Stifel Offers Insight on Mohawk's Performance

St. Louis, MO, February 13, 2017—Analyst Stifel released its analysis of Mohawk, following the company’s release of its FY earnings last week.

For 2017, Stifel anticipates sales growth in the mid-single digits. “We are modeling a slightly lower reported revenue growth of 4% in light of slightly more FX headwind and a small calendar headwind in 2017 than we had originally modeled, but few of our underlying assumptions change. The macro environment continues to be supportive of at least mid-single digit sales growth and Mohawk is still growing market share, domestically as well as around the world. The company has made progress on the commercial business in the U.S. and hard surface products are still performing quite well. We would tend to believe there is some amount of upside to our revenue estimate for 2017, assuming the macro picture does not weaken.”

Stifel notes, “The company is facing a $100+ million (>100 bps of margin) headwind to EBIT from patent expiration and plant start-up expenses, but yet margins are still expected to grow.”

Stifel also addresses Mohawk’s expected acquisition of EmilCeramica, which it did not factor into its projection, noting “…this should add approximately $120 million to 2017 revenues and over $20 million of EBITDA…We believe the ceramic business Emilceramica will add $160+ million of annualized revenue and about $30 million of EBITDA sometime in the second quarter (we have not included this business in our model until the deal closes). The balance sheet is in its strongest position in recent memory and the company's borrowing costs are quite attractive.”

Related Topics: CERAMICS OF ITALY, Mohawk Industries