LL Flooring Holdings, Inc. (“LL Flooring” or “Company”) (NYSE:
LL), a leading specialty retailer of hard-surface flooring in the
U.S., today announced financial results for the quarter ended March
31, 2023.
“As expected, the first quarter was very challenging and our
performance reflected the impact the difficult macro backdrop had
on discretionary home improvement spending. In addition, we
continue to experience pressure from brand awareness and
operational challenges that impacted first quarter results. Despite
the near-term volatility, we remain focused on areas of improvement
that will help stabilize our results and drive long-term growth
opportunities. These include further broadening and growing our
brand awareness among consumers to drive traffic; ensuring a
consistent customer experience across our omnichannel network to
improve conversion; and improving operating efficiencies by
actively working to reduce costs while focusing investments on our
top growth priorities,” said President and Chief Executive Officer
Charles Tyson.
Tyson continued, “Despite the headwinds that we are facing, we
remain confident in our ability to deliver the high-touch service
of an independent flooring retailer combined with the value,
assortment and convenience of a national brand. To that end, we
continue to execute on our strategic initiatives of growing sales
to Pro customers, building brand awareness, improving the customer
experience and innovating new products. Additionally, in response
to customer feedback, we have launched a new category pilot in
carpet in four stores with plans to be in 20 additional stores by
the end of the second quarter as we serve as the comprehensive
flooring solution provider for our customers. We are also pleased
to announce we are opening a third distribution center in Dallas in
the third quarter which will further optimize our supply chain
network.”
Tyson concluded, “As we look to the remainder of 2023, we expect
the macro backdrop to remain challenging as elevated inflation and
higher interest rates drive a more cautious consumer and pressure
higher ticket discretionary purchases. We have also been impacted
by the enforcement of the Uyghur Forced Labor Prevention Act
("UFLPA") as it relates to the importation of polyvinyl chloride
(PVC) which is resulting in delays in receipt of certain vinyl
flooring products. We are diligently working to provide the
additional documentation that has been requested by U.S. Customs.
During Q1, we experienced continued delays, incremental expenses
and lost sales as a result of detention notices within the vinyl
product category. Together these factors have limited our sales
visibility for the balance of the year. Despite these challenges,
we remain focused on driving sales through our initiatives, and we
are working diligently to align our cost structure with the help of
outside consultants. Importantly, looking beyond 2023, the medium
to long-term outlook for repair and remodel spending remains strong
and we remain confident in the long-term fundamentals of our
business.”
First Quarter Financial Highlights
- Net sales of $240.7 million decreased 13.7% compared to
the same period last year, driven by lower spending by consumers
versus last year combined with a decline in Pro sales.
- Total comparable store sales decreased 15.4% versus the
same period last year.
- Gross margin of 36.6% decreased 70 basis points as a
percentage of sales, driven by $2.1 million in incremental costs
related to customs delays on flooring products that contain PVC as
a consequence of the UFLPA.
- Excluding the vinyl charges, adjusted gross margin1 of 37.4%
increased 20 basis points as a percentage of net sales compared to
the same period last year, primarily reflecting the Company's
ability to offset higher material and transportation costs
(collectively up more than 500 basis points) through pricing,
promotion and alternative country/vendor sourcing strategies.
- SG&A as a percentage of net sales of 42.0% increased
650 basis points compared to the first quarter of last year and
included a $0.3 million charge for legal fees charged to earnings
related to CBP requests for additional documentation on imports of
flooring products that contain PVC as a consequence of the UFLPA.
Excluding the impact of the legal fees, Adjusted SG&A1 as a
percentage of net sales of 41.9% increased 640 basis points
compared to the first quarter of last year.
- The increases in both SG&A and Adjusted SG&A as a
percentage of net sales were due primarily to expense deleverage
from lower sales volumes.
- In addition, operating expenses were higher due to the planned
investments in our growth strategies including: costs associated
with new stores, investments in technology and digital enhancements
to improve the customer experience, and consulting fees related to
realigning our cost structure, as well as inflationary cost
increases. The increase was partially offset by restructuring cost
savings and lower variable costs due to lower sales volume.
- Operating margin of (5.5)% decreased 730 basis points
compared to the first quarter of last year. Adjusted operating
margin1 of (4.5)% decreased 620 basis points compared to the first
quarter of last year.
