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Share Name | Share Symbol | Market | Type |
---|---|---|---|
LL Flooring Holdings Inc | NYSE:LL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.07 | 4.46% | 1.64 | 1.66 | 1.55 | 1.55 | 32,043 | 15:17:45 |
LL Flooring Holdings, Inc. (“LL Flooring” or “Company”) (NYSE: LL), a leading specialty retailer of hard and soft surface flooring in the U.S., today announced financial results for the fourth quarter and year ended December 31, 2023.
"Fourth quarter business conditions remain difficult as we continue to experience the impact of weakness in existing home sales and the corresponding softness in the home improvement industry. We reported comparable store sales down 19.6% as we saw continued declines in traffic and lower average project sizes for our consumer and pro customers. Despite external headwinds, we are focused on our ability to deliver the high-touch service of an independent flooring retailer combined with the value, assortment, and convenience of a national brand,” said President and Chief Executive Officer Charles Tyson.
Tyson continued "Leading economic indicators suggest that home improvement spending will continue to be challenged through at least the first half of 2024, however, the long-term fundamentals of our business are strong due to aging housing stock, increased household formation and rising home values. To that end, we remain focused on executing on our brand transformation and on our strategic initiatives which we believe will drive revenue growth, increase brand awareness, spur product innovation and deliver a consistent customer experience. We are also gaining traction on several of our operating strategies, focusing on the customer experience, driving and improving NPS scores, innovating products including the execution of our carpet initiatives, and maintaining a strong focus on improving operational efficiencies and working capital management. All of which, gives us confidence in achieving long-term growth.”
Fourth Quarter Financial Highlights
1Please refer to the “Non-GAAP and Other Information” section and the GAAP to non-GAAP reconciliation tables below for more information.
Full Year Financial Highlights
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 December 31, 2023, the Company had liquidity of $118.2 million, consisting of excess availability under its Credit Agreement of $109.4 million, and cash and cash equivalents of $8.8 million.
During 2023, the Company generated $21.3 million of cash flows from operating activities, primarily driven by our effective inventory management and our cost savings initiatives implemented by management.
2024 Business Outlook
The Company continues to navigate uncertainty in the macroeconomic environment due to low consumer confidence, inflation, a volatile interest and mortgage rate environment and continued declines in 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:
1Please refer to the “Non-GAAP and Other Information” section and the GAAP to non-GAAP reconciliation tables below for more information.
Learn More about LL Flooring
Conference Call and Webcast Information
The Company plans to host a conference call and audio webcast on March 4, 2024, at 8:00 a.m. Eastern Time. The conference may be accessed by dialing (833) 470-1428 or (929) 526-1599 and entering pin number 918613. You may also use this website https://events.q4inc.com/attendee/638357847 in lieu of speaking to an operator. A replay will be available approximately two hours after the call ends through March 11, 2024 and may be accessed by dialing (929) 458-6194 and entering pin number 285260. 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 430 stores nationwide. The Company seeks to offer the best customer experience online and in stores, with more than 500 varieties of hard and soft 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, 2023, 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 Income (Loss); (vi) Adjusted Operating Margin (Loss); (vii) Adjusted Other Expense; (viii) Adjusted Other Expense as a percentage of net sales; (ix) Adjusted Earnings (Loss); and (x) Adjusted Earnings (Loss) 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 regulatory and legal settlements and associated legal and operating costs, changes in antidumping and countervailing duties, and goodwill impairment, 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.
Reconciliations of forward-looking non-GAAP measures are not provided because the company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the timing and significance of antidumping rate changes or vinyl charges.
(Tables Follow)
LL Flooring Holdings, Inc.
