Mohawk Industries, Inc. · NYSE:MHK
Mohawk Industries — Investor Presentation (May 2018)
41 slides from Mohawk Industries's investor presentation, May 2018
Slide 1: A World of Opportunity
A World of Opportunity Investor Presentation May 2018
Slide 2: Forward-looking Statements
Forward-looking Statements Certain of the statements in this presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties including, but not limited to, those set forth in our press releas
Slide 3: Mohawk Highlights
Mohawk Highlights • World’s largest flooring manufacturer • Market leader in all flooring categories • Ceramic • Sheet Vinyl • Carpet & Rugs • LVT • Laminate • Stone Flooring • Wood • Countertops • Expanding international presence • Differentiated distribution infrastructure • Strong cash flow to fu
Slide 4: Mohawk by the Numbers
Mohawk by the Numbers $9.5B $1.9B $6.6B 40 2017 Worldwide 2017 Adjusted CapEx & Acquisition Acquisitions Sales EBITDA Investments (2013-17) Since 1992 17 38,800+ 170+ 25,000+ Countries Employees Countries Customers Manufacturing Worldwide Sales Worldwide 4
Slide 5: Mohawk Rises on 2017 Fortune 500
Mohawk Rises on 2017 Fortune 500 Fortune Mohawk 2017 Category Results Rank Sales $8.95B 311 Profit $930M 205 MOHAWK’S RANK IN THE FORTUNE 500 Market Value $17B 242 Profit Growth 51.2% 12 5
Slide 6: 2017 Sales Mix
2017 Sales Mix SEGMENT GEOGRAPHY 42% Flooring NA 63% United States 36% Global Ceramic 25% Europe 23% Commercial 22% Flooring ROW 3% Russia 8% Other Subject to rounding 6
Slide 7: International Operations
International Operations U.S. Western Carpet/Rugs Europe Eastern LVT / Sheet Vinyl Ceramic Ceramic LVT / Sheet Vinyl Europe Countertops Laminate Ceramic Laminate Carpet Tile Wood Wood Canada Ceramic Russia Carpet Ceramic Rugs / Mats Laminate Dist. New Zealand/ Mexico Australia Ceramic Laminate Wood
Slide 8: Godfrey Hirst Acquisition
Godfrey Hirst Acquisition • Largest flooring provider in Australia and New Zealand • Carpet manufacturing and hard surface distribution • Market’s design and innovation leader • Synergies with existing Mohawk soft and hard surface business • Last fiscal year net sales US$334M • Closing expected May
Slide 9: Positive Industry Outlook
Positive Industry Outlook United States • GDP & flooring industry growing • Low mortgage rates driving home sales • New residential construction increasing • Rising home prices support reinvestment • Pent up demand – industry 22% below 2005 peak • Commercial end market growing Before After Rest of W
Slide 10: Operational Excellence
Operational Excellence • Deliver growth through innovative new products • Drive demand through differentiated collections • Enhance productivity & profitability through continuous process improvement & automation • Optimize resources & materials • Maintain superior logistics systems to improve servi
Slide 11: Product Innovation
Product Innovation CERAMIC CARPET StepWise ™ Digitally Printed Superior Slip Exclusive Super Proprietary Unified Ceramic Tile Resistance Soft & Stain Soft Flooring; Faster, Resistant Fiber Easier Installation LAMINATE / WOOD LVT / SHEET VINYL Proprietary Engineered Wood Rigid LVT: Deeply Embossed Sh
Slide 12: Best-In-Class Distribution
Best-In-Class Distribution • National network of distribution centers provides efficient delivery • Service Centers provide key channel for ceramic distribution Best-In-Class • Logistics system • 1,500 sales representatives • 350 distribution points • 650 trucks Carpet, Laminate, Wood & Vinyl DCs Ce
Slide 13: Investing in the Business
Investing in the Business • Invested $6.6B Capital Expenditures New Acquisitions 2013-2017 Dollars in Millions $2,194 • Acquisitions driving growth $2,027 $475 through new ~$1,600 $504 products & geographies Sales $1,225 $1,157 Capacity Growth from • 2013-2018 CapEx & CapEx Acquisitions improving $1
