With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

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Industries included in the sector are home equipment and furnishings and household and personal products.

Fortune Sector Leaders: Household Products

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

Founded in 1878, this flooring company now offers products worldwide for residential and commercial use.

This year's Fortune 500 marks the 66th running of the list.

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The Georgia-based manufacturer of residential and commercial flooring makes carpet, ceramic tile, wood, stone and laminate flooring and rugs.

This year's Fortune 500 marks the 65th running of the list.

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Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

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This year's Fortune 500 marks the 63rd running of the list.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Mohawk Industries is the largest flooring manufacturer in the world, employing over 40,000 people. The company supports residential construction, residential replacement, and commercial buildings. Products include ceramic tiling, luxury vinyl tile, wood flooring, and insulation. The company’s integrated approach has operations across design, material sourcing, manufacturing, and distribution. Mohawk Industries is one of the biggest suppliers of flooring, carpets, rugs, and tiling in North America. Manufacturing across 19 countries and selling in 180, the company has had 32 acquisitions since 2013.

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Mohawk Industries (MHK): Company Profile, Stock Price, News, Rankings

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Mohawk Industries

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Good day, and welcome to the Mohawk Industries Second Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad.

Please note this event is being recorded. I would now like to turn the conference over to James Funk, Chief Financial Officer. Please go ahead.

Thank you, Ashiya. Good morning, everyone, and welcome to Mohawk Industries quarterly investor conference call. Joining me on the call today are Jeff Lorrebaum, Chairman and Chief Executive Officer and Paul Dacock, President and Chief Operating Officer. Today, we'll update you on the company's second quarter performance and provide guidance for the third quarter of twenty twenty five. I'd like to remind everyone that our press release and statements that we make during this call may include forward looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties, including, but not limited to, those set forth in our press release and our periodic filings with Securities and Exchange Commission.

This call may include discussion of non GAAP numbers. For a reconciliation of any non GAAP to GAAP amounts, please refer to our Form eight ks and press release in the Investors section of our website. I'll now turn over the call to Jeff for his opening remarks.

Thanks, Jim. In challenging conditions across our regions, our results reflect the impact of our ongoing operational improvements, cost containment actions and market development initiatives. Our net sales for the second quarter were $2,800,000,000 essentially flat as reported and on a constant basis. Our premium residential and commercial products and new collections introduced during the past twenty four months benefited our performance. We generated second quarter adjusted earnings per share of $2.77 with strong productivity and restructuring actions as well as favorable FX impact and lower interest expense offset by higher input costs and plant shutdowns.

Our restructuring actions are on schedule and delivering the expected savings as we close high cost operations, eliminate inefficient assets, streamline distribution, and leverage technology to improve our administrative and operational costs. Our global operations team continued to identify productivity initiatives to lower our costs through enhancements to equipment, conserving energy, optimizing our supply chain and reengineering our products. Our industry faced continued pricing pressure from lower market volumes, which we mitigated through strengthening product and mix. During the quarter, we generated approximately $125,000,000 in free cash flow and we purchased about 393,000 shares of our stock for approximately $42,000,000 Our board recently approved a new authorization to acquire $500,000,000 of the company's outstanding stock. We are confident in our strategies to deliver long term profitable growth as the industry recovers from the cyclical downturn.

A dominant trend across our geographies is consumers' deferral of large discretionary purchases, which has reduced demand in our industry for almost three years. Geopolitical events, inflation and low housing turnover are contributing to market uncertainty that is limiting residential remodeling and new construction. The commercial channel continues to outperform residential. However, the architectural billing index in The U. S.

Is forecasting slowing conditions. Available U. S. Housing inventory has risen to its highest level since 02/2007, though elevated housing costs and high interest rates are constraining sales of both new and existing homes. In this challenging market, builders are offering price reductions and buying down interest rates to encourage purchases.

While housing turnover has historically driven remodeling, we believe that families remaining in their homes longer and increasing multi generational households will require additional renovation to meet evolving family needs. The Federal Reserve has postponed interest rate cuts while monitoring inflation and employment trends. Forecasters believe the Fed will cut rates twice in the second half of this year given potential market weakness. In June, the European Central Bank cut rates to two percent to stimulate the economy and the housing market. The ECB move comes as inflation has slowed to their target.

