Mohawk Industries (MHK)

Frank Boykin Chief Financial Officer
Jeffrey Lorberbaum Chairman & Chief Executive Officer
Christopher Wellborn President, Chief Operating Officer, President-Global Ceramic
Keith Hughes SunTrust
Stephen Kim Evercore ISI
Brian Biros Thomson Research Group
Eric Bosshard Cleveland Research
Michael Rehaut JPMorgan
John Baugh Stifel
Mike Dahl RBC Capital Markets
Susan Maklari Goldman Sachs
Laura Champine Loop Capital
Justin Speer Zelman
Trevor Allinson Wells Fargo
Mike Wood Nomura Instinet
Matthew Bouley Barclays
John Lovallo Bank of America
Call transcript
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Good morning. My name is Carol, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Mohawk Industries First Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. reminder, Tuesday, gentlemen, May a being conference As today, recorded X, Instructions] ladies this and is [Operator XXXX. Thank you.

I you conference. introduce Officer. would Mr. Frank Boykin, to now Chief Mr. may Boykin, your begin like Financial

Frank Boykin

include first as the subject Act various this but in Thank you, statements release of everyone, quarter periodic on with XXXX, set conference and risks including, morning, and Reform forward-looking our Carol. Securities Litigation press results. you filings that call those the defined Private I’d uncertainties Today, in update to, make which to company’s remind statements not quarter everyone press Securities our our to we’ll Commission. that forth and call. and the investor are welcome limited and Good may our Exchange during first like we to release

non-GAAP a include may call discussion This of numbers.

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

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

Jeffrey Lorberbaum

Frank. you, Thank

a For with were first The changed and unprecedented an the quarter, sales managing adjusted situation. day now FX the through down we're our world during one X.X%, period. quarter, first in for the less constant

businesses. government-mandated all Around consequence Corona virus. being the practices With stay-at-home the challenging spread world, a that contraction a slowing are of is the seismic economic

all the categories: year the nations. sales as leading presence XXX world's XX manufacturing more in flooring a countries in entered Mohawk than with in company strong and

near for were XXXX. the load. the we virus operating During we X.X the sheet evolving initiatives and leverage have The dramatically to historical XXXX, conditions. flow our adapt strategies as our a Until benefited plan changed rapidly as cash implemented times balance of in results term line and short the billion our $X.X strong of Corona with we outbreak, has from in quarter we generated our

virus to of ship some our we impacted at Countries markets. reduced shutting but government employee differently lower due the and through manufacturing and all As to reacting most reduce and demand states with quarter, the our In we the outbreak first produce are product, regions, spread to operations. actions concerns. progressed of the levels able were to

demand held of all construction with projects up up the dramatically, as markets, this being our allowed residential the being has point. residential better dropped commercial Across completed. most remodeling We're have channel and are to new still impacted

business projects To Do-it-yourself products global are event, started performing efforts to to conditions change. as teams home. and our respond as best while at we've this people some manage segment corporate staying established

increasing putting reducing work around improves. Temporary keeping stock adjusting we the with as strategies We're non-critical employees safe, layoffs as are from our expenses cutting expenditures, being and until hold the We're on production world short-term home balance furloughs purchases demand. and implemented environment and capital required.

majority of workforces. business maintain in where our supplementing countries to The is wages governments are

evolve in some and and are levels compensation. how unable demand and countries the we requiring to production changing future. we're are to processes will week, continuation align of the However, stopping Each operations with demand, adjusting predict our of

the flexible through we're is organization these guide to lessons but Our to and recession us times. from conditions, fluid last learned and applying X/XX adapting we

other after liquidity a we $X.X we to note our million and to to maturities obtained this through -- $XXX liquidity XXXX, $X million when manage economy position million recovers. recently term-loan month. have €XXX in strengthen have our We off expand billion, note pay no the a With

I to over Frank. turn now call will the

Frank Boykin

the in our in were for and sales Net pandemic $X,XXX March all slowed basis. business. million, reported, impacted decreased down Thank the X% but as you, as constant legacy X% growth on quarter Jeff. a Sales segments

million million. were million by impacted million. Our to Plant ex-charges XX.X% $XX and productivity $XX of volume year. costs $XX $XX last declining of and compared gross XX.X% results offset, Favorable $XX or shutdown of of reported margin was lower lower XX% million as price/mix inflation

charges SG&A than the year. percentage excluding year. in the were sales as normal XX.X% March compared reported XX.X% Slowing higher to SG&A and quarter, volume levels to or for drove $XXX this ex-charges last million

Onetime charges and primarily the rest wood flooring actions to million, were world of $XX reduce North to operations. carpet related America in our capacity to in consolidate

compared by volume and price/mix or of Operating $XX X.X% was income, $XX lower million of $XX million productivity and costs million Plant inflation profits million. charges, X.X% offset by last $XX excluding of $XXX to impacted of decline million in of Improving year. $X lower million. shutdown sales were

a across compared XX% of you due in April many which better down to our customers shut year Sales were To operations. our our view virus, the to last about enterprise and business. of give off the

Our world tighter sales more European restrictions. were rest of to due off

in to Our need we current environment, will cost reducing for XX%, a proportion as fixed sales to XX% XX% recovery. between the manufactured are is fixed SG&A about maintain decline fixed. range and cost we and to costs In variable capabilities not some

Given could quarter. loss this, the anticipate the quarter, in our margins in from and to XX% decremental we a XX%, second range

excluding unfavorable to were compared was the for XX% The in the year. expense compared tax The quarter. FX charges last $X.XX million. stronger Other income $X.XX $X last rate XX% improved to year. transactional U.S. dollar quarter, drove Earnings per to losses share,

later virus sales. regions $XXX of quarter, on million, the the Russia in were first FX X% In all or the segments. they as declining $XX basis. million; by million constant of and All million, affected performed March. impacted down better $X as Ceramics impacted were $XX but in the of headwinds sales not until a price/mix reported Lower X% to were Turning segment, Global volume

last shutdown versus $X negative price/mix of XX% $XX of $XX Our and million ex-charges productivity. inflation X.X% Lower million, of was offset million year. costs volume million. operating $X $XX margin million, were of Plant

million, the mix or negatively Flooring the a on declining American $XX both constant reported North sales sales Lower $XX as of down million, for $XXX of X% and segment, volume In million basis. impacted were X% price/ quarter.

