RICHMOND, Va., Feb. 25, 2020 /PRNewswire/ -- Lumber Liquidators (NYSE: LL), a leading specialty retailer of hard-surface flooring in North America, today announced financial results for the fourth quarter and full year ended December 31, 2019.

(PRNewsfoto/Lumber Liquidators)

"During the quarter, we made continued progress implementing our transformational plan designed to reinvigorate our brand and position us to deliver exceptional value in the hard-surface flooring marketplace," said Interim President and Chief Customer Experience Officer Charles Tyson.  "Comparable store sales grew slightly in the quarter, and profitability improved significantly, in large part due to the tariff exclusions announced by the U.S. Trade Representative in November."

"Reflecting on the full year, 2019 was especially dynamic with an ever-changing tariff environment," Tyson continued.  "Our tariff mitigation efforts in 2019, coupled with the exclusions announced in November, allowed us to substantially improve gross margins while remaining focused on delivering value to customers.  As we enter 2020, we remain focused on three key areas – delivering enhanced profitability, driving traffic to our stores and online, and improving the customer experience."

Fourth Quarter Results

Net sales for the fourth quarter of 2019 increased $4.9 million, or 1.8%, to $274 million as compared to the fourth quarter of 2018.  Comparable store sales increased 0.4% as compared to the fourth quarter of 2018 driven by sales growth in the vinyl plank category offset, in part, by weakness in bamboo and laminate. The Company opened two new stores and closed two stores in the fourth quarter of 2019.

Gross profit increased 17% in the fourth quarter of 2019 to $112 million as compared to $96 million in the comparable period in 2018. Gross margin expanded to 40.9% in the fourth quarter of 2019 from 35.7% in the fourth quarter of 2018 primarily due to the retroactive exclusion of tariffs on certain flooring products imported from China discussed under "Tariff Recovery" below.  The fourth quarter of 2019 was unfavorably impacted by countervailing duty rate changes and the fourth quarter of 2018 was favorably impacted by classification adjustments related to the Harmonized Tariff Schedule ("HTS"). Excluding these items as shown on the table that follows, Adjusted Gross Profit (a non-GAAP measure) increased by $18 million and Adjusted Gross Margin (a non-GAAP measure) improved to 41% this quarter from 35.1% in the fourth quarter of 2018. As noted, the margin increase was primarily driven by the retroactive tariff exclusions.  The period was also favorably impacted by a larger mix of higher-margin manufactured products, reduced discounting in the stores, merchandising cost-out efforts, and selective retail price increases earlier in 2019.  See "Non-GAAP and Other Information" below for a discussion of our use of non-GAAP items and a reconciliation of non-GAAP results.

Selling, general and administrative ("SG&A") expenses decreased 39% in the fourth quarter of 2019 to $93 million from $151 million in the comparable period in 2018.  SG&A in both quarters included incremental legal as well as other costs and credits related to lawsuits, investigations and certain other legal matters, with the most substantial being $61 million in accruals related to legal settlements recorded in the fourth quarter of 2018. Adjusted SG&A (a non-GAAP measure) increased $5.4 million to 33.9% as a percentage of sales, 130 basis points higher compared to the fourth quarter of 2018, primarily due to higher advertising, additional costs related to six net new stores compared to the fourth quarter a year ago, higher year-over-year incentive compensation and equity accruals, and costs related to the corporate headquarters relocation that occurred in fourth quarter of 2019.

Operating income was $19 million for the fourth quarter of 2019 compared to an operating loss of $55 million for the fourth quarter of 2018. Adjusted Operating Income (a non-GAAP measure) was $19 million for the fourth quarter of 2019 compared to $6.7 million for the fourth quarter of 2018.  The most significant driver of the increase was the impact on Adjusted Gross Margin from the retroactive exclusion of tariff on certain flooring products as well as additional efforts to enhance gross profit, partially offset by an increase in Adjusted SG&A.

Income tax expense was $2.4 million for the fourth quarter of 2019 compared to income tax expense of $0.4 million for the fourth quarter of 2018.  The increase was driven by higher taxable income leading to the complete depletion of the Company's Federal net operating losses.

Net income for the fourth quarter of 2019 was $16 million, or $0.57 per diluted share, compared to a net loss of $57 million, or $1.99 per diluted share, for the fourth quarter of 2018.  Adjusted Earnings and Adjusted EPS (non-GAAP measures) for the fourth quarter of 2019 were $16 million and $0.56 per diluted share, compared to $4.7 million and $0.17 per diluted share, for the fourth quarter of 2018.

