Mohawk Industries Settles Lawsuit, Revises Earnings Guidance

Mohawk Industries, the world's largest flooring manufacturer, announced Monday it has reached an agreement to settle a previously disclosed securities class action lawsuit. The company also resolved a tax dispute with Belgian tax authorities.

The securities lawsuit named Mohawk and certain of its executive officers as defendants. While Mohawk believes the suit is without merit and has defenses, the company concluded that further litigation would be protracted, burdensome, and expensive. The settlement amounts to $60 million, a significant portion of which is covered by insurance. The agreement is subject to court approval.

Separately, Mohawk settled a dispute with Belgian tax authorities regarding the tax treatment of royalty income. The Belgian authorities had issued a tax assessment of approximately €187 million for the years 2013 through 2018. Mohawk agreed to a one-time payment of €3 million to resolve the matter, having previously believed its tax position was correct.

Furthermore, Mohawk Industries lowered its adjusted earnings per share (EPS) forecast for the fourth quarter to a range of $1.27 to $1.31. This revision reflects softer-than-expected demand in the global residential flooring business, attributed to interest rate increases by the U.S. Federal Reserve, persistent high inflation, and lagging consumer confidence in the U.S. and Europe. Temporary plant shutdowns and the sale of higher-cost inventory also compressed margins.

The company is scheduled to release its complete fourth-quarter and full-year 2022 results, along with guidance for the first quarter of 2023, on February 9.