Huttig Building Products Reports Record Fourth Quarter And Full Year Net Income
Huttig Building Products (NASDAQ: HBP) reported a strong financial performance for Q4 2021, with net sales rising by 24.8% to $230.4 million and adjusted EBITDA at $9.7 million, significantly boosted by sales growth in major product categories despite supply chain challenges. Annual net sales for 2021 reached $937.8 million, an 18.4% increase from 2020, leading to a net income of $49.1 million from a previous loss. The company’s liquidity improved to $166.5 million, reflecting a robust operational model and demand-driven pricing in a competitive market.
- Net sales increased by 24.8% in Q4 2021 to $230.4 million.
- Annual net sales rose to $937.8 million, up 18.4% from 2020.
- Net income from continuing operations for Q4 2021 was $7.4 million, compared to $0.3 million in Q4 2020.
- Adjusted EBITDA for 2021 was $55.1 million, significantly higher than $20.1 million in 2020.
- Total liquidity reached $166.5 million, up from $59.3 million last year.
- Gross margins were affected by a $7.3 million LIFO adjustment in Q4 2021.
- Operating expenses increased by 11.1% in Q4 2021, largely due to increased personnel costs.
Fourth Quarter 2021 Highlights (compared to prior year quarter)
- Net sales increased
24.8% to$230.4 million compared to$184.6 million - Gross margins increased to
21.8% compared to20.1% - Gross margins were reduced by a LIFO valuation adjustment of
$7.3 million and$1.1 million , representing 317 basis points and 60 basis points, in 2021 and 2020, respectively - Net income from continuing operations was
$7.4 million compared to$0.3 million - Total liquidity increased to
$166.5 million compared to$59.3 million a year ago - Adjusted EBITDA was
$9.7 million , as reduced by a LIFO valuation adjustment of$7.3 million , compared to$2.4 million , as reduced by a LIFO valuation adjustment of$1.1 million
Full Year 2021 Highlights (compared to prior year)
- Net sales increased
18.4% to$937.8 million compared to$792.3 million - Gross margins increased to
22.2% compared to20.1% - Gross margins were reduced by a LIFO valuation adjustment of
$18.3 million and$2.4 million , representing 195 basis points and 30 basis points, in 2021 and 2020, respectively - Net income from continuing operations was
$49.1 million compared to a net loss of$0.9 million , after$9.5 million goodwill impairment and$1.5 million restructuring charges - Adjusted EBITDA was
$55.1 million , as reduced by a LIFO valuation adjustment of$18.3 million , compared to$20.1 million , as reduced by a LIFO valuation adjustment of$2.4 million
ST. LOUIS, March 02, 2022 (GLOBE NEWSWIRE) -- 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 fourth quarter and year ended December 31, 2021.
“I am extremely proud of our 2021 performance and record results,” said Jon Vrabely, President and CEO of Huttig. “We generated adjusted EBITDA of
| SUMMARY RESULTS FOR FOURTH QUARTER ENDED DECEMBER 31, 2021 | ||||||||||
| (unaudited) | ||||||||||
| (in millions, except per share data) | ||||||||||
| Three Months Ended December 31, | ||||||||||
| 2021 | 2020 | |||||||||
| Net sales | $ | 230.4 | 100.0 | % | $ | 184.6 | 100.0 | % | ||
| Gross margin | 50.2 | 21.8 | % | 37.1 | 20.1 | % | ||||
| Operating expenses | 40.1 | 17.4 | % | 36.1 | 19.6 | % | ||||
| Operating income | 10.1 | 4.4 | % | 1.0 | 0.5 | % | ||||
| Income from continuing operations | 7.4 | 3.2 | % | 0.3 | 0.2 | % | ||||
| Net income | 6.8 | 3.0 | % | 0.3 | 0.2 | % | ||||
| Income from continuing operations per share - basic and diluted | $ | 0.27 | $ | 0.01 | ||||||
| Net income per share - basic and diluted | $ | 0.25 | $ | 0.01 | ||||||
| Twelve Months Ended December 31, | ||||||||||
| 2021 | 2020 | |||||||||
| Net sales | $ | 937.8 | 100.0 | % | $ | 792.3 | 100.0 | % | ||
| Gross margin | 208.0 | 22.2 | % | 159.4 | 20.1 | % | ||||
| Operating expenses | 155.8 | 16.6 | % | 145.6 | 18.4 | % | ||||
| Operating income | 53.8 | 5.7 | % | 2.8 | 0.4 | % | ||||
| Income (loss) from continuing operations | 49.1 | 5.2 | % | (0.9 | ) | -0.1 | % | |||
| Net income (loss) | 48.5 | 5.2 | % | (0.9 | ) | -0.1 | % | |||
| Income (loss) from continuing operations per share - basic and diluted | $ | 1.79 | $ | (0.03 | ) | |||||
| Net income (loss) per share - basic and diluted | $ | 1.77 | $ | (0.03 | ) | |||||
Results of Operations
Fourth Quarter 2021 Compared to Fourth Quarter 2020
Net sales were
