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目录

74
美国
证券交易委员会
华盛顿特区20549
_________________________________________
表格10-Q
_________________________________________
☒ 根据1934年证券交易法第13或15(d)条，本季度报告
截至季度结束日期的财务报告2024年9月26日
或者
☐ 根据1934年证券交易法第13或15（d)条的转型报告
在从____过渡到____的过渡期间
委员会文件号码 001-38070
_________________________________________
Floor & Decor Holdings, Inc.
(根据其章程规定的注册人准确名称)
_________________________________________
特拉华州27-3730271
（设立或组织的其他管辖区域）（纳税人识别号码）
2500 Windy Ridge Parkway SE
亚特兰大乔治亚州30339
，（主要行政办公地址）(邮政编码)
(404)471-1634 
(注册人电话号码，包括区号)请在以下单选框中打勾：
请在以下单选框中打勾：
_________________________________________
在法案第12(b)条的规定下注册的证券：
每一类的名称交易标志在其上注册的交易所的名称
A类普通股，每股面值0.001美元FND请使用moomoo账号登录查看New York Stock Exchange

请在以下复选框中打勾:无论注册人(1)是否已在过去12个月内提交了《证券交易法》第13或15（d）条规定的所有报告(或者对于注册人在此期间被要求提交此类报告的较短期间)，以及(2)在过去90天内是否已接受了此类提交要求。 是 ☒ 不 ☐
在检查标记中表明注册人是否已经在过去的12个月内（或者为注册人需要提交这些文件的较短期间）根据S-T法规405规定，递交了每个互动数据文件。 是 ☒ 不 ☐
请勾选标记以说明注册人是大型快速申报人、加速申报人、非加速申报人、较小的报告公司还是新兴成长型公司。请查看《交易所法》第120亿.2条中“大型快速申报人”、“加速申报人”、“较小的报告公司”和“新兴成长型公司”的定义。
大型加速存取器
☒
加速存取器
☐
非大型快速提交者
☐
较小报告公司
☐
新兴成长公司
☐
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班级
2024年10月28日未结算余额
A类普通股，每股面值0.001美元107,231,341

目录

目录
页面
第 1 项。
第 2 项。
第 3 项。
第 4 项。
第 1 项。
第 1A 项。
第 2 项。
第 5 项。
第 6 项。

2
目录

前瞻性声明
本季度报告中的讨论涵盖了截至2024年9月26日的季度报告（“季度报告”），包括第I部分“财务状况和经营结果的管理层讨论与分析”下的项目2和第II部分项目1A“风险因素”，其中包含根据联邦证券法的涵义的前瞻性声明。除了本季度报告中包含的历史事实的声明外，还包括关于我们未来经营结果和财务状况、业务策略和计划以及管理层对未来运营目标的声明。在某些情况下，您可以通过诸如“可能”、“将”、“应该”、“预计”、“计划”、“预期”、“可能”、“寻求”、“打算”、“目标”、“项目”、“考虑”、“相信”、“估计”、“预测”、“预算”、“潜在”或“继续”等词语来识别前瞻性陈述或这些术语的否定形式或其他类似表达。
本季度报告中的前瞻性陈述基于我们对公司业务、经济和其他未来状况的当前期望、假设、估计和预测，包括自然灾害对销售的影响。这些陈述涉及已知和未知的风险、不确定性和可能导致我们实际结果、业绩或成就与前瞻性陈述中明示或暗示的任何未来结果、业绩或成就有实质不同的重要因素。
尽管我们认为本季度报告中的前瞻性陈述所体现的预期是合理的，但我们无法保证未来事件、结果、业绩或成就。许多重要因素可能导致实际结果与本季度报告中前瞻性陈述所示结果有实质性差异，包括但不限于本季度报告第I部分“管理层对财务状况和经营成果的讨论与分析”中描述的那些因素，第II部分“风险因素”中第1A条目以及公司在提交给证券交易委员会（“SEC”）的其他文件中的描述。一些可能导致实际结果与我们预期有所不同的关键因素包括以下内容：
•经济、硬质地板行业、消费者信心和自由支出、以及住房市场整体下滑，其中部分原因是由于持续高企或上升的通货膨胀或利率期货。
•我们未能成功应对计划新增店面增长所带来的挑战，以及在扩张过程中遇到的意外困难或成本增加的影响；
•我们无法以可接受的条款签订额外店铺的租约，或者续签或更换我们目前的店铺租约；
•我们未能成功预测和管理趋势、消费者偏好和需求；
•我们无法成功管理增加的竞争;
•我们无法管理我们的库存，包括库存过时、缩水和损坏的影响；
•政治和监管条件导致不确定性和市场波动，包括即将到来的美国总统大选以及与新政府相关的立法、监管、贸易和政策；
•我们的运输能力、供应链以及相关的计划和控制过程出现任何干扰，包括承运商能力限制、港口拥堵或关闭，运输成本、其他供应链成本或产品短缺；
•任何产品、材料和运输成本的批发价格上涨超出我们控制范围，包括由于通货膨胀导致的成本增加；
•重要人员辞职、无能力或死亡，包括我们的高管;
•我们无法吸引、聘用、培训和留住高素质的经理和员工;
•任何劳动活动的影响；
•我们对我们销售的产品依赖于外国进口，包括从国外获取产品所带来的风险；
•地缘政治风险，如中东冲突，乌克兰持续战争以及与全球贸易和关税相关的美国政策，如维吾尔强迫劳工防范法案下的进口限制，或任何反倾销和反补贴税，任何这些都可能影响我们从外国供应商进口产品的能力或增加我们的成本；
•我们管理可比店铺销售的能力;
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•如果我们任何供应商未能按照优惠条款和价格向我们提供优质产品，或未能遵守我们为产品设定的质量标准；
•我们无法找到足够合适的天然产品;
•天气条件、自然灾害或其他意外事件的影响，包括可能影响我们运营的公共卫生危机；
•我们无法保持足够的现金流或流动资金来支持我们不断扩大的业务并偿还现有的债务;
•受我们负债所施加的限制对我们当前和未来业务的影响，包括与我们的变量利率债务相关的风险；
•对我们、我们的产品或供应商适用的任何指控、调查、诉讼或违反法律和法规的行为；
•我们无法充分保护与我们的客户、我们、我们的合作伙伴、我们的供应商和其他第三方相关的信息的隐私和安防-半导体。
•任何对我们信息系统的重大中断，包括我们的网站；
•新的或者变化中的法律或者法规，包括税法和贸易政策和法规；
•任何未能保护我们的知识产权或与我们的知识产权或第三方的知识产权发生纠纷；
•任何未来战略交易的影响；和
•我们有能力管理与企业社会责任相关的风险。
由于前瞻性声明固有地面临风险和不确定性，其中一些无法预测或量化，因此您不应依赖这些前瞻性声明作为未来事件的预测。本季度报告中包含的前瞻性声明仅于此日期起具有效力。随着时间的推移会出现新的风险和不确定性，我们无法预测这些事件或它们对我们的影响。如果我们的前瞻性声明反映的事件和情况发生变化，我们的业务、财务状况和运营结果可能与我们的前瞻性声明中所表达的有实质性差异。除适用法律规定外，我们不打算公开更新或修订本处包含的任何前瞻性声明，无论是否基于任何新信息、未来事件或其他情况。
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目录

第I部分-财务信息
项目1：基本报表
Floor & Decor Holdings, Inc.及其子公司
汇编的综合资产负债表
（未经审计）
以千为单位，除了分享和每股数据截至9月26日，
2024		截至12月28日，
2023
资产    
流动资产：    
现金及现金等价物$180,771 $34,382 
应收所得税款项3,317 27,870 
应收款项，净额104,351 99,513 
净存货1,046,007 1,106,150 
预付费用和其他流动资产54,419 48,725 
总流动资产1,388,865 1,316,640 
固定资产净额1,763,980 1,629,917 
租赁资产1,346,653 1,282,625 
无形资产, 净额151,119 153,869 
商誉257,940 257,940 
递延所得税资产，净值16,635 14,227 
其他7,037 7,332 
所有基金类型，资产开多总计3,543,364 3,345,910 
资产总额$4,932,229 $4,662,550 
负债和股东权益
流动负债:
长期贷款的流动部分$2,103 $2,103 
租赁负债的当前部分134,629 126,428 
应付账款737,845 679,265 
应计费用及其他流动负债305,971 332,940 
递延收入12,472 11,277 
流动负债合计1,193,020 1,152,013 
期限贷款194,630 194,939 
租赁负债1,368,514 1,301,754 
递延所得税负债，净额53,373 67,188 
其他负债11,637 15,666 
长期负债总额1,628,154 1,579,547 
负债合计2,821,174 2,731,560 
承诺和 contingencies (注5)
股东权益
资本股本:
优先股，$0.00010.001每股面值; 10,000,000.01股已发行并流通；0 2024年9月26日和2023年12月28日分别发行和流通的股份
— — 
普通股A类，$0.001每股面值; 450,000,000 107,223,985 股份于2024年9月26日发行并流通， 106,737,532 股份于2023年12月28日发行并流通
107 107 
普通股B类，$0.001每股面值; 10,000,000 0 2024年9月26日和2023年12月28日发行并流通的股份
— — 
普通股C类，$0.001每股面值; 30,000,000 0 2024年9月26日和2023年12月28日发行并流通的股份
— — 
额外实收资本536,238 513,060 
累积其他全面损益，净额
(79)1,422 
保留盈余1,574,789 1,416,401 
股东权益总额2,111,055 1,930,990 
负债和股东权益总额$4,932,229 $4,662,550 
请参阅附注事项的简明合并财务报表。
5
目录

Floor & Decor Holdings, Inc.及其子公司
基本报表中的综合收益和综合收益表
（未经审计）
十三周年度结束39周结束
以千为单位，除每股数据外September 26,
2024		9月28日，
2023		September 26,
2024		9月28日，
2023
净销售额$1,117,926 $1,107,812 $3,348,354 $3,365,763 
销售成本632,056 640,357 1,901,424 1,949,557 
毛利润485,870 467,455 1,446,930 1,416,206 
营业费用：
销售和店铺运营339,135 308,581 1,014,888 923,658 
ZSCALER, INC.67,687 59,870 202,135 185,060 
开业前费用12,731 14,232 32,951 32,226 
营业费用总计419,553 382,683 1,249,974 1,140,944 
营业利润66,317 84,772 196,956 275,262 
利息费用，净额189 1,246 2,807 9,006 
税前收入66,128 83,526 194,149 266,256 
所得税费用14,438 17,603 35,761 57,357 
净利润$51,690 $65,923 $158,388 $208,899 
避险工具公平价值变动，税后净额(185)(907)(1,501)(1,882)
总综合收益$51,505 $65,016 $156,887 $207,017 
基本每股收益$0.48 $0.62 $1.48 $1.97 
摊薄每股收益$0.48 $0.61 $1.46 $1.94 
请参阅附注事项的简明合并财务报表。
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目录

Floor & Decor Holdings, Inc.及其子公司
股东权益的简化合并报表
（未经审计）
普通股股本外溢价
累计其他综合收益（损失）
未分配利润股东权益合计
A类
（以千为单位）股份数量
2023年12月29日余额106,738 $107 $513,060 $1,422 $1,416,401 $1,930,990 
股票补偿费用— — 7,232 — — 7,232 
行使股票期权171 — 3,854 — — 3,854 
根据限制性股票单位的归属而发行的普通股184 — — — — — 
员工股票购买计划下发行的股票28 — 2,720 — — 2,720 
普通股以支付税务负债赎回(110)— (13,057)— — (13,057)
其他综合损失，净额— — — (970)— (970)
净利润— — — — 50,032 50,032 
2024年3月28日余额107,011 $107 $513,809 $452 $1,466,433 $1,980,801 
股票补偿费用— — 8,355 — — 8,355 
行使股票期权112 — 1,588 — — 1,588 
根据限制性股票单位的归属而发行的普通股13 — — — — — 
普通股票赎回以支付税负(3)— (470)— — (470)
其他综合损失，净额— — — (346)— (346)
净利润— — — — 56,666 56,666 
2024年6月27日余额107,133 $107 $523,282 $106 $1,523,099 $2,046,594 
股票补偿费用— — 10,031 — — 10,031 
行使股票期权49 — 769 — — 769 
根据限制性股票单位的归属而发行的普通股18 — — — — — 
员工股票购买计划下发行的股票31 — 2,739 — — 2,739 
普通股票因纳税责任赎回(7)— (583)— — (583)
其他综合损失，净额
— — — (185)— (185)
净利润— — — — 51,690 51,690 
2024年9月26日余额107,224 $107 $536,238 $(79)$1,574,789 $2,111,055 
请参阅附注事项的简明合并财务报表。
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目录


Floor & Decor Holdings, Inc.及其子公司
股东权益的简化合并报表
（未经审计）
普通股股本外溢价
累计其他综合收益（损失）
未分配利润股东权益总计
A类
（以千为单位）股份数量
2022年12月30日的余额106,151 $106 $482,312 $4,337 $1,170,421 $1,657,176 
股票补偿费用— — 6,741 — — 6,741 
行使股票期权79 — 2,130 — — 2,130 
根据限制性股票单位的归属而发行的普通股117 — — — — — 
员工股票购买计划下发行的股票43 — 2,558 — — 2,558 
用于税务责任的普通股赎回(119)— (10,863)— — (10,863)
其他综合损失，净额
— — — (849)— (849)
净利润— — — — 71,524 71,524 
2023年3月30日余额106,271 $106 $482,878 $3,488 $1,241,945 $1,728,417 
股票补偿费用— — 8,306 — — 8,306 
行使股票期权123 — 2,728 — — 2,728 
根据限制性股票单位的归属而发行的普通股8 — — — — — 
普通股票用于偿还税务责任(11)— (998)— — (998)
其他综合损失，净额
— — — (126)— (126)
净利润— — — — 71,452 71,452 
2023年6月29日余额106,391 $106 $492,914 $3,362 $1,313,397 $1,809,779 
股票补偿费用— — 5,289 — — 5,289 
行使股票期权134 1 3,050 — — 3,051 
根据限制性股票单位的归属而发行的普通股7 — — — — — 
员工股票购买计划下发行的股票41 — 2,601 — — 2,601 
普通股票赎回以支付税务责任(3)— (260)— — (260)
其他综合损失，净额
— — — (907)— (907)
净利润— — — — 65,923 65,923 
2023年9月28日余额106,570 $107 $503,594 $2,455 $1,379,320 $1,885,476 
请参阅附注事项的简明合并财务报表。
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目录

Floor & Decor Holdings, Inc.及其子公司
简明的综合现金流量表
（未经审计）
39周结束
（以千为单位）September 26,
2024		9月28日，
2023
经营活动    
净利润$158,388 $208,899 
调整净利润以计入经营活动现金流量:
折旧和摊销172,690 146,947 
股票补偿费用25,618 20,336 
延迟所得税(15,813)4,953 
资产减值损失及处置净额1,511 858 
业绩补偿责任准入公允价值变动(866)2,329 
利率上限衍生合同110 85 
营运资产和负债变动，扣除收购影响净额：
应收款项，净额(4,838)2,931 
净存货60,143 195,590 
应付账款60,747 109,338 
应计费用及其他流动负债21,939 2,950 
所得税24,840 (8,912)
递延收入1,195 3,323 
其他，净额(3,896)9,348 
经营活动产生的现金流量净额501,768 698,975 
投资活动
购买固定资产(349,360)(413,717)
收购，扣除净现金— (17,353)
投资活动产生的净现金流出(349,360)(431,070)
筹资活动
偿还长期贷款(1,577)(1,577)
循环信用额度借款258,600 518,900 
可循环授信额度的付款(258,600)(729,100)
支付待定收益的责任(2,002)(5,241)
行使股票期权所得6,211 7,909 
员工股票购买计划收入5,459 5,159 
股票补偿奖励的税收支付(14,110)(12,121)
筹集资金净额(6,019)(216,071)
现金及现金等价物净增加额146,389 51,834 
现金及现金等价物期初余额34,382 9,794 
10,468,645$180,771 $61,628 
现金流补充资料披露
在营运租赁下取得的建筑物和设备$167,135 $192,906 
支付利息净额，减去已资本化的利息$3,959 $8,871 
支付的所得税款，净额$26,728 $62,105 
期末固定资产累计$89,090 $150,111 
See accompanying notes to condensed consolidated financial statements.
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Table of Contents

Floor & Decor Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
Nature of Business
Floor & Decor Holdings, Inc., together with its subsidiaries (the “Company,” “we,” “our,” or “us”) is a high-growth, differentiated, multi-channel specialty retailer of hard surface flooring and related accessories and seller of commercial surfaces. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate and vinyl, and natural stone along with decorative accessories and wall tile, installation materials, and adjacent categories at everyday low prices. Our stores appeal to a variety of customers, including professional installers and commercial businesses (“Pro”) and homeowners, which are comprised of do it yourself customers (“DIY”) and buy it yourself customers, who buy our products for professional installation (“BIY”). We operate within one reportable segment.
As of September 26, 2024, the Company, through its wholly owned subsidiary, Floor and Decor Outlets of America, Inc. (“Outlets”), operates 241 warehouse-format stores, which average 77,000 square feet, and five small-format standalone design studios in 38 states, as well as four distribution centers and an e-commerce site, FloorandDecor.com, and a commercial surfaces business through its subsidiary, Spartan Surfaces, LLC (“Spartan”). Substantially all of the Company’s operating assets and liabilities are held by Outlets.
