ST. LOUIS, MO -- 07/30/2008 -- Huttig Building Products, Inc. (NYSE: HBP), a leading domestic distributor of millwork, building materials and wood products, today announced results for the second quarter and six months ended June 30, 2008.
Second Quarter Results
The Company reported a net loss of $2.5 million, or ($0.12) per diluted share, compared to net income of $1.1 million, or $0.05 per diluted share, in second quarter 2007. Net sales declined 18% to $195.4 million, compared to $239.5 million in the prior year quarter. The operating loss was $2.8 million compared to operating income of $2.9 million in the prior year quarter. Second quarter 2008 and 2007 operating results reflected $1.0 million and $0.4 million, respectively, of branch closing costs and related inventory impairment and liquidations. Second quarter 2007 also included a $1.0 million pre-tax gain from the sale of a facility. Excluding these items from both periods, second quarter 2008 operating loss totaled $1.8 million compared to operating income of $2.3 million in the prior year quarter, gross profit margin was 19.0% versus 19.1%, and operating expenses declined by 10%.
Net sales continued to be impacted by the 30% year over year decline in average annualized housing starts for the quarter, to approximately 1.02 million, from 1.46 million, in the 2007 second quarter.
Commentary
"In this challenging environment, we continue to focus on controlling expenses, improving operating efficiencies, reducing inventories, generating cash, and gaining market share," said Jon Vrabely, President and CEO. "In the 2008 second quarter, we continued to make progress in each of these areas, particularly with respect to inventory reduction, cash generation and market share growth. During the quarter, we reduced inventory levels by $14 million, and our June 30, 2008 inventory level of $77.8 million was 24% below prior year. For the quarter, we also generated over $20 million of cash from operating activities of continuing operations. Our 2008 second quarter sales decline of 18%, year-over-year, is well below the 30% decline in housing starts indicating we continue to gain market share, particularly in specialty building products where sales were level with the prior year quarter."
"As of the end of the June 2008 quarter, we had cut annualized operating expenses by more than $40 million since the June 2006 quarter by consolidating facilities, reducing headcount and lowering infrastructure cost. Compared to the prior year quarter, our days sales outstanding decreased 4%, to 32.8 days; and bank debt, net of cash, dropped 25% to $26.7 million, from $35.8 million a year ago. Total debt to total capitalization, net of cash, improved to 23%, compared to 26% a year ago. Finally, we ended the 2008 second quarter with $62.8 million of availability under our revolving credit facility in addition to outstanding borrowings, an increase of almost $10 million since the end of the 2008 first quarter."
"Overall, we are pleased with our progress, but recognize there is more to be done."
Six Months Results
For the six months ended June 30, 2008, the Company's net loss from continuing operations of $12.2 million, or ($0.58) per diluted share, compares to a net loss of $2.1 million, or ($0.10) per diluted share, in the prior year period, as net sales declined 22% to $362.2 million compared to $461.9 million. The operating loss was $16.1 million compared to an operating loss of $0.9 million in the prior year period. The 2008 and 2007 period operating results included $1.3 million and $3.7 million, respectively, of branch closing costs and related inventory impairment and liquidations. In addition, the 2008 six month results were impacted by a $7.0 goodwill impairment charge, while the corresponding 2007 period included $1.5 million in pre-tax gains from the sale of two facilities. Excluding these items, the Company experienced an operating loss of $7.8 million during the first six months of 2008 compared to operating income of $1.3 million in the year ago period.
Conference Call
Management will host a conference call to discuss second quarter 2008 financial results on Thursday, July 31, 2008, at 11 AM Eastern Time (10 AM Central Time). To access the call, please dial 888-694-4702 and enter pin number 54785796. A replay will be available through August 14, 2008 by dialing 800-642-1687 and entering the same pin number.
About Huttig
Huttig Building Products, Inc., currently in its 123rd 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 34 distribution centers serving 44 states. The Company's wholesale distribution centers sell principally to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes.
Forward-Looking Statements
This press release contains forward-looking information as defined by the Private Securities Litigation Reform Act of 1995. This information presents management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are known and unknown factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking information. Such known factors are detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission and in other reports filed by the Company with the Securities and Exchange Commission from time to time.
