- Net sales increased 41.0% from the first quarter of fiscal
2020 to $782.5 million.
- Comparable store sales increased 31.1% from the first
quarter of fiscal 2020.
- Diluted earnings per share (“EPS”) increased 102.9% to $0.71
from $0.35 in the first quarter of fiscal 2020; Adjusted diluted
EPS* increased 100.0% to $0.68 from $0.34 in the first quarter of
fiscal 2020.
Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the
“Company,” or “Floor & Decor”) announces its financial results
for the first quarter of fiscal 2021, which ended April 1,
2021.
Tom Taylor, Chief Executive Officer, stated, “We could not be
more pleased with our first quarter earnings results, which are
supported by the favorable macro-economic environment and Floor
& Decor's strong execution. Our first quarter comparable store
sales increased 31.1% and reflected robust sales momentum across
all our merchandise categories and geographic regions. The
broad-based strength in our merchandise categories is an
acceleration of the strong trends from the second half of 2020 and
further validates our position as the one-stop solution for all of
our homeowners' and Pros' hard-surface flooring needs. We are
continuing to successfully deliver on our differentiated strategy
of offering the broadest in-stock and trend-forward assortment in
every category.”
Mr. Taylor continued, “We successfully opened a first quarter
record seven new warehouse stores, more than double the three new
warehouse stores we opened in the first quarter of fiscal 2020. For
the full year, we still expect to open 27 new warehouse stores, an
increase of 20.3% from 2020. We are pleased with the sales
performance among all our store vintages with many stores
experiencing record weekly sales in the first quarter of fiscal
2021. Our strong fiscal 2021 first quarter sales and profit results
serve to reinforce our belief in the strength of the new store
classes of 2020 and 2021.”
Please see “Comparable Store Sales” below for information on how
the Company calculates its comparable store sales growth.
For the Thirteen Weeks Ended April 1, 2021
- Net sales increased 41.0% to $782.5 million from $554.9 million
in the first quarter of fiscal 2020.
- Comparable store sales increased 31.1%.
- The Company opened seven new warehouse-format stores during the
first quarter of fiscal 2021, ending the quarter with 140
warehouse-format stores and two design studios.
- Operating income increased 105.6% to $95.9 million from $46.7
million in the first quarter of fiscal 2020. Operating margin
increased 390 basis points to 12.3%.
- Net income increased 104.5% to $75.8 million compared to $37.1
million in the first quarter of fiscal 2020. Diluted EPS was $0.71
compared to $0.35 in the first quarter of fiscal 2020, an increase
of 102.9%.
- Adjusted net income* increased 100.2% to $72.7 million compared
to $36.3 million in the first quarter of fiscal 2020. Adjusted
diluted EPS* was $0.68 compared to $0.34 in the first quarter of
fiscal 2020, an increase of 100.0%.
- Adjusted EBITDA* increased 73.8% to $127.1 million compared to
$73.1 million in the first quarter of fiscal 2020.
*Non-GAAP financial measures. Please see “Non-GAAP Financial
Measures” and “Reconciliation of GAAP to Non-GAAP Financial
Measures” below for more information.
The COVID-19 Pandemic Impact on Floor & Decor's Business;
Fiscal 2021 Outlook Reaffirmed
The COVID-19 pandemic had a material negative impact on our
financial results during the first half of fiscal 2020. While our
financial results during the second half of fiscal 2020 and the
first quarter of fiscal 2021 have been strong, the full impact that
the pandemic could have on our business remains highly
uncertain.
We continue to monitor the impact of the COVID-19 pandemic on
our associates, customers, business partners, and supply chain.
However, given the evolving nature of the pandemic and uncertainty
regarding its potential severity and duration, the full financial
impact of the COVID-19 pandemic on our business cannot be
reasonably estimated at this time. The extent of the impact of the
COVID-19 pandemic on our business and financial results will depend
on future developments, including the duration of the COVID-19
pandemic, the success of vaccination programs, the spread of
COVID-19 within the markets in which we operate, the impact to
countries from which we source inventory, fixed assets, and other
supplies, the effect of the pandemic on consumer confidence and
spending, and actions taken by government entities in response to
the pandemic, all of which are highly uncertain. Due to the
continued uncertainty regarding the ongoing impacts of the COVID-19
pandemic and the associated complexity of forecasting, we are
reaffirming select annual guidance for new store openings and
certain other financial measures that we believe we can reasonably
forecast.
