Dalton, GA, September 12, 2006--Tandus Group, Inc., in the second quarter reported adjusted EBITDA that increased to $20.7 million from $16.7 million for the same quarter of 2005.
As a percentage of sales, adjusted EBITDA was 19.2% for the second quarter of 2006 compared to 17.6% in the second quarter of 2005. The increase was principally due to higher sales volume in the Floorcoverings segment.
In the second quarter the company reported net sales of $108.1 million, an increase of 13.7% from $95.1 million for the thirteen weeks ended July 30, 2005.
Net sales of the company's floorcoverings segment were $101.0 million for the quarter as compared to $88.3 million for the comparable quarter of 2005, an increase of $12.7 million or 14.4%, primarily attributable to the North American operations.
Within these operations, the company's floorcoverings segment's net sales experienced a 10.7% increase in broadloom sales combined with an 11.5% increase in sales of structure-backed carpets (six-foot and carpet tile). The current quarter results reflect an increase in both Institutional sales (Healthcare, Education and Government) and Corporate sales, including Retail, of 11.0% and 12.0%, respectively.
The overall increase in the floorcoverings segment sales is primarily volume driven across all of its markets coupled with a slight increase in average selling prices. In addition, in the thirteen weeks ended July 30, 2005, the floorcoverings segment experienced lower sales in part due to complications related to the Company's transfer of its broadloom production from the Santa Ana, California facility to its Truro, Nova Scotia facility (the "Facility Maximization").
Net sales of the extrusion segment were $7.1 million for the thirteen weeks ended July 29, 2006 as compared to $6.8 million for the thirteen weeks ended July 30, 2005, an increase of $0.3 million or 4.4%. The increase in sales for the extrusion segment was due to overall higher demand from the Extrusion segment's external customers.
Cost of goods sold was $69.4 million, or 64.2% of sales, for the thirteen weeks ended July 29, 2006 as compared to $63.7 million, or 67.0% of sales, for the thirteen weeks ended July 30, 2005. The increase in cost of goods sold was primarily due to increased sales.
In addition, the company experienced increases in the prices of several key raw materials in the current quarter and the second half of fiscal 2005 that have carried over into the first half of fiscal 2006. Included in the 2005 period expenses was $2.3 million of costs related to the facility maximization. Excluding these costs, cost of goods sold for the thirteen weeks ended July 30, 2005 was $61.4 million, or 64.6% of sales.
Selling, general and administrative expenses for the thirteen weeks ended July 29, 2006 were $20.9 million, an increase of 5.6% from $19.8 million for the thirteen weeks ended July 30, 2005.
As a percentage of sales, total selling, general and administrative costs were 19.3% and 20.8% for the thirteen weeks ended July 29, 2006 and July 30, 2005, respectively. During the 2006 period, the company incurred an increase of approximately $1.9 million in legal and professional expenses. This increase was partially offset by lower samples expense of approximately $0.6 million.
The company experienced a foreign currency transaction gain of $0.1 million in each of the thirteen-week periods ended July 29, 2006 and July 30, 2005. Included in the 2005 period expense was $0.4 million of costs related to the facility maximization.
Net sales for the twenty-six weeks ended July 29, 2006 were $188.8 million, an increase of 15.5% from $163.4 million for the twenty-six weeks ended July 30, 2005. Net sales of the company's floorcoverings segment were $174.1 million for the twenty-six weeks ended July 29, 2006 as compared to $150.4 million for the twenty-six weeks ended July 30, 2005.
