Mohawk 3Q Earnings Off 5%, Beat Estimates

Calhoun, GA, October 18, 2007—Earnings for Mohawk Industries Inc. beat estimates for the third quarter.

Mohawk reported net earnings of $122 million and diluted earnings per share (EPS) of $1.78 (both 5% below last year). Results included a charge of $14.2 million before tax ($0.13 per share) related to plant closings in Mohawk and Dal-Tile segments.

Analysts had been expecting earnings of $1.65 in the quarter.

In the third quarter of 2006, net earnings and EPS were $128 million and $1.88 per share, respectively, and included a benefit of $8.8 million before tax ($0.08 per share) related to a refund from U.S. Customs.

For the first nine months of 2007, net earnings were $328 million and EPS was $4.79 (both flat to last year).

Jeffrey S. Lorberbaum, chairman and CEO, said, "We again exceeded our expectations in the third quarter in a difficult environment. Our total results have been positively impacted by the broadening of our product portfolio and our expanded geographic participation, which has partially offset the cyclical downturn in the U.S. flooring industry.”

He noted that the U.S. residential flooring industry was hurt by the slowing economy, tightening credit market, falling housing prices and low consumer confidence. He said the European business performed well overall with faster growth in the eastern European and Russian markets and the U.S. commercial channel is operating at a higher level than the residential channel with business investments still at positive levels.

The Mohawk segment sales were down in the third quarter. After pre-tax plant closing costs of $8.5 million, the operating margins were 7.2% (7.9% excluding closing costs). The company notes that it continues to raise prices in a soft market.

Dal-Tile sales during the quarter were about flat with last year. Operating margins were 12.7% (13.8% excluding closing costs). The company is repositioning some sales efforts to the commercial and multifamily channels from the residential channels.

Unilin sales increased significantly with operating margins at 18.8%, due partly to the strength of the Euro and a strong U.S. laminate business.

Mohawk said it has begun the integration of the Columbia wood plants., which are operating at a loss.

The company sees weakness early next year, with stronger performance at the end.

Related Topics:Mohawk Industries, Daltile