Huttig Building Products, Inc. Announces Fourth Quarter and Full Year 2018 Results
Fourth Quarter and Full Year 2018 Highlights:
- Net sales of
$196.2 million and$839.6 million , respectively - Sales growth of 9.5% and 11.5%, respectively
- Net loss of
$7.3 million and$6.4 million , respectively - Net reduction in debt of
$30.1 million in the fourth quarter of 2018
“I am pleased that we continue to achieve significant sales growth above that of the residential construction market in the fourth quarter, and for the full year,” said
SUMMARY RESULTS FOR FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2018 | |||||||||
(unaudited) | |||||||||
(in millions, except per share data) | |||||||||
Three Months Ended December 31, | |||||||||
2018 | 2017 |
||||||||
Net sales | $ | 196.2 | 100.0% | $ | 179.2 | 100.0% | |||
Gross margin | 38.1 | 19.4% | 36.8 | 20.5% | |||||
Operating expenses | 44.2 | 22.5% | 42.4 | 23.7% | |||||
Gain on disposal of assets | (0.1 | ) | 0.0% | - | 0.0% | ||||
Operating loss | (6.0 | ) | -3.1% | (5.6 | ) | -3.1% | |||
Net loss from continuing operations | (6.9 | ) | -3.5% | (8.9 | ) | -5.0% | |||
Net loss | (7.3 | ) | -3.7% | (9.8 | ) | -5.5% | |||
Net loss from continuing operations per share - basic and diluted | (0.27 | ) | (0.36 | ) | |||||
Net loss per share - basic and diluted | (0.29 | ) | (0.39 | ) | |||||
Twelve Months Ended December 31, | |||||||||
2018 |
2017 |
||||||||
Net sales | $ | 839.6 | 100.0% | $ | 753.2 | 100.0% | |||
Gross margin | 166.5 | 19.8% | 155.8 | 20.7% | |||||
Operating expenses | 167.5 | 19.9% | 155.7 | 20.7% | |||||
Gain on disposal of assets | (0.1 | ) | -0.1% | - | 0.0% | ||||
Operating income (loss) | (0.9 | ) | -0.1% | 0.1 | 0.0% | ||||
Net loss from continuing operations | (6.0 | ) | -0.7% | (6.2 | ) | -0.8% | |||
Net loss | (6.4 | ) | -0.8% | (7.1 | ) | -0.9% | |||
Net loss from continuing operations per share - basic and diluted | (0.24 | ) | (0.25 | ) | |||||
Net loss per share - basic and diluted | (0.26 | ) | (0.29 | ) | |||||
Results of Operations
Fourth Quarter 2018 Compared to Fourth Quarter 2017
Net sales from continuing operations were
Net sales in our major product categories changed as follows in the fourth quarter 2018 from the fourth quarter 2017: millwork sales increased 4.9% to
Gross margin increased approximately 3.5% to
Operating expenses increased
Net interest expense was
An income tax benefit from continuing operations of
As a result of the foregoing factors, we reported a net loss from continuing operations of
Adjusted EBITDA was
Fiscal 2018 Compared to Fiscal 2017
Net sales from continuing operations were
Net sales in our major product categories changed as follows in 2018 from 2017: millwork sales increased 5.0% to
Gross margin increased approximately 6.9% to
Operating expenses increased
Net interest expense was
An income tax benefit from continuing operations of
As a result of the foregoing factors, we reported a net loss from continuing operations of
Adjusted EBITDA was
Balance Sheet
Total available liquidity was
Conference Call
About Huttig
Huttig, currently in its 135th 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 27 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 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, management of cost structure, enhanced competitive posture, no 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 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 strength of new construction, home improvement and remodeling markets and the recovery of the homebuilding industry to levels consistent with the historical average total housing starts from 1959 to 2018 of approximately 1.4 million starts based on statistics tracked by the
Non-GAAP Financial Measures
Huttig supplements its reporting of net income (loss) with non-GAAP measurement of Adjusted EBITDA. This supplemental information should not be considered in isolation or as a substitute for GAAP measures.
Huttig defines Adjusted EBITDA as net income (loss) adjusted for interest, income taxes, depreciation and amortization and other special significant items as listed in the table below.
