Mohawk Industries, Inc. (NYSE: MHK) today announced a 2022 third
quarter net loss of $534 million and a diluted loss per share of
$8.40, including the impact of non-cash impairment charges of $696
million. The Company’s current market capitalization along with
challenging economic conditions and higher discount rates prompted
a review of its goodwill and intangible asset balances, which
resulted in the impairment charges. Adjusted net earnings were $212
million, and adjusted earnings per share (EPS) were $3.34,
excluding impairment and other non-recurring charges. Net sales for
the third quarter of 2022 were $2.9 billion, an increase of 3.6% as
reported and 8.3% on a constant basis. For the third quarter of
2021, net sales were $2.8 billion, net earnings were $271 million
and EPS was $3.93. Adjusted net earnings were $272 million, and
adjusted EPS was $3.95, excluding restructuring, acquisition, and
other charges.
For the nine months ended October 1, 2022, net
loss and loss per share were $8 million and $0.13, respectively,
including the impact of the non-cash impairment charges noted
above. Adjusted net earnings excluding impairment and other
non-recurring charges were $739 million and adjusted EPS was
$11.56. For the 2022 nine-month period, net sales were $9.1
billion, an increase of 7.7% versus prior year as reported or 12.1%
on a constant basis. For the nine-month period ending October 2,
2021, net sales were $8.4 billion, net earnings were $844 million
and EPS was $12.11; excluding restructuring, acquisition and other
charges, adjusted net earnings and EPS were $828 million and
$11.89, respectively.
Commenting on Mohawk Industries’ third quarter
performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated,
“Mohawk’s third quarter sales increased primarily from price
increases and strength in the commercial sector. Our sales were
weaker than we anticipated, as the retail channel softened across
all regions and product categories. The strengthening U.S. dollar
also negatively impacted our translated sales by $117 million or
4.1%. Our operating income declined as lower volume resulted in
higher unabsorbed cost and material, energy and transportation
inflation impacted our results. Our global organization responded
to the economic challenges with additional actions to optimize
cost, productivity and inventory levels.
“Our businesses in Europe have been impacted
more than others due to the unprecedented energy crisis and high
inflation that has slowed the region’s economy. Our costs have
continued to rise, and our pricing in Europe has not kept up with
the recent material and energy inflation, which has compressed our
margins. The Italian government provided energy subsidies during
the third quarter, and additional actions from both the European
Union and individual countries are being discussed. The high cost
of energy has forced European consumers to concentrate on
necessities and defer discretionary purchases. Our sales and
margins in the market will remain under pressure until the region
overcomes these challenges. These postponed purchases will increase
demand when the economy rebounds and enhance our results.
“The U.S. is being impacted by high overall
inflation and mortgage rates that have risen from below 3% to
approximately 7%. The residential market, which is the most
significant part of our business, is expected to decline further
before we see an inflection point. Remodeling has slowed, and our
product mix has been impacted as consumers trade down to options
that fit their budgets. It is estimated that the U.S. has a housing
deficit of five million units, and more than half of U.S. homes are
over 50 years old. Remodeling investments are expected to grow long
term as U.S. housing stock ages and families with low mortgage
rates choose to remain in their homes.
“While we manage through current conditions, we
are also investing in our business for the long term. We are
expanding our capacity in growing product categories, including
LVT, laminate, quartz countertops and premium ceramic and
insulation. We have recently completed a number of smaller
strategic acquisitions that will enhance our current product
offering and leverage our existing market positions. In Europe,
these include a sheet vinyl business, a mezzanine flooring company
and a wood veneer plant. In the U.S., we acquired a non-woven
flooring producer and a flooring accessories company.
“In the third quarter, our Global Ceramic
Segment’s net sales were $1.1 billion, an increase of 9.8% as
reported and 12.4% on a constant basis. The Segment’s operating
margin was negative 51.0%, including the impact of a non-cash
goodwill impairment charge and higher inflation, partially offset
by pricing and mix improvements and productivity. Excluding the
impact of the impairment and restructuring charges, the Segment’s
adjusted operating margin was 12.1%. The Segment delivered the
strongest operating performance during the quarter, even with
substantial inflation headwinds in Europe. Sales in the new home
construction channel were solid in most geographies, and the
commercial channel showed resilience with new construction and
remodeling projects continuing. In most markets, residential
remodeling has slowed due to tightening consumer discretionary
spending and higher interest rates. Sales in our U.S. ceramic
business expanded during the quarter, and we are gaining support
with our new higher-margin introductions that are an alternative to
European imports. Our countertop sales grew during the quarter, led
by our high-end quartz collections. Our European ceramic results
exceeded our expectations due to our sales and pricing actions,
positive mix and Italian energy subsidies. Sales of our premium
collections remained strong, while increased gas prices impacted
sales of our outdoor and lower-end products. In our other ceramic
markets, sales grew primarily through pricing, mix and strength in
the commercial channels. All businesses are reducing production in
the fourth quarter, which will increase our costs.
