Mohawk Industries (MHK) Q3 2022 Earnings Call Transcript

For the period ending October 1, 2022

October 28, 2022 11:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, everyone. My name is Jamie, and I'll be your conference operator today. At this time, I would like to welcome everyone to Mohawk Industries Third 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, October 28, 2022. Thank you.

At this time, I'd like to introduce Mr. James Brunk, Mr. Brunk, you may begin your conference.

James Brunk

Thank you, Jamie. 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 third quarter and provide guidance for the fourth 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

Mohawk's third quarter sales increased to $2.9 billion, up 3.6% as reported or approximately 8.3% on a constant basis, primarily from price increases and strength in the commercial sector.

Our sales in the quarter were weaker than we anticipated, as sales in the retail channel softened across all regions and product categories. The strengthening dollar also negatively impacted our translated sales for the quarter by $117 million or 4.1%.

Our operating income declined as lower volume resulted in higher unabsorbed costs and material energy and transportation inflation impacted our results. Our global organization responded to the economic challenges with additional actions to optimize cost, productivity and inventory levels.

There are substantial differences in the economic conditions affecting our various global markets and product categories. Our businesses in Europe have been impacted more than others, due to the unprecedented energy crisis and high inflation that has slowed the region's economy.