Mohawk Industries has reported 2014 fourth quarter net earnings of $147 million and diluted earnings per share (EPS) of $2.00.
Excluding unusual charges, net earnings were $167 million and EPS was $2.27, a 27% increase over last year’s fourth quarter adjusted EPS and the highest Q4 adjusted EPS in the company’s history. Net sales for the fourth quarter of 2014 were $1.95 billion, an increase of 1.4% versus the prior year’s fourth quarter or approximately 5% on a constant exchange basis. For the fourth quarter of 2013, net sales were $1.92 billion, net earnings were $95 million and EPS was $1.29; excluding unusual charges, net earnings were $131 million and EPS was $1.79.
Commenting on Mohawk’s fourth quarter performance, Jeffrey Lorberbaum, chairman and CEO, stated, “During the period, we significantly increased our adjusted operating income by 18% compared to the prior year as a result of productivity initiatives, aggressive cost containment and benefits from our acquisitions. We delivered solid results during the quarter, generating increased earnings even with negative translation impact from foreign currency. On a local basis, our European operations improved across all product categories in a challenging market. Across the enterprise, we reduced SG&A as a percentage of sales and held total dollars flat while still investing in growth areas of the business.”
According to Lorberbaum, the company's carpet segment net sales for the quarter were $780 million, up 4% over last year due to product innovation, enhanced raw material strategies, plant simplification, investments in state-of-the-art technologies and improved sales execution.
Ceramic segment net sales for the quarter were $744 million, up 1% over last year as reported or 7% at a constant exchange rate.
"[Our] new ceramic plant in Tennessee is on track to start up in the beginning of next year, with the building pad nearly complete," said Lorberbaum. "Mohawk's ceramic sales in Mexico are growing rapidly from providing a complete product line of higher styled premium products and value priced products as well as expanding participation in the retail and new construction channels. Sales and margins in the company’s European ceramic business grew by improving product mix, replacing inefficient manufacturing assets and reducing SG&A. Ceramic sales in Russia expanded significantly in local currency as consumers purchased ahead of anticipated price increases."
Mohawk's laminate and wood segment net sales for the quarter were $459 million, decreasing approximately 2% over last year as reported and increasing 4% at a constant exchange rate.
"We anticipate stronger organic growth on a local basis in 2015, driven by improvements in the U.S. economy and the flooring market," said Lorberbaum. "In the U.S., rising consumer confidence supported by lower gasoline prices, low interest rates, increased home values and an improving job market should drive higher growth in our category. The U.S. dollar has recently strengthened considerably relative to the euro, ruble and other currencies and our translated results will be impacted. While we cannot affect the exchange rates, we are aggressively implementing productivity initiatives, SG&A reductions and other cost containment projects to minimize the impact. We will continue to invest in product innovation and operational improvements to drive our top line growth and margins. The first quarter of 2015 has four additional days, increasing sales 6%, and the fourth quarter will have four less days than in the same periods last year. Taking all of these factors into account, our guidance for first quarter earnings is $1.54 to $1.63 per share, excluding any restructuring charges and new acquisitions."
Lorberbaum added that Mohawk's future acquisition plans will expand the company's footprint and strengthen the company's foundation for future growth in all flooring categories in North America, Europe, Russia, Asia and Australia.
For more information, visit mohawkflooring.com.
