Market Overview

Floor & Decor Holdings, Inc. Announces Second Quarter Fiscal 2018 Financial Results

Share:
  • Net sales increased 26.2% from second quarter 2017 to $434.3 million
  • Comparable store sales increased 11.4% from second quarter 2017
  • Diluted earnings per share ("EPS") increased 90.0% to $0.38 from
    $0.20 in the second quarter 2017; Adjusted diluted EPS increased 35.0%
    to $0.27 from $0.20 in the second quarter 2017
  • Provides third quarter and updates full year fiscal 2018 sales and
    earnings outlook

Floor & Decor Holdings, Inc. (NYSE:FND) ("We," "Our" the "Company," or
"Floor & Decor") announces its financial results for the second quarter
of fiscal 2018, which ended June 28, 2018.

Tom Taylor, Chief Executive Officer, stated, "We are pleased with our
solid second quarter performance. Floor & Decor's differentiated
business model with leading innovative product offerings, in-stock
inventory, and compelling value proposition continues to resonate with
both consumers and professional customers. I would like to thank all our
associates for their hard work and their exceptional service to our
customers."

Mr. Taylor continued, "Our new stores' first year sales and
profitability have never been higher, and this reinforces our confidence
in the 400 store opportunity we see for Floor & Decor. Our improving new
store performance, combined with other strategic priorities, gives me
confidence that our differentiated strategy is working well."

Unless indicated otherwise, the information in this release has been
adjusted to give effect to a 321.820-for-one stock split of our common
stock effected on April 24, 2017. See "Comparable Store Sales" below for
information on how the Company calculates its comparable store sales
growth.

For the Thirteen Weeks Ended June 28, 2018

  • Net sales increased 26.2% to $434.3 million from $344.0 million in the
    second quarter of fiscal 2017. Comparable store sales increased 11.4%,
    including an estimated 280 basis point benefit from post-hurricane
    demand in Houston.
  • The Company opened four new stores during the second quarter of fiscal
    2018, ending the quarter with 88 warehouse format stores.
  • Operating income increased 9.2% to $37.2 million from $34.1 million in
    the second quarter of fiscal 2017.
  • Net income increased 95.0% to $39.8 million compared to $20.4 million
    in the second quarter of fiscal 2017. Diluted EPS was $0.38 compared
    to $0.20 in the second quarter of fiscal 2017.
  • Adjusted net income* increased 37.7% to $28.4 million compared to
    $20.6 million in the second quarter of fiscal 2017. Adjusted diluted
    EPS* was $0.27 compared to $0.20 in the second quarter of fiscal 2017,
    an increase of 35.0%.
  • Adjusted EBITDA* increased 16.0% to $50.7 million compared to $43.7
    million in the second quarter of fiscal 2017.

For the Twenty-six Weeks Ended June 28, 2018

  • Net sales increased 28.5% to $837.2 million from $651.3 million in the
    first half of fiscal 2017. Comparable store sales increased 13.4%.
  • The Company opened five new stores during the first half of fiscal
    2018.
  • Operating income increased 29.9% to $73.8 million from $56.8 million
    in the first half of fiscal 2017.
  • Net income increased 127.3% to $71.7 million compared to $31.6 million
    in the first half of fiscal 2017. Diluted EPS was $0.68 compared to
    $0.33 in the first half of fiscal 2017.
  • Adjusted net income* increased 63.2% to $55.1 million compared to
    $33.8 million in the first half of fiscal 2017. Adjusted diluted EPS*
    was $0.53 compared to $0.33 in the first half of fiscal 2017, an
    increase of 60.6%.
  • Adjusted EBITDA* increased 30.3% to $98.5 million compared to $75.6
    million in the first half of fiscal 2017.

*Non-GAAP financial measures. Please see "Non-GAAP Financial
Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures"
below for more information.

