Mohawk Industries Reports Q2 Results
CALHOUN, Ga., July 25, 2024 (GLOBE NEWSWIRE) --
Mohawk Industries, Inc. (NYSE: MHK) today announced second quarter
2024 net earnings of $157 million and earnings per share (“EPS”) of
$2.46; adjusted net earnings were $192 million, and adjusted EPS
was $3.00. Net sales for the second quarter of 2024 were $2.8
billion, a decrease of 5.1% as reported and 4.5% on an adjusted
basis versus the prior year. During the second quarter of 2023, the
Company reported net sales of $3.0 billion, net earnings of $101
million and EPS of $1.58; adjusted net earnings were $176 million,
and adjusted EPS was $2.76.
For the six months ended June 29, 2024, net earnings and EPS
were $262 million and $4.10, respectively; adjusted net earnings
were $310 million, and adjusted EPS was $4.85. Net sales for the
first six months of 2024 were $5.5 billion, a decrease of 4.8% as
reported and 5.0% on an adjusted basis versus the prior year. For
the six months ended July 1, 2023, net sales were $5.8 billion, net
earnings were $181 million and EPS was $2.84; adjusted net earnings
were $288 million, and adjusted EPS was $4.51.
Commenting on the Company’s second quarter results, Chairman and
CEO Jeff Lorberbaum stated, “Our performance in the quarter
reflected our focus on the controllable factors of our business,
including sales initiatives, cost containment and restructuring
actions. Our adjusted earnings per share rose as a result of
productivity initiatives and restructuring as well as lower energy
and material costs, partially offset by market pressure on pricing,
mix and foreign exchange headwinds. We generated free cash flow of
approximately $142 million during the quarter, for a total of $239
million year to date. In the quarter, we purchased approximately
755 thousand shares, or 1.2%, of our stock for approximately $90
million.
Our second quarter results exceeded our expectations despite
soft market conditions around the globe. The commercial channel
continues to outperform residential, although some softness in the
category is occurring. While the long-term demand for our products
is strong, residential purchases across our geographies remain
weak. During the quarter, the actions we have taken improved
volumes in many product categories, though the gains were offset by
consumers trading down and competitive pricing. Residential
remodeling is under the greatest pressure as consumers continue to
defer large discretionary purchases due to inflation and
uncertainty about the future. In addition, flooring remodeling is
significantly influenced by housing turnover rates, which remain
suppressed due to elevated mortgage rates, higher home prices and
the ‘locked-in effect’ on homeowners.
To reduce costs and align our business with current conditions,
we are initiating additional restructuring actions that will
generate annualized savings of $100 million, of which $20-$25
million will be recognized this year. The cash cost of these
actions is about $40 million, with a total cost of approximately
$130 million. The execution timelines will vary by project, with
some extending throughout 2025 and into 2026. Across the segments,
we will idle less productive operations, consolidate regional
warehouses and leverage technology to lower administrative costs.
We will also retire less efficient equipment and simplify our
product offering. Along with these actions, our teams are
implementing many other measures to manage the current
environment.
For the second quarter, the Global Ceramic Segment reported a
3.4% decline in net sales as reported, or a 2.9% decline on an
adjusted basis, versus the prior year. The Segment’s operating
margin was 7.4% as reported, or 8.5% on an adjusted basis, as a
result of the unfavorable impact of price and product mix and
foreign exchange headwinds, partially offset by lower input costs
and productivity gains. In addition to our restructuring
initiatives, we are implementing numerous cost reduction projects
across the Segment, including product re-engineering, process
improvements and streamlining administrative functions. To improve
our mix, we are investing in product differentiation with
leading-edge printing, polishing and rectifying technologies. On
May 10, the U.S. Department of Commerce announced the commencement
of antidumping and countervailing duty investigations of ceramic
tile imported from India. The U.S. ceramic tile trade association
believes this could lead to tariffs between 400% and 800%. Given
India’s widespread dumping, Mexico has increased import duties on
Indian tile, and our other markets are currently investigating
similar options. In the U.S., our high-end design capabilities,
domestic manufacturing and extensive distribution infrastructure
are enhancing our participation in the builder and commercial
sectors. In Europe, our unit sales exceeded last year's levels as
we leveraged our manufacturing and styling advantages to create
higher value products.
