Mohawk Industries Reports Q3 Results And Announces $500 Million Stock Repurchase Plan
CALHOUN, Ga.,
For the nine months ending
Commenting on
"In the
We have many investments in new products and geographies in various stages of completion that have a combined sales potential of
We are confident about Mohawk's position in the global market, and our Board of Directors has approved a new plan to repurchase
"For the quarter, our Global Ceramic Segment sales decreased 1% as reported and increased 1% on a constant currency basis. Operating margin was approximately 13%, declining year over year due to inflation, pricing pressures and lower growth in most of our markets. Our
"On
"During the quarter, our
"For the quarter, our Flooring Rest of the World Segment's sales increased 17% as reported and 19% on a constant currency basis. The segment's operating margin was 14% as reported and 16% on an adjusted basis, as a result of improved price, product mix and productivity, offsetting inflation and start-up costs. Our segment sales rose substantially with the recent acquisition of
"We anticipate fourth quarter results continuing the soft trends we experienced in the third period. We expect sales to be slightly slower than the prior quarter in most markets and product categories. Even with price increases across the company, we will not offset inflation and our results will remain under pressure. Our margins are being impacted by more competitive environments, declining product mix, and lower manufacturing rates. We are introducing new products and executing cost reductions to improve our performance. We are expanding our internal transportation and optimizing our distribution strategy in the
"Presently, softening market conditions, significant inflation and declining product mix are hurting our results. LVT is an opportunity to expand while also impacting the volume, mix and pricing of our other products in the U.S. We are reacting to a stronger dollar which has compressed our margins. Going forward, our results should improve as we align pricing and enhance our product offering. Our new investments are on track with construction, start-up and the acquisition of customers and will provide proper returns when optimized. We will continue acquiring premier companies like Eliane to expand our offering and geographic presence. Mohawk is the largest flooring company in the world with low cost positions in all of our products. Mohawk's organizational depth, innovative products and strong balance sheet provide competitive advantages to create long-term value for our shareholders."
Stock repurchase authorization
Mohawk's board of directors has approved a share repurchase program pursuant to which the company may repurchase up to
Purchases will be made in accordance with all applicable securities laws and regulations and will be funded from available liquidity including available cash or borrowings under existing or future credit facilities. The share repurchase program does not obligate the company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the company's discretion. The timing and amount of any purchases of common stock will be based on our liquidity, general business and market conditions and other factors, including alternative investment opportunities.
ABOUT
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
Conference call
The telephone number is 1-800-603-9255 for US/
|
||||||||||
(Unaudited) |
||||||||||
Condensed Consolidated Statement of Operations Data |
Three Months Ended |
Nine Months Ended |
||||||||
(Amounts in thousands, except per share data) |
|
|
|
|
||||||
Net sales |
$ |
2,545,800 |
2,448,510 |
7,535,016 |
7,122,193 |
|||||
Cost of sales |
1,825,367 |
1,665,209 |
5,343,336 |
4,879,403 |
||||||
Gross profit |
720,433 |
783,301 |
2,191,680 |
2,242,790 |
||||||
Selling, general and administrative expenses |
