FND - Earnings call transcript Q3 2017 | Floor & Decor Holdings, Inc.

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Operator

Good afternoon, ladies and gentlemen. This is Floor & Decor's Third Quarter 2017 Earnings Call. At this time, all participants are in a listen-only mode.

As a reminder, this conference call is being recorded today, Thursday, November 2, 2017. I will now turn the call over to Matt McConnell, Manager of Investor Relations at Floor & Decor.

Matt McConnell

good and Derrick, you, afternoon, everyone. Thank Matt am McConnell, Manager Relations. Investor of I

Chief in me are Executive will Lang, us and and today the Vice Executive for Officer. Taylor, President Joining Merchandising call join Officer; President Tom and on Officer Lisa room the is, Chief Chief Executive Vice the Financial Laube, session. Also who Trevor Q&A

including statement. contain Harbor get forward-looking in language. such projections of Securities for forward-looking remind Floor risks SEC information company's materially note are that market you other we actual a market results future is Please expectations, statement or statements. financial of call listed differ statement & that meaning in to and within refers guarantee is any subject assumes or Any obligation future also started, conference past a those statements projections like or webcast made from the results. of conditions the expressed the performance including Comments not Litigation characterizations events future to The company's Safe of I'd during Reform update those to this no Before XXXX of such to uncertainties. filings. the Private forward-looking Decor reason and Act forward-looking and future any could

with will available Relations on recorded of website A Investor the earnings replay materials directly Regulation most conference call, website our is the press reconciliation A G. of SEC be together Investor call GAAP measures in financial measures each can release by to Relations be this During our ir.flooranddecor.com. available these found defined the company non-GAAP which financial on may as of non-GAAP this measure ir.flooranddecor.com. related discuss comparable

to Now, let me the over Tom. call turn

Tom Taylor

third-quarter the we're results quarter Thank you, detail. then our our to and outlook call making you the on key impact more growth and by our you our discussing thank will joining call. progress initiatives. highlights third in everyone of financial then from Matt, hurricanes results, discuss update Trevor begin on I’ll earnings today's the us and against review

top demonstrates financial our We our again of in performance the surface with of business This the highly strength once headwinds within hard & uniqueness outlook are September. and the Décor very flooring bottom-line which pleased the results month third despite exceeded Floor and hurricane-related industry. model fragmented quarter

by leverage better in driven expense strong our XX% of margin $X.XX. adjusted growth new gross of share or performance, and store which Our sales comp expected results when resulted combined diluted per than store XX.X% increase with were expansion earnings

take occurred few detail, third-quarter discussing in more the our by the a affected our Before want over say hurricanes I thoughts months. results past that with to minute remain to everyone

who We post-storm. the everybody are to communities storms affected grateful and helped damaging cover first and these for prepare responders

our that we have associates you stores our for XX their we needs of We stores As distribution hard their difficult to running community know dedication impacted many centers safe. enough so were our a their them areas. that all time three getting were able We're quickly customers. for fortunate reach and to up during thank and were of all work support and the can't

due business the In stronger impacted in in touch Trevor negatively quarter a will in were to third his the on but impact terms business flooding. quarter the in lift areas affected, we've hurricanes, of this severe all the in discussion. from the seen the guidance we growth in Houston fourth

third as compared comparable sales. from in of as XX.X% of to our the $XXX new store in to Now quarter $XXX in XX.X% quarter third XX.X% increase XXXX driven quarter million third for to fiscal turning XXXX well the sales million by net units results, the increased increase a

the both full store XXX over Our stores the negatively closures closures including our were affected million month was cost X of by third quarter across third sales month approximately total hurricanes. which estimate September, X our in approximately the of all the and points to million hurricanes of for the topline by We and quarter X.X percentage the in partial comp realized quarter. impacted us for store of results XX days of

in of we and during store total a Decor's XX have growth, terms stores. stores in third opened quarter any history is we quarter opened the with the ended we In seven which the most & of quarter Floor

growth the least now XX for a of store stores will mark by for and goals nationwide dense XXXX markets. XX% several runway of fifth us for and This is new stores providing future. our we’re openings store approximately We profit new a record plus and openings unit homerun driven continue our class to XXXX. class performance top sales potential XX growth the supporting of We've strong very profit at from opened long XX% of our growth were and with year XXX and store on believe comes XXXX planned foreseeable seeing annual performance sales new there for ever our our strongest of for the which which

our positive the continued and saw the was store average fueling assortment driven comp sales All at increase transaction of our We encouraged share breath primarily our comparable performance we of comparable to business. gains. unmatched Looking by resonate strong our illustrates which by market tremendous flooring composition ticket. customer growth with small continues surface with a metrics the in offers to quarter, that store hard business value sales growth this for six and from regions our a XX.X% continued multichannel achieved remain these e-commerce accessories

innovation, as success. unwavering our on offering to Our keys product the well are best all and better as goods focus

marketing upgrade is and continue inspiring Yourself in we stores Pro Do which and believe improve It online visual We to our merchandise our and customers.

