Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 26, 2020 | Apr. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 26, 2020 | |
Entity File Number | 001-38070 | |
Entity Registrant Name | Floor & Decor Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-3730271 | |
Entity Address, Address Line One | 2500 Windy Ridge Parkway SE | |
Entity Address, City or Town | Atlanta | |
Entity Address, Postal Zip Code | 30339 | |
Entity Address, State or Province | GA | |
City Area Code | 404 | |
Local Phone Number | 471-1634 | |
Title of 12(b) Security | Class A common stock, $0.001 par value per share | |
Trading Symbol | FND | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 102,311,502 | |
Entity Central Index Key | 0001507079 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 26, 2020 | Dec. 26, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 289,931 | $ 27,037 |
Income taxes receivable | 0 | 2,868 |
Receivables, net | 50,561 | 69,301 |
Inventories, net | 588,941 | 581,865 |
Prepaid expenses and other current assets | 21,562 | 20,415 |
Total current assets | 950,995 | 701,486 |
Fixed assets, net | 473,081 | 456,289 |
Right-of-use assets | 865,515 | 822,256 |
Intangible assets, net | 109,291 | 109,299 |
Goodwill | 227,447 | 227,447 |
Other assets | 7,551 | 7,532 |
Total long-term assets | 1,682,885 | 1,622,823 |
Total assets | 2,633,880 | 2,324,309 |
Current liabilities: | ||
Current portion of term loans | 1,808 | 0 |
Current portion of lease liabilities | 67,588 | 74,592 |
Trade accounts payable | 319,815 | 368,459 |
Accrued expenses and other current liabilities | 100,423 | 102,807 |
Income taxes payable | 9,674 | 0 |
Deferred revenue | 7,189 | 6,683 |
Total current liabilities | 506,497 | 552,541 |
Term loans | 138,326 | 142,606 |
Revolving line of credit | 275,000 | 0 |
Lease liabilities | 889,021 | 844,269 |
Deferred income tax liabilities, net | 13,633 | 18,378 |
Other liabilities | 2,114 | 2,179 |
Total long-term liabilities | 1,318,094 | 1,007,432 |
Total liabilities | 1,824,591 | 1,559,973 |
Commitments and contingencies (Note 5) | ||
Capital stock: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at March 26, 2020 and December 26, 2019 | 0 | 0 |
Additional paid-in capital | 378,234 | 370,413 |
Accumulated other comprehensive (loss) income, net | (125) | (193) |
Retained earnings | 431,078 | 394,015 |
Total stockholders' equity | 809,289 | 764,336 |
Total liabilities and stockholders' equity | 2,633,880 | 2,324,309 |
Class A Common Stock | ||
Capital stock: | ||
Common stock | 102 | 101 |
Class B Common Stock | ||
Capital stock: | ||
Common stock | 0 | 0 |
Class C Common Stock | ||
Capital stock: | ||
Common stock | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 26, 2020 | Dec. 26, 2019 |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | |
Preferred stock, shares issued | 0 | |
Preferred stock, shares outstanding | 0 | |
Class A Common Stock | ||
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, par value | $ 0.001 | |
Common stock, shares authorized | 450,000,000 | |
Common stock, shares issued | 102,308,612 | 101,457,858 |
Common stock, shares outstanding | 102,308,612 | 101,457,858 |
Class B Common Stock | ||
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, par value | $ 0.001 | |
Common stock, shares authorized | 10,000,000 | |
Common stock, shares issued | 0 | |
Common stock, shares outstanding | 0 | |
Class C Common Stock | ||
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, par value | $ 0.001 | |
Common stock, shares authorized | 30,000,000 | |
Common stock, shares issued | 0 | |
Common stock, shares outstanding | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Income Statement [Abstract] | ||
Net Sales | $ 554,937 | $ 477,050 |
Revenue, Product and Service [Extensible List] | us-gaap:ProductMember | |
Cost of sales | $ 318,905 | 275,676 |
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | |
Gross profit | $ 236,032 | 201,374 |
Operating expenses: | ||
Selling and store operating | 153,066 | 127,383 |
General and administrative | 30,858 | 30,202 |
Pre-opening | 5,434 | 4,027 |
Total operating expenses | 189,358 | 161,612 |
Operating income | 46,674 | 39,762 |
Interest expense, net | 1,807 | 2,921 |
Income before income taxes | 44,867 | 36,841 |
Provision for income taxes | 7,804 | 6,121 |
Net income | 37,063 | 30,720 |
Change in fair value of hedge instruments, net of tax, post-adoption | 68 | (334) |
Total comprehensive income | $ 37,131 | $ 30,386 |
Basic earnings per share | $ 0.36 | $ 0.31 |
Diluted earnings per share | $ 0.35 | $ 0.29 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common stockClass A Common Stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Class A Common Stock | Class B Common Stock | Class C Common Stock | Total |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect from adoption | $ (179) | $ (179) | ||||||
Balance at Dec. 27, 2018 | $ 98 | $ 340,462 | $ 186 | 243,563 | 584,309 | |||
Beginning balance (in shares) at Dec. 27, 2018 | 97,588,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 2,250 | 2,250 | ||||||
Exercise of stock options | 1,776 | 1,776 | ||||||
Exercise of stock options (in shares) | 348,000 | |||||||
Shares issued under employee stock plan | 1,419 | 1,419 | ||||||
Shares issued under employee stock plan (in shares) | 61,000 | |||||||
Other comprehensive gain (loss), net of tax, post-adoption | (334) | (334) | ||||||
Net income | 30,720 | 30,720 | ||||||
Balance at Mar. 28, 2019 | $ 98 | 345,907 | (148) | 274,104 | 619,961 | |||
Ending balance (in shares) at Mar. 28, 2019 | 97,997,000 | |||||||
Balance at Dec. 26, 2019 | $ 101 | 370,413 | (193) | 394,015 | 764,336 | |||
Beginning balance (in shares) at Dec. 26, 2019 | 101,458,000 | 101,457,858 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | $ 0 | 2,908 | 0 | 0 | 2,908 | |||
Stock-based compensation (in shares) | 0 | |||||||
Exercise of stock options | $ 1 | 3,782 | 0 | 0 | $ 3,783 | |||
Exercise of stock options (in shares) | 453,000 | 453,330 | ||||||
Shares issued under employee stock plan | $ 0 | 1,131 | 0 | 0 | $ 1,131 | |||
Shares issued under employee stock plan (in shares) | 30,000 | |||||||
Issuance of restricted stock award | $ 0 | 0 | 0 | 0 | 0 | |||
Issuance of restricted stock award (in shares) | 368,000 | |||||||
Other comprehensive gain (loss), net of tax, post-adoption | $ 0 | 0 | 68 | 0 | 68 | |||
Net income | 0 | 0 | 0 | 37,063 | 37,063 | |||
Balance at Mar. 26, 2020 | $ 102 | $ 378,234 | $ (125) | $ 431,078 | $ 809,289 | |||
Ending balance (in shares) at Mar. 26, 2020 | 102,309,000 | 102,308,612 | 0 | 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Operating activities | ||
Net income | $ 37,063 | $ 30,720 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 22,088 | 17,184 |
Gain on asset impairments and disposals | (29) | 0 |
Deferred income taxes | (4,739) | (1,057) |
Interest cap derivative contracts | 83 | 610 |
Stock based compensation expense | 2,908 | 2,250 |
Changes in operating assets and liabilities: | ||
Receivables, net | 18,740 | 22,568 |
Inventories, net | (7,076) | 33,510 |
Trade accounts payable | (48,644) | (84,005) |
Accrued expenses and other current liabilities | (2,478) | 3,017 |
Income taxes | 12,542 | 13,143 |
Deferred revenue | 506 | 1,337 |
Other, net | (6,296) | (12,256) |
Net cash provided by operating activities | 24,668 | 27,021 |
Investing activities | ||
Purchases of fixed assets | (38,384) | (31,634) |
Net cash used in investing activities | (38,384) | (31,634) |
Financing activities | ||
Borrowings on revolving line of credit | 275,000 | 80,200 |
Payments on revolving line of credit | 0 | (78,100) |
Payments on term loans | (875) | (875) |
Proceeds from exercise of stock options | 3,783 | 1,776 |
Proceeds from employee stock purchase plan | 1,131 | 1,419 |
Debt issuance costs | (2,429) | 0 |
Net cash provided by (used in) financing activities | 276,610 | 4,420 |
Net increase in cash and cash equivalents | 262,894 | (193) |
Cash and cash equivalents, beginning of the period | 27,037 | 644 |
Cash and cash equivalents, end of the period | 289,931 | 451 |
Supplemental disclosures of cash flow information | ||
Buildings and equipment acquired under operating leases | 63,578 | 53,049 |
Cash paid for interest | 1,298 | 1,987 |
