Mohawk Industries, Inc. Announces Second Quarter Earnings
For the six months ending
Commenting on
Carpet segment net sales for the quarter were
Ceramic segment net sales were
Laminate and Wood segment sales were
During the period, we once again demonstrated our ability to deliver earnings growth through sales improvement, productivity initiatives and leveraging acquisitions. In each of our segments, we are optimizing the efficiency of our operations, the advantages of our leading market positions, the breadth of our distribution and the strength of our brands to grow our business. We anticipate that our sales will strengthen as we move through the second half of the year supported by continued U.S. job creation and improved economic growth. In the third quarter, we anticipate further improvement in the U.S. market with limited growth in
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
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
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Consolidated Statement of Operations |
Three Months Ended |
Six Months Ended |
||||||
(Amounts in thousands, except per share data) |
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
||||
Net sales |
$ 2,048,247 |
1,976,299 |
3,861,342 |
3,463,114 |
||||
Cost of sales |
1,473,435 |
1,462,243 |
2,805,175 |
2,571,992 |
||||
Gross profit |
574,812 |
514,056 |
1,056,167 |
891,122 |
||||
Selling, general and administrative expenses |
352,564 |
380,858 |
703,184 |
671,082 |
||||
Operating income |
222,248 |
133,198 |
352,983 |
220,040 |
||||
Interest expense |
20,702 |
25,312 |
42,798 |
44,468 |
||||
Other (income) expense, net |
(1,555) |
(1,097) |
3,335 |
5,290 |
||||
Earnings from continuing operations before income taxes |
203,101 |
108,983 |
306,850 |
170,282 |
||||
Income tax expense |
50,240 |
23,240 |
72,936 |
33,972 |
||||
Earnings from continuing operations |
152,861 |
85,743 |
233,914 |
136,310 |
||||
Loss from discontinued operations, net of income tax benefit of $485 |
- |
(1,361) |
- |
(1,361) |
||||
Net earnings including noncontrolling interest |
152,861 |
84,382 |
233,914 |
134,949 |
||||
Net earnings (loss) attributable to noncontrolling interest |
111 |
(190) |
83 |
(118) |
||||
Net earnings attributable to Mohawk Industries, Inc. |
$ 152,750 |
84,572 |
233,831 |
135,067 |
||||
Basic earnings per share attributable to Mohawk Industries, Inc. |
||||||||
Income from continuing operations |
$ 2.10 |
1.19 |
3.21 |
1.92 |
||||
Loss from discontinued operations, net of income taxes |
- |
(0.02) |
- |
(0.02) |
||||
Basic earnings per share attributable to Mohawk Industries, Inc. |
$ 2.10 |
1.17 |
3.21 |
1.90 |
||||
Weighted-average common shares outstanding - basic |
72,832 |
72,406 |
72,788 |
70,907 |
||||
Diluted earnings per share attributable to Mohawk Industries, Inc. |
||||||||
Income from continuing operations |
$ 2.08 |
1.18 |
3.19 |
1.91 |
||||
Loss from discontinued operations, net of income taxes |
- |
(0.02) |
- |
(0.02) |
||||
Diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 2.08 |
1.16 |
3.19 |
1.89 |
||||
Weighted-average common shares outstanding - diluted |
73,297 |
72,867 |
73,302 |
71,405 |
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Other Financial Information |
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(Amounts in thousands) |
||||||||
Depreciation and amortization |
$ 83,754 |
80,643 |
164,738 |
140,992 |
||||
Capital expenditures |
$ 127,616 |
82,815 |
249,697 |
146,097 |
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Consolidated Balance Sheet Data |
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(Amounts in thousands) |
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June 28, 2014 |
June 29, 2013 |
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ASSETS |
||||||||
Current assets: |
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Cash and cash equivalents |
