CALHOUN, Ga., Feb. 22, 2011 /PRNewswire/ -- Mohawk Industries,
Inc. (NYSE: MHK) today announced 2010 fourth quarter net earnings
of $46 million and diluted earnings
per share (EPS) of $0.66. For the
fourth quarter of 2009, the net earnings were $20 million and EPS was $0.29. Excluding unusual items, 2009 fourth
quarter net earnings and EPS were $39
million and $0.56 per share.
Net sales for the fourth quarter of 2010 were $1.3 billion which was a decrease of
approximately 6% versus 2009. Net sales for the quarter increased
2% over the prior year on a constant days and exchange rate basis.
For the full year of 2010, our net earnings were $185 million and EPS was $2.65. For the full year of 2009, our net loss
was $5 million and loss per share was
$0.08. Net sales for the full year of
2010 were $5.3 billion representing a
slight decrease from 2009. On a constant exchange rate and
excluding 2009 sales adjustments, net sales decreased 2%. Our cash
position and liquidity remain strong with over $500 million available immediately after retiring
$300 million of bonds in January 2011.
Commenting on the fourth quarter results, Jeffrey S. Lorberbaum, Chairman and CEO stated,
"Our earnings exceeded our expectations as results were positively
impacted by enhanced manufacturing efficiencies, benefits from
restructuring actions, reducing SG&A costs and improved process
consistency. Our operating margin of 6.8% continues to show
improvement compared to last year despite rising raw material
costs. During 2010, our emphasis on innovation, new products,
manufacturing improvements and cost reduction have benefited our
margins and increased earnings. Investments in the Russian, Chinese
and Mexican flooring markets are expanding our international
presence and will provide platforms for future revenue and profit
growth. The consensus among economists is that these markets will
outperform the more mature U.S. and Western European flooring
markets. The U.S. industry decline experienced over the past few
years appears to have bottomed with some markets showing signs of
improvement."
After adjusting for the lower number of days in the quarter, our
Mohawk segment net sales decreased 3% but achieved the highest
operating margin in two years despite increasing raw material
costs. Manufacturing costs, material yields and process controls
have improved from last year. Our market position, after adjusting
for the number of days in the period, stabilized in the fourth
quarter as we accelerated key introductions in new residential
polyester carpets and commercial carpet tile products. We
implemented a 7-10% carpet price increase in February to offset our
raw material inflation. Sales of our commercial carpet tile
continue to grow supported by a broader product offering and an
expanded sales force. Improved planning and inventory processes
have enhanced our service levels, reducing delivery time and
costs.
Our Dal-Tile segment net sales declined 4% as reported but
increased 4% after adjusting for the lower number of days this
period and a constant exchange rate. In the fourth quarter, we
began implementing a price increase of 1-2% to cover rising
transportation costs. We have added sales personnel focusing on
large commercial accounts and housing contractors to maximize
participation in these improving markets. Dal-Tile is leading the
industry with advances in decorating technologies created by our
Reveal Imaging. We are introducing products that have greater
distinction between individual tiles, stronger natural visuals and
new textures. We are increasing our Mexican sales and
customer base by expanding our product selection and sales force.
Our joint venture in China
is broadening its product offering, implementing new production
technology and supplying tile to existing Mohawk markets. The
investment in China will position
us long term to take advantage of this growing market.
Our Unilin revenues were flat in the period as reported, but
increased 14% after adjusting for the number of days in the period
and the exchange rate. Our margins remain compressed as our
material costs have continued to escalate. We implemented price
increases in our board products in the fourth quarter and are
executing additional price increases in boards, laminate and
roofing in the first quarter to recover continued inflation and
improve margins. Our laminate flooring business is increasing with
Northern Europe, Russia and Asia out-performing. We are expanding our home
center participation by leveraging our technology and styling
leadership. The introduction of new furniture finishes and high
definition technology continues to affirm our leadership in
laminate technology. We are proceeding with construction of our
Russian laminate plant and expanding our Malaysian wood
manufacturing.
