MHK - Earnings call transcript Q1 2024 | Mohawk Industries, Inc.

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Operator

Good morning, everyone, and welcome to the Mohawk Industries First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please also note this event is being recorded. At this time, I'd like to turn the floor over to James Brunk. Please go ahead.

James Brunk

Thank you, Jamie. everyone. morning, Good Industries' Mohawk conference call. Welcome quarterly to investor

the Jeff me Reform our release this call uncertainties, the may include of Wellborn, as subject Chief and statements are in for today's Securities the Litigation limited including, you President to, and provide during forward-looking Private of and those in defined performance are to to on Securities our and and call set Lorberbaum, with remind make on release periodic update statements Executive Act we'll I'd Chief not risks the second Officer. which that Commission. Chairman first XXXX, guidance press Exchange Operating forth we quarter and Joining various press filings our and but Today, company's XXXX. Officer; like quarter and Chris that everyone

discussion call may numbers. This include of non-GAAP

please and section For GAAP to to a our amounts, call the website. the Jeff. Investors to of in over X-K any reconciliation of now turn release refer Form I'll our non-GAAP press

Jeff Lorberbaum

industry, morning, enhance Thanks, our are our impacting taking effects results actions reflect economic positive performance. headwinds Good everyone. of to Though the Jim. our we're

last and were weaker share XXXX for cost by materials net first Our and from compared earnings initiatives result offset benefits of billion, a and partially pricing were lower as of Adjusted quarter the X.X% down to $X.XX, sales up versus energy, year. per $X.X mix. X% restructuring productivity

to impact to with regions, market soft competition through quarter rates the EPS. for sales channel the our $X.XX Though and of low housing approximately remodeling remained or income due a remained inflation similar pricing $XX on exchange with negative impact on the spending. Currency Residential commercial residential. to discretionary of volume. and the mix in outperform significant slowing the to industry pressure affect continue operating quarter our Across prior conditions million continues

projects consumers can with higher that deferred. since reluctant flooring facing to readily are pressure ticket most replacements initiate greater be have Retailers reported

sales Our teams controllable remain focused costs and on managing Realizing restructuring through completing near-term opportunities, reducing environment. the initiatives.

production to We our inventories manage with continue demand. to levels market align

we're collections. sales, enhanced the with introductions our value convey stimulate investing new of features To in product that

and and reduce inflationary cost improve continue productivity. structure the rates declining to rebound actions Given there about improving in benefits items, additional housing other labor take consumer interest we our Globally, pressures is a optimism and to market. confidence, and

timing Brazil banks Central now to several time they rates depends first on America central and The Central by this initiated are the levels and the their rate on first Latin since of and reductions. is combat market banks. inflation, among lowered the region rates In each inflation targeted interest their achieving raised inflection Mexico levels. actions rates U.S. implement Bank the XXXX. in inflation aggressively focus maintaining for recently and interest cuts rate as Europe, to

moves rates. In eventually events rates that buying buyers their purchases are consumers. sellers the for require by of and U.S. noted housing investments The of present the mortgage forecast increase governments In are with the by new slight and a in reducing sales year. life Association U.S., rates. stimulating to properties some for builders subsidizing recently of Realtors is down starts improvement greater The existing U.S. XXXX second home for make in countries, interest half home interest regardless

and commitment product to and flooring Green a our people to our our way resilient of Builder The PVC-free Since that for their for one both women greatest of innovation. homeownership goal. named PureTech call, Newsweek year. remains will the of top our be strong America's as recognized workplaces for find realize desire and last one Mohawk, products We're to people selected pleased our

financial our will Jim a review of Now, provide for performance quarter. the

James Brunk

under a just year-over-year billion. of due were X.X% to Jeff. decrease $X.X consumer and trading continuing tight input due on price basis a you, to pressures reported Again, X.X% combination of down. a mix That's and the sales and demand, constant as Thank pass-through costs lower the

World in was Our Rest price the the most impacted the of quarter. mix and the by segment Flooring issue

Gross $XX margin reported substantially year. million. addition an adjusted $XXX as an $XXX productivity was impact was benefit versus basis the and XX.X% XX.X% restructuring as basically prior actions the to in million, our on an basis, of XX.X% in the with reported adjusted material the to XX.X% SG&A of mix energy year, lower negative and of XX.X% prior primarily and on of expense due of line price or million in cost offsetting

gave and an unfavorable us giving cost million $XX $XX over impact of approximately year, as a of of $XX margin quarter, negative million in currency by million margin slight of shutdowns Nonrecurring offsetting foreign operating X.X% an mix of weaker manufacturing the $XXX the improvement million $XX and million, the were productivity prior reported. input and $XXX That's of That increased temporary of of million. us impact operating driven price X.X%. the lower adjusted and of charges

million for favorable expense at Interest the prior year. quarter slightly versus was $XX

