MOHAWK INDUSTRIES INC [MHK] Filings

10-Q 1 mhk-20240629.htm 10-Q mhk-20240629

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 June 29, 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 July 24, 2024, the latest practicable date, is as follows: 63,117,076 shares of common stock, $.01 par value.

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MOHAWK INDUSTRIES, INC.

INDEX


		Page No
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations for the three and six months ended June 29, 2024 and July 1, 2023	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 29, 2024 and July 1, 2023	4

	Condensed Consolidated Balance Sheets as of June 29, 2024 and December 31, 2023	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 2024 and July 1, 2023	6

	Notes to the Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	32

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	35

Item 6.	Exhibits	36

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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			Six Months Ended
(In millions, except per share data)	June 29, 2024		July 1, 2023	June 29, 2024	July 1, 2023


Net sales	$	2,801.3	2,950.5	5,480.7	5,756.7
Cost of sales	2,077.5		2,218.5	4,107.4	4,381.3
Gross profit	723.8		732.0	1,373.3	1,375.4
Selling, general and administrative expenses	509.8		578.9	1,012.7	1,096.6

Operating income	214.0		153.1	360.6	278.8
Interest expense	12.6		22.9	27.5	40.0
Other (income) and expense, net	1.6		2.2	0.5	1.6
Earnings before income taxes	199.8		128.0	332.6	237.2
Income tax expense	42.3		26.8	70.1	55.7


Net earnings including noncontrolling interests	157.5		101.2	262.5	181.5
Less: net earnings attributable to noncontrolling interests	0.1		—	0.1	0.1
Net earnings attributable to Mohawk Industries, Inc.	$	157.4	101.2	262.4	181.4



Basic earnings per share attributable to Mohawk Industries, Inc.	$	2.47	1.59	4.12	2.85
Weighted-average common shares outstanding—basic	63.6		63.7	63.7	63.6



Diluted earnings per share attributable to Mohawk Industries, Inc.	$	2.46	1.58	4.10	2.84
Weighted-average common shares outstanding—diluted	63.9		63.9	64.0	63.9

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			Six Months Ended
(In millions)	June 29, 2024		July 1, 2023	June 29, 2024	July 1, 2023


Net earnings including noncontrolling interests	$	157.5	101.2	262.5	181.5
Other comprehensive income (loss):
Foreign currency translation adjustments	(71.0)		(0.2)	(158.9)	6.7
Prior pension and post-retirement benefit service cost and actuarial loss, net of tax	—		—	—	(0.5)
Other comprehensive income (loss)	(71.0)		(0.2)	(158.9)	6.2
Comprehensive income	86.5		101.0	103.6	187.7
Less: comprehensive loss attributable to noncontrolling interests	(0.1)		(0.3)	(0.1)	(0.3)
Comprehensive income attributable to Mohawk Industries, Inc.	$	86.6	101.3	103.7	188.0

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)	June 29, 2024		December 31, 2023


ASSETS
Current assets:
Cash and cash equivalents	$	497.4	642.6

Receivables, net	2,018.5		1,874.7
Inventories	2,579.9		2,551.9
Prepaid expenses	528.7		515.8

Other current assets	16.8		19.3
Total current assets	5,641.3		5,604.3
Property, plant and equipment	10,318.6		10,392.3
Less: accumulated depreciation	5,559.4		5,399.1
Property, plant and equipment, net	4,759.2		4,993.2
Right of use operating lease assets	396.2		428.5
Goodwill	1,136.7		1,159.7
Tradenames	689.5		705.7
Other intangible assets subject to amortization, net	151.9		169.6
Deferred income taxes and other non-current assets	504.8		498.8
Total assets	$	13,279.6	13,559.8



LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	718.0	1,001.7
Accounts payable and accrued expenses	2,109.8		2,035.3
Current operating lease liabilities	109.9		108.9
Total current liabilities	2,937.7		3,145.9
Deferred income taxes	361.2		391.5
Long-term debt, less current portion	1,691.5		1,701.8
Non-current operating lease liabilities	301.6		337.5
Other long-term liabilities	335.1		354.0
Total liabilities	$	5,627.1	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; 70.4 and 71.0 shares issued and outstanding in 2024 and 2023, respectively	0.7		0.7
Additional paid-in capital	1,955.0		1,947.5
Retained earnings	7,144.8		6,970.2
Accumulated other comprehensive income (loss)	(1,238.7)		(1,080.0)
	7,861.8		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	7,646.5		7,623.0
Noncontrolling interests	6.0		6.1
Total stockholders’ equity	7,652.5		7,629.1
Total liabilities and stockholders’ equity	$	13,279.6	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)


	Six Months Ended
(In millions)	June 29, 2024		July 1, 2023


Cash flows from operating activities:
Net earnings including noncontrolling interests	$	262.5	181.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Restructuring, excluding accelerated depreciation	25.1		33.4

Depreciation and amortization	325.7		326.5
Deferred income taxes	(32.8)		(59.5)

(Gain) loss on disposal of property, plant and equipment	(1.7)		0.4
Stock-based compensation expense	13.6		10.4

Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	(196.8)		(93.1)

Inventories	(66.9)		208.8
Accounts payable and accrued expenses	102.2		(84.0)

Other assets and prepaid expenses	18.5		(19.5)
Other liabilities	(32.1)		16.0
Net cash provided by operating activities	417.3		520.9
Cash flows from investing activities:
Additions to property, plant and equipment	(178.2)		(245.2)
Acquisitions, net of cash acquired	—		(515.4)
Purchases of short-term investments	—		(775.0)
Redemption of short-term investments	—		933.0
Net cash used in investing activities	(178.2)		(602.6)
Cash flows from financing activities:
Payments on Senior Credit Facility	(202.2)		(827.8)
Proceeds from Senior Credit Facility	135.7		827.7
Payments on commercial paper	(5,158.2)		(11,827.6)
Proceeds from commercial paper	5,861.0		12,013.4





Payments on Term Loan Facility	(912.3)		—
Net payments of other financing activities	(16.1)		(30.6)









Purchase of Mohawk common stock	(87.8)		—
Change in outstanding checks in excess of cash	(1.6)		1.2


Net cash (used in) provided by financing activities	(381.5)		156.3
Effect of exchange rate changes on cash and cash equivalents	(2.8)		(13.3)
Net change in cash and cash equivalents	(145.2)		61.3
Cash and cash equivalents, beginning of period	642.6		509.6
Cash and cash equivalents, end of period	$	497.4	570.9

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 of the new guidance.

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.

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(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 $74.5 million and $68.0 million as of June 29, 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 and six months ended June 29, 2024 and July 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 $67.9 million and $66.7 million as of June 29, 2024 and December 31, 2023, respectively. Straight-line amortization expense recognized during the six months ended June 29, 2024 and July 1, 2023 related to these capitalized costs was $31.6 million and $27.5 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 June 29, 2024 and July 1, 2023:


(In millions)
June 29, 2024	Global Ceramic		Flooring NA	Flooring ROW	Total
Geographical Markets:
United States	$	593.4	930.6	2.8	1,526.8
Europe	291.9		0.7	552.4	845.0
Latin America	182.5		1.0	9.2	192.7
Other	47.8		26.2	162.8	236.8
Total	$	1,115.6	958.5	727.2	2,801.3

Product Categories:
Ceramic & Stone	$	1,099.7	6.1	—	1,105.8
Carpet & Resilient	15.9		747.4	223.7	987.0
Laminate & Wood	—		205.0	236.0	441.0
Other (1)	—		—	267.5	267.5
Total	$	1,115.6	958.5	727.2	2,801.3


July 1, 2023	Global Ceramic		Flooring NA	Flooring ROW	Total
Geographical Markets:
United States	$	611.6	973.5	2.3	1,587.4
Europe	297.3		0.1	611.3	908.7
Latin America	198.0		0.7	8.2	206.9
Other	48.5		27.4	171.6	247.5
Total	$	1,155.4	1,001.7	793.4	2,950.5

Product Categories:
Ceramic & Stone	$	1,145.3	9.9	—	1,155.2
Carpet & Resilient	10.1		791.3	235.4	1,036.8
Laminate & Wood	—		200.5	253.8	454.3
Other (1)	—		—	304.2	304.2
Total	$	1,155.4	1,001.7	793.4	2,950.5

(1) Other includes roofing elements, insulation boards, chipboards and IP contracts.

