CALHOUN, Ga. — Mohawk Inds. reported profit of $205 million, up 31.9% over the year-ago period, and diluted earnings per share of $2.87 for the third quarter ended Sept. 26.
Net sales for the third quarter of 2020 were $2.6 billion, an increase of 2% as reported and on a constant currency basis. For the third quarter of 2019, net sales were $2.5 billion, net earnings were $156 million and EPS was $2.15.
“Our results in the period significantly exceeded our expectations, with sales recovering and operating income substantially increasing above last year’s levels,” said Jeffrey S. Lorberbaum, chairman and CEO. “All of our businesses and geographies were stronger due to higher demand and customers increasing inventory in our distribution channels.”
He noted that during the period, Mohawk’s inventory declined by about $80 million, and the company’s increase in manufacturing in the period was limited by challenges with hiring, training and capacity.
“To cover higher operating, material and logistics costs, we have announced selective price increases in some markets and product categories,” Lorberbaum said. “We have made significant progress on our previously announced restructuring actions and are in line with our planned schedule and savings estimates. In response to higher demand levels, we have postponed some restructuring projects while we assess future conditions.”
Also, the board of directors recently approved a plan to repurchase $500 million of company stock.
“We enter the fourth quarter with improved sales and margin trends and have a solid order backlog across the enterprise,” noted Lorberbaum. He noted that if the current economic trends continue, Mohawk anticipates fourth quarter EPS to be $2.75 to $2.87, with a non-recurring tax rate of approximately 5% for the period.
Mohawk also referenced an ongoing legal issue. As it had previously disclosed, Mohawk received subpoenas from the U.S. Department of Justice and the Securities and Exchange Commission relating to allegations in a class action suit against Mohawk.
The company said its Audit Committee completed a thorough internal investigation into these allegations of wrong doing and concluded that the allegations are without merit. Mohawk is cooperating fully with the ongoing governmental investigations and will continue to vigorously defend against the lawsuit.