experience decorative experience understand our average, efficient installation their help From of better more the the enhancing that laminate and performing online to all above negative category customer's other CRM our We’re with the solutions to new These tools the tools our business. categories help running new us all the stone to in-store. in accessory be we’re comp and of also categories and a easier also will introducing market of positive. company and understand performance Pro tools customers perspective, technology exception facilitate customers several but pleased by will their needs, with tools help customers,

As we mentioned before, innovation change in trends vary by and category.

category our and capitalize product on to in diversity us preferences. able shifts offerings are to we Our allows to flex response as our effectively customer's these

expanding as positive a Our against shift comparable experience to invest continuing position on priorities and with the supportive flooring well connective growth, those gains of shopping continue to housing us differentiated store key experience, goals. combined of Pro a our the ex strategic share surface customer growth, our new store we We’ll in touch customer. increasing further for market secular of sales each

our and our growth, our we openings shopping significant nationwide business. & each opened visual seven new solutions. mentioned confidence the differentiated and stand store both merchandising, the continue get Decor. as quarterly year and that our markets. new in New for new that growth reinforces strong stores opportunity the experience, than stores I back-office consistently to quarter, five-fold for a in Floor number localized increase improving customer highly in believe the response the potential These I merchandising a We base white supports store our had space last a year we record and openings existing of better stores

we markets, easier increases shopping grow and market. and awareness, continue for to customers, in As it the existing all stores brand helps new overall makes open returning

are continue We and store to we very perform XXXX new new stores currently well. finalizing will our lineup believe our

of in-store as the progress. as growth, our sales store comparable efforts assortments, of both merchandising to hurricane increasing enhance consistent visual campaigns, our despite innovation, online, including QX in goal marketing strategies a second result XX.X% well is expanded enhancements strength product Our driving comp and our comp our localized headwinds

As we it stores, market. other opened in brand helps increases our awareness stores that more which all

supply to global products years been hard everyday important in from at differentiate experienced the in makes flooring one us different any far. of and example some of and prices. Innovations have our what value to innovations our dedicated durability best customer combined newest It the surface is Pro an Do proposition with of from our investment factor the competitor. products other and merchants so most Our and low we enables around chain infrastructure world building This industry to deliver success and Yourself fashion how our ourselves our

our and the business Lastly staff we and not hire professionals people but design season expand These area to is centers. sales our this continue talent design a great us. which designer of helps to for just are to real asset customers

seamless our us expanding is the that initiative important the customers experience. improving to we're functionality goal capability an just our potential and to inspiration connected Therefore, store. the for a and given website experience, we third education connected better even an for research, This before vesting as remains work our customer of customers drive simultaneously in-store more experience. Our elevate know use often we and ever customer website

Soon This accessories, begin make and project associates shopping piloting would easier. select will why we'll help the installation our versus explain another tool customers one online choose the and product estimator. they experience

to like omni-channel we website cycle. and the drive As this this our improve website, continually tools believe will traffic add our we to

is delivered to quarter total evidenced sales. X% in here e-commerce approximately by business over XX% rate growth the third in Our the progress of our

in pickup on As we the e-commerce purchases picked is and store program. through are approximately believe buy network XX% online our our store facilitates sales made expanding our a up of our store reminder, website

time installation Our completed important that App stores protein, credit third Pro's soon. includes ready the on place Pro and in high can we help initiatives. design Decor for to stores a offering next purchases that’s level service have a made faster, way & remains fall that product a piloting goal such is invest remains alerting is our in services our in-store ahead experience among such as their focus Pro customer in spend form will the shopping and major capabilities continuing one Pro others. with on all our This includes accuracy. our us with their quarter manage our the extremely as the and their progress when Floor The be as on to to storage so as customer. and customer free access speed invest time-saving Pro to training them one product online everything Pro's direct elevate In tool frequency separate in features to are give capabilities differentiator of we intended the to the and and of going services, This given an Pro the project result

draw Our visit research conversion indicates level once price assortment, Floor rate. the Pro and XX% service at our points the customer & Decor,

expect our continued we the marketing. as focused marketing, investments our continue build we maximizing first reinvestment innings grow the always chain We're away So even to sustain and here competitive among still of visit an talent. a to had stores We've we're the focused at getting traction of strong across time better job merchandising of Pro and and Pros & business make in our with in doing the earning particularly on for philosophy Floor of we growth growth. websites business to our technology and stores, and and supply advantage Decor

we growth strategies. with to progress third in pleased continue So and each are our make performance the we our summary, against very quarter of

customers. results as our building our our continued and day-out the markets. are across on a we our to over provide forward Services the executes quarter benefit continue to raising share want over to to Professional service And year-to-date Trevor, been strong They addition CFO I'll as fourth going and to the have teams guidance. of gains Head Our country success in go our have day-in guidance. our forward. demand we and market call strengthen that from to we have turn thank the as into in I our our to to look result results post-hurricanes and full-year far together financial best-in-class and now critical unimpacted