During the second quarter, our Flooring Rest of the World
Segment’s net sales decreased by 8.3% as reported, or 7.0% on an
adjusted basis, versus the prior year. The Segment’s operating
margin was 9.0% as reported, or 12.6% on an adjusted basis, as a
result of the unfavorable impact of price and product mix and more
restructuring costs, partially offset by lower input costs and
productivity gains. In Europe, market conditions remain slow with
constrained consumer discretionary spending. Declining inflation
led the European Central Bank to lower key rates on June 6, and
additional cuts may follow. In this challenging environment, we
focused on actions to drive sales, such as enhancing our product
offering, executing promotions and implementing strategic marketing
campaigns. As a result of these initiatives, our volumes in
laminate, LVT and panels improved from the prior year’s low levels.
In addition to our restructuring actions, we are launching many
projects to improve productivity, enhance yields and lower labor
costs.
In the second quarter, our Flooring North America Segment's
sales declined 4.3% versus the prior year. The Segment’s operating
margin was 8.2% as reported, or 8.6% on an adjusted basis, as a
result of lower input costs, productivity gains and less
restructuring costs, partially offset by the unfavorable impact of
price and product mix. Despite challenging market conditions,
volumes improved year over year in some products and channels,
though partially offset by price and mix dynamics. This year, we
have expanded our relationships with larger U.S. home builders,
which are increasing their share of the market. Sales of our LVT
and laminate collections were stronger in the retailer and builder
channels. Our recent laminate expansion is ramping up to satisfy
higher demand for our waterproof flooring. The commercial sector
continues to outperform residential, with hospitality, government
and education channels leading, though fewer projects are being
initiated.
We anticipate present conditions continuing in the third quarter
with elevated interest rates, inflation and weak housing sales
impacting our markets. In the current environment, we are executing
plans to optimize our revenues and costs. Our restructuring
initiatives will deliver significant savings and enhance our
performance when our markets recover. We continue to benefit from
lower energy and raw material costs, partially offset by labor and
freight inflation. In the third quarter, we anticipate pricing
pressures will continue given low industry volumes, constrained
consumer spending on larger purchases and consumers trading down.
As usual, European summer holidays will seasonally impact our sales
and performance. Given these factors, we anticipate our third
quarter adjusted EPS to be between $2.80 and $2.90, excluding any
restructuring or other one-time charges.
While we manage the short-term environment, we are preparing to
capitalize on the demand that occurs when the industry rebounds.
Residential remodeling is our industry's largest category and
should lead the recovery as interest rates decline and consumer
confidence improves. Across our regions, new home construction and
commercial projects will be initiated as the economy strengthens,
and our product investments will enhance our participation. As the
world’s largest flooring manufacturer, we have the innovative
products, capabilities and financial strength to optimize our
results as the market recovers.”
ABOUT MOHAWK INDUSTRIES
Mohawk 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, Eliane, Elizabeth,
Feltex, Godfrey Hirst, Grupo Daltile, Karastan, Marazzi, Moduleo,
Mohawk, Mohawk Group, Performance Accessories, Pergo, Quick-Step,
Unilin and Vitromex. During the past two decades, Mohawk has
transformed its business from an American carpet manufacturer into
the world’s largest flooring company with operations in Australia,
Brazil, Europe, Malaysia, Mexico, New Zealand, Russia 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 freight, raw material prices and other input costs;
inflation and deflation in consumer markets; currency fluctuations;
energy costs and supply; timing and level of capital expenditures;
timing and implementation of price increases for the Company’s
products; impairment charges; identification and consummation of
acquisitions on favorable terms, if at all; integration of
acquisitions; international operations; introduction of new
products; rationalization of operations; taxes and tax reform;
product and other claims; litigation; geopolitical conflict;
regulatory and political changes in the jurisdictions in which the
Company does business; and other risks identified in Mohawk’s SEC
reports and public announcements.
Conference call Friday, July 26, 2024, at
11:00 AM Eastern Time
To participate in the conference call via the
Internet, please visit
http://ir.mohawkind.com/events/event-details/mohawk-industries-inc-2nd-quarter-2024-earnings-call.
To participate in the conference call via telephone, register in
advance at
https://dpregister.com/sreg/10190272/fceb831600 to
receive a unique personal identification number. You can also dial
1-833-630-1962 (US/Canada) or 1-412-317-1843 (international) on the
day of the call for operator assistance. For those unable to listen
at the designated time, the call will remain available for replay
through August 23, 2024, by dialing 1-877-344-7529 (US/Canada) or
1-412-317-0088 (international) and entering Conference ID #1152692.
