Attached files
| file | filename |
|---|---|
| 8-K - 8-K COVER PAGE - MOHAWK INDUSTRIES INC | a3q20158-kcoverpage.htm |
Exhibit 99.1
NEWS RELEASE | ||||
For Release: Immediately
Contact: Frank H. Boykin, Chief Financial Officer (706) 624-2695
MOHAWK INDUSTRIES ANNOUNCES RECORD THIRD QUARTER EARNINGS
QUARTERLY ADJUSTED EPS 22% INCREASE OVER PRIOR YEAR
Calhoun, Georgia, November 5, 2015 - Mohawk Industries, Inc. (NYSE:MHK) today announced 2015 third quarter net earnings of $215 million and diluted earnings per share (EPS) of $2.89. Excluding restructuring and acquisition charges, net earnings were $222 million and EPS was $2.98, a 22% increase over last year’s third quarter adjusted EPS and the highest adjusted quarterly EPS in the company’s history. Net sales for the third quarter of 2015 were $2.2 billion, up 8% versus the prior year’s third quarter or a 15% increase on a constant currency exchange rate basis. For the third quarter of 2014, net sales were $2.0 billion, net earnings were $151 million and EPS was $2.06; excluding restructuring and acquisition charges, net earnings were $179 million and EPS was $2.44.
For the nine months ending October 3, 2015, net sales were $6.1 billion, an increase of approximately 4% versus prior year or an increase of approximately 11% on a constant currency exchange rate basis. Net earnings and EPS for the nine-month period were $424 million and $5.73, respectively. Net earnings excluding restructuring and acquisition charges were $546 million and adjusted EPS was $7.38, an increase of 26% over the nine-month period adjusted EPS result in 2014. For the nine-months ending September 27, 2014, net sales were $5.9 billion, net earnings were $385 million and EPS was $5.25; excluding restructuring and acquisition charges, net earnings and EPS were $431 million and $5.88.
Commenting on Mohawk Industries’ third quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “In addition to our record earnings per share, our adjusted operating income reached a record level at $309 million, up 30% over the same quarter last year. All segments contributed to our sales and operating income improvements. Our new segment structure that we announced last quarter has benefited our performance, enabling us to optimize our regional businesses by enhancing our product offerings, manufacturing assets and distribution strategies. During the period, we made significant progress in aligning our IVC acquisition with our European and U.S. flooring businesses and our KAI
acquisition with our European ceramic operations. We are introducing products to take advantage of the unique capabilities and customer relationships of each organization. As we leverage the strength of these businesses, we anticipate greater market penetration and continued earnings growth in the future.”
“For the quarter, our Global Ceramic segment sales were up 2% as reported. On a constant exchange rate basis, sales grew 11% and adjusted operating income rose 15% versus prior year with adjusted operating margin increasing to 15% as a result of improved productivity, volume, price and mix and the KAI acquisition partially offset by currency headwinds. Our U.S. ceramic sales continued to improve, as we increased our investments in new products, additional sales representatives and new service centers and galleries. The residential new construction sector remains the strongest part of our U.S. ceramic business. To satisfy increased demand in the U.S. market, we have begun importing ceramic tile from both our Russian and Bulgarian businesses, leveraging our global footprint to optimize our profitability. Growth in the Mexican ceramic market remains strong as we improved our position, and we are adding new sales representatives to expand our distribution base in all channels. In Europe, our ceramic sales are outpacing the market. We are benefiting from the upgraded assets at our manufacturing facilities, which are increasing our competitiveness and yielding more differentiated products, such as 3-dimensional wall tiles, hexagons and brick visuals. Our Bulgarian ceramic business is increasing its product mix, improving its manufacturing and expanding sales outside the local market. Though Russia is in a recession, we are increasing our share of the ceramic market. Our sales in Russia grew on a local basis, though our margin contracted as inflation outpaced our price increases.
