CALHOUN, Georgia, February 23, 2012 /PRNewswire/ --
Mohawk Industries, Inc. (NYSE: MHK) today announced 2011 fourth quarter net earnings of $43 million and diluted earnings per share (EPS) of $0.62. Excluding unusual items, net earnings for the fourth quarter of 2011 were $50 million and EPS was $0.72, a 9% increase over last year. Net sales for the fourth quarter of 2011 were $1.4 billion, increasing 9% as reported and 10% with a constant exchange rate. For the fourth quarter of 2010, net earnings were $46 million and EPS was $0.66. Excluding unusual items for the fourth quarter of 2010, net earnings were $45 million and EPS was $0.66.
For the full year of 2011, our net earnings were $174 million and EPS was $2.52. Excluding unusual items, net earnings for the full year of 2011 were $202 million and EPS was $2.92, a 16% increase over last year. Net sales for the full year of 2011 were $5.6 billion, representing a 6% increase over 2010. For the full year of 2010, our net earnings were $185 million, and EPS was $2.65. Excluding unusual items for the full year of 2010, net earnings were $173 million and EPS was $2.52.
Commenting on Mohawk Industries' performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "The Company's fourth quarter results reflect improvements in sales and adjusted net earnings over last year with all segments showing sales growth for the last three quarters. In the U.S., sales in both the residential and commercial categories expanded, with commercial growing at a faster pace. Increased prices across many product categories are being implemented in the first quarter to recover higher material costs. Each segment has reduced costs through process improvements, investments in technology and strategic realignment of assets. Our net debt to adjusted EBITDA ratio was 2.0 and we have available liquidity of more than $900 million to redeem the 2012 bonds and provide flexibility for future opportunities."
Mohawk segment net sales grew by more than 8% with both the residential and commercial channels showing improvement. Operating margins were compressed by higher material costs and the delay of our price increase until the first quarter of 2012. A price increase of 5-7% is presently being implemented to offset material inflation. We introduced the next generation of soft carpets, branded SmartStrand Silk, which have an unparalleled softness, performance and environmental position. We expanded our filament extrusion and carpet tile capacity to satisfy the growing demand. We reduced our costs with improved manufacturing productivity, re-engineered processes and a more streamlined infrastructure.
Dal-Tile segment net sales grew almost 10% during the quarter with commercial growth exceeding residential. Our residential sales continued their positive growth trends for the third consecutive period. In the first quarter, we are implementing price increases of 3-5% on certain products to recover higher material and transportation costs. We have increased our presence in the home center channel, broadened design alternatives for larger sizes, and introduced ceramic tiles replicating wood. In Mexico, we are significantly growing our sales anticipating the completion of our new facility in April of this year. Our investments in design technology, product expansion, marketing and distribution sustained the growth of our business.
Unilin net sales increased approximately 10% as reported and on a local currency basis. Our laminate and wood flooring products continued growing in Europe, supported by the success of our new product introductions, expansion of our DIY strategy and the addition of Australian distribution and Russian manufacturing. In Europe, we are implementing laminate price increases of 2-3% in the first quarter. In the U.S., wood sales grew, laminate sales were slightly softer, and we received new commitments from home centers for both laminate and wood which will begin shipping in the first quarter. Our Russian laminate plant is manufacturing products comparable to our European production and will expand as we broaden the styles produced locally. We continue the integration of our Australian distributor, re-configuration of our Malaysian wood manufacturing and investments in our DidIt click furniture.
Improving consumer confidence, a positive employment outlook and lower housing inventories are cause for future optimism. In the first quarter, we anticipate additional sales growth, but at a lower rate than the fourth quarter which had easier comparisons. Presently, we are raising the prices on many of our products to recover the inflation of our materials. These increases will not be fully implemented until the second quarter reducing our first quarter margins. The start-up expenses of our major projects will impact our short-term results and the additional costs will decline as they ramp up. We expect continued sales growth, higher pricing, and productivity improvements will impact favorably our full year 2012 results. With these factors, our first quarter guidance for earnings is $0.47 to $0.57 per share, excluding any restructuring costs.
The flooring industry should continue its improvement throughout 2012. We have many initiatives to strengthen our product offering, expand our geographical reach, recover raw material inflation and reduce our costs. Our financial structure is strong and we can take advantage of new opportunities.
Mohawk is a leading supplier of flooring for both residential and commercial applications. Mohawk provides a complete selection for all markets of carpet, ceramic tile, laminate, wood, stone, vinyl, and rugs. These products are marketed under the premier brands in the industry including Mohawk, Karastan, Lees, Bigelow, Durkan, Daltile, American Olean, Unilin and Quick-Step. Mohawk's unique merchandising and marketing assists the consumer in creating exquisite floors to fulfill their dreams. Mohawk provides a premium level of service with its own trucking fleet and local distribution in the U.S. Mohawk's international presence includes operations in Australia, China, Europe, Malaysia, Mexico and Russia.
Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," "anticipates," "expects," and "estimates," or similar expressions constitute "forward-looking statements." 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. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation in raw material prices and other input costs; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company's products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; tax, product and other claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.
