Mohawk Industries, Inc. · NYSE:MHK
Mohawk Industries — Q3 2024 Earnings Presentation
37 slides from Mohawk Industries's earnings presentation, October 2024
Slide 1: Q3 2024 Investor Presentation
mohawkind.com Q3 2024 NYSE: MHK October 2024 Investor Presentation
Slide 2: Forward-looking Statements & Non-GAAP Numbers
Forward-looking Statements & Non-GAAP Numbers Certain of the statements in this presentation, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words “could,” “should,” “believes,” “anticipates,” “expects,
Slide 3: Company Overview
Company Overview
Slide 4: Mohawk at a Glance
Mohawk at a Glance $10.8B $1.4B $9.71 $499M Q3 2024 TTM Q3 2024 TTM Q3 2024 TTM Q3 2024 TTM Net Sales Adjusted EBITDA Adjusted EPS Free Cash Flow ~ ~ 32 43,300 19 170 Acquisitions Worldwide Countries Where Countries Where 2013-2023 Team Members1 We Manufacture1 We Sell Products1 1As of December 31,
Slide 5: Three Reporting Segments
Three Reporting Segments Flooring Flooring Global North Rest of the Ceramic America World • 39% TTM Q3 ’24 Sales • 35% TTM Q3 ’24 Sales • 26% TTM Q3 ’24 Sales • North America, Europe, • Primarily U.S./Canada • Europe, Australia/NZ, South America South America, Asia • Residential/Commercial • Floor a
Slide 6: Organizational Strategy
Organizational Strategy
Slide 7: Growth Strategy
Growth Strategy Non-Organic Market Development Growth & Penetration Mergers & acquisitions Higher sales to existing customers, sales of existing products to new customers & expansion into new markets Growth Operational Levers Product Innovation Excellence & Improvement Simplified operations, Higher-
Slide 8: Operational Excellence
Operational Excellence • Reduce manufacturing complexities • Maximize productivity • Continuously improve quality • Leverage differentiated distribution advantages • Invest in assets that drive speed & efficiency • Optimize automation opportunities • Drive better decisions through advanced informati
Slide 9: Three Decades of Expansion
Three Decades of Expansion Established leading Established leading 7 bolt-on Went public in Established U.S. & EU position market positions in acquisitions extend 1992; expanded strong positions in sheet vinyl & Australia/New participation in U.S. carpet & in U.S. & EU LVT; grew EU Zealand flooring
Slide 10: Market Development & Penetration
Market Development & Penetration Expanding sales with existing customers through • Differentiated new product launches, • Superior marketing and merchandising, and • Exclusive retail partnerships/aligned dealerships Entering new sales channels • Ceramic pavers for garden centers, landscapers and poo
Slide 11: Product Innovation
Product Innovation CERAMIC TILE CARPET Unprecedented Superior integral 3x the fiber of traditional Combines exclusive surface realism slip resistance carpet; ultra soft & fibers for next level stain resistant design & performance LAMINATE / WOOD RESILIENT Hyper-realistic visuals; Exclusive technolog
Slide 12: Capital Allocation Strategy
Capital Allocation Strategy Balanced Approach to Optimize Growth & Profitability Reinvest in the Business Focus on Growth, Cost Reduction and Asset Maintenance – ~$450M Planned for 2024 Maintain Investment Grade Credit Rating Net Debt to Adjusted EBITDA Ratio is 1.2x Pursue Bolt-on Acquisitions Targ
Slide 13: Q3 2024 Performance
Q3 2024 Performance
Slide 14: Summary of Q3 2024 Results
Summary of Q3 2024 Results • Net sales of $2.7B • Adjusted EPS of $2.90; up 6.6% YOY • Free Cash Flow of $204M • Margins benefited from restructuring, productivity gains and lower material & energy costs, partially offset by pricing & mix pressure • Market dynamics continued from Q2 2024 • Elevated
Slide 15: Macroeconomics
Macroeconomics U.S. Economy • U.S. Q2 2024 GDP: 3.0% • Disposable Personal Income: 5.0% • September All Items Consumer Price Index fell to 2.4% • High employment rates continue but down slightly • Raw material and energy costs remain lower • Sept. 2024 Architectural Billing Index at 45.7, flat with
Slide 16: Q3 2024 Financials
Q3 2024 Financials Net Sales Adjusted EBITDA Q3 Q3 (In millions, except per share data) $2.7B $392M 2023 2024 (-2.1% YOY, (+0.8% YOY) Net Sales $2,766.1 $2,719.0 Adjusted Basis) % Change -- -1.7% Adjusted OI Adjusted Diluted EPS % Change (Adjusted Basis) -- -2.1% $240M $2.90 Adjusted EBITDA $389.4 $
Slide 17: Q3 2024 Segment Financials
Q3 2024 Segment Financials Q3 2023 Q3 2024 (In millions) GLOBAL CERAMIC Sales $1,091.7 $1,058.0 % Change -- -3.1% Adjusted Operating Income $87.6 $90.8 % Adjusted Operating Margin 8.0% 8.6% FLOORING NA Sales $962.2 $974.0 % Change -- 1.2% Adjusted Operating Income $77.6 $88.9 % Adjusted Operating Ma
Slide 18: Global Ceramic
Global Ceramic • Results reflect favorable impact of increased productivity gains and lower input costs, partially offset by labor and freight inflation and unfavorable price and product mix • Restructuring initiatives underway: • Optimizing manufacturing by idling some less productive operations •
Slide 19: Flooring North America
Flooring North America • Results reflect lower input costs, productivity gains and higher volume, partially offset by unfavorable impact of price and product mix • Restructuring initiatives underway: • Rationalizing some manufacturing to enhance plant utilization • Retiring less efficient equipment
