Armstrong World Industries has reported a fourth quarter net income of $10.8 million, which is a 17.4% increase from 2012’s $9.2 million fourth quarter net income.
Consolidated net sales increased by approximately 8% to $49 million from the prior year period. The increase in sales was driven by higher volumes and pricing in wood flooring and higher volumes across all geographies in building products, with pricing, volume and mix all positive at a consolidated level.
Resilient flooring net sales for the quarter declined from $212.2 million to $208.2 million, while wood flooring sales sales rose from $107.8 million to $133.1 million. According to Armstrong, the higher volumes were driven by strong demand from the home center channel and independent distributors.
Despite the increase in sales, operating income declined due to increases in manufacturing and input costs driven by rising lumber prices and plant start up costs in Russia. Additionally, SG&A expenses increased to support emerging market and architectural specialties growth initiatives. The comparison was also impacted by approximately $8 million associated with cost reduction actions in the Resilient Flooring businesses in Europe and Australia .
Net income and earnings per share were positively impacted by a reduction in income tax expense driven by increased tax credit benefits when compared to the prior year period. Earnings per share also benefited from the Company's $260 million share repurchase in the third quarter of 2013.
"Fourth quarter sales results were in the middle of our guidance range, while weaker than expected global flooring sales and continued lumber inflation resulted in adjusted EBITDA near the low end of our guidance range," said Matt Espe, CEO. "Despite this softness, both our global resilient flooring and ceilings businesses achieved the highest fourth quarter adjusted EBITDA results since emergence."
Improved volumes in all geographies and better price realization and favorable mix, resulted in an ncrease of net sales for building products. Despite the increase in sales, operating income was mostly flat as the margin impact of higher volumes, improved price and higher earnings from WAVE were offset by increased SG&A expenses to support emerging market and architectural specialties growth initiatives and increases in manufacturing and input costs driven by rising raw materials and plant start up costs in Russia.