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Mohawk Industries Reports Q3 Results

CALHOUN, Ga., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Mohawk Industries, Inc. (NYSE: MHK) today announced a 2022 third quarter net loss of $534 million and a diluted loss per share of $8.40, including the impact of non-cash impairment charges of $696 million. The Company’s current market capitalization along with challenging economic conditions and higher discount rates prompted a review of its goodwill and intangible asset balances, which resulted in the impairment charges. Adjusted net earnings were $212 million, and adjusted earnings per share (EPS) were $3.34, excluding impairment and other non-recurring charges. Net sales for the third quarter of 2022 were $2.9 billion, an increase of 3.6% as reported and 8.3% on a constant basis. For the third quarter of 2021, net sales were $2.8 billion, net earnings were $271 million and EPS was $3.93. Adjusted net earnings were $272 million, and adjusted EPS was $3.95, excluding restructuring, acquisition, and other charges.

For the nine months ended October 1, 2022, net loss and loss per share were $8 million and $0.13, respectively, including the impact of the non-cash impairment charges noted above. Adjusted net earnings excluding impairment and other non-recurring charges were $739 million and adjusted EPS was $11.56. For the 2022 nine-month period, net sales were $9.1 billion, an increase of 7.7% versus prior year as reported or 12.1% on a constant basis. For the nine-month period ending October 2, 2021, net sales were $8.4 billion, net earnings were $844 million and EPS was $12.11; excluding restructuring, acquisition and other charges, adjusted net earnings and EPS were $828 million and $11.89, respectively.

Commenting on Mohawk Industries’ third quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Mohawk’s third quarter sales increased primarily from price increases and strength in the commercial sector. Our sales were weaker than we anticipated, as the retail channel softened across all regions and product categories. The strengthening U.S. dollar also negatively impacted our translated sales by $117 million or 4.1%. Our operating income declined as lower volume resulted in higher unabsorbed cost and material, energy and transportation inflation impacted our results. Our global organization responded to the economic challenges with additional actions to optimize cost, productivity and inventory levels.

“Our businesses in Europe have been impacted more than others due to the unprecedented energy crisis and high inflation that has slowed the region’s economy. Our costs have continued to rise, and our pricing in Europe has not kept up with the recent material and energy inflation, which has compressed our margins. The Italian government provided energy subsidies during the third quarter, and additional actions from both the European Union and individual countries are being discussed. The high cost of energy has forced European consumers to concentrate on necessities and defer discretionary purchases. Our sales and margins in the market will remain under pressure until the region overcomes these challenges. These postponed purchases will increase demand when the economy rebounds and enhance our results.

“The U.S. is being impacted by high overall inflation and mortgage rates that have risen from below 3% to approximately 7%. The residential market, which is the most significant part of our business, is expected to decline further before we see an inflection point. Remodeling has slowed, and our product mix has been impacted as consumers trade down to options that fit their budgets. It is estimated that the U.S. has a housing deficit of five million units, and more than half of U.S. homes are over 50 years old. Remodeling investments are expected to grow long term as U.S. housing stock ages and families with low mortgage rates choose to remain in their homes.

“While we manage through current conditions, we are also investing in our business for the long term. We are expanding our capacity in growing product categories, including LVT, laminate, quartz countertops and premium ceramic and insulation. We have recently completed a number of smaller strategic acquisitions that will enhance our current product offering and leverage our existing market positions. In Europe, these include a sheet vinyl business, a mezzanine flooring company and a wood veneer plant. In the U.S., we acquired a non-woven flooring producer and a flooring accessories company.

