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): April 28, 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):
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
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. ☐
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 April 28, 2022, Mohawk Industries, Inc. (the "Company") issued a press release to report the Company’s earnings for the fiscal quarter ended April 2, 2022, which is attached to this report as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
104 Interactive Data File
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: | April 28, 2022 | By: | /s/ Clifford Suing | |||||||||||||||||
Clifford Suing | ||||||||||||||||||||
Chief Accounting Officer and Corporate Controller | ||||||||||||||||||||
INDEX TO EXHIBITS
Exhibit | |||||||||||
99.1 | |||||||||||
| 104 | Interactive Data File | ||||||||||
Exhibit 99.1
| NEWS RELEASE | ||||||||||||||
For Release: Immediately
Contact: James Brunk, Chief Financial Officer (706) 624-2239
MOHAWK INDUSTRIES REPORTS Q1 RESULTS
Calhoun, Georgia, April 28, 2022 - Mohawk Industries, Inc. (NYSE: MHK) today announced 2022 first quarter net earnings of $245 million and diluted earnings per share (EPS) of $3.78. Adjusted net earnings were $246 million, and adjusted EPS was $3.78, excluding restructuring, acquisition, and other charges. Net sales for the first quarter of 2022 were $3.0 billion, an increase of 13.0% as reported and 17.3% on a constant currency and days basis. For the first quarter of 2021, net sales were $2.7 billion, net earnings were $237 million and EPS was $3.36. Adjusted net earnings were $246 million, and adjusted EPS was $3.49, excluding restructuring, acquisition, and other charges.
Commenting on Mohawk Industries’ first quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Mohawk’s results exceeded our expectations as first quarter sales rose to an all-time record, reflecting higher pricing, growth in our ceramic businesses, an improving commercial sector and benefit from our small acquisitions. Operating income exceeded our forecast as strength in our global ceramic businesses offset rising European energy costs, improved operational strategies enhanced Flooring North America’s results and our management of European market pressures benefited Flooring Rest of the World.”
During the quarter, we ran our operations at high levels in most markets to address order backlogs and replenish our inventory. During the past year, rapid cost escalations have required multiple pricing actions to pass through inflation. We have implemented these unprecedented increases across our markets and have announced additional increases across the business as inflation continues to rise. We are also controlling SG&A spending, enhancing operational efficiencies, and introducing innovative new product features. In some markets, our growth in the quarter was limited by inventory and production constraints. We are executing multiple expansion projects so that we can satisfy demand for our higher growth products, create new innovation and improve operational efficiencies. The categories that we are expanding include U.S. laminate, LVT and quartz countertops; European laminate, high-end porcelain slabs and specialty ceramic products; and ceramic tile in Brazil and Mexico. Our recent, bolt-on acquisitions in Europe are enhancing our growing insulation and panels businesses. Sales of our products remain strong, and the design and features we are bringing to market give us competitive advantages in all price points.
Market conditions for flooring remain favorable, even as governments raise interest rates to combat inflation. Employment is at high levels and wages are increasing in most of our markets. Millions of millennials in their late 20s and early 30s are forming households and desire home ownership. Unlike past cycles, U.S. housing inventory is historically low, more single-family homes are under construction and the U.S. home deficit will require years to align supply with demand. Remodeling should remain strong with rising home equity and buyers of existing homes still completing long-term projects that they initiated over the past few years. Commercial new construction and remodeling continue to strengthen as business conditions improve and projects that were delayed due to the pandemic are initiated.
Against a background of geopolitical tensions and rising inflation, Mohawk has continued to deliver sales growth, generate strong cash flow, and maintain historically low leverage. Given the undervaluation of our stock relative to our earnings, our board approved an additional $500 million share repurchase program in February. We acquired 2.1 million shares during the first quarter for a total of $307 million. Since the start of 2020, we have acquired 8.5 million shares representing 12% of the outstanding balance reflecting our confidence in Mohawk’s long-term growth and profitability.
