Mohawk Industries (MHK)

James Brunk Chief Financial Officer
Jeff Lorberbaum Chairman and Chief Executive Officer
Chris Wellborn President and Chief Operating Officer
Matthew Bouley Barclays
Susan Maklari Goldman Sachs
Phil Ng Jefferies
Tim Wojs Baird
Keith Hughes Truist
Stephen Kim Evercore ISI
Truman Patterson Wolfe Research
Mike Dahl RBC Capital Markets
Michael Rehaut JPMorgan
Adam Baumgarten Zelman
Eric Bosshard Cleveland Research
Brian Biros Thompson Research Group
David MacGregor Longbow Research
Call transcript
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Good morning. My name is Abigail, and I will be your conference operator today. At this time, I would like to welcome everyone to Mohawk Industries Third Quarter 2021 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, Friday, gentlemen, October a being conference As today, recorded XX, Instructions] ladies this and is [Operator XXXX. Thank you. I introduce would Mr. to now like James Brunk. Mr. begin may conference. you Brunk, your

James Brunk

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

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

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

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

Jeff Lorberbaum

you, Thank Jim.

approximately results the as X% expectations exceeded prior quarter billion. net rose year sales third Our our to $X.X over

per adjusted share. was Our EPS $X.XX

COVID seasonality. lockdowns our improvement that strong results delayed investments Home halted All the consumers of Europe's projects. production pace. and other in regions, managing most continued and a difficulties leading of creating Despite manufacturing as the summer these showed remodeling timing as concerns our slower though directly trends through sales businesses normal well commercial Year-over-year, geographies quarter performed and continued across sales a rate third environment most Australia, more and period disrupted government with some at in were a and at sector robust reflecting economies, the chain well, in Zealand supply COVID a headwinds, Malaysia changing retail. indirectly many as New impacted that

flexibility, reduce results complexity and organizational pricing improved enhance to with product operational align strategies Our period. our cost the and in

successfully lean We're and complexity will implement Even new at our ran investments managed Rather many to revenues logistics. our in products than as became more materials reduce enterprise. resulting constraints, LVT, continue in transportation manufacturing availability interruptions expected, of in and improving across panels. high and future external levels output higher period. the in the of the costs greater our we particular, of our board margins. and we We and carpet, expand the processes operations and we most chemical with reduced SG&A in supplies, to that challenging, Tight support managing labor, laminate

of While COVID cases regions, presently most in production. increased our seeing the during in we operations the period, affecting of declining experienced efficiencies our are many absenteeism

businesses improve during and increased customer higher gas, backlogs, to on fastest-growing levels in inventories norms. higher to delays than significant as temporary see material by high in are service being are the in our changes earlier a do of and term, any Currently, supply For to remained the operations issues, we has presently This not are the government mostly our at products our year. high plan were external near Xx reflected Due Though materials. and levels constraints. the some our order European as regulations efficiencies. businesses service shortages, our gas of run and Europe about our and costs during to fourth below Most quarter electricity we costs period, in capacity limited political and to they material orders, costs transportation pressures. our historical these challenge our carrying due are natural significant

extended service. investments initiated increase Completion to due and lead and those longer our and building equipment. is sales our being materials of additional production on times projects to increase have of We those

results trailing months. of the EBITDA have generated for we $X.X and billion during significantly XXXX XX over improved Our

valuations, Given of our price we financials. bought the $XXX $XXX current second and Board pursue our Jim of this review stock third share. by to average quarter, sales an to in additional the have With $XXX capital end low per of will additional approximately our increased investments the now current at million program our our our we our stock profitability. an million. Since acquisitions expand leverage, quarter and purchase

James Brunk

for increase as the actions constrained on and constant increase was supply, X.X% Sales price reported, labor, reported Thank price generally rate the a you, by and improved due billion, basis. excluding XX.X% or year. to XX.X% increasing as as inflation. transportation was COVID a and and year-over-year $X.X last driven growth, volume segments primarily quarter was X.X% The Jeff. offset All mix exceeded by which increasing disruptions. XX.X% mix, Gross primarily of charges, from margin, showed

margins. million, our new year, versus million year in as as Increased original and mix. of In savings detailed $X charges XX-Q, Restructuring the as pandemic, XX.X% and included product reached margin and reported the development productivity, exceeding sales, COVID-XX gains dollars amounts were excluding section prior was curtailed year-over-year after XX.X%. higher addition, our we result to increased be and versus a reported will items due that Operating will The and costs favorable of MD&A of have approximately SG&A annual savings. downtime our flat goal in the SG&A these were call. which FX was in filed inflation, actual price charges. $XXX improved be less prior

year. uptime, margins, partially prior increasing our versus offset in product lower prior points. well greater Interest The our million XXX continue, constrained as basis or development. $XX the quarter, expense inflation price and also Operating mix, increased and initiatives year the and by gains volume charges, by increase cost were FX productivity, in favorable year-over-year improving improved was manufacturing driven impact We results. XX.X%, in was flat excluding of improving in offsetting were XX.X% from We though, to other pursue as to costs.

