Floor & Decor Holdings, Inc. Announces Fourth Quarter and Fiscal 2017 Financial Results
- Net sales increased 40.0% from fourth quarter 2016 to $389.5 million
- Comparable store sales increased 24.4% from fourth quarter 2016
- Diluted earnings per share (“EPS”) increased 142.1% to $0.46 from $0.19 in the fourth quarter 2016; Adjusted diluted EPS increased 72.7% to $0.19 from $0.11 in the fourth quarter 2016
- Provides first quarter and full year fiscal 2018 guidance
ATLANTA--(BUSINESS WIRE)-- Floor & Decor Holdings, Inc. (NYSE:FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the fourth quarter of fiscal 2017, which ended December 28, 2017.
Tom Taylor, Chief Executive Officer, stated, “We are pleased to report our strongest quarter of the year as we close a successful fiscal 2017. Our investments in our people, innovative products, a connected customer experience, visual inspiration in-store and online, along with our unique large format stores and in-stock inventory model, continue to resonate with both consumers and professional customers. Fiscal 2017 marks our ninth consecutive year of double-digit comparable store sales growth, averaging 15% per year.”
Mr. Taylor continued, “As we look to fiscal 2018, we remain committed to improving on the strategies that have made us successful for nearly two decades. Given the strong backdrop and the fundamental strength of our business, we are going to use the benefits from tax reform to accelerate our strategic investments, which we believe will improve our competitive advantages and drive our planned net income growth for 2018 and beyond. I want to thank all of our associates who work hard every day to serve our customers and their communities. They are the key to our success.”
Unless indicated otherwise, the information in this release has been adjusted to give effect to a 321.820-for-one stock split of our common stock effected on April 24, 2017. See “Comparable Store Sales” below for information on how the Company calculates its comparable store sales growth.
For the Thirteen Weeks Ended December 28, 2017
- Net sales increased 40.0% to $389.5 million from $278.3 million in the fourth quarter of fiscal 2016. Comparable store sales increased 24.4%, including an estimated 800 basis point benefit from post-hurricane demand in Houston.
- The Company opened three new stores during the fourth quarter of fiscal 2017, ending the quarter with 83 warehouse format stores.
- Operating income increased 62.2% to $32.4 million from $20.0 million in the fourth quarter of fiscal 2016. Operating margin increased 110 basis points to 8.3%.
- Net income increased 187.2% to $48.0 million compared to $16.7 million in the fourth quarter of fiscal 2016. Diluted EPS was $0.46 compared to $0.19 in the fourth quarter of fiscal 2016.
- Adjusted net income* increased 76.9% to $19.9 million compared to $11.3 million in the fourth quarter of fiscal 2016. Adjusted diluted EPS* was $0.19 compared to $0.11 in the fourth quarter of fiscal 2016, an increase of 72.7%.
- Adjusted EBITDA* increased 54.5% to $43.5 million compared to $28.1 million in the fourth quarter of fiscal 2016.
For the Fiscal Year Ended December 28, 2017
- Net sales increased 31.8% to $1,384.8 million from $1,050.8 million in the same period of fiscal 2016. Comparable store sales increased 16.6%, including an estimated 200 basis point benefit from post-hurricane demand in Houston.
- The Company opened 14 new stores and relocated one store during the year ending December 28, 2017.
- Operating income increased 70.4% to $117.8 million compared to $69.1 million in the same period of fiscal 2016, which included a net $10.5 million charge to reserve for a legal settlement. Operating margin increased 190 basis points to 8.5%.
- Net income increased 138.8% to $102.8 million compared to $43.0 million in the same period of fiscal 2016. Diluted EPS was $1.03 compared to $0.49 in the same period of fiscal 2016.
- Adjusted net income* increased 58.8% to $71.0 million compared to $44.7 million in the same period of fiscal 2016. Adjusted diluted EPS* was $0.69 compared to $0.45 in the same period of fiscal 2016, an increase of 53.3%.
- Adjusted EBITDA* increased 46.5% to $158.8 million compared to $108.4 million in the same period of fiscal 2016.
*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.
Balance Sheet Highlights as of December 28, 2017
- Total liquidity was $146.7 million as of December 28, 2017, which was primarily from the availability on our revolving credit facility.
- Total debt was $193.5 million as of December 28, 2017, consisting of outstanding current and long-term portions of our secured term loan and revolving credit facilities.
