Mohawk Industries (MHK) 9 Feb 242023 Q4 Earnings call transcript

Company Profile

Participants

James Brunk	executive
Jeff Lorberbaum	executive
William Christopher Wellborn	executive
Susan Maklari	analyst
Philip Ng	analyst
Eric Bosshard	analyst
Stephen Kim	analyst
Timothy Wojs	analyst
Keith Hughes	analyst
Andrew Azzi	analyst
Joseph Ahlersmeyer	analyst
John Lovallo	analyst
Laura Champine	analyst
Matthew Bouley	analyst
Kathryn Thompson	analyst
Adam Baumgarten	analyst
Rafe Jadrosich	analyst

Call transcript

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Operator

Good day, and welcome to the Mohawk Industries Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to James Brunk. Please go ahead, sir.

James Brunk

Thank you, Rocco. welcome Industries' and investor everyone, morning, to quarterly Mohawk call. Good

Officer. Jeff on Wellborn, and Operating year you performance the the and me guidance quarter fourth Lorberbaum, the President we'll company's on call Chief and Chris Joining full and of are Chairman XXXX. quarter update Officer; Chief and for provide Today, first Executive

Commission. by Litigation may I'd our periodic filings we our make that Act release and with include statements which to like forward-looking statements Exchange are to Securities forth not and remind uncertainties, various everyone that to, the as XXXX, Securities of risks in the defined this those release set Reform including, our call Private limited press subject press during but and and

may of call include numbers. non-GAAP discussion This

of GAAP section the in refer a amounts, press X-K any Investors Form For to please and website. non-GAAP our to release of our reconciliation

to his over I'll for opening Jeff turn Jeff? remarks. the now call

Jeff Lorberbaum

Jim. Thanks,

our quarter results. quarter expectations reported on fourth Our legacy our sales a new X.X% in remodeling construction constant impact approximately basis. or and billion, of for to continued as X.X% residential and results down net with demand $X.X Lower ahead were of the

operating lower benefits offset had Our an from product and the the or exchange foreign material of on during $X.XX income quarter, lower quarter $X.XX productivity and and impact adjusted $XX raw EPS declined, was input by cost for EPS. with on million cost. Pricing containment, mix energy approximately costs

EPS of X% Turning basis adjusted a reported on to approximately or constant sales were $XX.X billion, our year as down approximately net full results. Mohawk's with $X.XX. X.X%

fluctuation. geographic though highly challenges by of creating markets footprint, we conditions. were sensitive for have rates to interest which year, diversified Last is our similar our impacted all a increased, Even rate industry,

postponed During home remodeling declined 'XX, were consumers projects sales down. and traded substantially, existing

factors investments market began creating stronger shutdown weak New starts. in though home as interest rates our sector than reduced to the costs. lending commercial remains rising [ industry also housing unabsorbed constrained interest year, was a ]. demand residential, increased construction and and reduced the across These home overhead as rates slow Throughout cut business,

enhancements. We also our aggressively focused managed these reduced our through energy invested optimizing levels, actions working resources, passed we acquisitions. capital lowering revenues in $XXX consumers we restructuring Under conditions, and costs merchandising and purchase Flooring. As excluding selling inventory and We've manufacturing inspire which sales over with products prices, industry on our in reduced materials. declining new and features million, through a result, and to to cost innovative by our

we our operations investing completed region. In the the recent around X we position our largest producer offering. we're in solidified as tile ceramic in the our world's acquisitions As leadership extended and integrate America world, to and Latin their acquisitions that XXXX, improve product

expenditures our our In operational. are should the that growth innovation product categories Europe, on slab product expansions as In and as capital focused have now highest economy year, improves. cost as the installation fully reduction we and porcelain well the

projects our laminate progressing. America, North in LVT While premium are

completing anticipate billion. free available year, in $XXX of flow expansion half the cash the debt and United During the and countertops with the of laminate X.Xx, closed of we quartz second year of liquidity leverage million this $X.X Europe in of States. We

We are interest higher retiring approximately has a X, rate. term a in which loan $XXX million of quarter

when conditions occurs. and emerge well the economic from are We positioned current cycle rebound stronger this to manage

Mohawk Newsweek America's for as recognized in greatest Finally, January, workplaces of diversity. one

the our people teams we are our which mirror proud most asset, that Our talented valuable we in communities operate. and are

now will financials. And overview provide of Jim an fourth quarter our

James Brunk

and volume X.X% offset of mix X.X% XX% over price $XXX line price constant as unfavorable year-over-year versus the prior adjusted pressures us an quarter as margin was basis, by offset XX.X% That billion. prior reported million. Interest $X.X productivity and of of as productivity, unfavorable income is the expense decrease as was year. offset mix, basis a basis, sales with reported X.X%. to which on FX. SG&A $XX Thank with The Sales as by was FX prior the price of for well X.X% in inflation, were million. in and the only and an increased basis for adjusted in due unfavorable limited the you, of year partially was offsetting On of operating just impact along an million percentage million Jeff. on versus $XX a improvement mix an quarter on unfavorable lower expense gains were of year. lower $XX XX.X% That's gives adjusted improvement. as offset million a FX as $XXX inflation the and X.X% partially Gross

