MHK 10-K & 10-Q changes, risk factors and insider trading

The floor covering industry is sensitive to changes in general economic conditions, such as consumer confidence, income and spending, corporate and government spending, interest rate levels, availability of credit and demand for housing. Significant or prolonged declines in the U.S. or global economies could have a material adverse effect on the Company’s business.

Downturns in the U.S. and global economies negatively impact the floor covering industry and the Company’s business. The Company derives a majority of its sales from residential and commercial construction and remodeling. During times of economic uncertainty or decline,downturns, end consumers tend to spendreduce lessspending on remodelinghome their homes.remodeling. Likewise, new home construction and the corresponding need for new flooring materials tends to slow during recessionary periods. In addition, the combination of high interest rates and inflation has madenegatively mortgagesimpacted lessmortgage affordableaffordability and has increased the cost of home improvement projects, impactingadversely theaffecting demand for the Company’s products. Cyclical economic downturns have caused, and could continue to cause, the industry to soften globally or in the local markets in which the Company operates. The Company cannot predict whether, when or ifto what degree elevated interest rates or inflation will further stabilize or decrease, and what effect such changes might have on repair and remodeling activities, new construction,construction or product demand, the Company’s business, or its financial condition.demand. A significant or prolonged decline in residential or commercial remodeling or new construction activity could have a material adverse effect on the Company’s business, financial condition, results of operations, and prospects.

The Company faces intense competition in the flooring industry that could decrease demand for the Company’s products or force it to lower prices, which could have a material adverse effect on the Company’s business.prices.

The floor covering industry is highly competitive. The Company faces competition from a number of manufacturers and independent distributors. The Company may also encounter competition from competitors introducing new products or technologies that better meet customers’ needs, whether through pricing, sustainability, quality, versatility or other characteristics. In addition, some of the Company’s competitors are located outside of the major markets in which the Company participates, and these competitors may benefit from lower input costs or state subsidies.subsidies which allow them to sell their products for less than fair value. Price competition or overcapacity may limit the Company’s ability to raise prices for its products, may force the Company to reduce prices and may also result in reduced levels of demand for the Company’s products and cause the Company to lose market share. Competitors may also engage in unfair trade practices.practices Forsuch example,as dumping or market distortion through customs duties evasion. Moreover, fluctuations in 2024,currency exchange rates and input costs may contribute to more attractive pricing for imports that compete with the U.S.Company’s Internationalproducts, Tradewhich Commissionmay investigatedput Indianpressure ceramic tile producers for unfairly selling their products inon the U.S.Company’s at less than fair value and for unfairly benefiting from government subsidies, causing harm to the U.S. ceramic tile industry.pricing.

To maintain the Company’s competitive position, the Company must continue to develop new products that meet changing consumer preferences and successfully market and commercialize its innovation, which may require substantial investments in the Company’s product development efforts, manufacturing facilities, distribution network and sales and marketing activities. Moreover, fluctuations in currency exchange rates and input costs may contribute to more attractive pricing for imports that compete with the Company’s products, which may put pressure on the Company’s pricing. Any of these factors could have a material adverse effect on the Company’s business, financial condition, results of operations, and prospects.

The Company’s international activities are significant to its manufacturing capacity, revenues and profits. The Company generates approximately 45%46% of its annual sales in countries outside of the U.S.U.S., In addition,and the Company continues to expand internationally through acquisitions, construction of new manufacturing operations and investments in existing ones. Currently, Flooring ROW has significant operations in Australia, Brazil, Europe, Malaysia, New Zealand and Russia, Global Ceramic has significant operations in Brazil, Europe, Mexico and Russia, and Flooring NA maintains LVT and carpet pad manufacturing operations in Mexico. In addition, theThe Company also sources raw materials and finished goods from multiple international locations.

•potential difficulties repatriating cash from non-U.S. subsidiaries;

The Company is subject tofaces risks and uncertainties associated with doing business in emerging markets.

