PRN: Mohawk Industries, Inc. Announces Third Quarter Earnings

30/ott/2014 22:32:20 PR Newswire Turismo Contatta l'autore

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Mohawk Industries, Inc. Announces Third Quarter Earnings

 
[30-October-2014]
 

-- Record Adjusted EPS; 21% Increase Over PY

-- Adjusted Operating Income Up 110 bps

CALHOUN, Georgia, Oct. 30, 2014 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced 2014 third quarter net earnings of $151 million and diluted earnings per share (EPS) of $2.06. Excluding unusual charges, net earnings were $179 million and EPS was $2.44, a 21% increase over last year's third quarter adjusted EPS and the highest quarterly adjusted EPS in the company's history. Net sales for the third quarter of 2014 were $1.99 billion, an increase of 1.5% versus the prior year's third quarter or approximately 2% on a constant exchange basis. For the third quarter of 2013, net sales were $1.96 billion, net earnings were $119 million and EPS was $1.63; e! xcluding unusual charges, net earnings were $147 million and EPS was $2.02.

For the nine months ending September 27, 2014, net sales were $5.9 billion, an increase of 8% versus the prior year. Net earnings and EPS for the nine-month period were $385 million and $5.25, respectively. Net earnings excluding unusual charges were $431 million and adjusted EPS was $5.88, an increase of 24% over the nine-month adjusted EPS results in 2013. For the nine months ending September 28, 2013, net sales were $5.4 billion, net earnings were $254 million and EPS was $3.53; excluding unusual charges, net earnings and EPS were $342 million and $4.76.

Commenting on Mohawk Industries' third quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "During the period, we significantly increased our adjusted operating income by 12% compared to last year through productivity enhancements, cost containment and acquisition synergies. Ongoing initiatives to control our expenses and increase our productivity yielded our highest operating margins in 8 years. We delivered good results this period, even in an environment with sluggish demand, due to our market diversification and strong execution. We will continue investing into our business to support future growth and profitability. The $550 million in capital investments we will make this year are increasing our productivity, allowing us to further differentiate our products and improve our margins."

Carpet segment net sales for the quarter were $779 million, up 1% over last year. Adjusted operating income for the segment rose approximately 20% over the prior year and the margin was up 170 basis points as a result of investments in new technology, increased productivity, cost reductions and improved quality. During the period, Mohawk's participation in the more value-oriented polyester category increased due to the company's proprietary Continuum fiber process that delivers superior post-consumer recycled carpet with outstanding stain and soil resistance as well as greater softness. Mohawk's position in modular tile continues to grow and is enhanced by the introduction of new 12-by-36-inch plank carpet tiles that can be utilized to create stylish new designs for public spaces. The price increase on certain products announced in April was fully executed at the beginning of the quarter and helped to offset increased raw material prices and ! freight costs. To offset escalating transportation costs, an additional freight increase was implemented in July.

Ceramic segment net sales for the quarter were $780 million, up 2% over last year as reported or 3% at a constant exchange rate. The segment's adjusted operating income grew 16% over the prior year due to increased productivity, better quality and improved pricing and mix. In the U.S., the integration of Marazzi into the company's U.S. ceramic operations is substantially complete. Site work has begun for the new ceramic plant in Tennessee, which will make higher value technical porcelain products that the company historically has imported. To recoup higher freight and raw material costs, a price increase was announced for implementation in January. In Mexico, new larger sizes, planks and market-leading designs should fuel further sales growth and improve mix, margins and average selling price. In Russia, sales grew on a local basis as enhancemen! ts in design, value and service helped capture increased share in a slowing ceramic market. In Europe, sales were essentially flat, although margins grew due to reduced costs and improved mix as new higher value products replaced older ones.

Laminate and Wood segment net sales for the quarter were $463 million, up approximately 3% over last year as reported and at a constant exchange rate. Adjusted operating margin for the segment was 11.6% due to lower sales in laminate, higher costs in new products and equipment start-ups offset by acquisitions and productivity improvements. In the U.S., new residential construction strengthened wood flooring sales, although market pricing did not keep pace with higher material costs. The segment's U.S. manufacturing facilities are aggressively implementing productivity improvements and cost reductions. In Europe, the Pergo product revision has upgraded the styling and performance of the brand, and the new Quick-Step laminate collection is being well received as a result of its luxurious appearance and distinctive texture. The segment's insulation business continued to grow with operational and formula improveme! nts offsetting pricing pressures. The segment's European board business delivered top line growth due to a broad product offering and increased margins from productivity improvements and higher material yields.

