Good morning, everyone. My name is Jamie, and I will be your conference operator today. At this time, I would like to welcome everyone to Mohawk Industries' Q3 2023 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press Star and the number One on your telephone keypads. To withdraw your questions, you may press Star and Two. Should anyone need assistance during the conference, you can signal an operator by pressing Star and Zero. As a reminder, ladies and gentlemen, this conference is being recorded today, Friday, October 27, 2023. Thank you. I would now like to introduce Mr. James Brunk. Mr. Brunk, you may begin your conference. Thank you, Jamie. Good morning, everyone. Welcome to Mohawk Industries' Quarterly Investor Conference 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 Q3 performance and provide guidance for the Q4 of 2023. 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 remarks. Thanks, Jim. In the Q3, our net sales were $2.8 billion, down approximately 5.2% as reported, or 8.1% on a constant and legacy basis, in line with our expectations as our industry faced continued pressures across all regions, primarily due to constrained residential investments and tightening of consumer discretionary spending. Our adjusted EPS for the quarter was $2.72, with our margins across the business benefiting from cost reductions, productivity initiatives, and lower input costs. Our Q3 performance was seasonally impacted by vacations in Europe, which reduced our sales and earnings versus the prior quarter. Our lower material and energy costs offset the decline in both price and mix. We also faced FX headwinds of approximately $20 million on operating income or $0.25 on EPS. We are managing our working capital and generated strong free cash flow of $385 million in the quarter and $660 million on the year-to-date basis. During the quarter, central banks around the world continued to raise interest rates to slow down their economies and reduce inflation. Their actions are affecting new construction and remodeling in both residential and commercial channels, postponing spending on new projects. In the US, mortgage rates have climbed to their highest level in more than two decades, which has suppressed the housing market and limited home renovation activity. In Europe, consumers are deferring large purchases, such as flooring, as a result of higher energy costs, inflation, and uncertainty due to the war in Ukraine. Our industry faces a greater impact from these pressures than other sectors, given that most flooring purchases are deferrable. With the high fixed costs required to produce flooring, competition increases as the industry slows and participants attempt to increase their sales to maximize absorption. As a result, our average selling prices and mix have declined, with the impact partially offset by lower material and energy costs, restructuring benefits, and process improvements. The expected housing sector recovery continues to be postponed, and we are managing the business to optimize our results and cash flow until it occurs. We're taking actions to increase our volumes while managing margins and operating expenses. We've launched differentiated collections, selectively introduced promotions, and expanded our participation in the new construction channel. To further enhance our competitive position, we will shut down older ceramic production in Italy, and we are converting US rigid LVT production to a direct extrusion process. These restructuring initiatives will result in a non-recurring charge of approximately $55 million, of which $50 million is non-cash. When completed, these initiatives should improve our profitability by $30 million annually by enhancing our productivity, lowering our manufacturing costs, and optimizing our production flexibility. Our European expansions in insulation and porcelain slabs are currently in operation. Our US premium laminate and LVT projects are continuing to start up. Expanded production in European laminate and US quartz countertops should begin in the second half of 2024. As the integration of our acquisitions in Mexico and Brazil proceeds, we have consolidated the general management, sales, and administrative functions while enhancing the company's product offering, operational efficiencies, and customer base. While the Mexican and Brazilian markets are experiencing reduced demand and margins, we anticipate gaining additional benefits from our acquisitions as these markets recover. In September, we released our fourteenth annual sustainability report, and for the first time, we provided Scope 3 emissions. Institutional Shareholder Services has ranked Mohawk as one of the top companies for environmental quality in the durable goods and apparel category. We have significantly exceeded our 25 goals related to decarbonization, waste reduction, and water conservation. We're lowering our carbon footprint by using more recycled content, increasing our green energy production, and expanding our product circularity. We recently received the Susan G. Komen Promise Award for our two decades of partnership in the fight against breast cancer. We've also formalized a board of directors selection policy as part of our ongoing commitment to diversity. To learn more, you can read the report online at mohawksustainability.com. I'll turn the call over to Jim for a review of our Q3 financial performance. Thank you, Jeff. Sales for the quarter were just under $2.8 billion. That's a 5.2% decrease as reported, 8.1% on a constant legacy basis. Higher interest rates and continued inflation has weakened new housing and remodeling activity, negatively impacting our global business with lower volume and price and mix pressures. Gross margin for the quarter was 25% as reported, and excluding one-time items, was 26.6%. That's up 100 basis points versus the prior year, with lower input and energy costs exceeding unfavorable price and mix in the quarter, along with stronger productivity, only partially offset by lower volume and unfavorable FX. The actual detailed amounts of these items will be included in the MD&A of our 10-Q, which we will file after the call. SG&A as a percentage of sales was 19.9% as reported. Excluding one-time items, was 18.1%. The dollar increase was primarily attributable to the impact of acquired businesses, investments in new products and marketing to drive increased future sales, unfavorable FX, and higher inflation. The operating margin, as reported, was a negative 26.5%, and excluding charges, was 8.4%. As the company's current market capitalization, along with challenging economic conditions and higher discount rates, resulted in a non-cash goodwill and trade name impairment charge of $876 million in the quarter. Total non-recurring charges was $967 million, primarily related to the impairment of the goodwill and trade names. But in addition, to further enhance our competitive position, we will shut down older ceramic production in Italy and converting our US rigid LVT production to a direct extrusion process. These actions should improve our profitability by approximately $30 