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Mohawk Industries Reports Q3 Results
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Mohawk Industries Reports Q3 Results

CALHOUN, Ga., Oct. 27, 2022 (GLOBE NEWSWIRE) — Mohawk Industries, Inc. (NYSE: MHK) today announced a 2022 third quarter net loss of $534 million and a diluted loss per share of $8.40, including the impact of non-cash impairment charges of $696 million. The Company’s current market capitalization along with challenging economic conditions and higher discount rates prompted a review of its goodwill and intangible asset balances, which resulted in the impairment charges. Adjusted net earnings were $212 million, and adjusted earnings per share (EPS) were $3.34, excluding impairment and other non-recurring charges. Net sales for the third quarter of 2022 were $2.9 billion, an increase of 3.6% as reported and 8.3% on a constant basis. For the third quarter of 2021, net sales were $2.8 billion, net earnings were $271 million and EPS was $3.93. Adjusted net earnings were $272 million, and adjusted EPS was $3.95, excluding restructuring, acquisition, and other charges.

For the nine months ended October 1, 2022, net loss and loss per share were $8 million and $0.13, respectively, including the impact of the non-cash impairment charges noted above. Adjusted net earnings excluding impairment and other non-recurring charges were $739 million and adjusted EPS was $11.56. For the 2022 nine-month period, net sales were $9.1 billion, an increase of 7.7% versus prior year as reported or 12.1% on a constant basis. For the nine-month period ending October 2, 2021, net sales were $8.4 billion, net earnings were $844 million and EPS was $12.11; excluding restructuring, acquisition and other charges, adjusted net earnings and EPS were $828 million and $11.89, respectively.

Commenting on Mohawk Industries’ third quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “Mohawk’s third quarter sales increased primarily from price increases and strength in the commercial sector. Our sales were weaker than we anticipated, as the retail channel softened across all regions and product categories. The strengthening U.S. dollar also negatively impacted our translated sales by $117 million or 4.1%. Our operating income declined as lower volume resulted in higher unabsorbed cost and material, energy and transportation inflation impacted our results. Our global organization responded to the economic challenges with additional actions to optimize cost, productivity and inventory levels.

“Our businesses in Europe have been impacted more than others due to the unprecedented energy crisis and high inflation that has slowed the region’s economy. Our costs have continued to rise, and our pricing in Europe has not kept up with the recent material and energy inflation, which has compressed our margins. The Italian government provided energy subsidies during the third quarter, and additional actions from both the European Union and individual countries are being discussed. The high cost of energy has forced European consumers to concentrate on necessities and defer discretionary purchases. Our sales and margins in the market will remain under pressure until the region overcomes these challenges. These postponed purchases will increase demand when the economy rebounds and enhance our results.

“The U.S. is being impacted by high overall inflation and mortgage rates that have risen from below 3% to approximately 7%. The residential market, which is the most significant part of our business, is expected to decline further before we see an inflection point. Remodeling has slowed, and our product mix has been impacted as consumers trade down to options that fit their budgets. It is estimated that the U.S. has a housing deficit of five million units, and more than half of U.S. homes are over 50 years old. Remodeling investments are expected to grow long term as U.S. housing stock ages and families with low mortgage rates choose to remain in their homes.

“While we manage through current conditions, we are also investing in our business for the long term. We are expanding our capacity in growing product categories, including LVT, laminate, quartz countertops and premium ceramic and insulation. We have recently completed a number of smaller strategic acquisitions that will enhance our current product offering and leverage our existing market positions. In Europe, these include a sheet vinyl business, a mezzanine flooring company and a wood veneer plant. In the U.S., we acquired a non-woven flooring producer and a flooring accessories company.