In the first quarter, our Global Ceramic Segment sales increased 14.5% as reported and 18.5% on a constant days and currency basis. The Segment’s operating margin was 9.4%, as a result of pricing and mix improvements, productivity and higher volumes, offset by rising inflation, including the European gas crisis and more normal seasonality. Our U.S. ceramic business continues to improve its sales and margins by enhancing its product mix and implementing multiple price increases to cover inflation. Our U.S. sales should be positively impacted by providing alternatives to tile imports, which are increasing in price and experiencing shipping delays. Our quartz countertop sales are growing rapidly, and to satisfy demand we have initiated construction to expand capacity at our Tennessee countertop facility. The results of our ceramic businesses in Mexico and Brazil continued to be strong, even with our sales in the quarter being limited by low inventory levels. To relieve constraints, we have increased capacity in Mexico, and we are negotiating with government agencies for permits and incentives to construct a new porcelain tile facility in Brazil. In our European ceramic business, sales in the first quarter grew as consumer demand strengthened, and our customers increased inventory levels in anticipation of inflation. Ceramic industry production in Europe was interrupted when Ukrainian clay supplies to Western Europe ceased. We anticipated the supply problems and increased inventory levels before the invasion to avoid interrupting our production. Natural gas prices for the balance of the year have escalated from prior estimates, raising our future costs. We improved our results by increasing prices more than expected, as well as enhancing our product mix.
For the quarter, our Flooring Rest of World Segment net sales increased 14.2% as reported or approximately 22.1% on a constant currency basis. The Segment’s operating margin was 15.3% as reported and 15.5% on an adjusted basis, impacted by inflation, supply chain disruptions and the impact of foreign exchange, partially offset by pricing and mix gains during the quarter. In challenging conditions, the segment’s leadership team took actions to manage escalating energy costs, rising inflation and unstable supply chains. Despite multiple price increases, we are lagging rapidly rising costs in Europe and have announced additional price increases in response to continuing inflationary pressures. Though material supply limited production, laminate sales increased in the quarter, and we expect continued long-term growth as we expand the premium laminate category. To support higher future sales, our laminate expansion in Belgium should be operational by the end of 2023. Sales in our LVT and sheet vinyl businesses were negatively impacted by material disruptions and low inventory levels. Raw material supply for both categories was especially challenging but improved as we progressed through the quarter. Our purchase of an insulation manufacturer with plants in Ireland and the U.K. increased our market share of polyurethane insulation products. In one of the insulation plants we acquired, a new production line with state-of-the-art technology is presently starting up. Our panel sales grew significantly in the quarter, and our new high-pressure laminate line is extending our manufacturing into a new product category that coordinates with our other wood panels. The integration of our recently acquired MDF facility is progressing as we improve efficiencies and expand its capacity. Our Australian business had robust demand in the quarter following the loosening of pandemic restrictions while New Zealand remains difficult due to continued restrictions.
In the quarter, our Flooring North America Segment sales increased 10.6% as reported or 12.3% on a constant days basis, and our operating margin was 8.9% as a result of pricing and mix improvements and productivity, partially offset by inflation and a return to more normal seasonality. The Segment is managing the greatest inflation we have ever experienced and is implementing further price increases. The strategies we have been implementing during the past two years have improved our sales execution, cost structure, service levels, and enabled us to manage this difficult environment. Across the Segment, we have initiated many projects to increase productivity, improve efficiencies and upgrade our assets to enhance our results. Mohawk holds a leading share of the laminate market, and sales of our premium collections continued to grow in the quarter as our new production line ramped up. Escalating market demand in North America is absorbing our additional production as it comes online, and we are further expanding our U.S. capacity next year to support continued growth. Our LVT sales continued to grow substantially in the first quarter as we benefited from an improved offering across all channels. Our LVT margins were impacted by supply disruptions that interrupted manufacturing, delays in sourced products and higher ocean freight costs. Our new West Coast LVT facility is initiating production and fine-tuning processes. Residential carpet service improved substantially, and customers are lowering inventory, impacting sales. We are raising prices to further offset escalating material and energy cost. By reducing complexity, simplifying operations and increasing efficiencies we are improving cost. Our commercial flooring sales continue to rebound, led by strength in the government, workplace, and health care channels. Sales in both our carpet tile and commercial LVT collections are growing, as new and deferred projects are being initiated. We have introduced a new carpet tile that provides superior acoustics and comfort, while achieving the highest level of sustainability certifications with half the carbon footprint. We continue to find innovative solutions to strengthen our environmental performance to maintain our leadership in eco-friendly products.
