CALHOUN, Ga., Aug. 2, 2012 /CNW/ - Mohawk Industries, Inc. today
announced 2012 second quarter net earnings of $73 million and
diluted earnings per share (EPS) of $1.06. Net earnings excluding
restructuring charges were $79 million and EPS was $1.14, a 20%
increase over last year's second quarter adjusted EPS. Net sales
for the second quarter of 2012 were $1.5 billion, in line with
prior year and an increase of 2% on a constant exchange rate. For
the second quarter of 2011, net earnings were $61 million and EPS
was $0.88. Net earnings excluding restructuring charges for the
second quarter of 2011, were $66 million and EPS was $0.95. For the
six months ending June 30, 2012, net sales were $2.9 billion, an
increase of 2% versus prior year and 4% on a constant exchange
rate. Net earnings and EPS for the six-month period were $114
million and $1.64, respectively. Net earnings excluding
restructuring charges were $120 million and EPS was $1.73, an
increase of 25% over the six-month adjusted EPS results in 2011.
For the six months ending July 2, 2011, net sales were $2.8
billion, net earnings were $84 million and EPS was $1.22. Excluding
restructuring charges, net earnings and EPS were $95 million and
$1.38, respectively. Commenting on Mohawk Industries' second
quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO,
stated, "Selling prices offsetting raw material inflation,
productivity gains, product mix improvements and lower interest
costs all contributed to our results. Sales increased 2% on a
constant exchange rate with commercial sales continuing to outpace
residential sales. We continue to control SG&A cost while
increasing new product investments across all businesses. During
the quarter, we generated adjusted EBITDA of $187 million, free
cash flow of $96 million and paid off $336 million of senior notes.
We have addressed many of today's economic challenges by enhancing
our product differentiation, reducing costs, improving efficiencies
and entering new product categories and geographies." Mohawk
segment adjusted operating income margin increased 110 basis points
over 2011 with gains from pricing, improved product mix and lower
costs from productivity offsetting lower volume and higher material
costs. Segment sales were down 3% during the second quarter. Carpet
sales for both the industry and Mohawk were approximately flat
compared to last year with residential remodeling activity slow.
Our rug sales continued to be soft due to lower retail sales, as
well as retailers deferring promotional activities and further
reducing inventory within the channel. During the quarter, Mohawk's
SmartStrand(®) Silk™ premium carpet collection experienced strong
sales growth due to its unsurpassed softness and proprietary
environmental features. We executed productivity improvements
across the business with particular gains from our capital
investments and reduction of waste. Dal-Tile segment sales grew 7%
during the quarter or 8% on a constant exchange rate. The segment
posted gains from increases in both residential and commercial
sales and growth in the Mexican market. Operating margins were
enhanced by higher volumes, greater manufacturing efficiencies,
improved material formulations and increased recycling. To address
the changing market demand, we converted mosaic and floor tile
production to porcelain, increased our ability to make larger sizes
and expanded our Reveal Imaging™ capabilities. The new Salamanca
facility in Mexico is producing red-body tile for the domestic
market. The plant's start-up costs are in line with our
expectations, and we anticipate positive contributions in early
2013 due to higher volume and productivity. Unilin segment sales
decreased 2% but increased 7% on a constant exchange rate. Outside
North America, laminate and wood flooring sales grew from continued
expansion in the DIY channel, expanded distribution in the U.K. and
Australian sales. Our Russian facility is progressing with
increased productivity and is manufacturing more complex products.
