MOHAWK INDUSTRIES INC

Previous wording

Mohawk is a significant supplier of every major flooring category with manufacturing operations in 19 countries and sales in approximately 180 countries. Based on its annual sales, the Company believes it is the world’s largest flooring manufacturer. A majority of the Company’s long-lived assets are located in the United States and Europe, which are also the Company’s primary markets. Additionally, the Company maintains operations in Australia, Brazil, Malaysia, Mexico, New Zealand, Russia and other parts of the world. The Company is a leading provider of flooring for residential and commercial markets and has earned significant recognition for its innovation in design and performance as well as sustainable business practices.

Current wording

Mohawk is a significant supplier of flooring and design surfaces with manufacturing operations in 19 countries and sales in approximately 180 countries. Based on its annual sales, the Company believes it is the world’s largest flooring manufacturer. A majority of the Company’s long-lived assets are located in the United States and Europe, which are also the Company’s primary markets. Additionally, the Company maintains operations in Australia, Brazil, Malaysia, Mexico, New Zealand, Russia and other parts of the world. The Company is a leading provider of flooring and design surfaces for residential and commercial markets and has earned significant recognition for its innovation in design and performance as well as sustainable business practices.

Previous wording

While commercial demand remained stable through the second quarter of 2026, continued softness in the U.S. and European housing markets, sluggish new home construction and a cautious consumer outlook negatively affected the Company’s markets. Housing turnover in the Company’s major regions remained near historically low levels, driven by affordability challenges, and broader economic uncertainty. The Company believes the ongoing housing shortage across its markets, stable employment conditions and wage growth, and record home equity levels may support greater participation in the housing market as consumer confidence improves, and aging housing stock and evolving family needs may support greater home renovation and remodeling. However, the ongoing impact of soft demand, inflationary pressures and elevated interest rates on the Company’s business, financial condition, results of operations, and prospects cannot be determined at this time.

Current wording

The Company continued to experience soft demand during the third quarter of 2026, particularly in residential end markets. Elevated interest rates, housing affordability constraints, inflationary pressures and broader economic uncertainty contributed to continued softness in the U.S. and European housing markets, sluggish new home construction and cautious consumer spending. Although housing shortages, aging housing stock and record home equity levels may support increased housing and remodeling activity over time, the timing and magnitude of a market recovery remain uncertain. The continuing effects of soft demand, inflation and elevated interest rates on the Company’s business, financial condition, results of operations, and prospects cannot be determined at this time.

Previous wording

The Company has implemented a number of restructuring actions and operational improvements intended to support sales performance, improve product mix, reduce its cost structure and enhance long‑term competitiveness. Cumulatively, restructuring actions initiated since 2022 are expected to deliver annualized benefits of approximately $360 million. In the second quarter of 2026, the Company announced a new group of restructuring projects across the business focused on strategic operational and administrative realignments, which will reduce the Company’s costs by approximately $60 million once completed. The Company believes these actions reflect its disciplined approach to capital allocation in the current environment. The Company remains focused on effectively managing near‑term market conditions, pursuing profitable growth opportunities, and positioning the Company to benefit when housing activity recovers.

Current wording

The Company continues to implement productivity initiatives, restructuring actions and other operational improvements designed to improve its cost structure, enhance operational performance and strengthen its long-term competitiveness. Cumulatively, restructuring actions initiated since 2022 are expected to deliver annualized benefits of approximately $410 million. Together with pricing and product mix initiatives, these actions are intended to mitigate inflationary pressures, improve the Company’s cost position, and support profitability in a soft demand environment. The Company remains focused on effectively managing near-term market conditions, pursuing profitable growth opportunities, generating cash and deploying capital with discipline, and positioning its businesses to benefit as housing activity recovers.

Previous wording

On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) by the executive branch are not lawful. On March 4, 2026, the Court of International Trade (CIT) ordered U.S. Customs and Border Protection (CBP) to begin the refund process for all importers who were subject to IEEPA tariffs. The Company submitted its request on April 21, 2026, for reimbursement in the amount of $70.7 million, reflecting the amount of IEEPA tariffs it determined were paid while such tariffs were in effect.

