PRN: Mohawk Industries, Inc. Announces Third Quarter Earnings

04/nov/2011 03.23.17 PR Newswire Turismo Contatta l'autore

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Mohawk Industries, Inc. Announces Third Quarter Earnings

 
[03-November-2011]
 

CALHOUN, Georgia, November 3, 2011 /PRNewswire/ --


Mohawk Industries, Inc. (NYSE: MHK) today announced 2011 third quarter net earnings of $47 million and diluted earnings per share (EPS) of $0.68. Adjusted net earnings were $57 million and EPS was $0.83 excluding the unusual items. For the third quarter of 2010, the net earnings were $51 million and EPS was $0.74 both as reported and excluding unusual items. Net sales for the third quarter of 2011 were $1.4 billion increasing 10% as reported and 8% with a constant exchange rate. Our cash position at the end of the quarter remains strong with $276 million and our net debt to adjusted EBITDA ratio was 2.1.

For the nine months ended October 1, 2011, net sales were $4.3 billion, an increase of approximately 5% as reported and 4% with a constant exchange rate. For the nine-month period, net earnings and EPS were $131 million and $1.90, respectively. Excluding unusual items, net earnings were $152 million and EPS was $2.21. For the nine months ended October 2, 2010, net earnings were $140 million and EPS was $1.99. Excluding unusual items in 2010, net earnings were $128 million and EPS was $1.86.

Commenting on the third quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "The Company's third quarter results reflect an improvement in sales and earnings over last year even with increased raw material costs and consumer reluctance to invest in renovation projects. Sales in both the residential and commercial categories expanded with commercial renovation leading the growth and new residential continuing to lag. Each segment continues to lower costs with new processes, reduced infrastructure and investment in more efficient assets."

Our Mohawk segment net sales improved 6% as we improved our position and grew in both residential and commercial categories. Operating margins were lower due to price increases lagging material inflation as well as continued pressure on our product mix as consumers remain cautious about larger discretionary investments. During the quarter, residential sales grew across most channels and product categories. Commercial sales momentum continued from the previous quarter, with both broadloom and carpet tile achieving gains. During 2011, we implemented two price increases that were fully realized by the end of the third quarter. During the period, raw material costs were greater than anticipated and the higher expense will impact our fourth quarter costs and margins. We have implemented hundreds of manufacturing initiatives yielding significant cost savings in 2011.

Our Dal-Tile segment net sales grew almost 11% during the period with both residential and commercial categories showing gains with product mix continuing to decline. In the comparable 2010 period, business was lower than expected due to the flooding in our Mexican facility from Hurricane Alex. During the quarter, we increased sales in all channels with particular strength in home centers due to additional commitments for our innovative mosaics, wall tile and porcelain tile. Our Mexican ceramic sales grew significantly on a local basis as we enhanced our penetration with new products and broader distribution. We have implemented new manufacturing processes to lower raw material costs, improve efficiency, reduce production runs and improve distribution costs.    

Our Unilin net sales increased approximately 19% as reported and 11% with a constant exchange rate. Sales in Europe increased across most channels and regions, and our price increases are beginning to catch up with the raw material inflation. We are implementing additional price increases for roof panels and insulation boards to offset further inflation in those products. Innovation in board manufacturing processes is enhancing our efficiency and material yields. Despite challenging market conditions, our European flooring products grew by capitalizing on the strength of our Quick-Step brand, growing our participation in the DIY channel, and expanding our wood flooring category. In the U.S., sales of our laminate flooring grew through expanded programs in all channels. We completed our Russian laminate flooring plant on schedule and are initiating production. We acquired the largest laminate and wood flooring distributor in Australia, which expands our strategy of getting closer to our customers and becoming more responsive to local markets.    

Mohawk's strategy to maximize our long term results is reflected in our international expansion in Mexico, Russia, China and Australia, new technologies to increase value, innovative product categories like Didit click furniture and process enhancements to lower our cost position across the enterprise. We remain confident in the future of our business and will continue to adjust our tactics as economic conditions change.  In the fourth quarter, we will be impacted by higher third quarter raw material costs; however we are currently seeing some moderation which will benefit next year. We will consider further price increases as appropriate and implement additional cost reductions to improve the business. With these factors, our fourth quarter guidance for earnings is $0.67 to $0.76 per share, excluding any restru! cturing costs.

Our strategy in this environment focuses on lowering our cost infrastructure, creating innovative products, maintaining a strong balance sheet and targeting new investments for future growth. Although the macro outlook is somewhat uncertain, we believe our results for next year will reflect continued improvement.

