Bolstered by four business acquisitions last year, Mohawk Industries Inc. boosted its adjusted earnings in 2017 above $1 billion for the first time and beat Wall Street analysts forecasts for fourth quarter profits by 9 cents a share.
The world's biggest floorcovering manufacturer said Friday its net income rose 5 percent in the fourth quarter from a year ago and the company expects sales and profits to continue to grow in the first quarter of 2018.
Despite the favorable earnings for Mohawk, however, shares of the floorcovering giant dropped another $7.11 per share, or nearly 2.8 percent, to close Friday at $249.46. In the past week, Mohawk shares fell $21.12, or 7.8 percent, to their lowest level since last October as investors worry that rising interest rates could hurt the carpet and hard surface floor manufacturer.
Mohawk shares are still up by $26.74, or 10.7 percent, in the past 12 months.
The Calhoun, Ga.-based company said it earned $240 million, or $3.21 per share, on sales of $2.4 billion in the final three month of 2017. Adjusted net earnings were $256 million, or $3.42 per share, excluding restructuring, acquisition and other charges.
The fourth quarter results were up 5 percent over a year ago and beat Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $3.33 per share.
For all of 2017, adjusted earnings rose rose 8 percent from the prior year to nearly $1.02 billion, or $13.61 per share, excluding restructuring, acquisition and other charges. $9.5 billion. Mohawk sales grew to $9.5 billion in 2017, also a record hight.
"During the year, we identified opportunities for growing our business, differentiating our products and improving our productivity, which we supported with over $900 million in internal investments, the highest in company history," Mohawk CEO Jeff Lorberbaum said in the earnings announcement.
Lorberbaum said in the first quarter of 2018 "we anticipate all segments improving sales." Combined with lower tax rates and ongoing improvements from recent acquisitions, Mohawk forecast it will earn from $2.93 to $3.02 per share in the first quarter. In the first quarter of 2017, Mohawk earned $2.68 per share.
"Over the past three years, our strategies of adding new products, increasing our capacities and acquiring new businesses have led to expanded earnings even as income from our click patents expired, " Lorberbaum said. "Our 2017 results reflected the impact of these strategies, even with $34 million in start-up costs to ramp up new products and production and significant increases in raw materials."
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340