Mohawk Industries (MHK) Q2 2022 Earnings Call Transcript

For the period ending July 2, 2022

July 29, 2022 11:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

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 Industries’ Second Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions] 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.

James Brunk

Thank you, Victoria. Good morning, everyone, and welcome to Mohawk Industries' quarterly investor call. Joining me on today's call are Jeff Lorberbaum, 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 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 amounts, please refer to our Form 8-K and press release in the Investors section of our website.

I'll now turn the call over to Jeff for his opening comments. Jeff?

Jeff Lorberbaum

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 and 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 US 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. US 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.