LL Flooring Holdings Inc (LL) 2023 Q1 法說會逐字稿

Good morning. Thank you for attending today's LL Flooring Holdings First Quarter 2023 Earnings Conference Call. My name is Megan, and I'll be your moderator for today's call. (Operator Instructions) I would now like to pass the conference over to Bruce Williams from ICR.

早上好。感謝您參加今天的 LL Flooring Holdings 2023 年第一季度收益電話會議。我叫梅根，我將擔任今天電話會議的主持人。 （操作員指示）我現在想將會議轉交給 ICR 的 Bruce Williams。

Bruce, please go ahead.

布魯斯，請繼續。

Thank you, operator. Good morning, everyone, and thank you for joining us. Today, I am joined by Charles Tyson, our President and Chief Executive Officer; and Terry Blanchard, Interim Chief Financial Officer.

謝謝你，接線員。大家早上好，感謝您加入我們。今天，我們的總裁兼首席執行官查爾斯·泰森 (Charles Tyson) 也加入了我的行列。臨時首席財務官特里·布蘭查德 (Terry Blanchard)。

As we begin, let me reference the safe harbor provisions of the U.S. securities laws for forward-looking statements. This conference call may contain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of LL Flooring. Although LL Flooring believes that the expectations reflected in its forward-looking statements are reasonable, you can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in LL Flooring's filings with the SEC.

在我們開始之前，讓我參考美國證券法中關於前瞻性陳述的安全港條款。本次電話會議可能包含前瞻性陳述，這些陳述受到重大風險和不確定性的影響，包括 LL Flooring 的未來運營和財務業績。儘管 LL Flooring 認為其前瞻性陳述中反映的預期是合理的，但您不能保證此類預期或其任何前瞻性陳述將被證明是正確的。 LL Flooring 向 SEC 提交的文件中包含了可能導致實際結果與前瞻性陳述中反映的結果存在重大差異的重要風險因素。

During today's call, management will be discussing results on an adjusted basis. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures and our explanation of why the non-GAAP financial measures may be useful are discussed in today's earnings.

在今天的電話會議上，管理層將討論調整後的結果。今天的收益中討論了非公認會計原則財務指標與最直接可比的公認會計原則財務指標的調節，以及我們對非公認會計原則財務指標可能有用的解釋。

The information contained in this call is accurate only as of the date discussed. Investors should not assume that their statements will remain operative after today, and LL Flooring undertakes no obligation to update any information discussed in this call.

本次電話會議中包含的信息僅截至討論日期準確。投資者不應假設他們的聲明在今天之後仍然有效，LL Flooring 不承擔更新本次電話會議中討論的任何信息的義務。

Now I am pleased to introduce President and CEO, Charles Tyson. Charles?

現在我很高興向大家介紹總裁兼首席執行官查爾斯·泰森。查爾斯？

Thank you, Bruce. Good morning, everyone, and thank you for joining us today. During today's call, I will begin by reviewing our first quarter results and then discussing progress on our key operational strategies, including plans to improve sales productivity and profitability, which gives us confidence in achieving long-term sustainable growth.

謝謝你，布魯斯。大家早上好，感謝您今天加入我們。在今天的電話會議中，我將首先回顧我們第一季度的業績，然後討論我們關鍵運營戰略的進展，包括提高銷售生產力和盈利能力的計劃，這讓我們對實現長期可持續增長充滿信心。

Terry Blanchard, our Interim CFO, will then review our financial results in more detail and discuss our outlook before we open up the call to your questions.

然後，我們的臨時首席財務官特里·布蘭查德 (Terry Blanchard) 將更詳細地審查我們的財務業績，並在我們開始回答您的問題之前討論我們的前景。

Now turning to our first quarter results. As expected, our first quarter performance was very challenging and our performance reflected the impact of the difficult macro backdrop had on discretionary home improvement spending.

現在轉向我們第一季度的業績。正如預期的那樣，我們第一季度的業績非常具有挑戰性，我們的業績反映了困難的宏觀背景對可自由支配的家居裝修支出的影響。

In addition, we continue to experience pressure from brand awareness and operational challenges that impacted the first quarter results. Despite the near-term volatility, we remain focused on areas of improvement that will help stabilize our results and drive long-term growth opportunities.

