2024-02-09 19:15:02 ET
Mohawk Industries, Inc. (MHK)
Q4 2023 Earnings Call Transcript
February 09, 2024, 11:00 AM ET
Company Participants
James Brunk - CFO
Jeff Lorberbaum - Chairman and CEO
Chris Wellborn - President and COO
Conference Call Participants
Susan Maklari - Goldman Sachs
Phil Ng - Jefferies
Eric Bouchard - Cleveland Research
Stephen Kim - Evercore
Timothy Wojs - Baird
Keith Hughes - Truist
Andrew Azzi - JPMorgan
Joe Ahlersmeyer - Deutsche Bank
John Lovallo - UBS
Laura Champine - Loop Capital
Matthew Bouley - Barclays
Kathryn Thompson - Thompson Research Group
Adam Baumgarten - Zelman
Rafe Jadrosich - Bank of America
Presentation
Operator
Good day, and welcome to the Mohawk Industries Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to James Brunk. Please go ahead, sir.
James Brunk
Thank you, Rocco. Good morning, everyone, and welcome to Mohawk Industries quarterly investor call. Joining me on the call are Jeff Lorberbaum, Chairman and Chief Executive Officer, and Chris Wellborn, President and Chief Operating Officer. Today, we will update you on the Company's fourth quarter and full year performance and provide guidance for the first 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 by 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 over the call to Jeff for his opening remarks. Jeff?
Jeff Lorberbaum
Thanks, Jim. Our fourth quarter results were ahead of our expectations, with net sales for the quarter of approximately $2.6 billion, down 1.4% as reported or 4.1% on a constant and legacy basis. Lower demand in residential remodeling and new construction continued to impact our results. Our adjusted EPS for the quarter was $1.96, with benefits from cost containment, productivity and lower input costs. Pricing and product mix declined offset by lower raw material and energy costs during the quarter. Foreign exchange had an impact of approximately $22 million on operating income, or $0.27 on EPS.
Turning to our full year results. Mohawk's net sales were approximately $11.1 billion, down approximately 5% as reported or 7.7% on a constant basis with adjusted EPS of $9.19. Last year, interest rates increased creating challenges for our industry, which is highly sensitive to rate fluctuation. Even though we have a diversified geographic footprint, all of our markets were impacted by similar conditions. During '23, existing home sales declined substantially, remodeling projects were postponed and consumers traded down. New home construction was also constrained as rising interest rates and a weak housing market reduced home starts. Throughout the year, the commercial sector remained stronger than residential though investments began to slow as interest rates increased in lending types. These factors reduced industry demand across our business, creating unabsorbed overhead and shutdown costs. As a result, our industry reduced selling prices and we pass through declining cost in energy and materials. Under these conditions, we focused on optimizing our revenues and lowering our costs through restructuring actions and manufacturing enhancement. We aggressively managed inventory levels, which reduced our working capital by over $300 million, excluding acquisitions. We also invested in sales resources, merchandising in new products with innovative features to inspire consumers to purchase flooring....
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Mohawk Industries, Inc. (MHK) Q4 2023 Earnings Call Transcript