Quarterly Report (10-q)

0001396033--12-31Q3false2021P1Y0001396033us-gaap:TreasuryStockMember2021-07-012021-09-300001396033us-gaap:CommonStockMember2021-07-012021-09-300001396033us-gaap:CommonStockMember2021-01-012021-09-300001396033us-gaap:CommonStockMember2020-07-012020-09-300001396033us-gaap:CommonStockMember2020-01-012020-09-300001396033us-gaap:RetainedEarningsMember2021-09-300001396033us-gaap:AdditionalPaidInCapitalMember2021-09-300001396033us-gaap:RetainedEarningsMember2021-06-300001396033us-gaap:AdditionalPaidInCapitalMember2021-06-300001396033us-gaap:RetainedEarningsMember2020-12-310001396033us-gaap:AdditionalPaidInCapitalMember2020-12-310001396033us-gaap:RetainedEarningsMember2020-09-300001396033us-gaap:AdditionalPaidInCapitalMember2020-09-300001396033us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001396033us-gaap:RetainedEarningsMember2020-06-300001396033us-gaap:AdditionalPaidInCapitalMember2020-06-300001396033us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001396033us-gaap:RetainedEarningsMember2019-12-310001396033us-gaap:AdditionalPaidInCapitalMember2019-12-310001396033us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001396033us-gaap:TreasuryStockMember2021-09-300001396033us-gaap:CommonStockMember2021-09-300001396033us-gaap:TreasuryStockMember2021-06-300001396033us-gaap:CommonStockMember2021-06-300001396033us-gaap:TreasuryStockMember2020-12-310001396033us-gaap:CommonStockMember2020-12-310001396033us-gaap:TreasuryStockMember2020-09-300001396033us-gaap:CommonStockMember2020-09-300001396033us-gaap:TreasuryStockMember2020-06-300001396033us-gaap:CommonStockMember2020-06-300001396033us-gaap:TreasuryStockMember2019-12-310001396033us-gaap:CommonStockMember2019-12-310001396033srt:ManagementMemberus-gaap:PerformanceSharesMember2021-01-012021-09-300001396033us-gaap:EmployeeStockOptionMember2021-09-300001396033us-gaap:EmployeeStockOptionMember2020-12-310001396033us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001396033us-gaap:RestrictedStockMember2021-09-300001396033us-gaap:RestrictedStockMember2020-12-310001396033us-gaap:PerformanceSharesMember2021-01-012021-09-300001396033us-gaap:PerformanceSharesMember2020-01-012020-09-300001396033us-gaap:RestrictedStockMember2021-01-012021-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMember2021-07-012021-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMember2021-07-012021-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMember2021-07-012021-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMember2021-07-012021-09-300001396033us-gaap:SalesRevenueProductLineMember2021-07-012021-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMember2021-01-012021-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMember2021-01-012021-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMember2021-01-012021-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMember2021-01-012021-09-300001396033us-gaap:SalesRevenueProductLineMember2021-01-012021-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMember2020-07-012020-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMember2020-07-012020-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMember2020-07-012020-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMember2020-07-012020-09-300001396033us-gaap:SalesRevenueProductLineMember2020-07-012020-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMember2020-01-012020-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMember2020-01-012020-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMember2020-01-012020-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMember2020-01-012020-09-300001396033us-gaap:SalesRevenueProductLineMember2020-01-012020-09-300001396033us-gaap:RevolvingCreditFacilityMember2021-07-012021-09-300001396033ll:LitigationRelatingToAbrasionClaimsMember2021-07-012021-09-300001396033ll:LitigationRelatingToBambooFlooringMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-09-300001396033ll:CashPaymentsMemberll:LitigationRelatingToBambooFlooringMember2020-10-012020-12-310001396033ll:KramerLitigationMattersMember2020-04-012020-06-300001396033ll:LitigationRelatingToBambooFlooringMember2019-12-012019-12-310001396033us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001396033us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001396033country:US2021-09-300001396033us-gaap:RetainedEarningsMember2021-07-012021-09-300001396033us-gaap:RetainedEarningsMember2021-01-012021-09-300001396033us-gaap:RetainedEarningsMember2020-07-012020-09-300001396033us-gaap:RetainedEarningsMember2020-01-012020-09-300001396033ll:ThirdAnnualReviewMemberll:CountervailingDutiesMember2021-09-300001396033ll:ThirdAnnualReviewMemberll:AntidumpingDutiesMember2021-09-300001396033ll:FourthAnnualReviewMemberll:CountervailingDutiesMember2021-09-300001396033ll:FirstAnnualReviewMemberll:AntidumpingDutiesMember2021-09-300001396033ll:FirstAndSecondAnnualReviewMemberll:CountervailingDutiesMember2021-09-300001396033ll:FifthAnnualReviewMemberll:CountervailingDutiesMember2021-09-300001396033ll:CountervailingDutiesMemberus-gaap:OtherCurrentAssetsMember2021-09-300001396033ll:CountervailingDutiesMemberus-gaap:OtherAssetsMember2021-09-300001396033ll:AntidumpingDutiesMemberus-gaap:OtherCurrentAssetsMember2021-09-300001396033ll:AntidumpingDutiesMemberus-gaap:OtherAssetsMember2021-09-300001396033ll:FifthAnnualReviewMemberll:DepositOneMemberll:CountervailingDutiesMember2018-06-300001396033ll:LitigationRelatingToBambooFlooringMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2020-07-012020-09-300001396033ll:GoldLitigationMember2020-01-012020-09-300001396033ll:LitigationRelatingToBambooFlooringMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2018-10-012018-12-310001396033ll:OtherMattersMember2021-01-012021-09-300001396033ll:OtherMattersMember2020-01-012020-09-300001396033ll:KramerLitigationMattersMember2020-01-012020-09-300001396033ll:SecondAnnualReviewMemberll:AntidumpingDutiesMember2020-10-012020-12-310001396033ll:EighthAnnualReviewMemberll:CountervailingDutiesMemberus-gaap:SubsequentEventMember2021-10-310001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMemberus-gaap:OtherNoncurrentLiabilitiesMember2021-09-300001396033ll:SixthAnnualReviewMemberll:CountervailingDutiesMember2021-09-300001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMember2021-09-300001396033ll:SeventhAnnualReviewMemberll:CountervailingDutiesMember2021-09-300001396033ll:SecondAnnualReviewMemberll:AntidumpingDutiesMember2021-09-300001396033ll:CountervailingDutiesMemberus-gaap:OtherCurrentLiabilitiesMember2021-09-300001396033ll:AntidumpingDutiesMemberus-gaap:OtherNoncurrentLiabilitiesMember2021-09-300001396033ll:AntidumpingDutiesMemberus-gaap:OtherCurrentLiabilitiesMember2021-09-300001396033ll:SavidisMember2021-09-300001396033ll:CountervailingDutiesMember2021-09-300001396033ll:SeventhAnnualReviewMemberll:CountervailingDutiesMember2020-12-310001396033ll:SecondAnnualReviewMemberll:AntidumpingDutiesMember2020-12-310001396033ll:ThirdAnnualReviewMemberll:AntidumpingDutiesMember2020-09-300001396033ll:SixthAnnualReviewMemberll:CountervailingDutiesMember2019-12-310001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMember2019-12-310001396033ll:FirstAnnualReviewMemberll:AntidumpingDutiesMember2018-12-310001396033ll:VisnackLitigationMattersMember2021-01-012021-09-3000013960332017-01-012017-12-310001396033ll:MasonMember2021-04-012021-04-300001396033ll:InStoreCreditMemberll:LitigationRelatingToBambooFlooringMember2019-07-012019-09-300001396033ll:CashPaymentsMemberll:LitigationRelatingToBambooFlooringMember2019-07-012019-09-300001396033ll:LitigationRelatingToBambooFlooringMember2019-07-012019-09-300001396033ll:InStoreCreditMemberll:LitigationRelatingToAbrasionClaimsMember2018-01-012018-12-310001396033ll:CashAndOrCommonStockMemberll:LitigationRelatingToAbrasionClaimsMember2018-01-012018-12-310001396033ll:LitigationRelatingToAbrasionClaimsMember2018-01-012018-12-310001396033ll:MasonMemberll:AccrualForLegalMattersAndSettlementsCurrentMember2021-09-300001396033ll:LitigationRelatingToBambooFlooringMemberus-gaap:OtherCurrentLiabilitiesMember2021-09-300001396033ll:LitigationRelatingToAbrasionClaimsMemberll:AccrualForLegalMattersAndSettlementsCurrentMember2021-09-300001396033ll:OtherMattersMember2021-09-300001396033ll:MasonMember2021-09-300001396033ll:LitigationRelatingToAbrasionClaimsMember2021-09-300001396033ll:GoldLitigationMember2021-09-300001396033ll:OtherMattersMember2020-12-310001396033ll:GoldLitigationMember2020-12-310001396033ll:OtherMattersMember2020-09-300001396033ll:LitigationRelatingToAbrasionClaimsMember2020-09-300001396033ll:GoldLitigationMember2020-09-300001396033ll:OtherMattersMember2019-12-310001396033ll:LitigationRelatingToAbrasionClaimsMember2019-12-310001396033ll:KramerLitigationMattersMember2019-12-310001396033ll:GoldLitigationMember2019-12-310001396033us-gaap:RevolvingCreditFacilityMemberll:SecondAmendmentMember2021-05-012021-09-300001396033us-gaap:RevolvingCreditFacilityMemberll:CreditAgreementMember2021-01-012021-04-290001396033us-gaap:LetterOfCreditMemberll:CreditAgreementMember2021-09-300001396033us-gaap:RevolvingCreditFacilityMember2021-09-300001396033us-gaap:RevolvingCreditFacilityMemberll:SecondAmendmentMember2021-01-012021-09-300001396033ll:AntidumpingDutiesMemberus-gaap:OtherExpenseMember2021-01-012021-09-300001396033ll:LitigationRelatingToAbrasionClaimsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-09-300001396033ll:MasonMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-09-300001396033us-gaap:ServiceMember2021-07-012021-09-300001396033us-gaap:ProductMember2021-07-012021-09-300001396033us-gaap:ServiceMember2021-01-012021-09-300001396033us-gaap:ProductMember2021-01-012021-09-300001396033us-gaap:ServiceMember2020-07-012020-09-300001396033us-gaap:ProductMember2020-07-012020-09-300001396033us-gaap:ServiceMember2020-01-012020-09-300001396033us-gaap:ProductMember2020-01-012020-09-3000013960332021-06-3000013960332020-06-3000013960332019-12-310001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-07-012021-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-07-012021-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-07-012021-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-07-012021-09-300001396033us-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-07-012021-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-09-300001396033us-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-07-012020-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-07-012020-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-07-012020-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-07-012020-09-300001396033us-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-07-012020-09-300001396033ll:SolidAndEngineeredHardwoodMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-09-300001396033ll:MoldingsAndAccessoriesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-09-300001396033ll:ManufacturedProductsMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-09-300001396033ll:InstallationAndDeliveryServicesMemberus-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-09-300001396033us-gaap:SalesRevenueProductLineMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-09-3000013960332020-09-3000013960332018-12-310001396033us-gaap:RestrictedStockMember2021-07-012021-09-300001396033us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001396033us-gaap:RestrictedStockMember2021-01-012021-09-300001396033us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001396033us-gaap:RestrictedStockMember2020-07-012020-09-300001396033us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001396033us-gaap:RestrictedStockMember2020-01-012020-09-300001396033us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001396033us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001396033us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001396033us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001396033us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300001396033ll:LitigationRelatingToBambooFlooringMember2021-01-012021-09-300001396033ll:LitigationRelatingToAbrasionClaimsMember2021-01-012021-09-300001396033ll:GoldLitigationMember2021-01-012021-09-300001396033ll:RetroactiveExemptionOnSubsetProductsMember2021-01-012021-09-300001396033ll:IncreaseInTariffsMember2021-01-012021-09-300001396033ll:ImpositionOfTariffsMember2021-01-012021-09-300001396033ll:ExemptionNotRenewedAndTariffsReImposedOnSubsetProductsMember2021-01-012021-09-300001396033ll:SecondAmendmentMember2021-07-012021-09-300001396033ll:MasonMember2021-01-060001396