EX-99.1 2 d304869dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

LUMBER LIQUIDATORS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2011

FINANCIAL RESULTS AND PROVIDES FULL YEAR 2012 OUTLOOK

~ Fourth Quarter Net Sales Increased 13.9% to $174.5 Million ~

~ Fourth Quarter Net Income Increased 42.9% to $8.5 Million, or $0.30 per Diluted Share ~

~ Full Year 2012 Net Sales Expected to be $710 million to $740 million, an Increase of 4.2% to 8.6% ~

~ Full Year 2012 EPS Expected to be $1.05 to $1.20, an Increase of 12.9% to 29.0% ~

~ Company Announces $50 Million Share Repurchase Program ~

TOANO, Va, February 22, 2012 – Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in the U.S., today announced financial results for the fourth quarter and full year ended December 31, 2011, as well as its outlook for 2012.

Fourth Quarter Results

Net sales increased $21.2 million, or 13.9%, to $174.5 million in the fourth quarter of 2011 from $153.2 million in the fourth quarter of 2010. Comparable store net sales increased 1.9% for the quarter, on top of an increase of 1.2% for the fourth quarter of the prior year, driven by an increase in both the number of customers served and the average sale. Non-comparable store net sales increased $18.3 million over the prior year period. The Company opened seven new stores during the fourth quarter of 2011 for a total of 40 new locations for the full year.

Gross margin was 35.5% in the fourth quarter of 2011 compared to 34.0% in the fourth quarter of 2010. Gross margin benefited from lower product costs due primarily to the continued implementation of sourcing initiatives and certain favorable shifts in sales mix. Partially offsetting these gross margin benefits were higher net transportation costs and the clearance of certain in-store merchandise inventory.

Selling, general and administrative (“SG&A”) expenses were $48.4 million, or 27.7% of net sales, for the fourth quarter of 2011, compared to $42.7 million, or 27.9% of net sales, for the fourth quarter of 2010. The $5.7 million increase in SG&A expenses includes an increase of approximately $4.0 million in total compensation expenses, primarily due to store base growth and increases in benefit costs and sales commissions and bonuses. Occupancy costs and depreciation increased approximately $1.6 million due primarily to store base growth and the investment in the integrated information technology solution.

Net income increased 42.9% to $8.5 million, or $0.30 per diluted share, in the fourth quarter of 2011 from $5.9 million, or $0.21 per diluted share, in the fourth quarter of the prior year. The effective tax rate was 38.7% in the fourth quarter of 2011 compared with 38.0% in the fourth quarter of 2010.

Cash and cash equivalents increased to $61.7 million at December 31, 2011 from $34.8 million at December 31, 2010, as operating activities provided $44.1 million in 2011, up from $17.0 million in 2010. Merchandise inventories decreased 15.4% on an available inventory per store basis as strong promotions drove net sales in the fourth quarter.


Robert M. Lynch, President and Chief Executive Officer, commented, “We steadily regained traction throughout the fourth quarter and were pleased with our strong finish to 2011. While our bottom-line results for the quarter were below our expectations, we achieved a solid increase in both our top- and bottom-line versus the prior year period. We built on our third quarter 2011 results and our fourth quarter performance was our best of the year. We successfully reinvested a portion of our sourcing initiative benefits in the fourth quarter to further strengthen our value proposition, and our product allocation and logistics team significantly lowered available inventory per store. We believe that we are well-positioned to continue to gain share in our highly fragmented market and deliver multi-year expansion of our net sales and operating margin.”

Full Year Results

Net sales increased 9.9% to $681.6 million in 2011 from $620.3 million in 2010. Comparable store net sales decreased 2.0% in 2011, compared to an increase of 2.1% in the prior year. Non-comparable store net sales increased $73.8 million. The Company opened 40 new stores in 2011 and operated 263 stores in 46 states and Canada at December 31, 2011.

Gross margin increased to 35.3% in 2011 compared to 34.8% in the prior year. SG&A expenses in 2011 were $198.2 million, or 29.1% of net sales, compared to SG&A expenses in 2010 of $173.7 million, or 28.0% of net sales. Operating income in 2011 increased to $42.4 million, or 6.2% of net sales, from $42.2 million, or 6.8% of net sales, in 2010.