Millwork sales increased
Gross margin was
We use the last-in, first-out (LIFO) inventory valuation method to value inventories. In the fourth quarter of 2021, this resulted in gross margins that were
Operating expenses increased
Net interest expense was
Income taxes were
As a result of the foregoing factors, we reported net income from continuing operations of
Adjusted EBITDA was
Fiscal 2021 Compared to Fiscal 2020
Net sales were
Net sales in our major product categories changed as follows in 2021 from 2020: millwork sales increased
Gross margin increased
We use the LIFO inventory valuation method to value inventories. In 2021, this resulted in gross margins that were
Operating expenses, increased
Operating income in 2020 includes a restructuring charge of
Net interest expense was
We recognized income tax expense from continuing operations of
As a result of the foregoing factors, we reported net income from continuing operations of
Adjusted EBITDA was
Balance Sheet & Liquidity
Cash provided by continuing operating activities was
Conference Call
Huttig Building Products, Inc. will host a conference call Thursday, March 3, 2022 at 10:00 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 4348227.
About Huttig
Huttig, currently in its 138th 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, 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: our ability to successfully identify and execute upon a potential strategic alternative to maximize shareholder value; the success of our growth initiatives; risks associated with our private brands; the strength of new construction, home improvement and remodeling markets, including the overall strength of the homebuilding industry where the historical annual average of total housing starts from 1959 to 2021 is approximately 1.4 million starts based on statistics tracked by the U.S. Census Bureau (“Historical Average”); the cyclical nature of our industry; risks of international suppliers; 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; product liability claims and other legal proceedings; market price changes, including inflation; commodity prices and demand in light of the COVID-19 pandemic; competition with existing or new industry participants; our failure to attract and retain key personnel and our general employee population; 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; our ability to comply with, and the restrictive effect of, the financial covenant applicable under our credit facility; 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; termination of key supplier relationships; the ability to source alternative suppliers in light of the COVID-19 pandemic; supply chain disruption; current or future litigation; 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; federal and state transportation regulations; 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; fuel cost increases; stock market volatility; failure to meet exchange listing requirements; stockholder activist disruption; information technology failures, network disruptions, cybersecurity attacks or breaches in data security; significant uninsured claims; the integration of any business we acquire and the liabilities of such businesses; the seasonality of our operations; any limitations on our ability to utilize our deferred tax assets to reduce future taxable income and tax liabilities; intangible asset impairment; and those factors 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, 2021. 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 disclosure of Adjusted EBITDA. 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 a non-GAAP financial measure by providing the information as a supplement to GAAP results for 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. This supplemental information should not be considered in isolation or as a substitute for GAAP measures.
Adjusted EBITDA
Huttig defines adjusted EBITDA as net income adjusted for interest, income taxes, depreciation and amortization and other items as listed in the table below. Adjusted EBITDA serves as an appropriate measure in evaluating the performance of our business because it is a primary measure used by management, and by similar companies in the industry, to evaluate operating performance and helps our investors better compare our operating performance with our competitors and enhances our investors’ overall understanding of the financial performance of our business.
