Mohawk Industries (MHK)

Frank Boykin Chief Financial Officer
Jeff Lorberbaum Chief Executive Officer
Chris Wellborn President, Chief Operating Officer and President-Global Ceramic
Stephen Kim Evercore ISI
Tim Wojs Baird
Sam Darkatsh Raymond James
Mike Dahl RBC Capital Markets
Keith Hughes Truist Securities
Eric Bosshard Cleveland Research
Phil Ng Jefferies
Kathryn Thompson Thompson Research Group
Susan Maklari Goldman Sachs
John Lovallo Bank of America
Matthew Bouley Barclays
Michael Rehaut JPMorgan
Call transcript
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Good morning. My name is Megan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mohawk Industries Third 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. Instructions]. [Operator

Boykin. ladies XX, conference would XXXX. to Mr. reminder, today, being now gentlemen, you introduce October Boykin, Friday, Thank Frank and a your is this recorded like may As begin Frank conference. Mr. you. I

Frank Boykin

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

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

joining to today addition Chris, Jim us Corporate and Jeff is on this Brunk, our In call Controller.

previously disclosed, Justice the to subpoenas and from we the and filed related class Department allegations Exchange of Commission action a received Securities in lawsuit we us. As against

our assistance that they concluded and Committee With merit. investigation outside completed allegations counsel the wrongdoing of into Audit are legal of a these thorough internal without

opening continue investigations over we will call I'll governmental We for turn do merit. ongoing has to defend Jeff are believe now against to Jeff? cooperating with fully lawsuit, his not and vigorously the which the remarks. the

Jeff Lorberbaum

you, Thank Frank.

remotely. from conditions, year's operating as this expectations, more trend investments well over our world people home levels. in are and income exceeded in increased Under significantly substantially sales purchases. with results working as pandemic homes quarter recovering their new third time remodeling the driving Globally, spending all home continued and last increasing Our

inventory increasing and pandemic. quarter our businesses channels. Rest due as were the in of to Northern Flooring higher delivered and All the the the customers businesses stronger Russian geographies and in our by World Australian our impacted European, of demand distribution results less were strongest

Our segments by also being commercial America and affected projects. while more COVID Flooring postponed Global Ceramic improved and North substantially

outperformed plants Our their and output categories, offsetting and worldwide our our vinyl about in laminate, our $X rates currencies efficiencies. million, Fluctuations in sheet declines other negatively LVT improved with EBIT new the and exchange by most euro. strengthening impacted

products the $XX we exceeded During by the and about as our inventory our world. million, period, across plants up demand declined for production, ramped

period price capacity. markets logistics with Our have in limited in higher manufacturing we announced operating, training challenges increases the was hiring, by and and product some and in increase To selective cover costs, material categories.

on progress In schedule our to we we future our demand significant conditions. assess savings. made postponed levels, have line actions higher are and previously and in planned with announced restructuring have We restructuring some response while projects

businesses procedures responded crisis, as distribution guidelines. the focus have that and Our Throughout our offices, exceed public keeping we systems, operations on safe. our employees has remained to implemented our health COVID the

our contacts the the very world. the customers remains collaborated all spread with containing testing of and Throughout tracking limited. within improved Even cases, are We successfully performance our our our future our around people each identified protect operations. pandemic, support and all in the visibility the other to have period,

on increase, and commerce As stimulus COVID cases restrictions reduce governments activities. may expand

and is change. remain Business uncertain. growth future could low, the inventory investments addition, consumer channels spending In in

end of we $XXX $X.X balance quarter, bringing at maturities. the billion our In in prefund information third and to our quarter, million of market debt In cash market. short-term We of pay long-term to the the billion advantage the future cash, generated continue favorable the trends $X.X environment to to evolving monitor to health of we conditions took and second about rate the our respond off period.

We believe the to turn purchases stock recently an improve. third the company's stock review as will the stock. pandemic the $XXX repurchase attractive acquisitions Frank call represents opportunities I'll and plan We investment of quarter to of economies Directors and Board for our growth, our approved of million pursue internal investment additional including a and our over financials.

Frank Boykin

for were segment Sales a Jeff. performing the you, Thank X% $X.XXX basis the of and up billion or reported best. World with constant on quarter as Rest

previous a year. be for impacted more compared to note, will quarter, our by sales next As two days the

by reported actual be year. offset Our later today. increase increasing or as charges, these lower the XX.X% in from mix. inflation, included productivity gross was and Year-over-year XX.X% excluding of primarily The amounts higher volume, margin was last will XX-Q price driven partially XX.X% by items filed

million, XX.X% or $XX in charges. SG&A favorable versus $XXX prior excluding year, sales, primarily reported impacted was was the or XX.X% by of This million. XX.X% of Our as productivity both

the Our $X of for cash. restructuring charges quarter, which million were $XX million was

All savings our with of and track our restructuring plans. are other original on

improving from $XX and stronger year. million. last The raw by was $XX price XX.X%, increase productivity million declining was driven was charges by and partially materials expect quarter interest offset next mix. approximately volume, excluding be margin expense Interest X.X% operating we unfavorable Our and to