此外，我們繼續面臨影響第一季度業績的品牌知名度和運營挑戰的壓力。儘管近期出現波動，我們仍然專注於改進領域，這將有助於穩定我們的業績並推動長期增長機會。

As a reminder, these areas are: one, further broadening and growing our brand awareness among consumers to drive traffic; and two, ensuring a consistent customer experience across our omnichannel network to improve conversion; three, improving operating efficiencies by actively working to reduce costs while focusing investments on our top growth priorities.

提醒一下，這些領域是：第一，進一步擴大和提高我們在消費者中的品牌知名度，以增加流量；第二，確保我們的全渠道網絡提供一致的客戶體驗，以提高轉化率；第三，通過積極降低成本來提高運營效率，同時將投資重點放在我們的首要增長優先事項上。

Importantly, we continue to execute on these areas during the quarter, which I'll discuss shortly. For the quarter, our total comp store sales were down 15.4% driven by lower spending by consumers versus last year, combined with a decline in Pro sales.

重要的是，我們將在本季度繼續在這些領域執行任務，我將很快對此進行討論。本季度，由於消費者支出較去年減少以及 Pro 銷售額下降，我們的比較商店總銷售額下降了 15.4%。

As mentioned earlier, we believe the lower consumer sales reflected continued pressures from inflation and higher interest rates on discretionary spending, coupled with brand awareness and operational challenges. Notably, we saw a more significant pullback from the consumer starting in early March.

如前所述，我們認為消費者銷售額下降反映了通脹和可自由支配支出利率上升的持續壓力，以及品牌知名度和運營挑戰。值得注意的是，從三月初開始，我們看到消費者出現了更顯著的回調。

Drilling down on the first quarter sales drivers, we saw a 4.2% increase in average ticket and an 8.7% increase in the average retail price per merchandise units sold compared for the first quarter of 2022. The higher average retail price was driven by inflationary pricing. Conversely, we saw a 19.6% decrease in transactions compared to the first quarter of 2022, primarily due to lower consumer demand.

深入研究第一季度的銷售驅動因素，我們發現與 2022 年第一季度相比，平均門票增長了 4.2%，每售出商品的平均零售價增長了 8.7%。平均零售價較高是由通脹定價推動的。相反，與 2022 年第一季度相比，我們的交易量下降了 19.6%，這主要是由於消費者需求下降。

Of note, we experienced our largest transaction declines from the West region where we've a large concentration of stores, while Florida continues to outperform, driven by strong market dynamics.

值得注意的是，我們在商店集中的西部地區經歷了最大的交易下降，而佛羅里達州在強勁的市場動態的推動下繼續表現出色。

In regard to our Pro sales performance during the quarter, we experienced less demand for larger ticket consumer projects as we believe the consumer postponed or canceled planned projects. Nevertheless, we remain very confident in our Pro long-term strategy, and our investment in the Pro business.

就本季度我們的 Pro 銷售業績而言，我們對大型門票消費項目的需求減少，因為我們認為消費者推遲或取消了計劃的項目。儘管如此，我們對 Pro 的長期戰略以及對 Pro 業務的投資仍然充滿信心。

Despite the sales challenges during the quarter, adjusted gross margins improved slightly to 37.4%. On a GAAP basis, we reported an operating loss of $13.2 million or negative 5.5%. On an adjusted basis, we reported an operating loss of $10.8 million or negative 4.5% reflecting lower sales and the SG&A investments we're making to support our long-term growth.

儘管本季度面臨銷售挑戰，調整後毛利率仍小幅提高至 37.4%。根據 GAAP 計算，我們報告的運營虧損為 1,320 萬美元，即負 5.5%。在調整後的基礎上，我們的營業虧損為 1,080 萬美元，即負 4.5%，反映出銷售額下降以及我們為支持長期增長而進行的 SG&A 投資。

We ended the quarter with a strong balance sheet and total liquidity of $157 million. Importantly, we ended Q1 with $47 million of debt, which was down from $72 million at the end of Q4. Terry will discuss the details of our first quarter financial results in a moment.

