Lumber Liquidators Announces Fourth Quarter and Full Year 2012 Financial Results and Provides Full Y

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Lumber Liquidators Announces Fourth Quarter and Full Year 2012 Financial Results and Provides Full Year 2013 Outlook

~ Fourth Quarter Net Sales Increased 20.8% to $210.7 Million and Comparable Store Net Sales Increased 13.2% ~

~ Fourth Quarter Operating Margin of 11.6% ~


~ Fourth Quarter Net Income Increased 63.2% to $13.8 Million, or $0.50 per Diluted Share ~

~ Full Year 2013 Net Sales Expected to be $885 million to $920 million ~

~ Full Year 2013 EPS Expected to be $1.90 to $2.15 ~

TOANO, Va.--(BUSINESS WIRE)-- Lumber Liquidators (NYS: LL) , the largest specialty retailer of hardwood flooring in North America, today announced financial results for the fourth quarter and full year ended December 31, 2012, as well as its outlook for 2013.

Fourth Quarter Results

Net sales increased $36.2 million, or 20.8%, to $210.7 million in the fourth quarter of 2012 from $174.5 million in the fourth quarter of 2011. Comparable store net sales increased 13.2% for the quarter, driven by a 9.1% increase in the number of customers invoiced and a 3.9% increase in the average sale. Non-comparable store net sales increased $13.1 million over the prior year period. As of December 31, 2012, the Company operated 288 stores, including four stores opened during the fourth quarter of 2012, for a total of 25 stores opened during the year.

Gross margin was 39.1% in the fourth quarter of 2012 compared to 35.5% in the fourth quarter of 2011. The increase in gross margin reflects generally lower product costs due to sourcing initiatives and sales mix, as well as lower net transportation costs and a reduction in the estimated shrink of merchandise inventories.

Selling, general and administrative ("SG&A") expenses decreased as a percentage of net sales to 27.4% for the fourth quarter of 2012 compared to 27.7% for the fourth quarter of 2011. Operating margin increased 390 basis points to 11.6% in the fourth quarter of 2012, from 7.7% in the fourth quarter of 2011.

Net income increased 63.2% to $13.8 million, or $0.50 per diluted share, in the fourth quarter of 2012 from $8.5 million, or $0.30 per diluted share, in the fourth quarter of the prior year. The Company's effective tax rate was 43.7% for the fourth quarter of 2012, compared to an effective tax rate of 38.7% in the fourth quarter of 2011, primarily due to the recording of a $1.3 million valuation allowance on certain deferred tax assets.

Cash and cash equivalents at December 31, 2012 totaled $64.2 million compared with $61.7 million at December 31, 2011.

Robert M. Lynch, President and Chief Executive Officer, commented, "Our team continued to execute on our key strategic initiatives to enhance the value proposition to our customer. In doing so, we delivered a record quarter, in total net sales, gross and operating margin, net income and free cash flow. We were particularly pleased with the increases in both traffic and ticket as the broadening of our advertising and branding message resonated with a larger population of flooring customers. Our team's focus on continuous improvement helped drive our performance, and with these outstanding fourth quarter and full year results, we have a strong foundation upon which we can generate sustainable additional growth as we enter 2013."

Full Year Results

Net sales increased 19.3% to $813.3 million in 2012 from $681.6 million in 2011, as comparable store net sales increased 11.4%, or $77.2 million, and non-comparable store net sales increased $54.5 million.

Gross margin increased to 38.0% in 2012 compared to 35.3% in the prior year. SG&A expenses decreased as a percentage of net sales to 28.3% in 2012, compared to 29.1% in 2011. Operating margin increased to 9.6% in 2012 from 6.2% in 2011.

Net income increased 79.2% to $47.1 million, or $1.68 per diluted share, in 2012 compared to $26.3 million, or $0.93 per diluted share, in the prior year. The Company's effective tax rate was 40.0% for 2012 compared to an effective tax rate of 39.0% in 2011.