X.X%, of lower $X Operating was XXX inflation points categories. charges, million $XX outperformed volume margin. to of basis negative offset million sheet $X million. plant Improving $XX other an year's of and costs LVT million of shutdown of compared productivity and last increase X.X% vinyl margin, and excluding product

Flooring sales segment, million of legacy on a down Higher of lower World price/mix. as X% were of offset the or constant million, $X $XXX basis. Rest $XX volume X.X% reported In was by million

Our operating price/mix. of Productivity were $X inflation in declining was segment, that's of lower offset XXX XX.X%, year. XX.X% million margin, by and last segment $X compared excluding of $XX negative $X charges to million the million basis of million and volume down

increased results. And then million, for another which the initiatives, full our excluding selling the costs shutdown had then estimate Corporate $X and million the loss, impacted marketing of was We $X million. and $XX Eliminations in charges, We year. segment, million and $X of operating

the the quarter balance Receivables billion. to sheet. at $X.XXX Jumping ended

$X,XXX days Our to ended at DSOs days first were $XXX compared the year. declining XX million in XX quarter last and X% or that year. Inventories about last the compares billion, quarter, to

to days in XXX Our quarter. XXX to fourth days the days compared improved

to and expect through improve continue inventory to end year. We days reduce the of the

the ended $XXX quarter in at of assets the of depreciation was million. expenditures amortization and capital for that Fixed included million billion, $XXX and quarter $X.XXX

at to million amortization for CapEx from year $XXX estimated We XXXX million, million. $XXX the are $XXX depreciation with full range to estimating and

months. the times. times coverage And for debt. XX was At ratio EBITDA Going X.X debt-to-EBITDA of XX our above the to to trailing the was end little interest long-term quarter, a

note available quarter million flow during pay end was then, will Our of of have free $XXX this million, and which leave with billion billion cash the pro liquidity. loan $X.X Since $XX forma €XXX a issued at will debt a $X.X term the total of quarter. the we million month,

We have sheet a our and strong even BBB+ environment. in rating remains balance unchanged this

make our program until this $XX stock the our time, quarter, XXX,XXX or will it Chris? shares, over further under During purchases to visibility first improves. buyback we million I turn will and Chris. back purchased not At

Christopher Wellborn

of in different virus, customers, Frank. impacting our taking you, strategies government workforce. based the distinct are manage facilities environments of to regulations to We're manufacturing the businesses currently executing our spread Thank are and on different operating Countries variety adapt. and approaches a

to to customers have shipping are Even requiring rapidly sharply, manufacturing In to environment. we from declined the our are that operating. April, inventory further weekly adjustments our where shutdowns adapt business changing mandated product occurred,

being having We're to retail what restricting and outlets is closed. have sites investments and the from to essential those expenses range been to our where some construction retail all markets and business. construction Our operational run

investments. and reducing IT SG&A, marketing are We

lowering and We non-critical and capital are R&D projects. maintenance engineering, spending

enhancing are and daily manage inventory financial payables. and categories, including We weekly our receivables reports levels, to headcount,

In obligated available. plants costs government We where and paying are to workforce down. the we furloughs when our are existing some assistance lowering implementing are countries, our by shut even layoffs using continue

though We are other material from are energy and lower headwinds greater. considerably costs, benefiting raw

career. that leaders difficult segments in businesses through and their times individual strong Each circumstances of our have multiple managed has

extraordinary taking business. is team and support customers global to entire our our Our steps protect

balanced of people with exceptional We the one am of business, and they of levels have of I an needs have another meeting proud keeping our the customers. team safe all at how

For decline global segment Italy on by regions period or segment's the constant a days points sales Each from were almost of $XXX the currency a was the at period, and X% of million, the the in forefront. with ceramic our last different year X% affected virus basis. at

region, we programs and government structure production are each cost each to our country. reducing adapting In our lowering different demand, in with

are declined Our commercial higher residential new has demand percentage U.S. those of as business still and completed. projects a has being so ceramic sales, slowly more

the than year, with from Through import stopped. February, China XX% imports lower X%, average shipments prior virtually and ceramic were pricing have

inventories. the our We to lower second product production are manufactured reducing quarter in

distancing We our selection at to added meet social have pickup curbside product service and virtual online centers requirements.

we click Our as collections begin into to ramp new channels. production up introducing tile continues different

improve. quartz our increasing productivity continue and are costs We to as countertops higher value our

consumer of selling significantly US products saw from slabs than to growing sales of professionally-installed concerns. awareness better the ones Do-It-Yourself a are in and portion are due produced distribution social base we Italy distancing as large expand.

were to of inflation, declining In In down specialty to Pennsylvania, plant mix the of first our year, sales tile state-mandated increased tile higher investments last Mexico, than been competition, has our distribution. part transportation and the with has closure as plant commercial slightly specialty better due costs our expand quarter operations. small shut and

government closed were continue throughout After to non-essential product inventory demand. our we down from plants ship shut meet April the to and businesses, customer

Brazil, virus end the in period. of In the even the negatively good, results channels. export were though Sales the new and construction impacted our in were strongest quarter

significantly commerce, other April, impacting most suspended our São regions and Paulo sales. During

We quarter production in the demand. second to reduce with inventory are lowering declining

business as performing and ceramic in This in manufacturing. Europe. Spain European down as virus well other of stopped French well by the shutdowns mandatory shut followed the market our was lockdown was government Corona in until travel closures Italy a the Our and

has some We've lack of transportation customers, been shipments. continue progressively impeded decreased and demand to shipments to though able has

many deteriorated not with of has of has with availability deteriorated many plants operating. product Our our

postponing We introductions reducing our product SKUs. are are and

operate factories to reduce to our government to reduce planning During support the are below sales second we're using quarter, we headcount. inventories and levels

We and monitoring are orders customer receivables.

