Mohawk Industries, Inc. (NYSE: MHK) today announced first quarter
2023 net earnings of $80 million and diluted earnings per share
(EPS) of $1.26. Adjusted net earnings were $112 million, and
adjusted EPS was $1.75, excluding restructuring, acquisition and
other charges. Net sales for the first quarter of 2023 were $2.8
billion, a decrease of 6.9% as reported and 5.9% on a constant
currency and days basis. For the first quarter of 2022, net sales
were $3.0 billion, net earnings were $245 million and EPS was
$3.78. Adjusted net earnings were $246 million, and adjusted EPS
was $3.78, excluding restructuring, acquisition and other charges.
Commenting on Mohawk Industries’ first quarter
performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “All
of our businesses are adapting our strategies to a more challenging
environment. We are managing our costs while investing in both our
short and long-term growth. We exceeded our earnings expectations
with the business maintaining higher pricing and stronger mix, and
Flooring Rest of the World outperforming the other segments. The
commercial channel continued to be stronger than residential with
home remodeling projects being postponed and new housing
construction being impacted by higher mortgage rates. Our balance
sheet remains strong, and we generated $129 million of free cash
flow in the quarter.”
We strategically invested in new product
innovation, enhanced merchandising and customer trade shows to
improve sales. We are continuing to reduce costs across the
enterprise by enhancing productivity, streamlining processes and
controlling administrative expenses. Our customers remained
conservative with their inventory commitments, and our operations
are running at lower utilization levels, creating higher costs from
unabsorbed overhead. In Flooring North America and Flooring Rest of
the World, our restructuring actions are on track and should
improve the results of our business.
We are limiting our capital investments to those
providing significant sales, margin and process improvements. We
are expanding our constrained categories that have the greatest
growth potential when the economy improves, including LVT, premium
laminate, quartz countertops, porcelain slabs and insulation
products. We completed two ceramic acquisitions in Brazil and
Mexico that had combined sales of approximately $425 million in
2022, almost doubling our existing market share. We are developing
strategies to increase sales and beginning to consolidate the
businesses to reduce cost, improve efficiencies and optimize
production. We also continue to improve the small bolt-on
acquisitions in Europe and the U.S. that we completed last
year.
Natural gas and electricity inflation remained a
headwind in the first quarter, though our future results will
benefit as lower energy costs flow through our P&L. Our
sustainability strategy includes investments in the production of
green energy, which reduces both our expenses and carbon footprint.
Our two biomass energy plants lowered our costs and improved our
results in the quarter. We also purchased some of our European
energy at various times to reduce future cost volatility. Italian
energy subsidies have recently been extended at reduced levels
through the second quarter of 2023.
For the first quarter, the Global Ceramic
Segment reported a 0.5% decline in net sales as reported, or a 1.2%
decline on a constant currency and days basis. The Segment’s
operating margin was 6.0% as reported, or 6.3% on an adjusted
basis, as a result of favorable pricing and product mix and
productivity gains, offset by inflation, lower volumes and
temporary shutdowns. Our 2023 product launches with new sizes,
unique visuals and polished finishes are benefiting our mix. We are
reducing production to align with demand and competition in the
marketplace is increasing. The U.S. is performing better than our
other ceramic markets due to our greater sales in the commercial
sector. Our more reliable U.S. domestic production is benefiting
our sales, particularly in our premium collections that provide
alternatives to European products. To increase our quartz
countertop volume, we are expanding our business with national
accounts, contractors and kitchen and bath retailers. In our
European ceramic business, we maintained higher average selling
prices than we anticipated, though our volumes decreased as
residential remodeling slowed. Our other ceramic markets also
declined with reduced spending on homes and greater reductions in
customer inventories, though our sales trends in these regions
seasonally improved as we progressed through the period.