Consolidated Balance Sheets
(in thousands)
December 31,
December 31,
2023
2022
Assets
Current Assets:
Cash and Cash Equivalents
$
8,772
$
10,800
Merchandise Inventories, Net
265,290
332,296
Prepaid Expenses
5,658
9,054
Other Current Assets
8,473
17,598
Total Current Assets
288,193
369,748
Property and Equipment, Net
100,490
101,758
Operating Lease Right-of-Use Assets
141,210
123,172
Deferred Tax Assets, Net
—
13,697
Other Assets
5,681
5,578
Total Assets
$
535,574
$
613,953
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts Payable
$
67,195
$
47,733
Customer Deposits and Store Credits
39,468
43,767
Accrued Compensation
6,915
9,070
Sales and Income Tax Liabilities
2,103
3,574
Accrual for Legal Matters and Settlements
15,344
22,159
Operating Lease Liabilities - Current
31,815
34,509
Other Current Liabilities
24,382
19,712
Total Current Liabilities
187,222
180,524
Other Long-Term Liabilities
8,391
6,162
Operating Lease Liabilities - Long-Term
116,651
99,186
Credit Agreement
66,000
72,000
Total Liabilities
378,264
357,872
Commitments and Contingencies
Stockholders’ Equity:
Common Stock ($0.001 par value; 35,000 shares authorized; 30,983 and 30,758 shares issued and 28,849 and 28,695 shares outstanding at December 31, 2023 and 2022, respectively)
31
31
Treasury Stock, at cost (2,134 and 2,063 shares, respectively)
(153,617
)
(153,331
)
Additional Capital
236,848
231,839
Retained Earnings
74,048
177,542
Total Stockholders’ Equity
157,310
256,081
Total Liabilities and Stockholders’ Equity
$
535,574
$
613,953
LL Flooring Holdings, Inc.
Consolidated Statements of Operations and Comprehensive (Loss) Income
(in thousands, except per share amounts)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
2021
Net Sales
Net Merchandise Sales
$
183,059
$
226,883
$
779,326
$
957,927
$
993,943
Net Services Sales
28,721
36,986
125,420
152,752
158,401
Total Net Sales
211,780
263,869
904,746
1,110,679
1,152,344
Cost of Sales
Cost of Merchandise Sold
103,919
139,733
477,495
589,719
588,166
Cost of Services Sold
26,187
29,385
104,538
119,797
124,136
Total Cost of Sales
130,106
169,118
582,033
709,516
712,302
Gross Profit
81,674
94,751
322,713
401,163
440,042
Selling, General and Administrative Expenses
99,205
112,080
403,499
412,885
387,356
Operating (Loss) Income
(17,531
)
(17,329
)
(80,786
)
(11,722
)
52,686
Other Expense
1,082
986
9,307
1,816
(104
)
(Loss) Income Before Income Taxes
(18,613
)
(18,315
)
(90,093
)
(13,538
)
52,790
Income Tax Expense (Benefit)
(668
)
(3,235
)
13,401
(1,457
)
11,092
Net (Loss) Income and Comprehensive (Loss) Income
$
(17,945
)
$
(15,080
)
$
(103,494
)
$
(12,081
)
$
41,698
Net (Loss) Income per Common Share—Basic
$
(0.62
)
$
(0.53
)
$
(3.59
)
$
(0.42
)
$
1.44
Net (Loss) Income per Common Share—Diluted
$
(0.62
)
$
(0.53
)
$
(3.59
)
$
(0.42
)
$
1.41
Weighted Average Common Shares Outstanding:
Basic
28,845
28,691
28,806
28,860
29,041
Diluted
28,845
28,691
28,806
28,860
29,525
LL Flooring Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2023
2022
2021
Cash Flows from Operating Activities:
Net (Loss) Income
$
(103,494
)
$
(12,081
)
$
41,698
Adjustments to Reconcile Net (Loss) Income:
Depreciation and Amortization
18,647
18,410
18,833
Impairment on Long-Lived Assets
1,316
—
—
Impairment of Goodwill
—
9,693
—
Deferred Income Taxes Provision
13,979
(2,361
)
276
Income on Redeemed or Expired Vouchers for Legal Settlements
(2,491
)
(1,300
)
(1,676
)
Stock-Based Compensation Expense
5,009
3,738
5,113
Provision for Inventory Obsolescence Reserves
3,469
1,615
2,345
Antidumping Adjustments
353
(1,036
)
(6,279
)
(Gain) Loss on Disposal of Fixed Assets
27
(2
)
44