tax non-GAAP versus XX.X% in XX.X% rate the year. is Our prior

to an as tax between XX%. on That $X.XX earnings $X.XX an expect an of reported QX's increase basis us of between year. versus We adjusted share of and per and XX%, XX% the be XX% the to prior full rate gave X% and be rate year and

mix That's a mix X.X% a had Operating of segments. product the compressed. points over $X a million. and by of input and offset and of of of million of In on to $XXX North million sales to the decrease decrease due million, basis XXX approximately approximately million. That's and price Turning Flooring reported on X% margin our introducing sales. basis $XX The unfavorable the of quarter, due as price had partially our conditions price lower continued That's and residential legacy to America, as constant and and Ceramic costs features an lower product enhance the resilient improved we as Global basis and $XX $XX carpet, unfavorable the as market due remodeling new are lines. adjusted impact X%. activity unique to the as of across just sales foreign impacting volume we lower and $XX was laminate impact collections through and reported decrease approximately impact a mix with the to X.X% difficult unfavorable of volume remains demand pressuring product gains well currency of reflecting productivity industry billion. business

$XX impact on That's gains And as $XXX as X.X% of finally, input Rest the product had even improvement That's and due X.X% offset margin unfavorable increase reported partially an initiatives. restructuring constant from we volume, product Operating our million. Europe. offset weak our Flooring basis $XX and and significant to a versus across cost and of impact or generally in unit in This by million. costs mix, with a year just of million benefit price price an impact productivity the of million, decrease by of basis World over a environment sales of a on of X.X%. favorable mix was prior partially $XX of unfavorable adjusted optimization was lower

has running million Operating of business, driven basis unfavorable unit product industry of margin in declined when offset prior the compared lower of to stronger and decrease of which $XX These substantially were the comps an high capacity. gains points the was year $XX million. by of was input $XX by million That's primarily partially costs approximately XXX impact our and mix on near XX.X%. panels adjusted $XX price a basis of million volume productivity

quarter, the year for prior million and forecast $XX $XX is in was eliminations for line full and year our Corporate with million.

primarily free in were over quarter over inventory $XX the the and Cash sheet. flow million. just equivalents Looking with million in billion, cash were costs. $X.X at decrease the of due to balance Inventories reduction $XXX just about a with of year-over-year cash million, $XXX

inventory to $X.X plant billion. just were XXX Our days equipment XXX. were shy and the level versus of year-end Property, days of reduced

the million quarter million to for with $XXX company $XX invest year Our was XXXX depreciation $XXX The to of in amortization the million, approximately approximately CapEx be to with plans million. $XXX $XXX for forecasted million. full and D&A

sheet flow point, to and Chris will leverage strong this to X.Xx. I over of balance operational review our over debt and At remained $X.X very at cash it billion the turn just performance. gross with Overall, QX

William Christopher Wellborn

Jim. Thanks,

is Global in soft customers market new competition segment Ceramic mix softest regions. across also is as operating lower-cost and channel is Product projects is residential options. declining undertaking remains the those pricing higher-value are our our industry sales selecting levels historical quarter, our affecting volume both The to During and margins. and remodeling below capture

increased. prices are other enhancing results, and have energy benefits though Reduced wages, our costs

in SG&A efficiencies and We're distribution cost execute of including network. lower-cost product productivity materials, reformulations reductions our to through continue higher utilization reduction We and driving initiatives, yields consolidating increased spending.

sales higher improve polishing in new investments Our value and delivering and formats technologies printing, to our rectifying mix. are

decorative are with We mosaics. and X-dimensional introducing new surfaces updated glazes, artisanal innovations

We visuals. wall offerings and in along are handcrafted floor smaller launching tile porcelain replicate and formats that larger slabs with

at manufacturing service both impacting the new a caused our customers. revenue. product operations our of facilities us with broad In the and and offering, January number and of quality business Our helping in service are advantages existing centers and suspension U.S., expand weather cost cold

filed for capacity. in between marketing Our XXX% our The this and tools ceramic tile ceramic should additional new expects year, enhanced industry XXX% the and and countertop market plus later India of has quartz expansion duties we're to response a U.S. petition support in widespread against developing completed and be Tennessee products tile U.S. additional subsidies. to dumping tariffs

Brazil, Europe, sales in sized European our panel and brands considering smaller similar countries which levels our also new our Other prices our improving new implementing In benefited than from actions. sales after we're so forecasted, are in other each In and growth expansion recent We're and we products. the and operate Mexico strategies premium should seeing each country, energy where sales larger robust distribution complement lower moved operations. in optimizing we're have marketplace. consumers. have our benefit and porcelain to product

segment, remained volumes increased which inflation. our trends low from quarter, Flooring in year's levels, of the Rest our World the of In be despite improving declining markets an may soft our prior indication In categories.

