FND - Earnings call transcript Q4 2020 | Floor & Decor Holdings, Inc.

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Operator

Greetings. Welcome to the Floor & Decor Holdings, Inc. Fourth Quarter and Fiscal Year 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. reminder, is a recorded. As Instructions] this being conference [Operator is Please conference recorded. note, this being turn over the Wayne now will I call Hood. to host, your Please go ahead.

Wayne Hood

and operator, afternoon, you, Thank good everyone.

Chief call on Lang, Trevor President Officer. are earnings me Financial Vice Lisa conference Chief Joining Tom President; our Executive Taylor, Executive and and Officer; Laube, today

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

comparable this recorded together on is During available defined will website better to understand Investor in Investor this non-GAAP financial by with between can be discuss believe Relations found these conference which as related earnings A directly disclosures call, call, performance website. at non-GAAP periods. each replay enable investors the materials, of our a the financial SEC on press We measures Relations basis GAAP Company most reconciliation release, our will measures comparable of operating measure non-GAAP the Regulation ir.flooranddecor.com. of A G. our available core to on be

over the turn now call to me Tom. Let

Tom Taylor

trends XXXX making some full initiatives. Trevor fourth review our fourth On earnings sales how and quarterly the quarter and consistently sales store third XXXX of from earnings million fiscal exceeding fiscal quarter in nine discuss fiscal of year We about Thank our all expectations. of fourth of and quarter XX full full exceptional On joining in growth us our saw increased $XXX.X in I and months we basis, or on as represented results quarter will and The for Wayne, XXXX year XXXX, will quarter XXXX the growth we of then quarter. on our strong fourth performance today's you, fiscal in to call, quarter our million everyone financial our $XXX acceleration year fiscal fiscal XXXX quarter the increased some of the and fourth XX-week fiscal progress XXXX strong conference highlights of We across total $XXX.X geographic questions. XX.X%, fiscal are we fiscal as year. discuss an we XXXX. well thanks for the to call fourth are comparable to the results the and rate that XX.X% strongest regions our XXXX, sales your open quarter fourth a experienced will thinking XXXX delivered robust then all the call. strategic

XXXX. in XX.X% of EBITDA $XX.X fiscal to Our increasing the fiscal exceeded expectations quarter adjusted from XXXX fourth fourth quarter our million million also $XX.X

history. in fiscal share debt XXXX. no $X.XX XXXX quarter We XXXX liquidity per fiscal adjusted strongest quarter balance in our our ended net from our fourth earnings to Our increased of sheet diluted with $X.XX the fourth on in position and XX.X% company's fiscal remain

in to enable XXXX us our our strengthening competitive further growing and balance make financial strong significant share position and towards sheet performance to market Our continue and investments beyond.

our the on XX in elements five were number XXXX, XXXX update the opened growth. of stores bringing store now warehouse beginning COVID-XX By states had me XXXX. studios considering four fourth on in fiscal of XXX, store warehouse XXXX. remarkable We the new These of fiscal strategic new stores month, of new an growth, total new construction. we one in fiscal and fiscal operate opened new quarter pillars two design Let December in store end at impact accomplishment warehouse warehouse five November a with openings the provide many we plus to stores of

warehouse to As XX% quarterly that objective to opening a unit balanced we desired achieve new end, in first To growth we stores the of long expect more than first the warehouse quarter XXXX, we expect to stores warehouse quarter store return new double fiscal we three to look of XXXX. in fiscal open cadence. the our intend of seven opened and fiscal more XXXX, new to

to we warehouse XX.X% XX For increase expect open new from the full year, stores, XXXX. an of

openings and XX% particularly be northeast new will the We markets, west existing our markets. of store warehouse coast the expect in in successful about XX% and in new

our the locations very new two to our the will half are represent move of mature by among all waterfall vintages, sales in pleased XXXX studio our stores our design stores. classes with continuing XXXX We most of XXXX. store strongest forward some fiscal of second additional the and pilot classic particularly with of stores, opening We and believe remain

store to pillar comparable growth, growing sales. our our of on Moving second

very in sales XXXX. pleased the start are store quarter fiscal strong We our to fourth and and comparable a broad-based fiscal with strength XXXX consistent

benefited XXXX, XXrd store increased year. fourth would quarter XX.X%. you Our increased have our fiscal XX.X% comparable week, Christmas sales for of estimate reported adjust if quarter sales comparable But into approximately the impact we fourth from store December which last moving the

This fiscal by XX.X% expectations. customer the XX.X% comparable customer in sales basis, strong XX.X% growth in October, comparable store store and a transactions in December. comparable Our represents were increased growth On in sales in transactions. XXXX strongest our rate exceeded store driven XX.X% and our monthly in November

into in store December when for comparable increase sales the was the Christmas week. XX.X% to mentioned, As XX.X% XXrd closer I shifting adjusting

the store merchandising offering our exit growth despite with surface our merchandising fiscal XX% pleased the sales store our in over categories to growth merchandising trend-right impacted approximately XX% wood sales very all base comparable made From double-digit quarter differentiated quarter modestly further teams XXXX sales strategy our Year-to-date, everyday one-stop leading to increased assortments are in price. and That are our comparable in as our low December job products weather product lock strong on of rate and our the for first The strength of chain quantities experienced the comparable deliver changes wood all a start We that flooring our fiscal broad-based severe to growth, approximately fourth has our customers' excluding said, now days. of have and store category. validates to multiple position our of XXXX store we perspective, continue strength categories innovative hard solution needs. and higher our of supply The enabled successfully at us category. XXXX.

our Our third strategic of growth experience. connected expanding customer pillar is

Our XX.X% our fiscal strong, accounting increasing of last and fourth e-commerce XXXX sales for with XX.X% remained quarter the year. XX.X% from of compared fiscal quarter sales fourth XXXX and

seeing second sales in peak quarter in XX.X% approaching following are e-commerce $XXX sales fiscal sales our full of over with fiscal fiscal the XX.X% our accounted e-commerce For increased penetration now of million more its XXXX. rate the a of our XXX.X% to XX% for believe normalized We XXXX. compared and year, we rate