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, Durkan, Daltile, 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 in the U.S. 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; tax, product and other claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.

There will be a conference call Friday, November 4, 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 # 17731505.  A conference call replay will also be available until November 18, 2011 by dialing +1-855-859-2056 for US/local calls and +1-404-537-3406 for International/Local calls and entering Conference ID # 17731505

     MOHAWK INDUSTRIES, INC. AND     SUBSIDIARIES      Consolidated Statement of     Operations                                    Three Months Ended     (Amounts in thousands, except per     share data)                           October 1, 2011     October 2, 2010          Net sales                                 $ 1,442,512           1,309,552     Cost of sales                               1,084,889             964,620     Gross profit                                  357,623             344,932     Selling, general and     administrative expenses                       266,159             259,750     Operating income                               91,464              85,182     Interest expense                               25,132              30,046     Other (income) expense, net                    13,413             (4,641)     Earnings before income taxes                   52,919              59,777     Income tax expense (benefit)                    5,223               7,513     Net earnings                                   47,696              52,264     Net earnings attributable to     noncontrolling interest                       (1,050)             (1,170)     Net earnings attributable to     Mohawk Industries, Inc.                   $    46,646              51,094     Basic earnings per share     attributable to Mohawk     Industries, Inc. (1)                      $      0.68                0.74     Weighted-average common shares     outstanding - basic                            68,759              68,593     Diluted earnings per share     attributable to Mohawk     Industries, Inc. (1)                      $      0.68                0.74     Weighted-average common shares     outstanding - diluted                          68,954              68,773    (1) Basic earnings per share attributable to Mohawk Industries, Inc.     for the nine months ended October 2, 2010, includes a decrease of     approximately $0.05, and diluted earnings per share attributable to     Mohawk Industries, Inc. for the nine months ended October 2, 2010,     includes a decrease of approximately $0.04, 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                                $   109,598             121,417     Depreciation and amortization             $    74,207              72,956     Capital expenditures                      $    69,741              39,101          Consolidated Balance Sheet Data     (Amounts in thousands)          ASSETS     Current assets:       Cash and cash equivalents       Receivables, net       Inventories       Prepaid expenses and other       current assets       Deferred income taxes          Total current assets     Property, plant and equipment,     net     Goodwill     Intangible assets, net     Deferred income taxes and other     non-current assets          LIABILITIES AND STOCKHOLDERS'     EQUITY     Current liabilities:       Current portion of long-term debt       Accounts payable and accrued       expenses          Total current liabilities     Long-term debt, less current     portion     Deferred income taxes and other     long-term liabilities          Total liabilities     Noncontrolling interest     Total stockholders' equity          Segment Information                           Three Months Ended     (Amounts in thousands)                October 1, 2011     October 2, 2010          Net sales:       Mohawk                                  $   754,470             713,481       Dal-Tile                                    381,891             345,074       Unilin                                      329,514             276,594       Intersegment sales                         (23,363)            (25,597)          Consolidated net sales               $ 1,442,512           1,309,552          Operating income (loss):       Mohawk                                  $    30,946              31,127       Dal-Tile                                     33,073              33,913       Unilin                                       33,048              24,640       Corporate and eliminations                  (5,603)             (4,498)          Consolidated operating income        $    91,464              85,182          Assets:       Mohawk       Dal-Tile       Unilin       Corporate and eliminations          Consolidated assets       


