Lumber Liquidators Holdings, Inc. (LL) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, June 30, 2021

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For Immediate Release

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LL FLOORING REPORTS FIRST QUARTER 2021 FINANCIAL RESULTS

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RICHMOND, Va., May 5, 2021 – Lumber Liquidators (“LL Flooring” or “Company”) (NYSE: LL), a leading specialty retailer of hard-surface flooring in North America, today announced financial results for the first quarter ended March 31, 2021.

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“During the first quarter, we delivered positive 6.9% comparable sales and increased our operating income from the first quarter of 2020, driven by continued execution on our transformation initiatives, strong demand for home improvement projects and accelerating year-over-year growth in our installation business,” said President and Chief Executive Officer Charles Tyson. “I want to thank all of our associates for driving our strategic priorities forward during the quarter, demonstrating progress on our four pillars of people and culture, improving the customer experience, driving traffic and transactions, and improving profitability.

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“We are intently focused on executing our strategies to drive sales and profitability in 2021. With more than 400 varieties of hard-surface floors featuring a range of quality styles and on-trend designs, we offer our customers quality choices and provide high-touch service and advice to help them achieve their flooring project needs. We will continue to pursue gross margin rate mitigation strategies and disciplined expense management to optimize profitability, and our strong balance sheet and liquidity support the investment in our strategies to position LL Flooring as the customer’s first choice in hard surface flooring over the long term.”

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First Quarter Results

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First quarter 2021 net sales of $283.5 million increased $16.1 million, or 6.0%, from the first quarter of 2020. Comparable store sales for the first quarter of 2021 increased 6.9% from the first quarter of 2020. We had one fewer selling day in the first quarter of 2021 relative to the prior-year period due to leap year in 2020. Comparable sales growth in 2021 primarily reflected continued execution on the Company’s transformation initiatives and strong consumer demand for installation and home improvement projects, as well as the impact from the onset of COVID-19 shutdowns in March 2020. Net merchandise sales increased 4.7% while net services sales (install and freight) increased 16.8% over the prior year. During the first quarter of 2021, the Company opened three new stores and closed one store, bringing total store count to 412 as of March 31, 2021.

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Gross profit increased 10.1% in the first quarter of 2021 to $115.6 million from $105.0 million in the comparable period in 2020 and gross margin increased 150 basis points to 40.8% in the first quarter of 2021 from 39.3% in the first quarter of 2020. For the first quarter of 2021, the Company reported a positive $6.6 million impact from anti-dumping duty rate changes compared to 2020. Excluding this item as shown on the table that follows, Adjusted Gross Profit (a non-GAAP measure) increased by $4.1 million and Adjusted Gross Margin (a non-GAAP measure) of 38.5% decreased by 80 basis points. The decrease in adjusted gross margin was due primarily to the reinstatement of tariffs on certain flooring products imported from China (discussed in the “Section 301 Tariffs” section that follows) partially offset by pricing and promotion strategies, and, to a lesser extent, alternative country sourcing efforts.

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SG&A expense increased 6.5% to $102.5 million, or 36.2% of sales, up 20 basis points in the first quarter of 2021 from the comparable period in 2020. SG&A in both quarters included certain costs related to legal matters. In April 2021, the Company settled two employment litigation matters and, as a result, accrued within SG&A a $7.7 million liability during the quarter ended March 31, 2021. Please refer to the Company’s Form 10-Q for the period ended March 31, 2021 for more details.

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Excluding these items as shown in the table that follows, Adjusted SG&A (a non-GAAP measure) decreased 0.8% to $94.7 million. As a percent of sales, adjusted SG&A improved 230 basis points, to 33.4% of sales, compared to 35.7% for the same period in the prior year. The decrease in adjusted SG&A was primarily driven by lower advertising costs,