“In the third quarter, our Global Ceramic Segment’s net sales were $1.1 billion, an increase of 9.8% as reported and 12.4% on a constant basis. The Segment’s operating margin was negative 51.0%, including the impact of a non-cash goodwill impairment charge and higher inflation, partially offset by pricing and mix improvements and productivity. Excluding the impact of the impairment and restructuring charges, the Segment’s adjusted operating margin was 12.1%. The Segment delivered the strongest operating performance during the quarter, even with substantial inflation headwinds in Europe. Sales in the new home construction channel were solid in most geographies, and the commercial channel showed resilience with new construction and remodeling projects continuing. In most markets, residential remodeling has slowed due to tightening consumer discretionary spending and higher interest rates. Sales in our U.S. ceramic business expanded during the quarter, and we are gaining support with our new higher-margin introductions that are an alternative to European imports. Our countertop sales grew during the quarter, led by our high-end quartz collections. Our European ceramic results exceeded our expectations due to our sales and pricing actions, positive mix and Italian energy subsidies. Sales of our premium collections remained strong, while increased gas prices impacted sales of our outdoor and lower-end products. In our other ceramic markets, sales grew primarily through pricing, mix and strength in the commercial channels. All businesses are reducing production in the fourth quarter, which will increase our costs.

“For the quarter, our Flooring Rest of the World segment’s net sales were $0.7 billion, a decrease of 4.8% as reported or an increase of 9.4% on a constant basis. The Segment’s operating margin was 6.2% as a result of higher inflation, temporary manufacturing shutdowns and lower volumes, partially offset by product mix improvements. The Segment’s adjusted operating margin was 8.5%, excluding the impact of restructuring activities and the impairment of certain intangible assets. The Segment’s sales rose primarily from price increases and growth in our panels, insulation and Oceania businesses. The Segment’s sales are mostly residential and were more impacted by constrained consumer spending. The retail sector is reducing inventories, and consumers are trading down in all categories. Our margins were compressed by inflation, lower sales volume and reduced production. The weakening markets are making additional price increases more difficult to implement. As flooring sales softened, we increased promotional activity to encourage consumers to trade up. While our premium laminate and LVT faced greater pressures, sales of our more value-oriented sheet vinyl grew. We have completed the acquisition of a small Polish sheet vinyl producer that will expand our business in central and eastern Europe. New building projects in western Europe are beginning to slow, and we are enhancing our insulation distribution by expanding our customer base and exports. Our insulation selling prices were slightly behind inflation, and our panels results weakened as demand softened and competition intensified. The French panels plant we acquired last year is increasing sales, and we have improved its productivity and operating expenses. We expanded distribution of our higher end decorative panels and acquired a small German mezzanine flooring company that will bolt on to our existing business. The Australian market is improving as the country relaxes COVID restrictions and New Zealand is more difficult with residential sales weakening.

“In the quarter, our Flooring North America Segment’s net sales were $1.1 billion, an increase of 3.7% as reported, and the Segment’s operating margin was 5.9% as a result of higher inflation, lower volumes and temporary manufacturing shutdowns, partially offset by pricing and mix improvements and productivity. The Segment’s adjusted operating margin was 8.0%, excluding the impact of restructuring, acquisition and integration-related costs and the impairment of certain intangible assets. The Segment’s sales increased primarily from pricing, with hard surface products outperforming due to our investments in premium laminate and LVT. The residential market softened as inflation impacted consumer discretionary spending, and retailers reduced their inventories. Our pricing actions offset material and energy inflation, though lower manufacturing volumes led to unfavorable absorption. We are implementing our restructuring plans to lower both our fixed and variable costs by shutting higher cost assets, reducing staffing and aligning production with demand. Our resilient sales continued to improve, with our strongest performance in the new home construction, multifamily and commercial channels. Sheet vinyl sales strengthened as inflation has increased interest in value-oriented flooring options. The first phase of our new West Coast LVT plant is operating at planned output levels, and additional lines will be installed throughout next year. Demand for our premium laminate continued to grow as a high performing, value alternative to other flooring. We have commitments to saturate our current laminate capacity and have initiated further expansion investments. Market conditions for carpet softened in the third quarter more than we had anticipated, and we reduced production, resulting in unabsorbed costs. In the second quarter, we announced carpet price increases that were implemented in the third quarter as inflation continued to rise. With demand softening, we were not able to increase prices further to recover the inflation after the announcement. We are seeing reductions in raw material costs that should align with our current pricing when our higher cost inventory is depleted. Our commercial business remains good, and the Architectural Billing Index reflects continued construction activity. Our commercial margins were strong as pricing and mix covered our inflation in the quarter. We have acquired a small rubber manufacturer that produces trim primarily used in commercial flooring installations. Sales in our rug business were lower than last year as major national retailers continued to adjust inventories. In July, we acquired a non-woven rug and carpet business, and the integration is delivering synergies.

