EX-99.1 2 v376223_ex99-1.htm EXHIBIT 99.1

 

FOR IMMEDIATE RELEASE

 

LUMBER LIQUIDATORS ANNOUNCES FIRST QUARTER 2014 FINANCIAL RESULTS AND UPDATES FULL YEAR 2014 OUTLOOK

 

~ Net Sales Increased 6.9% to $246.3 Million, Adversely Impacted by Unusually Severe Weather ~

~ Comparable Store Net Sales Decline 0.6% ~

~ Net Income of $13.7 Million, or $0.49 per Diluted Share ~

~ Company Maintains Full Year 2014 Outlook for Net Sales of $1.15 billion to $1.20 billion and EPS of $3.25 to $3.60 ~

 

TOANO, Va, April 30, 2014 – 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, 2014, and reiterated its outlook for 2014.

 

First Quarter Results

 

Net sales increased $15.9 million, or 6.9%, to $246.3 million in the first quarter of 2014 from $230.4 million in the first quarter of 2013. The Company estimates unusually severe winter weather adversely impacted net sales in as many as 135 of its 331 store locations in operation at March 31, 2014. In those stores adversely impacted by weather, net sales declined 3.8% to $93.6 million, and in all other stores, net sales increased 14.6% to $152.7 million.

 

In comparable stores, net sales decreased 0.6% overall, including a 13.1% decrease in weather-impacted stores and an 8.5% increase in all other stores. The Company’s average sale across all stores rose 2.6% in the first quarter of 2014, indicating a 3.2% decrease in the number of customers invoiced. As the weather moderated, customer demand generally strengthened across comparable stores. The Company believes a significant portion of the customer demand delayed by adverse weather in the first quarter will be recovered in the second and third quarters of 2014.

 

Gross margin was 41.1% in the first quarter of 2014 compared to 40.4% in the first quarter of 2013. The increase in gross margin reflects generally higher net product margin due to continued shifts in sales mix and lower product costs, partially offset by higher net transportation costs. Transportation costs included certain expenses related to the start-up of the West Coast distribution center, which began serving over 90 western store locations in March 2014.

 

Selling, general and administrative (“SG&A”) expenses increased $11.3 million, or 16.7%, to $78.9 million, and included incremental costs of $1.0 million related to the West Coast distribution center and a $1.7 million increase in legal and professional fees compared to the first quarter of 2013. SG&A expenses were 32.0% of net sales in the first quarter of 2014, up from 29.3% in the first quarter of 2013.

 

Net income decreased 13.2% to $13.7 million, or $0.49 per diluted share, in the first quarter of 2014 from $15.8 million, or $0.57 per diluted share, in the first quarter of the prior year.

 

Cash and cash equivalents at March 31, 2014 totaled $76.1 million compared with $72.7 million at March 31, 2013 and $80.6 million at December 31, 2013.

 

Robert M. Lynch, President and Chief Executive Officer, commented, “Like so many, our team was frustrated by the severity, scale and duration of the harsh winter and the adverse impact it had on our net sales. Our customers generally follow a long purchase cycle, which we believe was either interrupted or completely suspended due to the unusually severe winter weather. However, as conditions generally became more seasonal in mid-March, customer demand increased. The key strategic initiatives we have implemented over the last two years have strengthened our operations, and we believe we are more capable than ever of serving customers who postponed their flooring purchase in the first quarter.”

 

 
 

 

Company Outlook

 

The Company has reiterated its previously provided full year outlook for net sales and earnings per share, and now expects to achieve the following for the full year 2014:

 

·Net sales in the range of $1.15 billion to $1.20 billion.

 

·Comparable store net sales increasing in the mid to high single digits, from a previous range of high single to low-double digits.

 

·The opening of a total of 35 to 40 new store locations in the expanded showroom format, from a previous range of 30 to 40 new store locations.

 

·The remodeling of a total of 25 to 30 existing stores in the expanded showroom format, from a previous range of 25 to 35 existing stores.

 

·Capital expenditures between $80 million and $90 million, including up to $50 million for supply chain investments.

 

·De-leverage of SG&A expenses primarily related to store base expansion, advertising expenses increasing at a rate greater than net sales, the opening and continuing operation of the West Coast distribution center and higher than normal legal and professional fees.

 

·Operating margin expansion to a range of 13.0% to 13.8%.

 

·Earnings per diluted share in the range of approximately $3.25 to $3.60, based on a diluted share count of approximately 27.9 million shares, which is exclusive of any future impact of the stock repurchase program.

 

Mr. Lynch concluded, “As we look forward, we remain confident in the long-term strength of our business model and believe that our value proposition will allow us to gain further share in the fragmented wood flooring market. Our infrastructure investment this year will be the largest in our history, as we open key facilities in our supply chain, expand our finishing capacity, explore vertical integration and continue our store base expansion. Our new stores continue to exceed our plans, and we expect that the long-term investments we have made implementing our key strategic initiatives will enable us to expand operating margin in the remainder of the year and beyond.”

 

Conference Call and Webcast Information

 

The Company plans to host a conference call and audio webcast today, April 30, 2014, at 10:00 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 7, 2014 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering pin number 13580205. The live conference call and replay may also be accessed via audio webcast at the Investor Relations section of the Company’s website, www.lumberliquidators.com.

 

 
 

 

About Lumber Liquidators

 

In its 20th year and with more than 335 locations, Lumber Liquidators is North America’s largest specialty retailer of hardwood flooring. Lumber Liquidators features more than 340 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 Prefinished Hardwood 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.  You can also follow the company on Facebook and Twitter, and learn more about its corporate giving program at LayItForward.LumberLiquidators.com.

