Mohawk Industries Q1 Earnings Exceed Expectations

  • Mohawk Industries Inc MHK reported Q1 2023 revenues of $2.81 billion, down 6.9% Y/Y, exceeding the consensus of $2.50 billion.
  • Operating income declined to $125.8 million in Q1 from $320.8 million a year ago.
  • Global Ceramic revenues declined 0.5% Y/Y, and the operating margin stood at 6.0%. Flooring Rest of the World revenues fell 9.7% Y/Y, and the operating margin was 9.5%. Flooring North America revenues declined 11.1% Y/Y and witnessed a negative operating margin of 0.2%. 
  • All segments benefited from favorable pricing, product mix and productivity gains, partially negated by higher inflation, lower volumes and temporary shutdowns. 
  • Adjusted EPS of $1.75 beat the consensus of $1.18.
  • Net cash from operating activities rose significantly to $257.3 million from $55.0 million a year ago.
  • Cash and equivalents stood at $722.9 million at the end of the quarter.
  • Outlook: MHK expects adjusted EPS to be $2.56-$2.66 (vs. consensus of $2.41) in Q2 2023.
  • The company expects the industry volume and pricing to remain under pressure across its markets and projects seasonal improvement in demand and a reduction in energy and material costs in Q2 2023. 
  • "Natural gas and electricity inflation remained a headwind in the first quarter, though our future results will benefit as lower energy costs flow through our P&L. Our sustainability strategy includes investments in the production of green energy, which reduces both our expenses and carbon footprint. Our two biomass energy plants lowered our costs and improved our results in the quarter. We also purchased some of our European energy at various times to reduce future cost volatility. Italian energy subsidies have recently been extended at reduced levels through the second quarter of 2023," said Jeffrey S. Lorberbaum, Chairman and CEO.
  • Price Action: MHK shares closed higher by 4.13% at $98.78 on Thursday.


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