Slide 1: Investor Presentation – November 2015
Investor Presentation – November 2015
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 Industries Highlights
Mohawk Industries Highlights ▪ World’s largest flooring manufacturer ▪ Leading market positions • Ceramic • Sheet Vinyl & LVT • Carpet & Rugs • Stone Flooring & • Laminate Countertops • Wood ▪ Expanding international presence ▪ Total flooring product offering ▪ Vertically integrated manufacturing ▪
Slide 4: Mohawk by the Numbers
Mohawk by the Numbers $8.6B $1,353M 1,447% 33 Worldwide Sales Adjusted EBITDA Stock Growth Acquisitions Pro Forma Pro Forma Since 1992 Since 1992 13 30,000+ 140 25,000+ Countries Employees Countries Customers Manufacturing Worldwide Sales Worldwide 4 4
Slide 5: Focused Business Strategy
Focused Business Strategy ▪ Grow shareholder value ▪ Drive optimization of ▪ Provide value through resources and materials innovative products and ▪ Deliver above-market returns process improvements ▪ Leverage knowledge and ▪ Increase profits through innovation across segments ▪ Expand international
Slide 6: Aggressive Acquisition Strategy
Aggressive Acquisition Strategy New locations New flooring Proven Good valuation product categories management team Leverage strengths Potential for in existing locations Categories with Good bench significant ROI synergies to our strength Good short and existing businesses Shared values long-term P
Slide 7: IVC & KAI Acquisitions: Completed Q2 2015
IVC & KAI Acquisitions: Completed Q2 2015 IVC Group KAI Group • LVT & Sheet Vinyl Production • Ceramic Tile Production – Based in Belgium & U.S. – Leading ceramic producer in – 2014 sales $751M & EBITDA 19.7% Bulgaria & Romania – #1 European residential sheet vinyl & LVT – Focus on low- to mid-point
Slide 8: International Footprint
@ International Footprint i, United Westem Eastern States Carpet Europe Europe Rugs / Mats Ceramic C ; . ® Sheet Vinyl / LVT Laminate eramic Russia Mexico Ceramic / Stone Sheet Vinyl / Wood ; Laminate LVT Ceramic Laminate Ceramic Wood Australia/ New Zealand Laminate Wood Distribution Brazil India Wo
Slide 9: 2014 Sales Mix
Position by Product, Geography & End Market 2014 Sales Mix (pro forma) By Segment By End Market Flooring NA Commercial 42% 20% Global Ceramic 36% By Geography Western Europe 24% Russia 3% Flooring Other 3% ROW 22% Residential 80% North America 70% 9
Slide 10: Positive Industry Outlook
Positive Industry Outlook United States GDP growing & flooring will outpace Low mortgage rates driving home sales New residential construction increasing Uptick in first-time homebuyers Rising home prices support reinvestment Anticipate surge in new flooring purchases over the next few years Before
Slide 11: Historic Pent Up Demand: U.S. Flooring
Historic Pent Up Demand: U.S. Flooring 30.0 Market growth potential: 27.9 27.9 Despite the recent rebound, 26.7 the industry remains ~30% 26.0 25.4 below its 2005 peak. 25.0 23.7 20.7 21.0 20.0 18.7 19.0 17.9 17.8 17.5 17.3 16.9 Sq. Ft. in Billions 15.0 10.0 5.0 0.0 1992 1997 2002 2003 2004 2005 200
Slide 12: Product Mix Across U.S. Flooring Industry
Product Mix Across U.S. Flooring Industry U.S. Flooring Industry - $22 Billion Hardwood 15% Ceramic 12% Carpets & Rugs 49% Laminate 4% Stone 6% Other Resilient 1% Vinyl & LVT 12% Source: Floor Covering Weekly, July 27, 2015 12 12
Slide 13: U.S. Floor Covering Sales by End-Use Market
U.S. Floor Covering Sales by End-Use Market U.S. Industry Sales ▪ Industry recovery early in cycle Residential Builder 14% Replacement ▪ Anticipate considerable 60% expansion in new housing starts ▪ Residential remodeling may significantly expand with growing consumer confidence Commercial 26% ▪ Com
Slide 14: 2014 U.S. Flooring Market Leaders
2014 U.S. Flooring Market Leaders Total Flooring Industry Competitor Mix Mohawk 22% Imports & All Others 37% Armstrong 5% Tarkett 4% Mannington 4% Beaulieu of America 3% Shaw 18% Interface 2% Engineered Floors 2% Dixie Group 2% Source: Floor Focus, May 2015 14 14
Slide 15: U.S. Floorcovering Distribution Channels
U.S. Floorcovering Distribution Channels U.S. Industry Contractor 21% Specialty Stores 56% Home Centers 18% Other 5% Sources: Floor Covering Weekly, July 27, 2015 15 15
Slide 16: Innovative Products & Technologies
Innovative Products & Technologies Printed Ceramic Ceramic Wood Exclusive Super Proprietary Tile Planks Soft & Stain Polyester Fiber Resistant Fiber Process Deep Natural LVT With Locking Wear & Stain Surface Texture; Proprietary Engineered Resistant Wood Water Resistance Uniclic® System Hardwood Fin
Slide 17: World-Class Systems
World-Class Systems ▪ State-of-the-art order and inventory management system ▪ Sophisticated transportation management ▪ Integrated warehouse management ▪ Next-generation supply chain planning 17
Slide 18: Best-in-Class Distribution Network