Fixed assets accrued at the end of the period | $ 19,620 | $ 10,836 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 26, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies Nature of Business Floor & Decor Holdings, Inc., together with its subsidiaries (the “Company,” “we,” “our” or “us”) is a highly differentiated, rapidly growing specialty retailer of hard surface flooring and related accessories. We offer a broad in-stock assortment of tile, wood, laminate/ luxury vinyl plank, and natural stone flooring along with decorative and installation accessories at everyday low prices. Our stores appeal to a variety of customers, including professional installers and commercial businesses (“Pro”), Do-it-Yourself customers (“DIY”) and customers who buy our products for professional installation (“Buy-it-Yourself” or “BIY”). We operate within one reportable segment. As of March 26, 2020, the Company, through its wholly owned subsidiary, , operates 123 warehouse-format stores, which average 76,000 square feet, and one small-format standalone design center in 30 states, as well as four distribution centers and an e-commerce site, FloorandDecor.com. Fiscal Year The Company’s fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31st. Fiscal year ending December 31, 2020 (“fiscal 2020”) includes 53 weeks, and the fiscal year ended December 26, 2019 (“fiscal 2019”) included 52 weeks. When a 53 -week fiscal year occurs, we report the additional week at the end of the fiscal fourth quarter. 52 -week fiscal years consist of thirteen -week periods in each quarter of the fiscal year. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The Condensed Consolidated Balance Sheet as of December 26, 2019 has been derived from the audited Consolidated Balance Sheet for the fiscal year then ended. The interim condensed consolidated financial statements should be read together with the audited consolidated financial statements and related footnote disclosures included in the Company’s Annual Report on Form 10-K for fiscal 2019, filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2020 (the “Annual Report”). Management believes the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of results for the interim periods presented. Results of operations for the thirteen weeks ended March 26, 2020 and March 28, 2019 are not necessarily indicative of the results to be expected for the full years. Impact of the Novel Coronavirus On March 11, 2020, the World Health Organization announced that infections of the coronavirus (COVID-19) had become a pandemic, and on March 13, 2020, the U.S. President announced a National Emergency relating to the COVID-19 pandemic pandemic While these potential negative effects will not be fully reflected in the Company’s results of operations and overall financial performance until future periods, the Company has already experienced an impact to its operating results related to the COVID-19 pandemic. In particular, beginning on March 17, 2020 and continuing through the date we filed this report, the Company has closed some of its stores, and then on March 21, 2020, shifted its remaining stores to a curbside pickup model in the jurisdictions where government regulations permit such stores to continue to operate and where the customer demand makes such operations sustainable. From March 21, 2020 through March 26, 2020, the six days during the first quarter of fiscal 2020 in which the Company’s stores were limited to curbside operations, the Company experienced a 46% decline in comparable store sales* compared to the same period in the prior year, which is reflected in the Company’s condensed consolidated statements of operations and comprehensive income for the thirteen weeks ended March 26, 2020. See Note 8, “Subsequent Events” for additional information on the impact of the COVID-19 pandemic on the Company’s operations. * Comparable store sales refer to period-over-period comparisons of our net sales among the comparable store base. A store is included in the comparable store base on the first day of the thirteenth full fiscal month following its opening. Summary of Significant Accounting Policies Other than as noted below, there have been no updates to our Significant Accounting Policies since the Annual Report. For more information regarding our Significant Accounting Policies and Estimates, see the “Summary of Significant Accounting Policies” section of “Item 8. Financial Statements and Supplementary Data” of our Annual Report. Impairment Assessment of Goodwill and Other Indefinite-Lived Intangible Assets The Company tests goodwill and indefinite-lived intangible assets for impairment annually in the fourth quarter of each fiscal year, or more often if events occur or changes in circumstances indicate that the carrying amount of goodwill or indefinite-lived intangible assets may not be recoverable. We assess the value of our goodwill and indefinite-lived intangible assets under either a qualitative or quantitative approach. Under a qualitative approach, t a significant adverse change in customer demand or business climate, an adverse action or assessment by a regulator, If the recorded carrying value of goodwill or an indefinite-lived intangible asset exceeds its estimated fair value, an impairment charge is recorded to write the asset down to its estimated fair value. D ue to the impact of the COVID-19 pandemic on the Company’s operations and the markets in which it operates, the Company qualitatively assessed whether it was more likely than not that the goodwill and indefinite-lived intangible assets were impaired as of March 26, 2020. Based on this interim impairment assessment as of March 26, 2020, the Company determined that its goodwill and indefinite-lived intangible assets were not impaired. Recently Adopted Accounting Pronouncements Implementation Costs Incurred in Cloud Computing Arrangements. Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract Credit Losses. Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently Issued Accounting Pronouncements Reference Rate Reform. Reference Rate Reform (Topic 848), Simplifying the Accounting for Income Taxes. |
Revenues
Revenues | 3 Months Ended |
Mar. 26, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 2. Revenues Net sales consist of revenue associated with contracts with customers for the sale of goods in amounts that reflect the consideration the Company is entitled to receive in exchange for those goods and services. Deferred Revenue Under Accounting Standards Codification (“ASC”) 606, the Company recognizes revenue when the customer obtains control of the inventory. Amounts in deferred revenue at period-end reflect orders for which the inventory is not currently ready for physical transfer to the customer. Disaggregated Revenue The Company has one operating segment and one reportable segment . Thirteen Weeks Ended March 26, 2020 March 28, 2019 % of % of Product Category Net Sales Net Sales Net Sales Net Sales Tile $ 134,912 24 % $ 125,310 26 % Laminate / luxury vinyl plank 124,994 23 97,502 20 Decorative accessories / wall tile 113,597 20 94,440 20 Installation materials and tools 94,576 17 79,709 17 Wood 48,995 9 49,230 10 Natural stone 34,877 6 30,887 7 Other (1) 2,986 1 (28) — Total $ 554,937 100 % $ 477,050 100 % (1) Other includes delivery revenue less adjustments for deferred revenue, sales returns reserves, rewards under our Pro Premier Loyalty program, and other revenue related adjustments that are not allocated on a product-level basis |
Debt
Debt | 3 Months Ended |
Mar. 26, 2020 | |
Debt | |
