Huttig Building Products recorded a $4.5 million net loss in the third quarter, quadruple its loss for the same quarter in 2009, on a 3.1% drop in sales to $127.2 million, the distributor reported today in an SEC filing.
Huttig attributed the deeper loss from continuing operations to several factors:
- The sales decline "reflects ongoing challenges in the residential construction market including the impact of the expiration of the home buyer tax credit on April 30, 2010, which, we believe, pulled forward sales into the first half of the year," the company said. Huttig reported in July that it had slashed its net loss in the second quarter to $2.3 million from $6 million in the year-earlier period, thanks in part to an 11.7% rise in sales from continuing operations to $113.9 million.
- Gross margin shrank by 10% in the period from 2009's third quarter to total $22.8 million, "primarily due to the continued increased pricing pressure in the down housing market coupled with lower margins on certain wood commodity products." Huttig said it expects that pricing pressure to continue for the rest of this year.
- Operating expenses grew by $700,000 to total $26.6 million, primarily because of higher medical and fuel costs as well as some severance charges.
- Net interest expense climbed to $700,000 from the year-earlier $400,000. Roughly $100,000 of that increase was a write-off of deferred finance charges.
Millwork accounted for 46% of the revenue, up from 42% in the July to September 2009 period. The share coming from general bulding products (including composite decking, housewrap, roofing products, and insulation) slipped to 43% from 49%, while wood products (mainly engineed wood products, lumber, and panels) accounted for 11% of sales, up from 9%.
Huttig finished the quarter with $51.1 million in long-term debt, markedly more than its $31.4 million in long-term debt at the end of 2009's third quarter. On Sept. 3, the company amended and restated its credit agreement, setting up a four-year, $120 million asset-based senior secured credit facility that, as Huttig put it, "increases the applicable interest rate margins and reduces the threshold of excess availability before the fixed charge coverage ratio must be testedfrom $25 million to a range of $10 million to $15 million depending on the company's borrowing base."
Based in St. Louis, Huttig distributes building products via 27 distribution centers serving 41 states.