Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Floor & Decor Holdings, Inc. Announces Third Quarter Fiscal 2023 Financial Results By: Floor & Decor Holdings, Inc. via Business Wire November 02, 2023 at 16:05 PM EDT Net sales of $1,107.8 million increased 0.9% from the third quarter of fiscal 2022 Comparable store sales decreased 9.3% Diluted earnings per share of $0.61 Opened five new warehouse stores Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the third quarter of fiscal 2023, which ended September 28, 2023. Tom Taylor, Chief Executive Officer, stated, “Amidst the continuing economic challenges posed by rising mortgage interest rates, near-record-low existing home sales, ongoing pressure on housing affordability, and slowing sales of large ticket discretionary products, we are pleased to deliver third-quarter diluted earnings per share of $0.61. Our fiscal 2023 third-quarter results are a testament to our company’s agility and unwavering commitment to executing our key growth and customer engagement strategies at an exceptional level. We remain focused on continuing to grow our market share by capitalizing on our everyday low prices and value-driven options, trend-right product assortments, in-stock job lot quantities, and the exceptional customer service provided by our store associates. We believe that our execution and new warehouse store openings will position us for accelerating sales and earnings growth when industry growth returns.” Mr. Taylor continued, “In the third quarter of fiscal 2023, we opened five new warehouse stores. We continue to open new warehouse stores and intend to open 15 in the fourth quarter of fiscal 2023 toward achieving our 32 new store opening plan for fiscal 2023.” 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 September 28, 2023 Net sales of $1,107.8 million increased 0.9% from $1,097.8 million in the third quarter of fiscal 2022. Comparable store sales decreased 9.3%. We opened five new warehouse stores and closed one warehouse store, ending the quarter with 207 warehouse stores and five design studios. Operating income of $84.8 million decreased 16.6% from $101.7 million in the third quarter of fiscal 2022. Operating margin of 7.7% decreased 160 basis points from the third quarter of fiscal 2022. Net income of $65.9 million decreased 13.5% from $76.2 million in the third quarter of fiscal 2022. Diluted earnings per share ("EPS") of $0.61 decreased 14.1% from $0.71 in the third quarter of fiscal 2022. Adjusted EBITDA* of $140.9 million decreased 4.7% from $147.9 million in the third quarter of fiscal 2022. For the Thirty-nine Weeks Ended September 28, 2023 Net sales of $3,365.8 million increased 4.6% from $3,216.4 million in the same period of fiscal 2022. Comparable store sales decreased 6.3%. We opened 17 new warehouse stores and closed one warehouse store. Operating income of $275.3 million decreased 8.9% from $302.0 million in the same period of fiscal 2022. Operating margin of 8.2% decreased 120 basis points from the same period of fiscal 2022. Net income of $208.9 million decreased 8.8% from $229.0 million in the same period of fiscal 2022. Diluted EPS of $1.94 decreased 8.9% from $2.13 in the same period of fiscal 2022. Adjusted EBITDA* of $443.4 million increased 2.2% from $434.0 million in the same period of fiscal 2022. *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 28, 2023: Net sales of approximately $4,345 million to $4,385 million Comparable store sales of approximately (8.5)% to (7.8)% Diluted EPS of approximately $2.14 to $2.24 Adjusted EBITDA* of approximately $535 million to $550 million Depreciation and amortization expense of approximately $200 million Interest expense, net of approximately $11.5 million Tax rate of approximately 21.5% Diluted weighted average shares outstanding of approximately 108 million shares Open 32 new warehouse stores Capital expenditures of approximately $550 million to $575 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 third quarter fiscal 2023 financial results is scheduled for today, November 2, 2023, 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 13741530. The replay will be available until November 9, 2023. About Floor & Decor Holdings, Inc. Floor & Decor is a multi-channel specialty retailer and commercial flooring distributor operating 207 warehouse-format stores and five design studios across 36 states as of September 28, 2023. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate, 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 as performance measures 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 September 28, 2023 September 29, 2022 % Increase (Decrease) Amount % of Net Sales Amount % of Net Sales Net sales $ 1,107,812 100.0 % $ 1,097,824 100.0 % 0.9 % Cost of sales 640,357 57.8 650,349 59.2 (1.5 )% Gross profit 467,455 42.2 447,475 40.8 4.5 % Operating expenses: Selling and store operating 308,581 27.9 280,735 25.6 9.9 % General and administrative 59,870 5.3 54,697 5.0 9.5 % Pre-opening 14,232 1.3 10,386 0.9 37.0 % Total operating expenses 382,683 34.5 345,818 31.5 10.7 % Operating income 84,772 7.7 101,657 9.3 (16.6 )% Interest expense, net 1,246 0.2 3,032 0.3 (58.9 )% Income before income taxes 83,526 7.5 98,625 9.0 (15.3 )% Income tax expense 17,603 1.5 22,450 2.0 (21.6 )% Net income $ 65,923 6.0 % $ 76,175 6.9 % (13.5 )% Basic weighted average shares outstanding 106,393 105,754 Diluted weighted average shares outstanding 108,002 107,470 Basic earnings per share $ 0.62 $ 0.72 (13.9 )% Diluted earnings per share $ 0.61 $ 0.71 (14.1 )% Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 % Increase (Decrease) Amount % of Net Sales Amount % of Net Sales Net sales $ 3,365,763 100.0 % $ 3,216,404 100.0 % 4.6 % Cost of sales 1,949,557 57.9 1,924,589 59.8 1.3 % Gross profit 1,416,206 42.1 1,291,815 40.2 9.6 % Operating expenses: Selling and store operating 923,658 27.4 798,437 24.8 15.7 % General and