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Mohawk's (MHK) Q4 Earnings and Sales Beat, Q1 View Tepid
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Mohawk Industries, Inc. (MHK - Free Report) reported impressive results for fourth-quarter 2021. The top and bottom lines surpassed their respective Zacks Consensus Estimate and improved strongly on a year-over-year basis. The upside was backed by solid housing demand and favorable price, mix, and productivity.
MHK’s shares inched up 0.9% in the after-hours trading session on Feb 10.
Jeffrey S. Lorberbaum, chairman and CEO of Mohawk, said, “Flooring is an essential part of new construction and remodeling, and, as the world’s largest flooring manufacturer, Mohawk has built leading positions in the major flooring categories and key markets around the globe. Given this, we expect our business to benefit from strong demand through this economic cycle. With today’s low inventory of existing homes, new residential construction and remodeling should remain high for many years. In time, we expect the commercial sector to return to its historical growth with pent-up demand representing a significant opportunity.”
He continued, “In addition to expanding capacity, we continue to invest in our organization’s talent and state-of-the-art technology to deliver exceptional design, value and service to our customers. Over the next three years, we anticipate higher sales and margins as we implement our product, manufacturing and marketing initiatives.”
Inside the Numbers
Mohawk reported adjusted earnings of $2.95 per share, surpassing the consensus mark of $2.90 by 1.7% and increasing 16.7% year over year. The uptrend was backed by improved price, mix and productivity, partially offset by intense inflation and lower volume due to fewer days in the quarter.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Net sales of $2.76 billion topped the consensus estimate of $2.74 billion by 0.9% and increased 4.5% from the year-ago figure of $2.64 billion. On a constant-currency basis, net sales were up 11.8% year over year. The upside was driven by a robust residential new construction and remodeling environment. Commercial sales also improved from the prior year.
Operating Highlights
Adjusted gross profit of $740.9 million was down 2.6% year over year. Adjusted selling, general and administrative expenses — as a percentage of net sales — were marginally up from the year-ago period. Adjusted operating income totaled $258.8 million, which declined 15.2% year over year.
Segment Details
Global Ceramic: Sales in the segment totaled $949.5 million, up 3% year over year. Also, the metric improved 10% on a constant-currency basis. Adjusted operating income decreased to $60.4 million from $87.7 million a year ago. The segment’s operating margin was 6.3%. The upside was primarily due to productivity, pricing and mix improvements, partially offset by the European gas crisis, inflation, and seasonality.
Flooring North America: Net sales at the segment amounted to $1,015.5 million, increasing 5% year over year on a reported basis and 12% on a constant-currency basis. The segment registered an adjusted operating income of $92.9 million for the quarter compared with $91.1 million reported in the prior-year period. Operating margin was 9% in the quarter. Favorable price and mix and productivity improvements were partially offset by inflation and seasonality.
Flooring Rest of the World: Net sales in the segment increased 5% year over year to $795.7 million. On a constant-currency basis, sales were up 14% from the year-ago level. Adjusted operating income was $117.4 million, down from $138 million reported a year ago. The segment’s operating margin was 14.8%. Pricing and mix improvements were offset by inflation, fewer shipping days and supply chain constraints.
Financial Highlights
As of Dec 31, 2021, it had cash and cash equivalents of $268.9 million compared with $768.6 million in the corresponding period of 2020. Long-term debt — less current portion — at 2021-end was $1.7 billion compared with $2.36 billion at December 2020-end.
For 2021, the company generated free cash flow of $633 million, significantly down from $1,344.3 million a year ago.
2021 Highlights
Adjusted earnings came in at $14.86 per share, up 68.3% from $8.83 a year ago. Net sales were $11.2 billion, up 17.3% on a reported and 16% on a constant currency and days basis. Adjusted operating income for the year totaled $1.4 billion and adjusted EBITDA was $1.9 billion.