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First Quarter and Fiscal 2018 Outlook |
|||||
| Thirteen Weeks Ended | |||||
| 3/29/2018 | |||||
| Net sales | $397 - $402 | ||||
| Comparable store sales | 14.0% to 15.0% | ||||
| Diluted EPS | $0.22 - $0.23 | ||||
| Diluted weighted average shares outstanding | 105.0 | ||||
| Adjusted EBITDA | $45.0 - $46.1 | ||||
| Warehouse format store count | 84 | ||||
| New warehouse format stores | 1 | ||||
|
Year Ended |
|||||
| 12/27/2018 | |||||
| Net sales | $1,690 - $1,730 | ||||
| Comparable store sales | 8.5% to 11.5% | ||||
| Diluted EPS | $0.91 - $1.00 | ||||
| Diluted weighted average shares outstanding | 105.3 | ||||
| Adjusted EBITDA | $189.0 - $201.3 | ||||
| Depreciation and amortization | Approximately $48 | ||||
| Interest expense | Approximately $10 | ||||
| Tax rate | 23.7% | ||||
| Warehouse format store count | 100 | ||||
| New warehouse format stores | 17 | ||||
| Capital Expenditures | $140 - $150 | ||||
The above guidance includes certain non-GAAP financial measures (namely adjusted EBITDA). 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 2017 financial results is scheduled for today, March 1, 2018, 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 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 13675793. The replay will be available until March 8, 2018.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer of hard surface flooring and related accessories, offering a broad in-stock assortment of tile, wood, laminate and natural stone flooring along with decorative and installation accessories at everyday low prices.
Comparable Store Sales
‘‘Comparable store sales’’ includes net sales from the Company’s stores beginning on the first day of the thirteenth full fiscal month following the store’s opening. Because the Company’s e-commerce sales are fulfilled by individual stores, they are included in comparable store sales only to the extent such fulfilling store meets the above mentioned store criteria. 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.
Non-GAAP Financial Measures
Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA (which are shown in the reconciliations below) have been presented in this earnings release 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 Adjusted diluted weighted average shares outstanding (i.e., the weighted average shares outstanding during the relevant period plus the weighted average impact of issuing shares in our initial public offering (our “IPO”). 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. |
||||||||||||||
| Thirteen Weeks Ended | ||||||||||||||
| 12/28/2017 | 12/29/2016 | % Increase | ||||||||||||
| Actual | % of Sales | Actual | % of Sales | (Decrease) | ||||||||||
| Net sales | $389,501 | 100.0 | % | $278,294 | 100.0 | % | 40.0 | % | ||||||
| Cost of sales | 227,127 | 58.3 | 163,548 | 58.8 | 38.9 | |||||||||
| Gross profit | 162,374 | 41.7 | 114,746 | 41.2 | 41.5 | |||||||||
| Operating expenses: | ||||||||||||||
| Selling & store operating expenses | 102,223 | 26.2 | 74,821 | 26.9 | 36.6 | |||||||||
| General & administrative expenses | 25,090 | 6.5 | 17,212 | 6.1 | 45.8 | |||||||||
| Pre-opening expenses | 2,660 | 0.7 | 2,743 | 1.0 | (3.0) | |||||||||
| Total operating expenses | 129,973 | 33.4 | 94,776 | 34.0 | 37.1 | |||||||||
| Operating income | 32,401 | 8.3 | 19,970 | 7.2 | 62.2 | |||||||||
| Interest expense | 2,400 | 0.6 | 5,442 | 2.0 | (55.9) | |||||||||
| Loss on early extinguishment of debt | — | — | 1,660 | 0.6 | (100.0) | |||||||||
| Income before income taxes | 30,001 | 7.7 | 12,868 | 4.6 | 133.1 | |||||||||
| Provision for income taxes | (17,975) | (4.6) | (3,839) | (1.4) | 368.2 | |||||||||
| Net income | $47,976 | 12.3 | % | $16,707 | 6.0 | % | 187.2 | % | ||||||
| Basic weighted average shares outstanding | 94,961 | 83,511 | ||||||||||||
