Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • Perspective
    • Mailbag
    • Getting back on the road
      How long will it take for EVs to replace internal combustion engines?
      Watching, and hoping, for progress in 2021
      COVID-19 stories dominate 2020 headlines
    • Kickstart: Microchips, masks and US manufacturing
      Kickstart: Bringing plastics, sustainability to the construction site
      Kickstart: Making more US beds
      Kickstart: Katherine Johnson, Perseverance, plastics and space
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • Green feet: Braskem partners with Dansko on bio-based clogs
      Curbell donates plastic sheet for prosthetics project in Ecuador
      Covestro volunteers build ramp for Ohio veteran
      Chase expands giving campaign in 2020
    • There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
      ACC, NAM eye economic priorities in Biden presidency
    • Thermoformers: Would you believe a 12 percent gain?
      Just how big is thermoforming in North America?
      Changing names for compounders embracing corporate branding
      Diversity the key to outperforming the market
    • Thermoformers: Would you believe a 12 percent gain?
      The benefits of getting social
      Rising Stars shine bright future on industry
      Getting back on the road
    • Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
      Perspective: ‘Fake news' of a different sort?
      Perspective: Making products in the USA is good for the planet
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Video: Structural foam molding
      Structural foam molding: Flexibility for processors
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
      Polymer Points Live - October 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
      Canon Virginia, Inc.
      Sponsored Content By Canon Virginia, Inc.
      Canon Virginia Inc. brings collaboration to the table
      Sponsored By CDS MACHINES
      Facing medical equipment shortages during COVID-19 outbreak?
      Sponsored Content By Canon Virginia, Inc.
      Transform your molding capabilities with the Canon Shuttle Mold System
    • Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
December 05, 2014 01:00 AM

Difficult launch still holds promise of brighter sales future

Catherine Kavanaugh
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Associated Materials LLC
    Associated Materials LLC's Alside unit launched its Mezzo window line earlier this year.

    The Alside division of Cuyahoga Falls, Ohio-based Associated Materials LLC, has been making vinyl windows since 1980 but this year's launch of two new product lines has been wrought with challenges for the company with 35 years of experience.

    Despite commercial success since hitting the market in February, the Mezzo and Fusion window lines have been a $16 million drain to date on Associated Materials' bottom line because of early manufacturing inefficiencies and launch costs.

    Problems don't end there for the company, which also makes Genteck Building Products in vinyl, aluminum and steel; Ultraguard fences decks and rails; Revere vinyl, steel and aluminum building products; Preservation windows and siding; and Alpine windows. A net loss of $276.1 million on net sales of $870.2 million was recorded for the nine months ended Sept. 27. That compares to a net loss of $32 million for the same period in 2013, according to Securities and Exchange filings for Associated Materials.

    In addition to the troubled window launch, in the first three quarters of this year, the company also saw a $16.8 million decline in net sales for third-party manufactured products mainly in the roofing business, a $12.8 million drop in metal product sales, a $5.1 million drop in vinyl siding sales and a negative impact of $9.8 million due to the weaker Canadian dollar compared to the same period in 2013.

    At the same time, raw material costs increased $6.1 million and freight costs went up $2.8 million.

    In addition, management determined in August that the fair value of some assets was lower than the carrying value and they recorded a third quarter impairment charge for goodwill of $148.5 million and an impairment loss for certain trade names of $89.7 million. These are non-cash items but they contributed to the net income loss.

    Still, it's not all bad news for Associated Materials. The company did have a better third quarter with window sales being a bright spot that's seems to be getting brighter.

    “We achieved our first quarter of year-over-year top line growth in 2014,” CEO Brian Strauss said during a conference call with investment analysts on Nov. 14.

    He pointed to year-over-year net sales declines of 5.9 percent and 1.4 percent, respectively, for the first and second quarters. However, that was followed by a net sales increase of 4.1 percent to $353.7 million compared to the third quarter of last year.

    “Importantly embedded in this performance was 12.8 percent year-over-year growth in our window net sales,” Strauss said.

    Associated Materials is about to turn the corner on one-time cost issues related to the Mezzo and Fusion production launches as well as “material inflation,” which will be addressed by price increases “consistent with the market” for all vinyl and metal products the company manufactures, according to Chief Financial Officer Scott F. Stephens.

    “There's a fair amount of flex going on in the numbers given the magnitude of operational improvement we have going on in the plants,” said Stephens, who started with the company Oct. 14. “It's off the norm so it's a little difficult or murky for us to be real precise on the outlook other than to say we do expect most of that $16 million to be out of the business in 2015.”

    Designed to meet new Energy Star requirements and replace the Excalibur series, the Mezzo windows in particular impressed product reviewers with their slim frame and maximized glass area and were even hailed by some contractors as one of the best updates to come out in years.

    The introduction of Mezzo, which means middle, and Fusion, which targets value-minded consumers, allows Alside to expand it product mix and offer the marketplace good, better and best options when coupled with the existing higher-end Sheffield and Ultamaxx window lines.

    The two new window lines helped drive that growth of 4.1 percent but margin compression and other factors hurt the overall financial performance of Mezzo and Fusion windows. During the conference call, Strauss was asked what's going wrong with window production.

    “Is it a design flaw? Are you having trouble assembling the windows? Is there extruding problems? Are you having to go back and fix the windows in the field? What's happening?” one market analyst asked.

    Strauss's response was essentially all of the above.

    “You've got the buckets correctly,” he answered.

    Basically, Alside is struggling to meet expectations for its manufacturing cost on a per-window basis, Strauss said.

    “We started to see some progress toward the end of the third quarter and it continued into the fourth quarter,” he said. “…It has been slow to materialize but we're moving in that direction.”

    Associated Materials made progress in other important areas during the third quarter, Strauss added. Sales were up $2.1 million for vinyl siding during the three-month period and $5 million for the Installed Sales Solution business unit as both areas benefitted from higher demand in the new construction market.

    Vinyl siding and windows make up 51 percent of the net sales compared to 13 percent for metal products and 26 percent for third-party manufactured products, such as roofing materials and insulation.

    Strauss said he is optimistic about growth prospects. Price increases went into effect for vinyl siding and other products in October and will be in place for windows in the first quarter of 2015. Resin negotiations for next year are ongoing. The company has a new vice president of operations and the manufacturing rate of the new windows lines is nearing expectations. And, company officials are scrutinizing the balance sheet.

    “We're addressing areas of the business that have lower margins,” Strauss said. “We're looking at our stores. We're looking at roofing within our stores and certain product lines so there's a fair amount of detailed assessment of profitability by product, by store, etc., relative to the debt structure of the business.”

    Associated Materials produces exterior residential building products for the United States and Canada at 11 manufacturing facilities and distributes them through a network of 50,000 “contractor customers,” 126 company-operated supply centers and direct sales to independent dealers and national account customers. The company ranked 16th in Plastics News' most recent survey of North American pipe, profile and tubing extruders.

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
        • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions