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Mohawk Industries, Inc. Announces Second Quarter Earnings

August 07, 2015, 9:00 UTC+3
Record Q2 Adjusted EPS - 22% Increase Over PY
1 pages in this article

CALHOUN, Georgia, Aug. 6, 2015 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE: MHK) today announced 2015 second quarter net earnings of $186 million and diluted earnings per share (EPS) of $2.53. Excluding unusual charges, net earnings were $199 million and EPS was $2.69, a 22% increase over last year's second quarter adjusted EPS and the highest adjusted quarterly EPS in the company's history. Net sales for the second quarter of 2015 were $2.0 billion, flat versus the prior year's second quarter or a 7% increase on a constant currency exchange rate basis. For the second quarter of 2014, net sales were $2.0 billion, net earnings were $153 million and EPS was $2.08; excluding unusual charges, net earnings were $162 million and EPS was $2.21. 

For the six months ending July 4, 2015, net sales were $3.92 billion, an increase of approximately 2% versus prior year or an increase of approximately 9% on a constant currency exchange rate basis. Net earnings and EPS for the six-month period were $209 million and $2.83, respectively. Net earnings excluding unusual charges were $324 million and adjusted EPS was $4.39, an increase of 28% over the six-month period adjusted EPS result in 2014. For the six-months ending June 28, 2014, net sales were $3.86 billion, net earnings were $234 million and EPS was $3.19; excluding unusual charges, net earnings and EPS were $252 million and $3.44.

Commenting on Mohawk Industries' second quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "For the period, our adjusted operating margin was approximately 14%, an increase of  21% or 240 basis points compared to the prior year due to the performance of our differentiated new products, higher volume and improved productivity and costs across the enterprise. In May, we completed the purchase of KAI, giving us the leading position in the Bulgarian and Romanian ceramic markets positioned as the low-cost producer; and in mid-June we completed our acquisition of IVC, providing us with leading positions in luxury vinyl tile (LVT) and sheet vinyl on both sides of the Atlantic. The IVC and KAI acquisitions have compelling long-term potential and expand our business into new product categories and new markets. To maximize our growth, we have invested more into the business including developing differentiated products, hiring more sales personnel, and increasing our product sampling and merchandising. Our capital investments increased capacity to meet growing demand and improved manufacturing efficiencies and costs.

"During the second quarter, the Company realigned its reportable segments, organizing its carpet, wood, laminate and newly acquired vinyl operations by geography into the Flooring North America segment and the Flooring Rest of the World segment. Our Global Ceramic segment remains the same with the addition of KAI in Eastern Europe. Our management of the business has been aligned with this change, which will allow us to optimize our operations and sales by region while coordinating our technology, manufacturing and product development across the enterprise. We expect to gain synergies through enhanced customer relationships, better utilization of our assets and distribution systems and the implementation of best practices.

"For the quarter, our Global Ceramic segment's adjusted operating margin was approximately 16%, up 220 basis points as our mix, volume and productivity improved. The segment's sales were down 1% as reported or up approximately 8% on a constant exchange basis, including two months of KAI's results during the quarter. On a pro forma basis, ceramic has become the largest product category in our portfolio, constituting over 35% of our total revenues. Our U.S. ceramic business continues to build momentum across all channels with stronger growth in the residential new construction and commercial sectors. We are adding sales personnel, service centers and showrooms to maximize our U.S. sales and are utilizing our worldwide assets to satisfy the increasing U.S. demand. In Mexico, our sales continued their rapid growth as the economy expands and we grow our market share. We recently completed the acquisition of a small ceramic plant in Baja, Mexico, which will expand our position in Western Mexico and the Southwestern U.S. market. In our European ceramic business, our investments have significantly improved our product offering, sales and margins. The KAI acquisition expands our Eastern European business and creates opportunities to ship their products into other markets. In Russia, our second quarter revenues were up on a local basis as we grow market share in a contracting environment.

