CALHOUN, Ga., Feb. 15 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced 2006 fourth quarter net earnings of
$129.5 million (30% above last year) and diluted earnings per share
(EPS) of $1.90 (29% above last year). The 2006 fourth quarter net
earnings include $3.3 million in closing costs for a ceramic plant,
$1.8 million for stock options charges not required in the prior
year and income of $2.8 million for a partially paid customs
refund, all net of taxes. Net sales for the quarter were $1,898.6
million, an increase of 5% from 2005. The sales growth resulted
from the Unilin acquisition (completed October 31, 2005), hard
surfaces sales growth and price increases. Cash flow from
operations and EBITDA during the quarter remained strong at $235.8
million and $303.9 million, respectively. After paying down debt of
$602.7 million during the year and $190.9 million during the fourth
quarter, debt to EBITDA ratio improved to 2.5 and our debt to
capitalization ratio improved to 43%. Working capital also showed
improvement over last year. For the year 2006, net earnings were
$455.8 million (18% above last year) and EPS were $6.70 (17% above
last year). The 2006 net earnings include $3.3 million in closing
costs for a ceramic plant, $7.5 million for stock options charges
not required in the prior year and income of $12.3 million for a
partially paid customs refund, all net of taxes. Net sales for the
year were $7,905.8 million, an increase of 19% from 2005. This
increase is attributable to the Unilin acquisition, hard surface
sales growth, and price increases. In commenting on the fourth
quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated:
"Even though the industry remains soft, our business results were
good for the quarter. We benefited from strong growth in the Unilin
business and business initiatives to reduce costs. Our overall
strategy of offering a total flooring solution combined with an
expanded geographical presence has positively influenced results.
The U.S. flooring industry continued slowing. The residential new
construction market and the retail remodeling channel have
continued their decline. The commercial channel continues to out
perform the residential channel. The Mohawk segment sales were down
6% as industry sales continued to contract. The cost reduction
programs put in place last quarter partially offset lower margins
which were impacted by higher costs and reduced volume. There
continues to be an increased level of promotional activity to
stimulate customer activity. Our new and replacement residential
carpet sales continued to fall. The commercial channel continued to
grow during the quarter with some softening in the high end
category as customers have traded down. Our material costs have
remained high but could improve if commodity prices soften. There
are many initiatives on cost reduction, efficiency and sales growth
in process. We continue to review the industry and adjust to the
changing environment. Our Dal-Tile segment sales grew 4% during the
quarter despite a deteriorating residential market. Dal-Tile is
following industry trends with residential sales slowing and
commercial sales growing. We are reducing expenses, increasing
productivity, and focusing on the commercial and redecorating
channels. Our plant expansions were completed and will enhance our
position. Margins were impacted by the closing of a high cost
ceramic facility and higher transportation costs. Our ceramic
business is well positioned for the long-term. The Unilin segment
performed above our expectations. Both the European and U.S.
markets were strong with a proforma sales increase of 24% using a
constant exchange rate. The Mohawk brand laminate continues to
increase sales of Unilin products. Operating margins at 20% were
higher than anticipated due to volume increases, improved product
mix, and later raw material cost increases than anticipated. The
Unilin management team continues to produce strong results and has
proven to be a positive addition to our business. We received a
favorable international trade commission ruling which precluded
many importers from bringing laminate products into the U.S. that
infringe on patents." The Company is anticipating continued slow
U.S. industry sales in the first quarter of 2007 that will impact
margins and earnings. It has reduced manufacturing, administration,
and marketing expenses based on current industry conditions and
will continue to adjust as required. Based on these factors,
earnings guidance for the first quarter of 2007 is from $1.01 to
$1.10 EPS. This guidance includes refunds of approximately $5
million received from U.S. customs in January 2007. 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, February 16,
