Mohawk Industries Inc.

02/24/2026 | Press release | Distributed by Public on 02/24/2026 07:47

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company's financial condition and results of operations from management's perspective should be read in conjunction with the Consolidated Financial Statements and related Notes included in this report. The discussion in this Form 10-K includes a comparison of fiscal 2025 to fiscal 2024. This section also discusses fiscal 2024 and fiscal 2023 results, as the Company revised certain fiscal 2024 and fiscal 2023 items to correct for a misstatement in its financial statements discovered during the fourth quarter of fiscal 2025. The revisions ensure comparability across all periods reflected herein. In the aggregate, the correction of these errors impacted the 2023 and 2024 statement of operations by $9.5 million ($4.1 million was recorded to cost of sales and $5.4 million to other (income) and expense, net) and $3.0 million ($1.2 million was recorded to cost of sales and $1.8 million to other (income) and expense, net), respectively, and adjusted the retained earnings balance for the year ended December 31, 2022, by $29.6 million. For additional information, see Note 18, Immaterial Correction of Prior Period Financial Statementsof the Notes to the Consolidated Financial Statements included in this report.
References to "Mohawk," "the Company," "we," "our" and "us" refer to Mohawk Industries, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.
Business Summary
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.
Macroeconomic Conditions
While commercial demand remained stable through 2025, continued softness in U.S. housing turnover and sluggish new home construction negatively affected the Company's volumes. Weak consumer confidence also contributed to deferred spending on major discretionary projects, including home renovation activities. Housing turnover in the Company's major regions remained near historically low levels, driven by affordability challenges and broader economic uncertainty. In the U.S., existing home sales for 2025 were flat compared to the prior year, although December sales improved year-over-year. U.S. mortgage rates have recently declined to their lowest levels since autumn 2022; likewise, interest rates in Europe have declined to their lowest levels since autumn 2022. The Company believes these conditions, along with elevated consumer savings, lower inflation and stable employment, may support greater participation in the housing market as consumer confidence improves. However, the ongoing impact of soft demand, inflationary pressures and elevated interest rates to the Company's business, financial condition, results of operations, and prospects cannot be determined at this time.
In response to the challenging market conditions described above, the Company undertook a series of actions throughout 2025 designed to support sales performance and improve product mix in softer demand environments. These actions included the introduction of innovative products, targeted marketing initiatives, and promotional programs intended to stimulate activity in both residential and commercial channels. The Company's premium product launches provided differentiated design and performance attributes aimed at encouraging remodeling activity. In addition, the introduction of new commercial collections contributed to increased traction in new construction and commercial remodeling projects. The Company also implemented a number of restructuring actions and operational improvements intended to reduce its cost structure and enhance long-term competitiveness. Recent initiatives to streamline overhead and exit higher-cost assets are expected to generate approximately $30 million in annual savings upon completion. Cumulatively, restructuring actions initiated since 2022 are expected to deliver annualized benefits of approximately $365 million. Given the lack of improvement in the Company's end markets during 2025, the Company reduced capital expenditures to $440 million, representing a decline of approximately 30% compared with its depreciation levels. 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.
Tariffs Update
The Company continues to actively monitor trade policy and tariff announcements, including various executive orders issued by the current U.S. presidential administration. The Company has taken steps to mitigate the implemented tariffs through managing inventory of sourced products, adjusting prices as the tariff trade policy evolves and optimizing its supply chain. The Company continues to monitor changing tariff levels and adjust its strategies to mitigate their impact as trade policy evolves. These tariff actions, retaliatory measures, or other trade restrictions could materially and adversely impact the Company's
Index to Financial Statements
business, financial condition, results of operations, and prospects. For more information, please refer to Risk Factors, "Increased tariffs may increase the Company's costs of goods sold and/or decrease consumer discretionary spending"in Part I, Item 1A of this Form 10-K.
