CALHOUN, Ga., Oct. 26 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced 2006 third quarter net earnings of
$127,708,000 and diluted earnings per share (EPS) of $1.88 (both
10% above last year), in accordance with U.S. Generally Accepted
Accounting Principles (GAAP). Adjusted net earnings for the third
quarter of 2006 were $123,948,000 and adjusted EPS were $1.82 per
share. The adjusted net earnings exclude a stock option charge that
was not required in 2005 increasing net earnings by $1,855,000 and
exclude a partially-paid refund from U.S. Customs decreasing net
earnings by $5,615,000. Net sales for the quarter were
$2,024,019,000 an increase of 19% from 2005. The sales growth
resulted from the Unilin acquisition, hard surface sales growth,
and price increases. For the first nine months of 2006, net
earnings were $326,342,000 (14% above last year) and EPS were $4.80
(13% above last year), in accordance with U.S. GAAP. Adjusted net
earnings for the first nine months of 2006 were $322,525,000 and
adjusted EPS were $4.74 per share. The adjusted net earnings
exclude a stock option charge that was not required in 2005
increasing net earnings by $5,701,000 and exclude a partially-paid
refund from U.S. Customs decreasing net earnings by $9,518,000.
This increase is attributable to the Unilin acquisition, strong
hard surface sales growth and price increases. In commenting on the
quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated:
"I am pleased with our results for the quarter in light of the
current business environment. With 19% sales growth, higher gross
margins and a 10% improvement in EPS over last year, our third
quarter was positive. Our business is better balanced to minimize
the impact of changing economic and industry cycles than in the
past. The diversification of our product offering with a full line
of soft and hard products, participation in all sales channels of
residential and commercial, and our broader geographic exposure in
Europe improve our position. During the quarter the slowing U.S.
economy impacted our business. Both residential replacement and new
residential construction weakened through the quarter and the
commercial business continued positive trends. Raw material costs
increased in the third quarter and remained high even though oil
costs declined. A stronger European economy and improved U.S.
laminate sales have benefited our business. We see weaker industry
demand levels with the postponement of new home purchases and
redecorating projects in the near term. Recent changes in gasoline
prices have positively affected consumers and some retail
categories. This could improve large discretionary purchases and
positively affect retail flooring sales. Interest rates should
remain favorable, consumer confidence should recover, and the
industry demand for flooring should improve in the long term. The
Mohawk segment sales results were disappointing as industry sales
slowed substantially. Sales declined 1% with margins impacted by
higher costs and lower volumes. We began implementing a price
increase to offset higher raw material costs during the quarter.
Both new and replacement residential carpet declined significantly
from the prior year with commercial carpet continuing to grow. As
all levels of the industry try to stimulate consumer purchases, we
see more promotional activity. With the lower sales levels, cost
reduction plans are being implemented to reduce manufacturing
labor, SG&A and other discretionary spending. Production
schedules have been reduced to reflect lower demand and control
inventory levels. We could see improvement in our raw material
costs if the worldwide demand for commodity chemicals doesn't
impact prices and lower oil prices continue. During the third
quarter, we closed a staple yarn facility incurring $500,000 of
costs related to the closing. We will continue to review the
business and adjust to the changing environment. Our Dal-Tile
segment sales had solid performance growing 11% during the quarter.
Even with slowing industry growth, we anticipate increasing our
share due to prior investments in sales, product, and distribution.
Our margins were impacted by the start up expenses of our Oklahoma
expansion and increased transportation costs. We anticipate
transportation costs improving as gasoline costs decline. The start
up phase of the Oklahoma facility is complete and the plant is
expected to be operating near capacity by year-end. Our ceramic
business is well positioned to grow faster than the industry. The
Unilin segment results were strong for the third quarter with good
sales growth in the European laminate business. We also saw the
U.S. laminate sales improve through the quarter as our U.S.
distributors completed their inventory adjustments and purchased
product more in line with their current sales. Our launch of the
Mohawk laminate products continues on track and the first phase is
complete. The third quarter margins were higher due to better
laminate product mix, improvement in the U.S. distributor business,
improved board pricing and productivity, and control of
discretionary spending. We have been pleased with Unilin's
performance since the acquisition was completed. We are managing
our balance sheet with the debt to capitalization ratio improving
to 46% after paying down $168 million of debt during the third
quarter. We have many initiatives focused on improving efficiency,
inventory turns, and working capital management. During the
quarter, the lawsuit filed against us in 2004 that alleges Mohawk
hired undocumented workers to suppress wages was reviewed by the
11th Circuit Court. After reconsidering the case, the Court refused
to dismiss the RICO claims against Mohawk. Mohawk will appeal the
decision and will continue to vigorously defend itself against this
claim." The Company is anticipating continued slow sales in the
fourth quarter that will result in unabsorbed overhead costs and
impact our margin dollars. We are reducing our manufacturing,
administration, and marketing expenses. Our carpet margins will
also be affected by the lag between cost and selling price changes.
