TOANO, Va. - Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in the U.S., today announced financial results for the third quarter and nine months ended September 30, 2012, and raised its outlook for 2012.
Third Quarter Results
Net sales increased $32.3 million, or 18.8%, to $204.3 million in the third quarter of 2012 from $172.0 million in the third quarter of 2011. Comparable store net sales increased 12.0% for the quarter, driven by an 11.7% increase in the number of customers invoiced at these stores and a slight increase in the average sale. Non-comparable store net sales increased $11.7 million. The Company opened seven new stores during the third quarter.
Gross margin was 38.1% in the third quarter of 2012 compared to 35.6% in the third quarter of 2011. The increase in gross margin reflects generally lower costs of product due to both sourcing initiatives and sales mix, partially offset by higher net transportation costs.
Selling, general and administrative (SG&A) expenses decreased as a percentage of net sales to 28.0% for the third quarter of 2012 compared to 29.3% for the third quarter of 2011. Operating margin increased 380 basis points to 10.2% in the third quarter of 2012, from 6.4% in the third quarter of 2011.
Net income increased 91.3% to $12.9 million, or $0.46 per diluted share, in the third quarter of 2012 from $6.7 million, or $0.24 per diluted share, in the third quarter of the prior year.
Cash and cash equivalents at September 30, 2012 totaled $40.1 million, compared with $37.8 million at September 30, 2011 and $61.7 million at December 31, 2011.
Robert M. Lynch, President and Chief Executive Officer, commented, “Our team continued to generate consistent strength in our top line by broadening our advertising reach and frequency, expanding our merchandise assortment and driving effective store execution. As a result, we delivered record operating margin and EPS in the quarter. Our value proposition, combining price, selection, quality and availability with the expertise and service provided by our people, resonated with customers during the quarter as we continued to capture share in our fragmented market.”
First Nine Months Results
Net sales increased 18.8% to $602.7 million in the first nine months of 2012 from $507.1 million in the first nine months of 2011. Comparable store net sales increased 10.7% for the first nine months of 2012, compared to a decrease of 3.3% for the first nine months of the prior year. Non-comparable store net sales increased $41.4 million over the prior year. The Company opened 21 new stores during the first nine months of 2012 and as of September 30, 2012, operated 284 stores in 46 states and Canada.
Gross margin increased to 37.6% for the first nine months of 2012 from 35.3% in the same period of 2011. SG&A expenses decreased as a percentage of net sales to 28.7% for the first nine months of 2012, compared to 29.5% for the first nine months of 2011. Operating margin increased to 8.9% in the first nine months of 2012, from 5.7% in the first nine months of 2011.
Net income increased 86.9% to $33.3 million, or $1.18 per diluted share, in the first nine months of 2012 compared to $17.8 million, or $0.63 per diluted share, in the first nine months of the prior year.
During the nine months ended September 30, 2012, pursuant to its previously announced stock repurchase program, the Company repurchased approximately 1.5 million shares of its common stock for $40.1 million, including approximately 175,000 shares in the third quarter of 2012. At September 30, 2012, approximately $9.9 million remained available under the Company’s $50 million stock repurchase program.
Company Outlook
Based on year-to-date results and current trends, the Company now expects to achieve the following in 2012:
Net sales for the full year in the range of $791 million to $799 million, up from the previous range of $750 million to $775 million.
Comparable store net sales for the full year increasing in the mid to high single digits.
The opening of a total of 23 to 25 new store locations.
Full year earnings per diluted share in the range of $1.53 to $1.59, based on a diluted share count of approximately 28.0 million shares, which is exclusive of any future impact of the share repurchase program. The Company previously expected a range of $1.30 to $1.42, based on a diluted share count of 28.0 million shares.
Mr. Lynch concluded, “Our team remains unified in its vision and motivated to continue taking market share through our powerful value proposition and uniquely profitable store model. Even with record results through the third quarter, we are more excited than ever by the long-term opportunities that lie ahead. While our economy is facing a number of uncertainties in the coming months, our focus remains on continuous improvement in everything we do so that we can deliver value to our customers and shareholders.”
