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25.04.2024 22:10:07 - dpa-AFX: GNW-Adhoc: Mohawk Industries Reports Q1 Results
CALHOUN, Ga., April 25, 2024 (GLOBE NEWSWIRE) -- Mohawk Industries, Inc. (NYSE:
MHK) today announced first quarter 2024 net earnings of $105 million and
earnings per share ("EPS") of $1.64; adjusted net earnings were $119 million,
and adjusted EPS was $1.86. Net sales for the first quarter of 2024 were $2.7
billion, a decrease of 4.5% as reported and 5.5% on a legacy and constant basis
versus the prior year. During the first quarter of 2023, the Company reported
net sales of $2.8 billion, net earnings of $80 million and EPS of $1.26;
adjusted net earnings were $112 million, and adjusted EPS was $1.75.
Commenting on the Company's first quarter results, Chairman and CEO Jeff
Lorberbaum stated, "Though economic headwinds are impacting industry sales,
margins and mix, our first quarter results reflected the positive effect of
actions we are taking to enhance our performance. Our earnings per share rose
year over year as a result of restructuring, productivity initiatives and
benefits from lower cost raw materials and energy, partially offset by weaker
pricing and mix.
Across our regions, market conditions remained similar to the prior quarter,
with significant pricing and mix pressure due to industry competition for
volume. Though slowing, the commercial channel continues to outperform
residential. Residential remodeling remains soft due to low housing sales and
the impact of inflation on discretionary spending. Retailers have reported that
consumers are reluctant to initiate higher ticket projects, with flooring facing
greater pressure since most replacements can be readily deferred.
Our teams remain focused on managing through the near-term environment,
realizing sales opportunities, reducing controllable costs and completing
restructuring initiatives. We continue to manage our production levels to align
inventories with market demand. To stimulate sales, we are investing in new
product introductions with enhanced features and merchandising that conveys the
value of our collections. Given inflationary pressures in labor, benefits and
other items, we continue to take additional actions to reduce our cost structure
and improve productivity.
For the first quarter, the Global Ceramic Segment reported a 1.4% decline in net
sales as reported, or a 5.0% decline on a legacy and constant basis, versus the
prior year. The Segment's operating margin was 4.7% as reported, or 5.0% 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. Across the segment, our investments in new printing,
polishing and rectifying technologies are delivering higher value styles and
formats to improve our mix. We are introducing decorative innovations with new
glazes, three-dimensional surfaces and updated artisanal mosaics. In the U.S.,
weather caused the suspension of operations at a number of our manufacturing
facilities and service centers in January, impacting our cost and revenue. In
addition, the U.S. ceramic tile industry has filed a petition against India in
response to widespread dumping of ceramic tile in the U.S. market and expects
tariffs between 400-800% plus additional duties for subsidies. Other countries
where we operate are considering similar actions against India. In Europe, we
are seeing robust growth in porcelain panel sales after our recent capacity
expansion, and sales have also benefited from our new premium products. In
Mexico and Brazil, we are optimizing our sales and improving our operations. We
are implementing new distribution and product strategies in each country, so our
brands complement each other in the marketplace.
During the first quarter, our Flooring Rest of the World Segment's net sales
decreased by 7.4% as reported, or 5.9% on a constant basis, versus the prior
year. The Segment's operating margin was 9.7% as reported, or 10.1% on an
adjusted basis, as a result of the unfavorable impact of price and product mix,
partially offset by lower input costs, less restructuring, higher sales volume
and productivity gains. Our markets remained soft despite declining inflation.
In the quarter, our volumes increased from the prior year's low levels, which
may be an indication of improving trends in our categories. Our results were
impacted by pricing pressures as we passed through lower input costs in highly
competitive markets. We have completed the restructuring of our residential LVT
program with the savings we anticipated. The change is delivering substantial
growth in sales of our rigid LVT, which is replacing our discontinued flexible
products. In insulation, we have recently experienced material increases and are
raising our prices accordingly. In our panels business, margins have declined
from cyclically high comparisons due to the underutilization of industry
capacity, partially offset by mix improvement in our decorative collections. We
have announced selective price increases in panels to reflect rising material
costs.
In the first quarter, our Flooring North America Segment sales declined 5.6%
versus the prior year. The Segment's operating margin was 5.0% as reported, or
5.3% on an adjusted basis, as a result of lower input costs and productivity
gains, partially offset by the unfavorable impact of price and product mix.
Sales improved through the quarter, though many retailers and some of our
facilities were temporarily closed in January due to weather. Based on builder
optimism, new single-family home sales should improve through the year,
positively impacting our flooring business. Commercial sales continue to
outperform residential, led by the specified hospitality, retail and government
channels. Retailers are embracing our new residential product launches,
including PetPremier carpet and our award-winning PureTech resilient planks. We
are optimizing sales of our coordinated accessories and rubber trim business,
and we are growing our non-woven business with new customers and product
expansions. Our West Coast LVT facility is increasing production, and our
Georgia LVT restructuring initiatives are being implemented.
