Huttig Building Products Inc. (NASDAQ:HBP) Q2 2020 Earnings Conference Call - Final Transcript
Aug 04, 2020 • 11:00 am ET
[Operator Instructions] Our first question or comment comes from the line of Alan Weber from Robotti Advisors. Your line is open.
Good morning. How are you Jon?
Jon P. Vrabely
I'm good, Alan, thank you.
So can you talk about specifically about the supply chain disruptions on the millwork side? Just what actually took place? Are they behind you? And I guess the other general question is can you talk more about July trends?
Jon P. Vrabely
Yes. So let me take the first part of the question, Alan, and then Bob could happily jump in. But I would say early in the crisis, starting certainly in very late March and into the first part of April, as all companies, I believe, were developing their response plans to COVID, there were a variety of factors, I think, that came into play, including potential plant shutdowns, particularly across our major millwork suppliers, that disrupted their ability to continue to produce and meet at least then-current lead times. In addition to that, one of our major suppliers went on serious allocation, reducing the amount of product that we could purchase by 40% as compared to prior year purchases. So that had a very limiting impact in effect on the product that was available to us. My understanding is that, that limitation is still in place today, so we are -- continue to struggle to, in some cases, get as much of the product that we need. And it certainly has had an impact on our second quarter sales.
Bob, do you have anything to...
Yes. I would just -- Alan, I would just say that demand never really stopped. I mean, where we had states that took very aggressive actions early on, Pennsylvania, New York, Connecticut, Northeast, we certainly had an impact on revenues during that period of time, but the demand was still there and still very -- in a very strong manner. Labor comes into play here in a very large way, not only from cases of COVID in plants but getting people back to work. I think everybody in -- at least in our sector, in our segment of the industry, is struggling with finding people who are willing. I think that would probably be a fair statement. Willing to work. The jobs are out there, we have job openings, but trying to find labor is difficult for us as it is for our suppliers. So there's a downstream effect, there's an upstream effect and really, those are the two factors is demand and labor as far as -- and the impact, obviously, of the COVID that I can -- that I would describe.
And Alan, this is Phil. You had asked about sales trends. And normally, we don't comment on improving order activity. But we did see a positive sales trend after precipitous drop in April as we moved into May and then June and when we saw the levels of stabilization taking place. And we've seen that stabilization continue as we move into the