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LL Flooring Reports Fourth Quarter and Full Year 2023 Financial Results

LL Flooring Holdings, Inc. (“LL Flooring” or “Company”) (NYSE: LL), a leading specialty retailer of hard and soft surface flooring in the U.S., today announced financial results for the fourth quarter and year ended December 31, 2023.

"Fourth quarter business conditions remain difficult as we continue to experience the impact of weakness in existing home sales and the corresponding softness in the home improvement industry. We reported comparable store sales down 19.6% as we saw continued declines in traffic and lower average project sizes for our consumer and pro customers. Despite external headwinds, we are focused on our ability to deliver the high-touch service of an independent flooring retailer combined with the value, assortment, and convenience of a national brand,” said President and Chief Executive Officer Charles Tyson.

Tyson continued "Leading economic indicators suggest that home improvement spending will continue to be challenged through at least the first half of 2024, however, the long-term fundamentals of our business are strong due to aging housing stock, increased household formation and rising home values. To that end, we remain focused on executing on our brand transformation and on our strategic initiatives which we believe will drive revenue growth, increase brand awareness, spur product innovation and deliver a consistent customer experience. We are also gaining traction on several of our operating strategies, focusing on the customer experience, driving and improving NPS scores, innovating products including the execution of our carpet initiatives, and maintaining a strong focus on improving operational efficiencies and working capital management. All of which, gives us confidence in achieving long-term growth.”

Fourth Quarter Financial Highlights

  • Net sales decreased 19.7% to $211.8 million compared to the same period last year, driven by a decrease in transaction count and average transaction size reflecting lower spend by consumers and Pros.
  • Total comparable store sales decreased 20.2% versus the same period last year.
  • Gross margin increased 270 basis points to 38.6% and Adjusted gross margin1 increased 260 basis points to 38.3% compared to the same period last year, primarily driven by vendor cost outs and lower transportation costs, partially offset by headwinds from higher vinyl sourcing costs as we increased sourcing from domestic vendors.
  • SG&A as a percentage of net sales increased 430 basis points to 46.8% compared to the fourth quarter of last year and Adjusted SG&A1 as a percentage of net sales increased 800 basis points to 46.8% compared to the fourth quarter of last year. The increases in both SG&A and Adjusted SG&A as a percentage of net sales were due primarily to expense deleverage from lower sales volumes; Adjusted SG&A spending decreased $3.1 million primarily due to restructuring activities and lower advertising spend.
  • Operating margin loss increased 170 basis points to 8.3% compared to the fourth quarter of last year. Adjusted operating margin loss1 increased 550 basis points to 8.6% compared to the fourth quarter of last year.
  • Loss per Diluted Share increased $0.09 to $0.62 compared to the fourth quarter of last year. Adjusted Loss per Diluted Share1 increased $0.35 to $0.64 compared to the fourth quarter of last year.
  • We’ve continued to evaluate our store portfolio, resulting in the closure of seven stores during the fourth quarter. We also opened one new store, bringing our total store portfolio to 437 stores as of December 31, 2023.

1Please refer to the “Non-GAAP and Other Information” section and the GAAP to non-GAAP reconciliation tables below for more information.

Full Year Financial Highlights

  • Net sales decreased 18.5% to $904.7 million compared to last year, driven by a decrease in transaction count and average transaction size reflecting lower spend by consumers and Pros.
  • Total comparable store sales decreased 19.6% versus last year.
  • Gross margin decreased 40 basis points to 35.7% compared to 2022 and Adjusted gross margin1 increased 140 basis points to 37.5% compared to 2022. Gross margin decreased due to unfavorable antidumping duty rate changes and customs detentions on certain vinyl flooring products from Asia. The increase in adjusted gross margin1 was primarily due to lower vendor and transportation costs.
  • SG&A as a percentage of net sales increased 740 basis points to 44.6% compared to last year and adjusted SG&A1 increased 820 basis points to 44.5% compared to last year. Both SG&A and Adjusted SG&A increased as a percentage of net sales primarily due to expense deleverage on lower net sales; Adjusted SG&A spend remained relatively flat compared to 2022, as the cost savings from our restructuring activities and lower spend on advertising were offset by higher occupancy costs associated with the addition of a third distribution center, rents of new stores and lease renewals at higher rental rates, non-recurring professional services and IT spend associated with the rollout of our CRM.
  • Operating margin loss increased 780 basis points to 8.9% compared to last year. Adjusted operating margin loss1 increased 680 basis points to 7.0% compared to last year.
  • Loss per Diluted Share increased $3.17 to $3.59 compared to last year. Adjusted Loss per Diluted Share1 increased $2.84 to $3.01 compared to last year.
  • During 2023, the Company opened three new stores and closed eight, bringing total stores to 437 as of December 31, 2023.

