ST. LOUIS, MO -- 10/28/2008 -- Huttig Building Products, Inc. (NYSE: HBP), a leading domestic distributor of millwork, building materials and wood products, today announced results for the third quarter and nine months ended September 30, 2008.
Third Quarter Results
Third quarter 2008 net sales continued to be impacted by the 32% year over year decline in average annualized housing starts for the quarter, to approximately 0.88 million, from 1.30 million in the 2007 third quarter. Net sales declined 22% to $182.8 million, compared to $233.0 million in the prior year quarter. The Company reported a net loss of $7.7 million, or ($0.37) per diluted share, compared to a net loss of $0.1 million, or breakeven per share, in third quarter 2007. The operating loss was $6.2 million compared to operating income of $1.0 million in the prior year quarter. Third quarter 2008 operating results reflected $2.0 million of branch shut down costs and related inventory write down and liquidation charges associated with the closing of the Springfield, MO and Fredericksburg, VA branches. Excluding these items, third quarter 2008 operating loss totaled $4.2 million and the gross profit margin of 18.5% was slightly below 18.6% in the year ago quarter. Net income was also affected by $0.9 million of tax expense to bring the year-to-date tax benefit in line with a lower anticipated effective tax rate.
"Despite the tremendously challenging market in the 2008 third quarter, we continued to make progress strengthening the balance sheet and enhancing our ability to weather this downturn," said Jon Vrabely, President and CEO. "Survival and liquidity are the immediate challenges facing many in the industry today. Fortunately, due to our aggressive actions over the past two years, we feel that we are better positioned than many in the building industry. We continue to balance the short-term need to aggressively manage the cost structure with our long-term desire to preserve our value proposition."
Mr. Vrabely noted the following:
- -- Reduced Operating Expenses: Excluding branch shut down charges, third quarter 2008 operating expenses reduced 10% year over year. Huttig has reduced annualized operating expenses by more than $45 million or over 23% since June 2006, when the housing market began to fall. - -- Lowered Inventory: Huttig's September 30, 2008 inventory level of $70.8 million represents a 28% reduction year over year, and a 9% reduction from June 30, 2008. The substantially reduced inventory levels reflect a concerted effort to reduce the investment in slower moving items, generating cash to reduce debt and freeing capital to invest in faster moving inventory and new products. - -- Generated Cash and Lowered Debt: Despite the operating loss, the Company generated $2.6 million in cash in the September 2008 quarter compared to $4.0 million in the year ago period. Bank debt, net of cash, of $24.9 million at September 30, 2008 was 25% lower year over year and 7% below June 30, 2008. Total debt to total capitalization, net of cash, at September 30, 2008 improved to 23% from 24% in the year ago period. - -- Increased Liquidity: As previously announced, in July 2008 Huttig added a real estate component to the borrowing base under its credit facility which at the time provided approximately $25 million of additional borrowing capacity. As a result of the Company's continued effort to generate cash and the increased liquidity from the increase in the borrowing base, Huttig had $76.4 million of availability under its revolving credit facility at September 30, 2008, in addition to outstanding borrowings. - -- Share and Market Position: Sales for the third quarter were down 22% versus prior year and housing starts were down 32%. We believe this is the eighth consecutive quarter that Huttig's sales have outperformed the market. In addition, with the closure or consolidation of 16 small or underperforming locations since June of 2006, Huttig believes it now holds the number 1 or 2 market share position for the products its sells in a significant portion of the markets it services.
Nine Months Results
For the nine months ended September 30, 2008, the Company's net loss from continuing operations of $19.9 million, or ($0.95) per diluted share, compares to a net loss from continuing operations of $2.2 million, or ($0.11) per diluted share, in the prior year period. Net sales declined 22% to $545.0 million compared to $694.9 million. The operating loss was $22.3 million compared to an operating profit of $0.1 million in the prior year period. The 2008 and 2007 period operating results included $3.2 million and $3.7 million, respectively, of branch closing costs and related charges for inventory write downs and liquidations. In addition, 2008 nine month results were impacted by a $7.1 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 $12.0 million during the first nine months of 2008 compared to operating income of $2.3 million in the year ago period.
