Mohawk Industries, Inc. (NYSE: MHK) today announced 2019 fourth
quarter net earnings of $265 million and diluted earnings per share
(EPS) of $3.68, including a one-time tax benefit of $136 million.
Adjusted net earnings were $162 million, and EPS was $2.25,
excluding restructuring, acquisition and other charges. Net sales
for the fourth quarter of 2019 were $2.4 billion, down 1.0% as
reported and 1.7% on a constant currency and days basis. For the
fourth quarter of 2018, net sales were $2.45 billion, net earnings
were $229 million and EPS was $3.05, adjusted net earnings were
$188 million, and EPS was $2.53, excluding restructuring,
acquisition and other charges.
For the twelve months ending December 31, 2019, net earnings and
EPS were $744 million and $10.30, including the one-time fourth
quarter tax benefit. Net earnings excluding restructuring,
acquisition and other charges were $725 million and EPS was $10.04.
For the year, net sales were approximately $10 billion, flat versus
prior year as reported or an increase of 2% on a constant currency
and days basis. For the twelve-month period ending December 31,
2018, net sales were approximately $10 billion, net earnings were
$862 million and EPS was $11.47; excluding restructuring,
acquisition and other charges, net earnings and EPS were $922
million and $12.33.
Commenting on Mohawk Industries’ fourth quarter performance,
Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Our fourth
quarter results were as we expected, with sales flat to last year
and very strong cash generation. Operating and free cash flow for
the quarter were $440 million and $300 million, respectively.
For the full year, operating and free cash flow were about $1.4
billion and $870 million, respectively. Our leverage is approaching
historical lows, which provides us with the flexibility to pursue
additional opportunities. Under our stock repurchase program, we
bought approximately $23 million in the fourth quarter, for a total
of about $375 million since the inception of the buyback
program.
“As we anticipated, our businesses remained challenged by soft
demand, greater competition and reduced production volume. In the
U.S., markets continued to be influenced by the strong dollar, the
impact of LVT on other products and positive trends in housing that
should be a tailwind. Competition has increased in our global
markets, impacting our pricing and mix as we leverage investments
in sales and marketing to drive growth. Many countries where we
operate are stimulating their economies with lower interest rates
to encourage greater consumer spending and economic growth this
year. In the near term we still anticipate that most of our markets
will have continued pressure in our product categories.
“Throughout the period, we implemented changes to increase sales
and reduce costs. We have enhanced our LVT manufacturing in the
U.S. and Europe and realigned our U.S. carpet operations. We have
decreased our ceramic production and inventories and are taking out
wood flooring plants in the U.S. and Europe. We are reducing the
complexity of our operations, enhancing processes to reduce costs
and increasing automation to improve efficiencies. We continue to
improve the productivity and volume of our new LVT, U.S.
countertop, Russian sheet vinyl and European carpet tile
investments. Our acquisitions in Australia and Brazil are
installing state-of-the-art equipment that will expand their
product portfolios. We are introducing new design and performance
innovations to enhance our market positions and broaden our
customer base. To promote both new and existing products, we are
making higher levels of sales and marketing investments.
“For the quarter, our Global Ceramic Segment sales were flat as
reported and decreased 1.5% on a constant currency and days basis.
The segment’s operating margin was 6% as reported, declining year
over year primarily due to inflation and lower production rates
partially offset by productivity. Most of the segment’s markets
faced soft demand and excess industry capacity, that is compressing
market prices and margins. Our U.S. ceramic business remained under
pressure from LVT taking share and high industry inventories from
ceramic purchases ahead of tariffs. To align our own inventory
levels, we meaningfully reduced production in our North American
ceramic plants, which increased our costs. To improve sales, we are
rolling out multiple new products and adding sales representatives
and design consultants in major markets. We have begun
manufacturing our proprietary new click tile in multiple sizes and
designs, and we have already received commitments from major
customers. Our quartz countertop sales increased as we ramped up
productivity at our new plant. In Mexico, we continued to gain
market share by expanding our brands, distribution and product
offering with larger sizes, porcelain products and a more
comprehensive wall tile collection. In Brazil, we had good sales
growth in the period and initiated a new porcelain line to create
larger sizes for our premium collections. The southern European
economies remain slow, impacting our primary ceramic markets and
industry pricing. In Europe, we increased our volume and are
expanding our activities in the commercial and outdoor channels. In
Russia, we grew our sales in a soft market, and we are starting up
additional porcelain production to make super large sizes as well
as a new plant to produce coordinated premium sanitary ware.