The Company operates in emerging markets,markets includingsuch as Brazil, eastern Europe, Malaysia, Mexico and Russia,Russia and thereforeis has exposureexposed to certain risks of doing business in potentially unstable areasregions. of the world. Operations in emerging markets are subjectCompared to greater risk than more developed markets, includingthese inregions someoften casespresent significantheightened operational, legal, economic and political risks. Market conditions and thesupporting political structures that support them are subject to rapidcan change in these economies,rapidly, and the Company may not be able to react quickly enough to protect its assets and business operations. In particular, developing markets in which the Company operates may be characterized by one or more of the following:

•widespread poverty and resulting political instability;

Changes in any one or a combination of these factors could have a material adverse effect on the Company’s business, financial condition, results of operations, and prospects. Given the volatility in the current global economic climate and geopolitical events around the world, including the Russian military actions in Ukraine and ongoing conflicts in the Middle East,East and elsewhere, it is difficult for the Company to predict the complete impact of the foregoing matters on its business, financial condition, results of operations, and prospects.

The Company is exposed to currency exchange rate fluctuations. International sales have represented a significant percentage of the Company’s total sales, with approximately 45%46% of annual sales generated by international operations. The Company also maintains manufacturing facilities in 18 countries outside the U.S. The Company expects that a significant amount of its future sales will continue to come from outside the U.S. The Company is also exposed to currency exchange rate fluctuations bythrough its purchase of raw materials andmaterials, component parts and sourced goods from suppliers in multiple countries. The Company experiences currency-related gains and losses where sales or purchases are denominated in currencies other than the functional currency. In addition, the results of the Company’s foreign subsidiaries are translated into U.S. dollars from the local currency for consolidated reporting. The Company may not be able to manage its currency translation risks effectively, and volatility in currency exchange rates may have a material adverse effect on the Company’s consolidated financial statements and affect comparability of the Company’s results between financial periods.

The Company may be unable to predict customerchanging consumer preferences orand demand accurately, or to respond effectively to technological developments.effectively.

In periods of rising costs, the Company may be unable to pass increases in raw materials, labor, energy and fuel-related cost increasescosts on to its customers, which could have a material adverse effect on the Company’s business.customers.

The supply and prices of raw materials, labor, energy and fuel-related costs, including those related to oil and natural gas, are subject to market conditions and are impacted by many factors beyond the Company’s control, including geopolitical conflictconflict, (such as the ongoing conflicts in the Middle East and Russian military actions in Ukraine), pandemics (such as the COVID-19 pandemic),pandemics, labor shortages, weather conditions, natural disasters, governmental programs, regulations and trade and tariff policies, inflation and increased demand, among other factors. Although the Company generally 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 recovered. During such periods of time, the Company’s business, financial condition, results of operations, and prospects have been and may be materially affected.

The Company may be unable to obtain raw materials or sourced product on a timely basis, which could have a material adverse effect on the Company’s business.basis.

The principal raw materials used in the Company’s manufacturing operations include triexta, nylon, polypropylene, and polyester resins and fibers, which are used in the Company’s carpet business; clay, talc, feldspar and glazes, including frit (ground glass), zircon and stains, which are used in the Company’s ceramic tile business; wood, paper and resins, which are used in the Company’s wood and laminate flooring businesses and panels business; and glass fiber, plasticizers, and PVC resins, which are used in the Company’s sheet vinyl and luxury vinyl tile businesses. In addition to raw materials, the Company sources some finished goods. For certain raw materials and sourced products, the Company is dependent on one or a small number of suppliers. A material temporary or long-term adverse change in the Company’s relationship with such a supplier, the financial condition of such a supplier or such a supplier’s ability to manufacture or deliver such raw materials or sourced products to the Company could lead to an interruption of supply or require the Company to purchase more expensive alternatives. Also, the Company’s ability to obtain raw materials or source products at reasonable costs may be impacted by tariffs, global trade uncertainties and international crises, such as ongoing geopolitical conflict. For example, the Russian invasion of Ukraine resulted in supply chain disruption of raw materials sourced from Ukraine (primarily clay) in fiscal 2022, and the ongoing conflicts in the Middle East may result in an escalation of oil and petroleum-based chemical prices as well as the introduction of sanctions or transportation barriers, which could impact the Company’s operations. An extended interruption in the supply of sourced products or raw materials used in the Company’s business or in the supply of suitable substitute materials or products could disrupt the Company’s operations, which could have a material adverse effect on the Company’s business, financial condition, results of operations, and prospects.

