Yahoo Finance Mohawk (MHK) Cuts Q4 Adjusted EPS View on Low Flooring Demand
Mohawk Industries, Inc. MHK provided an update on its fourth-quarter 2022 outlook for adjusted EPS. Since its last quarter's earnings release on Oct 27, 2022, the company witnessed interest rate hike pressure, along with high inflation and lagging consumer confidence in the United States and Europe markets. This resulted in more softness in the global residential flooring business than MHK expected.
Due to this, Mohawk continued with temporary plant shutdowns, which negatively impacted margins and quarterly results. Also, weak demand in Flooring North America forced Mohawk to reduce its inventory levels. Due to these factors, the company expects fourth-quarter adjusted EPS between $1.27 and $1.31, excluding any restructuring or other one-time charges. Earlier, it anticipated adjusted EPS of $1.40-$1.50, excluding any restructuring charges. In fourth-quarter 2021, the metric totaled $2.95 per share. It plans to release its fourth-quarter 2022 results on Feb 9.
Apart from this, it signed a contract with plaintiffs to resolve the previously disclosed securities class action lawsuit. Initially filed on Jan 3, 2020, in the United States District Court for the Northern District of Georgia, this lawsuit could be protracted, burdensome and expensive.
Additionally, Mohawk settled a previously disclosed dispute with the Belgian Tax Authority (“BTA”) regarding the tax treatment of royalty income arising from intellectual property. In April 2022, the BTA issued a tax assessment of €187 million (including penalties but excluding interest) for 2013-2018. Although Mohawk believes its tax position in Belgium is correct, it entered an agreement with the BTA on Nov 23, 2022, to settle the dispute for a one-time payment of €3 million.
This Zacks Rank #3 (Hold) company’s shares have declined 28.5% in the past year compared with the Zacks Textile - Home Furnishing industry’s 30.8% fall. For 2023, earnings estimates of $10.28 per share suggest a 21% year-over-year decline. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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