Fiscal Year
The Company’s fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31st. The fiscal year ending December 26, 2024 (“fiscal 2024”) and the fiscal year ended December 28, 2023 (“fiscal 2023”) include 52 weeks. 52-week fiscal years consist of thirteen-week periods in each quarter of the fiscal year. When a 53-week fiscal year occurs, the Company reports the additional week at the end of the fiscal fourth quarter.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The Condensed Consolidated Balance Sheet as of December 28, 2023 has been derived from the audited Consolidated Balance Sheet for the fiscal year then ended. The interim condensed consolidated financial statements should be read together with the audited consolidated financial statements and related footnote disclosures included in the Company’s Annual Report on Form 10-K for fiscal 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024 (the “Annual Report”). Management believes the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of results for the interim periods presented. Results of operations for the thirteen and thirty-nine weeks ended September 26, 2024 are not necessarily indicative of the results to be expected for the full year.
Summary of Significant Accounting Policies
There were no significant changes to our Significant Accounting Policies as disclosed in the Annual Report. For more information regarding our Significant Accounting Policies and Estimates, see Note 1, “Summary of Significant Accounting Policies” in Part II, Item 8, “Financial Statements and Supplementary Data” of our Annual Report.
Recently Adopted Accounting Pronouncements
Leases. In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-01, “Leases (Topic 842), Common Control Arrangements.” The amendments in the ASU applying to public business entities clarify the accounting for leasehold improvements associated with common control leases, reducing diversity in practice and providing investors with financial information that will better reflect the economics of those transactions. In the first quarter of fiscal 2024, the Company adopted ASU No. 2023-01 on a prospective basis to all new leasehold improvements. The adoption of ASU 2023-01 did not have an impact on the Company’s consolidated financial statements or related disclosures and would only have an impact to the extent that the Company has future common control leases.
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Supplier Finance Programs. In September 2022, the FASB issued ASU No. 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50).” The ASU requires disclosure of the key terms of outstanding supply chain finance programs and a rollforward of the related amounts due to vendors participating in these programs. In the first quarter of fiscal 2023, the Company adopted the portion of the ASU 2022-04 guidance requiring disclosure of key terms of supply chain finance programs. The portion of the ASU 2022-04 guidance requiring a rollforward of activity within supply chain finance programs will be adopted in the Company’s Annual Report for fiscal 2024 and is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows as the standard only impacts financial statement footnote disclosures. For additional information, refer to Note 9, “Supply Chain Finance.”
Recently Issued Accounting Pronouncements
Codification Improvements. In March 2024, the FASB issued ASU No. 2024-02, “Codification Improvements - Amendments to Remove References to the Concepts Statements.” ASU 2024-02 removes references to various FASB Concepts Statements within the Codification. The guidance in ASU No. 2024-02 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, and can be applied either prospectively to all new transactions recognized on or after the date that the entity first applies the amendments or retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied. Early adoption is permitted. The adoption of ASU 2024-02 is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
Stock Compensation. In March 2024, the FASB issued ASU No. 2024-01, “Compensation - Stock Compensation (Topic 718).” The amendments in this ASU clarify how an entity determines whether a profits interest or similar award is within the scope of Accounting Standards Codification (“ASC”) 718, Compensation-Stock Compensation (“ASC 718”), by adding illustrative guidance. The guidance in ASU No. 2024-01 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, and can be applied either retrospectively to all prior periods presented in the consolidated financial statements or prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments. Early adoption is permitted. The adoption of ASU 2024-01 is not expected to have any impact on the Company’s consolidated financial statements or related disclosures. The Company expects that ASU 2024-01 would only be applicable to the Company to the extent that it issues profits interests or similar awards.
Income Taxes. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740).” The amendments in this ASU improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. Additionally, this ASU improves the effectiveness and comparability of disclosures by adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with SEC Regulation S-X 210.4-08(h) and by removing disclosures that no longer are considered cost beneficial or relevant. This guidance in ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption of the standard is permitted. The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
Segment Reporting. In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU expands disclosure of reportable segments by requiring more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how the Chief Operating Decision Maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The guidance in ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. This guidance should be applied retrospectively to all prior periods presented in the consolidated financial statements. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on the Company’s consolidated financial statements and related disclosures.
Presentation and Disclosure Requirements. In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” The ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The ASU was issued in response to the SEC’s August 2018 final amendments in Release No. 33-10532, Disclosure Update and Simplification, that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated. The guidance in ASU 2023-06 is intended to align GAAP requirements with those of the SEC and to facilitate the application of GAAP for all entities. The amendments introduced by ASU 2023-06 are effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. If, by June 30, 2027, the SEC has not removed the applicable requirements from its existing regulations, the pending content of the associated amendment will be removed from the ASC and will not become effective for any entities. Early adoption is permitted. The adoption of ASU 2023-06 is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
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2. Revenue
Net sales consist of revenue associated with contracts with customers for the sale of goods and services in amounts that reflect the consideration the Company is entitled to receive in exchange for those goods and services.
Deferred Revenue & Contract Liabilities
In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when the customer obtains control of the inventory. Amounts in deferred revenue at period-end reflect orders for which the inventory was not yet ready for physical transfer to customers.
Contract liabilities within the Condensed Consolidated Balance Sheets as of September 26, 2024 and December 28, 2023 primarily consisted of deferred revenue as well as amounts in accrued expenses and other current liabilities related to the Pro Premier Rewards loyalty program and unredeemed gift cards. As of September 26, 2024, contract liabilities totaled $73.0 million and included $52.4 million of loyalty program liabilities, $12.5 million of deferred revenue, and $8.1 million of unredeemed gift cards. As of December 28, 2023, contract liabilities totaled $69.6 million and included $45.6 million of loyalty program liabilities, $11.3 million of deferred revenue, and $12.7 million of unredeemed gift cards. Of the contract liabilities outstanding as of December 28, 2023, approximately $17.3 million was recognized in revenue during the thirty-nine weeks ended September 26, 2024.
Disaggregated Revenue
The Company has one reportable segment. The following table presents the net sales of each major product category (dollars in thousands):
Thirteen Weeks Ended
September 26, 2024September 28, 2023
Product CategoryNet Sales% of Net SalesNet Sales% of Net Sales
Laminate and vinyl$271,210 24 %$287,631 26 %
Tile255,202 23 258,148 23 
Installation materials and tools231,400 21 211,732 19 
Decorative accessories and wall tile188,537 17 183,657 17 
Wood67,016 6 66,646 6 
Natural stone50,704 5 51,655 5 
Adjacent categories27,852 2 21,789 2 
Other (1)26,005 2 26,554 2 
Total$1,117,926 100 %$1,107,812 100 %
Thirty-nine Weeks Ended
September 26, 2024September 28, 2023
Product CategoryNet Sales% of Net SalesNet Sales% of Net Sales
Laminate and vinyl$808,598 24 %$886,358 26 %
Tile774,018 23 793,995 24 
Installation materials and tools683,296 21 622,249 18 
Decorative accessories and wall tile577,921 17 573,014 17 
Wood201,146 6 193,207 6 
Natural stone154,127 5 160,565 5 
Adjacent categories75,963 2 61,814 2 
Other (1)73,285 2 74,561 2 
Total$3,348,354 100 %$3,365,763 100 %
(1) Other includes delivery, sample, and other product revenue and adjustments for deferred revenue, sales returns reserves, and other revenue related adjustments that are not allocated on a product-category basis.
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3. Debt
The following table summarizes the Company’s long-term debt as of September 26, 2024 and December 28, 2023:
in thousandsMaturity Date
Interest Rate Per Annum at September 26, 2024 (1)
September 26, 2024December 28, 2023
Credit Facilities:
Term Loan FacilityFebruary 14, 20277.25%Variable$200,819 $202,396 
Asset-based Loan Facility (“ABL Facility”)August 4, 20276.10%Variable— — 
Total secured debt at par value200,819 202,396 
Less: current maturities2,103 2,103 
Long-term debt maturities198,716 200,293 
Less: unamortized discount and debt issuance costs4,086 5,354 
Total long-term debt$194,630 $194,939 
(1) The applicable interest rate for the Term Loan Facility as presented herein does not include the effect of interest rate cap agreements. Refer to Note 8, “Fair Value Measurements” for additional details related to the Company’s interest rate cap agreements.
The following table summarizes scheduled maturities of the Company’s debt as of September 26, 2024:
in thousandsAmount
Thirteen weeks ending December 26, 2024$526 
20252,103 
20262,629 
2027195,561 
Total minimum debt payments$200,819 
Components of interest expense are as follows for the periods presented:
Thirteen Weeks EndedThirty-nine Weeks Ended
in thousandsSeptember 26, 2024September 28, 2023September 26, 2024September 28, 2023
Total interest expense, net of interest income (1)
$2,849 $3,255 $9,653 $14,022 
Less: interest capitalized2,660 2,009 6,846 5,016 
Interest expense, net$189 $1,246 $2,807 $9,006 
(1)Total interest expense, net of interest income includes interest income related to the Company’s interest rate cap agreements. The Company recognized no interest income related to interest rate cap agreements for the thirteen weeks ended September 26, 2024 compared to $1.4 million for the thirteen weeks ended September 28, 2023. The Company recognized interest income related to interest rate cap agreements of $1.9 million for the thirty-nine weeks ended September 26, 2024 compared to $3.7 million for the thirty-nine weeks ended September 28, 2023. Refer to Note 8, “Fair Value Measurements” for additional details related to the Company’s interest rate cap agreements.
