- Net sales increased 19.8% from the second quarter 2018 to
$520.3 million
- Comparable store sales increased 3.0% from the second quarter
2018; Comparable store sales excluding Houston increased 5.5%
- Diluted earnings per share (“EPS”) increased 10.5% to $0.42
from $0.38 in the second quarter 2018; Adjusted diluted EPS
increased 25.9% to $0.34 from $0.27 in the second quarter 2018
- Provides third quarter and updates full year fiscal 2019 sales
and earnings outlook
Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the
“Company,” or “Floor & Decor”) announces its financial results
for the second quarter of fiscal 2019, which ended June 27,
2019.
Tom Taylor, Chief Executive Officer, stated, “We are pleased
with our second quarter 2019 results. We delivered earnings per
share that exceeded the high-end of our guidance primarily as a
result of robust sales growth from our new stores, higher product
gross margin, as well as lower operating expenses, which led to
strong earnings flow through.”
Mr. Taylor continued, “We continue to make excellent progress on
the growth initiatives we have planned for fiscal 2019, including
our goal of opening 20 new warehouse stores, which would continue
our pattern of averaging 20% unit growth over each of the last
seven years. In the second quarter, we successfully opened three
new warehouse stores, ending the quarter with 106 warehouse stores,
up 20.5% from 88 warehouse stores as of the end of the second
quarter of 2018. We are particularly pleased with the early
performance of our class of 2019 stores as their results further
reinforce our new store potential. As we look to the remainder of
fiscal 2019, we remain focused on the execution of our key growth
strategies and aim to capitalize on the significant growth
opportunity that exists for Floor & Decor.”
Please see “Comparable Store Sales” below for information on how
the Company calculates its comparable store sales growth.
For the Thirteen Weeks Ended June 27, 2019
- Net sales increased 19.8% to $520.3 million from $434.3 million
in the second quarter of fiscal 2018. Comparable store sales
increased 3.0%. Comparable store sales excluding Houston increased
5.5%.
- The Company opened three new stores and relocated one store
during the second quarter of fiscal 2019, ending the quarter with
106 warehouse format stores.
- Operating income increased 23.2% to $45.9 million from $37.2
million in the second quarter of fiscal 2018. Operating margin
increased 20 basis points to 8.8%.
- Net income increased 9.4% to $43.6 million compared to $39.8
million in the second quarter of fiscal 2018. Diluted EPS was $0.42
compared to $0.38 in the second quarter of fiscal 2018.
- Adjusted net income* increased 24.5% to $35.3 million compared
to $28.4 million in the second quarter of fiscal 2018. Adjusted
diluted EPS* was $0.34 compared to $0.27 in the second quarter of
fiscal 2018, an increase of 25.9%.
- Adjusted EBITDA* increased 31.4% to $66.6 million compared to
$50.7 million in the second quarter of fiscal 2018.
For the Twenty-six Weeks Ended June 27, 2019
- Net sales increased 19.1% to $997.4 million from $837.2 million
in the second quarter of fiscal 2018. Comparable store sales
increased 3.1%. Comparable store sales excluding Houston increased
6.3%.
- The Company opened six new stores and relocated one store
during the twenty-six weeks ended June 27, 2019.
- Operating income increased 16.1% to $85.7 million from $73.8
million in the same period of fiscal 2018. Operating margin
decreased 20 basis points to 8.6%.
- Net income increased 3.6% to $74.3 million compared to $71.7
million in the same period of fiscal 2018. Diluted EPS was $0.71
compared to $0.68 in the same period of fiscal 2018.
- Adjusted net income* increased 18.5% to $65.3 million compared
to $55.1 million in the same period of fiscal 2018. Adjusted
diluted EPS* was $0.62 compared to $0.53 in the same period of
fiscal 2018, an increase of 17.0%.
- Adjusted EBITDA* increased 28.6% to $126.7 million compared to
$98.5 million in the same period of fiscal 2018.
*Non-GAAP financial measures. Please see “Non-GAAP
Financial Measures” and “Reconciliation of GAAP to Non-GAAP
Financial Measures” below for more information.
