Floor & Decor (FND) 23 Feb 232022 Q4 Earnings call transcript

Greetings, and welcome to the Floor & Decor Holdings, Inc. Fourth Quarter 2022 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce to your host, Wayne Hood, Vice President of Investor Relations. Thank you, Wayne.

begin. may You

and Decor's operator, call. everyone. to Welcome Thank quarter good and & fourth conference fiscal Floor you, afternoon, 'XX earnings

Joining and today Officer; me Officer. President call Taylor, Financial on Executive Chief and are Chief Trevor Langley, Bryan Tom President; Executive Vice Lang, our

XXXX harbor and of start, we of webcast risks Reform statements the meaning safe contain Private to to made Securities during Act of the remind forward-looking are Before Comments everyone this the and Litigation want company's I subject language. and conference call within uncertainties.

forward-looking expectations, listed that refers market or information statement SEC statement. Decor future its expressed results guarantee Any statements reason, not of for Please a filings. materially update such events, such is financial to those market The future any projections no or differ of other assumes results. future note forward-looking actual including those or is could & also performance projections any characterizations company's forward-looking statements. to obligation a future including past Floor from conditions in that in

replay release, recorded most Investor Relations directly A our available is which on will press this will a conference periods. reconciliation found disclosures be at be non-GAAP our related earnings better ir.flooranddecor.com. materials measures the this of our to of enable company to Relations performance believe by discuss on G. between our comparable GAAP can the call, defined investors financial measures non-GAAP operating core call financial these non-GAAP understand website. comparable in available Investor website SEC Regulation basis and During measures on of as We each A

to me turn Let Tom. the over now call

call. and earnings joining XXXX fourth Wayne, fiscal conference our us you, on for quarter everyone, Thank

quarter discuss During Bryan fourth earnings. today's fiscal review call, and fourth about fiscal provide XXXX and of share quarter our XXXX. of thoughts will a Then our will performance in-depth our some of more highlights I the Trevor

diluted share $X.XX adjusted our quarter year, increased XX.X% fourth we to to our on that by earnings $X.XX pleased range that announce earnings We to call. per per $X.XX guidance XXXX third quarter conference $X.XX are last the XXXX provided from share exceeding

Our per XX.X% in earnings $X.XX diluted by XXXX full share from $X.XX to XXXX. year adjusted increased

year end XXXX above we beginning which of our of share $X.XX guidance Notably, per the $X XXXX, the are the year that time. at geopolitical the our that slightly diluted headwinds not the adjusted we were earnings did during economic and unknown of full to contemplate per share low provided fiscal faced range at

achieve increases challenging to steep results XX%, significant and macroeconomic growth contributed in mortgage the declines to October, December prices. in XX.X% These they including and November pleased financial declined in particularly these XX.X%, considering sales when in factors are XXXX, year-over-year particularly home environment, rate We respectively. and existing moderating home

grow continued Despite investing these and further share market strategies our growth executing by widened to we in that competitive significant moat. remaining key our agile, headwinds, our initiatives

earnings strategies results. gross supply continue margin which contributed recapture quarter better-than-expected our chain deliver by pricing to costs, from our on our executing favorable We to plans fourth and rate

and of have to due easing Ocean demand port freight rates global declined market significantly lower congestion. the

strategically to to continue pass and move our tailwind supply certain and we Pro and through beyond. fiscal improving rates. rate and addition, logistic these grow cost as Collectively, should drayage domestic we homeowner customers savings demurrage, softening enable and chain margin In we in provide our will reductions XXXX fiscal XXXX and share seen in in have cost tension market a believe These XXXX. costs our material to to us gross

service in-stock economic that lean environment. the will to provided into on broad low our store in current stores by XXXX, reflects and way we our further our we capitalizing customer industry-leading say prices, enter manage As is intend associates. That to a we assortments

enhance time key to more to customers. teams plan XX sales FIT engage handle service, further the XXXX fourth tasks, We associates with daily customer of markets FIT To have in of allowing installation XXXX. teams of introduced the to six these field and quarter teams we or markets completed to teams end our with the rollout at

service proud we are service our and We of finished with customer best-in-class scores. our customer XXXX that highest

a possible to homeowners provide rely and price. the inspiration lowest Pros of information Our on wealth at us them style and with

on management touch I over and Trevor, items. Before want call turn of Board-related I the to a to couple

like to XXXX, three over year executives invested our prescribed our were February to our and our maintaining capital in retention EBIT period, main stock Board for performance tied goals: Directors I'd doubling peer that three the remind return of First, that grants adjusted exceeded everyone of group. on that authorized a

to are targets. that achieved successfully We pleased have announce these we financial

We be strategy. interest compensation executive cornerstone believe that long-term aligning with management's value creation shareholder our of should the

achieving return. our shareholder total For financial reason, team specific that to approved retention and Board grants again executive goals of linked equity for long-term our Directors

more our We these grants upcoming statement. will provide proxy in information on

that I'd strategic Second, to of Tractor everyone's and press background Board. at her Walmart. Supply our previously consistent individuals will held is and diverse experiences our Kersey objectives. join the the adding be today roles on to approach growth skills that growth with Resource support and Melissa McDonald's believe turn valuable We to She's nomination nomination at our of our senior Officer to our Melissa's currently like will continued attention release with Chief Human and

now to call discuss our over our to Let of Trevor pillars. and sales growth the some me turn

Thanks, Tom.

work get like all XXXX. I'm in in their associates vendor started, would even our the goes for success Thank to dedication time hard role contributions stores to I appreciation I express financial you our my gaining and that of associates as and for their achieving President, In company. my results. to and our your more to deepest invaluable appreciation Before these all partners commitment into more spending of unwavering for

with our quarter guidance last sales sales. XX.X% the $X,XXX,XXX,XXX increased Let me year our $XXX,XXX,XXX from fiscal Fourth line XXXX of now during earnings conference quarter Approximately fourth discuss full quarter midpoint in provided XXXX our third fiscal to call. and year.

