CALHOUN, Ga., April 27 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced first quarter net sales of
$1,925,106,000 in 2006 compared to net sales of $1,493,222,000 in
2005, an increase of 29%. The net sales growth was primarily
attributable to the Unilin acquisition, internal growth and price
increases. Adjusted net earnings for the first quarter of 2006 were
$72,862,000 (4% above last year) or $1.07 diluted earnings per
share (EPS), representing a 3% improvement above last year's
earnings. The adjusted net earnings exclude a $3 million stock
option charge that was not required in 2005. During the first
quarter of 2006, a non-cash LIFO charge impacted earnings by $14
million ($8.7 million, net of tax) or $.13 EPS compared to $6
million ($4.0 million, net of tax) or $.06 EPS in the first quarter
of 2005. In accordance with U.S. Generally Accepted Accounting
Principles (GAAP) net earnings for the first quarter of 2006 were
$71,120,000 and EPS were $1.04 per share. The first quarter of 2005
net earnings were $70,020,000 or $1.03 in EPS. The Mohawk segment
net sales of $1,150,546,000 in the first quarter of 2006 were up 5%
from $1,091,346,000. This was primarily attributable to increases
in prices in all product lines as well as growth in hard surface
sales. The Dal-Tile segment net sales of $473,910,000 in the first
quarter grew 18% from $401,876,000 from internal growth and
improved product mix. The Unilin segment net sales were
$302,630,000. In commenting on the first quarter results, Jeffrey
S. Lorberbaum, Chairman and CEO stated, "The results for the
quarter were in line with our guidance that we revised earlier. The
revision was attributable to our Mohawk segment which was
negatively impacted by a $14 million non-cash LIFO charge as well
as lower sales growth and margins in the residential replacement
carpet category. The slower carpet industry sales also impacted
pricing on some opening price point products more than we
anticipated. Our material costs moderated slightly from the high
levels after the hurricanes and remained relatively stable through
the quarter. "During the quarter, we started up a new manufacturing
facility to increase capacity of fiber extrusion and yarn
manufacturing in South Carolina. A carpet padding plant in the
Northwest was started up during the period. We completed the
purchase of a carpet backing plant early in the second quarter of
this year. We anticipate improving residential replacement carpet
demand which is historically affected by gains in employment levels
and consumer confidence. In addition, homeowners usually replace
their flooring at a faster rate when interest rates rise and people
move less frequently. "Our Dal-Tile segment results included strong
sales and operating profit growth. All product categories performed
well as this business continues to gain market share. The Oklahoma
ceramic expansion is progressing as planned while the Mexican
expansion was completed at the end of last year. The management has
transitioned smoothly to Harold Turk from Chris Wellborn who was
promoted to Mohawk COO. "Unilin results included growing sales in
both the U.S. and Europe. Our U.S. laminate strategy is in the
implementation stage and we expect a sales benefit in the second
half of 2006. The Unilin operating margin is lower in the first
quarter due to seasonally lower sales, distribution inventory
adjustments, higher wood and energy costs, and slightly lower
laminate prices. Our U.S. laminate plant expansion was completed
during the quarter to support additional growth in the U.S. The
first quarter sales results were negatively impacted by inventory
reductions of our distributors' due to shorter delivery times from
this facility. There will be additional adjustments in the second
quarter. Board price increases are being implemented to reflect
higher wood and chemical costs. New products are being introduced
under the Mohawk brand to increase our laminate distribution. "Our
balance sheet continues to strengthen as the debt to capitalization
ratio was further reduced to 51%. Our inventory turnover also
improved to 4.8 times from 3.9 times the prior year. We will
continue to focus on debt reduction in the future." The strong
economy along with improving consumer confidence should positively
affect our business in future periods. We continue to anticipate
continued growth in commercial and an improvement in the
replacement category, which is our largest channel, with some
slowing of new residential construction business later this year.
