HUTTIG BUILDING PRODUCTS INC (Form: 10-Q, Received: 07/30/2015 06:11:48)

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 June 30, 2015

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 Drive Suite 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 x No o

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

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

Large accelerated filer	¨		Accelerated filer	x

Non-accelerated filer	o	(Do not check if smaller reporting company)	Smaller reporting company	¨

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

The number of shares of Common Stock outstanding on June 30, 2015 was 24,885,265 shares.

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014 (unaudited)	3

	Condensed Consolidated Balance Sheets as of June 30, 2015, December 31, 2014 and June 31, 2014 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2015 and 2014 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 4.	Controls and Procedures	15

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	15

Item 6.	Exhibits	16

Signatures		17

Exhibit Index		18

PART 1 FINANCI AL 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						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Net sales	$	175.1		$	168.7		$	322.5		$	304.0
Cost of sales		139.5			135.2			258.4			244.0
Gross margin		35.6			33.5			64.1			60.0
Operating expenses		30.0			29.4			57.9			56.1
Gain on disposal of assets		(0.4	)		—			(0.4	)		—
Operating income		6.0			4.1			6.6			3.9
Interest expense, net		0.6			0.7			1.1			1.3
Income from continuing operations before income taxes		5.4			3.4			5.5			2.6
Provision for income taxes		—			—			—			—
Income from continuing operations		5.4			3.4			5.5			2.6
Loss from discontinued operations, net of taxes		(0.3	)		(0.2	)		(0.4	)		(3.4	)
Net income (loss)	$	5.1		$	3.2		$	5.1		$	(0.8	)

Net income from continuing operations per share - basic and diluted	$	0.21		$	0.14		$	0.22		$	0.11
Net loss from discontinued operations per share - basic and diluted	$	(0.01	)	$	(0.01	)		(0.02	)		(0.14	)
Net income (loss) per share - basic and diluted	$	0.20		$	0.13		$	0.20		$	(0.03	)

Weighted average shares outstanding:
Basic shares outstanding		24.1			23.6			24.0			23.4
Diluted shares outstanding		24.1			23.6			24.0			23.5

See notes to condensed consolidated financial statements

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Millions)

	June 30,		December 31,		June 30,
	2015		2014		2014
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	2.5	$	0.5	$	3.5
Trade accounts receivable, net		72.0		48.9		69.4
Inventories		76.2		67.4		77.4
Other current assets		6.8		7.8		6.5
Total current assets		157.5		124.6		156.8

PROPERTY, PLANT AND EQUIPMENT:
Land		4.3		4.3		4.3
Buildings and improvements		25.9		25.4		24.6
Machinery and equipment		36.4		36.0		34.9
Gross property, plant and equipment		66.6		65.7		63.8
Less accumulated depreciation		49.9		48.8		47.4
Property, plant and equipment, net		16.7		16.9		16.4

OTHER ASSETS:
Goodwill		6.3		6.3		6.3
Other		2.0		2.2		2.3
Deferred income taxes		7.8		8.0		7.7
Total other assets		16.1		16.5		16.3
TOTAL ASSETS	$	190.3	$	158.0	$	189.5

See notes to condensed consolidated financial statements

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Millions, Except Share Data)

	June 30,			December 31,			June 30,
	2015			2014			2014
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	0.8		$	1.3		$	0.6
Trade accounts payable		53.7			39.4			52.0
Deferred income taxes		7.8			8.0			7.7
Accrued compensation		3.8			4.0			2.9
Other accrued liabilities		11.9			13.4			11.8
Total current liabilities		78.0			66.1			75.0
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities		77.5			62.4			88.3
Other non-current liabilities		3.8			3.8			4.2
Total non-current liabilities		81.3			66.2			92.5

SHAREHOLDERS' EQUITY:
Preferred shares; $.01 par (5,000,000 shares authorized)		—			—			—
Common shares; $.01 par (50,000,000 shares authorized: 24,885,265; 24,556,536; and 24,572,371 shares issued at June 30, 2015,
December 31, 2014 and June 30, 2014, respectively)		0.2			0.2			0.2
Additional paid-in capital		40.6			40.4			39.7
Accumulated deficit		(9.8	)		(14.9	)		(17.9	)
Total shareholders' equity		31.0			25.7			22.0

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	190.3		$	158.0		$	189.5

See notes to condensed consolidated financial statements

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In Millions)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Cash Flows From Operating Activities:
Net income (loss)	$	5.1		$	3.2		$	5.1		$	(0.8	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net loss from discontinued operations		0.3			0.2			0.4			3.4
Depreciation and amortization		0.8			0.7			1.5			1.5
Non-cash interest expense		0.1			0.1			0.2			0.2
Stock-based compensation		0.4			0.4			0.8			0.7
Gain on disposal of assets		(0.4	)		—			(0.4	)		—
Changes in operating assets and liabilities:
Trade accounts receivable		(4.7	)		(9.2	)		(23.5	)		(25.1	)
Inventories		3.9			(2.3	)		(10.4	)		(10.7	)
Trade accounts payable		(6.6	)		(0.6	)		14.3			11.2
Other		1.2			(0.3	)		(1.2	)		(1.9	)
Total cash provided by (used in) operating activities		0.1			(7.8	)		(13.2	)		(21.5	)
Cash Flows From Investing Activities:
Capital expenditures		(0.7	)		(0.6	)		(0.9	)		(0.9	)
Proceeds from disposition of capital assets		2.4			—			2.4			—
Total cash provided by (used in) investing activities		1.7			(0.6	)		1.5			(0.9	)
Cash Flows From Financing Activities:
Borrowings of debt, net		—			9.5			14.3			26.1
Repurchase shares of common stock		—			—			(0.6	)		(0.8	)
Total cash provided by financing activities		—			9.5			13.7			25.3
Net increase in cash and equivalents		1.8			1.1			2.0			2.9
Cash and equivalents, beginning of period		0.7			2.4			0.5			0.6
Cash and equivalents, end of period	$	2.5		$	3.5		$	2.5		$	3.5

Supplemental Disclosure of Cash Flow Information:
Interest paid	$	0.5		$	0.6		$	0.9		$	1.2
Income taxes paid		—			0.1			0.1			0.1

See notes to condensed consolidated financial statements

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 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, 2014.