XXXX with very improvement the fourth third which are in fiscal of pleased to traffic XX% growth XXXX. increased the We quarter year-over-year, website, fiscal our from an quarter

to organic traffic as website our We continue customers paid well our as from direct to our and to brand. see search growth are choosing strong with double-digit as engage

growth XX% on quarter, our these to with website of our trends. direct which the pleased the in in team's particularly growing the to direct capitalize are We and traffic awareness is result ability brand fourth

app to including We across and our personalized unmatched will an business make investments continue experience website, efficient with our in-store. customer points, delivering all touch towards processes mobile

excited about making on For example, XXXX, notification, a customers offers pickup contactless for better here in out which personal and to the from we in devices, the a ability curbside check experience. rolling are

delivery times. year, to customers this later schedule intend Additionally, to pickup we and enable

in to metrics continue website orders, our remain to experience. actions our in part we speed believe further these experience, fourth and mobile critical lead optimize a our We purchases, improvement actions We of the connected That XX% strong will and of sample experience. taking believe about growth. are and further In conversion website will customer picked stores also of turn, to performance stores. to lead XXXX, excluding said, up our quarter e-commerce our additional were of fiscal which, in customer

the fourth grow to customers market our of on are share. pro and rests in making growth successful investments Our pillar commercial our we

enrollment grew despite engagement pandemic. We fiscal the monthly enrolled the since Pros remarkable a XXXX, to launch XXXX in fiscal fiscal about third in to Pros. caused PPR our quarter and at headwinds levels Pro PPR with program, by which us XX.X% in the XXX,XXX fiscal new existing strong We from increase and XXXX from our continuing enrollment optimistic encouraged make PPR app and see in investments award-winning a program, end fourth quarter, XXXX. Rewards, over quarter PPR Premier Pro further returned COVID-XX leaving drives XXXX third We the accelerate to in mobile the its loyalty and XXXX. which of and accomplishment had pre-COVID-XX are XX% fiscal were growth the represents We our in of

XXX,XXX reward XX% XXXX XX% fiscal social value that sales Pro engaging from about Pros The includes in is members, including the direct program increased experiences fiscal good now As and from XXXX. offerings. with the over our benefits a unique result result, were of the enrollment up about our items, teams. Pro of and reward PPR

the of our points points to amounting credits XX,XXX newest as example, earned XX% fiscal with PPR X.X members as redeemed option rose XX%, validating program of lifeblood Advisers For clean PPR In redeem versus offering PPR and our any XXXX, countries, partner one points generation, the to to over increased additions and to provide our contractor. is for points Home value savings well water newater. for redeemed of our Pros. resi over the engagement further have directly XXXX, Pro lead to million Pros underdeveloped

have is and for Xx an X.Xx us, and shop than we Our members. non-PPR spend that found PPR program more more nearly important PPR members tool frequently

Pro PPR customers our segmentation and to engagement reward personalization move further we'll for build Pro using intend our on credit and we our and to enhance efforts card. we loyalty, lifetime our and As program XXXX, drive into

We continue rands, in growth now our account for the generated those our which very of sales, particularly major in to regional sales that be most are by with managers commercial are pleased markets.

While the a of out build further our become plans in part this regional XXXX. Over our are about relative size Floor material to retail managers leverage fiscal fiscal managers we to sales add account see model. strengths, with us we our the opportunity organization are in XX growth business, commercial approximately XX Decor to expect excited triple from to key we sourcing regional & prompting to merchandising small account of our in time, sales XXXX, direct sales as

Let me growth. progress are now the with services, discuss free our the design fifth pillar of making we

our momentum where were increased the average fiscal rate, We ticket performance quarter from services and our our are highest of appointment safe Key fiscal including design pleased the felt the consumers XXXX XXXX. large fourth year penetration, conversion in quarter with free stores. fourth sales metrics, inside as meaningfully sales

design appointments appointments of and to design rates. important product our appointments and record conversion a in-person very as augmented Pros XXXX fiscal Design are with ones. XXX,XXX virtual recommendations homeowners, we Our were

had that Decor among who we XX% Floor So pleased survey satisfied. were and homeowners learn or were somewhat design over appointments very & Pros, to our that design through of

seen in We strategies double than strong more since XXXX and have and continued tied growth designer sales beyond. to to drive a have XXXX

high-touch, elevate and consistent, customers. our for design service continue We are a the that talent design focused best-in-class homeowner services. To Pro to building in seamless we'll and on end,

average are As a margin designer involved the average. above the is the we Company have project, discussed, with when and ticket

our turn following X now me customers over now have Within we for million now we types my our our defined pro database different homeowner and and We on distinct external to and buy-it-yourself, them have to have Let our market our in learned segmentation have information demographic two analysis. customers with combined homeowner personas. do-it-yourself CRM of updated research strategies further that comments into segments, what about nine we customers. customer create

recent of our more what flooring of on professional have general as specialist, business believe percent from also most approximately sales and from remodeler, research, comes our on owner, architect designer. business property come We to contractor, clarity side customers. homeowners of a we Based our XX% and our from professional the XX%

our believe still shop, More of XX% who when sales the influences importantly, of at about we looking and homeowners determination the where makes pro to XX%.

Additionally, a estimate involve XX% that we their of in purchasers now professional installation.

but granular both customers to enhance to this level customers. marketing always professional and detail new connected Our existing our in find store, and share customers, database strategy from obtain strategies of wallet well homeowners allows to CRM information been customers as us and more has new as serve

buy We are get don't to why now from sometimes as much us we and customers better informed the why sale.

begun relevant shopping to strategies communications and and our digital journey. and have have personalized refine homeowner through created pro more We targeting throughout the advertising

are our We our Pro services. also between building strategies pre-design desk collaborative and

will Finally, we Premier engagement pros us dollar spend, to our are program we segmenting our increase allow enhancing and loyalty expect Rewards Pro by by loyalty. which

our we our year our operate tirelessly the that quarter events due by associates XXXX serving and under close culture. fiscal that me circumstances each of In unexpected can result and XXXX, Let we of are and full fourth business successfully customers people and saying direct our our strength to extreme collaborative strong learned earnings the other.