represents billion, a which more three Our increased a of year full $X.X over doubling a fiscal to XXXX period. year sales record than sales our XX.X%

store fourth October, end from in was impacted positively expectations, basis fourth points. comparable comparable at year, in December. growth last growth of quarter Our sales including our the approximately X.X% Hurricane same X.X% and by X.X% the increasing Ian quarter November sales X.X% estimate low XXX period We in our store

not our The have sales Storm the growth material effect impact on Elliott from quarter. comparable closed did door a store for Winter

were and overall the During fourth laminate growth. categories adjacent the performing product categories, sales quarter, tile installation the materials company's strongest vinyl average and surpassing

third full increased of quarter X.X% of conference our by year X% last sales at comparable growth the low earnings Our year XX% from store fiscal on end to fiscal provided XXXX our call. guidance XXXX

XXXX expectations. line store sales to-date fiscal X.X% with first year, Our are from is down in period our quarter the comparable same which last

average now in our will growth discuss the I ticket.

fiscal were third comparable store XXXX. of XXXX Our compared fourth fiscal driven quarter XX.X% growth in XX.X% by the sales ticket in quarter with average

ticket in from vinyl pressures average from in increase ticket an growth Pro, design-led e-commerce initiatives. benefit sales and continues of and an prices and cost Our increase to sales retail penetration penetration laminate our in higher and to increase mitigate

our average industry-leading and innovation, the best average our we points. at higher our on to in ticket ongoing points and offer we continue drag customer lowest preferences Year-over-year, natural price where as ticket. better weakness trends hand, other see the overall products styles a price acted On toward

said, in Turning moderating culminating be in comparable transactions sales quarter a of in decline existing fourth line year. approximately decrease our transaction caused with continues to to the model interest our That our our business and decline fiscal transaction in sequential mortgage transactions. rates, from fourth us was the last prices store expectations in experience The in resilient. significant and in home quarter rapid steady increase XX.X% declines home sales growth to XXXX

three store fiscal October I opened delays. allows now construction growth. of of discuss XX stores, quarter and XXXX, goal XX successfully will and in fourth in our December. the industry-wide our of posed achieve to by opening warehouse warehouse despite This challenges including November new In the stores five accomplishment pillar XXXX in us both we

we MSAs fiscal the States. six studios presence warehouse of a end stores XXX the XX across operated now in At have in United XXXX, XX top states and design and the

earnings XX half third discussed to and warehouse call, previously them to for plan our be XX of and XXXX existing year. fiscal of As is we to prudent a it in range the primarily conference believe quarter second markets fiscal store towards XXXX during openings in weighted the

the Awaiting half pleased to openings first quarter consider construction XXXX, second warehouse have open intend XXXX, January and are and In four February. delays. fiscal to in of opened already that we we the two locations potential of the

lead operating will and ease we balanced As cadence store more construction more we that XXXX opening into -- more to look XXXX, quarterly warehouse expect beyond anticipate a warehouse stores store and delays weeks. to

our sufficiently large comments our to monitor have turn this juncture, and of open accelerating group design At area. design studios growth before we and diverse we further me can that believe we refine this in studios. that Let now

Turning business. to our Pro

share of fourth Our transactions our be successful. fourth continues the from XXXX. and Pros quarter X.X% expand market by XXXX, by sales of our store among to to strategy the comparable is quarter In pro increased XX.X%

XX.X% fiscal Pros sales. full XXXX for sales. XX.X% XXXX our for our year year XXXX sales of XX% full Gross comparison, quarter our of of fourth accounted By accounted and

successful. Our continues to efforts be to drive engagement

also value of PPR same industry-leading with number continued quarter Pro year. contacts of XXXX a to by during appreciation the Rewards strong compared last a or Premier where with the added redeemed most compared year. PPR program fourth our and We of our in XX% for previous with our our or approximately active the XX,XXX in XX% Pro program, the enrollment increase period members points increased Pros new Pros the demonstrate

with to trained Pros hosted Pros and and relationships through We XX design workshops with supporting XXXX. quote, with education and sticky X,XXX and solutions. looks to Decor high-quality products. installation partner trading and build in strategies Their events lifetime their impressed also demonstrates "I'm products, just Pros & lasting We education commitment look our and training the flooring the value and us Pros about Floor through beyond selling installations. have I hosting way told of training and

to keys more a help they Pros after training to educated grow." recommend to us my Our major express tradespeople. other feel business Importantly, high very likelihood tell and

important build these strategies intend and education beyond. and fiscal on training XXXX We to in

that dashboards on objectives. the and execution reporting our we our of and priorities Pro further remain focused tools and key on Additionally, build to teams strengthening

e-commerce our to business. Turning

fiscal fourth in and XX.X% increased Our of sales e-commerce last XX.X% accounted from compared for quarter sales our year the year. previous with XXXX XX.X%

full For year with XX.X% accounted in XXXX. XXXX, fiscal e-commerce compared for sales XX.X% and XX.X% of increased sales

customers' including conversion. focusing team As we our enter continues digital XXXX, to content our on strategies to and further inspirational execute e-commerce experience, optimize product,

value. more website filtering current our improved to for price have the on challenges likely we where experience Additionally, are economic our to consumers look reflect

design Moving design we our on about comprehensive growing through strengthen success. and career and grow in-store competitive strategy successfully leaders, a services four design our providing number opportunity divisional design have stores to remain excited market path services. and of that our to includes that moat adding training warehouse services designers ensure well-executed to our offerings. executed with clear in We them share the end, the a To