本季度末，我們的資產負債表強勁，流動性總額達到 1.57 億美元。重要的是，我們第一季度末的債務為 4700 萬美元，低於第四季度末的 7200 萬美元。特里稍後將討論我們第一季度財務業績的細節。

Despite the external headwinds that we're facing, we remain confident in our ability to deliver the high-touch service of an independent flooring reseller combined with the value assortment and convenience of a national brand. To that end, we continue to execute on our strategic initiatives as we focus on improving sales productivity and profitability as well as delivering on long-term sustainable growth.

儘管我們面臨外部阻力，但我們仍然相信自己有能力提供獨立地板經銷商的高品質服務以及民族品牌的價值分類和便利性。為此，我們繼續執行我們的戰略舉措，專注於提高銷售生產力和盈利能力以及實現長期可持續增長。

These initiatives are: growing sales to Pro customers; building brand awareness; improving the customer experience; innovating new products.

這些舉措包括： 增加對專業客戶的銷售；建立品牌意識；改善客戶體驗；創新新產品。

First, growing sales to Pro customers. Our Pro sales strategy remains a core growth pillar for LL. While we experienced a slight decline in the Pro category in Q1, we have previously generated 8 consecutive quarters of growth.

首先，增加對專業客戶的銷售。我們的專業銷售策略仍然是 LL 的核心增長支柱。雖然我們在第一季度經歷了 Pro 類別的小幅下滑，但此前我們已經連續 8 個季度實現增長。

We continue to build momentum with our national account strategy, which is being driven through execution by our inside and outside sales teams. As we look ahead, we will continue to invest in our Pro strategy to further develop capabilities aimed at driving increased retention and scale with existing Pros.

我們繼續通過我們的全國客戶戰略建立動力，該戰略是通過我們的內部和外部銷售團隊的執行來推動的。展望未來，我們將繼續投資於專業人士戰略，進一步開發旨在提高現有專業人士保留率和規模的能力。

We believe that implementing our new customer relationship management CRM platform will be integral in helping to achieve these goals. Our CRM system not only ensures a single repository of key customer information, so we know how best to meet their needs and wants, but also enables key triggers for future contact points during their shopping experience.

我們相信，實施我們新的客戶關係管理 CRM 平台將有助於實現這些目標。我們的 CRM 系統不僅確保關鍵客戶信息的單一存儲庫，以便我們知道如何最好地滿足他們的需求和願望，而且還可以在他們的購物體驗中觸發未來接觸點的關鍵觸發器。

We have made it a priority that our entire store team focuses on understanding each customer's unique story and project objectives whether we're chatting with customers online, engaging with Pros in our store or texting them about their material pickup. The CRM tool will help ensure we consistently execute more targeted messages for every customer.

我們的整個商店團隊都將重點放在了解每個客戶的獨特故事和項目目標上，無論我們是在網上與客戶聊天、與商店中的專業人士互動還是向他們發送有關材料取貨的短信。 CRM 工具將有助於確保我們始終如一地為每個客戶執行更有針對性的消息。

We plan to have completed our rollout for Pro customers by early third quarter and for consumer customers by the fourth quarter. We expect to begin to realize early benefits from the implementation in the second half of 2023, and we're confident that this, combined with more targeted marketing will drive efficient customer acquisition and improved conversion.

我們計劃在第三季度初完成對專業客戶的推出，並在第四季度完成對消費者客戶的推出。我們預計將在 2023 年下半年開始實現實施帶來的早期效益，我們相信，這一點與更有針對性的營銷相結合將推動高效的客戶獲取和更高的轉化。

Second, building brand awareness. We continue to focus on building brand awareness as a key area of opportunity to drive traffic and increased conversion to improve our sales performance over the long term. Since our rebranding from Lumber Liquidators, we have broadened our appeal as a national flooring destination offering a one-stop shop for consumers both seeking service and expertise from inspiration to installation.

二是打造品牌意識。我們繼續專注於建立品牌知名度，將其作為推動流量和增加轉化的關鍵機會領域，從而提高我們的長期銷售業績。自從我們從 Lumber Liquidators 更名以來，我們擴大了作為全國地板目的地的吸引力，為尋求從靈感到安裝的服務和專業知識的消費者提供一站式服務。

Our market research continues to tell us that the new LL Flooring brand scores significantly higher versus Lumber Liquidators on key metrics such as product quality, assortment and store associate expertise, which gives us confidence that we're gaining traction.

