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Mohawk Industries, Inc. (MHK - Free Report) reported better-than-expected results for fourth-quarter 2023, wherein its earnings and net sales surpassed the Zacks Consensus Estimate.
On a year-over-year basis, earnings increased while net sales declined.
The company’s quarterly results reflect benefits from cost containment, productivity, and lower energy and raw materials costs. Its focus on optimizing its revenues and reducing costs through restructuring actions and manufacturing enhancements bodes well. The uptrend was partially offset by soft contributions from the Flooring North America and Flooring Rest of the World segments.
Nonetheless, MHK’s strategic investments in sales resources, merchandising and new products with innovative features are expected to boost customer sentiments toward buying products under flooring.
Following the announcement, shares of this leading global flooring manufacturer lost 1.7% in the after-hours trading session on Feb 8.
Inside the Numbers
Mohawk reported adjusted earnings of $1.96 per share, which topped the Zacks Consensus Estimate of $1.85 by 6%. The metric grew from earnings of $1.32 per share, reflecting an increase of 48.5% year over year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Net sales of $2.61 billion topped the consensus estimate of $2.58 billion by 1.3% but decreased 1.5% from the year-ago figure of $2.65 billion. On a legacy and constant currency and days basis, net sales were down 4.1% year over year.
The adjusted gross margin was up 230 basis points (bps) year over year to 24.7%. Our model expected the adjusted gross margin to expand 290 bps to 25.3% year over year. Adjusted selling, general and administrative expenses, as a percent of net sales, increased 10 bps to 18% from the year-ago period. We expected this metric to expand 110 bps to 19% year over year.
Adjusted operating margin expanded 220 bps to 6.7% from 4.5% reported a year ago. This compares with our quarter’s anticipation of 6.3%.
Segment Details
Global Ceramic: Sales in the segment totaled $993.7 million, up 0.6% year over year but down 4.7% on a legacy and constant basis. Adjusted net sales were $941.7 million in the reported quarter. Adjusted operating income decreased to $48 million from $70.1 million a year ago. The segment’s adjusted operating margin was down to 4.8% from 7.1% a year ago.
Flooring North America: Net sales at the segment amounted to $912 million, down 3.6% year over year. The segment registered an adjusted operating profit of $63.2 million against an operating loss of $0.8 million reported in the prior-year period. Adjusted operating margin was 6.9% against (0.1)% reported a year ago.
Flooring Rest of the World: Net sales in the segment decreased 1.5% year over year to $706.5 million. On a legacy and constant currency basis, sales were down 4.1% from the year-ago level. Adjusted net sales were $687.8 million in the reported quarter. Adjusted operating income was $74.7 million, up from $55.5 million reported a year ago. The segment’s adjusted operating margin was 10.6%, up 290 bps year over year.
2023 Highlights
Adjusted earnings were $9.19 per share, down from adjusted earnings of $12.85 per share reported a year ago. Net sales were $11.1 billion, down 5.1% on a reported basis and 7.7% on a constant basis.
For the year, the company reported an operating loss of $287.8 million against an operating income of $244.2 million reported in 2022. Adjusted EBITDA was $328.1 million in 2023.
Financial Highlights
As of Dec 31, 2023, Mohawk had cash and cash equivalents of $642.6 million compared with $509.6 million in 2022-end. The long-term debt, less the current portion, was $1.7 billion, down from $1.98 billion at the end of fourth-quarter 2022.
For the fourth quarter, the company generated a free cash flow of $56 million compared with $91.1 million reported a year ago.
Q1 2024 View
Mohawk expects seasonality to be more aligned with long-term historical levels in the first quarter. It expects adjusted earnings to be $1.60-$1.70 per share. This indicates a decline from the year-ago figure of earnings of $1.75 per share.
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported impressive fourth-quarter 2023 results, wherein earnings and total revenues topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s quarterly results notably benefited from solid improvement in revenue per available room on the back of increased occupancy rates and average daily rate. Furthermore, during the quarter, HLT witnessed a record number of openings, which encouraged the uptrend to a great extent. The company states that it is well-positioned to continue driving innovation and growth through 2024, owing to the improving trends.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, the top and bottom lines increased on a year-over-year basis.
The quarterly results reflect unprecedented demand for the brands from new and loyal guests. The company reported record bookings, both in terms of rate and volume. Going forward, management emphasized delivering long-term shareholder value through industry-leading global brands, innovative fleet and diverse destinations. The company anticipates achieving two Trifecta goals ahead of schedule.
Las Vegas Sands Corp. (LVS - Free Report) reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and bottom lines increased on a year-over-year basis.
The company reported continued improvement in the operating environment in Macao and Singapore. In Macao, the company reported a sustained recovery across each of its segments. Singapore’s Marina Bay Sands demonstrated solid financial and operational performance. The introduction of new suite options and improved services is in line with the improving airlift capacity and the continuous recovery in travel and tourism spending, especially from China and the broader region.
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Mohawk (MHK) Q4 Earnings & Revenues Top, Q1 View Tepid
Mohawk Industries, Inc. (MHK - Free Report) reported better-than-expected results for fourth-quarter 2023, wherein its earnings and net sales surpassed the Zacks Consensus Estimate.