“In the third quarter, our Global Ceramic Segment’s net sales were $1.1 billion, an increase of 9.8% as reported and 12.4% on a constant basis. The Segment’s operating margin was negative 51.0%, including the impact of a non-cash goodwill impairment charge and higher inflation, partially offset by pricing and mix improvements and productivity. Excluding the impact of the impairment and restructuring charges, the Segment’s adjusted operating margin was 12.1%. The Segment delivered the strongest operating performance during the quarter, even with substantial inflation headwinds in Europe. Sales in the new home construction channel were solid in most geographies, and the commercial channel showed resilience with new construction and remodeling projects continuing. In most markets, residential remodeling has slowed due to tightening consumer discretionary spending and higher interest rates. Sales in our U.S. ceramic business expanded during the quarter, and we are gaining support with our new higher-margin introductions that are an alternative to European imports. Our countertop sales grew during the quarter, led by our high-end quartz collections. Our European ceramic results exceeded our expectations due to our sales and pricing actions, positive mix and Italian energy subsidies. Sales of our premium collections remained strong, while increased gas prices impacted sales of our outdoor and lower-end products. In our other ceramic markets, sales grew primarily through pricing, mix and strength in the commercial channels. All businesses are reducing production in the fourth quarter, which will increase our costs.

“For the quarter, our Flooring Rest of the World segment’s net sales were $0.7 billion, a decrease of 4.8% as reported or an increase of 9.4% on a constant basis. The Segment’s operating margin was 6.2% as a result of higher inflation, temporary manufacturing shutdowns and lower volumes, partially offset by product mix improvements. The Segment’s adjusted operating margin was 8.5%, excluding the impact of restructuring activities and the impairment of certain intangible assets. The Segment’s sales rose primarily from price increases and growth in our panels, insulation and Oceania businesses. The Segment’s sales are mostly residential and were more impacted by constrained consumer spending. The retail sector is reducing inventories, and consumers are trading down in all categories. Our margins were compressed by inflation, lower sales volume and reduced production. The weakening markets are making additional price increases more difficult to implement. As flooring sales softened, we increased promotional activity to encourage consumers to trade up. While our premium laminate and LVT faced greater pressures, sales of our more value-oriented sheet vinyl grew. We have completed the acquisition of a small Polish sheet vinyl producer that will expand our business in central and eastern Europe. New building projects in western Europe are beginning to slow, and we are enhancing our insulation distribution by expanding our customer base and exports. Our insulation selling prices were slightly behind inflation, and our panels results weakened as demand softened and competition intensified. The French panels plant we acquired last year is increasing sales, and we have improved its productivity and operating expenses. We expanded distribution of our higher end decorative panels and acquired a small German mezzanine flooring company that will bolt on to our existing business. The Australian market is improving as the country relaxes COVID restrictions and New Zealand is more difficult with residential sales weakening.

“In the quarter, our Flooring North America Segment’s net sales were $1.1 billion, an increase of 3.7% as reported, and the Segment’s operating margin was 5.9% as a result of higher inflation, lower volumes and temporary manufacturing shutdowns, partially offset by pricing and mix improvements and productivity. The Segment’s adjusted operating margin was 8.0%, excluding the impact of restructuring, acquisition and integration-related costs and the impairment of certain intangible assets. The Segment’s sales increased primarily from pricing, with hard surface products outperforming due to our investments in premium laminate and LVT. The residential market softened as inflation impacted consumer discretionary spending, and retailers reduced their inventories. Our pricing actions offset material and energy inflation, though lower manufacturing volumes led to unfavorable absorption. We are implementing our restructuring plans to lower both our fixed and variable costs by shutting higher cost assets, reducing staffing and aligning production with demand. Our resilient sales continued to improve, with our strongest performance in the new home construction, multifamily and commercial channels. Sheet vinyl sales strengthened as inflation has increased interest in value-oriented flooring options. The first phase of our new West Coast LVT plant is operating at planned output levels, and additional lines will be installed throughout next year. Demand for our premium laminate continued to grow as a high performing, value alternative to other flooring. We have commitments to saturate our current laminate capacity and have initiated further expansion investments. Market conditions for carpet softened in the third quarter more than we had anticipated, and we reduced production, resulting in unabsorbed costs. In the second quarter, we announced carpet price increases that were implemented in the third quarter as inflation continued to rise. With demand softening, we were not able to increase prices further to recover the inflation after the announcement. We are seeing reductions in raw material costs that should align with our current pricing when our higher cost inventory is depleted. Our commercial business remains good, and the Architectural Billing Index reflects continued construction activity. Our commercial margins were strong as pricing and mix covered our inflation in the quarter. We have acquired a small rubber manufacturer that produces trim primarily used in commercial flooring installations. Sales in our rug business were lower than last year as major national retailers continued to adjust inventories. In July, we acquired a non-woven rug and carpet business, and the integration is delivering synergies.

