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Mohawk's Q1 Earnings Beat Estimates, Revenues Lag, Both Down Y/Y
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Mohawk Industries, Inc. (MHK - Free Report) reported mixed results for the first quarter of 2025, with earnings topping the Zacks Consensus Estimate and net sales missing the same. On a year-over-year basis, both top and bottom lines declined.
The quarterly results were impacted by two fewer shipping days and foreign exchange headwinds. The company also faced challenges due to the new Flooring North America order system, though service levels have returned to normal. The bottom line benefited from productivity gains, restructuring actions and a lower tax rate, which helped offset the impact of pricing pressure and higher input costs.
Market conditions weakened sequentially in the first quarter, with residential remodeling remaining the slowest sector. Consumer confidence declined, adding to the uncertainty, while the implementation of global tariffs further complicated the situation. In response, the company increased inventory levels in anticipation of tariff impacts and estimated an annualized cost of around $50 million at the current 10% rate. Price increases and supply-chain adjustments are expected to manage these costs.
Nonetheless, the company remains optimistic about the flooring market’s long-term prospects, given the current phase of the housing cycle. Efforts to reduce costs, simplify operations and invest in new product features are ongoing. The company expects a significant rebound when industry volumes return to historical levels, similar to past recoveries after economic downturns.
Inside MHK’s Q1 Numbers
Mohawk reported adjusted earnings per share (EPS) of $1.52, which topped the Zacks Consensus Estimate of $1.41 by 7.8%. In the year-ago quarter, the company reported an adjusted EPS of $1.86. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Net sales of $2.53 billion missed the consensus estimate of $2.57 billion by 1.8% and inched down 5.7% year over year from $2.68 billion. On an adjusted basis, net sales were down 0.7% year over year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Adjusted gross margin contracted 30 basis points (bps) year over year to 24.1%. Adjusted selling, general and administrative expenses, as a percent of net sales, rose 80 bps to 19.2% from the year-ago period. Adjusted operating margin contracted 130 bps to 4.8% from 6.1% a year ago.
Mohawk’s Segmental Details
Global Ceramic: Sales in the segment totaled $993.8 million, down 4.9% year over year on a reported basis. On an adjusted basis, sales were up 1.2% from the year-ago level to $1.057 billion.
Adjusted operating income decreased to $48.2 million from $52.7 million a year ago. The segment’s adjusted operating margin contracted to 4.8% from 5% a year ago.
Flooring North America: Net sales of the segment amounted to $862.4 million, down 4.2% year over year on a reported basis and 1.1% on an adjusted basis. Adjusted net sales were $890.2 million.
The segment registered an adjusted operating profit of $25.5 million, down from $47.8 million reported in the prior-year period. Adjusted operating margin was 3%, down from 5.3% a year ago.
Flooring Rest of the World: Net sales in the segment decreased 8.8% year over year on a reported basis to $669.6 million. On an adjusted basis, sales were down 2.9% from the year-ago level to $713.3 million.
Adjusted operating income was $61 million, down from $74 million reported a year ago. The segment’s adjusted operating margin was 9.1%, down from 10.1% in the year-ago period.
Financial Highlights of MHK
As of March 29, 2025, it had cash and cash equivalents of $702.5 million compared with $658.5 million on March 30, 2024. The long-term debt, less the current portion, was $1.7 billion compared with $1.69 billion at the end of first-quarter 2024.
At the end of the first quarter, the company generated a negative free cash flow of $85.4 million against $96.9 million a year ago.
Impact of Tariffs and Market Trends
The company is seeing more uncertainty in the global economy after tariffs were implemented last month. Higher inflation, weak consumer confidence and reduced business spending are expected to create softer market conditions. Tariff impacts on consumer spending and housing are still unfolding. The company is focusing on cost control through restructuring, which is likely to result in savings of about $100 million this year.
FNA service levels have returned to normal. The company is working on improving the order system’s efficiency and performance. Pricing pressure is expected to continue due to low demand and strong competition across markets.
In FROW, demand for large home-related purchases remains weak in Europe. Product mix is shifting, but lower interest rates may help improve consumer spending. Global Ceramic and FNA are seeing better sales in commercial channels and premium products. Recent product launches are performing well, helping improve product mix and support overall sales.
MHK’s Q2 View
MHK expects adjusted EPS in the range of $2.52-$2.62, excluding restructuring and other charges, compared with the year-ago figure of $3.
Pool Corporation (POOL - Free Report) reported first-quarter 2025 results, with earnings and revenues missing the Zacks Consensus Estimate. Both top and bottom lines declined from the prior-year quarter's actuals.
Although discretionary project spending remained under pressure, overall sales picked up in March, recovering from the weather-related challenges seen in January and February.
JAKKS Pacific, Inc. (JAKK - Free Report) reported first-quarter 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
For the quarter, the company reported solid consumer demand across major markets and key retail channels. While U.S. market conditions posed some challenges in April, the company reported growth in Europe and Latin America, supported by strategic investments.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed first-quarter 2025 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues missing the same. The company reported adjusted EPS of $2.71, up from $1.77 in the prior-year quarter. Quarterly revenues of $4 billion increased 7.3% year over year from $3.72 billion.
Royal Caribbean reiterated its earnings guidance for 2025. The improved forecast is likely to be supported by favorable currency exchange movements and lower fuel costs.
