CALHOUN, Georgia, Feb. 22, 2013 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced 2012 fourth quarter net earnings of $66 million and diluted earnings per share (EPS) of $0.95. Excluding restructuring charges, net earnings were $70 million and EPS was $1.01, a 40% increase over last year's fourth quarter adjusted EPS. Net sales for the fourth quarter of 2012 were $1.44 billion, an increase of 4% versus the prior year's fourth quarter and an increase of 5% on a constant exchange rate basis. For the fourth quarter of 2011, net sales were $1.38 billion, net earnings were $43 million and EPS was $0.62. Excluding unusual items, adjusted net earnings for the fourth quarter of 2011 were $50 million and adjusted EPS was $0.72.
For the year ended December 31, 2012, net sales were $5.79 billion, an increase of 3% versus the prior year and 4% on a constant exchange rate basis. Net earnings and EPS for the year were $250 million and $3.61, respectively. Excluding restructuring charges, net earnings were $262 million and EPS was $3.78, an increase of 29% over adjusted EPS in 2011. For the year ended December 31, 2011, net sales were $5.64 billion, net earnings were $174 million and EPS was $2.52. Excluding unusual items, adjusted 2011 net earnings and adjusted EPS were $202 million and $2.92, respectively.
Commenting on Mohawk Industries' fourth quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "Price increases, productivity improvements, mix and lower interest all contributed to solid results for the period. During the quarter, we generated adjusted EBITDA of $165 million and cash flow from operations of $289 million and for the year adjusted EBITDA of $677 million and cash flow from operations of $588 million. In the U.S., we improved our mix as our higher value products gained greater traction with consumers. Our recent expansion into new international markets has generated additional growth in Mexico, Russia and Australia. In 2012, we kept SG&A dollars in line with 2011, while investing in innovative marketing and products. We are continuing to strategically invest in growing our core businesses and since October, we have announced the agreement to acquire three businesses – Pergo, Marazzi and Spano. All of these transactions in combination with our existing businesses will position Mohawk for significant growth in the future. In January, we successfully issued $600 million of ten year bonds at a coupon rate of 3.85% and plan to use the proceeds to finance a portion of our Marazzi acquisition."
Mohawk segment sales were flat during the fourth quarter, with carpet sales performing better than rug sales. Our rug sales improved from last quarter, though they remain below the prior year as lower product mix and retail sales continued to decrease our results. Our new premium carpets have improved our overall selling prices and margins however sales levels were impacted by home center product transitions that we expect to be completed during the first quarter. We recently announced a carpet price increase of 4-6% to cover rising material costs. By applying the innovative processes used to develop SmartStrand Silk, we introduced our Wear-Dated Embrace nylon collection in the fourth quarter. This extends our leadership position in the ultra-soft premium category. In the commercial category, we grew sales of our new carpet tile introductions made from our premium Duracolor fiber as designers embraced the styling with high performance stain and soil resistance. We executed manufacturing productivity improvements across the business through waste reduction, enhanced recycled content and improved efficiencies.
Dal-Tile segment sales grew 15% during the quarter, with gains in the U.S. and Mexico supported by new product introductions with enhanced textures, sophisticated designs and larger formats in both residential and commercial categories. Margin expansion came from higher volumes, enhanced productivity and improved yields partially offset by plant shutdowns to reduce inventory as our new capacity ramped up faster than anticipated. Sales grew in all residential channels with successful launches of new Reveal Imaging designs, coordinated wall, floor and mosaics collections, larger format tiles from our Chinese joint venture and new decorative assortments in the home center channel. Commercial sales continued strong with the hospitality sector leading the category. In Mexico, we increased production at our Salamanca facility and we are optimizing the plant's efficiencies and yields. During the quarter, Dal-Tile lowered overall manufacturing costs with higher efficiencies, improved material formulations, increased recycled content and effective quality initiatives.
Unilin segment sales grew 1% or 5% at a constant exchange rate. Increased laminate and hardwood sales in North America, growth in our insulation boards, expanded participation in the DIY channel and solid results from our Australian distribution business contributed to our sales improvement. Our margins were favorably impacted by lower amortization charges partially offset by material inflation and negative mix as European consumers purchased more value based alternatives. In North America, new product introductions, promotions and additional home center business enhanced our sales. To support continuing growth in our insulation board business, we have begun construction of a new manufacturing facility in France. As Western European housing contracted, our roof panel sales have declined and we reduced our workforce to balance accordingly. We have licensed patents for our click furniture to additional manufacturers who are introducing new products that will increase interest in the technology.
