10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

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 every Interactive Data File required to be submitted 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 such files).    Yes  ☑    No  ☐

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

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	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 March 31, 2019 was 26,548,886 shares.

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Operations for the three months ended  March 31, 2019 and 2018 (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2019, December 31, 2018 and March 31, 2018 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 6.	Exhibits	18
Signatures		19

2

PART I 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
	March 31,
	2019			2018
Net sales	$	197.4		$	198.0
Cost of sales		160.0			159.3
Gross margin		37.4			38.7
Operating expenses		39.6			39.2
Operating loss		(2.2	)		(0.5	)
Interest expense, net		1.7			1.1
Loss from continuing operations before income taxes		(3.9	)		(1.6	)
Income tax benefit		(0.7	)		(1.1	)
Loss from continuing operations		(3.2	)		(0.5	)
Loss from discontinued operations, net of taxes		—			—
Net loss	$	(3.2	)	$	(0.5	)
Loss from continuing operations per share - basic and diluted	$	(0.13	)	$	(0.02	)
Loss from discontinued operations per share - basic    and diluted	$	—		$	—
Net loss per share - basic and diluted	$	(0.13	)	$	(0.02	)
Weighted average shares outstanding:
Basic and diluted shares outstanding		25.3			25.1

See notes to condensed consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Millions)

	March 31,		December 31,		March 31,
	2019		2018		2018
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	0.9	$	0.8	$	1.3
Trade accounts receivable, net		89.2		69.0		100.9
Inventories, net		149.2		134.0		139.3
Other current assets		12.3		14.7		10.7
Total current assets		251.6		218.5		252.2
PROPERTY, PLANT AND EQUIPMENT:
Land		5.0		5.0		5.0
Buildings and improvements		32.4		32.3		31.2
Machinery and equipment		56.2		56.0		51.8
Gross property, plant and equipment		93.6		93.3		88.0
Less accumulated depreciation		61.0		60.0		57.3
Property, plant and equipment, net		32.6		33.3		30.7
OTHER ASSETS:
Operating lease right-of-use assets		35.2		—		—
Goodwill		9.5		9.5		9.5
Deferred income taxes		11.9		11.1		10.8
Other		5.4		5.6		6.4
Total other assets		62.0		26.2		26.7
TOTAL ASSETS	$	346.2	$	278.0	$	309.6

See notes to condensed consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Millions, Except Share Data)

	March 31,		December 31,		March 31,
	2019		2018		2018
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	1.7	$	1.8	$	1.3
Current maturities of operating lease right-of-use assets		9.1		—		—
Trade accounts payable		86.6		51.5		80.5
Accrued compensation		2.1		5.0		2.5
Other accrued liabilities		14.7		18.0		11.5
Total current liabilities		114.2		76.3		95.8
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities		143.6		137.1		145.4
Operating lease right-of-use liabilities, less current maturities		26.6		—		—
Other non-current liabilities		2.6		2.6		2.3
Total non-current liabilities		172.8		139.7		147.7
SHAREHOLDERS’ EQUITY:
Preferred shares: $.01 par (5,000,000 shares authorized)		—		—		—
Common shares: $.01 par (75,000,000 shares authorized: 26,548,886;    25,993,441; and 26,070,616 shares issued at March 31, 2019,    December 31, 2018 and March 31, 2018, respectively)		0.3		0.3		0.3
Additional paid-in capital		46.4		46.0		44.2
Retained earnings		12.5		15.7		21.6
Total shareholders’ equity		59.2		62.0		66.1
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	346.2	$	278.0	$	309.6

See notes to condensed consolidated financial statements

5

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(unaudited)

(In Millions)

	Common Shares		Additional			RetainedEarnings			Total
	Outstanding,		Paid-In			(Accumulated			Shareholders’
	at Par Value		Capital			Deficit)			Equity
Balance at January 1, 2018	$	0.3	$	44.0		$	22.1		$	66.4
Net loss		-		-			(0.5	)		(0.5	)
Payment for taxes related to share    settlement of equity awards		-		(0.4	)		-			(0.4	)
Stock compensation expense		-		0.6			-			0.6
Balance at March 31, 2018	$	0.3	$	44.2		$	21.6		$	66.1
Balance at January 1, 2019	$	0.3	$	46.0		$	15.7		$	62.0
Net loss		-		-			(3.2	)		(3.2	)
Payment for taxes related to share    settlement of equity awards		-		(0.1	)		-			(0.1	)
Stock compensation expense		-		0.5			-			0.5
Balance at March 31, 2019	$	0.3	$	46.4		$	12.5		$	59.2

6

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In Millions)

	Three Months Ended
	March 31,
	2019			2018
Cash Flows From Operating Activities:
Net Loss	$	(3.2	)	$	(0.5	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Depreciation and amortization		1.4			1.3
Non-cash interest expense		0.1			0.1
Stock-based compensation		0.5			0.6
Deferred income taxes		(0.8	)		(1.1	)
Changes in operating assets and liabilities:
Trade accounts receivable		(20.2	)		(34.1	)
Inventories, net		(15.2	)		(27.5	)
Trade accounts payable		35.1			29.5
Other		(3.3	)		(8.1	)
Cash used in continuing operating activities		(5.6	)		(39.8	)
Cash used in discontinued operating activities		(0.1	)		(0.3	)
Total cash used in operating activities		(5.7	)		(40.1	)
Cash Flows From Investing Activities:
Capital expenditures		(0.4	)		(1.6	)
Total cash used in investing activities		(0.4	)		(1.6	)
Cash Flows From Financing Activities:
Borrowings of debt, net		6.3			43.1
Repurchase of shares to satisfy employee tax withholdings		(0.1	)		(0.4	)
Total cash provided by financing activities		6.2			42.7
Net increase in cash and equivalents		0.1			1.0
Cash and equivalents, beginning of period		0.8			0.3
Cash and equivalents, end of period	$	0.9		$	1.3
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	1.6		$	1.0
Income taxes paid		—			—
Non-cash financing activities:
Assets acquired with debt obligations		0.1			0.6

See notes to condensed consolidated financial statements

7

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, 2018.

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

Adoption of New Accounting Standards

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments.  The Company adopted the standard using the full retrospective method, which did not require a cumulative effect adjustment to retained earnings. As a result of this adoption, there was no material impact on revenue recognition practices, income from continuing operations after taxes, net income or earnings per share.  See Note 3 “Revenue” for further discussion, including additional required qualitative and quantitative disclosures of revenue recognition policies. 

On October 1, 2018, the Company adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will now consist of a comparison of the fair value of a reporting unit with its carrying amount. Any impairment will now be determined by using the difference between the carrying amount and the fair value of the reporting unit, not to exceed the total goodwill allocated to that unit.