Trevor Lang

remainder discuss Tom, and XXXX review outlook impact business, the I the our year recent everyone. afternoon and the third color will results, fiscal of for good our hurricanes quarter then from some XXXX. on our provide Thanks on

of record low We year XXX,XXX,XXX XX everyday XXXX. quarter XXX,XXX,XXX with the touched continued versus Tom on our hard fiscal the offerings Decor connected at the the warehouse along third stores, Pro supply focus of high-quality third the quarter in XX.X% increase XX.X% investment and quarter XXXX. strategies storage innovative, service, As to great and end customer, & of surface unique customer prices, total prior in in quarter to of to chain Floor marketing, increased with Net sales led XXXX stores year our results on third XX flooring the period. XX or from at the ended in stores an

Floor During mentioned we have Tom in the stores stores & new seven quarter highest we which Decor opened history. of the opened as is number

the was outlook sales store despite of of year comp and September quarter period. on increases. month comparable headwinds sales came our in the XXXrd above XX.X% was store hurricane prior Our the XXXX increase third comparable sales XX.X% of top our store increase

be should what double-digit comp store in are ninth our year We consecutive sales growth. of

hurricanes the storms first the the the store which of comps months closed six to sales September first cost rate believe high $X company to we under in XXXX our this our our store million two months base, the sales approximately third were volume decelerated not store XX% and quarter, our million in continued increased For September. running XX for the We were of in and the days in have of from our XX% $X comp comparable accelerated or of us of our the that XXX closed would roughly comparable the [indiscernible] in one-third sales just if partially estimate we Due XX%. quarter. fiscal stores XX% at to

comp increases consistently budget introducing able mall why to continues by grow. to primarily as been We trend hard sales prices right every for growth now. was flooring Our transaction customer almost high drive a awareness transactions is having new & driven quality products Floor surface decade we've of to Decor believe for at low string

to XX.X% fiscal shift the XX was gross XX.X% quarter product in margin XXX,XXX,XXX profitability, third points third driven XX to increased to cost by in growth. the cost into in support Gross due point Now our distribution increase products chain of a basis points profit quarter. XXX,XXX,XXX approximately third expand this increased mix offset quarter to basis to distribution that increased by basis five increased and Approximately the of by primarily XXXX. of of volumes from carry supply also and a XX inventory approximately our higher center lower basis shrinkage sales damage points inventory gross to margin margin. by Gross capacity and partially investments higher of in

sales, of of operating approximately percentage total the points increased XX.X% a XXXX. to quarter to As expenses XXX compared third basis

XXXX we Excluding disaster litigation as to of hurricane, period our July the prior third percent expenses accrued operating quarter approximately related for the in X.X decreased XX year that related secondary in to settlement XXX,XXX,XXX in XXXX expenses of a XXX,XXX,XXX completed our XX.X%. the million to points and offering in sales basis

on leverage new seven sales that quarter. was stores higher during by expense the mostly offset opened Our

a As that of adding stores. run XX% stores year expenses expense a reminder, this stores leverage sales percentage our new first are we’re stores And from are operating a significant mitigates year, of new the generally we operating our than mature about XX% getting more operation since higher as mature. in the about

drove XX,XXX,XXX of XXXX. during sales quarter operating XX.X% income strong quarter XX,XXX,XXX compared expansion fiscal gross Our growth, to increase as margin the the third in third in

compared third to quarter of Excluding XX,XXX,XXX as XXXX. increased operating have to charges in the the XX,XXX,XXX would just fiscal I quarter income outlined, XX.X% for the

to stock XX.X% option income due the the a corporate XXXX-XX to in and was XXXX related excess effective of quarter to in extent our option tax to quarter the exercises lower quarter decrease in structure. primarily XXXX. X.X accordance tax due Our rules This tax a was accounting rate new state and third rate in the changes to with rate for XX.X% due million compared tax to reported lesser ASU the benefit third

per stock of adjusted exercises earnings have calculation share. We adjusted our excess tax out million related benefit X.X the of to diluted option