Current wording

On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) by the executive branch are not lawful. On March 4, 2026, the Court of International Trade (CIT) ordered U.S. Customs and Border Protection (CBP) to begin the refund process for all importers who were subject to IEEPA tariffs. On April 21, 2026, the Company began to submit requests for IEEPA tariff refund claims in the amount of $70.7 million, representing the IEEPA tariffs it identified as having been paid during the period such tariffs were active and eligible for refund.

Previous wording

As the nature, timing, and extent of any such refunds were uncertain, the Company elected to account for refunds as gain contingencies, based on the original tariff cost recognition in accordance with ASC 450, Contingencies(“ASC 450”). As of July 4, 2026, the Company has received $65.5 million in reimbursements. During the three and six months ended July 4, 2026, the Company reduced cost of sales by $49.3 million, effectively reversing the IEEPA tariff expense previously recognized in connection with inventory sold to customers since the tariffs were enacted in the first quarter of 2025, and reduced the carrying value of inventory and property, plant and equipment by $12.8 million and $3.4 million, respectively.

Current wording

Because of the uncertainty regarding the nature, timing, and extent of potential IEEPA tariff refunds, the Company elected to account for such refunds as gain contingencies, grounded in the original tariff cost recognition in accordance with ASC 450, Contingencies ("ASC 450"). As of October 3, 2026, the Company has received $67.0 million in IEEPA tariff refunds. During the three and nine months ended October 3, 2026, the Company reduced cost of sales by $12.8 million and $62.0 million, respectively, effectively reversing the IEEPA tariff expense previously recognized in connection with inventory sold to customers since the tariffs were enacted in the first quarter of 2025, and reduced the carrying value of inventory and property, plant and equipmentby $1.7 million and $3.4 million, respectively.

Previous wording

Due to its global footprint, Mohawk’s business is sensitive to geopolitical conflicts. The ongoing conflicts in the Middle East region have resulted in fluctuating energy prices, including for fuel, oil and natural gas, and have resulted in supply chain disruptions and increased transportation barriers that have adversely impacted the Company’s cost of sales. Higher energy and fuel prices have also negatively affected consumer confidence, contributing to the deferral of discretionary purchases and soft market conditions. In addition, the Company maintains operations in Russia through its Global Ceramic and Flooring ROW reporting segments. The Company continues to face legal, regulatory, financial, operational and reputational risks due to its Russian operations. For more information, please refer to Risk Factors, “The Company faces risks and uncertainties related to its operations in Russia” in Part I, Item 1A of the Company’s Annual Report in Form 10-K for the year ended December 31, 2025.

Current wording

Due to its global footprint, Mohawk’s business is sensitive to geopolitical conflicts. The Company maintains operations in Russia through its Global Ceramic and Flooring ROW reporting segments. The Company continues to face legal, regulatory, financial, operational and reputational risks due to its Russian operations. For more information, please refer to Risk Factors, “The Company faces risks and uncertainties related to its operations in Russia” in Part I, Item 1A of the Company’s Annual Report in Form 10-K for the year ended December 31, 2025. In addition, ongoing conflicts in the Middle East region have resulted in increased fuel, oil and natural gas prices, supply chain disruptions, and increased transportation barriers, which in turn have adversely impacted the Company’s cost of sales. Higher energy and fuel prices have also negatively affected consumer confidence, further contributing to deferred discretionary purchases and soft market conditions. The extent to which these geopolitical conflicts may continue to adversely affect the Company’s business, financial condition, results of operations and prospects cannot be predicted. More broadly, ongoing military conflicts may result in further economic sanctions or embargoes, regional instability, geopolitical shifts, retaliatory actions (including the potential nationalization of foreign‑owned businesses), increased tensions between the U.S. and countries in which the Company operates, and adverse impacts on the global economy, any of which could negatively affect the Company’s business and results of operations.

Previous wording

In 2026, the Company plans to invest approximately $460 million in capital expenditures focused on completing capacity expansion projects and targeted initiatives that will drive cost reduction while improving operational performance.

Current wording

In 2026, the Company plans to invest approxim ately $445 million in capital expenditures focused on completing capacity expansion projects and targeted initiatives that will drive cost reduction while improving operational performance.