The flooring industry appears to be at the bottom of this cycle, and we are
managing the controllable aspects of our business to improve our results. We
continue to reduce our costs through ongoing restructuring actions and
additional productivity initiatives. We are aligning production with market
demand to control working capital, which increases our unabsorbed overhead. To
enhance sales and margins, we are upgrading our product offering with unique
features and investing in new merchandising. This year we are completing our
LVT, quartz countertop and premium laminate expansion projects to support our
products with the greatest growth potential when the market recovers. Our other
capital investments are focused on reducing cost, delivering product innovation
or maintaining the business. Due to European vacation schedules, our second
quarter sales are seasonally higher than the third quarter. Given these factors,
we anticipate our second quarter adjusted EPS to be between $2.68 and $2.78,
excluding any restructuring or other one-time charges.
Residential flooring sales should lead the recovery as consumer confidence
improves, the housing market strengthens, and postponed remodeling projects are
initiated. Existing home sales will normalize and are a meaningful catalyst for
flooring since homeowners replace it more often before listing a property or
soon after completing a purchase. Across our geographies, housing has not kept
pace with household formations, and substantial home construction will be
required for many years to satisfy those needs. Additionally, as homes age,
increased remodeling investments are required to maintain property values. As
the world's largest flooring manufacturer, we expect to significantly benefit
from our brand leadership, investments in new capabilities and recent
acquisitions as the flooring market recovers. We have the products to inspire
consumers, the infrastructure to deliver superior service and the balance sheet
strength to invest in opportunities for the business."
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, Durkan, Eliane, Elizabeth, Feltex, GH Commercial, Godfrey Hirst, Grupo
Daltile, IVC Commercial, IVC Home, Karastan, Marazzi, Mohawk, Mohawk Group,
Mohawk Home, 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, April 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-1st-quarter-
2024-earnings-call. To participate in the conference call via telephone,
register in advance at https://dpregister.com/sreg/10188065/fc2a593c61 to
receive a unique personal identification number. You can also dial
1-833-630-1962 (U.S./Canada) or 1-412-317-1843 (international) on the day of the
call for operator assistance. A replay will be available until May 24, 2024, by
dialing 1-877-344-7529 (U.S./Canada) or 1-412-317-0088 (international) and
entering access code #5217402.
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Net earnings including noncontrolling
interests 105.0 80.3
Net earnings attributable to noncontrolling
interests - 0.1
-------------------------------------------------------------------------------
Net earnings attributable to Mohawk
Industries, Inc. $ 105.0 80.2
-------------------------------------------------------------------------------
Basic earnings per share attributable to
Mohawk Industries, Inc. $ 1.65 1.26
-------------------------------------------------------------------------------
Weighted-average common shares outstanding -
basic 63.7 63.6
-------------------------------------------------------------------------------
Diluted earnings per share attributable to
Mohawk Industries, Inc. $ 1.64 1.26
-------------------------------------------------------------------------------
Weighted-average common shares outstanding -
diluted 64.0 63.8
-------------------------------------------------------------------------------
Other Financial Information
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Free cash flow $ 96.9 128.8
-------------------------------------------------------------------------------
Depreciation and amortization $ 154.2 169.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ASSETS
Current assets:
-------------------------------------------------------------------------------
Deferred income taxes and other non-current
assets 517.1 444.8
-------------------------------------------------------------------------------
Total assets $ 13,531.5 14,763.5
-------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
-------------------------------------------------------------------------------
Deferred income taxes and other long-term
liabilities 747.3 770.2
-------------------------------------------------------------------------------
Total liabilities 5,883.7 6,657.8
-------------------------------------------------------------------------------
Total stockholders' equity 7,647.8 8,105.7
-------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 13,531.5 14,763.5
-------------------------------------------------------------------------------
Segment Information
-----------------------------------------------------------------------------
Net sales:
-----------------------------------------------------------------------------
Consolidated net sales $ 2,679.4 2,806.2
-----------------------------------------------------------------------------
Operating income (loss):
-----------------------------------------------------------------------------
Consolidated operating income $ 146.6 125.7
-----------------------------------------------------------------------------
Assets:
-----------------------------------------------------------------------------
Consolidated assets $ 13,531.5 14,763.5
-----------------------------------------------------------------------------
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.
