EX-99.1 2 d428647dex991.htm EX-99.1 EX-99.1

Slide 1

Investor Presentation Summer 2017 Exhibit 99.1


Slide 2

Huttig Building Products Summer 2017 Company Overview SAFE HARBOR / FORWARD LOOKING STATEMENT These presentation materials may contain forward-looking statements as defined by the U.S. Private Securities Litigation Reform Act of 1995 (“Reform Act”). Statements made in this presentation looking forward in time, including, but not limited to, statements regarding our current views with respect to future financial performance, the housing market, distribution channels, sales, supplier relationships, inventory levels, the ability to meet customer needs, competitive posture, obligations with respect to environmental remediation (including remediation of the Montana site in accordance with regulatory requirements and cost estimates), deterioration in our relationship with our unionized employees, including work stoppages or other disputes, and the financial impact of litigation or otherwise, are included pursuant to the “safe harbor” provision of the Reform Act. These statements present management’s expectations, beliefs, plans and objectives regarding our future financial performance and assumptions or judgments concerning such performance. These forward-looking statements are based on current projections, estimates, assumptions and judgments, and involve known and unknown risks and uncertainties. We disclaim any obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise. There are a number of other important factors that could cause our actual results or outcomes to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to, those detailed in Huttig’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (“SEC”) and other filings with the SEC, all of which are available on our website. Forward-looking statements should not be relied upon as a predictor of actual results. NON-GAAP FINANCIAL MEASURES Huttig defines Adjusted EBITDA as net income adjusted for interest, income taxes, depreciation and amortization and other special significant items. Huttig presents Adjusted EBITDA because it is a primary measure used by management, and by similar companies in the industry, to evaluate operating performance and Huttig believes it enhances investors’ overall understanding of the financial performance of our business. Additionally, Huttig defines Free Cash Flow as Adjusted EBITDA less capital expenditures.  Huttig presents Free Cash Flow because it is a meaningful indicator of cash available for the execution of Huttig’s business strategy.  Huttig defines Coverage Ratio as Adjusted EBITDA less capital expenditures divided by interest expense. The Coverage Ratio represents Huttig’s ability to meet financial obligations and its potential to fund growth opportunities. Adjusted EBITDA, Free Cash Flow, Coverage Ratio are not recognized terms under U.S. generally accepted accounting principles (“GAAP”) and do not purport to be alternatives to net income or operating cash flow as a measure of operating performance.  Huttig compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors affecting the business. Because not all companies use identical calculations, Huttig’s presentation of Adjusted EBITDA, Free Cash Flow, Coverage Ratio may not be comparable to other similarly titled measures of other companies.  The table in the appendix presents a reconciliation of Adjusted EBITDA to net income (loss) attributable to Huttig for the periods indicated.


Slide 3

Huttig Building Products Summer 2017 Nasdaq: HPB (8/15/17) $5.50 Market Capitalization (8/10/17)~$142 million Total Available Liquidity (6/30/17) $57 million TTM June 2017 Revenue $732 million TTM June 2017 Net Income$5.8 million TTM June 2017 Adj. EBITDA$ 18.5 million Huttig Building Products Company Overview 1. See appendix for non-GAAP reconciliation of Trailing Twelve Month (“TTM”) Adjusted EBITDA 1


Slide 4

Executive Overview Huttig Building Products Investment Highlights Wholesale distributor of specialty building products servicing 75% of U.S. housing market Our 27 distribution centers make us the only national distributor of millwork and specialty building products Focused on residential new home construction as well as repair and remodel segments Strategic initiatives focused on investing in the business, people and technology to accelerate profitable growth Expanding value-add millwork services through focused capital investment including high-capacity door line in Florida National expansion of Huttig-GripTM brand of fasteners and connectors Summer 2017 National Locations Leading national distributor of pre-finished doors Innovation in Value-Add Services


Slide 5

Company / Industry Overview Value Proposition / Strategy Overview Financial Overview Summary / Q&A Huttig Building Products Summer 2017 Experience measured in centuries Founded 1885


