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 June 30, 2020

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

Lumber Liquidators 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)

(804) 463-2000

(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 August 1, 2020, there are 28,852,998 shares of the registrant’s common stock, par value of $0.001 per share, outstanding.

LUMBER LIQUIDATORS HOLDINGS, INC.

Quarterly Report on Form 10-Q

For the quarter ended June 30, 2020

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION	2
Item 1.	Condensed Consolidated Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
	PART II – OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
	Signatures	41

1

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements.

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

	June 30,		December 31,
	2020		2019
Assets
Current Assets:
Cash and Cash Equivalents	$	126,737	$	8,993
Merchandise Inventories		248,722		286,369
Prepaid Expenses		8,544		8,288
Deposit for Legal Settlement		21,500		21,500
Tariff Recovery Receivable		18,285		27,025
Other Current Assets		5,545		6,938
Total Current Assets		429,333		359,113
Property and Equipment, net		96,864		98,733
Operating Lease Right-of-Use		121,544		121,796
Goodwill		9,693		9,693
Other Assets		7,046		6,674
Total Assets	$	664,480	$	596,009
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts Payable	$	68,516	$	59,827
Customer Deposits and Store Credits		55,492		41,571
Accrued Compensation		11,506		11,742
Sales and Income Tax Liabilities		9,722		7,225
Accrual for Legal Matters and Settlements Current		62,786		67,471
Operating Lease Liabilities - Current		36,740		31,333
Other Current Liabilities		23,998		18,937
Total Current Liabilities		268,760		238,106
Other Long-Term Liabilities		15,708		13,757
Operating Lease Liabilities - Long-Term		101,131		100,470
Deferred Tax Liability		921		426
Credit Agreement		101,000		82,000
Total Liabilities		487,520		434,759
Stockholders’ Equity:
Common Stock ($0.001 par value; 35,000 shares authorized; 30,161 and 29,959 shares issued and 28,852 and 28,714 shares outstanding, respectively)		30		30
Treasury Stock, at cost (1,309 and 1,245 shares, respectively)		(142,752)		(142,314)
Additional Capital		219,618		218,616
Retained Earnings		101,372		86,498
Accumulated Other Comprehensive Loss		(1,308)		(1,580)
Total Stockholders’ Equity		176,960		161,250
Total Liabilities and Stockholders’ Equity	$	664,480	$	596,009

See accompanying notes to condensed consolidated financial statements

2

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net Sales
Net Merchandise Sales	$	210,055	$	250,658	$	448,837	$	488,557
Net Services Sales		20,229		37,909		48,821		66,230
Total Net Sales		230,284		288,567		497,658		554,787
Cost of Sales
Cost of Merchandise Sold		125,953		157,801		266,699		309,226
Cost of Services Sold		16,039		28,279		37,696		49,463
Total Cost of Sales		141,992		186,080		304,395		358,689
Gross Profit		88,292		102,487		193,263		196,098
Selling, General and Administrative Expenses		82,288		103,864		178,495		200,896
Operating Income (Loss)		6,004		(1,377)		14,768		(4,798)
Other Expense		1,142		1,068		2,024		2,358
Income (Loss) Before Income Taxes		4,862		(2,445)		12,744		(7,156)
Income Tax Expense (Benefit)		2,223		411		(2,130)		624
Net Income (Loss)	$	2,639	$	(2,856)	$	14,874	$	(7,780)
Net Income (Loss) per Common Share—Basic	$	0.09	$	(0.10)	$	0.52	$	(0.27)
Net Income (Loss) per Common Share—Diluted	$	0.09	$	(0.10)	$	0.51	$	(0.27)
Weighted Average Common Shares Outstanding:
Basic		28,831		28,692		28,776		28,669
Diluted		28,892		28,692		28,889		28,669

See accompanying notes to condensed consolidated financial statements

3

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited, in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net Income (Loss)	$	2,639	$	(2,856)	$	14,874	$	(7,780)
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments		227		(309)		272		(192)
Total Other Comprehensive Income (Loss)		227		(309)		272		(192)
Comprehensive Income (Loss)	$	2,866	$	(3,165)	$	15,146	$	(7,972)