We over ended fiscal with XXX and during XXXX XXX,XXX designers managed year. than appointments more the

and store total for store to fourth were significantly company's design year, -- rate. led comparable the has full sales the growth above quarter comparable the which sales growth and Our

to our designers in further we at place on the the by right optimizing requirements continue right in right to these have the build will XXXX time. strategies ensure We staffing

processes customer great a sales elevates and efficient maximize allow we the implemented that for follow-up experience have thoughtful management relationship conversion. believe strategy, technology and to We to

we adjacent higher higher higher scores, are service as tickets, projects, calls, see margins. insulation average sales prior as when category involved we in have in sales discussed gross and customer As well designers materials

and with account pleased our be growth with commercial Turning to and the and to Surfaces RAMs, Spartan which our which our we includes earnings stores, sales form or at managers Spartan continue business, work regional Services. very

exceeded sales For once earnings expectations. fiscal our XXXX fourth quarter results and again

EBIT Spartan's same year. fourth of from an than fourth quarter XX% the quarter sales increased increased greater compared last XXXX the XXX% and period to by

to XXXX. compared XX.X% RAMs quarter fourth quarter fourth Our increased of the sales

in we commercial about and opportunities market our the discussed prior excited As strategies. earnings remain calls,

market Finally, share and are are from of the beyond. fiscal we excited opportunity a to XXXX about operating and continue grow our position in strength to

agile successfully the We macroeconomic to we environment. have model -- demonstrated challenging an challenges teams, the that and strategies continue right navigating the have business

more detail now will to financial fourth outlook Bryan for over the to I our quarter XXXX in our discuss turn results call and XXXX.

and Thank you, Tom Trevor.

such represent a to excited many with great company resilient I'm so associates.

caused which and diversification expanding proven our tariffs, years, antidumping efforts margin. navigate the we unexpected countervailing Over to our products, including significant outside control, have we successful economic that sourcing us can on gross duties while our events of continue

home develop our Most sales for caused recently, solutions some recording cost The close to all navigated inflation, global and serve existing profit. we us significant to supply stores our to alternative successfully time, considerable forcing and constraints while declines sales, COVID-XX us pandemic customers. in chain record

to share We our of manage to share beginning validating the still per model. we that provided allowed these of range report and durability diluted of headwinds in fiscal within strength earnings XXXX business us $X the per XXXX and XXXX, the $X.XX of that adjusted the at teams our agility and were

significant of thinking Let and of income cash and flows about XXXX. XXXX line some me the statement, discuss items fiscal in statement changes fourth how now then our were we quarter sheet the among balance discuss

Turning to fourth quarter gross our margin.

recapture store to plan. margin and teams that on are gross We chain supply pleased our continued deliver our merchandising,

to margin expectations Our of gross from fourth the in year, period XX.X% points exceeding our quarter XX%. XX.X% basis same last XXX increased rate

is improvement damage better-than-expected margins center due product from costs, primarily shrink lower higher costs. lower and inventory The favorable distribution to freight and

to on our Moving fourth quarter expenses.

quarter $XXX.X $XXX.X year. fourth million and from expenses period increased to XX.X% in same store million the last Our by selling operating

driven these in percentage and card expenses million X.X% basis depreciation. the Fourth in primarily year. deleverage XX our mature by expenses from stores of sales, and same increased general quarter a new stores, approximately credit $XX.X and last million by As payroll, deleveraged fees to period from $XX.X administrative transaction points,

by year. in to primarily XX.X% points and incentive same new million due As due the is levered the from last a in period last new increased Preopening in increase period stores general same seven primarily to expenses XX $X.X compensation. percentage expenses The sales, million compared XX of to lower to to year. administrative X.X%, $X.X stores basis opening XXXX

$X.X in to an million same to rate Fourth in is increased $X.X ABL increase line growth quarter million in with in under due borrowings our the expense million expense interest last from and facility and net year. The interest by is interest period our expectations $X.X increases. primarily

Let our comments to me turn now my profitability.

drove XXX same XX% increase a year. Our basis in to gross successfully adjusted recapture in quarter from efforts margin the fourth point period margin EBITDA last XX.X% our

period a from same last by adjusted grew result, XX% EBITDA the As year.

XX.X% to per earnings Our by income adjusted in GAAP by XX.X% and to fourth quarter net $X.XX million by share. the earnings last and same year. adjusted net $X.XX increased to million $XX.X period to $X.XX by quarter income increased share increased per XX.X% XX.X% $XX.X per increased diluted diluted from Fourth share

Our our average fourth were quarter shares non-GAAP weighted today's diluted in found to can GAAP XXX.X of release. be million. earnings press Reconciliations

Moving balance on cash and flow. to our sheet

growth of As XX.X%. modestly expectations last December year, our billion inventory sales $X.X XX.X% XX, from line increased and in with of above to XXXX,

growth, year earnings As we above inflation. call, discussed in sales to conference the expected full to our quarter inventory grow fiscal XXXX primarily third due

with receipts. due payables timing including of capital of XXXX Fiscal XXXX, Our drop $XXX.X to accrued million million our $XXX.X end XXXX primarily $XXX.X of the guidance timing fiscal million from period growth compared expenditures the of driven flow to XXXX above cash in last operations class million $XXX.X on in of and $XXX inventory $XXX stores. from million due at by million our year, to declined expenditures of totaled the capital spend

compared of were million liquidity and operations, at of ended million end fiscal under $XXX.X existing flow These hand and ABL ABL borrowings our capital XXXX from with fiscal with funded our borrowings cash outstanding XXXX. expenditures by facility. the on We cash on $XXX.X no

how our sales environment Let comments guidance. and are me fiscal the XXXX my now and thinking about we turn to earnings macroeconomic

than we guidance you today's a the see range release, reflect macroeconomic in years will prevailing in prior As to uncertainty. wider providing press are earnings

home are from higher down store expected sales of price throughout X% comparable strategic costs. freight from rates, to annual existing last to declines reflecting take XXXX flat from year, be benefit to expect in continued home fiscal we lower and moderating interest sales in Our most XXXX prices of the reductions growth

by the forward assumes X% sales stores expected We are the year. our the of in of store sales in year, late look XX% XXXX XXXX year warehouse last the the to full XX opening openings to XXXX from XX profit from fiscal year. opportunity planned second increase and Fiscal half to XX% to which in occurring