Reaffirmed Outlook for the Fiscal Year Ending December 30,
2021:
- Depreciation and amortization expense of approximately $116
million to $118 million
- Interest expense, net of approximately $5 million
- Tax rate of approximately 24%
- Diluted weighted average shares outstanding of approximately
107 million shares
- Open 27 new warehouse-format stores and two small design
studios
- Capital expenditures in the range of approximately $440 million
to $460 million
Conference Call Details
A conference call to discuss the first quarter fiscal 2021
financial results is scheduled for today, May 6, 2021, 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 approximately two hours following 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
21993476. The replay will be available until May 13, 2021.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer
operating 140 warehouse-format stores and two design studios across
32 states at the end of the first quarter of fiscal 2021. The
Company offers a broad assortment of in-stock hard-surface
flooring, including tile, wood, laminate, vinyl, and natural stone
along with decorative and installation accessories, 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.
Non-GAAP Financial Measures
Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted
EBITDA (which are shown in the reconciliations 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
Adjusted net income as net income adjusted to eliminate the impact
of certain items that we do not consider indicative of our core
operating performance and the tax effect related to those items. We
define Adjusted diluted EPS as Adjusted net income divided by
weighted average shares outstanding. We define EBITDA as net income
before interest, loss (gain) on early extinguishment of debt,
taxes, depreciation and amortization. We define Adjusted EBITDA as
net income before interest, loss (gain) on early extinguishment of
debt, taxes, depreciation and amortization, adjusted to eliminate
the impact of 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 tables below.
Adjusted net income, Adjusted diluted EPS, 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 Adjusted net income, Adjusted diluted EPS, 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. Adjusted net income,
Adjusted diluted EPS, EBITDA and Adjusted EBITDA are also used by
analysts, investors and other interested parties as performance
measures to evaluate companies in our industry.
Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted
EBITDA are non-GAAP measures of our financial performance and
should not be considered as alternatives to net income or diluted
EPS 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,
Adjusted net income, 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 Adjusted net
income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA, you
should be aware that in the future we will incur expenses that are
the same as or similar to some of the items eliminated in the
adjustments made to determine Adjusted net income, Adjusted diluted
EPS, EBITDA and Adjusted EBITDA, such as stock compensation
expense, loss on asset impairments and disposals, and other
adjustments. Our presentation of Adjusted net income, Adjusted
diluted EPS, 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 Adjusted net income,
Adjusted diluted EPS, EBITDA and Adjusted EBITDA differ among
companies in the retail industry, and therefore Adjusted net
income, Adjusted diluted EPS, 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.
