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CALHOUN, Ga., Nov. 3, 2011 /CNW/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced 2011 third quarter net earnings of $47 million and diluted earnings per share (EPS) of $0.68. Adjusted net earnings were $57 million and EPS was $0.83 excluding the unusual items. For the third quarter of 2010, the net earnings were $51 million and EPS was $0.74 both as reported and excluding unusual items. Net sales for the third quarter of 2011 were $1.4 billion increasing 10% as reported and 8% with a constant exchange rate. Our cash position at the end of the quarter remains strong with $276 million and our net debt to adjusted EBITDA ratio was 2.1.

For the nine months ended October 1, 2011, net sales were $4.3 billion, an increase of approximately 5% as reported and 4% with a constant exchange rate. For the nine-month period, net earnings and EPS were $131 million and $1.90, respectively. Excluding unusual items, net earnings were $152 million and EPS was $2.21. For the nine months ended October 2, 2010, net earnings were $140 million and EPS was $1.99. Excluding unusual items in 2010, net earnings were $128 million and EPS was $1.86.

Commenting on the third quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "The Company's third quarter results reflect an improvement in sales and earnings over last year even with increased raw material costs and consumer reluctance to invest in renovation projects. Sales in both the residential and commercial categories expanded with commercial renovation leading the growth and new residential continuing to lag. Each segment continues to lower costs with new processes, reduced infrastructure and investment in more efficient assets."

Our Mohawk segment net sales improved 6% as we improved our position and grew in both residential and commercial categories. Operating margins were lower due to price increases lagging material inflation as well as continued pressure on our product mix as consumers remain cautious about larger discretionary investments. During the quarter, residential sales grew across most channels and product categories. Commercial sales momentum continued from the previous quarter, with both broadloom and carpet tile achieving gains. During 2011, we implemented two price increases that were fully realized by the end of the third quarter. During the period, raw material costs were greater than anticipated and the higher expense will impact our fourth quarter costs and margins. We have implemented hundreds of manufacturing initiatives yielding significant cost savings in 2011.

Our Dal-Tile segment net sales grew almost 11% during the period with both residential and commercial categories showing gains with product mix continuing to decline. In the comparable 2010 period, business was lower than expected due to the flooding in our Mexican facility from Hurricane Alex. During the quarter, we increased sales in all channels with particular strength in home centers due to additional commitments for our innovative mosaics, wall tile and porcelain tile. Our Mexican ceramic sales grew significantly on a local basis as we enhanced our penetration with new products and broader distribution. We have implemented new manufacturing processes to lower raw material costs, improve efficiency, reduce production runs and improve distribution costs.

Our Unilin net sales increased approximately 19% as reported and 11% with a constant exchange rate. Sales in Europe increased across most channels and regions, and our price increases are beginning to catch up with the raw material inflation. We are implementing additional price increases for roof panels and insulation boards to offset further inflation in those products. Innovation in board manufacturing processes is enhancing our efficiency and material yields. Despite challenging market conditions, our European flooring products grew by capitalizing on the strength of our Quick-Step brand, growing our participation in the DIY channel, and expanding our wood flooring category. In the U.S., sales of our laminate flooring grew through expanded programs in all channels. We completed our Russian laminate flooring plant on schedule and are initiating production. We acquired the largest laminate and wood flooring distributor in Australia, which expands our strategy of getting closer to our customers and becoming more responsive to local markets.

Mohawk's strategy to maximize our long term results is reflected in our international expansion in Mexico, Russia, China and Australia, new technologies to increase value, innovative product categories like Didit click furniture and process enhancements to lower our cost position across the enterprise. We remain confident in the future of our business and will continue to adjust our tactics as economic conditions change. In the fourth quarter, we will be impacted by higher third quarter raw material costs; however we are currently seeing some moderation which will benefit next year. We will consider further price increases as appropriate and implement additional cost reductions to improve the business. With these factors, our fourth quarter guidance for earnings is $0.67 to $0.76 per share, excluding any restructuring costs.

Our strategy in this environment focuses on lowering our cost infrastructure, creating innovative products, maintaining a strong balance sheet and targeting new investments for future growth. Although the macro outlook is somewhat uncertain, we believe our results for next year will reflect continued improvement.

