LL Flooring Holdings, Inc.

Hello everyone and thank you for standing by. The LL Flooring second quarter 2023 earnings conference call will begin shortly. Our host for today will be Bruce Williams and you have the opportunity to register for a question by pressing star 1 on your telephone. Thank you for your patience. The conference call will begin shortly. Please stand by. Thank you. Oh, my God. Hello, everyone, and welcome to the LL Flooring Second Quarter Earnings Conference Call. My name is Bruno, and I'll be operating your call today. During this presentation, you can register to ask a question by pressing star 1 on your telephone. I will now hand over to your host, Bruce Williams from ICR. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining us. Today, I'm joined by Charles Tyson, our President and Chief Executive Officer, Bob Mador, Chief Financial Officer, and Andrew Wadhams, Senior Vice President, Retail and Commercial Sales. As we begin, let me reference the safe harbor provisions of the U.S. securities laws for forward-looking statements. This conference call may contain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of L.L. Florence. Although L.L. Floering believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations of any of its forward-looking statements will prove to be correct. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in L.L. Floering's filings with the SEC. During today's call, management will be discussing results on an adjusted basis. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures and an explanation of why the non-GAAP financial measures may be useful are discussed in today's earnings. The information contained in this call is accurate only as of the date discussed. Investors should not assume that those statements remain operative after today, and L.L. Floring undertakes no obligation to update any information discussed in this call. Now, I am pleased to introduce President and CEO, Charles Tyson. Charles?

Thank you, Bruce, and good morning, everyone. I want to welcome you to the LL Foreign Second Quarter Earnings Call. Joining me today, we have Bob Mador, our new CFO, and Andrew Wadhams, our new Head of Retail and Commercial Sales. During today's call, I will begin by reviewing our second quarter results Then Bob will take you through our financial results, and then I will discuss progress on our key strategic pillars, including updates on our plans to improve sales productivity and profitability, which gives us confidence in achieving long-term sustainable growth. Turning to our second quarter results, our second quarter performance was below expectations and primarily reflected the continued impact of the difficult macro backdrop, on home improvement spending. Weakness in discretionary categories driven by macroeconomic uncertainty, inflationary pressures, and restrictive financial conditions have been headwinds for home improvement spending. Looking ahead, there remains meaningful risk of slower spending trends due to these macro factors. In addition, we continue to experience pressure from our lower brand awareness as we continue on our transition to LL flooring. This is combined with some operational opportunities, which I will detail later. While our near-term results have been challenged, we remain focused on executing against our long-term strategic pillars and providing a differentiated flooring experience to our customers. To that end, I want to thank our field organization, supply chain, and corporate team members who are working hard to execute against our strategic initiatives. In addition, We recently announced several new critical hires within our senior leadership team, including Bob Maydor, CFO, has over 30 years of retail, finance, and executive experience focused on driving growth as well as optimizing costs and cash flow. Laura Massaro, our chief marketing officer, who has built successful marketing campaigns to drive brand awareness at several leading global brands, and Andrew Wadhams, Senior Vice President of Retail and Commercial Sales, who has extensive experience leading sales efforts and delivering extraordinary customer experience. I believe that these important hires in key strategic roles strengthen our team and provide us with leadership talent to successfully execute on our five strategic initiatives, which are, one, focus investments on our top growth priorities, two, grow brand awareness, three, ensure a consistent customer experience, four, improve operating efficiencies, and five, drive product innovation. We continue to execute on these areas, which I'll discuss shortly. Turning to the quarter, net sales declined 20.9%, and comparable store sales were down 22.2%. These results were driven by a decrease in transaction count, reflecting lower spending by consumers versus last year, combined with a decline in pro sales. As mentioned earlier, we believe the lower consumer sales largely reflected continued macro pressure that's been impacting bigger ticket discretionary spending. In addition, we saw less consumer spending on flooring projects as the average square foot project size declined sequentially. In addition, while average selling prices increased during the quarter, we made strategic price investments in select categories in order to reemphasize our value equation that we're well known for. I think it's important to note that LL flooring continues to score very high on value, which is very important to consumers in this high inflationary environment. In regard to our product segments, Our best-selling category remains within our premium segments, driven by the strength of our Duravana brand. For the quarter, operating loss was $20.5 million, and adjusted operating loss was $17.6 million. Now I will turn the call over to Bob to review our second quarter financial results in more detail.