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    Lumber Liquidators Announces Fourth Quarter And Full Year 2015 Financial Results

    Feb 29, 2016

    TOANO, Va., Feb. 29, 2016 /PRNewswire/ -- Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in North America, today announced financial results for the fourth quarter and full year ended December 31, 2015.

    Lumber Liquidators.

    Fourth Quarter Results

    Net sales in the fourth quarter of 2015 were $234.8 million, a decrease of 13.7% from the fourth quarter of 2014, including a comparable store net sales decline of 17.2% due to a 15.6% decrease in the number of customers invoiced and a 1.6% decrease in the average sale. The Company believes net sales continued to be negatively impacted by certain unfavorable allegations surrounding the product quality of its laminates sourced from China. Non-comparable store net sales increased $9.6 million over the comparable prior year period. The Company opened five new stores during the fourth quarter of 2015.

    Gross margin was 23.0% in the fourth quarter of 2015 as compared with 39.2% in the prior year period. This decrease is primarily attributable to a $22.2 million reduction in the carrying value of the Company's current inventory of laminate flooring sourced from China and related moldings. The reduction was the result of the Company's determination during the quarter that it would not sell such products through its stores due to strategic and operational considerations including potential distraction these products could have on our employees and our business. Gross margin was further impacted by a lower average selling price and lower traffic versus the prior year period. 

    Selling, general and administrative ("SG&A") expenses in the fourth quarter of 2015 increased $7.7 million, or 9.9%, from the fourth quarter of 2014 to $85.5 million. This rise was primarily due to a $6.5 million increase in certain legal and professional fees and related accruals. SG&A expenses were 36.4% of net sales in the fourth quarter of 2015, compared to 28.6% of net sales in the fourth quarter of 2014. 

    Net loss was $19.8 million, or a loss of $0.73 per diluted share, in the fourth quarter of 2015 as compared to net income of $17.3 million, or $0.64 per diluted share, in the fourth quarter of 2014.   

    Cash and cash equivalents at December 31, 2015 totaled $26.7 million compared with $20.3 million at December 31, 2014. At December 31, 2015, the Company had $20.0 million outstanding on its revolving credit facility. 

    John Presley, Chief Executive Officer, commented, "Over the past quarter we have taken meaningful steps to reestablish Lumber Liquidators with our customers and our shareholders. While we have made some progress in key areas such as compliance and core operational efficiency, we still have a long way to go. That said, our business model is intact, we are addressing legacy issues with clarity and candor, and we are rebuilding our brand."

    Full Year Results

    Net sales decreased 6.6% to $978.8 million in 2015 from $1.05 billion in 2014. Comparable store net sales decreased $116.2 million, or 11.1%, and net sales in non-comparable stores added $47.6 million versus the prior year. The Company opened 23 new stores in 2015, and as of December 31, 2015, operated 374 stores in the United States and Canada. 

    Gross profit decreased 33.3% to $278.9 million from $418.2 million in 2014. SG&A expenses increased as a percentage of net sales to 37.0% in 2015, compared to 30.0% in 2014.

    Net loss was $56.4 million, or $2.08 per diluted share, in 2015 compared to net income of $63.4 million, or $2.31 per diluted share, in the prior year.

    Mr. Presley concluded, "As we begin 2016, we are focused on four main areas that we believe will provide a strong foundation for Lumber Liquidators. First, we will concentrate on store performance and execution. Second, we will strengthen our value proposition to customers. Third, we will continue to enhance our vigilance surrounding responsible and compliant sourcing. Finally, we will opportunistically expand our business to better serve our customers. We believe that if we execute on these areas with excellence and integrity, we will build a stronger Lumber Liquidators for our customers, our employees and our shareholders."

    Conference Call and Webcast Information

    The Company plans to host a conference call and audio webcast on February 29, 2016, at 8:00 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 March 7, 2016 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering pin number 13630145. 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 more than 370 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring. The Company features more than 400 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 installation options for all of Lumber Liquidators' products, much of which is in stock and ready for delivery.

