PRN: Mohawk Industries, Inc. Announces Second Quarter Earnings

04/ago/2011 23.59.50 PR Newswire Turismo Contatta l'autore

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Mohawk Industries, Inc. Announces Second Quarter Earnings

 
[04-August-2011]
 

CALHOUN, Georgia, August 4, 2011 /PRNewswire/ --

Mohawk Industries, Inc. (NYSE: MHK) today announced 2011 second quarter net earnings of $61 million and diluted earnings per share (EPS) of $0.88. Excluding restructuring charges, net earnings were $66 million and EPS was $0.95. For the second quarter of 2010, the net earnings were $68 million and EPS was $0.95. Excluding non-recurring tax benefits, redemption premium on bonds and restructuring charges, net earnings and EPS were $53 million and $0.77 per share. Net sales for the second quarter of 2011 were $1.5 billion increasing 6% as reported and 3% with a constant exchange rate. Our cash position at the end of the quarter was $285 million and our net debt to adjusted EBITDA ! ratio was 2.1. A new five-year lower cost bank facility was executed in July to support future growth and investments.

For the six months ended July 2, 2011, net sales were $2.8 billion, an increase of approximately 3% as reported and 2% with a constant exchange rate. For the six-month period, net earnings and EPS were $84 million and $1.22, respectively. Excluding restructuring charges, net earnings were $95 million and EPS was $1.38. For the six months ended July 3, 2010, net earnings were $89 million and EPS was $1.24. Excluding unusual items in 2010, net earnings were $77 million and EPS was $1.12.

Commenting on the second quarter results, Jeffrey S. Lorberbaum, Chairman and CEO stated, "All of our businesses reported year over year sales growth and our operating margin improved to 7.3%, an increase of 50 basis points over last year excluding restructuring charges. This is our highest operating margin since 2008 as a result of continuing cost reductions, selling price increases and productivity gains throughout the enterprise. U.S. economic growth was lower than expected in the second quarter with the U.S. residential business remaining soft and the commercial business continuing to grow."

Our Mohawk segment net sales grew about 1% with improving commercial sales offsetting soft residential sales. Excluding restructuring charges, operating margin was 80 basis points higher than last year as a result of reductions in SG&A costs, price increases and improved manufacturing productivity. We are performing in line with the industry with growth in commercial remodeling and lower residential activity. Our commercial business posted sales gains in both tile and broadloom products. The carpet price increase announced in February was fully implemented in the period and the second increase initiated in April will be completed during the third quarter. Our South Carolina extrusion expansion was completed, we consolidated a commercial carpet plant and we announced the closure of a yarn spinning plant. Continued emphasis on productivity improvements has yielded more efficient processes in our manufacturing and administrative areas all! owing us to reduce personnel costs by an additional $10 million annually.  

Our Dal-Tile segment net sales grew more than 4% this period with commercial sales growth exceeding residential. Sales in all of our channels grew over the prior year as we outperformed the overall market. Higher product prices and fuel surcharges were implemented in the period to recover rising transportation costs. Our market share has improved due to the breadth of our offerings, new products with enhanced visuals, larger sizes and our superior service. We introduced a completely merchandised ceramic tile shop and a new installation warranty to differentiate Dal-Tile products. Our Reveal Imaging technology is being expanded throughout our manufacturing operations. Our business in Mexico is expanding as we broaden our product line and satisfy all price points. The plant near Mexico City is being constructed to produce non-porcelain ceramic tile at much lower costs, beginning in mid-2012. New workforce man! agement systems, increased truck utilization rates and new shipping channels are reducing our freight and distribution costs.    

Our Unilin net sales increased approximately 18% as reported and 7% on a constant exchange rate. Sales of our European products were positive with growth in our roofing systems and panels outperforming our flooring products and impacting the mix of our margins. In most of our European products, our price increases are beginning to catch up with the higher raw material costs. Our European flooring is gaining share in a challenging market by increasing our position in the European DIY channel and growing our presence in the UK, Russian and Australian markets. In the U.S., our Unilin flooring sales were impacted by low residential remodeling. Our wood sales continue to expand with an improved product mix and our wood plants have increased their productivity, yields and flexibility. We are growing our Russian customer base to support the new plant under construction near Moscow. In addition, the consolidation and expansion of our Malaysian woo! d manufacturing operations should be complete by first quarter 2012.  