“It is challenging to predict either the duration of the current economic conditions or their impact on our industry. As central banks around the world continue to raise interest rates and inflation reduces discretionary expenditures, we expect our businesses to remain under pressure. Residential remodeling drives a majority of our sales, and consumers are deferring purchases and trading down. In Europe, gas and electricity prices are reducing demand and increasing our manufacturing and material costs. We anticipate that governments in Europe will take actions to lower the impact on the economy, businesses and consumers. We are focused on managing through the current environment while investing to maximize our long-term profitability. We anticipate demand will slow further in the fourth quarter, and we will reduce production, resulting in greater unabsorbed overhead. To enhance sales, we are increasing promotional activity, introducing differentiated collections and reacting to competitive actions. We are executing restructuring actions, lowering administrative and manufacturing costs and reducing investments in marketing and advertising. Material prices spiked in the period and have begun softening in many categories. In Europe, flooring projects are being deferred and compressing industry volumes; at the same time, we are raising inventories of specific products ahead of expected higher energy costs this winter. After our second quarter U.S. pricing announcement, we incurred peak carpet material costs that will compress our margins until they flow through our inventory. We are postponing capital projects that do not impact our long-term strategies, while completing those that are critical to the near-term performance of our business. Finally, we expect the strengthening U.S. dollar will continue to reduce our translated results. Given these factors, we anticipate our fourth quarter adjusted EPS to be $1.40 to $1.50, excluding any restructuring or other one-time charges.

“During past decades, Mohawk has successfully managed through many challenging periods and industry recessions. The fundamentals of our business remain strong, and flooring remains an essential component of all new construction and remodeling. Mohawk has built leading positions in key markets around the globe with well-known brands and an extensive product offering. During this period, we are investing for the market rebound that always occurs after our industry contracts. We are expanding our higher growth categories of LVT, laminate, quartz countertops, premium ceramic and insulation which will increase our revenue and profitability with the next growth cycle. We have also made strategic acquisitions that bolt on to our businesses and create significant synergies that will enhance the combined results. Mohawk has a strong balance sheet with low net debt leverage of 1.2 times EBITDA and available liquidity exceeding $1.8 billion to manage through the current environment and optimize the long-term results.”

ABOUT MOHAWK INDUSTRIES
Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk’s vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Our industry leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Daltile, Durkan, Eliane, Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Mohawk Group, Pergo, Quick-Step and Unilin. During the past decade, Mohawk has transformed its business from an American carpet manufacturer into the world’s largest flooring company with operations in Australia, Brazil, Canada, Europe, Malaysia, Mexico, New Zealand and the United States.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words “could,” “should,” “believes,” “anticipates,” “expects,” and “estimates,” or similar expressions constitute “forward-looking statements.” For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation and deflation in raw material prices and other input costs; inflation and deflation in consumer markets; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company’s products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; taxes and tax reform, product and other claims; litigation; the risks and uncertainty related to the COVID-19 pandemic; and other risks identified in Mohawk’s SEC reports and public announcements.

Conference call Friday, October 28, 2022, at 11:00 AM Eastern Time
The telephone number is 1-833-630-1962 for U.S./Canada and 1-412-317-1843 for International/Local. A replay will be available until November 25, 2022, by dialing 1-877-344-7529 for U.S./Local calls and 1-412-317-0088 for International/Local calls and entering access code # 8886985.

