FND - Earnings call transcript Q3 2024 | Floor & Decor Holdings, Inc.

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Operator

Greetings, and welcome to the Floor & Decor Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Wayne Hood, Senior Vice President of Investor Relations. Thank you.

You may begin.

Wayne Hood

good and operator, you, afternoon, everyone. Thank Floor Conference Call. to & Decor's Earnings Quarter Third XXXX Fiscal Welcome

Joining our Langley, Officer; Trevor and me Chief Financial Lang, Taylor, on Chief President; call today and Bryan Officer. Executive President Tom Vice are Executive

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

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

will call on this available website. Investor of replay our be recorded related Relations and materials A

to now the turn Let over Tom. me call

Thomas Taylor

and our everyone, joining Thank earnings quarter XXXX fiscal conference you, call. on third us Wayne, for

will our about financial will our outlook I and our of in-depth for share the quarter highlights, Xrd earnings a fiscal Trevor fiscal some thoughts XXXX. provide performance of third then During today's quarter Bryan remainder our of XXXX and more discuss call, review updated

us flooring spending support We are the to communities. our executed serve these efforts. as the by the customers incredibly affected project proud of plans dedication deliver to our affected rebuilding of period enabled store we work $X.XX manage to surface the across of fiscal diluted began Xrd hurricanes the discretionary per stores associates' their challenges, remains and share face during their they better-than-expected associates expense for last hard thank expectations, dedication for by and home recovery and hard how and hurricanes primarily to in our quarter store XXXX compared demand work tight period due $X.XX year. large quickly particularly when to reopened the team our successfully and improvement company. earnings and their hard our management I to results Due challenging. want with the their These same efforts, exceeded our costs In

diluted $X.XX in will Bryan As million. $X.XX to detail, XXXX from discuss range $X.XX to are $X.XX narrowing per fiscal earnings share our from we guidance more

in September XX next cycle XXXX, to sales to Federal home that higher began of believe potentially easing flooring could surface existing its over XX the hard much leads ahead, Looking which months. finally the spending anticipated grind Reserve us and

million. increase by and sequentially in existing rates. year-over-year X% is our However, X.X% optimism tempered recent home September declined the $X.XX sales XX-year Moreover, mortgage to

which affordability headwind is remains prices. increased National according of year-over-year Association a While home X% moderated housing existing February. XXXX due in to Housing X.X% pressuring growth home to its September from sales to the price to of in the Realtors, meeting the demand growth secular in peak imbalance stock,

mindful consumers that of goods. remain spending of In short, wallet services from to expenditures still shifting yet we their consumption more indicate personal optimistic, Finally, are the share challenges.

hurricanes the early that to of shift XXXX me quarters year. third our fourth the in made and the affected comments fiscal stores of landfall Let some in and my

prayers go our the hearts families and hurricanes. foremost, and out First communities to and these impacted by

Turning made the on to July Coast category of early a X in storm. season. the landfall as the Texas Hurricane first Barrel hurricane

during as our fiscal Xnd reopen. mentioned and we by did wind that the not were call, offsetting points sales comparable in Xrd earnings estimated quarter-to-date caused an XXXX we damage Hurricane adversely Barrel. As XXXX see we Because flooding, not the quarter storm impacted stores XX increase basis approximately demand store mostly to our due

Helene and being or for or stores closed to for in stores in were X than more Helene, XX in states response, of landfall flood damage. Hurricane on catastrophic wide XX-month regions. stores. where the Hurricane September partially area closed to The Helene communities impacted impacted we in contrast, affected of XX store range or for adding our in substantial days. wide closed across our efforts This to credit operate which Furthermore, implemented more In land stores for XX days Milton we as Hurricane program base. later introduced or October by all impacting caused a took over steps causing about solution by X, back affected more made of made In we X flooding impacted Southeast. hurricanes stores landfall both broad miles or Florida closed an mostly XX% wind it the hurricane a resulted a Combined, moved on stores the support XX. XX partially and for and days Hurricane area of a after Turning brought X across staff. XX additional damage Broadly, rebuilding deliveries storm those

everyday truckloads key prices lot stores. low SKUs delivered the affected at also important and quantities of to job We additional

service. postponed to on focus teams customer inventory Our and packout projects store

single with efforts. are working restoration partners we Additionally, rebuilding the our to be a national source for

the and caused Looking flooding Eline ahead, we Hurricane the rebuilding spend the from from benefit by expect Mil. destructive

in than of say believe this extent benefit quarters extend are duration to other XXXX. it the any we forecast difficult precision point, at with could However, and this of over multiple to degree

to store shift new growth. comments Let my me

grow the challenging. remains continue market some and their and and to These format as our fundamentals prudently rethink close challenging by strategies. competitors share industry opening forced industry brand warehouse awareness new stores flooring of our growth have retail distributor recently stores, even We to in

are We share to we current grow period our opportunity of with their an and as recruiting Furthermore, actively using associates may affected managers who and who by areas market disruption be projects. the industry trade engaging by support are consolidation. this in for displaced homeowners and sales future pros need

to business competitive substantial model a due We build are our our decade advantages. in to significant over with favorable last position the investments

well and challenges Our our continue dedicated these teams to and strategic investments growth. us navigate position

fiscal format opened X including in warehouse we new of XXXX, openings XX quarter Third stores, September. fiscal

studios new result, to fourth compared November XX XXX the achieve opened the in plan quarter remaining operating December. third We of X ended we plan most a warehouse X fiscal stores expect studios warehouse and now fiscal date, the in store states. store occur to fiscal of X warehouse warehouse and quarter to As design fourth To format and stores format XXXX. in Daytona, in XX operate stores XXXX in in late format quarter, and We openings Florida, our opening same open stores we across warehouse with XX the the period year. XXX format last design have

in half format conditions, As intend we the discussed second stores XX on quarter XXXX, conference year warehouse mainly fiscal to our prior new existing open in in the and in earnings depending market markets. of approximately calls,

Our stores unchanged. long-term is XXX goal of operating

existing level However, time to of we when we a believe and be normal return stores slope the will historical reaching XXX home of line influenced by sales.

