Key Takeaways:
- Mohawk Industries posted Q2 adjusted EPS of $3.67, beating estimates by 42.8%
- Revenue rose 6.8% to $2.99 billion, topping the $2.79 billion consensus
- Q3 guidance of $2.50-$2.60 a share implies a sequential decline from Q2
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Mohawk Industries beats Q2 estimates by 42% on tariff refunds
Mohawk Industries Inc. reported second-quarter adjusted earnings of $3.67 a share, beating the $2.57 consensus by 42.8%, as revenue rose 6.8% to $2.99 billion from a year earlier.
"The results in the quarter significantly exceeded our expectations as we outperformed our markets," Chairman and Chief Executive Officer Jeff Lorberbaum said in the earnings release. The company benefited from volume growth, pricing and product mix across its regions, he said.
Nearly two-thirds of the earnings beat came from about $0.63 a share in tariff refunds that were not included in the company's prior guidance, according to the release. Adjusted operating income rose to $290.1 million from $223 million a year earlier, with the adjusted operating margin expanding to 9.7% from 8%. Free cash flow totaled $228.2 million, up from $126.1 million.
The flooring maker's results underscore a bifurcated demand environment. Commercial outperformed residential, which remains near multi-decade lows, while new home construction stayed pressured by affordability challenges. The Global Ceramic segment posted a 7.9% revenue increase, Flooring North America rose 3.1% and Flooring Rest of the World gained 9.7%. Adjusted operating margins improved across all three segments, led by Flooring ROW at 12%.
Management guided third-quarter adjusted earnings of $2.50 to $2.60 a share, including about $0.12 from additional tariff refunds already received. Excluding those, the baseline range is $2.38 to $2.48. Higher input costs from labor, materials and energy will flow through inventory in the second half, and additional price increases may be needed this year. The company also announced a new cost-savings program targeting $60 million in reductions by the end of 2027.
The guidance implies a sequential decline from the second quarter's $3.67, reflecting seasonal patterns and rising costs. Mohawk repurchased more than 600,000 shares for about $60 million during the quarter. Shares have gained about 3.7% year to date, trailing the S&P 500's 6.9% advance. Paul De Cock, currently president and chief operating officer, will succeed Lorberbaum as CEO on Sept. 30.
This article is for informational purposes only and does not constitute investment advice.