Conference Call
Management will host a conference call to discuss third quarter 2008 financial results on Friday, October 31, 2008, at 11 AM Eastern Time (10 AM Central Time). To access the call, dial 888-694-4702 and enter pin number 65128503. A replay will be available through November 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 31 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 Nine Months Ended September 30, September 30, ---------------------- ---------------------- 2008 2007 2008 2007 ---------- ---------- ---------- ---------- Net sales $ 182.8 $ 233.0 $ 545.0 $ 694.9 Cost of sales 149.8 189.7 443.2 564.0 ---------- ---------- ---------- ---------- Gross margin 33.0 43.3 101.8 130.9 Operating expenses 39.2 42.3 117.2 132.3 Goodwill impairment 0.1 - 7.1 - Gain on disposal of capital assets (0.1) - (0.2) (1.5) ---------- ---------- ---------- ---------- Operating income (loss) (6.2) 1.0 (22.3) 0.1 Interest expense, net 0.6 1.1 2.0 3.4 ---------- ---------- ---------- ---------- Loss from continuing operations before income taxes (6.8) (0.1) (24.3) (3.3) Provision (benefit) for income taxes 0.9 - (4.4) (1.1) ---------- ---------- ---------- ---------- Loss from continuing operations (7.7) (0.1) (19.9) (2.2) Loss from discontinued operations, net of taxes - - (0.1) (0.2) ---------- ---------- ---------- ---------- Net loss $ (7.7) $ (0.1) $ (20.0) $ (2.4) ========== ========== ========== ========== Net loss from continuing operations per share - basic and diluted $ (0.37) $ - $ (0.95) $ (0.11) Net loss from discontinued operations per share - basic and diluted - - (0.01) (0.01) ---------- ---------- ---------- ---------- Net loss per share - basic and diluted $ (0.37) $ - $ (0.96) $ (0.12) ========== ========== ========== ========== Basic and diluted shares outstanding 20,980,795 20,632,439 20,902,929 20,515,563 HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Per Share Data) September 30, December 31, September 30, 2008 2007 2007 ------------- ------------ ------------- (unaudited) (unaudited) ASSETS CURRENT ASSETS: Cash and equivalents $ 7.1 $ 1.8 $ 12.0 Trade accounts receivable, net 64.8 56.1 84.0 Inventories, net 70.8 88.7 98.1 Other current assets 5.0 13.6 9.5 ------------- ------------ ------------- Total current assets 147.7 160.2 203.6 ------------- ------------ ------------- PROPERTY, PLANT AND EQUIPMENT Land 5.6 5.6 5.7 Building and improvements 30.4 30.2 31.0 Machinery and equipment 29.6 30.0 30.1 ------------- ------------ ------------- Gross property, plant and equipment 65.6 65.8 66.8 Less accumulated depreciation 40.8 39.2 39.3 ------------- ------------ ------------- Property, plant and equipment, net 24.8 26.6 27.5 ------------- ------------ ------------- OTHER ASSETS: Goodwill, net 11.2 18.3 18.9 Other 3.9 5.1 5.5 Deferred income taxes 6.8 2.5 2.5 ------------- ------------ ------------- Total other assets 21.9 25.9 26.9 ------------- ------------ ------------- TOTAL ASSETS $ 194.4 $ 212.7 $ 258.0 ============= ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 0.4 $ 1.2 $ 0.9 Trade accounts payable 49.2 50.1 70.6 Deferred income taxes 5.3 5.3 5.1 Accrued compensation 5.1 6.3 6.2 Other accrued liabilities 13.7 15.9 15.3 ------------- ------------ ------------- Total current liabilities 73.7 78.8 98.1 ------------- ------------ ------------- NON-CURRENT LIABILITIES: Long-term debt, less current maturities 32.3 25.4 45.7 Other non-current liabilities 2.9 4.2 4.4 ------------- ------------ ------------- Total non-current liabilities 35.2 29.6 50.1 ------------- ------------ ------------- SHAREHOLDERS' EQUITY Preferred shares; $.01 par (5,000,000 shares authorized) - - - Common shares; $.01 par (50,000,000 shares authorized: 21,561,630, 20,968,445 and 20,968,445 shares issued at September 30, 2008, December 31, 2007 and September 30, 2007, respectively) 0.2 0.2 0.2 Additional paid-in capital 37.1 36.1 35.6 Retained earnings 48.2 68.2 74.0 Less: Treasury shares, at cost (0, 32,219 and 9,386 shares at September 30, 2008, December 31, 2007 and September 30, 2007, respectively) - (0.2) - ------------- ------------ ------------- Total shareholders' equity 85.5 104.3 109.8 ------------- ------------ ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 