Moving to sales. quarter our third

from million decreased Our with -- to fiscal year. same by total store last is XXXX quarter third increased $X,XXX Comparable the which in sales line X.X% period X.X%, expectations. sales our sales

estimate in comparable sales easier the hurricanes XX our comparable comparable Comparable XX We improved approximately as X.X% fiscal store On in quarter the in We XX.X% decline second was a September. the in and third negative full in in basis basis of X.X% basis quarter XX points XX was third points impact approximately and sales X.X% X.X% quarter estimate store on XXXX the in sequential points. sales the are basis, basis August store store fiscal monthly July, our in past store in we and of comparable encouraged August, declined quarter, quarter from that first sales XXXX. declined points comparisons. third impact in rate cycle sales X% our We July, the September.

sales XXXX see to were fourth company and comparable store store quarter above encouraging well comparable from emerging from continue X.X% trends declined perspective, the sales division, average. a comparable where we sales our Western store regional

which Let about of end our range impact our XXXX, same X.X% at hurricanes X.X% transactions of from period expectations me last the decreased expectations. In our to of and third is by comparable quarter ticket transaction Comparable low trends. average of the average compared due same year, the stores fiscal comparable last period of in to line the range our the ticket year. declining were the comment with

As from comparable benefited average comparisons. our past a ticket third transactions cycling quarter and reminder, easier

XXXX. transaction We will and the continue of ticket an fourth easier comparison sequential in from average quarter to benefit fiscal

profitability. in decorative trends points. to which continue to continue Like categories low prices. towards adjacent sales shift leading merchandising these Comparable drive innovation, everyday our materials, better enhancing styles to were in price our and store sales installation efforts products, Furthermore, best offer successfully average. better our quarters, sales and prior than at accessories higher-margin and company the industry-leading strategies a

turn Let to me few of call of more the over a now pillars discuss to Trevor growth. our

Unknown Executive

for want Tom. serving to our and my dedication Thanks, customers. associates also their gratitude express our to work to I hard

stores and online. expense the not at experience managing We does costs stores support come ensuring our in are center of this while tightly our customer store and in

high engagement service Our scores customer customer teams September. plans in our in consistently executing which level, record a resulted at are

projects market. sets needle this the market associates engaging complex playing. assisting addressing We despite engagement training We of conditions. growth. thrive on challenging We customer and proudly to in our customer and with like important greeting, with connected knowledge share our and grow pillar know to commitment questions. Their competitive industry and come achieved us are this foreign us us knowledgeable apart customer the helps and questions allow moving metrics . Shifting and role

quarter connected third sales. XXXX customer for X.X% fiscal approximately increased XX% of accounted sales by and Our

website. As growth to previously paid driving discussed, we continued executing towards organic strategies our and traffic

improve technology process by quality adding We to these website increase integrate execution seamless strategies continue to to to and the inspiring for customers and a is of to merchandising further search, solutions refining processes personalized content this our and design and continuing experience. The achieve efficiency. our essential online Plan our services. online in-store of to user-generated develop growing

design turn to me comments our services. my Let

services XXXX. to focus and work pros on fiscal third design of committed total sequential experience growth online to design period are elevated sales sales teams our in-store, opportunities significantly Their total and the increased during and high-value design personalized design across homeowners the in quarter our penetration hard channels. in and fiscal from store Consequently, XXXX and notable delivering year. comparable Our an third same in-home resulted last quarter

this continue services growth, We project we developed on on build strategies design building our website. for awareness to credibility and

provide design, galleries We for of created life online scheduling have showcasing an and designer-inspired and design These room-specific extensive design by real source enhanced imagery. and projects galleries. functionality interior with inspiration

providing about We how any these as inspiration, project. for beautiful ideas or are space serve excited galleries sources of

During to in continued retail Total for of of our grow my comments quarter to third accounting Pro. the sales sales. approximately fiscal XX% to XXXX, Pros

warehouse from with house share strong ones focuses existing Pros We relationships outside market that of our on deliver a and with distracting sales growth and mindset our supply new continued grassroot stores. nurturing to

services top a Pro increasingly customer understand priority achieve marketplace and spending priorities time brand of relationships tailored our precision. facilitating & codes by set provide To build in this, elevate store a Executive including focused Decor mutant more a greet tour with Our new and of to They with executing and Floor Merchant. engagement managers Pros are ZIP minimum that and in on weekly that exceptional a Chief our consistently includes solutions. service their speed store Pro to stores the with needs outside is are our delivers targets, engaging directly these

developed. off [indiscernible] store is competing we outreach team. new build involves marketing customer strengthened warehouse stronger quickly, in and brand fully store efforts helps to new This perspective, a larger get intensive which our relationships not start local awareness a brand our with markets a to From awareness process and where stores have new process

and reflect also to In to our service. partnering attract advertising driving a by successfully digital retain aligns growth provide scheduling bank's We focus staffing, cost-efficient needs having desk and and best that stores, way enhance to customer our us demand. support to prioritize with on with practical platforms training and We're Pros. bilingual continue at market we native Pro specific new within with channels to

