Mohawk Industries reported on the results of the fourth quarter of last yea

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CALHOUN, Georgia, February 8, 2019 / PRNewswire / – Mohawk Industries, Inc. (NYSE code: MHK) today reported that the company’s net profit for the fourth quarter of 2018 was $ 229 million, and diluted earnings per share (EPS) – $ 3.05. Excluding restructuring, acquisitions and other costs, the adjusted net income was $ 188 million and EPS $ 2.53, a decrease of 26% from the same period of the previous year. Net sales in the fourth quarter of 2018 were equal to $ 2.45 billion, which is 3% more on quarterly basis or 5% at a constant exchange rate. In the fourth quarter of 2017, net sales amounted to $ 2.37 billion, net income – $ 240 million, and EPS indicator – $ 3.21. Excluding restructuring charges, acquisitions and other costs, the adjusted net income was $ 256 million, and EPS was $ 3.42.

For the twelve-month period ended December 31, 2018, net profit and the ЕРS indicator of the company amounted to $ 862 million and $ 11.47, respectively. Net income, net of restructuring, acquisitions and other expenses, was $ 922 million, and EPS was $ 12.33, which is 9% lower compared to the adjusted EPS for the twelve-month period of 2017. For the entire 2018, net sales amounted to $ 10.0 billion, which is 5% more compared to the reporting figure for the previous year, or 4% at a constant exchange rate. For the twelve-month period ended December 31, 2017, net sales amounted to $ 9.5 billion, net income – $ 972 million, and EPS figure – $ 12.98; net of restructuring, acquisitions and other expenses, net income and EPS amounted to $ 1.0 billion and $ 13.61, respectively.

Commenting on the results of Mohawk Industries in the fourth quarter of last year, CEO and CEO Jeffrey S. Lorberbaum said: Despite the increase in prices for many products, our units experienced increasing pressure on the pricing and balance of the product mix.In this quarter, inflation continued to cause turbulence in all of our categories. x, and the increase in the cost of materials has affected our results. During this period, we reduced production volumes, adjusting to market demand. Start-up costs for new enterprises exceeded our expectations in this quarter, and LVT production efficiency rose more slowly than predicted. table tops and sheet vinyl, as well as an expanded Polish company for the production of ceramic tiles began production.

Over the past five years, we have consistently demonstrated record-breaking results, but the 2018th was more difficult than we expected – due to a sharp increase in inflation, sales of luxury vinyl, which affected other products in the US market, and a slowdown in most of our markets . Under such conditions, we selectively invested about $ 1.5 billion in optimizing our long-term efficiency, mainly in new product categories and regions with new projects and acquisitions. We also invested in savings initiatives and share buybacks. We manage to adequately cope with the current situation and at the same time increase the long-term value of our business. To this end, in 2018 we acquired leading flooring manufacturers in Australia, New Zealand and Brazil. In Europe, we bought the business of two distributors and a specialized company for the production of mezzanines. We entered the European market of porcelain tile and carpet tiles, expanded our presence in the segment of high-end ceramic products in Eastern Europe, launched production of vinyl sheet in Russia and quartz countertops in the United States. Most of the profits from these capital investments will be realized no earlier than 2020, as production increases, diversification and productivity increase. In this period, we bought Mohawk shares worth about $ 274 million, reducing the number of our shares outstanding by 2.3 million, or 3%.

In this quarter, sales in the global ceramics segment increased by 4.5% according to reported data or by 7% at a constant exchange rate. Operating margin in this segment was approximately 9% at the reported figure or 10% minus other costs, having decreased compared to the previous year as a result of inflation, pressure from pricing and product mix, as well as reduced production volumes partially offset by productivity growth. In North America, the performance of our ceramic division has consistently increased, but continued to be under pressure from import restrictions and transportation costs. In order to optimize margins, we increased the prices of our products, offsetting inflation and rising freight costs. Our new factory of quartz countertops has already begun to produce basic products, and we are increasing production and optimize our technological processes and compositions. Throughout the North American region, we are taking numerous steps to reduce our costs, including the consolidation of regional service centers and downsizing.