“During the quarter, our Flooring North America segment’s sales were up 8% over last year with adjusted operating income increasing 41%. The adjusted operating margin increased to almost 14% due to improved volume, productivity, input costs and the IVC acquisition partially offset by price and mix. The new structure of our North American carpet and hard surface businesses is improving our performance as we leverage the strength of our brands, marketing strategies and customer relationships across all categories. During the period, we increased our investments in sales personnel, merchandising and promotions in both carpet and hard surfaces categories to enhance our position in the marketplace. In our carpet business, we are beginning to see improved margin from our recent product introductions and the expansion of our Karastan customer base. Our commercial carpet margins continue to expand with the introduction of more stylized products, improved manufacturing efficiencies and enhanced service. We are improving our efficiency and reducing costs by closing two commercial carpet plants and consolidating the operations. Our rug sales and margins were up during the period as our new product introductions gained traction in the market. Sales of our hard surface products are growing faster than carpet across all channels, with builder and commercial sectors expanding the fastest. Our sheet vinyl and LVT sales
continue to grow, and we are introducing new Mohawk branded products from IVC to expand our vinyl offering in all channels.
“For the quarter, our Flooring Rest of the World segment’s sales rose 24% as reported or 41% on a constant exchange rate with adjusted operating income improving 48% over the prior year. The adjusted operating margin increased to almost 16% due to improved volume, input costs and the IVC acquisition partially offset by currency headwinds. Our laminate sales increased during the period, and our new product collection is one of our most successful ever due to its differentiated features and performance benefits such as our water resistant technology that is unique to the marketplace. Our wood sales improved along with our mix as we enhanced our Quick-Step and Pergo products with matt finishes, rustic visuals and brushed planks. Our vinyl business also improved with significant growth in LVT. We are introducing new LVT sizes with embossing, enhanced scratch resistance and superior click installation systems to add more value to our offering and participate in the commercial sector. As our Russian sheet vinyl business declined, we increased sales in other geographies to fully utilize our capacity. Our non-flooring product categories are up slightly with improving margins due to some relief in material costs. One of our chip board lines experienced an unplanned stop and will be down for four weeks, impacting operating income by approximately $3-4 million in our fourth quarter.
“Mohawk’s performance benefited from strategic acquisitions, new investments in sales and operations and improved manufacturing and logistics. The U.S. residential and commercial flooring markets have improved throughout 2015, with hard surface sales growing faster. Looking to the fourth quarter, we anticipate that the U.S. economy will continue its gradual growth. We expect year-over-year margin growth to continue in all segments as a result of our strategies and acquisitions. We are selectively increasing our SG&A relative to sales to optimize future market share. Our recent acquisitions are being integrated into our businesses and are positively impacting our earnings. The costs associated with new plant start-ups, interruption of our board production and four fewer days will be absorbed in the period. Taking all these factors into account, our guidance for the fourth quarter is $2.66 - $2.75 per share, which would be a 17 -21% increase over 2014, excluding any restructuring charges. Our fourth quarter earnings guidance would have been approximately $0.15 per share higher on a constant exchange rate relative to last year.”
ABOUT MOHAWK INDUSTRIES
Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk’s vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood,