Previous wording

For the three months ended July 4, 2026, the net earnings attributable to the Company were $196.1 million compared to the net earnings attributable to the Company of $146.5 million for the three months ended June 28, 2025. The change was primarily attributable to increased productivity; improved price and mix; higher volume, and the favorable net impact of foreign exchange rates, offset by higher input costs, which are inclusive of tariff refunds, driven by the impact of inflation as well as a higher effective tax rate.

Current wording

For the three months ended October 3, 2026, the net earnings attributable to the Company were $163.1 million compared to the net earnings attributable to the Company of $108.8 million for the three months ended September 27, 2025. The change was primarily attributable to increased productivity; improved price and mix and more shipping days, offset by lower volume, the unfavorable net impact of foreign exchange rates, higher input costs driven by the impact of inflation as well as a lower effective tax rate.

Previous wording

For the six months ended July 4, 2026, the net earnings attributable to the Company were $313.2 million compared to the net earnings attributable to the Company of $219.0 million for the six months ended June 28, 2025. The change was primarily attributable to increased productivity; improved price and mix, and more shipping days, offset by higher input costs driven by the impact of inflation.

Current wording

For the nine months ended October 3, 2026, the net earnings attributable to the Company were $476.4 million compared to the net earnings attributable to the Company of $327.9 million for the nine months ended September 27, 2025. The change was primarily attributable to increased productivity; improved price and mix, and more shipping days, offset by higher input costs driven by the impact of inflation.

Previous wording

Flooring NA—Net sales for the six months ended July 4, 2026, were $1,856.1 million, reflecting an increase of $46.9 million, or 2.6%, from $1,809.2 million reported for the six months ended June 28, 2025. The increase was primarily attributable to the $50 million favorable current year comparative impact of the order management system conversion and more shipping days for the six months ended July 4, 2026, of approximately $38 million, partially offset by lower sales volume of approximately $23 million and the unfavorable net impact of price and product mix of approximately $21 million.

Current wording

Net sales for the three months ended October 3, 2026, were $2,786.0 million, reflecting an increase of $28.1 million, or 1.0%, from $2,757.9 million reported for the three months ended September 27, 2025. The increase was primarily attributable to the favorable net impact of price and product mix of approximately $103 million and more shipping days for the quarter ended October 3, 2026, of approximately $38 million, partially offset by lower sales volume of approximately $105 million.

Previous wording

Selling, general and administrative expenses for the three months ended July 4, 2026, were $541.4 million, an increase of $15.7 million compared to $525.7 million for the three months ended June 28, 2025. Selling, general and administrative expenses did not significantly change as a percentage of net sales for the three months ended July 4, 2026, compared to the three months ended June 28, 2025.

Current wording

Selling, general and administrative expenses for the three months ended October 3, 2026, were $522.0 million, an increase of $3.8 million, or 0.7%, compared to $518.2 million for the three months ended September 27, 2025. Selling, general and administrative expenses did not significantly change as a percentage of net sales for the three months ended October 3, 2026, compared to the three months ended September 27, 2025.

Previous wording

Global Ceramic—Operating income was $145.4 million for the six months ended July 4, 2026, reflecting an increase of $15.4 million compared to operating income of $130.0 million for the six months ended June 28, 2025. The increase in operating income was primarily attributable to productivity gains of approximately $41 million; the favorable net impact of price and product mix of approximately $25 million and higher sales volume of approximately $10 million, partially offset by higher input costs of approximately $50 million which are net of tariff refunds.

Current wording

Global Ceramic—Operating income was $65.6 million for the three months ended October 3, 2026, reflecting a decrease of $6.0 million, or 8.4%, compared to operating income of $71.6 million for the three months ended September 27, 2025. The decrease in operating income was primarily attributable to higher input costs of approximately $50 million which are net of tariff refunds and more shipping days for the three months ended October 3, 2026, of approximately $4 million, partially offset by productivity gains of approximately $22 million; the favorable net impact of price and product mix of approximately $19 million and lower restructuring, acquisition and integration-related, and other costs of approximately $10 million. .

