 Sidoti Microcap
Investors Conference
May 9, 2014
Jon Vrabely –
President & CEO
Philip Keipp –
Vice President & CFO
555 Maryville University Drive -
Suite 400, St. Louis , Missouri
63141 | 800.325.4466 |
www.huttig.com Exhibit 99.1 |
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Forward-Looking Statements
With the exception of historical information, the matters disclosed in this
presentation are forward-looking statements.
Such statements involve certain risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Potential risks and uncertainties are described in the
Company’s filings with the Securities and Exchange Commission,
including its 2013 Form 10-K.
These forward-looking statements represent the Company’s judgment
as of the date of this presentation. The Company disclaims any intent
or obligation to update these forward-looking statements.
|
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130 Years of Industry Leadership
1866
–
Charles and William Huttig start a sawmill and lumberyard in Muscatine, Iowa
1885
–
Charles Huttig founds Huttig Sash and Door in St. Louis, Missouri
1917
–
Huttig constructs 650 aircraft to support U.S. military effort in World War I
1939
–
Huttig begins manufacturing effort to support U.S. military effort in World War II
1969
–
Huttig acquired by Crane Company - Stamford, Connecticut (NYSE: CR)
1988
–
Huttig acquires Palmer G. Lewis Company and expands operations in the West
1999
–
Huttig is spun off from Crane Company and simultaneously acquires Rugby
2004
–
Huttig divests one-step distribution and manufacturing businesses to focus
2005
–
Huttig acquires Texas Wholesale and enters the Texas market
2007
–
Jon Vrabely is appointed President & CEO
2012
–
Huttig repurchases 1 million shares of common stock
2013
–
Huttig is listed on NASDAQ |
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 Industry Overview |
 Huttig provides
value in the channel through sales, material handling and logistical expertise
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The Value of Wholesale Distribution in Building Materials
Wholesale Advantage
Many products require local value-add services that cannot effectively be
provided by manufacturers or dealers / retailers
•
Pre-hanging / pre-finishing doors, EWP design / cut services
Many products require scale and do not lend themselves to direct
distribution
•
Interior / exterior doors, composite decking, connectors, fasteners
Building
Products
Manufacturers
Wholesale
Distributors
Pro Dealers
Specialty Dealers
Retailers
Home Builders
Remodel Contractors
Manufactured Homes
OEM’s
Commercial Contractors |
 Primary Huttig Competition
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Company
Market
Company
Market
Company
Market
Reeb Millwork
Northeast
Mid-Atlantic
Boise
National
Boise
National
OrePac Building
Products
West
BlueLinx
National
BlueLinx
National
Milliken Millwork
Midwest
Mid-Atlantic
PrimeSource Building
Products
National
Weyerhaeuser (I-Level)
National
Tucker Door and
Trim
Southeast
Universal Forest
Products
National
Universal Forest
Products
National
Dyke Industries
Southeast
BMD
West
Regional and local
competitors
Regional and local
Boise
Southeast
Parkside Plunkett-
Webster
Midwest
Rugby Architectural
Building Products
West
Regional and local
competitors
Regional and local
Regional and local
competitors
Regional and local
Millwork
Building Materials
Wood Products |
 Market Overview |
 Overview of U.S. Housing Market
Source: US Dept of Commerce, US Census Bureau
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5 - year
0.69
10 - year
1.16
20 - year
1.36
30 - year
1.39
Since 1959
1.50
Average Starts
U.S. Residential Housing Starts
Excess (Deficit) Supply (2001 -
2013) |
 2014 Sidoti
Conference The Opportunity Tomorrow
Demographic
Drivers
Immigration
Domestic migration
Minority household gains
Rise in nontraditional households
Echo boomer generation forming
independent households
Aging house stock
Tailored housing demand in support of
aging, lifestyle and cultural preferences
Based on the Census Bureau’s latest
population projections and review of
demographic drivers, Harvard forecasts
average household growth, including single
family, multi-family and manufactured
homes, of 1.2 million new household
formation for the remainder of the decade.
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Remodeling Spend
$111.4
$114.7
$119.4
$120.9
$121.5
$123.1
$126.8
$126.0
$127.0
$128.7
$139.9
$140.4
$140.5
$145.5
$158.9
$153.1
$100
$110
$120
$130
$140
$150
$160
$170
2011-1
2
3
4
2012-1
2
3
4
2013 - 1
2
3
4
2014-1P
2P
3P
4P
US Census Bureau
Homeowner Improvements
Four-Quarter Moving Totals
Billions of $ |
 Value Proposition |
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Broad Geographic Footprint
•
Located where the U.S. is living, moving and building
•
Service area touches ~ 75% of housing activity in U.S.
