Stifel Comments on Mohawk's Q2 Earning Statement

St. Louis, MO, July 31, 2017-Stifel has released a statement about Mohawk’s Q2 earnings.

The analyst says, “Mohawk turned in a solid quarter with sales slightly outpacing our estimate but EPS above the company's guidance and a very favorable outlook for Q3 and beyond. In typical Mohawk fashion, there is not any one specific area driving the growth, but a variety of channel and product improvements. Capacity is coming on late in 2017 in many geographies and product types and there was plenty of discussion on the call regarding efficiency improvements to offset the initial start-up costs. We are not surprised, but continued to be impressed by the company's performance and are raising our target price on slightly higher earnings estimates.

“Organic growth accelerated for Mohawk to 5.5% from just under 4% in Q1 and that pace is expected to accelerate in the back half as demand remains strong, input inflation is passed through with pricing increases, and further capacity expansion allows for incremental sales opportunities. Despite the loss of approximately 7% of annual EBIT from expired patent income, higher than expected input inflation and increased start-up costs with increased expansion/investments, Mohawk is grinding out material earnings growth.

“The company has once again increased its capital spending plans to $850 million plus in 2017 with plans in place for $1.4 billion in new sales capacity. Certain projects have been accelerated given the strong demand environment and the addition of four small acquisitions has created opportunities within those businesses for additional expenditures. As of late, Mohawk has been investing more than acquiring which should accelerate organic growth assuming demand remains robust.”