LL Flooring Holdings, Inc.

OTCPK:LLFL.Q Stock Report

Market Cap: US$5.9k

LL Flooring Holdings Past Earnings Performance

Past criteria checks 0/6

LL Flooring Holdings's earnings have been declining at an average annual rate of -27.3%, while the Specialty Retail industry saw earnings growing at 17% annually. Revenues have been declining at an average rate of 2.4% per year.

Key information

-27.33%

Earnings growth rate

-27.26%

EPS growth rate

Specialty Retail Industry Growth26.64%
Revenue growth rate-2.42%
Return on equity-94.13%
Net Margin-14.30%
Last Earnings Update31 Mar 2024

Recent past performance updates

Recent updates

Seeking Alpha • Nov 29

LL Flooring: Book Value Is Diminishing Quickly Due To Weak Results

Summary LL Flooring Holdings reported -20.5% comparable store sales and -7.9% adjusted operating margins in Q3 2023. It was also hit with $16.2 million in additional costs related to antidumping duty changes on certain imports from 2012 to 2013. LL Flooring has limited its near-term cash burn with the help of drawing down its inventory. Book value has decreased from near $9 per share at the end of 2022 to a bit over $6 per share at the end of Q3 2023. Tom Sullivan has made another offer for LL Flooring, but at a significantly reduced price compared to his May 2023 offer. Read the full article on Seeking Alpha
Seeking Alpha • Oct 16

LL Flooring Receives A Non-Binding Offer At $5.85 Per Share

Summary Live Ventures has made a non-binding offer of $5.85 per share in cash to acquire LL Flooring. The offer appears to be at a good price for LL Flooring. Live Ventures may have challenges funding the deal given that the deal price (including assumed debt and adjusted working capital deficit) is more than its current enterprise value. Potential acquirers will need to have sufficient liquidity to deal with LL Flooring's cash burn in a turnaround attempt as well. Read the full article on Seeking Alpha
Seeking Alpha • Aug 15

LL Flooring: Weak Q2 2023 Results Leave It In A Challenging Position

Summary LL Flooring Holdings, Inc. reported -22.2% comparable store sales in Q2 2023, along with a -7.5% adjusted operating margin. These results were even worse than I was expecting and points to LL Flooring's value eroding rapidly. Cash burn (before working capital changes) may be around $75 million per year in its current state. LL Flooring rejected Sullivan's non-binding offer of $5.76 per share for the company. It is exploring strategic alternatives, but may not be able to get a similar or better offer than $5.76 per share now. Read the full article on Seeking Alpha
Seeking Alpha • Jun 17

LL Flooring: Sullivan's Bid Is Worth Considering

Summary Tom Sullivan made a non-binding cash bid for LL Flooring at $5.76 per share. I had previously estimated LL Flooring's value at $5 to $6 per share if it could reach breakeven cash flow by early 2024. LL Flooring's Q1 2023 results were a bit worse than I expected, and it is now trending towards mid-teens comparable store sales declines. Its ability to reach breakeven cash flow by early 2024 is doubtful due to its recent results and the macroeconomic environment. Thus, Sullivan's bid should be carefully considered. Read the full article on Seeking Alpha
Seeking Alpha • May 31

LL Flooring Holdings: Investors Should Push For A Deal

Summary LL Flooring Holdings has received a buyout offer at a substantial premium to its current share price, which could provide relief for investors after a significant decline in the company's value. The company's financial performance has deteriorated rapidly, with revenue, net profits, and EBITDA all declining significantly in recent years. The buyout offer could be a lifeline for the struggling company, but there is no guarantee that the deal will go through, and management has expressed confidence in their current strategy. Read the full article on Seeking Alpha
Seeking Alpha • Jan 28

