Mohawk Industries Reports Q4 Results
CALHOUN, Ga., Feb. 8, 2018 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced 2017 fourth quarter net earnings of $240 million and diluted earnings per share (EPS) of $3.21. Adjusted net earnings were $256 million and EPS was $3.42, excluding restructuring, acquisition and other charges, a 5% increase over last year. Net sales for the fourth quarter of 2017 were $2.4 billion, up 8.5% in the quarter and 6% on a constant days and currency basis. For the fourth quarter of 2016, net sales were $2.2 billion, net earnings were $234 million and EPS was $3.13; adjusted net earnings were $243 million and EPS was $3.26, excluding restructuring, acquisition and other charges.
For the year ended December 31, 2017, net earnings and EPS were $972 million and $12.98, respectively. Adjusted net earnings and EPS were $1,019 million and $13.61, excluding restructuring, acquisition and other charges, an 8% increase over last year. For the year ended December 31, 2017, net sales were $9.5 billion, an increase of 6% as reported and on a constant days and currency basis. For the year ended December 31, 2016, net sales were $9.0 billion, net earnings were $930 million and EPS was $12.48; adjusted net earnings and EPS were $940 million and $12.61, respectively, excluding restructuring, acquisition and other charges.
Commenting on Mohawk Industries' fourth quarter and full-year performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "In 2017, our strong organization and long-term strategies allowed Mohawk to deliver record-breaking results. For the full year, we generated operating income of $1.4 billion, up 6% as reported and 9% excluding restructuring, acquisition and other charges, and our EBITDA rose to $1.8 billion, both records. Our recurring business income grew at a much higher rate in 2017 when excluding the expired patent income and incremental start-up investments. During the year, we identified opportunities for growing our business, differentiating our products and improving our productivity, which we supported with over $900 million in internal investments, the highest in company history.
"Over the past three years, our strategies of adding new products, increasing our capacities and acquiring new businesses have led to expanded earnings even as income from our click patents expired. Our 2017 results reflected the impact of these strategies, even with $34 million in start-up costs to ramp up new products and production and significant increases in raw materials.
"During 2017, we completed four acquisitions to broaden our product offering and improve our cost structure. These include bolt-on ceramic businesses in Italy and Poland, a U.S. talc mine for ceramic and a nylon polymerization plant to further integrate our carpet manufacturing. Turning to our fourth quarter performance, we recorded our best results for the period in history, with operating income of $343 million, growing 13%, while absorbing start-up costs of approximately $10 million and the decline of income from patents.
"For the quarter, our Global Ceramic Segment sales increased 10% as reported and 8% on a constant days and currency basis. Our sales in Russia and Mexico grew the fastest, and our European acquisitions added approximately 6% to our sales. As anticipated, we saw improvement in our legacy sales during the period, with additional capacity coming online in Mexico, Russia and Europe and strengthening sales in the U.S. Our U.S. business improved as we progressed through the period, even with large customers postponing product changes and making reductions in their inventories. To increase our US sales and distribution, we have opened fifteen new tile and stone centers, and we are expanding our partnerships with both national and regional builders across the country including both our tile and countertop products. Our U.S. countertop sales are accelerating as we increase our distribution points and broaden our quartz offering. The Mexican ceramic market is strong, and our sales are increasing with new product offerings and our new production. Our new plant in Salamanca is fully operational, and production is ahead of our expectations. Our European ceramic sales increased substantially and outperformed the market. We have made significant progress in integrating our Italian and Polish acquisitions, broadening their product offerings and enhancing their sales strategies. Our Russian ceramic business has been operating at full capacity, and we are expanding our production to satisfy the growing demand and increase our market share.
