Armstrong World Industries Inc. Reports Operating Results (10-Q)
Armstrong World Industries, Inc. has a market cap of $2.65 billion; its shares were traded at around $45.13 with a P/E ratio of 20.61 and P/S ratio of 0.93.
Highlight of Business Operations:Pricing Initiatives. We periodically modify prices in response to changes in costs for raw materials and energy, and to market conditions and the competitive environment. In certain cases, realized price increases are less than the announced price increases because of competitive reactions and changing market conditions. We estimate that prior pricing actions increased our second quarter total consolidated net sales by approximately $9 million and in the first six months of 2012 by approximately $17 million, when compared to the same periods of 2011.
Cost of goods sold in the second quarter of 2012 was 75.2% of net sales, compared to 75.3% for the same period in 2011. Cost of goods sold in the first six months of 2012 was 76.7% of net sales, compared to 75.9% for the same period in 2011. The comparison for both periods was impacted by approximately $19 million of costs associated with the closure of our Mobile, AL Building Products facility, $15 million of which was recorded in the first quarter of 2012.
SG&A expenses in the second quarter of 2012 were $114.2 million, or 16.1% of net sales, and in the first six months of 2012 were $230.8 million, or 16.8% of net sales, compared to $122.2 million, or 16.3% of net sales, and $242.3 million, or 16.9% of net sales, for the corresponding periods in 2011. The decreases were due to reductions in core SG&A expenses.
Equity earnings from our WAVE joint venture were $14.9 million for the second quarter of 2012 compared to $12.6 million in the second quarter of 2011, and $28.5 million for the first six months of 2012 compared to $29.0 million in first six months of 2011. See Note 6 to the Condensed Consolidated Financial Statements for further information.
Operating income decreased for the second quarter of 2012 as favorable pricing and higher earnings from WAVE were unable to offset volume declines, increased manufacturing costs associated with the commencement of operations at our Millwood, WV plant, severances associated with European SG&A headcount reductions, and environmental charges related to several U.S. plants. Operating income decreased in the first half of 2012 as improvements in price were unable to offset volume declines, higher manufacturing costs, increased SG&A expenses associated with investments in emerging markets, cost reduction actions and inflationary headwinds. Results for the first six months of 2012 were impacted by approximately $19 million of accelerated depreciation, impairment and other charges associated with the closure of our previously idled Mobile, AL plant, approximately $15 million of which were recorded in the first quarter. Results for the first six months of 2012 were also impacted by approximately $4 million of costs recorded in the first quarter of 2012 associated with the resolution of a labor dispute at our Marietta, PA plant.
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