Keipp Rejoins Huttig Amid 3Q Improvements and Added Investments in Doors

October 31st, 2018 by Editor

Philip Keipp kicked off a third quarter (3Q) earnings call this week, shortly after returning as Huttig Building Products’ vice president and chief financial officer (CFO). Keipp, who served as CFO from July 2009 to June 2015, rejoins the company amid what officials point to as strong upticks stemming from diversification—including additional investments into door fabrication.

“I am excited to be back [to] work with the senior leadership team and the organization to help drive the execution of our strategic growth initiatives,” Keipp announced, before introducing president and CEO Jon Vrabely, who covered as interim CFO since January 2018. Other joining officers included Bob Furio, executive vice president and chief operating officer.

Furio reported that, since embarking on an accelerated growth strategy in early 2017, officials aimed to transform Huttig into a more diverse company—a move he suggests makes it less susceptible to, “the volatility of the new residential construction market.” While Furio failed to peg down exactly what drivers of volatility might be, analysts of the construction industries point to rising interest rates, affordability issues among housing and labor shortages as recent factors. Nonetheless, Huttig officials say they’re looking toward, “significant sustainable above market growth opportunities for many years into the future.” To that end, “… we have invested in growth initiatives to expand our value add door fabrication services, as well as product line additions and expansions,” Furio said.

In its 3Q highlights, the company reported net sales of $222 million, representing an increase of 11.2 percent over the previous year and a mark that’s 6.7 percent above market growth. More than 60 percent of sales growth was derived from strategic initiatives, officials report.

“Our sales performance in the quarter clearly demonstrates that our growth and diversification strategy is working,” Vrabely said. “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.”

Millwork proved a valuable contributor, reporting suggests, with product sales increasing 7.4 percent year over year in 3Q, to $104.8 million, compared to $97.6 million in 3Q 2017. Those quarterly increases drove a 5.1-percent increase overall for Huttig’s millwork sector in 2018. Building products sales increased 17.3 percent over the same quarter, to $96.9 million, compared to $82.6 million in 3Q 2017, while wood product sales increased 4.6 percent to $20.3 million.

Among quarterly detractors, officials mentioned litigation costs related to a legal dispute with PrimeSource Building Products Inc., which settled in June 2018.

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