我們的市場研究繼續告訴我們，新的 LL Flooring 品牌在產品質量、品種和店員專業知識等關鍵指標上的得分明顯高於 Lumber Liquidators，這讓我們相信我們正在獲得吸引力。

As we said before, our unaided brand awareness remains low, however, and as a result, we're intentionally focused on broadening brand awareness by investing in top of the funnel marketing strategies that evolve our creative approach to increase relevancy, refine our media campaigns to increase efficiency and expand our reach to increase exposure.

正如我們之前所說，我們的獨立品牌知名度仍然很低，因此，我們有意通過投資漏斗營銷策略來擴大品牌知名度，這些策略發展了我們的創意方法，以提高相關性，完善我們的媒體活動提高效率並擴大我們的影響範圍以增加曝光度。

Expanding on these 3 strategies. First, Creative. We're on track to launch our new campaign in the coming months that communicates the LL Flooring value proposition, highlighting the selection, expertise, assortment and value. Second, Efficiency. As mentioned, we're in the process of implementing a new CRM platform that will help improve the effectiveness of our digital marketing spend and strategy to increase conversion while lowering customer acquisition costs. And third, Reach. We're expanding our network presence across lineal and digital media.

擴展這 3 個策略。第一，創意。我們有望在未來幾個月內推出新的營銷活動，傳達 LL Flooring 的價值主張，突出選擇、專業知識、品種和價值。第二，效率。如前所述，我們正在實施一個新的 CRM 平台，該平台將有助於提高我們的數字營銷支出和戰略的有效性，以提高轉化率，同時降低客戶獲取成本。第三，達到。我們正在跨線性和數字媒體擴展我們的網絡存在。

Third, improving the omnichannel customer experience. We offer our customers a differentiated omnichannel experience that allows them to shop and purchase wherever and however they like. Many customers start their flooring journey online, and our online tools allow customers to easily navigate to their preferred flooring solution, make flooring selections and place an order.

第三，提升全渠道客戶體驗。我們為客戶提供差異化的全渠道體驗，讓他們能夠隨時隨地以自己喜歡的方式購物。許多客戶在線開始他們的地板之旅，我們的在線工具使客戶可以輕鬆導航到他們喜歡的地板解決方案，選擇地板並下訂單。

We added additional capabilities to our home delivery services in Q1 to utilize our 440 stores and supply chain network. Our customers have always been able to see inventory and pick up their products at any store they choose. But now we're allowing our online customers to have white glove or curbside delivery from the store to their home. This allows the customer to be able to do a same day or same week project when time is critical and not waiting for a delivery from a distribution center.

我們在第一季度為送貨上門服務增加了額外的功能，以利用我們的 440 家商店和供應鍊網絡。我們的客戶始終能夠在他們選擇的任何商店查看庫存並提取產品。但現在我們允許在線客戶從商店到家中享受白手套或路邊送貨服務。這使得客戶能夠在時間緊迫時完成同一天或同一周的項目，而無需等待配送中心的交貨。

In store, we provide a one-stop shop for customers, including an unmatched breadth of product offerings, knowledgeable associates and installation services that we manage through our network of independent third-party contractors.

在店內，我們為客戶提供一站式服務，包括無與倫比的產品範圍、知識淵博的員工以及我們通過獨立第三方承包商網絡管理的安裝服務。

In addition, our online call center serves as an additional resource for our customers as they embark on their shopping experience. It's important to our customers that we create a seamless experience across our omnichannel platform and continue to improve the shopping experience by investing in our people and in technology. This complete omnichannel experience widens our competitive advantage over independence.

此外，我們的在線呼叫中心為客戶提供購物體驗時的額外資源。對於我們的客戶來說，重要的是我們在全渠道平台上創造無縫體驗，並通過投資於我們的人員和技術來不斷改善購物體驗。這種完整的全渠道體驗擴大了我們相對於獨立性的競爭優勢。

Fourth, innovating new products. We're consistently focused on creating products that our customers will find both aesthetically pleasing as well as functional at a great value. To that end, a 100% PVC-free Duravana brand has been very well received by our customers. It's our fastest-growing brand and solves consumers' everyday living needs at a great value. Customers love the features of hard surface flooring infused with proprietary waterproof technology, and we intend to continue investing in expanding the assortment of Duravana through this year.