-------------------------------------------------------------------------------
Net earnings attributable to
Mohawk Industries, Inc. $ 105.0 80.2
Adjusting items:
Restructuring, acquisition
and integration-related and
other costs 7.9 32.0
Inventory step-up from
purchase accounting - 3.3
Legal settlements, reserves
and fees 8.8 1.0
Adjustments of
indemnification asset 2.4 (0.9 )
Income taxes - adjustments
of uncertain tax position (2.4 ) 0.9
Income tax effect of
adjusting items (2.9 ) (4.6 )
-------------------------------------------------------------------------------
Adjusted net earnings
attributable to Mohawk
Industries, Inc. $ 118.8 111.9
-------------------------------------------------------------------------------
Adjusted diluted earnings
per share attributable to
Mohawk Industries, Inc. $ 1.86 1.75
-------------------------------------------------------------------------------
Weighted-average common
shares outstanding - diluted 64.0 63.8
-------------------------------------------------------------------------------
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-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net debt $ 1,967.5
-----------------------------------------------------------------------------
Reconciliation of Net Earnings (Loss) to
Adjusted EBITDA
-------------------------------------------------------------------------------
Net earnings
(loss) including
noncontrolling
Net (earnings)
loss attributable
to noncontrolling
interests - (0.2 ) 0.1 - (0.1 )
Depreciation and
amortization((1)) 156.6 149.6 154.2 154.2 614.6
-------------------------------------------------------------------------------
EBITDA 307.5 (575.8 ) 325.3 301.9 358.9
Restructuring,
acquisition and
integration-
related and other
costs 33.7 47.6 6.0 5.4 92.7
Inventory step-up
from purchase
accounting 1.3 (0.1 ) - - 1.2
Impairment of
goodwill and
indefinite-lived
intangibles - 876.1 1.6 - 877.7
Legal settlements,
reserves and fees 48.0 43.5 (4.7 ) 8.8 95.6
Adjustments of
indemnification
asset (0.1 ) (1.9 ) (0.1 ) 2.4 0.3
-------------------------------------------------------------------------------
Adjusted EBITDA $ 390.4 389.4 328.1 318.5 1,426.4
-------------------------------------------------------------------------------
Net debt to
adjusted EBITDA 1.4
-------------------------------------------------------------------------------
((1))Includes accelerated depreciation of $8.0 for Q2 2023, ($0.5) for Q3 2023,
$2.6 for Q4 2023 and $2.4 for Q1 2024.
Reconciliation of Net Sales to Adjusted Net Sales
----------------------------------------------------------------------------
Mohawk Consolidated
----------------------------------------------------------------------------
Adjusted net sales $ 2,652.8 2,806.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Global Ceramic
----------------------------------------------------------------------------
Adjusted net sales $ 1,006.2 1,059.3
----------------------------------------------------------------------------
Flooring ROW
---------------------------------------------------------------
Adjusted net sales $ 746.4 793.5
---------------------------------------------------------------
Reconciliation of Gross Profit to Adjusted Gross Profit
-------------------------------------------------------------------------------
Gross Profit $ 649.5 643.4
Adjustments to gross
profit:
Restructuring,
acquisition and
integration-related and
other costs 5.5 29.1
Inventory step-up from
purchase accounting - 3.3
-------------------------------------------------------------------------------
Adjusted gross profit $ 655.0 675.8
-------------------------------------------------------------------------------
Adjusted gross profit as
a percent of net sales 24.4 % 24.1 %
-------------------------------------------------------------------------------
Reconciliation of Selling, General and Administrative Expenses to Adjusted
Selling, General and Administrative Expenses
-------------------------------------------------------------------------------
Selling, general and
administrative expenses $ 502.9 517.7
Adjustments to selling,
general and administrative
expenses:
Restructuring, acquisition
and integration-related and
other costs (2.4 ) (3.1 )
Legal settlements, reserves
and fees (8.8 ) (1.0 )
-------------------------------------------------------------------------------
Adjusted selling, general and
administrative expenses $ 491.7 513.6
-------------------------------------------------------------------------------
Adjusted selling, general and
administrative expenses as a
percent of net sales 18.4 % 18.3 %
-------------------------------------------------------------------------------
Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss)
-------------------------------------------------------------------------------
Mohawk Consolidated
Operating income $ 146.6 125.7
Adjustments to operating
income:
Restructuring,
acquisition and
integration-related and
other costs 7.9 32.2
Inventory step-up from
purchase accounting - 3.3
Legal settlements,
reserves and fees 8.8 1.0
-------------------------------------------------------------------------------
Adjusted operating
income $ 163.3 162.2
-------------------------------------------------------------------------------
Adjusted operating
income as a percent of
net sales 6.1 % 5.8 %
-------------------------------------------------------------------------------
Global Ceramic
Operating income $ 48.8 63.3
Adjustments to segment operating
income:
