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Mohawk Industries, Inc. recently announced 2009 third quarter net earnings of $34 million and diluted earnings per share (EPS) of $0.50, which included a restructuring charge of approximately $16 million primarily related to the distribution and manufacturing infrastructure. Excluding the restructuring charge, net earnings and EPS would be $44 million and $0.64 per share, respectively.
In the third quarter of 2008, the net loss was $1,485 million and the loss per share was $21.70. Excluding the 2008 third quarter charges, net earnings and EPS would have been $84 million and $1.23 per share, respectively. Net sales for the 2009 third quarter were $1,383 million, a decrease of 22% (21% with a constant exchange rate) from 2008. Continued cost control, reduced capital spending and lower working capital enabled generation of free cash flow of $128 million for the quarter.
For the first nine months of 2009, the net loss was $25 million, or a net loss per share of $0.37. Excluding year-to-date charges, net earnings would be $108 million and EPS would be $1.57. In the first nine months of 2008, the net loss and loss per share were $1,331 million and $19.45 per share, respectively. Excluding the 2008 year-to-date charges, net earnings and EPS would have been $244 million and $3.56 per share, respectively.
Net sales for the first nine months of 2009 were $3,997 million, representing a 25% decrease from 2008. Sales declined 22% with a constant exchange rate (excluding carpet tile charges). The sales decrease for both the quarter and the year-to-date in the U.S. and Europe is primarily attributable to continuing low home sales, soft business investment and weak consumer discretionary spending.
“Our third quarter earnings were slightly better than our guidance due to the many changes we have made to manage through this difficult environment,” said Jeffery S. Lorberbaum, chairman and CEO. “Our gross margin of 27%, an improvement of almost 200 basis points over last year, benefited from lower raw material and freight costs, personnel reductions, cost-containment measures, and plant consolidations. Investments in new products, research and development and capital expenditures are being made to improve sales, efficiencies, quality and service. Our balance sheet is strong, with over $300 million of cash, ample liquidity from our new $600 million bank facility and free cash flow of over $340 million, exceeding last year by approximately 55% on a year-to-date basis. Our strategy continues to be adjusted as the economic environment requires.”
Dal-Tile sales for the third quarter were down 23% (22% with a constant exchange rate). The decline in new housing sales and commercial is significantly affecting the ceramic industry. Dal-Tile is taking share from imports, which make up about half of the industry volume, with a broad product line and strong distribution. Dal-Tile further reduced its SG&A in the third quarter by merging local service centers, consolidating regional warehouses and reducing warehousing infrastructure. Manufacturing costs continue to improve with increased productivity, lower waste levels and higher quality. New introductions of engineered stone and terrazzo tile products are growing in the U.S. market. In Mexico, Dal-Tile is improving its market position by broadening its product line and expanding its customer base.
For more information, visit www.mohawkind.com or www.dal-tile.com.