“During the quarter, our Flooring North America Segment’s sales
decreased 4% as reported and 5% on a constant days basis with an
operating margin of 3% as reported and 7% excluding restructuring
and other charges. Operating income for the segment declined
primarily due to lower volume, price and mix. We have executed many
initiatives to align the business with the present conditions,
including closing three plants, consolidating high cost operations
and reducing wood manufacturing. The effects of these actions will
increase and flow through inventory with full cost benefit in the
third quarter of 2020. In the quarter, our residential carpet
sales performed best in the new home construction and multi-family
channels. We are leveraging our strengths in design and fiber
technology to deliver differentiated new collections in both
premium and value carpet categories. To create greater value for
our commercial customers and improve our cost, we invested in new
design capabilities, proprietary carpet tile backings and material
manufacturing. We have increased the production and speeds of our
LVT operations, and ongoing initiatives will further improve
formulations and throughput. During the period, U.S. tariffs on
click LVT were removed, and the market has adjusted pricing to
reflect this change. To expand our price points and highlight our
unique visuals and features, we are introducing new rigid and
flexible LVT collections for both residential and commercial
markets. The virus in China is postponing the start-up of some
production and could potentially disrupt some LVT service,
depending on when product shipments resume. Sales of our
water-proof laminate products are expanding, and we anticipate
continued growth due to their realistic appearance, durability and
ease of installation. To support higher laminate sales, we are
upgrading our HDF board production to expand capacity and improve
our costs.
“For the quarter, our Flooring Rest of the World Segment’s sales
increased 3% as reported and 4% on a constant currency and days
basis. The segment’s operating margin was 13% as reported and 14%
excluding restructuring and other charges, due to volume growth,
reduced start-up cost and lower inflation partially offset by price
and mix. Across the segment, our investments in product innovation,
cost improvements, acquisitions and new businesses strengthened our
results. We are outperforming the European laminate market, and
sales of our new Signature collection are ramping up quickly due to
an enhanced level of sophistication. We announced the consolidation
of wood manufacturing to our facility in Malaysia, which will
improve our costs and increase our flexibility to better satisfy
our customers. Our LVT sales grew as our manufacturing productivity
significantly improved. Our new rigid collections are being well
received and our next generation of flexible LVT provides our most
realistic wood and stone visuals. Our panels and insulation
businesses had good results in a more competitive environment. In
Australia and New Zealand, our soft and hard surface sales grew in
a difficult environment and we are launching many new carpet
collections to enhance our offering.
“Market conditions remain challenging across most of our
businesses and geographies. In response, we are adjusting our
business strategies, enhancing our product offering and
restructuring operations. We are increasing our investments in
sales and marketing, expanding our commercial participation and
enhancing both our premium and value collections. To broaden our
distribution into new channels and geographies, we are bringing
many new product innovations and categories to market. Our new LVT,
countertop, sheet vinyl and carpet tile plants are improving their
productivity as we invest to expand our customer base and sales
volume. As our LVT manufacturing capacity grows with higher speeds
and efficiencies, we are enhancing design and features and
increasing sales of our rigid and flexible offerings. We are
limiting the traditional inventory build that we typically do in
the first quarter, as we manage our production with market demand.
Taking all of this into account, our EPS guidance for the first
quarter of 2020 is $1.90 to $2.00, excluding any one-time
charges.
“LVT growth in the U.S., exchange rates and excess global
capacity continue as headwinds for our businesses. We are executing
specific initiatives to adapt to shifting consumer preferences,
changing markets and competitive pressures. For the full year of
2020, we expect that our actions to increase sales and
distribution, reduce costs and enhance utilization of our new
plants will deliver improved year-over-year results, with our
performance accelerating during the second half of the year. Our
balance sheet should continue to improve with ongoing strong cash
generation, and we remain focused on delivering long-term value to
our shareholders.”
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 14, 2020, at 11:00
AM Eastern TimeThe telephone number is 1-800-603-9255 for US/Canada
and 1-706-634-2294 for International/Local. Conference ID #
3678629. A replay will be available until March 14, 2020, by
dialing 1-855-859-2056 for US/local calls and 1-404-537-3406 for
International/Local calls and entering Conference ID # 3678629.