Best-in-Class Distribution Network ▪ 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 • 300 distribution points • 600 trucks CARPET-LAMINATE-WOOD-VINYL
Slide 19: The Business of Sustainability
The Business of Sustainability Improving the Environment in Our Communities ▪ Waste reduction • Over 4 billion lbs. of recycled materials purchased • Zero Process Waste to Landfill campaign ▪ Use of recycled content • Over 500 products contain recycled material • Recycle about 5 billion plastic bott
Slide 20: Global Ceramic Segment Competitive Advantages
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 21: Ceramic: Expanding Globally
Ceramic: Expanding Globally Market Leader Leading Position Manufacturing Locations 21
Slide 22: Global Tile Market: Opportunity
Global Tile Market: Opportunity 2014 Consumption by Region - 128 Billion Sq. Ft. India 6% Turkey, Saudi European Union 7% Arabia & Iran 6% Africa 6% Brazil 7% Indonesia & Vietnam 6% Russia 2% USA 2% China 41% Other 17% Sources: Ceramic World Review, September 2015, Internal Analysis. 22
Slide 23: Global Ceramic Segment: Brands Serving All Channels
Global Ceramic Segment: Brands Serving All Channels ▪ 215 company-operated service centers in the U.S. and Canada ▪ 26 stone centers in the U.S. ▪ 13 design galleries in the U.S. ▪ Independent distributors in Russia, the U.S. and Europe ▪ Home centers in the U.S., Canada and Mexico ▪ Home centers in
Slide 24: Flooring North America Competitive Advantages
Flooring North America Competitive Advantages ▪ Leading market share in all channels ▪ Leader in innovation, design & technology ▪ Well-known exclusive brands in soft and hard surfaces ▪ Leveraging customer relationships across product categories ▪ Low-cost integrated manufacturing ▪ Best-in-class n
Slide 25: Flooring North America: Brands Serving All Channels
Flooring North America: Brands Serving All Channels ▪ Independent ▪ Corporate ▪ Mass Merchants Specialty Retail ▪ Educational ▪ Department ▪ Aligned Dealers Stores ▪ Retail ▪ Independent ▪ Home Centers Specialty Retail ▪ Healthcare ▪ Home Centers ▪ Builder ▪ Aligned Dealers ▪ Hospitality ▪ Independe
Slide 26: Flooring Rest of the World Competitive Advantages
Flooring Rest of the World Competitive Advantages ▪ Leader in mid- to high-end categories ▪ Undisputed innovation frontrunner ▪ Extending value of widely recognized brands with introductions in new product categories ▪ Vertically integrated low-cost manufacturer across product categories ▪ Leveragin
Slide 27: Flooring ROW: Brands Serving All Channels
Flooring ROW: Brands Serving All Channels ▪ Independent ▪ Independent ▪ Independent ▪ Independent Specialty Retail Specialty Retail Specialty Retail Specialty Retail ▪ Home Centers ▪ Home Centers ▪ Home Centers ▪ Home Centers ▪ Independent ▪ Builder ▪ Builder ▪ Builder Distribution ▪ Independent ▪ M
Slide 28: Flooring ROW Segment: Boards & Panels
Flooring ROW Segment: Boards & Panels ▪ Chipboards Roofing Panels • Furniture and specialty construction ▪ Custom Roofing Panels • Insulated roof panels and hinged roofs ▪ Insulation Panels Chipboards Insulation Panels 28
Slide 29: Mohawk Industries
MOHAWK INDUSTRIES,
Slide 30: Adjusted Net Sales & Adjusted EBITDA
Adjusted Net Sales & Adjusted EBITDA Net Sales EBITDA (% of Net Sales) $8,634* $1,353* $7,349 $991 $5,788 $5,642 $677 $631 $633 $5,319 2010 2011 2012 2013 2014PF 2010 2011 2012 2013 2014PF 11.9% 11.2% 11.7% 13.5% 15.7% Dollars in Millions, excluding unusual items *Represents 12 months ownership of I
Slide 31: Earnings Summary (ex-unusual items)
Earnings Summary (ex-unusual items) (Dollars in Millions except EPS) Years Ended 2010 2011 2012 2013 2014 Net Sales $5,319 $5,642 $5,788 $7,349 $7,803 % Change (3%) 6% 3% 27% 6% Operating Income $327 $345 $398 $690 $834 Operating Margin 6% 6% 7% 9% 11% Net Earnings $173 $202 $262 $473 $598 % Change
Slide 32: Results by Segment (ex-unusual items)
Results by Segment (ex-unusual items) 2012 2013 2014 GLOBAL CERAMIC SEGMENT Sales $1,616 $2,677 $3,015 % Change 66% 13% Operating Income $127 $284 $360 Operating Margin 8% 11% 12% FLOORING NA SEGMENT Sales $3,139 $3,423 $3,441 % Change 9% 1% Operating Income $183 $279 $315 Operating Margin 6% 8% 9%
Slide 33: Quarterly Earnings Summary (Ex-unusual items)
Quarterly Earnings Summary (Ex-unusual items) (Dollars in Millions except EPS) Third Quarter 2013 2014 2015 Net Sales $1,962 $1,991 $2,151 % Change 33% 1% 8% Operating Income $213 $239 $309 Operating Margin 11% 12% 14% Diluted EPS $2.02 $2.44 $2.98 % Change 93% 21% 22% Diluted EPS $2.98 $2.44 $2.02
Slide 34: Leverage and Capital Structure
Leverage and Capital Structure (Dollars in Millions) Capitalization Maturity Schedule Net Debt-to-EBITDA Multiple* * 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013 2014 2015 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 As of October 3, 2015 *2015 Q2 / Q3 LTM EBITDA Pro Forma 34
Slide 35: Mohawk Industries
MOHAWK INDUSTRIES,