During 2012, pursuant to its previously announced stock repurchase program, the Company repurchased approximately 1.6 million shares of its common stock for $49.1 million, including approximately 171,000 shares in the fourth quarter of 2012. At December 31, 2012, approximately $50.9 million remained available under the Company's $100 million stock repurchase program.

Company Outlook

In 2013, the Company expects to achieve the following for the full year:

  • Net sales in the range of $885 million to $920 million.
  • Comparable store net sales increasing in the mid-single digits.
  • The opening of a total of 25 to 35 new store locations.
  • Earnings per diluted share in the range of $1.90 to $2.15, based on a diluted share count of approximately 28.0 million shares, which is exclusive of any future impact of the stock repurchase program.

Mr. Lynch concluded, "I am excited to lead this team into 2013. We expect to deliver continued growth in our operating margin by building on strategic initiatives both currently underway and those to be launched in 2013, including our 'store of the future' with its expanded showroom. In the coming year, we will aggressively pursue share in our highly fragmented market, and we expect to further enhance our assortment of quality products, optimize our supply chain and strengthen our commitment to develop the best people serving our customers. We are pleased that we have been able to maintain our strong capital structure and debt-free balance sheet, allowing us to invest in the long-term health of our business while rewarding our long-term shareholders. As we move forward, we believe we are well-positioned to further expand our footprint and deliver multi-year expansion of our net sales and operating margin."

Conference Call and Webcast Information

The Company plans to host a conference call and audio webcast today, February 20, 2013, at 10:00 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 through February 27, 2013 and may be accessed by dialing (877) 870-5176 or (858) 384-5517 and entering conference ID number 408486. The live conference call and replay may also be accessed via audio webcast at the Investor Relations section of the Company's website, www.lumberliquidators.com.

Raymond James Annual Institutional Investors Conference

The Company today also announced that Mr. Lynch and Daniel E. Terrell, Chief Financial Officer, will present at the Raymond James Annual Institutional Investors Conference. The Company's presentation is scheduled for Monday, March 4, 2013, at 10:25 a.m. Eastern Time in Orlando. The live webcast and replay of the Company's presentation may be accessed via audio webcast at the Investor Relations section of the Company's website, www.lumberliquidators.com.

About Lumber Liquidators

With over 290 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring. The Company features more than 340 first quality flooring varieties, including solid and engineered hardwood, bamboo, cork, laminate and resilient vinyl. Additionally, Lumber Liquidators provides a wide selection of flooring enhancements and accessories to complement, install and maintain your new floor. Every location is staffed with flooring experts who can provide advice and useful information about Lumber Liquidators' low priced product, much of which is in-stock and ready for delivery.

With quality brands including Bellawood Prefinished Hardwood and Morning Star Bamboo, Lumber Liquidators' flooring is often featured on popular television shows such as HGTV's Dream Home.

For more information, please visit www.lumberliquidators.com or call 1.800.HARDWOOD. You can also follow the Company on Facebook and Twitter.

Forward-Looking Statements

This press release and accompanying financial tables may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act. These statements are based on currently available information as of the date of such statements and are subject to risks and uncertainties that may cause actual results to differ. The Company specifically disclaims any obligation to update these statements which speak only as of their respective dates, except as may be required under the federal securities laws. Information regarding these additional risks and uncertainties is contained in the Company's filings with the Securities and Exchange Commission.

  
Lumber Liquidators Holdings, Inc.
 