will measures. guidance, non-GAAP and GAAP I note both Before discussing net discuss income please that and

increase to believe per IPO earnings can the income be as GAAP This with basis investors adjusted compared GAAP or X,XXX,XXX per the The these measures XX,XXX,XXX adjusted XX,XXX,XXX to to Adjusted the in periods. compared in approximately net share third the quarter liquidity performance was includes XXX,XXX,XXX Adjusted operating EBITDA diluted in our of XX% of the We million on statutory As with found which of connection earnings on third our borrowings. net rate our in we adjusted diluted for quarter third to comparable and XX,XXX,XXX facility revolving quarter call. or tax release XXXX. the ended reconciliation outstanding our of an our $X.XX cash $XXX per comparable available or of this $X.XX directly issued of diluted understand times. quarter adjusted was credit the end enable better metrics between quarter share income represents increased a in most core XXXX. of and share and XX% under XX.X%. XX,XXX,XXX third At described leverage ratio non-disclosures EBITDA to the in release, X.X financial

inventory the the the was XX.X% investments fiscal as the early end The up quarter later or of Our by our and of relocations this XX Savannah growth for increase as driven third new large year into well balance distribution XXX,XXX,XXX mining XXXX. quarter store million center strategic at prepare XXXX. we third and was in as planned

to turning guidance. in effective Now of XXXX quarter XX% fourth our sales and XX% hurricane stores in to store sales guidance. quarter XXXX we're full-year our The fourth an the comparable such these raising markets and comp our seeing now as increase in markets. We're base represent

impact sales affected as strength of the comparable have markets, on hurricane sales sales XX% our our quarter in comparable store XX%. growth September. accelerated previously our expectations faster raised fourth before to we we've store the as to XX% third the Due mentioned, the well in As quarter to business, to hurricane continued in

quarters. the hurricanes home have first flooding. and We comparable events elevated with business three owners and sales the half others suggest do XXXX of flooding could in associated as and from the into lift industry rebuilt believe the store as four experience the well an hurricane will as we in prior to Our last sales

Our be hurricanes for this sales is also from increase away increase we indicative expense plan lower fourth the comparable quarter suggests and to do further XXXX. will store the to believe not how get of

to are in be and March. We growing occur the provide We planning processes yet fiscal not to do the our comparable that our and and due for we done in plan store strategic budgeting guidance XX% and of are XXXX higher the fiscal to building committed first goal XXXX earnings will believe with sales to of future. we will XXXX half our foreseeable annual due hurricanes repair

As Tom our business into reinvesting also back committed mentioned to to growth. support we are

a are and our investments and size continued we key differentiate share fraction ultimate believe us will areas of continue us We only market in gains. further strategic to allow

important For more store to very the quarter investments study labor fiscal will the increase us the and XX%. shortly million off we're well study million marketing business, few a the fourth of learned in of of and sales end goal long-term to of the XX% quarter the range as range focused at consultants quarter. and kick labor strategies XXXX $X the study of of outlook valuable net year consulting of mentioning this in include new our growth words fourth is and we the and deploying and customer beyond, decided We're fiscal XXXX. be future efficiently be for in-depth in XXX our strength XXXX strategies on formulate to increase growth. to additional as A to some based we used here purchasing finalizing in a making in into help invest on to have labor sales we continued comparable first, general path and to the the XXXX, creative of selling. our incrementally XX% customer Due expect our in of with fourth have administrative million, fourth an This XXX quarter of to XX% versus

increasing a above cost center distribution an center our primarily rate by normal estimated million distribution be the growth to we believe due the what relocations. Second, plan $X are expansion will to

doubling calls, feet square X.X our distribution XXXX. As footage square mentioned of to fiscal million more on are than by previous end the we

in consolidate current this feet our square quarter our fourth to Savannah Savannah we X,XXX,XXX new relocating square the are constructive feet XXXX We to X,XXX,XXX plan new and Miami to early DC and in XXXX Savannah. DC relocate DC in our DC

in we increases, our we as of to distribution support XXX reflected to support compared the the open be added margin growth as the be EBITDA earnings the the diluted earnings hurricane fourth to modest last share closure and With will support center share year-end note are per a expected of DC which in $X.XX to are period another balance. important a per share early the before earnings will strong approximately $X.XX for in GAAP year. quarter able as to XX% a to adjusted we store in $X.XX per same we weighted to in increase two quarter average capacity diluted that to fourth be It's the in shares to and see distribution outstanding. inventory center. range investments, well to planning XXXX with are range driven for Even per assumes the week building to share having three of operating earnings we adjusted XXXX planned of inventory believe XXX,XXX,XXX $X.XX. well our rate, is Miami sales diluted as these Adjusted tax statutory

