Mercerville, NJ, August 9--Congoleum Corp. in the second quarter reported a net loss of $14.6 million or $1.77 per share, which included a $15.5 million charge for asbestos liabilities. In the second quarter of 2004 the company reported net income of $1.4 million or $0.16 a share. Sales for the quarter were off 7.7% to $58.1 million.
For the first six months of 2005 the company reported a net loss (after the asbestos related charge of $15.5 million) of $15.0 million, or $1.81 per share, versus net income of $900,000, or $0.11 per share, in the first six months of 2004.
Sales for the six months were $115.7 million, compared with sales of $115.0 million reported in the first six months of 2004, an increase of 0.6%.
Roger S. Marcus, chairman of the board, commented, "We would have had a slight profit in the quarter were it not for the asbestos charge. While our operating results trailed the second quarter of last year, I consider them satisfactory in light of the challenges we faced. The most significant of these was that as part of a broader reduction initiative, our largest distributor reduced its inventory of our products by $4.4 million, which negatively affected our gross profit in the quarter by over $1 million.
"Another factor that negatively impacted our operating performance this past quarter was the raw material situation. While raw material costs appear to have peaked, our price increases have yet to offset the cumulative impact of the inflation we have experienced. In addition, our plant efficiencies were hurt by the need to test and qualify new raw material sources."
Marcus continued, "The good news is that the worst of the raw material situation appears to be behind us. We are hopeful that material prices may even soften during the balance of the year, at least partially closing the gap between our cost increases and what we have been able to pass along in pricing. We believe we've resolved the formulation difficulties with our new materials, which should help our manufacturing performance.
"On the sales side, our DuraCeramic product continues to sell well and we are optimistic about its continued growth. In addition, the manufactured housing market has shown some signs of improvement. We also remain focused on controlling operating expenses."
Marcus finished by saying, "On the reorganization front, we've recently filed a new plan with the court and the related disclosure statement was approved July 28, 2005. We will begin soliciting acceptances of the latest plan shortly and a confirmation hearing is scheduled for December 13. As this quarter's charge indicates, these proceedings are painfully expensive and we are striving to get through them as rapidly as possible."