     MOHAWK INDUSTRIES, INC. AND     SUBSIDIARIES          Consolidated Statement of     Operations                                   Nine Months Ended     (Amounts in thousands, except per     share data)                         October 1, 2011       October 2, 2010          Net sales                                 4,263,961             4,056,874     Cost of sales                             3,182,499             2,995,940     Gross profit                              1,081,462             1,060,934     Selling, general and     administrative expenses                     832,214               832,405     Operating income                            249,248               228,529     Interest expense                             77,487               102,985     Other (income) expense, net                  13,794               (8,628)     Earnings before income taxes                157,967               134,172     Income tax expense (benefit)                 23,639               (8,327)     Net earnings                                134,328               142,499     Net earnings attributable to     noncontrolling interest                     (3,337)               (2,786)     Net earnings attributable to     Mohawk Industries, Inc.                     130,991               139,713     Basic earnings per share     attributable to Mohawk Industries,     Inc. (1)                                       1.91                  1.99     Weighted-average common shares     outstanding - basic                          68,725                68,567     Diluted earnings per share     attributable to Mohawk Industries,     Inc. (1)                                       1.90                  1.99     Weighted-average common shares     outstanding - diluted                        68,946                68,764          (1) Basic earnings per share attributable to Mohawk Industries, Inc.     for the nine months ended October 2, 2010, includes a decrease of     approximately $0.05, and diluted earnings per share attributable to     Mohawk Industries, Inc. for the nine months ended October 2, 2010,     includes a decrease of approximately $0.04, 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                                  138,188               210,394     Depreciation and amortization               222,804               222,251     Capital expenditures                        182,260                86,240    Consolidated Balance Sheet Data     (Amounts in thousands)                                         October 1, 2011       October 2, 2010     ASSETS     Current assets:       Cash and cash equivalents             $   276,156               365,835       Receivables, net                          775,421               697,491       Inventories                             1,132,073               996,271       Prepaid expenses and other current       assets                                    125,007               114,876       Deferred income taxes                     131,931               119,729          Total current assets                 2,440,588             2,294,202     Property, plant and equipment, net        1,696,182             1,680,541     Goodwill                                  1,389,430             1,389,057     Intangible assets, net                      634,164               710,934     Deferred income taxes and other     non-current assets                          117,204               117,176                                             $ 6,277,568             6,191,910     LIABILITIES AND STOCKHOLDERS'     EQUITY     Current liabilities:       Current portion of long-term debt     $   438,300               351,486       Accounts payable and accrued       expenses                                  774,939               779,825          Total current liabilities            1,213,239             1,131,311     Long-term debt, less current     portion                                   1,173,038             1,303,151     Deferred income taxes and other     long-term liabilities                       439,798               441,948          Total liabilities                    2,826,075             2,876,410     Noncontrolling interest                      32,758                34,121     Total stockholders' equity                3,418,735             3,281,379                                             $ 6,277,568             6,191,910          Segment Information                  As of or for the Nine Months Ended     (Amounts in thousands)              October 1, 2011       October 2, 2010          Net sales:       Mohawk                                  2,203,699             2,177,646       Dal-Tile                                1,105,775             1,050,088       Unilin                                  1,018,443               890,859       Intersegment sales                       (63,956)              (61,719)          Consolidated net sales               4,263,961             4,056,874          Operating income (loss):       Mohawk                                     79,187                74,100       Dal-Tile                                   82,911                77,432       Unilin                                    105,507                93,434       Corporate and eliminations               (18,357)              (16,437)          Consolidated operating income          249,248               228,529          Assets:       Mohawk                                $ 1,810,191             1,652,737       Dal-Tile                                1,735,718             1,677,957       Unilin                                  2,569,103             2,542,233       Corporate and eliminations                162,556               318,983          Consolidated assets                $ 6,277,568             6,191,910      


     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       Nine Months Ended                                October 1,  October 2,  October 1,  October 2,                                      2011        2010        2011        2010     Net earnings     attributable to     Mohawk Industries, Inc.      $ 46,646      51,094     130,991     139,713     Unusual items:       Unrealized foreign       currency losses (1)           9,085           -       9,085           -       Business       restructurings                2,186       3,330      15,513      12,263       Debt       extinguishment       costs                         1,116           -       1,116       7,514       Acquisitions       purchase       accounting                        -       1,713           -       1,713       U.S. customs       refund                            -     (5,765)           -     (5,765)       Discrete tax       items, net                        -           -           -    (24,407)       Income taxes                (1,761)         760     (4,597)     (2,999)          Adjusted net earnings          attributable to          Mohawk Industries, Inc. $ 57,272      51,132     152,108     128,032          Adjusted diluted     earnings per share     attributable to     Mohawk Industries, Inc. (2)      0.83        0.74        2.21        1.86     Weighted-average     common shares     outstanding -     diluted                        68,954      68,773      68,946      68,764          (1) Unrealized foreign currency losses for certain of the     Company's consolidated foreign subsidiaries that measure     financial conditions and results using the U.S. dollar rather     than the local currency.     (2) Diluted earnings per share attributable to Mohawk     Industries, Inc. for the nine months ended October 2, 2010,     excludes approximately $0.04 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)                                       October 1, 2011     Current portion of long-term     debt                                  $   438,300     Long-term debt, less current     portion                                 1,173,038     Less: Cash and cash     equivalents                               276,156     Net Debt                              $ 1,335,182      