Geopolitical Conflict
Due to its global footprint, Mohawk's business is sensitive to geopolitical conflict. 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 this Form 10-K. In addition, escalation of conflict in the Middle East region and elsewhere could result in supply chain disruptions, higher energy and raw material prices, decreased consumer demand for the Company's products and increased transportation barriers, though the extent of the impact on the Company's business, financial condition, results of operations, and prospects cannot be predicted. The broader consequences of current ongoing military conflicts, which may include further economic sanctions, embargoes, regional instability, and geopolitical shifts; potential retaliatory actions, including nationalization of foreign-owned businesses; increased tensions between the United States and countries in which the Company operates; and the extent of the conflict's effect on the Company's business and results of operations, as well as the global economy, cannot be predicted.
Liquidity and Capital Expenditures Overview
The Company believes it is well positioned with a strong balance sheet. Based on its current liquidity and available credit, the Company is in a position to finance internal investments, acquisitions and/or additional stock purchases and pay current debt as it becomes due. For information on risk that could impact the Company's results, please refer to Risk Factors-Financial and Liquidity Risksin Part I, Item 1A of this Form 10-K.
In 2025, the Company invested approximately $440 million focused on completing capacity expansion projects and targeted initiatives that will drive cost reduction while improving operational performance. In 2026, the Company plans to invest approximately $480 million focused on completing capacity expansion projects and targeted initiatives that will drive cost reduction while improving operational performance.
Net earnings attributable to the Company were $369.9 million for 2025 compared to net earnings of $514.7 million for 2024. The change was primarily attributable to higher input costs; higher restructuring, acquisition and integration-related, and other costs; lower sales volume; the unfavorable impact of temporary plant shutdowns and the impact of the Flooring North America order management system conversion, partially offset by productivity gains.
For the year ended December 31, 2025, the Company generated $1,056.2 million of cash from operating activities. As of December 31, 2025, the Company had cash and cash equivalents of $856.1 million, of which $485.3 million was in the U.S. and $370.8 million was in other countries.
Index to Financial Statements
Results of Operations
For the Years Ended December 31,
(In millions) 2025 2024 2023
Statement of operations data:
Net sales $ 10,785.4 100.0 % 10,836.9 100.0 % 11,135.1 100.0 %
Cost of sales (1)
8,210.7 76.1 % 8,150.4 75.2 % 8,429.6 75.7 %
Gross profit 2,574.7 23.9 % 2,686.5 24.8 % 2,705.5 24.3 %
Selling, general and administrative expenses (2)
2,065.0 19.1 % 1,984.8 18.3 % 2,119.7 19.0 %
Impairment of goodwill and indefinite-lived intangibles 19.9 0.2 % 8.2 0.1 % 877.7 7.9 %
Operating income (loss) 489.8 4.5 % 693.5 6.4 % (291.9) (2.6) %
Interest expense 17.8 0.2 % 48.5 0.4 % 77.5 0.7 %
Other (income) expense, net (3)
3.3 0.0 % 2.0 0.0 % (5.4) 0.0 %
Earnings (loss) before income taxes 468.7 4.3 % 643.0 5.9 % (364.0) (3.3) %
Income tax expense (4)
98.8 0.9 % 128.2 1.2 % 84.9 0.8 %
Net earnings (loss) including noncontrolling interests 369.9 3.4 % 514.8 4.8 % (448.9) (4.0) %
Less: Net earnings attributable to noncontrolling interests - 0.0 % 0.1 0.0 % 0.1 0.0 %
Net earnings (loss) attributable to Mohawk Industries, Inc. $ 369.9 3.4 % 514.7 4.7 % (449.0) (4.0) %
(1) Cost of sales includes:
Restructuring, acquisition and integration-related charges and other costs
$ 141.7 1.3 % 79.7 0.7 % 105.0 0.9 %
Step up of acquisition inventory - 0.0 % - 0.0 % 4.5 - %
Other charges (11.3) (0.1) % 3.5 0.0 % 4.1 - %
(2) Selling, general and administrative expenses include:
Restructuring, acquisition and integration-related charges 11.6 0.1 % 14.4 0.1 % 27.2 0.2 %
Reserves and fees for Legal settlements, 50.9 0.5 % 9.9 0.1 % 87.8 0.8 %
Other charges 0.5 0.0 % 10.7 0.1 % - - %
(3) Other (income) expense includes:
Release of indemnification asset (0.7) 0.0 % 1.8 0.0 % (3.0) - %
Other charges - 0.0 % 1.8 0.0 % 2.5 - %
(4)Income tax expense includes:
Foreign tax regulation change - 0.0 % 2.9 0.0 % (10.0) (0.1) %
Reversal of uncertain position - Income taxes 0.7 0.0 % (1.8) 0.0 % 3.0 0.0 %
Index to Financial Statements
Year Ended December 31, 2025, as Compared with Year Ended December 31, 2024
Net sales
Net sales for 2025 were $10,785.4 million compared to net sales of $10,836.9 million for 2024. The change was primarily attributable to lower sales volume of approximately $184 million; fewer shipping days for the twelve months ended December 31, 2025, of approximately $53 million and the impact of the order management system conversion of approximately $50 million, partially offset by the favorable net impact of foreign exchange rates of approximately $141 million and the favorable net impact of price and product mix of approximately $100 million.
