Mohawk 3rd Quarter Earnings Up 12 Percent
Calhoun, GA, Oct. 16-Mohawk Industries, Inc. today announced the highest quarterly net earnings in its history of $91,382,000 (12% above last year) and diluted earnings per share (EPS) of $1.36 (12% above last year) for the third quarter of 2003. This compares to $81,560,000 in net earnings and $1.21 in EPS for the third quarter of 2002.
This improvement was the result of strong sales growth in the Dal-Tile segment, increased operating income and lower interest costs.
Net sales for the quarter increased 6% to $1,303,166,000 from $1,224,403,000 in 2002. This increase was primarily the result of internal growth of both Mohawk and Dal- Tile products. The Mohawk segment net sales of $967,405,000 in the third quarter of 2003 were up 4% from $927,299,000 due to improving sales across all product categories.
The Dal-Tile segment net sales of $335,761,000 in the third quarter of 2003 grew 13% from $297,104,000 primarily from internal growth.
Net earnings for the first nine months of 2003 were $208,007,000 (4% above last year), or $3.10 in EPS (1% below last year), compared to $200,288,000 in net earnings, or $3.13 in EPS, for the first nine months of 2002.
This improvement in net earnings is attributable to sales growth and operating earnings growth in the third quarter as well as the acquisition of Dal-Tile during the first quarter of 2002. The reduction in EPS results from weak first quarter sales and higher raw material, energy and employee benefit costs during the period for the Mohawk segment. Net sales for the first nine months increased 10% to $3,635,062,000 from $3,318,860,000. This sales increase resulted primarily from the acquisition of Dal-Tile and hard surface internal growth.
In commenting on the third quarter results, Jeffrey S. Lorberbaum, President and CEO, stated, "The improvement in our third quarter was very encouraging and we believe somewhat indicative of the more optimistic outlook of most economists. All of our product categories experienced positive revenue growth in the third quarter. The Mohawk segment operating margin improved from 10.5% last year to 11.2%. The Dal-Tile segment's reported operating income was $52,702,000, resulting in an operating margin of 15.7%. Excluding the start up costs for the new Dal-Tile manufacturing facility (approximately $2,500,000), the Dal-Tile segment's operating income would have been $55,202,000, resulting in an operating margin of 16.4%, as compared to last year's operating margin of 15.8%. The overall carpet industry is showing signs of improvement with the new home business continuing to lead other sectors within the carpet industry. We believe the other segments of the floorcovering industry are also continuing to experience strong growth in new construction.
"We were able to effectively manage our costs this quarter in spite of continuing high energy and raw material costs. Price increases in carpet during the second quarter have improved our margins. We have also controlled our general and administrative costs to lower levels.
"The acquisition of Lees Carpet continues on track to close in the fourth quarter of 2003. We will integrate the financial and administrative systems into the Mohawk systems soon after closing. Additionally, a team has been formed to consolidate the operating systems in 2004. The Lees operation will continue under their existing management to focus on the unique product benefits that add value to their customers. All functional groups are developing strategies to maximize the combined value we bring to our customers. Our balance sheet is very strong with 26.5% debt to capitalization excluding $16,000,000 of cash on the balance sheet at the end of the current quarter. The current available bank line of $700,000,000 will more than cover the approximate $352,000,000 needed for the Lees Carpet acquisition. We believe the acquisition will be slightly accretive in 2004."
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Related Topics:Mohawk Industries, Daltile