The call will be archived and available for replay under the
"Investor Information" tab of mohawkind.com for replay for one
year.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions, except per share data) |
|
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
2,801.3 |
|
2,950.5 |
|
5,480.7 |
|
5,756.7 |
Cost of
sales |
|
|
2,077.5 |
|
2,218.5 |
|
4,107.4 |
|
4,381.3 |
Gross profit |
|
|
723.8 |
|
732.0 |
|
1,373.3 |
|
1,375.4 |
Selling, general and
administrative expenses |
|
|
509.8 |
|
578.9 |
|
1,012.7 |
|
1,096.6 |
Operating income |
|
|
214.0 |
|
153.1 |
|
360.6 |
|
278.8 |
Interest expense |
|
|
12.6 |
|
22.9 |
|
27.5 |
|
40.0 |
Other
expense, net |
|
|
1.6 |
|
2.2 |
|
0.5 |
|
1.6 |
Earnings before income taxes |
|
|
199.8 |
|
128.0 |
|
332.6 |
|
237.2 |
Income tax expense |
|
|
42.3 |
|
26.8 |
|
70.1 |
|
55.7 |
Net earnings including noncontrolling
interests |
|
|
157.5 |
|
101.2 |
|
262.5 |
|
181.5 |
Net
earnings attributable to noncontrolling interests |
|
|
0.1 |
|
— |
|
0.1 |
|
0.1 |
Net earnings attributable to Mohawk Industries,
Inc. |
|
$ |
157.4 |
|
101.2 |
|
262.4 |
|
181.4 |
|
|
|
|
|
|
|
|
|
Basic earnings per share attributable to Mohawk Industries,
Inc. |
|
$ |
2.47 |
|
1.59 |
|
4.12 |
|
2.85 |
Weighted-average common shares outstanding -
basic |
|
|
63.6 |
|
63.7 |
|
63.7 |
|
63.6 |
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
$ |
2.46 |
|
1.58 |
|
4.10 |
|
2.84 |
Weighted-average common shares outstanding -
diluted |
|
|
63.9 |
|
63.9 |
|
64.0 |
|
63.9 |
Other Financial
Information |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions) |
|
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
Net cash provided by operating activities |
|
$ |
233.6 |
|
263.6 |
|
417.3 |
|
520.9 |
Less:
Capital expenditures |
|
|
91.4 |
|
116.7 |
|
178.2 |
|
245.2 |
Free cash flow |
|
$ |
142.2 |
|
146.9 |
|
239.1 |
|
275.7 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
171.5 |
|
156.6 |
|
325.7 |
|
326.5 |
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In
millions) |
June 29, 2024 |
|
July 1, 2023 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
497.4 |
|
570.9 |
Receivables, net |
|
2,018.5 |
|
2,087.1 |
Inventories |
|
2,579.9 |
|
2,618.7 |
Prepaid expenses and other current assets |
|
545.5 |
|
574.6 |
Total current assets |
|
5,641.3 |
|
5,851.3 |
Property, plant and equipment,
net |
|
4,759.2 |
|
4,957.2 |
Right of use operating lease
assets |
|
396.2 |
|
400.4 |
Goodwill |
|
1,136.7 |
|
2,031.0 |
Intangible assets, net |
|
841.4 |
|
888.0 |
Deferred income taxes and other non-current assets |
|
504.8 |
|
457.3 |
Total assets |
$ |
13,279.6 |
|
14,585.2 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Short-term debt and current portion of long-term debt |
$ |
718.0 |
|
1,038.0 |
Accounts payable and accrued expenses |
|
2,109.8 |
|
2,143.8 |
Current operating lease liabilities |
|
109.9 |
|
106.1 |
Total current liabilities |
|
2,937.7 |
|
3,287.9 |
Long-term debt, less current
portion |
|
1,691.5 |
|
2,013.3 |
Non-current operating lease
liabilities |
|
301.6 |
|
310.6 |
Deferred income taxes and other long-term liabilities |
|
696.3 |
|
761.4 |
Total liabilities |
|
5,627.1 |
|
6,373.2 |
Total stockholders' equity |
|
7,652.5 |
|
8,212.0 |
Total liabilities and stockholders' equity |
$ |
13,279.6 |
|
14,585.2 |
Segment
Information |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
As of or for the Six Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
