Mohawk posts 3Q profit after year-earlier loss

Fri Oct 30, 2009 9:12 AM EDT

CALHOUN — Floor covering maker Mohawk Industries Inc. reported a profit for its third-quarter as its efforts to cut or control costs offset a decline in revenue.

The performance was a marked reveresal from a loss in the same period a year earlier, when it absorbed a massive impairment charge.

But the company said business conditions remain weak as it moves into seasonally slower quarters. The residential market appears to have stabilized, while the commercial market will continue to be difficult next year.

Lower production rates in the fourth quarter will result in higher overhead costs. It said carpet material costs will reduce margins until it passes them through with higher prices.

Jeffery S. Lorberbaum, Mohawk's chairman and CEO, said lower raw material and freight costs, personnel reductions, cost containment measures and plant consolidations helped boost the company's gross margin in the third quarter.

The Calhoun, Ga.-based company said after the markets closed Thursday its net income rose to $34.4 million, or 50 cents per share, for the three months ended Sept. 26. In the year-earlier period, Mohawk posted a loss of $1.49 billion, or $21.70 per share.

The latest quarterly results included a restructuring charge of about $16 million, mainly related to its distribution and manufacturing infrastructure. Excluding that charge, profit would be $44 million, or 64 cents per share.

In last year's third quarter, Mohawk recorded a $1.2 billion non-cash impairment charge for goodwill and intangibles, plus a $253 million deferred tax asset impairment.

Excluding those charges, its would have earned $84 million, or $1.23 per share.

Revenue fell 22 percent to $1.38 billion from $1.76 billion. Mohawk said the deline reflected low industry sales volumes.

Average estimates by Wall Street analysts were not immediately available.

Mohawk said it expects fourth-quarter earnings of 28 cents to 38 cents per share, excluding an estimated restructuring charge of $25 million mainly for non-cash reductions of its manufacturing and distribution infrastructure.

Shares of Mohawk were down 3 percent at $44.97 in premarket trading.