Floor & Decor Holdings, Inc. Announces First Quarter Fiscal 2022 Financial Results
•Net sales increased 31.5% from the first quarter of fiscal 2021 to $1,028.7 million.
•Comparable store sales increased 14.3% from the first quarter of fiscal 2021.
•Diluted earnings per share (“EPS”) decreased 7.0% to $0.66 from $0.71 in the first quarter of fiscal 2021; Adjusted diluted EPS* decreased 1.5% to $0.67 from $0.68 in the first quarter of fiscal 2021.
ATLANTA--(BUSINESS WIRE)--May 5, 2022--Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the first quarter of fiscal 2022, which ended March 31, 2022.
Tom Taylor, Chief Executive Officer, stated, “We entered fiscal 2022 with good momentum in our business and are pleased to deliver first-quarter sales and earnings that exceed expectations, especially considering our record sales and earnings last year. The strong first-quarter performance directly results from our store, commercial, and support teams successfully executing our growth strategies in a dynamic and challenging industry-wide operating environment. We believe that our competitive moat from a product, price, and access to inventory standpoint has never been stronger, giving us added confidence in our ability to continue to grow our market share despite a wide range of macro-economic challenges.”
Mr. Taylor continued, “We opened six new warehouse-format stores in the first quarter, including our first store in Portland, Oregon and fourth store on Long Island in Garden City, New York, and are pleased with their early performance. We also opened three design studios in the first quarter. We remain on plan to open nine warehouse-format stores in the second quarter and 32 total warehouse-format stores in fiscal 2022. We project a path towards operating at least 500 warehouse-format stores over time, implying we would be only 38% built out by the end of fiscal 2022.”
Please see “Comparable Store Sales” below for information on how the Company calculates its comparable store sales growth.
For the Thirteen Weeks Ended March 31, 2022
•Net sales increased 31.5% to $1,028.7 million from $782.5 million in the first quarter of fiscal 2021.
•Comparable store sales increased 14.3%.
•We opened six new warehouse stores and three design studios during the first quarter of fiscal 2022, ending the quarter with 166 warehouse stores and five design studios.
•Operating income decreased 2.1% to $94.0 million from $95.9 million in the first quarter of fiscal 2021. Operating margin decreased 320 basis points to 9.1%.
•Net income decreased 6.4% to $71.0 million compared to $75.8 million in the first quarter of fiscal 2021. Diluted EPS was $0.66 compared to $0.71 in the first quarter of fiscal 2021, a decrease of 7.0%.
•Adjusted net income* decreased 1.5% to $71.6 million compared to $72.7 million in the first quarter of fiscal 2021. Adjusted diluted EPS* was $0.67 compared to $0.68 in the first quarter of fiscal 2021, a decrease of 1.5%.
•Adjusted EBITDA* increased 6.8% to $135.8 million compared to $127.1 million in the first quarter of fiscal 2021.
*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.
The COVID-19 Pandemic Impact on Floor & Decor's Business
We continue to monitor the impact of the COVID-19 pandemic on 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 COVID-19 pandemic on our business cannot be reasonably estimated at this time. The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on future developments, including the duration of the COVID-19 pandemic, the success of vaccination programs, the spread of COVID-19 within the markets in which we operate, the impact to countries from which we source inventory, fixed assets, and other supplies, the effect of the pandemic on consumer confidence and spending, and actions taken by government entities in response to the pandemic, all of which are highly uncertain.
Reaffirmed Outlook for the Fiscal Year Ending December 29, 2022:
•Net sales of approximately $4,285 to $4,375 million
•Comparable store sales growth of approximately 10.5% to 13.0%
•Diluted EPS to be in the range of $2.75 to $3.00
•Adjusted EBITDA in the range of $575 million to $610 million
•Depreciation and amortization expense of approximately $151 million
•Interest expense, net of approximately $7 million
•Tax rate of approximately 24%, excluding tax benefits resulting from stock option exercises and the vesting of restricted stock and restricted stock units
•Diluted weighted average shares outstanding of approximately 108.4 million shares
•Open 32 new warehouse-format stores and four small design studios
•Capital expenditures in the range of approximately $550 million to $590 million
Conference Call Details
A conference call to discuss the first quarter fiscal 2022 financial results is scheduled for today, May 5, 2022, 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 will be available within two hours of 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 13728341. The replay will be available until May 12, 2022.
About Floor & Decor Holdings, Inc.
Floor & Decor is a multi-channel specialty retailer and commercial flooring distributor operating 166 warehouse-format stores and five design studios across 34 states at the end of the first quarter of fiscal 2022. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile, installation materials, and adjacent categories 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 of the existing store being relocated, 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. Sales through our Spartan Surfaces, LLC ("Spartan") subsidiary do not involve our stores and are therefore excluded from the comparable store sales calculation.