“For the quarter, our Flooring Rest of the World
segment’s net sales were $0.7 billion, a decrease of 4.8% as
reported or an increase of 9.4% on a constant basis. The Segment’s
operating margin was 6.2% as a result of higher inflation,
temporary manufacturing shutdowns and lower volumes, partially
offset by product mix improvements. The Segment’s adjusted
operating margin was 8.5%, excluding the impact of restructuring
activities and the impairment of certain intangible assets. The
Segment’s sales rose primarily from price increases and growth in
our panels, insulation and Oceania businesses. The Segment’s sales
are mostly residential and were more impacted by constrained
consumer spending. The retail sector is reducing inventories, and
consumers are trading down in all categories. Our margins were
compressed by inflation, lower sales volume and reduced production.
The weakening markets are making additional price increases more
difficult to implement. As flooring sales softened, we increased
promotional activity to encourage consumers to trade up. While our
premium laminate and LVT faced greater pressures, sales of our more
value-oriented sheet vinyl grew. We have completed the acquisition
of a small Polish sheet vinyl producer that will expand our
business in central and eastern Europe. New building projects in
western Europe are beginning to slow, and we are enhancing our
insulation distribution by expanding our customer base and exports.
Our insulation selling prices were slightly behind inflation, and
our panels results weakened as demand softened and competition
intensified. The French panels plant we acquired last year is
increasing sales, and we have improved its productivity and
operating expenses. We expanded distribution of our higher end
decorative panels and acquired a small German mezzanine flooring
company that will bolt on to our existing business. The Australian
market is improving as the country relaxes COVID restrictions and
New Zealand is more difficult with residential sales weakening.
“In the quarter, our Flooring North America
Segment’s net sales were $1.1 billion, an increase of 3.7% as
reported, and the Segment’s operating margin was 5.9% as a result
of higher inflation, lower volumes and temporary manufacturing
shutdowns, partially offset by pricing and mix improvements and
productivity. The Segment’s adjusted operating margin was 8.0%,
excluding the impact of restructuring, acquisition and
integration-related costs and the impairment of certain intangible
assets. The Segment’s sales increased primarily from pricing, with
hard surface products outperforming due to our investments in
premium laminate and LVT. The residential market softened as
inflation impacted consumer discretionary spending, and retailers
reduced their inventories. Our pricing actions offset material and
energy inflation, though lower manufacturing volumes led to
unfavorable absorption. We are implementing our restructuring plans
to lower both our fixed and variable costs by shutting higher cost
assets, reducing staffing and aligning production with demand. Our
resilient sales continued to improve, with our strongest
performance in the new home construction, multifamily and
commercial channels. Sheet vinyl sales strengthened as inflation
has increased interest in value-oriented flooring options. The
first phase of our new West Coast LVT plant is operating at planned
output levels, and additional lines will be installed throughout
next year. Demand for our premium laminate continued to grow as a
high performing, value alternative to other flooring. We have
commitments to saturate our current laminate capacity and have
initiated further expansion investments. Market conditions for
carpet softened in the third quarter more than we had anticipated,
and we reduced production, resulting in unabsorbed costs. In the
second quarter, we announced carpet price increases that were
implemented in the third quarter as inflation continued to rise.
With demand softening, we were not able to increase prices further
to recover the inflation after the announcement. We are seeing
reductions in raw material costs that should align with our current
pricing when our higher cost inventory is depleted. Our commercial
business remains good, and the Architectural Billing Index reflects
continued construction activity. Our commercial margins were strong
as pricing and mix covered our inflation in the quarter. We have
acquired a small rubber manufacturer that produces trim primarily
used in commercial flooring installations. Sales in our rug
business were lower than last year as major national retailers
continued to adjust inventories. In July, we acquired a non-woven
rug and carpet business, and the integration is delivering
synergies.