The Company makes significant capital investments in its businessbusiness, and such capital investments may not be successful or achieve their intended results.

The Company intendshas tohistorically growgrown its business through a combination of organic growth and acquisitions. Growth through acquisitions involves risks, manyincluding ofchallenges whichin mayidentifying continuesuitable toopportunities, affectnegotiating favorable terms, and completing transactions on a timely basis. Even once an acquisition is successfully executed, the Company aftermay theencounter acquisition.difficulties integrating an acquired business, including realizing anticipated synergies or cost savings. The Company cannot give assurance that an acquired company will achieve the levels of revenue, profitability and production that the Company expects. Acquisitions may require the issuance of additional securities or the incurrence of additional indebtedness, which may dilute the ownership interests of existing security holders or impose higher interest costs on the Company. In addition, economic conditions may fluctuate in the various regions and markets where newly acquired companies operate, which may present foreign exchange and operational risks to the Company. Additional challenges related to the Company’s acquisition strategy include:

•retaining key employees.personnel.

AThe failureCompany tofaces identifyrisks in identifying suitable acquisition candidates or partners for strategic investments and to complete acquisitions could have a material adverse effect on the Company’s business.investments.

The Company has been, and in the future may be, subject to costs, liabilities and other obligations under existing or new laws and regulations, which could have a material adverse effect on the Company’s business.regulations.

The Company is subject to increasingly numerous and complex laws, regulations and licensing requirements in each of the jurisdictions in which the Company conducts business. In addition, new laws and regulations may be enacted in the U.S. or abroad, the compliance with which may require the Company to incur additional personnel-related, environmental, or other compliance-related costs on an ongoing basis.

In particular, the Company’s operations are subject to various environmental, social, and health and safety laws and regulations. Increased focus by the U.S., European Union and other governmental authorities on climate change and other environmental matters has led to enhanced regulation in these regions, which is expected to result in increased compliance costs and could subject the Company to additional potential liabilities. The extent of these costs and risks is difficult to predict and will depend, in large part, on the extent of final regulations and the ways in which those regulations are enforced. The applicable requirements under these laws are subject to amendment, to the imposition of new or additional requirements and to changing interpretations of agencies or courts. The Company may incur material costs in order to comply with new or existing regulations, including fines and penalties and increased costs of its operations. For example, certain aspects of the Company’s operations and supply chain have become, and are expected to becomebecome, increasingly subject to federal, state, local and international laws, regulations and international treaties and industry standards related to climate change. Many governing bodies have introduced additional due diligence and disclosure requirements addressing sustainability that the Company expects will apply to its operations and supply chain in the coming years, such as California’s Climate Corporate Data Accountability Act inand theClimate U.S.Related Financial Risk Disclosure, and the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) and Corporate Sustainability Due Diligence Directive (“CSDDD”). Although certain sustainability-related regulations and reporting obligations have been relaxed in some jurisdictions through legislation or by court order, sustained emphasis by the U.S., European Union.Union and other governmental authorities on climate change and other environmental matters continues to create uncertainty. Numerous overlapping and sometimes conflicting regulations continue to evolve, and it is unclear which requirements will ultimately remain in effect following legislative or judicial review across multiple jurisdictions. This uncertainty is expected to result in ongoing compliance costs and may expose the Company to additional potential liabilities.

