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 third quarter ended September 30, 2020, and provided a business
update on its response to the COVID-19 pandemic.
“As devastating as the impact of the COVID-19
global pandemic has been on our country, economy, and way of life,
it was the catalyst for many of the changes we made to our
business, contributing to our improved financial performance in the
quarter,” said Jon Vrabely, President and CEO of Huttig. “I am very
proud of our entire organization and our third quarter results in
what remains a very challenging environment. Sales in the quarter
approached prior year levels, and if not for the impact of
COVID-related supply chain challenges, internal restructuring
activities, and our continued product line rationalization
initiative, we estimate our sales in the quarter would have
exceeded prior year levels. We made meaningful improvements,
reducing our expenses and debt, and have adapted to a leaner
expense structure that establishes the foundation for a more
profitable future.”
|
Three Months Ended September 30, |
|
|
2020 |
|
|
|
2019 |
|
Net sales |
$ |
212.7 |
|
100.0 |
% |
|
$ |
215.7 |
|
100.0 |
% |
Gross margin |
|
42.7 |
|
20.1 |
% |
|
|
44.7 |
|
20.7 |
% |
Operating expenses |
|
35.8 |
|
16.8 |
% |
|
|
41.4 |
|
19.2 |
% |
Restructuring charges |
|
- |
|
0.0 |
% |
|
|
- |
|
0.0 |
% |
Operating income |
|
6.9 |
|
3.2 |
% |
|
|
3.3 |
|
1.5 |
% |
Income from continuing
operations |
|
6.1 |
|
2.9 |
% |
|
|
1.6 |
|
0.7 |
% |
Net income |
|
6.1 |
|
2.9 |
% |
|
|
1.6 |
|
0.7 |
% |
Earnings from continuing
operations per share- basic and diluted |
$ |
0.24 |
|
|
|
$ |
0.06 |
|
|
Net earnings per share - basic
and diluted |
$ |
0.24 |
|
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2020 |
|
|
|
2019 |
|
Net sales |
$ |
607.7 |
|
100.0 |
% |
|
$ |
631.6 |
|
100.0 |
% |
Gross margin |
|
122.3 |
|
20.1 |
% |
|
|
126.4 |
|
20.0 |
% |
Operating expenses |
|
109.5 |
|
18.0 |
% |
|
|
122.0 |
|
19.3 |
% |
Goodwill impairment |
|
9.5 |
|
1.6 |
% |
|
|
- |
|
0.0 |
% |
Restructuring charges |
|
1.5 |
|
0.2 |
% |
|
|
- |
|
0.0 |
% |
Operating income |
|
1.8 |
|
0.3 |
% |
|
|
4.4 |
|
0.7 |
% |
Loss from continuing
operations |
|
(1.2 |
) |
-0.2 |
% |
|
|
(11.9 |
) |
-1.9 |
% |
Net loss |
|
(1.2 |
) |
-0.2 |
% |
|
|
(11.9 |
) |
-1.9 |
% |
Loss from continuing
operations per share- basic and diluted |
$ |
(0.04 |
) |
|
|
$ |
(0.47 |
) |
|
Net loss per share - basic and
diluted |
$ |
(0.04 |
) |
|
|
$ |
(0.47 |
) |
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
Three Months Ended
September 30, 2020 Compared to
Three Months Ended
September 30, 2019
Although as anticipated, the impact of the
COVID-19 pandemic negatively affected our net sales, our COVID-19
readiness and response plan has driven an overall improvement in
our operating results relative to our initial pandemic
forecasts.
Net sales were $212.7 million in the third
quarter of 2020, which were $3.0 million, or 1.4%, lower than
the third quarter of 2019. The decline was attributable to a number
of factors, including pandemic-induced changes to the operating
environment resulting in supply chain disruption, labor shortages,
which have increased lead times to our customers for value-add
production sales, and the acceleration 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 plan, 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. While
some of our largest markets were significantly impacted early in
the pandemic, third quarter activity has recovered to levels
approaching prior year sales after posting a 12.1% year-over-year
decline in the second quarter of 2020. Demand has improved as
construction activity has rebounded.