"During the quarter, our Flooring North America Segment's sales increased 3% as reported. The segment's margins increased approximately 130 basis points as reported, while absorbing $10 million of restructuring costs and $2.5 million of start-up costs associated with our new LVT line. Late in the fourth quarter, we implemented a carpet price increase to recover rising inflation. Our carpet sales were strong during the period as some customers raised their inventory levels prior to our price changes and residential sales continued to grow faster than commercial. Almost all channels in residential improved, highlighted by the success of our SmartStrand and Continuum product offerings. To better serve our dealers, we have recently combined our hard and soft surface residential sales management. We are seeing improvements in performance as we better leverage our relationships across our entire product portfolio. With our new carpet tile and broadloom collections, our commercial sales are strengthening in most channels, with particular strength in hospitality, institutional, retail and Mainstreet. We are expanding our rigid and flexible LVT offerings with specific products tailored for each of the residential, do-it-yourself, apartment and commercial markets. During the quarter, we increased our marketing investments in LVT to expand our sales in anticipation of our new manufacturing line, which will begin production in the second quarter. We are creating another unique position in the marketplace with Revwood Plus, a revolutionary new water proof wood product with leading style in larger sizes and contemporary finishes.
"For the quarter, our Flooring Rest of the World Segment's sales increased 18% as reported and 9% on a constant currency basis, as local economies improved and the Euro strengthened. Our reported operating income for the period increased 19% as a result of improved price and mix, productivity and a reduction of restructuring and acquisition charges. The price increases we implemented covered the dramatic changes in our material costs in most of our products. We have agreed to acquire Godfrey Hirst, the largest flooring company in Australia and New Zealand which is focused on carpet and expanding in hard surface flooring, as well as a small European mezzanine floor manufacturer, which will enhance our wood panel strategy and differentiate our products. In 2018, we also have finalized the acquisition of two small distributors in Europe to enhance our geographic penetration. Our LVT sales are growing rapidly as we pushed the limits of our capacity. We have the broadest LVT offering in Europe, and we are positioned as the market's style, design and performance leader. Our new European carpet tile plant has initiated limited manufacturing, with the final operational phases scheduled to come online this quarter before a full market launch in the second quarter. Our laminate sales are growing, driven by unique features such as planks over two meters long and our exclusive water proof technology. As demand increased, our new wood panel products enhanced our sales and mix, and process improvements have reduced our costs.
"The record results that Mohawk delivers reflect a unique strategy that combines the best features of a large, well-run public company, a private acquisition firm and a venture capital group. Our organization's capabilities to continuously expand by innovating our products, increasing our portfolio and participating in new regions is unsurpassed in the market. This year, to enhance our long-term growth and profitability, we will invest $60-$70 million starting up new operations to expand our market position and geographical scope. Of these investments, about one-third is non-cash depreciation due to limited utilization, one-third is for marketing to expand our distribution, and one-third is for the cost of ramping up new production.
During 2018, we will invest an additional $750 million in our existing businesses to complete projects that were begun in 2017 and to commence new initiatives. Our largest investments during this two-year period are the expansion of LVT in the U.S. and Europe; ceramic capacity increases in the U.S., Mexico, Italy, Poland, Bulgaria and Russia; luxury laminate in the U.S., Europe and Russia; carpet tile in Europe; sheet vinyl in Russia; countertops in the U.S. and Europe; and carpet and rugs in the U.S.
In the first quarter, we anticipate all segments improving sales and the introduction of innovative products across our portfolio. In Flooring North America, the timing of our carpet price increase moved some sales into the prior quarter. Our ongoing operating results, excluding the expired patents and start-up investments, will substantially improve in the first quarter. Our earnings will benefit from our past acquisitions and a stronger Euro, as well as our 2018 global tax rate which will decline to approximately 21% due to tax reform. Taking all of this into account, our EPS guidance for the first quarter is $2.93 to $3.02, excluding any one time charges.
The acquisition of Godfrey Hirst will be completed later this year after normal closing conditions are concluded. We anticipate opportunities to enhance their product innovation and marketing strategies, lower their costs by supplying raw materials and increase their sales of hard surface products. Godfrey Hirst should be accretive to EPS by $0.35 to $0.40 in the first twelve months.
ABOUT MOHAWK INDUSTRIESMohawk 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; taxes and tax reform, product and other claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.
Conference call Friday, February 9, 2018, 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 # 1786655. A replay will be available until Friday, March 9, 2018, by dialing 1-855-859-2056 for US/local calls and 1-404-537-3406 for International/Local calls and entering Conference ID # 1786655.