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. COMPREHENSIVE INCOME

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

3. DEBT

Debt consisted of the following (in millions):

	June 30,		December 31,		June 30,
	2015		2014		2014
Revolving credit facility	$	75.9	$	60.8	$	87.3
Other obligations		2.4		2.9		1.6
Total debt		78.3		63.7		88.9
Less current portion		0.8		1.3		0.6
Long-term debt	$	77.5	$	62.4	$	88.3

Credit Agreement — The Company has a $160.0 million asset-based senior secured revolving credit facility (“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 May 28, 2019.

At June 30, 2015, under the credit facility, the Company had revolving credit borrowings of $75.9 million outstanding at a weighted average interest rate of 2.09% per annum, letters of credit outstanding totaling $3.0 million, primarily for health and workers’ compensation insurance and $59.1 million of additional committed borrowing capacity. The Company pays an unused commitment fee of 0.25% per annum. In addition, the Company had $2.4 million of capital lease and other obligations outstanding at June 30, 2015.

The sole financial covenant in the credit facility is the fixed charge coverage ratio (“FCCR”) of 1.05:1.00 which must be tested by the Company if the excess borrowing availability falls below a range of $12.5 million to $20.0 million, depending on the Company’s borrowing base, and must also be tested on a pro forma basis prior to consummation of certain significant business transactions outside the ordinary course of the Company’s business, as defined in the credit agreement.

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

4. CONTINGENCIES

The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company generally has self-insured retention limits and has obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on claims experience. Liabilities for existing and unreported claims are accrued for when it is probable that future costs will be incurred and can be reasonably estimated.

As described in Note 7 — “Commitments and Contingencies” to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, Huttig was previously identified as a potentially responsible party in connection with the cleanup of contamination at a formerly owned property in Montana. The following information supplements and updates the Company’s prior disclosure. 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”). The Company submitted a work plan to the DEQ to implement the ROD and it is currently under review by the DEQ. Under the ROD, the DEQ estimated the remediation costs of the property to be $8.3 million. Based on the Company’s review of the ROD, including discussions with third-party specialists, the Company has accrued $3.7 million at June 30, 2015 and December 31, 2014 with respect to the contingent liability. The Company believes this accrual represents a reasonable estimate of its expected remaining costs of remediation in light of current facts and circumstances. However, the ultimate amount of remediation expenditures is difficult to estimate. There is uncertainty regarding the implementation of the final remediation. As part of the remediation process, additional soil and groundwater sampling, bench and pilot testing is required to ensure the remediation will achieve the projected outcome required by the DEQ. The Company considered in its estimate, among other things, discussions with the DEQ, including the utilization of alternative remediation methods. Potential indemnification or other claims we may be able to assert against third parties and possible insurance coverage have also been considered but any potential recoveries have not been recognized at this time. Since the top end of the range of our potential remediation costs for the property is unknown, our actual remediation expenses ultimately incurred could exceed our accrual by a material amount which could have a material adverse effect on our future liquidity, financial condition or operating results in any period in which any such additional expenses are recognized.

On June 29, 2015, certain private plaintiffs owning properties adjacent to the Montana site sued the Company in the Montana Fourth Judicial District Court seeking remediation of the property in excess of what is contemplated by the ROD and other damages. The Company has not yet been served, but plans to defend the lawsuit vigorously.

The Company has filed a declaratory action against certain liability insurers seeking, inter alia, defense and indemnification for the costs of implementing the final remediation activities associated with the Montana property and defense and indemnification costs associated with the related lawsuit described above. This case currently is pending in the United States District Court for the Eastern District of Missouri. A trial date has been set for August 21, 2017.

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

The Company accrues expenses for contingencies when it is probable that an asset has been impaired or a liability has been incurred and management can reasonably estimate the expense. Contingencies for which the Company has made accruals include environmental, product liability and other legal matters. It is possible, however, that actual expenses could exceed our accrual by a material amount which could have a material adverse effect on Huttig’s future liquidity, financial condition or operating results in the period in which any such additional expenses are incurred.

5. EARNINGS PER SHARE

The Company calculates its basic income per share by dividing net income allocated to common shares outstanding by the weighted average number of common shares outstanding. Holders of 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 loss es 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 milli ons).

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Earnings allocated to participating shareholders	$	0.2	$	0.2	$	0.2	$	0.1
Number of participating securities		1.0		1.2		1.1		1.3

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Weighted-average number of common shares-basic		24.1		23.6		24.0		23.4
Dilutive potential common shares		—		—		—		0.1
Weighted-average number of common shares-dilutive		24.1		23.6		24.0		23.5

The calculation of diluted earnings (loss) per common share for the periods ended June 30, 2015 and June 30, 2014 excludes the impact of antidilutive stock options and restricted stock units. The Company has 0.1 million stock options outstanding at June 30, 2015, which were all antidilutive.

6. INCOME TAXES

Huttig recognized no income tax expense or benefit in the six-month periods ended June 30, 2015 and June 30, 2014. At June 30, 2015, the Company had gross deferred tax assets of $36.9 million and a valuation allowance of $28.1 million netting to deferred tax assets of $8.8 million. The Company had deferred tax liabilities of $8.8 million at June 30, 2015. After classifying $1.0 million of short-term deferred tax assets against short-term deferred tax liabilities, the Company had current net deferred tax liabilities of $7.8 million, as well as long-term deferred tax assets of $7.8 million at June 30, 2015. The Company expects its deferred tax liabilities to be settled with utilization of its deferred tax assets. The deferred tax liabilities enable the Company to partially utilize the deferred tax assets at June 30, 2015, and the balance of the deferred tax assets are covered by the Company’s valuation allowance. The Company is not relying on future pre-tax income at June 30, 2015 to support the utilization of the deferred tax assets.

7. STOCK-BASED EMPLOYEE COMPENSATION

The Company recognized $0.8 million and $0.7 million in non-cash stock-based compensation expense in each of the six-month periods ended June 30, 2015 and June 30, 2014, respectively. During the first six months of 2015, the Company granted an aggregate of 500,468 shares of restricted stock at a fair market value of $3.19 per share under its 2005 Executive Incentive Compensation Plan, as amended. The restricted shares vest in three equal installments on the first, second and third anniversaries of the grant date. During the first six months of 2015, the Company granted 90,820 shares of restricted stock under its 2005 Non-Employee Directors’ Restricted Stock Plan, as amended, at an average fair market value of $3.52 per share. The directors’ restricted shares vest on the date of the 2016 Annual Meeting. The unearned compensation expense is being amortized into expense on a straight-line basis over the requisite service period for the entire award. As of June 30, 2015 and 2014, the total compensation expense not yet recognized related to all outstanding restricted stock/unit awards was $2.6 million and $2.5 million, respectively.