Debt | 3. Debt The following table summarizes our long-term debt as of March 26, 2020 and December 26, 2019: March 26, December 26, in thousands 2020 2019 Credit Facilities: UBS Facility Term Loan B $ 144,625 $ 145,500 Wells Facility Revolving Line of Credit 275,000 — Total secured debt at par value 419,625 145,500 Less: unamortized discount and debt issuance costs 4,491 2,894 Net carrying amount 415,134 142,606 Less: current maturities 1,808 — Total long-term debt $ 413,326 $ 142,606 Total debt at fair value $ 397,931 $ 145,136 Market risk associated with our fixed and variable rate long-term debt relates to the potential change in fair value and negative impact to future earnings, respectively, from a change in interest rates. The aggregate fair value of debt is based primarily on our estimates of interest rates, maturities, credit risk, and underlying collateral and is classified as Level 3 within the fair value hierarchy. The following table summarizes scheduled maturities of the Company’s debt, including current maturities, as of March 26, 2020: in thousands Amount Forty weeks ended December 31, 2020 $ 1,446 2021 1,085 2022 1,446 2023 1,446 2024 1,446 Thereafter (1) 412,756 Total minimum debt payments $ 419,625 ( 1) Thereafter maturities are comprised of $275,000 thousand due at maturity of the revolving credit facility on February 14, 2025 and $137,756 thousand due on the senior secured term loan facility through February 14, 2027. Credit Facility Amendments In February 2020, the Company refinanced its outstanding debt by entering into amendments to the credit and security agreements governing its senior secured term loan facility and revolving credit facility. Amended Term Loan Facility On February 14, 2020, the Company entered into a repricing and general amendment to the credit agreement governing its senior secured term loan facility (as amended, the “Amended Term Loan Facility”) that, among other things, (a) refinanced the existing term loan facility with a new term loan facility in the same aggregate principal amount of approximately $144,625 thousand, and (b) extended the stated maturity date under the Amended Term Loan Facility to February 14, 2027. The Amended Term Loan Facility also includes an “accordion” feature that allows the Company, under certain circumstances, to increase the size of the facility by an amount up to the greater of $270,000 thousand or 100.0% of Consolidated EBITDA (as defined in the Amended Term Loan Facility), plus additional amounts (x) if such increase is secured on a pari passu basis with the loans under the Amended Term Loan Facility, up to a Consolidated First Lien Leverage Ratio (as defined in the Amended Term Loan Facility) of 2.50:1.00, (y) if such increase is secured on a junior basis with the loans under the Amended Term Loan Facility, up to a Consolidated Secured Leverage Ratio (as defined in the Amended Term Loan Facility) of 3.50:1.00 and (z) if such increase is unsecured, up to a Consolidated Total Leverage Ratio (as defined in the Amended Term Loan Facility) of 3.50:1.00, subject to certain additional adjustments, which, under certain circumstances, allow for a Consolidated Total Leverage Ratio of up to 4.50:1.00. The amendment to the Amended Term Loan Facility also amended the margin applied to loans to (x) in the case of ABR Loans (as defined in the Amended Term Loan Facility), from 1.75% or 1.50% per annum (based on credit rating tests) to 1.00% per annum (subject to satisfying a leverage ratio test and subject to a leverage-based step-up to 1.25% if such leverage ratio test is exceeded), and (y) in the case of Eurodollar Loans (as defined in the Amended Term Loan Facility), from 2.75% or 2.50% per annum (based on credit rating tests) to 2.00% per annum (subject to satisfying a leverage ratio test and subject to a leverage-based step-up to 2.25% if such leverage ratio test is exceeded) (subject to a 0.00% floor on Eurodollar Loans). The material terms of the Amended Term Loan Facility were otherwise unchanged. At March 26, 2020, the applicable interest rate for borrowings under the Amended Term Facility was 3.6%. The Company evaluated the amendments to the term loan facility in accordance with ASC 470-50 and determined that the amendments resulted in a debt modification that was not an extinguishment. Therefore, no loss on debt extinguishment was recognized. The Company incurred costs of $2,501 thousand in connection with the refinancing which were comprised of (i) $1,779 thousand of fees to creditors that were accounted for as debt issuance costs and are amortizing to interest expense over the term of the Amended Term Loan Facility using the interest method and (ii) $722 thousand of professional fees to other third parties that were expensed during the thirteen week period ended March 26, 2020 and included in general and administrative expense on the consolidated statements of operations and comprehensive income. Amended ABL Facility On February 14, 2020, the Company also entered into a repricing and general amendment to the credit agreement governing its revolving credit facility (as amended, the “Amended ABL Facility”) that, among other things, (a) increased its revolving commitments to a total aggregate principal amount of $400,000 thousand, and (b) extended the stated maturity date under the Amended ABL Facility to February 14, 2025. The Amended ABL Facility also includes an “accordion” feature that allows the Company under certain circumstances, to increase the size of the facility by an amount up to $100,000 thousand, or such higher amount as may be agreed to by the Required Lenders (as defined in the Amended ABL Facility). The amendment to the Amended ABL Facility also amended the margin applied to loans and letters of credit to (x) in the case of Base Rate Loans (as defined in the Amended ABL Facility), from 0.25% or 0.50% per annum (based on availability) to a flat rate of 0.25% per annum, (y) in the case of LIBO Rate Loans (as defined in the Amended ABL Facility) and letter of credit fees for standby letters of credit, from 1.25% or 1.50% per annum (based on availability) to a flat rate of 1.25% per annum (subject to a 0.00% floor on LIBO Rate Loans) and (z) in the case of letter of credit fees for commercial letters of credit, from 0.75% or 1.00% per annum (based on availability) to a flat rate of 0.75% per annum. The material terms of the Amended ABL Facility were otherwise unchanged. At March 26, 2020, the applicable interest rate for borrowings under the Amended ABL Facility was 2.0%. The Company evaluated the amendments to the ABL facility in accordance with ASC 470-50 and determined that the amendments increased the borrowing capacity of the facility. In connection with this transaction, the Company incurred $650 thousand of costs that were deferred and are amortizing to interest expense over the term of the Amended ABL Facility. As of March 26, 2020, the Amended ABL Facility had a maximum availability of $400,000 thousand with actual available borrowings limited to the sum, at the time of calculation, of (a) eligible credit card receivables multiplied by the credit card advance rate, plus (b) the cost of eligible inventory, net of inventory reserves, multiplied by the applicable appraisal percentage, plus (c) 85% of eligible net trade receivables, plus (d) all eligible cash on hand, plus (e) 100% of the amount for which the eligible letter of credit must be honored after giving effect to any draws, minus certain Availability Reserves (each component as defined in the Amended ABL Facility). The Amended ABL Facility is available for issuance of letters of credit and contains a sublimit of $50,000 thousand for standby letters of credit and commercial letters of credit combined. Available borrowings under the facility are reduced by the face amount of outstanding letters of credit. Net availability under the Amended ABL Facility, as reduced by outstanding letters of credit of $20,512 thousand, was $85,676 thousand based on financial data as of March 26, 2020. Covenants The credit agreements governing the Amended Term Loan Facility and Amended ABL Facility contain customary restrictive covenants that, among other things and with certain exceptions, limit the Company’s ability to (i) incur additional indebtedness and liens in connection with such indebtedness, (ii) pay dividends and make certain other restricted payments, (iii) effect mergers or consolidations, (iv) enter into transactions with affiliates, (v) sell or dispose of property or assets, and (vi) engage in unrelated lines of business. In addition, these credit agreements subject the Company to certain reporting obligations and require that the Company satisfy certain financial covenants, including, among other things: • a requirement that if borrowings under the Amended ABL Facility exceed 90% of availability, the Company will maintain a certain fixed charge coverage ratio (defined as Consolidated EBITDA less non-financed capital expenditures and income taxes paid to consolidated fixed charges, in each case as more fully defined in the credit agreement governing the Amended ABL Facility). The Amended Term Loan Facility has no financial maintenance covenants. The Company is currently in compliance with all material covenants under the credit agreements. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 26, 2020 | |