Our XX% this was compared year. year, at rate to last tax income XX%

ranging the expect next year. quarter be and then from approximately returning XX% to to We to X% levels, fourth historical XX%

charges year. was share Our XX% $X.XX, last excluding up from earnings per

were business $XXX the with segment, our best reported, sales in Global X% X% almost million, constant to this up as performances down in segment. segments. non-U.S. Turning The basis. Ceramic turned businesses on In the a

XXX operating the up Our basis was to XX.X%, last excluding points, compared X.X% year. margin charges

in XX% In American major categories, challenging profitable hospitality. projects as which X% Operating compared end the increase office from down XX% In except reported were the and and Rest supported in Flooring the growth growth sales $XXX exposure excluding almost partially sales and markets, basis. inflation. decrease by was slower the offset and in World million, this $XXX with The with year. by in Our X.X% A was lower lower earnings all and million, segment. North commercial with X.X%, end was and a along lower top-line reported favorable price margin on driven volume mix productivity segment more segment, Northern by unfavorable a postponed commercial offset strong remains market, our by Flooring partially margin constant mix. last charges to price presence larger to increased of Europe as up productivity were

Our price operating operating margin corporate points drivers by XX.X%, materials, main $XX XXX up productivity and volume, raw favorable million. and lower that's basis eliminations In from excluding segment, charges last offset the charges loss was The unfavorable mix. partially excluding was year. the were XX.X% higher

Jumping balance sheet, total quarter to the $X.XXX our a the at expect $XX ended billion. the loss receivables in year come We million. at of about to

Our day XX improved days to sales from outstanding XX last year.

year the dropped billion reductions as with at ended quarter XX% inventories productions all sales. lagging and or businesses in $XXX million significant saw Our inventory from $X.XXX last almost

Chris? billion inventory and at Our were of billion amortization of capital details call of our assets the I'll and to cash the days sheet $X.XXX year. short-term finally, with investments the estimate almost and X.X at Fixed to expenditures $XXX of performance. the million. EBITDA. estimated million, were $X.X third flow Chris leverage debt XXX XXX now quarter D&A We adjusted included total balance strong the $XXX expenditures be days to billion, cash end and quarter during at at times quarter versus of the capital $X.X provide turn $XXX annual and remains segment last over and total depreciation million. of with And million, $XX about to

Chris Wellborn

Frank. you, Thank

quarter, basis. the X% sales on For segment days and our Ceramic currency Global increased a constant

excluding restructuring of income XX% grew margin with year. costs a XX% operating Our last to compared

inventories but low Most run present demand fourth demand sales postponed in demand increased visibility sector as U.S., the of the hampered in Overall, we showrooms have of improved commercial COVID, In quarter, residential our increased sluggish. both by well and customers' experienced up All sales of traffic solid, The shops. substantially while sustainability commercial our the significant ceramic plants seeing our and the our quarter. with stepped service. retail businesses more rebound of limiting in and third is to the their our our meet galleries growth and are as a inventories capacity remained to projects. was all in residential period,

to construction, period expected are year. from from prior but have new improved We next the shifted Commercial is to sales lagging. home sales commercial still focus through increase which

slightly during even as Our the inventories quarter, increased decreased we our levels. production

and We freight have higher increases operations to costs. announced cover price

Our plant our increasing improve as we countertop are mix. and quartz performing collections is style planned, our to higher

restructuring Our executed initiatives we are planned. as being

and lower-performing SG&A tile We've We reduced consolidated discontinued products. and distribution have labor also closed facilities cost X manufacturing and points.

Our Mexican U.S. same the ceramic of many trends as business the experiencing is

Mexico collections manufacturing in order optimizing are capacity imports, replace in running higher-end our backlogs, SKU To are offering. reduce production and porcelain to new shorter sizes. plants larger near we Our quantities operating

exclusive with being footprint our sales We by are expanding our shops opened Daltile-branded customers.

significant business growth its Our best domestic export quarter its in with in its both had and Brazilian ceramic history, markets.

capacity demand price that production inventories are we announced allocating are have rebalanced. will rising a We inflation, offset as into year. at full presently go and later increase consumer increased operating this effect To and

to our cost. create upgrade and assets, Brazilian our investments We products are our continuing higher-value reduce

ceramic the period strong inventories Our residential delivered as in business European results replenished. sales in are channel the improved and

by lower higher achieved reducing in the levels category commercial projects manufacturing August shutdown exports higher-value around hindered and substantial reduction periods. We Our the traditional performance world. was by for

higher service. pressures inventories the to during period to our pricing during period, offset increase service lower by improved, the we SG&A and and volumes productivity, inputs leverage. rose production and were As will our continue enhance Increased

Our COVID spikes which major cases, could restrictions markets impact due in future in to Europe are recent increasing demand.

