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Press release from PR Newswire

Lumber Liquidators Announces Third Quarter 2013 Financial Results And Raises Full Year Outlook

Wednesday, October 23, 2013

Lumber Liquidators Announces Third Quarter 2013 Financial Results And Raises Full Year Outlook

07:00 EDT Wednesday, October 23, 2013

~ Net Sales Increased 24.5% to $254.3 Million
~~ Comparable Store Net Sales Increased 17.4% ~
~ Operating Margin of 13.1%
~~ Net Income Increased 58.4% to $20.4 Million, or $0.73 per Diluted Share
~~ Company Raises Full Year Revenue Guidance to a Range of $985 million to $995 million and EPS Guidance to a Range of $2.65 to $2.74

TOANO, Va., Oct. 23, 2013 /PRNewswire/ -- Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in North America, today announced financial results for the third quarter and nine months ended September 30, 2013, and raised its outlook for 2013.

(Logo: http://photos.prnewswire.com/prnh/20130604/MM25930LOGO )

Third Quarter Results

Net sales increased $50.0 million, or 24.5%, to $254.3 million in the third quarter of 2013 from $204.3 million in the third quarter of 2012.  Comparable store net sales increased 17.4% for the quarter, driven by a 9.8% increase in the number of customers invoiced and a 6.9% increase in the average sale.  Non-comparable store net sales increased $14.5 million.  During the third quarter, the Company opened seven new stores and remodeled six existing stores.

Gross margin was 41.8% in the third quarter of 2013 compared to 38.1% in the third quarter of 2012.  The increase in gross margin reflects generally lower costs, increased attachment of moldings and accessories and certain operational efficiencies across the organization. 

Selling, general and administrative ("SG&A") expenses increased as a percentage of net sales to 28.8% for the third quarter of 2013 compared to 28.0% for the third quarter of 2012 as the Company continued to aggressively broaden the reach and frequency of its advertising. 

Operating margin increased 290 basis points to 13.1% in the third quarter of 2013, from 10.2% in the third quarter of 2012. 

Net income increased 58.4% to $20.4 million, or $0.73 per diluted share, in the third quarter of 2013 from $12.9 million, or $0.46 per diluted share, in the third quarter of the prior year.

Cash and cash equivalents at September 30, 2013 totaled $84.2 million compared with $40.1 million at September 30, 2012 and $64.2 million at December 31, 2012. 

Robert M. Lynch, President and Chief Executive Officer, commented, "We experienced consistently strong demand across the third quarter as our superior value proposition continues to resonate with a growing customer base.  We continue to gain share in a highly-fragmented market through our outstanding team of hardwood flooring experts, delivery of a wide assortment of high-quality products and by maintaining our position as the low-price leader.  We are pleased to have driven additional operating margin expansion through our focus on continuous improvement and the resulting cumulative benefits of our key strategic initiatives." 

First Nine Months Results

Net sales increased 23.1% to $741.8 million in the first nine months of 2013 from $602.7 million in the first nine months of 2012.  Comparable store net sales increased 15.8% for the first nine months of 2013, compared to 10.7% for the first nine months of the prior year.  Non-comparable store net sales increased $43.8 million over the prior year.  During the first nine months of 2013, the Company opened 19 new stores and remodeled 14 existing stores, all of which were in the Company's new "store of the future" expanded showroom format.  As of September 30, 2013, the Company operated 307 stores in 46 states and Canada. 

Gross margin increased to 41.2% for the first nine months of 2013 from 37.6% in the same period of 2012.  SG&A expenses increased to 28.8% of net sales for the first nine months of 2013, compared to 28.6% of net sales for the first nine months of 2012.  

Operating margin increased 350 basis points to 12.4% in the first nine months of 2013, from 8.9% in the first nine months of 2012.

Net income increased 70.2% to $56.6 million, or $2.03 per diluted share, in the first nine months of 2013 compared to $33.3 million, or $1.18 per diluted share, in the first nine months of the prior year. 

Company Outlook

Based on year-to-date results and current trends, the Company now expects to achieve the following for the full year:

  • Net sales for the full year in the range of $985 million to $995 million, from a previous range of $940 million to $963 million.
  • Comparable store net sales increasing 14% to 15%, with the fourth quarter ranging from 9% to 14%.
  • The opening of a total of 10 to 12 new store locations in the fourth quarter of the year, for a total of 29 to 31 new store locations in 2013.
  • Incremental SG&A expenses in the fourth quarter of approximately $1.4 million to $1.8 million, primarily related to the start-up of the West Coast distribution center and certain incremental legal and professional fees.
  • Capital expenditures between $35 million and $40 million, including $19 million to $21 million related to the supply chain optimization.
  • Earnings per diluted share in the range of approximately $2.65 to $2.74, based on a diluted share count of approximately 27.9 million shares, which is exclusive of any future impact of the stock repurchase program, up from a previous range of $2.45 to $2.60.

Mr. Lynch concluded, "Our team remains unified in its vision and motivated to continue taking market share through our powerful value proposition and uniquely profitable store model.  We continue to reinvest a portion of our success in our people, store model and support structures to enhance our value proposition and deliver cumulative, multi-year benefits.  We were excited to take the next steps in optimizing our supply chain during the third quarter, and we expect that the investment in new distribution facilities will enable us to deliver even better service to our customers and support the tremendous growth of our business.  Including our performance in the third quarter, we have achieved record results to date in 2013, but we are more excited than ever by the long-term opportunities that lie ahead.  We continue to expect multi-year operating margin expansion as we focus on delivering the best value proposition in flooring to our customers and rewarding our shareholders."

