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Press release from PR Newswire

Lumber Liquidators Announces Second Quarter 2010 Financial Results

Wednesday, August 04, 2010

Lumber Liquidators Announces Second Quarter 2010 Financial Results07:00 EDT Wednesday, August 04, 2010~ Second Quarter Net Sales Increased 17.9% to $168.7 Million ~ ~ Comparable Store Net Sales Increased 5.5% for the Second Quarter ~ ~ Second Quarter Net Income Increased 31.0% to $9.1 Million, or $0.32 per Diluted Share ~TOANO, Va., Aug. 4 /PRNewswire-FirstCall/ -- Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in the U.S., today announced financial results for the second quarter and six months ended June 30, 2010.  Second Quarter ResultsNet sales increased $25.6 million, or 17.9%, to $168.7 million in the second quarter of 2010 from $143.1 million in the second quarter of 2009.  Comparable store net sales increased 5.5% in the second quarter of 2010 as consumer demand continued to drive sales volume.  In the second quarter of 2009, comparable store net sales decreased 1.8%.  Non-comparable store net sales increased $17.7 million over the prior year period.  The Company opened six new stores during the second quarter.  Gross margin was 34.7% in the second quarter of 2010, a decrease from 35.3% in the second quarter of 2009.  Gross margin was impacted by shifts in our sales mix, increased product costs, primarily transportation and finishing costs, and selected promotional pricing designed to generate incremental consumer demand and sales volume.    Selling, general and administrative (SG&A) expenses were $43.9 million, or 26.0% of net sales, for the second quarter of 2010 compared to $39.2 million, or 27.4% of net sales, for the second quarter of 2009.  The decrease in SG&A expenses as a percentage of net sales for the second quarter of 2010 primarily reflects leverage in advertising, as well as reductions in legal, professional and other expenses, partially offset by the costs of store base expansion and infrastructure investments.Net income increased 31.0% to $9.1 million, or $0.32 per diluted share, in the second quarter of 2010 compared to $6.9 million, or $0.25 per diluted share, in the second quarter of the prior year.  The effective tax rate was 38.6% in the second quarter of 2010 and 39.6% in the second quarter of 2009; the 2010 reduction was primarily due to lower state income taxes.Jeffrey W. Griffiths, President and Chief Executive Officer, commented, "We continued our momentum through the second quarter, achieving our best-ever quarterly top and bottom line results.  We are pleased with our ability to leverage our flexible and differentiated business model to generate further operating margin expansion.   Our unique value proposition of price, selection, quality and availability continued to resonate well with customers and increase traffic.  Enhancing our value proposition with targeted promotional pricing of certain hardwoods and a broadened assortment of entry level hardwood price points, our annual sale in April drew a very strong customer response.  We remain focused on further improving our operations and building a foundation for long-term success and we are well positioned to continue our growth."First Six Months ResultsNet sales increased 19.8% to $319.9 million in the first six months of 2010 from $267.0 million in the first six months of 2009.  Comparable store net sales increased 6.7% for the first half of 2010, compared to a decrease of 3.7% for the first half of the prior year.  Non-comparable store net sales increased $35.1 million over the prior year.  The Company opened 17 new stores during the first six months of 2010 and currently operates 203 stores in 46 states.  Gross profit increased 17.8% to $112.0 million as gross margin decreased to 35.0% from 35.6% in the same period of 2009.  SG&A expenses increased 13.9% to $86.1 million, or 26.9% of net sales for the first half of 2010 compared to $75.5 million, or 28.3% of net sales for the first half of 2009.  Operating income increased 32.5% to $26.0 million, or 8.1% of net sales in the first six months of 2010 from $19.6 million, or 7.3% of net sales in the first six months of 2009.  Net income increased 33.5% to $16.1 million, or $0.57 per diluted share, in the first half of 2010 compared to $12.0 million, or $0.44 per diluted share, in the first half of the prior year.  Net income for the first six months of 2010 reflects an effective tax rate of 38.7% compared to 39.4% in the first six months of 2009. Company OutlookThe Company has updated its outlook for fiscal 2010 and expects the following:Net sales for the full year in the range of $630 million to $650 million.Comparable store net sales increases in the mid-single digits. Full year 2010 earnings per diluted share in the range of $1.13 to $1.23, based on a diluted share count of approximately 28.4 million shares and an effective tax rate in the range of 38.5% to 38.8%.The opening of 19 to 23 new store locations in the second half of the year, for a total of 36 to 40 new store locations in 2010, including its first store locations in Canada, expected to open in the fourth quarter. Mr. Griffiths concluded, "We expect to continue driving growth throughout the second half of the year and are on track to meet our strategic plans and financial targets for the full year.  We anticipate seeing gradual improvement in the macro-economic trends which impact the wood flooring market and we will implement advertising and promotional strategies accordingly.  We have increased our efforts to further enhance efficiency within our supply chain, and we continue to invest in our inventory planning and allocation expertise.   Looking ahead, we expect our strengthened operations to result in gross margin expansion in the second half of 2010 as compared to the first half of the year.  