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

Overview

Huttig is a distributor of a broad array of building material products used principally in new residential construction, home improvement, and remodeling and repair projects. We distribute our products through 27 distribution centers serving 41 states and sell primarily to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes.

The following table sets forth our sales by product classification as a percentage of total sales:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Millwork(1)		47	%		47	%		48	%		48	%
Building Products(2)		42	%		42	%		41	%		40	%
Wood Products(3)		11	%		11	%		11	%		12	%
Total Net Product Sales		100	%		100	%		100	%		100	%

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

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

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

Industry Conditions

New housing activity in the United States has shown modest improvement each year since 2009. However, 2015 activity is still below the historical average of 1.4 million total housing starts from 1959 to 2014 based on statistics tracked by the United States Census Bureau. Total housing starts were approximately 1.0 million in 2014. Through June 30, 2015, based on the most recent data provided by the United States Census Bureau, total new housing starts were approximately 11% above 2014 levels for the corresponding six-month period.

Various factors historically have caused our results of operations to fluctuate from period to period. These factors include levels of residential construction, the mix of single family and multi-family starts as a percent of the total residential construction, home improvement and remodeling activity, weather, prices of commodity wood and steel products, interest rates, competitive pressures, availability of credit and other local, regional and national economic conditions. Many of these factors are cyclical or seasonal in nature. We anticipate that further fluctuations in operating results from period to period will continue in the future. Our results in the first and fourth quarter of each year are generally adversely affected by winter weather patterns in the Midwest, Northeast and Northwest, which typically result in seasonal decreases in levels of construction activity in these areas. Because much of our overhead and expenses remain relatively fixed throughout the year, our operating profits tend to be lower during the first and fourth quarters.

We believe we have the product offerings, distribution channels, personnel, systems infrastructure and financial and competitive resources necessary for continued operations. Our future revenues, costs and profitability, however, are all likely to be influenced by a number of risks and uncertainties, including those discussed under the “Cautionary Statement” below.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require 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, 2014 in Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies.” During the six months ended June 30, 2015, 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, 2014.

Results of Operations

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

Net sales were $175.1 million in 2015, which was $6.4 million, or 4%, higher than in 2014. The increase was primarily due to higher levels of construction activity.

Sales increased in all major product categories in 2015 compared to 2014. Millwork sales increased 4% in 2015 to $82.7 million. Building products sales increased 3% in 2015 to $72.8 million. Wood product sales increased 7% in 2015 to $19.6 million.

Gross margin increased 6% to $35.6 million in 2015 as compared to $33.5 million in 2014. As a percentage of sales, gross margin increased to 20.3% in 2015 from 19.9% in 2014. The increase in gross margin percentage was primarily due to our operational initiatives as well as improved product mix.

Operating expenses increased $0.6 million to $30.0 million in 2015, compared to $29.4 million in 2014. The increase was primarily due to higher personnel costs as a result of wage increases related to reinstatement of previous wage reductions and the hiring of additional personnel, as well as expenses attributable to higher variable costs associated with increased sales. All prior wage reductions were reinstated throughout 2014. The increase in personnel costs was partially offset by a decrease in fuel expense due to lower fuel costs. As a percentage of sales, operating expenses decreased to 17.1% in 2015 from 17.4% in 2014 due to leveraging of expenses.

Our results for the three months ended June 30, 2015 included a gain on the sale of assets of $0.4 million related to the sale of our Southwest Roofing Supply branch.

Net interest expense was $0.6 million in 2015, compared to $0.7 million in 2014. The decrease was generally due to lower average debt outstanding and lower interest rates in the second quarter of 2015.

No income tax expense or benefit was recognized in the second quarter of 2015 or 2014.

If, in the future, we generate sufficient earnings in federal and state tax jurisdictions in which we have recorded valuation allowances, our conclusion regarding the need for a valuation allowance in these tax jurisdictions could change. Accordingly, it is reasonably possible we could have a reduction of some or a significant portion of our recorded valuation allowance of $28.1 million as of June 30, 2015. This determination would be dependent on a number of factors which would include, but not be limited to, our expectation of future taxable income.

As a result of the foregoing factors, we reported income from continuing operations of $5.4 million in 2015 compared to $3.4 million in 2014.

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

Net sales were $322.5 million in 2015, which was $18.5 million, or approximately 6%, higher than in 2014. The increase was primarily due to higher levels of construction activity and our core product growth initiatives, which we believe resulted in revenue growth in certain product categories above the market thereby gaining some level of market share.

Sales increased in all major product categories in 2015 from 2014. Millwork sales increased 5% in 2015 to $154.3 million. Building product sales increased 8% in 2015 to $131.6 million. Wood products sales increased 3% in 2015 to $36.6 million primarily due to an increase in demand in engineered wood.

Gross margin increased approximately 7% to $64.1 million, or 19.9% of sales, in 2015 as compared to $60.0 million, or 19.7% of sales, in 2014. The increase in gross margin percentage was primarily due to our operational initiatives.

Operating expenses increased $1.8 million to $57.9 million, or 18.0% of sales, in 2015, compared to $56.1 million, or 18.5% of sales, in 2014. The increase was primarily due to higher personnel costs as a result of wage increases related to reinstatement of previous wage reductions and the hiring of additional personnel, as well as expenses attributable to higher variable costs associated with increased sales. All prior wage reductions were reinstated throughout 2014. The increase in personnel costs was partially offset by a decrease in fuel expense due to lower fuel costs.

Our results for the six months ended June 30, 2015 included a gain on the sale of assets of $0.4 million related to the sale of our Southwest Roofing Supply branch.

Net interest expense was $1. 1 million in 2015, compared to $1.3 million in 2014. The decrease was generally due to lower average debt outstanding and lower interest rates in the second quarter of 2015.

No income tax expense or benefit was recognized in the six-month periods ended June 30, 2015 or 2014.

As a result of the foregoing factors, we reported income from continuing operations of $5.5 million in 2015 as compared to $2.6 million in 2014.

Discontinued Operations

We recorded a $0.4 million after-tax loss from discontinued operations in the first six months of 2015 as compared to a loss of $3.4 million in the first six months of 2014. The loss in both periods was due to environmental and related legal expenses. See further discussion under “Contingencies” below.