tax XX.X% per Earnings the rate charges XX.X% by versus in share full were $X.XX, to we year. as and versus was reported still XX.X%. excluding non-GAAP the XX.X% expect and were prior year, $X.XX, be XX% increasing and year rate Our prior between

as results, reported. by growth That's price partially driven by increasing our sales Flooring increase increased volumes the versus increasing and Operating and basis the QX while other an limited of X.X% year versus Now charges were costs comp or and due saw positive The increase with Global a actions North well product costs sales which was constraints. turning excluding -- improved volume exceeded increase as a ceramic was prior our impacted just reported X.X% difficult abnormal inflation constant Mexico basis, development. which business volume productivity improvement XX.X%, points basis was mix strongest just transportation on strengthening geographic approximately X.X% new $X came by offsetting gains the by favorable by XX.X%. year-over-year sales countertop Operating labor and in price/mix sales rising improved comparison, a our prior price a as under XXX margin margin $X points charges driven America in across year-over-year the was offset seasonality. constraints. performed offsetting to regions. and to segments. billion, Brazil, to an The offset and the had U.S. shutdowns mix led billion, up XXX products against excluding inflation, supply, price/mix strengthening year.

days. XX% from exceeded $X.X the XX be Taking just of volume the a with million inflation holiday, driven excluding In to year. billion mix This billion the eliminations our a exceeded on projected in million under exceeded full with by productivity and quarter and is plant just favorable at $XXX were if along with $X.X COVID price million was under XX% last $XXX just increase to $XX and of results. the result days days and balance. increase with with lockdowns charges, constraints by for actions over especially a Malaysia. line increase favorably cash the FX Corporate volumes $XXX projected quarter versus temporary just the an productivity, and $XXX restrictions, year of again and million, of for to summer compare XXX expect $XXX D&A a are COVID low or in and normal compared $XXX seasonality XXX that $X.X or free prior to as billion, and days and $X.X normal Zealand our to look a price a which Inventories gains offset I disruptions, decrease and lower with sales approximately flow results. million. Full increased year. just while at shy and lockdowns prior to which as Australia, Receivables you point costs $XX currently material shutdowns material of mix, basis, return our the the CapEx at year caused XX.X%. benefited addition, our That's year equipment million be year-to-date. is D&A. were LVT, and a here less in margin, the Improved over Rest sheet. increase returned our Cash the third at about were million, In and in million, quarter of would were billion shutdown. which DSO for a constant balance summer the in constrained the Operating an in days New Inventory quarter impacted year-end. CapEx XX.X% XX.X% temporary million, Property, Flooring under World, increase at year-end XXX of $XXX reported

it Company unpaid on and with hand. $XXX to Chris as sheet billion of results. QX January EBITDA. strong Looking at operational and balance October very with utilizing X% note The XX, on review cash adjusted million the that, at of I to euro redeemed remained current will their plus leverage notes over the $X.X X.Xx senior turn the flow One our cash debt end at debt. overall par interest, to XXXX gross And of

Chris Wellborn

Jim. you, Thank

XX.X% as and on in and mix a improvements, a segment Operating For the the and our period. seasonality as return normal XX.X% to more a of XX.X% result period, margins increased by constant basis. of pricing Rest reported World inflation offset Flooring sales were

quarter. production affected across geographies material the raw to outside During by continue the the LVT government supplies with most operations, quarter, product lockdowns. Overall, sales categories our impact were during strong our those affected and

and expect inflation continue periods. energy that will rely in accelerate material, gas and on costs that will We upcoming chemical transportation

now in and sales. interrupted Zealand demand. the have New production we These restrictions and meet our are period, During production shutdowns COVID to Australia been up lifted, and Malaysia, ramping

to proprietary have waterproof strong collections products sales consumers visuals. growth their realistic for performance laminate with Our and embracing continue our

unique introductions floors. Our feature that new premium services handcrafted wood laminate replicate

meet to by with initiating demand, and though inflation. the We our increased were as we period, sales and our new are In further collections. material in margins Our our transportation laminate during support businesses sales volume to distribution pressured growth. leading Europe expand are added projects we Russia Brazil, higher-than-anticipated other growing capacity raw and

LVT were period, and and mix Sales our quarter production that to reduced support lower inflation. lower LVT raising improved improving mix. joint patented with by our anticipate As during of to through anticipated, minimized benefited sales in improve product collections higher-value shortages given the the material higher water-type prices impact and pass LVT production and our fourth We our our availability levels our service. output. We rigid outperformed material the

and to our We as additional material increases price energy rise. continue have costs announced

transportation production material supply sheet tight by and shipments. sales vinyl and were bottlenecks impacted and outbound Our

distribution well with expanded. performed vinyl growing sales Our our business as Russian sheet

Our in the to COVID. quarters be weeks inventories Malaysia as in Sales products lockdowns wood due government of our and will XX depleted. September full down our both wood of third fourth plant have been resumed operations in after

yields our markets introducing wood plant supply, European improve flooring. collections veneer Zealand wood in patented We're New a Wet the Technology acquired successful launch are our and wood margins, after and markets we sales in reduced of have reopen. Production with and to Protect demand scaling to the up stops meet in its our U.S. operations We cost waterproof Australia as our our and

return consumer to our collections, premium markets new as benefit enhanced merchandising normal. will business and Our advertising the

offset installation and Sales panels as to in grew inflation offset are the another material implemented pricing increasing transportation rising increase We European inflation. we price of period our to costs.

