Mohawk Industries Reports Record Q1 Results

Mohawk Industries Reports Record Q1 Results

Canada NewsWire

CALHOUN, Ga., April 27, 2017 /CNW/ – Mohawk Industries, Inc. (NYSE: MHK) today announced 2017 first quarter record net earnings of $201 million and diluted earnings per share (EPS) of $2.68, a 16.5% increase versus prior year. Excluding restructuring, acquisition expenses and other charges, net earnings were $203 million, and EPS was $2.72, a 14% increase over last year’s first quarter adjusted EPS. Net sales for the first quarter of 2017 were $2.22 billion, up 2% versus the prior year’s first quarter as reported and 4% applying constant days and currency rates. For the first quarter of 2016, net sales were $2.17 billion, net earnings were $172 million and EPS was $2.30; excluding restructuring, acquisition and other charges, net earnings were $177 million and EPS was $2.38.

Commenting on Mohawk Industries’ first quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Our sales and earnings per share set records for the first quarter with volume, mix and productivity adding approximately $60 million to operating income. Our operating margin for the quarter rose to 12.4%, a 110 basis point improvement over the prior year and the highest first quarter result in the company’s history. Our first quarter sales grew as expected, with Flooring North America and Rest of the World outpacing Global Ceramic growth on a constant days and currency basis. This year around the world, we plan to invest more than $750 million to expand our production in most product categories. In addition, we are entering the European carpet tile and counter top markets as well as the Russian sheet vinyl business. In April, we completed the acquisition of two small ceramic manufacturers in Europe and a carpet nylon polymerization plant in the U.S.; in May, we anticipate purchasing a mine for our U.S. ceramic operations. We are initiating many price increases across our portfolio which should cover our material costs in the third quarter.

“For the quarter, our Global Ceramic Segment sales increased approximately 2% as reported and on a constant days and currency basis. Operating income for the segment rose approximately 16% as reported to a margin of 15%. In the period, the growth rate was lower due to customer inventory adjustments and postponed product transitions in North America, severe weather in Russia and Eastern Europe and a weaker Mexican Peso. Purchasing patterns have now returned to normal, and our sales growth is increasing. To recover increasing costs, we announced a general price increase in North America, which should be implemented by the end of the second quarter. Our recent investments in our North American ceramic business will propel our growth through the remainder of the year. Our new Tennessee facility is operating at planned volume and quality levels, and we are using the plant’s advanced technology to introduce premium products, such as sophisticated metallic and glazed color body collections. In the U.S. this year, we are planning to open 18 to 20 new ceramic tile or stone centers to expand our distribution. Our ceramic sales in Mexico continue to outpace the growing market, and we are developing new collections and distribution to utilize the additional capacity when our Salamanca expansion becomes operational later this year. In Europe, our ceramic business increased our profitability as a result of improved product mix, productivity and equipment upgrades. With the investments we have made in Russia, our domestic ceramic collections with award-winning designs and large sizes up to ten-feet long are replacing premium imported products.

“During the quarter, our Flooring North America Segment’s sales increased 4% as reported or 5% on a constant day’s basis. Operating income grew 22% to a margin of 10% as reported. Our raw materials have risen, and we are increasing prices as necessary. Sales of our hard surface products continue to outpace our carpet category, with our LVT and premium laminate growing the fastest. Our residential carpet sales performed well in the period with ongoing strength from our proprietary SmartStrand franchise. During the quarter, we introduced SmartStrand Silk Reserve, the next generation of ultra-soft carpet, which has extended our leadership in premium carpet. We anticipate continued sales improvement with our new tufted, printed and woven commercial carpet technologies, and we are extending our design leadership in carpet tile.  With their superior design and performance, our flexible, rigid and commercial LVT collections are being well accepted across all channels of the market. Our sheet vinyl sales strategy has improved our position with Mohawk retailers, independent distributors and home centers. Sales of our laminate collections remained strong with our unique styling and performance features and our new production line should be operational in the fourth quarter. We have upgraded our wood offering to meet the growing demand for wider planks with rich textures and sophisticated colors. After implementing residential and commercial carpet price increases, we announced additional pricing actions in carpet and sheet vinyl in May due to unforeseen increases in our raw materials. We anticipate that these increases will cover our costs in the third quarter.