Restructuring, acquisition and
integration-related and other
costs 3.9 0.7
Inventory step-up from purchase
accounting $ - 2.9
-------------------------------------------------------------------------------
Adjusted segment operating income $ 52.7 66.9
-------------------------------------------------------------------------------
Adjusted segment operating income
as a percent of net sales 5.0 % 6.3 %
-------------------------------------------------------------------------------
Flooring NA
Operating income (loss) $ 45.0 (2.0 )
Adjustments to segment operating
income (loss):
Restructuring, acquisition and
integration-related and other
costs 0.9 7.0
Legal settlements, reserves and
fees 1.9 -
-------------------------------------------------------------------------------
Adjusted segment operating income $ 47.8 5.0
-------------------------------------------------------------------------------
Adjusted segment operating income
as a percent of net sales 5.3 % 0.5 %
-------------------------------------------------------------------------------
Flooring ROW
Operating income $ 70.9 75.2
Adjustments to segment operating
income:
Restructuring, acquisition and
integration-related and other
costs 3.1 24.5
Acquisitions purchase
accounting, including inventory
step-up - 0.4
-------------------------------------------------------------------------------
Adjusted segment operating
income $ 74.0 100.1
-------------------------------------------------------------------------------
Adjusted segment operating
income as a percent of net sales 10.1 % 12.6 %
-------------------------------------------------------------------------------
Corporate and intersegment
eliminations
-------------------------------------------------------------------------------
Operating (loss) $ (18.1 ) (10.8 )
Adjustments to segment operating
(loss):
Restructuring, acquisition and
integration-related and other
costs - -
Legal settlements, reserves and
fees 6.9 1.0
-------------------------------------------------------------------------------
Adjusted segment operating (loss) $ (11.2 ) (9.8 )
-------------------------------------------------------------------------------
Reconciliation of Earnings Before Income Taxes to Adjusted Earnings Before
Income Taxes
-------------------------------------------------------------------------------
Earnings before income taxes $ 132.8 109.2
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 7.9 32.0
Inventory step-up from purchase
accounting - 3.3
Legal settlements, reserves and
fees 8.8 1.0
Adjustments of indemnification
asset 2.4 (0.9 )
-------------------------------------------------------------------------------
Adjusted earnings before income
taxes $ 151.9 144.5
-------------------------------------------------------------------------------
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense
-------------------------------------------------------------------------------
Income tax expense $ 27.8 28.9
Income taxes -
adjustments of uncertain
tax position 2.4 (0.9 )
Income tax effect of
adjusting items 2.9 4.6
-------------------------------------------------------------------------------
Adjusted income tax
expense $ 33.1 32.6
-------------------------------------------------------------------------------
Adjusted income tax rate 21.8 % 22.6 %
-------------------------------------------------------------------------------
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.
Â
MHK) today announced first quarter 2024 net earnings of $105 million and
earnings per share ("EPS") of $1.64; adjusted net earnings were $119 million,
and adjusted EPS was $1.86. Net sales for the first quarter of 2024 were $2.7
billion, a decrease of 4.5% as reported and 5.5% on a legacy and constant basis
versus the prior year. During the first quarter of 2023, the Company reported
net sales of $2.8 billion, net earnings of $80 million and EPS of $1.26;
adjusted net earnings were $112 million, and adjusted EPS was $1.75.
Commenting on the Company's first quarter results, Chairman and CEO Jeff
Lorberbaum stated, "Though economic headwinds are impacting industry sales,
margins and mix, our first quarter results reflected the positive effect of
actions we are taking to enhance our performance. Our earnings per share rose
year over year as a result of restructuring, productivity initiatives and
benefits from lower cost raw materials and energy, partially offset by weaker
pricing and mix.
Across our regions, market conditions remained similar to the prior quarter,
with significant pricing and mix pressure due to industry competition for
volume. Though slowing, the commercial channel continues to outperform
residential. Residential remodeling remains soft due to low housing sales and
the impact of inflation on discretionary spending. Retailers have reported that
consumers are reluctant to initiate higher ticket projects, with flooring facing
greater pressure since most replacements can be readily deferred.
Our teams remain focused on managing through the near-term environment,
realizing sales opportunities, reducing controllable costs and completing
restructuring initiatives. We continue to manage our production levels to align
inventories with market demand. To stimulate sales, we are investing in new
product introductions with enhanced features and merchandising that conveys the
value of our collections. Given inflationary pressures in labor, benefits and
other items, we continue to take additional actions to reduce our cost structure
and improve productivity.
