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 ACTOF 1934

For the quarterly period ended September 30, 2017

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 DriveSuite 400 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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐	(Do not check if smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

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

The number of shares of Common Stock outstanding on September 30, 2017 was 25,879,812 shares.

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Operations for the three and nine months ended  September 30, 2017 and 2016 (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2017, December 31, 2016 and September 30, 2016 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2017 and 2016 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 4.	Controls and Procedures	15
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	15
Item 6.	Exhibits	16
Signatures		17

2

PART 1 FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In Millions, Except Per Share Data)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017		2016			2017		2016
Net sales	$	199.6	$	192.8		$	574.0	$	549.5
Cost of sales		158.3		151.4			455.0		433.9
Gross margin		41.3		41.4			119.0		115.6
Operating expenses		38.2		33.6			113.3		94.7
Operating income		3.1		7.8			5.7		20.9
Interest expense, net		0.9		0.5			2.2		1.6
Income from continuing operations before income taxes		2.2		7.3			3.5		19.3
Income tax expense		0.9		2.5			0.8		7.1
Income from continuing operations		1.3		4.8			2.7		12.2
Income (loss) from discontinued operations, net of taxes		0.1		(0.1	)		—		4.3
Net income	$	1.4	$	4.7		$	2.7	$	16.5
Income from continuing operations per share - basic and diluted	$	0.05	$	0.19		$	0.10	$	0.48
Income (loss) from discontinued operations per share - basic    and diluted	$	0.00	$	0.00		$	0.00	$	0.17
Net income per share - basic and diluted	$	0.05	$	0.19		$	0.10	$	0.65
Weighted average shares outstanding:
Basic and diluted shares outstanding		24.9		24.6			24.8		24.5

See notes to condensed consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Millions)

	September 30,		December 31,		September 30,
	2017		2016		2016
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	1.2	$	0.3	$	1.1
Trade accounts receivable, net		87.5		59.3		78.7
Net inventories		108.1		81.0		84.4
Other current assets		12.1		9.5		7.2
Total current assets		208.9		150.1		171.4
PROPERTY, PLANT AND EQUIPMENT:
Land		5.0		5.0		5.0
Buildings and improvements		30.8		29.7		29.5
Machinery and equipment		49.5		43.5		41.5
Gross property, plant and equipment		85.3		78.2		76.0
Less accumulated depreciation		55.5		53.3		52.6
Property, plant and equipment, net		29.8		24.9		23.4
OTHER ASSETS:
Goodwill		9.5		9.5		9.5
Deferred income taxes		11.3		10.3		7.8
Other		7.0		7.5		14.8
Total other assets		27.8		27.3		32.1
TOTAL ASSETS	$	266.5	$	202.3	$	226.9

See notes to condensed consolidated financial statements

4

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Millions, Except Share Data)

	September 30,		December 31,		September 30,
	2017		2016		2016
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	1.2	$	1.0	$	0.8
Trade accounts payable		66.7		47.2		57.2
Deferred income taxes		—		—		5.0
Accrued compensation		3.5		6.8		5.2
Other accrued liabilities		13.7		15.1		13.0
Total current liabilities		85.1		70.1		81.2
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities		102.3		54.5		68.1
Other non-current liabilities		3.4		7.2		7.3
Total non-current liabilities		105.7		61.7		75.4
SHAREHOLDERS' EQUITY:
Preferred shares: $.01 par (5,000,000 shares authorized)		—		—		—
Common shares: $.01 par (75,000,000 shares authorized: 25,879,812;    25,638,862; and 25,466,252 shares issued at September 30, 2017,    December 31, 2016 and September 30, 2016, respectively)		0.3		0.3		0.3
Additional paid-in capital		43.5		42.8		42.4
Retained earnings		31.9		27.4		27.6
Total shareholders' equity		75.7		70.5		70.3
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	266.5	$	202.3	$	226.9

See notes to condensed consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In Millions)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Cash Flows From Operating Activities:
Net income	$	1.4		$	4.7		$	2.7		$	16.5
Adjustments to reconcile net income to net cash provided by    (used in) operating activities:
Income (loss) from discontinued operations		(0.1	)		0.1			—			(4.3	)
Depreciation and amortization		1.3			1.0			3.6			2.8
Non-cash interest expense		—			0.1			0.2			0.3
Stock-based compensation		0.5			0.4			1.6			1.2
Deferred taxes		0.9			2.4			0.8			9.3
Changes in operating assets and liabilities:
Trade accounts receivable		13.6			4.1			(28.2	)		(20.9	)
Net inventories		(11.2	)		(6.0	)		(27.1	)		(18.0	)
Trade accounts payable		3.1			1.0			19.5			12.7
Other		(3.3	)		2.5			(7.6	)		(1.1	)
Cash provided by (used in) continuing operating activities		6.2			10.3			(34.5	)		(1.5	)
Cash (used in) provided by discontinued operating activities		(2.2	)		(0.8	)		(3.9	)		3.6
Total cash provided by (used in) operating activities		4.0			9.5			(38.4	)		2.1
Cash Flows From Investing Activities:
Capital expenditures		(2.2	)		(1.5	)		(5.7	)		(2.7	)
Acquisition		—			—			—			(17.3	)
Total cash used in investing activities		(2.2	)		(1.5	)		(5.7	)		(20.0	)
Cash Flows From Financing Activities:
Borrowings of debt, net		(1.6	)		(7.7	)		45.9			19.1
Repurchase shares of common stock		—			—			(0.9	)		(0.4	)
Total cash (used in) provided by financing activities		(1.6	)		(7.7	)		45.0			18.7
Net increase in cash and equivalents		0.2			0.3			0.9			0.8
Cash and equivalents, beginning of period		1.0			0.8			0.3			0.3
Cash and equivalents, end of period	$	1.2		$	1.1		$	1.2		$	1.1
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	0.8		$	0.5		$	1.9		$	1.4
Income taxes paid		—			—			0.4			0.4

See notes to condensed consolidated financial statements

6

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Huttig Building Products, Inc. and its subsidiary (the “Company” or “Huttig”) were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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, 2016.

The condensed 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. NEW ACCOUNTING STANDARDS

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting", which simplified the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. Huttig adopted this standard in the first quarter of 2017, which had an immaterial impact to the consolidated financial statements and related disclosures.

In February 2016, the FASB issued accounting guidance, "Leases", which will supersede the existing lease guidance and will require all leases with a term greater than 12 months to be recognized in the statement of financial position and eliminate current real estate-specific lease guidance, while maintaining substantially similar classification criteria for distinguishing between finance leases and operating leases. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. This standard will be adopted on a modified retrospective basis. Huttig is required to adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In May 2014, the FASB issued accounting guidance, "Revenue from Contracts with Customers", which has been further clarified and amended. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and clarify guidance for multiple-element arrangements. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statement of Consolidated Financial Position. In August 2015, the FASB amended the guidance to allow for the deferral of the effective date of this standard. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Accordingly, Huttig is required to adopt this standard in the first quarter of fiscal year 2018. The Company is in process of implementing this guidance, including assembling an implementation team and performing a review of all revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition. The Company is continuing to evaluate the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

3. COMPREHENSIVE INCOME

Comprehensive income refers to net income adjusted by gains and losses that in conformity with GAAP are excluded from net income. Other comprehensive items are amounts that are included in shareholders’ equity in the condensed consolidated balance sheets. The Company has no comprehensive income items and therefore comprehensive net income (loss) is equal to net income (loss) for all periods presented.

