CALHOUN, Ga., Aug. 2, 2012
/PRNewswire/ -- Mohawk Industries, Inc. (NYSE: MHK) today
announced 2012 second quarter net earnings of $73 million and diluted earnings per share (EPS)
of $1.06. Net earnings excluding
restructuring charges were $79
million and EPS was $1.14, a
20% increase over last year's second quarter adjusted EPS. Net
sales for the second quarter of 2012 were $1.5 billion, in line with prior year and an
increase of 2% on a constant exchange rate. For the second quarter
of 2011, net earnings were $61
million and EPS was $0.88. Net
earnings excluding restructuring charges for the second quarter of
2011, were $66 million and EPS was
$0.95.
For the six months ending June 30,
2012, net sales were $2.9
billion, an increase of 2% versus prior year and 4% on a
constant exchange rate. Net earnings and EPS for the six-month
period were $114 million and
$1.64, respectively. Net earnings
excluding restructuring charges were $120
million and EPS was $1.73, an
increase of 25% over the six-month adjusted EPS results in 2011.
For the six months ending July 2,
2011, net sales were $2.8
billion, net earnings were $84
million and EPS was $1.22.
Excluding restructuring charges, net earnings and EPS were
$95 million and $1.38, respectively.
Commenting on Mohawk Industries' second quarter performance,
Jeffrey S. Lorberbaum, Chairman and
CEO, stated, "Selling prices offsetting raw material inflation,
productivity gains, product mix improvements and lower interest
costs all contributed to our results. Sales increased 2% on a
constant exchange rate with commercial sales continuing to outpace
residential sales. We continue to control SG&A cost while
increasing new product investments across all businesses. During
the quarter, we generated adjusted EBITDA of $187 million, free cash flow of $96 million and paid off $336 million of senior notes. We have addressed
many of today's economic challenges by enhancing our product
differentiation, reducing costs, improving efficiencies and
entering new product categories and geographies."
Mohawk segment adjusted operating income margin increased 110
basis points over 2011 with gains from pricing, improved product
mix and lower costs from productivity offsetting lower volume and
higher material costs. Segment sales were down 3% during the second
quarter. Carpet sales for both the industry and Mohawk were
approximately flat compared to last year with residential
remodeling activity slow. Our rug sales continued to be soft due to
lower retail sales, as well as retailers deferring promotional
activities and further reducing inventory within the channel.
During the quarter, Mohawk's SmartStrand® Silk™ premium
carpet collection experienced strong sales growth due to its
unsurpassed softness and proprietary environmental features. We
executed productivity improvements across the business with
particular gains from our capital investments and reduction of
waste.
Dal-Tile segment sales grew 7% during the quarter or 8% on a
constant exchange rate. The segment posted gains from increases in
both residential and commercial sales and growth in the Mexican
market. Operating margins were enhanced by higher volumes, greater
manufacturing efficiencies, improved material formulations and
increased recycling. To address the changing market demand, we
converted mosaic and floor tile production to porcelain, increased
our ability to make larger sizes and expanded our Reveal Imaging™
capabilities. The new Salamanca
facility in Mexico is producing
red-body tile for the domestic market. The plant's start-up costs
are in line with our expectations, and we anticipate positive
contributions in early 2013 due to higher volume and
productivity.
Unilin segment sales decreased 2% but increased 7% on a constant
exchange rate. Outside North
America, laminate and wood flooring sales grew from
continued expansion in the DIY channel, expanded distribution in
the U.K. and Australian sales. Our Russian facility is progressing
with increased productivity and is manufacturing more complex
products. In North America,
laminate sales grew from increased promotional activity by large
retailers and greater penetration in the home center channel.
Laminate collections featuring richly embossed surfaces, premium
long planks and our proprietary GenuEdge Technology ™ improved our
mix in both the remodeling and new construction markets. Our
insulated roofing product sales declined in Europe as the housing market contracted but
were offset by the growth of our insulation panels, which help to
meet energy efficiency goals.
Mohawk's commitment to product innovation, resource management
and process improvements yielded improved second quarter results.