lowering low The ceramic by channel our growth political even results business in businesses, Our recovered than strong Union stores. inventories last retail performing was Eurasian the company-owned other with construction exports. better new the and is constrained our driven in year, period. sales our Like and crisis the the our in Russian

plant strategy that offerings. new as other ware is our planned support sanitary and coordinate will with Our premium with operating products

shortages to rates. year. period performance segment approximately quarter increasing though period in inventory improved our hospitality, America most. with quarter, higher sales due the Flooring weak, office exceeding and employee impacted excluding improved the the the period margin due increase X% prior X% Inventories to end we the fall, demand improving them with low the staffing sales. remains the restructuring charges. prior operating continued segment's reported, Commercial retail limited to were from absentee expect from Revenue through the North as but production of to difficulties in income During the by levels The residential and substantially decreased our and

service demand, As our production levels aligns are our improving. with

savings Our and progressing cost expected manufacturing, programs achieving SG&A. and are logistics restructuring the in

business prior carpet period, residential remodeling retail Our best. performing improved with from the

outperforming and products average fiber other selling categories, impacting which price. polyester is are our Our mix

implementing which runs improved price shorter increases cost. progressed in market. but Increased are To higher we the our higher As overtime achieved improved we the our manufacturing through our production in rates, period, costs, and service cost. cover productivity we raised

Our Commercial and as easy rug restock their use reduce way sales to rug the decor. postpone an demand as as period, update flooring retailers home and their allocating increased inventories. we consumers are projects. them production increased depressed remodeling construction remains as businesses In our

slower deep a commercial sector. sales second our decline, recovery improved While anticipate in we the quarter from the

During installing production quarter has unable the line we we begin year. our enhanced postponed with our our channels. the in in strong growth should fourth are that introductions. laminate are features, new distribution sales running and laminate are waterproof of beauty consumer operations our provide to collections and mix. have period, new The and next To Even expanding laminate new laminate and satisfy capacity, attracting demand production with more increase our of product at all full had interest a

wood have increasing price pace, LVT operations higher compensate rapid collections improving continued collections we in with Sales our tariffs sourced the period. implemented our reduced collections, new and features. manufacturing our at are To to products mix. product wood their for our of produce to expand a commodity on unique share our and premium residential rigid repurposing We increases with launches

in are progress to manufacturing from our to initiatives in significant fell Output of COVID-related our although make facilities. Europe. continuing travel We behind interruptions productivity is some due increasing, U.S. schedule

Belgian operations. European LVT that to being engineers used to U.S. in recently have relocated our are enhanced implement the We processes

market Our efficiencies. greater and due in improved share, collections to continue to the category vinyl our sheet take cost

margin For XX% of reported. as The a the reported. Rest XX% quarter, with increased our World segment as segment's Flooring operating sales income approximately XX% of grew

people outperformed During expanded reducing its discretionary and other the sales at with the and time of period, more segment remodeling spending. all home as home geographies spending in

cost meet expenditures, across low lower Our product our the marketing service rates our vacation SG&A levels. our categories increasing higher order levels in maximize To time With as less plants period the we leveraged all inventories in August to off and remain and exceeded demand, business. consumer service. production production higher took

Our our more end X Flooring segments. commercial has Rest of the less other participation affected World that in segment negatively markets

from Europe. began Europe. was growth shipping support manufacturing Our Russia by laminate sales We higher laminate in to capacity demand limited in

the improving differentiated strong Our product and and attract new to our reduced industry-leading and launches our and We the brands marketing period. mix. in innovations our consumer, continue postponed products promotional are activities

sales quarter, efficiencies our as most our of the LVT grew During anticipated. collections improved as and production the costs we levels,

adding market LVT increased We as quarter, In efficiencies. our new our products with and position. of The Europe, we of demand. enhance we continue category expect strengthen improving yields our our and and to the operations and we shipping be productivity that shift cost next fourth will a faster rigid will the is the support rigid also weekend growing to in will our utilization features generation material LVT expand begin

sales the production in and value our best SG&A. our provides increased positively flooring our our as reopened. impacted vinyl sheet better volumes cost the retail and customers market, Our leveraged Higher

performed with consolidation and shift significantly the Our Russian adding higher our plant in our wood completed utilization in operations of margins. We sheet manufacturing reduced vinyl expanding plant well business. the We're cost. satisfy and Malaysia our another to

our us We to improved satisfy allowing increasing demand. have output,

material our vertically through lowering initiatives to gradually integrate. are our costs We

after Our costs as well. insulation increased our our declined, reopened. material products were as prices volumes rebounded have lower though remain margins Even our strong selling with markets

increases have raw Our are costs rising, material compensate. announced and now we price to

Our boards benefited material strong from prices. lower mix product demand, improved business and

investments plant. we manufacturing our in our cost expanding glue energy We also new reduced and the with made

business of and With New Australia success I'll carpet well positioned that, Zealand company Jeff. performed The with strong the Our margins with return branding is hard growth, product and our improved updated very strong product the offering. in surface. call sales its both and to well

Jeff Lorberbaum

remodeling into spaces have entered to backlog Thanks, for participation normal pandemic due new and and slower are quarter home sales The as and activities the a transformed expect and growth fourth other across margin our fallen. as has living improved solid levels. the lower in inventory the forecasted with in industry is to channel schools and fourth quarter has seasonality, offices order trends Chris. Residential our We we strong construction and enterprise. remain

with exceed Our higher-margin production to commercial channels with sales. We likely starts. projects will slow, service continue to anticipate inventories outpace be levels improving completed as our new rising

costs and track are to are our implementing plans We restructuring on reduce as expected.

by demand government limited and will be many evolve. to continues how visibility Our uncertainties, including restrictions

continue, of Assuming $X.XX anticipate X% a we the economic trends fourth our be EPS quarter to approximately the current $X.XX with to nonrecurring rate period. tax for

responded has as from restrictions expected changing Our economies business remodeling to are forward. levels the market The next COVID crisis, going present commercial to should improve new its year. and low construction varying government increase business and effectively recover Residential conditions.

to aggressive we'll glad and defensive Our your strong liquidity us move that, posture questions. a balance be generation will to more from to cash allow strategy. With take sheet, a growth


[Operator Instructions].

