SOURCE: American Biltrite Inc.
November 11, 2010 17:10 ET
American Biltrite Reports Third Quarter Results
WELLESLEY HILLS, MA--(Marketwire - November 11, 2010) - American Biltrite Inc. (NYSE Amex: ABL)
reported its results for the third quarter of 2010 today. During the third
quarter of 2010, American Biltrite's controlling ownership position of
Congoleum Corporation ("Congoleum") ended pursuant to Congoleum's Chapter
11 reorganization plan becoming effective. Therefore, American Biltrite
ceased consolidating Congoleum's results due to the loss of controlling
ownership. The historical results of Congoleum are included in American
Biltrite's financial statements as a discontinued operation. The
continuing operations of American Biltrite include American Biltrite's
tape, jewelry and Canadian divisions.
Net sales of the continuing operations for the three months ended September
30, 2010 were $53.8 million, up 15.5% from $46.5 million in the third
quarter of 2009. For the three months ended September 30, 2010, net income
from continuing operations was $2.0 million, or $0.59 per share (basic and
diluted), compared to net income from continuing operations of $386
thousand, or $0.11 per share (basic and diluted) for the third quarter of
2009. For the nine months ended September 30, 2010, net sales of the
continuing operations were $150.5 million compared with net sales of $128.5
million for the same period in 2009. For the nine months ended September
30, 2010, net income from continuing operations was $2.0 million, or $0.58
per share (basic and diluted), compared to a net loss from continuing
operations of $4.5 million, or $1.30 per share (basic and diluted) for the
first nine months of 2009.
Roger S. Marcus, Chairman of the Board, commented, "All of our operating
divisions were profitable in the third quarter of 2010 and showed
improvement over 2009. Results at the Tape division benefitted from
improving demand in Asian and domestic markets, but profit margins suffered
from significant raw material inflation that could not be passed along to
customers. Results at the Canadian division improved modestly as higher
sales of performance sheet rubber products offset lackluster demand for
flooring. Sales at K&M in the quarter were below year earlier levels, but
profitability improved as a result of cost reduction initiatives and a more
profitable mix of business."
Mr. Marcus continued, "This latest quarter continues to reflect the
significant improvements we've made in ABI's financial condition despite
the extraordinarily difficult conditions we've faced over the last 21
months. During 2009, we managed to generate significant cash from working
capital, reducing our debt load by $12.8 million or 50%. On July 1, 2010,
Congoleum's plan of reorganization became effective, resulting in
considerable improvement to our balance sheet and returning our
shareholders' equity to a level that meets the NYSE Amex listing
requirements. With this most recent quarter, ABI has returned to
profitability despite continued challenging industry and economic
conditions. We consider ABI's performance during this difficult period
something we can be proud of."
The Company's former subsidiary Congoleum Corporation filed a voluntary
petition for bankruptcy protection on December 31, 2003, with the United
States Bankruptcy Court for the District of New Jersey seeking relief under
Chapter 11 of the United States Bankruptcy Code as a means to resolve
claims asserted against it related to the use of asbestos in its products
decades ago. Congoleum's plan of reorganization was confirmed by the
United States District Court for the District of New Jersey on June 7, 2010
and became effective July 1, 2010. Upon effectiveness of Congoleum's plan
of reorganization, ABI's ownership interests in Congoleum were cancelled by
operation of the plan. Consequently, the results of reorganized Congoleum
are not included in the consolidated results of the Company subsequent to
June 30, 2010.
Congoleum's historical results through June 30, 2010, which ABI reported in
consolidation, included losses of $90.7 million in excess of the value of
ABI's investment in Congoleum. The deconsolidation of Congoleum in July
2010 resulted in the elimination from American Biltrite's consolidated
stockholders' equity of the accumulated deficit of $90.7 million attributed
to Congoleum. This $90.7 million was comprised of two components. One
component was the elimination of $37.1 million for prior period pension
adjustments recorded by ABI against accumulated other comprehensive income
on the balance sheet. The other component was the elimination of $53.6
million of operating losses charged against ABI's retained earnings. That
$53.6 million elimination was recorded as a non-cash gain from
deconsolidation in net income of discontinued operation.
