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    MHK
    Earnings call· Jun 2026(Q2 FY26)

    MOHAWK INDUSTRIES Q2 FY26 earnings call MHK

    Jul 31, 2026 Source

    Executive summary

    Mohawk Industries Q2 FY26 — Strong Performance Exceeds Expectations with Tariff Refunds and Productivity Gains

    Mohawk Industries delivered strong Q2 FY26 results, surpassing expectations due to effective execution, new product placements, and tariff refunds. The company is proactively managing costs through productivity gains and new restructuring initiatives, while navigating persistent softness in residential markets and rising input costs. Leadership transition is underway with Paul De Cock taking over as CEO, signaling a continued focus on operational excellence and shareholder returns.

    Highlights

    5

    • Net sales of $3 billion, up 6.8% as reported and 5% on a constant basis, significantly exceeding expectations.

    • Adjusted EPS of $3.67, including a $0.63 benefit from tariff refunds, outperforming guidance.

    • Adjusted operating income increased approximately 170 basis points to 9.7% of sales, driven by price, mix, and productivity.

    • Initiated new restructuring projects expected to reduce costs by approximately $60 million by the end of 2027.

    • Achieved 2025 sustainability goals, lowering emission intensity by 31%, waste to landfill by 55%, and water intensity by 50%.

    Concerns

    3

    • Residential channels remained soft, and new home construction and existing home sales continue to be affected by affordability challenges.

    • Anticipate flooring market conditions to remain challenging in Q3, with seasonally slower sales and higher input costs.

    • Underlying inflation stepped up by $35 million from Q1 to Q2, with a similar step-up expected from Q2 to Q3.

    Guidance & targets

    7
    CategoryTargetConfidence
    Adjusted EPS
    $2.50-$2.60
    high materiality
    Medium
    Adjusted EPS (excluding tariff refunds)
    $2.38-$2.48
    high materiality
    Medium
    Capital expenditures
    $460M
    medium materiality
    High
    Corporate expenses and eliminations
    $55M
    low materiality
    High
    Q3 Adjusted Tax Rate
    approximately 22%
    low materiality
    High
    Cost reduction from new restructuring projects
    $60M
    medium materiality
    High
    Cash restructuring costs for new projects
    $50M
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Global Ceramic
    Gained momentum with new premium tile and countertop placements in the U.S. Grew volumes and improved market positioning in Latin America. Benefits from tariff refunds included in operating income.
    Volume growth: approximately 3%Productivity initiatives: $20 millionPositive price/mix: $13 millionUnderlying inflation: $35 million
    		$1.2 billion7.9% as reported, 4.6% on a constant basis—Adjusted operating income was $99 million or 8.2% of net sales
    Flooring North America
    Sales growth led by volume strength in retail channels with price and mix improving sequentially. Market share increased in both hard and soft surfaces. Benefits from tariff refunds included in operating income.
    Adjusted operating income increase: $42 millionProductivity: $21 millionUnderlying inflation: $16 million
    		$976 million3.1% as reported, 4.7% on a constant basis—Adjusted operating income was $111 million, and adjusted operating margin was 11.4%
    Flooring Rest of the World
    Sales growth driven by pricing actions to address higher energy and material costs, along with modest mix improvement. Launching new collections in LVT and laminate to strengthen premium segment position. Insulation and panels businesses delivered strong results.
    Price and mix contribution: $41 millionIncreased input costs: $23 million
    		$806 million9.7% as reported, 6.2% on a constant basis—Adjusted operating margin was $97 million or 12% of sales

    Operational metrics

    21
    Adjusted EPS
    $3.67
    Q2 FY26

    Reported adjusted EPS, including a benefit from tariff refunds.

    Tariff refunds benefit
    $0.63
    Q2 FY26

    Benefit from tariff refunds, not included in Q2 guidance.

    Shares repurchased
    over 600,000
    Q2 FY26

    Part of the buyback program.

    Emission intensity reduction
    31%vs base year
    by 2025

    Achieved as part of 2025 sustainability goals.

    Waste to landfill intensity reduction
    55%vs base year
    by 2025

    Achieved as part of 2025 sustainability goals.

    Water intensity reduction
    50%vs base year
    by 2025

    Achieved as part of 2025 sustainability goals.

    Adjusted Gross Margin
    27.4%up 100 basis points from prior year
    Q2 FY26

    As reported gross margin was 26.6%.

    Adjusted SG&A as % of net sales
    17.7%70 basis point improvement versus prior year
    Q2 FY26

    As reported SG&A was 18.1% of net sales.

    Adjusted Operating Income
    $290 millionincrease of approximately 170 basis points versus prior year
    Q2 FY26

    As reported operating income was $254 million.

    Operating Income Driver: Price and Mix
    $54 million
    Q2 FY26

    Benefit to operating income from price and mix.

    Operating Income Driver: Restructuring and Productivity
    $43 million
    Q2 FY26

    Benefit to operating income from restructuring and productivity initiatives.

    Operating Income Driver: Higher Volumes
    $13 million
    Q2 FY26

    Benefit to operating income from higher volumes.

    Net Inflation Impact
    $28 million
    Q2 FY26

    Overall inflation impact, including tariff refunds.

    Underlying Inflation
    $77 million
    Q2 FY26

    Underlying inflation before considering tariff refunds.

