Mohawk Sees Record EPS in Third Quarter 2015; Global Ceramic Segment Sales Increase 2%
Mohawk Industries, Inc. recently announced 2015 third quarter net earnings of $215 million and diluted earnings per share (EPS) of $2.89. Excluding restructuring and acquisition charges, net earnings were $222 million, and EPS was $2.98, a 22% increase over last year’s third quarter adjusted EPS and the highest adjusted quarterly EPS in the company’s history. Net sales for the third quarter of 2015 were $2.2 billion, up 8% vs. the prior year’s third quarter (a 15% increase on a constant currency exchange rate basis).
For the nine months ending October 3, 2015, net sales were $6.1 billion, an increase of approximately 4% vs. the prior year or an increase of approximately 11% on a constant currency exchange rate basis. Net earnings and EPS for the nine-month period were $424 million and $5.73, respectively. Net earnings excluding restructuring and acquisition charges were $546 million, and adjusted EPS was $7.38, an increase of 26% over the nine-month period adjusted EPS result in 2014.
“In addition to our record earnings per share, our adjusted operating income reached a record level at $309 million, up 30% over the same quarter last year,” said Jeffrey S. Lorberbaum, chairman and CEO. “All segments contributed to our sales and operating income improvements. Our new segment structure that we announced last quarter has benefited our performance, enabling us to optimize our regional businesses by enhancing our product offerings, manufacturing assets and distribution strategies. During the period, we made significant progress in aligning our IVC acquisition with our European and U.S. flooring businesses and our KAI acquisition with our European ceramic operations. We are introducing products to take advantage of the unique capabilities and customer relationships of each organization. As we leverage the strength of these businesses, we anticipate greater market penetration and continued earnings growth in the future.”
Sales in the Global Ceramic segment were up 2%; on a constant exchange rate basis, sales grew 11%. And adjusted operating income rose 15% vs. the prior year, with adjusted operating margin increasing to 15%, reportedly as a result of improved productivity, volume, price and mix; the KAI acquisition partially offset by currency headwinds. U.S. ceramic sales continued to improve. The residential new construction sector remains the strongest part of the company’s U.S. ceramic business. To satisfy increased demand in the U.S. market, the company has reportedly begun importing ceramic tile from its Russian and Bulgarian businesses. Growth in the Mexican ceramic market also remained strong, and the company is adding new sales representatives to expand our distribution base in all channels.
The Flooring North America segment’s sales rose 8% over last year, with adjusted operating income increasing 41%. The adjusted operating margin increased to almost 14% due to improved volume, productivity, input costs and the IVC acquisition partially offset by price and mix. Reportedly, the new structure of the North American carpet and hard surface businesses is improving performance. During the period, the company increased investments in sales personnel, merchandising and promotions in both carpet and hard surfaces categories. The Flooring Rest of the World segment’s sales rose 24% as reported, or 41% on a constant exchange rate, with adjusted operating income improving 48% over the prior year. The adjusted operating margin increased to almost 16% due to improved volume, input costs and the IVC acquisition partially offset by currency headwinds.
“Looking to the fourth quarter, we anticipate that the U.S. economy will continue its gradual growth,” said Lorberbaum. “We expect year-over-year margin growth to continue in all segments as a result of our strategies and acquisitions. We are selectively increasing our SG&A relative to sales to optimize future market share. Our recent acquisitions are being integrated into our businesses and are positively impacting our earnings. The costs associated with new plant start-ups, interruption of our board production and four fewer days will be absorbed in the period. Taking all these factors into account, our guidance for the fourth quarter is $2.66-2.75 per share, which would be a 17-21% increase over 2014, excluding any restructuring charges. Our fourth quarter earnings guidance would have been approximately $0.15 per share higher on a constant exchange rate relative to last year.”
For more information, visit http://mohawkind.com.