Our entire Trevor XXXX to fourth their like other. and thank executive discuss work in and our results. to I'll to detail call and team hard year each our quarter more the serving leadership would customers for over full now to financial fiscal them turn dedication

Trevor Lang

Thanks, Tom.

challenging earnings fiscal effort fourth serve other. XXXX the the in is our and considering and of are quarter and exceptional faced customers each tireless accomplishment resiliency strong fiscal to model associates' results It environment testament a an our and we unique business our XXXX. Our to operating

we double-digit XXXX. which growth by We consecutive as are encouraging comparable is pleased sales with quarters growth, enter two transaction store of driven

highest our proud of particularly in half XXXX our and represents are margin financial in performance the fiscal as performance second operating history. it EBITDA We recent

line cash fiscal we then about fiscal'XXXX fourth how to discuss income in Let major XXXX. of thinking turn and items now me of my flow, some comments statement changes the quarter balance our sheet the statement, among are I'll and

XXXX. a We in week and to which had December quarter. our a million XXXX, XX-week XX operating $X.X versus we of million share our here December year, operations As period weeks added net basis. additional EBITDA. XX sales, earnings adjusted to fourth XX, a XXXX reminder, fiscal This period of income, million estimate million $XX.X in My $X.X in XX-week $X.XX income, our quarter the XX-week $X.X ending will ended diluted XXXX comments fourth with XX, weeks approximately XXXX fiscal from compared to on per be is XX-week XXXX's fiscal the in means of

XXXX the in tariff fiscal basis quarter core rigid vinyl. XXXX primarily fiscal gross reported rate margin Our related XX.X% to Section in in contracted refund million to fourth or XXX from fiscal XX.X% due to discussed XXX $XX entirely XXXX points

the strategies chain margins basis year, distribution margins due to driven XXX sales. continued XXX Excluding last to of improved leverage from product improved points merchandising on benefit points our higher gross our by and higher supply and enhancements basis center our infrastructure

XXXX fiscal our to quarter Turning fourth expenses.

million approximately result XXX in the Our direct points. from $XXX.X of fiscal from our The quarter that XX.X% year-over-year the to in strong XX.X% expenses leverage the XXXX, growth operating fiscal basis and million sales. fourth $XXX.X is total store improvement XXXX expense increased comes selling leveraging

of improved fourth Our the staffing to fiscal lean we sequentially to levels in quarter XXXX fiscal some but in the stores third of COVID-XX. due relative ran XXXX, quarter

exit leveraging XXXX, million fourth the general to in fiscal expenses quarter fourth sales quarter year-over-year. in The from of increased due points and Miami Our in XX and XX.X% $XX.X distribution was fourth of the to $XX related fiscal center. leverage increase center million XXXX administrative basis our incurred to $X.X store the we support relocation as to new our million year's quarter last as well the

XXXX. million opened stores of preopening primarily open in QX the spend same the QX stores in in Our for stores the that stores XX seven fourth spend and five $X.X million to for opening warehouse quarter due XX.X% new versus to to in from year, opening period five prior expenses XXXX XXXX throughout $X increased XXXX XXXX expected in and

pleased fiscal fiscal XXXX the store compared of benefit, expense with debt term when million in us primarily took pandemic. total center XXX average XX.X% approximately associates period in have at store from to COVID-XX are higher $X.X to in fiscal the outstanding million to spot the quarter XXXX. XX.X% related interest $XXX,XXX increased bonuses our would Fourth $X.X included reductions XXXX, quarter pay in We expense to Without Fourth XXXX to of tariff quarter same net they to results loan second our second that salary fourth XXXX due reforms. the the Section quarter of half due for interest benefit $X.X enabled XXXX. a fiscal associates our and reimbursed to strong support increased the

Our of tax or due with tax $X.X our income in book taxes rate was pretax for provision effective compared lower statutory when income related in million income benefits XX.X% rate fiscal XX.X% fiscal of stock quarter exercises. or The fourth to option expense $X.X primarily income XXXX tax to for excess million XXXX. compared deductions is to

Turning to our profitability.

adjusted XX.X% from XXXX the the XXX EBITDA primarily margin expense in our leverage, to fiscal point fiscal XX.X% same to $XX.X in with in fourth basis growing gross due adjusted million margin rate led to XXX $XX.X million points from in improvement XXXX, our increased rate, XXXX. quarter when coupled EBITDA which, to Our basis fiscal XX.X%

to in fiscal $XX.X fourth Our same fiscal XXXX. million net increased the quarter XXXX million GAAP in from income XX.X% $XX.X period

quarter share $X.XX increased Our share GAAP to XXXX. fourth from per $X.XX of per diluted XX.X% earnings the in

income XX% of fiscal the from XXXX adjusted fourth $XX.X to quarter million fiscal XXXX. net Our in increased fourth non-GAAP quarter million $XX

A XXXX. provided in fiscal non-GAAP fourth increased $X.XX fourth of today's reconciliation diluted in release. earnings to XXXX earnings $X.XX earnings from XX.X% fiscal to in per same quarter share quarter fiscal XXXX period is earnings Our the adjusted our

sheet fiscal and flow. on XXXX Moving balance cash to our

that our unprecedented been to and have sheet that in have strongest history plans. pleased company's the maintain balance a times we position are support able our during We strong growth these to liquidity

was in cash had XX, Further, December can under term our gross loan $XXX facility, no cash $XXX,XXX,XXX on there outstanding unused million outstanding access considered the sheet, when of borrowings our of is equivalents of XXXX, $XXX,XXX,XXX we XXXX. facility. net ABL XX, we debt and in As $XXX,XXX,XXX as December to approximately our related balance debt available

decrease net $XXX.X operating in in XXXX flow million to in doubled fiscal to decline in and primarily was in capital new $XXX.X XX% income from a working XXXX, growth to compared Our due primarily XX% our growth capital. historical strong working fiscal cash The due XXXX our new almost growth in fiscal in with our units. stores

Turning to capital expenditures.

fiscal For our fiscal XXXX. XXXX, for million compared million $XXX were expenditures $XXX.X total capital to