administrative 185,060 5.5 162,449 5.1 13.9 % Pre-opening 32,226 1.0 28,890 0.9 11.5 % Total operating expenses 1,140,944 33.9 989,776 30.8 15.3 % Operating income 275,262 8.2 302,039 9.4 (8.9 )% Interest expense, net 9,006 0.3 5,866 0.2 53.5 % Income before income taxes 266,256 7.9 296,173 9.2 (10.1 )% Income tax expense 57,357 1.7 67,215 2.1 (14.7 )% Net income $ 208,899 6.2 % $ 228,958 7.1 % (8.8 )% Basic weighted average shares outstanding 106,187 105,565 Diluted weighted average shares outstanding 107,850 107,444 Basic earnings per share $ 1.97 $ 2.17 (9.2 )% Diluted earnings per share $ 1.94 $ 2.13 (8.9 )% Condensed Consolidated Balance Sheets (In thousands, except for share and per share data) (Unaudited) As of September 28, 2023 As of December 29, 2022 Assets Current assets: Cash and cash equivalents $ 61,628 $ 9,794 Income taxes receivable 16,157 7,325 Receivables, net 97,733 94,732 Inventories, net 1,105,450 1,292,336 Prepaid expenses and other current assets 55,134 53,298 Total current assets 1,336,102 1,457,485 Fixed assets, net 1,562,616 1,258,056 Right-of-use assets 1,306,475 1,205,636 Intangible assets, net 154,786 152,353 Goodwill 257,940 255,473 Deferred income tax assets, net 12,446 11,265 Other assets 7,717 10,974 Total long-term assets 3,301,980 2,893,757 Total assets $ 4,638,082 $ 4,351,242 Liabilities and stockholders’ equity Current liabilities: Current portion of term loan $ 2,103 $ 2,103 Current portion of lease liabilities 125,348 105,693 Trade accounts payable 706,325 590,883 Accrued expenses and other current liabilities 327,224 298,019 Deferred revenue 13,383 10,060 Total current liabilities 1,174,383 1,006,758 Term loan 195,042 195,351 Revolving line of credit — 210,200 Lease liabilities 1,325,226 1,227,507 Deferred income tax liabilities, net 46,917 41,520 Other liabilities 11,038 12,730 Total long-term liabilities 1,578,223 1,687,308 Total liabilities 2,752,606 2,694,066 Stockholders’ equity Capital stock: Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Common stock Class A, $0.001 par value; 450,000,000 shares authorized; 106,569,892 shares issued and outstanding at September 28, 2023 and 106,150,661 issued and outstanding at December 29, 2022 107 106 Common stock Class B, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Common stock Class C, $0.001 par value; 30,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Additional paid-in capital 503,594 482,312 Accumulated other comprehensive income, net 2,455 4,337 Retained earnings 1,379,320 1,170,421 Total stockholders’ equity 1,885,476 1,657,176 Total liabilities and stockholders’ equity $ 4,638,082 $ 4,351,242 Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 Operating activities Net income $ 208,899 $ 228,958 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 146,947 112,691 Stock-based compensation expense 20,336 17,229 Deferred income taxes 4,953 1,747 Change in fair value of contingent earn-out liabilities 2,329 1,530 Loss on asset impairments and disposals, net 858 — Interest cap derivative contracts 85 85 Changes in operating assets and liabilities, net of effects of acquisitions: Receivables, net 2,931 (21,014 ) Inventories, net 195,590 (312,288 ) Trade accounts payable 109,338 (25,761 ) Accrued expenses and other current liabilities 2,950 27,796 Income taxes (8,912 ) (6,360 ) Deferred revenue 3,323 1,415 Other, net 9,348 (18,703 ) Net cash provided by operating activities 698,975 7,325 Investing activities Purchases of fixed assets (413,717 ) (322,825 ) Acquisitions, net of cash acquired (17,353 ) (1,121 ) Proceeds from sales of property — 4,773 Net cash used in investing activities (431,070 ) (319,173 ) Financing activities Payments on term loan (1,577 ) (1,577 ) Borrowings on revolving line of credit 518,900 663,200 Payments on revolving line of credit (729,100 ) (486,800 ) Payments of contingent earn-out liabilities (5,241 ) (2,571 ) Proceeds from exercise of stock options 7,909 7,100 Proceeds from employee stock purchase plan 5,159 4,379 Debt issuance costs — (1,505 ) Tax payments for stock-based compensation awards (12,121 ) (2,135 ) Net cash (used in) provided by financing activities (216,071 ) 180,091 Net increase (decrease) in cash and cash equivalents 51,834 (131,757 ) Cash and cash equivalents, beginning of the period 9,794 139,444 Cash and cash equivalents, end of the period $ 61,628 $ 7,687 Supplemental disclosures of cash flow information Buildings and equipment acquired under operating leases $ 192,906 $ 148,665 Cash paid for interest, net of capitalized interest $ 8,871 $ 3,437 Cash paid for income taxes, net of refunds $ 62,105 $ 71,800 Fixed assets accrued at the end of the period $ 150,111 $ 118,453 Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (Unaudited) EBITDA and Adjusted EBITDA Thirteen Weeks Ended September 28, 2023 September 29, 2022 Net income (GAAP): $ 65,923 $ 76,175 Depreciation and amortization (a) 50,336 39,600 Interest expense, net 1,246 3,032 Income tax expense 17,603 22,450 EBITDA 135,108 141,257 Stock-based compensation expense (b) 5,289 6,360 Other (c) 542 292 Adjusted EBITDA $ 140,939 $ 147,909 Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 Net income (GAAP): $ 208,899 $ 228,958 Depreciation and amortization (a) 145,439 111,237 Interest expense, net 9,006 5,866 Income tax expense 57,357 67,215 EBITDA 420,701 413,276 Stock-based compensation expense (b) 20,336 17,229 Other (c) 2,329 3,478 Adjusted EBITDA $ 443,366 $ 433,983 (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 the thirteen and thirty-nine weeks ended September 28, 2023 relate to changes in the fair value of contingent earn-out liabilities. Amounts for the thirteen and thirty-nine weeks ended September 29, 2022 primarily relate to relocation expenses for our Houston distribution center and 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, expectations related to our acquisition of Spartan, 