| Diluted weighted average shares outstanding | 104,238 | 88,542 | ||||||||||||
| Basic earnings per share | $0.51 | $0.20 | 155.0 | % | ||||||||||
| Diluted earnings per share | $0.46 | $0.19 | 142.1 | % | ||||||||||
|
Year Ended |
||||||||||||||
| 12/28/2017 | 12/29/2016 | % Increase | ||||||||||||
| Actual | % of Sales | Actual | % of Sales | (Decrease) | ||||||||||
| Net sales | $1,384,767 | 100.0 | % | $1,050,759 | 100.0 | % | 31.8 | % | ||||||
| Cost of sales | 812,203 | 58.7 | 621,497 | 59.1 | 30.7 | |||||||||
| Gross profit | 572,564 | 41.3 | 429,262 | 40.9 | 33.4 | |||||||||
| Operating expenses: | ||||||||||||||
| Selling & store operating expenses | 353,647 | 25.5 | 271,876 | 25.9 | 30.1 | |||||||||
| General & administrative expenses | 84,661 | 6.1 | 64,025 | 6.1 | 32.2 | |||||||||
| Pre-opening expenses | 16,485 | 1.2 | 13,732 | 1.3 | 20.0 | |||||||||
| Litigation settlement | — | — | 10,500 | 1.0 | (100.0) | |||||||||
| Total operating expenses | 454,793 | 32.8 | 360,133 | 34.3 | 26.3 | |||||||||
| Operating income | 117,771 | 8.5 | 69,129 | 6.6 | 70.4 | |||||||||
| Interest expense | 13,777 | 1.0 | 12,803 | 1.2 | 7.6 | |||||||||
| Loss on early extinguishment of debt | 5,442 | 0.4 | 1,813 | 0.2 | 200.2 | |||||||||
| Income before income taxes | 98,552 | 7.1 | 54,513 | 5.2 | 80.8 | |||||||||
| Provision for income taxes | (4,236) | (0.3) | 11,474 | 1.1 | (136.9) | |||||||||
| Net income | $102,788 | 7.4 | % | $43,039 | 4.1 | % | 138.8 | % | ||||||
| Basic weighted average shares outstanding | 90,951 | 83,432 | ||||||||||||
| Diluted weighted average shares outstanding | 99,660 | 88,431 | ||||||||||||
| Basic earnings per share | $1.13 | $0.52 | 117.3 | % | ||||||||||
| Diluted earnings per share | $1.03 | $0.49 | 110.2 | % | ||||||||||
|
Consolidated Balance Sheets |
||||||
| As of | As of | |||||
| December 28, | December 29, | |||||
| 2017 | 2016 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 556 | $ | 451 | ||
| Income taxes receivable | 12,472 | — | ||||
| Receivables, net | 54,041 | 34,533 | ||||
| Inventories, net | 427,950 | 293,702 | ||||
| Prepaid expenses and other current assets | 8,193 | 7,529 | ||||
| Total current assets | 503,212 | 336,215 | ||||
| Fixed assets, net | 220,952 | 150,471 | ||||
| Intangible assets, net | 109,362 | 109,394 | ||||
|
Goodwill |
227,447 | 227,447 | ||||
| Other assets | 7,019 | 7,639 | ||||
| Total long-term assets | 564,780 | 494,951 | ||||
| Total assets | $ | 1,067,992 | $ | 831,166 | ||
| Liabilities and stockholders’ equity | ||||||
| Current liabilities: | ||||||
| Current portion of term loans | $ | 3,500 | $ | 3,500 | ||
| Trade accounts payable | 258,730 | 158,466 | ||||
| Accrued expenses | 74,547 | 61,505 | ||||
| Income taxes payable | — | 5,787 | ||||
| Deferred revenue | 22,523 | 14,456 | ||||
| Total current liabilities | 359,300 | 243,714 | ||||
| Term loans | 144,562 | 337,243 | ||||
| Revolving line of credit | 41,000 | 50,000 | ||||
| Deferred rent | 25,570 | 16,750 | ||||
| Deferred income tax liabilities, net | 27,218 | 28,265 | ||||
| Tenant improvement allowances | 26,779 | 20,319 | ||||
| Other liabilities | 703 | 592 | ||||
| Total long-term liabilities | 265,832 | 453,169 | ||||
| Total liabilities | 625,132 | 696,883 | ||||
| Commitments and contingencies | ||||||
| Stockholders’ equity | ||||||
| Capital stock: | ||||||
|
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0
shares |
— | — | ||||
|
Common stock Class A, $0.001 par value; 450,000,000 shares
authorized; |
96 | 77 | ||||
|
Common stock Class B, $0.001 par value; 10,000,000 shares
authorized; 0 |
— | — | ||||
|
Common stock Class C, $0.001 par value; 30,000,000 shares
authorized; 0 |
— | 6 | ||||
| Additional paid-in capital | 323,419 | 117,270 | ||||
| Accumulated other comprehensive income (loss), net | (205) | 176 | ||||
| Retained earnings | 119,550 | 16,754 | ||||