July 1, 2023 |
|
|
June 29, 2024
|
|
|
July 1, 2023 |
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
Global Ceramic |
|
$ |
1,115.6 |
|
|
1,155.4 |
|
|
|
2,160.4 |
|
|
2,214.7 |
|
Flooring NA |
|
|
958.5 |
|
|
1,001.7 |
|
|
|
1,858.7 |
|
|
1,955.1 |
|
Flooring ROW |
|
|
727.2 |
|
|
793.4 |
|
|
|
1,461.6 |
|
|
1,586.9 |
|
Consolidated net sales |
|
$ |
2,801.3 |
|
|
2,950.5 |
|
|
|
5,480.7 |
|
|
5,756.7 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss): |
|
|
|
|
|
|
|
|
Global Ceramic |
|
$ |
83.1 |
|
|
84.0 |
|
|
|
131.9 |
|
|
147.3 |
|
Flooring NA |
|
|
78.3 |
|
|
37.2 |
|
|
|
123.3 |
|
|
35.2 |
|
Flooring ROW |
|
|
65.6 |
|
|
87.0 |
|
|
|
136.5 |
|
|
162.2 |
|
Corporate and intersegment eliminations |
|
|
(13.0 |
) |
|
(55.1 |
) |
|
|
(31.1 |
) |
|
(65.9 |
) |
Consolidated operating income |
|
$ |
214.0 |
|
|
153.1 |
|
|
|
360.6 |
|
|
278.8 |
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Global Ceramic |
|
|
|
|
|
$ |
4,931.5 |
|
|
5,546.2 |
|
Flooring NA |
|
|
|
|
|
|
3,940.2 |
|
|
4,210.2 |
|
Flooring ROW |
|
|
|
|
|
|
3,899.2 |
|
|
4,295.2 |
|
Corporate and intersegment eliminations |
|
|
|
|
|
|
508.7 |
|
|
533.6 |
|
Consolidated assets |
|
|
|
|
|
$ |
13,279.6 |
|
|
14,585.2 |
|
Reconciliation of Net 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. |
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions, except per share data) |
|
June 29, 2024
|
|
|
July 1, 2023 |
|
|
June 29, 2024 |
|
|
July 1, 2023 |
|
Net earnings attributable to Mohawk Industries, Inc. |
|
$ |
157.4 |
|
|
101.2 |
|
|
262.4 |
|
|
181.4 |
|
Adjusting items: |
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
41.4 |
|
|
41.7 |
|
|
49.3 |
|
|
73.7 |
|
Inventory step-up from purchase accounting |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
4.6 |
|
Legal settlements, reserves and fees |
|
|
1.3 |
|
|
48.0 |
|
|
10.1 |
|
|
49.0 |
|
Adjustments of indemnification asset |
|
|
(0.2 |
) |
|
(0.1 |
) |
|
2.2 |
|
|
(1.0 |
) |
Income taxes - adjustments of uncertain tax position |
|
|
0.2 |
|
|
0.1 |
|
|
(2.2 |
) |
|
1.0 |
|
Income tax effect of adjusting items |
|
|
(8.6 |
) |
|
(16.1 |
) |
|
(11.5 |
) |
|
(20.7 |
) |
Adjusted net earnings attributable to Mohawk Industries, Inc. |
|
$ |
191.5 |
|
|
176.1 |
|
|
310.3 |
|
|
288.0 |
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
$ |
3.00 |
|
|
2.76 |
|
|
4.85 |
|
|
4.51 |
|
Weighted-average common shares outstanding - diluted |
|
|
63.9 |
|
|
63.9 |
|
|
64.0 |
|
|
63.9 |
|
Reconciliation of
Total Debt to Net Debt |
|
(In
millions) |
June 29, 2024 |
Short-term debt and current portion of long-term debt |
$ |
718.0 |
Long-term debt, less current portion |
|
1,691.5 |
Total debt |
|
2,409.5 |
Less:
Cash and cash equivalents |
|
497.4 |
Net debt |
$ |
1,912.1 |
Reconciliation of Net Earnings (Loss) to Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve |
|
|
|
Three Months Ended |
|
Months Ended |
|
(In
millions) |
September 30,
2023 |
|
|
December 31,
2023 |
|
|
March 30,
2024 |
|
June 29,
2024 |
|
|
June 29,
2024 |
|
Net earnings (loss) including noncontrolling interests |
$ |
(760.3 |
) |
|
139.4 |
|
|
105.0 |
|
157.5 |
|
|
(358.4 |
) |
Interest expense |
|
20.1 |
|
|
17.4 |
|
|
14.9 |
|
12.6 |
|
|
65.0 |
|
Income tax expense |
|
15.0 |
|
|
14.2 |
|
|
27.8 |
|
42.3 |
|
|
99.3 |
|
Net (earnings) loss attributable to noncontrolling interests |
|
(0.2 |
) |
|
0.1 |
|
|
— |
|
(0.1 |
