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Core Insights - Mohawk Industries, Inc. reported third-quarter 2025 results with earnings slightly below estimates while net sales exceeded expectations, showing a year-over-year increase in sales but a decline in earnings [1][4] Financial Performance - Adjusted earnings per share (EPS) for Q3 were $2.67, missing the Zacks Consensus Estimate of $2.68 by 0.4%, down from $2.90 in the same quarter last year [4] - Net sales reached $2.8 billion, surpassing the consensus estimate of $2.73 billion by 1.1%, and increased by 1.4% year-over-year [4] - Adjusted gross margin contracted by 90 basis points to 25.3%, while adjusted operating margin decreased by 130 basis points to 7.5% [5] Segment Performance - Global Ceramic segment sales totaled $1.1 billion, up 4.4% year-over-year, but adjusted operating income decreased to $89.8 million [6] - Flooring North America segment net sales were $936.8 million, down 3.8% year-over-year, with adjusted operating profit falling to $67.9 million [7] - Flooring Rest of the World segment saw net sales increase by 4.3% year-over-year to $716.4 million, but adjusted operating income decreased to $59.3 million [8] Market Challenges and Opportunities - Mohawk is facing weak housing demand, high input costs, and trade-related challenges, which have negatively impacted margins [2] - Despite these challenges, the company is expected to achieve approximately $110 million in annualized savings in 2025 through cost-saving initiatives [3][9] - The company anticipates that falling interest rates and pent-up housing demand will gradually improve home sales and remodeling activity [3][12] Strategic Focus - Mohawk is focusing on strengthening sales strategies, advancing product innovation, and enhancing operational productivity to navigate ongoing industry challenges [11] - The company is targeting opportunities in new home construction and remodeling to alleviate housing inflation pressures [12] - Ongoing restructuring efforts are expected to generate significant savings, while the company continues to optimize its supply chain and enhance its product mix [13] Future Guidance - For Q4, Mohawk expects adjusted EPS in the range of $1.90-$2.00, compared to $1.95 in the same quarter last year, not accounting for potential new tariffs [14]

Financial Data and Key Metrics Changes - The company's third quarter net sales were $2.8 billion, reflecting a 1.4% increase as reported and flat on a constant basis compared to the prior year [5][10] - Adjusted EPS for the quarter was $2.67, influenced by productivity and restructuring initiatives, favorable currency exchange, and lower interest expense, but offset by higher input costs and temporary plant shutdowns [5][10] - Gross profit margin was reported at 23.7%, with an adjusted margin of 25.3%, impacted by higher input costs and lower volume [10][11] Business Line Data and Key Metrics Changes - Global Ceramic segment sales exceeded $1.1 billion, a 4.4% improvement as reported, with adjusted operating income at 8.1% [12] - Flooring North America reported sales of $937 million, a 3.8% decrease, with adjusted operating income at 7.2% [12][13] - Flooring Rest of the World had sales of $716 million, a 4.3% increase as reported, with adjusted operating income at 8.3% [13][14] Market Data and Key Metrics Changes - Consumer uncertainty continues to limit discretionary spending, particularly affecting residential remodeling, while the commercial sector remains stronger [7][8] - Central banks have lowered interest rates to stimulate economic growth, which is expected to benefit the U.S. housing market [7][8] - European consumers are experiencing lower inflation rates, which should encourage greater discretionary spending [8] Company Strategy and Development Direction - The company is executing targeted actions to drive performance, including operational enhancements and cost structure reductions, aiming for annualized savings of approximately $32 million [6][25] - The focus remains on optimizing supply chains and implementing price adjustments to address tariff impacts [8][25] - The company is leveraging its product portfolio and distribution advantages to expand relationships with customers [25] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic conditions have weakened, they believe the company has outperformed in most markets [5][7] - The expectation is for fourth quarter EPS to be between $1.90 and $2.00, with market volume anticipated to remain soft through the end of the year [26][27] - Management highlighted the importance of addressing the housing shortage and the potential for increased home sales and remodeling as interest rates decline [24][27] Other Important Information - The company generated approximately $310 million in free cash flow during the quarter and repurchased 315,000 shares for about $40 million [6][14] - The balance sheet remains strong, with cash and cash equivalents at $516 million and gross debt of $1.9 billion [14][15] Q&A Session Summary Question: Changes in fourth-quarter EPS expectations - Management noted that conditions weakened since the last update, with elevated interest rates and declining consumer confidence affecting remodeling [30] Question: Outperformance in product categories and regions - Management indicated that ceramic sales grew more than the market due to improved product and channel mix, with strong performance in the commercial sector [31] Question: Impact of price increases related to tariffs - Management confirmed that previously announced price increases are flowing through, with additional increases to recover tariffs and inflation [37][38] Question: Raw material and energy cost declines - Management stated that raw material prices are easing from their peak, but energy and wages will remain higher than the previous year [45] Question: Visibility on inflation into 2026 - Management indicated that it typically takes three to four months for cost changes to cycle through inventory, with continued inflation expected in input costs [50] Question: Cumulative tailwind from cost savings initiatives - Management expects approximately $110 million in savings from restructuring actions, with an additional $60 million-$70 million favorable impact anticipated in 2026 [52] Question: Commercial segment performance - Management confirmed that the commercial channel continues to outperform residential, with stable backlogs led by government and education sectors [105]