033ll:SeventhAnnualReviewMemberll:DepositTwoMemberll:CountervailingDutiesMember2017-01-012017-12-310001396033ll:SeventhAnnualReviewMemberll:DepositOneMemberll:CountervailingDutiesMember2017-01-012017-12-310001396033ll:FourthAnnualReviewMemberll:DepositTwoMemberll:CountervailingDutiesMember2014-01-012014-12-310001396033ll:FourthAnnualReviewMemberll:DepositOneMemberll:CountervailingDutiesMember2014-01-012014-12-310001396033ll:FirstAndSecondAnnualReviewMemberll:CountervailingDutiesMember2011-04-012012-12-310001396033ll:EighthAnnualReviewMemberll:AntidumpingDutiesMember2021-04-012021-04-300001396033ll:FifthAnnualReviewMemberll:DepositTwoMemberll:AntidumpingDutiesMember2015-12-012016-11-300001396033ll:FifthAnnualReviewMemberll:DepositThreeMemberll:AntidumpingDutiesMember2015-12-012016-11-300001396033ll:FifthAnnualReviewMemberll:DepositOneMemberll:AntidumpingDutiesMember2015-12-012016-11-300001396033ll:FourthAnnualReviewMemberll:DepositTwoMemberll:AntidumpingDutiesMember2014-12-012015-11-300001396033ll:FourthAnnualReviewMemberll:DepositOneMemberll:AntidumpingDutiesMember2014-12-012015-11-300001396033ll:ThirdAnnualReviewMemberll:DepositTwoMemberll:AntidumpingDutiesMember2013-12-012014-11-300001396033ll:ThirdAnnualReviewMemberll:DepositOneMemberll:AntidumpingDutiesMember2013-12-012014-11-300001396033ll:FirstAnnualReviewMemberll:DepositTwoMemberll:AntidumpingDutiesMember2011-05-012012-11-300001396033ll:FirstAnnualReviewMemberll:DepositOneMemberll:AntidumpingDutiesMember2011-05-012012-11-300001396033ll:SeventhAnnualReviewMemberll:AntidumpingDutiesMember2020-01-012020-03-310001396033ll:AntidumpingDutiesMember2020-01-012020-12-310001396033ll:AntidumpingDutiesMember2019-01-012019-12-310001396033ll:EighthAnnualReviewMemberll:CountervailingDutiesMemberus-gaap:SubsequentEventMember2021-10-012021-10-310001396033ll:SeventhAnnualReviewMemberll:CountervailingDutiesMember2020-10-012020-12-310001396033ll:SixthAnnualReviewMemberll:CountervailingDutiesMembersrt:MinimumMember2019-07-012019-09-300001396033ll:SixthAnnualReviewMemberll:CountervailingDutiesMembersrt:MaximumMember2019-07-012019-09-300001396033ll:FifthAnnualReviewMemberll:CountervailingDutiesMembersrt:MinimumMember2018-04-012018-06-300001396033ll:FifthAnnualReviewMemberll:CountervailingDutiesMembersrt:MaximumMember2018-04-012018-06-300001396033ll:EighthAnnualReviewMemberll:CountervailingDutiesMember2018-01-012018-12-310001396033ll:SeventhAnnualReviewMemberll:CountervailingDutiesMember2017-01-012017-12-310001396033ll:SixthAnnualReviewMemberll:DepositTwoMemberll:CountervailingDutiesMember2016-01-012016-12-310001396033ll:SixthAnnualReviewMemberll:DepositOneMemberll:CountervailingDutiesMember2016-01-012016-12-310001396033ll:FifthAnnualReviewMemberll:DepositTwoMemberll:CountervailingDutiesMember2015-01-012015-12-310001396033ll:FifthAnnualReviewMemberll:DepositOneMemberll:CountervailingDutiesMember2015-01-012015-12-310001396033ll:FourthAnnualReviewMemberll:CountervailingDutiesMember2014-01-012014-12-310001396033ll:ThirdAnnualReviewMemberll:CountervailingDutiesMember2013-01-012013-12-310001396033ll:FirstAndSecondAnnualReviewMemberll:CountervailingDutiesMembersrt:MinimumMember2011-04-012012-12-310001396033ll:FirstAndSecondAnnualReviewMemberll:CountervailingDutiesMembersrt:MaximumMember2011-04-012012-12-310001396033ll:EighthAnnualReviewMemberll:AntidumpingDutiesMemberus-gaap:SubsequentEventMember2021-10-012021-10-310001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMembersrt:MaximumMember2021-01-012021-09-300001396033ll:ThirdAnnualReviewMemberll:AntidumpingDutiesMember2020-09-012020-09-300001396033ll:ThirdAnnualReviewMemberll:AntidumpingDutiesMember2020-08-012020-08-310001396033ll:SecondAnnualReviewMemberll:AntidumpingDutiesMember2020-07-012020-09-300001396033ll:SecondAnnualReviewMemberll:AntidumpingDutiesMember2020-01-012020-09-300001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMembersrt:MinimumMember2019-07-012019-09-300001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMembersrt:MaximumMember2019-07-012019-09-300001396033ll:SixthAnnualReviewMemberll:AntidumpingDutiesMembersrt:MinimumMember2019-01-012019-12-310001396033ll:EighthAnnualReviewMemberll:AntidumpingDutiesMember2018-12-012019-11-300001396033ll:FirstAnnualReviewMemberll:AntidumpingDutiesMember2018-04-012018-06-300001396033ll:FirstAnnualReviewMemberll:AntidumpingDutiesMember2018-01-012018-03-310001396033ll:SeventhAnnualReviewMemberll:AntidumpingDutiesMember2017-12-012018-11-300001396033ll:SixthAnnualReviewMemberll:DepositTwoMemberll:AntidumpingDutiesMember2016-12-012017-11-300001396033ll:SixthAnnualReviewMemberll:DepositOneMemberll:AntidumpingDutiesMember2016-12-012017-11-300001396033ll:FifthAnnualReviewMemberll:AntidumpingDutiesMember2015-12-012016-11-300001396033ll:FourthAnnualReviewMemberll:AntidumpingDutiesMember2014-12-012015-11-300001396033ll:FourthAnnualReviewMember2014-12-012015-11-300001396033ll:ThirdAnnualReviewMemberll:AntidumpingDutiesMember2013-12-012014-11-300001396033ll:SecondAnnualReviewMemberll:AntidumpingDutiesMember2012-12-012013-11-300001396033ll:FirstAnnualReviewMemberll:AntidumpingDutiesMember2011-05-012012-11-300001396033ll:SavidisMember2021-04-012021-04-300001396033us-gaap:RevolvingCreditFacilityMemberll:SecondAmendmentMember2021-09-300001396033us-gaap:RevolvingCreditFacilityMemberll:CreditAgreementMember2021-09-300001396033ll:LitigationRelatingToAbrasionClaimsMember2020-12-310001396033ll:LitigationRelatingToAbrasionClaimsMember2018-12-310001396033us-gaap:RevolvingCreditFacilityMemberll:SecondAmendmentMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-05-012021-09-300001396033us-gaap:RevolvingCreditFacilityMemberll:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-04-2900013960332021-09-3000013960332020-12-3100013960332021-07-012021-09-300001396033us-gaap:TreasuryStockMember2021-01-012021-09-300001396033us-gaap:TreasuryStockMember2020-07-012020-09-3000013960332020-07-012020-09-300001396033us-gaap:TreasuryStockMember2020-01-012020-09-3000013960332020-01-012020-09-300001396033ll:SavidisWaitingTimeSubclassMember2021-01-012021-09-300001396033ll:SavidisMember2021-01-012021-09-300001396033ll:MasonMember2021-01-012021-09-3000013960332021-10-2800013960332021-01-012021-09-30xbrli:sharesiso4217:USDxbrli:purell:claimiso4217:USDxbrli:sharesll:statell:store