stone and vinyl flooring. Our industry-leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Bigelow, Daltile, Durkan, 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, November 6, 2015 at 11:00 AM Eastern Time
The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local. Conference ID # 53645820. A replay will be available until Friday, December 4, 2015 by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 53645820.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES | ||||||||||||
(Unaudited) | ||||||||||||
Consolidated Statement of Operations | Three Months Ended | Nine Months Ended | ||||||||||
(Amounts in thousands, except per share data) | October 3, 2015 | September 27, 2014 | October 3, 2015 | September 27, 2014 | ||||||||
Net sales | $ | 2,150,656 | 1,990,658 | 6,073,566 | 5,852,000 | |||||||
Cost of sales | 1,489,252 | 1,434,236 | 4,285,090 | 4,239,411 | ||||||||
Gross profit | 661,404 | 556,422 | 1,788,476 | 1,612,589 | ||||||||
Selling, general and administrative expenses | 372,670 | 342,729 | 1,200,152 | 1,045,913 | ||||||||
Operating income | 288,734 | 213,693 | 588,324 | 566,676 | ||||||||
Interest expense | 19,319 | 34,786 | 52,606 | 77,584 | ||||||||
Other expense (income), net | 4,249 | (2,374 | ) | 6,094 | 961 | |||||||
Earnings from continuing operations before income taxes | 265,166 | 181,281 | 529,624 | 488,131 | ||||||||
Income tax expense | 49,463 | 30,021 | 104,643 | 102,957 | ||||||||
Net earnings including noncontrolling interest | 215,703 | 151,260 | 424,981 | 385,174 | ||||||||
Net earnings attributable to noncontrolling interest | 798 | (6 | ) | 1,238 | 77 | |||||||
Net earnings attributable to Mohawk Industries, Inc. | $ | 214,905 | 151,266 | 423,743 | 385,097 | |||||||
Basic earnings per share attributable to Mohawk Industries, Inc. | ||||||||||||
Basic earnings per share attributable to Mohawk Industries, Inc. | $ | 2.91 | 2.08 | 5.77 | 5.29 | |||||||
Weighted-average common shares outstanding - basic | 73,915 | 72,864 | 73,384 | 72,814 | ||||||||
Diluted earnings per share attributable to Mohawk Industries, Inc. | ||||||||||||
Diluted earnings per share attributable to Mohawk Industries, Inc. | $ | 2.89 | 2.06 | 5.73 | 5.25 | |||||||
Weighted-average common shares outstanding - diluted | 74,438 | 73,376 | 73,907 | 73,332 | ||||||||
Other Financial Information | |||||||||||||
(Amounts in thousands) | |||||||||||||
Depreciation and amortization | $ | 94,955 | 85,167 | 268,622 | 249,905 | ||||||||
Capital expenditures | $ | 123,648 | 141,883 | 352,070 | 391,580 | ||||||||
Consolidated Balance Sheet Data | |||||||
(Amounts in thousands) | |||||||
October 3, 2015 | September 27, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 110,716 | 105,569 | ||||
Receivables, net | 1,340,650 | 1,209,557 | |||||
Inventories | 1,621,154 | 1,640,487 | |||||
Prepaid expenses and other current assets | 273,775 | 275,981 | |||||
Deferred income taxes | 152,899 | 137,220 | |||||
Total current assets | 3,499,194 | 3,368,814 | |||||
Property, plant and equipment, net | 3,046,491 | 2,772,722 | |||||
Goodwill | 2,280,722 | 1,668,520 | |||||
Intangible assets, net | 918,655 | 746,304 | |||||
Deferred income taxes and other non-current assets | 319,420 | 145,100 | |||||
Total assets | $ | 10,064,482 | 8,701,460 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and commercial paper | $ | 1,927,815 | 583,495 | ||||
Accounts payable and accrued expenses | 1,371,969 | 1,247,862 | |||||
Total current liabilities | 3,299,784 | 1,831,357 | |||||
Long-term debt, less current portion | 1,263,176 | 1,806,821 | |||||
Deferred income taxes and other long-term liabilities | 723,489 | 486,764 | |||||
Total liabilities | 5,286,449 | 4,124,942 | |||||
Redeemable noncontrolling interest | 22,150 | — | |||||
Total stockholders' equity | 4,755,883 | 4,576,518 | |||||
Total liabilities and stockholders' equity | $ | 10,064,482 | 8,701,460 | ||||
Segment Information | Three Months Ended | As of or for the Nine Months Ended | ||||||||||||
(Amounts in thousands) | October 3, 2015 | September 27, 2014 | October 3, 2015 | September 27, 2014 | ||||||||||
Net sales: | ||||||||||||||
Global Ceramic | $ | 791,538 | 779,842 | 2,301,168 | 2,271,660 | |||||||||
Flooring NA | 955,099 | 886,317 | 2,722,347 | 2,562,560 | ||||||||||
Flooring ROW | 404,026 | 326,146 | 1,050,390 | 1,021,951 | ||||||||||