LL Flooring: Weak Business Performance, But Trading At 0.6x Book Value

Summary LL Flooring's three-year stacked comps and adjusted operating margins both turned negative in Q3 2022. It also is reducing its new store opening plans for 2023. The weak macroeconomic environment is giving it problems, although it is also significantly underperforming competitors such as Floor & Decor. LL Flooring is trading at 0.6x book value currently. LL Flooring (LL) is underperforming business-wise as its three-year stacked comps turned negative in Q3 2022 and its adjusted operating margins also turned negative. These challenges resulted in its scaling back its new store opening plans for 2023 to reduce capex. As long as LL Flooring's results don't deteriorate further though, it should be able to operate at roughly breakeven cashflow. It is also trading at approximately 0.6x book value, so despite its problems I think it has upside if it can tread water until the macroeconomic climate improves. LL Flooring has not met previously reduced expectations, so its estimated value has been reduced to $7 to $8 per share though. Store Openings And Stock Repurchases LL Flooring is slowing its pace of new store openings, while planning on putting money towards share repurchases again. It opened 18 new stores in 2022, but now expects to open only three to four new stores in 2023 due to the uncertain macroeconomic environment. On the other hand LL Flooring plans to repurchase shares again, with $43 million available under its existing share repurchase program. It will probably need to improve its business performance at least a bit to be able to repurchase shares without incurring more debt though. While LL Flooring could repurchase shares by borrowing more money under its revolving line of credit, that would be a risky strategy. It does note that it may suspend or discontinue its share repurchase program at any time. Struggling Business LL Flooring has been struggling with declining sales recently. It reported net sales growth of -4.8% in Q3 2022, along with comparable store sales that were down -7.3%. While LL Flooring has reported a string of negative quarterly comparable store sales results since Q3 2021, it previously could point to tough comparisons to past quarters as a reason for the negative comparable store sales. This is no longer the case as LL Flooring's three-year stacked comps went negative (to -0.9%) in Q3 2022. LL Flooring attributes its challenges to continued lower consumer spending, while its sales to Pro customers grew nearly double-digits in Q3 2022. The weak sales combined with continued cost inflation pressure to push LL Flooring's adjusted operating margin negative in Q3 2022. It reported gross margins of 35.6% in Q3 2022 (down from 37.3% in Q3 2021), as it could not fully mitigate the large impact of higher material and transportation costs. Meanwhile adjusted SG&A went from 33.1% of net sales in Q3 2021 to 37.1% of net sales in Q3 2022, as it invested money to support its business plans and had lower sales levels to support the SG&A. This resulted in LL Flooring's adjusted operating margin going down to -1.6% in Q3 2022, compared to 4.1% in Q3 2021 and 2.0% in Q2 2022. In contrast, Floor & Decor reported +11.6% comparable store sales in Q3 2022 while maintaining a 9.3% operating margin (down only 0.2% from Q3 2021). It appears to be navigating the macroeconomic challenges much better than LL Flooring. Notes On Cash Flow Although LL Flooring's adjusted operating margin was negative -1.6% in Q3 2022, with a slight improvement to its operating margins it could avoid burning cash in 2023. Since it plans to cut back capex and open only three to four new stores in 2023, its capex might end up in the $5 million to $10 million range. LL Flooring's depreciation and amortization is around $18 million per year, and that affects operating margins. A -1.0% adjusted operating margin should result in roughly breakeven cash flow based on its reduced 2023 capex budget. Valuation As noted above, despite its challenges LL Flooring may be able to operate at around breakeven cash flow if it spends a limited amount on capex in 2023. It also noted that it had approximately $134 million in liquidity ($6 million in cash and $128 million available for borrowing on its revolving line of credit) at the end of Q3 2022.
Analysis Article • Jan 12

We Like These Underlying Return On Capital Trends At LL Flooring Holdings (NYSE:LL)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...
Seeking Alpha • Jan 09