Lower interest rates should support increased consumer spend, discretionary spending and business investment. The European housing market varies by region, though a shortage of units and affordability are common issues. In June, Germany's new government approved legislation to expand home construction by removing barriers that delayed building projects. Since the pandemic, European households have built up record levels of savings, which combined with lower interest rates should encourage housing sales. Given the increasing tariffs, we're emphasizing the benefits of our locally produced collections and leading position as a North American manufacturer.

We have begun to address the implemented tariffs through price adjustments and supply chain optimization. Earlier this month, the U. S. Government set a new deadline of August 1 for countries to complete tariff negotiations while also announcing specific tariffs on key trading partners. We are continuing to monitor the changing tariff levels and will adjust our strategies as they evolve.

On July 15, we released our annual sustainability report, which is currently available on our website. Embracing sustainable processes and products aligns our commitment to improve our operations and provide industry leading features and benefits. We continue to invest in product circularity, material optimization and green energy to benefit our customers, the environment and our results. This year, major media outlets have recognized Mohawk for reducing our carbon footprint, fostering innovation and developing a talented organization. Now Jim will review our financial details for the quarter.

Thank you, Jeff. Sales for the quarter were just over $2,800,000,000 That was flat versus the prior year as reported and on a constant basis due to favorable product and channel mix led by our hard surface business in Flooring North America and our commercial business across the enterprise, partially offset by negative volume and continued price pressure. Gross margin for the quarter was 25.5% as reported and excluding charges was 26.4%, a decrease of approximately 70 basis points versus the prior year, primarily due to higher input costs of $44,000,000 lower sales volume of $22,000,000 and increased shutdown costs of $18,000,000 partially offset by productivity gains of $47,000,000 and favorable FX of $15,000,000 SG and A expense as reported was 18.8% of sales and excluding charges was 18.5%, relatively close to the prior year. It gives us an operating income as reported of 6.7%. Non recurring charges for the quarter were $34,000,000 related to restructuring actions and the associated costs undertaken by all segments, which in total will result in annual cost savings in 2025 of approximately $100,000,000 That gave us an operating income on an adjusted basis of $223,000,000 or 8% of sales.

That's a decrease of approximately 120 basis points as the benefit from strengthening productivity and restructuring initiatives of $57,000,000 and FX of $9,000,000 were offset by the increased input costs of $63,000,000 lower sales volume impact of twenty one million dollars and higher shutdown costs of $18,000,000 Interest expense for the quarter was $5,000,000 a decrease from the prior year level due to lower overall debt balance and a benefit of interest income across the business. Our non GAAP tax rate for Q2 was 19.3 versus 20.9% in the prior year due to geographic dispersion of our income and certain one time benefits. We are forecasting a Q3 and full year tax rate to be approximately 19%. That gave us an earnings per share as reported of 2.34 and on an adjusted basis of $2.77 Turning to the segments. Global ceramic had sales that just exceeded $1,100,000,000 that was a 0.5% increase as reported or 1.1% on a constant basis as our product and channel mix performance offset the weakness in volume.

The segment benefited from our new product introductions, leading decorating technology and the strength of our commercial business. Operating income on adjusted basis was $90,000,000 or 8.1%. That's a decrease of approximately 40 basis points on an adjusted basis as the benefit from price and mix of $27,000,000 and strong productivity of $17,000,000 was offset by an increase in input costs of $36,000,000 and lower sales volume of $16,000,000 in the quarter. Flooring North America had sales of $947,000,000 that's a 1.2% decrease due to lower volumes mainly in our soft surfaces, partially offset by favorable product and channel mix driven by our resilient and laminate businesses. In The U.