7

4. DEBT

Debt consisted of the following (in millions):

	September 30,		December 31,		September 30,
	2017		2016		2016
Revolving credit facility	$	99.6	$	52.2	$	66.2
Other obligations		3.9		3.3		2.7
Total debt		103.5		55.5		68.9
Less current portion		1.2		1.0		0.8
Long-term debt	$	102.3	$	54.5	$	68.1

Credit Agreement — In July 2017, the Company amended and extended its asset-based senior secured revolving credit facility (“credit facility”) with Wells Fargo Capital Finance, Bank of America and JP Morgan Chase.  The amendment, among other things, increased the borrowing capacity from $160 million to $250 million, reduced the interest rate, reduced the minimum fixed charge coverage ratio and extended the maturity to July 14, 2022. Borrowing availability under the credit facility is based on eligible accounts receivable, inventory and real estate. The real estate component of the borrowing base amortizes monthly over 12.5 years on a straight-line basis.  Borrowings under the credit facility are collateralized by substantially all of the Company’s assets, and the Company is subject to certain operating limitations applicable to a loan of this type, which, among other things, place limitations on indebtedness, liens, investments, mergers and acquisitions, dispositions of assets, cash dividends and transactions with affiliates.

At September 30, 2017, the Company had revolving credit borrowings of $99.6 million outstanding at a weighted average interest rate of 2.5% per annum, letters of credit outstanding totaling $3.2 million, primarily used as collateral for health and workers’ compensation insurance and $69.7 million of excess committed borrowing capacity.  The Company pays an unused commitment fee of 0.25% per annum. In addition, the Company had $3.9 million of capital lease and other obligations outstanding at September 30, 2017.

The sole financial covenant in the credit facility is the fixed charge coverage ratio of  1.00:1.00, which must be tested by the Company if the excess committed borrowing availability falls below an amount in a range between $17.5 million to $31.3 million, which amounts depend on the Company’s borrowing base, and must also be tested on a pro forma basis prior to consummation of certain significant transactions outside the ordinary course of the Company’s business, as defined in the credit agreement.  At September 30, 2017, the company’s fixed charge coverage ratio exceeds 1.00:1.00. At September 30, 2017, the Company’s fixed charge coverage ratio exceeds 1.00:1.00. 

5. 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 for when it is probable that future costs will be incurred and can be reasonably estimated.

As described in Note 7 — “Commitments and Contingencies” to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016,  the Company was previously identified as a potentially responsible party in connection with the cleanup of contamination at a formerly owned property in Montana. On February 18, 2015, the Montana Department of Environmental Quality (the “DEQ”) issued an amendment to the unilateral administrative order of the DEQ outlining the final remediation of the property in its Record of Decision (the “ROD”).  Under the ROD, the DEQ estimated the remediation costs of the property to be $8.3 million. Since the ROD was issued, the Company has incurred costs which reduced the accrual to $7.1 million at December 31, 2016.

The Company spent $3.9 million in the first nine months of 2017 implementing the remedial action work plan (the “RAWP”).  The Company estimates the total remaining cost of implementing the RAWP to be $3.2 million at September 30, 2017. As of September 30, 2017, the Company believes the accrual represents a reasonable best estimate of the total remaining remediation costs, based on facts, circumstances, and information currently available to Huttig.  However, there are currently unknown variables relating to the actual levels of contaminants and amounts of soil that will ultimately require treatment or removal and as part of the remediation process, additional soil and groundwater sampling, and bench and pilot testing is required to ensure the remediation will achieve the projected outcome required by the DEQ.  Potential indemnification or other claims we may be able to assert against third parties and possible insurance coverage have also been considered but any potential recoveries have not been recognized at this time. The ultimate final amount of remediation costs and expenditures are difficult to estimate with certainty and as a result, the amount of actual costs and expenses ultimately incurred by Huttig with respect to this property could be lower than, or exceed the amount accrued as of September 30, 2017 by a material amount.  If actual costs are materially higher, the incremental expenses over the amount currently accrued could have a material adverse effect on our liquidity, financial condition and operating results.  

8

In addition, some of the Company’s current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which the Company, among others, could be held responsible. The Company currently believes that there are no material environmental liabilities at any of its distribution center locations.

The Company is also involved in litigation in Colorado, Illinois, and Texas filed by PrimeSource Building Products, Inc. (“PrimeSource”) against the Company and eleven of its employees in December 2016.  

The complaints allege, among other things, that certain former employees of PrimeSource have breached their contracts with PrimeSource (including non-competition, non‑interference and non-disclosure covenants) and fiduciary duties to PrimeSource, and that the former employees have misappropriated, and are using, trade secrets of PrimeSource on behalf of Huttig.  The complaints seek injunctive relief, compensatory damages, and with respect to certain counts, punitive damages.

On July 26, 2017, the Company and certain of the employee defendants filed counterclaims in the Illinois cases alleging, among others things, that PrimeSource has asserted and is maintaining its trade secret misappropriation claims in bad faith, tortiously interfered with the Company’s business relationships, and filed sham litigation and engaged in other exclusionary and predatory conduct in violation of Section 2 of the Sherman Act.

While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this litigation, and the Company is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome, the Company believes that PrimeSource’s claims lack merit.  The Company has retained outside counsel, and is vigorously defending itself against the lawsuits.  As of September 30, 2017, the Company incurred approximately $2.5 million in expenses related to the PrimeSource litigation, and expects to continue to incur such litigation expenses.

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. It is possible, however, that actual expenses could exceed our accrual by a material amount which could have a material adverse effect on the Company’s future liquidity, financial condition or operating results in the period in which any such additional expenses are incurred or recognized.

6. EARNINGS PER SHARE

The Company calculates its basic income per share by dividing net income allocated to common shares outstanding by the weighted average number of common shares outstanding.  Although the Company does not currently pay dividends, holders of unvested shares of restricted stock have a right to participate in dividends on the same basis as common shares. As a result, these share-based awards meet the definition of participating securities and the Company applies the two-class method to compute earnings per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In periods in which the Company has net losses, the losses are not allocated to participating securities because the participating security holders are not obligated to share in such losses.  The following table presents the number of participating securities and earnings allocated to those securities (in millions).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Earnings allocated to participating shareholders	$	—	$	0.2	$	0.1	$	0.6
Number of participating securities		1.1		1.0		1.2		1.0

The diluted earnings per share calculations include the effect of the assumed exercise using the treasury stock method for both stock options and unvested restricted stock units, except when the effect would be anti-dilutive.  The following table presents the number of common shares used in the calculation of net income per share from continuing operations (in millions).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Weighted-average number of common shares-basic		24.9		24.6		24.8		24.5
Dilutive potential common shares		—		—		—		—
Weighted-average number of common shares-dilutive		24.9		24.6		24.8		24.5

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7. INCOME TAXES

The Company’s effective tax rate for continuing operations was 41% in the third quarter of 2017 and 34% in the third quarter of 2016.  The Company’s effective tax rate for continuing operations was 23% and 37% in the nine month period ended September 30, 2017 and 2016, respectively.

