Group 1 - The core viewpoint is that the analyst maintains a hold rating on Floor & Decor Holdings due to concerns about the business recovery and visible headwinds [1] - The analyst emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and robust balance sheets [1] - There is a disagreement with the notion that low multiple stocks are inherently cheap, highlighting the importance of valuation in investment decisions [1] Group 2 - The analyst expresses that investing in successful companies carries risks, particularly the risk of overpaying for stocks [1] - The potential for significant development in certain companies may lessen the immediate importance of price [1]

Financial Performance - Floor & Decor reported revenue of $1.16 billion for the quarter ended March 2025, reflecting a year-over-year increase of 5.8% [1] - The earnings per share (EPS) for the same period was $0.45, slightly down from $0.46 a year ago [1] - The reported revenue was a surprise of -0.31% compared to the Zacks Consensus Estimate of $1.16 billion, while the EPS met the consensus estimate [1] Key Metrics - Comparable store sales decreased by 1.8%, which was below the nine-analyst average estimate of -1.2% [4] - The total number of warehouse stores was 254, slightly below the average estimate of 255 based on four analysts [4] - The company opened 4 new warehouse stores, exceeding the average estimate of 3 from two analysts [4] Stock Performance - Shares of Floor & Decor have returned -13% over the past month, compared to a -0.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - Floor & Decor (FND) reported quarterly earnings of $0.45 per share, matching the Zacks Consensus Estimate, but down from $0.46 per share a year ago [1] - The company posted revenues of $1.16 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.31%, compared to $1.1 billion in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times, but has topped consensus revenue estimates only once [2][3] Stock Movement and Outlook - Floor & Decor shares have declined approximately 28.4% since the beginning of the year, contrasting with the S&P 500's decline of 5.3% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.56 on revenues of $1.23 billion, and for the current fiscal year, it is $1.99 on revenues of $4.83 billion [7] Industry Context - The Retail - Home Furnishings industry, to which Floor & Decor belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Floor & Decor's stock performance [5][6]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $0.45 for Q1 fiscal 2025, a slight decrease from $0.46 in the same period last year [8] - Total sales increased by 5.8% to $1.161 billion from $1.097 billion year-over-year [9] - Gross profit rose by 8.1% driven by a 5.8% increase in sales and a 100 basis point increase in gross margin rate to 43.8% [34] - Selling and store operating expenses increased by 10.3% to $368.8 million, primarily due to new stores [34] Business Line Data and Key Metrics Changes - Comparable store sales decreased by 1.8% year-over-year, with the West Division outperforming this decline [20] - Sales growth was strongest in laminate and luxury vinyl plank, wood, and installation materials [22] - Connected customer sales increased by 2.1%, now accounting for approximately 18.3% of total sales [24] - Sales to professional customers continued to grow, accounting for about 50% of total sales [27] Market Data and Key Metrics Changes - The U.S. is now the largest country of manufacture for the company, accounting for approximately 27% of products sold, up from 20% in fiscal 2018 [14] - China accounted for 18% of products sold in fiscal 2024, down from 25% in fiscal 2023 and 50% in fiscal 2018 [14] Company Strategy and Development Direction - The company plans to open 20 new warehouse format stores in fiscal 2025, down from a previous expectation of 25 [18] - A tariff steering committee has been organized to manage tariff complexities and maintain operational agility [11] - The company is focusing on sourcing diversification to find high-quality products at competitive prices [13] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about high volatility and uncertainty in the economic environment, which could impact consumer spending [10] - The company is proactively implementing flexible plans to navigate potential economic downturns [10] - The updated fiscal 2025 guidance reflects the uncertain economic environment, with total sales expected to range from $4.66 billion to $4.8 billion [40] Other Important Information - The company maintained a strong balance sheet with $949.8 million in unrestricted liquidity [38] - The effective tax rate increased to 22% from 12.8% due to a decrease in excess tax benefits related to stock-based compensation [36] Q&A Session Summary Question: Follow-up on guidance and tariff impact - Management confirmed that they have experience dealing with tariffs and are negotiating