Mohawk is a leading supplier of flooring for both residential and commercial applications. Mohawk offers a complete selection of carpet, ceramic tile, laminate, wood, stone, vinyl, and rugs. These products are marketed under the premier brands in the industry, which include Mohawk, Karastan, Lees, Bigelow, Durkan, Daltile, American Olean, Unilin and Quick-Step. Mohawk's unique merchandising and marketing assist our customers in creating the consumers' dream. Mohawk provides a premium level of service with its own trucking fleet and local distribution in the U.S. Mohawk's operational international presence includes China, Europe, Malaysia, Mexico and Russia.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," "anticipates," "expects," and "estimates," or similar expressions constitute "forward-looking statements." For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation in raw material prices and other input costs; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company's products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; tax, product and other claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.

There will be a conference call Friday, November 4, 2011 at 11:00 AM Eastern Time.

The telephone number to call is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local.

Conference ID # 17731505. A conference call replay will also be available until November 18, 2011 by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 17731505

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 <<
 MOHAWK INDUSTRIES, INC. AND
 SUBSIDIARIES
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 <<
 Consolidated Statement of
 Operations Three Months Ended 
Nine Months Ended
 ------------------ 
-----------------
 (Amounts in thousands, October 1, October 2, 
October 1, October 2,
 except per share data) 2011 2010 
2011 2010
 ----------- ----------- 
----------- -----------
 >>

 <<
 Net sales $1,442,512 1,309,552
4,263,961 4,056,874
 Cost of sales 1,084,889 964,620
3,182,499 2,995,940
 ------------- --------- -------
--------- ---------
 Gross profit 357,623 344,932
1,081,462 1,060,934
 Selling, general and
 administrative expenses 266,159 259,750
832,214 832,405
 ------------------------ ------- -------
------- -------
 Operating income 91,464 85,182
249,248 228,529
 Interest expense 25,132 30,046
77,487 102,985
 Other (income) expense, net 13,413 
(4,641) 13,794 (8,628)
 --------------------------- ------ ------
------ ------
 Earnings before income
 taxes 52,919 59,777
157,967 134,172
 Income tax expense
 (benefit) 5,223 7,513
23,639 (8,327)
 ------------------ ----- -----
------ ------
 Net earnings 47,696 52,264
134,328 142,499
 ------------ ------ ------
------- -------
 Net earnings attributable
 to noncontrolling interest (1,050) 
(1,170) (3,337) (2,786)
 --------------------------- ------ ------
------ ------
 Net earnings attributable
 to Mohawk Industries, Inc. $46,646 51,094
130,991 139,713
 --------------------------- ------- ------
------- -------
 Basic earnings per share
 attributable to Mohawk
 Industries, Inc. (1) $0.68 0.74
1.91 1.99
 ------------------------ ----- ----
---- ----
 Weighted-average common
 shares outstanding -
 basic 68,759 68,593
68,725 68,567
 ----------------------- ------ ------
------ ------
 Diluted earnings per share
 attributable to Mohawk
 Industries, Inc. (1) $0.68 0.74
1.90 1.99
 -------------------------- ----- ----
---- ----
 Weighted-average common
 shares outstanding -
 diluted 68,954 68,773
68,946 68,764
 ----------------------- ------ ------
------ ------
 >>

 <<
 (1) Basic earnings per share attributable to Mohawk Industries, Inc.
for the nine months
 ended October 2, 2010, includes a decrease of approximately $0.05,
and diluted earnings
 per share attributable to Mohawk Industries, Inc. for the nine months
ended October 2,
 2010, includes a decrease of approximately $0.04, related to the
change in fair value for
 a redeemable noncontrolling interest in a consolidated subsidiary of
the Company.
 >>

 <<
 Other Financial Information
 (Amounts in thousands)
 Net cash provided by
 operating activities $109,598 121,417
138,188 210,394
 --------------------- -------- -------
------- -------
 Depreciation and
 amortization $74,207 72,956
222,804 222,251
 ---------------- ------- ------
------- -------
 Capital expenditures $69,741 39,101
182,260 86,240
 -------------------- ------- ------
------- ------
 >>