Financial Data and Key Metrics Changes - The company's third quarter net sales were $2.8 billion, reflecting a 1.4% increase as reported and flat on a constant basis compared to the prior year [3][10] - Adjusted earnings per share (EPS) were $2.67, benefiting from productivity and restructuring initiatives, favorable currency exchange, and lower interest expenses, despite higher input costs and temporary plant shutdowns [4][12] - Gross profit margin was reported at 23.7%, with an adjusted margin of 25.3%, impacted by higher input costs and lower volume [11] Business Line Data and Key Metrics Changes - Global Ceramic segment sales were over $1.1 billion, a 4.4% improvement as reported, driven by favorable price mix despite lower unit volume [12] - Flooring North America segment sales decreased by 3.8% to $937 million, with residential new construction and remodeling under pressure [13] - Flooring Rest of the World segment sales increased by 4.3% to $716 million, supported by growth in insulation and panels business [13][19] Market Data and Key Metrics Changes - Consumer uncertainty continues to limit discretionary spending, particularly affecting residential remodeling and new construction [6][18] - Central banks have lowered interest rates to stimulate economic growth, which is expected to benefit the U.S. housing market [7][26] - European consumers are experiencing lower inflation rates and have accrued record savings, which may encourage discretionary spending [8] Company Strategy and Development Direction - The company is focused on lowering its cost structure without impacting long-term growth potential, identifying additional restructuring opportunities to streamline operations [5][28] - The strategy includes optimizing the supply chain and implementing price adjustments to mitigate the impact of tariffs on imported products [9][28] - The company anticipates that market volume will remain soft through the end of the year, with a focus on product innovation and operational productivity to capitalize on future market recovery [30][31] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic conditions have weakened, the company has outperformed in most markets due to strong product offerings [4][26] - The company expects fourth quarter EPS to be between $1.90 and $2.00, considering one additional shipping day and excluding restructuring charges [29] - Management highlighted the significant pent-up demand in the remodeling business, anticipating a strong recovery once consumer confidence improves [30][31] Other Important Information - The company generated approximately $310 million of free cash flow during the quarter and repurchased 315,000 shares for about $40 million [5][6] - The balance sheet remains strong, with cash and cash equivalents of $516 million and gross debt of $1.9 billion [14] Q&A Session Summary Question: What significant changes have occurred since July that lowered expectations for Q4 EPS? - Management indicated that conditions weakened due to elevated interest rates and declining consumer confidence affecting remodeling [35] Question: Which product categories and regions outperformed the market? - The ceramic sales grew more than the market due to improved product and channel mix, with a larger commercial business enhancing performance [36] Question: What is the status of price increases related to tariffs? - Price increases have been announced to recover tariffs and inflation, with an expected realization over time [42][44] Question: What is the impact of raw material and energy cost declines? - Raw material prices are easing, but energy and wages remain higher than last year, with continued inflation anticipated [51][52] Question: How is the company managing its sales force during this challenging period? - The company has specialized sales forces for different segments, focusing on optimizing business with each customer [116]

