Congoleum reports loss for Q4 and fiscal year
Congoleum recorded a charge of $7.7 million before taxes in the fourth quarter of 2000 for expenses arising from these changes. A provision for a future return of inventory reduced fourth quarter sales by $4.0 million and reduced earnings before taxes by an additional $1.3 million.
Excluding the charges and reduction in sales for the distributor transition, sales for the fourth quarter were $55.5 million, an increase of $1.8 million or 3.3% over the fourth quarter of 1999. Net earnings excluding these charges were $300,000, down from $1.5 million in the fourth quarter of 1999.
After the effect of the transition charges, sales for the quarter were $51.5 million, down $2.3 million or 4.2% from the fourth quarter of 1999. The net loss for the fourth quarter of 2000 after these charges was $5.7 million. The loss per share after the charges was 69 cents in the fourth quarter of 2000 compared with earnings per share of 18 cents in the fourth quarter of 1999.
Excluding the charges and reduction in sales for the distributor transition, sales for the year ended Dec. 31, 2000 were $228.7 million, a decrease of 7.0% from the $246.0 million reported in 1999. The net loss for fiscal 2000 was $2.1 million compared with net earnings of $4.9 million in 1999.
After the transition related charges, sales for the year were $224.6 million, a decrease of 8.7% from the prior year. The net loss after these charges was $8.1 million. The loss per share was 98 cents in 2000, compared with earnings per share of 57 cents in 1999.
"Two major factors lead to our loss for the year,” said Roger S. Marcus, Congoleum chairman of the board. “The first was the depressed condition of the manufactured housing industry. Shipments to this industry constitute a major portion of our volume and our large share of the market left us bearing the full burden of the decline.
“The second factor was the replacement of a major distributor, which entailed significant expense and temporarily disrupted sales. Unfortunately, the impact of these factors overshadowed the spectacular success of our new Ultima product line, which has lead to a resurgence of enthusiasm for Congoleum at the retail level."
Marcus also said the addition of Mohawk as a distributor is expected to increase Congoleum’s market penetration and expand its retail presence. “The popularity of Ultima gives us an opportunity to capitalize on the momentum with additional designs as well as new products with similar selling features,” he said. “Finally, the completion of our capital program provides highly efficient capacity to produce increased volume. The eventual recovery of the manufactured housing industry will further fuel this growth. With all these strengths, I believe Congoleum is poised for much greater success in the future."