“It is challenging to predict either the
duration of the current economic conditions or their impact on our
industry. As central banks around the world continue to raise
interest rates and inflation reduces discretionary expenditures, we
expect our businesses to remain under pressure. Residential
remodeling drives a majority of our sales, and consumers are
deferring purchases and trading down. In Europe, gas and
electricity prices are reducing demand and increasing our
manufacturing and material costs. We anticipate that governments in
Europe will take actions to lower the impact on the economy,
businesses and consumers. We are focused on managing through the
current environment while investing to maximize our long-term
profitability. We anticipate demand will slow further in the fourth
quarter, and we will reduce production, resulting in greater
unabsorbed overhead. To enhance sales, we are increasing
promotional activity, introducing differentiated collections and
reacting to competitive actions. We are executing restructuring
actions, lowering administrative and manufacturing costs and
reducing investments in marketing and advertising. Material prices
spiked in the period and have begun softening in many categories.
In Europe, flooring projects are being deferred and compressing
industry volumes; at the same time, we are raising inventories of
specific products ahead of expected higher energy costs this
winter. After our second quarter U.S. pricing announcement, we
incurred peak carpet material costs that will compress our margins
until they flow through our inventory. We are postponing capital
projects that do not impact our long-term strategies, while
completing those that are critical to the near-term performance of
our business. Finally, we expect the strengthening U.S. dollar will
continue to reduce our translated results. Given these factors, we
anticipate our fourth quarter adjusted EPS to be $1.40 to $1.50,
excluding any restructuring or other one-time charges.
“During past decades, Mohawk has successfully
managed through many challenging periods and industry recessions.
The fundamentals of our business remain strong, and flooring
remains an essential component of all new construction and
remodeling. Mohawk has built leading positions in key markets
around the globe with well-known brands and an extensive product
offering. During this period, we are investing for the market
rebound that always occurs after our industry contracts. We are
expanding our higher growth categories of LVT, laminate, quartz
countertops, premium ceramic and insulation which will increase our
revenue and profitability with the next growth cycle. We have also
made strategic acquisitions that bolt on to our businesses and
create significant synergies that will enhance the combined
results. Mohawk has a strong balance sheet with low net debt
leverage of 1.2 times EBITDA and available liquidity exceeding $1.8
billion to manage through the current environment and optimize the
long-term results.”
ABOUT MOHAWK INDUSTRIESMohawk
Industries is the leading global flooring manufacturer that creates
products to enhance residential and commercial spaces around the
world. Mohawk’s vertically integrated manufacturing and
distribution processes provide competitive advantages in the
production of carpet, rugs, ceramic tile, laminate, wood, stone and
vinyl flooring. Our industry leading innovation has yielded
products and technologies that differentiate our brands in the
marketplace and satisfy all remodeling and new construction
requirements. Our brands are among the most recognized in the
industry and include American Olean, Daltile, Durkan, Eliane,
Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Mohawk
Group, Pergo, Quick-Step and Unilin. During the past decade, Mohawk
has transformed its business from an American carpet manufacturer
into the world’s largest flooring company with operations in
Australia, Brazil, Canada, Europe, Malaysia, Mexico, New Zealand
and the United States.
Certain of the statements in the immediately
preceding paragraphs, particularly anticipating future performance,
business prospects, growth and operating strategies and similar
matters and those that include the words “could,” “should,”
“believes,” “anticipates,” “expects,” and “estimates,” or similar
expressions constitute “forward-looking statements.” For those
statements, Mohawk claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. There can be no assurance that the
forward-looking statements will be accurate because they are based
on many assumptions, which involve risks and uncertainties. The
following important factors could cause future results to differ:
changes in economic or industry conditions; competition; inflation
and deflation in raw material prices and other input costs;
inflation and deflation in consumer markets; energy costs and
supply; timing and level of capital expenditures; timing and
implementation of price increases for the Company’s products;
impairment charges; integration of acquisitions; international
operations; introduction of new products; rationalization of
operations; taxes and tax reform, product and other claims;
litigation; the risks and uncertainty related to the COVID-19
pandemic; and other risks identified in Mohawk’s SEC reports and
public announcements.
Conference call Friday, October 28, 2022, at
11:00 AM Eastern TimeThe telephone number is 1-833-630-1962 for
U.S./Canada and 1-412-317-1843 for International/Local. A replay
will be available until November 25, 2022, by dialing
1-877-344-7529 for U.S./Local calls and 1-412-317-0088 for
International/Local calls and entering access code # 8886985.