Due primarily to supply chain disruption and
labor shortages, which lengthened lead times to our customers,
millwork sales decreased 8.8% to $90.8 million in the third
quarter, compared to $99.6 million in the comparable prior year
period. Building products sales increased 5.7% in the third quarter
of 2020 to $106.1 million, compared to $100.4 million in the third
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 mitigated by product rationalization activities related to our
objective of focusing on higher-margin, non-commoditized products.
Wood product sales increased 0.6% in the third quarter of 2020 to
$15.8 million, compared to $15.7 million in the third quarter of
2019.
Gross margin was $42.7 million in the third
quarter of 2020, compared to $44.7 million in the third quarter of
2019. As a percentage of sales, gross margin was 20.1% in the third
quarter of 2020, compared to 20.7% in the third quarter of 2019.
Gross margins were negatively impacted by product sales mix as
higher-margin, value-add categories were affected by supply chain
disruption and labor shortages, which extended our lead times.
Gross margins were also pressured by sales from branch closures and
product rationalization activities as we reduced inventories at
less than normal margins. While substantially complete,
restructuring activities will continue through the fourth quarter.
These initiatives, taken together, are expected to improve our
overall margin performance.
Operating expenses decreased $5.6 million to
$35.8 million in the third quarter of 2020, compared to
$41.4 million in the third quarter of 2019. Personnel costs
decreased $3.0 million, or 12.4%, as a result of expense reduction
actions taken in response to the COVID-19 pandemic, workforce
reductions, wage reductions, suspension of our matching
contributions under our employee benefit plan and restructuring
activities. These cost reductions were partially offset by higher
incentive compensation driven by improved operating results.
Non-personnel costs decreased $2.6 million, or 15.1%.
Operationally, travel, materials handling and other discretionary
spending was curtailed, due in part to the pandemic, and fuel costs
were lower due to lower volume and pricing. Additionally, bad debt
and insurance charges were lower than the third quarter of 2019. As
a percentage of sales, operating expenses were 16.8% in the third
quarter of 2020 compared to 19.2% in the third quarter of 2019.
Net interest expense was $0.8 million in the
third quarter of 2020 compared to $1.7 million in the third quarter
of 2019. The lower expense in the third quarter of 2020 reflects
both lower average debt outstanding and lower interest rates.
Income taxes were zero for the quarters ended
both September 30, 2020 and 2019.
As a result of the foregoing factors, we
reported net income of $6.1 million for the quarter ended
September 30, 2020, compared to net income of $1.6 million for the
quarter ended September 30, 2019.
Adjusted EBITDA was $8.5 million for the third
quarter of 2020, compared to $5.3 million for the third quarter of
2019. Adjusted EBITDA is a non-GAAP measurement. See the below
reconciliation of non-GAAP financial measures.
Nine Months
Ended September 30, 2020 Compared
to Nine Months Ended
September 30, 2019
Net sales were $607.7 million in the first nine
months of 2020, which were $23.9 million, or 3.8%, lower than the
first nine months of 2019. The decline was attributable to a
number of factors, including pandemic-induced changes to the
operating environment, resulting in supply chain disruption, labor
shortages, which have increased lead times to our customers for
value-add production sales, and the acceleration 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 plan, 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. While
some of our largest markets were significantly impacted early in
the pandemic, by the end of the third quarter, activity has
recovered to levels approaching prior year sales. Demand has
improved as construction activity has rebounded.
Due primarily to supply chain disruption and
labor shortages, which lengthened lead times to our customers,
millwork sales decreased 8.7% to $268.7 million in the first nine
months of 2020, compared to $294.3 million in the comparable prior
year period. Building products sales increased 2.2% in the first
nine months of 2020 to $296.1 million, compared to $289.7 million
in the first nine months 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 mitigated in the third quarter by
product rationalization activities related to our objective of
focusing on higher-margin, non-commoditized products. Wood product
sales decreased 9.9% in the first nine months of 2020 to $42.9
million, compared to $47.6 million in the first nine months of
2019.