See accompanying notes to condensed consolidated financial statements

4

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, in thousands)

													Total
	Common Stock			Treasury Stock			Additional		Retained				Stockholders'
	Shares	Value		Shares	Value		Capital		Earnings		AOCL		Equity
April 1, 2019	28,682	$	32	2,979	$	(142,157)	$	214,798	$	71,911	$	(1,268)	$	143,316
Stock-Based Compensation Expense	—		—	—		—		1,361		—		—		1,361
Release of Restricted Shares	19		—	—		—		—		—		—		—
Common Stock Repurchased	—		(2)	(1,740)		(112)		—		—		—		(114)
Translation Adjustment	—		—	—		—		—		—		(309)		(309)
Net Loss	—		—	—		—		—		(2,856)		—		(2,856)
June 30, 2019	28,701	$	30	1,239	$	(142,269)	$	216,159	$	69,055	$	(1,577)	$	141,398
April 1, 2020	28,812	$	30	1,293	$	(142,630)	$	218,736	$	98,733	$	(1,535)	$	173,334
Stock-Based Compensation Expense	—		—	—		—		846		—		—		846
Exercise of Stock Options	3		—	—		—		36		—		—		36
Release of Restricted Shares	37		—	—		—		—		—		—		—
Common Stock Repurchased	—		—	16		(122)		—		—		—		(122)
Translation Adjustment	—		—	—		—		—		—		227		227
Net Income	—		—	—		—		—		2,639		—		2,639
June 30, 2020	28,852	$	30	1,309	$	(142,752)	$	219,618	$	101,372	$	(1,308)	$	176,960

													Total
	Common Stock			Treasury Stock			Additional		Retained				Stockholders'
	Shares	Value		Shares	Value		Capital		Earnings		AOCL		Equity
January 1, 2019	28,627	$	32	2,951	$	(141,828)	$	213,744	$	76,835	$	(1,385)	$	147,398
Stock-Based Compensation Expense	—		—	—		—		2,415		—		—		2,415
Release of Restricted Shares	74		—	—		—		—		—		—		—
Common Stock Repurchased	—		(2)	(1,712)		(441)		—		—		—		(443)
Translation Adjustment	—		—	—		—		—		—		(192)		(192)
Net Loss	—		—	—		—		—		(7,780)		—		(7,780)
June 30, 2019	28,701	$	30	1,239	$	(142,269)	$	216,159	$	69,055	$	(1,577)	$	141,398
January 1, 2020	28,714	$	30	1,245	$	(142,314)	$	218,616	$	86,498	$	(1,580)	$	161,250
Stock-Based Compensation Expense	—		—	—		—		966		—		—		966
Exercise of Stock Options	3		—	—		—		36		—		—		36
Release of Restricted Shares	135		—	—		—		—		—		—		—
Common Stock Repurchased	—		—	64		(438)		—		—		—		(438)
Translation Adjustment	—		—	—		—		—		—		272		272
Net Income	—		—	—		—		—		14,874		—		14,874
June 30, 2020	28,852	$	30	1,309	$	(142,752)	$	219,618	$	101,372	$	(1,308)	$	176,960

