Mohawk Industries (NYSE:MHK) makes flooring, including tiling and rugs, for homes and businesses. The company is the second largest carpet and rug manufacturer in the US. Mohawk and Shaw Industries controlled a combined 45% of the U.S. flooring market. Since only a handful of companies manufacture flooring, but many companies distribute it, Mohawk and Shaw have high pricing power. Only 5% of Mohawk's sales are via Home Depot (HD) or Lowe's Companies (LOW). This fragmented distribution helps Mohawk control pricing. The company generated $5.3 billion in revenue but incurred a net loss of $5 million in 2009.
Petrochemicals account for between two-thirds and three-fourths of the cost of production of resin, a key input when making carpets, and so rising Oil Prices directly affect Mohawk's costs of production. The U.S. Housing Market also influences the flooring industry, but Mohawk has been partially insulated from the subprime-related housing crash since half of total flooring shipments go to replacement issues rather than new homes. Mohawk also has some immunity from the housing crash because a quarter of Mohawk's sales are to commercial real estate customers. Still, the company's sales fell by 22% in 2009 due to the weak housing market and sluggish economy.
Mohawk products include carpets, ceramic tiles, hardwood, resilient, and laminate. These products are marketed under the Mohawk brands Aladdin, Bigelow, Custom Weave, Karastan, and Mohawk Home. 85% of Mohawk's net sales were from North America, with the remaining 15% coming from international sales.
It was dark when I woke. This is a ray of susnhine.
Until I found this I thouhgt I'd have to spend the day inside.