Mohawk Industries Record 4th Quarter Earnings
For the twelve months ending
Commenting on
"Our fourth quarter performance represents our 7th consecutive period with record adjusted EPS. Our adjusted quarterly operating income margin rose to 14% of sales, an increase of 260 basis points due to productivity, volume and lower costs. Every segment delivered sales growth on a comparable basis while also expanding margins.
"For the quarter, our Global Ceramic segment sales were down 4% as reported. On a constant days and exchange rate basis, sales grew 7% and adjusted operating income rose 14% versus prior year with adjusted operating margin increasing to 13% as a result of improved price and mix, productivity, volume, input costs and the KAI acquisition. In the U.S., we increased our sales investments to improve our market position by increasing service centers, expanding our sales personnel and upgrading our distribution. Our new
"During the quarter, our
"For the quarter, our Flooring Rest of the World segment's sales rose 22% as reported or 41% on a constant days and exchange rate basis with adjusted operating income improving 59% over the prior year. The adjusted operating margin increased to 16% due to improved volume, input costs and the IVC acquisition. Our laminate and wood business in
"2015 was the best year in Mohawk's history, and we expect the momentum to continue this year. We anticipate that the demand trends in our U.S. and international markets will remain consistent with what we have been experiencing. Although 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 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; 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 |
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(Unaudited) |
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Consolidated Statement of Operations |
Three Months Ended |
Twelve Months Ended |
||||||
(Amounts in thousands, except per share data) |
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
||||
Net sales |
$ 1,997,997 |
1,951,446 |
8,071,563 |
7,803,446 |
||||
Cost of sales |
1,375,787 |
1,409,843 |
5,660,877 |
5,649,254 |
||||
Gross profit |
622,210 |
541,603 |
2,410,686 |
2,154,192 |
||||
Selling, general and administrative expenses |
372,968 |
335,483 |
1,573,120 |
1,381,396 |
||||
Operating income |
249,242 |
206,120 |
837,566 |
772,796 |
||||
Interest expense |
18,480 |
20,623 |
71,086 |
98,207 |
||||
Other expense (income), net |
11,525 |
9,737 |
17,619 |
10,698 |
||||
Earnings before income taxes |
219,237 |
175,760 |
748,861 |
663,891 |
||||
Income tax expense |
27,232 |
28,680 |
131,875 |
131,637 |
||||
Net earnings including noncontrolling interest |
192,005 |
147,080 |
616,986 |
532,254 |
||||
Net earnings (loss) attributable to noncontrolling interest |
446 |
212 |
1,684 |
289 |
||||
Net earnings attributable to Mohawk Industries, Inc. |
$ 191,559 |
146,868 |
615,302 |
531,965 |
||||
Basic earnings per share attributable to Mohawk Industries, Inc. |
||||||||
Basic earnings per share attributable to Mohawk Industries, Inc. |
$ 2.59 |
2.01 |
8.37 |
7.30 |
||||
Weighted-average common shares outstanding - basic |
73,924 |
72,905 |
73,516 |
72,837 |
||||
Diluted earnings per share attributable to Mohawk Industries, Inc. |
||||||||
Diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 2.57 |
2.00 |
8.31 |
7.25 |
||||
Weighted-average common shares outstanding - diluted |
74,475 |
73,452 |
74,043 |
73,363 |
||||
Other Financial Information |
||||||||
(Amounts in thousands) |
||||||||
Depreciation and amortization |
$ 94,025 |
95,665 |
362,647 |
345,570 |
||||
Capital expenditures |
$ 151,587 |
170,224 |
503,657 |
561,804 |
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Consolidated Balance Sheet Data |
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(Amounts in thousands) |
||||||||
December 31, 2015 |
December 31, 2014 |
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ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ 81,692 |
97,877 |
||||||
Receivables, net |
1,257,505 |
1,081,963 |
||||||
Inventories |
1,607,256 |
1,543,313 |
||||||
Prepaid expenses and other current assets |
303,519 |
257,333 |
||||||
Total current assets |
3,249,972 |
2,980,486 |
||||||
Property, plant and equipment, net |
3,147,118 |
2,703,210 |
||||||
Goodwill |
2,293,365 |
1,604,352 |
||||||
Intangible assets, net |
936,541 |
702,009 |
||||||
Deferred income taxes and other non-current assets |
315,368 |
295,487 |
||||||
Total assets |
$ 9,942,364 |
8,285,544 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and commercial paper |
$ 2,003,003 |
851,305 |
||||||
Accounts payable and accrued expenses |
1,256,025 |