See accompanying notes to condensed consolidated financial statements

5

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

	Six Months Ended June 30,
	2020		2019
Cash Flows from Operating Activities:
Net Income (Loss)	$	14,874	$	(7,780)
Adjustments to Reconcile Net Income (Loss):
Depreciation and Amortization		8,934		8,599
Deferred Income Taxes Provision		495		71
Stock-Based Compensation Expense		966		2,415
Provision for Inventory Obsolescence Reserves		1,574		626
(Gain) Loss on Disposal of Fixed Assets		(827)		50
Changes in Operating Assets and Liabilities:
Merchandise Inventories		35,897		12,883
Accounts Payable		9,150		(4,729)
Customer Deposits and Store Credits		13,921		2,652
Prepaid Expenses and Other Current Assets		10,330		(3,557)
Accrual for Legal Matters and Settlements		148		4,575
Payments for Legal Matters and Settlements		(4,833)		(33,725)
Deferred Rent Payments		5,813		—
Other Assets and Liabilities		9,225		3,828
Net Cash Provided by (Used in) Operating Activities		105,667		(14,092)
Cash Flows from Investing Activities:
Purchases of Property and Equipment		(7,212)		(8,907)
Other Investing Activities		949		64
Net Cash Used in Investing Activities		(6,263)		(8,843)
Cash Flows from Financing Activities:
Borrowings on Credit Agreement		45,000		63,000
Payments on Credit Agreement		(26,000)		(38,500)
Other Financing Activities		(637)		(1,074)
Net Cash Provided by Financing Activities		18,363		23,426
Effect of Exchange Rates on Cash and Cash Equivalents		(23)		671
Net Increase in Cash and Cash Equivalents		117,744		1,162
Cash and Cash Equivalents, Beginning of Period		8,993		11,565
Cash and Cash Equivalents, End of Period	$	126,737	$	12,727
Supplemental disclosure of non-cash operating and financing activities:
Tenant Improvement Allowance for Leases	$	(611)	$	(146)

See accompanying notes to condensed consolidated financial statements

6

Lumber Liquidators Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands, except per share amounts)

Note 1.       Basis of Presentation

Lumber Liquidators Holdings, Inc. and its direct and indirect subsidiaries (collectively and, where applicable, individually, 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 exotic and domestic hardwood species, engineered hardwood, laminate, resilient vinyl, waterproof vinyl plank and porcelain tile flooring direct to the consumer. The Company features renewable flooring products, bamboo and cork, and provides a wide selection of flooring enhancements and accessories, including moldings, noise-reducing underlayment, adhesives and flooring tools. The Company also provides in-home delivery and installation services to its customers. The Company primarily sells to homeowners or to contractors on behalf of homeowners through a network of store locations in metropolitan areas. As of June 30, 2020, the Company’s stores spanned 47 states in the United States (“U.S.”) and included eight stores in Canada. In addition to the store locations, the Company’s products may be ordered, and customer questions/concerns addressed, through both its customer relationship center in Richmond, Virginia and its website, LLFlooring.com.

The accompanying unaudited condensed 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 condensed 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 condensed 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, 2019.

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

Results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of future results to be expected for the full year due to a number of factors, including seasonality and general economic conditions that may impact sales for the remainder of fiscal 2020.

Impact of the COVID-19 Pandemic

On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become a pandemic, and on March 13, 2020, the U.S. President announced a National Emergency relating to the COVID-19 pandemic. The Company is uncertain of the magnitude of the adverse impact of the COVID-19 pandemic to its sales, supply chain, and distribution as well as to the overall economy and consumer spending, including the construction-renovation industry. The Company currently anticipates that disruptions resulting from COVID-19 could have a material negative impact on its sales and results of operations, financial position, and cash flows during 2020.

While these potential negative effects will not be fully reflected in the Company's results of operations and overall financial performance until future periods, the Company has already experienced an impact to financial results due to the COVID-19 pandemic. Most notably, starting as of the week of March 22, 2020 the Company closed as many as 56 stores for a period of time while all other stores operated under reduced hours and/or warehouse-only conditions, offering curbside pickup and job site delivery for our Pro and DIY customers. As reported in the Company’s first quarter earnings release, quarter-to-date comparable store sales were down approximately 30% through the week ended May 23. Improving performance in June resulted in a negative 21.3% comparable store sales for the full quarter. By early July, 98% of stores were fully open, with less than 10 operating by appointment only. Only one store remained

7

closed since the onset of the pandemic due to a unique store design while others closed periodically as warranted by market conditions.

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 amount of obligations under the Credit Agreement 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. In 2019, approximately 46% of the Company’s product was sourced from China. The Company is subject to risks associated with obtaining products from abroad, including disruptions or delays in production, shipments, delivery or processing, including due to the COVID-19 pandemic. While the Company continues to be uncertain as to the full impact of COVID-19 to the supply chain, the Company is executing contingency plans to minimize anticipated and potential disruptions to supply chain, domestic distribution centers and store operations.