1Please refer to the “Non-GAAP and Other Information” section and the GAAP to non-GAAP reconciliation tables below for more information.

Cash Flow & Liquidity

As of December 31, 2023, the Company had liquidity of $118.2 million, consisting of excess availability under its Credit Agreement of $109.4 million, and cash and cash equivalents of $8.8 million.

During 2023, the Company generated $21.3 million of cash flows from operating activities, primarily driven by our effective inventory management and our cost savings initiatives implemented by management.

2024 Business Outlook

The Company continues to navigate uncertainty in the macroeconomic environment due to low consumer confidence, inflation, a volatile interest and mortgage rate environment and continued declines in existing home sales. As a result, the Company is not providing financial guidance at this time.

The Company is, however, providing the following commentary. The Company expects:

  • In terms of our sales outlook for 2024, while we strongly believe that our strategic initiatives of our CRM and Pro initiatives will improve the customer experience and help drive traffic to stores, our visibility is limited as to when the macroeconomic environment will normalize.
  • Adjusted gross margins1 are expected to maintain year-over-year, driven primarily by potential reductions in transportation costs. The Company will continue to monitor the competitive pricing environment to inform its pricing and promotion strategies.
  • SG&A dollar spend and SG&A spend as a percentage of sales are expected to increase year-over-year, primarily due to lower net sales as we continue to invest in our strategic initiatives while navigating a dynamic macroeconomic environment.
  • Capital expenditures of approximately $15 million in 2024, primarily related to our strategic initiatives such as the rollout of Carpet across our store portfolio, and maintenance capital investments.

1Please refer to the “Non-GAAP and Other Information” section and the GAAP to non-GAAP reconciliation tables below for more information.

Learn More about LL Flooring

Conference Call and Webcast Information

The Company plans to host a conference call and audio webcast on March 4, 2024, at 8:00 a.m. Eastern Time. The conference may be accessed by dialing (833) 470-1428 or (929) 526-1599 and entering pin number 918613. You may also use this website https://events.q4inc.com/attendee/638357847 in lieu of speaking to an operator. A replay will be available approximately two hours after the call ends through March 11, 2024 and may be accessed by dialing (929) 458-6194 and entering pin number 285260. The live conference call and replay can also be accessed via audio webcast at the Investor Relations section of the Company's website, www.LLFlooring.com.

About LL Flooring

LL Flooring is one of the country’s leading specialty retailers of hard-surface flooring with more than 430 stores nationwide. The Company seeks to offer the best customer experience online and in stores, with more than 500 varieties of hard and soft surface floors featuring a range of quality styles and on-trend designs. LL Flooring's online tools also help empower customers to find the right solution for the space they've envisioned. LL Flooring's extensive selection includes waterproof hybrid resilient, waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, porcelain tile, and cork, with a wide range of flooring enhancements and accessories to complement. LL Flooring stores are staffed with flooring experts who provide advice, Pro partnership services and installation options for all of LL Flooring's products, the majority of which is in stock and ready for delivery.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release includes statements of the Company’s expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” "assumes," “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” "targets," “potential,” "will likely result," and other similar terms and phrases, are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company’s management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control.

The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. For a discussion of the risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission (“SEC”). Such filings are available on the SEC’s website at www.sec.gov and the Company’s Investor Relations website at https://investors.llflooring.com.

