Mohawk Industries, Inc.

Good morning. My name is Jesse, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Mohawk Industries third quarter 2019 earnings conference call. All lines are in place on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press the pound key. Should anyone need assistance at any time during this conference, please press star, then zero, and an operator will assist you. As a reminder, ladies and gentlemen, this conference is being recorded today, Friday, October 25th, 2019. Thank you. I'd now like to introduce Mr. Ken Hielskamp. Mr. Hielskamp, you may begin your conference.

Thank you. Good morning, everyone, and welcome to the Mohawk Industries Quarterly Investor Conference Call. Today, we'll update you on the company's third quarter results for 2019 and provide guidance for the fourth quarter. I'd like to remind everyone that our press release and statements that we make during this call may include forward-looking statements. as defined by the Private Securities Litigation Reform Act of 1995, subject to various risks and uncertainties, including but not limited to those set forth in our press release and our periodic filings with the Securities and Exchange Commission. This call may include discussion on non-GAAP numbers. For a reconciliation of any non-GAAP to GAAP amounts, please refer to our Form 8-K and the press release in the investor section of our website. The key speakers today are Jeff Lorberbaum, Chairman and Chief Executive Officer, Chris Wellborn, Chief Operating Officer, and Glenn Landau, Chief Financial Officer. I'll now turn the call over to Jeff for his opening remarks. Jeff?

Thank you, Ken. Our third quarter operating results were in line with our expectations, though we're not satisfied with our performance. Our sales were $2.5 billion, roughly flat as reported on a constant basis. Our adjusted operating income for the period was $250 million, or 10% of sales. Compared to the prior year, the US dollar strengthened, creating a $35 million impact on our translated revenues. As anticipated, our US businesses presented the greatest challenges during the period, given soft retail demand, the impact of LVT, a stronger dollar, and excess ceramic inventories in the industry. Lower interest rates in the US are positively impacting housing starts and home sales, and many believe this could be the beginning of an improving housing market. During the period, duties on imported ceramic tile were increased by an additional 104%, which will largely stop shipments coming into the market. Trends in our other major markets weakened, creating a more competitive environment. In most regions, significant political and trade uncertainties are affecting consumer confidence and spendings. In response to economic concerns, central banks in many countries are lowering interest rates to stimulate growth. We expect the present conditions to persist in the near term, and we'll further adjust our strategies as needed. We're progressing on the initiatives to improve our business, with the most significant of these being aligning the ceramic production with demand in the US, realigning our North American carpet operations, optimizing our LVT manufacturing, and ramping up our new plans. In addition, we're entering new product categories, introducing innovative product extensions, and optimizing our recent acquisitions. We are investing in more sales personnel and marketing to increase our penetration in new and existing products. We continue to streamline our operations to enhance efficiencies, and we are leveraging automation and process enhancements to lower our costs. Our free cash flow for the quarter is up year over year, and our balance sheet remain strong. Since the beginning of the third quarter, we purchased over 740,000 shares for approximately $91 million under our stock purchase program. For a review of our financial performance during the period, I'll turn the call over to Glenn.