Third Quarter and Fiscal 2019 Sales and
Earnings Outlook
(In millions, except EPS and store
count)
Thirteen Weeks Ending
9/26/2019
Net sales
$520 - $527
Comparable store sales
4.0% to 5.5%
GAAP diluted EPS
$0.22 - $0.24
Adjusted diluted EPS
$0.25 - $0.26
Diluted weighted average shares
outstanding
104.9
Adjusted EBITDA
$57.0 - $58.5
Warehouse format store count
113
New warehouse format stores
7
Updated Outlook
Prior Outlook
Year Ending
Year Ending
12/26/2019
12/26/2019
Net sales
$2,060 - $2,075
$2,020 - $2,055
Comparable store sales
4.5% to 5.5%
3.0% to 5.0%
GAAP diluted EPS
$1.14 - $1.18
$1.03 - $1.09
Adjusted diluted EPS
$1.09 - $1.12
$1.07 - $1.12
Diluted weighted average shares
outstanding
104.7
104.7
Adjusted EBITDA
$238.0 - $243.0
$235.5 - $243.0
Depreciation and amortization
Approximately $74.3
Approximately $73.7
Interest expense
Approximately $9.8
Approximately $9.8
Tax rate
23.3% for the remainder of fiscal
2019
23.3% for the remainder of fiscal
2019
Warehouse format store count
120
120
New warehouse format stores
20
20
Capital Expenditures
$205 - $215
$220 - $230
The above guidance includes certain non-GAAP financial measures
(namely Adjusted EBITDA and Adjusted diluted EPS). 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 second quarter fiscal 2019
financial results is scheduled for today, August 1, 2019, at 4:30
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
13692025. The replay will be available until August 8, 2019.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer
operating 106 warehouse-format stores across 28 states at the end
of the second quarter 2019. 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 Smyrna, Georgia.
Comparable Store Sales
Comparable store sales refer to period-over-period comparisons
of our net sales based on when the customer obtains control of
their product, which is typically at the time of sale and may be
slightly different than our historically reported net sales due to
timing of when final delivery of the product has occurred. A store
is included in the comparable store sales calculation on the first
day of the thirteenth full fiscal month following its opening,
which is when we believe comparability has been achieved. Since our
e-commerce 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. 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 square footage of an existing comparable
store, including remodels and relocations, does not eliminate that
store from inclusion in the calculation of comparable store sales.
Stores that are closed temporarily and relocated within their
primary trade areas are included in same store sales. Additionally,
any stores that were closed during the current or prior fiscal year
are excluded from the definition of comparable stores.
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 on early extinguishment of debt, taxes,
depreciation and amortization. We define Adjusted EBITDA as net
income before interest, loss 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 disposal, 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
6/27/2019
6/28/2018
% Increase
Actual
% of Sales
Actual
% of Sales
(Decrease)
Net sales
$
520,311
100.0
%
$
434,279
100.0
%
19.8
%
Cost of sales
302,488
58.1
256,641
59.1
17.9
Gross profit
217,823
41.9
177,638
40.9
22.6
Operating expenses:
Selling and store operating expenses
134,643
25.9
108,626
25.0
24.0
General and administrative expenses
30,916
5.9
25,179
5.8
22.8
Pre-opening expenses
6,369
1.2
6,588
1.5
(3.3
)
Total operating expenses
171,928
33.0
140,393
32.3
22.5
Operating income
45,895
8.8
37,245
8.6
23.2
Interest expense
2,223
0.4
2,145
0.5
3.6
Income before income taxes
43,672
8.4
35,100
8.1
24.4
Provision (benefit) for income taxes
76
—
(4,746
)
(1.1
)
NM
Net income
$
43,596
8.4
%
$
39,846
9.2
%
9.4
%
Basic weighted average shares
outstanding
98,642
96,684
Diluted weighted average shares
outstanding
104,840
104,937
Basic earnings per share