While XXXX stores in XXXX XXXX, than an intend store we early more stores so opened in we XXXX, increase future new fiscal spending we had openings. in capital fewer and open to in year for

land spent new intend also on more as and larger distribution of own bought We near distribution we centers current facility our to center our outside Texas. a Houston,

XXXX, fiscal with the and was reinvestments, store stores, our approximately new existing store for spending remaining while e-commerce associated XX% our for and information For distribution to growth. support technology, XX% capital were of center expenditures center investments support

we accommodative term, sales. appreciation pro price exceed look existing The moderate turn and growth strong we we're thinking how will to demand support to available which accelerated intermediate projects. XXXX. geographies robust to for Let the Indeed, perspective, comments lead will believe and which monetary and and and backlog into very tailwinds the over home policies reinvestment to remained across growth home and our secular home remained XXXX. continues macroeconomic fiscal sales From provide in me continue categories, homes has to a merchandise new fiscal has to supply, to believe now continue remain my about

optimistic economic COVID-XX from the from momentum are in While prospects our recognize the XXXX business, remain we of the about the COVID-XX risk business recovery the in and sustained we elevated -- pandemic.

guidance annual we that second was practice quarter and of established the the are not in providing For interim, our XXXX. that earnings reason, in continuing sales of fiscal specific

for guidance store forecasted. However, that select measures annual can be new we and believe are we reasonably openings providing financial

return to guidance. annual business and improve, we expect risks earnings sales to As

and sales While we and are to for XXXX, fiscal items me let some provide not earnings providing guidance specific annual context consider.

to cycling measuring be our growth a second of sales two- of half we store comparable on will believe basis in fiscal We three-year increasingly and better in gauge past underlying difficult XXXX and our the is XXXX, second comparisons trends. stack analytical half the a way

XXXX our XX.X% fourth and increased a third store quarter fiscal As quarter and comparable sales XX.X%, reminder, respectively.

million. We on approximately depreciation are $XXX $XXX and to amortization be planning million to

on the The remaining loan, tax term of to higher about the is planning million, be interest as was XXXX basis well cost, down$XX are lowering loan balance. points on interest we our term approximately XXX lower million approximately $X where We expense paid $XX is recently weighted average fiscal XX%. shares to due the Diluted million to outstanding, be to amended interest $XXX expense BX rate rate as be approximately and by estimated our estimated million.

As occur a due option benefit XXXX. may reminder, this that guidance does to not consider exercises stock of the impact in the tax fiscal

return to Our expenditures long-term to as fiscal expected other XXXX from strategic are in warehouse and new openings store we growth capital make XX% XXXX investments. accelerate

total stores, design We openings primarily two studios be are which planned on $XXX fiscal store XX approximately cash by open and small start be For capital to to operations in $XXX intend format format warehouse XXXX. XXXX, expenditures fiscal and from million on hand. funded million, construction cash will to

warehouse be to these fiscal expect quarters equally openings We balanced in throughout store XXXX. the

XXXX. fiscal XX XXXX. to reflects center our openings plan in new in fiscal have $XXX to store XXXX. distribution cash in is stores to Houston, million require XX are intend stores an the double Collectively, year-over-year relocate fiscal Texas in existing opened to a nearby to warehouse also warehouse increase million two these new and relocate XXXX. stores, to location costs We of in We more expected acceleration XXXX construction incurred will Most investments which in than the early $XXX fiscal in

by the feet feet will Houston X,XXX,XXX square in and purchased new to long DC increased have new square capacity double We on land our term. we DC capacity the already our building and X,XXX,XXX to intend X,XXX,XXX total feet. for This that square XX% own started to a construction

cargo a $XX allow to Additionally, leading million XXXX. are drayage savings Los in will Angeles we fewer ocean facility Collectively, these to to us which in new to distribution fiscal approximately transload freight $XX drive weight in maximize cash. intend open containers use that to will expected and million

in will expansion and of store center existing $XX remodeling million million existing approximately projects and invest We $XX distribution cash. using to

to to other plan in using technology support to we $XX center million and of approximately cash. Finally, continue invest million $XX information e-commerce initiatives infrastructure, store

As we a look beyond XXXX, our throes goal our EBIT is If in of double a still described to achieve as $XXX the to achieved, a million this quite in pandemic our would adjusted proxy in worst EBIT in the three-year statement. in XXXX, feat annual over XXXX century. period be

the continued lie we into is closing, believe of that we of we remain path longer COVID-XX As But growth, this line. unit straight high single-digit the at should growth, growth along XX%. to with three would XXXX. XX% I growth next momentum improvement, In net and us. by achievable. algorithm our the like has a mid- XXXX, team leadership these proud long-term best say growth store and believe comparable encouraged of how modest to our pandemic, least we fiscal to over to our ahead gross years, We in margin not will term, entire look years performed Due believe that the we to days goals are of be sales lead income

every to will to doing the executive Operator, for are serve like day they your questions. associates would Our great of work our personally we all entire our take thank now team customers.

Operator

Please first Our question from Instructions] Christopher Horvers with go ahead. [Operator JPMorgan. comes

Christopher Horvers

XXXX press and about there's also of Obviously, talk you costs of Can takes little bit gross of a the about cadence in think year, lot around freight you face? given there's the of the you out some can the tariffs comparisons And that investments insight you that puts and a you it? perhaps some margin make the as there. about and give

Trevor Lang

fantastic some the comments, good, Yes. that, the mentioned you decorative years, and margin, is prepared overall product accessories Section about we've reasons the the a insulation Trevor. up people buying margins with chain and as assortment best. we job with team, this of lot a the the gross better, supply XXX very team year our the more There's the We accessories putting across her talked together, if strong and mix Lisa and up and of nicely just A for over board. of really tariffs. in Chris, back benefit exited

very exited the year we strong. So

think you time. It As expansion. will half in that for the end put Baltimore big at us first the was a which of about of pretty XXXX, the remember a year, center, you distribution we at expense that XX% was

So we've gotten would the year. the get expect of to half to in the of leverage in out back of half leverage year. continue this first We that

first margins. the in expect maybe better would we moderately half So gross

didn't feel because, of to our gross margins. As you really call, weigh much that that. get inventory to to start that yet said of we bought in the the a second half of the We in anticipation as of year, XX% last tariff we going is lot into

international things else domestic that seeing everybody is certainly higher same are transportation costs. container We the costs, with higher seeing

we assortment, our we look have. we're half the important of our business, pricing year. I point most of probably And believe we make our uniqueness back know, look the at pressure we price to we want competition, would But lowest relative the probably you as look about is the the cost so we there. out power in leader And to we great feel more pricing the at at see power the as

to probably little The we upside us be of because of only the same the margin to now worked have with think got pressures. little could we year those down-ish a of profit I some as of So year. back half gross a bit first dollars. in bit that, the that you summarize flat to half cost try many maintain But for of years,

raise we to costs think the have going we to have offset ability see we we raise because retails up, to So if costs that.