million annually. Adjusted operating income was 8.4%, as I noted. The year-over-year decline was primarily driven by lower sales volume and unfavorable FX, partially offset by the reduction in input and energy costs, exceeding the impact of negative price and mix, and increased productivity gains, which were under pressure due to lower plant utilization. Interest expense for the quarter was $20 million. The year-over-year increase is due to a significant rise in global interest costs. Other income, other expense was income of $8 million. Non-GAAP tax rate was 20.8% in the current year versus 17.9% in the prior year. We expect Q4 2023's tax rate to be approximately 17.5%-18.5%. That gives us an EPS on an adjusted basis of $2.72. Turning to the segments. In Global Ceramic, sales were just under $1.1 billion. That's a 0.5% decrease as reported, and 6% on a legacy and constant basis. The US businesses volume outperformed, benefiting from our expanded position in new construction and commercial channel in the quarter. Adjusted operating income was $88 million or 8% of sales, a decline versus prior year as the global slowdown in demand and pressure on price mix led to further temporary shutdowns, lower sales volume, in addition to the impact of unfavorable FX, partially offset by improving productivity gains and restructuring actions. In Flooring North America, our sales were just over $960 million. That's a decrease of 11.7% as reported, and 12.2% on a constant basis, as higher interest rates and inflation continued to pressure discretionary spending across all print product channels. Adjusted operating income was $78 million or 8.1%. The operating margin was in line with prior year as lower input and energy costs offset negative price mix, partially offset by weaker volume and lower productivity due to underutilization of our plant assets in the current demand environment. In Flooring Rest of the World, the sales are just over $710 million. That's a 2.6% decrease as reported, and 5% on a constant basis, as our business has been impacted by low consumer confidence, higher interest rates, inflation, and geopolitical events. The business in Australia and New Zealand, and our resilient and insulation products, held up best in this environment. Adjusted operating income was $77 million, or 10.9%. Our adjusted operating income margin expanded versus prior year, as lower input and energy costs offset the weakening price mix, similar to Flooring North America, in addition to the benefits of green energy and fewer temporary plant shutdowns than the prior year, all partially offset by unfavorable FX. Corporate eliminations were $10 million for the quarter, in line with the prior year. Turning to the balance sheet, cash and cash equivalents were $518 million for the quarter, driven by strong management of working capital. Our free cash flow grew to $385 million in the Q3, and are standing at $660 million on a year-to-date basis. Receivables were just over $1.9 billion, with a DSO of 59 days, which was in line with the prior year. Inventories were just over $2.5 billion. The year-over-year inventory decreased $380 million, and excluding the impact of acquisitions, the decrease was $438 million, primarily due to a focused reduction in units, supported by lower year-over-year costs. Inventory days also decreased to 125 days from 131 in the prior year. Property, plant, and equipment was just shy of $4.8 billion, with Q3 CapEx standing at $127 million, with D&A of $150 million. Full year 2023 forecast includes a CapEx of just over $620 million at this point. And finally, gross debt was $2.6 billion, with leverage at 1.5x adjusted EBITDA. This positions the business to take full advantage of the rebound that historically follows a downturn like we are experiencing today. Now, with that, I'll turn it over to Chris to review our Q3 operational performance. Thanks, Jim. In Global Ceramic, our business outperformed due to our innovative product introductions and higher service levels. With this, we expanded our positions in the new home construction and commercial channels. Residential remodeling was slower due to lower home sales and postponed projects. Our investments in new decorating technology, polishing, and mosaics are providing domestic alternatives to premium imported ceramic. We are expanding our sales to regional builders, as well as kitchen and bath retailers, with our coordinated tile and countertop collections. To further expand our quartz countertop sales, we are introducing more stylized collections, utilizing new technologies that provide greater value. We have lowered our distribution costs by shipping more product directly from our plants and bypassing our regional warehouses. In our European ceramic business, retail traffic and new construction are being affected by economic uncertainty. In Southern Europe, where our business is concentrated, the economies are under greater pressure. Across all channels, low industry volume is creating more intense competition, and we are responding with specific price promotions by geography and channel to gain additional sales. Natural gas prices have declined by 80% from their peak, and we have reset our pricing to align with lower energy costs. While volumes have declined across most product types, sales of our premium Porcelain Slabs continue to grow, and we are optimizing our recent capacity expansion. We continue to adjust inventory and production to align with changing market conditions. To contain costs, we have increased productivity, reduced overhead, and implemented alternative formulations. In Latin America, we have reduced our cost structures to adapt to slower, more competitive markets, with Mexico being less affected. Our margins are being impacted by lower industry pricing, partially offset by declining energy costs. Inflation in both Mexico and Brazil is receding, and central banks are beginning to lower interest rates in response, with further reductions expected this year. We are integrating our acquisitions in both countries and making significant progress in executing our sales, product, and manufacturing synergies. To increase our distribution, we are gaining customer commitments to expand sales across all channels and price points using the combined product portfolio. In each country, we are utilizing the assets of our legacy business and acquisitions to broaden our product offering. We have completed the information systems conversion in Mexico, and the system consolidation in Brazil will be completed by the end of the year, enabling further operational improvements. In Flooring Rest of World, our margins benefited from declines in energy and raw material costs, partially offset by lower price and mix. Sheet vinyl continues to outperform other categories as it provides a lower cost alternative, and we have increased production to meet higher demand. With operational improvements underway, our Eastern European sheet vinyl acquisition is delivering higher style products and increased sales. Our laminate and LVT sales are under pressure in the softer market, and we are introducing new