Brands / Products
•
Align
with
the
top
manufacturers
in
the
industry
-
#
1
or
#
2
brand
in
each
product
category
we
sell
•
Focus on products that are in the early stages of the product life cycle
•
Focus on products that pro-dealers do not possess the scale to handle on a
direct basis National Accounts
•
Leverage
our
footprint,
brands
and
unique
product
mix
-
customer
can
consolidate
vendor
base
and reduce transaction costs
•
Dedicated national accounts team focused on national/regional pro-dealers and
R&R dealer/distributors
Service Proposition
•
The most important aspect of our business
•
A culture that is built on a “passion to serve”
•
Strive
to
be
the
“yes
we
can”
people
and
the
easiest
company
in
the
industry
with
which
to
do
business
•
Consistently
improve
our
customers’
experience
with
Huttig
Our Value Proposition
Huttig has a value proposition that is unmatched in the industry |
 Our
Value Proposition Geographic Footprint
Huttig
is
located
where
the
U.S.
population
is
living,
moving
and
building
–
Huttig’s
coastal
footprint fits a large population base; 63% of the U.S. population resides in coastal
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 Our
Value Proposition Brands/Products
Leverage footprint with the most preferred brands in the industry
Continue to establish distribution
agreements with the top six to
twelve branded manufacturers in
key millwork and building products
categories
Focus on products that are in the
early stages of the product life
cycle
Focus on categories that require
scale and value-add services
Recognized in the industry for
possessing the most diverse
product mix in the millwork and
building products categories
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 Our
Value Proposition National Brands/Products
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 Our
Value Proposition National Accounts
Consolidation continues to
drive this important customer
base
Leverage footprint and national
brands to continue penetration
Our broad geographic pre-hung
door capabilities provides
unique opportunity
Consistent service levels and
pricing adds value
Represents ~ 40% of total
revenue
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Our Value Proposition
Service Proposition
Speed to market
Next day delivery of inventoried shelf-items
Company-wide goal of 2-day lead times on
pre-hung interior and exterior doors
Key metrics to measure and act upon our
“complete and on-time”
delivery proposition
Utilize operations team to continue to
implement standard operating procedures to
improve service metrics and drive to be the
low-cost producer in the industry
Develop and implement technology-based solutions that support operating
initiatives and improve overall experience
Our service proposition is the foundation of our company and we are committed to
out-performing our competitors and exceeding our customers’
expectations
Standard of being the best service provider of every product we sell, in every market
we serve |
 Objectives, Strategies
and Key Initiatives |
 Leading
Service Leading Service
Provider
Provider
Dominant Market
Dominant Market
Share
Share
Strategies & Key Initiatives
Strategies & Key Initiatives
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2014 Objectives & Strategies
OBJECTIVES
Value Proposition
Value Proposition
* Broad Geographic Footprint * Brands &
Products * National Accounts * Service Proposition
Share
Share
Growth
Growth
Sales Culture
Acquisitions
Market
Segment
Penetration
& Expansion
Products
Value-Add
Services
Low Cost
Low Cost
Producer
Producer
S.O.P.
