UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 2022
Commission File Number 01-13697
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (706 ) 629-7721
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Item 2.02 Results of Operations and Financial Condition.
The information in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished pursuant to Item 2.02 and shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On February 10, 2022, Mohawk Industries, Inc. (the "Company") issued a press release to report the Company’s earnings for the fiscal quarter and year ended December 31, 2021, which is attached to this report as Exhibit 99.1.
Item 8.01 Other Events.
The Company announced that its Board of Directors approved a new share repurchase program on February 10, 2022, authorizing the Company to repurchase up to $500 million of its common stock. There is no remaining availability under the Company’s prior share repurchase program.
Under the share repurchase program, the Company may purchase common stock in open market transactions, block or privately negotiated transactions, and may from time to time purchase shares pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act or by any combination of such methods. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, credit availability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company's stock and the availability of alternative investment opportunities. No time limit was set for completion of repurchases and the share repurchase program may be suspended or discontinued at any time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Mohawk Industries, Inc. | ||||||||||||||||||||
Date: | February 10, 2022 | By: | /s/ Steven H. Lee | |||||||||||||||||
Steven H. Lee | ||||||||||||||||||||
Chief Accounting Officer and Corporate Controller | ||||||||||||||||||||
INDEX TO EXHIBITS
Exhibit | |||||||||||
99.1 | |||||||||||
Exhibit 99.1
| NEWS RELEASE | ||||||||||||||
For Release: Immediately
Contact: James Brunk, Chief Financial Officer (706) 624-2239
MOHAWK INDUSTRIES REPORTS Q4 RESULTS
Calhoun, Georgia, February 10, 2022 - 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 margins 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 margins 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.
| MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Condensed Consolidated Statement of Operations Data | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
| (Amounts in thousands, except per share data) | December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||||||||||
| Net sales | $ | 2,760,737 | 2,641,764 | 11,200,613 | 9,552,197 | ||||||||||||||||||
| Cost of sales | 2,023,294 | 1,903,680 | 7,931,879 | 7,121,507 | |||||||||||||||||||
| Gross profit | 737,443 | 738,084 | 3,268,734 | 2,430,690 | |||||||||||||||||||
| Selling, general and administrative expenses | 484,345 | 455,351 | 1,933,723 | 1,794,688 | |||||||||||||||||||
| Operating income | 253,098 | 282,733 | 1,335,011 | 636,002 | |||||||||||||||||||
| Interest expense | 12,169 | 15,897 | 57,252 | 52,379 | |||||||||||||||||||
| Other (income) expense, net | 1,140 | (6,742) | (12,234) | (751) | |||||||||||||||||||
| Earnings before income taxes | 239,789 | 273,578 | 1,289,993 | 584,374 | |||||||||||||||||||
| Income tax expense | 50,689 | 25,180 | 256,445 | 68,647 | |||||||||||||||||||
| Net earnings including noncontrolling interests | 189,100 | 248,398 | 1,033,548 | 515,727 | |||||||||||||||||||
| Net earnings attributable to noncontrolling interests | 11 | 176 | 389 | 132 | |||||||||||||||||||
| Net earnings attributable to Mohawk Industries, Inc. | $ | 189,089 | 248,222 | 1,033,159 | 515,595 | ||||||||||||||||||
| Basic earnings per share attributable to Mohawk Industries, Inc. | |||||||||||||||||||||||
| Basic earnings per share attributable to Mohawk Industries, Inc. | $ | 2.81 | 3.50 | 15.01 | 7.24 | ||||||||||||||||||
| Weighted-average common shares outstanding - basic | 67,209 | 70,951 | 68,852 | 71,214 | |||||||||||||||||||
| Diluted earnings per share attributable to Mohawk Industries, Inc. | |||||||||||||||||||||||
| Diluted earnings per share attributable to Mohawk Industries, Inc. | $ | 2.80 | 3.49 | 14.94 | 7.22 | ||||||||||||||||||
| Weighted-average common shares outstanding - diluted | 67,535 | 71,209 | 69,145 | 71,401 | |||||||||||||||||||
| Other Financial Information | ||||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 212,384 | 407,844 | 1,309,119 | 1,769,839 | |||||||||||||||||||||