- Loss per Diluted Share of $0.37 decreased $0.51 compared
to the first quarter of last year. Adjusted Loss Per Diluted Share1
of $0.31 decreased $0.44 compared to the first quarter of last
year.
- During the first quarter, the Company opened one new
store, bringing total stores to 443 as of March 31,
2023.
1Please refer to the “Non-GAAP and Other Information” section
and the GAAP to non-GAAP reconciliation tables below for more
information.
Cash Flow & Liquidity
As of March 31, 2023, the Company had liquidity of $157 million,
consisting of excess availability under its Credit Agreement of
$150 million, and cash and cash equivalents of $7 million.
During the first quarter of 2023, the Company generated $26
million of cash flows from operating activities primarily driven by
sell throughs of merchandise inventories rebuilt from the prior
year end and reduced inventory purchases.
2023 Business Outlook
The Company continues to navigate uncertainty in the
macroeconomic environment due to consumer confidence, inflation, a
volatile interest and mortgage rate environment and lower existing
home sales. As a result, the Company is not providing financial
guidance at this time.
The Company is, however, providing the following commentary. The
Company expects:
- Full year revenues to continue to be challenged due to macro
uncertainty further exacerbated by the customs delays related to
the UFLPA. The timing and resolution of the customs hold is unknown
and difficult to forecast. In addition, the company continues to
focus on areas of improvement including increasing brand awareness
and ensuring a seamless customer experience.
- Adjusted gross margins are expected to improve year-over-year,
with a stronger second half, driven primarily by a reduction in
international shipping rates and sourcing costs. The Company will
continue to monitor the competitive pricing environment to inform
its pricing and promotion strategies. In addition, the Company
expects its gross margin rate in 2023 to benefit from a greater mix
of our premium Duravana brand which carries higher margins and
delivers on customer needs for scratch-resistant and waterproof
flooring.
- SG&A dollar spend and SG&A spend as a percentage of
sales are expected to increase year-over-year, primarily due to
continued deleverage from lower sales volumes, inflationary
pressures on wages and benefits and investments in its new
distribution center and customer relationship management platform,
which it expects will support higher sales levels and make its
operating structure more efficient over time. The Company has
engaged consultants to undergo a comprehensive strategic review of
the cost structure.
- Capital expenditures in the range of approximately $15 million
to $20 million in 2023, primarily to support the new distribution
center, productivity investments, maintenance CapEx and three store
openings.
Learn More about LL Flooring
- Our commitment to quality, compliance, the communities we serve
and corporate giving: https://llflooring.com/corp/quality.html
- Follow us on social media: Facebook, Instagram and
Twitter.
Conference Call and Webcast Information
The Company plans to host a conference call and audio webcast on
May 8, 2023, at 8:00 a.m. Eastern Time. The conference may be
accessed by dialing (833) 470-1428 or (404) 975-4839 and entering
pin number 223759. A replay will be available approximately two
hours after the call ends through June 5, 2023 and may be accessed
by dialing (929) 458-6194 and entering pin number 972837. The live
conference call and replay can also be accessed via audio webcast
at the Investor Relations section of the Company's website,
www.LLFlooring.com.
About LL Flooring
LL Flooring is one of the country’s leading specialty retailers
of hard-surface flooring with more than 440 stores nationwide. The
Company seeks to offer the best customer experience online and in
stores, with more than 500 varieties of hard-surface floors
featuring a range of quality styles and on-trend designs. LL
Flooring's online tools also help empower customers to find the
right solution for the space they've envisioned. LL Flooring's
extensive selection includes waterproof hybrid resilient,
waterproof vinyl plank, solid and engineered hardwood, laminate,
bamboo, porcelain tile, and cork, with a wide range of flooring
enhancements and accessories to complement. LL Flooring stores are
staffed with flooring experts who provide advice, Pro partnership
services and installation options for all of LL Flooring's
products, the majority of which is in stock and ready for
delivery.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release includes statements of the Company’s
expectations, intentions, plans and beliefs that constitute
“forward-looking statements” within the meanings of the Private
Securities Litigation Reform Act of 1995. These statements, which
may be identified by words such as “may,” “will,” “should,”
“expects,” “intends,” “plans,” “anticipates,” “assumes,”
“believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,”
“projects,” “targets,” “potential,” “will likely result,” and other
similar terms and phrases, are based on the beliefs of the
Company’s management, as well as assumptions made by, and
information currently available to, the Company’s management as of
the date of such statements. These statements are subject to risks
and uncertainties, all of which are difficult to predict and many
of which are beyond the Company’s control.