433,189 |
403,203 |
1,309,730 |
1,232,083 |
||||||
Operating income |
287,244 |
380,098 |
881,950 |
1,010,707 |
||||||
Interest expense |
9,025 |
7,259 |
24,416 |
23,854 |
||||||
Other expense, net |
706 |
1,285 |
6,794 |
1,455 |
||||||
Earnings before income taxes |
277,513 |
371,554 |
850,740 |
985,398 |
||||||
Income tax expense |
49,487 |
100,532 |
215,928 |
251,572 |
||||||
Net earnings including noncontrolling interest |
228,026 |
271,022 |
634,812 |
733,826 |
||||||
Net income attributable to noncontrolling interest |
1,013 |
997 |
2,447 |
2,566 |
||||||
Net earnings attributable to |
$ |
227,013 |
270,025 |
632,365 |
731,260 |
|||||
Basic earnings per share attributable to |
||||||||||
Basic earnings per share attributable to |
$ |
3.03 |
3.63 |
8.46 |
9.84 |
|||||
Weighted-average common shares outstanding - basic |
74,603 |
74,338 |
74,599 |
74,330 |
||||||
Diluted earnings per share attributable to |
||||||||||
Diluted earnings per share attributable to |
$ |
3.02 |
3.61 |
8.42 |
9.77 |
|||||
Weighted-average common shares outstanding - diluted |
74,945 |
74,841 |
74,977 |
74,830 |
||||||
Other Financial Information |
||||||||||
(Amounts in thousands) |
||||||||||
Depreciation and amortization |
$ |
132,972 |
113,515 |
382,673 |
328,300 |
|||||
Capital expenditures |
$ |
144,594 |
229,207 |
642,949 |
654,630 |
|||||
Condensed Consolidated Balance Sheet Data |
||||||||||
(Amounts in thousands) |
||||||||||
|
|
|||||||||
ASSETS |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ |
91,351 |
84,502 |
|||||||
Receivables, net |
1,755,710 |
1,656,064 |
||||||||
Inventories |
2,214,295 |
1,911,029 |
||||||||
Prepaid expenses and other current assets |
487,114 |
345,515 |
||||||||
Total current assets |
4,548,470 |
3,997,110 |
||||||||
Property, plant and equipment, net |
4,586,236 |
4,090,099 |
||||||||
|
2,522,139 |
2,454,360 |
||||||||
Intangible assets, net |
944,661 |
890,298 |
||||||||
Deferred income taxes and other non-current assets |
399,420 |
390,946 |
||||||||
Total assets |
$ |
13,000,926 |
11,822,813 |
|||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||||
Current liabilities: |
||||||||||
Current portion of long-term debt and commercial paper |
$ |
1,333,853 |
1,172,781 |
|||||||
Accounts payable and accrued expenses |
1,623,418 |
1,524,237 |
||||||||
Total current liabilities |
2,957,271 |
2,697,018 |
||||||||
Long-term debt, less current portion |
1,528,551 |
1,544,665 |
||||||||
Deferred income taxes and other long-term liabilities |
912,100 |
755,020 |
||||||||
Total liabilities |
5,397,922 |
4,996,703 |
||||||||
Redeemable noncontrolling interest |
31,227 |
28,508 |
||||||||
Total stockholders' equity |
7,571,777 |
6,797,602 |
||||||||
Total liabilities and stockholders' equity |
$ |
13,000,926 |
11,822,813 |
|||||||
Segment Information |
Three Months Ended |
As of or for the Nine Months Ended |
||||||||
(Amounts in thousands) |
|
|
|
|
||||||
Net sales: |
||||||||||
Global Ceramic |
$ |
885,773 |
893,399 |
2,691,618 |
2,581,038 |
|||||
|
1,047,540 |
1,031,773 |
3,055,468 |
3,011,568 |
||||||
Flooring ROW |
612,487 |
523,338 |
1,787,930 |
1,529,587 |
||||||
Intersegment sales |
- |
- |
- |
- |
||||||
Consolidated net sales |
$ |
2,545,800 |
2,448,510 |
7,535,016 |
7,122,193 |
|||||
Operating income (loss): |
||||||||||
Global Ceramic |
$ |
118,716 |
143,368 |
366,893 |
411,961 |
|||||
|
93,369 |
163,494 |
268,779 |
383,118 |
||||||
Flooring ROW |
84,108 |
83,042 |
273,334 |
245,189 |
||||||
Corporate and intersegment eliminations |
(8,949) |
(9,806) |
(27,056) |
(29,561) |
||||||
Consolidated operating income |
$ |
287,244 |
380,098 |
881,950 |
1,010,707 |
|||||
Assets: |
||||||||||
Global Ceramic |
$ |
4,999,334 |
4,826,619 |
|||||||
|
3,989,784 |
3,699,633 |
||||||||
Flooring ROW |
3,709,623 |
3,128,213 |
||||||||
Corporate and intersegment eliminations |
302,185 |
168,348 |