Our investments in innovative products improved our mix and
contributed to higher margins. Though sales softened in the second
quarter, U.S. order rates have shown some improvement as we began
the third quarter. We do not expect material costs to follow oil
price declines due to specific higher chemical costs. In the U.S.,
low mortgage rates and higher housing starts should support future
flooring sales. In Europe, we will
have the normal seasonal slowing and expect the present trends
to continue with exchange rates being a headwind. Based on these
factors, our guidance for third quarter earnings is $0.96 to $1.05 per share, excluding any
restructuring costs.
We have addressed many of today's economic challenges by
enhancing our product differentiation, reducing costs, improving
efficiencies and entering new product categories and geographies.
We retain a strong financial position, which provides us
flexibility to invest in strategic opportunities going forward.
Mohawk is a leading supplier of flooring for both residential
and commercial applications. Mohawk provides a complete
selection for all markets of carpet, ceramic tile, laminate, wood,
stone, vinyl and rugs. These products are marketed under the
premier brands in the industry including Mohawk, Karastan, Lees,
Bigelow, Durkan, Mohawk Home, Daltile, American Olean, Unilin and
Quick-Step. Mohawk's unique merchandising and marketing
assists the consumer in creating exquisite floors to fulfill their
dreams. Mohawk provides a premium level of service with its own
trucking fleet and local distribution in the U.S. Mohawk's
international presence includes operations in Australia, Brazil, China, Europe, Malaysia, Mexico and Russia.
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; inflation
in raw material prices and other input costs; energy costs and
supply; timing and level of capital expenditures; timing and
implementation of price increases for the Company's products;
impairment charges; integration of acquisitions; international
operations; introduction of new products; rationalization of
operations; tax, product and other claims; litigation; and other
risks identified in Mohawk's SEC reports and public
announcements.
Conference call Friday, August 3,
2012 at 11:00 AM Eastern
Time
The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for
International/Local.
Conference ID # 98256242. A replay will also be available
until August 17, 2012 by dialing
855-859-2056 for US/local calls and 404-537-3406 for
International/Local calls and entering Conference ID #
98256242.
|
MOHAWK
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of
Operations
|
Three
Months Ended
|
|
Six Months
Ended
|
|
(Amounts in thousands, except per share
data)
|
June
30,
2012
|
|
July
2,
2011
|
|
June
30,
2012
|
|
July
2,
2011
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$1,469,793
|
|
1,477,854
|
|
2,878,828
|
|
2,821,449
|
|
Cost of
sales
|
1,081,329
|
|
1,095,607
|
|
2,130,938
|
|
2,097,610
|
|
Gross profit
|
388,464
|
|
382,247
|
|
747,890
|
|
723,839
|
|
Selling,
general and administrative expenses
|
280,746
|
|
280,547
|
|
568,196
|
|
566,055
|
|
Operating
income
|
107,718
|
|
101,700
|
|
179,694
|
|
157,784
|
|
Interest
expense
|
18,844
|
|
25,760
|
|
41,342
|
|
52,355
|
|
Other
(income) expense, net
|
440
|
|
396
|
|
(1,385)
|
|
381
|
|
Earnings before income
taxes
|
88,434
|
|
75,544
|
|
139,737
|
|
105,048
|
|
Income tax
expense
|
15,246
|
|
13,450
|
|
25,537
|
|
18,416
|
|
Net
earnings
|
73,188
|
|
62,094
|
|
114,200
|
|
86,632
|
|
Net
earnings attributable to noncontrolling interest
|
-
|
|
(1,191)
|
|
(635)
|
|
(2,287)
|
|
Net earnings attributable to
Mohawk Industries, Inc.
|
$
73,188
|
|
60,903
|
|
113,565
|
|
84,345
|
|
Basic
earnings per share attributable to Mohawk Industries,
Inc.
|
$
1.06
|
|
0.89
|
|
1.65
|
|
1.23
|
|
Weighted-average common shares outstanding -
basic
|
68,984
|
|
68,744
|
|
68,923
|
|
68,709
|
|
Diluted
earnings per share attributable to Mohawk Industries,
Inc.