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,” “focused on” 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 spending and the housing market, including as a result of rising inflation or interest rates, (2) demand fluctuations in the housing industry, and demand for our products and services may be adversely affected by unfavorable economic conditions, including rising interest rates, inflation, a decline in disposable income levels and recession fears, (3) an economic recession or depression, (4) global inflationary pressures on raw materials, energy, commodity, transportation, and other costs could cause our vendors to seek further price increases on the products we sell, (5) any disruption in our supply chain, including carrier capacity constraints, port congestion, higher shipping, rail, and trucking prices and other supply chain costs or product shortages, (6) our failure to successfully anticipate consumer preferences and demand, (7), our inability to pass along cost increases at rates consumers are willing to pay, or reduced demand due to pricing increases, (8) our inability to manage our growth, (9) our inability to manage costs and risks relating to new store openings, (10) our inability to find available locations for our stores on terms acceptable to us, (11) demand for our products and services may be adversely affected by unfavorable economic conditions, (12) any disruption in our distribution capabilities, including from difficulties operating our distribution centers, (13) our failure to execute our business strategy effectively and deliver value to our customers, (14) our inability to find, train and retain key personnel, (15) the resignation, incapacitation or death of any key personnel, (16) the inability to staff our stores and distribution centers sufficiently, (17) the effects of weather conditions, natural disasters or other unexpected events, including global health crises, such as the COVID-19 pandemic, may disrupt our operations, (18) our dependence on foreign imports for the products we sell, which may include the impact of tariffs and other duties, (19) geopolitical risks, such as the conflict in the Middle East, the ongoing war in Ukraine, or import restrictions under the Uyghur Forced Labor Prevention Act, that impact our ability to import from foreign suppliers or raise our costs, (20) if the use of “cookie” tracking technologies is further restricted, the amount of internet user information we collect would decrease, which could require additional marketing efforts and harm our business and operating results, (21) violations of laws and regulations applicable to us or our suppliers, (22) our failure to adequately protect against security breaches involving our information technology systems and customer information, (23) suppliers may sell similar or identical products to our competitors, (24) competition from other stores and internet-based competition, (25) impact of acquired companies, including Spartan, (26) our inability to manage our inventory obsolescence, shrinkage and damage, (27) our inability to maintain sufficient levels of cash flow or liquidity to meet growth expectations, (28) our inability to obtain merchandise on a timely basis at prices acceptable to us, (29) restrictions imposed by our indebtedness on our current and future operations, and (30) our variable rate debt subjects us to interest rate risk that could cause our debt service obligations to increase significantly. Additional information concerning these and other factors are described in “Forward-Looking Statements,” Item 1, “Business” and Item 1A, “Risk Factors” 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 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (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” and Item 1A, “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 28, 2023 (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/20231102101336/en/Contacts Investor Contacts: Wayne Hood 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 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Floor & Decor Holdings, Inc. Announces Third Quarter Fiscal 2023 Financial Results By: Floor & Decor Holdings, Inc. via Business Wire November 02, 2023 at 16:05 PM EDT Net sales of $1,107.8 million increased 0.9% from the third quarter of fiscal 2022 Comparable store sales decreased 9.3% Diluted earnings per share of $0.61 Opened five new warehouse stores Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the third quarter of fiscal 2023, which ended September 28, 2023. Tom Taylor, Chief Executive Officer, stated, “Amidst the continuing economic challenges posed by rising mortgage interest rates, near-record-low existing home sales, ongoing pressure on housing affordability, and slowing sales of large ticket discretionary products, we are pleased to deliver third-quarter diluted earnings per share of $0.61. Our fiscal 2023 third-quarter results are a testament to our company’s agility and unwavering commitment to executing our key growth and customer engagement strategies at an exceptional level. We remain focused on continuing to grow our market share by capitalizing on our everyday low prices and value-driven options, trend-right product assortments, in-stock job lot quantities, and the exceptional customer service provided by our store associates. We believe that our execution and new warehouse store openings will position us for accelerating sales and earnings growth when industry growth returns.” Mr. Taylor continued, “In the third quarter of fiscal 2023, we opened five new warehouse stores. We continue to open new warehouse stores and intend to open 15 in the fourth quarter of fiscal 2023 toward achieving our 32 new store opening plan for fiscal 2023.” 