Contact: James Brunk, Chief Financial
Officer (706) 624-2239
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
Condensed Consolidated Statement of Operations
Data |
Three Months Ended |
|
Nine Months Ended |
(Amounts in
thousands, except per share data) |
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
|
|
Net sales |
$ |
2,917,539 |
|
|
2,817,017 |
|
|
|
9,086,390 |
|
|
8,439,876 |
|
Cost of sales |
|
2,203,878 |
|
|
1,979,702 |
|
|
|
6,697,404 |
|
|
5,908,585 |
|
Gross profit |
|
713,661 |
|
|
837,315 |
|
|
|
2,388,986 |
|
|
2,531,291 |
|
Selling,
general and administrative expenses |
|
523,479 |
|
|
477,341 |
|
|
|
1,510,076 |
|
|
1,449,378 |
|
Impairment of goodwill and indefinite-lived intangibles |
|
695,771 |
|
|
- |
|
|
|
695,771 |
|
|
- |
|
Operating
(loss) income |
|
(505,589 |
) |
|
359,974 |
|
|
|
183,139 |
|
|
1,081,913 |
|
Interest
expense |
|
13,797 |
|
|
14,948 |
|
|
|
37,337 |
|
|
45,083 |
|
Other (income) expense, net |
|
(1,242 |
) |
|
21 |
|
|
|
(1,622 |
) |
|
(13,374 |
) |
(Loss) earnings before income taxes |
|
(518,144 |
) |
|
345,005 |
|
|
|
147,424 |
|
|
1,050,204 |
|
Income tax expense |
|
15,569 |
|
|
73,821 |
|
|
|
155,193 |
|
|
205,756 |
|
Net (loss) earnings including noncontrolling interests |
|
(533,713 |
) |
|
271,184 |
|
|
|
(7,769 |
) |
|
844,448 |
|
Net earnings attributable to noncontrolling interests |
|
256 |
|
|
206 |
|
|
|
440 |
|
|
378 |
|
Net (loss) earnings attributable to Mohawk Industries, Inc. |
$ |
(533,969 |
) |
|
270,978 |
|
|
|
(8,209 |
) |
|
844,070 |
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share attributable to Mohawk
Industries, Inc. |
|
|
|
|
|
|
|
Basic (loss) earnings per share attributable to Mohawk Industries,
Inc. |
$ |
(8.40 |
) |
|
3.95 |
|
|
|
(0.13 |
) |
|
12.16 |
|
Weighted-average common shares outstanding - basic |
|
63,534 |
|
|
68,541 |
|
|
|
63,923 |
|
|
69,389 |
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share attributable to Mohawk
Industries, Inc. |
|
|
|
|
|
|
|
Diluted (loss) earnings per share attributable to Mohawk
Industries, Inc. |
$ |
(8.40 |
) |
|
3.93 |
|
|
|
(0.13 |
) |
|
12.11 |
|
Weighted-average common shares outstanding - diluted |
|
63,534 |
|
|
68,864 |
|
|
|
63,923 |
|
|
69,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Information |
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
224,774 |
|
|
498,739 |
|
|
|
427,435 |
|
|
1,096,735 |
|
Less:
Capital expenditures |
|
150,043 |
|
|
147,740 |
|
|
|
430,084 |
|
|
375,179 |
|
Free cash flow |
$ |
74,731 |
|
|
350,999 |
|
|
|
(2,649 |
) |
|
721,556 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
$ |
153,466 |
|
|
148,618 |
|
|
|
436,449 |
|
|
448,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheet Data |
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
ASSETS |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
$ |
326,971 |
|
|
1,128,027 |
|
Short-term investments |
|
|
|
|
|
110,000 |
|
|
- |
|
Receivables, net |
|
|
|
|
|
2,003,261 |
|
|
1,880,476 |
|
Inventories |
|
|
|
|
|
2,900,116 |
|
|
2,215,630 |
|
Prepaid expenses and other current assets |
|
|
|
|
|
513,981 |
|
|
421,944 |
|
Total current assets |
|
|
|
|
|
5,854,329 |
|
|
5,646,077 |
|
Property,
plant and equipment, net |
|
|
|
|
|
4,524,536 |
|
|
4,442,339 |
|
Right of use
operating lease assets |
|
|
|
|
|
400,412 |
|
|
385,606 |
|
Goodwill |
|
|
|
|
|
1,827,968 |
|
|
2,612,201 |
|
Intangible
assets, net |
|
|
|
|
|
823,100 |
|
|
911,271 |
|
Deferred income taxes and other non-current assets |
|
|
|
|
|
370,689 |
|
|
452,806 |
|
Total assets |
|
|
|
|
$ |
13,801,034 |
|
|
14,450,300 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Short-term debt and current portion of long-term debt |
|
|
|
|
$ |
1,542,139 |
|
|
588,669 |
|
Accounts payable and accrued expenses |
|
|
|
|
|
2,256,097 |
|
|
2,209,942 |
|
Current operating lease liabilities |
|
|
|
|
|
106,511 |
|
|
103,132 |
|
Total current liabilities |
|
|
|
|
|
3,904,747 |
|
|
2,901,743 |
|
Long-term
