10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

Commission file number 1-14982

HUTTIG BUILDING PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-0334550
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

555 Maryville University Drive Suite 240 St. Louis, Missouri	63141
(Address of principal executive offices)	(Zip code)

(314) 216-2600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨        Accelerated filer  x        Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of Common Stock outstanding on March 31, 2006 was 20,519,641 shares.

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income for the three months ended March 31, 2006 and 2005 (unaudited)	3
	Consolidated Balance Sheets as of March 31, 2006 (unaudited), December 31, 2005 and March 31, 2005 (unaudited)	4
	Consolidated Statement of Shareholders’ Equity for the three months ended March 31, 2006 (unaudited)	6
	Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and 2005 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	20
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 5.	Other Information	21
Item 6.	Exhibits	21
Signatures		22
Exhibit Index		23

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In Millions, Except Per Share Data)

	Three Months Ended March 31,
	2006			2005
Net sales	$	281.1		$	249.4
Cost of sales		226.4			201.9
Gross margin		54.7			47.5
Operating expenses		49.8			42.3
Gain on disposal of capital assets		—			(2.5	)
Operating profit		4.9			7.7
Interest expense, net		(1.0	)		(1.1	)
Income from continuing operations before income taxes		3.9			6.6
Provision for income taxes		1.5			2.7
Income from continuing operations		2.4			3.9
Income from discontinued operations, net of taxes		—			1.4
Net Income	$	2.4		$	5.3
Net Income from Continuing Operations Per Share - Basic	$	0.12		$	0.20
Net Income from Discontinued Operations Per Share - Basic		—			0.07
Net Income Per Share - Basic	$	0.12		$	0.27
Net Income from Continuing Operations Per Share - Diluted	$	0.12		$	0.20
Net Income from Discontinued Operations Per Share - Diluted		—			0.07
Net Income Per Share - Diluted	$	0.12		$	0.27

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions)

	March 31, 2006		December 31, 2005		March 31, 2005
	(unaudited)				(unaudited)
ASSETS
Current Assets:
Cash and equivalents	$	1.7	$	1.4	$	1.2
Trade accounts receivable, net		116.7		85.3		105.1
Inventories		122.9		99.7		106.7
Other current assets		10.6		15.7		6.5
Total current assets		251.9		202.1		219.5
Property, Plant and Equipment:
Land		5.9		5.8		5.8
Building and improvements		31.8		31.6		29.9
Machinery and equipment		36.3		33.8		27.8
Gross property, plant and equipment		74.0		71.2		63.5
Less accumulated depreciation		35.2		34.8		31.8
Property, plant and equipment, net		38.8		36.4		31.7
Other Assets:
Goodwill, net		19.1		19.1		19.2
Other		8.0		7.9		8.0
Deferred income taxes		1.1		1.3		1.6
Total other assets		28.2		28.3		28.8
Total Assets	$	318.9	$	266.8	$	280.0

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share and Per Share Data)

	March 31, 2006			December 31, 2005			March 31, 2005
	(unaudited)						(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	8.8		$	9.7		$	5.5
Trade accounts payable		107.0			88.5			82.4
Deferred income taxes		5.3			5.1			5.1
Accrued compensation		6.2			9.8			8.0
Other accrued liabilities		9.9			11.3			10.8
Total current liabilities		137.2			124.4			111.8
Non-current Liabilities:
Long-term debt, less current maturities		58.9			23.5			65.0
Other non-current liabilities		3.9			4.0			3.5
Total non-current liabilities		62.8			27.5			68.5
Shareholders’ Equity:
Preferred shares; $.01 par (5,000,000 shares authorized)		—			—			—
Common shares; $.01 par (50,000,000 shares authorized; at March 31, 2006, December 31, 2005 and March 31, 2005—20,896,145 shares issued)		0.2			0.2			0.2
Additional paid-in capital		36.2			35.2			34.1
Retained earnings		86.1			83.7			70.6
Unearned compensation—restricted stock		(2.1	)		(0.7	)		—
Accumulated other comprehensive income		0.5			0.4			0.2
Less: Treasury shares, at cost (376,504 shares at March 31, 2006, 728,319 shares at December 31, 2005 and 1,018,644 shares at March 31, 2005)		(2.0	)		(3.9	)		(5.4	)
Total shareholders’ equity		118.9			114.9			99.7
Total Liabilities and Shareholders’ Equity	$	318.9		$	266.8		$	280.0

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(In Millions)

	Common Shares Outstanding, at Par Value		Additional Paid-In Capital			Retained Earnings		Unearned Compensation- Restricted Stock			Accumulated Other Comprehensive Income (Loss)		Treasury Shares, at Cost			Total Shareholders’ Equity
Balance at January 1, 2006	$	0.2	$	35.2		$	83.7	$	(0.7	)	$	0.4	$	(3.9	)	$	114.9
Net income							2.4										2.4
Fair market value adjustment of derivatives, net of tax benefit												0.1					0.1
Comprehensive income																	2.5
Restricted stock issued, net of forfeitures				0.7					(1.6	)				0.9			—
Stock compensation				0.2					0.2								0.4
Tax benefit on exercise of stock options				0.3													0.3
Stock options exercised				(0.2	)									1.0			0.8
Balance at March 31, 2006	$	0.2	$	36.2		$	86.1	$	(2.1	)	$	0.5	$	(2.0	)	$	118.9

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In Millions)

	Three Months Ended March 31,
	2006			2005
Cash Flows From Operating Activities:
Net income	$	2.4		$	5.3
Adjustments to reconcile net income to cash used in operations:
Net income from discontinued operations		—			(1.4	)
Depreciation and amortization		1.5			1.5
Non-cash stock compensation expense		0.4			—
Other adjustments		0.5			(2.4	)
Changes in operating assets and liabilities:
Trade accounts receivable		(31.4	)		(29.2	)
Inventories		(23.2	)		(24.2	)
Trade accounts payable		18.5			18.4
Other		(0.4	)		(0.5	)
Net cash used in operating activities of continuing operations		(31.7	)		(32.5	)
Net cash used in operating activities of discontinued operations		—			(1.8	)
Total cash used in operating activities		(31.7	)		(34.3	)
Cash Flows From Investing Activities:
Capital expenditures		(2.9	)		(0.5	)
Acquisition of Texas operations		—			(15.0	)
Proceeds from disposition of capital assets		0.1			2.4
Proceeds from disposition of discontinued operations		—			10.8
Total cash used in investing activities		(2.8	)		(2.3	)
Cash Flows From Financing Activities:
Borrowing and repayment of debt, net		33.7			32.9
Exercise of stock options		0.8			3.0
Tax benefit on exercise of stock options		0.3			—
Total cash provided by financing activities		34.8			35.9
Net Increase (Decrease) in Cash and Equivalents		0.3			(0.7	)
Cash and Equivalents, Beginning of Period		1.4			1.9
Cash and Equivalents, End of Period	$	1.7		$	1.2
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	1.0		$	1.1
Income taxes paid	$	1.5		$	—
Assets acquired with debt obligations	$	0.8		$	—

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

The unaudited interim consolidated financial statements of Huttig Building Products, Inc. (the “Company” or “Huttig”) were prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments (including normal recurring accruals) which, in the opinion of management, are considered necessary for the fair presentation of the results for the periods presented. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

The consolidated results of operations and resulting cash flows for the interim periods presented are not necessarily indicative of the results that might be expected for the full year. Due to the seasonal nature of Huttig’s business, operating profitability is usually lower in the Company’s first and fourth quarters than in the second and third quarters.