Conference call Friday, February 24, 2012 at 11:00 AM Eastern Time.
The telephone number is 1-800-603-9255 for US/Canada and +1-706-634-2294 for International/Local. Conference ID # 45556735. A replay will also be available until March 9, 2012 by dialing 855-859-2056 for US/local calls and +1-404-537-3406 for International/Local calls and entering Conference ID # 45556735.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statement of Operations (Amounts in Three Months Ended Twelve Months Ended thousands, December December December December except per share 31, 31, 31, 31, data) 2011 2010 2011 2010 Net sales $ 1,378,297 1,262,198 5,642,258 5,319,072 Cost of sales 1,042,880 920,532 4,225,379 3,916,472 Gross profit 335,417 341,666 1,416,879 1,402,600 Selling, general and administrative expenses 269,123 256,026 1,101,337 1,088,431 Operating income 66,294 85,640 315,542 314,169 Interest expense 24,130 30,166 101,617 133,151 Other (income) expense, net 257 (3,002) 14,051 (11,630) Earnings before income taxes 41,907 58,476 199,874 192,648 Income tax expense (benefit) (1,990) 11,040 21,649 2,713 Net earnings 43,897 47,436 178,225 189,935 Net earnings attributable to noncontrolling interest (966) (1,678) (4,303) (4,464) Net earnings attributable to Mohawk Industries, Inc. $ 42,931 45,758 173,922 185,471 Basic earnings per share attributable to Mohawk Industries, Inc. (1) $ 0.62 0.67 2.53 2.66 Weighted-average common shares outstanding - basic 68,768 68,612 68,736 68,578 Diluted earnings per share attributable to Mohawk Industries, Inc. (1) $ 0.62 0.66 2.52 2.65 Weighted-average common shares outstanding - diluted 69,016 68,843 68,964 68,764 (1) Basic and diluted earnings per share attributable to Mohawk Industries, Inc. for the twelve months ended December 31, 2010, includes a decrease of approximately $0.04 and $0.05, respectively, related to the change in fair value for a redeemable noncontrolling interest in a consolidated subsidiary of the Company. Other Financial Information (Amounts in thousands) Net cash provided by operating activities $ 162,805 109,318 300,993 319,712 Depreciation and amortization $ 74,930 74,522 297,734 296,773 Capital expenditures $ 93,313 69,940 275,573 156,180 Consolidated Balance Sheet Data (Amounts in thousands) December December 31, 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 311,945 354,217 Restricted cash - 27,954 Receivables, net 686,165 614,473 Inventories 1,113,630 1,007,503 Prepaid expenses and other current assets 135,514 111,162 Deferred income taxes 150,910 133,304 Total current assets 2,398,164 2,248,613 Property, plant and equipment, net 1,712,154 1,687,124 Goodwill 1,375,175 1,369,394 Intangible assets, net 605,100 677,127 Deferred income taxes and other non-current assets 115,635 116,668 $ 6,206,228 6,098,926 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 386,255 350,588 Accounts payable and accrued expenses 715,091 698,326 Total current liabilities 1,101,346 1,048,914 Long-term debt, less current portion 1,200,184 1,302,994 Deferred income taxes and other long-term liabilities 455,190 440,021 Total liabilities 2,756,720 2,791,929 Noncontrolling interest 33,723 35,441 Total stockholders' equity 3,415,785 3,271,556 $ 6,206,228 6,098,926 Segment As of or for the Information Three Months Ended Twelve Months Ended December December December December (Amounts in 31, 31, 31, 31, thousands) 2011 2010 2011 2010 Net sales: Mohawk $ 723,975 667,230 2,927,674 2,844,876 Dal-Tile 348,541 317,354 1,454,316 1,367,442 Unilin 326,321 297,415 1,344,764 1,188,274 Intersegment sales (20,540) (19,801) (84,496) (81,520) Consolidated net sales $ 1,378,297 1,262,198 5,642,258 5,319,072 Operating income (loss): Mohawk $ 30,687 48,804 109,874 122,904 Dal-Tile 18,387 19,902 101,298 97,334 Unilin 21,640 20,864 127,147 114,298 Corporate and eliminations (4,420) (3,930) (22,777) (20,367) Consolidated operating income $ 66,294 85,640 315,542 314,169 Assets: Mohawk $ 1,769,065 1,637,319 Dal-Tile 1,732,818 1,644,448 Unilin 2,533,070 2,475,049 Corporate and eliminations 171,275 342,110 Consolidated assets $ 6,206,228 6,098,926
Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc. (Amounts in thousands, except per share data) Three Months Ended Twelve Months Ended December December December December 31, 31, 31, 31, 2011 2010 2011 2010 Net earnings attributable to Mohawk Industries, Inc. $ 42,931 45,758 173,922 185,471 Unusual items: Unrealized foreign currency losses (1) - - 9,085 - Operating lease correction (2) 6,035 - 6,035 - Business restructurings 7,696 893 23,209 13,156 Debt extinguishment costs - - 1,116 7,514 Acquisitions purchase accounting - - - 1,713 U.S. customs refund - (1,965) - (7,730) Discrete tax items, net - - - (24,407) Income taxes (7,152) 407 (11,749) (2,592) Adjusted net earnings attributable to Mohawk Industries, Inc. $ 49,510 45,093 201,618 173,125 Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. $ 0.72 0.66 2.92 2.52 Weighted-average common shares outstanding - diluted 69,016 68,843 68,964 68,764 Reconciliation of Total Debt to Net Debt (Amounts in thousands) December 31, 2011 Current portion of long-term debt $ 386,255 Long-term debt, less current portion 1,200,184 Less: Cash and cash equivalents 311,945 Net Debt $ 1,274,494
