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Sep 26, 2020
Mohawk Q3 2020 Earnings Report
Mohawk Industries' Q3 2020 results significantly exceeded expectations, with sales recovering and operating income substantially increasing above last year's levels.
Key Takeaways
Mohawk Industries reported a strong third quarter in 2020, with net sales of $2.6 billion, a 2% increase year-over-year. Net profit was $205 million, with diluted EPS of $2.87. Adjusted net earnings were $233 million, and EPS was $3.26, excluding restructuring, acquisition and other charges. The company generated approximately $530 million in cash, bringing cash and short-term investments to around $1.2 billion. The company benefited from increased demand and customers increasing inventory in distribution channels.
Net sales for Q3 2020 were $2.6 billion, a 2% increase as reported and on a constant currency basis.
Net profit reached $205 million, with diluted earnings per share (EPS) of $2.87.
Adjusted net earnings amounted to $233 million, with EPS at $3.26, excluding specific charges.
Approximately $530 million in cash generated, elevating cash and short-term investments to about $1.2 billion.
Revenue by Segment
Forward Guidance
Assuming that the current economic trends continue, Mohawk anticipates its fourth quarter EPS to be $2.75 to $2.87, with a non-recurring tax rate of approximately 5% for the period.
Positive Outlook
- Residential remodeling and new home construction are expected to improve next year.
- The commercial business should increase from its present low levels as economies recover going forward.
- Strong balance sheet.
- Cash generation.
- Liquidity will allow Mohawk to move from a defensive posture to a more aggressive growth strategy.
Challenges Ahead
- The fourth quarter is slower for the industry due to normal seasonality.
- Expect lower growth in channel inventory levels.
- Higher margin commercial business will continue to be slow, with completed projects likely to outpace new starts.
- Visibility continues to be limited by many uncertainties, including how government restrictions and demand will evolve.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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