“It is challenging to predict either the duration of the current economic conditions or their impact on our industry. As central banks around the world continue to raise interest rates and inflation reduces discretionary expenditures, we expect our businesses to remain under pressure. Residential remodeling drives a majority of our sales, and consumers are deferring purchases and trading down. In Europe, gas and electricity prices are reducing demand and increasing our manufacturing and material costs. We anticipate that governments in Europe will take actions to lower the impact on the economy, businesses and consumers. We are focused on managing through the current environment while investing to maximize our long-term profitability. We anticipate demand will slow further in the fourth quarter, and we will reduce production, resulting in greater unabsorbed overhead. To enhance sales, we are increasing promotional activity, introducing differentiated collections and reacting to competitive actions. We are executing restructuring actions, lowering administrative and manufacturing costs and reducing investments in marketing and advertising. Material prices spiked in the period and have begun softening in many categories. In Europe, flooring projects are being deferred and compressing industry volumes; at the same time, we are raising inventories of specific products ahead of expected higher energy costs this winter. After our second quarter U.S. pricing announcement, we incurred peak carpet material costs that will compress our margins until they flow through our inventory. We are postponing capital projects that do not impact our long-term strategies, while completing those that are critical to the near-term performance of our business. Finally, we expect the strengthening U.S. dollar will continue to reduce our translated results. Given these factors, we anticipate our fourth quarter adjusted EPS to be $1.40 to $1.50, excluding any restructuring or other one-time charges.

“During past decades, Mohawk has successfully managed through many challenging periods and industry recessions. The fundamentals of our business remain strong, and flooring remains an essential component of all new construction and remodeling. Mohawk has built leading positions in key markets around the globe with well-known brands and an extensive product offering. During this period, we are investing for the market rebound that always occurs after our industry contracts. We are expanding our higher growth categories of LVT, laminate, quartz countertops, premium ceramic and insulation which will increase our revenue and profitability with the next growth cycle. We have also made strategic acquisitions that bolt on to our businesses and create significant synergies that will enhance the combined results. Mohawk has a strong balance sheet with low net debt leverage of 1.2 times EBITDA and available liquidity exceeding $1.8 billion to manage through the current environment and optimize the long-term results.”

ABOUT MOHAWK INDUSTRIES
Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk’s vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Our industry leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Daltile, Durkan, Eliane, Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Mohawk Group, Pergo, Quick-Step and Unilin. During the past decade, Mohawk has transformed its business from an American carpet manufacturer into the world’s largest flooring company with operations in Australia, Brazil, Canada, Europe, Malaysia, Mexico, New Zealand and the United States.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words “could,” “should,” “believes,” “anticipates,” “expects,” and “estimates,” or similar expressions constitute “forward-looking statements.” For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation and deflation in raw material prices and other input costs; inflation and deflation in consumer markets; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company’s products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; taxes and tax reform, product and other claims; litigation; the risks and uncertainty related to the COVID-19 pandemic; and other risks identified in Mohawk’s SEC reports and public announcements.

Conference call Friday, October 28, 2022, at 11:00 AM Eastern Time
The telephone number is 1-833-630-1962 for U.S./Canada and 1-412-317-1843 for International/Local. A replay will be available until November 25, 2022, by dialing 1-877-344-7529 for U.S./Local calls and 1-412-317-0088 for International/Local calls and entering access code # 8886985.