The Company's net income attributable to controlling interests consists of
three components: the net income or loss of its continuing operations, the
results of the discontinued operation (net of non-controlling interests),
and the gain from deconsolidation of Congoleum. The following table
presents these amounts for the three and nine months ended September 30,
2010 and 2009 (in thousands, except per share amounts):
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
--------- -------- -------- --------
Income (loss) from continuing
operations $ 2,043 $ 386 $ 2,001 $ (4,488)
Results of discontinued operation,
net of non-controlling interests - (1,062) (627) (3,842)
Gain from deconsolidation 53,565 - 53,565 -
--------- -------- -------- --------
Net income (loss) attributable to
controlling interests $ 55,608 $ (676) $ 54,939 $ (8,330)
========= ======== ======== ========
Per share:
Basic $ 16.16 $ (0.20) $ 15.96 $ (2.42)
Diluted 16.13 (0.20) 15.95 (2.42)
Warning regarding forward-looking statements and certain risks
The above news release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, that
involve risks, uncertainties and assumptions. These forward-looking
statements are based on American Biltrite's expectations as of the date of
this release, of future events. American Biltrite undertakes no obligation
to update any of these forward looking statements, except as may be
required by the federal securities laws. Although American Biltrite
believes that these expectations are based on reasonable assumptions,
within the bounds of its knowledge of its business and experience, there
can be no assurance that actual results will not differ materially from
expectations. Any or all of these expectations may turn out to be
incorrect and any forward-looking statements made in this release speak
only as of the date of this release. Readers are cautioned not to place
undue reliance on any forward-looking statements. Actual results could
differ significantly as a result of various factors. For example, the
above news release indicates that all of American Biltrite's operating
divisions were profitable in the third quarter of 2010, that American
Biltrite has made significant improvements in its financial condition, that
American Biltrite generated significant cash from working capital during
2009 and that American Biltrite reduced its debt load during 2009. This
may imply that all of American Biltrite's operating divisions will remain
profitable, that American Biltrite will continue to improve its financial
condition, that American Biltrite will generate significant cash from
working capital and that it will maintain or further decrease its debt
load. However, American Biltrite continues to operate under difficult and
unpredictable business and industry conditions, and its operating divisions
may not remain profitable, its financial condition may not continue to
improve, and could decline, it may not generate significant cash from
working capital, and may realize reductions in its working capital, and its
debt load may need to increase. Further, this press release indicates that
American Biltrite's shareholders' equity has returned to a level that meets
the NYSE Amex listing requirements, which may imply that the NYSE Amex will
find that American Biltrite has regained compliance with its listing
requirements. However, there can be no assurance that the NYSE Amex will
find American Biltrite in compliance with its continued listing standards
or that American Biltrite will be able to maintain its listing with the
NYSE Amex.
The consummation of the Congoleum plan of reorganization does not affect
American Biltrite's own significant asbestos related liabilities. The
extent of American Biltrite's asbestos related liabilities and related
funding obligations, and the impact such liabilities may have on its
businesses, financial condition and results of operations, will depend on
various factors, many of which are beyond American Biltrite's control,
including: the future cost and timing of estimated asbestos liabilities
and payments; the extent to which asbestos related claims are made against
American Biltrite and the costs and timing associated with defending
against such claims; the availability of insurance coverage and
reimbursement from insurance companies that underwrote the applicable
insurance policies for asbestos-related claims; the availability of funds
to pay any such amounts for which insurance or other third party
reimbursements are not available; the extent to which resources are
diverted from American Biltrite's businesses to instead be applied to such
liabilities and related matters; the extent to which other defendants which
may be found to be jointly and severally liable with American Biltrite fund
their allocated portion of asbestos liabilities; and the impact any adopted
federal legislation addressing asbestos claims may have on American
Biltrite's businesses, results of operations or financial conditions.
