Congoleum Corp.
Address:
3705 Quakerbridge Road
P.O. Box 3127
Mercerville, New Jersey 08619-0127
U.S.A.
Telephone: (609) 584-3000
Fax: (609) 584-3555
http://www.congoleum.com
Statistics:
Public Company
Incorporated: 1911 as The United Roofing & Manufacturing Co.
Employees: 1,320
Sales: $263.1 million (1995)
Stock Exchanges: New York
SICs: 2821 Plastics Materials, Synthetic Resins & Nonvulcanizable Elastomers; 3081 Unsupported Plastics Film & Sheet
Company Perspectives:
For decades, Congoleum products have been an integral part of the American home. Our motto, "Floors For The Way You Live," is becoming one of the most recognized in the industry. We have over 1,000 combinations of designs and colorations, across our 40 tile and sheet products. Our products serve markets from residential remodeling to manufactured housing to commercial flooring.
Company History:
Congoleum Corp., a manufacturer of vinyl sheet and tile products is among the nation's largest manufacturers of resilient vinyl flooring products, for both commercial and residential markets. Its corporate history includes such industry highlights as the introduction of the first no-wax floor and the first chemically embossed vinyl-sheet floor. Throughout a complex corporate history the Congoleum name has remained a constant. In 1995 American Biltrite Inc. secured a majority of Congoleum's voting power, and its chairman and chief executive officer also became Congoleum's chairman, president, and chief executive officer. Therefore, although nominally independent and publicly traded, Congoleum became in effect a subsidiary of American Biltrite.
Congoleum and Nairn, 1886-1924
By 1910 a new type of smooth-surfaced floor covering known as printed felt base had come into existence as an economical alternative to floorcloth and linoleum. The United Roofing & Manufacturing Co. was formed in 1911 to manufacture this waterproof floor covering, which was marketed under the registered name of Congoleum. Soon this entity became The Congoleum Co., a Pennsylvania corporation wholly controlled and operated by The Barrett Co. It was reincorporated in New York in 1919 as the Congoleum Co., Inc., with Barrett retaining a substantial interest until its holdings of preferred stock were reacquired by Congoleum in 1922. The company's plant, in 1920, was in Marcus Hook, Pennsylvania--a location the company still retained 75 years later. It had its general office in Philadelphia and display rooms and warehouses in New York City, Chicago, and San Francisco. Additional warehouses were located in Pittsburgh, Galveston, Minneapolis, and several other U.S. cities. Congoleum added to its line by acquiring Farr & Bailey Manufacturing Co., a Camden, New Jersey, linoleum maker, in 1920, and it purchased the Salem, New Jersey, plant of the Salem Manufacturing Co. in 1923 for additional felt-base production. It began making felt at a Maryland plant about the same time.
In 1924 Congoleum acquired Nairn Linoleum Co. and became Congoleum-Nairn, Inc. Michael Nairn was said to have been the founder in Scotland of the floorcloth industry. His son, Sir Michael Baker Nairn, was chairman of Michael Nairn & Co., Ltd. of Kirkaldy, Scotland, and in 1886 founded the Nairn Linoleum Co. Invented in 1860, linoleum constituted a more upscale product than printed felt base. Nairn's head office and linoleum plant were in Kearny, New Jersey.
Congoleum-Nairn, 1924-50
Congoleum-Nairn made Nairn's headquarters its own. A. W. Erickson of Congoleum became its chairman and Sir Michael Nairn its vice-chairman, but active management was headed by Alfred W. Hawkes, the president, who remained in this position until 1941. (He later became a U.S. senator from New Jersey.) Congoleum-Nairn had gross revenue of $10.4 million in 1925 and total income of $4.5 million, about half of which apparently came from patent royalties rather than from sales of its manufactured products. The years 1926 to 1930, during which the company suspended its annual dividend, were not as profitable, although it never lost money. It resumed its dividend in 1931 and sailed through the Great Depression with a comfortable profit each year.
By 1940 Congoleum-Nairn had become the leading producer of felt-base, smooth-surfaced floor coverings, which it sold under the tradenames Gold Seal Congoleum and Crescent Seal Congoleum. It was also producing a substantial quantity of linoleum under the tradenames Nairn, Nairn Sealex, and Nairn Treadlite. In addition it was producing linoleum paste, cement, self-polishing wax, and floor-laying and floor-maintenance accessories. It held minority interests in the Congoleum Co. of Canada, Ltd. and Michael Nairn of Greenwich, Ltd. (England). The Camden and Salem plants were discontinued in 1936 and 1939, respectively, with the former's production moved to Kearny and the latter's to Marcus Hook. Production at Salem revived in 1943, however, and continued until 1953.
