Company Quick10K Filing
Lumber Liquidators
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 29 $325
10-Q 2019-11-06 Quarter: 2019-09-30
10-Q 2019-08-07 Quarter: 2019-06-30
10-Q 2019-04-30 Quarter: 2019-03-31
10-K 2019-03-18 Annual: 2018-12-31
10-Q 2018-10-30 Quarter: 2018-09-30
10-Q 2018-07-31 Quarter: 2018-06-30
10-Q 2018-05-01 Quarter: 2018-03-31
10-K 2018-02-27 Annual: 2017-12-31
10-Q 2017-10-31 Quarter: 2017-09-30
10-Q 2017-08-01 Quarter: 2017-06-30
10-Q 2017-05-02 Quarter: 2017-03-31
10-K 2017-02-21 Annual: 2016-12-31
10-Q 2016-10-31 Quarter: 2016-09-30
10-Q 2016-07-27 Quarter: 2016-06-30
10-Q 2016-05-10 Quarter: 2016-03-31
10-K 2016-02-29 Annual: 2015-12-31
10-Q 2015-11-04 Quarter: 2015-09-30
10-Q 2015-08-05 Quarter: 2015-06-30
10-Q 2015-04-29 Quarter: 2015-03-31
10-K 2015-02-25 Annual: 2014-12-31
10-Q 2014-10-22 Quarter: 2014-09-30
10-Q 2014-07-30 Quarter: 2014-06-30
10-Q 2014-04-30 Quarter: 2014-03-31
10-K 2014-02-19 Annual: 2013-12-31
10-Q 2013-10-23 Quarter: 2013-09-30
10-Q 2013-07-24 Quarter: 2013-06-30
10-Q 2013-04-24 Quarter: 2013-03-31
10-K 2013-02-20 Annual: 2012-12-31
10-Q 2012-10-24 Quarter: 2012-09-30
10-Q 2012-07-25 Quarter: 2012-06-30
10-Q 2012-04-25 Quarter: 2012-03-31
10-K 2012-02-22 Annual: 2011-12-31
10-Q 2011-10-27 Quarter: 2011-09-30
10-Q 2011-07-26 Quarter: 2011-06-30
10-Q 2011-04-27 Quarter: 2011-03-31
10-K 2011-02-23 Annual: 2010-12-31
10-Q 2010-11-09 Quarter: 2010-09-30
10-Q 2010-08-04 Quarter: 2010-06-30
10-Q 2010-04-28 Quarter: 2010-03-31
10-K 2010-02-18 Annual: 2009-12-31
8-K 2020-02-05 Officers, Amend Bylaw, Regulation FD, Exhibits
8-K 2019-12-12 Regulation FD, Exhibits
8-K 2019-11-18 Other Events
8-K 2019-11-06 Earnings, Exhibits
8-K 2019-09-30 Enter Agreement
8-K 2019-09-09 Regulation FD, Exhibits
8-K 2019-09-09 Enter Agreement
8-K 2019-08-27 Regulation FD, Exhibits
8-K 2019-08-19 Officers, Exhibits
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-06-19 Regulation FD, Exhibits
8-K 2019-05-22 Officers, Shareholder Vote, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-03-29 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-03-15 Earnings, Officers, Exhibits
8-K 2019-03-12 Enter Agreement, Exhibits
8-K 2018-11-07 Regulation FD, Exhibits
8-K 2018-11-07 Officers
8-K 2018-10-30 Earnings, Exhibits
8-K 2018-09-28 Officers, Exhibits
8-K 2018-08-02 Regulation FD, Exhibits
8-K 2018-07-31 Earnings, Exhibits
8-K 2018-07-26 Officers, Other Events, Exhibits
8-K 2018-05-23 Shareholder Vote, Other Events, Exhibits
8-K 2018-05-09 Regulation FD, Exhibits
8-K 2018-05-01 Earnings, Exhibits
8-K 2018-03-28 Officers
8-K 2018-03-15 Enter Agreement
8-K 2018-02-27 Earnings, Exhibits
LL 2019-09-30
Part Ifinancial Information
Item 1. Financial Statements.
Note 1. Basis of Presentation
Note 2. Summary of Significant Accounting Policies
Note 3. Stockholders’ Equity
Note 4. Stock-Based Compensation
Note 5. Credit Agreement
Note 6. Income Taxes
Note 7.Leases
Note 8. Commitments and Contingencies
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part Iiother Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-10.1 ll-20190930ex101230105.htm
EX-10.2 ll-20190930ex102c5dfa6.htm
EX-31.1 ll-20190930ex311787183.htm
EX-31.2 ll-20190930ex312be8182.htm
EX-32.1 ll-20190930ex321aef999.htm

