Mercerville, NJ, November 10, 2005--Congoleum Corp. in the third quarter reported net income of $300,000, compared with $1.2 million in the third quarter of 2004. Diluted net income per share was $.04 for the third quarter of 2005, compared with $0.13 in the third quarter of 2004.
Net sales for the quarter were $60.5 million, compared with $58.9 million reported in the third quarter of 2004, an increase of 2.8%.
The company reported a net loss of $14.6 million, or $1.77 per share diluted for the first nine months of 2005. the loss includes a $15.5 million charge for asbestos liabilities. Excluding the asbestos-related charge, the Company would have had net income of $830,000, or $.10 per share diluted, for the nine months ended September 30, 2005. Net income in the first nine months of 2004 was $2.1 million, or $0.25 per share diluted.
Net sales for the first nine months of 2005 were $176.2 million, compared with $173.8 million reported in the first nine months of 2004, an increase of 1.3%.
Roger S. Marcus, Chairman of the Board, commented, "We faced some significant challenges in the third quarter which hurt our results. Costs for raw materials and energy, which had already increased significantly during the year, jumped again in the wake of hurricanes Katrina and Rita. In response, we instituted another price increase in October which should offset the latest cost increases at least partially in the fourth quarter and in full by next year. Unfortunately, this latest spike offset the third quarter margin recovery we had planned from price increases we initiated earlier in the year. In addition, our largest distributor reduced their inventory of our products by $1.8 million during the quarter as part of a broader inventory reduction program that we understand is now completed."
"On a positive note, while the hurricanes hurt us on the cost side, they also created an influx of orders for manufactured housing and RV products beginning in September that we expect will benefit us in the fourth quarter and hopefully into 2006. We are also encouraged by the continued sales strength of our industry leading 'Dura' products and excited about other new innovations we are bringing to market in 2006. Our programs to reduce operating expenses also continue to have a positive effect, as evidenced by the fact that we spent $2.4 million less in the third quarter of 2005 than the same period last year despite higher sales. If material costs can hold steady as our price increases catch up, we can see our margins return to more normal levels, which we hope will be the case as we move into 2006."
Mr. Marcus continued "On the reorganization front, we continue to negotiate settlements with insurers as we also press ahead to reach an agreement on a modified reorganization plan. With $164 million in court approved insurance settlements ready to fund our asbestos trust, we are making good progress toward getting a plan confirmed."
Mr. Marcus concluded "Finally, I am sad to say that the Board of Directors regretfully accepted the resignation of Cy Baldwin at its meeting today due to personal health reasons. Cy has been a director of Congoleum since its inception as a public company a decade ago, and I join my fellow directors in thanking him for his years of dedicated service and sage guidance. We will miss him greatly."
