Mohawk surprises with big 3Q
October 22, 2001,
Driven by solid gains in its rapidly expanding home fashions business, as well as a deep reduction in interest expense, third-quarter profits at Mohawk Industries leaped up by almost a third, rising by 32.9 percent to $55.7 million from $42.1 million the prior year.
Spurred by growing home sales, and the recent buyout of the Crown Crafts woven products business, sales at the big carpet and home fashions producer advanced by 3.8 percent, to $869.7 million from $838.5 million last year.
Most of the gain in sales was generated by the fast-track home fashions business, which offset modestly declining sales in Mohawk's core broadloom carpeting business, said Jeffrey Lorberbaum, president and ceo. Contributing to sales growth to a lesser extent, said Lorberbaum, was Mohawk's growing hard-surface floor coverings business.
Much of the gain in home fashions sales was triggered by the buyout earlier this year of the Crown Crafts woven products business, which at the time of the acquisition was generating about $85 million in sales. But even without the contribution of the former Crown Crafts business, sales throughout all of Mohawk's other home fashions businesses recorded solid gains, said Lorberbaum.
In a big lift to the bottom line, Mohawk continued to hack away at its long-term debt, interest expense and overall cost structure.
Firming up what was already one of the industry's most solid balance sheets, Mohawk slashed its long-term debt by almost two-thirds from year-ago levels, to $219.6 million from $592.7 million. That resulted in a deep cut in interest expense, which was pared by 32.5 percent, to $6.9 million from $10.2 million last year, a cash savings of $3.3 million.
Still whittling down its overhead, Mohawk trimmed its expenses by 50 basis points, or one-half of 1 percent, to 14.7 percent from 15.2 percent the previous year, the cost cuts more than offsetting modest gross margin erosion.
Continuing to knock down its stockpiles, Mohawk trimmed its inventories by 2.8 percent, to $576.2 million from $592.8 million.
|Qtr. 9/29 (x000)||2001||2000||% CHG|
|a-Earnings in the prior-year three- and nine-month periods include a $7 million charge stemming from the settlement of a class-action law suit.
|Oper. income (EBIT)||92,408||87,069||6.1|
|Per share (diluted)||$1.05||$0.79||32.9|
|Average gross margin||25.4%||25.5%||—|
|Oper. income (EBIT)||229,574||241,686||-5.0|
|Per share (diluted)||2.44||2.26||8.0|
|Average gross margin||25.2%||25.3%||—|