2. STOCK-BASED EMPLOYEE COMPENSATION

Prior to January 1, 2006, the Company accounted for its stock option plans using the intrinsic value method of accounting provided under APB Opinion No. 25 “Accounting for Stock Issued to Employees,” (APB 25) and related interpretations, as permitted by Financial Accounting Standards (SFAS) No. 123. Accordingly, share-based compensation for stock options was included as pro forma disclosure in the financial statement footnotes and continues to be provided in this manner for periods prior to January 1, 2006, as results for prior periods have not been restated.

Had the 2005 compensation cost been determined according to SFAS No. 123 (Revised), which was adopted by the Company on January 1, 2006 and is described in more detail below, the Company’s net income and earnings per share would have approximated the following pro forma amounts for the three months ended March 31, 2005:

(In millions, except per share amounts)	March 31, 2005
Net income as reported	$	5.3
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(0.1	)
Net income, pro forma	$	5.2
Net income per share - basic
As reported	$	0.27
Pro Forma	$	0.26
Net income per share - diluted
As reported	$	0.27
Pro Forma	$	0.26

The Company adopted SFAS No. 123 (Revised), Share-Based Payment on January 1, 2006 and has selected the Modified Prospective Application. Under this method, compensation costs recognized in the first quarter of 2006 include compensation costs for all share-based payments granted through December 31, 2005 for which the requisite service period had not been completed and compensation costs for all share-based payments granted subsequent to December 31, 2005. The grant values based on the date of grant for the grants prior to December 31, 2005 would not have been significantly different than calculated under SFAS No. 123 (Revised).

The fair value of each option award is estimated as of the date of grant using the Black-Scholes option pricing model. The weighted average assumptions used for the three month period ended March 31, 2006 in the model were as follows: expected term 5.7 years, expected volatility 48.8%, risk free interest rate 4.4% and expected dividend 0%. No options were granted in the first quarter of 2005. The expected term is estimated based on the Company’s past history of exercises and post-vesting employment termination behavior. The volatility is estimated based on historical volatility of Huttig stock calculated over the expected term of the option.

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The following summary presents the information regarding the outstanding stock options as of December 31, 2005 and changes during the first quarter of 2006 with regard to stock options:

	Shares (ooo’s)		Weighted Average Exercise Price		Average Remaining Contractual Term	Intrinsic Value (ooo’s)
Outstanding at December 31, 2005	1,292		$	4.90
Options granted	186			8.78
Options exercised	(185	)		4.12
Options cancelled	(12	)		4.97
Outstanding at March 31, 2006	1,281		$	5.58	7.4	$	4,783
Exercisable at March 31, 2006	840		$	3.99	6.5	$	4,469

During the first three months of 2006, the Company granted 179,915 shares of restricted stock at a weighted average fair market value of $8.77 under its 2005 Executive Incentive Compensation Plan. In addition, the Company granted 13,680 restricted stock units at a fair market value of $8.78 under its 2005 Non Employee Directors’ Restricted Stock Plan in the first three months of 2006.

The Company recognized approximately $0.4 million, or approximately $0.2 million net of related tax effects, in non-cash stock-based compensation expense in the three months ended March 31, 2006 for stock options ($0.2 million) and restricted stock awards ($0.2 million). As of March 31, 2006, the total compensation expense not yet recognized related to non-vested options and restricted stock awards is approximately $1.4 million and $2.0 million, respectively, and the related weighted average period over which it is expected to be recognized is approximately 11 months and 16 months, respectively.

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3. DEBT

Debt consisted of the following at March 31, 2006, December 31, 2005 and March 31, 2005 (in millions):

	March 31, 2006		December 31, 2005		March 31, 2005
Revolving credit facility	$	37.5	$	1.1	$	40.2
Term loan		23.6		24.6		27.8
Capital lease and other obligations		6.6		7.5		2.5
Total debt		67.7		33.2		70.5
Less current portion		8.8		9.7		5.5
Long-term debt	$	58.9	$	23.5	$	65.0

Credit Agreement — The Company has a credit agreement, which expires in September 2009, which provides for a term loan facility of $30 million and a revolving credit facility of up to $130 million. The revolving credit facility may be increased, subject to certain conditions, including bank approval, to a maximum availability of $180 million. As of March 31, 2006, the Company had revolving credit borrowings of $37.5 million, at a weighted average interest rate of 6.88%, and $23.6 million outstanding on the term loan under the credit agreement. The interest rate in the credit agreement on the term loan is variable. However, the Company has an interest rate swap agreement, which will expire in September 2009, which mirrors the term loan facility. The net effect of the swap agreement and the term loan facility is to provide the Company with a fixed rate of interest of 3.76%, plus an applicable borrowing spread of between 100 and 200 basis points above LIBOR depending on the ratio of senior debt to earnings before interest, taxes, depreciation and amortization, as defined (EBITDA) at the end of each quarter. This interest rate swap is used to hedge interest rate risks related to the Company’s variable rate term loan and is accounted for as a cash flow hedge. As of March 31, 2006, the effective interest rate on the term loan was 5.01%.

Compliance with the loan covenant in the credit agreement that is based on the amount of senior debt outstanding limits the amount available to the Company under its revolving credit facility. At March 31, 2006, the Company had approximately $41.1 million of credit available under its revolving credit facility in addition to the amount outstanding, based on the senior debt to EBITDA covenant.

The term loan facility provides for quarterly principal payments of approximately $1.1 million. Subject to certain exceptions, the Company is required to repay amounts outstanding under the credit agreement from the cash proceeds of asset dispositions, debt or equity securities issuances and insurance claims related to its owned real estate. The Company must also pay a commitment fee in the range of 0.25% to 0.40% per annum on the average daily-unused amount of the revolving credit commitment. The entire unpaid balance under the credit agreement is due and payable on September 23, 2009, the maturity date of the credit agreement.

The credit agreement contains financial covenants, including a minimum fixed charge coverage ratio, a maximum senior debt to EBITDA ratio, a minimum asset coverage ratio, and minimum tangible net worth. The credit agreement also contains restrictive covenants pertaining to the management and operations of Huttig and its subsidiaries. The covenants include, among others, limitations on indebtedness, guarantees, letters of credit, liens, investments, dividends, acquisitions, and asset sales. At March 31, 2006, the Company is in compliance with the debt covenants.

The credit agreement is guaranteed by each of the Company’s operating subsidiaries, and is secured by (i) a pledge to the administrative agent of the capital stock of Huttig’s subsidiaries, and (ii) the grant of security interests and liens on substantially all of the consolidated assets of Huttig and its subsidiaries, excluding, among other things, certain specified real estate assets.