四是創新新產品。我們始終致力於創造讓客戶覺得既美觀又實用且物超所值的產品。為此，100% 不含 PVC 的 Duravana 品牌受到了我們客戶的好評。它是我們增長最快的品牌，以巨大的價值解決了消費者的日常生活需求。客戶喜歡採用專有防水技術的硬面地板的特點，我們打算今年繼續投資擴大 Duravana 的品種。

We believe that our growing assortment of proprietary brands will continue to differentiate us from our competitors. Lastly, I want to talk about our new category pilot. As we have rebranded to LL Flooring, we received feedback from our customers and our Pro customers that they expected us to provide comprehensive flooring solutions for their projects, including carpeting.

我們相信，我們不斷增長的自有品牌品種將繼續使我們從競爭對手中脫穎而出。最後，我想談談我們的新品類試點。當我們更名為 LL Flooring 時，我們收到了客戶和 Pro 客戶的反饋，他們希望我們為其項目提供全面的地板解決方案，包括地毯。

As a result of that feedback, we've launched a pilot adding carpet in 4 stores. We intend to extend our pilot to 20 additional stores by the end of second quarter. As a result of adding carpet, our current addressable market grows to $36 billion, driven by the addition of carpet of $13 billion. Again, this category expansion aligns with our brand repositioning to LL Flooring, which implies a broad selection of hard flooring, carpet and installation services for our customers.

根據反饋意見，我們啟動了一項在 4 家商店添加地毯的試點項目。我們打算在第二季度末將試點範圍擴大到另外 20 家商店。由於增加了地毯，我們當前的潛在市場增長到 360 億美元，而增加的地毯價值為 130 億美元。同樣，這一類別的擴張與我們對 LL Flooring 的品牌重新定位相一致，這意味著為我們的客戶提供廣泛的硬地板、地毯和安裝服務選擇。

While still very early, initial engagement has been positive from associates, consumers and our Pro customers. Importantly, our entry into carpet does not require any investment in our supply chain or in inventory as the product is direct shipped from the manufacturer to the installer. We will continue to keep you updated on the status of this pilot next quarter.

雖然還為時過早，但員工、消費者和我們的專業客戶的初步參與度都非常積極。重要的是，我們進入地毯領域不需要對供應鍊或庫存進行任何投資，因為產品直接從製造商運送到安裝人員。我們將在下個季度繼續向您通報該試點項目的最新狀態。

Before turning to our outlook, I'm pleased to announce that we're opening a third distribution center in Dallas in Q3, which will further optimize our supply chain network. Opening a third DC will further improve our service levels and support our strategic growth priorities. It will also reduce transportation costs and optimize our supply chain efficiency over the long term.

在展望我們的前景之前，我很高興地宣布，我們將於第三季度在達拉斯開設第三個配送中心，這將進一步優化我們的供應鍊網絡。開設第三個配送中心將進一步提高我們的服務水平並支持我們的戰略增長重點。從長遠來看，它還將降低運輸成本並優化我們的供應鏈效率。

Now, I'd like to take a few minutes to discuss our outlook for 2023. First, I would like to update you on the vinyl flooring related customs delays originating from Vietnam. As we previously discussed, in February of 2023, the company began to receive detention notices from U.S. Customs related to flooring products that contain PVC as a consequence of the Uyghur Forced Labor Prevention Act, UFLPA.

現在，我想花幾分鐘時間討論一下我們對 2023 年的展望。首先，我想向您通報源自越南的乙烯基地板相關海關延誤的最新情況。正如我們之前討論的，2023 年 2 月，該公司開始收到美國海關因《維吾爾族強迫勞動預防法》(UFLPA) 而發出的與含有 PVC 的地板產品相關的扣留通知。

Enforcement of the UFLPA is having broad implications across flooring products, solar panels, cotton and other industries due to the customs delays. During Q1, we experienced continued delays, which resulted in $2.4 million in incremental expenses and approximately $3 million of lost sales. U.S. Customs is continuing to detain shipments within the vinyl product category, and we're diligently working to provide additional documentation that they're requesting.