Global Ceramic-Net sales for 2025 were $4,289.4 million compared to net sales of $4,226.6 million for 2024. The change was primarily attributable to the favorable net impact of price and product mix of approximately $125 million and the favorable net impact of foreign exchange rates of approximately $50 million, partially offset by lower sales volume of approximately $83 million and fewer shipping days for the twelve months ended December 31, 2025, of approximately $27 million.
Flooring NA-Net sales for 2025 were $3,638.5 million compared to net sales of $3,769.9 million for 2024. The change was primarily attributable to lower sales volume of approximately $109 million and the impact of the order management system conversion of approximately $50 million, partially offset by the favorable net impact of price and product mix of approximately $43 million.
Flooring ROW-Net sales for 2025 were $2,857.5 million compared to net sales of $2,840.4 million for 2024. The change was primarily attributable to the favorable net impact of foreign exchange rates of approximately $90 million, partially offset by the unfavorable net impact of price and product mix of approximately $68 million.
Quarterly net sales and the percentage changes in net sales by quarter for 2025 versus 2024 were as follows (dollars in millions):
2025 2024 Change
First quarter $ 2,525.8 2,679.4 (5.7) %
Second quarter 2,802.1 2,801.3 - %
Third quarter 2,757.9 2,719.0 1.4 %
Fourth quarter 2,699.6 2,637.2 2.4 %
Full year $ 10,785.4 10,836.9 (0.5) %
Gross profit
Gross profit for 2025 was $2,574.7 million compared to gross profit of $2,686.5 million for 2024. The change was primarily attributable to higher input costs of approximately $135 million; lower sales volume of approximately $72 million; the unfavorable impact of temporary plant shutdowns of approximately $52 million; higher restructuring, acquisition and integration-related, and other costs of approximately $47 million and the impact of the order management system conversion of approximately $26 million, partially offset by productivity gains of approximately $188 million and the favorable net impact of foreign exchange rates of approximately $48 million.
Selling, general and administrative expenses
Selling, general and administrative expenses for 2025 were $2,065.0 million compared to $1,984.8 million for 2024. The change was primarily attributable to higher input costs of approximately $53 million; higher restructuring, acquisition and integration-related, and other costs of approximately $40 million and the unfavorable net impact of foreign exchange rates of approximately $26 million, partially offset by productivity gains of approximately $32 million.
Impairment of goodwill and indefinite-lived intangibles
Impairment of goodwill and indefinite-lived intangibles for 2025 was $19.9 million compared to $8.2 million for 2024. During the fourth quarter of 2024 and 2025, the Company compared the estimated fair values of its indefinite-lived intangible to their carrying values and determined that there was an impairment charge in Global Ceramic in 2024 and Flooring Rest of the
Index to Financial Statements
World in 2025. See Note 7, Goodwill and Other Intangible Assets, of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further discussion of the Company's impairment charges.
Operating income (loss)
Operating income for 2025 was $489.8 million compared to operating income of $693.5 million for 2024. The change was primarily attributable to higher input costs of approximately $188 million; higher restructuring, acquisition and integration-related, and other costs of approximately $87 million; lower sales volume of approximately $69 million; the unfavorable impact of temporary plant shutdowns of approximately $52 million and the impact of the order management system conversion of approximately $30 million, partially offset by productivity gains of approximately $220 million.