products, merchandising, and select promotions to optimize volumes. We have executed the restructuring to support the conversion of our residential LVT offering from flexible to rigid cores, which is positively impacting our results. We are pursuing additional flooring sales, reducing costs, and aligning production with demand to manage the current conditions. Our panels business has slowed due to a decline in remodeling activity, construction projects, and industrial demand. Lower industry sales are affecting both our selling prices and volumes. Our material costs are declining, and we're also benefiting from improved productivity and green energy production. Sales of our higher-margin HPL collections are growing as our customer base expands. Our sales and operational synergies are progressing in both our board and mezzanine acquisitions. Our insulation business is positioned for longer-term growth as governments require greater energy conservation for new construction and remodeling. Insulation is less impacted than our other product categories as consumers and businesses invest to minimize their energy costs. Industry pricing has declined along with input costs, with regional variation caused by new plants coming online. In the Q3, our volume improved and our margins were in line with the prior year. In Australia and New Zealand, the industry slowed during the quarter, and our sales in both countries were down slightly. Our results were impacted by mixed pressure in the residential channels as consumers sought lower-cost flooring options to maintain their project budgets. To increase sales and protect our margins, we are introducing enhanced collections across fiber categories, elevating the market of our high-end products, and implementing targeted promotions to meet evolving demand. Commercial sales in New Zealand remain strong, and our broad product offering is helping us secure larger specified projects. In our Flooring North America segment, pricing and mix were under additional pressure as competition increased across all product categories. The impact on our results was partially offset by lower input costs, restructuring, and productivity initiatives. To expand our retail presence in all flooring categories, we continue to invest in both products and merchandising systems. We are increasing our participation in the new home construction channel with regional and national builders. Across the segment, we are implementing many projects to reduce costs, improve efficiencies, and maximize material utilization. We are reengineering products with alternative materials and increasing recycled content. We have completed many of our restructuring initiatives to lower our costs and better align with current conditions. In residential carpet, to improve our mix, we are expanding our premium collections, which provide superior styling and features for the more discerning consumer. For the value-conscious homeowners, we are increasing our environmentally friendly recycled polyester offering. We have completed the integration of our nonwoven flooring acquisition and are expanding their customer relationships. In resilient, our sheet vinyl collections continued to perform well as a preferred choice for budget-oriented consumers. As an alternative to PVC-based products, we introduced a new resilient polymer core that is more environmentally friendly and scratch-resistant. In the Q3, our imported LVT sales were disrupted by US Customs actions, and to satisfy customer orders, we substituted higher-cost alternatives. We anticipate an increase in LVT inventories in the Q4 to improve service. We are continuing to ramp up our West Coast LVT production and the new extrusion process in Georgia. We anticipate both projects will be substantially operational in the Q1. In addition, the proprietary technology we are implementing in these plants will enable us to introduce unique styling and features to the market. We are expanding our distribution of laminate in the retail and builder channels. Our RevWood collections are being more widely accepted as a waterproof flooring alternative with superior visuals. Our new laminate product launches have been well received as consumers seek premium visuals at accessible price points. We are offering selective promotions to improve volumes in a soft market. Our trim and stair accessories business is growing as we broaden the range of our patented products across all channels. Though US commercial activity slowed in the quarter as financing became more difficult, our commercial performance is holding up better than residential, led by the hospitality sector. Our carbon-neutral product collections, with industry-leading recycled content, provide superior performance and design options to architects and designers. Our EcoFlex ONE carpet tile technology is gaining rapid adoption in the specifier community due to its acoustics, comfort, and ease of installation. We are expanding the sales and distribution of our recent flooring accessories acquisition through our existing commercial partners. Our business development group has leveraged our product and service advantages to cultivate new relationships with major retail, healthcare, senior living, and real estate development customers. I'll return the call to Jeff for his closing remarks. Thanks, Chris. In the present industry downturn, we're managing the controllable aspects of our business while adjusting to regional market conditions. In all of our geographies, elevated interest rates and persistent inflation are restricting consumer discretionary spending, resulting in postponed remodeling projects and new home purchases. Similar pressures are beginning to reduce commercial investments as business sentiment declines. Competition for sales to utilize plant capacity is increasing in all of our markets, and lower input costs should offset the impact. With enhanced products and merchandising, selective promotions, and expanded participation in the best-performing sales channels, we're maximizing our volumes while managing our margins and operating expenses. Across the enterprise, we are implementing productivity, cost reductions, and restructuring initiatives to lower our expenses and improve our results. We continue to manage our working capital management to optimize our cash flow. We expect foreign exchange rates to continue to be an earnings headwind. Given these factors, we anticipate our Q4 adjusted EPS to be between $1.80 and $1.90, excluding any non-recurring charges. With this, our full year 2023 adjusted EPS should exceed $9. Historically, the flooring industry undergoes greater cyclical peaks and troughs than other building products due to its postponable nature. Our business fundamentals remain strong and will benefit from significant pent-up demand when the industry rebounds.... Given the aging US housing stock, more than 80% of homeowners who responded to recent JP Morgan surveys indicated they are planning renovation projects in the near term. In addition, after years of construction trailing demand, substantial new home building will be required for many