| Total stockholders’ equity | 442,860 | 134,283 | ||||
| Total liabilities and stockholders’ equity | $ | 1,067,992 | $ | 831,166 | ||
|
Consolidated Statements of Cash Flows |
|||||||
| Year Ended | Year Ended | ||||||
| December 28, | December 29, | ||||||
| 2017 | 2016 | ||||||
| Operating activities | |||||||
| Net income | $ | 102,788 | $ | 43,039 | |||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
| Depreciation and amortization | 38,062 | 28,604 | |||||
| Loss on early extinguishment of debt | 5,442 | 1,813 | |||||
| Loss on asset disposals | 128 | 451 | |||||
| Amortization of tenant improvement allowances | (3,311) | (2,561) | |||||
| Deferred income taxes | (557) | (5,536) | |||||
| Stock based compensation expense | 4,959 | 3,229 | |||||
| Changes in operating assets and liabilities: | |||||||
| Receivables, net | (19,508) | (10,793) | |||||
| Inventories, net | (134,248) | (21,133) | |||||
| Other assets | (1,591) | (4,817) | |||||
| Trade accounts payable | 100,264 | 11,145 | |||||
| Accrued expenses | 9,485 | 27,244 | |||||
| Income taxes | (18,259) | 8,271 | |||||
| Deferred revenue | 8,067 | 2,311 | |||||
| Deferred rent | 9,243 | 3,870 | |||||
| Tenant improvement allowances | 7,984 | 4,244 | |||||
| Other | 259 | 75 | |||||
| Net cash provided by operating activities | 109,207 | 89,456 | |||||
| Investing activities | |||||||
| Purchases of fixed assets | (102,253) | (74,648) | |||||
| Net cash used in investing activities | (102,253) | (74,648) | |||||
| Financing activities | |||||||
| Borrowings on revolving line of credit | 236,700 | 171,850 | |||||
| Payments on revolving line of credit | (245,700) | (214,750) | |||||
| Proceeds from term loans | — | 362,000 | |||||
| Payments on term loans | (197,500) | (98,334) | |||||
| Prepayment penalty on term loan extinguishment | — | (179) | |||||
| Debt issuance costs | (1,559) | (10,546) | |||||
| Cash dividends | — | (225,000) | |||||
| Net proceeds from initial public offering | 192,336 | — | |||||
| Proceeds from exercise of stock options | 8,874 | 284 | |||||
| Net cash used in financing activities | (6,849) | (14,675) | |||||
| Net increase in cash and cash equivalents | 105 | 133 | |||||
| Cash and cash equivalents, beginning of the period | 451 | 318 | |||||
| Cash and cash equivalents, end of the period |
|
$ |
556 |
$ |
451 | ||
| Supplemental disclosures of cash flow information | |||||||
| Cash paid for interest |
$ |
15,748 |
$ |
6,922 | |||
| Cash paid for income taxes |
$ |
14,392 |
$ |
8,929 | |||
| Fixed assets accrued at the end of the period |
$ |
8,521 |
$ |
5,387 | |||
| Fixed assets acquired as part of lease - paid for by lessor |
$ |
1,786 |
$ |
2,290 | |||
| Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||
|
(In thousands, except per share data) |
|||||||||||
|
(Unaudited) |
|||||||||||
|
Adjusted diluted weighted average shares outstanding |
|||||||||||
| Thirteen Weeks Ended | |||||||||||
| 12/28/2017 | 12/29/2016 | ||||||||||
| Diluted weighted average shares outstanding (GAAP) | 104,238 | 88,542 | |||||||||
| Adjustments for issuance of shares at IPO | — | 10,147 | |||||||||
| Adjusted diluted weighted average shares outstanding | 104,238 | 98,689 | |||||||||
| Year Ended | |||||||||||
| 12/28/2017 | 12/29/2016 | ||||||||||
| Diluted weighted average shares outstanding (GAAP) | 99,660 | 88,431 | |||||||||
| Adjustments for issuance of shares at IPO | 3,289 | 10,147 | |||||||||
| Adjusted diluted weighted average shares outstanding | 102,949 | 98,578 | |||||||||
|
Adjusted net income and Adjusted diluted EPS |
|||||||||||
| Thirteen Weeks Ended | |||||||||||
| 12/28/2017 | 12/29/2016 | ||||||||||
| Net income (GAAP): | $ | 47,976 | $ | 16,707 | |||||||
| Interest due to IPO (a) | — | 2,730 | |||||||||
| Term loan repricing (b) | — | 483 | |||||||||
| Secondary Offering costs (c) | 730 | — | |||||||||