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, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
2,424,512 |
|
|
2,448,618 |
|
|
|
9,970,672 |
|
|
9,983,634 |
|
Cost of sales |
|
|
1,801,705 |
|
|
1,802,228 |
|
|
|
7,294,629 |
|
|
7,145,564 |
|
Gross
profit |
|
|
622,807 |
|
|
646,390 |
|
|
|
2,676,043 |
|
|
2,838,070 |
|
Selling, general and administrative expenses |
|
|
467,993 |
|
|
433,014 |
|
|
|
1,848,819 |
|
|
1,742,744 |
|
Operating
income |
|
|
154,814 |
|
|
213,376 |
|
|
|
827,224 |
|
|
1,095,326 |
|
Interest
expense |
|
|
10,962 |
|
|
14,411 |
|
|
|
41,272 |
|
|
38,827 |
|
Other (income) expense, net |
|
|
(9,522 |
) |
|
504 |
|
|
|
36,407 |
|
|
7,298 |
|
Earnings before income taxes |
|
|
153,374 |
|
|
198,461 |
|
|
|
749,545 |
|
|
1,049,201 |
|
Income tax expense |
|
|
(111,299 |
) |
|
(31,582 |
) |
|
|
4,974 |
|
|
184,346 |
|
Net
earnings including noncontrolling interest |
|
|
264,673 |
|
|
230,043 |
|
|
|
744,571 |
|
|
864,855 |
|
Net income attributable to noncontrolling interest |
|
|
6 |
|
|
704 |
|
|
|
360 |
|
|
3,151 |
|
Net earnings attributable to Mohawk Industries, Inc. |
|
$ |
264,667 |
|
|
229,339 |
|
|
|
744,211 |
|
|
861,704 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share attributable to Mohawk Industries,
Inc. |
|
|
|
|
|
|
|
|
Basic earnings per share attributable to Mohawk Industries,
Inc. |
|
$ |
3.69 |
|
|
3.07 |
|
|
|
10.34 |
|
|
11.53 |
|
Weighted-average common shares outstanding - basic |
|
|
71,640 |
|
|
73,856 |
|
|
|
71,986 |
|
|
74,413 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to Mohawk Industries,
Inc. |
|
$ |
3.68 |
|
|
3.05 |
|
|
|
10.30 |
|
|
11.47 |
|
Weighted-average common shares outstanding - diluted |
|
|
71,954 |
|
|
74,183 |
|
|
|
72,264 |
|
|
74,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Information |
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
440,675 |
|
|
286,859 |
|
|
|
1,418,761 |
|
|
1,181,344 |
|
Depreciation and amortization |
|
$ |
153,759 |
|
|
139,092 |
|
|
|
576,452 |
|
|
521,765 |
|
Capital expenditures |
|
$ |
139,849 |
|
|
151,161 |
|
|
|
545,462 |
|
|
794,110 |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheet Data |
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
|
|
|
|
$ |
134,785 |
|
|
119,050 |
|
Receivables, net |
|
|
|
|
|
|
1,526,619 |
|
|
1,606,159 |
|
Inventories |
|
|
|
|
|
|
2,282,328 |
|
|
2,287,615 |
|
Prepaid expenses and other current assets |
|
|
|
|
|
|
485,725 |
|
|
496,472 |
|
Total current assets |
|
|
|
|
|
|
4,429,457 |
|
|
4,509,296 |
|
Property,
plant and equipment, net |
|
|
|
|
|
|
4,698,917 |
|
|
4,699,902 |
|
Right of use
operating lease assets |
|
|
|
|
|
|
323,003 |
|
|
- |
|
Goodwill |
|
|
|
|
|
|
2,570,027 |
|
|
2,520,966 |
|
Intangible
assets, net |
|
|
|
|
|
|
928,879 |
|
|
961,810 |
|
Deferred income taxes and other non-current assets |
|
|
|
|
|
|
436,397 |
|
|
407,149 |
|
Total assets |
|
|
|
|
|
$ |
13,386,680 |
|
|
13,099,123 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Current
portion of long-term debt and commercial paper |
|
|
|
|
|
$ |
1,051,498 |
|
|
1,742,373 |
|
Accounts
payable and accrued expenses |
|
|
|
|
|
|
1,559,140 |
|
|
1,523,866 |
|
Current operating lease liabilities |
|
|
|
|
|
|
101,945 |
|
|
- |
|
Total
current liabilities |
|
|
|
|
|
|
2,712,583 |
|
|
3,266,239 |
|
Long-term
debt, less current portion |
|
|
|
|
|
|
1,518,388 |
|
|
1,515,601 |
|
Non-current
operating lease liabilities |
|
|
|
|
|
|
228,155 |
|
|
- |
|
Deferred income taxes and other long-term liabilities |