Global Ceramic-Operating income was $266.7 million for 2025 compared to operating income of $249.5 million for 2024. The change was primarily attributable to productivity gains of approximately $84 million; the favorable net impact of price and product mix of approximately $56 million; the favorable net impact of foreign exchange rates of approximately $27 million and lower restructuring, acquisition and integration-related, and other costs of approximately $18 million, partially offset by higher input costs of approximately $107 million; lower sales volume of approximately $41 million.
Flooring NA-Operating income was $113.6 million for 2025 compared to operating income of $237.3 million for 2024. The change was primarily attributable to higher input costs of approximately $81 million; higher restructuring, acquisition and integration-related, and other costs of approximately $53 million; the unfavorable impact of temporary plant shutdowns of approximately $42 million and the impact of the order management system conversion of approximately $30 million, partially offset by productivity gains of approximately $112 million.
Flooring ROW-Operating income was $212.9 million for 2025 compared to operating income of $265.2 million for 2024. The change was primarily attributable to the unfavorable net impact of price and product mix of approximately $60 million.
Interest expense
Interest expense was $17.8 million for 2025 compared to interest expense of $48.5 million for 2024. The change was primarily attributable to strong cash flow and prepayments of the U.S. and European portions of the Term Loan Facility during the twelve months ended December 31, 2024, resulting in lower debt.
Other income and expense, net
Other expense was $3.3 million for 2025 compared to other expense of $2.0 million for 2024. Other income and expense, net did not significantly change for the twelve months ended December 31, 2025, from twelve months ended December 31, 2024.
Income tax expense
For 2025, the Company recorded income tax expense of $98.8 million on income before income taxes of $468.7 million for an effective tax rate of 21.1%, as compared to an income tax expense of $128.2 million on income before income taxes of $643.0 million, resulting in an effective tax rate of 19.9% for 2024. The increase in the effective tax rate was primarily driven by a larger increase in unrecognized tax benefits and amended returns during 2025, partially offset by a tax benefit related to a prior period adjustment to deferred taxes during 2025 and the Company's geographic dispersion of profits and losses for the respective periods.
Index to Financial Statements
Year Ended December 31, 2024, as Compared with Year Ended December 31, 2023
Net sales
Net sales for 2024 were $10,836.9 million compared to net sales of $11,135.1 million for 2023. The change was primarily attributable to the unfavorable net impact of price and product mix of approximately $397 million and the unfavorable net impact of foreign exchange rates of approximately $68 million, partially offset by more shipping days for the year ended December 31, 2024 of approximately $92 million; higher sales volume attributable to acquisitions of approximately $48 million and higher sales volume of approximately $27 million.
Global Ceramic-Net sales for 2024 were $4,226.6 million compared to net sales of $4,300.1 million for 2023. The change was primarily attributable to the unfavorable net impact of price and product mix of approximately $64 million; the unfavorable net impact of foreign exchange rates of approximately $64 million and lower sales volume of approximately $35 million, partially offset by higher sales volume attributable to acquisitions of approximately $48 million and more shipping days for the year ended December 31, 2024, of approximately $42 million.
Flooring NA-Net sales for 2024 were $3,769.9 million compared to net sales of $3,829.4 million for 2023. The change was primarily attributable to the unfavorable net impact of price and product mix of approximately $126 million, partially offset by higher sales volume of approximately $37 million.
Flooring ROW-Net sales for 2024 were $2,840.4 million compared to net sales of $3,005.6 million for 2023. The change was primarily attributable to the unfavorable net impact of price and product mix of approximately $207 million.
Quarterly net sales and the percentage changes in net sales by quarter for 2024 versus 2023 were as follows (dollars in millions):
2024 2023 Change
First quarter $ 2,679.4 2,806.2 (4.5) %
Second quarter 2,801.3 2,950.4 (5.1) %
Third quarter 2,719.0 2,766.2 (1.7) %
Fourth quarter 2,637.2 2,612.3 1.0 %
Full year $ 10,836.9 11,135.1 (2.7) %
Gross profit
Gross profit for 2024 was $2,686.5 million compared to gross profit of $2,705.5 million for 2023. The change was primarily attributable to lower input costs of approximately $260 million; productivity gains of approximately $151 million, partially offset by the unfavorable net impact of price and product mix of approximately $382 million.