Non-GAAP and Other Information

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses the following non-GAAP financial measures in the body of this press release and in the supplemental tables at the end of the release: (i) Adjusted Gross Profit; (ii) Adjusted Gross Margin; (iii) Adjusted SG&A; (iv) Adjusted SG&A as a percentage of net sales; (v) Adjusted Operating Income (Loss); (vi) Adjusted Operating Margin (Loss); (vii) Adjusted Other Expense; (viii) Adjusted Other Expense as a percentage of net sales; (ix) Adjusted Earnings (Loss); and (x) Adjusted Earnings (Loss) per Diluted Share. These non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies.

The non-GAAP financial measures are presented because we believe the non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends related to our financial condition and results of operations, These measures provide an additional tool for investors to use in evaluating our ongoing operating performance, and management, in certain cases, uses them to determine incentive compensation. The presented non-GAAP financial measures exclude items that management does not believe reflect our core operating performance, which include regulatory and legal settlements and associated legal and operating costs, changes in antidumping and countervailing duties, and goodwill impairment, as such items are outside of our control or due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. Reconciliations of these non-GAAP financial measures are provided on the pages that follow.

Reconciliations of forward-looking non-GAAP measures are not provided because the company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the timing and significance of antidumping rate changes or vinyl charges.

(Tables Follow)

LL Flooring Holdings, Inc.

Consolidated Balance Sheets

(in thousands)

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

8,772

 

 

$

10,800

 

Merchandise Inventories, Net

 

 

265,290

 

 

 

332,296

 

Prepaid Expenses

 

 

5,658

 

 

 

9,054

 

Other Current Assets

 

 

8,473

 

 

 

17,598

 

Total Current Assets

 

 

288,193

 

 

 

369,748

 

Property and Equipment, Net

 

 

100,490

 

 

 

101,758

 

Operating Lease Right-of-Use Assets

 

 

141,210

 

 

 

123,172

 

Deferred Tax Assets, Net

 

 

 

 

 

13,697

 

Other Assets

 

 

5,681

 

 

 

5,578

 

Total Assets

 

$

535,574

 

 

$

613,953

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts Payable

 

$

67,195

 

 

$

47,733

 

Customer Deposits and Store Credits

 

 

39,468

 

 

 

43,767

 

Accrued Compensation

 

 

6,915

 

 

 

9,070

 

Sales and Income Tax Liabilities

 

 

2,103

 

 

 

3,574

 

Accrual for Legal Matters and Settlements

 

 

15,344

 

 

 

22,159

 

Operating Lease Liabilities - Current

 

 

31,815

 

 

 

34,509

 

Other Current Liabilities

 

 

24,382

 

 

 

19,712

 

Total Current Liabilities

 

 

187,222

 

 

 

180,524

 

Other Long-Term Liabilities

 

 

8,391

 

 

 

6,162

 

Operating Lease Liabilities - Long-Term

 

 

116,651

 

 

 

99,186

 

Credit Agreement

 

 

66,000

 

 

 

72,000

 

Total Liabilities

 

 

378,264

 

 

 

357,872

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common Stock ($0.001 par value; 35,000 shares authorized; 30,983 and 30,758 shares issued and 28,849 and 28,695 shares outstanding at December 31, 2023 and 2022, respectively)

 

 

31

 

 

 

31

 

Treasury Stock, at cost (2,134 and 2,063 shares, respectively)

 

 

(153,617

)

 

 

(153,331

)

Additional Capital

 

 

236,848

 

 

 

231,839

 

Retained Earnings

 

 

74,048

 

 

 

177,542

 

Total Stockholders’ Equity

 

 

157,310

 

 

 

256,081

 

Total Liabilities and Stockholders’ Equity

 

$

535,574

 

 

$

613,953

 

LL Flooring Holdings, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

(in thousands, except per share amounts)

 

 

 

Three Months Ended

December 31,

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Merchandise Sales

 

$

183,059

 

 

$

226,883

 

 

$

779,326

 

 

$

957,927

 

 

$

993,943

 

Net Services Sales

 

 

28,721

 

 

 

36,986

 

 

 

125,420

 

 

 

152,752

 

 

 

158,401

 

