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Flooring manufacturer Mohawk Industries (NYSE:MHK) beat Wall Street’s revenue expectations in Q4 CY2024, but sales were flat year on year at $2.64 billion. Its non-GAAP profit of $1.95 per share was 5.3% above analysts’ consensus estimates.

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Mohawk Industries (MHK) Q4 CY2024 Highlights:

• Revenue: $2.64 billion vs analyst estimates of $2.53 billion (flat year on year, 4.1% beat)

• Adjusted EPS: $1.95 vs analyst estimates of $1.85 (5.3% beat)

• Adjusted EBITDA: $310.4 million vs analyst estimates of $297.7 million (11.8% margin, 4.3% beat)

• Adjusted EPS guidance for Q1 CY2025 is $1.39 at the midpoint, below analyst estimates of $1.67

• Operating Margin: 4.6%, down from 6.4% in the same quarter last year

• Free Cash Flow Margin: 9%, up from 2.1% in the same quarter last year

• Market Capitalization: $7.63 billion

Commenting on the Company’s fourth quarter and full year, Chairman and CEO Jeff Lorberbaum stated, “Our fourth quarter results exceeded our expectations as sales actions, restructuring initiatives and productivity improvements benefited our performance. Additionally, the negative sales impact from U.S. hurricanes was limited to approximately $10 million. While residential demand remained soft in our markets, our product introductions last year and our marketing initiatives contributed to our sales performance around the globe.

Company Overview

Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.

Home Furnishings

A healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Mohawk Industries grew its sales at a weak 1.7% compounded annual growth rate. This was below our standards and is a rough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Mohawk Industries’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.9% annually.