PRN: Mohawk Industries, Inc. Announces First Quarter Earnings

03/mag/2012 22.13.53 PR Newswire Turismo Contatta l'autore

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Mohawk Industries, Inc. Announces First Quarter Earnings

 
[03-May-2012]
 

CALHOUN, Georgia, May 3, 2012 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE:MHK) today announced 2012 first quarter net earnings of $40 million and diluted earnings per share (EPS) of $0.58, a 38% increase over last year's first quarter adjusted EPS. Net sales for the first quarter of 2012 were $1.4 billion, increasing 5% as reported and 6% with a constant exchange rate. For the first quarter of 2011, net earnings were $23 million and EPS was $0.34. Excluding restructuring charges for the first quarter of 2011, adjusted net earnings were $29 million and EPS was $0.42.

Commenting on Mohawk Industries' performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "Volume increases, price increases, cost reductions and lower interest expense contributed to our earnings growth in the quarter. In March, Standard & Poor's upgraded our credit rating and Moody's elevated our outlook to positive, reducing the interest rate on our notes. In April, we paid our 2012 maturing notes using our bank revolver which has lower interest rates. Our balance sheet remains strong with net debt to adjusted EBITDA at 2.2 times and approximately $500 million available for strategic opportunities, after the payment of the 2012 notes."

Mohawk segment sales grew 1% as we executed price increases that should cover our material cost in the second period. Higher carpet sales in the segment were offset by lower rug sales from deferred customer promotions, inventory reductions in the channel and lower product mix. In residential, we launched our revolutionary SmartStrand Silk collection, the next generation of soft carpet, with the inherent performance, ease of care and unique environmental features that have made SmartStrand successful. In the commercial business, our hospitality and core business improved, but we experienced weakness in our premium products. To provide greater value in commercial, we have introduced new high-end products, extended our SmartStrand brand into commercial applications and utilized new technology for improved pattern definition in hospitality. Productivity increases, improved yields, product re-engineering, process simplification and reduced complexity improved our cost position! and service levels.

Dal-Tile segment net sales grew 14% during the quarter through increased residential remodeling and commercial renovation, successful product launches and growth in the Mexican market. Price increases along with energy surcharges are being implemented to recover material and freight costs. Sales grew in all channels, driven by new products featuring Reveal Imaging, larger sizes, realistic wood designs and a premium commercial collection. In Mexico, we opened our Salamanca plant ahead of schedule. Sales in Mexico are growing dramatically due to our expanded offering of product designs, sizes and price points. We lowered manufacturing costs through higher productivity, reduced waste, and improved formulations that increase production speeds and recycled content.

Unilin segment net sales grew 4% as reported and 7% on a local basis supported by growth of laminate flooring and panels. The impact of the European debt situation on our business has been limited by our lower exposure to Southern European markets. We continue to gain share through new products, channels and regions, offsetting the impact of slowing national economies. We have implemented price increases in European laminate, roofing and most panels to recover higher material costs. We are increasing product placements in the home center and DIY channels with both laminate and wood. Our insulation panels business grew significantly and we are preparing to expand in France. Our strategies to expand internationally are progressing with our new Russian plant increasing production and our Australian distribution being integrated with Unilin.

Low mortgage rates, increasing home sales, and higher employment should sustain industry growth. Our emphasis on product and process innovation, cost management and flexibility has resulted in a stronger company. In the second quarter, we anticipate continued sales growth and improving margins as selling prices align with material inflation. We believe that our new product launches will improve profitability and sales growth. Improvements in productivity, inventory management, and interest expenses will favorably impact our results. With these factors, our guidance for second quarter earnings is $1.07 to $1.16 per share, excluding any restructuring costs. Our recent investments in new markets, technology, production capacity and R&D will improve our results. We have a strong financial position to pursue new strategic opportunities.

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, 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 expendit! ures; 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, May 4, 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 # 69432176. A replay will also be available until May 18, 2012 by dialing 855-859-2056 for US/local calls and +1-404-537-3406 for International/Local calls and entering Conference ID # 69432176.









MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES</! p>










Consolidated Statement of Operations



Three Months Ended




(Amounts in thousands, except per share data)



March 31, 2012


April 2, 2011













Net sales



$            1,409,035


1,343,595




Cost of sales



1,049,609


1,002,003




    Gross profit



359,426


341,592




Selling, general and administrative expenses



287,450


285,508




Operating income



71,976


56,084




Interest expense



22,498


26,595




Other (income) expense, net



(1,825)


(15)




    Earnings before income taxes



51,303


29,504




Income tax expense



10,291


4,966




Net earnings 



41,012


24,538




Net earnings attributable to noncontrolling interest



(635)


(1,096)




    Net earnings attributable to Mohawk Industries, Inc.



$                40,377


23,442




Basic earnings per share attributable to Mohawk Industries, Inc. 



$                    0.59


0.34




Weighted-average common shares outstanding - basic



68,862


68,674




Diluted earnings per share attributable to Mohawk Industries, Inc.



$                    0.58


0.34




Weighted-average common shares outstanding - diluted



69,141


68,904































Other Financial Information









(Amounts in thousands)









Net cash used in operating activities



$                44,470


67,413




Depreciation and amortization



$                73,286


74,253




Capital expenditures



$                43,251


52,811













Consolidated Balance Sheet Data









(Amounts in thousands)












March 31, 2012


April 2, 2011




ASSETS









Current assets:









    Cash and cash equivalents



$               304,775


256,231




    Receivables, net



782,000


754,826




    Inventories



1,164,991


1,075,613




    Prepaid expenses and other current assets



136,752


97,846




    Deferred income taxes 



156,110


155,159




        Total current assets



2,544,628


2,339,675




Property, plant and equipment, net



1,718,396


1,715,895




Goodwill



1,390,712


1,406,731




Intangible assets, net



599,625


689,703




Deferred income taxes and other non-current assets



145,833


114,229







$           6,399,194


6,266,233




LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Current portion of long-term debt



$                57,309


52,706




Accounts payable and accrued expenses



721,383


739,768




        Total current liabilities



778,692


792,474




Long-term debt, less current portion



1,642,419


1,577,188




Deferred income taxes and other long-term liabilities



458,786


449,984




        Total liabilities



2,879,897


2,819,646




Noncontrolling interest



-


33,255




Total stockholders' equity



3,519,297


3,413,332







$         6,399,194


6,266,233













Segment Information



As of or for the Three Months Ended




(Amounts in thousands)



March 31, 2012


April 2, 2011













Net sales:









    Mohawk



$             699,880


691,165




    Dal-Tile



392,925


344,415




    Unilin



337,424


325,832




    Intersegment sales



(21,194)


(17,817)




        Consolidated net sales



$         1,409,035


1,343,595













Operating income (loss):









    Mohawk



$              25,282


17,040




    Dal-Tile



26,028


17,700




    Unilin



27,146


26,250




    Corporate and eliminations



(6,480)


(4,906)




        Consolidated operating income



$              71,976


56,084













Assets:









    Mohawk



$         1,820,785


1,749,625




    Dal-Tile



1,759,934


1,674,408




    Unilin



2,620,013


2,654,268




    Corporate and eliminations



198,462


187,932




        Consolidated assets



$         6,399,194


6,266,233









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




March 31, 2012


April 2, 2011

Net earnings attributable to Mohawk Industries, Inc.



$                40,377


23,442

Unusual items:






Busine! ss restructurings



-


6,813

Income taxes



-


(1,018)

Adjusted net earnings attributable to Mohawk Industries, Inc.



$                40,377


29,237







Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. 