Our was non-GAAP tax in XX.X% rate current year. the

an and We XX%, to tax That $X.XX. expect us QX to to quarter XXXX full approximately earnings be the basis adjusted on share rate XX.X%. per the XX% an gives between for of XXXX XX.X% and be year

in by mix, Operating to unfavorable $XX adjusted the of Turning million, X.X% a prior offset pressure reported sales geographies on X.X% to increase basis demand seeing in energy price constant decreases under partially was Ceramic driven $X or on versus and decrease lower a as That's basis of legacy segments. costs. the X.X% and increased just Global price/mix had year. margin all billion. to in an only million. demand by X% with volume Unfavorable year-over-year X.X% into of and margins just and balance partially offset $XXX tight decrease reported levels lower budgets $XX mix. million. Flooring costs accounted energy pressure and of the the were million million FX by productivity of as and for had continued of pricing of and gains only a $XX the decrease of as sales material reduced America million. $XX $XX North That's sales over Due

demand. Operating lower was the innovative on and are Our pent-up we and being new our results the to which for margin million, in the due take in commercial led $XX $XX adjusted in on residential cost, productivity to advantage especially of hospitality breakeven basis benefiting channel. position are also price this well the of inflation million. by year, mix the In category prior focused gains material outperformed offsetting in products, an environment, and received million, of us of X.X% $XX weakness of ahead significantly margin

sales insulation, of volume the Flooring over That's categories. Consumer And a all constant the impacted $XXX interest and limiting on pressures competitive X.X% million. price reported versus just geopolitical basis. sales gains adjusted prior in million in year-over-year be million inflation to offsetting of rates, laminate basis were product were $XX Rest operating mix of to higher productivity $XX X.X% to million for margins offset FX were World, improvement is of in of continues on and Europe lower of by an million, in as performance, combined year, only the continued events, quarter. price/mix partially legacy activity $XX a X% the Stronger and with volume and resilient unfavorable and increasing XX.X% by $X which million, in unfavorable the environment. also contributed due offset higher Operating remodeling $XX sentiment decrease by

XXXX, $XX to $XX expect quarter Corporate them were and to million. eliminations for $XX million. we million be approximately And the in

XX% of quarter, days. Property, year Cash reduction and with and with $XXX $XXX of a and for $XXX for QX full debt QX and million inventory cash full billion CapEx with approximately $X.X $X.X shy for Inventories equivalents turning X.Xx, to million million year. the just to $XXX days million. sheet. were plans The very total and to the of XXXX The positioning in the company Finally, excluding at approximately $X by in and the leverage equipment rebound. sheet of million XXX the and of D&A of free $XXX approximately with $XX cash remained were of million CapEx balance year cash flow million $XXX the $XXX company Mohawk to with X acquisitions, balance $XXX market of million, reduction billion the million. strong billion, of shy versus prior were of gross plant D&A with of just flow well reduce

review operational will Chris QX Now our performance.

William Christopher Wellborn

margins. is compressing prices Ceramic and remains Jim. you, segment, volume industry In our low, Thank Global which

All competitive the energy are pass declining experiencing industry conditions similar of costs. our geographies and through

with mix, To the sizes inventory We small large demand to stylized in products are market. and throughout and our tailored have our introducing each year. production to are align managing enhance we significantly reduced

rates To expanding our business retail productivity, are U.S., we reduced premium through participation increased new distribution Italian have our innovative expanding increasing demand Brazil legacy with enhancing channel. We've and our In in formulation. and Mexico and our quartz acquisitions our contain rising DIY kitchen, last Elizabeth overhead local the results. countertop centers and businesses, we year our costs, the and countries, significantly and economic these and improve in introductions us styling with integrated service product strategy. sales, Brazil implemented our collections In our which bath due alternative with to positions conditions, in leading in mix. interest give We're and Combined Mexico. to new are marketing offering reduced and declined slowing operational Vitromex both

improving prices position. to are decline continued gas our and competitive Europe, In have

slabs Italy channels. to optimizing are of meet commercial premium demand residential both in in expansion We our recent porcelain growing the and

by results In remains quarter stress exchange. of were consumers retailers The and pricing cautious offsetting category business, costs in and our their levels. and our European the lower under improved pressure World gains, building driven productivity with product Flooring remaining Rest foreign reducing inventory input

control. in investing for XXXX are products cost while implementing tight We new

reenergizing brand with flagship Quick-Step our interactive are We displays.

