10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33767

 

LL Flooring Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	27-1310817
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4901 Bakers Mill Lane Richmond, Virginia	23230
(Address of Principal Executive Offices)	(Zip Code)

(800) 366-4204

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of exchange on which registered:
Common Stock, par value $0.001 per share	LL	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act:

☐  Large accelerated filer ☒ Accelerated filer ☐  Non-accelerated filer ☐  Smaller reporting company ☐  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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). ☐ Yes ☒ No

As of May 5, 2023, there are 30,495,996 shares of the registrant’s common stock, par value of $0.001 per share, outstanding.

LL FLOORING HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10‑Q

FOR THE QUARTER ENDED MARCH 31, 2023

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION	2
Item 1.	Consolidated Financial Statements and Supplementary Data	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
	PART II - OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	Signatures	26

1

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

LL Flooring Holdings, Inc.

Consolidated Balance Sheets (Unaudited)

In Thousands

	March 31,			December 31,
	2023			2022
Assets
Current Assets:
Cash and Cash Equivalents	$	6,977		$	10,800
Merchandise Inventories		307,738			332,296
Prepaid Expenses		10,443			9,054
Other Current Assets		14,441			17,598
Total Current Assets		339,599			369,748
Property and Equipment, net		100,421			101,758
Operating Lease Right-of-Use Assets		125,096			123,172
Net Deferred Tax Assets		17,533			13,697
Other Assets		5,628			5,578
Total Assets	$	588,277		$	613,953
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts Payable	$	54,361		$	47,733
Customer Deposits and Store Credits		46,560			43,767
Accrued Compensation		6,429			9,070
Sales and Income Tax Liabilities		3,462			3,574
Accrual for Legal Matters and Settlements		21,494			22,159
Operating Lease Liabilities - Current		30,564			34,509
Other Current Liabilities		24,680			19,712
Total Current Liabilities		187,550			180,524
Other Long-Term Liabilities		6,192			6,162
Operating Lease Liabilities - Long-Term		101,219			99,186
Credit Agreement		47,000			72,000
Total Liabilities		341,961			357,872
Commitments and Contingencies
Stockholders’ Equity:
Common Stock ($0.001 par value; 35,000 shares authorized; 30,916 and 30,758 shares issued and 28,798 and 28,695 shares outstanding at March 31, 2023, and December 31, 2022, respectively)		31			31
Treasury Stock, at cost (2,118 and 2,063 shares, respectively)		(153,562	)		(153,331	)
Additional Capital		232,890			231,839
Retained Earnings		166,957			177,542
Total Stockholders’ Equity		246,316			256,081
Total Liabilities and Stockholders’ Equity	$	588,277		$	613,953

See accompanying notes to consolidated financial statements

2

LL Flooring Holdings, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)

In Thousands, Except Per Share Data

	Three Months Ended March 31,
	2023			2022
Net Sales
Net Merchandise Sales	$	210,497		$	244,271
Net Services Sales		30,201			34,761
Total Net Sales		240,698			279,032
Cost of Sales
Cost of Merchandise Sold		128,397			147,419
Cost of Services Sold		24,301			27,534
Total Cost of Sales		152,698			174,953
Gross Profit		88,000			104,079
Selling, General and Administrative Expenses		101,185			99,025
Operating (Loss) Income		(13,185	)		5,054
Other Expense (Income)		1,159			(15	)
(Loss) Income Before Income Taxes		(14,344	)		5,069
Income Tax (Benefit) Expense		(3,759	)		1,032
Net (Loss) Income and Comprehensive (Loss) Income	$	(10,585	)	$	4,037
Net (Loss) Income per Common Share—Basic	$	(0.37	)	$	0.14
Net (Loss) Income per Common Share—Diluted	$	(0.37	)	$	0.14
Weighted Average Common Shares Outstanding:
Basic		28,717			29,145
Diluted		28,717			29,417

See accompanying notes to consolidated financial statements

3

LL Flooring Holdings, Inc.

Consolidated Statements of Stockholders’ Equity (Unaudited)

In Thousands

															Total
	Common Stock				Treasury Stock					Additional		Retained			Stockholders’
	Shares		Par Value		Shares		Value			Capital		Earnings			Equity
December 31, 2021		29,113	$	31		1,423	$	(145,337	)	$	227,804	$	189,623		$	272,121
Stock-Based Compensation Expense		—		—		—		—			873		—			873
Exercise of Stock Options		20		—		—		—			282		—			282
Release of Restricted Shares		95		—		—		—			—		—			—
Common Stock Repurchased		—		—		51		(810	)		—		—			(810	)
Net Income		—		—		—		—			—		4,037			4,037
March 31, 2022		29,228	$	31		1,474	$	(146,147	)	$	228,959	$	193,660		$	276,503
December 31, 2022		28,695	$	31		2,063	$	(153,331	)	$	231,839	$	177,542		$	256,081
Stock-Based Compensation Expense		—		—		—		—			1,051		—			1,051
Exercise of Stock Options		—		—		—		—			—		—			—
Release of Restricted Shares		103		—		—		—			—		—			—
Common Stock Repurchased		—		—		55		(231	)		—		—			(231	)
Net Loss		—		—		—		—			—		(10,585	)		(10,585	)
March 31, 2023		28,798	$	31		2,118	$	(153,562	)	$	232,890	$	166,957		$	246,316

See accompanying notes to consolidated financial statements

4

LL Flooring Holdings, Inc.

Consolidated Statements of Cash Flows (Unaudited)

In Thousands

	Three Months Ended March 31,
	2023			2022
Cash Flows from Operating Activities:
Net (Loss) Income	$	(10,585	)	$	4,037
Adjustments to Reconcile Net (Loss) Income:
Depreciation and Amortization		4,669			4,492
Deferred Income Taxes (Benefit) Provision		(3,836	)		157
Income on Vouchers Redeemed for Legal Settlements		(253	)		(423	)
Stock-Based Compensation Expense		1,051			873
Provision for Inventory Obsolescence Reserves		572			(110	)
Gain on Disposal of Fixed Assets		—			(9	)
Changes in Operating Assets and Liabilities:
Merchandise Inventories		23,574			(64,793	)
Accounts Payable		8,045			26,037
Customer Deposits and Store Credits		2,793			2,251
Prepaid Expenses and Other Current Assets		1,826			(2,448	)
Accrued Compensation		(2,641	)		(2,523	)
Other Assets and Liabilities		934			9,058
Net Cash Provided by (Used in) Operating Activities		26,149			(23,401	)
Cash Flows from Investing Activities:
Purchases of Property and Equipment		(4,741	)		(5,250	)
Other Investing Activities		—			61
Net Cash Used in Investing Activities		(4,741	)		(5,189	)
Cash Flows from Financing Activities:
Borrowings on Credit Agreement		66,000			—
Payments on Credit Agreement		(91,000	)		—
Common Stock Repurchased		(231	)		(810	)
Other Financing Activities		—			282
Net Cash Used in Financing Activities		(25,231	)		(528	)
Net Decrease in Cash and Cash Equivalents		(3,823	)		(29,118	)
Cash and Cash Equivalents, Beginning of Period		10,800			85,189
Cash and Cash Equivalents, End of Period	$	6,977		$	56,071
Supplemental Disclosure of Non-Cash Operating and Financing Activities:
Relief of Inventory for Vouchers Redeemed for Legal Settlements	$	412		$	714
Tenant Improvement Allowance for Leases		(66	)		(665	)

See accompanying notes to consolidated financial statements

5

LL Flooring Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

LL Flooring Holdings, Inc., formerly Lumber Liquidators Holdings, Inc., and its direct and indirect subsidiaries (collectively and, where applicable, individually, “LL Flooring” or the “Company”) engage in business as a multi-channel specialty retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories, operating as a single operating segment. The Company offers an extensive assortment of hard-surface flooring including waterproof hybrid resilient, waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, tile, and cork, with a wide range of flooring enhancements and accessories to complement. The Company also provides in-home delivery and installation services to its customers. The Company primarily sells to consumers or to Pros on behalf of consumers through a network of store locations in metropolitan areas. As of March 31, 2023, the Company’s 443 stores spanned 47 states in the United States (“U.S.”). In addition to the store locations, the Company’s products may be ordered, and customer questions or concerns addressed, through both its customer contact center in Richmond, Virginia, and its digital platform, LLFlooring.com.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10‑Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal and recurring adjustments except those otherwise described herein) considered necessary for a fair presentation have been included in the accompanying consolidated financial statements. However, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. Therefore, the interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s annual report filed on Form 10‑K for the year ended December 31, 2022.

The consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Note 2. Summary of Significant Accounting Policies

Fair Value of Financial Instruments

The carrying amounts of financial instruments such as cash and cash equivalents, accounts payable and other liabilities approximate fair value because of the short-term nature of these items. The carrying value of the Revolving Credit Facility approximates fair value due to the variable rate of interest.

Merchandise Inventories

The Company values merchandise inventories at the lower of cost or net realizable value. The method by which amounts are removed from inventory is weighted average cost. All of the hardwood flooring purchased from vendors is either prefinished or unfinished, and in immediate saleable form. The Company relies on a select group of international and domestic suppliers to provide imported flooring products that meet the Company’s specifications. The Company is subject to risks associated with obtaining products from abroad, including disruptions or delays in production, shipments, supply chain, delivery or processing. Also included in merchandise inventories are tariff-related costs.

6

Recognition of Net Sales

The Company generates revenues primarily by retailing merchandise in the form of hard-surface flooring and accessories. Additionally, the Company expands its revenues by offering services to deliver and/or install this merchandise for its customers; it considers these services to be separate performance obligations. The separate performance obligations are detailed on the customer’s invoice(s) and the customer often purchases flooring merchandise without purchasing installation or delivery services. Sales occur through the Company’s network of 443 stores, which spanned 47 states on March 31, 2023. In addition to the store locations, the Company's products may be ordered, and customer questions or concerns addressed, through both its customer contact center in Richmond, Virginia, and its digital platform, LLFlooring.com. The Company’s agreements with its customers are of short duration (less than a year), and as such the Company has elected not to disclose revenue for partially satisfied contracts that will be completed in the days following the end of a period as permitted by GAAP. The Company reports its revenues exclusive of sales taxes collected from customers and remitted to governmental taxing authorities, consistent with past practice.

Revenue is based on consideration specified in a contract with a customer and excludes any sales incentives from vendors. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer or performing services for a customer. Revenues from installation and freight services are recognized when the delivery is made or the installation is complete, which approximates the recognition of revenue over time due to the short duration of service provided. The price of the Company’s merchandise and services is specified in the respective contract and detailed on the invoice agreed to with the customer including any discounts. The Company generally requires customers to pay a deposit, equal to approximately half of the retail sales value, when ordering merchandise not regularly carried in a given location or not currently in stock. In addition, the Company generally does not extend credit to its customers with payment due in full at the time the customer takes possession of merchandise or when the service is provided. Customer payments and deposits received in advance of the customer taking possession of the merchandise or receiving the services are recorded as deferred revenues in the accompanying consolidated balance sheet caption “Customer Deposits and Store Credits.”

The following table shows the activity in this account for the periods noted:

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Customer Deposits and Store Credits, Beginning Balance	$	(43,767	)	$	(67,063	)
New Deposits		(259,164	)		(300,970	)
Recognition of Revenue		240,698			279,032
Sales Tax included in Customer Deposits		14,616			17,155
Other		1,057			2,532
Customer Deposits and Store Credits, Ending Balance	$	(46,560	)	$	(69,314	)

Subject to limitations under the Company’s policy, return of unopened merchandise is accepted for 90 days, subject to the discretion of the store manager. The amount of revenue recognized for flooring merchandise is adjusted for expected returns, which are estimated based on the Company’s historical data, current sales levels, and forecasted economic trends. The Company uses the expected value method to estimate returns because it has a large number of contracts with similar characteristics. The Company reduces revenue by the number of expected returns and records it within “Other Current Liabilities” on the consolidated balance sheet. In addition, the Company recognizes a related asset for the right to recover returned merchandise and records it in the “Other Current Assets” caption of the accompanying consolidated balance sheet. This amount was $1.1 million and $1.2 million on March 31, 2023 and December 31, 2022, respectively. The Company recognizes sales commissions as incurred since the amortization period is less than one year.

7

In total, the Company offers hundreds of different flooring products; however, no single flooring product represented a significant portion of its sales mix. By major product category, the Company’s sales mix was as follows:

	Three Months Ended March 31,
	2023				2022
	(in thousands, except percentage data)
Manufactured Products1	$	120,832	50	%	$	134,639	48	%
Solid and Engineered Hardwood		55,808	23	%		69,035	25	%
Moldings and Accessories and Other		33,857	14	%		40,597	15	%
Installation and Delivery Services		30,201	13	%		34,761	12	%
Total	$	240,698	100	%	$	279,032	100	%

1 Includes engineered vinyl plank, laminate, vinyl and tile.

Cost of Sales

Cost of sales includes the cost of products sold, including tariffs, the cost of installation services, and transportation costs from vendors to the Company’s distribution centers or store locations. It also includes transportation costs from distribution centers to store locations, transportation costs for the delivery of products from store locations to customers, certain costs of quality control procedures, warranty and customer satisfaction costs, inventory adjustments including obsolescence and shrinkage, and costs to produce and ship samples, which are net of vendor allowances. For the period ended March 31, 2023, cost of sales also included incremental costs associated with customs delays related to certain shipments of vinyl flooring.

The Company offers a range of limited warranties for the durability of the finish on its prefinished products to its services provided. These limited warranties range from one to 100 years, with lifetime warranties for certain of the Company’s products. Warranty reserves are based primarily on claims experience, sales history and other considerations, including payments made to satisfy customers for claims not directly related to the warranty on the Company’s products. Warranty costs are recorded in cost of sales. The related reserve was $0.9 million and $1.0 million on March 31, 2023 and December 31, 2022, respectively, and recorded in “Other Current Liabilities” on the accompanying consolidated balance sheets. The Company seeks recovery from its vendors and third-party independent contractors of installation services for certain amounts paid.

Vendor allowances mostly consist of volume rebates and are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period based on estimates of purchases. Volume rebates earned are initially recorded as a reduction in merchandise inventories and a subsequent reduction in cost of sales when the related product is sold. Reimbursement received for the cost of producing samples is recorded as an offset against cost of sales.

Note 3. Stockholders’ Equity

Net (Loss) Income per Common Share

The following table sets forth the computation of basic and diluted net (loss) income per common share:

	Three Months Ended March 31,
	2023			2022
	(in thousands, except per share data)
Net (Loss) Income	$	(10,585	)	$	4,037
Weighted Average Common Shares Outstanding—Basic		28,717			29,145
Effect of Dilutive Securities:
Common Stock Equivalents		—			272
Weighted Average Common Shares Outstanding—Diluted		28,717			29,417
Net (Loss) Income per Common Share—Basic	$	(0.37	)	$	0.14
Net (Loss) Income per Common Share—Diluted	$	(0.37	)	$	0.14

8

The following shares have been excluded from the computation of Weighted Average Common Shares Outstanding—Diluted because the effect would be anti-dilutive:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Stock Options		649		373
Restricted Shares		832		239

Stock Repurchase Program

In January 2012, the Company’s board of directors adopted an authorization for the repurchase of up to a total of $50.0 million of the Company’s common stock, which it increased by $50.0 million in each of November 2012 and January 2014. In February 2022, the board of directors further increased this authority by an additional $35.3 million for a total authorization to repurchase up to $50.0 million of the Company’s common stock on the open market or in private transactions. As of March 31, 2023, there remains $43.0 million outstanding under the share repurchase authorization, which does not have an expiration date. The Company did not repurchase any shares under the previous authorization during the three months ended March 31, 2023.

The timing and amount of any share repurchases under the authorization will be determined in the Company's discretion and based on market conditions and other considerations. Share repurchases under the authorizations may be made through open market purchases or pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. The program does not obligate LL Flooring to acquire any particular amount of its common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

Outside of the share repurchase program, during the three months ended March 31, 2023, the Company repurchased $0.2 million, or 54.7 thousand shares, of its common stock through net settlement of shares issued as a result of the vesting of restricted shares.

Note 4. Stock-based Compensation

The following table summarizes share activity related to employee stock options and restricted stock awards (“RSAs”):

	Stock Options			Restricted Stock Awards
	(in thousands)
Options Outstanding/Nonvested RSAs, December 31, 2022		724			637
Granted		—			1,416
Options Exercised/RSAs Released		—			(159	)
Forfeited		(156	)		(61	)
Options Outstanding/Nonvested RSAs, March 31, 2023		568			1,833

The Company granted a target of 61.8 thousand performance-based RSAs with a grant date fair value of $0.3 million during the three months ended March 31, 2023, a target of 94.6 thousand performance-based RSAs with a grant date fair value of $1.5 million during the three months ended March 31, 2022, and a target of 47.8 thousand performance-based RSAs with a grant date fair value of $1.1 million during the three months ended March 31, 2021. The performance-based RSAs in 2023 were awarded to certain members of senior management in connection with certain market conditions. The performance-based RSAs in 2022 and 2021 were awarded to certain members of senior management in connection with performance conditions based on achievement of specific key financial metrics. All performance-based RSAs will cliff vest if the respective performance conditions are met at the end of the respective 3-year service periods. The Company assesses the probability of achieving these metrics on a quarterly basis. For these

9

awards, the Company recognizes the fair value expense ratably over the service and vesting period. These awards are included above in RSAs granted.

Under the Company’s equity incentive plan, the Company’s non-employee directors are compensated with an annual RSA grant. The amount of outstanding nonvested RSAs granted to non-employee directors was 43.1 thousand on both March 31, 2023 and December 31, 2022. The Company also maintains the Outside Directors Deferral Plan under which each of the Company’s non-employee directors has the opportunity to elect annually to defer certain fees (which are payable in cash or in shares of Common Stock with a vesting period of at least one year). A non-employee director may elect to defer up to 100% of his or her fees and have such fees invested in deferred stock units. Deferred stock units must be settled in common stock in either a lump sum or up to five annual equal payments following a director's departure from the board. There were 257.7 thousand and 245.0 thousand deferred stock units outstanding at March 31, 2023 and December 31, 2022, respectively.

Note 5. Credit Agreement

On December 27, 2022, the Company entered into a Waiver and Third Amendment to the Credit Agreement (the “Amendment”) with Bank of America, N.A. ("the "Bank") and Wells Fargo Bank, National Association ("Wells" and, collectively with the Bank, the "Lenders") and the Bank in its capacity as administrative agent and collateral agent (in this capacity, the “Agent”) and Wells as syndication agent. The Amendment, among other things, (i) changed the rate under the Agreement for borrowings from a LIBOR-based rate to a Term SOFR-based rate (as defined in the Amendment), subject to certain adjustments specified in the Amendment and (ii) provided a waiver of a technical event of default under the Credit Agreement related to providing notice to the Lenders of the Company’s name change from Lumber Liquidators Holdings, Inc. to LL Flooring Holdings, Inc. Except as set forth in the Amendment, all other terms and conditions of the Credit Agreement remain in place.

