CALHOUN, Ga., Feb. 23 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced an increase in quarterly net
earnings of 5% above the fourth quarter of 2004 before a one-time
non-cash charge. In accordance with Generally Accepted Accounting
Principles, net earnings were $85,712,000 and diluted earnings per
share (EPS) was $1.26 for the fourth quarter of 2005. Before the
Unilin one-time non-cash charge of $34,305,000 ($22,329,000 after
tax) for purchase accounting of inventory, adjusted earnings were
$108,041,000 (5% above last year) and EPS of $1.59 (5% above last
year). Before the adjustment, Unilin positively impacted our
results due to strong margins and lower operating costs. Earning
were also positively affected by sales growth and better leveraging
of selling, general and administrative costs, offset by higher raw
material and energy costs and the impact of LIFO. The company had
estimated fourth quarter earnings of $1.49 to $1.58 EPS excluding
the adjustment. Net earnings and EPS for the fourth quarter of 2004
were $102,470,000 and $1.52, respectively. Net sales for the
quarter increased 22% to $1,804,551,000 from $1,475,099,000 in
2004. This increase was primarily the result of unit growth, price
increases and the Unilin acquisition. The Mohawk segment net sales
of $1,192,182,000 in the fourth quarter of 2005 were up 8% from
$1,103,474,000 due primarily to price increases. The Dal-Tile
segment net sales of $443,710,000 in the fourth quarter of 2005
grew 19% from $371,625,000 due to volume growth, price increases
and a small stone products acquisition. The Unilin segment,
acquired on October 31, 2005, had net sales of $168,814,000. Before
the one-time non-cash charge of $34,305,000 ($22,329,000 after tax)
for purchase accounting of Unilin inventory, adjusted earnings for
the year 2005 were $380,524,000 (3% above last year) and EPS of
$5.63 (3% above last year). Net earnings in accordance with GAAP
were $358,195,000 and $5.30 in EPS compared to $368,622,000 in net
earnings, and $5.46 in EPS, for 2004. This increase in adjusted EPS
and earnings is attributable to sales growth, better leverage of
selling, general and administrative costs and the Unilin
acquisition, offset by higher raw material and energy costs and the
impact of LIFO inventory charges in the Mohawk segment. Net sales
for the year 2005 increased 13% to $6,620,099,000 from
$5,880,372,000. This sales increase resulted primarily from the
acquisition of Unilin, internal growth and price increases. In
commenting on the fourth quarter results, Jeffrey S. Lorberbaum,
Chairman and CEO, stated, "The last few months have been eventful
as we completed in October the acquisition of Unilin, a fully
integrated European and U.S. laminate manufacturer, and a bond
offering in January to finance the purchase. We are pleased with
the acquisition and continue to make progress in developing and
implementing a strategy to enhance our U.S. laminate business. In
the U.S. we are focused on expanding our laminate business and
maximizing our new plant's efficiencies. Unilin results in the
period exceeded expectations with improved sales in the other wood
panel business and better leverage of operating costs. The U.S.
laminate business continues to grow with some softening in the
European business. "Our carpet and rug business experienced
significant disruption and higher costs in the raw material supply
chain as the oil refineries in the Gulf Coast region struggled to
recover lost capacity after the hurricanes in the quarter. We were
able to work through the disruption with minimal impact to our
service. Raw material and energy costs increased substantially and
necessitated increasing selling prices twice during the fourth
quarter. As in the past, our margins were impacted by the
difference in timing between cost increases and implementation of
price changes. We expect to pass these increases through to the
customer. Our product sales of nylon filament and polyester
carpets, commercial carpet tiles and hard surface flooring are
increasing while our nylon staple and polypropylene carpets and
home products sales were soft. Overall, sales trends continued with
the growth in the commercial and new residential construction
businesses outpacing residential replacement business. "The
Dal-Tile segment continues to grow in both the residential and
commercial businesses. All major product categories improved in
unit sales and were positively affected by price increases during
the quarter. The ceramic business was also negatively affected by
rising energy and transportation costs partially offset by price
increases. The capacity addition for our Mexican ceramic operation
has been completed and expansion of our Muskogee plant is scheduled
to be operational in the second half of this year. After
construction, it will take about nine to twelve months to achieve
the additional 20% increase in capacity. "Our balance sheet has
strengthened with the debt to capitalization ratio improving to
52.2% at December 31, 2005. We have repaid approximately $232
million of debt since the end of the third quarter. Additionally,
working capital as a percent of sales improved from 20% at the end
of 2004 to 18% at the end of 2005." The economy appears to be
strengthening with employment increasing and short-term interest
rates possibly leveling out. Oil prices, natural gas, and commodity
chemicals are unpredictable and may impact our costs. Our fourth
quarter price increases will be fully implemented during the second
quarter. We anticipate the flooring industry improving over 2005
led by commercial spending and residential redecorating. Stock
options were not expensed in prior periods and we estimate an
additional charge of $.04 per share in the first quarter. After
considering these factors, the earnings forecast for the first
quarter of 2006 is from $1.17 to $1.26. 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
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, American Olean, Unilin and Quick Step.