approach throughout to ticket in but we year. improve average to balanced our as our price is strategic growth the transaction trends Our reductions expected moderate move

the we a start third transactions to As fourth of and declines of second XX.X% reminder, against high XXXX. in fiscal comparing cycle XXXX a in past decline single-digit in the quarters before quarter

store comparable we decline to the fourth in returning through quarter. look third together, growth for Taken quarter sales the before to

expect a sales inventory sales. in growth we to we inventory our and support growth new rate at in to about As XXXX, than think grow slower stores

our cost from improvement change in The balanced XXXX savings drivers most select rate continue savings, we using throughout year-over-year improvement of we to the year. we half retails expect Because margin cost our to will first P&L strategically with a of reducing approach and profit complexion reductions. significant demonstrating are reinvest as strong the the growth in price the in year and gross

expect We as throughout rate approaching sequential gross in exit XX% margin XXXX. the improvement year, we our

card Our deleverage selling investments primarily of XX% as due at expenses new guidance. expected XXXX transaction midpoint be year-over-year sales and operating well and continued in our merchandising the as store stores and to to initiatives are fees. is wages of from sales The higher approximately credit

Preopening expenses are to to XXXX. of be flat around X% planned sales,

administrative approximately expenses our are in be sales X% and slightly We of guidance, at above midpoint sales XXXX. of planning to general the

increase an rate ABL approximately interest recapture. and due growth expense increases. to investments reflects XXXX primarily increase in borrowings to million. initiatives be million compensation continued $XX is increase our The over slight facility our expected support to is The to under and Interest $XX incentive

million. grow approximately EBITDA $XXX to XX% expect million $XXX X% to adjusted We to to our

XX.X%. approximately to EBITDA to expected adjusted be margin is rate XX% Our

continue to expected Importantly, be margin the towards margin a is XXXX see in of XXX range earnings teens. share mid-teens expected per are rate and million the be to $X.XX. to Diluted in estimated longer-term we outstanding average high to our shares medium-term weighted $X.XX rate shares. path diluted of

were primarily capital be Moving expenditures. flow and million are range million cash about capital thinking the in our on how to of borrowings $XXX from under be to operations funded we Fiscal and facility. $XXX XXXX to expenditures ABL by planned

to to the relocate open stores stores, we Collectively, are million. we XXXX. XX expected to plan main following We to three require cadence increase intend on improve format $XXX and in resulting investments in fiscal $XXX these store make intend year-over-year drivers: earlier. specifically, XX XXXX, million begin fiscal warehouse capital first, More construction XXXX. opening opening in the expenditures The stores reflects opening to stores more in to

As a openings. XXXX with incur CapEx in associated result, more will we the XXXX

Second, more that upfront we versus transitioning lower projects exchange facilities capital more to in are second-use require for rent. ground-up

Third, motion. higher for construction costs

and projects plan million approximately we in Additionally, remodeling $XXX existing invest centers using million. distribution to $XX store to

other $XX eagerly million. role am this macroeconomic to as to to In in center anticipate uncertain new we CFO, closing, may finally, $XX that for million And and plan grateful initiatives environment. support infrastructure, invest taking using technology, information I the my continue store in approximately e-commerce challenges and arise on

talented up In my team. & business in confident at never our I our make more and have the Floor Decor, been eight years associates that model

associates. our to executive every We uncertainty. extend of a dedication the our have express We and ability to customers hard appreciate team, On work want to thank our in the share you our gratitude and bring to demonstrated the day. recognize our behalf personal face serving market you and grow I of

questions. like with Operator, to take would we now that,

Morgan Gutman have first of We Simeon the ahead. Instructions] Please our question from line [Operator Stanley. with go

housing. I good wanted forward Hi to about afternoon. ask on the guys, curve

existing home have sales down lot. a We

They yet positive. I just numbers guess. the turned mentioned comps were You negative,

will back factor have it is reaccelerate that view to sales a stronger, half? time this get Does in half? pricing comp or worse? don't guess, anything in your that does around home allow So the it I different, is mean existing maybe the second and we that that just Does

is Yes, Simeon, Trevor. this

existing units off, May where them - is most down in to million but I'd we're X XXXX. trough first they range placing flat in say are Our X%, sales is today, at economists, of assumes XXXX, about home back million are sales the which X our against not recent view trough

to would the think higher we high being we with the about of expect rest the rates As go and as pricing, pricing decelerate that interest about probably year. to we likely continues think

and I follow to sales, guidance. million risk continue sales lot X wrong I existing decline we've there historical plan. you of to think we're home be home towards because contemplating a that And could units know I a sequentially X.X thing, of as given think companies other from worth and this one low existing is our if move guys million then

mature for. XX% it it This that's to model the that what we've X% years stores flat forecast X%. this of more benefit to stores that negative down we've get That, our so assumes those assumes stores But brings be all X% - given we back takes new stores opened up to mature. will because - the than to your flat guidance all

you think in but as state point as too, before, about about sales every it, us you've comp worth reminder, $XX is a at $X.XX in million And this EPS. Simeon, heard about

XX up than just So we basis do. differently guys about you may that equates flex or points of down as operating to margin

the Non-macro, some see. you okay. data set, market your and so guessing measure Are business I'm sales share, there? your we stable, core Can a color you accelerating? way denominator seeing non-commercial it, market share give Got as don't us your you

when And the shot. landscape that. what give read sales. market a of to from our that look our just our And a were in grew Total don't seem for how to reports competitive that too decent - total is. able to category, believe I'll you we We then they XXXX around This when be at on comp Tom. increase. year. sales continues close post XX.X%. performance kind our share indicate We Things look you is to pretty Catalina the

in - we way. we're So that see, share meaningful yes, I taking pretty from a everything

luck. good guys, Thanks

take go Short from ahead. next question with Suisse. We'll Credit Karen Please of line you. the Thank

very much. again. to talk to Good you thanks Hi,

just there have lot are relative of with that to of XXXX. a So guiding higher margins, and margins a questions respect kind flattish companies relative X.X% your margin you're assumptions to on to obviously of pre-pandemic are of kind couple EBIT, to looking significantly to

to that So parse little I out bit? a wanted

then we of And about how productivity terms should respect that. productivity, back-end how in store new timing new we to year, think I I looking that? realize about ask but with just think there should obviously this is loaded to about current at store wanted and

Karen, your to talking you are about be gross margin specific or just operating margin, on margin?