The total size of the Credit Agreement is $200.0 million, and the Company has an option to increase the Revolving Credit Facility to a maximum total amount of $250.0 million. The Credit Agreement has a maturity date of April 30, 2026.

The Revolving Credit Facility is secured by security interests in the Collateral (as defined in the Credit Agreement), which includes substantially all assets of the Company including, among other things, the Company’s inventory and credit card receivables, and the Company’s East Coast distribution center located in Sandston, Virginia. Under the terms of the Credit Agreement, the Company has the ability to release the East Coast distribution center from the Collateral under certain conditions.

The Amendment defines the margin for Term SOFR Rate Loans (as defined in the Amendment) as a range of 1.25% to 1.75% over the applicable Term SOFR Rate with respect to revolving loans depending on the Company’s average daily excess borrowing availability. The Term SOFR Rate Floor is 0.25%. The unused commitment fee is 0.25% per annum based on the average daily unused amount of the Revolving Credit Facility during the most recently completed calendar quarter. The weighted average interest rate applicable to the Company's Revolving Credit Facility for the three months ended March 31, 2023 was 6.1%.

The Credit Agreement contains a fixed charge coverage ratio covenant that becomes effective only when specified availability under the Revolving Credit Facility falls below the greater of $17.5 million or 10% of the Revolving Loan Cap (as defined in the Credit Agreement).

As of March 31, 2023, there was $47.0 million outstanding under the Revolving Credit Facility. The Company had $3.2 million in letters of credit which reduces its availability. As of March 31, 2023, there was $149.8 million of availability under the Credit Agreement.

Note 6. Taxes

The Company calculates its quarterly tax provision pursuant to the guidelines in Accounting Standards Codification ("ASC") 740-270 "Income Taxes." Generally, ASC 740-270 requires companies to estimate the annual effective tax rate for current year ordinary income. The estimated annual effective tax rate represents the best estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision and is adjusted for discrete items that occur within the period.

10

For the three months ended March 31, 2023, the Company recognized an income tax benefit of $3.8 million, which represented an effective tax rate of 26.2%. For the three months ended March 31, 2022, the Company recognized income tax expense of $1.0 million, which represented an effective tax rate of 20.4%. The higher effective tax rate in the current period primarily reflects the impact of permanent items on the pretax ordinary loss.

Based on the Company’s evaluation at a jurisdictional level as of March 31, 2023, the Company believes sufficient future taxable income, including consideration of future performance, market, or economic conditions, will be generated to use existing deferred tax assets. The amount of the deferred tax assets considered realizable could be adjusted in future periods if evidence warrants such a change.

In February 2022, the Company received sales tax and use tax assessments from the Commonwealth of Virginia covering part of 2014 through 2017. The Company believes there are factual errors, is disputing this assessment, and will defend itself vigorously in this matter. The Company is pursuing an administrative appeal, which was filed on April 15, 2022. Given the uncertainty of the final resolution, the Company cannot reasonably estimate the loss or range of loss, if any, that may result from this action and therefore no specific accrual has been made related to this. Any losses could, potentially, have a material adverse effect, individually or collectively, on the Company’s results of operations, financial condition and liquidity.

Note 7. Commitments and Contingencies

The following chart shows the activity (in thousands) related to the Balance Sheet “Accrual for Legal Matters and Settlements.” The matters themselves are described in greater detail in the paragraphs that follow the chart.

	December 31, 2022									March 31, 2023
Litigation Matter	Accrual for Legal Matters				Settlement		Vouchers			Accrual for Legal Matters
Description	and Settlements - Current		Accruals		Payments		Redeemed			and Settlements - Current
MDL	$	9,070	$	—	$	—	$	(320	)	$	8,750	1
Gold		12,864		—		—		(345	)		12,519	1
Other Matters		225		—		—		—			225
	$	22,159	$	—	$	—	$	(665	)	$	21,494
	December 31, 2021									March 31, 2022
Litigation Matter	Accrual for Legal Matters				Settlement		Vouchers			Accrual for Legal Matters
Description	and Settlements - Current		Accruals		Payments		Redeemed			and Settlements - Current
MDL	$	10,656	$	—	$	—	$	(464	)	$	10,192
Gold		14,885		—		—		(673	)		14,212
Mason		7,000		—		—		—			7,000
Other Matters		1,070		53		—		—			1,123
	$	33,611	$	53	$	—	$	(1,137	)	$	32,527

1The remaining accrual will be fulfilled by redeeming vouchers as discussed below.

Litigation Related to Formaldehyde-Abrasion MDLs

In 2018, the Company entered into a settlement agreement to resolve claims related to Chinese-manufactured laminate products (the “Formaldehyde-Abrasion MDL”). Under the terms of the settlement agreement, the Company funded $22.0 million in cash and provided $14.0 million in store-credit vouchers for an aggregate settlement amount of $36.0 million to settle claims. Cash and vouchers, which generally have a three-year life, were distributed by the administrator in the fourth quarter of 2020. The Company will monitor and evaluate the redemption of vouchers on a quarterly basis. The Company’s current expectation is that recipients bargained for this compensation as part of the settlement and therefore will redeem their voucher for product as intended. The rules on the expiration or escheat of any unused vouchers vary by state, and to the extent any expire unused, they will be terminated in accordance with those respective rules.

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As of March 31, 2023, the remaining accrual related to these matters was $8.8 million for vouchers. As $0.3 million of vouchers were redeemed during the three months ended March 31, 2023, the Company reduced the accrual for legal matters and settlements for the full amount, relieved inventory at its cost, and the remaining amount -- the gross margin for the items sold of $0.1 million was recorded as a reduction in “Selling, General and Administrative Expenses” (“SG&A”) on the consolidated statement of operations. The Company included those amounts in “MDL” in the chart above.

Litigation Relating to Bamboo Flooring

In 2019, the Company finalized a settlement agreement to resolve claims related to Morning Star bamboo flooring (the “Gold Litigation”). Under the terms of the settlement agreement, the Company contributed $14.0 million in cash and provided $16.0 million in store-credit vouchers, for an aggregate settlement of up to $30.0 million. Cash and vouchers, which generally have a three-year life, were distributed by the administrator in 2021. The Company will monitor and evaluate the redemption of vouchers on a quarterly basis. The Company’s current expectation is that recipients bargained for this compensation as part of the settlement and therefore will redeem their voucher for product as intended. The rules on the expiration or escheat of any unused vouchers vary by state, and to the extent any expire unused, they will be terminated in accordance with those respective rules.

As of March 31, 2023, the remaining accrual related to these matters was $12.5 million for vouchers. As $0.3 million of vouchers were redeemed during the three months ended March 31, 2023, the Company reduced the accrual for legal matters and settlements for the full amount, relieved inventory at its cost, and the remaining amount -- the gross margin for the items sold of $0.1 million was recorded as a reduction in “Selling, General and Administrative Expenses” (“SG&A”) on the consolidated statement of operations. The Company included those amounts in “Gold” in the chart above.

Mason Lawsuit

In the second quarter of 2022, the Company paid $7.1 million in settlement of a purported collective and class action lawsuit in the United States District Court for the Eastern District of New York on behalf of all current and former store managers, store managers in training, and similarly situated current and former employees (collectively, the "Mason Putative Class Employees") alleging that the Company violated the Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL") by classifying the Mason Putative Class Employees as exempt (the "Mason matter"). The alleged violations include failure to pay for overtime work. The Company included the amounts related to the Mason matter in the first quarter of 2022 in the chart above, as the matter was resolved in the second quarter of 2022.

Antidumping and Countervailing Duties Investigation

In October 2010, a conglomeration of domestic manufacturers of multilayered wood flooring (“Petitioners”) filed a petition seeking the imposition of antidumping (“AD”) and countervailing duties (“CVD”) with the United States Department of Commerce (“DOC”) and the United States International Trade Commission (“ITC”) against imports of multilayered wood flooring from China. This ruling applies to companies importing multilayered wood flooring from Chinese suppliers subject to the AD and CVD orders. The Company’s multilayered wood flooring imports from China accounted for approximately 4.9% of its flooring purchases for the year ended December 31, 2022.

As part of its processes in these proceedings, the DOC conducts annual reviews of the AD and CVD rates. In such cases, the DOC will issue preliminary rates that are not binding and are subject to comment by interested parties. After consideration of the comments received, the DOC will issue final rates for the applicable period, which may lag by a year or more. At the time of import, the Company makes deposits at the then prevailing rate, even while the annual review is in process. When rates are declared final by the DOC, the Company accrues a receivable or payable depending on where that final rate compares to the deposits it has made. The Company and/or the domestic manufacturers can appeal the final rate for any period and can place a hold on final settlement by U.S. Customs and Border Protection while the appeals are pending.

The Company as well as other involved parties have appealed many of the final rate determinations. Certain of those appeals are pending and, at times, have resulted in delays in settling the shortfalls and refunds. Because of the length of time for finalization of rates as well as appeals, any subsequent adjustment of AD and CVD rates typically flows through a period different from those in which the inventory was originally purchased and/or sold.

As of March 31, 2023, the outstanding AD and CVD principal balances were $2.5 million in other current assets, $0.2 million in other current liabilities, and $4.1 million in other long-term liabilities recorded on the consolidated balance sheet. These amounts represent what the Company would receive or pay (net of any collections or payments) as the result of subsequent adjustment to rates whether due to finalization by the DOC or because of action of a court based on appeals by various parties. These amounts do not include any initial amounts paid for AD or CVD in the current period at the in-effect rate at that time.

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The Company recorded net interest expense related to antidumping and countervailing duties of $0.2 million for the three months ended March 31, 2023 compared to net interest income of $0.07 million for the three months ended March 31, 2022. The amounts for both years are included in other expense on the Statements of Operations. The estimated associated interest payable and receivable for each period is recorded separately from the principal balance in the respective other current assets, other current liabilities, or long-term liabilities financial statement line item on the Company’s consolidated balance sheet.

Section 301 Tariffs

Since September 2018, pursuant to Section 301 of the Trade Act of 1974, the United States Trade Representative (“USTR”) has imposed tariffs on certain goods imported from China over four tranches ("Lists"). Products imported by the Company fall within Lists 3 and 4a for which tariffs range from 10% to 25%. On September 10, 2020 several importers of vinyl flooring ("the plaintiffs") filed a lawsuit with the Court of International Trade ("CIT") challenging the Section 301 tariffs under Lists 3 and 4a and the USTR's actions. The plaintiffs argued that the USTR had not acted within its statutory authority when it modified the original Section 301 determinations on certain goods from China by adding Lists 3 and 4a and that the agency had not demonstrated that it satisfied the procedural requirements of the Administrative Procedure Act. On March 17, 2023, the CIT issued a decision sustaining the List 3 and 4a tariffs. The CIT’s decision is expected to be appealed by the plaintiffs to the Court of Appeals for the Federal Circuit ("CAFC") by May 16, 2023. If these appeals are successful, the Company should qualify for refunds on these Section 301 tariffs. At this time, the Company is unable to predict the timing or outcome of the ruling by the CAFC.

Other Matters

The Company is also, from time to time, subject to claims and disputes arising in the normal course of business. In the opinion of management, while the outcome of any such claims and disputes cannot be predicted with certainty, its ultimate liability in connection with these matters is not expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

Note 8. Leases

On March 3, 2023, the Company entered into a ten-year lease agreement for a 457,363 square foot distribution center in Dallas, Texas, which will enable us to more efficiently serve our stores located in the Central United States. The lease commences on May 1, 2023. Future minimum rental payments under this lease are approximately $30 million over the ten-year lease term.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Forward-Looking Statements

This report 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,” "assumes," “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” "targets," “potential,” "will likely result," 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. These risks include, without limitation, the impact of any of the following:

•reduced consumer spending due to slower growth, economic recession, inflation, higher interest rates, and consumer sentiment;

•our advertising and overall marketing strategy, including anticipating consumer trends and increasing brand awareness;

•a sustained period of inflation impacting consumer spending;

•our inability to execute on our key initiatives or if such key initiatives do not yield desired results;

•stock price volatility;

•competition, including alternative e-commerce offerings;

•liquidity and/or capital resources changes and the impact of any changes or limitations, including, without limitation, ability to borrow funds and/or renew or roll over existing indebtedness;

•transportation availability and costs, including the impact of the war in Ukraine and the Company's European suppliers;

•disruptions to supply chain and product availability related to forced labor and other trade regulations, including with respect to the Uyghur Forced Labor Prevention Act ("UFLPA");

•inability to hire and/or retain employees;

•inability to staff stores due to overall pressures in the labor market;

•the outcomes of legal proceedings, and the related impact on liquidity;

•reputational harm;

•inability to open new stores, find suitable locations for our new store concept, and fund other capital expenditures;

•managing growth;

•disruption in our ability to distribute our products, including due to severe weather;

•operating an office in China;

•continuing and potential future impacts of the COVID-19 pandemic and related public health issues;

•managing third-party installers and product delivery companies;

•renewing store, warehouse, or other corporate leases;

•maintaining optimal inventory for consumer demand;

•our and our suppliers’ compliance with complex and evolving rules, regulations, and laws at the federal, state, and local level;

•having an overreliance on limited or sole-source suppliers;

•damage to our assets;

•availability of suitable hardwood, including disruptions from the impacts of severe weather and supply chain constraints;

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•product liability claims, marketing substantiation claims, wage and hour claims, and other labor and employment claims;

•sufficient insurance coverage, including cybersecurity insurance;

•disruptions due to cybersecurity threats, including any impacts from a network security incident;

•the handling of confidential customer information, including the impacts from the California Consumer Privacy Act and other applicable data privacy laws and regulations;

•management information systems disruptions;

•obtaining products domestically and from abroad, including tariffs and delays in shipping and transportation, as well as the effects of antidumping and countervailing duties;

•impact of changes in accounting guidance, including implementation guidelines and interpretations related to Environmental, Social, and Governance (“ESG”) matters;

•internal controls; and

•anti-takeover provisions.

Information regarding risks and uncertainties is contained in the Company’s reports filed with the SEC, including the Item 1A, “Risk Factors,” section of this quarterly report and the Form 10‑K for the year ended December 31, 2022.

This management discussion should be read in conjunction with the financial statements and notes included in Part I, Item 1. “Financial Statements” of this quarterly report and the audited financial statements and notes and management discussion included in the Company’s annual report filed on Form 10‑K for the year ended December 31, 2022.

Overview

LL Flooring is one of the leading specialty retailers of hard-surface flooring in the U.S. with 443 stores as of March 31, 2023. Our Company seeks to offer the best customer experience online and in stores, with more than 500 varieties of hard-surface floors featuring a range of quality styles and on-trend designs. Our online tools also help empower customers to find the right solution for the space they’ve envisioned. Our extensive selection includes waterproof hybrid resilient, waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, tile, and cork, with a wide range of flooring enhancements and accessories to complement. Our stores are staffed with flooring experts who provide advice, Pro partnership services and installation options for all our products, the majority of which are in stock and ready for delivery. Our vision is to be the customers’ first choice in hard-surface flooring by providing the best experience, from start to finish. We offer the accessible flooring expertise and high-touch service of a local store, combined with the value, omnichannel convenience and product availability of a national brand. We plan to leverage this advantage to differentiate ourselves in the highly fragmented flooring market.

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses the following non-GAAP financial measures: (i) Adjusted Gross Profit; (ii) Adjusted Gross Margin; (iii) Adjusted SG&A; (iv) Adjusted SG&A as a Percentage of Net Sales; (v) Adjusted Operating (Loss) Income; (vi) Adjusted Operating Margin; (vii) Adjusted Other Expense; (viii) Adjusted Other Expense as a Percentage of Net Sales; (ix) Adjusted (Loss) Earnings; and (x) Adjusted (Loss) Earnings per Diluted Share. These non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies.

The non-GAAP financial measures are presented because we believe the non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends related to our financial condition and results of operations, These measures provide an additional tool for investors to use in evaluating our ongoing operating performance, and management, in certain cases, uses them to determine incentive compensation. The presented non-GAAP financial measures exclude items that management does not believe reflect our core operating performance, which include incremental costs of sales and associated legal costs related to disruptions to supply chain and other trade regulations and changes in antidumping and countervailing duties, as such items are outside of our control or due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. Reconciliations of these non-GAAP financial measures are provided on the pages that follow (certain numbers may not sum due to rounding).

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Executive Summary

LL Flooring's first quarter was very challenging and our performance primarily reflected the impact the difficult macro backdrop had on discretionary home improvement spending. In addition, we continue to experience pressure from brand awareness and operational challenges that impacted first quarter results. Despite the near-term volatility, we remain focused on areas of improvement that will help stabilize our results and drive long-term growth opportunities. These include further broadening and growing our brand awareness among consumers to drive traffic; ensuring a consistent customer experience across our omnichannel network to improve conversion; and improving operating efficiencies by actively working to reduce costs while focusing investments on our top growth priorities. Importantly, we continued to execute on these areas during the quarter.

As we look to the remainder of 2023, we expect the macro backdrop to remain challenging as elevated inflation and higher interest rates drive a more cautious consumer and pressure higher ticket discretionary purchases. In the near term, these factors have limited our sales visibility. Looking beyond 2023, we remain confident the long-term fundamentals of our business are strong. As we continue to work on each of our strategic priorities, we remain focused on delivering long-term sustainable growth as a leading specialty flooring retailer.

Recent Development: Vinyl Update

In February 2023, U.S. Customs and Border Protection (“CBP”) added aluminum and polyvinyl chloride ("PVC") to a list of categories including cotton, tomatoes and polysilicon for which CBP has the ability to request additional documentation from importers under the Uyghur Forced Labor Prevention Act ("UFLPA"). During the first quarter, CBP began to request additional documentation with respect to the UFLPA for some shipments of vinyl flooring originating from Vietnam.

We require our vendors to follow our strict guidelines on responsible sourcing, we obtain periodic certifications from them concerning compliance with these standards and we perform audit procedures of their supply chain documentation. While CBP is continuing to detain shipments within the vinyl product category, and we are diligently working to provide additional documentation that they are requesting, we do not know how long their review of the documentation will take or when these delays will be resolved.

During the first quarter of 2023, we experienced continued delays resulting in $2.4 million of incremental expenses.

We're continuing to work to mitigate the disruptions by featuring alternative products in our current assortment and leveraging our sourcing capabilities to look at alternative flooring categories and sourcing geographies. Despite our mitigation efforts, we believe that this issue could have further material impacts on sales and margins as we progress throughout the year. See “Risk Factor – The Company and third-party suppliers on whom we rely source a significant portion of the merchandise we sell from Asia, which exposes us to the risk of supply chain disruptions" in the Company’s annual report filed on Form 10‑K for the year ended December 31, 2022.

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Results of Operations

We believe the selected sales data, the percentage relationship between net sales and major categories in the consolidated statements of operations and the percentage change in the dollar amounts of each of the items presented below are important in evaluating the performance of our business operations.