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES |
||||||||
|
(Unaudited) |
||||||||
|
Consolidated Statement of Operations Data |
Quarter Ended |
Year Ended | ||||||
|
(Amounts in thousands, except per share data) |
December 31, 2017 |
December 31, 2016 |
December 31, 2017 |
December 31, 2016 | ||||
|
Net sales |
$ 2,369,097 |
2,182,566 |
9,491,290 |
8,959,087 | ||||
|
Cost of sales |
1,615,473 |
1,491,567 |
6,494,876 |
6,146,262 | ||||
|
Gross profit |
753,624 |
690,999 |
2,996,414 |
2,812,825 | ||||
|
Selling, general and administrative expenses |
410,158 |
385,727 |
1,642,241 |
1,532,882 | ||||
|
Operating income |
343,466 |
305,272 |
1,354,173 |
1,279,943 | ||||
|
Interest expense |
7,257 |
8,485 |
31,111 |
40,547 | ||||
|
Other expense (income), net |
3,750 |
(3,190) |
5,205 |
(1,729) | ||||
|
Earnings before income taxes |
332,459 |
299,977 |
1,317,857 |
1,241,125 | ||||
|
Income tax expense |
91,593 |
65,469 |
343,165 |
307,559 | ||||
|
Net earnings including noncontrolling interest |
240,866 |
234,508 |
974,692 |
933,566 | ||||
|
Net income attributable to noncontrolling interest |
488 |
760 |
3,054 |
3,204 | ||||
|
Net earnings attributable to Mohawk Industries, Inc. |
$ 240,378 |
233,748 |
971,638 |
930,362 | ||||
|
Basic earnings per share attributable to Mohawk Industries, Inc. |
||||||||
|
Basic earnings per share attributable to Mohawk Industries, Inc. |
$ 3.23 |
3.15 |
13.07 |
12.55 | ||||
|
Weighted-average common shares outstanding - basic |
74,414 |
74,164 |
74,357 |
74,104 | ||||
|
Diluted earnings per share attributable to Mohawk Industries, Inc. |
||||||||
|
Diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 3.21 |
3.13 |
12.98 |
12.48 | ||||
|
Weighted-average common shares outstanding - diluted |
74,915 |
74,638 |
74,839 |
74,568 | ||||
|
Other Financial Information |
||||||||
|
(Amounts in thousands) |
||||||||
|
Depreciation and amortization |
$ 118,372 |
104,379 |
446,672 |
409,467 | ||||
|
Capital expenditures |
$ 251,368 |
211,365 |
905,998 |
672,125 | ||||
|
Consolidated Balance Sheet Data |
||||||||
|
(Amounts in thousands) |
||||||||
|
December 31, 2017 |
December 31, 2016 | |||||||
|
ASSETS |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ 84,884 |
121,665 | ||||||
|
Receivables, net |
1,558,159 |
1,376,151 | ||||||
|
Inventories |
1,948,663 |
1,675,751 | ||||||
|
Prepaid expenses and other current assets |
481,261 |
297,945 | ||||||
|
Total current assets |
4,072,967 |
3,471,512 | ||||||
|
Property, plant and equipment, net |
4,270,790 |
3,370,348 | ||||||
|
Goodwill |
2,471,459 |
2,274,426 | ||||||
|
Intangible assets, net |
891,767 |
834,606 | ||||||
|
Deferred income taxes and other non-current assets |
387,870 |
279,704 | ||||||
|
Total assets |
$ 12,094,853 |
10,230,596 | ||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
|
Current liabilities: |
||||||||
|
Current portion of long-term debt and commercial paper |
$ 1,203,683 |
1,382,738 | ||||||
|
Accounts payable and accrued expenses |
1,451,672 |
1,335,582 | ||||||
|
Total current liabilities |
2,655,355 |
2,718,320 | ||||||
|
Long-term debt, less current portion |
1,559,895 |
1,128,747 | ||||||
|
Deferred income taxes and other long-term liabilities |
783,131 |
576,346 | ||||||
|
Total liabilities |
4,998,381 |
4,423,413 | ||||||
|
Redeemable noncontrolling interest |
29,463 |
23,696 | ||||||
|
Total stockholders' equity |
7,067,009 |
5,783,487 | ||||||
|
Total liabilities and stockholders' equity |
$ 12,094,853 |
10,230,596 | ||||||
|
Segment Information |
Quarter Ended |
As of or for the Year Ended | ||||||
|
(Amounts in thousands) |