Gross margin was $122.3 million in the first
nine months of 2020, compared to $126.4 million in the first nine
months of 2019. As a percentage of sales, gross margin was 20.1% in
the first nine months of 2020, compared to 20.0% in the first nine
months of 2019. The gross margin percentage reflects the
favorable impact from our focus on higher margin sales
opportunities, partially offset by sales product mix as higher
margin categories were affected by supply chain disruption and
labor shortages, which extended our lead times. Gross margins were
impacted in the third quarter by sales from branch closures and
product rationalization activities as we reduced inventories at
less than normal margins. While substantially complete,
restructuring activities will continue through the fourth quarter.
These initiatives, taken together, are expected to improve our
overall margin performance.
Operating expenses, excluding a restructuring
charge of $1.5 million and goodwill impairment charge of $9.5
million, decreased $12.5 million to $109.5 million in the first
nine months of 2020, compared to $122.0 million in the first nine
months of 2019. Personnel costs decreased $8.9 million as a
result of expense reduction actions taken in response to the
COVID-19 pandemic, including workforce reductions, wage reductions,
suspension of Company matching contributions under an employee
benefit plan and reduced medical claims. Non-personnel costs
decreased $3.6 million. Operationally, travel, materials handling
and other discretionary spending was curtailed, due in part to the
pandemic, and fuel costs were lower due to lower volume and price.
Additionally, bad debt charges were lower than the first nine
months of 2019. These reductions were partially offset by an
increase in worker’s compensation charges and other insurance
costs. As a percentage of sales, operating expenses, net of
restructuring, were 18.0% in the first nine months of 2020 compared
to 19.3% in the first nine months of 2019.
During the first quarter of 2020, a decline in
the market value of the Company’s public equity concurrent with,
and caused in part by, the COVID-19 pandemic triggered an
assessment of goodwill. As a result of the interim goodwill
impairment test, the Company recognized a goodwill impairment
charge of $9.5 million.
During the third quarter of 2020, we
substantially completed the closure of our Columbus, Ohio and
Selkirk, New York branch locations as part of our restructuring
efforts. We expect the full closure to be completed in the fourth
quarter of 2020. During the second quarter of 2020, we recorded a
restructuring charge of $1.5 million for closure-related expenses
for personnel, facility, equipment and working capital related
costs.
Net interest expense was $3.0 million in the
first nine months of 2020 compared to $5.2 million in the first
nine months of 2019. The lower expense in the first nine months of
2020 reflected both lower average borrowing and lower interest
rates.
Income taxes were zero for the first nine months
of 2020, as compared to income tax expense of $11.1 million for the
first nine months of 2019. In the nine months ended September 30,
2019, we recorded a tax charge of $11.8 million for an increase in
our deferred tax asset valuation allowance. The increase was
required as realization of the net deferred asset was determined to
no longer meet the more-likely-than-not criterion under U.S.
GAAP. Most of the Company’s net deferred tax asset is
comprised of federal tax loss carryforwards which will begin
expiring in 2030. The deferred tax valuation allowance is
assessed each reporting period and the amount of net deferred tax
assets considered realizable could be adjusted in future periods
based on the Company’s financial performance. The net
operating loss carryforwards remain available to offset future
taxable income.
As a result of the foregoing factors, we
reported a net loss of $1.2 million and $11.9 million for the nine
months ended September 30, 2020 and 2019, respectively. Adjusted
for the $9.5 million goodwill impairment charge and the $1.5
million restructuring charge in 2020, and adjusted for the $11.8
million tax charge in 2019, year-to-date net income was $9.8
million in 2020 compared to a net loss of $0.1 million in the first
nine months of 2019.
Adjusted EBITDA was $17.7 million for the nine
months ended September 30, 2020 compared to $10.1 million for the
comparable period of 2019. Adjusted EBITDA is a non-GAAP
measurement. See the below reconciliation of non-GAAP financial
measures.
Balance Sheet &
Liquidity
Cash provided by operating activities was
$35.6 million during the first nine months of 2020, compared
to cash usage of $10.5 million during the first nine months of
2019. The increase in cash provided by operating activities was
primarily attributable to improved operating results combined with
a $31.7 million reduction of inventory during the first nine months
of 2020 driven by our COVID-19 readiness and response plan,
compared to an $8.7 million increase in inventory over the first
nine months of 2019. Accounts payable increased $11.1 million and
$16.9 million in 2020 and 2019, respectively, primarily as a
result of seasonal inventory purchase activity, temporary
modifications to terms with key vendors during the first nine
months of 2020, and seasonal inventory purchases to support
cyclical sales activity during the first nine months of 2019. These
decreases in working capital were partially offset by an increase
in accounts receivable of $25.3 million during the first nine
months of 2020, compared to an increase of $19.5 million in
the prior-year corresponding period. The increase in accounts
receivable over the first nine months of 2020 was primarily a
result of cyclical increases in sales activity.
