Mohawk Industries, Inc.

Good day and welcome to the Mohawk Industries third quarter 2026 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 this event is being recorded. I would now like to turn the conference over to Joe Ahlersmeyer, Vice President of Finance Investor Relations. Please go ahead.

Thanks, Chloe. Good morning, everyone, and thank you for joining the call. With me today are Paul De Cock, Chief Executive Officer, and Nick Manthey, Chief Financial Officer. Today, management will detail our new strategic and capital allocation framework, discuss an update on the company's third quarter performance, and provide guidance for the fourth quarter of 2026. I'd like to remind everyone that our press release and statements that we make during this call may include forward-looking statements, which are subject to various risks and uncertainties, including but not limited to those set forth in our press release and our filings with the SEC. This call may include 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 the call over to Paul for his opening remarks.

Thank you, Joe. Good morning, everyone, and thank you for joining us today on my first earnings call as CEO. Before we get started, let me first thank Jeff Lorberbaum for his leadership, drive, and passion for Mohawk. The leadership transition has been seamless, and we are fortunate to have his continuing support as chairman. This morning, I will begin with our results for the quarter and the market conditions we are navigating across our businesses. I'll then share my vision for Mohawk The actions already underway to drive outperformance and what you can expect from me and my leadership team. Let me start with our results. We delivered a solid quarter and I'm proud of how our teams executed. Our overall operating result was in line with our expectations, even as demand softened late in the quarter. The quarter reflected progress in four main areas. We grew sales and executed price increases in response to rising inflation. Growth in global ceramic was led by US retail and countertops and in flooring North America by retail and commercial. Flooring rest of the world sustained pricing gains despite lower market volumes. We acted decisively to offset the impacts of higher underlying inflation with the combination of price, mix and productivity more than offsetting the impacts of higher underlying inflation. We converted our performance into cash, generating cash from operations of $471 million and free cash flow of $390 million in the quarter, bringing our year-to-date free cash flow to $626 million. And we substantially increased share repurchases Returning $261 million to shareholders in the quarter, more than double what we did in the first half. Now let me take you through the performance of our end markets. In our US market, where we generate a little more than half of total company sales, market conditions remain challenging. Following the recent rises in rates, Demand weakened exiting the quarter and has remained soft across most products and channels during October, particularly in the builder channel. We are executing well and are focused on improving our leading market positions across all channels. We continue to differentiate our products and service advantages. In residential repair and remodel, which we estimate represents approximately half of our US sales, consumers continue to defer larger projects, and the outlook for existing home sales has weakened, entering seasonally slower months. Activity through the specialty retail channel is holding up better and improved sequentially, while larger format retail point of sale trends remain slow. Even in this environment, our retail business grew in the quarter and Gain Share across most of our product categories, led by residential carpet, where adoption of our industry-first asthma and allergen-friendly carpet is exceeding our expectations. Our laminate business continues to outgrow the category on scratch resistance and real wood visuals. Our ceramic remodel business improved for a fourth consecutive month, and countertops grew on new quartz designs and our concierge programs. Our market leading accessories assortment continues to build attachment across our hard surface platforms. In residential new construction, which we estimate represents about one fourth of our US sales, the builder market continues to soften. Single family starts have fallen with higher mortgage rates and declining builder confidence. Affordability is constraining buyers in most regions and large builders are managing construction costs. This is the most challenging environment across our end markets and we expect it to remain so in the near term. We added new builder program wins in both ceramic and laminate during the quarter. Our laminate is gaining with home builders as a better performing alternative to LVT and our stair and accessory solutions are becoming part of builder specifications. While these wins do not fully offset the market decline, they strengthen our position in this important channel and we expect them to compound when the market improves. Finally, in commercial, which we estimate represents the remaining fourth of our US sales, demand is more constructive than residential, with repair and remodel activity holding up better than new development. Industry activity among architects and designers is soft, as new project awards slowed in August and September. In