Four months into 2022, we remain cautiously optimistic about industry growth this year despite inflation and interest rate pressures. We have announced additional price increases in most of our products and markets as inflation continues to rise. Housing supply is historically low, and rising mortgage rates are spurring families to purchase homes sooner. Remodeling should be supported by continued existing home sales, higher home equity and the upgrading of homes purchased over the past two to three years. We expect that the commercial sector will continue its rebound with people returning to pre-pandemic routines. We expect improvements in the supply of constrained materials which should increase our production levels. Even though we are increasing prices, the historic rise in European energy costs continues to impact our business. Our capital investments, when completed, will relieve our specific capacity constraints and increase our offering. This year, we are focused on optimizing our mix and margins, controlling our spending and initiating additional productivity actions. Given these factors, we anticipate our second quarter adjusted EPS to be $4.25 to $4.35, excluding any restructuring charges.
“We have confidence in the long-term future of our business despite near-term uncertainties. Globally, there is a structural deficit for housing that will take years to satisfy, and we should benefit from strong long-term trends in new home construction, residential remodeling, and commercial projects. Our brands are the most recognized in flooring and provide a comprehensive product portfolio that includes the industry’s strongest collection of sustainable products. We are making it easier for our customers to grow their businesses through leading digital tools that generate customer leads, simplify ordering and expedite deliveries. Through the innovation of our talented team, we continue to lead the industry in design, performance and value. The strength of our balance sheet allows us to pursue both transformational and bolt-on acquisitions that complement our business. Over the next three to five years, these advantages should enhance Mohawk’s sales and margin expansion.”
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 around the globe.
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 and Russian military actions in Ukraine or other geopolitical events; 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, April 29, 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 # 2649466. A replay will be available until May 29, 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 # 2649466.
| MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||
| (Unaudited) | |||||||||||
| Condensed Consolidated Statement of Operations Data | Three Months Ended | ||||||||||
| (Amounts in thousands, except per share data) | April 2, 2022 | April 3, 2021 | |||||||||
| Net sales | $ | 3,015,663 | 2,669,026 | ||||||||
| Cost of sales | 2,213,535 | 1,877,257 | |||||||||
| Gross profit | 802,128 | 791,769 | |||||||||
| Selling, general and administrative expenses | 481,327 | 474,254 | |||||||||
| Operating income | 320,801 | 317,515 | |||||||||
| Interest expense | 11,481 | 15,241 | |||||||||
| Other (income) expense, net | 2,438 | (2,227) | |||||||||
| Earnings before income taxes | 306,882 | 304,501 | |||||||||
| Income tax expense | 61,448 | 67,690 | |||||||||
| Net earnings including noncontrolling interests | 245,434 | 236,811 | |||||||||
| Net earnings attributable to noncontrolling interests | 105 | 4 | |||||||||
| Net earnings attributable to Mohawk Industries, Inc. | $ | 245,329 | 236,807 | ||||||||
| Basic earnings per share attributable to Mohawk Industries, Inc. | |||||||||||
| Basic earnings per share attributable to Mohawk Industries, Inc. | $ | 3.79 | 3.37 | ||||||||
| Weighted-average common shares outstanding - basic | 64,686 | 70,179 | |||||||||
| Diluted earnings per share attributable to Mohawk Industries, Inc. | |||||||||||