existing to Our in tight acquired income their with insulation an our integrating and business. begun operations in have manufacturer improved due manufacturing We supplies. with material Ireland disruptions

our we third as quarter, business and decorative and specified increased We're markets. our new the enhance During mix pricing. a to expanded our panels introducing margins in grew range participation

We increase capacity differentiated have added add more products. and to new our features press that our will

in reported inflation. period. unscheduled production and results during strong by inflationary of acquisition partially the in pricing inflation. In in of restricted, our Company X.X% were chemicals XX.X% quarter, productivity, labor our were Flooring period, production fourth increase pioneer categories sales price complete an actions resins, capacity We raised position. France we quarter Our offset in material Western ongoing stops transportation Flooring across creating will as the lowered our segment expand the Supplies we given oil-related product our our prices, increases the a of will pricing additional Europe. America which material, third as rapidly and rising most MDF impacting and to margins sales a In North offset costs. result increased sustainability America as enhance most mix the that and implemented pressures improvements, prices will bio-based had intensified. and and our response to operating The further sales manufacturer North constraints is

complexity, our labor We affecting availability streamline our manufacturing continue quality. and limited residential and benefiting operational material and to our are efficiencies costs. reduce In carpet, and portfolio production product

increase to negatively by and We are low recover impacted inflation. challenges. continued continue and efficiencies to Volume labor shorter prices runs being inventories,

with are which replacing is older more We equipment, improving productivity. efficient labor our assets

in we backlog, high We to our at and service replenish quarter levels to and inventories. improve run fourth plan the have an elevated operations

as We cases the as slowly. and health improved rate recovering and enhancing growth office, which consumers nylon luxury government, education are their The channels in sectors are more period, slowed COVID of the SmartStrand mix has retail and our and care though with Commercial hospitality collections. homes our sales outpaced increased. premium sales upgrade

surface growing are Our specifications expand as projects. we and our increase in offering commercial sales hard

more styling and in cost, assets We labor reduce investing to are efficient improve enhance requirements.

and laminate though continues our business our restricted capacities. wood Our grow, to sales were by

reengineering production the advanced be year provide we our to this line laminate Chemical laminate as period new output. responded more in maximize limited end our shortages features. the formulations should by our Our by sales expand operational of our to and

We improve efficiencies our and are production. and reducing our operations complexities to simplify

increasing are in wood collections the volume and improving UltraWood high-performance is productivity new as new Our our of our mix plant increases.

period, with limiting even Our material production products. LVT the in increased days in sourced shipping supplies sales our and

our enhanced We and have with improved our mix by costs lowered processes. features our streamlining

end lack phase Our disruptions a growth, expanding this of year. yields increased are beginning and at adding plan future despite supply. million operations the throughput we from has our approximately $XXX of material support LVT initial To with the of production,

Ceramic result of to a our our production increasing the quarter, also X.X% sales are by increased plants We sheet Operating partially higher and segment mix vinyl reported were collections. In inflation. satisfy as offset X.X% expanding as Global our volume, productivity, a margins sales of pricing and improvements, on constant basis. XX.X%

commercial Our with strong Ceramic during grew continuing remaining improvement. business to residential period the U.S. the and sector show

plants. and the as costs, improved increased to quarter in higher material mix our enhanced raw we margins price transportation from implemented and output our Our increases offset

Additional pricing actions are continuing being taken inflation. to offset

reengineering by our materials are strategies. our alternative logistics costs products, our manufacturing enhancing and reducing We utilizing

and finishes to imported alternatives printing new introducing services textured are with technologies, premium tile. products polished We higher-value provide to

remodeling on exterior through that collections sell We centers. growing studio focuses program our and home and high-end outdoor direct that specialists are

to Our production our quartz countertop grow sales substantially recovered period. continue during as the

is our mix countertop higher-end visuals at sales rate. as grow improving a of faster Our

Our Mexican growing countries. inflation as Brazilian to ceramic and we prices in businesses increased both are offset

our We are offering, output. improving efficiencies refining our our and product increasing

residential projects have participation in expanded and commercial We sales. our

products. the number sell of We retailers exclusively our increasing that are

assets than enhanced though product our to schedules in remained and European by rising were offering. manufacturing mix to they new expand in investing business vacation are our and price, strong normal. ceramic enhance offset our inflation. production as in our We more results, Increases both in productivity return countries Sales

and enhanced our average and improved increased visuals, mix. with large our slabs products unique new price shapes selling Our

enhance We prices period, and due production styling to the improve In to further levels are our Europe unprecedented our natural gas efficiencies. and lines to electricity upgrading in shortages. rose anticipated

prices until mix be not production volume limitations negatively with our impacted align delay, year. we increased and and will as our in future. in Lower our is the until manage business Due next Russian third margins and an will Our continue equipment quarter expansion energy capacity to operational. Sales enhanced the our the ceramic increased prices to sales inflation. inventories until margins new and our impacted higher of will in ready period, offset be capacity mix cost

significantly and sales ware growing expand -- With sanitary operate I'll operations. in we that, are return to as the Our Jeff. production our call