							% Increase (Decrease)
	% of Net Sales						in Dollar Amounts
	Three Months Ended March 31,						2023
	2023			2022			vs. 2022
Net Sales
Net Merchandise Sales		87.5	%		87.5	%		(13.8	)%
Net Services Sales		12.5	%		12.5	%		(13.1	)%
Total Net Sales		100.0	%		100.0	%		(13.7	)%
Gross Profit		36.6	%		37.3	%		(15.4	)%
Selling, General and Administrative Expenses		42.0	%		35.5	%		2.2	%
Operating (Loss) Income		(5.5	)%		1.8	%		(360.9	)%
Other Expense (Income)		0.5	%		—	%		(7826.7	)%
(Loss) Income Before Income Taxes		(6.0	)%		1.8	%		(383.0	)%
Income Tax (Benefit) Expense		(1.6	)%		0.4	%		(464.2	)%
Net (Loss) Income and Comprehensive (Loss) Income		(4.4	)%		1.4	%		(362.2	)%

	Three Months Ended March 31,
	2023			2022
SELECTED SALES DATA
Average Sale1	$	1,767		$	1,695
Comparable Store Net Sales (Decrease) Increase2		(15.4	)%		(3.6	)%
Transaction Count Decrease3		(19.6	)%		(23.3	)%
Average Retail Price per Unit Sold Increase4		8.7	%		10.3	%
Number of Stores Open, end of period		443			431
Number of Stores Opened in Period, net of closures		1			7

1Average sale is defined as the average invoiced sales order, measured quarterly, excluding returns as well as transactions under $100 (which are generally sample orders or add-on/accessories to existing orders).

2A store is generally considered comparable on the first day of the thirteenth full calendar month after opening.

3Transaction count is calculated by applying the average sale to total net sales at comparable stores.

4Average retail price per unit (square feet for flooring and other units of measures for moldings and accessories) sold is calculated on a total company basis and excludes non-merchandise revenue.

Net Sales

Net sales of $240.7 million decreased 13.7% compared to the same period last year, driven by lower spending by consumers versus last year combined with a decline in Pro sales. Total comparable store sales decreased 15.4% versus the same period last year. During the first quarter, the Company opened one new store, bringing total stores to 443 as of March 31, 2023.

Average sale increased 4.2% and average retail price per unit sold increased 8.7%, primarily due to the Company's pricing and promotion strategies to offset higher material and transportation costs as well as favorable product mix. This was more than offset by the 19.6% decrease in transaction count, reflecting continued pressures on consumer discretionary spending due to consumer confidence, inflation, volatile mortgage rates impacting housing affordability and lower existing home sales. As the Company continues to navigate uncertainty in the macroeconomic environment, it will continue to monitor the competitive pricing environment to inform its pricing and promotion strategies.

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Gross Profit

Gross profit of $88.0 million decreased $16.1 million compared to the first quarter of 2022, and gross margin of 36.6% decreased 70 basis points compared to the same period last year, driven by $2.1 million in incremental costs related to customs delays on flooring products that contain PVC as a consequence of the UFLPA. Gross profit for the first quarter of 2022 was impacted by the net of antidumping and countervailing duty rate changes. Excluding these 2023 and 2022 unusual items, adjusted gross margin (a non-GAAP measure) of 37.4% increased 20 basis points compared to the same period last year, primarily reflecting the Company's ability to offset higher material and transportation costs (collectively up more than 500 basis points) through pricing, promotion and alternative country/vendor sourcing strategies.

In order to further reduce transportation costs and optimize our supply chain network, the Company will be opening a third distribution center in the third quarter of 2023. In March 2023, the Company entered into a ten-year lease agreement for a 457,363 square foot distribution center in Dallas, Texas, which will enable us to more efficiently serve our stores located in the Central United States. See Item 1, Note 8 to the consolidated financial statements for further detail regarding the lease.

Additionally, the Company’s financial statements have been impacted by Section 301 tariffs on certain products imported from China in recent years. The tariffs flow through the income statement as the product is sold. The Company has deployed strategies to mitigate tariffs and improve gross margin, primarily through adjusting its pricing and promotion strategies and alternative country sourcing. Through its sourcing strategy, the Company held the percentage of merchandise receipts subject to Section 301 tariffs to 16% during the three months ended March 31, 2023 and 2022.

As discussed in Item 1, Note 7 to the consolidated financial statements, the Company is unable to predict the timing or outcome of the ruling by the CAFC. If these appeals are successful, the Company should qualify for refunds on these Section 301 tariffs.

	Three Months Ended March 31,
	2023					2022
	$		% of Sales			$			% of Sales
	(in thousands, except percentage data)
Gross Profit/Margin, as reported (GAAP)	$	88,000		36.6	%	$	104,079			37.3	%
Vinyl Charges1		2,138		0.9	%		—			—	%
Antidumping and Countervailing Adjustments2		—		—	%		(241	)		(0.1	)%
Adjustment Items Subtotal		2,138		0.9	%		(241	)		(0.1	)%
Adjusted Gross Profit/Margin (non-GAAP measures)	$	90,138		37.4	%	$	103,838			37.2	%

1This amount represents costs related to customs delays on flooring products that contain PVC as a consequence of the UFLPA.

2This amount represents net antidumping and countervailing income associated with applicable prior-year shipments of engineered hardwood from China.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses of $101.2 million increased $2.2 million, and SG&A as a percentage of net sales of 42.0% increased 650 basis points versus the first quarter of last year. SG&A expenses in the first quarter of 2023 included a $0.3 million charge for legal fees charged to earnings related to CBP requests for additional documentation on imports of flooring products that contain PVC as a consequence of the UFLPA. Excluding the impact of the legal fees, adjusted SG&A expense (a non-GAAP measure) increased $1.9 million year-over-year, and adjusted SG&A as a percentage of net sales (a non-GAAP measure) of 41.9% increased 640 basis points compared to the first quarter of last year.

The increases in both SG&A and adjusted SG&A as a percentage of net sales were due primarily to expense deleverage from lower sales volumes. In addition, operating expenses were higher due to the planned investments in our growth strategies including: costs associated with new stores, investments in technology and digital enhancements to improve the customer experience, and consulting fees related to realigning our cost structure, as well as inflationary cost increases. The increase was partially offset by restructuring cost savings and lower variable costs due to lower sales volume.

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During the three months ended March 31, 2023, the Company redeemed $0.7 million of MDL and Gold vouchers and reduced the accrual for legal matters and settlements for the full amount, relieved inventory at its cost, and the remaining amount -- the gross margin for the items sold of $0.3 million was recorded as a reduction in SG&A expense. During the comparable prior period, the Company redeemed $1.1 million of MDL and Gold vouchers with a gross margin for the items sold of $0.4 million.

	Three Months Ended March 31,
	2023					2022
	$		% of Sales			$		% of Sales
	(in thousands, except percentage data)
SG&A, as reported (GAAP)	$	101,185		42.0	%	$	99,025		35.5	%
Legal and Professional Fees3		280		0.1	%		—		—	%
Adjusted SG&A (a non-GAAP measure)	$	100,905		41.9	%	$	99,025		35.5	%

3This amount represents incremental legal fees charged to earnings related to CBP requests for additional documentation on imports of flooring products that contain PVC as a consequence of the UFLPA. This does not include all legal costs incurred by the Company.

Operating (Loss) Income and Operating Margin

Operating loss was $13.2 million in the first quarter of 2023, compared to operating income of $5.1 million in the first three months of 2022. Adjusted operating loss (a non-GAAP measure) of $10.8 million decreased $15.6 million from $4.8 million adjusted operating income (a non-GAAP measure) in the first quarter of 2022. Operating margin of (5.5)% decreased 730 basis points compared to the first quarter of last year. Adjusted operating margin (a non-GAAP measure) of (4.5)% decreased 620 basis points compared to the first quarter of last year, which reflects the increased selling, general and administrative expenses and decreased gross margin as described in the above sections.

	Three Months Ended March 31,
	2023						2022
	$			% of Sales			$			% of Sales
	(in thousands, except percentage data)
Operating (Loss) Income, as reported (GAAP)	$	(13,185	)		(5.5	)%	$	5,054			1.8	%
Gross Margin Adjustment Items:
Vinyl Charges1		2,138			0.9	%		—			—	%
Antidumping and Countervailing Adjustments2		—			—	%		(241	)		(0.1	)%
Gross Margin Adjustment Items Subtotal		2,138			0.9	%		(241	)		(0.1	)%
SG&A Adjustment Items:
Legal and Professional Fees3		280			0.1	%		—			—	%
SG&A Adjustment Items Subtotal		280			0.1	%		—			—	%
Adjusted Operating (Loss) Income/ Margin (a non-GAAP measure)	$	(10,767	)		(4.5	)%	$	4,813			1.7	%

1,2,3 See the Gross Profit and SG&A sections above for more detailed explanations of these individual items.

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Other Expense (Income)

The Company had other expense of $1.2 million for the first quarter of 2023 compared to other income of $15.2 thousand in the first quarter of 2022. The prior year income was favorably impacted by the reversal of interest expense associated with antidumping and countervailing duty rate changes. Excluding the antidumping and countervailing adjustment in the first quarter of 2022, adjusted other expense (a non-GAAP measure) of $1.2 million in the first quarter of 2023 decreased $1.1 million from the first quarter of last year. The increase in other expense and adjusted other expense in the first quarter of 2023 is due to the interest on borrowings on our Credit Agreement, compared to no borrowings on the Credit Agreement in the first quarter of 2022.

	Three Months Ended March 31,
	2023					2022
	$		% of Sales			$			% of Sales
	(in thousands, except percentage data)
Other Expense (Income), as reported (GAAP)	$	1,159		0.5	%	$	(15	)		—	%
Interest Impact Related to Antidumping and Countervailing Adjustments4		—		—	%		(84	)		—	%
Adjusted Other Expense/Adjusted Other Expense as a % of Sales (a non-GAAP measure)	$	1,159		0.5	%	$	69			—	%

4This amount represents the interest income impact of certain antidumping and countervailing adjustments related to applicable prior-year shipments of engineered hardwood from China.

Provision for Income Taxes

The Company calculates its quarterly tax provision pursuant to the guidelines in Accounting Standards Codification ("ASC") 740-270 "Income Taxes." Generally, ASC 740-270 requires companies to estimate the annual effective tax rate for current year ordinary income. The estimated annual effective tax rate represents the best estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision and is adjusted for discrete items that occur within the period.

For the three months ended March 31, 2023, the Company recognized income tax benefit of $3.8 million, which represented an effective tax rate of 26.2%. For the three months ended March 31, 2022, the Company recognized income tax expense of $1.0 million, which represented an effective tax rate of 20.4%. The higher effective tax rate in the current period primarily reflects the impact of permanent items on the pretax ordinary loss.

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Net (Loss) Income per Diluted Share

Net loss per diluted share was $0.37 for the three months ended March 31, 2023, compared to net income per diluted share of $0.14 for the three months ended March 31, 2022. Adjusted loss per diluted share was $0.31 for the three months ended March 31, 2023, compared to net income per diluted share of $0.13 for the three months ended March 31, 2022.

	Three Months Ended March 31,
	2023			2022
	(in thousands, except per share data)
Net (Loss) Income, as reported (GAAP)	$	(10,585	)	$	4,037
Net (Loss) Income per Diluted Share (GAAP)	$	(0.37	)	$	0.14
Gross Margin Adjustment Items:
Vinyl Charges1		2,138			—
Antidumping and Countervailing Adjustments2		—			(241	)
Gross Margin Adjustment Items Subtotal		2,138			(241	)
SG&A Adjustment Items:
Legal and Professional Fees3		280			—
SG&A Adjustment Items Subtotal		280			—
Other Expense (Income) Adjustment Items:
Interest Impact Related to Antidumping and Countervailing Adjustments4		—			(84	)
Other Expense (Income) Adjustment Items Subtotal		—			(84	)
Income Tax Adjustment5		(636	)		85
Adjusted (Loss) Earnings	$	(8,803	)	$	3,797
Adjusted (Loss) Earnings per Diluted Share (a non-GAAP measure)	$	(0.31	)	$	0.13

1,2,3,4 See the Gross Profit, SG&A and Other Expense (Income) sections above for more detailed explanations of these individual items.

5Income tax adjustment is defined as the sum of gross margin, SG&A, and other expense (income) adjustment items multiplied by the Company’s federal incremental rate, which was 26.3% for the periods ended March 31, 2023 and 2022.

Liquidity, Capital Resources and Cash Flows

Sources of Liquidity

Cash flows from operations supplemented with our short-term and long-term borrowings remain sufficient to fund our operations while allowing us to fund our growth initiatives and position LL Flooring for long-term success. As of March 31, 2023, we had liquidity of $156.8 million, consisting of excess availability under our Credit Agreement of $149.8 million and cash and cash equivalents of $7.0 million. This represents an increase in liquidity of $21.2 million from December 31, 2022, primarily reflecting repayments of outstanding debt under the Credit Agreement. We believe that cash flows from operations, together with cash on hand, and the liquidity under our Credit Agreement will be sufficient to meet our obligations and fund our settlements, operations, anticipated capital expenditures, and potential share repurchases for the next 12 months.

The Company continues to navigate uncertainty in the macroeconomic environment due to consumer confidence, inflation, volatile mortgage rates impacting housing affordability and lower existing home sales. We prepare our forecasted cash flow and liquidity estimates based on assumptions that we believe to be reasonable but are also inherently uncertain. Actual future cash flows could differ from these estimates.

21

Capital Resources

As of March 31, 2023, our material contractual obligations consist of long-term debt and letters of credit under our Credit Agreement and leases. See Note 5 to the consolidated financial statements for further detail related to our Credit Agreement. See Note 8 to the consolidated financial statements for further detail related to leases to be read in conjunction with the Form 10‑K for the year ended December 31, 2022.

Cash Flows Summary

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Net Cash Provided by (Used in) Operating Activities	$	26,149		$	(23,401	)
Net Cash Used in Investing Activities		(4,741	)		(5,189	)
Net Cash Used in Financing Activities		(25,231	)		(528	)
Net Decrease in Cash and Cash Equivalents	$	(3,823	)	$	(29,118	)

During the three months ended March 31, 2023, the Company generated $26.1 million of cash flows from operating activities primarily driven by sell throughs of merchandise inventories rebuilt from the prior year end and reduced inventory purchases.

During the three months ended March 31, 2022, the Company used $23.4 million of cash flows for operating activities, which was primarily the result of purchases of inventory ($64.8 million), partially offset by increased accounts payable ($26.0 million), and net income ($4.0 million).

Net cash flows used in investing activities included $4.7 million and $5.2 million in capital expenditures in the three months ended March 31, 2023 and 2022, respectively. Capital expenditures in both years were used primarily for opening new stores and investments in digital, with additional investments related to store rebranding in the first quarter of 2022. The Company opened one new store in the first quarter of 2023 versus seven new stores in the same quarter prior year.

Net cash flows used in financing activities was $25.2 million during the three months ended March 31, 2023, compared to $0.5 million during the three months ended March 31, 2022. The activity in the current year was primarily attributable to $25.0 million of net repayments of outstanding debt under the Credit Agreement. Additionally, financing activities in the first quarter of both 2023 and 2022 included repurchases of common stock.

Merchandise Inventories

Our net sales fluctuate slightly as a result of seasonal factors, and we adjust merchandise inventories in anticipation of those factors, causing variations in our buildup of merchandise inventories. Generally, we experience higher-than-average net sales in the spring and fall, when more home remodeling activities typically take place, and lower-than-average net sales in the winter months and during the hottest summer months.

Merchandise inventories on March 31, 2023 decreased $24.6 million from December 31, 2022 as the Company began to sell through inventory rebuilt from the prior year and reduced inventory purchases. We consider merchandise inventories either “available for sale” or “in-transit,” based on whether we have physically received and inspected the products at an individual store location, in our distribution centers or in another facility where we control and monitor inspection.

In-transit inventory generally varies due to the timing of certain international shipments and certain seasonal factors, including international holidays, rainy seasons, and specific merchandise category planning.

22

Merchandise inventories and available inventory for sale per store in operation were as follows:

	As of		As of		As of
	March 31, 2023		December 31, 2022		March 31, 2022
	(in thousands)
Inventory – Available for Sale	$	284,462	$	307,730	$	266,228
Inventory – In-Transit		23,276		24,566		52,346
Total Merchandise Inventories	$	307,738	$	332,296	$	318,574
Inventory Available for Sale Per Store	$	642	$	696	$	618

Inventory available for sale per store as of March 31, 2023 decreased compared to December 31, 2022 due to the same drivers as merchandise inventories as well as the opening of a new store in the first quarter of 2023. Inventory available for sale per store increased compared to March 31, 2022 reflecting the Company's strategy to utilize the merchandise inventories rebuilt in 2022 to offer a compelling assortment of trend-right products close to its customers, as well as, to a lesser extent, inflation.

Critical Accounting Policies and Estimates

Critical accounting policies are those that we believe are both significant and that require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions. We have had no significant changes in our Critical Accounting Policies and Estimates since our annual report on Form 10‑K for the year ended December 31, 2022.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate Risk.

The Company can be exposed to interest rate risk because of variable rate borrowings under our Credit Agreement. To the extent the Company borrows at Term SOFR, financial results are subject to changes in the market rate of interest. As of March 31, 2023, we had $47.0 million outstanding under our Revolving Credit Facility, which carried a weighted average interest rate of 6.1% repayable at any time. A hypothetical 1% increase in interest rates would cause an increase of $0.5 million of annual interest if outstanding for the full year.

We currently do not engage in any interest rate hedging activity. However, in the future, to mitigate losses associated with interest rate risks, we may at times enter into derivative financial instruments, although we have not historically done so. We do not, and do not intend to, engage in the practice of trading derivative securities for profit.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the quarter ended March 31, 2023. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023.

Changes in Internal Control over Financial Reporting. There has been no change in our internal control over financial reporting that occurred during the most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

23

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

Information with respect to this item may be found in Note 7, “Commitments and Contingencies”, to the consolidated financial statements in Item 1 of Part I, which is incorporated herein by reference.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in our annual report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents our share repurchase activity for the quarter ended March 31, 2023 (in thousands, except per share amounts):

					Total Number		Maximum Dollar Value
					of Shares		of Shares That May Yet
					Purchased as		Be Purchased as
	Total Number		Average		Part of Publicly		Part of Publicly
	of Shares		Price Paid		Announced		Announced
Period	Purchased2		Per Share2		Programs		Programs1
January 1, 2023 to January 31, 2023		—	$	-		—	$	43,000
February 1, 2023 to February 28, 2023		13		5.05		—		43,000
March 1, 2023 to March 31, 2023		42		3.96		—		43,000
Total		55	$	4.22		—	$	43,000

1In January 2012, the Company’s board of directors adopted an authorization for the repurchase of up to a total of $50.0 million of the Company’s common stock, which it increased by $50.0 million in each of November 2012 and January 2014. In February 2022, the board of directors further increased this authority by an additional $35.3 million for a total authorization to repurchase up to $50.0 million of the Company’s common stock on the open market or in private transactions. As of March 31, 2023, there remains $43.0 million outstanding under the share repurchase authorization, which does not have an expiration date. The Company did not repurchase any shares under the previous authorization during the three months ended March 31, 2023.