At September 30, 2020, we had $69.8 million
total liquidity, including excess committed borrowing availability
of $69.0 million and cash of $0.8 million. Total liquidity was
$46.5 million at September 30, 2019, including excess committed
borrowing availability of $43.6 million and cash of $2.9
million.
Impact and Company Response to
COVID-19
In March 2020, the World Health Organization
recognized the novel strain of coronavirus, COVID-19, as a
pandemic. The United States, various other countries and state and
local jurisdictions have imposed, among other things, travel and
business operation restrictions intended to limit the spread of the
COVID-19 virus and have advised or required individuals to adhere
to social distancing or limit or forego their time outside of their
home. This pandemic and the governmental response have resulted in
significant and widespread economic disruptions to, and uncertainty
in, the global and U.S. economies, including in the regions in
which the Company operates. In many jurisdictions, the Company and
its customers were deemed “essential businesses” and continued to
operate, reducing the impact of these restrictions on the Company’s
operations and results for the three and nine months ended
September 30, 2020. However, the Company’s management cannot
reliably predict the future impact of the pandemic and the
governmental response to the pandemic on the Company’s operations
and future results.
With the exception of closing two branches as a
part of the Company’s restructuring efforts, all of the Company’s
branches remain open and capable of meeting customer needs. The
Company has taken protective measures to guard the health and
well-being of its employees and customers, including the
implementation of social distancing requirements and remote work
options where possible. The Company has observed certain of its
customers reducing purchases and operations due to the impact of
COVID-19 and governmental restrictions. The pandemic has also had
an adverse impact to the supply chain, with some of the Company’s
vendors putting the Company on allocation as a result of reduced
inventory and labor shortages, resulting in longer lead-times for
the fulfillment of certain products. The Company adjusted its sales
forecast accordingly and previously took proactive measures to
protect its operating liquidity, including communicating with
vendors and customers, seeking modification of payment and other
terms of rental and procurement agreements, and monitoring its
accounts receivable. The Company has also reduced inventory levels
to meet an anticipated decrease in demand and has implemented cost
containment measures, including closing two of its branches,
lay-offs, wage reductions, suspension of matching contributions to
its qualified defined contribution plan, and eliminated
non-essential spend. Wages were reinstated for a majority of
employees in October 2020. However, our higher-salaried employees
and senior management team continue to have reduced compensation.
Additionally, the compensation paid to our Board of Directors
continues at a reduced level. The Company has also delayed or
cancelled certain planned, non-essential capital expenditures. The
Company has utilized its diverse overseas network to source
alternative suppliers of its proprietary products, while
simultaneously rationalizing its purchase volume to better align
with its current sales projections and to manage the supply chain.
The Company has also been proactively communicating with its
lenders regarding potential modification to the terms of its credit
facility should it be deemed necessary. While the Company believes
these actions have mitigated the impact of the pandemic on its
operations, it cannot provide any assurance that these actions will
be successful if the pandemic continues to have a longer-term
impact on the economy. As of September 30, 2020, the Company does
not have any material outstanding deferred obligations to suppliers
as deferred amounts have been substantially repaid.
Mill Road Capital Management
Unsolicited, Non-Binding Expression of Interest
On August 6, 2020, the Company received an
unsolicited, non-binding, expression of interest from Mill Road
Capital Management LLC (“Mill Road”), a private investment firm, to
acquire all of the outstanding common stock of the Company for
$2.75 per share, subject to certain contingencies. On October 14,
2020, the Company received a revised expression of interest from
Mill Road to acquire all of the outstanding common stock of the
Company for $4.00 per share, subject to certain
contingencies. The Company’s Board of Directors is reviewing
Mill Road’s proposal and will determine the course of action it
believes is in the best interests of all its stockholders. The
Board is always open to considering strategic opportunities to
maximize value and has retained Lincoln International as its
financial advisor to assist the Board in its review. The Company
does not intend to disclose any updates regarding its review of the
proposal until the Board of Directors makes a determination
requiring further disclosure. In the meantime, the Company
continues to focus on executing on its business plan to drive
shareholder value.
