Mohawk Industries doubles earnings in first-quarter report

Mohawk Industries doubles earnings in first-quarter report

May 4th, 2012 by Ellis Smith in Business Around the Region

Jeff Lorberbaum

One of the region's largest employers is making a carpet comeback.

Calhoun, Ga.-based Mohawk Industries announced a 38 percent jump in first-quarter earnings to $40 million, or 58 cents per share, according to the company's earnings statement issued late Thursday.

The company increased sales 6 percent to $1.4 billion as the company's recession-fueled restructuring began to bear fruit.

This year's results are nearly double what the flooring manufacturer made in the first quarter of 2011, when Mohawk earned $23 million, or 34 cents per share, as the company closed some U.S. plants and made other investments to diversify its operations

"Volume increases, price increases, cost reductions and lower interest expense contributed to our earnings growth in the quarter," said Jeff Lorberbaum, chairman and CEO of Mohawk.

The company also got a boost from Standard & Poor's and Moody's, both of which bumped up the company's credit rating and allowed it to maintain about $500 million in cash after it pays off this year's debt, he said.

Carpet sales grew the slowest at 1 percent, followed by a 7 percent increase in laminate flooring sales and a large 14 percent jump in tile sales, he said.

Residential remodeling and commercial renovation helped to boost tile sales, and a new plant in Mexico helped the company lower manufacturing costs. The company plans to capitalize on its position in the laminate market by expanding in France, he said, as the company's Russian plant increases its production to meet growing demand.

Moving forward, Lorberbaum sees a bright future for Mohawk as the flooring manufacturer grows its way out of the biggest downturn in recent history.

"Low mortgage rates, increasing home sales and higher employment should sustain industry growth," he said.

In fact, he expects earnings per share to nearly double again in the second quarter to between $1.07 and $1.16 per share.

"Our recent investments in new markets, technology, production capacity and [research and development] will improve our results," Lorberbaum said.