As of December 31, 2019, the Company had $57 million outstanding under its revolving credit facility and $25 million outstanding under its FILO Term Loan, which, collectively, is a $7.5 million decrease from the end of the third quarter 2019. As of December 31, 2019, the Company had $111 million in liquidity, comprised of $9 million of cash and cash equivalents and $102 million of availability under the Credit Agreement.

Full-year Results

Net sales increased $8 million, or 0.7%, to $1,093 million in 2019 from $1,085 million in 2018, which includes a $19 million increase in non-comparable store net sales partially offset by a decrease of $11 million, or 1.0%, in comparable store net sales.  Net services sales (install and freight) increased 6.1% over the prior year while net merchandise sales remained flat. The Company opened 11 new stores in 2019, closed 5, and as of December 31, 2019, operated 419 stores in the United States and Canada.

Gross margin in 2019 increased to 36.9% from 36.2% in 2018, and when excluding items in the table that follows, Adjusted Gross Margin (a non-GAAP measure) increased to 37% in 2019 from 35.6% in 2018.  This 140 basis point improvement was due to a larger mix of higher-margin manufactured products, reduced discounting in the stores, merchandising cost-out efforts, and selective retail price increases. The improvement in Adjusted Gross Margin was achieved despite higher tariff-related costs and an increased mix of lower-margin installation sales.

SG&A expenses decreased as a percentage of net sales to 35.4% in 2019, compared to 40.9% in 2018.  When excluding items in the table that follows, Adjusted SG&A as a percentage of net sales (a non-GAAP measure) was 34.7% in 2019, an increase of 100 basis points from 33.7% in 2018.  The increase in Adjusted SG&A was driven by a combination of higher payroll and occupancy costs, which are primarily related to the 11 new stores opened this year, increases in IT expense, costs related to the headquarters move, and higher advertising.

Operating income was $17 million in 2019, compared to an operating loss of $51 million in 2018, heavily influenced by certain legal settlements. When excluding items in the table that follows, Adjusted Operating Income (a non-GAAP measure) was $25 million, with Adjusted Operating Margin of 2.3%, in 2019, compared to $20 million, or 1.9%, in 2018.  The primary driver of the increase was the growth in gross margin due to tariff mitigation efforts.

Income tax expense was $3.3 million in 2019 compared to income tax expense of $1 million in 2018. 

Net income was $9.7 million, or $ 0.34 per diluted share, in 2019 compared to a net loss of $54 million, or $1.90 per diluted share, in 2018.   2019 benefited from actions taken to improve gross margin while 2018 was adversely affected by legal settlements and other legal costs.

Tariff Recovery

On November 7, 2019 the United States Trade Representative ruled on a request made by certain interested parties, including the Company, and retroactively excluded certain flooring products imported from China from the Section 301 tariffs implemented at 10% beginning in September 2018 and escalating to 25% in June 2019.  The granted exclusion applies retroactively from the date the tariffs were originally implemented on September 24, 2018 through August 7, 2020.  The Company recognized approximately $11 million of operating income in the fourth quarter of 2019 related to recoveries associated with relevant products already sold through November 2019, net of certain other associated costs.  The Company also reduced the carrying cost of inventory by approximately $12 million related to relevant products held for sale and recorded a receivable of $25 million from U.S. Customs related to anticipated recoveries and expects to receive payments throughout the first half of 2020.

Commentary Regarding the Coronavirus

The Company obtains nearly half of its merchandise from Asia and most of that is sourced from China.  As such, the Company is closely monitoring the Coronavirus situation including the actions taken by authorities to combat the spread of the virus, which includes extended quarantines and restrictions on travel of both people and goods.  The near-term risk is the potential disruption to the Company's supply chain.  The Company is currently unable to predict the full impact of these potential disruptions, how and in what manner competitors will be affected, or the reaction of customers.  Merchandise on hand and already in route should allow the Company to avoid a material impact in the first quarter of 2020.  However, depending on the length and severity of the situation, the Company could see a material impact beginning as early as the second quarter, and such impact could continue for weeks or months.  The Company is monitoring on a daily basis and evaluating what actions to take to respond to potential disruptions.

