Mohawk Industries Q2 Earnings Call Highlights

Mohawk Industries Q2 Earnings Call Highlights

Mohawk exceeded its Q2 expectations: Net sales rose 6.8% year over year to $3 billion, while adjusted EPS reached $3.67, including approximately $0.63 per share from tariff refunds. Margins improved across all three segments: Adjusted operating margin increased to 9.7% as pricing, product mix, productivity and higher volumes offset inflation, with sales growth reported in Global Ceramic, Flooring North America and Flooring Rest of World. Management expects seasonal Q3 softness and adjusted EPS of $2.50-$2.60, including tariff refunds. CEO Jeff Lorberbaum will retire after 25 years, with COO Paul De Cock succeeding him while Lorberbaum remains chairman.

Mohawk Industries NYSE: MHK reported second-quarter 2026 results that exceeded its expectations, citing volume growth, pricing actions, improved product mix and productivity initiatives despite continued softness in residential flooring markets. Net sales rose 6.8% year over year to $3 billion, or 5% on a constant-currency basis, with growth across the company’s Global Ceramic, Flooring North America and Flooring Rest of World segments. Reported earnings per share were $3.22, while adjusted earnings per share were $3.67. Adjusted results included approximately $0.63 per share from tariff refunds that were not included in the company’s prior guidance.

Chairman and Chief Executive Officer Jeff Lorberbaum said the tariff refunds represented reversals of costs Mohawk had previously absorbed due to higher tariffs. The company also repurchased more than 600,000 shares for approximately $60 million during the quarter. Margins Improve as Price, Mix and Productivity Offset Inflation Chief Financial Officer Nick Manthey said adjusted gross margin was 27.4%, an increase of 100 basis points from a year earlier. Adjusted operating income reached $290 million, or 9.7% of sales, representing an approximately 170-basis-point improvement from the prior-year period. Manthey attributed the operating-income improvement to $54 million from price and mix, $43 million from restructuring and productivity efforts, and $13 million from higher volumes. Those gains offset inflationary pressures. Net inflation totaled $28 million during the quarter, including tariff refunds, while underlying inflation was $77 million. Mohawk said it implemented price increases across numerous products and geographies in response to higher materials, energy and transportation costs. Management expects higher input costs to continue flowing through inventory during the second half of the year and said additional pricing actions may be needed if inflation rises further. The company generated $236 million in free cash flow year to date. Capital expenditures totaled $88 million in the second quarter, and Mohawk now expects to invest about $460 million in 2026, primarily in cost reduction, product innovation and maintenance. Net debt was just under $1.1 billion, with a net debt-to-EBITDA ratio of 0.8 times. All Three Segments Report Sales Growth Global Ceramic: Net sales increased 7.9% as reported to $1.2 billion, or 4.6% in constant currency. The segment recorded about 3% volume growth, led by the U.S. and Europe, along with improved price and mix. Adjusted operating income was $99 million, or 8.2% of sales. Flooring North America: Net sales rose 3.1% as reported to $976 million, or 4.7% in constant currency. Mohawk said retail-channel volume growth and improving price and mix supported the segment. Adjusted operating income was $111 million, with an adjusted operating margin of 11.4%. Flooring Rest of World: Net sales increased 9.7% as reported ...