The tax rate for the first nine months of 2017 was impacted by the vesting of restricted stock which provided for additional income tax deduction in excess of the compensation deducted for GAAP purposes. This excess tax benefit increased the tax benefit reported on the first quarter loss.  As of September 30, 2017, the Company has $6.4 million valuation allowance primarily relating to certain state net operating loss carryforwards that are not likely to be realized in future periods.

8. STOCK-BASED EMPLOYEE COMPENSATION

The Company recognized $0.5 million and $0.4 million in non-cash stock-based compensation expense in the third quarter of 2017 and third quarter of 2016, respectively. The Company recognized $1.6 million and $1.2 million in non-cash stock-based compensation expense in the nine-month periods ended September 30, 2017 and September 30, 2016, respectively.  During the first nine months of 2017, the Company granted an aggregate of 404,793 shares of restricted stock at a fair market value of $6.64 per share under its 2005 Executive Incentive Compensation Plan, as amended and restated. Most restricted shares vest in three equal installments on the first, second and third anniversaries of the grant date or cliff vest in five years. During the first nine months of 2017, the Company granted 27,696 shares of restricted stock under its Non-Employee Directors’ Restricted Stock Plan, as amended, at an average fair market value of $8.68 per share. The directors’ restricted shares vest on the date of the 2018 Annual Meeting. The unearned compensation expense is being amortized into expense on a straight-line basis over the requisite service period for the entire award. As of September 30, 2017 and 2016, the total compensation expense not yet recognized related to all outstanding restricted stock/unit awards was $4.0 million and $2.6 million, respectively.

9. RIGHTS AGREEMENT

On May 18, 2016, the Board of Directors (the “Board”) of the Company entered into a rights agreement (the “Rights Agreement”) with Computershare Trust Company, N.A. and declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, $0.01 par value per share, of the Company.  The dividend was payable upon the close of business on May 31, 2016 to the stockholders of record upon the close of business on that date.  The Board adopted the Rights Agreement to protect stockholder value by attempting to reduce the risk that the Company’s ability to use its net operating losses to reduce potential future federal income tax obligations may become substantially limited. The Company’s stockholders approved the Rights Agreement at the 2017 Annual Meeting of Stockholders, held on April 25, 2017.

Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share (“Preferred Shares”), of the Company at a price of $13.86 per one one-hundredth of a Preferred Share, subject to adjustment.  As a result of the Rights Agreement, any person or group that acquires beneficial ownership of 4.99% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group.  

In connection with the entry into the Rights Agreement, on May 18, 2016, the Company filed with the Secretary of State of the State of Delaware an Amended and Restated Certificate of Designation of Series A Junior Participating Preferred Stock to create the Preferred Shares.

10. DISCONTINUED OPERATIONS

The Company recorded no after tax income or loss from discontinued operations in the nine months of 2017. The Company recorded income of $4.3 million in the first nine months of 2016 primarily as a result of payments received from settlement agreements with insurers, as well as with Crane Co., in connection with the declaratory action filed in the United States District court for the Eastern District of Missouri.

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

Overview

Huttig is a distributor of a broad array of building material products used principally in new residential construction, home improvement, and remodeling and repair projects.  We distribute our products through 27 distribution centers serving 41 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 by product classification as a percentage of total sales:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Millwork(1)		49	%		51	%		50	%		50	%
Building Products(2)		41	%		40	%		40	%		40	%
Wood Products(3)		10	%		9	%		10	%		10	%
Total Net Product Sales		100	%		100	%		100	%		100	%

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

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

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

Industry Conditions

New housing activity in 2017 is still below the historical average of 1.4 million total housing starts from 1959 to 2016 based on statistics tracked by the United States Census Bureau. Total housing starts were approximately 1.2 million in 2016. Through September 30, 2017, based on the most recent data provided by the United States Census Bureau, total new housing starts were approximately 3% above 2016 levels for the corresponding nine-month period.

Various factors historically have caused our results of operations to fluctuate from period to period. These factors include levels of residential construction, the mix of single family and multi-family starts as a percent of the total residential construction, home improvement and remodeling activity, weather, prices of commodity wood and steel 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 further fluctuations in operating results from period to period will continue in the future. Our results in the first and fourth quarter of each year are generally adversely affected by winter weather patterns in the Midwest, Northeast and Northwest, which typically result in seasonal decreases in levels of construction activity in these areas. As 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, distribution channels, personnel, systems infrastructure and financial and competitive resources necessary for continued operations. Our future revenues, costs and profitability, however, are all likely to be influenced by a number of risks and uncertainties, including those discussed under the “Cautionary Statement” below.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in accordance with GAAP, which requires 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 and these differences may be material. For a discussion of our significant accounting policies and estimates, see our Annual Report on Form 10-K for the year ended December 31, 2016 in Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies.” During the three months ended September 30, 2017, there were no material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the year ended December 31, 2016.

11

Results of Operations

Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016

Net sales were $199.6 million in 2017, which was $6.8 million, or 4 percent, higher than in 2016.  The increase in net sales was due to the general increase in housing activity, which was up 1 percent over the prior year.

Millwork sales were flat in 2017 at $97.6 million, compared to 2016. Building products sales increased 7 percent in 2017 to $82.6 million primarily due to increases in sales of our Huttig-Grip products. Wood product sales increased 5 percent in 2017 to $19.4 million.

Gross margin was $41.3 million in 2017, compared to $41.4 million in 2016.  As a percentage of sales, gross margin was 20.7 percent in 2017, compared to 21.5 percent in 2016. The gross margin percentage decrease was primarily due to increased production variances on lower production millwork sales during the three months ended September 30, 2017. Production variances occur when there is a mismatch between planned and actual number of units produced.

Operating expenses increased $4.6 million to $38.2 million in 2017, compared to $33.6 million in 2016.  The increase was primarily due to higher costs as a result of hiring additional sales and warehouse personnel related to our Huttig-Grip Division and repair and remodel growth initiatives.  The increase was also impacted by legal fees incurred defending our Huttig-Grip Division’s right to compete in the fastener market. As a percentage of sales, operating expenses increased to 19.1 percent in 2017 compared to 17.4 percent in 2016.

Net interest expense was $0.9 million in 2017 and $0.5 million in 2016.  The increase was primarily due to higher average debt and higher borrowing rates in 2017 compared to 2016.

Income tax expense of $0.9 million was recognized for the quarter ended September 30, 2017.  Income tax expense of $2.5 million was recognized for the third quarter of 2016.  See Note 7 – “Income Taxes” of the Notes to Condensed Consolidated Financial Statements (unaudited) in Item 1 for more information.

As a result of the foregoing factors, we reported income from continuing operations of $1.3 million in the third quarter of 2017 compared to $4.8 million in the third quarter of 2016.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net sales were $574.0 million in 2017, which was $24.5 million, or 4 percent, higher than in 2016.  The increase was primarily due to higher levels of construction activity, which was up 3 percent over the prior year, and the completion of the BenBilt Building Systems acquisition in the second quarter of 2016.

Millwork sales increased 6 percent in 2017 to $288.8 million, primarily due to increased construction activity and the acquisition. Building products sales increased 5 percent in 2017 to $229.6 million also primarily due to increased construction activity.  Wood product sales decreased 1 percent in 2017 to $55.6 million as we continue to de-emphasize this lower margin category.