During the first quarter, our Flooring Rest of
the World Segment’s net sales decreased by 9.7% as reported or 5.5%
on a constant currency and days basis. The Segment’s operating
margin was 9.5% as reported, or 12.6% on an adjusted basis, as a
result of favorable pricing and product mix offset by inflation,
lower volumes and temporary shutdowns. Our European businesses have
been compressed as high energy prices and inflation impacted
consumer budgets. Compared to the prior quarter, the Segment's
business improved as we increased promotions to strengthen sales,
had fewer shutdowns, lowered costs and expanded product options for
more constrained consumer budgets. As input costs decline, we
expect competitive pressures to increase in the market. Both
laminate and LVT volumes were lower in the quarter, and we are
controlling our costs and production levels in response. We have
begun the conversion of our residential LVT from flexible to rigid
and are preparing to restructure the operations. Our sheet vinyl
volume increased as consumers sought options to lower remodeling
costs. In our new Eastern European sheet vinyl acquisition, we are
improving the product offering and enhancing the facility’s
production and efficiencies. Our panels business has slowed with
the market and inventory reductions in the channel. Our margins
were higher than anticipated due to stronger pricing, lower input
costs and benefits from our biomass energy production. We are
making progress on achieving planned synergies in our French panels
and German mezzanine flooring acquisitions. Our insulation category
performed the best in the Segment as energy efficiency has become a
greater priority, and our polyurethane products provide the
greatest heat resistant properties. We have integrated our
insulation acquisition in Ireland and the U.K., and our new
facility is ramping up production ahead of schedule. In Australia
and New Zealand, our results were reduced by higher interest rates
and lower volumes. We are selectively introducing promotions to
drive sales and have raised prices to offset cost inflation.
In the first quarter, our Flooring North America
Segment sales decreased 11.1%. The Segment had a negative operating
margin of 0.2% as reported, or positive 0.5% on an adjusted basis,
as a result of favorable pricing and product mix along with
productivity gains, offset by inflation, reduced volumes, temporary
shutdowns and incremental marketing investments. The Segment has
been challenged by significant inflation, higher interest rates and
more restrictive lending, which have weakened the housing market
and our industry. As a result, our customers are more tightly
managing their inventory levels, and we are aligning production
with demand. Our margins should expand in the second quarter as our
input costs improve and plant utilization increases. Our
restructuring actions are on track and will lower our cost in the
residential and commercial soft surface categories. Commercial
sales remained solid with new construction and remodeling projects
continuing in most channels. The commercial flooring accessories
acquisition we completed last year has complemented our product
offering and benefited our business. Sales of residential soft
surfaces declined more than our other categories. The multifamily
business remains the strongest category in residential, and we are
expanding our participation in the channel. The U.S. LVT market is
becoming more competitive as the industry slows and ocean freight
costs decline. Imports from Asia are being interrupted as the U.S.
requires proof of supply chain compliance as part of the forced
labor protection act. Our West Coast LVT plant is continuing to
ramp up and production will increase as we move through the year.
Sheet vinyl sales are outperforming as consumers seek more
budget-oriented options. During the quarter, our laminate sales in
retail expanded with its increased acceptance as a waterproof
alternative, though volumes in the other channels declined.
Our industry is operating in a completely
different environment than a year ago. Around the world, central
banks are raising interest rates to slow their economies and reduce
inflation. These actions lower our industry volume as new home
sales and residential remodeling are postponed. The commercial
sector has remained stronger than residential, though higher
interest rates and tighter lending requirements could affect
business investments as the year progresses. We are maximizing our
sales and distribution by focusing on better performing channels,
introducing differentiated products and providing enhanced service
and value. We are proactively managing our spending and cost
structures to optimize our results. We anticipate that industry
volume and pricing will remain under pressure across our markets.
We expect seasonal improvement in demand along with reduced energy
and material costs to improve our future results. Given these
factors, we anticipate our second quarter adjusted EPS to be
between $2.56 and $2.66, excluding any restructuring, acquisition
and other charges.
This industry downturn is unique, with
employment remaining high, businesses continuing to invest and
homes maintaining their valuations. We are conservatively managing
the near term while we invest in long-term growth through product
innovation, capacity expansions and acquisitions. Our strong
balance sheet enables us to navigate the current downturn as we
prepare for the industry rebound that follows. Longer term, all of
our regions require the updating of aging houses and significant
new home construction to satisfy market needs. With our strength
across regions, markets and products, we anticipate capturing
increased opportunities when the recovery occurs in the housing
market and the economy.