Intersegment sales | (7 | ) | (1,647 | ) | (339 | ) | (4,171 | ) | ||||||
Consolidated net sales | $ | 2,150,656 | 1,990,658 | 6,073,566 | 5,852,000 | |||||||||
Operating income (loss): | ||||||||||||||
Global Ceramic | $ | 120,055 | 101,254 | 326,571 | 268,320 | |||||||||
Flooring NA | 125,910 | 83,623 | 145,861 | 207,578 | ||||||||||
Flooring ROW | 55,471 | 35,046 | 153,164 | 113,909 | ||||||||||
Corporate and eliminations | (12,702 | ) | (6,230 | ) | (37,272 | ) | (23,131 | ) | ||||||
Consolidated operating income | $ | 288,734 | 213,693 | 588,324 | 566,676 | |||||||||
Assets: | ||||||||||||||
Global Ceramic | $ | 3,938,242 | 3,788,164 | |||||||||||
Flooring NA | 3,195,904 | 2,641,171 | ||||||||||||
Flooring ROW | 2,699,255 | 2,033,718 | ||||||||||||
Corporate and eliminations | 231,081 | 238,407 | ||||||||||||
Consolidated assets | $ | 10,064,482 | 8,701,460 | |||||||||||
Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc. | ||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
October 3, 2015 | September 27, 2014 | October 3, 2015 | September 27, 2014 | |||||||||
Net earnings attributable to Mohawk Industries, Inc. | $ | 214,905 | 151,266 | 423,743 | 385,097 | |||||||
Adjusting items: | ||||||||||||
Restructuring, acquisition and integration-related and other costs | 12,770 | 14,013 | 43,784 | 36,907 | ||||||||
Acquisitions purchase accounting (inventory step-up) | 7,160 | — | 13,316 | — | ||||||||
Legal settlement and reserves | — | 10,000 | 127,000 | 10,000 | ||||||||
Bond redemption | — | 15,450 | — | 15,450 | ||||||||
Deferred loan costs | — | 1,080 | 651 | 1,080 | ||||||||
Income taxes | (12,940 | ) | (12,792 | ) | (62,984 | ) | (17,412 | ) | ||||
Adjusted net earnings attributable to Mohawk Industries, Inc. | $ | 221,895 | 179,017 | 545,510 | 431,122 | |||||||
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. | $ | 2.98 | 2.44 | 7.38 | 5.88 | |||||||
Weighted-average common shares outstanding - diluted | 74,438 | 73,376 | 73,907 | 73,332 | ||||||||
Reconciliation of Total Debt to Net Debt | |||
(Amounts in thousands) | |||
October 3, 2015 | |||
Current portion of long-term debt and commercial paper | $ | 1,927,815 | |
Long-term debt, less current portion | 1,263,176 | ||
Less: Cash and cash equivalents | 110,716 | ||
Net Debt | $ | 3,080,275 | |
Reconciliation of Operating Income to Adjusted EBITDA | ||||||||||||||||
(Amounts in thousands) | Trailing Twelve | |||||||||||||||
Three Months Ended | Months Ended | |||||||||||||||
December 31, 2014 | April 4, 2015 | July 4, 2015 | October 3, 2015 | October 3, 2015 | ||||||||||||
Operating income | $ | 206,120 | 43,774 | 255,816 | 288,734 | 794,444 | ||||||||||
Other (expense) income | (9,737 | ) | 1,083 | (2,928 | ) | (4,249 | ) | (15,831 | ) | |||||||
Net (earnings) loss attributable to non-controlling interest | (212 | ) | (158 | ) | (282 | ) | (798 | ) | (1,450 | ) | ||||||
Depreciation and amortization | 95,665 | 85,656 | 88,011 | 94,955 | 364,287 | |||||||||||
EBITDA | 291,836 | 130,355 | 340,617 | 378,642 | 1,141,450 | |||||||||||
Restructuring, acquisition and integration-related and other costs | 21,859 | 8,169 | 17,275 | 11,690 | 58,993 | |||||||||||
Acquisitions purchase accounting (inventory step-up) | — | — | 6,156 | 7,160 | 13,316 | |||||||||||
Legal settlement and reserves | — | 125,000 | — | — | 125,000 | |||||||||||
Adjusted EBITDA | $ | 313,695 | 263,524 | 364,048 | 397,492 | 1,338,759 | ||||||||||
Net Debt to Adjusted EBITDA | 2.3 | |||||||||||||||
Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate | ||||||||||||
(Amounts in thousands) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
October 3, 2015 | September 27, 2014 | October 3, 2015 | September 27, 2014 | |||||||||
Net sales | $ | 2,150,656 | 1,990,658 | 6,073,566 | 5,852,000 | |||||||
Adjustment to net sales on a constant exchange rate | 131,068 | — | 408,745 | — | ||||||||
Net sales on a constant exchange rate | $ | 2,281,724 | 1,990,658 | 6,482,311 | 5,852,000 | |||||||
Reconciliation of 2015 Net Sales to Pro Forma Net Sales on a Constant Exchange Rate Excluding 2015 Q3 Acquisition Volume | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
October 3, 2015 | September 27, 2014 | ||||||
Net sales | $ | 2,150,656 | 1,990,658 | ||||
