CALHOUN, Ga., July 30 /PRNewswire-FirstCall/ -- Mohawk Industries,
Inc. (NYSE:MHK) today announced 2009 second quarter net earnings of
$46 million and diluted earnings per share (EPS) of $0.67.
Operating income for the second quarter was $75 million. A
restructuring charge of $12 million was recorded in the quarter
primarily due to the closure of a European laminate facility.
Excluding the restructuring charge, operating income was $87
million and EPS was $0.79. In the second quarter of 2008, net
earnings and EPS were $89 million and $1.29 per share,
respectively. Net sales for the quarter were $1,406 million, a
decrease of 24% (22% on a constant exchange rate) from 2008. The
company generated cash flow from operations of $228 million. We
strengthened our balance sheet, by generating over $200 million in
free cash flow, paying $122 million of debt and investing $26
million in capital expenditures. We ended the period with a balance
of over $225 million in cash. The results benefited from
aggressively driving costs down, improving working capital, tighter
control over capital expenditures and an intense focus on
customers. For the first six months of 2009, our net loss was $60
million or a net loss per share of $0.87. Our operating loss for
the first six months was $71 million. Excluding the year to date
charges for carpet tile, FIFO inventory flow through and
restructuring, our operating income was $129 million. In the first
six months of 2008, net earnings and EPS were $154 million and
$2.25 per share, respectively. Net sales for the first six months
of 2009 were $2,614 million representing a 27% decrease from 2008.
Sales declined 22% based on a constant exchange rate excluding the
first quarter carpet tile charges. The sales decreases for both the
quarter and the year to date in the U.S. and Europe are
attributable to continuing low home sales, soft business investment
and weak consumer discretionary spending. In commenting on the
second quarter results, Jeffery S. Lorberbaum, Chairman and CEO
stated, "Our second quarter earnings surpassed our expectations.
Our results improved from the first quarter as we benefited from
increased sales, lower costs and higher utilization rates. We are
transitioning to a leaner, lower cost structure to emerge in a
stronger position when the economy recovers." The Mohawk segment
sales were down 21% with the residential decline beginning to
stabilize but commercial is expected to continue its contraction.
There remains pressure in the commodity categories and product mix
has been declining as customers trade down to reduce project costs.
After peaking, raw material costs improved and benefited our second
quarter results. During the quarter, improved seasonal sales,
higher plant utilization and lower costs helped offset the
deleveraging of our fixed overhead costs. We continue to cut
administrative, manufacturing and logistics costs focusing on
productivity, service and quality enhancements. Dal-Tile sales were
down 22% or 21% using a constant exchange rate. Dal-Tile has been
impacted greater by the present contraction of the commercial
business. Our Mexican business is growing by broadening our product
offering and expanding our distribution. Dal-Tile sales and
logistics infrastructures differentiate our products and services,
however, lower business levels have deleveraged the fixed costs.
The Dal-Tile cost structure has been reduced with many initiatives
on productivity, quality and product engineering. Our yields have
improved, raw material costs decreased, direct labor reduced and
controllable unit costs are down. Unilin sales declined 32% as
reported or 24% on a constant exchange rate basis. Even with
revenues down substantially, the operating margin was over 15%
excluding restructuring costs. Our laminate sales have declined
with residential remodeling and home sales. Royalties were impacted
by declining industry sales and new licenses. In the second quarter
we expensed the closing costs for a European flooring plant to
reduce capacity and costs. We are expanding our customer base with
our warehouse in Russia in preparation for local manufacturing.