The Company specifically disclaims any obligation to update
these statements, which speak only as of the dates on which such
statements are made, except as may be required under the federal
securities laws. For a discussion of the risks and uncertainties
that could cause actual results to differ from those contained in
the forward-looking statements, see the “Risk Factors” section of
the Company’s annual report on Form 10-K for the year ended
December 31, 2022, and the Company’s other filings with the
Securities and Exchange Commission (“SEC”). Such filings are
available on the SEC’s website at www.sec.gov and the Company’s
Investor Relations website at https://investors.llflooring.com.
Non-GAAP and Other Information
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses the following non-GAAP financial measures in the body of this
press release and in the supplemental tables at the end of the
release: (i) Adjusted Gross Profit; (ii) Adjusted Gross Margin;
(iii) Adjusted SG&A; (iv) Adjusted SG&A as a Percentage of
Net Sales; (v) Adjusted Operating (Loss) Income; (vi) Adjusted
Operating Margin; (vii) Adjusted Other Expense; (viii) Adjusted
Other Expense as a Percentage of Net Sales; (ix) Adjusted (Loss)
Earnings; and (x) Adjusted (Loss) Earnings per Diluted Share. These
non-GAAP financial measures should be viewed in addition to, and
not in lieu of, financial measures calculated in accordance with
GAAP. These supplemental measures may vary from, and may not be
comparable to, similarly titled measures by other companies.
The non-GAAP financial measures are presented because we believe
the non-GAAP financial measures provide useful information to
management and investors regarding certain financial and business
trends related to our financial condition and results of
operations, These measures provide an additional tool for investors
to use in evaluating our ongoing operating performance, and
management, in certain cases, uses them to determine incentive
compensation. The presented non-GAAP financial measures exclude
items that management does not believe reflect our core operating
performance, which include incremental costs of sales and
associated legal costs related to disruptions to supply chain and
other trade regulations and changes in antidumping and
countervailing duties, as such items are outside of our control or
due to their inherent unusual, non-operating, unpredictable,
non-recurring, or non-cash nature. Reconciliations of these
non-GAAP financial measures are provided on the pages that follow
(certain numbers may not sum due to rounding).
(Tables Follow)
LL Flooring Holdings,
Inc.
Condensed Consolidated Balance
Sheets (Unaudited)
In Thousands
March 31,
December 31,
2023
2022
Assets
Current Assets:
Cash and Cash Equivalents
$
6,977
$
10,800
Merchandise Inventories
307,738
332,296
Prepaid Expenses
10,443
9,054
Other Current Assets
14,441
17,598
Total Current Assets
339,599
369,748
Property and Equipment, net
100,421
101,758
Operating Lease Right-of-Use Assets
125,096
123,172
Net Deferred Tax Assets
17,533
13,697
Other Assets
5,628
5,578
Total Assets
$
588,277
$
613,953
Liabilities and Stockholders’
Equity
Current Liabilities:
Accounts Payable
$
54,361
$
47,733
Customer Deposits and Store Credits
46,560
43,767
Accrued Compensation
6,429
9,070
Sales and Income Tax Liabilities
3,462
3,574
Accrual for Legal Matters and
Settlements
21,494
22,159
Operating Lease Liabilities - Current
30,564
34,509
Other Current Liabilities
24,680
19,712
Total Current Liabilities
187,550
180,524
Other Long-Term Liabilities
6,192
6,162
Operating Lease Liabilities -
Long-Term
101,219
99,186
Credit Agreement
47,000
72,000
Total Liabilities
341,961
357,872
Commitments and Contingencies
Stockholders’ Equity:
Common Stock ($0.001 par value; 35,000
shares authorized; 30,916 and 30,758 shares issued and 28,798 and
28,695 shares outstanding at March 31, 2023, and December 31, 2022,
respectively)
31
31
Treasury Stock, at cost (2,118 and 2,063
shares, respectively)
(153,562
)
(153,331
)
Additional Capital
232,890
231,839
Retained Earnings
166,957
177,542
Total Stockholders’ Equity
246,316
256,081
Total Liabilities and Stockholders’
Equity
$
588,277
$
613,953
LL Flooring Holdings,
Inc.