Congoleum-Nairn introduced printed felt-base wall covering in 1944 and added a facility at its Kearny location in 1947 for the manufacture of asphalt tile. The creation of new households following World War II enabled sales to reach $60.4 million and net income $7.2 million in 1948, but the company could not maintain these record levels as new smooth-surfaced floor-covering products began to supplant linoleum and felt base. The 1948 sales figure was not topped until 1965.
Troubled Times and New Products, 1950-68
Forced by the competition to expand its line, Congoleum-Nairn in 1951 acquired Delaware Floor Products, Inc., a Wilmington manufacturer of vinyl plastic tile and rolls as well as felt-base floor coverings and also a manufacturer of sheet-vinyl coverings for sinks and counter tops. Congoleum also began producing rubber tile and desktop linoleum, plus cork and all-vinyl tile for the luxury market. In 1953 it acquired Sloane-Blabon Corp., another floor-covering maker, for $10.3 million, and in 1955 the equipment and inventories of the fibre-rug division of Patchogue-Plymouth Corp., creating a subsidiary called Loomweve Corp. to manufacture tufted carpeting, woven fibre rugs, and automotive flooring in Lawrence, Massachusetts.
The acquisitions were moving Congoleum-Nairn in the right direction, since by 1955 synthetic tiles were clearly supplanting linoleum in public favor. It shifted some of its linoleum production from sheets to squares in order to attract trade from do-it-yourselfers and brought out a linoleum tile with a special base and adhesive for use with concrete-slab construction. However, to meet intense competition from other tilemakers the company had to reduce its price for asphalt tiles by 13 percent and for vinyl plastic tiles by 10 percent in 1955, even though this sector of its business was barely profitable. In addition, Congoleum-Nairn was finding it more difficult to sell felt-base floor coverings because quality-conscious consumers increasingly found this enamel-top material inferior in wearability and other respects.
Shifting emphasis away from linoleum, Congoleum-Nairn moved its linoleum-making operations from the Kearny plant in 1957 to the former Sloane-Blabon factory in Trenton, New Jersey, retaining part of the Kearny facility to make asphalt and vinyl plastic tile. It installed at Marcus Hook what it called the largest rotogravure press in the world for a new plastic floor covering. Nevertheless, sales continued to skid--falling to a low of $41.1 million in 1960--and the company lost money in 1957, 1958, 1960, and 1961, the year it discontinued production in Wilmington. The annual dividend was suspended in 1958. At the 1960 annual meeting for shareholders an interior decorator who came armed with swatches called Congoleum-Nairn "moth-eaten," and a Brooklyn linoleum sales representative described the company's floor coverings as "dogs."
Congoleum-Nairn turned the corner in the early 1960s by reorganizing its distribution and merchandising operations and launching new products and new styles. Introduced in 1962, Cushionflor was a no-wax product--the first in its field--composed of a layer of chemically embossed vinyl foam bonded between a vinyl surface and a vinylized felt backing. It was advertised as having "the cushiony softness, warmth and quiet of carpeting" and proved the savior of the company. In December 1966 Congoleum-Nairn received two patents covering the chemically embossed vinyl-foam products it had been marketing and promptly instituted patent-infringement actions against four competitors, all of which were eventually settled on a basis favorable to the company. Profitable again since 1962, Congoleum-Nairn restored its annual dividend in 1965. It ended the year with $5.8 million in net income on record sales of $67 million. Sales reached $80.7 million in 1967.
Congoleum Industries, 1968-80
By 1968 Congoleum-Nairn had drawn a suitor in Milwaukee-based Bath Industries Inc., a holding company that acquired 42 percent of its stock. When Congoleum-Nairn's board of directors opposed a proposed merger Bath was able to push it through by removing nine of the directors and replacing them with its own nominees. Congoleum-Nairn became Congoleum Industries, a subsidiary of Bath Industries. Although the parent company included Bath Iron Works, one of the nation's oldest and most important shipyards, in 1969 two-thirds of its $189.8 million in revenues came from floor coverings and furniture and only about 28 percent from shipbuilding. Floor coverings and furniture accounted for 78 percent of the year's $7.6 million in profits and shipbuilding for only 18 percent. (The furniture sector included the former Mersman Bros. Corp., a Celina, Ohio, maker of occasional tables acquired by Congoleum-Nairn in 1963.)