Total Net Sales

 

 

211,780

 

 

 

263,869

 

 

 

904,746

 

 

 

1,110,679

 

 

 

1,152,344

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Merchandise Sold

 

 

103,919

 

 

 

139,733

 

 

 

477,495

 

 

 

589,719

 

 

 

588,166

 

Cost of Services Sold

 

 

26,187

 

 

 

29,385

 

 

 

104,538

 

 

 

119,797

 

 

 

124,136

 

Total Cost of Sales

 

 

130,106

 

 

 

169,118

 

 

 

582,033

 

 

 

709,516

 

 

 

712,302

 

Gross Profit

 

 

81,674

 

 

 

94,751

 

 

 

322,713

 

 

 

401,163

 

 

 

440,042

 

Selling, General and Administrative Expenses

 

 

99,205

 

 

 

112,080

 

 

 

403,499

 

 

 

412,885

 

 

 

387,356

 

Operating (Loss) Income

 

 

(17,531

)

 

 

(17,329

)

 

 

(80,786

)

 

 

(11,722

)

 

 

52,686

 

Other Expense

 

 

1,082

 

 

 

986

 

 

 

9,307

 

 

 

1,816

 

 

 

(104

)

(Loss) Income Before Income Taxes

 

 

(18,613

)

 

 

(18,315

)

 

 

(90,093

)

 

 

(13,538

)

 

 

52,790

 

Income Tax Expense (Benefit)

 

 

(668

)

 

 

(3,235

)

 

 

13,401

 

 

 

(1,457

)

 

 

11,092

 

Net (Loss) Income and Comprehensive (Loss) Income

 

$

(17,945

)

 

$

(15,080

)

 

$

(103,494

)

 

$

(12,081

)

 

$

41,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income per Common Share—Basic

 

$

(0.62

)

 

$

(0.53

)

 

$

(3.59

)

 

$

(0.42

)

 

$

1.44

 

Net (Loss) Income per Common Share—Diluted

 

$

(0.62

)

 

$

(0.53

)

 

$

(3.59

)

 

$

(0.42

)

 

$

1.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,845

 

 

 

28,691

 

 

 

28,806

 

 

 

28,860

 

 

 

29,041

 

Diluted

 

 

28,845

 

 

 

28,691

 

 

 

28,806

 

 

 

28,860

 

 

 

29,525

 

LL Flooring Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

$

(103,494

)

 

$

(12,081

)

 

 

$

41,698

 

Adjustments to Reconcile Net (Loss) Income:

 

 

 

 

 

 

 

 

 

 

Depreciation and Amortization

 

 

18,647

 

 

 

18,410

 

 

 

 

18,833

 

Impairment on Long-Lived Assets

 

 

1,316

 

 

 

 

 

 

 

 

Impairment of Goodwill

 

 

 

 

 

9,693

 

 

 

 

 

Deferred Income Taxes Provision

 

 

13,979

 

 

 

(2,361

)

 

 

 

276

 

Income on Redeemed or Expired Vouchers for Legal Settlements

 

 

(2,491

)

 

 

(1,300

)

 

 

 

(1,676

)

Stock-Based Compensation Expense

 

 

5,009

 

 

 

3,738

 

 

 

 

5,113

 

Provision for Inventory Obsolescence Reserves

 

 

3,469

 

 

 

1,615

 

 

 

 

2,345

 

Antidumping Adjustments

 

 

353

 

 

 

(1,036

)

 

 

 

(6,279

)

(Gain) Loss on Disposal of Fixed Assets

 

 

27

 

 

 

(2

)

 

 

 

44

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

 

 

 

 

Merchandise Inventories

 

 

61,243

 

 

 

(81,833

)

 

 

 

(15,104

)

Accounts Payable

 

 

17,254

 

 

 

(16,595

)

 

 

 

(8,538

)

Customer Deposits and Store Credits

 

 

(4,299

)

 

 

(23,296

)

 

 

 

5,674

 

Tariff Recovery Receivable

 

 

 

 

 

36

 

 

 

 

4,078

 

Prepaid Expenses and Other Current Assets

 

 

