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ARMSTRONG WORLD INDUSTRIES INC is a global leader in the design and manufacture of floors ceilings and cabinets. Armstrongs consolidated net sales totaled approximately $3.5 billion. Based in LancasterArmstrong operates Forty plants in ten countries. Armstrong World Industries Inc. has a market cap of $2.19 billion; its shares were traded at around $38.15 with a P/E ratio of 29.1 and P/S ratio of 0.7. Highlight of Business Operations:SG&A expenses in the third quarter of 2009 were $156.8 million, or 20.8% of net sales compared to $145.9 million, or 15.7% of net sales for the corresponding period in 2008. SG&A expenses in the first nine months of 2009 were $421.3 million, or 19.8% of net sales, compared to $452.7 million, or 16.9% of net sales for the corresponding period in 2008. The change in expense for both the three and nine months was primarily due to reduced spending in all segments, offset by the $31.6 million accelerated stock compensation expense. The increase in SG&A expenses as a percent of net sales is due to the significant decrease in net sales.
Equity earnings from our WAVE joint venture were $12.8 million in the third quarter of 2009, compared to $16.4 million in the third quarter of 2008, and $30.1 million in the first nine months of 2009, compared to $48.1 million in the first nine months of 2008. See Note 7 for further information.
We recorded operating income of $44.0 million in the third quarter of 2009 compared to operating income of $82.2 million in the third quarter of 2008. We recorded operating income of $92.2 million in the first nine months of 2009 compared to operating income of $217.4 million in the first nine months of 2008.
Interest expense was $4.9 million in the third quarter of 2009 compared to $7.5 million in the third quarter of 2008. Interest expense was $13.9 million in the first nine months of 2009 compared to $23.7 million in the first nine months of 2008. The decrease in 2009 is primarily due to decreases in average interest rates and outstanding debt balances.
Income tax (benefit) expense was ($24.6) million and $36.9 million for the third quarter of 2009 and 2008, respectively. The effective tax rate for the third quarter of 2009 was -61.8% as compared to a rate of 48.6% for 2008. The effective tax rate for third quarter 2009 was significantly lower than 2008 due to the recognition of tax benefits related to the settlement of the IRS audit in July 2009. Income tax (benefit) expense was ($1.1) million and $94.4 million for the first nine months of 2009 and 2008, respectively. The effective tax rate for the first nine months of 2009 was -1.4% versus 47.0% for 2008. The effective tax rate for the first nine months of 2009 was lower than 2008 due to the recognition of tax benefits related to the settlement of the IRS audit in July 2009 partially offset by higher unbenefitted foreign losses. See Note 10 to the Condensed Consolidated Financial Statements.
Net earnings of $64.4 million for the third quarter of 2009 compared to net earnings of $38.9 million for the third quarter of 2008. Net earnings of $81.5 million for the first nine months of 2009 compared to net earnings of $106.5 million for the first nine months of 2008.
Read the The complete ReportAWI is in the portfolios of Richard Pzena of Pzena Investment Management LLC, Michael Price of MFP Investors LLC.
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