The first full week of May might be coming to a close, but several industry companies have reported first quarter results. While each report has shown both financial upswings and downturns there has been a common trend – the early effects of COVID-19 on industry businesses. [DWM] highlights the recent financial reports for Jeld-Wen, Huttig Building Products, Inc. (Huttig), and Masonite International Corporation (Masonite), and how companies are cutting costs in light of the strain being placed on companies up and down the supply chain.

Jeld-Wen

“In many locations, JELD-WEN has been identified as an “essential business” allowing us to maintain operations and meet customer demand. In these locations, we are following World Health Organization and Centers for Disease Control and Prevention recommendations and adhering to local and regional guidelines, while adopting global best practices and utilizing JELD-WEN Excellence Model tools to ensure that we are minimizing exposure risk and protecting our associates,” said Gary S. Michel, Jeld-Wen president and CEO.

According to the company’s financial report, its net revenues for the three months ended March 28, 2020 decreased by $31.1 million, or 3.1%, when compared to the previous year. The decrease in net revenues was driven by a 3% decline in core revenues and a 2% adverse impact from foreign exchange, the report stated.

“In light of the uncertain impact of COVID-19, we moved decisively in the first quarter to reduce operating costs and defer non-essential capital investment, maintain the integrity of our supply chain, and manage our cash and liquidity,” said Michel. “Our cost reduction measures include compensation reductions for our executive leadership team and board of directors, as well as other programs to temporarily reduce our salary costs globally. We have also suspended all discretionary spending and we continue to seek ways to increase overall liquidity.”

Cash flows used in operations totaled $76.5 million in the first quarter of 2020, compared to cash flows used in operations of $28.0 million during the same period the previous year. The increase in cash flows used in operations was primarily due to an increase in working capital, the report stated.

On a segment basis for the first quarter of 2020, compared to the same period last year the report showed:

  • North America – Net revenues increased $21.6 million, or 3.8%. Core revenues increased due to a 3% pricing benefit.
  • Europe – Net revenues decreased $18.5 million, or 6.2%, to $281.5 million, due to a 3% adverse impact from foreign exchange and a 3% decrease in core revenues.
  • Australasia – Net revenues decreased $34.2 million, or 23.6%, due to a 18% decrease in core revenues.

“I am proud of how our associates have risen to this unprecedented challenge, as our COVID-19 response is expected to have an immediate, positive impact on our cost structure during the second quarter, while helping to further improve safety and maintain business continuity. We will emerge from this crisis a stronger, more unified JELD-WEN,” Michel said.

Huttig

Huttig,a distributor of millwork, building materials and wood products, reported increased net sales in its financial report for the first quarter, which ended March 31, 2020. The company also provided a business update on its response to COVID-19.

“Our first quarter operating results were significantly better across every key financial metric as compared to the prior year quarter. On a stand-alone basis, the first quarter of 2020 marked the first full quarter that our results began to reflect the positive impact we planned and anticipated since embarking on our accelerated growth strategy,” said Jon Vrabely, Huttig CEO and president.

Net sales were $203.0 million in the first quarter of 2020, an increase of 2.8%, when compared to the first quarter of 2019. The increase in net sales was primarily attributed to an increase in new residential construction, according to the financial report.

Millwork product sales increased 0.9% or $96.2 million in the first quarter of 2020, when compared to 2019’s first quarter report of $95.3 million. Building products sales went up by 5.1% in the first quarter of 2020 to $92.6 million, compared to $88.1 million in 2019, and wood product sales increased by 1.4% in the first quarter of 2020 to $14.2 million, when compared to $14.0 million in the first quarter of 2019.

“Unfortunately, as our results were just beginning to reflect the impact of our efforts and strategy, our world changed,” said Vrabley.

During the first quarter of 2020, a decline in the market value of our public equity concurrent with the COVID-19 pandemic triggered an assessment of goodwill, according to the financial report. The company determined as of March 31, 2020 the fair value of reporting units had decreased.

The company’s net interest expense was $1.3 million in the first quarter of 2020 and $1.7 million in the first quarter of 2019 due to lower average borrowing rates. According to the report, the company also highlighted a loss from continuing operations of $8.9 million for the quarter ended March 31, 2020, compared to a loss from continuing operations of $3.2 million for the quarter ended March 31, 2019.

“The unprecedented magnitude and unpredictability of the Coronavirus pandemic forced us to shift resources away from the continued execution of our growth strategy and towards the development and implementation of our COVID-19 readiness and response plan,” Vrabley added. “While we believe we were ahead of the curve in developing and executing the earliest versions of our response plan, and have continued to make meaningful progress, we anticipate the impact from this pandemic will be significant in the second quarter and thereafter as we continue working hard to mitigate its effect on our business.”

Masonite

“Masonite kicked off 2020 building strong momentum. Our North American residential pricing strategy was successfully implemented, and our global operations were performing well, resulting in strong first quarter results despite modest headwinds from COVID-19 beginning in March,” said Howard Heckes, CEO and president, when reflecting on the company’s first quarter.

According to its financial report, the company’s net sales increased 4% to $551 million when compared to its first quarter results in 2019. The increase in net sales, according to the report, was the result of a 4% increase in average unit price (AUP) and a 2% increase in base volume.

Other highlights include:

  • North American residential net sales were $384 million, an increase of 9%;
  • Europe net sales were $71 million, down by 16%; and
  • Architectural net sales were $91 million, up 7%.

Masonite’s total gross profit went up by 20% in the first quarter, according to the report. Masonite had $30 million of net income in the first quarter of 2020, an increase of $26 million from the prior year.

“As this situation [COVID-19] evolved into a global pandemic, we took swift and decisive action to protect the health and welfare of our employees while maintaining business continuity to support essential services,” said Heckes. “We are focused on maintaining financial stability, afforded by the strength of our balance sheet and liquidity. These are truly unprecedented times and we believe these actions will help us navigate near-term uncertainty and position us for further success once our end markets stabilize and recover.”

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