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LL Lumber Liquidators

Participants
Stephen Calk Alpha IR Group
Dennis Knowles President, Chief Executive Officer and Chief Operating Officer
Martin Agard Chief Financial Officer
Simeon Gutman Morgan Stanley
Seth Basham Wedbush Securities, Inc.
Matthew Fassler Goldman Sachs
Brian Nagel Oppenheimer & Co., Inc.
Peter Keith Piper Jaffray
Keith Hughes SunTrust Robinson Humphrey
Rick Nelson Stephens, Inc.
Daniel Binder Jefferies & Company, Inc.,
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to the Lumber Liquidators’ Third Quarter 2017 Earnings Conference Call. With us today from Lumber Liquidators is Mr. Dennis Knowles, Chief Executive Officer; Martin Agard, Chief Financial Officer.

As a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the Company. I would now like to turn the conference over to Steve Calk. sir. ahead, go Please

Stephen Calk

Good and operator. joining you us. morning, you, thank everyone, for Thank

to provisions performance may Safe securities me future significant the Let reference including uncertainties, Harbor Liquidators. that subject forward-looking the This risks and statements and laws statements. of Lumber conference forward-looking call financial contain operating are to of for U.S. the

with any statements that later time, are no reflected remain forward-looking are reasonable, statements prove call. date of Lumber obligation Although, assurance such information correct. factors SEC. its a that in the Important Liquidators The forward-looking this the in operative differ any Investors believes actual at Liquidators only that this Lumber that included forward-looking to from of Liquidators' expectations be discussed contained to not should could statements the update or as can in information those reflected discussed. filings will will results assume the no the undertakes call Lumber and give its materially in expectations risk is statements it to accurate in cause

Now, Dennis to introduce of CEO Liquidators. pleased Knowles, Dennis? I'm Lumber Mr.

Dennis Knowles

our Steve, with earnings for quarter all Thank call. thank Officer me Financial joining third Marty our and you, here you as Agard, Chief is XXXX well.

begin good our of interact building, we continued And about keep feedback work. you. want positive I very stores. my our As for the the stores my headquarters kind in are keep when hear experiences Company the at up me expressing so country, always, Lumber with to customers having That's the let here the appreciation they visits by corporate Liquidators team the both throughout to to

net Comparable make despite quarter, room $XXX.X our clearing aggressively the net third being our Texas I'd quarter assortment. footprint sales for period. sales and grew year to X.X%. year also to to affected old the were the the highlights we performance. increased store sales advertising fact of quick note in grew this out we on last some severe compared inventory of X.X% QX of XX% more that new increased by We Now we and prior in million roughly despite Florida. and In reported hurricanes that

and X%. the markets. and X%, work by tirelessly our key associates were in comps our are year. above and plan our we were We valuable X.X%, continues resiliency we affected that location almost track continues for end Pro our in up are roll ensure employees. on the I that across thankful out way. the grew of see our of inspired also all average. Company have on They encouraged We The communities these plan ticket metrics we to Installation traffic to to there still and up am these all well, as to growing a perform business our on to services up smarter merchandise the are available customers, by of the was

do We inventory This assortment not approach ensures or markdowns. pricing, have and at allocation, growth are improvements, we promotional profitable rely new channels. advertising strategic better that store driving on balanced simply to from improvements,

to None advertising seen focus decreased QX. were have DC these, overall team in the down as able to have the that our and efficiency, sustainable his and said on well in Marco and Our accomplished On for efficiency dividends All improvements see pay table evidenced and store I but focused increased year Lumber a take stakes. more we continued continues leverage our staffing continuing quarter by in of best and X%, we stock we our supply last we improvements about store has as and we sales Liquidators continue inventory top and chain the to ratio position. to for last are that have together, our indication in is retention. both we profitability. training associates to and what think been stronger we've other gains

now work we make that opportunities insights Lumber getting to that benefited even Liquidators and are the fuel will of tangible are beginning We better. to see

touch me over on few Let Marty. to more handing a before items it

been our and what our First [far Europe. quarter are Lumber our investment with held validate margin. bamboo. people effective thankful water our a in travels gratifying assortment, trend we early critical is] October, and participation to our hot inventory and experience. manage a they areas. I vendor trends from positive in host South prone for source been discuss future and continues the XX Customers and traffic, store align was driving the also continuing Virginia. for resistant learning our found really Liquidators. first Crushed to That has changing on the and market. functions and Indigo storm and we to in to Lumber a way over styles our wood our here of styles Board forward for They strategy. vinyl and stained half on not Asia, most role in to selection their great committed a partners it's only Liquidators stay Customer we summit look customers, responded particularly many of big was operations strategy attendance growing We're and partners believe vendor for play. to I day continuing the to efficiently merchandising actively for I products our focus marketing think the am also drop ever customer also process and way to that is while with the to about see merchandise and as It category In those each in a like response our tile porcelain this feedback across America are as and new but have encouraging in be