At this time the bulk of Congoleum Industries' sales was coming from the repair and maintenance market rather than from new construction. It also was a major supplier of furniture for the mobile- and recreational-home market. Another lucrative income source, amounting to $1.7 million in 1969, came from royalties earned on its patents. In 1970 Congoleum Industries also added to its carpeting capacity by moving into a $10-million plant in Wilburton, Oklahoma, that had the industry's most technologically advanced printing and dyeing machines. That year sales of its floor and wall products reached $96.6 million, and its share of the growing market for cushioned vinyl-sheet flooring was estimated at 40 percent. It claimed over 400 different patterns and colors in flooring, "more than anyone else in the business." In 1972 Congoleum Industries began a $20-million expansion of the Marcus Hook plant to provide new facilities for the manufacture of vinyl floor coverings.
Bath Industries acknowledged the preeminence of its Congoleum Industries unit by renaming itself Congoleum Corp. in 1975. Effective at the end of the year, Congoleum Industries was swallowed by the company and its operations divided into separate resilient-flooring, carpeting, and furniture divisions. Floor coverings remained the company's leading product sector in 1975, accounting for $169 million in revenues (42 percent of the total) and $25 million in net income (95 percent of the total). That year Congoleum Industries ceased producing vinyl asbestos tile. By this time tile was representing less than one percent of the parent firm's sales volume.
In 1976 Congoleum Corp. received $35 million in damages from Armstrong Cork Co., the industry leader in smooth-surfaced floor coverings, for violating the company's patents. This enabled Congoleum to pay down most of its long-term debt, which had swelled to a dangerous $75 million. The company had outstanding earnings in 1977 and 1978, sparked by its more-than-40-percent share of 1977's $1.7 billion in overall retail sales of resilient flooring. That year it collected $13.5 million in royalties on its flooring patents and was marketing resilient-flooring products through 65 independent wholesalers.
Aided by a backlog of naval shipyard contracts, Congoleum's sales soared to $558.6 million in 1978, and its net profits to $41.7 million. Resilient flooring remained its mainstay, however. That year the Home Furnishings Division, which consisted almost entirely of resilient flooring, accounted for $226 million in revenue and two-thirds of Congoleum's operating profits. Its operating margin of 21 percent was far higher than that of shipbuilding or Congoleum's other businesses.
Privately Held, 1980-95
In early 1980 Congoleum was acquired by Fibic Corp., a newly formed, privately held corporation organized by The First Boston Corp., with payment in cash of $38 for each share of common stock, or about $445 million in all. The new owners were First Boston, Inc., Century Capital Associates, various financial institutions loaning funds to the company, and members of Congoleum management. Headquarters were moved from Milwaukee to Portsmouth, New Hampshire.
First Boston sold its holdings in Congoleum in 1984 to the company's chief executives, Byron C. Radaker and Eddy G. Nicholson, in a leveraged buy out. Radaker and Nicholson, who said they owned or controlled 70 percent of Congoleum's stock, sold the Bath Iron Works unit in 1986 to a New York investment concern in a leveraged buy out valued at estimates ranging from $500 million to $675 million. At the same time they sold the remaining three company businesses piecemeal for a total of $175 million. The flooring business, which retained the Congoleum Corp. name, was purchased by Hillside Industries Inc., a subsidiary of New York-based Hillside Capital Inc. Hillside paid $82 million for the business but had to add another $48 million later because Congoleum had difficulty paying down $55 million in acquisition debt.
Based in Mercerville, New Jersey--outside Trenton--Congoleum embarked on a capital-spending program in 1989. One benefit of this program was that the Marcus Hook plant, which in 1987 led all Delaware river valley polluters by pumping more than a million pounds of ozone-destroying compounds into the air, completely eliminated this noxious discharge by switching from hazardous solvents to water in its inks. In 1991 Congoleum announced it would spend between $45 million and $50 million to improve several of its vinyl-flooring plants, with the bulk of the funds used to install new equipment, such as improved ovens and an improved printing system. The company was unable to borrow from banks for these improvements but in 1991 secured a $57.5-million asset-based working-capital line from CIT Group Inc.
Congoleum had net sales of $158.3 million in fiscal 1990 (ended September 30, 1990), $152.4 million in fiscal 1991, and $164.2 million in fiscal 1992. It had net income of $3.1 million in 1990 but lost $4.2 million in 1991 and $1.6 million in 1992, chiefly because of heavy interest payments on its considerable debt. In February 1993 American Biltrite Inc. sold its Amtico Tile Division, a producer of resilient-floor tiles, to Congoleum, in return for a 40 percent stake, valued at $18.8 million, in the company. The acquisition was effected through a new company, Congoleum Holdings Inc., which combined Amtico's assets with Hillside Industries' stock into a reorganized Congoleum Corp. In the 10 months following the merger this company had net sales of $211.1 million and net income of $11.2 million. In 1994 Congoleum had net sales of $265.8 million and net income of $17.5 million.
