Mohawk Industries Inc 10-Q for FY2021 Q3

Mohawk Industries Inc (MHK)

10-Q 2021-10-29 For: 2021-10-02

Added on April 09, 2026

About this 10-Q

Mohawk Industries Inc filed this 10-Q on October 29, 2021, covering the quarter ended October 2, 2021 (FY2021 Q3).

Headline figures

Quarter ended October 2, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.82B; up 9.4% from $2.57B a year earlier
Net income: $270.98M; up 32.1% from net income of $205.12M a year earlier
Diluted EPS: $3.93; up 36.9% from $2.87 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 October 2, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2021 and September 26, 2020	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended October 2, 2021 and September 26, 2020	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2021 and September 26, 2020	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	45


	October 2, 2021		December 31, 2020
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	1,128,027	768,625
Short-term investments	—		571,741
Receivables, net	1,880,476		1,709,493
Inventories	2,215,630		1,913,020
Prepaid expenses	402,770		369,432

Other current assets	19,174		31,343
Total current assets	5,646,077		5,363,654
Property, plant and equipment	8,992,970		8,905,266
Less: accumulated depreciation	4,550,631		4,314,037
Property, plant and equipment, net	4,442,339		4,591,229
Right of use operating lease assets	385,606		323,138
Goodwill	2,612,201		2,650,831
Tradenames	702,192		727,268
Other intangible assets subject to amortization, net	209,079		224,339
Deferred income taxes and other non-current assets	452,806		447,292
	$	14,450,300	14,327,751



LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	588,669	377,255
Accounts payable and accrued expenses	2,209,942		1,895,951
Current operating lease liabilities	103,132		98,042
Total current liabilities	2,901,743		2,371,248
Deferred income taxes	441,871		493,668
Long-term debt, less current portion	1,710,207		2,356,887
Non-current operating lease liabilities	292,806		234,726
Other long-term liabilities	351,224		330,064
Total liabilities	5,697,851		5,786,593
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; 75,355 and 77,624 shares issued in 2021 and 2020, respectively	754		776
Additional paid-in capital	1,902,978		1,885,142
Retained earnings	7,929,950		7,559,191
Accumulated other comprehensive loss	(872,617)		(695,145)
	8,961,065		8,749,964
Less: treasury stock at cost; 7,343 and 7,346 shares in 2021 and 2020, respectively	215,547		215,648
Total Mohawk Industries, Inc. stockholders’ equity	8,745,518		8,534,316
Nonredeemable noncontrolling interests	6,931		6,842
Total stockholders’ equity	8,752,449		8,541,158
	$	14,450,300	14,327,751


	Three Months Ended			Nine Months Ended
	October 2, 2021		September 26, 2020	October 2, 2021	September 26, 2020
	(In thousands, except per share data)
Net sales	$	2,817,017	2,574,870	8,439,876	6,910,433
Cost of sales	1,979,702		1,868,671	5,908,585	5,217,827
Gross profit	837,315		706,199	2,531,291	1,692,606
Selling, general and administrative expenses	477,341		443,455	1,449,378	1,339,338
Operating income	359,974		262,744	1,081,913	353,268
Interest expense	14,948		14,854	45,083	36,481
Other expense (income) net	21		(726)	(13,374)	5,990
Earnings before income taxes	345,005		248,616	1,050,204	310,797
Income tax expense	73,821		43,163	205,756	43,467


Net earnings including noncontrolling interests	271,184		205,453	844,448	267,330
Net earnings (loss) attributable to noncontrolling interests	206		336	378	(44)
Net earnings attributable to Mohawk Industries, Inc.	$	270,978	205,117	844,070	267,374

Basic earnings per share attributable to Mohawk Industries, Inc.


Basic earnings per share attributable to Mohawk Industries, Inc.	$	3.95	2.88	12.16	3.76
Weighted-average common shares outstanding—basic	68,541		71,197	69,389	71,190

Diluted earnings per share attributable to Mohawk Industries, Inc.


Diluted earnings per share attributable to Mohawk Industries, Inc.	$	3.93	2.87	12.11	3.75
Weighted-average common shares outstanding—diluted	68,864		71,378	69,683	71,362


☒			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


October 2, 2021	Global Ceramic segment		Flooring NA segment	Flooring ROW segment	Total
Geographical Markets
United States	$	556,496	1,016,015	3,851	1,576,362
Europe	205,263		1,398	545,538	752,199
Russia	81,246		25	40,275	121,546
Other	155,439		33,015	178,456	366,910
	$	998,444	1,050,453	768,120	2,817,017

