CALHOUN, Ga., Feb. 7, 2019 /CNW/ -- Mohawk Industries,
Inc. (NYSE: MHK) today announced 2018 fourth quarter net earnings
of $229 million and diluted earnings
per share (EPS) of $3.05. Adjusted
net earnings were $188 million and
EPS was $2.53, excluding
restructuring, acquisition and other charges, a 26% decrease from
last year. Net sales for the fourth quarter of 2018 were
$2.45 billion, up 3% in the
quarter and 5% on a constant currency basis. For the fourth quarter
of 2017, net sales were $2.37 billion, net earnings were
$240 million and EPS was $3.21; adjusted net earnings were $256 million, and EPS was $3.42, excluding restructuring, acquisition and
other charges.
For the twelve months ending December 31,
2018, net earnings and EPS were $862
million and $11.47,
respectively. Net earnings excluding restructuring, acquisition and
other charges were $922 million and
adjusted EPS was $12.33, a 9%
decrease from the 2017 twelve-month period adjusted EPS. For the
2018 twelve-month period, net sales were $10.0 billion, an increase of 5% versus prior
year as reported or 4% on a constant currency basis. For the
twelve-month period ending December 31,
2017, net sales were $9.5
billion, net earnings were $972
million and EPS was $12.98;
excluding restructuring, acquisition and other charges, net
earnings and EPS were $1.0 billion
and $13.61.
Commenting on Mohawk Industries' fourth quarter performance,
Jeffrey S. Lorberbaum, Chairman and
CEO, stated, "The period was affected by significant inflation,
slowing markets and LVT impacting sales of other products. Even as
we executed price increases in many products, our businesses
experienced greater pressures on pricing and mix. In the quarter,
inflation continued to be a headwind across most of our categories,
as higher cost materials flowed through our results. During the
period, we decreased our manufacturing production to adapt to
market demand. Our start-up costs for the quarter were higher than
we projected, with LVT production improving slower than
anticipated. Our new countertop and sheet vinyl plants initiated
manufacturing, along with our Polish ceramic tile
expansion.
"After five consecutive years of record earnings, 2018 proved
more difficult than we anticipated with inflation increasing
dramatically, luxury vinyl tile impacting other U.S. flooring
products and most of our markets slowing. In this environment, we
selectively invested approximately $1.5
billion to enhance our long-term performance, primarily in
new product categories and geographies with green field projects
and acquisitions, cost saving initiatives and buying back shares.
We are managing through current conditions while enhancing the
longer-term value of our business. To accomplish this, in 2018, we
acquired leading flooring companies in Australia, New
Zealand and Brazil and in
Europe acquired two flooring
distributors and a specialized mezzanine company. We entered the
European porcelain slabs and carpet tile markets, expanded our
higher end ceramic in Eastern
Europe and initiated sheet vinyl production in Russia and quartz countertop manufacturing in
the U.S. Much of the benefit from these capital investments will be
realized in 2020 and beyond as we achieve higher volume, mix and
productivity. In the period, we purchased approximately
$274 million of Mohawk stock,
reducing our share count by 2.3 million or the equivalent of 3% of
outstanding shares.
"For the quarter, our Global Ceramic Segment sales increased
4.5% as reported and 7% on a constant currency basis. The
segment's operating margin was approximately 9% as reported or 10%
excluding other charges, declining year over year due to inflation,
price and mix pressures and lower production partially offset by
increasing productivity. In North
America, our ceramic business increased sequentially but
remained challenged due to import pressures and transportation
expenses. To improve our margins, we have increased prices on our
products to recover inflation and higher freight costs. Our new
quartz countertop plant is manufacturing basic products as we ramp
up production and optimize our processes and formulations. Across
North America, we are taking many
actions to lower our costs, including consolidating regional
service centers and reducing headcount.
"In Mexico, our new production lines in Salamanca are operating well, and we are
focused on improving our mix and margins. We have announced price
increases in Mexico to cover
inflation and shipping costs. In November, we finalized the
purchase of Eliane in Brazil.
