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Mohawk Industries, Inc. Announces Fourth Quarter Earnings

February 20, 2015, 9:00 UTC+3
Record Q4 Adjusted EPS; 27% Increase Over PY. Adjusted Operating Income Up 160 bps
1 pages in this article

CALHOUN, Georgia, Feb. 19 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced 2014 fourth quarter net earnings of $147 million and diluted earnings per share (EPS) of $2.00. Excluding unusual charges, net earnings were $167 million and EPS was $2.27, a 27% increase over last year's fourth quarter adjusted EPS and the highest Q4 adjusted EPS in the company's history. Net sales for the fourth quarter of 2014 were $1.95 billion, an increase of 1.4% versus the prior year's fourth quarter or approximately 5% on a constant exchange basis. For the fourth quarter of 2013, net sales were $1.92 billion, net earnings were $95 million and EPS was $1.29; excluding unusual charges, net earnings were $131 million and EPS was $1.79.

For the twelve months ending December 31, 2014, net sales were $7.8 billion, an increase of 6% versus the prior year as reported or 7% on a constant exchange basis. Net earnings and EPS for the twelve month period were $532 million and $7.25, respectively. Net earnings excluding unusual charges were $598 million and adjusted EPS was $8.15, an increase of 24% over the twelve month adjusted EPS results in 2013. For the twelve months ending December 31, 2013, net sales were $7.3 billion, net earnings were $349 million and EPS was $4.82; excluding unusual charges, net earnings and EPS were $473 million and $6.55, respectively.

Commenting on Mohawk Industries' fourth quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "During the period, we significantly increased our adjusted operating income by 18% compared to the prior year as a result of productivity initiatives, aggressive cost containment and benefits from our acquisitions. We delivered solid results during the quarter, generating increased earnings even with negative translation impact from foreign currency. On a local basis, our European operations improved across all product categories in a challenging market. Across the enterprise, we reduced SG&A as a percentage of sales and held total dollars flat while still investing in growth areas of the business."

Carpet segment net sales for the quarter were $780 million, up 4% over last year. Our adjusted operating income increased approximately 32% over the prior year to 11%, producing our best quarterly performance in over a decade. We continue to benefit from product innovation, enhanced raw material strategies, plant simplification, investments in state-of-the-art technologies and improved sales execution. In the quarter, we introduced SmartStrand® Forever Clean™, the next generation of our exclusive franchise, which was selected by retailers at the national flooring trade show in January as the most innovative new product in any flooring category. Forever Clean combines SmartStrand's luxurious softness and exceptional durability with exclusive Nanoloc™ spill protection for quick and easy clean-up. The company continued to expand its Continuum™ polyester offering, which is gaining momentum across all price points. In commercial carpet, the business improved both top line growth and margins as a result of enhanced design, productivity improvements and material optimization.

Ceramic segment net sales for the quarter were $744 million, up 1% over last year as reported or 7% at a constant exchange rate. The segment's adjusted operating income grew 16% over the prior year, even with the impact of the declining euro and ruble; and the margin increased 150 basis points due to increased productivity as well as improved pricing and mix. In the U.S., the combined Dal-Tile and Marazzi organization is operating exceptionally well. The consolidated organization has enhanced the styling of our new products as we expand our offering of larger tile sizes, rectangles and planks, increasing our product mix and average selling prices. The company's new ceramic plant in Tennessee is on track to start up in the beginning of next year, with the building pad nearly complete. The company's ceramic sales in Mexico are growing rapidly from providing a complete product line of higher styled premium products and value priced products as well as expanding participation in the retail and new construction channels. Sales and margins in the company's European ceramic business grew by improving product mix, replacing inefficient manufacturing assets and reducing SG&A. Ceramic sales in Russia expanded significantly in local currency as consumers purchased ahead of anticipated price increases.