Christopher Horvers

I helpful. a for people of floors power your because stop super -- That's really appreciate lost putting And period they that. time. don't in typically,

impacting that exposure, Texas heavy about business weather, up XX%. talked with and your still to putting obviously You severe quarter-to-date, at but the

guess I think would do presumably you you much that table left back? the get on So that how

Tom Taylor

Go ahead.

Trevor Lang

that's So right. think yes, I

Our -- about of more and I impacted homes. think more our that in that, businesses bit With a was sales that some Tom might burst about be there pipes that were little there XX% said, happens. in busted. than got shit We read flows

So definitely see impact XX comp. and that wait But how was we'll plays out. have that there on to an

have had Our those would been by had that -- not impacted been comps impacted definitely higher storms. we not

Tom Taylor

out in is XX% of store of Texas, six, seven that. base we our and lost days five,

Trevor Lang

Yes.

Alabama little bit, and Tennessee a fact, too. In

Christopher Horvers

Okay.

So it per-store we quickly? Do per can extrapolate we that, back would come to back. do and off pretty like comes typically it probably day, expect you that, a

Trevor Lang

I we've put Florida things would damage have floors where sales. hope where and in discretionary take market Harvey hurt damaged. massive saw our depends was a few what damage, we like kind like into there that fixing seen to fences Hurricane storms We back. just increase because and But wind they income we've saw and lot that of in seen other our that, also into and otherwise two of actually in so. their obviously sales so storms a in It years people put roofs history were a and have people then it's

a a benefit pipes on whether expect just of early to some material too and upside we bit will like burst little that, damage but say a yet. I do balance, been be things think it of So to have would because there's because

Operator

Please Lasser ahead. Next question, with Michael UBS. go

Michael Lasser

pipeline pro your the belief accelerating one sense of And XX% nicely another. your estimate your what customers? that sales is would pro way are business seems or a for What's sheet involved these the of in in It have reshape a the allowing continue their they'll way we comfortable customer some would here? get in home, As to house it more why that like more for and their them, comfort accelerate even those reopening, makes be here?

Tom Taylor

had a that I question. Michael, hard time of understanding really all

bit a You're muffled.

can So question? repeat the you

Trevor Lang

I think I got pipeline...

Lisa Laube

Pipeline.

Tom Taylor

part I the I -- pipeline of mean I question. heard think pipeline

Michael Lasser

the like is of accelerate Tom business here? And from grown. question, has to pipeline? is continue Tom, big This Brady should the the The, your how why commercial was,

Tom Taylor

they have just there's the six-week hear a pipeline, plenty to mean I work. what customers of four- Yes. from professional our but is from backlog, we

point if people XX%. within is website still starting the would XX%. that quarter, -- still at other our look category. going you the They're there was to people too, at that are -- look are In up the traffic, So you I the people I at engaging is make, look we're traffic when Year-to-date, project, are fourth website. up first. which go our

the So that to good leads and pretty a on continues to demand. traffic pretty our website robust, be

all categories. of said -- So as across good Trevor tone as our We're prepared and we strong strong we about we're feel remarks, geographies all strong across in business. the

Michael Lasser

what's guidance. the just Okay. should put long-term guidance to at mentioned It there. exceeded that that to with the goal What allow better much be And point? consider business, you of seems you would like happening going not this factors that had you fast do Trevor, than given the you're the that out meet long-term we state outperformance and

Trevor Lang

That's a question, Michael. great

is Your crystal better -- many there's unknowns. too just just ball I than mine. don't

assume In stores. doing can do years our $X.X that were XX first stores there, we opened XX-K, year then out goal executing we million unit $XXX new that when put disclosed XX% the growth, -- thing than a would one was you they're we two, just lot XX that that year opened that -- more time, have that fiscal the in at versus want and we EBITDA, three stores in been and four. think million in to I

going still lost $X of XX not you're can But that x -- over so that we that's and right. feel So we're would to XX that I have we EBIT been get stores million $XX in hope contributing there. million X, get. profit. overcome that we

we've got track of of that the long think it. a most record making I

to many of past. years are intend XX%, to about example profit was kind income XX-week this and our another on than our the If quarter, of a will example in up and And it and certainly, sales, ourselves to where it last environment our we net XX-week up absolutely up robust, higher up year, XXX%. we which done was were our grow in and over you quarter a over rate a half income last second where at we've this simplify think the be if great basis net think a and XX%. -- I XX% sales was continues basis, much

be we So continue most if make will robust. to of indeed sales the it

Operator

McShane Kate Goldman question, with go Next Please ahead. Sachs.