Lumber Liquidators Earnings 2019-09-30

LL 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
BLDR 1,837 3,250 2,546 7,470 1,975 228 391 3,276 26% 8.4 7%
BMCH 1,411 1,811 892 3,622 932 120 248 1,601 26% 6.4 7%
GMS 1,189 2,274 1,612 3,185 1,033 72 306 2,340 32% 7.7 3%
BCC 996 1,733 1,028 4,676 0 -19 167 1,234 0% 7.4 -1%
FBM 817 1,450 1,067 2,133 634 2 131 1,383 30% 10.6 0%
LL 325 578 437 1,094 393 -59 -40 313 36% -7.8 -10%
ASPN 153 102 41 117 14 -32 -22 149 12% -6.9 -31%
HBP 61 334 285 834 164 -20 5 219 20% 45.6 -6%
JCTCF 36 22 2 34 10 2 2 33 31% 14.8 10%
SGBX 4 8 2 7 1 -4 -4 4 17% -1.1 -51%

10-Q 1 ll-20190930x10q.htm 10-Q ll_Current_Folio_10Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

or

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to             

Commission File Number: 001-33767

 

Picture 2

Lumber Liquidators Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

27-1310817

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

3000 John Deere Road

Toano,  Virginia

23168

(Address of Principal Executive Offices)

(Zip Code)

 

(757) 259-4280

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class:

 

Trading Symbol:

 

Name of exchange on which registered:

Common Stock, par value $0.001 per share

 

LL

 

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒  Yes  ◻  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒  Yes  ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2  of the Exchange Act:

 

 

 

 

 

◻  Large accelerated filer

☒  Accelerated filer

◻  Non-accelerated filer

  Smaller reporting company

  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).    Yes   ☒  No

As of November 1, 2019, there are 28,709,830 shares of the registrant’s common stock, par value of $0.001 per share, outstanding.

 

 

 

 

LUMBER LIQUIDATORS HOLDINGS, INC.

Quarterly Report on Form 10‑Q

For the quarter ended September 30, 2019

 

TABLE OF CONTENTS

 

 

1

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements.

Lumber Liquidators Holdings, Inc.
Condensed Consolidated
Balance Sheets
(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31, 

 

    

2019

    

2018

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

5,605

 

$

11,565

Merchandise Inventories

 

 

306,881

 

 

318,272

Prepaid Expenses

 

 

9,170

 

 

6,299

Deposit for Legal Settlement

 

 

21,500

 

 

21,500

Other Current Assets

 

 

9,360

 

 

8,667

Total Current Assets

 

 

352,516

 

 

366,303

Property and Equipment, net

 

 

94,052

 

 

93,689

Operating Lease Right-of-Use

 

 

111,364

 

 

 —

Goodwill

 

 

9,693

 

 

9,693

Other Assets

 

 

5,724

 

 

5,832

Total Assets

 

$

573,349

 

$

475,517

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts Payable

 

$

59,200

 

$

73,412

Customer Deposits and Store Credits

 

 

45,036

 

 

40,332

Accrued Compensation

 

 

10,870

 

 

9,265

Sales and Income Tax Liabilities

 

 

4,906

 

 

4,200

Accrual for Legal Matters and Settlements Current

 

 

68,475

 

 

97,625

Operating Lease Liabilities - Current

 

 

30,708

 

 

 —

Other Current Liabilities

 

 

18,476

 

 

17,290

Total Current Liabilities

 

 

237,671

 

 

242,124

Other Long-Term Liabilities

 

 

13,645

 

 

20,203

Operating Lease Liabilities - Long-Term

 

 

88,103

 

 

 —

Deferred Tax Liability

 

 

898

 

 

792

Credit Agreement

 

 

89,500

 

 

65,000

Total Liabilities

 

 

429,817

 

 