Our second quarter results were accomplished despite the weaker than expected economies in both the U.S. and Europe. During this challenging economic period, we have made many improvements throughout our business resulting in a leaner, more efficient organization. We are introducing innovative products and re-engineering existing ones to improve our sales mix and margins. We are continuing to reduce our cost structure, increase our productivity and invest in new products and geographies. We are increasing prices as needed in response to raw material and energy inflation. We are well positioned to leverage these changes into a more profitable business as residential remodeling and the economy improves. With these factors, our third quarter guidance for earnings is $0.82 to $0.91 per share, excluding any restructuring costs. Mohawk's strategies reflect our evolution from a North American carpet business into a l! arger, more diverse, total flooring company operating in the global market.

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. Mohawk's operational international presence includes 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; claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.

There will be a conference call Friday, August 5, 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 # 82606045.  A conference call replay will also be available until August 19, 2011 by dialing 855-859-2056 for US/local calls and +1-404-537-3406 for International/Local calls and entering Conference ID # 82606045.

          MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES           Consolidated Statement of Operations            Three Months Ended                                                     ------------------     (Amounts in thousands, except per share       July 2,        July 3,      data)                                          2011           2010                                                 --------        --------        Net sales                                   $1,477,854      1,400,086     Cost of sales                                1,095,607      1,025,330     ---------------------------------------      ---------      ---------         Gross profit                               382,247        374,756     Selling, general and administrative      expenses                                      280,547        285,030     -----------------------------------            -------        -------     Operating income                               101,700         89,726     Interest expense                                25,760         39,031     Other (income) expense, net                        396            544     ---------------------------                        ---            ---         Earnings before income taxes                75,544         50,151     Income tax expense (benefit)                    13,450        (18,814)     ----------------------------                    ------        -------     Net earnings                                    62,094         68,965     ------------                                    ------         ------     Net earnings attributable to      noncontrolling interest                        (1,191)          (884)     ----------------------------                    ------           ----         Net earnings attributable to Mohawk          Industries, Inc.                          $60,903         68,081         -----------------------------------        -------         ------     Basic earnings per share attributable      to Mohawk Industries, Inc. (1)                  $0.89           0.95     -------------------------------------            -----           ----           Weighted-average common shares      outstanding - basic                            68,744         68,585     ------------------------------                  ------         ------     Diluted earnings per share attributable      to Mohawk Industries, Inc. (1)                  $0.88           0.95     ---------------------------------------          -----           ----     Weighted-average common shares      outstanding - diluted                          68,981         68,789     ------------------------------                  ------         ------            (1) Basic earnings per share          attributable to Mohawk Industries,          Inc. for the three and six months          ended July 3, 2010, includes a          decrease of approximately $0.04, and          diluted earnings per share          attributable to Mohawk Industries,          Inc. for the three and six months          ended July 3, 2010, includes a          decrease of approximately $0.04 and          $0.05, respectively, related to the          change in fair value for a redeemable          noncontrolling interest in a          consolidated subsidiary of the          Company.         Other Financial Information     (Amounts in thousands)     Net cash provided by operating      activities                                    $96,003        135,169     ------------------------------                 -------        -------     Depreciation and amortization                  $74,344         72,497     -----------------------------                  -------         ------     Capital expenditures                           $59,708         23,830     --------------------                           -------         ------ 


   

