Good morning. My name is Craig and I will be your conference operator today. At this time, I would like to welcome everyone to the Mohawk Industries' Third Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Friday, October 27, 2017. Thank you. I would like to introduce Mr. Frank Boykin. Mr. Frank Boykin, you may begin your conference.

Thank you, Craig. Good morning, everyone, and welcome to Mohawk Industries quarterly investor conference call. Today, we'll update you on the Company's results for the third quarter of 2017 and provide guidance for the fourth quarter. 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. You can refer to our Form 8-K and press release in the Investor Information section of our website for a reconciliation of any non-GAAP to GAAP amounts. I'll now turn the call over to Jeff Lorberbaum, Mohawk's Chairman and Chief Executive Officer. Jeff?

Thank you, Frank. In the third quarter Mohawk delivered record earnings and EPS were sales growing approximately 7%. Our business outside the United States experienced the strongest revenue growth as economies of those countries expanded. In the period, we overcame rising material cost disruptions from hurricanes and reduced pattern revenues. Our price in mix continue to improve as we enhanced our product offering with unique designed and differentiated features. To recovery material inflation, we implemented enterprise-wide pricing actions this year. And with productivity and mix we cover a higher cost earlier than we expected this quarter. Our many operational initiatives and process improvements resulted in significant productivity gains of approximately $49 million and we incurred $8 million of start-up cost in our results. For the full year, we are investing $900 million to optimize long-term results by entering new product categories, extending our reach into new geographies and facilitating growth in our existing businesses. These projects include ceramic expansions in Mexico, Russia, Italy and Poland additional premium laminate, engineered wood, rug and polyester carpet capacity in the United States and increased premium laminate capacity in Europe and Russia. Our investment will satisfy increasing demand for our products as well as introduced state-of-the-art manufacturing technology to further our position as the industry's innovation leader. During 2018, in the United States we will launch production of rigid LVT as well as quartz countertops. In Europe, we will enter the rigid LVT carpet tile and porcelain countertop business. And in Russia, we will open a manufacturing plant to participate in the large sheet vinyl market. Our strong financial position allows us to aggressively grow through both internal investments and acquisitions. This year we've completed four acquisitions that broadened our product offering and enhanced our manufacturing advantages. Combined all of these initiatives will allow us to drive our long-term profitability and outperform the market. With our strong management team and balance sheet, we are well positioned to continue our extraordinary performance of the last five years. In the United States job creation has been solid throughout the year and consumer sentiment remains positive. The U.S. economy and housing market continues to grow at a more measured pace even with the disruption of September's hurricane. Single family housing starts are growing a multi-family construction is contracting this year. The October National Homebuilders Association showed builder confidence rising to the highest levels since spring. Remodeling trends are projected remain strong in recovery in Florida and Texas regions, will fuel substantial renovation and rebuilding. The October architectural building index shows positive commercial and institutional building trends in most of the country with a slight softening in the west. Outside the United States, the international monetary fund has increased this forecast for economic growth in Europe and in Russia through 2018. Now Chris Wellborn, our President and Chief Operating Officer, will provide you an overview of our segments performance during the third quarter.

Thank you, Jeff. Our flooring rest of the world segment had an exceptional quarter with majority of our manufactured product sales and earnings growing dramatically. Our pattern revenue is running at a higher rate than we anticipated due to the broader use of our patterns and increase in worldwide sales of the LVT. During the period our price increases and mix improvement offset our inflation in currency changes. Third quarter results were also enhanced by a reduction in summer shutdowns allowing us to shift more and customers increased purchased prior to pricing actions in either of which will occur going forward. Our laminate innovation in proprietary structures and waterproof technologies is increasing the selection of our products by customers who would ordinarily purchase wood flooring. This combined with our broader ray of sophisticated designs is expanding our lead in the premium laminate category. In this quarter, the start-up of our state-of-the-art laminate equipment will enable us to expand this growing category and broaden our distribution. The utilization of LVT is continuing its rapid acceptance in the marketplace. We are using the value of our well-known brands to segregate different channels and price points to address all components of the LVT market. Our present European LVT manufacturing is running at capacity and our new plant will begin operating by the end of the year. The new plant will expand our capacity of flexible LVT as well as produced rigid LVT. As always we will bring new innovations to LVT to differentiate our value proposition in the marketplace. Our process improvements and investments in leading technology continue to reduce our cost, enhancing our position as the LVT market gross and becomes more competitive. We improved the visuals in the sheet vinyl to offer a value alternative for LVT and we are increasing…