Product Categories
Ceramic & Stone	$	993,864	9,079	—	1,002,943
Carpet & Resilient	4,580		834,581	231,825	1,070,986
Laminate & Wood	—		206,793	250,307	457,100
Other(1)	—		—	285,988	285,988
	$	998,444	1,050,453	768,120	2,817,017


September 26, 2020	Global Ceramic segment		Flooring NA segment	Flooring ROW segment	Total
Geographical Markets
United States	$	508,291	947,648	421	1,456,360
Europe	197,070		2,655	466,172	665,897
Russia	77,564		25	36,062	113,651
Other	128,378		31,964	178,620	338,962
	$	911,303	982,292	681,275	2,574,870

Product Categories
Ceramic & Stone	$	908,419	7,170	—	915,589
Carpet & Resilient	2,884		791,212	241,561	1,035,657
Laminate & Wood	—		183,910	223,240	407,150
Other(1)	—		—	216,474	216,474
	$	911,303	982,292	681,275	2,574,870


	Three Months Ended			Nine Months Ended
	October 2 2021		September 26 2020	October 2 2021	September 26 2020
Cost of sales
Restructuring costs	$	246	17,711	15,685	78,383

Acquisition integration-related costs	306		(1)	349	1,153
Restructuring and acquisition integration-related costs	$	552	17,710	16,034	79,536

Selling, general and administrative expenses
Restructuring costs	$	(89)	8,627	226	21,704
Acquisition transaction-related costs	184		—	1,928	(210)
Acquisition integration-related costs	426		137	849	1,702
Restructuring, acquisition transaction and integration-related costs	$	521	8,764	3,003	23,196


	Lease impairments		Asset write-downs (gains on disposals)	Severance	Other restructuring costs	Total
Balances as of July 3, 2021	$	—	—	4,624	24	4,648
Restructuring costs
Global Ceramic segment	—		63	133	16	212
Flooring NA segment	—		(1,347)	(336)	3,079	1,396
Flooring ROW segment	—		(1,455)	(34)	119	(1,370)
Corporate	—		—	(81)	—	(81)
Total restructuring costs	—		(2,739)	(318)	3,214	157
Cash payments	—		—	(1,218)	(3,204)	(4,422)
Non-cash items	—		2,739	(64)	(9)	2,666
Balances as of October 2, 2021	$	—	—	3,024	25	3,049

Restructuring costs recorded in:
Cost of sales	$	—	(2,739)	(223)	3,208	246
Selling, general and administrative expenses	—		—	(95)	6	(89)
Total restructuring costs	$	—	(2,739)	(318)	3,214	157


	Fair Value
	October 2, 2021		December 31, 2020
Cash and cash equivalents:
Money market fund (Level 1)	$	—	197,835
Short-term investments:
Short-term investments (Level 1) (1)	—		571,741


	At October 2, 2021		At December 31, 2020
Customers, trade	$	1,820,757	1,591,503
Income tax receivable	29,435		112,580
Other	108,505		89,092
	1,958,697		1,793,175
Less: allowance for discounts, claims and doubtful accounts(1)	78,221		83,682
Receivables, net	$	1,880,476	1,709,493


	At October 2, 2021		At December 31, 2020
Finished goods	$	1,559,347	1,372,234
Work in process	132,715		126,231
Raw materials	523,568		414,555
Total inventories	$	2,215,630	1,913,020


	Tradenames
Balance as of December 31, 2020	$	727,268


Currency translation during the period	(25,076)
Balance as of October 2, 2021	$	702,192


	Nine Months Ended
	October 2, 2021		September 26, 2020
	(In thousands)
Cash flows from operating activities:
Net earnings including noncontrolling interests	$	844,448	267,330
Adjustments to reconcile net earnings to net cash provided by operating activities:
Restructuring	7,410		84,859

Depreciation and amortization	448,299		450,952
Deferred income taxes	(52,304)		(62,550)

Loss on disposal of property, plant and equipment	1,161		1,376
Stock-based compensation expense	19,411		14,559

Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	(275,952)		(210,717)

Inventories	(330,745)		389,067
Other assets and prepaid expenses	(23,860)		48,627

Accounts payable and accrued expenses	381,634		398,667
Other liabilities	77,233		(20,176)
Net cash provided by operating activities	1,096,735		1,361,994
Cash flows from investing activities:
Additions to property, plant and equipment	(375,179)		(265,414)
Acquisitions, net of cash acquired	(77,187)		—
Purchases of short-term investments	(778,239)		(791,084)
Redemption of short-term investments	1,344,574		425,800
Net cash provided by (used in) investing activities	113,969		(630,698)
Cash flows from financing activities:
Payments on Senior Credit Facilities	—		(633,134)
Proceeds from Senior Credit Facilities	—		617,797
Payments on commercial paper	(94,820)		(4,890,991)
Proceeds from commercial paper	94,605		4,195,353