As we restarted to countries of entered and plans reduce production. May, economies developing our Italian gradually have are most European their we lockdown

in the from Russian our inventory anticipating first Our quarter levels. the increasing due business, was inflation volume and declining ruble cost to higher their stronger-than-expected customers

added sales porcelain line production In to slabs. the and we a quarter, expand large tiles, our tiles, first of

up through sanitary We our a franchised own to and also products premium coordinated plan offer started ware stores.

until presently not required. March, Russia and further closed. now of the will as down sites stores In Although construction adjust impact and the we corona April, locked virus is reduced country production with did many much late

less of quarter, first products. one exit X% day from year or were $XXX segment America For North decline of X.X%, million, and the and other the wood approximately a profitable last sales our with flooring

during our supporting protecting our customers. We managing priority In the progress began our shifted corona making launched the XXXX. quarter to outbreak, employees, initiatives on virus the and March,

operating. remain and a to business, Across from are and furloughs number layoffs abrupt our much segment open reporting decline a sales lower are large sales. The and has the of that the are percentage with retailers not in reducing and of we align demand. implementing remodeling, traffic production higher Those

responders. dramatically is supplies, rug retailers team producing face the healthcare been gowns have and our our hospitals Many need impacting carry shields medical that for our sales. also growing for collections first and Rug meet closed, To

in our continued. quarter, underway multifamily sales projects carpet the performed the have as category builder residential best During and

carpet is purchase first market which quarter, the carpet created new by specialists, brought go virus. consumers planning in We To collections earlier must than and through installation greater to which sales in ever opportunities disadvantaging sales. carpet, the the measurements home before

strongest In challenging commercial, the marketplace. were performers sectors the in and education a government

as such adapting which working are and to visual home resources products We see to designers in planned from architects our their new spaces. allows studio, interactive through them

and During performed the their in segment. vinyl quarter, LVT sheet the best products

uptime. with and increased Our LVT operations improved daily have output higher

both of are features and being to the styles increasing New and flexible production rigid utilize introduced products.

for tariffs The as The ruble between U.S. slowed ban. market travel prices from LVT our LVT products. knowledge of plant Chinese lowered of click result European has transfer a the those

our China our featuring, for our improve collection the disruption The price product under margins brand. introduced created renovations. and and to performance have To premium point installation climate, limited for current design in in the enhanced we and project sourced multifamily more DIY corona virus ease of feeling

Light provides resilient easy flooring also DIY laminate alternative. an

realistic laminate durability. visuals, have operations In our waterproof increased and and Wood yields productivity business, Flooring manufacturing art provides state-of-the enhanced Our restructured which technology has our margin. we

During constant quarter, segment X% on flat a and outperformed or sales segment million, basis. World $XXX other Flooring The our year the decrease Rest of were from a of currency businesses. our days last

nature the and virus The has severity of of country. from response government the differed to country the

and And facilities. have of to work. others, closure the in shut coming retail construction. comfortable not down mandated have countries manufacturing Some are personnel Others

our while regulations operating. our others shut stopping starting have environment, shipping with this and Across continued our some Given and down are we of support align reduce from product completely demand. categories, manufacturing customer are inventory are to to operations

In operating trend and coming countries many down. In trend being appears COVID-XX the are distancing. Most to this peaking the stores many relaxed as hospitalizations more more of social Europe, with anticipate countries, to over parts weeks. lockdowns be that will extend outbreak

stores situation Even quarter. production and improves reopen, most sales anticipate significantly health lower in as second the we and

share as growth which difficult other product takes rigid outperformed product market we vinyl a recent The tile, carpet and LVT, categories. made categories sheet from in it LVT including investments, have environment. delivered in

Our rigid our track continues is as LVT output cost program on increases. progress to and well, reduction production

import are retail are until enhancing of introduction increasingly from LVT the capital New supply. closed levels are service we in that the products LVT Due with use stores, and interested customers to faster next-generation our value to fall. churns. our China local improved and postponing Customers

from to vinyl costs, sheet delivered production material We good rates our in lower impacted the quarter business margins. growth lower first volumes outside Russia. our the region benefited In higher the due exports and Europe in raw

well, as our and Our we product new performing base. plant customer is and expand Russian offering

Our carpet base commercial. retail distribution both tile limited a from sales to continues grow and and in volume investments, from

and strong as a Our products sales. of to laminate margins continues business deliver result new branded higher premium

countries and retail Results in quarter volumes, the related the primarily by declining selling to restricted. first higher new is marketing costs impacted and were of in collections launch where

while consumers online We are shop expanding our digital home. at sales as projects for DIY staying

postponing As other of new introductions the product the with our until year. end are we categories,

the Our the better Russian Laminate presently country business down. held up are throughout locked quarter, although parts of being

is completed plant in due our wood wood plant flooring Malaysian Our is Republic, government We reducing at costs. operating lower which restriction. to of Czech our closure levels presently the

were France our Our production April and other and insulation in Ireland plants are employees. furlough operating not reducing plants in

production of impacted being are are to the operations the board layoffs. we business, rest and Our starting stopping similarly and temporary with

to raw converts and our lower to products position plant the margins two, energy from due made new will past commence sales investments bio five quarter benefit the material our We will specialty low-cost prices period. a of have the the brand. In the that over waste-to-energy years. exits we operations, during sell and Higher supported we

In sales product being growing Australia A are many New with update hard slightly well and of up lower to carpet were is our pressuring and Zealand, services accepted. margins. our lines major sales

compared currencies sharp dollar. results impacted local quarter first to were by Our falling, negatively U.S. the

shutting New throughout our in April. In operations a manufacturing far. we and have seen government late on March, so lockdown Australia, stringent Whereas outlets Zealand's enacted no lockdown, retail