2020 Outlook

The Company introduced 2020 full-year expectations which exclude any potential supply chain disruption and associated financial impact related to Coronavirus as the Company is currently unable to estimate the magnitude of such impact.  In addition, Company expectations assume the continuation of Section 301 tariffs at 25% on currently tariffed Chinese imports while also assuming tariff exclusions granted in 2019 on vinyl and engineered "click" product remain in effect for all of 2020 despite a currently proposed August 2020 expiration.  The Company's 2020 Outlook is as follows:


Full Year 2020

Total revenue growth percentage

Low to mid single digit growth

Comparable store sales

Low single digit growth

Adjusted Operating Margin (a non-GAAP measure)

2.7% to 3.5%

New store openings

Approximately 15

Capital spending

$19 to $21 million

Conference Call and Webcast Information

The Company plans to host a conference call and audio webcast on February 25, 2020, 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 3, 2020 and may be accessed by dialing (844) 512-2921 or (412) 317-6671 and entering pin number 13698629. 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

Lumber Liquidators is one of North America's leading specialty retailers of hard-surface flooring with 419 stores as of December 31, 2019.  The Company features more than 400 varieties of floors in the latest styles, including waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, porcelain tile and cork flooring.  Additionally, Lumber Liquidators provides a wide selection of flooring enhancements and accessories to complement, install and maintain new floors.  Every location is staffed with flooring experts who can provide advice, pro services and installation options for all of Lumber Liquidators' products, much of which is in stock and ready for delivery.

Learn more about Lumber Liquidators:

  • Commitment to compliance, quality and the communities it serves: https://www.lumberliquidators.com/quality.
  • Corporate giving: LayItForward.LumberLiquidators.com.
  • Follow on social media: Facebook, Instagram and Twitter.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release includes statements of the Company's expectations, intentions, plans and beliefs that constitute "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. These risks include, without limitation, the impact on us of any of the following:

  • obligations related to and impacts of new laws and regulations, including pertaining to tariffs and exemptions;
  • the outcomes of legal proceedings, and the related impact on liquidity;
  • reputational harm;
  • obtaining products from abroad, including the effects of pandemic, including Coronavirus, and tariffs, as well as the effects of antidumping and countervailing duties;
  • obligations under various settlement agreements and other compliance matters;
  • disruption due to cybersecurity threats, including any impacts from a network security incident;
  • inability to open new stores, find suitable locations for our new store concept, and fund other capital expenditures;
  • inability to execute on our key initiatives or such key initiatives do not yield desired results;
  • managing growth;
  • transportation costs;
  • damage to our assets;
  • disruption in our ability to distribute our products, including due to disruptions from the impacts of severe weather;
  • operating stores in Canada and an office in China;
  • managing third-party installers and product delivery companies;
  • renewing store, warehouse, or other corporate leases;
  • having sufficient suppliers;
  • our, and our suppliers', compliance with complex and evolving rules, regulations, and laws at the federal, state, and local level;
  • disruption in our ability to obtain products from our suppliers;
  • product liability claims;
  • availability of suitable hardwood, including due to disruptions from the impacts of severe weather;
  • changes in economic conditions, both domestic and abroad;
  • sufficient insurance coverage, including cybersecurity insurance;
  • access to and costs of capital;
  • the handling of confidential customer information, including the impacts from the California Consumer Privacy Act;
  • management information systems disruptions;
  • alternative e-commerce offerings;
  • our advertising and overall marketing strategy;
  • anticipating consumer trends;
  • competition;
  • impact of changes in accounting guidance, including the implementation guidelines and interpretations;
  • maintenance of valuation allowances on deferred tax assets and the impacts thereof;
  • internal controls;
  • stock price volatility; and
  • anti-takeover provisions.

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 and other 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, 2019.

Non-GAAP and Other Information

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses the following non-GAAP financial measures: (i) Adjusted Gross Profit, (ii) Adjusted Gross Margin; (iii) Adjusted SG&A; (iv) Adjusted SG&A as a percentage of net sales; (v) Adjusted Operating Income; (vi) Adjusted Operating Margin; (vii) Adjusted Earnings; and (viii) Adjusted Earnings per Diluted Share.  These non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP.  These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies.