| Diluted earnings per share attributable to Mohawk Industries, Inc. | $ | 3.78 | 3.36 | ||||||||
| Weighted-average common shares outstanding - diluted | 64,970 | 70,474 | |||||||||
| Other Financial Information | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Net cash provided by operating activities | $ | 54,954 | 259,605 | |||||||||||
| Less: Capital expenditures | 129,470 | 114,735 | ||||||||||||
| Free cash flow | $ | (74,516) | 144,870 | |||||||||||
| Depreciation and amortization | $ | 141,415 | 151,216 | |||||||||||
| Condensed Consolidated Balance Sheet Data | |||||||||||
| (Amounts in thousands) | |||||||||||
| April 2, 2022 | April 3, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 230,559 | 557,262 | ||||||||
| Short-term investments | 310,000 | 782,267 | |||||||||
| Receivables, net | 2,044,698 | 1,813,858 | |||||||||
| Inventories | 2,513,244 | 1,996,628 | |||||||||
| Prepaid expenses and other current assets | 466,238 | 415,997 | |||||||||
| Total current assets | 5,564,739 | 5,566,012 | |||||||||
| Property, plant and equipment, net | 4,552,612 | 4,432,110 | |||||||||
| Right of use operating lease assets | 384,740 | 337,767 | |||||||||
| Goodwill | 2,579,385 | 2,594,727 | |||||||||
| Intangible assets, net | 883,527 | 921,846 | |||||||||
| Deferred income taxes and other non-current assets | 421,716 | 437,611 | |||||||||
| Total assets | $ | 14,386,719 | 14,290,073 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt and current portion of long-term debt | $ | 1,546,463 | 953,913 | ||||||||
| Accounts payable and accrued expenses | 2,220,347 | 1,954,396 | |||||||||
| Current operating lease liabilities | 104,823 | 98,982 | |||||||||
| Total current liabilities | 3,871,633 | 3,007,291 | |||||||||
| Long-term debt, less current portion | 1,088,401 | 1,719,115 | |||||||||
| Non-current operating lease liabilities | 293,239 | 248,022 | |||||||||
| Deferred income taxes and other long-term liabilities | 845,843 | 816,613 | |||||||||
| Total liabilities | 6,099,116 | 5,791,041 | |||||||||
| Total stockholders' equity | 8,287,603 | 8,499,032 | |||||||||
| Total liabilities and stockholders' equity | $ | 14,386,719 | 14,290,073 | ||||||||
| Segment Information | As of or for the Three Months Ended | |||||||||||||
| (Amounts in thousands) | April 2, 2022 | April 3, 2021 | ||||||||||||
| Net sales: | ||||||||||||||
| Global Ceramic | $ | 1,064,757 | 929,871 | |||||||||||
| Flooring NA | 1,071,910 | 969,250 | ||||||||||||
| Flooring ROW | 878,996 | 769,905 | ||||||||||||
| Consolidated net sales | $ | 3,015,663 | 2,669,026 | |||||||||||
| Operating income (loss): | ||||||||||||||
| Global Ceramic | $ | 100,338 | 87,804 | |||||||||||
| Flooring NA | 95,324 | 81,298 | ||||||||||||
| Flooring ROW | 134,650 | 159,306 | ||||||||||||
| Corporate and intersegment eliminations | (9,511) | (10,893) | ||||||||||||
| Consolidated operating income | $ | 320,801 | 317,515 | |||||||||||
| Assets: | ||||||||||||||
| Global Ceramic | $ | 5,240,214 | 5,161,660 | |||||||||||
| Flooring NA | 4,220,757 | 3,731,032 | ||||||||||||
| Flooring ROW | 4,413,013 | 4,120,381 | ||||||||||||
| Corporate and intersegment eliminations | 512,735 | 1,277,000 | ||||||||||||
| Consolidated assets | $ | 14,386,719 | 14,290,073 | |||||||||||
| 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 | |||||||||||
| April 2, 2022 | April 3, 2021 | ||||||||||
| Net earnings attributable to Mohawk Industries, Inc. | $ | 245,329 | 236,807 | ||||||||
| Adjusting items: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 1,918 | 11,574 | |||||||||
| Acquisitions purchase accounting, including inventory step-up | — | 303 | |||||||||
| Release of indemnification asset | 7,263 | — | |||||||||
| Income taxes - reversal of uncertain tax position | (7,263) | — | |||||||||
Income taxes | (1,684) | (2,735) | |||||||||
| Adjusted net earnings attributable to Mohawk Industries, Inc. | $ | 245,563 | 245,949 | ||||||||
| Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. | $ | 3.78 | 3.49 | ||||||||