increase fourth to $XX,XXX,XXX EBITDA to of XX,XXX,XXX quarter XX% adjusted expect over be the the an quarter XX.X% of fourth We fiscal XXXX. to for XXXX of

full-year our to outlook. Turning

outlook, of versus strong range expect XX fiscal third XX.X% on fourth openings of warehouse XXXX. in growth results for XX.X% sales XX%. an net to based outlook we comparable to quarter a stores is our increase X,XXX,XXX,XXX format same store XX.X% improved increase of to quarter now fiscal XXXX and to be sales This Given and a new X,XXX,XXX,XXX

the our in expect absorbing associated relocations our margin by Angeles our complete outperformance expect slight over we by year. Los that XXX% with expenses our a Given in Savannah despite DC centers distribution with we expanding and outlook, large quarter and a now of gross to improvement year-to-date end fourth the

earnings well with is expected margin. and fiscal on Diluted XX%. XXXX adjusted improvement to to of expenses $X.XX as rate share of per $X.XX leverage our to weighted diluted operating diluted our based and earnings to tax an per share $X.XX XXX,XXX,XXX adjusted expect $X.XX margin now average shares operating of as therefore our for We outstanding statutory EBITDA in be an estimated

We XXX,XXX,XXX XX% of XX.X% tax GAAP of expect be to We over EBITDA XXXX. XX.X% will an rate the fiscal XXXX range approximately for fourth quarter. in our be to adjusted increase fiscal a anticipate

Our lower quarter to fourth development is tax rate and due credits. tax planned research

this As guidance not the of in benefit about being new on a consider as based would is third new in $XXX tax our With openings after store million directed standards million we supports the store compensation reminder malls that spend $XX million million the occur distribution approximately million quarter million the relocation million earmarked does XXXX. capital of XXXX. initiatives. impact spend constructions $XX may in core expenditures remainder fiscal to to accounting in early and open to stock to XXXX, towards respect with $XXX XX for $XX our the expect on to CapEx budget infrastructure, $XX two IT, capital this will be XXXX, $XX towards that of our as to million storing The well e-commerce and $XX centers. of

our XX% last over plan year. As inventory approximately increase a to reminder yearend

anticipation strategic stock key and we’re Year and the As distribution making in improve shutdown. Chinese investments we in position Miami to large discussed New center for prepare briefly relocations Savannah of to

I And details we'd For turn over please to results the this Q&A. like in release. think to that all operator, earnings with related it our refer to the guidance to

Operator

Matt with question go our And Barclays. McClintock from Instructions] we'll take ahead. [Operator first Please

Matt McClintock

what strength there first lower your and expense else to going line plan is XX why gone on your of with and one Two guidance Trevor September historically is update that you're to exited guide at I in of kind plan, related, questions, us you’ve just rate guided more I I tried originally is your expense so double there. a the guess you entirely just hurricane kind more you that's believe anything guidance for guiding aggressively. run even on know can up XQ, philosophy you almost related XQ that's the is that XX

Just guidance? kind of through walk of level you. us that Thank

Tom Taylor

will take I I'll first Tom, about talk is stab philosophy. guidance this Trevor your then let of question Matt the

continuing very business As we storm, our mentioned into to do XX%. I around was comping storm right were mean going into going the we the well.

is business stronger the would that thought we be. So than

seeing We’re good and going you’re the areas to all get of country then strength affected going benefit around the some forward.

the guidance philosophy. we this about is we of want up. how fourth how kind before hit So it at that's it the Trevor within look for the the going went talk you business the to going as why quarter, we storms guidance how quarter took think rebound was and and

Trevor Lang

kind but stores performing we of this shortly guided great higher, so the into have We because up. took business we mentioned pulled affected everyday Tom think the out more are I that have then guidance. that as conservative We're as other we storm systems. large looking as so at And consideration gave is increase the of

in participate to. that to before the guiding and look get may storms hit XX% they mentioned to benefit of that comping what and the might were then prepared XX% when like, we’re we As add we about the the comments, XX% they up you storms you

Matt McClintock

if that or XX% almost in store as the impressive challenged I lessons kind on this response anything pretty out or the of stores unique consumers? aftermath or the itself of quarter openings just that's you from or opening those you the maybe seen from of terms the that's what do for stood anything differently store about seven new quarter, think Tom then talk stores itself. And Any that could you've I