 

Third Quarter and Fiscal 2018 Sales and Earnings Outlook
(In
millions, except EPS and store count)

 
     
Thirteen Weeks
Ended 9/27/2018
Net sales $427 - $433
Comparable store sales 9.5% to 10.5%
GAAP diluted EPS $0.21 - $0.22
Adjusted diluted EPS $0.21 - $0.23
Diluted weighted average shares outstanding 105.2
Adjusted EBITDA $45.9- $48.0
Warehouse format store count 95
New warehouse format stores 7
 
Updated Outlook Prior Outlook
Twelve Months Twelve Months
Ended 12/27/2018 Ended 12/27/2018
Net sales $1,696 - $1,710 $1,705 - $1,735
Comparable store sales 9.0% to 10.0% 9.5% to 11.5%
GAAP diluted EPS $1.07 - $1.11 $0.98 - $1.06
Adjusted diluted EPS $0.93 - $0.96 $0.93 - $1.01
Diluted weighted average shares outstanding 105.1 105.3
Adjusted EBITDA $188.7 - $193.2 $190.8 - $201.3
Depreciation and amortization Approximately $48 Approximately $48
Interest expense Approximately $8 Approximately $9
Tax rate 23.4% for the remainder of fiscal 2018 23.4% for the remainder of fiscal 2018
Warehouse format store count 100 100
New warehouse format stores 17 17
Capital Expenditures $160 - $167 $150 - $158
 

The above guidance includes certain non-GAAP financial measures (namely
Adjusted EBITDA and Adjusted diluted EPS). Please see "Non-GAAP
Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial
Measures" below for more information.

Conference Call Details

A conference call to discuss the second quarter fiscal 2018 financial
results is scheduled for today, August 2, 2018, at 9:00 a.m. Eastern
Time. A live audio webcast of the conference call, together with related
materials, will be available online at ir.flooranddecor.com.

A recorded replay of the conference call is expected to be available
approximately two hours of the conclusion of the call and can be
accessed both online at ir.flooranddecor.com
and by dialing 844-512-2921 (international callers please dial
412-317-6671). The pin number to access the telephone replay is
13681459. The replay will be available until August 9, 2018.

About Floor & Decor Holdings, Inc.

Floor & Decor is a multi-channel specialty retailer of hard surface
flooring and related accessories, offering a broad in-stock assortment
of tile, wood, laminate and natural stone flooring along with decorative
and installation accessories at everyday low prices.

Comparable Store Sales

Comparable store sales refer to period-over-period comparisons of our
net sales among the comparable store base, which has historically been
when customers obtained possession of their product. Starting in 2018,
when Accounting Standards Update No. 2014-19, "Revenue from Contracts
with Customer"
(Topic 606) was adopted, our comparable store sales
refer to period-over-period comparisons of our net sales based on when
the customer obtains control of their product, which is typically at the
time of sale and may be slightly different than our historically
reported net sales due to timing of when final delivery of the product
has occurred. A store is included in the comparable store sales
calculation on the first day of the thirteenth full fiscal month
following a store's opening, which is when we believe comparability has
been achieved. Since our e-commerce sales are fulfilled by individual
stores, they are included in comparable store sales only to the extent
the fulfilling store meets the above mentioned store criteria. Changes
in our comparable store sales between two periods are based on net sales
for stores that were in operation during both of the two periods. Any
change in square footage of an existing comparable store, including
remodels and relocations, does not eliminate that store from inclusion
in the calculation of comparable store sales. Stores that are closed
temporarily and relocated within their primary trade areas are included
in same store sales. Additionally, any stores that were closed during
the current or prior fiscal year are excluded from the definition of
comparable stores.

Non-GAAP Financial Measures

Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA
(which are shown in the reconciliations below) have been presented in
this earnings release as supplemental measures of financial performance
that are not required by, or presented in accordance with, accounting
principles generally accepted in the United States ("GAAP"). We define
Adjusted net income as net income adjusted to eliminate the impact of
certain items that we do not consider indicative of our core operating
performance and the tax effect related to those items. We define
Adjusted diluted EPS as Adjusted net income divided by Adjusted diluted
weighted average shares outstanding (i.e., the weighted average shares
outstanding during the relevant period plus the weighted average impact
of issuing shares in our initial public offering (our "IPO"). We define
EBITDA as net income before interest, loss on early extinguishment of
debt, taxes, depreciation and amortization. We define Adjusted EBITDA as
net income before interest, loss on early extinguishment of debt, taxes,
depreciation and amortization, adjusted to eliminate the impact of
certain items that we do not consider indicative of our core operating
performance. Reconciliations of these measures to the most directly
comparable GAAP financial measure are set forth in the tables below.

Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA
are key metrics used by management and our board of directors to assess
our financial performance and enterprise value. We believe that Adjusted
net income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA are useful
measures, as they eliminate certain items that are not indicative of our
core operating performance and facilitate a comparison of our core
operating performance on a consistent basis from period to period. We
also use Adjusted EBITDA as a basis to determine covenant compliance
with respect to our credit facilities, to supplement GAAP measures of
performance to evaluate the effectiveness of our business strategies, to
make budgeting decisions, and to compare our performance against that of
other peer companies using similar measures. Adjusted net income,
Adjusted diluted EPS, EBITDA and Adjusted EBITDA are also used by
analysts, investors and other interested parties as performance measures
to evaluate companies in our industry.

Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted EBITDA
are non-GAAP measures of our financial performance and should not be
considered as alternatives to net income or diluted EPS as a measure of
financial performance, or any other performance measure derived in
accordance with GAAP and they should not be construed as an inference
that our future results will be unaffected by unusual or non-recurring
items. Additionally, Adjusted net income, EBITDA and Adjusted EBITDA are
not intended to be measures of liquidity or free cash flow for
management's discretionary use. In addition, these non-GAAP measures
exclude certain non-recurring and other charges. Each of these non-GAAP
measures has its limitations as an analytical tool, and you should not
consider them in isolation or as a substitute for analysis of our
results as reported under GAAP. In evaluating Adjusted net income,
Adjusted diluted EPS, EBITDA and Adjusted EBITDA, you should be aware
that in the future we will incur expenses that are the same as or
similar to some of the items eliminated in the adjustments made to
determine Adjusted net income, Adjusted diluted EPS, EBITDA and Adjusted
EBITDA, such as stock compensation expense, loss on asset disposal, and
other adjustments. Our presentation of Adjusted net income, Adjusted
diluted EPS, EBITDA and Adjusted EBITDA should not be construed to imply
that our future results will be unaffected by any such adjustments.
Definitions and calculations of Adjusted net income, Adjusted diluted
EPS, EBITDA and Adjusted EBITDA differ among companies in the retail
industry, and therefore Adjusted net income, Adjusted diluted EPS,
EBITDA and Adjusted EBITDA disclosed by us may not be comparable to the
metrics disclosed by other companies.

Please see "Reconciliation of GAAP to Non-GAAP Financial Measures" below
for reconciliations of non-GAAP financial measures used in this release
to their most directly comparable GAAP financial measures.

 

Floor & Decor Holdings, Inc.
Consolidated
Statements of Income

(In thousands, except per share
data)
(Unaudited)

 
    Thirteen Weeks Ended  
6/28/2018   6/29/2017

% Increase

Actual   % of Sales Actual   % of Sales (Decrease)
Net sales $ 434,279

100.0

%

$

344,047

100.0 % 26.2 %
Cost of sales   256,641   59.1     201,819 58.7   27.2
Gross profit 177,638 40.9 142,228 41.3 24.9
Operating expenses:
Selling & store operating expenses 108,626 25.0 85,650 24.9 26.8
General & administrative expenses 25,179 5.8 19,518 5.6 29.0
Pre-opening expenses   6,588   1.5     2,958 0.9   122.7
Total operating expenses   140,393   32.3     108,126 31.4   29.8
Operating income 37,245 8.6 34,102 9.9 9.2
Interest expense 2,145 0.5 3,353 1.0 (36.0 )
Loss on early extinguishment of debt         5,442

1.5

  (100.0 )
Income before income taxes 35,100 8.1 25,307 7.4 38.7
Provision for income taxes   (4,746 ) (1.1 )   4,878 1.5   (197.3 )
Net income $ 39,846  

9.2

%

$

20,429

5.9 % 95.0 %
Basic weighted average shares outstanding 96,684 90,861
Diluted weighted average shares outstanding 104,937 99,919
Basic earnings per share $ 0.41 $ 0.22 86.4 %
Diluted earnings per share $ 0.38 $ 0.20 90.0 %
 