| Hurricane disaster recovery (d) | (397) | — | |||||||||
| Loss on early extinguishment of debt (e) | — | 1,660 | |||||||||
| Tax benefit of stock option exercises (f) | (10,555) | — | |||||||||
| Tax benefit of 2016 dividend (g) | — | (8,474) | |||||||||
| Research and development tax credits (h) | (429) | — | |||||||||
| Deferred tax adjustment due to tax reform (i) | (17,842) | — | |||||||||
| Tax impact of adjustments to net income (j) | 428 | (1,852) | |||||||||
| Adjusted net income | $ | 19,911 | $ | 11,254 | |||||||
| Adjusted diluted weighted average shares outstanding | 104,238 | 98,689 | |||||||||
| Adjusted diluted earnings per share | $ | 0.19 | $ | 0.11 | |||||||
| Year Ended | |||||||||||
| 12/28/2017 | 12/29/2016 | ||||||||||
| Net income (GAAP): | $ | 102,788 | $ | 43,039 | |||||||
| Litigation settlement (k) | — | 10,500 | |||||||||
| Interest due to 2016 Refinancing (l) | — | (8,784) | |||||||||
| Interest due to IPO (a) | 4,095 | 10,920 | |||||||||
| Term loan repricing (b) | 880 | 1,948 | |||||||||
| Secondary Offerings costs (c) | 1,712 | — | |||||||||
| Hurricane disaster expenses (d) | 76 | — | |||||||||
| Loss on early extinguishment of debt (e) | 5,442 | 1,813 | |||||||||
| Tax benefit of stock option exercises (f) | (21,771) | — | |||||||||
| Tax benefit of option payments (m) | — | (8,474) | |||||||||
| Research and development tax credits (h) | (429) | — | |||||||||
| Deferred tax adjustment due to tax reform (i) | (17,842) | — | |||||||||
| Tax impact of adjustments to net income (j) | (3,930) | (6,230) | |||||||||
| Adjusted net income | $ | 71,021 | $ | 44,732 | |||||||
| Adjusted diluted weighted average shares outstanding | 102,949 | 98,578 | |||||||||
| Adjusted diluted earnings per share | $ | 0.69 | $ | 0.45 | |||||||
| (a) |
Adjustment to decrease interest expense due to utilizing net IPO proceeds of approximately $192.0 million to pay down a portion of the Term Loan Facility (as described in the Company’s Prospectus, dated November 15, 2017 and filed with the Securities and Exchange Commission on November 16, 2017 (the “Prospectus”)). |
|
| (b) |
Adjustment to reflect the decrease in interest expense due to the repricing of the Term Loan Facility (as described in the Prospectus) on March 31, 2017, to lower our interest rate by 0.75% and another 0.50% effective October 1, 2017. |
|
| (c) | Reflects costs accrued in connection with a secondary public offering of the Company’s common stock by certain of the Company’s stockholders completed on July 25, 2017 (the “July Secondary Offering”) and the November 20, 2017 Secondary Offering (the “November Secondary Offering” and, together with the July Secondary Offering, the “Secondary Offerings”). The Company did not sell any shares in the Secondary Offerings and did not receive any proceeds from the sales of shares by the selling stockholders. | |
| (d) | Expenses and losses, net of recoveries, from hurricanes Harvey and Irma. | |
| (e) | Reflects the use of net proceeds from the IPO of approximately $192.0 million to repay a portion of the amounts outstanding under the Term Loan Facility, which resulted in a loss on extinguishment of debt in the amount of approximately $5.4 million in 2017. In 2016, we recorded a $1.8 million loss as a result of the non-cash write-off of certain deferred financing fees related to term borrowings at the time of the 2016 Refinancing (as described in the Prospectus). | |
| (f) | Tax benefit due to new stock option accounting (Accounting Standards Update (“ASU”) No. 2016-09). | |
| (g) |
Tax benefit related to the 2016 Refinancing (as defined in the Prospectus). |
|
| (h) | Research and development tax credits related to prior periods recorded as a reduction of current year tax expense. | |