|
|
|
|
|
|
801,106 |
|
|
877,224 |
|
Total liabilities |
|
|
|
|
|
|
5,260,232 |
|
|
5,659,064 |
|
Total stockholders' equity |
|
|
|
|
|
|
8,126,448 |
|
|
7,440,059 |
|
Total liabilities and stockholders' equity |
|
|
|
|
|
$ |
13,386,680 |
|
|
13,099,123 |
|
|
|
|
|
|
|
|
|
|
Segment Information |
|
Three Months Ended |
|
As of or for the Twelve Months Ended |
(Amounts in
thousands) |
|
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
Net
sales: |
|
|
|
|
|
|
|
|
Global Ceramic |
|
$ |
858,337 |
|
|
861,238 |
|
|
|
3,631,142 |
|
|
3,552,856 |
|
Flooring NA |
|
|
936,387 |
|
|
973,680 |
|
|
|
3,843,714 |
|
|
4,029,148 |
|
Flooring ROW |
|
|
629,788 |
|
|
613,700 |
|
|
|
2,495,816 |
|
|
2,401,630 |
|
Intersegment sales |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Consolidated net sales |
|
$ |
2,424,512 |
|
|
2,448,618 |
|
|
|
9,970,672 |
|
|
9,983,634 |
|
|
|
|
|
|
|
|
|
|
Operating
income (loss): |
|
|
|
|
|
|
|
|
Global Ceramic |
|
$ |
53,172 |
|
|
76,005 |
|
|
|
340,058 |
|
|
442,898 |
|
Flooring NA |
|
|
27,011 |
|
|
79,158 |
|
|
|
167,385 |
|
|
347,937 |
|
Flooring ROW |
|
|
83,036 |
|
|
72,467 |
|
|
|
359,428 |
|
|
345,801 |
|
Corporate and intersegment eliminations |
|
|
(8,405 |
) |
|
(14,254 |
) |
|
|
(39,647 |
) |
|
(41,310 |
) |
Consolidated operating income |
|
$ |
154,814 |
|
|
213,376 |
|
|
|
827,224 |
|
|
1,095,326 |
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Global Ceramic |
|
|
|
|
|
$ |
5,419,896 |
|
|
5,194,030 |
|
Flooring NA |
|
|
|
|
|
|
3,823,654 |
|
|
3,938,639 |
|
Flooring ROW |
|
|
|
|
|
|
3,925,246 |
|
|
3,666,617 |
|
Corporate and intersegment eliminations |
|
|
|
|
|
|
217,884 |
|
|
299,837 |
|
Consolidated assets |
|
|
|
|
|
$ |
13,386,680 |
|
|
13,099,123 |
|
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, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
Net earnings attributable to Mohawk Industries, Inc. |
|
$ |
264,667 |
|
|
229,339 |
|
|
744,211 |
|
|
861,704 |
|
|
|
Adjusting
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
49,802 |
|
|
20,412 |
|
|
99,679 |
|
|
78,449 |
|
|
|
Acquisitions purchase accounting , including inventory step-up |
|
|
222 |
|
|
6,721 |
|
|
3,938 |
|
|
15,359 |
|
|
|
Acquisition interest expense |
|
|
|
|
- |
|
|
4,322 |
|
|
- |
|
|
4,322 |
|
|
|
Deferred loan cost write off |
|
|
|
|
601 |
|
|
- |
|
|
601 |
|
|
- |
|
|
|
Impairment of net investment in a manufacturer and distributor of
Ceramic tile in China(1) |
|
|
(5,226 |
) |
|
- |
|
|
59,946 |
|
|
- |
|
|
|
Release of indemnification asset |
|
|
|
603 |
|
|
2,857 |
|
|
(57 |
) |
|
4,606 |
|
|
|
Income taxes - reversal of uncertain tax position |
|
|
(603 |
) |
|
(2,857 |
) |
|
56 |
|
|
(4,606 |
) |
|
|
European tax restructuring(2) |
|
|
|
|
(136,194 |
) |
|
- |
|
|
(136,194 |
) |
|
- |
|
|
|
Income taxes |
|
|
|
|
(12,183 |
) |
|
(73,282 |
) |
|
(46,842 |
) |
|
(37,817 |
) |
|
|
Adjusted net earnings attributable to Mohawk Industries, Inc. |
|
$ |
161,689 |
|
|
187,512 |
|
|
725,338 |
|
|
922,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
$ |
2.25 |
|
|
2.53 |
|
|
10.04 |
|
|
12.33 |
|
|
|
Weighted-average common shares outstanding - diluted |
|
|
71,954 |
|
|
74,183 |
|
|
72,264 |
|
|
74,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In September, the
US commerce department imposed a 104% countervailing duty on top of
the 25% general tariffs on all ceramic produced in China. As a
consequence, ceramic purchases from China will dramatically decline
and Mohawk took a $60 million write off to our investment in a