1,095,419 |
||||||
Total current liabilities |
3,259,028 |
1,946,724 |
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Long-term debt, less current portion |
1,196,928 |
1,402,135 |
||||||
Deferred income taxes and other long-term liabilities |
603,593 |
513,872 |
||||||
Total liabilities |
5,059,549 |
3,862,731 |
||||||
Redeemable noncontrolling interest |
21,952 |
- |
||||||
Total stockholders' equity |
4,860,863 |
4,422,813 |
||||||
Total liabilities and stockholders' equity |
$ 9,942,364 |
8,285,544 |
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Segment Information (a) |
Three Months Ended |
As of or for the Twelve Months Ended |
||||||
(Amounts in thousands) |
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
||||
Net sales: |
||||||||
Global Ceramic |
$ 711,691 |
743,619 |
3,012,859 |
3,015,279 |
||||
Flooring NA |
879,765 |
878,458 |
3,602,112 |
3,441,018 |
||||
Flooring ROW |
406,508 |
332,068 |
1,456,898 |
1,354,018 |
||||
Intersegment sales |
33 |
(2,699) |
(306) |
(6,869) |
||||
Consolidated net sales |
$ 1,997,997 |
1,951,446 |
8,071,563 |
7,803,446 |
||||
Operating income (loss): |
||||||||
Global Ceramic |
$ 87,583 |
82,793 |
414,154 |
351,113 |
||||
Flooring NA |
118,410 |
92,414 |
264,271 |
299,992 |
||||
Flooring ROW |
50,206 |
37,618 |
203,370 |
151,528 |
||||
Corporate and eliminations |
(6,957) |
(6,705) |
(44,229) |
(29,837) |
||||
Consolidated operating income |
$ 249,242 |
206,120 |
837,566 |
772,796 |
||||
Assets: |
||||||||
Global Ceramic |
$ 3,846,133 |
3,542,594 |
||||||
Flooring NA |
3,164,525 |
2,587,151 |
||||||
Flooring ROW |
2,805,246 |
1,909,487 |
||||||
Corporate and eliminations |
126,460 |
246,311 |
||||||
Consolidated assets |
$ 9,942,364 |
8,285,544 |
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) |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||
Net earnings attributable to Mohawk Industries, Inc. |
$ 191,559 |
146,868 |
615,302 |
531,965 |
||||||
Adjusting items: |
||||||||||
Restructuring, acquisition and integration-related and other costs and disposal of subsidiary |
30,820 |
26,649 |
74,604 |
63,556 |
||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
13,337 |
- |
||||||
Legal settlement and reserves |
(2,520) |
- |
124,480 |
10,000 |
||||||
Release of indemnification asset |
11,180 |
- |
11,180 |
- |
||||||
Bond redemption |
- |
3,472 |
- |
18,922 |
||||||
Deferred loan costs |
- |
- |
651 |
1,080 |
||||||
Income taxes - reversal of uncertain tax position |
(11,180) |
- |
(11,180) |
- |
||||||
Income taxes |
(9,889) |
(10,444) |
(72,872) |
(27,856) |
||||||
Adjusted net earnings attributable to Mohawk Industries, Inc. |
$ 209,991 |
166,545 |
755,502 |
597,667 |
||||||
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 2.82 |
2.27 |
10.20 |
8.15 |
||||||
Weighted-average common shares outstanding - diluted |
74,475 |
73,452 |
74,043 |
73,363 |
||||||
Reconciliation of Total Debt to Net Debt |
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(Amounts in thousands) |
||||||||||
December 31, 2015 |
||||||||||
Current portion of long-term debt and commercial paper |
$ 2,003,003 |
|||||||||
Long-term debt, less current portion |
1,196,928 |
|||||||||
Less: Cash and cash equivalents |
81,692 |
|||||||||
Net Debt |
$ 3,118,239 |
|||||||||
Reconciliation of Operating Income to Pro forma Adjusted EBITDA |
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(Amounts in thousands) |
Trailing Twelve |
|||||||||
Three Months Ended |
Months Ended |
|||||||||
April 4, 2015 |
July 4, 2015 |
October 3, 2015 |
December 31, 2015 |
December 31, 2015 |
||||||
Operating income |
$ 43,774 |
255,816 |
288,734 |
249,242 |
837,566 |
|||||
Other (expense) income |
1,083 |
(2,928) |
(4,249) |
(11,525) |
(17,619) |
|||||
Net (earnings) loss attributable to non-controlling interest |
(158) |
(282) |
(798) |
(446) |
(1,684) |
|||||
Depreciation and amortization |
85,656 |
88,011 |
94,955 |
94,025 |
362,647 |
|||||
EBITDA |
130,355 |
340,617 |
378,642 |
331,296 |
1,180,910 |
|||||
Restructuring, acquisition and integration-related and other costs |
8,169 |
15,275 |
11,690 |
30,820 |
65,954 |
|||||
Acquisitions purchase accounting (inventory step-up) |
- |
6,156 |
7,160 |
21 |
13,337 |
|||||
Legal settlement and reserves |
125,000 |
2,000 |
- |
(2,520) |
124,480 |
|||||
Release of indemnification asset |
- |
- |
- |
11,180 |
11,180 |
|||||
Acquisitions EBITDA |
45,470 |
28,010 |
- |
- |
73,480 |
|||||
Pro forma Adjusted EBITDA |
$ 308,994 |
392,058 |
397,492 |
370,797 |
1,469,341 |
|||||
Net Debt to Pro forma Adjusted EBITDA |
2.1 |
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Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and Constant Shipping days |