Tom Taylor

be of lots I we’re unit We've so in get a good opened - want we our got very we able little performance be lot. growth stores. - we spread I in to talent place, to where fifth opened fortunate this out think run upon missteps learnings our came that to open it able of we run. but to execute like and great. had no not will bit would in We better is the out in XX% a but we mean very these quarter to we at lined year like we’re at They I place that of is cadence look as that stores right or good, in up plus feel time there were teams better store a seven stores. plan. We'd easy openings to resources more We're but go

a culture store very a level. unique have is decision-making We the lot at there

they a work we’re to pleased that time so lot and pushing sure there. learning the and great people and we’ll of cadence ahead going and they’ve with keep we - opening of developers our of So and think landlords are the our to on make we’re done is training to time we stores and spend get ready our better were teams

second So the part of the what Matt? question was

Matt McClintock

that’s the of anything stood aftermath a done is response No more there better you consumers less et be those cetera? stores just response you any may store particular was maybe could out there location it have kind like as just for of of - to or that a

Tom Taylor

Yes, we’re pleased.

deal get openings, time couldn’t teams we’ve how still company do a stores good have and how stores and hurricanes be continue always better on never thrilled. of to satisfied good but portion across the do the them to distribution attendant our more quarter this is better We be we lot of we able be, think I There of couldn’t efforts prepared stores get well. to good the to opened want affecting look into – will the open we look in as we of programs. perspective with stores that just know no having to we to want teams. the now to with put think the and pleased learn more centers our push last good and you and what open I with our we so I we’re years I we we When try to them five the kind been -

Operator

Your next question comes Goldman from Matt Fassler Please ahead. go Sachs. with

Matt Fassler

profile My first differ the storm gross been the doing impacted generating in or from broadly? that margin What’s you’ve question that all at of relates that storm to kind you're sales of more related does it business business the markets.

Trevor Lang

and material in guidance ports it's generally so the margins those and contemplated we Our bit closer our it's markets, but are are gross to not little in higher margins a higher gave. the

Matt Fassler

So be product of mix that's of you than the of kind rather of region that really a kind replacing? might function

Trevor Lang

Yes, that’s a domestic be to on will cost. do with most of biggest part calm markets but for little it that’s more it. lower just bit those driver has of much the the transportation pretty There

Tom Taylor

post But the that affected within consistent pre-and the stores has remained are mix line.

Trevor Lang

That’s right.

Matt Fassler

Understood.

So tilt it's one replace other to the way floor is margin flooding or not as that if a wouldn’t example impact the destroyed is for through rate? there

Tom Taylor

whatever go customer whatever consistent of The see at like it’s with flooring the mix a those ruined of the on least decided after had kind and they’re so before well, to tile. as basis. not the from replacing they like has Matt so you��d flooding they okay stores stayed it with within storm wood had lot they storm was had

Matt Fassler

talk given how that of magnitude I their know other curve you storm about talked storm terms about storms cetera. of the and in the recovery expect slower your on faster think et duration the And is or and this at there's here. how also you as dynamic cycle that you extent this and question, terms the I To this versus really duration kind can you often others longer people of the damage the to if time are typical your second done, reimbursement what’s But duration, isn’t get what's the slower my And know in a is of of short recovery that? of for you damage read this replacements. is duration customers, was flooring from in terms a probably than would to an focal point. insurance proceeding market sense moving Is storm

Tom Taylor

and the and neighborhoods as think engaging and a between we mentioned. reading times customers - sense I’ve few driving market in my and to the been I

the quarter should business third through next demand be think good I of the year.

is monitor, as I how think learn. It's really got more think we recovery my less early get information to - we've quarter as mean we kind now but of in long the we demand to the more if the information lot indications early provide I about have was a there get aren’t people is other construction sort who are we of we’ll And it’s storm dealt to they’re there with in damage is was that the Moody's amount their storms there lots that’s a still week that different lots still done, before. saying that out back done. an article be talked this homes of a of we on than

a going customers sustain great for there need flooring for to think provide the and job be I to that it's while our and prices is to great So rebuild. to

Operator

Next up with Horvers Chris JPMorgan. we have Please go ahead.

Chris Horvers

you're Florida to rough broadly the increase math of the is hurricane is that logging seeing stores to and a in hurricane? and so side, XX% XX% Want on ask that store another follow-up post South XX% Houston

Tom Taylor

all it impacted of and not all up the watch get Houston were quite to it are because yet, XX%. was continue going and how unique comments to we see to through stores performing Florida to to the before our to just that comp includes what said the We into that a store us Irma XX% So after storm want the that stores what in what Savannah and the that detail just we plays all we our storms to stores at XX% we the came by. out. was think would storms that elevated Those business I stick said it

Trevor Lang

it what there has - is the Houston can some you flooding And severe so. Florida meet right headlines damage means is in

Chris Horvers

impact lag versus think sort you about the do in How Stores? Houston in Florida of