Operating margin.

is I'll hopefully I made volumes go we've mean, first, are at were and that this and where thoughtful they investments. efficient higher our just Trevor. time, than about been we've

million years Our $XX stores EBITDA. over close in and to getting to $X in old four-wall are sales million five close

so three as in our P&L. leveraged years, up last have components the And come volumes those we've of

mean Karen talked I think you about bit. Yes, of little well, as we've changing a as about the the complexity P&L

and recapture, about we So plan as on you you increasing margin throughout But gross by XXXX. throughout had sequentially kind due SG&A. think new offset margin slight will so gross to every significant have of stores in our recapture a have - we our gross we margin XXXX, see it's do it, quarter increase

just to 'XX think in store Thanks general about how and got going it. new 'XX? productivity forward And then just in

they million four-wall to hopefully, of million, four-wall curve million do $X million EBITDA. $X think in $XX in And our the read those year but $XX Day and do pages, believe million to XX-K, to maturation get We million just and stores stores we like said will we up Analyst around to and you that they $XX close XXX get yet that $XX EBITDA. just haven't all sales. at Today, as run get we new probably first can Yes. still mentioned, I

As there's so to I - 'XX, We're of we and I've they we're studied to the good those stores. going metrics 'XX even of in second of And pick what class that all be part the not good that we was half going of know just though mentioned. 'XX class is as the think in a of hit far 'XX the nearly 'XX. environment it as optimistic those first about

productivity. Right, about XX% they started

with So year. gains from we store this should that meaningful see openings XXXX pretty the late

you. thank great Okay,

Thank next Please you. Fargo. with take the We'll ahead. line Zach go of from Wells question Fadem the

guys. see housing expectations factors Could the to the today, need linger indicators you your you for flat opposed growth out into to good and as trough guide? to the think in about be through as us you down seeing XXXX X% category there will Hi, give you your for afternoon confidence walk And to that macro pressures comp what year, to category do 'XX. you the relative

at - us for year. obviously, think I specific get own when the Yes, they look move we through our we numbers, easier, as

happen. seems were That's we then two sales. existing X% sure, be to years around going like for If transactions full that's Our negative were sales, to down just XX%. of down and QX to make the over going which continued it QX they summer with for home negative existing home

I Fed in back of the the be But aged interest the start see either rebound. investment. come part time. you then just to going then against do inflation like little very to as is is well I a that easier to in or there's rates, in stock up down year of they going that start compares need and And to know, we're bit hopefully, we all pesky. a with spring the and be going rates from of And what what need as read, then housing it on the does know mortgage been feel sort a has And summer to even done

but in I business category - the So and of perspective, on tile is our our strong think you this right filings, can some see now.

with what now. strong categories. People resonating are categories those right installation Our are doing we're in

core fourth well. as quarter rigid the vinyl in Our was strong

business historically And the so that those would big what's we do to well I XXXX. us expect in, categories those are as drive into seen that continue going you've

a as that just whatever to stores is we'll reminder, so. flex And our

So, on if out continues in to of well. you do tile section, more we'll We'll target vinyl expand the our that. continue and growth expand vinyl to then

because flexibility categories. the have we're We in all

you in new note, line stores, able is you, that store the despite which to on excluding think it. were Got hold pandemic. opening sequentially And I expense QX XX first flat the for your

you operating that you little how you're through environment, 'XX? when can means? stores line economic deleverage about on So about the cadence a just what current should talk think say to And we your as we the of move exactly reflect bit that more

you of I flex a a generally at labor mean, the or end year. from biggest of have simplify similar just hours throughout opportunity we sort down. give we can and the that the - when perspective, - Yes, flex our We've to QX, or QX amount up of to hours is tried compare

decreases don't or we massive operating costs and so, of quarter-over-quarter. And in sort labor see increases

think going where XXXX, right? we we are labor, in a we continued in assumed As increase about have

that both We've in We every and that's part-time a payoff. think labor. pretty meaningful. We invested We've retailer turnover come been our good recently down the time our seen other happen. seen have full and

investment labor So turnover. we the to feel lower in of balance like we've made right that

are this tender We going credit a fees card costs, to increase big see pretty year. in

up, that we operating say And a up go some of expenses we provider as can up. those XXXX. or for so marketing other costs components think offset mid-year. going should with just look we with switching those will to costs We're But LIBOR and to I are the

actually QX just saw Zach, we expenses. increase points our out, it to to QX basis Yes. call XXX store from in

much to XX% see of which see look we'll has you'll So opened that we'll we as higher stores, XX start into new because a the as that, that at you kind complexion similar actually XXXX the midpoint. you exit when about because at average QX,

come new So kind similar well the what as see as of in is that XXXX. stores to as class in you QX into start --

guys. Got time for Thanks the it.

question take of from Please the Lasser We you. with next UBS. the Thank go Michael ahead. line

my Thanks a taking for evening. lot questions. Good

have how it And going So roughly that your where to is mature bad one, through just if number going question, going on two be, next is put one negative in out look like? this unit is follow-up. versus volumes And So in the this -- where I debate your does stores? card, indicated transactions basis how first you had what a you volumes some store of to year these year on like you're was this XXXX, especially it roll to two, then year, your be?