Financial Data and Key Metrics Changes - The company's Q3 2025 net sales were $2.8 billion, reflecting a 1.4% increase year-over-year but flat on a constant basis [4][10] - Adjusted EPS for the quarter was $2.67, influenced by productivity and restructuring initiatives, favorable currency exchange, and lower interest expenses, despite higher input costs and temporary plant shutdowns [4][12] - Gross profit margin was reported at 23.7%, with an adjusted margin of 25.3%, impacted by higher input costs and lower volume [10][11] Business Line Data and Key Metrics Changes - Global Ceramic segment sales exceeded $1.1 billion, a 4.4% increase as reported, with adjusted operating income at 8.1% [12][16] - Flooring North America reported sales of $937 million, a 3.8% decrease, with adjusted operating income at 7.2% [12][13] - Flooring Rest of the World had sales of $716 million, a 4.3% increase as reported, with adjusted operating income at 8.3% [12][14] Market Data and Key Metrics Changes - Consumer uncertainty continues to limit discretionary spending, particularly affecting residential remodeling, while the commercial sector remains stronger [6][18] - In Europe, consumer savings and lower inflation rates are expected to encourage discretionary spending, although the housing market remains constrained [8][19] - The U.S. housing market is anticipated to benefit from recent interest rate cuts, potentially stimulating home sales and remodeling [6][23] Company Strategy and Development Direction - The company is focusing on operational enhancements, administrative improvements, and technology advancements to lower costs without impacting long-term growth potential [5][24] - Additional restructuring opportunities have been identified, expected to yield annualized savings of approximately $32 million [5][24] - The company aims to leverage its product portfolio and distribution advantages to expand relationships with customers and mitigate pricing pressures [24] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic conditions have weakened, they believe the company has outperformed in most markets [4][6] - The company expects Q4 EPS to be between $1.90 and $2.00, with one additional shipping day [24] - Management highlighted the ongoing housing shortage and the need for increased new home construction and remodeling to alleviate housing inflation pressures [23][25] Other Important Information - The company generated approximately $310 million in free cash flow during the quarter and repurchased 315,000 shares for about $40 million [5][14] - The balance sheet remains strong, with cash and cash equivalents at $516 million and gross debt at $1.9 billion [14][15] Q&A Session Summary Question: Changes in fourth-quarter EPS expectations - Management noted that conditions weakened since the last update, with elevated interest rates and declining consumer confidence affecting remodeling and construction [28] Question: Outperformance in product categories and regions - The company attributed growth in ceramic sales to improved product and channel mix, with a larger commercial business enhancing performance [29] Question: Impact of price increases related to tariffs - Management confirmed that previously announced price increases are flowing through, with additional increases to recover tariffs and inflation [32][33] Question: Visibility on inflation into 2026 - Management indicated that it typically takes three to four months for cost changes to cycle through inventory, with continued inflation expected in input costs [44] Question: Benefit from new product launches - Management highlighted ongoing product innovation across all segments, including new technologies in ceramic and laminate products [48] Question: Commercial segment performance - Management confirmed that the commercial segment continues to outperform residential, with stable backlogs in government and education channels [78]

Q 3 2025 Ways We Win mohawkind.com NYSE: MHK 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," "anticipates," "expects," and "estimates," or similar expressions constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, an ...

Core Insights - Mohawk Industries reported $2.76 billion in revenue for Q3 2025, a year-over-year increase of 1.4% [1] - The EPS for the quarter was $2.67, down from $2.90 a year ago, with a surprise of -0.37% compared to the consensus estimate of $2.68 [1] Revenue Performance - Global Ceramic net sales reached $1.1 billion, exceeding the average estimate of $1.07 billion, reflecting a year-over-year increase of 4.4% [4] - Flooring ROW net sales were $716.4 million, surpassing the average estimate of $691.95 million, marking a 4.3% year-over-year increase [4] - Flooring NA net sales were $936.8 million, below the estimated $961.3 million, representing a decline of 3.8% year-over-year [4] Operating Income - Adjusted Operating Income for Global Ceramic was $89.8 million, above the average estimate of $85.02 million [4] - Adjusted Operating Income for Flooring NA was $67.9 million, lower than the average estimate of $76.48 million [4] - Adjusted Operating Income for Flooring ROW was $59.3 million, compared to the average estimate of $68.22 million [4] - Corporate and intersegment eliminations reported an adjusted operating income of -$11.5 million, better than the estimated -$13.2 million [4] Stock Performance - Mohawk Industries shares returned +0.3% over the past month, slightly outperforming the Zacks S&P 500 composite's +0.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Core Insights - Mohawk Industries reported quarterly earnings of $2.67 per share, slightly missing the Zacks Consensus Estimate of $2.68 per share, and down from $2.90 per share a year ago, indicating an earnings surprise of -0.37% [1] - The company achieved revenues of $2.76 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.13% and showing an increase from $2.72 billion year-over-year [2] - Mohawk Industries has outperformed consensus revenue estimates three times over the last four quarters [2] Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3] - The current consensus EPS estimate for the upcoming quarter is $2.14 on revenues of $2.67 billion, while for the current fiscal year, the estimate is $9.09 on revenues of $10.73 billion [7] Industry Context - The Textile - Home Furnishing industry, to which Mohawk Industries belongs, is currently ranked in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Mohawk's stock performance [5][6]

