Huttig Building Products posted a positive net income during the fiscal second quarter of 2019, but the company experienced a net sales decline during the quarter. St. Louis-based Huttig said the impact of the coronavirus (COVID-19) pandemic negatively affected net sales, which decreased 12.2% on a year-over-year basis to $192.0 million, according to the company’s earnings report.
The decline in net sales was caused primarily by changes to the operating environment related to COVID-19, according to Huttig. While many of the distributor’s largest markets were significantly impacted by the pandemic early in the second quarter, demand began improving as construction activity rebounded near the end of the quarter. Huttig said revenues were lower in all three of its product classifications, with varying levels of pandemic-related supply chain disruptions.
Millwork product sales decreased 17.9% on a YOY basis in the second quarter to $81.7 million. Huttig said millwork sales were most impacted by pandemic-related supply chain disruptions during the quarter. The distributor’s building products sales decreased 3.6% YOY in the second quarter to $97.5 million and experienced relatively consistent high levels of demand during the quarter. Wood product sales declined 28.5% YOY to $12.8 million in the quarter. Huttig said the decrease in wood product sales reflected the company’s decision to de-emphasize certain product lines within the category.
Huttig reported its gross margin decreased $5.6 million from the prior year period to $38.7 million the fiscal second quarter of 2020. As a percentage of sales, gross margin decreased 10 basis points YOY to 20.2%. The distributor said gross margins were negatively impacted by a shift in sales mix reflecting higher proportionate sales of lower margin categories and direct sales.
“In light of all the economic uncertainty caused by the COVID-19 pandemic, I am pleased with our financial performance in the second quarter,” Jon Vrabely, Huttig’s president and CEO, said in a news release. “We acted early, decisively, and aggressively to adjust our cost structure and inventory levels to mitigate the threat to the company posed by the pandemic.”
Huttig reported a net income of $1.6 million for the second quarter of 2020, compared to a net loss of $10.3 million for the prior year period. Adjusted for the company’s $1.5 million restructuring charge in 2020, Huttigs’ net income was $3.1 million in 2020. The company’s adjusted EBITDA rose $0.6 million YOY to $5.7 million in the second quarter.
Huttig’s operating expenses decreased $6.3 million YOY to $34.5 million in the quarter and personnel costs decreased 19.3% YOY as a result of expense actions taken in response to the COVID-19 pandemic. As a result of the pandemic, Huttig closed two branches and enforced workforce reductions and wage reductions. The distributor said it is in the process of closing its Columbus, Ohio and Selkirk, N.Y., branches as part of its restructuring efforts. The company anticipates the closing efforts at the two locations will be “substantially complete by the end of the third quarter.
