Mohawk 4Q Earnings Off on Unilin Acquisition Charg
Calhoun, GA, February 23, 2006--Mohawk Industries reported fourth-quarter earnings that declined on charges related to the company's acquisition of Unilin.
Earnings declined to $85.7 million, or $1.26 per share, from $102.5 million, or $1.54 per share, a year ago.
Before the Unilin one-time, non-cash charge of $34.3 million ($22.3 million after tax) for purchase accounting of inventory, adjusted earnings were $108.0 million (5% above last year) and EPS of $1.59 (5% above last year.
Analysts had forecast per-share earnings, excluding one-time items, of $1.50.
Net sales for the quarter increased 22% to $1.80 billion from $1.48 billion in 2004. This increase was primarily the result of unit growth, price increases and the Unilin acquisition.
Before the adjustment, Unilin positively impacted our results due to strong margins and lower operating costs.
Earning were also positively affected by sales growth and better leveraging of selling, general and administrative costs, offset by higher raw material and energy costs and the impact of LIFO.
The company had estimated fourth quarter earnings of $1.49 to $1.58 EPS excluding the adjustment. Net earnings and EPS for the fourth quarter of 2004 were $102.5 million and $1.52, respectively.
The Mohawk segment net sales of $1.19 billion in the fourth quarter of 2005 were up 8% from $1.10 billion due primarily to price increases.
The Dal-Tile segment net sales of $443.7 million in the fourth quarter of 2005 grew 19% from $371.6 million due to volume growth, price increases and a small stone products acquisition. The Unilin segment, acquired on October 31, 2005, had net sales of $168.8 million.
Net earnings in accordance with GAAP were $358.2 million and $5.30 in EPS compared to $368.6 million in net earnings, and $5.46 in EPS, for 2004. This increase in adjusted EPS and earnings is attributable to sales growth, better leverage of selling, general and administrative costs and the Unilin acquisition, offset by higher raw material and energy costs and the impact of LIFO inventory charges in the Mohawk segment.
Net sales for the year 2005 increased 13% to $6.62 billion from $5.88 billion. This sales increase resulted primarily from the acquisition of Unilin, internal growth and price increases.
In commenting on the fourth quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "The last few months have been eventful as we completed in October the acquisition of Unilin, a fully integrated European and U.S. laminate manufacturer, and a bond offering in January to finance the purchase. We are pleased with the acquisition and continue to make progress in developing and implementing a strategy to enhance our U.S. laminate business. In the U.S. we are focused on expanding our laminate business and maximizing our new plant's efficiencies. Unilin results in the period exceeded expectations with improved sales in the other wood panel business and better leverage of operating costs. The U.S. laminate business continues to grow with some softening in the European business.
"Our carpet and rug business experienced significant disruption and higher costs in the raw material supply chain as the oil refineries in the Gulf Coast region struggled to recover lost capacity after the hurricanes in the quarter. We were able to work through the disruption with minimal impact to our service. Raw material and energy costs increased substantially and necessitated increasing selling prices twice during the fourth quarter. As in the past, our margins were impacted by the difference in timing between cost increases and implementation of price changes. We expect to pass these increases through to the customer. Our product sales of nylon filament and polyester carpets, commercial carpet tiles and hard surface
Related Topics:Daltile, Mohawk Industries, RD Weis