Good morning, everyone, and welcome to the Mohawk Industries First Quarter 2024 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 one. To remove yourself from the question queue, you may press Star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to James Brunk. Please go ahead. 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 first quarter performance and provide guidance for the second quarter of 2024. 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 investor section of our website. I'll now turn the call over to Jeff. Thanks, Jim. Good morning, everyone. Though economic headwinds are impacting our industry, our results reflect positive effects of the actions we're taking to enhance our performance. Our net sales for the first quarter were $2.7 billion, down 4.5% compared to last year. Adjusted earnings per share were $1.86, up 6% versus 2023, as a result of restructuring, productivity initiatives, and benefits from lower cost materials and energy, partially offset by weaker pricing and mix. Currency exchange rates continue to affect our operating income with a negative impact in the quarter of approximately $12 million, or 15 cents on EPS. Across our regions, market conditions remain similar to the prior quarter, with significant pricing and mix pressure due to industry competition for volume. Though slowing, the commercial channel continues to outperform residential. Residential remodeling remains soft due to low housing sales and the impact of inflation on discretionary spending. Retailers have reported that consumers are reluctant to initiate higher-ticket projects, with flooring facing greater pressure since most replacements can be readily deferred. Our teams remain focused on managing through the near-term environment, realizing sales opportunities, reducing controllable costs, and completing restructuring initiatives. We continue to manage our production levels to align inventories with market demand. To stimulate sales, we're investing in new product introductions with enhanced features that convey the value of our collections. Given inflationary pressures and labor benefits and other items, we continue to take additional actions to reduce our cost structure and improve productivity. Globally, there is optimism about consumer confidence improving, interest rates declining, and a rebound in the housing market. The timing of this inflection in each market depends on inflation levels and actions by their central banks. Latin America aggressively raised interest rates to combat inflation, and now the region is among the first to implement rate reductions. Brazil's central bank initiated several rate cuts, and Mexico recently lowered rates for the first time since 2021. In the U.S. and Europe, central banks are maintaining interest rates as they focus on achieving their targeted inflation levels. The present forecast for U.S. new home starts and existing home sales is for a slight increase in 2024, with greater improvement in the second half of the year. In some countries, governments are subsidizing housing investments by reducing mortgage rates. In the U.S., builders are stimulating purchases of their properties by buying down interest rates for consumers. The U.S. Realtors Association recently noted that life events eventually require buyers and sellers to make moves regardless of interest rates. The desire for homeownership remains strong, and people will find a way to realize that goal. Since our last call, Newsweek named Mohawk one of America's Greatest Workplaces for Women, and Green Builder selected our PureTech PVC-free resilient flooring as one of their top products of the year. We're pleased to be recognized for both our commitment to our people and our product innovation. Now, Jim will provide a review of our financial performance for the quarter. Thank you, Jeff. Again, sales were just under $2.7 billion. That's a 4.5% decrease as reported, and 5.5% on a constant basis, due to year-over-year price and mix pressures continuing due to a combination of tight demand, the pass-through of lower input costs, and the consumer trading down. Our Flooring Rest of the World segment was impacted the most by the price and mix issue in the quarter. Gross margin was 24.2%, as reported, or 24.4% on an adjusted basis, versus 24.1% in the prior year, primarily due to lower cost material and energy of $147 million, substantially offsetting the negative impact of price and mix of $152 million, in addition to the benefit of our productivity and restructuring actions of $35 million. SG&A expense was 18.8%, as reported, and 18.4% on an adjusted basis, basically in line with the prior year. It gave us an operating margin of 5.5% as reported. Non-recurring charges were $17 million in the quarter, giving us an adjusted operating margin of 6.1%. That's a slight improvement over prior year, driven by the lower input costs of approximately $136 million, and increased productivity of $47 million, offsetting the negative impact of weaker price and mix of $153 million, and the unfavorable impact of foreign currency of $12 million, and temporary manufacturing shutdowns of $10 million. Interest expense for the quarter was $15 million. That's slightly favorable versus prior year. Our non-GAAP tax rate is 21.8% versus 22.6% in the prior year. We expect Q2's tax rate to be between 20% and 21%, and the full year rate to be between 19% and 21%. That gave us an earnings per share as reported of $1.64, and on an adjusted basis of $1.86, an increase of 6% versus the prior year. Turning to the segments. Global Ceramic had sales of just over $1 billion. That's a 1.4% decrease as reported, and 5% on a legacy and constant basis, due to the unfavorable impact of price and product mix and lower volume as the industry demand remains compressed. Operating margin on an adjusted basis was 5%. That's a decrease of approximately 130 basis points due to the unfavorable impact of price and product mix of approximately $40 million, reflecting the continued difficult market conditions, and the unfavorable impact of foreign currency of approximately $11 million, partially offset by lower input costs of $32 million and productivity gains of $14 million. In Flooring North America, we had sales