Mohawk Industries tops Q3 profit estimates, misses on revenue

Mohawk Industries Inc. (MHK) said on Oct. 29 that its adjusted earnings per share for the third quarter topped estimates, while revenue missed. Adjusted EPS was $2.72 for the quarter ended Oct. 3, against the $2.61 consensus estimate compiled by Finnhub.

Revenue was $2,786.0 million, below the $2.85 billion consensus estimate compiled by Finnhub, according to a press release the company furnished in a regulatory filing.

Here's how the company did:

• Adjusted EPS: $2.72 vs. $2.67 a year earlier, against $2.61 expected, according to Finnhub
• Diluted EPS: $2.72 vs. $1.75 a year earlier
• Revenue: $2,786.0 million vs. $2,757.9 million a year earlier, against $2.85 billion expected, according to Finnhub
• Net earnings attributable to Mohawk Industries: $163.1 million vs. $108.8 million a year earlier
• Adjusted EBITDA: $353.4 million

Quarterly results

Net sales rose about 1% from a year earlier. On an adjusted basis, sales were approximately flat. An additional shipping day added about 1% to sales.

Volumes fell about 4% on an adjusted basis, which the company attributed primarily to soft market demand. Price and mix contributed about 4% to sales growth, benefiting from price increases taken to offset inflation.

Operating income was $187.7 million, up about $51 million from the prior year. Adjusted operating income was $200.1 million, down about $5 million, which the company said was primarily due to lower volume and higher inflation.

CEO Paul De Cock said, “We delivered a solid third quarter in a weak demand environment.” He added, “We grew net sales as we executed price increases in response to rising inflation, we offset inflation with price, mix and productivity, and we are efficiently converting our earnings to strong cash flow.”

Segment results

Global Ceramic net sales were $1.1 billion, up about 2%, and up about 1% on an adjusted basis. Its operating income was $66 million, down about $6 million from the prior year.

Flooring North America net sales were $950 million, up about 1%, and approximately flat on an adjusted basis. Its operating income was $72 million, up about $18 million.

Flooring Rest of the World net sales were $707 million, down about 1% as reported. Its operating income was $66 million, up about $22 million from the prior year.

Cash flow and buybacks

Free cash flow was $390 million in the quarter. For the nine months, free cash flow was $626 million, up 78%, according to the release.

During the third quarter the company repurchased 2.0 million shares for $261 million. It returned another $34 million in the fourth quarter to date. The company said the repurchases reduced outstanding shares by approximately 4% in the second half.

The Board of Directors approved a new share repurchase program of up to $500 million, effective immediately. It follows a prior $500 million authorization approved in July 2025, under which the company bought about 7% of its shares outstanding at an average price of about $119 per share.

The company now expects full-year capital expenditures of about $445 million, against its previous expectation of $460 million. Net debt to adjusted EBITDA ended the quarter at 0.7x.

The company also introduced a capital allocation framework that targets baseline capital expenditures of about $375 million a year for at least the next several years. It seeks a long-term net debt to adjusted EBITDA target of up to 2.0x, while remaining committed to its investment-grade credit ratings.

Fourth-quarter outlook

For the fourth quarter of 2026, the company expects adjusted EPS of $1.35 to $1.45. It expects low single-digit growth in adjusted net sales from a year earlier.

The company said the quarter has four fewer shipping days than the prior-year period. Its guidance assumes adjusted net interest expense of about $4 million to $5 million, adjusted depreciation and amortization of about $148 million, an adjusted tax rate of about 23.5%, and about 58.5 million weighted average diluted shares.

Management will discuss the results on a conference call on Oct. 30 at 11 a.m. Eastern time.