Article Number : 2363 |
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| Date | 8/29/2007 8:46:19 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=2363 |
| Abstract | LANCASTER, Pa., July 30 /PRNewswire-FirstCall/ -- Armstrong World Industries, Inc. today reported second quarter 2007 net sales of $920.6 million, up 4 percent, from $884.1 million in the same period for 2006. The sales increase includes a $16 million benefit from foreign exchange... |
| Article | LANCASTER, Pa., July 30 /PRNewswire-FirstCall/ -- Armstrong World Industries, Inc. today reported second quarter 2007 net sales of $920.6 million, up 4 percent, from $884.1 million in the same period for 2006. The sales increase includes a $16 million benefit from foreign exchange. Reported operating income from continuing operations grew to $94.2 million from $82.1 million in the second quarter of 2006. Adjusted operating income from continuing operations of $93.8 million increased 18 percent compared to $79.2 million in the prior year quarter on the same basis. The Company uses adjusted income from operations in managing the business, and believes the adjustments provide users of this financial information with meaningful comparisons of operating performance between periods. Adjusted income excludes the impact of fresh-start reporting, restructuring charges and related costs, and certain other gains and losses. As detailed in the attached reconciliation to GAAP, these adjustments decreased operating income by $0.4 million in the second quarter of 2007 and $2.9 million in the second quarter of 2006. Performance in the second quarter of 2007 reflects a continuation of the trends experienced in the first three months of the year. Both sales and operating income sustained growth, with adjusted operating income increasing $15 million year-over-year, despite significant weakness in the U.S. residential markets. Growth in our commercial products and in our international businesses combined with improved manufacturing performance to more than offset downward pressure on sales of residential products. Segment Highlights Resilient Flooring net sales were $322.9 million in the second quarter of 2007 and $315.4 million in the same period of 2006. Excluding the favorable impact of foreign exchange rates, net sales were flat. Volume growth in Europe and improved product mix in North America offset lower volume of residential vinyl products. Reported operating income was $20.9 million in the quarter, up from $17.7 million in the second quarter of 2006. Adjusted operating income grew to $18.7 million from $10.6 million on the same basis in the prior year period as reduced manufacturing expense and lower SG&A leveraged flat sales. Wood Flooring net sales of $211.7 million in the second quarter declined 5 percent from $222.6 million in the prior year as volume declines related to the residential housing market slowdown more than offset the benefit from previously announced acquisitions. Reported operating income was $21.7 million in the quarter compared to income of $18.2 million reported in the second quarter of 2006. Adjusted operating income of $18.3 million declined from income of $22.2 million on the same basis in the prior year period. The reduction in operating income was due to the decline in sales volume, unfavorable product mix and higher lumber prices, which offset improved manufacturing productivity and reduced SG&A. Building Products net sales of $322.1 million in the second quarter of 2007 increased from $287.4 million in the prior year. Excluding the effects of favorable foreign exchange rates of $9 million, sales increased by 9 percent due to volume growth in Europe and both price realization and improved product mix across all geographies. Reported operating income increased to $58.8 million from $53.2 million in the second quarter of 2006. Adjusted operating income of $63.4 million grew from $53.4 million on the same basis in the prior year period. The growth was driven by improved price realization, better product mix and improved manufacturing productivity. These benefits were partially offset by inflation in raw materials and by higher SG&A supporting sales growth. Cabinets net sales in the second quarter of 2007 of $63.9 million increased 9 percent from $58.7 million in 2006 on higher volume. Reported operating income for the second quarter of $4.4 million improved from $2.1 million in the prior year due to sales growth, partially offset by manufacturing cost increases. There were no material adjustments to operating income in either period. Unallocated corporate expense of $11.6 million in 2007 increased from $9.1 million in 2006. Adjusted expense of $11.0 million increased from $9.1 million on the same basis in the prior year, primarily due to the impact on the U.S. pension credit of unfavorable demographic changes and to higher incentive compensation. Year-to-Date Results For the six months ended June 30, 2007, net sales were $1,784.0 million compared to $1,706.3 million in 2006. Excluding a $32 million favorable impact from exchange rates, net sales increased by 3 percent. Improvement in both price and product mix offset modest volume declines. Reported operating income for the first six months was $159.7 million compared to operating income of $129.3 million for the same period in 2006. Adjusted operating income of $155.7 million increased 22 percent compared to adjusted operating income of $127.4 million in the prior year period. Operating income grew due to benefits from price realization and manufacturing productivity in excess of inflation, and to improved product mix. Outlook Global macroeconomic indicators suggest a diverse outlook for key markets for 2007. Based on these indicators, we expect flat-to-modest growth across North American and European commercial markets, and sustained growth in the Pacific Rim. The outlook for North American residential markets is uncertain due to the continuing weakness in U.S. housing starts and mixed indicators for renovation. On a consolidated basis, improved prices and increased manufacturing productivity are anticipated to offset cost inflation. |