The economic recovery and stronger consumer spending will
positively impact our industry in 2011. The seasonally slow first
quarter is being affected by harsh weather and increasing raw
material costs offsetting savings from our cost initiatives. The
Chinese joint venture's extended holiday shutdown will unfavorably
impact our first quarter. The residential remodeling market should
improve with increased consumer spending and higher home sales.
Commercial remodeling is growing as businesses invest to maximize
their operating results. For the balance of 2011, we anticipate an
improvement in our results as price increases are implemented,
volume expands and the recovery continues. With these
factors, our first quarter guidance for earnings is $0.36 to $0.44 per share, excluding restructuring
charges.
We remain committed to enhancing our organization to drive
innovation in product, processes and costs. Advances in our
marketing, product introductions, manufacturing efficiencies, and
service should yield higher profitability. This year, a higher
level of capital investments will improve productivity, support new
product development and expand our global reach.
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, 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 local
distribution.
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.
There will be a conference call Wednesday, February 23, 2011 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 # 38370453. A conference
call replay will also be available until March 9, 2011 by dialing 800-642-1687 for
US/local calls and 706-645-9291 for International/Local calls and
entering Conference ID # 38370453.
MOHAWK INDUSTRIES, INC. AND
SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of
Operations
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
(Amounts in thousands, except
per share data)
|
December 31,
2010
|
|
December 31,
2009
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,262,198
|
|
1,347,108
|
|
5,319,072
|
|
5,344,024
|
|
Cost of sales
|
920,532
|
|
1,005,414
|
|
3,916,472
|
|
4,111,794
|
|
Gross
profit
|
341,666
|
|
341,694
|
|
1,402,600
|
|
1,232,230
|
|
Selling, general and
administrative expenses
|
256,026
|
|
294,829
|
|
1,088,431
|
|
1,188,500
|
|
Operating income
|
85,640
|
|
46,865
|
|
314,169
|
|
43,730
|
|
Interest expense
|
30,166
|
|
34,527
|
|
133,151
|
|
127,031
|
|
Other (income) expense,
net
|
(1,324)
|
|
1,509
|
|
(7,166)
|
|
(1,108)
|
|
Earnings (loss)
before income taxes
|
56,798
|
|
10,829
|
|
188,184
|
|
(82,193)
|
|
Income tax expense (benefit)
|
11,040
|
|
(8,950)
|
|
2,713
|
|
(76,694)
|
|
Net earnings
(loss)
|
$
45,758
|
|
19,779
|
|
185,471
|
|
(5,499)
|
|
Basic earnings (loss) per share
(1)
|
$
0.67
|
|
0.29
|
|
2.66
|
|
(0.08)
|
|
Weighted-average common shares
outstanding - basic
|
68,612
|
|
68,472
|
|
68,578
|
|
68,452
|
|
Diluted earnings (loss) per
share (1)
|
$
0.66
|
|
0.29
|
|
2.65
|
|
(0.08)
|
|
Weighted-average common shares
outstanding - diluted
|
68,843
|
|
68,682
|
|
68,784
|
|
68,452
|
|
|
|
|
|
|
|
|
|
|
(1) Basic and diluted
earnings per share for the twelve months ended December 31, 2010,
includes a decrease of approximately $0.04 and $0.05, respectively,
for an adjustment to the fair value of a redeemable noncontrolling
interest in a consolidated subsidiary of the Company.
