RICHMOND, Va., Aug. 5, 2020 /PRNewswire/ -- Lumber
Liquidators (NYSE: LL), a leading specialty retailer of
hard-surface flooring in North
America, today announced financial results for the second
quarter ended June 30, 2020.
"I would like to thank our associates for their commitment,
flexibility and dedication to providing outstanding service to our
customers during these uncertain times," said President and Chief
Executive Officer Charles
Tyson. "As a result of their perseverance, and despite
the headwinds of COVID-19 and its impacts on consumers, we
delivered meaningful improvement in gross margin and effectively
managed expenses to preserve liquidity and increase
profitability. While comparable store sales declined 21.3% in
in the quarter, execution against our strategic pillars helped
deliver a $5.5 million increase in
net income and a $2.9 million
increase in Adjusted Operating Income compared to prior year.
Our strong results would not have been possible without the
contributions from all associates, and I am thankful to be a part
of such a strong and dedicated team."
"We were encouraged by improving sales trends through the
quarter as markets reopened and consumers began to more fully
engage in home improvement projects," Tyson continued. "I am
confident that our continued focus on our transformation plan and
strategic pillars, including developing a strong people-centric,
diverse and collaborative culture, will position us well for
long-term success."
Second Quarter Results
Net sales in the second quarter of 2020 decreased $58 million, or 20.2%, to $230 million from the second quarter of
2019. Comparable store sales for the second quarter of 2020
were down 21.3% driven by the impact of COVID-19, but improved
sequentially as the quarter progressed and improved compared to the
previously reported quarter-to-date decline of approximately 30%
through May 23. The Company opened two net new stores in the
second quarter of 2020 bringing total store count to 422 as of
June 30, 2020.
Gross profit decreased 14% in the second quarter of 2020 to
$88 million from $102 million in the comparable period in 2019,
including the 2019 positive impact of classification adjustments
related to tariffs as shown in the tables that follow.
Without this item, Adjusted Gross Profit (a non-GAAP measure)
decreased approximately $13
million. Adjusted Gross Margin (a non-GAAP measure)
increased 309 basis points to 38.3% in the second quarter of 2020
from 35.2% in the second quarter of 2019 as margin enhancement
efforts, Section 301 tariff exclusions and supply chain efficiency
positively impacted results. Adjusted Gross Margin was also
aided by a larger mix of higher-margin manufactured products, a
lower mix of lower-margin installation labor sales, and reduced
discounting in stores. These items were somewhat offset by a
higher year-over-year inventory obsolescence charge and higher
customer delivery costs associated with delivery promotions.
SG&A expense decreased 21% to $82
million in the second quarter of 2020 from the comparable
period in 2019 but included certain costs in both periods related
to investigations and lawsuits. Excluding these items as
shown in the table that follows, Adjusted SG&A (a non-GAAP
measure) decreased 17%, or $16
million, compared to the same period in the prior
year. The reduction in Adjusted SG&A was primarily driven
by lower advertising expense as the Company reduced its promotional
cadence in response to COVID-19; lower payroll and benefits expense
as the Company took steps to align staffing with demand levels
while also implementing temporary salary reductions for corporate
office personnel and the Board of Directors; and lower transaction-
and business-related costs due to lower sales. The Company's
focus on expense management, liquidity preservation measures
and process efficiency helped deliver the year-over-year reduction
in Adjusted SG&A in the quarter.
Operating income was $6 million
for the second quarter of 2020 compared to an operating loss of
$1.4 million for the second quarter
of 2019. Adjusted Operating Income (a non-GAAP measure) was
$6.5 million for the second quarter
of 2020, a year-over-year increase of over $2.9 million compared to adjusted operating
income of $3.6 million for the second
quarter of 2019. The year-over-year increase was
primarily driven by the work to enhance gross margin while also
diligently managing expenses.
Income tax expense was $2.2
million for the second quarter of 2020 compared to income
tax expense of $0.4 million for the
second quarter of 2019. The variability of our tax rate in
2020 reflects the timing of deductions and the CARES Act on our
quarterly earnings.