Eliane is an industry leader, with the best brand and a premium
position in one of the world's largest ceramic markets. We have
ordered the first phase of new equipment to enhance Eliane's
operations and margins following the strategy we used to
dramatically improve Marazzi's profitability. In Europe, conditions softened as we went through
the period, with the Italian economy deteriorating the most due to
the political uncertainty. Given these conditions, we experienced
greater pressure on margins as competition increased. We reduced
production rates in the fourth quarter and are continuing to do so
in the first period. With the expansion of our European ceramic
footprint, we are increasing the specialization of our plants in
Italy, Spain, Poland
and Bulgaria to improve our
competitive advantages. In Russia, our sales and profitability
increased substantially, although the weaker ruble significantly
reduced our translated results. To enable us to grow in
Russia, we have installed two new
production lines in 2018, and we will commence production of
premium sanitary ware in 2019.
"During the quarter, our Flooring North America Segment's sales
decreased 3%. The segment's operating margin was 8% as reported and
9% on an adjusted basis, impacted by inflation, lower than expected
volume, productivity and higher start-up costs. In November, we
announced Paul de Cock's appointment
as President of the Flooring North America Segment to enhance our
results. He has changed the management structure to
improve our marketing, operations and innovation of each
flooring product. Our sales slowed as we went through the period
due to softer home sales and inventory reductions by customers
in some channels. During the period, we initiated further price
increases to recover higher material and freight costs. Carpet
was impacted by hard surface alternatives and the high cost of
materials. In our premium SmartStrand collections, we introduced
our new ColorMax technology and expanded our patented Air.O unified
soft flooring offering. We have reinvigorated the premium laminate
category through the new investments we made to produce visuals
that exceed real wood with previously unachievable durability and
water resistance. LVT sales grew substantially during the period as
we implemented our sourcing and manufacturing strategy. We are
offering a premium Pergo LVT collection which, before
introduction, has greater consumer brand recognition than any
other LVT product in the market. Although we anticipated even
more improvement, the output of our new LVT production
has increased about 20% over the prior period. Long term, we
are confident that our investment in this technology will provide
us with competitive advantages when it is operating at expected
levels.
"For the quarter, our Flooring Rest of the World Segment's sales
increased 12% as reported and 16% on a constant currency basis. The
segment's operating margin was 12% as reported and 13% on an
adjusted basis, due to volume growth and productivity
offset by the impact of price and mix, start-up costs and
FX. As we progressed through the period, we experienced
softening market conditions in both Europe and Australia. LVT sales continued their strong
growth, and we significantly outperformed the laminate market with
our premium collections. We have initiated laminate price
increases to recover rising costs and currency changes. Our
investments to expand laminate production in Europe and Russia have increased our market share by
delivering differentiated visuals and water proof features. Our LVT
sales continue to grow dramatically as our production rates
increase. Some of our LVT introductions were postponed until later
this period as we overcame technical problems that increased our
costs during the fourth quarter. We have seen about 15% production
improvements in LVT over the last quarter as our processes have
been refined and we anticipate continued improvement in the year
ahead. In Europe, we are gaining
share in sheet vinyl and our new sheet vinyl plant in Russia has commenced production. Our Russian
sheet vinyl facility is operating as planned and is producing goods
to satisfy commitments to major customers. Our European carpet tile
plant continues to progress as we broaden our product offering and
customer base.
"We have integrated Godfrey Hirst into the Mohawk
structure. Presently, the Australian housing market is slowing, and
we are adapting to the changing conditions. We are investing in new
assets to expand Godfrey Hirst's
commercial carpet and leveraging Mohawk's resources to enhance
product and material strategies. "The volume and profitability of
our insulation business is improving significantly. Our
polyurethane insulation is taking share from other products as it
did prior to prices rising from material constraints. Our board
sales and margins for the year were the highest in a decade. The
investments we have made in our board business have
improved our offering and productivity. We are expanding the
mezzanine flooring business we acquired last year as we leverage
our existing manufacturing and sales organization.
"As we enter 2019, many macroeconomic conditions around the
world could impact our results. Economies have been slowing in most
of our markets, oil volatility is making our costs unpredictable
and housing markets in many regions are under pressure. Though our
outlook is cautious because of these issues, we expect our results
to improve through the year. In the first quarter, we are reducing
production rates due to the softer environment we see in most of
our markets. Higher priced materials will flow through before we
realize the benefits from recent changes. The U.S. dollar
strengthened relative to last year and will have a significant
negative impact on the period. We continue to introduce innovative
new collections, implement price increases and improve
manufacturing processes. Taking all of this into account, our EPS
guidance for the first quarter of 2019 is $2.02 to $2.12, excluding any one-time charges.