At March 31, 2006, the Company had letters of credit outstanding under the credit agreement totaling $7.6 million, primarily for health and workers’ compensation insurance.

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4. CONTINGENCIES

The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company generally has self-insured retention limits and has obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on claims experience. Liabilities for existing and unreported claims are accrued when it is probable that future costs will be incurred and can be reasonably estimated.

The Company is subject to federal, state and local environmental protection laws and regulations. The Company’s management believes the Company is in compliance, or is taking action aimed at assuring compliance, with applicable environmental protection laws and regulations. However, there can be no assurance that future environmental liabilities will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.

In 1995, Huttig was identified as a potentially responsible party in connection with the clean up of pentachlorophenol, or PCP, at a formerly owned property in Montana that was used for the manufacture of wood windows. Huttig is voluntarily remediating this property under the oversight of and in cooperation with the Montana Department of Environmental Quality (“MDEQ”), and is complying with a 1995 unilateral administrative order of the MDEQ to complete a remedial investigation and feasibility study. The remedial investigation was completed and approved in 1998 by the MDEQ, which has issued its final risk assessment of this property. In March 2003, the MDEQ approved Huttig’s work plan for conducting a feasibility study to evaluate alternatives for cleanup. In July 2004, Huttig submitted the feasibility study report, which evaluated several potential remedies, including continuation and enhancement of remedial measures already in place and operating. Huttig also submitted plans for testing new technologies that could effectively remediate the site. The MDEQ will comment on the feasibility study report and its recommended remedy, and then will select a final remedy, publish a record of decision and negotiate with Huttig for an administrative order of consent on the implementation of the final remedy. Based on experience to date in remediating this site, the Company believes that the scope of remediation that the MDEQ ultimately determines will not have a material adverse effect on its results of operations or financial condition. The Company spent less than $0.1 million on remediation costs at this site in each of the three month periods ended March 31, 2006 and 2005, respectively. The annual level of future remediation expenditures is difficult to estimate because of the uncertainty relating to the final remedy to be selected by the MDEQ. As of March 31, 2006, the Company has accrued $0.6 million for future costs of remediating this site. Until the MDEQ selects a final remedy, however, management can give no assurance as to the scope or cost to Huttig of the final remediation order.

In June 2004, as part of the due diligence conducted by a party interested in acquiring the American Pine Products facility in Prineville, Oregon, a previously unknown release of petroleum hydrocarbons and pentachlorophenol, or PCP, was discovered in soil and groundwater at the facility. Based on the initial investigation, the Company believes that the source of the contamination was a former wood-dipping operation on the property that was discontinued approximately 20 years ago, prior to Huttig acquiring the facility. The Company has voluntarily reported this discovery to the Oregon Department of Environmental Quality (“ODEQ”) and has agreed to participate in the ODEQ’s voluntary cleanup program. Pursuant to this program, the Company has begun to remediate the property by product recovery under the oversight of the ODEQ. The Company has substantially completed its investigation of the scope of contamination and has submitted a preliminary report describing that scope to the ODEQ. The Company has placed previous owners of the facility on notice and made a related claim against them for costs associated with the remediation of this property. The Company spent less than $0.1 million on remediation costs at this site in each of the three month periods ended March 31, 2006 and 2005. As of March 31, 2006, the Company has accrued approximately $0.2 million for future costs of remediating this site. Until the ODEQ selects a final remedy, however, management can give no assurance as to the scope or cost to Huttig of the final remediation order.

In addition, some of our current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which we, among others, could be held responsible. We currently believe that there are no material environmental liabilities at any of our distribution center locations.

The Company and a former-employee driver had both been named as defendants in a wrongful death suit entitled Bank of Tampa (Estate of Jerome Parker) v. Huttig Building Products, Inc. and Noel Medina, Civil Action No. 8:05-CV-368, filed on or about January 28, 2005. The Plaintiff alleged liability for damages arising out of an accident that occurred on January 8, 2004 in Tampa, Florida. In March 2006, the parties entered into a final settlement of this lawsuit with no significant impact to the Company’s operating results or cash flows in the 2006 first quarter.

The Company accrues expenses for contingencies when it is probable that an asset has been impaired or a liability has been incurred and management can reasonably estimate the expense. Contingencies for which the Company has made accruals include environmental, product liability and other legal matters. Based on management’s assessment of the most recent

11

information available, management currently does not expect any of these contingencies to have a material adverse effect on the Company’s financial position or cash flow. It is possible, however, that future results of operations for any particular quarter or annual period and our financial condition could be materially affected by changes in assumptions or other circumstances related to these matters.

5. BASIC AND DILUTED NET INCOME PER SHARE

The following table sets forth the computation of net income per basic and diluted share (net income amounts in millions, share amounts in thousands, per share amounts in dollars):

	Three Months Ended March 31,
	2006		2005
Net income available to common shareholders
Net income from continuing operations	$	2.4	$	3.9
Net income from discontinued operations		—		1.4
Net income	$	2.4	$	5.3
Weighted average number of basic shares outstanding		20,186		19,642
Net income per share - Basic
Net income from continuing operations	$	0.12	$	0.20
Net income from discontinued operations		—		0.07
Net income	$	0.12	$	0.27
Weighted average number of basic shares outstanding		20,186		19,642
Effect of dilutive securities – options, restricted stock and restricted stock units outstanding		384		501
Weighted average number of diluted shares outstanding		20,570		20,143
Net income per share - Diluted
Net income from continuing operations	$	0.12	$	0.20
Net income from discontinued operations		—		0.07
Net income	$	0.12	$	0.27

At March 31, 2006, stock options to purchase 136,500 shares were not dilutive and, therefore, were not included in the computations of diluted income per share amounts. At March 31, 2005, all stock options were dilutive.

6. DIVESTITURES

During the first three months of 2005, the Company sold its remaining Builder Resource one-step branches, and certain assets, including certain accounts receivable, inventory, equipment and real property for $10.8 million in cash and reported an after-tax gain of $1.4 million. The after-tax gain is included in net income from discontinued operations for the 2005 first three months. The Company used the proceeds of the sale to pay down debt and retained trade payables. The operating results of our discontinued operations are shown below

DISCONTINUED OPERATIONS

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions)

	Three Months Ended March 31, 2005
Net Sales	$	2.5
Income before Income Taxes		2.2
Provision for Income Taxes		(0.8	)
Net Income	$	1.4

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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Huttig is a distributor of building materials used principally in new residential construction and in home improvement, remodeling, and repair work. We distribute our products through 46 distribution centers serving 48 states and sell primarily to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes.

The following table sets forth our sales from continuing operations, by product classification as a percentage of total sales:

	Three Months Ended March 31,
	2006		2005
Millwork(1)	54	%	52	%
General Building Products(2)	31	%	29	%
Wood Products(3)	15	%	19	%
Total Net Product Sales	100	%	100	%

(1) Millwork includes exterior and interior doors, pre-hung door units, windows, patio doors, mouldings, frames, stair parts and columns.

(2) General building products include composite decking, connectors, fasteners, housewrap, roofing products, insulation and other miscellaneous building products.