Table of Contents

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 September 30, 2021

☐ 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)

(800) 366-4204

(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 October 28, 2021, there are 29,088,188 shares of the registrant’s common stock, par value of $0.001 per share, outstanding.

Table of Contents

LUMBER LIQUIDATORS HOLDINGS, INC.

Quarterly Report on Form 10-Q

For the quarter ended September 30, 2021

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	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	32

	Signatures	34

Table of Contents

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements.

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


	September 30,		December 31,
	2021		2020
Assets
Current Assets:
Cash and Cash Equivalents	$	104,211	$	169,941
Merchandise Inventories		224,998		244,409
Prepaid Expenses		10,173		9,370
Tariff Recovery Receivable		—		4,078
Other Current Assets		11,396		10,354
Total Current Assets		350,778		438,152
Property and Equipment, net		95,586		97,557
Operating Lease Right-of-Use		123,526		109,475
Goodwill		9,693		9,693
Deferred Tax Asset		11,583		11,611
Other Assets		8,669		7,860
Total Assets	$	599,835	$	674,348

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts Payable	$	53,093	$	70,543
Customer Deposits and Store Credits		70,221		61,389
Accrued Compensation		9,203		15,347
Sales and Income Tax Liabilities		4,707		5,793
Accrual for Legal Matters and Settlements		34,903		30,398
Operating Lease Liabilities - Current		32,660		33,024
Other Current Liabilities		25,467		25,761
Total Current Liabilities		230,254		242,255
Other Long-Term Liabilities		6,714		13,293
Operating Lease Liabilities - Long-Term		101,964		90,194
Credit Agreement		—		101,000
Total Liabilities		338,932		446,742

Stockholders’ Equity:
Common Stock ($0.001 par value; 35,000 shares authorized; 30,496 and 30,229 shares issued and 29,089 and 28,911 shares outstanding, respectively)		30		30
Treasury Stock, at cost (1,407 and 1,318 shares, respectively)		(145,078)		(142,977)
Additional Capital		226,636		222,628
Retained Earnings		179,315		147,925
Total Stockholders’ Equity		260,903		227,606
Total Liabilities and Stockholders’ Equity	$	599,835	$	674,348

See accompanying notes to condensed consolidated financial statements

Table of Contents

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020

Net Sales
Net Merchandise Sales	$	240,802	$	261,009	$	750,388	$	709,845
Net Services Sales		41,427		34,824		116,675		83,646
Total Net Sales		282,229		295,833		867,063		793,491
Cost of Sales
Cost of Merchandise Sold		144,307		152,530		442,914		419,230
Cost of Services Sold		32,721		26,777		90,626		64,472
Total Cost of Sales		177,028		179,307		533,540		483,702
Gross Profit		105,201		116,526		333,523		309,789
Selling, General and Administrative Expenses		93,165		93,374		291,767		271,869
Operating Income		12,036		23,152		41,756		37,920
Other Expense (Income)		18		685		(252)		2,709
Income Before Income Taxes		12,018		22,467		42,008		35,211
Income Tax Expense		3,239		6,964		10,618		4,834
Net Income	$	8,779	$	15,503	$	31,390	$	30,377
Net Income per Common Share—Basic	$	0.30	$	0.54	$	1.08	$	1.05
Net Income per Common Share—Diluted	$	0.30	$	0.53	$	1.06	$	1.04
Weighted Average Common Shares Outstanding:
Basic		29,082		28,859		28,984		28,801
Diluted		29,455		29,334		29,494		29,075

See accompanying notes to condensed consolidated financial statements

Table of Contents

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020


Net Income	$	8,779	$	15,503	$	31,390	$	30,377
Other Comprehensive Income:
Foreign Currency Translation Adjustments		—		247		—		519
Total Other Comprehensive Income		—		247		—		519
Comprehensive Income	$	8,779	$	15,750	$	31,390	$	30,896

See accompanying notes to condensed consolidated financial statements

Table of Contents

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

July 1, 2020	28,852	$	30	1,309	$	(142,752)	$	219,618	$	101,372	$	(1,308)	$	176,960
Stock-Based Compensation Expense	—		—	—		—		1,146		—		—		1,146
Exercise of Stock Options	11		—	—		—		205		—		—		205
Release of Restricted Shares	8		—	—		—		—		—		—		—
Common Stock Repurchased	—		—	4		(75)		—		—		—		(75)
Translation Adjustment	—		—	—		—		—		—		247		247
Net Income	—		—	—		—		—		15,503		—		15,503
September 30, 2020	28,871	$	30	1,313	$	(142,827)	$	220,969	$	116,875	$	(1,061)	$	193,986

July 1, 2021	29,063	$	30	1,392	$	(144,788)	$	225,287	$	170,536	$	—	$	251,065
Stock-Based Compensation Expense	—		—	—		—		1,349		—		—		1,349
Release of Restricted Shares	26		—	—		—		—		—		—		—
Common Stock Repurchased	—		—	15		(290)		—		—		—		(290)
Net Income	—		—	—		—		—		8,779		—		8,779
September 30, 2021	29,089	$	30	1,407	$	(145,078)	$	226,636	$	179,315	$	—	$	260,903


													Total
	Common Stock			Treasury Stock			Additional		Retained				Stockholders'
	Shares	Value		Shares	Value		Capital		Earnings		AOCL		Equity