“For the quarter, our Flooring Rest of the World Segment’s sales increased 1% as reported and 3% on a constant days and currency basis and operating margin was 15% as reported. The segment’s operating margin was down versus prior year due to higher material costs and currency changes. We are increasing prices across most product categories to offset higher material costs, which should cover the costs in the third quarter. All of our LVT brands grew significantly during the period as we increased our production and expanded our distribution and product offering. Our new LVT product introductions are being well received across all channels due to their unique design and performance attributes. Our sheet vinyl sales lagged compared to last year as low inventories from earlier plant disruptions limited our service. We anticipate normalized sheet vinyl sales in the second quarter. Our laminate production in Europe is running at capacity, and we are preparing for the installation of new equipment that will give us additional capabilities to extend our lead in the category. Our insulation board sales continued to increase during the period, and our wood panel sales are growing with expanded margins as we improve our mix, capacity and efficiencies.

“We remain optimistic about the economy, the flooring industry and Mohawk’s potential. Our second quarter sales growth should accelerate sequentially on a local basis, and our operating income should improve despite inflation, expiring patents and a weaker British Pound. We are implementing product price increases across the enterprise due to escalating material costs. Our capital investments and process improvements will continue to yield higher productivity. This quarter, we will finalize four acquisitions that will broaden our product offering, geographic penetration and competitive position. Taking all of this into account, our adjusted EPS guidance for the second quarter is $3.53 to $3.62, including our acquisitions. In the third quarter, higher pricing and productivity as well as lower currency headwinds should improve our results. As we stated last quarter, this year’s sales growth, prior to acquisitions, will be similar to last year, and our adjusted operating margin will increase slightly. We are investing at record levels with upfront start-up and marketing costs this year to enhance our long-term growth and make Mohawk a more profitable company.”

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, 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, India, Malaysia, Mexico, New Zealand, Russia and the United States.

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 SEC reports and public announcements.

Conference call Friday, April 28, 2017, at 11:00 AM Eastern Time

The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local. Conference ID # 5364682. A replay will be available until Friday, May 26, 2017, by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 5364682.

 


MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

(Unaudited)


Consolidated Statement of Operations Data

Three Months Ended


(Amounts in thousands, except per share data)

April 1, 2017

April 2, 2016

Net sales

$                           2,220,645

2,172,046

Cost of sales

1,540,292

1,532,367

    Gross profit

680,353

639,679

Selling, general and administrative expenses

405,569

394,007

Operating income

274,784

245,672

Interest expense

8,202

12,301

Other expense (income), net

(2,832)

3,429

    Earnings before income taxes

269,414

229,942

Income tax expense

68,358

57,825

        Net earnings including noncontrolling interest

201,056

172,117

Net earnings attributable to noncontrolling interest

502

569

Net earnings attributable to Mohawk Industries, Inc.

$                               200,554

171,548


Basic earnings per share attributable to Mohawk Industries, Inc.

Basic earnings per share attributable to Mohawk Industries, Inc.

$                                        2.70

2.32

Weighted-average common shares outstanding – basic

74,212

73,976


Diluted earnings per share attributable to Mohawk Industries, Inc.

Diluted earnings per share attributable to Mohawk Industries, Inc.

$                                        2.68

2.30

Weighted-average common shares outstanding – diluted

74,754

74,490


Other Financial Information


(Amounts in thousands)

Depreciation and amortization

$                               105,024

100,194

Capital expenditures

$                               201,270

140,833

 


Consolidated Balance Sheet Data


(Amounts in thousands)

April 1, 2017

April 2, 2016


ASSETS

Current assets:

    Cash and cash equivalents

$                               188,436

98,305

    Receivables, net

1,497,908

1,406,725

    Inventories

1,740,880

1,652,030

    Prepaid expenses and other current assets

307,758

313,491

        Total current assets

3,734,982

3,470,551

Property, plant and equipment, net

3,506,154

3,224,327

Goodwill

2,293,107

2,339,521

Intangible assets, net

835,761

950,975

Deferred income taxes and other non-current assets

357,513

306,941

    Total assets

$                        10,727,517

10,292,315


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

   Current portion of long-term debt and commercial paper

$                           1,497,986

2,076,179

   Accounts payable and accrued expenses

1,330,341

1,247,489

        Total current liabilities

2,828,327

3,323,668

Long-term debt, less current portion

1,132,268

1,173,600

Deferred income taxes and other long-term liabilities

677,897

615,037

        Total liabilities

4,638,492

5,112,305

Redeemable noncontrolling interest

24,201

23,432

Total stockholders’ equity

6,064,824

5,156,578

    Total liabilities and stockholders’ equity

$                        10,727,517

10,292,315

 


Segment Information

As of or for the Three Months Ended


(Amounts in thousands)

April 1, 2017

April 2, 2016

Net sales:

    Global Ceramic

$                               784,969

773,726

    Flooring NA

939,496

906,364

    Flooring ROW

496,180

491,956

    Intersegment sales

        Consolidated net sales

$                           2,220,645

2,172,046

Operating income (loss):

    Global Ceramic

$                               116,036

99,777

    Flooring NA

92,142

75,351

    Flooring ROW

76,095

79,537

    Corporate and eliminations

(9,489)

(8,993)

        Consolidated operating income

$                               274,784

245,672

Assets:

    Global Ceramic

$                           4,229,183

3,988,285

    Flooring NA

3,528,062

3,267,529

    Flooring ROW

2,801,782

2,926,959

    Corporate and eliminations

168,490

109,542

        Consolidated assets

$                        10,727,517

10,292,315

 


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 1, 2017

April 2, 2016

Net earnings attributable to Mohawk Industries, Inc.

$                                 200,554

171,548

Adjusting items:

   Restructuring, acquisition and integration-related and other costs 

3,978

7,718

   Acquisitions purchase accounting (inventory step-up)

192

   Income taxes 

(1,415)

(2,277)

   Adjusted net earnings attributable to Mohawk Industries, Inc.

$                                   203,309

176,989

Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. 

$                                          2.72

2.38

Weighted-average common shares outstanding – diluted

74,754

74,490

 


Reconciliation of Total Debt to Net Debt


(Amounts in thousands)

April 1, 2017

Current portion of long-term debt and commercial paper

$                             1,497,986

Long-term debt, less current portion

1,132,268

Less: Cash and cash equivalents

188,436

     Net Debt

$                             2,441,818

 

 


Reconciliation of Operating Income to Adjusted EBITDA


(Amounts in thousands)

Trailing Twelve

Three Months Ended

Months Ended

July 2, 2016

October 1, 2016

December 31, 2016

April 1, 2017

April 1, 2017

Operating income

$                                 350,692

378,307

305,272

274,784

1,309,055

Other (expense) income

5,807

(3,839)

3,190

2,832

7,990

Net (earnings) loss attributable to non-controlling interest

(926)

(949)

(760)

(502)

(3,137)

Depreciation and amortization

101,215

103,680

104,379

105,024

414,298

EBITDA

456,788

477,199

412,081

382,138

1,728,206

Restructuring, acquisition and integration-related and other costs 

6,020

30,572

16,214

3,978

56,784

Acquisitions purchase accounting (inventory step-up)

192

192

Legal settlement and reserves

(90,000)

(90,000)

Release of indemnification asset

2,368

3,004

5,372

Tradename impairment 

47,905

47,905

Adjusted EBITDA 

$                                 462,808

468,044

431,299

386,308

1,748,459

   Net Debt to Adjusted EBITDA

1.4

 


Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and Constant Shipping Days


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Net sales

$                             2,220,645

2,172,046

Adjustment to net sales on constant shipping days

11,930

Adjustment to net sales on a constant exchange rate

18,180

Net sales on a constant exchange rate and constant shipping days

$                             2,250,755

2,172,046


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

April 1, 2017

April 2, 2016

Net sales

$                                 784,969

773,726

Adjustment to net sales on constant shipping days

5,160

Adjustment to segment net sales on a constant exchange rate

(498)

Segment net sales on a constant exchange rate and constant shipping days 

$                                 789,631

773,726

 


Reconciliation of Segment Net Sales to Segment Net Sales on Constant Shipping Days 


(Amounts in thousands)

Three Months Ended


Flooring NA

April 1, 2017

April 2, 2016

Net sales

$                                 939,496

906,364

Adjustment to net sales on constant shipping days

14,680

Segment net sales on constant shipping days 

$                                 954,176

906,364


Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Constant Shipping Days


(Amounts in thousands)

Three Months Ended


Flooring ROW

April 1, 2017

April 2, 2016

Net sales

$                                 496,180

491,956

Adjustment to net sales on constant shipping days

(7,910)

Adjustment to segment net sales on a constant exchange rate

18,678

Segment net sales on a constant exchange rate and constant shipping days 

$                                 506,948

491,956

 


Reconciliation of Gross Profit to Adjusted Gross Profit


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Gross Profit

$                                 680,353

639,679

Adjustments to gross profit:

 Restructuring, acquisition and integration-related and other costs 

2,813

5,848

 Acquisitions purchase accounting (inventory step-up)

192

Adjusted gross profit

$                                 683,358

645,527


Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Selling, general and administrative expenses

$                                 405,569

394,007

Adjustments to selling, general and administrative expenses:

Restructuring, acquisition and integration-related and other costs 

(1,165)