On January 1, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements.  The new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and a lease liability on the balance sheet for all leases with a term longer than 12 months.  Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.  The Company adopted the standard on its effective date using the modified retrospective approach.

On January 1, 2019, the Company also adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting.”  ASU 2018-07 more closely aligns the accounting for employee and nonemployee share-based payments.  As a result of this adoption, there was no material impact on stock compensation practices, income from continuing operations after taxes, net income or earnings per share.

The Company adopted the amendments to certain disclosure requirements in Securities Act of 1933, as amended, Release No. 33-10532, “Disclosure Update and Simplification” on November 5, 2018, the effective date of the release. Among the amendments is a requirement to present the changes in shareholders’ equity in the interim financial statements (either in a separate statement or footnote) in quarterly reports on Form 10-Q. See the Consolidated Statement of Shareholders’ Equity.

3. REVENUE

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods.  The Company reports sales revenue, including direct sales, on a net basis, which includes gross revenue adjustments for estimated returns, cash payment discounts based on the satisfaction of outstanding receivables, and volume purchase rebates.  The Company’s customer payment terms are typical for its industry. These terms vary by customer and location, as well as by the products purchased.

8

Regarding direct sales, the Company is the principal of these arrangements and is responsible for fulfilling the promise to provide specific goods to its customers, including product specifications, pricing and modifications prior to delivery.  Direct sales, as a percent of net sales, were 25% and 25% in each of the three-months ended March 31, 2019 and 2018, respectively.

The following table disaggregates revenue by product classification:

	Three Months Ended
	March 31,
	2019		2018
Millwork products	$	95.3	$	95.3
Building products		88.1		85.5
Wood products		14.0		17.2
Net sales	$	197.4	$	198.0

4.  LEASES

The Company has operating and financing leases for corporate offices, distribution centers, vehicles, and certain equipment. These leases have remaining lease terms of less than 1 year to 12 years and many of the leases have renewal options.  Because the Company is not reasonably certain to exercise the renewal options, the options are not considered in determineing the lease term, and associated potential option payments are excluded from lease payments and right-of-use calculations. In addition to fixed payments, many of the Company’s lease contracts contain variable payments. Vehicle lease variable payments typically include mileage and real estate leases include variable charges for taxes and common area maintenance.

	March 31,
	2019
Operating Lease Cost	$	3.2
Finance Lease Cost:
Amortization of right-of-use assets	$	0.5
Interest on lease liabilities		0.1
Total finance lease cost	$	0.6

The following lease assets and liabilities are included on the condensed consolidated balance sheet:

	March 31,
	2019
Operating Leases:
Operating lease right-of-use assets	$	35.2
Current maturities of operating lease right-of-use assets		9.1
Operating lease right-of-use liabilities, less current maturities		26.6
Total operating lease liabilities	$	35.7
Finance Leases:
Gross property, plant and equipment	$	9.7
Accumulated depreciation		(4.3	)
Property, plant and equipment, net	$	5.4
Current maturities of long-term debt	$	1.4
Long-term debt, less current maturities		3.1
Total finance lease liabilities	$	4.5

The Company has a weighted average remaining lease term of 5.72 years for its operating leases and 3.63 years for its financing leases. These leases have weighted average discount rate of 5.71% and 5.12% for operating leases and financing leases, respectively. The rate implicit in the lease is used to discount leases when known. While the implicit rate is often known for finance leases, the Company is generally unable to calculate the implicit rate in operating leases because it does not have access to the lessors residual value estimates nor the amount of the lessor’s deferred initial direct costs.  When the implicit rate is not known, the Company uses the incremental borrowing rate for secured loans of similar term. The Company uses available data for unsecured loans to borrowers of similar credit to the Company and adjusts the rate to reflect the effect of providing collateral equivalent to the outstanding obligation balance.

9

The following cash flow items are included on the condensed consolidated statement of cash flows:

	Three Months Ended
	March 31,
	2019
Operating cash used for operating leases	$	(3.1	)
Operating cash used for finance leases		(0.1	)
Financing cash used for finance leases		(0.4	)

Maturities of lease liabilities are as follows:

	Finance leases			Operating leases
2019(1)		1.3			8.2
2020		1.4			8.8
2021		1.2			7.1
2022		0.9			5.0
2023		0.5			4.1
Thereafter		—			8.7
Total lease payments	$	5.3		$	41.9
Less: imputed interest		(0.8	)		(6.2	)
Total future lease obligation	$	4.5		$	35.7

⁽¹⁾ This amount excludes the three-months ended March 31, 2019

Disclosures Related to Periods Prior to Adoption of ASU 2016-02

Operating lease rent expense was $16.6 million and $14.8 million, and sublease income $0.5 million and $0.5 million, for the years ended December 31, 2018 and 2017, respectively.  Future minimum lease payments under non-cancelable rental and lease agreements with initial or remaining terms in excess of one year were as follows at December 31, 2018:

	Operating
	Leases
2019		11.5
2020		8.8
2021		7.0
2022		4.8
2023		3.9
Thereafter		8.0
Total minimum lease payments	$	44.0

Certain leases also include options to purchase the leased property. Assets recorded under capital leases as of December 31, 2018 and December 31, 2017 were $8.5 million and $6.6 million, respectively.  These assets are recorded net of accumulated amortization of $2.9 million and $2.3 million as of December 31, 2018 and December 31, 2017, respectively.

5. DEBT

Debt consisted of the following (in millions): 

	March 31,		December 31,		March 31,
	2019		2018		2018
Revolving credit facility	$	139.3	$	132.3	$	142.6
Other obligations		6.0		6.6		4.1
Total debt		145.3		138.9		146.7
Less current maturities of long-term debt		1.7		1.8		1.3
Long-term debt, less current maturities	$	143.6	$	137.1	$	145.4

Credit Facility — The Company has a $250.0 million asset-based senior secured revolving credit facility (the “credit facility”).  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

10

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.  The entire unpaid balance under the credit facility is due and payable on July 14, 2022.

At March 31, 2019, the Company had revolving credit borrowings of $139.3 million outstanding at a weighted average interest rate of 4.34% per annum, letters of credit outstanding totaling $3.3 million, primarily used as collateral for health and workers’ compensation insurance, and $52.1 million of excess committed borrowing availability.  The Company pays an unused commitment fee of 0.25% per annum. In addition, the Company had $1.5 million of other obligations outstanding at a weighted average borrowing rate of 6.11%. The Company also had $4.5 million of financing lease obligations at March 31, 2019.  See Note 4 – “Leases” for more information.  