Term Loan Facility
The Term Loan Facility bears interest at a rate equal to either (a) a base rate determined by reference to the highest of (1) the “Prime Rate,” (2) the U.S. federal funds rate plus 0.5% and (3) the one-month Term Secured Overnight Financing Rate (“SOFR”) plus 1.0%, or (b) Adjusted Term SOFR, plus, in each case, the Applicable Margin (each term as defined in the Term Loan Facility credit agreement). The Applicable Margin for base rate loans will be between 1.00% and 1.25%, and the Applicable Margin for SOFR loans will be between 2.00% and 2.25% (subject to a floor of 0.00%), in each case, if the Company exceeds certain leverage ratio tests.
All obligations under the Term Loan Facility are secured by (1) a first-priority security interest in substantially all of the property and assets of Outlets and the other guarantors under the Term Loan Facility, with certain exceptions, and (2) a second-priority security interest in the collateral securing the ABL Facility.
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ABL Facility
As of September 26, 2024, the Company’s ABL Facility had a maximum availability of $800.0 million with actual available borrowings limited to the sum, at the time of calculation, of (a) eligible credit card receivables multiplied by the credit card advance rate, plus (b) the cost of eligible inventory, net of inventory reserves, multiplied by the applicable appraisal percentage, plus (c) 85% of eligible net trade receivables, plus (d) all eligible cash on hand, plus (e) 100% of the amount for which any eligible letter of credit must be honored after giving effect to any draws, minus certain Availability Reserves (each component as defined in the ABL Facility). The ABL Facility is available for issuance of letters of credit and contains a sublimit of $50.0 million for standby letters of credit and commercial letters of credit combined. Available borrowings under the facility are reduced by the face amount of outstanding letters of credit. The Company’s ABL Facility allows for the Company, under certain circumstances, to increase the size of the facility by an additional amount up to $200.0 million.
All obligations under the ABL Facility are secured by (1) a first-priority security interest in the cash and cash equivalents, accounts receivable, inventory, and related assets of Outlets and the other guarantors under the ABL Facility, with certain exceptions, and (2) a second-priority security interest in substantially all of the other property and assets of Outlets and the other guarantors under the Term Loan Facility.
Based on financial data as of September 26, 2024, net availability under the ABL Facility was $622.3 million as reduced by letters of credit of $37.1 million.
Covenants
The credit agreements governing the Term Loan Facility and ABL Facility contain customary restrictive covenants, which, among other things and with certain exceptions, limit the Company’s ability to (i) incur additional indebtedness and liens in connection with such indebtedness, (ii) pay dividends and make certain other restricted payments, (iii) effect mergers or consolidations, (iv) enter into transactions with affiliates, (v) sell or dispose of property or assets, and (vi) engage in unrelated lines of business. In addition, these credit agreements subject the Company to certain reporting obligations and require that the Company satisfy certain financial covenants, including, among other things, a requirement that if borrowings under the ABL Facility exceed 90% of availability, the Company will maintain a certain fixed charge coverage ratio (defined as Consolidated EBITDA less non-financed capital expenditures and income taxes paid to consolidated fixed charges, in each case as more fully defined in the ABL Facility).
The Term Loan Facility has no financial maintenance covenants. The Company is currently in compliance with all covenants under the credit agreements.
Fair Value of Debt
Market risk associated with the Company’s long-term debt relates to the potential change in fair value and negative impact to future earnings, respectively, from a change in interest rates. The aggregate fair value of debt is based primarily on the Company’s estimates of interest rates, maturities, credit risk, and underlying collateral. The estimated fair value and classification within the fair value hierarchy of the Term Loan Facility was as follows as of September 26, 2024 and December 28, 2023:
in thousandsFair Value Hierarchy ClassificationSeptember 26, 2024December 28, 2023
Term Loan FacilityLevel 3$200,317 $201,637 
The Term Loan Facility fair value is classified as Level 3 within the fair value hierarchy due to the use of unobservable inputs significant to the valuation, including indicative pricing from counterparties and discounted cash flow methods. No amounts were outstanding under the ABL Facility as of September 26, 2024 and December 28, 2023.
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4. Income Taxes
Effective tax rates for the thirteen and thirty-nine weeks ended September 26, 2024 and September 28, 2023 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within each period. The Company’s effective income tax rate was 21.8% and 21.1% for the thirteen weeks ended September 26, 2024 and September 28, 2023, respectively, and 18.4% and 21.5% for the thirty-nine weeks ended September 26, 2024 and September 28, 2023, respectively. For the thirteen weeks ended September 26, 2024, the effective income tax rate was higher than the statutory federal income tax rate of 21.0% primarily due to state income taxes that were partially offset by tax deductions in excess of book expense related to stock-based compensation awards. For the thirty-nine weeks ended September 26, 2024, the effective income tax rate was lower than the statutory federal income tax rate of 21.0% primarily due to tax deductions in excess of book expense related to stock-based compensation awards. For the thirteen and thirty-nine weeks ended September 28, 2023, the effective income tax rates were higher than the statutory federal income tax rate of 21.0% primarily due to state income taxes that were partially offset by tax deductions in excess of book expense related to stock-based compensation awards.
5. Commitments and Contingencies
Lease Commitments
The Company accounts for leases in accordance with ASC 842, Leases. The majority of the Company’s long-term operating lease agreements are for its retail locations, distribution centers, and corporate office, which expire in various years through 2049. Most of these agreements are retail leases wherein both the land and building are leased. The Company also has ground leases in which only the land is leased. The initial lease terms for the Company's retail locations, distribution centers, and corporate office typically range from 10-20 years. The majority of the Company’s leases also include options to extend, which are factored into the recognition of their respective assets and liabilities when appropriate based on management’s assessment of the probability that the options will be exercised.
When readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. If the rate implicit in the lease is not readily determinable, the Company uses a third party to assist in the determination of a secured incremental borrowing rate, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. The secured incremental borrowing rate is estimated based on yields obtained from Bloomberg for U.S. consumers with a BB credit rating and is adjusted for collateralization as well as inflation. As of September 26, 2024 and September 28, 2023, the Company’s weighted average discount rate was 5.8% and 5.7%, respectively. As of both September 26, 2024 and September 28, 2023, the weighted average remaining lease term of the Company’s leases was approximately 12 years.
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Lease Costs
The table below presents components of lease expense for operating leases.
Thirteen Weeks EndedThirty-nine Weeks Ended
in thousandsClassificationSeptember 26, 2024September 28, 2023September 26, 2024September 28, 2023
Fixed operating lease cost:Selling and store operating$44,648 $39,575 $131,223 $116,248 
Cost of sales6,551 6,385 19,464 17,856 
Pre-opening3,988 4,244 11,202 11,216 
General and administrative1,029 1,029 3,089 3,131 
Total fixed operating lease cost$56,216 $51,233 $164,978 $148,451 
Variable lease cost (1):Selling and store operating$17,170 $14,601 $53,261 $44,369 
Cost of sales764 1,149 3,114 3,307 
Pre-opening108 185 443 328 
General and administrative718 408 1,875 1,027 
Total variable lease cost$18,760 $16,343 $58,693 $49,031 
Sublease incomeCost of sales(691)(681)(2,053)(2,041)
Total operating lease cost (2)$74,285 $66,895 $221,618 $195,441 
(1) Includes variable costs for common area maintenance, property taxes, and insurance on leased real estate.
(2) Excludes short-term lease costs, which were immaterial for the thirteen and thirty-nine weeks ended September 26, 2024 and September 28, 2023.
Undiscounted Cash Flows
Future minimum lease payments under non-cancelable operating leases as of September 26, 2024 were as follows:
in thousandsAmount
Thirteen weeks ending December 26, 2024$47,189 
2025225,100 
2026212,896 
2027201,650 
2028181,053 
Thereafter1,302,753 
Total minimum lease payments (1) (2)2,170,641 
Less: amount of lease payments representing interest667,498 
Present value of future minimum lease payments1,503,143 
Less: current obligations under leases134,629 
Long-term lease obligations$1,368,514 
(1) Future lease payments exclude approximately $449.9 million of legally binding minimum lease payments for operating leases signed but not yet commenced.
(2) Operating lease payments include $255.0 million related to options to extend lease terms that are reasonably certain of being exercised.
For the thirty-nine weeks ended September 26, 2024 and September 28, 2023, cash paid for amounts included in the measurement of operating lease liabilities was $157.8 million and $141.7 million, respectively.
