CALHOUN, Ga., Oct. 29 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced 2009 third quarter net earnings of
$34 million and diluted earnings per share (EPS) of $0.50 which
included a restructuring charge of approximately $16 million,
primarily related to our distribution and manufacturing
infrastructure. Excluding the restructuring charge, net earnings
and EPS would be $44 million and $0.64 per share, respectively. In
the third quarter of 2008, the net loss was $1,485 million and loss
per share was $21.70. Excluding the 2008 third quarter charges, net
earnings and EPS would have been $84 million and $1.23 per share,
respectively. Net sales for the 2009 third quarter were $1,383
million, a decrease of 22% (21% with a constant exchange rate) from
2008. Continued cost control, reduced capital spending and lower
working capital enabled generation of free cash flow of $128
million for the quarter. For the nine months of 2009, our net loss
was $25 million or a net loss per share of $0.37. Excluding year to
date charges, net earnings would be $108 million and EPS would be
$1.57. In the first nine months of 2008 net loss and loss per share
were $1,331 million and $19.45 per share, respectively. Excluding
the 2008 year to date charges, net earnings and EPS would have been
$244 million and $3.56 per share, respectively. Net sales for the
first nine months of 2009 were $3,997 million representing a 25%
decrease from 2008. Sales declined 22% with a constant exchange
rate excluding carpet tile charges. The sales decrease for both the
quarter and the year to date in the U.S. and Europe is primarily
attributable to continuing low home sales, soft business investment
and weak consumer discretionary spending. In commenting on the
third quarter results, Jeffery S. Lorberbaum, Chairman and CEO
stated, "Our third quarter earnings were slightly better than our
guidance due to the many changes we have made to manage through
this difficult environment. Our gross margin of 27%, an improvement
of almost 200 basis points over last year benefited from lower raw
material and freight costs, personnel reductions, cost containment
measures and plant consolidations. Investments in new products,
research and development and capital expenditures are being made to
improve sales, efficiencies, quality and service. Our balance sheet
is strong with over $300 million of cash, ample liquidity from our
new $600 million bank facility and free cash flow of over $340
million exceeding last year by approximately 55% on a year to date
basis. Our strategy continues to be adjusted as the economic
environment requires." Mohawk segment sales were down 21% for the
third quarter, in line with the industry. Much of our efforts to
reduce costs and improve processes have been offset by low industry
volumes and unabsorbed overhead. Consumers are purchasing more
value-oriented products and selling prices on commoditized products
have compressed. Residential volume remains weak with commercial
still in decline. We have made improvements in our controllable
production costs and quality throughout our processes. Reductions
in our SG&A continue to be made throughout the organization.
The restructuring of our distribution model and consolidating
regional warehouses with Dal-Tile will lower our infrastructure
cost further. The commercial team is focused on the government,
healthcare and education markets, which should be stronger than the
other channels. Dal-Tile sales for the third quarter were down 23%
or 22% with a constant exchange rate. The decline in new housing
sales and commercial is significantly affecting the ceramic
industry. Dal-Tile is taking share from imports, which make up
about half of the industry volume with our broad product line and
strong distribution. We further reduced our SG&A in the third
quarter by merging local service centers, consolidating regional
warehouses and reducing our warehousing infrastructure.
Manufacturing costs continue to improve with increased
productivity, lower waste levels, and higher quality. Our new
introductions of engineered stone and terrazzo tile products are
growing in the U.S. market. In Mexico, we are improving our market
position by broadening our product line and expanding our customer
base. Unilin sales declined 21% or 18% with a constant exchange
rate. Our operating margins for the quarter were approximately 12%
and the EBITDA margin was approximately 26%. Demand in both our
U.S. and European markets remained challenging in the quarter.
Lower raw material costs, increased royalty income, postponement of
expenses and better than expected sales volume in some of our
products favorably impacted our earnings. Our laminate business has
been influenced by customers trading down to lower value
alternatives. To improve our laminate sales, we are increasing
participation in the DIY channels, growing sales of our new product
introductions, adding new product features and investing in new
product innovation. We broadened our wood distribution in both the
U.S. and Europe under multiple brands to reach all markets. We
continue to invest in research and development in our products to
provide greater value and to lower production costs. The board
products remain under significant pricing pressure due to excess
capacity in the markets and high fixed operating costs. Unilin has
implemented many cost reductions to lower SG&A, reduce
manufacturing costs and manage inventory levels. Business
conditions remain weak as we move into seasonally slower quarters.
The residential business appears to have stabilized and the
commercial business will continue to be difficult next year.
Sequentially, lower plant utilization rates in the fourth quarter
will result in higher unabsorbed overhead. Carpet material costs
will reduce margins until we pass them through with higher prices.