                      Consolidated Statement of Operations                Six Months Ended                                                         ----------------     (Amounts in thousands, except per share       July 2,             July 3,      data)                                          2011                2010                                                 --------            ---------        Net sales                                   2,821,449           2,747,322     Cost of sales                               2,097,610           2,031,320     -------------                               ---------           ---------         Gross profit                              723,839             716,002     Selling, general and administrative      expenses                                     566,055             572,655     -----------------------------------           -------             -------     Operating income                              157,784             143,347     Interest expense                               52,355              72,939     Other (income) expense, net                       381              (3,987)     ---------------------------                       ---              ------         Earnings before income taxes              105,048              74,395     Income tax expense (benefit)                   18,416             (15,840)     ----------------------------                   ------             -------     Net earnings                                   86,632              90,235     ------------                                   ------              ------     Net earnings attributable to      noncontrolling interest                       (2,287)             (1,616)     ----------------------------                   ------              ------         Net earnings attributable to Mohawk          Industries, Inc.                          84,345              88,619         -----------------------------------        ------              ------     Basic earnings per share attributable      to Mohawk Industries, Inc. (1)                  1.23                1.25     -------------------------------------            ----                ----           Weighted-average common shares      outstanding - basic                           68,709              68,554     ------------------------------                 ------              ------     Diluted earnings per share attributable      to Mohawk Industries, Inc. (1)                  1.22                1.24     ---------------------------------------          ----                ----     Weighted-average common shares      outstanding - diluted                         68,942              68,760     ------------------------------                 ------              ------            (1) Basic earnings per share          attributable to Mohawk Industries,          Inc. for the three and six months          ended July 3, 2010, includes a          decrease of approximately $0.04, and          diluted earnings per share          attributable to Mohawk Industries,          Inc. for the three and six months          ended July 3, 2010, includes a          decrease of approximately $0.04 and          $0.05, respectively, related to the          change in fair value for a redeemable          noncontrolling interest in a          consolidated subsidiary of the          Company.        Other Financial Information     (Amounts in thousands)     Net cash provided by operating      activities                                    28,590              88,977     ------------------------------                 ------              ------     Depreciation and amortization                 148,597             149,295     -----------------------------                 -------             -------     Capital expenditures                          112,519              47,139     --------------------                          -------              ------    


          Consolidated Balance Sheet Data     (Amounts in thousands)                                                 July 2,          July 3,                                                2011             2010                                             --------         --------     ASSETS     Current assets:         Cash and cash equivalents             $285,422         342,673         Receivables, net                       797,893         703,458         Inventories                          1,102,769         965,778         Prepaid expenses and other          current assets                        125,815         137,338         Deferred income taxes                  135,338         135,613         ---------------------             Total current assets             2,447,237       2,284,860     Property, plant and equipment,      net                                     1,730,914       1,654,161     Goodwill                                 1,418,830       1,340,003     Intangible assets, net                     681,178         686,156     Deferred income taxes and other      non-current assets                        110,841          38,736     -------------------------------            -------          ------                                             $6,389,000       6,003,916                                             ----------       ---------     LIABILITIES AND STOCKHOLDERS'      EQUITY     Current liabilities:       Current portion of long-term        debt                                   $453,185         351,307       Accounts payable and accrued        expenses                                771,297         808,909       ----------------------------             -------         -------             Total current liabilities        1,224,482       1,160,216     Long-term debt, less current      portion                                 1,155,150       1,303,155     Deferred income taxes and other      long-term liabilities                     460,109         431,355     -------------------------------            -------         -------             Total liabilities                2,839,741       2,894,726             -----------------                ---------       ---------     Noncontrolling interest                     32,300          33,309     -----------------------                     ------          ------     Total stockholders' equity               3,516,959       3,075,881     --------------------------               ---------       ---------                                             $6,389,000       6,003,916                                             ----------       ---------                          Segment Information     (Amounts in thousands)                                                    Three Months Ended                                                 ------------------                                                July 2,        July 3,                                                  2011           2010                                              --------        --------        Net sales:         Mohawk                               $758,064         747,582         Dal-Tile                              379,469         363,618         Unilin                                363,097         308,385         Intersegment sales                    (22,776)        (19,499)         ------------------                    -------         -------             Consolidated net sales         $1,477,854       1,400,086             ----------------------         ----------       ---------        Operating income (loss):         Mohawk                                $31,201          26,345         Dal-Tile                               32,138          28,124         Unilin                                 46,209          42,336         Corporate and          eliminations                          (7,848)         (7,079)         -------------                          ------          ------             Consolidated operating              income                          $101,700          89,726             ----------------------           --------          ------        Assets:         Mohawk         Dal-Tile         Unilin         Corporate and          eliminations         -------------             Consolidated assets             -------------------    