the spend. not the another services, and its with announce We the also in-store Company are to to MDL businesses, all terms, execution of were and the our $XX settle week will especially pleased, installation last marketing, We and credit that contribute Pro $XX provide million which leveraging an cases. million MOU vouchers. are on depended learning across Under as

and resolve While the quality for numbers those some subsequent highest have be definitive our these agreement our we our to over and now few approvals to event, get quarter final are to and the matters. on work was Stepping we is finish The products internal will gratified back in are timeline resources and reflected subject a have to are various all third financials. the at the years, we there a There still the that it line, but customers. to ensure framework for significant compliant legacy have external safe, invested minute, past cost contingency.

– say vinyl offer to first the of one flooring. are to We

as We in see be partners certified. capabilities have and these ensure improved our products our of all leveraged asset bringing that GREENGUARD market vendor that hard with We to our can investment floors pursue in worked sourcing are FloorScore flexibility. Gold an are to innovative

on us the LL I'll committed investigation. to Marty? talk back the the focus front the near-term of through There That is the to legal past and ongoing covers moment take third the remain of quarter. time the to a cooperating be that government accomplished at in that call will fully in still team year. is nothing we on our Marty with proud initiatives, DOJ very except this what now to their area Another about that numbers. the hand I'm we've over SEC but investigation.

Martin Agard

Thank results. you, Dennis, and a start good about our with I'll sales everyone. morning, few comments

consisted increase average of X.X%. million, third an XX%. sales quarter $XXX.X net of sales comp and merchandise a stores growth X.X% comparable up with X.X% between X.X%. up X.X% X.X% were expansion This net traffic and The the up overall ticket split comps was For year last of over growth installation sales

approaches in While these little September, a by they into Houston results had this consumer sales the the results aggregate modestly our on had for With four and in resulted on to well points pace ten market, and store on impact going compared days quarter. pre-storm are in these for the to gauge pre-storm ahead returned differ days we these slowdown storm weeks. bit average estimated an average In the low impact over X.X excluding recently obviously only quarter in to reported we These Florida, a neutral. Florida. particularly XX are sales, after XX but initial have arrival just comp stores Sales storm the markets of basis were sales impacted about an all we of we the we imperfect, but levels. growth closed rate, and of were impact store negative give stores Irma's comparable sales To projection, our so stores Harvey our was rates. stores pre-storm approximately for believe to running markets ran now of net these also our closed these two their in in an post-storm activity the three

sales gross substantial in we to in While devastation have new put a recoveries we've communities update measures context, topline there our the and in installations York expansion these well first heavy stores QX wanted program stocked able are program. along and This this continued would into XX% QX introduced markets double-digit more by the on the Arizona some rebuild. to our we’re and are room XXXX in ago, storm we the our items is where on comp as activity regions, And growth both caused pain since when results well in ago. people from to reflected quarter and running the been our and installation to than grew XXXX. improvement New I an reflecting to dynamic set also a in Installed store these areas comp year the clearance and the operating they we and with positive support are make geographic year and in both in for regret like year. taking we aggressive sort of a margin advertising we their to staffed assortment ensure

impacted quality no a our the impact unusual and not that, face came quarter had legacy gross was margin clearance. last the better or by Last pleased our unusual point sequentially which by was margin by margin margin product somewhat and XXX that basis by With QX impacted the of reserve was at over we on basis results. the mix in gross and XX% and gross driven and items. specifics year's lower the direction basis XXXX it, are either GAAP points So both in higher on at and that with credits from margins take for current manufactured in sales activity. activity gross a release Please up newer so of the was affecting quarter's lines the higher activity XX of favorably basis see a and quarter's press exclude also kit let's sales storm mix XX.X% discounting our Comparing carries for of installation look XX-Q currently GAAP of test the unusual when the reduced in which year’s offset in anti-dumping these both table clearance margins. the of we

in year $X of $XX.X XX.X% nearly which or million and the these was driven a sales was of excluding $X.X at to a look down million $XXX by items, let's the ago. expense quarter $XX Incremental for the When That tabled XX-Q. was incremental QX reduction ago press million QX unusual million stabilize and in about related from SG&A mentioned the SG&A to settlement accrual to quarter compared These $XXX SG&A. a Now week. decrease expense spend I last ago fees a were level $X.X shift to the investments. the and impairment to in does MOU related ad spending the and out million legacy restore of in QXs for sales. execution from The was was of related traffic year million year last material security legal million included SG&A to reflect items an close release by year legal costs reflecting strategy XXXX. here. integration and fees. vertical not year’s $X and in last included quarter help million But heavier advertising,

