Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 28, 2019 | Apr. 30, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Floor & Decor Holdings, Inc. | |
Entity Central Index Key | 0001507079 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 28, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-26 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 98,244,175 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 28, 2019 | Dec. 27, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 451 | $ 644 |
Income taxes receivable | 0 | 4,324 |
Receivables, net | 66,101 | 67,527 |
Inventories, net | 437,504 | 471,014 |
Prepaid expenses and other current assets | 23,342 | 15,949 |
Total current assets | 527,398 | 559,458 |
Fixed assets, net | 338,888 | 328,366 |
Right of use assets | 659,115 | 0 |
Intangible assets, net | 109,322 | 109,330 |
Goodwill | 227,447 | 227,447 |
Other assets | 11,181 | 9,490 |
Total long-term assets | 1,345,953 | 674,633 |
Total assets | 1,873,351 | 1,234,091 |
Current liabilities: | ||
Current portion of term loans | 3,500 | 3,500 |
Current portion of lease liability | 73,615 | 0 |
Trade accounts payable | 229,498 | 313,503 |
Accrued expenses and other current liabilities | 76,390 | 82,038 |
Income taxes payable | 8,765 | 0 |
Deferred revenue | 6,581 | 5,244 |
Total current liabilities | 398,349 | 404,285 |
Term loans | 141,152 | 141,834 |
Revolving line of credit | 2,100 | 0 |
Deferred rent | 0 | 36,980 |
Lease liabilities | 683,672 | 0 |
Deferred income tax liabilities, net | 25,666 | 26,838 |
Tenant improvement allowances | 0 | 37,295 |
Other liabilities | 2,451 | 2,550 |
Total long-term liabilities | 855,041 | 245,497 |
Total liabilities | 1,253,390 | 649,782 |
Commitments and contingencies | ||
Capital stock: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at March 28, 2019 and December 27, 2018 | 0 | 0 |
Additional paid-in capital | 345,907 | 340,462 |
Accumulated other comprehensive income (loss), net | (148) | 186 |
Retained earnings | 274,104 | 243,563 |
Total stockholders' equity | 619,961 | 584,309 |
Total liabilities and stockholders' equity | 1,873,351 | 1,234,091 |
Class A Common Stock | ||
Capital stock: | ||
Common stock | 98 | 98 |
Class B Common Stock | ||
Capital stock: | ||
Common stock | 0 | 0 |
Class C Common Stock | ||
Capital stock: | ||
Common stock | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 28, 2019 | Dec. 27, 2018 |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 97,997,529 | 97,588,539 |
Common stock, shares outstanding | 97,997,529 | 97,588,539 |
Class B Common Stock | ||
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Class C Common Stock | ||
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 28, 2019 | Mar. 29, 2018 | |
Income Statement [Abstract] | ||
Net Sales | $ 477,050 | $ 402,948 |
Type of Revenue [Extensible List] | us-gaap:ProductMember | |
Cost of sales | $ 275,676 | 237,562 |
Type of Cost, Good or Service [Extensible List] | us-gaap:ProductMember | |
Gross profit | $ 201,374 | 165,386 |
Operating expenses: | ||
Selling and store operating | 127,383 | 102,567 |
General and administrative | 30,202 | 23,339 |
Pre-opening | 4,027 | 2,974 |
Total operating expenses | 161,612 | 128,880 |
Operating income | 39,762 | 36,506 |
Interest expense | 2,921 | 1,784 |
Income before income taxes | 36,841 | 34,722 |
Provision for income taxes | 6,121 | 2,851 |
Net income | 30,720 | 31,871 |
Change in fair value of hedge instruments, net of tax | (334) | 430 |
Total comprehensive income | $ 30,386 | $ 32,301 |
Basic earnings per share | $ 0.31 | $ 0.33 |
Diluted earnings per share | $ 0.29 | $ 0.30 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common stockClass A Common Stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Class A Common Stock | Class B Common Stock | Class C Common Stock | Total |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect from adoption | $ 7,826 | $ 7,826 | ||||||
Balance at Dec. 28, 2017 | $ 96 | $ 323,419 | $ (205) | 119,550 | 442,860 | |||
Balance (in shares) at Dec. 28, 2017 | 95,509,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 1,415 | 1,415 | ||||||
Exercise of stock options | 3,195 | 3,195 | ||||||