I'll Jeff. return the call to

Jeffrey Lorberbaum

Chris. Thanks,

dramatically May, enter corona the world. the disrupting the around is As economies we virus

all those them. Mexico are in around in of easing plant restrictions are small and others the plants in Pennsylvania. our except explore are countries Some operation, extending a Presently, world while beginning to

We're reducing and focused cash, investments We're inventory government production, aligning and expenses preserving requirements with operational conserving on adjusting capabilities. reducing support. also and and

which governments subsequent the at cannot determined. commerce rate The consumer be and open will response

postponed more remodeling construction Some apparent. investment becomes until businesses have new both recovery in the and

place rate in the sales them, people about the we most April, recover. will below it of end at and the which XX% cannot prior year, the At world, with sheltering are across our predict

guidance to due the second COVID-XX. EPS unable loss the the circumstances, and quarter anticipate for provide a period these we to in Given are

crisis. liquidity Our manage substantial strong through sheet is of the balance with to billion $X.X

Our local return the to with market, normal in remains business time, over taking economies downturn. necessary model solid strong optimistic future to the actions each teams business. The we are long-term will manage the and of our about

With that, we will questions. take be glad to



[Operator ahead. go from Instructions] question Keith Please Our SunTrust. first Hughes

Keith Hughes

Thank you.

closed up starting a now that getting those more retail that guess, Just first, being April. open clearly here I to to businesses role you that with what's are Are states than not, of Is a the a open in are on lifted? couple sense in restrictions questions. happening in stores some these allowed in played May? of

Jeffrey Lorberbaum

We're and It's around they of watching going what up. will it. us the to too are we're for The from details do? that to country the have the news consumers is, early question states, just different start opening assuming

Keith Hughes

And guess, to Okay. the more, again, back question, U.S. second basically, I

LVT, market Or Was up You rest details the of pressure shares. is been than it for talked about and still – me, excuse just pressure, growing the just in April you? gaining LVT products? less

Jeffrey Lorberbaum

go quarter, the LVT, up. how we're the to sales the – see period because it to through. progresses higher ends is point in overall as slowing, the and having business was expand have will entered it March, slowed so we LVT a The in first but continued we started where going they see to to of it growth the we have and from as

Keith Hughes

the of business? question to materials. the that growing various two going over you for Is raw final quarter guess next on be parts tailwind I a in Okay. or

Jeffrey Lorberbaum

take have offset declining, a volume And costs. then recycled lower declining the The than our by but the will to materials mix. as alternatives. energy to pricing With point, our flow just materials, sales were material the raw through costs across virgin less are longer declined categories, and materials

Keith Hughes

Okay. Thank you.


ISI. from Our go Stephen next Evercore ahead. from comes question Please Kim

Stephen Kim

guys the Thanks I wanted to thanks productivity decremental ask a Frank. you for welcome made, commentary and the about and very back. the little much bit color. Frank, you

see pleased the to North were we strong one, in So number productivity Flooring America.

was go I to then might therefore, that did at restructuring $XX was at shutdown XQ, And in obviously, be and overall curious, that's to in going able thinking you that to to we if least, your portion, tied continue? expect we're the up, initiatives business, in million that XQ.

even But your look that the seems So is decremental if of XQ? into that, going we was reasonable more get XQ in to number end to it, double maybe range? think if wondering be we only to low me it -- overall it's to as than what double it shutdown

Frank Boykin

costs just fixed We're some sales costs. and first, historical margins. And put maybe about around to that to are and discussion about are then, Well, we driving out what taking the in fencing assumptions how behave take there decremental that. going are about variable

I - question run up, if impact shutdown will going I'm sure. say to we take have a there, answering sure on production is Stephen be as I'm down. that your shutdown to not, cost. larger capacity the that rates will going goes our our the not but extent our go costs down, That or for

Jeffrey Lorberbaum

will plants problem going the much continue. pieces are we the operating will the at offsetting productivity pieces that negatives to levels is lower and in Then be and high. overhead be the unabsorbed do The

Stephen Kim

sense. makes That Yes.

that America, Flooring any those a in of include gave? productivity that that and stand-alone that within Or levels? numbers Frank, clarify, reduction sort you in levels to $XX operating million sort volume is operating of number North the Just number, does suboptimal

Frank Boykin

down. as volumes productivity less have go You'll your

down. go up your drive as and You'll it volumes have more up. productivity They'll

Stephen Kim


I And potential there. question, you've you're ceramic been the a you've a know adjusting things Okay. more maybe I Got know indicated evaluating while it. your And Yes, downtime everything. now. plants make longer-term to previously for taking strategic for little in then permanent

has proper level if for business? you level curious the in thinking's just -- you sense the how the thinking your Obviously, tell Was a your give us could if assess a lot is about But evolved there? of us how what you could capacity changed. ceramic

Christopher Wellborn

trying the short-term the to are, adapt as So to read managing long-term the get soon read and we'll in. get can course, as a demand. volume of at fit our we a to capacity decrease same Stephen, on on we time, that, And

Stephen Kim

Thank you.


