CALHOUN, Ga., Feb. 25 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced 2009 fourth quarter net earnings of
$20 million and diluted earnings per share (EPS) of $0.29 which
included a restructuring charge of approximately $30 million
primarily related to our distribution and manufacturing
infrastructure. Excluding the restructuring charge, net earnings
and EPS would have been $39 million and $0.56 per share,
respectively. In the fourth quarter of 2008, the net loss was $128
million and loss per share was $1.87. Excluding the 2008 fourth
quarter goodwill, intangible and restructuring charges, net loss
and loss per share would have been $5.1 million and $0.08 per
share, respectively. Net sales for the 2009 fourth quarter were
$1,347 million, a decrease of 9% (11% with a constant exchange
rate) from 2008. Strong working capital management, reductions in
capital spending and active cost control enabled generation of free
cash flow of $222 million for the quarter. For the full year of
2009, our net loss was $5 million or a net loss per share of $0.08.
For the full year of 2008, net loss and loss per share were $1,458
million and $21.32 per share, respectively. Net sales for 2009 were
$5,344 million representing a 22% decrease from 2008. The sales
decrease for both the quarter and the year in the U.S. and Europe
is primarily attributable to continuing weak consumer discretionary
spending, low home sales and soft business investment. In
commenting on the fourth quarter results, Jeffrey S. Lorberbaum,
Chairman and CEO stated, "Our fourth quarter earnings exceeded
expectations due to the implementation of cost savings efforts,
personnel reductions and plant consolidations. Our balance sheet is
strong with over $500 million of cash and a net debt to total
capital ratio of 26%. All our segments have reduced infrastructure
and capacity and improved productivity. New products have been
developed in all segments that will enhance our sales and market
position. In spite of the very difficult environment, we are
strategically positioning our company for growth. Our geographic
product expansion continues with enhanced distribution of ceramic
tile in Mexico, laminate in Russia and wood flooring in Western
Europe. Environmental sustainability is a priority and Newsweek
recognized Mohawk as one of the top 15 companies in the consumer
product category for our efforts." Mohawk segment sales were down
8% for the fourth quarter, better than the industry. We are focused
on streamlining the business and reducing costs in this segment. We
have reorganized our commercial carpet manufacturing operations,
consolidated our backing facilities, combined carpet and ceramic
distribution warehousing and further reduced staffing levels. In
the first quarter of 2010, we are implementing a price increase to
recover raw material cost inflation. Our proprietary Smart Strand
brand has achieved broad customer acceptance in the market place as
a high value alternative to nylon and polyester due to its superior
softness, enhanced performance and easy maintenance. Dal-Tile sales
for the fourth quarter were down 20% as reported or 21% with a
constant exchange rate. Dal-Tile continues to outperform the market
with our broad product offering and market saturation. The
commercial industry decline is impacting our ceramic business more
significantly than other segments. Dal-Tile's leading design,
superior quality and extensive distribution infrastructure
distinguish us from the market. We have introduced "Out Stand," a
new technology for the commercial market, with a 60% recycled
content, more durable surface, better stain resistance and
anti-microbial protection. We have expanded our position in the
Home Centers and the Mexican market with product innovation and
superior service. We have increased our operational efficiency and
lowered our costs through process innovation and consolidation
initiatives, including the closing of our Dallas ceramic tile
manufacturing operation. Unilin sales increased 2% for the quarter
as reported and decreased 7% on a constant exchange rate. Our
operating margin for the quarter was 9% and the EBITDA margin was
approximately 22%. Although business conditions are difficult for
Europe and the U.S., we believe the category has reached the bottom
of the cycle. It is our view that the European market could improve
more rapidly than the U.S. since European consumers generally rely
less on credit and housing has not contracted as severely. We are
pursuing multiple strategies to maximize our laminate sales
including, new product introductions at lower prices, additional
technological innovation, geographic expansion and growth in the
DIY channel. We plan to develop business through the local
distribution we acquired in the U.K. in 2009, continued growth of
our European wood flooring business with an expanded product
offering and increased presence in Russia with local manufacturing.