of $900 million. That's a 5.6% decrease as reported, due to lower remodeling activity impacting volume, as well as pressuring price and mix across our product lines. The business improved through the quarter, and we are introducing new residential collections with unique features to enhance our carpet, laminate, and resilient sales. Operating margin on an adjusted basis was 5.3%. That's a significant improvement versus prior year, with favorable impact of lower input costs of $57 million and productivity gains of $23 million, as we benefit from our cost optimization and restructuring initiatives. This was partially offset by unfavorable impact of price and product mix of $20 million. Finally, Flooring Rest of the World had sales of just over $730 million. That's a 7.4% decrease as reported, or 5.9% on a constant basis, due to the unfavorable impact of price and product mix, partially offset by an increase in our unit volume, even in a generally weak environment across Europe. Operating margin on an adjusted basis was 10.1%. That's a decrease of 250 basis points, driven by the unfavorable impact of price and product mix of approximately $92 million, primarily in our panels business, which has declined substantially compared to the high prior year comps when the industry was running near capacity. These were partially offset by lower input costs of $48 million, stronger unit volume of $11 million, and productivity gains of $10 million. Corporate and eliminations was $11 million for the quarter, in line with prior year, and our full year forecast is for $45 million. Looking at the balance sheet, cash and cash equivalents were just over $650 million, with free cash flow in the quarter of $97 million. Inventories were just over $2.5 billion, with the year-over-year inventory decrease of about $200 million, primarily due to a reduction in cost. Our inventory days were reduced to 125 days versus a year-end level of 130. Property, plant, and equipment were just shy of $4.9 billion. Our CapEx for the quarter was $87 million, with depreciation and amortization of $154 million. The company plans to invest approximately $480 million-$500 million in 2024, with D&A for the full year forecasted to be approximately $600 million. Overall, the balance sheet and cash flow remain very strong, with gross debt at just over $2.6 billion and leverage at 1.4 times. At this point, I will turn it over to Chris to review our Q1 operational performance. Thanks, Jim. During the quarter, sales in our Global Ceramic segment remained soft across our regions. The industry is operating below historical levels, and market competition to capture volume is affecting both our pricing and margins. Product mix is also declining, as higher value residential remodeling channel is softest, and those customers undertaking new projects are selecting lower cost options. Reduced energy prices are enhancing our results, though wages, benefits, and other costs have increased. We continue to execute cost reduction initiatives, including utilization of lower cost materials, product reformulations, and reductions in SG&A spending. We're driving productivity through increased efficiencies, higher yields, and consolidating our distribution network. Our investments in new printing, polishing, and rectifying technologies are delivering higher value sales and formats to improve our mix... We are introducing decorative innovations with new glazes, three-dimensional surfaces, and updated artisanal mosaics. We are launching larger formats in floor and wall tile and porcelain slabs, along with smaller offerings that replicate handcrafted visuals. Our broad product offering, quality, and service advantages are helping us expand business with both new and existing customers. In the U.S., cold weather caused the suspension of operations at a number of our manufacturing facilities and service centers in January, impacting our cost and revenue. Our Tennessee quartz countertop expansion should be completed later this year, and we're developing new products and enhanced marketing tools to support our additional capacity. The U.S. ceramic tile industry has filed a petition against India in response to widespread dumping of ceramic tile in the U.S. market and expects tariffs between 400% and 800%, plus additional duties for subsidies. Other countries where we operate are considering similar actions. In Europe, we're seeing robust growth in porcelain panel sales after our recent expansion, and sales have also benefited from our new smaller and larger size premium products. European energy prices have moved to lower levels than forecasted, which should benefit consumers. In Mexico and Brazil, we're optimizing our sales and improving our operations. We're implementing new distribution and product strategies in each country, so our brands complement each other in the marketplace. In our Flooring Rest of the World segment, markets remain soft despite declining inflation. In the quarter, our volumes increased from the prior year's low levels, which may be an indication of improving trends in our categories, though our results were impacted by pricing pressures as we passed through lower input costs in highly competitive markets. Our Quick-Step brand sales improved during the quarter as we realigned price points, reflecting lower costs and increased marketing efforts to stimulate demand. We've completed the restructuring of our residential LVT program and are beginning to see the savings we anticipated. The change is delivering substantial growth in our residential rigid LVT, which is replacing our discontinued flexible products. In insulation, we've recently experienced material increases and are raising our prices accordingly. In our panels business, margins have declined from our cyclical high comparisons due to the underutilization of industry capacity, partially offset by mix improvement in our decorative collections. We've announced selective price increases in panels to reflect rising material costs. We continue to implement productivity initiatives and cost containment projects across the business, including labor efficiencies, higher yields, and alternative materials. We're enhancing our bolt-on acquisition in MDF boards, sheet vinyl, and