|
$
1.06
|
|
0.88
|
|
1.64
|
|
1.22
|
|
Weighted-average common shares outstanding -
diluted
|
69,259
|
|
68,981
|
|
69,204
|
|
68,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Financial Information
|
|
|
|
|
|
|
|
|
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
$
140,046
|
|
96,003
|
|
95,576
|
|
28,590
|
|
Depreciation and amortization
|
$
71,831
|
|
74,344
|
|
145,117
|
|
148,597
|
|
Capital
expenditures
|
$
44,436
|
|
59,708
|
|
87,687
|
|
112,519
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
2012
|
|
July
2,
2011
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
$
319,463
|
|
285,422
|
|
Receivables, net
|
|
|
|
|
782,122
|
|
797,893
|
|
Inventories
|
|
|
|
|
1,161,073
|
|
1,102,769
|
|
Prepaid expenses and other current
assets
|
|
|
|
|
144,915
|
|
125,815
|
|
Deferred income
taxes
|
|
|
|
|
126,613
|
|
135,338
|
|
Total
current assets
|
|
|
|
|
2,534,186
|
|
2,447,237
|
|
Property,
plant and equipment, net
|
|
|
|
|
1,652,444
|
|
1,730,914
|
|
Goodwill
|
|
|
|
|
1,363,356
|
|
1,418,830
|
|
Intangible
assets, net
|
|
|
|
|
564,948
|
|
681,178
|
|
Deferred
income taxes and other non-current assets
|
|
|
|
|
149,843
|
|
110,841
|
|
|
|
|
|
$6,264,777
|
|
6,389,000
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt
|
|
|
|
|
$
57,158
|
|
453,185
|
|
Accounts
payable and accrued expenses
|
|
|
|
|
733,411
|
|
771,297
|
|
Total
current liabilities
|
|
|
|
|
790,569
|
|
1,224,482
|
|
Long-term
debt, less current portion
|
|
|
|
|
1,570,530
|
|
1,155,150
|
|
Deferred
income taxes and other long-term liabilities
|
|
|
|
|
427,360
|
|
460,109
|
|
Total
liabilities
|
|
|
|
|
2,788,459
|
|
2,839,741
|
|
Noncontrolling interest
|
|
|
|
|
-
|
|
32,300
|
|
Total
stockholders' equity
|
|
|
|
|
3,476,318
|
|
3,516,959
|
|
|
|
|
|
$
6,264,777
|
|
6,389,000
|
|
|
|
|
|
|
|
|
|
Segment
Information
|
Three
Months Ended
|
|
As of or
for the Six Months Ended
|
|
(Amounts in thousands)
|
June
30,
2012
|
|
July
2,
2011
|
|
June
30,
2012
|
|
July
2,
2011
|
|
|
|
|
|
|
|
|
|
Net
sales:
|
|
|
|
|
|
|
|
|
Mohawk
|
$
734,493
|
|
758,064
|
|
1,434,373
|
|
1,449,229
|
|
Dal-Tile
|
404,288
|
|
379,469
|
|
797,213
|
|
723,884
|
|
Unilin
|
354,374
|
|
363,097
|
|
691,798
|
|
688,929
|
|
Intersegment sales
|
(23,362)
|
|
(22,776)
|
|
(44,556)
|
|
(40,593)
|
|
Consolidated net sales
|
$1,469,793
|
|
1,477,854
|
|
2,878,828
|
|
2,821,449
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
Mohawk
|
$
37,136
|
|
31,201
|
|
62,418
|
|
48,241
|
|
Dal-Tile
|
36,432
|
|
32,138
|
|
62,460
|
|
49,838
|
|
Unilin
|
40,575
|
|
46,209
|
|
67,721
|
|
72,459
|
|
Corporate and
eliminations
|
(6,425)
|
|
(7,848)
|
|
(12,905)
|
|
(12,754)
|
|
Consolidated operating income
|
$
107,718
|
|
101,700
|
|
179,694
|
|
157,784
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Mohawk
|
|
|
|
|
$
1,791,376
|
|
1,783,630
|
|
Dal-Tile
|
|
|
|
|
1,742,563
|
|
1,700,482
|
|
Unilin
|
|
|
|
|
2,539,997
|
|
2,717,032
|
|
Corporate and
eliminations
|
|
|
|
|
190,841
|
|
187,856
|
|
Consolidated assets
|
|
|
|
|
$
6,264,777
|
|
6,389,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Earnings Attributable to
Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to
Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share
Attributable to Mohawk Industries, Inc.
