Floor & Decor Holdings, Inc. Announces Second Quarter Fiscal 2023 Financial Results

Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the second quarter of fiscal 2023, which ended June 29, 2023.

Tom Taylor, Chief Executive Officer, stated, “Amidst the economic challenges of rising mortgage interest rates and near-record-low existing home sales, we are pleased to deliver second-quarter diluted earnings per share of $0.66, which was above our expectations. We are focused on what we can control by executing our growth and customer service strategies at a high level and effectively managing our profitability during this challenging period where sales are modestly below our expectations. As consumers prioritize value and savings, we intend to continue to grow our market share by capitalizing on our everyday low prices and value options, trend-forward broad assortments, in-stock job lot quantities, and the exceptional customer service provided by our store associates.”

Mr. Taylor continued, “In the second quarter of 2023, we achieved our plan of opening nine new warehouse stores and intend to open 32 warehouse stores in fiscal 2023. We ended the second quarter operating 203 warehouse stores and five design studios across 36 states.”

Please see “Comparable Store Sales” below for information on how the Company calculates period-over-period changes in comparable store sales.

For the Thirteen Weeks Ended June 29, 2023

• Net sales increased 4.2% to $1,135.9 million from $1,089.8 million in the second quarter of fiscal 2022.

• Comparable store sales decreased 6.0%.

• We opened nine new warehouse stores, ending the quarter with 203 warehouse stores and five design studios.

• Operating income of $95.0 million decreased 10.7% from $106.4 million in the second quarter of fiscal 2022. Operating margin of 8.4% decreased 140 basis points from the second quarter of fiscal 2022.

• Net income of $71.5 million decreased 12.7% from $81.8 million in the second quarter of fiscal 2022. Diluted earnings per share ("EPS") of $0.66 decreased 13.2% from $0.76 in the second quarter of fiscal 2022.

• Adjusted EBITDA* increased 1.7% to $152.8 million from $150.3 million in the second quarter of fiscal 2022.

For the Twenty-six Weeks Ended June 29, 2023

• Net sales increased 6.6% to $2,258.0 million from $2,118.6 million in the same period of fiscal 2022.

• Comparable store sales decreased 4.7%.

• We opened 12 new warehouse stores.

• Operating income of $190.5 million decreased 4.9% from $200.4 million in the same period of fiscal 2022. Operating margin of 8.4% decreased 110 basis points from the same period of fiscal 2022.

• Net income of $143.0 million decreased 6.4% from $152.8 million in the same period of fiscal 2022. Diluted EPS of $1.33 decreased 6.3% from $1.42 in the same period of fiscal 2022.

• Adjusted EBITDA* increased 5.7% to $302.4 million from $286.1 million in the same period of fiscal 2022.

*Non-GAAP financial measure. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.

Outlook for the Fiscal Year Ending December 28, 2023:

• Net sales of approximately $4,460 million to $4,530 million

• Comparable store sales of approximately (7.0)% to (5.5)%

• Diluted EPS of approximately $2.30 to $2.50

• Adjusted EBITDA* of approximately $570 million to $595 million

• Depreciation and amortization expense of approximately $200 million

• Interest expense, net of approximately $16 million to $17 million

• Tax rate of approximately 22%

• Diluted weighted average shares outstanding of approximately 108 million shares

• Open 32 new warehouse stores

• Capital expenditures of approximately $590 million to $630 million

*Non-GAAP financial measure. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.

Conference Call Details

A conference call to discuss the secondquarter fiscal 2023 financial results is scheduled for today, August 3, 2023, at 5:00 p.m. Eastern Time. A live audio webcast of the conference call, together with related materials, will be available online at ir.flooranddecor.com.

A recorded replay of the conference call is expected to be available within two hours of the conclusion of the call and can be accessed both online at ir.flooranddecor.com and by dialing 844-512-2921 (international callers please dial 412-317-6671). The pin number to access the telephone replay is 13739336. The replay will be available until August 10, 2023.

About Floor & Decor Holdings, Inc.

Floor & Decor is a multi-channel specialty retailer and commercial flooring distributor operating 203 warehouse-format stores and five design studios across 36 states as of June 29, 2023. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile, installation materials, and adjacent categories at everyday low prices. The Company was founded in 2000 and is headquartered in Atlanta, Georgia.

Comparable Store Sales

Comparable store sales refer to period-over-period comparisons of our net sales among the comparable store base and are based on when the customer obtains control of the product, which is typically at the time of sale. A store is included in the comparable store sales calculation on the first day of the thirteenth full fiscal month following a store’s opening, which is when we believe comparability has been achieved. Changes in our comparable store sales between two periods are based on net sales for stores that were in operation during both of the two periods. Any change in the square footage of an existing comparable store, including for remodels and relocations within the same primary trade area of the existing store being relocated, does not eliminate that store from inclusion in the calculation of comparable store sales. Stores that are closed for a full fiscal month or longer are excluded from the comparable store sales calculation for each full fiscal month that they are closed. Since our e-commerce, regional account manager, and design studio sales are fulfilled by individual stores, they are included in comparable store sales only to the extent the fulfilling store meets the above mentioned store criteria. Sales through our Spartan Surfaces, LLC ("Spartan") subsidiary do not involve our stores and are therefore excluded from the comparable store sales calculation.

Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA (which are shown in the reconciliation below) are presented as supplemental measures of financial performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States ("GAAP"). We define EBITDA as net income before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted to eliminate the impact of non-cash stock-based compensation expense and certain items that we do not consider indicative of our core operating performance. Reconciliations of these measures to the most directly comparable GAAP financial measure are set forth in the table below.

EBITDA and Adjusted EBITDA are key metrics used by management and our board of directors to assess our financial performance and enterprise value. We believe that EBITDA and Adjusted EBITDA are useful measures, as they eliminate certain items that are not indicative of our core operating performance and facilitate a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine covenant compliance with respect to our credit facilities, to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties as performance measures to evaluate companies in our industry.

EBITDA and Adjusted EBITDA are non-GAAP measures of our financial performance and should not be considered as alternatives to net income as a measure of financial performance, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of liquidity or free cash flow for management's discretionary use. In addition, these non-GAAP measures exclude certain non-recurring and other charges. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine EBITDA and Adjusted EBITDA, such as stock-based compensation expense, distribution center relocation expenses, fair value adjustments related to contingent earn-out liabilities, and other adjustments. Our presentation of EBITDA and Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of EBITDA and Adjusted EBITDA differ among companies in the retail industry, and therefore EBITDA and Adjusted EBITDA disclosed by us may not be comparable to the metrics disclosed by other companies.

Please see “Reconciliation of GAAP to Non-GAAP Financial Measures” below for reconciliations of non-GAAP financial measures used in this release to their most directly comparable GAAP financial measures.