Laminate and Wood segment net sales for the quarter were $459 million, decreasing approximately 2% over last year as reported and increasing 4% at a constant exchange rate. Adjusted operating margin for the segment was approximately 12%, growing 30 basis points over the prior year. Laminate sales in Europe benefited from the rapid acceptance of the new Quick-Step® Impressive™ collection with enhanced surface texture and water repellency. Construction of the company's LVT plant in Belgium has been completed, and the start-up is focused on new product development. During the period, the company purchased a New Zealand flooring distributor, which expands the company's distribution model successfully executed in the U.K., Eastern Europe and Australia. The integration of Spano into the company's European board business is largely complete, creating improved mix, increased operational efficiencies and reduced SG&A costs. In the U.S., wood flooring sales grew, with engineered wood sales rising substantially, while laminate sales were impacted by lower mix, product changes and inventory reductions by our customers.

We anticipate stronger organic growth on a local basis in 2015, driven by improvements in the U.S. economy and the flooring market. In the U.S., rising consumer confidence supported by lower gasoline prices, low interest rates, increased home values and an improving job market should drive higher growth in our category. The U.S. dollar has recently strengthened considerably relative to the euro, ruble and other currencies and our translated results will be impacted. While we cannot affect the exchange rates, we are aggressively implementing productivity initiatives, SG&A reductions and other cost containment projects to minimize the impact. We will continue to invest in product innovation and operational improvements to drive our top line growth and margins. The first quarter of 2015 has four additional days, increasing sales 6%, and the fourth quarter will have four less days than in the same periods last year. Taking all of these factors into account, our guidance for first quarter earnings is $1.54 to $1.63 per share, excluding any restructuring charges and new acquisitions.

In January, we announced the continuation of our aggressive acquisition strategy with the purchase of the IVC Group, and we anticipate that the transaction will close early in the second quarter. Recently, we also signed an agreement to purchase a small Eastern European ceramic manufacturer, with the transaction expected to be completed in the second quarter. We have a strong foundation for future growth in all flooring categories in North America, Europe, Russia, Asia and Australia as we enhance our position as the world's largest flooring manufacturer.

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, Bigelow, Daltile, Durkan, Karastan, Lees, Marazzi, Kerama Marazzi, Mohawk, Pergo, Unilin and Quick-Step. 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, China, 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 in raw material prices and other input costs; 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, February 20, 2015 at 11:00 AM Eastern Time

The telephone number is:

  • +1 (800) 603-92-55 for US/Canada
  • +1 (706) 634-22-94 for International/Local.

Conference ID # 64529911.

A replay will be available until Friday, March 6, 2015 by dialing 855-859-2056 for

US/local calls and +1 (404) 537-34-06 for International/Local calls and entering Conference ID # 64529911.

 

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

 

Consolidated Statement of Operations

 

Three Months Ended

 

Twelve Months Ended

(Amounts in thousands, except per share data)

 

December

31, 2014

 

December

31, 2013

 

December

31, 2014

 

December

31, 2013

 

Net sales

 

$ 1,951,446

 

1,924,104

 

7,803,446

 

7,348,754

Cost of sales

 

1,409,843

 

1,411,307

 

5,649,254

 

5,427,945

    Gross profit

 

541,603

 

512,797

 

2,154,192

 

1,920,809

Selling, general and administrative expenses

 

335,483

 

361,809

 

1,381,396

 

1,373,878

Operating income

 

206,120

 

150,988

 

772,796

 

546,931

Interest expense

 

20,623

 

22,148

 

98,207

 

92,246

Other expense (income), net

 

9,737

 

2,656

 

10,698

 

9,114

    Earnings from continuing operations before income taxes

 

175,760

 

126,184

 

663,891

 

445,571

Income tax expense

 

28,680

 

15,420

 

131,637

 

78,385

        Earnings from continuing operations

 

147,080

 

110,764

 

532,254

 

367,186

Loss from discontinued operations, net of income tax benefit of $268 and $1,050, respectively

 

-

 

(15,981)

 

-

 

(17,895)

        Net earnings including noncontrolling interest

 

147,080

 

94,783

 

532,254

 

349,291

Net earnings (loss) attributable to noncontrolling interest

 

212

 

132

 

289

 

505

Net earnings attributable to Mohawk Industries, Inc.

 

$ 146,868

 

94,651

 

531,965

 

348,786

                 

Basic earnings per share attributable to Mohawk Industries, Inc.

