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Mohawk Industries NYSE: MHK-N

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Mohawk Industries Reports Q2 Results

Globe Newswire - Thu Jul 29, 3:10PM CDT

CALHOUN, Ga., July 29, 2021 (GLOBE NEWSWIRE) -- Mohawk Industries, Inc. (NYSE:MHK) today announced 2021 second quarter net earnings of $336 million and diluted earnings per share (EPS) of $4.82. Adjusted net earnings were $310 million, and EPS was $4.45, excluding restructuring, acquisition and other charges. Net sales for the second quarter of 2021 were $3.0 billion, up 44% as reported and 38% on a constant currency and days basis. For the second quarter of 2020, net sales were $2.0 billion, net loss was $48 million and diluted loss per share was $0.68, adjusted net earnings were $26 million, and EPS was $0.37, excluding restructuring, acquisition and other charges.

For the six months ending July 3, 2021, net earnings and EPS were $573 million and $8.18, respectively. Net earnings excluding restructuring, acquisition and other charges were $556 million and EPS was $7.94. For the 2021 six-month period, net sales were $5.6 billion, an increase of 30% versus prior year as reported or 23% on a constant currency and days basis. For the six-month period ending June 27, 2020, net sales were $4.3 billion, net earnings were $62 million and EPS was $0.87; excluding restructuring, acquisition and other charges, net earnings and EPS were $146 million and $2.04, respectively.

Commenting on Mohawk Industries' second quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "In the quarter, we generated the highest quarterly sales of any period in our company's history. Our revenues increased significantly over last year, when the pandemic interrupted the global economy. Our second quarter results were significantly stronger than we had anticipated across all our businesses with sales building on the momentum from our first period. In the quarter, our EPS was the highest on record for any quarter and our operating margin expanded to its highest level in the last four years as we leveraged our operational and SG&A expenses. The actions we have taken to simplify our product offering, enhance our productivity and restructure our costs are benefiting our results. We have delivered almost $95 million of the anticipated $100 to $110 million in savings from our restructuring initiatives. Across the enterprise, we continue to respond to rising material, energy and transportation costs by increasing product prices and optimizing manufacturing and logistics.

"During the quarter, most of our manufacturing ran near capacity or were limited by material supply and labor availability. Raw material constraints in many of our operations led to unplanned production shut downs during the period. Overall, we successfully managed these interruptions that impeded our normal operations as well as regional manufacturing and customer closings related to Covid regulations in local areas. Our inventory levels increased slightly in the period, primarily reflecting higher material costs. Rising freight costs and limited shipping capacity impacted our material costs, availability of imported products, local shipments to customers and international exports. Presently, we do not anticipate near term abatement of these constraints.

"All of our markets continue to show strength with robust housing sales and remodeling investments across the world. Commercial projects are increasing as the global economy improves and businesses gain confidence to expand and remodel. Inventory levels in most channels remain low, and our sales backlog is above historical levels. To improve our sales, mix and efficiencies, we will introduce more new products with enhanced features and lower production complexity in the second half of the year. To alleviate manufacturing constraints, we have approved new capital investments of approximately $650 million to increase our production with most taking 12 to 18 months to implement. In the second quarter, we purchased $142 million of our stock at an average share price of approximately $208 for a total of $827 million since we initiated our purchasing program. With our strong balance sheet and historically low leverage, we are reviewing additional investments to expand our sales and profitability.

