Huttig pleased with Q3 growth
Building products distributor sees double-digit revenue gains.
Pointing to growth that outpaced the LBM market, St. Louis-based Huttig Building Products reported third quarter sales of $220.0 million, up 11.2% over the prior year.
Net income declined slightly to $1.2 million, compared to $1.4 million in the third quarter of 2017.
Residential construction activity was cited as one reason for sales gains. Another factor, according to the company, was the execution of its strategic growth initiatives.
“Our sales performance in the quarter clearly demonstrates that our growth and diversification strategy is working,” said Jon Vrabely, Huttig’s president and CEO. “While our total growth in the quarter far outpaced that of the market, of which a considerable amount was derived from outside our traditional customer segments, we need to continue to improve our margin and operating leverage to achieve our working capital targets. As such, we are taking measures to right-size our inventory and expense structure to be more aligned with our current and future projected growth.”
The company’s growth initiatives included an emphasis on building products, which saw the biggest percent gains in Q3. Huttig’s sales by category were reported like this:
- Building products sales increased 17.3% in the third quarter of 2018 to $96.9 million, compared to $82.6 million in the third quarter of 2017;
- Millwork product sales increased 7.4% in the third quarter of 2018 to $104.8 million, compared to $97.6 million in the third quarter of 2017; and
- Wood product sales increased 4.6% in the third quarter of 2018 to $20.3 million, compared to $19.4 million in the third quarter of 2017.
For the nine-month period, net sales were $643.4 million, which was $69.4 million, or 12.1%, higher than 2017. Here again, the company cited an increase in residential construction activity as compared to 2017 levels and organic growth derived from the execution of strategic growth initiatives.
Operating expenses increased $2.9 million to $41.1 million in the third quarter of 2018, compared to $38.2 million in the third quarter of 2017. Personnel costs increased approximately $1.5 million, primarily as a result of wage increases, increased variable compensation, higher healthcare costs, and hiring additional sales and warehouse personnel related to the execution of our strategic growth initiatives.
Non-personnel costs increased approximately $1.4 million, primarily as a result of higher fuel prices, increased contract hauling costs, and higher facilities costs.
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