mezzanine flooring, and we'll complete our premium laminate expansion this year. In Australia and New Zealand, reduced input costs and increased productivity offset lower pricing and volumes in a slow environment. In our Flooring North America segment, our results versus the prior year benefited from declining raw material and energy costs, partially offset by lower price and mix. While residential remodeling was generally weaker overall, market conditions varied depending on channel and product category. Sales improved through the quarter, though many retailers and some of our facilities were temporarily closed in January due to weather. Lower market demand and consumers trading down are creating a competitive marketplace, pressuring average selling prices and product mix. Based on builder optimism, new single-family home sales should improve through the year, positively impacting our flooring business. Commercial sales continue to outperform residential, led by the specified hospitality, retail, and government channels. Retailers are embracing our new residential product launches, including Pet Premier carpet and PureTech resilient planks. We're optimizing sales of our coordinated accessories and growing our recently acquired rubber trim business. We're increasing the sales of our nonwoven acquisition with new customers and product expansions. Our West Coast LVT facility is increasing production, and our Georgia restructuring initiatives are being implemented. During the quarter, we delivered productivity gains across the segment with operational improvements, better yields, and enhanced logistics. I'll return the call to Jeff for closing remarks. Thank you, Chris. The flooring industry appears to be at the bottom of this cycle, and we are managing controllable aspects of our business to improve our results. We continue to reduce our fixed and variable costs through ongoing restructuring and additional productivity initiatives. We're aligning production with market demand to control working capital, which increases our unabsorbed overhead. To enhance sales and margins, we're upgrading our product offering with unique features and investing in new merchandising. This year, we're completing our LVT, quartz countertop, and premium laminate expansion project to support our products with the greatest growth potential when the market recovers. Our other capital investments are focused on reducing costs, delivering product innovation, or maintaining the business. Due to European vacation schedules, our second quarter sales are seasonally higher than the third quarter. Given these factors, we anticipate our second quarter adjusted EPS to be between $2.68 and $2.78, excluding any restructuring or one-time charges. Residential flooring sales should lead the recovery as consumer confidence improves, the housing market strengthens and postponed remodeling projects are initiated. Existing home sales will normalize and are a meaningful catalyst for flooring, since homeowners replace it more often before listing a property or soon after completing a purchase. Across our geographies, housing has not kept pace with household formations, and substantial home construction will be required for many years to satisfy those needs. Additionally, as homes age, increased remodeling investments are required to maintain property values. As the world's largest flooring manufacturer, we expect to significantly benefit from our brand leadership, investments in new capabilities, and recent acquisitions as the flooring market recovers. We have the products to inspire consumers, the infrastructure to deliver superior service, and the balance sheet to invest in opportunities for the business. We'll now be glad to take your questions. Ladies and gentlemen, we'll now begin the question-and-answer session. To ask a question, you may press star and one on a touchtone phone. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. We also ask that you please limit yourselves to a question and a single follow-up in the interest of time. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Matthew Bouley from Barclays. Please go ahead with your question. Hi, good morning, everyone. Thank you for taking the question. So, obviously, the trajectory of interest rates is a little different than what the market thought earlier this year. I guess, two parts: Do you have any different thoughts around how you're thinking about earnings growth for Mohawk? I think previously, you had expected in the second half of the year that you could see growth year-over-year. Clearly, it was positive year-over-year in the first quarter. But any kind of thoughts around, you know, the cadence of the business into the second half? And then just, are you managing the business any differently, assuming this different rate environment, capital allocation, managing capacity, any restructuring actions being considered? Any thoughts around how that has evolved here? Thank you. The recent comments by the Fed that interest rates will stay higher could somewhat impact housing sales and the flooring industry improvement as we go through the year. The industry has been running at extremely low levels, and eventually, buyers and sellers have to do transactions. People who are not moving should increase remodeling over time, and housing sales are expected to increase from their very low levels. At the same time, we anticipated commercial would slow significantly. It's possible it could be better than we expected, given the stronger economies at this time. We still anticipate, you know, improvement in the second half and exceed the results this year. Got it. Perfectly. And then, I guess maybe sticking with the capital allocation side, you're, you know, you're completing some of your capacity investments this year. What does that mean for capital expenditures beyond 2024? And just kind of any additional thoughts around the share repurchase within that capital allocation set of priorities. Thank you. Well, first of all, just to remind you, you know, our forecast this year is somewhere between $480 million and $500 million. You know, that's below D&A of about $600 million. About 45% of that is really focused on cost reductions and product innovation. 