were input competitive markets. our impacted highly pricing costs lower pressures through we in So pass results by as

demand. our we cost sales efforts We've stimulate beginning are brand marketing the improved and quarter to we lower Quick-Step savings program completed Our restructuring price see realign the to residential the during of increased points, anticipated. LVT reflecting and as

our delivering our of our replacing which industry Insulation, business, is rigid material experienced capacity comparisons change raising increases underutilization declined decorative have In cyclical LVT, substantial collections. residential accordingly. our panels are in prices due The in partially In our is mix improvement our offset high discontinued flexible margins and products. from the growth recently to we've by

panels to and increases price reflect rising selective material announced We've cost.

implement to will MDF productivity vinyl cost efficiencies, and containment continue We acquisition sheet flooring mezzanine the alternative and this yields projects and We're complete business, enhancing including labor our materials. across higher year. containment in initiatives and expansion laminate and premium our bolt-on Boards

In Flooring by lower Australia, pricing In the environment. benefited price and New reduced slow mix. and a productivity in year results segment, offset Zealand, America increased raw energy prior our and costs, versus costs lower material from and input offset volumes declining our North partially

residential remodeling product on conditions vary and was While overall, weaker category. generally market channel depending

should through Lower creating builder temporarily optimism, business. hospitality, and improve our by closed on new continue January single-family down a residential channels. Based our to government trading consumers mix. pressuring quarter, some were through are in competitive to led the sales outperform the sales impacting Flooring Sales retail though year, home specified retailers weather. due the and marketplace, product Commercial positively facilities and improved selling many demand of average prices market in

We're sales our embracing recently coordinated residential with our PETPremier trim and are of nonwoven and business. optimizing sales rubber PureTech planks. resilient and the launches, new acquired growing acquisition our Retailers product of new carpet customers accessories We're expansions. including consolidated product our increasing

our LVT Coast West production, facility increasing is restructuring initiatives implemented. and Georgia Our are being

across and with I'll to the Jeff enhanced the closing improvements, better the segment operational yields logistics. we return quarter, gains delivered for During productivity remarks. call

Jeff Lorberbaum

the at to business and be improve managing to of appears our of we this industry cycle, results. controllable aspects Flooring bottom The Chris. you, our Thank are

We market we're and continue increases unique through our costs new reduce to and fixed to capital, to margins, additional with ongoing which features with enhance restructuring control unabsorbed in productivity our working overhead initiatives. merchandising. aligning our production product upgrading investing variable demand sales offering and and We're

premium and with we're our completing to quartz year, growth projects the This our countertop greatest support LVT potential the laminate when market expansion products recovers.

higher schedules, business. are European vacation than second our or are the investments capital costs, other focused Our quarter product sales reducing on third delivering seasonally maintaining innovation Due to the quarter.

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

flooring or strengthens recovery will and replace consumer our are housing often normalize completing confidence needs. more kept not before and for has a housing required improves, projects after postponed as the those will sales household years listing and should a purchase. formations geographies, since sales remodeling substantial many homeowners Existing home to catalyst Residential soon property flooring construction lead home it satisfy initiated. pace market meaningful our Across be to with for

Additionally, as investments values. homes to property increased age, required are remodeling maintain

our we world's market recovers. acquisitions capabilities the brand manufacturer, expect from As leadership, investments new largest flooring and significantly in flooring recent as to benefit the

glad be balance take consumers to the products business. invest the inspire sheet questions. to have We and your to opportunities service for the now infrastructure the We'll in to superior deliver

Operator

comes from from Bouley question [Operator Matthew Instructions] today first Barclays. Our

Matthew Bouley

rates So I you're you parts. different guess the half here? of into any has in capacity, assuming was you just obviously, see it thoughts interest kind could of a this any then you environment, considered. any cadence Mohawk? quarter. earlier around around business thoughts have rate the Any the of that than for And restructuring of managing that Clearly, this trajectory Are year-over-year year. growth different X earnings how any different year the what business how differently the year-over-year. being expected second I growth managing in second thinking little capital thought first are about half? But actions allocation around is previously, evolved the the had the think thoughts you market positive the

Jeff Lorberbaum

very have we The recent and the levels industry buyers year. Fed will through increase and rates higher time, given the over the in comments time who and economies exceed should go stay levels. moving possible running commercial better low low The improvement still the interest second significantly. the to remodeling not slow expected by year. this sales anticipate People transactions. At housing are results housing extremely expected as same the time. from sellers half the anticipated been do eventually somewhat has industry It's impact increase be could we would this their that it sales we stronger We and and could than improvement flooring are to at at

Matthew Bouley

side. maybe Got sticking with capital the then it. And guess perfectly. I allocation

XXXX? mean kind What around of within just of capital thoughts some share of for investments any completing this capacity You're your additional repurchase the year. allocation does that that beyond expenditures And set capital priorities.