January 1, 2020	28,714	$	30	1,245	$	(142,314)	$	218,616	$	86,498	$	(1,580)	$	161,250
Stock-Based Compensation Expense	—		—	—		—		2,112		—		—		2,112
Exercise of Stock Options	14		—	—		—		241		—		—		241
Release of Restricted Shares	143		—	—		—		—		—		—		—
Common Stock Repurchased	—		—	68		(513)		—		—		—		(513)
Translation Adjustment	—		—	—		—		—		—		519		519
Net Income	—		—	—		—		—		30,377		—		30,377
September 30, 2020	28,871	$	30	1,313	$	(142,827)	$	220,969	$	116,875	$	(1,061)	$	193,986

January 1, 2021	28,911	$	30	1,318	$	(142,977)	$	222,628	$	147,925	$	—	$	227,606
Stock-Based Compensation Expense	—		—	—		—		3,945		—		—		3,945
Exercise of Stock Options	6		—	—		—		63		—		—		63
Release of Restricted Shares	172		—	—		—		—		—		—		—
Common Stock Repurchased	—		—	89		(2,101)		—		—		—		(2,101)
Net Income	—		—	—		—		—		31,390		—		31,390
September 30, 2021	29,089	$	30	1,407	$	(145,078)	$	226,636	$	179,315	$	—	$	260,903

See accompanying notes to condensed consolidated financial statements

Table of Contents

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


	Nine Months Ended September 30,
	2021		2020

Cash Flows from Operating Activities:
Net Income	$	31,390	$	30,377
Adjustments to Reconcile Net Income:
Depreciation and Amortization		13,985		13,327
Deferred Income Taxes Provision		28		547
Income on Vouchers Redeemed for Legal Settlements		(1,183)		—
Stock-Based Compensation Expense		3,945		2,112
Provision for Inventory Obsolescence Reserves		1,784		2,564
Impairment of Operating Lease Right-of-Use		—		935
Loss (Gain) on Disposal of Fixed Assets		31		(401)
Changes in Operating Assets and Liabilities:
Merchandise Inventories		15,683		46,057
Accounts Payable		(17,277)		31,308
Customer Deposits and Store Credits		8,832		22,165
Accrued Compensation		(6,144)		2,530
Tariff Recovery Receivable		4,078		19,509
Prepaid Expenses and Other Current Assets		(792)		821
Accrual for Legal Matters and Settlements		7,733		2,183
Payments for Legal Matters and Settlements		(101)		(4,903)
Deferred Rent Payments		(2,154)		4,709
Other Assets and Liabilities		(9,558)		6,922
Net Cash Provided by Operating Activities		50,280		180,762

Cash Flows from Investing Activities:
Purchases of Property and Equipment		(12,276)		(9,822)
Other Investing Activities		58		949
Net Cash Used in Investing Activities		(12,218)		(8,873)

Cash Flows from Financing Activities:
Borrowings on Credit Agreement		—		45,000
Payments on Credit Agreement		(101,000)		(26,000)
Common Stock Repurchased		(2,101)		(513)
Other Financing Activities		(691)		7
Net Cash (Used in) Provided by Financing Activities		(103,792)		18,494
Effect of Exchange Rates on Cash and Cash Equivalents		—		(29)
Net (Decrease) Increase in Cash and Cash Equivalents		(65,730)		190,354
Cash and Cash Equivalents, Beginning of Period		169,941		8,993
Cash and Cash Equivalents, End of Period	$	104,211	$	199,347

Supplemental disclosure of non-cash operating activities:
Relief of Inventory for Vouchers Redeemed for Legal Settlements	$	1,944	$	—

Supplemental disclosure of non-cash operating and financing activities:
Tenant Improvement Allowance for Leases	$	(1,053)	$	(676)

See accompanying notes to condensed consolidated financial statements

Table of Contents

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, “LL Flooring” or 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, water-resistant 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 September 30, 2021, the Company’s network of 422 stores spanned 47 states in the United States (“U.S.”). 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 digital platform, 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, 2020.

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 nine months ended September 30, 2021 are not necessarily indicative of future results to be expected for the full year due to a number of factors, including supply chain, seasonality, tariffs, and general economic conditions, as well as the uncertainty and ongoing impact of the COVID-19 pandemic that may impact supply chain and/or sales for the remainder of fiscal 2021.

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 approximates fair value because of the short-term nature of these items.

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. The Company is subject to risks associated with obtaining products from abroad, including disruptions or delays in production, shipments, supply chain, delivery or processing, including due to the COVID-19 pandemic. The Company continues to execute contingency plans to minimize ongoing disruptions to supply chain, domestic distribution centers and store operations.

Table of Contents

Included in merchandise inventories are tariff-related costs, including Section 301 tariffs on certain products imported from China in recent years. A subset of these imports for certain click vinyl and other engineered products (the “Subset Products”) received an exemption that was made retroactive to the beginning of the Section 301 Tariffs for a period of time. The Company has deployed strategies to mitigate tariffs and improve gross margin, primarily through adjusting its pricing and promotion strategies and alternative country sourcing. The Company continues to monitor market pricing and promotional strategies to inform and guide its decisions. The following chart provides a timeline and tariff levels for the key events related to Section 301 Tariffs.


		Section 301 tariff		Corresponding approximate
Event	Timing	level on imports	Tariff level on	percentage of Company's
		from China	Subset Products	merchandise subject to tariff
Imposition of Tariffs	September 2018	10%	10% then 0%¹	48%
Increase in Tariffs	June 2019	25%	25% then 0%¹	44%
Retroactive Exemption on Subset Products¹	November 2019	25%	0%	10%
Exemption Not Renewed and Tariffs Re-imposed on Subset Products	August 2020	25%	25%	32%
	September 30, 2021	25%	25%	22%

1	On November 7, 2019, the U.S. Trade Representative granted a retroactive exclusion to September 2018 on Subset Products as defined in the Section 301 Tariffs section above bringing the rate to 0%.

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 in the U.S. at September 30, 2021. In addition, both the merchandise and services can be ordered through a call center and from the Company’s digital platform, 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 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.”