               

  Income from continuing operations 

 

$ 2.01

 

1.52

 

7.30

 

5.11

  Loss from discontinued operations, net of income taxes

 

-

 

(0.22)

 

-

 

(0.25)

Basic earnings per share attributable to Mohawk Industries, Inc.

 

$              2.01

 

1.30

 

7.30

 

4.86

Weighted-average common shares outstanding - basic

 

72,905

 

72,654

 

72,837

 

71,773

                 

Diluted earnings per share attributable to Mohawk Industries, Inc.

               

  Income from continuing operations 

 

$              2.00

 

1.51

 

7.25

 

5.07

  Loss from discontinued operations, net of income taxes

 

-

 

(0.22)

 

-

 

(0.25)

Diluted earnings per share attributable to Mohawk Industries, Inc.

 

$ 2.00

 

1.29

 

7.25

 

4.82

Weighted-average common shares outstanding - diluted

 

73,452

 

73,214

 

73,363

 

72,301

                 
                 
                 

Other Financial Information

               

(Amounts in thousands)

               

Net cash provided by (used in) operating activities

 

$ 338,765

 

198,190

 

662,188

 

525,163

Depreciation and amortization

 

$ 95,665

 

86,329

 

345,570

 

308,871

Capital expenditures

 

$ 170,224

 

111,027

 

561,804

 

366,550

                 

Consolidated Balance Sheet Data

             

(Amounts in thousands)

               
           

December

31, 2014

 

December

31, 2013

ASSETS

               

Current assets:

               

    Cash and cash equivalents

         

$ 97,877

 

54,066

    Receivables, net

         

1,081,963

 

1,062,875

    Inventories

         

1,543,313

 

1,572,325

    Prepaid expenses and other current assets

         

257,333

 

248,918

    Deferred income taxes 

         

151,784

 

147,534

        Total current assets

         

3,132,270

 

3,085,718

Property, plant and equipment, net

         

2,703,210

 

2,701,743

Goodwill

         

1,604,352

 

1,736,092

Intangible assets, net

         

702,009

 

811,602

Deferred income taxes and other non-current assets

         

143,703

 

159,022

    Total assets

         

$    8,285,544

 

8,494,177

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Current liabilities:

               

Current portion of long-term debt and commercial paper

         

$       851,305

 

127,218

Accounts payable and accrued expenses

         

1,104,509

 

1,193,593

        Total current liabilities

         

1,955,814

 

1,320,811

Long-term debt, less current portion

         

1,402,135

 

2,132,790

Deferred income taxes and other long-term liabilities

         

504,782

 

570,270

        Total liabilities

         

3,862,731

 

4,023,871

Total stockholders' equity

         

4,422,813

 

4,470,306

    Total liabilities and stockholders' equity

         

$    8,285,544

 

8,494,177

                 

Segment Information

 

Three Months Ended

 

As of or for the

Twelve Months Ended

(Amounts in thousands)

 

December

31, 2014

 

December

31, 2013

 

December

31, 2014

 

December

31, 2013

                 

Net sales:

               

    Carpet

 

$        779,865

 

747,143

 

3,013,948

 

2,986,096

    Ceramic

 

743,619

 

738,004

 

3,015,279

 

2,677,058

    Laminate and Wood

 

458,728

 

466,082

 

1,890,567

 

1,792,260

    Intersegment sales

 

(30,766)

 

(27,125)

 

(116,348)

 

(106,660)

        Consolidated net sales

 

$     1,951,446

 

1,924,104

 

7,803,446

 

7,348,754

                 

Operating income (loss):

               

    Carpet

 

$          84,759

 

60,087

 

255,938

 

209,023

    Ceramic

 

82,793

 

57,637

 

351,113

 

209,825

    Laminate and Wood

 

45,004

 

40,290

 

194,734

 

159,365

    Corporate and eliminations

 

(6,436)

 

(7,026)

 

(28,989)

 

(31,282)

        Consolidated operating income

 

$        206,120

 

150,988

 

772,796

 

546,931

                 

Assets:

               

    Carpet

         

$    1,986,081

 

1,786,085

    Ceramic

         

3,542,594

 

3,787,785

    Laminate and Wood

         

2,542,566

 

2,716,759

    Corporate and eliminations

         

214,303

 

203,548

        Consolidated assets

         

$    8,285,544

 

8,494,177

                 

 

 

Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc.