(1,194)

  Adjusted selling, general and administrative expenses

$                                 404,404

392,813

 


Reconciliation of Operating Income to Adjusted Operating Income


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Operating income

$                                 274,784

245,672

Adjustments to operating income:

Restructuring, acquisition and integration-related and other costs 

3,978

7,042

Acquisitions purchase accounting (inventory step-up)

192

Adjusted operating income

$                                 278,954

252,714

 


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income


(Amounts in thousands)

Three Months Ended


Global Ceramic

April 1, 2017

April 2, 2016

Operating income

$                                 116,036

99,777

Adjustments to segment operating income:

Restructuring, acquisition and integration-related and other costs 

204

766

Adjusted segment operating income

$                                 116,240

100,543


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income 


(Amounts in thousands)

Three Months Ended


Flooring NA 

April 1, 2017

April 2, 2016

Operating income

$                                    92,142

75,351

Adjustments to segment operating income:

  Restructuring, acquisition and integration-related and other costs 

2,313

3,676

  Adjusted segment operating income

$                                    94,455

79,027

 


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income


(Amounts in thousands)

Three Months Ended


Flooring ROW 

April 1, 2017

April 2, 2016

Operating income

$                                    76,095

79,537

Adjustments to segment operating income:

   Restructuring, acquisition and integration-related and other costs 

1,460

2,600

   Acquisitions purchase accounting (inventory step-up)

192

   Adjusted segment operating income

$                                    77,747

82,137

 


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 1, 2017

April 2, 2016

Earnings before income taxes

$                                 269,414

229,942

Noncontrolling interests

(502)

(569)

Adjustments to earnings including noncontrolling interests before income taxes:

Restructuring, acquisition and integration-related & other costs 

3,978

7,718

Acquisitions purchase accounting (inventory step-up)

192

 Adjusted earnings including noncontrolling interests before income taxes

$                                 273,082

237,091

 


Reconciliation of Income Tax Expense to Adjusted Income Tax Expense 


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Income tax expense 

$                                    68,358

57,825

Income tax effect of adjusting items

1,415

2,277

  Adjusted income tax expense

$                                    69,773

60,102

Adjusted income tax rate

25.6%

25.4%

The Company supplements its 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, more or fewer shipping days in a period 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, legal settlements and reserves, tradename impairments, acquisition purchase accounting (inventory step-up), release of indemnification assets and the reversal of uncertain tax positions.

 

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SOURCE Mohawk Industries, Inc.

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Mohawk Industries Reports Record Q1 Results

Mohawk Industries Reports Record Q1 Results

PR Newswire

CALHOUN, Ga., April 27, 2017 /PRNewswire/ – Mohawk Industries, Inc. (NYSE: MHK) today announced 2017 first quarter record net earnings of $201 million and diluted earnings per share (EPS) of $2.68, a 16.5% increase versus prior year. Excluding restructuring, acquisition expenses and other charges, net earnings were $203 million, and EPS was $2.72, a 14% increase over last year’s first quarter adjusted EPS. Net sales for the first quarter of 2017 were $2.22 billion, up 2% versus the prior year’s first quarter as reported and 4% applying constant days and currency rates. For the first quarter of 2016, net sales were $2.17 billion, net earnings were $172 million and EPS was $2.30; excluding restructuring, acquisition and other charges, net earnings were $177 million and EPS was $2.38.

Commenting on Mohawk Industries’ first quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Our sales and earnings per share set records for the first quarter with volume, mix and productivity adding approximately $60 million to operating income. Our operating margin for the quarter rose to 12.4%, a 110 basis point improvement over the prior year and the highest first quarter result in the company’s history. Our first quarter sales grew as expected, with Flooring North America and Rest of the World outpacing Global Ceramic growth on a constant days and currency basis. This year around the world, we plan to invest more than $750 million to expand our production in most product categories. In addition, we are entering the European carpet tile and counter top markets as well as the Russian sheet vinyl business. In April, we completed the acquisition of two small ceramic manufacturers in Europe and a carpet nylon polymerization plant in the U.S.; in May, we anticipate purchasing a mine for our U.S. ceramic operations. We are initiating many price increases across our portfolio which should cover our material costs in the third quarter.