$ 70,044 |
168,745 |
||||||
Receivables, net |
1,261,808 |
1,145,550 |
||||||
Inventories |
1,644,768 |
1,591,552 |
||||||
Prepaid expenses and other current assets |
267,210 |
229,859 |
||||||
Deferred income taxes |
135,259 |
134,489 |
||||||
Total current assets |
3,379,089 |
3,270,195 |
||||||
Property, plant and equipment, net |
2,830,202 |
2,594,256 |
||||||
Goodwill |
1,730,713 |
1,690,622 |
||||||
Intangible assets, net |
792,260 |
800,529 |
||||||
Deferred income taxes and other non-current assets |
149,417 |
153,362 |
||||||
Total assets |
$ 8,881,681 |
8,508,964 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and commercial paper |
$ 619,229 |
83,171 |
||||||
Accounts payable and accrued expenses |
1,253,291 |
1,261,791 |
||||||
Total current liabilities |
1,872,520 |
1,344,962 |
||||||
Long-term debt, less current portion |
1,807,609 |
2,450,584 |
||||||
Deferred income taxes and other long-term liabilities |
528,252 |
609,125 |
||||||
Total liabilities |
4,208,381 |
4,404,671 |
||||||
Total stockholders' equity |
4,673,300 |
4,104,293 |
||||||
Total liabilities and stockholders' equity |
$ 8,881,681 |
8,508,964 |
||||||
Segment Information |
Three Months Ended |
As of or for the Six Months Ended |
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(Amounts in thousands) |
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
||||
Net sales: |
||||||||
Carpet |
$ 780,308 |
770,868 |
1,455,234 |
1,466,202 |
||||
Ceramic |
796,724 |
760,168 |
1,491,818 |
1,172,049 |
||||
Laminate and Wood |
501,257 |
470,980 |
969,265 |
875,455 |
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Intersegment sales |
(30,042) |
(25,717) |
(54,975) |
(50,592) |
||||
Consolidated net sales |
$ 2,048,247 |
1,976,299 |
3,861,342 |
3,463,114 |
||||
Operating income (loss): |
||||||||
Carpet |
$ 62,826 |
54,862 |
97,097 |
80,100 |
||||
Ceramic |
106,407 |
46,304 |
167,066 |
76,280 |
||||
Laminate and Wood |
60,843 |
41,362 |
104,962 |
80,055 |
||||
Corporate and eliminations |
(7,828) |
(9,330) |
(16,142) |
(16,395) |
||||
Consolidated operating income |
$ 222,248 |
133,198 |
352,983 |
220,040 |
||||
Assets: |
||||||||
Carpet |
$ 1,960,106 |
1,803,212 |
||||||
Ceramic |
3,900,387 |
3,832,888 |
||||||
Laminate and Wood |
2,818,129 |
2,691,553 |
||||||
Corporate and eliminations |
203,059 |
181,311 |
||||||
Consolidated assets |
$ 8,881,681 |
8,508,964 |
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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. |
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(Amounts in thousands, except per share data) |
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Three Months Ended |
Six Months Ended |
||||||||
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
||||||
Net earnings attributable to Mohawk Industries, Inc. |
$ 152,750 |
84,572 |
233,831 |
135,067 |
|||||
Adjusting items: |
|||||||||
Restructuring, acquisition and integration-related costs |
11,169 |
41,321 |
22,894 |
51,177 |
|||||
Acquisitions purchase accounting (inventory step-up) |
- |
18,744 |
- |
18,744 |
|||||
Discontinued operations |
- |
1,845 |
- |
1,845 |
|||||
Interest on 3.85% senior notes |
- |
- |
- |
3,559 |
|||||
Income taxes |
(2,229) |
(12,668) |
(4,620) |
(15,448) |
|||||
Adjusted net earnings attributable to Mohawk Industries, Inc. |
$ 161,690 |
133,814 |
252,105 |
194,944 |
|||||
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. |
2.21 |
1.84 |
3.44 |
2.73 |
|||||
Weighted-average common shares outstanding - diluted |
73,297 |
72,867 |
73,302 |
71,405 |
|||||
Reconciliation of Total Debt to Net Debt |
|||||||||
(Amounts in thousands) |
|||||||||
June 28, 2014 |
|||||||||
Current portion of long-term debt and commercial paper |
$ 619,229 |
||||||||
Long-term debt, less current portion |
1,807,609 |
||||||||
Less: Cash and cash equivalents |
70,044 |
||||||||
Net Debt |
$ 2,356,794 |
