Mohawk Industries Inc 10-Q for FY2022 Q1

Mohawk Industries Inc (MHK)

10-Q 2022-04-29 For: 2022-04-02

Added on April 09, 2026

About this 10-Q

Mohawk Industries Inc filed this 10-Q on April 29, 2022, covering the quarter ended April 2, 2022 (FY2022 Q1).

Headline figures

Quarter ended April 2, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.02B; up 13.0% from $2.67B a year earlier
Net income: $245.33M; up 3.6% from net income of $236.81M a year earlier
Diluted EPS: $3.78; up 12.5% from $3.36 a year earlier

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Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	MHK	New York Stock Exchange


		Page No
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of April 2, 202 2 and December 31, 20 21	3

	Condensed Consolidated Statements of Operations for the three months ended April 2, 202 2 and April 3 , 20 2 1	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended April 2, 202 2 and April 3 , 202 1	5

	Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 202 2 and April 3 , 202 1	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38


	April 2, 2022		December 31, 2021
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	230,559	268,895
Short-term investments	310,000		323,000
Receivables, net	2,044,698		1,839,985
Inventories	2,513,244		2,391,672
Prepaid expenses	447,358		394,649

Other current assets	18,880		20,156
Total current assets	5,564,739		5,238,357
Property, plant and equipment	9,240,329		9,250,587
Less: accumulated depreciation	4,687,717		4,613,722
Property, plant and equipment, net	4,552,612		4,636,865
Right of use operating lease assets	384,740		389,967
Goodwill	2,579,385		2,607,909
Tradenames	687,734		694,905
Other intangible assets subject to amortization, net	195,793		205,075
Deferred income taxes and other non-current assets	421,716		451,439
Total assets	$	14,386,719	14,224,517



LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	1,546,463	624,503
Accounts payable and accrued expenses	2,220,347		2,217,418
Current operating lease liabilities	104,823		104,434
Total current liabilities	3,871,633		2,946,355
Deferred income taxes	498,273		495,521
Long-term debt, less current portion	1,088,401		1,700,282
Non-current operating lease liabilities	293,239		297,390
Other long-term liabilities	347,570		356,753
Total liabilities	6,099,116		5,796,301
Commitments and contingencies (Note 17)

Stockholders’ equity:
Preferred stock, $.01 par value; 60 shares authorized; no shares issued	—		—
Common stock, $.01 par value; 150,000 shares authorized; 70,880 and 72,952 shares issued and outstanding in 2022 and 2021, respectively	709		729
Additional paid-in capital	1,913,518		1,911,131
Retained earnings	7,630,837		7,692,064
Accumulated other comprehensive loss	(1,048,599)		(966,952)
	8,496,465		8,636,972
Less: treasury stock at cost; 7,341 and 7,343 shares in 2022 and 2021, respectively	215,495		215,547
Total Mohawk Industries, Inc. stockholders’ equity	8,280,970		8,421,425
Nonredeemable noncontrolling interests	6,633		6,791
Total stockholders’ equity	8,287,603		8,428,216
Total liabilities and stockholders’ equity	$	14,386,719	14,224,517


	Three Months Ended
	April 2, 2022		April 3, 2021
	(In thousands, except per share data)
Net sales	$	3,015,663	2,669,026
Cost of sales	2,213,535		1,877,257
Gross profit	802,128		791,769
Selling, general and administrative expenses	481,327		474,254
Operating income	320,801		317,515
Interest expense	11,481		15,241
Other expense (income) net	2,438		(2,227)
Earnings before income taxes	306,882		304,501
Income tax expense	61,448		67,690


Net earnings including noncontrolling interests	245,434		236,811
Net earnings attributable to noncontrolling interests	105		4
Net earnings attributable to Mohawk Industries, Inc.	$	245,329	236,807

Basic earnings per share attributable to Mohawk Industries, Inc.


Basic earnings per share attributable to Mohawk Industries, Inc.	$	3.79	3.37
Weighted-average common shares outstanding—basic	64,686		70,179

Diluted earnings per share attributable to Mohawk Industries, Inc.