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(Amounts in thousands) |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||
Net sales |
$ 1,997,997 |
1,951,446 |
8,071,563 |
7,803,446 |
||||||
Adjustment to net sales on constant shipping days |
112,093 |
- |
- |
- |
||||||
Adjustment to net sales on a constant exchange rate |
86,190 |
- |
490,090 |
- |
||||||
Net sales on a constant exchange rate and constant shipping days |
$ 2,196,280 |
1,951,446 |
8,561,653 |
7,803,446 |
||||||
Reconciliation of 2015 Net Sales to Net Sales on a Constant Exchange Rate and Constant Shipping Days Excluding 2015 Q4 Acquisition Volume |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
December 31, 2015 |
December 31, 2014 |
|||||||||
Net sales |
$ 1,997,997 |
1,951,446 |
||||||||
Adjustment to net sales on constant shipping days |
112,093 |
- |
||||||||
Adjustment to net sales on a constant exchange rate |
86,190 |
- |
||||||||
Less: 2015 Q4 impact of acquisition volume |
(162,849) |
- |
||||||||
2015 net sales on a constant exchange rate and constant shipping days excluding acquisition volume |
$ 2,033,431 |
1,951,446 |
||||||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Constant Shipping Days |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Global Ceramic |
December 31, 2015 |
December 31, 2014 |
||||||||
Net sales |
$ 711,691 |
743,619 |
||||||||
Adjustment to net sales on constant shipping days |
37,599 |
- |
||||||||
Adjustment to segment net sales on a constant exchange rate |
44,508 |
- |
||||||||
2015 Segment net sales on a constant exchange rate and constant shipping days |
$ 793,798 |
743,619 |
||||||||
Reconciliation of 2015 Segment Net Sales to Segment Net Sales on Constant Shipping Days |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Flooring NA (a) |
December 31, 2015 |
December 31, 2014 |
||||||||
Net sales |
$ 879,765 |
878,458 |
||||||||
Adjustment to net sales on constant shipping days |
54,059 |
- |
||||||||
2015 segment net sales on constant shipping days |
$ 933,824 |
878,458 |
||||||||
Reconciliation of 2015 Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Constant Shipping Days |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Flooring ROW (a) |
December 31, 2015 |
December 31, 2014 |
||||||||
Net sales |
$ 406,508 |
332,068 |
||||||||
Adjustment to net sales on constant shipping days |
20,435 |
- |
||||||||
Adjustment to segment net sales on a constant exchange rate |
41,660 |
- |
||||||||
2015 Segment net sales on a constant exchange rate and constant shipping days |
$ 468,603 |
332,068 |
||||||||
Reconciliation of Gross Profit to Adjusted Gross Profit |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
December 31, 2015 |
December 31, 2014 |
|||||||||
Gross Profit |
$ 622,210 |
541,603 |
||||||||
Adjustments to gross profit: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
15,945 |
11,568 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
||||||||
Adjusted gross profit |
$ 638,176 |
553,171 |
||||||||
Adjusted gross profit as a percent of net sales |
31.9% |
28.3% |
||||||||
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
December 31, 2015 |
December 31, 2014 |
|||||||||
Selling, general and administrative expenses |
$ 372,968 |
335,483 |
||||||||
Adjustments to selling, general and administrative expenses: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
(14,875) |
(3,127) |
||||||||
Legal settlement and reserves |
2,520 |
- |
||||||||
Adjusted selling, general and administrative expenses |
$ 360,613 |
332,356 |
||||||||
Adjusted selling, general and administrative expenses as a percent of net sales |
18.0% |
17.0% |
||||||||
Reconciliation of Operating Income to Adjusted Operating Income |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||
Operating income |
$ 249,242 |
206,120 |
837,566 |
772,796 |
||||||
Adjustments to operating income: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
30,820 |
14,695 |
74,604 |
51,602 |
||||||
Legal settlement and reserves |
(2,520) |
- |
124,480 |
10,000 |
||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
13,337 |
- |
||||||
Adjusted operating income |
$ 277,563 |
220,815 |
1,049,987 |
834,398 |
||||||
Adjusted operating income as a percent of net sales |
13.9% |
11.3% |
13.0% |
10.7% |
||||||
Reconciliation of Adjusted Operating Income on a Constant Exchange Rate |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||
Operating income |
$ 249,242 |
206,120 |
837,566 |
772,796 |
||||||
Adjustments to operating income: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
30,820 |
14,695 |
74,604 |
51,602 |
||||||
Legal settlement and reserves |
(2,520) |
- |
124,480 |
10,000 |
