mhk-20240330

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]


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

For the quarterly period ended March 30, 2024


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

For the transition period from to

Commission File Number 01-13697

__________________________________________

MOHAWK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

52-1604305

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

160 S. Industrial Blvd.

Calhoun

Georgia

30701

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (706) 629-7721

__________________________________________

Securities Registered Pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares outstanding of the issuer’s common stock as of April 24, 2024, the latest practicable date, is as follows: 63,863,085 shares of common stock, $.01 par value.

Table of Contents

MOHAWK INDUSTRIES, INC.

INDEX


		Page No
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations for the three months ended March 30, 202 4 and April 1, 202 3	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 30, 202 4 and April 1, 202 3	4

	Condensed Consolidated Balance Sheets as of March 30, 202 4 and December 31, 202 3	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 30, 202 4 and April 1, 202 3	6

	Notes to the Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	28

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	31

Item 6.	Exhibits	32

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended
(In millions, except per share data)	March 30, 2024		April 1, 2023


Net sales	$	2,679.4	2,806.2
Cost of sales	2,029.9		2,162.8
Gross profit	649.5		643.4
Selling, general and administrative expenses	502.9		517.7

Operating income	146.6		125.7
Interest expense	14.9		17.1
Other (income) and expense, net	(1.1)		(0.6)
Earnings before income taxes	132.8		109.2
Income tax expense	27.8		28.9


Net earnings including noncontrolling interests	105.0		80.3
Less: net earnings attributable to noncontrolling interests	—		0.1
Net earnings attributable to Mohawk Industries, Inc.	$	105.0	80.2



Basic earnings per share attributable to Mohawk Industries, Inc.	$	1.65	1.26
Weighted-average common shares outstanding—basic	63.7		63.6



Diluted earnings per share attributable to Mohawk Industries, Inc.	$	1.64	1.26
Weighted-average common shares outstanding—diluted	64.0		63.8

See accompanying notes to the Condensed Consolidated Financial Statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended
(In millions)	March 30, 2024		April 1, 2023


Net earnings including noncontrolling interests	$	105.0	80.3
Other comprehensive income (loss):
Foreign currency translation adjustments	(87.9)		6.9
Prior pension and post-retirement benefit service cost and actuarial loss, net of tax	—		(0.5)
Other comprehensive income (loss)	(87.9)		6.4
Comprehensive income	17.1		86.7
Less: comprehensive loss attributable to noncontrolling interests	—		—
Comprehensive income attributable to Mohawk Industries, Inc.	$	17.1	86.7

See accompanying notes to the Condensed Consolidated Financial Statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions, except par value and preferred stock shares)	March 30, 2024		December 31, 2023


ASSETS
Current assets:
Cash and cash equivalents	$	658.5	642.6

Receivables, net	2,007.2		1,874.7
Inventories	2,527.7		2,551.9
Prepaid expenses	512.5		515.8

Other current assets	15.8		19.3
Total current assets	5,721.7		5,604.3
Property, plant and equipment	10,355.1		10,392.3
Less: accumulated depreciation	5,470.0		5,399.1
Property, plant and equipment, net	4,885.1		4,993.2
Right of use operating lease assets	413.6		428.5
Goodwill	1,140.2		1,159.7
Tradenames	694.2		705.7
Other intangible assets subject to amortization, net	159.6		169.6
Deferred income taxes and other non-current assets	517.1		498.8
Total assets	$	13,531.5	13,559.8



LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	931.5	1,001.7
Accounts payable and accrued expenses	2,079.3		2,035.3
Current operating lease liabilities	109.3		108.9
Total current liabilities	3,120.1		3,145.9
Deferred income taxes	385.8		391.5
Long-term debt, less current portion	1,694.5		1,701.8
Non-current operating lease liabilities	321.8		337.5
Other long-term liabilities	361.5		354.0
Total liabilities	$	5,883.7	5,930.7
Commitments and contingencies (Note 16)