15% is relatively to complete those growth investments that you just mentioned. And the remaining 40% or so is on the maintenance of the business. You know, going forward into next year, given the completion of the capacity projects, you know, the focus will be, you know, on cost reductions, product innovation, and the maintenance of the business, unless, of course, we come up with new ideas from a capacity standpoint. In terms of other cash priorities, again, we'll focus on broadening our product offering and innovations around products, identifying acquisitions, whether they be bolt-on or acquisitions that would help us get into new markets. And then share buybacks are still being considered as part of that allocation. Thanks, Jim. Good luck, everyone. Our next question comes from Timothy Wojs from Baird. Please go ahead with your question. Hey, hey, guys. Good morning. Maybe just to start, you know, just, you know, in the first quarter, I mean, price mix, you know, I think kind of, kind of more than offset you know, some of the, you know, the, the raw material improvement or raw material cost improvement that you kind of saw on a year-over-year basis. So, as you kind of think about the next few quarters, how should we, you know, kind of model or kind of think about you know, that price mix cadence and maybe just price costs in general, you know, as you, as you kind of go through 2024? Let me start with some of the assumptions around Q2. That'll give us a baseline. You know, as we enter Q2, we are seeing some signs of increasing volume, but are seeing continued price and mix pressure. We expect seasonality to be more aligned with historical levels. We continue to invest in innovative products, process improvements, and cost reduction to try to control our costs. Still anticipate that FX will continue to be a headwind as well. In terms of material costs in Q2, we would anticipate the benefits from lower costs from a year-over-year perspective to be offset by that price and mix pressure, with Flooring Rest of the World continuing to be under the most pressure. Okay. Okay, that's really helpful. And then just I guess, on the panels, kind of price mix, you know, kind of commentary, when do the comps there just get easier? I think the panels business is gonna be under pressure all during this year. Okay, so that kind of- Comps will get less, will get easier in the second half. Okay. Okay, great. Thanks, guys. Our next question comes from Susan Maklari from Goldman Sachs. Please go ahead with your question. Thank you. Good morning, everyone. Morning. Jeff, it seems like you are starting to realize more of the benefits of the productivity and the restructuring efforts, even with the business continuing to be under pressure. Can you talk a bit about how that can contribute to the margin profile over time? And maybe where do you think that this can go, even if the macro remains less supportive? Let's start out with the general view by different channels. In the residential flooring sale, you know, always rebound from the low level that they're at. Consumer confidence improves, housing improves. You have the postponed remodeling that hasn't been done in the last couple of years, as they were pressured by inflation. So that comes back. We expect, as you said, the mix and average selling prices as the market improves, it actually changes because there's more higher value retail replacement business, and it helps the margins. We'll benefit from all the different activities on a continuous basis, with the cost reductions, the product investments, the growth initiatives. The different acquisitions that we've made over the past year and a half, we expect them to benefit our results significantly as the thing improves. This will all increase the margins with higher volumes, and we'll get leverage in the SG&A and the other overhead costs, as well as the increased productivity. So again, coming out of the cycle, we're at a low level, which happened in the last big downturn. The first, you know, expectation is that we get back to 10% operating income and then continue to expand it further. Okay, that's helpful color. Then, I guess, you know, you mentioned that you still expect to expand in the second half of this year. Just any thoughts on, you know, more specifics around how that may come together, what some of the key factors could be, especially as you think about the Flooring North America segment? Well, we start out with that we think we're gonna have the normal seasonality, which means, you know, typically in the US, the peak of the year tends to be the end of the second quarter into the third quarter, and we think it's gonna be more normalized. You know, at the moment, which we've said, the demand still is weak, with continued pressure on pricing. So, you know, until the volume gets back, we think there's still be the pressure there, along with the mix. What else is different? You know, again, we're just assuming that the replacement business, which has been really low, at some point, they have to start... If they're gonna stay in their houses, they're gonna have to start improving them, and then some of the people are gonna have to move just because of their lifestyles, so it can't stay at the bottom forever. So we're assuming that even if interest rates don't change a lot, that we'll start seeing some of this improvement there. And as you look in the other countries around the world, they look like they're going to start lowering interest rates sooner and faster, and the same thing should occur in those countries with consumer confidence and moving forward and doing more remodeling, which is the first thing that picks up. Okay. Thank you for that color, and good luck with everything. Thank you, Susan. Our next question comes from John Lovallo from UBS. Please go ahead with your question. Good morning, guys. Thank you for taking my questions. The first one, maybe just focusing on the second quarter. You know, it seemed, I think that previously you'd expected sort of on a year-over-year basis, energy cost reductions this offset, you know, negative price mix, and that productivity would offset, you know, wage and benefit inflation. I guess, the question is: Is that the expectation