"During the period, our Flooring North America segment's adjusted operating income increased 40%, achieving a margin of approximately 12%. All product categories contributed to the increase through productivity and lower costs, offset by price, mix and the start-up costs related to our new U.S. LVT plant. Segment sales increased approximately 3%, including about three weeks of IVC North American results. For the quarter, our carpet tile, laminate, wood, rugs and vinyl sales increased with broadloom carpet down slightly. Our new residential carpet introductions are gaining traction and should improve our remodeling business. During the quarter, we announced the closing of a yarn manufacturing facility, initiated the consolidation of our woven manufacturing and eliminated four regional warehouses. Sales of our hard surface products are growing faster than carpet due to their increasing use in new home construction and residential remodeling. With IVC, we are leveraging Mohawk's relationships to expand our sheet vinyl and LVT sales in all channels. Our new LVT plant in Georgia is starting up as anticipated, and is increasing its production as we refine the manufacturing processes.

"Our Flooring Rest of the World segment's adjusted operating margin was 18.5%, an increase of 250 basis points over the prior year, driven by improved volume, productivity initiatives and lower costs, offset by the start-up expenses of our new Belgian LVT plant and the translation impact of the stronger dollar. Net sales for the segment were down 7% as reported but up 13% on a constant exchange basis, including about three weeks of IVC sales in Europe. Sales of almost all product categories improved over the prior year with our new laminate introductions enhancing our market position. Our Czech wood plant is now operating near capacity with improved costs and margins, although currency translation of wood products from Malaysia impacted our costs. Our Belgian LVT sales continue to increase as we broaden our product offering, increase production and improve our manufacturing cost and quality. The IVC acquisition adds a strong management team, leading manufacturing capabilities and new market opportunities that we can optimize with our existing business.

"Our business is benefiting from years of thoughtful investments in new equipment and acquisitions. In addition to being the world's largest flooring manufacturer, we have the most comprehensive product portfolio with the best brands and assets. Looking ahead, we anticipate the U.S. economy will continue to improve, strengthening both the residential and commercial flooring markets. During the third quarter, we anticipate that U.S. sales and margins in all of our product categories will improve over last year. Though foreign currency is creating significant headwinds, most of our markets are improving and we are growing on a local basis. In Mexico, we expect our sales and margin expansion to continue in a ceramic market that is strongly growing. Our European business should continue to improve with the economy, as we benefit from our new ceramic manufacturing assets and other significant investments we have made. Even though Russia should be more difficult going forward, we expect to gain market share by expanding our position in all channels. In the third quarter, we will continue to absorb the start-up costs related to our capital investments, including two new LVT plants, a new ceramic plant and major upgrades across the enterprise. Our new acquisitions of vinyl in the U.S. and Europe and ceramic in Eastern Europe and Western Mexico will improve our results and long-term value. Taking all of these factors into account, our guidance for third quarter earnings is $2.91 to $2.99 per share, excluding any restructuring charges. Our third quarter earnings guidance would have been approximately $0.24 per share higher on a constant exchange rate relative to last year."

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, IVC, Lees, Marazzi, Mohawk, 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, August 7, 2015 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 # 81118248.  A replay will be available until Friday, September 4, 2015 by dialing 855-859-2056 for US/Local calls and 404-537-3406 for International/Local calls and entering Conference ID # 81118248.

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

(Unaudited)

Consolidated Statement of Operations                               Three Months Ended                     Six Months Ended

                                                                   ------------------                     ----------------

 

(Amounts in thousands, except per share data)                         July 4, 2015                         June 28, 2014             July 4, 2015               June 28, 2014

                                                                      ------------                         -------------             ------------               -------------

Net sales                                                                             $2,041,733                           2,048,247                  3,922,910                 3,861,342

Cost of sales                                                                          1,426,604                           1,473,435                  2,795,838                 2,805,175

-------------                                                                                                             ---------                  ---------                 ---------

Gross profit                                                                         615,129                             574,812                  1,127,072                 1,056,167

Selling, general and administrative expenses                                             359,313                             352,564                    827,482                   703,184

--------------------------------------------                                                                                -------                    -------                   -------

Operating income                                                                         255,816                             222,248                    299,590                   352,983

Interest expense                                                                          16,838                              20,702                     33,287                    42,798

Other expense (income), net                                                                2,928                             (1,555)                     1,845                     3,335

---------------------------                                                                                                  ------                      -----                     -----

Earnings before income taxes                                                         236,050                             203,101                    264,458                   306,850

Income tax expense                                                                        49,276                              50,240                     55,180                    72,936

------------------                                                                        ------                              ------                     ------                    ------

Net earnings including noncontrolling interest                                   186,774                             152,861                    209,278                   233,914

Net earnings (loss)  attributable to noncontrolling interest                                 282                                 111                        440                        83

------------------------------------------------------------                                 ---                                 ---                        ---                       ---

Net earnings attributable to Mohawk Industries, Inc.                                    $186,492                             152,750                    208,838                   233,831

----------------------------------------------------                                    --------                             -------                    -------                   -------

Basic earnings per share attributable to Mohawk Industries, Inc.

