Mercerville, NJ, Nov. 11--Congoleum Corporation today reported its financial results for the third quarter ended September 30.
Sales for the three months ended September 30 were $61.1 million, compared with sales of $57.7 million reported in the third quarter of 2002, an increase of 5.9%. Net income for the quarter ended September 30, 2003 was $1.3 million versus net income of $.6 million in the third quarter of 2002.
Earnings per share for the quarter ended September 30 was $.15, compared with earnings per share of $.07 in the third quarter of 2002. Net earnings in the third quarter included $1.6 million from the recognition of tax benefit realized as a result of net operating loss carry back claims received.
Sales for the nine months ended September 30 were $169.7 million, compared with sales of $183.6 million reported in the first nine months of 2002, a decrease of 7.6%. The net loss for the nine months ended September 30 was $3.3 million, or $.40 per share, versus net income (before a required accounting change) of $.7 million, or $.09 per share, in the first nine months of 2002. The required accounting change recorded in the first quarter of 2002 was a non-cash transition charge of $10.5 million, or $1.27 per share, for impairment of goodwill as required for adoption of Statement of Financial Accounting Standards No. 142.
Roger S. Marcus, Chairman of the Board,
commented "Third quarter results were negatively affected by $.4 million in severance expense due to an August layoff and by a major distributor's decision to reduce inventory levels, which I estimate cost us $1-2 million in sales in September. Despite this inventory reduction, sales in the third quarter increased over both the prior quarter and the third quarter of last year, as a result of newly introduced products as well as the continued success of products designed for the builder market and some improvement in sales to the manufactured housing industry. Operating results for the third quarter were below the third quarter of 2002 due to higher costs for raw materials, pensions, medical benefits, insurance, and energy and a less profitable sale mix. However, we have initiated a number of cost reduction steps this year to offset these increases, and the benefit of these efforts can be seen in the improvement in results in the third quarter over the second quarter. We expect our profit margins in the future will continue to benefit from the steps we have taken, as well as from a 3-5% price increase announced in September.
"The improvement in financial results from the second to the third quarter is but one of several positive developments. We also just signed a second five year labor contract, giving us long term agreements through 2008 covering our two largest plants. On the new product front, one of our recent introductions has far surpassed our expectations. Finally, as we just announced, the voting process on our pre-packaged plan of reorganization has now commenced, another major milestone. We expect our reorganization case will be filed around the end of this year, and we will be pursuing a prompt confirmation of our plan. The prospect of putting the reorganization behind us, combined with our sales momentum and the significant reductions we have made in our costs, could make 2004 a better year for Congoleum."