The non-GAAP financial measures are presented because management uses these non-GAAP financial measures to evaluate the Company's operating performance and, in certain cases, to determine incentive compensation. Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company's core operating performance, which include regulatory and legal settlements and associated legal and operating costs, changes in antidumping and countervailing duties, as such items are outside the control of the Company or are due to their inherent unusual, non-operating, unpredictable, non-recurring or non-cash nature.

For further information contact:

Lumber Liquidators Investor Relations
ir@lumberliquidators.com
Tel: 804-420-9801

(Tables Follow)

Lumber Liquidators Holdings, Inc.

Consolidated Balance Sheets

(In thousands)








December 31,


December 31, 



2019


2018

Assets






Current Assets:







Cash and Cash Equivalents


$

8,993


$

11,565

Merchandise Inventories



286,369



318,272

Prepaid Expenses



8,288



6,299

Deposit for Legal Settlement



21,500



21,500

Tariff Recovery Receivable



27,025



Other Current Assets



6,938



8,667

Total Current Assets



359,113



366,303

Property and Equipment, net



98,733



93,689

Operating Lease Right-of-Use Assets



121,796



Goodwill



9,693



9,693

Other Assets



6,674



5,832

Total Assets


$

596,009


$

475,517








Liabilities and Stockholders' Equity







Current Liabilities:







Accounts Payable


$

59,827


$

73,412

Customer Deposits and Store Credits



41,571



40,332

Accrued Compensation



11,742



9,265

Sales and Income Tax Liabilities



7,225



4,200

Accrual for Legal Matters and Settlements - Current



67,471



97,625

Operating Lease Liabilities - Current



31,333



Other Current Liabilities



18,937



17,290

Total Current Liabilities



238,106



242,124

Other Long-Term Liabilities



13,757



20,203

Operating Lease Liabilities - Long-Term



100,470



Deferred Tax Liability



426



792

Credit Agreement



82,000



65,000

Total Liabilities



434,759



328,119








Stockholders' Equity:







Common Stock ($0.001 par value; 35,000 shares authorized; 29,958 and 31,578
shares issued and 28,714 and 28,627 shares outstanding, respectively)



30



32

Treasury Stock, at cost (1,245 and 2,951 shares, respectively)



(142,314)



(141,828)

Additional Capital



218,616



213,744

Retained Earnings



86,498



76,835

Accumulated Other Comprehensive Loss



(1,580)



(1,385)

Total Stockholders' Equity



161,250



147,398

Total Liabilities and Stockholders' Equity


$

596,009


$

475,517








 

 

Lumber Liquidators Holdings, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)








Three Months Ended


Year Ended



December 31, (unaudited)


December 31,



2019


2018


2019


2018














Net Sales













Net Merchandise Sales


$

238,242


$

234,127


$

956,041


$

955,949

Net Services Sales



35,612



34,794



136,561



128,687

Total Net Sales



273,854



268,921



1,092,602



1,084,636

Cost of Sales













Cost of Merchandise Sold



135,287



146,903



586,918



596,411

Cost of Services Sold



26,653



26,043



101,998



95,285

Total Cost of Sales



161,940



172,946



688,916



691,696

Gross Profit



111,914



95,975



403,686



392,940

Selling, General and Administrative Expenses



92,578



150,885



386,970



443,513

Operating Income (Loss)



19,336



(54,909)



16,716



(50,573)

Other Expense



499



1,612



3,764



2,827

Income (Loss) Before Income Taxes



18,837



(56,521)



12,952



(53,400)

Income Tax Expense



2,439



354



3,289



979

Net Income (Loss)


$

16,398


$

(56,875)


$

9,663


$

(54,379)

Net Income (Loss) per Common Share—Basic


$

0.57


$

(1.99)


$

0.34


$

(1.90)

Net Income (Loss) per Common Share—Diluted


$

0.57


$

(1.99)


$

0.34


$

(1.90)

Weighted Average Common Shares Outstanding:













Basic



28,712



28,624



28,689



28,571

Diluted



28,833



28,624



28,793



28,571














 

 

Lumber Liquidators Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)






Year Ended December 31,



2019


2018


2017









Cash Flows from Operating Activities:









Net Income (Loss)


$

9,663


$

(54,379)


$

(37,823)

Adjustments to Reconcile Net Income (Loss):










Depreciation and Amortization



17,465



18,425



17,739

Deferred Income Taxes Provision (Benefit)



(366)



240



(3,246)

