TOANO, Va., May 2, 2017 /PRNewswire/ -- Lumber Liquidators
(NYSE: LL), the largest specialty retailer of hardwood flooring in
North America, today announced
financial results for the first quarter ended March 31, 2017.
First Quarter Results
Net sales in the first quarter of 2017 were $248.4 million, an increase of 6.4% from the
first quarter of 2016. This includes a comparable store net sales
increase of 4.7%, which reflected a 4.8% increase in average sale
slightly offset by a 0.1% decrease in customers invoiced.
Non-comparable store net sales increased $3.9 million over the comparable prior year
period. The Company opened two new stores during the first quarter
of 2017, bringing its total stores to 385.
Gross margin was 34.9% in the first quarter of 2017, compared
with 32.6% in the prior year period. The increase in gross margin
was impacted by the $2.9 million in
expenses for the Company's indoor air quality testing program
during the first quarter of 2016 which did not impact the first
quarter of 2017. The increase in gross margin in the first quarter
of 2017 was also due to increases in the sales mix of manufactured
products such as vinyl and ancillary products, both of which have
higher gross margins, and lower transportation costs due to 2016
including incremental costs related to consolidating its
discontinued Chinese laminates to a central warehouse. These
benefits were partially offset by an increased mix of installation
sales that have slightly lower gross margins.
Selling, general and administrative ("SG&A") expenses in the
first quarter of 2017 were $112.2
million compared to $117.2
million in the prior year quarter. In the quarter, the
Company recorded a charge of $18.0
million related to its outstanding formaldehyde-related
multi district litigation ("MDL") and its abrasion-related MDL.
This charge and other items impacting SG&A are detailed in the
attached supplemental schedule. Excluding those items, SG&A
increased $4.8 million as compared to
the year ago period driven by a $5.3
million increase in payroll related costs as a result of
greater store level staffing, commissions, and investments in
corporate capabilities partially offset by a $0.6 million net reduction in other SG&A
elements.
Net loss for the first quarter of 2017 was $26.4 million, or a loss of $0.93 per diluted share, as compared to a net
loss of $32.4 million, or
$1.20 per diluted share, during the
prior year period. The net loss and per share amounts for the
quarter ended March 31, 2017 do not
include the application of tax benefits to the pre-tax loss
amount.
At March 31, 2017, the Company had
$71.2 million in liquidity, comprised
of $11.0 million of cash and cash
equivalents and $60.2 million of
availability under its revolving credit facility. The Company
had $72.0 million outstanding on its
revolving credit facility at March 31,
2017. This compares to $101.0
million in liquidity at December 31,
2016, comprised of $10.3
million of cash and $90.7
million of availability under its revolving credit
facility. The Company had $40.0
million outstanding on its revolving credit facility at
December 31, 2016.
Dennis Knowles, Chief Executive
Officer, commented, "We continue to be pleased with our top line
sales performance, as we move from negative to low single-digit
growth in comparable store sales. Our investments in a
broader assortment and trend-right products are providing returns
in sales and margin. We continue to take steps to resolve legacy
legal and regulatory issues and optimize our cost structure. While
these are positive developments for our business, we remain focused
on the long-term strategic direction of the Company. Our main goals
are to provide better service to our customers, foster a great
place to work for our employees and return Lumber Liquidators to a
thriving and profitable business for our shareholders."
Conference Call and Webcast Information
The Company plans to host a conference call and audio webcast on
May 2, 2017, at 8:00 a.m. Eastern Time. The conference may be
accessed by dialing (877) 407-9039 or (201) 689-8470. A replay will
be available approximately two hours after the call ends through
May 9, 2017 and may be accessed by
dialing (844) 512-2921 or (412) 317-6671 and entering pin number
13658774. The live conference call and replay can also be accessed
via audio webcast at the Investor Relations section of the
Company's website, www.lumberliquidators.com.
About Lumber Liquidators
With 385 locations, Lumber Liquidators is North
America's largest specialty retailer of hardwood flooring. The
Company features more than 400 top quality flooring varieties,
including solid and engineered hardwood, bamboo, cork, laminate and
resilient vinyl. Additionally, Lumber Liquidators provides a wide
selection of flooring enhancements and accessories to complement,
install and maintain your new floor. Every location is staffed with
flooring experts who can provide advice and useful information
about Lumber Liquidators' low priced product, much of which is in
stock and ready for delivery.