Kim question Stephen ISI. with first comes Evercore Your from

Stephen Kim

is be share There there first release. ask been company I'm your wanted the to time, any if share investors changes, did Board's I a it results. repurchase earlier would been the to have there And between the authorization good comments in in the which of press up litigation. a internal questions some looks lawsuit think repurchase there its share and wondering, the investigation same Board's lot meanwhile, at to -- around that activity, question buyback? recent of were about language your we've release. litigation from important like, of reason its conclusion about might the when relationship getting the and the the on and step Congrats today's you address a regarding your

Frank Boykin

and a think, of a is good couple question, Steve, I that. this points, is That like make to about I'd Frank.

First, investigation last stated Audit that quarter, we Committee's substantially the was complete.

to an Audit This quarter, in Board's that the second Committee the authorize our action our view but indication their clarity our decision purchases And the think an that is of improved it's the allegations we for is concluded statement class additional complete value without authorization, investigation are stock position added the regarding the stock, of I point to merit. $XXX think the the on has of and lawsuit. that of also clearly I the indication million an

Stephen Kim

sense. It That's Yes. makes encouraging.

Okay. primarily relates and North next Great. North ceramic. My question to American America Flooring

as And You paused pausing for indicated seemed were two, reasons because restructuring: you there and main that because be X the one, well. need it restructuring like inventories your the demand's rebuilt. to surging;

rebuild big inventory a So of what to how understand is. trying the I'm is factor

stays demand it as say let's resi strong is now. So as

into stays be year? would to with Let's say once you likely capacity? XQ Or do you that your comfortable can And that inventories demand, you happy of think and XQ? restart -- a be it's it capacity you if next it level? to back do it you do inventories over good restructuring present When situation? to shape same, current strong. just going going in would think like further stays really you program do in reduce spill the in think your to Is the are would your your Or get

Jeff Lorberbaum

through What actually we think point, cost of about already the some the reduced the -- we same only total. point, I the the it. restructuring limited the XX% we this of third quarter. postponed a $XX At was by We this we million savings and executed haven't have portion of At said $XX million. of about amount concluded the of it's by savings

on to continuous As we forward $XX a basis. before, we $XX a said million period expect million going about

of costs a business. the It just So strategy on we changed was it. of haven't portion cutting and limited the restructuring out

we and changing quarter, it's as through. and the the fourth continue the up all and inventories down. and go increasing dependent to we're adjusting keep going we the inventories the evolving business first We'll how on demand inventories, see quarter On the between

a be the the rest inventories the some for shape to we in in the slower capacity year. you'll cases the us limitations, see of out coming the of us take expect year. through middle in We in peak first increasing of periods where And the to reasonable quarter have periods


from is question next Our Wojs Baird. with Tim

Tim Wojs

nice want job X Maybe echo, question, and to here. and my I just the on -- things. just in quarter the guidance

to is growth how is? And commercial. from what business commercial residential residential margin versus the versus perspective North America? in lines first parse way maybe then between there the Is the a performs any So X on differential out

Jeff Lorberbaum

of piece of business. are higher-level European Let's just We're have go very and substantially. U.S. and it next All ceramic could that, a parts to are total being that projects to commercial you more over ones The being through. where about significant. down our the view ceramic our have back anticipating pieces multiple to get XX% and the of but larger In years little we is much give kept the XX% as commercial significant new Existing a coming businesses. take somewhere are it limited business time U.S. slow The was it. carpet, a businesses forward. with most recovery better, year completed, have we are in commercial have parts of that business

Tim Wojs

Okay. fair to Is it say commercial's down?

Frank Boykin

The a too, higher-margin is, thing, in business just it with residential like it one emphasize the much is there, commercial would down other is I to Tim, side. to as

Tim Wojs

guess we've trying in get seen improvement just in Europe? in still in flooring business. I line to seems improvement okay. of the Are they then Europe, sense where margins frame way there Okay, to a America any given types the product rigid with like LVT of just LVT, other there's it that are margins of today? And opportunities And Europe in North is kind on the

Jeff Lorberbaum

margins average operating in high The as It's Europe much of our better. as contributing is LVT business. the results. our are positively not The to

States. we innovative the and basis specific to to we're getting as the X months. to new which continue keep In X continuing had to them have said, it's behind to is productivity actually of recently trouble In and cost, U.S., brought market a market the actions United we've of lower the now. U.S., they're we to We bringing in into cost expect get the ahead improve. engineers us Europe, which one We've the further the marketplace, the other and on going ahead just by to features over,

we'd plants, -- and earlier So in process the pieces in the Europe with out the align we're a had updating them to of in adding it. weekend left they're that I to here on to shift following and rigid is the to the we the get to U.S. we're products and it to there, going over we fill go. increasing think behind, need to demand where