328,119

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common Stock ($0.001 par value; 35,000 shares authorized; 29,953 and 31,578 shares issued and 28,710 and 28,627 shares outstanding, respectively)

 

 

30

 

 

32

Treasury Stock, at cost (1,243 and 2,951 shares, respectively)

 

 

(142,299)

 

 

(141,828)

Additional Capital

 

 

217,365

 

 

213,744

Retained Earnings

 

 

70,100

 

 

76,835

Accumulated Other Comprehensive Loss

 

 

(1,664)

 

 

(1,385)

Total Stockholders’ Equity

 

 

143,532

 

 

147,398

Total Liabilities and Stockholders’ Equity

 

$

573,349

 

$

475,517

 

See accompanying notes to condensed consolidated financial statements

2

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

    

2019

    

2018

    

2019

    

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Merchandise Sales

 

$

229,241

 

$

236,380

 

$

717,799

 

$

721,822

 

Net Services Sales

 

 

34,719

 

 

34,089

 

 

100,949

 

 

93,893

 

Total Net Sales

 

 

263,960

 

 

270,469

 

 

818,748

 

 

815,715

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Merchandise Sold

 

 

142,404

 

 

144,490

 

 

451,631

 

 

449,508

 

Cost of Services Sold

 

 

25,882

 

 

25,297

 

 

75,345

 

 

69,243

 

Total Cost of Sales

 

 

168,286

 

 

169,787

 

 

526,976

 

 

518,751

 

Gross Profit

 

 

95,674

 

 

100,682

 

 

291,772

 

 

296,964

 

Selling, General and Administrative Expenses

 

 

93,495

 

 

93,987

 

 

294,392

 

 

292,628

 

Operating Income (Loss)

 

 

2,179

 

 

6,695

 

 

(2,620)

 

 

4,336

 

Other Expense

 

 

909

 

 

547

 

 

3,265

 

 

1,214

 

Income (Loss) Before Income Taxes

 

 

1,270

 

 

6,148

 

 

(5,885)

 

 

3,122

 

Income Tax Expense

 

 

225

 

 

225

 

 

850

 

 

625

 

Net Income (Loss)

 

$

1,045

 

$

5,923

 

$

(6,735)

 

$

2,497

 

Net Income (Loss) per Common Share—Basic

 

$

0.04

 

$

0.21

 

$

(0.23)

 

$

0.09

 

Net Income (Loss) per Common Share—Diluted

 

$

0.04

 

$

0.21

 

$

(0.23)

 

$

0.09

 

Weighted Average Common Shares Outstanding:

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

 

28,706

 

 

28,602

 

 

28,681

 

 

28,552

 

Diluted

 

 

28,786

 

 

28,757

 

 

28,681

 

 

28,769

 

 

See accompanying notes to condensed consolidated financial statements

3

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss) 
(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

    

2019

    

2018

    

2019

    

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

1,045

 

$

5,923

 

$

(6,735)

 

$

2,497

 

Other Comprehensive Income (Loss):

 

 

  

 

 

  

 

 

  

 

 

  

 

Foreign Currency Translation Adjustments

 

 

(87)

 

 

69

 

 

(279)

 

 

(36)

 

Total Other Comprehensive Income (Loss)

 

 

(87)

 

 

69

 

 

(279)

 

 

(36)

 

Comprehensive Income (Loss)

 

$

958

 

$

5,992

 

$

(7,014)

 

$

2,461

 

 

See accompanying notes to condensed consolidated financial statements

4

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Common Stock

 

Treasury Stock

 

Additional

 

Retained

 

 

 

 

Stockholders'

 

    

Shares

    

Value

    

Shares

    

Value

    

Capital

    

Earnings

    

AOCL

    

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 1, 2018

 

28,551

 

$

31

 

2,935

 

$

(141,542)

 

$

210,953

 

$

127,788

 

$

(1,257)

 

$

195,973

Stock-Based Compensation Expense

 

 —

 

 

 —

 

 —

 

 

 —

 

 

1,117

 

 

 —

 

 

 —

 

 

1,117

Exercise of Stock Options

 

38

 

 

 —

 

 —

 

 

 —

 

 

690

 

 

 —

 

 

 —

 

 

690

Release of Restricted Shares

 

31

 

 

 1

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 1

Common Stock Repurchased

 

