Rising fuel costs and more expensive raw materials were merely speed bumps in the path to success last year for Mohawk Industries.

The Calhoun-based floor-covering giant still flexed its muscle as one of the biggest in the business. And in 2005, Mohawk got even bigger.

Jessica McGowan/Special (ENLARGE)

Jeffrey Lorberbaum, CEO of Mohawk Industries: The Calhoun-based company has flexed its muscle in the floor-covering industry.

AT A GLANCE • Clickable ticker: MHK • Headquarters: Calhoun • CEO: Jeffrey S. Lorberbaum • Employees: 37,700 • Business: Designs, manufactures and markets woven and tufted broadloom carpets and rugs for residential and commercial markets under varied brands. • Online: mohawkind.com REVENUE • 2005: $6.6 billion • 2004: $5.8 billion • 2003: $4.9 billion • 2002: $4.5 billion • 2001: $3.4 billion NET INCOME • 2005: $358.2 million • 2004: $368.6 million • 2003: $310.1 million • 2002: $284.5 million • 2001: $188.6 million NET INCOME PER SHARE • 2005: $5.30 • 2004: $5.46 • 2003: $4.62 • 2002: $4.39 • 2001: $3.55 WANT REPRINTS? Our provider can reformat articles, with accompanying photos and graphics. Get more information on custom reprints — and custom plaques.

The company has branched far from its traditional manufacturing roots in recent years, thanks to a buying spree that added ceramic tile and hardwood flooring to its stable of carpets and rugs.

Last year, Mohawk's big acquisition was Unilin Holding, a Belgian maker of laminate flooring.

Unilin, with annual sales of about $1 billion, put Mohawk in the middle of one of the fastest-growing flooring segments. In the United States alone, the laminate market is expected to grow 15 percent a year, Mohawk says. Carpet and rug sales, by comparison, are growing at less than 10 percent, according to industry experts.

The Unilin acquisition was a major move in Mohawk's modern makeover as a fully rounded floor-covering company, says Frank Boykin, chief financial officer.

"The acquisition of ceramic tile maker Dal-Tile in 2002 was a first transformational step, because that took us into hard surfaces," Boykin said. "Unilin, a laminate maker, was the second step."

Analysts expect to see more product innovation related to the Unilin acquisition. For example, Unilin is known for a glueless installation system that it has licensed to other companies.

In addition to three plants in the United States, Unilin also manufactures laminate products at 13 other plants in France, Belgium and the Netherlands.

Ceramic tile adds another buffer as far as manufacturing costs go, Boykin said. "Ceramic tile is essentially made out of dirt, so you don't have the volatility of raw materials."

The move into hard surfaces, coinciding with a switch in consumer preferences, is working out well for Mohawk.

Mohawk vs. Shaw

While Mohawk continues to be the largest carpet and rug manufacturer behind Shaw Industries, the company has eclipsed its North Georgia rival in other flooring categories. Mohawk says it is the No. 1 seller in each of the following categories: ceramic tiles, laminate and stone flooring.

Analysts are particularly pleased with Mohawk's move into ceramic tile and laminates, which now represent roughly 38 percent of total revenue.

"These businesses provide faster revenue growth ... in addition to higher margin and less cyclical profit streams," analyst Keith Hughes of SunTrust Robinson Humphrey wrote in a research report.

Meanwhile, the same can't exactly be said for the carpet business.

Mohawk, which makes carpet and rugs under its own name as well as other brands such as Karastan and Aladdin, has battled two years of soaring energy and raw material costs.

The company has survived the boosts, in part, by passing along price increases to customers. That can be tricky, though, because customers eventually may switch to cheaper categories or hold off on buying altogether.

Carpet sales and margins in Mohawk's residential replacement category were soft last year and continue to be sluggish in the first part of this year, Boykin noted.

"The commercial and residential builder market performed well, though, so that contributed to overall growth last year," he said.

Boykin said the company is keeping the momentum going by rolling out a steady stream of new products in all of its flooring categories.

Recent highlights include an exclusive line of stain-resistant hardwood flooring infused with 3M's Scotchguard; carpet fiber that will be made from a corn-based derivative; and glazed porcelain tile that simulates natural slate.

"We're in a great position because we offer products in every floor-covering category," Boykin said. "Now, we'll just keep building from there."