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Reconciliation of Operating Income to Adjusted EBITDA |
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(Amounts in thousands) |
Three Months Ended |
Trailing Twelve Months Ended |
|||||||
September 28, 2013 |
December 31, 2013 |
March 29, 2014 |
June 28, 2014 |
June 28, 2014 |
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Operating income |
$ 175,903 |
150,988 |
130,735 |
222,248 |
679,874 |
||||
Other (expense) income |
(1,168) |
(2,656) |
(4,890) |
1,555 |
(7,159) |
||||
Net (earnings) loss attributable to noncontrolling interest |
(491) |
(132) |
28 |
(111) |
(706) |
||||
Depreciation and amortization |
81,550 |
86,329 |
80,984 |
83,754 |
332,617 |
||||
EBITDA |
255,794 |
234,529 |
206,857 |
307,446 |
1,004,626 |
||||
Restructuring, acquisition and integration-related costs |
24,431 |
37,812 |
11,725 |
11,169 |
85,137 |
||||
Acquisitions purchase accounting (inventory step-up) |
12,297 |
- |
- |
- |
12,297 |
||||
Adjusted EBITDA |
$ 292,522 |
272,341 |
218,582 |
318,615 |
1,102,060 |
||||
Net Debt to Adjusted EBITDA |
2.1 |
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Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate |
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(Amounts in thousands) |
|||||||||
Three Months Ended |
|||||||||
June 28, 2014 |
June 29, 2013 |
||||||||
Net sales |
$ 2,048,247 |
1,976,299 |
|||||||
Adjustment to net sales on a constant exchange rate |
(14,171) |
- |
|||||||
Net sales on a constant exchange rate |
$ 2,034,076 |
1,976,299 |
|||||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
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(Amounts in thousands) |
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Three Months Ended |
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Ceramic |
June 28, 2014 |
June 29, 2013 |
|||||||
Net sales |
$ 796,724 |
760,168 |
|||||||
Adjustment to segment net sales on a constant exchange rate |
2,144 |
- |
|||||||
Segment net sales on a constant exchange rate |
$ 798,868 |
760,168 |
|||||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
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(Amounts in thousands) |
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Three Months Ended |
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Laminate and Wood |
June 28, 2014 |
June 29, 2013 |
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Net sales |
$ 501,257 |
470,980 |
|||||||
Adjustment to segment net sales on a constant exchange rate |
(16,315) |
- |
|||||||
Segment net sales on a constant exchange rate |
$ 484,942 |
470,980 |
|||||||
Reconciliation of Gross Profit to Adjusted Gross Profit |
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(Amounts in thousands) |
|||||||||
Three Months Ended |
|||||||||
June 28, 2014 |
June 29, 2013 |
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Gross Profit |
$ 574,812 |
514,056 |
|||||||
Adjustments to gross profit: |
|||||||||
Restructuring and integration-related costs |
6,755 |
14,334 |
|||||||
Acquisitions purchase accounting (inventory step-up) |
- |
18,744 |
|||||||
Adjusted gross profit |
$ 581,567 |
547,134 |
|||||||
Adjusted gross profit as a percent of net sales |
28.4% |
27.7% |
|||||||
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses |
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(Amounts in thousands) |
|||||||||
Three Months Ended |
|||||||||
June 28, 2014 |
June 29, 2013 |
||||||||
Selling, general and administrative expenses |
$ 352,564 |
380,858 |
|||||||
Adjustments to selling, general and administrative expenses: |
|||||||||
Restructuring, acquisition and integration-related costs |
(4,414) |
(26,987) |
|||||||
Adjusted selling, general and administrative expenses |
$ 348,150 |
353,871 |
|||||||
Adjusted selling, general and administrative expenses as a percent of net sales |
17.0% |
17.9% |