The following table presents the Company’s segment revenues disaggregated by the geographical market location of customer sales and product categories for the six months ended June 29, 2024 and July 1, 2023:

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(In millions)
June 29, 2024	Global Ceramic		Flooring NA	Flooring ROW	Total
Geographical Markets
United States	$	1,153.7	1,800.4	4.5	2,958.6
Europe	547.4		1.3	1,118.0	1,666.7
Latin America	367.6		2.0	19.1	388.7
Other	91.7		55.0	320.0	466.7
Total	$	2,160.4	1,858.7	1,461.6	5,480.7

Product Categories
Ceramic & Stone	$	2,131.9	12.0	—	2,143.9
Carpet & Resilient	28.5		1,447.5	437.9	1,913.9
Laminate & Wood	—		399.2	468.2	867.4
Other (1)	—		—	555.5	555.5
Total	$	2,160.4	1,858.7	1,461.6	5,480.7


July 1, 2023	Global Ceramic		Flooring NA	Flooring ROW	Total
Geographical Markets
United States	$	1,208.2	1,899.3	3.5	3,111.0
Europe	570.8		0.3	1,242.9	1,814.0
Latin America	342.3		1.6	14.6	358.5
Other	93.4		53.9	325.9	473.2
Total	$	2,214.7	1,955.1	1,586.9	5,756.7

Product Categories
Ceramic & Stone	$	2,195.4	18.5	—	2,213.9
Carpet & Resilient	19.3		1,541.8	317.0	1,878.1
Laminate & Wood	—		394.8	646.9	1,041.7
Other (1)	—		—	623.0	623.0
Total	$	2,214.7	1,955.1	1,586.9	5,756.7

(1) Other includes roofing elements, insulation boards, chipboards and IP contracts.

4. Restructuring, Acquisition and Integration-Related Costs

The Company incurs costs in connection with acquiring, integrating and restructuring acquisitions and in connection with its global cost-reduction and productivity initiatives. For example:

•In connection with acquisition activity, the Company typically incurs costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the combined company (which may include charges related to employees, assets and activities that will not continue in the combined company); and

•In connection with the Company’s cost-reduction/productivity initiatives, it typically incurs costs and charges associated with site closings and other facility rationalization actions, including accelerated depreciation (“Asset write-downs”) and workforce reductions.

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Restructuring, acquisition transaction and integration-related costs consisted of the following during the three and six months ended June 29, 2024 and July 1, 2023:


	Three Months Ended			Six Months Ended
(In millions)	June 29, 2024		July 1, 2023	June 29, 2024	July 1, 2023
Cost of sales:
Restructuring costs	$	35.2	29.5	40.6	58.6

Acquisition integration-related costs	—		0.9	0.1	0.9
Restructuring and acquisition integration-related costs	$	35.2	30.4	40.7	59.5

Selling, general and administrative expenses:
Restructuring costs	$	6.0	5.6	7.3	5.8
Acquisition transaction-related costs	0.1		1.0	0.2	1.3
Acquisition integration-related costs	0.1		4.7	1.1	7.1
Restructuring, acquisition transaction and integration-related costs	$	6.2	11.3	8.6	14.2

During 2022 and 2023, the Company implemented a number of restructuring actions, productivity initiatives and manufacturing enhancements focused on reducing costs to enhance future performance, including certain facility, asset and product rationalizations and workforce reductions. In 2024, the Company announced further restructuring actions to take advantage of additional opportunities related to the activities described above.