Consolidated Statements of
Income
(In thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended
April 1, 2021
March 26, 2020
% Increase
(Decrease)
Actual
% of Sales
Actual
% of Sales
Net sales
$
782,537
100.0
%
$
554,937
100.0
%
41.0%
Cost of sales
445,604
56.9
318,905
57.5
39.7
Gross profit
336,933
43.1
236,032
42.5
42.7
Operating expenses:
Selling and store operating
189,946
24.3
153,066
27.6
24.1
General and administrative
44,041
5.6
30,858
5.6
42.7
Pre-opening
6,997
0.9
5,434
1.0
28.8
Total operating expenses
240,984
30.8
189,358
34.1
27.3
Operating income
95,949
12.3
46,674
8.4
105.6
Interest expense, net
1,388
0.2
1,807
0.3
(23.2)
Income before income taxes
94,561
12.1
44,867
8.1
110.8
Provision for income taxes
18,765
2.4
7,804
1.4
140.5
Net income
$
75,796
9.7
%
$
37,063
6.7
%
104.5%
Basic weighted average shares
outstanding
104,073
101,629
Diluted weighted average shares
outstanding
107,099
105,510
Basic earnings per share
$
0.73
$
0.36
102.8%
Diluted earnings per share
$
0.71
$
0.35
102.9%
Consolidated Balance Sheets
(In thousands, except share and per share
data)
(Unaudited)
As of April 1, 2021
As of December 31,
2020
Assets
Current assets:
Cash and cash equivalents
$
354,051
$
307,772
Receivables, net
60,002
50,427
Inventories, net
607,649
654,000
Prepaid expenses and other current
assets
40,173
28,257
Total current assets
1,061,875
1,040,456
Fixed assets, net
611,311
579,359
Right-of-use assets
947,451
916,325
Intangible assets, net
109,269
109,269
Goodwill
227,447
227,447
Other assets
7,370
7,569
Total long-term assets
1,902,848
1,839,969
Total assets
$
2,964,723
$
2,880,425
Liabilities and stockholders’
equity
Current liabilities:
Current portion of term loans
$
2,103
$
1,647
Current portion of lease liabilities
79,041
94,502
Trade accounts payable
402,134
417,898
Accrued expenses and other current
liabilities
160,406
162,283
Income taxes payable
13,635
12,391
Deferred revenue
15,659
10,115
Total current liabilities
672,978
698,836
Term loans
195,546
207,157
Lease liabilities
975,185
941,125
Deferred income tax liabilities, net
32,449
27,990
Other liabilities
7,845
7,929
Total long-term liabilities
1,211,025
1,184,201
Total liabilities
1,884,003
1,883,037
Stockholders’ equity
Capital stock:
Preferred stock, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
April 1, 2021 and December 31, 2020
—
—
Common stock Class A, $0.001 par value;
450,000,000 shares authorized; 104,628,761 shares issued and
outstanding at April 1, 2021 and 104,368,212 issued and outstanding
at December 31, 2020
105
104
Common stock Class B, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
April 1, 2021 and December 31, 2020
—
—
Common stock Class C, $0.001 par value;
30,000,000 shares authorized; 0 shares issued and outstanding at
April 1, 2021 and December 31, 2020
—
—
Additional paid-in capital
415,576
408,124
Accumulated other comprehensive income,
net
247
164
Retained earnings
664,792
588,996
Total stockholders’ equity
1,080,720
997,388
Total liabilities and stockholders’
equity
$
2,964,723
$
2,880,425
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended
April 1, 2021
March 26, 2020
Operating activities
Net income
$
75,796
$
37,063
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
26,415
22,088
Gain on asset impairments and disposals,
net
—
(29
)
Deferred income taxes
4,459
(4,739
)
Interest cap derivative contracts
84
83
Stock-based compensation expense
4,734
2,908
Changes in operating assets and
liabilities:
Receivables, net
(9,575
)
18,740
Inventories, net
46,351
(7,076
)
Trade accounts payable
(13,376
)
(48,644
)
Accrued expenses and other current
liabilities
(16,204
)
(2,478
)
Income taxes
1,244
12,542
Deferred revenue
5,544
506
Other, net
(24,476
)
(6,296
)
Net cash provided by operating
activities
100,996
24,668
Investing activities
Purchases of fixed assets
(45,876
)
(38,384
)
Net cash used in investing activities
(45,876
)
(38,384
)
Financing activities
Borrowings on revolving line of credit
—
275,000
Proceeds from term loans
65,000
—
Payments on term loans
(75,151
)
(875
)
Proceeds from exercise of stock
options
2,383
3,783
Proceeds from employee stock purchase
plan
1,302
1,131
Debt issuance costs
(1,409
)
(2,429
)
Tax payments for stock-based compensation
awards
(966
)
—
Net cash (used in) provided by financing
activities
(8,841
)
276,610
Net increase in cash and cash
equivalents
46,279
262,894
Cash and cash equivalents, beginning of
the period
307,772
27,037
Cash and cash equivalents, end of the
period
$
354,051
$
289,931
Supplemental disclosures of cash flow
information
Buildings and equipment acquired under
operating leases
$
53,758
$
63,578
Cash paid for interest, net of capitalized
interest
$
1,376
$
1,298
Cash paid for income taxes, net of
refunds
$
13,055
$
—
Fixed assets accrued at the end of the
period
$
46,275
$
19,620
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In thousands, except EPS)
(Unaudited)
Adjusted net income and Adjusted
diluted EPS
Thirteen Weeks Ended
April 1, 2021
March 26, 2020
Net income (GAAP):
$
75,796
$
37,063
Distribution center relocation (a)
480
—
COVID-19 costs (b)
216
1,310
Debt modification expense (c)
171
722
Secondary offering costs (d)
—
267
Tariff refunds (e)
(72
)
(650
)
Tax benefit of stock option exercises
(f)
(3,672
)
(4,284
)
Tax impact of adjustments to net income
(g)
(192
)
1,906
Adjusted net income
$
72,727
$
36,334
Diluted weighted average shares
outstanding
107,099
105,510
Adjusted diluted EPS
$
0.68
$
0.34
(a)
Represents amounts related to the
relocation of our Houston distribution center.
