Net sales of $1,097.3 million decreased 2.2%
from the first quarter of fiscal 2023
Comparable store sales decreased
11.6%
Diluted earnings per share of $0.46
Opened four new warehouse stores
Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the
“Company,” or “Floor & Decor”) announces its financial results
for the first quarter of fiscal 2024, which ended March 28,
2024.
Tom Taylor, Chief Executive Officer, stated, “We are pleased to
report better-than-expected fiscal 2024 first quarter diluted
earnings per share of $0.46. We take pride in these first quarter
results as they demonstrate how our teams continue to work to
strategically grow our gross margin rate and prudently manage
expenses without sacrificing customer service amid the near-term
uncertain macroeconomic challenges. We are focused on continuing to
grow our market share by opening new warehouse-format stores,
capitalizing on our everyday low prices and value-driven options,
trend-right product assortments, in-stock job lot quantities, and
exceptional customer service.”
Mr. Taylor continued, “We have a busy fiscal 2024 second quarter
store opening plan, including opening in Brooklyn, New York. We
remain focused on managing our profitability in the short run while
at the same time continuing to make long-term growth investments
toward our plan to operate 500 warehouse-format stores in the
United States over time.”
Please see “Comparable Store Sales” below for information on how
the Company calculates period-over-period changes in comparable
store sales.
For the Thirteen Weeks Ended March 28, 2024
- Net sales of $1,097.3 million decreased 2.2% from $1,122.1
million in the first quarter of fiscal 2023.
- Comparable store sales decreased 11.6%.
- We opened four new warehouse stores, ending the quarter with
225 warehouse stores and five design studios.
- Operating income of $59.3 million decreased 37.9% from $95.5
million in the first quarter of fiscal 2023. Operating margin of
5.4% decreased 310 basis points from the first quarter of fiscal
2023.
- Net income of $50.0 million decreased 30.0% from $71.5 million
in the first quarter of fiscal 2023. Diluted earnings per share
("EPS") of $0.46 decreased 30.3% from $0.66 in the first quarter of
fiscal 2023.
- Adjusted EBITDA* of $123.0 million decreased 17.8% from $149.6
million in the first quarter of fiscal 2023.
*Non-GAAP financial measure. Please see “Non-GAAP Financial
Measures” and “Reconciliation of GAAP to Non-GAAP Financial
Measures” below for more information.
Outlook for the Fiscal Year Ending December 26, 2024:
- Net sales of approximately $4,600 million to $4,770
million
- Comparable store sales of approximately (5.5)% to (2.0)%
- Diluted EPS of approximately $1.75 to $2.05
- Adjusted EBITDA* of approximately $520 million to $560
million
- Depreciation and amortization expense of approximately $230
million
- Interest expense, net of approximately $9 million to $11
million
- Tax rate of approximately 20%
- Diluted weighted average shares outstanding of approximately
109 million shares
- Open 30 to 35 new warehouse stores
- Capital expenditures of approximately $400 million to $475
million
*Non-GAAP financial measure. Please see “Non-GAAP Financial
Measures” and “Reconciliation of GAAP to Non-GAAP Financial
Measures” below for more information.
Conference Call Details
A conference call to discuss the first quarter fiscal 2024
financial results is scheduled for today, May 2, 2024, at 5:00 p.m.
Eastern Time. A live audio webcast of the conference call, together
with related materials, will be available online at
ir.flooranddecor.com.
A recorded replay of the conference call is expected to be
available within two hours of the conclusion of the call and can be
accessed both online at ir.flooranddecor.com and by dialing
844-512-2921 (international callers please dial 412-317-6671). The
pin number to access the telephone replay is 13745248. The replay
will be available until May 9, 2024.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer and
commercial flooring distributor operating 225 warehouse-format
stores and five design studios across 36 states as of March 28,
2024. The Company offers a broad assortment of in-stock
hard-surface flooring, including tile, wood, laminate and vinyl,
and natural stone along with decorative accessories and wall tile,
installation materials, and adjacent categories at everyday low
prices. The Company was founded in 2000 and is headquartered in
Atlanta, Georgia.