 —

 

 

 —

 

14

 

 

(266)

 

 

 —

 

 

 —

 

 

 —

 

 

(266)

Translation Adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

69

 

 

69

Net Income

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

5,923

 

 

 —

 

 

5,923

September 30, 2018

 

28,620

 

$

32

 

2,949

 

$

(141,808)

 

$

212,760

 

$

133,711

 

$

(1,188)

 

$

203,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 1, 2019

 

28,701

 

$

30

 

1,239

 

$

(142,269)

 

$

216,159

 

$

69,055

 

$

(1,577)

 

$

141,398

Stock-Based Compensation Expense

 

 —

 

 

 —

 

 —

 

 

 —

 

 

1,206

 

 

 —

 

 

 —

 

 

1,206

Release of Restricted Shares

 

 9

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Common Stock Repurchased and Transferred

 

 —

 

 

 —

 

 4

 

 

(30)

 

 

 —

 

 

 —

 

 

 —

 

 

(30)

Translation Adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(87)

 

 

(87)

Net Income

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

1,045

 

 

 —

 

 

1,045

September 30, 2019

 

28,710

 

$

30

 

1,243

 

$

(142,299)

 

$

217,365

 

$

70,100

 

$

(1,664)

 

$

143,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Common Stock

 

Treasury Stock

 

Additional

 

Retained

 

 

 

Stockholders'

 

    

Shares

    

Value

    

Shares

    

Value

    

Capital

    

Earnings

    

AOCL

     

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2018

 

28,490

 

$

31

 

2,907

 

$

(140,875)

 

$

208,629

 

$

131,214

 

$

(1,152)

 

$

197,847

Stock-Based Compensation Expense

 

 —

 

 

 —

 

 —

 

 

 —

 

 

3,361

 

 

 —

 

 

 —

 

 

3,361

Exercise of Stock Options

 

43

 

 

 —

 

 —

 

 

 —

 

 

770

 

 

 —

 

 

 —

 

 

770

Release of Restricted Shares

 

87

 

 

 1

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 1

Common Stock Repurchased

 

 —

 

 

 —

 

42

 

 

(933)

 

 

 —

 

 

 —

 

 

 —

 

 

(933)

Translation Adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(36)

 

 

(36)

Net Income

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

2,497

 

 

 —

 

 

2,497

September 30, 2018

 

28,620

 

$

32

 

2,949

 

$

(141,808)

 

$

212,760

 

$

133,711

 

$

(1,188)

 

$

203,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2019

 

28,627

 

$

32

 

2,951

 

$

(141,828)

 

$

213,744

 

$

76,835

 

$

(1,385)

 

$

147,398

Stock-Based Compensation Expense

 

 —

 

 

 —

 

 —

 

 

 —

 

 

3,621

 

 

 —

 

 

 —

 

 

3,621

Release of Restricted Shares

 

83

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Common Stock Repurchased and Transferred

 

 —

 

 

(2)

 

(1,708)

 

 

(471)

 

 

 —

 

 

 —

 

 

 —

 

 

(473)

Translation Adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(279)

 

 

(279)

Net Loss

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(6,735)

 

 

 —

 

 

(6,735)

September 30, 2019

 

28,710

 

$

30

 

1,243

 

$

(142,299)

 

$

217,365

 

$

70,100

 

$

(1,664)

 

$

143,532

 

See accompanying notes to condensed consolidated financial statements

5

Lumber Liquidators Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

    

2019

    

2018

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

  

 

 

  

Net (Loss) Income

 

$

(6,735)

 

$

2,497

Adjustments to Reconcile Net (Loss) Income:

 

 

  

 

 

  

Depreciation and Amortization

 

 

12,903

 

 

14,042

Stock-Based Compensation Expense

 

 

3,621

 

 

3,131

(Gain) Loss on Disposal of Fixed Assets

 

 

(284)

 

 

1,812

Changes in Operating Assets and Liabilities:

 

 

  

 

 

  

Merchandise Inventories

 

 

10,270

 

 

(44,450)

Accounts Payable

 

 

(14,186)

 

 

(3,196)

Customer Deposits and Store Credits

 

 

4,810

 

 

5,079

Prepaid Expenses and Other Current Assets

 

 

(3,665)

 

 