$ 0.58


0.42

Weighted-average common shares outstanding - diluted



69,141


68,904













Reconciliation of Total Debt to Net Debt






(Am! ounts in thousands)








March 31, 2012




Current portion of long-term debt


$              57,309




Long-term debt, less current portion


1,642,419




Less: Cash and cash equivalents


304,775




Net Debt


$         1,394,953






Reconciliation of Operating Income to Adjusted EBITDA

(Amounts in thousands)



Three Months Ended


Trailing Twelve Months Ended



July 2, 2011


October 1, 2011


December 31, 2011


March 31, 2012


March 31, 2012

Operating income


$      101,700


91,464


66,294


71,976


331,434

Other (expense) income


(396)


(13,413)


(257)


1,825


(12,241)

    Net earnings attributable to noncontrolling interest


(1,191)


(1,050)


(966)


(635)


(3,842)

Depreciation and amortization


74,344


74,207


74,930


73,286


296,767

EBITDA


174,457


151,208


140,001


146,452


612,118

Unrealized foreign currency losses (1)


-


9,085


-


-


9,085

Operating lease correction (2)


-


-


6,035


-


6,035

Business restructurings


6,514


2,186


7,696


-


16,396

 Adjusted EBITDA 


$      180,971


162,479


153,732


146,452


643,634












Net Debt to Adj! usted EB ITDA










2.2









Reconciliation of Net Sales to Adjusted Net Sales





(Amounts in thousands)







Three Months Ended



March 31, 2012


April 2, 2011

Net sales


$     1,409,035


1,343,595

Adjustments to net sales:





Exchange rate


13,636


-

Adjusted net sales


$     1,422,671


1,343,595






Reconciliation of Segment Net Sales to Adjusted Segment Net Sales





(Amounts in thousands)







Three Months Ended

Unilin


March 31, 2012


April 2, 2011

Net sales


$      337,424


325,832

Adjustment to net sales:





Exchange rate


11,851


-

Adjusted net sales


$      349,275


325,832






Reconciliation of Operating Income to Adjusted Operating Income 





(Amounts in thousands)







Three Months Ended



March 31, 2012


April 2, 2011

Operating income


$       71,976


56,084

Adjustments to operating income:





Business restructurings


-


6,813

Adjusted operating income


$       71,976


62,897

   Adjusted operating margin as a percent of net sales


5.1%


4.7%






Reconciliation of Segment Operating Income to Adjusted Segment Operating Income 





(Amounts in thousands)







Three Months Ended

Mohawk 


March 31, 2012


April 2, 2011

Operating income


$       25,282


17,040

Adjustments to operating income:





Business restructurings


-


6,813

Adjusted operating income


$       25,282


23,853

   Adjusted operating margin as a percent of net sales


3.6%


3.5%






Reconciliation of Earnings Before Income Taxes to Adjusted Earnings Before Income Taxes





(Amounts in thousands)







Three Months Ended



March 31, 2012


April 2, 2011

Earnings before income taxes


$       51,303


29,504

Unusual items:





Business restructurings


-


6,813

Adjusted earnings before income taxes


$       51,303


36,317











Reconciliation of Income Tax Expense to Adjusted Income Tax Expense 





(Amounts in thousands)







Three Months Ended



March 31, 2012


April 2, 2011

Income tax expense   


$       10,291


4,966

Unusual items:





Income taxes


-


1,018

Adjusted income tax expense


$       10,291


5,984






Adjusted income tax rate


20%


16%






Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses





(Amounts in thousands)







Three Months Ended



March 31, 2012


April 2, 2011

Selling, general and administrative expenses


$      287,450


285,508

Adjustments to selling, general and administrative expenses:





Business restructurings


-


466

Exchange rate


2,378


-

Adjusted selling, general and administrative expenses


$      289,828


285,974

Adjusted selling, general and administrative expenses as a percent of net sales


20.6%


21.3%




















(1)  Unrealized foreign currency losses in Q3 2011  for certain of the Company's consolidated foreign subsidiaries that measure financial position and results using the U.S. dollar rather than the local currency.

(2)  Correction of an immaterial error related to accounting for operating leases


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
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