We LVT, the residential rigid to are and we flexible decommissioned our line. transition completing have

response reduced have and decline, prices product material we our energy the material our cost experienced market. In across recently prices insulation, are As competitive to accordingly. increases raising and we categories in

declined typically capacity. has excess competitive a from with performance the panels pricing wood more Our environment to during year high

flooring. We MDF and vinyl boards, bolt-on insulation, continue our enhance sheet in to actions acquisitions and restructuring smaller mezzanine implement

low rate quarter with decreased America, benefits aggressive market volumes productivity utilization last from over year costs, In Flooring gains. North the led and in fourth marketplace. industry restructuring improved to input profitability competition Reduced and significantly

sales improve innovative are differentiated increase costs. to collections, introducing being which and expand invest manufacturing business, initiatives to we We are to and our investments capital are category, and distribution making lower marketing growth. To in long-term product new our each are accepted. our well our features enhance In our continuing we

displays We installing product retailers our new around have of accelerate the these with already begun to the launches. sales country

color generation featuring enhances collection, SolidTech technology premier next visuals texture. of the our created with have LVT definition, new We with higher and that

category made flooring PVC-free. new The We a content. an outperformed with PureTech, core that have sector. LVT is our is waterproof the called XX% a by from renewable introduced made polymer which to commercial It led channel alternative also recycled hospitality expectations is and

needle are relationships flooring our trim We expand to and leveraging punch our customer acquisitions.

the closing that, With for his Jeff remarks. call I'll return to

Jeff Lorberbaum

Thank you, Chris.

a the historical aligned more enter be industry we to seasonality X and cyclical XXXX, with quarter is at expect low, As long-term we levels.

continuing We're products Our businesses expenses, and invest overhead and our their the in increase reducing to conditions. innovative adapt minimizing sales to mix. present to restructuring are the to

We volumes optimize declines in to costs. our competitive through the to pass are reacting pressures our as we input

our shutdowns impact We implementing continue to enhance are temporary demand. manage reduce with inflation. businesses inventory align to All our anticipate to the initiatives processes and to of

$X.XX, EPS and these charges. our Given be we excluding anticipate first $X.XX any to restructuring factors, between quarter

Over improve the company we have and actions the lower our cost recent manage volumes across past our many XX integrate initiated our structure, to months, acquisitions.

industry number second collectively line, anticipate Combined has flooring the of longer facilities Europe, new realized. interest to with reduced the improve these about decrease projects. of geopolitical dependent activity year. We sooner U.S. given of of by higher remodeling on followed half the American We've should market Historically, commercial the rates, improve expanding as Latin we a industry given million, half improving residential functions pace will this complete, our improvement action, strength the consolidated commercial consumer bottom actions than The sales. results emerge out be of remodeling with the flooring will already projects and $XXX of administrative cost plan sales, taking closed should lower will rate, of the believe operating banks headcount. and our manufacturing by from overall approximately production X time central the pressures. home home cycle confidence When category conditions and home cost with of downturns, in inflation our construction current We led complete. the the and and and

margins stock. increased investments be and supply housing past Housing sales remains housing in to and all multiple short recession, has increased geographies required years. update After our industry will with the aging remodeling expanded across our for

expand our Our restructuring expansions us will actions, new technology, targeted and enable acquisitions further recent in to investments business.

As We'll believe your uniquely the the company, to glad our results as we positioned largest flooring improve now market questions. world's are we to be recovers. take

Operator

Goldman with today's [Operator Maklari Susan first comes from Instructions] Sachs. And question

Susan Maklari

to about into think that the with Jeff, low maybe and start how do for move where cadence XXXX. coming on we should the we as half there's talked that think that the quarter about? over for And about you still How about this can year out lift business potential we talked could And the cyclical several you quarters? think sequential the you go you we call? the second last next lift that

Jeff Lorberbaum

Let's the from our to second the improving in believe year, rates lower results the start Europe will throughout The also projects. rates interest declined the commercial of their starting interest and see we with lag already the anticipate from occur rates year. with year. and should U.S. improvement investments throughout from have the in an peak in and and and slower grows. with and The We business industry Brazil the rates. We increased This last strengthen given with out markets. confidence declined mortgage anticipate last reverse has year. our business year, -- these to risk, half to and prices We mix starting energy economies lower with geopolitical consumer in as product slower rest their remodeling started improved housing

our period extended of products, new the benefit in as and economy recovers future an expect expansion projects reductions cost demand investments our and results. We higher should

Susan Maklari

versus different can the say, us rest world? Okay. bit little maybe how Mohawk helpful. different Flooring segments relative just that you terms going And more. a and America Global give into to what of you of think digging economies When That's thinking segments, about you very that in globally could segments do about you're opportunities how imply the on think the and that there? what's then -- or about Anything of Ceramics for North there