Table of Contents

The following table shows the activity in this account for the periods noted:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Customer Deposits and Store Credits, Beginning Balance	$	(67,731)	$	(55,492)	$	(61,389)	$	(41,571)
New Deposits		(304,604)		(324,726)		(935,576)		(870,052)
Recognition of Revenue		282,229		295,833		867,063		793,491
Sales Tax included in Customer Deposits		16,936		18,389		52,708		49,932
Other		2,949		2,260		6,973		4,464
Customer Deposits and Store Credits, Ending Balance	$	(70,221)	$	(63,736)	$	(70,221)	$	(63,736)

Subject to limitations under the Company’s policy, return of unopened merchandise is accepted for 90 days, subject to the discretion of the store manager. 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 September 30, 2021. 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 September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
Manufactured Products ¹	$	129,543	46	%	$	135,119	46	%	$	401,373	46	%	$	366,632	46	%
Solid and Engineered Hardwood		69,090	24	%		80,643	27	%		220,887	26	%		219,444	28	%
Moldings and Accessories and Other		42,169	15	%		45,247	15	%		128,128	15	%		123,769	16	%
Installation and Delivery Services		41,427	15	%		34,824	12	%		116,675	13	%		83,646	10	%
Total	$	282,229	100	%	$	295,833	100	%	$	867,063	100	%	$	793,491	100	%

¹ Includes engineered vinyl plank, laminate, vinyl 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 customers, certain costs of quality control procedures, warranty and customer satisfaction costs, inventory adjustments including obsolescence and shrinkage, and costs to produce and ship 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. This warranty reserve was $1.0 million at September 30, 2021. 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.

Table of Contents

Vendor allowances mostly consist of volume rebates and 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.

Note 3. Stockholders’ Equity

Net Income per Common Share

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net Income	$	8,779	$	15,503	$	31,390	$	30,377
Weighted Average Common Shares Outstanding—Basic		29,082		28,859		28,984		28,801
Effect of Dilutive Securities:
Common Stock Equivalents		373		475		510		274
Weighted Average Common Shares Outstanding—Diluted		29,455		29,334		29,494		29,075
Net Income per Common Share—Basic	$	0.30	$	0.54	$	1.08	$	1.05
Net Income per Common Share—Diluted	$	0.30	$	0.53	$	1.06	$	1.04

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		Nine Months Ended
	September 30,		September 30,
	2021	2020	2021	2020
Stock Options	222	112	167	390
Restricted Shares	280	110	100	113

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, 2021	554	872
Granted	109	265
Options Exercised/RSAs Released	(6)	(261)
Forfeited	(20)	(43)
Options Outstanding/Nonvested RSAs, September 30, 2021	637	833

The Company granted a target of 47,768 performance-based RSAs with a grant date fair value of $1.1 million during the nine months ended September 30, 2021 and a target of 94,591 performance-based RSAs with a grant date fair value of $0.9 million during the nine months ended September 30, 2020. The performance-based RSAs in both years were awarded to certain members of senior management in connection with the achievement of specific key financial metrics that will be measured over separate respective three-year periods and which will vest at the end of each respective three-year period if the respective performance conditions are met. In addition, the number of 2020 performance-based awards that will ultimately vest is also contingent upon the results of a relative total shareholder return multiple by the end of year three. 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.

Table of Contents

Note 5. Credit Agreement

The Company has a credit agreement (the “Credit Agreement”) with Bank of America, N.A. and Wells Fargo Bank, N.A. (the “Lenders”). On April 30, 2021, the Company entered into a Second Amendment to the Credit Agreement (the “Second Amendment”) with the Lenders. The execution of the Second Amendment, among other things, terminated the FILO Term Loans and converted those commitments to the Revolving Credit Facility. The total size of the Credit Agreement remained at $200 million, and the Company has an option to the increase the Revolving Credit Facility to a maximum total amount of $250 million. The maturity date of the Credit Agreement was extended to April 30, 2026.

The Revolving Credit Facility is 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 credit card receivables, and the Company’s East Coast 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 Second Amendment decreased the margin for LIBOR Rate Loans (as defined in the Second Amendment) to a range of 1.25% to 1.75% over the applicable LIBOR Rate with respect to revolving loans (as defined in the Second Amendment) depending on the Company’s’ average daily excess borrowing availability, a decrease of 1.25% from rates prior to the Second Amendment. As previously stated, the FILO Term Loans were terminated by this Second Amendment. The amendment decreased the LIBOR Rate Floor from 1.00% to 0.25%. The Second Amendment also decreased the unused commitment fee of 0.50% per annum to 0.25% per annum on the average daily unused amount of the Revolving Credit Facility during the most recently completed calendar quarter. As of September 30, 2021, had the Company re-borrowed, the Revolving Credit Facility would have carried an interest rate subject to the terms stated directly above.

The Credit Agreement contains a fixed charge coverage ratio covenant that becomes effective only when specified availability under the Revolving Credit Facility falls below the greater of $17.5 million or 10% of the Combined Loan Cap (as defined in the Credit Agreement).

Except as set forth in the Second Amendment, all other terms and conditions of the Credit Agreement remain in place.

The Company repaid all $101.0 million of borrowings during the second quarter of 2021. As of September 30, 2021, there was no amount outstanding under the Revolving Credit Facility. The Company had $3.0 million in letters of credit which reduces its availability. As of September 30, 2021, there was $128.0 million of availability under the Revolving Credit Facility.

Note 6. Income Taxes

The Company calculates its quarterly tax provision pursuant to the guidelines in Accounting Standards Codification ("ASC") 740-270 "Income Taxes." Generally, ASC 740-270 requires companies to estimate the annual effective tax rate for current year ordinary income. The estimated annual effective tax rate represents the best estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision and is adjusted for discrete items that occur within the period. This process has been employed in 2021. Due to disruption related to the COVID-19 pandemic in 2020, the Company applied the actual year-to-date effective tax rate for the tax provision in the three and nine-month periods ended September 30, 2020.

For the three months ended September 30, 2021, the Company recognized income tax expense of $3.2 million, which represented an effective tax rate of 27.0%. For the three months ended September 30, 2020, the Company recognized income tax expense of $7.0 million, which represented an effective tax rate of 31.0%.

Table of Contents

For the nine months ended September 30, 2021, the Company recognized income tax expense of $10.6 million, which represented an effective tax rate of 25.3%. For the nine months ended September 30, 2020, the Company recognized an income tax expense of $4.8 million, which represented an effective tax rate of 13.7%. The variability of the tax rate between the two periods is due to the use of the effective tax rate method in 2021 compared to discrete provision in 2020, including the favorable impact of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The Company has a valuation allowance recorded against certain of its net deferred tax assets of $5.6 million as of September 30, 2021 because the jurisdiction and nature of the assets makes realization of these deferred tax assets uncertain. The Company intends to maintain this valuation allowance on its deferred tax assets until there is sufficient evidence to support the realizability of those deferred tax assets or time lapses without opportunity to realize those assets.

