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In the second quarter of 2008, net earnings and EPS were $89 million and $1.29 per share, respectively. Net sales for the quarter were $1,406 million, a decrease of 24% (22% on a constant exchange rate) from 2008.
Mohawk generated cash flow from operations of $228 million. The company strengthened its balance sheet by generating over $200 million in free cash flow, paying $122 million of debt and investing $26 million in capital expenditures. The results benefited from aggressively driving costs down, improving working capital, tighter control over capital expenditures and an intense focus on customers.
For the first six months of 2009, Mohawk’s net loss was $60 million; the operating loss for the period was $71 million. Excluding the year-to-date charges for carpet tile, FIFO inventory flow through and restructuring, operating income was $129 million. In the first six months of 2008, net earnings and EPS were $154 million and $2.25 per share, respectively.
Net sales for the first six months of 2009 were $2,614 million, representing a 27% decrease from 2008. Sales declined 22% based on a constant exchange rate, excluding the first quarter carpet tile charges. The sales decreases for both the quarter and the year-to-date in the U.S. and Europe are attributable to continuing low home sales, soft business investment and weak consumer discretionary spending.
“Our second quarter earnings surpassed our expectations,” said Jeffery S. Lorberbaum, chairman and CEO. “Our results improved from the first quarter as we benefited from increased sales, lower costs and higher utilization rates. We are transitioning to a leaner, lower cost structure to emerge in a stronger position when the economy recovers.”
Dal-Tile sales were down 22% (21% using a constant exchange rate). Dal-Tile has been greatly impacted by the present contraction of the commercial business. The Mexican business is growing by broadening the product offering and expanding distribution. Dal-Tile sales and logistics infrastructures differentiate its products and services; however, lower business levels have deleveraged the fixed costs. The Dal-Tile cost structure has been reduced with many initiatives on productivity, quality and product engineering. In addition, yields have improved, raw material costs decreased, direct labor reduced and controllable unit costs are down.
In the second quarter, industry conditions were weak, and Mohawk anticipates the present trends continuing in the third quarter. U.S. residential appears to be stabilizing at a low level, with signs of improving home sales that are supported by low mortgage rates. The commercial decline continues, and the company is adjusting its business to the demand levels.
Additional details are available at www.mohawkind.com.