Gross margin increased 3 percent to $119.0 million in 2017 compared to $115.6 million in 2016.  As a percentage of sales, gross margin was 20.7 percent in the nine-month period ended September 30, 2017, compared to 21.0 percent in the corresponding nine-month period in 2016. The gross margin percentage decrease was primarily due to increased production variances on millwork sales and a higher proportion of direct sales in our overall mix during the nine months ended September 30, 2017.

Operating expenses increased $18.6 million to $113.3 million in 2017, compared to $94.7 million in 2016.  The increase was primarily due to costs incurred as a result of hiring additional sales and warehouse personnel related to our Huttig-Grip Division and repair and remodel growth initiatives. The increase was also impacted by the BenBilt Building Systems operating expenses for nine months in 2017 compared to the post-acquisition period in 2016 and a general increase in costs which outpaced sales growth for the respective nine month periods.  As a percentage of sales, operating expenses increased to 19.7 percent in 2017 compared to 17.2 percent in 2016, as the Company increased headcount to service anticipated sales growth.

Net interest expense increased to $2.2 million in 2017, compared to $1.6 million in 2016.  The increase was primarily due to higher average debt and higher borrowing rates in 2017 compared to 2016.

Income tax expense of $0.8 million was recognized for the nine-month period ended September 30, 2017.  Income tax expense of $7.1 million was recognized in the nine-month period ended September 30, 2016.  See Note 7 – “Income Taxes” of the Notes to Condensed Consolidated Financial Statements (unaudited) in Item 1 for more information.

12

As a result of the foregoing factors, we reported income from continuing operations of $2.7 million in 2017, compared to $12.2 million in 2016.

Discontinued Operations

We recorded no after tax loss or income discontinued operations in the first nine months of 2017. We recorded $4.3 million after-tax income in the first nine months of 2016 primarily as a result of payments received from settlement agreements with insurers, as well as with Crane Co., in connection with the declaratory action filed in the United States District court for the Eastern District of Missouri.

Liquidity and Capital Resources

We depend on cash flow from operations and funds available under our credit facility to finance our operations, including seasonal working capital needs, capital expenditures and other capital needs. 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 typically use cash as we build working capital during the first quarter in preparation for our second and third quarters. We also maintain significant inventories to meet the rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery and service terms with our suppliers. Accounts receivable typically increases during peak periods commensurate with the sales increase.  At September 30, 2017 and September 30, 2016, inventories and accounts receivable constituted approximately 73% and 72% of our total assets, respectively.  We closely monitor operating expenses including variable operating costs, and inventory levels during seasonally affected periods to minimize seasonal effects on our profitability.

Operations.  Cash used in operating activities increased by $40.5 million to $38.4 million in the first nine months of 2017, compared to cash provided by operating activities of $2.1 million in the first nine months of 2016.  In the first nine months of 2017, we recorded net income of $2.7 million compared to net income of $16.5 million in the corresponding period in 2016. Accounts receivable increased by $28.2 million during the first nine months of 2017, compared to an increase of $20.9 million in the prior-year corresponding period. The increase in accounts receivable over year end is due to the seasonality of our sales.  Days’ sales outstanding was 40.0 days at September 30, 2017 as compared to 37.2 days at September 30, 2016 based on annualized third quarter sales and quarter-end accounts receivable balances for the respective periods. We believe the days’ sales outstanding will return to more historical levels in the fourth quarter of 2017 as the extended terms given at our special promotional winter buy will have concluded. Inventory increased by $27.1 million in the first nine months of 2017 compared to an increase of $18.0 million in the corresponding period of 2016. The increase in inventories over the first nine months of the year represented normal seasonality and anticipated increased sales activity in 2017, including the expanded Huttig-Grip product line, as compared to year-end 2016.  We expect to continue building Huttig-Grip product inventory in the fourth quarter of 2017. Our inventory turns decreased to 6.2 turns in 2017 from 7.4 turns in 2016 based on annualized third quarter cost of goods sold and average inventory balances for the respective quarters. The decrease in inventory turns is primarily related to the inventory added to support the Huttig-Grip product line. Accounts payable increased by $19.5 million in the first nine months of 2017, compared to a $12.7 million increase in the corresponding prior-year period. The increase was primarily a result of our inventory build for the respective periods.  Days’ payable outstanding increased to 38.4 days at September 30, 2017 from 34.5 days at September 30, 2016 based on annualized third quarter costs of goods sold and quarter-end accounts payable balances for the respective periods.

Investing.  In the first nine months of 2017, net cash used in investing activities was $5.7 million compared to $20.0 million for the corresponding period in 2016.  The Company invested $5.7 million in machinery and equipment at various locations in the first nine months of 2017.  In the first nine months of 2016, we invested $17.3 million in an acquisition and $2.7 million in machinery and equipment.

Financing.  Cash provided by financing activities of $45.0 million in the first nine months of 2017 reflected net borrowings of $45.9 million offset by the Company’s repurchase of 0.1 million shares of its common stock for $0.9 million.  Cash provided from financing activities of $20.0 million in the first nine months of 2016 reflected net borrowings of $19.1 million offset by the Company’s repurchase of 0.1 million shares of its common stock for $0.4 million.  Net borrowings in 2016 included amounts borrowed to fund the acquisition. The shares repurchased in both periods were retired.

The Company believes that cash generated from its operations and availability under the credit facility will provide sufficient funds to meet the operating needs of the Company for at least the next twelve months.  However, if the Company’s availability falls below the required threshold and the Company does not meet the minimum fixed charge coverage ratio, its lenders would have the right to terminate the loan commitments and accelerate the repayment of the entire amount outstanding under the credit facility. The lenders could also foreclose on the Company’s assets that secure the credit facility. If the credit facility is terminated, the Company would be forced to seek alternative sources of financing, which may not be available on terms acceptable to it, or at all.

13

Off-Balance Sheet Arrangements

In addition to funds available from operating cash flows and the credit facility as described above, we use operating leases as a principal off-balance sheet financing technique. Operating leases are employed as an alternative to purchasing certain property, plant and equipment. For a discussion of our off-balance sheet arrangements, see our Annual Report on Form 10-K for the year ended December 31, 2016 in Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Commitments and Contingencies.” During the nine months ended September 30, 2017, there were no material changes to our off-balance sheet arrangements discussed in our Annual Report on Form 10-K for the year ended December 31, 2016.

Contingencies

We carry insurance policies on insurable risks with coverage and other terms that we believe to be appropriate. We generally have self-insured retention limits and have 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 for when it is probable that future costs will be incurred and can be reasonably estimated.

See Note 5 – “Contingencies” of the Notes to Condensed Consolidated Financial Statements (unaudited) in Item 1 for information on certain legal proceedings in which the Company is involved.