Contact:  James Brunk, Chief Financial Officer (706) 624-2239 

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES              
(Unaudited)              
Condensed Consolidated Statement of Operations Data Three Months Ended   Nine Months Ended
(Amounts in thousands, except per share data) October 1, 2022   October 2, 2021   October 1, 2022   October 2, 2021
               
Net sales $ 2,917,539     2,817,017       9,086,390     8,439,876  
Cost of sales   2,203,878     1,979,702       6,697,404     5,908,585  
Gross profit   713,661     837,315       2,388,986     2,531,291  
Selling, general and administrative expenses   523,479     477,341       1,510,076     1,449,378  
Impairment of goodwill and indefinite-lived intangibles   695,771           695,771      
Operating (loss) income   (505,589 )   359,974       183,139     1,081,913  
Interest expense   13,797     14,948       37,337     45,083  
Other (income) expense, net   (1,242 )   21       (1,622 )   (13,374 )
(Loss) earnings before income taxes   (518,144 )   345,005       147,424     1,050,204  
Income tax expense   15,569     73,821       155,193     205,756  
Net (loss) earnings including noncontrolling interests   (533,713 )   271,184       (7,769 )   844,448  
Net earnings attributable to noncontrolling interests   256     206       440     378  
Net (loss) earnings attributable to Mohawk Industries, Inc. $ (533,969 )   270,978       (8,209 )   844,070  
               
Basic (loss) earnings per share attributable to Mohawk Industries, Inc.              
Basic (loss) earnings per share attributable to Mohawk Industries, Inc. $ (8.40 )   3.95       (0.13 )   12.16  
Weighted-average common shares outstanding – basic   63,534     68,541       63,923     69,389  
               
Diluted (loss) earnings per share attributable to Mohawk Industries, Inc.              
Diluted (loss) earnings per share attributable to Mohawk Industries, Inc. $ (8.40 )   3.93       (0.13 )   12.11  
Weighted-average common shares outstanding – diluted   63,534     68,864       63,923     69,683  
               
               
               
Other Financial Information              
(Amounts in thousands)              
Net cash provided by operating activities $ 224,774     498,739       427,435     1,096,735  
Less: Capital expenditures   150,043     147,740       430,084     375,179  
Free cash flow $ 74,731     350,999       (2,649 )   721,556  
               
Depreciation and amortization $ 153,466     148,618       436,449     448,299  
               
               
Condensed Consolidated Balance Sheet Data              
(Amounts in thousands)              
          October 1, 2022   October 2, 2021
ASSETS              
Current assets:              
Cash and cash equivalents         $ 326,971     1,128,027  
Short-term investments           110,000      
Receivables, net           2,003,261     1,880,476  
Inventories           2,900,116     2,215,630  
Prepaid expenses and other current assets           513,981     421,944  
Total current assets           5,854,329     5,646,077  
Property, plant and equipment, net           4,524,536     4,442,339  
Right of use operating lease assets           400,412     385,606  
Goodwill           1,827,968     2,612,201  
Intangible assets, net           823,100     911,271  
Deferred income taxes and other non-current assets           370,689     452,806  
Total assets         $ 13,801,034     14,450,300  
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities:              
Short-term debt and current portion of long-term debt         $ 1,542,139     588,669  
Accounts payable and accrued expenses           2,256,097     2,209,942  
Current operating lease liabilities           106,511     103,132  
Total current liabilities           3,904,747     2,901,743  
Long-term debt, less current portion           1,019,984     1,710,207  
Non-current operating lease liabilities           306,617     292,806  
Deferred income taxes and other long-term liabilities           744,629     793,095  
Total liabilities           5,975,977     5,697,851  
Total stockholders’ equity           7,825,057     8,752,449  
Total liabilities and stockholders’ equity         $ 13,801,034     14,450,300  
               
Segment Information Three Months Ended   As of or for the Nine Months Ended
(Amounts in thousands) October 1, 2022   October 2, 2021   October 1, 2022   October 2, 2021
               