13,758

 

 

 

(2,968

)

 

 

 

700

 

Accrued Compensation

 

 

(2,156

)

 

 

(1,058

)

 

 

 

(5,219

)

Accrual for Legal Matters and Settlements

 

 

543

 

 

 

303

 

 

 

 

7,773

 

Payments for Legal Matters and Settlements

 

 

(345

)

 

 

(8,148

)

 

 

 

(101

)

Deferred Rent Payments

 

 

(187

)

 

 

(157

)

 

 

 

(2,315

)

Deferred Payroll Taxes

 

 

 

 

 

(2,585

)

 

 

 

(2,542

)

Other Assets and Liabilities

 

 

(1,341

)

 

 

2,916

 

 

 

 

(6,090

)

Net Cash Provided by (Used in) Operating Activities

 

 

21,285

 

 

 

(116,709

)

 

 

 

38,670

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

Purchases of Property and Equipment

 

 

(17,029

)

 

 

(22,048

)

 

 

 

(19,443

)

Other Investing Activities

 

 

2

 

 

 

65

 

 

 

 

71

 

Net Cash Used in Investing Activities

 

 

(17,027

)

 

 

(21,983

)

 

 

 

(19,372

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

Borrowings on Credit Agreement

 

 

306,000

 

 

 

289,500

 

 

 

 

 

Payments on Credit Agreement

 

 

(312,000

)

 

 

(217,500

)

 

 

 

(101,000

)

Common Stock Repurchased

 

 

(286

)

 

 

(7,994

)

 

 

 

(2,360

)

Other Financing Activities

 

 

 

 

 

297

 

 

 

 

(690

)

Net Cash (Used In) Provided by Financing Activities

 

 

(6,286

)

 

 

64,303

 

 

 

 

(104,050

)

Net Decrease in Cash and Cash Equivalents

 

 

(2,028

)

 

 

(74,389

)

 

 

 

(84,752

)

Cash and Cash Equivalents, Beginning of Period

 

 

10,800

 

 

 

85,189

 

 

 

 

169,941

 

Cash and Cash Equivalents, End of Period

 

$

8,772

 

 

$

10,800

 

 

 

$

85,189

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Non-Cash Operating and Financing Activities:

 

 

 

 

 

 

 

 

 

 

Relief of Inventory for Vouchers Redeemed for Legal Settlements

 

$

2,294

 

 

$

2,307

 

 

 

$

2,783

 

Tenant Improvement Allowance for Leases

 

 

(196

)

 

 

(1,155

)

 

 

 

(1,230

)

 

LL Flooring Holdings, Inc.

GAAP to Non-GAAP Reconciliation

(in thousands, except percentages)

Items impacting gross margin with comparisons to the prior-year periods include:

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

$

 

 

% of Sales

 

 

$

 

 

% of Sales

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

(in thousands, except percentage data)

 

Gross Profit/Margin, as reported (GAAP)

$

81,674

 

 

 

38.6

%

 

$

94,751

 

 

 

35.9

%

 

$

322,713

 

 

 

35.7

%

 

$

401,163

 

 

 

36.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vinyl Charges1

 

(701

)

 

 

(0.3

)%

 

 

 

 

 

 

 

 

5,426

 

 

 

0.6

%

 

 

 

 

 

%

Antidumping and Countervailing Adjustments2

 

95

 

 

 

 

 

 

(564

)

 

 

(0.2

)%

 

 

10,809

 

 

 

1.2

%

 

 

413

 

 

 

0.0

%

Adjustment Items Subtotal

 

(606

)

 

 

(0.3

)%

 

 

(564

)

 

 

(0.2

)%

 

 

16,235

 

 

 

1.8

%

 

 

413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Gross Profit/Margin (non-GAAP measures)

$

81,068

 

 

 

38.3

%

 

$

94,187

 

 

 

35.7

%

 

$

338,948

 

 

 

37.5

%

 

$

401,576

 

 

 

36.1

%

1

This amount represents costs related to CBP detention on flooring products that contain PVC as a consequence of the UFLPA.