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, 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;
integration of acquisitions; international operations; introduction
of new products; rationalization of operations; taxes and tax
reform; product and other claims; litigation; the risks and
uncertainty related to the COVID-19 pandemic; 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 28, 2023,
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-2023-earnings-call.
To participate in the conference call via telephone, register in
advance at
https://dpregister.com/sreg/10177490/f8f85704c6 to
receive a unique personal identification number or dial
1-833-630-1962 for U.S./Canada and 1-412-317-1843 for
international/local on the day of the call for operator assistance.
A replay will be available until May 26, 2023, by dialing
1-877-344-7529 for U.S./Canada calls and 1-412-317-0088 for
international/local calls and entering access code #6741654.
Contact: |
|
James Brunk, Chief Financial Officer |
|
|
(706) 624-2239 |
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
|
Three Months Ended |
(Amounts in thousands, except per share data) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
|
|
|
|
Net sales |
|
$ |
2,806,223 |
|
|
3,015,663 |
Cost of
sales |
|
|
2,162,781 |
|
|
2,213,535 |
Gross profit |
|
|
643,442 |
|
|
802,128 |
Selling, general and
administrative expenses |
|
|
517,652 |
|
|
481,327 |
Operating income |
|
|
125,790 |
|
|
320,801 |
Interest expense |
|
|
17,137 |
|
|
11,481 |
Other
expense (income), net |
|
|
(566 |
) |
|
2,438 |
Earnings before income taxes |
|
|
109,219 |
|
|
306,882 |
Income tax expense |
|
|
28,943 |
|
|
61,448 |
Net earnings including noncontrolling
interests |
|
|
80,276 |
|
|
245,434 |
Net
earnings attributable to noncontrolling interests |
|
|
38 |
|
|
105 |
Net earnings attributable to Mohawk Industries,
Inc. |
|
$ |
80,238 |
|
|
245,329 |
|
|
|
|
|
Basic earnings per share attributable to Mohawk Industries,
Inc. |
|
$ |
1.26 |
|
|
3.79 |
Weighted-average common shares outstanding -
basic |
|
|
63,582 |
|
|
64,686 |
|
|
|
|
|
Diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
$ |
1.26 |
|
|
3.78 |
Weighted-average common shares outstanding -
diluted |
|
|
63,846 |
|
|
64,970 |
Other Financial
Information |
|
|
|
|
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
April 2, 2022 |
|
Net cash provided by operating activities |
|
$ |
257,276 |
|
54,954 |
|
Less:
Capital expenditures |
|
|
128,493 |
|
129,470 |
|
Free cash flow |
|
$ |
128,783 |
|
(74,516 |
) |
|
|
|
|
|
Depreciation and amortization |
|
$ |
169,909 |
|
141,415 |
|
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(Amounts in thousands) |
April 1, 2023 |
|
April 2, 2022 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
572,858 |
|
230,559 |
Short-term investments |
|
150,000 |
|
310,000 |
Receivables, net |
|
2,052,362 |
|
2,044,698 |
Inventories |
|
2,729,876 |
|
2,513,244 |
Prepaid expenses and other
current assets |
|
556,043 |
|
466,238 |
Total current assets |
|
6,061,139 |
|
5,564,739 |
Property, plant and equipment,
net |
|
4,945,952 |
|
4,552,612 |
Right of use operating lease
assets |
|
396,064 |
|
384,740 |
Goodwill |
|
2,022,457 |
|
2,579,385 |
Intangible assets, net |
|
893,064 |
|
883,527 |
Deferred income taxes and other non-current assets |
