On August 1, 2024, Floor & Decor Holdings Inc (FND, Financial) released its 8-K filing detailing the financial results for the second quarter of fiscal 2024, which ended on June 27, 2024. Floor & Decor Holdings Inc operates as a specialty retailer in the hard surface flooring market, offering a range of tile, wood, laminate, and natural stone flooring products, as well as decorative and installation accessories at everyday low prices. The company serves professional installers, commercial businesses, DIY customers, and those who buy products for professional installation, primarily in the United States and through its e-commerce site.
Quarterly Performance Highlights
Floor & Decor Holdings Inc reported net sales of $1,133.1 million for the second quarter, a slight decrease of 0.2% from $1,135.9 million in the same period last year. This figure fell short of the analyst estimate of $1,150.49 million. Comparable store sales decreased by 9.0%, reflecting ongoing challenges in the housing market and discretionary spending on large projects.
Despite the revenue miss, the company reported diluted earnings per share (EPS) of $0.52, surpassing the analyst estimate of $0.51 but down from $0.66 in the same quarter last year. The gross margin rate exceeded expectations, which, along with prudent expense management, helped mitigate the impact of weaker sales.
Financial Achievements and Challenges
Floor & Decor Holdings Inc opened five new warehouse stores during the quarter, bringing the total to 230 warehouse stores and five design studios. The company plans to open 30 new warehouse stores in 2024, aligning with its long-term growth strategy to operate 500 warehouse-format stores in the United States.
Tom Taylor, Chief Executive Officer, stated, “We and our industry continue to contend with monetary policy affecting the housing market and repair and remodeling spending, including ongoing soft demand for large project discretionary hard surface flooring. Consequently, our second quarter total and comparable store sales were modestly below our expectations. However, our gross margin rate exceeded our expectations, which, coupled with prudent expense management, helped mitigate most of the impact from weak sales.”
Income Statement and Key Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Sales | $1,133.1 million | $1,135.9 million | -0.2% |
| Operating Income | $71.3 million | $95.0 million | -24.9% |
| Net Income | $56.7 million | $71.5 million | -20.7% |
| Diluted EPS | $0.52 | $0.66 | -21.2% |
Operating income for the quarter was $71.3 million, a decrease of 24.9% from $95.0 million in the same period last year. The operating margin decreased by 210 basis points to 6.3%. Net income was $56.7 million, down 20.7% from $71.5 million in Q2 2023. Adjusted EBITDA was $136.9 million, a decrease of 10.4% from $152.8 million in the same period last year.
Balance Sheet and Cash Flow
As of June 27, 2024, Floor & Decor Holdings Inc reported total assets of $4,818.1 million, up from $4,662.6 million at the end of 2023. The company’s cash and cash equivalents increased significantly to $138.1 million from $34.4 million. Total liabilities stood at $2,771.5 million, with stockholders' equity at $2,046.6 million.
Net cash provided by operating activities for the first half of fiscal 2024 was $341.5 million, compared to $476.6 million in the same period last year. The decrease was primarily due to changes in working capital and lower net income.
Outlook and Strategic Initiatives
Looking ahead, Floor & Decor Holdings Inc has updated its outlook for the fiscal year ending December 26, 2024. The company expects net sales to be in the range of $4,400 million to $4,490 million, with comparable store sales declining by approximately 8.5% to 6.5%. Diluted EPS is projected to be between $1.55 and $1.75, and adjusted EBITDA is expected to range from $480 million to $505 million.
Floor & Decor Holdings Inc continues to focus on expanding its market share and maintaining profitability in a challenging market environment. The company’s strategic initiatives, including new store openings and prudent expense management, are aimed at positioning it for strong growth when industry fundamentals improve.
Explore the complete 8-K earnings release (here) from Floor & Decor Holdings Inc for further details.
