Dalton, GA, Sept. 9--Tandus Group, Inc., which includes Collins & Aikman Floorcoverings and subsidiaries, reports earnings for the second quarter (13 weeks) and six months year-to-date (26 weeks) ended July 26.
Revenues for the 13 weeks ended July 26 were $93.9 million compared to $99.9 million for the prior year. Selling, general and administrative expenses for the 13 weeks ended July 26 were $21.0 million compared to $19.0 million for the prior year. Adjusted EBITDA for the 13 weeks ended July 26 was $18.2 million compared to $22.4 million for the prior year. As a percentage of sales, adjusted EBITDA margin for the 13 weeks ended July 26 was 19.4% compared to 22.5% for the prior year.
The decrease in revenues was due to the slow demand throughout the U.S. specified commercial market, in particular the corporate office market. While corporate office market sales were off, the company's core end markets (institutional end markets of education, healthcare, and government) were only slightly lower than prior year.
Selling, general and administrative expenses increased primarily due to increased salaries and benefits of $0.3 million, professional services of $0.8 million, marketing and promotional expenses of $1.0 million. Those expenses were partially offset by lower sales commissions of $0.5 million, and amortization of $0.5 million. The majority of these increases (excluding amortization) were incurred in support of the company's new selling strategy implemented at the beginning of the fiscal year. Subsequent to the quarter end, the company voluntarily prepaid $6.0 million in term loans.
Revenues for the 26 weeks ended July 26 were $165.5 million compared to $166.3 million for the prior year. Selling, general and administrative expenses for the 26 weeks ended July 26 were $40.0 million compared to $36.3 million for the prior year.
Adjusted EBITDA for the 26 weeks ended July 26 was $28.4 million compared to $31.8 million for the prior year. As a percentage of sales, adjusted EBITDA margin for the 26 weeks ended July 26 was 17.2% compared to 19.1% for the prior year.
The decrease in revenues was due to the slow demand throughout the U.S. specified commercial market, in particular the corporate office market, partially offset by the inclusion of extrusion's revenues for the full twenty-six weeks for 2003 compared to approximately 12 weeks in 2002 due to the Extrusion acquisition date of May 8, 2002.
Revenues to the company's institutional end markets were flat for the 26 weeks year-to-date comparison. Selling, general and administrative expenses increased primarily due to increased salaries and benefits of $1.3 million, sampling expenses of $0.2 million, marketing and promotional expenses of $1.4 million, partially offset by lower sales commissions of $0.8 million. and amortization of $1.1 million. A portion of these increases (excluding amortization) were incurred in support of the company's new selling strategy implemented at the beginning of the fiscal year and to support a number of new floor covering product lines which were recently introduced.
In late 2002, the company announced a new sales and marketing strategy that responds to customer needs and shifting market demands. Operating as an umbrella organization, Tandus has designed an efficient selling strategy to better leverage its product brands--C&A Floorcoverings, Monterey Carpets and Crossley Carpet Mills. The three brands' sales organizations have combined products and services to create a single point of contact for customers seeking single source floor covering solutions.
