Z pewnością nikt z założycieli pierwszej w Polsce Spółdzielczej Kasy Oszczędnościowo-Kredytowej w 1992 roku nie przewidywał, że po trzech dekadach niewielka placówka przy Elektrowni „Kozienice” będzie obsługiwać ponad dziesięć tysięcy członków w kilkunastu lokalizacjach i zarządzać ponad 100 mln zł aktywów.
Mohawk Industries, Inc. (NYSE: MHK) announced fourth quarter 2023 net earnings of $139 million and earnings per share (“EPS”) of $2.18. Adjusted net earnings were $125 million, and adjusted EPS was $1.96. Net sales for the fourth quarter of 2023 were $2.6 billion, a decrease of 1.4% as reported and 4.1% on a legacy and constant basis versus the prior year. In the fourth quarter of 2022, the Company reported net sales of $2.7 billion, net earnings of $33 million and EPS of $0.52; adjusted net earnings were $84 million, and adjusted EPS was $1.32.
During the twelve months ending December 31, 2023, the Company experienced a net loss of $440 million and a loss per share of $6.90, which included non-cash impairment charges of $878 million. Adjusted net earnings for the same period were $587 million, with an adjusted EPS of $9.19. Net sales for 2023 totaled $11.1 billion, representing a 5.1% decrease as reported and a 7.7% decrease on a legacy and constant basis compared to the prior year. In contrast, for the twelve-month period ending December 31, 2022, the Company reported net sales of $11.7 billion, net earnings of $25 million, and EPS of $0.39. Adjusted net earnings for this period were $823 million, with an adjusted EPS of $12.85.
Chairman and CEO Jeff Lorberbaum commented on the Company’s fourth quarter and full year results, noting that the fourth quarter exceeded expectations due to cost containment, productivity, and lower input costs. The industry’s reduced selling prices were offset by declining costs in energy and raw materials, and the company focused on optimizing revenue and reducing costs through restructuring and manufacturing enhancements. Inventory levels were aggressively managed, resulting in a reduction of working capital by over $300 million compared to the prior year, excluding acquisitions. Investment in sales resources, merchandising, and new products with innovative features aimed to inspire consumer purchases. The year closed with a net debt to adjusted EBITDA ratio of 1.5 times, free cash flow of $716 million, and available liquidity of $1.9 billion. In the first quarter of 2024, a higher interest rate term loan of approximately $900 million will be retired. The company is positioned to navigate current conditions and emerge stronger from the economic cycle rebound.
In the fourth quarter, the Global Ceramic Segment saw a 0.6% increase in net sales, but a 4.7% decline on a legacy and constant basis. The Segment’s operating margin was 4.2% as reported, or 4.8% on an adjusted basis. We have adjusted production to match demand and have reduced inventory significantly throughout the year. To control costs, we have increased productivity, reduced overhead, and implemented alternative formulations. In the U.S., we are expanding our distribution through local service centers and introducing new collections with premium Italian styling to improve our product mix. We have integrated Vitromex in Mexico and Elizabeth in Brazil, and are enhancing our sales, marketing, and operational strategies. Demand significantly declined in both countries last year due to rising interest rates and slowing economic conditions, leading to reduced results. In Italy, we are optimizing our recent expansion of premium porcelain slabs to meet growing demand in both the residential and commercial channels.During the last quarter, our Flooring Rest of the World Segment saw a decrease of 1.5% in net sales reported, or 4.1% on a legacy and constant currency basis. The Segment’s operating margin was 9.5% as reported, or 10.6% on an adjusted basis. The European building product category is still facing challenges due to cautious consumers and reduced inventory levels by retailers. We are focused on investing in new products for 2024 while also implementing strict cost controls. Our flagship Quick-Step brand is being revitalized with new interactive merchandising displays. Additionally, we have completed the transition to rigid LVT and decommissioned our residential flexible line. Our wood panels performance has shifted from high pricing to a more competitive environment with excess capacity. We are actively implementing restructuring actions in the segment and enhancing our recent smaller European bolt-on acquisitions, including insulation, MDF boards, sheet vinyl, and mezzanine flooring.
In the last quarter, sales in our Flooring North America Segment decreased by 3.6%. The operating margin for the Segment was 8.2% as reported, or 6.9% on an adjusted basis. The decline in market volumes resulted in lower industry utilization rates and increased competition. We are committed to investing in sales and marketing initiatives to expand our distribution and drive long-term growth. To strengthen our business, we are making capital investments to enhance our unique features and reduce manufacturing costs. We have introduced innovative new collections in each product category, which have been well received. The commercial channel, particularly the hospitality sector, exceeded our expectations. We are leveraging our customer relationships to expand our needle punch flooring and trim acquisitions.
As we head into 2024, our industry is currently experiencing a downturn and we anticipate first quarter seasonality to return to typical historical levels. Our businesses are focusing on reducing expenses, streamlining operations, and making necessary adjustments to adapt to current conditions. We are also committed to investing in new and innovative products to boost sales and improve our product mix. In response to competitive pressures, we are working to optimize our volumes as input costs decline. Additionally, we are proactively managing our inventory and preparing for temporary shutdowns to align with demand. All of our businesses are also implementing process improvement initiatives to mitigate the impact of inflation. Taking these factors into consideration, we expect our first quarter adjusted EPS to be in the range of $1.60 to $1.70.