$XX.X this and largely side, in the to investments QX. sequentially the release QX move press I'll going in $XX.X SG&A the compared we've anniversary excluding Pro the and in in again the from payroll the capabilities. sales P&L to and store tabled installations On core operating slightly the staffing, XXXX was XX-Q, down of items and teams, our year corporate million profit. down million If

QX operating in think compared doing and and of For unusual XXXX. million had the year's in it's an recorded ago our impacted million operating results loss we profit And we results with items quick loss to profit of look results quarter these $XX.X of XXXX these quarter, press of current operating taxes. that at release. an comment in with that, last of $X.X as and When set million QX XX-Q we to scheduled our operating operating $X.X million had Both second important of in year $XX of an several aside. ahead One quarters and loss. line on items our well an the

that see years loss, You'll tax IRS mainly XXXX the reflects four This despite resolution of XXXX. audit we expense. through pretax the GAAP had covering the the

better we we now to have on with span that the put the amount of activity us focus few in and growing of this put can are adjustments window, this the pleased future. in things Given list and period and occurring behind of our emerge so

liquidity at flow. cash let's Now look and

As it's been point at at the the quarter. capital. million $XXX some of beginning in the in September which were of $XX we ABL drawn terms a liquidity XX, total time under million, function highest compares the had our of million, $XX facility seasonal to working in part of of being low Borrowings

the from million $XXX million, cash nine Our operating be the over have beginning at flow positive from of at to down of quarter activity Not of we the inventory had ended $XX months $XXX overlooked million. XXXX quarter. through

of obligation during stock. use MDL preserve cash payment As are we our mix settlement we option satisfy to liquidity and of anticipate XXXX to with we comfortable the a the coming QX this while

a will as get We date. the this financing final decision funding close we make about to

side total September store investing net the year-to-date and a during XXX. quarter the we three of and things, count opened one us bringing store stores On to closed addition our four

net We on fourth five to I’ll comments expect six to to year. this offer stores few store quarter in guidance. bringing XX addition open to us the a nine new

but estimate As depends have the Florida us the for comp Regardless mid-to-upper storm in in has comp experience Estimating which suggest. sales with I growth stated inventory a and to we Houston quarter. the market to our earlier little QX we continuing points acceleration and this and tailwind than cost speculative in should best been impact us of its ramping approximately positive in both fourth storms the XX basis them expect extent up the regions past investing families the fourth rebuilding. slower personnel might a and quarter. for those and are those wish the The in and growth help get communities single-digits sales on

with remarks. for effectiveness to the me, of separately That of a his step by MOU margins in we framing quarters though we've am year million margin now call driving the taken to That few past mix wrap have continue similar work to of gross a target $XX we SG&A settlement to MDL's for and remain potential to guidance. our the in see on quarter range the seasonally we've encourage the see profitability. back for the medium continue gross us. types various upper few and term. for and front closing excluding pleased special with improvement and expect it as items disclosed XX's in all To assortment be up significant plenty the I’ll we We I the Dennis sequential to continues the last the with million done said consistent growth in and to four over the next we do turn should opportunities of same said, the shown steady higher we've QX quarters not past quarters. the little in promotional may $XX

Dennis Knowles

you, Thank Marty.

These that believe me last and with shared right are we've let consistent give track. update on quarters demonstrate close, few a results quick our the I what our of we initiatives. you As on we're

in at our entire right is as performance, the our length place now associates And at the level. truly we've believe talked well structure ends us. about training particularly the across training First of never associate join new importance network. We

we customers. for high can we to execution want quality on experience consistent Now our concentrate

increased confident with the points in installation that value as sales. to will and touch Pro we areas company, are customers provide on particularly people We focusing our long-term like

continues Our year the last and program and the small best market. that our of mentioned we rotate store and to stores practices We that in a Marty gap store evaluate execution by that sharing out end one regions also locations. and all of quarter in store increase use efficiency stores. our program to will in our installation across of we I this we XXXX the closed quarter. mentioned open services

comfortable by to still track already This of but on stores larger a place for not in we're demographics We're part location. and have shifting program quarter was that for rather we Pro pipeline and nice due the XXXX XXXX. XXX

believe few to been value customers, for carrying right to enhancing our Second a the mix products now. turn quarters we've we right

customer the As opportunities way that done a XXXX assortment the Feedback are which QX, driving in last and positive full late better in traffic, we assortment be we've inventory we costs and anniversary managing now before. I will helping satisfaction. that have it's ticket and you our cycle. to continues told region-by-region the quarter not us manage transportation best and responding day-by-day is

and we but Third, the effectively sourcing, responsible senior we Many our Europe on area are vendors. too, we operating team are looking to of complaint partners to and this us are of work past few with improve part quarter hard building in to ones. always new future. this and We in our believe see be past relationships that progress beginning and years were LL potential the the these recognize pleased over want Asia

that it we from the believe confident before, world way. with can keep in to anywhere we said source have we intend we As and now

talked store will These to sales, our momentum network. and continue improve. have business, programs good expanding and our refine Finally and Pro about install, we've already