2The table above reflects repurchases of 54.7 thousand shares of our common stock, at an average price of $$4.22, in connection with the net settlement of shares issued as a result of the vesting of restricted shares during the three months ended March 31, 2023.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

24

Item 6. Exhibits.

The exhibits listed in the following exhibit index are furnished as part of this report.

EXHIBIT INDEX

Exhibit
Number	Exhibit Description
10.1*	Tatum Services Agreement, dated as of March 6, 2023 between Randstad Professional US, LLC d/b/a Tatum and LL Flooring Holdings, Inc. (filed herewith).
10.2*	Form of Performance-Based Stock Unit Award Agreement, effective March 14, 2023 (filed herewith).
31.1	Certification of Principal Executive Officer of LL Flooring Holdings, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer of LL Flooring Holdings, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer and Principal Financial Officer of LL Flooring Holdings, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial statements from the Company’s Form 10‑Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive (Loss) Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		LL FLOORING HOLDINGS, INC.
		(Registrant)
Date: May 8, 2023	By:	/s/ F. Terrence Blanchard
		F. Terrence Blanchard
		Interim Chief Financial Officer (Principal Financial Officer)

26

EX-10

  EXHIBIT 10.1

TATUM SERVICES AGREEMENT

This TATUM SERVICES AGREEMENT (this "Agreement"), entered into as of March 6, 2023 is by and between RANDSTAD PROFESSIONALS US, LLC d/b/a Tatum, a Delaware limited liability company, with offices at 3625 Cumberland Boulevard, Suite 600, Atlanta, GA 30339 ("Tatum"), and LL FLOORING HOLDINGS, INC. with offices at 4901 Bakers Mill Lane, Richmond, VA 23230 (the "Company"). A "Party" shall mean either Tatum or the Company, as the case may be; the "Parties" shall mean Tatum and the Company, collectively.

WHEREAS, the Company desires to engage Tatum to perform certain outsourced interim services; and, Tatum is willing to provide the services of its personnel to perform such tasks subject to the terms and conditions hereof.

NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, Tatum and the Company agree as follows:

1.Services. The services (the "Services") and fees will be more particularly described on the template Schedule attached hereto and will be provided by the individual professional (the "Tatum Professional") identified on such Schedule. Schedules for additional Tatum Professionals may be added from time to time upon the mutual written agreement of the Parties. In addition, upon the request of the Company and the execution of an additional Schedule to this Agreement, Tatum will provide search Services to the Company, all as more particularly described on such Schedule.

2.Engagement.The Tatum Professional will be engaged by Tatum and Tatum will be solely responsible for determining the conditions, terms and payment of compensation and benefits for the Tatum Professional. The Company will be solely responsible for: establishing and approving appropriate work locations for the Tatum Professional at the Company’s site or other remote locations; providing the Tatum Professional day-to-day guidance, supervision, direction, assistance; and providing the Tatum Professional with all information necessary for the successful and timely completion of the Services. Tatum will have no oversight, control, or authority over the Tatum Professional with respect to the Services or work locations. The Company acknowledges that it is solely responsible for the sufficiency of the Services for its purposes and any work product required of the Tatum Professional. The Company will designate a management-level individual to be responsible for overseeing the Services, and the Tatum Professional will report directly to the Company manager with respect to the provision of the Services. Unless the Tatum Professional is acting as an executive officer of the Company and is authorized by the Company to make such decision, the Company will not permit or require the Tatum Professional to be the ultimate decision-making authority for any material decision, government reporting or public filing relating to the Company's business, including, without limitation, any proposed merger, acquisition, recapitalization, financial strategy or restructuring.

3.Fees and Expenses. The Company will pay Tatum the fees set forth on the applicable Schedule. In addition, the Company will reimburse Tatum directly for all preapproved travel and out-of-pocket expenses incurred in connection with this Agreement (including any Schedules). Tatum shall invoice the Company for, and the Company shall pay to Tatum for further remittance to the appropriate taxing authorities, any sales or use taxes applicable to the Services. If the Company claims that it is exempt from any such sales or use taxes, then the Company must provide Tatum with an exemption certificate satisfactory to Tatum.

4.Payment Terms. Payments to Tatum should be made within 30 days of receipt of undisputed invoice by electronic transfer in accordance with the instructions set forth below or such alternative instructions as provided by Tatum from time to time. Tatum will bill for Services weekly in arrears.

Bank Name and Address: Bank of America Merrill Lynch, 1401 Elm Street, Dallas, TX 75202

Beneficiary: Tatum

Beneficiary Account Number:

ABA Transit/Routing Number:

Please reference the Company's name in the body of the payment.

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5.Effective Date and Termination. This Agreement will be effective as of the earlier of (i) the date Tatum begins providing Services to the Company, or (ii) the date of the last signature to this Agreement as indicated on the signature page. In the event that a Party commits a breach of this Agreement (including any Schedule) and fails to cure the same within 10 days following delivery by the non-breaching Party of written notice specifying the nature of the breach, the non-breaching Party may terminate this Agreement or the applicable Schedule effective upon written notice of such termination. The termination rights set forth in this Section are in addition to and not in lieu of the termination rights set forth in each of the Schedules. Either Party may terminate this Agreement or any Schedule at any time without cause upon two weeks written notice to the other Party.

6.Conversion and Professional Placement Fees

(a)Conversion Fee. If, at any time during the time frame in which a Tatum Professional is providing Services to the Company and for a period of 12-months thereafter, other than in connection with this Agreement or another Tatum agreement, the Company or any of its subsidiaries or affiliates employs such Tatum Professional, or engages such Tatum Professional as an independent contractor, the Company will pay Tatum a placement fee in an amount equal to 30% of the Annualized Compensation (as defined below). “Annualized Compensation” is defined as salary, incentive, signing and other bonuses, and any other compensation that may be earned by the Tatum professional during the first 12 months of service with the Company (or its subsidiary or affiliate) regardless of when or if such compensation is actually paid.

The placement fee shall be due upon the commencement of the Tatum Professional's employment or engagement with the Company (or its subsidiary or affiliate).

(b)Professional Placement Fee. Separate from the interim Services provided by the Tatum Professional, if requested by the Company, Tatum can provide direct hire services by developing an applicant flow through its sources and refer qualified candidates for various financial, accounting, information technology and similar direct hire positions to the Company on an as needed basis (the "Direct Hire Candidate").

In consideration for Tatum providing Direct Hire Candidates, if the Company hires a Direct Hire Candidate referred by Tatum within one year of such referral, regardless of whether this Agreement has terminated, the Company agrees to pay Tatum a one-time professional service fee in an amount equal to 25% of the candidate's Annualized Compensation, as defined in 6(a). A candidate is considered referred by Tatum if Tatum submits the candidate's resume or curriculum vitae (in paper, electronic, or facsimile format) to the Company, unless the Company can show that it was already in possession of the candidate's resume or curriculum vitae before the referral by Tatum (“Prior Referral”). For avoidance of confusion, the Company shall notify Tatum of a Prior Referral with supporting documentation within three (3) business days of the presentment of the Direct Hire Candidate.

(c)Guarantee. Tatum provides a Direct Hire Candidate Guarantee on the following terms: (i) the guarantee is conditioned upon the Company's timely payment of the fees due to Tatum; (ii) the guarantee applies only if Tatum is notified in writing within 6 months of the Direct Hire Candidate’s start date that the Direct Hire Candidate has voluntarily resigned or was terminated for cause; and (iii) for a period of 6 months from the date Tatum is notified of a Direct Hire Candidate’s resignation/termination for cause, Tatum will use commercially reasonable efforts to find a substantially similar replacement for that Direct Hire Candidate (i.e., similar qualifications, title/position and salary range) without further charge to the Company.

The guarantee provided in this Section shall not apply if the Company: (iv) failed to timely pay the fees due pursuant to Section 4 of this Agreement; (v) seeks a replacement which is not substantially similar to the Direct Hire Candidate position filled, as defined in Section 6(c)(iii); or (vi) terminated the Direct Hire Candidate's engagement for a reason other than those listed in Section6(c)(ii). For, example, the guarantee would not apply if the termination was the result of the Company’s reorganization (e.g., change in the executive reporting structure, corporate organization or executive leadership), position elimination, reduction in force, acquisition/sale, or a material change in the Company’s support needs, including changes in the anticipated job scope or responsibility of the Direct Hire Candidate.

7.Warranties and Disclaimers. TATUM DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY, OR FITNESS OF USE OR PURPOSE. WITHOUT LIMITING THE FOREGOING, TATUM MAKES NO REPRESENTATIONOR WARRANTY WITH RESPECT TO THE TATUM PROFESSIONAL OR THE SERVICES PROVIDED HEREUNDER, AND TATUM WILL NOT BE RESPONSIBLE FOR ANY ACTION TAKEN BY THE COMPANY IN FOLLOWING OR DECLINING TO FOLLOW ANY OF THE TATUM PROFESSIONAL'S ADVICE OR RECOMMENDATIONS. THE SERVICES PROVIDED BY TATUM ANDTHE TATUMPROFESSIONAL HEREUNDER ARE FOR THE SOLE BENEFIT OF THE COMPANY AND NOT ANY UNNAMED THIRD

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PARTIES. THE SERVICES WILL NOT CONSTITUTE AN AUDIT, REVIEW, OPINION, OR COMPILATION, OR ANY OTHER TYPE OF FINANCIAL STATEMENT REPORTING OR ATTESTATION ENGAGEMENT THAT ISSUBJECT TO THERULES OF THE AICPA OR OTHER SIMILAR STATE OR NATIONAL PROFESSIONAL BODIES OR LAWS AND WILL NOT RESULT IN AN OPINION OR ANY FORM OF ASSURANCE ON INTERNAL CONTROLS.

8.Limitation of Liability; Indemnity.

(a)EXCEPT FOR CLAIMS BASED ON TATUM’S GROSS NEGLIGENCE OR WILLFULL MISCONDUCT, TATUM'S LIABILITY IN ANY AND ALL CATEGORIES AND FOR ANY AND ALL CAUSES ARISING UNDER THIS AGREEMENT, WHETHER BASED IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, WILL, IN THE AGGREGATE, NOT EXCEED THE ACTUAL FEES PAID BY THE COMPANY TO TATUM OVER THE PREVIOUS TWO MONTHS OF THIS AGREEMENT WITH RESPECT TO THE TATUM PROFESSIONAL FROM WHOM THE LIABILITY ARISES. IN NO EVENT WILL TATUM BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL,PUNITIVE, INDIRECT OR SPECIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, INTERRUPTION OR LOSS OF BUSINESS, PROFIT OR GOODWILL. AS A CONDITION FOR RECOVERY OF ANY LIABILITY, THE COMPANY MUST ASSERT ANY CLAIM AGAINST TATUM WITHIN SIX MONTHS AFTER DISCOVERY OR 90 DAYS AFTER THE TERMINATION OR EXPIRATION OF THE APPLICABLE SCHEDULE UNDER WHICH THE LIABILITY ARISES,WHICHEVER IS EARLIER.

(b)THE COMPANY AGREES TO INDEMNIFY TATUM AND THE TATUM PROFESSIONAL TO THE FULL EXTENT PERMITTED BY LAW FOR ANY LOSSES, COSTS, DAMAGES, AND EXPENSES (INCLUDINGREASONABLE ATTORNEYS' FEES), AS THEY ARE INCURRED, IN CONNECTION WITH ANY CAUSE OF ACTION,SUIT, OR OTHER PROCEEDING ARISING IN CONNECTION WITH THE TATUM PROFESSIONAL'S SERVICES TO THE COMPANY UNLESS DUE TO THE NEGLIGENCE OR WILLFUL MISCONDUCT OF TATUM’S PERFORMANCE OF SERVICES AS A STAFFING PROVIDER OR TATUM PROFESSIONAL.

9.Insurance.

(a)Tatum. At all times during the term of this Agreement, Tatum shall maintain at its expense and benefit (a) Workers' Compensation insurance which provides coverage for all employees of Tatum, including Tatum Professionals, as required by applicable law, and (b) comprehensive general liability insurance with a policy limit of not less than $1,000,000 per occurrence and $1,000,000 in the aggregate.

(b)Company. If Company is a public company and requires a Tatum Professional to serve as a Company officer or director, even on an interim basis, then Company shall maintain directors and officers insurance (“D&O Insurance”) covering the Tatum Professional in an amount reasonably determined by Company at no additional cost to Tatum or the Tatum Professional. If the Company is private and requires a Tatum Professional to serve as a Company officer or director, even on an interim basis, it will provide the Tatum Professional with substantially similar D&O Insurance as is provided to Company’s officers and directors, if any.

10.Company Circumstances.In the case that the Company acknowledges to Tatum and the Tatum Professionals that, as of the date of this Agreement, it is -- and has been for a considerable period of time one or more of the following: in dire financial condition, suffering extensive losses, operating with negative EBITDA, or experiencing insufficient cash-flow; and as a result, Company has been unable to obtain further credit or investment and may well need to consider reorganization or liquidation in bankruptcy; the Tatum Professionals will endeavor to assist the Company in finding alternatives to bankruptcy. Tatum and the Tatum Professionals offer no assurances that the Company can otherwise be restructured or that the Company's distressed condition can be reversed.

Change in Company Circumstances.During the term of this Agreement, if the Company enters into discussions with restructuring or bankruptcy advisors, Tatum and the Company will review the current fee structure and payment terms under this Agreement (including any Schedule) and agree on appropriate modifications. For instance, Tatum may switch to an hourly rate if Tatum Professionals are required to work extended hours or a premium may be imposed for hours worked in excess of eight (8) hours. In addition, Tatum and the Company will discuss the need for additional Tatum professionals with specialized skills in working with companies undergoing significant debt and equity restructuring, and as needed, Tatum professionals with experience helping companies seeking or operating under bankruptcy protection. The agreed upon additional professionals will be engaged under terms and fees commensurate to the expertise and services to be

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provided. In the event that Tatum and the Company cannot agree on appropriate modifications to this Agreement (including any Schedule) or the need for additional Tatum professionals, Tatum may immediately terminate this Agreement or any Schedule upon two weeks written notice to the Company.

11.Sanctions.Company represents that any provision of services by Company and any payment by Company to Tatum shall not result in any breach of any trade, economic or financial sanctions laws or regulations.

12.Non-Solicitation.Neither Party shall solicit or hire any employee of the other Party directly involved in the performance of this Agreement or that either party became aware of through the performance of this Agreement during the term of this Agreement and for a period of six (6) months thereafter; provided, however, that this provision shall not restrict in any way either Party’s right to solicit or recruit generally in the media or on the internet and shall not prohibit either Party, nor any subsidiary, parent or affiliated entity, from hiring an employee of the other Party who answers any advertisement or who otherwise voluntarily applies for hire without having been personally solicited or recruited.

13.Governing Law and Witness Fees.

(a)This Agreement will be governed by and construed in accordance with the laws of the state of Delaware, without regard to conflicts of laws provisions.

(b)This Agreement and the rights and obligations of the Parties hereunder shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the laws of the state of Delaware, without giving effect to provisions thereof regarding conflict of laws. All claims arising out of or related to this Agreement must be litigated exclusively in a court in the state of Delaware. Company and Tatum waive any objection based on personal jurisdiction and forum and waive any objection to venue of any action instituted hereunder to the extent that an action is brought in the courts identified above. Each Party agrees that a final judgment in any such action shall be conclusive and may be enforced in any other jurisdiction in any manner provided by law.

(c)In the event any employee of Tatum (including, without limitation, any Tatum Professional) is requested or authorized by the Company or is required by government regulation, subpoena, or other legal process to produce documents or appear as witnesses in connection with any action, suit or other proceeding initiated by a third party against the Company or by the Company against a third party, the Company will, so long as Tatum is not a party to the proceeding in which the information is sought, reimburse Tatum for its professional's time (based on customary rates) and expenses, as well as the fees and expenses of its counsel, incurred in responding to such requests. This provision is in addition to and not in lieu of any indemnification obligations the Company may have under this Agreement.

14.Miscellaneous.

(a)This Agreement together with all Schedules constitutes the entire agreement between the Parties with regard to the subject matter hereof and supersedes any and all agreements, whether oral or written, between the Parties with respect to its subject matter. No amendment or modification to this Agreement will be valid unless in writing and signed by both Parties.

(b)If any portion of this Agreement is found to be invalid or unenforceable, such provision will be deemed severable from the remainder of this Agreement and will not cause the invalidity or unenforceability of the remainder of this Agreement, except to the extent that the severed provision deprives either Party of a substantial portion of its bargain.

(c)Neither Party will be deemed to have waived any rights or remedies accruing under this Agreement unless such waiver is in writing and signed by the Party electing to waive the right or remedy. The waiver by any Party of a breach or violation of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach of such provision or any other provision of this Agreement.

(d)Neither Party will be liable for any delay or failure to perform under this Agreement (other than with respect to payment obligations) to the extent such delay or failure is a result of an act of God, war, earthquake, civil disobedience, court order, labor dispute, or other cause beyond such Party's reasonable control.

(e)The Company may not assign its rights or obligations under this Agreement without the express written consent of Tatum. Tatum shall be entitled (without the consent of the Company) to transfer this Agreement and/or assign its obligations, rights and benefits in this Agreement to any Tatum or Randstad affiliate or to a third party.

(f)Nothing in this Agreement will confer any rights upon any person or entity other than the parties hereto and their respective successors and permitted assigns and the Tatum Professionals.

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(g)The expiration or termination of this Agreement or any Schedule will not destroy or diminish the binding force and effect of any of the provisions of this Agreement or any Schedule that expressly, or by reasonable implication, come into or continue in effect on or after such expiration or termination, including, without limitation, provisions relating to payment of fees and expenses (including witness fees and expenses), hiring the Tatum Professionals, governing law, venue, limitation of liability and indemnity.

(h)The Company agrees to reimburse Tatum for all costs and expenses (including, without limitation, reasonable attorneys' fees, court costs and arbitration fees) incurred by Tatum in enforcing collection of any monies due under this Agreement.

(i)Each Party, in all matters relating to this Agreement, will act as an independent contractor. Neither Party will have authority nor will either Party represent that it has any authority to assume or create any obligation, express or implied, on behalf of the other, or to represent the other as an agent, employee, or in any other capacity. Neither execution nor performance of this Agreement shall be construed to have established any agency, joint venture, or partnership. Neither Party shall make any warranties or representations on behalf of the other arty. Tatum is responsible for payment to its employees and agents of all required compensation, benefits, social security, unemployment or disability insurance, income tax, federal, state, and local withholding taxes, benefits or similar items for the persons providing the services. In addition, neither Tatum nor Tatum Professional are eligible for any employee benefit programs from Company, nor are they entitled to separation pay. For the avoidance of doubt, no person providing services on behalf of Tatum shall be deemed to be an employee of Company for any purpose whatsoever.

(j)The Parties agree that this Agreement is confidential and will not disclose it or its terms to any person other than its attorneys, auditors, advisors, or those other persons necessary to performance, or execution, of this Agreement, and except as may be required by applicable securities or other laws.