| Less: Capital expenditures | 300,941 | 160,142 | 676,120 | 425,557 | ||||||||||||||||||||||
| Free cash flow | $ | (88,557) | 247,702 | 632,999 | 1,344,282 | |||||||||||||||||||||
| Depreciation and amortization | $ | 143,411 | 156,555 | 591,711 | 607,507 | |||||||||||||||||||||
| Condensed Consolidated Balance Sheet Data | |||||||||||
| (Amounts in thousands) | |||||||||||
| December 31, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 268,895 | 768,625 | ||||||||
| Short-term investments | 323,000 | 571,741 | |||||||||
| Receivables, net | 1,839,985 | 1,709,493 | |||||||||
| Inventories | 2,391,672 | 1,913,020 | |||||||||
| Prepaid expenses and other current assets | 414,805 | 400,775 | |||||||||
| Total current assets | 5,238,357 | 5,363,654 | |||||||||
| Property, plant and equipment, net | 4,636,865 | 4,591,229 | |||||||||
| Right of use operating lease assets | 389,967 | 323,138 | |||||||||
| Goodwill | 2,607,909 | 2,650,831 | |||||||||
| Intangible assets, net | 899,980 | 951,607 | |||||||||
| Deferred income taxes and other non-current assets | 451,439 | 447,292 | |||||||||
| Total assets | $ | 14,224,517 | 14,327,751 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt and current portion of long-term debt | $ | 624,503 | 377,255 | ||||||||
| Accounts payable and accrued expenses | 2,217,418 | 1,895,951 | |||||||||
| Current operating lease liabilities | 104,434 | 98,042 | |||||||||
| Total current liabilities | 2,946,355 | 2,371,248 | |||||||||
| Long-term debt, less current portion | 1,700,282 | 2,356,887 | |||||||||
| Non-current operating lease liabilities | 297,390 | 234,726 | |||||||||
| Deferred income taxes and other long-term liabilities | 852,274 | 823,732 | |||||||||
| Total liabilities | 5,796,301 | 5,786,593 | |||||||||
| Total stockholders' equity | 8,428,216 | 8,541,158 | |||||||||
| Total liabilities and stockholders' equity | $ | 14,224,517 | 14,327,751 | ||||||||
| Segment Information | Three Months Ended | As of or for the Twelve Months Ended | ||||||||||||||||||||||||
| (Amounts in thousands) | December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| Global Ceramic | $ | 949,501 | 919,668 | 3,917,319 | 3,432,756 | |||||||||||||||||||||
| Flooring NA | 1,015,513 | 963,365 | 4,116,405 | 3,594,075 | ||||||||||||||||||||||
| Flooring ROW | 795,723 | 758,731 | 3,166,889 | 2,525,366 | ||||||||||||||||||||||
| Consolidated net sales | $ | 2,760,737 | 2,641,764 | 11,200,613 | 9,552,197 | |||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||
| Global Ceramic | $ | 60,000 | 79,565 | 403,135 | 167,731 | |||||||||||||||||||||
| Flooring NA | 91,711 | 82,407 | 407,577 | 147,442 | ||||||||||||||||||||||
| Flooring ROW | 114,339 | 132,505 | 571,126 | 366,934 | ||||||||||||||||||||||
| Corporate and intersegment eliminations | (12,952) | (11,744) | (46,827) | (46,105) | ||||||||||||||||||||||
| Consolidated operating income | $ | 253,098 | 282,733 | 1,335,011 | 636,002 | |||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Global Ceramic | $ | 5,160,776 | 5,250,069 | |||||||||||||||||||||||
| Flooring NA | 4,125,960 | 3,594,976 | ||||||||||||||||||||||||
| Flooring ROW | 4,361,741 | 4,194,447 | ||||||||||||||||||||||||
| Corporate and intersegment eliminations | 576,040 | 1,288,259 | ||||||||||||||||||||||||
| Consolidated assets | $ | 14,224,517 | 14,327,751 | |||||||||||||||||||||||
| 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, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||
| Net earnings attributable to Mohawk Industries, Inc. | $ | 189,089 | 248,222 | 1,033,159 | 515,595 | ||||||||||||||||||
| Adjusting items: | |||||||||||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 4,558 | 22,382 | 23,118 | 166,817 | |||||||||||||||||||
| Acquisitions purchase accounting, including inventory step-up | 1,067 | — | 1,749 | — | |||||||||||||||||||
| Resolution of foreign non-income tax contingencies | — | — | (6,211) | — | |||||||||||||||||||
| Income tax effect on resolution of foreign non-income tax contingencies | — | — | 2,302 | — | |||||||||||||||||||
| One-time tax planning election | 4,568 | — | (22,163) | — | |||||||||||||||||||
Income taxes | (309) | (18,596) | (4,626) | (51,740) | |||||||||||||||||||
| Adjusted net earnings attributable to Mohawk Industries, Inc. | $ | 198,973 | 252,008 | 1,027,328 | 630,672 | ||||||||||||||||||
| Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. | $ | 2.95 | 3.54 | 14.86 | 8.83 | ||||||||||||||||||
| Weighted-average common shares outstanding - diluted | 67,535 | 71,209 | 69,145 | 71,401 | |||||||||||||||||||