Previous wording

Flooring ROW—Operating income was $78.7 million for the three months ended July 4, 2026, reflecting an increase of $12.9 million compared to operating income of $65.8 million for the three months ended June 28, 2025. The increase in operating income was primarily attributable to the favorable net impact of price and product mix of approximately $41 million, partially offset by higher input costs of approximately $23 million.

Current wording

Flooring ROW—Operating income was $66.0 million for the three months ended October 3, 2026, reflecting an increase of $22.2 million, or 51%, compared to operating income of $43.8 million for the three months ended September 27, 2025. The increase was primarily attributable to the favorable net impact of price and product mix of approximately $51 million and lower restructuring, acquisition and integration-related, and other costs of approximately $16 million, partially offset by higher input costs of approximately $35 million and lower sales volume of approximately $14 million.

Previous wording

Interest expense was $7.1 million for the six months ended July 4, 2026, reflecting a decrease of $4.5 million compared to interest expense of $11.6 million for the six months ended June 28, 2025. The decrease was primarily attributable to cash flow generation, resulting in lower financing needs.

Current wording

Interest expense was $1.6 million for the three months ended October 3, 2026, reflecting a decrease of $3.4 million, or 68%, compared to interest expense of $5.0 million for the three months ended September 27, 2025. The decrease was primarily attributable to cash flow generation, resulting in lower financing needs.

Previous wording

Other expense, net was $0.4 million for the three months ended July 4, 2026, compared to other expense, net of $3.0 million for the three months ended June 28, 2025. Other income and expense, net did not significantly change for the three months ended July 4, 2026, from the three months ended June 28, 2025.

Current wording

Other expense, net was $2.8 million for the three months ended October 3, 2026, compared to other expense, net of $(0.4) million for the three months ended September 27, 2025. Other (income) expense, net did not significantly change for the three months ended October 3, 2026, from the three months ended September 27, 2025.

Previous wording

For the three months ended July 4, 2026, the Company recorded income tax expense of $52.3 million on earnings before income taxes of $248.5 million, for an effective tax rate of 21.0%. For the three months ended June 28, 2025, the Company recorded income tax expense of $34.0 million on earnings before income taxes of $180.5 million, for an effective tax rate of 18.8%. The increase in the effective tax rate was primarily attributable to the Company’s geographic dispersion of profits and losses for the respective periods and a non-recurring benefit recorded during the three months ended June 28, 2025 related to a prior period Italian tax benefit. These unfavorable impacts were partially offset by a smaller increase in unrecognized tax benefits during the three months ended July 4, 2026.

Current wording

For the three months ended October 3, 2026, the Company recorded income tax expense of $20.1 million on earnings before income taxes of $183.3 million, for an effective tax rate of 11.0%. For the three months ended September 27, 2025, the Company recorded income tax expense of $23.3 million on earnings before income taxes of $132.1 million, for an effective tax rate of 17.6%. The decrease in the effective tax rate was primarily attributable to a decrease in unrecognized tax benefits during the three months ended October 3, 2026, and a non-recurring tax benefit recorded during the three months ended October 3, 2026, related to a U.S. tax election. These favorable impacts were partially offset by the Company's geographic dispersion of profits and losses for the respective periods.

Previous wording

Gross profit for the six months ended July 4, 2026, was $1,437.0 million, an increase of $139.3 million or 10.7%, compared to gross profit of $1,297.7 million for the six months ended June 28, 2025. The increase in gross profit dollars was primarily attributable to productivity gains of approximately $63 million; the favorable net impact of price and product mix of approximately $61 million; more shipping days for the six months ended July 4, 2026, of approximately $32 million; the favorable net impact of foreign exchange rates of approximately $29 million, and the $25 million favorable current year comparative impact of the order management system conversion, partially offset by higher input costs of approximately $48 million which are net of tariff refunds.