 <<
 Consolidated Balance Sheet
 Data
 (Amounts in thousands)
 
October 1, October 2,
 
2011 2010
 
----------- -----------
 ASSETS
 Current assets:
 Cash and cash equivalents 
$276,156 365,835
 Receivables, net 
775,421 697,491
 Inventories 
1,132,073 996,271
 Prepaid expenses and other
 current assets 
125,007 114,876
 Deferred income taxes 
131,931 119,729
 ---------------------
 Total current assets 
2,440,588 2,294,202
 Property, plant and
 equipment, net 
1,696,182 1,680,541
 Goodwill 
1,389,430 1,389,057
 Intangible assets, net 
634,164 710,934
 Deferred income taxes and
 other non-current assets 
117,204 117,176
 ------------------------- 
------- -------
 
$6,277,568 6,191,910
 
---------- ---------
 LIABILITIES AND
 STOCKHOLDERS' EQUITY
 Current liabilities:
 Current portion of long-
 term debt 
$438,300 351,486
 Accounts payable and
 accrued expenses 
774,939 779,825
 -------------------- 
------- -------
 Total current liabilities 
1,213,239 1,131,311
 Long-term debt, less
 current portion 
1,173,038 1,303,151
 Deferred income taxes and
 other long-term
 liabilities 
439,798 441,948
 ------------------------- 
------- -------
 Total liabilities 
2,826,075 2,876,410
 ----------------- 
--------- ---------
 Noncontrolling interest 
32,758 34,121
 ----------------------- 
------ ------
 Total stockholders' equity 
3,418,735 3,281,379
 -------------------------- 
--------- ---------
 
$6,277,568 6,191,910
 
---------- ---------
 >>

 <<
 
As of or for the Nine Months
 Segment Information Three Months Ended 
Ended
 ------------------ 
-----------------------------
 October 1, October 2, 
October 1, October 2,
 (Amounts in thousands) 2011 2010 
2011 2010
 ----------- ----------- 
----------- -----------
 >>

 <<
 Net sales:
 Mohawk $754,470 713,481
2,203,699 2,177,646
 Dal-Tile 381,891 345,074
1,105,775 1,050,088
 Unilin 329,514 276,594
1,018,443 890,859
 Intersegment sales (23,363) 
(25,597) (63,956) (61,719)
 >>

 <<
 Consolidated net sales $1,442,512 1,309,552
4,263,961 4,056,874
 ---------------------- ---------- ---------
--------- ---------
 >>

 <<
 Operating income (loss):
 Mohawk $30,946 31,127
79,187 74,100
 Dal-Tile 33,073 33,913
82,911 77,432
 Unilin 33,048 24,640
105,507 93,434
 Corporate and eliminations (5,603) 
(4,498) (18,357) (16,437)
 >>

 <<
 Consolidated operating
 income $91,464 85,182
249,248 228,529
 ---------------------- ------- ------
------- -------
 >>

 <<
 Assets:
 Mohawk 
$1,810,191 1,652,737
 Dal-Tile 
1,735,718 1,677,957
 Unilin 
2,569,103 2,542,233
 Corporate and eliminations 
162,556 318,983
 
-------
 Consolidated assets 
$6,277,568 6,191,910
 ------------------- 
---------- ---------




 >>

 <<
 Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to
Adjusted Net Earnings
 Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per
Share Attributable to
 Mohawk Industries, Inc.
 (Amounts in thousands,
 except per share data)
 
Three Months Ended Nine Months Ended
 
------------------ -----------------
 
October 1, October 2, October 1, October 2,
 
2011 2010 2011 2010
 
----------- ----------- ----------- -----------
 Net earnings attributable
 to Mohawk Industries,
 Inc. 
$46,646 51,094 130,991 139,713
 Unusual items:
 Unrealized foreign
 currency losses (1) 
9,085 - 9,085 -
 Business restructurings 
2,186 3,330 15,513 12,263
 Debt extinguishment costs 
1,116 - 1,116 7,514
 Acquisitions purchase
 accounting 
- 1,713 - 1,713
 U.S. customs refund 
- (5,765) - (5,765)
 Discrete tax items,
 net 
- - - (24,407)
 Income taxes 
(1,761) 760 (4,597) (2,999)
 ------------ 
------ --- ------ ------
 Adjusted net earnings attributable to
 Mohawk Industries, Inc. 
$57,272 51,132 152,108 128,032
 ------------------------------------- 
------- ------ ------- -------
 >>