) |
|
(0.2 |
) |
Depreciation and amortization(1) |
|
149.6 |
|
|
154.2 |
|
|
154.2 |
|
171.5 |
|
|
629.5 |
|
EBITDA |
|
(575.8 |
) |
|
325.3 |
|
|
301.9 |
|
383.8 |
|
|
435.2 |
|
Restructuring, acquisition and integration-related and other
costs |
|
47.6 |
|
|
6.0 |
|
|
5.4 |
|
20.9 |
|
|
79.9 |
|
Inventory step-up from purchase accounting |
|
(0.1 |
) |
|
— |
|
|
— |
|
— |
|
|
(0.1 |
) |
Impairment of goodwill and indefinite-lived intangibles |
|
876.1 |
|
|
1.6 |
|
|
— |
|
— |
|
|
877.7 |
|
Legal settlements, reserves and fees |
|
43.5 |
|
|
(4.7 |
) |
|
8.8 |
|
1.3 |
|
|
48.9 |
|
Adjustments of indemnification asset |
|
(1.9 |
) |
|
(0.1 |
) |
|
2.4 |
|
(0.2 |
) |
|
0.2 |
|
Adjusted EBITDA |
$ |
389.4 |
|
|
328.1 |
|
|
318.5 |
|
405.8 |
|
|
1,441.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
debt to adjusted EBITDA |
|
|
|
|
|
|
|
|
1.3 |
|
(1)Includes accelerated depreciation of ($0.5) for Q3
2023, $2.6 for Q4 2023, $2.4 for Q1 2024 and $20.5 for Q2 2024.
Reconciliation of Net Sales to Adjusted Net
Sales |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
|
June 29, 2024 |
|
Mohawk
Consolidated |
|
|
Net sales |
|
$ |
2,801.3 |
|
|
|
5,480.7 |
|
Adjustment for constant
shipping days |
|
|
(8.7 |
) |
|
|
8.1 |
|
Adjustment for constant
exchange rates |
|
|
25.0 |
|
|
|
29.4 |
|
Adjustment for acquisition volume |
|
|
— |
|
|
|
(47.8 |
) |
Adjusted net sales |
|
$ |
2,817.6 |
|
|
|
5,470.4 |
|
|
|
Three Months Ended |
|
|
June 29, 2024
|
|
Global
Ceramic |
Net sales |
|
$ |
1,115.6 |
|
Adjustment for constant
shipping days |
|
|
(8.7 |
) |
Adjustment for constant
exchange rates |
|
|
14.6 |
|
Adjusted net sales |
|
$ |
1,121.5 |
|
|
|
|
Flooring
ROW |
|
|
Net sales |
|
$ |
727.2 |
|
Adjustment for constant
exchange rates |
|
|
10.4 |
|
Adjusted net sales |
|
$ |
737.6 |
|
Reconciliation of Gross Profit to Adjusted Gross
Profit |
|
|
Three Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
|
July 1, 2023 |
|
Gross Profit |
|
$ |
723.8 |
|
|
|
732.0 |
|
Adjustments to gross
profit: |
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
35.2 |
|
|
|
30.4 |
|
Inventory step-up from purchase accounting |
|
|
— |
|
|
|
1.3 |
|
Adjusted gross profit |
|
$ |
759.0 |
|
|
|
763.7 |
|
|
|
|
|
|
|
Adjusted gross profit as a percent of net sales |
|
27.1 |
% |
|
25.9 |
% |
Reconciliation of Selling, General and Administrative
Expenses to Adjusted Selling, General and Administrative
Expenses |
|
|
Three Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
July 1, 2023 |
|
Selling, general and administrative expenses |
|
$ |
509.8 |
|
|
578.9 |
|
Adjustments to selling,
general and administrative expenses: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
(6.2 |
) |
|
(11.3 |
) |
Legal settlements, reserves and fees |
|
|
(1.3 |
) |
|
(48.0 |
) |
Adjusted selling, general and administrative expenses |
|
$ |
502.3 |
|
|
519.6 |
|
|
|
|
|
|
Adjusted selling, general and administrative expenses as a percent
of net sales |
|
17.9 |
% |
|
17.6 |
% |
Reconciliation of Operating Income (Loss) to Adjusted
Operating Income (Loss) |
|
|
Three Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
July 1, 2023 |
|
Mohawk Consolidated |
|
|
|
|
|
Operating income |
|
$ |
214.0 |
|
|
153.1 |
|
Adjustments to operating
income: |
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
41.4 |
|
|
41.7 |
|
Inventory step-up from purchase accounting |
|
|
— |
|
|
1.3 |
|
Legal settlements, reserves and fees |