Stock-Based Compensation Expense



4,848



4,091



4,735

Provision for Inventory Obsolescence Reserves



1,888



3,108



6,349

(Gain) Loss on Disposal of Fixed Assets



(221)



1,818



1,498

Changes in Operating Assets and Liabilities:










Merchandise Inventories



28,941



(59,179)



32,614

Accounts Payable



(13,640)



4,852



(52,475)

Customer Deposits and Store Credits



1,353



1,685



6,001

Prepaid Expenses and Other Current Assets



(27,113)



2,902



28,962

Accrual for Legal Matters and Settlements



4,575



63,951



36,960

Deposit for Legal Settlement





(21,500)



Payments for Legal Matters and Settlements



(34,729)



(2,904)



(2,522)

Other Assets and Liabilities



7,665



(6,096)



600

Net Cash Provided by (Used in) Operating Activities



329



(42,986)



39,392











Cash Flows from Investing Activities:










Purchases of Property and Equipment



(19,906)



(14,332)



(7,411)

Other Investing Activities



422



871



3,073

Net Cash Used in Investing Activities



(19,484)



(13,461)



(4,338)











Cash Flows from Financing Activities:










Borrowings on Credit Agreement



104,500



74,000



40,000

Payments on Credit Agreement



(87,500)



(24,000)



(65,000)

Proceeds from the Exercise of Stock Options





770



1,347

Payments on Financed Insurance Obligations





(612)



(734)

Payments on Capital Lease Obligations



(1,119)



(953)



(1,806)

Net Cash Provided by (Used in) Financing Activities



15,881



49,205



(26,193)

Effect of Exchange Rates on Cash and Cash Equivalents



702



(1,131)



806

Net (Decrease) Increase in Cash and Cash Equivalents



(2,572)



(8,373)



9,667

Cash and Cash Equivalents, Beginning of Period



11,565



19,938



10,271

Cash and Cash Equivalents, End of Period


$

8,993


$

11,565


$

19,938











Supplemental disclosure of non-cash operating and financing activities:










Tenant Improvement Allowance for Leases


$

(2,962)


$


$

Financed Insurance Premiums







1,346

 

 

Lumber Liquidators Holdings, Inc.

GAAP to Non-GAAP Reconciliation

(in thousands, except percentages)










Items impacting gross margin with comparisons to the prior-year periods include:














Three Months Ended December 31, (unaudited)


Year Ended December 31,



2019


2018


2019


2018



$

% Sales


$

% Sales


$

% Sales


$

% Sales



(dollars in thousands)

Gross Profit, as reported (GAAP)


$

111,914

40.9

%


$

95,976

35.7

%


$

403,686

36.9

%


$

392,940

36.2

%






















Antidumping Adjustments 1



364

0.1

%



%



1,143

0.1

%



(4,948)

(0.5)

%

HTS Classification Adjustments 2



%



(1,711)

(0.6)

%



(779)

%



(1,711)

(0.1)

%

Sub-Total Items above



364

0.1

%



(1,711)

(0.6)

%



364

0.1

%



(6,659)

(0.6)

%






















Adjusted Gross Profit/Margin (non-GAAP measures)


$

112,278

41.0

%


$

94,265

35.1

%


$

404,050

37.0

%


$

386,281

35.6

%

Represents countervailing and antidumping expense (income) associated with applicable shipments of engineered hardwood from China related to prior periods.

Represents classification adjustments related to the Harmonized Tariff Schedule ("HTS") duty categorization in prior periods.

 

Items impacting SG&A with comparisons to the prior-year period include:










Three Months Ended December 31, (unaudited)


Year Ended December 31,



2019


2018


2019


2018



$

% Sales


$

% Sales


$

% Sales


$

% Sales



(dollars in thousands)

SG&A, as reported (GAAP)


$

92,578

33.8

%


$

150,885

56.1

%


$

386,970

35.4

%


$

443,513

40.9

%






















Accrual for Legal Matters and Settlements 3



(1,100)

(0.4)

%



61,000

22.7

%



3,475

0.3

%



63,951

5.9

%

Legal and Professional Fees 4



766

0.3

%



2,325

0.8

%



4,169

0.4

%



11,707

1.1

%

All Other 5



%



%



%



1,769

0.2

%

Sub-Total Items above



(334)

(0.1)

%



63,325

23.5

%



7,644

0.7

%



77,427

7.2

%






















Adjusted SG&A (a non-GAAP measure)


$

92,912

33.9

%


$

87,560

32.6

%


$

379,326

34.7

%


$

366,086

33.7

%

3  

This amount represents a $1.1 million insurance recovery in the fourth quarter of 2019 of legal fees related to certain significant legal action.  A $4.75 million expense was recorded in the second quarter of 2019 for the Kramer employment case and $0.3 million for certain Related Laminate Matters.  Accrual for Legal Matters and Settlements in 2018 represents the charge to earnings related to the Bamboo Flooring Litigation, the governmental investigations, and Related Laminate Matters in 2018.