Condensed Consolidated
Statements of Operations (Unaudited)
In Thousands, Except per Share
Amounts
Three Months Ended March
31,
2023
2022
Net Sales
Net Merchandise Sales
$
210,497
$
244,271
Net Services Sales
30,201
34,761
Total Net Sales
240,698
279,032
Cost of Sales
Cost of Merchandise Sold
128,397
147,419
Cost of Services Sold
24,301
27,534
Total Cost of Sales
152,698
174,953
Gross Profit
88,000
104,079
Selling, General and Administrative
Expenses
101,185
99,025
Operating (Loss) Income
(13,185
)
5,054
Other Expense (Income)
1,159
(15
)
(Loss) Income Before Income
Taxes
(14,344
)
5,069
Income Tax (Benefit) Expense
(3,759
)
1,032
Net (Loss) Income and Comprehensive
(Loss) Income
$
(10,585
)
$
4,037
Net (Loss) Income per Common
Share—Basic
$
(0.37
)
$
0.14
Net (Loss) Income per Common
Share—Diluted
$
(0.37
)
$
0.14
Weighted Average Common Shares
Outstanding:
Basic
28,717
29,145
Diluted
28,717
29,417
LL Flooring Holdings,
Inc.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
In Thousands
Three Months Ended March
31,
2023
2022
Cash Flows from Operating
Activities:
Net (Loss) Income
$
(10,585
)
$
4,037
Adjustments to Reconcile Net (Loss)
Income:
Depreciation and Amortization
4,669
4,492
Deferred Income Taxes (Benefit)
Provision
(3,836
)
157
Income on Vouchers Redeemed for Legal
Settlements
(253
)
(423
)
Stock-Based Compensation Expense
1,051
873
Provision for Inventory Obsolescence
Reserves
572
(110
)
Gain on Disposal of Fixed Assets
—
(9
)
Changes in Operating Assets and
Liabilities:
Merchandise Inventories
23,574
(64,793
)
Accounts Payable
8,045
26,037
Customer Deposits and Store Credits
2,793
2,251
Prepaid Expenses and Other Current
Assets
1,826
(2,448
)
Accrued Compensation
(2,641
)
(2,523
)
Other Assets and Liabilities
934
9,058
Net Cash Provided by (Used in)
Operating Activities
26,149
(23,401
)
Cash Flows from Investing
Activities:
Purchases of Property and Equipment
(4,741
)
(5,250
)
Other Investing Activities
—
61
Net Cash Used in Investing
Activities
(4,741
)
(5,189
)
Cash Flows from Financing
Activities:
Borrowings on Credit Agreement
66,000
—
Payments on Credit Agreement
(91,000
)
—
Common Stock Repurchased
(231
)
(810
)
Other Financing Activities
—
282
Net Cash Used in Financing
Activities
(25,231
)
(528
)
Net Decrease in Cash and Cash
Equivalents
(3,823
)
(29,118
)
Cash and Cash Equivalents, Beginning of
Period
10,800
85,189
Cash and Cash Equivalents, End of
Period
$
6,977
$
56,071
Supplemental Disclosure of Non-Cash
Operating and Financing Activities:
Relief of Inventory for Vouchers Redeemed
for Legal Settlements
$
412
$
714
Tenant Improvement Allowance for
Leases
(66
)
(665
)
LL Flooring Holdings,
Inc.
GAAP to Non-GAAP
Reconciliation
Items impacting gross margin with
comparisons to the prior-year periods include:
Three Months Ended March
31,
2023
2022
$
% of Sales
$
% of Sales
(in thousands, except
percentage data)
Gross Profit/Margin, as reported
(GAAP)
$
88,000
36.6
%
$
104,079
37.3
%
Vinyl Charges1
2,138
0.9
%
—
—
%
Antidumping and Countervailing
Adjustments2
—
—
%
(241
)
(0.1
)%
Adjustment Items Subtotal
2,138
0.9
%
(241
)
(0.1
)%
Adjusted Gross Profit/Margin (non-GAAP
measures)
$
90,138
37.4
%
$
103,838
37.2
%
1
This amount represents costs related to
customs delays on flooring products that contain PVC as a
consequence of the UFLPA.
2
This amount represents net antidumping and
countervailing income associated with applicable prior-year
shipments of engineered hardwood from China.