Exercise of stock options (in shares) | 585,000 | |||||||
Other comprehensive gain (loss), net of tax | 430 | 430 | ||||||
Net income | 31,871 | 31,871 | ||||||
Balance at Mar. 29, 2018 | $ 96 | 328,029 | 225 | 159,247 | 487,597 | |||
Balance (in shares) at Mar. 29, 2018 | 96,094,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect from adoption | (179) | (179) | ||||||
Balance at Dec. 27, 2018 | $ 98 | 340,462 | 186 | 243,563 | 584,309 | |||
Balance (in shares) at Dec. 27, 2018 | 97,588,000 | 97,588,539 | 0 | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 2,250 | 2,250 | ||||||
Exercise of stock options | 1,776 | 1,776 | ||||||
Exercise of stock options (in shares) | 348,000 | |||||||
Shares issued under employee stock plan | 1,419 | 1,419 | ||||||
Shares issued under employee stock plan (in shares) | 61,000 | |||||||
Other comprehensive gain (loss), net of tax | (334) | (334) | ||||||
Net income | 30,720 | 30,720 | ||||||
Balance at Mar. 28, 2019 | $ 98 | $ 345,907 | $ (148) | $ 274,104 | $ 619,961 | |||
Balance (in shares) at Mar. 28, 2019 | 97,997,000 | 97,997,529 | 0 | 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 28, 2019 | Mar. 29, 2018 | |
Operating activities | ||
Net income | $ 30,720 | $ 31,871 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,184 | 11,534 |
Amortization of tenant improvement allowances | 0 | (1,045) |
Deferred income taxes | (1,057) | 2,111 |
Interest cap derivative contracts | 610 | (535) |
Stock based compensation expense | 2,250 | 1,415 |
Changes in operating assets and liabilities: | ||
Receivables, net | 22,568 | 15,775 |
Inventories, net | 33,510 | (9,262) |
Trade accounts payable | (84,005) | (3,723) |
Accrued expenses and other current liabilities | 3,017 | (12,926) |
Income taxes | 13,143 | 780 |
Deferred revenue | 1,337 | 1,500 |
Deferred rent | 0 | 2,707 |
Tenant improvement allowances | 0 | 128 |
Other, net | (12,256) | 282 |
Net cash provided by operating activities | 27,021 | 40,612 |
Investing activities | ||
Purchases of fixed assets | (31,634) | (27,841) |
Net cash used in investing activities | (31,634) | (27,841) |
Financing activities | ||
Borrowings on revolving line of credit | 80,200 | 51,900 |
Payments on revolving line of credit | (78,100) | (66,100) |
Payments on term loans | (875) | (1,750) |
Proceeds from exercise of stock options | 1,776 | 3,195 |
Proceeds from employee stock purchase plan | 1,419 | 0 |
Net cash used in financing activities | 4,420 | (12,755) |
Net (decrease) increase in cash and cash equivalents | (193) | 16 |
Cash and cash equivalents, beginning of the period | 644 | 556 |
Cash and cash equivalents, end of the period | 451 | 572 |
Supplemental disclosures of cash flow information | ||
Buildings and equipment acquired under operating leases | 53,049 | 0 |
Cash paid for interest | 1,987 | 2,368 |
Cash paid for income taxes | 0 | 19 |
Fixed assets accrued at the end of the period | 10,836 | 16,332 |
Fixed assets acquired as part of lease - paid for by lessor | $ 0 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 28, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Nature of Business Floor & Decor Holdings, Inc., together with its subsidiaries (the “Company,” “we,” “our” or “us”) is a highly differentiated, rapidly growing specialty retailer of hard surface flooring and related accessories. We offer a broad in stock assortment of tile, wood, laminate and natural stone flooring along with decorative and installation accessories at everyday low prices. Our stores appeal to a variety of customers, including professional installers and commercial businesses (“Pro”), Do It Yourself customers (“DIY”) and customers who buy the products for professional installation (“Buy it Yourself” or “BIY”). We operate within one reportable segment. As of March 28, 2019, the Company, through its wholly owned subsidiary, Floor and Decor Outlets of America, Inc. (“F&D”) , operates 103 warehouse-format stores, which average 75,000 square feet, and one small-format standalone design center in 28 states, as well as three distribution centers and an e-commerce site, FloorandDecor.com. Fiscal Year The Company’s fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31st. Fiscal years ended December 26, 2019 (“fiscal 2019”) and December 27, 2018 (“fiscal 2018”) include 52 weeks. When a 53-week fiscal year occurs, we report the additional week at the end of the fiscal fourth quarter. 