Included in merchandise inventories are tariff related costs, including Section 301 tariffs. In late 2019, with an additional update in the first quarter 2020, the United States Trade Representative (“USTR”) ruled on a request made by certain interested parties, including the Company, and retroactively excluded certain flooring products imported from China from the Section 301 tariffs. The tariff exclusions are currently scheduled to expire in August 2020. Approximately 46% of the Company’s product was subject to Section 301 tariffs through most of 2019, but that declined to approximately 10% to 15% following the November 2019 exclusion on click vinyl and engineered products granted by the USTR. As of June 30, 2020, the Company has an $18 million receivable related to these tariffs in the caption “Tariff Recovery Receivable” on the condensed consolidated balance sheets and expects to receive payments by the end of 2020.

Recognition of Net Sales

The Company generates revenues primarily by retailing merchandise in the form of hard-surface and porcelain 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 a network of 422 stores, which spanned 47 states including eight stores in Canada, at June 30, 2020. In addition, both the merchandise and services can be ordered through a call center and from the Company’s website, 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 and amounts collected on behalf of third parties. 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

8

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 condensed 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				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Customer Deposits and Store Credits, Beginning Balance	$	(37,836)	$	(47,633)	$	(41,571)	$	(40,332)
New Deposits		(264,473)		(302,429)		(545,326)		(594,262)
Recognition of Revenue		230,284		288,567		497,658		554,787
Sales Tax included in Customer Deposits		14,862		17,483		31,543		34,264
Other		1,671		1,124		2,204		2,655
Customer Deposits and Store Credits, Ending Balance	$	(55,492)	$	(42,888)	$	(55,492)	$	(42,888)

Subject to limitations under the Company’s policy, return of unopened merchandise is accepted for 90 days. Due to the impact of COVID-19, the Company temporarily extended its return policy an additional 60 days starting in March 2020. 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 amount of expected returns and records it within “Other Current Liabilities” on the condensed consolidated balance sheet. The Company continues to estimate the amount of returns based on historical data. 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 condensed consolidated balance sheet. This amount was $1.3 million at June 30, 2020. 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 June 30,								Six Months Ended June 30,
	2020				2019				2020				2019
Manufactured Products 1	$	112,441	49	%	$	118,212	41	%	$	231,478	46	%	$	228,679	41	%
Solid and Engineered Hardwood		62,164	27	%		83,547	29	%		138,773	28	%		165,382	30	%
Moldings and Accessories and Other		35,450	15	%		48,899	17	%		78,586	16	%		94,496	17	%
Installation and Delivery Services		20,229	9	%		37,909	13	%		48,821	10	%		66,230	12	%
Total	$	230,284	100	%	$	288,567	100	%	$	497,658	100	%	$	554,787	100	%

¹     Includes laminate, vinyl, engineered vinyl plank and porcelain 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

9

customers, certain costs of quality control procedures, warranty and customer satisfaction costs, inventory adjustments including obsolescence and shrinkage, and costs to produce samples, which are net of vendor allowances.

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 Company seeks recovery from its vendors and third-party independent contractors of installation services for certain amounts paid.

Vendor allowances primarily consist of volume rebates that are earned as a result of attaining certain purchase levels and reimbursement for the cost of producing samples. Vendor allowances 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.

Recent Accounting Pronouncements Adopted

In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions obtained as a result of the COVID-19 pandemic. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession obtained was a result of a new arrangement reached with the lessor (treated within the lease modification accounting framework) or if a lease concession obtained was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows lessees, if certain criteria have been met, to bypass the lease-by-lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company has elected to apply this practical expedient for the period beginning as of April 1, 2020 for those agreements where total payments under the modified lease are substantially the same or less than the original agreement. Included in “Operating Lease Liabilities - Current” on the condensed consolidated balance sheet is a $5.4 million liability as of June 30, 2020 related to deferred payments as a result of the COVID-19 rent concessions, as well as an additional $0.4 million included in “Operating Lease Liabilities - Long-Term.” The deferred payments will be made over the remainder of the lease term in accordance with each concession agreement.

