Huttig Building Products, Inc. Announces First Quarter 2008 Results; Records a $7.0 Million Non-Cash Goodwill Impairment Charge
Huttig Building Products, Inc. (NYSE: HBP), a leading domestic distributor of millwork, building materials and wood products, today announced results for the first quarter ended March 31, 2008.
The Company reported a net loss of $9.8 million, or ($0.47) per diluted share, for the 2008 first quarter, compared to a net loss of $3.4 million, or ($0.17) per diluted share, in the corresponding year ago quarter. Net sales declined 25% to $166.8 million, compared to $222.4 million in the year ago period. The operating loss was $13.3 million compared to $3.8 million in the prior year quarter. Excluding the charges and gains in both periods as described below, the first quarter 2008 operating loss totaled $6.0 million compared to an operating loss of $0.9 million in the prior year quarter, gross profit margin was 19.1% versus 19.2%, and operating expenses declined by 13%.
First quarter 2008 results include a non-cash goodwill impairment charge to operating expenses of $7.0 million before tax, or $0.24 per share net of tax, reflective of a further decline in actual and forecasted operating results at certain of the Company's branch operating units. First quarter 2008 results also include net charges of $0.3 million related to previously announced cost reduction actions initiated in the 2007 fourth quarter, while first quarter 2007 results include net charges of $3.4 million from a prior cost reduction program, which charges were partially offset by a $0.5 million gain on the disposal of a facility.
During the 2008 first quarter, Huttig continued its program aimed at improving operating efficiencies and reducing its cost structure. Inventories at March 31, 2008 declined 11% year over year, to $92.1 million. Bank debt, net of cash, at March 31, 2008 decreased 20%, to $46.7 million, from $58.3 million a year ago. Total debt to total capitalization, net of cash, at March 31, 2008 decreased to 34%, compared to 36% at March 31, 2007. Cash used in operating activities of continuing operations was $23.6 million versus $21.2 million in the year ago first quarter. At the end of the March 2008 quarter, the Company had $53.2 million of availability under its revolving credit facility in addition to outstanding borrowings.
"While seasonally one of our slowest quarters, the 2008 first quarter was also significantly impacted by the 29% year over year decline in annualized housing starts, to approximately 1.04 million, from approximately 1.46 million in the 2007 first quarter, with annualized housing starts for March 2008 decreasing to under .95 million," said Jon Vrabely, President and CEO. "Given this challenge, we continue to pursue all avenues aimed at controlling expenses, improving operating efficiencies, reducing inventories and generating cash. Although we incurred an operating loss in the quarter, our year over year sales decreased less than the overall decline in housing starts, suggesting that we have continued to increase our overall market share despite having fewer physical locations. In addition, we have essentially maintained our gross profit margin percentage despite the increased competitive pressure as a result of the market decline. That having been said, there continue to be opportunities which we will aggressively pursue to expand our market share, further improve operating efficiencies and reduce costs."
During the quarter, Huttig successfully completed, on time and within budget, the consolidation of distribution facilities in Kansas City, Missouri and Greensburg, Pennsylvania into adjacent facilities in Springfield, Missouri, Columbus, Ohio, and Lancaster, Pennsylvania, allowing those adjacent branches to further leverage their cost structure. Looking ahead, Huttig is implementing a LEAN manufacturing initiative to identify additional opportunities to improve production and operational efficiencies. The Company is also intensifying its efforts to sell slower moving inventory to free up capital and reduce debt.
Conference Call
Management will host a conference call to discuss first quarter 2008 financial results on Friday, April 18, 2008, at 11 AM Eastern Time (10 AM Central Time). To access the call, please dial 888-694-4702 and enter pin number 41767177. A replay will be available through May 2, 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 36 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
March 31,
----------------------
2008 2007
---------- ----------
Net sales $ 166.8 $ 222.4
Cost of sales 134.7 180.6
---------- ----------
Gross margin 32.1 41.8
Operating expenses 38.4 46.1
Goodwill impairment 7.0 -
Gain on disposal of capital assets - (0.5)
---------- ----------
Operating loss (13.3) (3.8)
Interest expense, net 0.7 1.1
---------- ----------
Loss from continuing operations before income taxes (14.0) (4.9)
Benefit for income taxes (4.2) (1.7)
---------- ----------
Loss from continuing operations (9.8) (3.2)
Loss from discontinued operations, net of taxes - (0.2)
---------- ----------
Net loss $ (9.8) $ (3.4)
========== ==========
Net loss from continuing operations per share -
basic and diluted $ (0.47) $ (0.16)
Net loss from discontinued operations per share -
basic and diluted - (0.01)
---------- ----------