Thank you, Chris. Net sales for the quarter were $2.449 billion up 7% over last year, with the legacy business growing 3% on a constant exchange rate basis. We had our strongest growth in the rest of world segment for the quarter. Our gross margin as reported was 32%, excluding charges the margin was 32.5% and was favorably influenced by $63 million of price mix and $40 million of productivity. These were partially offset by $61 million of input cost inflation as well as lower IP. SG&A as reported was 16.5% of net sales or 16.3% excluding charges which were slightly better than last year. Productivity of $9 million offset investments back into SG&A of $6 million. We had unusual charges in the quarter of $17 million which were primarily related to plant consolidation in the flooring the North American segment and acquisitions related to charges in global ceramic. Last year, we had a net benefit of $12 million related to a legal settlement. Our operating margin excluding charges was 16.2% up slightly over last year. The results were positively impacted by $62 million of price mix and $49 million of productivity offsetting this $61 million of input cost in IP. If we look at income tax, the rate for the quarter was 27.6% that compares to 26.4% last year. We expect the rate to be 27% to 27.5% in the fourth quarter. In 2018, we expect the full year rate to range between 28.5% and 29.5% as the geographic mix of our earnings shifts to higher tax jurisdictions. Earnings per share excluding charges was $3.75 and increased 7% over last year. Moving to the segments, in the flooring rest of world segment, sales as reported were $523 million or up 13%. This was an 8% increase on a constant…

Thank you, Frank. In the fourth quarter we anticipate that the business will improve as we benefit from innovative new products, increased volume and the performance of our recent acquisitions. We expect higher sales with the release of some of our capacity constraints enabling us to expand our market position. During the period, we will absorb higher start-up cost estimated at $15 million, our results as new operations come online. The destructions caused by the hurricanes in the U.S. should diminish as those markets begin their recovery. Greater productivity, better product mix and price changes should improve our fourth quarter results overcoming the reductions from our expired patents. Taking all this into account, our EPS guidance for the first quarter is $3.25 to $3.34 excluding any one-time charges. We are leveraging our strong financial position to invest in the business at record levels expanding our capacity in most categories, broadening our product portfolios and entering new markets. The four acquisitions we have completed are enhancing our results and further our global strategy. Next year, start-up cost and marketing investments of our new operations will vary quarter-to-quarter, as we expand our business into new products and geographies with many of the benefits in future years as our utilization increases. Our organization's ability to maximize internal investments and execute acquisitions around the world will deliver greater long-term growth and profitability. We will now be glad to take your questions.

[Operator Instructions] Our first question comes from the line of Bob Wetenhall from RBC Capital.

Our next question comes from Stephen Kim from Evercore ISI.

Our next question comes from Mike Dahl of Barclays.

Our next question comes from Susan Maklari from Credit Suisse.

Our next question comes from John Baugh from Stifel.

Our next question comes from Mike Wood from Nomura Instinet.

Our next question comes from John Lovallo of Bank of America.

Our next question comes from Sam Eisner of Goldman Sachs.

Our next question comes from Laura Champine from Roe Equity Research.

Our next question comes from Kathryn Thompson of Thompson Research Group.

Our next question comes from Keith Hughes from SunTrust.

Our next question comes from David MacGregor of Longbow Research.

Our next question comes from Stephen East of Wells Fargo.

Our next question comes from Tim Wojs from Baird.

Our next question comes from Eric Bosshard from Cleveland Research.

I'm showing no further questions this time. And I'd like to turn the call back over to Mr. Lorberbaum for closing comments.

Thank you very much for joining us. We think we're well positioned for next year and beyond. We're putting investments in to drive the business and profitability long-term. And we're really interested in the long-term growth and there is going to be more variation quarter-to-quarter with the all the aggressive actions we're taking. Thank you for joining us.

This concludes today's conference. You may now disconnect.