For the first quarter, the Global Ceramic Segment reported a 1.4% decline in net
sales as reported, or a 5.0% decline on a legacy and constant basis, versus the
prior year. The Segment's operating margin was 4.7% as reported, or 5.0% 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. Across the segment, our investments in new printing,
polishing and rectifying technologies are delivering higher value styles and
formats to improve our mix. We are introducing decorative innovations with new
glazes, three-dimensional surfaces and updated artisanal mosaics. In the U.S.,
weather caused the suspension of operations at a number of our manufacturing
facilities and service centers in January, impacting our cost and revenue. In
addition, the U.S. ceramic tile industry has filed a petition against India in
response to widespread dumping of ceramic tile in the U.S. market and expects
tariffs between 400-800% plus additional duties for subsidies. Other countries
where we operate are considering similar actions against India. In Europe, we
are seeing robust growth in porcelain panel sales after our recent capacity
expansion, and sales have also benefited from our new premium products. In
Mexico and Brazil, we are optimizing our sales and improving our operations. We
are implementing new distribution and product strategies in each country, so our
brands complement each other in the marketplace.
During the first quarter, our Flooring Rest of the World Segment's net sales
decreased by 7.4% as reported, or 5.9% on a constant basis, versus the prior
year. The Segment's operating margin was 9.7% as reported, or 10.1% on an
adjusted basis, as a result of the unfavorable impact of price and product mix,
partially offset by lower input costs, less restructuring, higher sales volume
and productivity gains. Our markets remained soft despite declining inflation.
In the quarter, our volumes increased from the prior year's low levels, which
may be an indication of improving trends in our categories. Our results were
impacted by pricing pressures as we passed through lower input costs in highly
competitive markets. We have completed the restructuring of our residential LVT
program with the savings we anticipated. The change is delivering substantial
growth in sales of our rigid LVT, which is replacing our discontinued flexible
products. In insulation, we have recently experienced material increases and are
raising our prices accordingly. In our panels business, margins have declined
from cyclically high comparisons due to the underutilization of industry
capacity, partially offset by mix improvement in our decorative collections. We
have announced selective price increases in panels to reflect rising material
costs.
In the first quarter, our Flooring North America Segment sales declined 5.6%
versus the prior year. The Segment's operating margin was 5.0% as reported, or
5.3% on an adjusted basis, as a result of lower input costs and productivity
gains, partially offset by the unfavorable impact of price and product mix.
Sales improved through the quarter, though many retailers and some of our
facilities were temporarily closed in January due to weather. Based on builder
optimism, new single-family home sales should improve through the year,
positively impacting our flooring business. Commercial sales continue to
outperform residential, led by the specified hospitality, retail and government
channels. Retailers are embracing our new residential product launches,
including PetPremier carpet and our award-winning PureTech resilient planks. We
are optimizing sales of our coordinated accessories and rubber trim business,
and we are growing our non-woven business with new customers and product
expansions. Our West Coast LVT facility is increasing production, and our
Georgia LVT restructuring initiatives are being implemented.
The flooring industry appears to be at the bottom of this cycle, and we are
managing the controllable aspects of our business to improve our results. We
continue to reduce our costs through ongoing restructuring actions and
additional productivity initiatives. We are aligning production with market
demand to control working capital, which increases our unabsorbed overhead. To
enhance sales and margins, we are upgrading our product offering with unique
features and investing in new merchandising. This year we are completing our
LVT, quartz countertop and premium laminate expansion projects to support our
products with the greatest growth potential when the market recovers. Our other
capital investments are focused on reducing cost, delivering product innovation
or maintaining the business. Due to European vacation schedules, our second
quarter sales are seasonally higher than the third quarter. Given these factors,
we anticipate our second quarter adjusted EPS to be between $2.68 and $2.78,
excluding any restructuring or other one-time charges.
Residential flooring sales should lead the recovery as consumer confidence
improves, the housing market strengthens, and postponed remodeling projects are
initiated. Existing home sales will normalize and are a meaningful catalyst for
flooring since homeowners replace it more often before listing a property or
soon after completing a purchase. Across our geographies, housing has not kept
pace with household formations, and substantial home construction will be
required for many years to satisfy those needs. Additionally, as homes age,
increased remodeling investments are required to maintain property values. As
the world's largest flooring manufacturer, we expect to significantly benefit
from our brand leadership, investments in new capabilities and recent
acquisitions as the flooring market recovers. We have the products to inspire
consumers, the infrastructure to deliver superior service and the balance sheet
strength to invest in opportunities for the business."