"For the quarter, our Flooring Rest of the World Segment's sales increased 68% as reported and 50% on a constant currency and days basis. The segment's operating margins increased from 5.9% to 19.7% as reported. The increase was due to higher volume, pricing and mix improvements and a reduction of Covid restrictions partially offset by inflation. All our major product categories improved significantly during the period as residential sales expanded in all regions. We have implemented multiple price increases in most product categories to cover inflation in materials and freight. Raw material supplies are problematic and have impacted our LVT production and sales the most. We anticipate material and freight challenges will continue to impact our business in the third quarter. Sales of our high-end laminate continue to grow dramatically as our proprietary products are being widely accepted as a water-proof alternative to LVT and wood. We recently completed the acquisition of a laminate distributor in the U.K. that will improve our position in the market. Our LVT sales growth was strong during the period and could have been even higher if material shortages had not interrupted manufacturing. We are significantly expanding sales of our rigid LVT collections with our patented water-tight joints that prevent moisture from penetrating the floor. Our sheet vinyl sales rebounded strongly as retail stores opened in our primary markets. Our sheet vinyl distribution in Russia has expanded, and we are maximizing production to meet the growing demand. Our Australian and New Zealand flooring businesses delivered excellent results with sales and margins exceeding our expectations. Carpet sales are strengthening with the launch of new high-end wool and triexta collections that improved our mix. To expand our existing insulation business in Ireland and the U.K., we have signed an agreement to acquire an insulation manufacturer, which is pending government approval. Our panels business is running at full capacity and so far we have been able to manage material shortages without interruptions to our operations. To enhance our panel offering, we are commissioning a new line to create unique surfaces and visuals to differentiate our offering in the market.

"During the quarter, our Flooring North America Segment's sales increased 35% as reported and on a constant basis and operating margin was 10.7% as reported, primarily due to higher volume, productivity, pricing and mix improvements and fewer Covid interruptions partially offset by inflation. Through the period, our order rate remained strong, and our sales backlog remains above historical levels. We are maximizing output at our facilities to support higher sales and improve our service. During the quarter, our production levels were hindered by local labor shortages and material supply, particularly in LVT, sheet vinyl and carpet. Ocean freight constraints delayed receipt of our imported products, impacting our sales, inventories and service levels. We implemented price increases as our material and transportation costs increased, and we have announced additional pricing actions as inflation continues. Our residential carpet sales continued their growth as consumers continue to invest in their homes. Our commercial sales have improved as businesses increase remodeling and new construction projects. To support higher demand of our premium laminate collections, we have implemented many process improvements to maximize our U.S. production and are importing product from our global operations. Our laminate expansion remains on schedule and should be operational by the end of this year. Our new waterproof Ultrawood collections are being launched as a high-performance alternative to typical engineered wood floors. Our LVT and sheet vinyl sales continue to increase, with growth in the residential retail and new construction channels. We have enhanced our LVT offering with more realistic visuals, proprietary water-tight joints and improved stain and scratch resistance. When material availability increases, we should see further improvement in our U.S. LVT manufacturing, which will support our recent product launches.

"For the quarter, our Global Ceramic Segment's sales increased 38% as reported and 34% on a constant currency and days basis. The segment's operating margin increased to 13.1% as reported, primarily due to higher volume, productivity, pricing and mix improvements and fewer Covid disruptions partially offset by inflation. Our ceramic businesses around the world have greatly improved, with strength in the residential channel and increasing commercial sales. All of them have low inventories, which impacted our sales growth and service levels. We continue to raise prices to cover material, energy and transportation inflation. Our U.S. ceramic business is strengthening, and we are improving our product mix with new shapes, sizes, and surface structures. Our countertop sales and mix continued to improve as we expand our premium offering with new technologies. Our Mexican and Brazilian ceramic businesses are very strong, with our residential business in both regions at historically high levels and commercial still recovering. Due to capacity constraints, our facilities could not fulfill customer demand, so we are allocating our production. We are expanding operations in Mexico this quarter, and we have initiated new investments to increase capacity in Brazil. Our European ceramic business delivered strong sales and profitability as pricing, mix and productivity improved our margins. We increased sales of our premium slabs, small sizes, outdoor and antibacterial collections. To support sales of our high-end collections, we have initiated expansion projects which will take through next year to complete. Our ceramic sales in Russia were robust across all channels with our direct sales to customers through our owned stores and new construction projects outperforming. We have initiated expansion plans in Russia with new production expected in the second half of next year.

"The global economy should continue to improve due to low interest rates, government stimulus and the success of COVID vaccines. Around the world, flooring sales trends remain favorable with residential remodeling and new construction at high levels and commercial projects strengthening. In the third period, we expect our strong sales to continue, with typical seasonal slowing from the second quarter. We will expand the introduction of new products with additional features and increase our sales investments to enhance our future sales and mix. Material, energy and transportation inflation is expected to continue and will require further pricing actions to offset. Most of our facilities should operate at high utilization rates though ongoing material and local labor constraints will limit our production. Our Global Ceramic and Flooring Rest of the World segments will observe their European vacation schedules in the third quarter, which reduces production and increases costs in the period. In many countries, future government actions to contain Covid remain a risk and could impact our business. Given these factors, we anticipate our third quarter adjusted EPS to be $3.71 to $3.81, excluding any restructuring charges.