First-Quarter 2022 View
MHK intends to run operations at high levels to support sales, improve services and increase inventories. It anticipates moderate inflation and easing labor, material, and energy constraints. Mohawk has initiated multiple expansion projects, reduced spending and improved efficiencies to offset these woes. To adjust cost pressure, the company has been implementing price increases across the products and geographies.
For first-quarter 2022, record-high natural gas prices are likely to increase net costs by $40-$45 million in the European ceramic business. Given the current situation, Mohawk expects first-quarter adjusted earnings to be $2.90-$3.00, excluding restructuring charges, indicating a significant decline from the year-ago figure of $3.49. The Zacks Consensus Estimate for first-quarter adjusted earnings is pegged at $3.09 per share.
Recent Earnings Releases From Broader Consumer Discretionary Sector
Adtalem Global Education Inc. (ATGE - Free Report) reported lackluster second-quarter fiscal 2022 results. The company’s earnings and revenues lagged their respective Zacks Consensus Estimate due to the pandemic-related challenges.
Also, Adtalem reduced its fiscal 2022 guidance for earnings and revenues due to the pending sale of the Financial Services segment and COVID-related headwinds associated with the Omicron variant.
Leggett & Platt, Inc. (LEG - Free Report) reported tepid earnings for fourth-quarter 2021. The top and bottom lines surpassed the Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite revenue growth.
Despite strong raw material-related selling price and acquisitions, Leggett witnessed higher costs associated with supply chain issues, semiconductor and foam chemical shortages, labor constraints as well as transportation challenges.
Hasbro, Inc. (HAS - Free Report) reported impressive fourth-quarter fiscal 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The bottom line outpaced the consensus mark for the sixth straight quarter, while the top line beat the same for the third consecutive quarter.
Hasbro reported adjusted earnings of $1.21 per share, beating the Zacks Consensus Estimate of 89 cents. In the prior-year quarter, the company reported adjusted earnings of $1.27 per share.
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Mohawk's (MHK) Q4 Earnings and Sales Beat, Q1 View Tepid
Mohawk Industries, Inc. (MHK - Free Report) reported impressive results for fourth-quarter 2021. The top and bottom lines surpassed their respective Zacks Consensus Estimate and improved strongly on a year-over-year basis. The upside was backed by solid housing demand and favorable price, mix, and productivity.
MHK’s shares inched up 0.9% in the after-hours trading session on Feb 10.
Jeffrey S. Lorberbaum, chairman and CEO of Mohawk, said, “Flooring is an essential part of new construction and remodeling, and, as the world’s largest flooring manufacturer, Mohawk has built leading positions in the major flooring categories and key markets around the globe. Given this, we expect our business to benefit from strong demand through this economic cycle. With today’s low inventory of existing homes, new residential construction and remodeling should remain high for many years. In time, we expect the commercial sector to return to its historical growth with pent-up demand representing a significant opportunity.”
He continued, “In addition to expanding capacity, we continue to invest in our organization’s talent and state-of-the-art technology to deliver exceptional design, value and service to our customers. Over the next three years, we anticipate higher sales and margins as we implement our product, manufacturing and marketing initiatives.”
Inside the Numbers
Mohawk reported adjusted earnings of $2.95 per share, surpassing the consensus mark of $2.90 by 1.7% and increasing 16.7% year over year. The uptrend was backed by improved price, mix and productivity, partially offset by intense inflation and lower volume due to fewer days in the quarter.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Mohawk Industries, Inc. price-consensus-eps-surprise-chart | Mohawk Industries, Inc. Quote
Net sales of $2.76 billion topped the consensus estimate of $2.74 billion by 0.9% and increased 4.5% from the year-ago figure of $2.64 billion. On a constant-currency basis, net sales were up 11.8% year over year. The upside was driven by a robust residential new construction and remodeling environment. Commercial sales also improved from the prior year.
