One Truck. Many Brands. One Solution. One Truck. Many Brands. One Solution. Southwestern Showcase Investor Conference Southwestern Showcase Investor Conference Jon Vrabely, COO, and Dave Fleisher, CFO Jon Vrabely, COO, and Dave Fleisher, CFO Dallas, Texas, November 15, 2006 Dallas, Texas, November 15, 2006 Exhibit 99.1 |
2 2 Forward-Looking Statements Forward-Looking Statements • With the exception of historical information, the matters disclosed in this presentation are forward-looking statements. • Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward- looking statements. Potential risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission, including its 2005 Form 10-K. • These forward-looking statements represent the Company’s judgment as of the date of this presentation. The Company disclaims any intent or obligation to update these forward-looking statements. |
3 3 Who We Are Who We Are • One of the largest national distributors of millwork, and the only national distributor that sells millwork, specialty building products and wood products • Products offered used for new residential construction and home improvement, remodeling and repair • Sell to pro dealers who service pro builders, remodeling contractors and DIY customers • Over 100,000 SKUs, with 42 distribution centers, serving 46 states, covering 80% of housing starts • 121 years old, 20.3 million shares outstanding • FY05 sales $1.1 billion, operating margin 2.9%, net margin 1.6%, $0.84 per share diluted • Strong balance sheet |
4 4 Where We Fit In Where We Fit In Two-Step Advantage • Many products don’t lend themselves to direct distribution • Two-step provides value-added services, economies of scale, reduced logistics costs Building Products Manufacturers Two-Step Distributors One-Step Pro Dealer Professional Home Builder / Remodeler Huttig plays a key role in moving products on just in time basis Huttig plays a key role in moving products on just in time basis |
5 5 Our Value Proposition Our Value Proposition • Products we sell – Save job site time and labor – Enable pro dealers to offer the variety of products that builders want • Service is key – Breadth and depth of SKUs – Delivering the right product at the right time • National footprint – Enables us to service a growing number of national pro dealers and national vendors |
6 6 The Challenge Today The Challenge Today • Starts have fallen dramatically – 3Q06: 1.7 million annualized rate – 2Q06: 1.9 million annualized rate – 3Q05: 2.1 million annualized rate • Impact on Huttig 9M06 vs. 9M05 Performance – Sales up 5% to $872 million – Gross profit margin 18.5% vs. 19.1% – Operating loss of ($1.5) million vs. profit of $26.0 million – 3Q06 includes $17.2 million in charges – 4Q06 projected to include $1.4 million in charges |
7 7 The Opportunity Tomorrow The Opportunity Tomorrow • Starts expected to average 2 million/year for next 10 years – Immigration – Baby boomer 2nd homes – Echo baby boomer 1st homes – Tear-downs • Continued consolidation among manufacturers, distributors, pro dealers, pro builders |
8 8 Pro-Active Steps Already Taken Pro-Active Steps Already Taken • $11+ million in annual savings – Closed or consolidated 5 branches – Cut 240 positions (11% of workforce) – Wrote off discontinued inventory – Eliminated costly Oracle project • More to come – Reducing inventory levels – Cutting rental expenses – Decreasing contract labor costs |
9 9 Disciplined & Focused Strategy Going Forward Disciplined & Focused Strategy Going Forward • Improve service proposition • Continue growth – Enhance customer targeting – Continue to pursue national vendor strategy – Acquisitions • Sharpen focus on financial performance |
10 10 Strong Balance Sheet to Pursue Growth Strong Balance Sheet to Pursue Growth • Strong current ratio • New $160M credit facility increases flexibility • $4.40 per share in tangible book value • Total debt to cap of 39.2% At 9/30/06 ($ in Millions) $308 Total Liabilities & Shareholders’ Equity $114 Total Shareholders’ Equity $70 Long-Term Liabilities $124 Current Liabilities $308 Total Assets $30 Other $31 PPE $247 Current Assets |
