Mohawk’s Shares Up on Q2 Earnings Beat, Net Sales Miss
Mohawk Industries, Inc. (NYSE: MHK) reported mixed results for the second quarter of 2024 (ended Jun 29). Its earnings surpassed the Zacks Consensus Estimate and improved year over year. It reported an earnings beat in each of the trailing six quarters.
On the other hand, net sales declined on a year-over-year basis and missed the consensus mark.
The softness in the top line was driven by the ongoing inflationary conditions and market uncertainties that consumers are facing globally. These factors induced uncertainty among consumers regarding discretionary spending, thus affecting the sales volume. Also, the company’s flooring remodeling is trapped under the pressures of elevated mortgage rates, higher home prices and the locked-in effect on homeowners. Although its commercial channel is faring well, MHK remains concerned about its residential purchases across its geographies, given the aforementioned headwinds.
That said, the bottom line gained due to the company’s effective implementation of its productivity initiatives and restructuring actions as well as lower energy and material costs, partially offset by the market pressure on pricing, mix and foreign exchange headwinds. Given the current market backdrop, the company is primarily focusing on controllable factors including sales initiatives, cost containment and restructuring actions to continue its growth streak.
Through operational efficiencies and strategic restructuring actions, the company aims to generate annualized savings of $100 million, of which $20-$25 million will be recognized in 2024.
Shares of this leading global flooring manufacturer gained 11.5% in the after-hours trading session on Jul 25.
Inside the Numbers
Mohawk reported adjusted earnings per share of $3.00, which topped the Zacks Consensus Estimate of $2.76 by 8.7%. The metric also increased 8.7% year over year.