CALHOUN, Ga., Feb. 22, 2011 /CNW/ -- 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
------------------ (Amounts in thousands, except per December 31,
December 31, share data) 2010 2009 ------------- ------------- Net
sales $1,262,198 1,347,108 Cost of sales 920,532 1,005,414
--------------------------------- ------- --------- Gross profit
341,666 341,694 Selling, general and administrative expenses
256,026 294,829 ----------------------------------- ------- -------
Operating income 85,640 46,865 Interest expense 30,166 34,527 Other
(income) expense, net (1,324) 1,509 ---------------------------
------ ----- Earnings (loss) before income taxes 56,798 10,829
Income tax expense (benefit) 11,040 (8,950) Net earnings (loss)
$45,758 19,779 ------------------- ------- ------ Basic earnings
(loss) per share (1) $0.67 0.29 -----------------------------------
----- ---- Weighted-average common shares outstanding - basic
68,612 68,472 ------------------------------ ------ ------ Diluted
earnings (loss) per share (1) $0.66 0.29
--------------------------------- ----- ---- Weighted-average
common shares outstanding - diluted 68,843 68,682
------------------------------ ------ ------ (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
------------------------------ -------- ------- Depreciation and
amortization $74,522 81,827 ----------------------------- -------
------ Capital expenditures $69,940 37,644 --------------------
------- ------ Consolidated Statement of Operations Twelve Months
Ended ------------------- (Amounts in thousands, except per
December 31, December 31, share data) 2010 2009 -------------
------------- Net sales 5,319,072 5,344,024 Cost of sales 3,916,472
4,111,794 --------------------------------- --------- ---------
Gross profit 1,402,600 1,232,230 Selling, general and
administrative expenses 1,088,431 1,188,500
----------------------------------- --------- --------- Operating
income 314,169 43,730 Interest expense 133,151 127,031 Other
(income) expense, net (7,166) (1,108) ---------------------------
------ ------ Earnings (loss) before income taxes 188,184 (82,193)
Income tax expense (benefit) 2,713 (76,694) Net earnings (loss)
185,471 (5,499) ------------------- ------- ------ Basic earnings
(loss) per share (1) 2.66 (0.08)
----------------------------------- ---- ----- Weighted-average
common shares outstanding - basic 68,578 68,452
------------------------------ ------ ------ Diluted earnings
(loss) per share (1) 2.65 (0.08) ---------------------------------
---- ----- Weighted-average common shares outstanding - diluted
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 319,712 672,205
------------------------------ ------- ------- Depreciation and
amortization 296,773 303,004 ----------------------------- -------
------- Capital expenditures 156,180 108,925 --------------------
------- ------- Consolidated Balance Sheet Data (Amounts in
thousands) December 31, December 31, 2010 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
---------- --------- As of or for the Three Segment Information
Months Ended ---------------------- December 31, December 31,
(Amounts in thousands) 2010 2009 ------------- ------------- Net
sales: Mohawk $667,230 738,716 Dal-Tile 317,354 329,985 Unilin
297,415 298,331 Intersegment sales (19,801) (19,924) Consolidated
net sales $1,262,198 1,347,108 ---------------------- ----------
--------- Operating income (loss): Mohawk $48,804 16,269 Dal-Tile
19,902 11,528 Unilin 20,864 25,331 Corporate and eliminations
(3,930) (6,263) Consolidated operating income $85,640 46,865
---------------------- ------- ------ Assets: Mohawk Dal-Tile
Unilin Corporate and eliminations Consolidated assets
------------------- As of or for the Twelve Segment Information
Months Ended ----------------------- December 31, December 31,
(Amounts in thousands) 2010 2009 ------------- ------------- Net
sales: Mohawk 2,844,876 2,856,741 Dal-Tile 1,367,442 1,426,757
Unilin 1,188,274 1,128,315 Intersegment sales (81,520) (67,789)
Consolidated net sales 5,319,072 5,344,024 ----------------------
--------- --------- Operating income (loss): Mohawk 122,904
(125,965) Dal-Tile 97,334 84,154 Unilin 114,298 105,953 Corporate
and eliminations (20,367) (20,412) Consolidated operating income
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 ------------------
December 31, December 31, 2010 2009 ------------- ------------- Net
sales $1,262,198 1,347,108 Adjustments to net sales Commercial
carpet tile reserve - - Impact of shipping days 95,145 - Exchange
rate 18,557 - Adjusted net sales $1,375,900 1,347,108
------------------ ---------- --------- Twelve Months Ended
------------------- December 31, December 31, 2010 2009
------------- ------------- Net sales 5,319,072 5,344,024
Adjustments to net sales Commercial carpet tile reserve - 121,224
Impact of shipping days - - Exchange rate 36,588 - Adjusted net
sales 5,355,660 5,465,248 ------------------ --------- ---------
Reconciliation of Segment Net Sales to Adjusted Segment Net Sales
(Amounts in thousands) Three Months Ended ------------------
December 31, December 31, Mohawk segment 2010 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, December 31, 2010 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, December 31, 2010 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, December 31, 2010 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 ------------------
December 31, December 31, Mohawk segment 2010 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. Frank H. Boykin, Chief Financial Officer,
+1-706-624-2695 Web Site: http://www.mohawkind.com
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