Conference
Call
Huttig Building Products, Inc. will host a
conference call Friday, October 30, 2020 at 11:00 a.m. Central
Time. Participants can listen to the call live via webcast by going
to the investor portion of Huttig’s website at www.huttig.com.
Participants can also access the live conference call via telephone
at (866) 238-1641 or (213) 660-0927 (international). The conference
ID for this call is 1596573.
About Huttig
Huttig, currently in its 136th 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.
Forward-Looking
Statements
This press release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. The words or phrases “will likely
result,” “are expected to,” “will continue,” “is anticipated,”
“believe,” “estimate,” “project” or similar expressions may
identify forward-looking statements, although not all
forward-looking statements contain such words. Statements made in
this press release looking forward in time, including, but not
limited to, statements regarding our current views with respect to
financial performance, future growth in the housing market,
distribution channels, sales, favorable supplier relationships,
inventory levels, the ability to meet customer needs, enhanced
competitive posture, strategic initiatives, absence of material
financial impact from litigation or contingencies, including
environmental proceedings, are included pursuant to the “safe
harbor” provision of the Private Securities Litigation Reform Act
of 1995.
These statements present management’s
expectations, beliefs, plans and objectives regarding our future
business and financial performance. We cannot guarantee that any
forward-looking statements will be realized or achieved. These
forward-looking statements are based on current projections,
estimates, assumptions and judgments, and involve known and unknown
risks and uncertainties. We disclaim any obligation to publicly
update or revise any of these forward-looking statements, whether
as a result of new information, future events or otherwise.
There are a number of factors, some of which are
beyond our control that could cause our actual results to differ
materially from those expressed or implied in the forward-looking
statements. These factors include, but are not limited to, the
following: the impact of global health concerns, including the
current COVID-19 pandemic, and governmental responses to such
concerns, on our business, results of operations, liquidity and
capital resources; the success of our growth initiatives; expansion
of the Huttig-Grip product line; the strength of new construction,
home improvement and remodeling markets and the recovery of the
homebuilding industry to levels consistent with the historical
annual average total housing starts from 1959 to 2019 of
approximately 1.4 million starts based on statistics tracked by the
U.S. Census Bureau; the cyclical nature of our industry; our
ability to comply with, and the restrictive effect of, the
financial covenant applicable under our credit facility; risks of
international suppliers; the ability to source alternative
suppliers in light of the COVID-19 pandemic; product liability
claims and other legal proceedings; commodity prices and demand in
light of the COVID-19 pandemic; stock market volatility; failure to
meet exchange listing requirements; stockholder activist
disruption; current or future litigation; information technology
failures, network disruptions, cybersecurity attacks or breaches in
data security; termination of key supplier relationships; our
failure to attract and retain key personnel; goodwill impairment;
deterioration of our customers’ creditworthiness or our inability
to forecast such deteriorations particularly in light of the
COVID-19 pandemic; the loss of a significant customer; the cost of
environmental compliance, including actual expenses we may incur to
resolve proceedings we are involved in arising out of a formerly
owned facility in Montana; competition with existing or new
industry participants; deterioration in our relationship with our
unionized employees, including work stoppages or other disputes;
funding requirements for multi-employer pension plans for our
unionized employees; significant uninsured claims; the integration
of any business we acquire and the liabilities of such businesses;
the seasonality of our operations; federal and state transportation
regulations; fuel cost increases; any limitations on our ability to
utilize our deferred tax assets to reduce future taxable income and
tax liabilities; risks associated with our private brands;
uncertainties resulting from changes to United States and foreign
laws, regulations and policies; the potential impact of changes in
tariff costs, including tariffs on imported steel and aluminum, and
potential anti-dumping or countervailing duties; and those set
forth under Part I, Item 1A – “Risk Factors” in the Company’s
Annual Report on Form 10-K for the year ended December 31,
2019, as supplemented by Form 8-K filed on April 27, 2020, Part II,
Item 1A – “Risk Factors” of the Quarterly Reports on Form 10-Q for
the quarter ended March 31, 2020 and September 30, 2020. These
factors may not constitute all factors that could cause actual
results to differ from those discussed in any forward-looking
statement. Accordingly, forward-looking statements should not be
relied upon as a predictor of actual results.