Twenty-six Weeks Ended

6/28/2018

6/29/2017

% Increase
Actual % of Sales

Actual

% of Sales (Decrease)
Net sales $ 837,227 100.0 % $ 651,343 100.0 % 28.5 %
Cost of sales   494,203   59.0     383,644 58.9   28.8
Gross profit 343,024 41.0 267,699 41.1 28.1
Operating expenses:
Selling & store operating expenses 211,193 25.3 166,401 25.5 26.9
General & administrative expenses 48,518 5.8 37,399 5.8 29.7
Pre-opening expenses   9,562   1.1     7,125 1.1   34.2
Total operating expenses   269,273   32.2     210,925 32.4   27.7
Operating income 73,751 8.8 56,774 8.7 29.9
Interest expense 3,929 0.5 8,767 1.4 (55.2 )
Loss on early extinguishment of debt         5,442 0.8   (100.0 )
Income before income taxes 69,822 8.3 42,565 6.5 64.0
Provision for income taxes   (1,895 ) (0.3 )   11,008 1.7   (117.2 )
Net income $ 71,717   8.6 % $ 31,557 4.8 % 127.3 %
Basic weighted average shares outstanding 96,199 87,195
Diluted weighted average shares outstanding 104,808 94,900
Basic earnings per share $ 0.75 $ 0.36 108.3 %
Diluted earnings per share $ 0.68 $ 0.33 106.1 %
 

 

Consolidated Balance Sheets
(In thousands, except
share and per share data)
(Unaudited)

   
As of As of
June 28, December 28,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 547 $ 556
Income taxes receivable 15,866 12,472
Receivables, net 41,343 54,041
Inventories, net 432,446 427,950
Prepaid expenses and other current assets   12,107   8,193
Total current assets 502,309 503,212
Fixed assets, net 271,500 220,952
Intangible assets, net 109,346 109,362
Goodwill 227,447 227,447
Other assets   7,808   7,019
Total long-term assets   616,101   564,780
Total assets $ 1,118,410 $ 1,067,992
Liabilities and stockholders' equity
Current liabilities:
Current portion of term loans $ 3,500 $ 3,500
Trade accounts payable 264,987 258,730
Accrued expenses 62,162 74,547
Deferred revenue   4,683   22,523
Total current liabilities 335,332 359,300
Term loans 143,198 144,562
Revolving line of credit 13,600 41,000
Deferred rent 30,650 25,570
Deferred income tax liabilities, net 30,702 27,218
Tenant improvement allowances 27,650 26,779
Other liabilities   2,604   703
Total long-term liabilities   248,404   265,832
Total liabilities   583,736   625,132
Commitments and contingencies
Stockholders' equity
Capital stock:

Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0
shares issued and
outstanding at June 28, 2018 and December
28, 2017

Common stock Class A, $0.001 par value; 450,000,000 shares
authorized; 97,218,543
shares issued and outstanding at June
28, 2018 and 95,509,179 issued and outstanding
at December
28, 2017

97 96

Common stock Class B, $0.001 par value; 10,000,000 shares
authorized; 0 shares
issued and outstanding at June 28, 2018
and 0 shares issued and outstanding at December 28, 2017

Common stock Class C, $0.001 par value; 30,000,000 shares
authorized; 0 shares
issued and outstanding at June 28, 2018
and 0 shares issued and outstanding at December 28, 2017

Additional paid-in capital 335,024 323,419
Accumulated other comprehensive income (loss), net 460 (205)
Retained earnings   199,093   119,550
Total stockholders' equity   534,674   442,860
Total liabilities and stockholders' equity $ 1,118,410 $ 1,067,992
 

 

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
    Twenty-six Weeks Ended
June 28,   June 29,
2018 2017
Operating activities
Net income $ 71,717 $ 31,557
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 23,632 18,058
Non-cash loss on early extinguishment of debt 5,442
Amortization of tenant improvement allowances (2,165) (1,547)
Deferred income taxes 2,822 7,586
Interest cap derivative contracts (794)
Stock based compensation expense 2,952 2,135
Changes in operating assets and liabilities:

 

 

Receivables, net 12,697 (3,967)
Inventories, net (14,989) (73,771)
Other assets (3,306) (1,643)
Trade accounts payable 6,257 85,118
Accrued expenses (21,912) (10,901)
Income taxes (5,320) (7,868)
Deferred revenue 2,441 7,063
Deferred rent 4,955 5,994
Tenant improvement allowances 3,034 3,124
Other   1,902   59
Net cash provided by operating activities 83,923 66,439
Investing activities
Purchases of fixed assets   (63,438)   (45,498)
Net cash used in investing activities (63,438) (45,498)
Financing activities
Borrowings on revolving line of credit 129,300 111,700
Payments on revolving line of credit (156,700) (129,900)
Payments on term loans (1,750) (195,750)
Net proceeds from initial public offering 192,082
Proceeds from exercise of stock options 8,656 1,855
Debt issuance costs     (993)
Net cash used in financing activities   (20,494)   (21,006)
Net decrease in cash and cash equivalents (9) (65)
Cash and cash equivalents, beginning of the period   556   451
Cash and cash equivalents, end of the period $ 547 $ 386
Supplemental disclosures of cash flow information
Cash paid for interest $ 3,844 $ 11,682
Cash paid for income taxes $ 637 $ 11,134
Fixed assets accrued at the end of the period $ 18,596 $ 8,472
Fixed assets acquired as part of lease - paid for by lessor $ $ 1,786
 