Board demand is down in Europe creating excess capacity and
compressing prices in the market. The roofing structure sales are
softening and selling prices have remained stable. We are reducing
our costs by cutting infrastructure, SG&A and headcount while
improving productivity. In addition, working capital, maintenance
costs and capital expenditures have been reduced. New investments
are being made in technology, products and systems to reduce costs
and maximize our future. In the second period, industry conditions
were weak and we anticipate the present trends continuing in the
third quarter. U.S. residential appears to be stabilizing at a low
level with signs of improving home sales which are supported by low
mortgage rates. The commercial decline continues and we are
adjusting our business to the demand levels. Our carpet raw
material costs are expected to increase slightly in the second
half. The Unilin results are expected to be lower due to holiday
shutdowns, higher period costs and lower royalties. Our third
quarter guidance for earnings is $0.54 to $0.63 per share. Excluded
from this guidance is an estimated restructuring charge of
approximately $25 million, most non-cash, related to infrastructure
reductions in manufacturing and distribution. Each of our
businesses is managing the balance sheet to maximize our cash
position, reducing expenditures and remaining focused on our
customers. The investments in our products, systems and
organization will make our business stronger and more competitively
positioned as the economy improves. 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, July 31, 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 # 19457479. A
conference call replay will also be available until August 14, 2009
by dialing 800-642-1687 for US/local calls and 706-645-9291 for
International/Local calls and entering Conference ID # 19457479.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statement of
Operations (Amounts in thousands, except per share data) Three
Months Ended Six Months Ended -------------------
------------------ June 27, June 28, June 27, June 28, 2009 2008
2009 2008 -------- -------- -------- -------- Net sales $1,406,012
1,840,045 2,614,351 3,578,142 Cost of sales 1,038,624 1,357,153
2,093,274 2,635,411 ------------- --------- --------- ---------
--------- Gross profit 367,388 482,892 521,077 942,731 Selling,
general and administrative expenses 292,710 336,829 592,283 672,350
------------------------ ------- ------- ------- ------- Operating
income (loss) 74,678 146,063 (71,206) 270,381 Interest expense
30,002 32,742 60,186 66,509 Other (income) expense, net (4,622)
1,650 (2,007) 4,429 --------------------------- ------ ----- ------
----- Earnings (loss) before income taxes 49,298 111,671 (129,385)
199,443 Income tax expense (benefit) 3,037 22,893 (69,759) 45,275
---------------------------- ----- ------ ------- ------ Net
earnings (loss) $46,261 88,778 (59,626) 154,168
----------------------- ------- ------ ------- ------- Basic
earnings (loss) per share $0.68 1.30 (0.87) 2.25
--------------------- ----- ---- ----- ---- Weighted-average common
shares outstanding - basic 68,449 68,403 68,441 68,389
--------------------------- ------ ------ ------ ------ Diluted
earnings (loss) per share $0.67 1.29 (0.87) 2.25
----------------------- ----- ---- ----- ---- Weighted-average
common shares outstanding - diluted 68,613 68,617 68,441 68,598
----------------------- ------ ------ ------ ------ Other Financial
Information (Amounts in thousands) Net cash provided by operating
activities $228,126 266,871 266,045 186,692 ---------------------
-------- ------- ------- ------- Depreciation and amortization
$77,062 75,052 144,742 148,308 ---------------- ------- ------
------- ------- Capital expenditures $25,830 49,839 52,923 105,810
-------------------- ------- ------ ------ ------- Consolidated
Balance Sheet Data (Amounts in thousands) June 27, June 28, 2009
2008 -------- -------- ASSETS Current assets: Cash and cash
equivalents $226,543 64,038 Receivables, net 778,456 982,378
Inventories 936,336 1,250,300 Prepaid expenses 127,866 131,218
Deferred income taxes and other assets 186,572 138,332
---------------------------- ------- ------- Total current assets
2,255,773 2,566,266 Property, plant and equipment, net 1,864,301
2,018,813 Goodwill 1,399,277 2,876,724 Intangible assets, net
812,190 1,190,157 Deferred income taxes and other assets 24,148
307,572 ----------------------------- ------ ------- $6,355,689
8,959,532 ---------------------- ---------- --------- LIABILITIES
AND EQUITY Current liabilities: Current portion of long-term debt
$55,335 290,392 Accounts payable and accrued expenses 875,590
965,743 --------------------- ------- ------- Total current
liabilities 930,925 1,256,135 Long-term debt, less current portion
1,804,086 1,896,642 Deferred income taxes and other long-term
liabilities 490,355 734,150 ---------------------------- -------