Kate McShane

seeing, that way the any speaking? high. later how quarter you taking three estate for pipeline rents were and you're months Thanks just since the my real you question. mentioned for really about wondered, that's still viewing estate real favorable evolved XXXX had of and last last is quality is in how Trevor, just I here, opportunities the beyond

Tom Taylor

mean, real and would I of visibility that. good. The we class, XXXX the about seeing mentioned in -- the to think comments, that our as of feel good out we're I'll didn't opportunities class 'XX, extremely pipeline have we to Trevor, that continues the estate see. and it looks we also. We're prepared take yes, we getting be good class we

started of good years as way So last so a over and consecutive we're come unit about way, it. in we've -- deals had to the we meaningful eight few feel have XX% years our growth,

Trevor Lang

think, you the at Yes. to XX going Kate. all class be. are what to to XX stores know And I even just to some of When that, those numbers stores, put look we

And per single rent now. going high to I per right? be XX high about square We in the the to foot. We're square in were going single Our XX past, what to we've around to digits think the be to close foot half going had we're be digits. probably is in

we stores, And the a as south we're rents generally where California. the mentioned, putting team you are northeast real done job. and than expect, those Tom stores started. fantastic estate rents the the as And So in more in lot a has more just could

is a be opening it's fantastic the to going is to just and class be going The -- be going finished -- classroom class. fantastic cloud. a of So to

metrics great. new store So, return just are

Kate McShane

question I little That's know helpful. places. been in levels. few in that light just comments was my a bit then inventory on a And follow-up you the prepared mentioned they've

look Just to the would like where better inventory have any how over you build levels? there And are we year? expect to categories still the inventory should

Tom Taylor

you Trevor, start. I'll Yes. can talk about the build.

be I into model a benefits types can a XXX-plus you're of that when keeping when out the the options challenge. Our a would tile in-stock of is of is with continues store inventory of put -- find has chasing have you're say five easy. tiles, you mean of usually one comps, it when not I these to up our having customer's of hands. you something that to

feels we that So while every of and assortments always our guacamole, category something, overcome like it we're we're able we're we're and across never satisfied and never to broad -- it's sell. because that like always we're chasing happy

know, don't you the want I about to Trevor, So talk if cadence of.

Trevor Lang

Yes. since Tom I think And back we been have been business this, our has mentioned ever the accelerating in month. up

them the of have the had open though out certain we just assortment stocks breadth even stocks since because categories selling the accelerate ever able of to been we we've website, certain so And the of great in up. and ourselves, back on again,

year, I that think growing about our rate as think our you slow we'll inventory to expectation this is themselves. be

Operator

Next of question Liz Suzuki, Bank is America.

Liz Suzuki

other are and the occurred the CapEx, is given factors pretty into XXXX. But the Coast. in store You in some New the just locations that CapEx besides spend being the going guidance the It just stores like understanding of of number meaningfully some West seems for talk cost just stores about there is XXXX. which up of going and XXXX York per the up larger going

to work, think beyond going midpoint want likely spending which to you of about $XXX little be off will the that how XXXX at XXXX? be a grow, and million the just level is elevated to it's think So for base

Trevor Lang

is little XXXX a elevated. going Definitely, be bit to Yes.

yes, $XXX to, So over I from going think, CapEx at is million just midpoint. our

higher. said You out. CapEx -- a was And store much. is be couple up it things A all per call $XXX not to to million. going our It's going I'd One, probably that close two higher little down taking on our CapEx only a is own We're of part as the this the the reason rents are coming to actually CapEx going we're of that year. reason for stores few really, more the burden. bit

one in Dallas and Connecticut. one think I in

fuel gain We dirt on go the call piece be bit store, development, rents are to it's for of ourselves self the million it's a would the where where going lot CapEx get a we're up do mix doing not is of and probably more few that $XX go on we that three other two home that higher. And there's profits a otherwise would higher, can We've a in we A three things going We've going a build lower where basis, like stores a to to little just we'll and to a relocate. that go all to spend. we're relocations develop up CapEx materially we is done and we're personal benefit lot. got past. so in cases, to out but more on all sales been that. But the run this call our the I what taking relocations That's is and year. component get

that center bit little on bought distribution We actually unique. started have square heard, foot. own the might center, a land, The in going that's to Houston. million that So construction as X.X distribution you we're

CapEx in to So $XX our well we're small, there. than $X less million $XX spending million. Normally, is DC CapEx very

to company. months, for bit smarter we're years. getting another We unique. least -- that do a And that's XX as have to two another maybe hope a So won't at then

going -- you're as as of category. XX-K, you you massively Our adjacent our the at sales kind see in are up our adjacent look categories, to

then the that's about to some think took right we of think won't the in a one is bit store, still We So that's probably I But relos money per numbers CapEx I probably DC I XX-K, little category of things million the $X $X year, in you think and that possibly call to would I as then many we out. our that's big this million the number. expansion. beyond have probably the with And these about adjacent year. think think But per some going going so a it's it fashion, that's consumer. to of but high-volume I volumes works money. we've think reflowing still to on small, a up got with logical expanding And stores and be so some the their to lot. us cost more We're better spend And CapEx a our are that. couple stores because we're as super that high,

Operator

Please with Instructions] Greg Our comes from question next [Operator ahead. go Melich Evercore.

Greg Melich

influencing love growth tariff I there I'd and the wasn't, be guess how to in have on ticket it. the inflation and if because what may all I that in been know focused mix

inflation the estimate was to last quarter year? what So any in way

Trevor Lang

maybe think We I lot fit -- there, we would. Yes, our of and sales. sell what be lot X% don't we our of we just X% inflation. don't some X% in or wood, but sales, employment doesn't saw were a of in We of a but

happen going we So XX% -- tariffs, to two the that's point, lot right. haven't a seen

I think that's now our maybe of sales. XX%

going that we to the more So kind half to higher costs. back We of costs us. is going there's then higher about the across that's else again, one talking going going to there. bigger XXXX international and affect trucking fiscal cost, is domestic of that come be are be And think, container to some the higher that everybody are

centers our difference And between expecting are good are getting the XX% the I really the think out I to when We us the planning as for probably be competitors again, been. think close as But it's retailers benefit us higher. to prices of our is ever with, those is the and just and good. to want But industry, there reiterate the that of for industry. XX% of those, smaller are XX%, you we compete that's competitors most about the home and

as I difference retails. raise to raise seen And to it. going bit, the is -- a too, they're don't it's going grow, think be cost been it's -- to their ours as but have strong we've we So pricing as

Operator

Steve Our Guggenheim next Please go from with question Forbes Securities. ahead. comes

Steven Forbes

I to two-part maybe CRM question evening. the wanted a Good focus learnings, here. on

do expand right, there, is average but of a learnings? you get lot here where And spend curious share and a telling of part The if mentioned behind trajectory you during CRM those if maybe you math could sort why first terms just so of you or share but gaining can your the go. prepared curious then us learnings, could showing wallet on the obviously or the on the in pro, pro, right? is of don't helpful update the second curious, sale one, the the understanding detail wallet could Tom, We you you on it capture, what remarks,

Tom Taylor

Lisa take leading question. the let She's I'll our effortless. CRM CRM Yes.