1,153

Accrual for Legal Matters and Settlements

 

 

4,575

 

 

2,951

Payments for Legal Matters and Settlements

 

 

(33,725)

 

 

(2,264)

Other Assets and Liabilities

 

 

5,341

 

 

(6,584)

Net Cash Used in Operating Activities

 

 

(17,075)

 

 

(25,829)

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

  

 

 

  

Purchases of Property and Equipment

 

 

(13,523)

 

 

(10,651)

Other Investing Activities

 

 

419

 

 

553

Net Cash Used in Investing Activities

 

 

(13,104)

 

 

(10,098)

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

  

 

 

  

Borrowings on Credit Agreement

 

 

85,500

 

 

37,000

Payments on Credit Agreement

 

 

(61,000)

 

 

(9,000)

Payments on Financed Insurance Obligations

 

 

 -

 

 

(612)

Other Financing Activities

 

 

(1,104)

 

 

(163)

Net Cash Provided by Financing Activities

 

 

23,396

 

 

27,225

Effect of Exchange Rates on Cash and Cash Equivalents

 

 

823

 

 

595

Net Decrease in Cash and Cash Equivalents

 

 

(5,960)

 

 

(8,107)

Cash and Cash Equivalents, Beginning of Period

 

 

11,565

 

 

19,938

Cash and Cash Equivalents, End of Period

 

$

5,605

 

$

11,831

 

See accompanying notes to condensed consolidated financial statements

6

Lumber Liquidators Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Amounts in thousands, except per share amounts)

Note 1.       Basis of Presentation

Lumber Liquidators Holdings, Inc. and its direct and indirect subsidiaries (collectively and, where applicable, individually, the “Company”) engage in business as a multi-channel specialty retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories, operating as a single operating segment. The Company offers an extensive assortment of exotic and domestic hardwood species, engineered hardwood, laminate, resilient vinyl, waterproof vinyl plank and porcelain tile flooring direct to the consumer. The Company also features the renewable flooring products, bamboo and cork, and provides a wide selection of flooring enhancements and accessories, including moldings, noise-reducing underlayment, adhesives and flooring tools. The Company also provides in-home delivery and installation services to its customers. The Company sells primarily to homeowners or to contractors on behalf of homeowners through a network of store locations in metropolitan areas. As of September 30, 2019, the Company’s stores spanned 47 states in the United States (“U.S.”) and included eight stores in Canada. In addition to the store locations, the Company’s products may be ordered, and customer questions/concerns addressed, through both its call center in Toano, Virginia and its website, www.lumberliquidators.com. Until January 2019, the Company finished the majority of its Bellawood products on its finishing lines in Toano, Virginia, which along with the call center, corporate offices, and a distribution center, represent the “Corporate Headquarters.” In July of 2018, the Company announced its plan to sell its finishing line equipment to an unaffiliated third-party purchaser and to relocate its corporate headquarters to Richmond, Virginia, in 2019. The Company ceased finishing floors in January 2019.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10‑Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal and recurring adjustments except those otherwise described herein) considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. However, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s annual report filed on Form 10‑K for the year ended December 31, 2018.

The condensed consolidated financial statements of the Company include the accounts of its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of future results to be expected for the full year due to a number of factors, including seasonality.

 

Note 2.       Summary of Significant Accounting Policies

Fair Value of Financial Instruments

 

The carrying amounts of financial instruments such as cash and cash equivalents, accounts payable and other liabilities approximate fair value because of the short-term nature of these items. The carrying amount of obligations under the Credit Agreement approximates fair value due to the variable rate of interest.

 

Merchandise Inventories

 

The Company values merchandise inventories at the lower of merchandise cost or net realizable value. The Company determines merchandise cost using the weighted average method.  All of the hardwood flooring the Company purchases from suppliers is either prefinished or unfinished and in immediate saleable form. Inventory cost includes the costs of bringing an article to its existing condition and location, such as shipping and handling and import tariffs. The Company periodically reviews the carrying value of items in inventory and records a lower of cost or net realizable value

7

adjustment when there is evidence that the utility of inventory will be less than its cost. In determining net realizable value, the Company makes judgments and estimates as to the market value of its products, based on factors such as historical results and current sales trends. Although the Company believes its products are appropriately valued as of the balance sheet date, there can be no assurance that future events or changes in key assumptions would not significantly impact their value.