4  

Represents charges to earnings related to our defense of certain significant legal actions during the period. This does not include all legal costs incurred by the Company.

All Other in 2018 represents an impairment of certain assets related to the Company's decision to exit the finishing business.

 

Items impacting operating income (loss) and operating margin with comparisons to the prior-year period include:











Three Months Ended December 31, (unaudited)




Year Ended December 31,




(dollars in thousands)




(dollars in thousands)




2019

% Sales


2018

% Sales


2019

% Sales


2018

% Sales

Operating Income (Loss), as reported (GAAP)

$

19,336

7.1

%


$

(54,909)

(20.4)

%


$

16,716

1.5

%


$

(50,573)

(4.7)

%





















Gross Margin Items:




















Antidumping Adjustments 1


364

0.1

%



%



1,143

0.1

%



(4,948)

(0.5)

%

HTS Classification Adjustments 2


%



(1,711)

(0.6)

%



(779)

%



(1,711)

(0.1)

%

Gross Margin Subtotal


364

0.1

%



(1,711)

(0.6)

%



364

0.1

%



(6,659)

(0.6)

%





















SG&A Items:




















Accrual for Legal Matters and Settlements 3


(1,100)

(0.4)

%



61,000

22.7

%



3,475

0.3

%



63,951

5.9

%

Legal and Professional Fees 4


766

0.3

%



2,325

0.8

%



4,169

0.4

%



11,707

1.1

%

All Other 5


%



%



%



1,769

0.2

%

SG&A Subtotal


(334)

(0.1)

%



63,325

23.5

%



7,644

0.7

%



77,427

7.2

%





















Adjusted Operating Income/Margin (a non-GAAP measure)


$

19,366

7.1

%


$

6,705

2.5

%


$

24,724

2.3

%


$

20,195

1.9

%

 

1,2,3,4,5 

See the Gross Profit and SG&A sections above for more detailed explanations of these individual items.

 

Items impacting earnings per diluted share with comparisons to the prior-year periods include:






Three Months Ended December 31, (unaudited)


Year Ended December 31,


2019


2018


2019


2018


(dollars in thousands, except per share
amounts)


(dollars in thousands, except per share
amounts)

Net Income (Loss), as reported (GAAP)

$

16,398


$

(56,876)


$

9,663


$

(54,379)

Net Income (Loss), per Diluted Share as reported (GAAP)

$

0.57


$

(1.99)


$

0.34


$

(1.90)













Gross Margin Items:












Antidumping Adjustments 1


364





1,143



(4,948)

HTS Classification Adjustments 2




(1,711)



(779)



(1,711)

Gross Margin Subtotal


364



(1,711)



364



(6,659)













SG&A Items:












Accrual for Legal Matters and Settlements 3


(1,100)



61,000



3,475



63,951

Legal and Professional Fees (2019 is net of taxes) 4


567



2,325



3,085



11,707

All Other 5








1,769

SG&A Subtotal


(533)



63,325



6,560



77,427













Adjusted Earnings

$

16,229


$

4,738


$

16,587


$

16,389

Adjusted Earnings per Diluted Share (a non-GAAP measure)


$

0.56


$

0.17


$

0.58


$

0.57

 

1,2,3 

See the Gross Profit and SG&A sections above for more detailed explanations of these individual items.

Represents charges to earnings related to our defense of certain significant legal actions during the period. This does not include all legal costs incurred by the Company. 2019 items have been tax effected at the Company's federal statutory rate of 26%.  Due to the full valuation allowance of the deferred tax assets as of December 31, 2018, these adjustments did not have a tax impact during that year.

All Other in 2018 represents an impairment of certain assets related to the Company's decision to exit the finishing business.

 

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SOURCE Lumber Liquidators

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