The sole financial covenant in the credit facility is the minimum fixed charge coverage ratio (“FCCR”) of 1.00:1.00, which must be tested by the Company if the excess borrowing availability falls below an amount in the range of $17.5 million to $31.3 million, depending on the borrowing base. In the first quarter of 2019, the minimum FCCR was not required to be tested as excess borrowing availability was greater than the minimum threshold. However, if the Company’s availability would have fallen below that threshold, the Company would not have met the minimum FCCR. The FCCR must also be tested on a pro forma basis prior to consummation of certain significant business transactions outside the ordinary course of business, as defined in the agreement.

6. CONTINGENCIES

The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company 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.

Environmental and Legal Matters

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 and other legal matters. It is possible, however, that actual expenses could exceed the accruals 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.

Environmental Matters

As described in Note 9 — “Commitments and Contingencies” in the notes to the Company’s audited consolidated financial statements under Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, the Company was previously identified as a potentially responsible party in connection with contamination cleanup 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”).  In September 2015, the remedial action work plan (“RAWP”) was approved.

The Company paid $0.1 million in the first three months of 2019 implementing the RAWP.  The Company estimates the total remaining cost of implementing the RAWP to be $3.2 million at March 31, 2019. As of March 31, 2019, the Company believes the accrual represents a reasonable best estimate of the total remaining remediation costs, based on facts, circumstances, and information currently available.  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 outcome required by the DEQ.  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 the Company with respect to this property could be lower than, or exceed the amount accrued as of March 31, 2019 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 the Company’s liquidity, financial condition and operating results.  

In addition, some of the Company’s current and former distribution centers are located in areas 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.

Legal Matters

See Note 9 – “Commitments and Contingencies” in the notes to the consolidated financial statements under Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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7. EARNINGS (LOSS) PER SHARE

The Company calculates its basic income (loss) per share by dividing net income (loss) allocated to common shares outstanding by the weighted average number of common shares outstanding. Unvested shares of restricted stock 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
	March 31,
	2019		2018
Earnings allocated to participating shareholders	$	—	$	—
Number of participating securities		1.1		1.0

The diluted earnings per share calculations include the effect of assumed exercise using the treasury stock method for 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 loss per share from continuing operations (in millions).

	Three Months Ended
	March 31,
	2019		2018
Weighted-average number of common shares-basic		25.3		25.1
Dilutive potential common shares		—		—
Weighted-average number of common shares-dilutive		25.3		25.1

8. INCOME TAXES

The Company’s effective tax rate from continuing operations was a benefit of 18% and 69% in the three month periods ended March 31, 2019 and 2018, respectively. The 2019 tax rate was impacted by the vesting of restricted stock which provided an income tax deduction in excess of the compensation deduction for GAAP purposes.

As of March 31, 2019, the Company had a $7.3 million valuation allowance primarily relating to certain state net operating loss carryforwards that are not likely to be realized in future periods.

9. STOCK-BASED COMPENSATION

The Company recognized $0.5 million and $0.6 million in non-cash, stock-based compensation expense for the three-month periods ended March 31, 2019 and 2018, respectively.  During the first three months of 2019, the Company granted an aggregate of 510,684 shares of restricted stock at a weighted average value of $2.37 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 three months of 2019, the Company granted an aggregate of 90,000 shares of restricted stock under its Non-Employee Directors’ Restricted Stock Plan, as amended, at an average fair market value of $2.30 per share. The directors’ restricted shares vest over one year. Unearned compensation expense is amortized into expense on a straight-line basis over the requisite service period for the entire award. As of March 31, 2019 and 2018, the total compensation expense not yet recognized related to all outstanding restricted stock awards was $3.8 million and $5.2 million, respectively.

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

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, strategic initiatives, absence of 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. We cannot guarantee that any forward-looking statements will be realized or achieved.  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 annual average; the cyclical nature of our industry; the successful implementation of our growth initiatives; the effects of increased inventories to support our growth initiatives and the impact if levels become excessive; the uncertainties resulting from changes to United States and foreign laws, regulations and policies; 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; dumping duties; tariffs; 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 legal proceedings; the integration of any business we acquire and the liabilities of such businesses; information technology system failure, network disruptions, cybersecurity attacks and breaches in data security; 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, 2018. 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.

Overview

We are 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
	March 31,
	2019			2018
Millwork products (1)		48	%		48	%
Building products (2)		45	%		43	%
Wood products (3)		7	%		9	%
Total net product sales		100	%		100	%

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(1) Millwork products generally include 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 2019 is still trending below the historical annual average of 1.4 million total housing starts from 1959 to 2018 based on statistics tracked by the United States Census Bureau. Total housing starts were approximately 1.2 million in 2018. Through March 31, 2019, based on the most recent data provided by the United States Census Bureau, total new housing starts were 9.7% below 2018 levels for the corresponding three-month period.

Various factors 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 percentage of total residential construction, home improvement and remodeling activity, weather, prices of commodity wood and steel products, dumping duties, tariffs, 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 quarters 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.

Strategic Initiatives

Our strategy is to increase shareholder value through the growth and diversification of our business.  To accomplish this, we have developed strategic initiatives that require investments in our infrastructure, our people and technology platform.  Our goals are to accelerate our growth and diversify our business, which we believe will improve operating leverage over the intermediate term.

To accelerate our growth and diversification, we have made strategic capital and operating investments to execute our product line expansion and market segment penetration organic growth initiatives.  The national expansion of our Huttig-Grip product line, which is sourced both domestically and internationally, expands the breadth and geographic coverage of our private label specialty building product lines.  Through our investments in automated, high-capacity, pre-finish door lines and segment-focused sales resources, further penetration of the home improvement, repair and remodel market diversifies our business to be less dependent on new home construction, reinforces our position as the largest, value-add door fabricator to the professional residential construction market in the country, and accelerates our growth in higher value, and higher gross margin products.

In addition to the above initiatives, we continue to invest in our organization to attract the best talent to achieve our goal of creating a top-performing, disciplined organization with talented, engaged, and empowered people.  We also continue to invest in our technology platform to achieve improved operating efficiencies in the functional areas of the business while delivering advanced customer interface technology to make Huttig the clear supplier of choice for the products we sell.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, 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, 2018 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 March 31, 2019, 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, 2018.

Results of Operations

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

Net sales were $197.4 million in the first quarter of 2019, which was $0.6 million, or 0.3%, lower than the first quarter of 2018.  The decrease in net sales was primarily attributed to a modest softening in the markets we serve coupled with adverse winter weather in much of the Midwest and Northern Coastal regions which negatively impacted construction activity.

Millwork product sales remained consistent in the first quarter of 2019 as compared to the first quarter of 2018 at $95.3 million. Building products sales increased 2.9% in the first quarter of 2019 to $88.1 million, compared to $85.5 million in the first quarter of

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2018,and wood product sales decreased 18.6% in the first quarter of 2019 to $14.0million, compared to $17.2 million in the first quarter of 2018. The proportionate increase in sales of building products is generally consistent with our strategic growth initiatives.