The recent change in oil prices has not presently impacted our raw
materials. We cannot predict the affect on our costs or customer
demand in the future. After considering these factors, we estimate
the earnings forecast for the second quarter of 2006 to range from
$1.51 to $1.60. 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 Friday, April 28, 2006
at 11:00 AM Eastern Time. The telephone number to call is
1-800-603-9255. A conference call replay will also be available
until Monday, May 1, 2006 by dialing 1-800-642-1687 for US/local
calls and (706) 645-9291 for international calls and entering
Conference ID # 8208904. MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data (Amounts in thousands,
except per Three months ended share data) April 1, 2006 April 2,
2005 Net sales $1,925,106 1,493,222 Cost of sales 1,422,096
1,108,520 Gross profit 503,010 384,702 Selling, general and
administrative expenses 352,443 261,072 Operating income 150,567
123,630 Interest expense 40,335 11,876 Other (income) expense, net
2,727 2,004 Earnings before income taxes 107,505 109,750 Income
taxes 36,385 39,730 Net earnings $71,120 70,020 Basic earnings per
share $1.05 1.05 Weighted-average shares outstanding 67,564 66,804
Diluted earnings per share $1.04 1.03 Weighted-average common and
dilutive potential common shares outstanding 68,079 67,692 Other
Financial Information (Amounts in thousands) Net cash provided by
operating activities $104,526 50,701 Depreciation &
amortization $64,853 32,265 Capital expenditures $45,632 34,521
Consolidated Balance Sheet Data (Amounts in thousands) April 1,
2006 April 2, 2005 ASSETS Current assets: Cash and cash equivalents
$82,174 - Receivables 948,229 739,789 Inventories 1,186,626
1,145,747 Prepaid expenses 140,194 46,428 Deferred income taxes
34,857 55,311 Total current assets 2,392,080 1,987,275 Property,
plant and equipment, net 1,822,424 940,086 Goodwill 2,642,389
1,377,349 Tradenames 630,402 272,280 Intangible assets 542,734
49,366 Other assets 30,704 14,672 $8,060,733 4,641,028 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of
long-term debt $100,156 218,501 Accounts payable and accrued
expenses 1,033,726 756,895 Total current liabilities 1,133,882
975,396 Long-term debt, less current portion 3,148,000 700,000
Deferred income taxes and other long- term liabilities 628,020
221,531 Total liabilities 4,909,902 1,896,927 Total stockholders'
equity 3,150,831 2,744,101 $8,060,733 4,641,028 Segment Information
As of or for the Three Months Ended (Amounts in thousands) April 1,
2006 April 2, 2005 Net sales: Mohawk $1,150,546 1,091,346 Dal-Tile
473,910 401,876 Unilin 302,630 - Corporate and eliminations (1,980)
- Consolidated net sales $1,925,106 1,493,222 Operating income:
Mohawk $52,279 65,625 Dal-Tile 69,602 58,470 Unilin 40,019 -
Corporate and eliminations (11,333) (465) Consolidated operating
income $150,567 123,630 Assets: Mohawk $2,458,587 2,472,133
Dal-Tile 2,257,052 2,117,843 Unilin 3,255,582 - Corporate and
eliminations 89,512 51,052 Consolidated assets $8,060,733 4,641,028
Reconciliation of reported net earnings to adjusted net earnings
Three Months Ended April 1, 2006 April 2, 2005 Net earnings
reported $71,120 70,020 Add: Stock option expense, net of taxes of
$1,008 1,742 - Adjusted net earnings $72,862 70,020 Adjusted net
earnings per common share (basic) $ 1.08 1.05 Adjusted net earnings
per common share (diluted) $ 1.07 1.03 The Company believes it is
useful for itself and investors to review, as applicable, both GAAP
information that includes the stock compensation impact of SFAS
123R, and the non-GAAP measure that excludes such information in
order to assess the performance of the Company's business for
planning and forecasting in subsequent periods. 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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