S, residential remodeling remained slow with the commercial channel still outperforming. Operating income on an adjusted basis was $69,000,000 or 7.3% for a decrease of approximately 130 basis points versus the prior year as higher input costs of $23,000,000 unfavorable net impact of price and mix of approximately $9,000,000 and increased shutdown costs of $11,000,000 were partially offset by the benefit of strengthening productivity of $32,000,000 Flooring Rest of the World had sales of $734,000,000 That's a 1% increase as reported and 3% decrease on a constant basis. The decrease is primarily due to the continued pricing pressure in the residential remodeling channel as consumers deferred large discretionary purchases. The ECP though has lowered rates further, but has not yet driven increases in housing or remodeling activity. Operating income on an adjusted basis was $76,000,000 or 10.4%.

That was a decrease of two twenty basis points versus the prior year, primarily due to unfavorable net price and mix of $19,000,000 partially offset by productivity gains of approximately $8,000,000 Given the weak residential market, we are lowering costs by removing inefficient assets and reducing operational and administrative expenses. Corporate eliminations was $13,000,000 for the quarter, in line with the prior year, and our full year 2025 expenses are estimated to be approximately $50,000,000 Taking a brief look at the balance sheet. Cash and cash equivalents were $547,000,000 for the quarter with free cash flow of $126,000,000 in the quarter as we also repurchased shares of approximately $42,000,000 Inventories were just increased above 2,700,000,000 That's an increase of $130,000,000 for the quarter, primarily due to FX and an increase in imported inventory due to new tariffs. Property, plant and equipment was just above $4,700,000,000 with Q2 CapEx of $80,000,000 compared to a D and A of $156,000,000 The company has reduced its planned investments to approximately $500,000,000 in 2025 with D and A for the full year forecasted at approximately $610,000,000 40% of the projects focus on cost reduction and product innovation and 40% on maintenance and other with the remaining 20% to complete our growth initiatives.

Overall, the balance sheet and cash flow outlook remained very strong with current net debt of $1,700,000,000 and leverage at 1.2 times. Now Paul will review our Q2 operational performance.

Thank you, Jim. In our Global Ceramic segment, our results in challenging market conditions benefited from sales of our premium products, strength in commercial projects, expanded distribution and operational improvements. We have pressure on pricing from excess industry capacity and pressure from imports. Our product and channel mix strengthened from our superior product portfolio and brand leadership. In the quarter, we minimized the impact of inflation on input costs through select price increases and restructuring projects as well as numerous productivity initiatives including refinements to manufacturing processes, supply chain optimization and increasing distribution efficiencies.

In The U. S, our commercial performance was solid, while residential sales remain challenged from softness in remodeling and new construction. We are leveraging the strength of our nationwide distribution system to target a wider range of contractors, specialty retailers and commercial projects. To counter rising input costs, we made pricing adjustments on higher value products, while increasing productivity actions. As tariffs are evolving, we are promoting our domestically produced floor and wall tile and our expansion of quartz countertop capacity in Tennessee will allow us to produce more of our offering in The U.

S. Home remodeling in Europe remains constrained, while the commercial channel continues to perform well led by the hospitality sector. In major European cities, our designer showrooms and educational events for architects and designers have increased our participation in commercial projects and boosted sales of our premium collections. Sales of our porcelain slabs with more realistic visuals are growing in both traditional channels as well as for use in countertops and furniture manufacturing. In Brazil, higher interest rates have slowed the domestic market though exports benefited sales and our mix improved.

We offset higher input costs through productivity gains from operational enhancements and realigning manufacturing assets. The Mexican market remains soft and we have implemented select price increases, introduced more porcelain and innovative polished collections to enhance mix and partner with distributors to add more Dalthau branded stores. Restructuring initiatives in our Mexican operations are on track to improve our market position and lower our costs with benefits anticipated in the second half of the year. Our Flooring Rest of the World segment managed through difficult market conditions with additional operational enhancements and cost containment actions. Residential remodeling remains soft in Europe and new construction has not kept up with population growth.

A rebound in homebuilding and renovation will be needed to meet growing demand. Pricing and mix pressure remains strong in this challenging market and we are executing promotions to optimize our results. We took many actions to increase productivity in our operations and supply chain as well as enhance our material costs. We are removing inefficient assets, reducing operational and administrative costs and consolidating operations. We continue to invest in recycling waste and green energy to reduce costs.