So Lisa.

Lisa Laube

Sure.

So back first your question. to

customers gotten there's longer that dived things into some control, we've have start learnings do So we within that to that play our is are some that term. understand some we our of the as

is convenience XXX one. have only big We a stores. For still instance,

we be So may the closest to someone. not store

possible the sales that we're lose not it's we So close just could because enough.

continue familiarity, we extremely So to bigger being we we the shop an brand. which get get essence also do us, also as people and as have There's comes we I with to an that that. out think high conversion of hear young continue a our rate. there, And message

So can basically, if we them. we can get them sell in a store,

really the for best goal that shop. share I pro and speak for sure proposition wallet I'll business value customers -- model lot Trevor that to than to closer them the is best the piece. us, the let the So that make than understand to that it's have probably am. people why He's a place the believe we and we

Trevor Lang

we we're $XX,XXX that where more spending and amount a small have what we learning a to of or $XX,XXX a And amount big of have pros. share, those are with is pros are people pros, data PPR embedded, with longer Yes. on than that here part the had with lot improved business. massive these market Lisa we've get And had We of more as as was the we've mentioned, to for reason for this a -- program, a year total us.

spend figuring a set next it. spending pros which again, $XX,XXX expand obviously small take Some desk about, of to but loyalty we're spending got a talked kind credit, another of where other of overall to of number $XX,XXX them have tier kind loyalty way percentage share grows, we small with those are how add sure wallet but them. then pros Tom pros, that small pros our of of program what them. we've a set a are is big The big small share, like is very that's and is year, we're care with the And like -- us these why our that of a we six program, to great benefits going and learnings do lot, that get but we're big the part and with they year, leads, we on a lot. good structured HomeAdvisor, is, and with out those And is amount a of making taking obviously which learning people substantial working of pros, our number figures of

And over so that's advisers executed. us well. those going help a that us loyalty what people have at to all companies and some executed we're And really now think think in strategies, that roll loyalty these next you about CRM we bigger We've or move tiers. to that the CRM we year play sort and through if got the have so, good out loans of helping that look lot of as strategies they've

if share. we total, a boil area down, small of a though, still in So have or sort wallet I percentage It catchment of you would very that a is trade pro area big continuing very say, at on to grow stores, opportunity of a for us. well got here of our the focused corporate that a as all And wallet as team we've small office is share. very people

Operator

Please Barclays. Next Short, go question, Karen ahead.

Karen Short

vintage if talk say and a a you the questions structure expected XXXX as -- you Just of markets could stores? what color for few vintages about the like be and the northeast wondering think a bit waterfall sales the And a in then little would expense markets, newer I'm percent little west SG&A give the could you denser coast. wondering the just on on quick if

Trevor Lang

is This Yes. Trevor.

our look of five SG&A. the for on of is around is low in XX%. their Total total kind SG&A total, store XXs, level XX% you So kind over in are years, six stores or if companies

Our opened run -- in first more our and they the stores, they mature XXs low year stores the higher. XX% are kind of about newer

So to SG&A. low mid-XX% they're kind in of the

low to then over markets even it that runs low goes expect, our stores kind If from was... about new stores to about bifurcate generally the lower new in then because it And brand-new volumes And our higher question as we higher year. further, the in to is think then, to our But it. those. of SG&A we period, than XXs how second first the that simple down new as And percent mid- that. your existing XX% to five-year the markets higher think and way you XXs is with about a would the question, you than do generally are stores

Tom Taylor

Waterfall.

Lisa Laube

Waterfall.

Trevor Lang

I've been we of yes, been a I down because stores, last incremental our been from When has million. we've XXX treat been Waterfall, to XX the running it wrong our now, might comp But here new million model surprised. stores to points $X I've and including higher XXX don't be stores $X -- always year, basis our new and continue store years much -- comp pleasantly the sky. case. new come We or new go I've volumes. that, been at hear I to pleasantly and to rate on

disclosed XX-K, million we $XX our Now as in to stores, aiming million. we're from our new $XX

date, seen we've not But waterfall because opening up slow. really will stores So at a come at some to point, are that such new down waterfall that higher rate. our

Operator

Next question, ahead. with Seth go Sigman Please Crédit Suisse.

Seth Sigman

I a lot increases there us your out, to help margin? and or a think you about 'XX on to based wanted think expenses. in I'm back was half talk bigger this frame gross there And So SG&A cut the had way year. us is operating but sure in period all 'XX you headwinds think what give how it like in a expenses to a Can about a limited you of SG&A into little where 'XX? there in year. leverage where ability that, net bit operations, about then for to and not happened were the did some expenses tailwinds

Trevor Lang

because, more sales though, the because stores. SG&A got stores, component giving comment we're question, stores than our not new in that to higher I a Yes. store we're have the would operating It's more new XX new lot than last at gave, only answer leverage stores count number. SG&A difficult you the not of doubling which store just question of XX level new expecting comfortable a on in from say, based we in very mature and new to to stores going obviously, XX% sales with the

in level we comping We We'll I think, years, again, we've a we not get new stores our that are corporate leverage XX gotten we're little every stores, our less, bit get new in year, do we're expense, incredible, but is leverage, think, been leverage, I've year from really XX only of to out expecting again. but of to again, in because here XX absolutely much leverage out we've -- intend to got store this stores. which and going

Operator

Chuck Grom question, Please Haskett. with Gordon ahead. go Next

John Park

This John Park on for Chuck.

second of those center design a and little about Can your have out adding think guys now frame you next years? open. more they over bit productivity guys a from the should how the should market You we to ramp how sales few

Tom Taylor

Yes.

opened So in we've got Dallas. we one design -- studio

more the just two to to early as dynamics this way So another learn tell. to far. too But about year. them talk one open -- it more. kind few of too of seeing and just really we'll We more it. to far, what We so how need But we're like we they'll work. becomes early meaningful, open share it's ready get a we'll understand of it's we're to getting open And