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 September 28, 2023 Net sales of $1,107.8 million increased 0.9% from $1,097.8 million in the third quarter of fiscal 2022. Comparable store sales decreased 9.3%. We opened five new warehouse stores and closed one warehouse store, ending the quarter with 207 warehouse stores and five design studios. Operating income of $84.8 million decreased 16.6% from $101.7 million in the third quarter of fiscal 2022. Operating margin of 7.7% decreased 160 basis points from the third quarter of fiscal 2022. Net income of $65.9 million decreased 13.5% from $76.2 million in the third quarter of fiscal 2022. Diluted earnings per share ("EPS") of $0.61 decreased 14.1% from $0.71 in the third quarter of fiscal 2022. Adjusted EBITDA* of $140.9 million decreased 4.7% from $147.9 million in the third quarter of fiscal 2022. For the Thirty-nine Weeks Ended September 28, 2023 Net sales of $3,365.8 million increased 4.6% from $3,216.4 million in the same period of fiscal 2022. Comparable store sales decreased 6.3%. We opened 17 new warehouse stores and closed one warehouse store. Operating income of $275.3 million decreased 8.9% from $302.0 million in the same period of fiscal 2022. Operating margin of 8.2% decreased 120 basis points from the same period of fiscal 2022. Net income of $208.9 million decreased 8.8% from $229.0 million in the same period of fiscal 2022. Diluted EPS of $1.94 decreased 8.9% from $2.13 in the same period of fiscal 2022. Adjusted EBITDA* of $443.4 million increased 2.2% from $434.0 million in the same period of fiscal 2022. *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 28, 2023: Net sales of approximately $4,345 million to $4,385 million Comparable store sales of approximately (8.5)% to (7.8)% Diluted EPS of approximately $2.14 to $2.24 Adjusted EBITDA* of approximately $535 million to $550 million Depreciation and amortization expense of approximately $200 million Interest expense, net of approximately $11.5 million Tax rate of approximately 21.5% Diluted weighted average shares outstanding of approximately 108 million shares Open 32 new warehouse stores Capital expenditures of approximately $550 million to $575 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 third quarter fiscal 2023 financial results is scheduled for today, November 2, 2023, 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 13741530. The replay will be available until November 9, 2023. About Floor & Decor Holdings, Inc. Floor & Decor is a multi-channel specialty retailer and commercial flooring distributor operating 207 warehouse-format stores and five design studios across 36 states as of September 28, 2023. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate, 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 as performance measures 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 September 28, 2023 September 29, 2022 % Increase (Decrease) Amount % of Net Sales Amount % of Net Sales Net sales $ 1,107,812 100.0 % $ 1,097,824 100.0 % 0.9 % Cost of sales 640,357 57.8 650,349 59.2 (1.5 )% Gross profit 467,455 42.2 447,475 40.8 4.5 % Operating expenses: Selling and store operating 308,581 27.9 280,735 25.6 9.9 % General and administrative 59,870 5.3 54,697 5.0 9.5 % Pre-opening 14,232 1.3 10,386 0.9 37.0 % Total operating expenses 382,683 34.5 345,818 31.5 10.7 % Operating income 84,772 7.7 101,657 9.3 (16.6 )% Interest expense, net 1,246 0.2 3,032 0.3 (58.9 )% Income before income taxes 83,526 7.5 98,625 9.0 (15.3 )% Income tax expense 17,603 1.5 22,450 2.0 (21.6 )% Net income $ 65,923 6.0 % $ 76,175 6.9 % (13.5 )% Basic weighted average shares outstanding 106,393 105,754 Diluted weighted average shares outstanding 108,002 107,470 Basic earnings per share $ 0.62 $ 0.72 (13.9 )% Diluted earnings per share $ 0.61 $ 0.71 (14.1 )% Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 % Increase (Decrease) Amount % of Net Sales Amount % of Net Sales Net sales $ 3,365,763 100.0 % $ 3,216,404 100.0 % 4.6 % Cost of sales 1,949,557 57.9 1,924,589 59.8 1.3 % Gross profit 1,416,206 42.1 1,291,815 40.2 9.6 % Operating expenses: Selling and store operating 923,658 27.4 798,437 24.8 15.7 % General and administrative 185,060 5.5 162,449 5.1 13.9 % Pre-opening 32,226 1.0 28,890 0.9 11.5 % Total operating expenses 1,140,944 33.9 989,776 30.8 15.3 % Operating income 275,262 8.2 302,039 9.4 (8.9 )% Interest expense, net 9,006 0.3 5,866 0.2 53.5 % Income before income taxes 266,256 7.9 296,173 9.2 (10.1 )% Income tax expense 57,357 1.7 67,215 2.1 (14.7 )% Net income $ 208,899 6.2 % $ 228,958 7.1 % (8.8 )% Basic weighted average shares outstanding 106,187 105,565 Diluted weighted average shares outstanding 107,850 107,444 Basic earnings per share $ 1.97 $ 2.17 (9.2 )% Diluted earnings per share $ 1.94 $ 2.13 (8.9 )% Condensed Consolidated Balance Sheets (In thousands, except for share and per share data) (Unaudited) As of September 28, 2023 As of December 29, 2022 Assets Current assets: Cash and cash equivalents $ 61,628 $ 9,794 Income taxes receivable 16,157 7,325 Receivables, net 97,733 94,732 Inventories, net 1,105,450 1,292,336 Prepaid expenses and other current assets 55,134 53,298 Total current assets 1,336,102 1,457,485 Fixed assets, net 1,562,616 1,258,056 Right-of-use assets 1,306,475 1,205,636 Intangible assets, net 154,786 152,353 Goodwill 257,940 255,473 Deferred income tax assets, net 12,446 11,265 Other assets 7,717 10,974 Total long-term assets 3,301,980 2,893,757 Total assets $ 4,638,082 $ 4,351,242 Liabilities and stockholders’ equity Current liabilities: Current portion of term loan $ 2,103 $ 2,103 Current portion of lease liabilities 125,348 105,693 Trade accounts payable 706,325 590,883 Accrued expenses and other current liabilities 327,224 298,019 Deferred revenue 13,383 10,060 Total current liabilities 1,174,383 1,006,758 Term loan 195,042 195,351 Revolving line of credit — 210,200 Lease liabilities 1,325,226 1,227,507 Deferred income tax liabilities, net 46,917 41,520 Other liabilities 11,038 12,730 Total long-term liabilities 1,578,223 1,687,308 Total liabilities 2,752,606 