Pro These successful events attendees. and educational third Rewards higher events notable included their installation which loyalty drive XXX driven September program our classes, in XXXX flooring We industry. our nationwide free with educational successfully which fiscal appreciation purchasing to with of and a Premier industry-leading month, sales in over sweepstakes. annual giveaways remain Pro held We in the educational materials. excited continue We with XX loyalty Pros XXXX, the uptick activity we approximately have who about consistently hosting attend especially in is demonstrating events believe in XXX quarter

regional are third that exceeded quarter account XXXX pleased we our the our managers of Finally, in sales our from expectations. fiscal

care, flooring set disruptive health These than the high specification opportunity senior growth sales company Fiscal hospitality and discuss revenue XXXX, average. quarter are our the education, commercial to to on of Services high rates, quote continues long-term a flooring third business. of conversion profitability. now market the commercial team have These the in sectors and more Spartan strategies to grow profitability Let's are attractive at the sectors Leadership faster living market. where continued recurring commercial execute for sectors generally the greatest. and

comprehensive aims across relationships long would the in a a to the high availability, leverage leader to the disruptive nationwide products superior Spartan commercial country. industry specification by provide specified network term, and strong Over service This delivery flooring prioritize sales Services and network. become establishing

market support profitability Over and years, share continue infrastructure out sales making objectives. our we at to our and and build growth scale representatives the next will achieve several to investments, growth

To believe growth challenging have enabling business us conclude, initiatives to resilient model navigate right period. we the strategic teams, and this we

now over me Let to turn Bryan. the call

Bryan Langley

successfully our inventory growth achievements profitability free our chain These challenging. to grow strong to our generate testament team's gross Thank strategic I are have approach you, flow. proud and supply executed Tom, am when our and and how manage teams industry Trevor. our managing strategies rate, control of margin our commitment cash and a expenses, to is

sheet me let quarter significant the the third discuss our among statement cash some of and Now balance items statement, changes of in line flows. income

last operating Our gross quarter selling expenses warehouse in by Spartan same and rate expectations. period basis store the our $X.X by in fiscal driven is year expenses million our line third margin selling an by due store at and from same year. XX.X% is million stores. the last offset from to favorable $XX.X XX.X% costs. rate in increased Services, X.X% points XXXX quarter increase in million million year, supply increase primarily period by primarily same XXXX XX $XXX.X $X.X decrease period The from to increased to margin with gross of growth the of XXX and comparable at partially operating operating third chain additional Year-over-year Fiscal sequential last a stores compared to

to successfully the by The and expectations operating XX.X% selling exceeded our year. expenses. sales, from increased to percentage period store stores of managing operating basis our store and due performance This last other expenses approximately payroll points same XXX

million to G&A and in cost approximately to to by million X.X%, period compensation store expenses from higher our same growth. of quarter sales support our staffing is expenses XXXX and deleveraged basis increased incentive points administrative store primarily XX decline Fiscal to sales. of $XX.X by due Percentage the $X.X comparable to growth additional This XX.X% last third the year. $X.X of attributed million general

expense same Fiscal partially interest open ABL reduction the third decrease amounts to under the interest period to preparing in third year quarter contracts. was and quarter decrease balances interest were by of average same to million prior capitalized, expense XXXX from XX.X% the outstanding due in interest fiscal a by income period XX.X% due higher lower decreased last Our a we future $XX.X primarily higher in an compared XXXX net to preopening The that decrease decreased period. to from stores increase million expenses to our number in the our last year. facility, year. from is cap The income interest $X.X from offset cash interest derivative

due quarter $XXX.X our increased same EBITDA in from XX Fiscal Fiscal tax awards. decrease year, and a the basis third X.X% were related to sales. to from primarily decline XXXX period to in deleverage primarily expense comparable due million, benefits rate stock-based XX.X% compensation in last quarter adjusted effective the to XXXX store third points excess tax XX.X% declined

increased net year. XX.X%, $XX.X Depreciation to period contributing XX.X% per $X.XX, and amortization the falling XX.X% declining income same earnings to by and last diluted share million of by from

and to flow. on sheet cash Moving our balance

with the unrestricted balance ended for period a million and $XXX.X contraction. strong to allows which to million equivalents of in structure existing grow us during cash industry even $XXX.X available ABL cash maintain continue consisting continue our quarter third We the a of We $XXX.X of to sheet, capital facility. prudently borrowing liquidity, under within million and

our September XXXX, inventory $X.X decreased billion XX, the last to from of by year. As X.X% period same

Let estimated thinking me our to to to approximate margin are to billion. guidance XX.X%, year to how billion to with we billion $X.XX how sales decline with compares with as store operating Selling unchanged XX%. expected $X.XX approximately Sales and Variable expenses prior to X.X% and now prior be X.X%. store XXXX are approximately are turn $X.X expected X.X% and billion my $X.X comments are Gross previous down from expected about our to to of expectations. XX.X% full of our guidance. it fiscal to guidance is a prior our percentage compared of be compared X.X% sales

rate timing quarter late be fourth store of third expense quarter. the fourth most the pressured the of We to new openings expect and the due to in the quarter the year

