Net sales of $1,117.9 million increased 0.9%
from the third quarter of fiscal 2023
Comparable store sales decreased
6.4%
Diluted earnings per share of $0.48
Opened 11 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 2024, which ended September 26,
2024.
Tom Taylor, Chief Executive Officer, stated, “We are incredibly
proud of how our store and store support teams executed our plans
and managed costs during a period when demand for large project
discretionary home improvement and hard surface flooring spending
remained challenging. In the face of these challenges, the hard
work and dedication of our associates enabled us to deliver fiscal
2024 third quarter diluted earnings per share of $0.48, which
exceeded our expectations. We continue implementing and executing
strategies designed to grow our market share while working
prudently to manage our profitability and maintain a strong balance
sheet in this challenging period. I particularly want to thank our
associates affected by the recent hurricanes for their hard work
and dedication to their communities. Thanks to their efforts, we
quickly reopened our stores to begin serving customers affected by
the hurricanes as they began their recovery and rebuilding
efforts.”
In the third quarter of fiscal 2024, we opened 11 new
warehouse-format stores, including eight openings in fiscal
September. As a result, we ended the third quarter operating 241
warehouse-format stores and five design studios compared with 207
warehouse-format stores and five design studios in the same period
last year. We plan to open ten warehouse-format stores in the
fourth quarter of fiscal 2024 to achieve our 30 new
warehouse-format store opening plan in fiscal 2024.
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 26, 2024
- Net sales of $1,117.9 million increased 0.9% from $1,107.8
million in the third quarter of fiscal 2023.
- Comparable store sales decreased 6.4%.
- We opened 11 new warehouse stores, ending the quarter with 241
warehouse stores and five design studios.
- Operating income of $66.3 million decreased 21.8% from $84.8
million in the third quarter of fiscal 2023. Operating margin of
5.9% decreased 180 basis points from the third quarter of fiscal
2023.
- Net income of $51.7 million decreased 21.6% from $65.9 million
in the third quarter of fiscal 2023. Diluted earnings per share
(“EPS”) of $0.48 decreased 21.3% from $0.61 in the third quarter of
fiscal 2023.
- Adjusted EBITDA* of $132.9 million decreased 5.7% from $140.9
million in the third quarter of fiscal 2023.
For the Thirty-nine Weeks Ended September 26, 2024
- Net sales of $3,348.4 million decreased 0.5% from $3,365.8
million in the same period of fiscal 2023.
- Comparable store sales decreased 9.0%.
- We opened 20 new warehouse stores.
- Operating income of $197.0 million decreased 28.4% from $275.3
million in the same period of fiscal 2023. Operating margin of 5.9%
decreased 230 basis points from the same period of fiscal
2023.
- Net income of $158.4 million decreased 24.2% from $208.9
million in the same period of fiscal 2023. Diluted EPS of $1.46
decreased 24.7% from $1.94 in the same period of fiscal 2023.
- Adjusted EBITDA* of $392.8 million decreased 11.4% from $443.4
million in the same period of fiscal 2023.
*Non-GAAP financial measure. Please see “Non-GAAP Financial
Measures” and “Reconciliation of GAAP to Non-GAAP Financial
Measures” below for more information.
Updated Outlook for the Fiscal Year Ending December 26,
2024:
- Net sales of approximately $4,400 million to $4,430
million
- Comparable store sales of approximately (8.5)% to (7.5)%
- Diluted EPS of approximately $1.65 to $1.75
- Adjusted EBITDA* of approximately $490 million to $500
million
- Depreciation and amortization expense of approximately $235
million
- Interest expense, net of approximately $4 million
- Tax rate of approximately 18%
- Diluted weighted average shares outstanding of approximately
108 million shares
- Open 30 new warehouse stores
- Capital expenditures of approximately $360 million to $390
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 2024
financial results is scheduled for today, October 30, 2024, at 5:00
p.m. Eastern Time. A live audio webcast of the conference call,
together with related materials, will be available online at
ir.flooranddecor.com.
A recorded replay of the conference call is expected to be
available approximately three hours after 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
13748389. The replay will be available until November 6, 2024.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer and
commercial flooring distributor operating 241 warehouse-format
stores and five design studios across 38 states as of September 26,
2024. The Company offers a broad assortment of in-stock
hard-surface flooring, including tile, wood, laminate and vinyl,
and natural stone along with decorative accessories and wall tile,
installation materials, and adjacent categories at everyday low
prices. The Company was founded in 2000 and is headquartered in
Atlanta, Georgia.
