News Release
| Mohawk Industries, Inc. Announces Record Quarterly Earnings in Third Quarter |
CALHOUN, Ga., Oct 16, 2003 /PRNewswire-FirstCall via COMTEX/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced the highest quarterly net earnings in its history of $91,382,000 (12% above last year) and diluted earnings per share (EPS) of $1.36 (12% above last year) for the third quarter of 2003. This compares to $81,560,000 in net earnings and $1.21 in EPS for the third quarter of 2002. This improvement was the result of strong sales growth in the Dal-Tile segment, increased operating income and lower interest costs. Net sales for the quarter increased 6% to $1,303,166,000 from $1,224,403,000 in 2002. This increase was primarily the result of internal growth of both Mohawk and Dal- Tile products. The Mohawk segment net sales of $967,405,000 in the third quarter of 2003 were up 4% from $927,299,000 due to improving sales across all product categories. The Dal-Tile segment net sales of $335,761,000 in the third quarter of 2003 grew 13% from $297,104,000 primarily from internal growth. Net earnings for the first nine months of 2003 were $208,007,000 (4% above last year), or $3.10 in EPS (1% below last year), compared to $200,288,000 in net earnings, or $3.13 in EPS, for the first nine months of 2002. This improvement in net earnings is attributable to sales growth and operating earnings growth in the third quarter as well as the acquisition of Dal-Tile during the first quarter of 2002. The reduction in EPS results from weak first quarter sales and higher raw material, energy and employee benefit costs during the period for the Mohawk segment. Net sales for the first nine months increased 10% to $3,635,062,000 from $3,318,860,000. This sales increase resulted primarily from the acquisition of Dal-Tile and hard surface internal growth. In commenting on the third quarter results, Jeffrey S. Lorberbaum, President and CEO, stated, "The improvement in our third quarter was very encouraging and we believe somewhat indicative of the more optimistic outlook of most economists. All of our product categories experienced positive revenue growth in the third quarter. The Mohawk segment operating margin improved from 10.5% last year to 11.2%. The Dal-Tile segment's reported operating income was $52,702,000, resulting in an operating margin of 15.7%. Excluding the start up costs for the new Dal-Tile manufacturing facility (approximately $2,500,000), the Dal-Tile segment's operating income would have been $55,202,000, resulting in an operating margin of 16.4%, as compared to last year's operating margin of 15.8%. The overall carpet industry is showing signs of improvement with the new home business continuing to lead other sectors within the carpet industry. We believe the other segments of the floorcovering industry are also continuing to experience strong growth in new construction. "We were able to effectively manage our costs this quarter in spite of continuing high energy and raw material costs. Price increases in carpet during the second quarter have improved our margins. We have also controlled our general and administrative costs to lower levels. "The acquisition of Lees Carpet continues on track to close in the fourth quarter of 2003. We will integrate the financial and administrative systems into the Mohawk systems soon after closing. Additionally, a team has been formed to consolidate the operating systems in 2004. The Lees operation will continue under their existing management to focus on the unique product benefits that add value to their customers. All functional groups are developing strategies to maximize the combined value we bring to our customers. Our balance sheet is very strong with 26.5% debt to capitalization excluding $16,000,000 of cash on the balance sheet at the end of the current quarter. The current available bank line of $700,000,000 will more than cover the approximate $352,000,000 needed for the Lees Carpet acquisition. We believe the acquisition will be slightly accretive in 2004." Currently the company does see improving trends in the carpet industry and continued growth in the hard surface products, but there is still some uncertainty as consumer confidence trends and employment statistics continue to be lackluster. After considering these factors, the fourth quarter earnings forecast range is from $1.32 to $1.40 EPS. Certain of the statements in the immediately preceding paragraphs, particularly anticipating future financial performance, business prospects, growth and operating strategies, proposed acquisitions, and similar matters, and those preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "forecast," "estimates," or similar expressions constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Those statements are based on many assumptions including assumptions regarding the Company's ability to maintain its sales growth and gross margins and to control costs. These or other assumptions could prove inaccurate and therefore, there can be no assurance that the "forward-looking statements" will prove to be accurate. Forward-looking statements involve a number of risks and uncertainties. The following important factors affect the future results of Mohawk and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in economic conditions generally in the carpet, rug and floorcovering markets served by Mohawk; competition from other carpet, rug and floorcovering manufacturers; raw material prices; timing and level of capital expenditures; the successful integration of acquisitions including the challenges inherent in diverting Mohawk's management attention and resources from other strategic matters and from operational matters for an extended period of time; the successful introduction of new products; the successful rationalization of existing operations; and other risks identified from time to time in the Company's SEC reports and public announcements. Mohawk is a leading supplier of flooring for both residential and commercial applications and a producer of woven and tufted broadloom carpet, rugs and ceramic tile. The Company designs, manufactures and markets premier carpet brand names, which include "Mohawk," "Karastan," "Aladdin," "Bigelow," "Custom Weave," "Durkan," "Galaxy," "Helios," "Horizon," "Mohawk Commercial," "World," and "Wunda Weve." Mohawk offers a broad line of home products including rugs, throws, pillows and bedspreads under the brand names Aladdin, Goodwin Weavers, Karastan, Mohawk Home and Newmark. Mohawk manufactures and distributes ceramic tile and natural stone products under the brand names Dal- Tile, Mohawk and American Olean. Mohawk also offers other products that include laminate, wood and vinyl flooring and carpet padding under the Mohawk brand name. There will be a conference call Friday, October 17, 2003 at 11:00 a.m. Eastern Time. The telephone number to call is 1-800-603-9255. A conference call replay will also be available until Friday, October 24, 2003 by dialing 1-800-642-1687 for US/local calls and (706) 645-9291 for international calls and entering Conference ID # 3374137.