"Our major product and geographic expansions are at varying
stages of ramping up. As we progress through this year, these
investments will increase our sales and margins, price increases
will benefit our results, start-up costs will decline, and
production levels will increase. We will begin to realize the
potential of these projects in 2020 as volume and efficiencies
increase. Today, the business is stronger with substantial
resources, a broader product portfolio and a more diverse
geographic footprint. We have a strong balance sheet, extensive
liquidity and historically low debt leverage. In the short-term, we
are taking the appropriate steps to manage through market
uncertainties, and we are confident our investments and
acquisitions will significantly enhance our long-term
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, 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, India, 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 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; and other risks identified in Mohawk's SEC reports and
public announcements.
Conference call Friday,
February 8, 2019, at 11:00 AM Eastern
Time
The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for
International/Local. Conference ID # 8594256. A replay will be
available until March 8, 2019, by
dialing 1-855-859-2056 for US/local calls and 1-404-537-3406 for
International/Local calls and entering Conference ID # 8594256.
MOHAWK INDUSTRIES,
INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Operations Data
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
(Amounts in
thousands, except per share data)
|
|
December 31,
2018
|
|
December 31,
2017
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
2,448,618
|
|
2,369,097
|
|
9,983,634
|
|
9,491,290
|
Cost of
sales
|
|
1,802,228
|
|
1,615,473
|
|
7,145,564
|
|
6,494,876
|
Gross profit
|
|
646,390
|
|
753,624
|
|
2,838,070
|
|
2,996,414
|
Selling, general and
administrative expenses
|
|
433,014
|
|
410,158
|
|
1,742,744
|
|
1,642,241
|
Operating
income
|
|
213,376
|
|
343,466
|
|
1,095,326
|
|
1,354,173
|
Interest
expense
|
|
14,411
|
|
7,257
|
|
38,827
|
|
31,111
|
Other expense,
net
|
|
504
|
|
3,750
|
|
7,298
|
|
5,205
|
Earnings before income taxes
|
|
198,461
|
|
332,459
|
|
1,049,201
|
|
1,317,857
|
Income tax
expense
|
|
(31,582)
|
|
91,593
|
|
184,346
|
|
343,165
|
Net
earnings including noncontrolling interest
|
|
230,043
|
|
240,866
|
|
864,855
|
|
974,692
|
Net income
attributable to noncontrolling interest
|
|
704
|
|
488
|
|
3,151
|
|
3,054
|
Net earnings
attributable to Mohawk Industries, Inc.
|
|
$
229,339
|
|
240,378
|
|
861,704
|
|
971,638
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to Mohawk Industries, Inc.
|
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to Mohawk Industries, Inc.
|
|
$
3.07
|
|
3.23
|
|
11.53
|
|
13.07
|
Weighted-average
common shares outstanding - basic
|
|
73,856
|
|
74,414
|
|
74,413
|
|
74,357
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share attributable to Mohawk Industries, Inc.
|
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to Mohawk Industries, Inc.
|
|
$
3.05
|
|
3.21
|
|
11.47
|
|
12.98
|
Weighted-average
common shares outstanding - diluted
|
|
74,183
|
|
74,915
|
|
74,773
|
|
74,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Information
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
$
139,092
|
|
118,372
|
|
521,765
|
|
446,672
|
Capital
expenditures
|
|
$
151,161
|
|
251,368
|
|
794,110
|
|
905,998
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
119,050
|
|
84,884
|
Receivables, net
|
|
|
|
|
|