(3) Wood products include engineered wood products, and other wood products, such as lumber and panels.

Industry Conditions

Various factors historically have caused our results of operations to fluctuate from period to period. These factors include levels of construction, home improvement and remodeling activity, weather, prices of commodity wood products, interest rates, competitive pressures, availability of credit and other local, regional and national economic conditions. Many of these factors are cyclical or seasonal in nature. We anticipate that fluctuations from period to period will continue in the future. Our first quarter and fourth quarter are generally adversely affected by winter weather patterns in the Midwest and Northeast, which typically result in seasonal decreases in levels of construction activity in these areas. Because much of our overhead and expenses remain relatively fixed throughout the year, our operating profits tend to be lower during the first and fourth quarters.

We believe we have the product offerings, warehouse and support facilities, personnel, systems infrastructure and financial and competitive resources necessary for continued business success. Our future revenues, costs and profitability, however, are all likely to be influenced by a number of risks and uncertainties, including those discussed under “Cautionary Statement,” below.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require management to make estimates and assumptions. Management bases these estimates and assumptions on historical results and known trends as well as management forecasts. Actual results could differ from these estimates and assumptions. See our Annual Report on Form 10-K in Part II, Item 7 - “Managements’ Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates.”

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Results of Operations

Three Months Ended March 31, 2006 Compared to the Three Months Ended March 31, 2005

Continuing Operations

Net sales from continuing operations were $281.1 million, which were $31.7 million, or approximately 13%, higher than 2005. Sales increased in all four regions. By region, sales in the Southeast, Northeast, West and Midwest regions increased 22%, 13%, 9%, and 2%, respectively. Net sales in the 2006 first quarter benefited from higher millwork and building product sales, as well as favorable winter weather.

By product, sales increased in the millwork and building product categories, compared to the year-ago quarter and sales in the wood products category decreased slightly. Millwork sales increased 17% to $151.2 million primarily due to increased sales of exterior and interior doors. Building products increased 20% to $87.6 million, led by decking, siding, roofing, connectors, house wrap and railings. Engineered wood sales were up 26% to $11.6 million, while sales of other wood products, mostly commodity products, decreased 18% to $30.7 million.

Gross margin increased 15% to $54.7 million or 19.5% of sales as compared to $47.5 million or 19.0% of sales in the prior year period. As compared to the prior year quarter, our gross margin as a percentage of sales benefited from a more favorable product mix of millwork and building products along with higher margins on millwork, including mouldings. First quarter 2005 moulding margins were negatively impacted by a decline in moulding prices.

Operating expenses totaled $49.8 million or 17.7% of sales, in the 2006 first quarter, compared to $42.3 million or 17.0% of sales in the prior-year quarter. Operating expenses in 2006 included an increase of approximately $0.4 million of non-cash stock-based compensation expense as the Company began expensing stock options effective January 1, 2006. Operating expenses in the 2006 first quarter also reflected other increased personnel costs of $5.0 million primarily due to an increase in employee headcount to support the Company’s new branches and other expansion strategies, as well as higher incentive compensation costs. Non-personnel expenses increased $2.1 million in the 2006 first quarter, as compared to the 2005 first quarter which benefited approximately $0.6 million from the settlement of the Rugby lawsuit. Excluding the Rugby settlement, the $1.4 million increase in 2006 first quarter non-personnel expenses was primarily due to higher fuel, utilities and building and equipment rent costs, including expenses associated with our new branches as these investments ramp up.

The year-ago quarter included a gain on the sale of a facility of $2.5 million, which benefited after-tax results by approximately $0.08 a share.

Net interest expense was $1.0 million in the current quarter and $1.1 million prior year quarter as lower debt balances were partially offset by increased interest rates in the first quarter of 2006 compared to the year ago quarter.

Income taxes as a percentage of pre-tax income for the three months ended March 31, 2006 and 2005 were approximately 38% and 41%, respectively.

As a result of the foregoing factors, operating profits from continuing operations decreased to $4.9 million in the 2006 first quarter from $7.7 million in the year ago quarter. Net income from continuing operations was $2.4 million, or $0.12 per diluted share, in the 2006 first quarter, as compared to $3.9 million, or $0.20 per diluted share, in the 2005 first quarter, which included the $2.5 million gain on the sale of a facility and the $0.6 million favorable legal settlement that together benefited 2005 first quarter results by $0.09 per diluted share.

Discontinued Operations

Results from discontinued operations in the three months ended March 31, 2005 reflect sales of $2.5 million and an after-tax gain of $1.4 million on the February 1, 2005 divestiture of the remaining Builder Resource one-step branches.

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Liquidity and Capital Resources

We depend on cash flow from operations and funds available under our revolving credit facility to finance seasonal working capital needs, capital expenditures and any acquisitions that we may undertake. Our working capital requirements are generally greatest in the second and third quarters, which reflect the seasonal nature of our business. The second and third quarters are also typically our strongest operating quarters, largely due to more favorable weather throughout many of our markets compared to the first and fourth quarters. We typically generate cash from working capital reductions in the fourth quarter of the year and build working capital during the first quarter in preparation for our second and third quarters. We also maintain significant inventories to meet rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery and service terms with our suppliers. At March 31, 2006, December 31, 2005 and March 31, 2005, inventories constituted approximately 39%, 37% and 38% of our total assets, respectively. We also closely monitor operating expenses and inventory levels during seasonally affected periods and, to the extent possible, manage variable operating costs to minimize seasonal effects on our profitability.

Operations. Cash used in continuing operating activities decreased $0.8 million to $31.7 million for the three months ended March 31, 2006 from $32.5 million for the first three months of 2005. Accounts receivable increased by $31.4 million in the 2006 first quarter compared to an increase of $29.2 in the 2005 first quarter. Days sales outstanding decreased to 37.9 days at March 31, 2006 compared to 38.5 days at March 31, 2005 based on annualized sales for the respective immediately preceding quarter. Inventory increased by $23.2 million in the 2006 first quarter compared to an increase of $24.2 million in the 2005 first quarter. Annualized inventory turns, calculated as the ratio of annualized cost of goods sold for each three-month period ended March 31 divided by the average of the beginning and ending inventory balances for each such three-month period, were 8.1 turns at March 31, 2006 compared to 8.9 turns at March 31, 2005. The reduction in inventory turns is partially related to our investment in inventory at our Long Island and Minneapolis branches, which were not operating in the first quarter of 2005, and to inventory purchased in the first quarter of 2006 related to a new wood product line for sales in the following quarters of 2006. In the 2006 first quarter, the Company received a $1.6 million insurance recovery on the inventory at its leased facility in Riviera Beach, Florida. In April 2006, the Company received the remaining $0.4 million of the insurance recovery on this inventory.