------- Total liabilities 3,225,366 3,886,927
------------------------- --------- --------- Total equity
3,130,323 5,072,605 ------------ --------- --------- $6,355,689
8,959,532 ---------- --------- Segment Information (Amounts in
thousands) As of or for the As of or for the Three Months Ended Six
Months Ended ------------------- ------------------ June 27, June
28, June 27, June 28, 2009 2008 2009 2008 -------- --------
-------- -------- Net sales: Mohawk $767,790 968,426 1,362,121
1,873,470 Dal-Tile 376,704 481,511 735,182 930,562 Unilin 279,715
411,525 548,181 815,280 Corporate and eliminations (18,197)
(21,417) (31,133) (41,170) ---------------- ------- ------- -------
------- Consolidated net sales $1,406,012 1,840,045 2,614,351
3,578,142 ------------------ ---------- --------- ---------
--------- Operating income (loss): Mohawk $20,560 34,593 (158,495)
56,834 Dal-Tile 30,331 58,169 51,460 115,110 Unilin 31,141 60,121
45,693 110,077 Corporate and eliminations (7,354) (6,820) (9,864)
(11,640) ------------------------ ------ ------ ------ -------
Consolidated operating income (loss) $74,678 146,063 (71,206)
270,381 ---------------------- ------- ------- ------- -------
Assets: Mohawk $1,723,006 2,400,869 Dal-Tile 1,621,409 2,259,255
Unilin 2,646,999 4,109,314 Corporate and eliminations 364,275
190,094 ---------------- ------- ------- Consolidated assets
$6,355,689 8,959,532 ------------------------- ---------- ---------
Reconciliation of Operating Income (Loss) to Adjusted Operating
Income (Amounts in thousands) Three Months Ended June 27, 2009
-------------------------------------------------- Segment
Information Mohawk ------------------------------------- Mohawk
Dal-Tile Unilin Corporate Consolidated
-------------------------------------------------- Operating income
$20,560 30,331 31,141 (7,354) 74,678 Add: Restructuring 605 -
11,455 - 12,060 --- --- ------ --- ------ Adjusted operating income
$21,165 30,331 42,596 (7,354) 86,738 ======= ====== ====== ======
====== Six Months Ended June 27, 2009 ---------------- Operating
loss $(71,206) Add: Restructuring 15,960 Add: Commercial Carpet
Tile Reserve 122,492 Add: FIFO Inventory 61,794 ------ Adjusted
operating income $129,040 ======== Reconciliation of Net Earnings
to Adjusted Net Earnings (Amounts in thousands) Three Months Ended
June 27, 2009 ------------------ Net earnings $46,261 Add:
Restructuring 12,060 Less: Taxes (4,402) ------ Adjusted net
earning $53,919 ======= Reconciliation of Net Sales to Adjusted Net
Sales (Amounts in thousands) Three Months Ended June 27, 2009
-------------------------------------------------- Segment
Information Mohawk ------------------------------------- Mohawk
Dal-Tile Unilin Corporate Consolidated
-------------------------------------------------- Net sales
$767,790 376,704 279,715 (18,197) 1,406,012 Add: Exchange rate -
6,122 31,268 - 37,390 --- ----- ------ --- ------ Adjusted net
sales $767,790 382,826 310,983 (18,197) 1,443,402 ======== =======
======= ======= ========= Six Months Ended June 27, 2009
-------------------------------------------------- Segment
Information Mohawk ------------------------------------- Mohawk
Dal-Tile Unilin Corporate Consolidated
-------------------------------------------------- Net sales
$1,362,121 735,182 548,181 (31,133) 2,614,351 Add: Exchange rate -
12,143 60,924 - 73,067 Add: Commercial Carpet Tile Reserve 110,224
- - - 110,224 ------- -- -- -- ------- Adjusted net sales
$1,472,345 747,325 609,105 (31,133) 2,797,642 ========== =======
======= ======= ========= Reconciliation of Gross Profit to
Adjusted Gross Profit (Amounts in thousands) Three Months Ended
June 27, 2009 ------------ Gross profit $367,388 Add: Restructuring
12,060 ------ Adjusted gross profit $379,448 ========
Reconciliation of Unilin Segment Operating Income to Unilin Segment
EBITDA (Amounts in thousands) Three Months Ended ------------- June
27, 2009 ------------- EBITDA reconciliation Operating income
$31,141 Add: Restructuring 11,455 Other (expense)/Income 910
Depreciation and amortization 39,441 ------ EBITDA $82,947 =======
Reconciliation of Net Cash Provided by Operating Activities to Free
Cash Flow (Amounts in thousands) Trailing Four Three Months Ended
Quarters Ended
----------------------------------------------------- Sept. 27,
Dec. 31, March 29, June 27, June 27, 2008 2008 2009 2009 2009
--------- -------- --------- -------- -------- Net cash provided by
operating activities $184,837 198,505 37,919 228,126 649,387 Less:
Capital expenditures (49,512) (62,502) (27,093) (25,830) (164,937)
------- ------- ------- ------- -------- Free Cash Flow $135,325
136,003 10,826 202,296 484,450 ======== ======= ====== =======
======= DATASOURCE: Mohawk Industries, Inc. CONTACT: Frank H.
Boykin, Chief Financial Officer, Mohawk Industries, Inc.,
+1-706-624-2246 Web Site: http://www.mohawkind.com/
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