(Amounts in thousands, except per share data)

             
           

Three Months Ended

 

Twelve Months Ended

           

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

Net earnings attributable to Mohawk Industries, Inc.

 

$          146,868

 

94,651

 

531,965

 

348,786

Adjusting items:

               

Restructuring, acquisition, integration-related costs and disposal of subsidiary

 

26,649

 

37,812

 

63,556

 

113,420

Acquisitions purchase accounting (inventory step-up)

 

-

 

-

 

-

 

31,041

Discontinued operations

 

-

 

16,249

 

-

 

18,945

Legal reserve

 

-

 

-

 

10,000

 

-

Bond redemption

 

3,472

 

-

 

18,922

 

-

Deferred loan costs

 

-

 

-

 

1,080

 

490

Interest on 3.85% senior notes

 

-

 

-

 

-

 

3,559

Income taxes

 

(10,444)

 

(17,621)

 

(27,856)

 

(42,841)

Adjusted net earnings attributable to Mohawk Industries, Inc.

 

$          166,545

 

131,091

 

597,667

 

473,400

                         

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

 

2.27

 

1.79

 

8.15

 

6.55

Weighted-average common shares outstanding - diluted

 

73,452

 

73,214

 

73,363

 

72,301

                         

Reconciliation of Adjusted Diluted Earnings Per Share on a Constant Exchange Rate

               
                         
               

Three Months Ended

       
               

December 31, 2014

       

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

 

$                   2.27

       

Adjustment to constant exchange rate

 

0.09

       

Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. on a constant exchange rate

 

$                   2.36

       
                         

Reconciliation of Total Debt to Net Debt

                 

(Amounts in thousands)

                   
       

December 31, 2014

               

Current portion of long-term debt and commercial paper

 

$          851,305

               

Long-term debt, less current portion

 

1,402,135

               

Less: Cash and cash equivalents

 

97,877

               

Net Debt

 

$       2,155,563

               
                         

Reconciliation of Operating Income to Adjusted EBITDA

                 

(Amounts in thousands)

               

Trailing Twelve

       

Three Months Ended

 

Months Ended

       

March 29, 2014

 

June 28, 2014

 

September 27, 2014

 

December 31, 2014

 

December 31, 2014

Operating income

 

130,735

 

222,248

 

213,693

 

206,120

 

772,796

Other (expense) income

 

(4,890)

 

1,555

 

2,374

 

(9,737)

 

(10,698)

Net (earnings) loss attributable to non-controlling interest

 

28

 

(111)

 

6

 

(212)

 

(289)

Depreciation and amortization

 

80,984

 

83,754

 

85,167

 

95,665

 

345,570

EBITDA

 

206,857

 

307,446

 

301,240

 

291,836

 

1,107,379

Restructuring, acquisition and integration-related costs

 

11,725

 

11,169

 

14,013

 

26,649

 

63,556

Legal reserve

 

-

 

-

 

10,000

 

-

 

10,000

 Adjusted EBITDA 

 

218,582

 

318,615

 

325,253

 

318,485

 

1,180,935

                         

Net Debt to  Adjusted EBITDA

                 

1.8

                         

Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate

                   

(Amounts in thousands)

                   
       

Three Months Ended

 

Twelve Months Ended

   
       

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

   

Net sales

 

$       1,951,446

 

1,924,104

 

7,803,446

 

7,348,754

   

Adjustment to net sales on a constant exchange rate

 

72,152

 

-

 

56,052

 

-

   

Net sales on a constant exchange rate

 

$       2,023,598

 

1,924,104

 

7,859,498

 

7,348,754

   
                         

Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate

               

(Amounts in thousands)

                   
       

Three Months Ended

           

Ceramic

 

December 31, 2014

 

December 31, 2013

           

Net sales

 

$          743,619

 

738,004

           

Adjustment to segment net sales on a constant exchange rate

 

44,742

 

-

           

Segment net sales on a constant exchange rate

 

$          788,361

 

738,004

           
                         

Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate

               

(Amounts in thousands)