 <<
 Adjusted diluted earnings per share
 attributable to Mohawk Industries, Inc.
 (2) 
0.83 0.74 2.21 1.86
 Weighted-average common
 shares outstanding -
 diluted 
68,954 68,773 68,946 68,764
 >>

 <<
 (1) Unrealized foreign currency losses for certain of the Company's
 consolidated foreign subsidiaries that measure financial conditions
and
 results using the U.S. dollar rather than the local currency.
 (2) Diluted earnings per share attributable to Mohawk Industries, Inc.
 for the nine months ended October 2, 2010, excludes approximately
$0.04
 related to the change in fair value for a redeemable noncontrolling
 interest in a consolidated subsidiary of the Company.
 >>

 <<
 Reconciliation of Total
 Debt to Net Debt
 (Amounts in thousands)
 October 1,
 2011
 -----------
 Current portion of long-
 term debt $438,300
 Long-term debt, less
 current portion 1,173,038
 Less: Cash and cash
 equivalents 276,156
 ------------------- -------
 Net Debt $1,335,182
 -------- ----------
 >>

 <<
 Reconciliation of Operating Income to
 Adjusted EBITDA
 
Trailing
 (Amounts in thousands) 
Twelve
 Three
Months Ended Months Ended
 
------------------
 December 31, April
2, July 2, October 1, October 1,
 2010 
2011 2011 2011 2011
 ------------- 
--------- -------- ----------- -----------
 Operating income $85,640 
56,084 101,700 91,464 334,888
 Other (expense) income 1,037 
(15) 396 (13,413) (11,995)
 Unrealized foreign
 currency losses (1) - 
- - 9,085 9,085
 U.S. customs refund 1,965 
- - - 1,965
 Net earnings attributable
 to noncontrolling
 interest (1,678) 
(1,096) (1,191) (1,050) (5,015)
 Depreciation and
 amortization 74,522 
74,253 74,344 74,207 297,326
 ---------------- ------ 
------ ------ ------ -------
 EBITDA 161,486 
129,226 175,249 160,293 626,254
 Business restructurings - 
6,813 6,514 2,186 15,513
 ----------------------- --- 
----- ----- ----- ------
 Adjusted EBITDA $161,486 
136,039 181,763 162,479 641,767
 --------------- -------- 
------- ------- ------- -------
 >>

 <<
 Net Debt to Adjusted
 EBITDA 
2.1
 -------------------- 
---
 >>

 <<
 (1) Unrealized foreign currency losses for certain of the Company's
 consolidated foreign subsidiaries that measure financial conditions
and
 results using the U.S. dollar rather than the local currency.
 >>

 <<
 Reconciliation of Net
 Sales to Adjusted Net
 Sales
 (Amounts in thousands)
 Three Months Ended 
Nine Months Ended
 ------------------ 
-----------------
 October 1, 
October 2, October 1, October 2,
 2011 
2010 2011 2010
 ----------- 
----------- ----------- -----------
 Net sales $1,442,512 
1,309,552 4,263,961 4,056,874
 Adjustments to net
 sales:
 Exchange rate (22,724) 
- (57,554) -
 Adjusted net sales $1,419,788 
1,309,552 4,206,407 4,056,874
 ---------------------------- ---------- 
--------- --------- ---------
 >>

 <<
 Reconciliation of Segment Net Sales to
 Adjusted Segment Net Sales
 (Amounts in thousands)
 Three Months Ended
 ------------------
 October 1, 
October 2,
 Unilin 
2011 2010
 ------ ----------- 
-----------
 Net sales $329,514 
276,594
 Adjustment to net
 sales:
 Exchange rate (21,205) 
-
 Adjusted net sales $308,309 
276,594
 ------------------ -------- 
-------
 >>