Jeff Lorberbaum

Thanks, Chris. generation. Mohawk higher XXXX, and results margin Throughout has sales with delivered exceptional expansion cash growth, robust

unusually our be typical sales improve when year the we'll For to demand In more the period, our inventory. was support high. anticipate increase fourth will seasonality high run operations that last quarter, service our our and industry at we levels unlike

categories some increasing expand capacities, are the production categories. manufacturing growing our we're limited sales to in of being investments these Our by and

price Ceramic by staffing, are cost We're enhancing Europe, adjust constraints across enterprise. cost higher million continuing the We net the quarter, increases In strategies business. supply it and our will management, to and industry implement cost. for aggressive to fourth the additional record across maintaining technology the leveraging gas and to prices manage are the transportation some approximately increasing time $XX take and the in

had our fourth year. fewer than calendar addition, X% In days the quarter prior

remain Given outlook charges. with businesses growth. from excluding remains be these availability, long-term fourth anticipate to robust our commercial temporary adjusted remodeling invest sector $X.XX optimistic construction factors, as new $X.XX, and inflation EPS we and any quarter residential challenges and home restructuring in material Despite our projected the to to improving

introductions. Next should and with our grow sales expansions capacity innovative product year, new

the and Our results optimize chain economic supply conditions. continue to evolve our to with strategies

sheet increased strategic is questions. We'll it investments history your take balance Our acquisitions. internal to now glad be and and the strongest supports in


[Operator comes first question of Bouley Instructions] Barclays. Matthew line with Your the from

open. now is line Your

Matthew Adrien

the taking question. for you Thank morning. Good

run going prices headwind, think out that kind million QX, you rate million good on about XXXX to that price? last in you we forward if of is we will don't able to should do be relative assume the $XX called So, align this And $XX confidence you what natural abate? that a with when have saw to the gas that

Chris Wellborn

and is electricity increases impact to depend will get prices Russian expected decline will costs changes Timing being by gas that than QX result. QX are winter. and of after QX, impact actions, anticipated. be greater But better will increases market anticipate unpredictable. and are presently prices Well, on are We hedges further dramatically inflation. Gas which cover the impacted can QX

Jeff Lorberbaum

something said and note, XX%. Just yesterday, as Putin the dropped prices a

volatile, highly circumstances. it's have So, the and keep to to adjusting we'll

Matthew Adrien

That's helpful Understood. very color.

Rest signaling all say mean a Flooring of over that, year I will profitability this a versus you've on going there as look of XX%. of you kind that's year, year. Would World And that Rest seasonality was World. prior how the been one was down the be representation still but forward? it normal may Second fair margin expected, of

Chris Wellborn

operations in our were This accelerate. Overall, of on or pricing by affected with costs continuing typical Inflation those affected Well, well seasonality our mix gas most. transport offset improvements, QX return production vacation will energy LVT based a a as to Sales normal strong year, the inflation to result materials, move the QX government year, outside performed versus as and COVID. the with impact raw and last continue geographies are supplies and chemical and categories product material taking with and pressures. our in across business stopped more by lockdowns.

James Brunk

with in response and There's increasing And really and material many historically we'll price point parts one to you're increases that. Matt, are moving costs energy push continue margins, high. right, additional to there, is


question is with Maklari Susan from Goldman Sachs. Next

Your line is now open.

Susan Maklari

taking Flooring some My we morning seasonality given Good the fourth question. the quarter, How last you. everyone. you've the Thank we some couple quarters. of business? America the really that about margins about improvement question think and should is, the coming be thinking that into the nice in North as seen of are the pressures Thanks over first for

Jeff Lorberbaum

in on year, As the than generation. We've exceptional months. had the typical We We've areas this end in. at quarter this increases billion is expand then levels, the facility And of see robust which it. the sales. we're year. And our through constraints piece, fourth the with have year investments them work at we We up We're look have XX at you labor at in the we estimate expanded expect We've X% $X.X days put to to keep point. and quarter, we're supply have point, through we've trailing to Ceramic the margins. fourth quarter constricted results don't increasing to the stopping far so which cash delivered implementing impact the and grown the that Europe $XX and more by to will additional now. EBITDA We'll run anything anticipate strong we putting the based price the should this high the best really we seasonality million, all last continue end. was, in

Susan Maklari

that, up we bigger how is be following Okay. the there think to year about to the any helpful. entering ability That's margins do the and you're one should on about the year? expecting continue we a that of backlog you move And then as with, presumably relative next expand another? segment sort where maybe XXXX And think to

Jeff Lorberbaum

look -- believe remains having we're the you we short-term out challenges long-term that the If today, optimistic. outlook despite

start You economies. direction overall at of looking the the

it. have Europe, have inflation decline. disruptions In increase depend time. our the transportation temporary We to is impacted will year, expected is its expecting You and remain see are and If continue Ceramic continuing up with change price what energy we across competitive first going to and expand year, The prices sales And margins, recover think expected the which them through with residential we've the forward its will spending winter. look The quarters align material Europe, most to them. this drop through happens moderate electricity to three improve. rapid over commercial we to impact with this which strong. and Inflation to businesses. to is we the doing the expected by should expansion due keep we been use inflation in push in margin problem with it. able the policies industry everything how half the in conditions of we economy to supply With can the as quarter The the both supportive. We're to projected intensity and to to the with third aligns government really cost improvement. next gas are on and get remain once we're

we into from look operating. inventories benefit supply, until But year, improved to that the there's some next innovations. of mind, increasing we're production, as expect new we As remain the material product will higher in investments as keep new constrained still well businesses are putting in

We support expect continue greater significant generate we're acquisitions to fund. to the to and which investments cash will trying


Next Ng question is with Jefferies. Phil with

now is line Your open.