"We entered this year with uncertainty about Covid, the economic recovery, home renovation and new construction. Our business is stronger than we had anticipated, and we are increasing investments to support additional growth and improve efficiencies. Longer term, housing sales and remodeling are expected to remain at a high level, apartment renovation should accelerate as rent deferment expires and investments in commercial projects should continue to strengthen. We are expanding our operations and introducing new innovations to maximize our results. Our balance sheet is strong, and we are exploring additional internal and acquisition opportunities."

ABOUT MOHAWK INDUSTRIES

Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk's vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Our industry leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Daltile, Durkan, Eliane, Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Mohawk Group, Pergo, Quick-Step and Unilin. During the past decade, Mohawk has transformed its business from an American carpet manufacturer into the world's largest flooring company with operations in Australia, Brazil, Canada, Europe, India, Malaysia, Mexico, New Zealand, Russia and the United States.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," "anticipates," "expects," and "estimates," or similar expressions constitute "forward-looking statements." For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation and deflation in raw material prices and other input costs; inflation and deflation in consumer markets; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company's products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; taxes and tax reform, product and other claims; litigation; and other risks identified in Mohawk's SEC reports and public announcements.

Conference call July 30, 2021, 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 # 6767965. A replay will be available until August 30, 2021, by dialing 1-855-859-2056 for US/local calls and 1-404-537-3406 for International/Local calls and entering Conference ID # 6767965.

Contact: James Brunk, Chief Financial Officer (706) 624-2239

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES                                                                                                                                                                                                                                                                        
(Unaudited)                                                                                                                                                                                                                                                                                                     
Condensed Consolidated Statement of Operations Data                                                                                                                                                                      Three Months Ended                                                                                         Six Months Ended
(Amounts in thousands, except per share data)                                                                                                                                                                            July 3,2021                                           June 27, 2020                     July 3,2021                                            June 27, 2020
                                                                                                                                                                                                                                                                                             
Net sales                                                                                                                                                                                                                $                    2,953,833     2,049,800        5,622,859      4,335,563   
Cost of sales                                                                                                                                                                                                              2,051,626     1,679,833        3,928,883      3,349,156   
    Gross profit                                                                                                                               902,207       369,967          1,693,976      986,407     
Selling, general and administrative expenses                                                                                                                                                                               497,783       430,925          972,037        895,883     
Operating income (loss)                                                                                                                                                                                                    404,424       (60,958    )                        721,939        90,524      
Interest expense                                                                                                                                                                                                           14,894        12,956           30,135         21,627      
Other (income) expense, net                                                                                                                                                                                                (11,168   )                      1,037            (13,395    )                      6,716       
    Earnings (loss) before income taxes                                                                                                        400,698       (74,951    )                        705,199        62,181      
Income tax expense (benefit)                                                                                                                                                                                               64,245        (26,363    )                        131,935        304         
        Net earnings (loss) including noncontrolling interests     336,453       (48,588    )                        573,264        61,877      
Net earnings (loss) attributable to noncontrolling interests                                                                                                                                                               168           (331       )                        172            (380       )
Net earnings (loss) attributable to Mohawk Industries, Inc.                                                                                                                                                              $                    336,285       (48,257    )                        573,092        62,257      
                                                                                                                                                                                                                                                                                             
Basic earnings (loss) per share attributable to Mohawk Industries, Inc.                                                                                                                                                                                                                                         
Basic earnings (loss) per share attributable to Mohawk Industries, Inc.                                                                                                                                                  $                    4.84          (0.68      )                        8.21           0.87        
Weighted-average common shares outstanding - basic                                                                                                                                                                         69,432        71,186           69,809         71,364      
                                                                                                                                                                                                                                                                                             