years to come. Commercial activity will expand as the economic outlook improves. As the world's largest flooring provider, Mohawk is well-positioned to capitalize on these opportunities. Well, we'll now be glad to answer your questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then number one, using your telephone keypads. Management request that you please limit yourselves to one primary and one follow-up. Once again, that is star and then one to join the question queue. Our first question today comes from Matthew Bouley from Barclays. Please go ahead with your question. Hey, good morning, everyone. Thanks for taking the question. Did I hear you correctly, that the reduction in input costs actually exceeded the decline in price mix during the quarter? I guess, correct me if I misheard that, but, you know, how do you anticipate price mix versus cost to play out into Q4 and perhaps any early thoughts on 2024 there? Thank you. Thank you, Matt. Yes, let me frame that. So the cost started gradually falling in late 2022, and it takes usually three to six months to flow through our P&L. In Q3, and I'll provide some numbers here that also be in our 10-Q, lower costs led by material and energy totaled $112 million, offsetting the weaker price mix of $106 million. Now, sequentially, costs declined $65 million, exceeding the lower price mix of $29 million. In the Q4, we would anticipate lower costs should continue to flow through, the P&L. Got it. Okay, super helpful. Thank you for that, Jim. Then, secondly, you know, you mentioned maybe zooming into to Europe and natural gas and ceramic there specifically. I know you mentioned certainly the costs have come down quite a bit from the extreme levels last year, but now, you know, European natural gas seems like it's creeping higher again, clearly in a market that seems like it's a little more competitive. So, you know, how do you anticipate specifically cost and price playing out in that market, European ceramic? Thank you. Well, you're correct that the cost for gas has come down a lot, but in Europe, the business continues to face pressure with declining retail traffic and new construction. We're responding to conditions with promotions, and we also have premium slabs continue to grow, and we're optimizing our new slab line. We're also initiating restructuring actions to eliminate older assets and improve our cost and utilization. And then we'll just have to see, you know, how the gas levels out. It's definitely a lot lower than last year. All right. Thanks, guys. Good luck. Thank you. Our next question comes from John Lovallo from UBS. Please go ahead with your question. Good morning, guys. Thank you for taking my questions. Maybe just following up on, on Matt there. Did the lower material and input costs offset the declines in price mix across segments in the quarter? You know, I'm more curious, I guess, about Global Ceramic there, specifically. And then as we move into the Q4, how should we think about margins by segment? Is there anything outside of normal seasonality that we should consider there? Well, in the quarter, the lower material and energy offset price mix in Flooring North America and Flooring Rest of the World, as Global Ceramic still has some higher cost material that is flowing through, it should kind of complete hitting the P&L in the Q3. Got it. And then, any factors we should consider on margin in the Q4 outside of sort of normal seasonality? No, you know, if you look at the Q4, you know, we still have elevated interest rates and inflation. We anticipate constrain the discretionary spending with postponed remodeling and home purchases. Remember, obviously, it seasonally slows due to the holidays. Margins are expected to be higher than last year, with greater pricing pressure and increased shutdowns. We do anticipate lower input costs, as I noted, and we should be continuing to implement productivity and cost reductions. And don't forget, foreign exchange, we anticipate will continue to be a headwind in the quarter. The higher volumes in the quarter will leverage the margins as we pick up later. Sorry, that's not this quarter. In the quarter, he got it right. I'm sorry. Okay, thank you. And then as a follow-up, the $620 million in full year CapEx implies a pretty good step up to, I think, around $250 million in the Q4. Is that, is that just timing, or is there anything going on there in particular that we should consider? No, it's really timing. As you end the quarter, in terms of 2023, between 2023 and 2024, you know, our focus continues to be investing in optimizing, you know, the future of the business with the growth investments that we've talked about, really making up $200 -250 million of that, maintenance CapEx would be another $250 million, and then the balance of that budget for the year on cost reductions, product innovation, and acquisitions. Okay. Thank you, guys. Our next question comes from Joe Ahlersmeyer from Deutsche Bank. Please go ahead with your question. Hey, good morning, everybody. Thanks for taking the questions. Good morning. A couple peers of yours have offered some early assumptions on residential US end markets into next year, might call it a, a flattish outlook on balance. For simplicity, let's just maybe take the international markets aside for a second, and the commercial as well, and just talk about North America residential, across your segments. Question is, I guess, do you agree with that assessment that the market could be relatively flat next year within that, and what the sources of upside and downside to that might be? When we look forward at it, the flooring industry has actually been in a downturn since mid-2022. We believe that we're gonna see an improvement in the middle of the year as inflation moderates and financing improves. When these occur, we think, consumer confidence will improve, and the industry will start to get better. So we see the first half basically as a continuation of where we are, with improvement as we go through the year. And then, depending upon how strong and when it occurs, we'll determine what the volume is versus this year. That's very helpful, Jeff. Appreciate that. So maybe a follow-up here. From late 2020 to early 2022, you bought back, you know, $1.4 billion of your stock, around $170 a share. There's even a stretch in there where you were buying it at $200. You stopped buying it back last March, and I know there was, you know, cash flow softened, you were investing in CapEx, and you had some maturities in there. But, you know, on several calls now, and especially on this one, you're talking about the health of the category, your competitive position not having changed much. So just how might an investor, who is the incremental buyer of your stock today, reconcile that sentiment with seemingly the hesitancy around buying back their stock right now? Well, at the moment, there's still a lot of economic uncertainty in the world. The financing conditions are still difficult. There's regional conflicts that can affect everything. So we believe that at the moment, having excess capacity is preferred, but