James Brunk

product $XXX remind Well, about is first somewhere below our you, that of and this million of of forecast maintenance the between million investments is complete remaining is you on all, XX% is million. D&A or just growth focused XX% XX% really those business. about and And the that to $XXX the That's year cost reductions on $XXX to relatively just of mentioned. so innovation.

completion the year, Going of projects. next the forward given into capacity

unless up with of ideas of capacity a and business, standpoint. the from The reductions, innovation we maintenance course, new focus product cost on will be the come

cash focus again, get broadening or on be identifying help and products new we'll being as are other share buybacks markets. us bolt-on offering innovations they our then of acquisitions, priorities, product And into around allocation. still whether that that acquisitions of terms part considered In would

Operator

Our Wojs Tim comes question from from next Baird.

Timothy Wojs

cost some I think basis. improvement start, I that of first saw just of improvement raw a kind of quarter, more or offset kind in just to Maybe mean, material raw than on price mix, the you the year-over-year material

in or we about kind and go kind cadence of kind price general So maybe cost kind through price about that of just next of quarters, as we how few XXXX. you think the should think as of model mix

James Brunk

the baseline. us assumptions some of a with give start QX, that around me Let

enter As of historical continued and but QX, with seeing to are expect volume, are signs we be seasonality pressure some we seeing increasing we levels. aligned price mix more

headwind to We as products, continue be and try innovative to to continue our FX a anticipate process reduction control still will in that to costs well. invest cost improvements

Flooring costs In mix of to benefits the offset lower of world the from costs Rest be from a by material perspective with would and we that under the most continuing in anticipate pressure. terms the pressure year-over-year price QX to be

Timothy Wojs

Okay.

Okay. kind kind of just, panel easier? guess, helpful. of I just when on And then get mix That's commentary, do the comps really the there price

William Christopher Wellborn

going panels under the business all think pressure during is I be year. to this

Jeff Lorberbaum

will less cost the get was in second -- -- cost the But get will easier half.

Operator

Our Maklari next from Susan from question Goldman comes Sachs.

Susan Maklari

And productivity business about even the Jeff, to do can this like if and the with that margin less you it more seems macro go realize are you supportive? that think efforts even of can you profile talk benefits a to the bit the contribute time? over of under continuing be pressure. how maybe to Can the the restructuring remains where starting

Jeff Lorberbaum

with housing from that start general the by Consumer Let's they're sales out always improves. residential rebound channels. the flooring the In low at view level different improves, confidence

You in have as by pressured they of done inflation. been were hasn't to postpone remodeling couple the years that last

as that said, So activities product made different and the helps growth benefit margins. expect, X.X thing the average mix it the it cost We'll significantly and selling our there's different we years, that the business, prices improves, because replacement on as the results as basis expect initiatives, retail over you benefit higher-value changes them the all actually the from we reduction, the improves. continuous more market back, to we've the a past acquisitions that the investments, comes

the margins in the costs increase volumes, and This and well will leverage overhead as with other get increased as higher SG&A the the we'll productivity.

low at happened the which the So cycle, in last a downturn. big of level, coming out we're

further. it expectation then The to back operating to get is that XX% we expand first continue and income

Susan Maklari

that expect year. in of color. the half this you then helpful still you to mentioned expand I second And That's Okay. guess,

come especially be, that could of America North the together? on the some factors more about specifics key as Flooring any Just around What thoughts you think may segment? how

Jeff Lorberbaum

we're in the be pressure we've said the second peak When third U.S., the At which start more it's quarter demand is typically -- of the the which think we to end pricing. normal have we we the out and weak the to to into tends normalized. with seasonality, going the moment, going be think on quarter, means continued of the still year the with

the think So the until gets be there, we volume with mix. still there'll along the back, pressure

have their at them. different. is else business, that which going to going really because to to just houses, the improving it they're to have of What low, in they're of been they assuming And stay then start Again, bottom going can't have replacement some start move the we're stay the so point, if people some has just at forever. are to their to lifestyles

assuming some other we'll improvement interest they're rates rates around as of seeing change you they And to that even countries and that lowering we're faster. So don't if there. start in interest sooner lot, look look the a the like world, start going this

the that And confidence countries up. remodeling, should forward which picks same with thing and and thing those in consumer the more is occur first moving doing

Operator

John comes from next from question Our Lovallo UBS.