Through product innovation, expanded distribution and process improvements, Mohawk delivered solid fourth quarter results. We are seeing some inflation in our raw materials and are taking the appropriate actions in the marketplace to address. In the U.S., low mortgage rates, stabilizing home prices and improving employment should sustain the housing recovery. We believe that U.S. residential remodeling should see improvement in the future and that the European economic conditions are near a bottom. We anticipate revenue growth for 2013 as the U.S. market improves and we realize some benefits from recent acquisitions. The first quarter earnings are seasonally the lowest and represented a little less than one sixth of 2012's full year results. With this, our guidance for first quarter earnings is $0.77 to $0.86 per share, excluding any restructuring, acquisition costs and interest on the new bonds for Marazzi.
Mohawk is a leading supplier of flooring for both residential and commercial applications. Mohawk provides a complete selection for all markets of carpet, ceramic tile, laminate, wood, stone, vinyl and rugs. These products are marketed under the premier brands in the industry including Mohawk, Karastan, Lees, Bigelow, Durkan, Mohawk Home, Daltile, American Olean, Unilin, Pergo and Quick-Step. Mohawk's unique merchandising and marketing assists consumers in creating exquisite floors to fulfill their dreams. Mohawk provides a premium level of service with its own trucking fleet and local distribution in the U.S. Mohawk's international presence includes operations in Australia, Brazil, China, Europe, India, Malaysia, Mexico and Russia.
Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," "anticipates," "expects," and "estimates," or similar expressions constitute "forward-looking statements." For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation in raw material prices and other input costs; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company's products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; tax, product and other claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.
Conference call Friday, February 22, 2013 at 11:00 AM Eastern Time
The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local.
Conference ID # 91220581. A replay will be available until March 8, 2013 by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 91220581.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
| Consolidated Statement of Operations |
Three Months Ended |
Twelve Months Ended |
||||||||||||
| (Amounts in thousands, except per share data) |
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
||||||||||
| Net sales |
$ |
1,435,659 |
1,378,297 |
5,787,980 |
5,642,258 |
|||||||||
| Cost of sales |
1,066,329 |
1,042,880 |
4,297,922 |
4,225,379 |
||||||||||
| Gross profit |
369,330 |
335,417 |
1,490,058 |
1,416,879 |
||||||||||
| Selling, general and administrative expenses |
273,470 |
269,123 |
1,110,550 |
1,101,337 |
||||||||||
| Operating income |
95,860 |
66,294 |
379,508 |
315,542 |
||||||||||
| Interest expense |
15,402 |
24,130 |
74,713 |
101,617 |
||||||||||
| Other expense, net |
1,366 |
257 |
303 |
14,051 |
||||||||||
| Earnings before income taxes |
79,092 |
41,907 |
304,492 |
199,874 |
||||||||||
| Income tax expense |
12,703 |
(1,990) |
53,599 |
21,649 |
||||||||||
| Net earnings |
66,389 |
43,897 |
250,893 |
178,225 |
||||||||||
| Net earnings attributable to noncontrolling interest |
— |
(966) |
(635) |
(4,303) |
||||||||||
| Net earnings attributable to Mohawk Industries, Inc. |
$ |
66,389 |
42,931 |
250,258 |
173,922 |
|||||||||
| Basic earnings per share attributable to Mohawk Industries, Inc. |
$ |
0.96 |
0.62 |
3.63 |
2.53 |
|||||||||
| Weighted-average common shares outstanding - basic |
69,095 |