Our new production lines in the Mexican Salamanca function at the right level, and we are concentrating our efforts on optimizing the range and increasing margins. We announced price increases in the Mexican market to offset inflation and rising transportation costs. In November, the acquisition process of the Brazilian enterprise Eliane was completed. This company is the industry leader with the best brand and leading positions in one of the world’s largest ceramic products market. We placed an order for the first set of new equipment to optimize Eliane production and increase operating margins, following the strategy we used to increase the profitability of Marazzi. In Europe, activity declined this quarter, and the worst deterioration was observed in the Italian economy, mainly due to political instability. Given these conditions, we experienced increased pressure on operating margins amid growing competition. In the fourth quarter, we reduced production rates and continue this course in the first quarter of the new year. As our presence on the European ceramic market expands, we are increasing the specialization of our plants in Italy, Spain, Poland and Bulgaria, increasing our competitive advantages. In Russia, we recorded a noticeable increase in sales and profitability, although due to the weakening ruble in terms of the US dollar, the results noticeably decreased. To secure growth in the Russian market, in 2018 we installed two new production lines and will begin production of premium sanitary ceramics in 2019.

Reported sales in the North American flooring segment declined by 3% this quarter. The segment’s operating margin was 8%, according to the reported indicators, and 9%, taking into account the correction. Some negative impact on the results had inflation, lower production volumes than planned, as well as the cost of launching new facilities. In November, we reported on the appointment of Paul de Cock (Paul de Cock) to the presidency of the North American flooring segment and we hope that this step will allow us to increase the effectiveness of this unit. Mr. de Cock reorganized the management structure of this segment in order to optimize the marketing, operations and innovation performance of each product across the division. In this quarter, our sales gradually declined due to a decrease in activity in the sale of residential real estate and a decrease in inventories by customers in some channels. During the period, we initiated additional price increases to offset rising costs for materials and freight. The carpet segment was affected by the expansion of the range of alternative hard-coated products and the rising cost of materials. In our premium SmartStrand collections, we introduced our new ColorMax technology and expanded our Air.O patented soft flooring range. We have somewhat revived the premium laminate category by investing additional funds in creating textures that are even more expressive than natural wood, with previously unattainable indicators of resistance to wear and moisture. Sales of LVT in this quarter increased markedly against the background of the implementation of the updated sourcing and production strategy. We offer the prestigious collection of Pergo vinyl tiles, which even before the presentation has greater visibility among consumers than any other similar product on the market. And although we predicted even greater growth, the output of our new LVT plant increased by about 20% this quarter. In the long term, we are confident that our investments in this technology will provide us with competitive advantages after the release of a new production base to the expected level of productivity.

In this quarter, sales in the “flooring – other countries of the world” segment increased by 12% in reported figures and by 16% at a constant exchange rate. The operating margin in this segment was 12% according to reported data and 13% on a given basis. Growth and productivity were offset by the impact of pricing and product mix, the cost of launching new facilities and exchange rates. During this quarter, we recorded a decline in activity in the markets of Europe and Australia. Sales of vinyl tiles continued to show steady growth, and we were able to noticeably surpass the market average in the laminate market thanks to our premium collections. We initiated price increases to offset cost increases and currency fluctuations. Investments in the expansion of laminate production in Europe and Russia have allowed us to increase our market share in these markets and present products with an expressive texture and moisture resistance to regional consumers. LVT sales in this segment continued their rapid growth as production rates increased. We had to slightly postpone the release of certain categories of vinyl tiles to the market due to technical problems that increased our costs in the fourth quarter of last year. In this quarter, LVT production increased by approximately 15%, thanks to the optimization of technological processes, and we expect further growth in the new year. In Europe, we are increasing our presence in the sheet vinyl market, and our new plant in Russia has already started production. The Russian base for the production of sheet vinyl operates as planned, and manufactures products in sufficient volume, fulfilling orders from major customers. Our European carpet tile factory continues to scale up its operations as we expand our product range and customer base.

We integrated the Godfrey Hirst into the Mohawk structure. There is currently some stagnation in the Australian housing market, and we are adapting to changing conditions. We are investing in new assets, expanding the Godfrey Hirst presence in the commercial carpet market and using Mohawk resources to optimize product and material strategies. The volume and profitability of the products of our insulation materials division are noticeably increasing. Our polyurethane insulation takes on the share of other products – both before and after the price increase due to restrictions on the supply of materials. The sales and operating margins of plate materials in this quarter were the highest for the year. Our investments in this direction allowed us to optimize our product range and production efficiency. We are expanding our mezzanine flooring production, which we acquired last year, using our existing production and marketing organization.