Darkatsh Sam Your James. next is with question Raymond

Sam Darkatsh

you quarter quarter why figure guidance more in if than getting restructuring Two see might, fourth in to the knowing higher, quick that I'm did what looks you're expansion the year-on-year of not that case, that beyond much might margin in. we expansion third? in quarter It margin saw far coming be fourth the we I going the production mild you as questions, in implies your to have like incremental your Why conservatism a might a as pricing, the on savings is that third quarter. fourth be trying specifically. the

Jeff Lorberbaum

the with last a they -- listening and through be the fourth the period basis, the On quarter looks third you're a happen continue the sure and to to we of it's going costs all marketing impact how and time a with activities to huge expenses We're like the going what's going things cut to take it lot relative lower residential not COVID. have our going structures to amount marketing about to we at were compared European COVID cost will our business. when normalize good, a but of -- go so you and to forward our where quarter are, the ran as to each forward. in basis the look third businesses we're vacation pieces sales, our and year, through. our back capacities we in the capacity on At on In the the other same had quarter,

the stay it's open. the going with European And So far I but by are they're day. essential, it appears to changing businesses, mean, customers that considered our

to but we going moment, can't tell the at good what's happen. that's So

don't bottomed yet commercial if not. we businesses, or they've really Our know

in have really ones completing. up, fourth they're coming place projects put things how together go all through completion, new coming were the -- determine quarter. slower the to balance are to as out You and to The hard are old going they're and we it's

our to those of trying So we're all considerations. in estimate, reflect

Sam Darkatsh


I'm Second cash somewhere fourth inventory the I Is I Frank, positive back free you fair free the of question, quarter? that quarter how if flow getting to in guess, envelope, the the flow a breakeven might. cash ramp. on to somewhat in representation area, depending see

Frank Boykin


going be I in think it's to that range.


Your next question is from Mike Markets. Dahl with RBC Capital

Mike Dahl

America I have Flooring on X questions North specifically.

The first, I'm went obviously moving the XQ for about a lot and curious strength -- still you possible which in consistent talked the of market. the pieces if it's through with LVT, seeing is

were down overall sales Your North Flooring America X%.

was what were -- sales? North America LVT, Excluding Flooring what flooring

Jeff Lorberbaum

out that can I limited our capacities don't and information all you at production the tell product were level. categories We give by that our sales in the levels.

into million quarter With of go inventories the higher that whole with third we is taken business inventory and usually the $XXX reduce the of out that's been them.

picked that. limited had the whole were all nobody carpet one area, whole the see The where industry same workforce the sales whole So it industry is. the could decline categories, the the by the with industry let in up. because In specifically,

the significantly. and pressure hiring staffed So the on it workforce there's then in back a training it getting huge and up, impacted

restrictions more Flooring the other in North on businesses. of many than had the it America So business

COVID go we goes absenteeism, long it, the come when we'd the absenteeism with then they the But have where way down up. and home, people a training, like still be, We're in protecting are impacts. having still to business. but inside let We to people we're

our So have to the have ability would protecting we rates to raise people all them. liked is as the impacting high production as

Frank Boykin

on the was America commercial, too, before. just we about Flooring had And talked Jeff North in biggest I that as had add would single Mike, headwind sales

Jeff Lorberbaum

margins. the on And

Frank Boykin

Right. Yes.

Mike Dahl


America the Okay. just commercial, within positive with That's still hopefully, helpful. or in seeing my North fourth be And are the headwinds still into you're that with given to under puts anticipate for and that kind those do your there, next bottoming. guide, you and -- quarter takes of sales pressure? ties question But

Jeff Lorberbaum

more expecting the of We're same.


question next Keith with Hughes Your Securities. from Truist is

Keith Hughes

to Flooring Two questions. One back America. North

you're I at point look LVT while. market? been know where the you've you're now segment, the you a at a do As think for your in you at growth growing underperforming

Jeff Lorberbaum

have think erratic, I The we numbers with because the really And imports ceramic. the get you market. numbers in to we're imports. growing the that based cannot are same thing hard by -- are so on have the the been and

take in the imported the assume that on reflects volumes going You and can't what's marketplace.

it's hard really the -- that's anything So estimate this point to at imported. sales for about

Keith Hughes

second its growth have too. That from build increase? growth ramping are was think Do some numbers there indicates is just ahead more XXXX? this you my high, inventory that question. erratic LVT The some up particularly and been import limited in of Or price back

Jeff Lorberbaum

growth rate same And going base growth to has and as rate grow the been, is continues growth hard bigger, the It's to not it's going just but lower rate. slow. to at One the tell. get is at still the I rate to is going think it grow a to

Keith Hughes


of negative could question and this growth ceramic, called some in flip talked Second guess, it's reemergence you some about, term? you in in the pricing within for that time. price/mix been negative something I that or residential -- third question, and that to of With the out the some positive discussion, the is near