Items impacting SG&A with comparisons
to the prior-year periods include:
Three Months Ended March
31,
2023
2022
$
% of Sales
$
% of Sales
(in thousands, except
percentage data)
SG&A, as reported (GAAP)
$
101,185
42.0
%
$
99,025
35.5
%
Legal and Professional Fees3
280
0.1
%
—
—
%
Adjusted SG&A (a non-GAAP measure)
$
100,905
41.9
%
$
99,025
35.5
%
1
This amount represents incremental legal
fees charged to earnings related to CBP requests for additional
documentation on imports of flooring products that contain PVC as a
consequence of the UFLPA. This does not include all legal costs
incurred by the Company.
LL Flooring Holdings,
Inc.
GAAP to Non-GAAP
Reconciliation
Items impacting operating (loss) income
and operating margin with comparisons to the prior-year periods
include:
Three Months Ended March
31,
2023
2022
$
% of Sales
$
% of Sales
(in thousands, except
percentage data)
Operating (Loss) Income, as reported
(GAAP)
$
(13,185
)
(5.5
)%
$
5,054
1.8
%
Gross Margin Adjustment Items:
Vinyl Charges1
2,138
0.9
%
—
—
%
Antidumping and Countervailing
Adjustments2
—
—
%
(241
)
(0.1
)%
Gross Margin Adjustment Items Subtotal
2,138
0.9
%
(241
)
(0.1
)%
SG&A Adjustment Items:
Legal and Professional Fees3
280
0.1
%
—
—
%
SG&A Adjustment Items Subtotal
280
0.1
%
—
—
%
Adjusted Operating (Loss) Income/ Margin
(a non-GAAP measure)
$
(10,767
)
(4.5
)%
$
4,813
1.7
%
1,2,3
See the Gross Profit and SG&A sections
above for more detailed explanations of these individual items.
Items impacting other expense (income)
with comparisons to the prior year periods include:
Three Months Ended March
31,
2023
2022
$
% of Sales
$
% of Sales
(in thousands, except
percentage data)
Other Expense (Income), as reported
(GAAP)
$
1,159
0.5
%
$
(15
)
—
%
Interest Impact Related to Antidumping and
Countervailing Adjustments4
—
—
%
(84
)
—
%
Adjusted Other Expense/Adjusted Other
Expense as a % of Sales (a non-GAAP measure)
$
1,159
0.5
%
$
69
—
%
4
This amount represents the interest income
impact of certain antidumping and countervailing adjustments
related to applicable prior-year shipments of engineered hardwood
from China.
LL Flooring Holdings,
Inc.
GAAP to Non-GAAP
Reconciliation
Items impacting earnings per diluted share
with comparisons to the prior-year periods include:
Three Months Ended March
31,
2023
2022
(in thousands, except per
share data)
Net (Loss) Income, as reported (GAAP)
$
(10,585
)
$
4,037
Net (Loss) Income per Diluted Share
(GAAP)
$
(0.37
)
$
0.14
Gross Margin Adjustment Items:
Vinyl Charges1
2,138
—
Antidumping and Countervailing
Adjustments2
—
(241
)
Gross Margin Adjustment Items Subtotal
2,138
(241
)
SG&A Adjustment Items:
Legal and Professional Fees3
280
—
SG&A Adjustment Items Subtotal
280
—
Other Expense (Income) Adjustment
Items:
Interest Impact Related to Antidumping and
Countervailing Adjustments4
—
(84
)
Other Expense (Income) Adjustment Items
Subtotal
—
(84
)
Income Tax Adjustment5
(636
)
85
Adjusted (Loss) Earnings
$
(8,803
)
$
3,797
Adjusted (Loss) Earnings per Diluted Share
(a non-GAAP measure)
$
(0.31
)
$
0.13
1,2,3,4
See the Gross Profit, SG&A and Other
Expense (Income) sections above for more detailed explanations of
these individual items.
5
Income tax adjustment is defined as the
sum of gross margin, SG&A, and other expense (income)
adjustment items multiplied by the Company’s federal incremental
rate, which was 26.3% for the periods ended March 31, 2023 and
2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005108/en/
LL Flooring Investor Relations ICR Bruce Williams
ir@llflooring.com Tel: 804-420-9801
LL Flooring (NYSE:LL)
過去 株価チャート
から 4 2024 まで 5 2024
LL Flooring (NYSE:LL)
過去 株価チャート
から 5 2023 まで 5 2024