CALHOUN, Georgia, July 15, 2025 (GLOBE NEWSWIRE) -- Mohawk Industries, Inc. (NYSE: MHK) today published its 16 annual impact report, which highlights progress toward the Company's sustainability goals, new environmentally friendly residential and commercial products, and activities that benefit the Company's people and communities as well as the planet. "At Mohawk, we invest in what works—solutions that reduce our environmental impact, strengthen our business and benefit our customers," said Chairman and Ch ...

Core Viewpoint - Mohawk Industries will release its Q2 2025 financial results on July 24, 2025, and will host a live earnings call on July 25, 2025, at 11:00 AM ET [1]. Group 1: Company Overview - Mohawk Industries is a leading global flooring manufacturer, providing products for residential and commercial spaces [2]. - The company has established a competitive advantage through vertically integrated production and distribution processes across various flooring types, including carpets, tiles, and vinyl [2]. - Over the past two decades, Mohawk has transformed from a U.S. carpet manufacturer to the largest flooring company globally, with operations in North America, Europe, South America, Oceania, and Asia [2]. Group 2: Earnings Call Information - The earnings call will be accessible via a live stream and can also be replayed until August 22, 2025, using specific access codes [1][3]. - For those unable to attend the live call, a replay can be accessed through the company's investor relations website [1].

Company Overview - Mohawk Industries is the leading global flooring manufacturer, enhancing residential and commercial spaces worldwide [2] - The company has transformed from an American carpet manufacturer into the world's largest flooring company over the past two decades, with operations in North America, Europe, South America, Oceania, and Asia [2] - Mohawk's vertically integrated manufacturing and distribution processes provide competitive advantages in producing various flooring products, including carpet, rugs, ceramic tile, laminate, wood, stone, and vinyl flooring [2] Upcoming Earnings Call - Mohawk Industries will release its Second Quarter 2025 earnings on July 24, 2025, followed by a conference call on July 25, 2025, at 11:00 am ET [1] - The conference call will be available for live streaming on the company's investor relations website [1] - For those unable to attend the live call, a replay will be available until August 22, 2025 [1]

Group 1 - The stock of Mohawk Industries, Inc. (MHK) is experiencing significant attention due to high implied volatility in the options market, particularly the Aug 15, 2025 $65 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - Mohawk Industries currently holds a Zacks Rank 3 (Hold) in the Textile - Home Furnishing industry, which is in the top 5% of the Zacks Industry Rank, but analysts have not increased earnings estimates for the current quarter, leading to a decrease in the consensus estimate from $2.67 to $2.63 per share [3] Group 2 - The high implied volatility surrounding Mohawk Industries may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay, hoping the stock does not move as much as expected by expiration [4]

Core Insights - Mohawk Industries, Inc. (MHK) is benefiting from strategic restructuring initiatives, international market exposure, and a stable balance sheet, although facing challenges from elevated input costs and a softer residential market [1][8]. Group 1: Company Performance - MHK shares have decreased by 15.5% year-to-date, underperforming the broader Zacks Consumer Discretionary sector and the S&P 500 index [2]. - The Zacks Consensus Estimate for MHK's earnings per share (EPS) for 2025 has decreased from $9.45 to $9.21, indicating a 5.1% year-over-year decline, while the 2026 estimate has increased from $10.96 to $10.63, reflecting a growth of 15.4% [3]. Group 2: Growth Drivers - Mohawk's restructuring initiatives aim to enhance productivity and profitability, including aligning production with demand and optimizing manufacturing processes [5]. - The company is implementing targeted pricing increases on higher-value products to mitigate elevated input costs, with expected benefits of approximately $100 million in 2025 from these initiatives [6]. - Mohawk has a strong international presence, generating significant net sales outside the U.S., and is expanding its operations in various countries to increase market share [9]. Group 3: Financial Position - As of March 29, 2025, Mohawk's cash and cash equivalents stood at $702.5 million, an increase from $658.5 million in March 2024, indicating a stable cash position to meet short-term obligations [11]. Group 4: Challenges - The company is experiencing margin compression due to higher input costs and restructuring expenses, with adjusted gross margin contracting by 30 basis points to 24.1% year-over-year [14]. - The residential remodeling sector is facing a slowdown due to low housing turnover and elevated interest rates, which is expected to continue affecting demand [15][18].

This presentation may include discussion of non-GAAP numbers. For a reconciliation of any non-GAAP to GAAP amounts, please refer to the reconciliation tables at the end of this presentation. MOHAWK INDUSTRIES 1 Q1 2025 Ways We Win Forward-looking Statements & Non-GAAP Numbers Certain of the statements in this presentation, particularly those anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," ...