Kathryn ahead. question from Thompson Group. next Our Please Research go Thomson

Brian Biros

the an and the I for an chain Hi, good actually to China global quarter, Brian gave I Asia. Thanks where the today, my update impact wanted on guys from Last Asia? us starting update today This supply on chain. comes of supply for you Biros from guess, morning. on question. are supply chain we Kathryn. provide out is add on given you taking could

wonder And Europe run heard previous the we've are also end I market, rates what approaching just you the Chinese LVT guys that specifically March. just of and at hearing. U.S. production, through see was to

Jeffrey Lorberbaum

is vacation there's a in Same the thing. of What normally year. period the happens first

inventories up the So that, anticipated. to but where going what didn't business trends have It start-up up you now you the close in to declining had gotten production build has before, into United everybody States. since was it

level of imports And on so the of understand also consumption. in present ago, the you really present for with sight based in what difficult it's because you're is seeing have don't the sales months also industry what that, come are the and to purchases it's

Brian Biros

about details? follow-up $XXX which and I you guess, million. sense. was think plan, know can more in you the a think a I original for was lower more I it. makes it mentioned the CapEx, talk That provide than Got prepared I And remarks, -- on around then number, the

mentioned million. just have is I CapEx maintenance previously guys And you think $XXX

So to the that What can for is you've sacrificed pushing CapEx? kind what off able being of difference talk and the you about been short-term off guys in there? push

Frank Boykin

already some able which not were already the $XXX Well, we're represents have started, projects see committed, of a so stop to what million, of major those. part you in million, $XXX that

you as maintenance. as down continuing innovation going maintenance be to and And and forward number well safety number is cited. savings that are just the the We cost much lower with projects important than

Brian Biros

Got it. Thank you.

Frank Boykin

welcome. are You


from ahead. next Cleveland question from comes Bosshard Research. Please go Eric Our

Eric Bosshard

and the and follow-up. insight Thanks XQ. detail on a for for question margin A the the morning. Good

decremental XX% to As about we and should the year, back half that? incremental should of the the than or in this XX%, differently XX%, think continue range, behave margin XX%, we expect it

Jeffrey Lorberbaum

with that going difficulty visibility to how cost is with like takeout, versus trend and permanent The call our and the lack to on are. of to are we the going decremental respond a temporary, times all said impact not couple we're are margins knowing is, already, of how going what sales

So Eric, right an don't on to give that now. that you'd prepared I we're think you to answer have question like

Frank Boykin

You with temporary also have governments helping evolve on thing another different they're are amounts depending how most of change economies. and to the and them going

We also don't know.

Eric Bosshard

the in look market, North tile you your second the curious then through a the you from the call standpoint. question, sounds price import your And volume terms as American and of know business, in visibility. perfect don't year-to-date, American I'm competitive North it, have year, data performance, on I and tile positive and

you where the terms of In what are how data in in of mix, dynamic market going, import do seeing -- share change the feel your or considering terms you the that's competitive price market shows? the that growth, and especially as

Jeffrey Lorberbaum

and has Yes. production imports manufactured we're up, ramping and would we've court is to our U.S. the commercial been production inventory. continued is projects. to to impacted percentage a of higher business due that residential What expanding The our tile ceramic reduced countertops. click I less ceramic say decline, The new and lower higher

Eric Bosshard

the the kind What from then a does projects, complete there that? of follow-up of these or an you these from is side one other that just of new And and Being is commercial, proper on res expectation? Okay. air when that. continue, pocket pressures shielded the on some

Jeffrey Lorberbaum

some down, I But think could we but you new really don't be home up. gap the declined, some a expectation you there in as an In the have states, could will have future. what Well, have shut think open been think know, I which balance. that I is we've could that starts

possibly other. the could one So offset

Eric Bosshard

Thank Okay. you.


next comes ahead. Please Michael Your Rehaut go from question JPMorgan. from

Michael Rehaut

everyone. hope morning, taking Thanks for and healthy out my question. Good safe is there. everyone I

rest look had given of like XQ any XX% but down America ceramic bit segment-by-segment, you're maybe comments in and of and World mentioned could you -- the terms XX% little I XX%, get believe world how XX%. too Any the hoping Flooring volatility ceramic appreciate to you of you be closer know that to and than maybe question, – is magnitude to if don't XX% that a Rest First if World, to more of as magnitude North provide of just extreme granular was that XX%. America relative North about maybe here, the sales. I of you thinking helpful. of degree worse I directional there Flooring would the across type declines like Rest degree around

Jeffrey Lorberbaum

differed I can In in World talk virus of the just outperformed first of Rest country by Rest first segments. about impact Flooring Flooring the with corona more quarter, the of other World. the The severe lockdowns the U.S.

an had we was more abrupt into Europe severe. and April, got As decline

Rest was more were increased U.S. construction are impacted but lockdown April, up and than to Of were the in projects earlier restrictive, open, not the and opening customers virus stopped, The In commercial more started many That's World. most countries and some commerce.

Frank Boykin

other World lockdown are businesses due The and Rest similar. significantly at, to the it’s are of the that more

we that mean can like look don't because I the week's weeks. last anything, next numbers tell you – don't So orders

Jeffrey Lorberbaum

Yes. data just looking or We're a four here five volatile at of weeks in environment. very

hard So that. it's hard good, to draw conclusions really from

Michael Rehaut

maybe have have I around the the improving, stronger second six my weeks, Right, – there of last the some reported trends actually really two the homebuilders some progressed. has been question is initial part have maybe over bit pointed of declines companies trends some have or have also Others month little products of a building some order improvement pointed lessening weeks, three as or orders. last to to even over by comments some guess, across of the Right. companies slowing

discernible on any commentary you're unfold the seeing and can around U.S., us in and lines? you As there's across throughout month, what seeing you're the of zeroing if how give ceramic you're patterns kind of the trends product carpet terms in of any other some the

Jeffrey Lorberbaum

down because and I different different at can't up tell can in trend you it. are anything, the and – a have really orders customers you that across see changes you points going

cycles, reasons. to remember, a the products, durable it's more categories. than floorings some of other other ticket And higher declined couple past general. thing that for than declined in One it's is price a in One

Second lower a this amount that DIY, at is is is, it's point. got doing sold which through better

to when worn And categories replaced have finally, other they're product out. be

can Our almost with products live forever. you

customers while. that for them the postponing a get when stuff So the keeps comfortable

with it's the causing a impact more So – higher pace.