|
|
1.3 |
|
|
48.0 |
|
Adjusted operating income |
|
$ |
256.7 |
|
|
244.1 |
|
Adjusted operating income as a percent of net sales |
|
9.2 |
% |
|
8.3 |
% |
Global
Ceramic |
|
|
|
|
|
Operating income |
|
$ |
83.1 |
|
|
84.0 |
|
Adjustments to segment
operating income: |
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
11.7 |
|
|
13.8 |
|
Inventory step-up from purchase accounting |
|
|
— |
|
|
1.3 |
|
Adjusted segment operating income |
|
$ |
94.8 |
|
|
99.1 |
|
|
|
|
|
|
|
Adjusted segment operating income as a percent of net sales |
|
8.5 |
% |
|
8.6 |
% |
Flooring
NA |
|
|
|
|
|
Operating income |
|
$ |
78.3 |
|
|
37.2 |
|
Adjustments to segment
operating income: |
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
3.7 |
|
|
18.5 |
|
Legal settlements, reserves and fees |
|
|
— |
|
|
4.9 |
|
Adjusted segment operating income |
|
$ |
82.0 |
|
|
60.6 |
|
|
|
|
|
|
|
Adjusted segment operating income as a percent of net sales |
|
8.6 |
% |
|
6.0 |
% |
Flooring
ROW |
|
|
|
|
|
Operating income |
|
$ |
65.6 |
|
|
87.0 |
|
Adjustments to segment
operating income: |
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
25.8 |
|
|
9.4 |
|
Adjusted segment operating income |
|
$ |
91.4 |
|
|
96.4 |
|
|
|
|
|
|
|
Adjusted segment operating income as a percent of net sales |
|
12.6 |
% |
|
12.2 |
% |
Corporate and intersegment eliminations |
|
|
|
Operating (loss) |
$ |
(13.0 |
) |
|
(55.1 |
) |
Adjustments to segment
operating (loss): |
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
0.2 |
|
|
— |
|
Legal settlements, reserves and fees |
|
1.3 |
|
|
43.1 |
|
Adjusted segment operating (loss) |
$ |
(11.5 |
) |
|
(12.0 |
) |
Reconciliation of Earnings Before Income Taxes to Adjusted
Earnings Before Income Taxes |
|
|
Three Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
July 1, 2023 |
|
Earnings before income taxes |
|
$ |
199.8 |
|
|
128.0 |
|
Net earnings attributable to
noncontrolling interests |
|
|
(0.1 |
) |
|
— |
|
Adjustments to earnings
including noncontrolling interests before income taxes: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
41.4 |
|
|
41.7 |
|
Inventory step-up from purchase accounting |
|
|
— |
|
|
1.3 |
|
Legal settlements, reserves and fees |
|
|
1.3 |
|
|
48.0 |
|
Adjustments of indemnification asset |
|
|
(0.2 |
) |
|
(0.1 |
) |
Adjusted earnings before income taxes |
|
$ |
242.2 |
|
|
218.9 |
|
Reconciliation of Income Tax Expense to Adjusted Income Tax
Expense |
|
|
Three Months Ended |
(In
millions) |
|
June 29, 2024
|
|
|
July 1, 2023 |
|
Income tax expense |
|
$ |
42.3 |
|
|
26.8 |
|
Income taxes - adjustments of
uncertain tax position |
|
|
(0.2 |
) |
|
(0.1 |
) |
Income
tax effect of adjusting items |
|
|
8.6 |
|
|
16.1 |
|
Adjusted income tax expense |
|
$ |
50.7 |
|
|
42.8 |
|
|
|
|
|
|
Adjusted income tax rate |
|
|
20.9 |
% |
|
19.6 |
% |
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; more or fewer
shipping days in a period 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, reserves
and fees, impairment of goodwill and indefinite-lived intangibles,
acquisition purchase accounting, including inventory step-up from
purchase accounting, adjustments of indemnification asset,
adjustments of uncertain tax position and European tax
restructuring.
Contact: |
|
James Brunk, Chief Financial Officer |
|
|
(706)
624-2239 |
|
|
|
Mohawk Industries (TG:MWK)
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