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Litigation
On November 15, 2021, the Company was added as a defendant in a wrongful death lawsuit, Nguyen v. Inspections Now, Inc., No. 21-DCV-287142, pending in the 434th Judicial District Court of Fort Bend County, Texas. Bestview International Company and Bestview (Fuzhou) Import & Export Co. LTD are also named as defendants in the case; former defendants Inspections Now, Inc. and Jason Post Homes, LLC have been dismissed. Plaintiff’s petition alleges that “wood paneling” allegedly purchased from the Company was installed in the vicinity of plaintiff’s fireplace and caught fire while the fireplace was lit. The fire consumed plaintiff’s home and resulted in injuries to plaintiff and another occupant and the death of plaintiff’s three children and mother. Plaintiff alleges product defect and failure to warn claims against the Company and product defect, failure to warn, and strict liability claims against the Bestview entities. Plaintiff’s petition seeks damages in excess of $1.0 million for property damage, personal injury, and wrongful death. The petition also seeks exemplary damages. Plaintiff’s ex-husband, brother, and the additional occupant have since intervened as plaintiffs in the lawsuit. Intervenors allege the same claims against the Company and the Bestview entities and collectively seek damages in excess of $11.0 million for property damage, personal injury (as to the other occupant), wrongful death, and exemplary damages. The Company has answered all petitions, denying the allegations. The case is currently set for trial in the third quarter of fiscal 2025.
The Company maintains insurance that may cover any liability arising out of the above-referenced litigation up to the policy limits and subject to meeting certain deductibles and to other terms and conditions thereof. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from the above-referenced litigation.
On June 18, 2020, an alleged stockholder filed a putative derivative complaint, Lincolnshire Police Pension Fund v. Taylor, et al., No. 2020-0487-JTL, in the Delaware Court of Chancery, purportedly on behalf of the Company against certain of the Company’s officers, directors, and stockholders. An amended complaint was filed on September 14, 2022. The Company along with the other defendants filed a motion to dismiss on October 31, 2022. The plaintiffs then filed a second amended complaint on December 22, 2022. On February 6, 2023, the Company, along with the other defendants, filed a motion to dismiss the operative complaint. On December 5, 2023, the Court denied the defendants’ motion to dismiss, and the case proceeded to discovery. The complaint alleges breaches of fiduciary duties and unjust enrichment. The factual allegations underlying these claims are similar to the factual allegations made in the previously dismissed In re Floor & Decor Holdings, Inc. Securities Litigation, as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The complaint seeks unspecified damages and restitution for the Company from the individual defendants and the payment of costs and attorneys’ fees. On September 17, 2024, the defendants entered into a Stipulation of Compromise and Settlement (the “Stipulation”) with the plaintiffs, which was filed with the Court on September 17, 2024, setting forth the terms and conditions of a proposed settlement. The settlement provides, among other things, for a full release of the claims that the plaintiffs or any other Company stockholder asserted or could have asserted in the litigation against any of the defendants in exchange for (1) an $8.0 million payment to the Company, net of payment of the fees and expenses of plaintiffs’ counsel, and (2) the Company’s agreement to implement and/or maintain certain corporate governance measures, as more fully described in the Stipulation. The settlement is subject to Court approval, the Court hearing for which is scheduled in the fourth quarter of fiscal 2024. The settlement, if finally approved, will cause the dismissal with prejudice of this litigation.
The Company is also subject to various other legal actions, claims, and proceedings arising in the ordinary course of business, which may include claims related to general liability, workers’ compensation, product liability, intellectual property, and employment-related matters resulting from its business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company establishes reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. These various other ordinary course proceedings are not expected to have a material impact on the Company’s consolidated financial position, cash flows, or results of operations. Regardless of the outcome, however, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.
6. Stock-based Compensation
In accordance with ASC 718, the Company measures compensation cost for all stock-based awards at fair value on the date of grant and recognizes compensation expense, net of forfeitures, using the straight-line method over the requisite service period of awards expected to vest, which for each of the awards is the service vesting period.
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The table below presents components of stock-based compensation expense within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income:
Thirty-nine Weeks Ended
in thousandsSeptember 26, 2024September 28, 2023
General and administrative$22,338 $18,927 
Selling and store operating3,280 1,409 
Total stock-based compensation expense$25,618 $20,336 
Stock Options
The table below summarizes stock option activity for the thirty-nine weeks ended September 26, 2024:
OptionsWeighted Average Exercise Price
Outstanding at December 29, 2023
1,607,341 $28.51 
Exercised(331,778)$18.72 
Forfeited or expired(2,518)$68.82 
Outstanding at September 26, 2024
1,273,045 $30.97 
Vested and exercisable at September 26, 2024
1,258,196 $30.21 
Restricted Stock Units
The Company periodically grants restricted stock units (“RSUs”) that represent an unfunded, unsecured right to receive a share of the Company’s Class A common stock upon vesting. During the thirty-nine weeks ended September 26, 2024, the Company granted RSUs to certain employees, executive officers, and non-employee directors comprised of service-based RSUs and performance-based RSUs. Service-based RSUs vest based on the grantee’s continued service through the vesting date. The performance-based RSUs cliff vest based on (i) the Company’s achievement of predetermined financial metrics at the end of a three-year performance period and (ii) the grantee’s continued service through the vesting date. Depending on the extent to which the relevant performance goals are achieved, the number of common shares earned upon vesting may range from 0% to 200% of the award granted. The Company assesses the probability of achieving all performance goals on a quarterly basis. The service period for RSUs granted during the period varies by grantee and is one year from the grant date for non-employee directors and ranges between two to four years from the grant date for employees and executive officers.
The following table summarizes restricted stock unit activity during the thirty-nine weeks ended September 26, 2024:
Restricted Stock Units
Service-basedPerformance-basedTotal shareholder returnTotal Restricted Stock Units
Unvested at December 29, 2023608,140 188,543 58,854 855,537 
Granted252,692 50,855 — 303,547 
Vested(214,620)— — (214,620)
Forfeited(38,539)(13,838)(4,204)(56,581)
Unvested at September 26, 2024607,673 225,560 54,650 887,883 
The aggregate fair value for all restricted stock units granted during the thirty-nine weeks ended September 26, 2024 was $33.9 million. The grant-date fair value of service-based RSUs and performance-based RSUs is based on the closing market price of the Company’s Class A common stock on the date of grant.
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Restricted Stock Awards
The following table summarizes restricted stock award activity during the thirty-nine weeks ended September 26, 2024:
Restricted Stock Awards
Service-basedPerformance-based (1)Total shareholder return (1)Total Restricted Stock Awards
Unvested at December 29, 202334,783 47,662 31,056 113,501 
Vested(30,680)(47,662)(31,056)(109,398)
Forfeited(395)— — (395)
Unvested at September 26, 20243,708 — — 3,708 
(1) The performance-based and total shareholder return restricted stock awards that vested during the period were issued at 100% of target based on achievement of the predetermined performance and total shareholder return criteria as specified in the underlying grant agreements.
7. Earnings Per Share
Net Income per Common Share
The Company calculates basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effect of share-based awards using the treasury stock method.
The following table shows the computation of basic and diluted earnings per share for the periods presented:
Thirteen Weeks EndedThirty-nine Weeks Ended
in thousands, except per share dataSeptember 26, 2024September 28, 2023September 26, 2024September 28, 2023
Net income$51,690 $65,923 $158,388 $208,899 
Basic weighted average shares outstanding107,185 106,393 107,000 106,187 
Dilutive effect of share-based awards1,107 1,609 1,282 1,663 
Diluted weighted average shares outstanding108,292 108,002 108,282 107,850 
Basic earnings per share$0.48 $0.62 $1.48 $1.97 
Diluted earnings per share$0.48 $0.61 $1.46 $1.94 
The following potentially dilutive securities were excluded from the computation of diluted earnings per share as a result of their anti-dilutive effect:
Thirteen Weeks EndedThirty-nine Weeks Ended
in thousandsSeptember 26, 2024September 28, 2023September 26, 2024September 28, 2023
Stock options4 56 3 56 
Restricted stock units4 8 4 14 
8. Fair Value Measurements
As of September 26, 2024 and December 28, 2023, the Company had certain financial assets and liabilities on its Condensed Consolidated Balance Sheets that were required to be measured at fair value on a recurring or non-recurring basis. The estimated fair values of financial assets and liabilities such as cash and cash equivalents, receivables, prepaid expenses and other current assets, other assets, accounts payable, and accrued expenses and other current liabilities approximate their respective carrying values as reported within the Condensed Consolidated Balance Sheets. See Note 3, “Debt” for discussion of the fair value of the Company’s debt.
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Contingent Earn-out Liabilities
As of September 26, 2024, the contingent earn-out liabilities had an aggregate estimated fair value of $4.5 million, of which $3.4 million is included in accrued expenses and other current liabilities and $1.1 million is included in other liabilities within the Condensed Consolidated Balance Sheets. The Company’s contingent earn-out liabilities are classified as Level 3 within the fair value hierarchy due to the use of unobservable inputs that are significant to their respective valuations. The table below summarizes changes in contingent earn-out liabilities during the thirty-nine weeks ended September 26, 2024:
in thousandsContingent Earn-out Liabilities
Balance at December 28, 2023$11,137 
Fair value adjustments(866)
Payments(5,769)
Balance at September 26, 2024$4,502 
The $0.9 million net decrease in the fair value of contingent earn-out liabilities during the thirty-nine weeks ended September 26, 2024 was recognized in general and administrative expense within the Condensed Consolidated Statements of Operations and Comprehensive Income.