Conference Call and Webcast Information

The Company plans to host a conference call and audio webcast today, October 23, 2013, 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 two hours after the call through October 30, 2013 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering pin number 10000349.  The live conference call and replay can also be accessed via audio webcast at the Investor Relations section of the Company's website, www.lumberliquidators.com.

About Lumber Liquidators

With over 305 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring.  The Company features more than 340 first quality flooring varieties, including solid and engineered hardwood, bamboo, cork, laminate and resilient vinyl.  Additionally, Lumber Liquidators provides a wide selection of flooring enhancements and accessories to complement, install and maintain your new floor.  Every location is staffed with flooring experts who can provide advice and useful information about Lumber Liquidators' low priced product, much of which is in-stock and ready for delivery.

With quality brands including Bellawood Prefinished Hardwood and Morning Star Bamboo, Lumber Liquidators' flooring is often featured on popular television shows such as HGTV's Dream Home.

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

Forward-Looking Statements

This press release and accompanying financial tables may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act. These statements are based on currently available information as of the date of such statements and are subject to risks and uncertainties that may cause actual results to differ. The Company specifically disclaims any obligation to update these statements which speak only as of their respective dates, except as may be required under the federal securities laws. Information regarding these additional risks and uncertainties is contained in the Company's filings with the Securities and Exchange Commission.

For further information contact:

Lumber Liquidators Investor Relations

Ashleigh McDermott

Tel: 757.566.7512

(Tables Follow)

 

Lumber Liquidators Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

September 30,2013

December 31, 2012

Assets

(unaudited)

Current Assets:

Cash and Cash Equivalents 

$       84,194

$       64,167

Merchandise Inventories

237,290

206,704

Prepaid Expenses

5,715

5,168

Other Current Assets

15,110

12,106

Total Current Assets

342,309

288,145

Property and Equipment, net

56,712

47,764

Goodwill

9,693

9,693

Other Assets

1,732

1,785

Total Assets

$   410,446

$   347,387

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts Payable

$       37,690

$       55,110

Customer Deposits and Store Credits

32,488

25,747

Accrued Compensation

10,722

7,969

Sales and Income Tax Liabilities

5,041

4,314

Other Current Liabilities

16,817

7,887

Total Current Liabilities

102,758

101,027

Deferred Rent

3,823

3,653

Deferred Tax Liability

8,523

8,166

Stockholders' Equity:

Common Stock ($0.001 par value; 35,000,000 authorized;               27,609,809 and 27,214,144 outstanding, respectively)

30

29

Treasury Stock, at cost (2,034,911 and 1,719,706 shares, respectively)

(75,161)

(50,552)

Additional Capital

160,958

131,724

Retained Earnings

209,867

153,267

Accumulated Other Comprehensive (Loss) Income

(352)

73

Total Stockholders' Equity

295,342

234,541

Total Liabilities and Stockholders' Equity

$   410,446

$   347,387

 

Lumber Liquidators Holdings, Inc

Condensed Consolidated Statements of Income

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

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2013

2012

2013

2012

Net Sales

$  254,278

$   204,291

$    741,807

$    602,672

Cost of Sales

147,903

126,405

436,356

376,169

Gross Profit

106,375

77,886

305,451

226,503

Selling, General and Administrative Expenses

73,108

57,135

213,690

172,638

Operating Income

33,267

20,751

91,761

53,865

Other (Income) Expense

(64)

(26)

(425)

(99)

Income Before Income Taxes

33,331

20,777

92,186

53,964

Provision for Income Taxes

12,932

7,895

35,586

20,708

Net Income

$    20,399

$      12,882

$      56,600

$      33,256

Net Income per Common Share?Basic

$         0.74

$          0.47

$          2.06

$          1.21

Net Income per Common Share?Diluted

$         0.73

$          0.46

$          2.03

$          1.18

Weighted Average Common Shares Outstanding:

Basic

27,594,573

27,125,855

27,448,441

27,518,206

Diluted

27,954,115

27,744,564

27,905,131

28,094,040

 

Lumber Liquidators Holdings, Inc

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2013

2012

Cash Flows from Operating Activities:

Net Income

$        56,600

$        33,256

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

Depreciation and Amortization

8,503

7,323

Stock-Based Compensation Expense

4,168

3,019

Changes in Operating Assets and Liabilities:

Merchandise Inventories

(30,704)

(30,962)

Accounts Payable

(17,622)

(8,212)

Customer Deposits and Store Credits

6,754

5,966

Prepaid Expenses and Other Current Assets

(3,991)

(2,427)

Other Assets and Liabilities

12,994

8,973

Net Cash Provided by Operating Activities

36,702

16,936

Cash Flows from Investing Activities:

Purchases of Property and Equipment

(17,261)

(9,570)

Net Cash Used in Investing Activities

(17,261)

(9,570)

Cash Flows from Financing Activities:

Payments for Share Repurchases

(24,609)

(40,349)

Proceeds from the Exercise of Stock Options

9,796

8,031

Excess Tax Benefit from Stock-Based Compensation

15,711

3,141

Net Cash Provided by (Used in) Financing Activities

898

(29,177)

Effect of Exchange Rates on Cash and Cash Equivalents

(312)

201

Net Increase (Decrease) in Cash and Cash Equivalents

20,027

(21,610)

Cash and Cash Equivalents, Beginning of Period

64,167

61,675

Cash and Cash Equivalents, End of Period

$      84,194

$      40,065

 

SOURCE Lumber Liquidators

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