52-week fiscal years consist of thirteen-week periods in the first, second, third and fourth quarters of the fiscal year. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The Condensed Consolidated Balance Sheet as of December 27, 2018 has been derived from the audited Consolidated Balance Sheet for the fiscal year then ended. The interim condensed consolidated financial statements should be read together with the audited consolidated financial statements and related footnote disclosures included in the Company’s Annual Report on Form 10-K for fiscal 2018, filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2019 (the “Annual Report”). Management believes the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of results for the interim periods presented. Results of operations for the thirteen weeks ended March 28, 2019 and March 29, 2018 are not necessarily indicative of the results to be expected for the full year. There have been no updates to our Significant Accounting Policies since the Annual Report, except for the policy changes in connection with the newly adopted lease accounting standard outlined in Note 5. For information regarding our Significant Accounting Policies and Estimates, see the “Summary of Significant Accounting Policies” section of “Item 8. Financial Statements and Supplementary Data” of our Annual Report. Recently Issued Accounting Pronouncements There have been no updates to Recently Issued Accounting Pronouncements that have yet to be adopted since the Annual Report. For information regarding Recently Issued Accounting Pronouncements, see the “Summary of Significant Accounting Policies” section of “Item 8. Financial Statements and Supplementary Data” of our Annual Report. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, " Leases (Topic 842) ." ASU No. 2016-02 requires that lessees recognize lease assets and lease liabilities on the balance sheet with an option to exclude short-term leases (leases with terms of 12 months or less). The guidance also requires disclosures about the amount, timing, and uncertainty of cash flows arising from leases. We adopted the ASU on December 28, 2018, the first day of our fiscal year 2019, using the modified retrospective approach. The cumulative effect adjustment upon adoption resulted in an immaterial opening balance sheet reduction to retained earnings. The adoption of ASU No. 2016-02 in the first quarter of fiscal 2019 had a material impact on the Company’s Condensed Consolidated Balance Sheet in respect to the right of use assets, lease liabilities, tenant improvement allowances, and deferred rent but did not have a material impact on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income or Statements of Cash Flows. Refer to Note 5 for further details. |
Revenues
Revenues | 3 Months Ended |
Mar. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 2. Revenues Disaggregated Revenue The following table presents the net sales of each major product category (in thousands): Thirteen Weeks Ended March 28, 2019 March 29, 2018 % of % of Product Category Net Sales Net Sales Net Sales Net Sales Tile $ 125,310 26 % $ 117,402 29 % Laminate / Luxury Vinyl Plank 97,502 20 66,892 17 Decorative Accessories 94,440 20 78,489 19 Installation Materials and Tools 79,709 17 63,581 16 Wood 49,230 10 46,485 12 Natural Stone 30,887 7 28,006 7 Delivery and Other (28) — 2,093 — Total $ 477,050 100 % $ 402,948 100 % . |
Debt
Debt | 3 Months Ended |
Mar. 28, 2019 | |
Debt | |
Debt | 3. Debt Fair Value of Debt Market risk associated with our fixed and variable rate long‑term debt relates to the potential change in fair value and negative impact to future earnings, respectively, from a change in interest rates. The aggregate fair value of debt is based primarily on our estimates of interest rates, maturities, credit risk, and underlying collateral and is classified as Level 3 within the fair value hierarchy. At March 28, 2019 and December 27, 2018, the carrying amounts and fair values of our debt were as follows: March 28, December 27, (in thousands) 2019 2018 Total debt at par value $ 150,225 $ 149,000 Less: unamortized discount and debt issuance costs 3,473 3,666 Net carrying amount $ 146,752 $ 145,334 Fair value $ 148,003 $ 147,883 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 28, 2019 | |