Our fourth quarter guidance for earnings is $0.28 to $0.38 per
share. Excluded from the guidance is an estimated restructuring
charge of $25 million, primarily non-cash reductions of our
manufacturing and distribution infrastructure. We continue to make
the necessary structural changes to strengthen our long-term
business. Each segment is executing innovative ways to positively
position us in all product categories. All of our efforts to
strengthen the business during this downturn will significantly
benefit us in the future as the industry recovers. 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; raw material and energy costs; timing and level of
capital expenditures; integration of acquisitions; rationalization
of operations; claims; 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, October 30, 2009 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 # 34166688. A
conference call replay will also be available until November 13,
2009 by dialing 800-642-1687 for US/local calls and 706-645-9291
for International/Local calls and entering Conference ID #
34166688. MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Consolidated
Statement of Operations Three Months Ended Nine Months Ended
-------------------- -------------------- (Amounts in thousands,
Sept. 26, Sept. 27, Sept. 26, Sept. 27, except per share data) 2009
2008 2009 2008 --------- --------- --------- --------- Net sales
$1,382,565 1,763,034 3,996,916 5,341,176 Cost of sales 1,013,106
1,323,963 3,106,380 3,959,374 --------- --------- ---------
--------- Gross profit 369,459 439,071 890,536 1,381,802 Selling,
general and administrative expenses 301,388 321,259 893,671 993,609
Impairment of goodwill and other intangibles - 1,418,912 -
1,418,912 --------- --------- --------- --------- Operating income
(loss) 68,071 (1,301,100) (3,135)(1,030,719) Interest expense
32,318 30,540 92,504 97,049 Other (income) expense, net (610) 4,201
(2,617) 8,630 --------- --------- --------- --------- Earnings
(loss) before income taxes 36,363 (1,335,841) (93,022)(1,136,398)
Income tax expense (benefit) 2,015 148,940 (67,744) 194,215
--------- --------- --------- --------- Net earnings (loss) $34,348
(1,484,781) (25,278)(1,330,613) --------- --------- ---------
--------- Basic earnings (loss) per share $0.50 (21.70) (0.37)
(19.45) --------- --------- --------- --------- Weighted-average
common shares outstanding - basic 68,456 68,411 68,446 68,396
--------- --------- --------- --------- Diluted earnings (loss) per
share $0.50 (21.70) (0.37) (19.45) --------- --------- ---------
--------- Weighted-average common shares outstanding - diluted
68,653 68,411 68,446 68,396 --------- --------- --------- ---------
Other Financial Information (Amounts in thousands) Net cash
provided by operating activities $146,549 190,287 412,594 376,979
--------- --------- --------- --------- Depreciation and
amortization $76,435 77,712 221,177 226,020 --------- ---------
--------- --------- Capital expenditures $18,678 49,512 71,281
155,322 --------- --------- --------- --------- Consolidated
Balance Sheet Data (Amounts in thousands) September 26, 2009
September 27, 2008 ------------------ ------------------ ASSETS
Current assets: Cash and cash equivalents $306,145 62,025
Receivables, net 832,105 933,741 Inventories 939,478 1,234,651
Prepaid expenses 117,367 122,464 Deferred income taxes and other
current assets 164,016 151,160
----------------------------------------------------------------
Total current assets 2,359,111 2,504,041 Property, plant and
equipment, net 1,841,779 1,963,939 Goodwill 1,424,391 1,529,321
Intangible assets, net 817,586 954,826 Deferred income taxes and
other non-current assets 45,588 20,259
----------------------------------------------------------------
$6,488,455 6,972,386
----------------------------------------------------------------
LIABILITIES AND EQUITY Current liabilities: Current portion of
long-term debt $53,163 131,663 Accounts payable and accrued
expenses 876,579 980,873
----------------------------------------------------------------
Total current liabilities 929,742 1,112,536 Long-term debt, less
current portion 1,802,138 1,924,698 Deferred income taxes and other
long-term liabilities 510,486 558,471
----------------------------------------------------------------
Total liabilities 3,242,366 3,595,705
----------------------------------------------------------------
Total equity 3,246,089 3,376,681
----------------------------------------------------------------
$6,488,455 6,972,386
---------------------------------------------------------------- As
of or for the As of or for the Segment Information Three Months
Ended Nine Months Ended (Amounts in thousands)
----------------------- --------------------- Sept. 26, Sept. 27,
Sept. 26, Sept. 27, 2009 2008 2009 2008 --------- ---------
--------- --------- Net sales: Mohawk $755,904 953,827 2,118,025
2,827,297 Dal-Tile 361,590 472,031 1,096,772 1,402,593 Unilin
281,803 357,785 829,984 1,173,065 Intersegment sales (16,732)
(20,609) (47,865) (61,779)
-------------------------------------------------------------------------
Consolidated net sales $1,382,565 1,763,034 3,996,916 5,341,176
-------------------------------------------------------------------------
Operating income (loss): Mohawk $16,261 (224,376) (142,234)
(167,542) Dal-Tile 21,166 (479,918) 72,626 (364,808) Unilin 34,929
(592,549) 80,622 (482,472) Corporate and eliminations (4,285)
(4,257) (14,149) (15,897)
-------------------------------------------------------------------------
Consolidated operating income (loss) $68,071 (1,301,100) (3,135)
(1,030,719)
-------------------------------------------------------------------------
Assets: Mohawk $1,697,334 2,122,463 Dal-Tile 1,622,502 1,736,212
Unilin 2,754,233 2,912,235 Corporate and eliminations 414,386
201,476
-------------------------------------------------------------------------
Consolidated assets $6,488,455 6,972,386
-------------------------------------------------------------------------
Reconciliation of Net Sale to Adjusted Net Sales (Amounts in
thousands) Three Months Ended Nine Months Ended
-------------------- -------------------- Sept. 26, Sept. 27, Sept.