Chinese manufacturer and distributor, of which $5 million was
recovered in Q4 2019. |
(2) The Company
implemented select operational, administrative and financial
restructurings that centralized certain business processes and
intangible assets in various European jurisdictions into a new
entity. The restructurings resulted in a current tax liability of
$136 million, calculated by measuring the fair value of intangible
assets transferred. The Company offset the tax liability with the
utilization of $136 million of deferred tax assets from accumulated
net operating loss carry forwards. The restructurings also resulted
in the Company recording a $136 million deferred tax asset, and a
corresponding deferred tax benefit, related to the tax basis of the
intangible assets transferred. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Total Debt to Net Debt |
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
Current portion of long-term debt and commercial paper |
|
$ |
1,051,498 |
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
|
|
1,518,388 |
|
|
|
|
|
|
|
|
|
Less: Cash
and cash equivalents |
|
|
|
|
134,785 |
|
|
|
|
|
|
|
|
|
Net Debt |
|
|
|
$ |
2,435,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income to Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve |
|
|
|
|
Three Months Ended |
|
Months Ended |
|
|
|
|
March 30, 2019 |
|
June 29, 2019 |
|
September 28, 2019 |
|
December 31, 2019 |
|
December 31, 2019 |
Operating
income |
|
|
|
$ |
165,330 |
|
|
266,860 |
|
|
240,220 |
|
|
154,814 |
|
|
827,224 |
|
Other (expense)/income |
|
|
|
|
3,736 |
|
|
3,048 |
|
|
(52,713 |
) |
|
9,522 |
|
|
(36,407 |
) |
Net (income) loss attributable to noncontrolling interest |
|
|
10 |
|
|
(213 |
) |
|
(151 |
) |
|
(6 |
) |
|
(360 |
) |
Depreciation and amortization |
|
|
|
137,291 |
|
|
140,482 |
|
|
144,920 |
|
|
153,759 |
|
|
576,452 |
|
EBITDA |
|
|
|
|
306,367 |
|
|
410,177 |
|
|
332,276 |
|
|
318,089 |
|
|
1,366,909 |
|
Restructuring, acquisition and integration-related and other
costs |
|
|
39,495 |
|
|
8,840 |
|
|
1,542 |
|
|
49,802 |
|
|
99,679 |
|
Impairment of net investment in a manufacturer and distributor of
Ceramic tile in China |
|
|
- |
|
|
- |
|
|
65,172 |
|
|
(5,226 |
) |
|
59,946 |
|
Acquisitions purchase accounting, including inventory step-up |
|
|
2,552 |
|
|
1,164 |
|
|
- |
|
|
222 |
|
|
3,938 |
|
Release of indemnification asset |
|
|
|
- |
|
|
- |
|
|
(659 |
) |
|
603 |
|
|
(56 |
) |
Adjusted EBITDA |
|
|
|
$ |
348,414 |
|
|
420,181 |
|
|
398,331 |
|
|
363,490 |
|
|
1,530,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Sales to Net Sales on a Constant
Exchange Rate and on Constant Shipping Days Excluding Acquisition
Volume |
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
Net sales |
|
|
|
$ |
2,424,512 |
|
|
2,448,618 |
|
|
9,970,672 |
|
|
9,983,634 |
|
|
|
Adjustment to net sales on constant shipping days |
|
|
(36,469 |
) |
|
- |
|
|
713 |
|
|
- |
|
|
|
Adjustment to net sales on a constant exchange rate |
|
|
18,721 |
|
|
- |
|
|
178,290 |
|
|
- |
|
|
|
Net sales on a constant exchange rate and constant shipping
days |
|
|
2,406,764 |
|
|
2,448,618 |
|
|
10,149,675 |
|
|
9,983,634 |
|
|
|
Less: impact of acquisition volume |
|
|
|
(34,597 |
) |
|
- |
|
|
(359,949 |
) |
|
- |
|
|
|
Net sales on a constant exchange rate and constant shipping days
excluding acquisition volume |
|
$ |
2,372,167 |
|
|
2,448,618 |
|
|
9,789,726 |
|
|
9,983,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Net Sales to Segment Net Sales on a Constant Exchange
