Mohawk Industries, Inc. Announces Fourth Quarter Earnings
Record Q4 Adjusted EPS; 27% Increase Over PY
Adjusted Operating Income Up 160 bps
For the twelve months ending
Commenting on
Carpet segment net sales for the quarter were
Ceramic segment net sales for the quarter were
Laminate and Wood segment net sales for the quarter were
We anticipate stronger organic growth on a local basis in 2015, driven by improvements in the U.S. economy and the flooring market. In the U.S., rising consumer confidence supported by lower gasoline prices, low interest rates, increased home values and an improving job market should drive higher growth in our category. The U.S. dollar has recently strengthened considerably relative to the euro, ruble and other currencies and our translated results will be impacted. While we cannot affect the exchange rates, we are aggressively implementing productivity initiatives, SG&A reductions and other cost containment projects to minimize the impact. We will continue to invest in product innovation and operational improvements to drive our top line growth and margins. The first quarter of 2015 has four additional days, increasing sales 6%, and the fourth quarter will have four less days than in the same periods last year. Taking all of these factors into account, our guidance for first quarter earnings is
In January, we announced the continuation of our aggressive acquisition strategy with the purchase of the
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 in raw material prices and other input costs; 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; tax, product and other claims; litigation; and other risks identified in Mohawk's
Conference call
The telephone number is 1-800-603-9255 for US/
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
||||||||
Consolidated Statement of Operations |
Three Months Ended |
Twelve Months Ended |
||||||
(Amounts in thousands, except per share data) |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
||||
Net sales |
$ 1,951,446 |
1,924,104 |
7,803,446 |
7,348,754 |
||||
Cost of sales |
1,409,843 |
1,411,307 |
5,649,254 |
5,427,945 |
||||
Gross profit |
541,603 |
512,797 |
2,154,192 |
1,920,809 |
||||
Selling, general and administrative expenses |
335,483 |
361,809 |
1,381,396 |
1,373,878 |
||||
Operating income |
206,120 |
150,988 |
772,796 |
546,931 |
||||
Interest expense |
20,623 |
22,148 |
98,207 |
92,246 |
||||
Other expense (income), net |
9,737 |
2,656 |
10,698 |
9,114 |
||||
Earnings from continuing operations before income taxes |
175,760 |
126,184 |
663,891 |
445,571 |
||||
Income tax expense |
28,680 |
15,420 |
131,637 |
78,385 |
||||
Earnings from continuing operations |
147,080 |
110,764 |
532,254 |
367,186 |
||||
Loss from discontinued operations, net of income tax benefit of $268 and $1,050, respectively |
- |
(15,981) |
- |
(17,895) |
||||
Net earnings including noncontrolling interest |
147,080 |
94,783 |
532,254 |
349,291 |
||||
Net earnings (loss) attributable to noncontrolling interest |
212 |
132 |
289 |
505 |
||||
Net earnings attributable to Mohawk Industries, Inc. |
$ 146,868 |
94,651 |
531,965 |
348,786 |
||||
Basic earnings per share attributable to Mohawk Industries, Inc. |
||||||||
Income from continuing operations |
$ 2.01 |
1.52 |
7.30 |
5.11 |
||||
Loss from discontinued operations, net of income taxes |
- |
(0.22) |
- |
(0.25) |
||||
Basic earnings per share attributable to Mohawk Industries, Inc. |
$ 2.01 |
1.30 |
7.30 |
4.86 |
||||
Weighted-average common shares outstanding - basic |
72,905 |
72,654 |
72,837 |
71,773 |
||||
