Financial Data and Key Metrics Changes - Total sales for Q3 2020 increased by 31.4% to $684.8 million from $521.1 million in Q3 2019 [11] - Comparable store sales rose by 18.4%, exceeding expectations, with a year-to-date comparable store sales flat compared to last year [11][12] - Adjusted EBITDA reached a record $106.7 million, up 86.8% from $57.1 million in Q3 2019, with an adjusted EBITDA margin of 15.6% [13][47] - GAAP net income increased by 67.8% to $68.8 million from $41 million in the same period last year, with diluted earnings per share rising to $0.65 from $0.39 [48] Business Line Data and Key Metrics Changes - Three new warehouse stores were opened in Q3 2020, bringing the total to 128 stores, a 13.3% increase from 113 stores at the end of Q3 2019 [14] - E-commerce sales surged by 111.5% year-over-year, accounting for 16.6% of total sales compared to 10.2% last year [20] Market Data and Key Metrics Changes - Existing home sales grew for the fourth consecutive month in September, reaching a seasonally adjusted annual rate of 6.5 million, up 9.4% from the prior month and nearly 21% from last year [31] - The housing market is benefiting from sustained low mortgage interest rates, which are hovering at or below 3% [31] Company Strategy and Development Direction - The company plans to open five new warehouse stores in Q4 2020, aiming for a total of 133 stores by the end of fiscal 2020, a 10.8% increase from fiscal 2019 [15] - The company is focusing on enhancing its Pro Premier Rewards program to drive engagement with professional customers, with enrollment increasing by 30% year-over-year [24][26] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the economic recovery, citing factors such as increased savings rates and a shift in consumer spending towards home improvement due to COVID-19 [30][33] - The company remains cautious about potential risks related to COVID-19, including the possibility of renewed restrictions in certain markets [58] Other Important Information - The company announced the appointment of three new board members with significant operational and strategic expertise, effective January 1, 2021 [34][35] - The company maintained a strong liquidity position with unrestricted liquidity of $628.5 million as of September 24, 2020 [49] Q&A Session Summary Question: Trends throughout the quarter and geographic consistency - Management noted consistent improvement across all geographies, with September showing a strong exit rate of 20.8% [68] Question: Gross margin expectations for Q4 - Management clarified that the Q4 gross margin is expected to be up year-over-year but less than the 200 basis point increase seen in Q3 [72] Question: Comparison of flooring category performance - Management indicated that consumer apprehension about allowing professionals into homes is not a significant concern, as professionals are in demand [78] Question: Transportation costs and supply chain strategies - Management highlighted the effectiveness of long-term contracts in mitigating transportation cost increases, with no immediate impact felt [104] Question: October performance compared to September - Management confirmed that October's performance is consistent with the strong exit rate from September [106] Question: Future outlook for gross margins and housing turnover - Management acknowledged the potential for gross margins to improve but noted that it is too early to provide specific guidance for next year [108]
Floor & Decor(FND) - 2020 Q3 - Earnings Call Transcript