Mohawk''s Earnings Soar
Calhoun, GA, Oct. 15--Mohawk Industries had record quarterly net earnings of $81.56 million (46% above last year) and diluted earnings per share (EPS) of $1.21 (15% above last year) for the third quarter. This compares to $55.73 million in net earnings and $1.05 in EPS for the same period a year ago. This improvement was the result of: the contribution to earnings, net of the acquisition effects, from the Dal-Tile operations of $0.05 EPS; increased earnings of $0.09 EPS from Mohawk operations as a result of higher sales and lower costs; and an average reduction of approximately 743,000 shares of stock for the third quarter of 2002, which contributed $0.02 EPS. Net sales for the quarter increased 35% to $1.22 billion from $907.85 million a year ago. This increase was the result of the Dal-Tile merger and internal growth of Mohawk products. Net sales for the third quarter increased 3.8% on a proforma basis. The Mohawk segment net sales of $927.07 million grew 2% primarily from hard surface products and the Dal-Tile segment net sales of $297.34 million grew 9% (from $271.59 million) primarily from residential products.
Net earnings for the first nine months of this year were $200.29 million (55% above last year), or $3.13 in EPS (28% above last year), compared to $129.40 million in net earnings, or $2.44 in EPS, for the first nine months of last year. This improvement in EPS and net earnings is attributable to: the Dal-Tile acquisition; sales growth; operating earnings growth; and an average reduction of approximately 538,000 shares of stock for the first nine months of 2002. Net sales for the first nine months increased 30% to $3.32 billion from $2.55 billion. The Mohawk segment sales of $2.70 billion grew 6% and the Dal-Tile segment proforma sales of $851.17 million grew 9%. Total company net sales increased 7% on a proforma basis.
"We were able to produce all-time record results this quarter even though economic conditions were slower,² said Jeffrey S. Lorberbaum, president and CEO. ³We¹re very pleased with our ability to continue to perform at a high level even in difficult times. The structure of our company allows us to react and respond quickly to economic and market changes.
"We¹re very pleased with the performance of Dal-Tile and its contribution to our results since the acquisition was completed. The growth prospects for the Dal-Tile products are very good with the opportunity to increase their distribution through new residential channels. We successfully completed the first phase of the Dal-Tile integration during the third quarter. The company can now ship tile products carried in the Dal-Tile warehouses to customers through the Mohawk distribution channels using the existing Mohawk order entry system. We¹re on schedule with our long term plan to leverage our two businesses and provide additional value to our customers.
"Our strategic move to position our company as a leader in all floorcovering products is progressing as planned, with approximately 30% of our total sales in hard surface products. With our strong financial position, we¹re optimistic about our future when the economy fully recovers."
The debt to capitalization ratio decreased to 33% this quarter with approximately $75 million of debt reduction. This debt reduction was the result of strong earnings and effective working capital management offset by the repurchase of 1,128,300 shares of stock. The company has reduced debt by approximately $206 million since the acquisition of Dal-Tile. The company plans to continue with its stock repurchases. The company has approximately 4,879,000 shares open to repurchase from its original authorization. The effective income tax rate was reduced when compared to the first half of 2002 due to tax credits realized in the third quarter of $2.50 million with a comparable amount expected in the fourth quarter.
Related Topics:Mohawk Industries, Daltile