CALHOUN, Ga., Oct. 19 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced net sales for the third quarter of
2005 increased 11% to $1,697,634,000 from $1,529,651,000 for the
third quarter of 2004. Diluted earnings per share (EPS) and net
earnings for the third quarter of 2005 were $1.61 (4% below last
year) and $108,652,000 (4% below last year), respectively. This
compares to EPS and net earnings of $1.67 and $112,687,000,
respectively, for the third quarter of 2004. The third quarter
results were impacted by higher raw material costs, increasing
energy costs and additional ceramic tile introductions that were
shifted from the second to the third quarter partially offset by
higher sales volume. The sales increase was due to higher sales
volume in both the Mohawk and Dal-Tile segments as well as price
increases. In the third quarter of 2005, the Mohawk segment net
sales of $1,248,216,000 increased 11% from $1,129,422,000 and the
Dal-Tile segment net sales of $449,418,000 grew 12% from
$400,229,000. The growth in both segments resulted from unit growth
and price increases. EPS for the first nine months of 2005 was
$4.03 (2% above last year) and net earnings were $272,483,000 (2%
above last year) compared to $3.94 EPS and $266,152,000 in net
earnings for the first nine months of 2004. This increase in EPS
and earnings is attributable to sales growth, partially offset by
higher raw material and energy costs. Net sales for the first nine
months of 2005 were $4,815,548,000, representing a 9% increase from
2004 sales of $4,405,273,000. The sales increase resulted from
volume growth and price increases. In commenting on the third
quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated,
"The effect of both Hurricanes Katrina and Rita has reduced our
results in the third quarter as we previously reported. As our raw
material supply chain has begun to bring production capacity back
on line, we are seeing cost increases and some supply disruptions.
Additionally, natural gas, diesel fuel, and gasoline prices have
substantially increased in the quarter. As disclosed earlier,
Mohawk implemented carpet price increases of between 5% to 8% in
early October and also increased hard surface prices. In addition,
Mohawk announced another carpet price increase of similar size to
be implemented in mid-November to offset the continuing cost
increases. "The petrochemical industry on the Gulf Coast continues
to struggle with the aftermath of the storms. We expect to see
continued high costs and some supply limitations until these issues
are resolved. Given the present conditions, we believe we will be
able to maintain reasonable service levels as we manage the
business with lower inventory. Although it is difficult for both
Mohawk and our customers to adapt to these rapidly increasing
costs, I believe we both will be successful in passing these to the
end consumer. The industry will benefit as the Gulf Coast is being
rebuilt over the next few years. "The Mohawk segment grew 11% in
sales with new residential construction and commercial channels
continuing to out pace the residential replacement business. During
the latter part of the quarter, we saw carpet purchases and
shipments increase ahead of our price increase. Price increases
continue to lag the rapidly rising costs for energy and raw
materials. Lower consumer confidence and the impact of the storms
on gas and energy costs could influence spending in the future. The
Dal-Tile segment continues to perform well with sales growing at
12% from the previous year. The segment was impacted by higher
energy, transportation and product introductions in the third
quarter. The expansion of our ceramic manufacturing operations in
Mexico and Oklahoma is on track for completion. "The acquisition of
Unilin is scheduled to close in the fourth quarter of this year. As
previously reported, we have determined to permanently finance the
transaction with debt. We are currently evaluating the appropriate
combination of prepayable and term debt. The acquisition is not
expected to have a significant impact on the fourth quarter before
any one-time non-cash purchase accounting charges. Our outside
advisors are reviewing these charges and the intangible asset
amortization amounts as required under the purchase accounting
rules. The Unilin acquisition will be another transformational
event for our company making Mohawk a leader in the fast growing
U.S. laminate market. "Our economy continues to show strength but
the short term impact of the Gulf Coast storms on energy and the
petrochemical industry has created uncertainty and higher costs.
Additionally, consumer confidence and interest rates could impact
the economy. Unforeseen changes in our supply chain may affect our
results. Based on these factors, our fourth quarter earnings
forecast is from $1.49 to $1.58." Certain of the statements in the
immediately preceding paragraphs, particularly anticipating future
performance, business prospects, growth and operating strategies,
proposed acquisitions, and similar matters, and those that include
the words "believes," "anticipates," "forecast," "estimates," or
similar expressions constitute "forward-looking statements." For
those statements, Mohawk claims the protection of the safe harbor
for forward- looking statements contained in the Private Securities
Litigation Reform Act of 1995. There can be no assurance that the
forward-looking statements will be accurate because they are based
on many assumptions which involve risks and uncertainties. The
following important factors could cause future results to differ:
changes in economic or industry conditions; competition; raw
material and energy prices; timing and level of capital
expenditures; integration of acquisitions; introduction of new
products; rationalization of operations; litigation; and other
risks identified in Mohawk's SEC reports and public announcements.