December 31, 2017 |
December 31, 2016 |
December 31, 2017 |
December 31, 2016 | ||||
|
Net sales: |
||||||||
|
Global Ceramic |
$ 824,062 |
749,146 |
3,405,100 |
3,174,706 | ||||
|
Flooring NA |
999,290 |
970,136 |
4,010,858 |
3,865,746 | ||||
|
Flooring ROW |
545,865 |
463,284 |
2,075,452 |
1,918,635 | ||||
|
Intersegment sales |
(120) |
- |
(120) |
- | ||||
|
Consolidated net sales |
$ 2,369,097 |
2,182,566 |
9,491,290 |
8,959,087 | ||||
|
Operating income (loss): |
||||||||
|
Global Ceramic |
$ 113,440 |
102,080 |
525,401 |
478,448 | ||||
|
Flooring NA |
157,219 |
140,311 |
540,337 |
505,115 | ||||
|
Flooring ROW |
83,865 |
70,735 |
329,054 |
333,091 | ||||
|
Corporate and intersegment eliminations |
(11,058) |
(7,854) |
(40,619) |
(36,711) | ||||
|
Consolidated operating income |
$ 343,466 |
305,272 |
1,354,173 |
1,279,943 | ||||
|
Assets: |
||||||||
|
Global Ceramic |
$ 4,838,310 |
4,024,859 | ||||||
|
Flooring NA |
3,702,137 |
3,410,856 | ||||||
|
Flooring ROW |
3,245,424 |
2,689,592 | ||||||
|
Corporate and intersegment eliminations |
308,982 |
105,289 | ||||||
|
Consolidated assets |
$ 12,094,853 |
10,230,596 | ||||||
|
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) |
||||||||||||
|
Quarter Ended |
Year Ended | |||||||||||
|
December 31, 2017 |
December 31, 2016 |
December 31, 2017 |
December 31, 2016 | |||||||||
|
Net earnings attributable to Mohawk Industries, Inc. |
$ 240,378 |
233,748 |
971,638 |
930,362 | ||||||||
|
Adjusting items: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
15,435 |
16,214 |
49,144 |
60,523 | ||||||||
|
Acquisitions purchase accounting , including inventory step-up |
- |
- |
13,314 |
- | ||||||||
|
Legal settlement and reserves |
- |
- |
- |
(90,000) | ||||||||
|
Release of indemnification asset |
4,459 |
3,004 |
4,459 |
5,371 | ||||||||
|
Tradename impairment |
- |
- |
- |
47,905 | ||||||||
|
Income taxes - reversal of uncertain tax position |
(4,459) |
(3,004) |
(4,459) |
(5,371) | ||||||||
|
Income tax reform, net |
810 |
- |
810 |
- | ||||||||
|
Income taxes |
(624) |
(6,678) |
(16,260) |
(8,443) | ||||||||
|
Adjusted net earnings attributable to Mohawk Industries, Inc. |
$ 255,999 |
243,284 |
1,018,646 |
940,347 | ||||||||
|
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. |
$ 3.42 |
3.26 |
13.61 |
12.61 | ||||||||
|
Weighted-average common shares outstanding - diluted |
74,915 |
74,638 |
74,839 |
74,568 | ||||||||
|
Reconciliation of Total Debt to Net Debt |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
December 31, 2017 |
||||||||||||
|
Current portion of long-term debt and commercial paper |
$ 1,203,683 |
|||||||||||
|
Long-term debt, less current portion |
1,559,895 |
|||||||||||
|
Less: Cash and cash equivalents |
84,884 |
|||||||||||
|
Net Debt |
$ 2,678,694 |
|||||||||||
|
Reconciliation of Operating Income to Adjusted EBITDA |
||||||||||||
|
(Amounts in thousands) |
Trailing Twelve | |||||||||||
|
Quarters Ended |
Months Ended | |||||||||||
|
April 1, 2017 |
July 1, 2017 |
September 30, 2017 |
December 31, 2017 |
December 31, 2017 | ||||||||
|
Operating income |
$ 274,784 |
355,825 |
380,098 |
343,466 |
1,354,173 | |||||||
|
Other (expense) income |
2,832 |
(3,002) |
(1,285) |
(3,750) |
(5,205) | |||||||
|
Net (income) loss attributable to noncontrolling interest |
(502) |
(1,067) |
(997) |
(488) |
(3,054) | |||||||
|
Depreciation and amortization |
105,024 |
109,761 |
113,515 |
118,372 |
446,672 | |||||||
|
EBITDA |
382,138 |
461,517 |
491,331 |
457,600 |
1,792,586 | |||||||
|
Restructuring, acquisition and integration-related and other charges |
3,978 |
15,878 |
