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Mohawk Industries, Inc. MHK reported mixed results for the first quarter of 2025, with earnings topping the Zacks Consensus Estimate and net sales missing the same. On a year-over-year basis, both top and bottom lines declined.
The quarterly results were impacted by two fewer shipping days and foreign exchange headwinds. The company also faced challenges due to the new Flooring North America order system, though service levels have returned to normal. The bottom line benefited from productivity gains, restructuring actions and a lower tax rate, which helped offset the impact of pricing pressure and higher input costs.
Market conditions weakened sequentially in the first quarter, with residential remodeling remaining the slowest sector. Consumer confidence declined, adding to the uncertainty, while the implementation of global tariffs further complicated the situation. In response, the company increased inventory levels in anticipation of tariff impacts and estimated an annualized cost of around $50 million at the current 10% rate. Price increases and supply-chain adjustments are expected to manage these costs.
Nonetheless, the company remains optimistic about the flooring market’s long-term prospects, given the current phase of the housing cycle. Efforts to reduce costs, simplify operations and invest in new product features are ongoing. The company expects a significant rebound when industry volumes return to historical levels, similar to past recoveries after economic downturns.
Inside MHK’s Q1 Numbers
Mohawk reported adjusted earnings per share (EPS) of $1.52, which topped the Zacks Consensus Estimate of $1.41 by 7.8%. In the year-ago quarter, the company reported an adjusted EPS of $1.86. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Net sales of $2.53 billion missed the consensus estimate of $2.57 billion by 1.8% and inched down 5.7% year over year from $2.68 billion. On an adjusted basis, net sales were down 0.7% year over year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Mohawk Industries, Inc. price-consensus-eps-surprise-chart | Mohawk Industries, Inc. Quote
Adjusted gross margin contracted 30 basis points (bps) year over year to 24.1%. Adjusted selling, general and administrative expenses, as a percent of net sales, rose 80 bps to 19.2% from the year-ago period. Adjusted operating margin contracted 130 bps to 4.8% from 6.1% a year ago.
Mohawk’s Segmental Details
Global Ceramic: Sales in the segment totaled $993.8 million, down 4.9% year over year on a reported basis. On an adjusted basis, sales were up 1.2% from the year-ago level to $1.057 billion.
Adjusted operating income decreased to $48.2 million from $52.7 million a year ago. The segment’s adjusted operating margin contracted to 4.8% from 5% a year ago.
Flooring North America: Net sales of the segment amounted to $862.4 million, down 4.2% year over year on a reported basis and 1.1% on an adjusted basis. Adjusted net sales were $890.2 million.
The segment registered an adjusted operating profit of $25.5 million, down from $47.8 million reported in the prior-year period. Adjusted operating margin was 3%, down from 5.3% a year ago.
Flooring Rest of the World: Net sales in the segment decreased 8.8% year over year on a reported basis to $669.6 million. On an adjusted basis, sales were down 2.9% from the year-ago level to $713.3 million.
Adjusted operating income was $61 million, down from $74 million reported a year ago. The segment’s adjusted operating margin was 9.1%, down from 10.1% in the year-ago period.