Mohawk Industries Down on View

Shares drop 3% after a soft forecast.
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Mohawk Industries

(MHK) - Get Report

, a maker of commercial carpets, said its third-quarter earnings rose 10.3%, helped by higher sales and improved margins.

The Calhoun, Ga.-based company earned $127.7 million, or $1.88 a share, in the quarter, compared with $115.8 million, or $1.71 a share, a year ago. Adjusted for items, earnings were $1.82 a share. Analysts polled by Thomson First Call were expecting earnings of $1.79 a share in the most recent quarter.

Third-quarter revenue rose 19.2% to $2.02 billion. The growth in sales was helped by acquisition of

Unilin

, hard surface sales growth and prices increases.

The company forecasts its fourth-quarter earnings at $1.51 a share to $1.60 a share as against analysts' estimate of $1.74 a share. The guidance does not include the expected closing of higher cost ceramic production at an estimated cost of $6 million or the anticipated additional refunds from U.S. customs.

The company anticipates continued slow sales in the fourth quarter resulting in unabsorbed overhead costs. The company said it is reducing its manufacturing, administration, and marketing expenses.

Sales at the company's Mohawk segment fell 1.2% to $1.23 billion, as industry sales slowed substantially. Mohawk is implementing cost reduction plans to reduce manufacturing labor, SG&A and other discretionary spending. During the third quarter, the company closed a staple yarn facility incurring $500,000 of costs related to the closing.

Revenue from Dal-Tile segment rose 11.5% to $501.2 million.

Unilin segment posted revenue of $292.9 million on back of sales growth in the European laminate business and also an improvement in the laminate sales in U.S.

Shares dropped $2.45 to $75.34.

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