be still pretty we'll than XXXX, mean, I materially. Yes. higher

year just look had to million. doing don't have years XXXX. million back did was in -- $XX it five but then. what at back was $XX to in over stores the it that, go we in confident pretty old, So those probably and I I'm finished I close below we

going a change much. of have all to to flat don't going we're if know that that that complexion so comp, I is the And

you And condition follow-up back then be your to growth would how there negative opening under on Is plans? store pull order year comp would this which in need XXXX? store is your any in moderate for my question to you your

to -- this are our no, I'll answer plans Michael, that. I continue to effectively. the At point, run business

and sprint, -- to not marathon execute in we've say be agile the this ability long think smart and a We we're that deliver, on demonstrated the going our we on be run is kind playing I game. we a our way of we're what -- for we'll to business.

be XX worse have year. We to this store turned consider count. for to would us lowering Things had to our XX significantly

next a that but given be haven't pretty feel year, I confident around that number for will We that, number.

think whatever happening. a don't there. saw inhibit cautious might the that only that we've on would Michael, things a things be little right, And see one, material decline I two tied invested return We historically, said if there's us, from if liquidity in a perspective got we thing only reason, then is, which capital. the we for

depending somewhere low-double high-single in there open getting probably high from And because between return new we is XXs return put think to a capital we're on invested higher digits, cost on a slightly still inflation with cost, of with the even a stores, there. in you is a cost higher digits, factors even capital. Our what

So capital envision changing much. I liquidity don't the issue either return a that invested having on or

decade, through And to done we're for we're so the invest just going going -- we've like to yes, last cycles.

very in good close to with opening really looks Class we're 'XX what class our 'XX -- And Right. good. for be and to just earlier, 'XX looks comment at be that a too, Trevor looking what to said

and good lot luck. a Thanks

you. Thank

Thank you.

take Grom Thank go from our the Gordon with of Haskett. We ahead. question you. line Please next Chuck

guys comp gain. and the congrats Really you provide good Hi, year. afternoon, on really monthly thanks. helping Good a

February? what you far also could transactions so provide was the transactions fourth are and wondering So and quarter I by five months doing if January in in year-to-date

the Yes, transactions. sure. cadence monthly give and I you can Look,

transactions in for XX.X November So for in XX.X us, QX and down X.X October, were in December.

So pretty quarter. the throughout consistent

and far? in color so any And February January Okay.

Yes, cost very consistent with QX.

How we exited finish that have -- of range kind that's been consistent. fairly

Is Okay. you any that could more housing delineation where the provide? than has the there And any slowed color in markets rest on transactions country? turnover of

bit pressure. performing to rest that than the country, is seems sales West the bit into the softer and under say little a little a would more existing home of tie I

So that's what see. we

on then store on And Great. just last Karen's follow-up one one for productivity. me, a Okay. question new

NSP Over had years, to XX%. the averaged past great close couple you've that's of

our XXs, quarter on math This model. at least and low the was in

Just that point else there or anything timing that if led guys to? anything was to curious could you

we pretty But And Yes. those our a we Thanksgiving, -- then QX, I are was have Christmas week of the quarter would in around volume. the seasonal stores fourth when of also, low say don't opened late. business. in the weeks timing real the

And so but those from have low of timing that may NSD, of really more the just it's appearance the or...

opened our year, half to We XX% in of we're openings the And our have this the remember, of in going Exactly. stores back full. of too. XX XX

why And Yes. little expecting weaker that to think a bit I well. speed that's be as you're

Okay.

growth we to sales X% growth. on sales to flat XX% why negative That's comp, a an have X% would

XX%. Normally, So that in that's tells XX% to there. you the right

it. much. very Appreciate Thanks Okay.

with next [Operator Guggenheim of from you. Securities. line Steven ahead. Thank Forbes Please We Instructions] the take question go

I guys. focus, to Tom. wanted Good evening,

of about from cost scale And the to the the to, initiative maybe think what you do the about today, expect of supporting do should size you how some then I the I if about curious it And expand are we talked hearing you sort terms responsibilities? can of excitement think alleviate the terms tasking in could of rollout. you to what of initiative? they on what the that briefly members? was the FIT of net in program stores

Yes.

an service in, within in we it's really stores. put our So the XX effort customer to continue to improve

do-it-yourself from day whole the that into So can the we the customers our just focus to take away the do care tasks and come goal. taking associates can That's store. customers they so anything on professional of to during

started one the with pilot a market. around playing while in we So ago

was we what like feedback the really stores terrific. We saw. The from

the So this that and think XX the all of and the little is a then will exit to six better, a as And little presentation gets bit up open we're customer we year, the we service the markets we get in get within store as think we're bit we going into year. stores of again, effort next better.

And of in then it's gross terms investment the or program terms? just into like net on whether

majority team into and of little funds centralized got It but -- pulled differently. are the hours cost, It's it the managed come bit of stores from little a within bit a funds the it. a that's just

Thank Exciting. you.

the We Zaccone Thank with you. take Please go Citi. next the of Steven line ahead. question from

your seeing for the year afternoon. can implement about taking Good is the the tickets for competitive wanted reductions Or price landscape coming Is the something down? to decision positive reductions? price to with Great. questions. you're despite Thanks I And year. still costs due this ask purely price in to strategic then my strategic this be that gaps? there

-- I'll on start this Tom. price. is the I'll So

all prices We We goes. to are us to need continue ability where stated we year do as to to margin take to continue think we recapture supply be. costs scripts. in the down plan First, to going the chain give as our our our

just reaction give in And cash business. share It would widen to heavy quicker partners, chain influence And costs competitive we're supply anything first at down to thing our come our a give our the going flows, some going the It Pro is to up last take the the pretty ability go the a to to of basis. is year last here. time us moat I is say marketplace. on my They back. as we not a prices have in for saw in that significantly that XX years of

could on be at And average price a second low if half to, But the yes, my we QX if that the be negative of and lapping a but Yes. the was then it ticket we're mean, would keep had I case. very, look, reductions very also question, strategic part the in negative us comp, in in the comp XXXX. that QX back the highest of increases have in

much So harder it's compare. a

gross Okay. for follow-up Great. I that. Thanks just was margin. had The on

the just thanks of chain rate gross see X.X. supply had back you some margin business for the the potential But So a to medium the to look go go above that margin prior over besides gross on term, back detail that rate What that above if do drivers for the peak prior 'XX. see recouping you are costs? peak

think designers made I within above I few heard Trevor reasons. can is This we've go One, we've progress, got stores. over Tom. when peak. And was speaking, tremendous a think it's as the you XXX do the our for in prior you store,

the is a are a to intend has and bit within taken when sell our service design initiative a related, we they know So we higher-margin of an basket. designer improved store,

business, I then the help. department, frequency margin Two, we've on. and more a categories selling installation the professional the more added, us accessories within perspective. They're the And margin best better what think and done better that lastly, strategy, we supply getting from make could products, with house we've helping they're and

in stores, They still those even are our environment, continue best macro the better in better do to customers the of light buying products. and