$
0.44
$
0.41
7.3
%
Diluted earnings per share
$
0.42
$
0.38
10.5
%
Twenty-six Weeks Ended
6/27/2019
6/28/2018
Actual
% of Sales
Actual
% of Sales
% Increase
Net sales
$
997,361
100.0
%
$
837,227
100.0
%
19.1
%
Cost of sales
578,164
58.0
494,203
59.0
17.0
Gross profit
419,197
42.0
343,024
41.0
22.2
Operating expenses:
Selling and store operating expenses
262,026
26.3
211,193
25.3
24.1
General and administrative expenses
61,118
6.1
48,518
5.8
26.0
Pre-opening expenses
10,396
1.0
9,562
1.1
8.7
Total operating expenses
333,540
33.4
269,273
32.2
23.9
Operating income
85,657
8.6
73,751
8.8
16.1
Interest expense
5,144
0.5
3,929
0.5
30.9
Income before income taxes
80,513
8.1
69,822
8.3
15.3
Provision (benefit) for income taxes
6,197
0.6
(1,895
)
(0.3
)
NM
Net income
$
74,316
7.5
%
$
71,717
8.6
%
3.6
%
Basic weighted average shares
outstanding
98,214
96,199
Diluted weighted average shares
outstanding
104,606
104,808
Basic earnings per share
$
0.76
$
0.75
1.3
%
Diluted earnings per share
$
0.71
$
0.68
4.4
%
NM – Not Meaningful
Consolidated Balance
Sheets
(In thousands, except share and
per share data)
(Unaudited)
As of
As of
June 27,
December 27,
2019
2018
Assets
Current assets:
Cash and cash equivalents
$
51,450
$
644
Income taxes receivable
2,837
4,324
Receivables, net
35,641
67,527
Inventories, net
446,397
471,014
Prepaid expenses and other current
assets
27,689
15,949
Total current assets
564,014
559,458
Fixed assets, net
382,646
328,366
Right of use assets
720,009
—
Intangible assets, net
109,315
109,330
Goodwill
227,447
227,447
Other assets
7,693
9,490
Total long-term assets
1,447,110
674,633
Total assets
$
2,011,124
$
1,234,091
Liabilities and stockholders’
equity
Current liabilities:
Current portion of term loans
$
3,500
$
3,500
Current portion of lease liabilities
44,461
—
Trade accounts payable
272,695
313,503
Accrued expenses and other current
liabilities
97,015
82,038
Deferred revenue
6,967
5,244
Total current liabilities
424,638
404,285
Term loans
140,470
141,834
Deferred rent
—
36,980
Lease liabilities
747,595
—
Deferred income tax liabilities, net
25,173
26,838
Tenant improvement allowances
—
37,295
Other liabilities
2,360
2,550
Total long-term liabilities
915,598
245,497
Total liabilities
1,340,236
649,782
Stockholders’ equity
Capital stock:
Preferred stock, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
June 27, 2019 and December 27, 2018
—
—
Common stock Class A, $0.001 par value;
450,000,000 shares authorized; 99,111,260 shares issued and
outstanding at June 27, 2019 and 97,588,539 issued and outstanding
at December 27, 2018
99
98
Common stock Class B, $0.001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding at
June 27, 2019 and December 27, 2018
—
—
Common stock Class C, $0.001 par value;
30,000,000 shares authorized; 0 shares issued and outstanding at
June 27, 2019 and December 27, 2018
—
—
Additional paid-in capital
353,450
340,462
Accumulated other comprehensive income
(loss), net
(361
)
186
Retained earnings
317,700
243,563
Total stockholders’ equity
670,888
584,309
Total liabilities and stockholders’
equity
$
2,011,124
$
1,234,091
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Twenty-six Weeks Ended
June 27,
June 28,
2019
2018
Operating activities
Net income
$
74,316
$
71,717
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
34,910
23,632
Gain on asset disposals
22
—
Amortization of tenant improvement
allowances
—
(2,165)
Deferred income taxes
(1,478)
2,822
Interest cap derivative contracts
1,250
(794)
Stock based compensation expense
4,418
2,952
Changes in operating assets and
liabilities:
Receivables, net
15,809
12,697
Inventories, net
24,618
(14,989)
Trade accounts payable
(40,808)
6,257
Accrued expenses and other current
liabilities
9,058
(21,912)
Income taxes
1,541
(5,320)
Deferred revenue
1,723
2,441
Deferred rent
—
4,955
Tenant improvement allowances
—
3,034
Other, net
(3,222)
(1,404)
Net cash provided by operating
activities
