Mohawk 2Q Earnings Up 16%
Mohawk 2Q Earnings Up 16%
Calhoun, GA, July 21--Mohawk announced record diluted earnings per share (EPS) and net earnings for the second quarter of 2004 of $1.29 (15% above last year) and $87,158,000 (16% above last year), respectively. This compares to EPS and net earnings of $1.12 and $74,985,000, respectively, for the second quarter of 2003.
Analysts' polled by Thomson First Call expected the firm to report earnings per share of $1.30 on average.
Net sales for the quarter increased 19% to $1,486,916,000 compared to $1,247,181,000 for the second quarter of 2003.
The Mohawk segment net sales of $1,106,512,000 in the second quarter of 2004 increased 19% from $926,745,000 due to growth in all products as a result of improving general economic conditions and the Lees acquisition. The Dal-Tile segment net sales of $380,404,000 in the second quarter of 2004 grew 19% from $320,436,000 primarily from internal growth.
EPS for the first half of 2004 was $2.27 (30% above last year) and net earnings were $153,465,000 (32% above last year) compared to $1.74 EPS and $116,625,000 in net earnings for the first half of 2003.
Net sales for the first half of 2004 were $2,878,177,000 representing a 23% increase from the first half of 2003 sales of $2,331,896,000.
In commenting on the second quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "As the economy continues to improve, our sales are expanding in both business segments year over year. The Mohawk residential replacement business continues to grow as consumer confidence improves over last year. The Mohawk commercial category is experiencing sales increases as businesses invest in new space and renovations. Although mortgage rates have increased, the residential new construction business continues at a strong pace. The Mohawk hard surface product offerings continue to be broadened and are experiencing strong growth. Our Home Product sales also expanded during the quarter.
"The Dal-Tile segment sales momentum continues in all product categories with floor tile and stone products leading the others. Dal-Tile has become the largest distributor of stone flooring and counter tops in the highly fragmented U.S. market. We have recently completed another small acquisition in the latter part of the second quarter. The new Muskogee, Oklahoma porcelain tile facility is running well at approximately 85% capacity. In the future, we will continue increasing the production of higher value porcelain tile in the plant.
"There continues to be cost pressures from natural gas and oil selling at or near historic highs. These cost increases have reduced our margins in the second quarter of 2004. In addition, the cost of commodity chemicals such as benzene (a major component of nylon) has increased dramatically more than oil. To mitigate these, we implemented multiple price increases for carpet products during the first half, with the latest in mid-June. Presently, we are receiving notices of further carpet raw material cost increases in the third quarter. As a result, we are currently determining the timing and amount of selling price increases required. Additionally, we have implemented price increases during the first half on many hard surface products and the Mohawk segment has added a fuel surcharge in line with the industry to pass through changes in distribution costs.
"In the second quarter, our working capital position remains strong with inventory turns improving to 4.7 times and our debt to capitalization ratio improving to 28.6%. Additionally, we repurchased 100,000 shares of stock at an average price of $71.83.
"The company anticipates the economy continuing to expand throughout the year. We expect our revenue growth to moderate as comparisons with the prior year become more difficult in the second half. Future cost changes in natural gas, oil and commodity chemicals could impact our margins either positively or negatively in the second half. Based on these factors, our third quarter forecast for EPS is from $1.45 to $1.52.
Related Topics:Daltile, RD Weis, Mohawk Industries