Huttig 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 (loss) 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 | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (7.3 | ) | $ | (9.8 | ) | $ | (6.4 | ) | $ | (7.1 | ) | |||
Net loss from discontinued operations, net of taxes | 0.4 | 0.9 | 0.4 | 0.9 | |||||||||||
Interest expense, net | 1.9 | 0.9 | 6.5 | 3.1 | |||||||||||
Provision for income taxes | (1.0 | ) | 2.4 | (1.4 | ) | 3.2 | |||||||||
Depreciation and amortization | 1.4 | 1.3 | 5.4 | 4.9 | |||||||||||
Stock compensation expense | 0.5 | 0.6 | 2.3 | 2.2 | |||||||||||
Gain on disposal of assets | (0.1 | ) | - | (0.1 | ) | - | |||||||||
Other Expenses1 | 0.1 | 0.6 | 3.5 | 3.0 | |||||||||||
Adjusted EBITDA | $ | (4.1 | ) | $ | (3.1 | ) | $ | 10.2 | $ | 10.2 | |||||
1 Primarily expenses associated with litigation and settlement of litigation. | |||||||||||||||
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(unaudited) | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 196.2 | $ | 179.2 | $ | 839.6 | $ | 753.2 | |||||||
Cost of sales | 158.1 | 142.4 | 673.1 | 597.4 | |||||||||||
Gross margin | 38.1 | 36.8 | 166.5 | 155.8 | |||||||||||
Operating expenses | 44.2 | 42.4 | 167.5 | 155.7 | |||||||||||
Gain on disposal of assets | (0.1 | ) | (0.1 | ) | — | ||||||||||
Operating income (loss) | (6.0 | ) | (5.6 | ) | (0.9 | ) | 0.1 | ||||||||
Interest expense, net | 1.9 | 0.9 | 6.5 | 3.1 | |||||||||||
Loss from continuing operations before income taxes | (7.9 | ) | (6.5 | ) | (7.4 | ) | (3.0 | ) | |||||||
Provision for (benefit from) income taxes | (1.0 | ) | 2.4 | (1.4 | ) | 3.2 | |||||||||
Net loss from continuing operations | (6.9 | ) | (8.9 | ) | (6.0 | ) | (6.2 | ) | |||||||
Net loss from discontinued operations, net of taxes | (0.4 | ) | (0.9 | ) | (0.4 | ) | (0.9 | ) | |||||||
Net loss | $ | (7.3 | ) | $ | (9.8 | ) | $ | (6.4 | ) | $ | (7.1 | ) | |||
Net loss from continuing operations per share - basic and diluted | $ | (0.27 | ) | $ | (0.36 | ) | $ | (0.24 | ) | $ | (0.25 | ) | |||
Net loss from discontinued operations per share - basic and diluted | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.04 | ) | |||
Net loss per share - basic and diluted | $ | (0.29 | ) | $ | (0.39 | ) | $ | (0.26 | ) | $ | (0.29 | ) | |||
Weighted average shares outstanding: | |||||||||||||||
Basic and diluted shares outstanding | 25.1 | 24.9 | 25.1 | 24.9 | |||||||||||
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(unaudited) | |||||
(in millions) | |||||
December 31, | December 31, | ||||
2018 | 2017 | ||||
ASSETS | |||||
Current Assets: | |||||
Cash and equivalents | $ | 0.8 | $ | 0.3 | |
Trade accounts receivable, net | 69.0 | 66.8 | |||
Inventories, net | 134.0 | 111.9 | |||
Other current assets | 14.7 | 11.4 | |||
Total current assets | 218.5 | 190.4 | |||
Property, plant and equipment: | |||||
Land | 5.0 | 5.0 | |||
Buildings and improvements | 32.3 | 31.1 | |||
Machinery and equipment | 56.0 | 49.8 | |||
Gross property, plant and equipment | 93.3 | 85.9 | |||
Less accumulated depreciation | 60.0 | 56.4 | |||
Property, plant and equipment, net | 33.3 | 29.5 | |||
Other Assets: | |||||
Goodwill | 9.5 | 9.5 | |||
Deferred income taxes | 11.1 | 9.7 | |||
Other | 5.6 | 6.8 | |||
Total other assets | 26.2 | 26.0 | |||
Total Assets | $ | 278.0 | $ | 245.9 | |
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(unaudited) | |||||
(in millions, except share data) | |||||
