Financial Data and Key Metrics Changes - The fourth quarter net sales were approximately $2.7 billion, an increase of 2.4% as reported, but a decrease of approximately 3.3% on a constant basis compared to the prior year [4] - Adjusted EPS for the quarter was $2, up approximately 3% versus the prior year, while the full year adjusted EPS was $8.96, a decrease of approximately 7.5% [5][13] - Free cash flow for the year was approximately $620 million, with stock repurchases of approximately 1.3 million shares for $149 million [5] Business Line Data and Key Metrics Changes - Global Ceramic segment had sales of just under $1.1 billion, a 6.1% increase as reported, and flat on a constant basis [13] - Flooring North America sales were $893 million, a 4.8% decrease as reported, or 6.2% on a constant basis, primarily due to a decline in the residential soft surface business [14] - Flooring Rest of the World sales were $737 million, a 6.5% increase as reported, but a 3.5% decrease on a constant basis [16] Market Data and Key Metrics Changes - Approximately 55% of sales were in the U.S., 30% in Europe, and 15% in other geographies [5] - Housing turnover in major regions remains at historical lows due to affordability challenges and economic uncertainty [5] - In Europe, high building costs and labor constraints continue to impede residential construction, although moderate recoveries have emerged in Southern and Eastern Europe [8] Company Strategy and Development Direction - The company is focusing on innovative product introductions and marketing actions to stimulate sales in soft markets [9] - Capital expenditures for 2026 are planned at approximately $480 million, focusing on product innovation and cost reduction [18] - The company anticipates benefits from product mix, productivity, and cost reductions to offset headwinds from higher energy and labor costs [28] Management's Comments on Operating Environment and Future Outlook - Management noted that while home renovation remains soft, there is optimism for improvement in existing home sales due to lower mortgage rates and increased housing supply [44] - The company expects 2026 to be a transitional year with some improvement in remodeling activity and anticipates exceeding last year's earnings [44][46] - Management highlighted that pricing pressures are likely to remain due to competitive market conditions [32] Other Important Information - The company initiated numerous restructuring actions and operational improvements that lowered its cost position [10] - The balance sheet remains strong, with gross debt of $2 billion and leverage of 0.9 times adjusted EBITDA [18] Q&A Session Summary Question: Expectations for price and mix in 2026 - Management anticipates continued pressure in the market, with inflation levels similar to 2025, but expects pricing, improved mix, and productivity to help offset inflation [32][33] Question: Inventory management ahead of spring selling season - Inventories were reduced in the fourth quarter, and management believes they are close to where they need to be, with optimism from customers for the upcoming year [39][41] Question: Outlook for 2026 and pricing dynamics - Management expects price, mix, and volume to improve, driven by pricing initiatives and a stable commercial business [57][58] Question: Impact of tariffs and pricing strategies - Tariffs range from 15%-50%, and management has taken actions to offset these costs through pricing and supply chain management [93] Question: Pricing pressure in Flooring Rest of the World - Management noted strong price competition but anticipates a slightly positive price effect as they move through the year [97]

Core Insights - Mohawk Industries reported revenue of $2.7 billion for the quarter ended December 2025, reflecting a year-over-year increase of 2.4% [1] - The company's EPS was $2.00, up from $1.95 in the same quarter last year, with an EPS surprise of +0.92% compared to the consensus estimate of $1.98 [1] Financial Performance - Revenue from Global Ceramic was $1.07 billion, matching analyst estimates and showing a year-over-year increase of 6.1% [4] - Revenue from Flooring ROW was $737.1 million, exceeding the average estimate of $717.58 million and representing a 6.6% increase year-over-year [4] - Revenue from Flooring NA was $892.5 million, below the average estimate of $931.18 million, indicating a decline of 4.8% year-over-year [4] Operating Income - Adjusted Operating Income