   

Reconciliation of GAAP to Non-GAAP Financial Measures
(In
thousands, except EPS)
(Unaudited)

 

Adjusted diluted weighted average shares outstanding

 

Thirteen Weeks Ended

6/28/2018

 

6/29/2017

Diluted weighted average shares outstanding (GAAP)

 104,937

99,919

Adjustments for issuance of shares at IPO

 

 —

   

 3,011

 

Adjusted diluted weighted average shares outstanding

 

 104,937

   

 102,930

 
 
Twenty-six Weeks Ended
6/28/2018 6/29/2017
Diluted weighted average shares outstanding (GAAP) 104,808 94,900
Adjustments for issuance of shares at IPO       6,579  
Adjusted diluted weighted average shares outstanding   104,808     101,479  
 

Adjusted net income and Adjusted diluted EPS

 

Thirteen Weeks Ended

6/28/2018 6/29/2017
Net income (GAAP): $ 39,846 $ 20,429
Interest due to IPO (a) 1,365
Term loan repricing (b) 195
Secondary offering costs (c) 815 285
Hurricane disaster recovery (d) (205 )
Loss on early extinguishment of debt (e) 5,442
Miami distribution center exit (f) 581
Tax benefit of stock option exercises (g) (12,511 ) (4,408 )
Tax impact of adjustments to net income (h)   (153 )   (2,696 )
Adjusted net income $ 28,373   $ 20,612  
Adjusted diluted weighted average shares outstanding 104,937 102,930
Adjusted diluted EPS $ 0.27 $ 0.20
 

Twenty-six Weeks Ended

6/28/2018 6/29/2017
Net income (GAAP): $ 71,717 $ 31,557
Interest due to IPO (a) 4,095
Term loan repricing (b) 686

Secondary offering costs (c)

815 285
Hurricane disaster recovery (d) (516 )
Loss on early extinguishment of debt (e) 5,442
Miami distribution center exit (f) 581
Tax benefit of stock option exercises (g) (17,413 ) (4,408 )
Tax impact of adjustments to net income (h)   (80 )   (3,888 )
Adjusted net income $ 55,104   $ 33,769  
Adjusted diluted weighted average shares outstanding 104,808 101,479
Adjusted diluted EPS $ 0.53 $ 0.33
 

 
(a) Adjustment to decrease interest expense due to utilizing net
proceeds from the IPO of approximately $192.0 million to pay down a
portion of the Term Loan Facility (as described in the Company's
Annual Report for fiscal 2017 filed with the Securities and Exchange
Commission on March 5, 2018 (the "Annual Report")).
(b) Adjustment to reflect the decrease in interest expense due to the
repricing of the Term Loan Facility on March 31, 2017, to lower our
interest rate by 0.75% and another 0.50% effective October 1, 2017
(as described in the Annual Report).
(c)

For the period ended June 28, 2018, reflects costs accrued in
connection with a secondary public offering of the Company's
common stock by certain of the Company's stockholders completed on
May 29, 2018 (the "May 2018 Secondary Offering"). For the period
ended June 29, 2017, reflects costs accrued in connection with a
secondary public offering of the Company's common stock by certain
of the Company's stockholders completed on July 25, 2017 (the
"July 2017 Secondary Offering"). The Company did not sell any
shares in the secondary offerings and did not receive any proceeds
from the sales of shares by the selling stockholders.

(d) Net insurance recoveries from hurricanes Harvey and Irma.
(e) Reflects the use of net proceeds from the IPO of approximately
$192.0 million to repay a portion of the amounts outstanding under
the Term Loan Facility (as described in the Annual Report), which
resulted in a loss on extinguishment of debt in the amount of
approximately $5.4 million in 2017.
(f) Amounts for the thirteen and twenty-six weeks ended June 28, 2018
relate to costs incurred in connection with the closure of the
Company's Miami distribution center.
(g) Tax benefit due to stock option exercises.
(h) Adjustments for taxes related to pre-tax adjustments above.
 
