EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1





~ First Quarter Net Sales Increased 5.6% to $159.7 Million ~

~ First Quarter Net Income of $5.8 Million, or $0.20 per Diluted Share ~

~ Opens 16 Stores in First Quarter, Including Three in Canada ~

TOANO, Va, April 27, 2011 – Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in the U.S., today announced financial results for the first quarter ended March 31, 2011, and updated its outlook for 2011.

First Quarter Results

Net sales increased $8.5 million, or 5.6%, to $159.7 million in the first quarter of 2011 from $151.2 million in the first quarter of 2010. Comparable store net sales decreased 4.3% for the quarter, in comparison to an increase of 8.0% for the first quarter of the prior year. Comparable store net sales for the first quarter generally reflect the adverse impact of inconsistent servicing of new demand following the implementation of the Company’s integrated technology solution in August 2010. The effective execution of promotional strategies resulting from strengthened coordination of merchandising, marketing and store operations efforts positively impacted net sales in the quarter.

Non-comparable store net sales increased $15.0 million over the prior year period as the Company opened a record 16 new stores during the first quarter, including three in Canada. Seven of the 16 locations were opened in March. In comparison, the Company opened 11 new store locations in the first quarter of 2010.

Gross margin was 36.2% in the first quarter of 2011 compared to 35.4% in the first quarter of 2010. The increase in gross margin reflects benefits from sourcing initiatives, a shift in the sales mix to higher margin products and strengthened in-store retail price discipline partially offset by increased transportation costs.

Selling, general and administrative (“SG&A”) expenses were $48.5 million, or 30.3% of net sales, for the first quarter of 2011 compared to $42.2 million, or 27.9% of net sales, for the first quarter of 2010. The increase in SG&A expenses as a percentage of net sales for the first quarter of 2011 reflects an increase in certain payroll and occupancy costs of the Company’s new stores, including Canada, depreciation of the integrated technology solution, and increases in certain other costs, including legal, professional and bankcard discount rate fees. This was partially offset by leverage of the Company’s national advertising spend.

Net income decreased 17.1% to $5.8 million, or $0.20 per diluted share, in the first quarter of 2011 from $7.0 million, or $0.25 per diluted share, in the first quarter of the prior year. The effective tax rate was 38.7% in the first quarter of 2011 compared with 38.8% in the first quarter of 2010.

Jeffrey W. Griffiths, Chief Executive Officer, commented, “We are pleased with our progress across a range of strategic initiatives. We believe our store operations have regained pre-implementation levels of productivity and have improved execution in converting demand to net sales. Importantly, we believe our value proposition continued to resonate with customers during the quarter. We also further strengthened our management team and have already begun to see a positive impact to our business. In particular, our

team’s enhanced supply chain expertise was instrumental in implementing several sourcing initiatives which helped drive gross margin expansion. Finally, we opened a record number of new stores during the quarter, including our first three stores in the Canadian market. Overall, we remain confident in the strength of our business model and our ability to deliver shareholder value over the long-term.”

Company Outlook

In 2011, the Company expects to achieve the following:



Net sales for the full year in the range of $700 million to $730 million.



A comparable store net sales increase in the low to mid-single digits.



The opening of a total of 40 to 50 new store locations, with 35 to 40 in the U.S. and the remainder in Canada.



Full year 2011 earnings per diluted share in the range of $1.13 to $1.28, based on a diluted share count of approximately 28.5 million shares, with earnings growth weighted toward the back half of the year.



Positive free cash flow1 for the year, with capital expenditures in the range of approximately $16 million to $18 million and available merchandise inventory per store in the range of approximately $570,000 to $590,000.

Mr. Griffiths concluded, “We are encouraged by our solid start to 2011, and expect to continue building momentum as we move through the remainder of the year. In the second quarter, we may continue to experience some lingering impact to demand generation due to our systems implementation and we remain cautious about macroeconomic challenges that may persist. However, we are confident that our value proposition, improvements that we are making in our sourcing programs and in-store operations, and our commitment to serving our customers will allow us to continue gaining share in the fragmented hardwood flooring market. With a strengthened management team, reinvigorated focus on disciplined customer service, debt free balance sheet and strong capital structure, we are confident that we have the right foundation in place for future growth.”

Conference Call and Webcast Information

The Company plans to host a conference call and audio webcast on April 27, 2011, 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 one hour after the call through May 11, 2011 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering conference ID number 370971. 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 over 240 locations, Lumber Liquidators is North America’s largest specialty retailer of hardwood flooring. The Company features more than 340 first quality flooring varieties, including solid and engineered hardwood, bamboo, cork, laminate and resilient vinyl. 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.