The Companyextent believesof politicalthese costs and scientificrisks attentionis difficult to issues concerning climate changepredict and ESG matters will continue,depend, within increasinglylarge numerouspart, on the extent of final regulations and complex laws and regulations that could affect the Company’s financial condition. The lack of consistent climate legislation in the jurisdictionsways in which those regulations are enforced. The applicable requirements under these laws are subject to amendment, the Companyimposition operatesof createsnew economicor additional requirements, changing interpretations by agencies or courts, and regulatoryuncertainty uncertainty.as to whether or how enforcement will occur. If these laws or regulations impose significant operational restrictions and compliance requirements on the Company, they could increase costs associated with the Company’s operations, including costs for raw materialsmaterials, energy and transportation. Non-compliance with climate change treaties, regulations and disclosure requirements could also negatively impact the Company’s reputation. The Company couldmay also face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of the Company’s operations on the environment. In addition, energynon-compliance prices could increase as a result ofwith climate change legislationtreaties, regulations and disclosure requirements could also negatively impact the Company’s reputation and result in penalties or otherenforcement environmental mandates.actions.

Also,In addition, the Company’s manufacturing facilities may become subject to further limitations on emissions due to public policy concerns regarding climate change or other environmental or health and safety concerns. Because the Company’s manufacturing processes use a significant amount of energy, especially natural gas, the imposition of greenhouse gas emissions limitations, such as a “cap-and-trade” system, could require the Company to increase its capital expenditures, use its cash to acquire emission credits or restructure its manufacturing operations.

The Company has established strategies, goals and targets related to climate change and other sustainability matters. The Company’s ability to implement and achieve any such strategies, goals or targets depends on a number of factors, including, but not limited to, evolving regulatory standards, changes in carbon markets, consumer demand for low-carbon and sustainable products, technological developments, the conduct of third-party manufacturers and suppliers, climate change-related impacts, and raw material and supply chain disruptions. Actual or perceived failures or delays in implementing and achieving strategies, goals and targets related to climate change and other environmental matters could adversely affect the Company’s business, financial condition, results of operations, and prospects, and result in reputational harm and increased risk of litigation.

In addition, investor advocacy groups, certain institutional investors, investment funds, lenders, market participants, stockholders, customers, and other stakeholders have focused increasingly on ESG and sustainability practices of companies. These parties have placed increased importance on the implications of the social cost of their investments. If Mohawk’s ESGsustainability practices do not meet investor, lender, or other industry stakeholder expectations and standards, which continue to evolve, the Company’s access to capital may be negatively impacted based on an assessment of Mohawk’s ESGsustainability strategies and practices. These limitations, in both the debt and equity markets, may materially negatively affect the Company’s ability to manage its liquidity, refinance existing debt, grow its businesses, and implement its strategies, as well as adversely impact the Company’s business, financial condition, results of operations, and prospects.

It is possible that investor advocacy groups, certain institutional investors, investment funds, lenders, market participants, stockholders, customers, and other stakeholders may not be satisfied with Mohawk’s ESGsustainability practices or the speed of their adoption. In addition to the costs associated with the activities discussed above, the Company could also incur additional costs and require additional resources to monitor, report, and comply with various ESGsustainability practices. Also, the Company’s failure, or perceived failure, to meet the standards set forth in theits Impactannual Reportimpact report could negatively impact its reputation, employee retention, and the willingness of customers and suppliers to do business with the Company.

The Company may beis exposed to litigation, claims and other legal proceedings relating to its products, operations and compliance with various laws and regulations, which could have a material adverse effect on the Company’s business.regulations.

In the ordinary course of business, the Company is subject to a variety of product-related claims, lawsuits and legal proceedings, including those relating to product liability, product warranty, product recall, personal injury, and other matters. The Company is also subject to various claims related to its operations and its compliance with various corporate laws and regulations, including matters described in Note 15, Commitments and Contingencies. A very large claim or several similar claims asserted by a large class of plaintiffs could have a material adverse effect on the Company’s business, if the Company is unable to successfully defend against or resolve these matters or if its insurance coverage is insufficient to satisfy any judgments against the Company or settlements relating to these matters. Although the Company has product liability insurance and other types of insurance, the policies may not provide coverage for certain claims against the Company or may not be sufficient to cover all possible liabilities. Further, the Company may not be able to maintain insurance at commercially acceptable premium levels. Moreover, adverse publicity arising from claims made against the Company, even if the claims are not successful, could adversely affect the Company’s reputation or the reputation and sales of its products.