(k)All notices under this Agreement shall be validly given or served in writing when delivered (i) to the e-mail address set forth below, the receipt of which is confirmed by the recipient, (ii) three (3) business days after being sent by certified mail, return receipt requested, postage pre-paid, or (iii) upon delivery by reputable overnight courier, all delivery charges pre-paid, and in the case of notice by the methods set forth in (ii) or (iii) addressed as follows:

If to Tatum:

Randstad Professionals US, LLC d/b/a Tatum

Address: 3625 Cumberland Boulevard, Suite 600, Atlanta, GA 30339 Attn: Legal Dept.

E-mail: chris.kearney@tatum-us.com

If to Company:

Chief Legal, Ethics and Compliance Officer

Address: 4901 Bakers Mill Lane Richmond, VA 23230

E-mail: legal@llflooring.com

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the dates set forth below.

RANDSTAD PROFESSIONALS US, LLC d/b/a TATUM:		LL FLOORING HOLDINGS, INC.:
By:	/s/ Nicholas Mishima	By:	/s/ Matt T Argano
Name:	Nicholas Mishima	Name:	Matt T Argano
Title:	Corporate Counsel	Title:	SVP, CHRO
Date:	Mar 6, 2023	Date:	Mar 7, 2023

Issued By	Revision Date	Page
Randstad Legal	April 2022	5

 

Schedule to Tatum Services Agreement

This Schedule is entered into in connection with that certain Tatum Services Agreement, dated March 6, 2023 (the "Agreement"), by and between Randstad Professionals US, LLC d/b/a Tatum ("Tatum") and LL Flooring Holdings, Inc. (the "Company") and will be governed by the terms and conditions of the Agreement.

1.Tatum Professional Name: Terry Blanchard

2.Service Description and Position Title: Interim Chief Financial Officer

3.Company Supervisor: Chief Executive Officer

4.Start Date: On or about March 13, 2023

5.Minimum Term: N/A

6.Fees: Except as otherwise set forth below, the Company will pay to Tatum $275/hour and $370/hour for weekly hours greater than 40 for the Tatum Professional. As a condition to providing the Services, Tatum requires Company to pay a security deposit in the amount equal to $30,000 (the "Deposit"), which is due upon execution of this Schedule. If the Company breaches the Agreement (including the terms of any Schedule or any other agreement between the Company and Tatum or any Tatum Professional) and fails to cure such breach as provided for herein (or therein), Tatum will be entitled to apply the Deposit to its or the Tatum Professional's damages resulting from such breach. In the event the Deposit falls below the amount required to cover payment obligations or other resulting damages, the Company will pay Tatum an additional amount equal to the shortfall. Upon the expiration or termination of the Agreement, Tatum will first apply the Deposit to any unfulfilled payment obligations of the Company to Tatum or any Tatum Professional (or to any damages owed to Tatum or any Tatum Professional), and the remaining balance of the Deposit, if any, shall be returned to the Company.

In the event of an actual conflict between the terms and conditions of this Schedule and the Agreement, the terms and conditions of the Agreement will control.

RANDSTAD PROFESSIONALS US, LLC d/b/a TATUM:		LL FLOORING HOLDINGS, INC.:
By:	/s/ Nicholas Mishima	By:	/s/ Matt T Argano
Name:	Nicholas Mishima	Name:	Matt T Argano
Title:	Corporate Counsel	Title:	SVP, CHRO
Date:	Mar 6, 2023	Date:	Mar 7, 2023

Issued By	Revision Date	Page
Randstad Legal	April 2022	6

EX-10

  EXHIBIT 10.2

LL FLOORING HOLDINGS, INC.
PERFORMANCE-BASED
STOCK UNIT AWARD AGREEMENT

4901 Bakers Mill Lane, Richmond, Virginia 23230
Phone: (804) 463-2000/Fax (804)420-9701

[Date]

[Name]

[Street]

[City, State]

RE: Employee Performance-Based Stock Unit Award Agreement

Dear [Name]:

LL Flooring Holdings, Inc. (the “Company”) has granted to you an Award of Stock Units pursuant and subject to the provisions of the Lumber Liquidators Holdings, Inc. 2011 Equity Compensation Plan, as amended and restated (the “Plan”). All terms used herein that are defined in the Plan have the same meaning given them in the Plan.

This Award of Stock Units is made pursuant to the Plan. The Plan is administered by the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”). The terms of the Plan are incorporated into this Award Agreement, and, in the case of any conflict between the Plan and this Award Agreement, the terms of the Plan shall control. A copy of the Plan will be provided to you upon request.

1.Grant. In consideration of your agreements contained in this Award Agreement, the Company hereby grants to you the following number of Stock Units(the “Stock Units”) (collectively the “Target Number” of Stock Units) as of the following date (the “Grant Date”), each Stock Unit corresponding to one share of the common stock of the Company, par value $.001 per share (the “Stock”).

Grant Date	Target Number of Stock Units Granted
[Date]	[Stock Units]

Subject to the terms and conditions of the Plan and this Award Agreement, each Stock Unit represents an unsecured promise of the Company to deliver, and your right to receive, one share of the Stock of the Company at the time and on the terms and conditions set forth herein. As a holder of Stock Units, you only have the rights of a general unsecured creditor of the Company. The Stock Units are subject to the performance and employment-based vesting restrictions and

other terms set forth in this Award Agreement and the Plan. Until the performance and employment-based vesting restrictions have lapsed and the Stock Units are to be settled, the Stock Units are forfeitable and nontransferable.

2.Vesting. The Award of Stock Units is subject to the following performance and employment-based vesting terms and conditions:

(a)Except as otherwise set forth herein, the Stock Units shall be considered performance-based (“Performance-Based”) and shall become vested and payable with respect to that number of Stock Units subject to this Award Agreement that correlates to the performance objective achieved for the three-year performance period beginning January 1, 2023 and ending December 31, 2025 (the “Performance Period”) set forth on the attached Exhibit A, as determined by the Committee in its sole discretion, provided you remain continuously employed by the Company or a Related Company from the Date of Grant through the end of the Performance Period. Notwithstanding the foregoing, none of the Stock Units shall become vested and payable if the performance objective for the Performance Period set forth on Exhibit A is not achieved at or above the designated levels set forth therein.

(b)Upon a Change in Control before the end of the Performance Period, the Stock Units subject to this Award Agreement shall become eligible to vest and become payable with respect to the Target Number of Stock Units. In the event no provision is made for the continuance, assumption or substitution by the Company or its successor in connection with a Change in Control of the Stock Units, then, contemporaneously with the Change in Control, the Stock Units shall become vested and payable with respect to the Target Number of Stock Units, to the extent not vested previously, subject to your continued employment with the Company (or any Related Company) until the date of the Change in Control. If provision is made for the continuance, assumption or substitution by the Company or its successor in connection with the Change in Control of the Stock Units subject to this Award Agreement, then the Stock Units shall become vested and payable with respect to the Target Number of Stock Units, to the extent not vested previously, subject to your continued employment with the Company (or any Related Company) through the last day of the Performance Period or, if earlier, contemporaneously with the termination of your employment with the Company (or any Related Company) if your employment is terminated by you for Good Reason or is terminated by the Company (or any Related Company), and such termination is not a Termination for Cause, in each case on or after the Change in Control and on or before the end of the Performance Period. “Good Reason” and “Termination for Cause” are defined in Section 16 of this Award Agreement.

(c)If you die or become Disabled (as determined by the Committee) while you are employed by the Company (or any Related Company), and your employment with the Company (or any Related Company) is terminated as a result of such death or Disability prior to the end of the Performance Period (or, if earlier, prior to a Change in Control in connection with which no provision is made for the continuance, assumption or substitution by the Company or its successor in connection with a Change in Control of the Stock Units), the Stock Units subject to this Award Agreement shall remain outstanding until the end of the Performance Period (or, if earlier, until a Change in Control in connection with which no provision is made for the continuance, assumption or substitution by the Company or its successor in connection with a Change in Control of the Stock Units) and shall become vested and payable as if you had remained

employed with the Company (or any Related Company) until the end of the Performance Period (or, if earlier, a Change in Control in connection with which no provision is made for the continuance, assumption or substitution by the Company or its successor in connection with a Change in Control of the Stock Units), with respect to the number of Stock Units that otherwise would have become vested and payable through the end of the Performance Period or, if earlier, Change in Control, multiplied by a fraction, the numerator of which is the number of full months elapsed from the first day of the Performance Period until the last day of the month which includes the date of your death or Disability, and the denominator of which is the number of full months between the first day of the Performance Period and the last day of the Performance Period or, if earlier, the last day of the month which includes the date of a Change in Control in connection with which no provision is made for the continuance, assumption or substitution by the Company or its successor in connection with a Change in Control of the Stock Units). If you die or become Disabled (as determined by the Committee) while you are employed by the Company (or any Related Company), and your employment with the Company (or any Related Company) is terminated as a result of such death or Disability after the end of the Performance Period, then, the Stock Units shall become vested and payable with respect to the number of Stock Units that are to become vested and payable for the Performance Period, notwithstanding your subsequent death or Disability. If you die or become Disabled (as determined by the Committee) while you are employed by the Company (or any Related Company), and your employment with the Company (or any Related Company) is terminated as a result of such death or Disability before the end of the Performance Period and after the date of a Change in Control in connection with which provision is made for the continuance, assumption or substitution by the Company or its successor in connection with a Change in Control of the Stock Units, the Stock Units shall become vested and payable with respect to the Target Number of Stock Units multiplied by a fraction, the numerator of which is the number of full months elapsed from the first day of the Performance Period until the last day of the month which includes the date of your death or Disability, and the denominator of which is the number of full months in the Performance Period.

(d)Except as otherwise set forth above, you must be employed by the Company (or any Related Company) on the relevant date for any Stock Units to become vested and payable. If your employment with the Company (or any Related Company) terminates for any reason other than your death or Disability, and other than by you for Good Reason or by the Company (or any Related Company) on or after a Change in Control and on or before the end of the Performance Period, and such termination is not a Termination for Cause, any rights you may have under this Award Agreement with regard to unvested Stock Units shall be null and void. Any rights you may have under this Award Agreement with regard to unvested Stock Units shall be forfeited and become null and void at the earliest time at which the Stock Units may no longer become vested and payable pursuant to the terms hereof. The date upon which the Stock Units become vested and payable shall be referred to as the “Vesting Date.”

3.Settlement of Award. Subject to the terms of Section 2 above, the Company shall issue to you one share of Stock for each Stock Unit that has become vested and payable under Section 2 above and shall deliver to you such shares of Stock as soon as practicable (and within thirty (30) days) after the Vesting Date. In its sole discretion, the Company may elect to deliver the Stock to you by book-entry in the Company’s books or by electronic delivery to a brokerage account established for your benefit at a financial/brokerage firm selected by the Company. You agree to complete and sign any documents and take any additional action that the financial/brokerage firm

designated by the Company may request to enable the Company to deliver the Stock on your behalf.

4.Cash Dividends. For so long as you hold outstanding Stock Units under this Award Agreement, if the Company pays any cash dividends on its Stock, then the Company will pay to you in cash for each outstanding Stock Unit covered by this Award Agreement as of the record date for such dividend, less any required withholding taxes, the per share amount of such dividend that you would have received had you owned the underlying shares of Stock as of the record date of the dividend if, and only if, the Stock Units become vested and payable and the related shares of Stock are issued to you pursuant to the terms of this Award Agreement. In that case, the Company shall pay such cash amounts to you, less any required withholding taxes, at the same time the related shares of Stock are delivered to you. The additional payments pursuant to this Section 4 shall be treated as a separate arrangement.

5.Forfeiture and Repayment Provision. If the Committee determines, in its sole discretion, that you have, at any time, willfully engaged in conduct that is harmful to the Company (or any Related Company), the Committee may declare that all or a portion of this Award is immediately forfeited. If the Committee determines, in its sole discretion, that you have willfully engaged in conduct that is harmful to the Company (or any Related Company), you shall repay to the Company all or any shares of Stock owned by you as a result of this Award Agreement or all or any of the amount realized as a result of the sale of Stock awarded to you under this Award Agreement, along with the gross amount, before withholdings, of any cash dividends paid to you under this Award Agreement, to the extent required by the Committee. Repayment or forfeiture required under this Section shall be enforced by the Board or its delegate, in the manner the Board or its delegate determines to be appropriate. Your acceptance of the Stock Units reflected in this Award Agreement constitutes acceptance of the forfeiture and repayment provisions of this Section.

6.Rights as a Shareholder. Except as set forth in Section 4 above, you shall not have any rights as a shareholder with respect to shares of Stock subject to these Stock Units until issuance of the shares of Stock.

7.Transfer Restrictions. You may not sell, assign, transfer, pledge, hypothecate or encumber the Stock Units awarded to you under this Award Agreement prior to the time such Stock Units become fully vested and payable in accordance with this Award Agreement and the shares of Stock are issued to you.

8.Fractional Shares. A fractional share of Stock will not be issued and any fractional shares may be disregarded by the Company.

9.Adjustments. If the number of outstanding shares of Stock is increased or decreased as a result of a stock dividend, stock split or combination of shares, recapitalization, merger in which the Company is the surviving corporation, or other change in the Company’s capitalization without the receipt of consideration by the Company, the number and kind of your unvested Stock Units shall be proportionately adjusted by the Committee, whose determination shall be binding.

10.Notices. Any notice to be given to the Company under the terms of this Award Agreement shall be addressed to the Corporate Secretary at LL Flooring Holdings, Inc., 4901 Bakers Mill Lane, Richmond, Virginia 23230. Any notice to be given to you shall be addressed to you at the address set forth above or your last known address at the time notice is sent. Notices shall be deemed to have been duly given if mailed first class, postage prepaid, addressed as above.

11.Applicable Withholding Taxes. No Stock Units shall become vested and payable until you have paid to the Company the amount that must be withheld under federal, state and local income and employment tax laws or you and the Company have made satisfactory arrangements for the payment of such taxes. As a condition to the settlement of the Award, you shall be required to pay any required withholding taxes attributable to the Award in cash or cash equivalent acceptable to the Committee. However, the Company in its discretion may, but is not required to, allow you to satisfy any such applicable withholding taxes (but only for the minimum required withholding that would not result in adverse financial accounting consequences) (i) by allowing you to surrender shares of Stock that you already own, (ii) through a cashless transaction through a broker, (iii) by means of a “net settlement” procedure, (iv) by such other medium of payment as the Committee shall authorize or (v) by any combination of the allowable methods of payment set forth herein.

12.Applicable Securities Laws. You may be required to execute a customary written indication of your investment intent and such other agreements the Company deems necessary or appropriate to comply with applicable securities laws. The Company may delay grant of the Award, and any delivery of shares of Stock to be issued under the Award, until you have executed such indication or agreements.

13.Acceptance of Stock Units. By signing this Award Agreement, you indicate your acceptance of the Stock Units and your agreement to the terms and conditions set forth in this Award Agreement which, together with the terms of the Plan, shall become the Company’s Award Agreement with you. You also hereby acknowledge that a copy of the Plan has been made available and agree to all of the terms and conditions of the Plan, as it may be amended from time to time. Unless the Company otherwise agrees in writing, the Stock Units granted under this Award Agreement will not become vested or payable if you do not accept this Award Agreement by signing this Award Agreement within thirty (30) days after the Grant Date.

14.Clawback. The Stock Units are subject to such clawback as may be determined under the Company’s Clawback Policy (as such Clawback Policy is in effect from time to time) or as may be required by any applicable law, government regulation or stock exchange listing requirement. Your acceptance of the Stock Units reflected in this Award Agreement constitutes acceptance of the clawback provisions described in this Section 14. This Section 14 is intended to comply with Section 954 of Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and all regulations and rulemaking thereunder and should be interpreted accordingly.

15.Binding Effect. This Award Agreement shall be binding upon and inure to the benefit of your legatees, distributees, and personal representatives and the successors of the Company (or any Related Company). Any references herein to the Company (or any Related Company) shall include any successor company to either.

16.Definitions. For purposes of this Award Agreement:

(a)“Good Reason” shall have the same meaning as under any employment, severance or change in control agreement between you and the Company (or any Related Company), or if no such employment or severance agreement exists or such agreement does not contain any such definition, “Good Reason” shall mean your voluntary termination of employment with the Company or a Related Company based on (i) the company’s failure to pay or provide, or a material reduction in, your base salary or annual target bonus opportunity, or (ii) a material reduction in your responsibilities within the Company (or any Related Company), provided you give the Company or Related Company which employs you notice of any event or condition that would constitute "Good Reason" within thirty (30) days of the event or condition which would constitute "Good Reason," and upon receipt of such notice the Company or Related Company shall have thirty (30) days to remedy such event or condition, and if such event or condition is not remedied within such thirty (30)-day period, any termination of employment by you for "Good Reason" must occur within sixty (60) days after the period for remedying such condition or event has expired.

(b)“Termination for Cause” shall mean termination of your employment for “Cause” as defined under any employment, severance or change in control agreement between you and the Company (or any Related Company) or, if no such agreement exists or such agreement does not contain any such definition, “Cause” shall mean your (i) personal dishonesty, (ii) fraud, (iii) willful or repeated misconduct, (iv) gross negligence, (v) breach of a fiduciary duty to the Company (or any Related Company), (vi) intentional failure to perform your duties, (vii) material violation of Company (or any Related Company) policy, (viii) unsatisfactory performance of your job duties; provided, however, that in such instances where the Company (or any Related Company), at its sole discretion, deems such unsatisfactory performance curable, the Company (or any Related Company) shall give such notice and opportunity to cure as the Company (or any Related Company) deems reasonable, (ix) material noncompliance with financial reporting requirements under federal securities laws, (x) conviction of or plea of guilty or “no contest” to a felony or crime of moral turpitude under the laws of the United States or any state thereof, and/or (xi) action or inaction that materially diminishes or impairs the goodwill or reputation of the Company (or any Related Company).

17. Section 409A. This Award is intended to be exempt from Section 409A of the Code as a short-term deferral, because settlement of the Award is to occur later than 2½ months after the later of (i) the end of the Company’s fiscal year in which the Stock Units become vested or (y) the end of the calendar year in which the Stock Units become vested. Notwithstanding the preceding, neither the Company nor any Related Company shall be liable to you or any other person if the Internal Revenue Service or any court or other authority having jurisdiction over such matter determines for any reason that any payments hereunder are subject to taxes, penalties or interest as a result of failing to be exempt from, or comply with, Section 409A of the Code.

18. No Right to Continued Employment. Neither the Plan, the granting of this Award nor any other action taken pursuant to the Plan or this Award constitutes or is evidence of any agreement or understanding, express or implied, that the Company or any Related Company will retain you as an employee or other service provider for any period of time or at any particular rate of compensation.

IN WITNESS WHEREOF, the Company has caused this Performance-Based Stock Unit Award Agreement to be signed, as of this [Date].

LL FLOORING HOLDINGS, INC.

