Mohawk Industries, Inc.

Good day, and welcome to the Mohawk Industries fourth quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to James Brunk. Please go ahead, sir.

Thank you, Rocco. Good morning, everyone, and welcome to Mohawk Industries' quarterly investor call. Joining me on the call are Jeff Loribond, Chairman and Chief Executive Officer, and Chris Welborn, President and Chief Operating Officer. Today, we'll update you on the company's fourth quarter and full year performance and provide guidance for the first quarter of 2024. 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, 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 discussion of non-GAAP numbers. For reconciliation of any non-GAAP to GAAP amounts, please refer to our Form 8K and press release in the Investor section of our website. I'll now turn over the call to Jeff for his opening remarks. Jeff?

Thanks, Jim. Our fourth quarter results were ahead of our expectations, with net sales for the quarter of approximately $2.6 billion, down 1.4% as reported, or 4.1% on a constant and legacy basis. Lower demand and residential remodeling and new construction continue to impact our results. Our adjusted EPS for the quarter was $1.96, with benefits from cost containment, productivity, and lower input costs. Pricing and product mix declined, offset by lower raw material and energy costs during the quarter, or an exchange at an impact of approximately $22 million on operating income, or 27 cents on EPS. Turning to our full-year results, Mohawk's net sales were approximately $11.1 billion, down approximately 5% as reported, or 7.7% on a constant basis, with adjusted EPS of $9.19. Last year, interest rates increased, creating challenges for our industry, which is highly sensitive to rate fluctuations. Even though we have a diversified geographic footprint, all of our markets were impacted by similar conditions. During 23, existing home sales declined substantially, remodeling projects were postponed, and consumers traded down. New home construction was also constrained as rising interest rates and a weak housing market reduced home starts. Throughout the year, the commercial sector remained stronger than residential, though investments began to slow as interest rates increased and lending hiked. These factors reduced industry demand across our business, creating unabsorbed overhead and shutdown costs. As a result, our industry reduced selling prices, and we passed through declining costs in energy and materials. Under these conditions, we focused on optimizing our revenues and lowering our costs through restructuring actions and manufacturing enhancements. We aggressively managed inventory levels, which reduced our working capital by over $300 million, excluding acquisitions. We've also invested in sales resources, merchandising, and new products with innovative features to inspire consumers to purchase flooring. As we integrate our recent acquisitions around the world, we're investing to improve their operations and product offering. In 2023, we completed two acquisitions in Latin America that extended our position as the world's largest ceramic tile producer and solidified our leadership in the regions. In the year, we focused our capital expenditures on product innovation and cost reduction, as well as product categories that should have the highest growth as the economy improves. In Europe, our porcelain slab and insulation expansions are now fully operational. While in North America, our premium laminate LVT projects are progressing. During the second half of this year, we anticipate completing the expansion of laminate in Europe and quartz countertops in the United States. We close the year with debt leverage of one and a half times, free cash flow of $716 million, and available liquidity of $1.9 billion. We are retiring a term loan of approximately $900 million in quarter one, which has a higher interest rate. We are well positioned to manage current conditions and emerge stronger from this economic cycle when the rebound occurs. Finally, in January, Newsweek recognized Mohawk as one of America's greatest workplaces for diversity. Our talented people are our most valuable asset, and we are proud that our teams mirror the communities in which we operate. And now Jim will provide an overview of our fourth quarter financials.