Mohawk Q3 2020 Earnings Report
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.
Mohawk
Mohawk
Mohawk 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.
- Anticipate service improving with inventories rising as production levels exceed sales.
Revenue & Expenses
Visualization of income flow from segment revenue to net income