Slide 14: Extending Sales Capacity through Investment
Extending Sales Capacity through Investment $2.3B internal investment (2016-2018) MEXICO & UNITED STATES SOUTH AMERICA EUROPE RUSSIA • Adding capacity in • Doubling ceramic • Modernized Italian • Adding sheet LVT, ceramic, capacity at ceramic facilities; vinyl plant laminate and Salamanca added porc
Slide 15: Aggressive Acquisition Strategy
Aggressive Acquisition Strategy Invested $3.6B in 16 acquisitions since 2013 GEOGRAPHY PRODUCTS MANAGEMENT RETURNS • Strategic fit • Focus on flooring • Proven • Best possible management valuation • Leverage strengths • New product teams in existing categories • Potential for locations • Good bench
Slide 16: The Business of Sustainability
The Business of Sustainability 6.2B 6.5B 500+ 42M Plastic Bottles Pounds of Waste Products with Pounds of Tires Recycled Recycled Recycled Content Recycled Into Doormats 47 36% 442M 5% Plants with Zero Waste Water Intensity Gallons of Reduced GHG Intensity to Landfill Reduced since 2010 Water Consum
Slide 17: Global Ceramic
Daltile – Porcelain Tile WOODBRIDGE SERIES May 2018 Global Ceramic
Slide 18: Global Ceramic Segment
Global Ceramic Segment Competitive Advantages • Worldwide ceramic leader with leading positions in North America, Eastern & Western Europe and Russia • Most widely recognized ceramic brands • Broad product line satisfies all channels and price points • North American market share substantially large
Slide 19: Ceramic: Leveraging Global Assets
Ceramic: Leveraging Global Assets Leading Position Manufacturing Locations Optimizing worldwide product development and distribution to meet market demands in different regions 19
Slide 20: Global Tile Market: 135 Billion Sq. Ft.
Global Tile Market: 135 Billion Sq. Ft. 2017 Mohawk Capacity – 2.2 Billion Sq. Ft. Brazil China 40%6% Indonesia & India 6% Vietnam 6% Africa 5% Europe 10% Saudi Arabia & Turkey 4% USA 2% Mexico 2% China 43% Russia 2% Other 13% Sources: Ceramic World Review, Issue 123, September 2017, Internal Analys
Slide 21: Global Ceramic: Brands Serving All Channels
Global Ceramic: Brands Serving All Channels UNITED STATES & CANADA RUSSIA • 251 service centers • 22 distribution centers • 40 stone centers • 350 company-owned or • 16 design galleries franchised retail stores • Independent specialty retail • Home centers • Home centers • New construction • Indepen
Slide 22: Global Ceramic: Countertops
Global Ceramic: Countertops Stone Quartz Porcelain High-end, contemporary, luxe An upscale look engineered Scale and style of natural feel for any room for down-to-earth durability stone slabs with the benefits of porcelain tile 22
Slide 23: Flooring North America
Karastan Wool Carpet CAPE VIEW May 2018 Flooring North America
Slide 24: Flooring North America Segment
Flooring North America Segment Competitive Advantages • Leading market share in all channels • Leader in innovation, design & technology • Significant growth opportunity with LVT • Well-known exclusive brands Mohawk Unified Soft Flooring • Leverage customer relationships AIR.O across product categor
Slide 25: Flooring NA: Brands Serving All Channels
Flooring NA: Brands Serving All Channels RESIDENTIAL CARPET BATH & AREA RUGS • Independent • Mass Merchants Specialty Retail • Department Stores • Aligned Dealers • Home Centers • Home Centers • Independent • Builder Specialty Retail • Multi-family • E-Commerce COMMERCIAL CARPET HARD SURFACES • Corp
Slide 26: Flooring Rest of the World
Pergo Luxury Vinyl Tile GREY RIVER OAK May 2018 Flooring Rest of the World
Slide 27: Flooring Rest of the World Segment