Diluted earnings per share attributable to Mohawk Industries, Inc. |
||||||||
Income from continuing operations |
$ 2.00 |
1.51 |
7.25 |
5.07 |
||||
Loss from discontinued operations, net of income taxes |
- |
(0.22) |
- |
(0.25) |
||||
Diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 2.00 |
1.29 |
7.25 |
4.82 |
||||
Weighted-average common shares outstanding - diluted |
73,452 |
73,214 |
73,363 |
72,301 |
||||
Other Financial Information |
||||||||
(Amounts in thousands) |
||||||||
Net cash provided by (used in) operating activities |
$ 338,765 |
198,190 |
662,188 |
525,163 |
||||
Depreciation and amortization |
$ 95,665 |
86,329 |
345,570 |
308,871 |
||||
Capital expenditures |
$ 170,224 |
111,027 |
561,804 |
366,550 |
||||
Consolidated Balance Sheet Data |
||||||||
(Amounts in thousands) |
||||||||
December 31, 2014 |
December 31, 2013 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ 97,877 |
54,066 |
||||||
Receivables, net |
1,081,963 |
1,062,875 |
||||||
Inventories |
1,543,313 |
1,572,325 |
||||||
Prepaid expenses and other current assets |
257,333 |
248,918 |
||||||
Deferred income taxes |
151,784 |
147,534 |
||||||
Total current assets |
3,132,270 |
3,085,718 |
||||||
Property, plant and equipment, net |
2,703,210 |
2,701,743 |
||||||
Goodwill |
1,604,352 |
1,736,092 |
||||||
Intangible assets, net |
702,009 |
811,602 |
||||||
Deferred income taxes and other non-current assets |
143,703 |
159,022 |
||||||
Total assets |
$ 8,285,544 |
8,494,177 |
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and commercial paper |
$ 851,305 |
127,218 |
||||||
Accounts payable and accrued expenses |
1,104,509 |
1,193,593 |
||||||
Total current liabilities |
1,955,814 |
1,320,811 |
||||||
Long-term debt, less current portion |
1,402,135 |
2,132,790 |
||||||
Deferred income taxes and other long-term liabilities |
504,782 |
570,270 |
||||||
Total liabilities |
3,862,731 |
4,023,871 |
||||||
Total stockholders' equity |
4,422,813 |
4,470,306 |
||||||
Total liabilities and stockholders' equity |
$ 8,285,544 |
8,494,177 |
||||||
Segment Information |
Three Months Ended |
As of or for the Twelve Months Ended |
||||||
(Amounts in thousands) |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
||||
Net sales: |
||||||||
Carpet |
$ 779,865 |
747,143 |
3,013,948 |
2,986,096 |
||||
Ceramic |
743,619 |
738,004 |
3,015,279 |
2,677,058 |
||||
Laminate and Wood |
458,728 |
466,082 |
1,890,567 |
1,792,260 |
||||
Intersegment sales |
(30,766) |
(27,125) |
(116,348) |
(106,660) |
||||
Consolidated net sales |
$ 1,951,446 |
1,924,104 |
7,803,446 |
7,348,754 |
||||
Operating income (loss): |
||||||||
Carpet |
$ 84,759 |
60,087 |
255,938 |
209,023 |
||||
Ceramic |
82,793 |
57,637 |
351,113 |
209,825 |
||||
Laminate and Wood |
45,004 |
40,290 |
194,734 |
159,365 |
||||
Corporate and eliminations |
(6,436) |
(7,026) |
(28,989) |
(31,282) |
||||
Consolidated operating income |
$ 206,120 |
150,988 |
772,796 |
546,931 |
||||
Assets: |
||||||||
Carpet |
$ 1,986,081 |
1,786,085 |
||||||
Ceramic |
3,542,594 |
3,787,785 |
||||||
Laminate and Wood |
2,542,566 |
2,716,759 |
||||||
Corporate and eliminations |
214,303 |
203,548 |
||||||
Consolidated assets |
$ 8,285,544 |
8,494,177 |
||||||
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, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||
Net earnings attributable to Mohawk Industries, Inc. |
$ 146,868 |
94,651 |
531,965 |
348,786 |
||||||||
Adjusting items: |
||||||||||||
Restructuring, acquisition, integration-related costs and disposal of subsidiary |
26,649 |
37,812 |
63,556 |
113,420 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