2,694,066 Stockholders’ equity Capital stock: Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Common stock Class A, $0.001 par value; 450,000,000 shares authorized; 106,569,892 shares issued and outstanding at September 28, 2023 and 106,150,661 issued and outstanding at December 29, 2022 107 106 Common stock Class B, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Common stock Class C, $0.001 par value; 30,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Additional paid-in capital 503,594 482,312 Accumulated other comprehensive income, net 2,455 4,337 Retained earnings 1,379,320 1,170,421 Total stockholders’ equity 1,885,476 1,657,176 Total liabilities and stockholders’ equity $ 4,638,082 $ 4,351,242 Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 Operating activities Net income $ 208,899 $ 228,958 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 146,947 112,691 Stock-based compensation expense 20,336 17,229 Deferred income taxes 4,953 1,747 Change in fair value of contingent earn-out liabilities 2,329 1,530 Loss on asset impairments and disposals, net 858 — Interest cap derivative contracts 85 85 Changes in operating assets and liabilities, net of effects of acquisitions: Receivables, net 2,931 (21,014 ) Inventories, net 195,590 (312,288 ) Trade accounts payable 109,338 (25,761 ) Accrued expenses and other current liabilities 2,950 27,796 Income taxes (8,912 ) (6,360 ) Deferred revenue 3,323 1,415 Other, net 9,348 (18,703 ) Net cash provided by operating activities 698,975 7,325 Investing activities Purchases of fixed assets (413,717 ) (322,825 ) Acquisitions, net of cash acquired (17,353 ) (1,121 ) Proceeds from sales of property — 4,773 Net cash used in investing activities (431,070 ) (319,173 ) Financing activities Payments on term loan (1,577 ) (1,577 ) Borrowings on revolving line of credit 518,900 663,200 Payments on revolving line of credit (729,100 ) (486,800 ) Payments of contingent earn-out liabilities (5,241 ) (2,571 ) Proceeds from exercise of stock options 7,909 7,100 Proceeds from employee stock purchase plan 5,159 4,379 Debt issuance costs — (1,505 ) Tax payments for stock-based compensation awards (12,121 ) (2,135 ) Net cash (used in) provided by financing activities (216,071 ) 180,091 Net increase (decrease) in cash and cash equivalents 51,834 (131,757 ) Cash and cash equivalents, beginning of the period 9,794 139,444 Cash and cash equivalents, end of the period $ 61,628 $ 7,687 Supplemental disclosures of cash flow information Buildings and equipment acquired under operating leases $ 192,906 $ 148,665 Cash paid for interest, net of capitalized interest $ 8,871 $ 3,437 Cash paid for income taxes, net of refunds $ 62,105 $ 71,800 Fixed assets accrued at the end of the period $ 150,111 $ 118,453 Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (Unaudited) EBITDA and Adjusted EBITDA Thirteen Weeks Ended September 28, 2023 September 29, 2022 Net income (GAAP): $ 65,923 $ 76,175 Depreciation and amortization (a) 50,336 39,600 Interest expense, net 1,246 3,032 Income tax expense 17,603 22,450 EBITDA 135,108 141,257 Stock-based compensation expense (b) 5,289 6,360 Other (c) 542 292 Adjusted EBITDA $ 140,939 $ 147,909 Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 Net income (GAAP): $ 208,899 $ 228,958 Depreciation and amortization (a) 145,439 111,237 Interest expense, net 9,006 5,866 Income tax expense 57,357 67,215 EBITDA 420,701 413,276 Stock-based compensation expense (b) 20,336 17,229 Other (c) 2,329 3,478 Adjusted EBITDA $ 443,366 $ 433,983 (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 the thirteen and thirty-nine weeks ended September 28, 2023 relate to changes in the fair value of contingent earn-out liabilities. Amounts for the thirteen and thirty-nine weeks ended September 29, 2022 primarily relate to relocation expenses for our Houston distribution center and 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, expectations related to our acquisition of Spartan, 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,” “focused on” 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 spending and the housing market, including as a result of rising inflation or interest rates, (2) demand fluctuations in the housing industry, and demand for our products and services may be adversely affected by unfavorable economic conditions, including rising interest rates, inflation, a decline in disposable income levels and recession fears, (3) an economic recession or depression, (4) global inflationary pressures on raw materials, energy, commodity, transportation, and other costs could cause our vendors to seek further price increases on the products we sell, (5) any disruption in our supply chain, including carrier capacity constraints, port congestion, higher shipping, rail, and trucking prices and other supply chain costs or product shortages, (6) our failure to successfully anticipate consumer preferences and demand, (7), our inability to pass along cost increases at rates consumers are willing to pay, or reduced demand due to pricing increases, (8) our inability to manage our growth, (9) our inability to manage costs and risks relating to new store openings, (10) our inability to find available locations for our stores on terms acceptable to us, (11) demand for our products and services may be adversely affected by unfavorable economic conditions, (12) any disruption in our distribution capabilities, including from difficulties operating our distribution centers, (13) our failure to execute our business strategy effectively and deliver value to our customers, (14) our inability to find, train and retain key personnel, (15) the resignation, incapacitation or death of any key personnel, (16) the inability to staff our stores and distribution centers sufficiently, (17) the effects of weather conditions, natural disasters or other unexpected events, including global health crises, such as the