John Lovallo

inflation. that the would the that quarter I offset did still America? the wage on in had for that question think you quarter? negative I maybe seemed mix the sort first expected that energy The this happen offset only basis, is, cost price and second productivity previously, just one, And a the first reductions It and expectation second quarter. in North focusing of year-over-year is benefit on guess

James Brunk

look in materials we offset at World of as and is all, mix. terms materials where and energy, the of place in lower million pressure the $XXX the negative the and if million I did mix. seen, Energy and cost most unfavorable quarter, first it's price not to $XXX the that one The Rest as favorable said, category Flooring the first said, in was about just of price Well, compared I

I I pressure the would quarter, the think in trend in of would world. second the that anticipate Flooring highest where the continuing is Rest

John Lovallo

Okay.

there, sort it. the wrap from input expect productivity head you impact of additional also the to but a a year. of to sort need mean, inflation. to And maybe to it? right the lower Is we way I Got Okay. offset to of less favorable should then costs. just second less trying volume to probably from year-over-year, of And around price my mix then headwind think drive negative that pricing from about lap impact any half

James Brunk

the less to would I lap prior the right think year-over-year. Yes, speaking a John, about will lap What also start the But it. also way headwind. become to you year you're Again, right, is going it cost. anticipate, to about as I'm lower of we're price/mix start to

turn well. and getting And a so but as less impactful get as Really bit to that as also less pickup stronger, volume, you'll well. get a will little anticipate a costs going we is, into what shutdown volume become it's benefit in you

year. And second as the so that go will be of we the focus into half the

Operator

comes Ng from from next question Jefferies. Our Phil

Collin Verron

for This I wanted is the start actually to Collin piece. commercial on on Phil. just

maybe outpace year-over-year You we of are know commercial your commercial of then of for as higher commercial the size that to each that of how And just in your commercial business? residential that's flooring everyone volumes slowing. business that move continued you through Are XXXX. end about the segments? remind thinking the volumes And then

Jeff Lorberbaum

better What we faster last slowing as We still is continue anticipated. haven't better the it was is performing thought off that initiated than year. think in said it's it we than We would business through holding projects fall it we year had been and new the commercial has, thought. to we're that going than up the

products So unique, more anticipating price as you more it the we're have pressure. still since pricings slowing. are have you don't resilient commercially, also so And much

a it's government time hospitality a... a the and the approvals the retail better, Anything because just when to want as to longer getting start longer to commercial take presently, you back we for else comment in it And give begin side, get the to takes the construction outperforming. planning on going to And improve business. channels are

James Brunk

the overall up overall, Mohawk highest makes in of XX%, XX% the roughly segment. commercial the And ceramic about with business being the it

Collin Verron

ceramic versus just wanted the of how really you're would India Okay. tile point guess Indian about you point? then the That's Can the I positioned on talk portfolio just helpful I tile? tariffs. imports, that tariff the touch what Indian of those from And percentage price And price on your to color. benefit

William Christopher Wellborn

Well, Council XXX% the should been pushed freight India And between America of to has be XXX%. course, of help so that our increase with been capacity, And North energy and have prices The volume since growing. low. expects market down costs. tariffs declining it's excess imports been and of Tile and pricing those

Jeff Lorberbaum

in They question. tend the to to part more marketplace the be that low focused answer of the of to mid-end

Operator

Our comes question next from Keith Hughes from Truist.

Keith Hughes

Your know comments Flooring America. in call, release. around highlighted earlier seen also in improvements business improving volume the you I Have the that North was some in

James Brunk

see, no, segment. At we world still Global North quarter, this point, some in rest the volumes Florida America segments, did both the the the volume in in improvement noted, and of first Ceramic we were lower as

Keith Hughes

Okay.

sequential those is what you're movement in no So X saying.

Jeff Lorberbaum

always first the quarter lower quarter. is the than fourth Remember,

James Brunk

from perspective I as year-over-year was speaking a well.

Keith Hughes

Okay.

numbers commercial Second strong. has North guess of question areas about I moving What know up? in talk ceramic. if end-user commercial markets been America, have in the I the could you been

William Christopher Wellborn

commercial in But flat. ceramic, Jeff we we the generally, hasn't It year. been through it's the decreased to would. it I as much soften go said, we as Well, that business thought expect as as would say,

Jeff Lorberbaum

our is market about comment don't business flat. the is. think was I I think the -- the

Keith Hughes

is is And I what are commercial, within that offsetting areas weaker, right? assume office but

Jeff Lorberbaum

talked we one same the be would before. about That

William Christopher Wellborn

schools, things strong. been Yes, like the hospitality, have medical still those

James Brunk

would I to add well. that And as government

Operator

JPMorgan. Our Rehaut question from next from Michael comes

Michael Rehaut

would around of into current and as Ceramic. thoughts quarter given the look would what for positive? and your Flooring backdrop, trends negative any would North of mix get year, into the get expect mix the as we to remain second the trends that we to type the And even kind love would be the of price be and America demand change I half? driving you into second And Global or half pricing back First, driving

James Brunk

significantly, believe for the now, will But remains are of we to the start operations. of to certainly cost the the sales to confidence towards housing activity would under housing especially given The start should industry that the still do price/mix being increase. right down of year. get anticipate industry balance start consumer I and cycle, volumes see pressure as headwind fixed the but bottom high you rebound we think price/mix low we Given

William Christopher Wellborn

I us on at back, in mean that tend should one comes be ceramic, the thing in as least remodeling margins higher. future the help that, to

Michael Rehaut

Right.

bit the Okay. commercial, I also margins though, little on higher. are guess a

how little about bit that that way slows be depending think So the a offset Or of that? well? as is would on to commercial an right much

James Brunk

That is specified about and right be to way the blend to in margin. think richer more it, and a tends product it's of nature

Michael Rehaut

Right.