- |
- |
- |
31,041 |
||||||||
Discontinued operations |
- |
16,249 |
- |
18,945 |
||||||||
Legal reserve |
- |
- |
10,000 |
- |
||||||||
Bond redemption |
3,472 |
- |
18,922 |
- |
||||||||
Deferred loan costs |
- |
- |
1,080 |
490 |
||||||||
Interest on 3.85% senior notes |
- |
- |
- |
3,559 |
||||||||
Income taxes |
(10,444) |
(17,621) |
(27,856) |
(42,841) |
||||||||
Adjusted net earnings attributable to Mohawk Industries, Inc. |
$ 166,545 |
131,091 |
597,667 |
473,400 |
||||||||
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. |
2.27 |
1.79 |
8.15 |
6.55 |
||||||||
Weighted-average common shares outstanding - diluted |
73,452 |
73,214 |
73,363 |
72,301 |
||||||||
Reconciliation of Adjusted Diluted Earnings Per Share on a Constant Exchange Rate |
||||||||||||
Three Months Ended |
||||||||||||
December 31, 2014 |
||||||||||||
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 2.27 |
|||||||||||
Adjustment to constant exchange rate |
0.09 |
|||||||||||
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. on a constant exchange rate |
$ 2.36 |
|||||||||||
Reconciliation of Total Debt to Net Debt |
||||||||||||
(Amounts in thousands) |
||||||||||||
December 31, 2014 |
||||||||||||
Current portion of long-term debt and commercial paper |
$ 851,305 |
|||||||||||
Long-term debt, less current portion |
1,402,135 |
|||||||||||
Less: Cash and cash equivalents |
97,877 |
|||||||||||
Net Debt |
$ 2,155,563 |
|||||||||||
Reconciliation of Operating Income to Adjusted EBITDA |
||||||||||||
(Amounts in thousands) |
Trailing Twelve |
|||||||||||
Three Months Ended |
Months Ended |
|||||||||||
March 29, 2014 |
June 28, 2014 |
September 27, 2014 |
December 31, 2014 |
December 31, 2014 |
||||||||
Operating income |
130,735 |
222,248 |
213,693 |
206,120 |
772,796 |
|||||||
Other (expense) income |
(4,890) |
1,555 |
2,374 |
(9,737) |
(10,698) |
|||||||
Net (earnings) loss attributable to non-controlling interest |
28 |
(111) |
6 |
(212) |
(289) |
|||||||
Depreciation and amortization |
80,984 |
83,754 |
85,167 |
95,665 |
345,570 |
|||||||
EBITDA |
206,857 |
307,446 |
301,240 |
291,836 |
1,107,379 |
|||||||
Restructuring, acquisition and integration-related costs |
11,725 |
11,169 |
14,013 |
26,649 |
63,556 |
|||||||
Legal reserve |
- |
- |
10,000 |
- |
10,000 |
|||||||
Adjusted EBITDA |
218,582 |
318,615 |
325,253 |
318,485 |
1,180,935 |
|||||||
Net Debt to Adjusted EBITDA |
1.8 |
|||||||||||
Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||
Net sales |
$ 1,951,446 |
1,924,104 |
7,803,446 |
7,348,754 |
||||||||
Adjustment to net sales on a constant exchange rate |
72,152 |
- |
56,052 |
- |
||||||||
Net sales on a constant exchange rate |
$ 2,023,598 |
1,924,104 |
7,859,498 |
7,348,754 |
||||||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
Ceramic |
December 31, 2014 |
December 31, 2013 |
||||||||||
Net sales |
$ 743,619 |
738,004 |
||||||||||
Adjustment to segment net sales on a constant exchange rate |
44,742 |
- |
||||||||||
Segment net sales on a constant exchange rate |
$ 788,361 |
738,004 |
||||||||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
Laminate and Wood |
December 31, 2014 |
December 31, 2013 |
||||||||||
Net sales |
$ 458,728 |
466,082 |
||||||||||
Adjustment to segment net sales on a constant exchange rate |
27,411 |
- |
||||||||||
Segment net sales on a constant exchange rate |
$ 486,139 |
466,082 |
||||||||||
Reconciliation of Gross Profit to Adjusted Gross Profit |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||
Gross Profit |
$ 541,603 |
512,797 |
2,154,192 |
1,920,809 |
||||||||