DATES FOR FUTURE PRESS RELEASES AND CONFERENCE CALLS:
PRESS RELEASE CONFERENCE CALL
4th QUARTER 2003 FEBRUARY 5, 2004 FEBRUARY 6, 2004 11:00AM (800-603-9255)
1st QUARTER 2004 APRIL 21, 2004 APRIL 22, 2004 11:00AM (800-603-9255)
2nd QUARTER 2004 JULY 21, 2004 JULY 22, 2004 11:00AM (800-603-9255)
3rd QUARTER 2004 OCTOBER 21, 2004 OCTOBER 22, 2004 11:00AM (800-603-9255)
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of
Earnings Data
(Amounts in thousands, Three Months Ended Nine Months Ended
except per share data) September September September September
27, 2003 28, 2002 27, 2003 28, 2002
Net sales $1,303,166 1,224,403 3,635,062 3,318,860
Cost of sales 938,280 883,000 2,655,277 2,422,174
Gross profit 364,886 341,403 979,785 896,686
Selling, general and
administrative expenses 205,482 197,779 612,120 538,229
Operating income 159,404 143,624 367,665 358,457
Interest expense 14,162 16,426 41,347 42,377
Other (income) expense, net 1,333 1,634 (1,252) 2,139
Earnings before income
taxes 143,909 125,564 327,570 313,941
Income taxes 52,527 44,004 119,563 113,653
Net earnings $91,382 81,560 208,007 200,288
Basic earnings per share $1.38 1.22 3.14 3.19
Weighted-average shares
outstanding 66,260 66,824 66,167 62,855
Diluted earnings per share $1.36 1.21 3.10 3.13
Weighted-average common and
dilutive potential common
shares outstanding 67,222 67,683 67,017 64,086
Other Financial Information
(Amounts in thousands)
Depreciation & amortization $26,006 25,024 77,444 75,500
Capital expenditures $26,498 26,831 80,323 74,072
Consolidated Balance Sheet Data
(Amounts in thousands)
September 27, September 28,
ASSETS 2003 2002
Current assets:
Cash $16,360 -
Receivables 602,867 569,567
Inventories 830,291 742,647
Prepaid expenses 29,786 22,732
Deferred income taxes 82,074 83,056
Total current assets 1,561,378 1,418,002
Property, plant and equipment, net 859,066 843,782
Goodwill 1,290,666 1,277,453
Other assets 167,325 165,916
$3,878,435 3,705,153
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $25,998 42,366
Accounts payable and accrued expenses 688,995 681,299
Total current liabilities 714,993 723,665
Long-term debt, less current portion 762,801 903,104
Deferred income taxes and other long-
term liabilities 210,045 180,890
Total liabilities 1,687,839 1,807,659
Total stockholders' equity 2,190,596 1,897,494
$3,878,435 3,705,153
As of or for the As of or for the
Segment Information Three Months Ended Nine Months Ended
September September September September
(Amounts in thousands) 27, 2003 28, 2002 27, 2003 28, 2002
Net sales:
Mohawk $967,405 927,299 2,702,261 2,704,204
Dal-Tile 335,761 297,104 932,801 614,656
Consolidated net
sales $1,303,166 1,224,403 3,635,062 3,318,860
Operating income:
Mohawk $108,499 97,594 235,053 266,714
Dal-Tile 52,702 46,955 137,749 95,258
Corporate and
eliminations (1,797) (925) (5,137) (3,515)
Consolidated
operating income $159,404 143,624 367,665 358,457
Assets:
Mohawk $1,777,780 1,733,632
Dal-Tile 1,966,519 1,839,261
Corporate and
eliminations 134,136 132,260
Consolidated assets $3,878,435 3,705,153
SOURCE Mohawk Industries, Inc. John D. Swift, Chief Financial Officer of Mohawk Industries, Inc., +1-706-629-7721 http://www.mohawkind.com |