Liquidity and Capital Resources

We depend on cash flow from operations and funds available under our credit facility to finance our operations, including seasonal working capital needs, capital expenditures and other capital needs. Our working capital requirements are generally greatest in the second and third quarters, which reflect the seasonal nature of our business. The second and third quarters are also typically our strongest operating quarters, largely due to more favorable weather throughout many of our markets compared to the first and fourth quarters. We typically generate cash from working capital reductions in the fourth quarter of the year and typically use cash as we build working capital during the first quarter in preparation for our second and third quarters. We also maintain significant inventories to meet the rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery and service terms with our suppliers. Accounts receivable also typically increase during peak periods commensurate with the sales increase. At June 30, 2015 and June 30, 2014, inventories and accounts receivable constituted approximately 78% and 77% of our total assets, respectively. 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.

Operations. Cash used in operating activities decreased by $8.3 million to $13.2 million in the first six months of 2015, compared to $21.5 million in the first six months of 2014. In 2015, we recorded a profit of $5.1 million compared to a net loss of $0.8 million in 2014. Accounts receivable increased by $23.5 million during 2015, compared to an increase of $25.1 million a year ago. The increase in accounts receivable over the first six months of the year was commensurate with sales activity including the seasonality of our sales. Days’ sales outstanding was 37.5 days at each of June 30, 2015 and June 30, 2014 based on annualized second quarter sales and quarter-end accounts receivable balances for the respective periods. Inventory increased by $10.4 million in the first six months of 2015 compared to an increase of $10.7 million in the corresponding period of 2014. The increase in inventories over the first six months of the year represented normal seasonality and participation in certain early buy programs coupled with anticipated increased sales activity in 2015 as compared to 2014. Our inventory turns were 7.1 turns in each of 2015 and 2014 based on annualized second quarter costs of goods sold and average inventory balances for the respective quarters. Accounts payable increased by $14.3 million in the first six months of 2015, compared to an $11.2 million increase in the corresponding year-ago period. The increase was primarily a result of our inventory build for the respective periods. Days’ payable outstanding was 35.1 days at each of June 30, 2015 and June 30, 2014 based on annualized second quarter costs of goods sold and quarter-end accounts payable balances for the respective periods.

Investing. In 2015, net cash provided by investing activities was $1.5 million, which compares to net cash used in investing activities of $0.9 million in 2014. The Company received proceeds of $2.4 million for the sale of assets of its Southwest Roofing Supply branch in the second quarter of 2015. The Company invested $0.9 million in machinery and equipment at various locations in the first six months of each of 2015 and 2014.

Financing. Cash provided from financing activities of $13.7 million in 2015 reflected net borrowings of $14.3 million offset by the Company’s repurchase of 0.2 million shares of its common stock for $0.6 million. The repurchased shares were retired. Cash provided from financing activities of $25.3 million in the first six months of 2014 reflected net borrowings of $26.1 million offset by the Company’s repurchase of 0.2 million shares of its common stock for $0.8 million. The repurchased shares were retired.

Credit Agreement. We have a $160.0 million asset-based senior secured revolving credit facility (“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 our assets and we are 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 May 28, 2019, the maturity date.

At June 30, 2015, under the credit facility, we had revolving credit b orrowings of $75. 9 million outstanding at a weighted average interest rate of 2.0 9 % per annum, letters of credit outstanding totaling $3.0 million, primarily for health and workers’ compensation insurance and $59. 1 million of additional committed borrowing capacity. We pay an unused commitment fee of 0.25% per annum. In addition, we had $2. 4 million of capital lease and other obligations outstanding at June 30, 2015 .

The sole financial covenant in the credit facility is the fixed charge coverage ratio (“FCCR”) of 1.05:1.00 which must be tested by us if the excess borrowing availability falls below a range of $12.5 million to $20.0 million depending on our borrowing base and must also be tested on a pro forma basis prior to consummation of certain significant business transactions outside our ordinary course of business, as defined in the credit agreement.

We believe that cash generated from our operations and funds available under the credit facility will provide sufficient funds to meet the operating needs of the business for at least the next twelve months. However, if availability would have fallen below the required threshold 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. In that event, we would be forced to seek alternative sources of financing, which may not be available on terms acceptable to us, or at all.

Off-Balance Sheet Arrangements

In addition to funds available from operating cash flows and the credit facility as described above, we use operating leases as a principal off-balance sheet financing technique. Operating leases are employed as an alternative to purchasing certain property, plant and equipment. For a discussion of our off-balance sheet arrangements, see our Annual Report on Form 10-K for the year ended December 31, 2014 in Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Commitments and Contingencies.” During the six months ended June 30, 2015, there were no material changes to our off-balance sheet arrangements discussed in our Annual Report on Form 10-K for the year ended December 31, 2014.

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

In addition, some of our current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which we, among others, could be held responsible. We currently believe that there are no material environmental liabilities at any of our distribution center locations.

We accrue 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 we have made accruals include environmental, product liability and other legal matters. It is possible, however, that actual expenses could exceed our accrual by a material amount which could have a material adverse effect on our future liquidity, financial condition or operating results in the period in which any such additional expenses are incurred.

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 to stockholders looking forward in time, including, but not limited to, statements regarding our current views with respect to financial performance, future growth in the housing market, distribution channels, sales, favorable supplier relationships, inventory levels, the ability to meet customer needs, enhanced competitive posture, no material financial impact from litigation or contingencies, including environmental proceedings, are included pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995.

These statements present management’s expectations, beliefs, plans and objectives regarding our future business and financial performance. These forward-looking statements are based on current projections, estimates, assumptions and judgments, and involve

known and unknown risks and uncertainties. We disclaim any obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise.

There are a number of factors, some of which are beyond our control that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. These factors include, but are not limited to: the strength of construction, home improvement and remodeling markets and the recovery of the homebuilding industry to levels consistent with the historical average of total housing starts; the cyclical nature of our industry; 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; termination of key supplier relationships; competition with existing or new industry participants; the cost of environmental compliance, including actual expenses we may incur to resolve proceedings we are involved in arising out of a formerly owned facility in Montana; 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 those set forth under Item 1A-“Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. 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.

ITEM 4 — CONTROL S AND PROCEDURES

Evaluation of Disclosure Controls and Procedures – As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and Interim Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures are effective as of June 30, 2015.

Changes in Internal Control of Financial Reporting – There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2015, 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 4 – Contingencies of the Notes to Condensed Consolidated Financial Statements (unaudited) in Item 1 for information on legal proceedings in which the Company is involved. See also Part I, Item 3-“Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 6 — EXHIBITS

The exhibits filed as part of this Report on Form 10-Q are listed in the Exhibit Index immediately preceding the exhibits.