26, Sept. 27, 2009 2008 2009 2008 --------- --------- ---------
--------- Net sales $1,382,565 1,763,034 3,996,916 5,341,176 Add:
Commercial carpet tile reserve - 14,614 110,224 23,651 Add:
Exchange rate 16,825 - 89,825 - --------- --------- ---------
--------- Adjusted net sales $1,399,390 1,777,648 4,196,965
5,364,827 --------- --------- --------- --------- Reconciliation of
Segment Net Sale to Adjusted Segment Net Sales (Amounts in
thousands) Three Months Ended -------------------- Sept. 26, Sept.
27, 2009 2008 --------- --------- Dal-Tile segment
------------------------------------------------- Net sales
$361,590 472,031 Add: Exchange rate 4,518 -
------------------------------------------------- Adjusted net
sales $366,108 472,031
------------------------------------------------- Unilin segment
------------------------------------------------- Net sales
$281,803 357,785 Add: Exchange rate 12,307 -
------------------------------------------------- Adjusted net
sales $294,110 357,785
------------------------------------------------- Reconciliation of
Net Earnings (Loss) to Adjusted Net Earnings (Amounts in thousands,
except per share data) Three Months Ended Nine Months Ended
-------------------- -------------------- Sept. 26, Sept. 27, Sept.
26, Sept. 27, 2009 2008 2009 2008 ---------- --------- ---------
--------- Net earnings (loss) $34,348 (1,484,781) (25,278)
(1,330,613) Unusual charges: Add: Impairment of goodwill and other
intangibles - 1,418,912 - 1,418,912 Add: Commercial carpet tile
reserve - 14,614 122,492 23,651 Add: FIFO inventory - - 61,794 -
Add: Business restructurings 16,019 - 31,936 - Add: Income tax
expense (benefit) (6,167) 135,620 (83,004) 132,140
-------------------------------------------------------------------------
Adjusted net earnings $44,200 84,365 107,940 244,090
-------------------------------------------------------------------------
Basic earnings (loss) per share $0.50 (21.70) (0.37) (19.45)
Weighted-average common shares outstanding - basic 68,456 68,411
68,446 68,396 Adjusted Diluted earnings per share $0.64 1.23 1.57
3.56 Weighted-average common shares outstanding - diluted 68,653
68,600 68,606 68,599 Reconciliation of Free Cash Flow (Amounts in
thousands) Three Months Ended Nine Months Ended ------------------
------------------------------ Sept. 26, 2009 Sept. 26, 2009 Sept.
27, 2008 ------------------ -------------- -------------- Net cash
provided by operations $146,549 412,594 376,979 Net cash used in
investing (24,282) (77,205) (163,668) less: Acquisitions, net of
cash 5,604 5,924 8,346 ----------------------------------------
------------------------------ Free cash flow $127,871 341,313
221,657 ----------------------------------------
------------------------------ Reconciliation of Unilin Segment
Operating Income to Unilin Segment EBITDA (Amounts in thousands)
Three Months Ended ------------------ EBITDA reconciliation
September 26, 2009 -----------------------------------------
Operating income $34,929 Add: Other income 833 Add: Depreciation
and amortization 38,247 ----------------- ------ EBITDA $74,009
-------- ------- 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. DATASOURCE: Mohawk Industries, Inc. CONTACT: Frank H.
Boykin, Chief Financial Officer of Mohawk Industries, Inc.,
+1-706-624-2695 Web Site: http://www.mohawkind.com/
Copyright
