Armstrong reports Q2 sales increase
Sales increased in all regions of the world and in most operating segments. The improvement in sales was due to higher prices in North America and to generally improved demand for Armstrong's products throughout the world, the company said.
Operating income of $3.6 million was recorded for the second quarter of 2004 compared to an operating loss of $33.4 million in the second quarter of 2003. 2004 results include a non-cash charge of $60.0 million to reflect a goodwill impairment loss related to the European resilient flooring reporting unit.
In the second quarter of 2003, a non-cash charge of $73.0 million was recorded related to management's updated assessment of probable asbestos-related insurance asset recoveries. Excluding these non-cash charges, results in an adjusted operating income of $63.6 million in 2004 compared to an adjusted operating income of $39.6 million in 2003, an increase of 60.6 percent. The improvement in operating income is primarily due to higher U.S. selling prices, improved volume, and the savings associated with 2003 cost reduction initiatives. These improvements were partially offset by higher raw material costs, particularly lumber and PVC, as well as higher selling, general, and administrative expenses.
Resilient Flooring net sales were $321.9 million in the second quarter of 2004, compared to $308.3 million in the second quarter of 2003. 2004 sales compared to 2003 were favorably impacted by $5.6 million from the translation effect of the changes in foreign exchange rates. An operating loss of $39.5 million was recorded for the quarter.
In the second quarter of 2004, a non-cash charge of $60.0 million was recorded for a goodwill impairment loss related to the European resilient flooring reporting unit. Excluding the $60.0 million charge, operating income increased from $19.1 million in 2003 to $20.5 million in the second quarter of 2004 as improvements in sales volume and the benefits from cost reduction initiatives more than offset increased raw material costs. Wood Flooring net sales of $214.1 million in the second quarter of 2004 increased 17.9 percent from $181.6 million in the prior year. This increase was primarily driven by improved selling prices and higher sales volume. Operating income of $21.1 million in the second quarter of 2004 compared to $5.7 million in the second quarter of 2003. The increase in operating income was primarily attributable to higher prices, sales volume gains and lower manufacturing overhead costs, partially offset by higher lumber prices.
Textiles and Sports Flooring net sales of $65.1 million decreased in the second quarter of 2004 compared to $67.1 million in the second quarter of 2003. Excluding the favorable effects of foreign exchange rates of $4.2 million, net sales decreased 8.7 percent.
An operating loss of $1.7 million in the second quarter of 2004 was incurred compared to an operating loss of $3.1 million in the second quarter of 2003. The decreased loss was due to reduced manufacturing expenses, lower raw material costs and the effects of selling price increases partially offset by the impact of sales volume declines.
For the six-month period ending June 30, 2004, net sales were $1,748.5 million, an increase of 9.2 percent from the $1,601.8 million reported for the first six months of 2003. Increases were reported for all segments except Textiles and Sports Flooring. Excluding the favorable effects of foreign exchange rates of $51.2 million, consolidated net sales increased 5.8 percent.
Operating income in the first half of 2004 was $45.2 million. This compares to an operating loss of $22.1 million for the first six months of 2003. The improvement in operating income was due to higher prices and increased volume as well as savings from 2003 cost reduction initiatives. Partially offsetting these gains were increased raw material and salary and wage costs.
Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!