SIGNAT URES

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: July 30, 2015
		Jon P. Vrabely
		President, Chief Executive Officer and Interim Chief Financial Officer
		(Principal Executive Officer, Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number		Description

3.1		Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 to the Form 10 filed with the Securities and Exchange Commission on September 21, 1999).

3.2		Amended and Restated Bylaws of the Company (as of September 26, 2007) (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on September 28, 2007).

*10.1		2005 Nonemployee Directors’ Restricted Stock Plan, Third Amendment and Restatement, effective March 31, 2015 (Incorporated by reference to Attachment A to the Definitive Proxy Statement filed with the Securities and Exchange Commission on March 20, 2015).
*10.2		2005 Executive Incentive Compensation Plan, Fourth Amendment and Restatement, effective April 27, 2015 (Incorporated by reference to Attachment B to the Definitive Proxy Statement filed with the Securities and Exchange Commission on March 20, 2015).
*10.3		Form of Restricted Stock Agreement under the 2005 Executive Incentive Compensation Plan, as amended.
*10.4		Form of Restricted Stock Agreement under the 2005 Nonemployee Directors’ Restricted Stock Plan, as amended.
*10.5		Separation Agreement dated May 29, 2015 by and between Philip Keipp and the Company.
31.1		Certification by Chief Executive Officer and Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

10l.SCH		XBRL Taxonomy Extension Scheme Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*Management contract or compensatory plan or arrangement.

Exhibit 10.3

RESTRICTED STOCK AGREEMENT

HUTTIG BUILDING PRODUCTS, INC.

2005 EXECUTIVE INCENTIVE COMPENSATION PLAN

[insert date]

The parties to this Restricted Stock Agreement (this “Agreement”) are Huttig Building Products, Inc., a Delaware corporation (the “Corporation”), and [insert name] , an employee of the Corporation (the “Participant”).

Pursuant to the terms of the Huttig Building Products, Inc. 2005 Executive Incentive Compensation Plan, as amended and restated from time to time (the “Plan”), the Corporation, upon the recommendation of the Management Organization and Compensation Committee (the “Committee”) of the Board of Directors, has determined to award to the Participant [insert number] shares of restricted stock, subject to the terms of the Plan as of the date of this Agreement (the “Grant Date”). As a condition to such award and pursuant to the terms of the Plan, the Corporation and the Participant hereby enter into this Agreement and agree to the terms and conditions set forth herein.

1.	DEFINITIONS .

Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings contained in the Plan. For purposes of this Agreement, and for purposes of interpreting the terms of the Plan, “Restriction Period” shall mean a period commencing on the Grant Date and ending for 33-1/3% of the grant on each subsequent anniversary date for the three-year period ending [insert date] .

2.	AWARD OF HUTTIG SHARES

Pursuant to the provisions of the Plan and this Agreement and by the authority of the Committee, the Corporation awards [insert number] shares (the “Restricted Stock”) of the Corporation’s common stock, par value $.01 per share (“Huttig Shares”), to the Participant. The Corporation, the Board of Directors and the Committee do not guarantee the Restricted Stock from loss of value or depreciation.

3.	RESTRICTIONS AND RIGHTS

(a)

During the Restriction Period, the Restricted Stock may not be sold, transferred, assigned or pledged (the “Restrictions”). During the Restriction Period, the Restricted Stock is subject to forfeiture in the event that the Participant attempts to sell, transfer, assign or pledge the Restricted Stock or the Participant violates one of the covenants contained in Section 6 of this Agreement. Except as provided under Section 5 of this Agreement, the Restrictions on the Restricted Stock shall automatically lapse:

(i)	upon expiration of the Restriction Period;

(ii)	in the event of the Participant’s retirement at or after age 65, permanent disability, or death or upon a Change in Control; or

(iii)

as may be otherwise provided under the terms of the Plan.

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(b)

Notwithstanding anything in this Agreement to the contrary, the Committee may, in the Committee’s sole discretion, waive or modify this Agreement to permit the lapse of Restrictions on all or a portion of the Restricted Stock awarded hereunder prior to the end of the Restriction Period, including, without limitation, upon the Participant’s retirement before age 65.

(c)	During the Restriction Period, the Participant will be entitled to all other rights of a shareholder of the Corporation with respect to the Restricted Stock, including the right to vote the Restricted Stock and receive dividends and other distributions thereon.

4.	LEGEND REQUIREMENT

Each stock certificate or book-entry notation evidencing an award of Restricted Stock shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such award substantially in the following form (the “Legend”):

“The sale or transfer of these shares of stock is subject to certain restrictions on transfer as set forth in the Huttig Building Products, Inc. 2005 Executive Incentive Compensation Plan, as amended and restated from time to time, and in the associated Award Agreement. Copies of such Plan and Agreement may be obtained from Huttig Building Products, Inc., 555 Maryville University Dr., Suite 400, St. Louis, MO 63141.”

5.	TERMINATION OF EMPLOYMENT

Subject to the rights of the Committee under Section 3(b), termination of the Participant’s employment during the Restriction Period for any reason other than retirement at or after age 65, permanent disability or death shall result in the forfeiture of all Restricted Stock as to which the Restrictions have not lapsed, and the Participant shall be required to return all applicable stock certificates to the Corporation. Records of the Corporation and its Subsidiaries regarding Participant’s period of employment, termination thereof and the reasons therefor, permanent disability, leaves of absence, re-employment and other matters shall be conclusive for all purposes hereunder, unless determined by the Corporation or the Committee to be incorrect.

COVENANTS

(a)	The Participant agrees to be bound by all terms and provisions of the Plan, and all such provisions shall be deemed a part of this Agreement for all purposes.

(b)

The Participant agrees to provide the Corporation, when and if requested, with any information or documentation which the Corporation believes necessary or advisable in connection with the administration of the Plan, including data required to assure compliance with the requirements of the Securities and Exchange Commission, of any stock exchange upon which the Huttig Shares are then listed, or of any applicable federal, state or other law.

(c)

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Corporation, in its sole discretion, may accept Restricted Stock awarded hereunder or Huttig Shares otherwise previously acquired in satisfaction thereof.

7.	NO COVENANT OF EMPLOYMENT

Neither the execution and delivery of this Agreement nor the granting of any award evidenced by this Agreement shall constitute, or be evidence of, any agreement or understanding, express or implied, on the part of the Corporation or any of its subsidiaries to employ the Participant for any specific period.

