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    Lumber Liquidators Announces Third Quarter 2014 Financial Results And Updates Full Year 2014 Outlook

    ~ Net Sales Increased 4.6% to $266.1 Million

    ~~ Net Income of $15.7 Million, or $0.58 per Diluted Share

    Oct 22, 2014

    TOANO, Va., Oct. 22, 2014 /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, 2014.

    Lumber Liquidators

    Third Quarter Results

    Net sales increased $11.8 million, or 4.6%, to $266.1 million in the third quarter of 2014 from $254.3 million in the third quarter of 2013.  In comparable stores, net sales decreased 4.9% in the third quarter of 2014, though each month during the quarter was stronger than the previous month, as the availability of certain inventory recovered and the fall flooring season began with relative strength in late August.  Non-comparable store net sales increased $24.2 million and included net sales from five new stores opened during the third quarter of 2014. 

    Gross margin was 39.2% in the third quarter of 2014 compared to 41.8% in the third quarter of 2013 due primarily to adverse net shifts in sales mix, greater promotions, discounting at the point of sale and greater costs of inventory shrink and obsolescence.  These costs were partially offset by lower net transportation costs.

    Selling, general and administrative ("SG&A") expenses in the third quarter of 2014 increased $5.3 million, or 7.2%, to $78.4 million primarily due to higher advertising, occupancy, legal and professional expenses.  SG&A expenses were 29.5% of net sales in the third quarter of 2014, compared to 28.8% of net sales in the third quarter of 2013. 

    Net income was $15.7 million, or $0.58 per diluted share, in the third quarter of 2014 and $20.4 million, or $0.73 per diluted share, in the third quarter of 2013.

    Robert M. Lynch, President and Chief Executive Officer, commented, "We saw improvement in our net sales trends over the course of the quarter as inventory levels recovered and the fall flooring season began.  We were able to achieve the lower end of our revenue and EPS ranges, although constrained inventory of certain key products and promotional events led to a gross margin which was lower than we had anticipated.  At the same time that we addressed near-term challenges in our business, we continued to focus on the long-term by implementing our strategic initiatives and investing in our value proposition.  We were excited to launch our new Bellawood collection during the quarter, featuring new flooring styles and a finish that's considerably more resilient than other floors on the market.  While 2014 has been a challenging year in a number of areas, we believe the significant investments we have made in our infrastructure and the continued implementation of our key strategic initiatives have positioned us well for future growth and operating margin expansion." 

    First Nine Months Results

    Net sales increased 4.5% to $775.4 million in the first nine months of 2014 from $741.8 million in the first nine months of 2013.  Comparable store net sales decreased 4.3% for the first nine months of 2014.  Non-comparable store net sales increased $65.6 million over the same prior year period.  The Company opened 31 new stores during the first nine months of 2014 and as of September 30, 2014, operated 349 stores in 46 states and Canada. 

    Gross margin decreased to 40.2% for the first nine months of 2014 from 41.2% in the same period of 2013.  SG&A expenses were 30.5% of net sales for the first nine months of 2014, compared to 28.8% of net sales for the first nine months of 2013. 

    Net income decreased 18.7% to $46.0 million, or $1.67 per diluted share, in the first nine months of 2014 compared to $56.6 million, or $2.03 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 2014:

    • Net sales in the range of $1.05 billion to $1.065 billion, from a previous range of $1.05 billion to $1.10 billion, with the fourth quarter ranging from $275 million to $290 million.

    • A decrease in comparable store net sales in the low single digits, with a fourth quarter range of low single digits either positive or negative.  The previous full year range was low single digits either positive or negative.

    • The opening of three new store locations in the expanded showroom format in the fourth quarter, for a total of 34 new store locations in 2014.

    • The remodeling of two existing stores in the expanded showroom format in the fourth quarter, for a total of 17 existing stores remodeled in 2014. 

    • Capital expenditures of up to $85 million for 2014, including up to $50 million for supply chain investments.

    • Earnings per diluted share in the range of $2.38 to $2.52 based on a diluted share count of 27.5 million shares, which is exclusive of any future impact of the stock repurchase program, from a previous range of $2.65 to $3.00, with the fourth quarter ranging from $0.71 to $0.85.

    Mr. Lynch concluded, "Our commitment to building the best team, re-launching Bellawood with expansion of our own finishing capacity, initial investments in vertical integration, an intense focus on both quality control and assurance, and significant expansion of distribution facilities are all steps to a stronger value proposition for our customer.  In the fourth quarter, we expect our operations to continue to improve even in an uncertain environment for large-ticket, discretionary home improvement.  As we look forward to 2015 and beyond, we remain confident that the significant investments we are making in our business should allow us to once again expand gross and operating margin." 

    Conference Call and Webcast Information

    The Company plans to host a conference call and audio webcast today, October 22, 2014, 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 ends through October 29, 2014 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering pin number 13592003.  The live conference call and replay may also be accessed via audio webcast at the Investor Relations section of the Company's website, www.lumberliquidators.com.

    About Lumber Liquidators

    In its 20th year and with more than 350 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring. Lumber Liquidators features more than 350 top 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 premier 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 and This Old House.