necessary price increases to offset impacts [46][47] Question: Perception of business weakness and guidance reduction - Management acknowledged the difficulty in predicting consumer demand but emphasized strong execution and market share growth [57][59] Question: Price increases across the industry - Management noted that they have seen price increases from competitors but have not yet raised prices beyond normal adjustments [63][64] Question: Store unit growth criteria - Management stated that the decision to reduce store openings was based on current market conditions and sales performance [68][69] Question: Acceleration in sales trends - Management indicated that improvements in sales were consistent and not solely due to weather or tariff announcements [78][80] Question: Sourcing advantages post-tariff - Management confirmed that they are sourcing from more countries now than in the past and do not anticipate a significant change in their sourcing advantage [84][86]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $0.45 for the first quarter of fiscal 2025, a slight decrease from $0.46 in the same period last year [5][6] - Total sales increased by 5.8% to $1,161 million from $1,097 million year-over-year [6][30] - Gross profit rose by 8.1% driven by the sales increase and a 100 basis point increase in gross margin rate to 43.8% [30][34] - Selling and store operating expenses increased by 10.3% to $368.8 million, primarily due to new stores [30][31] Business Line Data and Key Metrics Changes - Comparable store sales decreased by 1.8% year-over-year, with the West Division outperforming this decline [16][17] - Sales growth was strongest in laminate and luxury vinyl plank, wood, and installation materials [18] - Connected customer sales increased by 2.1%, now accounting for approximately 18.3% of total sales [19][20] - Sales to professional customers continued to grow, accounting for about 50% of total sales [22] Market Data and Key Metrics Changes - The U.S. is now the largest country of manufacture for the company, accounting for approximately 27% of products sold, up from 20% in fiscal 2018 [11] - China accounted for 18% of products sold, down from 25% in fiscal 2023 and 50% in fiscal 2018 [11] - The company anticipates receipts from China to approximate mid to low single digits of total receipts by the end of fiscal 2025 [11][12] Company Strategy and Development Direction - The company is focused on managing tariff impacts through vendor negotiations and sourcing diversification strategies [9][10] - Plans to open 20 new warehouse format stores in fiscal 2025, down from a previous expectation of 25 [14][15] - The company aims to maintain its competitive advantage through a broad assortment and innovative product offerings [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding consumer spending due to economic volatility and potential recession risks [7][36] - The company is proactively implementing flexible plans to navigate economic challenges [7][36] - Updated fiscal 2025 guidance reflects a cautious outlook, with total sales expected to increase by 5% to 8% [37][39] Other Important Information - The company maintains a strong liquidity position with $949.8 million in unrestricted liquidity [35] - General and administrative expenses increased by 3.5% to $69.1 million, attributed to investments in store growth [32] Q&A Session Summary Question: Clarification on tariff impact and pricing strategy - Management confirmed that they have experience managing tariffs and are negotiating with vendors to offset impacts, expecting modest price increases if necessary [44][46] Question: Concerns about business weakness and guidance reduction - Management acknowledged the challenges but emphasized strong execution and market share growth, while being prepared for various scenarios [56][58] Question: Store growth strategy and criteria for adjustments - The company plans to open 20 new stores based on current market conditions, with flexibility to adjust if necessary [66][68] Question: Impact of tariffs on gross margin - Management aims to maintain gross margin rates despite tariff impacts, with a focus on managing gross profit dollars [102]