| Reconciliation of Total Debt to Net Debt Less Short-Term Investments | |||||
| (Amounts in thousands) | |||||
| December 31, 2021 | |||||
| Short-term debt and current portion of long-term debt | $ | 624,503 | |||
| Long-term debt, less current portion | 1,700,282 | ||||
| Total debt | 2,324,785 | ||||
| Less: Cash and cash equivalents | 268,895 | ||||
| Net Debt | 2,055,890 | ||||
| Less: Short-term investments | 323,000 | ||||
| Net debt less short-term investments | $ | 1,732,890 | |||
| Reconciliation of Operating Income to Adjusted EBITDA | ||||||||||||||||||||||||||||||||
| (Amounts in thousands) | Trailing Twelve | |||||||||||||||||||||||||||||||
| Three Months Ended | Months Ended | |||||||||||||||||||||||||||||||
| April 3, 2021 | July 3, 2021 | October 2, 2021 | December 31, 2021 | December 31, 2021 | ||||||||||||||||||||||||||||
| Operating income | $ | 317,515 | 404,424 | 359,974 | 253,098 | 1,335,011 | ||||||||||||||||||||||||||
| Other income (expense) | 2,227 | 11,168 | (21) | (1,140) | 12,234 | |||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (4) | (168) | (206) | (11) | (389) | |||||||||||||||||||||||||||
Depreciation and amortization(1) | 151,216 | 148,466 | 148,618 | 143,411 | 591,711 | |||||||||||||||||||||||||||
| EBITDA | 470,954 | 563,890 | 508,365 | 395,358 | 1,938,567 | |||||||||||||||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 5,756 | 3,321 | 982 | 4,641 | 14,700 | |||||||||||||||||||||||||||
| Acquisitions purchase accounting, including inventory step-up | 303 | 153 | 226 | 1,067 | 1,749 | |||||||||||||||||||||||||||
| Resolution of foreign non-income tax contingencies | — | (6,211) | — | — | (6,211) | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 477,013 | 561,153 | 509,573 | 401,066 | 1,948,805 | ||||||||||||||||||||||||||
| Net Debt less short-term investments to adjusted EBITDA | 0.9 | |||||||||||||||||||||||||||||||
(1) Includes $8,417 of accelerated depreciation in Q4 YTD 2021.
| Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and on Constant Shipping Days | ||||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Net sales | $ | 2,760,737 | 2,641,764 | 11,200,613 | 9,552,197 | |||||||||||||||||||||
| Adjustment to net sales on constant shipping days | 173,206 | — | 41,841 | — | ||||||||||||||||||||||
| Adjustment to net sales on a constant exchange rate | 20,737 | — | (160,015) | — | ||||||||||||||||||||||
| Net sales on a constant exchange rate and constant shipping days | $ | 2,954,680 | 2,641,764 | 11,082,439 | 9,552,197 | |||||||||||||||||||||
| Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Global Ceramic | December 31, 2021 | December 31, 2020 | |||||||||
| Net sales | $ | 949,501 | 919,668 | ||||||||
| Adjustment to segment net sales on constant shipping days | 54,209 | — | |||||||||
| Adjustment to segment net sales on a constant exchange rate | 5,951 | — | |||||||||
| Segment net sales on a constant exchange rate and constant shipping days | $ | 1,009,661 | 919,668 | ||||||||
| Reconciliation of Segment Net Sales to Segment Net Sales on Constant Shipping Days | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring NA | December 31, 2021 | December 31, 2020 | |||||||||
| Net sales | $ | 1,015,513 | 963,365 | ||||||||
| Adjustment to segment net sales on constant shipping days | 65,517 | — | |||||||||
| Segment net sales on constant shipping days | $ | 1,081,030 | 963,365 | ||||||||
| Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring ROW | December 31, 2021 | December 31, 2020 | |||||||||
| Net sales | $ | 795,723 | 758,731 | ||||||||
| Adjustment to segment net sales on constant shipping days | 53,481 | — | |||||||||
| Adjustment to segment net sales on a constant exchange rate | 14,786 | — | |||||||||
| Segment net sales on a constant exchange rate and constant shipping days | $ | 863,990 | 758,731 | ||||||||
| Reconciliation of Gross Profit to Adjusted Gross Profit | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| December 31, 2021 | December 31, 2020 | ||||||||||
| Gross Profit | $ | 737,443 | 738,084 | ||||||||
| Adjustments to gross profit: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 2,363 | 22,789 | |||||||||
| Acquisitions purchase accounting, including inventory step-up | 1,067 | — | |||||||||
| Adjusted gross profit | $ | 740,873 | 760,873 | ||||||||
| Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| December 31, 2021 | December 31, 2020 | ||||||||||
| Selling, general and administrative expenses | $ | 484,345 | 455,351 | ||||||||