Income Taxes | |
Income Taxes | 4. Income Taxes Our effective income tax rates were 16.6% and 8.2% for the thirteen weeks ended March 28, 2019 and March 29, 2018, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 28, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 5. Commitments and Contingencies Lease Commitments On December 28, 2018, the first day of our fiscal year 2019, we adopted ASU No. 2016-02, "Leases (Topic 842)", which requires that lessees recognize lease assets and lease liabilities for all leases on the balance sheet with an option to exclude short-term leases (leases with terms of 12 months or less). We adopted ASU No. 2016-02 using the modified retrospective approach and elected the package of practical expedients to use in transition, which permitted us not to reassess, under the new standard, our prior conclusions about lease identification and lease classification. The cumulative effect adjustment upon adoption of ASU No. 2016-02 resulted in an immaterial adjustment to retained earnings. The adoption also resulted in the addition of $621 million right of use assets and corresponding $701 million lease liabilities to our balance sheet, while eliminating deferred rent and tenant improvement allowances. Additionally, we do not separate lease and nonlease components of contracts. The majority of our long-term operating lease agreements through F&D are for our corporate office, retail locations, and distribution centers, which expire in various years through 2038. All of our building leases have 10-15 year lease terms, except one lease which has a 20-year term. The majority of our building leases also include options to extend, which are factored into the recognition of their respective assets and liabilities when appropriate. Additionally, one building lease contains variable lease payments, which are determined based on a percentage of retail sales over a contractual level, and we sublease real estate within one store and one distribution center to third parties. Certain lease agreements include escalating rents over the lease terms which, under the new accounting standard, results in rent being expensed on a straight‑line basis over the life of the lease that commences on the date we have the right to control the property. Our lease agreements do not contain any residual value guarantees or restrictive covenants that would reasonably be expected to have a material impact on our business. As most of our leases do not provide a readily determinable implicit rate, we use a third party to determine our incremental borrowing rate, specifically the Bloomberg yield curve for US consumers with a BB- credit rating. The rate is adjusted for collateralization as well as inflation. Lease Position The table below presents supplemental balance sheet information related to operating leases. As of (in thousands, except lease term and discount rate) Balance Sheet Classification March 28, 2019 Assets Building Right of use assets $ 647,667 Equipment Right of use assets 6,263 Land Right of use assets 245 Software Right of use assets 4,940 Total operating lease assets $ 659,115 Liabilities Current Building Current portion of lease liabilities $ 68,927 Equipment Current portion of lease liabilities 2,784 Land Current portion of lease liabilities 93 Software Current portion of lease liabilities 1,811 Total current operating lease liabilities $ 73,615 Noncurrent Building Lease liabilities $ 675,769 Equipment Lease liabilities 4,663 Land Lease liabilities 158 Software Lease liabilities 3,082 Total noncurrent operating lease liabilities $ 683,672 Total operating lease liabilities $ 757,287 Weighted-average remaining lease term 9 years Weighted-average discount rate Lease Costs The table below presents components of lease expense for operating