|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2018
Floor & Decor Holdings, Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
001-38070 |
27-3730271 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
2233 Lake Park Drive Smyrna, GA |
30080 |
(Address of principal executive offices) |
(Zip Code) |
(404) 471-1634
(Registrant’s
telephone number, including area code)
Not Applicable
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).
Emerging growth company ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞
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Item 2.02. Results of Operations and Financial Condition.
On August 2, 2018, Floor & Decor Holdings, Inc. issued a press release announcing its financial results for the quarter ended June 28, 2018. The text of the press release is included as Exhibit 99.1 to this Form 8-K.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Number |
Description |
99.1 |
Press Release, dated August 2, 2018 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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FLOOR & DECOR HOLDINGS, INC. |
||||
Date: |
August 2, 2018 |
By: |
/s/ David V. Christopherson |
||
|
Name: |
David V. Christopherson |
|||
|
Title: |
Executive Vice President, Secretary and |
Exhibit Index
Exhibit No. |
Description |
|
Exhibit 99.1
Floor & Decor Holdings, Inc. Announces Second Quarter Fiscal 2018 Financial Results
ATLANTA--(BUSINESS WIRE)--August 2, 2018--Floor & Decor Holdings, Inc. (NYSE:FND) (“We,” “Our” the “Company,” or “Floor & Decor”) announces its financial results for the second quarter of fiscal 2018, which ended June 28, 2018.
Tom Taylor, Chief Executive Officer, stated, “We are pleased with our solid second quarter performance. Floor & Decor’s differentiated business model with leading innovative product offerings, in-stock inventory, and compelling value proposition continues to resonate with both consumers and professional customers. I would like to thank all our associates for their hard work and their exceptional service to our customers.”
Mr. Taylor continued, “Our new stores’ first year sales and profitability have never been higher, and this reinforces our confidence in the 400 store opportunity we see for Floor & Decor. Our improving new store performance, combined with other strategic priorities, gives me confidence that our differentiated strategy is working well.”
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 June 28, 2018
For the Twenty-six Weeks Ended June 28, 2018
*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.
Third Quarter and Fiscal 2018 Sales and Earnings Outlook |
|||||
Thirteen Weeks | |||||
Ended 9/27/2018 | |||||
Net sales | $427 - $433 | ||||
Comparable store sales | 9.5% to 10.5% | ||||
GAAP diluted EPS | $0.21 - $0.22 | ||||
Adjusted diluted EPS | $0.21 - $0.23 | ||||
Diluted weighted average shares outstanding | 105.2 | ||||
Adjusted EBITDA | $45.9- $48.0 | ||||
Warehouse format store count | 95 | ||||
New warehouse format stores | 7 | ||||
Updated Outlook | Prior Outlook | ||||
Twelve Months | Twelve Months | ||||
Ended 12/27/2018 | Ended 12/27/2018 | ||||
Net sales | $1,696 - $1,710 | $1,705 - $1,735 | |||
Comparable store sales | 9.0% to 10.0% | 9.5% to 11.5% | |||
GAAP diluted EPS | $1.07 - $1.11 | $0.98 - $1.06 | |||
Adjusted diluted EPS | $0.93 - $0.96 | $0.93 - $1.01 | |||
Diluted weighted average shares outstanding | 105.1 | 105.3 | |||
Adjusted EBITDA | $188.7 - $193.2 | $190.8 - $201.3 | |||
Depreciation and amortization | Approximately $48 | Approximately $48 | |||
Interest expense | Approximately $8 | Approximately $9 | |||
Tax rate | 23.4% for the remainder of fiscal 2018 | 23.4% for the remainder of fiscal 2018 | |||