68,768 |
68,988 |
68,736 |
||||||||||
| Diluted earnings per share attributable to Mohawk Industries, Inc. |
$ |
0.95 |
0.62 |
3.61 |
2.52 |
|||||||||
| Weighted-average common shares outstanding - diluted |
69,536 |
69,016 |
69,306 |
68,964 |
||||||||||
| Other Financial Information |
||||||||||||||
| (Amounts in thousands) |
||||||||||||||
| Net cash provided by operating activities |
$ |
289,043 |
162,805 |
587,590 |
300,993 |
|||||||||
| Depreciation and amortization |
$ |
63,878 |
74,930 |
280,293 |
297,734 |
|||||||||
| Capital expenditures |
$ |
73,296 |
93,313 |
208,294 |
275,573 |
|||||||||
| Consolidated Balance Sheet Data |
||||||||||||
| (Amounts in thousands) |
||||||||||||
| December 31, 2012 |
December 31, 2011 |
|||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ |
477,672 |
311,945 |
|||||||||
| Receivables, net |
679,473 |
686,165 |
||||||||||
| Inventories |
1,133,736 |
1,113,630 |
||||||||||
| Prepaid expenses and other current assets |
147,580 |
135,514 |
||||||||||
| Deferred income taxes |
111,585 |
150,910 |
||||||||||
| Total current assets |
2,550,046 |
2,398,164 |
||||||||||
| Property, plant and equipment, net |
1,692,852 |
1,712,154 |
||||||||||
| Goodwill |
1,385,771 |
1,375,175 |
||||||||||
| Intangible assets, net |
553,799 |
605,100 |
||||||||||
| Deferred income taxes and other non-current assets |
121,216 |
115,635 |
||||||||||
| Total assets |
$ |
6,303,684 |
6,206,228 |
|||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Current portion of long-term debt |
$ |
55,213 |
386,255 |
|||||||||
| Accounts payable and accrued expenses |
773,436 |
715,091 |
||||||||||
| Total current liabilities |
828,649 |
1,101,346 |
||||||||||
| Long-term debt, less current portion |
1,327,729 |
1,200,184 |
||||||||||
| Deferred income taxes and other long-term liabilities |
427,689 |
455,190 |
||||||||||
| Total liabilities |
2,584,067 |
2,756,720 |
||||||||||
| Noncontrolling interest |
— |
33,723 |
||||||||||
| Total stockholders' equity |
3,719,617 |
3,415,785 |
||||||||||
| Total liabilities and stockholders' equity |
$ |
6,303,684 |
6,206,228 |
|||||||||
| Segment Information |
Three Months Ended |
As of and for the Twelve Months Ended |
|||||||||||||
| (Amounts in thousands) |
December 31, 2012 |
December 31, 2011 |
December 31, |
December 31, 2011 |
|||||||||||
| Net sales: |
|||||||||||||||
| Mohawk |
$ |
725,895 |
723,975 |
2,912,055 |
2,927,674 |
||||||||||
| Dal-Tile |
401,637 |
348,541 |
1,616,383 |
1,454,316 |
|||||||||||
| Unilin |
329,969 |
326,321 |
1,350,349 |
1,344,764 |
|||||||||||
| Intersegment sales |
(21,842) |
(20,540) |
(90,807) |
(84,496) |
|||||||||||
| Consolidated net sales |
$ |
1,435,659 |
1,378,297 |
5,787,980 |
5,642,258 |
||||||||||
| Operating income (loss): |
|||||||||||||||
| Mohawk |
$ |
51,968 |
30,687 |
158,196 |
109,874 |
||||||||||
| Dal-Tile |
21,039 |
18,387 |
120,951 |
101,298 |
|||||||||||
| Unilin |
29,796 |
21,640 |
126,409 |
127,147 |
|||||||||||
| Corporate and eliminations |
(6,943) |
(4,420) |
(26,048) |
(22,777) |
|||||||||||
| Consolidated operating income |
$ |
95,860 |
66,294 |
379,508 |
315,542 |
||||||||||
| Assets: |
|||||||||||||||
| Mohawk |
$ |
1,721,214 |
1,769,065 |
||||||||||||
| Dal-Tile |
1,731,258 |
1,732,818 |
|||||||||||||
| Unilin |
2,672,389 |
2,533,070 |
|||||||||||||
| Corporate and eliminations |
178,823 |
171,275 |
|||||||||||||
| Consolidated assets |
$ |
6,303,684 |
6,206,228 |
||||||||||||
| Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc. |
||||||||||||||||||
| (Amounts in thousands, except per share data) |
||||||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
| December 31, |
December 31, |
December 31, 2012 |
December 31, |
|||||||||||||||
| Net earnings attributable to Mohawk Industries, Inc. |
$ |
66,389 |
42,931 |
250,258 |