2

This amount represents net antidumping and countervailing (income)/expense associated with applicable prior-year shipments of engineered hardwood from China.

Items impacting SG&A with comparisons to the prior-year periods include:

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

(in thousands, except percentage data)

 

SG&A, as reported (GAAP)

$

99,205

 

 

 

46.8

%

 

$

112,080

 

 

 

42.5

%

 

$

403,499

 

 

 

44.6

%

 

$

412,885

 

 

 

37.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recovery from Legal Matters and Settlements1

 

 

 

 

%

 

 

 

 

 

%

 

 

 

 

 

%

 

 

(150

)

 

 

%

Legal and Professional Fees2

 

(36

)

 

 

%

 

 

 

 

 

%

 

 

886

 

 

 

0.1

%

 

 

 

 

 

%

Goodwill Impairment Charge3

 

 

 

 

%

 

 

9,693

 

 

 

3.7

%

 

 

 

 

 

0.0

%

 

 

9,693

 

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted SG&A (a non-GAAP measure)

$

99,241

 

 

 

46.8

%

 

$

102,387

 

 

 

38.8

%

 

$

402,613

 

 

 

44.5

%

 

$

403,342

 

 

 

36.3

%

1.

The 2022 amount represents insurance recovery related to the Gold Litigation recorded in the third quarter of 2022. This item is described more fully in Item 8, Note 10 to the consolidated financial statements filed in the December 31, 2022 10-K.

2.

This amount represents charges to earnings related to our defense of certain significant legal actions during the period. This does not include all legal costs incurred by the Company.

3.

This amount represents an impairment charge resulting from the Company's evaluation of goodwill during the fourth quarter of 2022. This item is described more fully in Item 8, Note 3 to the consolidated financial statements filed in the December 31, 2022 10-K.

LL Flooring Holdings, Inc.

GAAP to Non-GAAP Reconciliation

(in thousands, except percentages)

Items impacting operating income and operating margin with comparisons to the prior-year periods include:

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

$

 

 

% of Sales

 

 

$

 

 

% of Sales

 

 

$

 

 

% of Sales

 

 

$

 

 

% of Sales

 

 

(in thousands, except percentage data)

 

Operating Loss, as reported (GAAP)

$

(17,531

)

 

 

(8.3

)%

 

$

(17,329

)

 

 

(6.6

)%

 

$

(80,786

)

 

 

(8.9

)%

 

$

(11,722

)

 

 

(1.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit/Margin Adjustment Items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vinyl Charges1

 

(701

)

 

 

(0.3

)%

 

 

 

 

 

%

 

 

5,426

 

 

 

0.6

%

 

 

 

 

 

%

Antidumping and Countervailing Adjustments2

 

95

 

 

 

0.0

%

 

 

(564

)

 

 

(0.2

)%

 

 

10,809

 

 

 

1.2

%

 

 

413

 

 

 

 

Gross Profit/Margin Adjustment Items Subtotal

 

(606

)

 

 

(0.3

)%

 

 

(564

)

 

 

(0.2

)%

 

 

16,235

 

 

 

1.8

%

 

 

413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A Adjustment Items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recovery from Legal Matters and Settlements3

 

 

 

 

%

 

 

 

 

 

%

 

 

 

 

 

%

 

 

(150

)

 

 

%

Legal and Professional Fees4

 

(36

)

 

 

0.0

%

 

 

 

 

 

%

 

 

886

 

 

 

0.1

%

 

 

 

 

 

%

Goodwill Impairment Charge5

 

 

 

 

%

 

 

9,693

 

 

 

3.7

%

 

 

 

 

 

0.0

%

 

 

9,693

 

 

 

0.9

%

SG&A Adjustment Items Subtotal

 

(36

)

 

 

0.0

%

 

 

9,693

 

 

 

3.7

%

 

 

886

 

 

 

0.1

%

 

 

9,543

 

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Loss / Margin (a non-GAAP measure)

$

(18,173

)

 

 

(8.6

)%

 

$

(8,200

)

 

 

(3.1

)%

 

$

(63,665

)

 

 

(7.0

)%

 

$

(1,766

)

 

 

(0.2

)%

1,2,3,4,5 See the Gross Profit and SG&A sections above for more detailed explanations of these individual items.

