CALHOUN, Ga., Feb. 10, 2022 (GLOBE NEWSWIRE) -- Mohawk Industries, Inc. (NYSE: MHK) today announced a 2021 fourth quarter net earnings of $189 million and diluted earnings per share (EPS) of $2.80. Adjusted net earnings were $199 million, and EPS was $2.95, excluding restructuring, acquisition, and other charges. Net sales for the fourth quarter of 2021 were $2.8 billion, an increase of 4.5% as reported and 11.8% on a constant currency and days basis. For the fourth quarter of 2020, net sales were $2.6 billion, net earnings were $248 million and EPS was $3.49. Adjusted net earnings were $252 million, and EPS was $3.54, excluding restructuring, acquisition, and other charges.

For the twelve months ending December 31, 2021, net earnings and EPS were $1,033 million and $14.94, respectively. Net earnings excluding restructuring, acquisition and other charges were $1,027 million and EPS was $14.86. For the 2021 twelve-month period, net sales were $11.2 billion, an increase of 17.3% versus prior year as reported or 16% on a constant currency and days basis. For the twelve-month period ending December 31, 2020, net sales were approximately $9.6 billion, net earnings were $516 million and EPS was $7.22; excluding restructuring, acquisition, and other charges, net earnings and EPS were $631 million and $8.83, respectively.

Commenting on Mohawk Industries’ fourth quarter and full year performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “For the full year, Mohawk’s business improved significantly. Our operating margin for the year rose dramatically to approximately 12%. Our 2021 adjusted operating income approached $1.4 billion with adjusted EBITDA exceeding $1.9 billion. In addition, we achieved 12% organic sales growth and improved our adjusted margin by 270 basis points versus our 2019 pre-pandemic results. We ended the year with a historically strong balance sheet, and during the fourth quarter we purchased approximately 2.4 million additional shares of our stock, for a total of approximately 4.9 million shares purchased during the full year. In February, the board of directors approved an additional authorization for share repurchases of $500 million reiterating our confidence in the company’s strength and to enhance shareholder return.

“Our fourth quarter sales remained strong, driven by a robust residential new construction and remodeling environment. Commercial sales improved as well, though they still lagged pre-pandemic levels. Earnings in the quarter benefited from improved price, mix and productivity, offset by increased inflation and lower volume from fewer days in the quarter compared to the prior year, which included abnormal seasonal demand.

“For the quarter, our Flooring Rest of World Segment net sales increased 5% as reported or approximately 14% on a constant days and currency basis. The Segment’s operating margin was 14.4% as reported and 14.8% on an adjusted basis, impacted by inflation, fewer shipping days and supply chain constraints, partially offset by pricing and mix gains during the quarter. Beginning in the third quarter, the segment’s material costs began escalating at an unpredictable pace due to the impact of electricity, gas and material shortages. Despite multiple pricing actions to recover, we are still lagging inflation and have announced further price increases to offset these extraordinary circumstances. We will continue to monitor and take further actions as required. To maximize our growing premium laminate sales, we expanded our press capacity last year, and we are investing in a new line that will support $150 million of additional sales when operational towards the end of 2023. We are continuing to enhance our LVT processes, even as we experience shortages that limited our production and sales. Throughout this year, we will optimize our bolt-on acquisitions of a French MDF facility, and an Irish insulation manufacturer by integrating them with our existing operations and upgrading their assets and processes.

“In the fourth quarter, our Global Ceramic segment sales increased 3% as reported and 10% on a constant days and currency basis. The Segment’s operating margin was 6.3%, as a result of productivity, pricing and mix improvements offset by the European gas crisis, inflation and more normal seasonality. Mexico, Brazil and Russia outperformed in the quarter, even though sales in those regions were constrained by capacity limitations. We grew sales and improved mix with our innovative floor, wall and mosaic offerings, quartz and porcelain slabs, as well as expanding our position in exterior products. Inflation in material, labor and energy continue to impact our ceramic markets, and we are taking additional pricing actions to recover. In Europe, natural gas prices are presently more than five times higher than last year and we anticipate our pricing aligning with our costs in the second half of this year. Future European energy prices will depend on stability in the region and whether Russia increases supply. As the world’s largest producer of ceramic tile, Mohawk has many opportunities to leverage our position and grow long-term sales and profits. In Brazil we are constructing a new porcelain tile facility that should be starting up the second half of next year. In Mexico, we are expanding our production of mosaics and specialty products. In Russia, we are increasing our porcelain tile capacity with a new production line this year and another line in 2023. In Europe, we are adding capacity to expand our porcelain slab, outdoor and specialty tile businesses and in the U.S., we are increasing our quartz countertop production. Collectively, these expansions will support additional sales of approximately $300 million when all the lines are fully operational.