The Company’sCompany inabilitymay be unable to protect its intellectual property rights could have a material adverse effect on the Company’s business.rights.

The Company relies, in part,relies on the patent, trade secret and trademark lawsprotections ofin the U.S., countries in the European Union and elsewhere,other jurisdictions, as well as confidentiality agreements with some of the Company’scertain employees, to protect its intellectual property. The Company cannot assure investors that any patents owned by or issued to it will provide the Company with competitive advantages, that third parties will not challenge these patents, or that the Company’s pending patent applications will ultimately be approved.granted.

The Company has obtained and applied for numerous U.S and foreign service marks and trademark registrations and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. The Company cannot guarantee that any of the Company’s pending or future applications will be approvedgranted by the applicable governmental authorities. The failure to obtain trademark registrations in the United StatesU.S. and in other countriesjurisdictions could limit the Company’s ability to protect its trademarks and impede its marketing efforts in those jurisdictions.

The following discussion and analysis of the Company’s financial condition and results of operations from management's perspective and should be read in conjunction with the consolidatedConsolidated financialFinancial statementsStatements and related notesNotes included in this report. The discussion in this Form 10-K includes a comparison of fiscal 20242025 to fiscal 2023.2024. AThis similarsection discussionalso discusses fiscal 2024 and analysis that compares fiscal 2023 toresults, as the Company revised certain fiscal 20222024 mayand befiscal found2023 items to correct for a misstatement in Itemits 7,financial Management’sstatements Discussiondiscovered 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 Analysis2024 statement of Financialoperations Conditionby $9.5 million ($4.1 million was recorded to cost of sales and Results$5.4 million to other (income) and expense, net) and $3.0 million ($1.2 million was recorded to cost of Operations,sales ofand $1.8 million to other (income) and expense, net), respectively, and adjusted the Company’sretained Formearnings 10-Kbalance for the fiscal year ended December 31, 2023.2022, by $29.6 million. For additional information, see Note 18, Immaterial Correction of Prior Period Financial Statements of the Notes to the Consolidated Financial Statements included in this report.

Mohawk is a significant supplier of every major flooring category with manufacturing operations in 19 nationscountries 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 U.S.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 sustainability.sustainable business practices.

Due to its global footprint, Mohawk’s business is sensitive to geopolitical conflict,conflict. including the Russia-Ukraine conflict and the ongoing conflicts in the Middle East. Since the first quarter of 2022, theThe Company hasmaintains suspended new investmentsoperations in Russia inthrough responseits Global Ceramic and Flooring ROW reporting segments. The Company continues to ongoingface legal, regulatory, financial, operational and reputational risks due to its Russian militaryoperations. actionsFor more information, please refer to Risk Factors, "The Company faces risks and uncertainties related to its operations in Ukraine,Russia" andin thePart U.S.,I, theItem European1A Unionof andthis otherForm governments have imposed and broadened sanctions on Russia as well as on certain individuals and financial institutions.10-K. In addition, aescalation prolonged and more expansiveof conflict in the Middle East region and elsewhere could escalateresult oilin supply chain disruptions, higher energy and petroleum-basedraw chemicalmaterial pricesprices, asdecreased wellconsumer asdemand lead tofor the introductionCompany’s ofproducts sanctionsand orincreased transportation barriers, though the extent of the impact on the Company’s businessbusiness, andfinancial condition, results of operations, asand well as the global economy,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 U.S.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.

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 FactorsFactors-Financial and Liquidity Risks in Part I, Item 1A of this Form 10-K.

Net earnings attributable to the Company were $517.7$369.9 million for 20242025 compared to a net lossearnings of $439.5$514.7 million for 2023.2024. The change was primarily attributable to lower impairment charges; lowerhigher input costs; productivityhigher gainsrestructuring, acquisition and integration-related, and other costs; lower legalsales settlements,volume; reservesthe unfavorable impact of temporary plant shutdowns and fees,the impact of the Flooring North America order management system conversion, partially offset by theproductivity unfavorable net impact of price and product mix.gains.