Chris Wellborn

Well, would pricing. Keith, less than typically commercial be residential pricing

pricing. expect So wouldn't help I on a

been pressure X. Secondly, the with under pricing far, in, the on those coming so has imports

of expect I So don't lot help -- whole pricing. a from wouldn't

going help don't us. the We other is But increase residential to transportation to are offset taking -- and I costs. price shift to generally, a

Jeff Lorberbaum

things. ceramic's isn't where helping the countries exchange imported rates the countries, of from, X The months, their most the coming which have past weakened in


question from next Bosshard with is Eric Your Research. Cleveland

Eric Bosshard

it little What's going I'd had, that goes business, seems on you just conversation seems environment excess need something? as more specifically, look here. in But It of in capacity And bit share. for like get create where wrong like be could some seems I offset competitive the commercial the business? this On X industry. the months, it tile understand am more U.S. Or currency? looking less forward to I take love tile per a to it environment. this I price it costs. pricing or more U.S. could next Am volume, we a with missing a aggressive for X pricing with the And the from would at sense to create your or like

Chris Wellborn

going think lower-performing manufacturing have But you also restructuring North distribution manufacturing I we've planned. as to business already in that facilities as is remain consolidated the X In and reduced executed States. tile SG&A, may the and products. America, initiatives we are closed competitive being United we've know, Well, points. implemented And

So in where same pricing we an I but think the we'll reducing is environment at our cost be time. competitive, are

Eric Bosshard

I Okay. a what's guess trend just in as this, putting terms across -- pricing? Are are through the within the increases of of Or -- well? rest the the is industry industry price follow-on others

Chris Wellborn

Really, process the we imports about this we recently competitors. have increase, All we implementing we -- price the that declined yet we other and know of point. that know implemented have the at do or price know don't can don't average in of but a

Jeff Lorberbaum

freight. basically increase is focused on price the The

the If The you are country, rates around tight. dramatically. look are systems transportation freight the up going

only are everybody And us. moving up, going who's so all the anything to not cost of go


with question next is Jefferies. Our Phil from Ng

Phil Ng

U.S. your the U.S., versus the international Outside to a faster commercial piece seems on quarter. snapped Congrats much have back solid business in

So the I'm next you playing dynamic should better like just just expect here? and maybe your improve of lack we trying to that partly to quarters that's sense. few -- a inventory. out as Should sounds get labor operations catch-up It due

Jeff Lorberbaum

-- give -- the... I me question The

Frank Boykin

the well heard on we sure question not our real I'm end.

it through more can time, So please? go you one

Phil Ng

much results sounds Yes. -- than problem. your Should U.S. yes, we -- it looks in did like the no It better international like

partly sounds to saw labor in expand of do quarters? And like that it's on Can catch-up It the a expect the to that? U.S. out U.S. could dynamic well quicker due you international inventory, lack trying play Just few in why snapback. next understand the that you as

Jeff Lorberbaum

part businesses the regions Europe, first performed The the it majority which Northern that are of in that is our of better. --

margins, higher so a commercial percentage the much have our the impact higher businesses our businesses. they the didn't residential in they is Second and same volume commercial on are than residential have and commercial margins sales of

-- the had over we time, LVT same there the performance better. At suffer. also is they So

shifts doing Russia demand. we our We of and demand because have profitable occurrence a satisfy better new had that our vinyl LVT sheet and think well. then lot layer in We're the the well. to we both is the of plant in competitors business and also the we turned Australian that in also pent-up And business increasing were than And a positioned really it's Australian performed marketplace. in

Phil Ng

that the in your where are on Got from And being help U.S., terms mix? some profitable. at -- levels understand of you the evolution U.S. are on that to in terms are evolution where your for it. to us in capacitization color LVT lines? look watermarks Any you standpoint where That's give of way any improving of forward going helpful, an Jeff. us And then with

Jeff Lorberbaum

X behind to we're The bringing think reason the the X X, all about people up. we're We months, are so maybe catch over the European businesses is profitable, European one. and to

in innovations and with of Europe, us in addition, products step ahead new they're the marketplace. one In

we which up So their as them. we'll be introducing higher, little here mix a is to catch

Phil Ng

kind close Okay. X gap? to month expect that Should you X early you we year to of profitable next if closer getting

Jeff Lorberbaum

I think so.


Your Group. next with question Thompson Thompson Research is Kathryn from

Kathryn Thompson

It's and in how the you off American our understanding time that shorter holidays from you're discuss years. the at business, year standpoint, least Christmas North the this than is around compare it's around shifts. in previous you approach an and operate, Thanksgiving to happening industry Could been what year this year? X holidays off time have with discuss potential how those multiple was ways against approaching point different final that, given And you last also COVID

Jeff Lorberbaum

do time So first, the different on frames. fall holidays

one So to due the on the impact volume could have timing. a it positive is

all some that through required. the there's business them they're inventories are or increase service they the -- a We the and to the if the decrease levels some the and around closures volume can group within limits holidays volunteers that holidays, and shifts On work get of of on usually, based business can.

running raise them more our utilization think we to inventories of if if So to. need we increase the in need and capacity keep the we we projections, plants can

