"The Mohawk segment sales for the quarter were off 10% from last year as the industry suffered from slow residential sales. Our comps will become easier in the third quarter because industry sales began declining in this period last year."
Commercial sales were stronger than residential as modular carpet continued to gain market share. Raw material costs increased during the quarter and we announced a carpet price increase in May of 4% to 6% which we began implementing in June. Promotions continue at a greater pace to stimulate sales and balance asset utilization in the industry.
"The Dal-Tile segment sales for the quarter were slightly below last year. We believe we are performing better than market due to the earlier investments made in sales, products and marketing. Commercial sales are offsetting some of the weakness in residential."
Selected price increases were implemented in the quarter and surcharges are being applied to cover increased transportation and energy costs. We are reducing our controllable costs but margins are lower due to infrastructure investments in distribution and sales personnel to maximize sales and unabsorbed overhead from lower production schedules.
"Our Unilin segment turned in a strong performance for the quarter with sales up 16% over last year. The European economy is strong while the U.S. residential market remains weak. The strong Euro positively impacted sales by 5% and operating income by $5 million. Our patents continue to gain strength and we entered new license agreements growing revenues."
Our Unilin segment results were the highest ever but we anticipate results in the second half to be more in line with past performance.
"Our agreement with Columbia Forest Products to acquire two solid wood plants and one engineered plant in the U.S. and one engineered plant in Malaysia is expected to close in the third quarter.The plants are currently experiencing losses, but the business is expected to be accretive after the first year."
After the acquisition, Mohawk will be the second largest producer in the pre-finished wood category, which is expected to grow between 6% to 8% over time. The transaction is subject to customary government approvals and closing conditions.
"We are focused on environmental stewardship and will be presenting our many initiatives under a program identified as Greenworks."
This program includes recycling both post consumer and industrial waste, utilizing bio-based raw materials and energy, and reducing water usage, energy consumption and emissions. Greenworks is beneficial for our customers, our communities and the environment.
"During the period, no payments were received from U.S. Customs for duty refunds. In the future, we expect additional payments though the timing and amount are not known at this point."
marketing@alchempro.com
