2025 Demand Outlook
Q: Will demand improve across all segments in 2025?
A: Management is confident that demand will increase across all markets in 2025, driven by expected declines in global interest rates, which should boost consumer and business confidence. They anticipate improved mix, volume increases, and better asset utilization, leading to enhanced sales and margins next year. However, predicting the exact timing is challenging due to various market variables. - , - , - , -

Impact of Interest Rates
Q: Do lower interest rates affect recovery expectations?
A: The company believes that declining interest rates will positively impact demand, as they improve affordability and encourage remodeling and new construction activities. As rates decrease, they expect housing markets worldwide to see increased activity, contributing to growth in their markets sometime in 2025. - , - , -

Cost Reduction Plan
Q: What's the status of the $100 million cost-saving plan?
A: The company initially announced a $100 million savings plan, but now expects to achieve slightly more, with $20–$25 million realized this year and the majority in 2025. Restructuring initiatives are on schedule and aim to lower costs and enhance productivity. -

Margins and Price/Mix Outlook
Q: How are margins expected to trend given price/mix pressures?
A: Margins are under pressure due to price/mix headwinds and inflation in wages and benefits. In Q4, the company faces inflation driven by wages, and previous benefits from lower material and energy costs have lapped. However, they expect strong productivity gains to offset some pressures. While raising prices is challenging in the current competitive environment, significant inflation may necessitate passing on costs to customers. - , - , -

LVT and Laminate Growth
Q: What is the outlook for LVT and laminate flooring segments?
A: The company believes it is gaining market share in both LVT and laminate. Despite pricing pressures in LVT, they have outperformed the market, benefiting from productivity and lower material costs. They are launching new products, such as a wood plank with recycled content, and expanding capacity. In laminate, volume increased over last year, with growing acceptance in various channels, including new construction. They are taking share as a waterproof alternative to LVT and ramping up production to meet demand. - , - , -

European Business Outlook
Q: How is the European business performing and expected to recover?
A: The European segment is experiencing weaker demand and pricing pressures due to higher interest rates and political uncertainties. Recovery may lag other regions, and timing is uncertain. However, European central banks have initiated interest rate cuts, which could stimulate activity and benefit sales. - , -

Hurricane Impacts and Rebuild
Q: What is the impact of recent hurricanes, and will there be a rebuild benefit?
A: The company estimates a negative impact of $25–$40 million from back-to-back hurricanes in the Southeast U.S., affecting Q4 demand. Rebuilding efforts may take time, with flooring installations likely spread throughout 2025, depending on recovery pace. - , - , -

M&A Environment
Q: Are there opportunities for acquisitions in the current market?
A: Currently, limited M&A options exist as companies are hesitant to sell during downturns. However, management expects more opportunities over the next 12–18 months as the industry improves, potentially allowing them to acquire weaker players and consolidate the market. - , -

Ability to Raise Prices
Q: Can the company raise prices to offset higher costs?
A: Raising prices is currently challenging due to competitive pressures and excess capacity. However, increasing ocean freight costs and potential inflation may require price adjustments. Significant inflation would likely necessitate passing costs to customers. - , - , -

Commercial Demand Slowing
Q: How is slowing commercial demand affecting the business?
A: Commercial demand, which includes higher-margin products, is slowing and expected to contract, potentially impacting margins. Segments like hospitality, government, and education remain stronger. Management anticipates that residential remodeling demand will recover first, leveraging pent-up demand as consumer confidence improves. - , - , -