                   
       

Three Months Ended

           

Laminate and Wood

 

December 31, 2014

 

December 31, 2013

           

Net sales

 

$          458,728

 

466,082

           

Adjustment to segment net sales on a constant exchange rate

 

27,411

 

-

           

Segment net sales on a constant exchange rate

 

$          486,139

 

466,082

           
                         

Reconciliation of Gross Profit to Adjusted Gross Profit 

                   

(Amounts in thousands)

                   
       

Three Months Ended

 

Twelve Months Ended

   
       

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

   

Gross Profit

 

$          541,603

 

512,797

 

2,154,192

 

1,920,809

   

Adjustments to gross profit:

                   

Restructuring and integration-related costs

 

11,568

 

16,707

 

31,222

 

49,151

   

Acquisitions purchase accounting (inventory step-up)

 

-

 

-

 

-

 

31,041

   

  Adjusted gross profit

 

$          553,171

 

529,504

 

2,185,414

 

2,001,001

   

 Adjusted gross profit as a percent of net sales

 

28.3%

 

27.5%

 

28.0%

 

27.2%

   
                         

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

           

(Amounts in thousands)

                   
       

Three Months Ended

       
       

December 31, 2014

 

December 31, 2013

           

Selling, general and administrative expenses

$          335,483

 

361,809

           

Adjustments to selling, general and administrative expenses:

                 

Restructuring, acquisition and integration-related costs

(3,127)

 

(19,644)

           

  Adjusted selling, general and administrative expenses

$          332,356

 

342,165

           

Adjusted selling, general and administrative expenses as a percent of net sales

17.0%

 

17.8%

           
                         

Reconciliation of Operating Income to Adjusted Operating Income 

                 

(Amounts in thousands)

                   
       

Three Months Ended

 

Twelve Months Ended

   
       

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

   

Operating income

 

$          206,120

 

150,988

 

772,796

 

546,931

   

Adjustments to operating income:

                   

Restructuring, acquisition and integration-related costs

14,695

 

36,351

 

63,556

 

111,939

   

Legal reserve

 

-

 

-

 

10,000

 

-

   

Acquisitions purchase accounting (inventory step-up)

-

 

-

 

-

 

31,041

   

  Adjusted operating income

$          220,815

 

187,339

 

846,352

 

689,911

   

   Adjusted operating income as a percent of net sales

11.3%

 

9.7%

 

10.8%

 

9.4%

   
                         

Reconciliation of Adjusted Operating Income on a Constant Exchange Rate

                 

(Amounts in thousands)

                   
       

Three Months Ended

           
       

December 31, 2014

 

December 31, 2013

           

Operating income

 

$          206,120

 

150,988

           

Adjustments to operating income

 

14,695

 

36,351

           

Adjustments to operating income on a constant exchange rate

8,050

 

-

           

  Adjusted operating income on constant exchange rate

$          228,865

 

187,339

           

   Adjusted operating income as a percent of net sales

11.3%

 

9.7%

           
                         

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income 

               

(Amounts in thousands)

                   
       

Three Months Ended

 

Twelve Months Ended

   

Carpet

 

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

   

Operating income

 

$            84,759

 

60,087

 

255,938

 

209,023

   

Adjustment to segment operating income:

                   

Restructuring, acquisition and integration-related costs

1,999

 

6,005

 

1,999

 

13,603

   

Legal reserve

 

-

 

-

 

10,000

 

-

   

  Adjusted segment operating income

$            86,758

 

66,092

 

267,937

 

222,626

   

   Adjusted operating income as a percent of net sales

11.1%

 

8.8%

 

8.9%

 

7.5%

   
                         

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income 

               

(Amounts in thousands)

                   
       

Three Months Ended

 

Twelve Months Ended

   

Ceramic

 

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

   

Operating income

 

$            82,793

 

57,637

 

351,113

 

209,825

   

Adjustments to segment operating income:

                 

Restructuring, acquisition and integration-related costs

2,905

 

15,982

 

9,330

 

42,876

   

Acquisitions purchase accounting (inventory step-up)

-

 

-

 

-

 

31,041

   

  Adjusted segment operating income

$            85,698

 

73,619

 