   

EBITDA and Adjusted EBITDA

 
Thirteen Weeks Ended
6/28/2018 6/29/2017
Net income (GAAP) $ 39,846 $ 20,429
Depreciation and amortization (a) 10,683 8,026
Interest expense 2,145 3,353
Loss on early extinguishment of debt (b) 5,442
Income tax expense (benefit)   (4,746)   4,878
EBITDA 47,928 42,128
Stock compensation expense (c) 1,537 1,250
Other (d)   1,218   303
Adjusted EBITDA $ 50,683 $ 43,681
 

Twenty-six Weeks Ended

6/28/2018 6/29/2017
Net income $ 71,717 $ 31,557
Depreciation and amortization (a) 20,911 15,794
Interest expense 3,929 8,767
Loss on early extinguishment of debt (b) 5,442
Income tax expense (benefit)   (1,895)   11,008
EBITDA 94,662 72,568
Stock compensation expense (c) 2,952 2,135
Other (d)   896   875
Adjusted EBITDA $ 98,510 $ 75,578
 

 
(a) Net of amortization of tenant improvement allowances and excludes
deferred financing amortization, which is included as a part of
interest expense in the table above.
(b) Reflects the use of net proceeds from the IPO of approximately
$192.0 million to repay a portion of the amounts outstanding under
the Term Loan Facility, which resulted in a loss on extinguishment
of debt in the amount of approximately $5.4 million in 2017 (as
described in the Annual Report).
(c) Non-cash charges related to stock-based compensation programs, which
vary from period to period depending on timing of awards and
forfeitures.
(d) Other adjustments include amounts management does not consider
indicative of our core operating performance. Amounts for the
thirteen and twenty-six weeks ended June 28, 2018, primarily relate
to costs associated with the May 2018 Secondary Offering, the
closing of the Company's distribution center near Miami, Florida and
expenses, net of insurance recoveries from hurricanes Harvey and
Irma. Amounts for the thirteen and twenty-six weeks ended June 29,
2017, relate to costs associated with the IPO and the July 2017
Secondary Offering.
 

 

Reconciliation of GAAP to Non-GAAP Financial Measures -
Third
Quarter 2018 Sales and Earnings Outlook

(In millions,
except per share data)
(Unaudited)

 

Adjusted net income and Adjusted diluted EPS

       
Thirteen Weeks Ended
9/27/2018 9/28/2017
Low End High End Actual
Net income (GAAP): $ 22.0 $ 23.5 $ 23.3
Term loan repricing (a) 0.2
Secondary offering costs (b) 0.7
Hurricane disaster expenses (c) 0.5
Miami distribution center exit (d) 0.7 0.7
Tax benefit of stock option exercises (e) (6.8)
Tax impact of adjustments to net income (f)   (0.2)   (0.2)   (0.5)
Adjusted net income $ 22.5 $ 24.0 $ 17.3
Adjusted weighted average shares outstanding 105.2 105.2 103.9
Adjusted diluted EPS $ 0.21 $ 0.23 $ 0.17
 
 
(a) Adjustment to reflect the decrease in interest expense due to the
repricing of the Term Loan Facility on March 31, 2017, to lower our
interest rate by 0.75% and another 0.50% effective October 1, 2017
(as described in the Annual Report).
(b) Reflects costs accrued in connection with the July 2017 Secondary
Offering. The Company did not sell any shares in the secondary
offering and did not receive any proceeds from the sales of shares
by the selling stockholders.
(c) Expenses and losses from hurricanes Harvey and Irma recorded in the
third quarter of 2017.
(d) Reflects costs associated with the closing of the Company's Miami
distribution center.
(e) Tax benefit due to stock option exercises.
(f) Adjustment for taxes related to pre-tax adjustments above.
 