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, Durkan, Eliane, Elizabeth, Feltex, GH Commercial, Godfrey Hirst, Grupo
Daltile, IVC Commercial, IVC Home, Karastan, Marazzi, Mohawk, Mohawk Group,
Mohawk Home, 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, April 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-1st-quarter-
2024-earnings-call. To participate in the conference call via telephone,
register in advance at https://dpregister.com/sreg/10188065/fc2a593c61 to
receive a unique personal identification number. You can also dial
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
-------------------------------
March April
(In millions, except per share data) 30, 2024 1, 2023
-------------------------------------------------------------------------------
Net sales $ 2,679.4 2,806.2 Cost of sales 2,029.9 2,162.8
-------------------------------------------------------------------------------
Gross profit 649.5 643.4 Selling, general and administrative expenses 502.9 517.7
-------------------------------------------------------------------------------
Operating income 146.6 125.7 Interest expense 14.9 17.1 Other (income) expense, net (1.1 ) (0.6 )
-------------------------------------------------------------------------------
Earnings before income taxes 132.8 109.2 Income tax expense 27.8 28.9
-------------------------------------------------------------------------------
Net earnings including noncontrolling
interests 105.0 80.3
Net earnings attributable to noncontrolling
interests - 0.1
-------------------------------------------------------------------------------
Net earnings attributable to Mohawk
Industries, Inc. $ 105.0 80.2
-------------------------------------------------------------------------------
Basic earnings per share attributable to
Mohawk Industries, Inc. $ 1.65 1.26
-------------------------------------------------------------------------------
Weighted-average common shares outstanding -
basic 63.7 63.6
-------------------------------------------------------------------------------
Diluted earnings per share attributable to
Mohawk Industries, Inc. $ 1.64 1.26
-------------------------------------------------------------------------------
Weighted-average common shares outstanding -
diluted 64.0 63.8
-------------------------------------------------------------------------------
Other Financial Information
Three Months Ended
-----------------------------------
March
(In millions) 30, 2024 April 1, 2023
-------------------------------------------------------------------------------
Net cash provided by operating activities $ 183.7 257.3 Less: Capital expenditures 86.8 128.5
-------------------------------------------------------------------------------
Free cash flow $ 96.9 128.8
-------------------------------------------------------------------------------
Depreciation and amortization $ 154.2 169.9
-------------------------------------------------------------------------------
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March
(In millions) 30, 2024 April 1, 2023
-------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 658.5 572.9 Short-term investments - 150.0 Receivables, net 2,007.2 2,052.3 Inventories 2,527.7 2,729.9 Prepaid expenses and other current assets 528.3 556.0
-------------------------------------------------------------------------------
Total current assets 5,721.7 6,061.1 Property, plant and equipment, net 4,885.1 4,946.0 Right of use operating lease assets 413.6 396.1 Goodwill 1,140.2 2,022.5 Intangible assets, net 853.8 893.0
Deferred income taxes and other non-current
assets 517.1 444.8
-------------------------------------------------------------------------------
Total assets $ 13,531.5 14,763.5
-------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term debt $ 931.5 1,056.5 Accounts payable and accrued expenses 2,079.3 2,155.4 Current operating lease liabilities 109.3 106.5
-------------------------------------------------------------------------------
Total current liabilities 3,120.1 3,318.4 Long-term debt, less current portion 1,694.5 2,265.1 Non-current operating lease liabilities 321.8 304.1
Deferred income taxes and other long-term
liabilities 747.3 770.2
-------------------------------------------------------------------------------
Total liabilities 5,883.7 6,657.8
-------------------------------------------------------------------------------
Total stockholders' equity 7,647.8 8,105.7
-------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 13,531.5 14,763.5
-------------------------------------------------------------------------------
Segment Information
As of or for the Three Months
Ended
-----------------------------------
March
(In millions) 30, 2024 April 1, 2023
-----------------------------------------------------------------------------
Net sales:
Global Ceramic $ 1,044.8 1,059.3 Flooring NA 900.2 953.4 Flooring ROW 734.4 793.5
-----------------------------------------------------------------------------
Consolidated net sales $ 2,679.4 2,806.2
-----------------------------------------------------------------------------
Operating income (loss):
Global Ceramic $ 48.8 63.3 Flooring NA 45.0 (2.0 ) Flooring ROW 70.9 75.2 Corporate and intersegment eliminations (18.1 ) (10.8 )
-----------------------------------------------------------------------------
Consolidated operating income $ 146.6 125.7
-----------------------------------------------------------------------------
Assets:
Global Ceramic $ 4,978.1 5,499.4 Flooring NA 3,939.9 4,265.1 Flooring ROW 3,894.6 4,314.8 Corporate and intersegment eliminations 718.9 684.2
-----------------------------------------------------------------------------
Consolidated assets $ 13,531.5 14,763.5