Changes in Operating Assets and Liabilities:
Merchandise Inventories
61,243
(81,833
)
(15,104
)
Accounts Payable
17,254
(16,595
)
(8,538
)
Customer Deposits and Store Credits
(4,299
)
(23,296
)
5,674
Tariff Recovery Receivable
—
36
4,078
Prepaid Expenses and Other Current Assets
13,758
(2,968
)
700
Accrued Compensation
(2,156
)
(1,058
)
(5,219
)
Accrual for Legal Matters and Settlements
543
303
7,773
Payments for Legal Matters and Settlements
(345
)
(8,148
)
(101
)
Deferred Rent Payments
(187
)
(157
)
(2,315
)
Deferred Payroll Taxes
—
(2,585
)
(2,542
)
Other Assets and Liabilities
(1,341
)
2,916
(6,090
)
Net Cash Provided by (Used in) Operating Activities
21,285
(116,709
)
38,670
Cash Flows from Investing Activities:
Purchases of Property and Equipment
(17,029
)
(22,048
)
(19,443
)
Other Investing Activities
2
65
71
Net Cash Used in Investing Activities
(17,027
)
(21,983
)
(19,372
)
Cash Flows from Financing Activities:
Borrowings on Credit Agreement
306,000
289,500
—
Payments on Credit Agreement
(312,000
)
(217,500
)
(101,000
)
Common Stock Repurchased
(286
)
(7,994
)
(2,360
)
Other Financing Activities
297
(690
)
Net Cash (Used In) Provided by Financing Activities
(6,286
)
64,303
(104,050
)
Net Decrease in Cash and Cash Equivalents
(2,028
)
(74,389
)
—
(84,752
)
Cash and Cash Equivalents, Beginning of Period
10,800
85,189
169,941
Cash and Cash Equivalents, End of Period
$
8,772
$
10,800
$
85,189
Supplemental Disclosure of Non-Cash Operating and Financing Activities:
Relief of Inventory for Vouchers Redeemed for Legal Settlements
$
2,294
$
2,307
$
2,783
Tenant Improvement Allowance for Leases
(196
)
(1,155
)
(1,230
)
LL Flooring Holdings, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except percentages)
Items impacting gross margin with comparisons to the prior-year periods include:
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
$
% of Sales
$
% of Sales
$
% of Sales
$
% of Sales
(in thousands, except percentage data)
Gross Profit/Margin, as reported (GAAP)
$
81,674
38.6
%
$
94,751
35.9
%
$
322,713
35.7
%
$
401,163
36.1
%
Vinyl Charges1
(701
)
(0.3
)%
—
—
5,426
0.6
%
—
—
%
Antidumping and Countervailing Adjustments2
95
—
(564
)
(0.2
)%
10,809
1.2
%
413
0.0
%
Adjustment Items Subtotal
(606
)
(0.3
)%
(564
)
(0.2
)%
16,235
1.8
%
413
—
Adjusted Gross Profit/Margin (non-GAAP measures)
$
81,068
38.3
%
$
94,187
35.7
%
$
338,948
37.5
%
$
401,576
36.1
%
1
This amount represents costs related to CBP detention on flooring products that contain PVC as a consequence of the UFLPA.2
This amount represents net antidumping and countervailing (income)/expense 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 December 31,
Year Ended December 31,
2023
2022
2023
2022
$
% of Sales
$
% of Sales
$
% of Sales
$
% of Sales
(in thousands, except percentage data)
SG&A, as reported (GAAP)
$
99,205
46.8
%
$
112,080
42.5
%
$
403,499
44.6
%
$
412,885
37.2
%
Recovery from Legal Matters and Settlements1
—
—
%
—
—
%
—
—
%
(150
)
—
%
Legal and Professional Fees2
(36
)
—
%
—
—
%
886
0.1
%
—
—
%
Goodwill Impairment Charge3
—
—
%
9,693
3.7
%
—
0.0
%
9,693
0.9
%
Adjusted SG&A (a non-GAAP measure)
$
99,241
46.8
%
$
102,387
38.8
%
$
402,613
44.5
%
$
403,342
36.3
%
1.
The 2022 amount represents insurance recovery related to the Gold Litigation recorded in the third quarter of 2022. This item is described more fully in Item 8, Note 10 to the consolidated financial statements filed in the December 31, 2022 10-K.2.
This amount represents charges to earnings related to our defense of certain significant legal actions during the period. This does not include all legal costs incurred by the Company.3.