Comparable Store Sales
Comparable store sales refer to period-over-period comparisons
of our net sales among the comparable store base and are based on
when the customer obtains control of the product, which is
typically at the time of sale. A store is included in the
comparable store sales calculation on the first day of the
thirteenth full fiscal month following a store’s opening, which is
when we believe comparability has been achieved. Changes in our
comparable store sales between two periods are based on net sales
for stores that were in operation during both of the two periods.
Any change in the square footage of an existing comparable store,
including for remodels and relocations within the same primary
trade area of the existing store being relocated, does not
eliminate that store from inclusion in the calculation of
comparable store sales. Stores that are closed for a full fiscal
month or longer are excluded from the comparable store sales
calculation for each full fiscal month that they are closed. Since
our e-commerce, regional account manager, and design studio sales
are fulfilled by individual stores, they are included in comparable
store sales only to the extent the fulfilling store meets the above
mentioned store criteria. Sales through our Spartan Surfaces, LLC
("Spartan") subsidiary do not involve our stores and are therefore
excluded from the comparable store sales calculation.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA (which are shown in the
reconciliation below) are presented as supplemental measures of
financial performance that are not required by, or presented in
accordance with, accounting principles generally accepted in the
United States ("GAAP"). We define EBITDA as net income before
interest, taxes, depreciation and amortization. We define Adjusted
EBITDA as net income before interest, taxes, depreciation and
amortization, adjusted to eliminate the impact of non-cash
stock-based compensation expense and certain items that we do not
consider indicative of our core operating performance.
Reconciliations of these measures to the most directly comparable
GAAP financial measure are set forth in the table below.
EBITDA and Adjusted EBITDA are key metrics used by management
and our board of directors to assess our financial performance and
enterprise value. We believe that EBITDA and Adjusted EBITDA are
useful measures, as they eliminate certain items that are not
indicative of our core operating performance and facilitate a
comparison of our core operating performance on a consistent basis
from period to period. We also use Adjusted EBITDA as a basis to
determine covenant compliance with respect to our credit
facilities, to supplement GAAP measures of performance to evaluate
the effectiveness of our business strategies, to make budgeting
decisions, and to compare our performance against that of other
peer companies using similar measures. EBITDA and Adjusted EBITDA
are also frequently used by analysts, investors and other
interested parties to evaluate companies in our industry.
EBITDA and Adjusted EBITDA are non-GAAP measures of our
financial performance and should not be considered as alternatives
to net income as a measure of financial performance, or any other
performance measure derived in accordance with GAAP and they should
not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Additionally, EBITDA
and Adjusted EBITDA are not intended to be measures of liquidity or
free cash flow for management's discretionary use. In addition,
these non-GAAP measures exclude certain non-recurring and other
charges. Each of these non-GAAP measures has its limitations as an
analytical tool, and you should not consider them in isolation or
as a substitute for analysis of our results as reported under GAAP.
In evaluating EBITDA and Adjusted EBITDA, you should be aware that
in the future we may incur expenses that are the same as or similar
to some of the items eliminated in the adjustments made to
determine EBITDA and Adjusted EBITDA, such as stock-based
compensation expense, distribution center relocation expenses, fair
value adjustments related to contingent earn-out liabilities, and
other adjustments. Our presentation of EBITDA and Adjusted EBITDA
should not be construed to imply that our future results will be
unaffected by any such adjustments. Definitions and calculations of
EBITDA and Adjusted EBITDA differ among companies in the retail
industry, and therefore EBITDA and Adjusted EBITDA disclosed by us
may not be comparable to the metrics disclosed by other
companies.
Please see “Reconciliation of GAAP to Non-GAAP Financial
Measures” below for reconciliations of non-GAAP financial measures
used in this release to their most directly comparable GAAP
financial measures.
Floor & Decor Holdings,
Inc.