-----------------------------------------------------------------------------
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
------------------------------------------------
(In millions, except per March
share data) 30, 2024 April 1, 2023
-------------------------------------------------------------------------------
Net earnings attributable to
Mohawk Industries, Inc. $ 105.0 80.2
Adjusting items:
Restructuring, acquisition
and integration-related and
other costs 7.9 32.0
Inventory step-up from
purchase accounting - 3.3
Legal settlements, reserves
and fees 8.8 1.0
Adjustments of
indemnification asset 2.4 (0.9 )
Income taxes - adjustments
of uncertain tax position (2.4 ) 0.9
Income tax effect of
adjusting items (2.9 ) (4.6 )
-------------------------------------------------------------------------------
Adjusted net earnings
attributable to Mohawk
Industries, Inc. $ 118.8 111.9
-------------------------------------------------------------------------------
Adjusted diluted earnings
per share attributable to
Mohawk Industries, Inc. $ 1.86 1.75
-------------------------------------------------------------------------------
Weighted-average common
shares outstanding - diluted 64.0 63.8
-------------------------------------------------------------------------------
Reconciliation of Total Debt to Net Debt (In millions) March 30, 2024
-----------------------------------------------------------------------------
Short-term debt and current portion of long-term debt $ 931.5 Long-term debt, less current portion 1,694.5
-----------------------------------------------------------------------------
Total debt 2,626.0 Less: Cash and cash equivalents 658.5
-----------------------------------------------------------------------------
Net debt $ 1,967.5
-----------------------------------------------------------------------------
Reconciliation of Net Earnings (Loss) to
Adjusted EBITDA
Trailing
Twelve
Months
Three Months Ended Ended
------------------------------------------------------------
September December March March
July 1, 30, 31, 30, 30,
(In millions) 2023 2023 2023 2024 2024
-------------------------------------------------------------------------------
Net earnings
(loss) including
noncontrolling
interests $ 101.2 (760.3 ) 139.4 105.0 (414.7 ) Interest expense 22.9 20.1 17.4 14.9 75.3 Income tax expense 26.8 15.0 14.2 27.8 83.8
Net (earnings)
loss attributable
to noncontrolling
interests - (0.2 ) 0.1 - (0.1 )
Depreciation and
amortization((1)) 156.6 149.6 154.2 154.2 614.6
-------------------------------------------------------------------------------
EBITDA 307.5 (575.8 ) 325.3 301.9 358.9
Restructuring,
acquisition and
integration-
related and other
costs 33.7 47.6 6.0 5.4 92.7
Inventory step-up
from purchase
accounting 1.3 (0.1 ) - - 1.2
Impairment of
goodwill and
indefinite-lived
intangibles - 876.1 1.6 - 877.7
Legal settlements,
reserves and fees 48.0 43.5 (4.7 ) 8.8 95.6
Adjustments of
indemnification
asset (0.1 ) (1.9 ) (0.1 ) 2.4 0.3
-------------------------------------------------------------------------------
Adjusted EBITDA $ 390.4 389.4 328.1 318.5 1,426.4
-------------------------------------------------------------------------------
Net debt to
adjusted EBITDA 1.4
-------------------------------------------------------------------------------
((1))Includes accelerated depreciation of $8.0 for Q2 2023, ($0.5) for Q3 2023,
$2.6 for Q4 2023 and $2.4 for Q1 2024.
Reconciliation of Net Sales to Adjusted Net Sales
Three Months Ended
-----------------------------------
March
(In millions) 30, 2024 April 1, 2023
----------------------------------------------------------------------------
Mohawk Consolidated
Net sales $ 2,679.4 2,806.2 Adjustment for constant shipping days 16.8 - Adjustment for constant exchange rates 4.4 - Adjustment for acquisition volume (47.8 ) -
----------------------------------------------------------------------------
Adjusted net sales $ 2,652.8 2,806.2
----------------------------------------------------------------------------
Three Months Ended
-----------------------------------
March
30, 2024 April 1, 2023
----------------------------------------------------------------------------
Global Ceramic
Net sales $ 1,044.8 1,059.3 Adjustment for constant shipping days 5.4 - Adjustment for constant exchange rates 3.8 - Adjustment for acquisition volume (47.8 ) -
----------------------------------------------------------------------------
Adjusted net sales $ 1,006.2 1,059.3
----------------------------------------------------------------------------
Flooring ROW
Net sales $ 734.4 793.5 Adjustment for constant shipping days 11.4 - Adjustment for constant exchange rates 0.6 -
---------------------------------------------------------------
Adjusted net sales $ 746.4 793.5
---------------------------------------------------------------
Reconciliation of Gross Profit to Adjusted Gross Profit
Three Months Ended
----------------------------------------------------
(In millions) March 30, 2024 April 1, 2023
-------------------------------------------------------------------------------
Gross Profit $ 649.5 643.4
Adjustments to gross
profit:
Restructuring,
acquisition and
integration-related and
other costs 5.5 29.1
Inventory step-up from
purchase accounting - 3.3
-------------------------------------------------------------------------------
Adjusted gross profit $ 655.0 675.8
-------------------------------------------------------------------------------
Adjusted gross profit as
a percent of net sales 24.4 % 24.1 %
-------------------------------------------------------------------------------
Reconciliation of Selling, General and Administrative Expenses to Adjusted
Selling, General and Administrative Expenses
Three Months Ended
-----------------------------------------------