Net sales:              
Global Ceramic $ 1,096,656     998,444       3,319,982     2,967,818  
Flooring NA   1,089,634     1,050,453       3,261,082     3,100,892  
Flooring ROW   731,249     768,120       2,505,326     2,371,166  
Consolidated net sales $ 2,917,539     2,817,017       9,086,390     8,439,876  
               
Operating (loss) income:              
Global Ceramic $ (559,706 )   118,896       (305,099 )   343,135  
Flooring NA   64,672     118,625       260,026     315,866  
Flooring ROW   45,508     133,595       304,265     456,787  
Corporate and intersegment eliminations   (56,063 )   (11,142 )     (76,053 )   (33,875 )
Consolidated operating (loss) income $ (505,589 )   359,974       183,139     1,081,913  
               
Assets:              
Global Ceramic         $ 4,866,822     5,174,981  
Flooring NA           4,490,502     3,960,037  
Flooring ROW           4,036,675     4,276,310  
Corporate and intersegment eliminations           407,035     1,038,972  
Consolidated assets         $ 13,801,034     14,450,300  
Reconciliation of Net (Loss) Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc.
(Amounts in thousands, except per share data)
        Three Months Ended   Nine Months Ended    
        October 1, 2022   October 2, 2021   October 1, 2022   October 2, 2021    
Net (loss) earnings attributable to Mohawk Industries, Inc.   $ (533,969 )   270,978     (8,209 )   844,070      
Adjusting items:                        
Restructuring, acquisition and integration-related and other costs     34,460     1,044     38,118     18,560      
Acquisitions purchase accounting, including inventory step-up     1,401     226     1,544     682      
Impairment of goodwill and indefinite-lived intangibles     695,771         695,771          
Resolution of foreign non-income tax contingencies                 (6,211 )    
Income tax effect on resolution of foreign non-income tax contingencies                 2,302      
One-time tax planning election                   (26,731 )    
Legal settlements and reserves       45,000         45,000          
Release of indemnification asset               7,324          
Income taxes – reversal of uncertain tax position             (7,324 )        
Income taxes – impairment of goodwill and indefinite-lived intangibles     (10,168 )       (10,168 )        
Income taxes         (20,487 )   (203 )   (23,291 )   (4,317 )    
Adjusted net earnings attributable to Mohawk Industries, Inc.   $ 212,008     272,045     738,765     828,355      
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc.   $ 3.34     3.95     11.56     11.89      
Weighted-average common shares outstanding – diluted     63,534     68,864     63,923     69,683      
 
 
                         
Reconciliation of Total Debt to Net Debt Less Short-Term Investments
(Amounts in thousands)                        
        October 1, 2022                
Short-term debt and current portion of long-term debt   $ 1,542,139                  
Long-term debt, less current portion       1,019,984                  
Total debt         2,562,123                  
Less: Cash and cash equivalents       326,971                  
Net debt         2,235,152                  
Less: Short-term investments       110,000                  
Net debt less short-term investments     $ 2,125,152                  
                         
                         
                         
Reconciliation of Operating Income (Loss) to Adjusted EBITDA
(Amounts in thousands)                       Trailing Twelve
        Three Months Ended   Months Ended
        December 31,2021   April 2,2022   July 2,2022   October 1, 2022   October 1, 2022
Operating income (loss)       $ 253,098     320,801     367,927     (505,589 )   436,237  
Other income (expense)         (1,140 )   (2,438 )   2,818     1,242     482  
Net income attributable to noncontrolling interests     (11 )   (105 )   (79 )   (256 )   (451 )
Depreciation and amortization(1)       143,411     141,415     141,569     153,466     579,861  
EBITDA         395,358     459,673     512,235     (351,137 )   1,016,129  
Restructuring, acquisition and integration-related and other costs     4,641     1,857     1,801     21,375     29,674  
Acquisitions purchase accounting, including inventory step-up     1,067         143     1,401     2,611  
Impairment of goodwill and indefinite-lived intangibles                 695,771     695,771  
Legal settlements and reserves                   45,000     45,000  
Release of indemnification asset           7,324             7,324  
Adjusted EBITDA       $ 401,066     468,854     514,179     412,410     1,796,509  
                         