Slide 6

Company / Industry Overview Huttig Building Products Summer 2017


Slide 7

Growth Concentrated in Strategic Products Sales growth of 5% driven by growth of strategic products Millwork: up 8% Building Products: up 4% Segment Highlights Sales Growth Millwork - Strategic growth category totaling 51% of total company revenue with more than half of category sales generated by value-add door fabrication services including pre-finished and pre-hung exterior and interior doors Building Products - Strategic growth category totaling 39% of total company revenue driven by composite decking, railing, trim, fasteners and connectors, including all Huttig-Grip private label products Wood - 10% of total company revenue driven by value-add engineered wood products and specialty panel products Highest margin category Huttig Building Products Summer 2017 Total: $374.4 Total: $356.7 $ in millions


Slide 8

Service Proposition Huttig Building Products Speed to market Next day delivery of inventoried shelf items 3-day lead times on pre-hung interior and exterior doors 15-day lead times on pre-finished interior and exterior doors Deliver quality products at the right price Ensure highest quality on value-add fabricated products Protect inventory items to ensure highest quality Connect customers and vendors through buying shows and marketing events Product training and technical instruction Buying shows and marketing events with promotional campaigns and seasonal rebates Our service proposition is the foundation of our company and we are committed to outperforming our competitors and exceeding our customers’ expectations Strive to be the best service provider of every product we sell, in every market we serve Summer 2017


Slide 9

Home Builders Remodel Contractors Commercial Contractors Manufactured Homes OEMs “Do It Yourselves” Pro Dealers Specialty Dealers Retailers BFS BMC Lansing Lowes Home Depot Wholesale Distributors Huttig BlueLinx Boise Small regional players Building Products Manufacturers Therma Tru Masonite CPG Simpson Strong Tie LP Building Products Value of Wholesale in Housing Market Supply Chain Access to the market Sales coverage and expertise Warehousing, logistics, and local services Many products require local value-add services that cannot effectively be provided by manufacturers Scale of working capital required does not lend itself to direct distribution Relief of working capital pressures Huttig Building Products Value to Suppliers Access to local value-add services that require scale Relief of working capital pressures and access to credit Ability to order in small quantities on an ‘as needed’ basis preserving capital Sales support and product expertise to increase sales Aggregate volume with Huttig to maximize vendor rebates Expedient and timely delivery Value to Customers Summer 2017


Slide 10

Unique Capabilities to Serve National Accounts Pro-Dealers, Co-Ops and National Retailers Huttig Building Products National accounts generated 47% of total revenue as of June 2017 National pro-dealers and retailers prefer Huttig because of our millwork capabilities, breadth of brands and geographical coverage Huttig has an experienced national accounts team dedicated to national accounts Consistent service and pricing across our customers’ geography adds value Huttig recognized as vendor of the year for LBM Advantage, a national buying group, citing quality of our products, increasing market penetration and customer service Summer 2017 1 1 1. LBM Advantage and Independent Builders Supply Association (IBSA) announced intent to merge on January 5, 2017.


Slide 11

Specialty Focused Brand Portfolio Huttig represents the most preferred brands by pro-dealers, builders and consumers Huttig Building Products National reach of specialty brands with regional nuances across U.S. Focused on millwork and specialty building product categories that are complex; requiring expertise, scale and value-added services Deliver products that are in early stages of life cycle providing long-term, sustained growth Huttig carries the products consumers want Distribution network augments vendors’ breadth of products that can be delivered on a timely and cost effective basis Decking dealers can increase the number of SKUs and color choices available in peak season Millwork manufacturers benefit from Huttig’s ability to customize their products Summer 2017


Slide 12

Overview of U.S. Housing Market Source: US Dept of Commerce, US Census Bureau U.S. Housing Market Total Historical Starts (in millions) Huttig Building Products U.S. Professional Home Remodel Projects (in millions) Source: Real Estate Economics Hanley Wood Forecast 14.0 12.0 10.0 8.0 4.0 6.0 2.0 Summer 2017 2.5 2.0 1.5 1.0 0.5 Historical Average: 1.4 4% YTD Growth in 2017