Flooring Rest of the World Segment Competitive Advantages • Leader in mid- to high-end categories • Undisputed innovation frontrunner • Significant growth opportunity with LVT • Extend value of well known brands into new product categories • Vertically integrated low-cost Quick-Step Laminate manufac
Slide 28: Flooring ROW: Brands Serving All Channels
Flooring ROW: Brands Serving All Channels LAMINATE LVT • Independent Specialty • Independent Specialty Retail Retail • Home Centers • Home Centers • Independent Distribution • Builder • Company-owned Distribution (U.K., Italy, • Multi-family Switzerland, Australia, New • Commercial Zealand, India) •
Slide 29: Flooring ROW Panels
Flooring ROW Panels MDF & Chipboards Insulation Panels Roofing Panels Furniture and specialty Airtight solutions for Insulated custom roof panels construction renovations or new and hinged roofs construction 29
Slide 30: Financials
Mohawk Group Carpet Tile LICHEN COLLECTION May 2018 Financials
Slide 31: Net Sales & Adjusted EBITDA
Net Sales & Adjusted EBITDA Net Sales (% YOY Growth) EBITDA (% of Net Sales) $1,859 $1,711 $9,491 19.6% $8,959 5.9% $1,395 $8,072 $7,803 19.1% 11.0% $1,171 $7,349 3.4% $991 17.3% 6.2% 15.0% 26.9% 13.5% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Dollars in Millions, excluding unusual items 31
Slide 32: Earnings Summary
Earnings Summary (ex-unusual items) 2013 2014 2015 2016 2017 Net Sales $7,349 $7,803 $8,072 $8,959 $9,491 % Change 27% 6% 3% 11% 6% EBITDA $991 $1,171 $1,395 $1,711 $1,859 EBITDA Margin 13% 15% 17% 19% 20% Operating Income $690 $834 $1,050 $1,298 $1,416 Operating Margin 9% 11% 13% 14% 15% Net Earnin
Slide 33: Results by Segment
Results by Segment (ex-unusual items) *2013 - 2014 represent Q2 2015 realignment of segments (Dollars in Millions) 33
Slide 34: Quarterly Earnings Summary
Quarterly Earnings Summary (ex-unusual items) Adjusted Diluted Quarterly EPS First Quarter Results [VALUE] $2.72 2016 2017 2018 $2.38 Net Sales $2,172 $2,221 $2,412 % Change 15% 2% 9% EBITDA $350 $386 $411 EBITDA Margin 16% 17% 17% Operating Income $253 $279 $292 Operating Margin 12% 13% 12% Adjuste
Slide 35: Leverage and Capital Structure
Leverage and Capital Structure Maturity Schedule1 Net Debt-to-EBITDA Multiple2 $2,500 Unused $2,000 ECP 2.1x 2.1x USCP $1,500 Bonds 1.8x 1.6x 1.6x 1.5x 1.5x $1,000 1.4x 1.4x 1.4x $500 $0 2018 2019 2020 2021 2022 2023 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Average Rate 1.45% (43% Fixed / 5
Slide 36: Industry Data
Mohawk Wood REVWOOD PLUS May 2018 Industry Data
Slide 37: U.S. Flooring Industry: $24.5 Billion
U.S. Flooring Industry: $24.5 Billion [CATEGORY NAME] [PERCENTAGE] [CATEGORY NAME] [PERCENTAGE] Carpet & Rugs 47% [CATEGORY NAME] [PERCENTAGE] Stone 6% [CATEGORY NAME] [PERCENTAGE] [CATEGORY NAME] LVT 8% [PERCENTAGE] Source: Floor Covering Weekly, July 24, 2017 Subject to rounding 37
Slide 38: U.S. Flooring Sales by End Use Market
U.S. Flooring Sales by End Use Market Commercial Residential • Anticipate [VALUE]% Replacement 58% continued expansion in new housing starts • Residential remodeling projected to significantly expand Builder 16% • Commercial indicators suggest future growth Source: Floor Covering Weekly, July 24, 20
Slide 39: U.S. Flooring Market
U.S. Flooring Market Mohawk 24% Imports/All Others 35% Armstrong 5% Tarkett 4% Mannington 4% Engineered Floors 3% Interface 2% Shaw 19% Dixie Group 2% Beaulieu of America 2% Source: Floor Focus, May 2017 Does not include sales of stone flooring or carpet cushion, categories in which Mohawk has leadi
Slide 40: U.S. Flooring Channels
U.S. Flooring Channels Contractors 22% Specialty Stores 56% Home Centers 19% Other 3% Sources: Floor Covering Weekly, July 24, 2017 Subject to rounding 40
Slide 41: Investor Presentation
Investor Presentation Marazzi Porcelain Tile May 2018 GRANDE CONCRETE LOOK