we're continuing to review it and would consider buying stock as our visibility improves from where it is today. All right. Thank you, Jeff. Our next question comes from Susan Maklari from Goldman Sachs. Please go ahead with your question. Thank you. Good morning, everyone. Good morning. Good morning. Jeff, maybe just building off of, Joe's question. As you think about 2024, you're gonna go into the year with some excess capacity. I know you mentioned that you think the market can improve in the middle of the year, but how do you think about the company-specific efforts that you detailed in your remarks around cost-cutting and new products, and how those will be layered in over the course of 2024, and what they could mean for Mohawk? Well, let's see. As we look through it, higher volumes as we go and the business improves, we'll leverage the SG&A, it'll get overhead, and the productivity will all improve. We expect improvements in the average selling prices as margins expand. Customers start trading up and buying better products. We'll also see benefits from the restructuring and takeouts that'll come through when all that occurs. And then, in addition, we have multiple acquisitions we've done recently. Those have also been compressed. Those will also, the volume will come up, and we expect them to significantly help our performance. And finally, the investments in the growth areas will add to our sales ability as we come out of this. So as we think through the whole thing, we see the margins expanding significantly as the business improves. Okay. That's helpful color. And then, you know, as part of that, you've mentioned that the macro in some of these markets, especially some of your newer markets, is hopefully maybe taking a bit of a turn for the better next year. As you think about the opportunities in some of those areas and those categories, anything that, you know, is interesting to you or that we should be thinking about over the next year and a half or so? If you look at Latin America, in this cycle, they actually raised rates more aggressively than the rest of the world and further, so we're actually starting to see them starting to lower rates, and we think there could be significant rate decreases in Mexico and Brazil, even this year. So those things, they may come out of this earlier than others. The business in Australia has held up better for us. There's a less competitive environment in the marketplace, and we've been able to hold on to margins a little better. Europe is really difficult to know what's gonna happen. The consumer confidence remains low, and it's gonna take something to help it move. Different than the United States and Europe, the average worker got much higher increases, so they covered more of inflation than we do, so it's really a confidence issue in Europe. Okay. Thank you for the color, and good luck with everything. Thank you, Susan. Our next question comes from Stephen Kim from Evercore. Please go ahead with your question. Yeah, thanks very much, guys. Appreciate all the color you've given so far. Jeff, you've laid out pretty clearly, in both your press release and what you've said today, you know, the factors that drive your business to be, you know, rather cyclical. You know, right now, you've got a lot of challenges that are coming from all quarters, you know, as competitors try to leverage their fixed costs in a tough market and drive pricing and all that. And then also on the way, you know, on the way up, everything gets better, as I think you just were talking about with Susan. More broadly, my question is, how important is it to you to drive changes in your business that may deliberately reduce this embedded cyclicality in your business over the longer haul? Well, the cyclicality is based on the really two things. One is how sensitive we are to interest rates, and then the other part is the high capital fixed costs of the industry, including our company, our competitors, and we tend to move up and down, trying to minimize these things. I think if you're gonna stay in the industry, it's part of it, is it. Now, we're getting into other things like the insulation business that we're in, in Europe. It doesn't have as much, the fixed costs are much less, for instance, and the margins hold up better, in it. So we're in different businesses and different categories that react differently today. Remember, these are not purchases that are canceled, these are deferred. So you see a pent-up demand, and, you know, with the aging stock of housing, and as Jeff said in prepared remarks, the building just being behind the need for housing, we feel like we're in a great position, you know, over that mid to longer term. For the first two or three years after this thing is over, the pent-up demand for houses, for, housing, for improvements and remodeling that hasn't been done, we don't lose it. It just comes back later. Yeah. Yeah, I certainly agree that there's a somewhat longer-term rebound on the way. And so getting to that, I think you were—I think Joe was asking you about the timing of a rebound, or maybe it was somebody else, but you know, you talked about it with the US I think you said you're looking for, you know, you're bracing for a tough one, first half next year. You think by mid-year, it's gonna materialize. Let's say you're right, and it does actually start to materialize by mid-year. I'm curious how you are planning to run your, carry your inventory levels. You know, I think of relatively higher levels of inventory as being something that leads to strong service levels, you know, as soon as demand rebounds. And I'm curious as to whether you're planning around inventory in the US, particularly is going to be such that you sort of, you know, allow yourself to build inventories or carry higher inventories than maybe normal, you know, in anticipation of wanting to try to provide strong service levels, maybe at the beginning of Q3. And then also, could you just broaden your view beyond the US to, to, to, let's say, Europe and LatAm? You know, do you similarly think, you know, mid-year, next year is when we may see a turn? Let's start with the first part. The inventory levels are based on two things. One is what the market is, and the other is in our ability to respond. Given the low volume rates we're at presently, we have a significant upside and capacity to react to it, and so we probably won't build much inventory until we see it coming, and then we think we have the ability to utilize the capacity that we already have to solve it, to satisfy it as it goes up. On the other side, the different regions, I think that this possible Latin America will come out of this first, and then Europe is a little hard to know. I would guess Europe may trail the US If I had to pick, Latin America may come out of it earlier, US in the middle, and maybe Europe a little later. Would be my present guess, but we'll have to see how it evolves. Stephen, one thing- Okay ... on your original question as well, the restructuring actions that we're taking, you know, part of that is to lower and permanently lower our, our