The following table presents a reconciliation of net income, 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, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net income (loss) | $ | 6.8 | $ | 0.3 | $ | 48.5 | $ | (0.9 | ) | |||||
| Net loss from discontinued operations, net of taxes | 0.6 | - | 0.6 | - | ||||||||||
| Interest expense, net | 0.5 | 0.6 | 2.5 | 3.6 | ||||||||||
| Provision for income taxes | 2.2 | 0.1 | 2.2 | 0.1 | ||||||||||
| Depreciation and amortization | 1.3 | 1.2 | 4.9 | 5.2 | ||||||||||
| Stock compensation expense | 0.4 | 0.2 | 1.6 | 1.3 | ||||||||||
| Goodwill impairment | - | - | - | 9.5 | ||||||||||
| Restructuring charge | - | - | - | 1.5 | ||||||||||
| Gain on sale of assets | - | - | (1.6 | ) | (0.2 | ) | ||||||||
| Employee retention tax credit | - | - | (1.5 | ) | - | |||||||||
| Class action settlement | (2.1 | ) | - | (2.1 | ) | - | ||||||||
| Adjusted EBITDA | $ | 9.7 | $ | 2.4 | $ | 55.1 | $ | 20.1 | ||||||
| HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| (unaudited) | ||||||||||||||
| (in millions, except Per Share Data) | ||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net sales | $ | 230.4 | $ | 184.6 | $ | 937.8 | $ | 792.3 | ||||||
| Cost of sales | 180.2 | 147.5 | 729.8 | 632.9 | ||||||||||
| Gross margin | 50.2 | 37.1 | 208.0 | 159.4 | ||||||||||
| Operating expenses | 40.1 | 36.1 | 155.8 | 145.6 | ||||||||||
| Gain on disposal of assets | — | — | (1.6 | ) | — | |||||||||
| Goodwill impairment | — | — | — | 9.5 | ||||||||||
| Restructuring charge | — | — | — | 1.5 | ||||||||||
| Operating income | 10.1 | 1.0 | 53.8 | 2.8 | ||||||||||
| Interest expense, net | 0.5 | 0.6 | 2.5 | 3.6 | ||||||||||
| Income (loss) from continuing operations before income taxes | 9.6 | 0.4 | 51.3 | (0.8 | ) | |||||||||
| Provision for income taxes | 2.2 | 0.1 | 2.2 | 0.1 | ||||||||||
| Net income (loss) from continuing operations | 7.4 | 0.3 | 49.1 | (0.9 | ) | |||||||||
| Net loss from discontinued operations, net of taxes | (0.6 | ) | — | (0.6 | ) | — | ||||||||
| Net income (loss) | $ | 6.8 | $ | 0.3 | $ | 48.5 | $ | (0.9 | ) | |||||
| Earnings per share: | ||||||||||||||
| Net income (loss) from continuing operations per share - basic and diluted | $ | 0.27 | $ | 0.01 | $ | 1.79 | $ | (0.03 | ) | |||||
| Net loss from discontinued operations per share - basic and diluted | (0.02 | ) | — | (0.02 | ) | — | ||||||||
| Net income (loss) per share - basic and diluted | $ | 0.25 | $ | 0.01 | $ | 1.77 | $ | (0.03 | ) | |||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic shares outstanding | 27.5 | 26.0 | 27.5 | 26.0 | ||||||||||
| Diluted shares outstanding | 27.5 | 26.0 | 27.5 | 26.0 | ||||||||||
| HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | |||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| (unaudited) | |||||
| (in millions) | |||||
| December 31, | December 31, | ||||
| 2021 | 2020 | ||||
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and equivalents | $ | 3.3 | $ | 0.3 | |
| Trade accounts receivable, net | 88.6 | 69.3 | |||
| Inventories, net | 128.8 | 105.7 | |||
| Other current assets | 18.3 | 10.6 | |||
| Total current assets | 239.0 | 185.9 | |||
| PROPERTY, PLANT AND EQUIPMENT: | |||||
| Land | 5.0 | 5.0 | |||
| Buildings and improvements | 31.8 | 32.3 | |||
| Machinery and equipment | 60.5 | 58.2 | |||
| Gross property, plant and equipment | 97.3 | 95.5 | |||
| Less accumulated depreciation | 70.3 | 67.1 | |||
| Property, plant and equipment, net | 27.0 | 28.4 | |||
| OTHER ASSETS: | |||||
| Operating lease right-of-use assets | 38.1 | 33.9 | |||
| Other | 5.7 | 4.4 | |||
| Total other assets | 43.8 | 38.3 | |||
| TOTAL ASSETS | $ | 309.8 | $ | 252.6 | |
| HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (unaudited) | ||||||
| (in millions, except Share Data) | ||||||
| December 31, | December 31, | |||||
| 2021 | 2020 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Current maturities of long-term debt | $ | 1.8 | $ | 1.7 | ||
| Current maturities of operating lease right-of-use liabilities | 10.2 | 9.1 | ||||
| Trade accounts payable | 66.4 | 53.1 | ||||
| Accrued compensation | 18.0 | 10.0 | ||||
| Other accrued liabilities | 20.1 | 15.7 | ||||
| Total current liabilities | 116.5 | 89.6 | ||||
| NON-CURRENT LIABILITIES: | ||||||
| Long-term debt, less current maturities | 69.6 | 92.4 | ||||
| Operating lease right-of-use liabilities, less current maturities | 27.9 | 24.9 | ||||
| Other non-current liabilities | 2.7 | 2.4 | ||||
| Total non-current liabilities | 100.2 | 119.7 | ||||
| SHAREHOLDERS’ EQUITY: | ||||||
| Preferred shares: $.01 par (5,000,000 shares authorized) | — | — | ||||
| Common shares; $.01 par (75,000,000 shares authorized: 27,390,741 shares issued and outstanding at December 31, 2021 and 26,889,190 at December 31, 2020) | 0.3 | 0.3 | ||||
| Additional paid-in capital | 50.8 | 49.5 | ||||
| Retained earnings (accumulated deficit) | 42.0 | (6.5 | ) | |||
| Total shareholders’ equity | 93.1 | 43.3 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 309.8 | $ | 252.6 | ||
| HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
| (unaudited) | |||||||||||||||
| (in millions) | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Cash Flows From Operating Activities: | |||||||||||||||
| Net income (loss) | $ | 6.8 | $ | 0.3 | $ | 48.5 | $ | (0.9 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
| Net loss from discontinued operations, net of taxes | 0.6 | — | 0.6 | — | |||||||||||
| Depreciation and amortization | 1.3 | 1.2 | 4.9 | 5.2 | |||||||||||
| Non-cash interest expense | — | — | 0.2 | 0.2 | |||||||||||
| Stock-based compensation expense | 0.4 | 0.2 | 1.6 | 1.3 | |||||||||||
| Deferred income taxes | 1.2 | — | (0.4 | ) | — | ||||||||||
| Goodwill impairment | — | — | — | 9.5 | |||||||||||
| Restructuring charge | — | — | — | 1.5 | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Trade accounts receivable | 12.5 | 16.5 | (19.3 | ) | (8.8 | ) | |||||||||
| Inventories, net | (0.7 | ) | 2.0 | (23.1 | ) | 33.7 | |||||||||
| Trade accounts payable | (15.9 | ) | (14.8 | ) | 13.3 | (3.7 | ) | ||||||||
| Other | 0.3 | 1.7 | 2.0 | 4.8 | |||||||||||
| Cash provided by continuing operating activities | 6.5 | 7.1 | 28.3 | 42.8 | |||||||||||
| Cash used in discontinued operating activities | (0.2 | ) | (0.1 | ) | (0.8 | ) | (0.2 | ) | |||||||
| Total cash provided by operating activities | 6.3 | 7.0 | 27.5 | 42.6 | |||||||||||
| Cash Flows From Investing Activities: | |||||||||||||||
| Capital expenditures | — | (0.2 | ) | (1.3 | ) | (1.7 | ) | ||||||||
| Proceeds from disposition of assets | 0.1 | 0.2 | 1.7 | 0.2 | |||||||||||
| Cash provided by (used in) investing activities | 0.1 | — | 0.4 | (1.5 | ) | ||||||||||
| Cash Flows From Financing Activities: | |||||||||||||||
| Repayments of debt, net | (7.5 | ) | (7.5 | ) | (24.6 | ) | (43.0 | ) | |||||||
| Payment for taxes related to share settlement of equity awards | (0.1 | ) | — | (0.3 | ) | — | |||||||||
| Cash used in financing activities | (7.6 | ) | (7.5 | ) | (24.9 | ) | (43.0 | ) | |||||||
| Net increase (decrease) in cash and equivalents | (1.2 | ) | (0.5 | ) | 3.0 | (1.9 | ) | ||||||||
| Cash and equivalents, beginning of period | 4.5 | 0.8 | 0.3 | 2.2 | |||||||||||
| Cash and equivalents, end of period | $ | 3.3 | $ | 0.3 | $ | 3.3 | $ | 0.3 | |||||||
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