Huttig Building Products incurred a net loss of $900,000 in the first quarter, swinging from a $1.4 million net profit in the year-earlier period, despite seeing sales climb 11% to $175.7 million, the distributor reported late March 31.
“Our first quarter results show the continued growth of our business and an increase in operating expenses resulting from the continued, meaningful investments we are making in our accelerated growth strategy,” Jon Vrabely, Huttig’s president and CEO, said in the company’s earnings announcement. “While these investments are negatively impacting our short-term results, they are truly transformational in nature and provide the best opportunity to generate significant, sustained, profitable growth in the intermediate term.”
The St. Louis-based firm credited its sales increase to increased construction work; revenue from BenBilt Building Systems , which it acquired last spring; and better results from the first quarter’s promotional winter buy sales compared with how it did a year earlier. The gross margin held steady at 20.2%.
But operating expenses increased 28% to $37 million. Said Vrabely: “The increase in our operating expenses is the result of continued investments in our people, as well as the expansion of our value-add service capabilities and the Huttig-Grip product line, which present significant, intermediate-term growth opportunities.”
Millwork sales rose 15% to hit $91.9 million, contributing more than half of total revenues. Building product sales increased 10% to $68.1 million, while wood product sales fell 4% from a year earlier to reach $15.7 million.
The company likes to measure itself using adjusted EBITDA–earnings before interest, taxes, depreciation, and amortizatoin as well as discontinued operations and stock compensation expense. By that metric, the company slipped to a positive $100,000 adjusted EBITDA in the first quarter from $4.2 million in the first three months of 2016.
The company’s balance sheet shows $78.5 million in long-term debt less current maturities that total $1 million.
Huttig operates 27 distribution centers serving 41 states.