Operating Highlights
Adjusted gross profit of $740.9 million was down 2.6% year over year. Adjusted selling, general and administrative expenses — as a percentage of net sales — were marginally up from the year-ago period. Adjusted operating income totaled $258.8 million, which declined 15.2% year over year.
Segment Details
Global Ceramic: Sales in the segment totaled $949.5 million, up 3% year over year. Also, the metric improved 10% on a constant-currency basis. Adjusted operating income decreased to $60.4 million from $87.7 million a year ago. The segment’s operating margin was 6.3%. The upside was primarily due to productivity, pricing and mix improvements, partially offset by the European gas crisis, inflation, and seasonality.
Flooring North America: Net sales at the segment amounted to $1,015.5 million, increasing 5% year over year on a reported basis and 12% on a constant-currency basis. The segment registered an adjusted operating income of $92.9 million for the quarter compared with $91.1 million reported in the prior-year period. Operating margin was 9% in the quarter. Favorable price and mix and productivity improvements were partially offset by inflation and seasonality.
Flooring Rest of the World: Net sales in the segment increased 5% year over year to $795.7 million. On a constant-currency basis, sales were up 14% from the year-ago level. Adjusted operating income was $117.4 million, down from $138 million reported a year ago. The segment’s operating margin was 14.8%. Pricing and mix improvements were offset by inflation, fewer shipping days and supply chain constraints.
Financial Highlights
As of Dec 31, 2021, it had cash and cash equivalents of $268.9 million compared with $768.6 million in the corresponding period of 2020. Long-term debt — less current portion — at 2021-end was $1.7 billion compared with $2.36 billion at December 2020-end.
For 2021, the company generated free cash flow of $633 million, significantly down from $1,344.3 million a year ago.
2021 Highlights
Adjusted earnings came in at $14.86 per share, up 68.3% from $8.83 a year ago. Net sales were $11.2 billion, up 17.3% on a reported and 16% on a constant currency and days basis. Adjusted operating income for the year totaled $1.4 billion and adjusted EBITDA was $1.9 billion.
First-Quarter 2022 View
MHK intends to run operations at high levels to support sales, improve services and increase inventories. It anticipates moderate inflation and easing labor, material, and energy constraints. Mohawk has initiated multiple expansion projects, reduced spending and improved efficiencies to offset these woes. To adjust cost pressure, the company has been implementing price increases across the products and geographies.
For first-quarter 2022, record-high natural gas prices are likely to increase net costs by $40-$45 million in the European ceramic business. Given the current situation, Mohawk expects first-quarter adjusted earnings to be $2.90-$3.00, excluding restructuring charges, indicating a significant decline from the year-ago figure of $3.49. The Zacks Consensus Estimate for first-quarter adjusted earnings is pegged at $3.09 per share.
Zacks Rank
Mohawk currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Releases From Broader Consumer Discretionary Sector
Adtalem Global Education Inc. (ATGE - Free Report) reported lackluster second-quarter fiscal 2022 results. The company’s earnings and revenues lagged their respective Zacks Consensus Estimate due to the pandemic-related challenges.
Also, Adtalem reduced its fiscal 2022 guidance for earnings and revenues due to the pending sale of the Financial Services segment and COVID-related headwinds associated with the Omicron variant.
Leggett & Platt, Inc. (LEG - Free Report) reported tepid earnings for fourth-quarter 2021. The top and bottom lines surpassed the Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite revenue growth.
Despite strong raw material-related selling price and acquisitions, Leggett witnessed higher costs associated with supply chain issues, semiconductor and foam chemical shortages, labor constraints as well as transportation challenges.
Hasbro, Inc. (HAS - Free Report) reported impressive fourth-quarter fiscal 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The bottom line outpaced the consensus mark for the sixth straight quarter, while the top line beat the same for the third consecutive quarter.
Hasbro reported adjusted earnings of $1.21 per share, beating the Zacks Consensus Estimate of 89 cents. In the prior-year quarter, the company reported adjusted earnings of $1.27 per share.