Financial Performance - Net sales for the quarter ended March 27, 2025, increased to $1,160,740, representing a growth of 5.8% compared to $1,097,289 for the same period in 2024[17] - Gross profit for the quarter was $508,168, up from $470,026 in the prior year, indicating a gross margin improvement[17] - Operating income rose to $64,229, compared to $59,311 in the previous year, reflecting a year-over-year increase of 3.1%[17] - Net income for the quarter was $48,878, slightly down from $50,032 in the same quarter last year, resulting in basic earnings per share of $0.45[17] - Net income for the thirteen weeks ended March 27, 2025, was $48,878,000, a decrease of 2.3% from $50,032,000 for the same period in 2024[23] - Basic earnings per share for the period was $0.45, down from $0.47 in the prior year, while diluted earnings per share also decreased to $0.45 from $0.46[64] - Operating income for the Retail segment was $61.929 million, compared to $57.050 million in the prior year, indicating a growth in operational efficiency[73] Assets and Liabilities - Total assets increased to $5,368,264, up from $5,050,478 as of December 26, 2024, showing a growth of 6.3%[15] - Total liabilities rose to $3,146,501, compared to $2,880,320 at the end of the previous quarter, indicating an increase of 9.3%[15] - Current liabilities totaled $1,253,504, slightly higher than $1,244,192 from the previous quarter, indicating a marginal increase[15] - Long-term debt as of March 27, 2025, was $194,424,000, slightly down from $194,527,000 at the end of the previous fiscal year[37] - As of March 27, 2025, amounts due to financial intermediaries for supply chain finance programs were $177.3 million, up from $167.7 million at the end of 2024[70] Cash Flow - Net cash provided by operating activities decreased to $71,164,000 from $147,510,000 year-over-year, reflecting a decline of 51.7%[23] Equity and Stockholder Information - The company reported total stockholders' equity of $2,221,763, up from $2,170,158, reflecting a growth of 2.4%[15] - The number of outstanding stock options as of March 27, 2025, was 1,097,465, with a weighted average exercise price of $31.16[59] Risks and Future Strategies - The company continues to face risks related to economic conditions, competition, and supply chain disruptions, which could impact future performance[11] - Future growth strategies include managing new store openings and enhancing brand awareness to drive sales[11] - The Company plans to continue expanding its product offerings and market presence, focusing on both professional and DIY customer segments[26] Lease and Interest Expenses - Total fixed operating lease costs for the thirteen weeks ended March 27, 2025, were $60.164 million, compared to $53.279 million for the same period in 2024, representing an increase of 13.5%[50] - Total operating lease costs for the thirteen weeks ended March 27, 2025, were $83.161 million, up from $72.724 million in the prior year, reflecting a year-over-year increase of 14.3%[50] - The effective income tax rate for the thirteen weeks ended March 27, 2025, was 22.0%, up from 12.8% for the same period in 2024[47] - The Company recognized interest expense of $1,548,000 for the thirteen weeks ended March 27, 2025, compared to $1,955,000 for the same period in 2024[38] - A 1.0% increase in the effective interest rate on the company’s $199.8 million outstanding Credit Facilities would result in an additional interest expense of approximately $2.0 million over the next twelve months[116] Legal Matters - The Company is currently involved in litigation with potential damages exceeding $11.0 million related to a wrongful death lawsuit[55] Other Financial Metrics - The laminate and vinyl category generated $286,160,000 in sales, representing 25% of total net sales, up from 24% in the previous year[36] - The company’s contingent earn-out liability decreased from $4.502 million to $0.750 million during the thirteen weeks ended March 27, 2025, reflecting a fair value adjustment of $(375,000) and payments of $(3.377 million)[66] - The change in fair value of the company’s interest rate cap contracts was less than $0.1 million for the thirteen weeks ended March 27, 2025, compared to a $1.0 million change in the prior year[69] - The company’s fair value assessment for its interest rate cap contract considered counterparty default risk and its own credit risk, utilizing Level 2 inputs for valuation[69]

Financial Performance - Net sales for the first quarter of fiscal 2025 were $1,160.7 million, an increase of 5.8% from $1,097.3 million in the first quarter of fiscal 2024[6] - Comparable store sales decreased by 1.8% in the first quarter of fiscal 2025[6] - Diluted earnings per share (EPS) for the first quarter was $0.45, down 2.2% from $0.46 in the same period last year[6] - Operating income increased by 8.3% to $64.2 million, with an operating margin of 5.5%, up 10 basis points from the previous year[6] - Adjusted EBITDA for the first quarter was $129.8 million, reflecting a 5.5% increase from $123.0 million in the first quarter of fiscal 2024[6] - Net income for the thirteen weeks ended March 27, 2025, was $48,878,000, a decrease of 2.3% compared to $50,032,000 for the same period in 2024[21] - EBITDA for the same period was $123,616,000, representing an increase of 7.5% from $115,190,000 in the prior year[22] - Adjusted EBITDA increased to $129,821,000, up 5.8% from $122,998,000 year-over-year[22] - Net cash provided by operating activities was $71,164,000, down 51.8% from $147,510,000 in the previous year[21] - Cash and cash equivalents at the end of the period were $186,930,000, compared