December 31, | December 31, | ||||
2018 | 2017 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current Liabilities: | |||||
Current maturities of long-term debt | $ | 1.8 | $ | 1.2 | |
Trade accounts payable | 51.5 | 51.0 | |||
Accrued compensation | 5.0 | 6.3 | |||
Other accrued liabilities | 18.0 | 16.6 | |||
Total current liabilities | 76.3 | 75.1 | |||
Non-Current Liabilities | |||||
Long-term debt, less current maturities | 137.1 | 101.8 | |||
Other non-current liabilities | 2.6 | 2.5 | |||
Total non-current liabilities | 139.7 | 104.3 | |||
Shareholders' Equity: | |||||
Preferred shares: $.01 par (5,000,000 shares authorized) | — | — | |||
Common shares; $.01 par (75,000,000 shares authorized: 25,993,441 shares issued and outstanding at December 31, 2018 and 25,843,166 at December 31, 2017) |
0.3 | 0.3 | |||
Additional paid-in capital | 46.0 | 44.1 | |||
Retained earnings | 15.7 | 22.1 | |||
Total shareholders' equity | 62.0 | 66.5 | |||
Total Liabilities and Shareholders' Equity | $ | 278.0 | $ | 245.9 | |
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(unaudited) | |||||||||||||||
(in millions) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cash Flows From Operating Activities: | |||||||||||||||
Net loss | $ | (7.3 | ) | $ | (9.8 | ) | $ | (6.4 | ) | $ | (7.1 | ) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|||||||||||||||
Net loss from discontinued operations, net of taxes | 0.4 | 0.9 | 0.4 | 0.9 | |||||||||||
Depreciation and amortization | 1.4 | 1.3 | 5.4 | 4.9 | |||||||||||
Non-cash interest expense | - | 0.1 | 0.2 | 0.3 | |||||||||||
Stock compensation expense | 0.5 | 0.6 | 2.3 | 2.2 | |||||||||||
Deferred taxes | (0.9 | ) | 1.6 | (1.3 | ) | 2.4 | |||||||||
Gain on disposal of capital assets | (0.1 | ) | — | (0.1 | ) | — | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Trade accounts receivable, net | 27.3 | 20.7 | (2.2 | ) | (7.5 | ) | |||||||||
Inventories, net | 19.7 | (3.8 | ) | (22.1 | ) | (30.9 | ) | ||||||||
Trade accounts payable | (13.2 | ) | (15.7 | ) | 0.5 | 3.8 | |||||||||
Other | 2.2 | 5.1 | (3.1 | ) | (2.5 | ) | |||||||||
Cash provided by (used in) continuing operating activities | 30.0 | 1.0 | (26.4 | ) | (33.5 | ) | |||||||||
Cash (used in) provided by discontinued operating activities | 0.1 | (0.7 | ) | (0.6 | ) | (4.6 | ) | ||||||||
Total cash provided by (used in) operating activities | 30.1 | 0.3 | (27.0 | ) | (38.1 | ) | |||||||||
Cash Flows From Investing Activities: | |||||||||||||||
Capital expenditures | (1.0 | ) | (0.4 | ) | (7.8 | ) | (6.1 | ) | |||||||
Proceeds from disposition of capital assets | 0.3 | — | 1.2 | — | |||||||||||
Cash used in investing activities | (0.7 | ) | (0.4 | ) | (6.6 | ) | (6.1 | ) | |||||||
Cash Flows From Financing Activities: | |||||||||||||||
Net borrowing (repayment) of debt | (30.1 | ) | (0.8 | ) | 34.5 | 45.1 | |||||||||
Payment for taxes related to share settlement of equity awards | — | — | (0.4 | ) | (0.9 | ) | |||||||||
Total cash (used in) provided by financing activities | (30.1 | ) | (0.8 | ) | 34.1 | 44.2 | |||||||||
Net increase (decrease) in cash and equivalents | (0.7 | ) | (0.9 | ) | 0.5 | — | |||||||||
Cash and equivalents, beginning of period | 1.5 | 1.2 | 0.3 | 0.3 | |||||||||||
Cash and equivalents, end of period | $ | 0.8 | $ | 0.3 | $ | 0.8 | $ | 0.3 | |||||||
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Source: Huttig Building Products, Inc.