In the Flooring category, our laminate performance improved as we have progressed through the quarter. We are expanding our LVT distribution across channels with new collections and customer relationships. While our commodity panels business remains under pressure from excess capacity in the market, our mix benefited from the expansion of our high end decorative collections and entry into new geographies. We increased our sales volume of insulation boards despite soft demand and we are expanding distribution in Germany and Poland to prepare for a new Eastern European plant. In Australia, our hard surface offering performed well and we are expanding our LVT alternatives.

Carpet sales remained under pressure and the recent election has improved the economic outlook and orders are strengthening. We implemented price increases in June and are improving efficiencies in our operations. Flooring North America segment sales were about flat for the quarter with strong performance in hard surface categories across all channels. Rising housing inventory and lower mortgage rates could improve home sales and residential remodeling. While pricing pressure remains strong in the market, we minimize the impact with enhanced product mix and cost reductions from stronger material yields, supply chain optimization and reduced marketing costs.

We are managing inventories with reduced production and are making targeted investments to support sales and improve operations. Our restructuring actions have streamlined our operations by rationalizing inefficient assets, closing higher cost production and simplifying our product offering. We continue to work with customers and suppliers to manage the impact of tariff costs as the situation evolves. We had strong sales growth in the quarter from our LVT, laminate and hybrid products with retailers and builders embracing our superior visuals and features. Manufacturing enhancements at our East And West Coast LVT operations have increased operational efficiencies, improving our cost position with a strong domestic portfolio to support our growing LVT sales.

Our premium fashion and value collections led our soft surface performance as residential carpet sales remain under pressure due to reduced renovation. Our commercial carpet tile and hard surface order backlog is strong led by the education and hospitality sectors. I'll now return the call to Jeff for his closing remarks.

Thanks, Paul. As we focus on market development, operational improvements and cost containment, we are continuing to take actions that will optimize our performance in the current market. Ongoing inflation and low consumer confidence are constraining industry sales and the timing of the inflection point remains unpredictable. To improve sales, we're leveraging the strength of our portfolio, superior service and brand value to expand our business with current and new customers. The pricing pressure in our markets remains elevated, we are improving our mix through our premium collections, commercial sales and recent product introductions.

Input cost pressures will continue with the impact peaking in the third quarter as they flow through our inventory. To mitigate these higher costs, our teams will continue to execute productivity initiatives in all aspects of our operations. Our restructuring actions should deliver approximately $100,000,000 in benefits this year while strengthening our operations for the future. Evolving U. S.

Trade policy should benefit Mohawk where approximately 85% of our U. S. Business is produced in North America. We will manage the impact of tariffs through supply chain enhancements, cost optimization and price adjustments. Our guidance does not include the potential impact from new tariffs, which have not been finalized at this time.

Given these factors, we expect our third quarter EPS will be between $2.56 and $2.66 excluding any restructuring or onetime charges. Historically, down cycles in our industry are followed by several years of sales growth from pent up demand. During the past three years, we have investments to improve our operational performance, cost position and our product features. Through these actions, we are strategically positioned to respond to today's challenges and capitalize on opportunities as the industry recovers. We'll now be glad to take your questions.

Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. We ask that you please limit yourself to one question and one follow-up question. If at any time your question has been addressed and you would like to withdraw your question, The first question comes from Mike Thal with RBC Capital Markets. Please go ahead.

Thanks for taking my questions. I want to start with Flooring North America pricing environment or competitive environment. I think it's interesting because in 1Q price mix was positive and the comp was easier in 2Q. You've got all the premium collections that seems to be doing better. Can you just help us understand a little more of that inflection back to negative net price mix, maybe quantify kind of how you fared versus the market or give us a little more color on that dynamic on price mix and how we should be thinking about through the back half of the year in North America?

Yes. So in Flooring North America, our segment sales were about flat for the quarter with stronger performance in the hard surface categories. Residential remodeling remained slow and commercial continues to outperform our residential business. LVT enhancements have improved our efficiency and costs and our teams continue to execute productivity initiatives across our operations. Our restructuring actions have enhanced our operations by rationalizing inefficient assets, closing higher cost production and simplifying our product offering.