The following table summarizes the restructuring activities for the three months ended June 29, 2024:


(In millions)	Asset Write- Downs and (Gains) on Disposals, net		Severance	Other Restructuring Costs	Total
Balance as of March 30, 2024	$	—	9.5		—	9.5
Restructuring costs
Global Ceramic	7.2		5.0		(0.6)	11.6
Flooring NA	1.7		—		2.0	3.7
Flooring ROW	18.7		6.9		—	25.6
Corporate	—		0.3		—	0.3
Total restructuring costs	27.6		12.2		1.4	41.2
Cash payments	—		(5.3)		(1.4)	(6.7)
Non-cash items	(27.6)		(0.1)		—	(27.7)
Balances as of June 29, 2024	$	—	16.3		—	16.3

Restructuring costs recorded in:
Cost of sales	$	27.6	6.6		1.0	35.2
Selling, general and administrative expenses	—		5.6		0.4	6.0
Total restructuring costs	$	27.6	12.2		1.4	41.2

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The following table summarizes the restructuring activities for the six months ended June 29, 2024:


(In millions)	Asset Write- Downs and (Gains) on Disposals, net		Severance	Other restructuring costs	Total
Balances as of December 31, 2023	$	—	12.1	—	12.1
Restructuring costs
Global Ceramic	9.2		5.5	—	14.7
Flooring NA	1.7		—	2.8	4.5
Flooring ROW	21.0		7.0	0.4	28.4
Corporate	—		0.3	—	0.3
Total restructuring costs	31.9		12.8	3.2	47.9
Cash payments	—		(8.3)	(3.1)	(11.4)
Non-cash items	(31.9)		(0.3)	(0.1)	(32.3)
Balances as of June 29, 2024	$	—	16.3	—	16.3

Restructuring costs recorded in:
Cost of sales	$	31.9	6.7	2.0	40.6
Selling, general and administrative expenses	—		6.1	1.2	7.3
Total restructuring costs	$	31.9	12.8	3.2	47.9

The Company currently estimates that it will incur additional restructuring costs of approximately $95-$110 million primarily related to asset write-downs and other restructuring related costs, which are expected to be executed throughout 2025 and into 2026.

As of June 29, 2024, the accrual balance related to restructuring activities was $6.1 million for plans approved prior to 2024 and $10.2 million for plans approved during 2024.

For the plans approved prior to 2024, restructuring expenses of $6.2 million and $12.4 million were recorded during the three and six months ended June 29, 2024, respectively. For the plans approved during 2024, restructuring expenses of $35.0 million and $35.5 million were recorded during the three and six months ended June 29, 2024, respectively.

The Company expects the remaining severance and other restructuring costs to be paid over the next 12 months.

5. Receivables, net


(In millions)	June 29, 2024		December 31, 2023
Customers, trade	$	1,905.2	1,716.3
Income tax receivable	35.1		48.4
Other	143.7		176.8
Less: allowance for discounts, claims and doubtful accounts	65.5		66.8
Receivables, net	$	2,018.5	1,874.7

6. Inventories


(In millions)	June 29, 2024		December 31, 2023
Finished goods	$	1,824.1	1,797.0
Work in process	168.2		164.2
Raw materials	587.6		590.7
Total inventories	$	2,579.9	2,551.9

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7. Goodwill and Intangible Assets

The components of goodwill and other intangible assets are as follows:

Goodwill:


(In millions)	Global Ceramic		Flooring NA	Flooring ROW	Total



Balance as of December 31, 2023 (1)	$	—	372.3	787.4	1,159.7



Currency translation	—		—	(23.0)	(23.0)




Balance as of June 29, 2024	$	—	372.3	764.4	1,136.7

(1) Net of accumulated impairment losses of $2,886.7 ($1,644.7 in Global Ceramic, $557.9 in Flooring NA and $684.1 in Flooring ROW).