                                              As of or for the Six                                                  Months Ended                                              --------------------                                            July 2,          July 3,                                              2011             2010                                            --------         --------        Net sales:         Mohawk                            1,449,229        1,464,165         Dal-Tile                            723,884          705,014         Unilin                              688,929          614,265         Intersegment sales                  (40,593)         (36,122)         ------------------                  -------          -------             Consolidated net sales        2,821,449        2,747,322             ----------------------        ---------        ---------        Operating income (loss):         Mohawk                               48,241           42,973         Dal-Tile                             49,838           43,519         Unilin                               72,459           68,794         Corporate and          eliminations                       (12,754)         (11,939)         -------------                       -------          -------             Consolidated operating              income                         157,784          143,347             ----------------------          -------          -------        Assets:         Mohawk                           $1,783,630        1,675,226         Dal-Tile                          1,700,482        1,570,238         Unilin                            2,717,032        2,423,695         Corporate and          eliminations                       187,856          334,757         -------------                       -------          -------             Consolidated assets          $6,389,000        6,003,916             -------------------          ----------        --------- 



        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                                                      ------------------                                                   July 2,          July 3,                                                     2011             2010                                                  --------         --------     Net earnings attributable to Mohawk      Industries, Inc.                             $60,903           68,081     Unusual items:       Business restructurings                       6,514            4,929       Debt extinguishment costs                         -            7,514       Discrete tax items, net                           -          (24,407)       Income taxes                                 (1,818)          (3,290)       ------------                                 ------           ------         Adjusted net earnings attributable to          Mohawk Industries, Inc.                  $65,599           52,827         -------------------------------------     -------           ------        Adjusted diluted earnings per share      attributable to Mohawk Industries,      Inc.(1)                                         0.95             0.77     Weighted-average common shares      outstanding - diluted                         68,981           68,789                                                           Six Months Ended                                                       ----------------                                                    July 2,         July 3,                                                      2011            2010                                                   --------        --------     Net earnings attributable to Mohawk      Industries, Inc.                              84,345          88,619     Unusual items:       Business restructurings                      13,327           8,933       Debt extinguishment costs                         -           7,514       Discrete tax items, net                           -         (24,407)       Income taxes                                 (2,836)         (3,759)       ------------                                 ------          ------         Adjusted net earnings attributable to          Mohawk Industries, Inc.                   94,836          76,900         -------------------------------------      ------          ------        Adjusted diluted earnings per share      attributable to Mohawk Industries,      Inc.(1)                                         1.38            1.12     Weighted-average common shares      outstanding - diluted                         68,942          68,760              (1) Diluted earnings per share attributable to Mohawk Industries,     Inc. for the three and six months ended July 3, 2010, excludes     approximately $0.04 and $0.05, respectively, related to the change     in fair value for a redeemable noncontrolling interest in a     consolidated subsidiary of the Company.                    Reconciliation of Total Debt to Net Debt     (Amounts in thousands)                                        July 2,                                      2011                                    --------     Current portion of      long-term debt                $453,185     Long-term debt,      less current      portion                      1,155,150     Less: Cash and cash      equivalents                    285,422     -------------------             -------       Net Debt                   $1,322,913       --------                   ---------- 


 

          Reconciliation of Operating Income to Adjusted EBITDA     (Amounts in thousands)                                                Three Months Ended                                          ------------------                                    October 2,        December 31,                                       2010               2010                                   -----------       -------------     Operating income                 $85,182              85,640         Other income          (expense)                    (1,124)              1,037         U.S. customs refund            5,765               1,965       Net earnings        attributable to        noncontrolling        interest                       (1,170)             (1,678)         Depreciation and          amortization                 72,956              74,522         ----------------              ------              ------            EBITDA                    161,609             161,486         Business          restructurings                3,330                   -         ---------------                -----                 ---      Adjusted EBITDA                $164,939             161,486      ---------------                --------             -------             Net Debt to Adjusted        EBITDA       --------------------                                                     Three Months Ended                                      ------------------                                    April 2,        July 2,                                       2011           2011                                    ---------       --------     Operating income                56,084         101,700         Other income          (expense)                     (15)            396         U.S. customs refund              -               -       Net earnings        attributable to        noncontrolling        interest                     (1,096)         (1,191)         Depreciation and          amortization               74,253          74,344         ----------------            ------          ------            EBITDA                  129,226         175,249         Business          restructurings              6,813           6,514         ---------------              -----           -----      Adjusted EBITDA               136,039         181,763      ---------------               -------         -------             Net Debt to Adjusted        EBITDA       --------------------                                                 Trailing Twelve                                     Months Ended                                     ------------                                     July 2, 2011                                     ------------     Operating income                    328,606         Other income          (expense)                          294         U.S. customs refund               7,730       Net earnings        attributable to        noncontrolling        interest                          (5,135)         Depreciation and          amortization                   296,075         ----------------                -------            EBITDA                       627,570         Business          restructurings                  16,657         ---------------                  ------      Adjusted EBITDA                    644,227      ---------------                    -------             Net Debt to Adjusted        EBITDA                               2.1       --------------------                  --- 