Unilin has implemented many cost reductions to lower SG&A,
reduce manufacturing costs and manage inventory levels while
further investing in product innovation. The first quarter is
seasonally the slowest quarter of the year. The residential
category should improve during the year while the commercial
category still faces significant headwinds. We are implementing a
price increase on carpet and wood products to offset rising
material costs but the lag in implementation will negatively impact
the first quarter. Interest costs this year will be higher
primarily due to rates increasing from our new agreement. Our first
quarter guidance for earnings is $0.10-$0.20 per share excluding
restructuring charges. The economy improved in the fourth quarter
and continued growth is expected throughout 2010. After our
seasonally slower first quarter, future periods should improve as
we move through the year. The improvements we have implemented
throughout our business and the realization of price increases will
benefit us in future quarters. Our business is financially strong,
committed to ongoing process improvement and maximizing our long
term results. Certain of the statements in the immediately
preceding paragraphs, particularly anticipating future performance,
business prospects, growth and operating strategies and similar
matters and those that include the words "could," "should,"
"believes," "anticipates," "expects," and "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 costs; timing and level of capital
expenditures; integration of acquisitions; rationalization of
operations; claims; 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, and rugs. 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 26, 2010 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. Conference ID # 49764409. A
conference call replay will also be available until March 12, 2010
by dialing 800-642-1687 for US/local calls and 706-645-9291 for
International/Local calls and entering Conference ID # 49764409.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statement of
Operations (Amounts in thousands, except per share data) Three
Months Ended Year Ended ----------------------------
---------------------------- December 31, December 31, December 31,
December 31, 2009 2008 2009 2008 ------------ ------------
------------ ------------ Net sales $1,347,108 1,485,172 5,344,024
6,826,348 Cost of sales 1,005,414 1,129,210 4,111,794 5,088,584
------------------------------------------------------------------------
Gross profit 341,694 355,962 1,232,230 1,737,764 Selling, general
and administrative expenses 294,829 324,892 1,188,500 1,318,501
Impairment of goodwill and other intangibles - 124,485 - 1,543,397
------------------------------------------------------------------------
Operating income (loss) 46,865 (93,415) 43,730 (1,124,134) Interest
expense 34,527 30,001 127,031 127,050 Other expense (income), net
1,509 18,352 (1,108) 26,982
------------------------------------------------------------------------
Earnings (loss) before income taxes 10,829 (141,768) (82,193)
(1,278,166) Income tax (benefit) expense (8,950) (14,153) (76,694)
180,062
------------------------------------------------------------------------
Net earnings (loss) $19,779 (127,615) (5,499) (1,458,228)
-----------------------------------------------------------------------
Basic earnings (loss) per share $0.29 (1.87) (0.08) (21.32)
------------------------------------------------------------------------
Weighted-average common shares outstanding - basic 68,472 68,416
68,452 68,401
------------------------------------------------------------------------
Diluted earnings (loss) per share $0.29 (1.87) (0.08) (21.32)
------------------------------------------------------------------------
Weighted-average common shares outstanding - diluted 68,682 68,416
68,452 68,401
------------------------------------------------------------------------
Other Financial Information (Amounts in thousands) Net cash
provided by operating activities $259,611 199,107 672,205 576,086
------------------------------------------------------------------------
Depreciation and amortization $81,827 69,034 303,004 295,054
------------------------------------------------------------------------
Capital expenditures $37,644 62,502 108,925 217,824
------------------------------------------------------------------------
Consolidated Balance Sheet Data (Amounts in thousands) December 31,
December 31, 2009 2008 ------------- ------------ ASSETS Current
assets: Cash and cash equivalents $531,458 93,519 Receivables, net
673,931 696,284 Inventories 892,981 1,168,272 Prepaid expenses
108,947 125,603 Deferred income taxes and other current assets
151,683 162,571
------------------------------------------------------------------------
Total current assets 2,359,000 2,246,249 Property, plant and
equipment, net 1,791,412 1,925,742 Goodwill 1,411,128 1,399,434
Intangible assets, net 785,342 847,850 Deferred income taxes and
other non-current assets 44,564 26,900
------------------------------------------------------------------------
$6,391,446 6,446,175
------------------------------------------------------------------------
LIABILITIES AND EQUITY Current liabilities: Current portion of
long-term debt $52,907 94,785 Accounts payable and accrued expenses
831,115 782,131
------------------------------------------------------------------------
Total current liabilities 884,022 876,916 Long-term debt, less
current portion 1,801,572 1,860,001 Deferred income taxes and other
long-term liabilities 471,570 524,325
------------------------------------------------------------------------
Total liabilities 3,157,164 3,261,242
------------------------------------------------------------------------
Total equity 3,234,282 3,184,933