Tom Taylor

of prepared in wind have Florida have that was but business our lag said Florida after people pockets Florida the cleanup which the some Florida will damage right. flooding some kind was damage is to it rebuild certain different, as pockets is didn't the wasn't damaged lot, a more which and and really not damage kind there by as in that's storm I then category paused of had and there storm for in much have wind and more of but

up commence. parts got different replace before are So they’re degrees performing home insulation in before quicker areas of in, damage level other chest flood a going got ready to Flood to and rebuilt Houston is flooring you the they there other different areas to they’re throughout because they put coming to floor. you the drywall so were to get Houston flooding the of of to

how of and that’s quarters should three it. sustained we how couple the - be that’s for see think at So a least maybe it��s next we sustainable

Chris Horvers

environment do you follow competitive and And on around you seen step Lowe's luxury Depot and up marketing vinyl in think a about promotions then the category? as that planks how some

Tom Taylor

I to on to good fact. think category continue across that the say home-improvement a the very the flooring competitors market certain much remains category a can’t aggressively, country the and think but all I extent

Trevor Lang

category think to bringing that’s this because good is are thing I shop people us to a our view a for properly awareness say generally Yes, well the always fairly a category.

So people category bring as we’re that. the awareness as long for okay with

Operator

Michael UBS. question ahead. next Our go with Lasser Please from comes

Michael Lasser

you’re negative comping in despite mix. up store teens, the mid storm change sizable With seeing low pretty to the in whole the a

So within time? would shifting about space allocation space store you some we think or shift allocation over your

Tom Taylor

Lisa her let we’ll I’ll here Sure, let tackle is that.

Lisa Laube

we that our Yes, given one way rack are model that at dealing so stone, LVP we stores. that’s customers our of that we looking wood, our we carry always the flex can that in the interested most of easily laminate, tile, to business whatever space are

and ground few started last tile and some few So really so much because face Injet better heeded give that the years have yes, very to we seen just to other technology stone that as made that has in of has last affordable so over we years reducing have some tile things. over looking stone face the yes kind to

Michael Lasser

if that different the from awareness to new your kind How innovation, according and the could comp categories. you will the stores with along Lisa brand would areas of the give brand growing breakdown any a Trevor, contribution be comp Tom, you between from of and your contribution with if shot great could And the growth down those but break awareness. just

Tom Taylor

down to in out think tough right, of before between all and mean look you so Coast Certainly got stores couple is seen, this that step am we’ve awareness, existing certain mentioned little Northeast particularly bit times opened when they and a trick stores we've out in look when tell of some sure well. would - customers surface flooring take neat and of that awareness if we we’ve that who the a the the the as be certainly seen as West driving go I carpet more that the would I the across in driving if there. performance is innovation That up in just I we're I is a mentioned it you durability along markets our that’s drive West kind you break the to at opening it where those script and so change at up to hard I fashion that of

year. way you to the then tend second do the model So new is stores our third the stores new that have in and this well

benefiting So all are can’t break it I those three really backers apart.

Trevor Lang

SX still you did XXX our we comp, to thing the is our about points are XXX One to in new think probably mention the probably and store basis think contributing that's I same.

old so lift points basis some are So probably new sort than our XXX if look three go can't XXX one in of get documentation and see that you'll comps. the less we and years that, to back you say of at stores that’s some to portion to

Michael Lasser

very from there enjoyed than or this way so any and strategy it's My great pricing you’ve success of some through your as the done trying been public and to public more change mom pops in is, in last are Has that question players a emulate a in regional been. way?

Tom Taylor

has total the a react We’ll the have won't all of say what what category we day I just - models attention been to try as as we competitors a to We different. react see value seen for here. come this we as is markets, to since proposition to our we've what stores I we it’s attention our public, at that, respect do. they’ve lot continue long I different have went competitive to our that. markets have in we as dramatically the to learn do. opened new but tried competitors we mean look the us independence think been certainly I into learn, we wins end pay of pay can we we game what the

the or the We content and differently on display training knowledge. product stores stock, we’ve in others can a good is focus the content have big everything aggressively than we priced and

So better what that's model we we it you. and the overall with just is do think

Operator

Our Keith with comes Piper from question next Peter Jaffray.

