Mohawk Authorizes $500 Million Share Buyback, Forecasts Lower Fourth-Quarter Earnings
Key Facts
Mohawk announced on October 29 a new authorization to repurchase up to $500 million of its common shares, as it forecast adjusted earnings per share of $1.35 to $1.45 in the fourth quarter of 2026. The company said the authorization is effective immediately, while the earnings range was included in its third-quarter results statement. The announcement combines a return of capital to shareholders with operating expectations pointing to a weaker flooring market than in the previous quarter. The company posted adjusted earnings per share of $2.72 in the third quarter, up about 2% year over year. Sales also rose about 1% to $2.786 billion, supported by growth in its Global Ceramic and North American Flooring segments.
The authorization does not commit the company to repurchasing a specific number of shares, and Mohawk set no deadline for completing it. The company said the timing and volume of purchases would depend on cash generation, leverage, market conditions, the share price and other factors. The program follows completion of the previous authorization, which reduced shares outstanding by about 7%, at an average purchase price of about $119 per share. The company did not link the new authorization to its stock valuation, instead placing it within a capital-allocation framework. That framework rests on four pillars: outperforming markets; product innovation and brand strength; profitability and operational excellence; and cash generation and capital discipline.
In the third quarter, adjusted sales volumes fell about 4%, which the company attributed primarily to weak market demand. By contrast, price and mix contributed about 4% to sales growth, improving compared with the previous quarter. Chief Executive Paul De Cock said the company delivered strong sales in a weak demand environment and implemented price increases in response to rising inflation. Net earnings were $163 million, while adjusted earnings before interest, taxes, depreciation and amortization came to about $353 million, a margin of 12.7% of sales. Free cash flow was $390 million for the quarter and $626 million in the first nine months of 2026, up 78% year over year.
Mohawk expects weaker flooring market conditions in the fourth quarter than in the third quarter, alongside low-single-digit year-over-year growth in adjusted net sales. The quarter has four fewer shipping days than the same period a year earlier and three fewer than the third quarter, a factor the company cited in its outlook. Management expects cost-of-sales inflation pressure to be close to its third-quarter level and to be fully offset through pricing, mix and productivity; it also expects similar dynamics in the first quarter of 2027. The company lowered its 2026 capital-spending forecast to about $445 million from $460 million previously, while expecting core spending of about $375 million annually for at least several years. It ended the third quarter with net debt equal to 0.7 times adjusted earnings before interest, taxes, depreciation and amortization. The earnings conference call was scheduled for October 30, with a replay available through November 27.