“For the quarter, our Global Ceramic Segment sales increased approximately 2% as reported and on a constant days and currency basis. Operating income for the segment rose approximately 16% as reported to a margin of 15%. In the period, the growth rate was lower due to customer inventory adjustments and postponed product transitions in North America, severe weather in Russia and Eastern Europe and a weaker Mexican Peso. Purchasing patterns have now returned to normal, and our sales growth is increasing. To recover increasing costs, we announced a general price increase in North America, which should be implemented by the end of the second quarter. Our recent investments in our North American ceramic business will propel our growth through the remainder of the year. Our new Tennessee facility is operating at planned volume and quality levels, and we are using the plant’s advanced technology to introduce premium products, such as sophisticated metallic and glazed color body collections. In the U.S. this year, we are planning to open 18 to 20 new ceramic tile or stone centers to expand our distribution. Our ceramic sales in Mexico continue to outpace the growing market, and we are developing new collections and distribution to utilize the additional capacity when our Salamanca expansion becomes operational later this year. In Europe, our ceramic business increased our profitability as a result of improved product mix, productivity and equipment upgrades. With the investments we have made in Russia, our domestic ceramic collections with award-winning designs and large sizes up to ten-feet long are replacing premium imported products.

“During the quarter, our Flooring North America Segment’s sales increased 4% as reported or 5% on a constant day’s basis. Operating income grew 22% to a margin of 10% as reported. Our raw materials have risen, and we are increasing prices as necessary. Sales of our hard surface products continue to outpace our carpet category, with our LVT and premium laminate growing the fastest. Our residential carpet sales performed well in the period with ongoing strength from our proprietary SmartStrand franchise. During the quarter, we introduced SmartStrand Silk Reserve, the next generation of ultra-soft carpet, which has extended our leadership in premium carpet. We anticipate continued sales improvement with our new tufted, printed and woven commercial carpet technologies, and we are extending our design leadership in carpet tile.  With their superior design and performance, our flexible, rigid and commercial LVT collections are being well accepted across all channels of the market. Our sheet vinyl sales strategy has improved our position with Mohawk retailers, independent distributors and home centers. Sales of our laminate collections remained strong with our unique styling and performance features and our new production line should be operational in the fourth quarter. We have upgraded our wood offering to meet the growing demand for wider planks with rich textures and sophisticated colors. After implementing residential and commercial carpet price increases, we announced additional pricing actions in carpet and sheet vinyl in May due to unforeseen increases in our raw materials. We anticipate that these increases will cover our costs in the third quarter.

“For the quarter, our Flooring Rest of the World Segment’s sales increased 1% as reported and 3% on a constant days and currency basis and operating margin was 15% as reported. The segment’s operating margin was down versus prior year due to higher material costs and currency changes. We are increasing prices across most product categories to offset higher material costs, which should cover the costs in the third quarter. All of our LVT brands grew significantly during the period as we increased our production and expanded our distribution and product offering. Our new LVT product introductions are being well received across all channels due to their unique design and performance attributes. Our sheet vinyl sales lagged compared to last year as low inventories from earlier plant disruptions limited our service. We anticipate normalized sheet vinyl sales in the second quarter. Our laminate production in Europe is running at capacity, and we are preparing for the installation of new equipment that will give us additional capabilities to extend our lead in the category. Our insulation board sales continued to increase during the period, and our wood panel sales are growing with expanded margins as we improve our mix, capacity and efficiencies.

“We remain optimistic about the economy, the flooring industry and Mohawk’s potential. Our second quarter sales growth should accelerate sequentially on a local basis, and our operating income should improve despite inflation, expiring patents and a weaker British Pound. We are implementing product price increases across the enterprise due to escalating material costs. Our capital investments and process improvements will continue to yield higher productivity. This quarter, we will finalize four acquisitions that will broaden our product offering, geographic penetration and competitive position. Taking all of this into account, our adjusted EPS guidance for the second quarter is $3.53 to $3.62, including our acquisitions. In the third quarter, higher pricing and productivity as well as lower currency headwinds should improve our results. As we stated last quarter, this year’s sales growth, prior to acquisitions, will be similar to last year, and our adjusted operating margin will increase slightly. We are investing at record levels with upfront start-up and marketing costs this year to enhance our long-term growth and make Mohawk a more profitable company.”

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, 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, India, Malaysia, Mexico, New Zealand, Russia and the United States.

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 SEC reports and public announcements.

Conference call Friday, April 28, 2017, at 11:00 AM Eastern Time

The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local. Conference ID # 5364682. A replay will be available until Friday, May 26, 2017, by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 5364682.