|
|
(Amounts in thousands, except per share
data)
|
|
|
|
|
Three
Months Ended
|
|
Six Months
Ended
|
|
June
30,
2012
|
|
July
2,
2011
|
|
June
30,
2012
|
|
July
2,
2011
|
|
Net
earnings attributable to Mohawk Industries, Inc.
|
$
73,188
|
|
60,903
|
|
113,565
|
|
84,345
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
Business
restructurings
|
8,226
|
|
6,514
|
|
8,226
|
|
13,327
|
|
Income
taxes
|
(2,201)
|
|
(1,818)
|
|
(2,201)
|
|
(2,836)
|
|
Adjusted
net earnings attributable to Mohawk Industries, Inc.
|
$
79,213
|
|
65,599
|
|
119,590
|
|
94,836
|
|
|
|
|
|
|
|
|
|
Adjusted
diluted earnings per share attributable to Mohawk Industries,
Inc.
|
$
1.14
|
|
0.95
|
|
1.73
|
|
1.38
|
|
Weighted-average common shares outstanding -
diluted
|
69,259
|
|
68,981
|
|
69,204
|
|
68,942
|
|
|
Reconciliation of Operating Cash Flow to Free Cash
Flow
|
|
|
(Amounts in thousands)
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
Net cash
provided by operating activities
|
$
140,046
|
|
Additions
to property, plant and equipment
|
(44,436)
|
|
Free cash flow
|
$
95,610
|
|
|
|
Reconciliation of Net Earnings to Adjusted
EBITDA
|
|
|
(Amounts in thousands)
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
Net
earnings
|
$
73,188
|
|
Income tax
expense
|
15,246
|
|
Interest
expense
|
18,844
|
|
Depreciation and amortization
|
71,831
|
|
EBITDA
|
179,109
|
|
Business
restructurings
|
8,226
|
|
Adjusted EBITDA
|
$
187,335
|
|
|
Reconciliation of Net Sales to Net Sales on a
Constant Exchange Rate
|
|
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Six Months
Ended
|
|
June
30,
2012
|
|
July
2,
2011
|
|
June
30,
2012
|
|
July
2,
2011
|
|
Net
sales
|
$
1,469,793
|
|
1,477,854
|
|
2,878,828
|
|
2,821,449
|
|
Adjustment
to net sales on a constant exchange rate:
|
|
|
|
|
|
|
|
|
Exchange
rate
|
36,326
|
|
-
|
|
49,962
|
|
-
|
|
Net sales on a
constant exchange rate
|
$
1,506,119
|
|
1,477,854
|
|
2,928,790
|
|
2,821,449
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Net Sales to Segment Net
Sales on a Constant Exchange Rate
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
Dal-Tile
|
June 30,
2012
|
|
July 2,
2011
|
|
Net
sales
|
$
404,288
|
|
379,469
|
|
Adjustment
to segment net sales on a constant exchange rate:
|
|
|
|
|
Exchange
rate
|
3,555
|
|
-
|
|
Segment net sales on a
constant exchange rate
|
$
407,843
|
|
379,469
|
|
|
|
|
|
Reconciliation of Segment Net Sales to Segment Net
Sales on a Constant Exchange Rate
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
Unilin
|
June 30,
2012
|
|
July 2,
2011
|
|
Net
sales
|
$
354,374
|
|
363,097
|
|
Adjustment
to segment net sales on a constant exchange rate:
|
|
|
|
Exchange
rate
|
32,771
|
|
-
|
|
Segment net sales on a
constant exchange rate
|
$
387,145
|
|
363,097
|
|
|
|
|
|
Reconciliation of Gross Profit to Adjusted Gross
Profit
|
|
|
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
July 2,
2011
|
|
Gross
Profit
|
$
388,464
|
|
382,247
|
|
Adjustment
to gross profit:
|
|
|
|
|
Business
restructurings
|
6,636
|
|
5,532
|
|
Adjusted gross profit
|
$
395,100
|
|
387,779
|
|
Adjusted gross profit as a percent of
net sales
|
26.9%
|
|
26.2%
|
|
|
|
|
|
Reconciliation of Operating Income to Adjusted
Operating Income
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
July 2,
2011
|
|
Operating
income
|
$
107,718
|
|
101,700
|
|
Adjustment
to operating income:
|
|
|
|
|
Business
restructurings
|
8,226
|
|
6,514
|
|
Adjusted operating income
|
$
115,944
|
|
108,214
|
|
Adjusted operating margin as a percent
of net sales
|
7.9%
|
|
7.3%
|
|
|
|
|
|
Reconciliation of Segment Operating Income to
Adjusted Segment Operating Income
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
Mohawk
|
June 30,
2012
|
|
July 2,
2011
|
|
Operating
income
|
$
37,136
|
|
31,201
|
|
Adjustment
to segment operating income:
|
|
|
|
|
Business
restructurings
|
7,383
|
|
6,514
|
|
Adjusted
segment operating income
|
$
44,519
|
|
37,715
|
|
Adjusted operating margin as
a percent of net sales
|
6.1%
|
|
5.0%
|
|
|
|
|
|
Reconciliation of Segment Operating Income to
Adjusted Segment Operating Income
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
Unilin
|
June 30,
2012
|
|
July 2,
2011
|
|
Operating
income
|
$
40,575
|
|
46,209
|
|
Adjustment
to segment operating income:
|
|
|
|
|
Business
restructurings
|
843
|
|
-
|
|
Adjusted
segment operating income
|
$
41,418
|
|
46,209
|
|
Adjusted operating
margin as a percent of net sales
|
11.7%
|
|
12.7%
|
|
|
|
|
|
Reconciliation of Earnings Before Income Taxes to
Adjusted Earnings Before Income Taxes
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
July 2,
2011
|
|
Earnings
before income taxes
|
$
88,434
|
|
75,544
|
|
Adjustment
to earnings before income taxes:
|
|
|
|
|
Business
restructurings
|
8,226
|
|
6,514
|
|
Adjusted
earnings before income taxes
|
$
96,660
|
|
82,058
|
|
|
|
|
|
|
|
|
|
Reconciliation of Income Tax Expense to Adjusted
Income Tax Expense
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
July 2,
2011
|
|
Income tax
expense
|
$
15,246
|
|
13,450
|
|
Adjustment
to income tax expense:
|
|
|
|
|
Income tax effect of
business restructurings
|
2,201
|
|
1,818
|
|
Adjusted income tax expense
|
$
17,447
|
|
15,268
|
|
|
|
|
|
Adjusted
income tax rate
|
18%
|
|
19%
|
|
|
|
|
|
Reconciliation of Selling, General and
Administrative Expenses to Adjusted Selling, General and
Administrative Expenses
|
|
(Amounts in thousands)
|
|
|
|
|
Three
Months Ended
|
|
June 30,
2012
|
|
July 2,
2011
|
|
Selling,
general and administrative expenses
|
$
280,746
|
|
280,547
|
|
Adjustments to selling, general and administrative
expenses:
|
|
|
|
|
Business
restructurings
|
(1,590)
|
|
(982)
|
|
Exchange
rate
|
(6,042)
|
|
-
|
|
Adjusted selling, general and administrative expenses
|
$
273,114
|
|
279,565
|
|
Adjusted
selling, general and administrative expenses as a percent of net
sales
|
18.6%
|
|
18.9%
|
|
|
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.