Diluted earnings per share attributable to Mohawk Industries, Inc.	$	3.78	3.36
Weighted-average common shares outstanding—diluted	64,970		70,474


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


April 2, 2022	Global Ceramic Segment		Flooring NA Segment	Flooring ROW Segment	Total
Geographical Markets
United States	$	585,231	1,035,880	2,786	1,623,897
Europe	245,236		2,132	637,363	884,731
Russia	66,518		23	39,736	106,277
Other	167,772		33,875	199,111	400,758
	$	1,064,757	1,071,910	878,996	3,015,663

Product Categories
Ceramic & Stone	$	1,059,711	8,988	—	1,068,699
Carpet & Resilient	5,046		843,082	244,128	1,092,256
Laminate & Wood	—		219,840	297,137	516,977
Other(1)	—		—	337,731	337,731
	$	1,064,757	1,071,910	878,996	3,015,663


April 3, 2021	Global Ceramic Segment		Flooring NA Segment	Flooring ROW Segment	Total
Geographical Markets
United States	$	534,547	936,098	2,419	1,473,064
Europe	207,500		330	558,138	765,968
Russia	62,018		30	27,657	89,705
Other	125,806		32,792	181,691	340,289
	$	929,871	969,250	769,905	2,669,026

Product Categories
Ceramic & Stone	$	927,459	8,322	—	935,781
Carpet & Resilient	2,412		772,079	247,724	1,022,215
Laminate & Wood	—		188,849	253,213	442,062
Other(1)	—		—	268,968	268,968
	$	929,871	969,250	769,905	2,669,026


	Three Months Ended
	April 2 2022		April 3 2021
Cost of sales
Restructuring costs	$	898	10,165

Acquisition integration-related costs	40		17
Restructuring and acquisition integration-related costs	$	938	10,182

Selling, general and administrative expenses
Restructuring costs	$	—	(90)
Acquisition transaction-related costs	696		849
Acquisition integration-related costs	284		243
Restructuring, acquisition transaction and integration-related costs	$	980	1,002


	Severance		Other restructuring costs	Total
Balances as of December 31, 2021	$	1,634	995	2,629
Restructuring costs

Flooring NA Segment	—		105	105
Flooring ROW Segment	—		793	793

Total restructuring costs	—		898	898
Cash payments	(875)		(970)	(1,845)
Non-cash items	(15)		(904)	(919)
Balances as of April 2, 2022	$	744	19	763

Restructuring costs recorded in:
Cost of sales	$	—	898	898

Total restructuring costs	$	—	898	898


	At April 2, 2022		At December 31, 2021
Customers, trade	$	1,947,020	1,721,584
Income tax receivable	59,365		73,727
Other	111,527		117,823
	2,117,912		1,913,134
Less: allowance for discounts, claims and doubtful accounts	73,214		73,149
Receivables, net	$	2,044,698	1,839,985


	At April 2, 2022		At December 31, 2021
Finished goods	$	1,738,910	1,677,707
Work in process	164,442		144,004
Raw materials	609,892		569,961
Total inventories	$	2,513,244	2,391,672


	Tradenames
Balance as of December 31, 2021	$	694,905


Currency translation during the period	(7,171)
Balance as of April 2, 2022	$	687,734


Gross carrying amounts:	Customer relationships		Patents	Other	Total
Balance as of December 31, 2021	$	680,177	256,336	6,786	943,299
Adjustments related to acquisitions	(36)		—	—	(36)
Currency translation during the period	(8,985)		(6,378)	(143)	(15,506)
Balance as of April 2, 2022	$	671,156	249,958	6,643	927,757

Accumulated amortization:	Customer relationships		Patents	Other	Total
Balance as of December 31, 2021	$	483,748	252,414	2,062	738,224
Amortization during the period	6,961		165	47	7,173
Currency translation during the period	(7,135)		(6,282)	(16)	(13,433)
Balance as of April 2, 2022	$	483,574	246,297	2,093	731,964

Intangible assets subject to amortization, net as of April 2, 2022	$	187,582	3,661	4,550	195,793


	Three Months Ended
	April 2, 2022		April 3, 2021
	(In thousands)
Cash flows from operating activities:
Net earnings including noncontrolling interests	$	245,434	236,811
Adjustments to reconcile net earnings to net cash provided by operating activities:
Restructuring	898		4,256

Depreciation and amortization	141,415		151,216
Deferred income taxes	13,989		3,740

(Gain) loss on disposal of property, plant and equipment	(365)		2,522
Stock-based compensation expense	5,655		5,968

Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	(225,922)		(138,764)

Inventories	(141,344)		(109,550)
Accounts payable and accrued expenses	39,908		122,748

Other assets and prepaid expenses	(23,259)		(34,432)
Other liabilities	(1,455)		15,090
Net cash provided by operating activities	54,954		259,605
Cash flows from investing activities:
Additions to property, plant and equipment	(129,470)		(114,735)
Acquisitions, net of cash acquired	951		(6,338)
Purchases of short-term investments	(933,000)		(698,698)
Redemption of short-term investments	946,000		486,489
Net cash used in investing activities	(115,519)		(333,282)
Cash flows from financing activities:


Payments on commercial paper	(2,667,668)		(32,633)
Proceeds from commercial paper	2,990,240		35,600