“In the quarter, our Flooring North America segment sales increased 5% as reported or 12% on a constant basis, and operating margin was 9% as a result of productivity, pricing and mix improvements partially offset by inflation and a return to more normal seasonality. The success of our differentiated products benefited our mix, though some consumers did trade down to offset inflation. In the quarter, we increased prices again due to higher energy and material inflation. Mohawk is the leader in the U.S. laminate market, and we have reinvigorated the product category in all channels with improved visuals and waterproof performance. We are increasing our laminate capacity to support $300 million of additional sales, and the first expansion phase is starting up this quarter with the second phase following in 2023. LVT remains the fastest growing flooring product in the market, and our LVT business delivered strong growth in the fourth quarter, as we continued to improve production at our existing facility. We are starting up a new LVT operation to support sales of over $160 million. The first equipment in the plant is being installed now, and the project will be completed in phases through the second half of 2023. In addition to these capacity increases, we also have many cost-saving investments, including fiber manufacturing and transportation projects, that will improve productivity and profitability within the segment over the next two to three years.

“After our record-setting 2021, we are enthusiastic about Mohawk’s future growth and profitability. This year, GDP is expected to grow 3 to 5% in most of our markets, with residential sales remaining strong and commercial improving. Interest rates will likely rise but should remain historically favorable and support continued home sales and remodeling. During the year we anticipate inflation moderating, and constraints in labor, material and energy declining. We are selling all of our capacity in many product categories and are optimizing our mix and margins this year. We have initiated multiple expansion projects to increase our sales in these growing areas this year and beyond. Significant short-term material, energy and transportation inflation is affecting all our businesses, and we are reengineering formulations, reducing spending and improving efficiencies to offset. We are presently implementing price increases and have announced additional ones across our products and geographies. We will continue to adjust our pricing as necessary and will recover our margins over time. In Europe, energy costs have dramatically accelerated and have also affected the cost of our materials. Our European ceramic business has been the most impacted, which we anticipate will create a $40-$45 million headwind, net of price increases, in the first quarter. Given these factors, we anticipate our first quarter adjusted EPS to be $2.90 to $3.00, excluding any restructuring charges. In the second half, we expect our margins to improve as capacity expands, inflation moderates and pricing aligns.

“Based on the strength of our company, our product and geographic diversity, investments in growing categories and potential acquisitions, our long-range outlook is for higher sales growth and margin expansion. Flooring is an essential part of new construction and remodeling, and, as the world’s largest flooring manufacturer, Mohawk has built leading positions in the major flooring categories and key markets around the globe. Given this, we expect our business to benefit from strong demand through this economic cycle. With today’s low inventory of existing homes, new residential construction and remodeling should remain high for many years. In time, we expect the commercial sector to return to its historical growth with pent-up demand representing a significant opportunity. Mohawk’s sustainable products enhance both our distribution and bottom line by appealing to today’s environmentally conscious end users. During the fourth quarter, we released our annual environmental, sustainability and governance report, which details Mohawk’s commitment to product circularity and decarbonization; it is available on our investor website. In addition to expanding capacity, we continue to invest in our organization’s talent and state-of-the-art technology to deliver exceptional design, value and service to our customers. Over the next three years, we anticipate higher sales and margins as we implement our product, manufacturing and marketing initiatives. We will continue to leverage our strong balance sheet to pursue acquisitions that further our geographic reach and product offering while growing our sales and profitability.”

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 those 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, February 11, 2022, at 11:00 AM Eastern Time

The telephone number is 1-800-603-9255 for U.S./Canada and 1-706-634-2294 for International/Local. Conference ID # 6194374. A replay will be available until March 11, 2022, by dialing 1-855-859-2056 for U.S./local calls and 1-404-537-3406 for International/Local calls and entering Conference ID # 6194374.

Contact: James Brunk, Chief Financial Officer (706) 624-2239 

Source: Mohawk Industries, Inc.