Net loss per share - basic and diluted $ (0.47) $ (0.17)
========== ==========
Basic and diluted shares outstanding 20,760,862 20,379,903
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
March 31, December 31, March 31,
2008 2007 2007
---------- --------- ---------
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 2.7 $ 1.8 $ 4.5
Trade accounts receivable, net 69.9 56.1 91.7
Inventories, net 92.1 88.7 103.6
Other current assets 10.3 13.6 15.2
---------- --------- ---------
Total current assets 175.0 160.2 215.0
---------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land 5.6 5.6 6.0
Building and improvements 30.3 30.2 32.6
Machinery and equipment 29.9 30.0 32.5
---------- --------- ---------
Gross property, plant and
equipment 65.8 65.8 71.1
Less accumulated depreciation 39.8 39.2 41.7
---------- --------- ---------
Property, plant and equipment, net 26.0 26.6 29.4
---------- --------- ---------
OTHER ASSETS:
Goodwill, net 11.2 18.3 19.0
Other 4.7 5.1 5.8
Deferred income taxes 7.0 2.5 2.4
---------- --------- ---------
Total other assets 22.9 25.9 27.2
---------- --------- ---------
TOTAL ASSETS $ 223.9 $ 212.7 $ 271.6
========== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 0.7 $ 1.2 $ 2.2
Trade accounts payable 51.4 50.1 72.0
Deferred income taxes 5.6 5.3 4.0
Accrued compensation 4.5 6.3 4.8
Other accrued liabilities 13.1 15.9 13.6
---------- --------- ---------
Total current liabilities 75.3 78.8 96.6
---------- --------- ---------
NON-CURRENT LIABILITIES:
Long-term debt, less current
maturities 50.0 25.4 63.7
Other non-current liabilities 3.5 4.2 4.1
---------- --------- ---------
Total non-current liabilities 53.5 29.6 67.8
---------- --------- ---------
SHAREHOLDERS' EQUITY
Preferred shares; $.01 par (5,000,000
shares authorized) - - -
Common shares; $.01 par (50,000,000
shares authorized: 21,560,176,
20,968,445 and 20,896,145 shares
issued at March 31, 2008,
December 31, 2007 and March 31,
2007, respectively) 0.2 0.2 0.2
Additional paid-in capital 36.5 36.1 35.6
Retained earnings 58.4 68.2 73.0
Less: Treasury shares, at cost - (0.2) (1.6)
---------- --------- ---------
Total shareholders' equity 95.1 104.3 107.2
---------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 223.9 $ 212.7 $ 271.6
========== ========= =========
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 (9.8) (9.8)
---------
Comprehensive loss (9.8)
---------
Restricted stock
issued, net of
forfeitures (0.2) 0.2 -
Stock options
exercised, net 0.2 - 0.2
Stock compensation 0.4 0.4
---------- --------- --------- --------- ---------
Balance at March 31,
2008 $ 0.2 $ 36.5 $ 58.4 $ - $ 95.1
========== ========= ========= ========= =========
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In Millions)
Three Months Ended
March 31,
------------------
2008 2007
-------- --------
Cash Flows From Operating Activities:
Net loss $ (9.8) $ (3.4)
Adjustments to reconcile net loss to cash used
in operating activities:
Net loss from discontinued operations - 0.2
Depreciation and amortization 1.1 1.3
Stock compensation 0.4 0.5
Goodwill impairment 7.0 -
Other adjustments (4.3) (0.3)
Changes in operating assets and liabilities:
Trade accounts receivable (13.8) (17.6)
Inventories (3.4) (6.3)
Trade accounts payable 1.3 9.9
Other (2.1) (5.5)
-------- --------
Total net cash used in operating activities (23.6) (21.2)
-------- --------
Cash Flows From Investing Activities:
Capital expenditures (0.4) (1.6)
Proceeds from disposition of capital assets 0.1 1.0
-------- --------
Total cash used in investing activities (0.3) (0.6)
-------- --------
Cash Flows From Financing Activities:
Borrowings and payments of debt, net 24.1 20.2
Exercise of stock options 0.7 -
-------- --------
Total cash provided by financing activities 24.8 20.2
-------- --------
Net increase (decrease) in cash and equivalents 0.9 (1.6)
Cash and equivalents, beginning of period 1.8 6.1
-------- --------
Cash and equivalents, end of period $ 2.7 $ 4.5
======== ========
Supplemental Disclosure of Cash Flow Information:
Interest paid $ 0.6 $ 1.1
Income taxes refunded (1.0) -
Cash received from exercise of stock options 0.4 -
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS WORKSHEET
(UNAUDITED)
(In Millions)
Three Months Ended
March 31, 2008
----------------------------------------
As Reported Charges/Gain Adjusted
------------ ------------ ------------
Net sales $ 166.8 $ 166.8
Gross margin 32.1 (0.2) 31.9
Operating expenses 38.4 (0.5) 37.9
Goodwill impairment 7.0 (7.0) -
Gain on disposal of capital
assets - - -
------------ ------------ ------------
Operating profit (loss) (13.3) 7.3 (6.0)
Gross margin 19.2% 19.1%
Operating expenses margin 23.0% 22.7%
Operating profit (loss) margin -8.0% -3.6%
Three Months Ended
March 31, 2007
----------------------------------------
As Reported Charges/Gain Adjusted
------------ ------------ ------------
Net sales $ 222.4 $ 222.4
Gross margin 41.8 1.0 42.8
Operating expenses 46.1 (2.4) 43.7
Gain on disposal of capital
assets (0.5) 0.5 -
------------ ------------ ------------
Operating profit (loss) (3.8) 2.9 (0.9)
Gross margin 18.8% 19.2%
Operating expenses margin 20.7% 19.6%
Operating profit (loss) margin -1.7% -0.4%
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
Source: Marketwire (April 17, 2008 - 4:30 PM EDT)
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