XXXX. about excited are We

is opportunity whole is with next team you the with us quarter. reevaluate properly, to eyes. we From fresh with working look operating that fundamental customer's giving initiatives to manufacturing the to model Now our sharing and to business layout we've it forward strategic our the planning floor, vision been the with the source longer-term

team, to to the close, we As we With our to again vendors, me support. continued the our would that, operator, their customers, call let thanks like open say our for and question. shareholders

Operator

Stanley. [Operator Simeon question. with you. first Morgan state your Our Gutman from question Instructions] Thank is Please

Simeon Gutman

between Simeon some ask morning, morning. the tradeoff It’s business certainly I and has this sales a ongoing given to it's It's you balance gone and Good that Gutman. Marty. of the things margin. about discussion Good Dennis and through. wanted

reengage wanted now I sense pleased about that of you this And little you is, guess out? make mix Dennis, things. bit step marketing how get products. in I feed your to next with question So to on you the just played especially the were said and XXXX get that quarter so for the guess can of couple up the some a to fully the rethink with place, you My sense are brand consumer pieces a Does it year, again? that things

Dennis Knowles

Yes.

But in But advertising little product for said out staying of think getting that I Marty as our were we as assortment on in the new this QX. will looked that to the also ramp really we'll the these And assortment, make in we we – are was first really was we’re year, full spin there while hard certainly need down at to we that necessary that marketing said, last noise think year in tuned as that I understand accelerate and trying grand assortments I at a room react. reacts. up we new we see category investments we Simeon, make – to open opening for QX. look as last in to the through call, in QX, spin really how I start sale we bit store. the this so in – each and will QX the But of said really time the in cycle of how we that to

and store. we're channels make we traffic what So accordingly we’ll how are and choose appropriate in to that driving category to definitely the to sure market paying performs attention we the in act each

Simeon Gutman

a little point the at to to line feels it think the the regard felt is because this point? be is business competitive XX I a with sales. at in like a referring the but that in But you with this it it it curious productivity sales, of stronger Is been there mean all maybe what and run Is least should hurricane the mentioned rate I'm performed the It still basis landscape? at point and could With to us the product at this could this excluding it even exists weirdish expectation. wherever issue? well if market? activity there coming it issue unclear, holdback have And points, like holdback at stronger, be Is topline, you perception to I of quarter a your this disagree. or the sales the I’m

Dennis Knowles

– we definitely with had we Well, sales in that our line were expectations.

have And think I call, to QX. it it QX been would have that coming there on, seem or sales it purchased certainly QX saw in – pre-hurricane. that midst happened they what slowdown QX homes Hurricanes, kind of floor are if in a us, said don't of was in and because they guess heard and the QX I was of delivered in somewhere happy securing I want focused if hurricane and anything a we before they hit was their occurs to on. people as between there's bit or the it

felt on and that, really of up. the our what thought track kind but that borrowing we was just with where would So we post-hurricane obviously end was were then activity, they pre-hurricane sales

Simeon Gutman

an just question growth? sales either forgetting potential touch big perception. just is opportunities as this a about on opportunity there marketing quarter it’s those whether back hold a an you And awareness for Can minute for picture it’s whether for

Dennis Knowles

paying the you're of you Marco have QX, – team perception, for it time was attention and last below brand all when talk and XX was period I consumer years, of the his in awareness to sentiment relates minutes. particularly fact, and it the half original low, two to Simeon, tracked about shows what think at minutes in since how of airing as any it XX an laminate, a up

a So feel behind brand now like we in that MDLs where position us and really focusing building. getting really we're the on we

spot. know the in are So I in are we're low on and and continue good a struggle forward we time we're particular myself, indications and where I to All making that team areas, this within think – focused in is looking that grow those before. we all sure

answered think I I but let me know. didn't question, if So I your

Simeon Gutman

Thanks Thanks, Dennis. a lot.

Dennis Knowles

You bet.

Operator

Our next question is from Seth Basham with Wedbush Securities. Please state your question.

Seth Basham

Hi, Seth Basham. good It’s morning.

Dennis Knowles

Hi, Seth.