Slide 20: Flooring ROW
Flooring ROW • Results reflect unfavorable impact of price and product mix, partially offset by lower input costs and productivity gains and less shutdown cost • Restructuring initiatives underway: • Lowering administrative and operational costs • Consolidating distribution • Streamlining product po
Slide 21: Q4 2024 Guidance
Q4 2024 Guidance • Industry demand remains constrained across all regions • Price/mix pressure continues in competitive markets • Three factors are impacting mix performance: • Consumers trading down due to tighter project budgets • New construction outperforming retail channels • Softening commerci
Slide 22: Short-Term Outlook
Short-Term Outlook • We remain confident in the fundamentals of our business & strategy to improve our results • As we transition into 2025, predicting the demand inflection point is extremely difficult • H1 2025 demand could be “choppy,” with impacts of U.S. elections, geopolitical events and an un
Slide 23: Seizing Long-term Opportunities
Seizing Long-term Opportunities • Interest rate cuts should benefit the industry with pent-up consumer demand driving flooring purchases • Flooring sales expected to improve when • Inflation moderates & consumer confidence grows • Housing markets strengthen • Postponed remodeling projects are initia
Slide 24: Appendix
Appendix MOHAWK
Slide 25: Annual Earnings Summary (Consolidated)
Annual Earnings Summary (Consolidated) 2021 2022 2023 (In millions, except per share data) Net Sales $11,200.6 $11,737.1 $11,135.1 % Change 17.3% 4.8% -5.1% Adjusted EBITDA $1,948.8 $1,649.7 $1,416.5 % Adjusted EBITDA Margin 17.4% 14.1% 12.7% Adjusted Operating Income $1,360.4 $1,083.0 $814.4 % Adju
Slide 26: Annual Results by Segment
Annual Results by Segment 2021 2022 2023 (In millions) GLOBAL CERAMIC Sales $3,917.3 $4,307.7 $4,300.1 % Change 14.1% 10.0% -0.2% Adjusted Operating Income $405.8 $456.9 $301.6 % Adjusted Operating Margin 10.4% 10.6% 7.0% FLOORING NA Sales $4,116.4 $4,207.1 $3,829.4 % Change 14.5% 2.2% -9.0% Adjuste
Slide 27: Maturity/Liquidity Profile
Maturity/Liquidity Profile1 $2,500 September 28, 2024 Total Debt (millions)3 June 2027 EUR Note $558 20% Floating Sept 2028 USD Note $600 80% Fixed May 2030 USD Note $500 Average rate 4.0% USCP/Revolver $249 $2,000 ECP/Revolver $195 ECP/Revolver Leases/Other $88 Avail. Total Debt (Adjusted) $2,190 U
Slide 28: Reconciliation Tables
Reconciliation Tables
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures RECONCILIATION OF NET SALES TO ADJUSTED NET SALES (In millions) Q3 2024 CONSOLIDATED Net Sales $ 2,719.0 Adjustment for constant shipping days (13.9) Adjustment for constant exchange acquisition volume rates -4.2 Adjusted net sales $ 2,709.3 GLOBAL CERAMIC Net Sal
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED OPERATING INCOME (LOSS) (In millions) Q3 2023 Q3 2024 CONSOLIDATED Operating income (loss) $ (733.7) 212.3 Adjustments to operating income (loss): Restructuring, acquisition and integration-related and other costs 47.0 19.5 Software implementation cost wr
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED OPERATING INCOME TTM Q3 (In millions) 2022 2023 2024 Operating income (loss) $ 244.2 (287.8) 740.0 Adjustments to operating income (loss): Restructuring, acquisition and integration-related and other costs 86.0 132.2 80.1 Software implementation cost writ
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED EBITDA (In millions) Q3 2023 Q3 2024 Net earnings (loss) including noncontrolling interests $ (760.3) 162.0 Interest expense 20.1 11.2 Income tax expense 15.0 39.8 Net (earnings)/loss attributable to non-controlling interest (0.1) - Depreciation and amort
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures TRAILING TWELVE MONTH NET SALES (In millions) Q4 2023 Q1 2024 Q2 2024 Q3 2024 TTM Q3 2024 GLOBAL CERAMIC Sales $ 993.7 1,044.8 1,115.6 1,058.0 4,212.1 FLOORING NA Sales 912.1 900.2 958.5 974.0 3,744.8 FLOORING ROW Sales 706.5 734.4 727.2 687.0 2,855.1 CONSOLIDATED
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED OPERATING INCOME (LOSS) (In millions) 2022 2023 Q3 2024 TTM GLOBAL CERAMIC Operating income (loss) $ (236.1) (166.4) 256.8 Adjustments to segment operating income (loss): Restructuring, acquisition and integration-related and other costs 4.5 37.0 27.9 Inv
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED NET EARNINGS TTM Q3 (In millions, except per share data) 2022 2023 2024 Net earnings (loss) attributable to Mohawk Industries, Inc. $ 25.2 (439.5) 563.9 Adjusting items: Restructuring, acquisition, integration-related and other costs 87.8 129.3 77.4 Softw
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures NET DEBT (In millions) 2022Q4 2023Q4 2024Q3 Current portion of long-term debt and commercial paper $ 840.6 1,001.7 465.3 Long-term debt, less current portion 1,978.5 1,701.8 1,716.4 Total debt 2,819.1 2,703.5 2,181.7 Less: cash and cash equivalents 509.6 642.5 424
Slide 37: Q3 2024 Investor Presentation
Q3 2024 Investor Presentation For additional information, please visit mohawkind.com 37