Interest Rate Cap Contracts
Changes in interest rates impact the Company’s results of operations. In an effort to manage exposure to this risk, the Company enters into derivative contracts and may adjust its derivative portfolio as market conditions change.
As of September 26, 2024, the Company’s outstanding interest rate cap contract was designated as a cash flow hedge. The contract has a notional value of $150.0 million and effectively caps SOFR-based interest payments on a portion of the Company’s Term Loan Facility at 5.50% beginning in May 2024 and will continue until the agreement expires in April 2026. The Company’s two interest cap agreements outstanding at December 28, 2023, each with a notional value of $75.0 million, expired in April 2024. The effective portion of the gain or loss on effective cash flow hedges is reported as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings in the same period in which the hedged transaction affects earnings. The effective portion of the derivative represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized in earnings.
The Company’s outstanding interest rate cap contracts as of September 26, 2024 and December 28, 2023 were valued primarily using Level 2 inputs based on data readily observable in public markets. The Company’s interest rate cap contracts were negotiated with counterparties without going through a public exchange. Accordingly, the Company’s fair value assessments for these derivative contracts gave consideration to the risk of counterparty default as well as the Company’s own credit risk. As of September 26, 2024 and December 28, 2023, the total fair value of the Company’s interest rate cap contracts was approximately $0.1 million and $1.8 million, respectively, which are presented as a component of AOCI within stockholders’ equity on the Condensed Consolidated Balance Sheets net of tax of $0.1 million and $0.4 million, respectively. No interest income was reclassified from AOCI into earnings related to the interest rate cap contracts during the thirteen weeks ended September 26, 2024 compared to $1.4 million of interest income reclassified from AOCI into earnings during the thirteen weeks ended September 28, 2023. During the thirty-nine weeks ended September 26, 2024 and September 28, 2023, the Company reclassified $1.9 million and $3.7 million, respectively, of interest income from AOCI into earnings related to the interest rate cap contracts.
9. Supply Chain Finance
The Company facilitates supply chain finance programs through financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. When a supplier utilizes one of the supply chain finance programs and receives an early payment from a financial intermediary, the supplier takes a discount on the invoice. The Company then pays the financial intermediary the full amount of the invoice on the original due date. The Company does not reimburse suppliers for any costs they incur for participation in the program. Supplier participation is voluntary, and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the financial intermediaries. As a result, all amounts owed to the financial intermediaries are presented as trade accounts payable in the Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected in trade accounts payable at September 26, 2024 and December 28, 2023 were $168.1 million and $114.0 million, respectively.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of our operations should be read together with the financial statements and related notes of Floor & Decor Holdings, Inc. and Subsidiaries included in Part I, Item 1, “Financial Statements” of this Quarterly Report and with our audited financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2023 and filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024 (the “Annual Report”). As used in this Quarterly Report, except where the context otherwise requires or where otherwise indicated, the terms “Floor & Decor,” “Company,” “we,” “our,” or “us” refer to Floor & Decor Holdings, Inc. and its subsidiaries, and “Spartan” refers to our subsidiary Spartan Surfaces, LLC.
Overview
Founded in 2000, Floor & Decor is a high-growth, differentiated, multi-channel specialty retailer of hard surface flooring and related accessories and seller of commercial surfaces with 241 warehouse-format stores across 38 states as of September 26, 2024. We believe our unique approach to selling hard surface flooring and our consistent and disciplined culture of innovation and reinvestment create a differentiated business model in the hard surface flooring category. We believe that we offer the industry’s broadest in-stock assortment of tile, wood, laminate and vinyl, and natural stone flooring along with decorative and installation accessories and adjacent categories at everyday low prices, positioning us as the one-stop destination for our customers’ entire hard surface flooring needs. We appeal to a variety of customers, including professional installers and commercial businesses (“Pro”) and homeowners, which are comprised of do it yourself customers (“DIY”) and buy it yourself customers, who buy the products for professional installation (“BIY”).
We operate on a 52- or 53-week fiscal year ending the Thursday on or preceding December 31. The following discussion contains references to the thirteen and thirty-nine weeks ended September 26, 2024 and September 28, 2023, respectively.
During the thirty-nine weeks ended September 26, 2024, we continued to make key long-term strategic investments, including:
•opening 20 new warehouse-format stores, ending the quarter with 241 warehouse-format stores and five design studios;
•focusing on innovative new products and localized assortments, supported by inspirational in-store and online visual merchandising solutions;
•adding more resources dedicated to serving our Pro customers, including hiring professional external sales staff to drive more Pro sales;
•investing in our Pro, connected customer, in-store designer, customer relationship, and store focused technology; and
•investing capital to continue enhancing the in-store shopping experience for our customers.
Key Performance Indicators
We consider a variety of performance and financial measures in assessing the performance of our business. The key performance and financial measures we use to determine how our business is performing are comparable store sales, the number of new store openings, gross profit and gross margin, operating income, and EBITDA and Adjusted EBITDA. For definitions and a discussion of how we use our key performance indicators, see the “Key Performance Indicators” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report. See “Non-GAAP Financial Measures” below for a discussion of how we define EBITDA and Adjusted EBITDA and a reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
Other key financial terms we use include net sales, selling and store operating expenses, general and administrative expenses, and pre-opening expenses. For definitions and a discussion of how we use other key financial terms, see the “Other Key Financial Definitions” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report.
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Results of Operations
See Part II, Item 1A, “Risk Factors” for information about the potential impacts that risks, such as declines in economic conditions that affect the residential housing market and consumer spending for hard surface flooring, interest rates, inflation, global supply chain disruptions, and geopolitical instability, among others, may have on our results of operations and overall financial performance for future periods.
The following table summarizes key components of our results of operations for the periods indicated:
Thirteen Weeks Ended
September 26, 2024September 28, 2023Increase (Decrease)
dollars in thousandsAmount% of Net SalesAmount% of Net Sales$%
Net sales$1,117,926 100.0 %$1,107,812 100.0 %$10,114 0.9 %
Cost of sales632,056 56.5 640,357 57.8 (8,301)(1.3)%
Gross profit485,870 43.5 467,455 42.2 18,415 3.9 %
Operating expenses:
Selling and store operating339,135 30.3 308,581 27.9 30,554 9.9 %
General and administrative67,687 6.1 59,870 5.3 7,817 13.1 %
Pre-opening12,731 1.2 14,232 1.3 (1,501)(10.5)%
Total operating expenses419,553 37.6 382,683 34.5 36,870 9.6 %
Operating income66,317 5.9 84,772 7.7 (18,455)(21.8)%
Interest expense, net189 — 1,246 0.2 (1,057)(84.8)%
Income before income taxes66,128 5.9 83,526 7.5 (17,398)(20.8)%
Income tax expense14,438 1.3 17,603 1.5 (3,165)(18.0)%
Net income$51,690 4.6 %$65,923 6.0 %$(14,233)(21.6)%

Thirty-nine Weeks Ended
September 26, 2024September 28, 2023Increase (Decrease)
dollars in thousandsAmount% of Net SalesAmount% of Net Sales$%
Net sales$3,348,354 100.0 %$3,365,763 100.0 %$(17,409)(0.5)%
Cost of sales1,901,424 56.8 1,949,557 57.9 (48,133)(2.5)%
Gross profit1,446,930 43.2 1,416,206 42.1 30,724 2.2 %
Operating expenses:
Selling and store operating1,014,888 30.3 923,658 27.4 91,230 9.9 %
General and administrative202,135 6.0 185,060 5.5 17,075 9.2 %
Pre-opening32,951 1.0 32,226 1.0 725 2.2 %
Total operating expenses1,249,974 37.3 1,140,944 33.9 109,030 9.6 %
Operating income196,956 5.9 275,262 8.2 (78,306)(28.4)%
Interest expense, net2,807 0.1 9,006 0.3 (6,199)(68.8)%
Income before income taxes194,149 5.8 266,256 7.9 (72,107)(27.1)%
Income tax expense35,761 1.1 57,357 1.7 (21,596)(37.7)%
Net income$158,388 4.7 %$208,899 6.2 %$(50,511)(24.2)%
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Selected Financial Information
Thirteen Weeks EndedThirty-nine Weeks Ended
September 26, 2024September 28, 2023September 26, 2024September 28, 2023
Comparable store sales(6.4)%(9.3)%(9.0)%(6.3)%
Comparable average ticket(2.4)%(2.8)%(3.7)%1.8 %
Comparable transactions
(4.1)%(6.8)%(5.6)%(7.9)%
Number of warehouse-format stores241207241207
Adjusted EBITDA (in thousands) (1) $132,897$140,939$392,752$443,366
Adjusted EBITDA (% of net sales)11.9 %12.7 %11.7 %13.2 %
(1)    EBITDA and Adjusted EBITDA are non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” below for additional information and a reconciliation of EBITDA and Adjusted EBITDA to net income.