General percentage above X%. X%. as approximately expenses expected Preopening to administrative expected a as sales sales are are of slightly of and percentage to be be a expenses

pressure with approximately to expense expected is million million, interest the to expense ERP approximately of is in guidance from prior of due rate be to Diluted be to Net rate $X $XXX We fourth our $X is XX% unchanged approximately with million $X.XX our $X to to guidance unchanged most to Adjusted prior compared Tax expenses. our million share expected of $XXX million to million. $XXX earnings of to prior $XXX Depreciation per is be $X year million. expense million guidance to the compared guidance. the approximately to approximately our our estimated expect and amortization compared million to prior estimated $X.XX. range quarter to of with be expected $X.XX EBITDA $X.XX be prior are guidance. from the be $XXX expected

the average million $XXX outstanding of shares, approximately weighted warehouse Diluted timing capital million. expected Capital approximately a guidance. million $XXX unchanged million $XXX guidance to compared new are with XXXX. due to to XXX decline openings in shares expenditures $XXX in for million our is change expenditures class to of prior of from The our store of prior be the

making I growth day. dedication to We prudent vendor we continue partners for every and industry associates investments our thank fundamentals earnings serving their in result want and believe strong contributions will customers when that to improve. our

questions. would now to like we Operator, take

Operator

[Operator Instructions].

from come Morgan line the questions of first Our Simeon Gutman with Stanley.

Simeon Gutman

the XX higher? leaning Floor the Or XX stores? in look Decor. does And first environment invest ask XX for margin? into question, that are maybe as that & you Tom the mentioned the to are protecting next you to My months. Can described over higher open like remarks, I you you'd in Does the mean grind prepared grinding what

Thomas Taylor

Tom. is So Simeon, this

call, on not the That stores we're changed. said for next planning year. XX last what is we So has

of we got year, to openings. out we push and those some we've into want said, if I get next As flexibility

today, we XX%. have We plan new the But do is to that. as still ability the sit the

the react to We turn prepared the of plenty event inventory We've get in fast. the ability in system, to if and quicker. the got were product are market

We staffed. if lowering it We're are to taking case. continues stores the and ready to And and that Our the being be action we to to We're see happen, cautious that hope existing seen that sales hope will for some prudent. haven't that, nice . handle occurs, our interest were occurs. And to it event that to when And in But spurs well and start the be rates. sales it's Fed we believe that, that. yet. it that follow we're that home that positive. prepared we

Unknown Executive

Trevor. is this Simeon, And

that I adding think it's by. sitting we're worth not idly

stores. taking cost CapEx We the the out are of of

margins of new and -- the than gross performing stores been. historically are as Our we're higher operating out they've well. taking costs

to muted differently, take over that a a to bit a capital. taken good going be environment, last of out a higher a lower the more if we successful we operate gross we're in months at work a to give stores this stores of still so X lot lot muted a operating on can in if environment, new and we've -- research of cost return costs . So us done are lot and the margin

Simeon Gutman

And change normalized growth. business about in rate level. . the this level of XXX follow-up home the times home existing years, assuming not the mentioned But existing the certain sales was number Tom sure stores months, years I'm quick it this reached several be to had growth enough a a on referenced sales, back many question. It's right the direction. that you've which may in in versus moving the get some growth, take the macro, When it's that should over quarters, time, That next all

Thomas Taylor

to seeing positive. Simon. that sales business our turn right, home a gives trajectory as us the I us, That's and existing ability That's benefit improve. believe . for net start

Operator

line questions the next Our with from Horvers Christopher of come . JPMorgan.

Christopher Horvers

questions. a So of follow-up couple

prior this, stores I they sales So you to and question certain markets the comping price inflection? that the are are is, are in positively? the If but Coast indexes look . West West positive. Coast, Coast don't to the of your first some stores your home seeing have been think at West you home positive on existing

Bryan Langley

I'll This is this take Bryan. one.

the the chain. hopeful about yet, now. it we're inflected But outperforming deposit haven't That's way rest We the we're really we but meaningfully right that talking they're of crossed...

Thomas Taylor

We is West. we from that improvement, we see starting and out September Yes. saw better that. should home the the We the than the coming existing benefit They're It to will of in company. of that sales think are like . that continue. show month

Simeon Gutman

were Existing home September. up sales X% the in over in West

Christopher Horvers

Right. over up X%.

So a X%. you down do -- you did

-- So you're close close at Yes. Got West. point you're to in flat this getting the pretty to it.

guess a home of little off bit sales positive a I of dynamics. So existing lag

the up. of question not comparison get But from an sort at you more be just the the we're stayed anymore. can it's lead could So the you do Or would look extended It's for happen we that flat if trend been a composite just can that prior we what on that And period like volatile. is that it very is up factors how to to coming following of think in . if positive back trend. trend time, then existing, have think to Like rates you like bottom environment? we not don't you

Thomas Taylor

look, compares to ease. mean, our I Well, continue

category. homes the easier. the that positive, So turning business, And that, net for are for more it do that's benefit existing our if over, to comparisons going said, a home get I are our better turn sales as I think is

that, event I think they'll come applied down, historically, apply scenario cash refi people will they'll their happen, and appreciation improvement. I in that's where happened that doesn't into been the a household think home or to of cash things continue that out flat. interest stay that then because then there's more that, with of rates take If what's let's houses, out say

bathroom the that take of in house. your And I money event we to can't than you do so about your think of out everything do

category. apply sales that Chris, out they in down people the flat the hope and see home we event of then household to hoping take to what's because existing the if stayed don't cash with in place, and happened continue that that appreciation, come is the rates I'm So that