Jeff Lorberbaum

we way. improve take have. each think pricing categories will business the we're that in remodeling Europe the longer businesses North We they're going leading to segments more the in improvement Ceramic pressures The America we see other panels Flooring Sure. and flooring going continuing see to and we more with the category be in where that think to than in

James Brunk

know our we've given further recovers, crisis in the geopolitical kind lower as stressing Europe, region consumer confidence. we And we'll seen that have of down is budgets see But across traded business. and tighter consumers improvement

Jeff Lorberbaum

the inflation. at marketplace same everybody they the through. to the increased remind make And [indiscernible] of energy regulations impacting higher more world their have have less time, costs Just the in Europe, and still a then dynamic it the wages rest than

Operator

next question Ng our Philip today comes with Jefferies. And from

Philip Ng

R&R trying see that consumer going we could your bigger drive tied be Certainly, just the rates when business gauge hit that things should it down, coming side. confidence hard is what the has quickly is with to looking how housing demand? it's and improving So do demand? kind When at? we been just that to -- Rates And unleash of down, we should being elevated turnover? on look at are driver the comes kind of that to pent-up

Jeff Lorberbaum

all starts consumer it cycles, with past In sentiment.

start which the consumer, can As discretionary soon And as more the on business, spending. stores the about impacts comfortable start it in they immediately. remodeling money it, starts spending that improving, walk feel then as and they

more lower central the you So business, starts what rates, that always is as in resales, happens starts they a happens the a part end. so loan but of you one longer is but complete, remind the building other. banks with our have time the they rates home the right just it that that also new start increasing interest And start at it. The works are start in piece they products and start. the But remodeling and concurrently before home shows then large take to which longer builders the up to increasing. Then you after commercial through they because planning it then the, projects, the works put take you homes almost finally, now, sell

James Brunk

homes Philip, so are you really that two geographies, new have underbuilt. of points. also key in And is our One most

an low. is inventory the also So then aging it's And inventory.

of remodeling out to which as position position. a we kind prime strong puts start very a it's to us So come for in in increase,

Philip Ng

Jim. follow-up, Okay. And then a

front going a whether When to it's that operating some good lot volumes obviously the guys portfolio -- think business, we from on products. the recovery done the the back standpoint? pivot to XXXX, is leverage You the with think broadly have new half a way there into top about cost drop-down in a or just about more of and line

James Brunk

Well, are a couple things there. of important

course, XX%, now XXXX. and based anywhere of geography impacted So are you're utilization right us rates, business on different, and which that some XX% is right in which shutdowns, driving certainly between

that the at XX% line. product you or also look product be increasing, look segment through in we to demand year anywhere volumes terms incremental whether inventory on And and depending and reductions of in reduce should and the category could XXXX, in the improving XX% impact. as premium you're the further margins As lower from more commodity

Operator

next Cleveland Our Eric Bosshard today question Research. comes with from

Eric Bosshard

Two could. things, if I

you're First all, of in expect that travel commercial incremental into that, to expecting path we or What 'XX? that's has back for 'XX relative is residential half should there better. commercial I the perhaps in or Jeff, to here? to commercial because the pressure more path on you of the year. especially is to And a business improvement outlined 'XX side, the been assume the applies from focused,

Jeff Lorberbaum

Yes.

X going borrowing it the business between we went through given 'XX there's We started then and more. the falling, actually projects -- be be and to before the started, continue getting As borrowing to I slowed going takes to them rates we projects to will rates -- year are down, earlier come for described years or up, then of lag slower. it X.X tight the time money a what and the markets be it but feel money time the in, start the start we interest cost expect the when to could was commercial think how

Eric Bosshard

Okay.

for same the the in And is is just path so U.S. time, business generate grow you environment? growth to the could company business trying of to XX% revenue for in the improvement recover an of lags business Or commercial wait before get XX% of this, residential. and rates within the sense do in the a is commercial. are Can those that to Mohawk of for Europe I'm At revenues of lags. the total type growth? or need the revenue incremental the

Jeff Lorberbaum

expecting commercial have growth decline business weaker. to even We're is it, to in the the in and residential growth offset so in the the though commercial

Eric Bosshard

And second just then doing you change that a little perspective What give a the decision. of CapEx that did question, 'XX Just 'XX. dig Can of bit, the less 'XX? up into in what are more versus bit you do little in on us 'XX? you

James Brunk

Sure.

product As countertops, $XXX innovation. the identified maintenance we've that million. then XX% focused be is XX% in reductions items cost about year. our And prepared I to for forecast noted about About of and laminate, in initiatives will around insulation. is LVT, and complete growth slabs the and porcelain to XX% remarks, be for that other going on quartz