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Lumber Liquidators Holdings, Inc. |
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| Condensed Consolidated Balance Sheets | ||||||||
| (in thousands, except share data) | ||||||||
|
September 30, |
December 31, |
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| Assets | (unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 40,065 | $ | 61,675 | ||||
| Merchandise Inventories | 194,954 | 164,139 | ||||||
| Prepaid Expenses | 6,352 | 4,292 | ||||||
| Other Current Assets | 8,017 | 7,863 | ||||||
| Total Current Assets | 249,388 | 237,969 | ||||||
| Property and Equipment, net | 46,391 | 44,147 | ||||||
| Goodwill | 9,693 | 9,693 | ||||||
| Other Assets | 1,907 | 3,045 | ||||||
| Total Assets | $ | 307,379 | $ | 294,854 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 29,973 | $ | 38,161 | ||||
| Customer Deposits and Store Credits | 24,074 | 18,120 | ||||||
| Accrued Compensation | 6,831 | 2,509 | ||||||
| Sales and Income Tax Liabilities | 4,388 | 5,092 | ||||||
| Other Current Liabilities | 9,765 | 6,839 | ||||||
| Total Current Liabilities | 75,031 | 70,721 | ||||||
| Deferred Rent | 3,605 | 3,328 | ||||||
| Deferred Tax Liability | 6,153 | 5,721 | ||||||
| Stockholders’ Equity: | ||||||||
|
Common Stock ($0.001 par value; 35,000,000 authorized; 27,141,423 and 27,894,543 |
29 | 28 | ||||||
| Treasury Stock, at cost (1,539,971 and 53,085 shares, respectively) | (41,465 | ) | (1,116 | ) | ||||
| Additional Capital | 124,346 | 110,163 | ||||||
| Retained Earnings | 139,459 | 106,203 | ||||||
| Accumulated Other Comprehensive Income (Loss) | 221 | (194 | ) | |||||
| Total Stockholders’ Equity | 222,590 | 215,084 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 307,379 | $ | 294,854 | ||||
| Lumber Liquidators Holdings, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||
| (in thousands, except share data and per share amounts) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net Sales | $ | 204,291 | $ | 171,993 | $ | 602,672 | $ | 507,133 | ||||||||
| Cost of Sales | 126,405 | 110,745 | 376,169 | 328,368 | ||||||||||||
| Gross Profit | 77,886 | 61,248 | 226,503 | 178,765 | ||||||||||||
| Selling, General and Administrative Expenses | 57,135 | 50,327 | 172,638 | 149,832 | ||||||||||||
| Operating Income | 20,751 | 10,921 | 53,865 | 28,933 | ||||||||||||
| Other (Income) Expense | (26 | ) | (148 | ) | (99 | ) | (303 | ) | ||||||||
| Income Before Income Taxes | 20,777 | 11,069 | 53,964 | 29,236 | ||||||||||||
| Provision for Income Taxes | 7,895 | 4,334 | 20,708 | 11,438 | ||||||||||||
| Net Income | $ | 12,882 | $ | 6,735 | $ | 33,256 | $ | 17,798 | ||||||||
| Net Income per Common Share—Basic | $ | 0.47 | $ | 0.24 | $ | 1.21 | $ | 0.64 | ||||||||
| Net Income per Common Share—Diluted | $ | 0.46 | $ | 0.24 | $ | 1.18 | $ | 0.63 | ||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic | 27,125,855 | 27,759,306 | 27,518,206 | 27,673,741 | ||||||||||||
| Diluted | 27,744,564 | 28,327,375 | 28,094,040 | 28,379,234 | ||||||||||||
| Lumber Liquidators Holdings, Inc. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Nine Months Ended
September 30, |
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| 2012 | 2011 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income | $ | 33,256 | $ | 17,798 | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
| Depreciation and Amortization | 7,323 | 6,129 | ||||||
| Stock-Based Compensation Expense | 3,019 | 3,002 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Merchandise Inventories | (30,962 | ) | (5,789 | ) | ||||
| Accounts Payable | (8,212 | ) | (14,184 | ) | ||||
| Customer Deposits and Store Credits | 5,966 | 6,967 | ||||||
| Prepaid Expenses and Other Current Assets | (2,427 | ) | (2,866 | ) | ||||
| Other Assets and Liabilities | 8,973 | 4,960 | ||||||
| Net Cash Provided by Operating Activities | 16,936 | 16,017 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of Property and Equipment | (9,570 | ) | (11,637 | ) | ||||
| Cash Paid for Acquisition | — | (4,725 | ) | |||||
| Net Cash Used in Investing Activities | (9,570 | ) | (16,362 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Payments for Share Repurchases | (40,349 | ) | (151 | ) | ||||
| Proceeds from the Exercise of Stock Options | 8,031 | 2,116 | ||||||
| Excess Tax Benefits on Stock Option Exercises | 3,141 | 1,421 | ||||||
| Net Cash (Used in) Provided by Financing Activities | (29,177 | ) | 3,386 | |||||
| Effect of Exchange Rates on Cash and Cash Equivalents . | 201 | (54 | ) | |||||
| Net (Decrease) Increase in Cash and Cash Equivalents | (21,610 | ) | 2,987 | |||||
| Cash and Cash Equivalents, Beginning of Period | 61,675 | 34,830 | ||||||
| Cash and Cash Equivalents, End of Period | $ | 40,065 | $ | 37,817 | ||||
Source: Lumber Liquidators
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