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Information
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
$
109,318
|
|
259,611
|
|
319,712
|
|
672,205
|
|
Depreciation and
amortization
|
$
74,522
|
|
81,827
|
|
296,773
|
|
303,004
|
|
Capital expenditures
|
$
69,940
|
|
37,644
|
|
156,180
|
|
108,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet
Data
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
354,217
|
|
531,458
|
|
Restricted cash
|
27,954
|
|
-
|
|
Receivables,
net
|
614,473
|
|
673,931
|
|
Inventories
|
1,007,503
|
|
892,981
|
|
Prepaid
expenses
|
91,731
|
|
108,947
|
|
Deferred income
taxes and other current assets
|
152,735
|
|
151,683
|
|
Total
current assets
|
2,248,613
|
|
2,359,000
|
|
Property, plant and equipment,
net
|
1,687,124
|
|
1,791,412
|
|
Goodwill
|
1,369,394
|
|
1,411,128
|
|
Intangible assets,
net
|
677,127
|
|
785,342
|
|
Deferred income taxes and other
non-current assets
|
116,668
|
|
44,564
|
|
|
$
6,098,926
|
|
6,391,446
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
350,588
|
|
52,907
|
|
Accounts payable and
accrued expenses
|
698,326
|
|
831,115
|
|
Total
current liabilities
|
1,048,914
|
|
884,022
|
|
Long-term debt, less current
portion
|
1,302,994
|
|
1,801,572
|
|
Deferred income taxes and other
long-term liabilities
|
440,021
|
|
471,570
|
|
Total
liabilities
|
2,791,929
|
|
3,157,164
|
|
Noncontrolling
interest
|
35,441
|
|
33,459
|
|
Total stockholders'
equity
|
3,271,556
|
|
3,200,823
|
|
|
$
6,098,926
|
|
6,391,446
|
|
|
|
|
|
|
|
|
|
|
Segment
Information
|
As of or for
the Three Months Ended
|
|
As of or for
the Twelve Months Ended
|
|
(Amounts in
thousands)
|
December 31,
2010
|
|
December 31,
2009
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Mohawk
|
$
667,230
|
|
738,716
|
|
2,844,876
|
|
2,856,741
|
|
Dal-Tile
|
317,354
|
|
329,985
|
|
1,367,442
|
|
1,426,757
|
|
Unilin
|
297,415
|
|
298,331
|
|
1,188,274
|
|
1,128,315
|
|
Intersegment
sales
|
(19,801)
|
|
(19,924)
|
|
(81,520)
|
|
(67,789)
|
|
Consolidated net sales
|
$
1,262,198
|
|
1,347,108
|
|
5,319,072
|
|
5,344,024
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Mohawk
|
$
48,804
|
|
16,269
|
|
122,904
|
|
(125,965)
|
|
Dal-Tile
|
19,902
|
|
11,528
|
|
97,334
|
|
84,154
|
|
Unilin
|
20,864
|
|
25,331
|
|
114,298
|
|
105,953
|
|
Corporate and
eliminations
|
(3,930)
|
|
(6,263)
|
|
(20,367)
|
|
(20,412)
|
|
Consolidated operating income
|
$
85,640
|
|
46,865
|
|
314,169
|
|
43,730
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Mohawk
|
|
|
|
|
$
1,637,319
|
|
1,582,652
|
|
Dal-Tile
|
|
|
|
|
1,644,448
|
|
1,546,393
|
|
Unilin
|
|
|
|
|
2,475,049
|
|
2,598,182
|
|
Corporate and
eliminations
|
|
|
|
|
342,110
|
|
664,219
|
|
Consolidated assets
|
|
|
|
|
$
6,098,926
|
|
6,391,446
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Earnings
to Adjusted Net Earnings and Adjusted Diluted Earnings Per
Share
|
|
|
(Amounts in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
December 31,
2009
|
|
|
|
|
|
Net earnings
|
|
|
$
19,779
|
|
|
|
|
|
Unusual items:
|
|
|
|
|
|
|
|
|
Business
restructurings
|
|
|
29,787
|
|
|
|
|
|
Income taxes
|
|
|
(10,872)
|
|
|
|
|
|
Adjusted net
earnings
|
|
|
$
38,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per
share
|
|
|
$
0.56
|
|
|
|
|
|
Weighted-average common shares
outstanding - diluted
|
|
|
68,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Sales to
Adjusted Net Sales