still for the second quarter, and did that happen in the first quarter only in North America? Well, first of all, in the first quarter, as I said, if I just look at materials and energy, it's about $147 million favorable in terms of lower costs compared to the $153 million unfavorable price and mix. The most pressure was seen, as we said, in the Flooring Rest of the World category, and that is the one place where materials and energy did not offset the negative price mix. I would think in the second quarter, I would anticipate that trend continuing, where the pressure is the highest in Flooring Rest of the World. Okay, okay. Got it. And then just trying to wrap my head around the second half of the year. I mean, should we expect a negative impact from, you know, pricing to sort of lap? so maybe less of a price mix headwind year-over-year, but also probably less favorable impact from lower input costs. And then sort of from there, you need volume to drive productivity to offset any additional inflation. Is that the right way to think about it? Yes, John, that is the right way to think about it. What I would anticipate as you start to lap the prior year, price mix will become less of a headwind. Again, we're speaking about year-over-year. But you're also right, I'm gonna start to also lap the lower cost, and so that will become less impactful as well. Really, what it's gonna turn into is, as we anticipate, volume getting a little bit stronger, you'll get a pickup in volume, but you also get a benefit in less shutdown cost as well. And so that will be the focus as we go into the second half of the year. Great, thank you. Our next question comes from Phil Ng from Jefferies. Please go ahead with your question. Hi, good morning. This is actually, Collin on for Phil. I just wanted to start on the commercial piece. You noted that the commercial continued to outpace residential, but that it's slowing. Are volumes higher year-over-year in that commercial business? And then how are you thinking about your commercial flooring volumes as we move through the end of 2024? And then maybe just remind everyone of the size of that commercial business for each of your segments. What we said was that the commercial business is holding up better than we had anticipated. We thought that it would fall off faster than it has, and we're performing better than we thought. We still think it's gonna continue slowing through the year, as new projects, you know, haven't been initiated in the last year, so we're still anticipating it slowing. In commercial, you also have pricings more resilient since the products are more unique, so you don't have as much price pressure. And presently, the hospitality, retail, government channels are outperforming. And just as a comment on the backside, when we start getting better, it's gonna take longer for the commercial to improve because it takes a longer time to get the planning, approvals, and construction to begin in the business. Anything else you wanna give him? Overall, you know, the commercial makes up, you know, roughly about 20-25% of the overall Mohawk business, with it being the highest in the ceramic segment. That's helpful color. Then, I guess I just wanted to touch on the Indian ceramic tile tariffs. Can you just talk about the price point of those Indian imports, how you're positioned versus that price point, and what percentage of your portfolio could really benefit from the tariff on the Indian tile? Well, the prices of imports have been declining with excess capacity, energy, and freight costs, and of course, India's been growing. The Tile Council of North America expects those tariffs to be between 400% and 800%, and that should help our volume and increase market pricing since it's been pushed down so low. They tend to be more focused in the low to mid end of the marketplace, to answer that part of the question. Great. Thank you, and good luck. Thank you. Thank you. Our next question comes from Keith Hughes from Truist. Please go ahead with your question. Thank you. Your comments around business improving earlier in the call, I know that was highlighted in the release. Have you also seen some volume improvements in Flooring North America? At this point, no. In the first quarter, volumes were still lower in both the Flooring North America and Global Ceramic segments. We did see, as we noted, some volume improvement in the Rest of the World segment. Okay, so no sequential movement in those two, is what you're, what you're saying? Remember, the first quarter is always lower than the fourth quarter. Right. I was speaking from a year-over-year perspective as well. Okay. Second question in ceramic. I guess if you could talk about the end user markets in North America. I know commercial has been strong. What areas of commercial have been moving the numbers up? Well, in general, the commercial business in ceramic, I would say, has been flat. It hasn't decreased as much as we thought it would, but as Jeff said, we expect that to soften as we go through the year. I think the comment was, our business is about flat. I don't think the market is. Yeah. Within commercial, I assume office is weaker, but what areas are offsetting that? Is that right? That would be the same one we talked about before. Yeah, like hospitality, the medical, schools, those things have still been strong. I would add to that government as well. Okay. Thank you. Thank you. Our next question comes from Michael Rehaut from JP Morgan. Please go ahead with your question. Hi, excuse me. Good morning, thanks for taking my questions. First, I would love to get your thoughts around price mix trends for Flooring North America and Global Ceramic. And, you know, as we look into the second quarter and even the second half of the year, given the current demand backdrop, you know, would you expect, you know, pricing and mix to remain negative as we get into the back half? And, you know, what kind of trends would be driving that or would be driving any type of change into the positives? You know, given the right now, the low housing sales, industry volumes are still down significantly. We think price mix remains under pressure, especially given the high fixed costs of operations. You know, the industry