 

EBITDA and Adjusted EBITDA

 
    Thirteen Weeks Ended
9/27/2018   9/28/2017
Low End   High End Actual
Net income (GAAP): $ 22.0 $ 23.5 $ 23.3
Depreciation and amortization (a) 12.6 12.6 8.5
Interest expense 2.2 2.2 2.6
Income tax expense   6.7   7.3   2.7
EBITDA 43.5 45.6 37.1
Stock compensation expense (b) 1.7 1.7 1.4
Other (c)   0.7   0.7   1.2
Adjusted EBITDA $ 45.9 $ 48.0 $ 39.7
 

 
(a) Net of amortization of tenant improvement allowances and excludes
deferred financing amortization, which is included as a part of
interest expense in the table above.
(b) Non-cash charges related to stock-based compensation programs, which
vary from period to period depending on timing of awards and
forfeitures.
(c) Other adjustments include amounts management does not consider
indicative of our core operating performance. Amounts for the
thirteen weeks ended September 27, 2018 relate to the closing of the
Company's Miami distribution center. Amounts for the thirteen weeks
ended September 28, 2017, relate to costs associated with the July
2017 Secondary Offering and expenses and losses from hurricanes
Harvey and Irma.
 

   

Reconciliation of GAAP to Non-GAAP Financial Measures
Fiscal
Year 2018 Sales and Earnings Outlook

(In millions, except
per share data)
(Unaudited)

 

Adjusted diluted weighted average shares outstanding

Year Ended
12/27/2018   12/28/2017
Low End   High End Actual
Diluted weighted average shares outstanding (GAAP) 105.1 105.1 99.7
Adjustments for issuance of shares at IPO           3.3  
Adjusted diluted weighted average shares outstanding   105.1     105.1     102.9  
 

Adjusted net income and Adjusted diluted EPS

Year Ended

12/27/2018 12/28/2017
Low End High End Actual
Net income (GAAP): $ 112.9 $ 116.4 $ 102.8
Interest due to IPO (a) 4.1
Term loan repricing (b) 0.9
Secondary offering costs (c) 0.8 0.8 1.7
Hurricane disaster expenses (recovery) (d) (0.5 ) (0.5 ) 0.1
Loss on early extinguishment of debt (e) 5.4
Miami distribution center exit (f) 2.0 2.0
Tax benefit of stock option exercises (g) (17.4 ) (17.4 ) (21.8 )
Research and development tax credits (h) (0.4 )
Deferred tax adjustment for tax reform (i) (17.8 )
Tax impact of adjustments to net income (j)   (0.5 )   (0.5 )   (3.9 )
Adjusted net income $ 97.3   $ 100.8   $ 71.0  
Adjusted weighted average shares outstanding 105.1 105.1 102.9
Adjusted diluted EPS $ 0.93 $ 0.96 $ 0.69
 

Certain numbers may not sum due to rounding

 
(a) Adjustment to decrease interest expense due to utilizing net IPO
proceeds of approximately $192.0 million to pay down a portion of
the Term Loan Facility (as described in the Annual Report).
(b) Adjustment to reflect the decrease in interest expense due to the
repricing of the Term Loan Facility on March 31, 2017, to lower our
interest rate by 0.75% and another 0.50% effective October 1, 2017
(as described in the Annual Report).
(c) Amounts for the year ended 2018 relate to costs accrued in
connection with the May 2018 Secondary Offering. Amounts for the
year ended 2017 relate to costs accrued in connection with the July
2017 Secondary Offering and a secondary public offering of the
Company's common stock by certain of the Company's stockholders
completed on November 20, 2017 (the "November 2017 Secondary
Offering"). The Company did not sell any shares in the secondary
offerings and did not receive any proceeds from the sales of shares
by the selling stockholders.
(d) Expenses and losses, net of recoveries, from hurricanes Harvey and
Irma recorded in 2018 and 2017.
(e) Reflects the use of net proceeds from the IPO of approximately
$192.0 million to repay a portion of the amounts outstanding under
the Term Loan Facility, which resulted in a loss on extinguishment
of debt in the amount of approximately $5.4 million in 2017 (as
described in the Annual Report).
(f) Reflects costs associated with the closing of the Company's Miami
distribution center.
(g) Tax benefit due to stock option exercises.
(h) Research and development tax credits related to prior periods
recorded as a reduction of current year tax expense.
(i) Effect of our deferred tax rate adjustment to reflect the expected
rate our deferred tax liabilities and assets will actualize at in
future periods related to the 2017 tax reform act passed in December
2017.
(j) Adjustment for taxes related to pre-tax adjustments above.
 

