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[August 2006]
American Standard Announces Second-Quarter Results
American Standard Companies Inc (Piscataway, NJ, USA) has announced second quarter net income per diluted share of 93 cents in accordance with Generally Accepted Accounting Principles (GAAP). Net income per diluted share was 92 cents excluding the impact of operational consolidation expenses and benefits from tax items and an asset sale. The company had estimated net income per diluted share of 87-93 cents on a GAAP basis and 90-96 cents on an adjusted basis. Sales for the quarter were a record US$2.991 billion, up 8.6% from the prior year and up 8.1% excluding the impact of foreign exchange."We had a good quarter with continued healthy sales growth, strong order backlog in our air conditioning business and progress on our Bath and Kitchen improvement initiatives," said Fred Poses, Chairman and CEO.
GAAP net income for the quarter was US$191.7 million, down 7.8% from US$207.9 million in Q2/2005. Adjusted net income was up 1.2%, including stock option expensing and excluding operational consolidation expenses and benefits from tax items and an asset sale. GAAP net income per diluted share was the same as last year after reducing second quarter 2005 net income by 2 cents for stock option expensing. Net income per diluted share was up 5.7%, when adjusted to include stock option expensing and exclude operational consolidation expenses and benefits from tax items and an asset sale.
Among comments on the constituent businesses, Mr Poses said: "Bath and Kitchen sales improvements are taking longer than we expected, but the business achieved higher sales and segment income compared with first quarter and is making operational progress. During the quarter, the company experienced higher commodity costs and continued to invest in new products and marketing for long-term growth".
Bath and Kitchen sales were US$621 million, down 4.3% (down 4.8% excluding foreign exchange effects) from the prior year because of sales declines in the Americas. Segment income was US$4.7 million, down from US$35.6 million in Q2/2005. The decline in segment income was caused by lower sales and production volumes as well as higher commodity costs. The impact of these items exceeded benefits from improved pricing, material savings and previous operational consolidations. Adjusted segment income was US$12.5 million excluding foreign exchange effects, operational consolidation expenses and an asset sale.
In the USA, the company continued to see good early customer demand as it completed rollout of the new Lifetime™ whirlpool tubs and continued the introduction of the Cadet 3™ toilet and faucets with the EverClean™ finish and Speed Connect™ drain. In the UK, about 1,200 distributors and retailers attended a launch event for several new products and Bath and Kitchen participated in events for architects and designers in Bucharest and Moscow.
Ideal Standard's 'm-tech' thermostat technology was honoured as 'Product of the Year 2006' by EDT, a European association of wholesalers. In China, Bath and Kitchen won contracts for a variety of new construction projects associated with the 2008 Olympics in Beijing, including several sports stadiums, the Qingdao yacht centre, the Qinhuangdao football training centre and Marco Polo Hotel. Bath and Kitchen also opened a new Bathaus in Guangzhou, China, its fifth flagship showroom in Asia. New commercial sales included ones for Ergife Palace Hotel (Rome, Italy); Kolter Communities (West Palm Beach, FL, USA.); Trump Marina Hotel and Casino (Atlantic City, NJ, USA); and WCI Communities (Bonita Springs, FL, USA).
"As part of our initiatives to rebuild Bath and Kitchen's profitability, we have announced plans to consolidate our ceramics manufacturing operations in the United Kingdom," said Mr Poses. "These plans will result in the elimination of about 235 jobs at our Hull plant and relocation of the ceramics production to more cost-effective locations. This action will cost about $15 million ($10.5 million after taxes) and generate annual savings of about $10 million, starting next year. We very carefully consider any plans that affect people's jobs and believe these and any possible future actions are essential to improve Bath and Kitchen's profitability and continue to build its global competitiveness."
www.americanstandard.com
ENDS