In North America, laminate sales grew from increased promotional
activity by large retailers and greater penetration in the home
center channel. Laminate collections featuring richly embossed
surfaces, premium long planks and our proprietary GenuEdge
Technology ™ improved our mix in both the remodeling and new
construction markets. Our insulated roofing product sales declined
in Europe as the housing market contracted but were offset by the
growth of our insulation panels, which help to meet energy
efficiency goals. Mohawk's commitment to product innovation,
resource management and process improvements yielded improved
second quarter results. Our investments in innovative products
improved our mix and contributed to higher margins. Though sales
softened in the second quarter, U.S. order rates have shown some
improvement as we began the third quarter. We do not expect
material costs to follow oil price declines due to specific higher
chemical costs. In the U.S., low mortgage rates and higher housing
starts should support future flooring sales. In Europe, we will
have the normal seasonal slowing and expect the present trends to
continue with exchange rates being a headwind. Based on these
factors, our guidance for third quarter earnings is $0.96 to $1.05
per share, excluding any restructuring costs. We have addressed
many of today's economic challenges by enhancing our product
differentiation, reducing costs, improving efficiencies and
entering new product categories and geographies. We retain a strong
financial position, which provides us flexibility to invest in
strategic opportunities going forward. 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, Mohawk Home, 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 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. Conference call Friday, August 3,
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 # 98256242. A replay will also
be available until August 17, 2012 by dialing 855-859-2056 for
US/local calls and 404-537-3406 for International/Local calls and
entering Conference ID # 98256242. MOHAWK INDUSTRIES, INC. AND
SUBSIDIARIES Consolidated Statement of Three Months Ended Six
Months Ended Operations (Amounts in June 30, July 2, June 30, July
2, thousands, except 2012 2011 2012 2011 per share data) Net sales
$1,469,793 1,477,854 2,878,828 2,821,449 Cost of sales 1,081,329
1,095,607 2,130,938 2,097,610 Gross profit 388,464 382,247 747,890
723,839 Selling, general and administrative 280,746 280,547 568,196
566,055 expenses Operating income 107,718 101,700 179,694 157,784
Interest expense 18,844 25,760 41,342 52,355 Other (income) 440 396
(1,385) 381 expense, net Earnings before 88,434 75,544 139,737
105,048 income taxes Income tax expense 15,246 13,450 25,537 18,416
Net earnings 73,188 62,094 114,200 86,632 Net earnings attributable
to - (1,191) (635) (2,287) noncontrolling interest Net earnings
attributable to $ 73,188 60,903 113,565 84,345 Mohawk Industries,
Inc. Basic earnings per share attributable $ 1.06 0.89 1.65 1.23 to
Mohawk Industries, Inc. Weighted-average common shares 68,984
68,744 68,923 68,709 outstanding - basic Diluted earnings per share
attributable $ 1.06 0.88 1.64 1.22 to Mohawk Industries, Inc.
Weighted-average common shares 69,259 68,981 69,204 68,942
outstanding - diluted Other Financial Information (Amounts in
thousands) Net cash provided by $ 140,046 96,003 95,576 28,590
operating activities Depreciation and $ 71,831 74,344 145,117
148,597 amortization Capital expenditures $ 44,436 59,708 87,687
112,519 Consolidated Balance Sheet Data (Amounts in thousands) June
30, July 2, 2012 2011 ASSETS Current assets: Cash and cash $
319,463 285,422 equivalents Receivables, net 782,122 797,893
Inventories 1,161,073 1,102,769 Prepaid expenses and 144,915
125,815 other current assets Deferred income 126,613 135,338 taxes
Total current assets 2,534,186 2,447,237 Property, plant and
1,652,444 1,730,914 equipment, net Goodwill 1,363,356 1,418,830
Intangible assets, 564,948 681,178 net Deferred income taxes and
other 149,843 110,841 non-current assets $6,264,777 6,389,000
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
portion of $ 57,158 453,185 long-term debt Accounts payable and
733,411 771,297 accrued expenses Total current 790,569 1,224,482
liabilities Long-term debt, less 1,570,530 1,155,150 current
portion Deferred income taxes and other 427,360 460,109 long-term
liabilities Total liabilities 2,788,459 2,839,741 Noncontrolling -
32,300 interest Total stockholders' 3,476,318 3,516,959 equity $
6,264,777 6,389,000 Segment Information Three Months Ended As of or
for the Six Months Ended (Amounts in June 30, July 2, June 30, July
2, thousands) 2012 2011 2012 2011 Net sales: Mohawk $ 734,493
758,064 1,434,373 1,449,229 Dal-Tile 404,288 379,469 797,213
723,884 Unilin 354,374 363,097 691,798 688,929 Intersegment sales
(23,362) (22,776) (44,556) (40,593) Consolidated net $1,469,793
1,477,854 2,878,828 2,821,449 sales Operating income (loss): Mohawk
$ 37,136 31,201 62,418 48,241 Dal-Tile 36,432 32,138 62,460 49,838
Unilin 40,575 46,209 67,721 72,459 Corporate and (6,425) (7,848)
(12,905) (12,754) eliminations Consolidated $ 107,718 101,700