Rate and on Constant Shipping Days Excluding Acquisition
Volume |
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Global Ceramic |
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Net sales |
|
|
|
$ |
858,337 |
|
|
861,238 |
|
|
|
|
|
|
|
Adjustment to net sales on constant shipping days |
|
|
(11,889 |
) |
|
- |
|
|
|
|
|
|
|
Adjustment to segment net sales on a constant exchange rate |
|
|
1,969 |
|
|
- |
|
|
|
|
|
|
|
Segment net sales on a constant exchange rate and constant shipping
days |
|
|
848,417 |
|
|
861,238 |
|
|
|
|
|
|
|
Less: impact of acquisition volume |
|
|
|
(20,728 |
) |
|
- |
|
|
|
|
|
|
|
Segment net sales on a constant exchange rate and constant shipping
days excluding acquisition volume |
|
$ |
827,689 |
|
|
861,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Net Sales to Segment Net Sales on
Constant shipping Days |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring NA |
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Net sales |
|
|
|
$ |
936,387 |
|
- |
973,680 |
|
|
|
|
|
|
|
Adjustment to net sales on constant shipping days |
|
|
(14,631 |
) |
- |
- |
|
|
|
|
|
|
|
Segment net sales on constant shipping days |
|
$ |
921,756 |
|
- |
973,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Segment Net Sales to Segment Net Sales on a Constant Exchange
Rate and on Constant Shipping Days Excluding Acquisition
Volume |
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring ROW |
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Net sales |
|
|
|
$ |
629,788 |
|
|
613,700 |
|
|
|
|
|
|
|
Adjustment to net sales on constant shipping days |
|
|
(9,948 |
) |
|
- |
|
|
|
|
|
|
|
Adjustment to segment net sales on a constant exchange rate |
|
|
16,752 |
|
|
- |
|
|
|
|
|
|
|
Segment net sales on a constant exchange rate and constant shipping
days |
|
|
636,592 |
|
|
613,700 |
|
|
|
|
|
|
|
Less: impact of acquisition volume |
|
|
|
(13,869 |
) |
|
- |
|
|
|
|
|
|
|
Segment net sales on a constant exchange rate and constant shipping
days excluding acquisition volume |
|
$ |
622,723 |
|
|
613,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Selling, General and Administrative
Expenses to Adjusted Selling, General and Administrative
Expenses |
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
$ |
467,993 |
|
|
433,014 |
|
|
|
|
|
|
|
Adjustments to selling, general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
(4,651 |
) |
|
(10,268 |
) |
|
|
|
|
|
|
Release of indemnification asset |
|
|
|
(2 |
) |
|
- |
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses |
|
$ |
463,340 |
|
|
422,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income to Adjusted Operating
Income |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
Operating
income |
|
|
|
$ |
154,814 |
|
|
213,376 |
|
|
827,224 |
|
|
1,095,326 |
|
|
|
Adjustments to operating income: |
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
49,802 |
|
|
20,613 |
|
|
106,954 |
|
|
78,650 |
|
|
|
Release of indemnification asset |
|
|
|
2 |
|
|
- |
|
|
247 |
|
|
- |
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
222 |
|
|
6,721 |
|
|
3,938 |
|
|
15,359 |
|
|
|
Adjusted operating income |
|
|
|
$ |
204,840 |
|
|
240,710 |
|
|
938,363 |
|
|
1,189,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Operating Income to Adjusted
Segment Operating Income |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Global Ceramic |
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Operating
income |
|
|
|
$ |
53,172 |
|
|
76,005 |