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(In Millions, Except Share and Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $ 195.4 $ 239.5 $ 362.2 $ 461.9
Cost of sales 158.7 193.8 293.4 374.4
---------- ---------- ---------- ----------
Gross margin 36.7 45.7 68.8 87.5
Operating expenses 39.6 43.8 78.0 89.9
Goodwill impairment - - 7.0 -
Gain on disposal of capital
assets (0.1) (1.0) (0.1) (1.5)
---------- ---------- ---------- ----------
Operating income (loss) (2.8) 2.9 (16.1) (0.9)
Interest expense, net 0.7 1.2 1.4 2.3
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income taxes (3.5) 1.7 (17.5) (3.2)
Provision (benefit) for
income taxes (1.1) 0.6 (5.3) (1.1)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations (2.4) 1.1 (12.2) (2.1)
Loss from discontinued
operations, net of taxes (0.1) - (0.1) (0.2)
---------- ---------- ---------- ----------
Net income (loss) $ (2.5) $ 1.1 $ (12.3) $ (2.3)
========== ========== ========== ==========
Net income (loss) from
continuing operations per
share - basic and diluted $ (0.11) $ 0.05 $ (0.58) $ (0.10)
Net loss from discontinued
operations per share -
basic and diluted (0.01) - (0.01) (0.01)
---------- ---------- ---------- ----------
Net income (loss) loss per
share - basic and diluted $ (0.12) $ 0.05 $ (0.59) $ (0.11)
========== ========== ========== ==========
Basic shares outstanding 20,907,718 20,517,897 20,863,568 20,456,155
Diluted shares outstanding 20,907,718 20,785,902 20,863,568 20,456,155
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Data)
June 30, December 31, June, 30
2008 2007 2007
--------- --------- ---------
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 6.2 $ 1.8 $ 7.1
Trade accounts receivable, net 70.3 56.1 89.5
Inventories, net 77.8 88.7 102.1
Other current assets 5.6 13.6 7.8
--------- --------- ---------
Total current assets 159.9 160.2 206.5
--------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land 5.6 5.6 5.7
Building and improvements 30.3 30.2 30.7
Machinery and equipment 29.5 30.0 31.7
--------- --------- ---------
Gross property, plant and equipment 65.4 65.8 68.1
Less accumulated depreciation 40.2 39.2 40.1
--------- --------- ---------
Property, plant and equipment, net 25.2 26.6 28.0
--------- --------- ---------
OTHER ASSETS:
Goodwill, net 11.2 18.3 18.9
Other 4.2 5.1 5.6
Deferred income taxes 7.9 2.5 2.3
--------- --------- ---------
Total other assets 23.3 25.9 26.8
--------- --------- ---------
TOTAL ASSETS $ 208.4 $ 212.7 $ 261.3
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 0.2 $ 1.2 $ 1.4
Trade accounts payable 54.6 50.1 80.6
Deferred income taxes 5.5 5.3 4.7
Accrued compensation 5.0 6.3 4.9
Other accrued liabilities 13.3 15.9 12.7
--------- --------- ---------
Total current liabilities 78.6 78.8 104.3
--------- --------- ---------
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities 33.5 25.4 43.8
Other non-current liabilities 3.4 4.2 3.7
--------- --------- ---------
Total non-current liabilities 36.9 29.6 47.5
--------- --------- ---------
SHAREHOLDERS' EQUITY
Preferred shares; $.01 par (5,000,000
shares authorized) - - -
Common shares; $.01 par (50,000,000
shares authorized: 21,566,630,
20,968,445 and 20,968,445 shares issued
at June 30, 2008, December 31, 2007 and
June 30, 2007, respectively) 0.2 0.2 0.2
Additional paid-in capital 36.8 36.1 35.2
Retained earnings 55.9 68.2 74.1
Less: Treasury shares, at cost (0, 32,219
and 6,636 shares at June 30, 2008,
December 31, 2007 and June 30, 2007,
respectively) - (0.2) -
--------- --------- ---------
Total shareholders' equity 92.9 104.3 109.5
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 208.4 $ 212.7 $ 261.3
========= ========= =========
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
UNAUDITED
(In Millions)
Common
Shares
Outstan- Addit- Total
ding, ional Treasury Share-
at Par Paid-In Retained Shares holders'