Going Public Again in 1995
In February 1995 Congoleum completed a public offering of 4.65 million shares of Class A common stock at $13 a share, following which Congoleum Holdings was merged into Congoleum Corp. The proceeds of the sale ($56.2 million) and other company funds were used to acquire the 4.65 million shares of Class B common stock--with twice the voting power of Class A stock--held by Hillside Industries, also at $13 a share. Following these transactions American Biltrite held 82 percent of the Class B common stock and 57 percent of the combined voting power of the corporation. Hillside Capital held 18 percent of the Class B stock and 12 percent of the voting power. The biggest holders of the Class A common stock were Putnam Investments, Inc. and The Zweig Companies, with nine and seven percent, respectively. Roger S. Marcus, American Biltrite's chairman and chief executive officer, was president, chairman, and chief executive officer of Congoleum.
In 1996 Congoleum was manufacturing 40 vinyl tile and sheet products available in more than 1,000 combinations of designs and colors. These products were being used principally in the remodeling-and-replacement, commercial, manufactured-home and new-residential markets. A substantial amount of its vinyl tile was being sold through home centers and mass-market merchandisers. The majority of these tiles had an adhesive backing mainly for do-it-yourself customers, with the remainder sold "dry back" and generally installed by professionals in commercial and, to a lesser extent, residential settings. The sheet vinyl was almost exclusively for residential use. In addition, the company was producing through-chip inlaid products for the commercial market. Congoleum was selling these products through over 13,000 outlets by means of about 40 distributors providing about 100 distribution points in the United States and Canada. Retail prices ranged from below $3 to more than $45 per square yard.
Congoleum owned sheet-vinyl manufacturing plants in Marcus Hook and Trenton, a vinyl-tile plant in Trenton, and a felt plant (felt being still used in the backing of vinyl sheets) in Finksburg, Maryland. It was leasing its corporate and marketing offices in Mercerville. In 1995 Congoleum introduced Futura, which it called the flagship product of a new generation of residential flooring; Forum Wood Plank, a vinyl tile sold in plank form with a startlingly natural wood color and grain; and Ultraflor, a higher-priced, more-durable vinyl sheet for manufactured-housing builders.
Congoleum's net sales declined slightly to $263.1 million in 1995 in what the company attributed to a cyclical downturn in the homebuilding sector, accompanied by rising raw-material prices, and "a sluggish retail environment and higher interest rates." Net income fell to $9.4 million, with earnings negatively affected by a $1.5-million after-tax charge relating to a writeoff of accounts receivable from Color Tile, Inc. which filed for Chapter 11 bankruptcy protection in January 1996. Congoleum's long-term debt was $90 million in June 1996.
Principal Subsidiaries: Congoleum Intellectual Properties, Inc.; Congoleum International Incorporated (U.S. Virgin Islands).
Further Reading:
"Bath Industries Sets Vote on Merger Plan with Congoleum-Nairn," Wall Street Journal, September 9, 1968.
"Congoleum," Barron's, January 23, 1995, p. 49.
"Congoleum-Nairn Holders Criticize Firm for Loss, Sales Drop," Wall Street Journal, June 2, 1960, p. 14.
"Congoleum: Still a Sitting Duck?" Financial World, February 1, 1979, pp. 20-21.
Ditlev-Simonsen, Cecilie, "Congoleum Gone, but Cash Remains," Boston Globe, August 23, 1986, p. 33.
Hals, Tom, "Congoleum Expands to Match the Rise in Manufactured Housing," Philadelphia Business Journal, p. 34.
Keresztes, Peter, "Results at Congoleum Show Plenty of Bounce," Barron's, February 6, 1978, pp. 33-34.
Laubsher, Harry W., "Bath Industries Inc.," Wall Street Transcript, August 31, 1970, p. 21605.
"Lease on Life," Forbes, May 1, 1976, pp. 44-45.
Millman, Gregory J., "Hock the Company? Why Not?" CFO, September 1991, pp. 72, 77.
Sherman, Joseph V., "Barely Scratching the Surface," Barron's, October 25, 1971, p. 11.
Solomon, Goody L., "Glossier Sheen," Barron's, February 25, 1963, p. 5.
Welling, Brenton, Jr., "Makers of Plastic Tiles, Linoleum Fight Fiercely Despite Building Boom," Wall Street Journal, March 11, 1955, pp. 1, 14.
Source: International Directory of Company Histories, Vol. 18. St. James Press, 1997.