       

EBITDA and Adjusted EBITDA

 
Year Ended
12/27/2018 12/28/2017
Low End High End Actual
Net income (GAAP): $ 112.9 $ 116.4 $ 102.8
Depreciation and amortization (a) 47.5 47.5 33.5
Interest expense 8.3 8.3 13.8
Loss on early extinguishment of debt (b) 5.4
Income tax expense   10.7   11.7   (4.2)
EBITDA 179.4 183.9 151.3
Stock compensation expense (c) 6.9 6.9 5.0
Loss on asset disposal 0.1 0.1 0.1
Other (d)   2.3   2.3   2.4
Adjusted EBITDA $ 188.7 $ 193.2 $ 158.8
 
 
(a) Net of amortization of tenant improvement allowances and excludes
deferred financing amortization, which is included as a part of
interest expense in the table above.
(b) Reflects the use of net proceeds from the IPO of approximately
$192.0 million to repay a portion of the amounts outstanding under
the Term Loan Facility, which resulted in a loss on extinguishment
of debt in the amount of approximately $5.4 million (as described in
the Annual Report).
(c) Non-cash charges related to stock-based compensation programs, which
vary from period to period depending on timing of awards and
forfeitures.
(d) Other adjustments include amounts management does not consider
indicative of our core operating performance. Amounts for the year
ended 2018 relate to costs associated with the closing of the May
2018 Secondary Offering, the closing of the Company's Miami
distribution center and expenses, net of insurance recoveries from
hurricanes Harvey and Irma. Amounts for the year ended 2017 relate
to costs associated with the IPO, the July 2017 Secondary Offering
and November 2017 Secondary Offering, and expenses and losses, net
of recoveries, from hurricanes Harvey and Irma.
 

Forward-Looking Statements

This release and the associated webcast/conference call contain
forward-looking statements, including with respect to the Company's
estimated net sales, comparable store sales growth, diluted EPS,
Adjusted diluted EPS, diluted weighted average shares outstanding,
Adjusted EBITDA, warehouse format store count and new warehouse format
stores for both the thirteen weeks ended September 27, 2018 and all of
fiscal 2018 and with respect to the Company's estimated depreciation and
amortization expenses, interest expense, tax rate and capital
expenditures for fiscal 2018. All statements other than statements of
historical fact contained in this release, including statements
regarding the Company's future operating results and financial position,
business strategy and plans and objectives of management for future
operations, are forward-looking statements. These statements involve
known and unknown risks, uncertainties and other important factors that
may cause the Company's actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
Forward-looking statements are based on management's current
expectations and assumptions regarding the Company's business, the
economy and other future conditions, including the impact of recent
natural disasters on sales.

In some cases, you can identify forward-looking statements by terms such
as "may," "will," "should," "expects," "intends," "plans,"
"anticipates," "could," "seeks," "intends," "target," "projects,"
"contemplates," "believes," "estimates," "predicts," "budget,"
"potential," "focused on" or "continue" or the negative of these terms
or other similar expressions. The forward-looking statements contained
in this release are only predictions. Although the Company believes that
the expectations reflected in the forward-looking statements in this
release are reasonable, the Company cannot guarantee future events,
results, performance or achievements. A number of important factors
could cause actual results to differ materially from those indicated by
the forward-looking statements in this release or the associated
webcast/conference call, including, without limitation, those factors
described in Item 1A, "Risk Factors" of Part I and Item 7, "Special Note
Regarding Forward-Looking Statements," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of Part II of
the Annual Report, and "Business" sections and elsewhere in the Annual
Report.

Because forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified, you
should not rely on these forward-looking statements as predictions of
future events. The forward-looking statements contained in this release
or the associated webcast/conference call speak only as of the date
hereof. New risks and uncertainties arise over time, and it is not
possible for the Company to predict those events or how they may affect
the Company. If a change to the events and circumstances reflected in
the Company's forward-looking statements occurs, the Company's business,
financial condition and operating results may vary materially from those
expressed in the Company's forward-looking statements. Except as
required by applicable law, the Company does not plan to publicly update
or revise any forward-looking statements contained herein or in the
associated webcast/conference call, whether as a result of any new
information, future events or otherwise, including the Company's
estimated net sales, comparable store sales growth, diluted EPS,
Adjusted diluted EPS, diluted weighted average shares outstanding,
Adjusted EBITDA, warehouse format store count and new warehouse format
stores for both the thirteen weeks ended September 27, 2018 and all of
fiscal 2018 and with respect to the Company's estimated depreciation and
amortization expenses, interest expense, tax rate and capital
expenditures for fiscal 2018.

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