Longbow analyst David MacGregor's Q3 Flooring Survey indicate 2-4% volume growth for the US flooring markets, suggesting below consensus results for Neutral rated Mohawk (MHK) and Interface (TILE). The analyst cut his Q3 earnings estimate for Mohawk to $3.71 from $3.77, below consensus of $3.75, driven by ceramic tile weakness. For Interface, the analyst cut his Q3 earnings estimate to 28c from 30c, versus consensus of 30c, due to increasing pressure from cheaper competitors and internal disruptions.

The company said, "The flooring industry appears to be at the bottom of this cycle, and we are managing the controllable aspects of our business to improve our results. We continue to reduce our costs through ongoing restructuring actions and additional productivity initiatives. We are aligning production with market demand to control working capital, which increases our unabsorbed overhead. To enhance sales and margins, we are upgrading our product offering with unique features and investing in new merchandising. This year we are completing our LVT, quartz countertop and premium laminate expansion projects to support our products with the greatest growth potential when the market recovers. Our other capital investments are focused on reducing cost, delivering product innovation or maintaining the business. Due to European vacation schedules, our second quarter sales are seasonally higher than the third quarter. Given these factors, we anticipate our second quarter adjusted EPS to be between $2.68 and $2.78, excluding any restructuring or other one-time charges. Residential flooring sales should lead the recovery as consumer confidence improves, the housing market strengthens, and postponed remodeling projects are initiated. Existing home sales will normalize and are a meaningful catalyst for flooring since homeowners replace it more often before listing a property or soon after completing a purchase. Across our geographies, housing has not kept pace with household formations, and substantial home construction will be required for many years to satisfy those needs. Additionally, as homes age, increased remodeling investments are required to maintain property values. As the world's largest flooring manufacturer, we expect to significantly benefit from our brand leadership, investments in new capabilities and recent acquisitions as the flooring market recovers. We have the products to inspire consumers, the infrastructure to deliver superior service and the balance sheet strength to invest in opportunities for the business."