Mohawk Industries, Inc.

Good morning. My name is Tawanda, and I will be your conference operator today. At this time, I would like to welcome everyone to Mohawk Industries' second quarter 2021 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, Friday, July 30, 2021. I would now like to introduce your speaker for today, Mr. James Brunk. Mr. Brunk, you may begin your conference.

Thank you, Tawanda. Good morning, everyone, and welcome to Mohawk Industries' quarterly investor call. Joining me on today's call are Jeff Lorabom, Chairman and Chief Executive Officer, and Chris Wellborn, President and Chief Operating Officer. Today, we'll update you on the company's second 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 Allegation 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 Commission. This call may include the discussion of non-GAAP numbers. For a reconciliation of non-GAAP to GAAP amounts, please refer to our Form 8K and press release in the Investor section of our website. Now I'll turn the call over to Jeff for his opening remarks.

Jeff? Thank you, Jim. In the second quarter, we generated revenue of approximately $3 billion, the highest quarterly sales of any period in our company's history. Our sales increased significantly over last year when the pandemic interrupted the global economy. Our adjusted EPS of $4.45 was the highest on record for any quarter. Our success is the result of the extraordinary efforts of all of our team members across the world. They have shown their dedication and resilience to overcome the challenges that we have faced. We greatly appreciate what they have been able to achieve. Our second quarter results were significantly stronger than we had anticipated across all of our businesses with sales building on a momentum from our first period. In the quarter, our operating margin expanded to their highest level in the last four years as we leveraged our operational and SG&A expenses. The actions we have taken to simplify our product offering, enhance our productivity, and restructure our costs are benefiting our results. We've delivered almost $95 million of the anticipated $100 to $110 million in savings for our restructuring initiatives. Across the enterprise, we continue to respond to rising material, energy, and transportation costs by increasing prices and optimizing manufacturing and logistics. During the quarter, most of our manufacturing ran at capacity, or we were limited by material supply and labor availability. Raw material constraints in many of our operations led to unplanned production shutdowns during the period. Overall, we successfully managed interruptions that impeded our normal operations, as well as regional manufacturing and customer closings related to COVID regulations in local areas. Our inventory levels increased slightly in the period, primarily reflecting higher material costs. Rising freight costs and limited shipping capacity impacted our material costs, availability of imported products, local shipments to customers, and international exports. Presently, we do not anticipate near-term abatement of these constraints. All of our markets continue to show strength with robust housing sales and remodeling investments across the world. Commercial projects are increasing as the global economy improves and businesses gain confidence to expand and remodel. Inventory levels in most channels remain low, and our sales backlogs are above our historical levels. To improve our sales mix and efficiencies, we will introduce more new products with enhanced features and lower production complexity in the second half of the year. To alleviate manufacturing constraints, we have approved new capital investments of approximately $650 million to increase our production, with most taking 12 to 18 months to fully implement. In the second quarter, we purchased $142 million of our stock at an average price of $2.08 for a total amount of approximately $830 million since we initiated the program. With our strong balance sheet and historically low leverage, we're reviewing additional investments to expand our sales and profitability. Jim will now cover the second quarter financials.