Phil Ng

expect kind Are is current given And really here? trying and on pretty pricing? prices side. the guiding in strip at of of then job certainly cost like really the guide rest be seems of neutral? pretty prices, to pricing a a it the team kind on a Or when your spot kind seasonal on color Congrats but increases? some you at are that backdrop. be good price and forward approach a nature implies good come has and of curve can you of on is you to environment. looking in the cost that in outlook, focused proactive great you we're that give us ceramic, you're Your quarter Outside European of business actually the tough you done tough price looking a your the Certainly, in forward separately, How Europe, down nat hard. expected tackling and to mentioned gas

James Brunk

really of has on as at and this seeing we XX%. volatile prices offset as very actions We're on are it's to that out, continuing QX, prices and dependent. Well, energy today difficult will categories. raise materials most point determine volatile a year-to-date first, pointed And by material over basis through that comments. pricing the energy Europe, across Jeff the mix gas spot costs said, very and drop change predict. Russia the In are to inflation. just We're Obviously,

So, in time -- QX. Europe this to sometime catch Ceramic expect and up at we

Jeff Lorberbaum

prices in what higher purchasing going guess about reflect the to to yet anybody's we Gas future alone The keep gas just prices. they're can the it's going now we're answer are you from best tomorrow, to Europe The six we're market the starting months material reacting give conditions. now. have to be to prices, is that

can to we that say going keep costs prices with best we're that are changing. raising the the So is aligned

Phil Ng

pent-up That's really not seems helpful. issue, from demand supply some you a here. demand It's constraints. Demand got chain and pretty healthy

your your And what curious, just are I broadly, Any elevated you tougher appreciate continue front? expect we pre-pandemic backlogs? you color backdrop of we've more carpet telling kind to out Or return that this levels? business to ceramics kind volumes you for you, Do growth customers So to in got on growth more more look year? XXXX, of and that comps. past seen this

Jeff Lorberbaum

XX% a up we is more to growth go can't growing I through. dramatically. normalized, to keep year, think our turn to going keep the going as going be that and in sales So it? will We by they're rates. typical think to industry think going more is can't it's Housing we -- reflect it


with Tim from Wojs is question Baird. next Our

Your line is now open.

Tim Wojs

what capital and way you're of about kind on year there planning available next 'XX that of or what spend output size investments Maybe just first you question and to capacity any potential 'XX. growth to might Is represent? kind the as think

Jeff Lorberbaum

with to today our Just limiting as by expansion, is sales begin delays before material production by are as import capacities and being the the at well by the moment. supply, constrained transportation

moment, haven't plan point. major finalized costs, to the million more the with going investing At at we're year. that The think million expand up we budget year sales pieces end in are we about $XXX -- to this and $XXX this we're So but Brazil Mexico, to next it's estimating those approximately countertop U.S. being of huge U.S. Europe; productivity then amount always Europe in ceramic top go getting areas. on the other and on efficiencies and there's through. expanded well in as business; and are the we as LVT a these, laminate quartz as the in And and spent Russia; be

Tim Wojs


imported Okay. performed share That's LVT? Is to imports internally has ceramic think pressured? your share a you on your how any way are guys is from as or that competition helpful. way imports, has versus how then of there shifted a those kind relative And there more articulate standpoint imported

Jeff Lorberbaum

The estimates the of it, in there levels. is so inventory change much

So in everybody during -- all downturn, in example, ceramic, an just the the ceramic all stopped as imports.

So the what got happened is all down. shut imports

to all is rebuilt. the the to in versus It's inventory trying really are channel and now the consumer the the spending. difficult what difference So inventories see distribution be

with line So we but both. in think performing we're are changing the inventories in dramatically sales, the

Tim Wojs

Do you you kind taking just share? feeling get you're you're like the Or maintaining? do of that feel

Jeff Lorberbaum

you gave I anything would Does a be it? guess, is

Tim Wojs

What's your guess?

