Mohawk Industries Earnings Cheat Sheet: Margins Shrink as Costs Rise, Profit Falls

Mohawk Industries Inc. (NYSE:MHK) reported its results for the second quarter. Mohawk Industries, Inc. is a producer of floor covering products for residential and commercial applications in the United States and residential applications in Europe.

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Mohawk Industries Earnings Cheat Sheet for the Second Quarter

Results: Net income for Mohawk Industries Inc. fell to $60.9 million (88 cents per share) vs. $68.1 million (99 cents per share) a year earlier. This is a decline of 10.5% from the year earlier quarter.

Revenue: Rose 5.6% to $1.48 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MHK reported adjusted net income of 95 cents per share. By that measure, the company beat the mean estimate of 93 cents per share. Analysts were expecting revenue of $1.45 billion.

Quoting Management: Jeffrey S. Lorberbaum, Chairman and CEO stated, “All of our businesses reported year over year sales growth and our operating margin improved to 7.3%, an increase of 50 basis points over last year excluding restructuring charges. This is our highest operating margin since 2008 as a result of continuing cost reductions, selling price increases and productivity gains throughout the enterprise. U.S. economic growth was lower than expected in the second quarter with the U.S. residential business remaining soft and the commercial business continuing to grow.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the first quarter, net income rose 14.1% from the year earlier, while the figure increased more than twofold in the fourth quarter of the last fiscal year, 48.8% in the third quarter of the last fiscal year and 47.2% in the second quarter of the last fiscal year.

From the first quarter, the company’s current liabilities rose to $1.22 billion from $792.5 million.

A year-over-year revenue increase last quarter snaps a streak of four consecutive quarters of revenue declines. The worst quarter in that span was the fourth quarter of the last fiscal year, which saw a 6.3% decrease.

Gross margin shrank 0.9 percentage point to 25.9%. The contraction appeared to be driven by increased costs, which rose 6.9% from the year earlier quarter while revenue rose 5.6%.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of 42 cents per share.

Competitors to Watch: Interface, Inc. (NASDAQ:IFSIA), The Dixie Group, Inc. (NASDAQ:DXYN), Victoria PLC (VCP), Airea Plc (AIEA), Gaskell PLC (GKLL), Oriental Weavers Carpet Co. (ORWE), Paragon Union Berhad (PARAGON), and Carmel Holdings (I.L) Ltd. (CRHO).

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(Source: Xignite Financials)