由於海關延誤，UFLPA 的執行對地板產品、太陽能電池板、棉花和其他行業產生了廣泛影響。第一季度，我們經歷了持續的延誤，導致 240 萬美元的增量支出和約 300 萬美元的銷售損失。美國海關繼續扣留乙烯基產品類別的貨物，我們正在努力提供他們要求的其他文件。

However, we do not have any visibility as to when these delays will be resolved and when held product will be released. We're continuing to work to mitigate the disruptions by featuring alternative products in our current assortment and leveraging our sourcing capabilities to look at alternative flooring categories and sourcing geographies. Despite our mitigation efforts, we believe that this issue could have further material impacts on sales and margins as we progress throughout the year.

然而，我們不知道這些延遲何時能夠得到解決，以及所持有的產品何時會被釋放。我們將繼續努力通過在當前品種中提供替代產品並利用我們的採購能力來尋找替代地板類別和採購地區來減輕干擾。儘管我們採取了緩解措施，但我們相信，隨著我們全年的進展，這個問題可能會對銷售和利潤產生進一步的重大影響。

Next, we expect the macro backdrop to remain challenging as elevated inflation and higher interest rates drive a more cautious consumer and pressure higher-ticket discretionary purchases. In the near term, this makes sales visibility more limited.

接下來，我們預計宏觀背景仍將充滿挑戰，因為通脹上升和利率上升促使消費者更加謹慎，並對高價可自由支配的購買造成壓力。短期內，這使得銷售能見度更加有限。

However, we are focused on driving sales to the initiatives just discussed. In terms of margins, we continue to expect that merchandise margins will improve as we realize the benefits from freight cost relief to gross margin beginning in the second half of 2023.

然而，我們的重點是推動剛才討論的舉措的銷售。就利潤率而言，我們繼續預計，隨著我們從 2023 年下半年開始意識到貨運成本降低對毛利率的好處，商品利潤率將有所改善。

On the expense side, we recognize our cost structure is not aligned with our current run rate of sales. To that end, we've engaged consultants to undergo a comprehensive strategic review of our cost structure, and we will provide an update on future calls.

在費用方面，我們認識到我們的成本結構與我們當前的銷售速度不相符。為此，我們聘請了顧問對我們的成本結構進行全面的戰略審查，我們將在未來的電話會議中提供最新信息。

In terms of liquidity, the strength of our balance sheet positions us to navigate the challenging macro environment. During Q1, we reduced our bank borrowings by $25 million and have availability under our bank credit agreement of $150 million, which we believe to be adequate.

就流動性而言，我們的資產負債表實力使我們能夠應對充滿挑戰的宏觀環境。第一季度，我們減少了 2500 萬美元的銀行借款，並根據我們的銀行信貸協議獲得了 1.5 億美元的可用資金，我們認為這是足夠的。

Importantly, looking beyond 2023, the medium- to long-term outlook for repair and remodel spending remains strong, supported by tailwinds such as the aging housing stock in the U.S., new household formation by millennials and the desire of baby boomers to age in place. With that as a backdrop, we remain confident in the long-term fundamentals of our business.

重要的是，展望 2023 年以後，在美國住房存量老化、千禧一代組建新家庭以及嬰兒潮一代希望就地養老等有利因素的支持下，維修和改造支出的中長期前景仍然強勁。在此背景下，我們對業務的長期基本面仍然充滿信心。

We're continuing to work on each of our strategic priorities, and we remain focused on delivering long-term sustainable growth as a leading specialty flooring retailer.

我們將繼續致力於每個戰略重點，並繼續專注於作為領先的特種地板零售商實現長期可持續增長。

With that, I will turn the call over to Terry to review our first quarter results and outlook in more detail. Terry?

接下來，我將把電話轉給特里，以更詳細地審查我們第一季度的業績和前景。特里？

Thanks, Charles, and good morning, everyone. Today, I'll focus on the key highlights of our first quarter results, and then I will discuss how we are approaching the remainder of the year. I'll be discussing certain non-GAAP adjusted numbers today, which eliminate certain items that are not indicative of our core business results.