cost structure, which then does help us, you know, in good times and bad. Okay. Yeah, makes sense. Thanks very much, guys. Our next question comes from Keith Hughes, from Truist. Please go ahead with your question. Oh, thank you. A question on the change your LVT production, your rigid to direct extrusion. Can you talk a little bit more about that? What kind of cost savings and that, how long it's gonna take to do the conversion? Yeah. Yeah, Keith, our Georgia rigid production is presently being converted to direct extrusion to lower our costs. We're also installing new technology in both plants that will provide unique styling and features. These changes will give us more flexibility to ship the products from both the East and West plants, and we will have savings of more than $20 million annually when it's executed. Will this change all of your rigid LVT production to this method, or is this a partial conversion? No, it'll all be changed to this. Okay. And does this drive just more efficient machine time, or how do you get the savings from it? Well, when we, we're changing from a heated press technology to an extrusion process, and this allows for a lower cost formulation, and it's just currently in the startup phase. We should be substantially operational in Q1. Q1. Okay. All right. Thank you very much. Our next question comes from Phil Ng from Jefferies. Please go ahead with your question. Hey, guys. Energy prices have kind of bounced off the bottom. Are you starting to see any upward pressure on your input costs, more broadly? I know it's somewhat tied to oil, appreciating there's a lag. Have you started seeing your price mix in your different respective business stabilize here, or there's still some pressure, as we kind of look forward? Let's see if we can answer a few different ways. One is, we think that the material costs have probably bottomed at this point, as well as, there's a good chance maybe the pricing has also maybe bottomed, but we'll have to see. As the oil and energy prices go up, it is the basic cost of it, but also supply and demand. So I'm not sure how it's gonna actually flow through, given the low demand of the industry and categories using the different chemicals. It may take a little longer for it to flow through this time than normal. Usually, as we come out of the recession, what happens is, the demand goes up, and then the chemicals have to recover their margins as it goes through. When that occurs, we have to pass through the increase in costs as it happens. Okay, that's helpful. And then a few more questions on LVT. With the investment you're making on the extruding side and with Mexicali coming online early next year, how does your product stack up from a cost and quality standpoint versus imports coming out of Asia? And does your LVT manufacturing business now, at this point, early next year, stack up from a margin standpoint versus North American flooring? Is it, you know, accretive, neutral, still a headwind? How should we think about all those things? Let me see. Well, first of all, we think the new products that we're coming out with in the LVT are gonna, especially at the high end, we're gonna be definitely competitive with imports. The pricing has declined substantially from the import prices, with both lower freight as well as lower material costs. Our US manufacture costs are also coming down with it. We still have other things going on, like service disruptions from China, given the US impeding the different pieces. And so next year, our margins should expand, and we expect the profitability of the business to improve. We also introduced a new resilient polymer core that's environmentally friendly with superior scratch resistance. That's doing really well. Okay. And some of the friction you mentioned in terms of imports coming in from Asia, how does that position Mohawk, especially as you ramp up some of this domestic capacity? Is it a good guy or just broadly, your cost goes up because at the end of the day, you're still importing from Asia, maybe not directly from China? The combination of both, as you would suspect. The lower costs we're getting through with the imports that we do. We're also getting lower costs here as the material costs fall, and the energy prices here fall also. On the other hand, competition's increased with the lower volumes, and the pricing's come down at the same time. Okay. Appreciate all the great color. Thank you. Our next question comes from Michael Rehaut from JP Morgan. Please go ahead with your question. Hi, guys. This is Andrew Azzi in for Mike. Thanks for taking my question. Appreciate you guys shouting us out in your press release. I just wanted to ask, maybe from a pricing standpoint, any markets in particular that you have concerns for, that prices will fall more significantly or, or maybe even vice versa? Most of the markets, matter of fact, all the markets we're in, the pricing has declined. You have a combination of the cost of the materials coming down, the energy prices coming down, and these unabsorbed overhead that we've talked about the industry. So the pricing's come down. The question is, is it at the bottom today, or will it go down or not? We think it may be at the bottom as we speak. As things improve going forward, we think that there'll be pressure once the industry improves, to increase the material prices from our supply base, and we'll react to that when it occurs. That's usually after the industry does. At the same time, you have the world events with oil and gas and how that affects everything. That one's anybody's guess, and we'll just have to react to it. Thanks, Jeff. I guess in terms of lower input costs and energy costs, are you seeing any further sequential declines into next quarter and maybe any thoughts on next year and how quickly pricing has been aligning to energy prices? Well, again, you know, from a total material and energy cost in the Q4 versus the prior year, we should continue to see the positive impact of the flow-through to the P&L, offsetting the lower price mix. That's from a year-over-year perspective. Thanks. I appreciate that. Our next question comes from Adam Baumgarten from Zelman. Please go ahead with your question. Hey, guys, just one from me. Good morning. Just wondering if the recent carpet payment terms and the removal of some of the discounts you guys historically had as an industry will have a positive impact on the Flooring North America segment going forward? The industry has changed some of the terms within it. Depending upon where you are, it has helped the margins a little bit. We are staying aligned with our customers in many cases, and we didn't try to push through an increase like some of the other guys did. So we're trying to use it to improve our position within the customers. Okay, got it. Thank you. Our next question comes from Kathryn Thompson from Thompson Research Group. Please go ahead with your question. Hi, thank you for taking my question today. Just focusing on the commercial end market, you know, we looked at some resi-focused stocks, traded better on less bad news this year, early