Mohawk Industries Inc (MHK, Financial) announced its third quarter 2023 earnings on October 26, 2023. The company reported a net loss of $760 million and a loss per share of $11.94, impacted by non-cash impairment charges of $876 million. The challenging macroeconomic conditions and higher discount rates prompted a review of its goodwill and intangible asset balances, resulting in the impairment charges.
Financial Performance
Adjusted net earnings were $174 million, and adjusted earnings per share (“EPS”) were $2.72, excluding impairment and other non-recurring charges. Net sales for the third quarter of 2023 were $2.8 billion, a decrease of 5.2% as reported and 8.1% on a legacy and constant currency and days basis versus the prior year.
For the nine-month period ending September 30, 2023, the company reported a net loss and loss per share of $579 million and $9.10, respectively. Adjusted net earnings were $462 million, and adjusted EPS was $7.23, excluding impairment and other non-recurring charges. For the first nine months of 2023, net sales were $8.5 billion, a decrease of 6.2% as reported and 8.7% on a legacy and constant currency and days basis versus the prior year.
CEO Commentary
“Our results for the quarter were in line with our expectations as our industry faced continued pressures across all regions, primarily due to constrained residential investments and further tightening of consumer discretionary spending. Our third quarter performance was seasonally impacted by vacations in Europe, which reduced our sales and earnings versus the prior quarter. Lower material and energy costs offset the decline in both price and mix. We also faced foreign exchange headwinds of approximately $20 million on operating income or $0.25 on EPS. Across the business, we benefited from cost reductions, productivity initiatives and lower input costs. We are managing our working capital and generated strong free cash flow of $385 million in the quarter and $660 million for the year to date." - Jeff Lorberbaum, Chairman and CEO of Mohawk Industries Inc
Financial Tables
The company's net sales for the third quarter of 2023 were $2.8 billion, a decrease from $2.9 billion in the same period of 2022. The Global Ceramic Segment reported a 0.5% decline in net sales, while the Flooring North America Segment sales declined 11.7%. The Flooring Rest of the World Segment’s net sales decreased by 2.6%.
The company's total assets as of September 30, 2023, were $13.1 billion, a decrease from $13.8 billion as of October 1, 2022. The total stockholders' equity was $7.3 billion, a decrease from $7.8 billion in the same period of the previous year.
Outlook
The company expects its fourth quarter adjusted EPS to be between $1.80 to $1.90, excluding any non-recurring charges. With this, the company's 2023 full year adjusted EPS should exceed $9.00. Despite the current industry downturn, the company is managing the controllable aspects of its business while adjusting to regional market conditions.
Explore the complete 8-K earnings release (here) from Mohawk Industries Inc for further details.