Condensed Consolidated
Statements of Income
(In thousands, except for per
share data)
(Unaudited)
Thirteen Weeks Ended
March 28, 2024
March 30, 2023
% Increase
(Decrease)
Amount
% of Net Sales
Amount
% of Net Sales
Net sales
$
1,097,289
100.0
%
$
1,122,052
100.0
%
(2.2
)%
Cost of sales
627,263
57.2
652,934
58.2
(3.9
)%
Gross profit
470,026
42.8
469,118
41.8
0.2
%
Operating expenses:
Selling and store operating
334,345
30.5
303,671
27.1
10.1
%
General and administrative
66,777
6.1
61,911
5.5
7.9
%
Pre-opening
9,593
0.8
8,020
0.7
19.6
%
Total operating expenses
410,715
37.4
373,602
33.3
9.9
%
Operating income
59,311
5.4
95,516
8.5
(37.9
)%
Interest expense, net
1,955
0.2
4,862
0.4
(59.8
)%
Income before income taxes
57,356
5.2
90,654
8.1
(36.7
)%
Income tax expense
7,324
0.6
19,130
1.7
(61.7
)%
Net income
$
50,032
4.6
%
$
71,524
6.4
%
(30.0
)%
Basic weighted average shares
outstanding
106,770
105,962
Diluted weighted average shares
outstanding
108,255
107,718
Basic earnings per share
$
0.47
$
0.67
(29.9
)%
Diluted earnings per share
$
0.46
$
0.66
(30.3
)%
Condensed Consolidated Balance
Sheets
(In thousands, except for share and per
share data)
(Unaudited)
As of March 28, 2024
As of December 28,
2023
Assets
Current assets:
Cash and cash equivalents
$
57,426
$
34,382
Income taxes receivable
15,830
27,870
Receivables, net
100,951
99,513
Inventories, net
1,032,130
1,106,150
Prepaid expenses and other current
assets
49,746
48,725
Total current assets
1,256,083
1,316,640
Fixed assets, net
1,651,373
1,629,917
Right-of-use assets
1,317,694
1,282,625
Intangible assets, net
152,953
153,869
Goodwill
257,940
257,940
Deferred income tax assets, net
15,406
14,227
Other assets
7,211
7,332
Total long-term assets
3,402,577
3,345,910
Total assets
$
4,658,660
$
4,662,550
Liabilities and stockholders’
equity
Current liabilities:
Current portion of term loan
$
2,103
$
2,103
Current portion of lease liabilities
129,150
126,428
Trade accounts payable
641,180
679,265
Accrued expenses and other current
liabilities
287,011
332,940
Deferred revenue
14,195
11,277
Total current liabilities
1,073,639
1,152,013
Term loan
194,836
194,939
Lease liabilities
1,337,756
1,301,754
Deferred income tax liabilities, net
60,478
67,188
Other liabilities
11,150
15,666
Total long-term liabilities
1,604,220
1,579,547
Total liabilities
2,677,859
2,731,560
Stockholders’ equity
Capital stock:
Preferred stock, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
March 28, 2024 and December 28, 2023
—
—
Common stock Class A, $0.001 par value;
450,000,000 shares authorized; 107,011,266 shares issued and
outstanding at March 28, 2024 and 106,737,532 issued and
outstanding at December 28, 2023
107
107
Common stock Class B, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
March 28, 2024 and December 28, 2023
—
—
Common stock Class C, $0.001 par value;
30,000,000 shares authorized; 0 shares issued and outstanding at
March 28, 2024 and December 28, 2023
—
—
Additional paid-in capital
513,809
513,060
Accumulated other comprehensive income,
net
452
1,422
Retained earnings
1,466,433
1,416,401
Total stockholders’ equity
1,980,801
1,930,990
Total liabilities and stockholders’
equity
$
4,658,660
$
4,662,550
Condensed Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended
March 28, 2024
March 30, 2023
Operating activities
Net income
$
50,032
$
71,524
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
56,423
46,352
Deferred income taxes
(7,530
)
(7,211
)
Stock-based compensation expense
7,232
6,741
Change in fair value of contingent
earn-out liabilities