Diluted earnings (loss) per share attributable to Mohawk Industries, Inc.                                                                                                                                                                                                                                       
Diluted earnings (loss) per share attributable to Mohawk Industries, Inc.                                                                                                                                                $                    4.82          (0.68      )                        8.18           0.87        
Weighted-average common shares outstanding - diluted                                                                                                                                                                       69,745        71,186           70,102         71,547      
                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                             
Other Financial Information                                                                                                                                                                                                                                                                                     
(Amounts in thousands)                                                                                                                                                                                                                                                                                          
Net cash provided by operating activities                                                                                                                                                                                $                    338,391       568,521          597,996        763,495     
Less: Capital expenditures                                                                                                                                                                                                 112,703       80,639           227,439        196,271     
Free cash flow                                                                                                                                                                                                           $                    225,688       487,882          370,557        567,224     
                                                                                                                                                                                                                                                                                             
Depreciation and amortization                                                                                                                                                                                            $                    148,466       154,094          299,681        299,610     
                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                             
Condensed Consolidated Balance Sheet Data                                                                                                                                                                                                                                                                       
(Amounts in thousands)                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                        July 3,2021                                            June 27, 2020
ASSETS                                                                                                                                                                                                                                                                                                          
Current assets:                                                                                                                                                                                                                                                                                                 
    Cash and cash equivalents                                                                                                                                                                  $                    753,677        737,712     
    Short-term investments                                                                                                                                                                       662,358        56,700      
    Receivables, net                                                                                                                                                                             2,017,622      1,586,398   
    Inventories                                                                                                                                                                                  2,081,967      1,922,048   
    Prepaid expenses and other current assets                                                                                                                                                    434,932        443,140     
        Total current assets                                                                                         5,950,556      4,745,998   
Property, plant and equipment, net                                                                                                                                                                                                                                           4,459,380      4,434,544   
Right of use operating lease assets                                                                                                                                                                                                                                          383,343        318,047     
Goodwill                                                                                                                                                                                                                                                                     2,609,174      2,541,906   
Intangible assets, net                                                                                                                                                                                                                                                       922,699        910,838     
Deferred income taxes and other non-current assets                                                                                                                                                                                                                           467,641        418,071     
    Total assets                                                                                                                                                                               $                    14,792,793     13,369,404  
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                                            
Current liabilities:                                                                                                                                                                                                                                                                                            
    Short-term debt and current portion of long-term debt                                                                                                                                      $                    958,781        135,350     
    Accounts payable and accrued expenses                                                                                                                                                        2,119,154      1,618,584   
    Current operating lease liabilities                                                                                                                                                          100,951        118,296     
        Total current liabilities                                                                                    3,178,886      1,872,230   
Long-term debt, less current portion                                                                                                                                                                                                                                         1,723,294      2,573,155   
Non-current operating lease liabilities                                                                                                                                                                                                                                      292,101        226,555     
Deferred income taxes and other long-term liabilities                                                                                                                                                                                                                        824,570        772,600     
        Total liabilities                                                                                            6,018,851      5,444,540   
Total stockholders' equity                                                                                                                                                                                                                                                   8,773,942      7,924,864   
    Total liabilities and stockholders' equity                                                                                                                                                 $                    14,792,793     13,369,404  
                                                                                                                                                                                                                                                                                             
Segment Information                                                                                                                                                                                                      Three Months Ended                                                                                         As of or for the Six Months Ended
(Amounts in thousands)                                                                                                                                                                                                   July 3,2021                                           June 27, 2020                     July 3,2021                                            June 27, 2020
                                                                                                                                                                                                                                                                                             
Net sales:                                                                                                                                                                                                                                                                                                      
    Global Ceramic                                                                                                                           $                    1,039,503     753,335          1,969,374      1,601,785   
    Flooring NA                                                                                                                                1,081,189     800,088          2,050,439      1,648,418   
    Flooring ROW                                                                                                                               833,141       496,377          1,603,046      1,085,360   
        Consolidated net sales                                   $                    2,953,833     2,049,800        5,622,859      4,335,563   
                                                                                                                                                                                                                                                                                             
