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Jul 01, 2023
Mohawk Q2 2023 Earnings Report
Mohawk Industries' financial performance declined due to housing market challenges and inflation, but margins expanded sequentially through cost management and productivity initiatives.
Key Takeaways
Mohawk Industries reported a decrease in net sales and earnings for Q2 2023 compared to the previous year, impacted by higher interest rates, inflation, and declining flooring sales. However, margins expanded sequentially due to seasonal improvements, increased production, productivity initiatives, and lower input costs. The company generated $147 million in free cash flow and is implementing restructuring actions to save $35 million annually.
Net sales for Q2 2023 were $3.0 billion, a 6.4% decrease as reported and 9.6% on a legacy and constant currency and days basis versus the prior year.
Net earnings were $101 million, and diluted earnings per share (EPS) was $1.58.
Adjusted EPS was $2.76, excluding restructuring, acquisition and other charges.
Generated $147 million of free cash flow during the quarter.
Revenue by Segment
Forward Guidance
Mohawk anticipates its third quarter adjusted EPS to be between $2.62 to $2.72, excluding any restructuring, acquisition and other charges.
Positive Outlook
- Rise in builder confidence and housing starts in the U.S. will increase residential new construction business.
- Expect the commercial sector to outperform the residential channel through this year.
- New restructuring initiatives should save $35 million per year.
- Recent acquisitions will add greater benefit to results as they optimize their performance.
- Lower material and energy costs will partially offset pressure on pricing and mix.
Challenges Ahead
- Central banks have raised interest rates to reduce inflation and are signaling that additional rate hikes are possible.
- Remodeling and existing home sales are being delayed due to limited housing availability, higher interest rates and inflation.
- Expect continued pressure on pricing and mix.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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