Adjustments to gross profit: |
||||||||||||
Restructuring and integration-related costs |
11,568 |
16,707 |
31,222 |
49,151 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
- |
- |
- |
31,041 |
||||||||
Adjusted gross profit |
$ 553,171 |
529,504 |
2,185,414 |
2,001,001 |
||||||||
Adjusted gross profit as a percent of net sales |
28.3% |
27.5% |
28.0% |
27.2% |
||||||||
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
December 31, 2014 |
December 31, 2013 |
|||||||||||
Selling, general and administrative expenses |
$ 335,483 |
361,809 |
||||||||||
Adjustments to selling, general and administrative expenses: |
||||||||||||
Restructuring, acquisition and integration-related costs |
(3,127) |
(19,644) |
||||||||||
Adjusted selling, general and administrative expenses |
$ 332,356 |
342,165 |
||||||||||
Adjusted selling, general and administrative expenses as a percent of net sales |
17.0% |
17.8% |
||||||||||
Reconciliation of Operating Income to Adjusted Operating Income |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||
Operating income |
$ 206,120 |
150,988 |
772,796 |
546,931 |
||||||||
Adjustments to operating income: |
||||||||||||
Restructuring, acquisition and integration-related costs |
14,695 |
36,351 |
63,556 |
111,939 |
||||||||
Legal reserve |
- |
- |
10,000 |
- |
||||||||
Acquisitions purchase accounting (inventory step-up) |
- |
- |
- |
31,041 |
||||||||
Adjusted operating income |
$ 220,815 |
187,339 |
846,352 |
689,911 |
||||||||
Adjusted operating income as a percent of net sales |
11.3% |
9.7% |
10.8% |
9.4% |
||||||||
Reconciliation of Adjusted Operating Income on a Constant Exchange Rate |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
December 31, 2014 |
December 31, 2013 |
|||||||||||
Operating income |
$ 206,120 |
150,988 |
||||||||||
Adjustments to operating income |
14,695 |
36,351 |
||||||||||
Adjustments to operating income on a constant exchange rate |
8,050 |
- |
||||||||||
Adjusted operating income on constant exchange rate |
$ 228,865 |
187,339 |
||||||||||
Adjusted operating income as a percent of net sales |
11.3% |
9.7% |
||||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
Carpet |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
||||||||
Operating income |
$ 84,759 |
60,087 |
255,938 |
209,023 |
||||||||
Adjustment to segment operating income: |
||||||||||||
Restructuring, acquisition and integration-related costs |
1,999 |
6,005 |
1,999 |
13,603 |
||||||||
Legal reserve |
- |
- |
10,000 |
- |
||||||||
Adjusted segment operating income |
$ 86,758 |
66,092 |
267,937 |
222,626 |
||||||||
Adjusted operating income as a percent of net sales |
11.1% |
8.8% |
8.9% |
7.5% |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
Ceramic |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
||||||||
Operating income |
$ 82,793 |
57,637 |
351,113 |
209,825 |
||||||||
Adjustments to segment operating income: |
||||||||||||
Restructuring, acquisition and integration-related costs |
2,905 |
15,982 |
9,330 |
42,876 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
- |
- |
- |
31,041 |
||||||||
Adjusted segment operating income |
$ 85,698 |
73,619 |
360,443 |
283,742 |
||||||||
Adjusted operating income as a percent of net sales |
11.5% |
10.0% |
12.0% |
10.6% |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
Ceramic |
December 31, 2014 |
December 31, 2013 |
||||||||||
Operating income |
$ 82,793 |
57,637 |
||||||||||
Adjustments to operating income |
2,905 |
15,982 |
||||||||||
Adjustments to operating income on a constant exchange rate |
4,493 |
- |
||||||||||
Adjusted operating income on constant exchange rate |