LL Flooring: An Average Company At A Wonderful Price

Summary The article provides an overview of LL Flooring and analyses the fundamentals and balance sheet of the company. LL is well-positioned to enjoy the industry's tailwind. LL's lacking of competitiveness among peers and facing macro headwinds could deteriorate its operating performance in 2023. Despite the stock trading at 60% of its book value, I give the stock a "Hold" rating. Investment Thesis Shares of LL Flooring (LL) have plummeted by over 80% from the recent high two years ago (Jan 2021). The stock dropped to a level that was only seen during the Covid-19 pandemic. Although LL only trades at 60% of its book value, I rate the company as a “Hold” due to its lack of competitiveness and near-term headwinds. Data by YCharts Well-adapted to Industry Tailwind The U.S. hard surface floor covering market is highly fragmented. Its addressable market size is estimated to be $36 billion, with an expected growth rate of 8.3% CAGR. With 442 stores across the U.S., LL continues to grow its store count to expand the company’s footprint and gain market share. LL Flooring LL pointed out in the company’s latest investor presentation slides that hard surface flooring will outpace soft surface flooring (e.g. carpet), and vinyl plank will outpace other types of flooring as consumers shift to durable and waterproof products. Indeed, the market share of hard surface flooring grew from 50% in 2016 to 57% in 2021 in the floor covering market. The company is well-positioned to adopt such consumer trends. Apart from focusing on the hard surface floor covering sector, its gradual secular shift from solid and engineered hardwood products to manufactured products (e.g. laminate, vinyl and porcelain tile) shall maintain LL’s competitiveness. Total sales of manufactured products rose from 41% in 2019 to 48% in 2022 Q3, while hardwood products dropped from 29% in 2019 to 23% in 2022 Q3 (p.8 of Form 10-Q). The shift also reduces the cyclical factor led by lumber prices, which is positive for the company’s development and profitability. The cost of various hardwood species is essential to LL’s profitability on hardwood products. If LL fails to react to the surging hardwood costs promptly, it could cause the operating results to deteriorate. Solid Balance Sheet Although the capital expenditure of LL has been on a rising trend in recent years, from $7.4 million in 2017 to $24 million in TTM, which may generate cash flow problems, the balance sheet of the company generally remains solid. LL currently holds $6.1 million worth of cash or equivalents but owns $69 million of debt via a Revolving Credit Facility at a weighted average interest rate of 4.6%, which may be concerning (p.10 of Form 10-Q). However, the amount of debt that LL possessed is only a fraction of its asset size, and its equity-to-asset ratio is also solid. A summary of financial strength ratios is tabled below for easy reference. Debt-to-Equity Ratio 0.76 Debt-to-Asset Ratio 0.31 Equity-to-Asset Ratio 0.41 (Source: Author, with data from Gurufocus) Lack of Competitiveness Despite the positive changes that the company has made in recent times, like setting up its website with montages available and its focus on the Pros, LL continues to lack competitiveness in my view. The company’s major competitors could be divided into three major categories: Large home improvement retailers (Home Depot (HD) and Lowe’s (LOW)) Specialty retailers (Floor and Decor (FND) and LL) Mom and pops shops LL Flooring Large home improvement retailers have the largest store count and the broadest range of home improvement products (e.g. not limited to hard surface flooring only). For instance, HD owns 2,319 stores across the U.S., Canada and Mexico, and flooring is only accountable for 6.1% of its total sales in 2021 (p.50 of Form 10-K). Specialty retailers have a great variety of products and a higher number of stock-keeping units (“SKU”). For example, FND offers products from over 60 proprietary brands and approximately 4200 SKUs in each store. However, FND only has 197 stores and studios, which is less than one-tenth of Home Depot's store count (p.13 of Form 10-K). The fact that LL is less accessible than large home improvement retailers and offers less variety of products than its specialty retailing peers has put the company in an awkward position to compete. Based on my own research on LL’s website (accessed on 5 January 2023), there are only 17 styles of porcelain tile available sitewide, and skirting tiles are also lacking. Please find the table below for the compiled data of major players in the hard surface floor covering market. Compiled by Author I think the lack of competitiveness has led LL to an average financial result over the past decade. The company recorded net losses in 4 years over the last decade, and revenue merely grew by 15% from 2013 to 2021. In the previous quarter, LL recorded a narrowing gross margin (down 170 bps YoY), an adjusted loss per diluted share of $0.14 and comparable store sales dropped 7.3% YoY. High Inventory Level The high level of inventories is also concerning, as inventory rose by almost $110 million in 2022. The company explained its move as to supporting the company’s strategy to place inventory close to its customers and to support new stores. I found its situation similar to its competitor, FND, which I covered earlier this month: Styles of tiles and hard flooring materials are like clothes in your closet. They will change seasonally. Thus, the increasing inventory level is my concern, as old-fashioned floor covering materials could become outdated. There is a risk that the company will mark down the prices to clear the excessive and out-of-style inventories.
Seeking Alpha • Nov 11