Gross margin was $37.4 million in the first quarter of 2019, compared to $38.7 million in the first quarter of 2018. As a percentage of sales, gross margin was 18.9% in the first quarter of 2019, compared to 19.5% in the first quarter of 2018. The reduction in gross margin percent was primarily attributed to a higher proportional increase in building product sales as compared to other higher margin product categories as well as a competitive pricing environment and incremental costs from customer programs.

Operating expenses increased $0.4 million to $39.6 million in the first quarter of 2019, compared to $39.2 million in the first quarter of 2018.  Personnel costs decreased approximately $0.2 million, primarily as a result of lower wages from cost reductions offset in part by higher medical costs.  Non-personnel costs increased approximately $0.6 million, primarily as a result of higher equipment and facility costs and an increase in contract hauling costs. As a percentage of sales, operating expenses were 20.1% in the first quarter of 2019, compared to 19.8% in the first quarter of 2018.

Net interest expense was $1.7 million in the first quarter of 2019 compared to $1.1 million in the first quarter of 2018.  The increase was primarily due to higher average outstanding borrowings on our credit facility as well as higher interest rates in the first quarter of 2019 compared to the first quarter of 2018.

Income tax benefit was $0.7 million for the quarter ended March 31, 2019, as compared to $1.1 million for the first quarter of 2018.

As a result of the foregoing factors, we reported a loss from continuing operations of $3.2 million for the quarter ended March 31, 2019, compared to a loss from continuing operations of $0.5 million for the quarter ended March 31, 2018.

Liquidity and Capital Resources

We depend on our cash flows from operations and funds available under our revolving credit facility to finance seasonal working capital needs, capital expenditures, additional investments in our product lines, including Huttig-Grip, and any acquisitions that we may undertake. Typically, our working capital requirements are greatest in the second and third quarters, which reflect the seasonal nature of our business. The second and third quarters also tend to be our strongest operating quarters, largely due to more favorable weather throughout many of our markets compared to the first and fourth quarters. We typically generate cash from working capital reductions in the fourth quarter of the year and build working capital during the first quarter in preparation for our second and third quarters. We also maintain significant inventories to meet the rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery and service terms with our suppliers.

Throughout 2018, our working capital was impacted significantly by investments in inventory related to the national expansion of our Huttig-Grip product line. Sourcing Huttig-Grip products internationally requires longer lead-times and higher inventory levels to ensure available supply, and generally requires shorter payment terms to suppliers, but it also provides an opportunity for higher margins. At March 31, 2019, inventories and accounts receivable constituted approximately 69% of our total assets.  We closely monitor operating expenses and inventory levels during seasonally affected periods and, to the extent possible, manage variable operating costs to minimize seasonal effects on our profitability.

At March 31, 2019, we had $52.1 million of excess committed borrowing availability.

Operations.  Cash used in operating activities was $5.7 million during the first three months of 2019, compared to cash used in operating activities of $40.1 million during the first three months of 2018. Accounts receivable increased by $20.2 million during the first three months of 2019, compared to an increase of $34.1 million in the prior-year corresponding period. The increase in accounts receivable over the first three months of the year is a result of the normal seasonality of our business.  Our inventory levels increased $15.2 million during the first three months of 2019 largely driven by the normal seasonal build for increased sales activity. Inventory increased $27.5 million in the comparative prior year period driven by normal seasonal build and by expansion of our Huttig-Grip product line.  These working capital increases were offset by an increase in accounts payable of $35.1 million and $29.5 million in 2019 and 2018, respectively, primarily as a result of our inventory build for the respective periods. The accounts payable increase relative to the increase in inventories is mitigated in part by shorter payment terms to suppliers on internationally sourced products.

Investing.  During the first three months of 2019, net cash used in investing activities was $0.4 million compared to $1.6 million for the corresponding period in 2018 and was largely used for additional investments in machinery and equipment at various distribution centers, including additional investments related to our strategic growth initiatives.

Financing.  Cash provided by financing activities of $6.2 million during the first three months of 2019 reflected net borrowings of $6.3 million offset by $0.1 million for the repurchase of shares to satisfy employee tax withholdings on stock-based awards.  Cash provided by financing activities of $42.7 million in the first three months of 2018 reflected net borrowings of $43.1 million offset by $0.4 million for the repurchase of shares to satisfy employee tax withholdings on stock-based awards.

We believe cash generated from operations and funds available under the credit facility will provide sufficient funds to meet our operating needs for at least the next twelve months. At March 31, 2019, the minimum fixed charge coverage ratio (“FCCR”) was not required to be tested, as excess borrowing availability was greater than the minimum threshold. However, if our availability had fallen below that threshold, we would not have met the minimum FCCR. If we are unable to maintain excess borrowing availability of more

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than the applicable amount in the range of $17.5 million to $31.3 million and we do not meet the minimum FCCR, the 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 our assets that secure the credit facility. If the credit facility was terminated, we would be forced to seek alternative sources of financing, which may not be available on terms acceptable to us, or at all.

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 6 – Contingencies of the Notes to the Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 for information on legal proceedings in which we are involved.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided in Part II, Item 7A – “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures – The Company, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2019 in all material respects to (a) causing information required to be disclosed by us in reports that we file or submit under the U.S. Securities and Exchange Commission’s rules and forms and (b) causing such information to be accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Control systems must reflect resource constraints and be cost-effective, can be undercut by simple errors and misjudgments, and can be circumvented by individuals within an organization. Because of these and other inherent limitations in all control systems, no matter how well they are designed, our disclosure controls and procedures and internal controls can provide reasonable, but not absolute, protection from error and fraud.

Management’s Report on Internal Control Over Financial Reporting – The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of our Board of Directors. Based on our evaluation under the framework in Internal Control-Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of March 31, 2019.

Changes in Internal Control of Financial Reporting – In conjunction with the adoption of ASC Topic 842, effective January 1, 2019, we implemented a lease accounting system and related processes and internal controls over financial reporting. There were no other changes that occurred during the quarter ended March 31, 2019, 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 6 – “Contingencies” of the Notes to the Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 for information on legal proceedings in which the Company is involved. See also Note 9 – “Commitments and Contingencies” in the notes to our consolidated financial statements under Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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, 2018, 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, 2018.