This amount represents an impairment charge resulting from the Company's evaluation of goodwill during the fourth quarter of 2022. This item is described more fully in Item 8, Note 3 to the consolidated financial statements filed in the December 31, 2022 10-K.LL Flooring Holdings, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except percentages)
Items impacting operating income and operating margin with comparisons to the prior-year periods include:
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
$
% of Sales
$
% of Sales
$
% of Sales
$
% of Sales
(in thousands, except percentage data)
Operating Loss, as reported (GAAP)
$
(17,531
)
(8.3
)%
$
(17,329
)
(6.6
)%
$
(80,786
)
(8.9
)%
$
(11,722
)
(1.1
)%
Gross Profit/Margin Adjustment Items:
Vinyl Charges1
(701
)
(0.3
)%
—
—
%
5,426
0.6
%
—
—
%
Antidumping and Countervailing Adjustments2
95
0.0
%
(564
)
(0.2
)%
10,809
1.2
%
413
—
Gross Profit/Margin Adjustment Items Subtotal
(606
)
(0.3
)%
(564
)
(0.2
)%
16,235
1.8
%
413
—
SG&A Adjustment Items:
Recovery from Legal Matters and Settlements3
—
—
%
—
—
%
—
—
%
(150
)
—
%
Legal and Professional Fees4
(36
)
0.0
%
—
—
%
886
0.1
%
—
—
%
Goodwill Impairment Charge5
—
—
%
9,693
3.7
%
—
0.0
%
9,693
0.9
%
SG&A Adjustment Items Subtotal
(36
)
0.0
%
9,693
3.7
%
886
0.1
%
9,543
0.9
%
Adjusted Operating Loss / Margin (a non-GAAP measure)
$
(18,173
)
(8.6
)%
$
(8,200
)
(3.1
)%
$
(63,665
)
(7.0
)%
$
(1,766
)
(0.2
)%
1,2,3,4,5 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 December 31,
Year Ended December 31,
2023
2022
2023
2022
$
% of Sales
$
% of Sales
$
% of Sales
$
% of Sales
(in thousands, except percentage data)
Other Expense, as reported (GAAP)
$
1,082
0.5
%
$
986
0.4
%
$
9,307
1.0
%
$
1,816
0.2
%
Interest Impact Related to Antidumping and Countervailing Adjustments1
27
0.0
%
(147
)
0.0
%
5,565
0.6
%
(148
)
—
%
Adjusted Other Expense/Adjusted Other Expense as a % of Sales (a non-GAAP measure)
$
1,055
0.5
%
$
1,133
0.4
%
$
3,742
0.4
%
$
1,964
0.2
%
1.
This amount represents net interest (income)/expense 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
(in thousands, except per share data)
Items impacting earnings per diluted share with comparisons to the prior-year periods include:
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
(in thousands, except per share data)
Net Loss, as reported (GAAP)
$
(17,945
)
$
(15,080
)
$
(103,494
)
$
(12,081
)
Net Loss per Diluted Share (GAAP)
$
(0.62
)
$
(0.53
)
$
(3.59
)
$
(0.42
)
Gross Profit/Margin Adjustment Items:
Vinyl Charges1
(701
)
—
5,426
—
Antidumping and Countervailing Adjustments2
95
(564
)
10,809
413
Gross Profit/Margin Adjustment Items Subtotal
(606
)
(564
)
16,235
413
SG&A Adjustment Items:
Recovery from Legal Matters and Settlements3
—
—
—
(150
)
Legal and Professional Fees4
(36
)
—
886
—
Goodwill Impairment Charge5
—
9,693
—
9,693
SG&A Adjustment Items Subtotal
(36
)
9,693
886
9,543
Other Expense (Income) Adjustment Items:
Interest Impact Related to Antidumping and Countervailing Adjustment6
27
(147
)
5,565
(148
)
Other Expense (Income) Adjustment Items Subtotal
27
(147
)
5,565
(148
)
Income Tax Adjustment7
158
(2,353
)
(5,830
)
(2,570
)
Adjusted Loss
$
(18,402
)
$
(8,451
)
$
(86,638
)
$
(4,843
)
Adjusted Loss per Diluted Share (a non-GAAP measure)
$
(0.64
)
$
(0.29
)
$
(3.01
)
$
(0.17
)
1,2,3,4,5,6
See the Gross Profit, SG&A and Other Expense (Income) sections above for more detailed explanations of these individual items.7
Income Tax Adjustment is defined as the sum of Gross Profit/Margin, SG&A, and Other Expense (Income) Adjustment Items multiplied by the Company’s federal incremental rate, which was 25.7% for the 2023 period and 26.2% for the 2022 period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240301411085/en/
For further information contact: LL Flooring Investor Relations ICR Bruce Williams ir@llflooring.com Tel: 804-420-9801
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