179,694 157,784 operating income Assets: Mohawk $ 1,791,376
1,783,630 Dal-Tile 1,742,563 1,700,482 Unilin 2,539,997 2,717,032
Corporate and 190,841 187,856 eliminations Consolidated assets $
6,264,777 6,389,000 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 Six Months Ended June 30,
July 2, June 30, July 2, 2012 2011 2012 2011 Net earnings
attributable to $ 73,188 60,903 113,565 84,345 Mohawk Industries,
Inc. Adjusting items: Business restructurings 8,226 6,514 8,226
13,327 Income taxes (2,201) (1,818) (2,201) (2,836) Adjusted net
earnings attributable to Mohawk $ 79,213 65,599 119,590 94,836
Industries, Inc. Adjusted diluted earnings per share attributable
to Mohawk $ 1.14 0.95 1.73 1.38 Industries, Inc. Weighted-average
common shares 69,259 68,981 69,204 68,942 outstanding - diluted
Reconciliation of Operating Cash Flow to Free Cash Flow (Amounts in
thousands) Three Months Ended June 30, 2012 Net cash provided by
operating activities $ 140,046 Additions to property, plant and
equipment (44,436) Free cash flow $ 95,610 Reconciliation of Net
Earnings to Adjusted EBITDA (Amounts in thousands) Three Months
Ended June 30, 2012 Net earnings $ 73,188 Income tax expense 15,246
Interest expense 18,844 Depreciation and amortization 71,831 EBITDA
179,109 Business restructurings 8,226 Adjusted EBITDA $ 187,335
Reconciliation of Net Sales to Net Sales on a Constant Exchange
Rate (Amounts in thousands) Three Months Ended Six Months Ended
June 30, July 2, June 30, July 2, 2012 2011 2012 2011 Net sales $
1,469,793 1,477,854 2,878,828 2,821,449 Adjustment to net sales on
a constant exchange rate: Exchange rate 36,326 - 49,962 - Net sales
on a constant $ 1,506,119 1,477,854 2,928,790 2,821,449 exchange
rate Reconciliation of Segment Net Sales to Segment Net Sales on a
Constant Exchange Rate (Amounts in thousands) Three Months Ended
Dal-Tile June 30, 2012 July 2, 2011 Net sales $ 404,288 379,469
Adjustment to segment net sales on a constant exchange rate:
Exchange rate 3,555 - Segment net sales on a constant exchange $
407,843 379,469 rate Reconciliation of Segment Net Sales to Segment
Net Sales on a Constant Exchange Rate (Amounts in thousands) Three
Months Ended Unilin June 30, 2012 July 2, 2011 Net sales $ 354,374
363,097 Adjustment to segment net sales on a constant exchange
rate: Exchange rate 32,771 - Segment net sales on a constant
exchange $ 387,145 363,097 rate Reconciliation of Gross Profit to
Adjusted Gross Profit (Amounts in thousands) Three Months Ended
June 30, 2012 July 2, 2011 Gross Profit $ 388,464 382,247
Adjustment to gross profit: Business restructurings 6,636 5,532
Adjusted gross profit $ 395,100 387,779 Adjusted gross profit as a
percent of net 26.9% 26.2% sales Reconciliation of Operating Income
to Adjusted Operating Income (Amounts in thousands) Three Months
Ended June 30, 2012 July 2, 2011 Operating income $ 107,718 101,700
Adjustment to operating income: Business restructurings 8,226 6,514
Adjusted operating income $ 115,944 108,214 Adjusted operating
margin as a percent of 7.9% 7.3% net sales Reconciliation of
Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands) Three Months Ended Mohawk June 30, 2012 July
2, 2011 Operating income $ 37,136 31,201 Adjustment to segment
operating income: Business restructurings 7,383 6,514 Adjusted
segment operating income $ 44,519 37,715 Adjusted operating margin
as a percent of 6.1% 5.0% net sales Reconciliation of Segment
Operating Income to Adjusted Segment Operating Income (Amounts in
thousands) Three Months Ended Unilin June 30, 2012 July 2, 2011
Operating income $ 40,575 46,209 Adjustment to segment operating
income: Business restructurings 843 - Adjusted segment operating
income $ 41,418 46,209 Adjusted operating margin as a percent of
11.7% 12.7% net sales Reconciliation of Earnings Before Income
Taxes to Adjusted Earnings Before Income Taxes (Amounts in
thousands) Three Months Ended June 30, 2012 July 2, 2011 Earnings
before income taxes $ 88,434 75,544 Adjustment to earnings before
income taxes: Business restructurings 8,226 6,514 Adjusted earnings
before income taxes $ 96,660 82,058 Reconciliation of Income Tax
Expense to Adjusted Income Tax Expense (Amounts in thousands) Three
Months Ended June 30, 2012 July 2, 2011 Income tax expense $ 15,246
13,450 Adjustment to income tax expense: Income tax effect of
business 2,201 1,818 restructurings Adjusted income tax expense $
17,447 15,268 Adjusted income tax rate 18% 19% Reconciliation of
Selling, General and Administrative Expenses to Adjusted Selling,
General and Administrative Expenses (Amounts in thousands) Three
Months Ended June 30, 2012 July 2, 2011 Selling, general and
administrative $ 280,746 280,547 expenses Adjustments to selling,
general and administrative expenses: Business restructurings
(1,590) (982) Exchange rate (6,042) - Adjusted selling, general and
$ 273,114 279,565 administrative expenses Adjusted selling, general
and administrative expenses as a percent of net 18.6% 18.9% sales
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. Mohawk Industries,
Inc. CONTACT: Frank H. Boykin, Chief Financial Officer,
+1-706-624-2695http://www.mohawkind.com
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