In the new 2019, numerous macroeconomic factors around the world can affect our operations. In most markets, there is a general decline in the economy, and fluctuations in oil prices do not allow us to predict spending. In addition, housing markets in many regions of the world are under increasing pressure. These and other factors force us to make predictions with more caution, however, we expect to improve the results of our activities in the new year. In the first quarter of 2019, we are reducing production rates, adapting to lower activity. observed in most of our market. We will feel a rise in prices for raw materials and materials before we can realize profits and take other advantages from the latest optimization initiatives. Strengthening the dollar compared with last year will have a significant negative effect throughout the entire period. We continue to market innovative products and collections, raise prices and optimize production processes. Taking into account all the above factors, the EPS indicator we forecast for the first quarter of 2019 is $ 2.02-2.12, net of any one-time expenses.

Today we are at different stages of expanding the range of main product categories and increasing our geographic presence. Throughout this year, these investments will allow us to increase sales and increase operating margins. Higher prices will have a positive impact on our results, the cost of launching new facilities will decrease and production will increase. We will begin to realize the potential of these projects in 2020 as the volumes and production efficiency increase. Today, our company is a strong business with significant resources, an extensive product portfolio and diversified geographic coverage. We have an optimized balance of assets, significant liquidity and statistically low debt leverage. In the short term, we are taking the necessary steps to overcome market uncertainties and are confident that our investments and acquisitions will significantly improve our long-term performance. “


Mohawk Industries is a leading global flooring manufacturer that manufactures products to enhance the comfort of residential and commercial premises around the world. Vertically integrated manufacturing and distribution processes give the company a competitive edge in the production of carpet, ceramic tile, laminate, natural wood, stone and vinyl coatings. The result of advanced innovative developments are products and technologies that allow our brands to stand out in the market and satisfy all the needs of repair projects or new construction. Our brands are among the most recognizable and widely recognized in the industry. Among them are American Olean, Daltile, Durkan, Eliane, Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Mohawk Group, Pergo, Quick-Step and Unilin. Over the past decade, Mohawk has evolved from a purely American carpet manufacturer to the world’s largest flooring company operating in Australia, Brazil, Canada, Europe, India, Malaysia, Mexico, New Zealand, Russia and the United States.

Some of the statements in the above paragraphs relate, in particular, to future indicators, business prospects, business development, business strategies and similar aspects, as well as including the expressions “may”, “should”, “consider”, “assume”, “expect “,” count “, etc., are” prognostic “. For such claims, Mohawk is protected by a “safe haven” as provided for by the 1995 Private Securities Litigation Reform Act. There are no guarantees as to the accuracy of the forecast statements, since they are based on a variety of assumptions, subject to risks and uncertainties. On the discrepancy of factsThe following important factors may affect forecast results: changes in economic and industry conditions; competition; inflation and deflation of prices for raw materials and the growth of other production costs; inflation and consumer price deflation; the cost and stability of energy supply; terms and level of capital costs; terms and procedures for raising prices for the company’s products; reduced fair market value; integration of acquisitions; international operations; introduction of new products to the market; rationalization of economic activities; lawsuits in respect of taxes, products and other issues; litigation; and other risks identified in Mohawk’s reports to the US Securities and Exchange Commission and public statements.

The teleconference will take place on Friday, February 8, 2019, at 11:00 am Eastern time. Phone numbers: for calls from the USA / Canada 1-800-603-9255, for international / regional calls 1-706- 634-2294. Conference ID: 8594256. A re-broadcast will be available until March 8, 2019 at 1-855-859-2056 (for calls from the US / local calls) and 1-404-537-3406 (for international / regional calls). To access the broadcast, you must enter the conference identification number 8594256.


(unverified data)

Financial Summary Report

Quarter ending

The twelve month period ending

(amounts in thousands, excluding earnings per share)

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

Net Sales

$ 2,448,618

2 369 097

9 983 634

9 491 290

Cost of sales

1 802 228




Gross Profit

646 390



2 996 414

Selling, general and administrative expenses

433 014

410 158


1 642 241

Operating Income

213 376

343 466



Interest expenses

14 411



31 111

Other expenses (income), net





Profit before income tax

198 461

332 459

1 049 201


Income tax expense


91 593

184 346

343 165

Net profit with non-controlling interest

230 043


864 855

974 692

Net profit attributable to non-controlling interest





Net income attributable to Mohawk Industries, Inc.