Non-GAAP
Financial Measures
Huttig supplements its reporting of net income
with the non-GAAP measurement of Adjusted EBITDA. This supplemental
information should not be considered in isolation or as a
substitute for GAAP measures.
The Company defines Adjusted EBITDA as net
income adjusted for interest, income taxes, depreciation and
amortization and other items as listed in the table below and
presents Adjusted EBITDA because it is a primary measure used by
management, and by similar companies in the industry, to evaluate
operating performance and Huttig believes it enhances investors’
overall understanding of the financial performance of our business.
Adjusted EBITDA is not a recognized term under GAAP and does not
purport to be an alternative to net income as a measure of
operating performance. Huttig compensates for the limitations of
using non-GAAP financial measures by using them to supplement GAAP
results to provide a more complete understanding of the factors
affecting the business. Because not all companies use identical
calculations, Huttig’s presentation of Adjusted EBITDA may not be
comparable to other similarly titled measures of other
companies.
Adjusted EBITDA
The following table presents a reconciliation of
net income (loss), the most directly comparable financial measure
under GAAP, to Adjusted EBITDA for the periods presented (in
millions):
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
|
2020 |
|
|
|
2019 |
|
Net income (loss) |
$ |
6.1 |
|
$ |
1.6 |
|
$ |
(1.2 |
) |
|
$ |
(11.9 |
) |
Interest expense, net |
|
0.8 |
|
|
1.7 |
|
|
3.0 |
|
|
|
5.2 |
|
Benefit from income taxes |
|
- |
|
|
- |
|
|
- |
|
|
|
11.1 |
|
Depreciation and
amortization |
|
1.2 |
|
|
1.5 |
|
|
3.9 |
|
|
|
4.1 |
|
Stock compensation
expense |
|
0.4 |
|
|
0.5 |
|
|
1.0 |
|
|
|
1.6 |
|
Goodwill impairment |
|
- |
|
|
- |
|
|
9.5 |
|
|
|
- |
|
Restructuring Charges |
|
- |
|
|
- |
|
|
1.5 |
|
|
|
- |
|
Adjusted EBITDA |
$ |
8.5 |
|
$ |
5.3 |
|
$ |
17.7 |
|
|
$ |
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HUTTIG BUILDING PRODUCTS, INC.
AND SUBSIDIARY |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
(in millions, except Per Share Data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
|
2020 |
|
|
|
2019 |
|
Net sales |
$ |
212.7 |
|
$ |
215.7 |
|
$ |
607.7 |
|
|
$ |
631.6 |
|
Cost of sales |
|
170.0 |
|
|
171.0 |
|
|
485.4 |
|
|
|
505.2 |
|
Gross margin |
|
42.7 |
|
|
44.7 |
|
|
122.3 |
|
|
|
126.4 |
|
Operating expenses |
|
35.8 |
|
|
41.4 |
|
|
109.5 |
|
|
|
122.0 |
|
Goodwill impairment |
|
— |
|
|
— |
|
|
9.5 |
|
|
|
— |
|
Restucturing charges |
|
— |
|
|
— |
|
|
1.5 |
|
|
|
— |
|
Operating income (loss) |
|
6.9 |
|
|
3.3 |
|
|
1.8 |
|
|
|
4.4 |
|
Interest expense, net |
|
0.8 |
|
|
1.7 |
|
|
3.0 |
|
|
|
5.2 |
|
Income (loss) from operations
before income taxes |
|
6.1 |
|
|
1.6 |
|
|
(1.2 |
) |
|
|
(0.8 |
) |
Income tax expense |
|
— |
|
|
— |
|
|
— |
|
|
|
11.1 |
|
Income (loss) from continuing
operations |
|
6.1 |
|
|
1.6 |
|
|
(1.2 |
) |
|
|
(11.9 |
) |
Loss from discontinued
operations, net of taxes |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
Net income (loss) |
$ |
6.1 |
|
$ |
1.6 |
|
$ |
(1.2 |
) |
|
$ |
(11.9 |
) |
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations per share- basic |
$ |
0.24 |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
$ |
(0.47 |
) |
Loss from discontinued
operations per share- basic |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
Net earnings (loss) per share
- basic |
$ |
0.24 |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
$ |
(0.47 |
) |
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations per share- diluted |
$ |
0.24 |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
$ |
(0.47 |
) |
Loss from discontinued
operations per share- diluted |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
Net income (loss) per share-
diluted |
$ |
0.24 |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
$ |
(0.47 |
) |
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic shares outstanding |
|
26.0 |
|
|
25.5 |
|
|
26.0 |
|
|
|
25.4 |
|
Diluted shares outstanding |
|
26.2 |
|
|
25.6 |
|
|
26.0 |
|
|
|
25.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HUTTIG BUILDING PRODUCTS, INC.