194.4 $ 212.7 $ 258.0 ============= ============ ============= HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY UNAUDITED (In Millions) Common Shares Outstanding, Additional Treasury Total at Par Paid-In Retained Shares, Shareholders' Value Capital Earnings at Cost Equity ---------- --------- --------- --------- --------- Balance at January 1, 2008 $ 0.2 $ 36.1 $ 68.2 $ (0.2) $ 104.3 --------- Net loss (20.0) (20.0) --------- Comprehensive loss (20.0) --------- Restricted stock issued, net of forfeitures (0.2) 0.2 - Stock options exercised, net 0.1 0.1 Stock compensation 1.1 1.1 ---------- --------- --------- --------- --------- Balance at September 30, 2008 $ 0.2 $ 37.1 $ 48.2 $ - $ 85.5 ========== ========= ========= ========= ========= HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (In Millions) Three Months Nine Months Ended Ended September 30, September 30, ---------------- ---------------- 2008 2007 2008 2007 ------- ------- ------- ------- Cash Flows From Operating Activities: Net loss $ (7.7) $ (0.1) $ (20.0) $ (2.4) Adjustments to reconcile net loss to net cash provided by operating activities: Net loss from discontinued operations - - 0.1 0.2 Depreciation and amortization 1.2 1.1 3.4 3.8 Stock compensation 0.4 0.4 1.2 1.3 Impairment of long-lived assets 0.3 - 7.3 0.5 Other adjustments 0.9 0.5 (4.7) (0.9) Changes in operating assets and liabilities: Trade accounts receivable 5.5 5.5 (8.7) (9.9) Inventories 7.0 4.0 17.9 (0.8) Trade accounts payable (5.4) (10.0) (0.9) 8.5 Other 0.4 2.6 3.8 3.3 ------- ------- ------- ------- Total net cash provided by (used in) operating activities 2.6 4.0 (0.6) 3.6 ------- ------- ------- ------- Cash Flows From Investing Activities: Capital expenditures (0.9) (0.6) (1.7) (2.6) Proceeds from disposition of capital assets 0.1 0.1 0.6 3.0 ------- ------- ------- ------- Total cash provided by (used in) investing activities (0.8) (0.5) (1.1) 0.4 ------- ------- ------- ------- Cash Flows From Financing Activities: Borrowings and payments of debt, net (1.0) 1.3 6.1 0.9 Exercise of stock options 0.1 0.1 0.9 1.0 ------- ------- ------- ------- Total cash provided by (used in) financing activities (0.9) 1.4 7.0 1.9 ------- ------- ------- ------- Net increase in cash and equivalents 0.9 4.9 5.3 5.9 Cash and equivalents, beginning of period 6.2 7.1 1.8 6.1 ------- ------- ------- ------- Cash and equivalents, end of period $ 7.1 $ 12.0 $ 7.1 $ 12.0 ======= ======= ======= ======= Supplemental Disclosure of Cash Flow Information: Interest paid $ 0.6 $ 1.0 $ 1.8 $ 3.3 Income taxes refunded - - 5.2 4.0 Cash received from exercise of stock options - - 0.4 0.8 HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS WORKSHEET (UNAUDITED) (In Millions) Three Months Ended Nine Months Ended September 30, 2008 September 30, 2008 ---------------------------- ---------------------------- As Charges As Charges Reported /Gain Adjusted Reported /Gain Adjusted -------- -------- -------- -------- -------- -------- Net sales $ 182.8 $ 182.8 $ 545.0 $ 545.0 Gross margin 33.0 0.8 33.8 101.8 1.1 102.9 Operating expenses 39.2 (1.1) 38.1 117.2 (2.1) 115.1 Goodwill impairment 0.1 (0.1) - 7.1 (7.1) - Gain on disposal of capital assets (0.1) - (0.1) (0.2) - (0.2) -------- -------- -------- -------- -------- -------- Operating profit (loss) (6.2) 2.0 (4.2) (22.3) 10.3 (12.0) Gross margin 18.1% 18.5% 18.7% 18.9% Operating expenses margin 21.4% 20.8% 21.5% 21.1% Operating profit (loss) margin -3.4% -2.3% -4.1% -2.2% Three Months Ended Nine Months Ended September 30, 2007 September 30, 2007 ---------------------------- ---------------------------- As Charges As Charges Reported /Gain Adjusted Reported /Gain Adjusted -------- -------- -------- -------- -------- -------- Net sales $ 233.0 $ 233.0 $ 694.9 $ 694.9 Gross margin 43.3 - 43.3 130.9 1.0 131.9 Operating expenses 42.3 - 42.3 132.3 (2.7) 129.6 Gain on disposal of capital assets - - - (1.5) 1.5 - -------- -------- -------- -------- -------- -------- Operating profit (loss) 1.0 - 1.0 0.1 2.2 2.3 Gross margin 18.6% 18.6% 18.8% 19.0% Operating expenses margin 18.2% 18.2% 19.0% 18.7% Operating profit (loss) margin 0.4% 0.4% 0.0% 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