The is relax that have, future we're It is this impact mean, country going or it's going could retail forward. I the which how it's will to every it can't at we stores point, I in the so the even could thing, the guess we be same that -- predict to mean, to should see guidance. be can't opening guess, starting other What hard is We restrictions of help almost could it be substantially really worse. I any better. why give evolve, the now.

idea. We no have

Michael Rehaut

XQ, I I a last Right. you an operating one, just one guess, quick understand. about clarification. expecting talk No, Can loss.

Just would that EBIT to – basis? on clarify, be talking an we're about a on

Frank Boykin

loss. EBIT EBIT. Yes,

Michael Rehaut

Right. Thank you.


from John ahead. Our comes next Stifel. go Please from Baugh question

John Baugh

down the pricing you where are issue. wanted you seeing you. in the anything morning issue? Thank of of into jump typical areas to seeing as difficult I And wishes there's a around like-for-like trade sort are best mix pressure? this operate, Or sort all and Good you period. price, primary mix

Jeff Lorberbaum

in $XX price pressure lot and a in pricing first was had mix first the some quarter. in quarter, mix the were was – we there both and decrease million There of – under a

open more a the suspect, would pricing movements market's as turmoil, there's of yet. lot as you not gotten because nobody's As

So to to we're it evolves. going how see have

yet – knows? who As

John Baugh

the weakening be you're happen -- pocket And home demand backlogs, with the subsequent following. a little you then flooring potentially working and could mentioned an where out? outlook same but what's the commercial start on as just a through in the months Would couple commercial follow-up a of area bit there air decent of for

Jeff Lorberbaum

to have go the end call you months. -- to means ones housing, new thing, ones, built projects six be in it, the which that The on. year of it, Same tend it. large tend smaller more, or the at is that a get In we ones

at be So the end. we tend to

there. it get we So

commercial starting out. either of projects or stop On them, the pipelines planning other side, the if get they pushed

to the business, opening doors, Even offsetting anticipate which and no close more, do retail just to basically have many or going It's Now places. hardly have the on, you it. in to -- they're been both has to out way we timing the so of stopped how have up things going that, you to going shows is anybody balance there's if up, either. residential

John Baugh

you, Jeff. Thank Okay. luck. Good

Operator: Capital from ahead. next RBC go from Dahl Markets. Your Mike Please comes

Mike Dahl

impact there any have by you to just as can follow-up shutdowns standpoint, the breakdown a your sales of dynamics channel? retail April of comment, sense given some customer Jeff, give Thanks. Just an of last your these way much is just those U.S., performance us Hi. within how a from channel had? to some

Jeff Lorberbaum

that I don't channels as hurt from was The suspect. also the residential have remodeling one inventory is at it the to most, was There the give inventory. you. you would changes some

expect. inventory Basically, typically, goes for that the you improvement first seasonal the the up in quarter

the drained. first in People built cutting were of little a system. started inventories inventories quarter, some get have bit the to which out So

then go on. you interrupted, ones idea the same side, that what's give delivering going And of with, even you we're to to ahead designers' projects an the samples going have on we were thing to commercial started homes

How to different the don't we it's are to the anticipate going is in problem how the near-term again, affect and if -- it's how it's worse. to all going change dramatically having we're And going know is better get really cannot we purchasers to the business. change or going

Mike Dahl

it. Got

... question second My Okay.

Frank Boykin

residential that, a would much categories. the if of -- other total much the add percentage tends higher run than Mike I think, as remodel pie I more to to

Mike Dahl

Right. Right.

up specialty some question, given uncertainty period. and follow-up of expecting you there Can probably can particularly debt over and to even some the back on doors you channel, pain some just could seeing expense retail bad being on what the talk your you're whether A open with real-time the mom-and-pops the felt about are respect you can talk anything What to? that receivables? in Okay.

Frank Boykin

quarter year DSOs heard the you in where mean as you of And a in were may our if in of the first much of compares recession, was bad pretty receivables, the this address be I'll a just we percent line end ago were quarter at I that about Yes, a the and to XXXX-XXXX that. with of note our a four-tenths running two-tenths compare year. expense debt percent. it

also that So last don't we you And really much downturn. significant any in remind the we didn't I'd customers. have movement large see

widespread a have customer diverse pretty We base.

Mike Dahl

Okay. Thanks, Frank.


from Please from Your Sachs. Susan comes question Goldman Maklari next go ahead.

Susan Maklari

Thank the especially you. you the And going that to given maybe last My downturn? to shift exposure seen today? first the is back outline for products what your to is business just question in we've the material raw Can us relative petroleum-based discussion.

Jeffrey Lorberbaum

carpet The and the from the largest carpet really base – base the to Relative biggest assets, materials. carpet the business largest it's business of downturn, portion really the material. the vinyl oil oil of has industry has portion last has the or vinyl comes

other product large different through it. of material has side, categories, use then a they the streams. And have all different you raw natural gas other On in go ceramic the

Susan Maklari

how we XX XX we how And raw through material coming if results? relative meant difference for ago, say, But exposure? should Right. years it carpet years to has shrunk in that about has think think where that was, what about ago, your

Jeffrey Lorberbaum

There will exposure. be less

buying that's other of though significantly gone to also a and have relative period happen less down, thing short side given the we're buying the we're one going just our volume in the decrease dramatic inventories the less, prices even short-term, in to The reducing on time, that producing.

buying we impact to reducing if run. the both have same positive running were impact at always would rates on So have are those of going it an we the and

Susan Maklari

Okay. And can you… then

Jeffrey Lorberbaum

polyester prices. the from oil prices, it, in One gas more manufactured down recycled proportion recycled are piece moving our to is not bottles with enter and into bottles the

Susan Maklari



a much benefit be there So as there? won't of

Jeffrey Lorberbaum


Susan Maklari

making you And a months the plant bit last And so? that also talk any U.S.? Okay. can are been you two progress obviously what's been in little there going with or coming has to How the LVT over your that together? is on given just change

Jeffrey Lorberbaum

continues improved downtime The and less in a daily on more the It the has basis. and throughput rates Yes. higher LVT to productivity place get during period.

period the the in amount sales we Our continue to were increasing. go up, slowed they but that

to load, making engineers The engineers transfer because still over here progress. Europe would we're but have didn't, from travel, been the knowledge they've when U.S. we normally, the of

half, go the the step It mechanical some at change second the running the material costs the both identified on well that we impact We've But we're will continue in the speeds and European progress improvements. quarter third as make to further. that will US. as side and

Susan Maklari

you. Thank Okay.