So to be and a high had. to rate that we of as dynamic our now time, I do supply that happening look we question that what's understand costs, the that of will exceed believe It's I we'll I within at margin all but of able be chain believe end exceed. able

margin EBITDA the higher-teen the top margin from going we're as to may just little of piggyback gross achieve need of Tom long-term complexion strive just to our that, be to higher, we a about the Look, on mentioned, methodical to P&L as changes that, Yes. rate. on bit our

that strategic So about as we're methodical of well. and being kind

take We ahead. the line Please Sachs. question with next you. Goldman go Thank McShane from of Kate

dead were afternoon. there sourcing, wondering the any guide? if the 'XX kind wondered low in any guide which to a could with may maybe we in than if Good there your the do just then And better different regards changes circumstances talk end through updates beating thanks. your guide environment were were Hi, of or if end that of in XXXX? versus just sourcing than to be the horse, you you maybe your expect at of high Without would I

stab Yes, existing then the if Tom that home any I'll and was a mean, lower and at to this may I and drove think higher. rates reason in. Fed for weigh take I being sales Bryan

are than you I they so if services, a is lot consumer years much for is focused any on more of three read hard want can think on hard that right, on COVID. services report goods they on the because less consumer spend the you the goods spending

for can be positives us. net things two Those

we're at our from certainly feel great standpoint around competitive look with. are about think who super we're pleased competing We perspective. we we with when I that where

So those would may be the out. upside call I

agree. I'd

of what's the What second was part the -- question?

sourcing just kind of was 'XX. versus environment the any in I what in was wondering change in experienced about 'XX

No. provider, lowest cost no I country mean we're trying always find to the in. what it's matter

of constantly years. significantly changing last of suppliers XXX XX the best to country penetration. countries couple over don't in XXXX countries. anticipate are I over have be we than different wherever know, you Per can constantly are product. changing As the Those our get we any

the We of take the Liz America. with go Bank of you. Thank Please line Suzuki question ahead. from next

thinking about is price you you're the private how is Hi, environment Park when the this can current consumer on Liz for was getting in Suzuki. sensitive. label Sarah to I wondering mix if more speak

a at that. stab take I'll So

label. of are we the -- majority do what private is We

doing brands. our is private I X use. the anticipating of long All only any level is what where I installation brands SKUs place our categories that hard accessories don't label. brand want think name where our surface strategy works in we own carry we're But generally to in professionals across The in are change well. relevance

Please line of from the We'll next Evercore go question Greg ahead. with ISI. Melich take our

all up DIY side. do wanted of and like the -- DIY guidance? DIY. on by to end traffic to Pro It expect improve sign in starting your of I is Or to the ask is you decline you Any about shift? seems the outpacing pro would 'XX still that

Trevor. Greg, this is

I think right. exactly you're

is the of business hear pretty country. We their Pro year. our performing we is strong a them what from across towards did with Pros And the deep well. end Our the dive this early is business year,

and at They business but their They historic they've strong. of and business their feel feel probably not are got plenty backlogs, it's like still backlogs about their strong. concerned are don't

side, to the it I on have homeowner feels think that's like change. to man, certainly going

two that's changing, to feel going X.X mortgage something to maybe it where point, that's out sales or going Pro does close rounding whether change years with now than but stronger And be at we're rates like has some existing home to been homeowner. because much

Justin We'll from Please your Kleber you. line of next the question with Thank go take Baird. ahead.

Hi, good afternoon, everyone.

the is much On starting have risk? XX.X any trade see for exited And margin effectively, guide, XQ the of year point gross do that not the you you at? assumptions a or planning better, down you as the into contemplated from best your

off. of take of I'll part Yes, kind head it and then it first the

mean, on. you're I So yes, spot

starting kind exiting there. sequential the of then point and So is really from we improvement QX expect

the that's I'll let. then and right thought So

don't expect haven't too that. and to we Yes, trade much have seen we

jobs look look still of as the do customers Even to flooring best we as are better we still the are fourth into products. use and to month surface January that into today, of hard electing electing as and quarter,

think do get floor I so, to the can need. And they make that they project willing to if afford that spend to and what they're the the flooring decision they they want

haven't is in yet. - today. of we as seen down middle this, trade the we're the seeing not we're So And it and of this

foresee I change. that don't So

got Yes, merchandising a they're sharp their That's team on sophisticated line we've that structure. right.

seen haven't we down. a trade So

from the Jefferies. with line the Thank ahead. Matuszewski Please next go take Jonathan of question you. We'll

Thanks evening. squeezing me good in. for Hi,

price And well? gap you'd are on question as down. supply narrow how going not to bit be I sounds not, XXXX. suppose competitors is, Just are taking it is coming a to you like guess for your chain industry, going to that you're as costs in the think down I your planning one react I much pricing, question your be my if prices as guess,

competitors? we about, should contemplated how in that's guess, XXXX Thanks. gap price overall I your versus think Just your

that we're not price, back start of flowing managing price supply gap I'll for our you're on with in And with all into chain. savings that - dollar correct about we competitive dollar feel today. good we're the anticipating

some P&L As the the change, we've we Bryan mentioned hit. and EBIT of complexities to earlier, long-term within want margins that got

a market will the But change is spread good. our in that So little bit.

