Higher volumes in wood flooring and building products helped drive net sales higher at Armstrong World Industries (Lancaster, Pa.) in the second quarter of 2013, but rising lumber costs and higher labor costs drove operating income and net income down.
Net sales were up 4.6 percent compared with the same quarter in 2012, at $706.6 million, and net income for the quarter was $30.6 million, down 27.5 percent compared with the same quarter in 2012.
For wood flooring, net sales were up to $138.2 million for the quarter, a 10.7 percent increase over the same quarter in 2012, while operating income was down 81.9 percent. The company cited strong volume growth "aided by favorable price realization from pricing actions taken earlier in the year" and said the volume was driven by strong demand from independent distributors due to gains in new residential construction. It also cited share gains with independent distributors and the home center channel from new product introductions. Operating income was driven down due to rising lumber costs and higher labor costs as crews were added at several solid wood plants to accommodate increased demand.
"We were encouraged to see volume growth in most of our businesses and geographies in the second quarter, including our domestic commercial and residential businesses," said Tom Mangas, senior vice president and CFO, in a statement. "However, we continue to face manufacturing and lumber inflation headwinds in the wood business and now expect a lower commercial market opportunity in Europe for the remainder of the year. As a result, we are lowering our full-year earnings guidance." Management continues to expect sales in the $2.7 to $2.8 billion range, but now expects full year adjusted EBITDA to be in the range of $370 to $400 million.
The full second-quarter report can be found here.