Unknown Executive

will we some benefit. a markets other a short the of benefit. to that with to side It's we Hurricane -- of of are happened going But This really early and few maybe there's bit signs Florida, get coming a Hurricane Helene on is a just going -- bit we're Trevor. through, stores Milton This West believe the is some get term. but a be

to in in the a we when huge Now recent. of that but bigger is had is of Houston we we're XXXX lot 'XX. early, going obviously benefit benefit hurricanes some it's than likely because back the X destruction those very And and there were be

Christopher Horvers

talked benefit you I was basis, from you is point the a Well, Harvey. follow-up, a stores. of read On on XXX guess XX% you X% about saw stores. mind which my Harvey of basis XX-month

the I quite granted, Milton should of X% that is but not maybe and Now it's we of focus X on like level stores. like think stores, it's

a do think take XX that you in should . ratio, versus we versus saw lift that X-point Harvey million by that stores from that So of affected you X the just X% subsequent months in Harvey?

Unknown Executive

a really, I think of today, did. there, some but maybe smaller. bigger stores more went that the is we're it's size the is what there for much of little in Harvey. bit will a again, be down Harvey now going through We're lot are West XX% seeing to obviously, we impact. it of be than when Tampa opportunity And Coast Carolinas, Sarasota, the impacted Over where Florida, we're time, to seeing less the

Thomas Taylor

for too it's to on, know I pile but bit sure. first, would won't say, I early a

Harvey much think event flooding different. bit RV was over significant more a area. I a very a was geographical

prepared. look, We're we're too in month coming We're seeing bit now, lot good to come stores but I can just more, we now, early -- a rebuild everything those So . things it's early. but as but capture us. know out think we'll a to it's a that of from it's little doing

Operator

Securities. with of . from the Guggenheim come questions Steven next Forbes Our line

Steven Forbes

given start just challenging of within. it especially just up investors Bryan. the macro to on about ROIC. Maybe questions for that Tom the Lots Tremor, following with business. on how you're operating ROIC to think

can you've cost us new planning done to work for some stores XX how your you the forma reduce behind Any the capital. versus you're -- point, sort year? You that modeled the year is about initial the capital of talked year. of cost way ROIC . for remind frame to on you're And maybe next of around the planning how stores help X that pro next

Thomas Taylor

go work reduce after our first, will will and cost of and of Yes, tremendous store have Tom. I Trevor I will I'm -- a done in the amount this Bryan openings. to is we weigh sure new

things by So the same that taking we've noncustomer-facing at by store. the reduce done the operating of cost the done time, out reduced that stores. the we've rightsizing of the We've cost store while to

as really than markets better shoot we approach more we've will going as going a trying selected taken a bringing that stores, earlier, with know, a more bit new perform we it good said know the precision market. we going then to we're to in And down. that So XXXX to into we voids

So more thing. there's markets, sure less a new of

So done of we've the gross cost we store improving, with and get . the are XXXX. think will we and cost better how that, store our as of that through the operating stores with selecting and -- the improve what margins

Michael Lasser

in macro to our It transparent that X. off that very help are pro year that Yes. alleviate our of lower bit in than some Obviously, million the been were $XX stores turning forma super a will today, pressure. little million this environment $XX target we've we

it will that. just fully macro the mitigate that. offset but pressure put mentioned, help will offset some So of but Tom It will help won't on backdrop, ROIC, given that everything offset and some it, of .

Steven Forbes

quick just maybe Bryan, follow-up. a then And

how given you As the through expenses and structure measure that sort talk growth business burden don't year frame the what the of think margin operating of you needed -- growth to this on to if how stores? expense next at anybody you what next as we comp, of XX% is through sort store help of through of any of sort level plans work maybe environment, selling year? that know through can year the ratio the to for for to think growth the think hold we about burden Like to the I or and level sort guided right, way

Bryan Langley

our We're the not store side. expenses. the commit a comment Those late more growth year store late and ready come. openings bit process Obviously, just of budgeting we'll on year. drag will to a sort XXXX hold of now getting QX take into this We're selling to pressure store on our on next QX the in and detailed little openings some put of the just But on of yet. to given in

We'll on come that, obviously for to but commit and guidance the give more transparency we're to not the call to ready you comp. guys next So that. around

Operator

Our Haskett. with come line Chuck of next questions Grom Gordon from the

from of Wells come Zach line Fargo. questions with next Our Fadem the

Zachary Fadem

back at When is potential operating start over the opened your you recovery how this then And drag implied margins? outlook say last which should stores as that past? scenario, drag much . the new operating how the And about margin about you look does year, this X%, a how to your year? just is you constrained would compare think for the think we about snap in to margin by