Comparable Store Sales
Comparable store sales refer to period-over-period comparisons
of our net sales among the comparable store base and are based on
when the customer obtains control of the product, which is
typically at the time of sale. A store is included in the
comparable store sales calculation on the first day of the
thirteenth full fiscal month following a store’s opening, which is
when we believe comparability has been achieved. Changes in our
comparable store sales between two periods are based on net sales
for stores that were in operation during both of the two periods.
Any change in the square footage of an existing comparable store,
including for remodels and relocations within the same primary
trade area of the existing store being relocated, does not
eliminate that store from inclusion in the calculation of
comparable store sales. Stores that are closed for a full fiscal
month or longer are excluded from the comparable store sales
calculation for each full fiscal month that they are closed. Since
our e-commerce, regional account manager, and design studio sales
are fulfilled by individual stores, they are included in comparable
store sales only to the extent the fulfilling store meets the above
mentioned store criteria. Sales through our Spartan Surfaces, LLC
(“Spartan”) subsidiary do not involve our stores and are therefore
excluded from the comparable store sales calculation.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA (which are shown in the
reconciliation below) are presented as supplemental measures of
financial performance that are not required by, or presented in
accordance with, accounting principles generally accepted in the
United States (“GAAP”). We define EBITDA as net income before
interest, taxes, depreciation and amortization. We define Adjusted
EBITDA as net income before interest, taxes, depreciation and
amortization, adjusted to eliminate the impact of non-cash
stock-based compensation expense and certain items that we do not
consider indicative of our core operating performance.
Reconciliations of these measures to the most directly comparable
GAAP financial measure are set forth in the table below.
EBITDA and Adjusted EBITDA are key metrics used by management
and our board of directors to assess our financial performance and
enterprise value. We believe that EBITDA and Adjusted EBITDA are
useful measures, as they eliminate certain items that are not
indicative of our core operating performance and facilitate a
comparison of our core operating performance on a consistent basis
from period to period. We also use Adjusted EBITDA as a basis to
determine covenant compliance with respect to our credit
facilities, to supplement GAAP measures of performance to evaluate
the effectiveness of our business strategies, to make budgeting
decisions, and to compare our performance against that of other
peer companies using similar measures. EBITDA and Adjusted EBITDA
are also frequently used by analysts, investors and other
interested parties to evaluate companies in our industry.
EBITDA and Adjusted EBITDA are non-GAAP measures of our
financial performance and should not be considered as alternatives
to net income as a measure of financial performance, or any other
performance measure derived in accordance with GAAP, and they
should not be construed as an inference that our future results
will be unaffected by unusual or non-recurring items. Additionally,
EBITDA and Adjusted EBITDA are not intended to be measures of
liquidity or free cash flow for management’s discretionary use. In
addition, these non-GAAP measures exclude certain non-recurring and
other charges. Each of these non-GAAP measures has its limitations
as an analytical tool, and you should not consider them in
isolation or as a substitute for analysis of our results as
reported under GAAP. In evaluating EBITDA and Adjusted EBITDA, you
should be aware that in the future we may incur expenses that are
the same as or similar to some of the items eliminated in the
adjustments made to determine EBITDA and Adjusted EBITDA, such as
stock-based compensation expense, 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. The Company does not provide a reconciliation
of forward-looking measures where it believes such a reconciliation
would imply a degree of precision and certainty that could be
confusing to investors and the Company is unable to reasonably
predict certain items contained in the GAAP measures without
unreasonable efforts. This is due to the inherent difficulty of
forecasting the timing or amount of various items that have not yet
occurred and are out of the Company’s control or cannot be
reasonably predicted. For the same reasons, the Company is unable
to address the probable significance of the unavailable
information. Forward-looking non-GAAP financial measures provided
without the most directly comparable GAAP financial measures may
vary materially from the corresponding GAAP financial measures.
Floor & Decor Holdings,
Inc.