leases. Thirteen Weeks Ended (in thousands) Classification March 28, 2019 Operating lease cost (1) Selling and store operating $ 26,015 Sublease income Selling and store operating (623) Total lease cost $ 25,392 (1) Includes variable lease costs, which are immaterial. Undiscounted Cash Flows Future minimum lease payments under non‑cancelable operating leases (with initial or remaining lease terms in excess of one year) as of March 28, 2019, were: (in thousands) Amount Thirty-nine weeks ended December 26, 2019 $ 82,939 2020 112,086 2021 105,317 2022 98,163 2023 93,513 Thereafter 503,402 Total minimum lease payments (2) $ 995,420 Less: amount of lease payments representing interest 238,133 Present value of future minimum lease payments 757,287 Less: current obligations under leases 73,615 Long-term lease obligations $ 683,672 (2) Future lease payments exclude $311 million of legally binding minimum lease payments for operating leases signed but not yet commenced. For the thirteen weeks ended March 28, 2019, cash paid for operating leases was $24.6 million. Litigation We are subject to other various legal actions, claims and proceedings arising in the ordinary course of business, which may include claims related to general liability, workers’ compensation, product liability, intellectual property and employment-related matters resulting from our business activities. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. These proceedings are not expected to have a material impact on our consolidated financial position, cash flows or results of operations. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 28, 2019 | |
Stock-Based Compensation Abstract | |
Stock-Based Compensation | 6. Stock Based Compensation At our 2018 annual meeting of stockholders held on May 17, 2018, our stockholders approved the Floor & Decor Holdings, Inc. Employee Stock Purchase Plan (the “ESPP”), which became available to substantially all of our employees beginning in the third quarter of fiscal 2018. The ESPP permits eligible employees to purchase shares of our common stock through payroll deductions, subject to certain limitations. The purchase price of the shares under the ESPP in no event will be less than the lesser of 85% of the lower of the fair market value of our common stock on either the first or last trading day of each six-month offering period. There were 1,500,000 shares of our Class A common stock, par value $0.001 per share, approved for issuance. On December 31, 2018, $1.4 million in contributions were used to purchase 60,871 shares of our Class A common stock. Additionally, during the thirteen weeks ended March 28, 2019, the Company recognized $143 thousand of stock-based compensation expense related to the ESPP. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 28, 2019 | |
Earnings Per Share | |
Earnings Per Share | 7. Earnings Per Share Net Income per Common Share We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effect of stock options. The following table shows the computation of basic and diluted earnings per share: Thirteen Weeks Ended March 28, March 29, (in thousands, except per share data) 2019 2018 Net income $ 30,720 $ 31,871 Basic weighted average shares outstanding 97,785 95,714 Dilutive effect of share based awards 6,536 8,951 Diluted weighted average shares outstanding 104,321 104,665 Basic earnings per share $ 0.31 $ 0.33 Diluted earnings per share $ 0.29 $ 0.30 The following awards have been excluded from the computation of dilutive effect of share based awards because the effect would be anti‑dilutive: Thirteen Weeks Ended March 28, March 29, (in thousands) 2019 2018 Stock options 986 98 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 28, 2019 | |
Summary of Significant Accounting Policies | |