Value Capital Earnings at Cost Equity
--------- -------- -------- -------- --------
--------
Balance at January 1,
2008 $ 0.2 $ 36.1 $ 68.2 $ (0.2) $ 104.3
--------
Net loss (12.3) (12.3)
--------
Comprehensive loss (12.3)
--------
Restricted stock issued,
net of forfeitures (0.2) 0.2 -
Stock options exercised, net 0.1 0.1
Stock compensation 0.8 0.8
--------- -------- -------- -------- --------
Balance at June 30, 2008 $ 0.2 $ 36.8 $ 55.9 $ - $ 92.9
========= ======== ======== ======== ========
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Cash Flows From Operating
Activities:
Net income (loss) $ (2.5) $ 1.1 $ (12.3) $ (2.3)
Adjustments to reconcile net
income (loss) to cash provided
by (used in) operating activities:
Net loss from discontinued
operations 0.1 - 0.1 0.2
Depreciation and amortization 1.1 1.4 2.2 2.7
Stock compensation 0.4 0.4 0.8 0.9
Goodwill impairment - - 7.0 -
Other adjustments (1.3) (1.1) (5.6) (1.4)
Changes in operating assets and
liabilities:
Trade accounts receivable (0.4) 2.0 (14.2) (15.4)
Inventories 14.3 1.5 10.9 (4.8)
Trade accounts payable 3.2 8.6 4.5 18.5
Other 5.5 6.9 3.4 1.2
-------- -------- -------- --------
Total net cash provided by (used
in) operating activities 20.4 20.8 (3.2) (0.4)
-------- -------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures (0.4) (0.4) (0.8) (2.0)
Proceeds from disposition of
capital assets 0.4 1.9 0.5 2.9
-------- -------- -------- --------
Total cash provided by (used
in) investing activities - 1.5 (0.3) 0.9
-------- -------- -------- --------
Cash Flows From Financing Activities:
Borrowings and payments of debt,
net (17.0) (20.6) 7.1 (0.4)
Exercise of stock options 0.1 0.9 0.8 0.9
-------- -------- -------- --------
Total cash provided by (used
in) financing activities (16.9) (19.7) 7.9 0.5
-------- -------- -------- --------
Net increase in cash and equivalents 3.5 2.6 4.4 1.0
Cash and equivalents, beginning of
period 2.7 4.5 1.8 6.1
-------- -------- -------- --------
Cash and equivalents, end of period $ 6.2 $ 7.1 $ 6.2 $ 7.1
======== ======== ======== ========
Supplemental Disclosure of Cash
Flow Information:
Interest paid $ 0.6 $ 1.2 $ 1.2 $ 2.3
Income taxes refunded 4.2 4.0 5.2 4.0
Cash received from exercise of
stock options - 0.6 0.4 0.6
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS WORKSHEET
(UNAUDITED)
(In Millions)
Three Months Ended Six Months Ended
June 30, 2008 June 30, 2008
------------------------- -------------------------
As Charges As Charges
Reported /Gain Adjusted Reported /Gain Adjusted
------- ------- ------- ------- ------- -------
Net sales $ 195.4 $ 195.4 $ 362.2 $ 362.2
Gross margin 36.7 0.5 37.2 68.8 0.3 69.1
Operating expenses 39.6 (0.5) 39.1 78.0 (1.0) 77.0
Goodwill impairment - - - 7.0 (7.0) -
Gain on disposal of
capital assets (0.1) - (0.1) (0.1) - (0.1)
------- ------- ------- ------- ------- -------
Operating profit
(loss) (2.8) 1.0 (1.8) (16.1) 8.3 (7.8)
Gross margin 18.8% 19.0% 19.0% 19.1%
Operating expenses
margin 20.3% 20.0% 21.5% 21.3%
Operating profit
(loss) margin -1.4% -0.9% -4.4% -2.2%
Three Months Ended Six Months Ended
June 30, 2007 June 30, 2007
------------------------- -------------------------
As Charges As Charges
Reported /Gain Adjusted Reported /Gain Adjusted
------- ------- ------- ------- ------- -------
Net sales $ 239.5 $ 239.5 $ 461.9 $ 461.9
Gross margin 45.7 0.1 45.8 87.5 1.0 88.5
Operating expenses 43.8 (0.3) 43.5 89.9 (2.7) 87.2
Gain on disposal of
capital assets (1.0) 1.0 - (1.5) 1.5 -
------- ------- ------- ------- ------- -------
Operating profit
(loss) 2.9 (0.6) 2.3 (0.9) 2.2 1.3
Gross margin 19.1% 19.1% 18.9% 19.2%
Operating expenses
margin 18.3% 18.2% 19.5% 18.9%
Operating profit
(loss) margin 1.2% 1.0% -0.2% 0.3%
Contacts Steve Anreder Steven.Anreder@Anreder.Com Gary Fishman Gary.Fishman@Anreder.Com both of Anreder & Company for Huttig Building Products, Inc. +1-212-532-3232