Investing. Cash used in investing activities for the three months ended March 31, 2006 reflects $1.1 million related to a new enterprise resource planning system and the balance primarily to machinery and equipment at multiple branch locations. Cash used in investing activities for the three months ended March 31, 2005 reflects $15.0 million used for the acquisition of Texas Wholesale in Dallas, Texas, and $0.5 million of capital expenditures for continuing operating activities and for development of the new enterprise resource planning system. The uses of cash in investing activities in the first quarter of 2005 were partially offset by $10.8 million of proceeds from the disposition of our remaining Builder Resource locations in Alabama, Tennessee, and Kansas, $2.4 million of proceeds from the sale of our Manchester, New Hampshire facility. At March 31, 2006, the Company has invested approximately $7.0 million in a new enterprise resource planning system. During the first quarter of 2006, we invested $1.9 million in this project, including approximately $0.8 million related to consulting services financed directly by our vendor and considered non-cash financing. The balance of approximately $1.1 million relates primarily to internal costs capitalized in developing this system.

Financing. Cash provided from financing activities for the first three months of 2006 and 2005 primarily reflect $33.7 million and $32.9 million in net borrowings, respectively. Cash provided from financing activities in the 2006 and 2005 first three months also reflects $1.1 million and $3.0 million, respectively, from the exercise of employee stock options.

The Company has a credit agreement, which expires in September 2009, which provides for a term loan facility of $30 million and a revolving credit facility of up to $130 million. The revolving credit facility may be increased, subject to certain conditions, including bank approval, to a maximum availability of $180 million. As of March 31, 2006, the Company had revolving credit borrowings of $37.5 million, at a weighted average interest rate of 6.88%, and $23.6 million outstanding on the term loan under the credit agreement. The interest rate in the credit agreement on the term loan is variable. However, the Company has an interest rate swap agreement, which will expire in September 2009, which mirrors the term loan facility. The net effect of the swap agreement and the term loan facility is to provide the Company with a fixed rate of interest of 3.76%, plus an applicable borrowing spread of between 100 and 200 basis points above LIBOR depending on the ratio of senior debt to earnings before interest, taxes, depreciation and amortization, as defined (EBITDA) at the end of each quarter. This interest rate swap is used to hedge interest rate risks related to the Company’s variable rate term loan and is accounted for as a cash flow hedge. As of March 31, 2006, the effective interest rate on the term loan was 5.01%.

Compliance with the loan covenant in the credit agreement that is based on the amount of senior debt outstanding limits the amount available to the Company under its revolving credit facility. At March 31, 2006, the Company had approximately $41.1 million of credit available under its revolving credit facility in addition to the amount outstanding, based on the senior debt to EBITDA covenant.

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The term loan facility provides for quarterly principal payments of approximately $1.1 million. Subject to certain exceptions, the Company is required to repay amounts outstanding under the credit agreement from the cash proceeds of asset dispositions, debt or equity securities issuances and insurance claims related to its owned real estate. The Company must also pay a commitment fee in the range of 0.25% to 0.40% per annum on the average daily-unused amount of the revolving credit commitment. The entire unpaid balance under the credit agreement is due and payable on September 23, 2009, the maturity date of the credit agreement.

The credit agreement contains financial covenants, including a minimum fixed charge coverage ratio, a maximum senior debt to EBITDA ratio, a minimum asset coverage ratio, and minimum tangible net worth. The credit agreement also contains restrictive covenants pertaining to the management and operations of Huttig and its subsidiaries. The covenants include, among others, limitations on indebtedness, guarantees, letters of credit, liens, investments, dividends, acquisitions, and asset sales. At March 31, 2006, the Company is in compliance with the debt covenants.

The credit agreement is guaranteed by each of the Company’s operating subsidiaries, and is secured by (i) a pledge to the administrative agent of the capital stock of Huttig’s subsidiaries, and (ii) the grant of security interests and liens on substantially all of the consolidated assets of Huttig and its subsidiaries, excluding, among other things, certain specified real estate assets.

At March 31, 2006, the Company had letters of credit outstanding under the credit agreement totaling $7.6 million, primarily for health and workers’ compensation insurance.

We believe that cash generated from our operations and funds available under our credit facility will provide sufficient funds to meet our currently anticipated short-term and long-term liquidity and capital expenditure requirements.

Off-Balance Sheet Arrangements

In addition to funds available from operating cash flows, and bank credit agreements as described above, we use operating leases as a principal off-balance sheet technique. Operating leases are employed as an alternative to purchasing certain property, plant and equipment. See our Annual Report on Form 10-K in Part II, Item 7 - “Managements’ Discussion and Analysis of Financial Condition and Results of Operations-Commitments and Contingencies.”

Divestitures

During the first three months of 2005, we sold our remaining Builder Resource one-step branches, and certain assets, including accounts receivable, inventory, equipment and real property for $10.8 million in cash and reported an after-tax gain of $1.4 million. The after-tax gain is included in net income from discontinued operations for the three months ended March 31, 2005. We used the proceeds of the sale to pay down debt and trade payables. We reported these branches as discontinued operations and related assets were classified as held for sale effective December 31, 2004.

Acquisition

During the first quarter of 2005, we, through our wholly owned subsidiary, Huttig Texas Limited Partnership, completed the purchase of substantially all of the assets of Texas Wholesale for $15.0 million in cash, $2.2 million in guaranteed payments to the former majority owner and the assumption of certain liabilities. The source of funds for the acquisition was our existing credit facility.

Contingencies

The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company generally has self-insured retention limits and has obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on claims experience. Liabilities for existing and unreported claims are accrued when it is probable that future costs will be incurred and can be reasonably estimated.

The Company is subject to federal, state and local environmental protection laws and regulations. The Company’s management believes the Company is in compliance, or is taking action aimed at assuring compliance, with applicable environmental protection laws and regulations. However, there can be no assurance that future environmental liabilities will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.

In 1995, Huttig was identified as a potentially responsible party in connection with the clean up of pentachlorophenol, or PCP, at a formerly owned property in Montana that was used for the manufacture of wood windows. Huttig is voluntarily

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remediating this property under the oversight of and in cooperation with the Montana Department of Environmental Quality (“MDEQ”), and is complying with a 1995 unilateral administrative order of the MDEQ to complete a remedial investigation and feasibility study. The remedial investigation was completed and approved in 1998 by the MDEQ, which has issued its final risk assessment of this property. In March 2003, the MDEQ approved Huttig’s work plan for conducting a feasibility study to evaluate alternatives for cleanup. In July 2004, Huttig submitted the feasibility study report, which evaluated several potential remedies, including continuation and enhancement of remedial measures already in place and operating. Huttig also submitted plans for testing new technologies that could effectively remediate the site. The MDEQ will comment on the feasibility study report and its recommended remedy, and then will select a final remedy, publish a record of decision and negotiate with Huttig for an administrative order of consent on the implementation of the final remedy. Based on experience to date in remediating this site, the Company believes that the scope of remediation that the MDEQ ultimately determines will not have a material adverse effect on its results of operations or financial condition. The Company spent less than $0.1 million on remediation costs at this site in each of the three month periods ended March 31, 2006 and 2005, respectively. The annual level of future remediation expenditures is difficult to estimate because of the uncertainty relating to the final remedy to be selected by the MDEQ. As of March 31, 2006, the Company has accrued $0.6 million for future costs of remediating this site. Until the MDEQ selects a final remedy, however, management can give no assurance as to the scope or cost to Huttig of the final remediation order.