Selling, general and administrative expenses
Selling, general and administrative expenses for 2024 were $1,984.8 million compared to $2,119.7 million for 2023. The change was primarily attributable to lower legal settlements, reserves and fees of approximately $78 million.
Impairment of goodwill and indefinite-lived intangibles
Impairment of goodwill and indefinite-lived intangibles for 2024 was $8.2 million compared to $877.7 million for 2023. During the fourth quarter of 2024, the Company compared the estimated fair values of its indefinite-lived intangible to their carrying values and determined that there was an impairment charge in Global Ceramic. In 2023, the Company recorded impairment charges as a result of a decrease in the Company's market capitalization,a higher WACC and macroeconomic conditions. See Note 7, Goodwill and Other Intangible Assets, of the notes to the Consolidated Financial Statements included in Part II, Item 8 of the Company's Form 10-K for the fiscal year ended December 31, 2024, for further discussion of the Company's impairment charges.
Index to Financial Statements
Operating income (loss)
Operating income for 2024 was $693.5 million compared to operating loss of $291.9 million for 2023. The change was primarily attributable to lower impairment charges to reduce the carrying amount of goodwill and indefinite-lived intangibles of approximately $870 million; lower input costs of approximately $214 million; productivity gains of approximately $176 million; lower legal settlements, reserves and fees of approximately $78 million, partially offset by the unfavorable net impact of price and product mix of approximately $385 million.
Global Ceramic-Operating income was $249.5 million for 2024 compared to operating loss of $166.4 million for 2023. The change was primarily attributable to lower impairment charges to reduce the carrying amount of goodwill and indefinite-lived intangibles of approximately $419 million; productivity gains of approximately $67 million; lower input costs of approximately $50 million, partially offset by the unfavorable net impact of price and product mix of approximately $92 million.
Flooring NA-Operating income was $237.3 million for 2024 compared to operating loss of $61.3 million for 2023. The change was primarily attributable to lower impairment charges to reduce the carrying amount of goodwill and indefinite-lived intangibles of approximately $216 million; lower input costs of approximately $93 million; productivity gains of approximately $67 million, partially offset by the unfavorable net impact of price and product mix of approximately $109 million.
Flooring ROW-Operating income was $265.2 million for 2024 compared to operating income of $69.7 million for 2023. The change was primarily attributable to lower impairment charges to reduce the carrying amount of goodwill and indefinite-lived intangibles of approximately $235 million; lower input costs of approximately $80 million; productivity gains of approximately $41 million, partially offset by the unfavorable net impact of price and product mix of approximately $184 million.
Interest expense
Interest expense was $48.5 million for 2024 compared to interest expense of $77.5 million for 2023. The change was primarily attributable to strong cash flow and the resulting lower debt level.
Other income and expense, net
Other expense was $2.0 million for 2024 compared to other income of $5.4 million for 2023. Other income and expense, net did not significantly change for the twelve months ended December 31, 2024, from twelve months ended December 31, 2023.
Income tax expense
For 2024, the Company recorded income tax expense of $128.2 million on income before income taxes of $643.0 million for an effective tax rate of 19.9%, as compared to an income tax expense of $84.9 million on loss before income taxes of $364.0 million, resulting in an effective tax rate of (23.3)% for 2023. The change in the effective tax rate was primarily driven by a shift from a loss before income taxes to earnings before income taxes and a decrease in the impairment of non-deductible goodwill.
Liquidity and Capital Resources
The Company's primary capital requirements are for working capital, capital expenditures and acquisitions. The Company's capital needs are met primarily through a combination of internally generated funds, commercial paper, bank credit lines, term and senior notes and credit terms from suppliers. As of December 31, 2025, the Company had a total of $1,317.5 million available under its Senior Credit Facility. The Company also maintains local currency revolving lines of credit and other credit facilities to provide liquidity to its businesses around the world. None of such local facilities are material in amount.