Condensed Consolidated Statements of
Income
(In thousands, except for per share
data)
(Unaudited)
Thirteen Weeks Ended
September 26, 2024
September 28, 2023
% Increase
(Decrease)
Amount
% of Net Sales
Amount
% of Net Sales
Net sales
$
1,117,926
100.0
%
$
1,107,812
100.0
%
0.9
%
Cost of sales
632,056
56.5
640,357
57.8
(1.3
)%
Gross profit
485,870
43.5
467,455
42.2
3.9
%
Operating expenses:
Selling and store operating
339,135
30.3
308,581
27.9
9.9
%
General and administrative
67,687
6.1
59,870
5.3
13.1
%
Pre-opening
12,731
1.2
14,232
1.3
(10.5
)%
Total operating expenses
419,553
37.6
382,683
34.5
9.6
%
Operating income
66,317
5.9
84,772
7.7
(21.8
)%
Interest expense, net
189
—
1,246
0.2
(84.8
)%
Income before income taxes
66,128
5.9
83,526
7.5
(20.8
)%
Income tax expense
14,438
1.3
17,603
1.5
(18.0
)%
Net income
$
51,690
4.6
%
$
65,923
6.0
%
(21.6
)%
Basic weighted average shares
outstanding
107,185
106,393
Diluted weighted average shares
outstanding
108,292
108,002
Basic earnings per share
$
0.48
$
0.62
(22.6
)%
Diluted earnings per share
$
0.48
$
0.61
(21.3
)%
Thirty-nine Weeks
Ended
September 26, 2024
September 28, 2023
% Increase
(Decrease)
Amount
% of Net Sales
Amount
% of Net Sales
Net sales
$
3,348,354
100.0
%
$
3,365,763
100.0
%
(0.5
)%
Cost of sales
1,901,424
56.8
1,949,557
57.9
(2.5
)%
Gross profit
1,446,930
43.2
1,416,206
42.1
2.2
%
Operating expenses:
Selling and store operating
1,014,888
30.3
923,658
27.4
9.9
%
General and administrative
202,135
6.0
185,060
5.5
9.2
%
Pre-opening
32,951
1.0
32,226
1.0
2.2
%
Total operating expenses
1,249,974
37.3
1,140,944
33.9
9.6
%
Operating income
196,956
5.9
275,262
8.2
(28.4
)%
Interest expense, net
2,807
0.1
9,006
0.3
(68.8
)%
Income before income taxes
194,149
5.8
266,256
7.9
(27.1
)%
Income tax expense
35,761
1.1
57,357
1.7
(37.7
)%
Net income
$
158,388
4.7
%
$
208,899
6.2
%
(24.2
)%
Basic weighted average shares
outstanding
107,000
106,187
Diluted weighted average shares
outstanding
108,282
107,850
Basic earnings per share
$
1.48
$
1.97
(24.9
)%
Diluted earnings per share
$
1.46
$
1.94
(24.7
)%
Condensed Consolidated Balance
Sheets
(In thousands, except for share and per
share data)
(Unaudited)
As of September 26,
2024
As of December 28,
2023
Assets
Current assets:
Cash and cash equivalents
$
180,771
$
34,382
Income taxes receivable
3,317
27,870
Receivables, net
104,351
99,513
Inventories, net
1,046,007
1,106,150
Prepaid expenses and other current
assets
54,419
48,725
Total current assets
1,388,865
1,316,640
Fixed assets, net
1,763,980
1,629,917
Right-of-use assets
1,346,653
1,282,625
Intangible assets, net
151,119
153,869
Goodwill
257,940
257,940
Deferred income tax assets, net
16,635
14,227
Other assets
7,037
7,332
Total long-term assets
3,543,364
3,345,910
Total assets
$
4,932,229
$
4,662,550
Liabilities and stockholders’
equity
Current liabilities:
Current portion of term loan
$
2,103
$
2,103
Current portion of lease liabilities
134,629
126,428
Trade accounts payable
737,845
679,265
Accrued expenses and other current
liabilities
305,971
332,940
Deferred revenue
12,472
11,277
Total current liabilities
1,193,020
1,152,013
Term loan
194,630
194,939
Lease liabilities
1,368,514
1,301,754
Deferred income tax liabilities, net
53,373
67,188
Other liabilities
11,637
15,666
Total long-term liabilities
1,628,154
1,579,547
Total liabilities
2,821,174
2,731,560
Stockholders’ equity
Capital stock:
Preferred stock, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
September 26, 2024 and December 28, 2023
—
—
Common stock Class A, $0.001 par value;
450,000,000 shares authorized; 107,223,985 shares issued and
outstanding at September 26, 2024 and 106,737,532 issued and
outstanding at December 28, 2023
107
107
Common stock Class B, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
September 26, 2024 and December 28, 2023
—
—
Common stock Class C, $0.001 par value;
30,000,000 shares authorized; 0 shares issued and outstanding at
September 26, 2024 and December 28, 2023
—
—
Additional paid-in capital
536,238
513,060
Accumulated other comprehensive (loss)
income, net
(79
)
1,422
Retained earnings
1,574,789
1,416,401
Total stockholders’ equity
2,111,055
1,930,990
Total liabilities and stockholders’
equity
$
4,932,229
$
4,662,550
Condensed Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Thirty-nine Weeks
Ended
September 26, 2024
September 28, 2023
Operating activities