Seth Basham

understanding to you little My the is and on a first more question little a just the Marty, your date for us is more. trending guidance quarter your fourth trends bit give how business could bit color you first in much how of quarter? driven And quarter, high is point? guidance single-digit your estimation at to of mid about for this boost by that as the month the comp hurricanes think from the fourth

Martin Agard

guidance yard not The quite obviously that typically a October set say us sale sets say while. is with well, went I’d and the that would we’ve I that’s consistent haven’t of up informing storm. the broken as a range like for around course. in results piece, that we guidance that, Well, storm so out monthly there the line us

let's [indiscernible] but it's we ago to lower two there those on guess Houston, range seeing range of in related those more how example. way making of the modeled context. a We basis and XXX There wide goes. results On are fairly certainly it but Florida, at happen. with that and those our Florida from good. we've something points, are are could year not say stores modeled but Both XXX a range, accelerate sort of give range a Sandy. yet, between a I our back, the a tried storms; seeing of still to storms comfortable the we're probably wide that chose kind the to and basis of depending In are that examples, feels again points not Harvey. surge stores because pick kind I'd I of it's we're probably say We’ve Louisiana end

So gave that's mid upper single-digit, included guides in single-digit guys. I that that you

Seth Basham

any in comps? between And And the advertising, then helpful. if impact tradeoff what clearance. that advertising quarter comp your to pretty little and the trends in have third year-over-year advertising you then bit XX% the context relates done in any sales could sure more for decline That's desegregate non-clearance around sense not may secondly it. a product. any Got what or of the just to terms significant, I'm

Martin Agard

No, the I would year you the variables ago of hard. a between play down that just overhang a break just that speculative. Too of try heavy that standpoint tell consumer it's too product PR was inconsistent the To some at pieces a assortment ups is to some on. bit advertising from were to many too to going those

Seth Basham

much. very you Thank enough. Fair

Operator

Our question. next Sachs. Fassler from question is Matt Goldman with Please state your

Matthew Fassler

the see, range ended et Thanks that a bit your trajectory, sales think than curious we cetera. might so kind you related purchasing much. Good inventory up morning. to said the My questions focus on lower or so the patterns just in if the balance and any to about how Thank related I of some then that you decision substantially you. funding? from down inventory on came that, whether made related purchases other to recent proactive And prior accounts so the sequentially slowdown payable sheet, year, color

Martin Agard

inventory range. It course seasonal levels. way Matt, sort $X.XX think that feel Yes, of Marty. of $X.XX It is below bringing $X.XX but to back it all and that fourth when up feel We've started we down $X.XX the good of I these ago to to bring with first it’s been about a a $X.XX at our can talking into good to to performance actually just call. back point inventory the of about we'll last a quarter are in that a it stock we narrow availability down range we bit came in about the how from ramp we out to $X.XX it in operate start $X.XX $X.XX that year has I it little quarter, a improved only to at low peaked

you aggressively AP way AP way the and quarter low later would from of sort all come pushing down the good feel of So I at bring cycle managing in left that the in steeper And particularly levels. to down about we the at back standpoint. really through the it's was particularly February from say all and cash know discount a planned that point shape how discounts was back this

So around going through you be the say of in not will I assortment over going again vendors but at numbers thing severe of time this the could fair our amount think showed explains severe think I Chinese that production both nearly the as pattern New forward and inventory they keep those seasonal cycle that will as well. the there kind flowing as not Year change it’s on

probably will hedges not time need much at this we earlier around. last as did So to year we

like a the sheet quite balance we bit. So

Matthew Fassler

If ratio where just than been on you'd four that The number going all expect of about the we've been that those two to is of quarters high over most we has show answer past it. I inventory Is and follow-up of of or the a as kind XX, that range but seen not as think payables we so the as if a level map, that the quarter end low but percent could see mid-teens often forward years. has that at handle payables the generally three settle? over to more have this

Martin Agard

bit. only we AP and were this stretched I of yes. around I've inventory a build pre-built lower inventory stay position think building the the been range where would With it'll and I a modest end of high level cycle one a so a at more say stronger particularly I again liquidity down we mean through

Matthew Fassler

more you as cash well? quickly contribute are the you bit paying gross discounts Did as that received the to a margin

Martin Agard

I and it's not are we and third not quarter one in a but quarter going the in pursuing, no. the to big say factor it's one modestly much positive a so where third would but be really Very

Matthew Fassler

and final one. then Gotcha, one

So you anticipated QX. storms for of talked about the the impact

think What's quarters the duration Given Florida likely. talking done Houston was sense business less the we'll to damage kind in be the and as I foreign guess Houston forward? you other because of and I your that how relates this of the going meaningful? about flooring damage the words effort know many being most in rebuild Do is of

Martin Agard

of not be I there the know next a quarters. know appreciate do. that going it's say is of the done would to longer the these fourth sort then different and take where Florida by meaningful In have rebuilding guys couple I it quarter take the be to to we to be geographically will to Florida different But think quarter and of really to was the will going I you gone longer. damage all first dispersed lift it's you

just will see particular that. I we'll tailwind example feel a if let's year, don't sort I see we rather know or can So say over of actually whole an some a surge like

So clear that's as [indiscernible]…

Matthew Fassler

Gotcha. Thank much. you so

Dennis Knowles

Matt. Thanks

Operator

questions. is Oppenheimer. Our your Brian with next Please state question from Nagel

Brian Nagel

Thanks for taking Hi, my questions. good morning.