| Weighted-average common shares outstanding - diluted | 64,970 | 70,474 | |||||||||
| Reconciliation of Total Debt to Net Debt Less Short-Term Investments | |||||
| (Amounts in thousands) | |||||
| April 2, 2022 | |||||
| Short-term debt and current portion of long-term debt | $ | 1,546,463 | |||
| Long-term debt, less current portion | 1,088,401 | ||||
| Total debt | 2,634,864 | ||||
| Less: Cash and cash equivalents | 230,559 | ||||
| Net Debt | 2,404,305 | ||||
| Less: Short-term investments | 310,000 | ||||
| Net debt less short-term investments | $ | 2,094,305 | |||
| Reconciliation of Operating Income to Adjusted EBITDA | ||||||||||||||||||||||||||||||||
| (Amounts in thousands) | Trailing Twelve | |||||||||||||||||||||||||||||||
| Three Months Ended | Months Ended | |||||||||||||||||||||||||||||||
| July 3, 2021 | October 2, 2021 | December 31, 2021 | April 2, 2022 | April 2, 2022 | ||||||||||||||||||||||||||||
| Operating income | $ | 404,424 | 359,974 | 253,098 | 320,801 | 1,338,297 | ||||||||||||||||||||||||||
| Other income (expense) | 11,168 | (21) | (1,140) | (2,438) | 7,569 | |||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (168) | (206) | (11) | (105) | (490) | |||||||||||||||||||||||||||
Depreciation and amortization(1) | 148,466 | 148,618 | 143,411 | 141,415 | 581,910 | |||||||||||||||||||||||||||
| EBITDA | 563,890 | 508,365 | 395,358 | 459,673 | 1,927,286 | |||||||||||||||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 3,321 | 982 | 4,641 | 1,918 | 10,862 | |||||||||||||||||||||||||||
| Acquisitions purchase accounting, including inventory step-up | 153 | 226 | 1,067 | — | 1,446 | |||||||||||||||||||||||||||
| Resolution of foreign non-income tax contingencies | (6,211) | — | — | — | (6,211) | |||||||||||||||||||||||||||
| Release of indemnification asset | — | — | — | 7,263 | 7,263 | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 561,153 | 509,573 | 401,066 | 468,854 | 1,940,646 | ||||||||||||||||||||||||||
| Net Debt less short-term investments to adjusted EBITDA | 1.1 | |||||||||||||||||||||||||||||||
(1) Includes $8,417 of accelerated depreciation recorded for the trailing twelve months ended April 2, 2022.
| Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and on Constant Shipping Days | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||||||
| Net sales | $ | 3,015,663 | 2,669,026 | |||||||||||
| Adjustment to net sales on constant shipping days | 21,018 | — | ||||||||||||
| Adjustment to net sales on a constant exchange rate | 93,781 | — | ||||||||||||
| Net sales on a constant exchange rate and constant shipping days | $ | 3,130,462 | 2,669,026 | |||||||||||
| 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 | April 2, 2022 | April 3, 2021 | |||||||||
| Net sales | $ | 1,064,757 | 929,871 | ||||||||
| Adjustment to segment net sales on constant shipping days | 4,269 | — | |||||||||
| Adjustment to segment net sales on a constant exchange rate | 32,423 | — | |||||||||
| Segment net sales on a constant exchange rate and constant shipping days | $ | 1,101,449 | 929,871 | ||||||||
| Reconciliation of Segment Net Sales to Segment Net Sales on Constant Shipping Days | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring NA | April 2, 2022 | April 3, 2021 | |||||||||
| Net sales | $ | 1,071,910 | 969,250 | ||||||||
| Adjustment to segment net sales on constant shipping days | 16,749 | — | |||||||||
| Segment net sales on constant shipping days | $ | 1,088,659 | 969,250 | ||||||||
| Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring ROW | April 2, 2022 | April 3, 2021 | |||||||||
| Net sales | $ | 878,996 | 769,905 | ||||||||
| Adjustment to segment net sales on a constant exchange rate | 61,358 | — | |||||||||
| Segment net sales on a constant exchange rate | $ | 940,354 | 769,905 | ||||||||
| Reconciliation of Gross Profit to Adjusted Gross Profit | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| April 2, 2022 | April 3, 2021 | ||||||||||
| Gross Profit | $ | 802,128 | 791,769 | ||||||||