Warehouse format store count | 100 | 100 | |||
New warehouse format stores | 17 | 17 | |||
Capital Expenditures | $160 - $167 | $150 - $158 | |||
The above guidance includes certain non-GAAP financial measures (namely Adjusted EBITDA and Adjusted diluted EPS). 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 second quarter fiscal 2018 financial results is scheduled for today, August 2, 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 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 13681459. The replay will be available until August 9, 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 refer to period-over-period comparisons of our net sales among the comparable store base, which has historically been when customers obtained possession of their product. Starting in 2018, when Accounting Standards Update No. 2014-19, “Revenue from Contracts with Customer” (Topic 606) was adopted, our comparable store sales refer to period-over-period comparisons of our net sales based on when the customer obtains control of their product, which is typically at the time of sale and may be slightly different than our historically reported net sales due to timing of when final delivery of the product has occurred. A store is included in the comparable store sales calculation on the first day of the thirteenth full fiscal month following a store’s opening, which is when we believe comparability has been achieved. Since our e-commerce sales are fulfilled by individual stores, they are included in comparable store sales only to the extent the fulfilling store meets the above mentioned store criteria. Changes in our comparable store sales between two periods are based on net sales for stores that were in operation during both of the two periods. Any change in square footage of an existing comparable store, including remodels and relocations, does not eliminate that store from inclusion in the calculation of comparable store sales. Stores that are closed temporarily and relocated within their primary trade areas are included in same store sales. Additionally, any stores that were closed during the current or prior fiscal year are excluded from the definition of comparable stores.
Non-GAAP Financial Measures
Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA (which are shown in the reconciliations below) 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. |
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Thirteen Weeks Ended | |||||||||||||||||
6/28/2018 | 6/29/2017 |
% Increase |
|||||||||||||||
Actual | % of Sales | Actual | % of Sales | (Decrease) | |||||||||||||
Net sales | $ | 434,279 |
100.0 |
% |
$ |
344,047 |
100.0 | % | 26.2 | % | |||||||
Cost of sales | 256,641 | 59.1 | 201,819 | 58.7 | 27.2 | ||||||||||||
Gross profit | 177,638 | 40.9 | 142,228 | 41.3 | 24.9 | ||||||||||||
Operating expenses: | |||||||||||||||||
Selling & store operating expenses | 108,626 | 25.0 | 85,650 | 24.9 | 26.8 | ||||||||||||
General & administrative expenses | 25,179 | 5.8 | 19,518 | 5.6 | 29.0 | ||||||||||||
Pre-opening expenses | 6,588 | 1.5 | 2,958 | 0.9 | 122.7 | ||||||||||||
Total operating expenses | 140,393 | 32.3 | 108,126 | 31.4 | 29.8 | ||||||||||||
Operating income | 37,245 | 8.6 | 34,102 | 9.9 | 9.2 | ||||||||||||
Interest expense | 2,145 | 0.5 | 3,353 | 1.0 | (36.0 | ) | |||||||||||
Loss on early extinguishment of debt | — | — | 5,442 |
1.5 |
(100.0 | ) | |||||||||||
Income before income taxes | 35,100 | 8.1 | 25,307 | 7.4 | 38.7 | ||||||||||||
Provision for income taxes | (4,746 | ) | (1.1 | ) | 4,878 | 1.5 | (197.3 | ) | |||||||||
Net income | $ | 39,846 |
9.2 |
% |
$ |
20,429 |