Net income
$
158,388
$
208,899
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
172,690
146,947
Stock-based compensation expense
25,618
20,336
Deferred income taxes
(15,813
)
4,953
Loss on asset impairments and disposals,
net
1,511
858
Change in fair value of contingent
earn-out liabilities
(866
)
2,329
Interest cap derivative contracts
110
85
Changes in operating assets and
liabilities, net of effects of acquisition:
Receivables, net
(4,838
)
2,931
Inventories, net
60,143
195,590
Trade accounts payable
60,747
109,338
Accrued expenses and other current
liabilities
21,939
2,950
Income taxes
24,840
(8,912
)
Deferred revenue
1,195
3,323
Other, net
(3,896
)
9,348
Net cash provided by operating
activities
501,768
698,975
Investing activities
Purchases of fixed assets
(349,360
)
(413,717
)
Acquisition, net of cash acquired
—
(17,353
)
Net cash used in investing activities
(349,360
)
(431,070
)
Financing activities
Payments on term loan
(1,577
)
(1,577
)
Borrowings on revolving line of credit
258,600
518,900
Payments on revolving line of credit
(258,600
)
(729,100
)
Payments of contingent earn-out
liabilities
(2,002
)
(5,241
)
Proceeds from exercise of stock
options
6,211
7,909
Proceeds from employee stock purchase
plan
5,459
5,159
Tax payments for stock-based compensation
awards
(14,110
)
(12,121
)
Net cash used in financing activities
(6,019
)
(216,071
)
Net increase in cash and cash
equivalents
146,389
51,834
Cash and cash equivalents, beginning of
the period
34,382
9,794
Cash and cash equivalents, end of the
period
$
180,771
$
61,628
Supplemental disclosures of cash flow
information
Buildings and equipment acquired under
operating leases
$
167,135
$
192,906
Cash paid for interest, net of capitalized
interest
$
3,959
$
8,871
Cash paid for income taxes, net of
refunds
$
26,728
$
62,105
Fixed assets accrued at the end of the
period
$
89,090
$
150,111
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In thousands)
(Unaudited)
EBITDA and Adjusted EBITDA
Thirteen Weeks Ended
September 26, 2024
September 28, 2023
Net income (GAAP):
$
51,690
$
65,923
Depreciation and amortization (a)
57,328
50,336
Interest expense, net
189
1,246
Income tax expense
14,438
17,603
EBITDA
123,645
135,108
Stock-based compensation expense (b)
10,031
5,289
Other (c)
(779
)
542
Adjusted EBITDA
$
132,897
$
140,939
Thirty-nine Weeks
Ended
September 26, 2024
September 28, 2023
Net income (GAAP):
$
158,388
$
208,899
Depreciation and amortization (a)
171,044
145,439
Interest expense, net
2,807
9,006
Income tax expense
35,761
57,357
EBITDA
368,000
420,701
Stock-based compensation expense (b)
25,618
20,336
Other (c)
(866
)
2,329
Adjusted EBITDA
$
392,752
$
443,366
(a)
Excludes amortization of deferred
financing costs, which is included as part of interest expense, net
in the table above.
(b)
Non-cash charges related to
stock-based compensation programs, which vary from period to period
depending on the timing of awards and forfeitures.
(c)
Other adjustments include amounts
management does not consider indicative of our core operating
performance. Amounts for both the thirteen and thirty-nine weeks
ended September 26, 2024 and September 28, 2023 relate to changes
in the fair value of contingent earn-out liabilities.
Forward-Looking Statements
This release and the associated webcast/conference call contain
forward-looking statements within the meaning of the federal
securities laws. All statements other than statements of historical
fact contained in this release and the associated
webcast/conference call, including statements regarding the
Company’s future operating results and financial position, business
strategy and plans, and objectives of management for future
operations, are forward-looking statements. In some cases, you can
identify forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “seeks,”
“intends,” “target,” “projects,” “contemplates,” “believes,”
“estimates,” “predicts,” “budget,” “potential,” or “continue” or
the negative of these terms or other similar expressions.
The forward-looking statements contained in this release and the
associated webcast/conference call are based on our current
expectations, assumptions, estimates, and projections regarding the
Company’s business, the economy, and other future conditions,
including the impact of natural disasters on sales. 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.