Operating income (loss):                                                                                                                                                                                                                                                                                        
    Global Ceramic                                                                                                                           $                    136,435       (33,809    )                        224,239        14,168      
    Flooring NA                                                                                                                                115,943       (45,484    )                        197,241        (9,278     )
    Flooring ROW                                                                                                                               163,886       29,478           323,192        105,294     
    Corporate and intersegment eliminations                                                                                                    (11,840   )                      (11,143    )             (22,733    )                      (19,660    )
        Consolidated operating income (loss)                     $                    404,424       (60,958    )             721,939        90,524      
                                                                                                                                                                                                                                                                                  
Assets:                                                                                                                                                                                                                                                                                              
    Global Ceramic                                                                                                                                                                  $                    5,206,786      5,112,084   
    Flooring NA                                                                                                                                                                       3,870,309      3,682,638   
    Flooring ROW                                                                                                                                                                      4,240,433      3,770,581   
    Corporate and intersegment eliminations                                                                                                                                           1,475,265      804,101     
        Consolidated assets                                                                             $                    14,792,793     13,369,404
Reconciliation of Net Earnings (Loss) 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 3,2021                                                   June 27, 2020                      July 3,2021                        June 27, 2020                       
Net earnings (loss) attributable to Mohawk Industries, Inc.                                               $                    336,285               (48,257     )                      573,092         62,257           
Adjusting items:                                                                                                                                                                                      
Restructuring, acquisition and integration-related and other costs                                          6,094                 100,336         17,971          112,266          
Resolution of foreign non-income tax contingencies                                                          (6,211            )                      -               (6,211      )                      -                
One-time tax planning election                                                                              (26,731           )                      -               (26,731     )                      -                
Income taxes                                                                                                923                   (25,723     )                      (1,812      )                      (28,802     )                       
Adjusted net earnings attributable to Mohawk Industries, Inc.                                             $                    310,360               26,356          556,309         145,721          
                                                                                                                                                                                   
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc.                               $                    4.45                  0.37            7.94            2.04             
Weighted-average common shares outstanding - diluted                                                        69,745                71,186          70,102          71,547           
                                                                                                                                                                                   
 
 
                                                                                                                                                                                   
Reconciliation of Total Debt to Net Debt Less Short-Term Investments                                                                                                                                  
(Amounts in thousands)                                                                                                                                                                                
                                                                                       July 3,2021                                                                                                    
Short-term debt and current portion of long-term debt                                                     $                    958,781                                                                
Long-term debt, less current portion                                                                        1,723,294                                                              
Total debt                                                                                                  2,682,075                                                              
Less: Cash and cash equivalents                                                                             753,677                                                                
Net Debt                                                                                                    1,928,398                                                              
Less: Short-term investments                                                                                662,358                                                                
 Net debt less short-term investments                                                  $                    1,266,040                                                              
                                                                                                                                                                                   
                                                                                                                                                                                   
                                                                                                                                                                                   
                                                                                                                                                                                   
                                                                                                                                                                                   
Reconciliation of Operating Income to Adjusted EBITDA                                                                                                                                                 
(Amounts in thousands)                                                                                                                                                                               Trailing Twelve
                                                                                       Three Months Ended                                                                                                                                                                                                              Months Ended
                                                                                       September 26, 2020                                            December 31, 2020                  April 3, 2021                      July 3,2021                        July 3,2021
Operating income                                                                                          $                    262,744               282,733         317,515         404,424         1,267,416    
Other income                                                                                                726                   6,742           2,227           11,168          20,863       
Net income attributable to noncontrolling interests                                                         (336              )                      (176        )                      (4          )                      (168        )                      (684        )
Depreciation and amortization (1)                                                                           151,342               156,555         151,216         148,466         607,579      
EBITDA                                                                                                      414,476               445,854         470,954         563,890         1,895,174    
Restructuring, acquisition and integration-related and other costs                                          26,925                15,947          6,059           (2,737      )                      46,194       
 Adjusted EBITDA                                                                       $                    441,401               461,801         477,013         561,153         1,941,368    
                                                                                                                                                                                   
Net Debt less short-term investments to Adjusted EBITDA                                                                                                                                              0.7          
(1) Includes $2,620 of accelerated depreciation in Q2 2021 with $5,243 in Q3 2020, $6,435 in Q4 2020 and $5,818 in Q1 2021.                                                                                                                                                       
                                                                                                                                                                                   
Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and on Constant Shipping Days                                                                                                                                          
(Amounts in thousands)                                                                                                                                                                                
                                                                                       Three Months Ended                                                                                                  Six Months Ended                                                                          
                                                                                       July 3,2021                                                   June 27, 2020                      July 3,2021                        June 27, 2020                       
Net sales                                                                                                 $                    2,953,833             2,049,800       5,622,859       4,335,563        
Adjustment to net sales on constant shipping days                                                           (20,418           )                      -               (131,365    )                      -                
Adjustment to net sales on a constant exchange rate                                                         (97,818           )                      -               (161,717    )                      -                
Net sales on a constant exchange rate and constant shipping days                                                                                $                    2,835,597             2,049,800       5,329,777       4,335,563        
                                                                                                                                                                                   
                                                                                                                                                                                   
                                                                                                                                                                                   
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days                                                                                                                                                                
(Amounts in thousands)                                                                                                                                                                                
                                                                                       Three Months Ended                                                                                                                                   
Global Ceramic                                                                                            July 3,2021                                                   June 27, 2020                                                       
Net sales                                                                                                 $                    1,039,503             753,335                                          
Adjustment to segment net sales on constant shipping days                                                   (8,193            )                      -                                                
Adjustment to segment net sales on a constant exchange rate                                                 (22,242           )                      -                                                
Segment net sales on a constant exchange rate and constant shipping days                                                                        $                    1,009,068             753,335                                          
                                                                                                                                                                                   
                                                                                                                                                                                   
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days                                                                                                                                                                
(Amounts in thousands)                                                                                                                                                                                
                                                                                       Three Months Ended                                                                                                                                   
Flooring ROW                                                                                              July 3,2021                                                   June 27, 2020                                                       
Net sales                                                                                                 $                    833,141               496,377                                          
Adjustment to segment net sales on constant shipping days                                                   (12,225           )                      -                                                
Adjustment to segment net sales on a constant exchange rate                                                 (75,575           )                      -                                                
Segment net sales on a constant exchange rate and constant shipping days                                                                        $                    745,341               496,377                                          
                                                                                                                                                                                   
                                                                                                                                                                                   
Reconciliation of Gross Profit to Adjusted Gross Profit                                                                                                                                               
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
                                                                                                                                       July 3,2021                                                   June 27, 2020                                
Gross Profit                                                                                                                                              $                    902,207               369,967                   
Adjustments to gross profit:                                                                                                                                                                                                   
Restructuring, acquisition and integration-related and other costs                                                                                          5,452                 69,478                    
  Adjusted gross profit                                                                                             $                    907,659               439,445                   
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses                                                                                                                                                                                    
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
                                                                                                                                       July 3,2021                                                   June 27, 2020                                
Selling, general and administrative expenses                                                                                                              $                    497,783               430,925                   
Adjustments to selling, general and administrative expenses:                                                                                                                                                                   
Restructuring, acquisition and integration-related and other costs                                                                                          (1,480            )                      (27,282      )                               
  Adjusted selling, general and administrative expenses                                                             $                    496,303               403,643                   
                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
Reconciliation of Operating Income (Loss) to Adjusted Operating Income                                                                                                                                                         
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
                                                                                                                                       July 3,2021                                                   June 27, 2020                                
Operating income (loss)                                                                                                                                   $                    404,424               (60,958      )                               
Adjustments to operating income (loss):                                                                                                                                                                                        
Restructuring, acquisition and integration-related and other costs                                                                                          6,932                 96,760                    
  Adjusted operating income                                                                                         $                    411,356               35,802                    
                                                                                                                                                                                                            