Now from a margin perspective, we have a lot of productivity initiatives ongoing and our mix improvements in the quarter were offset by cost inflation, price pressure and lower production. Our productivity initiatives and restructuring actions are progressing as expected and they are lowering our costs and we are continuing investments in new products to prepare for the recovery of the category.

And Mike from a second half perspective, I would expect that the favorable mix both product and channel would minimize the impact of the pricing pressures. So I would expect the year over year to see improvement as you go through Q3 and Q4.

Okay. Yes, that's very helpful. And then my second question, the comments about this guidance does not include any potential impacts from the new tariffs. I think clearly the way things roll through your P and L, it seems like that would take a little bit of time to flow through anyway. But just based on all the moving pieces, if tariffs were to stay in place at the currently articulated rates that you see around the globe, do you have any updated or refined sense of how much cost pressure that you would have to offset?

If you start out with the initial tariffs were about 10%. We're implementing changes presently in the marketplace and we'll continue doing that. The present reciprocal tariffs have been announced from 10% to 50%. The negotiations are continuing on these tariffs almost changing by the day. Given that we don't know what they are and it looks like they're going to have significant differences from where they're starting, we're not going to know until we get to the end.

You're right that assuming that they don't get implemented until late in the third quarter, the impact will be practically none, as it no matter what they are. And we're going to adjust when they're finalized as they're needed. In addition to that, I guess, we won't know the impact that they're going to have on the economy until later and if it'll have any impact on our industry.

The next question comes from Sam Reid with Wells Fargo. Please go ahead.

Awesome, thanks so much. The release, just sticking on the topic of competitive pricing, The release and the prepared remarks did make a few references to competitive price dynamics. I just wanted to drill down and talk through kind of where you're seeing competitive pricing most acutely in The US. Are there any indications that some of your peers have been pushing through price from tariffs? Or are you finding that in general the peers are more or less kind of holding or perhaps even pulling back on price, given what we're seeing from a volume standpoint?

Yes. Thank you for your question. We've announced 8% increases that we are implementing in the market as we speak. The industry will have to increase further with higher tariffs. There's currently some delays on impact with inventory in the system.

And we're obviously also reviewing other alternatives to optimize our supply chain to compensate for the tariffs.

That's very helpful. Switching gears here, I believe as part of your ERP transition that you might actually have better visibility and real time data into some of your smaller customers, particularly some of your mom and pop specialty retail customers. Just curious, one, if that's the case, and then just two, how you might be able to leverage that data. Is there an opportunity here to perhaps better manage pricing and inventories in that channel, presumably now that you might have a better read on real time trends? Thanks.

We have some better analysis that we can see of the different customers. We're trying to use it to understand it and make better decisions through it. But in general, it hasn't dramatically changed our, strategies and what we're doing at this point.

The next question comes from Susan McLeary with Goldman Sachs. Please go ahead.

Good morning. My first question is going back to the product. You mentioned several times in your prepared remarks some of the benefits that you're starting to see from the newer collections that you've launched. Can you talk a bit about where those products are in terms of getting into the channels? Any thoughts on how they could perhaps drive share gains and some more benefits to results in the upcoming quarters?

We've been introducing different products over the last few years. The recent introductions in the first part of the year are going into the market now and growing in what they're doing. We've introduced a lot of things because we think we're positioning ourselves as we come out of the recovery. Some of the big things in it would be ceramic. We have significant investments in new digital printing technologies that create three-dimensional visuals.

It's able to have different color intensity as well as different ways to create surface textures. In LVT, we've introduced multiple alternatives for vinyl PVC that actually give better performance to the consumer. In laminate, we've introduced the next generation of aesthetics as we go through. We are introducing in countertops new veining technology, as well as getting ready to start up a new plant, in the third quarter. In carpet, we've put in a whole new collection on super premium collections just as limited examples of the things that we're doing.