Net debt less short-term investments to adjusted EBITDA                   1.2  
(1) Includes accelerated depreciation of $13,085 for Q3 2022.                    
                         
                         
Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)                        
        Three Months Ended   Nine Months Ended    
        October 1, 2022   October 2, 2021   October 1, 2022   October 2, 2021    
Net sales       $ 2,917,539     2,817,017     9,086,390     8,439,876      
Adjustment to net sales on constant shipping days     17,504         49,315          
Adjustment to net sales on a constant exchange rate     116,782         327,350          
Net sales on a constant exchange rate and constant shipping days   $ 3,051,825     2,817,017     9,463,055     8,439,876      
                         
                         
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)                        
        Three Months Ended            
Global Ceramic       October 1, 2022   October 2, 2021            
Net sales       $ 1,096,656     998,444              
Adjustment to segment net sales on constant shipping days     4,542                  
Adjustment to segment net sales on a constant exchange rate     20,774                  
Segment net sales on a constant exchange rate and constant shipping days   $ 1,121,972     998,444              
                         
                         
Reconciliation of Segment Net Sales to Adjusted Segment Net Sales
(Amounts in thousands)                        
        Three Months Ended            
Flooring NA       October 1, 2022   October 2, 2021            
Net sales       $ 1,089,634     1,050,453              
Rug adjustment         40,000                  
Adjusted segment net sales   $ 1,129,634     1,050,453              
                         
                         
Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)                        
        Three Months Ended            
Flooring ROW       October 1, 2022   October 2, 2021            
Net sales       $ 731,249     768,120              
Adjustment to segment net sales on constant shipping days     12,962                  
Adjustment to segment net sales on a constant exchange rate     96,008                  
Segment net sales on a constant exchange rate and constant shipping days   $ 840,219     768,120              
                         
                         
Reconciliation of Gross Profit to Adjusted Gross Profit
(Amounts in thousands)                        
        Three Months Ended            
        October 1, 2022   October 2, 2021            
Gross Profit       $ 713,661     837,315              
Adjustments to gross profit:                        
Restructuring, acquisition and integration-related and other costs     30,422     552              
Acquisitions purchase accounting, including inventory step-up     1,401     226              
Adjusted gross profit       $ 745,484     838,093              
                         
                         
Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses
(Amounts in thousands)                        
        Three Months Ended            
        October 1, 2022   October 2, 2021            
Selling, general and administrative expenses   $ 523,479     477,341              
Adjustments to selling, general and administrative expenses:                    
Restructuring, acquisition and integration-related and other costs     (4,117 )   (521 )            
Legal settlements and reserves       (45,000 )                
Adjusted selling, general and administrative expenses   $ 474,362     476,820              
                   
                         
Reconciliation of Operating (Loss) Income to Adjusted Operating Income
(Amounts in thousands)                        
        Three Months Ended        
        October 1, 2022   October 2, 2021            
Operating (loss) income       $ (505,589 )   359,974              
Adjustments to operating (loss) income:                      
Restructuring, acquisition and integration-related and other costs     34,539     1,073              
Acquisitions purchase accounting, including inventory step-up     1,401     226              
Impairment of goodwill and indefinite-lived intangibles     695,771                  
Legal settlements and reserves       45,000                  
Adjusted operating income     $ 271,122     361,273              
                         
                         
Reconciliation of Segment Operating (Loss) Income to Adjusted Segment Operating Income
(Amounts in thousands)                        
        Three Months Ended            
Global Ceramic       October 1, 2022   October 2, 2021            
Operating (loss) income       $ (559,706 )   118,896              
Adjustments to segment operating (loss) income:                    
Restructuring, acquisition and integration-related and other costs     3,366     212              
Impairment of goodwill         688,514                  
Adjusted segment operating income     $ 132,174     119,108              
                         
