Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Improving Outlook For Huttig Building Products - January 2013

|Includes: Huttig Building Products, Inc. (HBP)

Huttig Building Products (HBPI on Pink Sheets) has downsized and reduced their cost structure to where they are about break-even at the current (still depressed) level of housing starts. Now with homebuilding activity clearly on the upswing they should report improving profitability.

Other recent notable developments for Huttig are as follows.

· The amended credit facility that was put in place in December gives them increased financial flexibility.

· The negotiated sale in December of the almost 5.8 million shares owned by CEMEX demonstrated that there was good interest in buying the stock at $1.10 per share.

· The company's purchase of 1.0 million shares in the negotiated sale reinforces the belief that the company does not anticipate any future liquidity problem.

The following are some developments that I think will probably occur in the relatively near future.

· The company will probably seek relisting on the New York Stock Exchange or NASDAQ. This will make the company more attractive with some investors vs. when it has been listed on the Pink Sheets.

· As homebuilding activity continues to improve and Huttig's business outlook improves, at some point the company will be justified in reversing the valuation allowance associated with its deferred tax assets. This will be reflected as a non-cash income tax credit on the income statement, and it will increase equity on their balance sheet. This valuation allowance was $31.7 million at the end of 2011. The reversal won't have much real effect, but it will make the balance sheet look significantly better.