5.9 | % | 95.0 | % | |||||||
Basic weighted average shares outstanding | 96,684 | 90,861 | |||||||||||||||
Diluted weighted average shares outstanding | 104,937 | 99,919 | |||||||||||||||
Basic earnings per share | $ | 0.41 | $ | 0.22 | 86.4 | % | |||||||||||
Diluted earnings per share | $ | 0.38 | $ | 0.20 | 90.0 | % | |||||||||||
Twenty-six Weeks Ended |
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6/28/2018 |
6/29/2017 |
% Increase | |||||||||||||||
Actual | % of Sales |
Actual |
% of Sales | (Decrease) | |||||||||||||
Net sales | $ | 837,227 | 100.0 | % | $ | 651,343 | 100.0 | % | 28.5 | % | |||||||
Cost of sales | 494,203 | 59.0 | 383,644 | 58.9 | 28.8 | ||||||||||||
Gross profit | 343,024 | 41.0 | 267,699 | 41.1 | 28.1 | ||||||||||||
Operating expenses: | |||||||||||||||||
Selling & store operating expenses | 211,193 | 25.3 | 166,401 | 25.5 | 26.9 | ||||||||||||
General & administrative expenses | 48,518 | 5.8 | 37,399 | 5.8 | 29.7 | ||||||||||||
Pre-opening expenses | 9,562 | 1.1 | 7,125 | 1.1 | 34.2 | ||||||||||||
Total operating expenses | 269,273 | 32.2 | 210,925 | 32.4 | 27.7 | ||||||||||||
Operating income | 73,751 | 8.8 | 56,774 | 8.7 | 29.9 | ||||||||||||
Interest expense | 3,929 | 0.5 | 8,767 | 1.4 | (55.2 | ) | |||||||||||
Loss on early extinguishment of debt | — | — | 5,442 | 0.8 | (100.0 | ) | |||||||||||
Income before income taxes | 69,822 | 8.3 | 42,565 | 6.5 | 64.0 | ||||||||||||
Provision for income taxes | (1,895 | ) | (0.3 | ) | 11,008 | 1.7 | (117.2 | ) | |||||||||
Net income | $ | 71,717 | 8.6 | % | $ | 31,557 | 4.8 | % | 127.3 | % | |||||||
Basic weighted average shares outstanding | 96,199 | 87,195 | |||||||||||||||
Diluted weighted average shares outstanding | 104,808 | 94,900 | |||||||||||||||
Basic earnings per share | $ | 0.75 | $ | 0.36 | 108.3 | % | |||||||||||
Diluted earnings per share | $ | 0.68 | $ | 0.33 | 106.1 | % | |||||||||||
Consolidated Balance Sheets |
||||||
As of | As of | |||||
June 28, | December 28, | |||||
2018 | 2017 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 547 | $ | 556 | ||
Income taxes receivable | 15,866 | 12,472 | ||||
Receivables, net | 41,343 | 54,041 | ||||
Inventories, net | 432,446 | 427,950 | ||||
Prepaid expenses and other current assets | 12,107 | 8,193 | ||||
Total current assets | 502,309 | 503,212 | ||||
Fixed assets, net | 271,500 | 220,952 | ||||
Intangible assets, net | 109,346 | 109,362 | ||||
Goodwill | 227,447 | 227,447 | ||||
Other assets | 7,808 | 7,019 | ||||
Total long-term assets | 616,101 | 564,780 | ||||
Total assets | $ | 1,118,410 | $ | 1,067,992 | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Current portion of term loans | $ | 3,500 | $ | 3,500 | ||
Trade accounts payable | 264,987 | 258,730 | ||||
Accrued expenses | 62,162 | 74,547 | ||||
Deferred revenue | 4,683 | 22,523 | ||||
Total current liabilities | 335,332 | 359,300 | ||||
Term loans | 143,198 | 144,562 | ||||
Revolving line of credit | 13,600 | 41,000 | ||||
Deferred rent | 30,650 | 25,570 | ||||
Deferred income tax liabilities, net | 30,702 | 27,218 | ||||
Tenant improvement allowances | 27,650 | 26,779 | ||||
Other liabilities | 2,604 | 703 | ||||
Total long-term liabilities | 248,404 | 265,832 | ||||
Total liabilities | 583,736 | 625,132 | ||||
Commitments and contingencies | ||||||
Stockholders’ equity | ||||||
Capital stock: | ||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0
shares issued and |
— | — | ||||
Common stock Class A, $0.001 par value; 450,000,000 shares
authorized; 97,218,543 |
97 | 96 | ||||
Common stock Class B, $0.001 par value; 10,000,000 shares
authorized; 0 shares |
— | — | ||||
Common stock Class C, $0.001 par value; 30,000,000 shares