to $57,426,000 at the end of the same period last year[21] - Purchases of fixed assets totaled $66,728,000, a decrease from $111,688,000 in the prior year[21] - The company reported a loss on asset impairments and disposals of $32,000, compared to $37,000 in the previous year[21] Future Outlook - The company plans to open 20 new warehouse stores in fiscal 2025, reduced from a prior expectation of 25 new stores[2] - The updated outlook for fiscal year 2025 includes net sales projected between $4,660 million and $4,800 million[11] - Comparable store sales guidance for fiscal year 2025 is expected to range from (2.0)% to 1.0%[11] - Capital expenditures are projected to be approximately $310 million to $360 million for fiscal year 2025[11] Challenges and Risks - The company anticipates challenges in managing new store growth and potential impacts from economic conditions[27] - Future performance may be affected by various risks including supply chain disruptions and changes in consumer preferences[27] - The company is focused on maintaining brand image and managing competition in the market[27]

Core Viewpoint - Floor & Decor Holdings, Inc. is expected to report an increase in revenue for the first quarter of 2025, with a consensus estimate of $1.16 billion, reflecting a 6.1% improvement from the previous year [1] Revenue and Earnings Estimates - The Zacks Consensus Estimate for first-quarter earnings per share is stable at 45 cents, indicating a decline of 2.2% from the same period last year [2] - The company has a trailing four-quarter earnings surprise average of 18.2%, with the last reported quarter exceeding estimates by 50% [2] Key Growth Drivers - The company's disciplined expansion strategy, supply chain agility, strategic investments, and merchandise innovation are expected to enhance market share [2] - A persistent supply-demand imbalance in housing and the increasing median age of owner-occupied homes are driving demand for home upgrades and remodeling, benefiting hard surface flooring and related categories [2] Product and Market Expansion - The launch of new product categories, including a semi-custom cabinet program in 40 warehouse stores and online, is anticipated to be a significant revenue catalyst [3] - By entering adjacent remodeling categories such as cabinets and outdoor products, the company is expanding its share of customer projects beyond flooring [3] Store Expansion Strategy - The disciplined approach to expanding the store footprint is a key driver of top-line growth, focusing on warehouse-format store openings in markets with existing brand awareness [4] - The strategic push to capture a larger share of the professional customer base is gaining traction [4] Sales Performance Concerns - A soft start to the first quarter is noted, with comparable store sales declining 1.7% as of February 20, indicating that momentum from the previous quarter may not have continued [5] - The company has diversified its sourcing away from China, reducing reliance from 50% in 2018 to 18% in 2024, although tariffs remain a challenge [5] Earnings Prediction Model - The current model does not predict a definitive earnings beat for Floor & Decor, as it holds a Zacks Rank of 3 and an Earnings ESP of 0.00% [6][7]

Company Overview - Floor & Decor (FND) shares increased by 11.9% to close at $78.20, following President Trump's announcement to suspend U.S. tariffs for 90 days, which renewed investor optimism [1] - The stock had previously experienced a 22.2% loss over the past four weeks [1] Earnings Expectations - Floor & Decor is expected to report quarterly earnings of $0.45 per share, reflecting a year-over-year decrease of 2.2% [2] - Revenue is projected to be $1.16 billion, representing a 6.1% increase from the same quarter last year [2] Stock Performance Insights - The consensus EPS estimate for Floor & Decor has remained unchanged over the last 30 days, indicating a lack of upward momentum in earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Context - Floor & Decor is part of the Zacks Retail - Home Furnishings industry, which includes Haverty Furniture (HVT) [3] - Haverty Furniture's consensus EPS estimate is $0.16, showing a year-over-year increase of 14.3%, but it currently has a Zacks Rank of 4 (Sell) [4]

Core Insights - The article discusses the investment perspective on Floor & Decor Holdings (NYSE: FND), emphasizing a hold rating due to expectations of the stock remaining rangebound [1] Group 1: Investment Philosophy - The company adopts a fundamentals-based approach to value investing, focusing on long-term durability and affordability rather than merely low multiples [1] - There is a belief that successful companies can be risky investments if overvalued, highlighting the importance of valuation in investment decisions [1] - The article suggests that in certain situations, the potential for growth may outweigh immediate price concerns [1]