AND SUBSIDIARY |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited) |
(in millions) |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
September 30, |
|
2020 |
|
2019 |
|
2019 |
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and equivalents |
$ |
0.8 |
|
$ |
2.2 |
|
$ |
2.9 |
Trade accounts receivable, net |
|
85.8 |
|
|
60.5 |
|
|
88.5 |
Inventories, net |
|
107.7 |
|
|
139.4 |
|
|
142.7 |
Other current assets |
|
9.7 |
|
|
12.8 |
|
|
13.1 |
Total current assets |
|
204.0 |
|
|
214.9 |
|
|
247.2 |
|
|
|
|
|
|
PROPERTY, PLANT AND
EQUIPMENT: |
|
|
|
|
|
Land |
|
5.0 |
|
|
5.0 |
|
|
5.0 |
Buildings and improvements |
|
32.5 |
|
|
32.4 |
|
|
32.5 |
Machinery and equipment |
|
59.0 |
|
|
58.2 |
|
|
57.3 |
Gross property, plant and equipment |
|
96.5 |
|
|
95.6 |
|
|
94.8 |
Less accumulated depreciation |
|
67.0 |
|
|
64.4 |
|
|
63.2 |
Property, plant and equipment, net |
|
29.5 |
|
|
31.2 |
|
|
31.6 |
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
|
Operating lease right-of-use assets |
|
36.3 |
|
|
40.9 |
|
|
39.5 |
Goodwill |
|
— |
|
|
9.5 |
|
|
9.5 |
Deferred income taxes |
|
— |
|
|
— |
|
|
0.1 |
Other |
|
4.6 |
|
|
5.0 |
|
|
5.2 |
Total other assets |
|
40.9 |
|
|
55.4 |
|
|
54.3 |
TOTAL ASSETS |
$ |
274.4 |
|
$ |
301.5 |
|
$ |
333.1 |
|
|
|
|
|
|
|
|
|
HUTTIG BUILDING PRODUCTS, INC.
AND SUBSIDIARY |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited) |
(in millions, except share data) |
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
September 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
2019 |
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
1.8 |
|
|
$ |
1.7 |
|
|
$ |
1.7 |
Current maturities of operating lease right-of-use liabilities |
|
|
9.6 |
|
|
|
9.7 |
|
|
|
9.6 |
Trade accounts payable |
|
|
67.9 |
|
|
|
56.8 |
|
|
|
68.4 |
Accrued compensation |
|
|
8.1 |
|
|
|
5.5 |
|
|
|
2.7 |
Other accrued liabilities |
|
|
15.2 |
|
|
|
15.8 |
|
|
|
14.4 |
Total current liabilities |
|
|
102.6 |
|
|
|
89.5 |
|
|
|
96.8 |
NON-CURRENT LIABILITIES: |
|
|
|
|
|
|
Long-term debt, less current maturities |
|
|
99.8 |
|
|
|
135.1 |
|
|
|
151.8 |
Operating lease right-of-use liabilities, less current
maturities |
|
|
27.0 |
|
|
|
31.6 |
|
|
|
30.5 |
Other non-current liabilities |
|
|
2.3 |
|
|
|
2.4 |
|
|
|
2.4 |
Total non-current liabilities |
|
|
129.1 |
|
|
|
169.1 |
|
|
|
184.7 |
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
Preferred shares: $.01 par (5,000,000 shares authorized) |
|
|
— |
|
|
|
— |
|
|
|
— |
Common shares: $.01 par (75,000,000 shares authorized:
26,889,190; 26,441,926; and 26,538,181 shares issued at
September 30, 2020, December 31, 2019 and September 30, 2019,
respectively) |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.3 |
Additional paid-in capital |
|
|
49.2 |
|
|
|
48.2 |
|
|
|
47.5 |
Retained earnings (accumulated deficit) |
|
|
(6.8 |
) |
|
|
(5.6 |
) |
|
|
3.8 |
Total shareholders’ equity |
|
|
42.7 |
|
|
|
42.9 |
|
|
|
51.6 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
274.4 |
|
|
$ |
301.5 |
|
|
$ |
333.1 |
|
|
|
|
|
|
|
|
|
|
|
|
HUTTIG BUILDING PRODUCTS, INC.