| Adjustments to gross profit: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 938 | 10,182 | |||||||||
| Acquisitions purchase accounting, including inventory step-up | — | 303 | |||||||||
| Adjusted gross profit | $ | 803,066 | 802,254 | ||||||||
| Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| April 2, 2022 | April 3, 2021 | ||||||||||
| Selling, general and administrative expenses | $ | 481,327 | 474,254 | ||||||||
| Adjustments to selling, general and administrative expenses: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | (980) | (1,002) | |||||||||
| Adjusted selling, general and administrative expenses | $ | 480,347 | 473,252 | ||||||||
| Reconciliation of Operating Income to Adjusted Operating Income on a Constant Exchange Rate | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||||||
| Operating income | $ | 320,801 | 317,515 | |||||||||||
| Adjustments to operating income: | ||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 1,918 | 11,184 | ||||||||||||
| Acquisitions purchase accounting, including inventory step-up | — | 303 | ||||||||||||
| Adjustment to operating income on a constant exchange rate | 11,210 | — | ||||||||||||
| Adjusted operating income on a constant exchange rate | $ | 333,929 | 329,002 | |||||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Global Ceramic | April 2, 2022 | April 3, 2021 | |||||||||
| Operating income | $ | 100,338 | 87,804 | ||||||||
| Adjustments to segment operating income: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | — | 1,273 | |||||||||
| Adjustment to segment operating income on a constant exchange rate | 2,989 | — | |||||||||
| Adjusted segment operating income on a constant exchange rate | $ | 103,327 | 89,077 | ||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring NA | April 2, 2022 | April 3, 2021 | |||||||||
| Operating income | $ | 95,324 | 81,298 | ||||||||
| Adjustments to segment operating income: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 105 | 8,859 | |||||||||
| Adjusted segment operating income | $ | 95,429 | 90,157 | ||||||||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate | |||||||||||
| (Amounts in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| Flooring ROW | April 2, 2022 | April 3, 2021 | |||||||||
| Operating income | $ | 134,650 | 159,306 | ||||||||
| Adjustments to segment operating income: | |||||||||||
| Restructuring, acquisition and integration-related and other costs | 1,813 | 1,054 | |||||||||
| Acquisitions purchase accounting, including inventory step-up | — | 303 | |||||||||
| Adjustment to segment operating income on a constant exchange rate | 8,221 | — | |||||||||
| Adjusted segment operating income on a constant exchange rate | $ | 144,684 | 160,663 | ||||||||
| Reconciliation of Earnings Including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||||||
| Earnings before income taxes | $ | 306,882 | 304,501 | |||||||||||
| Net earnings attributable to noncontrolling interests | (105) | (4) | ||||||||||||
| Adjustments to earnings including noncontrolling interests before income taxes: | ||||||||||||||
| Restructuring, acquisition and integration-related and other costs | 1,918 | 11,574 | ||||||||||||
| Acquisitions purchase accounting, including inventory step-up | — | 303 | ||||||||||||
| Release of indemnification asset | 7,263 | — | ||||||||||||
| Adjusted earnings including noncontrolling interests before income taxes | $ | 315,958 | 316,374 | |||||||||||
| Reconciliation of Income Tax Expense to Adjusted Income Tax Expense | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||||||
| Income tax expense | $ | 61,448 | 67,690 | |||||||||||
| Income taxes - reversal of uncertain tax position | 7,263 | — | ||||||||||||
| Income tax effect of adjusting items | 1,684 | 2,735 | ||||||||||||
| Adjusted income tax expense | $ | 70,395 | 70,425 | |||||||||||
| Adjusted income tax rate | 22.3% | 22.3% | ||||||||||||
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.