Income Taxes | |
Income Taxes | 4. Income Taxes Effective tax rates for the thirteen weeks ended March 26, 2020 and March 28, 2019 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within each period. The Company’s effective income tax rate was 17.4% for the thirteen weeks ended March 26, 2020 and 16.6% for the thirteen weeks ended March 28, 2019. The effective income tax rate in each of these periods was lower than the statutory federal income tax rate of 21.0% primarily due to the recognition of income tax benefits for discrete items, the largest of which were tax deductions in excess of book expense related to stock option exercises. For the thirteen weeks ended March 26, 2020 and March 28, 2019, benefits for discrete items were partially offset by the recognition of discrete expense totaling $2.2 million and $0.1 million, respectively, for loss contingencies related to uncertain tax positions, including estimated interest and penalties related to such positions. The Company accounts for income taxes under the liability method in accordance with ASC 740, Income Taxes The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the associated temporary differences became deductible. On a quarterly basis, the Company evaluates whether it is more likely than not that its deferred tax assets will be realized in the future and concludes whether or not a valuation allowance must be established. The Company accounts for uncertain tax positions in accordance with ASC 740. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements using a two-step process for evaluating tax positions taken, or expected to be taken, on a tax return. The Company may only recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. In addition, the Company recognizes a loss contingency for uncertain tax positions when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The amounts recognized for uncertain tax positions require that management make estimates and judgments based on provisions of the tax law, which may be subject to change or varying interpretations. The Company includes estimated interest and penalties related to uncertain tax position accruals within accrued expenses and other current liabilities in the condensed consolidated balance sheets and within income tax expense in the condensed consolidated statements of operations and comprehensive income. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 26, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 5. Commitments and Contingencies Lease Commitments The Company accounts for leases in accordance with ASC 842, Leases When readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of our leases do not provide a readily determinable implicit rate. If the rate implicit in the lease is not readily determinable, we use a third party to assist in the determination of a secured incremental borrowing rate, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. The secured incremental borrowing rate is estimated based on yields obtained from Bloomberg for U.S. consumers with a BB- credit rating and is adjusted for collateralization as well as inflation. As of March 26, 2020, our weighted average discount rate was 5.2%, and our weighted average remaining lease term was 10 years. Lease Costs The table below presents components of lease expense for operating leases. Thirteen Weeks Ended in thousands Classification March 26, 2020 March 28, 2019 Operating lease cost (1) Selling and store operating $ 33,816 $ 26,015 Sublease income Selling and store operating (597) (623) Total lease cost $ 33,219 $ 25,392 (1) Includes variable lease costs, which were immaterial for the thirteen weeks ended March 26, 2020 and March 28, 2019. Undiscounted Cash Flows Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of March 26, 2020 were as follows: in thousands Amount Forty weeks ended December 31, 2020 $ 119,364 2021 133,445 2022 126,405 2023 123,690 2024 119,965 Thereafter 642,961 Total minimum lease payments (2) $ 1,265,830 Less: amount of lease payments representing interest 309,221 Present value of future minimum lease payments 956,609 Less: current obligations under leases 67,588 Long-term lease obligations $ 889,021 (2) Future lease payments exclude approximately $91.7 million of legally binding minimum lease payments for operating leases signed but not yet commenced. For the thirteen weeks ended March 26, 2020, cash paid for operating leases was $32.9 million. Litigation On May 20, 2019, an alleged stockholder of the Company filed a putative class action lawsuit, Taylor v. Floor & Decor Holdings, Inc., et al., No. 1:19-cv-02270-SCJ (N.D. Ga.), in the United States District Court for the Northern District of Georgia against the Company and certain of our officers, directors and stockholders. In re Floor & Decor Holdings, Inc. Securities Litigation, The operative complaint alleges certain violations of federal securities laws based on, among other things, purported materially false and misleading statements and omissions allegedly made by the Company between May 23, 2018 and August 1, 2018 and seeks class certification, unspecified monetary damages, costs and attorneys’ fees and equitable relief. The Company denies the material allegations and has moved to dismiss the lawsuit. In addition, the Company maintains insurance that may cover any liability arising out of this litigation up to the policy limits and subject to meeting certain deductibles and to other terms and conditions thereof. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, we are currently unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from this litigation. We are also subject to various other legal actions, claims and proceedings arising in the ordinary course of business, which may include claims related to general liability, workers’ compensation, product liability, intellectual property and employment-related matters resulting from our business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. These various other ordinary course proceedings are not expected to have a material impact on our consolidated financial position, cash flows, or results of operations, however regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 26, 2020 | |
Stock-Based Compensation Abstract | |
Stock-Based Compensation | 6. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation- Stock Compensation, which requires measurement of compensation cost for all stock awards at fair value on the date of grant and recognition of compensation, net of forfeitures, over the requisite service period for awards expected to vest. Stock compensation expense for the thirteen weeks ended March 26, 2020 and March 28, 2019 was $2.9 million and $2.2 million, respectively, and was included in general and administrative expenses on the Company’s condensed consolidated statement of operations and comprehensive income. On February 24, 2020, the Company granted a combination of stock options, restricted stock units, and restricted stock to our non-employee directors and certain of our employees under the 2017 Stock Incentive Plan as part of our annual long-term incentive grants, as outlined below. Stock Options The stock options granted to eligible employees during the first quarter of fiscal 2020 had a weighted average grant-date fair value of $21.81 and vest in four ratable annual installments on each of the first four anniversaries of the grant date, subject to the grantee’s continued service through the applicable vesting date. The Company estimates the fair value of stock option grants using the Black-Scholes-Merton option pricing model with the following weighted average assumptions: Thirteen Weeks Ended March 26, 2020 Risk-free interest rate 1.24 % Expected volatility 38.4 % Expected life (in years) 5.75 Dividend yield — % The Company