Floor & Decor Holdings, Inc.

Greetings and welcome to the Floor & Decor Holdings, Inc. First Quarter 2024 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Wayne Hood, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to Floor & Decor's fiscal 2024 first quarter earnings conference call. Joining me on our call today are Tom Taylor, Chief Executive Officer, Trevor Lang, President, and Brian Langley, Executive Vice President and Chief Financial Officer. Before we start, I want to remind everyone of the company's Safe Harbor language. Comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risk and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement. The company's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. Florida Core assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results. During this conference call, the company will discuss non-GAAP financial measures as defined by SEC Regulation G. We believe non-GAAP disclosures enable investors to better understand our core operating performance on a comparable basis between periods. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measures can be found in the earnings press release, which is available on our investor relations website at ir.florendecor.com. The recorded replay of this call and related materials will be available on our investor relations website. Let me now turn the call over to Tom.

Thank you, Wayne, and everyone for joining us on our fiscal 2024 first quarter earnings conference call. During today's call, Trevor and I will discuss some of our fiscal 2024 first quarter earnings highlights. Then Brian will provide a more in-depth review of our first quarter financial performance and share our thoughts about some of our financial projections for the remainder of fiscal 2024. We are pleased to report fiscal 2024 first quarter earnings diluted earnings per share of 46 cents, which surpassed our expectations. We take pride in these results as they demonstrate how our teams can manage our profitability by continuing to strategically grow our gross margin rate and prudently manage expenses without sacrificing customer service amid ongoing weak demand for hard surface flooring. These results are a testament to our store associates' hard work and dedication. reflecting their tireless work to drive sales and engagement with our homeowner and pro customers daily. We are happy to report that their efforts continue to result in high customer service scores across all our touchpoints, which helps set us apart from our competition. During this uncertain demand period for hard surface flooring, it's important for us to focus on what we can control. Therefore, we've taken steps to reinforce our price and value messaging at the front of our stores. We do this by offering bulk-out displays of opportunity buys, deals of the week, and compelling adjacent category offerings. Our strategy also includes having well-equipped salespeople and designers on the floor at the right time. We proactively greet and assist customers who enter our stores by asking them, what project are you working on? This approach helps us drive conversions and customer satisfaction. We are also diligent about following up on open quotes and are focused on closing high-value opportunities in design and pro using our CRM solutions. We use our CRM data and business intelligence tools to drive sales and engagement with inactive, active, and new pros. Additionally, we continue to drive sales with innovative new products like Excel Slabs that were added to 17 additional locations in the first quarter. bringing the offering to 130 warehouse stores. While demand for hard surface flooring is likely to remain challenged in the near term, we remain committed to offering our customers innovative and stylish hard surface products of superior quality at everyday low prices, in job lock quantities, and providing them with a high level of service across all touchpoints. These values are fundamental to our growth strategy and we believe they will help us increase our market share and create lifetime value among homeowners and pros. Let me briefly turn my comments to the tragedy in Baltimore caused by the Francis Scott Key Bridge collapse on March 26th. We know many agencies are working very hard to reopen the channel as quickly as possible, and we thank them for their efforts. We have a 1.5 million square foot state-of-the-art distribution center near the Port of Baltimore, one of our four distribution centers in the United States. This facility is open and operating normally, except it now receives products from other ports. As many of you know, we have a strong, experienced distribution and supply chain leadership team with a long history of successfully overcoming unexpected global distribution and supply chain challenges. We have proudly called on them, again, and as expected, They quickly implemented strategies to ensure the timely flow of inventory to our stores with only a modest impact on profitability. We are working closely with our ocean carrier partners to divert containers to the nearby ports of New York, New Jersey, Norfolk, and other East Coast ports. We are leveraging our existing dedicated trucking fleets to help mitigate the cost impacts of transporting products to our distribution center. Recently, a channel that can accommodate smaller commercial vessels opened. we will shortly begin moving products on barge vessels utilizing this channel to replenish our distribution center as well. We are hopeful the Baltimore port will start operating normally by the end of May. That's the estimate of the Army Corps of Engineers. Before turning the call over to Trevor, I would like to take a moment to express how proud our leadership is of our team's ability to manage our profitability, inventory, and capital spending despite the challenges posed by weak flooring demand. By doing so, we can continue to make significant strategic growth investments with the long-term goal of operating 500 warehouse stores in the United States. Trevor will share more details about our busy fiscal 2024 second quarter new warehouse store opening plan, which includes the opening of a new 129,000 square foot warehouse format store in Brooklyn, New York. We welcome the people of New York to visit this store and embark on their next inspirational flooring project. Let me now turn the call over to Trevor.