ceramic, commercial sales declined as projects were deferred and we are responding by concentrating on the active segments. Hospitality, healthcare, and education are the most active segments and return to office continues to support carpet tiles, driving strong performance in office. Our commercial LVT category continued to build momentum, delivering a six consecutive month of order growth, while sales of carpet tile, commercial accessories, and our rubber platform also grew in the quarter. Now pivoting to Europe. In Europe, which represents approximately one-third of our total company sales, consumer demand remains soft, with weak residential activity and showroom traffic. Though commercial projects are holding up better, Our premium collections continue to outperform and in ceramic or large format and slab offerings are growing. In laminate, our innovation leadership continues to win with customers. European natural gas prices have roughly doubled since the start of the third quarter and we have responded quickly, bringing our ceramic price increase forward and announcing November price increases in our European panels and insulation businesses to recover recover even higher energy and chemical costs. Outside of the US and Europe, which represents the rest of total company sales, demand remains soft with consumers pressured by inflation and high rates, although we continue to outperform. These market conditions reinforce why our focus must remain on the actions within our control. As the largest flooring and design services company globally, Mohawk has built many unique strengths and advantages, which include our leading market positions, our recognized brands, our innovation expertise, our strong customer relationships, and the scale and efficiency of our manufacturing and distribution operations. Our strategy builds upon these strengths and advantages. We are aligning our actions and investments to a strategic framework comprising four pillars, each supporting our goal of delivering more value to our customers along with more value per share for our investors. Now let me take you through the four pillars. The first pillar is outperforming our markets. This is our catalyst for compounding value creation through demand cycles. We estimate that our industry grows low single digits annually on average over the long term. We participate in cyclical end markets, but our team members find ways to succeed and perform against any market backdrop. When the industry is expanding, we must grow faster than the market, and when it is contracting, we will relentlessly pursue share wins that will compound through the next expansion. Our go-to-market approach will be consistent through cycles, focused on the most attractive segments of the market. We will deepen customer relationships and solidify Mohawk as the vendor of choice across all channels. We will use digital tools to create downstream demand and pull our product offerings through the value chain. We are committed to continuously improving our competitive position through expanded partnerships, new customer wins, and growth in differentiated routes to market. We will be transparent about conditions, but our focus, like the expectations I have set for our leaders, will be outperformance through cycles and over the long term. The second pillar, product innovation and brand strength, deals with the solutions that drive the first pillar. Innovation is a core competency underpinned by our three global innovation hubs. Ceramic Surfaces in Italy, Hard Surfaces in Belgium, and Soft Surfaces in the US. We own a portfolio of patented technological innovations that further support our advantage. We will continue to build on the strength of our brands, and we see immense opportunities in the evolution of consumer preferences toward high-quality, trusted brands over commoditized offerings. Our focus will be on bringing more distinctive products and solutions to the categories and channels where we can create the greatest value. The third pillar, profitability and operational excellence, is how we will aim to ensure the highest level of service to our customers while we continuously improve margins and incremental returns. We will be defining Mohawk's operating model, building around a culture of productivity, continuous cost improvement, and operational excellence supported by strong digital capabilities. We believe our quality and service will extend our competitive lead and deepen our relationships with the retailers, distributors, and contractors who sell and install our products. The fourth pillar, cash generation and capital discipline, deals with how we convert profitable growth into cash and how effectively we redeploy that capital to enhance shareholder value. We will have a sharp orientation toward cash returns, and this is not unique to capital expenditures. Every dollar of deployable cash we have will pass through a strict framework, from operating expenses to capital investments to inorganic investments. We will invest sufficiently in the core business, exercise discipline in evaluating inorganic opportunities, and return capital to shareholders through consistent share repurchases. My team and I are energized by the opportunity ahead and committed to demonstrating strategic traction, delivering operationally, and deploying capital in ways that meaningfully enhance shareholder value. And with that, I will turn it over to Nick.