 


MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

(Unaudited)


Consolidated Statement of Operations Data

Three Months Ended


(Amounts in thousands, except per share data)

April 1, 2017

April 2, 2016

Net sales

$                           2,220,645

2,172,046

Cost of sales

1,540,292

1,532,367

    Gross profit

680,353

639,679

Selling, general and administrative expenses

405,569

394,007

Operating income

274,784

245,672

Interest expense

8,202

12,301

Other expense (income), net

(2,832)

3,429

    Earnings before income taxes

269,414

229,942

Income tax expense

68,358

57,825

        Net earnings including noncontrolling interest

201,056

172,117

Net earnings attributable to noncontrolling interest

502

569

Net earnings attributable to Mohawk Industries, Inc.

$                               200,554

171,548


Basic earnings per share attributable to Mohawk Industries, Inc.

Basic earnings per share attributable to Mohawk Industries, Inc.

$                                        2.70

2.32

Weighted-average common shares outstanding – basic

74,212

73,976


Diluted earnings per share attributable to Mohawk Industries, Inc.

Diluted earnings per share attributable to Mohawk Industries, Inc.

$                                        2.68

2.30

Weighted-average common shares outstanding – diluted

74,754

74,490


Other Financial Information


(Amounts in thousands)

Depreciation and amortization

$                               105,024

100,194

Capital expenditures

$                               201,270

140,833

 


Consolidated Balance Sheet Data


(Amounts in thousands)

April 1, 2017

April 2, 2016


ASSETS

Current assets:

    Cash and cash equivalents

$                               188,436

98,305

    Receivables, net

1,497,908

1,406,725

    Inventories

1,740,880

1,652,030

    Prepaid expenses and other current assets

307,758

313,491

        Total current assets

3,734,982

3,470,551

Property, plant and equipment, net

3,506,154

3,224,327

Goodwill

2,293,107

2,339,521

Intangible assets, net

835,761

950,975

Deferred income taxes and other non-current assets

357,513

306,941

    Total assets

$                        10,727,517

10,292,315


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

   Current portion of long-term debt and commercial paper

$                           1,497,986

2,076,179

   Accounts payable and accrued expenses

1,330,341

1,247,489

        Total current liabilities

2,828,327

3,323,668

Long-term debt, less current portion

1,132,268

1,173,600

Deferred income taxes and other long-term liabilities

677,897

615,037

        Total liabilities

4,638,492

5,112,305

Redeemable noncontrolling interest

24,201

23,432

Total stockholders’ equity

6,064,824

5,156,578

    Total liabilities and stockholders’ equity

$                        10,727,517

10,292,315

 


Segment Information

As of or for the Three Months Ended


(Amounts in thousands)

April 1, 2017

April 2, 2016

Net sales:

    Global Ceramic

$                               784,969

773,726

    Flooring NA

939,496

906,364

    Flooring ROW

496,180

491,956

    Intersegment sales

        Consolidated net sales

$                           2,220,645

2,172,046

Operating income (loss):

    Global Ceramic

$                               116,036

99,777

    Flooring NA

92,142

75,351

    Flooring ROW

76,095

79,537

    Corporate and eliminations

(9,489)

(8,993)

        Consolidated operating income

$                               274,784

245,672

Assets:

    Global Ceramic

$                           4,229,183

3,988,285

    Flooring NA

3,528,062

3,267,529

    Flooring ROW

2,801,782

2,926,959

    Corporate and eliminations

168,490

109,542

        Consolidated assets

$                        10,727,517

10,292,315

 


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 1, 2017

April 2, 2016

Net earnings attributable to Mohawk Industries, Inc.

$                                 200,554

171,548

Adjusting items:

   Restructuring, acquisition and integration-related and other costs 

3,978

7,718

   Acquisitions purchase accounting (inventory step-up)

192

   Income taxes 

(1,415)

(2,277)

   Adjusted net earnings attributable to Mohawk Industries, Inc.

$                                   203,309

176,989

Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. 

$                                          2.72

2.38

Weighted-average common shares outstanding – diluted

74,754

74,490

 


Reconciliation of Total Debt to Net Debt


(Amounts in thousands)

April 1, 2017

Current portion of long-term debt and commercial paper

$                             1,497,986

Long-term debt, less current portion

1,132,268

Less: Cash and cash equivalents

188,436

     Net Debt

$                             2,441,818

 

 


Reconciliation of Operating Income to Adjusted EBITDA


(Amounts in thousands)

Trailing Twelve

Three Months Ended

Months Ended

July 2, 2016

October 1, 2016

December 31, 2016

April 1, 2017

April 1, 2017

Operating income

$                                 350,692

378,307

305,272

274,784

1,309,055

Other (expense) income

5,807

(3,839)

3,190

2,832

7,990

Net (earnings) loss attributable to non-controlling interest

(926)

(949)

(760)

(502)

(3,137)