debt, less current portion |
|
|
|
|
|
1,019,984 |
|
|
1,710,207 |
|
Non-current
operating lease liabilities |
|
|
|
|
|
306,617 |
|
|
292,806 |
|
Deferred income taxes and other long-term liabilities |
|
|
|
|
|
744,629 |
|
|
793,095 |
|
Total liabilities |
|
|
|
|
|
5,975,977 |
|
|
5,697,851 |
|
Total stockholders' equity |
|
|
|
|
|
7,825,057 |
|
|
8,752,449 |
|
Total liabilities and stockholders' equity |
|
|
|
|
$ |
13,801,034 |
|
|
14,450,300 |
|
|
|
|
|
|
|
|
|
Segment Information |
Three Months Ended |
|
As of or for the Nine Months Ended |
(Amounts in
thousands) |
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
|
|
Net
sales: |
|
|
|
|
|
|
|
Global Ceramic |
$ |
1,096,656 |
|
|
998,444 |
|
|
|
3,319,982 |
|
|
2,967,818 |
|
Flooring NA |
|
1,089,634 |
|
|
1,050,453 |
|
|
|
3,261,082 |
|
|
3,100,892 |
|
Flooring ROW |
|
731,249 |
|
|
768,120 |
|
|
|
2,505,326 |
|
|
2,371,166 |
|
Consolidated net sales |
$ |
2,917,539 |
|
|
2,817,017 |
|
|
|
9,086,390 |
|
|
8,439,876 |
|
|
|
|
|
|
|
|
|
Operating
(loss) income: |
|
|
|
|
|
|
|
Global Ceramic |
$ |
(559,706 |
) |
|
118,896 |
|
|
|
(305,099 |
) |
|
343,135 |
|
Flooring NA |
|
64,672 |
|
|
118,625 |
|
|
|
260,026 |
|
|
315,866 |
|
Flooring ROW |
|
45,508 |
|
|
133,595 |
|
|
|
304,265 |
|
|
456,787 |
|
Corporate and intersegment eliminations |
|
(56,063 |
) |
|
(11,142 |
) |
|
|
(76,053 |
) |
|
(33,875 |
) |
Consolidated operating (loss) income |
$ |
(505,589 |
) |
|
359,974 |
|
|
|
183,139 |
|
|
1,081,913 |
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
Global Ceramic |
|
|
|
|
$ |
4,866,822 |
|
|
5,174,981 |
|
Flooring NA |
|
|
|
|
|
4,490,502 |
|
|
3,960,037 |
|
Flooring ROW |
|
|
|
|
|
4,036,675 |
|
|
4,276,310 |
|
Corporate and intersegment eliminations |
|
|
|
|
|
407,035 |
|
|
1,038,972 |
|
Consolidated assets |
|
|
|
|
$ |
13,801,034 |
|
|
14,450,300 |
|
Reconciliation
of Net (Loss) Earnings Attributable to Mohawk Industries, Inc. to
Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and
Adjusted Diluted Earnings Per Share Attributable to Mohawk
Industries, Inc. |
(Amounts in thousands,
except per share data) |
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
|
|
Net (loss) earnings attributable to Mohawk Industries, Inc. |
|
$ |
(533,969 |
) |
|
270,978 |
|
|
(8,209 |
) |
|
844,070 |
|
|
|
Adjusting
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
34,460 |
|
|
1,044 |
|
|
38,118 |
|
|
18,560 |
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
1,401 |
|
|
226 |
|
|
1,544 |
|
|
682 |
|
|
|
Impairment of goodwill and indefinite-lived intangibles |
|
|
695,771 |
|
|
- |
|
|
695,771 |
|
|
- |
|
|
|
Resolution of foreign non-income tax contingencies |
|
|
- |
|
|
- |
|
|
- |
|
|
(6,211 |
) |
|
|
Income tax effect on resolution of foreign non-income tax
contingencies |
|
|
- |
|
|
- |
|
|
- |
|
|
2,302 |
|
|
|
One-time tax planning election |
|
|
|
- |
|
|
- |
|
|
- |
|
|
(26,731 |
) |
|
|
Legal settlements and reserves |
|
|
|
45,000 |
|
|
- |
|
|
45,000 |
|
|
- |
|
|
|
Release of indemnification asset |
|
|
|
- |
|
|
- |
|
|
7,324 |
|
|
- |
|
|
|
Income taxes - reversal of uncertain tax position |
|
|
- |
|
|
- |
|
|
(7,324 |
) |
|
- |
|
|
|
Income taxes - impairment of goodwill and indefinite-lived
intangibles |
|
|
(10,168 |
) |
|
- |
|
|
(10,168 |
) |
|
- |
|
|
|
Income taxes |
|
|
|
|
(20,487 |
) |
|
(203 |
) |
|
(23,291 |
) |
|
(4,317 |
) |
|
|
Adjusted net earnings attributable to Mohawk Industries, Inc. |
|
$ |
212,008 |
|
|
272,045 |
|
|
738,765 |
|
|
828,355 |
|
|
|
Adjusted diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
$ |
3.34 |
|
|
3.95 |
|
|
11.56 |
|
|
11.89 |
|
|
|
Weighted-average common shares outstanding - diluted |
|
|
63,534 |
|
|
68,864 |
|
|
63,923 |
|
|
69,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Total Debt to Net Debt Less Short-Term Investments |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2022 |
|
|
|
|
|
|
|
|
Short-term debt and current portion of long-term debt |
|
$ |
