Share gains and tariff refunds drive 2Q beat; Cost inflation risks remain

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Mohawk Industries

Share gains and tariff refunds drive 2Q

beat; Cost inflation risks remain

Reiterate Rating: NEUTRAL | PO: 130.00 USD | Price: 123.10 USD

2Q beats on share gains & tariff refund; risks remain

Mohawk reported 2Q26 adjusted EPS of $3.67 ($3.04 ex. $0.63 tariff benefit), ahead of

our $2.58 estimate with revenue and margin beats across all segments. Management

guided 3Q EPS of $2.50-$2.60 (incl. $0.12 tariff benefit), above consensus at $2.40.

While results reflected solid execution and share gains, guidance implies a larger-thannormal seasonal decline given softer end-market demand, some potential demand pullforward in 2Q, and rising input costs in 2H.

2Q rev ahead on share gains & new product placements

Revenue increased 6.8% YoY, and 5.0% on a constant basis (FX and shipping days),

driven by higher price/mix and volume growth. Global Ceramic and Flooring NA growth

was primarily volume-driven, while Flooring RoW growth was driven by price/mix.

Management noted volume benefited from initial stocking of new product placements

and some pull-forward ahead of price increases, though they believe the impact was

limited. Resi flooring demand remained soft, but MHK gained share in soft/hard surface.

Management expects a weaker-than-normal seasonal trend after strong 2Q sales.

Inflation expected to increase in 2H; margin risk remains

Price/mix (+$54M) and productivity (+$43M) more than offset underlying inflation

headwinds (-$77M ex. tariffs), driving YoY operating margin expansion. MHK experienced

a $35M QoQ increase in underlying inflation during 2Q and expects a similar increase in

3Q. Management expects price/mix and productivity to offset inflation in 3Q and may

pursue additional pricing in 4Q if cost pressures persist. Given expectations for softer

volumes, partly offset by tariff refunds and cost savings, we expect modest margin

pressure in 2H26 and into 1H27. To mitigate inflation, MHK reiterated $50-$60M of

restructuring savings and $80-$100M of annual productivity initiatives and announced

an additional $60M of structural cost reductions, largely completed by the end of 2027.

Raise EPS and PO; Reiterate Neutral

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