Note 7. Commitments and Contingencies

The following chart shows the activity related to the Balance Sheet “Accrual for Legal Matters and Settlements”. The matters themselves are described in greater detail in the paragraphs that follow the chart.


		January 1, 2021								September 30, 2021
Litigation Matter		Accrual for Legal Matters								Accrual for Legal Matters
Description		and Settlements		Accruals		Settlement Payments		Vouchers Redeemed		and Settlements
MDL	$	14,000	$	—	$	—	$	(2,781)	$	11,219	¹
Gold		16,000		—		—		(346)		15,654	¹
Mason		—		7,000		—		—		7,000
Other Matters		398		733		(101)		—		1,030
	$	30,398	$	7,733	$	(101)	$	(3,127)	$	34,903

		January 1, 2020								September 30, 2020
Litigation Matter		Accrual for Legal Matters								Accrual for Legal Matters
Description		and Settlements		Accruals		Settlement Payments		Vouchers Redeemed		and Settlements
MDL	$	35,500	$	—	$	—	$	—	$	35,500
Gold		27,000		2,000		—		—		29,000
Kramer		4,750		—		(4,750)		—		—
Other Matters		221		183		(153)		—		251
	$	67,471	$	2,183	$	(4,903)	$	—	$	64,751

1	The remaining accrual will be fulfilled by redeeming vouchers as discussed below.

Employment Cases

Mason Lawsuit

In August 2017, Ashleigh Mason, Dan Morse, Ryan Carroll and Osagie Ehigie filed a purported class action lawsuit in the United States District Court for the Eastern District of New York on behalf of all current and former store managers, store managers in training, and similarly situated current and former employees (collectively, the “Mason Putative Class Employees”) alleging that the Company violated the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) by classifying the Mason Putative Class Employees as exempt. The alleged violations include failure to pay for overtime work. The plaintiffs sought certification of the Mason Putative Class Employees for (i) a collective action covering the period beginning three years prior to the filing of the complaint (plus a tolling period) through the disposition of this action for the Mason Putative Class Employees nationwide in connection with FLSA and

Table of Contents

(ii) a class action covering the period beginning six years prior to the filing of the complaint (plus a tolling period) through the disposition of this action for members of the Mason Putative Class Employees who currently are or were employed in New York in connection with NYLL. The plaintiffs did not quantify any alleged damages but, in addition to attorneys’ fees and costs, the plaintiffs seek class certification, unspecified amounts for unpaid wages and overtime wages, liquidated and/or punitive damages, declaratory relief, restitution, statutory penalties, injunctive relief and other damages.

In November 2018, the plaintiffs filed a motion requesting conditional certification for all store managers and store managers in training who worked within the federal statute of limitations period. In May 2019, the magistrate judge granted plaintiffs’ motion for conditional certification. On January 6, 2021, the magistrate judge ruled in favor of a motion by the Company to exclude from the Mason Putative Class the claims of 55 opt-in plaintiffs who participated in a prior California state class-action settlement that released all claims arising from the same facts on which the Mason matter is based.

In April 2021, the Company entered into a Memorandum of Understanding (“Mason MOU”) with counsel for the lead plaintiffs in the Mason matter. Under the terms of the Mason MOU, the Company will pay up to $7.0 million to settle the claims asserted in the Mason matter on behalf of all Mason Putative Class Employees who (i) opted-in to the collective action (“Collective Members”) and (ii) are currently or were employed in New York and did not previously file an opt-in notice to participate in the collective action (the “New York Non Opt-Ins”). The New York Non Opt-Ins will have an opportunity to file an opt-in notice to participate in the settlement. To the extent that a New York Non Opt-In does not subsequently file such a notice, then the amount apportioned to that claim shall revert to the Company. In addition, any checks issued to the Collective Members and the New York Non Opt-Ins which are not cashed within one hundred eighty days will revert to the Company. The Mason MOU is subject to certain contingencies, including court approval of the definitive settlement agreement. There can be no assurance that a settlement will be approved or as to the ultimate outcome of the litigation. If a final, court approved settlement is not reached, the Company will defend the matter vigorously and believes there are meritorious defenses and legal standards that must be met for success on the merits. If the parties are unable to finalize the settlement, the Mason matter could have a material adverse effect on the Company’s financial condition and results of operations. As a result of these developments, the Company determined that a probable loss has been incurred and has accrued within SG&A a $7.0 million liability during the first quarter of 2021. As of September 30, 2021, the remaining accrual related to this matter is $7.0 million, which has been included in the caption “Accrual for Legal Matters and Settlements” on its condensed consolidated balance sheet.

Savidis Lawsuit

On April 9, 2020, Lumber Liquidators was served with a lawsuit filed by Tanya Savidis, on behalf of herself and all others similarly situated (collectively, the “Savidis Plaintiffs”). Ms. Savidis filed a purported class action lawsuit in the Superior Court of California, County of Alameda on March 6, 2020, on behalf of all current and former Lumber Liquidators employees employed as non-exempt employees. The complaint alleges violation of the California Labor Code including, among other items, failure to pay minimum wages and overtime wages, failure to provide meal periods, failure to permit rest breaks, failure to reimburse business expenses, failure to provide accurate wage statements, failure to pay all wages due upon separation within the required time, and engaging in unfair business practices (the “Savidis matter”). On or about May 22, 2020, the Savidis Plaintiffs provided notice to the California Department of Industrial Relations requesting they be permitted to seek penalties under the California Private Attorney General Act for the same substantive alleged violations asserted in the Complaint. The Savidis Plaintiffs seek certification of a class action covering the prior four-year period prior to the filing of the complaint to the date of class certification (the “California Employee Class”), as well as a subclass of class members who separated their employment within three years of the filing of the suit to the date of class certification (the “Waiting Time Subclass”). The Savidis Plaintiffs did not quantify any alleged damages but, in addition to attorneys’ fees and costs, seek statutory penalties, unspecified amounts for unpaid wages, benefits, and penalties, interest, and other damages.