Net income for the second quarter of 2020 increased $5.5 million to $2.6
million compared to a net loss of $2.9 million for the second quarter of 2019,
while Adjusted Earnings (a non-GAAP measure) for the second quarter
of 2020 was $3.0 million, a
year-over-year increase of $2.2
million compared to Adjusted Earnings of $820 thousand for the second quarter of 2019.
Earnings per diluted share was $0.09 for the second quarter 2020 versus a loss
per share of $0.10 in the year ago
quarter. On an adjusted basis, second quarter earnings per
diluted share increased $0.07 to
$0.10 compared to an adjusted
earnings per diluted share of $0.03
for the second quarter of 2019.
Net cash provided by operating activities was $106 million for the year to date, inclusive of
$70 million in the second quarter, an
increase of $120 million over the
equivalent period of the prior year. The increase was
primarily driven by strong working capital management including
adjusting inventory buying plans to reflect lower volumes of
activity, and extending payment terms with vendors, landlords and
other service providers, as well as growth in customer deposits,
and reduced tariff and income tax receivables as cash payments were
received during the second quarter. In addition, lower cash
outflows related to legacy legal settlements and lower expenses
aided the year-over-year comparison.
As of June 30, 2020, the Company
had $76 million outstanding under its
revolving credit facility and $25
million outstanding under its FILO Term Loan.
Collectively, this is a $19 million
increase from the end of the fourth quarter 2019 while the cash and
cash equivalents balance increased by $118
million. As of June 30, 2020,
the Company had $186 million in
liquidity, comprised of $127 million
of cash and cash equivalents and $59
million of availability under the Credit Agreement.
COVID-19 Update
The second quarter of 2020 was significantly affected by the
COVID-19 pandemic, but the Company remained focused on serving its
customers while keeping the health and safety of employees' and
customers' paramount. The Company operated in a
variety of operating models (fully open, curbside-pickup, online)
during the quarter and utilized safety measures such as personal
protective equipment for employees and customers. Additional
measures included contact-free and appointment-based engagement
with customers, adding barriers at registers and social distancing
signage and guidelines to stores. These practices were
implemented to comply with state and local ordinances along with
recommendations from the CDC and State Boards of Health. By
early July, 98% of stores were fully open, with less than 10
operating by appointment only. Only one store remained closed
since the onset of the pandemic due to a unique store design while
others closed periodically as warranted by market conditions.
As reported in the Company's first quarter earnings release,
quarter-to-date comparable store sales were down approximately 30%
through the week ended May 23. Improving performance in June
resulted in a negative 21.3% comparable store sales for the full
quarter.
Throughout the quarter, the Company leveraged strategic
investments in digital capabilities made over the past 18 months,
including the Floor Finder and Picture It! tools, to serve
customers at LLFlooring.com. Web traffic has increased
meaningfully, particularly when store showrooms had limited
availability. The Company has also expanded availability of
online flooring samples and extended hours for voice and
click-to-chat customer support, while also continuing to offer
curbside store pickup and enhanced home-delivery options.
In April, as a result of reduced demand and the changes in
operating models due to COVID-19, the Company temporarily
furloughed a number of store associates and reduced operating hours
in its distribution centers. As demand returned through the
quarter, the Company recalled associates, and as of late June, had
invited all furloughed employees back to work and had returned to
normal operations in its distribution centers. The Company
implemented a range of other measures to increase financial
flexibility and maintain agility during this challenging time. As a
result of improved business trends, the temporary reduction in all
salaried corporate employees' and Board of Directors' compensation
ended effective July 1,
2020.
Liquidity Update
As of June 30, 2020, the Company
had liquidity of approximately $186
million, consisting of excess availability under its Credit
Agreement of $59 million, and cash
and cash equivalents of $127
million. This represents an increase in liquidity of
$55 million from March 31, 2020. In addition, the Company's
debt balance as of June 30, 2020 was
$101 million, unchanged since
amending the Credit Agreement on April
17.
As previously announced, on April 17,
2020, the Company amended its Credit Agreement to increase
total availability under the Senior Secured Credit Facilities from
$200 million to $237.5 million, and increased the advance rate
against inventory under the borrowing base. This amendment
expires August 30, 2020. The
current credit agreement maturity remains March 2024 and contains no financial covenants,
except for a fixed charge coverage ratio if borrowings exceed 90%
of availability.