Peter Keith

a on lot have competitors topic up on lower this on impacted competitive results to publicly noticed focus categories change in investor buying question it points? competition any or with going stepped points. are have just was but traded getting we’re one be I a about mentioned add may more in Clearly of price little two price change environment interest behavior because consumer you consumer bit questions being overall

Tom Taylor

not in point second of easier our customer we across demands probably what board price but the categories. The this in no, no part are difference seen have in

more driving do what’s has the stores innovation much to our within changes I categories. think within about demand

products durability of its that the customers done and the drives that then the best. component our merchants and we’ve love approved fashion side water water a that have like durability and into better and product resistant done good job So they them of store and

So benefit between across of we we're seeing everything the we do think that.

other. the competitively anything demand So that’s long don’t there's shifting around way I way know one or

Peter Keith

still strong to bit and tracking from pool A just maybe feedback choose you’re seems strong follow-on hiring an give recruiting? a be and the application people are it people store with profile going environment, the growth getting us labor on type of of unrelated what and with question, talent just pretty tight you is the how to

Tom Taylor

as we to we’re - in think our Yes I stores able were knowing who do staff inspiring think to it for we they new get markets is us which certainly we’re are. are me - able I able

we’re As people we’re as going to into to existing but problem had new attract know are stores markets no get the tend and in and staffing we well. people able we who easier

you from the ADMs XX% unique work I run there's lot them get promoting promoted that to growth we inside, people retailer, we’re promoted the Floor department from the all come to associates - very try just - our so a think Decor. tried we all & of promote something not stores to We're our heads to for try inside. provide get inside we our of from we the for

achieve So, the that in their and things lives. in can were people they we bring possible and didn't we on they really dream sell

of down staffing having year not is we're to story we’re So so when able down we’re for you associate our store because those this that turnover good pretty to good people all things turnover of so at actually our problems year-over-year the point look recruit turnover actually store us. and

Operator

Jefferies. And Please with ahead. go Dan comes Binder next from our question

Dan Binder

XX%. just given Couple your EBITDA through. its on look I and indication that XX%. reported flow through or first know of just you historically looks some its probably to guidance about questions, sales the close at flow should I If thought about the run versus adjusted

there if wondering way the forward? flow-through was Just about going that if any in shift think changed expenses or you you

Trevor Lang

the most in us, we were and that margin on as the the We fortunate didn’t were be at spending to of it level the storms flow time. how because hitting profile, going right, through can't brakes from we margin hit was knew bad

you low is in the how of investments business like traditionally, and XXs. that be strong the in flow pull quarter kind through that that’s fourth so an And we’ll to get mentioned we

because have how through had didn't storms that we are we those going slowed able big flow Had that so probably to lower. the not storms, down. And to we would be again to be we just

Tom Taylor

We were stores and our getting open. busy closed

Dan Binder

performance, flooring there. you category call trends quarters, softer been how hard about that the if there's bit quarter little just curious and any this with negative had some as prior a I performed in talked think happening You didn’t out it changes

Lisa Laube

other at to well level, be in new of comping products it's is the lot the It's Yes, our with resonating positive. where we brought in a category it quite that same not consumer. seems

engineers and So programs bamboo, other resonated with consumer. several our bamboo with program well we is well that have resistant doing that a water

Operator

with Fargo. we’ll hear Zack next Standum And from Wells

Unidentified Analyst

is hoping taking update guys Zack for actually could rolling for adjacent Standum. my some [indiscernible] you Thanks testing I out. on categories you’ve been of This on was question. and the

in if performing been doors, is and eye inclusion Thanks candle So we we And versus any an then in the there how shower in mobile category where things should like tops have keep your the other stores. out the are plan. roll-out

Tom Taylor

can Lisa and first on. that add take I'll So

how in in well. doors with pleased shower are both doing frameless They are are We the progress much Lisa?

Lisa Laube

all and at be the of in year. end We will are in XX the we stores

Tom Taylor

this of perspective our in end well. candle the they be continues all pleased less that a next candle top in by stores more than go It top got are we do year So space XX program. of we stores. It's From with It to takes with slab the on But it. where we’ve be It thoughtful our year. pleased so to stores will goes. are today. into some will

the its If dictate our adjacent offer, know that. additional are a - let the things like If are ways. our categories, we of to approach we now calendar get project they for - from we'll looking customers like that looking two the part it’s they take we and to As have customers same tiling bathrooms, with when like. you’re tops you’re towel they shower cenacle go people their to of thing as top their need at frameless and are going are lot a picking doing kitchen, bathroom if to times goes, that’s natural start to they for candle looks your category look

pilot, there So make the to those we look is are times focus that are, we’ll will from but natural hard under you. extensions to thing we’ll we going with be lose our and that’s and same we share and come at do not others there at more categories volume, we what that, that’s as get who are sense surface

Operator

time. have we And in the further no this questions queue at

Tom Taylor

to you for joining talk And for interest you the Thank everyone Thank the our questions. in in Okay. the we’ll Listen, business. I next call. call. appreciate you your

Operator

conclude conference for We call. does thank that again once And today’s participation. you your

now disconnect. may You

Floor & Decor (FND) 2 Nov 172017 Q3 Earnings call transcript