In June 2004, as part of the due diligence conducted by a party interested in acquiring the American Pine Products facility in Prineville, Oregon, a previously unknown release of petroleum hydrocarbons and pentachlorophenol, or PCP, was discovered in soil and groundwater at the facility. Based on the initial investigation, the Company believes that the source of the contamination was a former wood-dipping operation on the property that was discontinued approximately 20 years ago, prior to Huttig acquiring the facility. The Company has voluntarily reported this discovery to the Oregon Department of Environmental Quality (“ODEQ”) and has agreed to participate in the ODEQ’s voluntary cleanup program. Pursuant to this program, the Company has begun to remediate the property by product recovery under the oversight of the ODEQ. The Company has substantially completed its investigation of the scope of contamination and has submitted a preliminary report describing that scope to the ODEQ. The Company has placed previous owners of the facility on notice and made a related claim against them for costs associated with the remediation of this property. The Company spent less than $0.1 million on remediation costs at this site in each of the three month periods ended March 31, 2006 and 2005. As of March 31, 2006, the Company has accrued approximately $0.2 million for future costs of remediating this site. Until the ODEQ selects a final remedy, however, management can give no assurance as to the scope or cost to Huttig of the final remediation order.

In addition, some of our current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which we, among others, could be held responsible. We currently believe that there are no material environmental liabilities at any of our distribution center locations.

The Company and a former-employee driver had both been named as defendants in a wrongful death suit entitled Bank of Tampa (Estate of Jerome Parker) v. Huttig Building Products, Inc. and Noel Medina, Civil Action No. 8:05-CV-368, filed on or about January 28, 2005. The Plaintiff alleged liability for damages arising out of an accident that occurred on January 8, 2004 in Tampa, Florida. In March 2006, the parties entered into a final settlement of this lawsuit with no significant impact to the Company’s operating results or cash flows in the 2006 first quarter.

The Company accrues expenses for contingencies when it is probable that an asset has been impaired or a liability has been incurred and management can reasonably estimate the expense. Contingencies for which the Company has made accruals include environmental, product liability and other legal matters. Based on management’s assessment of the most recent information available, management currently does not expect any of these contingencies to have a material adverse effect on the Company’s financial position or cash flow. It is possible, however, that future results of operations for any particular quarter or annual period and our financial condition could be materially affected by changes in assumptions or other circumstances related to these matters.

Cautionary Statement

Certain statements in this Form 10-Q contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding:

• our expectation that known contingencies, including risks relating to environmental and legal proceedings, will not have a material adverse effect on our financial position or cash flow;

• our belief that cash from operations and funds under our credit facility will be sufficient to meet our short-term and long-term liquidity and capital expenditure requirements;

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• our belief that we have the product offerings, warehouse and support facilities, personnel, systems infrastructure and financial and competitive resources necessary for continued business success;

• our liquidity and exposure to market risk; and

• cyclical and seasonal trends, including our statements that operating profits are usually lower in the first and fourth quarters than in the second and third quarters, that we typically generate cash from working capital reductions in the fourth quarter and build working capital in the first quarter, and that our working capital requirements are generally greatest in the second and third quarters.

The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements present management’s expectations, beliefs, plans and objectives regarding our future business and financial performance. These forward-looking statements are based on current projections, estimates, assumptions and judgments, and involve known and unknown risks and uncertainties. There are a number of factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. These factors include, but are not limited to, the following:

• the strength of the national and local new residential construction and home improvement and remodeling markets, which in turn depend on factors such as

• interest rates,

• immigration patterns,

• regional demographics,

• employment levels,

• availability of credit,

• prices of wood and steel products,

• consumer confidence and

• weather conditions,

• the level of competition in our industry,

• our relationships with suppliers of the products we distribute,

• our ability to comply with availability requirements and financial covenants under our revolving credit facility,

• fluctuation in prices of wood and steel products,

• costs of complying with environmental laws and regulations,

• our exposure to product liability claims,

• our ability to attract and retain key personnel and

• risk of losses associated with accidents.

Additional information concerning these and other factors that could materially affect our results of operations and financial condition are included in our most recent Annual Report on Form 10-K. We disclaim any obligation to publicly update or revise any of these forward-looking statements.

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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk as it relates to effects of changes in interest rates. We had debt outstanding at March 31, 2006 under our revolving credit facility of $37.5 million and a term loan of $23.6 million.

In September 2004, we entered into an interest rate swap agreement, which will expire in September 2009, which mirrors the term loan facility. The net effect of the swap agreement and the term loan facility is to provide the Company with a fixed rate of interest of 3.76%, plus an applicable borrowing spread of between 100 and 200 basis points above LIBOR depending on the ratio of senior debt to earnings before interest, taxes, depreciation and amortization, as defined (EBITDA) at the end of each quarter. This interest rate swap is used to hedge interest rate risks related to our variable rate term loan and is accounted for as a cash flow hedge.

All of our debt under our revolving credit facility accrues interest at a floating rate basis of between 100 and 200 basis points above LIBOR. If market interest rates for LIBOR had been different by an average of 1% for the three months ended March 31, 2006, our interest expense and income before taxes would have changed by $0.1 million. These amounts are determined by considering the impact of the hypothetical interest rates on our borrowing cost. This analysis does not consider the effects of any change in the overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management may take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our financial structure.

We are subject to periodic fluctuations in the price of wood and steel commodities. Profitability is influenced by these changes as prices change between the time we buy and sell the wood or steel. In addition, to the extent changes in interest rates affect the housing and remodeling market, we would be affected by such changes.

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ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures – The Company, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective as of March 31, 2006 in all material respects in (a) causing information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) causing such information to be accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control of Financial Reporting – There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2006, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

The Company and a former-employee driver had both been named as defendants in a wrongful death suit entitled Bank of Tampa (Estate of Jerome Parker) v. Huttig Building Products, Inc. and Noel Medina, Civil Action No. 8:05-CV-368, filed on or about January 28, 2005. The Plaintiff alleged liability for damages arising out of an accident that occurred on January 8, 2004 in Tampa, Florida. In March 2006, the parties entered into a final settlement of this lawsuit with no significant impact to the Company’s operating results or cash flows in the first quarter of 2006.

See Note 4 – Contingencies of the Notes to Consolidated Financial Statements in Item 1 for information on this and other legal proceedings in which the Company is involved.

ITEM 5 — OTHER INFORMATION

The Company and Hank Krey entered into a separation agreement (the “Agreement”) dated April 28, 2006 in connection with Mr. Krey’s resignation as Vice President – Chief Information Officer of the Company. Pursuant to the Agreement, the Company will pay Mr. Krey his base salary through March 30, 2007 or such earlier date as Mr. Krey obtains other full-time employment. In addition, Mr. Krey will have the right to continue to participate in certain of the Company’s benefit programs through that date. The Company will also pay Mr. Krey the balance in his deferred bonus bank at December 31, 2005 under the Company’s EVA Incentive Compensation Plan. The Agreement contains mutual releases of liability between Mr. Krey and Huttig.