122,157
83,923
Investing activities
Purchases of fixed assets
(78,172)
(63,438)
Net cash used in investing activities
(78,172)
(63,438)
Financing activities
Borrowings on revolving line of credit
95,300
129,300
Payments on revolving line of credit
(95,300)
(156,700)
Payments on term loans
(1,750)
(1,750)
Proceeds from exercise of stock
options
7,152
8,656
Proceeds from employee stock purchase
plan
1,419
—
Net cash provided by (used in) financing
activities
6,821
(20,494)
Net increase (decrease) in cash and cash
equivalents
50,806
(9)
Cash and cash equivalents, beginning of
the period
644
556
Cash and cash equivalents, end of the
period
$
51,450
$
547
Supplemental disclosures of cash flow
information
Buildings and equipment acquired under
operating leases
$
132,213
$
—
Cash paid for interest
$
3,912
$
3,844
Cash paid for income taxes
$
12,099
$
637
Fixed assets accrued at the end of the
period
$
25,420
$
18,596
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In thousands, except EPS)
(Unaudited)
Adjusted net income and Adjusted
diluted EPS
Thirteen Weeks Ended
6/27/2019
6/28/2018
Net income (GAAP):
$
43,596
$
39,846
Secondary offering costs (a)
180
815
Hurricane disaster recovery (b)
—
(205
)
Store Support Center relocation and
distribution center closure (c)
1,819
581
Tax benefit of stock option exercises
(d)
(9,843
)
(12,511
)
Tax impact of adjustments to net income
(e)
(415
)
(153
)
Adjusted net income
$
35,337
$
28,373
Diluted weighted average shares
outstanding
104,840
104,937
Adjusted diluted EPS
$
0.34
$
0.27
Twenty-six Weeks Ended
6/27/2019
6/28/2018
Net income (GAAP):
$
74,316
$
71,717
Secondary offering costs (a)
573
815
Hurricane disaster (recovery) expenses
(b)
—
(516
)
Store Support Center relocation and
distribution center closure (c)
3,415
581
Tax benefit of stock option exercises
(d)
(12,341
)
(17,413
)
Tax impact of adjustments to net income
(e)
(666
)
(80
)
Adjusted net income
$
65,297
$
55,104
Adjusted diluted weighted average shares
outstanding
104,606
104,808
Adjusted diluted EPS
$
0.62
$
0.53
(a)
Reflects costs accrued in connection with
secondary public offerings of the Company’s common stock by certain
of the Company’s stockholders. The Company did not sell any shares
in these offerings and did not receive any proceeds from the sales
of shares by the selling stockholders.
(b)
Reflects net insurance recoveries from
hurricanes Harvey and Irma.
(c)
Amounts for the thirteen and twenty-six
weeks ended June 27, 2019, relate to costs incurred in connection
with the relocation of the Company’s Store Support Center and
closure of the Miami distribution center. Amounts for the thirteen
and twenty-six weeks ended June 28, 2018, relate to costs incurred
in connection with the closure of the Company’s Miami distribution
center.
(d)
Tax benefit due to stock option accounting
(ASU No. 2016-09).
(e)
Adjustment for taxes related to pre-tax
adjustments above and miscellaneous tax reserves related to prior
years.
EBITDA and Adjusted EBITDA
Thirteen Weeks Ended
6/27/2019
6/28/2018
Net income (GAAP):
$
43,596
$
39,846
Depreciation and amortization (a)
17,392
10,683
Interest expense
2,223
2,145
Income tax expense (benefit)
76
(4,746
)
EBITDA
63,287
47,928
Stock compensation expense (b)
2,168
1,537
Gain on asset disposal
(22
)
—
Other (c)
1,159
1,218
Adjusted EBITDA
$
66,592
$
50,683
Twenty-six Weeks Ended
6/27/2019
6/28/2018
Net income (GAAP):
$
74,316
$
71,717
Depreciation and amortization (a)
34,263
20,911
Interest expense
5,144
3,929
Income tax expense (benefit)
6,197
(1,895
)
EBITDA
119,920
94,662
Stock compensation expense (b)
4,418
2,952
Gain on asset disposal
(22
)
—
Other (c)
2,344
896
Adjusted EBITDA
$
126,660
$
98,510
(a)
Excludes deferred financing amortization,
which is included as a part of interest expense in the table above.
For the thirteen and twenty-six weeks ended June 28, 2018, amounts
are also net of amortization of tenant improvement allowances.