Contact:  James Brunk, Chief Financial Officer (706) 624-2239 


MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES       
(Unaudited)       
Condensed Consolidated Statement of Operations DataThree Months Ended Nine Months Ended
(Amounts in thousands, except per share data)October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021
        
Net sales$2,917,539  2,817,017   9,086,390  8,439,876 
Cost of sales 2,203,878  1,979,702   6,697,404  5,908,585 
Gross profit 713,661  837,315   2,388,986  2,531,291 
Selling, general and administrative expenses 523,479  477,341   1,510,076  1,449,378 
Impairment of goodwill and indefinite-lived intangibles 695,771  -   695,771  - 
Operating (loss) income (505,589) 359,974   183,139  1,081,913 
Interest expense 13,797  14,948   37,337  45,083 
Other (income) expense, net (1,242) 21   (1,622) (13,374)
(Loss) earnings before income taxes (518,144) 345,005   147,424  1,050,204 
Income tax expense 15,569  73,821   155,193  205,756 
Net (loss) earnings including noncontrolling interests (533,713) 271,184   (7,769) 844,448 
Net earnings attributable to noncontrolling interests 256  206   440  378 
Net (loss) earnings attributable to Mohawk Industries, Inc.$(533,969) 270,978   (8,209) 844,070 
        
Basic (loss) earnings per share attributable to Mohawk Industries, Inc.       
Basic (loss) earnings per share attributable to Mohawk Industries, Inc.$(8.40) 3.95   (0.13) 12.16 
Weighted-average common shares outstanding - basic 63,534  68,541   63,923  69,389 
        
Diluted (loss) earnings per share attributable to Mohawk Industries, Inc.       
Diluted (loss) earnings per share attributable to Mohawk Industries, Inc.$(8.40) 3.93   (0.13) 12.11 
Weighted-average common shares outstanding - diluted 63,534  68,864   63,923  69,683 
        
        
        
Other Financial Information       
(Amounts in thousands)       
Net cash provided by operating activities$224,774  498,739   427,435  1,096,735 
Less: Capital expenditures 150,043  147,740   430,084  375,179 
Free cash flow$74,731  350,999   (2,649) 721,556 
        
Depreciation and amortization$153,466  148,618   436,449  448,299 
        
        
Condensed Consolidated Balance Sheet Data       
(Amounts in thousands)       
     October 1, 2022 October 2, 2021
ASSETS       
Current assets:       
Cash and cash equivalents    $326,971  1,128,027 
Short-term investments     110,000  - 
Receivables, net     2,003,261  1,880,476 
Inventories     2,900,116  2,215,630 
Prepaid expenses and other current assets     513,981  421,944 
Total current assets     5,854,329  5,646,077 
Property, plant and equipment, net     4,524,536  4,442,339 
Right of use operating lease assets     400,412  385,606 
Goodwill     1,827,968  2,612,201 
Intangible assets, net     823,100  911,271 
Deferred income taxes and other non-current assets     370,689  452,806 
Total assets    $13,801,034  14,450,300 
LIABILITIES AND STOCKHOLDERS' EQUITY       
Current liabilities:       
Short-term debt and current portion of long-term debt    $1,542,139  588,669 
Accounts payable and accrued expenses     2,256,097  2,209,942 
Current operating lease liabilities     106,511  103,132 
Total current liabilities     3,904,747  2,901,743 
Long-term debt, less current portion     1,019,984  1,710,207 
Non-current operating lease liabilities     306,617  292,806 
Deferred income taxes and other long-term liabilities     744,629  793,095 
Total liabilities     5,975,977  5,697,851 
Total stockholders' equity     7,825,057  8,752,449 
Total liabilities and stockholders' equity    $13,801,034  14,450,300 
        