Current wording

Gross profit for the nine months ended October 3, 2026, was $2,146.8 million, an increase of $194.3 million, or 10.0%, compared to gross profit of $1,952.5 million for the nine months ended September 27, 2025. The increase in gross profit dollars was primarily attributable to the favorable net impact of price and product mix of approximately $148 million; productivity gains of approximately $100 million; more shipping days for the nine months ended October 3, 2026, of approximately $44 million; the favorable net impact of foreign exchange rates of approximately $28 million; lower restructuring, acquisition and integration-related, and other costs of approximately $26 million and the favorable current year comparative impact of the order management system conversion of $25 million, partially offset by higher input costs of approximately $131 million which are net of tariff refunds and lower sales volume of approximately $40 million.

Previous wording

Selling, general and administrative expenses for the six months ended July 4, 2026, were $1,071.5 million, an increase of $58.6 million compared to $1,012.9 million for the six months ended June 28, 2025. Selling, general and administrative expenses did not significantly change as a percentage of net sales for the six months ended July 4, 2026, compared to the six months ended June 28, 2025.

Current wording

Selling, general and administrative expenses for the nine months ended October 3, 2026, were $1,593.5 million, an increase of $62.5 million, or 4.1%, compared to $1,531.0 million for the nine months ended September 27, 2025. Selling, general and administrative expenses did not significantly change as a percentage of net sales for the nine months ended October 3, 2026, compared to the nine months ended September 27, 2025.

Previous wording

Other expense, net was $1.7 million for the six months ended July 4, 2026, reflecting a favorable change of $1.0 million compared to other expense, net of $2.7 million for the six months ended June 28, 2025. Other expense, net did not significantly change for the six months ended July 4, 2026, from the six months ended June 28, 2025.

Current wording

Other expense, net was $4.7 million for the nine months ended October 3, 2026, reflecting an unfavorable change of $2.5 million compared to other expense, net of $2.2 million for the nine months ended September 27, 2025. Other expense, net did not significantly change for the nine months ended October 3, 2026, from the nine months ended September 27, 2025.

Previous wording

For the six months ended July 4, 2026, the Company recorded income tax expense of $43.4 million on earnings before income taxes of $356.7 million, for an effective tax rate of 12.2%. For the six months ended June 28, 2025, the Company recorded income tax expense of $51.5 million on earnings before income taxes of $270.5 million for an effective tax rate of 19.0%. The decrease in the effective tax rate was primarily attributable to a smaller increase in unrecognized tax benefits during the three months ended July 4, 2026 and tax benefits recognized during the six months ended July 4, 2026, including (i) a one-time tax benefit associated with a legal entity restructuring initiative, (ii) tax credits issued by the Brazilian government related to prior years, and (iii) a foreign tax credit benefit recorded in connection with a U.S. amended return. These favorable impacts were partially offset by the Company’s geographic dispersion of profits and losses for the respective periods.

Current wording

For the nine months ended October 3, 2026, the Company recorded income tax expense of $63.6 million on earnings before income taxes of $540.1 million, for an effective tax rate of 11.8%. For the nine months ended September 27, 2025, the Company recorded income tax expense of $74.8 million on earnings before income taxes of $402.7 million for an effective tax rate of 18.6%. The decrease in the effective tax rate was primarily attributable to a decrease in unrecognized tax benefits during the nine months ended October 3, 2026 and tax benefits recognized during the nine months ended October 3, 2026, including (i) a one-time tax benefit associated with a legal entity restructuring initiative, (ii) tax credits issued by the Brazilian government related to prior years, (iii) a foreign tax credit benefit recorded in connection with a U.S. amended return and (iv) a non-recurring tax benefit related to a U.S. tax election. These favorable impacts were partially offset by the Company’s geographic dispersion of profits and losses for the respective periods.

Previous wording

Net cash provided by operating activities in the first six months of 2026 was $426.6 million, compared to net cash provided by operating activities of $210.0 million in the first six months of 2025. The change was primarily attributable to higher net earnings and the changes in accounts receivable, accounts payable, and inventories.

Current wording

Net cash provided by operating activities in the nine months ended October 3, 2026 was $897.8 million, compared to net cash provided by operating activities of $596.6 million in the nine months ended September 27, 2025. The change was primarily attributable to higher net earnings and the changes in accounts receivable and inventories.