Unilin margins will decrease to a more sustainable rate. Based on
these factors, our earnings guidance for the fourth quarter of 2006
is from $1.51 to $1.60 EPS. This guidance does not include the
expected closing of higher cost ceramic production at an estimated
cost of $6,000,000 or the anticipated additional refunds from U.S.
customs. 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 "could,"
"should," "believes," "anticipates," "forecasts," "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, October 27, 2006
at 11:00 AM Eastern Time. The telephone number to call is
1-800-603-9255 for US/Canada and 1-706-634-2294 for
International/Local. A conference call replay will also be
available until November 3, 2006 by dialing 1-800-642-1687 for
US/local calls and 1-706-645-9291 for international calls and
entering Conference ID # 8008744. MOHAWK INDUSTRIES, INC. AND
SUBSIDIARIES Consolidated Statement of Earnings Data Three Months
Ended Nine Months Ended (Amounts in thousands, Sept. 30, Oct. 1,
Sept. 30, Oct. 1, except per share data) 2006 2005 2006 2005 Net
sales $2,024,019 1,697,634 6,007,248 4,815,548 Cost of sales
1,455,508 1,234,680 4,330,015 3,524,060 Gross profit 568,511
462,954 1,677,233 1,291,488 Selling, general and administrative
expenses 345,771 274,052 1,067,547 806,144 Operating income 222,740
188,902 609,686 485,344 Interest expense 44,655 10,775 131,113
35,166 Other (income) expense, net 55 (400) 6,380 2,526 U.S.
Customs refund, net (8,834) - (15,066) - Earnings before income
taxes 186,864 178,527 487,259 447,652 Income taxes 59,156 62,764
160,917 160,147 Net earnings $127,708 115,763 326,342 287,505 Basic
earnings per share $1.89 1.73 4.82 4.30 Weighted-average shares
outstanding 67,704 66,865 67,654 66,827 Diluted earnings per share
$1.88 1.71 4.80 4.26 Weighted-average common and dilutive potential
common shares outstanding 68,021 67,519 68,056 67,572 Other
Financial Information (Amounts in thousands) Net cash provided by
operating activities $203,534 173,253 546,241 328,033 Depreciation
& amortization $68,040 31,138 202,674 94,900 Capital
expenditures $41,389 51,448 124,048 150,801 Consolidated Balance
Sheet Data (Amounts in thousands) Sept. 30, 2006 Oct. 1, 2005
ASSETS Current assets: Cash $69,730 - Receivables 958,416 811,628
Inventories 1,275,435 1,116,781 Prepaid expenses 126,895 44,160
Deferred income taxes 55,128 55,311 Total current assets 2,485,604
2,027,880 Property, plant and equipment, net 1,869,273 995,205
Goodwill 2,685,092 1,378,849 Intangibles 1,168,739 319,644 Other
assets 25,933 13,007 $8,234,641 4,734,585 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Current portion of
long-term debt $509,151 68,679 Accounts payable and accrued
expenses 1,124,974 776,199 Total current liabilities 1,634,125
844,878 Long-term debt, less current portion 2,438,732 700,000
Deferred income taxes and other long- term liabilities 631,283
230,748 Total liabilities 4,704,140 1,775,626 Total stockholders'
equity 3,530,501 2,958,959 $8,234,641 4,734,585 As of or for the As
of or for the Segment Information Three Months Ended Nine Months
Ended Sept 30, Oct. 1, Sept. 30, Oct. 1, (Amounts in thousands)
2006 2005 2006 2005 Net sales: Mohawk $1,233,833 1,248,216
3,626,371 3,524,477 Dal-Tile 501,241 449,418 1,482,065 1,291,071
Unilin 292,924 - 909,319 - Intersegment eliminations (3,979) -
(10,507) - Consolidated net sales $2,024,019 1,697,634 6,007,248
4,815,548 Operating income: Mohawk $110,505 121,940 275,111 295,631
Dal-Tile 69,642 69,137 213,286 196,898 Unilin 49,748 - 149,424 -
Corporate and intersegment eliminations (7,155) (2,175) (28,135)
(7,185) Consolidated operating income $222,740 188,902 609,686
485,344 Assets: Mohawk $2,597,805 2,509,552 Dal-Tile 2,294,118
2,174,055 Unilin 3,239,804 - Corporate and eliminations 102,914
50,978 Consolidated assets $8,234,641 4,734,585 Reconciliation of
reported net earnings to adjusted net earnings Three Months Nine
Months (Amounts in thousands, except per Ended Ended share data)
Sept. 30, 2006 Sept. 30, 2006 Net earnings reported $127,708
326,342 Adjustments: Stock option expense, net of taxes of $1,064
and $3,327, respectively 1,855 5,701 U.S. Customs refund, net of
taxes of $3,219 and $5,548, respectively (5,615) (9,518) $123,948
322,525 Adjusted net earnings per common share (basic) $1.83 4.77
Adjusted net earnings per common share (diluted) $1.82 4.74 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 U.S. Customs refund, 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/
Copyright
Mohawk Industries (NYSE:MHK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Mohawk Industries (NYSE:MHK)
Historical Stock Chart
From Jul 2023 to Jul 2024