Mohawk is a leading supplier of flooring for both residential and
commercial applications. Mohawk offers a complete selection of
broadloom carpet, ceramic tile, laminate, wood, stone, vinyl, rugs
and other home products. These products are marketed under the
premier brands in the industry, which include Mohawk, Karastan,
Ralph Lauren, Lees, Bigelow, Dal- Tile and American Olean. Mohawk's
unique merchandising and marketing assist our customers in creating
the consumers' dream. Mohawk provides a premium level of service
with its own trucking fleet and over 250 local distribution
locations. There will be a conference call Thursday October 20,
2005 at 11:00 AM Eastern Time. The telephone number to call is
1-800-603-9255 for US/local and 706-634-2294 for international
calls. A conference call replay will also be available until
Thursday, October 27, 2005 by dialing 1-800-642-1687 for US/local
calls and (706) 645-9291 for international calls and entering
Conference ID # 1485856. MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data Three Months Ended Nine
Months Ended (Amounts in thousands, October 1, October 2, October
1, October 2, except per share data) 2005 2004 2005 2004 Net sales
$1,697,634 1,529,651 4,815,548 4,405,273 Cost of sales 1,245,766
1,093,598 3,547,469 3,200,355 Gross profit 451,868 436,053
1,268,079 1,204,918 Selling, general and administrative expenses
274,052 242,995 806,144 742,148 Operating income 177,816 193,058
461,935 462,770 Interest expense 10,775 13,918 35,166 41,084 Other
(income) expense, net (400) 2,467 2,526 4,880 Earnings before
income taxes 167,441 176,673 424,243 416,806 Income taxes 58,789
63,986 151,760 150,654 Net earnings $108,652 112,687 272,483
266,152 Basic earnings per share $1.62 1.69 4.08 3.99
Weighted-average shares outstanding 66,865 66,669 66,827 66,680
Diluted earnings per share $1.61 1.67 4.03 3.94 Weighted-average
common and dilutive potential common shares outstanding 67,519
67,468 67,572 67,544 Other Financial Information (Amounts in
thousands) Net cash provided by operating activities $173,253
138,356 328,033 196,038 Depreciation & amortization $31,138
31,964 94,900 93,074 Capital expenditures $51,448 31,708 150,801
70,382 Consolidated Balance Sheet Data (Amounts in thousands)
October 1, October 2, 2005 2004 ASSETS Current assets: Receivables
$811,628 718,006 Inventories 1,089,970 1,000,802 Prepaid expenses
44,160 40,993 Deferred income taxes 55,311 84,260 Total current
assets 2,001,069 1,844,061 Property, plant and equipment, net
995,204 898,824 Goodwill 1,378,849 1,377,881 Other assets 332,652
338,404 $4,707,774 4,459,170 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Current portion of long-term debt $68,679
207,315 Accounts payable and accrued expenses 776,199 779,080 Total
current liabilities 844,878 986,395 Long-term debt, less current
portion 700,000 700,009 Deferred income taxes and other long-term
liabilities 221,134 213,668 Total liabilities 1,766,012 1,900,072
Total stockholders' equity 2,941,762 2,559,098 $4,707,774 4,459,170
Segment Information As of or for the Three As of or for the Nine
Months Ended Months Ended (Amounts in thousands) October 1, October
2, October 1, October 2, 2005 2004 2005 2004 Net sales: Mohawk
$1,248,216 1,129,422 3,524,477 3,265,357 Dal-Tile 449,418 400,229
1,291,071 1,139,916 Consolidated net sales $1,697,634 1,529,651
4,815,548 4,405,273 Operating income: Mohawk $110,854 131,361
272,222 300,183 Dal-Tile 69,137 62,750 196,898 168,047 Corporate
and eliminations (2,175) (1,053) (7,185) (5,460) Consolidated
operating income $177,816 193,058 461,935 462,770 Assets: Mohawk
$2,482,741 2,304,347 Dal-Tile 2,174,055 2,072,761 Corporate and
eliminations 50,978 82,062 Consolidated assets $4,707,774 4,459,170
DATASOURCE: Mohawk Industries, Inc. CONTACT: Frank H. Boykin, Chief
Financial Officer of Mohawk Industries, Inc., +1-706-624-2695 Web
site: http://www.mohawkind.com/
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