Items impacting other expense (income) with comparisons to the prior year periods include:

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

$

 

 

% of

Sales

 

 

 

(in thousands, except percentage data)

 

Other Expense, as reported (GAAP)

 

$

1,082

 

 

 

0.5

%

 

$

986

 

 

 

0.4

%

 

$

9,307

 

 

 

1.0

%

 

$

1,816

 

 

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Impact Related to Antidumping and Countervailing Adjustments1

 

 

27

 

 

 

0.0

%

 

 

(147

)

 

 

0.0

%

 

 

5,565

 

 

 

0.6

%

 

 

(148

)

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Other Expense/Adjusted Other Expense as a % of Sales (a non-GAAP measure)

 

$

1,055

 

 

 

0.5

%

 

$

1,133

 

 

 

0.4

%

 

$

3,742

 

 

 

0.4

%

 

$

1,964

 

 

 

0.2

%

1.

This amount represents net interest (income)/expense impact of certain antidumping and countervailing adjustments related to applicable prior-year shipments of engineered hardwood from China.

LL Flooring Holdings, Inc.

GAAP to Non-GAAP Reconciliation

(in thousands, except per share data)

Items impacting earnings per diluted share with comparisons to the prior-year periods include:

 

 

 

Three Months Ended

December 31,

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(in thousands, except per share data)

 

Net Loss, as reported (GAAP)

 

$

(17,945

)

 

$

(15,080

)

 

$

(103,494

)

 

$

(12,081

)

Net Loss per Diluted Share (GAAP)

 

$

(0.62

)

 

$

(0.53

)

 

$

(3.59

)

 

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit/Margin Adjustment Items:

 

 

 

 

 

 

 

 

 

 

 

 

Vinyl Charges1

 

 

(701

)

 

 

 

 

 

5,426

 

 

 

 

Antidumping and Countervailing Adjustments2

 

 

95

 

 

 

(564

)

 

 

10,809

 

 

 

413

 

Gross Profit/Margin Adjustment Items Subtotal

 

 

(606

)

 

 

(564

)

 

 

16,235

 

 

 

413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A Adjustment Items:

 

 

 

 

 

 

 

 

 

 

 

 

Recovery from Legal Matters and Settlements3

 

 

 

 

 

 

 

 

 

 

 

(150

)

Legal and Professional Fees4

 

 

(36

)

 

 

 

 

 

886

 

 

 

 

Goodwill Impairment Charge5

 

 

 

 

 

9,693

 

 

 

 

 

 

9,693

 

SG&A Adjustment Items Subtotal

 

 

(36

)

 

 

9,693

 

 

 

886

 

 

 

9,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expense (Income) Adjustment Items:

 

 

 

 

 

 

 

 

 

 

 

 

Interest Impact Related to Antidumping and Countervailing Adjustment6

 

 

27

 

 

 

(147

)

 

 

5,565

 

 

 

(148

)

Other Expense (Income) Adjustment Items Subtotal

 

 

27

 

 

 

(147

)

 

 

5,565

 

 

 

(148

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Adjustment7

 

 

158

 

 

 

(2,353

)

 

 

(5,830

)

 

 

(2,570

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Loss

 

$

(18,402

)

 

$

(8,451

)

 

$

(86,638

)

 

$

(4,843

)

Adjusted Loss per Diluted Share (a non-GAAP measure)

 

$

(0.64

)

 

$

(0.29

)

 

$

(3.01

)

 

$

(0.17

)

1,2,3,4,5,6

See the Gross Profit, SG&A and Other Expense (Income) sections above for more detailed explanations of these individual items.

7

Income Tax Adjustment is defined as the sum of Gross Profit/Margin, SG&A, and Other Expense (Income) Adjustment Items multiplied by the Company’s federal incremental rate, which was 25.7% for the 2023 period and 26.2% for the 2022 period.

 

Contacts

For further information contact:

LL Flooring Investor Relations

ICR

Bruce Williams

ir@llflooring.com

Tel: 804-420-9801

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