Lumber Liquidators Settles With CARB; Stock Rips 15%

Lumber Liquidators Holdings Inc LL is up 15 percent at $13.84. The significant rally follows news that the company has resolved an inquiry by the California Air Resource Board (CARB).

In a press release, it was confirmed that the agreement between Lumber Liquidators and CARB "fully resolves the previously disclosed inquiry."

The inquiry involved laminate flooring products, which were sourced from China and have not been available for purchase since May 2015.

The Agreement

According to the SEC Form 8-K, "The Settlement Agreement does not constitute an admission of any wrongdoing by LL, the Company or any other entity and provides that CARB releases LL and its related parties from any and all claims that CARB may have pertaining to those products […] Under the terms of the Settlement Agreement, LL agreed to pay a total sum of $2.5 million upon execution of the Settlement Agreement. LL also agreed to implement certain voluntary measures, including a risk based supplier audit program and testing research program as described in the Settlement Agreement."

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The press release explained that the agreement entails Lumber Liquidators to "implement a series of voluntary compliance procedures to ensure that all of the Company's flooring products comply with CARB's formaldehyde standards."

CARB's standards are widely considered the "most stringent in the country."

The pair have agreed to work together to pioneer a program to test flooring products "designed to establish best practices and protocols for testing flooring products."

According to the press release, "This program will set a new standard for the industry and ensure that all products are tested appropriately and consistently on behalf of consumers and businesses."

CEO Jon Presley commented, "Consumer safety is our top priority, and over the past year, we have implemented a number of consumer-focused initiatives."

He continued, "We strengthened our quality assurance procedures, launched the largest voluntary testing program in our nation's history and, in May 2015, voluntarily suspended the sale of all laminate flooring sourced from China.

"We look forward to continuing to work with CARB to establish new industry standards for flooring product testing. We believe today's settlement will go a long way in helping us to execute our strategy, which includes rebuilding our brand and communicating – with clarity and candor – the value of our products to our customers and stakeholders," Presley concluded.

Image credit: Dwight Burdette, Wikimedia