ATLANTA–Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the third quarter of fiscal 2019, which ended September 26, 2019.
Tom Taylor, Chief Executive Officer, stated, “We are pleased with our third quarter 2019 earnings results as we delivered 19.5% sales growth and earnings per share that exceeded the high-end of our expectations, despite an estimated 70 basis point headwind to our comparable store sales caused by Hurricane Dorian. Our third quarter comparable store sales growth accelerated from our second quarter, in-line with our expectations. We remain particularly pleased with our new stores – the class of 2019 is currently on track to be our best class of new stores from a first year sales perspective. Collectively, the performance of our new stores, the sales trends in our existing stores, and select price increases to offset the impact of tariffs leads us to believe that we will continue to experience an acceleration in our sales trend into the fourth quarter of 2019. We remain very pleased with our merchandising and supply chain teams’ efforts to mitigate the impact of tariffs on our product costs and continue to expect a meaningful decline in the percentage of our purchase orders that originate from China by the end of 2019. While we are pleased with our third quarter results, we have updated our fourth quarter and full year outlook to reflect a softer-than-expected start to the fourth quarter.”
Mr. Taylor continued, “In the third quarter, we successfully opened seven new warehouse stores, ending the quarter with 113 warehouse stores, up 18.9% from 95 warehouse stores as of the end of the third quarter of 2018. As we look to the remainder of fiscal 2019, we expect to open seven new stores, leading to another year of 20.0% unit growth. We believe our third quarter and year-to-date 2019 results continue to validate the strength of our value proposition in the hard-surface flooring industry. I would like to thank all our associates for their hard work and their exceptional service to our customers.”
Please see “Comparable Store Sales” below for information on how the Company calculates its comparable store sales growth.
For the Thirteen Weeks Ended September 26, 2019
- Net sales increased 19.5% to $521.1 million from $435.9 million in the third quarter of fiscal 2018. Comparable store sales increased 4.6%. Comparable store sales excluding Houston increased 6.0%.
- The Company opened seven new stores during the third quarter of fiscal 2019, ending the quarter with 113 warehouse format stores.
- Operating income decreased 8.3% to $31.4 million from $34.2 million in the third quarter of fiscal 2018. Operating margin decreased 190 basis points to 6.0%. The third quarter of fiscal 2019 included a $4.1 million impairment of our right-of-use asset related to our former Store Support Center.
- Net income increased 54.2% to $41.0 million compared to $26.6 million in the third quarter of fiscal 2018. Diluted EPS was $0.39 compared to $0.25 in the third quarter of fiscal 2018.
- Adjusted net income* increased 9.9% to $28.1 million compared to $25.5 million in the third quarter of fiscal 2018. Adjusted diluted EPS* was $0.27 compared to $0.24 in the third quarter of fiscal 2018, an increase of 12.5%.
- Adjusted EBITDA* increased 16.8% to $57.1 million compared to $48.9 million in the third quarter of fiscal 2018.
For the Thirty-nine Weeks Ended September 26, 2019
- Net sales increased 19.3% to $1,518.5 million from $1,273.1 million in the same period of fiscal 2018. Comparable store sales increased 3.6%. Comparable store sales excluding Houston increased 6.2%.
- The Company opened thirteen new stores and relocated one store during the thirty-nine weeks ended September 26, 2019.
- Operating income increased 8.4% to $117.1 million from $108.0 million in the same period of fiscal 2018. Operating margin decreased 80 basis points to 7.7%. The third quarter of fiscal 2019 included a $4.1 million impairment of our right-of-use asset related to our former Store Support Center.
- Net income increased 17.3% to $115.3 million compared to $98.3 million in the same period of fiscal 2018. Diluted EPS was $1.10 compared to $0.94 in the same period of fiscal 2018.
- Adjusted net income* increased 15.8% to $93.4 million compared to $80.6 million in the same period of fiscal 2018. Adjusted diluted EPS* was $0.89 compared to $0.77 in the same period of fiscal 2018, an increase of 15.6%.
- Adjusted EBITDA* increased 24.7% to $183.8 million compared to $147.4 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.
Conference Call Details
A conference call to discuss the third quarter fiscal 2019 financial results is scheduled for today, November 1, 2019, at 9:00 a.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 13694995. The replay will be available until November 8, 2019.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer operating 113 warehouse-format stores across 28 states at the end of the third 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 Atlanta, 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.
Courtesy of -(BUSINESS WIRE)-