------------------------------------------------------------------------
$6,391,446 6,446,175
------------------------------------------------------------------------
Segment Information (Amounts in thousands) As of or for the As of
or for the Three Months Ended Year Ended
---------------------------- --------------------------- December
31, December 31, December 31, December 31, 2009 2008 2009 2008
------------ ------------ ------------ ------------ Net sales:
Mohawk $738,716 800,886 2,856,741 3,628,183 Dal-Tile 329,985
412,780 1,426,757 1,815,373 Unilin 298,331 292,143 1,128,315
1,465,208 Intersegment sales (19,924) (20,637) (67,789) (82,416)
------------------------------------------------------------------------
Consolidated net sales $1,347,108 1,485,172 5,344,024 6,826,348
------------------------------------------------------------------------
Operating income (loss): Mohawk $16,269 (48,610) (125,965)
(216,152) Dal-Tile 11,528 41,438 84,154 (323,370) Unilin 25,331
(82,439) 105,953 (564,911) Corporate and eliminations (6,263)
(3,804) (20,412) (19,701)
------------------------------------------------------------------------
Consolidated operating income (loss) $46,865 (93,415) 43,730
(1,124,134)
------------------------------------------------------------------------
Assets: Mohawk $1,582,652 1,876,696 Dal-Tile 1,546,393 1,693,765
Unilin 2,598,182 2,663,599 Corporate and eliminations 664,219
212,115
------------------------------------------------------------------------
Consolidated assets $6,391,446 6,446,175
------------------------------------------------------------------------
Reconciliation of Net Sales to Adjusted Net Sales (Amounts in
thousands) Three Months Ended -------------------------------------
December 31, 2009 December 31, 2008 -----------------
----------------- Net sales $1,347,108 1,485,172 Add: Exchange rate
(27,400) -
-------------------------------------------------------------------------
Adjusted net sales $1,319,708 1,485,172
-------------------------------------------------------------------------
Reconciliation of Segment Net Sales to Adjusted Segment Net Sales
(Amounts in thousands) Three Months Ended
---------------------------------- December 31, December 31, 2009
2008 -------------- ------------ Dal-Tile segment
-------------------------------------------------------------------------
Net sales $329,985 412,780 Add: Exchange rate (1,848) -
-------------------------------------------------------------------------
Adjusted net sales $328,137 412,780
-------------------------------------------------------------------------
Unilin segment
-------------------------------------------------------------------------
Net sales $298,331 292,143 Add: Exchange rate (25,552) -
-------------------------------------------------------------------------
Adjusted net sales $272,779 292,143
-------------------------------------------------------------------------
Reconciliation of Net Earnings (Loss) to Adjusted Net Earnings
(Loss) (Amounts in thousands, except per share data) Three Months
Ended -------------------------------- December 31, December 31,
2009 2008 ------------ ------------
-------------------------------------------------------------------------
Net earnings (loss) $19,779 (127,615) Add: Impairment of goodwill
and other intangibles - 124,485 Add: Business restructurings 29,787
29,670 Add: Income tax expense (benefit) (10,872) (31,672)
-------------------------------------------------------------------------
Adjusted net earnings (Loss) $38,694 (5,132)
-------------------------------------------------------------------------
Adjusted diluted earnings per share $0.56 (0.08) Weighted-average
common shares outstanding - diluted 68,682 68,416 Reconciliation of
Free Cash Flow (Amounts in thousands) Three Months Ended Year Ended
------------------ ----------------- December 31, 2009 December 31,
2009 ------------------ ----------------- Net cash provided by
operations $259,611 672,205 Less: Net cash used in investing
(37,644) (114,849) Less: Acquisition, net of cash acquired - 5,924
-----------------------------------------------------
----------------- Free cash flow $221,967 563,280
-----------------------------------------------------
----------------- Reconciliation of Unilin Segment Operating Income
to Unilin Segment EBITDA (Amounts in thousands) Three Months Ended
------------------- December 31, 2009 EBITDA reconciliation
-----------------------------------------------------------
Operating income $25,331 Less: Other expense (1,293) Add:
Depreciation and amortization 41,400
----------------------------------------------------------- EBITDA
$65,438 -----------------------------------------------------------
EBITDA margin 22% Reconciliation of Total Debt to Net Debt (Amounts
in thousands) As of ----------------- December 31, 2009
----------------- Current portion of long-term debt $52,907
Long-term debt, less current portion 1,801,572 Less: Cash and cash
equivalents (531,458)
-------------------------------------------------------------------------
Net Debt $1,323,021
-------------------------------------------------------------------------
Reconciliation of Total Debt and Equity to Total Capitalization
(Amounts in thousands) As of ----------------- December 31, 2009
----------------- Current portion of long-term debt $52,907
Long-term debt, less current portion 1,801,572 Total equity
3,234,282
-------------------------------------------------------------------------
Total Capitalization $5,088,761
-------------------------------------------------------------------------
Net Debt to Capitalization 26% 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, +1-706-624-2695 Web Site:
http://www.mohawkind.com/
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