On a year-over-year basis, earnings increased while net sales declined.
The company’s quarterly results reflect benefits from cost containment, productivity, and lower energy and raw materials costs. Its focus on optimizing its revenues and reducing costs through restructuring actions and manufacturing enhancements bodes well. The uptrend was partially offset by soft contributions from the Flooring North America and Flooring Rest of the World segments.
Nonetheless, MHK’s strategic investments in sales resources, merchandising and new products with innovative features are expected to boost customer sentiments toward buying products under flooring.
Following the announcement, shares of this leading global flooring manufacturer lost 1.7% in the after-hours trading session on Feb 8.
Inside the Numbers
Mohawk reported adjusted earnings of $1.96 per share, which topped the Zacks Consensus Estimate of $1.85 by 6%. The metric grew from earnings of $1.32 per share, reflecting an increase of 48.5% year over year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Mohawk Industries, Inc. price-consensus-eps-surprise-chart | Mohawk Industries, Inc. Quote
Net sales of $2.61 billion topped the consensus estimate of $2.58 billion by 1.3% but decreased 1.5% from the year-ago figure of $2.65 billion. On a legacy and constant currency and days basis, net sales were down 4.1% year over year.
The adjusted gross margin was up 230 basis points (bps) year over year to 24.7%. Our model expected the adjusted gross margin to expand 290 bps to 25.3% year over year. Adjusted selling, general and administrative expenses, as a percent of net sales, increased 10 bps to 18% from the year-ago period. We expected this metric to expand 110 bps to 19% year over year.
Adjusted operating margin expanded 220 bps to 6.7% from 4.5% reported a year ago. This compares with our quarter’s anticipation of 6.3%.
Segment Details
Global Ceramic: Sales in the segment totaled $993.7 million, up 0.6% year over year but down 4.7% on a legacy and constant basis. Adjusted net sales were $941.7 million in the reported quarter. Adjusted operating income decreased to $48 million from $70.1 million a year ago. The segment’s adjusted operating margin was down to 4.8% from 7.1% a year ago.
Flooring North America: Net sales at the segment amounted to $912 million, down 3.6% year over year. The segment registered an adjusted operating profit of $63.2 million against an operating loss of $0.8 million reported in the prior-year period. Adjusted operating margin was 6.9% against (0.1)% reported a year ago.
Flooring Rest of the World: Net sales in the segment decreased 1.5% year over year to $706.5 million. On a legacy and constant currency basis, sales were down 4.1% from the year-ago level. Adjusted net sales were $687.8 million in the reported quarter. Adjusted operating income was $74.7 million, up from $55.5 million reported a year ago. The segment’s adjusted operating margin was 10.6%, up 290 bps year over year.
2023 Highlights
Adjusted earnings were $9.19 per share, down from adjusted earnings of $12.85 per share reported a year ago. Net sales were $11.1 billion, down 5.1% on a reported basis and 7.7% on a constant basis.
For the year, the company reported an operating loss of $287.8 million against an operating income of $244.2 million reported in 2022. Adjusted EBITDA was $328.1 million in 2023.
Financial Highlights
As of Dec 31, 2023, Mohawk had cash and cash equivalents of $642.6 million compared with $509.6 million in 2022-end. The long-term debt, less the current portion, was $1.7 billion, down from $1.98 billion at the end of fourth-quarter 2022.
For the fourth quarter, the company generated a free cash flow of $56 million compared with $91.1 million reported a year ago.
Q1 2024 View
Mohawk expects seasonality to be more aligned with long-term historical levels in the first quarter. It expects adjusted earnings to be $1.60-$1.70 per share. This indicates a decline from the year-ago figure of earnings of $1.75 per share.
Zacks Rank & Recent Consumer Discretionary Releases
Mohawk currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported impressive fourth-quarter 2023 results, wherein earnings and total revenues topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s quarterly results notably benefited from solid improvement in revenue per available room on the back of increased occupancy rates and average daily rate. Furthermore, during the quarter, HLT witnessed a record number of openings, which encouraged the uptrend to a great extent. The company states that it is well-positioned to continue driving innovation and growth through 2024, owing to the improving trends.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, the top and bottom lines increased on a year-over-year basis.
The quarterly results reflect unprecedented demand for the brands from new and loyal guests. The company reported record bookings, both in terms of rate and volume. Going forward, management emphasized delivering long-term shareholder value through industry-leading global brands, innovative fleet and diverse destinations. The company anticipates achieving two Trifecta goals ahead of schedule.
Las Vegas Sands Corp. (LVS - Free Report) reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and bottom lines increased on a year-over-year basis.
The company reported continued improvement in the operating environment in Macao and Singapore. In Macao, the company reported a sustained recovery across each of its segments. Singapore’s Marina Bay Sands demonstrated solid financial and operational performance. The introduction of new suite options and improved services is in line with the improving airlift capacity and the continuous recovery in travel and tourism spending, especially from China and the broader region.