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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 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 Company’s Quarterly Report on Form 10-Q filed 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 Company’s Current Report on Form 8-K filed 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 Company’s Current Report on Form 8-K filed 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 Company’s Current Report on Form 8-K filed on May 20, 2016).
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

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SIGNATURES

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

	HUTTIG BUILDING PRODUCTS, INC.
	/s/  Jon P. Vrabely
Date: April 30, 2019
	Jon P. Vrabely
	President and Chief Executive Officer
	(Principal Executive Officer)

	HUTTIG BUILDING PRODUCTS, INC.
	/s/  Philip W. Keipp
Date: April 30, 2019
	Philip W. Keipp
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

19

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: April 30, 2019	/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, Philip W. Keipp, 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: April 30, 2019	/s/Philip W. Keipp
	Philip W. Keipp
	Vice President - 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 March 31, 2019, 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, Philip W. Keipp, 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

April 30, 2019

/s/ Philip W. Keipp

Philip W. Keipp

Vice President - Chief Financial Officer

April 30, 2019

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2019 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	HBP
Entity Registrant Name	HUTTIG BUILDING PRODUCTS INC
Entity Central Index Key	0001093082
Current Fiscal Year End Date	--12-31
Entity Emerging Growth Company	false
Entity Filer Category	Accelerated Filer
Smaller reporting company	true
Entity Common Stock, Shares Outstanding	26,548,886

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net sales	$ 197.4	$ 198.0
Cost of sales	160.0	159.3
Gross margin	37.4	38.7
Operating expenses	39.6	39.2
Operating loss	(2.2)	(0.5)
Interest expense, net	1.7	1.1
Loss from continuing operations before income taxes	(3.9)	(1.6)
Income tax benefit	(0.7)	(1.1)
Loss from continuing operations	(3.2)	(0.5)
Net loss	$ (3.2)	$ (0.5)
Loss from continuing operations per share - basic and diluted	$ (0.13)	$ (0.02)
Net loss per share - basic and diluted	$ (0.13)	$ (0.02)
Weighted average shares outstanding:
Basic and diluted shares outstanding	25.3	25.1

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
CURRENT ASSETS:
Cash and equivalents	$ 0.9	$ 0.8	$ 1.3
Trade accounts receivable, net	89.2	69.0	100.9
Inventories, net	149.2	134.0	139.3
Other current assets	12.3	14.7	10.7
Total current assets	251.6	218.5	252.2
PROPERTY, PLANT AND EQUIPMENT:
Land	5.0	5.0	5.0
Buildings and improvements	32.4	32.3	31.2
Machinery and equipment	56.2	56.0	51.8
Gross property, plant and equipment	93.6	93.3	88.0
Less accumulated depreciation	61.0	60.0	57.3
Property, plant and equipment, net	32.6	33.3	30.7
OTHER ASSETS:
Operating lease right-of-use assets	35.2
Goodwill	9.5	9.5	9.5
Deferred income taxes	11.9	11.1	10.8
Other	5.4	5.6	6.4
Total other assets	62.0	26.2	26.7
TOTAL ASSETS	346.2	278.0	309.6
CURRENT LIABILITIES:
Current maturities of long-term debt	1.7	1.8	1.3
Current maturities of operating lease right-of-use assets	9.1
Trade accounts payable	86.6	51.5	80.5
Accrued compensation	2.1	5.0	2.5
Other accrued liabilities	14.7	18.0	11.5
Total current liabilities	114.2	76.3	95.8
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities	143.6	137.1	145.4
Operating lease right-of-use liabilities, less current maturities	26.6
Other non-current liabilities	2.6	2.6	2.3
Total non-current liabilities	172.8	139.7	147.7
SHAREHOLDERS’ EQUITY:
Preferred shares: $.01 par (5,000,000 shares authorized)
Common shares: $.01 par (75,000,000 shares authorized: 26,548,886; 25,993,441; and 26,070,616 shares issued at March 31, 2019, December 31, 2018 and March 31, 2018, respectively)	0.3	0.3	0.3
Additional paid-in capital	46.4	46.0	44.2
Retained earnings	12.5	15.7	21.6
Total shareholders’ equity	59.2	62.0	66.1
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 346.2	$ 278.0	$ 309.6

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
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	26,548,886	25,993,441	26,070,616

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Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Millions	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings (Accumulated Deficit) [Member]
Beginning Balance at Dec. 31, 2017	$ 66.4	$ 0.3	$ 44.0	$ 22.1
Net loss	(0.5)			(0.5)
Payment for taxes related to share settlement of equity awards	(0.4)		(0.4)
Stock compensation expense	0.6		0.6
Ending Balance at Mar. 31, 2018	66.1	0.3	44.2	21.6
Beginning Balance at Dec. 31, 2018	62.0	0.3	46.0	15.7
Net loss	(3.2)			(3.2)
Payment for taxes related to share settlement of equity awards	(0.1)		(0.1)
Stock compensation expense	0.5		0.5
Ending Balance at Mar. 31, 2019	$ 59.2	$ 0.3	$ 46.4	$ 12.5

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash Flows From Operating Activities:
Net Loss	$ (3.2)	$ (0.5)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1.4	1.3
Non-cash interest expense	0.1	0.1
Stock-based compensation	0.5	0.6
Deferred income taxes	(0.8)	(1.1)
Changes in operating assets and liabilities:
Trade accounts receivable	(20.2)	(34.1)
Inventories, net	(15.2)	(27.5)
Trade accounts payable	35.1	29.5
Other	(3.3)	(8.1)
Cash used in continuing operating activities	(5.6)	(39.8)
Cash used in discontinued operating activities	(0.1)	(0.3)
Total cash used in operating activities	(5.7)	(40.1)
Cash Flows From Investing Activities:
Capital expenditures	(0.4)	(1.6)
Total cash used in investing activities	(0.4)	(1.6)
Cash Flows From Financing Activities:
Borrowings of debt, net	6.3	43.1
Repurchase of shares to satisfy employee tax withholdings	(0.1)	(0.4)
Total cash provided by financing activities	6.2	42.7
Net increase in cash and equivalents	0.1	1.0
Cash and equivalents, beginning of period	0.8	0.3
Cash and equivalents, end of period	0.9	1.3
Supplemental Disclosure of Cash Flow Information:
Interest paid	1.6	1.0
Non-cash financing activities:
Assets acquired with debt obligations	$ 0.1	$ 0.6

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Basis of Presentation

3 Months Ended

Mar. 31, 2019

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, 2018.

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

3 Months Ended

Mar. 31, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Standards

2. NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments.  The Company adopted the standard using the full retrospective method, which did not require a cumulative effect adjustment to retained earnings. As a result of this adoption, there was no material impact on revenue recognition practices, income from continuing operations after taxes, net income or earnings per share.  See Note 3 “Revenue” for further discussion, including additional required qualitative and quantitative disclosures of revenue recognition policies. 