(b)
Amounts are comprised of sanitation,
personal protective equipment, and other costs that directly
related to efforts to mitigate the impact of the COVID-19 pandemic
on our business.
(c)
Represents legal fees incurred in
connection with amendments to the senior secured term loan credit
facility.
(d)
Amounts relate to costs associated with
secondary public offerings of the Company’s Class A common stock by
certain of our stockholders. The Company did not sell any shares or
receive any proceeds from the sale of shares by the selling
stockholders.
(e)
Represents interest earned on outstanding
tariff refund receivables during the thirteen weeks ended April 1,
2021. During the thirteen weeks ended March 26, 2020, represents
income for additional tariff refunds recognized related to certain
engineered wood products as well as interest earned on tariff
refund receivables.
(f)
Tax benefit due to stock option
exercises.
(g)
Tax adjustments for pre-tax adjustments
above and tax reserves, including for uncertain tax positions,
related to prior years.
EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
Thirteen Weeks Ended
April 1, 2021
March 26, 2020
Net income (GAAP):
$
75,796
$
37,063
Depreciation and amortization (a)
25,520
21,673
Interest expense, net
1,388
1,807
Income tax expense
18,765
7,804
EBITDA
121,469
68,347
Stock compensation expense (b)
4,734
2,908
COVID-19 costs (c)
216
1,310
Tariff refunds (d)
—
(401)
Other (e)
656
962
Adjusted EBITDA
$
127,075
$
73,126
(a)
Excludes amortization of deferred
financing costs, which is included as a 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)
Amounts are comprised of sanitation,
personal protective equipment, and other costs that directly
related to efforts to mitigate the impact of the COVID-19 pandemic
on our business.
(d)
Represents income for additional tariff
refunds during the thirteen weeks ended March 26, 2020 related to
certain engineered wood products. Interest income for tariff
refunds is included within interest expense, net in the table
above.
(e)
Other adjustments include amounts
management does not consider indicative of our core operating
performance. Amounts for the thirteen weeks ended April 1, 2021
primarily relate to relocation expenses for our Houston
distribution center and legal fees associated with the February
2021 amendment to our senior secured term loan credit facility.
Amounts for the thirteen weeks ended March 26, 2020 primarily
relate to legal fees associated with the February 2020 amendment to
our senior secured term loan credit facility and costs associated
with a potential secondary public offering of the Company’s Class A
common stock by certain of our stockholders.
Forward-Looking Statements
This release and the associated webcast/conference call contain
forward-looking statements. All statements other than statements of
historical fact contained in this release, including statements
regarding the Company’s future operating results and financial
position, business strategy and plans, objectives of management for
future operations and the impact of the COVID-19 pandemic, 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 the COVID-19 pandemic.
In some cases, you can identify forward-looking statements by
terms such as “may,” “will,” “should,” “expects,” “intends,”
“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 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, those
factors 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 2020 filed with
the Securities and Exchange Commission (the “SEC”) on February 25,
2021 (the “Annual Report”) and elsewhere in the Annual Report,
those factors 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 April 1, 2021 (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/20210506005943/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
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