Jeff Lorberbaum

doing we're think better. I


Hughes is Truist. question Our with with next Keith

is now open. Your line

Keith Hughes

in and a about a lot Talked companies. call lot other this constrained of production

If to what has within a which constrained? end to have you North ability most that America, And look materials you one things scale, had of product the the and raw the produce of been nature? had better

Jeff Lorberbaum

The constrained whatever give the supply LVT they and hand us. production, vinyl which to plant the has mouth. running been The be would stopping starting just most or

to So Georgia, give from may affected. it. in the length labor plants everybody just with huge it's least there the in might it be that area on least a amount capacity But the and you same given the the the from carpet manning the is problem of probably of North extremes. affected most standpoint, is pool, from pulling affected be a material The -- side

Keith Hughes

get Yes, it. I've XX, I billboards your on high seen

readily Could and those there Second available? better question, bit you strength is shifting -- little Or America to a more there our causing some some areas? than in mentioned inputs Central and South sorry, what's units. talk to other some look -- South American you earlier businesses of

Jeff Lorberbaum

are Russia ceramic They're in businesses capacity. all Our Brazil at running Mexico, running wide all and open.

it? more, labor are inventories are we material As ship into can't capacity we constraints We the high. And doing came in is went low COVID, backlogs well. any we with markets, those quarter three out constraints. it industries third and of but don't the all have in The markets, constraints or have

Chris Wellborn

And adding year. capacity Keith, we're Brazil Mexico, next and to Russia


is next Evercore ISI. question Our Kim Stephen with

line Your is open. now

Stephen Kim

of thanks a us information, gave so for that. You lot great

at -- equipment said be high would think levels I that you running XQ. you in

you're reformulation in I material about the of get effort some places, shortages. You to talked guess, doing around that many

than XQ higher be produce to a XQ? regarding you that are I so going in said slower. question And And you my in guess seasonally did then sales, be is, would to you at able level

implies be you'll more in result. be that of would I'm benefit it Or strong pretty rebuilding sold? ultimately that So are when as wondering I if be those And the half in would first productivity that productivity recognized would XXXX products inventory. assume be also a XQ?

Jeff Lorberbaum

change the production in What and are quarter going don't is First flow assuming the where winter constraints we unlike think, will sure that any -- increase to normally to going the to through. rates the is typical, strong we're inventory have we're the fairly we're I third where this are we because we're cost, not to we going assuming in anything as in where will point, differences allow all be at year, similar them. be which we're volume stayed the inventories it more know the as turns normal going us the through that's off, last as future. The through falls to go to the

Stephen Kim

it. U.S. got LVT of was about but inventory, the business, period time. lot And Great. a short On in information given then you there a Okay. of Yes. talked

were Or materials other you availability? I produce wrong? to you hear are nameplate material In in In that nameplate production process to words, get a really dealing no challenges did challenges, I facing million? I In could this right. adding line capacity. make it's actually that able sure business, quarter, led am you've And try you're business, LVT hear manufacturing just just that want U.S. historically LVT heard you did in? U.S. believe that you to a longer to $XXX that the I been if get to the to capacity at where I the really So with raw those about say

Jeff Lorberbaum

Is by better And in material inflation. We're increasing The so premium and in the it? was the U.S. improving Europe. shortages is LVT limited with and sales with prices higher rigid mix business product products.

plants which products, keep we material have the everybody the yields was what's the to productivity, the U.S., out, On does, have the to impacting freight what going. the delays And sales same and level. increased coming have them you have you imported but is else heard the

North higher and say And are expecting soon output week $XXX we as so We're the And as more And throughput. say by increase is of putting it our the starting we to production to plant week, in day another we're they're we get that million. more with support then did stopping in. to day America and we material existing to production the did expanding it.

Stephen Kim

same are be going Or in actually the there for to be that building? moving across the Is location a new -- you going new to new with the street line? a for

Jeff Lorberbaum

full. is in they're that building The

Stephen Kim

I Yes. thought. That's what


question with Mr. Wolfe Patterson next Truman with Research. Our

open. now is line Your

Truman Patterson

spike inflation, overnight. touch of kind natural to wanted gas happened on Just in the which the

still in headwind can ceramics? way there out the gas the headwind a not all the ceramics pretty to U.S. as degree any of the natural size in level, called U.S. is you frame business. You maybe the Europe. European us same inflating at high million help $XX Is the business

Jeff Lorberbaum

to XX% energy about see point. of we reference -- is U.S. some cost. and roughly which electricity, historically together the give you as gas Let's X% X%, The bundle

double prices and they that as where are just So reference gas a maybe point, were.

continue try out prices So we is what impact it. the you to can and figure recover approximately raise when

Truman Patterson


Okay. year. then, repurchasing consistently over past been And all fairly the you shares have

into You just of share look thinking on have about you Are about a authorization, the repurchase? repurchase turning are share more did based valuation, you forward cash all, billion when another programmatic hand. you on $X

James Brunk

other to cash three drive changed We're the I part and priority. in products. our acquisitions. will be at think to them new We going try offering of broaden but We're this point, product to about going enter to acquisitions at bolt-on of look Truman. and going costs. buyback morning. and cash innovation haven't that constrained our talked share priorities and businesses this We're expanding markets identify reducing our really continue products, to

Jeff Lorberbaum

review flow him to thinks. want of he versus is end lower you today the quarter? where Do than cash It's the it the with

James Brunk


So we...

Truman Patterson

Yes, I would.

