Mohawk Grew Earnings by 16.5% in Q1

Calhoun, GA, April 27, 2017-Mohawk announced Q1 2017 sales of $2.22 billion, compared to $2.17 billion in Q1 2016, an increase of 2.3%.

Net earnings were $201 million, a 16.5% increase versus Q1 2016’s $172 million.

Flooring North America had net sales of $939 million, a rise of 3.7% over the prior year period, and the global ceramic business had net sales of $785, an increase of 1.4% YOY.

Commenting on Mohawk Industries' first quarter performance, Jeffrey S. Lorberbaum, chairman and CEO, stated, "Our sales and earnings per share set records for the first quarter with volume, mix and productivity adding approximately $60 million to operating income. Our operating margin for the quarter rose to 12.4%, a 110 basis point improvement over the prior year and the highest first quarter result in the company's history. Our first quarter sales grew as expected, with Flooring North America and Rest of the World outpacing Global Ceramic growth on a constant days and currency basis. This year around the world, we plan to invest more than $750 million to expand our production in most product categories. In addition, we are entering the European carpet tile and counter top markets as well as the Russian sheet vinyl business. In April, we completed the acquisition of two small ceramic manufacturers in Europe and a carpet nylon polymerization plant in the U.S.; in May, we anticipate purchasing a mine for our U.S. ceramic operations. We are initiating many price increases across our portfolio, which should cover our material costs in the third quarter.

Comments analyst Stifel on the company’s outlook, “The company (MHK - Buy, $238.88) comments that growth in Q2 will increase sequentially from Q1 and that there is clear evidence this is already taking place in the current quarter. Price increases through the balance of the year and greater capacity indicate sales growth should increase sequentially as we head through the year baring a slowdown in demand. North American flooring sales were 5% ahead when adjusting for constant days and currency, a solid performance and in line with our expectations…. The company will have completed four acquisitions by the end of Q2 and will outline the accretion expected from these on its conference call tomorrow. The company continues to emphasize the point that sales and earnings will grow at a rapid clip year over year in 2017 when adjusting out the loss of patent income, start-up costs, raw material increases and some currency. We knew reported income growth in 2017 would be a challenge in light of these factors but note the underlying growth is still robust on both the top and bottom lines.”