Mohawk's Global Sales Up 9% in Q4, NA Sales Up 3%

Calhoun, Ga, February 12, 2021-Mohawk Industries announced net sales for Q4 2020 were $2.6 billion, an increase of 9.0% from Q4 2019’s $2.4 billion. Q4 2020 net earnings were $248 million, a 6.5% decrease compared to $265 million in Q4 2019.

For the 2020 twelve-month period, net sales were $9.6 billion, a decrease of 4.2% versus prior year’s $10 billion, while net earnings were $516 million, compared to $744 million in the same period last year.

For Q4 2020, global ceramic sales were $920 million, a 7% increase versus $858 million in the prior year quarter. For the fiscal year, global ceramic sales were $3.4 billion, a 6% decline versus $3.6 billion in 2019.

For Q4 2020, Flooring North America sales were $963 million, a 3% increase versus $936 million in the prior year quarter. For the fiscal year, Flooring North America sales were $3.6 billion, a 5% decline versus $3.8 billion in 2019.

For Q4 2020, Flooring Rest of World sales were $759 million, a 20% increase versus $630 million in the prior year quarter. For the fiscal year, Flooring Rest of World sales were $2.5 billion, even with sales of $2.5 billion in 2019.

Commenting on Mohawk Industries’ fourth quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Our fourth quarter results exceeded our expectations as we posted our highest ever quarterly sales. All of our markets saw strengthening residential purchases, with laminate, LVT and sheet vinyl outperforming other flooring categories. Commercial activity remains weak and impacted sales and margins in the businesses where we have significant participation. Our results improved with higher volumes, restructuring initiatives and leverage on costs, while being adversely affected by lower runs and inventory, higher absenteeism and labor shortages in some operations. We are also seeing greater inflationary pressures in many product categories, and we are increasing prices to recover.

“Through the fourth quarter we have achieved about $50 million of the projected $100 to $110 million in anticipated savings from our restructuring initiatives. We continue to assess some projects based on changing market conditions. Our free cash flow for the period was about $250 million after capital investments of approximately $160 million, and for the year our record free cash flow exceeded $1.3 billion. After paying off our short-term debt and prefunding our longer-term maturities in the second quarter, our net debt leverage is at a historical low. Our strong financial position gives us flexibility to pursue additional opportunities, including internal investments, acquisitions and stock purchases. Since the third quarter, we have acquired approximately one million shares of our stock for $130 million as part of our stock repurchase plan.”

Mohawk's year-end investor conference call, held the morning of February 12, relayed the following points,

* Jim Brunk will take the CFO role effective April 1

* Q4 Results - Flooring North America, the largest segment, was flat in revenue; Global Ceramic revenue was up 6%; Flooring Rest of the World grew 13%.

* Q4 2020 sales broke a company record

* Mohawk’s LVT lines are running seven days a week.

* Product demand experienced in the fourth quarter 2020 is continuing into the first quarter of 2021

* Mohawk is expanding its domestic laminate production capacity by $125 million.

* The firm took share last year due to aggressive sales initiatives and consistent service under difficult circumstances

* Ceramic sales grew thanks to increased customer traffic at company owned stores and through home center channel

* The countertop business is increasing substantially

* Mohawk is increasing prices 3% to 8% to offset inflation in materials, labor and transportation

* Residential carpet sales grew as consumers are attracted to comfort and noise reduction

* Demand within the commercial sector has improved from its bottom but remains depressed