James Brunk

Yes, we ended I And October. off the prepared in billion the remarks, have €XXX million quarter said in we paid X%, over cash. my in with just $X as

cash So for on-hand we them. used


is Dahl Markets. with And RBC our next Capital Mike from question

open. now is line Your

Mike Dahl

growing the and in spike wondering substantially seems be the of if gas, dynamic sense headwinds magnitude, actually the it you north of order if dynamic, costs XQ, in some like just in can it's us things order then the facing keep not still that mean, nat inventory, XQ, gas hold little magnitude but of today, Jeff, given of were just When should how give it's of we're XQ XQ? XQ is. seeing turn you're of time kind just to bit. talk you that? directionally, on and I'm harping your a I sorry the to to an into I know it the about timing important point given

Chris Wellborn

some pricing. our also impacted Yes. that catch I prices believe twice of on up. presently can not hedge significantly we've time, we'll even limiting we're that, just We short-term over of and comment as some though their needs much, are competition our already raised But behind.

Jeff Lorberbaum

we costs one have quarter piece. quarter In our flow the into FIFO with estimates, we have now in -- next the remember, our

they'll So pass through.

of of hours, competition in have continue a on. things did to expect it. been back. hedge We've we because pricing we going some two some One So over limited little get to the really is it increasing time bit

to with lined in prices, they third want it you up. to you were natural have it drop quarter So next you then future forward up which side gas prices, increasing it's XX% quarter pricing down, second from limiting are to And costs at where is how look we prior are I year. the all of other push to how and if predicted yesterday, the coming think, now. have fast -- of is, can the be it we where the Do the in we the get

Mike Dahl

Okay. Got quarter quarter year, you in it. I'm seems business down year. still the that moving that When these that And next are about year-on-year that. -- so until third really unclear. is clear around headwind will pieces? margin XQ, a margins Is next it seems you be the of the overall my it given follow-up But to some be talk of third ceramic, of this for until going saying is

Jeff Lorberbaum

All is our comments margins around the ceramic are Europe specifically it. the impact, on

Chris Wellborn

the on thing one just Mike, energy.

and Our gas less other is less. businesses much the much require impact

significant also biomass green reducing requirements. wind energy and We produced using

it So [indiscernible] impact will

Jeff Lorberbaum

things changing. as We don't view full they're have a of

and it's to fluid. cost European other and we're to increase, align materials in So with cost but just businesses, see to prices, our natural trying related anything that's we're gas, the starting the


And our is JPMorgan. question Rehaut next Michael with from

Your line is now open.

Michael Rehaut

question, a point maybe you're XQ more kind at around from First price want and basis you depending here the on views assuming less cost what XXX just into When revenue, but of sum XQ up year-over-year look at I XQ. for or maybe you're looking drop. to obviously

in some margins margin a to XXX historically, -- ago the what's flat points there's to Now of had Usually, actually is sequentially. drop also when XQ. of basis that is can to a that you XQ due comp decline year tougher XX lot interesting sequential you have

be let's at You with be year-over-year fully didn't you have today in the year that price say, shipping covered more tailwind. up, drop, much chance have how or last the a implementing to day made look you're when But realized? increases as that should of that that XQ

Jeff Lorberbaum

you comp not And fewer margin said all to have the it which of made impacts higher pieces last the piece. out ceramic, have You what the $XX million days in also level, then then unusually you the separate the only the the overheads. to year related fixed coverage X% impacts with the was high seasonally sales

together. all have So those you

James Brunk

of In will addition impacting to will in Material saw to chemical challenges that, QX carpet, the and and in pressure is on obviously think businesses we cost. really really we QX. productivity supplies the which shortages increasing the constrained the number our put And boards do LVT, laminate continue business. continue a

Michael Rehaut

to material but price maybe XQ, offset you at that XQ, a roughly. way, you it Yes, obviously, another raw was of had said inflation, mean, look lot and mix in when able I

on you cost the to When trying that to been gap a basis, of go do $XX in was think XQ. either on the neutral Would the a a price dollar to have second in throughout company that or back might consolidated increases might and And of negative try seeing to margin basis, quarter? sense now, not quarter the that basis price But neutral? even that, that of You're negative first XQ. a think price what do represents? get because inclusive or or been -- Just cost when get a be just hoping implementing year. you've I successful. million flip impact you right you They've a it positive? sense

James Brunk

the situation, gas natural especially as chemicals along volatile Mike, Europe, that with of process. any part is a manufacturing impact come from in their Well, Ceramic it very really with that

well. So the which quarter the in million a will gap that will the and believe and the between creates We see price inflation first mix flow-through increase as deficit, today. $XX in that we'll increase right fourth quarter,

Michael Rehaut

let's take be mean gas of think you're headwind, quarter? I Or as the aside to, out in to all first Just we putting you moment, If the were over nat neutral expect you would cost price nat that? kind say, headwind, seeing the inflation should well? for about a gas how

Jeff Lorberbaum

trying to pressure some the aligned trying them to short get can fast them and headwind in Listen, we align. prices, and going in of what a And the be prices and can't we're every tomorrow, there even but the there we is we're gas all is is to to markets. figure -- raising all it. with is price increasing we're the inflation, one is as term, The get the out businesses as

James Brunk

us does flow-through through the into QX you negatively impact as go well. QX impact And as


is with from Adam question next Zelman. Baumgarten Our

Your open. line now is

Adam Baumgarten

price a or difficult You getting pricing are mentioned any little the portfolio there bit reason for a more categories across some your benefiting other global that European who holding where back ceramic some bit. is another? of producers have maybe hedges Are maybe and

