Huttig Building Products reported a decrease in net sales during the fourth quarter of 2019, primarily due to the company’s de-emphasis on commoditized, low-margin products, commodity pricing issues in wood products, and softness in new residential construction. The St. Louis-based distributor posted net sales of $180.4 million in the fourth quarter, an 8.1% decrease year over year (YOY), according to the company’s quarterly earnings report.
Net millwork sales in the quarter decreased 7.2% YOY to $90.0 million, building product sales decreased 7.8% to $77.1 million, and wood product sales decreased 15.3% YOY to $13.3 million.
For the full 2019 fiscal year, Huttig posted net sales of $812.0 million, a 3.3% decrease compared to 2018. Huttig attributed the decrease to softness in the new residential construction market; a de-emphasis of low margin, commoditized products; a competitive market environment; and temporary operational disruption due to enterprise resource planning upgrades in the second and third quarters. For the full fiscal year, millwork sales decreased 4% compared to 2018, building product sales increased 0.3% from 2018, and wood product sales decreased 17.4% from 2018.
“Our sales were impacted in 2019 by lower levels of new residential construction in the first half of the year,” Jon Vrabely, president and CEO of Huttig, said in a news release. “Although new residential construction showed modest improvement in the second half of 2019, the growth was primarily concentrated in the fourth quarter and was heavier in the multifamily segment, where we have less exposure. We also continued our de-emphasis on more commoditized, lower margin categories.”
Huttig reported a net loss from continuing operations of $9.4 million in the fourth quarter of 2019, a 36% decrease YOY. For the full fiscal year, the distributor reported a net loss of $21.3 million, compared to a net loss of $6.0 million in 2018.
The company’s gross margin decreased 6.6% YOY to $35.6 million in the fourth quarter. Gross margin as a percentage of sales increased 30 basis points YOY to 19.7% in the fourth quarter. For the full fiscal year, Huttig reported a gross margin of $162.0 million, a 2.7% decrease compared to 2018, which the company attributed to lower overall sales margins. Gross margin as a percentage of net sales increased 20 basis points from 2018 to 20%.
The company’s adjusted EBITDA in the fourth quarter was -$4.9 million compared to -$4.1 million for the fourth quarter of 2018. For the full fiscal year, adjusted EBITDA decreased to $5.2 million in 2019 from $10.2 million in 2018.
Huttig distributes millwork, building materials, and wood products principally used in new residential construction and in-home improvement, remodeling, and repair work. The company distributes its products through 27 distribution centers servicing 41 states.
