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Mohawk Industries, Inc. MHK is scheduled to report results for the first quarter of 2025 on May 1, after market close.
In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 3.7% but declined by a penny year over year. Net sales beat the consensus estimate by 2.8% and inched up 1% year over year.
MHK’s earnings surpassed expectations in each of the trailing four quarters, delivering an average surprise of 5.6%.
How Are Estimates Placed for Mohawk Stock?
The Zacks Consensus Estimate for Mohawk’s earnings per share (EPS) has decreased to $1.40 from $1.41 over the past seven days. The estimated figure indicates a decrease of 24.7% from the year-ago level. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
The consensus estimate for net sales is pegged at $2.57 billion, indicating a 4.1% decrease from the year-earlier level.
Mohawk Industries, Inc. Price and EPS Surprise
Mohawk Industries, Inc. price-eps-surprise | Mohawk Industries, Inc. Quote
Factors That May Influence Mohawk’s Quarterly Results
Mohawk’s first quarter is likely to have reflected the ongoing macroeconomic and industry headwinds, with continued softness in demand due to elevated interest rates, low housing turnover, and a cautious consumer environment. These pressures are expected to have weighed on both sales volumes and pricing power in the to-be-reported quarter.
Our model expects first-quarter net sales in the Global Ceramic (which accounted for 38.2% of fourth-quarter 2024 net sales), Flooring North America (35.5%) and Flooring Rest of World (26.2%) segments to decline 5.8%, 4% and 2.4% to $984.6 million, $864.4 million and $717.1 million year over year, respectively.
Cost inflation remains a critical headwind, particularly in materials, labor, and energy. Though Mohawk is actively pursuing pricing actions in select categories and implementing cost reductions, management acknowledged that it will be difficult to fully offset rising costs through pricing alone. Moreover, currency headwinds from a stronger U.S. dollar are expected to affect international results by an estimated $7–$10 million in operating income. Seasonal dynamics will also weigh on performance, as the first quarter typically marks the slowest quarter of the year and will have two fewer shipping days compared with the year-ago period.
The Flooring North America segment implemented a new order management system, which had more issues than anticipated. A problematic rollout of a new order system led to shipment and invoicing delays. While manufacturing and financial systems remained unaffected, these issues are expected to reduce first-quarter operating income by $25–$30 million, with roughly $15–$20 million attributed to extraordinary costs and up to $50 million in lost sales. Management expects the bulk of the impact to be contained in the first quarter.
Despite these near-term challenges, Mohawk is leaning on strategic levers to support performance. Restructuring efforts across business units are expected to yield $100 million in incremental savings in 2025 and $285 million on a run-rate basis by 2026. Additionally, the company is introducing new, higher-margin products across its segments to improve mix and stimulate demand. These innovations, particularly in premium laminate, LVT, and quartz surfaces, are expected to provide long-term pricing and margin benefits.
We expect the adjusted gross margin to decline 110 bps year over year to 23.3%. The adjusted operating margin is expected to decrease to 4.8% from 6.1% reported a year ago.