 |  |  |  |  |  |  |  |  |
|
Mohawk Industries, Inc. Announces First Quarter Earnings
CALHOUN, Ga., April 17 /PRNewswire-FirstCall/ -- Mohawk Industries, Inc. NYSE: MHK today announced 2008 first quarter net earnings of $65 million and diluted earnings per share (EPS) of $0.95 (both 28% below last year). Last year a $9 million pre-tax refund ($6 million after tax) from U.S. Customs was received and we are still anticipating additional refunds. Net sales for the quarter were $1,738 million, a decrease of 6.7% from 2007. Our balance sheet remained strong during the quarter with debt to capitalization at 32% and debt to EBITDA at 2.3. The U.S. economy continues to slow and is being impacted by tightening credit, contracting residential home sales, declining consumer confidence, and increasing costs. The flooring industry is in a cyclical downturn and the residential remodeling category is one of the first to fall but leads the rebound when the economy improves. Spending on commercial has remained positive though it is expected to slow in the future. The U.S. credit problems have affected Europe with growth expected to be flat to modest overall and good in Eastern Europe and Russia. In commenting on the first quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated: "Our performance for the first quarter exceeded our guidance for the period in a very difficult environment. All of our business segments have managed through cyclical downturns in the past and are focused on improving productivity and quality, reducing infrastructure costs, passing along increased costs, controlling working capital, and investing in products and assets to enhance our future. "Our Mohawk segment has continued to slow with weak industry conditions resulting in sales declining 13.6%. Residential sales remain slow with new and existing home sales low and consumers postponing purchases. Our carpet price increases are being implemented during the quarter and should be substantially complete by the end of the second quarter. To better align with present volumes, additional reductions in infrastructure costs and production levels were made during the period. New residential introductions are being shipped earlier than prior years and are concentrated on fashion and value engineered products. Commercial product sales are stronger than residential. Carpet tiles continue to grow and our new Encycle tile with leading edge technology has benefits that make it more durable, environmentally friendly and economically advantageous. Raw material and energy costs are rising and may require future pricing action. Many initiatives to reduce energy and water consumption are being implemented in our operations. A new Mohawk consumer campaign is being launched that co-ordinates TV, print and digital marketing appealing to the design enthusiast with fashionable styling and superior selection. "The Dal-Tile segment sales in the first quarter declined 3.8% which we believe outperformed the industry again. Strong growth in the commercial market is off-setting some of the weakness in the residential market. Our sales in Mexico and Canada have continued to expand as we increase our penetration in those markets. Our distribution system has been expanded with the opening of a new service center in Michigan and we have planned three to four more this year. Our sales force and new introductions are focusing on the better performing commercial, multi-family and higher end remodeling categories. Our ceramic price increase initiated in the fourth quarter is substantially implemented. In April, we are executing additional price increases on selected products and raising the energy surcharge to pass along increased costs. Cost reduction initiatives remain a priority concentrated on SG&A, manufacturing productivity, inventory management, freight and raw materials. Dal-Tile's new product 'Metro Leather' won the Dealer's Choice Award for the best new ceramic tile. "The Unilin segment sales were up 14.7% in the first quarter as reported and up 4.7% using a constant exchange rate. Unilin sales were down 6.2% excluding our wood acquisition on a local basis. Both the European and U.S. markets slowed in the period with growth continuing in Eastern Europe and Russia. Sales grew in U.S. laminate and European roofing systems with the other products slowing compared to the prior year. Our costs increased due to plant start up expenses, rising energy and materials, higher costs for U.S. imports and lower overhead absorption. Price increases are being executed in some markets to offset rising costs and currency changes. Reductions in staffing and production levels are being made to further align with industry conditions. Our U.S. flooring expansion should begin production by the end of the second quarter and will reduce imports of higher cost products from Europe. Our wood flooring team continues to improve operational costs and quality as planned. Our wood production is operating at a loss and experiencing lower volumes with the industry. We are launching new distressed and antique looks as well as a patented installation system to enhance our position." Although seasonal improvements will benefit the second quarter, we expect to have many of the same challenges we faced during the first quarter. Weak demand and higher costs in the U.S. and Europe will weigh on our future results. We will adjust our business as changes in customer demand and costs require. Lower debt levels, reduced tax rates and beneficial exchange rates will positively affect our results. Based on these factors, our guidance for the second quarter of 2008 is $1.36 to $1.45. In spite of a difficult flooring market, Mohawk continues to modernize manufacturing facilities, create innovative products, and launch exciting advertising and promotional campaigns. We are positioned with a more dynamic and cost effective enterprise for the turn around that always occurs. Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies, proposed acquisitions, and similar matters, and those that include the words "could," "should," "believes," "anticipates," "forecasts," "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; raw material and energy prices; timing and level of capital expenditures; integration of acquisitions; introduction of new products; rationalization of operations; litigation and other risks identified in Mohawk's SEC reports and public announcements. 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, Ralph Lauren, 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 over 250 local distribution locations. There will be a conference call Friday, April 18, 2008 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. A conference call replay will also be available until April 25, 2008 by dialing 1-800-642-1687 for US/local calls and 1-706-645-9291 for International/Local calls and entering Conference ID # 39978826.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data
(Amounts in thousands, except per
share data) Three Months Ended
March 29, 2008 March 31, 2007
Net sales $1,738,097 1,863,863
Cost of sales 1,278,258 1,340,423
Gross profit 459,839 523,440
Selling, general and administrative
expenses 335,521 352,863
Operating income 124,318 170,577
Interest expense 33,767 41,579
Other (income) expense, net 2,779 4,227
U.S. Customs refund - (9,122)
Earnings before income taxes 87,772 133,893
Income taxes 22,382 43,515
Net earnings $65,390 90,378
Basic earnings per share $0.96 1.33
Weighted-average shares outstanding 68,375 67,906
Diluted earnings per share $0.95 1.32
Weighted-average common and dilutive
potential common shares outstanding 68,579 68,255
Other Financial Information
(Amounts in thousands)
Net cash provided by (used in)
operating activities $(80,179) 88,767
Depreciation & amortization $73,256 73,846
Capital expenditures $55,971 24,956
Consolidated Balance Sheet Data
(Amounts in thousands)
March 29, 2008 March 31, 2007
ASSETS
Current assets:
Cash & cash equivalents $73,289 53,598
Receivables 955,325 978,789
Inventories 1,296,424 1,245,073
Prepaid expenses 135,429 119,815
Deferred income taxes 135,407 176,444
Total current assets 2,595,874 2,573,719
Property, plant and equipment, net 2,026,058 1,864,999
Goodwill 2,877,671 2,710,821
Intangible assets 1,211,512 1,166,626
Deferred income taxes and other
assets 306,304 29,141
$9,017,419 8,345,306
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $367,785 514,772
Accounts payable and accrued expenses 932,856 1,012,558
Total current liabilities 1,300,641 1,527,330
Long-term debt, less current portion 2,003,013 2,189,862
Deferred income taxes and other long-
term liabilities 764,785 775,517
Total liabilities 4,068,439 4,492,709
Total stockholders' equity 4,948,980 3,852,597
$9,017,419 8,345,306
Segment Information As of or for the Three Months Ended
(Amounts in thousands) March 29, 2008 March 31, 2007
Net sales:
Mohawk $905,044 1,047,661
Dal-Tile 449,051 466,961
Unilin 403,755 352,096
Corporate and eliminations (19,753) (2,855)
Consolidated net sales $1,738,097 1,863,863
Operating income:
Mohawk $22,241 48,445
Dal-Tile 56,941 64,395
Unilin 49,956 60,499
Corporate and eliminations (4,820) (2,762)
Consolidated operating income $124,318 170,577
Assets:
Mohawk $2,410,031 2,496,295
Dal-Tile 2,257,190 2,279,739
Unilin 4,162,172 3,337,020
Corporate and eliminations 188,026 232,252
Consolidated assets $9,017,419 8,345,306
Reconciliation of Debt to Capital, EBITDA and Debt to EBITDA
Debt to Capital
As of
March 29, 2008
Outstanding Debt (a) $2,370,798
Total stockholders' equity 4,948,980
Total capital (b) $7,319,778
Debt to capital percentage
(a)/(b) 32%
EBITDA
Trailing Four
Three Months Ended Quarters Ended
(Amounts in thousands) June 30, Sept. 29, Dec. 31, March 29, March 29,
2007 2007 2007 2008 2008
EBITDA reconciliation:
Operating
income $198,248 200,814 180,467 124,318 703,847
Other (expense)/
income 2,783 799 3 (2,779) 806
Depreciation and
amortization 75,382 75,636 81,573 73,256 305,847
EBITDA $276,413 277,249 262,043 194,795 (c) 1,010,500
Debt to EBITDA
Debt to EBITDA (a)/(c) 2.3
Reconciliation of Unilin Segment Net Sales to Adjusted
Unilin Segment Net Sales
Three Months Ended
(Amounts in thousands) March 29, 2008
Unilin segment net sales $403,755
Less: Exchange rate gain 35,200
Adjusted Unilin segment net sales 368,555
Less: Wood acquisition net sales 38,218
Adjusted Unilin segment net sales
for exchange rate gain and wood
acquisition $330,337
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.
Website: http://www.mohawkind.com/ |
Issuers of news releases and not PR Newswire are solely responsible for the accuracy of the content.
Terms and conditions, including restrictions on
redistribution, apply.
Copyright © 1996-2008 PR Newswire Association LLC.
All Rights Reserved.
A United Business Media company.