Bryan Langley

is I've the mean years, Zach, in, will been there heavy from pressure, of I've can this which where a is but the come This but through, environment mature and delever. I our the for I still here negative new from first where coming start from XX lot environment in pressure our sales then is have the seen Tom is in. stores jump Bryan. it's got Trevor first stores put I'll and stores. decline over pressure also costs. some still new that mean a you've

sales specifics lot pressure new even the a little existing new from those bit and stores on our So stores causing still cannibalization stores our without the a on there, but has put X. giving

snap it growth of we significant going sort will it's path back earnings kind when or snap any won't be, it of will as glide to take time, far have environment. power it what immediately, but should back As given

into So it see environment power, historical think year goes earnings growth back but next significant to get you if don't levels overnight. we sort will of I there's any and

think it to take kind get. of will I time

Thomas Taylor

we And will to the learned this store that our in disciplined lessons amount -- make, say and within would undertake, -- those more we our spending continue support add sales is rebound. of have Tom. the be we that be projects a I investment that to within will within of I'll center, we amount apply

sales store operate really investments. we within hours as to around. those is get our start see our are stores. the We flow kick those we at XX% and of good on then as and minimum we more benefit center We running there. sales And we of throughout thing last that So benefit We see would thoughtful support soon stores be should should turn the how see the kind in around. as make investments

. So that be helpful. would very

Bryan Langley

Yes.

ever $XX.X and release scores I able high store as see as our were mentioned service our the comp think are guys that the you numbers they've on will number to customer we've stores credit million Trevor to our out is in taken because out, got million XX-Q, the out to in I've as been. to that put call, and of $X.X associates just give we decrease year-to-date,

not So we're customer the that in this way doing experience. it's impacting a

Unknown Executive

was flowing have plan we once mid- so think that through the flow upper to in is X% next the are XXs guidance upper if If operating to above is And to we there sales confident accretive plan. once plan, just to that incremental you're operating the on going pretty margin this give very upside, the if margin, and XXs through you're above your to year, the we operating is that set sales modeling, a that I plan, feel is when obviously and I set, at -- in income. like above the mid-

Zachary Fadem

on 'XX? just where are store what call 'XX enter, into Got the remains similar and store we we it, new it it. out new to just and openings negative push today. negative of is half you operating comps the to remain today drag extent if as the margins first And would Curious

Thomas Taylor

we we we We were we'll it benefit plan. things said continue out. still If Well, stores. from is we we we on next things our think decision. that visibility have certainly, we top is a make push those the trending. the both, line benefit give Then from on stores better with the yes, the will time depend little bit how opening some turn that us sales If as the that, year existing pull the and that half would want to we're home we're stores the I call, see put really refi, to of our make it positive. improve, hurricane, time yes, can to stores planning flexibility the and I we'll event of to get call, XX the . then worse, on out, will today, beginning back by to in at guess

Operator

next question with Seth Our of the Sigman Barclays. from Instructions] comes line [Operator

Seth Sigman

the you As you as couple would industry -- out see has you perspective, about feel an pocket, different think as to a of see thinking shake last a seems about does air expected exiting be have I'm from years like to is the what pre-pandemic? starting industry from that of have over right, wider really there about Because you seen downturn? And anything versus the changed how competitive think do it how we're you results. range the

there. context any just So

Thomas Taylor

can out would of let I Liquidators anything independents Trevor, noise less come you had heard I say I'll closing. had closures noise or We Ersan if and closing, seen that be after there'll go competitors already of We've as say, in you stores. cycle. would close this see different. -- chime some to of we within Lumber I distributors

when less that we believe there'll competitors I enter market. So be the

like to than the different to And have . continue have and have. deal go getting with have to how better, pre-COVID. much don't to think in don't we think their deal much improvement that's we'll that they ebbing so I continue always centers, with I getting independents think home worse too business. that flowing, changed and I we'll about

similar we this bubble that we the same pre-COVID, the passes. I and have are think competitive the I to have they'll advantages as So think competitive advantages be today

Operator

Our Lasser UBS. the Michael line next from question with of comes

Michael Lasser

-- how the what up question to share. and if year, compared your related be? your that the this might this year store will XXXX? assume versus midpoint is guide of you market the industry traffic where Given per transactions of to Obviously, per end store your for is And perception

more that stores being are it are across wouldn't why cannibalization. and than there's been the some closures traffic transactions XXXX, But better burdened and flattish be Your with versus market, is? if metric .

Bryan Langley

I at I'll in. what's of a like there implied Tom then is in is Bryan. look exit X-year the can go flat almost we start kind Trevor CAGR, weigh would When and that This at and transaction.

were from higher, transactions our basically so where post-XXXX. ticket that's line exited inflationary the have because happened an average are that XXXX of but with And all we in were things

So when that, think but about are is almost ticket you higher, flat. our transactions

we And basis burdened during against so would yes, of have macro time as digits we lot single relatively by is at and said back opened per environment. a mid-high were, But today with that have would flat given they Analyst from are period stores a store transactions this Day, down cannibalization have where which that algorithm on the historically that our transactions. mainly long-term we driven

tells believe the fact back of it given stores, those a kind XXXX. some relatively and the things that So of there's demand we lot that are you we were within in to flat of we where pent-up

Operator

Our with from Haskett. comes next question Grom line the Chuck of Gordon

Charles Grom

Sorry help the category the areas guess, What about you about innovation quarter. attributable us the pipeline materials actions How you're . up to then with first that on the excited any think of may here areas? I installation in talk that can products. years? next innovation over other and call. success nicely Can XX% few about And be under in there? price much were you the about duress,