     Reconciliation of Operating Income     to Adjusted EBITDA     (Amounts in                                                      Trailing     thousands)                                                        Twelve                                                                       Months                                      Three Months Ended               Ended                           December      April    July 2,   October    October                           31, 2010     2, 2011    2011     1, 2011    1, 2011     Operating     income                $ 85,640     56,084   101,700     91,464    334,888       Other (expense)       income                 1,037       (15)       396   (13,413)   (11,995)       Unrealized foreign       currency losses(1)         -          -         -      9,085      9,085       U.S. customs refund    1,965          -         -          -      1,965       Net earnings       attributable to       noncontrolling       interest             (1,678)    (1,096)   (1,191)    (1,050)    (5,015)       Depreciation       and       amortization          74,522     74,253    74,344     74,207    297,326          EBITDA            161,486    129,226   175,249    160,293    626,254       Business       restructurings             -      6,813     6,514      2,186     15,513     Adjusted     EBITDA               $ 161,486    136,039   181,763    162,479    641,767            Net Debt to       Adjusted EBITDA                                                     2.1       (1) Unrealized foreign currency losses for certain of the     Company's consolidated foreign subsidiaries that measure     financial conditions and results using the U.S. dollar rather     than the local currency. 


     Reconciliation of     Net Sales to     Adjusted Net Sales     (Amounts in     thousands)                                 Three Months Ended        Nine Months Ended                              October 1,   October 2,   October 1,  October 2,                                 2011         2010         2011        2010     Net sales                $ 1,442,512  1,309,552    4,263,961   4,056,874     Adjustments to     net sales:       Exchange rate             (22,724)          -     (57,554)           -          Adjusted net          sales               $ 1,419,788  1,309,552    4,206,407   4,056,874 


     Reconciliation of Segment Net Sales to Adjusted Segment Net Sales     (Amounts in thousands)                                           Three Months Ended                                      October 1,        October 2,     Unilin                              2011              2010     Net sales                           $ 329,514           276,594     Adjustment to net sales:       Exchange rate                      (21,205)                 -          Adjusted net sales             $ 308,309           276,594    Reconciliation of Operating Income to Adjusted Operating Income     (Amounts in thousands)                                           Three Months Ended                                      October 1,        October 2,                                         2011              2010     Operating income                    $  91,464            85,182     Adjustments to operating income:       Business restructurings               2,186             3,330       Adjusted operating income         $  93,650            88,512       Adjusted operating       margin as a percent of       net sales                              6.5%              6.8%          Reconciliation of Segment Operating Income to Adjusted     Segment Operating Income     (Amounts in thousands)                                           Three Months Ended                                      October 1,        October 2,     Mohawk                              2011              2010     Operating income                    $  30,946            31,127     Adjustments to operating income:       Business restructurings               2,186             1,292       Adjusted operating income         $  33,132            32,419       Adjusted operating       margin as a percent of       net sales                              4.4%              4.5%          Dal-Tile     Operating income                    $  33,073            33,913     Adjustments to operating income:       Business restructurings                   -             1,223       Adjusted operating income         $  33,073            35,136       Adjusted operating       margin as a percent of       net sales                              8.7%             10.2%          Unilin     Operating income                    $  33,048            24,640     Adjustments to operating income:       Business restructurings                   -               815       Adjusted operating income         $  33,048            25,455       Adjusted operating       margin as a percent of       net sales                             10.0%              9.2%          Reconciliation of Earnings Before Income Taxes to     Adjusted Earnings Before Income Taxes     (Amounts in thousands)                                           Three Months Ended                                      October 1,        October 2,                                         2011              2010     Earnings before income taxes        $  52,919            59,777     Unusual items:       Unrealized foreign       currency losses (1)                   9,085                 -       Business restructurings               2,186             3,330       Debt extinguishment costs             1,116                 -       Acquisitions purchase accounting          -             1,713       U.S. customs refund                       -           (5,765)       Adjusted earnings       before income taxes               $  65,306            59,055          (1) Unrealized foreign currency losses for certain of the     Company's consolidated foreign subsidiaries that measure     financial conditions and results using the U.S. dollar     rather than the local currency.          Reconciliation of Income Tax Expense to Adjusted Income Tax Expense     (Amounts in thousands)                                           Three Months Ended                                      October 1,        October 2,                                         2011              2010     Income tax expense                  $   5,223             7,513     Unusual items:       Income taxes                          1,761             (760)       Adjusted income tax expense       $   6,984             6,753          Adjusted income tax rate                  11%               11%          Reconciliation of Selling, General and Administrative     Expenses to Adjusted Selling, General and Administrative     Expenses     (Amounts in thousands)                                           Three Months Ended                                      October 1,        October 2,                                         2011              2010     Selling, general and     administrative expenses             $ 266,159           259,750     Adjustments to selling,     general and administrative     expenses:       Exchange rate                       (3,920)                 -       Adjusted selling,       general and       administrative expenses           $ 262,239           259,750          Adjusted selling, general          and administrative expenses          as a percent of net sales          18.2%             19.8%          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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