COVID-19 pandemic, may disrupt our operations, (18) our dependence on foreign imports for the products we sell, which may include the impact of tariffs and other duties, (19) geopolitical risks, such as the conflict in the Middle East, the ongoing war in Ukraine, or import restrictions under the Uyghur Forced Labor Prevention Act, that impact our ability to import from foreign suppliers or raise our costs, (20) if the use of “cookie” tracking technologies is further restricted, the amount of internet user information we collect would decrease, which could require additional marketing efforts and harm our business and operating results, (21) violations of laws and regulations applicable to us or our suppliers, (22) our failure to adequately protect against security breaches involving our information technology systems and customer information, (23) suppliers may sell similar or identical products to our competitors, (24) competition from other stores and internet-based competition, (25) impact of acquired companies, including Spartan, (26) our inability to manage our inventory obsolescence, shrinkage and damage, (27) our inability to maintain sufficient levels of cash flow or liquidity to meet growth expectations, (28) our inability to obtain merchandise on a timely basis at prices acceptable to us, (29) restrictions imposed by our indebtedness on our current and future operations, and (30) our variable rate debt subjects us to interest rate risk that could cause our debt service obligations to increase significantly. Additional information concerning these and other factors are described in “Forward-Looking Statements,” Item 1, “Business” and Item 1A, “Risk Factors” 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 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (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” and Item 1A, “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 28, 2023 (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/20231102101336/en/Contacts Investor Contacts: Wayne Hood 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
Net sales of $1,107.8 million increased 0.9% from the third quarter of fiscal 2022 Comparable store sales decreased 9.3% Diluted earnings per share of $0.61 Opened five new warehouse stores
Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the third quarter of fiscal 2023, which ended September 28, 2023. Tom Taylor, Chief Executive Officer, stated, “Amidst the continuing economic challenges posed by rising mortgage interest rates, near-record-low existing home sales, ongoing pressure on housing affordability, and slowing sales of large ticket discretionary products, we are pleased to deliver third-quarter diluted earnings per share of $0.61. Our fiscal 2023 third-quarter results are a testament to our company’s agility and unwavering commitment to executing our key growth and customer engagement strategies at an exceptional level. We remain focused on continuing to grow our market share by capitalizing on our everyday low prices and value-driven options, trend-right product assortments, in-stock job lot quantities, and the exceptional customer service provided by our store associates. We believe that our execution and new warehouse store openings will position us for accelerating sales and earnings growth when industry growth returns.” Mr. Taylor continued, “In the third quarter of fiscal 2023, we opened five new warehouse stores. We continue to open new warehouse stores and intend to open 15 in the fourth quarter of fiscal 2023 toward achieving our 32 new store opening plan for fiscal 2023.” 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 September 28, 2023 Net sales of $1,107.8 million increased 0.9% from $1,097.8 million in the third quarter of fiscal 2022. Comparable store sales decreased 9.3%. We opened five new warehouse stores and closed one warehouse store, ending the quarter with 207 warehouse stores and five design studios. Operating income of $84.8 million decreased 16.6% from $101.7 million in the third quarter of fiscal 2022. Operating margin of 7.7% decreased 160 basis points from the third quarter of fiscal 2022. Net income of $65.9 million decreased 13.5% from $76.2 million in the third quarter of fiscal 2022. Diluted earnings per share ("EPS") of $0.61 decreased 14.1% from $0.71 in the third quarter of fiscal 2022. Adjusted EBITDA* of $140.9 million decreased 4.7% from $147.9 million in the third quarter of fiscal 2022. For the Thirty-nine Weeks Ended September 28, 2023 Net sales of $3,365.8 million increased 4.6% from $3,216.4 million in the same period of fiscal 2022. Comparable store sales decreased 6.3%. We opened 17 new warehouse stores and closed one warehouse store. Operating income of $275.3 million decreased 8.9% from $302.0 million in the same period of fiscal 2022. Operating margin of 8.2% decreased 120 basis points from the same period of fiscal 2022. Net income of $208.9 million decreased 8.8% from $229.0 million in the same period of fiscal 2022. Diluted EPS of $1.94 decreased 8.9% from $2.13 in the same period of fiscal 2022. Adjusted EBITDA* of $443.4 million increased 2.2% from $434.0 million in the same period of fiscal 2022. *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 28, 2023: Net sales of approximately $4,345 million to $4,385 million Comparable store sales of approximately (8.5)% to (7.8)% Diluted EPS of approximately $2.14 to $2.24 Adjusted EBITDA* of approximately $535 million to $550 million Depreciation and amortization expense of approximately $200 million Interest expense, net of approximately $11.5 million Tax rate of approximately 21.5% Diluted weighted average shares outstanding of approximately 108 million shares Open 32 new warehouse stores Capital expenditures of approximately $550 million to $575 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 third quarter fiscal 2023 financial results is scheduled for today, November 2, 2023, 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 13741530. The replay will be available until November 9, 2023. About Floor & Decor Holdings, Inc. Floor & Decor is a multi-channel specialty retailer and commercial flooring distributor operating 207 warehouse-format stores and five design studios across 36 states as of September 28, 2023. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate, 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 as performance measures 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 September 28, 2023 September 29, 2022 % Increase (Decrease) Amount % of Net Sales Amount % of Net Sales Net sales $ 1,107,812 100.0 % $ 1,097,824 100.0 % 0.9 % Cost of sales 640,357 57.8 650,349 59.2 (1.5 )% Gross profit 467,455 42.2 447,475 40.8 4.5 % Operating expenses: Selling and store operating 308,581 27.9 280,735 25.6 9.9 % General and administrative 59,870 5.3 54,697 5.0 9.5 % Pre-opening 14,232 1.3 10,386 0.9 37.0 % Total operating expenses 382,683 34.5 345,818 31.5 10.7 % Operating income 84,772 7.7 101,657 9.3 (16.6 )% Interest expense, net 1,246 0.2 3,032 0.3 (58.9 )% Income before income taxes 83,526 7.5 98,625 9.0 (15.3 )% Income tax expense 17,603 1.5 22,450 2.0 (21.6 )% Net income $ 65,923 6.0 % $ 76,175 6.9 % (13.5 )% Basic weighted average shares outstanding 106,393 105,754 Diluted weighted average shares outstanding 108,002 107,470 Basic earnings per share $ 0.62 $ 0.72 (13.9 )% Diluted earnings per share $ 0.61 $ 0.71 (14.1 )% Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 % Increase (Decrease) Amount % of Net Sales Amount % of Net Sales Net sales $ 3,365,763 100.0 % $ 3,216,404 100.0 % 4.6 % Cost of sales 1,949,557 57.9 1,924,589 59.8 1.3 % Gross profit 1,416,206 42.1 1,291,815 40.2 9.6 % Operating expenses: Selling and store operating 923,658 27.4 798,437 24.8 15.7 % General and administrative 185,060 5.5 162,449 5.1 13.9 % Pre-opening 32,226 1.0 28,890 0.9 11.5 % Total operating expenses 1,140,944 33.9 989,776 30.8 15.3 % Operating income 275,262 8.2 302,039 9.4 (8.9 )% Interest expense, net 9,006 0.3 5,866 0.2 53.5 % Income before income taxes 266,256 7.9 296,173 9.2 (10.1 )% Income tax expense 57,357 1.7 67,215 2.1 (14.7 )% Net income $ 208,899 6.2 % $ 228,958 7.1 % (8.8 )% Basic weighted average shares outstanding 106,187 105,565 Diluted weighted average shares outstanding 107,850 107,444 Basic earnings per share $ 1.97 $ 2.17 (9.2 )% Diluted earnings per share $ 1.94 $ 2.13 (8.9 )% Condensed Consolidated Balance Sheets (In thousands, except for share and per share data) (Unaudited) As of September 28, 2023 As of December 29, 2022 Assets Current assets: Cash and cash equivalents $ 61,628 $ 9,794 Income taxes receivable 16,157 7,325 Receivables, net 97,733 94,732 Inventories, net 1,105,450 1,292,336 Prepaid expenses and other current assets 55,134 53,298 Total current assets 1,336,102 1,457,485 Fixed assets, net 1,562,616 1,258,056 Right-of-use assets 1,306,475 1,205,636 Intangible assets, net 154,786 152,353 Goodwill 257,940 255,473 Deferred income tax assets, net 12,446 11,265 Other assets 7,717 10,974 Total long-term assets 3,301,980 2,893,757 Total assets $ 4,638,082 $ 4,351,242 Liabilities and stockholders’ equity Current liabilities: Current portion of term loan $ 2,103 $ 2,103 Current portion of lease liabilities 125,348 105,693 Trade accounts payable 706,325 590,883 Accrued expenses and other current liabilities 327,224 298,019 Deferred revenue 13,383 10,060 Total current liabilities 1,174,383 1,006,758 Term loan 195,042 195,351 Revolving line of credit — 210,200 Lease liabilities 1,325,226 1,227,507 Deferred income tax liabilities, net 46,917 41,520 Other liabilities 11,038 12,730 Total long-term liabilities 1,578,223 1,687,308 Total liabilities 2,752,606 2,694,066 Stockholders’ equity Capital stock: Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Common stock Class A, $0.001 par value; 450,000,000 shares authorized; 106,569,892 shares issued and outstanding at September 28, 2023 and 106,150,661 issued and outstanding at December 29, 2022 107 106 Common stock Class B, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Common stock Class C, $0.001 par value; 30,000,000 shares authorized; 0 shares issued and outstanding at September 28, 2023 and December 29, 2022 — — Additional paid-in capital 503,594 482,312 Accumulated other comprehensive income, net 2,455 4,337 Retained earnings 1,379,320 1,170,421 Total stockholders’ equity 1,885,476 1,657,176 Total liabilities and stockholders’ equity $ 4,638,082 $ 4,351,242 Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 Operating activities Net income $ 208,899 $ 228,958 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 146,947 112,691 Stock-based compensation expense 20,336 17,229 Deferred income taxes 4,953 1,747 Change in fair value of contingent earn-out liabilities 2,329 1,530 Loss on asset impairments and disposals, net 858 — Interest cap derivative contracts 85 85 Changes in operating assets and liabilities, net of effects of acquisitions: Receivables, net 2,931 (21,014 ) Inventories, net 195,590 (312,288 ) Trade accounts payable 109,338 (25,761 ) Accrued expenses and other current liabilities 2,950 27,796 Income taxes (8,912 ) (6,360 ) Deferred revenue 3,323 1,415 Other, net 9,348 (18,703 ) Net cash provided by operating activities 698,975 7,325 Investing activities Purchases of fixed assets (413,717 ) (322,825 ) Acquisitions, net of cash acquired (17,353 ) (1,121 ) Proceeds from sales of property — 4,773 Net cash used in investing activities (431,070 ) (319,173 ) Financing activities Payments on term loan (1,577 ) (1,577 ) Borrowings on revolving line of credit 518,900 663,200 Payments on revolving line of credit (729,100 ) (486,800 ) Payments of contingent earn-out liabilities (5,241 ) (2,571 ) Proceeds from exercise of stock options 7,909 7,100 Proceeds from employee stock purchase plan 5,159 4,379 Debt