determines the grant date fair value of stock options with assistance from a third-party valuation specialist. Expected volatility is estimated based on the historical volatility of the Company’s Class A common stock since its initial public offering in 2017 as well as the historical volatility of the common stock of similar public entities. The Company considers various factors in determining the appropriateness of the public entities used in determining expected volatility, including the entity's life cycle stage, industry, growth profile, size, financial leverage, and products offered. T Stock option activity during the thirteen weeks ended March 26, 2020 was as follows: Weighted Average Exercise Options Price Outstanding at December 26, 2019 6,037,079 $ 13.64 Granted 270,531 57.70 Exercised (453,330) 8.34 Forfeited or expired (27,648) 23.27 Outstanding at March 26, 2020 5,826,632 $ 16.05 The Company’s total unrecognized compensation cost related to stock options as of March 26, 2020 was $22,753 thousand, which is expected to be recognized over a weighted average period of 2.8 years. Restricted Stock Units During the thirteen weeks ended March 26, 2020, the Company granted 108,242 restricted stock units to certain employees with a weighted average grant-date fair value of $57.70. The restricted stock units granted to eligible employees represent an unfunded, unsecured right to receive a share of the Company’s Class A common stock upon vesting. These awards vest in four ratable annual installments on each of the first four anniversaries of the grant date, subject to the grantee’s continued service through the applicable vesting date. The fair value of the restricted stock units was determined based on the closing price of the Company’s Class A common stock on the date of grant. The Company’s total unrecognized compensation cost related to restricted stock units as of March 26, 2020 was $6,096 thousand, which is expected to be recognized over a weighted average period of 3.9 years. Restricted Stock Awards During the thirteen weeks ended March 26, 2020, the Company issued 367,702 shares of restricted stock to certain executive officers and non-employee directors, comprised of 160,315 shares of restricted stock with a payout subject to certain performance criteria (“performance-based restricted stock”), 104,456 shares of restricted stock with a payout subject to the Company’s total shareholder return (“TSR”) compared to a specified peer group (“TSR awards”), and 102,931 shares of restricted stock that vest based on the grantee’s continued service through the applicable vesting dates (“service-based restricted stock”). The fair value of performance-based and service-based restricted stock awards is based on the closing market price of the Company's Class A common stock on the date of grant. The fair value of the TSR awards is estimated on grant date using the Monte Carlo valuation method. The Compensation cost for restricted stock awards is recognized using the straight-line method over the requisite service period, which for each of the awards is the service vesting period. The service vesting period for awards granted during the first quarter of fiscal 2020 was one year for non-employee directors and ranged between three to four years for awards to executive officers. As of March 26, 2020, total unrecognized compensation cost related to unvested restricted stock awards was $20,085 thousand, which is expected to be recognized over a weighted average period of 3.8 years. The performance-based restricted stock cliff vest based on (i) the Company's achievement of pre-determined financial metrics at the end of a three-year performance period and (ii) the grantee’s continued service through the vesting date. The TSR awards cliff vest based on (i) the Company's relative total shareholder return (“TSR”) compared to a specified peer group, with no vesting unless the Company’s TSR exceeds the median TSR of the specified peer group and (ii) the grantee’s continue service through the vesting date. accordance with ASC 718, Stock Compensation , as the TSR awards are subject to a market condition, their fair value was estimated using a Monte Carlo valuation model with the following assumptions: Thirteen Weeks Ended March 26, 2020 Risk-free interest rate 1.21 % Expected volatility 46.5 % Expected term (in years) 2.84 Dividend yield — % |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 26, 2020 | |
Earnings Per Share | |
Earnings Per Share | 7. Earnings Per Share Net Income per Common Share We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effect of share-based awards. The following table shows the computation of basic and diluted earnings per share: Thirteen Weeks Ended March 26, March 28, in thousands, except per share data 2020 2019 Net income $ 37,063 $ 30,720 Basic weighted average shares outstanding 101,629 97,785 Dilutive effect of share-based awards 3,881 6,536 Diluted weighted average shares outstanding 105,510 104,321 Basic earnings per share $ 0.36 $ 0.31 Diluted earnings per share $ 0.35 $ 0.29 The following share-based awards have been excluded from the computation of dilutive earnings per share because their effect would be anti-dilutive: Thirteen Weeks Ended March 26, March 28, in thousands 2020 2019 Stock options 590 986 Restricted stock 284 — Restricted stock units 108 — |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 26, 2020 | |
Subsequent Events | |
Subsequent Events | 8. Subsequent Events Coronavirus Aid, Relief, and Economic Security Act On March 27, 2020, the U.S. President signed into law H.R. 748, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which includes, among other things, tax provisions such as temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary deferral of certain payments for the employer portion of social security taxes, technical corrections of prior tax legislation for tax depreciation of certain qualified improvement property, and the availability of certain refundable employee retention credits. Due to the recent enactment of the CARES Act, the Company is currently evaluating its potential impact on the Company’s consolidated financial statements. However, the Company anticipates that it will benefit from certain of the income tax provisions of the CARES Act, including the temporary five-year net operating loss carryback allowance and the technical correction for qualified improvement property, which changes 39-year property to 15-year property eligible for 100% tax bonus depreciation. The Company estimates that these income tax provisions will result in substantial refunds of income taxes paid for fiscal 2013 through fiscal 2019 and potential reductions to fiscal 2020 income taxes. In addition, the Company expects to benefit from the temporary deferral of payments for the employer portion of social security taxes. The Company also expects to benefit from the employee retention credits and, potentially, other provisions within the CARES Act that are being assessed. Where certain income tax provisions of the CARES Act are determined to be applicable following the completion of the Company’s assessment, these may result in an income tax benefit recorded in the condensed consolidated statements of operations and comprehensive income in the second quarter of fiscal 2020, the period in which the legislation was enacted. COVID-19 Update On March 11, 2020, the World Health Organization announced that COVID-19 had become a pandemic, and on March 13, 2020, the U.S. President announced a National Emergency relating to the COVID-19 pandemic. National, state and local authorities have recommended social distancing and imposed or are considering quarantine and isolation measures on large portions of the population, including mandatory business closures. These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign economies of uncertain severity and duration. The effectiveness of economic stabilization efforts, including proposed government payments to affected citizens and industries, is uncertain. Some economists are predicting the United States may enter a recession as a result of the pandemic. Since the end of the first fiscal quarter of fiscal 2020, the impact of the COVID-19 pandemic and its adverse effects