Intangible assets not subject to amortization:


(In millions)	Tradenames
Balance as of December 31, 2023	$	705.7


Currency translation during the period	(16.2)
Balance as of June 29, 2024	$	689.5

Intangible assets subject to amortization:


(In millions)	Customer Relationships		Patents	Other	Total




Balance as of December 31, 2023
Gross carrying amount	$	691.5	249.7	8.7	949.9
Accumulated amortization	(531.0)		(247.2)	(2.1)	(780.3)
Net intangible assets subject to amortization	160.5		2.5	6.6	169.6
Balance as of June 29, 2024
Gross carrying amount	677.4		242.4	8.6	928.4
Accumulated amortization	(534.0)		(240.2)	(2.3)	(776.5)
Net intangible assets subject to amortization	$	143.4	2.2	6.3	151.9

Three Months Ended

Six Months Ended

(In millions)

June 29, 2024

July 1, 2023

June 29, 2024

July 1, 2023

Amortization expense

7.0

7.1

13.7

14.2

8. Accounts Payable and Accrued Expenses


(In millions)	June 29, 2024		December 31, 2023
Outstanding checks in excess of cash	$	0.6	2.2
Accounts payable, trade	1,082.8		1,038.0
Accrued expenses	708.5		667.7
Product warranties	33.8		37.6
Accrued interest	14.0		20.1


Accrued compensation and benefits	270.1		269.7
Total accounts payable and accrued expenses	$	2,109.8	2,035.3

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9. Accumulated Other Comprehensive Income (Loss)


(In millions)	Foreign Currency Translation Adjustments		Prior Pension and Post-Retirement Benefit Service Cost and Actuarial Gain (Loss)	Total
Balance as of December 31, 2023	$	(1,079.3)	(0.7)	(1,080.0)
Current period other comprehensive income (loss)	(158.7)		—	(158.7)

Balance as of June 29, 2024	$	(1,238.0)	(0.7)	(1,238.7)

10. Stock-Based Compensation

The Company recognizes compensation expense for all stock-based payments granted based on the grant-date fair value estimated in accordance with the provisions of ASC 718-10. Compensation expense is recognized on a straight-line basis over the awards’ estimated lives for fixed awards with ratable vesting provisions.

The Company granted no restricted stock units (“RSUs”) for the three months ended June 29, 2024. The Company granted 0.3 million RSUs at a weighted average grant-date fair value of $101.42 per unit for the six months ended June 29, 2024. The Company granted 0.0 million RSUs at a weighted average of grant-date fair value of $94.86 per unit for the three months ended July 1, 2023. The Company granted 0.3 million RSUs at a weighted average grant-date fair value of $102.09 per unit for the six months ended July 1, 2023. The Company recognized stock-based compensation expense related to the issuance of RSUs of $6.8 million ($5.0 million net of taxes) and $5.4 million ($4.0 million net of taxes) for the three months ended June 29, 2024 and July 1, 2023, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. The Company recognized stock-based compensation costs related to the issuance of RSUs of $13.6 million ($10.1 million net of taxes) and $10.4 million ($7.7 million net of taxes) for the six months ended June 29, 2024 and July 1, 2023, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. Pre-tax unrecognized compensation expense for unvested RSUs granted to employees, net of estimated forfeitures, was $31.9 million as of June 29, 2024, and will be recognized as expense over a weighted-average period of approximately 2.00 years.

11. Other Income and Expense, net


	Three Months Ended			Six Months Ended
(In millions)	June 29, 2024		July 1, 2023	June 29, 2024	July 1, 2023
Foreign currency (gains) losses, net	$	1.8	6.8	3.9	11.7





All other, net	(0.2)		(4.6)	(3.4)	(10.1)
Total other (income) and expense, net	$	1.6	2.2	0.5	1.6

12. Income Taxes

For the three months ended June 29, 2024, the Company recorded income tax expense of $42.3 million on earnings before income taxes of $199.8 million for an effective tax rate of 21.2%. For the three months ended July 1, 2023, the Company recorded income tax expense of $26.8 million on earnings before income taxes of $128.0 million, for an effective tax rate of 20.9%. The increase in the effective tax rate was primarily driven by higher earnings before taxes and the Company’s geographic dispersion of profits and losses for the respective periods, partially offset by a larger increase in unrecognized tax benefits during the three months ended July 1, 2023.