Proceeds from Senior Notes issuance	—		1,062,240
Repayments on Senior Notes	(352,609)		(326,904)
Proceeds from Term Loan Facility	—		500,000


Gross carrying amounts:	Customer relationships		Patents	Other	Total
Balance as of December 31, 2020	$	699,795	273,570	6,945	980,310
Intangible assets acquired during the period	11,569		4,628	—	16,197
Currency translation during the period	(27,584)		(15,846)	(112)	(43,542)
Balance as of October 2, 2021	$	683,780	262,352	6,833	952,965

Accumulated amortization:	Customer relationships		Patents	Other	Total
Balance as of December 31, 2020	$	481,256	273,426	1,289	755,971
Amortization during the period	20,870		475	736	22,081
Currency translation during the period	(18,403)		(15,729)	(34)	(34,166)
Balance as of October 2, 2021	$	483,723	258,172	1,991	743,886

Intangible assets subject to amortization, net as of October 2, 2021	$	200,057	4,180	4,842	209,079


	At October 2, 2021		At December 31, 2020
Outstanding checks in excess of cash	$	4,724	5,672
Accounts payable, trade	1,147,004		1,016,897
Accrued expenses	709,180		566,052
Product warranties	46,346		54,692
Accrued interest	22,895		30,403


Accrued compensation and benefits	279,793		222,235
Total accounts payable and accrued expenses	$	2,209,942	1,895,951


	At October 2, 2021			At December 31, 2020
	Fair Value		Carrying Value	Fair Value	Carrying Value
1.750% Senior Notes, payable June 12, 2027; interest payable annually	$	623,655	579,643	635,664	615,006
3.625% Senior Notes, payable May 15, 2030; interest payable semi-annually	546,490		500,000	561,890	500,000
3.85% Senior Notes, payable February 1, 2023; interest payable semi-annually	622,518		600,000	638,844	600,000
2.00% Senior Notes, payable January 14, 2022; interest payable annually (1)	580,385		579,643	624,680	615,006


2021 Floating Rate Notes, payable September 04, 2021; interest payable quarterly	—		—	368,738	369,004






Finance leases and other	48,816		48,816	46,302	46,302
Unamortized debt issuance costs	(9,226)		(9,226)	(11,176)	(11,176)
Total debt	2,412,638		2,298,876	2,864,942	2,734,142
Less current portion of long term debt and commercial paper	589,411		588,669	376,989	377,255
Long-term debt, less current portion	$	1,823,227	1,710,207	2,487,953	2,356,887


	Foreign currency translation adjustments		Pensions, net of tax	Total
Balance as of December 31, 2020	$	(680,255)	(14,890)	(695,145)
Current period other comprehensive income (loss)	(177,788)		316	(177,472)

Balance as of October 2, 2021	$	(858,043)	(14,574)	(872,617)


		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















July 3, 2021		76,372	$764	$1,895,612	$7,867,795	($781,506)	(7,343)	($215,547)	$6,824	$8,773,942
Shares issued under employee and director stock plans		—	—	(59)	—	—	—	—	—	(59)
Stock-based compensation expense		—	—	7,425	—	—	—	—	—	7,425

Repurchases of common stock		(1,017)	(10)	—	(208,823)	—	—	—	—	(208,833)


Net earnings attributable to noncontrolling interests		—	—	—	—	—	—	—	206	206
Currency translation adjustment on noncontrolling interests		—	—	—	—	—	—	—	(99)	(99)


Currency translation adjustment		—	—	—	—	(91,219)	—	—	—	(91,219)
Prior pension and post-retirement benefit service cost and actuarial gain		—	—	—	—	108	—	—	—	108

Net earnings		—	—	—	270,978	—	—	—	—	270,978
October 2, 2021		75,355	$754	$1,902,978	$7,929,950	($872,617)	(7,343)	($215,547)	$6,931	$8,752,449


	At October 2, 2021		At December 31, 2020
Assets:
Global Ceramic segment	$	5,174,981	5,250,069
Flooring NA segment	3,960,037		3,594,976
Flooring ROW segment	4,276,310		4,194,447
Corporate and intersegment eliminations	1,038,972		1,288,259
Total	$	14,450,300	14,327,751








Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	150,553	67,000
Finance leases	$	11,525	10,340


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
July 4 through August 7, 2021	0.3	$	197.44	0.3	$	113.4
August 8 through September 4, 2021	0.6	$	199.49	0.6	$	—
September 5 through October 2, 2021	0.2	$	182.18	0.2	$	463.8
Total	1.1	$	195.69	1.1


No.						Description

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.