Mohawk Industries, Inc. Q3 2009 Earnings Call Transcript

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2009-10-30 13:35:16.0

Tags: Asset, Call Transcript, Payback, Earnings, Mohawk Industries Inc., Asset Management, Operational Planning, Business Operations, Seeking Alpha

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from the line of Sam Darkatsh with Raymond James.

Sam Darkatsh -- Raymond James

Good morning, Jeff, good morning, Frank. How are you? Couple of quick questions. It looks like you are going to have about $57 million of restructuring costs this year, some of that capacity takeouts, some of that asset breakdown and it is happening throughout the course of the year. If you could give us a sense, Frank, as to what the incremental savings might look like in 2010 versus 2009 so we could get a sense of what is to come?

Frank Boykin

You know, we should see a payback on that over the course of about anywhere from a year to a year and a half payback, Sam, starting in 2010.

Sam Darkatsh -- Raymond James

But you would've already picked up some of the savings in 2009, is that correct?

Frank Boykin

Correct. It is more towards the backend, obviously, than the front end, but just answering your question in terms of payback for the next year and how to look at it.

Sam Darkatsh -- Raymond James

And would the payback be similar on the Q4 restructuring, because it seems to be more asset write-down than capacity takeout?

Frank Boykin

Yes, when we talk about payback, I am talking about earnings.

Sam Darkatsh -- Raymond James

Okay. Second question, this is to housekeeping. Can you help quantify the timing issue with some of the Unilin expenses that were pushed out? Could you help quantify that a little bit?

Frank Boykin

Let us see. Well, we have not broken it down separately, Sam. What we're trying to do when we described the third quarter and in the fourth quarter was just to go through some of the issues that impacted the third-quarter favorably and how they might impact the fourth quarter. So we are not prepared to break that out separately.

Jeff Lorberbaum

And as we go into the fourth quarter, we are expecting the yield and margins to be lower based on the impact of low volume and the price and mix changes. We have higher raw materials we are anticipating as well as energy costs as we went from the third quarter into the fourth quarter. We are expecting to spend more money in our marketing with our new product introductions as well as investments in our brands. And some of the maintenance costs, we keep trying to postpone them as long as possible, so some of the maintenance costs will be higher in the fourth quarter than they will through the rest of the year as we invest in the maintenance pieces.

 

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