for Global Ceramic was $62.7 million, surpassing the average estimate of $56.49 million [4] - Adjusted Operating Income for Flooring NA was $39.2 million, falling short of the average estimate of $49.53 million [4] - Adjusted Operating Income for Flooring ROW was $65.1 million, slightly above the average estimate of $64.63 million [4] - Adjusted Operating Income for Corporate and intersegment eliminations was -$14.9 million, compared to the average estimate of -$14.39 million [4] Stock Performance - Shares of Mohawk Industries have returned +12.7% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.3% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Financial Performance - In Q4 2025, Mohawk Industries reported net earnings of $42 million and adjusted net earnings of $124 million, with an adjusted EPS of $2.00[1][2] - Net sales for Q4 2025 were $2.7 billion, reflecting a 2.4% increase as reported but a 3.3% decrease on an adjusted basis compared to Q4 2024[1][2] - For the full year 2025, net sales totaled $10.8 billion, a decrease of 0.5% as reported and 1.3% on an adjusted basis compared to 2024[2] - Adjusted net earnings attributable to Mohawk Industries, Inc. for the twelve months ended December 31, 2025, were $559.3 million, down from $617.2 million in 2024, reflecting a decline of 9.4%[23] - Adjusted diluted earnings per share for the twelve months ended December 31, 2025, were $8.96, compared to $9.70 in 2024, a decrease of 7.7%[23] - Earnings before income taxes for Q4 2025 were $66.0 million, a decline from $108.5 million in Q4 2024[32] - Adjusted earnings before income taxes remained stable at $149.5 million for both Q4 2025 and Q4 2024[32] Cash Flow and Capital Management - The company generated free cash flow of approximately $621 million in 2025 and repurchased about 1.3 million shares for approximately $150 million[3] - Capital spending in 2025 was reduced to $435 million, approximately 30% below depreciation levels, in response to market conditions[6] - Total debt as of December 31, 2025, was $2,030.5 million, with net debt standing at $1,174.4 million after accounting for cash and cash equivalents[24] Segment Performance - The Global Ceramic Segment saw net sales increase by 6.1% as reported, while the Flooring North America Segment experienced a 4.8% decrease in net sales[7][8] - The Global Ceramic segment reported net sales of $1,070.0 million for the three months ended December 31, 2025, an increase from $1,008.2 million in 2024[22] - Flooring NA segment experienced a decline in net sales to $892.5 million for the three months ended December 31, 2025, down from $937.2 million in 2024, a decrease of 4.9%[22] - Flooring segment operating income for Q4 2025 was $44.6 million, down from $60.9 million in Q4 2024[31] - Adjusted segment operating income as a percentage of net sales decreased to 8.8% in Q4 2025 from 10.0% in Q4 2024[31] Future Outlook - Mohawk anticipates first quarter 2026 adjusted EPS to be between $1.75 and $1.85, excluding any restructuring or one-time charges[10] - Mohawk expects improvements in sales and earnings for 2026, contingent on economic conditions and the recovery of residential remodeling[11] Tax and Accounting Adjustments - Income tax expense increased to $24.0 million in Q4 2025 from $18.3 million in Q4 2024[33] - Adjusted income tax expense as a percentage of adjusted earnings before income taxes was 17.1% in Q4 2025, slightly down from 17.8% in Q4 2024[33] - The company identified an immaterial error affecting prior financial statements, resulting in a $42.1 million reduction in reported accounts receivable[34][35] - The company recorded expenses of $9.5 million for the year ended 2023 and $3.0 million for the year ended 2024 due to prior period corrections[35] Non-GAAP Measures - The company emphasizes the use of non-GAAP measures to provide insights into growth trends and long-term profitability[36][38] - Certain items are excluded from non-GAAP measures to avoid obscuring underlying business trends, including restructuring and legal settlements[37][38] Asset Growth - Total assets increased to $13,687.3 million as of December 31, 2025, up from $12,736.5 million in 2024, representing a growth of 7.5%[21] - Consolidated net sales for the twelve months ended December 31, 2025, were $10,785.4 million, a slight decrease of 0.5% from $10,836.9 million in 2024[22] Gross Profit and Operating Income - Gross profit for the three months ended December 31, 2025, was $622.2 million, slightly up from $620.6 million in 2024[28] - Adjusted operating income for the three months ended December 31, 2025, was $152.1 million, compared to $159.8 million in 2024, a decrease of 4.7%[30]