||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
13,337 |
- |
||||||
Adjustments to operating income on a constant exchange rate |
12,132 |
- |
74,232 |
- |
||||||
Adjusted operating income on constant exchange rate |
$ 289,695 |
220,815 |
1,124,219 |
834,398 |
||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Global Ceramic |
December 31, 2015 |
December 31, 2014 |
||||||||
Operating income |
$ 87,583 |
82,793 |
||||||||
Adjustment to segment operating income: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
4,872 |
2,905 |
||||||||
Adjusted segment operating income |
$ 92,455 |
85,698 |
||||||||
Adjusted operating income as a percent of net sales |
13.0% |
11.5% |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Global Ceramic |
December 31, 2015 |
December 31, 2014 |
||||||||
Operating income |
$ 87,583 |
82,793 |
||||||||
Adjustments to segment operating income: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
4,872 |
2,905 |
||||||||
Adjustments to operating income on a constant exchange rate |
4,909 |
- |
||||||||
Adjusted segment operating income on constant exchange rate |
$ 97,364 |
85,698 |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Flooring NA (a) |
December 31, 2015 |
December 31, 2014 |
||||||||
Operating income |
$ 118,410 |
92,414 |
||||||||
Adjustments to segment operating income: |
||||||||||
Legal settlement and reserves |
(2,520) |
- |
||||||||
Restructuring, acquisition and integration-related and other costs |
8,852 |
2,594 |
||||||||
Adjusted segment operating income |
$ 124,742 |
95,008 |
||||||||
Adjusted operating income as a percent of net sales |
14.2% |
10.8% |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Flooring ROW (a) |
December 31, 2015 |
December 31, 2014 |
||||||||
Operating income |
$ 50,206 |
37,618 |
||||||||
Adjustments to segment operating income: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
16,254 |
8,829 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
||||||||
Adjusted segment operating income |
$ 66,481 |
46,447 |
||||||||
Adjusted operating income as a percent of net sales |
16.4% |
14.0% |
||||||||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
Flooring ROW (a) |
December 31, 2015 |
December 31, 2014 |
||||||||
Operating income |
$ 50,206 |
37,618 |
||||||||
Adjustments to segment operating income: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
16,254 |
8,829 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
||||||||
Adjustments to operating income on a constant exchange rate |
7,222 |
- |
||||||||
Adjusted segment operating income on constant exchange rate |
$ 73,703 |
46,447 |
||||||||
Reconciliation of Earnings from Continuing Operations incl Non Controlling Interest Before Income Taxes to Adjusted Earnings from Continuing Operations incl Non Controlling Interest Before Income Taxes |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
December 31, 2015 |
December 31, 2014 |
|||||||||
Earnings from continuing operations before income taxes |
$ 219,237 |
175,760 |
||||||||
Noncontrolling interest |
(446) |
(212) |
||||||||
Adjustments to earnings from continuing operations incl non controlling interest before income taxes: |
||||||||||
Restructuring, acquisition and integration-related and other costs |
30,820 |
26,649 |
||||||||
Acquisitions purchase accounting (inventory step-up) |
21 |
- |
||||||||
Legal settlement and reserves |
(2,520) |
- |
||||||||
Release of indemnification asset |
11,180 |
- |
||||||||
Bond redemption |
- |
3,472 |
||||||||
Adjusted Earnings from Continuing Operations incl Non Controlling Interest Before Income Taxes |
$ 258,292 |
205,669 |
||||||||
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense |
||||||||||
(Amounts in thousands) |
||||||||||
Three Months Ended |
||||||||||
December 31, 2015 |
December 31, 2014 |
|||||||||
Income tax expense |
$ 27,232 |
28,680 |
||||||||
Income taxes - reversal of uncertain tax position |
11,180 |
- |
||||||||
Income tax effect of adjusting items |
9,889 |
10,444 |
||||||||
Adjusted income tax expense |
$ 48,301 |
39,124 |
||||||||
Adjusted income tax rate |
18.7% |
19.0% |
||||||||
(a) Prior year segment data adjusted to reflect the second quarter 2015 segment realignment |
||||||||||
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, integration-related and other costs, legal settlement and reserves and acquisitions purchase accounting (inventory step-up) is useful because it allows investors to evaluate our performance for different periods on a more comparable basis. |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mohawk-industries-record-4th-quarter-earnings-300226460.html
SOURCE
Frank H. Boykin, Chief Financial Officer (706) 624-2695