Chattanooga carpet company reports strong fourth quarter despite flat carpet market

Chattanooga carpet company reports strong fourth quarter despite flat carpet market

Chairman and CEO expects positive 2016

February 25th, 2016 by Staff and Wire Reports in Business Around the Region

Calhoun, Ga.-based Mohawk Industries is the largest flooring manufacturer in the world.

Photo by Contributed Photo /Times Free Press.

Jeffrey Lorberbaum, CEO of Mohawk Industries, speaks to the Chattanooga Rotary Club Thursday, Nov. 6, 2014.

Jeffrey Lorberbaum, CEO of Mohawk Industries, speaks to...

Photo by Tim Barber /Times Free Press.

Even in a relatively flat flooring market last year, Mohawk Industries Inc. boosted fourth quarter adjusted net income by 24 percent over a year ago, wrapping up what became a record year for the Calhoun, Ga.-based company.

Mohawk reported Thursday that fourth quarter profits totaled $192 million, or $2.57 per share. Excluding non-recurring costs, the company's quarterly earnings were $210 million, $2.82 per share — beating by 9 cents per share what the average estimate was among analysts surveyed by Zacks.com.

With the quarterly adjusted profit gains, Mohawk posted its seventh consecutive record earnings quarter.

Net sales in the quarter were $2 billion for the world's biggest floorcovering manufacturer. Last year, fourth-quarter net sales were $1.95 million, net earnings (excluding non-recurring costs) were $167 million and earnings per share were $2.27.

"Mohawk is one of the few companies who had a good fourth quarter," said Kemp Harr, publisher of Floor Focus magazine.

Other flooring companies, especially those specializing in carpet production, have struggled to post earnings gains.

Harr said Thursday Mohawk's investments in hard surface products helped lift the Calhoun company.

"They're in a better position for hard surface sells, which is where the business is right now," said Harr.

Jeff Lorberbaum, chairman and CEO of Mohawk, said the company's "targeted investments" made since 2013 resulted in a strong year in 2015.

Mohawk finalized a pair of investments in luxury vinyl and ceramic manufacturing plants in Europe last year, expanding the company's hard surface footprint across two hemispheres.

"While making these investments for future growth, we strengthened our balance sheet and reduced our leverage, enabling us to continue optimizing our shareholder returns," said Lorberbaum.

In total, Mohawk has invested nearly $5 billion — nearly $3.5 billion in nine acquisitions — in the company to expand manufacturing capacity and bring new products to market since 2013, Lorberbaum said.

And he said in Thursday's release that Mohawk will invest an additional $600 million to $650 million on internal projects, to increase ceramic capacity in the U.S., Mexico, Europe and Russia, improve carpet manufacturing processes, increase wood production in the U.S. and Europe and install new technologies in the laminate business in the U.S. and Europe.

"We anticipate that the demand trends in our U.S. and international markets will remain consistent with what we have been experiencing" in 2016, said Lorberbaum.

He did report, however, that the stronger U.S. dollar resulted in headwinds for the company abroad in 2015, negatively impacting net sales by 6 percent and operating income about 9 percent. But building on past acquisitions and investments abroad, Mohawk expects to continue seeing solid local sales in Europe and Russia.

"This year we will increase investments in our existing businesses to improve our long-term performance," said Lorberbaum. "Taking all these factors into account, our guidance for the first quarter is $2.24- $2.33 per share, which would be a 32- 37 percent increase over 2015, excluding any restructuring, acquisition and other charges."

Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6480.


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