Huttig Building Products reported its net sales in the fourth quarter of 2018 increased 9.5% year over year (YOY) to $196.2 million. The distributor also announced that net sales for the full year period were $839.6 million, an 11.5% increase compared to 2017. According to the St. Louis-based Huttig, the growth in net sales was primarily as a result of sales growth in the company’s Huttig-Grip product line and higher levels of construction activity.
Net sales for millwork products increased 4.9% in the fourth quarter and 5.0% for the full year, building product sales increased 20.3% in the fourth quarter and 22.2% for the full year, and wood product sales increased 9.3% in the fourth quarter and 1.1% for the full year.
Despite the healthy growth in net sales, Huttig posted a net loss in the fourth quarter of 2018 of $7.3 million, after posting a net loss of $9.8 million during the fourth quarter of 2017. The distributor also posted a net loss for the full year of $6.4 million, compared to a net loss of $7.1 million in 2017. The distributor said the net losses could be attributable to an increase in non-personnel costs. These expenses increased approximately $1.7 million, primarily due to higher fuel prices, increased contract hauling costs, and higher facility costs, the company stated.
“Despite our strong sales growth, we have yet to be successful in leveraging our growth into incremental profitability,” Huttig President and CEO Jon Vrabely said in a public statement. “Accordingly, we recently completed actions to adjust our cost structure which we believe will enable us to achieve this objective in 2019.”
Huttig’s gross margin increased 3.5% to $38.1 million in the fourth quarter of 2018, however gross margin as a percentage of sales continued to decline, falling to 1.1% YOY to 19.4%. For the full year, the gross margin increased 6.9% to $166.5 million in 2018, but the gross margin as a percentage of sales fell 90 basis points YOY to 19.8%. The slip in gross margin percentage was attributed to a higher proportionate increase in direct sales volume and the higher proportional increase in building product sales compared to the growth of other, higher margin product categories.
The distributor’s adjusted EBITDA for the fourth quarter of 2018 was a loss of $4.1 million, compared to a loss of $3.1 million in the fourth quarter of 2018. For the full year, adjusted EBITDA remained stagnant at $10.2 million.
