The world's biggest flooring company said demand for its carpets and vinyl flooring exceeded its production capacity as consumer demand for flooring grew during the pandemic.
Mohawk Industries Inc. said Thursday that sales and profits in the third quarter rose above year-ago levels and topped what Wall Street analysts had predicted for the Calhoun, Georgia-based manufacturer.
Mohawk reported net profit of $205 million, or $2.87 per share, and adjusted net earnings were $233 million, or $3.26 per share, excluding restructuring, acquisition and other charges. That easily beat the street forecast of $2.87 per share for adjusted earnings.
Net sales for the third quarter of 2020 were $2.6 billion, an increase of 2% as reported and on a constant currency basis and $80 million above what analysts had predicted.
"Our results in the period significantly exceeded our expectations, with sales recovering and operating income substantially increasing above last year's levels," Mohawk CEO Jeff Lorberbaum said in the company's earnings release. "Under continued pandemic conditions, people all over the world are spending more time in their homes and working remotely. Globally, this trend is increasing investments in home remodeling as well as driving new home purchases."
During the period, Mohawk said demand for its products exceeded its production, and inventory declined by about $80 million, "as we ramped up plants across the world." Lorberbaum said.
"Our increase in manufacturing in the period was limited by challenges with hiring, training and capacity," he said. "To cover higher operating, material and logistics costs, we have announced selective price increases in some markets and product categories."
Mohawk disclosed in July that it had received subpoenas from the U.S. Department of Justice and the Securities and Exchange Commission related to an investigation into charges that the company had inflated sales and profits in the way it booked its sales. With the assistance of outside legal counsel, Mohawk said its Audit Committee completed a thorough internal investigation into these allegations of wrongdoing "and concluded that the allegations are without merit.
"The company is cooperating fully with the ongoing governmental investigations and will continue to vigorously defend against the lawsuit, which the Company does not believe has merit," Mohawk said in a statement Thursday.
- Compiled by Dave Flessner