Previous wording

Net cash used in investing activities in the first six months of 2026 was $187.3 million compared to net cash used in investing activities of $169.3 million in the first six months of 2025. The change was primarily attributable to the increase in capital expenditures of $21.3 million for the six months ended July 4, 2026, compared to the six months ended June 28, 2025.

Current wording

Net cash used in investing activities in the nine months ended October 3, 2026 was $264.8 million compared to net cash used in investing activities of $245.6 million in the nine months ended September 27, 2025. The change was primarily attributable to the increase in capital expenditures of $25.9 million for the nine months ended October 3, 2026, compared to the nine months ended September 27, 2025.

Previous wording

Net cash used in financing activities in the first six months of 2026 was $247.9 million compared to net cash used in financing activities of $205.1 million in the first six months of 2025. The change was primarily attributable to higher share repurchases of $56.5 million and lower net proceeds on the Senior Credit Facility of $25.9 million as compared to the first six months of 2025, offset by lower net repayments on Commercial Paper of $98.9 million in the first six months of 2026 as compared to net repayments of $144.5 million in the first six months of 2025.

Current wording

Net cash used in financing activities in the nine months ended October 3, 2026 was $645.6 million compared to net cash used in financing activities of $532.4 million in the nine months ended September 27, 2025. The change was primarily attributable to higher share repurchases of $276.8 million and lower net proceeds on the Senior Credit Facility of $16.9 million as compared to the nine months ended September 27, 2025, offset by lower net repayments on Commercial Paper of $230.9 million in the nine months ended October 3, 2026 as compared to net repayments of $415.4 million in the nine months ended September 27, 2025.

Previous wording

As of July 4, 2026, the Company had cash of $849.6 million, of which $289.0 million was in the United States and $560.6 million was in foreign countries, including approximately 35% of the Company’s cash and cash equivalents held in Russia. The Company believes that its cash and cash equivalents on hand, cash generated from operations and availability under its existing credit facilities will be sufficient to meet its capital expenditure, working capital and debt servicing requirements over at least the next twelve months. The Company plans to permanently reinvest the cash held outside the United States. The Company believes that its cash and cash equivalents, cash generated from operations, and availability under its Senior Credit Facility will be sufficient to meet its planned capital expenditures, working capital investments and debt servicing requirements over the next twelve months. The Company continually evaluates its projected needs and may conduct additional debt financings, subject to market conditions, to increase its liquidity and to take advantage of attractive financing opportunities.

Current wording

As of October 3, 2026, the Company had cash of $816.8 million, of which $67.5 million was in the United States and $749.3 million was in foreign countries, including approximately 38% of the Company’s cash and cash equivalents held in Russia. The Company believes that its cash and cash equivalents on hand, cash generated from operations and availability under its existing credit facilities will be sufficient to meet its capital expenditure, working capital and debt servicing requirements over at least the next twelve months. The Company plans to permanently reinvest the cash held outside the United States. The Company believes that its cash and cash equivalents, cash generated from operations, and availability under its Senior Credit Facility will be sufficient to meet its planned capital expenditures, working capital investments and debt servicing requirements over the next twelve months. The Company continually evaluates its projected needs and may conduct additional debt financings, subject to market conditions, to increase its liquidity and to take advantage of attractive financing opportunities.

Previous wording

On July 24, 2025, the Company’s Board of Directors approved a new share repurchase program, authorizing the Company to repurchase up to $500 million of its common stock (the “Share Repurchase Program”). For the three months ended July 4, 2026, the Company purchased $59.4 million of its common stock under the Share Repurchase Program. As of July 4, 2026, there remained $295.6 million authorized under the Share Repurchase Program.

Current wording

On July 24, 2025, the Company’s Board of Directors approved a new share repurchase program, authorizing the Company to repurchase up to $500 million of its common stock (the “2025 Share Repurchase Program”). For the three months ended October 3, 2026, the Company purchased $261.3 million of its common stock under the 2025 Share Repurchase Program. As of October 3, 2026, there remained $34.4 million authorized under the 2025 Share Repurchase Program and as of October 20, 2026, the authorization was exhausted. On October 26, 2026, the Company’s Board of Directors approved a new share repurchase program, authorizing the Company to repurchase up to $500 million of its common stock.