authorized; 0 shares |
— | — | ||||
Additional paid-in capital | 335,024 | 323,419 | ||||
Accumulated other comprehensive income (loss), net | 460 | (205) | ||||
Retained earnings | 199,093 | 119,550 | ||||
Total stockholders’ equity | 534,674 | 442,860 | ||||
Total liabilities and stockholders’ equity | $ | 1,118,410 | $ | 1,067,992 | ||
Consolidated Statements of Cash Flows |
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Twenty-six Weeks Ended | |||||||
June 28, | June 29, | ||||||
2018 | 2017 | ||||||
Operating activities | |||||||
Net income | $ | 71,717 | $ | 31,557 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 23,632 | 18,058 | |||||
Non-cash loss on early extinguishment of debt | — | 5,442 | |||||
Amortization of tenant improvement allowances | (2,165) | (1,547) | |||||
Deferred income taxes | 2,822 | 7,586 | |||||
Interest cap derivative contracts | (794) | — | |||||
Stock based compensation expense | 2,952 | 2,135 | |||||
Changes in operating assets and liabilities: |
|
|
|||||
Receivables, net | 12,697 | (3,967) | |||||
Inventories, net | (14,989) | (73,771) | |||||
Other assets | (3,306) | (1,643) | |||||
Trade accounts payable | 6,257 | 85,118 | |||||
Accrued expenses | (21,912) | (10,901) | |||||
Income taxes | (5,320) | (7,868) | |||||
Deferred revenue | 2,441 | 7,063 | |||||
Deferred rent | 4,955 | 5,994 | |||||
Tenant improvement allowances | 3,034 | 3,124 | |||||
Other | 1,902 | 59 | |||||
Net cash provided by operating activities | 83,923 | 66,439 | |||||
Investing activities | |||||||
Purchases of fixed assets | (63,438) | (45,498) | |||||
Net cash used in investing activities | (63,438) | (45,498) | |||||
Financing activities | |||||||
Borrowings on revolving line of credit | 129,300 | 111,700 | |||||
Payments on revolving line of credit | (156,700) | (129,900) | |||||
Payments on term loans | (1,750) | (195,750) | |||||
Net proceeds from initial public offering | — | 192,082 | |||||
Proceeds from exercise of stock options | 8,656 | 1,855 | |||||
Debt issuance costs | — | (993) | |||||
Net cash used in financing activities | (20,494) | (21,006) | |||||
Net decrease in cash and cash equivalents | (9) | (65) | |||||
Cash and cash equivalents, beginning of the period | 556 | 451 | |||||
Cash and cash equivalents, end of the period | $ | 547 | $ | 386 | |||
Supplemental disclosures of cash flow information | |||||||
Cash paid for interest | $ | 3,844 | $ | 11,682 | |||
Cash paid for income taxes | $ | 637 | $ | 11,134 | |||
Fixed assets accrued at the end of the period | $ | 18,596 | $ | 8,472 | |||
Fixed assets acquired as part of lease - paid for by lessor | $ | — | $ | 1,786 | |||
Reconciliation of GAAP to Non-GAAP Financial Measures |
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Adjusted diluted weighted average shares outstanding |
|||||||||
Thirteen Weeks Ended |
|||||||||
6/28/2018 |
6/29/2017 |
||||||||
Diluted weighted average shares outstanding (GAAP) |
104,937 |
99,919 |
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Adjustments for issuance of shares at IPO |
— |
3,011 |
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Adjusted diluted weighted average shares outstanding |
104,937 |
102,930 |
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Twenty-six Weeks Ended | |||||||||
6/28/2018 | 6/29/2017 | ||||||||
Diluted weighted average shares outstanding (GAAP) | 104,808 | 94,900 | |||||||
Adjustments for issuance of shares at IPO | — | 6,579 | |||||||
Adjusted diluted weighted average shares outstanding | 104,808 | 101,479 | |||||||
Adjusted net income and Adjusted diluted EPS |
|||||||||
Thirteen Weeks Ended |
|||||||||
6/28/2018 | 6/29/2017 | ||||||||
