Mohawk(US:MHK)2025-10-23 20:23Financial 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].