8.	ADMINISTRATION AND INTERPRETATION OF PLAN AND AGREEMENT

All terms, conditions and restrictions of the Plan are incorporated herein and made a part hereof as if stated herein. In the event of any conflict between the terms of this Agreement and those of the Plan, the provisions of the Plan shall prevail.

The Committee shall have full authority and discretion, subject only to the terms of the Plan, to decide all matters relating to the administration or interpretation of the Plan and this Agreement, and all such action by the Committee shall be final, conclusive, and binding upon the Corporation and the Participant. The Committee shall have full authority and discretion to modify at any time the Restriction Period, the Restrictions, the other terms and conditions of this Agreement, the Legend and any other instrument evidencing this award, provided that no such modification shall increase the benefit under such award beyond that which the Committee could have originally granted at the time of the award, or shall impair the rights of the Participant under such award except in accordance with the Plan, any applicable agreement or applicable law or with consent of the Participant. The Corporation, the Committee and the members of the Board of Directors shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Stock granted hereunder.

This Agreement is deemed to be issued in, the award evidenced hereby is deemed to be granted in, and both shall be governed by the laws of, the State of Delaware. There have been no representations to the Participant other than those contained herein.

DELIVERY

All certificates or book-entry notations for Restricted Stock awarded under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which Huttig Shares are then listed and any applicable federal or state securities law, and the Committee may cause a legend or legends, in addition to the Legend required under Section 4 of this Agreement, to be put on any such certificates or book-entry notations to make appropriate reference to such restrictions.

The stock certificates, if any, evidencing the Restricted Stock shall be held in custody by the Corporation or its designee until the Restrictions thereon shall have lapsed and the Committee may require, as a condition of any award, that the Participant shall have delivered a stock power endorsed in blank relating to the Restricted Stock covered by such award.

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to the Restricted Stock, including, but not limited to, the payment by the Participant of all applicable withholding taxes, the Corporation shall deliver or cause to be delivered to the Participant a certificate or certificates, or in the Committee’s sole discretion, make appropriate book-entry notation on the Company’s books, in each case for the applicable Restricted Stock which shall not bear the Legend required under Section 4 of this Agreement.

Nothing herein shall require the Corporation to issue any Huttig Shares with respect to an award if that issuance would, in the reasonable determination of the Corporation, constitute a violation of rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which Huttig Shares are then listed or any applicable federal or state securities law.

10.	DEATH BENEFITS .

The Participant may designate a beneficiary or beneficiaries (contingently or successively) to whom any benefit hereunder and under the Plan is to be paid in the event of his or her death and, from time to time, may change his or her designated beneficiary. A beneficiary designation shall be made in writing in a form prescribed by the Committee and delivered to the Corporation while the Participant is alive. If there is no designated beneficiary surviving at the death of the Participant, payment of any death benefit of the Participant shall be paid to the Participant’s executor, administrator or legal representative.

11.

AMENDMENT

The terms of this Agreement shall be subject to the terms of the Plan as the Plan may be amended from time to time by the Board of Directors of the Corporation unless any such amendment by its terms or by its clear intent is inapplicable to this Agreement.

12.

NOTICE

Any notice to the Corporation provided for in this Agreement shall be in writing and addressed to it in care of the Secretary of the Corporation, and any notice to the Participant shall be in writing and addressed to the Participant at the address contained in the Corporation’s records at the time or to such other address designated in writing by the Participant.

13.	PARTICIPANT ACKNOWLEDGMENT .

By accepting this grant, the Participant acknowledges receipt of a copy of the Plan, and acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan, this Agreement and the Restricted Stock granted hereunder shall be final and conclusive.

[Remainder of page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the day and year first above written.

HUTTIG BUILDING PRODUCTS, INC.

___________________________________

By:

Title:

PARTICIPANT

_______________________________

[insert name]

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Exhibit 10.4

RESTRICTED STOCK AGREEMENT

HUTTIG BUILDING PRODUCTS, INC.

2005 NON-EMPLOYEE DIRECTORS’ RESTRICTED STOCK PLAN

[insert date]

The parties to this Restricted Stock Agreement (this “Agreement”) are Huttig Building Products, Inc., a Delaware corporation (the “Corporation”), and [insert name] , a non-employee member of the Board of Directors of the Corporation (the “Participant”).

Pursuant to the terms of the Huttig Building Products, Inc. 2005 Non-Employee Directors’ Restricted Stock Plan, as amended and restated from time to time (the “Plan”), the Corporation, upon the recommendation of the Management Organization and Compensation Committee (the “Committee”) of the Board of Directors, has determined to award to the Participant [insert number] shares of restricted stock, subject to the terms of the Plan as of the date of this Agreement (the “Grant Date”). As a condition to such award and pursuant to the terms of the Plan, the Corporation and the Participant hereby enter into this Agreement and agree to the terms and conditions set forth herein.

1.	DEFINITIONS .

2.	AWARD OF HUTTIG SHARES

3.	RESTRICTIONS AND RIGHTS

(a)

(i)	upon expiration of the Restriction Period;

(ii)	in the event of the Participant’s death or upon a Change in Control; or

(iii)

as may be otherwise provided under the terms of the Plan.

(b)	Notwithstanding anything in this Agreement to the contrary, the Committee may, in the Committee’s sole discretion, waive or modify this Agreement to permit the lapse of

Page 1 of 5

Restrictions on all or a portion of the Restricted Stock awarded hereunder prior to the end of the Restriction Period, including, without limitation, upon the Participant’s retirement from service or permanent disability.

(c)	During the Restriction Period, the Participant will be entitled to all other rights of a shareholder of the Corporation with respect to the Restricted Stock, including the right to vote the Restricted Stock and receive dividends and other distributions thereon.

4.	LEGEND REQUIREMENT

“The sale or transfer of these shares of stock is subject to certain restrictions on transfer as set forth in the Huttig Building Products, Inc. 2005 Non-Employee Directors’ Restricted Stock Plan, as amended and restated from time to time, and in the associated Award Agreement. Copies of such Plan and Agreement may be obtained from Huttig Building Products, Inc., 555 Maryville University Dr., Suite 400, St. Louis, MO 63141.”

5.	TERMINATION OF SERVICE

Subject to the rights of the Committee under Section 3(b), termination of the Participant’s service during the Restriction Period for any reason other than the Participant’s death or a Change in Control shall result in the forfeiture of all Restricted Stock as to which the Restrictions have not lapsed, and the Participant shall be required to return all applicable stock certificates to the Corporation.