Lorberbaum said, "We anticipate that growth in the U.S. economy and the flooring category will remain unchanged during the fourth quarter with residential remaining slow as commercial grows. Overall we expect improvement in our sales and operating margins compared to last year. However, due to the strengthening U.S. dollar, we anticipate foreign currency translation will reduce sales and profits as reported. Our performance will benefit from new products, productivity improvements, synergies from our acquisitions and cost containment initiatives. We remain confident in our ability to execute our business strategy within the prevailing economic conditions. With these factors, our guidance for fourth quarter earnings is $2.18 to $2.27 per share, excluding any restructuring charges. We foresee upside for the U.S. flooring industry over the medium to long term. The forecast for new home construction in the U.S. is for robust growth for the next s! everal years, and we believe that stronger employment numbers and improving consumer confidence will result in increased home remodeling."

ABOUT MOHAWK INDUSTRIES

Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk's vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Our industry-leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Bigelow, Daltile, Durkan, Karastan, Lees, Marazzi, Kerama Marazzi, Mohawk, Pergo, Unilin and Quick-Step. During the past decade, Mohawk has transformed its business from an American carpet manufacturer into the world's largest flooring company with operations in Australia, Brazil, Canad! a, China, Europe, India, Malaysia, Mexico, Russia and the United States.

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 t! he 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, October 31, 2014 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 # 10924357. A replay will be available until Friday, November 14, 2014 by dialing 855-859-2056 for US/local calls and +1-404-537-3406 for International/Local calls and entering Conference ID # 10924357.

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES










Consolidated Statement of Operations


Three Months Ended


Nine Months Ended

(Amounts in thousands, except per share data)


September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013










Net sales


$ 1,990,658


1,961,536


5,852,000


5,424,650

Cost of sales


1,434,236


1,444,646


4,239,411


4,016,638

Gross profit


556,422


516,890


1,612,589


1,408,012

Selling, general and administrative expenses


342,729


340,987


1,045,913


1,012,069

Operating income


213,693


175,903


566,676


395,943

Interest expense


34,786


25,630


77,584


70,098

Other expense (income), net


(2,374)


1,168


961


6,458

Earnings from continuing operations before income taxes


181,281


149,105


488,131


319,387

Income tax expense


30,021


28,993


102,957


62,965

Earnings from continuing operations


151,260


120,112


385,174


256,422

Loss from discontinued operations, net of income tax benefit of $297 and $782, respectively


-


(553)


-


(1,914)

Net earnings including noncontrolling interest


151,260


119,559


385,174


254,508

Net earnings (loss) attributable to noncontrolling interest


(6)


491


77


373

Net earnings attributable to Mohawk Industries, Inc.


$ 151,266


119,068


385,097


254,135










Basic earnings per share attributable to Mohawk Industries, Inc.









Income from continuing operations


$ 2.08


1.65


5.29


3.59

Loss from discontinued operations, net of income taxes


-


(0.01)


-


(0.03)

Basic earnings per share attributable to Mohawk Industries, Inc.


$ 2.08


1.64


5.29


3.56

Weighted-average common shares outstanding - basic


72,864


72,575


72,814


71,467










Diluted earnings per share attributable to Mohawk Industries, Inc.









Income from continuing operations


$ 2.06


1.64


5.25


3.56

Loss from discontinued operations, net of income taxes


-


(0.01)


-


(0.03)

Diluted earnings per share attributable to Mohawk Industries, Inc.


$ 2.06


1.63


5.25


3.53

Weighted-average common shares outstanding - diluted


73,376


73,087


73,332


71,975




























Other Financial Information









(Amounts in thousands)









Net cash provided by (used in) operating activities


$ 225,549


213,059


323,423


326,973

Depreciation and amortization


$ 85,167


81,550


249,905


222,542

Capital expenditures


$ 141,883


109,426


391,580


255,523










Consolidated Balance Sheet Data









(Amounts in thousands)















September 27, 2014


September 28, 2013

ASSETS









Current assets:









Cash and cash equivalents






$ 105,569


63,580

Receivables, net






1,209,557


1,154,368

Inventories






1,640,487


1,612,696

Prepaid expenses and other current assets






275,981


221,767

Deferred income taxes






137,220


136,052

Total current assets






3,368,814


3,188,463

Property, plant and equipment, net






2,772,722


2,683,984

Goodwill






1,668,520


1,713,883

Intangible assets, net






746,304


811,116

Deferred income taxes and other non-current assets






145,100


166,711

Total assets






$ 8,701,460


8,564,157

LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Current portion of long-term debt and commercial paper






$ 583,495


89,031

Accounts payable and accrued expenses






1,247,862


1,296,192

Total current liabilities






1,831,357


1,385,223

Long-term debt, less current portion






1,806,821


2,257,391

Deferred income taxes and other long-term liabilities






486,764


587,910

Total liabilities






4,124,942


4,230,524

Noncontrolling interest






-


-

Total stockholders' equity






4,576,518


4,333,633

Total liabilities and stockholders' equity






$ 8,701,460


8,564,157










Segment Information


Three Months Ended


As of or for the Nine Months Ended

(Amounts in thousands)


September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013










Net sales:









Carpet


$ 778,849


772,751


2,234,083


2,238,953

Ceramic


779,842


767,005


2,271,660


1,939,054

Laminate and Wood


462,574


450,723


1,431,839


1,326,178

Intersegment sales


(30,607)


(28,943)


(85,582)


(79,535)

Consolidated net sales


$ 1,990,658


1,961,536


5,852,000


5,424,650










Operating income (loss):









Carpet


$ 74,082


68,836


171,179


148,936

Ceramic


101,254


75,908


268,320


152,188

Laminate and Wood


44,768


39,020


149,730


119,075

Corporate and eliminations


(6,411)


(7,861)


(22,553)


(24,256)

Consolidated operating income


$ 213,693


175,903


566,676


395,943










Assets:









Carpet






$ 2,016,109


1,830,869

Ceramic






3,788,164


3,820,002

Laminate and Wood






2,672,599


2,721,707

Corporate and eliminations






224,588


191,579

Consolidated assets






$ 8,701,460


8,564,157

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









September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013



Net earnings attributable to Mohawk Industries, Inc.


$ 151,266


119,068


385,097


254,135



Adjustments to net earnings:











Restructuring, acquisition and integration-related costs


14,013


24,431


36,907


75,608



Acquisitions purchase accounting (inventory step-up)


-


12,297


-


31,041



Discontinued operations


-


851


-


2,696



Legal reserve


10,000


-


10,000


-



Bond redemption


15,450


-


15,450


-



Deferred loan costs


1,080


490


1,080


490



Interest on 3.85% senior notes


-


-


-


3,559



Income taxes


(12,792)


(9,772)


(17,412)


(25,220)



Adjusted net earnings attributable to Mohawk Industries, Inc.


$ 179,017


147,365


431,122


342,309


















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


$ 2.44


2.02


5.88


4.76



Weighted-average common shares outstanding - diluted


73,376


73,087


73,332


71,975


















Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate



(Amounts in thousands)

















Three Months Ended


Nine Months Ended









September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013





Net sales


$ 1,990,658


1,961,536


5,852,000


5,424,650





Adjustment to net sales on a constant exchange rate


8,517


-


(16,100)


-





Net sales on a constant exchange rate


$ 1,999,175


1,961,536


5,835,900


5,424,650




















Reconciliation of Net Sales to Pro Forma Net Sales on a Constant Exchange Rate








(Amounts in thousands)

















Nine Months Ended











September 27, 2014


September 28, 2013









Net sales


$ 5,852,000


5,424,650









2013 Acquisitions




333,994









Adjustment to net sales on a constant exchange rate


(16,100)


-









Pro forma net sales on a constant exchange rate


$ 5,835,900


5,758,644
























Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate



(Amounts in thousands)

















Ceramic


Laminate and Wood









Three Months Ended


Three Months Ended









September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013





Net sales


$ 779,842


767,005


462,574


450,723





Adjustment to segment net sales on a constant exchange rate


9,098


-


(581)


-





Segment net sales on a constant exchange rate


$ 788,940


767,005


461,993


450,723




















Reconciliation of Gross Profit to Adjusted Gross Profit

(Amounts in thousands)

















Three Months Ended











September 27, 2014


September 28, 2013









Gross Profit


$ 556,422


516,890









Adjustments to gross profit:













Restructuring and integration-related costs


7,261


14,699









Acquisitions purchase accounting (inventory step-up)


-


12,297









Adjusted gross profit


$ 563,683


543,886









Adjusted gross profit as a percent of net sales


28.3%


27.7%
























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

(Amounts in thousands)

