We to continue be good. anticipate it to

am we're I very see doing. a have we marketplace - in if within today. we're it So will confident I watch the not it, - We're accordingly don't react we what and what seeing

ahead. the take We'll question Please the Seth Sigman line Barclays. from you. go of next with Thank

to inflation are It still across Great, seeing the question on I I'm pricing in curious, to like wanted sounds terms competition follow-up rational, thanks for taking extent. if maybe but own what frame you pricing of the the could we're some how is inventory And question. versus that units? now? much growth one position, of have And right then Thank just follow-up? seeing inventory is your I you. channel year-over-year you the

I'll kind start part - or from seeing is Ersan, standpoint. with you're the pricing and what this Tom. I'll to start Trevor want an inventory level if you hit of

we're big From to from the pay channel, movement do. competition think always price pricing I box which a much seen to aggressive in we'll haven't pricing. independent in an certainly we is We continue standpoint, seems like have them, seeing to attention price.

learned previous recessions a have significant - being from extent. eroding I margins they think We and cautious they're have their in to

better our been. the channel against like is feel been it's it's than I than why historically that's spread So probably independent

from rationale level inventory that that, an So stays we hope standpoint.

levels Okay. at for high to seems this them. is close to in good And shape to competition Inventory Ersan. seem point be this be and

everyone I went general, a to everything. last tell don't chasing see. have sure they We - mean didn't inventory I But for of sure. they're in in know we lot hard they're was that's from - what It's that high. stock. as we're

inflation grew on a as sales, our was piece, inventory a the why at tie pace And faster in that mean, just than to inflation well. big I reason

take ROTH next Bellinger David We'll you. the MKM. go of the ahead. Thank Please line question from with

for the thanks question. Hi,

flowing year in earlier So were of, to benefit helps the you guide. mentioned through sales you you the newer the the that maturing stores to comps, get full

of it seems you're point, ramp like stores? contemplating planning of can you type size comp from first, some units that this not in environment. maturing because those two, subset of you're at slower And So the lift macro the

is a correct Thank So that you. assumption?

so comp is Yes, your we to what of to kind adds it yes, three about our question, that. so four point that new stores believe add

way, six it. to be way will our another think is to down mature the stores kind So three of about really said

given markets. And on of be haven't we the in by but somewhat that offset transparent right? number cannibalization, Roughly is existing number completely XX% though, are stores that, our just

flowing And so isn't all wouldn't work through because that obviously math the either.

going So, cannibalization there markets. oh is stores - some about of sorry existing as into, XX% our an are

of second environment, a part by just but the the question, And your I that macroeconomic not bit would little be much. it tampered think

Thank question the Dean line take Rosenblum you. We'll Please with from ahead. final go Bernstein. of the

is DIY? follow-up I outlook actually project explicitly by potential or Hi the guys, that business the kitchen it do existing lot the thanks getting bought one I selling or your talked sales of about and wondering I a And house on business for We've of a if to driven the have call. And of was then need you home taking ready my home Pro could am it, my impact hard home mix for about surface. on in floor business. I as see versus mix and you other just versus the I'm my I or a talk

exactly because we know housing I I change how house, and is carpet I'll sell it sell it, over? my I much someone of doesn't this, think it. the hey, the of floors bedrooms. let - and the going [ph]. before me is, change start the hurt just bought business my I'm to business don't housing and know me that do I floors in it don't like when know Trevor let don't house, Or driven can while know by add the saying, my turns I I just But a what I percentage bought I

percentage a are flooring. redoing customers of There's, that those absolutely their

home have that is, sales So home go we are wind our positive, our what sales of existing it's when Floor many our existing backs. I to base. how for wind are can't that. in & when transactions And exactly to say negative, But number Decor

I that's Trevor, So if have there's side back deal anything to know, with. of don't we the what question. to

mean, in I've We've XX existing downturns home we've time slow. And been sales. seen years. comps every right. That's I had three our here

sales? your customers of of Got of it. as Pro the growth seeing terms penetration Pro Pros showing possible purchasing you of DIY Pros up the are that customers for And had. purchasing And the because growth the essentially then desk DIYs Pro DIY. they're jobs Is that follow-up versus essentially, through that bringing customers are the the in on it you're for the increase already Pro materials is that in

it's listen, And that. mean, we are strong businesses out I broadly I across some you of when possible. don't Intel our have that their called says larger any don't I well. know think that as have look competitors retail, Pro

doing behalf point low more a on to and half in spending job. in we're of is can I But the XXs I'm consumer. incredible a they're ago, the an from sure the that low now So XXs. we're up certainly It's that year not

of call. think, the I reached this end Yes, go we have please ahead.

think questions, no questions. that right? I There's, So more concludes the

you, your I closing over sir. to was more No over just comments, questions. handing for

my you so very much. Thank comments. closing Good,

like about to feel really way I it XXXX. a we look, executed the good would So very I just say difficult in that

I it, be 'XX given in -- anticipating we to weren't to we be were gave interest our the that us rates. you low script, be end they as day we Ukraine to in guidance, about aggressive As the for had raising started, guidance think my said Feds as the war at if that going of and

anticipated we what pricing the was would very of. end at press to natural don't of be and and low think the that on gas I And do. kind Ukraine And war its proud effect something

our part-time full-time here. and difficult able our one faced environments XX in never I my open the store Our across in stores have that to of better, continue We service years XX most opening come associates scores were been down. to turnover

will proud teams not [indiscernible] just sprint. continue I'm the a And us. it. - We're our a side widen way say cycle. competition, other be is invest marathon, running and and our to excited to So around going we It really improve on for to bring valley, year about of we're this in moat a a the a executed. that this of they will what we're This better can the place is

you. appreciate joining call. I I So the appreciate and everyone interest, everyone's Thank

Thank you. Ladies and gentlemen, this concludes teleconference. today's

You this participation. may disconnect for you Thank your lines your at time.