 

Forward-Looking Statements

 

This press release and accompanying financial tables may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act. These statements are based on currently available information as of the date of such statements and are subject to risks and uncertainties that may cause actual results to differ. The Company specifically disclaims any obligation to update these statements which speak only as of their respective dates, except as may be required under the federal securities laws. Information regarding these additional risks and uncertainties is contained in the Company’s filings with the Securities and Exchange Commission.

 

For further information contact:

 

Lumber Liquidators Investor Relations  
Ashleigh McDermott  
Tel: 757.566.7512  

 

(Tables Follow)

 

 
 

 

Lumber Liquidators Holdings, Inc. 

Condensed Consolidated Balance Sheets

(in thousands, except share data)

 

   March 31,   December 31, 
   2014   2013 
   (unaudited)     
Assets          
Current Assets:          
Cash and Cash Equivalents  $76,065   $80,634 
Merchandise Inventories   247,370    252,428 
Prepaid Expenses   7,926    6,229 
Other Current Assets   11,880    12,916 
Total Current Assets   343,241    352,207 
Property and Equipment, net   78,409    65,947 
Goodwill   9,693    9,693 
Other Assets   1,698    1,712 
Total Assets  $433,041   $429,559 
           
Liabilities and Stockholders’ Equity          
Current Liabilities:          
Accounts Payable  $41,496   $56,327 
Customer Deposits and Store Credits   33,510    22,377 
Accrued Compensation   4,813    11,709 
Sales and Income Tax Liabilities   8,046    4,878 
Other Current Liabilities   18,330    11,709 
Total Current Liabilities   106,195    107,000 
           
Deferred Rent   4,862    4,169 
Deferred Tax Liability   9,636    9,061 
           
Stockholders’ Equity:          
Common Stock ($0.001 par value; 35,000,000 authorized; 27,505,476 and 27,557,570 outstanding, respectively)   30    30 
Treasury Stock, at cost (2,311,285 and 2,133,307 shares, respectively)   (103,046)   (85,382)
Additional Capital   171,419    164,581 
Retained Earnings   244,356    230,662 
Accumulated Other Comprehensive Loss   (411)   (562)
Total Stockholders’ Equity   312,348    309,329 
Total Liabilities and Stockholders’ Equity  $433,041   $429,559 

 

 
 

 

Lumber Liquidators Holdings, Inc. 

Condensed Consolidated Statements of Income

 (in thousands, except share data and per share amounts)

(unaudited)

 

   Three Months Ended 
   March 31, 
   2014   2013 
         
Net Sales  $246,291   $230,419 
Cost of Sales   145,004    137,422 
           
Gross Profit   101,287    92,997 
           
Selling, General and Administrative Expenses   78,866    67,589 
           
Operating Income   22,421    25,408 
           
Other (Income) Expense   94    (210)
           
Income Before Income Taxes   22,327    25,618 
           
Provision for Income Taxes   8,633    9,837 
           
Net Income  $13,694   $15,781 
           
Net Income per Common Share—Basic  $0.50   $0.58 
           
Net Income per Common Share—Diluted  $0.49   $0.57 
           
Weighted Average Common Shares Outstanding:          
Basic   27,521,443    27,211,506 
Diluted   27,832,110    27,783,611 

 

 
 

 

Lumber Liquidators Holdings, Inc. 

Condensed Consolidated Statements of Cash Flows 

(in thousands)

(unaudited)

 

   Three Months Ended 
   March 31, 
   2014   2013 
         
Cash Flows from Operating Activities:          
Net Income  $13,694   $15,781 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:          
Depreciation and Amortization   3,437    2,716 
Stock-Based Compensation Expense   1,514    1,107 
Changes in Operating Assets and Liabilities:          
Merchandise Inventories   4,897    (3,522)
Accounts Payable   (16,305)   (15,966)
Customer Deposits and Store Credits   11,170    2,874 
Prepaid Expenses and Other Current Assets   (533)   1,952 
Other Assets and Liabilities   4,421    6,122 
Net Cash Provided by Operating Activities   22,295    11,064 
           
Cash Flows from Investing Activities:          
Purchases of Property and Equipment   (14,384)   (2,589)
Net Cash Used in Investing Activities   (14,384)   (2,589)
           
Cash Flows from Financing Activities:          
Payments for Stock Repurchases   (17,664)   (4,276)
Proceeds from the Exercise of Stock Options   2,089    1,278 
Excess Tax Benefit from Stock-Based Compensation   3,224    3,367 
Net Cash (Used in) Provided by Financing Activities   (12,351)   369 
Effect of Exchange Rates on Cash and Cash Equivalents   (129)   (283)
Net (Decrease) Increase in Cash and Cash Equivalents   (4,569)   8,561 
Cash and Cash Equivalents, Beginning of Period   80,634    64,167 
Cash and Cash Equivalents, End of Period  $76,065   $72,728 

 

 
 

 

Lumber Liquidators Holdings, Inc. 

Other Supporting Schedules 

(in thousands)

(unaudited)

 

Segregation of total first quarter 2014 net sales and the percentage change in comparison to the first quarter of 2013 into those stores the Company believes were significantly impacted by the unusually severe weather from all other stores:

 

   Three Months Ended March 31, 2014 
  

 

All Stores

   Stores Significantly
Impacted by Weather
  

 

All Other Stores

 
         
Net sales  $246,291   $93,628   $152,663 
Percentage increase (decrease)   6.9%   (3.8)%   14.6%
                     percentage increase (decrease) 
Comparable stores net sales1   (0.6)%   (13.1)%   8.5%
                
Net sales in markets with all stores comparable (no cannibalization)   3.2%   (7.1)%   9.8%
Net sales in cannibalized markets2   17.2%   0.6%   37.0%

___________________

1A store is generally considered comparable on the first day of the thirteenth full calendar month after opening

2A cannibalized market has at least one comparable store and one non-comparable store