will start to rebound as you start to see consumer confidence and housing activity certainly increase. But, you know, we do believe we should start to get towards the bottom of the cycle, but I would anticipate price mix being that headwind for the balance of the year. I mean, one thing that should help us in the future, as remodeling comes back, the margins in that, at least on ceramic, tend to be higher. Right. Okay. I guess the margins on commercial, though, are also a little bit higher, so that would be, depending on how much commercial slows, a little bit of an offset as well, or... Right. Is that the right way to think about that? That is the right way to think about it. That's more specified in nature and tends to be, a richer, a richer blend of products and margins. Right. Right. Well, second question, would love to get your thoughts. You do a continuous amount of productivity, restructuring, adjustments to your footprint. I know there's a lot of moving pieces there, but, you know, would love to try and get a sense for what benefits, you know, cost-saving benefits, your restructuring actions contributed to the second quarter in aggregate. And, you know, if that type of contribution or benefit, that you're seeing right now on a quarterly pace would increase into the back half of the year or just kind of stay consistent with what you're seeing, this past quarter? Let me frame it, a little bit better, for you, Mike, in terms of the restructuring actions. Yeah, we continue to execute the actions that we have previously identified. We've realized about about $90 million of the savings of about a $150 million goal through the first quarter, so that's last year through the first quarter of this year. So we have about another $60 million of benefit that is gonna flow through the P&L. Much of the restructuring has been executed, including the closure of high-cost assets, the restructuring of LVT operations, discontinuing low-margin products, and reducing administrative structure. All the businesses are continuing cost reductions in SG&A operations and logistics. In the first quarter, you know, that certainly was a part of the benefit of the $47 million that I noted in our productivity, and that will help as we go through the balance of the year. Great. Thanks so much. Our next question comes from Mike Dahl from RBC. Please go ahead with your question. Hi, thanks for taking my questions. First one is, you know, obviously, on a year-on-year basis, there's a lot of noise looking at kind of the price mix comparisons. On a sequential basis, and maybe specifically for North America and Global Ceramic, can you talk to kind of the sequential trends that you've seen year to date or versus 4Q in price mix? What's embedded in the 2Q guide? And then the flip side, obviously, on cost, you addressed some of the year-on-year dynamics. We've seen, you know, obviously, a pickup in oil. So can you also speak to, you know, whether or not in flooring North America, in particular, you're starting to see some upward pressure sequentially on your cost basket? Let me start with your comment on the sequential price mix. You know, from Flooring North America and Global Ceramic, from Q4 to Q1, it was, you know, relatively flat. But from Q1 to Q2, I would anticipate that you'll see more pressure in Flooring North America. Again, that's sequentially Q1 to Q2. Some of that is around seasonality. Some of that is in the price mix pressures in that segment. But from an overall company standpoint, I still would say that Flooring Rest of the World remains under probably the most pressure because of what we've talked about in the panels area. There's still gonna be additional productivity and cost reductions to help offset that. And as you look forward with it, we think the raw materials and input costs coming into the year were at a low. We have seen some movements in the first quarter, and we expect limited increases, given the present environment that we're in. We think that as business improves in the future at some point, we would expect the suppliers to raise prices, and we'll have to follow with increases to pass them through. And then it's also possible, given all the economic events and/or regional conflicts, that they could change our view on it overnight. Right. Yeah. Okay, fair enough. Thanks. And then second question, you know, specifically with respect to the second half and 3Q, you did make a comment highlighting European seasonality, 2Q versus 3Q. I feel like normally, that might be a comment that we see more next quarter as a reminder to the people as you're thinking about your 3Q guide. Can you just talk to, you know, the intent behind that, that comment or just- We were trying to remind everybody that the European business is on a different cycle, as well as we have some South American businesses, you're in the middle of their winter, is that? So when everybody doesn't always consider the non-U.S. businesses, and we just, as you're putting through the models, we just wanted to remind you. So in the context of the year-on-year improvement, it is the idea that sequentially, 3Q earnings could be down sequentially. If you're looking, you know, it's a little early to tell that. A lot depends on the rebound and if we start to see that volume increase, like we talked about earlier. But the real point was that Europe tends to peak in the second quarter from a historic standpoint. Got it. Okay. 