Mohawk Industries, Inc.

Mohawk Industries' fourth quarter 2024 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 a touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to James Brunk, Chief Financial Officer. Please go ahead.

Thank you, Wyatt. Good morning, everyone. Welcome to Mohawk Industries Quarterly Investor Conference Call. Joining me on the call is Jeff Lohrbaum, Chairman and Chief Executive Officer, and Chris Wellborn, our Vice Chairman. Today, we'll update you on the company's fourth quarter and full year performance and provide guidance for the first quarter of 2025. 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 Commission. This call may include discussion of non-GAAP numbers. For a reconciliation of any non-GAAP to GAAP numbers, 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 remarks. Jeff? Thank you, Jim.

Our fourth quarter results exceeded our expectations as sales actions, restructuring initiatives, and productivity improvements benefited our performance. Additionally, the sales impact from US hurricanes was limited to approximately $10 million. Net sales for the quarter were approximately $2.6 billion, consistent with the prior year with two additional shipping days, partially offset by the strengthening U.S. dollar. While residential demand remains soft in our markets, our product introductions last year and our marketing initiatives contributed to our sales performance around the globe. Our adjusted EPS for the quarter was $1.95, in line with the prior year from productivity, additional shipping days, lower interest expense, offset by unfavorable pricing, product mix, and inflation. For the full year, our net sales were approximately $10.8 billion, down approximately 3% as reported, and on a constant basis. With an adjusted EPS of $9.70, as we progressed through the year, our industry deteriorated from higher interest rates, lower housing turnover, and reduced remodeling. In response to these conditions, we took additional actions to optimize sales and launched initiatives to reduce overhead, enhance productivity, and restructure operations to maximize our performance. Last year, 55% of our sales were in the U.S. and 45% were in other geographies with leading flooring positions on four continents. The fourth quarter environment was an extension of the conditions our industry faced throughout last year. Consumers continued to limit large discretionary purchases, and consumer confidence remained constrained by cumulative inflation, economic uncertainty, and geopolitical tensions. During 24, home sales across the world stayed suppressed, while U.S. homeowners remained locked in place with low mortgages, and existing U.S. home sales fell to a 30-year low. Central banks in the U.S., Europe, and other regions lowered interest rates during the latter part of last year, though the impact on housing turnover was negligible in most regions. Consumers who did initiate remodeling were more affluent or completing essential projects. New home construction was also constrained around the world, with higher home costs and interest rates impacting starts. builders increased sales by buying down mortgage rates to make monthly payments more affordable. Throughout the year, investments in the commercial sector slowed, though they remained stronger than residential remodeling. These factors reduced market demand and created heightened industry competition for volume. This also resulted in greater unabsorbed overhead and shutdown costs as we managed production and inventory. Given these conditions, we focused on stimulating sales with innovative new products, marketing actions, and promotional programs. Our product launches delivered style and performance at affordable prices as well as unique premium products to incentivize remodeling. Last year, we initiated significant restructuring actions and operational improvements that are lowering our costs and will benefit our longer-term results. During 2024, we focused capital expenditures on projects driving sales, reducing costs, and maintaining our assets. Through these actions, we delivered full-year increase of approximately 6% and adjusted earnings per share in a soft market. For the year, we generated free cash flow of $680 million and repurchased 1.3 million shares of stock for $161 million. We ended the year with available liquidity of $1.6 billion and debt leverage of 1.1 times. We are well positioned to manage this market cycle, pursue opportunities for long-term profitable growth, and emerge stronger when the housing markets improve. We are taking actions in areas we control to optimize our current performance and improve sales and profits when volumes rebound. Now Jim will review our financial details.