Segment InformationThree Months Ended As of or for the Nine Months Ended
(Amounts in thousands)October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021
        
Net sales:       
Global Ceramic$1,096,656  998,444   3,319,982  2,967,818 
Flooring NA 1,089,634  1,050,453   3,261,082  3,100,892 
Flooring ROW 731,249  768,120   2,505,326  2,371,166 
Consolidated net sales$2,917,539  2,817,017   9,086,390  8,439,876 
        
Operating (loss) income:       
Global Ceramic$(559,706) 118,896   (305,099) 343,135 
Flooring NA 64,672  118,625   260,026  315,866 
Flooring ROW 45,508  133,595   304,265  456,787 
Corporate and intersegment eliminations (56,063) (11,142)  (76,053) (33,875)
Consolidated operating (loss) income$(505,589) 359,974   183,139  1,081,913 
        
Assets:       
Global Ceramic    $4,866,822  5,174,981 
Flooring NA     4,490,502  3,960,037 
Flooring ROW     4,036,675  4,276,310 
Corporate and intersegment eliminations     407,035  1,038,972 
Consolidated assets    $13,801,034  14,450,300 



Reconciliation of Net (Loss) Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc.
(Amounts in thousands, except per share data)
    Three Months Ended Nine Months Ended  
    October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021  
Net (loss) earnings attributable to Mohawk Industries, Inc. $(533,969) 270,978  (8,209) 844,070   
Adjusting items:            
Restructuring, acquisition and integration-related and other costs  34,460  1,044  38,118  18,560   
Acquisitions purchase accounting, including inventory step-up  1,401  226  1,544  682   
Impairment of goodwill and indefinite-lived intangibles  695,771  -  695,771  -   
Resolution of foreign non-income tax contingencies  -  -  -  (6,211)  
Income tax effect on resolution of foreign non-income tax contingencies  -  -  -  2,302   
One-time tax planning election   -  -  -  (26,731)  
Legal settlements and reserves   45,000  -  45,000  -   
Release of indemnification asset   -  -  7,324  -   
Income taxes - reversal of uncertain tax position  -  -  (7,324) -   
Income taxes - impairment of goodwill and indefinite-lived intangibles  (10,168) -  (10,168) -   
Income taxes    (20,487) (203) (23,291) (4,317)  
Adjusted net earnings attributable to Mohawk Industries, Inc. $212,008  272,045  738,765  828,355   
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. $3.34  3.95  11.56  11.89   
Weighted-average common shares outstanding - diluted  63,534  68,864  63,923  69,683   
 
 
             
Reconciliation of Total Debt to Net Debt Less Short-Term Investments
(Amounts in thousands)            
    October 1, 2022        
Short-term debt and current portion of long-term debt $1,542,139         
Long-term debt, less current portion   1,019,984         
Total debt    2,562,123         
Less: Cash and cash equivalents   326,971         
Net debt    2,235,152         
Less: Short-term investments   110,000         
Net debt less short-term investments  $2,125,152         
             
             
             
Reconciliation of Operating Income (Loss) to Adjusted EBITDA
(Amounts in thousands)           Trailing Twelve
    Three Months Ended Months Ended
    December 31,2021 April 2,2022 July 2,2022 October 1, 2022 October 1, 2022
Operating income (loss)   $253,098  320,801  367,927  (505,589) 436,237 
Other income (expense)    (1,140) (2,438) 2,818  1,242  482 
Net income attributable to noncontrolling interests  (11) (105) (79) (256) (451)
Depreciation and amortization(1)   143,411  141,415  141,569  153,466  579,861 
EBITDA    395,358  459,673  512,235  (351,137) 1,016,129 
Restructuring, acquisition and integration-related and other costs  4,641  1,857  1,801  21,375  29,674 
Acquisitions purchase accounting, including inventory step-up  1,067  -  143  1,401  2,611 
Impairment of goodwill and indefinite-lived intangibles  -  -  -  695,771  695,771 
Legal settlements and reserves   -  -  -  45,000  45,000 
Release of indemnification asset   -  7,324  -  -  7,324 
Adjusted EBITDA   $401,066  468,854  514,179  412,410  1,796,509 
             
Net debt less short-term investments to adjusted EBITDA         1.2 
(1) Includes accelerated depreciation of $13,085 for Q3 2022.          
             