Slide 13

Value Proposition / Strategy Overview Huttig Building Products Summer 2017


Slide 14

Strategic Initiatives Huttig Building Products Summer 2017 People Invest in creating a top performing, disciplined organization that strives for the highest level of associate engagement with the best and most empowered people Accelerate Growth Aggressively pursue profitable organic growth through the Huttig-Grip expansion, Repair & Remodel segment penetration and opportunistic acquisitions Technology Invest in technology to derive better insights and improve our overall efficiency while ensuring best in industry customers interface technology Gross Profit Prioritize profit over revenue by maximizing margin on every order through pricing, controlling input costs and increasing mix of complex products that require scale and value add services


Slide 15

Our Value Proposition Repair & Remodel Huttig Building Products Summer 2017 Huttig’s Repair & Remodel business drives value and adds diversity Margins tend to be higher, especially in value-add pre-finished and pre-hung door fabrication services Diversifies business to lower dependence on new home construction segment, which represented approximately 50% of revenues Growth built on existing foundation enhanced with organic and acquisitions expansion Customized selling and marketing collateral to drive pull-through revenue for our committed customers Launch regional high-capacity Florida door line with BenBilt quality BenBilt acquisition increases R&R share and geographical coverage Existing pre-finished door business with solid reputation pre 2016 Build out NE door line


Slide 16

The Next Level of Investing Leveraging Huttig-Grip Brand Huttig Building Products Spring 2017 Private label expansion provides margin growth opportunities Nails & screws in 1 lb. and 5 lb. packaged programs, buckets, and bulk boxes Collated fasteners, staples, finish & brads Threaded rod and anchor bolts Concrete accessories Poly sheeting, adhesives, synthetic underlayment & felt, house wrap, insulation, GAF roofing shingles, ventilation and underlayment products Sourcing internationally and domestically Expand relationships with manufacturing mills across various geographies Total quality management program to ensure quality products and reliable supply chain Diversity of vendors protects against supply constraints and increased costs Huttig-Grip initiative expands the breadth of the private label product lines, branded specialty building products lines, and geographical service area on a national basis


Slide 17

Expansion of Huttig-Grip Leveraging Existing Brand and National Network Incremental revenue opportunity of $175 million to $250 million over the intermediate term Standard operating leverage of 5% to 7% equates to $12 to $25 million upon maturity of line Dedicated experienced personnel driving initiative Working capital expansion of $40 to $60 million in Inventory and Accounts Receivable Leveraging existing footprint, infrastructure, and personnel to drive rapid growth Summer 2017 Huttig Building Products


Slide 18

Continued focus on profitable growth to improve operating leverage Our Path to Accelerate Growth and Performance Huttig Building Products 1. See appendix for non-GAAP reconciliations. Operating leverage defined as growth in operating margin vs. revenue growth Focused on growth in strategic categories with higher margin opportunities Return on invested capital in excess of cost of capital drives continued growth Concentrate on product categories that require scale and value-add services Enhanced analytics to anticipate market demand and pricing trends Summer 2017 Slide Q3 2015 IR Presentation 2013 2014 2015 2016 TTM Q2 17 Total Gross Profit 0.19800000000000001 0.19700000000000001 0.20200000000000001 0.21199999999999999 0.21099999999999999 2.2000000000000002 3.2 Operating Margin (Continuing Ops) 1.0999999999999999 1.3% 2.2% 3.2% 1.7% 4 Total Adjusted EBITDA1 margin 1.8% 2.1% 2.9% 0.04 2.5%


Slide 19

Financial Overview Huttig Building Products Summer 2017


Slide 20

Consolidated Financial Information Huttig Building Products Net Sales and Gross Margin % Free Cash Flow See appendix for non-GAAP reconciliations. Adjusted EBITDA¹ Summer 2017 ($ in millions) Key Financial Considerations for Growth Investment planned to earn returns above our cost of capital Planned increase in quarterly operating expenses by $4.0 million to drive growth initiatives Targeting $1.0 billion run rate in sales by year-end 2019 Approach maintains flexibility in case the cycle turns Prioritize organic initiatives and acquisitions based on risk / reward, alignment with our strategy and diversification it brings to the business Q2 17 includes summer building season and inventory added to support Huttig-Grip product line ($ in millions) ($ in millions)