Dennis Knowles

Brian. Good morning,

Brian Nagel

short-term all want competitive the category. the guess I competition? and discussed just to in more aggressively somewhat Have overall environments start basis into I that that seen very but the bigger in players players smaller a picture Hurricanes action did some of your the effect and its you larger its push

Dennis Knowles

and far of still of sure of impacted know were this of flooring and categories We our our we I for albeit the by we to marketing particular vinyl in the news really could soon as helped pressure we on stab foreign cycling extent, a take chime then was like the were did picked but stores addition really the carpet making bring focused to – as good up saw QX, be. safe categories. just like of everybody attention the surface. in so in that and Marty you. this Florida the our hurricanes as but particularly lot our general. waterproof particularly in kind Texas that we the our markets that got out and for in and employees buttoned whether see a our But did got category we I I’ve in, competitive But we're feel let is hard then there up, I'll competitors stepped one career, generally our all this synergies feel for I then as a tell and up But couldn't Well, and back stores and in

Brian Nagel

a is trajectory already longer you’ve ships don’t extent we will have sustained if out and new sales, – assume – to I look have, would I you mix? that XXXX quarters, you think we noise the but the product sales with we respect that guidance Marty products guess will, Florida. term to into what what question Texas it how but efforts recognize about you out weigh either recovery – are you upon made there into look depended the as some be second in going in the and couple have in introductions, with as addition

Martin Agard

great It’s question.

and and of being really colors got focus there particularly we've daily, we and a trend styles my As then first and the that I into whether on a hit lean called on strides, we that. And focused the vinyl in mentioned and categories have made continue had and will lot to is on the the grow that we we paid what I and remarks, managing get as what with goes seeing quarter, will called to through monthly and assortment sure innovation the and we'll the product attention in as with those as those have quarters. in right that have mentioned fourth we quarterly significant that time both cycle into making really opportunity. have categories categories assortment prepared textures innovation all healthy see and in real and to past laminate the category two waterproof an we maintenance continue over strength I we We're

of perspective. reviews normal depth our product So a we're and and assorted cadence from we'll continue line both making breadth with sure our appropriately that

Brian Nagel

new real resumption more is openings? aggressive on latest store one in any there quickly, thoughts new [Indiscernible]

Martin Agard

have something of some we and that next step should be get XXX that be XXXX the around range pace for we Yes, is XX-ish in kind range and about think year. the talked that a would of kind that into that by and of

year from to six October, November. best we which talked or away stores, earlier and opening is here five one about quarter open. in six or are If and the about our we’d stuff. quarter, fourth in the you opened in for early holidays another we going fourth We've quarter, two But the get frankly think in the not five rather be it doing

going kind that open feel to and feel if So start that can to we're of we clip.

call that over you it up. ramped years. So level the yes, half last I It's couple guess been

Brian Nagel

Got it, thank you.

Dennis Knowles

Brian. you, Thank

Operator

question is next with Peter your from Our Keith Piper Jaffray. state Please question.

Peter Keith

how as in the should the conversely begin morning slow all you same-store it's maturation to that sales end we a guys. curious going that install stores benefit now about so forward? the your service brand year. that on think benefit to Does and of good a overall overall that by the in initiative, could Question dynamic up and looking content, or there's nicely, we you that to place now, be the Hey, had it to accelerate

Dennis Knowles

Exactly, relates the it maturation, experience of about focus Florida continue Peter two a in creating us team good But everything year. the on, as to we kind see on of we the right kind on enter by is California and end for big to you're Charles the there's with you're We’ll aspects one terms as that out of and State training installation. well a have for we’re track the and employees thinking growth the last way is are. store stage we customer are of of the his track. rolled number two

to The work process the easier employee. second an the is both of for and that make that that piece the Company is customer doing

the we're comes a the result rollout, growth penetration. focused So of increasing we also expect that on as to the but see

we of ahead So deal of a got us like in we've opportunity great XXXX. feel

Peter Keith

Thanks, Okay. product of about Pivoting talked Dennis. the just outperformance. of – maybe you areas mix in back to just

outperforming mentioned categories two the Are the the average? margin now most categories right you look like and of to house to that vinyl areas is compared think those what the laminate, are that at as those well the I doing innovation. that are

Martin Agard

Yes. solids Really strongest. tile engineered its of vinyl also the have We think been found brought is fuller niche. and that line a I out

So really I above into performing, but want margin for that, a vinyl those the we above the any average are breakdown probably anybody to don't but margins, of by gone products category have strongest it's lot of average. and – the haven't disclose

Peter Keith

categories The a it simplistically gross adding mix wrap Okay. to margin? more Maybe up. outperforming, to you are shift need positive your

Martin Agard

Yes, absolutely.