Group 1 - The core viewpoint is that Mohawk Industries (NYSE: MHK) is facing significant demand challenges due to the current mortgage rate environment, leading to a downgrade to a hold rating [1] - The investment strategy focuses on fundamentals-based value investing, emphasizing the importance of long-term durability and robust balance sheets over low multiples [1] - There is a belief that while investing in successful companies carries risks, the potential for vast development opportunities can make immediate price less critical [1]

Core Viewpoint - Mohawk Industries, Inc. reported mixed results for Q1 2025, with earnings exceeding estimates while net sales fell short, reflecting a year-over-year decline in both metrics [1][5]. Financial Performance - Adjusted EPS was $1.52, surpassing the Zacks Consensus Estimate of $1.41 by 7.8%, but down from $1.86 in the prior year [5]. - Net sales reached $2.53 billion, missing the consensus estimate of $2.57 billion by 1.8% and declining 5.7% year-over-year from $2.68 billion [5]. - Adjusted gross margin contracted by 30 basis points to 24.1%, while adjusted operating margin decreased by 130 basis points to 4.8% [6]. Segment Performance - Global Ceramic segment sales totaled $993.8 million, down 4.9% year-over-year, with adjusted sales up 1.2% to $1.057 billion [7]. - Flooring North America reported net sales of $862.4 million, down 4.2% year-over-year, with adjusted net sales at $890.2 million [8]. - Flooring Rest of the World saw net sales decrease by 8.8% year-over-year to $669.6 million, with adjusted sales down 2.9% to $713.3 million [9]. Market Conditions and Challenges - The company faced challenges from two fewer shipping days, foreign exchange headwinds, and a new order system in Flooring North America, although service levels have normalized [2][3]. - Market conditions weakened, particularly in residential remodeling, with consumer confidence declining and global tariffs complicating the situation [3][12]. - The company anticipates an annualized cost of around $50 million due to tariffs at the current 10% rate, and is focusing on inventory management and pricing adjustments [3][12]. Future Outlook - Despite current challenges, the company remains optimistic about the long-term prospects of the flooring market, expecting a significant rebound as industry volumes return to historical levels [4]. - The company projects adjusted EPS for Q2 2025 in the range of $2.52-$2.62, down from $3 in the prior year [15].

Financial Data and Key Metrics Changes - The company reported sales of $2,500,000,000, a decrease of 5.7% as reported or about flat on a constant basis, impacted by two fewer shipping days and foreign exchange headwinds [6][16]. - Earnings per share (EPS) were $1.52, benefiting from productivity gains, restructuring actions, and a lower tax rate, which offset pricing pressure and higher input costs [7][19]. - Gross margin for the quarter was 23.1% as reported, and 24.1% excluding charges, in line with the prior year [17]. - Operating income was $96,000,000 or 3.8%, with adjusted operating margin at 4.8%, a decrease of 130 basis points year-over-year due to higher input costs [17][18]. Business Line Data and Key Metrics Changes - **Global Ceramic**: Sales were just over $990,000,000, a 4.9% decrease as reported but a 1.2% increase on a constant basis, driven by improved product and channel mix [20]. - **Flooring North America**: Sales were $862,000,000, a decrease of 4.2% as reported or 1.1% on a constant basis, impacted by the order management system conversion [20]. - **Flooring Rest of the World**: Sales were $670,000,000, an 8.8% decrease as reported and 2.9% on an adjusted basis, driven by lower sales volume and unfavorable price mix [21]. Market Data and Key Metrics Changes - Conditions in the first quarter weakened sequentially, with residential remodeling remaining the lowest sector [12]. - Consumer confidence in the U.S. has been declining, affecting spending and housing activity [13]. - In Europe, consumer confidence has also declined due to economic uncertainty, leading to postponed home sales and remodeling activities [14]. Company Strategy and Development Direction - The company aims to grow market share in a challenging environment by optimizing product mix and reducing costs [24]. - Restructuring projects are on schedule, with expected savings of approximately $100,000,000 this year [18][34]. - The company is focusing on enhancing domestic manufacturing capabilities to mitigate tariff impacts and improve competitive positioning [9][24]. Management's Comments on Operating Environment and Future Outlook - Management anticipates that the impact of tariffs will influence consumer spending and new construction, though the extent is unpredictable [11]. - The company expects pricing pressure to continue across all regions due to low demand and competitive markets [35]. - The outlook for the second quarter adjusted EPS is projected to be between $2.52 and $2.62, excluding any restructuring or one-time charges [36]. Other Important Information - The company purchased 225,000 shares of its stock for approximately $26,000,000 during the quarter [8]. - Cash and cash equivalents were just over $700,000,000, with free cash flow expected to remain strong despite a use of approximately $85,000,000 in Q1 [22][23]. Q&A Session Summary Question: Timing of tariff impact and pricing actions - The CFO indicated that the $50,000,000 annualized cost impact from tariffs would be more evident in the late third to fourth quarter, as inventory turnover takes time [41]. Question: Domestic capacity and pricing strategy - Management emphasized the advantage of domestic production capacity in the U.S. market, which will be leveraged to optimize results amid tariff increases [43]. Question: Balancing pricing power and demand - Management acknowledged the challenge of balancing pricing power with slower demand, indicating that pricing actions are being assessed continuously [49][50]. Question: EPS growth outlook amid tariff impacts - Management expressed that EPS growth would depend on market conditions, with efforts to offset tariff impacts through pricing and cost-cutting measures [58][59]. Question: Inventory levels and market dynamics - The company noted an increase in inventory levels due to preemptive imports ahead of tariffs, with no significant changes in downstream volumes observed [105][106]. Question: Breakdown of imports and tariff exposure - The company clarified that a significant portion of imports comes from countries like Vietnam and India, with minimal exposure to China [111][112].