Laura comes go Capital. next from Our ahead. from Loop question Champine Please

Laura Champine

my for Thanks taking question.

operating the just forward. going has an And historical Firstly, generated relevant then context, Mohawk for when last is more loss? time

But about plan your how appreciate production flat your you your plan year-on-year? to uncertainties. when or I quickly could you you back all comments certainly production, get demand to do volumes

Jeffrey Lorberbaum

$XXX the I think the prices when went last enough. prices couldn't or a oil was to XXXX, in raise and we time had XXXX we loss soon

flow-through one period. loss the remember don't the -- date. in we exactly the the I So caused of

Frank Boykin

XXXX. quarter First

Jeffrey Lorberbaum

quarter second question? of First XXXX. part then And your I the forgot

Laura Champine

part was you're to volumes. your be to back second The when of planning year-on-year in flat terms production

Jeffrey Lorberbaum

for right But down week there's the and the of equipment. shut basis, we're starting a cost week-to-week operate a period a on it to of incoming really high for period. stopping, now, reacting a upon business and depending If we

we're business down the stopping weekly get and then really we are incoming ones, and times on related inventory a the we're to level, running it starting On back other build line. shut to and basis, on

Laura Champine

you. Thank Got it.


question comes Justin with from Speer Your next Zelman.

Your is line open.

Justin Speer

you. Thank

to volumes with I you assuming think a decline a breakeven revenue potentially First there you that volume question, do April Or view, any your in the are the particular, be relaxed? are just restrictions view is being improvement where you'd threshold in or your for you the going the saw you guess, balance second XX% of down -- consistent in in suggests product activity quarter? with the decline quarter?

Jeffrey Lorberbaum

it have We're we’re high don't still any for we going up assuming would on. we If it. volumes enough, money, difficult do quarter, it's the ready to but to be make go base the evidence to

Justin Speer


So productivity, the global if rough shutdown, -- it you in know give the but in me, out I break the for costs and terms dollar it productivity can rough of don't production ceramic. rough shutdown,

out guessing rest for the for give can business? much What productivity you the ceramic do break know think the based you quarter, for -- assumptions. I'm and drag If you're pretty planning of you will be for volume the on second that your of what us,

Jeffrey Lorberbaum

Justin, got we've like we a very said really not limited times of couple -- right now. we're visibility already,

so getting for And to anything not including in and quarter forecasting we productivity the volumes quarter. the be second are into really

Frank Boykin

and medium to have going we scenarios, know don't multiple work. and we which high, low, Listen, is one

Justin Speer

about very, I strong. I facility closures. tailwinds $XX from it. very announced an difficult. previously And annualized was to get number, very like volume did annualized you left know had the we thought that productivity improvement? it's about so I Positively know productivity went into us America in be North should North in I you quarter, going million Flooring And on Flooring in a normalized maybe with what that basis help what just about an consistent how more think understand productivity first America? scenario to some

Frank Boykin

Well, I drivers earlier, initiatives. much of put caller programs, through. these we developed savings is And one for the cost one we think is I mentioned productivity drivers volume another of the with how

keep year. of to on performs the answering dependent the the hate be going how so partially And rest to volume questions but I the same way, it's through

Jeffrey Lorberbaum

start-ups all shutdowns, the same the of the our the shutdowns And make, then productivity. part we time you into goes productivity, in all and pieces, the the more They're make, shutdowns, number. and start-ups

Justin Speer

million And with put the Right. a quarter. first a the a was such I popping low-double-digit drive there Or plant $XX decline that else But went almost it know you to high that but maybe probably led -- number facility that, improvement? that up was high-single, is LVT into there a volume helped in that? something also closures

Jeffrey Lorberbaum

significant it of have the period. improvements LVT the in pieces, was one did and

Justin Speer

Thank you, guys.


Wells Fargo. Your Truman next question from with comes Patterson

open. Your is line

Trevor Allinson

going for some additional online. on capacity the increased Allinson your recent to morning. bringing guys This quarters, be were helping efforts, for selling my Trevor Truman. to good of is you you sell and you Thank taking question. have thoughts In that Hi, marketing

on Just rebounds. your ability thinking you products about sell SG&A to guys once costs, balancing side? those ability demand to your those How about the SG&A take thinking are actions also out

Frank Boykin

correct. You're

sales volume decreased. We in the last expand we're the but conditions. with first have been investing costs The the align The and dollars and business, amounts, in line as percent present the has increased the with virus in SG&A steps were interrupted marketing year business. the dollar and the to sales taking basically to of quarter

we marketing more to on once view where going the business we get to costs, adjust going permanent a a reducing is cost once the and structure already forward. be We're expenses, we'll administrative basis, total get of

somewhere whether changes temporary At an little learn point, And or this week, every permanently. than making a more between presently, more. or L a are we V it's the we two,

Trevor Allinson

to taking about year-over-year pretty Okay. then a you basis sales driving last on Thank be pretty decline hoping in quarter North seem bit much out healthy and factors? a bucket weakness America, could Flooring with whether little it's Maybe you right. market. top more housing what's All a market line on you. could And LVT was there. just share discuss other the I or line

Frank Boykin

doing, channels. stores in LVT the in there's the some in is the others. even inventory the the In mid-single sales doing installation to some continuing if industry measurements take period. from digits adjustments in on The channels, in channels, and in carpet were declined open they period, though stop the share stopped first they as going some

that get going of better hoping things will we're to happen business sure to it's not long whole these going upside the going down. mean, tomorrow many if it's or has turned I how but forward, So take. We're