Note 3.       Stockholders’ Equity

Net Income (Loss) per Common Share

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net Income (Loss)	$	2,639	$	(2,856)	$	14,874	$	(7,780)
Weighted Average Common Shares Outstanding—Basic		28,831		28,692		28,776		28,669
Effect of Dilutive Securities:
Common Stock Equivalents		61		—		113		—
Weighted Average Common Shares Outstanding—Diluted		28,892		28,692		28,889		28,669
Net Income (Loss) per Common Share—Basic	$	0.09	$	(0.10)	$	0.52	$	(0.27)
Net Income (Loss) per Common Share—Diluted	$	0.09	$	(0.10)	$	0.51	$	(0.27)

10

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		Six Months Ended
	June 30,		June 30,
	2020	2019	2020	2019
Stock Options	598	644	544	644
Restricted Shares	742	839	419	613

Stock Repurchase Program

The Company’s board of directors has authorized the repurchase of up to $150 million of the Company’s common stock. At June 30, 2020, the Company had approximately $14.7 million remaining under this authorization. The Company has not repurchased any shares of its common stock under this program in more than three years.

Note 4.       Stock-based Compensation

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

		Restricted Stock
	Stock Options	Awards
Options Outstanding/Nonvested RSAs, January 1, 2020	693	911
Granted	197	451
Options Exercised/RSAs Released	(3)	(200)
Forfeited	(271)	(225)
Options Outstanding/Nonvested RSAs, June 30, 2020	616	937

The Company granted a target of 94,591 performance-based RSAs with a grant date fair value of $0.9 million during the six months ended June, 2020 and a target of 100,281 performance-based RSAs with a grant date fair value of $1.1 million during the six months ended June 30, 2019. The 2020 performance-based RSAs were awarded to certain members of senior management in connection with the achievement of specific key financial metrics and a relative total shareholder return multiple measured over a three-year period and also vest over a three-year period. The number of 2020 performance-based awards that will ultimately vest is contingent upon the achievement of these key financial metrics and the results of the relative total shareholder return multiple by the end of year three. The 2019 performance-based RSAs were awarded to certain members of senior management in connection with the achievement of specific key financial metrics measured over a two-year period and vest over a three-year period. The number of 2019 performance-based awards that will ultimately vest is contingent upon the achievement of these key financial metrics by the end of year two. 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 performance and vesting period. These awards are included above in RSAs Granted.

Note 5.      Credit Agreement

The Company has a credit agreement (the “Credit Agreement”) with Bank of America, N.A. and Wells Fargo Bank, National Association (the “Lenders”). On April 17, 2020, the Company entered into a First Amendment to the Credit Agreement (the “Amendment”) with the Lenders. The execution of the Amendment, among other things, temporarily increases the maximum amount of borrowings under the Revolving Credit Facility (the “Revolving Credit Facility”) from $175 million to $212.5 million until August 30, 2020, subject to the borrowing bases described below. The total size of the Credit Agreement increased to $237.5 million, inclusive of the first in-last out $25 million term loan (the “FILO Term Loan”).

The Revolving Credit Facility and the FILO Term Loan mature on March 29, 2024 and are 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 accounts receivables, and the Company’s East Coast

11

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 permanently increased the margin for LIBOR Rate Loans (as defined in the Amendment) to (i) 2.50% to 3.00% over the applicable LIBOR Rate (as defined in the Amendment) with respect to Revolving Loans (as defined in the Amendment) and (ii) 3.75% to 4.50% over the applicable LIBOR Rate with respect to FILO Term Loans (as defined in the Amendment), in each case (for one, two, three or six month interest periods as selected by the Company) depending on the Company’s average daily excess borrowing availability under the Revolving Credit Facility during the most recently completed fiscal quarter. The Amendment also permanently increased the unused commitment fee of