$ 90,191 |
73,619 |
||||||||||
Adjusted operating income as a percent of net sales |
11.4% |
10.0% |
||||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
Laminate and Wood |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
||||||||
Operating income |
$ 45,004 |
40,290 |
194,734 |
159,365 |
||||||||
Adjustment to segment operating income: |
||||||||||||
Restructuring, acquisition and integration-related costs |
9,424 |
13,852 |
38,788 |
54,235 |
||||||||
Adjusted segment operating income |
$ 54,428 |
54,142 |
233,522 |
213,600 |
||||||||
Adjusted operating income as a percent of net sales |
11.9% |
11.6% |
12.4% |
11.9% |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
Laminate and Wood |
December 31, 2014 |
December 31, 2013 |
||||||||||
Operating income |
$ 45,004 |
40,290 |
||||||||||
Adjustments to operating income |
9,424 |
13,852 |
||||||||||
Adjustments to operating income on a constant exchange rate |
3,557 |
- |
||||||||||
Adjusted operating income on constant exchange rate |
$ 57,985 |
54,142 |
||||||||||
Adjusted operating income as a percent of net sales |
11.9% |
11.6% |
||||||||||
Reconciliation of Earnings from Continuing Operations Before Income Taxes to Adjusted Earnings from Continuing Operations Before Income Taxes |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
December 31, 2014 |
December 31, 2013 |
|||||||||||
Earnings from continuing operations before income taxes |
$ 175,760 |
126,184 |
||||||||||
Adjustments to earnings from continuing operations before income taxes: |
||||||||||||
Restructuring, acquisition, integration-related costs and disposal of subsidiary |
26,649 |
37,812 |
||||||||||
Acquisitions purchase accounting (inventory step-up) |
- |
- |
||||||||||
Legal reserve |
- |
- |
||||||||||
Bond redemption |
3,472 |
- |
||||||||||
Deferred loan costs |
- |
- |
||||||||||
Interest on 3.85% senior notes |
- |
- |
||||||||||
Adjusted earnings before income taxes |
$ 205,881 |
163,996 |
||||||||||
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense |
||||||||||||
(Amounts in thousands) |
||||||||||||
Three Months Ended |
||||||||||||
December 31, 2014 |
December 31, 2013 |
|||||||||||
Income tax expense |
$ 28,680 |
15,420 |
||||||||||
Income tax effect of adjusting items |
10,444 |
17,353 |
||||||||||
Adjusted income tax expense |
$ 39,124 |
32,773 |
||||||||||
Adjusted income tax rate |
19% |
20% |
||||||||||
Proforma Net Sales and Operating Income Adjusted by FX |
||||||||||||
(Amounts in thousands) |
Twelve Months Ended |
|||||||||||
December 31, 2014 |
||||||||||||
Net Sales |
Operating Income |
|||||||||||
Net Sales and Operating Income as reported |
$ 7,803,446 |
772,796 |
||||||||||
FX adjustments using average rates of Euro/USD: 1.14 and Ruble/USD: 61.0 |
(392,838) |
(56,436) |
||||||||||
Proforma Net Sales and Operating Income Adjusted by FX |
$ 7,410,608 |
716,360 |
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The Company believes it is useful for itself and investors to review, as applicable, both GAAP and the above non-GAAP measures in order to assess the performance of the Company's business for planning and forecasting in subsequent periods. In particular, the Company believes excluding the impact of restructuring, acquisition and integration-related costs is useful because it allows investors to evaluate our performance for different periods on a more comparable basis. |
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mohawk-industries-inc-announces-fourth-quarter-earnings-300038769.html
SOURCE
Frank H. Boykin, Chief Financial Officer, (706) 624-2695