謝謝查爾斯，大家早上好。今天，我將重點關注我們第一季度業績的主要亮點，然後我將討論我們如何應對今年剩餘時間。今天我將討論某些非公認會計原則調整後的數字，這些數字消除了某些不代表我們核心業務業績的項目。

For full details regarding our financial results, please refer to our earnings press release on the Investor Relations section of our website.

有關我們財務業績的完整詳細信息，請參閱我們網站投資者關係部分的收益新聞稿。

Turning to our results. For the first quarter, net sales decreased 13.7% versus the prior year period, driven primarily by a decline in sales to consumers and to a lesser extent, declines in our Pro segment. Comparable sales decreased 15.4% year-over-year. During the quarter, we opened 1 new store late in the quarter, bringing our store count total to 443.

轉向我們的結果。第一季度的淨銷售額與去年同期相比下降了 13.7%，這主要是由於面向消費者的銷售額下降以及我們的 Pro 細分市場的下降所致。可比銷售額同比下降15.4%。本季度，我們在季度末開設了 1 家新店，使我們的商店總數達到 443 家。

Gross profit of $88 million decreased $16.1 million compared to the first quarter of 2022 and gross margin of 36.6% decreased 70 basis points compared to the same period last year. Gross profit for the first quarter of 2023 included $2.1 million of incremental costs related to customs delays on certain vinyl flooring products from Asia that Charles detailed earlier.

毛利潤為 8800 萬美元，較 2022 年第一季度減少 1610 萬美元，毛利率為 36.6%，較去年同期下降 70 個基點。 2023 年第一季度的毛利潤包括與來自亞洲的某些乙烯基地板產品的海關延誤相關的 210 萬美元增量成本，Charles 之前對此進行了詳細說明。

Gross profit for the first quarter of 2022 was also impacted by the net of antidumping and countervailing duty rate charges. Excluding these 2023 and 2022 charges, adjusted gross margin, a non-GAAP measure, of 37.4%, increased 20 basis points compared to the same period last year.

2022 年第一季度的毛利潤也受到反傾銷和反補貼稅率費用淨額的影響。排除這些 2023 年和 2022 年費用，調整後毛利率（非 GAAP 衡量標準）為 37.4%，與去年同期相比增加了 20 個基點。

The increase in adjusted gross margin primarily reflects the company's ability to offset higher material and transportation costs through pricing, promotion and alternative country vendor sourcing strategies. As Charles mentioned, we expect to see continued merchandise margin improvement as we anticipate realizing the benefits from freight cost relief with the more significant benefits to gross margin beginning in the second half of 2023.

調整後毛利率的增長主要反映了該公司通過定價、促銷和替代國家供應商採購策略抵消更高的材料和運輸成本的能力。正如 Charles 提到的，我們預計商品利潤率將持續改善，因為我們預計將在 2023 年下半年開始實現貨運成本減免帶來的好處，並為毛利率帶來更顯著的好處。

SG&A expenses of $101.2 million increased $2.2 million compared to the first quarter of 2022. Adjusted SG&A, a non-GAAP measure, was approximately $100.9 million for 41.9% of net sales, a 640 basis point increase versus the prior year due primarily to expense deleverage from lower sales volumes.

SG&A 費用為 1.012 億美元，與 2022 年第一季度相比增加了 220 萬美元。調整後的 SG&A（非 GAAP 指標）約為 1.009 億美元，占淨銷售額的 41.9%，比上一年增加了 640 個基點，這主要是由於費用去槓桿化來自較低的銷量。

In addition, operating expenses were higher due to investments we're making to generate long-term sales growth as well as increased store labor cost due to competitive wage rate environment as we focus on retaining talent. Q1 operating expenses were partially offset by restructuring cost savings and lower variable costs due to lower sales.