1,606,159
|
|
1,558,159
|
Inventories
|
|
|
|
|
|
2,287,615
|
|
1,948,663
|
Prepaid expenses and other current assets
|
|
|
|
|
|
496,472
|
|
481,261
|
Total
current assets
|
|
|
|
|
|
4,509,296
|
|
4,072,967
|
Property, plant and
equipment, net
|
|
|
|
|
|
4,699,902
|
|
4,270,790
|
Goodwill
|
|
|
|
|
|
2,520,966
|
|
2,471,459
|
Intangible assets,
net
|
|
|
|
|
|
961,810
|
|
891,767
|
Deferred income taxes
and other non-current assets
|
|
|
|
|
|
407,149
|
|
387,870
|
Total assets
|
|
|
|
|
|
$
13,099,123
|
|
12,094,853
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt and commercial paper
|
|
|
|
|
|
$
1,742,373
|
|
1,203,683
|
Accounts payable and
accrued expenses
|
|
|
|
|
|
1,523,866
|
|
1,451,672
|
Total
current liabilities
|
|
|
|
|
|
3,266,239
|
|
2,655,355
|
Long-term debt, less
current portion
|
|
|
|
|
|
1,515,601
|
|
1,559,895
|
Deferred income taxes
and other long-term liabilities
|
|
|
|
|
|
877,224
|
|
783,131
|
Total
liabilities
|
|
|
|
|
|
5,659,064
|
|
4,998,381
|
Redeemable
noncontrolling interest
|
|
|
|
|
|
-
|
|
29,463
|
Total stockholders'
equity
|
|
|
|
|
|
7,440,059
|
|
7,067,009
|
Total liabilities and stockholders' equity
|
|
|
|
|
|
$
13,099,123
|
|
12,094,853
|
|
|
|
|
|
|
|
|
|
Segment
Information
|
|
Three Months
Ended
|
|
As of or for the
Twelve Months Ended
|
(Amounts in
thousands)
|
|
December 31,
2018
|
|
December 31,
2017
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Global Ceramic
|
|
$
861,238
|
|
824,062
|
|
3,552,856
|
|
3,405,100
|
Flooring NA
|
|
973,680
|
|
999,290
|
|
4,029,148
|
|
4,010,858
|
Flooring ROW
|
|
613,700
|
|
545,865
|
|
2,401,630
|
|
2,075,452
|
Intersegment sales
|
|
-
|
|
(120)
|
|
-
|
|
(120)
|
Consolidated net sales
|
|
$
2,448,618
|
|
2,369,097
|
|
9,983,634
|
|
9,491,290
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Global Ceramic
|
|
$
76,005
|
|
113,440
|
|
442,898
|
|
525,401
|
Flooring NA
|
|
79,158
|
|
157,219
|
|
347,937
|
|
540,337
|
Flooring ROW
|
|
72,467
|
|
83,865
|
|
345,801
|
|
329,054
|
Corporate and intersegment eliminations
|
|
(14,254)
|
|
(11,058)
|
|
(41,310)
|
|
(40,619)
|
Consolidated operating income
|
|
$
213,376
|
|
343,466
|
|
1,095,326
|
|
1,354,173
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Global Ceramic
|
|
|
|
|
|
$
5,194,030
|
|
4,838,310
|
Flooring NA
|
|
|
|
|
|
3,938,639
|
|
3,702,137
|
Flooring ROW
|
|
|
|
|
|
3,666,617
|
|
3,245,424
|
Corporate and intersegment eliminations
|
|
|
|
|
|
299,837
|
|
308,982
|
Consolidated assets
|
|
|
|
|
|
$
13,099,123
|
|
12,094,853
|
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.
|
(Amounts in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
December 31,
2018
|
|
December 31,
2017
|
Net earnings
attributable to Mohawk Industries, Inc.
|
|
|
|
$
229,339
|
|
240,378
|
|
861,704
|
|
971,638
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
|
|
20,412
|
|
15,435
|
|
78,449
|
|
49,144
|
Acquisitions purchase
accounting , including inventory step-up
|
|
|
|
6,721
|
|
-
|
|
15,359
|
|
13,314
|
Acquisition interest
expense
|
|
|
|
|
|
4,322
|
|
-
|
|
4,322
|
|
-
|
Release of
indemnification asset
|
|
|
|
|
2,857
|
|
4,459
|
|
4,606
|
|
4,459
|
Income taxes -
reversal of uncertain tax position
|
|
|
|
(2,857)
|
|
(4,459)
|
|
(4,606)
|
|
(4,459)
|
Income tax reform,
net
|
|
|
|
|
|
-
|
|
810
|
|
-
|
|
810
|
Income taxes
(1)
|
|
|
|
|
|
(73,282)
|
|
(624)
|
|
(37,817)
|
|
(16,260)
|
Adjusted net earnings
attributable to Mohawk Industries, Inc.
|
|
|
|
$
187,512
|
|
255,999
|
|
922,017
|
|
1,018,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share attributable to Mohawk Industries,
Inc.