Three Months Ended









September 27, 2014


September 28, 2013









Selling, general and administrative expenses


$ 342,729


340,987









Adjustments to selling, general and administrative expenses:













Restructuring, acquisition and integration-related costs


(6,752)


(9,712)









Legal reserve



(10,000)


-









Adjusted selling, general and administrative expenses


$ 325,977


331,275









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


16.4%


16.9%
























Reconciliation of Operating Income to Adjusted Operating Income

(Amounts in thousands)

















Three Months Ended


Nine Months Ended









September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013





Operating income


$ 213,693


175,903


566,676


395,943





Adjustments to operating income:













Restructuring, acquisition and integration-related costs


14,013


24,411


36,907


75,588





Legal reserve


10,000


-


10,000


-





Acquisitions purchase accounting (inventory step-up)


-


12,297


-


31,041





Adjusted operating income


$ 237,706


212,611


613,583


502,572





Adjusted operating margin as a percent of net sales


11.9%


10.8%


10.5%


9.3%




















Reconciliation of Segment Operating Income to Adjusted Operating Income

(Amounts in thousands)

















Carpet


Ceramic


Laminate and Wood





Three Months Ended


Three Months Ended


Three Months Ended





September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013


September 27, 2014


September 28, 2013

Operating income


$ 74,082


68,836


101,254


75,908


44,768


39,020

Adjustments to operating income:













Restructuring, acquisition and integration-related costs


-


1,570


4,248


3,070


9,015


19,246

Legal reserve



10,000


-


-


-


-


-

Acquisitions purchase accounting (inventory step-up)


-


-


-


12,297


-


-

Adjusted operating income


$ 84,082


70,406


105,502


91,275


53,783


58,266

Adjusted operating margin as a percent of net sales


10.8%


9.1%


13.5%


11.9%


11.6%


12.9%
















Reconciliation of Total Debt to Net Debt


(Amounts in thousands)

















September 27, 2014











Current portion of long-term debt and commercial paper


$ 583,495











Long-term debt, less current portion


1,806,821











Less: Cash and cash equivalents


105,569











Net Debt


$ 2,284,747


























Reconciliation of Operating Income to Adjusted EBITDA

(Amounts in thousands)










Trailing Twelve







Three Months Ended


Months Ended







December 31, 2013


March 29, 2014


June 28, 2014


September 27, 2014


September 27, 2014



Operating income


$ 150,988


130,735


222,248


213,693


717,664



Other (expense) income


(2,656)


(4,890)


1,555


2,374


(3,617)



Net (earnings) loss attributable to noncontrolling interest


(132)


28


(111)


6


(209)



Depreciation and amortization


86,329


80,984


83,754


85,167


336,234



EBITDA


234,529


206,857


307,446


301,240


1,050,072



Restructuring, acquisition and integration-related costs


37,812


11,725


11,169


14,013


74,719



Legal reserve


-


-


-


10,000


10,000



Adjusted EBITDA


$ 272,341


218,582


318,615


325,253


1,134,791


















Net Debt to Adjusted EBITDA










2.0


















Reconciliation of Earnings from Continuing Operations Before Income Taxes to Adjusted Earnings from Continuing Operations Before Income Taxes

(Amounts in thousands)

















Three Months Ended













September 27, 2014


September 28, 2013









Earnings from continuing operations before income taxes


$ 181,281


149,105









Adjustments to earnings from continuing operations before income taxes:













Restructuring, acquisition and integration-related costs


14,013


24,431









Acquisitions purchase accounting (inventory step-up)


-


12,297









Legal reserve


10,000


-









Bond redemption


15,450


-









Deferred loan costs


1,080


490









Interest on 3.85% senior notes


-


-









Adjusted earnings before income taxes


$ 221,824


186,323







































 

Reconciliation of Income Tax Expense to Adjusted Income Tax Expense

(Amounts in thousands)

















Three Months Ended













September 27, 2014


September 28, 2013









Income tax expense


$ 30,021


28,993









Income tax effect of adjusting items


12,792


9,475









Adjusted income tax expense


$ 42,813


38,468
























Adjusted income tax rate


19%


21%














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. In particular, the Company believes excluding the impact of restructuring, acquisition and integration-related costs is useful because it allows investors to evaluate our performance for different periods on a more comparable basis.

 


Company Codes: NYSE:MHK
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