    Net Interest Expense
    $5 millionconsistent with prior year
    Q2 FY26
    Adjusted Tax Rate
    21.1%
    Q2 FY26
    Capital Expenditures
    $88 million
    Q2 FY26
    Net Debt
    just under $1.1 billion
    Q2 FY26
    Net Debt-to-EBITDA Ratio
    0.8x
    Q2 FY26
    Shipping days variation
    +1vs prior year and Q2 FY26
    Q3 FY26

    One additional shipping day in Q3 compared to both the prior year period and Q2 FY26.

    Shipping days variation
    -4
    Q4 FY26

    Four less shipping days in Q4, which will be a bigger impact than Q3's variation.

    Industry KPIs

    2
    MetricValueDetails
    Tariff refunds duties$0.63USD/share
    Segment revenue operating income mixGlobal Ceramic: $1.2B revenue, 8.2% OI margin; Flooring North America: $976M revenue, 11.4% OI margin; Flooring Rest of World: $806M revenue, 12% OI marginUSD

    Product announcements

    3
    ProductTypeDetails
    Hero rubber flooringmilestone
    Anti-allergen carpet productlaunch
    U.S. domestic countertop manufacturing lineexpansion

    Risks & headwinds

    4
    Soft residential market conditionsQ2 FY26, expected to continue in Q3 FY26

    Residential channels remained soft, new home construction market remains pressured, existing home sales continue to be affected by affordability challenges

    Mitigation: Proactively managing controllable aspects: enhancing sales strategy, pricing, operational improvements, managing inventory and costs; expanding new product placements.

    Higher input costs and underlying inflationSecond half of FY26

    Higher input costs will flow through inventory and impact on margins in the second half of the year, underlying inflation step up by about $35 million from Q1 to Q2, and we'll see a similar step-up from Q2 to Q3, Q4 to remain elevated

    Mitigation: Executing price increases, productivity gains, restructuring actions; additional price increases may be required.

    Seasonally slower Q3 salesQ3 FY26

    Expect our sales to seasonally drop from the second quarter to the third quarter, seasonal pattern could be more pronounced than in past years

    Mitigation: Factored into outlook; driving own results through new product placements and pricing.

    Fewer shipping days in Q4Q4 FY26

    4 less shipping days in Q4

    Mitigation: Acknowledged as a factor, but no specific mitigation mentioned beyond general operational management.

    What to watch in Q3 FY26

    5

    Q3 Adjusted EPS (excluding tariff refunds)

    Q3 FY26
    CurrentQ2 Adjusted EPS (ex-refunds) was $3.04
    Target$2.38-$2.48

    Why it matters

    This will indicate the underlying profitability trend, excluding one-time📎 tariff benefits, in a challenging market.

    Excluding these tariff refunds and any restructuring or other onetime charges, our outlook contemplates a baseline EPS range of between $2.38 and $2.48.

    Q&A highlights

    6

    Asked about specific product categories and end markets (residential vs. commercial) contributing to Mohawk's impressive share gains, referencing NeoCon.

    Jeff Lorberbaum highlighted the success of innovations showcased at NeoCon, including the Hero rubber flooring product which won awards. He noted that new product placements in residential business also contributed to gains, and commercial continues to outperform.

    “We also showed our new Hero rubber flooring product that is made with recycled Nike regrind and that product won 3 Best of NeoCon awards.”

    asked by Susan Maklari · answered by Jeff Lorberbaum

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Exceeds Expectations

    Mohawk's Q2 FY26 results significantly surpassed expectations, with net sales of $3 billion, up 6.8% reported and 5% constant currency. This outperformance was driven by volume growth, pricing, product mix, and initial stocking of new product placements, alongside a $0.63/share benefit from tariff refunds not included in guidance. The company believes it outpaced the market and gained share in most regions despite a soft residential market.

    02

    Strategic Initiatives and Cost Management

    The company is proactively managing its business through enhanced sales strategies, pricing actions, and operational improvements. New restructuring projects focused on operational simplification, organizational realignment, warehouse consolidation, and capacity optimization are expected to reduce costs by approximately $60 million by the end of 2027, requiring $50 million in cash restructuring costs. These are permanent structural improvements to the cost base.

    03

    Leadership Transition

    Jeff Lorberbaum announced his retirement as CEO after 25 years, with Paul De Cock taking over. Paul, who has worked with Jeff for over two decades, expressed optimism about Mohawk's future, emphasizing continued focus on operational excellence, product innovation, and market leadership, supported by a strong balance sheet and cash flow generation.

    04

    Market Conditions and Outlook

    Residential channels remain soft, with new home construction and existing home sales pressured by affordability. The commercial sector continues to outperform residential. For Q3, Mohawk anticipates challenging flooring market conditions, seasonally slower sales, and higher input costs, which will flow through inventory and impact margins. Additional price increases may be required in the second half of the year.

    05

    Product Innovation and Market Share Gains

    Mohawk successfully introduced new collections and expanded product placements, particularly in premium tile and countertop in Global Ceramic, and hard and soft surfaces in Flooring North America. The company's new Hero rubber flooring product, made with recycled Nike regrind, won three Best of NeoCon awards, highlighting its innovation capabilities. These efforts are driving market share gains and improving product mix.

    06

    Sustainability Achievements

    Mohawk successfully completed its 2025 sustainability goals, lowering emission intensity by 31%, waste to landfill intensity by 55%, and water intensity by 50% from its base year. This achievement was highlighted in their 17th annual impact report.

    AI-generated summary of the company’s earnings call. Not investment advice.