Based on what we know today about the impact of COVID-19, the
Company believes that cash flows from operations, together with the
liquidity under its Credit Agreement, provides sufficient liquidity
to navigate the current environment.
Section 301 Tariffs
On November 7, 2019, the U.S.
Trade Representative granted a retroactive exclusion on certain
"click" vinyl and engineered products imported from China.
The Company is monitoring the expiration of this exclusion
currently slated for August 7,
2020. Should the tariff exclusion not be extended, there
would be an impact to cash flow related to future product
purchases, but the impact to gross margin will be delayed based
primarily on the flow of inventory.
2020 Outlook
As previously announced on April 20,
2020, the Company withdrew its annual financial guidance
that was initially provided on February
25, 2020. The uncertainty surrounding the duration and
extent of the impact of COVID-19 makes it uniquely challenging to
accurately forecast future financial performance, and as such, the
Company is not providing financial guidance at this time.
Conference Call and Webcast Information
The Company plans to host a conference call and audio webcast on
August 5, 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
August 12, 2020 and may be accessed
by dialing (844) 512-2921 or (412) 317-6671 and entering pin number
13706414. The live conference call and replay can also be accessed
via audio webcast at the Investor Relations section of the
Company's website, www.LLFlooring.com.
About Lumber Liquidators
Lumber Liquidators is one of North America's leading specialty
retailers of hard-surface flooring with 422 stores as of
June 30, 2020. 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.
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:
- an overall decline in the health of the economy, the
hard-surface flooring industry, the housing market and overall
consumer spending, including the effects of the COVID-19
pandemic;
- impact on sales, ability to obtain and distribute products, and
employee safety and retention, including the effects of the
COVID-19 pandemic;
- 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
COVID-19 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;
- 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
SG&A; (ii) Adjusted SG&A as a percentage of net sales;
(iii) Adjusted Operating Income; (iv) Adjusted Operating Margin;
(v) Adjusted Earnings; and (vi) 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
(Unaudited, in
thousands)
|
|
|
|
June
30,
|
|
December 31,
|
|
|
2020
|
2019
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
126,737
|
$
|
8,993
|
Merchandise
Inventories
|
|
|
248,722
|
|
286,369
|
Prepaid
Expenses
|
|
|
8,544
|
|
8,288
|
Deposit for Legal
Settlement
|
|
|
21,500
|
|
21,500
|
Tariff Recovery
Receivable
|
|
|
18,285
|
|
27,025
|
Other Current
Assets
|
|
|
5,545
|
|
6,938
|
Total Current
Assets
|
|
|
429,333
|
|
359,113
|
Property and
Equipment, net
|
|
|
96,864
|
|
98,733
|
Operating Lease
Right-of-Use
|
|
|
121,544
|
|
121,796
|
Goodwill
|
|
|
9,693
|
|
9,693
|
Other
Assets
|
|
|
7,046
|
|
6,674
|
Total
Assets
|
|
$
|
664,480
|
$
|
596,009
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
Payable
|
|
$
|
68,516
|
$
|
59,827
|
Customer Deposits and
Store Credits
|
|
|
55,492
|
|
41,571
|
Accrued
Compensation
|
|
|
11,506
|
|
11,742
|
Sales and Income Tax
Liabilities
|
|
|
9,722
|
|
7,225
|
Accrual for Legal
Matters and Settlements - Current
|
|
|
62,786
|
|
67,471
|
Operating Lease
Liabilities - Current
|
|
|
36,740
|
|
31,333
|
Other Current
Liabilities
|
|
|
23,998
|
|
18,937
|
Total Current
Liabilities
|
|
|
268,760
|
|
238,106
|
Other Long-Term
Liabilities
|
|
|
15,708
|
|
13,757
|
Operating Lease
Liabilities - Long-Term
|
|
|
101,131
|
|
100,470
|
Deferred Tax
Liability
|
|
|
921
|
|
426
|
Credit
Agreement
|
|
|
101,000
|
|
82,000
|
Total
Liabilities
|
|
|
487,520
|
|
434,759
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common Stock ($0.001
par value; 35,000 shares authorized; 30,161 and 29,959
shares issued and 28,852 and 28,714 shares outstanding,
respectively)
|
|
|
30
|
|
30
|
Treasury Stock, at
cost (1,309 and 1,245 shares, respectively)
|
|
|
(142,752)
|
|
(142,314)
|
Additional
Capital
|
|
|
219,618
|
|
218,616
|
Retained
Earnings
|
|
|
101,372
|
|
86,498
|
Accumulated Other
Comprehensive Loss
|
|
|
(1,308)
|
|
(1,580)
|
Total
Stockholders' Equity
|
|
|
176,960
|
|
161,250
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
664,480
|
$
|
596,009
|
Lumber Liquidators
Holdings, Inc.