|
444,781 |
|
421,716 |
Total assets |
$ |
14,763,457 |
|
14,386,719 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Short-term debt and current portion of long-term debt |
$ |
1,056,473 |
|
1,546,463 |
Accounts payable and accrued expenses |
|
2,155,412 |
|
2,220,347 |
Current operating lease liabilities |
|
106,488 |
|
104,823 |
Total current liabilities |
|
3,318,373 |
|
3,871,633 |
Long-term debt, less current
portion |
|
2,265,138 |
|
1,088,401 |
Non-current operating lease
liabilities |
|
304,123 |
|
293,239 |
Deferred income taxes and other long-term liabilities |
|
770,117 |
|
845,843 |
Total liabilities |
|
6,657,751 |
|
6,099,116 |
Total stockholders' equity |
|
8,105,706 |
|
8,287,603 |
Total liabilities and stockholders' equity |
$ |
14,763,457 |
|
14,386,719 |
Segment
Information |
|
|
|
|
|
|
As of or for the Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
|
|
|
|
|
Net sales: |
|
|
|
|
Global Ceramic |
|
$ |
1,059,334 |
|
|
1,064,757 |
|
Flooring NA |
|
|
953,417 |
|
|
1,071,910 |
|
Flooring ROW |
|
|
793,472 |
|
|
878,996 |
|
Consolidated net sales |
|
$ |
2,806,223 |
|
|
3,015,663 |
|
|
|
|
|
|
Operating income (loss): |
|
|
|
|
Global Ceramic |
|
$ |
63,317 |
|
|
100,338 |
|
Flooring NA |
|
|
(2,013 |
) |
|
95,324 |
|
Flooring ROW |
|
|
75,245 |
|
|
134,650 |
|
Corporate and intersegment eliminations |
|
|
(10,759 |
) |
|
(9,511 |
) |
Consolidated operating income |
|
$ |
125,790 |
|
|
320,801 |
|
|
|
|
|
|
Assets: |
|
|
|
|
Global Ceramic |
|
$ |
5,499,366 |
|
|
5,240,214 |
|
Flooring NA |
|
|
4,265,140 |
|
|
4,220,757 |
|
Flooring ROW |
|
|
4,314,799 |
|
|
4,413,013 |
|
Corporate and intersegment eliminations |
|
|
684,152 |
|
|
512,735 |
|
Consolidated assets |
|
$ |
14,763,457 |
|
|
14,386,719 |
|
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 |
(Amounts in thousands, except per share data) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Net earnings attributable to Mohawk Industries, Inc. |
|
$ |
80,238 |
|
|
245,329 |
|
Adjusting items: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
32,123 |
|
|
1,918 |
|
Inventory step-up from purchase accounting |
|
|
3,305 |
|
|
— |
|
Release of indemnification asset |
|
|
— |
|
|
7,263 |
|
Income taxes - reversal of uncertain tax position |
|
|
— |
|
|
(7,263 |
) |
Income tax effect of adjusting items |
|
|
(3,723 |
) |
|
(1,684 |
) |
Adjusted net earnings attributable to Mohawk Industries, Inc. |
|
$ |
111,943 |
|
|
245,563 |
|
|
|
|
|
|
Adjusted diluted earnings per share attributable to Mohawk
Industries, Inc. |
|
$ |
1.75 |
|
|
3.78 |
|
Weighted-average common shares outstanding - diluted |
|
|
63,846 |
|
|
64,970 |
|
Reconciliation of
Total Debt to Net Debt Less Short-Term Investments |
|
(Amounts in thousands) |
April 1, 2023 |
Short-term debt and current portion of long-term debt |
$ |
1,056,473 |
Long-term debt, less current portion |
|
2,265,138 |
Total debt |
|
3,321,611 |
Less:
Cash and cash equivalents |
|
572,858 |
Net debt |
|
2,748,753 |
Less:
Short-term investments |
|
150,000 |
Net debt less short-term investments |
$ |
2,598,753 |
Reconciliation of Net Earnings (Loss) to Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve |
|
|
Three Months Ended |
|
Months Ended |
|
(Amounts in thousands) |
July 2,2022 |
|
|
October 1,2022 |
|
|
December 31,2022 |
|
|