With premier brands including Bellawood and Morning
Star Bamboo, Lumber Liquidators' flooring is often featured on
popular television shows such as HGTV's Dream Home and This Old
House. For more information, please visit www.LumberLiquidators.com
or call 1.800.HARDWOOD.
Lumber Liquidators aims to be the industry leader in
sustainability. For more information, please visit
www.LumberLiquidators.com/Sustainability. Learn more about our
corporate giving program at LayItForward.LumberLiquidators.com. You
can also follow the Company on Facebook and Twitter.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT
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," "believes," "thinks,"
"estimates," "seeks," "predicts," "could," "projects," "potential"
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. Forward-looking
statements in this press release may include, without limitation,
statements regarding legal matters and settlement discussions, the
terms of and compliance with the Plea Agreement with the Department
of Justice (the "Plea Agreement") and the associated environmental
compliance plan (the "Lacey Compliance Plan"), the Company's
ability to borrow under its asset-based revolving credit facility,
elevated levels of legal and professional fees, elevated levels of
payroll and stock-based compensation expense, sales growth,
comparable store net sales, number of stores providing installation
services, impact of cannibalization, impact of inflation, price
changes, inventory availability and inventory per store, inventory
valuation, earnings performance, stock-based compensation expense,
margins, return on invested capital, advertising costs, costs to
administer the Company's indoor air quality testing program,
intention to conduct additional investigation and reviews in
connection with certain consumers' indoor air quality tests,
strategic direction, the scale of the expansion of and transition
to the Company's laminate products sourced from Europe and North
America, supply chain, the demand for the Company's
products, benefits from an improving housing market, volatility in
the housing market; construction of engineered hardwood as to not
be subject to anti-dumping and countervailing duties, ultimate
resolution of governmental investigations, and store openings and
remodels. The Company's actual results could differ
materially from those projected in or contemplated by the
forward-looking statements as a result of potential risks,
uncertainties and other factors including, but not limited to,
changes in general economic and financial conditions, such as the
rate of unemployment, consumer access to credit, and interest rate;
the volatility in mortgage rates; the legislative/regulatory
climate; political unrest in the countries of the Company's
suppliers; the ability to retain and motivate Company employees;
the availability of sufficient suitable hardwood; the impact on the
Company if the Company is unable to maintain quality control over
its products; the cost and effect on the Company's reputation of,
and consumers' purchasing decisions in connection with, unfavorable
allegations surrounding the product quality of the Company's
laminates sourced from China; the
terms of and compliance with the voluntary measures associated with
the settlement agreement with the California Air Resources Board;
the terms of and compliance with the corrective action plan
associated with the settlement agreement with the Consumer Product
Safety Commission; changes in international trade laws and
treaties; the Company's suppliers' ability to meet its quality
assurance requirements; disruption in the Company's suppliers'
abilities to supply needed inventory; the impact on the Company's
business of its expansion of laminate products sourced from
Europe and North America and the flooring industry's
demand for product from these regions; disruptions or delays in the
production, shipment, delivery or processing through ports of
entry; the strength of the Company's competitors and their ability
to increase their market share; slower growth in personal income;
the number of customers requesting and cost associated with
addressing the Company's indoor air quality testing program; the
ability to collect necessary additional information from applicable
customers in connection with indoor air quality test results;
changes in business and consumer spending and the demand for the
Company's products; changes in transportation costs; the rate of
growth of residential remodeling and new home construction; the
Company's ability to offset the effects of the rate of inflation,
if higher than expected; the demand for and profitability of
installation services; changes in the scope or rates of any
antidumping or countervailing duty rates applicable to the
Company's products; the duration, costs and outcome of pending or
potential litigation or governmental investigations; ability to
successfully and timely implement the Lacey Compliance Plan;
ability to make timely payments pursuant to the terms of the Plea
Agreement; ability to borrow under its asset-based revolving credit
facility; ability to reach an appropriate resolution in connection
with the governmental investigations; uncertainty regarding the
disposition of the laminate flooring sourced from China and costs and/or benefits associated
with such disposal; and inventory levels. 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. Information
regarding these additional risks and uncertainties is contained in
the Company's other reports filed with the Securities and Exchange
Commission, including the Item 1A, "Risk Factors," section of the
Form 10-K for the year ended December 31,
2016.