 <<
 Reconciliation of Operating Income to
 Adjusted Operating Income
 (Amounts in thousands)
 Three Months Ended
 ------------------
 October 1, 
October 2,
 2011 
2010
 ----------- 
-----------
 Operating income $91,464 
85,182
 Adjustments to operating
 income:
 Business restructurings 2,186 
3,330
 Adjusted operating income $93,650 
88,512
 ------------------------- ------- 
------
 Adjusted operating margin
 as a percent of net
 sales 6.5% 
6.8%
 >>

 <<
 Reconciliation of Segment Operating Income to Adjusted
 Segment Operating Income
 (Amounts in thousands)
 Three Months Ended
 ------------------
 October 1, 
October 2,
 Mohawk 
2011 2010
 ------ ----------- 
-----------
 Operating income $30,946 
31,127
 Adjustments to operating
 income:
 Business restructurings 2,186 
1,292
 Adjusted operating income $33,132 
32,419
 ------------------------- ------- 
------
 Adjusted operating margin
 as a percent of net
 sales 4.4% 
4.5%
 >>

 <<
 Dal-Tile
 --------
 Operating income $33,073 
33,913
 Adjustments to operating
 income:
 Business restructurings - 
1,223
 Adjusted operating income $33,073 
35,136
 ------------------------- ------- 
------
 Adjusted operating margin
 as a percent of net
 sales 8.7% 
10.2%
 >>

 <<
 Unilin
 ------
 Operating income $33,048 
24,640
 Adjustments to operating
 income:
 Business restructurings - 
815
 Adjusted operating income $33,048 
25,455
 ------------------------- ------- 
------
 Adjusted operating margin
 as a percent of net
 sales 10.0% 
9.2%
 >>

 <<
 Reconciliation of Earnings Before Income Taxes to Adjusted
 Earnings Before Income Taxes
 (Amounts in thousands)
 Three Months Ended
 ------------------
 October 1, 
October 2,
 2011 
2010
 ----------- 
-----------
 Earnings before income
 taxes $52,919 
59,777
 Unusual items:
 Unrealized foreign
 currency losses (1) 9,085 
-
 Business restructurings 2,186 
3,330
 Debt extinguishment costs 1,116 
-
 Acquisitions purchase
 accounting - 
1,713
 U.S. customs refund - 
(5,765)
 ------------------- --- 
------
 Adjusted earnings before
 income taxes $65,306 
59,055
 ------------------------ ------- 
------
 >>

 <<
 (1) Unrealized foreign currency losses for certain of the Company's
 consolidated foreign subsidiaries that measure financial conditions
and
 results using the U.S. dollar rather than the local currency.
 >>

 <<
 Reconciliation of Income Tax Expense to
 Adjusted Income Tax Expense
 (Amounts in thousands)
 Three Months Ended
 ------------------
 October 1, 
October 2,
 2011 
2010
 ----------- 
-----------
 Income tax expense $5,223 
7,513
 Unusual items:
 Income taxes 1,761 
(760)
 ------------ ----- 
----
 Adjusted income tax
 expense $6,984 
6,753
 ------------------- ------ 
-----
 >>

 <<
 Adjusted income tax
 rate 11% 
11%
 ------------------- --- 
---
 >>

 <<
 Reconciliation of Selling, General and Administrative Expenses to Adjusted
Selling,
 General and Administrative Expenses
 (Amounts in thousands)
 Three Months Ended
 ------------------
 October 1, 
October 2,
 2011 
2010
 ----------- 
-----------
 Selling, general and
 administrative expenses $266,159 
259,750
 Adjustments to selling, general and
 administrative expenses:
 Exchange rate (3,920) 
-
 ------------- ------ 
---
 Adjusted selling, general
 and administrative
 expenses $262,239 
259,750
 ------------------------- -------- 
-------
 Adjusted selling, general
 and administrative
 expenses as a percent of
 net sales 18.2% 
19.8%
 >>

 <<
 The Company believes it is useful for itself and investors
 to review, as applicable, both GAAP and the above non-
 GAAP measures in order to assess the performance of the
 Company's business for planning and forecasting in
 subsequent periods.






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For further information: Frank H. Boykin, Chief Financial Officer, +1-706-624-2695 Web Site: http://www.mohawkind.com