Jeff Lorberbaum: We look forward at it or the flooring industry has actually been in a downturn since mid-2022. We believe that we are going to 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 has started 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 when it occurs, we will determine what the volume is versus this year.
Joe Ahlersmeyer: That’s very helpful. Jeff, appreciate that. So maybe a — seemingly a follow-up here. From late 2020 to early 2022, you bought back $1.4 billion of your stock, around $170 a share, even stretching there where you are buying it at $200. You stopped buying it back last March and I know there was cash flow softened, you are investing in CapEx and you had some maturities in there. But on several calls now and especially on this one you are 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 your stock right now?
Jeff Lorberbaum: 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 are continuing to review it and would consider buying stock as our visibility improves from where it is today.
Joe Ahlersmeyer: All right. Thank you, Jeff.
Operator: Our next question comes from Susan Maklari from Goldman Sachs. Please go ahead with your question.
Susan Maklari: Thank you. Good morning, everyone.
James Brunk: Good morning,
Jeff Lorberbaum: Good morning.
Susan Maklari: Jeff, maybe just building off of Joe’s question, as you think about 2024, you are going to 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’s specific efforts that you detailed in your remarks around cost cutting in new products and how those will be layered in over the course of 2024 and what they could mean for Mohawk?
Jeff Lorberbaum: Let’s say, as we look through it, higher volumes as we go and the business improves, we will leverage the SG&A 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 product will also see benefits from the restructuring and take-outs that will come through when all that occurs. And then in addition, we have multiple acquisitions we have 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.
Susan Maklari: Okay. That’s helpful color. And then, as part of that, you have mentioned 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 is interesting to you that we should be thinking about over the next year and a half or so?
Jeff Lorberbaum: 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 are 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 might come out of this earlier than others. Business in Australia has held up better for us. There is a less competitive environment in the marketplace and we have been able to hold on to margins a little better. Europe is really difficult to know what’s going to happen. The consumer confidence remains low and it’s going to take something to help it move. And different than the United States and Europe, the average worker got much higher increases. So they covered more than inflation and we do. So it’s really a confidence issue in Europe.
Susan Maklari: Okay. Thank you for the color and good luck with everything.
Jeff Lorberbaum: Thank you, Susan.
Operator: Our next question comes from Stephen Kim from Evercore. Please go ahead with your question.
Stephen Kim: Yeah. Thanks very much guys. I appreciate all the color you gave — given so far. Jeff, you have laid out pretty clearly in both your press release and what you have said today. The factors that drive your business to be rather cyclical. Right now you have got a lot of challenges that are coming from all quarters, with competitors try to leverage their fixed costs in a tough market and drive pricing and all that. And then also on the way up everything gets better. 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?
Jeff Lorberbaum: Well, the cyclicality is based on the — they are really two things, one is, how sensitive we are to interest rates, and then the other part is, these high capital fixed cost that the industry, including our company, our competitors and we tend to move up and down trying to minimize these things. I think if you are going to stay in the industry it’s part of it as if. Now we are getting into other things like the insulation business that we are 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 are in different business and different categories that react differently today.
James Brunk: And remember, as these are not purchases that are canceled. These are deferred. So, if you see a pent-up demand and 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 are in a great position over that mid to longer term.