Reconciliation of Operating Income to Adjusted EBITDA (Amounts in thousands) Trailing Twelve Months Three Months Ended Ended December April 2, July 2, October December 31, 2011 2011 1, 2011 31, 2011 2011 Operating income $ 56,084 101,700 91,464 66,294 315,542 Other (expense) income 15 (396) (13,413) (257) (14,051) Net earnings attributable to noncontrolling interest (1,096) (1,191) (1,050) (966) (4,303) Depreciation and amortization 74,253 74,344 74,207 74,930 297,734 EBITDA 129,256 174,457 151,208 140,001 594,922 Unrealized foreign currency losses (1) - - 9,085 - 9,085 Operating lease correction (2) - - - 6,035 6,035 Business restructurings 6,813 6,514 2,186 7,696 23,209 Adjusted EBITDA $ 136,069 180,971 162,479 153,732 633,251 Net Debt to Adjusted EBITDA 2.0 Reconciliation of Net Sales to Adjusted Net Sales (Amounts in thousands) Three Months Ended Twelve Months Ended December December December December 31, 31, 31, 31, 2011 2010 2011 2010 Net sales $ 1,378,297 1,262,198 5,642,258 5,319,072 Adjustments to net sales: Exchange rate 4,193 - (53,337) - Adjusted net sales $ 1,382,490 1,262,198 5,588,921 5,319,072 Reconciliation of Segment Net Sales to Adjusted Segment Net Sales (Amounts in thousands) Three Months Ended December December Unilin 31, 2011 31, 2010 Net sales $ 326,321 297,415 Adjustment to net sales: Exchange rate 1,996 - Adjusted net sales $ 328,317 297,415 Reconciliation of Operating Income to Adjusted Operating Income (Amounts in thousands) Three Months Ended December December 31, 2011 31, 2010 Operating income $ 66,294 85,640 Adjustments to operating income: Operating lease correction (2) 6,035 - Business restructurings 7,696 893 Adjusted operating income $ 80,025 86,533 Adjusted operating margin as a percent of net sales 5.8% 6.9% Reconciliation of Segment Operating Income to Adjusted Segment Operating Income (Amounts in thousands) Three Months Ended December December Mohawk 31, 2011 31, 2010 Operating income $ 30,687 48,804 Adjustments to operating income: Operating lease correction (2) 2,761 - Business restructurings 7,696 893 Adjusted operating income $ 41,144 49,697 Adjusted operating margin as a percent of net sales 5.7% 7.4% Dal-Tile Operating income $ 18,387 19,902 Adjustments to operating income: Operating lease correction (2) 3,274 - Adjusted operating income $ 21,661 19,902 Adjusted operating margin as a percent of net sales 6.2% 6.3% Reconciliation of Earnings Before Income Taxes to Adjusted Earnings Before Income Taxes (Amounts in thousands) Three Months Ended December December 31, 2011 31, 2010 Earnings before income taxes $ 41,907 58,476 Unusual items: Operating lease correction (2) 6,035 - Business restructurings 7,696 893 U.S. customs refund - (1,965) Adjusted earnings before income taxes $ 55,638 57,404 Reconciliation of Income Tax Expense (Benefit) to Adjusted Income Tax Expense (Amounts in thousands) Three Months Ended December December 31, 2011 31, 2010 Income tax expense (benefit) $ (1,990) 11,040 Unusual items: Income taxes 7,152 (407) Adjusted income tax expense $ 5,162 10,633 Adjusted income tax rate 9% 19% Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses (Amounts in thousands) Three Months Ended December December 31, 2011 31, 2010 Selling, general and administrative expenses $ 269,123 256,026 Adjustments to selling, generaland administrative expenses: Operating lease correction (2) (6,035) - Business restructurings (3,214) 403 Exchange rate 765 - Adjusted selling, general and administrative expenses $ 260,639 256,429 Adjusted selling, general and administrative expenses as a percent of net sales 18.9% 20.3% (1) Unrealized foreign currency losses in Q3 2011 for certain of the Company's consolidated foreign subsidiaries that measure financial position and results using the U.S. dollar rather than the local currency. (2) Correction of an immaterial error related to accounting for operating leases The Company believes it is useful for itself and investors to review, as applicable, both GAAP and the above non-GAAP measures in order to assess the performance of the Company's business for planning and forecasting in subsequent periods.
SOURCE Mohawk Industries, Inc.