Adherence
LEAN
Technology
Leveraging
Scale
Customer
Customer
Experience
Experience
Culture
LEAN
Service
Metrics
Technology
Gross Profit
Gross Profit
Pricing
Leverage
Scale
LEAN
Financial
Financial
Performance
Performance
Short-term
Long-term
Capital
Management
People
People
Org Structure
Disciplined
Approach To
Managing
Our People
Recruiting &
Development
Safety
Disciplined & Customer
Disciplined & Customer
Financial Performance
Financial Performance
Centric Culture
Centric Culture |
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Current Priorities
Continued execution of pricing
initiative to improve gross profit
Capitalize on improving market to
drive profitable organic growth
Pursue growth opportunities through
product and segment expansion
Opportunistically pursue acquisitions
to increase market share, expand
geographical coverage, drive
product line extensions and diversify
the business
Balance the need to reinvest in the
business with the desire to maximize
profits
Expedite the advancement of our
customer interface technology |
 Acquisition Opportunities
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Objectives
Expand share and leverage in existing
markets
New geographic locations
New segments / products
Smaller Firms
Acquisition opportunities
Mostly family-owned
Considerations
Capital outlay
Requires lender consent
Willing sellers / valuation gap
(1) Source: HCN Top 100 Distributor Scorecard September
2013. Excludes buying groups such as LMC, Do It Best, True Value, ACE Hardware and
ENAP
Two-Step Building Products
Distribution Market
(1)
Top 15
Distributors
(Huttig # 10)
$18 Billion
74 Smaller
Firms
$11 Billion |
 Financial Overview |
 The past seven years have been a fight for survival for many companies in our
industry
Through aggressive restructuring activities, cost reductions and
working
capital management, we reduced debt by $10.3 million between 2006 and
2009
At the wholesale distribution and pro-dealer levels of the channel, Huttig is
the only publicly-traded company in the space that hasn’t had to do
one or more of the following to survive:
Financial Overview
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•
File bankruptcy
•
Sell the company
•
Break bank covenants
•
Raise mezzanine level debt
•
Dilute existing shareholders through raising additional equity
|
 Twelve consecutive quarters of year-over-year improvement in net income
from continuing operations, excluding special significant items
Made significant reinvestment in the business in 2012 and 2013
Amended and extended credit facility in December 2012
Repurchased 1.0 million shares in December 2012
Listed on NASDAQ in December 2013
Generated positive earnings in 2013
Total available liquidity of $41.9 million at March 2014
Federal tax loss carryforwards of $69 million
Strategically and financially well-positioned to focus on profitable
growth Financial Overview
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 Financial Overview
Credit Facility
$120 million ABL facility; five year tenure
•
Expandable to $160 million
•
Expires December 2017
Competitive Pricing
•
Weighted average rate of 2.75% in Q1’14
GECC and Wells Fargo each hold 50% of the commitment
Strong relationship with GECC and Wells Fargo
One financial covenant (FCCR)
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 Adjusted EBITDA
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($ In Millions)
YOY %
23.3%
13.5%
53.0%
192.1%
74.1%
14.9%
Net sales
$455.2
$467.7
$479.3
$521.1
$561.5
$572.3
YOY %
(32.2%)
2.7%
2.5%
8.7%
7.8%
1.9%
GM %
18.5%
18.2%
18.6%
19.3%
19.8%
20.0%
Adj EBITDA %
(3.4%)
(2.9%)
(1.3%)
1.1%
1.8%
2.0%
($15.5)
($13.4)
($6.3)
$ 5.8
$ 10.1
$ 11.6
2009
2010
2011
2012
2013
Q1'14
LTM
Adjusted EBITDA |
 APPENDIX |
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Reconciliation of Non-GAAP Measures:
Net Income to Adjusted EBITDA
LTM Ended
2009
2010
2011
2012
2013
March 31,
2014
Net income (loss)
(20.5)
$
(18.9)
$
(13.2)
$
(0.5)
$
3.2
$
1.2
$
Income (loss) from discontinued operatons
(0.7)
0.5
(0.5)
(0.4)
(0.4)
(3.6)
Income (loss) from continuing operations
(19.8)
(19.4)
(12.7)
(0.1)
3.6
4.8
Interest expense, net
1.5
2.1
2.8
2.9
2.6
2.6
Provision (benefit) for income taxes
(2.8)
(0.4)
(0.3)
-
0.1
0.1
Depreciation and amortization(i)
4.1
3.6
2.8
2.7
2.8
3.0
Goodwill impairment(ii)
1.0
-
0.4
1.9
-
-
Gain on disposal of assets(iii)
(1.5)
(0.4)
-
(2.4)
-
-
Restructuring charge(iv)
1.1
0.3
0.2
-
-
-
Stock-based compensation(v)
0.9
0.8
0.5
0.8
1.0
1.1
Adjusted EBITDA
(15.5)
$
(13.4)
$
(6.3)
$
5.8
$
10.1
$
11.6
$
(i)
Excludes amortization of bank loan origination fees, which are included in interest
expense (ii)
(iii)
Represents the sale of previously closed facilities
(iv)
(v)
Represents non-cash stock-based compensation
($ in millions)
Year Ended
Represents non-cash goodwill impairment charges
Represents costs incurred for employee reductions and branch closures and
consolidations |
 Investor Contacts
Don Hake
Huttig Building Products, Inc.
314-216-2600
investor@huttig.com
Philip Keipp
Vice President & Chief Financial Officer
Huttig Building Products, Inc.
314-216-2893
pkeipp@huttig.com
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St. Louis Corporate Headquarters |