Net Sales
Net sales during the thirteen weeks ended September 26, 2024 increased $10.1 million, or 0.9%, compared to the corresponding prior year period primarily due to sales from the 34 new warehouse-format stores that we opened since September 28, 2023 and growth in Spartan, partially offset by a decrease in comparable store sales of 6.4%. The comparable store sales decline during the period of 6.4%, or $67.3 million, was due to a 4.1% decrease in comparable transactions and a 2.4% decrease in comparable average ticket. Non-comparable sales of $77.4 million during the same period were primarily driven by new stores and revenue from Spartan.
Net sales during the thirty-nine weeks ended September 26, 2024 decreased $17.4 million, or 0.5%, compared to the corresponding prior year period primarily due to a decrease in comparable store sales of 9.0%, partially offset by sales from the 34 new warehouse-format stores that we opened since September 28, 2023 and growth in Spartan. The comparable store sales decline during the period of 9.0%, or $291.3 million, was due to a 5.6% decrease in comparable transactions and a 3.7% decrease in comparable average ticket. Non-comparable sales of $273.9 million during the same period were primarily driven by new stores and revenue from Spartan.
We believe the decreases in comparable transactions for the thirteen and thirty-nine weeks ended September 26, 2024 were largely driven by the impact of lower existing home sales. The decreases in comparable average ticket during the thirteen and thirty-nine weeks ended September 26, 2024, were primarily due to smaller average transaction sizes.
We estimate that retail sales during both the thirteen and thirty-nine weeks ended September 26, 2024 were approximately 52% from homeowners and 48% from Pros compared to approximately 56% from homeowners and 44% from Pros during both the thirteen and thirty-nine weeks ended September 28, 2023.
Gross Profit and Gross Margin
Gross profit during the thirteen weeks ended September 26, 2024 increased $18.4 million, or 3.9%, compared to the corresponding prior year period. The increase in gross profit was primarily driven by an increase in gross margin to 43.5%, up approximately 130 basis points from 42.2% in the same period a year ago.
Gross profit during the thirty-nine weeks ended September 26, 2024 increased $30.7 million, or 2.2%, compared to the corresponding prior year period. The increase in gross profit was primarily driven by an increase in gross margin to 43.2%, up approximately 110 basis points from 42.1% in the same period a year ago.
The increases in gross margin during the thirteen and thirty-nine weeks ended September 26, 2024 were primarily driven by a decrease in supply chain costs.
Selling and Store Operating Expenses
Selling and store operating expenses during the thirteen weeks ended September 26, 2024 increased $30.6 million, or 9.9%, compared to the corresponding prior year period. The increase in selling and store operating expenses was primarily driven by $37.3 million for new stores and $1.0 million at Spartan, partially offset by a decrease of $7.7 million at our comparable stores. As a percentage of net sales, selling and store operating expenses increased by approximately 240 basis points to 30.3% from 27.9% in the corresponding prior year period.
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Selling and store operating expenses during the thirty-nine weeks ended September 26, 2024 increased $91.2 million, or 9.9%, compared to the corresponding prior year period. The increase in selling and store operating expenses was primarily driven by $115.7 million for new stores and $6.3 million at Spartan, partially offset by a decrease of $30.8 million at our comparable stores. As a percentage of net sales, selling and store operating expenses increased by approximately 290 basis points to 30.3% from 27.4% in the corresponding prior year period.
The increases in selling and store operating expenses in total and as a percentage of net sales during the thirteen and thirty-nine weeks ended September 26, 2024 were primarily attributable to deleverage from a decrease in comparable store sales and the addition of new stores.
General and Administrative Expenses
General and administrative expenses during the thirteen weeks ended September 26, 2024 increased $7.8 million, or 13.1%, compared to the corresponding prior year period. Our general and administrative expenses as a percentage of net sales increased by approximately 80 basis points to 6.1% from 5.3% in the corresponding prior year period.
General and administrative expenses during the thirty-nine weeks ended September 26, 2024 increased $17.1 million, or 9.2%, compared to the corresponding prior year period. Our general and administrative expenses as a percentage of net sales increased by approximately 50 basis points to 6.0% from 5.5% in the corresponding prior year period.
The increases in general and administrative expenses in total and as a percentage of net sales for the thirteen and thirty-nine weeks ended September 26, 2024 were primarily driven by incentive compensation of $7.0 million and $9.3 million, respectively, and additional staffing costs to support store growth of approximately $1.6 million and $6.4 million, respectively.
Pre-Opening Expenses
Pre-opening expenses during the thirteen weeks ended September 26, 2024 decreased $1.5 million, or 10.5%, compared to the corresponding prior year period. The decrease in pre-opening expenses during the thirteen weeks ended September 26, 2024 primarily resulted from a decrease in the number of future stores that we were preparing to open compared to the corresponding prior year period.
Pre-opening expenses during the thirty-nine weeks ended September 26, 2024 increased $0.7 million, or 2.2%, compared to the corresponding prior year period. The increase in pre-opening expenses during the thirty-nine weeks ended September 26, 2024 primarily resulted from an increase in the number of stores that we opened compared to the corresponding prior year period.
Interest Expense, Net
Net interest expense during the thirteen weeks ended September 26, 2024 decreased $1.1 million, or 84.8%, compared to the corresponding prior year period.
Net interest expense during the thirty-nine weeks ended September 26, 2024 decreased $6.2 million, or 68.8%, compared to the corresponding prior year period.
The decreases in net interest expense for the thirteen and thirty-nine weeks ended September 26, 2024 were primarily due to a decrease in average amounts outstanding under our ABL Facility, higher interest income as a result of higher cash balances, and an increase in interest capitalized, partially offset by lower interest income from our interest cap derivative contracts.
Income Tax Expense
Income tax expense was $14.4 million during the thirteen weeks ended September 26, 2024 compared to $17.6 million during the thirteen weeks ended September 28, 2023. The effective tax rate was 21.8% for the thirteen weeks ended September 26, 2024 compared to 21.1% in the corresponding prior year period. The effective tax rate increase during the thirteen weeks ended September 26, 2024 was primarily due to a decrease in excess tax benefits related to stock-based compensation awards.
Income tax expense was $35.8 million during the thirty-nine weeks ended September 26, 2024 compared to $57.4 million during the thirty-nine weeks ended September 28, 2023. The effective tax rate was 18.4% for the thirty-nine weeks ended September 26, 2024 compared to 21.5% in the corresponding prior year period. The effective tax rate decrease during the thirty-nine weeks ended September 26, 2024 was primarily due to an increase in excess tax benefits related to stock-based compensation awards that were partially offset by limitations on deductions for compensation to certain employees under Internal Revenue Code Section 162(m).
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Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are key metrics used by management and our board of directors to assess our financial performance and enterprise value. We believe that EBITDA and Adjusted EBITDA are useful measures, as they eliminate certain expenses that are not indicative of our core operating performance and facilitate a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine covenant compliance with respect to our ABL Facility and Term Loan Facility (together, the “Credit Facilities”), to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors, and other interested parties as performance measures to evaluate companies in our industry.
EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by or presented in accordance with GAAP. We define EBITDA as net income before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization adjusted to eliminate the impact of non-cash stock-based compensation expense and certain items that we do not consider indicative of our core operating performance. See below for a reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.
EBITDA and Adjusted EBITDA are non-GAAP measures of our financial performance and should not be considered as alternatives to net income as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of liquidity or free cash flow for management’s discretionary use. In addition, these non-GAAP measures exclude certain non-recurring and other charges. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine EBITDA and Adjusted EBITDA, such as stock-based compensation expense, fair value adjustments related to contingent earn-out liabilities, and other adjustments. Our presentation of EBITDA and Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of EBITDA and Adjusted EBITDA differ among companies in the retail industry, and therefore EBITDA and Adjusted EBITDA disclosed by us may not be comparable to the metrics disclosed by other companies.
For the periods presented, the following table reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP:
Thirteen Weeks EndedThirty-nine Weeks Ended
in thousandsSeptember 26, 2024September 28, 2023September 26, 2024September 28, 2023
Net income$51,690 $65,923 $158,388 $208,899 
Depreciation and amortization (a)57,328 50,336 171,044 145,439 
Interest expense, net189 1,246 2,807 9,006 
Income tax expense14,438 17,603 35,761 57,357 
EBITDA123,645 135,108 368,000 420,701 
Stock-based compensation expense (b)10,031 5,289 25,618 20,336 
Other (c)(779)542 (866)2,329 
Adjusted EBITDA$132,897 $140,939 $392,752 $443,366 
(a)Excludes amortization of deferred financing costs, which is included as part of interest expense, net in the table above.
(b)Non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards and forfeitures.
(c)Other adjustments include amounts management does not consider indicative of our core operating performance. Amounts for both the thirteen and thirty-nine weeks ended September 26, 2024 and September 28, 2023 relate to changes in the fair value of contingent earn-out liabilities.
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Liquidity and Capital Resources
Liquidity is provided primarily by cash flows from operations and our $800.0 million ABL Facility. Unrestricted liquidity based on our September 26, 2024 financial data was $803.1 million, consisting of $180.8 million in cash and cash equivalents and $622.3 million immediately available for borrowing under the ABL Facility without violating any covenants thereunder.