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
December 31,
2010
|
|
December 31,
2009
|
|
Net sales
|
$
1,262,198
|
|
1,347,108
|
|
5,319,072
|
|
5,344,024
|
|
Adjustments to net
sales
|
|
|
|
|
|
|
|
|
Commercial carpet tile
reserve
|
-
|
|
-
|
|
-
|
|
121,224
|
|
Impact of shipping
days
|
95,145
|
|
-
|
|
-
|
|
-
|
|
Exchange rate
|
18,557
|
|
-
|
|
36,588
|
|
-
|
|
Adjusted net
sales
|
$
1,375,900
|
|
1,347,108
|
|
5,355,660
|
|
5,465,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Net
Sales to Adjusted
Segment Net Sales
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
Mohawk segment
|
December 31,
2010
|
|
December 31,
2009
|
|
Net sales
|
$
667,230
|
|
738,716
|
|
Adjustments to net
sales
|
|
|
|
|
Impact of shipping
days
|
46,100
|
|
-
|
|
Adjusted net
sales
|
$
713,330
|
|
738,716
|
|
|
|
|
|
|
Dal-Tile segment
|
|
|
|
|
Net sales
|
$
317,354
|
|
329,985
|
|
Adjustments to net
sales
|
|
|
|
|
Impact of shipping
days
|
26,445
|
|
-
|
|
Exchange rate
|
(1,592)
|
|
-
|
|
Adjusted net
sales
|
$
342,207
|
|
329,985
|
|
|
|
|
|
|
Unilin segment
|
|
|
|
|
Net sales
|
$
297,415
|
|
298,331
|
|
Adjustments to net
sales
|
|
|
|
|
Impact of shipping
days
|
22,600
|
|
-
|
|
Exchange rate
|
20,149
|
|
-
|
|
Adjusted net
sales
|
$
340,164
|
|
298,331
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Gross Profit
to Adjusted Gross
Profit
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
Gross profit
|
$
341,666
|
|
341,694
|
|
Adjustments to gross
profit
|
|
|
|
|
Business
restructurings
|
-
|
|
22,295
|
|
Adjusted gross
profit
|
$
341,666
|
|
363,989
|
|
Adjusted gross margin as
a percent of net sales
|
27.1%
|
|
27.0%
|
|
|
|
|
|
|
Reconciliation of Selling,
General and Administrative
Expenses to Adjusted Selling,
General and Administrative Expenses
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
Selling, general and
administrative expenses
|
$
256,026
|
|
294,829
|
|
Adjustments to selling, general
and administrative expenses
|
|
|
|
|
Business
restructurings
|
-
|
|
7,492
|
|
Adjusted selling, general
and administrative expenses
|
$
256,026
|
|
302,321
|
|
Adjusted selling, general
and administrative expenses as a percent of net sales
|
20.3%
|
|
22.4%
|
|
|
|
|
|
|
Reconciliation of Operating
Income to Adjusted
Operating Income
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
Operating income
|
$
85,640
|
|
46,865
|
|
Adjustments to operating
income
|
|
|
|
|
Business
restructurings
|
-
|
|
29,787
|
|
Adjusted operating
income
|
$
85,640
|
|
76,652
|
|
Adjusted operating margin
as a percent of net sales
|
6.8%
|
|
5.7%
|
|
|
|
|
|
|
Reconciliation of Segment
Operating Income to
Adjusted Segment Operating
Income
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
Mohawk segment
|
December 31,
2010
|
|
December 31,
2009
|
|
Operating income
|
$
48,804
|
|
16,269
|
|
Adjustments to operating
income
|
|
|
|
|
Business
restructurings
|
-
|
|
20,189
|
|
Adjusted operating
income
|
$
48,804
|
|
36,458
|
|
Adjusted operating margin
as a percent of net sales
|
7.3%
|
|
4.9%
|
|
|
|
|
|
|
Dal-Tile segment
|
|
|
|
|
Operating income
|
$
19,902
|
|
11,528
|
|
Adjustments to operating
income
|
|
|
|
|
Add: Business
restructurings
|
-
|
|
9,598
|
|
Adjusted operating
income
|
$
19,902
|
|
21,126
|
|
Adjusted operating margin
as a percent of segment net sales
|
6.3%
|
|
6.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
SOURCE Mohawk Industries, Inc.