Mohawk Industries, Inc. Announces Third Quarter Earnings per Share
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CALHOUN, Ga., Oct. 20 /PRNewswire-FirstCall/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced diluted earnings per share (EPS) and net earnings for the third quarter of 2004 of $1.67 (23% above last year) and $112,687,000 (23% above last year), respectively. This compares to EPS and net earnings of $1.36 and $91,382,000, respectively, for the third quarter of 2003. The improvement in EPS results from strong sales growth in both the Mohawk and Dal-Tile segments, improved manufacturing efficiencies, higher absorption of manufacturing fixed costs, better leverage of selling, general and administrative costs and the Lees Carpet acquisition, offset by higher raw material and energy costs. Net sales for the quarter increased 17% to $1,531,151,000 compared to $1,303,166,000 for the third quarter of 2003. The sales increase was primarily due to organic growth in both segments and the Lees acquisition, which positively impacted sales by 5%. The Mohawk segment net sales of $1,130,922,000 in the third quarter of 2004 increased 17% from $967,405,000 due to growth in all products as a result of economic conditions and the Lees acquisition. The Dal-Tile segment net sales of $400,229,000 in the third quarter of 2004 grew 19% from $335,761,000 primarily from internal growth.
EPS for the first nine months of 2004 was $3.94 (27% above last year) and net earnings were $266,152,000 (28% above last year) compared to $3.10 EPS and $208,007,000 in net earnings for the first nine months of 2003. This increase in EPS and earnings is attributable to strong sales growth, better leverage of selling, general and administrative costs and the Lees acquisition, offset by higher raw material and energy costs. Net sales for the first nine months of 2004 were $4,409,327,000 representing a 21% increase from 2003 sales of $3,635,062,000. The sales increase resulted from strong organic growth, the acquisition of Lees and four additional days in the first quarter of 2004. The company's fiscal calendar for 2004 when compared to 2003, increased by four days in the first quarter which added approximately 2% to sales in the first nine months of 2004.
In commenting on the third quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "We are pleased with our results in this uncertain economic environment. Our sales in both business segments reflected year over year gains. The Mohawk segment residential replacement business, residential new construction business, and hard surface product offerings all continued their improvement. Sales in the Mohawk commercial category reflected increases over last year.
"The Dal-Tile segment sales momentum continues in all product categories with floor tile and stone products leading the others. We believe investments to update the service centers, add sales representatives and increase service levels are continuing to generate gains in market share. The new Muskogee, Oklahoma porcelain tile facility is running well at approximately 90% capacity and should be at capacity by year-end.
"There continue to be raw material and energy cost pressures as natural gas and oil are both at or near historic highs. These cost increases have impacted our margins in the third quarter of 2004. To mitigate these, we implemented multiple price increases for carpet products during the first nine months of the year, with the latest increase in October. Although we have not received formal notice of further increases at this time, the continuing high level of commodity costs is troubling. We believe these costs will moderate over the long term but the short-term trend of these costs is uncertain.
"In the third quarter, our working capital position remained strong with inventory turns at 4.4 times and our debt to capitalization ratio improving to 26%. Additionally, we repurchased 150,000 shares of stock at an average price of $74.88.
"We initiated several major projects in the quarter to support our growth including expansion of the Mexican tile manufacturing operation, additional extrusion and yarn processing capacity and warehouse space to support our hard surface and home products. We expect these projects to be completed in the next 12 to 18 months with most of the capital spending occurring in 2005."
The company anticipates the economy will expand moderately the rest of the year based on current trends. However, certain economic factors such as consumer confidence, job trends and oil and other energy costs, could impact our business. In the fourth quarter, we expect our revenue growth to moderate as comparisons with the prior year become more difficult, also, we have four fewer days in the quarter, (a 7% sales impact), and Lees was acquired during the 2003 fourth quarter. Future raw material cost changes could impact our margins in the last quarter. Based on these factors, our fourth quarter forecast for EPS is from $1.46 to $1.55.
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 "believes," "anticipates," "forecast," "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; 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 broadloom carpet, ceramic tile, wood, stone, laminate, vinyl, rugs and other home products. These products are marketed under the premier brands in the industry, which include Mohawk, Karastan, Ralph Lauren, Lees, Bigelow, Dal-Tile and American Olean. 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 Thursday October 21, 2004
at 11:00 AM Eastern Time.