Basic earnings per share attributable to Mohawk Industries, Inc.                           $2.54                                2.10                       2.85                      3.21

----------------------------------------------------------------                           -----                                ----                       ----                      ----

Weighted-average common shares outstanding - basic                                        73,264                              72,832                     73,123                    72,788

--------------------------------------------------                                        ------                              ------                     ------                    ------

Diluted earnings per share attributable to Mohawk Industries, Inc.

Diluted earnings per share attributable to Mohawk Industries, Inc.                         $2.53                                2.08                       2.83                      3.19

------------------------------------------------------------------                         -----                                ----                       ----                      ----

Weighted-average common shares outstanding - diluted                                      73,756                              73,297                     73,644                    73,302

----------------------------------------------------                                      ------                              ------                     ------                    ------

Other Financial Information

(Amounts in thousands)

Depreciation and amortization                                                            $88,011                              83,754                    173,667                   164,738

-----------------------------                                                            -------                              ------                    -------                   -------

Capital expenditures                                                                    $122,628                             127,616                    228,422                   249,697

--------------------                                                                    --------                             -------                    -------                   -------

Consolidated Balance Sheet Data

(Amounts in thousands)

                                                                                                                                     July 4, 2015               June 28, 2014

                                                                                                                                    ------------               -------------

ASSETS

Current assets:

Cash and cash equivalents                                                                                                                        $171,087                    70,044

Receivables, net                                                                                                                                1,387,687                 1,261,808

Inventories                                                                                                                                     1,592,403                 1,644,768

Prepaid expenses and other current assets                                                                                                         303,871                   267,210

Deferred income taxes                                                                                                                             153,574                   135,259

    ---------------------

Total current assets                                                                                                                        3,608,622                 3,379,089

Property, plant and equipment, net                                                                                                                  3,014,751                 2,830,202

Goodwill                                                                                                                                            2,294,214                 1,730,713

Intangible assets, net                                                                                                                                931,296                   792,260

Deferred income taxes and other non-current assets                                                                                                    316,787                   149,417

--------------------------------------------------

Total assets                                                                                                                                  $10,165,670                 8,881,681

    ------------                                                                                                                                  -----------                 ---------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt and commercial paper                                                                                             $1,698,044                   619,229

Accounts payable and accrued expenses                                                                                                               1,303,487                 1,253,291

-------------------------------------                                                                                                               ---------                 ---------

Total current liabilities                                                                                                                   3,001,531                 1,872,520

Long-term debt, less current portion                                                                                                                1,777,828                 1,807,609

Deferred income taxes and other long-term liabilities                                                                                                 750,125                   528,252

-----------------------------------------------------                                                                                                 -------                   -------

Total liabilities                                                                                                                           5,529,484                 4,208,381

        -----------------                                                                                                                           ---------                 ---------

Redeemable noncontrolling interest                                                                                                                     21,304                         -

----------------------------------                                                                                                                     ------                       ---

Total stockholders' equity                                                                                                                          4,614,882                 4,673,300

--------------------------                                                                                                                          ---------                 ---------

Total liabilities and stockholders' equity                                                                                                    $10,165,670                 8,881,681

    ------------------------------------------                                                                                                    -----------                 ---------

Segment Information                                                Three Months Ended            As of or for the Six Months Ended

                                                                   ------------------            ---------------------------------

(Amounts in thousands)                                                July 4, 2015                         June 28, 2014             July 4, 2015               June 28, 2014

                                                                      ------------                         -------------             ------------               -------------

Net sales:

Global Ceramic                                                                      $789,802                             796,724                  1,509,630                 1,491,818

Flooring NA                                                                          920,337                             895,912                  1,767,248                 1,676,243