|
|
|
|
$
2.53
|
|
3.42
|
|
12.33
|
|
13.61
|
Weighted-average
common shares outstanding - diluted
|
|
|
|
|
74,183
|
|
74,915
|
|
74,773
|
|
74,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes a benefit
of $13,590 for full year 2018 to finalize the provisional 2017
Transition Tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Total Debt to Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt and commercial paper
|
|
$
1,742,373
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
1,515,601
|
|
|
|
|
|
|
|
|
Less: Cash and cash
equivalents
|
|
|
119,050
|
|
|
|
|
|
|
|
|
Net Debt
|
|
|
|
$
3,138,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Trailing
Twelve
|
|
|
|
|
Three Months
Ended
|
|
Months
Ended
|
|
|
|
|
March 31,
2018
|
|
June 30,
2018
|
|
September 29,
2018
|
|
December 31,
2018
|
|
December 31,
2018
|
Operating
income
|
|
|
|
268,399
|
|
326,307
|
|
287,244
|
|
213,376
|
|
1,095,326
|
Other (expense)
income
|
|
|
|
(3,998)
|
|
(2,090)
|
|
(706)
|
|
(504)
|
|
(7,298)
|
Net (income) loss
attributable to noncontrolling interest
|
|
(475)
|
|
(959)
|
|
(1,013)
|
|
(704)
|
|
(3,151)
|
Depreciation and
amortization
|
|
|
122,654
|
|
127,048
|
|
132,972
|
|
139,092
|
|
521,765
|
EBITDA
|
|
|
|
386,580
|
|
450,306
|
|
418,497
|
|
351,260
|
|
1,606,642
|
Restructuring,
acquisition and integration-related and other costs
|
|
22,104
|
|
16,042
|
|
19,890
|
|
20,412
|
|
78,449
|
Acquisitions purchase
accounting, including inventory step-up
|
|
1,354
|
|
194
|
|
7,090
|
|
6,721
|
|
15,359
|
Release of
indemnification asset
|
|
|
1,749
|
|
-
|
|
-
|
|
2,857
|
|
4,606
|
Adjusted
EBITDA
|
|
|
|
411,787
|
|
466,542
|
|
445,477
|
|
381,250
|
|
1,705,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Sales to Net Sales on a Constant Exchange Rate Excluding
Acquisition Volume
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
Net sales
|
|
|
|
$
2,448,618
|
|
2,369,097
|
|
9,983,634
|
|
9,491,290
|
|
|
Adjustment to net
sales on a constant exchange rate
|
|
38,485
|
|
-
|
|
(85,273)
|
|
-
|
|
|
Net sales on a
constant exchange rate
|
|
|
2,487,103
|
|
2,369,097
|
|
9,898,361
|
|
9,491,290
|
|
|
Less: impact of
acquisition volume
|
|
|
(106,906)
|
|
-
|
|
(228,585)
|
|
-
|
|
|
Net sales on a
constant exchange rate excluding acquisition volume
|
|
$
2,380,197
|
|
2,369,097
|
|
9,669,776
|
|
9,491,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Net Sales to Segment Net Sales on a Constant Exchange Rate
Excluding Acquisition Volume
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
Global
Ceramic
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
861,238
|
|
824,062
|
|
|
|
|
|
|
Adjustment to segment
net sales on a constant exchange rate
|
|
17,359
|
|
-
|
|
|
|
|
|
|
Segment net sales on
a constant exchange rate
|
|
878,597
|
|
824,062
|
|
|
|
|
|
|
Less: impact of
acquisition volume
|
|
|
(35,064)
|
|
-
|
|
|
|
|
|
|
Segment net sales on
a constant exchange rate excluding acquisition volume
|
|
$
843,533
|
|
824,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Net Sales to Segment Net Sales on a Constant Exchange Rate
Excluding Acquisition Volume
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
Flooring
ROW
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
613,700
|
|
545,865
|
|
|
|
|
|
|
Adjustment to segment
net sales on a constant exchange rate
|
|
21,126
|
|
-
|
|
|
|
|
|
|
Segment net sales on
a constant exchange rate
|
|
634,826
|
|
545,865
|
|
|
|
|
|
|
Less: impact of
acquisition volume
|
|
|
(71,842)
|
|
-
|
|
|
|
|
|
|
Segment net sales on
a constant exchange rate excluding acquisition volume
|
|
$
562,984
|
|
545,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Gross Profit to Adjusted Gross Profit
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
$
646,390
|
|
753,624
|
|
|
|
|
|
|
Adjustments to gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
10,345
|
|
11,339
|
|
|
|
|
|
|
Acquisitions purchase
accounting, including inventory step-up
|
|
6,721
|
|
-
|
|
|
|
|
|
|
Adjusted gross
profit
|
|
|
|
$
663,456
|
|
764,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Selling, General and Administrative Expenses to Adjusted Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
$
433,014
|
|
410,158
|
|
|
|
|
|
|
Adjustments to
selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