Net cash provided by operating activities for the year ended December 31, 2025 was $1,056.2 million, compared to net cash provided by operating activities of $1,133.9 million for the year ended December 31, 2024. The change was primarily attributable to lower net earnings; the change in deferred income taxes, partially offset by the change in inventory; higher restructuring, and the change in accounts receivable.
Index to Financial Statements
Net cash used in investing activities for the year ended December 31, 2025 was $441.9 million compared to net cash used in investing activities of $454.4 million for the year ended December 31, 2024. The net cash used in investing activities for the year ended December 31, 2025 did not significantly change from the net cash used in investing activities for the year ended December 31, 2024.
Net cash used in financing activities for the year ended December 31, 2025 was $470.0 million compared to net cash used in financing activities of $629.5 million for the year ended December 31, 2024. The change was primarily attributable to prior year payments of term loan facility of $912.3 million; higher net proceeds from the Senior Credit Facility of $65.4 million, partially offset by the lower net proceeds from commercial paper of $821.1 million (year to date net repayment of $283.7 million in 2025 as compared to net proceeds of $537.3 million in 2024) and higher share repurchase of $13.0 million.
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"). On February 10, 2022, the Company's Board of Directors approved a share repurchases authorization in the amount of $500 million (the "2022 Share Repurchase Program," and together with the 2025 Share Repurchase Program, the "Share Repurchase Programs"). For the three months ended December 31, 2025, the Company purchased $40.7 million of its common stock under the Share Repurchase Programs. As of December 31, 2025, there remained $419.3 million authorized under the 2025 Share Repurchase Program. The 2022 Share Repurchase Program was completed in the quarter ended September 27, 2025.
As of December 31, 2025, the Company had cash of $856.1 million, of which $370.8 million was held outside the U.S. The Company plans to permanently reinvest the cash held outside the U.S. 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.
On January 31, 2024, the Company prepaid the entirety of the USD portion of the Term Loan Facility, in the amount of $675.0 million. On February 16, 2024, the Company prepaid the entirety of the EUR portion of the Term Loan Facility, in the amount of €220 million.
See Note 9, Long-Term Debt, of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further discussion of the Company's long-term debt. The Company may continue, from time to time, to retire its outstanding debt through cash purchases in the open market, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors. The amount involved may be material.
Index to Financial Statements
Contractual Obligations and Commitments
The following is a summary of the Company's future minimum payments under contractual obligations and commitments as of December 31, 2025 (in millions):
Contractual Obligations and Commitments:
Total 2026 2027 2028 2029 2030 Thereafter
Long-term debt, including current maturities(1)
$ 2,036.8 289.3 607.3 615.8 10.3 505.5 8.6
Interest payments on long-term debt and finance leases (2)
223.3 74.8 65.4 54.5 18.8 9.4 0.4
Operating leases 485.8 151.7 117.9 85.1 49.3 32.8 48.9
Purchase commitments (3)
247.8 172.3 35.5 19.8 6.8 6.7 6.7
Expected pension contributions (4)
4.3 4.3 - - - - -
Uncertain tax positions (5)
20.6 20.6 - - - - -
Guarantees (6)
92.3 92.3 - - - - -
Total $ 3,110.9 805.3 826.1 775.2 85.2 554.4 64.6
(1) Debt maturity table excludes deferred loan costs.
(2) For fixed-rate debt, the Company calculated interest based on the applicable rates and payment dates. For variable-rate debt, the Company estimated average outstanding balances for the respective periods and applied interest rates in effect as of December 31, 2025 to these balances.
(3) Includes volume commitments, primarily for raw material purchases.
(4) Includes the estimated pension contributions for 2026 only, as the Company is unable to estimate the pension contributions beyond 2026. The Company's projected benefit obligation and plan assets as of December 31, 2025, were $93.3 and $88.0, respectively. The projected benefit obligation liability has not been presented in the table above due to uncertainty as to amounts and timing regarding future payments.