Depreciation and amortization

101,215

103,680

104,379

105,024

414,298

EBITDA

456,788

477,199

412,081

382,138

1,728,206

Restructuring, acquisition and integration-related and other costs 

6,020

30,572

16,214

3,978

56,784

Acquisitions purchase accounting (inventory step-up)

192

192

Legal settlement and reserves

(90,000)

(90,000)

Release of indemnification asset

2,368

3,004

5,372

Tradename impairment 

47,905

47,905

Adjusted EBITDA 

$                                 462,808

468,044

431,299

386,308

1,748,459

   Net Debt to Adjusted EBITDA

1.4

 


Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and Constant Shipping Days


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Net sales

$                             2,220,645

2,172,046

Adjustment to net sales on constant shipping days

11,930

Adjustment to net sales on a constant exchange rate

18,180

Net sales on a constant exchange rate and constant shipping days

$                             2,250,755

2,172,046


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

April 1, 2017

April 2, 2016

Net sales

$                                 784,969

773,726

Adjustment to net sales on constant shipping days

5,160

Adjustment to segment net sales on a constant exchange rate

(498)

Segment net sales on a constant exchange rate and constant shipping days 

$                                 789,631

773,726

 


Reconciliation of Segment Net Sales to Segment Net Sales on Constant Shipping Days 


(Amounts in thousands)

Three Months Ended


Flooring NA

April 1, 2017

April 2, 2016

Net sales

$                                 939,496

906,364

Adjustment to net sales on constant shipping days

14,680

Segment net sales on constant shipping days 

$                                 954,176

906,364


Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Constant Shipping Days


(Amounts in thousands)

Three Months Ended


Flooring ROW

April 1, 2017

April 2, 2016

Net sales

$                                 496,180

491,956

Adjustment to net sales on constant shipping days

(7,910)

Adjustment to segment net sales on a constant exchange rate

18,678

Segment net sales on a constant exchange rate and constant shipping days 

$                                 506,948

491,956

 


Reconciliation of Gross Profit to Adjusted Gross Profit


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Gross Profit

$                                 680,353

639,679

Adjustments to gross profit:

 Restructuring, acquisition and integration-related and other costs 

2,813

5,848

 Acquisitions purchase accounting (inventory step-up)

192

Adjusted gross profit

$                                 683,358

645,527


Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Selling, general and administrative expenses

$                                 405,569

394,007

Adjustments to selling, general and administrative expenses:

Restructuring, acquisition and integration-related and other costs 

(1,165)

(1,194)

  Adjusted selling, general and administrative expenses

$                                 404,404

392,813

 


Reconciliation of Operating Income to Adjusted Operating Income


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Operating income

$                                 274,784

245,672

Adjustments to operating income:

Restructuring, acquisition and integration-related and other costs 

3,978

7,042

Acquisitions purchase accounting (inventory step-up)

192

Adjusted operating income

$                                 278,954

252,714

 


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income


(Amounts in thousands)

Three Months Ended


Global Ceramic

April 1, 2017

April 2, 2016

Operating income

$                                 116,036

99,777

Adjustments to segment operating income:

Restructuring, acquisition and integration-related and other costs 

204

766

Adjusted segment operating income

$                                 116,240

100,543


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income 


(Amounts in thousands)

Three Months Ended


Flooring NA 

April 1, 2017

April 2, 2016

Operating income

$                                    92,142

75,351

Adjustments to segment operating income:

  Restructuring, acquisition and integration-related and other costs 

2,313

3,676

  Adjusted segment operating income

$                                    94,455

79,027

 


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income


(Amounts in thousands)

Three Months Ended


Flooring ROW 

April 1, 2017

April 2, 2016

Operating income

$                                    76,095

79,537

Adjustments to segment operating income:

   Restructuring, acquisition and integration-related and other costs 

1,460

2,600

   Acquisitions purchase accounting (inventory step-up)

192

   Adjusted segment operating income

$                                    77,747

82,137

 


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 1, 2017

April 2, 2016

Earnings before income taxes

$                                 269,414

229,942

Noncontrolling interests

(502)

(569)

Adjustments to earnings including noncontrolling interests before income taxes:

Restructuring, acquisition and integration-related & other costs 

3,978

7,718

Acquisitions purchase accounting (inventory step-up)

192

 Adjusted earnings including noncontrolling interests before income taxes

$                                 273,082

237,091

 


Reconciliation of Income Tax Expense to Adjusted Income Tax Expense 


(Amounts in thousands)

Three Months Ended

April 1, 2017

April 2, 2016

Income tax expense 

$                                    68,358

57,825

Income tax effect of adjusting items

1,415

2,277

  Adjusted income tax expense

$                                    69,773

60,102

Adjusted income tax rate

25.6%

25.4%

The Company supplements its 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, more or fewer shipping days in a period 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, legal settlements and reserves, tradename impairments, acquisition purchase accounting (inventory step-up), release of indemnification assets and the reversal of uncertain tax positions.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mohawk-industries-reports-record-q1-results-300447557.html

SOURCE Mohawk Industries, Inc.