Fiscal Year | Fiscal Year The Company’s fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31st. Fiscal years ended December 26, 2019 (“fiscal 2019”) and December 27, 2018 (“fiscal 2018”) include 52 weeks. When a 53-week fiscal year occurs, we report the additional week at the end of the fiscal fourth quarter. 52-week fiscal years consist of thirteen-week periods in the first, second, third and fourth quarters of the fiscal year. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The Condensed Consolidated Balance Sheet as of December 27, 2018 has been derived from the audited Consolidated Balance Sheet for the fiscal year then ended. The interim condensed consolidated financial statements should be read together with the audited consolidated financial statements and related footnote disclosures included in the Company’s Annual Report on Form 10-K for fiscal 2018, filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2019 (the “Annual Report”). Management believes the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of results for the interim periods presented. Results of operations for the thirteen weeks ended March 28, 2019 and March 29, 2018 are not necessarily indicative of the results to be expected for the full year. |
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements There have been no updates to Recently Issued Accounting Pronouncements that have yet to be adopted since the Annual Report. For information regarding Recently Issued Accounting Pronouncements, see the “Summary of Significant Accounting Policies” section of “Item 8. Financial Statements and Supplementary Data” of our Annual Report. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, " Leases (Topic 842) ." ASU No. 2016-02 requires that lessees recognize lease assets and lease liabilities on the balance sheet with an option to exclude short-term leases (leases with terms of 12 months or less). The guidance also requires disclosures about the amount, timing, and uncertainty of cash flows arising from leases. We adopted the ASU on December 28, 2018, the first day of our fiscal year 2019, using the modified retrospective approach. The cumulative effect adjustment upon adoption resulted in an immaterial opening balance sheet reduction to retained earnings. The adoption of ASU No. 2016-02 in the first quarter of fiscal 2019 had a material impact on the Company’s Condensed Consolidated Balance Sheet in respect to the right of use assets, lease liabilities, tenant improvement allowances, and deferred rent but did not have a material impact on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income or Statements of Cash Flows. Refer to Note 5 for further details. |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 28, 2019 | |
Disaggregation of Revenue [Abstract] | |
Disaggregated Revenue | Thirteen Weeks Ended March 28, 2019 March 29, 2018 % of % of Product Category Net Sales Net Sales Net Sales Net Sales Tile $ 125,310 26 % $ 117,402 29 % Laminate / Luxury Vinyl Plank 97,502 20 66,892 17 Decorative Accessories 94,440 20 78,489 19 Installation Materials and Tools 79,709 17 63,581 16 Wood 49,230 10 46,485 12 Natural Stone 30,887 7 28,006 7 Delivery and Other (28) — 2,093 — Total $ 477,050 100 % $ 402,948 100 % |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 28, 2019 | |
Debt | |
Schedule of fair value debt | March 28, December 27, (in thousands) 2019 2018 Total debt at par value $ 150,225 $ 149,000 Less: unamortized discount and debt issuance costs 3,473 3,666 Net carrying amount $ 146,752 $ 145,334 Fair value $ 148,003 $ 147,883 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 28, 2019 | |
Commitments and Contingencies. | |
Schedule of supplemental balance sheet information related to operating leases | As of (in thousands, except lease term and discount rate) Balance Sheet Classification March 28, 2019 Assets Building Right of use assets $ 647,667 Equipment Right of use assets 6,263 Land Right of use assets 245 Software Right of use assets 4,940 Total operating lease assets $ 659,115 Liabilities Current Building Current portion of lease liabilities $ 68,927 Equipment Current portion of lease liabilities 2,784 Land Current portion of lease liabilities 93 Software Current portion of lease liabilities 1,811 Total current operating lease liabilities $ 73,615 Noncurrent Building Lease liabilities $ 675,769 Equipment Lease liabilities 4,663 Land Lease liabilities 158 Software Lease liabilities 3,082 Total noncurrent operating lease liabilities $ 683,672 Total operating lease liabilities $ 757,287 Weighted-average remaining lease term 9 years Weighted-average discount rate |