The description of the Agreement set forth above is qualified in its entirety by reference to the actual terms of the Agreement, which is filed as an exhibit to this Quarterly Report on Form 10-Q.

ITEM 6 — EXHIBITS

Exhibit Number	Description
3.1	Restated Certificate of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Form 10 filed with the Commission on September 21, 1999.)
3.2	Amended and Restated Bylaws of the Company (as of September 28, 2005). (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Commission on October 4, 2005.)
*10.1	Agreement between Hank Krey and the Company dated April 28, 2006.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

* Management plan or compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HUTTIG BUILDING PRODUCTS, INC.
Date: May 4, 2006	/s/ Michael A. Lupo
	Michael A. Lupo
	President, Chief Executive Officer
	And Director (Principal Executive Officer)
Date: May 4, 2006	/s/ David L. Fleisher
	David L. Fleisher
	Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit Number	Description
*10.1	Agreement between Hank Krey and the Company dated April 28, 2006.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

* Management plan or compensatory plan or arrangement

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EX-10.1

Exhibit 10.1

SEPARATION AGREEMENT AND

RELEASE OF ALL CLAIMS

This Separation Agreement and Release of all Claims (“Release”) is made and entered into by and between Hank Krey (“Employee”) and Huttig Building Products, Inc., its affiliates, subsidiaries, related corporations, successors and assigns (the “Company”) as of this 28^th day of April, 2006 (the “Effective Date”). In consideration of the following promises, the parties agree as follows:

1. Employee acknowledges that he will separate from employment with the Company effective as of the earlier of (a) March 30, 2007 or (b) such date as Employee commences full-time employment with another employer (such date being hereafter referred to as the “Separation Date”). As of the Separation Date, Employee’s employment relationship with the Company will end. In connection with Employee’s separation, the Company and Employee have agreed to settle all matters relating to Employee’s employment relationship with the Company and its termination.

2. Employee voluntarily terminates and irrevocably resigns from the Company effective as of the Separation Date, which termination and resignation is hereby accepted by the Company. Employee’s personnel file will reflect his resignation as of the Separation Date. As of March 30, 2006, Employee shall automatically and without taking any further actions be deemed to have resigned from all officer and director positions then held by him with the Company and all of its subsidiaries. Notwithstanding the foregoing, Employee will continue as an employee of the Company until the Separation Date, although his active employment will end on March 30, 2006. He will be on paid leave from March 30, 2006 through the Separation Date (the “Severance Period”). Employee shall promptly notify the Company in writing if he becomes employed on a full-time basis by another employer prior to March 30, 2007 which notification shall include the amount of Employee’s new base salary with his new employer.

3. In consideration for the releases and covenants by Employee contained in this Release, the Company shall, on the terms and conditions hereinafter set forth, provide to Employee:

(a) During the Severance Period, the Company shall pay Employee 100% of Employee’s current base salary (his current base salary is $195,000.00 on an annualized basis). If Employee becomes employed by another employer prior to March 30, 2007, at a base salary less than Employee’s current base salary, then the Company shall continue to pay to Employee severance payments equal to the difference between Employee’s new base salary and Employee’s current base salary until March 30, 2007. Such amounts will be paid in accordance with the Company’s regular payroll practices, prorated for any partial payroll periods, and will be subject to all withholding and deductions currently applicable to compensation received by an employee as an employee of the Company.

(b) On or promptly following the expiration of the 7-day revocation period set for in paragraph 11 of this Release, the Company shall pay Employee the entire balance (as of December 31, 2005 and after taking into account 2005 results) of his EVA Bank account under the Company’s EVA Incentive Compensation Plan, subject to all withholding and deductions currently applicable to compensation received by an employee as an employee of the Company.

(c) On or promptly following the expiration of the 7-day revocation period set forth in paragraph 11 of this Release, the Company shall pay Employee the value of Employee’s accrued, but unused vacation pay for 2006, which is equal to two and one-half days of pay based on Employee’s current base salary, subject to all withholding and deductions currently applicable to compensation received by an employee as an employee of the Company

(d) During the Severance Period, Employee will not receive or accrue any paid time off, such as vacation days or holidays.

(e) During the Severance Period, Employee will have the right to continue to participate in the Company’s benefit programs (as those programs may exist from time to time), provided that Employee contributes the same amount for such benefit coverages as other similarly situated employees (which contributions will be withheld from the payments provided in paragraph (a) above), and provided that the Company continues such coverage for active employees. Notwithstanding the foregoing, during the Severance Period, Employee shall not be entitled to any coverage under the Company’s short-term or long-term disability plans or under any Company sponsored life insurance.

(f) Employee shall have the right to continued use of the Company vehicle (provided that Employee maintains compliance with HB-102 the Company Vehicle Policy), laptop and cell phone currently assigned to Employee until the earlier of (i) the Separation Date or (ii) the date Employee relocates from the St. Louis, Missouri area, at which time Employee’s right to use such property shall terminate and Employee shall be responsible for returning such property to the Company.

(g) Any stock options and restricted stock granted to Employee under the Company’s equity incentive plans that are not vested as of March 30, 2006 shall be forfeited. The stock options granted to Employee under such equity compensation plans that are vested as of March 30, 2006 shall remain exercisable for ninety (90) days following the Separation Date.

(h) A statement that the Company’s records shall reflect Employee’s resignation effective as of the Separation Date, although his active employment will end on March 30, 2006.

(i) A reference letter in the form attached hereto as Exhibit A and a commitment that any Company officer or human resources employee responding to a request from a potential employer for an employment reference regarding Employee shall not provide an oral or written reference that is inconsistent with the terms of the attached reference letter.

Employee acknowledges that the above payments and benefits are provided to Employee in consideration and recognition of past services rendered and in exchange for Employee’s promises and obligations herein. Employee further acknowledges that such payments and benefit are made in lieu of any and all payments or benefits that might otherwise be available to Employee arising out of his employment with the Company (excluding Employee’s non-forfeitable balance, if any, in the Huttig Deferred Compensation Plan and Employee’s non-forfeitable rights to his accrued benefits, if any, under the Huttig 401(k) plan).

4. In consideration for the foregoing, Employee, Employee’s successors and assigns, and anyone claiming by or through Employee (the “Employee Parties”) hereby irrevocably and unconditionally release and forever discharge the Company, its affiliates, subsidiaries, and related entities, and their respective owners, directors, officers, employees, agents, successors and assigns (collectively the “Company Parties”) from and against any and all manner of actions, liability, causes of action, claims, demands, contracts, attorney’s fees, back pay, claims for personal injury, discrimination, and/or mental anguish, claims for vacation pay, sick pay, or any other employee benefits, which any of the Employee Parties now may have or hold or at any time heretofore had or held, arising out of, existing by reason of, resulting from, or based upon: Employee’s employment with Company, or the separation therefrom, and any employment practice, custom or policy of any of the Company Parties.