have become more prevalent in many of the locations where the Company and its customers and suppliers conduct business. As a result, the Company has begun to experience more pronounced disruptions to its operations, including a significant decline in sales. While the Company expects some of these disruptions and the decline in sales to be temporary, the Company anticipates that these and further adverse impacts resulting from the COVID-19 pandemic will have a material negative effect on its business, results of operations, financial position, and cash flows in 2020. In addition, uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets. To the extent that the COVID-19 pandemic continues or worsens, governments may impose additional restrictions. The continued impact of the COVID-19 pandemic and any related restrictions could result in a number of adverse impacts to the Company’s business, including but not limited to additional disruption to the economy and consumers’ willingness and ability to spend, additional temporary store closures and reduced store operating hours, temporary or permanent disruption to the businesses of the professionals who rely on the Company’s products, additional work restrictions, and supply chains that are interrupted, slowed, or rendered inoperable. As a result, it may be challenging to obtain the products and services that support the Company’s business needs, and individuals could become ill, quarantined, or otherwise unable to work or travel due to health reasons or governmental restrictions. Also, governments may impose other laws, regulations, or taxes which could adversely impact the Company’s business, financial condition, or results of operations. Further, if the businesses of the Company’s customers are similarly affected, they might delay or reduce purchases from the Company. The potential effects of the COVID-19 pandemic also could impact the Company in a number of other ways including, but not limited to, reductions to the Company’s profitability, laws and regulations affecting the Company’s business, the availability of future borrowings, the cost of borrowings, credit risks of the Company’s customers and counterparties, and potential impairments of the carrying value of goodwill, other indefinite-lived intangible assets, right-of-use assets, fixed assets, and other assets. Given the evolving impact of the COVID-19 pandemic on the health, economic, social, and governmental environments in which the Company and its employees, customers, suppliers, and other business partners operate, the potential impact that the pandemic could have on the Company’s business remains uncertain, and the effects of the COVID-19 pandemic will not be fully reflected in the Company’s results of operations and overall financial performance until future periods. In response to the impact and uncertainties caused by the COVID-19 pandemic and these changing conditions, the Company is implementing a number of measures to minimize cash outlays, including lowering inventory purchases and related supply chain costs to align with reduced sales, temporarily reducing compensation for all executive officers and most employees, freezing new hiring, reducing or eliminating non-essential spending, reducing advertising spending, furloughing certain employees, and delaying or reducing planned capital expenditures, including new store investments. The Company continues to monitor this rapidly developing situation and may, as necessary, reduce expenditures further, borrow additional amounts under its term loan and revolving line of credit facilities, or pursue other sources of capital that may include other forms of external financing in order to increase its cash position and preserve financial flexibility in response to the uncertainty in the United States and global markets resulting from COVID-19. Refer to Note 3, “Debt” for additional information regarding the Company’s outstanding credit facilities. The Company expects that its actions to reduce expenditures together with cash on hand, cash expected to be generated from operations, the availability of borrowings under the Company’s credit facilities, and if necessary, additional funding through other forms of external financing, will be sufficient to meet liquidity requirements, anticipated capital expenditures, and payments due under the Company’s credit facilities for at least the next twelve months. However, the COVID-19 pandemic is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the pandemic lasts. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 26, 2020 | |
Summary of Significant Accounting Policies | |
Fiscal Year | Fiscal Year The Company’s fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31st. Fiscal year ending December 31, 2020 (“fiscal 2020”) includes 53 weeks, and the fiscal year ended December 26, 2019 (“fiscal 2019”) included 52 weeks. When a 53 -week fiscal year occurs, we report the additional week at the end of the fiscal fourth quarter. 52 -week fiscal years consist of thirteen -week periods in each quarter of the fiscal year. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The Condensed Consolidated Balance Sheet as of December 26, 2019 has been derived from the audited Consolidated Balance Sheet for the fiscal year then ended. The interim condensed consolidated financial statements should be read together with the audited consolidated financial statements and related footnote disclosures included in the Company’s Annual Report on Form 10-K for fiscal 2019, filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2020 (the “Annual Report”). Management believes the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of results for the interim periods presented. Results of operations for the thirteen weeks ended March 26, 2020 and March 28, 2019 are not necessarily indicative of the results to be expected for the full years. |
Goodwill and Other Indefinite-Lived Intangible Assets | Impairment Assessment of Goodwill and Other Indefinite-Lived Intangible Assets The Company tests goodwill and indefinite-lived intangible assets for impairment annually in the fourth quarter of each fiscal year, or more often if events occur or changes in circumstances indicate that the carrying amount of goodwill or indefinite-lived intangible assets may not be recoverable. We assess the value of our goodwill and indefinite-lived intangible assets under either a qualitative or quantitative approach. Under a qualitative approach, t a significant adverse change in customer demand or business climate, an adverse action or assessment by a regulator, If the recorded carrying value of goodwill or an indefinite-lived intangible asset exceeds its estimated fair value, an impairment charge is recorded to write the asset down to its estimated fair value. D ue to the impact of the COVID-19 pandemic on the Company’s operations and the markets in which it operates, the Company qualitatively assessed whether it was more likely than not that the goodwill and indefinite-lived intangible assets were impaired as of March 26, 2020. Based on this interim impairment assessment as of March 26, 2020, the Company determined that its goodwill and indefinite-lived intangible assets were not impaired. |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Implementation Costs Incurred in Cloud Computing Arrangements. Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract Credit Losses. Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently Issued Accounting Pronouncements Reference Rate Reform. Reference Rate Reform (Topic 848), Simplifying the Accounting for Income Taxes. |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 26, 2020 | |
Disaggregation of Revenue [Abstract] | |
Disaggregated Revenue | Thirteen Weeks Ended March 26, 2020 March 28, 2019 % of % of Product Category Net Sales Net Sales Net Sales Net Sales Tile $ 134,912 24 % $ 125,310 26 % Laminate / luxury vinyl plank 124,994 23 97,502 20 Decorative accessories / wall tile 113,597 20 94,440 20 Installation materials and tools 94,576 17 79,709 17 Wood 48,995 9 49,230 10 Natural stone 34,877 6 30,887 7 Other (1) 2,986 1 (28) — Total $ 554,937 100 % $ 477,050 100 % (1) Other includes delivery revenue less adjustments for deferred revenue, sales returns reserves, rewards under our Pro Premier Loyalty program, and other revenue related adjustments that are not allocated on a product-level basis |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 26, 2020 | |