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Mohawk's Q1 Earnings Beat Estimates, Revenues Lag, Both Down Y/Y
Mohawk Industries, Inc. (MHK - Free Report) reported mixed results for the first quarter of 2025, with earnings topping the Zacks Consensus Estimate and net sales missing the same. On a year-over-year basis, both top and bottom lines declined.
The quarterly results were impacted by two fewer shipping days and foreign exchange headwinds. The company also faced challenges due to the new Flooring North America order system, though service levels have returned to normal. The bottom line benefited from productivity gains, restructuring actions and a lower tax rate, which helped offset the impact of pricing pressure and higher input costs.
Market conditions weakened sequentially in the first quarter, with residential remodeling remaining the slowest sector. Consumer confidence declined, adding to the uncertainty, while the implementation of global tariffs further complicated the situation. In response, the company increased inventory levels in anticipation of tariff impacts and estimated an annualized cost of around $50 million at the current 10% rate. Price increases and supply-chain adjustments are expected to manage these costs.
Nonetheless, the company remains optimistic about the flooring market’s long-term prospects, given the current phase of the housing cycle. Efforts to reduce costs, simplify operations and invest in new product features are ongoing. The company expects a significant rebound when industry volumes return to historical levels, similar to past recoveries after economic downturns.
Inside MHK’s Q1 Numbers
Mohawk reported adjusted earnings per share (EPS) of $1.52, which topped the Zacks Consensus Estimate of $1.41 by 7.8%. In the year-ago quarter, the company reported an adjusted EPS of $1.86. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Net sales of $2.53 billion missed the consensus estimate of $2.57 billion by 1.8% and inched down 5.7% year over year from $2.68 billion. On an adjusted basis, net sales were down 0.7% year over year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Mohawk Industries, Inc. price-consensus-eps-surprise-chart | Mohawk Industries, Inc. Quote
Adjusted gross margin contracted 30 basis points (bps) year over year to 24.1%. Adjusted selling, general and administrative expenses, as a percent of net sales, rose 80 bps to 19.2% from the year-ago period. Adjusted operating margin contracted 130 bps to 4.8% from 6.1% a year ago.
Mohawk’s Segmental Details
Global Ceramic: Sales in the segment totaled $993.8 million, down 4.9% year over year on a reported basis. On an adjusted basis, sales were up 1.2% from the year-ago level to $1.057 billion.
Adjusted operating income decreased to $48.2 million from $52.7 million a year ago. The segment’s adjusted operating margin contracted to 4.8% from 5% a year ago.
Flooring North America: Net sales of the segment amounted to $862.4 million, down 4.2% year over year on a reported basis and 1.1% on an adjusted basis. Adjusted net sales were $890.2 million.
The segment registered an adjusted operating profit of $25.5 million, down from $47.8 million reported in the prior-year period. Adjusted operating margin was 3%, down from 5.3% a year ago.
Flooring Rest of the World: Net sales in the segment decreased 8.8% year over year on a reported basis to $669.6 million. On an adjusted basis, sales were down 2.9% from the year-ago level to $713.3 million.
Adjusted operating income was $61 million, down from $74 million reported a year ago. The segment’s adjusted operating margin was 9.1%, down from 10.1% in the year-ago period.
Financial Highlights of MHK
As of March 29, 2025, it had cash and cash equivalents of $702.5 million compared with $658.5 million on March 30, 2024. The long-term debt, less the current portion, was $1.7 billion compared with $1.69 billion at the end of first-quarter 2024.
At the end of the first quarter, the company generated a negative free cash flow of $85.4 million against $96.9 million a year ago.
Impact of Tariffs and Market Trends
The company is seeing more uncertainty in the global economy after tariffs were implemented last month. Higher inflation, weak consumer confidence and reduced business spending are expected to create softer market conditions. Tariff impacts on consumer spending and housing are still unfolding. The company is focusing on cost control through restructuring, which is likely to result in savings of about $100 million this year.
FNA service levels have returned to normal. The company is working on improving the order system’s efficiency and performance. Pricing pressure is expected to continue due to low demand and strong competition across markets.
In FROW, demand for large home-related purchases remains weak in Europe. Product mix is shifting, but lower interest rates may help improve consumer spending. Global Ceramic and FNA are seeing better sales in commercial channels and premium products. Recent product launches are performing well, helping improve product mix and support overall sales.
MHK’s Q2 View
MHK expects adjusted EPS in the range of $2.52-$2.62, excluding restructuring and other charges, compared with the year-ago figure of $3.
MHK’s Zacks Rank & Recent Consumer Discretionary Releases
Mohawk currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pool Corporation (POOL - Free Report) reported first-quarter 2025 results, with earnings and revenues missing the Zacks Consensus Estimate. Both top and bottom lines declined from the prior-year quarter's actuals.
Although discretionary project spending remained under pressure, overall sales picked up in March, recovering from the weather-related challenges seen in January and February.
JAKKS Pacific, Inc. (JAKK - Free Report) reported first-quarter 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
For the quarter, the company reported solid consumer demand across major markets and key retail channels. While U.S. market conditions posed some challenges in April, the company reported growth in Europe and Latin America, supported by strategic investments.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed first-quarter 2025 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues missing the same. The company reported adjusted EPS of $2.71, up from $1.77 in the prior-year quarter. Quarterly revenues of $4 billion increased 7.3% year over year from $3.72 billion.
Royal Caribbean reiterated its earnings guidance for 2025. The improved forecast is likely to be supported by favorable currency exchange movements and lower fuel costs.