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Propex Fabrics Inc net revenues rise 14.9% in Q1 2005
17 May '05
7 min read
We experienced significantly higher volumes across industrial fabrics products, particularly in our packaging product line. The Europe geographic region experienced revenue growth in the first quarter of 2005 as a result of higher prices offset by lower carpet industry volumes. Brazilian net revenue increased primarily as a result of increased selling prices and strengthening of the Brazilian real versus the U.S. dollar.The following table summarizes revenue performance in the first quarter of 2005 versus the first quarter of 2004:
Cost of Sales
Cost of sales increased 12.4% from $121.6 million in the first quarter of 2004 to $136.7 million in the first quarter of 2005. The increase in cost of sales primarily reflects the significant increase in the cost of polypropylene, along with a $3.4 million expense related to the amortization of purchase accounting related inventory fair value adjustments. These additional costs were partially offset by lower postretirement benefits, the absence of a LIFO adjustment expense, lower depreciation and lower non-recurring charges. As a percentage of net revenue, cost of sales decreased from 86.5% in the first quarter of 2004 to 84.6% in the first quarter of 2005. Notwithstanding our ability to pass along the majority of the increased resin costs, raw materials still increased as a percentage of our overall cost of sales and revenue.
Selling, General and Administrative Expenses
Selling, general and, general and administrative expenses increased from $12.8 million in the first quarter of 2004 to $14.5 million in the first quarter of 2005. As a percentage of net revenue, selling, general and administrative expenses were 9.1% in the first quarter of 2004 and 9.0% in 2005. In North America, administrative costs increased during the first quarter of 2005 due to the amortization of intangible assets established under purchase accounting, and the inclusion of certain stand-alone costs such as insurance costs and one- time acquisition accounting costs. In 2004, BP corporate cost allocations were treated as a reconciling item and excluded from segment results. Included within selling, general and administrative expenses is our research and development expense, which totaled $1.7 million in the first quarter of 2004 and the first quarter of 2005.
Cost of Sales
Cost of sales increased 12.4% from $121.6 million in the first quarter of 2004 to $136.7 million in the first quarter of 2005. The increase in cost of sales primarily reflects the significant increase in the cost of polypropylene, along with a $3.4 million expense related to the amortization of purchase accounting related inventory fair value adjustments. These additional costs were partially offset by lower postretirement benefits, the absence of a LIFO adjustment expense, lower depreciation and lower non-recurring charges. As a percentage of net revenue, cost of sales decreased from 86.5% in the first quarter of 2004 to 84.6% in the first quarter of 2005. Notwithstanding our ability to pass along the majority of the increased resin costs, raw materials still increased as a percentage of our overall cost of sales and revenue.
Selling, General and Administrative Expenses
Selling, general and, general and administrative expenses increased from $12.8 million in the first quarter of 2004 to $14.5 million in the first quarter of 2005. As a percentage of net revenue, selling, general and administrative expenses were 9.1% in the first quarter of 2004 and 9.0% in 2005. In North America, administrative costs increased during the first quarter of 2005 due to the amortization of intangible assets established under purchase accounting, and the inclusion of certain stand-alone costs such as insurance costs and one- time acquisition accounting costs. In 2004, BP corporate cost allocations were treated as a reconciling item and excluded from segment results. Included within selling, general and administrative expenses is our research and development expense, which totaled $1.7 million in the first quarter of 2004 and the first quarter of 2005.
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