Slide 1: The Long View
The Long View mohawkind.com Q3 2023 NYSE: MHK October 2023 Investor Presentation
Slide 2: Forward-looking Statements
Forward-looking Statements 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 releases and our periodic filings w
Slide 3: Company Overview
Company Overview
Slide 4: Mohawk at a Glance
Mohawk at a Glance $11.2B $1.3B $8.55 $1.3B Q3 2023 TTM Q3 2023 TTM Q3 2023 TTM Q3 2023 TTM Net Sales Adjusted EBITDA Adjusted EPS Cash Flow from Operations 32 ~ 40,900 19 ~ 170 Acquisitions Worldwide Countries Countries 2013-2023 Team Members1 with Manufacturing with Sales 1As of December 31, 2022
Slide 5: Three Reporting Segments
Three Reporting Segments Flooring Flooring Global North Rest of the Ceramic America World • 38% Sales Q3 ’23 TTM • 35% Sales Q3 ’23 TTM • 27% Sales Q3 ’23 TTM • North America, Europe, • Primarily U.S./Canada • Europe, Australia/NZ, South America South America, Asia • Residential/Commercial • Floor a
Slide 6: The Long View
The Long View
Slide 7: Growth Strategy
Growth Strategy Non-Organic Market Development Growth & Penetration Mergers & acquisitions Higher sales to existing customers, sales of existing products to new customers & expansion into new markets Operational Product Innovation Excellence & Improvement Simplified operations, Higher-value product
Slide 8: Operational Excellence
Operational Excellence • Reduce manufacturing complexities • Maximize productivity • Continuously improve quality • Leverage differentiated distribution advantages • Invest in assets that drive speed & efficiency • Optimize automation opportunities • Drive better decisions through advanced informati
Slide 9: Three Decades of Expansion
Three Decades of Expansion Strong record of integrating acquisitions while investing for organic growth Established leading Boosted share in Extended presence Expanded global two major ceramic Went public in Established U.S. & EU position sheet vinyl & in the EU ceramic markets – Brazil & 1992; expa
Slide 10: Market Development & Penetration
Market Development & Penetration Expanding sales with existing customers through • Differentiated new product launches • Superior marketing and merchandising • Exclusive retail partnerships/aligned dealerships Entering new sales channels • Ceramic pavers for garden centers, landscapers and pool cons
Slide 11: Product Innovation
Product Innovation CERAMIC TILE CARPET Built-in antibacterial Superior integral 3x the fiber of traditional Combines exclusive protection slip resistance carpet; ultra soft & fibers for next level stain resistant design & performance LAMINATE / WOOD RESILIENT Hyper-realistic visuals; Exclusive techn
Slide 12: Prudent Financial Management
Prudent Financial Management Generate strong free cash flow, effectively manage working capital & investments Maintain financial flexibility Use excess cash to pay down debt and re-invest in the business Disciplined approach to acquisitions Committed to maintaining investment grade rating 12
Slide 13: Third Quarter 2023
Third Quarter 2023
Slide 14: Q3 2023 Financial Results
Q3 2023 Financial Results Net Sales Adjusted EBITDA Q3 Q3 (Amounts in millions) 2022 2023 $2.8B $389M Net Sales $2.918 $2,766 (-8.1% YOY (-5.6% YOY) on a Constant Basis) % Change -- -5.2% % Change on a Constant and Adjusted OI Adjusted Diluted EPS Legacy Basis -- -8.1% $233M $2.72 Adjusted EBITDA $4
Slide 15: Key Current Issues
Key Current Issues U.S. Economy • Revised Q2 GDP: 2.1%; Initial Q3 GDP: 4.9% • Historically low unemployment rates • Material and energy inflation declining • October Architectural Billing Index at 47.7 • Housing supply deficit remains ~5 million • Aging housing & low stock should drive future growt
Slide 16: Key Current Issues (continued)
Key Current Issues (continued) Operations • Further restructuring projects announced • U.S. rigid LVT converting to direct extrusion • Older Italian ceramic product to be shut down • ~$30 million in annual savings • Capacity expansion projects on schedule • North America: LVT & laminate operating •
Slide 17: Global Ceramic Segment
Global Ceramic Segment • Sales: down 6.0% on a constant & legacy basis • Adj. Op. Margin down due to unfavorable price & product mix, temp shutdowns, lower volumes & FX headwinds, partially offset by productivity gains • Residential sales soft as inflation & interest rates affect consumer spending •
Slide 18: Flooring Rest of the World Segment
