Mohawk Industries, Inc.

Good morning. My name is Carol and I will be your conference operator today. At this time, I would like to welcome everyone to the Mohawk Industries first quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would 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, Tuesday, May 5th, 2020. Thank you. I would now like to introduce Mr. Frank Boykin, Chief Financial Officer. Mr. Boykin, you may begin your conference.

Thank you, Carol. Good morning, everyone, and welcome to our first quarter investor conference call. Today, we'll update you on the company's first quarter results. 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 in the Private Securities Litigation Reform Act of 1995, which are 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 Commissions. This call may include discussion of non-GAAP numbers. For a reconciliation of any non-GAAP to GAAP amounts, please refer to our Form 8K and press release in the Investors section of our website. I'll now turn the call over to Jeff for his opening remarks.

Jeff? Thank you, Frank. For the first quarter, our sales were down 3.5% with a constant FX adjusted for one less day in the period. The world changed during the first quarter, and we're now managing through an unprecedented situation. Around the world, government-mandated stay-at-home practices are slowing the spread of the coronavirus, with the consequence being a seismic economic contraction that is challenging all businesses. Mohawk entered the year as the world's leading flooring company with a strong presence in all categories, manufacturing in 18 countries and sales in more than 170 nations. During 2019, we generated $1.4 billion of operating cash flow and have a strong balance sheet and leverage of 1.6 times near our historical low. Until the outbreak, our results for the quarter were in line with our plan as we benefited from the initiatives we implemented in 2019. The coronavirus has dramatically changed our short-term strategies as we adapt to the rapidly evolving conditions. As we progressed through the first quarter, government actions to reduce the spread of the virus impacted all of our markets. Countries and states are reacting differently to the outbreak, with some shutting our manufacturing operations. In most regions, we were able to produce and ship product, but it reduced levels due to lower demand and employee concerns. Across all of our markets, demand has dropped dramatically, with residential remodeling being impacted the most up to this point. We're allowed new residential construction, and the commercial channel have held up better as projects are still being completed. Do-it-yourself products are performing best as some people started projects while staying at home. To respond to this global event, we've established corporate segment and business teams to manage our efforts as conditions change. We're keeping employees safe, increasing work from home, and adjusting strategies as required. We're reducing capital expenditures, cutting non-critical expenses, and putting our stock purchases on hold until the environment improves. Temporary layoffs and furloughs are being implemented around the world as we balance production with short-term demand. The majority of our business is in countries where governments are supplementing wages to maintain workforces. Some countries are stopping our operations and requiring continuation of compensation. Each week, we're adjusting production and processes to align with the changing levels of demand, and we are unable to predict how demand will evolve in the future. Our organization is flexible and adapting to fluid conditions, and we're applying the lessons we learned from 9-11 and the last recession to guide us through these times. We recently obtained a $500 million term loan to expand our liquidity to 1.3 billion after we pay off a $300 million euro note this month. With no other maturities in 2020, we have liquidity to manage through and strengthen our position when the economy recovers. I now will turn the call over to Frank.