Profits for the world's biggest floorcovering maker fell in the third quarter due to relatively stagnant retail demand in the United States and the impact of a strong dollar and more competition in the ceramic floor market.
Mohawk Industries said its diluted earnings in the three month ended Sept. 30 totaled $156 million, or $2.15 per diluted share, on revenues of $2.5 billion. Those results were down 28.8% from a year ago, although results were better and ahead of projections when restructuring and acquisition costs are excluded.
Mohawk CEO Jeff Lorberbaum said operating results in the past three months "were in line with our expectations, though we are not satisfied with our performance.
"As anticipated, our U.S. businesses presented the greatest challenges during the period given soft retail demand, the impact of LVT, a stronger dollar and excess ceramic industry inventories," he said. "Trends in our other major markets weakened, creating a more competitive environment. We expect the present conditions to persist and will further adjust our strategies as needed."
Lorberbaum said Mohawk is taking steps to respond to the market "with the most significant of these being aligning ceramic production with demand in the U.S., realigning our North American carpet operations, optimizing our LVT manufacturing and ramping up our new plants."
The Calhoun, Georgia-based floorcovering company also is entering new product categories and making product extensions as well as trying to capitalize on recent acquisitions in Australia, New Zealand and Brazil.
"We are investing more in sales personnel and marketing to increase our penetration in new and existing products," Lorberbaum said. "We continue to streamline our operations to enhance efficiencies, and we are leveraging automation and process enhancements to lower costs."
Mohawk said it expects fourth quarter earnings to between $2.13 and $2.23 per share, excluding any one-time charges, and Lorberbaum said the company should benefit it 2020 "from our new products, higher utilization of our start-ups and cost reductions we have taken during 2019."
Shares of Mohawk, which are already up 11.1% so far this year, rose in after-hours trading after the third quarter results were announced. Lorberbaum said the company purchased over 740,000 shares of company stock for about $91 million during the third quarter under Mohawk's stock purchase program.