Kathryn Thompson

the more year directly, time holidays you versus this last maybe year? are taking Well, around off less

Jeff Lorberbaum

truth, trying to we're tell have is idea X we going how happen everything know the at over what's the no leaving Well, and to flexible we to going COVID, the react. months not more how almost know to you if But governments working to restrict is week-to-week, to And with and don't us because the be us we anticipate restrict to going or next minute. happening. this we're are what's don't we more, know don't demand volume going so consumer

necessary. as producing we're So

Frank Boykin

below production they get can hard and to up. as said need several we're we as where The other running inventories side to be, caught is, times, as try to too, we've of that, are our

Jeff Lorberbaum

which same pieces now to of the all year's to the hard trying through to estimate We're And and next works. looking the we're requirements, how thing the at first see is really do. the at way quarter time, trying

Kathryn Thompson


thinking, totally able you. equal, all was if were else appreciate you So to that. that, do would I I

meet now Okay. current do with just remains demand on you is guess is QX assuming to current based of that production continue, type be up? sufficient time assumption catch longer with it I by to thing a backdrop, clear, levels? it that able levels, that of your Or the be you'll as with your production period is right believe you would if to the end require

Jeff Lorberbaum

we to rates. inventories to them going to consumers demand we on believe. up both year then production pieces, the adjusting December based want are, year. up and we're the they And sure COVID. through demand We're the will relative all see seasonally, keep the strong fourth off. quarter to we're our the the November we're next And what But we the it on to normally, in to not -- and where how expecting quarter, inventories the our them be by catch for dependent is where level the going the falls of get strategy to question, and is reacting it's it get and they And end in is go No. how first


Your is with Sachs. next Maklari Susan from question Goldman

Susan Maklari

we any you we're is, some Europe, little react And this quarter. thinking differences how you're could the then? in back differently shutdowns of bit saw question about good you And of how My in that maybe into to countries? and back March can relative in spring effect around time a the to talk relative a on about Congratulations going there first some back to starting to those go April? see what

Jeff Lorberbaum

with, feel relative up, any impact At in our begin this cases to but haven't the gone early have too it changes them. demand to To really for new it's point, us the hasn't moment, bed, we more seen either or limiting limiting limiting go -- they at what are how They're to At putting time the out They're on and to people social limitations go they restaurants. us. bars they're activities. they night. --

up so this point, And we to it. haven't seen

to get how So they going if going and we're do have to any, see to on impact it's restricted have what, to us.

Frank Boykin

the last in over the and essential this so went the both through essential But March, be considered Susan, Europe through and now. May, too, We in U.S. exercise with businesses we're time, of we're April going same to and definition far, back in businesses.

Susan Maklari

right. input as year? us we in next it That's get Can starting be you into cost. And obviously, magnitude to are that about question inflation, of give and the that mentioned your should Okay. we helpful. next All some how of you some idea you then is, inflation my thinking see

Jeff Lorberbaum

different category. product, It's by by

were European on ran there. installation we LVT think to of ceramic, U.S. and with what U.S. vinyl Brazilian with sheet the I going categories. was we in European through of mostly carpet; and run number ceramic; through U.S. costs description, try materials I'll them. freight; raising earlier the prices LVT; raw up; you heard some vinyl a with as based

all being difficult in process predict. The of are oil really enacted. to So prices those are

they're they're have how various go, to we're the to them. So going supply to follow There's going to of and and demand the between. where react going also places in

of really there's Europe, tight in vinyl supply in it. a So

are up. So the going prices

demands hard work how and out, So as it's to appropriate. going supply all predict are reacting to the we're and really


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

John Lovallo

begin basis, and increase second one hiring, see the the other Maybe marketing side. with on side cetera, year-over-year. SG&A? of then I dollar et on on starting, a some SG&A. expense, the should a basis of amount was mean the Frank, cost-containment down productivity and just that dollar to in increased the sustainability given of that I'm efforts On year-over-year curious quarter, it the we

Frank Boykin

we now, on Jeff and cost. from to see quarter will pull that Right we begin continue quarter. normalize did But expenses, third which that well, we the have in our help lower restructuring in fourth benefits to to as back as said, the that marketing plans

John Lovallo

just Okay. And then maybe on Global Ceramic.

in sales towards residential. shift guys focus You a mentioned

part you more hiring that or walk could us it I Or mean business."? guys saying, is this repositioning people? focus I "Hey, we people just that. what curious of involves. Just actually new simply need to mean you the look, on just that maybe through is

Chris Wellborn

there's area. for so and started, into time, right that on the and slowed we've some happened added will pulled resources the that like what's business construction. lot Commercial, not back. beyond. projects we've as several in legs the new resources business. maybe of got on But residential back for and out the And year both Well, think months and next commercial down, that and we I of now, looks in it's taken come residential same it at been think, -- the remodeling we've business, a The whole


Matthew Barclays. Your with next question is from Bouley

Matthew Bouley

a margin do. I mentioned think that unpack bit more you was you a of little of And drove degree to XX%, world what guess vacation than you margin I helped The typically can the during strength? that by producing little maybe August, period rest what --

the should on Just trying to normalized understand basis. more what of look a that business profitability like