	At April 2, 2022		At December 31, 2021
Outstanding checks in excess of cash	$	2,483	3,005
Accounts payable, trade	1,296,066		1,228,621
Accrued expenses	644,161		666,209
Product warranties	41,693		45,215
Accrued interest	19,143		17,940


Accrued compensation and benefits	216,801		256,428
Total accounts payable and accrued expenses	$	2,220,347	2,217,418


	Foreign currency translation adjustments		Prior pension and post-retirement benefit service cost and actuarial gain (loss)	Total
Balance as of December 31, 2021	$	(959,199)	(7,753)	(966,952)
Current period other comprehensive income (loss)	(82,184)		537	(81,647)

Balance as of April 2, 2022	$	(1,041,383)	(7,216)	(1,048,599)


	At April 2, 2022			At December 31, 2021
	Fair Value		Carrying Value	Fair Value	Carrying Value
1.750% Senior Notes, payable June 12, 2027; interest payable annually	$	553,286	552,303	601,037	566,380
3.625% Senior Notes, payable May 15, 2030; interest payable semi-annually	490,125		500,000	538,545	500,000
3.85% Senior Notes, payable February 1, 2023; interest payable semi-annually	606,060		600,000	615,630	600,000




U.S. commercial paper	911,000		911,000	598,000	598,000
European commercial paper	24,854		24,854	15,859	15,859




Finance leases and other	54,825		54,825	53,163	53,163
Unamortized debt issuance costs	(8,118)		(8,118)	(8,617)	(8,617)
Total debt	2,632,032		2,634,864	2,413,617	2,324,785
Less current portion of long term-debt and commercial paper	1,546,463		1,546,463	624,503	624,503
Long-term debt, less current portion	$	1,085,569	1,088,401	1,789,114	1,700,282


		Total Stockholders’ Equity
		Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Nonredeemable Noncontrolling Interests	Total Stockholders’ Equity
	Shares	Amount	Shares				Amount















December 31, 2021		72,952	$729	$1,911,131	$7,692,064	($966,952)	(7,343)	($215,547)	$6,791	$8,428,216
Shares issued under employee and director stock plans		105	1	(3,268)	—	—	2	52	—	(3,215)
Stock-based compensation expense		—	—	5,655	—	—	—	—	—	5,655

Repurchases of common stock		(2,177)	(21)	—	(306,556)	—	—	—	—	(306,577)


Net earnings attributable to noncontrolling interests		—	—	—	—	—	—	—	105	105
Currency translation adjustment on noncontrolling interests		—	—	—	—	—	—	—	(263)	(263)


Currency translation adjustment		—	—	—	—	(82,184)	—	—	—	(82,184)
Prior pension and post-retirement benefit service cost and actuarial gain		—	—	—	—	537	—	—	—	537

Net earnings		—	—	—	245,329	—	—	—	—	245,329
April 2, 2022		70,880	$709	$1,913,518	$7,630,837	($1,048,599)	(7,341)	($215,495)	$6,633	$8,287,603


	At April 2, 2022		At December 31, 2021
Assets:
Global Ceramic Segment	$	5,240,214	5,160,776
Flooring NA Segment	4,220,757		4,125,960
Flooring ROW Segment	4,413,013		4,361,741
Corporate and intersegment eliminations	512,735		576,040
Total	$	14,386,719	14,224,517








Right of use assets obtained in exchange for lease obligations:
Operating leases	$	21,769	45,569
Finance leases	$	4,710	5,241


Period	Total Number of Shares Purchased in Millions	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan in Millions	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan in Millions
January 1 through February 5, 2022	0.2	$	174.81	0.2	$	—
February 6 through March 5, 2022	1.9	$	141.64	1.9	$	230.2
March 6 through April 2, 2022	0.0	$	—	0.0	$	230.2
Total	2.1	$	144.94	2.1


No.						Description

3.1						Restated Certificate of Incorporation of Mohawk, as amended. (Incorporated herein by reference to Exhibit 3.1 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998.)
3.2						Restated Bylaws of Mohawk. (Incorporated herein by reference to Exhibit 3.1 in the Company’s Report on Form 8-K dated February 19, 2019.)
31.1						Certification Pursuant to Rule 13a-14(a).
31.2						Certification Pursuant to Rule 13a-14(a).
32.1						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95.1						Mine Safety Disclosure pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104						Interactive Data File


1		I have reviewed this quarterly report on Form 10-Q of Mohawk Industries, Inc.;
2		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5		The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ Jeffrey S. Lorberbaum
Jeffrey S. Lorberbaum
Chairman and Chief Executive Officer


1			The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.