By: /s/ Charles E. Tyson

Charles E. Tyson

Chief Executive Officer

LL FLOORING HOLDINGS, INC.
PERFORMANCE-BASED
STOCK UNIT AWARD AGREEMENT

Exhibit A

Subject to the provisions of this award Agreement, the number of stock units covered by this award Agreement that will vest and become payable BASED ON Performance ACHIEVED FOR THE PERFORMANCE PERIOD will be determined AS FOLLOWS:

1.Calculate the relative Total Shareholder Return (TSR) Payout Percent: Determine the relative TSR for the Company compared to the S&P 600 Retailing Industry Group, and the Company’s relative TSR Percentile Rank (as defined below), for the Performance Period. If the Company’s relative TSR Percentile Rank is below the 25th percentile, the Payout Percent will be 0%, and no Stock Units will become vested and payable under this Award Agreement. If the Company’s relative TSR Percentile Rank is at the 25% percentile, the Payout Percent will be 25%. If the Company’s relative TSR Percentile Rank is at the 50% percentile, the Payout Percent will be 100%. If the Company’s relative TSR Percentile Rank is at the 75% percentile or higher, the Payout Percent will be 200%. If the Company’s relative TSR Percentile Rank for the Performance Period is between “Threshold Goal” and “Target Goal” or between “Target Goal” and “Maximum Goal”, the Payout Percent will be determined using straight line interpolation based on the actual relative TSR Percentile Rank achieved for the Performance Period.

2.Determine the Number of Stock Units that are to become Vested and Payable: Determine the number of Stock Units that are to become vested and payable based on performance achieved during the Performance Period by multiplying the Target Number of Stock Units that are granted pursuant to this Award Agreement by the relative TSR Payout Percent. Notwithstanding any other provision of this Award Agreement, the maximum number of Stock Units that may become vested and payable under this Award Agreement shall not exceed 200% of the Target Number of Stock Units subject to this Award Agreement.

3.Chart: The relative TSR Payout Percent and the number of Stock Units that are to become vested and payable for the Performance Period shall be determined based on the following chart:

3 year relative Total Shareholder Return (rTSR)	Performance 3-Year Period 2023 – 2025 Based on 3-yr approved Plan	Payout
	Below Threshold Goal	No Payout
	Threshold Goal – 25th Percentile	25%
	Target Goal – 50th Percentile	100%
	Maximum Goal – 75th Percentile or higher	200% [Maximum Payout]

The performance goals and the associated percentages will be adjusted by the Committee to reflect the pro forma impact of acquisitions or divestitures by the Company during the Performance Period. Additionally, the performance goals and the associated percentages may be adjusted by the Committee in its discretion due to (i) unforeseen changes to the macroeconomic business environment, (ii) unanticipated regulatory change or (iii) changes in US GAAP or the application thereof that would result in an inequitable dilution or enlargement of the rights granted under this Award Agreement.

4.Definitions: The following definitions shall apply for determining the number of Stock Units that will becomes vested and payable for the Performance Period:

“Accumulated Shares” means, for a given trading day, the sum of (i) one (1) share and (ii) the cumulative number of shares of a company’s common stock purchasable with dividends declared on such company’s common stock to that point during the Performance Period, assuming same day reinvestment of such dividends at the closing price on the ex-dividend date.

“Closing Average Period” means the twenty trading days ending on the last day of the Performance Measurement Period.

“Closing Average Share Value” means the average Share Value over the trading days in the Closing Average Period.

“Opening Average Period” means the twenty trading days ending on the first day of the Performance Period.

“Opening Average Share Value” means the average Share Value over the trading days in the Opening Average Period.

“Relative Total Shareholder Return” means the Company’s TSR relative to the TSR of the S&P 600 Retailing Industry Group. Relative Total Shareholder Return will be determined by ranking the S&P 600 Retailing Industry Group (not including the Company) from highest to lowest according to their respective TSRs. After this ranking, the percentile performance of each of the S&P 600 Retailing Industry Group companies will be determined as follows:

P =	N – R
	N – 1

where: (i) “P” represents the percentile performance which will be rounded, if necessary, to the nearest whole percentile by application of regular rounding; (ii) “N” represents the number of companies in the S&P 600 Retailing Industry Group as of the last day of the Performance Measurement Period; and (iii)“R” represents a company’s ranking relative to the S&P 600 Retailing Industry Group.

Example: If there are 14 companies in the S&P 600 Retailing Industry Group, the company that ranked 5th would be at the 69.2 percentile: .692 = ((14 – 5) / (14 – 1)).

“Share Value” means, with respect to a given trading day, the closing price of a company’s common stock multiplied by the Accumulated Shares for such trading day.

“TSR” means, for the Company and for the S&P 600 Retailing Industry Group, such company’s total shareholder return, expressed as a percentage, which will be calculated by dividing (i) the Closing Average Share Value by (ii) the Opening Average Share Value and subtracting one from the quotient.

EX-31

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Charles E. Tyson, certify that:

1.I have reviewed this quarterly report on Form 10-Q of LL Flooring Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 8, 2023	/s/ Charles E. Tyson
	Charles E. Tyson
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, F. Terrence Blanchard, certify that:

1.I have reviewed this quarterly report on Form 10-Q of LL Flooring Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 8, 2023	/s/ F. Terrence Blanchard
	F. Terrence Blanchard
	Interim Chief Financial Officer
	(Principal Financial Officer)

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Charles E. Tyson, President and Chief Executive Officer of LL Flooring Holdings, Inc. (the "Registrant"), and F. Terrence Blanchard, Interim Chief Financial Officer of the Registrant, each hereby certifies that, to the best of his or her knowledge:

1.The Registrant's quarterly report on Form 10-Q for the quarter ended March 31, 2023, to which this Certification is attached as Exhibit 32.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Charles E. Tyson	/s/ F. Terrence Blanchard
Charles E. Tyson	F. Terrence Blanchard
President and Chief Executive Officer	Interim Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)
Date: May 8, 2023	Date: May 8, 2023

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	May 05, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Quarterly Report	true
Document Transition Report	false
Securities Act File Number	001-33767
Entity Registrant Name	LL Flooring Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-1310817
Entity Address, Address Line One	4901 Bakers Mill Lane
Entity Address, City or Town	Richmond
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23230
City Area Code	800
Local Phone Number	366-4204
Title of 12(b) Security	Common Stock
Trading Symbol	LL
Security Exchange Name	NYSE
Entity Interactive Data Current	Yes
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001396033
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,495,996
Entity Current Reporting Status	Yes

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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current Assets:
Cash and Cash Equivalents	$ 6,977	$ 10,800
Merchandise Inventories	307,738	332,296
Prepaid Expenses	10,443	9,054
Other Current Assets	14,441	17,598
Total Current Assets	339,599	369,748
Property and Equipment, net	100,421	101,758
Operating Lease Right-of-Use Assets	125,096	123,172
Net Deferred Tax Assets	17,533	13,697
Other Assets	5,628	5,578
Total Assets	588,277	613,953
Current Liabilities:
Accounts Payable	54,361	47,733
Customer Deposits and Store Credits	46,560	43,767
Accrued Compensation	6,429	9,070
Sales and Income Tax Liabilities	3,462	3,574
Accrual for Legal Matters and Settlements - Current	21,494	22,159
Operating Lease Liabilities - Current	30,564	34,509
Other Current Liabilities	24,680	19,712
Total Current Liabilities	187,550	180,524
Other Long-Term Liabilities	6,192	6,162
Operating Lease Liabilities - Long-Term	101,219	99,186
Credit Agreement	47,000	72,000
Total Liabilities	341,961	357,872
Commitments and Contingencies
Stockholders' Equity:
Common Stock ($0.001 par value; 35,000 shares authorized; 30,916 and 30,758 shares issued and 28,798 and 28,695 shares outstanding at March 31, 2023, and December 31, 2022, respectively)	31	31
Treasury Stock, at cost (2,118 and 2,063 shares, respectively)	(153,562)	(153,331)
Additional Capital	232,890	231,839
Retained Earnings	166,957	177,542
Total Stockholders' Equity	246,316	256,081
Total Liabilities and Stockholders' Equity	$ 588,277	$ 613,953

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Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	35,000	35,000
Common Stock, shares, issued	30,916	30,758
Common Stock, shares outstanding	28,798	28,695
Treasury Stock, shares	2,118	2,063

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Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net Sales	$ 240,698	$ 279,032
Cost of Sales	152,698	174,953
Gross Profit	88,000	104,079
Selling, General and Administrative Expenses	101,185	99,025
Operating (Loss) Income	(13,185)	5,054
Other Expense (Income)	1,159	(15)
(Loss) Income Before Income Taxes	(14,344)	5,069
Income Tax (Benefit) Expense	(3,759)	1,032
Net (Loss) Income and Comprehensive (Loss) Income	$ (10,585)	$ 4,037
Net (Loss) Income per Common Share-Basic	$ (0.37)	$ 0.14
Net (Loss) Income per Common Share-Diluted	$ (0.37)	$ 0.14
Weighted Average Common Shares Outstanding:
Basic	28,717	29,145
Diluted	28,717	29,417
Product [Member]
Net Sales	$ 210,497	$ 244,271
Cost of Sales	128,397	147,419
Net Services Sales
Net Sales	30,201	34,761
Cost of Sales	$ 24,301	$ 27,534

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Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Beginning Balance at Dec. 31, 2021	$ 272,121	$ 31	$ (145,337)	$ 227,804	$ 189,623
Beginning Balance (in shares) at Dec. 31, 2021		29,113	1,423
Stock-Based Compensation Expense	873			873
Exercise of Stock Options	282			282
Exercise of Stock Options (in shares)		20
Release of Restricted Shares (in shares)		95
Common Stock Repurchased	(810)		$ (810)
Common Stock Repurchased, (in treasury shares)			51
Net Income	4,037				4,037
Ending Balance at Mar. 31, 2022	276,503	$ 31	$ (146,147)	228,959	193,660
Ending Balance (in shares) at Mar. 31, 2022		29,228	1,474
Beginning Balance at Dec. 31, 2022	256,081	$ 31	$ (153,331)	231,839	177,542
Beginning Balance (in shares) at Dec. 31, 2022		28,695	2,063
Stock-Based Compensation Expense	1,051			1,051
Release of Restricted Shares (in shares)		103
Common Stock Repurchased	(231)		$ (231)
Common Stock Repurchased, (in treasury shares)			55
Net Income	(10,585)				(10,585)
Ending Balance at Mar. 31, 2023	$ 246,316	$ 31	$ (153,562)	$ 232,890	$ 166,957
Ending Balance (in shares) at Mar. 31, 2023		28,798	2,118

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows from Operating Activities:
Net (Loss) Income	$ (10,585)	$ 4,037
Adjustments to Reconcile Net (Loss) Income:
Depreciation and Amortization	4,669	4,492
Deferred Income Taxes (Benefit) Provision	(3,836)	157
Income on Vouchers Redeemed for Legal Settlements	(253)	(423)
Stock-Based Compensation Expense	1,051	873
Provision for Inventory Obsolescence Reserves	572	(110)
Gain on Disposal of Fixed Assets		(9)
Changes in Operating Assets and Liabilities:
Merchandise Inventories	23,574	(64,793)
Accounts Payable	8,045	26,037
Customer Deposits and Store Credits	2,793	2,251
Prepaid Expenses and Other Current Assets	1,826	(2,448)
Accrued Compensation	(2,641)	(2,523)
Other Assets and Liabilities	934	9,058
Net Cash Provided by (Used in) Operating Activities	26,149	(23,401)
Cash Flows from Investing Activities:
Purchases of Property and Equipment	(4,741)	(5,250)
Other Investing Activities		61
Net Cash Used in Investing Activities	(4,741)	(5,189)
Cash Flows from Financing Activities:
Borrowings on Credit Agreement	66,000
Payments on Credit Agreement	(91,000)
Common Stock Repurchased	(231)	(810)
Other Financing Activities		282
Net Cash Used in Financing Activities	(25,231)	(528)
Net Decrease in Cash and Cash Equivalents	(3,823)	(29,118)
Cash and Cash Equivalents, Beginning of Period	10,800	85,189
Cash and Cash Equivalents, End of Period	6,977	56,071
Supplemental disclosure of non-cash operating activities:
Relief of Inventory for Vouchers Redeemed for Legal Settlements	412	714
Supplemental disclosure of non-cash investing activities:
Tenant Improvement Allowance for Leases	$ (66)	$ (665)

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Basis of Presentation

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

LL Flooring Holdings, Inc., formerly Lumber Liquidators Holdings, Inc., and its direct and indirect subsidiaries (collectively and, where applicable, individually, “LL Flooring” or the “Company”) engage in business as a multi-channel specialty retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories, operating as a single operating segment. The Company offers an extensive assortment of hard-surface flooring including waterproof hybrid resilient, waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, tile, and cork, with a wide range of flooring enhancements and accessories to complement. The Company also provides in-home delivery and installation services to its customers. The Company primarily sells to consumers or to Pros on behalf of consumers through a network of store locations in metropolitan areas. As of March 31, 2023, the Company’s 443 stores spanned 47 states in the United States (“U.S.”). In addition to the store locations, the Company’s products may be ordered, and customer questions or concerns addressed, through both its customer contact center in Richmond, Virginia, and its digital platform, LLFlooring.com.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10‑Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal and recurring adjustments except those otherwise described herein) considered necessary for a fair presentation have been included in the accompanying consolidated financial statements. However, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. Therefore, the interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s annual report filed on Form 10‑K for the year ended December 31, 2022.

The consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Fair Value of Financial Instruments

The carrying amounts of financial instruments such as cash and cash equivalents, accounts payable and other liabilities approximate fair value because of the short-term nature of these items. The carrying value of the Revolving Credit Facility approximates fair value due to the variable rate of interest.

Merchandise Inventories

The Company values merchandise inventories at the lower of cost or net realizable value. The method by which amounts are removed from inventory is weighted average cost. All of the hardwood flooring purchased from vendors is either prefinished or unfinished, and in immediate saleable form. The Company relies on a select group of international and domestic suppliers to provide imported flooring products that meet the Company’s specifications. The Company is subject to risks associated with obtaining products from abroad, including disruptions or delays in production, shipments, supply chain, delivery or processing. Also included in merchandise inventories are tariff-related costs.

Recognition of Net Sales

The Company generates revenues primarily by retailing merchandise in the form of hard-surface flooring and accessories. Additionally, the Company expands its revenues by offering services to deliver and/or install this merchandise for its customers; it considers these services to be separate performance obligations. The separate performance obligations are detailed on the customer’s invoice(s) and the customer often purchases flooring merchandise without purchasing installation or delivery services. Sales occur through the Company’s network of 443 stores, which spanned 47 states on March 31, 2023. In addition to the store locations, the Company's products may be ordered, and customer questions or concerns addressed, through both its customer contact center in Richmond, Virginia, and its digital platform, LLFlooring.com. The Company’s agreements with its customers are of short duration (less than a year), and as such the Company has elected not to disclose revenue for partially satisfied contracts that will be completed in the days following the end of a period as permitted by GAAP. The Company reports its revenues exclusive of sales taxes collected from customers and remitted to governmental taxing authorities, consistent with past practice.

Revenue is based on consideration specified in a contract with a customer and excludes any sales incentives from vendors. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer or performing services for a customer. Revenues from installation and freight services are recognized when the delivery is made or the installation is complete, which approximates the recognition of revenue over time due to the short duration of service provided. The price of the Company’s merchandise and services is specified in the respective contract and detailed on the invoice agreed to with the customer including any discounts. The Company generally requires customers to pay a deposit, equal to approximately half of the retail sales value, when ordering merchandise not regularly carried in a given location or not currently in stock. In addition, the Company generally does not extend credit to its customers with payment due in full at the time the customer takes possession of merchandise or when the service is provided. Customer payments and deposits received in advance of the customer taking possession of the merchandise or receiving the services are recorded as deferred revenues in the accompanying consolidated balance sheet caption “Customer Deposits and Store Credits.”

The following table shows the activity in this account for the periods noted:

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Customer Deposits and Store Credits, Beginning Balance	$	(43,767	)	$	(67,063	)
New Deposits		(259,164	)		(300,970	)
Recognition of Revenue		240,698			279,032
Sales Tax included in Customer Deposits		14,616			17,155
Other		1,057			2,532
Customer Deposits and Store Credits, Ending Balance	$	(46,560	)	$	(69,314	)

Subject to limitations under the Company’s policy, return of unopened merchandise is accepted for 90 days, subject to the discretion of the store manager. The amount of revenue recognized for flooring merchandise is adjusted for expected returns, which are estimated based on the Company’s historical data, current sales levels, and forecasted economic trends. The Company uses the expected value method to estimate returns because it has a large number of contracts with similar characteristics. The Company reduces revenue by the number of expected returns and records it within “Other Current Liabilities” on the consolidated balance sheet. In addition, the Company recognizes a related asset for the right to recover returned merchandise and records it in the “Other Current Assets” caption of the accompanying consolidated balance sheet. This amount was $1.1 million and $1.2 million on March 31, 2023 and December 31, 2022, respectively. The Company recognizes sales commissions as incurred since the amortization period is less than one year.

In total, the Company offers hundreds of different flooring products; however, no single flooring product represented a significant portion of its sales mix. By major product category, the Company’s sales mix was as follows:

	Three Months Ended March 31,
	2023				2022
	(in thousands, except percentage data)
Manufactured Products1	$	120,832	50	%	$	134,639	48	%
Solid and Engineered Hardwood		55,808	23	%		69,035	25	%
Moldings and Accessories and Other		33,857	14	%		40,597	15	%
Installation and Delivery Services		30,201	13	%		34,761	12	%
Total	$	240,698	100	%	$	279,032	100	%

1 Includes engineered vinyl plank, laminate, vinyl and tile.

Cost of Sales

Cost of sales includes the cost of products sold, including tariffs, the cost of installation services, and transportation costs from vendors to the Company’s distribution centers or store locations. It also includes transportation costs from distribution centers to store locations, transportation costs for the delivery of products from store locations to customers, certain costs of quality control procedures, warranty and customer satisfaction costs, inventory adjustments including obsolescence and shrinkage, and costs to produce and ship samples, which are net of vendor allowances. For the period ended March 31, 2023, cost of sales also included incremental costs associated with customs delays related to certain shipments of vinyl flooring.

The Company offers a range of limited warranties for the durability of the finish on its prefinished products to its services provided. These limited warranties range from one to 100 years, with lifetime warranties for certain of the Company’s products. Warranty reserves are based primarily on claims experience, sales history and other considerations, including payments made to satisfy customers for claims not directly related to the warranty on the Company’s products. Warranty costs are recorded in cost of sales. The related reserve was $0.9 million and $1.0 million on March 31, 2023 and December 31, 2022, respectively, and recorded in “Other Current Liabilities” on the accompanying consolidated balance sheets. The Company seeks recovery from its vendors and third-party independent contractors of installation services for certain amounts paid.