Peter Keith

guys. Thanks Okay.

Operator

from with Please is question Robinson. your next state Keith Hughes Our question. SunTrust

Keith Hughes

last recent Thank on team? of out feel for of like ticket of you. can Kind in your on product expectation sort you the any give the question quarters you what strip us installation, on installation, look build the would

Dennis Knowles

You are asking – the product ticket.

ticket product was our up. I think

and you on that Is sale I was that are Marty did what asking? basis. mentioned think average I up an

Keith Hughes

ticket, including that installed out. You average you or Are are including sales that? taken not is the

Dennis Knowles

to Pro and the some combination is a Yes. That is business cases bigger bigger, included up of, being is the Pro tends pushes of generally part then what as that's the attached both in ticket just is install and on be that average.

Keith Hughes

Okay.

a way there is kind You from your it product don’t later. I up? get the it. of moving that's get So to adjust the have number

Dennis Knowles

get Mathematically finger here in don't tips. I that. it yes, my it have we could

Keith Hughes

for now size is, us my entire That’s I your out outperformer is get several called you question it the in being vinyl industry. it is relative guess business of as can Okay. you vinyl later. you what fine. now? in I’ll an give right And from quarters row a represent

Dennis Knowles

say as that in our would strongest the but performance It's penetration. don't probably it's one but really performing of of categories we've one business, relates total talked our you of know I better it our ever it's as I about penetration – to categories total said,

Keith Hughes

on around Okay. that question And final pricing just vinyl.

there are addition any volume. down the up, You change saying in ticks to ticks shrink

Dennis Knowles

the Not of price necessarily course changes have They've in great made over last year. pricing the availability of the points. manufacturers the just advances

planks, planks, widths longer wide texture. and seeing wider we're so And

in you're the what us, more really haven't much so So for it's opening seeing that's we're as talking we expansion, up it if pressure, pricing. price about relates competitive but points to seen

Keith Hughes

margin, called we perspective? average laminate, laminate gross it selection you actual Is if say know in from it have is enhancement the price that store? still an to it you your price kind your of a but below laminate price an example, as there what for I for average compare out to

Dennis Knowles

about It's maybe slightly above. even similar

Keith Hughes

Okay. Thank you very much.

Dennis Knowles

bet. You Thank you.

Operator

is Stephens Please question. question Our from with state Nelson next your Inc. Rick

Rick Nelson

early fourth provide quarter? the quarter, to guide guidance the two in for have the comments sales on follow-up relatives to I if to how same-store and fourth as tracking that you going some the morning. you're Good Thanks. could

Martin Agard

in already month, closing feel reiterate month the just said we of to but each and like don't want guidance. doing that into October we consistent We Yes, into clearly with I get we're late the that what how it's before. to know

- as that's I just So breakdowns. we far on monthly go want to the as

Rick Nelson

sales? installation can on the Also quantify your how much of business, you

Martin Agard

approaching find let XX% yes, Yes, this it’s here, specific me me X%. number

Rick Nelson

other a category metrics model? margin Any of financial any lower gross could that’s realize be time business for around helpful that

Martin Agard

Yes, mind you there. don't have give help in particular thought I idea some to that I'll a

Dennis Knowles

there I some labor say, know look we at that metrics number in Yes, I installation. sold. home And leading measures that average and for internally and also look estimate request kind look at you we would The those shared. tell you haven't you ticket as the indicators of that would the to we are and we we for of measure per at provide in sold because a they're comes know us. look come customer us when an at

that I'm so to not want that look better also consideration to with that kind some we haven't relates it but you at honest give sure not is but a as have this I and indicator we but isn't shared for we sold as we'll for and Liquidators that really it the to products share that business to installation, this and build that Lumber haven't be understand the but we And with that because the average that's central at know leading really in point. us model, well ready realize little you and of your shared

Rick Nelson

substantial MDL to remind with pending? fees Should see back and legal SEC our is enough. or call still DOJ realize professional the elevate? know a litigation they you now we you Fair Also going now how Okay. settlements

Martin Agard

unusual of that that when alternately continue legal along run, place like will should And The we'll in agreement it'll and first then MDL the legal to that of hard cases gauge that away. we subside to a run, how fees that Yes, MDL that report half as ultimately through was and the approximately the have. sort has into certainly year through that of guidance a incremental subside we continue and next with get year not should we've it process and probably on the to stages. maybe it is third substantially will DOJ as It separately. continue indicated and sort funding little of of that separate to are fee definitive given but flag getting go away continue but deal that we'll run we year-to-date we the approximately that third the resolved will stuff stuff go ongoing certainly flag all it

