Mohawk Industries Earnings: Turnaround in the Works

Mohawk Industries Inc. (NYSE:MHK) reported its results for the first quarter. Mohawk Industries 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 First Quarter

Results: Net income for Mohawk Industries Inc. rose to $40.4 million (59 cents per share) vs. $23.4 million (34 cents per share) in the same quarter a year earlier. This marks a rise of 72.2% from the year-earlier quarter.

Revenue: Rose 4.9% to $1.41 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Mohawk Industries Inc. reported adjusted net income of 58 cents per share. By that measure, the company fell short of mean estimate of $1.10 per share. Analysts were expecting revenue of $1.42 billion.

Quoting Management: Commenting on Mohawk Industries’ performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Volume increases, price increases, cost reductions and lower interest expense contributed to our earnings growth in the quarter. In March, Standard & Poor’s upgraded our credit rating and Moody’s elevated our outlook to positive, reducing the interest rate on our notes. In April, we paid our 2012 maturing notes using our bank revolver which has lower interest rates. Our balance sheet remains strong with net debt to adjusted EBITDA at 2.2 times and approximately $500 million available for strategic opportunities, after the payment of the 2012 notes.”

Key Stats:

Revenue has increased for four consecutive quarters. Revenue increased 9.2% to $1.38 billion in the fourth quarter of the last fiscal year. The figure rose 10.2% in the third quarter of the last fiscal year from the year earlier and climbed 5.6% in the second quarter of the last fiscal year from the year-ago quarter.

Last quarter’s profit increase ends a three-quarter streak of profit decreases. In the fourth quarter of the last fiscal year, net income fell 6.2% from the year earlier, while the figure dropped 8.7% in the third quarter of the last fiscal year and 10.5% in the second quarter of the last fiscal year.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 58 cents versus a mean estimate of net income of 54 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is $1.01 per share, down from $1.02 ninety days ago. For the fiscal year, the average estimate has moved down from $3.66 a share to $3.49 over the last ninety days.

Competitors to Watch: Interface, Inc., The Dixie Group, Inc., Victoria PLC, Airea Plc, Gaskell PLC, Oriental Weavers Carpet Co., Paragon Union Berhad, and Carmel Holdings (I.L) Ltd.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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