Net income in both 2011 and 2010 was $26.3 million, or $0.93 per diluted share. The Company’s effective tax rate was 39.0% for 2011, compared to an effective tax rate of 38.5% in 2010.

Share Repurchase Program

Lumber Liquidators also announced today that its Board of Directors has authorized the repurchase of up to $50 million of the Company’s common stock. The repurchases will be subject to market conditions and other factors and will be made from time to time through open market purchases or through privately negotiated transactions.

Company Outlook

In 2012, the Company expects to achieve the following:

 

   

Net sales for the full year in the range of $710 million to $740 million.

 

   

Comparable store net sales change in the low single digits, either positive or negative.

 

   

The opening of a total of 20 to 25 new store locations, including two to four in Canada.

 

   

Full year earnings per diluted share in the range of $1.05 to $1.20, based on a diluted share count of approximately 28.7 million shares.


Mr. Lynch concluded, “I am excited to lead the Company into 2012 with momentum building solidly over the last six months of 2011. Though we remain cautious in our near-term outlook due to potentially volatile consumer demand for large-ticket discretionary purchases, we have launched significant initiatives that we expect will provide cumulative benefits in the coming years. Our share repurchase program marks an important step in returning value to our shareholders, and expresses confidence in our proven store model. We expect to continue to build momentum in 2012, and generate meaningful year-over-year improvement in our top- and bottom-line results.”

Conference Call and Webcast Information

The Company plans to host a conference call and audio webcast today, February 22, 2012, 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 February 29, 2012 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering conference ID number 387499. 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.

Raymond James Annual Institutional Investors Conference

The Company today also announced that Mr. Lynch and Daniel E. Terrell, Chief Financial Officer, will present at the Raymond James Annual Institutional Investors Conference. The Company’s presentation is scheduled for Wednesday, March 7, 2012 at 8:05 a.m. ET in Orlando. The live webcast and replay of the Company’s presentation may be accessed via audio webcast at the Investor Relations section of the Company’s website, www.lumberliquidators.com.

About Lumber Liquidators

With over 265 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.

With quality brands including Bellawood Prefinished Hardwood and Morning Star Bamboo, Lumber Liquidators’ flooring is often featured 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 Investor Relations

Ashleigh McDermott

Tel: 757.566.7512

(Tables Follow)


Lumber Liquidators Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

 

     December 31,  
     2011     2010  

Assets

    

Current Assets:

    

Cash and Cash Equivalents

   $ 61,675      $ 34,830   

Merchandise Inventories

     164,139        155,131   

Prepaid Expenses

     4,292        4,837   

Other Current Assets

     7,863        8,007   
  

 

 

   

 

 

 

Total Current Assets

     237,969        202,805   

Property and Equipment, net

     44,147        35,314   

Goodwill

     9,693        1,050   

Other Assets

     3,045        3,121   
  

 

 

   

 

 

 

Total Assets

   $ 294,854      $ 242,290   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current Liabilities:

    

Accounts Payable

   $ 38,161      $ 33,744   

Customer Deposits and Store Credits

     18,120        12,039   

Accrued Compensation

     2,509        2,460   

Sales and Income Tax Liabilities

     5,092        2,859   

Other Current Liabilities

     6,839        5,585   
  

 

 

   

 

 

 

Total Current Liabilities

     70,721        56,687   

Deferred Rent

     3,328        2,746   

Deferred Tax Liability

     5,721        2,352   

Stockholders’ Equity:

    

Common Stock ($0.001 par value; 35,000,000 authorized; 27,894,543 and 27,472,680 outstanding, respectively)

     28        27   

Additional Capital

     109,047        100,531   

Retained Earnings

     106,203        79,947   

Accumulated Other Comprehensive Loss

     (194     —     
  

 

 

   

 

 

 

Total Stockholders’ Equity

     215,084        180,505   
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 294,854      $ 242,290   
  

 

 

   

 

 

 


Lumber Liquidators Holdings, Inc.