Consolidated
Statements of Operations
(Unaudited, in
thousands, except per share amounts)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Merchandise
Sales
|
|
$
|
210,055
|
|
$
|
250,658
|
|
$
|
448,837
|
|
$
|
488,557
|
Net Services
Sales
|
|
|
20,229
|
|
|
37,909
|
|
|
48,821
|
|
|
66,230
|
Total Net
Sales
|
|
|
230,284
|
|
|
288,567
|
|
|
497,658
|
|
|
554,787
|
Cost of
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Merchandise
Sold
|
|
|
125,953
|
|
|
157,801
|
|
|
266,699
|
|
|
309,226
|
Cost of Services
Sold
|
|
|
16,039
|
|
|
28,279
|
|
|
37,696
|
|
|
49,463
|
Total Cost of
Sales
|
|
|
141,992
|
|
|
186,080
|
|
|
304,395
|
|
|
358,689
|
Gross
Profit
|
|
|
88,292
|
|
|
102,487
|
|
|
193,263
|
|
|
196,098
|
Selling, General and
Administrative Expenses
|
|
|
82,288
|
|
|
103,864
|
|
|
178,495
|
|
|
200,896
|
Operating Income
(Loss)
|
|
|
6,004
|
|
|
(1,377)
|
|
|
14,768
|
|
|
(4,798)
|
Other
Expense
|
|
|
1,142
|
|
|
1,068
|
|
|
2,024
|
|
|
2,358
|
Income (Loss) Before
Income Taxes
|
|
|
4,862
|
|
|
(2,445)
|
|
|
12,744
|
|
|
(7,156)
|
Income Tax Expense
(Benefit)
|
|
|
2,223
|
|
|
411
|
|
|
(2,130)
|
|
|
624
|
Net Income
(Loss)
|
|
$
|
2,639
|
|
$
|
(2,856)
|
|
$
|
14,874
|
|
$
|
(7,780)
|
Net Income (Loss)
per Common Share—Basic
|
|
$
|
0.09
|
|
$
|
(0.10)
|
|
$
|
0.52
|
|
$
|
(0.27)
|
Net Income (Loss)
per Common Share—Diluted
|
|
$
|
0.09
|
|
$
|
(0.10)
|
|
$
|
0.51
|
|
$
|
(0.27)
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
28,831
|
|
|
28,692
|
|
|
28,776
|
|
|
28,669
|
Diluted
|
|
|
28,892
|
|
|
28,692
|
|
|
28,889
|
|
|
28,669
|
Lumber Liquidators
Holdings, Inc.