576
1,434
Loss (gain) on asset impairments and
disposals, net
37
(177
)
Interest cap derivative contracts
28
28
Changes in operating assets and
liabilities:
Receivables, net
(1,438
)
6,740
Inventories, net
74,020
111,189
Trade accounts payable
(35,079
)
47,176
Accrued expenses and other current
liabilities
(7,905
)
(68,733
)
Income taxes
13,186
25,495
Deferred revenue
2,918
4,358
Other, net
(4,990
)
5,364
Net cash provided by operating
activities
147,510
250,280
Investing activities
Purchases of fixed assets
(111,688
)
(139,398
)
Net cash used in investing activities
(111,688
)
(139,398
)
Financing activities
Payments on term loan
(526
)
(526
)
Borrowings on revolving line of credit
258,600
215,400
Payments on revolving line of credit
(258,600
)
(319,100
)
Payments of contingent earn-out
liabilities
(5,769
)
(5,241
)
Proceeds from exercise of stock
options
3,854
2,130
Proceeds from employee stock purchase
plan
2,720
2,558
Tax payments for stock-based compensation
awards
(13,057
)
(10,863
)
Net cash used in financing activities
(12,778
)
(115,642
)
Net increase (decrease) in cash and cash
equivalents
23,044
(4,760
)
Cash and cash equivalents, beginning of
the period
34,382
9,794
Cash and cash equivalents, end of the
period
$
57,426
$
5,034
Supplemental disclosures of cash flow
information
Buildings and equipment acquired under
operating leases
$
68,360
$
55,701
Cash paid for interest, net of capitalized
interest
$
1,195
$
4,692
Cash paid for income taxes, net of
refunds
$
1,665
$
1,651
Fixed assets accrued at the end of the
period
$
100,091
$
109,161
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In thousands)
(Unaudited)
EBITDA and Adjusted EBITDA
Thirteen Weeks Ended
March 28, 2024
March 30, 2023
Net income (GAAP):
$
50,032
$
71,524
Depreciation and amortization (a)
55,879
45,926
Interest expense, net
1,955
4,862
Income tax expense
7,324
19,130
EBITDA
115,190
141,442
Stock-based compensation expense (b)
7,232
6,741
Other (c)
576
1,434
Adjusted EBITDA
$
122,998
$
149,617
(a)
Excludes amortization of deferred
financing costs, which is included as part of interest expense, net
in the table above.
(b)
Non-cash charges related to stock-based compensation programs,
which vary from period to period depending on the timing of awards
and forfeitures.
(c)
Other adjustments include amounts management does not consider
indicative of our core operating performance. Amounts for both the
thirteen weeks ended March 28, 2024 and March 30, 2023 relate to
changes in the fair value of contingent earn-out liabilities.
Forward-Looking Statements
This release and the associated webcast/conference call contain
forward-looking statements within the meaning of the federal
securities laws. All statements other than statements of historical
fact contained in this release and the associated
webcast/conference call, including statements regarding the
Company’s future operating results and financial position, business
strategy and plans, and objectives of management for future
operations, are forward-looking statements. These statements are
based on our current expectations, assumptions, estimates and
projections. These statements involve known and unknown risks,
uncertainties and other important factors that may cause the
Company’s actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Forward-looking statements are based on management’s
current expectations and assumptions regarding the Company’s
business, the economy, and other future conditions, including the
impact of natural disasters on sales.
