Restructuring and Cost Savings
Q: Why are you reducing costs and capacity now?
A: We anticipate a slow market recovery into next year, so we're optimizing profits by taking out more costs now. This positions us better for the second half and increases profitability as the market recovers. -

Growth Outlook for 2025
Q: How will capacity support growth next year?
A: We expect demand to start improving from current lows, driven by pent-up demand in housing and remodeling. We're ready to leverage cost structures and product mix as markets recover, with investments in high-growth areas like laminate, quartz countertops, slabs in Europe, and insulation. -

Restructuring Savings Across Segments
Q: How will restructuring savings fall across segments?
A: From the initial $150 million restructuring, we've realized about $110 million through Q2, expecting $130 million by year-end, spread fairly evenly, with a bit more in Flooring North America. The new $100 million savings will benefit Flooring North America more, with $20–$25 million recognized this year and a larger piece next year. -

Commercial Business Outlook
Q: What is happening in the commercial business?
A: Commercial is holding up better than residential but is slowing with fewer new projects. Sectors like hospitality, retail, government, and education are outperforming. Pricing remains resilient due to market differentiation, but as we recover, commercial improvement will lag due to longer planning and construction times. -

Share Buybacks and Confidence
Q: What drove your decision to repurchase shares?
A: We believe we're reaching the end of the cycle and have taken actions to manage short-term pressures. Confident in market recovery, we see this as a good time to buy shares, having repurchased $90 million in the quarter. We'll continue to evaluate share repurchases as part of our capital allocation strategy. -

Top Line Expectations for H2
Q: What's the top line outlook for Q3 and H2?
A: We expect current conditions to continue into Q3, with weak demand and pricing pressures. Seasonal factors like European holidays will reduce Q3 sales. For Q4, we might see some rate reductions, but impacts are likely next year, with continued low industry utilization and unabsorbed overheads due to disciplined inventory management. -

Margin Improvement Amid Top Line Pressures
Q: Can you improve margins despite top line pressures?
A: Improvements are mainly from internal actions, though some volume improvements in certain product categories are offset by pricing and mix pressures. We're focusing on controlling costs and restructuring to enhance margins in a tough market. -

Market Share Gains in LVT and Laminate
Q: Are LVT and laminate businesses growing?
A: Yes, unit volumes in LVT and laminate have improved, with units up in both categories. We're gaining share, executing well, and seeing adoption across markets, as laminate becomes a preferred alternative to wood and LVT. - - -

Impact of Higher Freight Costs on Pricing
Q: How do higher freight costs affect pricing?
A: Increased ocean freight and potential tariffs are benefiting our domestic manufacturing. Imported products will have to pass through higher freight costs, and while we haven't seen competitors raise prices yet, they will have to due to significant freight rate increases. - -

Timing of Recovery with Rate Cuts
Q: How would rate cuts impact demand recovery?
A: Historically, rate reductions boost consumer confidence, leading to pent-up remodeling demand releasing with minimal lag. New and existing home sales pick up, followed by commercial activity with a 9–12 month lag. If rate cuts occur, we could see uplift as soon as next spring. -

Use of Technology and AI
Q: How are you leveraging technology to lower costs?
A: We're improving our internal systems to reduce administrative costs and are in the early stages of exploring AI. We're investing in training and see significant future opportunities, but AI hasn't yet made a major change in our cost structure. - -

Product Differentiation and Profitability
Q: How are product features driving business?
A: We're focusing on product differentiation through new features in ceramic tiles, LVT, laminate, and countertops. These innovations aim to enhance durability, aesthetics, and acoustics, which should positively impact mix and profitability as retail markets recover and consumers return. -

Upside Drivers in Q2 and Trends into Q3
Q: What drove Q2 upside, and will trends continue?
A: Across all segments, cost reductions and restructuring activities improved margins, while investing in new products for future growth. For Q3, we're assuming current conditions continue, with cost management offsetting market pressures. -

Productivity Gains and Margin Expansion
Q: Can productivity gains drive margin expansion?
A: As volumes increase, we'll run facilities more efficiently, reducing shutdown costs and unabsorbed overheads. We're continually implementing cost reductions and expect ongoing benefits from restructuring savings into next year. -

Price and Cost Trends
Q: What's the outlook for price and cost trends?
A: In Q2, material and energy costs benefited us by $90 million, offset by weaker price/mix of $111 million. Input cost benefits will lessen in H2 as we lap lower costs from last year. We expect continued pricing and mix pressures across segments. - -

Mix Trends
Q: Is product mix getting better or worse?
A: Mix trends are affected by both product and channel mix. Commercial slowdown negatively impacts mix, but we're leveraging investments in new products to improve it. Overall, we don't see significant changes in conditions from Q2 to Q3. -

Market Share Gains and Sustainability
Q: Are your market share gains sustainable?
A: We're expanding distribution, investing in sales and marketing, and offering differentiated products and value propositions. We're being rewarded with increased market share in some areas, and our capacity to compete has improved, especially in Europe as energy costs have come down. - -