    With premier brands including Bellawood and Morning Star Bamboo, Lumber Liquidators' flooring is often featured on popular television shows such as HGTV's Dream Home and This Old House. For more information, please visit www.LumberLiquidators.com or call 1.800.HARDWOOD.

    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, earnings performance, margins, return on invested capital, strategic direction, capital expenditures, supply chain, the demand for the Company's products, and store openings and remodels. 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 rates; the volatility in mortgage rates; the legislative/regulatory climate; political unrest in the countries of the Company's suppliers; the ability to retain and motivate the Company's employees; the availability of sufficient suitable hardwood; the impact on the Company if it is unable to maintain quality control over its products; the cost and effect on the Company's reputation of, and consumers' purchasing decisions in connection with, unfavorable allegations surrounding the product quality of the Company's laminates sourced from China; the Company's suppliers' ability to meet its quality assurance requirements; disruption in the Company's suppliers' abilities to supply needed inventory; the impact on the Company's business of its expansion of laminate products sourced from Europe and North America and the flooring industry's demand for product from these regions; disruptions or delays in the production, shipment, delivery or processing through ports of entry; the strength of the Company's competitors and their ability to increase their market share; slower growth in personal income; the number of customers requesting and cost associated with addressing the Company's indoor air quality testing program; the ability to collect necessary information from applicable customers in connection with indoor air quality test results; changes in business and consumer spending and the demand for the Company's products; changes in transportation costs; the rate of growth of residential remodeling and new home construction; the Company's ability to offset the effects of the rate of inflation, if higher than expected; the demand for and profitability of installation services; changes in the scope or rates of any antidumping or countervailing duty rates applicable to the Company's products; the duration, costs and outcome of pending or potential litigation or governmental investigations; the ability to successfully and timely implement the compliance plan in connection with the plea agreement entered into with the Department of Justice; the ability to make timely payments pursuant to the terms of the plea agreement entered into with the Department of Justice; the ability to borrow under its asset-backed revolving credit facility; he ability to reach an appropriate resolution in connection with the governmental investigations; 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, 2015.

    For further information contact:

    Lumber Liquidators Investor Relations
    Steve Calk
    Tel: 757.566.7512

    Lumber Liquidators Holdings, Inc.
    Consolidated Balance Sheets
    (in thousands, except share data)





    December 31,




    December 31,





    2015




    2014


    Assets









    Current Assets:









    Cash and Cash Equivalents


    $

    26,703



    $

    20,287


    Merchandise Inventories



    244,402




    314,371


    Prepaid Expenses



    5,931




    5,575


    Refundable Income Taxes



    19,596




    -


    Deferred Tax Asset



    21,045




    8,901


    Other Current Assets



    5,111




    8,143


    Total Current Assets



    322,788




    357,277


    Property and Equipment, net



    121,997




    124,867


    Goodwill



    9,693




    9,693


    Other Assets



    1,724




    1,625


    Total Assets


    $

    456,202



    $

    493,462











    Liabilities and Stockholders' Equity









    Current Liabilities:









    Accounts Payable


    $

    55,247



    $

    80,303


    Customer Deposits and Store Credits



    33,771




    34,943


    Accrued Compensation



    6,057




    3,693


    Sales and Income Tax Liabilities



    3,914




    7,472


    Other Current Liabilities



    28,755




    17,836


    Total Current Liabilities



    127,744




    144,247


    Other Long-Term Liabilities



    20,252




    6,603


    Deferred Tax Liability



    10,638




    10,558


    Revolving Credit Facility



    20,000





    Total Liabilities



    178,634




    161,408











    Stockholders' Equity:









    Common Stock ($0.001 par value; 35,000,000 shares authorized;
    27,088,460 and 27,069,307 shares outstanding, respectively)



    30




    30


    Treasury Stock, at cost (2,824,814 and 2,816,780 shares, respectively)



    (138,987)




    (138,692)


    Additional Capital



    180,590




    177,479


    Retained Earnings



    237,600




    294,033


    Accumulated Other Comprehensive Loss



    (1,665)