Consolidated
Statements of Cash Flows
(Unaudited, in
thousands)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$
|
14,874
|
|
$
|
(7,780)
|
|
Adjustments to
Reconcile Net Income (Loss):
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
|
8,934
|
|
|
8,599
|
|
Deferred Income Taxes
Provision
|
|
|
495
|
|
|
71
|
|
Stock-Based
Compensation Expense
|
|
|
966
|
|
|
2,415
|
|
Provision for
Inventory Obsolescence Reserves
|
|
|
1,574
|
|
|
626
|
|
(Gain) Loss on
Disposal of Fixed Assets
|
|
|
(827)
|
|
|
50
|
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
|
|
|
|
Merchandise
Inventories
|
|
|
35,897
|
|
|
12,883
|
|
Accounts
Payable
|
|
|
9,150
|
|
|
(4,729)
|
|
Customer Deposits and
Store Credits
|
|
|
13,921
|
|
|
2,652
|
|
Prepaid Expenses and
Other Current Assets
|
|
|
10,330
|
|
|
(3,557)
|
|
Accrual for Legal
Matters and Settlements
|
|
|
148
|
|
|
4,575
|
|
Payments for Legal
Matters and Settlements
|
|
|
(4,833)
|
|
|
(33,725)
|
|
Deferred Rent
Payments
|
|
|
5,813
|
|
|
—
|
|
Other Assets and
Liabilities
|
|
|
9,225
|
|
|
3,828
|
|
Net Cash Provided
by (Used in) Operating Activities
|
|
|
105,667
|
|
|
(14,092)
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Purchases of Property
and Equipment
|
|
|
(7,212)
|
|
|
(8,907)
|
|
Other Investing
Activities
|
|
|
949
|
|
|
64
|
|
Net Cash Used in
Investing Activities
|
|
|
(6,263)
|
|
|
(8,843)
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
Borrowings on Credit
Agreement
|
|
|
45,000
|
|
|
63,000
|
|
Payments on Credit
Agreement
|
|
|
(26,000)
|
|
|
(38,500)
|
|
Other Financing
Activities
|
|
|
(637)
|
|
|
(1,074)
|
|
Net Cash Provided
by Financing Activities
|
|
|
18,363
|
|
|
23,426
|
|
Effect of Exchange
Rates on Cash and Cash Equivalents
|
|
|
(23)
|
|
|
671
|
|
Net Increase in
Cash and Cash Equivalents
|
|
|
117,744
|
|
|
1,162
|
|
Cash and Cash
Equivalents, Beginning of Period
|
|
|
8,993
|
|
|
11,565
|
|
Cash and Cash
Equivalents, End of Period
|
|
$
|
126,737
|
|
$
|
12,727
|
|
Supplemental
disclosure of non-cash operating and financing
activities:
|
|
|
|
|
|
|
|
Tenant Improvement
Allowance for Leases
|
|
$
|
(611)
|
|
$
|
(146)
|
|
Lumber Liquidators
Holdings, Inc.
GAAP to Non-GAAP
Reconciliation
(in thousands,
except percentages)
|
|
Items impacting gross
margin with comparisons to the prior-year period
include:
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
$
|
% of
Sales
|
|
$
|
% of
Sales
|
|
$
|
% of
Sales
|
|
$
|
% of
Sales
|
|
(dollars in thousands)
|
|
(dollars in thousands)
|
Gross Profit, as
reported (GAAP)
|
$
|
88,292
|
38.3
|
%
|
|
$
|
102,487
|
35.5
|
%
|
|
$
|
193,263
|
38.8
|
%
|
|
$
|
196,098
|
35.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HTS Classification
Adjustments 1
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.3)
|
%
|
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.1)
|
%
|
Sub-Total Items
Above
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.3)
|
%
|
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Profit
(a non-GAAP
measure)
|
$
|
88,292
|
38.3
|
%
|
|
$
|
101,708
|
35.2
|
%
|
|
$
|
193,263
|
38.8
|
%
|
|
$
|
195,319
|
35.2
|
%
|
________________________
|
1
|
Represents
classification adjustments related to the HTS duty categorization
in prior periods during the three and six months ended June 30,
2019.
|
Items impacting
SG&A with comparisons to the prior-year period
include:
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
$
|
%
Sales
|
|
$
|
%
Sales
|
|
$
|
%
Sales
|
|
$
|
%
Sales
|
|
|
(dollars in thousands)
|
|
(dollars in thousands)
|
SG&A, as reported
(GAAP)
|
|
$
|
82,288
|
35.7
|
%
|
|
$
|
103,864
|
36.0
|
%
|
|
$
|
178,495
|
35.9
|
%
|
|
$
|
200,896
|
36.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Recovery) Accrual
for Legal
Matters and Settlements 2
|
|
|
(500)
|
(0.2)
|
%
|
|
|
4,750
|
1.6
|
%
|
|
|
(500)
|
(0.1)
|
%
|
|
|
4,575
|
0.8
|
%
|
Legal and
Professional Fees3
|
|
|
995
|
0.4
|
%
|
|
|
1,017
|
0.4
|
%
|
|
|
1,788
|
0.4
|
%
|
|
|
2,995
|
0.5
|
%
|
Sub-Total Items
above
|
|
|
495
|
0.2
|
%
|
|
|
5,767
|
2.0
|
%
|
|
|
1,288
|
0.3
|
%
|
|
|
7,570
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A (a
non-GAAP
measure)
|
|
$
|
81,793
|
35.5
|
%
|
|
$
|
98,097
|
34.0
|
%
|
|
$
|
177,207
|
35.6
|
%
|
|
$
|
193,326
|
34.9
|
%
|
|
|
________________________
|
2
|
This amount
represents a $0.5 million insurance recovery in the second quarter
of 2020 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 certain Related Laminate
Matters, which is described more fully in Note 7 to the condensed
consolidated financial statements filed in the June 30, 2020
10-Q.