Second question, get would love your thoughts. to

a of restructuring I do there's sense I the a continuous or of quarterly benefits in the into for increase to amount the that half footprint. restructuring quarter benefits moving cost-saving this pieces actions of know of a year if adjustments And second love pace aggregate. what You just to kind with past quarter? you're your type productivity, that contribution now on of a get but your contributed lot and there, back try would what stay or seeing benefit you're consistent to seeing would right of

James Brunk

actions. me Let terms for little frame the in of you, better restructuring a Mike, bit

we that million identified previously about $XXX quarter. about We realized have million actions of the $XX through continue the of savings first the execute we've to goal

last that's first through So year year. of the quarter this

quarter, another we all of much LVT the SG&A as reducing So including of of of of the year. of we is the was closure will have certainly the restructuring operations, the million and logistics. been first $XX part through In and help that flow reductions low-margin executed, cost restructuring has balance and Most of products the going productivity that structure. a continuing are and high-cost businesses operations million of the $XX the And administrative P&L. benefit that benefit go in that discontinuing the through our I the noted assets, the to --

Operator

Dahl question Mike from next RBC. Our comes from

Michael Dahl

and there's one year-to-date price talk lot sequential mix price mix? and comparisons. the for is, you've Global the of to sequential XQ XQ and a basis, noise guide? the kind trends a On First of a Can of in embedded kind at that or basis, you America specifically on Ceramic. seen What's year-on-year versus obviously, looking maybe North

then dynamics pickup cost, you the we've on flip the of side, year-on-year some a seen, addressed And obviously, oil. obviously, in

or America, starting see in So on in basket? whether some or you to speak also can you're particular, foreign your to not North cost pressure upward sequentially

James Brunk

to QX on that's So comment From the QX North in with see North more was and on But QX. flat. would start sequentially From to Global from relatively Again, pressure QX, you'll to it me America Flooring QX Ceramic. let Flooring -- America. anticipate QX, that I from sequential price/mix. your

Some of that is around seasonality.

pressures Some of mix that price segment. that the in is in

overall say company standpoint, we've talked most of pressure the that of area. World still panels the what Flooring I remains because about in from Rest But probably an would under the

Jeff Lorberbaum

There's and be reductions were it, and forward to additional we think productivity look you that. with the coming going input the raw year And costs cost offset the still into coming as materials to we're low. help

think We to expect have would in prices we them seen given the raise the we're and quarter, pass to limited expect to business we and some movements in present point, suppliers the some follow as we'll We that increases increases environment have in. first that future, improves at with the through.

could they it economic given also that the our change possible, regional And overnight. then events conflicts it's and/or view on all

Michael Dahl

Right. Yes.

then second And Okay. Fair question. enough.

XQ. half XQ, you be Specifically a more I second see a normally, might with quarter. in make respect highlighting did versus XQ we next like that European comment seasonality, to feel the comment that

intent people that. behind talk about as guide. Can you're you As to thinking a your the XQ just reminder, the

Jeff Lorberbaum

models, were to -- as American middle businesses. is everybody consider cycle well European always And of remind businesses trying the putting just so the you. South here -- through some doesn't the different we have as we you're wanted non-U.S. as is in that remind their to just winter We everybody we a on business the that

Michael Dahl

context earnings XQ is sequentially, year-on-year improvement So down idea be in that of the sequentially? the the could

James Brunk

So Europe a early -- in was volume start earlier. real if the depends to to you're peak historic tends a looking while But talked it's the second that like little the on from standpoint. if And tell we see about that rebound. that we point it quarter increase, to

Operator

Kathryn Thompson Research Thompson comes Our from question from next Group.