Slide 21

2017 Investment Outlook and Credit Facility Huttig Building Products Summer 2017 Expected 2017 capital expenditures of $8 to $11 million to support: Strategic growth initiatives IT investment in infrastructure, applications and ERP system Facility and equipment replacement including historical average maintenance of $2 to $3 million Reduced from prior estimates of $8.5 to $12.0 million Increased Credit Facility Continued strong relationship with Wells Fargo, Bank of America and JPMorgan Committed capacity of $68 million1 Total availability of $250 million Additional untapped accordion of $50 million Matures in July of 2022 Low cost of funding with weighted average interest rate of 2.8% as of June 30, 2017 Single financial covenant, fixed charge coverage ratio of 1.00:1.00 1. After July 14, 2017 amendment to credit facility


Slide 22

Summary Housing fundamentals continue to improve Below the mid-point of housing starts for last 30 years First-time home buyers are starting to enter market Access to capital and strategically well positioned to drive profitable grow Viable internal investment and acquisition related strategic growth opportunities Investment in Huttig-Grip Completed Florida/Constructing Northeast Door Line More national vendor programs Diversify the business Investing in 4 key focus areas Profitable Growth Margin Enhancement Technology Our People Business Highlights Strategy is Working Huttig Building Products Strong financial results After 5 years of consecutive year-over-year improvements, 2017 is an investment year for Huttig’s long-term future Over 50 people in the Huttig-Grip division Completed $250 Million Credit Facility in July 2017 Adjusted EBITDA TTM of $18.5 million TTM Profit Margins of 21.1% Significant investments in the business Investing in organic growth Evaluating and pursuing accretive acquisitions Investing in our owned facilities Adding sales resources Increasing recruiting efforts and building bench strength Upgrading IT infrastructure Replacing rolling stock Summer 2017


Slide 23

APPENDIX Huttig Building Products Summer 2017


Slide 24

Reconciliation of Adjusted EBITDA to Net Income Huttig Building Products Summer 2017 plus minus plus LTM Ended ($ in millions) 2013 2014 2015 2016 TTM Q2 17 YR 2014 YTD June 14 YTD June 15 June 30, 2015 Net income 3.2 2.2000000000000002 26 16.3 5.8 2.2000000000000002 -0.8 5.0999999999999996 8.1 Less: Income (loss) from discontinued operations, net of tax -0.4 -3.6 -3.4 3 -1.5 Income from continuing operations 3.6 5.8000000000000007 29.4 13.3 7.3 5.8000000000000007 #REF! #REF! #REF! Interest expense, net 2.6 2.5 2.2999999999999998 2.2000000000000002 2.4 2.5 1.3 1.1000000000000001 2.2999999999999998 Provision (benefit) for income taxes 0.1 0 -17.2 7.2 2.5 0 0 0 0 Depreciation and amortization 2.8 3.1 3 3.9 4.4000000000000004 3.1 1.5 1.5 3.1 Goodwill impairment 0 0 0 0 0 0 0 0 Gain on disposal of assets 0 0 -0.4 0 0 0 0 -0.4 -0.4 Stock-based compensation 1 1.4 1.8 1.7 1.9 1.4 0.7 0.8 1.5 Adjusted EBITDA 10.1 12.8 18.900000000000002 28.299999999999997 18.5 12.8 #REF! #REF! #REF! Capital Expenditures -2.2000000000000002 -1.8 -2.8 -4.0999999999999996 -6.4 Interest Coverage: (Cash Generated/ Interest) 3.0384615384615383 4.4000000000000004 0 7.0000000000000009 10.999999999999996 5.041666666666667


Slide 25

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 states Market Leadership with National Scale Huttig Building Products Summer 2017