1,542,139 |
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
|
|
1,019,984 |
|
|
|
|
|
|
|
|
|
Total
debt |
|
|
|
|
2,562,123 |
|
|
|
|
|
|
|
|
|
Less: Cash and cash equivalents |
|
|
|
326,971 |
|
|
|
|
|
|
|
|
|
Net debt |
|
|
|
|
2,235,152 |
|
|
|
|
|
|
|
|
|
Less: Short-term investments |
|
|
|
110,000 |
|
|
|
|
|
|
|
|
|
Net debt less short-term investments |
|
|
$ |
2,125,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Operating Income (Loss) to Adjusted EBITDA |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve |
|
|
|
|
Three Months Ended |
|
Months Ended |
|
|
|
|
December 31,2021 |
|
April 2,2022 |
|
July 2,2022 |
|
October 1, 2022 |
|
October 1, 2022 |
Operating income (loss) |
|
|
|
$ |
253,098 |
|
|
320,801 |
|
|
367,927 |
|
|
(505,589 |
) |
|
436,237 |
|
Other income (expense) |
|
|
|
|
(1,140 |
) |
|
(2,438 |
) |
|
2,818 |
|
|
1,242 |
|
|
482 |
|
Net income attributable to noncontrolling interests |
|
|
(11 |
) |
|
(105 |
) |
|
(79 |
) |
|
(256 |
) |
|
(451 |
) |
Depreciation and amortization(1) |
|
|
|
143,411 |
|
|
141,415 |
|
|
141,569 |
|
|
153,466 |
|
|
579,861 |
|
EBITDA |
|
|
|
|
395,358 |
|
|
459,673 |
|
|
512,235 |
|
|
(351,137 |
) |
|
1,016,129 |
|
Restructuring, acquisition and integration-related and other
costs |
|
|
4,641 |
|
|
1,857 |
|
|
1,801 |
|
|
21,375 |
|
|
29,674 |
|
Acquisitions purchase accounting, including inventory step-up |
|
|
1,067 |
|
|
- |
|
|
143 |
|
|
1,401 |
|
|
2,611 |
|
Impairment of goodwill and indefinite-lived intangibles |
|
|
- |
|
|
- |
|
|
- |
|
|
695,771 |
|
|
695,771 |
|
Legal settlements and reserves |
|
|
|
- |
|
|
- |
|
|
- |
|
|
45,000 |
|
|
45,000 |
|
Release of indemnification asset |
|
|
|
- |
|
|
7,324 |
|
|
- |
|
|
- |
|
|
7,324 |
|
Adjusted EBITDA |
|
|
|
$ |
401,066 |
|
|
468,854 |
|
|
514,179 |
|
|
412,410 |
|
|
1,796,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt less short-term investments to adjusted EBITDA |
|
|
|
|
|
|
|
|
|
1.2 |
|
(1) Includes accelerated depreciation of $13,085 for Q3 2022. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Sales to Net Sales on a Constant Exchange Rate and on
Constant Shipping Days |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
|
|
Net sales |
|
|
|
$ |
2,917,539 |
|
|
2,817,017 |
|
|
9,086,390 |
|
|
8,439,876 |
|
|
|
Adjustment to net sales on constant shipping days |
|
|
17,504 |
|
|
- |
|
|
49,315 |
|
|
- |
|
|
|
Adjustment to net sales on a constant exchange rate |
|
|
116,782 |
|
|
- |
|
|
327,350 |
|
|
- |
|
|
|
Net sales on a constant exchange rate and constant shipping
days |
|
$ |
3,051,825 |
|
|
2,817,017 |
|
|
9,463,055 |
|
|
8,439,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Net Sales to Segment Net Sales on a Constant Exchange
Rate and on Constant Shipping Days |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Global Ceramic |
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Net sales |
|
|
|
$ |
1,096,656 |
|
|
998,444 |
|
|
|
|
|
|
|
Adjustment to segment net sales on constant shipping days |
|
|
4,542 |
|
|
- |
|
|
|
|
|
|
|
Adjustment to segment net sales on a constant exchange rate |
|
|
20,774 |
|
|
- |
|
|
|
|
|
|
|
Segment net sales on a constant exchange rate and constant shipping
days |
|
$ |
1,121,972 |
|
|
998,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Net Sales to Adjusted Segment Net Sales |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring NA |
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Net sales |
|
|
|
$ |
1,089,634 |
|
|
1,050,453 |
|
|
|
|
|
|
|
Rug
adjustment |
|
|
|
|
40,000 |
|
|
- |
|
|
|
|
|
|
|
Adjusted segment net sales |
|
$ |
1,129,634 |
|
|
1,050,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Net Sales to Segment Net Sales on a Constant Exchange
Rate and on Constant Shipping Days |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring ROW |
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Net sales |
|
|
|
$ |
731,249 |
|
|
768,120 |
|
|
|
|
|
|
|