              Reconciliation of Net Sales to Adjusted Net Sales     (Amounts in thousands)                                          Three Months Ended                                       ------------------                                July 2, 2011      July 3, 2010                                ------------      ------------     Net sales                    $1,477,854         1,400,086     Adjustments to      net sales:       Exchange rate                 (35,604)                -       -------------                 -------               ---         Adjusted net          sales                   $1,442,250         1,400,086         ------------             ----------         ---------                                           Six Months Ended                                       ----------------                                July 2, 2011      July 3, 2010                                ------------      ------------     Net sales                     2,821,449         2,747,322     Adjustments to      net sales:       Exchange rate                 (33,285)                -       -------------                 -------               ---         Adjusted net          sales                    2,788,164         2,747,322         ------------              ---------         ---------                          Reconciliation of Segment Net Sales to Adjusted Segment      Net Sales     (Amounts in thousands)                                            Three Months Ended                                            ------------------     Unilin segment                  July 2, 2011         July 3, 2010     --------------                  ------------         ------------     Net sales                           $363,097              308,385     Adjustments to net sales:       Exchange rate                      (33,558)                   -       -------------                      -------                  ---         Adjusted net sales              $329,539              308,385         ------------------              --------              -------              Reconciliation of Operating Income to Adjusted      Operating Income     (Amounts in thousands)                                            Three Months Ended                                            ------------------                                    July 2, 2011          July 3, 2010                                    ------------          ------------     Operating income                   $101,700                89,726     Adjustments to operating income:       Business restructurings             6,514                 4,929       -----------------------             -----                 -----       Adjusted operating income        $108,214                94,655       -------------------------        --------                ------        Adjusted operating margin         as a percent of net sales           7.3%                  6.8%        Mohawk segment     --------------     Operating income                    $31,201                26,345     Adjustments to operating income:       Business restructurings             6,514                 4,929       -----------------------             -----                 -----       Adjusted operating income         $37,715                31,274       -------------------------         -------                ------        Adjusted operating margin         as a percent of net sales           5.0%                  4.2%        Reconciliation of Earnings Before Income Taxes to      Adjusted Earnings Before Income Taxes     (Amounts in thousands)                                             Three Months Ended                                             ------------------                                    July 2,  2011          July 3, 2010                                    -------------          ------------     Earnings before income      taxes                             $75,544                50,151     Unusual items:       Business restructurings            6,514                 4,929       Debt extinguishment costs              -                 7,514       -------------------------            ---                 -----         Adjusted earnings before          income taxes                  $82,058                62,594         ------------------------       -------                ------        Reconciliation of Income Tax Expense (Benefit) to      Adjusted Income Tax Expense     (Amounts in thousands)                                           Three Months Ended                                           ------------------                                    July 2, 2011          July 3, 2010                                    ------------          ------------     Income tax expense      (benefit)                         $13,450              (18,814)     Unusual items:       Discrete tax items, net                -               24,407       Income taxes                       1,818                3,290       ------------                       -----                -----         Adjusted income tax expense    $15,268                8,883           Adjusted income tax rate                19%                  14%     ------------------------               ---                  --- 


 

          Reconciliation of Selling, General and      Administrative Expenses to     Adjusted Selling, General and Administrative      Expenses     (Amounts in      thousands)                                     Three Months Ended                                     ------------------                                  July 2,          July 3,                                    2011            2010                                 --------         --------     Selling, general and      administrative      expenses                   $280,547          285,030     Adjustments to      selling, general      and administrative      expenses:       Exchange rate               (5,821)               -       -------------               ------              ---       Adjusted selling,        general and        administrative        expenses                 $274,726          285,030       -----------------         --------          -------              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. 



 


Company Codes: NYSE:MHK, Bloomberg:MHK@US, RICS:MHK.N
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