CALHOUN, Ga., July 19 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced 2007 second quarter net earnings of
$115 million and diluted earnings per share (EPS) of $1.68 (both 4%
below last year). Net sales for the quarter were $1,977 million, a
decrease of 4% from 2006. During the quarter the Company had strong
cash flow from operations of $226 million and EBITDA of $276
million. In addition, debt of $208 million was paid down during the
quarter reducing the Company debt to capital ratio to 38%. For the
first half of 2007, net earnings were $206 million and EPS was
$3.01 (both 3% above last year). Net sales for the first half of
2007 were $3,841 million representing a 4% decrease from 2006. The
sales decreases for both the quarter and the year to date are
attributable to slowing U.S. industry demand in the residential new
construction and redecorating business. In commenting on the second
quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated:
"Second quarter earnings were ahead of our guidance for the
quarter. The European business maintained its strong growth and
performance partially offsetting the cyclical down turn in the U.S.
Our U.S. commercial business continued performing better than our
residential business. U.S. residential flooring is in a cyclical
downturn with soft sales in the new home and consumer redecorating
categories. During the quarter, Mohawk took another important step
in its strategy to become a complete provider of floor covering
with the announced acquisition of four wood manufacturing plants.
"The Mohawk segment sales for the quarter were off 10% from last
year as the industry suffered from slow residential sales. Our
comps will become easier in the third quarter because industry
sales began declining in this period last year. Commercial sales
were stronger than residential as modular carpet continued to gain
market share. Raw material costs increased during the quarter and
we announced a carpet price increase in May of 4% to 6% which we
began implementing in June. Promotions continue at a greater pace
to stimulate sales and balance asset utilization in the industry.
"The Dal-Tile segment sales for the quarter were slightly below
last year. We believe we are performing better than market due to
the earlier investments made in sales, products and marketing.
Commercial sales are offsetting some of the weakness in
residential. Selected price increases were implemented in the
quarter and surcharges are being applied to cover increased
transportation and energy costs. We are reducing our controllable
costs but margins are lower due to infrastructure investments in
distribution and sales personnel to maximize sales and unabsorbed
overhead from lower production schedules. Our Dal-Tile team is
implementing multiple initiatives to reduce costs, improve
efficiency and manage working capital. We are increasing production
as we continue to shift products to our own facilities which were
previously sourced externally. "Our Unilin segment turned in a
strong performance for the quarter with sales up 16% over last
year. The European economy is strong while the U.S. residential
market remains weak. The strong Euro positively impacted sales by
5% and operating income by $5 million. Our patents continue to gain
strength and we entered new license agreements growing revenues.
Our Unilin segment results were the highest ever but we anticipate
results in the second half to be more in line with past
performance. "Our agreement with Columbia Forest Products to
acquire two solid wood plants and one engineered plant in the U.S.
and one engineered plant in Malaysia is expected to close in the
third quarter. The plants are currently experiencing losses, but
the business is expected to be accretive after the first year.