$ 229,339

240 378

861 704

971 638

Earnings per share attributable to Mohawk Industries, Inc.

Net income per share attributable to Mohawk Industries, Inc.

$ 3.07




Weighted average number of ordinary shares outstanding – basic

73 856

74 414

74 413

74 357

Diluted earnings per share attributable to Mohawk Industries, Inc.

Diluted earnings per share attributable to Mohawk Industries, Inc.

$ 3.05




The weighted average number of ordinary shares outstanding is diluted

74 183

74 915

74 773

74 839

Other Financial Information

(Amounts in Thousands)

Depreciation and amortization

$ 139,092

118 372


446 672

Capital Costs

$ 151,161

251 368

794 110

905 998

Summary Balance Report Data

(Amounts in Thousands)

December 31, 2018

December 31, 2017


Current assets:

Cash and cash equivalents

$ 119,050


Accounts Receivable, Net


1 558 159



1 948 663

Prepaid expenses of future years and other current assets

496 472


Total current assets

4 509 296

4 072 967

Property, production facilities and equipment, clean

4,699 902

4 270 790



2 471 459

Intangibles, net

961 810

891 767

Deferred income tax and other non-current assets

407 149

387 870

Total assets

$ 13,099,123



Short-term liabilities:

Current portion of long-term debt and commercial paper

$ 1,742,373

1 203 683

Accounts Payable and Outstanding Costs

1 523 866


Total current liabilities



Long-term debt minus current portion

1 515 601

1 559 895

Deferred income tax and other long-term liabilities


783 131

Total obligations



Redeemable non-controlling interest


Total interests of shareholders

7 440 059

7 067 009

Total liabilities and interests of shareholders

$ 13,099,123


Segment Information

Quarter ending

As of the twelve-month period ended

(Amounts in Thousands)

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

Net Sales:

Global Ceramic Segment

$ 861,238

824 062

3 552 856

3 405 100

Flooring NA (flooring – North America)

973 680



4 010 858

Flooring ROW (flooring – other regions of the world)



2 401 630


Intersegment Sales



Consolidated net sales

$ 2,448,618

2 369 097

9 983 634

9 491 290

Operating income (loss):

Global Ceramic Segment

$ 76,005

113 440

442 898

525 401

Flooring NA (flooring – North America)

79 158

157 219

347 937

540 337

Flooring ROW (flooring – other regions of the world)

72 467

83 865

345 801

329 054

Corporate and corporate exceptions





Total Operating Income

$ 213,376

343 466




Global Ceramic Segment

$ 5,194,030

4 838 310

Flooring NA (flooring – North America)

3 938 639


Flooring ROW (flooring – other regions of the world)



Corporate and corporate exceptions

299 837

308 982

Consolidated assets

$ 13,099,123


Alignment of net income attributable to Mohawk Industries, Inc. with adjusted net income attributable to Mohawk Industries, Inc., and adjusted diluted earnings per share attributable to Mohawk Industries, Inc.

(amounts in thousands, excluding earnings per share)

Quarter ending

The twelve month period ending

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

Net income attributable to Mohawk Industries, Inc.

$ 229,339

240 378

861 704

971 638

Adjustment Positions:

Costs of restructuring, acquiring new companies, integration, etc.

20 412

15 435

78 449

49 144

Accounting Acquisition (increase in inventories)


15 359

13 314

Release of assets used as compensation

4 322

4 322

Income tax – cancellation of doubtful tax positions


4 459


4 459

Income Tax (1)





Net income attributable to Mohawk Industries, Inc.



Adjustment Positions:





Adjusted net income attributable to Mohawk Industries, Inc.

$ 187,512

255 999

922 017

1 018 646

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

$ 2.53




The weighted average number of ordinary shares outstanding is diluted

74 183

74 915

74 773

74 839

(1) Including a profit of $ 13,590 for the entire 2018 in order to finalize the transitional tax for 2017.

Reconciliation of total indebtedness

Sourced from and machine translated for your benefit

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