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, acapitalization,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 thisthe Company’s Form 10-K for the fiscal year ended December 31, 2024, for further discussion of the Company’s impairment charges.

Net cash provided by operating activities for the year ended 2024December 31, 2025 was $1,133.9$1,056.2 million, compared to net cash provided by operating activities of $1,329.2$1,133.9 million for the year ended 2023.December 31, 2024. The change was primarily attributable to lower net earnings; the change in inventorydeferred andincome accounts receivable,taxes, partially offset by the change in accountsinventory; payablehigher restructuring, and higherthe netchange earnings.in accounts receivable.

Net cash used in investing activities for the year ended 2024December 31, 2025 was $454.4$441.9 million compared to net cash used in investing activities of $970.3$454.4 million for the year ended 2023.December 31, 2024. The changenet wascash primarilyused attributablein toinvesting activities for the decreaseyear ended December 31, 2025 did not significantly change from the net cash used in acquisitioninvesting costsactivities of $515.4 million andfor the decreaseyear inended capitalDecember expenditures31, of $158.5 million, partially offset by the decrease in the redemptions of short-term investments of $158.0 million (net of purchases of short-term investments).2024.

Net cash used in financing activities for the year ended 2024December 31, 2025 was $629.5$470.0 million compared to net cash used in financing activities of $210.6$629.5 million for the year ended 2023.December 31, 2024. The change was primarily attributable to higherprior year payments of term loan facility of $912.3 million,million; lowerhigher net proceeds from Senior Notes of $600.0 million, higher share repurchase of $162.8 million and lower proceeds fromthe Senior Credit Facility of $124.1$65.4 million (net of payments),million, partially offset by the higherlower net proceeds from commercial paper of $1,360.9$821.1 million (year to date net repayment of payments$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 FebruaryJuly 10,24, 2022,2025, 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 “20222025 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, 2024,2025, there remainsremained $67.8$419.3 million authorized under the 2025 Share Repurchase Program. The 2022 Share Repurchase Program.Program was completed in the quarter ended September 27, 2025.

As of December 31, 2024,2025, the Company had cash of $666.6$856.1 million, of which $181.6$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 operationsoperations, 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 goodwill impairment tests are based on determining the fair value of the specified reporting units basedrelying 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 approaches. The Company has identified Global Ceramic, Flooring NA and Flooring ROW as its reporting units for the purposes of allocating and testing for impairment.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 changechange, such as judgementsjudgments and assumptions about appropriate sales growth rates, operating margins, Weighted Average Cost of Capital (“WACC”), capital expenditures and comparable company market multiples.

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 Company’s unaudited condensed consolidated financial statements and related notes included in this report, as well as ourthe Company's audited consolidated financial statements for the year ended December 31, 2025, which are included in ourthe Company's Annual Report on Form 10-K for the year ended December 31, 2025.

While commercial demand remained stable through the firstsecond quarter of 2026, continued softness in the U.S. and European housing turnover,markets, sluggish new home construction and weaka cautious consumer confidenceoutlook negatively affected the Company’s markets. Housing turnover in the Company'sCompany’s major regions remained near historically low levels, driven by affordability challenges, elevated mortgage rates and home prices, and broader economic uncertainty. While theThe Company believes the ongoing housing shortage across its markets, along with elevated consumer savings, and stable employment conditions,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 toon the Company’s business, financial condition, results of operations, and prospects cannot be determined at this time.

Over the last several quarters, theThe 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.

Due to its global footprint, Mohawk’s business is sensitive to geopolitical conflicts. The ongoing conflicts in the Middle East region have resulted in higherfluctuating 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 goods sold.sales. Higher energy and fuel prices have also negatively affected consumer confidence, resultingcontributing into the deferral of discretionary projectspurchases and weakenedsoft market demand.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.