13,853 |
15,231 |
48,940 | |||||||
|
Acquisitions purchase accounting, including inventory step-up |
192 |
9,571 |
3,551 |
- |
13,314 | |||||||
|
Release of indemnification asset |
- |
- |
- |
4,459 |
4,459 | |||||||
|
Adjusted EBITDA |
$ 386,308 |
486,966 |
508,735 |
477,290 |
1,859,299 | |||||||
|
Net Debt to Adjusted EBITDA |
1.4 | |||||||||||
|
Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and Constant Shipping Days Excluding Acquisition Volume |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
Year Ended |
|||||||||||
|
December 31, 2017 |
December 31, 2016 |
December 31, 2017 |
December 31, 2016 |
|||||||||
|
Net sales |
$ 2,369,097 |
2,182,566 |
9,491,290 |
8,959,087 |
||||||||
|
Adjustment to net sales on constant shipping days |
2,293 |
- |
38,651 |
- |
||||||||
|
Adjustment to net sales on a constant exchange rate |
(60,112) |
- |
(69,346) |
- |
||||||||
|
Net sales on a constant exchange rate and constant shipping days |
2,311,278 |
2,182,566 |
9,460,595 |
8,959,087 |
||||||||
|
Less: impact of acquisition volume |
(42,106) |
- |
(137,448) |
- |
||||||||
|
Net sales on a constant exchange rate and constant shipping days excluding acquisition volume |
$ 2,269,172 |
2,182,566 |
9,323,147 |
8,959,087 |
||||||||
|
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Constant Shipping Days Excluding Acquisition Volume |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
Global Ceramic |
December 31, 2017 |
December 31, 2016 |
||||||||||
|
Net sales |
$ 824,062 |
749,146 |
||||||||||
|
Adjustment to net sales on constant shipping days |
2,293 |
- |
||||||||||
|
Adjustment to segment net sales on a constant exchange rate |
(19,387) |
- |
||||||||||
|
Segment net sales on a constant exchange rate and constant shipping days |
806,968 |
749,146 |
||||||||||
|
Less: impact of acquisition volume |
(42,106) |
- |
||||||||||
|
Segment net sales on a constant exchange rate and constant shipping days excluding acquisition volume |
$ 764,862 |
749,146 |
||||||||||
|
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
Flooring ROW |
December 31, 2017 |
December 31, 2016 |
||||||||||
|
Net sales |
$ 545,865 |
463,284 |
||||||||||
|
Adjustment to segment net sales on a constant exchange rate |
(40,725) |
- |
||||||||||
|
Segment net sales on a constant exchange rate |
$ 505,140 |
463,284 |
||||||||||
|
Reconciliation of Gross Profit to Adjusted Gross Profit |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
December 31, 2017 |
December 31, 2016 |
|||||||||||
|
Gross Profit |
$ 753,624 |
690,999 |
||||||||||
|
Adjustments to gross profit: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
11,339 |
12,218 |
||||||||||
|
Adjusted gross profit |
$ 764,963 |
703,217 |
||||||||||
|
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
December 31, 2017 |
December 31, 2016 |
|||||||||||
|
Selling, general and administrative expenses |
$ 410,158 |
385,727 |
||||||||||
|
Adjustments to selling, general and administrative expenses: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
(3,892) |
(3,996) |
||||||||||
|
Adjusted selling, general and administrative expenses |
$ 406,266 |
381,731 |
||||||||||
|
Reconciliation of Operating Income to Adjusted Operating Income |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
Year Ended |
|||||||||||
|
December 31, 2017 |
December 31, 2016 |
December 31, 2017 |
December 31, 2016 |
|||||||||
|
Operating income |
$ 343,466 |
305,272 |
1,354,173 |
1,279,943 |
||||||||
|
Adjustments to operating income: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
15,231 |
16,214 |
48,940 |
59,847 |