Kathryn Thompson

we've or since more and dumping and the terms or do reinstatement are last the seeing about what tariffs trends talked you your yet, are your just on we some products? on for year tariffs are U.S. But updates in particularly the the gotten feedback So in Chinese of about of What hearing Europe off activities, rolled end last for that, have move acknowledge of in tariffs year. LVT potential for of better you services thoughts

William Christopher Wellborn

you Well, about general. asked LVT in

And LVT LVT. and our sales in has production Pricing facility U.S., is Coast our categories. foreign Europe, declined and the import our West to as our we the slowed operations. being lower we other to specific increase implemented where change completed product rigid to restructuring LVT transportation is profitability in our and raw reducing through residential So of mix materials, cost the in That's year. our and our are as the Georgia and completed. restructuring increasing with in LVT have cost We've improving expanding, we're go sales

Jeff Lorberbaum

announced against at any on That's this question. dumping been the hasn't answer LVT to There actions other point. the

Kathryn Thompson

market the from pressures lower-priced just Europe? additional? in competitive hitting Are Like LVT you seeing

William Christopher Wellborn

very environment, well. actually end at competitive I a we to the the putting higher and doing tend but that are pretty in are be market products it's the mean

Kathryn Thompson

out little And things helpful. projects. But other hand, more out string number. of market worse I that preponderance our But of aren't focused commercial that the one maybe number that mega came week. on often the a projects know the large that That's not point and ABI captured the bit necessarily then industry on with market the contacts to kind beat that Okay. mega And the to pulling talked of to ABI this death. end we a in lackluster

checks in to in projects. larger-scale does Mohawk a commercial Against the get conversation. what the know What market a it's these would end do channel showing better suggest. of are I the versus early ABI always backdrop process. So

how kind that this always this time. past, larger-type do with How you You've projects? these said of do in a period position environment? you done in you yourself -- the different do is but how truly of And win

William Christopher Wellborn

commercial commercial in that our carpet ceramic a resources, it us on an our and of can on got advantage. answer I people and Well, are and and works gives sharing just that projects really commercial, that, are calling thing well one out together these lot we've

Jeff Lorberbaum

designers, the same We're the owners contractors architects, at time. all the calling and building on the the

agreeing ourselves still to in the to up it's marketplace. and the the We on of well And going you planning we continue able being aggressive but position a it's are participating are that than little our the different holding projects to been with and in we we've to guess, I stronger we're marketplace. anticipated and comment, our think slow, calling offerings in

Operator

Loop Our question from Capital. next from Laura comes Champine

Laura Champine

excess capacity. on is question My

at -- -- where quantified now? recent high initiatives XX% would is where get to they that And of your can today? it you current I are sort in not running that where utilization high too how how ballpark stay with think past, the volumes like assuming can you've you restructuring

Jeff Lorberbaum

should XX% we're depends The you're and in. we've -- in done, quarter also restructuring it still it period XX%, which a range. initiatives

when to it over market tend I you And the flatten as year, and production year it go best back dynamics. the move it's So out through we to the really it does should to our question We the can. level -- even as to think though, the get up. is, really out out to change going try

anything We dramatically it done the without utilization change that's marketplace the haven't going improvement. capacity to

James Brunk

before. on our growth complete cost said we really, innovation as talked is the product had just that and reduction focus we we the CapEx, investments about on more As

Laura Champine

with I cost you find you you or know own less this Are and doing your forth, back vertically extruding that so are less that seeing? do becoming but yourself you're more integrated, meaning inflation flexes yarn?

Jeff Lorberbaum

changed. hasn't It

Operator

Kim Stephen Our from next question from Evercore. comes

Stephen Kim

do I of and just where bit. basis about curious take -- reach you number Earlier that little annualized targeting was that the your here? on to a that are to think that it But further. talked what call, in we explore an XX% needed I to then a kind from look we where you operating are XX% kind volume the fact I kind just to to get like of target is margin was growth wanted think obviously relative of to

maybe getting we're growth kind volume talking about XX% Is like of -- it from here.

Just in estimation? your to kind of get some order magnitude of

Jeff Lorberbaum

I'm the not you. give have number sure I to

should recall we are The out like that our years models for the it. the impossible We we're of done, we as volume think changes, the different it you have ourselves next don't define this changes timing, moment year the we reaching with it's into some in to built see we I X we've and it see and fall, see that models this. next and know, more come significantly going time to out of

William Christopher Wellborn

And substantial underutilized a that it moves. volume Stephen, as we up, get benefit given moves we how as are,

Stephen Kim

of determine end that I obviously, side. the control. you. clearly, certainly side can But is that's mean, it day, and the the cost the going the that's at of mean, thing, I sounds doing to Yes. outside your part the that's even one you're I you the mean, everything like market on product for on

And you're like looking for so something sounds but -- it material. fairly

mean, growth of didn't I type mean see Is that unreasonable. ballpark it's not you bottom that of that minimum? kind threw at the I XX% like off of a number that would in out I kind I think the a that, there was the expansion

James Brunk

of go new kind is of starts as about stronger. year, talking the as you're out a if construction top in that that the accelerated downturn, you unusual one, first numbers not in back are the come sales to get come even you remodeling home back, Stephen, you Yes. last to

unusual a rebound GDP you it's flooring in get before the plus normal back which type numbers. into more to So growth, from multiyear not get a be benefit could

Stephen Kim

exactly. Yes,

be to fun Well, will Okay. that watch.