Flooring ROW                                                                         331,622                             357,738                    646,364                   695,804

Intersegment sales                                                                      (28)                            (2,127)                     (332)                  (2,523)

    ------------------                                                                       ---                              ------                       ----                    ------

Consolidated net sales                                                        $2,041,733                           2,048,247                  3,922,910                 3,861,342

        ----------------------                                                        ----------                           ---------                  ---------                 ---------

Operating income (loss):

Global Ceramic                                                                      $121,189                             106,407                    206,516                   167,066

Flooring NA                                                                           95,143                              76,602                     19,951                   123,955

Flooring ROW                                                                          53,052                              47,398                     97,693                    78,864

Corporate and eliminations                                                          (13,568)                            (8,159)                  (24,570)                 (16,902)

    --------------------------                                                           -------                              ------                    -------                   -------

Consolidated operating income                                                   $255,816                             222,248                    299,590                   352,983

        -----------------------------                                                   --------                             -------                    -------                   -------

Assets:

Global Ceramic                                                                                                                                 $3,950,088                 3,900,387

Flooring NA                                                                                                                                     3,182,465                 2,587,409

Flooring ROW                                                                                                                                    2,710,895                 2,174,546

Corporate and eliminations                                                                                                                        322,222                   219,339

                                                                                                                                               -------

Consolidated assets                                                                                                                       $10,165,670                 8,881,681

        -------------------                                                                                                                       -----------                 ---------

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                                              Six Months Ended

                                                                                                                                                                                   ------------------                                              ----------------

                                                                                                                                                                                      July 4, 2015                                                  June 28, 2014                              July 4, 2015               June 28, 2014

                                                                                                                                                                                      ------------                                                  -------------                              ------------               -------------

Net earnings attributable to Mohawk Industries, Inc.                                                                                                                                                         $186,492                                              152,750                                   208,838                     233,831

Adjusting items:

Restructuring, acquisition and integration-related and

other costs                                                                                                                                                                                                   20,485                                               11,169                                    33,014                      22,894

Acquisitions purchase accounting (inventory step-up)                                                                                                                                                            6,156                                                    -                                    6,156                           -

Legal settlement and reserves                                                                                                                                                                                        -                                                   -                                  125,000                           -

Deferred loan costs                                                                                                                                                                                                    -                                                   -                                      651                           -

Income taxes                                                                                                                                                                                                    (14,490)                                             (2,229)                                 (50,044)                    (4,620)

------------                                                                                                                                                                                                     -------                                               ------                                   -------                      ------

Adjusted net earnings attributable to Mohawk Industries,

Inc.                                                                                                                                                                                                        $198,643                                              161,690                                   323,615                     252,105

--------------------------------------------------------                                                                                                                                                     --------                                              -------                                   -------                     -------

Adjusted diluted earnings per share attributable to Mohawk Industries, Inc.                                                                                                                                   $2.69                                                 2.21                                      4.39                        3.44

Weighted-average common shares outstanding - diluted                                                                                                                                                           73,756                                               73,297                                    73,644                      73,302

Reconciliation of Total Debt to Net Debt

(Amounts in thousands)

                                                                                                         July 4, 2015

                                                                                                         ------------

 

Current portion of long-term debt and commercial paper                                                                          $1,698,044

Long-term debt, less current portion                                                                                              1,777,828

Less: Cash and cash equivalents                                                                                                     171,087

Net Debt                                                                                                                           $3,304,785

--------                                                                                                                           ----------

 

Reconciliation of Operating Income to Adjusted EBITDA

(Amounts in thousands)                                                                                                                                                                                                                                                                                                   Trailing Twelve

                                                                                                            Three Months Ended                                                                                           Months Ended

                                                                                                            ------------------

                                                                                                      September 27, 2014                                                           December 31, 2014                                                April 4, 2015                              July 4, 2015                July 4, 2015

                                                                                                      ------------------                                                           -----------------                                                -------------                              ------------                ------------

Operating income                                                                                                                      213,693                                                                     206,120                                               43,774                                   255,816                     719,403

Other (expense) income                                                                                                                2,374                                                                     (9,737)                                               1,083                                   (2,928)                    (9,208)

Net (earnings) loss attributable to non-controlling

interest                                                                                                                                6                                                                       (212)                                               (158)                                    (282)                      (646)