Adjustment to segment net sales on constant shipping days |
|
|
12,962 |
|
|
- |
|
|
|
|
|
|
|
Adjustment to segment net sales on a constant exchange rate |
|
|
96,008 |
|
|
- |
|
|
|
|
|
|
|
Segment net sales on a constant exchange rate and constant shipping
days |
|
$ |
840,219 |
|
|
768,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Gross Profit to Adjusted Gross Profit |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Gross
Profit |
|
|
|
$ |
713,661 |
|
|
837,315 |
|
|
|
|
|
|
|
Adjustments
to gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
30,422 |
|
|
552 |
|
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
1,401 |
|
|
226 |
|
|
|
|
|
|
|
Adjusted gross profit |
|
|
|
$ |
745,484 |
|
|
838,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Selling, General and Administrative Expenses to Adjusted
Selling, General and Administrative Expenses |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Selling, general and administrative expenses |
|
$ |
523,479 |
|
|
477,341 |
|
|
|
|
|
|
|
Adjustments to selling, general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
(4,117 |
) |
|
(521 |
) |
|
|
|
|
|
|
Legal settlements and reserves |
|
|
|
(45,000 |
) |
|
- |
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses |
|
$ |
474,362 |
|
|
476,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Operating (Loss) Income to Adjusted Operating
Income |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Operating
(loss) income |
|
|
|
$ |
(505,589 |
) |
|
359,974 |
|
|
|
|
|
|
|
Adjustments to operating (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
34,539 |
|
|
1,073 |
|
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
1,401 |
|
|
226 |
|
|
|
|
|
|
|
Impairment of goodwill and indefinite-lived intangibles |
|
|
695,771 |
|
|
- |
|
|
|
|
|
|
|
Legal settlements and reserves |
|
|
|
45,000 |
|
|
- |
|
|
|
|
|
|
|
Adjusted operating income |
|
|
$ |
271,122 |
|
|
361,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Operating (Loss) Income to Adjusted Segment Operating
Income |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Global Ceramic |
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Operating
(loss) income |
|
|
|
$ |
(559,706 |
) |
|
118,896 |
|
|
|
|
|
|
|
Adjustments to segment operating (loss) income: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
3,366 |
|
|
212 |
|
|
|
|
|
|
|
Impairment of goodwill |
|
|
|
|
688,514 |
|
|
- |
|
|
|
|
|
|
|
Adjusted segment operating income |
|
|
$ |
132,174 |
|
|
119,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Operating Income to Adjusted Segment Operating
Income |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring NA |
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Operating
income |
|
|
|
$ |
64,672 |
|
|
118,625 |
|
|
|
|
|
|
|
Adjustments to segment operating income: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
20,223 |
|
|
1,396 |
|
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
1,401 |
|
|
- |
|
|
|
|
|
|
|
Impairment of indefinite-lived intangibles |
|
|
1,407 |
|
|
- |
|
|
|
|
|
|
|
Adjusted segment operating income |
|
|
$ |
87,703 |
|
|
120,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Operating Income to Adjusted Segment Operating
Income |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring ROW |
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Operating
income |
|
|
|
$ |
45,508 |
|
|
133,595 |
|
|
|
|
|
|
|
Adjustments to segment operating income: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
10,950 |
|
|
(454 |
) |
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
- |
|
|
226 |
|
|
|
|
|
|
|
Impairment of indefinite-lived intangibles |
|
|
5,850 |
|
|
- |
|
|
|
|
|
|
|
Adjusted segment operating income |
|
|
$ |
62,308 |
|
|
133,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Operating (Loss) to Adjusted Segment Operating
(Loss) |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Corporate and intersegment eliminations |
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Operating