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 may 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, distribution center relocation expenses, fair value adjustments related to contingent earn-out liabilities, 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 for per share data)
|Thirteen Weeks Ended|
|March 31, 2022||April 1, 2021||% Increase|
|Actual||% of Sales||Actual||% of Sales|
|Net sales||$||1,028,734 ||100.0 ||%||$||782,537 ||100.0 ||%||31.5 ||%|
|Cost of sales||620,676 ||60.3 ||445,604 ||56.9 ||39.3 |
|Gross profit||408,058 ||39.7 ||336,933 ||43.1 ||21.1 |
|Selling and store operating||249,500 ||24.3 ||189,946 ||24.3 ||31.4 |
|General and administrative||54,645 ||5.3 ||44,041 ||5.6 ||24.1 |
|Pre-opening||9,941 ||1.0 ||6,997 ||0.9 ||42.1 |
|Total operating expenses||314,086 ||30.5 ||240,984 ||30.8 ||30.3 |
|Operating income||93,972 ||9.1 ||95,949 ||12.3 ||(2.1)|
|Interest expense, net||1,162 ||0.1 ||1,388 ||0.2 ||(16.3)|
|Income before income taxes||92,810 ||9.0 ||94,561 ||12.1 ||(1.9)|
|Provision for income taxes||21,859 ||2.1 ||18,765 ||2.4 ||16.5 |
|Net income||$||70,951 ||6.9 ||%||$||75,796 ||9.7 ||%||(6.4)||%|
|Basic weighted average shares outstanding||105,398 ||104,073 |
|Diluted weighted average shares outstanding||107,539 ||107,099 |
|Basic earnings per share||$||0.67 ||$||0.73 ||(8.2)||%|
|Diluted earnings per share||$||0.66 ||$||0.71 ||(7.0)||%|
Consolidated Balance Sheets
(In thousands, except for share and per share data)
|As of March 31, 2022||As of December 30, 2021|
|Cash and cash equivalents||$||31,828 ||$||139,444 |
|Income taxes receivable||— ||3,507 |
|Receivables, net||97,754 ||81,463 |
|Inventories, net||1,149,531 ||1,008,151 |
|Prepaid expenses and other current assets||43,368 ||40,780 |
|Total current assets||1,322,481 ||1,273,345 |
|Fixed assets, net||1,007,942 ||929,083 |
|Right-of-use assets||1,136,515 ||1,103,750 |
|Intangible assets, net||151,798 ||151,935 |
|Goodwill||255,473 ||255,473 |
|Deferred income tax assets, net||8,999 ||9,832 |
|Other assets||10,179 ||7,277 |
|Total long-term assets||2,570,906 ||2,457,350 |
|Total assets||$||3,893,387 ||$||3,730,695 |
|Liabilities and stockholders’ equity|
|Current portion of term loans||$||1,577 ||$||2,103 |
|Current portion of lease liabilities||109,670 ||104,602 |
|Trade accounts payable||688,488 ||661,883 |
|Accrued expenses and other current liabilities||254,753 ||248,935 |
|Income taxes payable||16,809 ||— |
|Deferred revenue||22,021 ||14,492 |
|Total current liabilities||1,093,318 ||1,032,015 |
|Term loans||195,660 ||195,762 |
|Lease liabilities||1,151,952 ||1,120,990 |
|Deferred income tax liabilities, net||40,821 ||40,958 |
|Other liabilities||9,219 ||17,771 |
|Total long-term liabilities||1,397,652 ||1,375,481 |
|Total liabilities||2,490,970 ||2,407,496 |
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2022 and December 30, 2021
|— ||— |
Common stock Class A, $0.001 par value; 450,000,000 shares authorized; 105,842,162 shares issued and outstanding at March 31, 2022 and 105,760,650 issued and outstanding at December 30, 2021
|106 ||106 |
Common stock Class B, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2022 and December 30, 2021
|— ||— |
Common stock Class C, $0.001 par value; 30,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2022 and December 30, 2021
|— ||— |
|Additional paid-in capital||457,045 ||450,332 |
|Accumulated other comprehensive income, net||2,089 ||535 |
|Retained earnings||943,177 ||872,226 |
|Total stockholders’ equity||1,402,417 ||1,323,199 |
|Total liabilities and stockholders’ equity||$||3,893,387 ||$||3,730,695 |
Consolidated Statements of Cash Flows
|Thirteen Weeks Ended|
|March 31, 2022||April 01, 2021|
|Net income||$||70,951 ||$||75,796 |
|Adjustments to reconcile net income to net cash (used in) provided by operating activities:|
|Depreciation and amortization||34,613 ||26,415 |
|Stock-based compensation expense||5,980 ||4,734 |
|Change in fair value of contingent earn-out liabilities||364 ||— |
|Deferred income taxes||237 ||4,459 |
|Interest cap derivative contracts||29 ||84 |
|Changes in operating assets and liabilities, net of effects of acquisition:|
|Inventories, net||(141,363)||46,351 |
|Trade accounts payable||27,661 ||(13,376)|
|Accrued expenses and other current liabilities||(3,969)||(16,204)|
|Income taxes||19,842 ||1,244 |
|Deferred revenue||7,529 ||5,544 |
|Net cash (used in) provided by operating activities||(3,333)||100,996 |
|Purchases of fixed assets||(100,904)||(45,876)|
|Acquisition, net of cash acquired||(490)||— |
