Higher levels of residential construction in the fourth quarter led to an increase in net sales on a year-over-year (YOY) basis at Huttig Building Products. Despite pandemic-induced changes to the company’s operating environment, supply chain disruptions, and labor shortages, Huttig’s fourth quarter sales increased 2.3% to $184.6 million in the fourth quarter, according to the company’s quarterly earnings report.
Millwork sales for Huttig decreased 1.9% YOY to $88.3 million in the fourth quarter while building product sales increased 7.5% YOY to $82.9 million. Wood product sales increased 0.8% YOY to $13.4 million in the quarter.
Huttig engaged in restructuring activities during the second half of 2020, including the closure of two branches in the third quarter, and strengthened its focus on core and strategic products. While the product rationalization project may result in lower sales initially, Huttig expects the project to generate higher gross margins and higher sales of focused product categories. For the full fiscal year, net sales decreased 2.4% to $792.3 million compared to 2019.
“The momentum we generated through the third quarter of 2020 continued and contributed to our solid fourth quarter results,” president and CEO Jon Vrabely said in a news release. “In light of the headwinds of restructuring activities and continued supply chain challenges across several key product categories, we were able to grow fourth quarter sales over the prior year and significantly improve our operating results and profitability. Combined with working effective capital management, we ended the year with our highest liquidity and lowest debt levels in several years.”
Huttig’s gross margin in the fourth quarter increased $1.5 million YOY to $37.1 million. As a percentage of sales, gross margin increased 40 basis points to 20.1% in the fourth quarter of 2020. The increase in margin percentage reflects a favorable impact of Huttig’s focus on higher-margin sales opportunities. For the full 2020 fiscal year, gross margin decreased 1.6% from 2019 to $159.4 million in 2020. Gross margin as a percentage of sales increased 10 basis points YOY to 20.1%.
The distributor reported operating expenses decreased 17.2% YOY to $36.1 million in the fourth quarter. Huttig said personnel costs decreased $2.7 million as a result of expense reduction actions taken in response to COVID-19, including workforce reductions, wage reductions, the suspension of the company’s matching benefit contributions, and restructuring activities. Huttig said the majority of wage reductions were restored during the fourth quarter of 2020.
Huttig reported a net income of $0.3 million for the fourth quarter, compared to a net operating loss of $9.4 million in the fourth quarter of 2019. The company’s adjusted EBITDA was $2.4 million in the fourth quarter of 2020, compared to -$4.9 million in the prior year period. For the full 2020 fiscal year, Huttig reported a net loss of $0.9 million in 2020, compared to a net loss of $21.3 million in 2019. The distributor’s adjusted EBITDA for the full fiscal year was $20.1 million, an increase of $14.9 million compared to the 2019 fiscal year.
St. Louis-based Huttig Building Products is a domestic distributor of millwork, building materials and wood products used in residential construction and in-home improvement, remodeling, and repair work. The company distributes its products through 25 distribution centers serving 41 states.