Operator

Next Basham ahead. Securities. from Wedbush with go Seth Please question comes

Seth Basham

My question is around gross margin.

of excluding Just how do we factors you tariff next factors the quarters the comparisons? you gross how supply versus chain pricing margins to expect hitting refund half quarter, mix? to back other coming much merchandising, two see as over comparison, from play And the before the in start such out and improvement those leveraging back the

Trevor Lang

the gross about Yes. year. products, perspective XX.X%, those the was of we continues margins, think business both this quarter well. think generally from our And pure our as better decorative we We also gross margin where started then higher and are as better margin. product carry as the quarter, which to do a last mix a majority best the I at consumers exited choosing is And the

we from we expect year, would product margin. and the again, of said, bit come As going margin of little from get the little get bit bit of the to of supply that I a year, in that would half we're A some chain that probably we as to next that expect as come little probably get would well. into first of a

Operator

question, Gutman Stanley. Please ahead. with Morgan Next Simeon go

Unidentified Analyst

building for home industry taking Obviously, question pretty far. the sales absence the could have how Thanks Hanna the and the housing touch My on to so progresses internal are your actually you on the color guide, And specifically the some on dependent is is the year? interest Pintoff. into you're if thinking trends year? of you've improvement top demand on planning what what vaccine COVID time you strong line around and during broader and how about you This outcomes trends line. give seen us you're extent the question. In rates top could

Trevor Lang

Yes.

is -- I Trevor. this think

good the it's as I backdrop as been. ever is think

they're now, The think out XXX think having them there, at about They're XX% are years I the are repurpose the bit over high. up existing more going it. their Interest X.X units exercise. old. spending people record you to still but in XX home, If highest close is lows. it's think home, everything, play, time turnover, little are of work, housing they're record their to or a on million rates million it's We're which home sales I

those historically was all too? So leads good Sorry. part for business. do, and second have backdrop, been that very a in question, we to to are has that there things -- we a macro strong that our us And

Unidentified Analyst

going driver looking is at COVID the the vaccine. timing which a of sense of way and the And be you're to

Trevor Lang

lot to giving to games. That's they again, based things I information, think, the going is out travel go to better guidance. My not are start to taking And further recent ball again, why on, and that's lot there. say. be a on we're will People is really we're a getting start hard to will better. sense

been And some would those being that as of without mentioned, as Texas. we're towards in have But to could discretionary higher us directed that Tom go has comping number been activities. other of -- back possibly storms leisure XX,

remains backdrop strong. very the So

Tom Taylor

think think XX% of share. around are our those from years who old, still brand we are. our a three XX%, you so less better. We about Trevor, share stores is that awareness where get We've to than add still tailwinds model out our people us, unaided I'd hovers been find too, stores. some We're taking taker. we so

place -- So line. and to we've got to just lot of in top continue a initiatives drive

Operator

Bellinger Research. ahead. David go Wolfe Please question, with Next

David Bellinger

question. Maybe look few that Thanks the same level younger structural taking sales stores of per on for fleet? foot And at trending what topic over potential stores follow-up these here. inform where productivity tools you in at the years? an on you newer does reaching now this of the a point, productivity? way Is some those earlier of some But is of as the your are about it the versus there units mature next most anything the square

Trevor Lang

notes find I'm flipping Yes. just and try some to here.

our they're for I X older of sales think old, Our XX north $XXX or and years productivity $XXX... stores,

Tom Taylor

$XXX, you sent today. it

Trevor Lang

exactly. Yes. I mean,

So in they I speaking, look higher our older those it's the sales mean are, I volume at you profit strong foot. lead over as $XXX stores, the and the us they about generally square that stores. feel think does are. much to per And higher think I

sales I'm stores And -- $XXX at well per years XX foot. is in yes, just I'm square so over over looking our old

lot a obviously that. are stores than lower newer Our

is it and wine, the fine it the stores profitable higher the the volume the more like get, So older get. a

And so that does bode well.

in get and in million We and year be I XX% $X.X to XX to follow $XX new Those the stores $XX sales X won simplify If million business, economics, right. to $XX and close EBITDA store years in million, to million getting EBITDA. our to sales you the stores old, in the you new be $XX closer margins. gave million, to going they're $XX million really first

wallet commercial pro. here, for almost a it's we've been the have we've substantial design got done all years And great said, amount We Tom a and XX business. majority the of have So of here I as with don't share. initiatives and still

share Our mind is slowly low.

my comments, in of the So as with future. ended kind day lies our best we

Operator

ahead. comes Bottiglieri Exane question from Please last Our go with BNP. Chris

Steve McManus

McManus wanted back Steve It's here. for guys. Hi, to Chris. on circle freight. us to I for Thanks squeeze

rates guys the step seeing seen the uptick ocean months. you rate couple up at from I you mentioned of weren't spot time, but think increases really quarter, we've freight really an last last

So there just that you fourth more if meaningful a the quarter. impact curious was saw guys in

Trevor Lang

they're No, one And think May. fourth our Again, contracted thoughtful had we contracts our all of comes our very the time. almost over kind up chain first in not and of those team, come in out. -- supply containers I

so, And have spot. to a with we don't lot deal the

have because We are have some a so insignificant. little bit, doing pretty volumes been been but higher, just our it's we

we So way see really didn't -- of mirror, higher we in looking cost. much the rearview the in

year, half it new just two As times our as probably then a we start overall see the the to will we those But in first inventory up. market of costs the going don't just of second the get and year. as we I higher as to to is much contracts -- get so year, feel turns because we we the over half mentioned, likely

Operator

comments. Thank closing would floor to for you. the like to turn Taylor over I Tom

Tom Taylor

call. we to next you listen everyone. thank your but I thank joining Well, everyone forward in. know and associates in to hope I lot safe healthy, We and is everyone. want these for the staying thank quarter. in we interest, everything talking the Thanks, trying a of you you look appreciate our I and to they're all times, doing for that

Operator

teleconference. today's concludes This

your and for thank You you time lines this may your disconnect at participation.

Floor & Decor (FND) 26 Feb 212020 Q4 Earnings call transcript