AND SUBSIDIARY |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(unaudited) |
(in millions) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Cash Flows From Operating
Activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
6.1 |
|
|
$ |
1.6 |
|
|
$ |
(1.2 |
) |
|
$ |
(11.9 |
) |
Adjustments to reconcile net loss to net cash used
in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
1.2 |
|
|
|
1.5 |
|
|
|
3.9 |
|
|
|
4.1 |
|
Non-cash interest expense |
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.2 |
|
Stock-based compensation |
|
0.4 |
|
|
|
0.5 |
|
|
|
1.0 |
|
|
|
1.6 |
|
Deferred income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.0 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
9.5 |
|
|
|
— |
|
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Trade accounts receivable |
|
9.7 |
|
|
|
8.2 |
|
|
|
(25.3 |
) |
|
|
(19.5 |
) |
Inventories, net |
|
0.8 |
|
|
|
(1.0 |
) |
|
|
31.7 |
|
|
|
(8.7 |
) |
Trade accounts payable |
|
5.0 |
|
|
|
(1.2 |
) |
|
|
11.1 |
|
|
|
16.9 |
|
Other |
|
2.1 |
|
|
|
(0.1 |
) |
|
|
3.3 |
|
|
|
(3.9 |
) |
Cash provided by (used in) continuing operating activities |
|
25.4 |
|
|
|
9.6 |
|
|
|
35.7 |
|
|
|
(10.2 |
) |
Cash used in discontinued operating activities |
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
Total cash provided by (used in) operating activities |
|
25.4 |
|
|
|
9.5 |
|
|
|
35.6 |
|
|
|
(10.5 |
) |
Cash Flows From Investing
Activities: |
|
|
|
|
|
|
|
Capital expenditures |
|
(0.7 |
) |
|
|
(0.4 |
) |
|
|
(1.5 |
) |
|
|
(1.2 |
) |
Total cash used in investing activities |
|
(0.7 |
) |
|
|
(0.4 |
) |
|
|
(1.5 |
) |
|
|
(1.2 |
) |
Cash Flows From Financing
Activities: |
|
|
|
|
|
|
|
Borrowings (repayments) of debt, net |
|
(25.7 |
) |
|
|
(7.3 |
) |
|
|
(35.5 |
) |
|
|
13.9 |
|
Repurchase of shares to satisfy employee tax withholdings |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
Total cash provided by (used in) financing activities |
|
(25.7 |
) |
|
|
(7.3 |
) |
|
|
(35.5 |
) |
|
|
13.8 |
|
Net increase (decrease) in
cash and equivalents |
|
(1.0 |
) |
|
|
1.8 |
|
|
|
(1.4 |
) |
|
|
2.1 |
|
Cash and equivalents,
beginning of period |
|
1.8 |
|
|
|
1.1 |
|
|
|
2.2 |
|
|
|
0.8 |
|
Cash and equivalents, end of
period |
$ |
0.8 |
|
|
$ |
2.9 |
|
|
$ |
0.8 |
|
|
$ |
2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information, contact:
investor@huttig.com
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