The company’s net sales for the quarter were $743.7 million compared to $765.1 million for the first quarter of 2000. Diluted earnings per share (EPS) came in at 51 cents, which translates to $27.2 million in net earnings in the first quarter of 2001. Net earning for the same period a year prior were $34.0 million, or 61 cents per share. Gross profit as percentage of net sales declined to 23.9% from 24.9%.
The company said its lower sales and earnings are attributable to declining industry shipments and the slowing economy. The lower gross profit percentage results from higher-than-normal costs for oil and energy, losses on the disposition of Crown Crafts obsolete inventory and an unfavorable product mix, Mohawk said. A price increase on selected items was implemented during March but had little impact on first quarter results.
“We are not satisfied with our results this quarter,” said Jeffrey S. Lorberbaum, Mohawk president and CEO. “As our stock price remains at levels below our expectations, we will continue the repurchase program previously authorized by our board of directors.”
Lorberbaum said that the company repurchased 171,000 shares in the first quarter and now has reacquired more than 8.9 million shares since the September 1999 inception of the program. He also noted that the company’s debt to total capitalization ratio improved from 43.9% at the end of 2000 to 42.8% in the first quarter. “We continue to expand the marketing programs to assist our dealers with the Ralph Lauren, Mohawk Floorscapes and Mohawk Color Center programs, as well as our brand advertising,” Lorberbaum said. “Our new product introductions have been sampled earlier than in prior years and inventories to support them have been put in place. The hard-surface infrastructure is being implemented and the category is growing as we anticipated. We are excited about all our hard-surface products and believe that their success will add to long-term shareholder value.”
Company management believes that EPS for the second quarter of 2001 will be below last year’s by 10% to 15%, and the third quarter of 2001 EPS will trail last year’s by 5% to 10%.