Our liquidity is generally not seasonal. Our primary cash needs are for merchandise inventories, payroll, store rent, and other operating expenses and capital expenditures associated with opening new stores and remodeling existing stores as well as information technology, e-commerce, store support center, and distribution center infrastructure. We also use cash for the payment of taxes and interest and, as applicable, acquisitions. We expect that cash generated from operations together with cash on hand, the availability of borrowings under our Credit Facilities, and if necessary, additional funding through other forms of external financing, will be sufficient to meet liquidity requirements, anticipated capital expenditures, and payments due under our Credit Facilities for the next twelve months and the foreseeable future.
Total capital expenditures in fiscal 2024 are planned to be between approximately $360 million to $390 million and are expected to be funded primarily by cash generated from operations and borrowings under the ABL Facility. Our capital needs may change in the future due to changes in our business, new opportunities that we choose to pursue, or other factors. We currently expect the following for capital expenditures in fiscal 2024 (projected amounts are based on the gross costs that we expect to accrue for these investments on the Condensed Consolidated Balance Sheets in fiscal 2024, which may include amounts incurred but not yet settled in cash during the period):
•invest approximately $265 million to $295 million to open 30 warehouse-format stores, relocate stores, and begin construction on stores opening after fiscal 2024;
•invest approximately $65 million in existing store remodeling projects and our distribution centers; and
•invest approximately $30 million in information technology infrastructure, e-commerce, and other store support center initiatives.
Cash Flow Analysis
A summary of our operating, investing, and financing activities is shown in the following table:
Thirty-nine Weeks Ended
in thousandsSeptember 26, 2024September 28, 2023
Net cash provided by operating activities$501,768 $698,975 
Net cash used in investing activities(349,360)(431,070)
Net cash used in financing activities
(6,019)(216,071)
Net increase in cash and cash equivalents
$146,389 $51,834 
Net Cash Provided by Operating Activities
Cash provided by operating activities consists primarily of (i) net income adjusted for non-cash items, including depreciation and amortization, stock-based compensation, deferred income taxes, and changes in the fair values of contingent earn-out liabilities and (ii) changes in working capital.
Net cash provided by operating activities during the thirty-nine weeks ended September 26, 2024 and September 28, 2023 was $501.8 million and $699.0 million, respectively. The decrease in net cash provided by operating activities was primarily driven by a lower decrease in inventory, lower increase in trade accounts payable, and a decline in cash earnings after adjusting net income for non-cash items such as depreciation and amortization, which were partially offset by a decrease in income taxes receivable and an increase in accrued expenses and other current liabilities.
Net Cash Used in Investing Activities
Investing activities typically consist primarily of capital expenditures for new store openings and existing store remodels, including leasehold improvements, racking, fixtures, vignettes, design centers, and new infrastructure and information systems. Cash payments to acquire businesses are also included in investing activities.
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Net cash used in investing activities during the thirty-nine weeks ended September 26, 2024 and September 28, 2023 was $349.4 million and $431.1 million, respectively. The decrease in net cash used in investing activities was due to a decrease in capital expenditures and cash paid for an acquisition in 2023. The decline in capital expenditures was driven by the timing of construction payable settlements for recently completed stores and a decrease in new stores under construction compared to the corresponding prior year period.
Net Cash Used in Financing Activities
Financing activities consist primarily of borrowings and related repayments under our credit agreements, tax payments related to the vesting or exercise of stock-based compensation awards, proceeds from the exercise of stock options and our employee share purchase program, and payments of contingent earn-out consideration.
Net cash used in financing activities during the thirty-nine weeks ended September 26, 2024 and September 28, 2023 was $6.0 million and $216.1 million, respectively. The decrease in net cash used in financing activities was primarily driven by a decrease in net ABL Facility repayments.
Our Credit Facilities
As of September 26, 2024, total Term Loan Facility debt was $200.8 million, and no amounts were outstanding under our ABL Facility. For additional information regarding our Term Loan Facility and ABL Facility, including applicable covenants and other details, please refer to Note 3, “Debt.”
Credit Ratings
Our credit ratings are periodically reviewed by rating agencies. Standard & Poor’s issuer credit rating of BB with a stable outlook and Moody’s issuer credit rating of Ba3 with a stable outlook remain unchanged as of September 26, 2024. These ratings and our current credit condition affect, among other things, our ability to access new capital. Negative changes to these ratings may result in more stringent covenants and higher interest rates under the terms of any new debt. Our credit ratings could be lowered or rating agencies could issue adverse commentaries in the future, which could have a material adverse effect on our business, financial condition, results of operations, and liquidity. In particular, a weakening of our financial condition, including an increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, result in a credit rating downgrade or change in outlook, or otherwise increase our cost of borrowing.
U.S. Tariffs and Global Economy
The current domestic and international political environment, including existing and potential changes to U.S. policies related to global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy. In particular, the ongoing trade dispute between the U.S. and China has resulted in the U.S. imposing tariffs of 25% on many products from China. While exclusions from tariffs were granted for certain products from China, nearly all of these exclusions have expired. In fiscal 2023, approximately 25% of the products we sold were produced in China. As we continue to manage the impact these tariffs may have on our business, we continue taking steps to mitigate some of these cost increases through negotiating lower costs from our vendors, increasing retail pricing as we deem appropriate, and sourcing from alternative countries. While our efforts have mitigated a substantial portion of the overall effect of increased tariffs, the enacted tariffs have increased our inventory costs and associated cost of sales for the remaining products still sourced from China.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with GAAP, which requires management to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and other factors management believes to be reasonable. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
For a description of our critical accounting policies and estimates, refer to Part II, Item 7, “Critical Accounting Policies and Estimates” in our Annual Report. There have been no material changes to our critical accounting policies and estimates as disclosed in our Annual Report. See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to our condensed consolidated financial statements included in this Quarterly Report, which describes recent accounting pronouncements adopted by us.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk affecting the Company, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of the Annual Report. While our exposure to market risk has not changed materially since December 28, 2023, uncertainty with respect to the economic effects of declines in economic conditions that affect the residential housing market and consumer spending for hard surface flooring, inflation, global supply chain disruptions, and geopolitical instability, among others, have introduced significant volatility in the financial markets, including interest rates and foreign currency exchange rates. See further discussion in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional details.
Interest Rate Risk
Our operating results are subject to risk from interest rate fluctuations on our Credit Facilities, which have variable interest rates. Based on the $200.8 million total outstanding principal balance of our Credit Facilities as of September 26, 2024, a 1.0% increase in the effective interest rate of this debt would cause an increase in interest expense of approximately $2.0 million over the next twelve months, excluding the impact of our interest rate cap agreement. To lessen our exposure to interest rate risk, we entered into an interest rate cap agreement in January 2024 with a notional value of $150.0 million. The interest cap agreement effectively caps SOFR-based interest payments on a portion of the Company’s Term Loan Facility at 5.50% beginning in May 2024 and will continue until the agreement expires in April 2026. For additional information related to the Company’s Credit Facilities, refer to Note 3, “Debt.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to provide reasonable assurance that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in reports filed or submitted under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, have reviewed the effectiveness of the Company’s disclosure controls and procedures as of September 26, 2024 and, based on their evaluation, have concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level. The condensed consolidated financial statements included in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during the fiscal quarter ended September 26, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company has begun a multi-year implementation of portions of our enterprise resource planning (ERP) system, which will replace our existing core financial and merchandising systems. The implementation is expected to occur in phases over the next few years. As the phased implementation occurs, it may result in changes to our processes and procedures, which may result in changes to our internal controls over financial reporting. As such changes occur, we will evaluate quarterly whether they materially affect our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See the information under the “Litigation” caption in Note 5, “Commitments and Contingencies” to our Condensed Consolidated Financial Statements included in this Quarterly Report, which we incorporate here by reference.
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Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors described in Part I, Item 1A, “Risk Factors” in our Annual Report filed with the SEC on February 22, 2024, which could materially affect our business, financial condition, and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the fiscal quarter ended September 26, 2024, the Company did not engage in any unregistered sales of any of its equity securities, and neither the Company nor any of its affiliated purchasers repurchased any of the Company’s equity securities.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended September 26, 2024, none of our directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
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Item 6. Exhibits
Incorporated by Reference
ExhibitExhibit DescriptionFormFile No.ExhibitFiling Date
3.1
10-Q
001-380703.18/5/2021
3.2
10-Q
001-380703.211/2/2023
31.1
31.2
32.1
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
101.SCH
Inline XBRL Taxonomy Extension Schema Document*
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
*
Filed herewith.
**
These certifications are not deemed filed by the SEC and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FLOOR & DECOR HOLDINGS, INC.
Dated:  October 30, 2024
By:/s/ Thomas V. Taylor
Thomas V. Taylor
Chief Executive Officer
(Principal Executive Officer)
Dated:  October 30, 2024
By:/s/ Bryan H. Langley
Bryan H. Langley
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Dated:  October 30, 2024
By:/s/ Luke T. Olson
Luke T. Olson
Vice President, Chief Accounting Officer
(Principal Accounting Officer)
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