OtterBox and mophie Collaborate to Expand uniVERSE

Logo

OtterBox and mophie Collaborate to Expand uniVERSE

PR Newswire

FORT COLLINS, Colo., April 27, 2017 /PRNewswire/ – Greatness happens when things align perfectly in the uniVERSE. OtterBox, the No. 1-most trusted brand in smartphone case protection, is partnering with leading mobile battery brand mophie to bring advanced wireless charging technology to the uniVERSE Case System.1

The uniVERSE Case System, a CES Innovation Award honoree, is a modular protective case that transforms by attaching a variety of accessories from other top mobile brands, like SanDisk expandable memory and olloclip lenses.2 mophie’s new charge force battery and adapter for the uniVERSE Case System allow for universal wireless charging, compatible with popular wireless charging platforms, such as Qi, that are popping up in cafes, new vehicles and the connected home.

“OtterBox built uniVERSE to bring together industry leaders and cutting-edge innovators, building a diverse mobile ecosystem,” said OtterBox CEO Jim Parke. “The mophie partnership brings together best-in-class products for the benefit of iPhone users. With dozens of other accessory partners, the uniVERSE Case System proves how customized mobile devices can truly be.”

The mophie charge force battery for uniVERSE, $69.95, features a low-profile, 2,500mAh capacity and priority+ charging that charges iPhone first, then the battery. For connected consumers that don’t need the extended battery life, the charge force adapter, $49.95, brings all the conveniences of wireless charging to iPhone with virtually unnoticeable size and weight.

The uniVERSE ecosystem is extended with a variety of accessories for charging and mounting. A built-in magnet aligns the charge force battery and adapter with any mophie charge force mounting accessory for a perfect charge and convenience at the office, in the car and on the go.

  • charge force wireless charging base ($39.95) – This weighted charging base features a secure and stable feel. Quickly drop and charge iPhone while the base stays put.
  • charge force vent mount ($59.95) – A four-prong mount securely slips over a vehicle’s air vent louvers for hands-free calling or turn-by-turn directions while charging.
  • charge force desk mount ($59.95) – A stable mount sticks to desks or table tops to charge securely while enjoying FaceTime calls or watch videos at the perfect angle.

The mophie charge force battery and adapter for uniVERSE Case System are available now at otterbox.com and additional charge force accessories are coming soon. For a limited time receive a discount when purchasing an iPhone 7 or iPhone 7 Plus uniVERSE case with a mophie charge force battery or adapter on otterbox.com.3 The entire uniVERSE ecosystem can be viewed at otterbox.com.


About OtterBox:

OtterBox boldly innovates and designs premium protective cases for smartphones and tablets. From its humble beginnings in a Fort Collins, Colo., garage, OtterBox has evolved its product lines to meet the needs of today’s mobile consumer to become the No. 1 selling smartphone case in the U.S.4 From rugged to versatile to fashionable, OtterBox has a product for every lifestyle.

At the center of every OtterBox innovation is a deeper goal to effect positive, lasting change. In partnership with the OtterCares Foundation, OtterBox grows to give back by inspiring kids to change the world through entrepreneurship and philanthropy. To learn more about this mission, visit otterbox.com/givingback.

For more information, visit www.otterbox.com.


Notes:

1 Source: The NPD Group/Consumer Tracking Service, US, Jan. 2013Dec. 2016

2 OtterBox uniVERSE case is NOT protective against water. Will provide added protection against bumps, drops and shock. 

3 Only available when an iPhone 7 or iPhone 7 Plus uniVERSE case is purchased with a mophie charge force battery or charge force adapter on otterbox.com until June 30, 2017. For more information, visit otterbox.com.

4 Source: The NPD Group/Retail Tracking Service: Cell Phone Device Protection/Units Sold 1/2012 – 7/2016

©2017 Otter Products, LLC. All rights reserved. OtterBox and all OtterBox logos, trademarks and symbols are the property of Otter Products, LLC. All other logos, trademarks and symbols are the property of their respective owners.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/otterbox-and-mophie-collaborate-to-expand-universe-300447161.html

SOURCE OtterBox