|
|
|
|
|
|
|
Adjustments to segment operating income: |
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
1,204 |
|
|
4,162 |
|
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
- |
|
|
6,721 |
|
|
|
|
|
|
|
Adjusted segment operating income |
|
|
$ |
54,376 |
|
|
86,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Operating Income to Adjusted
Segment Operating Income |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring NA |
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Operating
income |
|
|
|
$ |
27,011 |
|
|
79,158 |
|
|
|
|
|
|
|
Adjustments to segment operating income: |
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
42,149 |
|
|
7,159 |
|
|
|
|
|
|
|
Adjusted segment operating income |
|
|
$ |
69,160 |
|
|
86,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Operating Income to Adjusted
Segment Operating Income |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Flooring ROW |
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
Operating
income |
|
|
|
$ |
83,036 |
|
|
72,467 |
|
|
|
|
|
|
|
Adjustments to segment operating income: |
|
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
6,235 |
|
|
5,949 |
|
|
|
|
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
222 |
|
|
- |
|
|
|
|
|
|
|
Adjusted segment operating income |
|
|
$ |
89,493 |
|
|
78,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Earnings Including Noncontrolling Interests Before Income Taxes
to Adjusted Earnings Including Noncontrolling Interests Before
Income Taxes |
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
Earnings before income taxes |
|
|
|
$ |
153,374 |
|
|
198,461 |
|
|
749,545 |
|
|
1,049,201 |
|
|
|
Noncontrolling interests |
|
|
|
|
(6 |
) |
|
(704 |
) |
|
(360 |
) |
|
(3,151 |
) |
|
|
Adjustments to earnings including noncontrolling interests before
income taxes: |
|
|
|
|
|
|
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
49,802 |
|
|
20,412 |
|
|
99,679 |
|
|
78,449 |
|
|
|
Acquisitions purchase accounting, including inventory step-up |
|
|
222 |
|
|
6,721 |
|
|
3,938 |
|
|
15,359 |
|
|
|
Impairment of net investment in a manufacturer and distributor of
Ceramic tile in China |
|
|
(5,226 |
) |
|
- |
|
|
59,946 |
|
|
- |
|
|
|
Release of indemnification asset |
|
|
|
603 |
|
|
2,857 |
|
|
(57 |
) |
|
4,606 |
|
|
|
Acquisition interest expense |
|
|
|
|
- |
|
|
4,322 |
|
|
- |
|
|
4,322 |
|
|
|
Deferred loan cost write off |
|
|
|
|
601 |
|
|
- |
|
|
601 |
|
|
- |
|
|
|
Adjusted earnings including noncontrolling interests before
income taxes |
|
$ |
199,370 |
|
|
232,069 |
|
|
913,292 |
|
|
1,148,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Income Tax Expense to Adjusted Income Tax
Expense |
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
Income tax
expense |
|
|
|
$ |
(111,299 |
) |
|
(31,582 |
) |
|
4,974 |
|
|
184,346 |
|
|
|
European tax
restructuring |
|
|
|
|
136,194 |
|
|
- |
|
|
136,194 |
|
|
- |
|
|
|
Income taxes - reversal of uncertain tax position |
|
|
603 |
|
|
2,857 |
|
|
(56 |
) |
|
4,606 |
|
|
|
Income tax effect of adjusting items |
|
|
|
12,183 |
|
|
73,282 |
|
|
46,842 |
|
|
37,817 |
|
|
|
Adjusted income tax expense |
|
|
|
$ |
37,681 |
|
|
44,557 |
|
|
187,954 |
|
|
226,769 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax rate |
|
|
|
|
18.9 |
% |
|
19.2 |
% |
|
20.6 |
% |
|
19.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
|
|
Contact:
Glenn Landau, Chief Financial Officer (706) 624-2025
Mohawk Industries (NYSE:MHK)
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