Depreciation and amortization                                                                                                        85,167                                                                      95,665                                               85,656                                    88,011                     354,499

-----------------------------                                                                                                        ------                                                                      ------                                               ------                                    ------                     -------

EBITDA                                                                                                                                301,240                                                                     291,836                                              130,355                                   340,617                   1,064,048

Restructuring, acquisition and integration-related and

other costs                                                                                                                        11,311                                                                      21,859                                                8,169                                    17,275                      58,614

Acquisitions purchase accounting (inventory step-up)                                                                                     -                                                                          -                                                   -                                    6,156                       6,156

Legal settlement and reserves                                                                                                        10,000                                                                           -                                             125,000                                         -                    135,000

Adjusted EBITDA                                                                                                                      322,551                                                                     313,695                                              263,524                                   364,048                   1,263,818

---------------                                                                                                                      -------                                                                     -------                                              -------                                   -------                   ---------

Net Debt to  Adjusted EBITDA                                                                                                                                                                                                                                                                                                               2.6

----------------------------                                                                                                                                                                                                                                                                                                               ---

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

(Amounts in thousands)

                                                                                                      Three Months Ended                                                            Six Months Ended

                                                                                                      ------------------                                                            ----------------

                                                                                                         July 4, 2015                                                                June 28, 2014                                                   July 4, 2015                             June 28, 2014

                                                                                                         ------------                                                                -------------                                                   ------------                             -------------

Net sales                                                                                                                          $2,041,733                                                                   2,048,247                                            3,922,910                                 3,861,342

Adjustment to net sales on a

constant exchange rate                                                                                                               140,913                                                                           -                                             277,616                                         -

                                                                                                                                      -------                                                                         ---                                             -------                                       ---

Net sales on a constant exchange rate                                                                                           $2,182,646                                                                   2,048,247                                            4,200,526                                 3,861,342

-------------------------------------                                                                                           ----------                                                                   ---------                                            ---------                                 ---------

Reconciliation of 2015 Net Sales to Pro Forma Net Sales on a Constant Exchange Rate Excluding 2015 Q2 Acquisition Volume

(Amounts in thousands)

                                                                                                      Three Months Ended

                                                                                                      ------------------

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

Net sales                                                                                                                          $2,041,733                                                                   2,048,247

Adjustment to net sales on a constant exchange rate                                                                                140,913                                                                           -

Less: 2015 Q2 impact of acquisition volume                                                                                        (55,672)                                                                          -

                                                                                                                                   -------                                                                         ---

 

2015 pro forma net sales on a constant exchange rate

excluding acquisition volume                                                                                                   $2,126,974                                                                   2,048,247

----------------------------------------------------                                                                            ----------                                                                   ---------

 

 

 

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

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Global Ceramic                                                                                           July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Net sales                                                                                                                            $789,802                                                                     796,724

 

Adjustment to segment net sales on a constant exchange

rate                                                                                                                               68,957                                                                           -

 

Segment net sales on a constant exchange rate                                                                                     $858,759                                                                     796,724

---------------------------------------------                                                                                     --------                                                                     -------

 

 

 

Reconciliation of 2015 Segment Net Sales to Segment Pro Forma Net Sales on a Constant Exchange Rate Excluding 2015 Q2 Acquisition Volume

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Global Ceramic                                                                                           July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Net sales                                                                                                                            $789,802                                                                     796,724

 

Adjustment to segment net sales on a constant exchange

rate                                                                                                                               68,957                                                                           -

 

Less: 2015 Q2 impact of acquisition volume                                                                                        (17,675)                                                                          -

                                                                                                                                   -------                                                                         ---

 

2015 segment pro forma net sales on a constant exchange

rate excluding acquisition volume                                                                                                $841,084                                                                     796,724

-------------------------------------------------------                                                                           --------                                                                     -------

 

 

 

Reconciliation of 2015 Segment Net Sales to Segment Pro Forma  Net Sales on a Constant Exchange Rate Excluding 2015 Q2 Acquisition Volume

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Flooring NA                                                                                              July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Net sales                                                                                                                            $920,337                                                                     895,912

 

Adjustment to segment net sales on a constant exchange

rate                                                                                                                                    -                                                                          -