Operator

from comes Kim Stephen Evercore. question with next Our

Stephen Kim

gather First dynamic. coming across pricing like for your seems sort of question, I it how guess, wondering specifically? I But bit sense all products at got ceramic, varying some could imports. pricing in you if or talk market. dynamic you portfolio, could from the contextualize just us was that particularly of about the sort you've I pressure in a the a across U.S., more give Maybe it's little

James Brunk

we believe near that generally is pricing is bottom. what or at the So bottom the

certainly results. be covered to lower continue weak as half wages see year-over-year, comparable and and year-over-year And improvement insurances the still and still by actions. mix Jeff though those through with trend year anticipate benefits pressures lower and from We and the In that and with items and to to as the types inflation basically improved pricing as that of out, EU, restructuring that such second and rates. and price drive should of align should then pressure. more items year, we other But so energy through standpoint. the the you material a productivity pointed go remains Europe production From you see

Stephen Kim

[indiscernible] Helpful. Okay.

Jeff Lorberbaum

Sorry, Stephen, that. have going you're to repeat to

up. broke You

Stephen Kim

[indiscernible]

Operator

the this queue, going we'll back Kim, to make Mr. out in, you're get not is back operator. you able in what you if can sir. the to I'm dial saying. question, clear We're the

with Our next comes Baird. question Wojs Timothy from

Timothy Wojs

had questions. really Just two

opportunity of So been Jeff, of the or same cycles? kind activity around of the little come longer-term M&A cycles, the coming flooring be bottoming would kind how just in mean, that kind it as picture first bit of there's out the there last I cycle? Historically, the this the industry more couple I opportunity M&A you characterize would of M&A a decades. one, bigger maybe guess out of we a over over maybe question several kind of M&A. of today last like was around

Jeff Lorberbaum

I But of how happened predict margins are buyers of expectations the what's low and that you the when know high in and with the don't to together. the is low the expectations get that past, in the you future. the can't get businesses sellers are

start going coming valuations. as So you with the and margins up, out it's to easier align back start

who seller to of would typically thing in anybody this is coming to wants get expect it out couple going and first same happen of time. the innings who the the as out, it, I of wanted comes So the you're has

Timothy Wojs

Okay.

question for on LVT you maybe maybe preliminary in an like feedback sort what second formulations line. could the of over any just on or then kind update And what the quarters? of next expectations And give way that? seeing kind the look with kind new there Good. of you're sales Okay. us there might any several Is of

William Christopher Wellborn

we've so can new Georgia. as alternative. visuals a a ramping production just provide we're introducing renewable process extrusion and and we're that up West And We've technologies also core comment our polymer and in unique improved got new -- our I surfaces also to got an Coast

Jeff Lorberbaum

sell the it running, running. a to get up the and the takes it is have takes you can't you with sales once it, equipment it equipment before and align still So while the to you get

are up coming up, fill and would go the year. and to sales the we expect through it's as up it So coming now we

Timothy Wojs

is Okay. kind it Or the preliminarily early? channel? from Any too just of feedback

Jeff Lorberbaum

tell too It's early to exactly.

we commitments it We through we year. think we're middle up, up filled the and have gaining it fill go as -- to of we'll the get

Operator

And question from Truist. comes today Keith at our next Hughes

Keith Hughes

volume appear out of North is to there and bottoming Just pace now? a you pace the here in more the where in business term? quarter. America of right be the question in on short Is going a Is market the can remodel tell the business weak the way

Jeff Lorberbaum

we do see feedback actually feedback. One about getting we volumes, our They're bottom. year get our know but it. own from and impacted can is our other next to we where point going in All is there's things all consumer get better, at pieces a customers way that they change this what's of sentiment how no optimistic pretty measure to the the than to it

things. helps get homes the higher prices as people that and So on on

There's postponing have -- people been it.

want really the to to other it not that in if know gaining down the all So They're comes similar different confidence you in regions, truth. the pieces, much in places. and it's

Keith Hughes

the they part fade here. to and be input quarters many obviously of Jim, And where how will are costs will they continue until positive numbers materials Okay. those then long a -- how away? sort raw assuming now, of quarter stay numbers, for you those

James Brunk

basis, from same I of aligns in terms the continue mix and at flow are least to price of half materials first a right. where They kind year-over-year energy and that comparison through material to energy, raw through with but period. and lower away, of see which standpoint, the year anticipate You're starting fade on time are in that a we'll

Keith Hughes

in a So diminishing first at about way the and a second quarter, to it? that is rate think

James Brunk

the kind Yes, of through P&L. flow because to there's that out much the of less inventory