             
Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)            
    Three Months Ended Nine Months Ended  
    October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021  
Net sales   $2,917,539  2,817,017  9,086,390  8,439,876   
Adjustment to net sales on constant shipping days  17,504  -  49,315  -   
Adjustment to net sales on a constant exchange rate  116,782  -  327,350  -   
Net sales on a constant exchange rate and constant shipping days $3,051,825  2,817,017  9,463,055  8,439,876   
             
             
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)            
    Three Months Ended      
Global Ceramic   October 1, 2022 October 2, 2021      
Net sales   $1,096,656  998,444       
Adjustment to segment net sales on constant shipping days  4,542  -       
Adjustment to segment net sales on a constant exchange rate  20,774  -       
Segment net sales on a constant exchange rate and constant shipping days $1,121,972  998,444       
             
             
Reconciliation of Segment Net Sales to Adjusted Segment Net Sales
(Amounts in thousands)            
    Three Months Ended      
Flooring NA   October 1, 2022 October 2, 2021      
Net sales   $1,089,634  1,050,453       
Rug adjustment    40,000  -       
Adjusted segment net sales $1,129,634  1,050,453       
             
             
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)            
    Three Months Ended      
Flooring ROW   October 1, 2022 October 2, 2021      
Net sales   $731,249  768,120       
Adjustment to segment net sales on constant shipping days  12,962  -       
Adjustment to segment net sales on a constant exchange rate  96,008  -       
Segment net sales on a constant exchange rate and constant shipping days $840,219  768,120       
             
             
Reconciliation of Gross Profit to Adjusted Gross Profit
(Amounts in thousands)            
    Three Months Ended      
    October 1, 2022 October 2, 2021      
Gross Profit   $713,661  837,315       
Adjustments to gross profit:            
Restructuring, acquisition and integration-related and other costs  30,422  552       
Acquisitions purchase accounting, including inventory step-up  1,401  226       
Adjusted gross profit   $745,484  838,093       
             
             
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses
(Amounts in thousands)            
    Three Months Ended      
    October 1, 2022 October 2, 2021      
Selling, general and administrative expenses $523,479  477,341       
Adjustments to selling, general and administrative expenses:          
Restructuring, acquisition and integration-related and other costs  (4,117) (521)      
Legal settlements and reserves   (45,000) -       
Adjusted selling, general and administrative expenses $474,362  476,820       
          
             
Reconciliation of Operating (Loss) Income to Adjusted Operating Income
(Amounts in thousands)            
    Three Months Ended    
    October 1, 2022 October 2, 2021      
Operating (loss) income   $(505,589) 359,974       
Adjustments to operating (loss) income:           
Restructuring, acquisition and integration-related and other costs  34,539  1,073       
Acquisitions purchase accounting, including inventory step-up  1,401  226       
Impairment of goodwill and indefinite-lived intangibles  695,771  -       
Legal settlements and reserves   45,000  -       
Adjusted operating income  $271,122  361,273       
             
             
Reconciliation of Segment Operating (Loss) Income to Adjusted Segment Operating Income
(Amounts in thousands)            
    Three Months Ended      
Global Ceramic   October 1, 2022 October 2, 2021      
Operating (loss) income   $(559,706) 118,896       
Adjustments to segment operating (loss) income:          
Restructuring, acquisition and integration-related and other costs  3,366  212       
Impairment of goodwill    688,514  -       
Adjusted segment operating income  $132,174  119,108       
             