| (i) | Effect of our deferred tax rate adjustment to reflect the expected rate our deferred tax liabilities and assets will actualize at in future periods related to the 2017 tax reform act passed in December 2017. | |
| (j) | Adjustment for taxes related to pre-tax adjustments above. | |
| (k) | Reserve for a legal settlement recorded in second and third quarter 2016 related to a classwide settlement to resolve a class action lawsuit. | |
| (l) | Adjustment to interest expense due to higher debt associated with the 2016 Refinancing. | |
| (m) | Adjustment to fiscal 2016 taxes due to $8.5 million state and federal tax benefit related to option payments. | |
|
EBITDA and Adjusted EBITDA |
|||||||||
| Thirteen Weeks Ended | |||||||||
| 12/28/2017 | 12/29/2016 | ||||||||
| Net income (GAAP): | $ | 47,976 | $ | 16,707 | |||||
| Depreciation and amortization (a) | 9,227 | 7,151 | |||||||
| Interest expense | 2,400 | 5,441 | |||||||
| Loss on early extinguishment of debt (b) | — | 1,660 | |||||||
| Income tax expense | (17,975) | (3,839) | |||||||
| EBITDA | 41,628 | 27,121 | |||||||
| Stock compensation expense (c) | 1,406 | 1,023 | |||||||
| Loss on asset disposal | 128 | — | |||||||
| Other (d) | 332 | — | |||||||
| Adjusted EBITDA | $ | 43,494 | $ | 28,144 | |||||
|
Year Ended |
|||||||||
| 12/28/2017 | 12/29/2016 | ||||||||
| Net income (GAAP): | $ | 102,788 | $ | 43,039 | |||||
| Depreciation and amortization (a) | 33,546 | 25,089 | |||||||
| Interest expense | 13,777 | 12,803 | |||||||
| Loss on early extinguishment of debt (b) | 5,442 | 1,813 | |||||||
| Income tax expense | (4,236) | 11,474 | |||||||
| EBITDA | 151,317 | 94,218 | |||||||
| Stock compensation expense (c) | 4,959 | 3,229 | |||||||
| Loss on asset disposal | 128 | 451 | |||||||
| Litigation settlement (e) | — | 10,500 | |||||||
| Other (d) | 2,377 | — | |||||||
| Adjusted EBITDA | $ | 158,781 | $ | 108,398 | |||||
| (a) | Net of amortization of tenant improvement allowances and excludes deferred financing amortization, which is included as a part of interest expense in the table above. | |
| (b) | Reflects the use of net proceeds from the IPO of approximately $192.0 million to repay a portion of the amounts outstanding under the Term Loan Facility, which resulted in a loss on extinguishment of debt in the amount of approximately $5.4 million. In 2016, we recorded a $1.8 million loss recorded as a result of the non-cash write-off of certain deferred financing fees related to term borrowings outstanding at the time of the 2016 Refinancing. | |
| (c) | Non-cash charges related to stock-based compensation programs, which vary from period to period depending on timing of awards and forfeitures. | |
| (d) | Other adjustments include amounts management does not consider indicative of our core operating performance. Amounts for the thirteen weeks and full year ended 2017 relate to costs in connection with the IPO, Secondary Offerings, and expenses and losses, net of recoveries, from hurricanes Harvey and Irma. | |
| (e) | Legal settlement recorded in second and third quarter 2016 related to a classwide settlement to resolve a class action lawsuit. | |
|
Guidance Reconciliation – First Quarter 2018 |
|||||||||||
|
Adjusted diluted weighted average shares outstanding |
|||||||||||
| Thirteen Weeks Ended | |||||||||||
| 3/29/2018 | 3/30/2017 | ||||||||||
| Low End | High End | Actual | |||||||||
| Diluted weighted average shares outstanding (GAAP) | 105.0 | 105.0 | 88.6 | ||||||||
| Adjustments for issuance of shares at IPO | — | — | 10.1 | ||||||||
| Adjusted diluted weighted average shares outstanding | 105.0 | 105.0 | 98.8 | ||||||||
|
Adjusted net income and Adjusted diluted EPS |
|||||||||||
| Thirteen Weeks Ended | |||||||||||
| 3/29/2018 | 3/30/2017 | ||||||||||
| Low End | High End | Actual | |||||||||
| Net income (GAAP): | $ | 23.4 | $ | 24.3 | $ | 11.1 | |||||
| Interest due to IPO (a) | — | — | 2.7 | ||||||||