(5) Excludes $105.8 of non-current accrued income tax liabilities and related interest and penalties for uncertain tax positions. These liabilities have not been presented in the table above due to uncertainty as to amounts and timing regarding future payments.
(6) Includes bank guarantees and letters of credit.
Critical Accounting Policies
In preparing the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles, the Company must make decisions which impact the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. Such decisions include the selection of appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching such decisions, the Company applies judgment based on its understanding and analysis of the relevant circumstances and historical experience. Actual amounts could differ from those estimated at the time the Consolidated Financial Statements are prepared.
The Company's significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. Some of those significant accounting policies require the Company to make subjective or complex judgments or estimates. Critical accounting estimates are defined as those that are both most important to the portrayal of a company's financial condition and results and require management's most difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
The Company believes the following accounting policies require it to use judgments and estimates in preparing its consolidated financial statements and represent critical accounting policies.
•Acquisition accounting. The fair value of the consideration the Company pays for each new acquisition is allocated to tangible assets and identifiable intangible assets, liabilities assumed, any noncontrolling interest in the acquired entity and goodwill. The accounting for acquisitions involves a considerable amount of judgment and estimate, including the fair value of certain forms of consideration; fair value of acquired intangible assets involving projections of future revenues and cash flows that are then either discounted at an estimated discount rate or measured at an estimated royalty rate; fair value of other acquired assets and assumed liabilities, including potential contingencies; and the useful lives of the acquired assets. The assumptions used are determined at the time of the acquisition in accordance with accepted valuation models. Projections are developed using internal forecasts, available industry and market data and estimates of long-term rates of growth for the business. The impact of prior or future acquisitions on the Company's financial position or results of operations may be materially impacted by the change in or initial selection
Index to Financial Statements
of assumptions and estimates. See Note 2, Acquisitions, included in Part II, Item 8 of this Form 10-K for further discussion of business combination accounting valuation methodology and assumptions.
•Goodwill and other intangibles. In accordance with the provisions of the FASB ASC Topic 350, Intangibles-Goodwill and Other, the Company tests goodwill and other intangible assets with indefinite lives, which for the Company are tradenames, for impairment on an annual basis on the first day of the fourth quarter (or on an interim basis if a triggering event occurs that might reduce the fair value of the reporting unit below its carrying value). Such triggering events or circumstances could include a significant change in the business climate, legal factors, operating performance or trends, competition, or sale or disposition of a significant portion of a reporting unit.
In 2025, the Company did not perform impairment tests at an interim date as no triggering events or circumstances were identified that might reduce the fair value of the reporting unit below its carrying value.
The goodwill impairment tests are based on determining the fair value of the specified reporting units relying on management judgments and assumptions using the discounted cash flows under the income approach classified in Level 3 of the fair value hierarchy and comparable company market valuation classified in Level 2 of the fair value hierarchy. Indefinite-lived intangibles are recorded and tested for impairment at the asset level. The valuation approaches are subject to key judgments and assumptions that are sensitive to change, such as judgments and assumptions about appropriate sales growth rates, operating margins, Weighted Average Cost of Capital ("WACC"), capital expenditures and comparable company market multiples.
The Company has identified Global Ceramic, Flooring NA and Flooring ROW as its reporting units for the purposes of allocating and testing for impairment. The Company completed quantitative goodwill impairment tests for the Flooring NA and Flooring ROW reporting units in 2025. In determining the fair value of the reporting units, the Company used both an income approach and market approach to estimate the fair value of the reporting units, and with both approaches weighted equally when determining the estimated fair value. The Company engaged a third-party valuation specialist to assist in developing these estimated and valuation approaches.
•Under the income approach, estimated future discounted cash flows were used to estimate the fair value of the reporting unit. The income approach required the Company's management to make certain market participant key assumptions such as growth rates, operating margins, and WACC and capital expenditures.
•Under the market approach, the Company estimated the fair value of a reporting unit based on market multiples of earnings for benchmark companies that have similar risks, participate in similar markets and compete with the Company directly.
•Valuation multiples were selected based on a financial benchmarking analysis that compared each reporting unit's operating results with the comparable companies' information. In addition to these financial considerations, qualitative factors such as variations in growth opportunities and overall risk among the benchmark companies were considered in the ultimate selection of the multiple.
