Mohawk Industries' third-quarter sales rose 1%, but adjusted operating income fell as lower volumes offset much of pricing and product-mix gains amid weak demand in flooring markets.
Net sales for the quarter ended Oct. 3 reached $2.786 billion, compared with $2.758 billion a year earlier. Net earnings attributable to Mohawk were $163.1 million, up from $108.8 million.
Adjusted results were more subdued. Adjusted operating income declined to $200.1 million from $205.5 million, and adjusted net earnings slipped to $163.1 million from $166.5 million. Adjusted diluted earnings per share rose to $2.72 from $2.67.
The year-earlier quarter included $47.2 million in restructuring, acquisition, integration-related and other costs, versus $12.4 million this year. It also had $21.6 million in legal settlements, reserves and fees; Mohawk reported no costs in that category this quarter. The effective tax rate was 11%, down from 17.6%, partly because of reduced unrecognized tax benefits and a one-time U.S. tax-election benefit, the filing said.
Mohawk said adjusted sales were nearly flat and adjusted sales volumes fell about 4%. Its filing showed that price and product mix added about $103 million to sales, while an additional shipping day contributed about $38 million. Lower sales volume reduced sales by about $105 million.
Segment results varied: Global Ceramic sales increased 2.2% to $1.129 billion, and Flooring North America sales grew 1.4% to $949.9 million. Flooring Rest of the World sales declined 1.2% to $707.5 million. Mohawk cited elevated interest rates, housing affordability constraints, inflation and economic uncertainty as factors weighing on housing markets and consumer spending in the United States and Europe.
Operating cash flow reached $471.2 million, and free cash flow was $390.4 million. Mohawk repurchased 2.0 million shares for $261.3 million during the quarter and approved a new authorization for up to $500 million in repurchases. Chief Executive Officer Paul De Cock called the quarter a “solid third quarter in a weak demand environment.”
Mohawk forecasts fourth-quarter adjusted diluted earnings of $1.35 to $1.45 per share, with adjusted net sales expected to grow at a low-single-digit rate year over year. The company expects softer flooring-market conditions and four fewer shipping days than in the year-earlier quarter.