COVENANTS

(a)	The Participant agrees to be bound by all terms and provisions of the Plan, and all such provisions shall be deemed a part of this Agreement for all purposes.

(b)

(c)

The Participant agrees, upon due notice and demand, to promptly pay to the Corporation the cash amount of any taxes which are required to be withheld by the Corporation either at the time the Restriction Period lapses or at the time of award (in cases where the Participant duly elects to be taxed at such earlier time); provided, however, the Corporation, in its sole discretion, may accept Restricted Stock awarded hereunder or Huttig Shares otherwise previously acquired in satisfaction thereof.

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7.	ADMINISTRATION AND INTERPRETATION OF PLAN AND AGREEMENT

DELIVERY

As soon as administratively practicable following the lapse of the Restrictions with respect to any of the Restricted Stock without a forfeiture, and upon the satisfaction of all other applicable conditions as to the Restricted Stock, including, but not limited to, the payment by the Participant of all applicable withholding taxes, the Corporation shall deliver or cause to be delivered to the Participant a certificate or certificates, or in the Committee’s sole discretion, make appropriate book-entry notation on the Company’s books, in each case for the applicable Restricted Stock which shall not bear the Legend required under Section 4 of this Agreement.

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regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which Huttig Shares are then listed or any applicable federal or state securities law .

9.	DEATH BENEFITS .

10.

AMENDMENT

11.

NOTICE

12.	PARTICIPANT ACKNOWLEDGMENT .

[Remainder of page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the day and year first above written.

HUTTIG BUILDING PRODUCTS, INC.

__________________________________

By:

Title:

PARTICIPANT

____________________________

[insert name]

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Exhibit 10.5

SEPARATION AGREEMENT

1.	Philip Keipp (“ Employee ”) submitted his letter of resignation on May 29, 2015 and his last day of employment is June 12, 2015.

In consideration for the releases and covenants by Employee contained in this Separation Agreement (the “ Release ”), Huttig Building Products, Inc., its affiliates, subsidiaries, related entities, successors and assigns (the “ Company ”) shall, on the terms and conditions hereinafter set forth agree to give to Employee:

Severance pay of $134,615 less Employee’s group health insurance contributions and subject to all usual withholding for state and federal taxing authorities, payable in equal installments in accordance with the Company’s first regularly scheduled payroll following expiration of the time periods set forth in Paragraph 8 below and ending on December 31, 2015 (the “ Severance Period ”). Employee’s restricted stock shares that are scheduled to vest in January 2016 will be awarded on the date of the January vesting; provided, all other restricted stock shares shall be forfeited. The total number of shares to vest in January 2016 is 63,334, with 23,334 shares vesting on January 27, 2016, 20,000 shares vesting on January 28, 2016, and 20,000 shares vesting on January 29, 2016. Employee shall be entitled to the payments and equity award referred to above only if Employee signs this Release and delivers it to the Company within twenty-one (21) days of receipt, and does not thereafter revoke it within the revocation period set forth in Paragraph 8 of this Release.

The right to continue to participate in the Company’s health insurance plans, with the Company paying the portion of the plan costs that the Company would have paid had the Employee continued to be an active employee of the Company and the Employee paying the portion of the plan costs that Employee would have paid as an active employee of the Company, until the earlier of (i) December 31, 2015, or (ii) the date Employee commences other employment. In the event Employee obtains new employment, Employee must provide written notification to the Company’s benefits department within three (3) days of accepting a position.

c.	During the Severance Period, Employee will not receive or accrue any continuation of any other benefits during the Severance Period.

The Employee shall automatically and without any further actions be deemed to have resigned from all officer positions held by him with respect to the Company. Further, all agreements between Employee and the Company, including without limitation, the Indemnity Agreement and the Change of Control Agreement shall be deemed terminated herewith.

In consideration of the foregoing, Employee, Employee’s agents and family members (collectively, the “ Employee Parties ”) hereby irrevocably and unconditionally release and forever discharge the Company, its affiliates, subsidiaries, and related entities, and their respective owners, directors, officers, employees, agents, successors, and assigns (collectively, the “ Company Parties ”) from and against any and all manner of actions, liability, causes of action, claims, demands, contracts, attorneys’ fees, back pay, lost future wages, claims for personal injury, discrimination, and/or mental anguish, claims for vacation pay, sick pay, or any other employee benefits, which any of the Employee Parties now may have or hold or at any time heretofore had or held, arising out of, existing by reason of, resulting from, or based upon:

Exhibit 10.5

Employee’s employment with Company, or the separation therefrom, and any employment practice, custom or policy of any of the Company Parties.

Employee acknowledges and agrees that the claims released and discharged hereby include, but are not limited to, claims that have been or could be asserted under: the common law of the State of Missouri; the Missouri Human Rights Act; any rights pursuant to Missouri Revised Statutes §287.780 and §290.140; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Civil Rights Act of 1866; the Civil Rights Act of 1871; Section 1981 through 1988 of Titles 29 and 42 of the United States Code, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Immigration Reform and Control Act, as amended; the Americans with Disabilities Act of 1990, as amended; the Age of Discrimination in Employment Act of 1967, as amended; the Workers Adjustment and Retraining Notification Act, as amended; the Occupational Safety and Health Act, as amended; the National Labor Relations Act, as amended; the Rehabilitation Act of 1973; the False Claims Act; the Equal Pay Act; the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, or any replacement acts; the Immigration Reform Control Act, as amended; the Older Worker Benefit Protection Act; the Sarbanes-Oxley Act of 2002; any tort theory including but not limited to the torts of wrongful discharge and negligent or intentional misrepresentation; or, any other legal limitation on the employment relationship, whether federal, state, local or common law; and any other federal, state, or local law, constitution, regulation, ordinance, decision or common law claim concerning employment, wages, vacation, personal leave, holiday or sick pay, paid time off, payment pursuant to any practice, policy, handbook or manual of the Company, including without limitation, any Company severance plans, hours of work, labor relations, employment relations, fair employment practices, fair credit reporting, human rights, civil rights, service letters, occupational safety and health, discrimination in employment, including disparate impact, harassment, failure to accommodate, retaliation, or termination of employment; any and all claims for personal injury, emotional distress, libel, slander, defamation and other physical, economic, or emotional injury; and all claims for attorneys’ fees and costs. Employee agrees that this Release includes the release of all claims, which Employee does not know or expect to exist in Employee’s favor at the time Employee signs this Release. This Release releases all such claims.

