Mohawk Has Record Second Quarter Earnings

Calhoun, GA, July 16--Mohawk Industries, Inc. today announced diluted earnings per share (EPS) and net earnings for the second quarter of 2003 with a second quarter record EPS of $1.12 per share or $74,985,000 in net earnings. This compares to EPS of $1.10 or $75,518,000 in net earnings for the second quarter of 2002. The improvement in EPS results from strong earnings in the Dal-Tile segment and lower outstanding shares due to the stock repurchase program. Net sales for the quarter increased 2% to $1,247,181,000 compared to $1,227,747,000 for the second quarter of 2002. The sales increase was attributable to strong sales of hard surface products. The Mohawk segment net sales of $926,745,000 in the second quarter of 2003 were down 1% from $938,680,000 due to lower sales of residential replacement carpet and Home products which reflected the general economic conditions. The Dal-Tile segment net sales of $320,436,000 in the second quarter of 2003 grew 11% from $289,067,000 from internal growth. EPS for the first half of 2003 was $1.74 or $116,625,000 in net earnings compared to $1.91 EPS or $118,728,000 in net earnings for the first half of 2002. This decline in EPS and earnings is attributable to weak first quarter sales and higher raw material, energy and benefit costs in the carpet and rug industry. Net sales for the first half of 2003 were $2,331,896,000 representing an 11% increase from the first half of 2002 sales of $2,094,457,000. This sales increase resulted primarily from the acquisition of Dal-Tile and hard surface internal growth. In commenting on the second quarter results, Jeffrey S. Lorberbaum, President and CEO, stated, "I am encouraged by the improving trend we saw in the residential and commercial carpet industry and the continued strength in hard surface products during the second quarter. During the last part of the quarter we began to experience improvements in both the carpet shipment and incoming order rates. We are encouraged by these trends but believe the economy still has significant room to improve. "We implemented a price increase in carpet during the second quarter to offset raw material increases. Our Dal-Tile segment continues to perform exceptionally well with strong sales and earnings. "The operating margin as a percentage of sales has declined slightly primarily due to the start up costs of the new tile manufacturing plant. The plant began production on schedule in June, and we are still on target to be at breakeven by the end of the year. During the second quarter, our Dal-Tile segment completed the acquisition of a regional stone operation which will make us the largest distributors of stone flooring and countertop slabs in the U.S. In addition, the Mohawk segment recently purchased a niche bath rug manufacturer. "We were pleased to be included in the 2002 Barron's 500 list which ranks company investor performance. We were ranked number 33 based on revenues, stock performance and cash flow return on investment. In addition, Business Week ranked Mohawk in its Global 1000 which includes the world's most valuable companies." The debt to capitalization ratio was 28.9% at the end of the quarter. The company repurchased 100,000 shares of common stock in the second quarter and has purchased approximately 10,957,000 shares of common stock since the inception of the program in September 1999 when the Board of Directors authorized up to 15,000,000 shares to be repurchased. Inventory levels have increased to support the hard surface growth in both the Mohawk and Dal-Tile segments and as a result of the stone operation acquisition. Most economists are forecasting business conditions to show improvement in the fall of this year. As the economy improves, more consumer dollars are expected to be spent on home decoration increasing sales of floorcovering products. Based on these factors, the third quarter earnings forecast range is from $1.25 to $1.35 EPS.

Related Topics:Daltile, Mohawk Industries

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