Stockholders’ equity:
Preferred stock, $.01 par value; 60,000 shares authorized; no shares issued	$	—	—
Common stock, $.01 par value; 150.0 shares authorized; 71.2 and 71.0 shares issued and outstanding in 2024 and 2023, respectively	0.7		0.7
Additional paid-in capital	1,949.1		1,947.5
Retained earnings	7,075.2		6,970.2
Accumulated other comprehensive income (loss)	(1,167.8)		(1,080.0)
	7,857.2		7,838.4
Less: treasury stock at cost; 7.3 shares in 2024 and 2023	215.3		215.4
Total Mohawk Industries, Inc. stockholders’ equity	7,641.9		7,623.0
Noncontrolling interests	5.9		6.1
Total stockholders’ equity	7,647.8		7,629.1
Total liabilities and stockholders’ equity	$	13,531.5	13,559.8

See accompanying notes to the Condensed Consolidated Financial Statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended
(In millions)	March 30, 2024		April 1, 2023


Cash flows from operating activities:
Net earnings including noncontrolling interests	$	105.0	80.3
Adjustments to reconcile net earnings to net cash provided by operating activities:
Restructuring	4.3		6.2

Depreciation and amortization	154.2		169.9
Deferred income taxes	(11.7)		(28.7)

(Gain) loss on disposal of property, plant and equipment	(0.5)		1.2
Stock-based compensation expense	6.8		5.0

Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	(140.5)		(67.7)

Inventories	(3.8)		113.8
Accounts payable and accrued expenses	84.8		(33.1)

Other assets and prepaid expenses	(3.6)		4.3
Other liabilities	(11.3)		6.1
Net cash provided by operating activities	183.7		257.3
Cash flows from investing activities:
Additions to property, plant and equipment	(86.8)		(128.5)
Acquisitions, net of cash acquired	—		(519.4)
Purchases of short-term investments	—		(625.0)
Redemption of short-term investments	—		633.0
Net cash used in investing activities	(86.8)		(639.9)
Cash flows from financing activities:
Payments on Senior Credit Facilities	(88.3)		—
Proceeds from Senior Credit Facilities	21.8		357.4
Payments on commercial paper	(1,807.4)		(6,876.3)
Proceeds from commercial paper	2,722.2		6,989.3





Payments on Term Loan Facility	(912.3)		—
Net payments of other financing activities	(10.4)		(18.3)










Change in outstanding checks in excess of cash	(1.7)		(1.1)


Net cash (used in) provided by financing activities	(76.1)		451.0
Effect of exchange rate changes on cash and cash equivalents	(4.9)		(5.1)
Net change in cash and cash equivalents	15.9		63.3
Cash and cash equivalents, beginning of period	642.6		509.6
Cash and cash equivalents, end of period	$	658.5	572.9

See accompanying notes to the Condensed Consolidated Financial Statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Mohawk,” or “the Company” as used in this Form 10-Q refer to Mohawk Industries, Inc.

Interim Reporting

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto, and the Company’s description of critical accounting policies, included in the Company’s 2023 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Results for interim periods are not necessarily indicative of the results for the year.

Recent Accounting Pronouncements—Effective in Future Years

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands segment disclosures for public entities, including requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the title and position of the CODM and an explanation of how the CODM uses reported measures of segment profit or loss in assessing segment performance and allocating resources. The new guidance also expands disclosures about a reportable segment’s profit or loss and assets in interim periods and clarifies that a public entity may report additional measures of segment profit if the CODM uses more than one measure of a segment’s profit or loss. The new guidance does not remove existing segment disclosure requirements or change how a public entity identifies its operating segments, aggregates those operating segments, or determines its reportable segments. The guidance effective for fiscal years beginning after December 15, 2023, and subsequent interim periods with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact this new guidance will have on its disclosures upon adoption.

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which applies to all entities subject to income taxes. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. For public business entities, this standard will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance.

2. Acquisitions

2023 Acquisitions

During the first quarter of 2023, the Company completed the acquisitions of two ceramic tile businesses in Brazil and Mexico within Global Ceramic for $515.5 million. The Company’s acquisitions resulted in a goodwill allocation of $87.5 million. A portion of the goodwill is expected to be deductible for tax purposes. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisitions. These benefits include opportunities to improve the Company’s ceramic performance by leveraging best practices, operational expertise, product innovation and manufacturing assets across the segment. The following table presents the allocation of the purchase price by major class of assets acquired and liabilities assumed as of the acquisition date.