looking they past the back of first And the decline. even to to the the are then in third quarter, of the front Flooring the further typically, from there. actually And have are to the in the half. the and X actually certainly highest Rest back, kind the specifically, second steady declined it a which your relates fourth, in question was was each margins margins Second stronger years, half than I'm margins at World of to

factors Just And you sequential maybe can just that margins? trend differently think wondering, out reason would track of that. declines as we've structural the are to part any that that vacations where there from recent seen there call any is in XXXX

Jeff Lorberbaum

down little you're and When our customers, out the quarter, come quarter which many because going in the vacations Listen, which, have weeks, more X X, in then a Europe, you ship you factories last cases, us into shut the the Christmas of we which. tend you vacations correct. hit of entire the both addition to to the vacations, the third fourth in you

second those to quarter a So be caused things peak. both of the

Operator

Fargo. Our next Wells question comes from Sam Reid from

Richard Reid

a perhaps slightly a dig on the bit I U.S., wanted different point. deeper particularly vantage pricing, to in but it from ask

seeing the be through channel. So might can you walk some you of by that differences

recently, instance, retailers say, centers? been are price for any independent deviations So home dynamics more the the that seeing there in between versus you've

Jeff Lorberbaum

In under general, lot the a of retail business is pressure.

income in average You retailers. lower have level our from that, have general, a on the home centers specialty buying

other been at So than channel they've impacted this more the point.

William Christopher Wellborn

ceramic, I of home that's that's the under remodeling, the been said, also particularly And has like the been one it's centers affects higher-margin would say, overall, our it businesses in off -- Jeff the but pressure. only which one not been most like

Richard Reid

makes here. And quickly that No, maybe switching talking tile sense. just gears, then

a curious Vegas, kind though, was was outcome to kind from had that I event by of and pretty wins least impressive there. in business at this was Tile feedback? show Your of see, that gotten obviously. year, impressed sort that the display any Just I any what and Delta wanted at the Kitchen Bath of it or you've

William Christopher Wellborn

I U.S. had we really and about distribution. new a think show. the ceramic, And you expanded construction as good our if improved just commercial talk we

a higher-margin Our price new gaining impacted, been but are and and negatively mix done price we've partially and traction products declines. on that offsetting innovative have lot these

I market in. been cost of it's the service able a the from higher builder products paid particularly in a improve than of some levels been ceramic in expand there's some the our channels our imported in also and were mix, coming with to high-end European the as and we've share U.S., product our think to we've So off. And lot work business taken better

Operator

Eric Our next from comes Cleveland Bosshard Research. from question

Eric Bosshard

Yes, X things, if I could.

is quarter? a expected First expected? better your the bit the consensus. what earnings and that's better was better I number. were in of XQ than little little the not I better But what's know than a than bit even guy all, think

Jeff Lorberbaum

had We he panel the and comps minute productivity. Floor more we it most we world did but to better sales keep first declines volume input mix. And the through from greater piece overhead, the step add, of from then group. the and results because else really that anything want benefits costs had did weaker reviewing in America expected. unabsorbed ago, had So pricing last restructuring in And declined. a went we the and from offset lower change quarter North improved the result you the easier the had Jim? the that margin The were as industry business rest most, the year which

James Brunk

commercial for Jeff segments the biggest through residential at around the that The probably productivity quarter as point. keeps outperforming the us. the But gains were again, said, channel, No. this

Eric Bosshard

half and going into What kind the And America even in half, second the seeing mix XQ. talked are guess, then your price now, is you the secondly, I business or bit of about incrementally into April within seeing now? results informs optimism second business eroding what that North March improving are You you a that the optimism?

Jeff Lorberbaum

seasonality seeing any the the don't you improvements that the information first we have through don't would we're normal we and quarter And going definitive second that And expect. into have.

James Brunk

cycle confidence. We at this has interest Most like anticipating continued consumer we've signs. also along spending are but people housing starts look talked about and remodeling indicators business certain bottom. monitoring through rates, new as discretionary Obviously, the the as coming been off watch to continue well with the we'll And commercial. stronger Yes. build

see so and been we're to postponing also. we're that benefits people low with going assuming it, some It's from

anticipate start we business single-digit least pick So up in across area. the volumes to low to at really the

Jeff Lorberbaum

do that Last We don't One we reduced thing. inventory to have year other again. substantially.

Operator

be Jeff any gentlemen, closing Lorberbaum we'll to question-and-answer like And the back for ladies session. remarks. I'd and floor to with today's over turn concluding that,

Jeff Lorberbaum

on downturn us. good positioned you. day. joining from category Long enhance the well our term, time We're the has. you will and Thank for Have and our a it as results. the to products appreciate rebound markets We always taking

Operator

has attending And for ladies presentation. you do now gentlemen, and the concluded. conference today's We thank

You may now disconnect your lines.

Mohawk Industries (MHK) 26 Apr 242024 Q1 Earnings call transcript