April
(In millions) March 30, 2024 1, 2023
-------------------------------------------------------------------------------
Selling, general and
administrative expenses $ 502.9 517.7
Adjustments to selling,
general and administrative
expenses:
Restructuring, acquisition
and integration-related and
other costs (2.4 ) (3.1 )
Legal settlements, reserves
and fees (8.8 ) (1.0 )
-------------------------------------------------------------------------------
Adjusted selling, general and
administrative expenses $ 491.7 513.6
-------------------------------------------------------------------------------
Adjusted selling, general and
administrative expenses as a
percent of net sales 18.4 % 18.3 %
-------------------------------------------------------------------------------
Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss)
ThreeMonths Ended
----------------------------------------------------
(In millions) March 30, 2024 April 1, 2023
-------------------------------------------------------------------------------
Mohawk Consolidated
Operating income $ 146.6 125.7
Adjustments to operating
income:
Restructuring,
acquisition and
integration-related and
other costs 7.9 32.2
Inventory step-up from
purchase accounting - 3.3
Legal settlements,
reserves and fees 8.8 1.0
-------------------------------------------------------------------------------
Adjusted operating
income $ 163.3 162.2
-------------------------------------------------------------------------------
Adjusted operating
income as a percent of
net sales 6.1 % 5.8 %
-------------------------------------------------------------------------------
Global Ceramic
Operating income $ 48.8 63.3
Adjustments to segment operating
income:
Restructuring, acquisition and
integration-related and other
costs 3.9 0.7
Inventory step-up from purchase
accounting $ - 2.9
-------------------------------------------------------------------------------
Adjusted segment operating income $ 52.7 66.9
-------------------------------------------------------------------------------
Adjusted segment operating income
as a percent of net sales 5.0 % 6.3 %
-------------------------------------------------------------------------------
Flooring NA
Operating income (loss) $ 45.0 (2.0 )
Adjustments to segment operating
income (loss):
Restructuring, acquisition and
integration-related and other
costs 0.9 7.0
Legal settlements, reserves and
fees 1.9 -
-------------------------------------------------------------------------------
Adjusted segment operating income $ 47.8 5.0
-------------------------------------------------------------------------------
Adjusted segment operating income
as a percent of net sales 5.3 % 0.5 %
-------------------------------------------------------------------------------
Flooring ROW
Operating income $ 70.9 75.2
Adjustments to segment operating
income:
Restructuring, acquisition and
integration-related and other
costs 3.1 24.5
Acquisitions purchase
accounting, including inventory
step-up - 0.4
-------------------------------------------------------------------------------
Adjusted segment operating
income $ 74.0 100.1
-------------------------------------------------------------------------------
Adjusted segment operating
income as a percent of net sales 10.1 % 12.6 %
-------------------------------------------------------------------------------
Corporate and intersegment
eliminations
-------------------------------------------------------------------------------
Operating (loss) $ (18.1 ) (10.8 )
Adjustments to segment operating
(loss):
Restructuring, acquisition and
integration-related and other
costs - -
Legal settlements, reserves and
fees 6.9 1.0
-------------------------------------------------------------------------------
Adjusted segment operating (loss) $ (11.2 ) (9.8 )
-------------------------------------------------------------------------------
Reconciliation of Earnings Before Income Taxes to Adjusted Earnings Before
Income Taxes
Three Months Ended
--------------------------------------------
April
(In millions) March 30, 2024 1, 2023
-------------------------------------------------------------------------------
Earnings before income taxes $ 132.8 109.2
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 7.9 32.0
Inventory step-up from purchase
accounting - 3.3
Legal settlements, reserves and
fees 8.8 1.0
Adjustments of indemnification
asset 2.4 (0.9 )
-------------------------------------------------------------------------------
Adjusted earnings before income
taxes $ 151.9 144.5
-------------------------------------------------------------------------------
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense
Three Months Ended
----------------------------------------------------
(In millions) March 30, 2024 April 1, 2023
-------------------------------------------------------------------------------
Income tax expense $ 27.8 28.9
Income taxes -
adjustments of uncertain
tax position 2.4 (0.9 )
Income tax effect of
adjusting items 2.9 4.6
-------------------------------------------------------------------------------
Adjusted income tax
expense $ 33.1 32.6
-------------------------------------------------------------------------------
Adjusted income tax rate 21.8 % 22.6 %
-------------------------------------------------------------------------------
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.
James Brunk, Chief Financial Officer Contact: (706) 624-2239
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| Name | WKN | Börse | Kurs | Datum/Zeit | Diff. | Diff. % | Geld | Brief | Erster | Schluss | |
|---|---|---|---|---|---|---|---|---|---|---|---|
 |
MOHAWK INDS INC. DL-,01 | 885067 | Frankfurt | 107,000 | 03.05.24 09:06:58 | +1,000 | +0,94% | 0,000 | 0,000 | 107,000 | 107,000 |
