Mercerville, NJ, November 9, 2006--Congoleum Corp. in the third quarter reported a loss of $400,000 compared with net income of $0.3 million in the third quarter of 2005. The net loss per share was $.05 for the third quarter of 2006, compared with net income per share of $.04 in the third quarter of 2005.
Sales for the three months ended September 30, 2006 were $57.5 million, compared with sales of $60.5 million reported in the third quarter of 2005, a decrease of $3.0 million or 5.0%.
Net income for the nine months ended September 30, 2006 was $0.4 million, or $.05 per share, versus a net loss of $14.6 million, or $1.77 per share, in the first nine months of 2005 (which included an asbestos related charge of $15.5 million). Sales for the nine months ended September 30, 2006 were $173.4 million compared with sales of $176.2 million in the first nine months of 2005.
Roger S. Marcus, chairman of the board, commented, "As previously reported, there was an explosion in late August on one of our two main resilient sheet production lines at the Marcus Hook facility. Fortunately, no one was hurt and the damage was limited to the oven section of the line. We were able to immediately replace about a third of the lost production capacity using our other line on a seven-day operation. We also made an arrangement with a competitor to provide the balance of our requirements. By the end of September we were nearly back to normal service levels as a result of these arrangements. While we estimate the incident cost us approximately $0.8 million in the third quarter due to excess costs, lost production and the impact of lost sales, I do not anticipate any further negative impact on fourth quarter performance. The equipment manufacturer, our insurance carrier, and our own employees should all be complimented for their timely response and support in expediting the line rebuilding process. At this time we expect the replacement line will be installed and running by the end of this year."
Mr. Marcus continued, "In addition to the impact of the production disruption, our third quarter sales suffered from an extremely slow retail environment, particularly in upper end remodel products, which is affecting the entire flooring category. On a positive note, our Duraproduct sales continue to show healthy growth despite this environment, and we are benefiting from the 2006 introduction of our K-Tech product line which we did not have at this time last year."
"The impact of the production line incident, the weak retail environment, and continuing cost increases on certain specialty raw materials all hurt our results for the quarter. However, the good news is that the line problems are behind us, costs for our core raw materials appear to have stabilized, and a September price increase of nearly 5% will help our margins going forward. While we will not have the hurricane-related business that took place in the fourth quarter of 2005, we expect increased Duraproduct sales and the addition of K-Tech will help replace some of that business."
On December 31, 2003, Congoleum Corporation filed a voluntary petition with the United States Bankruptcy Court for the District of New Jersey (Case No. 03-51524) seeking relief under Chapter 11 of the United States Bankruptcy Code as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago.