Cautionary Statement Relevant to Forward-looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “believe,” “estimate,” “project” or similar expressions may identify forward-looking statements, although not all forward-looking statements contain such words.  Statements made in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K looking forward in time, including, but not limited to, statements regarding our current views with respect to financial performance, future growth in the housing market, distribution channels, sales, favorable supplier relationships, inventory levels, the ability to meet customer needs, enhanced competitive posture, no material financial impact from litigation or contingencies, including environmental proceedings, are included pursuant to the “safe harbor” provision 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. 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 factors, some of which are beyond our control 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 strength of construction, home improvement and remodeling markets and the recovery of the homebuilding industry to levels consistent with the historical average of total housing starts; the cyclical nature of our industry; the uncertainties resulting from changes to policies and laws following the U.S. election in November 2016; the cost of environmental compliance, including actual expenses we may incur to resolve proceedings we are involved in arising out of the formerly owned facility in Montana; any limitations on our ability to utilize our deferred tax assets to reduce future taxable income and tax liabilities; our ability to comply with, and the restrictive effect of, the financial covenant applicable under our credit facility; the loss of a significant customer; deterioration of our customers’ creditworthiness or our inability to forecast such deteriorations; commodity prices; risks associated with our private brands; termination of key supplier relationships; risks of international suppliers; competition with existing or new industry participants; goodwill impairment;  the seasonality of our operations; significant uninsured claims; federal and state transportation regulations; fuel cost increases; our failure to attract and retain key personnel; deterioration in our relationship with our unionized employees, including work stoppages or other disputes; funding requirements for multi-employer pension plans for our unionized employees; product liability claims and other claims, litigation matters or regulatory proceedings; the integration of any business we acquire and the liabilities of such businesses; and those set forth under Part I, Item 1A-“Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and as set forth in Part II, Item 1A-“Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017. These factors may not constitute all factors that could cause actual results to differ from those discussed in any forward-looking statement. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

14

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures – As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and 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 Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of September 30, 2017.

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 September 30, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS 

See Note 5 – Contingencies of the Notes to Condensed Consolidated Financial Statements (unaudited) in Item 1 for information on legal proceedings in which the Company is involved.  See also Part I, Item 3-“Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

ITEM 1A — RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, as supplemented by the risk factor discussed in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, which could materially affect our business, financial condition, and future results. These described risks are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016 as supplemented by the risk factor in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017.

15

ITEM 6 — EXHIBITS

Exhibit Number	Description
2.1	Distribution Agreement dated December 6, 1999 between Crane Co. and the Company. (Incorporated by reference to Exhibit No. 2.1 of Amendment No. 4 to the Company’s Registration Statement on Form 10 (File No. 1-14982) filed with the Securities and Exchange Commission on December 6, 1999).
3.1	Second Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 to the Form 10-Q filed with the Securities and Exchange Commission on May 2, 2017).
3.2	Amended and Restated Bylaws of the Company (as of September 26, 2007) (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on September 28, 2007).
3.3	Amended and Restated Certificate of Designation of Series A Junior Participating Preferred Stock, as filed with the Secretary of State of Delaware on May 18, 2016 (Incorporated by reference to Exhibit 3.01 to the Form 8-K filed with the Securities and Exchange Commission on May 20, 2016).
4.1	Rights Agreement, dated May 18, 2016, by and between Huttig Building Products, Inc. and Computershare Trust Company, N.A., as Rights Agents (Incorporated by reference to Exhibit 4.01 to the Form 8-K filed with the Securities and Exchange Commission on May 20, 2016).
10.1	Sixth Amendment to Amended and Restated Credit Agreement dated July 14, 2017, by and among the Company, Huttig, Inc., Wells Fargo Capital Finance, LLC and the other parties signatory thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 18, 2017).
*10.2	Separation Agreement dated October 18, 2017, by and between Gregory W. Gurley and the Company (Incorporated by reference to Exhibit 10.1 to the Company’s current Report on Form 8-K filed on October 23, 2017).
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.
101.INS	XBRL Instance Document
10l.SCH	XBRL Taxonomy Extension Scheme Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*Management contract or compensatory arrangement

16

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.
	/s/  Jon P. Vrabely
Date: October 31, 2017
	Jon P. Vrabely
	President and Chief Executive Officer
	(Principal Executive Officer)

	HUTTIG BUILDING PRODUCTS, INC.
	/s/  Oscar A. Martinez
Date: October 31, 2017
	Oscar A. Martinez
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

17

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, Jon P. Vrabely, 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 likely 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: October 31, 2017	/s/ Jon P. Vrabely
	Jon P. Vrabely
	President and Chief Executive Officer

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, Oscar A. Martinez, 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 likely 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: October 31, 2017	/s/ Oscar A.Martinez
	Oscar A. Martinez
	Vice President and Chief Financial Officer

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 September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon P. Vrabely, President and Chief Executive Officer of the Company, and I, Oscar A. Martinez, 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/ Jon P. Vrabely

Jon P. Vrabely

President and Chief Executive Officer

October 31, 2017

/s/ Oscar A. Martinez

Oscar A. Martinez

Vice President and Chief Financial Officer

October 31, 2017

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2017 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	HBP
Entity Registrant Name	HUTTIG BUILDING PRODUCTS INC
Entity Central Index Key	0001093082
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding	25,879,812

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Net sales	$ 199,600,000	$ 192,800,000	$ 574,000,000	$ 549,500,000
Cost of sales	158,300,000	151,400,000	455,000,000	433,900,000
Gross margin	41,300,000	41,400,000	119,000,000	115,600,000
Operating expenses	38,200,000	33,600,000	113,300,000	94,700,000
Operating income	3,100,000	7,800,000	5,700,000	20,900,000
Interest expense, net	900,000	500,000	2,200,000	1,600,000
Income from continuing operations before income taxes	2,200,000	7,300,000	3,500,000	19,300,000
Income tax expense	900,000	2,500,000	800,000	7,100,000
Income from continuing operations	1,300,000	4,800,000	2,700,000	12,200,000
Income (loss) from discontinued operations, net of taxes	100,000	(100,000)	0	4,300,000
Net income	$ 1,400,000	$ 4,700,000	$ 2,700,000	$ 16,500,000
Income from continuing operations per share - basic and diluted	$ 0.05	$ 0.19	$ 0.10	$ 0.48
Income (loss) from discontinued operations per share - basic and diluted	0.00	0.00	0.00	0.17
Net income per share - basic and diluted	$ 0.05	$ 0.19	$ 0.10	$ 0.65
Weighted average shares outstanding:
Basic and diluted shares outstanding	24.9	24.6	24.8	24.5

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
CURRENT ASSETS:
Cash and equivalents	$ 1.2	$ 0.3	$ 1.1
Trade accounts receivable, net	87.5	59.3	78.7
Net inventories	108.1	81.0	84.4
Other current assets	12.1	9.5	7.2
Total current assets	208.9	150.1	171.4
PROPERTY, PLANT AND EQUIPMENT:
Land	5.0	5.0	5.0
Buildings and improvements	30.8	29.7	29.5
Machinery and equipment	49.5	43.5	41.5
Gross property, plant and equipment	85.3	78.2	76.0
Less accumulated depreciation	55.5	53.3	52.6
Property, plant and equipment, net	29.8	24.9	23.4
OTHER ASSETS:
Goodwill	9.5	9.5	9.5
Deferred income taxes	11.3	10.3	7.8
Other	7.0	7.5	14.8
Total other assets	27.8	27.3	32.1
TOTAL ASSETS	266.5	202.3	226.9
CURRENT LIABILITIES:
Current maturities of long-term debt	1.2	1.0	0.8
Trade accounts payable	66.7	47.2	57.2
Deferred income taxes			5.0
Accrued compensation	3.5	6.8	5.2
Other accrued liabilities	13.7	15.1	13.0
Total current liabilities	85.1	70.1	81.2
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities	102.3	54.5	68.1
Other non-current liabilities	3.4	7.2	7.3
Total non-current liabilities	105.7	61.7	75.4
SHAREHOLDERS' EQUITY:
Preferred shares: $.01 par (5,000,000 shares authorized)
Common shares: $.01 par (75,000,000 shares authorized: 25,879,812; 25,638,862; and 25,466,252 shares issued at September 30, 2017, December 31, 2016 and September 30, 2016, respectively)	0.3	0.3	0.3
Additional paid-in capital	43.5	42.8	42.4
Retained earnings	31.9	27.4	27.6
Total shareholders' equity	75.7	70.5	70.3
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 266.5	$ 202.3	$ 226.9