Trevor Allinson

you. Good luck. Thank Okay.


with Your next Instinet. question comes Nomura from Mike Wood

open. is line Your

Mike Wood

Frank. back, Welcome Hi.

picture you big in outperform money going profitability. you're and to a clearly to their industry guys likely XQ, lose suffering to with in of here in always is Jeff. First, have expectation for Mohawk question continue but the terms

knowing many of And what closures? actually share? of quickly, your your some business before struggled competitors to COVID-XX, are thoughts may closures, that And doing gain how so permanent competitors and even your are you see how business what many

Jeffrey Lorberbaum

could are ability to markets, operating. long liquidity. players sustain there in product continue their different their businesses, their and struggling to their it how detrimentally ability countries categories, with said, you before And in upon that affect different As this different lasts, depending were

the to at these trying this going own to At deep we the point. tell our this but this to control at how prepared can't in minimize downturn react moment. at we point, are long to And reverse trying all we're on things to it's go, we quickly, moment investments the cost Because or and focused pieces. how are

Mike Wood

fears been in particularly are LVT risk the have thoughts China, go what that oversupply There you Or as if are slowed more your there? retailers here? any forward LVT? is Understanding seeing had Are question. follow-up demand a price erosion of evidence of declined. long And we it. Got now but growth a of severe closed, many or in that

Jeffrey Lorberbaum

Over price declined years, the the past of processes has improved. LVT production have the as

the that's you continue prices, to with short-term, the to happen assumed go have as going going capacities, In while. when don't know get for We a you through. I older what's

pricing. how Is As it is plays run the same the out. impact we'll to all it materials maybe And assets. at all our But - some in same people have product occurs that will the categories. decreasing? try thing So, are raw to time, see the the


comes Your Matthew from with Bouley Barclays. question next

Your is open. line

Matthew Bouley

much questions, productivity. related taking just if was rebates I America in on quarter? productivity? you -- Thank Or disclosed all. you my for a think the that back the was LVT to it's I those don't small last don't There of Hey, how million, -- know $XX that -- it productivity, was North

Frank Boykin

don't in it if don’t money. But remember is I limited I it was There I know was only of But small. small but productivity. a was a shows you I up. There where mean it think know don’t amount

right quarters. I'm sure, spread was exactly over was to I I dollar and if not about think it it $XX million the disclose. amount got three

Jeffrey Lorberbaum

it's but is number. it said, small And in Jeff like a productivity, Yes.

Frank Boykin

it an doesn't even flow then amount. And through,

Matthew Bouley

in from actually mandatory places? Got since what the shutdowns. to you then fulfil guess it. you That’s were discussed Whether to perfect. it’s customer? I product able were there places where extent inventory in those shipping And

not were XXX% fulfil to you able of it. Presumably,

there's result that we move Thanks. the pent-up actually should business of So, think, as any sort a needle? would

Jeffrey Lorberbaum

a is may were maybe There we satisfy to places know how customers to it have weren't knowing, where or And I other don't it. to don't waiting sufficient on measure of demand. products. all it. the inventories switched be way The the

Matthew Bouley

Thanks Okay. understood. I so much.


with from comes of question Bank next John Lovallo America. Our

is line open. Your

John Lovallo

will shift we've me kind in easier harder, happening been for in level. of guys. surfaces COVID-XX over from consumer just decade the squeezing seeing maybe past towards Thank preference higher a Do one, the you anyway? to first you that that Hey, clean here. I think expedite guess,

Jeffrey Lorberbaum

I you your choice that don't know it's for what choices to of flooring. The of have, it, the what is how made purpose impact it. you going in value in attributes are what the are, proposition any like the evidence says product flooring

at an I this really see having So impact don't that point.

John Lovallo

Is manufacturing America the lot of world, this on quickly, guys complete a that just in four rightsizing in of Okay. footprint the point? doing wood largely And work you and then that. at were North rest

Jeffrey Lorberbaum

did engineered plants plant and we Czechoslovakia, we we sold a was States, the manufacturing wood other we closed still United and wood solid in in have products. What plant an

take alternatives So capacity their less place. those we have markets for as

John Lovallo

guys. you, Thank Okay.


Your next Jefferies. with Phil question from Ng comes

line Your is open.

Unidentified Analyst

Collin actually Phil. is on This for

Just to if you XX% margins may the wondering fair talk could in XX% decremental how different segments about to your guide? relative

Jeffrey Lorberbaum

you there higher color And goods fixed we're Not fixed sold. with cost. two-- that of to say, I to XX% segments sure would three was is varied the prepared get the into the the much there's detail. that from The of in only cost ceramic we XX% gave cost segment

Unidentified Analyst

inventory on the the your expecting helpful? just over any flow to changes that the out months? just then working thinking free levels you given color on as of you're that you capital conversion. be How give you couple about if past And guys manage would And cash how play are Okay. can

Jeffrey Lorberbaum

capital, because then downturns, out probably that's inventories, to going able Historically, done cash reasonably time. flow to some declines push past receivables, payables and and we our of think in this I in has also been well have working happen

we we've be stated this current then our in that consider we the reduction that expenditures also back and not think to significant thing we've environment. made in other need stock I is the capital will buying

be cash move as of pretty free through rest environment we So should year. the to the strong flow relative the

Unidentified Analyst

Thank and you good luck. much very Great.

Jeffrey Lorberbaum



for Mr. time. further call the are remarks. will now I at questions back turn There Lorberbaum closing no this over to

Jeffrey Lorberbaum

managers and different We business adjust is by Each position strategies, a different are The geography short-term we're approaches the actions. reevaluating a appreciate product circumstances based taking everyone and taking on and week, strong we're medium Have our category in We're day. time today, in markets better The to both and that government call. your nice actions the the a position. will We term. on call. and in. changing emerge appreciate on to


conference today’s concludes this you gentlemen, call. and Ladies participating. for Thank

now may You disconnect.