(10,268)
|
|
(3,892)
|
|
|
|
|
|
|
Adjusted
selling, general and administrative expenses
|
|
$
422,746
|
|
406,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Income to Adjusted Operating Income
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Operating
income
|
|
|
|
$
213,376
|
|
343,466
|
|
|
|
|
|
|
Adjustments to
operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
20,613
|
|
15,231
|
|
|
|
|
|
|
Acquisitions purchase
accounting, including inventory step-up
|
|
6,721
|
|
-
|
|
|
|
|
|
|
Adjusted operating
income
|
|
|
|
$
240,710
|
|
358,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Operating Income to Adjusted Segment Operating
Income
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
Global
Ceramic
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Operating
income
|
|
|
|
$
76,005
|
|
113,440
|
|
|
|
|
|
|
Adjustments to
segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
4,162
|
|
1,834
|
|
|
|
|
|
|
Acquisitions purchase
accounting, including inventory step-up
|
|
6,721
|
|
-
|
|
|
|
|
|
|
Adjusted segment
operating income
|
|
|
$
86,888
|
|
115,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Operating Income to Adjusted Segment Operating
Income
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
Flooring
NA
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Operating
income
|
|
|
|
$
79,158
|
|
157,219
|
|
|
|
|
|
|
Adjustments to
segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
7,159
|
|
9,776
|
|
|
|
|
|
|
Adjusted
segment operating income
|
|
|
$
86,317
|
|
166,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Operating Income to Adjusted Segment Operating
Income
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
Flooring
ROW
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Operating
income
|
|
|
|
$
72,467
|
|
83,865
|
|
|
|
|
|
|
Adjustments to
segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
5,949
|
|
2,266
|
|
|
|
|
|
|
Adjusted segment
operating income
|
|
|
$
78,416
|
|
86,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Operating Loss to Adjusted Segment Operating
Loss
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
Corporate and
intersegment eliminations
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Operating
loss
|
|
|
|
$
(14,254)
|
|
(11,058)
|
|
|
|
|
|
|
Adjustments to
segment operating loss:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related and other costs
|
|
3,343
|
|
1,355
|
|
|
|
|
|
|
Adjusted segment
operating loss
|
|
|
$
(10,911)
|
|
(9,703)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Earnings including Noncontrolling Interests Before Income Taxes to
Adjusted Earnings Including Noncontrolling Interests Before Income
Taxes
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
|
|
$
198,461
|
|
332,459
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
|
(704)
|
|
(488)
|
|
|
|
|
|
|
Adjustments to
earnings including noncontrolling interests before income
taxes:
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
acquisition and integration-related & other costs
|
|
20,412
|
|
15,435
|
|
|
|
|
|
|
Acquisitions purchase
accounting, including inventory step-up
|
|
6,721
|
|
-
|
|
|
|
|
|
|
Acquisition interest
expense
|
|
|
|
4,322
|
|
-
|
|
|
|
|
|
|
Release of
indemnification asset
|
|
|
2,857
|
|
4,459
|
|
|
|
|
|
|
Adjusted
earnings including noncontrolling interests before income
taxes
|
|
$
232,069
|
|
351,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Income Tax Expense to Adjusted Income Tax
Expense
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
$
(31,582)
|
|
91,593
|
|
|
|
|
|
|
Income taxes -
reversal of uncertain tax position
|
|
2,857
|
|
4,459
|
|
|
|
|
|
|
Income tax
reform
|
|
|
|
-
|
|
(810)
|
|
|
|
|
|
|
Income tax effect of
adjusting items
|
|
|
|
73,282
|
|
624
|
|
|
|
|
|
|
Adjusted
income tax expense
|
|
|
$
44,557
|
|
95,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
rate
|
|
|
|
19.2%
|
|
27.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
acquisition purchase accounting, including inventory step-up,
release of indemnification assets and the reversal of uncertain tax
positions.
|
|
|
View original
content:http://www.prnewswire.com/news-releases/mohawk-industries-reports-q4-results-300792002.html
SOURCE Mohawk Industries, Inc.