173,922 |
|||||||||||||
| Adjusting items: |
||||||||||||||||||
| Unrealized foreign currency losses (1) |
— |
— |
— |
9,085 |
||||||||||||||
| Operating lease correction (2) |
— |
6,035 |
— |
6,035 |
||||||||||||||
| Business restructurings |
6,109 |
7,696 |
18,564 |
23,209 |
||||||||||||||
| Debt extinguishment costs |
— |
— |
— |
1,116 |
||||||||||||||
| Income taxes |
(2,111) |
(7,152) |
(7,003) |
(11,749) |
||||||||||||||
| Adjusted net earnings attributable to Mohawk Industries, Inc. |
$ |
70,387 |
49,510 |
261,819 |
201,618 |
|||||||||||||
| Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. |
$ |
1.01 |
0.72 |
3.78 |
2.92 |
|||||||||||||
| Weighted-average common shares outstanding - diluted |
69,536 |
69,016 |
69,306 |
68,964 |
||||||||||||||
| Reconciliation of Operating Cash Flow to Free Cash Flow |
|||||||||
| (Amounts in thousands) |
|||||||||
| Three Months Ended |
|||||||||
| December 31, 2012 |
|||||||||
| Net cash provided by operating activities |
$ |
289,043 |
|||||||
| Capital expenditures |
73,296 |
||||||||
| Free cash flow |
$ |
215,747 |
|||||||
| Reconciliation of Total Debt to Net Debt |
|||||||||
| (Amounts in thousands) |
|||||||||
| December 31, 2012 |
December 31, 2011 |
||||||||
| Current portion of long-term debt |
$ |
55,213 |
386,255 |
||||||
| Long-term debt, less current portion |
1,327,729 |
1,200,184 |
|||||||
| Less: Cash and cash equivalents |
477,672 |
311,945 |
|||||||
| Net Debt |
$ |
905,270 |
1,274,494 |
||||||
| Reconciliation of Operating Income to Adjusted EBITDA |
|||||||||||||||||||
| (Amounts in thousands) |
|||||||||||||||||||
| Three Months Ended |
Trailing Twelve |
||||||||||||||||||
| March 31, 2012 |
June 30, 2012 |
September 29, 2012 |
December 31, 2012 |
December 31, 2012 |
|||||||||||||||
| Operating income |
$ |
71,976 |
107,718 |
103,954 |
95,860 |
379,508 |
|||||||||||||
| Other (expense) income |
1,825 |
(440) |
(322) |
(1,366) |
(303) |
||||||||||||||
| Net earnings attributable to noncontrolling interest |
(635) |
— |
— |
— |
(635) |
||||||||||||||
| Depreciation and amortization |
73,286 |
71,831 |
71,298 |
63,878 |
280,293 |
||||||||||||||
| EBITDA |
146,452 |
179,109 |
174,930 |
158,372 |
658,863 |
||||||||||||||
| Business restructurings |
— |
8,226 |
4,229 |
6,109 |
18,564 |
||||||||||||||
| Adjusted EBITDA |
$ |
146,452 |
187,335 |
179,159 |
164,481 |
677,427 |
|||||||||||||
| Net Debt to Adjusted EBITDA |
1.3 |
||||||||||||||||||
| Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate |
||||||||||
| (Amounts in thousands) |
||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||
| December 31, |
December 31, |
December 31, 2012 |
December 31, 2011 |
|||||||
| Net sales |
$1,435,659 |
1,378,297 |
5,787,980 |
5,642,258 |
||||||
| Adjustment to net sales on a constant exchange rate |
9,423 |
— |
92,300 |
— |
||||||
| Net sales on a constant exchange rate |
$1,445,082 |
1,378,297 |
5,880,280 |
5,642,258 |
||||||
| Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
||||||
| (Amounts in thousands) |
||||||
| Three Months Ended |
||||||
| Dal-Tile |
December 31, 2012 |
December 31, 2011 |
||||
| Net sales |
$401,637 |
348,541 |
||||
| Adjustment to segment net sales on a constant exchange rate |
(1,635) |
— |
||||
| Segment net sales on a constant exchange rate |
$400,002 |
348,541 |
||||
| Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
||||||
| (Amounts in thousands) |
||||||
| Three Months Ended |
||||||
| Unilin |
December 31, 2012 |
December 31, 2011 |
||||
| Net sales |
$329,969 |
326,321 |
||||
| Adjustment to segment net sales on a constant exchange rate |
11,058 |
— |
||||
| Segment net sales on a constant exchange rate |
$341,027 |
326,321 |
||||
| Reconciliation of Operating Income to Adjusted Operating Income |
||||||||||||||
| (Amounts in thousands) |