Table of Contents


(In millions)	Amounts Recognized as of the Acquisition Date
Working capital	$	95.3
Property, plant and equipment	333.5
Tradenames	38.5
Customer relationships	4.0
Goodwill	87.5
Long-term debt, including current portion	(26.0)
Deferred tax, net	(10.0)
	522.8
Less: cash acquired	(7.3)
Net consideration transferred (net of cash acquired)	$	515.5

During 2023, the Company recognized impairment losses on goodwill and tradenames. For the amounts recognized, please refer to Note 8, Goodwill and Other Intangible Assets, in Part II, Item 8 in the Company’s 2023 Annual Report filed on Form 10-K as well as Note 7, Goodwill and Intangible Assets, in this Form 10-Q.

3. Revenue from Contracts with Customers

Contract Liabilities

The Company records contract liabilities when it receives payment prior to fulfilling a performance obligation. Contract liabilities related to revenues are recorded in accounts payable and accrued expenses on the accompanying Condensed Consolidated Balance Sheets. The revenues related to these performance obligations are expected to be recognized within a twelve-month period. The Company had contract liabilities of $72.3 million and $68.0 million as of March 30, 2024 and December 31, 2023, respectively.

Performance Obligations

Substantially all of the Company’s revenue is recognized at a point in time when the product is either shipped or received from the Company’s facilities and control of the product is transferred to the customer. Accordingly, the Company does not recognize a significant amount of revenue from performance obligations satisfied, or partially satisfied, in prior periods, and the amount of such revenue recognized during the three months ended March 30, 2024 and April 1, 2023 was immaterial.

Costs to Obtain a Contract

The Company incurs certain incremental costs to obtain revenue contracts. These costs relate to marketing display structures and are capitalized when the amortization period is greater than one year, with the amount recorded in other assets on the accompanying Condensed Consolidated Balance Sheets. Capitalized costs to obtain contracts were $67.2 million and $66.7 million as of March 30, 2024 and December 31, 2023, respectively. Straight-line amortization expense recognized during the three months ended March 30, 2024 and April 1, 2023 related to these capitalized costs was $15.8 million and $13.1 million, respectively.

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Revenue Disaggregation

The Company has three reporting segments: Global Ceramic, Flooring North America (“Flooring NA”) and Flooring Rest of the World (“Flooring ROW”). The following table presents the Company’s segment revenues disaggregated by the geographical market location of customer sales and product categories for the three months ended March 30, 2024 and April 1, 2023:


(In millions)
March 30, 2024	Global Ceramic		Flooring NA	Flooring ROW	Total
Geographical Markets:
United States	$	560.4	869.7	1.6	1,431.7
Europe (1)	255.5		0.6	565.6	821.7
Latin America	185.1		1.0	9.9	196.0
Other	43.8		28.9	157.3	230.0
Total	$	1,044.8	900.2	734.4	2,679.4

Product Categories:
Ceramic & Stone	$	1,032.2	5.9	—	1,038.1
Carpet & Resilient	12.6		700.0	214.2	926.8
Laminate & Wood	—		194.3	232.3	426.6
Other (2)	—		—	287.9	287.9
Total	$	1,044.8	900.2	734.4	2,679.4


April 1, 2023	Global Ceramic		Flooring NA	Flooring ROW	Total
Geographical Markets:
United States	$	596.6	925.8	1.2	1,523.6
Europe (1)	273.5		0.2	631.6	905.3
Latin America	144.3		0.8	6.3	151.4
Other	44.9		26.6	154.4	225.9
Total	$	1,059.3	953.4	793.5	2,806.2

Product Categories:
Ceramic & Stone	$	1,050.1	8.6	—	1,058.7
Carpet & Resilient	9.2		750.5	222.0	981.7
Laminate & Wood	—		194.3	252.7	447.0
Other (2)	—		—	318.8	318.8
Total	$	1,059.3

SEC Form 10-Q filed by Mohawk Industries Inc.