Okay. That's helpful. And then when we look at the margins this quarter, was nice to see how they came together even with the pressures that you're facing in the operating environment. Any thoughts on how we should be expecting profitability to trend in the back half of this year? And then any thoughts on the outlook further as you think about conditions perhaps improving over time?

Let's see if I can give you some color to think about. We do anticipate that the second half conditions are going to remain challenging. At this point, we don't see any improvement in the market conditions. Mortgage rates, inflation and consumer confidence are still constraining the industry. We're taking a lot of actions to self help ourselves through our sales actions, leveraging our product offering we just talked about, executing productivity initiatives across all the parts of the business.

We are selectively increasing prices across our various geographic portfolios where we can get price. We expect the third quarter to follow the same historical seasonality given that European vacations impact sales when they all go on vacation in August. Around the world, central banks are reducing interest rates, which we believe could stimulate spending in housing sales. We'll continue to benefit from our restructuring actions that will total over $100,000,000 this year. Inflation should peak in the third quarter and given higher input costs from the earlier periods should flow through our cost in the third period.

We have to respond to increases in tariffs as required once we know what they are and can understand the impact of different supply points. Assuming no changes in the present trends, we expect improvement in our fourth quarter results over last year.

Okay. Thank you for the color and good luck with everything.

The next question comes from Timothy Wah with Baird. Please go ahead.

Hey, everybody. Good morning. Thanks for all the details. Maybe just in The U. S.

Or in North America, specifically in hard surface, as you look at kind of the first half, how do you feel that Mohawk is performing relative to the market, specifically in the hard surface category in The U. S. Based on what you can see?

Yes, we're performing well compared to the market. Our premium waterproof laminate sales are expanding and the product is perceived as an excellent alternative to LVT in both residential remodeling and new construction. Our price and mix improved, but was partially offset by cost inflation. And we think that our domestic laminates should benefit as import tariffs increase other alternatives. And also on the LVT side, our sales increased as we enhanced our portfolio.

We're expanding both our sourced and manufactured volumes and our new hybrid vinyl alternatives with improved visuals and higher performance are being very well accepted in the market.

Okay. Okay, great. And then just I guess kind of piggybacking on the answer from the last question just on Q4 maybe being better on a year over year basis. What would be kind of the key drivers to that on a year over year basis? Is it just lower shutdown costs and productivity, kind of driving that?

Is it something around kind of price cost? Just any more kind of details as you kind of see it today? Thanks.

Thanks, Tim. We first of all, we expect normal sales seasonality from Q3 to Q4. As Jeff mentioned, the peak inflation that should hit in Q3 should ease as we go through the fourth quarter. So that's going to help benefit. We'll also see, favorable impact from price increases, the stronger mix that we've achieved so far this year, restructuring and productivity actions.

And so assuming no changes from those present trends, we do expect the fourth quarter results to be better than the prior year.

The next question comes from Michael Rehmar with JPMorgan. Please go ahead.

Thanks. Appreciate it. So just to clarify on the comment from before, Jim, when you talk about results or profitability in 4Q being better year over year, Is that I would assume that applies to not just EPS, but consolidated margins as well?

Yes. Because you're looking at inflation still being in place, but lower than the peak in Q3. We're still getting the benefit from productivity, both from the restructuring and ongoing initiatives. We see favorability in mix as well. So all those things will help, in terms of both the sales and the margins.

Great. No, it's good to hear. Secondly, I was hoping to go back to a prior question about competitive pricing perhaps in The U. S. And in other regions as well.

Just would love to dial down and get a little bit better sense. I think the question was around which product categories perhaps you're seeing competitive pricing in? And how pervasive is that? I know you I think in discussing this before, you guys talked about maybe what you're trying to do to address it in terms of price increases, if I heard right. But just wanted to better understand which price points and which product categories you're seeing that particularly in The U.

S. And how that's evolved over the past year perhaps?

I think the best way to try to start it is that with the industry volumes being down for three years and the low volumes that the industry is at with the high capital cost and fixed cost levels that the industry has, there is we think we're at the bottom. The prices have declined to where we think there's nowhere for them to go in general as we go through. In addition, the industry now you get into each segment and each geography. There's different pricing pressures in different ones. In some of the products and categories, we've announced price increases and the industry has in different markets.