Financial Data and Key Metrics Changes - Reported sales for the first quarter were $2.5 billion, a decrease of 5.7% as reported or approximately flat on a constant basis, impacted by two fewer shipping days and foreign exchange headwinds [3][12] - Earnings per share (EPS) for the quarter was $1.52, benefiting from productivity gains, restructuring actions, and a lower tax rate, which offset pricing pressure and higher input costs [4][14] - Gross margin for the quarter was 23.1% as reported, and 24.1% excluding charges, consistent with the prior year [13] - Operating income was reported at $96 million, or 3.8%, with adjusted operating margin at 4.8%, a decrease of 130 basis points year-over-year due to higher input costs [14][18] Business Line Data and Key Metrics Changes - Global Ceramic segment had sales of over $990 million, a 4.9% decrease as reported but a 1.2% increase on a constant basis, driven by improved product and channel mix [15] - Flooring North America sales were $862 million, a decrease of 4.2% as reported or 1.1% on a constant basis, impacted by the order management system conversion [15] - Flooring Rest of the World reported sales of $670 million, an 8.8% decrease as reported and 2.9% on an adjusted basis, driven by lower sales volume and unfavorable price mix [16] Market Data and Key Metrics Changes - Conditions in the first quarter weakened sequentially, with residential remodeling remaining the lowest sector [8][11] - Consumer confidence in the U.S. has been declining, affecting home sales and remodeling activities [10][11] - In Europe, consumer confidence has also declined due to economic uncertainty, leading to postponed home sales and remodeling activities [11][12] Company Strategy and Development Direction - The company aims to grow market share in a challenging environment by optimizing product mix and reducing costs [19] - Restructuring projects are on schedule, with expected savings of approximately $100 million this year [14][30] - The company is focusing on enhancing domestic manufacturing capabilities to mitigate tariff impacts and improve competitive positioning [5][21] Management Comments on Operating Environment and Future Outlook - Management anticipates that the impact of tariffs will influence consumer and business spending, though the extent is unpredictable [7][29] - The company expects pricing pressure to continue across all regions due to low demand and competitive markets [30] - Long-term prospects for the flooring category remain optimistic, with expectations of significant improvement when industry volumes return to historical levels [31] Other Important Information - The company purchased 225,000 shares of its stock for approximately $26 million during the quarter [4] - Cash and cash equivalents were over $700 million, with free cash flow usage of approximately $85 million primarily due to delayed invoicing and increased imports ahead of tariffs [16][17] Q&A Session Summary Question: Timing of tariff impact - The company expects the $50 million annualized cost impact from tariffs to be more pronounced in the late third quarter and fourth quarter, as inventory turnover takes time [34][36] Question: Pricing power in a promotional environment - The company believes that tariffs will be passed through to consumers, with selective pricing actions being taken to offset costs [42][44] Question: EPS growth outlook - Management indicated that EPS growth will depend on market conditions, with efforts to offset tariff impacts through pricing and cost-cutting measures [51][52] Question: Energy cost headwinds - The company expects energy costs to be slightly higher in Q2, with potential benefits from lower natural gas prices in the fourth quarter [118][120] Question: Inventory levels and market share - The company has increased inventory levels due to imports ahead of tariffs, and is focused on maintaining market share without leading with price [97][95]