Armstrong World Industries has released its second quarter results.
Second Quarter Results from Continuing Operations
Consolidated net sales increased slightly to $710.0 million compared to $706.6 in 2013 driven by favorable price and mix which offset lower volumes in the Americas and Europe across all businesses, according to the company.
According to Matt Espe, CEO, despite the increase in sales, operating income and net income both declined. Manufacturing and input costs increased driven primarily by rising lumber costs and the margin impact of lower volumes, only partially offset by favorable price and mix. Results for the second quarter of 2014 were also impacted by approximately $8 million for severance and other charges primarily associated with the decision to close the company's resilient flooring plant in Thomastown, Australia and its engineered wood flooring plant in Kunshan, China.
"Despite soft sales, we delivered second quarter adjusted EBITDA in the middle of our guidance range," he noted. "The softer demand environment we experienced in the quarter and first half of 2014 has tempered our outlook for the back half of the year."
Second Quarter Segment Highlights
Resilient flooring net sales declined 2% from $252.1 million in 2013 to $247.1 due to lower volumes in the Americas and Europe which were only partially offset by positive contributions from mix. Operating income declined driven by the margin impact of lower volumes, higher depreciation charges for plant investments and higher input costs which were only partially offset by manufacturing productivity improvements. The comparison was also impacted by $2 million of severance and other charges related to the closure of our Thomastown, Australia facility and cost reduction actions in EMEA in the second quarter.
Net sales of wood flooring improved slightly .9% from $138.2 million in 2013 to $139.4 as improvements in price and mix more than offset volume declines.
Net sales of building products improved 2.3% from$316.3 million in 2013 to $323.5 driven by positive mix and price which more than offset the impact of lower volumes. Operating income was essentially flat in the second quarter of 2014 as improved price and mix and higher earnings from WAVE were offset by higher manufacturing, primarily depreciation charges for plant investments, and input costs.
Operating income declined due to increases in manufacturing and input costs driven by rising lumber costs and the margin impact of lower volumes, but gross profit still improved over the prior year period driven by favorable price and mix. However, results were impacted by approximately $4 million of idle equipment impairment charges and $3 million of severance and other charges associated with the closure of our engineered wood flooring plant in Kunshan, China.