In order to corroborate the estimated fair value conclusions of the Company's reporting units, the Company combined the estimated fair values for all reporting units and performed a market capitalization reconciliation to assess the reasonableness of the implied control premium. The Company also compared its market capitalization to net book value of equity to assess the implied control premium for reasonableness. The Company also applied sensitivities to assumptions and inputs used in measuring the reporting unit's fair value to address estimation uncertainty.
The Company has not made any material changes to the valuation methodology utilized to assess goodwill impairment since the date of its last annual impairment test, which is the first day of the fourth quarter of 2025.
The Company determined the fair value of each of its reporting units exceeded their respective carrying values as of the date of its last annual impairment test.
As of October 28, 2025, the fair value of the FNA reporting unit exceeded its carrying value by more than 15%, and the fair value of the Flooring ROW reporting unit exceeded its carrying value by less than 15%.
A 50 basis point increase to the discount rate used in the income approach valuation, assuming no changes to the market approach or other factors used in the impairment test, would reduce the estimated fair value of the Flooring ROW reporting unit by approximately $92 million, and the reporting unit's fair value would continue to exceed its carrying value by more than 8%.
The Company will continue to monitor the performance of the reporting units to ensure no interim indications of possible impairment have occurred before the next annual goodwill impairment assessment at the beginning of the fourth quarter of 2026.
Index to Financial Statements
•Long-lived assets. The Company reviews its long-lived asset groups, which include intangible assets subject to amortization, which for the Company are its patents and customer relationships, for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset groups may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of long-lived assets to future undiscounted net cash flows expected to be generated by these asset groups. If such asset groups are considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets held for sale are reported at the lower of the carrying amount or fair value less estimated costs of disposal and are no longer depreciated.
•Income taxes.The Company's effective tax rate is based on its income, statutory tax rates and tax planning opportunities available in the jurisdictions in which it operates. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining the Company's tax expense and in evaluating the Company's tax positions. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in a future period. The Company evaluates the recoverability of these future tax benefits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely on estimates, including business forecasts and other projections of financial results over an extended period of time. In the event that the Company is not able to realize all or a portion of its deferred tax assets in the future, a valuation allowance is provided. The Company would recognize such amounts through a charge to income in the period in which that determination is made or when tax law changes are enacted. For further information regarding the Company's valuation allowances, see Note 14,Income Taxes,included in Part II, Item 8 of this Form 10-K.
In the ordinary course of business there is inherent uncertainty in quantifying the Company's income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available as of the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information, as required by the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740-10. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the Consolidated Financial Statements. For further information regarding the Company's uncertain tax positions, see Note 14, Income Taxes,included in Part II, Item 8 of this Form 10-K.
Recent Accounting Pronouncements
See Note 1, Summary of Significant Accounting Policies, of the Company's accompanying Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a description of recent accounting pronouncements and the potential impact on the Company's financial statements and disclosures.
Impact of Inflation
Inflation affects the Company's manufacturing costs, distribution costs and operating expenses. The Company expects raw material prices, many of which are petroleum-based, to fluctuate based upon worldwide supply and demand of commodities used in the Company's production processes. Although the Company attempts to pass on increases in raw material, labor, energy and fuel-related costs to its customers, the Company's ability to do so is dependent upon the rate and magnitude of any increase, competitive pressures and market conditions for the Company's products. There have been in the past, and may be in the future, periods of time during which increases in these costs cannot be fully recovered. In the past, the Company has often been able to enhance productivity and develop new product innovations to help offset increases in costs resulting from inflation in its operations.
Index to Financial Statements
Seasonality
The Company is a calendar year-end company. Global Ceramic and Flooring NA typically have higher net sales in the second and third quarters. Flooring ROW typically has higher net sales in the first and second quarters. Because periods of economic downturn can affect the seasonality of each segment, sales for any one quarter are not necessarily indicative of the sales that may be achieved for any other quarter or for the full year.
Mohawk Industries Inc. published this content on February 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 24, 2026 at 13:47 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]