On October 1, 2018, the Company adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will now consist of a comparison of the fair value of a reporting unit with its carrying amount. Any impairment will now be determined by using the difference between the carrying amount and the fair value of the reporting unit, not to exceed the total goodwill allocated to that unit.

On January 1, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements.  The new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and a lease liability on the balance sheet for all leases with a term longer than 12 months.  Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.  The Company adopted the standard on its effective date using the modified retrospective approach.

On January 1, 2019, the Company also adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting.”  ASU 2018-07 more closely aligns the accounting for employee and nonemployee share-based payments.  As a result of this adoption, there was no material impact on stock compensation practices, income from continuing operations after taxes, net income or earnings per share.

The Company adopted the amendments to certain disclosure requirements in Securities Act of 1933, as amended, Release No. 33-10532, “Disclosure Update and Simplification” on November 5, 2018, the effective date of the release. Among the amendments is a requirement to present the changes in shareholders’ equity in the interim financial statements (either in a separate statement or footnote) in quarterly reports on Form 10-Q. See the Consolidated Statement of Shareholders’ Equity.

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Revenue

3 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

Revenue

3. REVENUE

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods.  The Company reports sales revenue, including direct sales, on a net basis, which includes gross revenue adjustments for estimated returns, cash payment discounts based on the satisfaction of outstanding receivables, and volume purchase rebates.  The Company’s customer payment terms are typical for its industry. These terms vary by customer and location, as well as by the products purchased.

Regarding direct sales, the Company is the principal of these arrangements and is responsible for fulfilling the promise to provide specific goods to its customers, including product specifications, pricing and modifications prior to delivery.  Direct sales, as a percent of net sales, were 25% and 25% in each of the three-months ended March 31, 2019 and 2018, respectively.

The following table disaggregates revenue by product classification:

	Three Months Ended
	March 31,
	2019		2018
Millwork products	$	95.3	$	95.3
Building products		88.1		85.5
Wood products		14.0		17.2
Net sales	$	197.4	$	198.0

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

4.  LEASES

The Company has operating and financing leases for corporate offices, distribution centers, vehicles, and certain equipment. These leases have remaining lease terms of less than 1 year to 12 years and many of the leases have renewal options.  Because the Company is not reasonably certain to exercise the renewal options, the options are not considered in determineing the lease term, and associated potential option payments are excluded from lease payments and right-of-use calculations. In addition to fixed payments, many of the Company’s lease contracts contain variable payments. Vehicle lease variable payments typically include mileage and real estate leases include variable charges for taxes and common area maintenance.

	March 31,
	2019
Operating Lease Cost	$	3.2
Finance Lease Cost:
Amortization of right-of-use assets	$	0.5
Interest on lease liabilities		0.1
Total finance lease cost	$	0.6

The following lease assets and liabilities are included on the condensed consolidated balance sheet:

	March 31,
	2019
Operating Leases:
Operating lease right-of-use assets	$	35.2
Current maturities of operating lease right-of-use assets		9.1
Operating lease right-of-use liabilities, less current maturities		26.6
Total operating lease liabilities	$	35.7
Finance Leases:
Gross property, plant and equipment	$	9.7
Accumulated depreciation		(4.3	)
Property, plant and equipment, net	$	5.4
Current maturities of long-term debt	$	1.4
Long-term debt, less current maturities		3.1
Total finance lease liabilities	$	4.5

The Company has a weighted average remaining lease term of 5.72 years for its operating leases and 3.63 years for its financing leases. These leases have weighted average discount rate of 5.71% and 5.12% for operating leases and financing leases, respectively. The rate implicit in the lease is used to discount leases when known. While the implicit rate is often known for finance leases, the Company is generally unable to calculate the implicit rate in operating leases because it does not have access to the lessors residual value estimates nor the amount of the lessor’s deferred initial direct costs.  When the implicit rate is not known, the Company uses the incremental borrowing rate for secured loans of similar term. The Company uses available data for unsecured loans to borrowers of similar credit to the Company and adjusts the rate to reflect the effect of providing collateral equivalent to the outstanding obligation balance.

The following cash flow items are included on the condensed consolidated statement of cash flows:

	Three Months Ended
	March 31,
	2019
Operating cash used for operating leases	$	(3.1	)
Operating cash used for finance leases		(0.1	)
Financing cash used for finance leases		(0.4	)

Maturities of lease liabilities are as follows:

	Finance leases			Operating leases
2019(1)		1.3			8.2
2020		1.4			8.8
2021		1.2			7.1
2022		0.9			5.0
2023		0.5			4.1
Thereafter		—			8.7
Total lease payments	$	5.3		$	41.9
Less: imputed interest		(0.8	)		(6.2	)
Total future lease obligation	$	4.5		$	35.7

⁽¹⁾ This amount excludes the three-months ended March 31, 2019

Disclosures Related to Periods Prior to Adoption of ASU 2016-02

Operating lease rent expense was $16.6 million and $14.8 million, and sublease income $0.5 million and $0.5 million, for the years ended December 31, 2018 and 2017, respectively.  Future minimum lease payments under non-cancelable rental and lease agreements with initial or remaining terms in excess of one year were as follows at December 31, 2018:

	Operating
	Leases
2019		11.5
2020		8.8
2021		7.0
2022		4.8
2023		3.9
Thereafter		8.0
Total minimum lease payments	$	44.0

Certain leases also include options to purchase the leased property. Assets recorded under capital leases as of December 31, 2018 and December 31, 2017 were $8.5 million and $6.6 million, respectively.  These assets are recorded net of accumulated amortization of $2.9 million and $2.3 million as of December 31, 2018 and December 31, 2017, respectively.

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Debt

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt

5. DEBT

Debt consisted of the following (in millions): 

	March 31,		December 31,		March 31,
	2019		2018		2018
Revolving credit facility	$	139.3	$	132.3	$	142.6
Other obligations		6.0		6.6		4.1
Total debt		145.3		138.9		146.7
Less current maturities of long-term debt		1.7		1.8		1.3
Long-term debt, less current maturities	$	143.6	$	137.1	$	145.4

Credit Facility — The Company has a $250.0 million asset-based senior secured revolving credit facility (the “credit facility”).  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.  The entire unpaid balance under the credit facility is due and payable on July 14, 2022.    

At March 31, 2019, the Company had revolving credit borrowings of $139.3 million outstanding at a weighted average interest rate of 4.34% per annum, letters of credit outstanding totaling $3.3 million, primarily used as collateral for health and workers’ compensation insurance, and $52.1 million of excess committed borrowing availability.  The Company pays an unused commitment fee of 0.25% per annum. In addition, the Company had $1.5 million of other obligations outstanding at a weighted average borrowing rate of 6.11%. The Company also had $4.5 million of financing lease obligations at March 31, 2019.  See Note 4 – “Leases” for more information.  