Adjustment to net sales on a constant exchange rate | 131,068 | — | |||||
Less: 2015 Q3 impact of acquisition volume | (178,560 | ) | — | ||||
2015 proforma net sales on a constant exchange rate excluding acquisition volume | $ | 2,103,164 | 1,990,658 | ||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
Global Ceramic | October 3, 2015 | September 27, 2014 | |||||
Net sales | $ | 791,538 | 779,842 | ||||
Adjustment to segment net sales on a constant exchange rate | 75,785 | — | |||||
Segment net sales on a constant exchange rate | $ | 867,323 | 779,842 | ||||
Reconciliation of 2015 Segment Net Sales to Segment Pro Forma Net Sales on a Constant Exchange Rate Excluding 2015 Q3 Acquisition Volume | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
Global Ceramic | October 3, 2015 | September 27, 2014 | |||||
Net sales | $ | 791,538 | 779,842 | ||||
Adjustment to segment net sales on a constant exchange rate | 75,785 | — | |||||
Less: 2015 Q3 impact of acquisition volume | (26,827 | ) | — | ||||
2015 Segment pro forma net sales on a constant exchange rate excluding acquisition volume | $ | 840,496 | 779,842 | ||||
Reconciliation of 2015 Segment Net Sales to Segment Pro Forma Net Sales on a Constant Exchange Rate Excluding 2015 Q3 Acquisition Volume | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
Flooring NA | October 3, 2015 | September 27, 2014 | |||||
Net sales | $ | 955,099 | 886,317 | ||||
Adjustment to segment net sales on a constant exchange rate | — | — | |||||
Less: 2015 Q3 impact of acquisition volume | (37,779 | ) | — | ||||
2015 Segment pro forma net sales on a constant exchange rate excluding acquisition volume | $ | 917,320 | 886,317 | ||||
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
Flooring ROW | October 3, 2015 | September 27, 2014 | |||||
Net sales | $ | 404,026 | 326,146 | ||||
Adjustment to segment net sales on a constant exchange rate | 55,283 | — | |||||
Segment net sales on a constant exchange rate | $ | 459,309 | 326,146 | ||||
Reconciliation of 2015 Segment Net Sales to Segment Pro Forma Net Sales on a Constant Exchange Rate Excluding 2015 Q3 Acquisition Volume | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
Flooring ROW | October 3, 2015 | September 27, 2014 | |||||
Net sales | $ | 404,026 | 326,146 | ||||
Adjustment to segment net sales on a constant exchange rate | 55,283 | — | |||||
Less: 2015 Q3 impact of acquisition volume | (113,955 | ) | — | ||||
2015 Segment pro forma net sales on a constant exchange rate excluding acquisition volume | $ | 345,354 | 326,146 | ||||
Reconciliation of Gross Profit to Adjusted Gross Profit | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
October 3, 2015 | September 27, 2014 | |||||
Gross Profit | $ | 661,404 | 556,422 | |||
Adjustments to gross profit: | ||||||
Restructuring, acquisition and integration-related and other costs | 7,291 | 7,261 | ||||
Acquisitions purchase accounting (inventory step-up) | 7,160 | — | ||||
Adjusted gross profit | $ | 675,855 | 563,683 | |||
Adjusted gross profit as a percent of net sales | 31.4 | % | 28.3 | % | ||
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
October 3, 2015 | September 27, 2014 | |||||
Selling, general and administrative expenses | $ | 372,670 | 342,729 | |||
Adjustment to selling, general and administrative expenses: | ||||||
Restructuring, acquisition and integration-related and other costs | (5,479 | ) | (6,752 | ) | ||
Legal settlement and reserves | — | (10,000 | ) | |||
Adjusted selling, general and administrative expenses | $ | 367,191 | 325,977 | |||
Adjusted selling, general and administrative expenses as a percent of net sales | 17.1 | % | 16.4 | % | ||
Reconciliation of Operating Income to Adjusted Operating Income | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
October 3, 2015 | September 27, 2014 | |||||
Operating income | $ | 288,734 | 213,693 | |||
Adjustments to operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 12,770 | 14,013 | ||||
Legal settlement and reserves | — | 10,000 | ||||
Acquisitions purchase accounting (inventory step-up) | 7,160 | — | ||||
Adjusted operating income | $ | 308,664 | 237,706 | |||
Adjusted operating income as a percent of net sales | 14.4 | % | 11.9 | % | ||