 

Less: 2015 Q2 impact of acquisition volume                                                                                        (10,036)                                                                          -

                                                                                                                                   -------                                                                         ---

 

2015 segment pro forma net sales on a constant exchange

rate excluding acquisition volume                                                                                                $910,301                                                                     895,912

-------------------------------------------------------                                                                           --------                                                                     -------

 

 

 

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

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Flooring ROW                                                                                             July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Net sales                                                                                                                            $331,622                                                                     357,738

 

Adjustment to segment net sales on a constant exchange

rate                                                                                                                               71,955                                                                           -

 

Segment net sales on a constant exchange rate                                                                                     $403,577                                                                     357,738

---------------------------------------------                                                                                     --------                                                                     -------

 

 

 

Reconciliation of 2015 Segment Net Sales to Pro Forma Segment Net Sales on a Constant Exchange Rate Excluding 2015 Q2 Acquisition Volume

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Flooring ROW                                                                                             July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Net sales                                                                                                                            $331,622                                                                     357,738

 

Adjustment to segment net sales on a constant exchange

rate                                                                                                                               71,955                                                                           -

 

Less: 2015 Q2 impact of acquisition volume                                                                                        (27,961)                                                                          -

                                                                                                                                   -------                                                                         ---

 

2015 Segment Pro forma net sales on a constant exchange

rate excluding acquisition volume                                                                                                $375,616                                                                     357,738

-------------------------------------------------------                                                                           --------                                                                     -------

 

 

 

 

Reconciliation of Gross Profit to Adjusted Gross Profit

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Gross Profit                                                                                                                         $615,129                                                                     574,812

 

Adjustments to gross profit:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                        12,341                                                                       6,755

 

Acquisitions purchase accounting (inventory step-up)                                                                                 6,156                                                                           -

 

  Adjusted gross profit                                                                                                              $633,626                                                                     581,567

  ---------------------                                                                                                              --------                                                                     -------

 

   Adjusted gross profit as a percent of net sales                                                                                   31.0%                                                                      28.4%

 

 

 

 

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

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Selling, general and administrative expenses                                                                                      $359,313                                                                     352,564

 

Adjustment to selling, general and administrative

expenses:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                       (8,144)                                                                    (4,414)

 

  Adjusted selling, general and administrative expenses                                                                           $351,169                                                                     348,150

  -----------------------------------------------------                                                                           --------                                                                     -------

 

Adjusted selling, general and administrative expenses as

a percent of net sales                                                                                                              17.2%                                                                      17.0%

 

 

 

Reconciliation of Operating Income to Adjusted Operating Income

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Operating income                                                                                                                     $255,816                                                                     222,248

 

Adjustments to operating income:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                        20,485                                                                      11,169

 

Acquisitions purchase accounting (inventory step-up)                                                                                 6,156                                                                           -

 

  Adjusted operating income                                                                                                        $282,457                                                                     233,417

  -------------------------                                                                                                        --------                                                                     -------

 

   Adjusted operating income as a percent of net sales                                                                               13.8%                                                                      11.4%

 

 

 

 

Reconciliation of Adjusted Operating Income on a Constant Exchange Rate

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Operating income                                                                                                                     $255,816                                                                     222,248

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                        20,485                                                                      11,169

 

Acquisitions purchase accounting (inventory step-up)                                                                                 6,156                                                                           -

 

    Adjustments to operating income on a constant exchange

     rate                                                                                                                           24,955                                                                           -

 

  Adjusted operating income on constant exchange rate                                                                             $307,412                                                                     233,417

  ---------------------------------------------------                                                                             --------                                                                     -------

 

 

 

 

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Global Ceramic                                                                                           July 4, 2015                                                                June 28, 2014

--------------                                                                                           ------------                                                                -------------

 

Operating income                                                                                                                     $121,189                                                                     106,407

 

Adjustments to segment operating income:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                            77                                                                         196

 

Acquisitions purchase accounting (inventory step-up)                                                                                 1,932                                                                           -

 

  Adjusted segment operating income                                                                                                $123,198                                                                     106,603

  ---------------------------------                                                                                                --------                                                                     -------

 

   Adjusted operating income as a percent of net sales                                                                               15.6%                                                                      13.4%

 

 

 

 