Net income (GAAP): | $ | 39,846 | $ | 20,429 | |||||
Interest due to IPO (a) | — | 1,365 | |||||||
Term loan repricing (b) | — | 195 | |||||||
Secondary offering costs (c) | 815 | 285 | |||||||
Hurricane disaster recovery (d) | (205 | ) | — | ||||||
Loss on early extinguishment of debt (e) | — | 5,442 | |||||||
Miami distribution center exit (f) | 581 | — | |||||||
Tax benefit of stock option exercises (g) | (12,511 | ) | (4,408 | ) | |||||
Tax impact of adjustments to net income (h) | (153 | ) | (2,696 | ) | |||||
Adjusted net income | $ | 28,373 | $ | 20,612 | |||||
Adjusted diluted weighted average shares outstanding | 104,937 | 102,930 | |||||||
Adjusted diluted EPS | $ | 0.27 | $ | 0.20 | |||||
Twenty-six Weeks Ended |
|||||||||
6/28/2018 | 6/29/2017 | ||||||||
Net income (GAAP): | $ | 71,717 | $ | 31,557 | |||||
Interest due to IPO (a) | — | 4,095 | |||||||
Term loan repricing (b) | — | 686 | |||||||
Secondary offering costs (c) |
815 | 285 | |||||||
Hurricane disaster recovery (d) | (516 | ) | — | ||||||
Loss on early extinguishment of debt (e) | — | 5,442 | |||||||
Miami distribution center exit (f) | 581 | — | |||||||
Tax benefit of stock option exercises (g) | (17,413 | ) | (4,408 | ) | |||||
Tax impact of adjustments to net income (h) | (80 | ) | (3,888 | ) | |||||
Adjusted net income | $ | 55,104 | $ | 33,769 | |||||
Adjusted diluted weighted average shares outstanding | 104,808 | 101,479 | |||||||
Adjusted diluted EPS | $ | 0.53 | $ | 0.33 | |||||
(a) | Adjustment to decrease interest expense due to utilizing net proceeds from the IPO of approximately $192.0 million to pay down a portion of the Term Loan Facility (as described in the Company’s Annual Report for fiscal 2017 filed with the Securities and Exchange Commission on March 5, 2018 (the “Annual Report”)). | |
(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 (as described in the Annual Report). | |
(c) |
For the period ended June 28, 2018, 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 May 29, 2018 (the “May 2018 Secondary Offering”). For the period ended June 29, 2017, 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 2017 Secondary Offering”). 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) | Net insurance 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 (as described in the Annual Report), which resulted in a loss on extinguishment of debt in the amount of approximately $5.4 million in 2017. | |
(f) | Amounts for the thirteen and twenty-six weeks ended June 28, 2018 relate to costs incurred in connection with the closure of the Company’s Miami distribution center. | |
(g) | Tax benefit due to stock option exercises. | |
(h) | Adjustments for taxes related to pre-tax adjustments above. | |
EBITDA and Adjusted EBITDA |
||||||
Thirteen Weeks Ended | ||||||
6/28/2018 | 6/29/2017 | |||||
Net income (GAAP) | $ | 39,846 | $ | 20,429 | ||
Depreciation and amortization (a) | 10,683 | 8,026 | ||||
Interest expense | 2,145 | 3,353 | ||||
Loss on early extinguishment of debt (b) | — | 5,442 | ||||
Income tax expense (benefit) | (4,746) | 4,878 | ||||
EBITDA | 47,928 | 42,128 | ||||
Stock compensation expense (c) | 1,537 | 1,250 | ||||
Other (d) | 1,218 | 303 | ||||
Adjusted EBITDA | $ | 50,683 | $ | 43,681 | ||
Twenty-six Weeks Ended |
||||||
6/28/2018 | 6/29/2017 | |||||
Net income | $ | 71,717 | $ | 31,557 | ||
Depreciation and amortization (a) | 20,911 | 15,794 | ||||
Interest expense | 3,929 | 8,767 | ||||
Loss on early extinguishment of debt (b) | — | 5,442 | ||||
Income tax expense (benefit) | (1,895) | 11,008 | ||||
EBITDA | 94,662 | 72,568 | ||||
Stock compensation expense (c) | 2,952 | 2,135 | ||||
Other (d) | 896 | 875 | ||||