Over the past year and a half, we have implemented a number of initiatives throughout the company to streamline our costs, adapt to lower volume, and integrate our recent acquisitions. These efforts, combined with improving industry conditions as we move past the low point of the cycle, are expected to lead to better results in the latter half of the year. Anticipated interest rate cuts by central banks are expected to boost home sales, residential remodeling, and commercial projects. The pace of improvement in the flooring category will depend on inflation rates, consumer confidence, and the strength of home sales. We anticipate that the U.S. and Latin American markets will see improvement before Europe, which may be slower to recover due to current geopolitical pressures. Historically, our industry has rebounded after housing recessions, with increased sales and expanding margins for several years. Housing remains in short supply across all of our markets, and there is a growing need for remodeling investments to update the aging housing stock. Our restructuring efforts, investments in new technologies, targeted expansions, and recent acquisitions will position us to further grow our business. As the world’s largest flooring company, we believe we are uniquely positioned to improve our results as the market recovers.
O NAS MOHAWK INDUSTRIES
Mohawk Industries to wiodący globalny producent podłóg, który tworzy produkty, aby ulepszać przestrzenie mieszkalne i komercyjne na całym świecie. Zintegrowane wertykalnie procesy produkcyjne i dystrybucyjne Mohawka zapewniają przewagi konkurencyjne w produkcji dywanów, wykładzin, płytek ceramicznych, laminatów, drewna, kamienia i podłóg winylowych. Nasze innowacje przemysłowe zaowocowały produktami i technologiami, które wyróżniają nasze marki na rynku i spełniają wszystkie wymagania dotyczące remontów i nowych budynków. Nasze marki należą do najbardziej rozpoznawalnych w branży i obejmują American Olean, Daltile, Durkan, Eliane, Elizabeth, Feltex, GH Commercial, Godfrey Hirst, Grupo Daltile, IVC Commercial, IVC Home, Karastan, Marazzi, Mohawk, Mohawk Group, Mohawk Home, Pergo, Quick-Step, Unilin i Vitromex. W ciągu ostatniej dekady Mohawk przekształcił swoją działalność z amerykańskiego producenta dywanów w największą na świecie firmę zajmującą się podłogami, z operacjami w Australii, Brazylii, Kanadzie, Europie, Malezji, Meksyku, Nowej Zelandii, Rosji i Stanach Zjednoczonych.
Some of the statements in the paragraphs above, especially those related to future performance, business prospects, growth and operating strategies, and similar matters, as well as those containing words such as „could,” „should,” „believes,” „anticipates,” „expects,” and „estimates,” are considered to be „forward-looking statements.” Mohawk asserts that these statements are protected by the safe harbor for forward-looking statements in the Private Securities Litigation Reform Act of 1995. Due to the fact that these statements are based on numerous assumptions involving risks and uncertainties, there is no guarantee that they will be accurate. Factors such as changes in economic or industry conditions, competition, inflation and deflation in freight and raw material prices, currency fluctuations, energy costs and supply, as well as other risks identified in Mohawk’s SEC reports and public announcements, could cause future results to differ.
Join us for our conference call on Friday, February 9, 2024, at 11:00 AM Eastern Time. To participate online, visit http://ir.mohawkind.com/events/event-details/mohawk-industries-inc-4th-quarter-2023-earnings-call. If you prefer to join by phone, please register in advance at https://dpregister.com/sreg/10185489/fb57257e00 or dial 1-833-630-1962 for U.S./Canada or 1-412-317-1843 for international/local on the day of the call for operator assistance. A replay will be available until March 8, 2024, by dialing 1-877-344-7529 for U.S./Canada calls and 1-412-317-0088 for international/local calls and entering access code #3161276.
(tables in attachment)
In compliance with Securities and Exchange Commission rules, the Company includes non-GAAP financial measures alongside its condensed consolidated financial statements prepared in accordance with US GAAP. The tables in the attachment provide a reconciliation of the Company’s non-GAAP measures to the most directly comparable US GAAP measure. It is important to note that these non-GAAP measures should be considered in addition to the comparable US GAAP measure and may not be comparable to measures reported by other companies. The Company believes that these non-GAAP measures, when reconciled to the corresponding US GAAP measure, provide valuable insights for investors. For example, non-GAAP revenue measures help identify growth trends and facilitate comparisons of revenue with prior and future periods, while non-GAAP profitability measures aid in understanding the long-term profitability trends of the Company’s business and comparing its profits with prior and future periods.
To provide a more accurate representation of its revenue, the Company’s non-GAAP measures exclude certain items that may fluctuate significantly between periods and mask underlying business trends. These items include foreign currency transactions and translation, fluctuations in the number of shipping days in a period, and the impact of acquisitions.
Our non-GAAP profitability measures exclude certain items that may not accurately reflect the Company’s core operating performance. These items include restructuring, acquisition and integration-related costs, legal settlements, impairment of goodwill and indefinite-lived intangibles, acquisition purchase accounting, release of indemnification assets, and the reversal of uncertain tax positions and European tax restructuring.
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