April 1,2023 |
|
|
April 1,2023 |
|
Net earnings (loss) including noncontrolling interests |
$ |
280,510 |
|
|
(533,713 |
) |
|
33,552 |
|
|
80,276 |
|
|
(139,375 |
) |
Interest expense |
|
12,059 |
|
|
13,797 |
|
|
14,601 |
|
|
17,137 |
|
|
57,594 |
|
Income tax expense |
|
78,176 |
|
|
15,569 |
|
|
2,917 |
|
|
28,943 |
|
|
125,605 |
|
Net earnings attributable to noncontrolling interests |
|
(79 |
) |
|
(256 |
) |
|
(96 |
) |
|
(38 |
) |
|
(469 |
) |
Depreciation and amortization(1) |
|
141,569 |
|
|
153,466 |
|
|
159,014 |
|
|
169,909 |
|
|
623,958 |
|
EBITDA |
|
512,235 |
|
|
(351,137 |
) |
|
209,988 |
|
|
296,227 |
|
|
667,313 |
|
Restructuring, acquisition and integration-related and other
costs |
|
1,801 |
|
|
21,375 |
|
|
33,786 |
|
|
9,104 |
|
|
66,066 |
|
Inventory step-up from purchase accounting |
|
143 |
|
|
1,401 |
|
|
1,218 |
|
|
3,305 |
|
|
6,067 |
|
Impairment of goodwill and indefinite-lived intangibles |
|
— |
|
|
695,771 |
|
|
— |
|
|
— |
|
|
695,771 |
|
Legal settlements, reserves and fees, net of insurance
proceeds |
|
— |
|
|
45,000 |
|
|
9,231 |
|
|
— |
|
|
54,231 |
|
Adjusted EBITDA |
$ |
514,179 |
|
|
412,410 |
|
|
254,223 |
|
|
308,636 |
|
|
1,489,448 |
|
|
|
|
|
|
|
|
|
|
|
Net debt less short-term investments to adjusted EBITDA |
|
|
|
|
|
|
|
|
1.7 |
|
(1)Includes accelerated depreciation of $13,085 for Q3 2022 and
$15,915 for Q4 2022 in addition to $23,019 for Q1 2023.
Reconciliation of Net Sales to Adjusted Net
Sales |
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
Mohawk
Consolidated |
Net sales |
|
$ |
2,806,223 |
|
|
3,015,663 |
Adjustment for constant
shipping days |
|
|
(948 |
) |
|
— |
Adjustment for constant exchange rates |
|
|
30,960 |
|
|
— |
Adjusted net sales |
|
$ |
2,836,235 |
|
|
3,015,663 |
Global
Ceramic |
Net sales |
|
$ |
1,059,334 |
|
|
1,064,757 |
Adjustment for constant
shipping days |
|
|
(948 |
) |
|
— |
Adjustment for constant exchange rates |
|
|
(6,187 |
) |
|
— |
Adjusted net sales |
|
$ |
1,052,199 |
|
|
1,064,757 |
Flooring
ROW |
|
|
|
|
Net sales |
|
$ |
793,472 |
|
878,996 |
Adjustment for constant exchange rates |
|
|
37,147 |
|
— |
Adjusted net sales |
|
$ |
830,619 |
|
878,996 |
Reconciliation of Gross Profit to Adjusted Gross
Profit |
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Gross Profit |
|
$ |
643,442 |
|
|
802,128 |
|
Adjustments to gross
profit: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
29,056 |
|
|
938 |
|
Inventory step-up from purchase accounting |
|
|
3,305 |
|
|
— |
|
Adjusted gross profit |
|
$ |
675,803 |
|
|
803,066 |
|
|
|
|
|
|
Adjusted gross profit as a percent of net sales |
|
|
24.1 |
% |
|
26.6 |
% |
Reconciliation of Selling, General and Administrative
Expenses to Adjusted Selling, General and Administrative
Expenses |
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Selling, general and administrative expenses |
|
$ |
517,652 |
|
|
481,327 |
|
Adjustments to selling,
general and administrative expenses: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
(4,058 |
) |
|
(980 |
) |
Adjusted selling, general and administrative expenses |
|
$ |
513,594 |
|
|
480,347 |
|
|
|
|
|
|
Adjusted selling, general and administrative expenses as a percent
of net sales |
|
|
18.3 |
% |
|
15.9 |
% |
Reconciliation of Operating Income to Adjusted Operating
Income |