||||||||
|
Legal settlement and reserves |
- |
- |
- |
(90,000) |
||||||||
|
Tradename impairment |
- |
- |
- |
47,905 |
||||||||
|
Acquisitions purchase accounting, including inventory step-up |
- |
- |
13,314 |
- |
||||||||
|
Adjusted operating income |
$ 358,697 |
321,486 |
1,416,427 |
1,297,695 |
||||||||
|
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
Global Ceramic |
December 31, 2017 |
December 31, 2016 |
||||||||||
|
Operating income |
$ 113,440 |
102,080 |
||||||||||
|
Adjustments to segment operating income: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
1,834 |
1,303 |
||||||||||
|
Adjusted segment operating income |
$ 115,274 |
103,383 |
||||||||||
|
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
Flooring NA |
December 31, 2017 |
December 31, 2016 |
||||||||||
|
Operating income |
$ 157,219 |
140,311 |
||||||||||
|
Adjustments to segment operating income: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
9,776 |
5,826 |
||||||||||
|
Adjusted segment operating income |
$ 166,995 |
146,137 |
||||||||||
|
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
Flooring ROW |
December 31, 2017 |
December 31, 2016 |
||||||||||
|
Operating income |
$ 83,865 |
70,735 |
||||||||||
|
Adjustments to segment operating income: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
2,266 |
8,903 |
||||||||||
|
Adjusted segment operating income |
$ 86,131 |
79,638 |
||||||||||
|
Reconciliation of Segment Operating Loss to Adjusted Segment Operating Loss |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
Corporate and intersegment eliminations |
December 31, 2017 |
December 31, 2016 |
||||||||||
|
Operating loss |
$ (11,058) |
(7,854) |
||||||||||
|
Adjustments to segment operating loss: |
||||||||||||
|
Restructuring, acquisition and integration-related and other charges |
1,355 |
182 |
||||||||||
|
Adjusted segment operating loss |
$ (9,703) |
(7,672) |
||||||||||
|
Reconciliation of Earnings including Noncontrolling Interests Before Income Taxes to Adjusted Earnings including Noncontrolling Interests Before Income Taxes |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
December 31, 2017 |
December 31, 2016 |
|||||||||||
|
Earnings before income taxes |
$ 332,459 |
299,977 |
||||||||||
|
Noncontrolling interests |
(488) |
(760) |
||||||||||
|
Adjustments to earnings including noncontrolling interests before income taxes: |
||||||||||||
|
Restructuring, acquisition and integration-related & other charges |
15,435 |
16,214 |
||||||||||
|
Release of indemnification asset |
4,459 |
3,004 |
||||||||||
|
Adjusted earnings including noncontrolling interests before income taxes |
$ 351,865 |
318,435 |
||||||||||
|
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense |
||||||||||||
|
(Amounts in thousands) |
||||||||||||
|
Quarter Ended |
||||||||||||
|
December 31, 2017 |
December 31, 2016 |
|||||||||||
|
Income tax expense |
$ 91,593 |
65,469 |
||||||||||
|
Income taxes - reversal of uncertain tax position |
4,459 |
3,004 |
||||||||||
|
Income tax reform |
(810) |
- |
||||||||||
|
Income tax effect of adjusting items |
624 |
6,678 |
||||||||||
|
Adjusted income tax expense |
$ 95,866 |
75,151 |
||||||||||
|
Adjusted income tax rate |
27.2% |
23.6% |
||||||||||
|
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 charges, legal settlements and reserves, tradename impairments, acquisition purchase accounting, including inventory step-up, release of indemnification assets, income tax reform and the reversal of uncertain tax positions. |
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SOURCE Mohawk Industries, Inc.