Debt | |
Schedule of Long Term Debt | March 26, December 26, in thousands 2020 2019 Credit Facilities: UBS Facility Term Loan B $ 144,625 $ 145,500 Wells Facility Revolving Line of Credit 275,000 — Total secured debt at par value 419,625 145,500 Less: unamortized discount and debt issuance costs 4,491 2,894 Net carrying amount 415,134 142,606 Less: current maturities 1,808 — Total long-term debt $ 413,326 $ 142,606 Total debt at fair value $ 397,931 $ 145,136 |
Schedule of Maturities of Debt | in thousands Amount Forty weeks ended December 31, 2020 $ 1,446 2021 1,085 2022 1,446 2023 1,446 2024 1,446 Thereafter (1) 412,756 Total minimum debt payments $ 419,625 ( 1) Thereafter maturities are comprised of $275,000 thousand due at maturity of the revolving credit facility on February 14, 2025 and $137,756 thousand due on the senior secured term loan facility through February 14, 2027. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 26, 2020 | |
Commitments and Contingencies. | |
Schedule of components of lease expense | Thirteen Weeks Ended in thousands Classification March 26, 2020 March 28, 2019 Operating lease cost (1) Selling and store operating $ 33,816 $ 26,015 Sublease income Selling and store operating (597) (623) Total lease cost $ 33,219 $ 25,392 (1) Includes variable lease costs, which were immaterial for the thirteen weeks ended March 26, 2020 and March 28, 2019. |
Schedule of future minimum lease payments under non cancelable operating leases | in thousands Amount Forty weeks ended December 31, 2020 $ 119,364 2021 133,445 2022 126,405 2023 123,690 2024 119,965 Thereafter 642,961 Total minimum lease payments (2) $ 1,265,830 Less: amount of lease payments representing interest 309,221 Present value of future minimum lease payments 956,609 Less: current obligations under leases 67,588 Long-term lease obligations $ 889,021 (2) Future lease payments exclude approximately $91.7 million of legally binding minimum lease payments for operating leases signed but not yet commenced. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 26, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of stock option activity | Weighted Average Exercise Options Price Outstanding at December 26, 2019 6,037,079 $ 13.64 Granted 270,531 57.70 Exercised (453,330) 8.34 Forfeited or expired (27,648) 23.27 Outstanding at March 26, 2020 5,826,632 $ 16.05 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions used to estimate the fair value of awards granted | Thirteen Weeks Ended March 26, 2020 Risk-free interest rate 1.24 % Expected volatility 38.4 % Expected life (in years) 5.75 Dividend yield — % |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions used to estimate the fair value of awards granted | Thirteen Weeks Ended March 26, 2020 Risk-free interest rate 1.21 % Expected volatility 46.5 % Expected term (in years) 2.84 Dividend yield — % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 26, 2020 | |
Earnings Per Share | |
Schedule of computation of basic and diluted earnings per share | Thirteen Weeks Ended March 26, March 28, in thousands, except per share data 2020 2019 Net income $ 37,063 $ 30,720 Basic weighted average shares outstanding 101,629 97,785 Dilutive effect of share-based awards 3,881 6,536 Diluted weighted average shares outstanding 105,510 104,321 Basic earnings per share $ 0.36 $ 0.31 Diluted earnings per share $ 0.35 $ 0.29 |
Schedule of awards excluded from computation | Thirteen Weeks Ended March 26, March 28, in thousands 2020 2019 Stock options 590 986 Restricted stock 284 — Restricted stock units 108 — |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) ft² in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 26, 2020ft²statefacilitysegment | Mar. 28, 2019segment | Dec. 31, 2020 | Dec. 26, 2019 | |
Real Estate Properties [Line Items] | ||||
Number of reportable segments | segment | 1 | 1 | ||
Number of states with facilities | state | 30 | |||
Number of distribution centers | 4 | |||
Fiscal year period | 371 days | 364 days | ||
Fiscal quarter period | 91 days | |||
Decline in sales, as a percent | 46.00% | |||
Minimum | ||||
Real Estate Properties [Line Items] | ||||
Fiscal year period | 364 days | |||
Maximum | ||||
Real Estate Properties [Line Items] | ||||
Fiscal year period | 371 days | |||
Warehouse Format Store [Member] | ||||
Real Estate Properties [Line Items] | ||||
Number of stores | 123 | |||
Area of facility | ft² | 76 | |||
Small Format Store [Member] | ||||
Real Estate Properties [Line Items] | ||||
Number of stores | 1 |
Revenues (Details)
Revenues (Details) $ in Thousands | 3 Months Ended | |
Mar. 26, 2020USD ($)segment | Mar. 28, 2019USD ($)segment | |
Disaggregation of Revenue [Line Items] | ||
Number of reportable segments | segment | 1 | 1 |
Number of operating segments | segment | 1 | 1 |
Net Sales | $ 554,937 | $ 477,050 |
Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 554,937 | $ 477,050 |
% of Net Sales | 100.00% | 100.00% |
Tile [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 134,912 | $ 125,310 |
% of Net Sales | 24.00% | 26.00% |
Laminate Luxury Vinyl Plank [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 124,994 | $ 97,502 |
% of Net Sales | 23.00% | 20.00% |
Decorative Accessories [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 113,597 | $ 94,440 |
% of Net Sales | 20.00% | 20.00% |
Installation Materials And Tools [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 94,576 | $ 79,709 |
% of Net Sales | 17.00% | 17.00% |
Wood Flooring [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 48,995 | $ 49,230 |
% of Net Sales | 9.00% | 10.00% |
Natural Stone [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 34,877 | $ 30,887 |
% of Net Sales | 6.00% | 7.00% |
Other | Revenue from Contract with Customer, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 2,986 | $ (28) |
% of Net Sales | 1.00% | 0.00% |
Debt - Summary of Long-term Deb
Debt - Summary of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 26, 2020 | Feb. 14, 2020 | Dec. 26, 2019 |
Debt Instrument [Line Items] | |||
Total debt at par value | $ 419,625 | $ 144,625 | $ 145,500 |
Less: unamortized discount and debt issuance costs | 4,491 | 2,894 | |
Net carrying amount | 415,134 | 142,606 | |
Less: current maturities | 1,808 | 0 | |
Total long-term debt | 413,326 | 142,606 | |
Level 3 | |||
Debt Instrument [Line Items] | |||
Total debt at fair value | $ 397,931 | 145,136 | |
Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Interest rate at end of period, as a percent | 3.60% | ||
Total debt at par value | $ 144,625 | $ 145,500 | |
Wells Facility Revolving Line of Credit/ABL | |||
Debt Instrument [Line Items] | |||
Interest rate at end of period, as a percent | 2.00% | ||
Total debt at par value | $ 275,000 |
Debt - Maturities (Details)
Debt - Maturities (Details) - USD ($) | Mar. 26, 2020 | Feb. 14, 2020 | Dec. 26, 2019 |
Debt Instrument [Line Items] | |||
Remainder of year | $ 1,446,000 | ||
2021 | 1,085,000 | ||
2022 | 1,446,000 | ||
2023 | 1,446,000 | ||
2024 | 1,446,000 | ||
Thereafter | 412,756,000 | ||
Total minimum debt payments | 419,625,000 | $ 144,625,000 | $ 145,500,000 |
Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Thereafter | 137,756 | ||
Total minimum debt payments | 144,625,000 | $ 145,500,000 | |
Wells Facility Revolving Line of Credit/ABL | |||
Debt Instrument [Line Items] | |||
Thereafter | 275,000 | ||
Total minimum debt payments | $ 275,000,000 |
Debt - Amended Term Loan Facili
Debt - Amended Term Loan Facility (Details) - USD ($) | Feb. 14, 2020 | Feb. 13, 2020 | Mar. 26, 2020 | Mar. 28, 2019 | Dec. 26, 2019 |
Debt Instrument [Line Items] | |||||
Total debt at par value | $ 144,625,000 | $ 419,625,000 | $ 145,500,000 | ||
Debt issuance costs | 2,429,000 | $ 0 | |||
Term Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Total debt at par value | 144,625,000 | $ 145,500,000 | |||
First Lien Leverage Ratio | 2.50 | ||||
Consolidated Secured Leverage Ratio | 3.50 | ||||
Consolidated Total Leverage Ratio | 3.50 | ||||
Loss on extinguishment of debt | 0 | ||||