||||||||
Consolidated assets |
$ |
13,000,926 |
11,822,813 |
|||||||
Reconciliation of Net Earnings Attributable to |
||||||||||||||
(Amounts in thousands, except per share data) |
||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
|
|
|
|
|||||||||||
Net earnings attributable to |
$ |
227,013 |
270,025 |
632,365 |
731,260 |
|||||||||
Adjusting items: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
19,890 |
13,853 |
58,036 |
33,709 |
||||||||||
Acquisitions purchase accounting , including inventory step-up |
7,090 |
3,551 |
8,638 |
13,314 |
||||||||||
Release of indemnification asset |
- |
- |
1,749 |
- |
||||||||||
Income taxes - reversal of uncertain tax position |
- |
- |
(1,749) |
- |
||||||||||
Income taxes (1) |
(7,701) |
(6,545) |
35,465 |
(15,637) |
||||||||||
Adjusted net earnings attributable to |
$ |
246,292 |
280,884 |
734,504 |
762,646 |
|||||||||
Adjusted diluted earnings per share attributable to |
$ |
3.29 |
3.75 |
9.80 |
10.19 |
|||||||||
Weighted-average common shares outstanding - diluted |
74,945 |
74,841 |
74,977 |
74,830 |
||||||||||
(1) Includes |
||||||||||||||
Reconciliation of Total Debt to Net Debt |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
|
||||||||||||||
Current portion of long-term debt and commercial paper |
$ |
1,333,853 |
||||||||||||
Long-term debt, less current portion |
1,528,551 |
|||||||||||||
Less: Cash and cash equivalents |
91,351 |
|||||||||||||
Net Debt |
$ |
2,771,053 |
||||||||||||
Reconciliation of Operating Income to Adjusted EBITDA |
||||||||||||||
(Amounts in thousands) |
Trailing Twelve |
|||||||||||||
Three Months Ended |
Months Ended |
|||||||||||||
|
|
|
|
|
||||||||||
Operating income |
$ |
343,466 |
268,399 |
326,307 |
287,244 |
1,225,416 |
||||||||
Other (expense) income |
(3,750) |
(3,998) |
(2,090) |
(706) |
(10,544) |
|||||||||
Net (income) loss attributable to noncontrolling interest |
(488) |
(475) |
(959) |
(1,013) |
(2,935) |
|||||||||
Depreciation and amortization |
118,372 |
122,654 |
127,048 |
132,972 |
501,046 |
|||||||||
EBITDA |
457,600 |
386,580 |
450,306 |
418,497 |
1,712,983 |
|||||||||
Restructuring, acquisition and integration-related and other costs |
15,231 |
22,104 |
16,042 |
19,890 |
73,267 |
|||||||||
Acquisitions purchase accounting, including inventory step-up |
- |
1,354 |
194 |
7,090 |
8,638 |
|||||||||
Release of indemnification asset |
4,459 |
1,749 |
- |
- |
6,208 |
|||||||||
Adjusted EBITDA |
$ |
477,290 |
411,787 |
466,542 |
445,477 |
1,801,096 |
||||||||
Net Debt to Adjusted EBITDA |
1.5 |
|||||||||||||
Reconciliation of |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
|
|
|
|
|||||||||||
Net sales |
$ |
2,545,800 |
2,448,510 |
7,535,016 |
7,122,193 |
|||||||||
Adjustment to net sales on a constant exchange rate |
23,400 |
- |
(123,758) |
- |
||||||||||
Net sales on a constant exchange rate |
2,569,200 |
2,448,510 |
7,411,258 |
7,122,193 |
||||||||||
Less: impact of acquisition volume |
(75,165) |
- |
(121,680) |
- |
||||||||||
Net sales on a constant exchange rate excluding acquisition volume |
$ |
2,494,035 |
2,448,510 |
7,289,578 |
7,122,193 |
|||||||||
Reconciliation of Segment |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
Global Ceramic |
|
|
||||||||||||
Net sales |
$ |
885,773 |
893,399 |
|||||||||||
Adjustment to segment net sales on a constant exchange rate |
13,081 |
- |
||||||||||||
Segment net sales on a constant exchange rate |
$ |
898,854 |
893,399 |
|||||||||||
Reconciliation of Segment |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
Flooring ROW |
|
|
||||||||||||
Net sales |
$ |
612,487 |
523,338 |
|||||||||||
Adjustment to segment net sales on a constant exchange rate |
10,319 |
- |
||||||||||||
Segment net sales on a constant exchange rate |
622,806 |
523,338 |
||||||||||||
Less: impact of acquisition volume |
(75,165) |
- |
||||||||||||
