Mohawk Industries Inc. boosted profits in the first quarter ahead of what analysts had predicted as the world’s biggest floor covering maker achieved record sales in the first three months of 2022.
Calhoun, Georgia-based Mohawk reported Thursday that its adjusted earnings after excluding one-time expenses rose by 8.3% to $246 million, or $3.78 per share, in the first three months of 2022.
The results beat Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of $2.89 per share.
The flooring maker posted revenue of $3.02 billion in the period, also topping Street forecasts. Four analysts surveyed by Zacks expected $2.9 billion.
“Mohawk’s results exceeded our expectations as first quarter sales rose to an all-time record, reflecting higher pricing, growth in our ceramic businesses, an improving commercial sector and benefit from our small acquisitions,” Mohawk CEO Jeff Lorberbaum said Thursday in an earnings announcement after the stock market closed. “Operating income exceeded our forecast as strength in our global ceramic businesses offset rising European energy costs, improved operational strategies enhanced Flooring North America’s results and our management of European market pressures benefited Flooring Rest of the World.”
Shares of Mohawk jumped nearly 12.8% in after market trading after the results were announced Thursday.
Lorberbaum said market conditions for flooring remain favorable, even as governments raise interest rates to combat inflation.
“Employment is at high levels and wages are increasing in most of our markets,” he said. “Millions of millennials in their late 20s and early 30s are forming households and desire home ownership. Unlike past cycles, U.S. housing inventory is historically low, more single-family homes are under construction and the U.S. home deficit will require years to align supply with demand.”
Mohawk’s board of directors approved a $500 million stock repurchase program in February and Mohawk acquired 2.1 million shares during the first quarter for a total of $307 million.
“Since the start of 2020, we have acquired 8.5 million shares representing 12% of the outstanding balance reflecting our confidence in Mohawk’s long-term growth and profitability,” Loberbaum said.
Shares of Mohawk has risen 8% since reaching the low point of the year earlier this month, but Mohawk’s stock still closed Thursday down 28.2% since the start of the year and 38.6% below the stock price of a year ago.
“Four months into 2022, we remain cautiously optimistic about industry growth this year despite inflation and interest rate pressures,” Loberbaum said in Thursday’s earnings release. “We have announced additional price increases in most of our products and markets as inflation continues to rise. Housing supply is historically low, and rising mortgage rates are spurring families to purchase homes sooner. Remodeling should be supported by continued existing home sales, higher home equity and the upgrading of homes purchased over the past two to three years. We expect that the commercial sector will continue its rebound with people returning to pre-pandemic routines.”
– Compiled by Dave Flessner who may be reached at dflessner@timesfreepress.com or at 423-757-6340