Operator

comes Michael today next Rehaut JPMorgan. our And question with from

Andrew Azzi

Azzi on Andrew is This Mike. for

me. Just for one

and further in out seeing think we're mix what perhaps does been the North initiatives, margin longer-term and you've that maybe you all And the initiatives basis? taking America the how a the get to going on can actions you things recently to where cost in on compare segment? there, do that with As Flooring think been have all

Jeff Lorberbaum

are as The you're get plant goes margins you're as barely get -- to up. the up of goes costs, the to flat going the and in volume as the the going up, segment SG&A hold utilization the still we're low plants, to on goes the stoppages going SG&A leverage decreased to try it

next So we'll the the margins. And think few years. we there. get as leverage margin things occurs And you'll growth it those continued expand will see over

Andrew Azzi

in And to actually these longer-term and is horizon? Or like investments of of way then more there maybe any resources the merchandising, sales is a in quantify that initiatives? also magnitude those

Jeff Lorberbaum

long Part We made to you in relative investing in continue organizations of in which in up the to SG&A high. conscious our set historical magnitude us the -- the merchandising the can see products, in continue maintain costs, to choices it sales is term. to for investing order

come the volume comes So you down as see higher can will which the it in level SG&A up. of a sales, percent of as

James Brunk

we the new marketplace, position we pickup improves, year. strengthened the settlement, year and that placement of end materials go into will next as in half in see -- through the the the of then in consumer as so samples and the you the as through if it And second ourselves

Operator

Ahlersmeyer with Deutsche Joe from comes today question next Bank. Our

Joseph Ahlersmeyer

already Jim, sort benefits you've the been second place offsetting EBIT the on back talking to mean then up just half you're which about like that see sort what and up improvement, guiding maybe on you a Are that of to the suggesting is half, potentially it for trying front talking other you're that? of is so sounds EBIT is you're where of kind which kind then the other half, if the get seems volume. And function price/mix about side that going to we EBIT here of here. it of willing it, of flattish flush the deflation year? could to a we're improvement EBITDA bad I to to, quarter first you like And be in you're guys are offsetting the seeing. productivity the the in in the

James Brunk

the much and the fact, indicated, year that half second -- has if think to strengthens, that's the a year, be in results what through from business Jeff in year-over-year line, we're perspective. story perspective from volume-led a improve Joe, I a full will As it the with pretty of correct. then

Jeff Lorberbaum

if as picks as with products Just up mix to better historical the the homeowners. a improves remodeling, because business comment, they also sell

James Brunk

have more Joe, with which have is half to of indeed do of also volumes you which the as the And that second begin overhead, less production. shutdown, into plays improve. year You also of benefit, steady unabsorbed the if the that,

Joseph Ahlersmeyer

just the feels at like on always once way this And them. question the sort my And recent is lap these understood you've Right. second they're back the half, because it shutdown positive had negative-on-negative. half, of back I've the think you looking X is they're I we're most actually --

you're of if getting improvement the do have a is timing kind for to lapping of in to it these, the Or around improve would more So you you're double positive, anticipation do of volume demand production, that decision just in be kind back the half? and flexible that wondering you? growth in

Jeff Lorberbaum

it we're the were to anticipation flex Given won't beforehand, of so we the at very capacities inventories we but build as levels, we not up you'd of intending you to. have going running it. it to occurs, it in have we're build assume some If high

Operator

UBS. today with question Lovallo next our comes And John from

John Lovallo

first one quarter. first normal just comments around to on The the in seasonality returning the is

to about from revenue do along that the in way revenue those both right And maybe slightly same seasonality and it? So how and first fourth is if to think you America? is lines, Flooring I I of maybe kind look World of of assume quarter mean, to fair it XXXX, Rest low normal to mid-single-digit XXXX to think flat margins in Ceramic the down sort instance, at quarter? that sequential Global segment about in North for improvement to

James Brunk

margins. Flooring is you laminate World if with impacted perspective, should the from we quarter, and and by from much volumes and So are costs, Europe Ceramic Flooring the its North first believe segment more look right weaker would some the being margin in prices mix, more, from panels restructuring year increased compressing the now Rest last of impacted mix the a actions. and lower Flooring wood lower coming with improve a market so World and and which of lower in Rest categories America given productivity of lower of

John Lovallo

Low that Is Ceramic how thinking though, both sequential Flooring World mid-single-digit consistent to guys and North America? the improvement in you Rest it. I and revenue of Got mentioned maybe terms down flat in global it? of cadence are that about to in with

James Brunk

of just quarter versus you Are speaking the in year? the first prior

John Lovallo

Sorry, sequentially first fourth quarter quarter. to

James Brunk

fourth you... The -- why quarter don't

John Lovallo

up. follow can We

James Brunk

on up one. that Follow

John Lovallo

a problem. Not Sure.

repurchases? Second I capital term down terms you into thoughts Any paying get mentioned question million loan. in you back might guys is on of $XXX the market the just know on when allocation.