Consolidated Statements of Income

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

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2011     2010     2011     2010  
     (unaudited)              

Net Sales

   $ 174,454      $ 153,220      $ 681,587      $ 620,281   

Cost of Sales

     112,544        101,195        440,912        404,451   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     61,910        52,025        240,675        215,830   

Selling, General and Administrative Expenses

     48,405        42,682        198,237        173,667   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     13,505        9,343        42,438        42,163   

Interest and Other Income, net

     (284     (208     (587     (579
  

 

 

   

 

 

   

 

 

   

 

 

 

Income Before Income Taxes

     13,789        9,551        43,025        42,742   

Provision for Income Taxes

     5,331        3,630        16,769        16,476   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 8,458      $ 5,921      $ 26,256      $ 26,266   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income per Common Share—Basic

   $ 0.30      $ 0.22      $ 0.95      $ 0.96   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income per Common Share—Diluted

   $ 0.30      $ 0.21      $ 0.93      $ 0.93   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average Common Shares Outstanding:

        

Basic

     27,804,219        27,444,850        27,706,629        27,384,095   

Diluted

     28,379,994        28,277,018        28,379,693        28,246,453   


Lumber Liquidators Holdings, Inc.

Consolidated Statements of Cash Flows

(in thousands)

 

     Year Ended
December 31,
 
     2011     2010  

Cash Flows from Operating Activities:

    

Net Income

   $ 26,256      $ 26,266   

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

    

Depreciation and Amortization

     8,328        5,773   

Deferred Income Taxes

     2,402        4,300   

Stock-Based Compensation Expense

     4,005        3,091   

Changes in Operating Assets and Liabilities:

    

Merchandise Inventories

     (9,197     (21,789

Accounts Payable

     4,467        1,136   

Customer Deposits and Store Credits

     6,104        2,234   

Prepaid Expenses and Other Current Assets

     (1,943     (3,548

Other Assets and Liabilities

     3,679        (487
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

     44,101        16,976   

Cash Flows from Investing Activities:

    

Purchases of Property and Equipment

     (16,988     (20,535

Cash Paid for Acquisition

     (4,725     —     
  

 

 

   

 

 

 

Net Cash Used in Investing Activities

     (21,713)        (20,535)   

Cash Flows from Financing Activities:

    

Proceeds from the Exercise of Stock Options

     3,070        1,796   

Excess Tax Benefits on Stock Option Exercises

     1,690        1,307   

Common Stock Purchased Pursuant to Equity Compensation Plans

     (249     (389
  

 

 

   

 

 

 

Net Cash Provided by Financing Activities

     4,511        2,714   
  

 

 

   

 

 

 

Effect of Exchange Rates on Cash and Cash Equivalents

     (54     —     

Net Increase (Decrease) in Cash and Cash Equivalents

     26,845        (845

Cash and Cash Equivalents, Beginning of Year

     34,830        35,675   
  

 

 

   

 

 

 

Cash and Cash Equivalents, End of Year

   $ 61,675      $ 34,830   
  

 

 

   

 

 

 


Lumber Liquidators Holdings, Inc.

Other Supporting Schedules

Changes to comparable prior year results were as follows:

 

   

For the three months ended

December 31,

   

For the year ended

December 31,

 
    2011     2010     2011     2010  
    increase (decrease)  

Comparable Stores:

       

Net sales

    1.9     1.2     (2.0 %)      2.1

Customers invoiced1

    0.9     (1.9 )%      (4.7 %)      4.5

Average sale2

    1.0     3.2     2.8     (2.4 )% 

Average retail price per unit sold3

    6.4     (0.4 )%      6.8     (3.7 )% 

 

  1

Approximated by applying average sale to total net sales at comparable stores

  2 

Average sale is calculated on a total company basis

  3 

Average retail price per unit sold is calculated on a total company basis and excludes certain service revenue, which consists primarily of freight charges for in-home delivery

Merchandise inventory is considered either “available for sale” or “inbound in-transit,” based on whether the Company has physically received and inspected the products. Merchandise inventories and available inventory per store in operation on December 31 were as follows:

 

     2011      2010      2009  
     (in thousands)  

Inventory – Available for Sale

   $ 135,850       $ 136,179       $ 109,369   

Inventory – Inbound In-Transit

     28,289         18,952         23,973   
  

 

 

    

 

 

    

 

 

 

Total Merchandise Inventories

   $ 164,139       $ 155,131       $ 133,342   
  

 

 

    

 

 

    

 

 

 

Available Inventory Per Store

   $ 517       $ 611       $ 588