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 risks that could impact the Company’s results, please refer to Risk Factors in Part I, Item 1A inof the Company’s 2025 Annual Report filed on Form 10-K.10-K for the year ended December 31, 2025.

In 2026, the Company plans to invest approximately $480$460 million in capital expenditures focused on completing capacity expansion projects and targeted initiatives that will drive cost reduction while improving operational performance.

For the three months ended AprilJuly 4, 2026, the net earnings attributable to the Company were $117.1$196.1 million compared to the net earnings attributable to the Company of $72.6$146.5 million for the three months ended MarchJune 29,28, 2025. The change was primarily attributable to increased productivity,productivity; improved price and mix; higher volume, and the favorable current year comparativenet impact of theforeign orderexchange management system conversion, the tax benefit recognized, and more shipping days, partiallyrates, offset by higher input costscosts, andwhich lowerare volume.inclusive of tariff refunds, driven by the impact of inflation as well as a higher effective tax rate.

Quarter Ended AprilJuly 4, 2026, as compared with Quarter Ended MarchJune 29,28, 2025

Flooring ROW—Net sales for the three months ended AprilJuly 4, 20262026, were $751.3$2,991.4 million, reflecting an increase of $81.7$189.3 million, or 12.2%,6.8%, from $669.6$2,802.1 million reported for the three months ended MarchJune 29,28, 2025. The increase was primarily attributable to higher sales volume of approximately $78 million; the favorable net impact of price and product mix of approximately $67 million; and the favorable net impact of foreign exchange rates of approximately $70$61 millionmillion, andpartially moreoffset by fewer shipping days for the quarter ended AprilJuly 4, 2026, of approximately $41 million, partially offset by lower sales volume of approximately $22$13 million.

Gross profit for the three months ended AprilJuly 4, 20262026, was $641.9$795.1 million, an increase of $58.6$80.7 million, or 10.0%,11.3%, compared to gross profit of $583.3$714.4 million for the three months ended MarchJune 29,28, 2025. The change was primarily attributable to productivity gains of approximately $32 million; the $25 million favorable current year comparative impact of the order management system conversion and the favorable net impact of foreignprice exchangeand ratesproduct mix of approximately $20$54 million; productivity gains of approximately $31 million; and higher sales volume of approximately $16 million, partially offset by higher input costs of approximately $28$19 million which are net of tariff refunds and the unfavorable impact of temporary plant shutdowns of approximately $10 million.

Selling, general and administrative expenses for the three months ended AprilJuly 4, 20262026, were $530.1$541.4 million, an increase of $42.8$15.7 million compared to $487.3$525.7 million for the three months ended MarchJune 29,28, 2025. Selling, general and administrative expenses did not significantly change as a percentage of net sales for the three months ended AprilJuly 4, 2026, compared to the three months ended MarchJune 29,28, 2025.

Operating income for the three months ended AprilJuly 4, 20262026, was $111.8$253.7 million, reflecting an increase of $15.8$65.0 million, or 16.5%,34.4%, compared to operating income of $96.0$188.7 million for the three months ended MarchJune 29,28, 2025. The increase in operating income was primarily attributable to the favorable net impact of price and product mix of approximately $54 million; productivity gains of approximately $36$43 million; theand $30higher millionsales favorable current year comparative impactvolume of theapproximately order$13 management system conversion;million, partially offset by higher input costs of approximately $38$28 million; higherwhich restructuring,are acquisitionnet of tariff refunds and integration-related,the andunfavorable otherimpact costsof temporary plant shutdowns of approximately $11$10 million.

Global Ceramic—Operating income was $51.2$94.1 million for the three months ended AprilJuly 4, 2026, reflecting an increase of $9.4$5.9 million compared to operating income of $41.8$88.2 million for the three months ended MarchJune 29,28, 2025. The increase in operating income was primarily attributable to productivity gains of approximately $21$20 million and the favorable net impact of price and product mix of approximately $13 million;million, partially offset by higher input costs of approximately $30$20 million.million which are net of tariff refunds.