Vendor allowances mostly consist of volume rebates and are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period based on estimates of purchases. Volume rebates earned are initially recorded as a reduction in merchandise inventories and a subsequent reduction in cost of sales when the related product is sold. Reimbursement received for the cost of producing samples is recorded as an offset against cost of sales.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Stockholders' Equity

Note 3. Stockholders’ Equity

Net (Loss) Income per Common Share

The following table sets forth the computation of basic and diluted net (loss) income per common share:

	Three Months Ended March 31,
	2023			2022
	(in thousands, except per share data)
Net (Loss) Income	$	(10,585	)	$	4,037
Weighted Average Common Shares Outstanding—Basic		28,717			29,145
Effect of Dilutive Securities:
Common Stock Equivalents		—			272
Weighted Average Common Shares Outstanding—Diluted		28,717			29,417
Net (Loss) Income per Common Share—Basic	$	(0.37	)	$	0.14
Net (Loss) Income per Common Share—Diluted	$	(0.37	)	$	0.14

The following shares have been excluded from the computation of Weighted Average Common Shares Outstanding—Diluted because the effect would be anti-dilutive:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Stock Options		649		373
Restricted Shares		832		239

Stock Repurchase Program

In January 2012, the Company’s board of directors adopted an authorization for the repurchase of up to a total of $50.0 million of the Company’s common stock, which it increased by $50.0 million in each of November 2012 and January 2014. In February 2022, the board of directors further increased this authority by an additional $35.3 million for a total authorization to repurchase up to $50.0 million of the Company’s common stock on the open market or in private transactions. As of March 31, 2023, there remains $43.0 million outstanding under the share repurchase authorization, which does not have an expiration date. The Company did not repurchase any shares under the previous authorization during the three months ended March 31, 2023.

The timing and amount of any share repurchases under the authorization will be determined in the Company's discretion and based on market conditions and other considerations. Share repurchases under the authorizations may be made through open market purchases or pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. The program does not obligate LL Flooring to acquire any particular amount of its common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

Outside of the share repurchase program, during the three months ended March 31, 2023, the Company repurchased $0.2 million, or 54.7 thousand shares, of its common stock through net settlement of shares issued as a result of the vesting of restricted shares.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 4. Stock-based Compensation

The following table summarizes share activity related to employee stock options and restricted stock awards (“RSAs”):

	Stock Options			Restricted Stock Awards
	(in thousands)
Options Outstanding/Nonvested RSAs, December 31, 2022		724			637
Granted		—			1,416
Options Exercised/RSAs Released		—			(159	)
Forfeited		(156	)		(61	)
Options Outstanding/Nonvested RSAs, March 31, 2023		568			1,833

The Company granted a target of 61.8 thousand performance-based RSAs with a grant date fair value of $0.3 million during the three months ended March 31, 2023, a target of 94.6 thousand performance-based RSAs with a grant date fair value of $1.5 million during the three months ended March 31, 2022, and a target of 47.8 thousand performance-based RSAs with a grant date fair value of $1.1 million during the three months ended March 31, 2021. The performance-based RSAs in 2023 were awarded to certain members of senior management in connection with certain market conditions. The performance-based RSAs in 2022 and 2021 were awarded to certain members of senior management in connection with performance conditions based on achievement of specific key financial metrics. All performance-based RSAs will cliff vest if the respective performance conditions are met at the end of the respective 3-year service periods. The Company assesses the probability of achieving these metrics on a quarterly basis. For these

awards, the Company recognizes the fair value expense ratably over the service and vesting period. These awards are included above in RSAs granted.

Under the Company’s equity incentive plan, the Company’s non-employee directors are compensated with an annual RSA grant. The amount of outstanding nonvested RSAs granted to non-employee directors was 43.1 thousand on both March 31, 2023 and December 31, 2022. The Company also maintains the Outside Directors Deferral Plan under which each of the Company’s non-employee directors has the opportunity to elect annually to defer certain fees (which are payable in cash or in shares of Common Stock with a vesting period of at least one year). A non-employee director may elect to defer up to 100% of his or her fees and have such fees invested in deferred stock units. Deferred stock units must be settled in common stock in either a lump sum or up to five annual equal payments following a director's departure from the board. There were 257.7 thousand and 245.0 thousand deferred stock units outstanding at March 31, 2023 and December 31, 2022, respectively.

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Credit Agreement

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Credit Agreement

Note 5. Credit Agreement

On December 27, 2022, the Company entered into a Waiver and Third Amendment to the Credit Agreement (the “Amendment”) with Bank of America, N.A. ("the "Bank") and Wells Fargo Bank, National Association ("Wells" and, collectively with the Bank, the "Lenders") and the Bank in its capacity as administrative agent and collateral agent (in this capacity, the “Agent”) and Wells as syndication agent. The Amendment, among other things, (i) changed the rate under the Agreement for borrowings from a LIBOR-based rate to a Term SOFR-based rate (as defined in the Amendment), subject to certain adjustments specified in the Amendment and (ii) provided a waiver of a technical event of default under the Credit Agreement related to providing notice to the Lenders of the Company’s name change from Lumber Liquidators Holdings, Inc. to LL Flooring Holdings, Inc. Except as set forth in the Amendment, all other terms and conditions of the Credit Agreement remain in place.

The total size of the Credit Agreement is $200.0 million, and the Company has an option to increase the Revolving Credit Facility to a maximum total amount of $250.0 million. The Credit Agreement has a maturity date of April 30, 2026.

The Revolving Credit Facility is secured by security interests in the Collateral (as defined in the Credit Agreement), which includes substantially all assets of the Company including, among other things, the Company’s inventory and credit card receivables, and the Company’s East Coast distribution center located in Sandston, Virginia. Under the terms of the Credit Agreement, the Company has the ability to release the East Coast distribution center from the Collateral under certain conditions.

The Amendment defines the margin for Term SOFR Rate Loans (as defined in the Amendment) as a range of 1.25% to 1.75% over the applicable Term SOFR Rate with respect to revolving loans depending on the Company’s average daily excess borrowing availability. The Term SOFR Rate Floor is 0.25%. The unused commitment fee is 0.25% per annum based on the average daily unused amount of the Revolving Credit Facility during the most recently completed calendar quarter. The weighted average interest rate applicable to the Company's Revolving Credit Facility for the three months ended March 31, 2023 was 6.1%.

The Credit Agreement contains a fixed charge coverage ratio covenant that becomes effective only when specified availability under the Revolving Credit Facility falls below the greater of $17.5 million or 10% of the Revolving Loan Cap (as defined in the Credit Agreement).

As of March 31, 2023, there was $47.0 million outstanding under the Revolving Credit Facility. The Company had $3.2 million in letters of credit which reduces its availability. As of March 31, 2023, there was $149.8 million of availability under the Credit Agreement.

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Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 6. Taxes

The Company calculates its quarterly tax provision pursuant to the guidelines in Accounting Standards Codification ("ASC") 740-270 "Income Taxes." Generally, ASC 740-270 requires companies to estimate the annual effective tax rate for current year ordinary income. The estimated annual effective tax rate represents the best estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision and is adjusted for discrete items that occur within the period.

For the three months ended March 31, 2023, the Company recognized an income tax benefit of $3.8 million, which represented an effective tax rate of 26.2%. For the three months ended March 31, 2022, the Company recognized income tax expense of $1.0 million, which represented an effective tax rate of 20.4%. The higher effective tax rate in the current period primarily reflects the impact of permanent items on the pretax ordinary loss.

Based on the Company’s evaluation at a jurisdictional level as of March 31, 2023, the Company believes sufficient future taxable income, including consideration of future performance, market, or economic conditions, will be generated to use existing deferred tax assets. The amount of the deferred tax assets considered realizable could be adjusted in future periods if evidence warrants such a change.

In February 2022, the Company received sales tax and use tax assessments from the Commonwealth of Virginia covering part of 2014 through 2017. The Company believes there are factual errors, is disputing this assessment, and will defend itself vigorously in this matter. The Company is pursuing an administrative appeal, which was filed on April 15, 2022. Given the uncertainty of the final resolution, the Company cannot reasonably estimate the loss or range of loss, if any, that may result from this action and therefore no specific accrual has been made related to this. Any losses could, potentially, have a material adverse effect, individually or collectively, on the Company’s results of operations, financial condition and liquidity.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

The following chart shows the activity (in thousands) related to the Balance Sheet “Accrual for Legal Matters and Settlements.” The matters themselves are described in greater detail in the paragraphs that follow the chart.

	December 31, 2022									March 31, 2023
Litigation Matter	Accrual for Legal Matters				Settlement		Vouchers			Accrual for Legal Matters
Description	and Settlements - Current		Accruals		Payments		Redeemed			and Settlements - Current
MDL	$	9,070	$	—	$	—	$	(320	)	$	8,750	1
Gold		12,864		—		—		(345	)		12,519	1
Other Matters		225		—		—		—			225
	$	22,159	$	—	$	—	$	(665	)	$	21,494
	December 31, 2021									March 31, 2022
Litigation Matter	Accrual for Legal Matters				Settlement		Vouchers			Accrual for Legal Matters
Description	and Settlements - Current		Accruals		Payments		Redeemed			and Settlements - Current
MDL	$	10,656	$	—	$	—	$	(464	)	$	10,192
Gold		14,885		—		—		(673	)		14,212
Mason		7,000		—		—		—			7,000
Other Matters		1,070		53		—		—			1,123
	$	33,611	$	53	$	—	$	(1,137	)	$	32,527

1The remaining accrual will be fulfilled by redeeming vouchers as discussed below.

Litigation Related to Formaldehyde-Abrasion MDLs

In 2018, the Company entered into a settlement agreement to resolve claims related to Chinese-manufactured laminate products (the “Formaldehyde-Abrasion MDL”). Under the terms of the settlement agreement, the Company funded $22.0 million in cash and provided $14.0 million in store-credit vouchers for an aggregate settlement amount of $36.0 million to settle claims. Cash and vouchers, which generally have a three-year life, were distributed by the administrator in the fourth quarter of 2020. The Company will monitor and evaluate the redemption of vouchers on a quarterly basis. The Company’s current expectation is that recipients bargained for this compensation as part of the settlement and therefore will redeem their voucher for product as intended. The rules on the expiration or escheat of any unused vouchers vary by state, and to the extent any expire unused, they will be terminated in accordance with those respective rules.

As of March 31, 2023, the remaining accrual related to these matters was $8.8 million for vouchers. As $0.3 million of vouchers were redeemed during the three months ended March 31, 2023, the Company reduced the accrual for legal matters and settlements for the full amount, relieved inventory at its cost, and the remaining amount -- the gross margin for the items sold of $0.1 million was recorded as a reduction in “Selling, General and Administrative Expenses” (“SG&A”) on the consolidated statement of operations. The Company included those amounts in “MDL” in the chart above.

Litigation Relating to Bamboo Flooring

In 2019, the Company finalized a settlement agreement to resolve claims related to Morning Star bamboo flooring (the “Gold Litigation”). Under the terms of the settlement agreement, the Company contributed $14.0 million in cash and provided $16.0 million in store-credit vouchers, for an aggregate settlement of up to $30.0 million. Cash and vouchers, which generally have a three-year life, were distributed by the administrator in 2021. The Company will monitor and evaluate the redemption of vouchers on a quarterly basis. The Company’s current expectation is that recipients bargained for this compensation as part of the settlement and therefore will redeem their voucher for product as intended. The rules on the expiration or escheat of any unused vouchers vary by state, and to the extent any expire unused, they will be terminated in accordance with those respective rules.

As of March 31, 2023, the remaining accrual related to these matters was $12.5 million for vouchers. As $0.3 million of vouchers were redeemed during the three months ended March 31, 2023, the Company reduced the accrual for legal matters and settlements for the full amount, relieved inventory at its cost, and the remaining amount -- the gross margin for the items sold of $0.1 million was recorded as a reduction in “Selling, General and Administrative Expenses” (“SG&A”) on the consolidated statement of operations. The Company included those amounts in “Gold” in the chart above.

Mason Lawsuit

In the second quarter of 2022, the Company paid $7.1 million in settlement of a purported collective and class action lawsuit in the United States District Court for the Eastern District of New York on behalf of all current and former store managers, store managers in training, and similarly situated current and former employees (collectively, the "Mason Putative Class Employees") alleging that the Company violated the Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL") by classifying the Mason Putative Class Employees as exempt (the "Mason matter"). The alleged violations include failure to pay for overtime work. The Company included the amounts related to the Mason matter in the first quarter of 2022 in the chart above, as the matter was resolved in the second quarter of 2022.

Antidumping and Countervailing Duties Investigation

In October 2010, a conglomeration of domestic manufacturers of multilayered wood flooring (“Petitioners”) filed a petition seeking the imposition of antidumping (“AD”) and countervailing duties (“CVD”) with the United States Department of Commerce (“DOC”) and the United States International Trade Commission (“ITC”) against imports of multilayered wood flooring from China. This ruling applies to companies importing multilayered wood flooring from Chinese suppliers subject to the AD and CVD orders. The Company’s multilayered wood flooring imports from China accounted for approximately 4.9% of its flooring purchases for the year ended December 31, 2022.

As part of its processes in these proceedings, the DOC conducts annual reviews of the AD and CVD rates. In such cases, the DOC will issue preliminary rates that are not binding and are subject to comment by interested parties. After consideration of the comments received, the DOC will issue final rates for the applicable period, which may lag by a year or more. At the time of import, the Company makes deposits at the then prevailing rate, even while the annual review is in process. When rates are declared final by the DOC, the Company accrues a receivable or payable depending on where that final rate compares to the deposits it has made. The Company and/or the domestic manufacturers can appeal the final rate for any period and can place a hold on final settlement by U.S. Customs and Border Protection while the appeals are pending.

The Company as well as other involved parties have appealed many of the final rate determinations. Certain of those appeals are pending and, at times, have resulted in delays in settling the shortfalls and refunds. Because of the length of time for finalization of rates as well as appeals, any subsequent adjustment of AD and CVD rates typically flows through a period different from those in which the inventory was originally purchased and/or sold.

As of March 31, 2023, the outstanding AD and CVD principal balances were $2.5 million in other current assets, $0.2 million in other current liabilities, and $4.1 million in other long-term liabilities recorded on the consolidated balance sheet. These amounts represent what the Company would receive or pay (net of any collections or payments) as the result of subsequent adjustment to rates whether due to finalization by the DOC or because of action of a court based on appeals by various parties. These amounts do not include any initial amounts paid for AD or CVD in the current period at the in-effect rate at that time.

The Company recorded net interest expense related to antidumping and countervailing duties of $0.2 million for the three months ended March 31, 2023 compared to net interest income of $0.07 million for the three months ended March 31, 2022. The amounts for both years are included in other expense on the Statements of Operations. The estimated associated interest payable and receivable for each period is recorded separately from the principal balance in the respective other current assets, other current liabilities, or long-term liabilities financial statement line item on the Company’s consolidated balance sheet.

Section 301 Tariffs

Since September 2018, pursuant to Section 301 of the Trade Act of 1974, the United States Trade Representative (“USTR”) has imposed tariffs on certain goods imported from China over four tranches ("Lists"). Products imported by the Company fall within Lists 3 and 4a for which tariffs range from 10% to 25%. On September 10, 2020 several importers of vinyl flooring ("the plaintiffs") filed a lawsuit with the Court of International Trade ("CIT") challenging the Section 301 tariffs under Lists 3 and 4a and the USTR's actions. The plaintiffs argued that the USTR had not acted within its statutory authority when it modified the original Section 301 determinations on certain goods from China by adding Lists 3 and 4a and that the agency had not demonstrated that it satisfied the procedural requirements of the Administrative Procedure Act. On March 17, 2023, the CIT issued a decision sustaining the List 3 and 4a tariffs. The CIT’s decision is expected to be appealed by the plaintiffs to the Court of Appeals for the Federal Circuit ("CAFC") by May 16, 2023. If these appeals are successful, the Company should qualify for refunds on these Section 301 tariffs. At this time, the Company is unable to predict the timing or outcome of the ruling by the CAFC.

Other Matters

The Company is also, from time to time, subject to claims and disputes arising in the normal course of business. In the opinion of management, while the outcome of any such claims and disputes cannot be predicted with certainty, its ultimate liability in connection with these matters is not expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

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Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

Note 8. Leases

On March 3, 2023, the Company entered into a ten-year lease agreement for a 457,363 square foot distribution center in Dallas, Texas, which will enable us to more efficiently serve our stores located in the Central United States. The lease commences on May 1, 2023. Future minimum rental payments under this lease are approximately $30 million over the ten-year lease term.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of financial instruments such as cash and cash equivalents, accounts payable and other liabilities approximate fair value because of the short-term nature of these items. The carrying value of the Revolving Credit Facility approximates fair value due to the variable rate of interest.

Merchandise Inventories

Merchandise Inventories

The Company values merchandise inventories at the lower of cost or net realizable value. The method by which amounts are removed from inventory is weighted average cost. All of the hardwood flooring purchased from vendors is either prefinished or unfinished, and in immediate saleable form. The Company relies on a select group of international and domestic suppliers to provide imported flooring products that meet the Company’s specifications. The Company is subject to risks associated with obtaining products from abroad, including disruptions or delays in production, shipments, supply chain, delivery or processing. Also included in merchandise inventories are tariff-related costs.

Recognition of Net Sales

Recognition of Net Sales

The Company generates revenues primarily by retailing merchandise in the form of hard-surface flooring and accessories. Additionally, the Company expands its revenues by offering services to deliver and/or install this merchandise for its customers; it considers these services to be separate performance obligations. The separate performance obligations are detailed on the customer’s invoice(s) and the customer often purchases flooring merchandise without purchasing installation or delivery services. Sales occur through the Company’s network of 443 stores, which spanned 47 states on March 31, 2023. In addition to the store locations, the Company's products may be ordered, and customer questions or concerns addressed, through both its customer contact center in Richmond, Virginia, and its digital platform, LLFlooring.com. The Company’s agreements with its customers are of short duration (less than a year), and as such the Company has elected not to disclose revenue for partially satisfied contracts that will be completed in the days following the end of a period as permitted by GAAP. The Company reports its revenues exclusive of sales taxes collected from customers and remitted to governmental taxing authorities, consistent with past practice.

Revenue is based on consideration specified in a contract with a customer and excludes any sales incentives from vendors. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer or performing services for a customer. Revenues from installation and freight services are recognized when the delivery is made or the installation is complete, which approximates the recognition of revenue over time due to the short duration of service provided. The price of the Company’s merchandise and services is specified in the respective contract and detailed on the invoice agreed to with the customer including any discounts. The Company generally requires customers to pay a deposit, equal to approximately half of the retail sales value, when ordering merchandise not regularly carried in a given location or not currently in stock. In addition, the Company generally does not extend credit to its customers with payment due in full at the time the customer takes possession of merchandise or when the service is provided. Customer payments and deposits received in advance of the customer taking possession of the merchandise or receiving the services are recorded as deferred revenues in the accompanying consolidated balance sheet caption “Customer Deposits and Store Credits.”

