Mohawk Industries, Inc.

Good morning everyone and welcome to the Mohawk Industries first quarter 2025 earnings conference call. All participants will be in a 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 and then one on your touch tone phones. Please note this event is being recorded. At this time, I'd like to turn the conference call over to Mr. James Brunk, Chief Financial Officer. Sir, please go ahead.

Thanks, Jamie. Good morning, everyone, and welcome to Mohawk Industries' Quarterly Investor Conference Call. Joining me on the call are Jeff Lohrbaum, Chairman and Chief Executive Officer, and Paul DeCock, President and Chief Operating Officer. Today, we'll update you on the company's first quarter performance, and provide guidance for the second 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 periodic filings with the Securities and Exchange Commission. This call may include the 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 Investor section of our website. I'll now turn over the call to Jeff for his opening remarks. Thank you, Jim.

In the first quarter, our reported sales were $2.5 billion, a decrease of 5.7% as reported, or about flat on a constant basis, absorbing two fewer shipping days and year-over-year foreign exchange headwinds. Even with soft market conditions, our premium collections and differentiated products we launched in 2024 generated above market results. We recorded earnings per share of $1.52, with our performance primarily benefiting from productivity gains, restructuring actions, and a lower tax rate, which offset pricing pressure and higher input costs. The impact of missed sales and extraordinary costs from our new Flooring North America order system was within the expected range and service has returned to historical rates. We are enhancing the system to improve our efficiencies and provide greater functionality and capabilities. During the quarter, we purchased 225,000 shares of our stock for approximately $26 million. Last month, global tariffs were announced, which elevated uncertainty for businesses and consumers. In response to the retaliatory tariffs, the U.S. also implemented tariffs of 145% on China and which supplies a significant part of LVT sold in the U.S. MOAC is a substantial domestic operation to produce ceramic tile, carpet, laminate, sheet vinyl, LVT, and quartz countertops, which is more advantageous as tariffs increase. To offer our customers a wider variety of options, we supplement our ceramic tile and LVT manufactured in the U.S. with imported products. Most of the ceramic tile and some of the LVT we import is produced in our own facilities in Mexico and is not subject to tariffs under the USMCA agreement. We increased our inventory levels in preparation of tariffs being implemented. At the current 10% rate, we estimate Mohawk will incur annualized costs of approximately $50 million, which we expect to address through price increases and supply chain adjustments as needed. In addition to direct To the direct impact, the tariffs are likely to influence consumer and new construction and business spending in both the U.S. and abroad, though the extent is unpredictable at this time. Another impact of the tariffs is a weakening of the U.S. dollar, which could benefit our domestic manufacturing and translated results this year. Across our markets, conditions in the first quarter weakened sequentially, with the residential remodeling remaining the lowest sector. Even before the tariff announcement, consumer confidence had been falling as individuals have grown increasingly anxious about their future prospects. In the U.S., concerns over inflation have prevented the Fed from reducing rates, though most are now predicting the Fed will make multiple rate cuts during 2025. So far this year, more U.S. homes are being offered for sale as available housing inventory continues to rise. After multiple years of deferring purchases, Some consumers are re-entering the real estate market to meet their current family needs. Others are staying in their homes longer than planned and will initiate remodeling projects to maintain their properties and accommodate family changes. As the spring selling season begins, the outlook for U.S. homebuilders remains cautious, with March results showing significant variation by regions. Due to economic uncertainty and the war in Ukraine, consumer confidence in Europe has also declined, leading to postponed home sales and remodeling activities. As inflation nears their target, the European Central Bank cut central rates to 2.25% in April to stimulate the economy as well as the housing market. As defense and infrastructure spending increases, European economies, particularly Germany, could see improvement. Now Jim will review our financial details for the quarter. Thank you.