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000	5,000,000
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000	75,000,000
Common stock, shares issued	25,879,812	25,638,862	25,466,252

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Cash Flows From Operating Activities:
Net income	$ 1,400,000	$ 4,700,000	$ 2,700,000	$ 16,500,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Income (loss) from discontinued operations	(100,000)	100,000	0	(4,300,000)
Depreciation and amortization	1,300,000	1,000,000	3,600,000	2,800,000
Non-cash interest expense		100,000	200,000	300,000
Stock-based compensation	500,000	400,000	1,600,000	1,200,000
Deferred taxes	900,000	2,400,000	800,000	9,300,000
Changes in operating assets and liabilities:
Trade accounts receivable	13,600,000	4,100,000	(28,200,000)	(20,900,000)
Net inventories	(11,200,000)	(6,000,000)	(27,100,000)	(18,000,000)
Trade accounts payable	3,100,000	1,000,000	19,500,000	12,700,000
Other	(3,300,000)	2,500,000	(7,600,000)	(1,100,000)
Cash provided by (used in) continuing operating activities	6,200,000	10,300,000	(34,500,000)	(1,500,000)
Cash (used in) provided by discontinued operating activities	(2,200,000)	(800,000)	(3,900,000)	3,600,000
Total cash provided by (used in) operating activities	4,000,000	9,500,000	(38,400,000)	2,100,000
Cash Flows From Investing Activities:
Capital expenditures	(2,200,000)	(1,500,000)	(5,700,000)	(2,700,000)
Acquisition				(17,300,000)
Total cash used in investing activities	(2,200,000)	(1,500,000)	(5,700,000)	(20,000,000)
Cash Flows From Financing Activities:
Borrowings of debt, net	(1,600,000)	(7,700,000)	45,900,000	19,100,000
Repurchase shares of common stock			(900,000)	(400,000)
Total cash (used in) provided by financing activities	(1,600,000)	(7,700,000)	45,000,000	18,700,000
Net increase in cash and equivalents	200,000	300,000	900,000	800,000
Cash and equivalents, beginning of period	1,000,000	800,000	300,000	300,000
Cash and equivalents, end of period	1,200,000	1,100,000	1,200,000	1,100,000
Supplemental Disclosure of Cash Flow Information:
Interest paid	$ 800,000	$ 500,000	1,900,000	1,400,000
Income taxes paid			$ 400,000	$ 400,000

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Basis of Presentation

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Huttig Building Products, Inc. and its subsidiary (the “Company” or “Huttig”) were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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, 2016.

The condensed 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.

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New Accounting Standards

9 Months Ended

Sep. 30, 2017

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Standards

2. NEW ACCOUNTING STANDARDS

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting", which simplified the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. Huttig adopted this standard in the first quarter of 2017, which had an immaterial impact to the consolidated financial statements and related disclosures.

In February 2016, the FASB issued accounting guidance, "Leases", which will supersede the existing lease guidance and will require all leases with a term greater than 12 months to be recognized in the statement of financial position and eliminate current real estate-specific lease guidance, while maintaining substantially similar classification criteria for distinguishing between finance leases and operating leases. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. This standard will be adopted on a modified retrospective basis. Huttig is required to adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In May 2014, the FASB issued accounting guidance, "Revenue from Contracts with Customers", which has been further clarified and amended. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and clarify guidance for multiple-element arrangements. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statement of Consolidated Financial Position. In August 2015, the FASB amended the guidance to allow for the deferral of the effective date of this standard. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Accordingly, Huttig is required to adopt this standard in the first quarter of fiscal year 2018. The Company is in process of implementing this guidance, including assembling an implementation team and performing a review of all revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition. The Company is continuing to evaluate the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

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Comprehensive Income

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Comprehensive Income

3. COMPREHENSIVE INCOME

Comprehensive income refers to net income adjusted by gains and losses that in conformity with GAAP are excluded from net income. Other comprehensive items are amounts that are included in shareholders’ equity in the condensed consolidated balance sheets. The Company has no comprehensive income items and therefore comprehensive net income (loss) is equal to net income (loss) for all periods presented.

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Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Debt

4. DEBT

Debt consisted of the following (in millions):

	September 30,		December 31,		September 30,
	2017		2016		2016
Revolving credit facility	$	99.6	$	52.2	$	66.2
Other obligations		3.9		3.3		2.7
Total debt		103.5		55.5		68.9
Less current portion		1.2		1.0		0.8
Long-term debt	$	102.3	$	54.5	$	68.1

Credit Agreement — In July 2017, the Company amended and extended its asset-based senior secured revolving credit facility (“credit facility”) with Wells Fargo Capital Finance, Bank of America and JP Morgan Chase.  The amendment, among other things, increased the borrowing capacity from $160 million to $250 million, reduced the interest rate, reduced the minimum fixed charge coverage ratio and extended the maturity to July 14, 2022. Borrowing availability under the credit facility is based on eligible accounts receivable, inventory and real estate. The real estate component of the borrowing base amortizes monthly over 12.5 years on a straight-line basis.  Borrowings under the credit facility are collateralized by substantially all of the Company’s assets, and the Company is subject to certain operating limitations applicable to a loan of this type, which, among other things, place limitations on indebtedness, liens, investments, mergers and acquisitions, dispositions of assets, cash dividends and transactions with affiliates.

At September 30, 2017, the Company had revolving credit borrowings of $99.6 million outstanding at a weighted average interest rate of 2.5% per annum, letters of credit outstanding totaling $3.2 million, primarily used as collateral for health and workers’ compensation insurance and $69.7 million of excess committed borrowing capacity.  The Company pays an unused commitment fee of 0.25% per annum. In addition, the Company had $3.9 million of capital lease and other obligations outstanding at September 30, 2017.

The sole financial covenant in the credit facility is the fixed charge coverage ratio of  1.00:1.00, which must be tested by the Company if the excess committed borrowing availability falls below an amount in a range between $17.5 million to $31.3 million, which amounts depend on the Company’s borrowing base, and must also be tested on a pro forma basis prior to consummation of certain significant transactions outside the ordinary course of the Company’s business, as defined in the credit agreement.  At September 30, 2017, the company’s fixed charge coverage ratio exceeds 1.00:1.00. At September 30, 2017, the Company’s fixed charge coverage ratio exceeds 1.00:1.00. 

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Contingencies

9 Months Ended

Sep. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Contingencies

5. 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 for when it is probable that future costs will be incurred and can be reasonably estimated.