    (796)


    Total Stockholders' Equity



    277,568




    332,054


    Total Liabilities and Stockholders' Equity


    $

    456,202



    $

    493,462











     

    Lumber Liquidators Holdings, Inc.
    Consolidated Statements of Income
    (in thousands, except share data and per share amounts)





    Year Ended December 31,





    2015



    2014



    2013













    Net Sales


    $

    978,776


    $

    1,047,419


    $

    1,000,240


    Cost of Sales



    699,918



    629,252



    589,257


    Gross Profit



    278,858



    418,167



    410,983


    Selling, General and Administrative Expenses



    362,051



    314,094



    284,960


    Operating (Loss) Income



    (83,193)



    104,073



    126,023


    Other Expense (Income)



    234



    490



    (442)


    (Loss) Income Before Income Taxes



    (83,427)



    103,583



    126,465


    Income Tax (Benefit) Expense



    (26,994)



    40,212



    49,070


    Net (Loss) Income


    $

    (56,433)


    $

    63,371


    $

    77,395


    Net (Loss) Income per Common Share—Basic


    $

    (2.08)


    $

    2.32


    $

    2.82


    Net (Loss) Income per Common Share—Diluted


    $

    (2.08)


    $

    2.31


    $

    2.77


    Weighted Average Common Shares Outstanding:











    Basic



    27,082,299



    27,264,882



    27,484,790


    Diluted



    27,082,299



    27,485,852



    27,914,322


      

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




    Year Ended December 31,



    2015


    2014


    2013

    Cash Flows from Operating Activities:










    Net (Loss) Income


    $

    (56,433)


    $

    63,371


    $

    77,395

    Adjustments to Reconcile Net (Loss) Income to
    Net Cash Provided by Operating Activities:










    Depreciation and Amortization



    17,392



    14,714



    11,666

    Deferred Income Taxes



    (12,064)



    (152)



    (846)

    Stock-Based Compensation Expense



    3,941



    5,593



    5,974

    Impairment Charges related to Property and Equipment



    4,392





    Inventory Lower of Cost or Market Adjustments



    26,162





    Deconsolidation of Variable Interest Entity



    1,457





    Changes in Operating Assets and Liabilities:










    Merchandise Inventories



    42,773



    (62,140)



    (45,834)

    Accounts Payable



    (21,450)



    21,478



    (15)

    Customer Deposits and Store Credits



    (1,075)



    12,623



    (3,354)

    Prepaid Expenses and Other Current Assets



    (18,385)



    (1,836)



    (257)

    Other Assets and Liabilities



    22,494



    3,436



    8,271

    Net Cash Provided by Operating Activities



    9,204



    57,087



    53,000

    Cash Flows from Investing Activities:










    Purchases of Property and Equipment



    (22,478)



    (71,138)



    (28,585)

    Net Cash Used in Investing Activities



    (22,478)



    (71,138)



    (28,585)

    Cash Flows from Financing Activities:










    Payments for Stock Repurchases



    (295)



    (53,310)



    (34,830)

    Proceeds from the Exercise of Stock Options





    3,150



    10,255

    Excess Tax Benefit from Stock-Based Compensation





    4,004



    17,132

    Borrowings on Revolving Credit Facility



    39,000



    53,000



    Payments on Revolving Credit Facility



    (19,000)



    (53,000)



    Net Cash Provided by (Used in) Financing Activities



    19,705



    (46,156)



    (7,443)

    Effect of Exchange Rates on Cash and Cash Equivalents



    (15)



    (140)



    (505)

    Net Increase (Decrease) in Cash and Cash Equivalents



    6,416



    (60,347)



    16,467

    Cash and Cash Equivalents, Beginning of Year



    20,287



    80,634



    64,167

    Cash and Cash Equivalents, End of Year


    $

    26,703


    $

    20,287


    $

    80,634

     

    Photo - http://photos.prnewswire.com/prnh/20130529/NY21644LOGO

    SOURCE Lumber Liquidators, Inc.


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