this year, and then you fast forward to this week, you had more commercial-focused ceiling manufacturer also trade up on less bad news in the commercial space, or relatively less bad news. What are you seeing in terms of your pipeline of your business in North America with commercial end market? And what have you done to shift your business and focus towards certain end markets that are performing relatively better than the traditional office and retail? Thank you. Commercial business is holding up better than the residential business. We are seeing softening in the marketplace in different categories. The ABI index, which predicts the new parts coming online, is showing declines. So as in other recessions, typically, a year to a year and a half later, the commercial starts softening as the commercial projects finish up. So we're starting to see that. On the other hand, in commercial, you have a much more differentiated product offering, so the pricing is more resilient than it is in the residential business. In the different categories, government, senior care, hospitality, restaurants, are all doing better, and we're emphasizing our participation in those. Okay, yeah. I have a full understanding of the timing difference between residential and non-res. It was really and it was helpful to some extent, but just getting a better understanding of that mix shift for you, and now tell me importantly, what does it look like going forward? Because, for instance, we're having industry contacts are saying, "Listen, we're starting to see projects being not just postponed, but canceled, but we're able to shift mix, to adjust." One other follow-up question: As you know, you have obviously made a lot of efforts over the past trailing twelve months to rightsize operations and to make various restructuring charges. But stepping back and look at the bigger picture, from a long-term standpoint, what is the industrial logic for having the global footprint as you manage your business going forward? What's the argument for keeping the global footprint as it is currently? Thanks very much. The global footprint allows us to participate in the same categories across the world. It allows us to leverage the knowledge of what we can do with product innovation, styling, design, distribution concepts, in order to optimize the businesses. And the businesses that we have, such as ceramic, we have different businesses that are in high, medium, and low. The high ones lead it, and then it flows down through to the other ones to help us increase our mix and distribution in the business. In different businesses we get into, we can help if they're strong in residential, we can help them show to how to maximize their commercial business. We have other categories that we get benefits out of just the processes running warehouses and distribution, information systems. There's a lot of synergies that you can do to help the acquired businesses. Okay, great. Thank you. Our next question comes from Truman Patterson from Wolfe Research. Please go ahead with your question. Hey, good morning, everyone, and thanks for taking my questions. First, whenever I'm looking at the Q4 EPS guidance, sequentially versus Q3, it implies, you know, a bit worse than normal seasonal decline. I'm just hoping you could help us discuss, from a high level, the buckets that got worse throughout the quarter that really led to that guide. And then also, or I believe you mentioned Brazil, Australia, but are there any areas, product categories, you know, pricing, et cetera, where you're perhaps seeing some stability, if you will? ... You covered a lot of ground. Let's see if I can get most of it. Starting out with the elevated interest rates and inflation are constraining the spending, and it's postponing the remodeling and home purchases. Our assumptions are that it's more difficult in the period. You're also in the time where the seasonality, so there's more holidays. Given the control of the inventories and lack of need for manufacturing ahead, there's more shutdowns being planned in the period. We are assuming increasing pressure in commercial in the Q4 versus the Q3. The margins on a year-over-year are higher than they were, but we think there's still gonna be this greater pressure and less covering the absorbed overheads as we control the inventories and working capital. We're implementing productivity and cost reductions, and then we expect the foreign exchange. Our present assumptions are that it's a similar headwind with what was happening in the Q3. Yeah, so sequentially, you know, that, that gap that you're talking about, you know, if you look back over time, you know, from 2018 forward, you, you know, you've got mid-20% difference from Q3 to Q4. It's a little bit more this year, in our implied guidance. And I'd say the, the additional shutdowns and the foreign exchange certainly are two headwinds that may be a little bit unusual than prior years. Another difference is in normal years, we would normally pull the inventories down in the end of the Q3, the start of the Q4, and then be building it back as we come out of the quarter. So we're not doing that. That didn't happen this year. Okay. Thanks for that. And then just wanted to follow up on kind of a prior question. You all have been generating a lot of cash flow this year, you know, $2.6 billion in debt. It seems pretty manageable. And Jeff, I think you mentioned earlier that, you know, perhaps you might not step into share repurchase today. You know, I'm just hoping you could discuss potential for M&A, any geographies or product categories of focus, as well as how you might balance that, you know, with your own current valuation of your share price, you know, balance M&A in lieu of share repurchases. First, before we get into the new, new M&A, we have the two recent acquisitions we've done in Brazil and Mexico, which we're integrating and taking costs out. We have three or four bolt-on acquisitions that are also being put together with the business. All of those should give us significant upside as we come up and the volumes go up in the businesses. As we come out of this in the future, you're correct that the value of the business today allows to purchase the stock and give significant opportunity, which we'll consider as soon as we make sure there's not another worldwide problem that's about to occur, with all the events going on as we go through. We'll have to see what that looks like versus other alternatives that arise. Asked another way, any M&A deals flowing across your desk, are those valuations more attractive than your current valuation for Mohawk? The only businesses that tend to sell in this environment are ones that are seriously distressed and don't have any options. As at these valuations, most companies don't do many, don't try to sell their businesses. Okay, perfect. Thank you. Our next question comes from Laura Champine from Loop Capital. Please go ahead with your question. Thanks for taking my question. You called out in your press release the negative impact on Europe from the conflict in Ukraine. Can you give us more