| Term loan repricing (b) | — | — | 0.5 | ||||||||
| Tax impact of adjustments to net income (c) | — | — | (1.2 | ) | |||||||
| Adjusted net income | $ | 23.4 | $ | 24.3 | $ | 13.2 | |||||
| Adjusted weighted average shares outstanding | 105.0 | 105.0 | 98.8 | ||||||||
| Adjusted diluted EPS | $ | 0.22 | $ | 0.23 | $ | 0.13 | |||||
| Certain numbers may not sum due to rounding | ||
| (a) | Adjustment to decrease interest expense due to utilizing net IPO proceeds of approximately $192.0 million to pay down a portion of the Term Loan Facility. | |
| (b) | Adjustment to reflect the decrease in interest expense due to the repricing of the Term Loan Facility on March 31, 2017, to lower our interest rate by 0.75% and another 0.50% effective October 1, 2017. | |
| (c) | Adjustment for taxes related to pre-tax adjustments above. | |
|
EBITDA and Adjusted EBITDA |
||||||||||
| Thirteen Weeks Ended | ||||||||||
| 3/29/2018 | 3/30/2017 | |||||||||
| Low End | High End | Actual | ||||||||
| Net income (GAAP): | $ | 23.4 | $ | 24.3 | $ | 11.1 | ||||
| Depreciation and amortization (a) | 10.7 | 10.7 | 7.8 | |||||||
| Interest expense | 2.2 | 2.2 | 5.4 | |||||||
| Income tax expense | 7.3 | 7.5 | 6.1 | |||||||
| EBITDA | 43.6 | 44.7 | 30.4 | |||||||
| Stock compensation expense (b) | 1.4 | 1.4 | 0.9 | |||||||
| Other (c) | — | — | 0.6 | |||||||
| Adjusted EBITDA | $ | 45.0 | $ | 46.1 | $ | 31.9 | ||||
| Certain numbers may not sum due to rounding | ||
| (a) | Net of amortization of tenant improvement allowances and excludes deferred financing amortization, which is included as a part of interest expense in the table above. | |
| (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 ended March 30, 2017, relate to costs in connection with the IPO. | |
|
Guidance Reconciliation - Fiscal Year 2018 |
|||||||||
|
Adjusted diluted weighted average shares outstanding |
|||||||||
| Year Ended | |||||||||
| 12/27/2018 | 12/28/2017 | ||||||||
| Low End | High End | Actual | |||||||
| Diluted weighted average shares outstanding (GAAP) | 105.3 | 105.3 | 99.7 | ||||||
| Adjustments for issuance of shares at IPO | — | — | 3.3 | ||||||
| Adjusted diluted weighted average shares outstanding | 105.3 | 105.3 | 102.9 | ||||||
|
Adjusted net income and Adjusted diluted EPS |
|||||||||
|
Year Ended |
|||||||||
| 12/27/2018 | 12/28/2017 | ||||||||
| Low End | High End | Actual | |||||||
| Net income (GAAP): | $ | 95.8 | $ | 105.1 | $ | 102.8 | |||
| Interest due to IPO (a) | — | — | 4.1 | ||||||
| Term loan repricing (b) | — | — | 0.9 | ||||||
| Secondary Offering costs (c) | — | — | 1.7 | ||||||
| Hurricane disaster expenses (d) | — | — | 0.1 | ||||||
| Loss on early extinguishment of debt (e) | — | — | 5.4 | ||||||
| Tax benefit of stock option exercises (f) | — | — | (21.8) | ||||||
| Research and development tax credits (g) | — | — | (0.4) | ||||||
| Deferred tax adjustment for tax reform (h) | — | — | (17.8) | ||||||
| Tax impact of adjustments to net income (i) | — | — | (3.9) | ||||||
| Adjusted net income | $ | 95.8 | $ | 105.1 | $ | 71.0 | |||
| Adjusted weighted average shares outstanding | 105.3 | 105.3 | 102.9 | ||||||
| Adjusted diluted EPS | $ | 0.91 | $ | 1.00 | $ | 0.69 | |||
| Certain numbers may not sum due to rounding | ||
| (a) | Adjustment to decrease interest expense due to utilizing net IPO proceeds of approximately $192.0 million to pay down a portion of the Term Loan Facility. | |
| (b) | Adjustment to reflect the decrease in interest expense due to the repricing of the Term Loan Facility on March 31, 2017, to lower our interest rate by 0.75% and another 0.50% effective October 1, 2017. | |
| (c) | Reflects costs accrued in connection with the Secondary Offerings. The Company did not sell any shares in the Secondary Offerings and did not receive any proceeds from the sales of shares by the selling stockholders. | |