Adjusted EBITDA | $ | 98,510 | $ | 75,578 | ||
(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 2017 (as described in the Annual Report). | |
(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 and twenty-six weeks ended June 28, 2018, primarily relate to costs associated with the May 2018 Secondary Offering, the closing of the Company’s distribution center near Miami, Florida and expenses, net of insurance recoveries from hurricanes Harvey and Irma. Amounts for the thirteen and twenty-six weeks ended June 29, 2017, relate to costs associated with the IPO and the July 2017 Secondary Offering. | |
Reconciliation of GAAP to Non-GAAP Financial Measures - |
||||||||||
Adjusted net income and Adjusted diluted EPS |
||||||||||
Thirteen Weeks Ended | ||||||||||
9/27/2018 | 9/28/2017 | |||||||||
Low End | High End | Actual | ||||||||
Net income (GAAP): | $ | 22.0 | $ | 23.5 | $ | 23.3 | ||||
Term loan repricing (a) | — | — | 0.2 | |||||||
Secondary offering costs (b) | — | — | 0.7 | |||||||
Hurricane disaster expenses (c) | — | — | 0.5 | |||||||
Miami distribution center exit (d) | 0.7 | 0.7 | — | |||||||
Tax benefit of stock option exercises (e) | — | — | (6.8) | |||||||
Tax impact of adjustments to net income (f) | (0.2) | (0.2) | (0.5) | |||||||
Adjusted net income | $ | 22.5 | $ | 24.0 | $ | 17.3 | ||||
Adjusted weighted average shares outstanding | 105.2 | 105.2 | 103.9 | |||||||
Adjusted diluted EPS | $ | 0.21 | $ | 0.23 | $ | 0.17 | ||||
(a) | 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 (as described in the Annual Report). | |
(b) | Reflects costs accrued in connection with the July 2017 Secondary Offering. The Company did not sell any shares in the secondary offering and did not receive any proceeds from the sales of shares by the selling stockholders. | |
(c) | Expenses and losses from hurricanes Harvey and Irma recorded in the third quarter of 2017. | |
(d) | Reflects costs associated with the closing of the Company’s Miami distribution center. | |
(e) | Tax benefit due to stock option exercises. | |
(f) | Adjustment for taxes related to pre-tax adjustments above. | |
EBITDA and Adjusted EBITDA |
||||||||||
Thirteen Weeks Ended | ||||||||||
9/27/2018 | 9/28/2017 | |||||||||
Low End | High End | Actual | ||||||||
Net income (GAAP): | $ | 22.0 | $ | 23.5 | $ | 23.3 | ||||
Depreciation and amortization (a) | 12.6 | 12.6 | 8.5 | |||||||
Interest expense | 2.2 | 2.2 | 2.6 | |||||||
Income tax expense | 6.7 | 7.3 | 2.7 | |||||||
EBITDA | 43.5 | 45.6 | 37.1 | |||||||
Stock compensation expense (b) | 1.7 | 1.7 | 1.4 | |||||||
Other (c) | 0.7 | 0.7 | 1.2 | |||||||
Adjusted EBITDA | $ | 45.9 | $ | 48.0 | $ | 39.7 | ||||
(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 September 27, 2018 relate to the closing of the Company’s Miami distribution center. Amounts for the thirteen weeks ended September 28, 2017, relate to costs associated with the July 2017 Secondary Offering and expenses and losses from hurricanes Harvey and Irma. | |
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||||||||
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) | 105.1 | 105.1 | 99.7 | ||||||||||
Adjustments for issuance of shares at IPO | — | — | 3.3 | ||||||||||
Adjusted diluted weighted average shares outstanding | 105.1 | 105.1 | 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): | $ | 112.9 | $ | 116.4 | $ | 102.8 | |||||||
Interest due to IPO (a) | — | — | 4.1 | ||||||||||
Term loan repricing (b) | — | — | 0.9 | ||||||||||
Secondary offering costs (c) | 0.8 | 0.8 | 1.7 | ||||||||||
Hurricane disaster expenses (recovery) (d) | (0.5 | ) | (0.5 | ) | 0.1 | ||||||||
Loss on early extinguishment of debt (e) | — | — | 5.4 | ||||||||||