The telephone number to call is 1-800-603-9255. A conference call
replay will also be available until Thursday, October 28, 2004 by dialing
1-800-642-1687
for US/local calls and (706) 645-9291 for international calls and entering
Conference ID # 1365558.
DATES FOR FUTURE PRESS RELEASES AND CONFERENCE CALLS:
PRESS RELEASE CONFERENCE CALL
4th QUARTER 2004 FEBRUARY 10, 2005 FEBRUARY 11, 2005 11:00AM(800-603-9255)
1st QUARTER 2005 APRIL 21, 2005 APRIL 22, 2005 11:00AM(800-603-9255)
2nd QUARTER 2005 JULY 20, 2005 JULY 21, 2005 11:00AM(800-603-9255)
3rd QUARTER 2005 OCTOBER 20, 2005 OCTOBER 21, 2005 11:00AM(800-603-9255)
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of
Earnings Data Three Months Ended Nine Months Ended
(Amounts in thousands, Oct. 2, Sept. 27, Oct. 2, Sept. 27,
except per share data) 2004 2003 2004 2003
Net sales $1,531,150 1,303,166 4,409,327 3,635,062
Cost of sales 1,104,340 938,280 3,233,556 2,655,277
Gross profit 426,810 364,886 1,175,771 979,785
Selling, general and
administrative expenses 233,752 205,482 713,001 612,120
Operating income 193,058 159,404 462,770 367,665
Interest expense 13,918 14,162 41,084 41,347
Other (income) expense, net 2,467 1,333 4,880 (1,252)
Earnings before income
taxes 176,673 143,909 416,806 327,570
Income taxes 63,986 52,527 150,654 119,563
Net earnings $112,687 91,382 266,152 208,007
Basic earnings per share $1.69 1.38 3.99 3.14
Weighted-average shares
outstanding 66,669 66,260 66,680 66,167
Diluted earnings per share $1.67 1.36 3.94 3.10
Weighted-average common and
dilutive potential common
shares outstanding 67,468 67,222 67,544 67,017
Other Financial Information
(Amounts in thousands)
Net cash provided by
operating activities $138,356 101,311 196,038 152,443
Depreciation & amortization $31,964 26,006 93,074 77,444
Capital expenditures $31,708 26,498 70,382 80,323
Consolidated Balance Sheet Data
(Amounts in thousands)
Oct. 2, Sept. 27,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $- 16,360
Receivables 718,006 602,867
Inventories 1,000,802 830,291
Prepaid expenses 40,993 29,786
Deferred income taxes 84,260 82,074
Total current assets 1,844,061 1,561,378
Property, plant and equipment, net 898,824 859,066
Goodwill 1,377,881 1,290,666
Other assets 338,404 167,325
$4,459,170 3,878,435
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $207,315 80,171
Accounts payable and accrued expenses 779,080 688,995
Total current liabilities 986,395 769,166
Long-term debt, less current portion 700,009 708,628
Deferred income taxes and other long-term liabilities 213,668 210,045
Total liabilities 1,900,072 1,687,839
Total stockholders' equity 2,559,098 2,190,596
$4,459,170 3,878,435
Segment Information As of or for the Three As of or for the Nine
Months Ended Months Ended
(Amounts in thousands) Oct. 2, Sept. 27, Oct. 2, Sept. 27,
2004 2003 2004 2003
Net sales:
Mohawk $1,130,922 967,405 3,269,411 2,702,261
Dal-Tile 400,229 335,761 1,139,916 932,801
Consolidated net
sales $1,531,151 1,303,166 4,409,327 3,635,062
Operating income:
Mohawk $131,361 108,499 300,183 235,053
Dal-Tile 62,750 52,702 168,047 137,749
Corporate and
eliminations (1,053) (1,797) (5,460) (5,137)
Consolidated
operating income $193,058 159,404 462,770 367,665
Assets:
Mohawk $2,276,475 1,777,780
Dal-Tile 2,072,761 1,966,519
Corporate and eliminations 109,934 134,136
Consolidated assets $4,459,170 3,878,435
SOURCE Mohawk Industries, Inc.
-0- 10/20/2004
/CONTACT: John D. Swift, Chief Financial Officer of Mohawk Industries,
Inc., +1-706-624-2247/
/Web site: http://www.mohawkind.com/
(MHK)
CO: Mohawk Industries, Inc.
ST: Georgia