Dalton, GA, Dec. 9--Tandus Group, Inc., which includes Collins & Aikman Floorcoverings, Inc., and Subsidiaries, reports earnings for the third quarter (13 weeks) and nine months year-to-date (39 weeks) ended October 25.
"In spite of a tough specified commercial market, I am pleased that our core markets continue to hold up while the corporate office market, particularly our broadloom businesses have been more impacted," stated Mac Bridger, CEO of Tandus. "Notwithstanding the adverse economic climate, we were able to voluntarily prepay $10.0 million of bank term loans through excess cash flow."
Revenues for the 13 weeks ended October 25 were $74.1 million compared to $84.3 million for the prior year. Selling, general and administrative expenses for the third quarter were $18.6 million compared to $17.9 million for the prior year. Adjusted EBITDA for the 13 weeks ended October 25 was $9.4 million compared to $13.1 million for the prior year. As a percentage of sales, Adjusted EBITDA margin for the third quarter was 12.7% compared to 15.5% 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. Selling, general and administrative expenses increased primarily due to increased salaries and benefits of $0.3 million, professional services of $0.6 million, sampling expenses of $0.6 million, marketing and promotional expenses of $0.3 million, partially offset by foreign currency gains of $1.3 million, lower sales commissions of $0.4 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. Additionally, the company voluntarily prepaid $10.0 million in term loans during the 13 weeks ended October 25.
Revenues for the 39 weeks ended October 25 were $239.6 million compared to $250.6 million for the prior year. Selling, general and administrative expenses for the 39 weeks ended October 25 were $58.6 million compared to $54.2 million for the prior year.
Adjusted EBITDA for the 39 weeks ended October 25 was $37.8 million compared to $44.9 million for the prior year. As a percentage of sales, Adjusted EBITDA margin for the 39 weeks ended October 25 was 15.8% compared to 17.8% 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 39 weeks for 2003 compared to approximately 25 weeks in 2002 due to the Extrusion acquisition date of May 8, 2002.
Revenues to the company's institutional end markets were slightly down for the 39 weeks year-to-date comparison. Selling, general and administrative expenses increased primarily due to increased salaries and benefits of $1.6 million, professional services of $0.6 million, sampling expenses of $1.0 million, marketing and promotional expenses of $2.2 million, partially offset by lower sales commissions of $1.2 million, foreign currency gains of $1.5 million, and amortization of $1.6 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.