Core Viewpoint - Mohawk Industries reported mixed financial results for Q4 2025, with net earnings of $42 million and adjusted net earnings of $124 million, reflecting ongoing challenges in the housing market and increased input costs [1][2][3]. Financial Performance - Q4 2025 net sales were $2.7 billion, a 2.4% increase year-over-year, but a 3.3% decrease on an adjusted basis [1][2]. - For the full year 2025, net earnings were $370 million, with an EPS of $5.93, while adjusted net earnings were $559 million, with an adjusted EPS of $8.96 [2]. - The company generated free cash flow of approximately $621 million in 2025 and repurchased about 1.3 million shares for approximately $150 million [3]. Market Conditions - The company faced macroeconomic challenges, including weak consumer confidence and low housing turnover, which affected sales volume [4][5]. - U.S. existing home sales remained stagnant, although December saw a slight increase compared to the previous year [4]. - In Europe, interest rates and inflation have eased, contributing to stable consumer savings and steady employment [4]. Segment Performance - The Global Ceramic Segment saw a 6.1% increase in net sales, while the Flooring North America Segment experienced a 4.8% decrease [6][8][20]. - The Flooring Rest of the World Segment reported a 6.5% increase in net sales, but a 3.5% decrease when adjusted for constant days and exchange rates [7][20]. Strategic Actions - The company implemented various strategies to stimulate sales, including innovative product launches and marketing initiatives [5]. - Capital expenditures were reduced to $435 million, approximately 30% below depreciation levels, in response to market conditions [5]. - Mohawk anticipates that lower interest rates will encourage investments in commercial construction and renovation [4][10]. Future Outlook - The company expects continued competitive market conditions in Q1 2026, with adjusted EPS projected between $1.75 and $1.85 [9]. - Mohawk anticipates improvements in sales and earnings for 2026, contingent on economic conditions and the recovery of residential remodeling [10].

Core Insights - Mohawk Industries, Inc. (MHK) is set to report its fourth-quarter results for 2025 on February 12, after market close [1] - In the last reported quarter, adjusted earnings per share (EPS) missed the Zacks Consensus Estimate by 0.4%, while net sales exceeded expectations by 1.1% [1] - Year-over-year, net sales grew by 1.4%, but adjusted EPS declined by 7.9% [1] Earnings Performance - MHK's earnings surpassed expectations in three of the last four quarters, with an average surprise of 4.2% [2] - The Zacks Consensus Estimate for fourth-quarter EPS remains unchanged at $1.98, reflecting a 1.5% increase from the previous year's EPS of $1.95 [3] Sales Trends - The fourth-quarter top-line performance is expected to improve year-over-year, driven by contributions from the Global Ceramic (40.1% of Q3 2025 net sales) and Flooring Rest of the World (26% of Q3 2025 net sales) segments [4] - The Global Ceramic segment is anticipated to benefit from premium collections, commercial sales, and expanded distribution [4] - The Flooring Rest of the World segment is expected to see growth due to strong performance in panels and insulation, with increased plant utilization [4] Segment Performance - The model predicts fourth-quarter net sales for Global Ceramic to rise by 6.4% to $1.07 billion, while Flooring North America is expected to decline by 1.2% to $926.4 million, and Flooring Rest of World is projected to increase by 1.1% to $699.7 million [7] Margin Expectations - The bottom line is expected to improve compared to the previous year due to favorable pricing strategies aimed at offsetting cost pressures from tariffs and macroeconomic challenges [8] - Productivity gains and improved profitability from strategic efforts, such as closing high-cost facilities and streamlining distribution, are also expected to enhance margins [8] - Adjusted EPS is projected to be in the range of $1.90-$2.00, compared to $1.95 reported a year ago [9] - The adjusted gross margin is expected to expand by 40 basis points to 24.8%, while the adjusted EBITDA margin is projected to increase by 500 basis points to 13.8% [10] Earnings Prediction - The model does not predict an earnings beat for Mohawk this time, as the company has an Earnings ESP of 0.00% and a Zacks Rank of 4 (Sell) [11]