In December 2020, the Company began contacting individuals who constitute the Savidis Plaintiffs and offered individual settlements in satisfaction of their claims. In April 2021, the Company entered into a Memorandum of Understanding (“Savidis MOU”) with counsel for the lead plaintiffs in the Savidis matter. Under the terms of the Savidis MOU, the Company will pay $0.9 million reduced by a credit of $0.1 million for amounts already paid to the

Table of Contents

individuals who accepted the Company’s prior settlement offer. The Company accrued an additional $675 thousand related to this matter in the first quarter 2021. The Savidis MOU is subject to certain contingencies, including court approval of the definitive settlement agreement. There can be no assurance that a settlement will be approved or as to the ultimate outcome of the litigation. If a final, court approved settlement is not reached, the Company will defend the matter vigorously and believes there are meritorious defenses and legal standards that must be met for success on the merits. If the parties are unable to finalize the settlement, the Savidis matter could have a material adverse effect on the Company’s financial condition and results of operations.

Visnack Lawsuit

On June 29, 2020, Michael Visnack, on behalf of himself and all others similarly situated (collectively, the “Visnack Plaintiffs”) filed a purported class action lawsuit in the Superior Court of California, County of San Diego, on behalf of all current and former store managers, and others similarly situated. The Complaint alleges violation of the California Labor Code including, among other items, failure to pay wages and overtime, wage statement violations, meal and rest break violations, unpaid reimbursements and waiting time, and engaging in unfair business practices (the “Visnack matter”). The Visnack Plaintiffs seek certification of a class period beginning September 20, 2019, through the date of Notice of Class Certification, if granted. The Visnack Plaintiffs did not quantify any alleged damages but, in addition to attorneys’ fees and costs, they seek unspecified amounts for each of the causes of action such as unpaid wages and overtime wages, failure to provide meal periods and rest breaks, payroll record and wage statement violations, failure to reimburse expenses and waiting time, liquidated and/or punitive damages, declaratory relief, restitution, statutory penalties, injunctive relief and other damages.

On December 14, 2020, the court ruled in favor of a motion by the Company to compel arbitration for Michael Visnack under the existing agreement between the Company and Mr. Visnack. The court declined to outright dismiss the putative class claims but stayed the putative class claims and Private Attorneys General Act claims pending arbitration. The court denied plaintiff’s request to conduct discovery. In the first quarter of 2021, the Company received notice that Mr. Visnack has filed an arbitration claim, which the Company intends to defend. Mr. Visnack is a Collective Member of the Mason Putative Class and will have the opportunity to decide whether to participate in the Mason settlement and release his claims against the Company, in which case he would be removed as the lead Plaintiff in the Visnack matter. In December 2020, the Company began contacting individuals who constitute the purported class in the Visnack matter and has offered individual settlements in satisfaction of their claims. To the extent individuals accepted these settlement offers, they have released the Company from the claims and been removed from the purported class. As of March 31, 2021, the Company had reached agreement with a portion of the purported class incurring less than $50 thousand in fees, taxes, and other costs. The Company included those amounts in “Other Matters” in the chart above.

The Company is evaluating the Visnack Putative Class Employees' claims and intends to defend itself vigorously in this matter. Given the uncertainty of litigation, the preliminary stage of the case and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss, if any, that may result from this action and therefore no accrual has been made related to this. Any such losses could, potentially, have a material adverse effect, individually or collectively, on the Company’s results of operations, financial condition and liquidity.

Kramer lawsuit

In November 2017, Robert J. Kramer, on behalf of himself and all others similarly situated (collectively, the “Kramer Plaintiffs”) filed a purported class action lawsuit in the Superior Court of California, County of Sacramento on behalf of all current and former store managers, all others with similar job functions and/or titles and all current and former employees classified as non-exempt or incorrectly classified as exempt and who worked for the Company in the State of California alleging violation of the California Labor Code including, among other items, failure to pay wages and overtime and engaging in unfair business practices (the “Kramer matter”). The Company reached settlement for this matter for $4.75 million in the third quarter of 2019 and paid that amount to the settlement administrator in the second quarter of 2020 for distribution to class members.

Table of Contents

Antidumping and Countervailing Duties Investigation

In October 2010, a conglomeration of domestic manufacturers of multilayered wood flooring (“Petitioners”) filed a petition seeking the imposition of antidumping (“AD”) and countervailing duties (“CVD”) with the United States Department of Commerce (“DOC”) and the United States International Trade Commission (“ITC”) against imports of multilayered wood flooring from China. This ruling applies to companies importing multilayered wood flooring from Chinese suppliers subject to the AD and CVD orders. The Company’s multilayered wood flooring imports from China accounted for approximately 4% and 6% of its flooring purchases in 2020 and 2019, respectively.

As part of its processes in these proceedings, the DOC conducts annual reviews of the AD and CVD rates. In such cases, the DOC will issue preliminary rates that are not binding and are subject to comment by interested parties. After consideration of the comments received, the DOC will issue final rates for the applicable period, which may lag by a year or more. At the time of import, the Company makes deposits at the then prevailing rate, even while the annual review is in process. When rates are declared final by the DOC, the Company accrues a receivable or payable depending on where that final rate compares to the deposits it has made. The Company and/or the domestic manufacturers can appeal the final rate for any period and can place a hold on final settlement by U.S. Customs and Border Protection while the appeals are pending.

The Company as well as other involved parties have appealed many of the final rate determinations. Certain of those appeals are pending and, at times, have resulted in delays in settling the shortfalls and refunds shown in the table below. Because of the length of time for finalization of rates as well as appeals, any subsequent adjustment of AD and CVD rates typically flows through a period different from those in which the inventory was originally purchased and/or sold.

Results by period for the Company are shown below. The column labeled ‘September 30, 2021 Receivable/Liability Balance’ represents the amount the Company would receive or pay (net of any collections or payments) as the result of subsequent adjustment to rates whether due to finalization by the DOC or because of action of a court based on appeals by various parties. It does not include any initial amounts paid for AD or CVD in the current period at the in-effect rate at that time.

The Company recorded net interest income related to antidumping of $1.8 million for the nine months ended September 30, 2021, with the amount included in other expense on the condensed consolidated statements of operations. The estimated associated interest payable and receivable for each period is not included in the table below but is included in the same financial statement line item on the Company’s condensed consolidated balance sheet as the associated liability and receivable balance for each period.

Table of Contents


Review		Rates at which		September 30, 2021
Period	Period Covered	Company	Final Rate	Receivable/Liability
		Deposited		Balance
Antidumping
1	May 2011 through	6.78% and 3.3%	0.73%¹	$1.3 million
	November 2012			receivable¹

LL

LL Flooring News