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 questions today. So you talked about the move for tariffs on surfaces in the U.S., but we do, we do acknowledge that, and we've gotten some feedback about the Chinese tariffs have rolled off last year and are hearing just more of, you know, dumping activities, particularly for LVT, since the end of last year. What are your thoughts or updates on potential reinstatement of tariffs, or better yet, what are you seeing in terms of trends in Europe for your products? Thank you. Um. Well, you ask about LVT in general. So LVT sales have slowed as in other flooring categories. Pricing has declined with lower raw materials, import costs and transportation. In the U.S., you know, our West Coast facility is increasing our production, and our Georgia restructuring is being completed. And in Europe, we completed the restructuring of our LVT operations. We've implemented the change in our residential LVT to rigid, and where sales are expanding, and we're improving our product mix and reducing costs to increase our profitability as we go through the year. That's specific to LVT. There hasn't been any announced actions against dumping on LVT at this point. That's the answer to the other question. Are you seeing competitive pressures just from lower-priced LVT hitting the market in Europe? Um. Like, additional. Uh, well- I mean, it's a very competitive environment, but the products that we are putting in the market tend to be at the higher end and are actually doing pretty well. Okay. That's helpful. And then, I know that, not to beat the commercial end market horse to death, but maybe pulling the string a little bit more and with the preponderance of mega projects, and, you know, one of the things, the market focused on a lackluster ABI number that came out this week. But on the other hand, you know, our industry contacts that we talked to point out that often large, you know, kind of mega projects aren't necessarily captured in that ABI number. So channel checks are showing a better commercial end market versus what the ABI would suggest. Against the backdrop of these larger scale projects, what does Mohawk do to get in early in the conversation? I know it's always a process. You've always said that down in the past, but this is truly a different period of time. How do you position yourself with these larger type projects, and how do you kind of win in this environment? Well, I can just answer one thing on that, that in our carpet commercial and our ceramic commercial, we've got a lot of people that are calling on these commercial projects together and are sharing resources, and it works out really well and gives us an advantage. We, we're calling on the designers, the architects, the building owners, and the contractors all at the same time. We are participating in the planning of the different projects, and we've been able to position ourselves well in the marketplace. And our comments, I guess, are agreeing with you that it's holding up a little stronger than we anticipated, but we still think it's gonna continue to slow, and we're being aggressive in our calling on and offerings to the marketplace. Okay, great. Thank you. Thank you. Our next question comes from Laura Champine from Loop Capital. Please go ahead with your question. Hi, my question is on excess capacity. I think that you've quantified sort of ballpark running at 75% utilization in the not too recent past. Where is that now, and how high can you, how high would you like to get it, with your current restructuring initiatives, assuming volumes stay where they are today? The restructuring initiatives we've done, you know, we're still in a 75%-80% range. It should. It also depends which period and quarter you're in. So as you go through the year, though, I think it's gonna, it should move up. And the question really is, when does the market get back and really change the dynamics? We tend to try to flatten our production out over the year to even it out, to level it out as best we can. We haven't done anything that's gonna dramatically change it, you know, the capacity utilization without the marketplace improving. As we said on CapEx, really, our focus is more on the cost reduction and product innovation, as we just complete the growth investments that we had talked about before. I know that it flexes back and forth, but do you find yourself becoming more or less vertically integrated? Meaning, you know, are you extruding your own yarn? Are you doing less so with this cost inflation that you're seeing? It hasn't changed. Okay. That's it. Thank you. Thank you. Our next question comes from Stephen Kim from Evercore. Please go ahead with your question. Yeah, thanks very much, guys. Earlier in the call, I think you talked about the fact you're, you know, obviously targeting to get to a 10% operating margin and then look to take it further. But that 10% number just kind of was... Just wanted to explore that a little bit. I'm curious, what kind of volume growth do you think is needed to reach that target on an annualized basis, relative to kind of, like, where we are here? Is it, you know, we're talking about getting, like, maybe 10% kind of volume growth from here? Or just kind of get some order of magnitude in your estimation. I'm not sure I have the number to give you. We have our models out for the next three years, and, you know, we see ourselves reaching that with the different models we've done, and I don't recall the volume changes that are built into it. The timing, like, you know, it's impossible to define the moment in time it changes. We think we're gonna see some of it this fall, and we should see significantly more next year as we come out of this. Stephen, given how underutilized we are, as that volume moves up, we get, we get a substantial benefit, as it moves. Yeah, I mean, clearly. I mean, that's the one thing, you know, obviously, that's outside of your control. I mean, it sounds like you're doing everything you can, certainly on the cost side and even on the product side. But at the end of the day, that's the part that, you know, the market's gonna determine for you. And so, but it sounds like it's, but it sounds like you're looking for something, you know, fairly material. I mean, it's not like... I mean, I threw a 10% type growth number out there, that, I didn't think that that was unreasonable. Is that kind of in the ballpark of the kind of expansion in, off the bottom, that you would see at a minimum? Yeah. You know, Stephen, you know, the numbers that, that you're talking about are not unusual. As you come out of a downturn, even if you go back to, the last one, that first year, you get a kind of accelerated pop, in the sales as remodeling starts to come back, new home construction is stronger. So it's not unusual to get, a multiyear, benefit from, the rebound, before you get more back into a normal, growth, which in flooring could be, you know, GDP plus type numbers. Yeah. Yeah, exactly. Okay, well, that'll be fun to watch. The second question