ATLANTA–Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the fourth quarter and fiscal year ended December 31, 2020, which included an additional week of operations (53rd week) compared to the prior year. Tom Taylor, Chief Executive Officer, stated, “We are very pleased with our fiscal 2020 fourth quarter and full-year 2020 earnings results, which reflect exceptional execution by our associates and their tireless efforts towards serving our customers and each other during the COVID-19 pandemic.
“Driven by strong transactions and broad-based regional and category growth, our fiscal 2020 fourth-quarter comparable store sales increased 21.6%, the strongest quarterly growth rate of the year. For the full year, our fiscal 2020 comparable store sales increased 5.5%, a significant achievement considering the impact of the COVID-19 pandemic on our store operations beginning in late March. Our fiscal 2020 fourth quarter total net sales exceeded our expectations, increasing $196.7 million to $723.7 million, an increase of 37.3% from the fourth quarter of fiscal 2019. Our fiscal 2020 fourth quarter adjusted EBITDA* also exceeded our expectations improving to a record $97.6 million, an increase of 65.9% from the fourth quarter of fiscal 2019. We are encouraged by our fiscal 2020 fourth quarter comparable store sales growth exit rate and the strong start to fiscal 2021.”
Mr. Taylor continued, “We opened five new warehouse stores in the fourth quarter of fiscal 2020, bringing the total number of warehouse stores that we operate to 133 and two design studios in 31 states at the end of fiscal 2020. As we look to fiscal 2021, we expect to open seven new warehouse stores in the first quarter of fiscal 2021, more than double the three new warehouse stores we opened in the first quarter of fiscal 2020. For the fiscal 2021 full year, we intend to return to 20% annual unit growth following having to slow growth in 2020 due to the impact of the COVID-19 pandemic. We have planned for a strong and balanced quarterly store opening pipeline of 27 new warehouse stores in fiscal 2021, an increase of 20.3% from 2020.”
Our fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31. Our fiscal year ended December 31, 2020 (fiscal 2020) included an additional week of operations (53rd week) compared to the fiscal year ended December 26, 2019 (fiscal 2019) and the fiscal year ending December 30, 2021 (fiscal 2021). Please see “Comparable Store Sales” below for information on how the Company calculates its comparable store sales growth.
For the Fiscal Quarter Ended December 31, 2020
- Net sales increased 37.3% to $723.7 million from $527.0 million in the fourth quarter of fiscal 2019.
- Comparable store sales increased 21.6%.
- The Company opened five new warehouse-format stores during the fourth quarter of fiscal 2020, ending the quarter with 133 warehouse-format stores and two design studios.
- Operating income increased 61.5% to $68.0 million from $42.1 million in the fourth quarter of fiscal 2019. Operating margin increased 140 basis points to 9.4%. The fourth quarter of fiscal 2019 included income of $14.0 million related to estimated tariff refunds.
- Net income increased 61.7% to $57.1 million compared to $35.3 million in the fourth quarter of fiscal 2019. Diluted EPS was $0.54 compared to $0.34 in the fourth quarter of fiscal 2019, an increase of 58.8%.
- Adjusted net income* increased 86.0% to $50.2 million compared to $27.0 million in the fourth quarter of fiscal 2019. Adjusted diluted EPS* was $0.47 compared to $0.26 in the fourth quarter of fiscal 2019, an increase of 80.8%.
- Adjusted EBITDA* increased 65.9% to $97.6 million compared to $58.8 million in the fourth quarter of fiscal 2019.
For the Fiscal Year Ended December 31, 2020
- Net sales increased 18.6% to $2,425.8 million from $2,045.5 million in fiscal 2019.
- Comparable store sales increased 5.5%.
- The Company opened 13 new warehouse-format stores and one design studio.
- Operating income increased 34.8% to $214.6 million from $159.2 million in fiscal 2019. Operating margin increased 100 basis points to 8.8%.
- Net income increased 29.4% to $195.0 million compared to $150.6 million in fiscal 2019. Diluted EPS was $1.84 compared to $1.44 in fiscal 2019, an increase of 27.8%.
- Adjusted net income* increased 32.4% to $159.3 million compared to $120.3 million in fiscal 2019. Adjusted diluted EPS* was $1.50 compared to $1.15 in fiscal 2019, an increase of 30.4%.
- Adjusted EBITDA* increased 33.1% to $323.0 million compared to $242.6 million in fiscal 2019.
Estimated 53rd Week Impact
We estimate that the 53rd week added the following amounts in fiscal 2020:
- Net sales of $41.8 million;
- Operating income of $8.5 million;
- Net income of $6.4 million and diluted EPS of $0.06;
- Adjusted EBITDA* of $8.8 million.
*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.
Fiscal 2021 Outlook
The COVID-19 pandemic had a material negative impact on our financial results during the first two quarters of fiscal 2020. While our financial results improved during the second half of fiscal 2020 relative to the first half of the year, the full impact that the pandemic could have on the broader economy and our business in fiscal 2021 remains highly uncertain. We continue to monitor the situation closely with regards to 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 pandemic on our business cannot be reasonably estimated at this time, and we are planning for fiscal 2021 based on a range of potential outcomes. Due to the continued uncertainty regarding the ongoing impacts of the COVID-19 pandemic and the associated complexity of forecasting, we are providing select annual guidance for new store openings and certain other financial measures that we believe we can reasonably forecast.
Outlook for the Fiscal Year (Fifty-two weeks) 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 $440 million to $460 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 fourth quarter fiscal 2020 financial results is scheduled for today, February 25, 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 13715433. The replay will be available until March 4, 2021.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer operating 133 warehouse-format stores and two design studios across 31 states at the end of the fourth quarter of fiscal 2020. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate/luxury vinyl plank, 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, 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.
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