Core Viewpoint - The carpet industry in northwest Georgia, particularly companies like Shaw Industries and Mohawk, has been significantly impacted by the use of PFAS (per- and polyfluoroalkyl substances), leading to environmental contamination and health concerns among local residents. The industry's reliance on these chemicals for stain resistance has resulted in widespread pollution and legal challenges as communities seek accountability for the health risks associated with PFAS exposure. Group 1: Industry Practices and Historical Context - The carpet industry has utilized PFAS for decades, with companies like Shaw Industries and Mohawk relying on these chemicals for stain resistance in carpet production [3][27][35] - 3M's announcement in 2000 to reformulate Scotchgard due to health concerns marked a pivotal moment for the industry, as it highlighted the dangers of PFAS accumulation in human blood [1][34] - The lack of stringent regulations allowed carpet manufacturers to continue using PFAS and related chemicals, contributing to significant environmental pollution [4][12][19] Group 2: Environmental and Health Impact - The contamination from carpet mills has led to PFAS being detected in local water sources, with levels exceeding EPA health advisories [5][60][69] - Residents in the region have reported health issues, including elevated PFAS levels in their blood, raising concerns about potential links to various health problems [7][81][90] - Studies have shown that the Conasauga River, affected by carpet industry runoff, has some of the highest recorded PFAS levels in surface water globally [69][76] Group 3: Legal and Regulatory Challenges - Numerous lawsuits have been filed against carpet manufacturers and chemical suppliers, with communities seeking compensation for the health and environmental damages caused by PFAS [97][100] - The regulatory response has been slow, with federal and state agencies struggling to implement effective measures to address PFAS contamination [16][101] - The carpet industry has faced increasing scrutiny and pressure to reformulate products and address past practices, yet challenges remain in fully eliminating PFAS from production processes [86][87]

Core Insights - Chicago Partners Investment Group LLC increased its stake in Mohawk Industries by 230.0% in Q3, owning 6,180 shares valued at $734,000 [2] - Institutional investors and hedge funds collectively own 78.98% of Mohawk Industries [3] Institutional Activity - Goldman Sachs raised its stake by 14.1% in Q1, now holding 344,797 shares valued at $39,369,000 after acquiring 42,655 additional shares [3] - UBS AM increased its stake by 0.6% in Q1, owning 193,977 shares worth $22,148,000 after acquiring 1,175 shares [3] - Wealth Enhancement Advisory Services LLC grew its position by 190.5% in Q2, now owning 15,031 shares valued at $1,666,000 [3] - Farther Finance Advisors LLC increased its stake by 85.6% in Q2, now holding 2,437 shares valued at $255,000 [3] Insider Activity - Insider Suzanne L. Helen sold 2,700 shares at an average price of $109.00, totaling $294,300, reducing her ownership by 3.82% [4] - Corporate insiders sold 17,600 shares valued at $1,945,754 in the last ninety days, with insiders owning 17.40% of the stock [4] Analyst Ratings - Barclays set a price target of $121.00 for Mohawk Industries [5] - Raymond James reissued a "strong-buy" rating with a price target of $150.00, up from $140.00 [5] - Jefferies Financial Group lowered its price target from $134.00 to $128.00, maintaining a "hold" rating [5] - The consensus rating for Mohawk Industries is "Moderate Buy" with an average price target of $133.83 [6] Company Performance - Mohawk Industries reported Q3 earnings of $2.67 per share, missing the consensus estimate by $0.01, with revenue of $2.76 billion, exceeding expectations [8] - The company's quarterly revenue increased by 1.4% year-over-year [8] - Mohawk Industries has a market cap of $7.46 billion, a PE ratio of 17.97, and a debt-to-equity ratio of 0.21 [7] Company Overview - Mohawk Industries is a global flooring manufacturer, producing a wide range of floor covering products for residential and commercial applications [9] - The company has a vertically integrated platform, controlling product quality and supply chain efficiency [9]

