Huttig Continues With Restructuring Program

Huttig Building Products Inc., a distributor of millwork, building materials and wood products headquartered in Saint Louis, Mo., recently announced results for its three and nine months ending September 30, 2006. In addition, the company announced incurred charges of $17.2 million associated with an expanded restructuring program aimed at reduced costs and increased efficiencies and says it expects to incur additional charges of approximately $1.4 million in the fourth quarter.

Huttig reported third quarter net sales from continuing operations of $294.2 million in 2006, a 3 percent decrease from last year, and attributes its third quarter 2006 results partly to a decrease in housing starts. In spite of decreases, the company reports its national account strategy continues to be successful and its building products increased 4 percent, while engineered wood sales improved by 3 percent in the 2006 third quarter as compared to 2005.

Huttig has also announced a decision to close two distribution centers, one in Albany, N.Y., and another in Grand Rapids, Mich., in the fourth quarter of 2006. The company says its Albany distribution center operations will be consolidated into its Selkirk, N.Y., and Newington, Conn., branches, while it reports the Grand Rapids, Mich., branch is "relatively small and operates in a difficult housing market." The company says the closing and consolidation will result in operating charges of approximately $1.0 million before tax and is expected to be recognized during the 2006 fourth quarter.

The company expects to reduce its work force by an additional 130 positions in the fourth quarter of 2006 and a charge of approximately $0.4 million in associated severance costs. It says it will have reduced its workforce by approximately 240 positions, or 11 percent, from June 30, 2006, levels, including approximately 60 positions eliminated at closed branches. Jon Vrabely, chief operating officer (COO), who will become Huttig's chief executive officer (CEO) on January 1, 2007, said, "While no company wants to take these actions, we believe they are necessary to improve our cost structure and operating margins, and ensure that Huttig remains focused and operates at maximum efficiency during the current weakness in the housing market." Vrabely also said, "These actions are also designed to better position Huttig to serve its customer base through stronger, more focused branches."

The company says its third and fourth quarter force reductions are expected to generate approximately $7.5 million in savings on an annualized basis, while branch closures and consolidations are expected to result in annual profit improvements of approximately $3.6 million.