Huttig Building Products Inc (fka HBP)

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Huttig Building Products, Inc. Announces Third Quarter 2008 Results





ST. LOUIS, MO -- (Marketwire) -- 10/30/08 -- 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.