Schedule of components of lease expense | Thirteen Weeks Ended (in thousands) Classification March 28, 2019 Operating lease cost (1) Selling and store operating $ 26,015 Sublease income Selling and store operating (623) Total lease cost $ 25,392 (1) Includes variable lease costs, which are immaterial. |
Schedule of Future minimum lease payments under non cancelable operating leases | (in thousands) Amount Thirty-nine weeks ended December 26, 2019 $ 82,939 2020 112,086 2021 105,317 2022 98,163 2023 93,513 Thereafter 503,402 Total minimum lease payments (2) $ 995,420 Less: amount of lease payments representing interest 238,133 Present value of future minimum lease payments 757,287 Less: current obligations under leases 73,615 Long-term lease obligations $ 683,672 (2) Future lease payments exclude $311 million of legally binding minimum lease payments for operating leases signed but not yet commenced. For the thirteen weeks ended March 28, 2019, cash paid for operating leases was $24.6 million. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 28, 2019 | |
Earnings Per Share | |
Schedule of computation of basic and diluted earnings per share | Thirteen Weeks Ended March 28, March 29, (in thousands, except per share data) 2019 2018 Net income $ 30,720 $ 31,871 Basic weighted average shares outstanding 97,785 95,714 Dilutive effect of share based awards 6,536 8,951 Diluted weighted average shares outstanding 104,321 104,665 Basic earnings per share $ 0.31 $ 0.33 Diluted earnings per share $ 0.29 $ 0.30 |
Schedule of awards excluded from computation | Thirteen Weeks Ended March 28, March 29, (in thousands) 2019 2018 Stock options 986 98 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) ft² in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 28, 2019ft²statesegmentfacility | Dec. 26, 2019 | Dec. 27, 2018 | |
Real Estate Properties [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Number of states with facilities | state | 28 | ||
Number of distribution centers | 3 | ||
Fiscal year period | 364 days | 364 days | |
Fiscal quarter period | 91 days | ||
Minimum | |||
Real Estate Properties [Line Items] | |||
Fiscal year period | 364 days | ||
Maximum | |||
Real Estate Properties [Line Items] | |||
Fiscal year period | 371 days | ||
Warehouse Format Store [Member] | |||
Real Estate Properties [Line Items] | |||
Number of stores | 103 | ||
Area of facility | ft² | 75 | ||
Small Format Store [Member] | |||
Real Estate Properties [Line Items] | |||
Number of stores | 1 |
Disaggregated Revenue (Details)
Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 28, 2019 | Mar. 29, 2018 | |
Net Sales | $ 477,050 | $ 402,948 |
Percentage of Net Sales | 100.00% | 100.00% |
Tile | ||
Net Sales | $ 125,310 | $ 117,402 |
Percentage of Net Sales | 26.00% | 29.00% |
Decorative Accessories | ||
Net Sales | $ 94,440 | $ 78,489 |
Percentage of Net Sales | 20.00% | 19.00% |
Laminate Luxury Vinyl Plank | ||
Net Sales | $ 97,502 | $ 66,892 |
Percentage of Net Sales | 20.00% | 17.00% |
Installation Materials And Tools | ||
Net Sales | $ 79,709 | $ 63,581 |
Percentage of Net Sales | 17.00% | 16.00% |
Wood | ||
Net Sales | $ 49,230 | $ 46,485 |
Percentage of Net Sales | 10.00% | 12.00% |
Natural Stone | ||
Net Sales | $ 30,887 | $ 28,006 |
Percentage of Net Sales | 7.00% | 7.00% |
Delivery and Other | ||
Net Sales | $ (28) | $ 2,093 |
Percentage of Net Sales | 0.00% | 0.00% |
Debt - Fair Value of Debt (Deta
Debt - Fair Value of Debt (Details) - USD ($) $ in Thousands | Mar. 28, 2019 | Dec. 27, 2018 |
Debt Instrument [Line Items] | ||
Total debt at par value | $ 150,225 | $ 149,000 |
Less: unamortized discount and debt issuance costs | 3,473 | 3,666 |
Net carrying amount | 146,752 | 145,334 |
Level 3 | ||
Debt Instrument [Line Items] | ||
Fair value | $ 148,003 | $ 147,883 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 28, 2019 | Mar. 29, 2018 | |
Income Taxes | ||
Effective income tax rate (as a percent) | 16.60% | 8.20% |
Commitments and Contingencies -
Commitments and Contingencies - Lease costs (Details) $ in Thousands | 3 Months Ended | ||