As described in Note 7 — “Commitments and Contingencies” to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016,  the Company was previously identified as a potentially responsible party in connection with the cleanup of contamination at a formerly owned property in Montana. On February 18, 2015, the Montana Department of Environmental Quality (the “DEQ”) issued an amendment to the unilateral administrative order of the DEQ outlining the final remediation of the property in its Record of Decision (the “ROD”).  Under the ROD, the DEQ estimated the remediation costs of the property to be $8.3 million. Since the ROD was issued, the Company has incurred costs which reduced the accrual to $7.1 million at December 31, 2016.

The Company spent $3.9 million in the first nine months of 2017 implementing the remedial action work plan (the “RAWP”).  The Company estimates the total remaining cost of implementing the RAWP to be $3.2 million at September 30, 2017. As of September 30, 2017, the Company believes the accrual represents a reasonable best estimate of the total remaining remediation costs, based on facts, circumstances, and information currently available to Huttig.  However, there are currently unknown variables relating to the actual levels of contaminants and amounts of soil that will ultimately require treatment or removal and as part of the remediation process, additional soil and groundwater sampling, and bench and pilot testing is required to ensure the remediation will achieve the projected outcome required by the DEQ.  Potential indemnification or other claims we may be able to assert against third parties and possible insurance coverage have also been considered but any potential recoveries have not been recognized at this time. The ultimate final amount of remediation costs and expenditures are difficult to estimate with certainty and as a result, the amount of actual costs and expenses ultimately incurred by Huttig with respect to this property could be lower than, or exceed the amount accrued as of September 30, 2017 by a material amount.  If actual costs are materially higher, the incremental expenses over the amount currently accrued could have a material adverse effect on our liquidity, financial condition and operating results.  

In addition, some of the Company’s current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which the Company, among others, could be held responsible. The Company currently believes that there are no material environmental liabilities at any of its distribution center locations.

The Company is also involved in litigation in Colorado, Illinois, and Texas filed by PrimeSource Building Products, Inc. (“PrimeSource”) against the Company and eleven of its employees in December 2016.  

The complaints allege, among other things, that certain former employees of PrimeSource have breached their contracts with PrimeSource (including non-competition, non‑interference and non-disclosure covenants) and fiduciary duties to PrimeSource, and that the former employees have misappropriated, and are using, trade secrets of PrimeSource on behalf of Huttig.  The complaints seek injunctive relief, compensatory damages, and with respect to certain counts, punitive damages.

On July 26, 2017, the Company and certain of the employee defendants filed counterclaims in the Illinois cases alleging, among others things, that PrimeSource has asserted and is maintaining its trade secret misappropriation claims in bad faith, tortiously interfered with the Company’s business relationships, and filed sham litigation and engaged in other exclusionary and predatory conduct in violation of Section 2 of the Sherman Act.

While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this litigation, and the Company is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome, the Company believes that PrimeSource’s claims lack merit.  The Company has retained outside counsel, and is vigorously defending itself against the lawsuits.  As of September 30, 2017, the Company incurred approximately $2.5 million in expenses related to the PrimeSource litigation, and expects to continue to incur such litigation expenses.

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. It is possible, however, that actual expenses could exceed our accrual by a material amount which could have a material adverse effect on the Company’s future liquidity, financial condition or operating results in the period in which any such additional expenses are incurred or recognized.

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Earnings Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

6. EARNINGS PER SHARE

The Company calculates its basic income per share by dividing net income allocated to common shares outstanding by the weighted average number of common shares outstanding.  Although the Company does not currently pay dividends, holders of unvested shares of restricted stock have a right to participate in dividends on the same basis as common shares. As a result, these share-based awards meet the definition of participating securities and the Company applies the two-class method to compute earnings per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In periods in which the Company has net losses, the losses are not allocated to participating securities because the participating security holders are not obligated to share in such losses.  The following table presents the number of participating securities and earnings allocated to those securities (in millions).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Earnings allocated to participating shareholders	$	—	$	0.2	$	0.1	$	0.6
Number of participating securities		1.1		1.0		1.2		1.0

The diluted earnings per share calculations include the effect of the assumed exercise using the treasury stock method for both stock options and unvested restricted stock units, except when the effect would be anti-dilutive.  The following table presents the number of common shares used in the calculation of net income per share from continuing operations (in millions).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Weighted-average number of common shares-basic		24.9		24.6		24.8		24.5
Dilutive potential common shares		—		—		—		—
Weighted-average number of common shares-dilutive		24.9		24.6		24.8		24.5

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

7. INCOME TAXES

The Company’s effective tax rate for continuing operations was 41% in the third quarter of 2017 and 34% in the third quarter of 2016. The Company’s effective tax rate for continuing operations was 23% and 37% in the nine month period ended September 30, 2017 and 2016, respectively.

The tax rate for the first nine months of 2017 was impacted by the vesting of restricted stock which provided for additional income tax deduction in excess of the compensation deducted for GAAP purposes. This excess tax benefit increased the tax benefit reported on the first quarter loss.  As of September 30, 2017, the Company has $6.4 million valuation allowance primarily relating to certain state net operating loss carryforwards that are not likely to be realized in future periods.

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Stock-Based Employee Compensation

9 Months Ended

Sep. 30, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Employee Compensation

8. STOCK-BASED EMPLOYEE COMPENSATION

The Company recognized $0.5 million and $0.4 million in non-cash stock-based compensation expense in the third quarter of 2017 and third quarter of 2016, respectively. The Company recognized $1.6 million and $1.2 million in non-cash stock-based compensation expense in the nine-month periods ended September 30, 2017 and September 30, 2016, respectively.  During the first nine months of 2017, the Company granted an aggregate of 404,793 shares of restricted stock at a fair market value of $6.64 per share under its 2005 Executive Incentive Compensation Plan, as amended and restated. Most restricted shares vest in three equal installments on the first, second and third anniversaries of the grant date or cliff vest in five years. During the first nine months of 2017, the Company granted 27,696 shares of restricted stock under its Non-Employee Directors’ Restricted Stock Plan, as amended, at an average fair market value of $8.68 per share. The directors’ restricted shares vest on the date of the 2018 Annual Meeting. The unearned compensation expense is being amortized into expense on a straight-line basis over the requisite service period for the entire award. As of September 30, 2017 and 2016, the total compensation expense not yet recognized related to all outstanding restricted stock/unit awards was $4.0 million and $2.6 million, respectively.

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Rights Agreement

9 Months Ended

Sep. 30, 2017

Warrants And Rights Note Disclosure [Abstract]

Rights Agreement

9. RIGHTS AGREEMENT

On May 18, 2016, the Board of Directors (the “Board”) of the Company entered into a rights agreement (the “Rights Agreement”) with Computershare Trust Company, N.A. and declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, $0.01 par value per share, of the Company.  The dividend was payable upon the close of business on May 31, 2016 to the stockholders of record upon the close of business on that date.  The Board adopted the Rights Agreement to protect stockholder value by attempting to reduce the risk that the Company’s ability to use its net operating losses to reduce potential future federal income tax obligations may become substantially limited. The Company’s stockholders approved the Rights Agreement at the 2017 Annual Meeting of Stockholders, held on April 25, 2017.

Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share (“Preferred Shares”), of the Company at a price of $13.86 per one one-hundredth of a Preferred Share, subject to adjustment.  As a result of the Rights Agreement, any person or group that acquires beneficial ownership of 4.99% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group.  