We remain committed to further enhancing our value proposition to improve our competitive advantage and expand our market share."  Conference Call and Webcast InformationThe Company will host a conference call and audio webcast today, August 4, 2010, at 10:00 a.m. Eastern Time.  The conference may be accessed by dialing (877) 407-9039 or (201) 689-8470.  A replay will be available approximately one hour after the call through August 18, 2010 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering conference ID number 354149.  The live conference call and replay can also be accessed via audio webcast at the Investor Relations section of the Company's website, www.lumberliquidators.com. About Lumber LiquidatorsLumber Liquidators is the largest specialty retailer of hardwood flooring in the United States. With more than 200 stores and 340 varieties of flooring, including solid and engineered hardwood, bamboo, cork and laminate, and featuring premier brands such as Bellawood (which features a 50-year warranty), Dream Home, Schon, Virginia Mill Works, and Morning Star, Lumber Liquidators has one of the most extensive selections of prefinished and unfinished hardwood flooring in the industry. Its hardwood line is made up of more than 25 domestic and exotic wood species in both prefinished and unfinished brands of various lengths and widths.  Flooring experts in every store provide consumers with useful product information and answers to all of their flooring questions.While keeping costs down is part of the Company's philosophy, Lumber Liquidators is also committed to offering high-quality, name-brand products that it stands behind with confidence.Forward-Looking Statements This press release and accompanying financial tables may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act. These statements are based on currently available information as of the date of such statements and are subject to risks and uncertainties that may cause actual results to differ. The Company specifically disclaims any obligation to update these statements which speak only as of their respective dates, except as may be required under the federal securities laws. Information regarding these additional risks and uncertainties is contained in the Company's most recent periodic filings with the Securities and Exchange Commission.For further information contact:Lumber LiquidatorsFDDaniel Terrell/Ashleigh McDermottLeigh Parrish/Jessica GreenbergerTel: 757.566.7512Tel. 212.850.5600(Tables Follow)Lumber Liquidators Holdings, Inc.Condensed Consolidated Balance Sheets(in thousands, except share data)June 30,2010December 31,2009Assets(unaudited)Current Assets:Cash and Cash Equivalents$  42,169$  35,675Merchandise Inventories143,146133,342Prepaid Expenses6,5325,988Other Current Assets5,6154,356Total Current Assets197,462179,361Property and Equipment, net26,90920,491Deferred Income Taxes2,1032,002Other Assets3,9974,026Total Assets$  230,471$  205,880Liabilities and Stockholders' Equity  Current Liabilities:Accounts Payable$  33,542$  32,608Customer Deposits and Store Credits13,8579,805Accrued Compensation2,6514,512Sales and Income Tax Liabilities3,2462,770Other Current Liabilities6,4315,566Total Current Liabilities59,72755,261Deferred Rent2,4222,185Stockholders' Equity:Common Stock ($0.001 par value; 35,000,000 authorized; 27,419,674 and 27,234,222 outstanding, respectively)2727Additional Capital98,55394,726Retained Earnings69,74253,681Total Stockholders' Equity168,322148,434Total Liabilities and Stockholders' Equity$  230,471$  205,880Lumber Liquidators Holdings, Inc.Condensed Consolidated Statements of Income(in thousands, except share data and per share amounts)(unaudited)Three Months EndedJune 30, Six Months Ended June 30, 2010 200920102009Net Sales$   168,674$   143,116$   319,869$   266,968Cost of Sales110,13492,538207,825171,828Gross Profit58,54050,578112,04495,140Selling, General and Administrative Expenses43,86339,24786,07675,542Operating Income14,67711,33125,96819,598Interest and Other Income, net(135)(150)(228)(272)Income Before Income Taxes14,81211,48126,19619,870Provision for Income Taxes5,7194,54210,1357,838Net Income$  9,093$  6,939$  16,061$  12,032Net Income per Common Share -- Basic$  0.33$  0.26$  0.59$  0.45Net Income per Common Share -- Diluted$  0.32$  0.25$  0.57$  0.44Weighted Average Common Shares Outstanding:Basic27,385,64426,863,59927,334,75326,830,575Diluted28,292,01427,534,29728,236,42227,355,657Lumber Liquidators Holdings, Inc.Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited)Six Months Ended June 30, 2010 2009 Cash Flows from Operating Activities:Net Income$  16,061$  12,032Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:Depreciation and Amortization2,5802,341Stock-Based Compensation Expense1,5321,651Changes in Operating Assets and Liabilities:Merchandise Inventories(9,804)(18,044)Accounts Payable3656,623Customer Deposits and Store Credits4,0523,370Prepaid Expenses and Other Current Assets(1,803)1,152Other Assets and Liabilities(390)1,510Net Cash Provided by Operating Activities12,59310,635Cash Flows from Investing Activities:Purchases of Property and Equipment(8,394)(3,099)Net Cash Used in Investing Activities(8,394)(3,099)Cash Flows from Financing Activities:Proceeds from the Exercise of Stock Options1,321663Excess Tax Benefits on Stock Option Exercises1,107--Common Stock Purchased Pursuant to Equity Compensation Plans(133)(32)Other--(1)Net Cash Provided by Financing Activities2,295630Net Increase in Cash and Cash Equivalents6,4948,166Cash and Cash Equivalents, Beginning of Period35,67535,139Cash and Cash Equivalents, End of Period$     42,169$     43,305SOURCE Lumber LiquidatorsFor further information: Daniel Terrell/Ashleigh McDermott of Lumber Liquidators, +1-757-566-7512; or Leigh Parrish/Jessica Greenberger of FD for Lumber Liquidators, +1-212-850-5600