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Mohawk Up 22% in 2Q

Buoyed by a recent acquisition, deep cuts in capital spending, and a $6.3 U.S. customs refund, second-quarter profits at Mohawk Industries jumped up by 21.9%, to $119.5 million from $98.1 million last year.

Rising on last year's buyout of Belgian flooring company Unilin, sales raced ahead by 26.7%, to $2.1 billion from $1.6 billion the year before. Unilin added $313.8 million to the top line, and without that boost, sales would have risen a more modest 7.4%. Sales in the core Mohawk business grew by 4.8%, held in check by slowing demand in the replacement market for residential carpets.

Unilin made a solid contribution to the bottom line as well, generating an operating profit of $59.7 million. That helped offset weakness in the core Mohawk business, where operating profits fell by 3.3%, to $99.0 million from $102.4 million.

Mohawk slashed its capital spending in the period by 42.9%, to $37.0 million from $64.8 million last year, generating a cash savings of $27.8 million.

Jeffrey Lorberbaum, chairman and ceo, said, “The Mohawk segment grew sales by 5% with margins improving from the first quarter.” He said the Mohawk division — which includes the carpet and Mohawk Living home textiles segments — will raise some prices to recover recently raised material costs.

“Industry sales improved from the first quarter but were still behind last year in units,” Lorberbaum continued.

“Sales trends continued with the commercial channel and residential construction channel performing better than the residential replacement channel.”


QTR. 7/1 (x000) 2006 2005 %CHANGE
a. Second-quarter results include miscellaneous expenses of $3.6 million, compared with $922,000 during the same period a year ago; and a U.S. customs refund of $6.2 million.
b. Six-month results include $6.3 million in miscellaneous expenses, compared with $2.9 million a year ago; and a U.S. customs refund of $6.3 million.
Sales $2,058,123 $1,624,692 26.7
Oper. income (EBIT) 223,045 167,145 23.4
Net income 119,513a 98,080a 21.9
Per share (diluted) 1.76 1.45 21.4
Average gross margin 28.8% 27.0%
SG&A expenses 17.9% 16.7%

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