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Mohawk Consolidated |
|
|
|
|
Operating income |
|
$ |
125,790 |
|
|
320,801 |
|
Adjustments to operating
income: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
33,114 |
|
|
1,918 |
|
Inventory step-up from purchase accounting |
|
|
3,305 |
|
|
— |
|
Adjusted operating income |
|
$ |
162,209 |
|
|
322,719 |
|
|
|
|
|
|
Adjusted operating income as a percent of net sales |
|
|
5.8 |
% |
|
10.7 |
% |
Global
Ceramic |
|
|
|
|
Operating income |
|
$ |
63,317 |
|
|
100,338 |
|
Adjustments to segment
operating income: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
637 |
|
|
— |
|
Inventory step-up from purchase accounting |
|
|
2,941 |
|
|
— |
|
Adjusted segment operating income |
|
$ |
66,895 |
|
|
100,338 |
|
|
|
|
|
|
Adjusted segment operating income as a percent of net sales |
|
|
6.3 |
% |
|
9.4 |
% |
Flooring
NA |
|
|
|
|
Operating (loss) income |
|
$ |
(2,013 |
) |
|
95,324 |
|
Adjustments to segment
operating (loss) income: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
6,990 |
|
|
105 |
|
Adjusted segment operating income |
|
$ |
4,977 |
|
|
95,429 |
|
|
|
|
|
|
Adjusted segment operating income as a percent of net sales |
|
|
0.5 |
% |
|
8.9 |
% |
Flooring
ROW |
|
|
|
|
Operating income |
|
$ |
75,245 |
|
|
134,650 |
|
Adjustments to segment
operating income: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
24,497 |
|
|
1,813 |
|
Inventory step-up from purchase accounting |
|
|
364 |
|
|
— |
|
Adjusted segment operating income |
|
$ |
100,106 |
|
|
136,463 |
|
|
|
|
|
|
Adjusted segment operating income as a percent of net sales |
|
|
12.6 |
% |
|
15.5 |
% |
Reconciliation of Earnings Including Noncontrolling
Interests Before Income Taxes to Adjusted Earnings Including
Noncontrolling Interests Before Income Taxes |
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Earnings before income taxes |
|
$ |
109,219 |
|
|
306,882 |
|
Net earnings attributable to
noncontrolling interests |
|
|
(38 |
) |
|
(105 |
) |
Adjustments to earnings
including noncontrolling interests before income taxes: |
|
|
|
|
Restructuring, acquisition and integration-related and other
costs |
|
|
32,123 |
|
|
1,918 |
|
Inventory step-up from purchase accounting |
|
|
3,305 |
|
|
— |
|
Release of indemnification asset |
|
|
— |
|
|
7,263 |
|
Adjusted earnings including noncontrolling interests before income
taxes |
|
$ |
144,609 |
|
|
315,958 |
|
Reconciliation of Income Tax Expense to Adjusted Income Tax
Expense |
|
|
Three Months Ended |
(Amounts in thousands) |
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Income tax expense |
|
$ |
28,943 |
|
|
61,448 |
|
Income taxes - reversal of
uncertain tax position |
|
|
— |
|
|
7,263 |
|
Income
tax effect of adjusting items |
|
|
3,723 |
|
|
1,684 |
|
Adjusted income tax expense |
|
$ |
32,666 |
|
|
70,395 |
|
|
|
|
|
|
Adjusted income tax rate |
|
|
22.6 |
% |
|
22.3 |
% |
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.
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, net of insurance proceeds, impairment of goodwill and
indefinite-lived intangibles, acquisition purchase accounting,
including inventory step-up from purchase accounting, release of
indemnification assets and the reversal of uncertain tax
positions.
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