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Breaking Flooring News

Armstrong reports first quarter results

May 9, 2003
Armstrong Holdings Inc. recently reported first quarter 2003 net sales of $774.9 million, about 3.6 percent higher than first quarter net sales of $748.0 million in 2002.

Excluding the effects of favorable foreign exchange rates of $35.3 million, consolidated net sales decreased by 1.1 percent.

Wood flooring sales increased while all other segment sales were lower primarily due to lower sales volumes.

First quarter 2003 operating income of $11.3 million compared to income of $40.5 million in the first quarter of 2002. The net effect of exchange rates on operating income was $0.4 million. The decline in operating income was primarily due to lower net sales, excluding the effect of foreign exchange rates, and from higher raw material costs, particularly lumber, natural gas and oil-based materials, Armstrong said.

In addition, there was a $6.4 million decrease in the U.S. pension credit in the first quarter of 2003 as compared to the prior year. The prior year results also benefited by $5.3 million from changes in long-term disability benefit policies. A restructuring charge of $3.2 million was recorded in the first quarter of 2003 as part of the restructuring plan to consolidate certain functions in the European Textiles and Sports Flooring and Resilient Flooring segments, compared to a $0.5 million restructuring charge in 2002 in the Textiles and Sports Flooring segment.

Resilient flooring net sales were $286.7 million in the first quarter of 2003 and $281.3 million in the first quarter of 2002. This 1.9 percent increase primarily resulted from favorable foreign exchange rates.

Operating income of $17.6 million in the quarter compared to operating income in the first quarter of 2002 of $18.8 million. This decrease was primarily due to higher raw material costs, lower volume and a 2002 benefit of $3.1 million related to changes in long-term disability benefit policies for certain employees. Additionally, 2003 included $0.9 million of restructuring charges.

Wood flooring net sales of $167.2 million in the first quarter of 2003 increased 3.9 percent from $160.9 million in the prior year. This increase was primarily driven by increased volume and by an improved mix of products. Operating income of $2.2 million in the first quarter of 2003 compared to $8.7 million in the first quarter of 2002. The decline in operating income was primarily attributable to increases in lumber costs.

Textiles and Sports Flooring net sales in the first quarter of 2003 increased to $62.0 million from $54.0 million. Excluding the effects of favorable foreign exchange rates of $12.3 million, sales were down 6.5 percent due to weak European markets. An operating loss of $6 million in 2003 compared to an operating loss in 2002 of $1.9 million. The 2003 results included restructuring charges of $2.3 million, as compared to restructuring charges in 2002 of $0.5 million.

Building Products net sales of $207.1 million in the first quarter of 2003 increased from $195.5 million in the prior year. Excluding the effects of favorable foreign exchange rates of $12.6 million, sales would have decreased by 0.5 percent, primarily due to lower sales volume in the U.S. and European commercial markets, partially offset by gains in the emerging markets of Eastern Europe. Operating income decreased to $17.8 million from operating income of $22.7 million in the first quarter of 2002. This decrease resulted from increases in natural gas costs, higher administrative expenses, and a 2002 benefit of $1.2 million related to changes in long-term disability benefit policies.

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