Other factors that could cause actual results to differ from expectations
include: (i) any termination of American Biltrite's business arrangements
with Congoleum and possible conflicting demands on American Biltrite's
executive officers in light of American Biltrite's contractual obligations
to make those officers' services available to Congoleum; (ii) American
Biltrite's ability to comply with the covenants imposed on it under its
credit agreement, the availability of borrowings under its credit
facilities and its ability to generate sufficient operating cash flows to
fund its businesses and operations; (iii) the future cost and timing of
payments associated with and availability of insurance coverage for
environmental liabilities and non-asbestos product and general liability
claims; (iv) continued or increased volatility or high prices for raw
materials or energy and the availability of raw materials; (v) increased
competitive activity from competitors, some of which have greater resources
and broader distribution channels; (vi) unfavorable developments in various
markets for American Biltrite's or its subsidiaries' products or in the
national or global economy in general; (vii) shipment delays, depletion of
inventory and increased production costs resulting from unforeseen
disruptions of operations at any of American Biltrite's or its
subsidiaries' facilities or distributors; (viii) the incurrence of product
warranty costs; (ix) changes in customers for American Biltrite's or its
subsidiaries' products or the failure of customers to timely pay for
product purchased; (x) the failure of distributors or sales representatives
to adequately perform; and (xi) the loss of any key executives.
Other factors which may cause actual results to differ from expectations
include those set forth in American Biltrite's other filings with the
Securities and Exchange Commission, including its Annual Report on Form
10-K for the fiscal year ended December 31, 2009, Quarterly Report on Form
10-Q for the quarter ended June 30, 2010, and its subsequent filings.
AMERICAN BILTRITE INC.
RESULTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2010 AND 2009
($000, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
--------- --------- --------- ---------
Net sales $ 53,758 $ 46,524 $ 150,549 $ 128,451
Cost of products sold 39,722 33,663 110,559 96,422
Selling, general &
administrative expenses 12,241 12,394 36,964 36,316
--------- --------- --------- ---------
Income (loss) from operations 1,795 467 3,026 (4,287)
Interest and other income
(expense), net 970 332 (36) 118
Provision for income taxes 715 289 930 242
Noncontrolling interests (7) (124) (59) (77)
--------- --------- --------- ---------
Income (loss) from continuing
operations 2,043 386 2,001 (4,488)
Income (loss) from discontinued
operation, net of noncontrolling
interests (including gain on
deconsolidation of $53,565 in
the three months ended
September 30, 2010) 53,565 (1,062) 52,938 (3,842)
--------- --------- --------- ---------
Net income (loss) attributable
to controlling interests $ 55,608 $ (676) $ 54,939 $ (8,330)
========= ========= ========= =========
Basic income (loss) per share:
Income (loss) from continuing
operations per common share $ 0.59 $ 0.11 $ 0.58 $ (1.30)
Income (loss) from
discontinued operation per
common share 15.57 (0.31) 15.38 (1.12)
--------- --------- --------- ---------
Net income (loss)
attributable to controlling
interests per common share $ 16.16 $ (0.20) $ 15.96 $ (2.42)
========= ========= ========= =========
Diluted income (loss) per
share:
Income (loss) from continuing
operations per common share $ 0.59 $ 0.11 $ 0.58 $ (1.30)
Income (loss) from
discontinued operation per
common share 15.54 (0.31) 15.37 (1.12)
--------- --------- --------- ---------
Net income (loss)
attributable to controlling
interests per common share $ 16.13 $ (0.20) $ 15.95 $ (2.42)
========= ========= ========= =========
Weighted average number of
common and equivalent shares
outstanding
Basic 3,441,369 3,441,551 3,441,455 3,441,551
Diluted 3,446,871 3,441,551 3,445,151 3,441,551
AMERICAN BILTRITE INC.
RESULTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2010 AND 2009
BY SEGMENT
($000)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
--------- --------- --------- ---------
Revenues from external
customers
Tape products $ 25,765 $ 20,094 $ 73,295 $ 55,827
Jewelry 13,486 14,619 36,438 37,618
Canadian division 14,507 11,811 40,816 35,006
--------- --------- --------- ---------
Total revenues from external
customers $ 53,758 $ 46,524 $ 150,549 $ 128,451
========= ========= ========= =========
Segment profit (loss) before
taxes
Tape products $ 535 $ (590) $ (757) $ (4,276)
Jewelry 1,754 1,271 2,357 538
Canadian division 586 407 1,230 358
Corporate (expense) income (110) (289) 160 (789)
--------- --------- --------- ---------
Total segment income (loss)
before taxes $ 2,765 $ 799 $ 2,990 $ (4,169)
========= ========= ========= =========