The following table shows the activity in this account for the periods noted:

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Customer Deposits and Store Credits, Beginning Balance	$	(43,767	)	$	(67,063	)
New Deposits		(259,164	)		(300,970	)
Recognition of Revenue		240,698			279,032
Sales Tax included in Customer Deposits		14,616			17,155
Other		1,057			2,532
Customer Deposits and Store Credits, Ending Balance	$	(46,560	)	$	(69,314	)

Subject to limitations under the Company’s policy, return of unopened merchandise is accepted for 90 days, subject to the discretion of the store manager. The amount of revenue recognized for flooring merchandise is adjusted for expected returns, which are estimated based on the Company’s historical data, current sales levels, and forecasted economic trends. The Company uses the expected value method to estimate returns because it has a large number of contracts with similar characteristics. The Company reduces revenue by the number of expected returns and records it within “Other Current Liabilities” on the consolidated balance sheet. In addition, the Company recognizes a related asset for the right to recover returned merchandise and records it in the “Other Current Assets” caption of the accompanying consolidated balance sheet. This amount was $1.1 million and $1.2 million on March 31, 2023 and December 31, 2022, respectively. The Company recognizes sales commissions as incurred since the amortization period is less than one year.

In total, the Company offers hundreds of different flooring products; however, no single flooring product represented a significant portion of its sales mix. By major product category, the Company’s sales mix was as follows:

	Three Months Ended March 31,
	2023				2022
	(in thousands, except percentage data)
Manufactured Products1	$	120,832	50	%	$	134,639	48	%
Solid and Engineered Hardwood		55,808	23	%		69,035	25	%
Moldings and Accessories and Other		33,857	14	%		40,597	15	%
Installation and Delivery Services		30,201	13	%		34,761	12	%
Total	$	240,698	100	%	$	279,032	100	%

1 Includes engineered vinyl plank, laminate, vinyl and tile.

Cost of Sales

Cost of Sales

Cost of sales includes the cost of products sold, including tariffs, the cost of installation services, and transportation costs from vendors to the Company’s distribution centers or store locations. It also includes transportation costs from distribution centers to store locations, transportation costs for the delivery of products from store locations to customers, certain costs of quality control procedures, warranty and customer satisfaction costs, inventory adjustments including obsolescence and shrinkage, and costs to produce and ship samples, which are net of vendor allowances. For the period ended March 31, 2023, cost of sales also included incremental costs associated with customs delays related to certain shipments of vinyl flooring.

The Company offers a range of limited warranties for the durability of the finish on its prefinished products to its services provided. These limited warranties range from one to 100 years, with lifetime warranties for certain of the Company’s products. Warranty reserves are based primarily on claims experience, sales history and other considerations, including payments made to satisfy customers for claims not directly related to the warranty on the Company’s products. Warranty costs are recorded in cost of sales. The related reserve was $0.9 million and $1.0 million on March 31, 2023 and December 31, 2022, respectively, and recorded in “Other Current Liabilities” on the accompanying consolidated balance sheets. The Company seeks recovery from its vendors and third-party independent contractors of installation services for certain amounts paid.

Vendor allowances mostly consist of volume rebates and are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period based on estimates of purchases. Volume rebates earned are initially recorded as a reduction in merchandise inventories and a subsequent reduction in cost of sales when the related product is sold. Reimbursement received for the cost of producing samples is recorded as an offset against cost of sales.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Schedule of Customer Deposits and Store Credits

The following table shows the activity in this account for the periods noted:

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Customer Deposits and Store Credits, Beginning Balance	$	(43,767	)	$	(67,063	)
New Deposits		(259,164	)		(300,970	)
Recognition of Revenue		240,698			279,032
Sales Tax included in Customer Deposits		14,616			17,155
Other		1,057			2,532
Customer Deposits and Store Credits, Ending Balance	$	(46,560	)	$	(69,314	)

Sales Mix by Major Product

In total, the Company offers hundreds of different flooring products; however, no single flooring product represented a significant portion of its sales mix. By major product category, the Company’s sales mix was as follows:

	Three Months Ended March 31,
	2023				2022
	(in thousands, except percentage data)
Manufactured Products1	$	120,832	50	%	$	134,639	48	%
Solid and Engineered Hardwood		55,808	23	%		69,035	25	%
Moldings and Accessories and Other		33,857	14	%		40,597	15	%
Installation and Delivery Services		30,201	13	%		34,761	12	%
Total	$	240,698	100	%	$	279,032	100	%

1 Includes engineered vinyl plank, laminate, vinyl and tile.

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Computation of Basic and Diluted Net Income Loss Per Common Share

The following table sets forth the computation of basic and diluted net (loss) income per common share:

	Three Months Ended March 31,
	2023			2022
	(in thousands, except per share data)
Net (Loss) Income	$	(10,585	)	$	4,037
Weighted Average Common Shares Outstanding—Basic		28,717			29,145
Effect of Dilutive Securities:
Common Stock Equivalents		—			272
Weighted Average Common Shares Outstanding—Diluted		28,717			29,417
Net (Loss) Income per Common Share—Basic	$	(0.37	)	$	0.14
Net (Loss) Income per Common Share—Diluted	$	(0.37	)	$	0.14

Anti-Dilutive Securities Excluded from Computation of Weighted Average Common Shares Outstanding Diluted

The following shares have been excluded from the computation of Weighted Average Common Shares Outstanding—Diluted because the effect would be anti-dilutive:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Stock Options		649		373
Restricted Shares		832		239

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary Of Activity Related To Stock Options And Restricted Stock Awards

The following table summarizes share activity related to employee stock options and restricted stock awards (“RSAs”):

	Stock Options			Restricted Stock Awards
	(in thousands)
Options Outstanding/Nonvested RSAs, December 31, 2022		724			637
Granted		—			1,416
Options Exercised/RSAs Released		—			(159	)
Forfeited		(156	)		(61	)
Options Outstanding/Nonvested RSAs, March 31, 2023		568			1,833

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of activity related to the Balance Sheet Accrual for Legal Matters and Settlements

The following chart shows the activity (in thousands) related to the Balance Sheet “Accrual for Legal Matters and Settlements.” The matters themselves are described in greater detail in the paragraphs that follow the chart.

	December 31, 2022									March 31, 2023
Litigation Matter	Accrual for Legal Matters				Settlement		Vouchers			Accrual for Legal Matters
Description	and Settlements - Current		Accruals		Payments		Redeemed			and Settlements - Current
MDL	$	9,070	$	—	$	—	$	(320	)	$	8,750	1
Gold		12,864		—		—		(345	)		12,519	1
Other Matters		225		—		—		—			225
	$	22,159	$	—	$	—	$	(665	)	$	21,494
	December 31, 2021									March 31, 2022
Litigation Matter	Accrual for Legal Matters				Settlement		Vouchers			Accrual for Legal Matters
Description	and Settlements - Current		Accruals		Payments		Redeemed			and Settlements - Current
MDL	$	10,656	$	—	$	—	$	(464	)	$	10,192
Gold		14,885		—		—		(673	)		14,212
Mason		7,000		—		—		—			7,000
Other Matters		1,070		53		—		—			1,123
	$	33,611	$	53	$	—	$	(1,137	)	$	32,527

1The remaining accrual will be fulfilled by redeeming vouchers as discussed below.

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Basis of Presentation (Narrative) (Details)	Mar. 31, 2023 Store State
Organization and Business Operations [Line Items]
Number of states in which stores operates | State	47
U.S.
Organization and Business Operations [Line Items]
Number of stores | Store	443

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Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) Store State	Dec. 31, 2022 USD ($)
Organization And Business Operations [Line Items]
Number of states in which stores operates | State	47
Asset for right to recover returned merchandise	$ 1,100	$ 1,200
Cash and Cash Equivalents	$ 6,977	10,800
Minimum years of product warranty	1 year
Maximum years of product warranty	100 years
Product warranty reserve	$ 900	$ 1,000
U.S.
Organization And Business Operations [Line Items]
Number of stores | Store	443

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Summary of Significant Accounting Policies (Schedule of Customer Deposits and Store Credits) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Customer Deposits and Store Credits, Beginning Balance	$ (43,767)	$ (67,063)
New Deposits	(259,164)	(300,970)
Recognition of Revenue	240,698	279,032
Sales Tax included in Customer Deposits	14,616	17,155
Other	1,057	2,532
Customer Deposits and Store Credits, Ending Balance	(46,560)	(69,314)
Service [Member]
Recognition of Revenue	$ 30,201	$ 34,761

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Summary of Significant Accounting Policies (Sales Mix by Major Product) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Product Information [Line Items]
Net Sales	$ 240,698	$ 279,032
Sales Revenue, Product Line [Member] | Product Concentration Risk [Member]
Product Information [Line Items]
Net Sales	$ 240,698	$ 279,032
Percent	100.00%	100.00%
Product [Member]
Product Information [Line Items]
Net Sales	$ 210,497	$ 244,271
Manufactured Products [Member] | Sales Revenue, Product Line [Member] | Product Concentration Risk [Member]
Product Information [Line Items]
Net Sales	$ 120,832	$ 134,639
Percent	50.00%	48.00%
Solid and Engineered Hardwood [Member] | Sales Revenue, Product Line [Member] | Product Concentration Risk [Member]
Product Information [Line Items]
Net Sales	$ 55,808	$ 69,035
Percent	23.00%	25.00%
Moldings and Accessories [Member] | Sales Revenue, Product Line [Member] | Product Concentration Risk [Member]
Product Information [Line Items]
Net Sales	$ 33,857	$ 40,597
Percent	14.00%	15.00%
Installation and Delivery Services [Member] | Sales Revenue, Product Line [Member] | Product Concentration Risk [Member]
Product Information [Line Items]
Net Sales	$ 30,201	$ 34,761
Percent	13.00%	12.00%

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Stockholders' Equity (Computation of Basic and Diluted Net Income Loss Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Equity [Abstract]
Net (Loss) Income	$ (10,585)	$ 4,037
Weighted Average Common Shares Outstanding-Basic	28,717	29,145
Effect of Dilutive Securities:
Common Stock Equivalents		272
Weighted Average Common Shares Outstanding-Diluted	28,717	29,417
Net (Loss) Income per Common Share-Basic	$ (0.37)	$ 0.14
Net (Loss) Income per Common Share-Diluted	$ (0.37)	$ 0.14

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Stockholders' Equity (Anti-Dilutive Securities Excluded from Computation of Weighted Average Common Shares Outstanding-Diluted) (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earning per share	649	373
Restricted Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earning per share	832	239

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Stockholders' Equity (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Feb. 28, 2022	Jan. 31, 2014	Nov. 30, 2012	Jan. 31, 2012
Stock Repurchase Programs [LineItems]
Payments for repurchase of common stock	$ 231	$ 810
Stock Repurchase Program [Member]
Stock Repurchase Programs [LineItems]
Stock repurchase program, authorized amount			$ 50,000			$ 50,000
Increase in stock repurchase program authorized amount			$ 35,300	$ 50,000	$ 50,000
Common stock repurchased, remaining authorized amount	$ 43,000
Shares repurchased	0
Outside of the Share Repurchase Program [Member]
Stock Repurchase Programs [LineItems]
Shares repurchased	54,700
Payments for repurchase of common stock	$ 200

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Stock Based Compensation (Narrative) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) Payment shares	Mar. 31, 2022 USD ($) shares	Mar. 31, 2021 USD ($) shares	Dec. 31, 2022 shares
Deferred Compensation Arrangement with Individual, Share-Based Payments [Line Items]
Deferred stock units outstanding	257,700			245,000.0
Non Employee Director [Member]
Deferred Compensation Arrangement with Individual, Share-Based Payments [Line Items]
Deferred percentage of director fees invested in deferred stock units	100.00%
Deferred stock unit settled in common stock number of annual equal payments | Payment	5
Deffered compensation arrangement description	Deferred stock units must be settled in common stock in either a lump sum or up to five annual equal payments following a director's departure from the board.
Shares outstanding	43,100			43,100
Vesting period of grants	1 year
Restricted Shares [Member]
Deferred Compensation Arrangement with Individual, Share-Based Payments [Line Items]
Awards granted	1,416,000
Forfeited	61,000
Shares outstanding	1,833,000			637,000
Performance-Base Restricted Stock Awards [Member]
Deferred Compensation Arrangement with Individual, Share-Based Payments [Line Items]
Awards granted	61,800	94,600	47,800
Grant date fair value of awards | $	$ 0.3	$ 1.5	$ 1.1
Performance-Base Restricted Stock Awards [Member] | Management [Member]
Deferred Compensation Arrangement with Individual, Share-Based Payments [Line Items]
Share-based compensation terms	The performance-based RSAs in 2023 were awarded to certain members of senior management in connection with certain market conditions. The performance-based RSAs in 2022 and 2021 were awarded to certain members of senior management in connection with performance conditions based on achievement of specific key financial metrics. All performance-based RSAs will cliff vest if the respective performance conditions are met at the end of the respective 3-year service periods. The Company assesses the probability of achieving these metrics on a quarterly basis. For these awards, the Company recognizes the fair value expense ratably over the service and vesting period.

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Stock-Based Compensation (Summary of Activity Related to Stock Options) (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2023 shares
Stock Option [Member]
Shares
Beginning Balance	724
Forfeited	(156)
Ending Balance	568
Restricted Shares [Member]
Shares
Beginning Balance	637
Granted	1,416
Released	(159)
Forfeited	(61)
Ending Balance	1,833

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Credit Agreement (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	4 Months Ended	23 Months Ended
	Mar. 31, 2023	Apr. 29, 2021	Mar. 31, 2023
Line of Credit Facility [Line Items]
Payments on Credit Agreement	$ 91,000
Credit Agreement [Member]
Line of Credit Facility [Line Items]
Credit facility remaining borrowing capacity	149,800		$ 149,800
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Letters of credit outstanding	47,000		47,000
Revolving Credit Facility [Member] | Credit Agreement [Member]
Line of Credit Facility [Line Items]
Line of Credit Covenant Trigger	$ 17,500		$ 17,500
Line of credit covenant trigger percentage	10.00%		10.00%
Revolving Credit Facility [Member] | Amendment
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 200,000		$ 200,000
Option to increase aggregate amount	$ 250,000		$ 250,000
Credit facility maturity date	Apr. 30, 2026
Credit facility, unused capacity, commitment fee percentage			0.25%
Average interest rate	6.10%		6.10%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate SOFR [Member] | Amendment
Line of Credit Facility [Line Items]
SOFR Floor Rate			0.25%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate SOFR [Member] | Minimum [Member] | Credit Agreement [Member]
Line of Credit Facility [Line Items]
Margin (as a percent)		1.25%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate SOFR [Member] | Maximum [Member] | Amendment
Line of Credit Facility [Line Items]
Margin (as a percent)			1.75%
Letter of Credit [Member] | Credit Agreement [Member]
Line of Credit Facility [Line Items]
Letters of credit outstanding	$ 3,200		$ 3,200

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Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Taxes [Line Items]
Effective tax rate	26.20%	20.40%
Income Tax (Benefit) Expense	$ (3,759)	$ 1,032

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended			12 Months Ended
	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2021
Loss Contingencies [Line Items]
Accrued expenses			$ 53
Accrual for Legal Matters and Settlements - Current	$ 21,494			$ 22,159
Vouchers Accrued or (Redeemed) During Period	(665)		(1,137)
Gross profit	88,000		104,079
Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	21,494		32,527	$ 22,159			$ 33,611
Antidumping Duties [Member]
Loss Contingencies [Line Items]
Loss Contingency Multilayered Hardwood Products Purchase Percentage				4.90%
Antidumping Duties [Member] | Other Current Liabilities [Member]
Loss Contingencies [Line Items]
Contingent Liability	200
Antidumping Duties [Member] | Other Current Assets [Member]
Loss Contingencies [Line Items]
Contingent Receivable	2,500
Antidumping Duties [Member] | Other Long-Term Liabilities [Member]
Loss Contingencies [Line Items]
Contingent Liability	4,100
Antidumping Duties [Member] | Other Expense [Member]
Loss Contingencies [Line Items]
Interest income	(200)		70
Litigation Relating to Formaldehyde Abrasion MDL's [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Amount						$ 36,000
Vouchers Accrued or (Redeemed) During Period	(320)		(464)
Litigation Relating to Formaldehyde Abrasion MDL's [Member] | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	8,750		10,192	$ 9,070			10,656
Litigation Relating to Formaldehyde Abrasion MDL's [Member] | Selling, General and Administrative Expenses [Member]
Loss Contingencies [Line Items]
Gross profit	100
Litigation Relating to Bamboo Flooring
Loss Contingencies [Line Items]
Litigation Settlement, Amount					$ 30,000
Litigation Relating to Bamboo Flooring | Selling, General and Administrative Expenses [Member]
Loss Contingencies [Line Items]
Payment of litigation settlement	100
Gold [Member]
Loss Contingencies [Line Items]
Vouchers Accrued or (Redeemed) During Period	(345)		(673)
Gold [Member] | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	$ 12,519		14,212	$ 12,864			14,885
Mason
Loss Contingencies [Line Items]
Payment of litigation settlement		$ 7,100
Mason | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current			$ 7,000				$ 7,000
Cash and or Common Stock [Member] | Litigation Relating to Formaldehyde Abrasion MDL's [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Amount						22,000
Cash Payments [Member] | Litigation Relating to Bamboo Flooring
Loss Contingencies [Line Items]
Litigation Settlement, Amount					14,000
In Store Credit [Member] | Litigation Relating to Formaldehyde Abrasion MDL's [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Amount						$ 14,000
In Store Credit [Member] | Litigation Relating to Bamboo Flooring
Loss Contingencies [Line Items]
Litigation Settlement, Amount					$ 16,000

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Commitments and Contingencies - Litigation matters (rollforward) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	$ 22,159
Accruals During Period		$ 53
Vouchers Accrued or (Redeemed) During Period	(665)	(1,137)
Accrual for Legal Matters and Settlements - Current	21,494
Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	22,159	33,611
Accrual for Legal Matters and Settlements - Current	21,494	32,527
Litigation Relating to Formaldehyde Abrasion MDL's [Member]
Loss Contingencies [Line Items]
Vouchers Accrued or (Redeemed) During Period	(320)	(464)
Litigation Relating to Formaldehyde Abrasion MDL's [Member] | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	9,070	10,656
Accrual for Legal Matters and Settlements - Current	8,750	10,192
Gold [Member]
Loss Contingencies [Line Items]
Vouchers Accrued or (Redeemed) During Period	(345)	(673)
Gold [Member] | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	12,864	14,885
Accrual for Legal Matters and Settlements - Current	12,519	14,212
Mason [Member] | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current		7,000
Accrual for Legal Matters and Settlements - Current		7,000
Other Matters [Member]
Loss Contingencies [Line Items]
Accruals During Period		53
Other Matters [Member] | Accrual for Legal Matters and Settlements Current [Member]
Loss Contingencies [Line Items]
Accrual for Legal Matters and Settlements - Current	225	1,070
Accrual for Legal Matters and Settlements - Current	$ 225	$ 1,123

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Leases - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 03, 2023 USD ($) SquareFeet
Leases [Abstract]
Lease description	The lease commences on May 1, 2023. Future minimum rental payments under this lease are approximately $30 million over the ten-year lease term.
Lease agreement term		10 years
Leases Area | SquareFeet		457,363
Future minimum rental payments under lease | $		$ 30