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CALHOUN, Georgia, Feb. 25, 2016 /PRNewswire/. Mohawk Industries, Inc. (NYSE: MHK) today announced 2015 fourth quarter net earnings of $192 million and diluted earnings per share (EPS) of $2.57. Excluding restructuring, acquisition and other charges, net earnings were $210 million and EPS was $2.82, a 24% increase over last year's fourth quarter adjusted EPS. Net sales for the fourth quarter of 2015 were $2.0 billion, up 2% versus the prior year's fourth quarter with four less shipping days or a 13% increase on a constant days and currency exchange rate basis. For the fourth quarter of 2014, net sales were $1.95 billion, net earnings were $147 million and EPS was $2.00; excluding restructuring, acquisition and other charges, net earnings were $167 million and EPS was $2.27.
For the twelve months ending December 31, 2015, net sales were $8.1 billion, an increase of approximately 3% versus prior year or an increase of approximately 10% on a constant currency exchange rate basis. Net earnings and EPS for the twelve month period were $615 million and $8.31, respectively. Net earnings excluding restructuring, acquisition and other charges were $756 million and EPS was $10.20, an increase of 25% over the twelve month period adjusted EPS result in 2014. For the twelve months ending December 31, 2014, net sales were $7.8 billion, net earnings were $532 million and EPS was $7.25; excluding restructuring, acquisition and other charges, net earnings and EPS were $598 million and $8.15.
Commenting on Mohawk Industries' full year and fourth quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "Our strong performance during 2015 was the result of our aggressive growth strategy and targeted investments we began in 2013 as the economic recovery gained momentum. Since that time, we have invested almost $5 billion, approximately $3.5 billion in nine acquisitions to expand our product offerings, geographies and market share and approximately $1.5 billion in our existing business to introduce innovative products, enhance manufacturing efficiencies and expand our capacity. While making these investments for future growth, we strengthened our balance sheet and reduced our leverage, enabling us to continue optimizing our shareholder returns. We remain optimistic about 2016, and this year we will invest an additional $600 to $650 million in internal projects, which include increased ceramic capacity and upgrades in the U.S, Mexico, Europe and Russia, process improvements in carpet manufacturing, additional LVT manufacturing in the U.S. and Europe, increased wood production in U.S. and Europe and installation of advanced technology in our U.S. and European laminate businesses. Last year, we achieved record results in every quarter with about 30% of our business outside the U.S., where we faced significant foreign exchange translation headwinds. If adjusted for exchange rate changes, our 2015 net sales would have been $490 million higher -- an impact of approximately 6% -- and our operating income would have been $74 million greater, a 9% impact.
"Our fourth quarter performance represents our 7th consecutive period with record adjusted EPS. Our adjusted quarterly operating income margin rose to 14% of sales, an increase of 260 basis points due to productivity, volume and lower costs. Every segment delivered sales growth on a comparable basis while also expanding margins.
"For the quarter, our Global Ceramic segment sales were down 4% as reported. On a constant days and exchange rate basis, sales grew 7% and adjusted operating income rose 14% versus prior year with adjusted operating margin increasing to 13% as a result of improved price and mix, productivity, volume, input costs and the KAI acquisition. In the U.S., we increased our sales investments to improve our market position by increasing service centers, expanding our sales personnel and upgrading our distribution. Our new Tennessee porcelain plant is in the final stages of construction and should start up within the quarter. We have dramatically expanded our product offering in Mexico at all price points and have improved our margin and mix with plans to double the size of our Salamanca plant. We have improved the capacity and cost structures of our recently acquired ceramic plant in Western Mexico. Our European ceramic sales have been growing in a lackluster market. We anticipate completing the second phase of our Italian equipment upgrades by the second quarter, which will further enhance our product offering and improve our cost structure, and we will continue the optimization of our Bulgarian ceramic operations. During the period, we had a good performance in Russia, gaining market share as the economy continues to decline.
"During the quarter, our Flooring North America segment's sales were flat versus last year as reported, or increased 6% on a constant day's basis with adjusted operating income increasing 31%. The adjusted operating margin increased to 14% due to improved productivity, volume, input costs and the IVC acquisition partially offset by price and mix. The Flooring North America segment has made progress in expanding our brands and customer relationships, enhancing our style and design, transferring innovative manufacturing practices and utilizing the Mohawk distribution system for all products. Sales of our premium carpet products, including our luxury Karastan brand and SmartStrand product collections, grew during the period. In commercial carpet, our margins continued to improve as a result of our new product introductions, streamlined manufacturing and plant consolidations. Our rug business continues to outperform the overall segment with fashionable new accent rugs made with our exclusive fibers providing softer characteristics and greater value. We are expanding our new Impressive laminate collection, which provides stylized looks not achievable in natural wood. Our vinyl sales are performing as planned and our new LVT plant continues to improve its performance with increased production levels. We continue to ramp up our Mohawk branded LVT and sheet vinyl sales in the builder, multi-family and retail markets, and we are developing new products to extend our sheet vinyl further into commercial channels.
"For the quarter, our Flooring Rest of the World segment's sales rose 22% as reported or 41% on a constant days and exchange rate basis with adjusted operating income improving 59% over the prior year. The adjusted operating margin increased to 16% due to improved volume, input costs and the IVC acquisition. Our laminate and wood business in Europe outperformed the market as a result of our focus on differentiated products at mid to high-end price points. We continue to expand our latest laminate embossing technology, which creates more realistic visuals. Our European wood sales are growing quickly, supplied from our Czech wood plant with the balance coming from our Malaysian facility. The IVC vinyl sales increased but were constrained by capacity limitations. Our new LVT plant in Belgium is operating well, and sales are developing better than planned. The plant is constrained by manufacturing limitations, and equipment additions in the middle of the year will increase our capacity about 50%. Our insulation products had record sales this year, and we have expanded our offering and our geographical footprint with recently acquired plants in Ireland, the U.K. and Belgium. Our other board product sales were up slightly and margins improved from mix, asset upgrades and plant consolidations.
"2015 was the best year in Mohawk's history, and we expect the momentum to continue this year. We anticipate that the demand trends in our U.S. and international markets will remain consistent with what we have been experiencing. Although growth in Europe is limited and negative in Russia, our international businesses are delivering solid results on a local basis. Our sales and margins should continue to improve over last year as a result of our continued innovations, process improvements and disciplined execution. Our recent acquisitions are progressing with operational and market synergies that we anticipated. This year we will increase investments in our existing businesses to improve our long-term performance. Taking all these factors into account, our guidance for the first quarter is $2.24 - $2.33 per share, which would be a 32 -37% increase over 2015, excluding any restructuring, acquisition and other charges."
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, IVC, Karastan, Lees, 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, 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, February 26, 2016, 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 # 24993589. A replay will be available until Friday, March 25, 2016, by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 24993589.
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 and acquisitions purchase accounting (inventory step-up) 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 (706) 624-2695