|Net cash used in investing activities||(101,394)||(45,876)|
|Proceeds from term loans||— ||65,000 |
|Payments on term loans||(1,051)||(75,151)|
|Payments of contingent earn-out consideration||(2,571)||— |
|Proceeds from exercise of stock options||577 ||2,383 |
|Proceeds from employee stock purchase plan||1,963 ||1,302 |
|Debt issuance costs||— ||(1,409)|
|Tax payments for stock-based compensation awards||(1,807)||(966)|
|Net cash used in financing activities||(2,889)||(8,841)|
|Net (decrease) increase in cash and cash equivalents||(107,616)||46,279 |
|Cash and cash equivalents, beginning of the period||139,444 ||307,772 |
|Cash and cash equivalents, end of the period||$||31,828 ||$||354,051 |
|Supplemental disclosures of cash flow information|
|Buildings and equipment acquired under operating leases||$||61,180 ||$||53,758 |
|Cash paid for interest, net of capitalized interest||$||1,099 ||$||1,376 |
|Cash paid for income taxes, net of refunds||$||1,763 ||$||13,055 |
|Fixed assets accrued at the end of the period||$||104,230 ||$||46,275 |
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except EPS)
Adjusted net income and Adjusted diluted EPS
|Thirteen Weeks Ended|
|March 31, 2022||April 1, 2021|
|Net income (GAAP):||$||70,951 ||$||75,796 |
|Distribution center relocation (a)||1,341 ||480 |
|Contingent earn-out liabilities fair value adjustment (b)||364 ||— |
|Tariff refund adjustments (c)||(67)||(72)|
|COVID-19 costs (d)||— ||216 |
|Debt modification expense (e)||— ||171 |
|Tax benefit of stock-based compensation awards (f)||(558)||(3,672)|
|Tax impact of adjustments to net income (g)||(400)||(192)|
|Adjusted net income||$||71,631 ||$||72,727 |
|Diluted weighted average shares outstanding||107,539 ||107,099 |
|Adjusted diluted EPS||$||0.67 ||$||0.68 |
(a)Represents amounts related to our Houston distribution center relocation that was completed in the first quarter of fiscal 2022.
(b)Reflects remeasurement charges due to changes in the fair value of contingent earn-out liabilities.
(c)Represents adjustments to estimated tariff refund receivables.
(d)Amounts are comprised of sanitation, personal protective equipment, and other costs that directly related to efforts to mitigate the impact of the COVID-19 pandemic on our business.
(e)Represents legal fees incurred in connection with amendments to the senior secured term loan credit facility.
(f)Tax benefit resulting from stock option exercises and the vesting of restricted stock and restricted stock units.
(g)Tax adjustments for pre-tax adjustments above.
EBITDA and Adjusted EBITDA
|Thirteen Weeks Ended|
|March 31, 2022||April 1, 2021|
|Net income (GAAP):||$||70,951 ||$||75,796 |
|Depreciation and amortization (a)||34,120 ||25,520 |
|Interest expense, net||1,162 ||1,388 |
|Income tax expense||21,859 ||18,765 |
|EBITDA||128,092 ||121,469 |
|Stock-based compensation expense (b)||5,980 ||4,734 |
|COVID-19 costs (c)||— ||216 |
|Other (d)||1,705 ||656 |
|Adjusted EBITDA||$||135,777 ||$||127,075 |
(a)Excludes amortization of deferred financing costs, which is included as part of interest expense, net in the table above.
(b)Non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards and forfeitures.
(c)Amounts are comprised of sanitation, personal protective equipment, and other costs directly related to efforts to mitigate the impact of the COVID-19 pandemic on our business.
(d)Other adjustments include amounts management does not consider indicative of our core operating performance. Amounts for the thirteen weeks ended March 31, 2022 primarily relate to expenses for our Houston distribution center relocation that was completed during the quarter and changes in the fair value of contingent earn-out liabilities. Amounts for the thirteen weeks ended April 1, 2021 primarily relate to relocation expenses for our Houston distribution center and legal fees associated with the February 2021 amendment to our senior secured term loan credit facility.
This release and the associated webcast/conference call contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this release, including statements regarding the Company’s future operating results and financial position, expectations related to our acquisition of Spartan Surfaces, Inc. (“Spartan”), business strategy and plans, objectives of management for future operations, and the impact of the coronavirus (COVID-19) pandemic, 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 the COVID-19 pandemic.
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.
Vice President of Investor Relations
Senior Manager of Investor Relations