information on the Russian business? What are your plans for that? And is that business a material hit to earnings this year? Well, the answer is no to that. But in Russia, we're following all the sanctions. We're adjusting our strategies to adjust to these more difficult market conditions. We're also leveraging our leading, styling, and distribution to maximize, maximize our sales in that market. Remember, that's, you know, Russia is less than all the Russian businesses together are less than 5% of our business. Understood. Thank you. Our next question comes from Eric Bosshard from Cleveland Research. Please go ahead with your question. Thank you. Two things. First of all, Jeff, you've talked about this being the bottom of price and then a potential improvement in the middle of 2024. I'm just curious what you're seeing in the business now that supports both of those thoughts. First, the pricing decreases are following the material costs, and the material costs, we believe, are at a bottom. So we believe that will change the pricing from falling significantly more going forward. And then what was the other part of the question? ...the second part was the comment about the, the first half being similar to today, and then the path for improvement in the back half of 2024, what you're seeing in the business today that informs that? I guess that we don't have a crystal ball any more than you do. We're making the assumption that the present circumstances continue. We believe we have line of sight into the Q1. After that, given the dynamics that's going on in the world, anything could happen. That's it. Yeah, what we're kind of quoting there is there's numerous people that have come out and said that, you know, you'll see some strengthening in the back half of the year, but again, you can get an argument going the other way as well. So it's, it's really one scenario here. Okay. And then secondly, the goodwill write-off is a component of that, or I'm just curious, the catalyst for this, is there some component of this that relates to a reduced future earnings of the business, or are there other dynamics that explain a write-off of that magnitude? You know, Eric, it really starts with the volatility on the macro side. The higher interest rates, inflation, deterioration in the market conditions, you know, negatively impacted our business, which reduced our market capitalization. Then you go through an internal, you know, review of the stock price compared to that, and it triggered the goodwill impairment that was required. Remember, that's a non-cash charge in the quarter, and it's across all the segments. There'll be more detail for you to see in the 10- Q that's filed after the call. Okay, thank you. Our next question comes from Rafe Jadrosich from Bank of America. Please go ahead with your question. Hi, thanks for taking my questions. It's Rafe. So the first thing I wanted to ask is just what are you seeing in terms of industry capacity, particularly in the US? Are you seeing other competitors start to pull back in any of the segments, or are you seeing any foreign competition continuing to add capacity? Across all the different categories, there have been capacity taken out of some pieces of the industry in different places. In LVT, over the past year, there have been some increases in capacity in the US marketplace. What else was the rest of the question? Are you seeing any of the foreign competitors open capacity in the US? Is there any incremental capacity investments there? And then, are any of the domestic manufacturers reducing capacity on categories like carpet or hardwood? Well, I can just comment in ceramic, there have been a couple that have added new plants, but in general, the capacity that's in the United States is slightly underutilized, I would say, in ceramic. And the ceramic one, probably about 50, in excess of 50% is imported. So there's some of the foreign companies are opening some capacity here, which he's talking about. LVT would be similar to the same situation, where there's some of the foreign ones have opened up capacity here, trying to find ways to optimize their service levels from where they are. And in some of the other product categories, there have been some capacities taken out of the industry. Okay, got it. That's helpful. And then just on the new construction outlook, can you just remind us your exposure to multifamily versus single family, and then what you're seeing on between those two segments? Not sure I have those numbers in front of me. The new construction home building, I think, is around 20-25% of our business. I don't have the number in front of me of the multifamily piece. Yeah, we don't have that. We don't usually break that out. We kind of include it in the new construction number that Jeff quoted. It's either in the new construction number or it's in the remodeling number as it gets replaced as we go forward. Okay. Is there if it seems like based on what kind of home builders are saying now, that we'll still see single family construction probably rise next year, but it looks like the multifamily outlook is pretty soft, and we could see some pretty significant declines. Do you have the meaningful exposure on the multifamily side? And is there any margin difference between single family and multifamily, or is it relatively small compared to single family? Multifamily typically is lower. They typically use lower quality products than the single family home construction. On the other hand, the multifamily gets replaced much more frequently, typically after they change over tenants in it, depends on where they are and what it could be replaced every few years, where the home new building could be a seven to 10-year cycle. So there's a big difference in the replacement cycles, as well as the quality of products going into each. As we've said earlier, we see expanding presence in US ceramic and new construction and the commercial channels, and also in Flooring North America as well. You know, our relationship with the builders is stronger. The other thing you mentioned, the multifamily, the new starts are coming, but the typical multifamily takes minimum of a year and a half and could be two and a half years to finish. There is a huge number of projects that are coming through that haven't been finished yet, and our product category is the last one to go in them. Yes, so similar to commercial, it has a long tail to be completed. Got it. So there, there's still a backlog there. It's just... That's very helpful. Thank you. Yes, correct. Thank you. Ladies and gentlemen, at this time, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Mr. Lorberbaum for closing remarks. We're managing the controllable costs that we've been discussing. We continue to react to changing market conditions, which are volatile. We see significant upside when the market returns, and we think we're well positioning ourselves for that to occur. We appreciate you joining us. Have a great day. Thank you. Ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for attending today's presentation. You may now disconnect your lines.