                                                                                                                                                                                                            
Reconciliation of Segment Operating Income (Loss) to Adjusted Segment Operating Income                                                                                                                                                            
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
Global Ceramic                                                                                                                                            July 3,2021                                                   June 27, 2020                                
Operating income (loss)                                                                                                                                   $                    136,435               (33,809      )                               
Adjustments to segment operating income (loss):                                                                                                                                                                                
Restructuring, acquisition and integration-related and other costs                                                                                          726                   37,672                    
  Adjusted segment operating income                                                                                 $                    137,161               3,863                     
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
Reconciliation of Segment Operating Income (Loss) to Adjusted Segment Operating Income (Loss)                                                                                                                                                                        
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
Flooring NA                                                                                                                                               July 3,2021                                                   June 27, 2020                                
Operating income (loss)                                                                                                                                   $                    115,943               (45,484      )                               
Adjustments to segment operating income (loss):                                                                                                                                                                                
Restructuring, acquisition and integration-related and other costs                                                                                          5,487                 28,226                    
  Adjusted segment operating income (loss)                                                                          $                    121,430               (17,258      )                               
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income                                                                                                                                                                   
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
Flooring ROW                                                                                                                                              July 3,2021                                                   June 27, 2020                                
Operating income                                                                                                                                          $                    163,886               29,478                    
Adjustments to segment operating income:                                                                                                                                                                                       
Restructuring, acquisition and integration-related and other costs                                                                                          442                   29,614                    
  Adjusted segment operating income                                                                                 $                    164,328               59,092                    
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
Reconciliation of Earnings (Loss) Including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes                                                                                                                                                                                                                   
(Amounts in thousands)                                                                                                                                                                                                         
                                                                                                                                       Three Months Ended                                                                                                            
                                                                                                                                       July 3,2021                                                   June 27, 2020                                
Earnings (loss) before income taxes                                                                                                                       $                    400,698               (74,951      )                               
Net (earnings) loss attributable to noncontrolling interests                                                                                                (168              )                      331                       
Adjustments to earnings (loss) including noncontrolling interests before income taxes:                                                                                                                                                            
Restructuring, acquisition and integration-related and other costs                                                                                          6,094                 100,336                   
Resolution of foreign non-income tax contingencies                                                                                                          (6,211            )                      -                         
  Adjusted earnings including noncontrolling interests before income taxes                                          $                    400,413               25,716                    
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Reconciliation of Income Tax Expense (Benefit) to Adjusted Income Tax Expense (Benefit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
(Amounts in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                     Three Months Ended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                     July 3,2021                                                                                                                                                                         June 27, 2020                                                                                                                                                                                                                                                                                                                                                                                                                                              
Income tax expense (benefit)                                                                                                                                                                                                                            $                                                               64,245                                                                                           (26,363                                                         )                                                                                                                                                                                                                                                                                                                                                                                          
One-time tax planning election                                                                                                                                                                                                                                                                       26,731                                                                                           -                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income tax effect of adjusting items                                                                                                                                                                                                                                                                 (923   )                                                                                                            25,723                                                                                                                                                                                                                                                                                                                                                                                                                                  
  Adjusted income tax expense (benefit)                                                                                                                                                                           $                                                               90,053                                                                                           (640                                                            )                                                                                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Adjusted income tax rate                                                                                                                                                                                                                                                                             22.5   %                                                                                                            (2.5                                                            )%                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
The Company supplements its condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, with certain non-GAAP financial measures. As required by the Securities and Exchange Commission rules, the tables above present a reconciliation of the Company's non-GAAP financial measures to the most directly comparable US GAAP measure. Each of the non-GAAP measures set forth above should be considered in addition to the comparable US GAAP measure, and may not be comparable to similarly titled measures reported by other companies. The Company believes these non-GAAP measures, when reconciled to the corresponding US GAAP measure, help its investors as follows: Non-GAAP revenue measures that assist in identifying growth trends and in comparisons of revenue with prior and future periods and non-GAAP profitability measures that assist in understanding the long-term profitability trends of the Company's business and in comparisons of its profits with prior and future periods.    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
The Company excludes certain items from its non-GAAP revenue measures because these items can vary dramatically between periods and can obscure underlying business trends. Items excluded from the Company's non-GAAP revenue measures include: foreign currency transactions and translation and the impact of acquisitions.                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
The Company excludes certain items from its non-GAAP profitability measures because these items may not be indicative of, or are unrelated to, the Company's core operating performance. Items excluded from the Company's non-GAAP profitability measures include: restructuring, acquisition and integration-related and other costs, acquisition purchase accounting, including inventory step-up, release of indemnification assets and the reversal of uncertain tax positions.

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COMTEX_390627643/2241/2021-07-29T16:10:01

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