    Lumber Liquidators aims to be the industry leader in sustainability. For more information, please visit www.LumberLiquidators.com/Sustainability.  Learn more about our corporate giving program at LayItForward.LumberLiquidators.com.  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" 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," "believes," "thinks," "estimates," "seeks," "predicts," "could," "projects," "potential" 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. Forward-looking statements in this press release may include, without limitation, statements regarding sales growth, comparable store net sales, impact of cannibalization, price changes, earnings performance, stock-based compensation expense, margins, return on invested capital, strategic direction, the demand for the Company's products, the completion of the East Coast distribution center and store openings.  The Company's actual results could differ materially from those projected in or contemplated by the forward-looking statements as a result of potential risks, uncertainties and other factors including, but not limited to, changes in general economic and financial conditions, such as the rate of unemployment, consumer access to credit, and interest rate; the volatility in mortgage rates; the legislative/regulatory climate; political unrest in the countries of the Company's suppliers; the availability of sufficient suitable hardwood; the strength of the Company's competitors and their ability to increase their market share; slower growth in personal income; changes in business and consumer spending; changes in transportation costs; the rate of growth of residential remodeling and new home construction; the impact weather may have on customer traffic and sales; the successful and timely completion of the East Coast distribution center, with such completion being impacted by, among other things, weather and governmental-imposed requirements; and inventory levels.  The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. Information regarding these additional risks and uncertainties is contained in the Company's other reports filed with the Securities and Exchange Commission, including the Item 1A, "Risk Factors," section of the Form 10-K for the year ended December 31, 2013.

    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,

    December 31,


    2014

    2013


    (unaudited)


    Assets



    Current Assets:



    Cash and Cash Equivalents

    $       10,788

    $       80,634

    Merchandise Inventories

    288,827

    252,428

    Prepaid Expenses

    6,058

    6,229

    Other Current Assets

    17,025

    12,916




    Total Current Assets

    322,698

    352,207

    Property and Equipment, net

    118,506

    65,947

    Goodwill

    9,693

    9,693

    Other Assets

    1,637

    1,712




    Total Assets

    $   452,534

    $   429,559




    Liabilities and Stockholders' Equity



    Current Liabilities:



    Accounts Payable

    $       56,243

    $       56,327

    Customer Deposits and Store Credits

    33,186

    22,377

    Accrued Compensation

    4,727

    11,709

    Sales and Income Tax Liabilities

    5,356

    4,878

    Other Current Liabilities

    24,488

    11,709




    Total Current Liabilities

    124,000

    107,000




    Deferred Rent

    6,243

    4,169

    Deferred Tax Liability

    9,065

    9,061




    Stockholders' Equity:



    Common Stock ($0.001 par value; 35,000,000 shares authorized; 
       27,057,543 and 27,557,570 shares outstanding, respectively)

    30

    30

    Treasury Stock, at cost (2,815,908 and 2,133,307 shares, respectively)

    (138,645)

    (85,382)

    Additional Capital

    175,558

    164,581

    Retained Earnings

    276,688

    230,662

    Accumulated Other Comprehensive Loss

    (405)

    (562)




    Total Stockholders' Equity

    313,226

    309,329




    Total Liabilities and Stockholders' Equity

    $   452,534

    $   429,559

     

     

    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,


    2014

    2013

    2014

    2013






    Net Sales

    $   266,067

    $   254,278

    $    775,443

    $    741,807

    Cost of Sales

    161,909

    147,903

    463,760

    436,356






    Gross Profit

    104,158

    106,375

    311,683

    305,451






    Selling, General and Administrative Expenses

    78,377

    73,108

    236,309

    213,690






    Operating Income

    25,781

    33,267

    75,374

    91,761






    Other (Income) Expense

    82

    (64)

    246

    (425)






    Income Before Income Taxes

    25,699

    33,331

    75,128

    92,186






    Provision for Income Taxes

    9,974

    12,932

    29,102

    35,586






    Net Income

    $      15,725

    $      20,399

    $      46,026

    $      56,600






    Net Income per Common Share—Basic

    $           0.58

    $           0.74

    $           1.68

    $           2.06






    Net Income per Common Share—Diluted

    $           0.58

    $           0.73

    $           1.67

    $           2.03






    Weighted Average Common Shares Outstanding:





    Basic

    27,096,229

    27,594,573

    27,332,418

    27,448,441

    Diluted

    27,270,997

    27,954,115

    27,569,800

    27,905,131

     

     

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




    Nine Months Ended

    September 30,


    2014

    2013




    Cash Flows from Operating Activities:



    Net Income

    $        46,026

    $        56,600

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



    Depreciation and Amortization

    10,846

    8,503

    Stock-Based Compensation Expense

    4,040

    4,168

    Changes in Operating Assets and Liabilities:



    Merchandise Inventories

    (36,557)

    (30,704)

    Accounts Payable

    (717)

    (17,622)

    Customer Deposits and Store Credits

    10,841

    6,754

    Prepaid Expenses and Other Current Assets

    (2,374)

    (3,991)

    Other Assets and Liabilities

    329

    12,994




    Net Cash Provided by Operating Activities

    32,434

    36,702




    Cash Flows from Investing Activities:



    Purchases of Property and Equipment

    (56,214)

    (17,261)




    Net Cash Used in Investing Activities

    (56,214)

    (17,261)




    Cash Flows from Financing Activities:



    Payments for Stock Repurchases

    (53,263)

    (24,609)

    Proceeds from the Exercise of Stock Options

    2,938

    9,796

    Excess Tax Benefit from Stock-Based Compensation

    3,747

    15,711

    Borrowings on Revolving Credit Facility

    26,000

    Payments on Revolving Credit Facility

    (26,000)




    Net Cash (Used in) Provided by Financing Activities

    (46,578)

    898




    Effect of Exchange Rates on Cash and Cash Equivalents

    512

    (312)




    Net (Decrease) Increase in Cash and Cash Equivalents

    (69,846)

    20,027

    Cash and Cash Equivalents, Beginning of Period

    80,634

    64,167




    Cash and Cash Equivalents, End of Period

    $      10,788

    $      84,194

     

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    To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lumber-liquidators-announces-third-quarter-2014-financial-results-and-updates-full-year-2014-outlook-988093369.html

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