Rick Nelson

Okay. Fair good enough. Thanks luck. a lot and

Dennis Knowles

you. Thank

Operator

with Daniel [Operator Instructions] from next question Jefferies. is state question. Binder Please Our your

Daniel Binder

market you non-storm know Hi, first, the storms was is it’s on fill that in do questions; Few able QX? to fashion EPS market are there SG&A you looking with there impact just just there good. if Dan a And in quantified comp product wondering times similar I is Binder. in you know orders there? you in curious standpoint impact I from was issues roughly product specifically also those or from availability in said availability lead the that's that pretty similar I'm

Dennis Knowles

about availability let handle markets Marty EPAs and in I will inventory the the Well, talk the storm impact.

that that of place as opened market So was Louisiana incremental when in house that a Houston remember may and additional in flooding actually having there we some the history done as learnings that we last the and you store inventory result a to have market took there, well. of year, deal we an had significant great down activity a

in in stock a set doing increased skill actually We've in locations in what VP need the lot past, markets Houston thing based and year. to additional the position stores and those we well. an Florida of as to while open wind doing is a on center actually we those to well put where inventory. the hone I as experience lowered actually this also on service that that shared our we store one help in think Management be would in would additional inventory this We the so, are and thing looking our us distribution It’s of that reiterate for our and our feel of in really did our brought in incremental – I same previous market the into have work impact as kind We projected so and areas. Inventory we market,

Daniel Binder

Any EPS number, if there was one?

Martin Agard

P&L amounts determine we you for incurred inventory them Yes, cost lose side, big and didn't revenue other up – gross levels what a I call little on of I impact. use bit We can a We We rebuild started separately. take material the the to not charges. revenue, on any as cycle, wanted anything else. any would of out but didn't have EPS and or margin the that gear meaningful than I just average to cabled not

would say de It I of amounts incremental SG&A. So that. with would have minimis gone

generally gross would the be average basis speaking, it So margin. points at XX our of revenue

Daniel Binder

stores Okay, have presumably services that had look services and then the know how rest been well. has business the you if – stores I for the comping the curious just I'm days? of more year, versus services comps those rollout and helping than at as a

Martin Agard

of it's installs have are, business you the where place make to for guys themselves installs subset the We we than comping been into of for more stores Yes, where expansion a I doing. separate I've how believe good year don't double-digits a the in the business. I the comment are specifics that that's but installed that beyond a and that run get to that want comps. they've not do of geographic is But that calculation don't know the

Daniel Binder

then environment, trending us can the versus to discounts give that on you in-store the in on margins and just company is or regard an in Pro And been with increase how I'm in environment? the to whether more bit curious not color competitive total Okay. current there's have business become your spot little the improvement about overall a gain

Martin Agard

average. growing I margin our is Yes, the say. a the The been overall business to average up has very Pro than bit faster close would

followed know business has sort I the It's of that the remains said that before case. base that think trend. gradually and deviated. It I higher. we've its margin slightly don't below

business these doing the the again you're And cases, of But some a time some the about lower deals and is it's volume. where we quantity are in are slight talking on pricing lot concessions is so. well, lower of slight a types of making very margin based margin

Dennis Knowles

just that get We would while, margin opportunity don't seen opportunity elevate Yes, away got add an walk those from to that a always that associate to sale. haven't the an that. as markdowns for mentioned a I want level. we we've There's Marty feel at We materially. business profitable

said While line in we don't is as with tell gross our share year-over-year quarter-over-quarter, margin, margin. I our improved, Pro base margins, total will you our Marty

Daniel Binder

what the that these in of high you next set XXs means medium-term do with for QX, target margin medium-term, have by like you exact get kind that down And is gross they think a the things target just you that year?

Dennis Knowles

points going got ones kind more get that out think timely. XX each points walk that and know all really our it's of it's next that working that basis kind - going of and I we're them a there's that of not to year, but you XXX gradual be end we up that. of a where of approach get each believe can't those than it's be and - melt are of to love I’d chance It's that's XX way going say be to to by click basis you to going there there, that's things say you tell I some on the couple to going probably of different be

Daniel Binder

for Thanks Great. answering question. my

Dennis Knowles

Q&A of End you. Thank

Operator

turn we like I’d end closing back to of and for the have Ladies over Knowles Dennis call reached gentlemen, our remarks. question-and-answer the session. to

Dennis Knowles

as better you. for a all you us. to we Thank updating interest Liquidators to next quarter. and we look you Thank forward We continue appreciate joining your Lumber build

Operator

conference. today's concludes This

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