|||||||
Reconciliation of Operating Income to Adjusted Operating Income |
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(Amounts in thousands) |
|||||||||
Three Months Ended |
Six Months Ended |
||||||||
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
||||||
Operating income |
$ 222,248 |
133,198 |
352,983 |
220,040 |
|||||
Adjustments to operating income: |
|||||||||
Restructuring, acquisition and integration-related costs |
11,169 |
41,321 |
22,895 |
51,177 |
|||||
Acquisitions purchase accounting (inventory step-up) |
- |
18,744 |
- |
18,744 |
|||||
Adjusted operating income |
$ 233,417 |
193,263 |
375,878 |
289,961 |
|||||
Adjusted operating margin as a percent of net sales |
11.4% |
9.8% |
9.7% |
8.4% |
|||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
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(Amounts in thousands) |
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Three Months Ended |
Six Months Ended |
||||||||
Carpet |
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
|||||
Operating income |
$ 62,826 |
54,862 |
97,097 |
80,100 |
|||||
Adjustment to segment operating income: |
|||||||||
Restructuring, acquisition and integration-related costs |
- |
- |
- |
6,217 |
|||||
Adjusted segment operating income |
$ 62,826 |
54,862 |
97,097 |
86,317 |
|||||
Adjusted operating margin as a percent of net sales |
8.1% |
7.1% |
6.7% |
5.9% |
|||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
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(Amounts in thousands) |
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Three Months Ended |
Six Months Ended |
||||||||
Ceramic |
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
|||||
Operating income |
$ 106,407 |
46,304 |
167,066 |
76,280 |
|||||
Adjustments to segment operating income: |
|||||||||
Restructuring, acquisition and integration-related costs |
196 |
23,361 |
2,177 |
23,823 |
|||||
Acquisitions purchase accounting (inventory step-up) |
- |
18,744 |
- |
18,744 |
|||||
Adjusted segment operating income |
$ 106,603 |
88,409 |
169,243 |
118,847 |
|||||
Adjusted operating margin as a percent of net sales |
13.4% |
11.6% |
11.3% |
10.1% |
|||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
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(Amounts in thousands) |
|||||||||
Three Months Ended |
Six Months Ended |
||||||||
Laminate and Wood |
June 28, 2014 |
June 29, 2013 |
June 28, 2014 |
June 29, 2013 |
|||||
Operating income |
$ 60,843 |
41,362 |
104,962 |
80,055 |
|||||
Adjustment to segment operating income: |
|||||||||
Restructuring, acquisition and integration-related costs |
10,773 |
17,960 |
20,348 |
21,137 |
|||||
Adjusted segment operating income |
$ 71,616 |
59,322 |
125,310 |
101,192 |
|||||
Adjusted operating margin as a percent of net sales |
14.3% |
12.6% |
12.9% |
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 |
|||||||||
June 28, 2014 |
June 29, 2013 |
||||||||
Earnings from continuing operations before income taxes |
$ 203,101 |
108,983 |
|||||||
Adjustments to earnings from continuing operations before income taxes: |
|||||||||
Restructuring, acquisition and integration-related costs |
11,169 |
41,321 |
|||||||
Acquisitions purchase accounting (inventory step-up) |
- |
18,744 |
|||||||
Adjusted earnings before income taxes |
$ 214,270 |
169,048 |
|||||||
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense |
|||||||||
(Amounts in thousands) |
|||||||||
Three Months Ended |
|||||||||
June 28, 2014 |
June 29, 2013 |
||||||||
Income tax expense |
$ 50,240 |
23,240 |
|||||||
Income tax effect of adjusting items |
2,229 |
12,183 |
|||||||
Adjusted income tax expense |
$ 52,469 |
35,423 |
|||||||
Adjusted income tax rate |
24% |
21% |
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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. |
SOURCE
Frank H. Boykin, Chief Financial Officer (706) 624-2695