Debt refinancing costs, total | 2,501,000 | ||||
Debt issuance costs | 1,779,000 | ||||
Professional Fees | $ 722,000 | ||||
Term Loan Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Consolidated Total Leverage Ratio | 4.50 | ||||
Term Loan Facility | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate (as a percent) | 1.00% | ||||
Margin including step-up (as a percent) | 1.25% | ||||
Term Loan Facility | Base Rate [Member] | Minimum | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate (as a percent) | 1.50% | ||||
Term Loan Facility | Base Rate [Member] | Maximum | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate (as a percent) | 1.75% | ||||
Term Loan Facility | Eurodollar [Member] | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate (as a percent) | 2.00% | ||||
Variable rate floor (as a percent) | 0.00% | ||||
Margin including step-up (as a percent) | 2.25% | ||||
Term Loan Facility | Eurodollar [Member] | Minimum | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate (as a percent) | 2.50% | ||||
Term Loan Facility | Eurodollar [Member] | Maximum | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate (as a percent) | 2.75% | ||||
Term Loan Facility Accordion Feature [Member] | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity as percentage of EBITDA | 100.00% | ||||
Borrowing capacity | $ 270,000,000 |
Debt - Amended ABL Facility (De
Debt - Amended ABL Facility (Details) - USD ($) $ in Thousands | Feb. 14, 2020 | Feb. 13, 2020 | Mar. 26, 2020 | Mar. 28, 2019 |
Line of Credit Facility [Line Items] | ||||
Debt issuance costs | $ 2,429 | $ 0 | ||
Wells Facility Revolving Line of Credit/ABL | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing capacity | $ 400,000 | 400,000 | ||
Debt issuance costs | 650 | |||
Available borrowing capacity | $ 85,676 | |||
Percentage of trade receivables | 85.00% | |||
Percentage of letter of credit | 100.00% | |||
Outstanding letters of credit | $ 20,512 | |||
Percentage usage of facility to trigger covenant | 90.00% | |||
Wells Facility Revolving Line of Credit/ABL | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 0.75% | |||
Revolving Credit Facility Accordion Feature [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing capacity | $ 100,000 | |||
Letter of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing capacity | $ 50,000 | |||
Variable interest rate (as a percent) | 0.75% | |||
Letter of Credit [Member] | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 1.00% | |||
Base Rate [Member] | Wells Facility Revolving Line of Credit/ABL | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 0.25% | |||
Base Rate [Member] | Wells Facility Revolving Line of Credit/ABL | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 0.25% | |||
Base Rate [Member] | Wells Facility Revolving Line of Credit/ABL | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 0.50% | |||
London Interbank Offered Rate (LIBOR) [Member] | Wells Facility Revolving Line of Credit/ABL | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 1.25% | |||
Variable rate floor (as a percent) | 0.00% | |||
London Interbank Offered Rate (LIBOR) [Member] | Wells Facility Revolving Line of Credit/ABL | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 1.25% | |||
London Interbank Offered Rate (LIBOR) [Member] | Wells Facility Revolving Line of Credit/ABL | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate (as a percent) | 1.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Income Taxes | ||
Effective income tax rate (as a percent) | 17.40% | 16.60% |
Federal statutory tax rate (as a percent) | 21.00% | |
Expense related to loss contingencies for uncertain tax positions | $ 2.2 | $ 0.1 |
Commitments and Contingencies -
Commitments and Contingencies - Lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Lease Commitments | ||
Existence of option to extend | true | |
Weighted average discount rate | 5.20% | |
Weighted average remaining lease term | 10 years | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 33,816 | $ 26,015 |
Sublease income | (597) | (623) |
Lease, Cost, Total | $ 33,219 | $ 25,392 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Maturity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Dec. 26, 2019 | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Remainder of year | $ 119,364 | |
2021 | 133,445 | |
2022 | 126,405 | |
2023 | 123,690 | |
2024 | 119,965 | |
Thereafter | 642,961 | |
Total minimum lease payments | 1,265,830 | |
Amount representing interest | 309,221 | |
Operating Lease, Liability, Total | 956,609 | |
Current portion of lease liabilities | 67,588 | $ 74,592 |
Long-term lease obligations | 889,021 | $ 844,269 |
Minimum lease payments for leases not yet commenced | 91,700 | |
Cash paid during the period against operating lease liabilities | $ 32,900 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 2,908 | $ 2,250 |
Weighted average grant date fair value, grants in period | $ 21.81 | |
Options | ||
Outstanding at the beginning of period | 6,037,079 | |
Granted | 270,531 | |
Exercised | (453,330) | |
Forfeited or expired | (27,648) | |
Outstanding at the end of period | 5,826,632 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of period | $ 13.64 | |
Granted | 57.70 | |
Exercised | 8.34 | |
Forfeited or expired | 23.27 | |
Outstanding at the end of period | $ 16.05 | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Period of vesting provision | 4 years | |
Fair Value Assumptions | ||
Risk free interest rate | 1.24% | |
Expected volatility | 38.40% | |
Expected life (in years) | 5 years 9 months | |
Additional Disclosures | ||
Unrecognized compensation cost amount | $ 22,753 | |
Unrecognized compensation cost period for recognition | 2 years 9 months 18 days |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 26, 2020USD ($)$ / sharesshares | |
Restricted Stock Units (RSUs) [Member] | |
Restricted Stock | |
Granted | 108,242 |
Weighted average grant date fair value, grants in period | $ / shares | $ 57.70 |
Period of vesting provision | 4 years |
Unrecognized compensation cost amount | $ | $ 6,096 |
Unrecognized compensation cost period for recognition | 3 years 10 months 24 days |
Restricted Stock | |
Restricted Stock | |
Granted | 367,702 |
Weighted average grant date fair value, grants in period | $ / shares | $ 53.89 |
Unrecognized compensation cost amount | $ | $ 20,085 |
Unrecognized compensation cost period for recognition | 3 years 9 months 18 days |
Fair Value Assumptions | |
Risk free interest rate | 1.21% |
Expected volatility | 46.50% |
Expected life (in years) | 2 years 10 months 2 days |
Restricted Stock | Non-employee director | |
Restricted Stock | |
Period of vesting provision | 1 year |
Restricted Stock | Minimum | Executive Officer [Member] | |
Restricted Stock | |
Period of vesting provision | 3 years |
Restricted Stock | Maximum | Executive Officer [Member] | |
Restricted Stock | |
Period of vesting provision | 4 years |
Performance-Based Restricted Stock [Member] | |
Restricted Stock | |
Granted | 160,315 |
Period of vesting provision | 3 years |
TSR Awards [Member] | |
Restricted Stock | |
Granted | 104,456 |
Service-Based Restricted Stock [Member] | |
Restricted Stock | |
Granted | 102,931 |
Earnings Per Share - Calculatio
Earnings Per Share - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Earnings Per Share | ||
Net income | $ 37,063 | $ 30,720 |
Basic weighted average shares outstanding | 101,629 | 97,785 |
Dilutive effect of share based awards | 3,881 | 6,536 |
Diluted weighted average shares outstanding | 105,510 | 104,321 |
Basic earnings per share | $ 0.36 | $ 0.31 |
Diluted earnings per share | $ 0.35 | $ 0.29 |
Earnings Per Share - Dilutive e
Earnings Per Share - Dilutive effects of share based awards (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 26, 2020 | Mar. 28, 2019 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares excluded from the computation of diluted earnings (per share) | 590 | 986 |
Restricted Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares excluded from the computation of diluted earnings (per share) | 284 | |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares excluded from the computation of diluted earnings (per share) | 108 |