For further information contact:
Lumber Liquidators Investor Relations
Steve Calk
Tel: 757.566.7512
(Tables Follow)
|
Lumber Liquidators
Holdings, Inc.
Consolidated
Balance Sheets
(in thousands,
except share data)
|
|
|
|
|
March
31,
|
|
|
|
December
31,
|
|
|
|
2017
|
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
10,971
|
|
|
$
|
10,271
|
|
Merchandise
Inventories
|
|
|
301,332
|
|
|
|
301,892
|
|
Prepaid
Expenses
|
|
|
6,316
|
|
|
|
5,367
|
|
Refundable Income
Taxes
|
|
|
31,171
|
|
|
|
31,429
|
|
Other Current
Assets
|
|
|
3,900
|
|
|
|
5,346
|
|
Total Current
Assets
|
|
|
353,690
|
|
|
|
354,305
|
|
Property and Equipment,
net
|
|
|
112,091
|
|
|
|
115,004
|
|
Goodwill
|
|
|
9,693
|
|
|
|
9,693
|
|
Other Assets
|
|
|
3,522
|
|
|
|
3,542
|
|
Total
Assets
|
|
$
|
478,996
|
|
|
$
|
482,544
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
$
|
87,381
|
|
|
$
|
120,647
|
|
Customer Deposits and
Store Credits
|
|
|
42,127
|
|
|
|
32,639
|
|
Accrued
Compensation
|
|
|
6,945
|
|
|
|
9,193
|
|
Sales and Income Tax
Liabilities
|
|
|
5,196
|
|
|
|
4,249
|
|
Other Current
Liabilities
|
|
|
36,236
|
|
|
|
19,984
|
|
Total Current
Liabilities
|
|
|
177,885
|
|
|
|
186,712
|
|
Other Long-Term
Liabilities
|
|
|
18,982
|
|
|
|
21,142
|
|
Deferred Tax
Liability
|
|
|
3,995
|
|
|
|
3,798
|
|
Revolving Credit
Facility
|
|
|
72,000
|
|
|
|
40,000
|
|
Total
Liabilities
|
|
|
272,862
|
|
|
|
251,652
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Common Stock ($0.001
par value; 35,000,000 shares authorized;
31,258,368 and 31,102,436 shares issued and 28,384,125 and
28,248,606 shares outstanding, respectively)
|
|
|
31
|
|
|
|
31
|
|
Treasury Stock, at
cost (2,874,243 and 2,853,830 shares, respectively)
|
|
|
(139,791)
|
|
|
|
(139,420)
|
|
Additional
Capital
|
|
|
204,653
|
|
|
|
202,700
|
|
Retained
Earnings
|
|
|
142,665
|
|
|
|
169,037
|
|
Accumulated Other
Comprehensive Loss
|
|
|
(1,424)
|
|
|
|
(1,456)
|
|
Total Stockholders'
Equity
|
|
|
206,134
|
|
|
|
230,892
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
478,996
|
|
|
$
|
482,544
|
|
Lumber Liquidators
Holdings, Inc.
Consolidated
Statements of Operations
(in thousands,
except share data and per share amounts)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Net
Sales
|
$
|
248,389
|
|
$
|
233,513
|
|
Cost of
Sales
|
|
161,590
|
|
|
157,404
|
|
Gross
Profit
|
|
86,799
|
|
|
76,109
|
|
Selling, General and
Administrative Expenses
|
|
112,214
|
|
|
117,236
|
|
Operating
Loss
|
|
(25,415)
|
|
|
(41,127)
|
|
Other
Expense
|
|
512
|
|
|
151
|
|
Loss Before Income
Taxes
|
|
(25,927)
|
|
|
(41,278)
|
|
Income Tax Expense
(Benefit)
|
|
445
|
|
|
(8,876)
|
|
Net
Loss
|
$
|
(26,372)
|
|
$
|
(32,402)
|
|
Net Loss per
Common Share—Basic
|
$
|
(0.93)
|
|
$
|
(1.20)
|
|
Net Loss per
Common Share—Diluted
|
$
|
(0.93)
|
|
$
|
(1.20)
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
Basic
|
|
28,291,658
|
|
|
27,090,575
|
|
Diluted
|
|
28,291,658
|
|
|
27,090,575
|
|
Lumber Liquidators
Holdings, Inc.
