Mohawk Industries, Inc.

good morning my name is victoria and i'll be your conference operator today at this time i would like to welcome everyone to mohawk industry second second quarter 2022 conference call all lines have been placed on mute to prevent any background noise after the speaker's remark 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 star then two. Should anyone need assistance at this 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 29, 2022. Thank you. I would like to introduce Mr. James Brunk. Mr. Brunk, you may begin your conference.

Thank you, Otaria. Good morning, everyone, and welcome to Mohawk Industries Quarterly Investor Call. Joining me on today's call are Jeff Lowerbaum, Chairman and Chief Executive Officer, and Chris Wellborn, President and Chief Operating Officer. Today, we'll update you on the company's second quarter and provide guidance for the third 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 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 Exchange Commission. This call may include discussion of non-GAAP numbers. For reconciliation in any non-gap-to-gap amounts, please refer to our Form 8K and press release in the Investor section of our website. I'll now turn the call over to Jeff for his opening comments. Jeff? Thanks, Jim.

Mohawk's second quarter sales rose to $3.2 billion, up 6.7% as reported, or approximately 11.1% on a constant basis. Sales grew in all our segments. with our top-line results benefiting from price increases, enhanced product mix, improvements in commercial, and contributions from our small acquisitions. As the quarter progressed, the global economic environment became increasingly challenging, and our organizations implemented additional actions to support our performance. Our operating income for the quarter was in line with our expectations, even as material, energy, and transportation inflation remained a significant headwind, and our translated results were impacted by the strengthening U.S. dollar. Over the past 18 months, all of our businesses have faced extraordinary inflation, and we have instituted multiple price increases to pass through these higher costs. We're also taking numerous operational actions, including cost controls, productivity improvements, mix and logistics enhancements. Across our markets, inflation is causing changes in consumers' discretionary spending. U.S. housing sales have been impacted more than our other markets as mortgage rates have risen faster. Unlike past economic cycles, housing demand exceeds the available supply, and foreclosures are not an issue. In Europe, interest rates have not risen as much as the U.S., though consumer discretionary spending is being eroded by energy and other inflation, which is impacting demand. Volatility in natural gas supplies have caused a dramatic spike in near-term prices, and supplies and pricing remain uncertain. European countries are considering strategies for alternative supply, ways to ration gas, and subsidies to support those most affected. In most regions, Investments in commercial construction and remodeling remain solid. Both projects that were deferred due to the pandemic and new projects are being initiated in greater numbers as the commercial sector continues to strengthen. As we navigate the near-term market dynamics, Mohawk's strong balance sheet provides many options for investments, including internal expansion, acquisition, and stock buybacks. During the second quarter, we announced approximately $440 million in new acquisitions, with the largest being an agreement to acquire Vitromex, a leading ceramic manufacturer in Mexico. In early July, we completed the acquisition of Foss Floors, a leading U.S. needle-punch flooring manufacturer. In Europe, we are making excellent progress integrating our 2021 bolt-on insulation and panel acquisitions. which are contributing to our results as expected. We continue to explore additional acquisition opportunities. Our expansion projects remain on schedule, including laminate, LVT, quartz countertops, and European porcelain slabs. These investments will help us satisfy current and future demand, as well as deliver our next generation of product innovation and operational efficiencies. Now Jim will review our second quarter financial performance in greater detail.