So we're raising prices where the industry allows us to get it. And it's going to help us. But the inflation is still here. If you look at energy prices, chemical prices, they tended to peak in the first part of the year. Those are flowing through our costs now.

We think we'll get some help from it as we get on to the fourth quarter. But I don't want leave you. There's still plenty of inflation that we have to recover within it. Getting back to the tariffs, the tariffs we have to understand before the last move what each geography is going to be and where they are to determine what the best options are available to us and we'll take whatever actions we need to. We believe that the rates are so high that the industry will pass them through.

And it's being a little confused by inventory and the channels. There's some a little earlier and later than others, but they're all going to have to move.

And Mike, it's very, very important obviously. Any discussion that we have about, tariffs is to remind you that we have substantial, local production in ceramic, carpet, laminate, sheet vinyl, LVT and quartz countertop, which represents about 85% of our U. S. Business. So it's really critical to hone in on the fact that we have that strong local footprint.

Yes. No, I appreciate that. I mean, maybe just to squeeze one last one in. Have you seen in the last in this past quarter or two or to the extent you've seen it, I'm curious if you expect it to continue into the third quarter. Any type of abnormal competitive actions by importers either stuffing the channel or being more aggressive in the near term in response to tariffs and what type of impact that might have had on your results?

I think the best way to answer it is you have to separate out. The importers are trying to raise their inventories ahead of anything as we are. And you can see in our numbers we raised the inventory. So we're all purchasing it ahead to try to give us time to get the execution of it. Many of our customers and their customers, the business hasn't been as aggressive as they thought.

So to tell you the truth, I don't think there's been as much buying as I thought there would be given what they've done even prior because you started out back in January. So I think that describes what's happening at this point.

The next question comes from Keith Hughes with Truist. Please go ahead.

Thank you. Switching to following Rest of World, you talked about some pressure in your panels business. I guess if we ex that out, how was the kind of core flooring business in Rest of World? Was it was some of the downside pressure less without those panels?

You're right. The industry volumes in our panel business remained slow and we have continued price pressure in that business. Although we can offset some of that with our higher end decorative panels, which are growing and which are improving our mix. And then the second question on the European flooring market. The European flooring market remains difficult with low demand and price pressures in the market.

There's a lot of promotional activities that are being utilized to maximize the volumes. We had improving laminate performance as we progress through the quarter and we also installed a new laminate press that is more efficient and can produce the next generation of product features. And we're also continuing to expand our LVT distribution across multiple channels with new collections and customer relationships to compensate for the slow market conditions.

Would EBIT in the flooring part of flooring rest of world, would it have been up without panels or would it still would have been down like the whole segment?

I hate to speculate on the margin profile, but certainly as Paul said, the improvement in laminate as we progress through the quarter and LVT would be margin accretive to our business.

The next question comes from Trevor Ellison with Wolfe Research. Please go ahead.

Hi, good morning. Thank you for taking my questions. It sounds like commercial end markets are still outperforming for you. At the same time, the leading indicator has been soft for a while here. So I'm curious on the pipeline there.

Do you expect commercial to continue outperforming for the remainder of 2025? Are you anticipating that business softened here moving forward?

You're right that our U. S. Commercial business performed well and our U. S. Commercial carpet tile and hard surface backlog at this moment remains strong and that is led by the education and hospitality segments.

We're making additional investments in sales activities to expand our specified business and our new product introductions both in hard and soft categories have been very well accepted. The ABI index is currently below 50 and has been for a while and we do expect going forward the markets to slow down a little bit. Our Rest of World segment has limited exposure to commercial as you know and so they're more exposed to residential.

Okay. That's very helpful. And then a question on pricing in your U. S. Ceramics business given there's a decent amount of import competition there as well.

Are you taking prices higher in U. S. Ceramics or expecting to push prices higher in that business? And then you called out some positive pricemix in ceramics overall in the second quarter. How much of that was a mix tailwind versus like for like pricing increases?

Mohawk Industries (MHK) Q2 2025 Earnings Call Transcript

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