Mohawk Industries, Inc. News
Mohawk Industries, Inc. Announces First Quarter Earnings
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
In commenting on the first quarter results,
"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
"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
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
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,
There will be a conference call
A conference call replay will also be available until
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.
SOURCE Mohawk Industries, Inc.
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