1  Free cash flow is defined as net cash provided by operating activities less capital expenditures.

Named one of Forbes’ 100 Most Trustworthy Companies of 2010, the Company’s quality products—such as Bellawood Prefinished Hardwood and Morning Star Bamboo—regularly appear on popular television shows, such as Extreme Makeover: Home Edition and HGTV’s Dream Home.

For more information, please visit www.lumberliquidators.com or call 1.800.HARDWOOD. You can also follow the Company on Facebook and Twitter.

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    FD
Daniel Terrell/Ashleigh McDermott    Leigh Parrish/Megan Crudele
Tel: 757.566.7512    Tel. 212.850.5600
       (Tables Follow)

Lumber Liquidators Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)


     March 31,
    December 31,



Current Assets:


Cash and Cash Equivalents

   $ 43,130      $ 34,830   

Merchandise Inventories

     162,992        155,131   

Prepaid Expenses

     5,443        4,837   

Other Current Assets

     7,801        8,007   

Total Current Assets

     219,366        202,805   

Property and Equipment, net

     37,979        35,314   

Other Assets

     4,148        4,171   

Total Assets

   $ 261,493      $ 242,290   

Liabilities and Stockholders’ Equity


Current Liabilities:


Accounts Payable

   $ 32,994      $ 33,744   

Customer Deposits and Store Credits

     20,143        12,039   

Accrued Compensation

     3,499        2,460   

Sales and Income Tax Liabilities

     4,085        2,859   

Other Current Liabilities

     6,959        5,585   

Total Current Liabilities

     67,680        56,687   

Deferred Rent

     3,057        2,746   

Deferred Tax Liability

     2,114        2,352   

Stockholders’ Equity:


Common Stock ($0.001 par value; 35,000,000 authorized; 27,599,174 and 27,472,680 outstanding, respectively)

     28        27   

Additional Capital

     102,892        100,531   

Retained Earnings

     85,723        79,947   

Accumulated Other Comprehensive Income (Loss)

     (1     —     

Total Stockholders’ Equity

     188,642        180,505   

Total Liabilities and Stockholders’ Equity

   $ 261,493      $ 242,290   

Lumber Liquidators Holdings, Inc.

Condensed Consolidated Statements of Income

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



     Three Months Ended
March 31,
     2011     2010  

Net Sales

   $ 159,680      $ 151,195   

Cost of Sales

     101,887        97,691   

Gross Profit

     57,793        53,504   

Selling, General and Administrative Expenses

     48,453        42,213   

Operating Income

     9,340        11,291   

Interest and Other Income, net

     (87     (93

Income Before Income Taxes

     9,427        11,384   

Provision for Income Taxes

     3,650        4,416   

Net Income

   $ 5,777      $ 6,968   

Net Income per Common Share—Basic

   $ 0.21      $ 0.26   

Net Income per Common Share—Diluted

   $ 0.20      $ 0.25   

Weighted Average Common Shares Outstanding:



     27,572,244        27,283,296   


     28,378,063        28,180,265   

Lumber Liquidators Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)



     Three Months Ended
March 31,
     2011     2010  

Cash Flows from Operating Activities:


Net Income

   $ 5,777      $ 6,968   

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:


Depreciation and Amortization

     1,910        1,325   

Stock-Based Compensation Expense

     922        693   

Changes in Operating Assets and Liabilities:


Merchandise Inventories

     (7,861     2,293   

Accounts Payable

     (1,168     (8,282

Customer Deposits and Store Credits

     8,104        5,322   

Prepaid Expenses and Other Current Assets

     (737     82   

Other Assets and Liabilities

     4,111        9,500   

Net Cash Provided by Operating Activities

     11,058        17,901   

Cash Flows from Investing Activities:


Purchases of Property and Equipment

     (4,159     (3,583

Net Cash Used in Investing Activities

     (4,159     (3,583

Cash Flows from Financing Activities:


Proceeds from the Exercise of Stock Options

     870        437   

Excess Tax Benefits on Stock Option Exercises

     659        337   

Common Stock Purchased Pursuant to Equity Compensation Plans

     (126     (113

Net Cash Provided by Financing Activities

     1,403        661   

Effect of Exchange Rates on Cash and Cash Equivalents

     (2     —     

Net Increase in Cash and Cash Equivalents

     8,300        14,979   

Cash and Cash Equivalents, Beginning of Period

     34,830        35,675   

Cash and Cash Equivalents, End of Period

   $ 43,130      $ 50,654