MHK Q3 2025 10-Q Analysis: Rising Costs Squeeze Mohawk's Margins

Mohawk Industries, a global leader in the flooring industry, recently released its financial results for the third quarter of 2025. For anyone interested in the health of the housing and renovation markets, Mohawk's performance can be a telling indicator. Let's peel back the layers of their latest 10-Q filing to understand the key trends shaping their business.

For the quarter, Mohawk's financials show a story of modest sales growth overshadowed by significant pressure on profitability. While the top line grew, rising costs ate into the bottom line, a challenge many companies are facing in the current economic climate.

A Look at the Numbers

A visual breakdown of the company's quarterly income statement helps clarify where the money came from and where it went.

In the third quarter ending September 27, 2025, Mohawk Industries reported net sales of $2.76 billion, a slight 1.4% increase from $2.72 billion in the same period last year. However, this top-line growth didn't translate into higher profits.

The company's gross profit—what's left after accounting for the cost of producing and selling its products—fell to $655 million from $693 million a year ago. This dip pushed the gross margin down from 25.5% to 23.7%. The primary reason for this was a 3.8% increase in the Cost of Sales, which outpaced revenue growth.

The pressure continued further down the income statement. Operating income saw a steep decline of over 35%, dropping to $137 million from $212 million in Q3 2024. This was driven not only by the lower gross profit but also by an 8% increase in Selling, General, and Administrative (SG&A) expenses, which include costs like marketing, salaries, and logistics.

Ultimately, net earnings for the quarter landed at $108.8 million, a significant drop from the $162.0 million reported in the prior year. This translates to a diluted earnings per share (EPS) of $1.75, compared to $2.55 in Q3 2024.

Segment Performance

Mohawk operates through three main business segments, and a look at their individual performance reveals a consistent trend of margin compression.

• Global Ceramic: This segment, which focuses on ceramic and stone flooring, saw sales rise to $1.1 billion. However, its operating income declined from $83.4 million to $71.6 million.
• Flooring North America (NA): Covering products like carpet and resilient flooring in the U.S. and Canada, this segment faced headwinds. Sales slipped to $937 million from $974 million, and operating income fell from $73.0 million to $54.4 million.
• Flooring Rest of World (ROW): This segment, which includes laminate, wood, and other flooring products outside North America, increased its sales to $716 million. Despite this, its operating income fell sharply to $43.8 million from $67.8 million a year ago.

Navigating the Headwinds

Mohawk Industries' third-quarter results paint a picture of a company navigating a challenging environment. While managing to grow sales slightly, the firm is grappling with rising costs that are eroding its profitability across all major business lines. The performance of the Flooring NA segment, with declines in both sales and profit, suggests particular weakness in the North American market.

In a move to return capital to shareholders, the company repurchased approximately 0.3 million shares of its common stock for $40.6 million during the quarter. While such actions can signal management's confidence, the underlying operational challenges remain. As a major player tied to the construction and remodeling industries, Mohawk's future performance will heavily depend on its ability to manage costs effectively and adapt to broader economic trends influencing consumer spending on big-ticket home improvements.