For the six months ended June 29, 2024, the Company recorded income tax expense of $70.1 million on earnings before income taxes of $332.6 million for an effective tax rate of 21.1%, as compared to income tax expense of $55.7 million on earnings before income taxes of $237.2 million, for an effective tax rate of 23.5% for the six months ended July 1, 2023. The decrease in the effective tax rate was primarily driven by a larger increase in unrecognized tax benefits and the write-off of an income tax receivable no longer expected during the six months ended July 1, 2023, partially offset by the Company’s geographic dispersion of profits and losses for the respective periods.

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13. Stockholders’ Equity

The following tables reflect the changes in stockholders’ equity for the three months ended June 29, 2024 and July 1, 2023.


		Total Stockholders’ Equity
		Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Noncontrolling Interests	Total Stockholders’ Equity
(In millions)	Shares	Amount	Shares				Amount















Balance as of March 30, 2024		71.2	$0.7	$1,949.1	$7,075.2	($1,167.8)	(7.3)	($215.3)	$5.9	$7,647.8
Shares issued under employee and director stock plans, net of shares withheld to pay taxes on employees’ equity awards		—	—	(0.9)	—	—	—	—	—	(0.9)
Stock-based compensation expense		—	—	6.8	—	—	—	—	—	6.8

Repurchases of common stock		(0.8)	—	—	(87.8)	—	—	—	—	(87.8)


Net earnings attributable to noncontrolling interests		—	—	—	—	—	—	—	0.1	0.1
Currency translation adjustment on noncontrolling interests		—	—	—	—	—	—	—	(0.1)	(0.1)
Purchase of noncontrolling interest, net of taxes		—	—	—	—	—	—	—	0.1	0.1

Currency translation adjustment		—	—	—	—	(70.9)	—	—	—	(70.9)
Prior pension and post-retirement benefit service cost and actuarial loss		—	—	—	—	—	—	—	—	—

Net earnings		—	—	—	157.4	—	—	—	—	157.4
Balances as of June 29, 2024		70.4	$0.7	$1,955.0	$7,144.8	($1,238.7)	(7.3)	($215.3)	$6.0	$7,652.5


		Total Stockholders’ Equity
		Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Noncontrolling Interests	Total Stockholders’ Equity
(In millions)	Shares	Amount	Shares				Amount















Balances as of April 1, 2023		71.0	$0.7	$1,932.1	$7,490.0	($1,107.9)	(7.3)	($215.4)	$6.2	$8,105.7
Shares issued under employee and director stock plans, net of shares withheld to pay taxes on employees’ equity awards		—	—	—	—	—	—	—	—	—
Stock-based compensation expense		—	—	5.3	—	—	—	—	—	5.3

Repurchases of common stock		—	—	—	—	—	—	—	—	—


Net earnings attributable to noncontrolling interests		—	—	—	—	—	—	—	—	—
Currency translation adjustment on noncontrolling interests		—	—	—	—	—	—	—	(0.3)	(0.3)
Purchase of noncontrolling interest, net of taxes		—	—	—	—	—	—	—	—	—

Currency translation adjustment		—	—	—	—	0.1	—	—	—	0.1
Prior pension and post-retirement benefit service cost and actuarial gain		—	—	—	—	—	—	—	—	—

Net earnings		—	—	—	101.2	—	—	—	—	101.2
Balances as of July 1, 2023		71.0	$0.7	$1,937.4	$7,591.2	($1,107.8)	(7.3)	($215.4)	$5.9	$8,212.0

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The following tables reflect the changes in stockholders’ equity for the six months ended June 29, 2024 and July 1, 2023.


		Total Stockholders’ Equity
		Common Stock		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Noncontrolling Interest	Total Stockholders’ Equity
(In millions)	Shares	Amount	Shares				Amount

Balances as of December 31, 2023		71.0	$0.7	$1,947.5	$6,970.2	($1,080.0)	(7.3)	($215.4)	$6.1	$7,629.1
Shares issued under employee and director stock plans, net of shares withheld to pay taxes on employees’ equity awards		0.2	—	(6.1)	—	—	—