In some cases, you can identify forward-looking statements by
terms such as “may,” “will,” “should,” “expects,” “plans,”
“anticipates,” “could,” “seeks,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “budget,”
“potential,” or “continue” or the negative of these terms or other
similar expressions. The forward-looking statements contained in
this release are only predictions. Although the Company believes
that the expectations reflected in the forward-looking statements
in this release and the associated webcast/conference call are
reasonable, the Company cannot guarantee future events, results,
performance or achievements. A number of important factors could
cause actual results to differ materially from those indicated by
the forward-looking statements in this release or the associated
webcast/conference call, including, without limitation, (1) an
overall decline in the health of the economy, the hard surface
flooring industry, consumer confidence and discretionary spending,
and the housing market, including as a result of rising inflation
or interest rates, (2) our failure to successfully manage the
challenges that our planned new store growth poses or the impact of
unexpected difficulties or higher costs during our expansion, (3)
our inability to enter into leases for additional stores on
acceptable terms or renew or replace our current store leases, (4)
our failure to successfully anticipate and manage trends, consumer
preferences, and demand, (5) our inability to successfully manage
increased competition, (6) our inability to manage our inventory,
including the impact of inventory obsolescence, shrinkage, and
damage, (7) any disruption in our distribution capabilities, supply
chain, and our related planning and control processes, including
carrier capacity constraints, port congestion or shut down,
transportation costs, and other supply chain costs or product
shortages, (8) any increases in wholesale prices of products,
materials, and transportation costs beyond our control, including
increases in costs due to inflation, (9) the resignation,
incapacitation, or death of any key personnel, including our
executive officers, (10) our inability to attract, hire, train, and
retain highly qualified managers and staff, (11) the impact of any
labor activities, (12) our dependence on foreign imports for the
products we sell, including risks associated with obtaining
products from abroad, (13) geopolitical risks, such as the conflict
in the Middle East, the ongoing war in Ukraine, and U.S. policies
related to global trade and tariffs, such as import restrictions
under the Uyghur Forced Labor Prevention Act, or any antidumping
and countervailing duties, any of which could impact our ability to
import from foreign suppliers or raise our costs, (14) our ability
to manage our comparable store sales growth, (15) any failure by
any of our suppliers to supply us with quality products on
attractive terms and prices, (16) any failure by our suppliers to
adhere to the quality standards that we set for our products, (17)
our inability to locate sufficient suitable natural products,
particularly products made of more exotic species or unique stone,
(18) the effects of weather conditions, natural disasters, or other
unexpected events, including public health crises that may disrupt
our operations, (19) our inability to maintain sufficient levels of
cash flow or liquidity to fund our expanding business and service
our existing indebtedness, (20) any allegations, investigations,
lawsuits, or violations of laws and regulations applicable to us,
our products, or our suppliers, (21) our inability to adequately
protect the privacy and security of information related to our
customers, us, our associates, our suppliers, and other third
parties, (22) any material disruption in our information systems,
including our website, (23) new or changing laws or regulations,
including tax laws and trade policies and regulations, (24) any
failure to protect our intellectual property rights or disputes
regarding our intellectual property or the intellectual property of
third parties, (25) the impact of any future strategic
transactions, (26) restrictions imposed by our indebtedness on our
current and future operations, including risks related to our
variable rate debt, and (27) our ability to manage risks related to
corporate social responsibility. Additional information concerning
these and other factors are described in “Forward-Looking
Statements,” Item 1, “Business,” Item 1A, “Risk Factors,” and Item
1C "Cybersecurity" of Part I and Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and
Item 9A, “Controls and Procedures” of Part II of the Company’s
Annual Report for fiscal 2023 filed with the Securities and
Exchange Commission (the “SEC”) on February 22, 2024 (the “Annual
Report”) and elsewhere in the Annual Report, and those described in
Item 2, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” of the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended March 28, 2024
(the “10-Q”) and elsewhere in the 10-Q, and those described in the
Company’s other filings with the SEC.
Because forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or
quantified, you should not rely on these forward-looking statements
as predictions of future events. The forward-looking statements
contained in this release or the associated webcast/conference call
speak only as of the date hereof. New risks and uncertainties arise
over time, and it is not possible for the Company to predict those
events or how they may affect the Company. If a change to the
events and circumstances reflected in the Company’s forward-looking
statements occurs, the Company’s business, financial condition and
operating results may vary materially from those expressed in the
Company’s forward-looking statements. Except as required by
applicable law, the Company does not plan to publicly update or
revise any forward-looking statements contained herein or in the
associated webcast/conference call, whether as a result of any new
information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502050502/en/
Investor Contacts: Wayne Hood Senior Vice President of
Investor Relations 678-505-4415 wayne.hood@flooranddecor.com or
Matt McConnell Senior Manager of Investor Relations 770-257-1374
matthew.mcconnell@flooranddecor.com
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