Although the Company believes that the expectations reflected in
the forward-looking statements in this release and the associated
webcast/conference call are reasonable, the Company cannot
guarantee future events, results, performance or achievements. A
number of important factors could cause actual results to differ
materially from those indicated by the forward-looking statements
in this release or the associated webcast/conference call,
including, without limitation, (1) an overall decline in the health
of the economy, the hard surface flooring industry, consumer
confidence and discretionary spending, and the housing market,
including as a result of persistently high or rising inflation or
interest rates, (2) our failure to successfully manage the
challenges that our planned new store growth poses or the impact of
unexpected difficulties or higher costs during our expansion, (3)
our inability to enter into leases for additional stores on
acceptable terms or renew or replace our current store leases, (4)
our failure to successfully anticipate and manage trends, consumer
preferences, and demand, (5) our inability to successfully manage
increased competition, (6) our inability to manage our inventory,
including the impact of inventory obsolescence, shrinkage, and
damage, (7) political and regulatory conditions that contribute to
uncertainty and market volatility, including the upcoming U.S.
presidential election and legislative, regulatory, trade and
policies associated with a new administration, (8) any disruption
in our distribution capabilities, supply chain, and our related
planning and control processes, including carrier capacity
constraints, port congestion or shut down, transportation costs,
and other supply chain costs or product shortages, (9) any
increases in wholesale prices of products, materials, and
transportation costs beyond our control, including increases in
costs due to inflation, (10) the resignation, incapacitation, or
death of any key personnel, including our executive officers, (11)
our inability to attract, hire, train, and retain highly qualified
managers and staff, (12) the impact of any labor activities, (13)
our dependence on foreign imports for the products we sell,
including risks associated with obtaining products from abroad,
(14) geopolitical risks, such as the conflict in the Middle East,
the ongoing war in Ukraine, and U.S. policies related to global
trade and tariffs, such as import restrictions under the Uyghur
Forced Labor Prevention Act, or any antidumping and countervailing
duties, any of which could impact our ability to import from
foreign suppliers or raise our costs, (15) our ability to manage
our comparable store sales, (16) any failure by any of our
suppliers to supply us with quality products on attractive terms
and prices or to adhere to the quality standards that we set for
our products, (17) our inability to locate sufficient suitable
natural products, (18) the effects of weather conditions, natural
disasters, or other unexpected events, including public health
crises, that may disrupt our operations, (19) our inability to
maintain sufficient levels of cash flow or liquidity to fund our
expanding business and service our existing indebtedness, (20)
restrictions imposed by our indebtedness on our current and future
operations, including risks related to our variable rate debt, (21)
any allegations, investigations, lawsuits, or violations of laws
and regulations applicable to us, our products, or our suppliers,
(22) our inability to adequately protect the privacy and security
of information related to our customers, us, our associates, our
suppliers, and other third parties, (23) any material disruption in
our information systems, including our website, (24) new or
changing laws or regulations, including tax laws and trade policies
and regulations, (25) any failure to protect our intellectual
property rights or disputes regarding our intellectual property or
the intellectual property of third parties, (26) the impact of any
future strategic transactions, and (27) our ability to manage risks
related to corporate social responsibility. Additional information
concerning these and other factors are described in
“Forward-Looking Statements,” Item 1, “Business,” Item 1A, “Risk
Factors,” and Item 1C “Cybersecurity” of Part I and Item 7,
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and Item 9A, “Controls and Procedures” of
Part II of the Company’s Annual Report on Form 10-K for the fiscal
year ended December 28, 2023, filed with the Securities and
Exchange Commission (the “SEC”) on February 22, 2024 (the “Annual
Report”) and elsewhere in the Annual Report, as well as those
described in Item 2, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 2024 (the “10-Q”) and elsewhere in the 10-Q, and
those described in the Company’s other filings with the SEC.
Because forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or
quantified, you should not rely on these forward-looking statements
as predictions of future events. The forward-looking statements
contained in this release or the associated webcast/conference call
speak only as of the date hereof. New risks and uncertainties arise
over time, and it is not possible for the Company to predict those
events or how they may affect the Company. If a change to the
events and circumstances reflected in the Company’s forward-looking
statements occurs, the Company’s business, financial condition, and
operating results may vary materially from those expressed in the
Company’s forward-looking statements. Except as required by
applicable law, the Company does not plan to publicly update or
revise any forward-looking statements contained herein or in the
associated webcast/conference call, whether as a result of any new
information, future events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030358030/en/
Investor Contacts:
Wayne Hood Senior Vice President of Investor Relations
678-505-4415 wayne.hood@flooranddecor.com
or
Matt McConnell Senior Manager of Investor Relations 770-257-1374
matthew.mcconnell@flooranddecor.com
Floor and Decor (NYSE:FND)
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