(b)
Non-cash charges related to stock-based
compensation programs, which vary from period to period depending
on 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 twenty-six weeks ended
June 27, 2019, primarily relate to costs and expenses associated
with secondary public offerings of the Company’s common stock by
certain of the Company’s stockholders, the relocation of the
Company’s Store Support Center, and the closure of the Company’s
Miami distribution center. Amounts for the thirteen and twenty-six
weeks ended June 28, 2018, primarily relate to costs associated
with secondary public offerings of the Company’s common stock by
certain of the Company’s stockholders and the closure of the
Company’s Miami distribution center, net of insurance recoveries
from hurricanes Harvey and Irma.
Reconciliation of GAAP to Non-GAAP
Financial Measures
Third Quarter 2019 Earnings
Outlook
(In millions, except per share data)
(Unaudited)
Certain numbers may not sum due to
rounding
Adjusted net income and Adjusted
diluted EPS
Thirteen Weeks Ended
9/26/2019
9/27/2018
Low End
High End
Actual
Net income (GAAP):
$
23.5
$
24.8
$
26.6
Secondary offering costs (a)
—
—
0.3
Store Support Center relocation and
distribution center closure (b)
3.4
3.4
0.7
Tax benefit of stock option exercises
(c)
—
—
(0.7
)
Deferred tax adjustment for tax reform and
other credits (d)
—
—
(1.2
)
Tax impact of adjustments to net income
(e)
(0.8
)
(0.8
)
(0.1
)
Adjusted net income
$
26.1
$
27.4
$
25.5
Diluted weighted average shares
outstanding
104.9
104.9
104.6
Adjusted diluted EPS
$
0.25
$
0.26
$
0.24
(a)
Reflects costs incurred in connection with
secondary public offerings of the Company’s common stock by certain
of the Company’s stockholders. The Company did not sell any shares
in the offering and did not receive any proceeds from the sales of
shares by the selling stockholders.
(b)
For the thirteen weeks ending September
26, 2019, reflects costs associated with the relocation of the
Company’s Store Support Center and the closure of the Company’s
Miami distribution center. For the thirteen weeks ended September
27, 2018, amounts reflect costs associated with the closure of the
Company’s Miami distribution center.
(c)
Tax benefit due to stock option
exercises.
(d)
Adjustment reflects the impact of tax rate
changes resulting from tax reform on temporary differences as
reported in the 2017 tax return as compared to what was originally
recorded in the fiscal 2017 provision and other credits.
(e)
Adjustments for taxes related to pre-tax
adjustments above
EBITDA and Adjusted
EBITDA
Thirteen Weeks Ended
9/26/2019
9/27/2018
Low End
High End
Actual
Net income (GAAP):
$
23.5
$
24.8
$
26.6
Depreciation and amortization (a)
19.0
19.0
12.0
Interest expense
2.3
2.3
2.2
Income tax expense
7.3
7.5
5.5
EBITDA
52.1
53.6
46.2
Stock compensation expense (b)
2.3
2.3
1.7
Other (c)
2.6
2.6
1.0
Adjusted EBITDA
$
57.0
$
58.5
$
48.9
(a)
Excludes deferred financing amortization
which is included as a part of interest expense in the table above.
For the thirteen weeks ended September 27, 2018, amounts are net of
tenant improvement allowances.
(b)
Non-cash charges related to stock-based
compensation programs, which vary from period to period depending
on timing of awards and forfeitures.
(c)
Other adjustments include amounts
management does not consider indicative of our core operating
performance. Amounts for the thirteen weeks ending September 26,
2019 primarily relate to costs associated with the relocation of
the Company’s Store Support Center and the closure of the Company’s
Miami distribution center. Amounts for the thirteen weeks ended
September 27, 2018 primarily relate to costs associated with
secondary public offerings of the Company’s common stock by certain
of the Company’s stockholders and the closure of the Company’s
Miami distribution center.
