Mohawk Industries (MHK) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales were $2.53 billion, down 5.7% year-over-year, with adjusted EPS at $1.52 and adjusted EBITDA at $268 million, impacted by fewer shipping days, FX headwinds, and Flooring North America order system conversion.

• Productivity gains, restructuring actions, and a lower tax rate partially offset pricing pressure and higher input costs.

• Tariffs on Chinese imports are expected to increase annualized costs by ~$50 million, with mitigation planned through price increases and supply chain adjustments.

• 225,000 shares repurchased for ~$26 million in Q1 2025.

• Net earnings attributable to shareholders were $72.6 million (EPS $1.15), both down from the prior year.

Financial highlights

• Gross margin was 23.1% as reported, 24.1% adjusted; operating income was $96 million (3.8% margin), with adjusted operating income at $122 million (4.8% margin).

• Adjusted EBITDA margin was 10.6% in Q1 2025, down from 11.9% in Q1 2024.

• Free cash flow was negative $85 million, mainly due to delayed invoicing and increased imports ahead of tariffs.

• Net debt at quarter-end was $1.68 billion; net debt to adjusted EBITDA ratio at 1.2x.

• Cash and cash equivalents at quarter-end were $702.5 million.

Outlook and guidance

• Q2 2025 adjusted EPS is expected between $2.52 and $2.62, excluding restructuring or one-time charges.

• Restructuring actions are projected to yield ~$100 million in annual savings in 2025, with some savings extending into 2026.

• Full-year interest expense forecast is $25–$30 million; tax rate expected at 20%.

• Management anticipates continued pricing pressure, soft demand, and inflation, but expects productivity gains and cost containment to partially offset these headwinds.

• Long-term demand is expected to recover as interest rates decline and housing cycles improve.