 

Recognition of Net Sales

The Company generates revenues primarily by retailing merchandise flooring and accessories in the form of solid and engineered hardwood, bamboo, cork, laminate, resilient vinyl, waterproof vinyl plank and porcelain tile flooring. Additionally, the Company expands its revenues by offering services to deliver and/or install this merchandise for its customers; it considers these services to be separate performance obligations. The separate performance obligations are detailed on the customer’s invoice(s) and the customer often purchases flooring merchandise without purchasing installation or delivery services. Sales occur through a network of 419 stores, which spanned 47 states including eight stores in Canada, at September 30, 2019. In addition, both the merchandise and services can be ordered through a call center and from the Company’s website, www.lumberliquidators.com. The Company’s agreements with its customers are of short duration (less than a year) and as such the Company has elected not to disclose revenue for partially satisfied contracts that will be completed in the days following the end of a period as permitted by GAAP. The Company reports its revenues exclusive of sales taxes collected from customers and remitted to governmental taxing authorities, consistent with past practice.

Revenue is based on consideration specified in a contract with a customer, and excludes any sales incentives from vendors and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer or performing service for a customer. Revenues from installation and delivery services are recognized when the delivery is made or the installation is complete, which approximates the recognition of revenue over time due to the short duration of service provided. The price of the Company’s merchandise and services are specified in the respective contracts and detailed on the invoice reviewed with the customer including any discounts. The Company generally requires customers to pay a deposit, equal to approximately half of the retail sales value, when ordering merchandise not regularly carried in a given location or not currently in stock. In addition, the Company generally does not extend credit to its customers with payment due in full at the time the customer takes possession of merchandise or when the service is provided. Customer payments and deposits received in advance of the customer taking possession of the merchandise or receiving the services are recorded as deferred revenues in the accompanying condensed consolidated balance sheet caption Customer Deposits and Store Credits.

The following table shows the activity in this account for the periods noted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

    

2019

    

2018

    

2019

    

2018

Customer Deposits and Store Credits, Beginning Balance

 

$

(42,888)

 

$

(45,347)

 

$

(40,332)

 

$

(38,546)

New Deposits

 

 

(281,747)

 

 

(285,047)

 

 

(876,010)

 

 

(873,450)

Recognition of Revenue

 

 

263,960

 

 

270,469

 

 

818,748

 

 

815,715

Sales Tax included in Customer Deposits

 

 

15,982

 

 

16,622

 

 

50,246

 

 

50,715

Other

 

 

(343)

 

 

(210)

 

 

2,312

 

 

2,053

Customer Deposits and Store Credits, Ending Balance

 

$

(45,036)

 

$

(43,513)

 

$

(45,036)

 

$

(43,513)

 

Subject to limitations under the Company’s policy, return of unopened merchandise is accepted for 90 days. The amount of revenue recognized for flooring merchandise is adjusted for expected returns, which are estimated based on the Company’s historical data, current sales levels, and forecasted economic trends. The Company uses the expected value method to estimate returns because it has a large number of contracts with similar characteristics. The Company reduces revenue by the amount of expected returns and records it within accrued expenses and other on the condensed consolidated balance sheet.  The Company continues to estimate the amount of returns based on the historical data. In addition, the Company recognizes a related asset for the right to recover returned merchandise and records it in the other

8

current assets caption of the accompanying condensed consolidated balance sheet. This amount was $1.2 million at September 30, 2019. The Company recognizes sales commissions as incurred since the amortization period is less than one year. The Company offers a range of limited warranties for the durability of the finish on its prefinished products. These limited warranties range from one to 100 years, with limited lifetime warranties for certain of the Company’s products. Warranty reserves are based primarily on claims experience, sales history and other considerations. Warranty costs are recorded in cost of sales.

In total, the Company offers hundreds of different flooring products; however, no single flooring product represented a significant portion of its sales mix. By major product category, the Company’s sales mix was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2019

    

2018

    

2019

 

2018

 

Manufactured Products 1

 

$

108,825

 

41

%  

$

98,580

 

36

%  

$

337,479

 

41

%

$

289,431

 

35

%

Solid and Engineered Hardwood

 

 

76,358

    

29

%  

 

89,700

    

33

%