Employee affirms that Employee has not filed, caused to be filed, or presently is a party to any claim against the Company. Employee agrees that he has otherwise been paid all amounts due to him and that he is not owed any other amounts as a result of his employment with the Company. Employee further affirms that Employee has no known workplace injuries or occupational diseases.

Employee represents that Employee has not filed, nor is there pending, any claim to which Employee is a party, charging party, or complainant before any administrative agency or court including, but not limited to, the Department of Labor, the Equal Employment Opportunity Commission, the Missouri Commission on Human Rights, the St. Louis Civil Rights Enforcement Agency, or any local human relations commission. Employee waives Employee’s right to request a letter under the Missouri Service Letter Statute. Employee knowingly and voluntarily waives Employee’s rights, if any, to recover any damages or other relief for any claim brought by the Equal Employment Opportunity Commission, and/or any state or local agency on Employee’s behalf under all federal, state, and local anti-discrimination laws.

Exhibit 10.5

Employee agrees not to disclose any information regarding the existence or substance of this Release, the discussions leading up to it, or the fact of settlement, to anyone except to Employee’s spouse/partner, income tax return preparer and attorney (if any). Employee represents that Employee has not, prior to signing this Release, told anyone other than Employee’s spouse/partner, income tax return preparer and attorney, about the dollar amounts referred to herein. Employee specifically agrees not to disparage the management, employees, products, or business of the Company or any of the Company Parties in any manner. Employee represents that Employee understands that this pledge of confidentiality and non-disparagement is an integral part of the agreement of the Company to provide severance benefits and payment. Notwithstanding the foregoing, Company shall be permitted to disclose this Release, and/or the terms of this Release, as required by law, regulations or stock exchange requirements.

8.	By execution of this Release, Employee expressly waives any and all rights or claims arising under the Age Discrimination of Employment Act of 1967 (“ADEA”) and:

a.	Employee acknowledges that Employee’s waiver of rights or claims arising under the ADEA is in writing and is understood by Employee;

b.	Employee expressly understands that this waiver specifically refers to rights or claims arising under the ADEA;

c.	Employee expressly understands that by execution of this Release, Employee does not waive any rights or claims under the ADEA that may arise after the date the waiver is executed;

d.	Employee acknowledges that the waiver of Employee’s rights or claims arising under the ADEA is in exchange for the consideration outlined above, which is substantially above and beyond that to which Employee is entitled;

e.	Employee acknowledges that the Company is expressly advising Employee to consult with an attorney of his choosing prior to executing this Release.

f.	Employee has been advised by the Company that Employee is entitled to at least twenty-one (21) days from receipt of this Release within which to consider this Release, which period commenced on May 29, 2015 ;

Employee acknowledges that Employee has been advised by the Company that Employee is entitled to revoke (in the event Employee executes this Release) Employee’s waiver of rights or claims arising under the ADEA within seven (7) days after executing this Release and that said waiver will not be, and does not become, effective or enforceable until the seven (7) day revocation period has expired;

h.	The parties agree that should Employee exercise Employee’s right to revoke the waiver under subparagraph (g) hereof, this entire Release, and its obligations, including, but not limited to the obligation to provide Employee with severance pay, are null, void and of no effect; and

Employee acknowledges, notwithstanding any other provision of this Release to the contrary, that no sums or benefits due Employee hereunder, including the severance pay contained in Paragraph 1, shall be paid or provided until the revocation period specified in subparagraph (g) hereof has expired and then, and only, then, shall such sums be paid in accordance with Paragraph 1.

j.	Employee acknowledges and agrees that Employee will communicate Employee’s decision to accept or reject this Release to the Company as provided herein. Specifically,

Exhibit 10.5

Employee further acknowledges and agrees and understands that Employee has the right to revoke this Release for seven (7) days after signing by provided written notice to Rebecca Kujawa, General Counsel, Huttig Building Products, Inc., 555 Maryville University Drive, Suite 400, St. Louis, Missouri, 63141.

During the Severance Period, Employee will, without further compensation, be available to assist the Company as reasonably requested by the Company regarding activities pertaining to Employee’s prior responsibilities with the Company and do such other things as are reasonably requested by the Company to provide for an orderly transition of Employee’s employment responsibilities. In addition, Employee agrees to assist the Company, and if necessary to testify, through a deposition or at trial, with respect to matters related to periods during which Employee was employed by the Company.

10.	Employee acknowledges that Employee has read this Release, fully understands its terms, and is voluntarily signing this Release with full knowledge of its significance.

11.	The parties agree that neither this Release nor the furnishing of the consideration for this Release shall be deemed or construed at any time for any purpose as an admission by either party, or evidence of any liability or unlawful conduct of any kind.

12.

This Release shall be governed and conformed in accordance with the laws of the state of Missouri without regard to its conflict of laws provision. Should any provision of this Release be declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediately become null and void, leaving the remainder of this Release in full force and effect.

13.	This Release may not be modified, altered or changed except in writing and signed by both parties wherein specific reference is made to this Release.

14.

Employee shall return any and all of Company’s property and documents which he may have in his possession. Employee shall not communicate or disclose to any entity or person, or use for the Employee’s own account, without the prior written consent of the Company, any information concerning the business, methods of operation, or affairs of the Company (including, without limitation, customer lists or information, developments, marketing concepts, ideas or strategies, pricing or cost information, and information about the Company’s methods of operation). However, the obligations of this paragraph 14 shall not apply in the event and to the extent that matters become generally known to and available for use by the public otherwise than by the Employee’s act or omission.

15.

This Release sets forth the entire agreement between the parties hereto, and fully supersedes any prior agreements or understands between the parties. Employee acknowledges that Employee has not relied on any representations, promises, or agreements of any kind in connection with the decision to accept this Release, except for those set forth in this Release.

Exhibit 10.5

Accepted and agreed as of the date set forth below.


EMPLOYEE		HUTTIG BUILDING PRODUCTS, INC.

By:	/s/ Philip Keipp	By:	/s/ JON P. VRABELY
	Philip Keipp
		Name:		J.P.Vrabely
Date:	6-2-15
		Title:			President & CEO

		Date:			June 1, 2015

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;

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: July 30, 2015	/s/ Jon P. Vrabely
	Jon P. Vrabely
	President, Chief Executive Officer and Interim Chief Financial Officer

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 June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon P. Vrabely, President, Chief Executive Officer and Interim Chief Financial Officer of the Company, certify, to my 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, Chief Executive Officer and Interim Chief Financial Officer

July 30, 2015