| Adjustments to selling, general and administrative expenses: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | (2,238) | 394 | |||||||||
| Adjusted selling, general and administrative expenses | $ | 482,107 | 455,745 | ||||||||
| Reconciliation of Operating Income to Adjusted Operating Income | ||||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Operating income | $ | 253,098 | 282,733 | 1,335,011 | 636,002 | |||||||||||||||||||||
| Adjustments to operating income: | ||||||||||||||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 4,601 | 22,395 | 23,637 | 163,479 | ||||||||||||||||||||||
| Acquisitions purchase accounting, including inventory step-up | 1,067 | — | 1,749 | — | ||||||||||||||||||||||
| Adjusted operating income | $ | 258,766 | 305,128 | 1,360,397 | 799,481 | |||||||||||||||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Global Ceramic | December 31, 2021 | December 31, 2020 | |||||||||
| Operating income | $ | 60,000 | 79,565 | ||||||||
| Adjustments to segment operating income: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 416 | 8,164 | |||||||||
| Adjusted segment operating income | $ | 60,416 | 87,729 | ||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring NA | December 31, 2021 | December 31, 2020 | |||||||||
| Operating income | $ | 91,711 | 82,407 | ||||||||
| Adjustments to segment operating income: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 1,146 | 8,651 | |||||||||
| Adjusted segment operating income | $ | 92,857 | 91,058 | ||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring ROW | December 31, 2021 | December 31, 2020 | |||||||||
| Operating income | $ | 114,339 | 132,505 | ||||||||
| Adjustments to segment operating income: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 2,022 | 5,496 | |||||||||
| Acquisitions purchase accounting, including inventory step-up | 1,067 | — | |||||||||
| Adjusted segment operating income | $ | 117,428 | 138,001 | ||||||||
| Reconciliation of Segment Operating (Loss) to Adjusted Segment Operating (Loss) | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Corporate and intersegment eliminations | December 31, 2021 | December 31, 2020 | |||||||||
| Operating (loss) | $ | (12,952) | (11,744) | ||||||||
| Adjustments to segment operating (loss): | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 1,018 | 84 | |||||||||
| Adjusted segment operating (loss) | $ | (11,934) | (11,660) | ||||||||
| Reconciliation of Earnings Including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| December 31, 2021 | December 31, 2020 | |||||||||||||
| Earnings before income taxes | $ | 239,789 | 273,578 | |||||||||||
| Net earnings attributable to noncontrolling interests | (11) | (176) | ||||||||||||
| Adjustments to earnings including noncontrolling interests before income taxes: | ||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 4,558 | 22,382 | ||||||||||||
| Acquisitions purchase accounting, including inventory step-up | 1,067 | — | ||||||||||||
| Adjusted earnings including noncontrolling interests before income taxes | $ | 245,403 | 295,784 | |||||||||||
| Reconciliation of Income Tax Expense to Adjusted Income Tax Expense | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| December 31, 2021 | December 31, 2020 | |||||||||||||
| Income tax expense | $ | 50,689 | 25,180 | |||||||||||
| One-time tax planning election | (4,568) | — | ||||||||||||
| Income tax effect of adjusting items | 309 | 18,596 | ||||||||||||
| Adjusted income tax expense | $ | 46,430 | 43,776 | |||||||||||
| Adjusted income tax rate | 18.9% | 14.8% | ||||||||||||
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 Securities and Exchange Commission rules, the tables above present a reconciliation of the Company’s non-GAAP financial measures to the most directly comparable US GAAP measure. Each of the non-GAAP measures set forth above should be considered in addition to the comparable US GAAP measure, and may not be comparable to similarly titled measures reported by other companies. The Company believes these non-GAAP measures, when reconciled to the corresponding US GAAP measure, help its investors as follows: Non-GAAP revenue measures that assist in identifying growth trends and in comparisons of revenue with prior and future periods and non-GAAP profitability measures that assist in understanding the long-term profitability trends of the Company's business and in comparisons of its profits with prior and future periods.
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.