After the acquisition, Mohawk will be the second largest producer
in the pre-finished wood category, which is expected to grow
between 6% to 8% over time. The transaction is subject to customary
government approvals and closing conditions. "We are focused on
environmental stewardship and will be presenting our many
initiatives under a program identified as Greenworks. This program
includes recycling both post consumer and industrial waste,
utilizing bio- based raw materials and energy, and reducing water
usage, energy consumption and emissions. Greenworks is beneficial
for our customers, our communities and the environment. "During the
period, no payments were received from U.S. Customs for duty
refunds. In the future, we expect additional payments though the
timing and amount are not known at this point." The company expects
the U.S. residential environment to continue to be difficult during
the third quarter. The management team is committed to maintaining
the proper balance between cost cutting and being prepared for a
future turnaround. Based on these factors, the guidance for the
third quarter of 2007 is $1.61 to $1.70 EPS. Certain of the
statements in the immediately preceding paragraphs, particularly
anticipating future performance and business prospects constitute
"forward-looking statements" under 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,
including our ability to successfully implement our plans, 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, July 20, 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 July 27, 2007 by dialing 1-800-642-1687 for
US/local calls and 1-706-645-9291 for International/Local calls and
entering Conference ID # 4827114. MOHAWK INDUSTRIES, INC. AND
SUBSIDIARIES Consolidated Statement of Earnings Data Three Months
Ended Six Months Ended (Amounts in thousands, June 30, July 1, June
30, July 1, except per share data) 2007 2006 2007 2006 Net sales
$1,977,210 2,058,123 3,841,073 3,983,229 Cost of sales 1,420,512
1,465,745 2,760,935 2,874,507 Gross profit 556,698 592,378
1,080,138 1,108,722 Selling, general and administrative expenses
358,450 369,333 711,313 721,776 Operating income 198,248 223,045
368,825 386,946 Interest expense 39,138 46,123 80,717 86,458 Other
(income) expense, net (2,783) 3,598 1,444 6,325 U.S. Customs refund
- (6,232) (9,122) (6,232) Earnings before income taxes 161,893
179,556 295,786 300,395 Income taxes 46,625 60,043 90,140 101,761
Net earnings $115,268 119,513 205,646 198,634 Basic earnings per
share $1.69 1.77 3.02 2.94 Weighted-average shares outstanding
68,167 67,693 68,037 67,629 Diluted earnings per share $1.68 1.76
3.01 2.92 Weighted-average common and dilutive potential common
shares outstanding 68,533 68,067 68,394 68,073 Other Financial
Information (Amounts in thousands) Net cash provided by operating
activities $225,685 238,181 314,452 342,707 Depreciation &
amortization $75,382 69,781 149,228 134,634 Capital expenditures
$35,428 37,027 60,384 82,659 Consolidated Balance Sheet Data
(Amounts in thousands) June 30, 2007 July 1, 2006 ASSETS Current
assets: Cash & cash equivalents $57,763 73,398 Receivables
968,103 987,626 Inventories 1,229,326 1,283,931 Prepaid expenses
121,625 134,087 Deferred income taxes 173,252 41,427 Total current
assets 2,550,069 2,520,469 Property, plant and equipment, net
1,858,282 1,904,803 Goodwill 2,719,724 2,691,910 Intangible assets
1,153,761 1,196,310 Other assets 27,972 34,319 $8,309,808 8,347,811
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
portion of long-term debt $364,114 530,626 Accounts payable and
accrued expenses 1,031,237 1,146,904 Total current liabilities
1,395,351 1,677,530 Long-term debt, less current portion 2,137,349
2,596,412 Deferred income taxes and other long-term liabilities
768,278 654,332 Total liabilities 4,300,978 4,928,274 Total
stockholders' equity 4,008,830 3,419,537 $8,309,808 8,347,811 As of
or for the Three As of or for the Six Segment Information Months
Ended Months Ended June 30, July 1, June 30, July 1, (Amounts in
thousands) 2007 2006 2007 2006 Net sales: Mohawk $1,113,412
1,241,992 2,161,073 2,392,538 Dal-Tile 505,187 506,914 972,148
980,824 Unilin 363,531 313,765 715,627 616,395 Corporate and
eliminations (4,920) (4,548) (7,775) (6,528) Consolidated net sales
$1,977,210 2,058,123 3,841,073 3,983,229 Operating income: Mohawk
$59,730 98,993 108,175 164,606 Dal-Tile 69,353 74,042 133,748
143,644 Unilin 81,737 59,657 142,236 99,676 Corporate and
eliminations (12,572) (9,647) (15,334) (20,980) Consolidated
operating income $198,248 223,045 368,825 386,946 Assets: Mohawk
$2,448,907 2,622,196 Dal-Tile 2,297,745 2,270,910 Unilin 3,333,319
3,353,389 Corporate and eliminations 229,837 101,316 Consolidated
assets $8,309,808 8,347,811 Reconciliation of EBITDA and Debt to
capital percentage Three Months Ended (Amounts in thousands) June
30, 2007 EBITDA reconciliation: Operating income $198,248 Other
(expense)/income 2,783 Depreciation and amortization 75,382 EBITDA
$276,413 Outstanding Debt (a) $2,501,463 Total stockholders' equity
4,008,830 Total capital (b) $6,510,293 Debt to capital (a)/(b) 38%
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
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