Mohawk Industries has grown to the world's biggest floorcovering company through 30 acquisitions since 2002, but the Calhoun, Ga.-based company is still planning on record levels of capital spending this year to boost efficiency and output and potentially buy still more companies.
Mohawk CEO Jeff Lorberbaum told industry analysts Friday the company is budgeting record amounts for its capital investments to build new plants in Tennessee and Europe, expand its carpet extrusion capacity in North Georgia and upgrade and expand its other floorcovering operations around the world.
"We are planning to increase capital investments across the enterprise to an all-time high of $500 million to support the introduction of innovative products, to sustain our growth with increased manufacturing capacity and to drive productivity," Lorberbaum said.
Mohawk announced plans in March to build a $180 million ceramic plant in Dickson County, Tenn.
The company said despite a weather-induced drop in industry sales in the first quarter, floorcovering sales should rise worldwide by 5 percent to 6 percent this year and Mohawk wants to grab a bigger share of the market.
"We're going to continue to invest in the business and look for strategic M&A (merger and acquisition) opportunities," Mohawk Chief Financial Officer Frank Boykin said.
Mohawk expects the investments to pay off handsomely, starting this year. Mohawk said it expects to nearly double its earnings in 2014, projecting per-share earnings of $8 to $8.30 this year, up from $4.82 per share in net income in 2013.
Mohawk reported first quarter earnings late Thursday, excluding unusual charges, of $90 million, or $1.23 per share. The results were 5 cents per share better than analysts had expected and were up 41 percent over a year ago. Sales for Mohawk grew 22 percent in the first quarter over a year ago to $1.8 billion.
Investors cheered the earnings report and favorable forecast, boosting Mohawk shares by $7.62 per share, or more than 5.7 percent, to close Friday at $140.94.
"In each of our businesses, we have many local advantages, including leading market positions, recognized brands, diverse distribution and efficient manufacturing, to position our businesses for growth as the market improves," Lorberbaum said.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340