Core Insights - Mohawk Industries, Inc. (MHK) is a leading flooring products company with a market cap of $7.3 billion, offering a diverse range of products for residential and commercial applications [1] Financial Performance - Analysts expect MHK to report a diluted EPS of $1.98 for Q4 2025, reflecting a 1.5% increase from $1.95 in the same quarter last year [2] - For the full fiscal year, MHK's EPS is projected to be $8.94, down 7.8% from $9.70 in fiscal 2024, but is expected to rise 14.9% year-over-year to $10.27 in fiscal 2026 [3] Stock Performance - MHK stock has underperformed the S&P 500 Index, which gained 17.7% over the past 52 weeks, with MHK shares showing only marginal increases during this period [4] - The stock also lagged behind the Consumer Discretionary Select Sector SPDR Fund, which rose by 11.6% in the same timeframe [4] Market Challenges - The company's recent quarter performance was impacted by weaker economic conditions and higher input costs, which offset gains from premium product sales and productivity initiatives [5] - Management highlighted ongoing challenges such as low consumer confidence, inflation, and the effects of hurricanes [5] Recent Earnings Report - On October 23, 2025, MHK reported Q3 results, with adjusted EPS of $2.67, slightly below Wall Street expectations of $2.68, while revenue reached $2.8 billion, exceeding forecasts of $2.7 billion [6] - For Q4, MHK anticipates adjusted EPS to range between $1.90 and $2.00 [6] Analyst Ratings - The consensus opinion on MHK stock is moderately bullish, with a "Moderate Buy" rating from analysts [7] - Out of 18 analysts, eight recommend a "Strong Buy" and ten suggest a "Hold," with an average price target of $136.27, indicating a potential upside of 14.8% from current levels [7]

Core Viewpoint - Mohawk Industries, Inc. (NYSE:MHK) is considered a cheap stock with a mixed analyst response, showing a potential upside of 25.65% based on a median price target of $138.50 [1] Analyst Ratings and Price Targets - Jefferies reduced the price target for Mohawk Industries to $128 from $134, maintaining a 'Hold' rating, as they favor consumer-facing companies with strong pricing power due to a projected soft residential construction market entering 2026 [2] - Wells Fargo lowered the price target to $110 from $125 while reaffirming an 'Equal Weight' rating, citing skepticism about the housing market complicating investment strategies for 2025 [3] - Barclays also adjusted the price target to $121 from $122, reiterating an 'Equal Weight' rating, and noted a continued decline in single-family housing starts, indicating a volatile housing market [4] Company Overview - Mohawk Industries, Inc. is based in Georgia and specializes in flooring products for both remodeling and new construction, operating through three segments: Global Ceramic, Flooring North America, and Flooring Rest of the World [4]

Core Viewpoint - Mohawk Industries, Inc. is experiencing significant stock underperformance amid challenging market conditions, with recent financial results falling short of expectations [3][5][6] Company Overview - Mohawk Industries, Inc. is a leading global flooring manufacturer based in Calhoun, Georgia, specializing in premium carpets, hardwood, laminate, tiles, and stone products for both residential and commercial markets [1] - The company has a market capitalization of $6.82 billion, categorizing it as a mid-cap stock [2] Stock Performance - Mohawk's shares reached a 52-week high of $143.13 in September but have since declined by 23.7%, underperforming the broader market and its sector [3] - Over the past three months, the stock has decreased by 16.8%, while the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) has seen only marginal declines [3] - In the last 52 weeks, Mohawk's stock has dropped by 12.4%, contrasting with a 10.9% increase over the past six months [4] Financial Results - In the third quarter, Mohawk reported net sales of $2.76 billion, a modest year-over-year growth of 1.4%, surpassing Wall Street's expectation of $2.73 billion [5] - The company's earnings per share (EPS) fell by 7.9% year-over-year to $2.67, missing the anticipated $2.68, leading to a 7% intraday stock drop following the announcement [6] - Comparatively, another furnishings firm, Interface, Inc. (TILE), has shown a 10.2% increase over the past 52 weeks and a 41% increase over the past six months, highlighting Mohawk's underperformance [6]