Jeff Lorberbaum

it in see decided million haven't determine can of change term, We debt We've quarter. pay uncertainties we off the to to conditions. yet. at the still first short we in whenever We financing $XXX do difficult decided

to decided haven't we back So begin moment. buying at this stock

Operator

with Laura Capital. comes next Loop question our And Champine from

Laura Champine

that? something taking And in we down that On were else really Brazil the if segment Flooring profitability Ceramic, North America, wondering is driving on of how cost were sales I'm from I'm recapture, profit is XXX basis segment the year-over-year struck that the and much for then there's improvement, wondering a X%. acquisitions point Mexico? hit if with the given mostly that

Jeff Lorberbaum

productivity So it's North business. quarter earnings the And the Flooring these costs, think into to different drive in as continue as then with margins. period. carry marketing the going We the new in in collections to -- and well lower restructuring product to improve invest over and America, activities we on offsetting pricing, continue from all the first gains did the

William Christopher Wellborn

to Brazil, South base Mexico lot our done both the on impacted we've in which environment, dramatic America, interest and a those rates, interest are which that come down, future. had to the businesses business. Laura, businesses should a and the acquisitions integrated, in or rates and reduce In in got more And the starting improve the lot cost. fully the less increases We've

Laura Champine

Got it. acquired on give can you was the how on more in the impact granularity revenues negative to margins But the QX? any much me

William Christopher Wellborn

slowed the they down underutilized. Well, as markets have were fully are integrated. businesses somewhat we -- expect are and I the that dilutive

Operator

next comes our And Barclays. question with Matthew Bouley from

Matthew Bouley

enterprise, play Just Ceramic any the Global on price was cost versus into but obviously, you're it expecting for was Ceramic? in into negative. out QX And to still Ceramic, price sequentially zooming entire positive -- how cost color

William Christopher Wellborn

Yes.

I'll Let comment me Ceramic. on --

and expected. manage the And margins in what FX. also was demand, line to mix with QX took then Year-over-year impacted price by we were lower downtime So holidays production around we extra environment, increased our we In we've mix And that We acquisitions productivity to inventories. we able with products. reduced our were integrated. still and our enhance our new those cost, got also

along You and the are prices most of as been to coming energy down price/mix seeing the some those consumers. decline in passed are have

James Brunk

that's that it lot to seen actually what sequentially, slightly think sequentially. I from a out improve -- I speaking from would you've so you're them bottoming QX should if QX, of again of say and

Matthew Bouley

it. Got

year. of the as cost or Okay. then one, together? these And obviously, remind just rate cost are at we move run gotten today magnitude programs past of us terms programs of Or And you've you Perfect. to there's -- of over the a sort of reduction those announced you kind through additional Can few benefit second flowing in of 'XX? kind through? accrue reduction savings you've

James Brunk

months in these So other over out the the million of of our processes of $XXX garner Collectively, across implementing X in we trying of and to we late been really should half reductions about that XX assets, the cost aligning there's actions segments. lower-cost focused last from that actions. XXXX. all capacity realized Almost has high-cost restructuring take

remaining the get you So flow XXXX. to through portion

current seeing evaluate and try results. -- the Of factors. to some to course, drive to to by being continue you're We'll actions offset situation in our necessary of XXXX as other take improved current that continue

Operator

question Kathryn next from Thompson Research Thompson comes today our with And Group.

Kathryn Thompson

more of can companies growth, and know balance and earlier in you But path call, you on growth M&A. of public don't on the the But that cost-cutting can we pipeline you have behind focused plenty M&A. said you're for you the including can't the predict private companies that measures. comment the that like Tagging what looks -- for said, question, when their bulk on and largely organic previous

both your and an products on the please forward, focusing going what thoughts on M&A? flavor just on for then pipeline the of organic, So comment could from comment you on growth geographies greater and focus

Jeff Lorberbaum

all start the have. we Let's are with businesses the that underutilized capacities out

categories is have and product we the the operations goal utilization the as that present drive of the improved. So business to

on ones, of we slowdown include before where other products other -- investing we're we're the those, that as investing LVT we're were the they and the filled constrained that over through the in go year. be areas up those and the this there into the in should changing are the process we we're more in plants On went category, which

and category. have surfaces. LVT into putting core well new durability use and products in polymer In laminate, intensity of Countertops color the Ceramic, every that textures in differentiated a going introducing we're technologies product We're marketplace being X-dimensional improve the those structure new accepted. acoustics and renewable in introducing is to we're assets.