Mar. 28, 2019USD ($)facility | Dec. 28, 2018USD ($) | Dec. 27, 2018USD ($) | |
Lease Commitments | |||
Lease, Practical Expedients, Package [true false] | true | ||
Right of use assets | $ 659,115 | $ 0 | |
Operating Lease, Liability, Total | $ 757,287 | ||
Lease term for 1 particular lease | 20 years | ||
Existence of option to extend | true | ||
Number of leases with variable payments | facility | 1 | ||
Number of stores subleased | facility | 1 | ||
Number of distribution centers subleased | facility | 1 | ||
Existence of residual value guarantee | false | ||
Current portion of lease liability | $ 73,615 | 0 | |
Lease liabilities | $ 683,672 | $ 0 | |
Weighted average remaining lease term | 9 years | ||
Weighted average discount rate | 5.40% | ||
Lease, Cost [Abstract] | |||
Operating lease cost | $ 26,015 | ||
Sublease income | (623) | ||
Lease, Cost, Total | 25,392 | ||
Building [Member] | |||
Lease Commitments | |||
Right of use assets | 647,667 | ||
Current portion of lease liability | 68,927 | ||
Lease liabilities | 675,769 | ||
Equipment [Member] | |||
Lease Commitments | |||
Right of use assets | 6,263 | ||
Current portion of lease liability | 2,784 | ||
Lease liabilities | 4,663 | ||
Land [Member] | |||
Lease Commitments | |||
Right of use assets | 245 | ||
Current portion of lease liability | 93 | ||
Lease liabilities | 158 | ||
Software and Software Development Costs [Member] | |||
Lease Commitments | |||
Right of use assets | 4,940 | ||
Current portion of lease liability | 1,811 | ||
Lease liabilities | $ 3,082 | ||
Minimum | |||
Lease Commitments | |||
Lease term | 10 years | ||
Maximum | |||
Lease Commitments | |||
Lease term | 15 years | ||
Accounting Standards Update 2016-02 [Member] | Restatement Adjustment [Member] | |||
Lease Commitments | |||
Right of use assets | $ 621,000 | ||
Operating Lease, Liability, Total | $ 701,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Maturity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 28, 2019 | Dec. 27, 2018 | |
Operating Lease Liabilities, Payments Due [Abstract] | |||
Thirty-nine weeks ended December 26, 2019 | $ 82,939 | ||
2020 | 112,086 | ||
2021 | 105,317 | ||
2022 | 98,163 | ||
2023 | 93,513 | ||
Thereafter | 503,402 | ||
Total minimum lease payments | 995,420 | ||
Amount representing interest | 238,133 | ||
Operating Lease, Liability, Total | 757,287 | ||
Current portion of lease liability | 73,615 | $ 0 | |
Long-term lease obligations | 683,672 | $ 0 | |
Minimum lease payments for leases not yet commenced | $ 311,000 | ||
Cash paid during the period against operating lease liabilities | $ 24,600 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2018 | May 17, 2018 | Mar. 28, 2019 | Dec. 27, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued under employee stock plan (in shares) | 60,871 | |||
Shares issued under employee stock plan | $ 1,400 | $ 1,419 | ||
Stock purchase plan, expense | $ 143 | |||
Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Employee Stock Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair market value measurement period | 6 months | |||
Employee Stock Purchase Plan [Member] | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Purchase price, as a percentage of fair market value | 85.00% | |||
Employee Stock Purchase Plan [Member] | Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares of stock authorized under the plan | 1,500,000 | |||
Common stock, par value | $ 0.001 |
Earnings Per Share - Calculatio
Earnings Per Share - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 28, 2019 | Mar. 29, 2018 | |
Earnings Per Share | ||
Net income | $ 30,720 | $ 31,871 |
Basic weighted average shares outstanding | 97,785 | 95,714 |
Dilutive effect of share based awards | 6,536 | 8,951 |
Diluted weighted average shares outstanding | 104,321 | 104,665 |
Basic earnings per share | $ 0.31 | $ 0.33 |
Diluted earnings per share | $ 0.29 | $ 0.30 |
Earnings Per Share - Dilutive e
Earnings Per Share - Dilutive effects of share based awards (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 28, 2019 | Mar. 29, 2018 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares excluded from the computation of diluted earnings (per share) | 986 | 98 |