5. In consideration for the foregoing, the Company, its subsidiaries, their respective successors and assigns, and anyone claiming by or through the Company or any of its subsidiaries (collectively, the “Releasing Company Parties”) hereby irrevocably and unconditionally release and forever discharge Employee and his successors and assigns (collectively, the “Released Employee Parties”), from and against any and all manner of actions, liability, causes of action, claims, demands, contracts and attorney’s fees, which any of the Releasing Company Parties now may have or hold or at any time heretofore had or held, arising out of, existing by reason of, resulting from, or based upon: Employee’s employment with Company, the performance of Employee’s duties or the failure of Employee to properly perform such duties, including, without limitation claims by any of the Releasing Company Parties against the Released Employee Parties for indemnification or contribution for liability imposed by third party claims against the Releasing Company Parties.

6. Employee shall be entitled to the payment and other consideration described above only if Employee signs this Release and delivers it to the Company within twenty-one (21) days of receipt of this Release and does not revoke this Release within the revocation period described in paragraph 11 of this Release. Provided Employee signs and delivers this Release and does not thereafter revoke, the payment referred to in paragraph 1(a) above shall begin within ten (10) days after the Company receives this signed Release. By signing this Release and delivering it to the Company on or before April 28, 2006, the parties acknowledge that Employee has timely signed and delivered this Release to the Company.

7. Employee acknowledges and agrees that the claims released and discharged hereby include, but are not limited to, claims that have been or could be asserted under: (a) the Missouri Human Rights Act; (b) rights pursuant to Missouri Revised Statutes §287.780 and §290.140; (c) Title VII of the Civil Rights Act of 1964, as amended; (d) the National Labor Relations Act, as amended; (e) the Fair Labor Standards Act, (f) the Employee Retirement Income Security Act of 1974, as amended; (g) Sections 1981 through 1988 of Title 42 of the United States Code, as amended; (h) the Civil Rights Act of 1866; (i) the Civil Rights Act of 1871; (j) the Civil Rights Act of 1991; (k) the Americans with Disabilities Act of 1990; (l) the Rehabilitation Act of 1973; (m) the False Claims Act; (n) the Family and Medical Leave Act of 1993; (o) the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, or any replacement acts; (p) the Immigration Reform Control Act, as amended; (q) the Occupational Safety and Health Act, as amended; (r) the Workers’ Adjustment and Retraining Notification Act, as

amended; (s) the Older Worker Benefit Protection Act; (t) the Age Discrimination in Employment Act (u) the Sarbanes-Oxley Act of 2002; (v) any other federal, state, municipal, or local law, constitution, statute, regulation, ordinance, executive order, decision or common law claim concerning employment, wages, hours of work, labor relations, employment relations, fair employment practices, fair credit reporting, human rights, civil rights, service letters, occupational safety and health, discrimination in employment, or termination of employment including, without limitation, any claim for wrongful termination, retaliation, or any other aspect of employment brought under Missouri statutory or common law; any one or more of causes of action, complaints, charges, or rights enforceable in any forum, whether a court or an administrative agency; (w) any claim for vacation, sick or personal leave pay or payment pursuant to any practice, policy, handbook or manual of the Company (x) any and all claims for personal injury, emotional distress, libel, slander, defamation, and other physical, economic, or emotional injury; (y) any public policy, contract (express, written or implied) except for this Release, tort, or common law; and (z) any allegation for any one or more of the Employee’s indebtedness, claims, damages, causes of action, suits for legal or equitable relief, costs, attorneys’ fees, or liabilities of every nature and description and either direct or consequential. Employee does not hereby waive any rights or claims that may arise after the date Employee signs this Release. In addition, Employee does not release any claims for medical treatment for worker’s compensation claims for injuries arising prior to execution of this Release or for any claim to enforce the terms of this Release.

8. Employee agrees not to disparage the management, employees, business or products of the Company or any of the Company Parties in any manner. The Company parties agree not to disparage the Employee Parties or Employee’s family in any manner.

9. Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company and its customers and suppliers, which shall have been obtained by Employee during Employee’s employment with the Company and which shall not be or become public knowledge (other than by acts by Employee or Employee’s representatives in violation of this Agreement). Employee shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. Following the expiration of the Severance Period, Employee shall continue to be obligated under this paragraph not to use or to disclose secret or confidential information of the Company so long as it shall remain proprietary or protectable as confidential or trade secret information.

10. Employee agrees that, during the Severance Period, he will, without further compensation, be available to assist the Company as reasonably requested by the Company at mutually agreeable time(s) in the metropolitan St. Louis area regarding activities pertaining to his prior responsibilities with the Company, not exceeding twenty-four (24) hours per calendar month, and do such other things as are reasonably requested by the Company to provide for an orderly transition of his employment responsibilities. In addition, during the Severance Period, Employee agrees to assist the Company, and if necessary to testify through a deposition or at trial, with respect to matters related to periods during which he was employed by the Company. The Company agrees that any services under this paragraph 10 will be requested in a manner that will not unreasonably interfere with Employee’s then current employment. Any services provided by Employee in excess of twenty-four (24) hours per calendar month shall be compensated at the rate of $100.00 per hour, less required withholdings.

11. Employee acknowledges that Employee has been advised to seek an attorney for advice regarding the effect of this Release prior to signing it. Employee also acknowledges that Employee was offered and was advised that Employee could take up to twenty-one (21) days to study this Release before signing it. Employee understands that Employee has the right to revoke this Release for seven (7) days after signing by providing written notification to Darlene Schroeder, Vice President—Human Resources at 555 Maryville University Drive, Suite 200, St. Louis, Missouri, 63141. In the event that Employee revokes this Release during such 7-day period, this Release shall be null and void in its entirety and all of the Company’s obligations hereunder shall cease immediately.

12. Employee agrees that his request for a service letter under Missouri Revised Statute Section 290-140 is hereby withdrawn.

13. Employee acknowledges that Employee has read the entire contents of this Release, understands all of its terms, and has executed it voluntarily with full knowledge of its significance. Employee represents and warrants that no other consideration has been promised to Employee for executing this Release other than as described in paragraph 1 above, and that no attorney or counsel is entitled to any fees as a result of this Release.

HANK KREY	HUTTIG BUILDING PRODUCTS, INC.
/s/ HANK KREY	By:	/s/ Darlene K. Schroeder
Signature	Its:	Vice President, Human Resources
Date: April 28, 2006	Date:	April 28, 2006

EX-31.1

EXHIBIT 31.1

Huttig Building Products, Inc. and Subsidiaries

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael A. Lupo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Huttig Building Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have;

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably like to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2006	/s/ Michael A. Lupo
	Michael A. Lupo
	President and Chief Executive Officer

24

EX-31.2

EXHIBIT 31.2

Huttig Building Products, Inc. and Subsidiaries

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David L. Fleisher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Huttig Building Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have;

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably like to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2006	/s/ David L. Fleisher
	David L. Fleisher
	Vice President and Chief Financial Officer

25

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Huttig Building Products, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael A. Lupo, President and Chief Executive Officer of the Company, and I, David L. Fleisher, Vice President and Chief Financial Officer of the Company, certify, to our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael A. Lupo

Michael A. Lupo

President and Chief Executive Officer

May 4, 2006

/s/ David L. Fleisher

David L. Fleisher

Vice President and Chief Financial Officer

May 4, 2006