Reconciliation of Adjusted Operating Income on a Constant Exchange Rate | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
October 3, 2015 | September 27, 2014 | |||||
Operating income | $ | 288,734 | 213,693 | |||
Adjustments to operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 12,770 | 14,013 | ||||
Legal settlement and reserves | — | 10,000 | ||||
Acquisitions purchase accounting (inventory step-up) | 7,160 | — | ||||
Adjustment to operating income on a constant exchange rate | 21,392 | — | ||||
Adjusted operating income on a constant exchange rate | $ | 330,056 | 237,706 | |||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
Global Ceramic | October 3, 2015 | September 27, 2014 | ||||
Operating income | $ | 120,055 | 101,254 | |||
Adjustments to segment operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 118 | 4,248 | ||||
Acquisitions purchase accounting (inventory step-up) | 949 | — | ||||
Adjusted segment operating income | $ | 121,122 | 105,502 | |||
Adjusted operating income as a percent of net sales | 15.3 | % | 13.5 | % | ||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
Global Ceramic | October 3, 2015 | September 27, 2014 | ||||
Operating income | $ | 120,055 | 101,254 | |||
Adjustments to segment operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 118 | 4,248 | ||||
Acquisitions purchase accounting (inventory step-up) | 949 | — | ||||
Adjustment to operating income on a constant exchange rate | 12,701 | — | ||||
Adjusted segment operating income on a constant exchange rate | $ | 133,823 | 105,502 | |||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
Flooring NA | October 3, 2015 | September 27, 2014 | ||||
Operating income | $ | 125,910 | 83,623 | |||
Adjustments to segment operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 5,148 | 10,578 | ||||
Acquisitions purchase accounting (inventory step-up) | 1,527 | — | ||||
Adjusted segment operating income | $ | 132,585 | 94,201 | |||
Adjusted operating income as a percent of net sales | 13.9 | % | 10.6 | % | ||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
Flooring ROW | October 3, 2015 | September 27, 2014 | ||||
Operating income | $ | 55,471 | 35,046 | |||
Adjustments to segment operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 4,030 | 8,437 | ||||
Acquisitions purchase accounting (inventory step-up) | 4,683 | — | ||||
Adjusted segment operating income | $ | 64,184 | 43,483 | |||
Adjusted operating income as a percent of net sales | 15.9 | % | 13.3 | % | ||
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
Flooring ROW | October 3, 2015 | September 27, 2014 | ||||
Operating income | $ | 55,471 | 35,046 | |||
Adjustments to segment operating income: | ||||||
Restructuring, acquisition and integration-related and other costs | 4,030 | 8,437 | ||||
Acquisitions purchase accounting (inventory step-up) | 4,683 | — | ||||
Adjustment to operating income on a constant exchange rate | 8,691 | — | ||||
Adjusted segment operating income on a constant exchange rate | $ | 72,875 | 43,483 | |||
Reconciliation of Earnings from Continuing Operations Including Noncontrolling Interest Before Income Taxes to Adjusted Earnings from Continuing Operations Including Noncontrolling Interest Before Income Taxes | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
October 3, 2015 | September 27, 2014 | |||||
Earnings before income taxes | $ | 265,166 | 181,281 | |||
Noncontrolling interest | (798 | ) | 6 | |||
Adjustments from continuing operations before income taxes: | ||||||
Restructuring, acquisition and integration-related & other costs | 12,770 | 14,013 | ||||
Acquisitions purchase accounting (inventory step-up) | 7,160 | — | ||||
Legal settlement and reserves | — | 10,000 | ||||
Bond redemption | — | 15,450 | ||||
Deferred loan costs | — | 1,080 | ||||
Adjusted earnings before income taxes | $ | 284,298 | 221,830 | |||
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense | ||||||
(Amounts in thousands) | ||||||
Three Months Ended | ||||||
October 3, 2015 | September 27, 2014 | |||||
Income tax expense | $ | 49,463 | 30,021 | |||
Income tax effect of adjusting items | 12,940 | 12,792 | ||||
Adjusted income tax expense | $ | 62,403 | 42,813 | |||
Adjusted income tax rate | 21.9 | % | 19.3 | % | ||
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.