2007 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 February 23, 2007 by dialing 1-800-642-1687 for
US/local calls and 1-706-645-9291 for International/Local calls and
entering Conference ID # 6034022. MOHAWK INDUSTRIES, INC. AND
SUBSIDIARIES Consolidated Statement of Earnings Data Three Months
Ended Twelve Months Ended (Amounts in thousands, December December
December December except per share data) 31, 2006 31, 2005 31, 2006
31, 2005 Net sales $1,898,594 1,804,551 7,905,842 6,620,099 Cost of
sales 1,344,516 1,327,793 5,674,531 4,851,853 Gross profit 554,078
476,758 2,231,311 1,768,246 Selling, general and administrative
expenses 324,704 289,718 1,392,251 1,095,862 Operating income
229,374 187,040 839,060 672,384 Interest expense 42,584 31,625
173,697 66,791 Other (income) expense, net 2,108 934 8,488 3,460
U.S. Customs refund, net (4,370) - (19,436) - Earnings before
income taxes 189,052 154,481 676,311 602,133 Income taxes 59,561
54,848 220,478 214,995 Net earnings $129,491 99,633 455,833 387,138
Basic earnings per share $1.91 1.48 6.74 5.78 Weighted-average
shares outstanding 67,733 67,248 67,674 66,932 Diluted earnings per
share $1.90 1.47 6.70 5.72 Weighted-average common and dilutive
potential common shares outstanding 68,058 67,860 68,056 67,644
Other Financial Information (Amounts in thousands) Net cash
provided by operating activities $235,804 233,511 782,045 561,544
Depreciation & amortization $72,278 55,757 274,952 150,657
Capital expenditures $41,721 96,505 165,769 247,306 Consolidated
Balance Sheet Data (Amounts in thousands) December 31, 2006
December 31, 2005 ASSETS Current assets: Cash & cash
equivalents $63,492 134,585 Receivables 851,428 848,666 Inventories
1,225,874 1,215,427 Prepaid expenses 138,866 140,789 Deferred
income taxes 99,251 49,534 Total current assets 2,378,911 2,389,001
Property, plant and equipment, net 1,888,088 1,810,728 Goodwill
2,699,639 2,621,963 Intangible assets 1,180,094 1,174,097 Other
assets 31,662 44,248 $8,178,394 8,040,037 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Current portion of
long-term debt $576,134 113,809 Accounts payable and accrued
expenses 1,019,629 998,105 Total current liabilities 1,595,763
1,111,914 Long-term debt, less current portion 2,207,547 3,194,561
Deferred income taxes and other long- term liabilities 659,821
675,324 Total liabilities 4,463,131 4,981,799 Total stockholders'
equity 3,715,263 3,058,238 $8,178,394 8,040,037 As of or for the As
of or for the Three Months Ended Twelve Months Ended Segment
Information December December December December (Amounts in
thousands) 31, 2006 31, 2005 31, 2006 31, 2005 Net sales: Mohawk
$1,115,689 1,192,182 4,742,060 4,716,659 Dal-Tile 459,754 443,710
1,941,819 1,734,781 Unilin 327,599 168,814 1,236,918 168,814
Corporate and eliminations (4,448) (155) (14,955) (155)
Consolidated net sales $1,898,594 1,804,551 7,905,842 6,620,099
Operating income: Mohawk $112,275 131,180 387,386 426,811 Dal-Tile
57,615 63,296 270,901 260,194 Unilin 64,669 (5,162) 214,093 (5,162)
Corporate and eliminations (5,185) (2,274) (33,320) (9,459)
Consolidated operating income $229,374 187,040 839,060 672,384
Assets: Mohawk $2,462,420 2,473,497 Dal-Tile 2,257,107 2,207,514
Unilin 3,302,195 3,263,248 Corporate and eliminations 156,672
95,778 Consolidated assets $8,178,394 8,040,037 Reconciliation of
EBITDA, debt to EBITDA ratio, Debt to capital percentage and Unilin
pro forma sales increase Three Months Ended Twelve Months Ended
(Amounts in thousands) December 31, 2006 December 31, 2006 EBITDA
reconciliation: Operating income $229,374 839,060 Other expense
(2,108) (8,488) U.S. Customs refund, net 4,370 19,436 Depreciation
and amortization 72,278 274,952 EBITDA (a) $303,914 1,124,960 Ratio
of outstanding debt to EBITDA reconciliation: Outstanding Debt (b)
$2,783,681 Ratio of outstanding debt to EBITDA (b)/(a) 2.5 Debt to
capital reconciliation: Outstanding Debt (b) $2,783,681 Outstanding
Debt $2,783,681 Total stockholders' equity 3,715,263 Total capital
(c) $6,498,944 Debt to capital (b)/(c) 43% Three Months Ended Three
Months Ended December 31, 2005 December 31, 2006 Unilin proforma
sales reconciliation: Net sales reported $327,599 168,814 Unilin
net sales prior to acquisition - 76,275 Impact of applying constant
foreign exchange rate of $1.28 (1) - 18,266 $327,599 263,355
Proforma net sales percentage change 24% (1) Represents the
incremental foreign exchange impact by applying the 2006 fourth
quarter exchange rate to the 2005 fourth quarter results. The
Company believes it is useful for itself and investors to review,
as applicable, both GAAP and the above non-GAAP measures 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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