relates to Flooring Rest of the World, specifically. I'm looking at the margins there, and in each of the past three years, your margins have declined from the first quarter, which was the highest, actually, to the second, to the third, to the fourth. It was actually a, you know, kind of a steady decline. And then going even further back, you know, typically, the margins are stronger in the certainly in the front half than they are in the back half. Just wondering, are there any structural factors that you can call out? You know, maybe, maybe the vacations as part of that. But... Is there any reason to think that 2024 would track differently from that recent trend, where we've seen, you know, just sequential declines in margins? Listen, in Europe, you're correct. When you come out of the, you tend to ship a little more going into the third quarter because of the vacations, both of us and our customers. The vacations last 2-3 weeks, which in many cases, we shut down the entire factories. Then you hit the fourth quarter, which you have the Christmas vacations in addition to which, so both of those things cause the second quarter to be a peak. Gotcha. All right. Thanks very much, guys. Appreciate it. Our next question comes from Sam Reid from Wells Fargo. Please go ahead with your question. Awesome. Thanks so much, guys. Wanted to dig a bit deeper on pricing, particularly in the U.S., but perhaps ask it from a slightly different vantage point. So can you walk through some of the differences that you might be seeing by channel? So for instance, you know, are there any deviations in price dynamics that you've been seeing more recently, say, between the independent retailers versus the home centers? In general, the retail business is under a lot of pressure. You have the home centers that, in general, have a lower income level, buying on average from our specialty retailers, so they've been impacted more than the other channel at this point. And I would say overall, like particularly in ceramic, the one that's been off the most has been the remodeling, which not only it affects the home centers, like Jeff said, but it, it's also one of our higher margin businesses that's been under pressure. No, that makes sense. And then maybe switching gears, just quickly talking tile here. You know, your tile Daltile business had a pretty impressive display at the Kitchen and Bath Show this year. At least I was impressed by it. And that was in Vegas, obviously. You know, wanted to see, though, you know, any wins that you've gotten from that event or kind of any feedback? You know, just sort of curious, kind of what the outcome was there. Thanks. You know, I think we had a really good show, and if you just talk about U.S. Ceramic, the new construction and commercial improved as we expanded our distribution. Our price and mix have been negatively impacted, but we've done a lot on new, innovative, and higher-margin products that are gaining traction and partially offsetting these price declines. So there's been a lot of work in our ceramic business in the U.S., particularly to improve our product mix, and I think it's paid off. We've taken some market share from the high-end Europeans, where their cost higher, and we've also been able to expand in some of the builder channels as our service levels were better than the imported products coming in. Absolutely, guys. Helpful, and thanks so much. Thank you. Thank you. Our next question comes from Eric Bosshard, from Cleveland Research. Please go ahead with your question. Yeah, two things, if I could. First of all, what was better than expected in the quarter? I think that the earnings were a little bit better, and even the two of you guys a little bit better than consensus. I know that's not your number, but what's better than expected? So the first quarter results were better because we had greater benefit from restructuring and productivity. We had declines in input costs that he went through with you a minute ago offset the lower pricing and mix. The weaker sales did result in more unabsorbed overhead, which we had expected. Flooring North America improved the most, but it had the most easier comps from the group. And then the Flooring Rest of the World piece, we keep reviewing that the panel business really did the margin step change from last year in it as the industry volume declined. And anything else you want to add, Jim? No, you know, the commercial channel, again, keeps outperforming residential at this point. But as Jeff said, probably the biggest gains for the quarter were around the productivity that the segments threw off. Okay. And then secondly, the optimism going into the second half, what are you seeing in the business now? You talked about North America price mix, I guess, eroding a bit incrementally in the 2Q. What are you seeing within your business now, the results March or even April, that is improving and kind of informs that second half optimism? We're seeing the normal seasonality improvements through the first quarter and going into the second that we would expect, and we don't have any definitive information that you don't have. Yeah, and we'll continue to watch, you know, certain signs. We look at indicators, you know, like consumer confidence. Obviously, we've talked about interest rates, but also discretionary spending and continued monitoring the housing starts, as well as new build has been stronger through this cycle, along with commercial. Most people are anticipating the remodeling business coming off the bottom. It's been so low with people postponing it, and we're assuming we're gonna see some benefits from that also. Yeah, so we anticipate volumes really across the business to start to pick up, at least in the low single digit area. One other thing, last year, we reduced inventory substantially. We don't have to do that again. Thank you. Ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Jeff Lorberbaum for any closing remarks. Long term, the category will rebound from the downturn, as it always has. We're well positioned on our product and markets to enhance our results. We appreciate you for taking the time and joining us. Have a good day. Thank you. Ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.