Mohawk Earnings Rise on One Time Tax Benefit

Calhoun, GA, February 13, 2008--Net income for Mohawk Industries Inc. fell in the fourth quarter compared to a year ago.

The company reported net income of $107.5 million, or $1.57 per share compare to $129.5 million and $1.90 per share a year ago.

With a $271.6 million one-time tax benefit, Mohawk had earnings of $379.1 million in the fourth quarter or $5.53 per share.

Net revenues for the quarter were $1.8 billion, a decrease of 5 percent from 2006. Sales were helped by the Columbia wood flooring acquisition, exchange rates and growth in the Dal-Tile segment, which partially offset other sales declines, Mohawk said.

Cash flow from operations was $273 million and Mohawk retired $189 million of debt.

For the year 2007, earnings were $706.8 million, or $10.32 per share, including the tax benefit.

Net sales for the year were $7.58 billion, a decrease of 4 percent from 2006.

For the year Unilin's reported that operating profit increased27%. Mohawk had cash flow from operations of $875 million and reduced its debt by $534 million.

"During 2007 we endured a difficult U.S. housing market and rising costs, while continuing the growth of our Unilin segment," said CEO Jeffrey Lorberbaum.

"Our management team in the U.S. handled the many challenges as the flooring market continued its decline. Our three segments are managing this cycle with many initiatives to improve revenues, reduce costs, increase prices, improve productivity, manage working capital and update our product portfolio."

Lorberbaum said the Mohawk segment has been hit the hardest, with sales down 13 percent in the quarter and a 7.2 percent operating margin. He said the commercial channel outperformed the residential channel and that trend is expected to continue.

He also noted that raw material costs have escalated and a carpet price increase was announced in December with further adjustments in January. He also emphasized the company's ongoing cost cutting and efficiency improvements. The company is increasing its sales focus in the commercial, multi-family and high-end residential segments.

Our Dal-Tile sales were up 2 percent in the quarter compared to 2006 with operating margins of 13.2 percent.

Unilin segment sales grew by 20 percent over last year with an operating margin at 15 percent. Without Columbia, Unilin's sales growth was 7 percent and the operating margin was 18.3 percent.

The second quarter earnings are expected to improve and be more in line with last year, Mohawk said.

Related Topics:Daltile, Mohawk Industries