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

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Global Ceramic                                                                                           July 4, 2015                                                                June 28, 2014

--------------                                                                                           ------------                                                                -------------

 

Operating income                                                                                                                     $121,189                                                                     106,407

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                            77                                                                         196

 

Acquisitions purchase accounting (inventory step-up)                                                                                 1,932                                                                           -

 

Adjustments to operating income on a constant exchange

rate                                                                                                                               11,919                                                                           -

 

  Adjusted  segment operating income on constant exchange

   rate                                                                                                                           $135,117                                                                     106,603

  -------------------------------------------------------                                                                         --------                                                                     -------

 

 

 

 

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Flooring NA                                                                                              July 4, 2015                                                                June 28, 2014

-----------                                                                                              ------------                                                                -------------

 

Operating income                                                                                                                      $95,143                                                                      76,602

 

Adjustments to segment operating income:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                        11,465                                                                         869

 

Acquisitions purchase accounting (inventory step-up)                                                                                 1,167                                                                           -

 

  Adjusted segment operating income                                                                                                $107,775                                                                      77,471

  ---------------------------------                                                                                                --------                                                                      ------

 

   Adjusted operating income as a percent of net sales                                                                               11.7%                                                                       8.6%

 

 

 

Reconciliation of Segment Operating Income to Adjusted Segment Operating Income

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Flooring ROW                                                                                             July 4, 2015                                                                June 28, 2014

------------                                                                                             ------------                                                                -------------

 

Operating income                                                                                                                      $53,052                                                                      47,398

 

Adjustment to segment operating income:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                         5,109                                                                       9,904

 

Acquisitions purchase accounting (inventory step-up)                                                                                 3,057                                                                           -

 

  Adjusted segment operating income                                                                                                 $61,218                                                                      57,302

  ---------------------------------                                                                                                 -------                                                                      ------

 

   Adjusted operating income as a percent of net sales                                                                               18.5%                                                                      16.0%

 

 

 

 

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

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

Flooring ROW                                                                                             July 4, 2015                                                                June 28, 2014

------------                                                                                             ------------                                                                -------------

 

Operating income                                                                                                                      $53,052                                                                      47,398

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                         5,109                                                                       9,904

 

Acquisitions purchase accounting (inventory step-up)                                                                                 3,057                                                                           -

 

Adjustments to operating income on a constant exchange

rate                                                                                                                               12,541                                                                           -

 

  Adjusted segment operating income on constant exchange

   rate                                                                                                                            $73,759                                                                      57,302

  ------------------------------------------------------                                                                           -------                                                                      ------

 

 

 

Reconciliation of Earnings from Continuing Operations incl Non Controlling Interest Before Income Taxes to Adjusted Earnings from Continuing Operations incl Non Controlling Interest Before Income Taxes

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Earnings before income taxes                                                                                                       $236,050                                                                     203,101

 

Noncontrolling interest                                                                                                                 (282)                                                                      (111)

 

Adjustments to earnings from continuing operations

before income taxes:

 

Restructuring, acquisition and integration-related and

other costs                                                                                                                        20,485                                                                      11,169

 

Acquisitions purchase accounting (inventory step-up)                                                                                 6,156                                                                           -

 

  Adjusted earnings before income taxes                                                                                           $262,409                                                                     214,159

  -------------------------------------                                                                                           --------                                                                     -------

 

 

 

Reconciliation of Income Tax Expense to Adjusted Income Tax Expense

 

(Amounts in thousands)

 

                                                                                                      Three Months Ended

                                                                                                      ------------------

 

                                                                                                         July 4, 2015                                                                June 28, 2014

                                                                                                         ------------                                                                -------------

 

Income tax expense                                                                                                                    $49,276                                                                      50,240

 

Income tax effect of adjusting

items                                                                                                                                 14,490                                                                       2,229

                                                                                                                                       ------                                                                       -----

 

  Adjusted income tax expense                                                                                                       $63,766                                                                      52,469

  ---------------------------                                                                                                       -------                                                                      ------

 

 

Adjusted income tax rate                                                                                                                24.3%                                                                      24.5%

------------------------                                                                                                                 ----                                                                        ----

 

 

 

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, integration-related and other costs, legal settlement and reserves 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, +1-706-624-2695

 

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