The sole financial covenant in the credit facility is the minimum fixed charge coverage ratio (“FCCR”) of 1.00:1.00, which must be tested by the Company if the excess borrowing availability falls below an amount in the range of $17.5 million to $31.3 million, depending on the borrowing base. In the first quarter of 2019, the minimum FCCR was not required to be tested as excess borrowing availability was greater than the minimum threshold. However, if the Company’s availability would have fallen below that threshold, the Company would not have met the minimum FCCR. The FCCR must also be tested on a pro forma basis prior to consummation of certain significant business transactions outside the ordinary course of business, as defined in the agreement.

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Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Contingencies

6. CONTINGENCIES

The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company 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.

Environmental and Legal Matters

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 and other legal matters. It is possible, however, that actual expenses could exceed the accruals 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.

Environmental Matters

As described in Note 9 — “Commitments and Contingencies” in the notes to the Company’s audited consolidated financial statements under Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, the Company was previously identified as a potentially responsible party in connection with contamination cleanup 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”).  In September 2015, the remedial action work plan (“RAWP”) was approved.

The Company paid $0.1 million in the first three months of 2019 implementing the RAWP.  The Company estimates the total remaining cost of implementing the RAWP to be $3.2 million at March 31, 2019. As of March 31, 2019, the Company believes the accrual represents a reasonable best estimate of the total remaining remediation costs, based on facts, circumstances, and information currently available.  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 outcome required by the DEQ.  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 the Company with respect to this property could be lower than, or exceed the amount accrued as of March 31, 2019 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 the Company’s liquidity, financial condition and operating results.  

In addition, some of the Company’s current and former distribution centers are located in areas 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.

Legal Matters

See Note 9 – “Commitments and Contingencies” in the notes to the consolidated financial statements under Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

7. EARNINGS (LOSS) PER SHARE

The Company calculates its basic income (loss) per share by dividing net income (loss) allocated to common shares outstanding by the weighted average number of common shares outstanding. Unvested shares of restricted stock 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
	March 31,
	2019		2018
Earnings allocated to participating shareholders	$	—	$	—
Number of participating securities		1.1		1.0

The diluted earnings per share calculations include the effect of assumed exercise using the treasury stock method for 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 loss per share from continuing operations (in millions).

	Three Months Ended
	March 31,
	2019		2018
Weighted-average number of common shares-basic		25.3		25.1
Dilutive potential common shares		—		—
Weighted-average number of common shares-dilutive		25.3		25.1

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

8. INCOME TAXES

The Company’s effective tax rate from continuing operations was a benefit of 18% and 69% in the three month periods ended March 31, 2019 and 2018, respectively. The 2019 tax rate was impacted by the vesting of restricted stock which provided an income tax deduction in excess of the compensation deduction for GAAP purposes.

As of March 31, 2019, the Company had a $7.3 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 Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

9. STOCK-BASED COMPENSATION

The Company recognized $0.5 million and $0.6 million in non-cash, stock-based compensation expense for the three-month periods ended March 31, 2019 and 2018, respectively.  During the first three months of 2019, the Company granted an aggregate of 510,684 shares of restricted stock at a weighted average value of $2.37 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 three months of 2019, the Company granted an aggregate of 90,000 shares of restricted stock under its Non-Employee Directors’ Restricted Stock Plan, as amended, at an average fair market value of $2.30 per share. The directors’ restricted shares vest over one year. Unearned compensation expense is amortized into expense on a straight-line basis over the requisite service period for the entire award. As of March 31, 2019 and 2018, the total compensation expense not yet recognized related to all outstanding restricted stock awards was $3.8 million and $5.2 million, respectively.

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Revenue (Tables)

3 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

Schedule of Disaggregation of Revenue by Product Classification

The following table disaggregates revenue by product classification:

	Three Months Ended
	March 31,
	2019		2018
Millwork products	$	95.3	$	95.3
Building products		88.1		85.5
Wood products		14.0		17.2
Net sales	$	197.4	$	198.0

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Components of Lease Expense

	March 31,
	2019
Operating Lease Cost	$	3.2
Finance Lease Cost:
Amortization of right-of-use assets	$	0.5
Interest on lease liabilities		0.1
Total finance lease cost	$	0.6

Schedule of Lease Assets and Liabilities Included on Condensed Consolidated Balance Sheet

The following lease assets and liabilities are included on the condensed consolidated balance sheet:

	March 31,
	2019
Operating Leases:
Operating lease right-of-use assets	$	35.2
Current maturities of operating lease right-of-use assets		9.1
Operating lease right-of-use liabilities, less current maturities		26.6
Total operating lease liabilities	$	35.7
Finance Leases:
Gross property, plant and equipment	$	9.7
Accumulated depreciation		(4.3	)
Property, plant and equipment, net	$	5.4
Current maturities of long-term debt	$	1.4
Long-term debt, less current maturities		3.1
Total finance lease liabilities	$	4.5

Schedule of Cash Flow items are Included on the Condensed Consolidated Statement of Cash Flows

The following cash flow items are included on the condensed consolidated statement of cash flows:

	Three Months Ended
	March 31,
	2019
Operating cash used for operating leases	$	(3.1	)
Operating cash used for finance leases		(0.1	)
Financing cash used for finance leases		(0.4	)

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities are as follows:

	Finance leases			Operating leases
2019(1)		1.3			8.2
2020		1.4			8.8
2021		1.2			7.1
2022		0.9			5.0
2023		0.5			4.1
Thereafter		—			8.7
Total lease payments	$	5.3		$	41.9
Less: imputed interest		(0.8	)		(6.2	)
Total future lease obligation	$	4.5		$	35.7

⁽¹⁾ This amount excludes the three-months ended March 31, 2019

Schedule of Future Minimum Lease Payments under Non-cancelable Rental and Lease Agreements

Future minimum lease payments under non-cancelable rental and lease agreements with initial or remaining terms in excess of one year were as follows at December 31, 2018:

	Operating
	Leases
2019		11.5
2020		8.8
2021		7.0
2022		4.8
2023		3.9
Thereafter		8.0
Total minimum lease payments	$	44.0

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Debt (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Summary of Long-term Debt

Debt consisted of the following (in millions): 

	March 31,		December 31,		March 31,
	2019		2018		2018
Revolving credit facility	$	139.3	$	132.3	$	142.6
Other obligations		6.0		6.6		4.1
Total debt		145.3		138.9		146.7
Less current maturities of long-term debt		1.7		1.8		1.3
Long-term debt, less current maturities	$	143.6	$	137.1	$	145.4

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2019

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
	March 31,
	2019		2018
Earnings allocated to participating shareholders	$	—	$	—
Number of participating securities		1.1		1.0