So them go the own main and assets through. the as to objective we use that is drive we up

no the discussed are that the moment we there's there acquisitions side, look we're buyers we're the that market a On to sitting ready at close before. at this and to between acquisition difference large is pending sellers always which in but at moment, opportunities,

this waiting point. to nothing at be closed immediate there's So

Kathryn Thompson

of just from and/or type clarification M&A terms there product focus? of terms in confirmation or geographic is Any -- further -- -- a an just of standpoint, in

Jeff Lorberbaum

question question? was The or investment an an acquisition -- that

Kathryn Thompson

-- the That's question it's question. acquisition an acquisition

Jeff Lorberbaum

completed acquisitions. -- integrated. just They X are we Latin We're America, in basically fully

to And those. are so managements those more do care nothing and of taking there's

improving We that at all which are got we've earlier have those haven't across going bolt-on through. the number benefits world, we that we're of a acquisitions finishing gone points up through the and

a need don't had which to really business pick one, drive. if I we growing. I we have have that insulation guess the is specific our insulation to piece We business,

be expand in investing additional it additional in than that assets say done area. would an other sooner ones I So would in to capacities

do prefer because with found we drive the geographies really them putting find new more acquisition management of on and bolt-on in it. together, advantages then And the to that the We the you business. right into acquisition get would the ones side, we but we by fits the where right it's right go -- if product

Operator

Adam next our And Zelman. Baumgarten with question from comes

Adam Baumgarten

would expect Jeff, to Just negative in on mix have And if confirm, that is case, XXXX? to do the maybe a outperform commercial residential markets that and you margins? impact

Jeff Lorberbaum

what because commercial have decrease a you X ago Built projects the in year in to a our businesses is were years are happens that plans the completing. started

As and a in the buy complete, being gains of less mix to products. for quality is correct. mix in time. period but higher, mix, going there's going the commercial retail, the which they it's the so And The to be offset be in a think business gap they you're there's in consumer then higher by residential started, we purchases

James Brunk

as our leads New is items, You remodeling kind when should ticket consumer remodeling split, and have residential to higher to to an we've then as Adam, that leads you more higher right? you say remember, about out-mix of improves, which talked -- business. construction for settlement

could that help. So also

Adam Baumgarten

sell across I it's North across you're various it. across different the I product Got pressure just Flooring the you pressure? where but pricing degree think America, products seeing maybe in some various board, color Okay. the know And then the maybe the that thinking about most and just categories business?

Jeff Lorberbaum

The whole under dropped. category the have is volumes as pressure

differentiated in it. mix. prices prices import suspect, have declined pressure than the the The more come with more have The the pressure in have commoditized down the volume less both in being the prices as -- each would categories. under you category, ones. pricing and also As there's sold products carpets And LVT

the So those might others. be a than little worse

Operator

today Jadrosich next our question America. of comes Rafe from with Bank And

Rafe Jadrosich

I or or your to were wanted could I'm up on the less side? to helping moved competition have Ceramic the wondering, continuing either to rise, that And is rates ask if container if or pricing U.S. lead LVT recently, that competition in container Europe reducing business rates

Jeff Lorberbaum

long supply products, first out with Let's start chain. that a imported there's

while into move, things to it for be before while. has the a through it a the takes when marketplaces it and flows So sustained

absorbed flow are rise. So would that would up. it's in market move the prices early and the and up too through stay It to tell were the rates if already would freight the inventories after

to early be it's too input this sustained. and decide point, impact At going it's if have -- to any

Rafe Jadrosich

impact and they where the stabilization either quarters, If container do start quarter rates price to are for today improvement? think or actually pricing would you stay to you'd or some see X have that next an

Jeff Lorberbaum

of would the help suspect, It it have and would would marketplace in to manufacturing. the you would up, flow as go would is, happened it product. the prices What our and prices into the raise cost local the

Rafe Jadrosich

Is the compete could in in U.S.? the imported is in some obviously where like fewer disruptions the that that from -- Asia? you to Great. And And do Sea. of most imports with Does then business start the product? is Or benefit that against from Europe Red the Europe? context your

Jeff Lorberbaum

Asia, the is have would Is India. the be from Yes. in the where then -- would The you moving are X Ceramic Europe LVT, those players most. have the so it so imports mostly you aggressive in -- be most

the do to ship high-end On other We all the over ship vinyl side, product world. marketplaces. we around ship the Middle sheet place. other We ceramic and the East

So it impacts those limited ways.

Operator

concludes This to remarks. I'd over the conference our any Jeff back turn question-and-answer to Lorberbaum for closing session. like

Jeff Lorberbaum

interest Thank appreciate the the in States. your positioned well United recovery that's We we're you in much. for very come Mohawk. believe going We to

good day. So thank you call. joining a Have for the

Operator

all you conference for today's The presentation. we now concluded, you. has Thank and thank attending

and a your disconnect have now may day. wonderful You lines,

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