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Mohawk Releases Financial Results; 4th Qtr Dal-Tile Sales Down 20%

March 2, 2010
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Mohawk Industries, Inc. recently announced 2009 fourth quarter net earnings of $20 million and diluted earnings per share (EPS) of $0.29, which included a restructuring charge of approximately $30 million primarily related to distribution and manufacturing infrastructure. Excluding the restructuring charge, net earnings and EPS would have been $39 million and $0.56 per share, respectively.

In the fourth quarter of 2008, the net loss was $128 million and the loss per share was $1.87. Excluding the 2008 fourth quarter goodwill, intangible and restructuring charges, the net loss and loss per share would have been $5.1 million and $0.08 per share, respectively. Net sales for the 2009 fourth quarter were $1,347 million, a decrease of 9% (11% with a constant exchange rate) from 2008. Strong working capital management, reductions in capital spending and active cost control enabled the generation of free cash flow of $222 million for the quarter.

For the full year of 2009, Mohawk’s net loss was $5 million, or $0.08 per share. For the full year of 2008, the net loss and loss per share were $1,458 million and $21.32 per share, respectively. Net sales for 2009 were $5,344 million, representing a 22% decrease from 2008. The sales decrease for both the quarter and the year in the U.S. and Europe is primarily attributable to continuing weak consumer discretionary spending, low home sales and soft business investment.

“Our fourth quarter earnings exceeded expectations due to the implementation of cost savings efforts, personnel reductions and plant consolidations,” said Jeffrey S. Lorberbaum, chairman and CEO. “Our balance sheet is strong with over $500 million of cash and a net debt-to-total capital ratio of 26%. All our segments have reduced infrastructure and capacity and improved productivity. New products have been developed in all segments that will enhance our sales and market position. In spite of the very difficult environment, we are strategically positioning our company for growth. Our geographic product expansion continues with enhanced distribution of ceramic tile in Mexico, laminate in Russia and wood flooring in Western Europe. Environmental sustainability is a priority and Newsweek recognized Mohawk as one of the top 15 companies in the consumer product category for our efforts.”

Dal-Tile sales for the fourth quarter were down 20%, as reported, or 21% with a constant exchange rate. Dal-Tile continues to outperform the market with a broad product offering and market saturation. The commercial industry decline is impacting the ceramic business more significantly than other segments. According to Mohawk, Dal-Tile's leading design, superior quality and extensive distribution infrastructure distinguish it from the market. The company has introduced Out Stand, a new technology for the commercial market that offers a 60% recycled content, more durable surface, better stain resistance and anti-microbial protection. It has also expanded its position in the Home Centers and the Mexican market with product innovation and superior service. Dal-Tile has increased its operational efficiency and lowered its costs through process innovation and consolidation initiatives, including the closing of the Dallas, Texas-based ceramic tile manufacturing operation.

The economy improved in the fourth quarter and continued growth is expected throughout 2010. After a seasonally slower first quarter, future periods should improve as Mohawk moves through the year. The improvements it has implemented throughout the business, and the realization of price increases, are expected to provide benefits in future quarters.

For additional information, visit www.mohawkind.com.

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