Mohawk Industries NYSE: MHK reported second-quarter 2026 results that exceeded its expectations, citing volume growth, pricing actions, improved product mix and productivity initiatives despite continued softness in residential flooring markets.
Net sales rose 6.8% year over year to $3 billion, or 5% on a constant-currency basis, with growth across the company’s Global Ceramic, Flooring North America and Flooring Rest of World segments. Reported earnings per share were $3.22, while adjusted earnings per share were $3.67. Adjusted results included approximately $0.63 per share from tariff refunds that were not included in the company’s prior guidance.
Chairman and Chief Executive Officer Jeff Lorberbaum said the tariff refunds represented reversals of costs Mohawk had previously absorbed due to higher tariffs. The company also repurchased more than 600,000 shares for approximately $60 million during the quarter.
Margins Improve as Price, Mix and Productivity Offset Inflation
Chief Financial Officer Nick Manthey said adjusted gross margin was 27.4%, an increase of 100 basis points from a year earlier. Adjusted operating income reached $290 million, or 9.7% of sales, representing an approximately 170-basis-point improvement from the prior-year period.
Manthey attributed the operating-income improvement to $54 million from price and mix, $43 million from restructuring and productivity efforts, and $13 million from higher volumes. Those gains offset inflationary pressures. Net inflation totaled $28 million during the quarter, including tariff refunds, while underlying inflation was $77 million.
Mohawk said it implemented price increases across numerous products and geographies in response to higher materials, energy and transportation costs. Management expects higher input costs to continue flowing through inventory during the second half of the year and said additional pricing actions may be needed if inflation rises further.
The company generated $236 million in free cash flow year to date. Capital expenditures totaled $88 million in the second quarter, and Mohawk now expects to invest about $460 million in 2026, primarily in cost reduction, product innovation and maintenance. Net debt was just under $1.1 billion, with a net debt-to-EBITDA ratio of 0.8 times.
All Three Segments Report Sales Growth
- Global Ceramic: Net sales increased 7.9% as reported to $1.2 billion, or 4.6% in constant currency. The segment recorded about 3% volume growth, led by the U.S. and Europe, along with improved price and mix. Adjusted operating income was $99 million, or 8.2% of sales.
- Flooring North America: Net sales rose 3.1% as reported to $976 million, or 4.7% in constant currency. Mohawk said retail-channel volume growth and improving price and mix supported the segment. Adjusted operating income was $111 million, with an adjusted operating margin of 11.4%.
- Flooring Rest of World: Net sales increased 9.7% as reported to $806 million, or 6.2% in constant currency. Pricing actions, modest mix improvement, and performance in panels and insulation contributed to growth. Adjusted operating income was $97 million, or 12% of sales.
President and Chief Operating Officer Paul De Cock said Mohawk estimates it gained share in both hard- and soft-surface flooring in North America. The company cited new product placements, premium tile and countertop offerings, new soft-surface products, and expanded retail and commercial-channel positions.
De Cock also said commercial markets continued to outperform residential markets globally. Residential demand remained pressured by low home resale activity, affordability constraints and soft new-home construction, according to management.
New Cost Programs and Product Launches
Mohawk said it has begun additional projects involving operational simplification, organizational realignment, warehouse consolidation and capacity optimization. The projects are expected to reduce costs by about $60 million, with most completed by the end of 2027. The company expects associated cash restructuring costs of approximately $50 million.
Management said new collections in luxury vinyl tile, laminate, ceramic, carpet and countertops helped secure customer placements and initial inventory stocking during the quarter. De Cock said the company expects reorders from those placements to contribute in later periods, although he noted that the third quarter is seasonally slower than the second quarter.
During the call, De Cock highlighted Mohawk’s commercial product introductions, including its Hero rubber flooring product made with recycled Nike Grind. He said the product received three Best of NeoCon awards.
Third-Quarter Outlook and Leadership Transition
For the third quarter, Mohawk expects adjusted earnings per share of $2.50 to $2.60, excluding restructuring and other one-time charges. The outlook includes about $0.12 per share from additional tariff refunds already received. Excluding those refunds, the company’s baseline adjusted EPS outlook is $2.38 to $2.48.
Management expects sales to decline seasonally from the second quarter, excluding foreign exchange and shipping-day effects. The third quarter will include one additional shipping day compared with both the prior-year period and the second quarter. Mohawk also noted that the fourth quarter will have four fewer shipping days.
Lorberbaum announced that he will retire as chief executive officer after 25 years in the role, with De Cock set to succeed him. Lorberbaum will continue as chairman of the board. De Cock, who previously led Mohawk’s European flooring business and Flooring North America segment before becoming COO, said the company would continue to prioritize innovation, operational execution, profitable growth investments and share repurchases.
About Mohawk Industries (NYSE:MHK)
Mohawk Industries, Inc is a global flooring manufacturer that designs, produces and distributes a broad range of floor covering products for both residential and commercial applications. Headquartered in Calhoun, Georgia, the company traces its roots to 1878 and has expanded through a series of strategic acquisitions and organic growth initiatives. Over the decades, Mohawk has built a vertically integrated platform encompassing yarn manufacturing, fiber production, wood and laminate finishing, and ceramic tile fabrication, enabling tight control over product quality and supply chain efficiency.
The company's product portfolio includes residential and commercial carpet, ceramic and porcelain tile, laminate, wood and natural stone flooring, luxury vinyl, and innovative surface solutions.
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