                         
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)                        
        Three Months Ended            
Flooring NA       October 1, 2022   October 2, 2021            
Operating income       $ 64,672     118,625              
Adjustments to segment operating income:                    
Restructuring, acquisition and integration-related and other costs     20,223     1,396              
Acquisitions purchase accounting, including inventory step-up     1,401                  
Impairment of indefinite-lived intangibles     1,407                  
Adjusted segment operating income     $ 87,703     120,021              
                         
                         
Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)                        
        Three Months Ended            
Flooring ROW       October 1, 2022   October 2, 2021            
Operating income       $ 45,508     133,595              
Adjustments to segment operating income:                    
Restructuring, acquisition and integration-related and other costs     10,950     (454 )            
Acquisitions purchase accounting, including inventory step-up         226              
Impairment of indefinite-lived intangibles     5,850                  
Adjusted segment operating income     $ 62,308     133,367              
                         
                         
Reconciliation of Segment Operating (Loss) to Adjusted Segment Operating (Loss)
(Amounts in thousands)                        
        Three Months Ended            
Corporate and intersegment eliminations   October 1, 2022   October 2, 2021            
Operating (loss)       $ (56,063 )   (11,142 )            
Adjustments to segment operating (loss):                    
Restructuring, acquisition and integration-related and other costs         (82 )            
Legal settlements and reserves       45,000                  
Adjusted segment operating (loss)     $ (11,063 )   (11,224 )            
                         
                         
Reconciliation of (Loss) Earnings Including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes
(Amounts in thousands)                        
        Three Months Ended            
        October 1, 2022   October 2, 2021            
(Loss) earnings before income taxes     $ (518,144 )   345,005              
Net earnings attributable to noncontrolling interests     (256 )   (206 )            
Adjustments to (loss) earnings including noncontrolling interests before income taxes:                    
Restructuring, acquisition and integration-related and other costs     34,460     1,044              
Acquisitions purchase accounting, including inventory step-up     1,401     226              
Impairment of goodwill and indefinite-lived intangibles     695,771                  
Legal settlements and reserves       45,000                  
Adjusted earnings including noncontrolling interests before income taxes   $ 258,232     346,069              
                         
                         
Reconciliation of Income Tax Expense to Adjusted Income Tax Expense
(Amounts in thousands)                        
        Three Months Ended            
        October 1, 2022   October 2, 2021            
Income tax expense       $ 15,569     73,821              
Income tax effect on impairment of goodwill and indefinite-lived intangibles     10,168                  
Income tax effect of adjusting items       20,487     203              
Adjusted income tax expense     $ 46,224     74,024              
                         
Adjusted income tax rate       17.9 %   21.4 %            
                         
The Company supplements its condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, with certain non-GAAP financial measures. As required by the Securities and Exchange Commission rules, the tables above present a reconciliation of the Company’s non-GAAP financial measures to the most directly comparable US GAAP measure. Each of the non-GAAP measures set forth above should be considered in addition to the comparable US GAAP measure, and may not be comparable to similarly titled measures reported by other companies. The Company believes these non-GAAP measures, when reconciled to the corresponding US GAAP measure, help its investors as follows: Non-GAAP revenue measures that assist in identifying growth trends and in comparisons of revenue with prior and future periods and non-GAAP profitability measures that assist in understanding the long-term profitability trends of the Company’s business and in comparisons of its profits with prior and future periods.
                         
The Company excludes certain items from its non-GAAP revenue measures because these items can vary dramatically between periods and can obscure underlying business trends. Items excluded from the Company’s non-GAAP revenue measures include: foreign currency transactions and translation and the impact of acquisitions.
                         
The Company excludes certain items from its non-GAAP profitability measures because these items may not be indicative of, or are unrelated to, the Company’s core operating performance. Items excluded from the Company’s non-GAAP profitability measures include: restructuring, acquisition and integration-related and other costs, legal settlements and reserves, impairment of goodwill and indefinite-lived intangibles, acquisition purchase accounting, including inventory step-up, release of indemnification assets and the reversal of uncertain tax positions.

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