Thomas Taylor

jump Tom. is Ersan start, This then Sure. can in. I'll and

things innovation got more bringing more an in our trying with products do from done. think on program a to standpoint, going are I we're We've outdoor historically stores. good the pilot outdoor into we we've than where

customer. of on historically amount So reviews we expand since done. try our Even the of path down line that product we've can continued sell we done amount COVID, we've our the to newness. the things to We've same

adjacent into And add sense. to we're So there's coming categories store. to that think I products new our make continuing adjacent add categories, the constantly

that should kind things those cycle. out of all So . of on help

Unknown Executive

as add I XxX, next at just XxX, for our business. constantly the a to going to the those this, year we market also won porcelain incremental wood continue that we get is been such are few slabs be to last, things we've sound. panels going. well. to the of want and business satiates expanding and stores totally And as top well, to items reduces other to and as started critical X.X acoustic year On that's panels, XxXX wood stores porcelain this more by the unique to that where X tried munis innovation we to to more

Thomas Taylor

more And there's comment. Yes.

big another to category first the we're quarter. pilot adjacent that have in We going

be come to even of still. So and our to to as customers. We're . will out ammunition this better. do to it give trying to to innovative the add we And market we're continue not sitting turns, our more offering and us trying satisfy

Unknown Executive

This Trevor. is

made Your go very strategic question supply a Several strategy. on decision insulation a we house ago, years to materials. after

the mattered professional customer. customer, our materials really we the And good very professional to especially insulation in brands added that with So category. we're seeing success

that going everything to category. shop needs. and really think so probably that again, years big have And try And the that's that's X now just become best-performing on one-stop been brand a we our

Operator

Our next Securities. the question Keith comes from line Truist with . Hughes of

Keith Hughes

of start down about less I per move that. earlier categories getting ticket of dig to square you any in. we metrics talked up foot inflation average negative, the price and product the But or seeing whatever kind are into guess particularly Are coming selling You comps. seeing levels

Thomas Taylor

I'm completely not sure Trevor? I question. got the

Unknown Executive

in improving in Yes, of It's company. bigger I getting gotten was business got been, the very a of flipping. I I existing strong, our a house lot wood XXXX, you've had quarter think is each X last wouldn't is issue quarters face ticket relative projects categories and think, each a largest component and people laminate to bit million the on ticket laminate The we houses better. do had many ticket much and slipping homes better. ticket when of you has ticket. comp biggest going our X.X with on And mean our it's generally our we our that and larger back today

houses XX% home many sales X.X nearly flipped. existing have down the down that is as Now we're million whatever

on much So smaller are more are bathrooms much bathrooms half and those they're people in-house focused and staying and jobs.

wood said, they don't just people because And was house. issue as almost stronger business, is that at so driven main by facing same I when their the the homes that ticket were put we're economy rate in completely the predominantly

Thomas Taylor

with product the good. customers that still to continued seeing outperform better project and the stepping . when they're Yes. do elect into still best are the that that And we to has

Operator

Our next of Wintermantel with ISI. question comes Oliver Evercore from the line

Unknown Analyst

guidance implied line, year-over-year. margin gross like the the up it still quarter gross On is fourth looks margin

next how little the conceptually, I could you If business just you're you margins going not year? guide But a Is bit think talk And for gross drive the in traffic, know do think gross bit quarter. the into an about margins to fourth conceptually, XXXX. opportunity to in year? a next little of maybe then drivers there about to reinvest about you to how

Thomas Taylor

to our from gross margin continuing We're and better we're makes line see better Yes. benefits to supply costs, customers margin gross of and on. buy that to a best benefits electing good which seeing from chain and the products,

So those continue margin. quarter. into continue will driver the We things of to gross a think be that fourth

As we look to next category. market the challenging for year, yes, is a still this

we the they and existing on that to veterans. sure we make on get we're lot that bottom of low buy views product to a or from pass new to on We're from line. can, it the challenged and side get of be first certainly our to to cost line cost do products our as as trying can them possibly putting we're as as good products as merchants new pressure So vendors

next are yes, again on So to gross margins improve planning we have year.

Bryan Langley

Yes.

Just reminder, is This too, as that. a on top Bryan. of

back are of And put should the in XXXX reminder, when open will second as So just we another Seattle. beginning as QX this into of pressure those we're you're optionality in half move we of then X the XXXX. rate entering X don't as open the just into as Both planning in modeling, and line with center then And a QX do we very model, the about guys have year. you thinking forget gross to in relatively margin there's we're on XXXX. will then that distribution be in our half

Operator

question comes with Jefferies. of next Our from Jonathan Matuszewski the line

Jonathan Matuszewski

stores, you XX% for is still Obviously, household holding hours. I has trending? labor how footsteps are conversion housing that Historically, shared you've on up even seeing stores your stretched budgets. minimum But around on in traffic challenged is and with average. are the And conversion been turnover think levels with those

Unknown Executive

trends brand detailed Trevor. is conducted often. This pretty tracker We quite do recently Yes. a And those just we continue. that

convert a very that at that conversion and exposed we market consistent is either then the look numbers of the quoted you people or once the lot seen stores, is us. less. are are online But size what Issue you those brand, high the the just get they for in very to them entering then the aware, are If with that just shop, customers the we've previously. is

Thomas Taylor

[indiscernible] softwares to the improvement. just conversion. customer continued scores The your pros in it show tracker amongst service Not showing brand were the

a So how pleased stores monthly the stores, branch just similar we're basis are executing. results. it the our We're within showed our not at with but way measuring

Operator

Peter from Our Sandler. . next Piper Keith of question comes with the line

Unknown Analyst

Keith. on This for Peter is Alexia Morgan

wondering if from We hearing liquidator business? this stores ticket then are are you've sales opportunity on within -- are that lumber election durables noticed about your the dynamic seeing you closing? headwinds big We're XX or distraction. And any from so