Reconciliation of GAAP to
Non-GAAP Financial Measures
Fiscal Year 2019 Earnings
Outlook
(In millions, except per share
data)
(Unaudited)
Certain numbers may not sum due
to rounding
Adjusted net income and
Adjusted diluted EPS
Year Ended
12/26/2019
12/27/2018
Low End
High End
Actual
Net income (GAAP):
$
119.6
$
123.2
$
116.2
Secondary offering costs (a)
0.6
0.6
1.1
Hurricane disaster recovery (b)
—
—
(0.5
)
Store Support Center relocation and
distribution center closure (c)
7.6
7.6
7.1
Tax benefit of stock option exercises
(d)
(12.3
)
(12.3
)
(19.7
)
Deferred tax adjustment for tax reform and
other credits (e)
—
—
(1.2
)
Tax impact of adjustments to net income
(f)
(1.8
)
(1.8
)
(1.6
)
Adjusted net income
$
113.7
$
117.3
$
101.5
Diluted weighted average shares
outstanding
104.7
104.7
104.6
Adjusted diluted EPS
$
1.09
$
1.12
$
0.97
(a)
Reflects costs accrued in connection with
secondary public offerings of the Company’s common stock by certain
of the Company’s stockholders. The Company did not sell any shares
in the offerings and did not receive any proceeds from the sales of
shares by the selling stockholders.
(b)
Reflects net insurance recoveries from
hurricanes Harvey and Irma.
(c)
For the year ending December 26, 2019,
reflects costs associated with the relocation of the Company’s
Store Support Center and the closure of the Company’s Miami
distribution center. For the year ended December 27, 2018, amounts
reflect costs associated with the closure of the Company’s Miami
distribution center.
(d)
Tax benefit due to stock option
exercises.
(e)
Reflects the impact of tax rate changes
resulting from tax reform on temporary differences as reported in
the Company’s 2017 tax return as compared to the amount the Company
originally recorded for such impacts in fiscal 2017 and other
credits.
(f)
Adjustment for taxes related to pre-tax
adjustments above.
EBITDA and Adjusted EBITDA
Year Ended
12/26/2019
12/27/2018
Low End
High End
Actual
Net income (GAAP):
$
119.6
$
123.2
$
116.2
Depreciation and amortization (a)
74.3
74.3
46.3
Interest expense
9.8
9.8
8.9
Income tax expense
19.7
21.1
6.2
EBITDA
223.4
228.4
177.6
Stock compensation expense (b)
9.1
9.1
6.5
Other (c)
5.5
5.5
7.8
Adjusted EBITDA
$
238.0
$
243.0
$
191.9
(a)
Excludes deferred financing amortization
which is included as a part of interest expense in the table above.
For the year ended December 27, 2018, amounts are net of tenant
improvement allowances.
(b)
Non-cash charges related to stock-based
compensation programs, which vary from period to period depending
on timing of awards and forfeitures
(c)
Other adjustments include amounts
management does not consider indicative of our core operating
performance. Amounts for the year ending December 26, 2019
primarily relate to costs associated with secondary public
offerings of the Company’s common stock by certain of the Company’s
stockholders, the relocation of the Company’s Store Support Center,
and the closure of the Company’s Miami distribution center. Amounts
for the year ended December 27, 2018 primarily relate to costs
associated with secondary public offerings of the Company’s common
stock by certain of the Company’s stockholders and the closure of
the Company’s Miami distribution center, net of insurance
recoveries from hurricanes Harvey and Irma.
Forward-Looking Statements
This release and the associated webcast/conference call contain
forward-looking statements, including with respect to the Company’s
estimated net sales, comparable store sales growth, diluted EPS,
Adjusted diluted EPS, diluted weighted average shares outstanding,
Adjusted EBITDA, warehouse format store count and new warehouse
format stores for both the thirteen weeks ending September 26,
2019, and all of fiscal 2019 and with respect to the Company’s
estimated depreciation and amortization expenses, interest expense,
tax rate and capital expenditures for fiscal 2019. 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 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 recent natural disasters on sales.
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 2018 filed with
the Securities and Exchange Commission (the “SEC”) on February 25,
2019 (the “Annual Report”) and in the Company’s Quarterly report on
Form 10-Q for the quarter ended June 27, 2019 filed with the SEC on
August 1, 2019 (the “Quarterly Report”) under the sections labeled
“Forward-Looking Statements.” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” “Legal
Proceedings” and “Risk Factors” and elsewhere in the Annual Report
and Quarterly Report.
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, including the Company’s
estimated net sales, comparable store sales growth, diluted EPS,
Adjusted diluted EPS, diluted weighted average shares outstanding,
Adjusted EBITDA, warehouse format store count and new warehouse
format stores for both the thirteen weeks ending September 26,
2019, and all of fiscal 2019 and with respect to the Company’s
estimated depreciation and amortization expenses, interest expense,
tax rate and capital expenditures for fiscal 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005839/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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