LL Flooring: Now Getting To Bargain-Basement Levels

Summary LL Flooring Holdings, Inc. missed earnings estimates in Q3. Management, though, is sticking to its long-term strategy. Growing sales to Pro customers is the best trend LL Flooring Holdings, Inc. has going for it. Intro If we pull up a long-term chart of LL Flooring Holdings, Inc. (LL), we see that, unfortunately, it makes for dismal reading. Shares are down well over 70% since they topped out back in December 2020, with no clear end in sight at present. The one ray of hope is that we have had a marginal up-move in the monthly histogram, but the long-term stochastics remain depressed and currently come in around the 8 level. Given that long-term investors would be going against the grain here, we would need to see LL's long-term stochastics take out the 20 level before entertaining any thought of putting long deltas to work in LL Flooring Holdings. The reason being (and value investors will know this all too well) this pertains to the premise of opportunity cost. In an inflationary environment where the purchasing power of one's dollars will be considerably less in time to come, waiting for a stock to bounce out of oversold conditions could end up being a very risky endeavor, to say the least. Remember, it is all about real returns (and not nominal returns), which is why stocks that trade in a rangebound manner or even worse (may be heading south at an accelerated rate of knots) open the door to much poorer returns in the long run. LL Flooring Technical Chart (Stockcharts.com) Q3 Misses Estimates LL Flooring Holdings recently announced its third quarter earnings numbers where we witnessed an earnings miss (-$0.14 per share) on lower-than-expected sales ($268.8 million). Management cited lower customer spending buoyed by higher inflation as the principal reason for the lower sales print. Furthermore, costs rose in the quarter due to higher inflation and a ramping up of investment spending. This resulted in operating income actually coming in negative (-$4.3 million), which was the first quarterly operating loss for quite some time in LL Flooring. Whether this is the start of a sustained trend remains in the dark at this stage, as management refrained from providing any forward-looking guidance on the Q3 earnings call. What we did learn is that more favorable terms in associated transportation costs which management obtained will help the income statement in time, but we most likely will not see evidence of this for some time to come. Sound Fundamentals The trends alluded to here mean the company will not be opening the number of stores originally envisioned, and this is probably a smart play as "Pro-Growth" is where the priority currently lies. The reason being is that growth in revenues to pro customers continues to gain traction, with another high single-digit growth recorded in the third quarter. Higher inventory at stores, user-friendly e-commerce technology, and competitive pricing are resulting in a very high retention rate among Pros. Management believes that recurring income on growing volumes will end up being a winning combo despite giving up some margin to pros on the front end initially. Cheap Sales & Assets

Revenue & Expenses Breakdown

How LL Flooring Holdings makes and spends money. Based on latest reported earnings, on an LTM basis.

Earnings and Revenue History

OTCPK:LLFL.Q Revenue, expenses and earnings (USD Millions)
DateRevenueEarningsG+A ExpensesR&D Expenses
31 Mar 24853-1223990
31 Dec 23905-1034010
30 Sep 23957-1014160
30 Jun 231,010-684170
31 Mar 231,072-274050
31 Dec 221,111-124030
30 Sep 221,132133970
30 Jun 221,145263910
31 Mar 221,148353840
31 Dec 211,152423870
30 Sep 211,171623800
30 Jun 211,185693800
31 Mar 211,114603660
31 Dec 201,098613740
30 Sep 201,067473640
30 Jun 201,035323640
31 Mar 201,094273810
31 Dec 191,093103870
30 Sep 191,088-643740
30 Jun 191,094-593700
31 Mar 191,089-573680
31 Dec 181,085-544420
30 Sep 181,07653670
30 Jun 181,062-193650
31 Mar 181,042-133580
31 Dec 171,029-383690
30 Sep 171,014-463830
30 Jun 171,001-463830
31 Mar 17975-633790
31 Dec 16961-693760
30 Sep 16950-833290
30 Jun 16942-733190
31 Mar 16952-813140
31 Dec 15979-563230
30 Sep 151,016-193330
30 Jun 151,04653410
31 Mar 151,061423330
31 Dec 141,047633140
30 Sep 141,034673080
30 Jun 141,022712950
31 Mar 141,016752960
31 Dec 131,000772850

Quality Earnings: LLFL.Q is currently unprofitable.

Growing Profit Margin: LLFL.Q is currently unprofitable.

Free Cash Flow vs Earnings Analysis

Past Earnings Growth Analysis

Earnings Trend: LLFL.Q is unprofitable, and losses have increased over the past 5 years at a rate of 27.3% per year.

Accelerating Growth: Unable to compare LLFL.Q's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: LLFL.Q is unprofitable, making it difficult to compare its past year earnings growth to the Specialty Retail industry (-4.8%).

Return on Equity

High ROE: LLFL.Q has a negative Return on Equity (-94.13%), as it is currently unprofitable.

Return on Assets

Return on Capital Employed

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Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2024/12/23 18:14
End of Day Share Price 2024/12/23 00:00
Earnings2024/03/31
Annual Earnings2023/12/31

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.

Analysis Model and Snowflake

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Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

LL Flooring Holdings, Inc. is covered by 20 analysts. 0 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

AnalystInstitution
David StrasserBrean Capital Historical (Janney Montgomery)
Laura ChampineCanaccord Genuity
Laura ChampineCantor Fitzgerald & Co.