||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||
| December 31, 2012 |
December 31, 2011 |
December 31, |
December 31, |
|||||||||||
| Operating income |
$ |
95,860 |
66,294 |
379,508 |
315,542 |
|||||||||
| Operating lease correction (2) |
— |
6,035 |
— |
6,035 |
||||||||||
| Business restructurings |
6,109 |
7,696 |
18,564 |
23,209 |
||||||||||
| Adjusted operating income |
$ |
101,969 |
80,025 |
398,072 |
344,786 |
|||||||||
| Adjusted operating margin as a percent of net sales |
7.1% |
5.8% |
6.9% |
6.1% |
||||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||||
| (Amounts in thousands) |
||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||
| Mohawk |
December 31, 2012 |
December 31, 2011 |
December 31, |
December 31, |
||||||||||
| Operating income |
$ |
51,968 |
30,687 |
158,196 |
109,874 |
|||||||||
| Operating lease correction (2) |
— |
2,761 |
— |
2,761 |
||||||||||
| Business restructurings |
— |
7,696 |
10,504 |
23,209 |
||||||||||
| Adjusted segment operating income |
$ |
51,968 |
41,144 |
168,700 |
135,844 |
|||||||||
| Adjusted operating margin as a percent of net sales |
7.2% |
5.7% |
5.8% |
4.6% |
||||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||||
| (Amounts in thousands) |
||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||
| Dal-Tile |
December 31, 2012 |
December 31, 2011 |
December 31, |
December 31, |
||||||||||
| Operating income |
$ |
21,039 |
18,387 |
120,951 |
101,298 |
|||||||||
| Operating lease correction (2) |
— |
3,274 |
— |
3,274 |
||||||||||
| Business restructurings |
6,109 |
— |
6,109 |
— |
||||||||||
| Adjusted segment operating income |
$ |
27,148 |
21,661 |
127,060 |
104,572 |
|||||||||
| Adjusted operating margin as a percent of net sales |
6.8% |
6.2% |
7.9% |
7.2% |
||||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||||
| (Amounts in thousands) |
||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||
| Unilin |
December 31, 2012 |
December 31, 2011 |
December 31, |
December 31, |
||||||||||
| Operating income |
29,796 |
21,640 |
126,409 |
127,147 |
||||||||||
| Business restructurings |
— |
— |
1,951 |
— |
||||||||||
| Adjusted segment operating income |
$ |
29,796 |
21,640 |
128,360 |
127,147 |
|||||||||
| Adjusted operating margin as a percent of net sales |
9.0% |
6.6% |
9.5% |
9.5% |
||||||||||
| Reconciliation of Earnings Before Income Taxes to Adjusted Earnings Before Income Taxes |
|||||||
| (Amounts in thousands) |
|||||||
| Three Months Ended |
|||||||
| December 31, 2012 |
December 31, 2011 |
||||||
| Earnings before income taxes |
$ |
79,092 |
41,907 |
||||
| Adjustments to earnings before income taxes: |
|||||||
| Operating lease correction (2) |
— |
6,035 |
|||||
| Business restructurings |
6,109 |
7,696 |
|||||
| Adjusted earnings before income taxes |
$ |
85,201 |
55,638 |
||||
| Reconciliation of Income Tax Expense to Adjusted Income Tax Expense |
|||||||
| (Amounts in thousands) |
|||||||
| Three Months Ended |
|||||||
| December 31, 2012 |
December 31, 2011 |
||||||
| Income tax expense |
$ |
12,703 |
(1,990) |
||||
| Income tax effect of adjusting items |
2,111 |
7,152 |
|||||
| Adjusted income tax expense |
$ |
14,814 |
5,162 |
||||
| Adjusted income tax rate |
17% |
9% |
|||||
| (1) Unrealized foreign currency losses in Q3 2011 for certain of the Company's consolidated foreign subsidiaries that measure financial position and results using the U.S. dollar rather than the local currency. |
|||||||
| (2) Correction of an immaterial error related to accounting for operating leases |
|||||||
| The Company believes it is useful for itself and investors to review, as applicable, both GAAP and the above non-GAAP measures in order to assess the performance of the Company's business for the planning and forecasting in subsequent periods. |
|||||||