Consolidated
Statements of Cash Flows
(in
thousands)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2017
|
|
2016
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
Net Loss
|
$
|
(26,372)
|
|
$
|
(32,402)
|
|
Adjustments to
Reconcile Net Loss to Net Cash Used in Operating
Activities:
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
4,335
|
|
|
4,524
|
|
Stock-Based
Compensation Expense
|
|
1,259
|
|
|
1,671
|
|
Stock-Based Portion of
Provision for Securities Class Action
|
|
-
|
|
|
16,020
|
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
|
|
|
Merchandise
Inventories
|
|
(298)
|
|
|
3,578
|
|
Accounts
Payable
|
|
(32,032)
|
|
|
(2,925)
|
|
Customer Deposits and
Store Credits
|
|
9,587
|
|
|
23
|
|
Prepaid Expenses and
Other Current Assets
|
|
733
|
|
|
(34,115)
|
|
Other Assets and
Liabilities
|
|
13,029
|
|
|
35,427
|
|
Net Cash Used in
Operating Activities
|
|
(29,759)
|
|
|
(8,199)
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
Purchases of Property
and Equipment
|
|
(2,502)
|
|
|
(2,409)
|
|
Net Cash Used in
Investing Activities
|
|
(2,502)
|
|
|
(2,409)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
Proceeds from the
Exercise of Stock Options
|
|
815
|
|
|
-
|
|
Payments on Capital
Lease Obligations
|
|
(114)
|
|
|
-
|
|
Borrowings on
Revolving Credit Facility
|
|
35,000
|
|
|
10,000
|
|
Payments on Revolving
Credit Facility
|
|
(3,000)
|
|
|
(5,000)
|
|
Other Financing
Activities
|
|
(371)
|
|
|
(80)
|
|
Net Cash Provided
by Financing Activities
|
|
32,330
|
|
|
4,920
|
|
Effect of Exchange
Rates on Cash and Cash Equivalents
|
|
631
|
|
|
958
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
700
|
|
|
(4,730)
|
|
Cash and Cash
Equivalents, Beginning of Period
|
|
10,271
|
|
|
26,703
|
|
Cash and Cash
Equivalents, End of Period
|
$
|
10,971
|
|
$
|
21,973
|
|
Lumber Liquidators
Holdings, Inc.
Other Supporting
Schedules
(in
thousands)
|
|
|
Items impacting
SG&A with comparisons to the prior year include:
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(dollars in
thousands)
|
|
Multi-District
Litigation 1
|
|
$
|
18,000
|
|
$
|
-
|
|
|
Legal and
Professional Fees 2
|
|
|
2,344
|
|
|
10,414
|
|
|
Securities and
Derivatives Class Action 3
|
|
|
-
|
|
|
18,520
|
|
|
All Other
4
|
|
|
-
|
|
|
1,275
|
|
|
Total
|
|
$
|
20,344
|
|
$
|
30,209
|
|
|
___________________
|
|
|
|
|
|
|
|
|
1 This
amount represents the charge to earnings related to the Company's
formaldehyde-related MDL and abrasion-related MDL, which is
described more fully in Note 7 to the condensed consolidated
financial statements in the Form 10-Q for the quarterly period
ended March 31, 2017.
|
|
2
Represents charges to earnings related to the Company's defense of
various significant legal actions during the period. This does not
include all legal costs incurred by the Company.
|
|
3 This
amount represents the net charge to earnings related to the
stock-based element of the Company's 2016 settlement in the
securities class action lawsuit in addition to $2.5 million related
to the Company's' derivatives class action lawsuit.
|
|
4 All
other primarily relates to various payroll factors, including the
Company's retention initiatives, and the net impact of the CARB and
Prop 65 settlements in 2016.
|
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visit:http://www.prnewswire.com/news-releases/lumber-liquidators-announces-first-quarter-2017-financial-results-300449040.html
SOURCE Lumber Liquidators