Mohawk Industries Inc. Earnings: Profit Rises Again, Investors Happy

Falling revenue did not prevent Mohawk Industries Inc. (NYSE:MHK) from reporting a profit boost in the second 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 Inc. Earnings Cheat Sheet

Results: Net income for Mohawk Industries Inc. rose to $73.2 million ($1.06 per share) vs. $60.9 million (88 cents per share) in the same quarter a year earlier. This marks a rise of 20.2% from the year-earlier quarter.

Revenue: Fell 0.5% to $1.47 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Mohawk Industries Inc. reported adjusted net income of $1.14 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.13 per share. It beat the average revenue estimate of $1.42 billion.

Quoting Management: Commenting on Mohawk Industries’ second quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Selling prices offsetting raw material inflation, productivity gains, product mix improvements and lower interest costs all contributed to our results. Sales increased 2% on a constant exchange rate with commercial sales continuing to outpace residential sales. We continue to control SG&A cost while increasing new product investments across all businesses. During the quarter, we generated adjusted EBITDA of $187 million, free cash flow of $96 million and paid off $336 million of senior notes. We have addressed many of today’s economic challenges by enhancing our product differentiation, reducing costs, improving efficiencies and entering new product categories and geographies.”

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 10.2%.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of 58 cents versus a mean estimate of net income of 54 cents per share.

The company has now seen net income rise in two straight quarters. In the first quarter, net income rose 72.2% from the year earlier.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for third quarter has fallen from $1.04 per share to $1.02. For the fiscal year, the average estimate has moved up from $3.48 a share to $3.65 over the last ninety days.

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

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