Flooring ROWNA—Operating income was $70.5$97.8 million for the three months ended AprilJuly 4, 2026, reflecting an increase of $11.8$45.3 million compared to operating income of $58.7$52.5 million for the three months ended MarchJune 29,28, 2025. The increase in operating income was primarily attributable to productivity gains; of approximately $21 million and lower input costs,costs partiallyof offsetapproximately by$18 themillion unfavorablewhich are net impact of pricetariff and product mix.refunds.

Interest expense was $2.4$4.8 million for the three months ended AprilJuly 4, 2026, reflecting a decrease of $4.0$0.4 million compared to interest expense of $6.4$5.2 million for the three months ended MarchJune 29,28, 2025. TheInterest decreaseexpense wasdid primarilynot attributablesignificantly tochange cashfor flowthe generationthree resultingmonths inended lowerJuly financing4, needs.2026, from the three months ended June 28, 2025.

Other expense, net was $1.2$0.4 million for the three months ended AprilJuly 4, 20262026, compared to other income,expense, net of $0.5$3.0 million for the three months ended MarchJune 29,28, 2025. Other income and expense, net did not significantly change for the three months ended AprilJuly 4, 2026, from the three months ended MarchJune 29,28, 2025.

For the three months ended AprilJuly 4, 2026, the Company recorded income tax benefitexpense of $8.9$52.3 million on earnings before income taxes of $108.2$248.5 million, for an effective tax rate of (8.2)%.21.0%. For the three months ended MarchJune 29,28, 2025, the Company recorded income tax expense of $17.5$34.0 million on earnings before income taxes of $90.1$180.5 million, for an effective tax rate of 19.4%.18.8%. The decreaseincrease in the effective tax rate was primarily attributable to tax benefits recognized during the three months ended April 4, 2026, including (i) a one-time U.S. 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 and a non-recurring benefit recorded during the three months ended MarchJune 29,28, 2025 related to a prior period adjustmentItalian totax deferredbenefit. taxes.These unfavorable impacts were partially offset by a smaller increase in unrecognized tax benefits during the three months ended July 4, 2026.

Net cash provided by operating activities in the first threesix months of 2026 was $110.1$426.6 million, compared to net cash provided by operating activities of $3.7$210.0 million in the first threesix months of 2025. The change was primarily attributable to higher net earnings and the changechanges in accounts receivable; higher net earnings; change inreceivable, accounts payablepayable, and change in inventories.

Net cash used in investing activities in the first threesix months of 2026 was $102.3$187.3 million compared to net cash used in investing activities of $89.1$169.3 million in the first threesix months of 2025. The change was primarily attributable to the increase in capital expenditures of $13.2$21.3 million for the threesix months ended AprilJuly 4, 2026, compared to the threesix months ended MarchJune 29,28, 2025.

Net cash providedused byin financing activities in the first threesix months of 2026 was $11.8$247.9 million compared to net cash providedused byin financing activities of $90.8$205.1 million in the first threesix months of 2025. The change was primarily attributable to higher share repurchases of $56.5 million and lower net proceeds fromon commercialthe paperSenior Credit Facility of $35.0$25.9 million (yearas compared to datethe first six months of 2025, offset by lower net proceedsrepayments on Commercial Paper of $92.5$98.9 million in the first threesix months of 2026 as compared to net proceedsrepayments of $127.5$144.5 million in the first threesix months of 2025) and higher share repurchases of $39.2 million.2025.

As of AprilJuly 4, 2026, the Company had cash of $872.3$849.6 million, of which $491.6$289.0 million was in the United States and $380.7$560.6 million was in foreign countries, including approximately 30%35% of the Company'sCompany’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.

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 AprilJuly 4, 2026, the Company purchased $64.3$59.4 million of its common stock under the Share Repurchase Program. As of AprilJuly 4, 2026, there remained $355.0$295.6 million authorized under the Share Repurchase Program.

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 offor 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.

The Company did not have any off-balance sheet arrangements as of AprilJuly 4, 2026.