Chris Wellborn

stops. will -- had you mentioned, take lower volume price/mix. additional by and with investments. Australia cost, but had Well, were We the In New In LVT I due better lower productivity due Russian QX can higher economy be material rebounded we And seasonality, volume. marketing higher areas. Zealand, as had that. and was lower all We margins sheet vacation was QX, we we that volume improved purchases. and cost deferred our to as in higher performance. offset from increased to

Matthew Bouley

it. Got

kind of been I And from Second is list? an that areas the, pivoting of more perspective? around balance on the Could wish what's kind growth, language I discuss improving light constrained on you one in felt guess, sheet. guess, if mentioned the any investment you of you aggressive there the have

Jeff Lorberbaum

I I week-to-week. almost the manage an surviving mean think day-to-day, The up last a unknown have future trying focus it's to all has on -- changing been strategies to you and back little. months, X

about future on hold, investments any so away. And were at put was acquisitions anything put looking

the and know So were period, gone and to cash demand flows be what like. we going through this didn't we've

point, where and alternatives getting expenses, the to we're looking So approach And pieces. to back go And going have aggressively product are at this business to looking constriction have we the how comfortable significantly, we capital And restarting we today, we to at do good we to decide it. is as projects. and that normalize. is have to improved on we to think are start business this at has a categories and still point, business, alternatives just starting year grow next at and like we're things that go that starting then new potential look what and acquisitions. postponed the But into


JPMorgan. question Rehaut is next Your from Michael with

Michael Rehaut

results. the on Congrats

sales wanted were contributed had for segments there possible, were there than any sense, and just contributed And larger, it a that if to the get I sense mentioned a if to wanted growth where quarter. others. more build First, where the to what just you inventory overall get during third

Jeff Lorberbaum

a of It's the or third fourth question quarter quarter?

Michael Rehaut

of less of sales growth hear roughly on, contribution to so percent growth a inventory was just less But a if relative for said again, on give if both, was you know XQ, thoughts Well, quarter, contribution the growth. you from basis. contribution a but I in what for the restocking. -- be your what could there'll me the I from the from inventory bold, could settle that be third I'll love

Frank Boykin

Mike, think... I

Jeff Lorberbaum

the actually went the $XX business down inventory of First is third million. the quarter, whole in

efforts. the in declined inventories our quarter the third with all So even

we went through training COVID have of increased a still cost lot we period. production as rates inventory the with the that, the -- the people, period, through went the And we businesses. across with different Now absenteeism, as

things those up, we'll cases get communities the go expect better to in happens. see as the have But we So what to going forward.

Frank Boykin

to just your sure question... maybe make understood And we

Michael Rehaut

was -- the maybe not there had decline sales demand as your own the prepared was what to you rebounded referring that your in I'm inventory channel, said to in I customers referring I well. some restocking business. I'm was at inventory and Yes. but the by into thought What the it, remarks as misunderstanding

but what restocking if was growth And inventory your have not the if the was. the inventory by that did, contribution what sales case, any own did, sales customers of you sense your into balances what channel the so to

Jeff Lorberbaum

us, perfect came that in have inventories. they quarter, knowing improved into going don't We of like sales just The to know We the inventories period third what views happen, and low into of coming second was they of out reduced the it. the them. that rest all most not their with

they in the And increase demand, on wanted not going be, We but have inventory tried they increases. views the parts, able in the own places. we're in their of up not in to tried most get some so still specific -- is instances there's sure some think channel, of they to inventories they're their that very think inventories. going we to they've poor those to of we the supply one increase with through know because we satisfy And the and know it. volume have large been some customers, to We low -- it, them is to we what's tried

can't piece is that -- won't inventories will which because is reduce time. was view, of We it uncomfortable if get what in the can't if there in happen, period help tell they Now as get with. it because further going we're doesn't to what's we is, we have and tell demand which the they some it orders them to don't in the the they another why increase

a this don't that there's moving in good really views parts of. lot of thing So we have

Michael Rehaut

of a share Or just and appreciate was looking general moment. that terms would at? understand perhaps shorter the to happening And I going a period. implemented in slightly of more over over I authorization you time different back period the what secondly, this for time immediately something to the maybe a of guess be want time? that. this just are that this be language is repurchase -- and case, more sounded type it if plan that's to -- is just I

Frank Boykin

it's general a Well, authorization.

buy the million. had you that one to to we amount increase was another a -- general up can us by of of descriptions used. for $XXX you authorization think I the This shares is

So to a this in us because stock good to forward. value is going invest it's our allow going we believe

said like and we'll alternatives, continue investment we at earlier. this different capital so acquisitions, And expenditures one, including to look just


remarks. Lorberbaum to I call would now closing Mr. the for back over like turn to

Jeff Lorberbaum

We're as required. responding to the COVID crisis

will forward The improving to year, improve our been tell, cutting can to is next growth results we've with visibility expect that taking reacting keep and to support continue balance more the have our should poor, to to be appreciate And time sales. is The much. strategy. a year We to we us. our aggressive businesses, both moving and commercial costs, actions you've going Thank you improve. strong next we're taken sheet our you in to As very it.


today's concludes This conference.

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