Consolidated Balance Sheets
(in thousands, except share data)
 
December 31,
 2012  2011 
Assets
Current Assets:
Cash and Cash Equivalents$64,167$61,675
Merchandise Inventories206,704164,139
Prepaid Expenses5,1684,292
Other Current Assets 12,106  7,863 
Total Current Assets288,145237,969
Property and Equipment, net47,76444,147
Goodwill9,6939,693
Other Assets 1,785  3,045 
Total Assets$347,387 $294,854 
 
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable$55,110$38,161
Customer Deposits and Store Credits25,74718,120
Accrued Compensation7,9692,509
Sales and Income Tax Liabilities4,3145,092
Other Current Liabilities 7,887  6,839 
Total Current Liabilities101,02770,721
 
Deferred Rent3,6533,328
Deferred Tax Liability8,1665,721
 
Stockholders' Equity:
Common Stock ($0.001 par value; 35,000,000 authorized; 27,214,144 and 27,894,543 outstanding, respectively)2928
Treasury Stock, at cost (1,719,706 and 58,730 shares, respectively)(50,552)(1,116)
Additional Capital131,724110,163
Retained Earnings153,267106,203
Accumulated Other Comprehensive Income (Loss) 73  (194)
Total Stockholders' Equity 234,541  215,084 
Total Liabilities and Stockholders' Equity$347,387 $294,854 
  
Lumber Liquidators Holdings, Inc.
 
Consolidated Statements of Income
(in thousands, except share data and per share amounts)
 
Three Months EndedYear Ended
December 31,December 31,
 2012   2011  2012   2011 
(unaudited)
Net Sales$210,655$174,454$813,327$681,587
Cost of Sales 128,373  112,544  504,542  440,912 
Gross Profit82,28261,910308,785240,675
 
Selling, General and Administrative Expenses 57,800  48,405  230,439  198,237 
Operating Income24,48213,50578,34642,438
 
Interest and Other Income, net (40) (284) (140) (587)
Income Before Income Taxes24,52213,78978,48643,025
 
Provision for Income Taxes 10,714  5,331  31,422  16,769 
Net Income$13,808 $8,458 $47,064 $26,256 
Net Income per Common Share—Basic$0.51 $0.30 $1.71 $0.95 
Net Income per Common Share—Diluted$0.50 $0.30 $1.68 $0.93 
Weighted Average Common Shares Outstanding:
Basic27,240,23527,804,21927,448,33327,706,629
Diluted27,845,21428,379,99428,031,45328,379,693
 
Lumber Liquidators Holdings, Inc.
 
Consolidated Statements of Cash Flows
(in thousands)
 
Year Ended December 31,
 2012   2011   2010 
Cash Flows from Operating Activities:
Net Income$47,064$26,256$26,266
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization9,9578,3285,773
Deferred Income Taxes1602,4024,300
Stock-Based Compensation Expense3,9974,0053,091
Changes in Operating Assets and Liabilities:
Merchandise Inventories(42,712)(9,197)(21,789)
Accounts Payable16,7564,4671,136
Customer Deposits and Store Credits7,6266,1042,234
Prepaid Expenses and Other Current Assets(2,835)(1,943)(3,548)
Other Assets and Liabilities 7,256  3,679  (487)
Net Cash Provided by Operating Activities47,26944,10116,976
 
Cash Flows from Investing Activities:
Purchases of Property and Equipment(13,376)(16,988)(20,535)
Cash Paid for Acquisition   (4,725)  
Net Cash Used in Investing Activities(13,376)(21,713)(20,535)
 
Cash Flows from Financing Activities:
Payments for Stock Repurchases(49,436)(249)(389)
Proceeds from the Exercise of Stock Options10,4543,0701,796
Excess Tax Benefits on Stock Option Exercises 7,131  1,690  1,307 
Net Cash (Used in) Provided by Financing Activities (31,851) 4,511  2,714 
Effect of Exchange Rates on Cash and Cash Equivalents450(54)
Net Increase (Decrease) in Cash and Cash Equivalents2,49226,845(845)
Cash and Cash Equivalents, Beginning of Year 61,675  34,830  35,675 
Cash and Cash Equivalents, End of Year$64,167 $61,675 $34,830 
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Lumber Liquidators Holdings, Inc.
 
Other Supporting Schedules
(unaudited)
 
Three Months EndedYear Ended
December 31,December 31,
 2012