Mohawk (MHK) shares drop on mixed financial results for Q4 and full year 2023
Mohawk Industries, a global leader in the flooring industry, unveiled its financial outcomes for the fourth quarter and the entirety of 2023. The company encountered mixed results, highlighted by a decline in net sales and a substantial net loss for the year, largely attributable to non-cash impairment charges. Nonetheless, Mohawk Industries saw an uplift in adjusted earnings per share (EPS) for the fourth quarter and generated considerable free cash flow throughout the year.
For the fourth quarter, net earnings stood at $139 million with an EPS of $2.18, whereas adjusted figures were slightly lower at $125 million and $1.96, respectively. This reflects an improvement from the previous year's fourth quarter, which saw net earnings of $33 million and an EPS of $0.52. The annual results, however, revealed a net loss of $440 million and a loss per share of $6.90, significantly influenced by impairment charges amounting to $878 million. Adjusted net earnings for the year were reported at $587 million, with an adjusted EPS of $9.19.
Jeff Lorberbaum, the company's Chairman and CEO, addressed the financial performance, emphasizing the company's initiatives in cost management, productivity, and inventory control, which led to a reduction in working capital by more than $300 million. He further highlighted strategic investments aimed at driving consumer demand through sales resources, merchandising, and new product development.
Our fourth quarter results exceeded our expectations, benefiting from cost containment, productivity enhancements, and lower input costs. We are positioned to navigate the current conditions effectively and emerge stronger as the economy rebounds, Lorberbaum stated.
Despite a downturn in net sales, Mohawk Industries maintained robust liquidity, concluding the year with $1.9 billion in available liquidity and repaying a high-interest term loan of approximately $900 million in early 2024. The net debt to adjusted EBITDA ratio remained at a healthy 1.5 times.
Looking to the first quarter of 2024, Mohawk Industries projects adjusted EPS to range between $1.60 and $1.70, anticipating a return to typical seasonal patterns. The company continues to focus on expense minimization, overhead reduction, and operational restructuring to adapt to the prevailing market environment. Lorberbaum remains optimistic about the latter half of the year, anticipating improvements as the industry stabilizes and central banks potentially reduce interest rates.
MHK shares are down between 4-5% in reaction to the report, finding some measure of support from the rising 50-day moving average around $102.