Mohawk Ind. Exceeds Earnings Expectations in 4Q, Fiscal 2010
March 26, 2011,
"Our earnings exceeded our expectations as results were positively impacted by enhanced manufacturing efficiencies, benefits from restructuring actions, reducing SG&A costs and improved process consistency," said Jeffrey Lorberbaum, chairman and ceo. "Our operating margin of 6.8% continues to show improvement compared to last year despite rising raw material cost."
In its fourth quarter, the total company's net earnings jumped 130% to $46 million and diluted earnings per share increased to a better-than-expected 66 cents compared to the year ago period's net earnings of $20 million and EPS of 29 cents. Excluding unusual items, 2009 fourth quarter net earnings and EPS were $39 million and 56 cents per share.
Net sales for the three months were less favorable, dipping by about 6% to $1.3 billion. But on a constant days and exchange rate basis, net sales increased 2% over the prior year.
Results for the full fiscal year included: net earnings of $185 million and EPS of $2.65 versus a net loss of $5 million and loss per share of $0.08; and a slight decreased in net sales to $5.3 billion. On a constant exchange rate and excluding 2009 sales adjustments, net sales decreased 2% for 2010.
After adjusting for the lower number of days in the quarter, the company's Mohawk segment - which includes soft flooring division Mohawk Home - suffered a net sales decreased of 3%, "but achieved the highest operating margin in two years despite increasing raw material costs," Lorberbaum noted. "Manufacturing costs, material yields and process controls have improved from last year."
He explained the segment's market position, after adjusting for the number of days in the period, "stabilized in the fourth quarter as we accelerated key introductions in new residential polyester carpets and commercial carpet tile products."
To help offset raw material price increases, Mohawk this month implemented a 7% to 10% carpet price.
Lorberbaum said "the seasonally slow first quarter" has already been affected by harsh weather and increasing raw material costs "offsetting savings from our cost initiatives."
For the balance of 2011, Mohawk anticipates an improvement in its results as price increases are implemented, volume expands and the recovery continues - all of these factors prompting a first quarter guidance for earnings of 36 cents to 44 cents per share, excluding restructuring charges.