Financial Performance - Q3 2025 net earnings were $109 million, with an EPS of $1.75; adjusted net earnings were $167 million, and adjusted EPS was $2.67[1]. - Net sales for Q3 2025 were $2.8 billion, up 1.4% year-over-year; for the first nine months of 2025, net sales were $8.1 billion, a decrease of 1.4% compared to the prior year[2]. - Consolidated net sales for the three months ended September 27, 2025, were $2,757.9 million, a slight increase from $2,719.0 million in the same period last year, reflecting a growth of 1.4%[24]. - Adjusted net earnings attributable to Mohawk Industries, Inc. for the three months ended September 27, 2025, were $166.5 million, compared to $184.0 million for the same period in 2024, a decrease of 9.1%[25]. - Adjusted diluted earnings per share for the three months ended September 27, 2025, were $2.67, down from $2.90 in the prior year, a decline of 7.9%[25]. - Consolidated operating income for the three months ended September 27, 2025, was $136.7 million, down from $212.3 million in the same period last year, a decrease of 35.5%[32]. - Adjusted gross profit for the three months ended September 27, 2025, was $699.0 million, compared to $711.3 million in the prior year, a decrease of 1.9%[30]. - Earnings before income taxes for the three months ended September 27, 2025, decreased to $132.1 million from $201.8 million for the same period in 2024, representing a decline of approximately 34.4%[34]. - Adjusted earnings before income taxes for the same period were $200.6 million, down from $229.4 million, reflecting a decrease of about 12.6%[34]. Cash Flow and Shareholder Returns - The company generated approximately $310 million in free cash flow during the quarter and repurchased 315,000 shares for about $40 million[6]. Cost Management and Restructuring - Annualized savings from new restructuring actions are expected to be approximately $32 million, contributing to a total of $110 million in savings for the year[5]. - The company is focusing on operational enhancements and technology advancements to lower costs without impacting long-term growth potential[4]. - Restructuring, acquisition, and integration-related costs amounted to $47.2 million in the latest quarter, significantly higher than $19.5 million in the prior year[34]. - Adjusted selling, general and administrative expenses as a percentage of net sales for the three months ended September 27, 2025, were 17.9%, compared to 17.3% in the prior year[31]. Taxation - Income tax expense for the three months ended September 27, 2025, was $23.3 million, compared to $39.8 million in the prior year, indicating a reduction of approximately 41.5%[35]. - Adjusted income tax expense decreased to $34.1 million from $45.4 million, a decline of about 25.5%[35]. - The adjusted income tax rate to adjusted earnings before income taxes improved to 17.0% from 19.8% year-over-year[35]. Market and Industry Outlook - The flooring industry is expected to benefit from declining interest rates, which should encourage increased home sales and remodeling over time[11]. Asset and Liability Management - Total assets increased to $13,620.5 million as of September 27, 2025, up from $13,313.2 million a year earlier, representing a growth of 2.3%[23]. - Total liabilities decreased to $5,279.5 million as of September 27, 2025, from $5,457.5 million a year earlier, a reduction of 3.3%[23]. - Net debt as of September 27, 2025, was $1,402.7 million, calculated as total debt of $1,918.9 million minus cash and cash equivalents of $516.2 million[26]. Supply Chain and Pricing Strategy - The company is addressing tariff impacts by optimizing the supply chain and implementing price adjustments on affected product categories[7]. - Material and energy expenses are improving from peak levels, although higher costs from earlier in the year will continue to affect Q4 earnings[3]. Non-GAAP Financial Measures - The company continues to utilize non-GAAP financial measures to provide insights into growth trends and long-term profitability, which may not be directly comparable to other companies[36]. - Certain items are excluded from non-GAAP revenue measures to avoid obscuring underlying business trends, including foreign currency transactions and the impact of acquisitions[37]. - Non-GAAP profitability measures exclude costs that are not indicative of core operating performance, such as restructuring and legal settlements[38].

Core Insights - Mohawk Industries reported third quarter 2025 net earnings of $109 million and earnings per share (EPS) of $1.75, with adjusted net earnings of $167 million and adjusted EPS of $2.67, reflecting a slight increase in net sales to $2.8 billion, up 1.4% year-over-year [1][2][3] Financial Performance - For the nine months ended September 27, 2025, net earnings were $328 million with an EPS of $5.24, while adjusted net earnings were $435 million and adjusted EPS was $6.96. Net sales for this period totaled $8.1 billion, a decrease of 1.4% compared to the previous year [2][3] - The company generated approximately $310 million in free cash flow during the quarter and repurchased 315,000 shares for about $40 million [5][17] Market Conditions and Strategy - The company faced weakened economic conditions but believes it outperformed its markets, benefiting from a successful product mix and ongoing productivity initiatives [3][10] - Mohawk is executing targeted actions to enhance performance, including operational improvements and cost structure reductions, aiming for annualized savings of approximately $32 million [4][10] Segment Performance - Net sales in the Global Ceramic Segment increased by 4.4% as reported, with an operating margin of 6.5% [7] - The Flooring Rest of the World Segment saw a 4.3% increase in net sales, while the Flooring North America Segment experienced a 3.8% decrease [8][9] Industry Outlook - The flooring industry is currently challenged by low home sales and postponed consumer purchases, but declining interest rates and increased disposable income are expected to support future home sales and remodeling [11][10] - The company anticipates that market volume will remain soft through the end of the year, projecting fourth quarter adjusted EPS between $1.90 and $2.00 [10][11]