Summary of Diluted Earning Per Share

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

	Three Months Ended
	March 31,
	2019		2018
Weighted-average number of common shares-basic		25.3		25.1
Dilutive potential common shares		—		—
Weighted-average number of common shares-dilutive		25.3		25.1

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Revenue - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Direct Sales [Member] | Customer Concentration Risk [Member]
Disaggregation Of Revenue [Line Items]
Direct sales, percentage of net sales	25.00%	25.00%

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Revenue - Schedule of Disaggregation of Revenue by Product Classification (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation Of Revenue [Line Items]
Net Sales	$ 197.4	$ 198.0
ASC Topic 606
Disaggregation Of Revenue [Line Items]
Net Sales	197.4	198.0
ASC Topic 606 | Millwork Products [Member]
Disaggregation Of Revenue [Line Items]
Net Sales	95.3	95.3
ASC Topic 606 | Building Products [Member]
Disaggregation Of Revenue [Line Items]
Net Sales	88.1	85.5
ASC Topic 606 | Wood Products [Member]
Disaggregation Of Revenue [Line Items]
Net Sales	$ 14.0	$ 17.2

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Leases - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Leases [Line Items]
Operating lease, weighted average remaining lease term	5 years 8 months 19 days
Finance lease, weighted average remaining lease term	3 years 7 months 17 days
Operating lease, weighted average discount rate, percent	5.71%
Finance lease, weighted average discount rate, percent	5.12%
Rental expense for operating leases		$ 16.6	$ 14.8
Sublease income		0.5	0.5
Assets recorded under capital leases, net		8.5	6.6
Assets recorded under capital leases, accumulated amortization		$ 2.9	$ 2.3
Minimum [Member]
Leases [Line Items]
Operating and Financing leases, remaining lease terms	1 year
Maximum [Member]
Leases [Line Items]
Operating and Financing leases, remaining lease terms	12 years

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Leases - Components of Lease Expense (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating Lease Cost	$ 3.2
Finance Lease Cost:
Amortization of right-of-use assets	0.5
Interest on lease liabilities	0.1
Total finance lease cost	$ 0.6

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Leases - Schedule of Lease Assets and Liabilities Included on Condensed Consolidated Balance Sheet (Detail) $ in Millions	Mar. 31, 2019 USD ($)
Operating Leases:
Operating lease right-of-use assets	$ 35.2
Current maturities of operating lease right-of-use assets	9.1
Operating lease right-of-use liabilities, less current maturities	26.6
Total operating lease liabilities	35.7
Finance Leases:
Gross property, plant and equipment	9.7
Accumulated depreciation	(4.3)
Property, plant and equipment, net	$ 5.4
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:PropertyPlantAndEquipmentNet
Current maturities of long-term debt	$ 1.4
Long-term debt, less current maturities	3.1
Total finance lease liabilities	$ 4.5

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Leases - Schedule of Cash Flow Items are Included on Condensed Consolidated Statement of Cash Flows (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating cash used for operating leases	$ (3.1)
Operating cash used for finance leases	(0.1)
Financing cash used for finance leases	$ (0.4)

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Leases - Schedule of Maturities of lease liabilities (Detail) $ in Millions	Mar. 31, 2019 USD ($)
Finance Lease Liabilities, Payments, Due [Abstract]
2019	$ 1.3
2020	1.4
2021	1.2
2022	0.9
2023	0.5
Total lease payments	5.3
Less: imputed interest	(0.8)
Total future lease obligation	4.5
Operating Lease Liabilities, Payments Due [Abstract]
2019	8.2
2020	8.8
2021	7.1
2022	5.0
2023	4.1
Thereafter	8.7
Total lease payments	41.9
Less: imputed interest	(6.2)
Total future lease obligation	$ 35.7

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Leases - Schedule of Future Minimum Lease Payments under Non-cancelable Rental and Lease Agreements (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 11.5
2020	8.8
2021	7.0
2022	4.8
2023	3.9
Thereafter	8.0
Total minimum lease payments	$ 44.0

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Debt - Summary of Long-term Debt (Detail) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Debt Disclosure [Abstract]
Revolving credit facility	$ 139.3	$ 132.3	$ 142.6
Other obligations	6.0	6.6	4.1
Total debt	145.3	138.9	146.7
Less current maturities of long-term debt	1.7	1.8	1.3
Long-term debt, less current maturities	$ 143.6	$ 137.1	$ 145.4

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Debt - Additional Information (Detail) - USD ($)		3 Months Ended
	Jul. 14, 2017	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Line of Credit Facility [Line Items]
Revolving credit borrowing		$ 139,300,000	$ 132,300,000	$ 142,600,000
Letters of credit outstanding		3,300,000
Other obligations		1,500,000
Financing lease obligations		4,500,000
Minimum [Member]
Line of Credit Facility [Line Items]
Fall of excess borrowing availability		17,500,000
Maximum [Member]
Line of Credit Facility [Line Items]
Fall of excess borrowing availability		$ 31,300,000
Other Obligations [Member]
Line of Credit Facility [Line Items]
Weighted average interest rate		6.11%
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, due and payable date	Jul. 14, 2022
Amortization period on real estate component of borrowing base	12 years 6 months
Revolving credit borrowing		$ 139,300,000
Weighted average interest rate		4.34%
Excess committed borrowing availability		$ 52,100,000
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

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Contingencies - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Amount paid to implement remedial action work plan	$ 0.1
Accrual for reasonably estimable remediation cost	$ 3.2

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Earnings Per Share - Summary of Number of Participating Securities and Earning Allocated to those Securities (Detail) - shares shares in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Number of participating securities	1.1	1.0

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Earnings Per Share - Summary of Diluted Earning Per Share (Detail) - shares shares in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Weighted Average Number Of Shares Outstanding [Abstract]
Weighted-average number of common shares-basic	25.3	25.1
Weighted-average number of common shares-dilutive	25.3	25.1

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation benefit, percent	18.00%	69.00%
Valuation allowance for net deferred tax assets	$ 7.3

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Stock-Based Compensation - Additional Information (Detail) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) Installment $ / shares shares	Mar. 31, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation | $	$ 0.5	$ 0.6
Number of installments of restricted shares | Installment	3
Restricted stock award vesting rights	The directors’ restricted shares vest over one year.
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense of restricted stock | $	$ 3.8	$ 5.2
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	510,684
Weighted average fair market value of restricted shares granted | $ / shares	$ 2.37
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	90,000
Weighted average fair market value of restricted shares granted | $ / shares	$ 2.30
Non-Employee Directors' Restricted Stock Plan [Member] | Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares, vesting period	1 year
Cliff Vest [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares, vesting period	5 years