|
3
|
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.
|
Items impacting
operating income (loss) and operating margin with comparisons to
the prior-year period include:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
$
|
% of
Sales
|
|
$
|
% of
Sales
|
|
$
|
% of
Sales
|
|
$
|
% of
Sales
|
|
(dollars in thousands)
|
|
(dollars in thousands)
|
Operating Income
(Loss), as reported
(GAAP)
|
$
|
6,004
|
2.6
|
%
|
|
$
|
(1,377)
|
(0.5)
|
%
|
|
$
|
14,768
|
3.0
|
%
|
|
$
|
(4,798)
|
(0.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HTS Classification
Adjustments 1
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.3)
|
%
|
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.1)
|
%
|
Gross Margin
Subtotal
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.3)
|
%
|
|
|
—
|
—
|
%
|
|
|
(779)
|
(0.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Recovery) Accrual
for Legal Matters
and Settlements2
|
|
(500)
|
(0.2)
|
%
|
|
|
4,750
|
1.6
|
%
|
|
|
(500)
|
(0.1)
|
%
|
|
|
4,575
|
0.8
|
%
|
Legal and
Professional Fees3
|
|
995
|
0.4
|
%
|
|
|
1,017
|
0.4
|
%
|
|
|
1,788
|
0.3
|
%
|
|
|
2,995
|
0.5
|
%
|
SG&A
Subtotal
|
|
495
|
0.2
|
%
|
|
|
5,767
|
2.0
|
%
|
|
|
1,288
|
0.2
|
%
|
|
|
7,570
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income (a non-
GAAP measure)
|
$
|
6,499
|
2.8
|
%
|
|
$
|
3,611
|
1.2
|
%
|
|
$
|
16,056
|
3.2
|
%
|
|
$
|
1,993
|
0.3
|
%
|
|
________________________
|
1,2,3 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(dollars in thousands,
except per share amounts)
|
|
(dollars in thousands,
except per share amounts)
|
Net Income (Loss), as
reported (GAAP)
|
$
|
2,639
|
|
$
|
(2,856)
|
|
$
|
14,874
|
|
$
|
(7,780)
|
Net Income (Loss) per
Diluted Share (GAAP)
|
$
|
0.09
|
|
$
|
(0.10)
|
|
$
|
0.51
|
|
$
|
(0.27)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
Items:
|
|
|
|
|
|
|
|
|
|
|
|
HTS Classification
Adjustments 1
|
|
—
|
|
|
(576)
|
|
|
—
|
|
|
(576)
|
Gross Margin
Subtotal
|
|
—
|
|
|
(576)
|
|
|
—
|
|
|
(576)
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
Items:
|
|
|
|
|
|
|
|
|
|
|
|
(Recovery) Accrual
for Legal Matters and Settlements2
|
|
(369)
|
|
|
3,510
|
|
|
(369)
|
|
|
3,381
|
Legal and
Professional Fees 3
|
|
735
|
|
|
742
|
|
|
1,321
|
|
|
2,213
|
SG&A
Subtotal
|
|
366
|
|
|
4,252
|
|
|
952
|
|
|
5,594
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
(Loss)
|
$
|
3,005
|
|
$
|
820
|
|
$
|
15,826
|
|
$
|
(2,762)
|
Adjusted Earnings
(Loss) per Diluted Share (a non-GAAP measure)
|
$
|
0.10
|
|
$
|
0.03
|
|
$
|
0.55
|
|
$
|
(0.10)
|
|
________________________
|
1,2,3 See the Gross Profit and
SG&A sections above for more detailed explanations of these
individual items. These items have been tax affected at the
Company's federal statutory rate of 26.1%.
|
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SOURCE Lumber Liquidators