Jeff Lorberbaum

we than looks point, if and/or rather good. this be At inflation And we've see The through Ceramic like if prices same. at Europe impacted. is start able the to trying the softening and change. do start to Most point, some other the one we're it more material to question most push to businesses, it business the continue decreases. the in point, changing. changes The it But this increasing that's been now, of dramatically at will marketplaces up will

Adam Baumgarten

about And it. Flooring really are to their pricing demand on LVT, focusing just just Got and America of versus about demand you and worried historical kind maybe you continue potential mainly specifically, patterns then thinking increase any as carpet given destruction pricing? North

Jeff Lorberbaum

else. budgets. same and gone consumers and the some have not to prices in. continue costs go start only limited budgets, for is up At the up, installation cost time, which to new housing the driving they looking -- limited And everything to When when all have cheaper put alternatives have that they

So that you a concern can. it some point, at get up high there as it as is

the hand, all the On have positives you on. going other

up, have commercial people wages You the -- going economy is more working, expanding. growing, still

we'll is, it. So everybody they are else balance the to going question moment, are how find out, and the we that is still optimistic right at Right the balance.


next Bosshard Our Eric with question is from Research. Cleveland

now Your line is open.

Eric Bosshard

things. Two

LVT in start are of add evolved has do not of LVT of the the of of from First what addition a import And are they've we curve business, where share to more? or your in and terms you all, done. market now I'm why just has philosophically and where traveled the has penetration a why road U.S. of U.S. capacity, capacity think manufacturing U.S.? had -- imports in curious done the market strategically we have the in

Jeff Lorberbaum

Let's see.

it the rate still has keep to on large cannot greater total. but industry industry a be the it's growth the up should had of in than is the it, First size of part. gotten based rate grow The of flooring growth

to increase Second players we hours that is problems United think pieces, should with support all are the needs. shipping more the and our and the capacity States multiple different given in all all putting there we those things also

Eric Bosshard

Okay. ask again. targeted And to and to then same be follow-up the question not try just a

supply calendar quite the XQ out in gas, chain margin inflation is you've has Is and what trying days the in business year-to-date challenges and and performed I'm in well. the to the excluding had figure this that sustainable, point? not these challenges something the you XQ? gas issues you that in and performance that changing Is suggest again, sustain natural suggests the issues is handle something can't there ignoring there calendar to Excluding

Jeff Lorberbaum

the magnitude I raise is to don't to everywhere. it only The the balance continuing increases how long and takes up. them so. We're of prices think thing


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

Your open. line is now

Brian Biros

for Biros Brian actually This is Kathryn. on

if that's pricing more demand the next further year fatigue are harder Or price construction at start I one, then general increases there, that making those by worked even higher levels? think inflation a to there of out of pace, to kind on First backlogs guess, moderates? you do price it if if solely through supportive be due to might get more pass

Jeff Lorberbaum

start to I and good for you're the to in change occur. the all softening, a your category to trend that will the as when have guess to see mine raw think is of And pricing do then across as if the that. going materials

Brian Biros

guys to or Is maybe internal is a then reducing a And a complexity. how out margin basis, maybe that about have on think points? you measure level? the that reducing there Yes. on just the initiatives maybe to follow-up way much Okay. squeeze there around Or basis more on

Jeff Lorberbaum

you've Well, our seen margins the through have that year expanded.

those of able the complexity things, product and get more out plan. the been it we throughput the and of by the to more seen we're You've offering, to to a more and we're taking and result margins and it's able take through and the the have the plants, costs of out seeing results


question next Research. MacGregor our from with is And Longbow David

Your line is now open.

David MacGregor

You talked about the business. commercial

into in but any how go spreads improvement, different what you to talk in residential versus in what and planning be seeing just as XXXX? you slower of approaching may sort residential about you're I'm at recovery could price facing you're said you're if You commercial were differently the cost we rate. how than in do wondering commercial a inflation

Jeff Lorberbaum

It business unique made sale commercial offering. is features. more differentiated a The design, is performance, a uniqueness, with

to it. because businesses be higher-margin so that, with of tends And it

to increases. So they tend a the to little recover easier be

the in that impacted we conclude that Now what the increased, with and got of we out. increasing quarter it. some move it the projects as the to pushed third And saw thought is growth, -- what happens COVID were of going were rate forward

are and how it the at they good. perceive fairly most of the don't them corporations all see economy So looking

So there we over be will that year. perceive next improvement continued

David MacGregor

today? that of ceramic. high, relatively remember I what you remind can And but commercial us stand is it's percentage where would

Jeff Lorberbaum

in U.S., Before was the it collapsed it XX%. about

less because the decreased. whole category it's Now


Mr. And comments. period. that's Lorberbaum our turn I the call the now for closing of over back end to question-and-answer will

Jeff Lorberbaum

term. overcome We'll well front we appreciate to in of the you a that us, are join disruptions time taking short-term us. day. positioned all of Mohawk great for long the Have the is and today


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

now disconnect. You may