             
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)            
    Three Months Ended      
Flooring NA    October 1, 2022 October 2, 2021      
Operating income   $64,672  118,625       
Adjustments to segment operating income:          
Restructuring, acquisition and integration-related and other costs  20,223  1,396       
Acquisitions purchase accounting, including inventory step-up  1,401  -       
Impairment of indefinite-lived intangibles  1,407  -       
Adjusted segment operating income  $87,703  120,021       
             
             
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)            
    Three Months Ended      
Flooring ROW    October 1, 2022 October 2, 2021      
Operating income   $45,508  133,595       
Adjustments to segment operating income:          
Restructuring, acquisition and integration-related and other costs  10,950  (454)      
Acquisitions purchase accounting, including inventory step-up  -  226       
Impairment of indefinite-lived intangibles  5,850  -       
Adjusted segment operating income  $62,308  133,367       
             
             
Reconciliation of Segment Operating (Loss) to Adjusted Segment Operating (Loss)
(Amounts in thousands)            
    Three Months Ended      
Corporate and intersegment eliminations October 1, 2022 October 2, 2021      
Operating (loss)   $(56,063) (11,142)      
Adjustments to segment operating (loss):          
Restructuring, acquisition and integration-related and other costs  -  (82)      
Legal settlements and reserves   45,000  -       
Adjusted segment operating (loss)  $(11,063) (11,224)      
             
             
Reconciliation of (Loss) Earnings Including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes
(Amounts in thousands)            
    Three Months Ended      
    October 1, 2022 October 2, 2021      
(Loss) earnings before income taxes  $(518,144) 345,005       
Net earnings attributable to noncontrolling interests  (256) (206)      
Adjustments to (loss) earnings including noncontrolling interests before income taxes:          
Restructuring, acquisition and integration-related and other costs  34,460  1,044       
Acquisitions purchase accounting, including inventory step-up  1,401  226       
Impairment of goodwill and indefinite-lived intangibles  695,771  -       
Legal settlements and reserves   45,000  -       
Adjusted earnings including noncontrolling interests before income taxes $258,232  346,069       
             
             
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense
(Amounts in thousands)            
    Three Months Ended      
    October 1, 2022 October 2, 2021      
Income tax expense   $15,569  73,821       
Income tax effect on impairment of goodwill and indefinite-lived intangibles  10,168  -       
Income tax effect of adjusting items   20,487  203       
Adjusted income tax expense  $46,224  74,024       
             
Adjusted income tax rate   17.9% 21.4%      
             
The Company supplements its condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, with certain non-GAAP financial measures. As required by the Securities and Exchange Commission rules, the tables above present a reconciliation of the Company's non-GAAP financial measures to the most directly comparable US GAAP measure. Each of the non-GAAP measures set forth above should be considered in addition to the comparable US GAAP measure, and may not be comparable to similarly titled measures reported by other companies. The Company believes these non-GAAP measures, when reconciled to the corresponding US GAAP measure, help its investors as follows: Non-GAAP revenue measures that assist in identifying growth trends and in comparisons of revenue with prior and future periods and non-GAAP profitability measures that assist in understanding the long-term profitability trends of the Company's business and in comparisons of its profits with prior and future periods.
             
The Company excludes certain items from its non-GAAP revenue measures because these items can vary dramatically between periods and can obscure underlying business trends. Items excluded from the Company's non-GAAP revenue measures include: foreign currency transactions and translation and the impact of acquisitions.
             
The Company excludes certain items from its non-GAAP profitability measures because these items may not be indicative of, or are unrelated to, the Company's core operating performance. Items excluded from the Company's non-GAAP profitability measures include: restructuring, acquisition and integration-related and other costs, legal settlements and reserves, impairment of goodwill and indefinite-lived intangibles, acquisition purchase accounting, including inventory step-up, release of indemnification assets and the reversal of uncertain tax positions.

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