(loss) |
|
|
|
$ |
(56,063 |
) |
|
(11,142 |
) |
|
|
|
|
|
|
Adjustments to segment operating (loss): |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
- |
|
|
(82 |
) |
|
|
|
|
|
|
Legal settlements and reserves |
|
|
|
45,000 |
|
|
- |
|
|
|
|
|
|
|
Adjusted segment operating (loss) |
|
|
$ |
(11,063 |
) |
|
(11,224 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of (Loss) Earnings Including Noncontrolling Interests Before Income
Taxes to Adjusted Earnings Including Noncontrolling Interests
Before Income Taxes |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
(Loss) earnings before income taxes |
|
|
$ |
(518,144 |
) |
|
345,005 |
|
|
|
|
|
|
|
Net earnings attributable to noncontrolling interests |
|
|
(256 |
) |
|
(206 |
) |
|
|
|
|
|
|
Adjustments to (loss) earnings including noncontrolling interests
before income taxes: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
34,460 |
|
|
1,044 |
|
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
1,401 |
|
|
226 |
|
|
|
|
|
|
|
Impairment of goodwill and indefinite-lived intangibles |
|
|
695,771 |
|
|
- |
|
|
|
|
|
|
|
Legal settlements and reserves |
|
|
|
45,000 |
|
|
- |
|
|
|
|
|
|
|
Adjusted earnings including noncontrolling interests before income
taxes |
|
$ |
258,232 |
|
|
346,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Income Tax Expense to Adjusted Income Tax Expense |
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
October 1, 2022 |
|
October 2, 2021 |
|
|
|
|
|
|
Income tax
expense |
|
|
|
$ |
15,569 |
|
|
73,821 |
|
|
|
|
|
|
|
Income tax effect on impairment of goodwill and indefinite-lived
intangibles |
|
|
10,168 |
|
|
- |
|
|
|
|
|
|
|
Income tax effect of adjusting items |
|
|
|
20,487 |
|
|
203 |
|
|
|
|
|
|
|
Adjusted income tax expense |
|
|
$ |
46,224 |
|
|
74,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax rate |
|
|
|
17.9 |
% |
|
21.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
supplements its condensed consolidated financial statements, which
are prepared and presented in accordance with US GAAP, with certain
non-GAAP financial measures. As required by the Securities and
Exchange Commission rules, the tables above present a
reconciliation of the Company's non-GAAP financial measures to the
most directly comparable US GAAP measure. Each of the non-GAAP
measures set forth above should be considered in addition to the
comparable US GAAP measure, and may not be comparable to similarly
titled measures reported by other companies. The Company believes
these non-GAAP measures, when reconciled to the corresponding US
GAAP measure, help its investors as follows: Non-GAAP revenue
measures that assist in identifying growth trends and in
comparisons of revenue with prior and future periods and non-GAAP
profitability measures that assist in understanding the long-term
profitability trends of the Company's business and in comparisons
of its profits with prior and future periods. |
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
excludes certain items from its non-GAAP revenue measures because
these items can vary dramatically between periods and can obscure
underlying business trends. Items excluded from the Company's
non-GAAP revenue measures include: foreign currency transactions
and translation and the impact of acquisitions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
excludes certain items from its non-GAAP profitability measures
because these items may not be indicative of, or are unrelated to,
the Company's core operating performance. Items excluded from the
Company's non-GAAP profitability measures include: restructuring,
acquisition and integration-related and other costs, legal
settlements and reserves, impairment of goodwill and
indefinite-lived intangibles, acquisition purchase accounting,
including inventory step-up, release of indemnification assets and
the reversal of uncertain tax positions. |
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