In connection with the entry into the Rights Agreement, on May 18, 2016, the Company filed with the Secretary of State of the State of Delaware an Amended and Restated Certificate of Designation of Series A Junior Participating Preferred Stock to create the Preferred Shares.

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Discontinued Operations

9 Months Ended

Sep. 30, 2017

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

10. DISCONTINUED OPERATIONS

The Company recorded no after tax income or loss from discontinued operations in the nine months of 2017. The Company recorded income of $4.3 million in the first nine months of 2016 primarily as a result of payments received from settlement agreements with insurers, as well as with Crane Co., in connection with the declaratory action filed in the United States District court for the Eastern District of Missouri.

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New Accounting Standards (Policies)

9 Months Ended

Sep. 30, 2017

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Standards

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting", which simplified the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. Huttig adopted this standard in the first quarter of 2017, which had an immaterial impact to the consolidated financial statements and related disclosures.

In February 2016, the FASB issued accounting guidance, "Leases", which will supersede the existing lease guidance and will require all leases with a term greater than 12 months to be recognized in the statement of financial position and eliminate current real estate-specific lease guidance, while maintaining substantially similar classification criteria for distinguishing between finance leases and operating leases. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. This standard will be adopted on a modified retrospective basis. Huttig is required to adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In May 2014, the FASB issued accounting guidance, "Revenue from Contracts with Customers", which has been further clarified and amended. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and clarify guidance for multiple-element arrangements. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statement of Consolidated Financial Position. In August 2015, the FASB amended the guidance to allow for the deferral of the effective date of this standard. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Accordingly, Huttig is required to adopt this standard in the first quarter of fiscal year 2018. The Company is in process of implementing this guidance, including assembling an implementation team and performing a review of all revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition. The Company is continuing to evaluate the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

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Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Summary of Long-term Debt

Debt consisted of the following (in millions):

	September 30,		December 31,		September 30,
	2017		2016		2016
Revolving credit facility	$	99.6	$	52.2	$	66.2
Other obligations		3.9		3.3		2.7
Total debt		103.5		55.5		68.9
Less current portion		1.2		1.0		0.8
Long-term debt	$	102.3	$	54.5	$	68.1

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Summary of Number of Participating Securities and Earning Allocations to those Securities

The following table presents the number of participating securities and earnings allocated to those securities (in millions).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Earnings allocated to participating shareholders	$	—	$	0.2	$	0.1	$	0.6
Number of participating securities		1.1		1.0		1.2		1.0

Summary of Diluted Earning Per Share

The following table presents the number of common shares used in the calculation of net income per share from continuing operations (in millions).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Weighted-average number of common shares-basic		24.9		24.6		24.8		24.5
Dilutive potential common shares		—		—		—		—
Weighted-average number of common shares-dilutive		24.9		24.6		24.8		24.5

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Debt - Summary of Long-term Debt (Detail) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Debt Disclosure [Abstract]
Revolving credit facility	$ 99.6	$ 52.2	$ 66.2
Other obligations	3.9	3.3	2.7
Total debt	103.5	55.5	68.9
Less current portion	1.2	1.0	0.8
Long-term debt	$ 102.3	$ 54.5	$ 68.1

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Debt - Additional Information (Detail) - USD ($)		9 Months Ended
	Jul. 14, 2017	Sep. 30, 2017	Jul. 13, 2017	Dec. 31, 2016	Sep. 30, 2016
Line of Credit Facility [Line Items]
Revolving credit borrowing		$ 99,600,000		$ 52,200,000	$ 66,200,000
Letters of credit outstanding		3,200,000
Capital lease and other obligations		3,900,000		$ 3,300,000	$ 2,700,000
Minimum [Member]
Line of Credit Facility [Line Items]
Fall of excess committed borrowing availability		17,500,000
Maximum [Member]
Line of Credit Facility [Line Items]
Fall of excess committed borrowing availability		31,300,000
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, expiration date	Jul. 14, 2022
Amortization period on real estate component of borrowing base	12 years 6 months
Revolving credit borrowing		$ 99,600,000
Weighted average interest rate		2.50%
Excess committed borrowing capacity		$ 69,700,000
Unused commitment fees		0.25%
Fixed charge coverage ratio of credit facility		100.00%
Revolving Credit Facility [Member] | Asset Backed Securities [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 250,000,000		$ 160,000,000

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Contingencies - Additional Information (Detail) $ in Millions		9 Months Ended	12 Months Ended
	Feb. 18, 2015 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2016 USD ($) Employee
Contingencies And Commitments [Line Items]
Estimated total costs to remediate property	$ 8.3
Accrual for reasonably estimable remediation cost		$ 3.2	$ 7.1
Amount spent to implement remedial action work plan		3.9
PrimeSource [Member]
Contingencies And Commitments [Line Items]
Number of employees, litigation filed | Employee			11
Litigation expenses		$ 2.5

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Earnings Per Share - Summary of Number of Participating Securities and Earning Allocated to those Securities (Detail) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Earnings allocated to participating shareholders		$ 0.2	$ 0.1	$ 0.6
Number of participating securities	1.1	1.0	1.2	1.0

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Earnings Per Share - Summary of Diluted Earning Per Share (Detail) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Weighted Average Number Of Shares Outstanding [Abstract]
Weighted-average number of common shares-basic	24.9	24.6	24.8	24.5
Dilutive potential common shares	0.0	0.0	0.0	0.0
Weighted-average number of common shares-dilutive	24.9	24.6	24.8	24.5

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, percent	41.00%	34.00%	23.00%	37.00%
Valuation allowance for net deferred tax assets	$ 6.4		$ 6.4

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Stock-Based Employee Compensation - Additional Information (Detail) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) Installment $ / shares shares	Sep. 30, 2016 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation | $	$ 0.5	$ 0.4	$ 1.6	$ 1.2
Number of installments of restricted shares | Installment			3
Restricted stock award vesting rights			The directors’ restricted shares vest on the date of the 2018 Annual Meeting.
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense of restricted stock | $	$ 4.0	$ 2.6	$ 4.0	$ 2.6
2005 Executive Incentive Compensation Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock shares granted | shares			404,793
Fair market value of restricted shares granted | $ / shares			$ 6.64
Non-Employee Directors' Restricted Stock Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock shares granted | shares			27,696
Fair market value of restricted shares granted | $ / shares			$ 8.68
Cliff Vest [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares, vesting period			5 years

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Rights Agreement - Additional Information (Detail) - $ / shares		9 Months Ended
	May 18, 2016	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Class Of Warrant Or Right [Line Items]
Conversion basis of dividend distribution		one preferred share purchase right (a “Right”) for each outstanding share of common stock
Common stock, par value	$ 0.01	$ 0.01	$ 0.01	$ 0.01
Dividend payable date		May 31, 2016
Preferred stock, par value		$ 0.01	$ 0.01	$ 0.01
Common stock acquisition beneficial ownership percentage	4.99%
Series A Junior Participating Preferred Stock [Member]
Class Of Warrant Or Right [Line Items]
Preferred stock, par value	$ 0.01
Purchase price of one one-hundredth of preferred shares	$ 13.86

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Discontinued Operations - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Discontinued Operations And Disposal Groups [Abstract]
Income (loss) from discontinued operations, net of taxes	$ 100,000	$ (100,000)	$ 0	$ 4,300,000