issuance costs — (1,505 ) Tax payments for stock-based compensation awards (12,121 ) (2,135 ) Net cash (used in) provided by financing activities (216,071 ) 180,091 Net increase (decrease) in cash and cash equivalents 51,834 (131,757 ) Cash and cash equivalents, beginning of the period 9,794 139,444 Cash and cash equivalents, end of the period $ 61,628 $ 7,687 Supplemental disclosures of cash flow information Buildings and equipment acquired under operating leases $ 192,906 $ 148,665 Cash paid for interest, net of capitalized interest $ 8,871 $ 3,437 Cash paid for income taxes, net of refunds $ 62,105 $ 71,800 Fixed assets accrued at the end of the period $ 150,111 $ 118,453 Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (Unaudited) EBITDA and Adjusted EBITDA Thirteen Weeks Ended September 28, 2023 September 29, 2022 Net income (GAAP): $ 65,923 $ 76,175 Depreciation and amortization (a) 50,336 39,600 Interest expense, net 1,246 3,032 Income tax expense 17,603 22,450 EBITDA 135,108 141,257 Stock-based compensation expense (b) 5,289 6,360 Other (c) 542 292 Adjusted EBITDA $ 140,939 $ 147,909 Thirty-nine Weeks Ended September 28, 2023 September 29, 2022 Net income (GAAP): $ 208,899 $ 228,958 Depreciation and amortization (a) 145,439 111,237 Interest expense, net 9,006 5,866 Income tax expense 57,357 67,215 EBITDA 420,701 413,276 Stock-based compensation expense (b) 20,336 17,229 Other (c) 2,329 3,478 Adjusted EBITDA $ 443,366 $ 433,983 (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 the thirteen and thirty-nine weeks ended September 28, 2023 relate to changes in the fair value of contingent earn-out liabilities. Amounts for the thirteen and thirty-nine weeks ended September 29, 2022 primarily relate to relocation expenses for our Houston distribution center and 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, expectations related to our acquisition of Spartan, 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,” “focused on” 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 spending and the housing market, including as a result of rising inflation or interest rates, (2) demand fluctuations in the housing industry, and demand for our products and services may be adversely affected by unfavorable economic conditions, including rising interest rates, inflation, a decline in disposable income levels and recession fears, (3) an economic recession or depression, (4) global inflationary pressures on raw materials, energy, commodity, transportation, and other costs could cause our vendors to seek further price increases on the products we sell, (5) any disruption in our supply chain, including carrier capacity constraints, port congestion, higher shipping, rail, and trucking prices and other supply chain costs or product shortages, (6) our failure to successfully anticipate consumer preferences and demand, (7), our inability to pass along cost increases at rates consumers are willing to pay, or reduced demand due to pricing increases, (8) our inability to manage our growth, (9) our inability to manage costs and risks relating to new store openings, (10) our inability to find available locations for our stores on terms acceptable to us, (11) demand for our products and services may be adversely affected by unfavorable economic conditions, (12) any disruption in our distribution capabilities, including from difficulties operating our distribution centers, (13) our failure to execute our business strategy effectively and deliver value to our customers, (14) our inability to find, train and retain key personnel, (15) the resignation, incapacitation or death of any key personnel, (16) the inability to staff our stores and distribution centers sufficiently, (17) the effects of weather conditions, natural disasters or other unexpected events, including global health crises, such as the COVID-19 pandemic, may disrupt our operations, (18) our dependence on foreign imports for the products we sell, which may include the impact of tariffs and other duties, (19) geopolitical risks, such as the conflict in the Middle East, the ongoing war in Ukraine, or import restrictions under the Uyghur Forced Labor Prevention Act, that impact our ability to import from foreign suppliers or raise our costs, (20) if the use of “cookie” tracking technologies is further restricted, the amount of internet user information we collect would decrease, which could require additional marketing efforts and harm our business and operating results, (21) violations of laws and regulations applicable to us or our suppliers, (22) our failure to adequately protect against security breaches involving our information technology systems and customer information, (23) suppliers may sell similar or identical products to our competitors, (24) competition from other stores and internet-based competition, (25) impact of acquired companies, including Spartan, (26) our inability to manage our inventory obsolescence, shrinkage and damage, (27) our inability to maintain sufficient levels of cash flow or liquidity to meet growth expectations, (28) our inability to obtain merchandise on a timely basis at prices acceptable to us, (29) restrictions imposed by our indebtedness on our current and future operations, and (30) our variable rate debt subjects us to interest rate risk that could cause our debt service obligations to increase significantly. Additional information concerning these and other factors are described in “Forward-Looking Statements,” Item 1, “Business” and Item 1A, “Risk Factors” 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 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (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” and Item 1A, “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 28, 2023 (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/20231102101336/en/
Investor Contacts: Wayne Hood 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