| (d) | Expenses and losses, net of recoveries from hurricanes Harvey and Irma recorded in 2017. | |
| (e) | Reflects the use of net proceeds from the IPO of approximately $192.0 million to repay a portion of the amounts outstanding under the Term Loan Facility, which resulted in a loss on extinguishment of debt in the amount of approximately $5.4 million in 2017. | |
| (f) | Tax benefit due to stock option accounting (ASU No. 2016-09). | |
| (g) | Research and development tax credits related to prior periods recorded as a reduction of current year tax expense. | |
| (h) | Effect of our deferred tax rate adjustment to reflect the expected rate our deferred tax liabilities and assets will actualize at in future periods related to the 2017 tax reform act passed in December 2017. | |
| (i) | Adjustment for taxes related to pre-tax adjustments above. | |
|
EBITDA and Adjusted EBITDA |
||||||||||
| Year Ended | ||||||||||
| 12/27/2018 | 12/28/2017 | |||||||||
| Low End | High End | Actual | ||||||||
| Net income (GAAP): | $ | 95.8 | $ | 105.1 | $ | 102.8 | ||||
| Depreciation and amortization (a) | 47.5 | 47.5 | 33.5 | |||||||
| Interest expense | 9.6 | 9.6 | 13.8 | |||||||
| Loss on early extinguishment of debt (b) | — | — | 5.4 | |||||||
| Income tax expense | 29.7 | 32.7 | (4.2) | |||||||
| EBITDA | 182.6 | 194.9 | 151.3 | |||||||
| Stock compensation expense (c) | 6.4 | 6.4 | 5.0 | |||||||
| Loss on asset disposal | — | — | 0.1 | |||||||
| Other (d) | — | — | 2.4 | |||||||
| Adjusted EBITDA | $ | 189.0 | $ | 201.3 | $ | 158.8 | ||||
| Certain numbers may not sum due to rounding | ||
| (a) | Net of amortization of tenant improvement allowances and excludes deferred financing amortization, which is included as a part of interest expense in the table above. | |
| (b) | Reflects the use of net proceeds from the IPO of approximately $192.0 million to repay a portion of the amounts outstanding under the Term Loan Facility, which resulted in a loss on extinguishment of debt in the amount of approximately $5.4 million. | |
| (c) | Non-cash charges related to stock-based compensation programs, which vary from period to period depending on timing of awards and forfeitures. | |
| (d) | Other adjustments include amounts management does not consider indicative of our core operating performance. Amounts for the thirteen weeks and full year ended 2017 relate to costs in connection with the IPO, Secondary Offerings, and expenses and losses, net of 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, diluted weighted average shares outstanding, Adjusted EBITDA, warehouse format store count and new warehouse format stores for both the thirteen weeks ended March 29, 2018 and all of fiscal 2018 and with respect to the Company’s estimated depreciation and amortization expenses, interest expense, tax rate and capital expenditures for fiscal 2018. 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 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 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 “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” sections and elsewhere in the Prospectus.
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, diluted weighted average shares outstanding, Adjusted EBITDA, warehouse format store count and new warehouse format stores for both the thirteen weeks ended March 29, 2018 and all of fiscal 2018 and with respect to the Company’s estimated depreciation and amortization expenses, interest expense, tax rate and capital expenditures for fiscal 2018.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180301005464/en/
Investor Contacts:
Floor & Decor Holdings, Inc.
Matthew
McConnell, 770-257-1374
InvestorRelations@flooranddecor.com
or
ICR,
Inc.
Farah Soi/Rachel Schacter, 203-682-8200
InvestorRelations@flooranddecor.com
Source: Floor & Decor Holdings, Inc.
Released March 1, 2018