11 11 Outlook Outlook • FY06 – $1.1 billion sales – After 3Q and 4Q charges, expect modest operating loss (before interest, write-off of unamortized loan fees and taxes) • FY07 – Expand market share – Expand national vendor programs – Increase sales to national accounts – Improve operational discipline • FY08-09 – Market rebound – Better position to capture growth Long Term Objective • 5% operating margin |
One Truck. Many Brands. One Solution. One Truck. Many Brands. One Solution. The Details The Details |
13 13 Millwork 53% Building Materials 32% Lumber 15% Sales by Product Lines (9M06) Sales by Product Lines (9M06) |
14 14 Brands Pro Dealers Want Brands Pro Dealers Want |
15 15 Value-Added Services Value-Added Services Huttig is Nation’s Largest Wholesaler of Pre-Hung Doors • Pre-hanging saves hours of job site labor • Pre-hung doors generally sell for more than 20% margins |
16 16 National Branch Network National Branch Network |
17 17 Southeast 29% West 34% Northeast 24% Midwest 13% Sales by Region (9M06) Sales by Region (9M06) |
One Truck. Many Brands. One Solution. One Truck. Many Brands. One Solution. Growth Strategies Growth Strategies |
19 19 Improving Branch Service, Growth & Profitability Improving Branch Service, Growth & Profitability • Service, not just price, is critical to customers and their profitability • Big opportunity – One-third of branches great service – One-third OK – One-third need improvement • Implementing “best practices” throughout the branch network • Improving customer targeting • P&L managers now in every branch |
20 20 National Vendor Strategy National Vendor Strategy • National distribution rights to most popular brands in key categories • Provides benefits to both manufacturers and customers • Enables Huttig to increase sales to national, regional and local accounts |
21 21 National Account Strategy National Account Strategy Huttig’s National Account Sales 18% CAGR 2002-2005 Huttig’s National Account Sales 18% CAGR 2002-2005 |
22 22 Acquisitions Acquisitions • Objectives – New geographic locations – Expand share and leverage in existing markets – 12-15% ROI • Smaller Firms – Excellent acquisition opportunities – 49% market share – Mostly family-owned * Source: HCN Top 150 Distributor Scorecard July 2006. Excludes retailers and buying groups such as LMC, Do It Best, True Value, ACE Hardware and ENAP Building Products Building Products Distribution Market* Distribution Market* Top 10 Distributors (includes Huttig) $28 Billion 129 Smaller Firms $27 Billion |
23 23 Compelling Valuation Compelling Valuation 0.96 1.32 1.40 1.57 2.18 3.28 Huttig’s Price to Book at Significant Discount to Peers (11/07/06)* Huttig’s Price to Book at Significant Discount to Peers (11/07/06)* * Source: Capital IQ, division of Standard & Poor’s |
24 24 Conclusion Conclusion • Mid- to long-term housing forecast is strong – 2 million starts/year • No significant national competition in millwork – accounts for 50%+ of sales, requires value added services • National footprint along with national vendor strategy uniquely positions Huttig to capitalize on continued consolidation of national pro dealers and pro builders • Financial flexibility from new $160M credit facility enables Huttig to capitalize on value added growth and acquisition opportunities |
25 25 Investor Contacts Investor Contacts Steven Anreder (Steven.Anreder@Anreder.Com) Gary Fishman (Gary.Fishman@Anreder.Com) Anreder & Company Phone: 212.532.3232 Investor Relations Agency Ken Young, Treasurer Huttig Building Products, Inc. 555 Maryville University Drive St. Louis, MO 63141 Phone: 314.216.2648 Email: KYoung@Huttig.Com Huttig |
One Truck. Many Brands. One Solution. One Truck. Many Brands. One Solution. Southwestern Showcase Investor Conference Southwestern Showcase Investor Conference Jon Vrabely, COO, and Dave Fleisher, CFO Jon Vrabely, COO, and Dave Fleisher, CFO Dallas, Texas, November 15, 2006 Dallas, Texas, November 15, 2006 |