Miami distribution center exit (f) | 2.0 | 2.0 | — | ||||||||||
Tax benefit of stock option exercises (g) | (17.4 | ) | (17.4 | ) | (21.8 | ) | |||||||
Research and development tax credits (h) | — | — | (0.4 | ) | |||||||||
Deferred tax adjustment for tax reform (i) | — | — | (17.8 | ) | |||||||||
Tax impact of adjustments to net income (j) | (0.5 | ) | (0.5 | ) | (3.9 | ) | |||||||
Adjusted net income | $ | 97.3 | $ | 100.8 | $ | 71.0 | |||||||
Adjusted weighted average shares outstanding | 105.1 | 105.1 | 102.9 | ||||||||||
Adjusted diluted EPS | $ | 0.93 | $ | 0.96 | $ | 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 (as described in the Annual Report). | |
(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 (as described in the Annual Report). | |
(c) | Amounts for the year ended 2018 relate to costs accrued in connection with the May 2018 Secondary Offering. Amounts for the year ended 2017 relate to costs accrued in connection with the July 2017 Secondary Offering and a secondary public offering of the Company’s common stock by certain of the Company’s stockholders completed on November 20, 2017 (the “November 2017 Secondary Offering”). 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 2018 and 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 (as described in the Annual Report). | |
(f) | Reflects costs associated with the closing of the Company’s Miami distribution center. | |
(g) | Tax benefit due to stock option exercises. | |
(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. | |
EBITDA and Adjusted EBITDA |
||||||||||
Year Ended | ||||||||||
12/27/2018 | 12/28/2017 | |||||||||
Low End | High End | Actual | ||||||||
Net income (GAAP): | $ | 112.9 | $ | 116.4 | $ | 102.8 | ||||
Depreciation and amortization (a) | 47.5 | 47.5 | 33.5 | |||||||
Interest expense | 8.3 | 8.3 | 13.8 | |||||||
Loss on early extinguishment of debt (b) | — | — | 5.4 | |||||||
Income tax expense | 10.7 | 11.7 | (4.2) | |||||||
EBITDA | 179.4 | 183.9 | 151.3 | |||||||
Stock compensation expense (c) | 6.9 | 6.9 | 5.0 | |||||||
Loss on asset disposal | 0.1 | 0.1 | 0.1 | |||||||
Other (d) | 2.3 | 2.3 | 2.4 | |||||||
Adjusted EBITDA | $ | 188.7 | $ | 193.2 | $ | 158.8 | ||||
(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 (as described in the Annual Report). | |
(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 year ended 2018 relate to costs associated with the closing of the May 2018 Secondary Offering, the closing of the Company’s Miami distribution center and expenses, net of insurance recoveries from hurricanes Harvey and Irma. Amounts for the year ended 2017 relate to costs associated with the IPO, the July 2017 Secondary Offering and November 2017 Secondary Offering, 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, Adjusted diluted EPS, diluted weighted average shares outstanding, Adjusted EBITDA, warehouse format store count and new warehouse format stores for both the thirteen weeks ended September 27, 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 contained 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 Item 1A, “Risk Factors” of Part I and Item 7, “Special Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II of the Annual Report, and “Business” sections and elsewhere in the Annual Report.
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, Adjusted diluted EPS, diluted weighted average shares outstanding, Adjusted EBITDA, warehouse format store count and new warehouse format stores for both the thirteen weeks ended September 27, 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.
CONTACT:
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