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 on Friday, February 24,
2006, at 11:00 AM Eastern Time. The telephone number to call is
1-800-603-9255, and the conference ID is 5610982. A conference call
replay will be available until Tuesday, February 28, 2006 by
dialing 1-800-642-1687 for US/local calls and (706) 645-9291 for
international calls and entering Conference ID # 5610982. MOHAWK
INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statement of
Earnings Data Three Months Ended Twelve Months Ended (Amounts in
thousands, Dec. 31 Dec. 31 Dec. 31 Dec. 31 except per share data)
2005 2004 2005 2004 Net sales $1,804,551 1,475,099 6,620,099
5,880,372 Cost of sales 1,349,496 1,059,176 4,896,965 4,259,531
Gross profit 455,055 415,923 1,723,134 1,620,841 Selling, general
and administrative expenses 289,718 243,103 1,095,862 985,251
Operating income 165,337 172,820 627,272 635,590 Interest expense
31,625 12,308 66,791 53,392 Other (income) expense, net 934 (71)
3,460 4,809 Earnings before income taxes 132,778 160,583 557,021
577,389 Income taxes 47,066 58,113 198,826 208,767 Net earnings
$85,712 102,470 358,195 368,622 Basic earnings per share $ 1.27
1.54 5.35 5.53 Weighted-average shares outstanding 67,248 66,689
66,932 66,682 Diluted earnings per share $ 1.26 1.52 5.30 5.46
Weighted-average common and dilutive potential common shares
outstanding 67,860 67,595 67,644 67,557 Other Financial Information
(Amounts in thousands) Net cash provided by operating activities $
131,810 46,799 459,843 242,837 Depreciation & amortization $
54,429 30,014 149,329 123,088 Capital expenditures $ 96,505 36,219
247,306 106,601 Consolidated Balance Sheet Data (Amounts in
thousands) December 31, December 31, 2005 2004 ASSETS Current
assets: Cash & cash equivalents $ 134,585 - Receivables 848,666
660,650 Inventories 1,166,913 1,017,983 Prepaid expenses 140,789
49,381 Deferred income taxes 49,534 55,311 Total current assets
2,340,487 1,783,325 Property, plant and equipment, net 1,810,728
905,332 Goodwill 2,621,963 1,377,349 Intangible assets 1,174,097
322,646 Other assets 44,248 14,466 $ 7,991,523 4,403,118
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
portion of long-term debt $ 113,809 191,341 Accounts payable and
accrued expenses 998,105 623,061 Total current liabilities
1,111,914 814,402 Long-term debt, less current portion 3,194,561
700,000 Deferred income taxes and other long-term liabilities
657,928 222,379 Total liabilities 4,964,403 1,736,781 Total
stockholders' equity 3,027,120 2,666,337 $ 7,991,523 4,403,118
Segment Information As of or for the As of or for the (Amounts in
thousands) Three Months Ended Twelve Months Ended Dec. 31 Dec. 31
Dec. 31 Dec. 31 2005 2004 2005 2004 Net sales: Mohawk $1,192,182
1,103,474 4,716,659 4,368,831 Dal-Tile 443,710 371,625 1,734,781
1,511,541 Unilin 168,814 - 168,814 - Corporate and eliminations
(155) - (155) - Consolidated net sales $1,804,551 1,475,099
6,620,099 5,880,372 Operating income: Mohawk $ 109,477 124,073
381,699 424,256 Dal-Tile 63,296 51,784 260,194 219,831 Unilin
(5,162) - (5,162) - Corporate and eliminations (2,274) (3,037)
(9,459) (8,497) Consolidated operating income $ 165,337 172,820
627,272 635,590 Assets: Mohawk $2,424,982 2,285,025 Dal-Tile
2,207,514 2,063,195 Unilin 3,263,248 - Corporate and eliminations
95,779 54,898 Consolidated assets $7,991,523 4,403,118 Included in
the Consolidated Statement of Earnings data is a one-time non-cash
charge for Unilin purchase accounting related to the step-up in
basis for inventory. The following reconciliation of net earnings
reflects the impact of this charge on earnings. The Company
believes the exclusion of this charge provides a meaningful
depiction of its ongoing operations. As of or for the As of or for
the Adjusted net earnings Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 2004 Net
earnings $85,712 102,470 358,195 368,622 Inventory basis: Step-up
34,305 - 34,305 - Less: Income tax effect 11,976 - 11,976 - Net
adjustment 22,329 22,329 Adjusted net earnings $108,041 102,470
380,524 368,622 Adjusted diluted earnings per share $1.59 1.52 5.63
5.46 Weighted-average common and dilutive potential common shares
outstanding 67,860 67,595 67,644 67,557 Pro forma working capital
ratio As of December 31, 2005 Net sales reported $6,620,099 Unilin
10 month net sales 993,407 Pro forma net sales $7,613,506 Net
working capital $1,342,382 Working capital ratio 18% First Call
Analyst: FCMN Contact: christi_scarbro@mohawkind.com DATASOURCE:
Mohawk Industries, Inc. CONTACT: Frank H. Boykin, Chief Financial
Officer of Mohawk Industries, +1-706-624-2695 Web site:
http://www.mohawkind.com/
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