Unknown Executive

I can better. have This is said gotten we our Trevor. script, mean on I'll go first and Tom then the or to comps Bryan this weigh QX in. date

we that don't our numbers continually that so date, have better had reasonable years. gotten . happens But the quarter. we've QX again, seen throughout don't I anything that we And if expectation to yet. know that know to I a every mean X

Thomas Taylor

That's true.

be how we positive There'll stores located, as that close net that's they where ones are closing. good. So on haven't us. the event to we give fortunate store of for ours, be able And associates. the and think depending that to to close, seen benefit yet. some been Lumber them their they to that It's a are they've are displaced Liquidators place employment an to get closed higher We've the been affected. them where and help We've a is in been some get able -- any down

that So sell should in we in that most, we look what when business versus we than category that they somewhere. offerings our you compete again, beneficiary. think when so We across better sell, will be what go are

Operator

Short comes question the with line Melius. from next Our of Karen

Unknown Analyst

you talk to again. to Good

So I pretty my question XQ was implied a just range. it's guidance on range. the mean wide

everything is range. a comps in give wondering can if just puts also margins. you wide and mean on general, pretty EBITDA I but So takes

if more. could you that just to wondering a So talk little

Unknown Executive

still September. readout it's the a in. for environment million There's there. macro Yes. X.XX sales we're volatility still lot out at that came I Existing of just home mean in

bit So hold little movement bit the that I little just the gives that in range. pause the of half compress from there's a macro mean a of still we last readout. in to did range us

just you around so transactions. that, about down why implied to X.X% And think a our to around which achieve Most most for is about X.X% what's to X.X% is that comp, full it the when -- is in in of there is year. of down X.X% QX

our down digits So our implied be transactions approximately QX. with flat mid-single in ticket would around

the around business. just So at is most of transactions we as variability our look

Operator

the Our with Blee next from Philip comes of Blair. William question line

Phillip Blee

market -- if demand abate? think previously then of spot keep does to impact rising And impact more capacity a fiscal contracted be costs, in out, You XXXX. begins spoke freight minimal XXXX I bit play though, insulated about the rates the a on would how And that you from meaningfully if don't inflect?

Unknown Executive

This is Trevor.

have at the everybody Floor higher really we've . those later are and to higher, higher over are turn kind just you the still and even time spot along, come In of probably those of our inventory rates. we're Decor. been we the probably if spring, market expect at wouldn't contracts when money. -- we we rates, increases market case us. rates find we that we'll benefits those some rates When stays then spot X market late on and we we that XX going As rates early for And the you rates seen the here, do higher to retail And the past, higher really they long-term be. is have go & of with are rational said, today. passed majority we've spring QX I've a all up, out a -- X QX. will seen else rates. years and similar have year, the In really some not would is save to times rolling rates of we those us new our because If are going do winter, will be paying the I'm see deal our because what be until frame

Operator

from next Bank the Our America. of with question Baum Molly comes line of

Unknown Analyst

to ask follow earnings the but to another up question about competitive this on dynamics, it specifically had relates call EDLP Robi evening, strategy. your I wanted as

I to feel from good as you piece, it your relates on how elasticity opening your about you're seeing And that if present. reductions. still price of at the price curious last I'm price breadth guess and X points. of So positioning And kind specifically, categories any relative the

Thomas Taylor

This the home still at features about and We feel with Tom. spread competition we and centers. We improvement versus still compete we our features the are in a good is look price the the level. mainly for position versus good like we line good apples-for-apples up, feel them competitors. When

moving a they against compete I'm the of like target. We sure kind And So about category within good attention that, how but down. pay things up them. go to we -- go do. it's and I just feel Things

become of to installation so try benefit we calls, wallet. give previous to price specific As in mentioned Pro in for to more that their as Pros, that we adjusting good lower particularly department more we've are our materials seen aggressive on us seen reactions we've for products to

is So some dividends. that And we'll as results continue with continue at move and looking within should put department. our pilot paying that and that to to

Operator

Baird. Justin will come of question with the last line Our from Kleber

Justin Kleber

directly, include from Just drag closures? a any in that lift offset rebuild more hurricanes markets? that a some headwind even clarification include your and the quarter-to-date . from on those does guide guess, early hurricane the And implied has Or I store by initial demand been creation XQ comp. Does

Bryan Langley

the for thanks Bryan. This is question. Justin,

So date, X.X%. kind was neutral just from quarter impacts. to our it That down remind, storm of is to

of material neutralized sort right Tom that our business a It's pickup low not we've bit of implied the and pickup. that to within in of little tell have of too hard it's and as implied storms that. the no early little when little of that that have material within any amount did Trevor just headwinds kind is bit mentioned obviously, it's seen guidance a throughout on we so So now, high bit hit, there's but range a between There's quarter,

Thomas Taylor

have . that's what passed, of but to as impact the the we've then like clean the release, are during so that seen We but things don't is time, there people a over Coming for drag be. sure would came, and up storms since better, we'll know a see.

joining us call. the everyone So on I appreciate

you. you Thank to forward look next on we So updating call. the

Operator

That does appreciate We Thank today's you. your conclude teleconference. participation.

this You rest disconnect may Enjoy day. your time. your lines the of at

Floor & Decor (FND) 30 Oct 242024 Q3 Earnings call transcript