Flooring Rest of the World Segment • Sales down 5.0% on a constant & legacy basis • Adj. Op. Margin up due to lower raw material & energy costs and less downtime, partially offset by unfavorable price & product mix and foreign exchange • Flooring under pressure; sheet vinyl sales growing as value al
Slide 19: Flooring North America Segment
Flooring North America Segment • Sales down 12.2% on a legacy basis • Adj. Op. Margin down due to unfavorable price & product mix, reduced volumes & unfavorable productivity, partially offset by lower inflation • Commercial sector continues to outperform residential, though softening • Enhanced posi
Slide 20: Outlook
Outlook • High interest rates & consumer inflation persist ▪ Commercial sector beginning to show signs of weakening • Believe retail customer inventory adjustments may have bottomed • Highly competitive markets pressuring price; mix impacted by consumers trading down • Declining input costs positive
Slide 21: Outlook (continued)
Outlook (continued) • Conservatively managing working capital while investing to maximize growth & profitability when markets recover • Product innovation • Capacity expansions • Acquisition enhancements • Strategically investing in enhanced products, merchandising & marketing activity to grow sales
Slide 22: Financials
7 7 ta / Financials MOHAWK
Slide 23: Earnings Summary (Consolidated)
Earnings Summary (Consolidated) 2019 2020 2021 2022 Q3 TTM Net Sales $9,971 $9,552 $11,201 $11,737 $11,174 % Change -0.1% -4.2% 17.3% 4.8% -4.8% Adjusted EBITDA $1,530 $1,389 $1,949 $1,650 $1,343 % Adjusted EBITDA Margin 15.3% 14.5% 17.4% 14.1% 12.0% Adjusted Operating Income $938 $799 $1,360 $1,083
Slide 24: Results by Segments
Results by Segments 2019 2020 2021 2022 Q3 TTM GLOBAL CERAMIC Sales $3,631 $3,433 $3,917 $4,308 $4,294 % Change 2.2% -5.5% 14.1% 10.0% -0.3% Adjusted Operating Income $344 $234 $406 $457 $324 % Adjusted Operating Margin 9.5% 6.8% 10.4% 10.6% 7.5% FLOORING NA Sales $3,844 $3,594 $4,116 $4,207 $3,863
Slide 25: Maturity Profile
Maturity Profile1 $2,500 September 30, 2023 Total Debt (millions)3 June 2027 EUR Note $529 35% Floating Sept 2028 USD Note $600 65% Fixed May 2030 USD Note $500 Average rate 4.53% Term Loan USD $675 $2,000 Term Loan EUR $233 Term Loan USCP/Revolver $0 Avail. ECP/Revolver $0 ECP/Revolver Revolver2 Le
Slide 26: Reconciliation Tables
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Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures RECONCILIATION OF NET SALES TO ADJUSTED NET SALES (Amounts in thousands) Q3 2022 Q3 2023 CONSOLIDATED Net Sales $ 2,917,539 2,766,186 Adjustment for constant shipping days - 2,473 Adjustment for constant exchange rates - 11,230 Adjustment for acquisition volume -
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED OPERATING INCOME (Amounts in thousands) Q3 2022 Q3 2023 CONSOLIDATED Operating (loss) (505,589) (733,742) Adjustments to operating (loss): Restructuring, acquisition and integration-related and other costs 34,539 47,083 Inventory step-up from purchase acc
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED OPERATING INCOME (Amounts in thousands) 2019 2020 2021 2022 Q3 TTM Operating income (loss) $ 827,224 636,002 1,335,011 244,217 (393,829) Adjustments to operating income (loss): Restructuring, acquisition and integration-related and other costs 107,201 163
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures NET EARNINGS TO ADJUSTED EBITDA (Amounts in thousands) Q3 2022 Q3 2023 Net earnings including noncontrolling interests (533,713) (760,289) Interest expense 13,797 20,144 Income tax expense 15,569 14,954 Net (income)/loss attributable to non-controlling interest (2
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED OPERATING INCOME (Amounts in thousands) 2019 2020 2021 2022 Q3 TTM GLOBAL CERAMIC Operating income (loss) $ 335,639 167,731 403,135 (236,066) (138,919) Adjustments to operating income (loss): Restructuring, acquisition and integration-related and other co
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ADJUSTED NET EARNINGS (Amounts in thousands, except EPS) 2019 2020 2021 2022 Q3 TTM Net earnings (loss) attributable to Mohawk Industries, Inc. $ 744,211 $ 515,595 $ 1,033,159 $ 25,247 $ (545,548) Adjusting items: Restructuring, acquisition, integration-related an
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures NET DEBT (Amounts in thousands) 2020Q4 2021Q4 2022Q4 2023Q3 Current portion of long-term debt and commercial paper $ 377,255 624,503 840,571 922,697 Long-term debt, less current portion 2,356,887 1,700,282 1,978,563 1,675,590 Total debt 2,734,142 2,324,785 2,819,1
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