Segment net sales on a constant exchange rate excluding acquisition volume |
$ |
547,641 |
523,338 |
|||||||||||
Reconciliation of Gross Profit to Adjusted Gross Profit |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
|
|
|||||||||||||
Gross Profit |
$ |
720,433 |
783,301 |
|||||||||||
Adjustments to gross profit: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
10,202 |
8,845 |
||||||||||||
Acquisitions purchase accounting, including inventory step-up |
7,090 |
3,551 |
||||||||||||
Adjusted gross profit |
$ |
737,725 |
795,697 |
|||||||||||
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
|
|
|||||||||||||
Selling, general and administrative expenses |
$ |
433,189 |
403,203 |
|||||||||||
Adjustments to selling, general and administrative expenses: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
(9,688) |
(5,008) |
||||||||||||
Adjusted selling, general and administrative expenses |
$ |
423,501 |
398,195 |
|||||||||||
Reconciliation of Operating Income to Adjusted Operating Income |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
|
|
|||||||||||||
Operating income |
$ |
287,244 |
380,098 |
|||||||||||
Adjustments to operating income: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
19,890 |
13,853 |
||||||||||||
Acquisitions purchase accounting, including inventory step-up |
7,090 |
3,551 |
||||||||||||
Adjusted operating income |
$ |
314,224 |
397,502 |
|||||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
Global Ceramic |
|
|
||||||||||||
Operating income |
$ |
118,716 |
143,368 |
|||||||||||
Adjustments to segment operating income: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
181 |
2,800 |
||||||||||||
Acquisitions purchase accounting, including inventory step-up |
- |
3,551 |
||||||||||||
Adjusted segment operating income |
$ |
118,897 |
149,719 |
|||||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
Flooring NA |
|
|
||||||||||||
Operating income |
$ |
93,369 |
163,494 |
|||||||||||
Adjustments to segment operating income: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
10,603 |
8,682 |
||||||||||||
Adjusted segment operating income |
$ |
103,972 |
172,176 |
|||||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
Flooring ROW |
|
|
||||||||||||
Operating income |
$ |
84,108 |
83,042 |
|||||||||||
Adjustments to segment operating income: |
||||||||||||||
Restructuring, acquisition and integration-related and other costs |
5,596 |
1,620 |
||||||||||||
Acquisitions purchase accounting, including inventory step-up |
7,090 |
- |
||||||||||||
Adjusted segment operating income |
$ |
96,794 |
84,662 |
|||||||||||
Reconciliation of Earnings including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
|
|
|||||||||||||
Earnings before income taxes |
$ |
277,513 |
371,554 |
|||||||||||
Noncontrolling interests |
(1,013) |
(997) |
||||||||||||
Adjustments to earnings including noncontrolling interests before income taxes: |
||||||||||||||
Restructuring, acquisition and integration-related & other costs |
19,890 |
13,853 |
||||||||||||
Acquisitions purchase accounting, including inventory step-up |
7,090 |
3,551 |
||||||||||||
Adjusted earnings including noncontrolling interests before income taxes |
$ |
303,480 |
387,961 |
|||||||||||
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense |
||||||||||||||
(Amounts in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
|
|
|||||||||||||
Income tax expense |
$ |
49,487 |
100,532 |
|||||||||||
Income tax effect of adjusting items |
7,701 |
6,545 |
||||||||||||
Adjusted income tax expense |
$ |
57,188 |
107,077 |
|||||||||||
Adjusted income tax rate |
18.8% |
27.6% |
||||||||||||
The Company supplements its condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, with certain non-GAAP financial measures. As required by the |
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. |
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