenses decreased $2.1 million to $36.9 million in the first quarter of 2021, compared to $39.0 million in the first quarter of 2020. Personnel costs decreased $0.6 million, or 2.7%, reflecting workforce and other adjustments made to our cost structure. These cost reductions were partially offset by higher incentive compensation driven by improved operating results. Non-personnel costs decreased $1.5 million, or 8.9%.
Operationally, first quarter discretionary spending such as travel and advertising was curtailed, due in part to the COVID-19 pandemic. Additionally, our bad debt provision improved in the first quarter of 2021 as pandemic-related disruption began to subside. Higher insurance costs for property and vehicles partially offset the reduction in operating costs. Overall, the cost structure was levered against higher sales volume.
As a percentage of net sales, operating expenses were 17.2% in the first quarter of 2021 compared to 19.2% in the first quarter of 2020.
Learn more at www.huttig.com.
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