Armstrong World Industries, a global manufacturer of floors, ceilings and cabinets, reported net sales of $748.6 million for its second fiscal quarter, a 3.3% rise over sales of $724.8 million in the same quarter a year ago.
Net income for the quarter, which ended June 30, was $37.9 million. This compares with $26.8 million in the second quarter of 2010, a 41.4% increase.
Excluding a $24 million favorable foreign exchange impact for the quarter, sales were relatively flat compared with the prior-year period. On a consolidated level, price and mix were able to offset broad volume declines in all businesses and geographies, except in the wood business and in Asia where volume grew. Volume declines in the European flooring markets reflect the exit from the residential flooring business in the fourth quarter of 2010, and the simplification of the company’s country and product offerings in Europe. Excluding the impact of these actions, volumes in European flooring showed slight improvement, the company said.
In the building products segment, net sales increased 7.2% to $305 million. The increase in net sales was driven by favorable foreign exchange of approximately $12 million and better price and mix, which were partially offset by lower volumes in the Americas and Western Europe, the company said.
Net sales in vinyl flooring decreased slightly (0.5%) to $274.7 million. Wood flooring rose by 5% to $133.6 million. Price, volume and mix were all positive contributors to the latter category, the company said.
In cabinets, net sales dropped 5.1% to $35.3 million. The company attributed this to a less favorable product mix.
"I am pleased to announce that, on an adjusted basis, EBITDA was up 24% from Q2 2010 levels, on relatively flat sales," said Matt Espe, president and CEO. "Volumes were down in most of our business, reflecting the cautionary economic environment in which we continue to operate. We were, however, able to achieve increased profitability through the continued execution of our cost-savings plans, pricing ability, mix gains from new products and leverage of LEAN investments."
Management's macroeconomic outlook for 2011 is down slightly from the beginning of the year, when U.S. and Western European markets were expected to be relatively flat. Management projected new home starts in the United States to be around 600,000, and anticipated repair and remodel activity in North America to be flat to slightly down, and commercial repair remodel activity to be slightly up. "We now expect our residential and commercial end markets opportunity to be slightly lower, as the domestic economic recovery appears to be delayed," said Tom Mangas, senior VP and CFO. "We continue to expect emerging markets' GDP to continue to grow in the high single-digit range."