360,443

 

283,742

   

   Adjusted operating income as a percent of net sales

11.5%

 

10.0%

 

12.0%

 

10.6%

   
                         

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate

           

(Amounts in thousands)

                   
       

Three Months Ended

           

Ceramic

   

December 31, 2014

 

December 31, 2013

           

Operating income

 

$            82,793

 

57,637

           

Adjustments to operating income

 

2,905

 

15,982

           

Adjustments to operating income on a constant exchange rate

4,493

 

-

           

  Adjusted operating income on constant exchange rate

$            90,191

 

73,619

           

   Adjusted operating income as a percent of net sales

11.4%

 

10.0%

           
                         

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income 

               

(Amounts in thousands)

                   
       

Three Months Ended

 

Twelve Months Ended

   

Laminate and Wood

 

December 31, 2014

 

December 31, 2013

 

December 31, 2014

 

December 31, 2013

   

Operating income

 

$            45,004

 

40,290

 

194,734

 

159,365

   

Adjustment to segment operating income:

                 

Restructuring, acquisition and integration-related costs

9,424

 

13,852

 

38,788

 

54,235

   

  Adjusted segment operating income

$            54,428

 

54,142

 

233,522

 

213,600

   

   Adjusted operating income as a percent of net sales

11.9%

 

11.6%

 

12.4%

 

11.9%

   
                         

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate

           

(Amounts in thousands)

                   
       

Three Months Ended

           

Laminate and Wood

 

December 31, 2014

 

December 31, 2013

           

Operating income

 

$            45,004

 

40,290

           

Adjustments to operating income

9,424

 

13,852

           

Adjustments to operating income on a constant exchange rate

3,557

 

-

           

  Adjusted operating income on constant exchange rate

$            57,985

 

54,142

           

   Adjusted operating income as a percent of net sales

11.9%

 

11.6%

           
                         

Reconciliation of Earnings from Continuing Operations Before Income Taxes to Adjusted Earnings from Continuing Operations Before Income Taxes

       

(Amounts in thousands)

                   
       

Three Months Ended

           
       

December 31, 2014

 

December 31, 2013

           

Earnings from continuing operations before income taxes

$          175,760

 

126,184

           

Adjustments to earnings from continuing operations before income taxes:

                 

Restructuring, acquisition, integration-related costs and disposal of subsidiary

26,649

 

37,812

           

Acquisitions purchase accounting (inventory step-up)

-

 

-

           

Legal reserve

-

 

-

           

Bond redemption

3,472

 

-

           

Deferred loan costs

-

 

-

           

Interest on 3.85% senior notes

-

 

-

           

  Adjusted earnings before income taxes

$          205,881

 

163,996

           
                         
                         

Reconciliation of Income Tax Expense to Adjusted Income Tax Expense 

                 

(Amounts in thousands)

                   
       

Three Months Ended

           
       

December 31, 2014

 

December 31, 2013

           

Income tax expense 

   

$            28,680

 

15,420

           

Income tax effect of adjusting items

 

10,444

 

17,353

           

  Adjusted income tax expense

 

$            39,124

 

32,773

           
                         

Adjusted income tax rate

 

19%

 

20%

           
                         
                         

Proforma Net Sales and Operating Income Adjusted by FX

                 

(Amounts in thousands)

 

Twelve Months Ended

           
       

December 31, 2014

           
       

Net Sales

 

Operating Income

           

Net Sales and Operating Income as reported

$       7,803,446

 

772,796

           

FX adjustments using average rates of Euro/USD: 1.14 and Ruble/USD: 61.0

(392,838)

 

(56,436)

           

Proforma Net Sales and Operating Income Adjusted by FX

$       7,410,608

 

716,360

           
 

The Company believes it is useful for itself and investors to review, as applicable, both GAAP and the above non-GAAP measures in order to assess the performance of the Company's business for planning and forecasting in subsequent periods. In particular, the Company believes excluding the impact of restructuring, acquisition and integration-related costs is useful because it allows investors to evaluate our performance for different periods on a more comparable basis.

 

Contact:

Frank H. Boykin, Chief Financial Officer

Tel.: +1 (706) 624-26-95

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