此外，由於我們為實現長期銷售增長而進行的投資以及由於我們專注於留住人才而具有競爭性的工資環境而增加了商店勞動力成本，因此運營費用較高。第一季度的運營費用被重組成本節省和銷售額下降導致的可變成本降低部分抵消。

As a result, first quarter operating loss was $13.2 million compared to operating income of $5.1 million in the prior year. Adjusted operating loss, a non-GAAP measure, was $10.8 million compared to an adjusted operating income of $4.8 million last year. And first quarter net loss per share was $0.37 compared to earnings per share of $0.14. Adjusted loss per share, a non-GAAP measure, was $0.36 compared to an adjusted earnings per share of $0.13 in the prior year period.

結果，第一季度營業虧損為 1,320 萬美元，而上一年營業收入為 510 萬美元。調整後營業虧損（非 GAAP 衡量標準）為 1,080 萬美元，而去年調整後營業收入為 480 萬美元。第一季度每股淨虧損為 0.37 美元，而每股收益為 0.14 美元。調整後每股虧損（非 GAAP 衡量標準）為 0.36 美元，而上年同期調整後每股收益為 0.13 美元。

Turning to our quarter end balance sheet and cash flow. Inventory declined approximately [70.4%]from December 31, 2022, driven by sell-through of higher cost inventory and reflects our continued focus on managing working capital. We ended the quarter with $157 million in liquidity, comprised of $7 million in cash and $150 million of availability under our revolving credit facility.

轉向我們的季末資產負債表和現金流。自 2022 年 12 月 31 日起，庫存下降了約 [70.4%]，原因是成本較高的庫存售完，這反映了我們對營運資金管理的持續關注。截至本季度末，我們的流動資金為 1.57 億美元，其中包括 700 萬美元現金和循環信貸額度下的 1.5 億美元可用資金。

Our net cash flow provided from operating activity in the first quarter was $26.1 million, driven by lower inventory levels. We are pleased to have strengthened our balance sheet during the quarter and ended Q1 with $47 million of debt, which was down from $72 million as of the end of 2022.

由於庫存水平較低，第一季度經營活動提供的淨現金流量為 2610 萬美元。我們很高興在本季度加強了我們的資產負債表，第一季度末的債務為 4700 萬美元，低於 2022 年底的 7200 萬美元。

CapEx was $4.7 million for the quarter, which primarily reflects the investment in our Dallas distribution center that is scheduled to open in the third quarter.

本季度資本支出為 470 萬美元，主要反映了對計劃於第三季度開業的達拉斯配送中心的投資。

Now let me turn my comments to the outlook for the remainder of 2023. Given the current inflationary trends as well as a challenging macro backdrop and the customs hold on certain vinyl products, we expect sales visibility to remain limited for the balance of the year. Despite these factors, we remain focused on executing against our strategic initiatives and believe our strategy to an increased brand awareness and deliver a more consistent customer experience, will gain traction and drive store productivity.

現在讓我談談 2023 年剩餘時間的展望。鑑於當前的通脹趨勢以及充滿挑戰的宏觀背景以及海關對某些乙烯基產品的限制，我們預計今年剩餘時間的銷售能見度仍然有限​​。儘管存在這些因素，我們仍然專注於執行我們的戰略舉措，並相信我們提高品牌知名度和提供更一致的客戶體驗的戰略將獲得牽引力並提高商店生產力。

Gross margins are expected to improve year-over-year with a stronger second half driven primarily by a reduction in international shipping rates and sourcing costs. We will continue to monitor the competitive pricing environment to form our pricing and promotion strategies.

毛利率預計將同比改善，下半年毛利率將強勁，這主要是由於國際運費和採購成本的下降。我們將繼續監控競爭性定價環境，以製定我們的定價和促銷策略。

In addition, we expect the gross margin rate to benefit from a greater mix of our premium Duravana brand, which carries higher margins. SG&A dollar spend and SG&A spend as a percentage of sales are expected to increase year-over-year primarily due to inflationary pressures on wages and benefits, investment in our new distribution center and our customer relationship management platform, which we expect will support higher sales levels and make our operating structure more efficient over time.

此外，我們預計毛利率將受益於我們的優質 Duravana 品牌的更大組合，該品牌的利潤率更高。 SG&A 美元支出以及 SG&A 支出佔銷售額的百分比預計將同比增加，這主要是由於工資和福利的通脹壓力、對新配送中心和客戶關係管理平台的投資，我們預計這將支持更高的銷售額隨著時間的推移，我們的運營結構將變得更加高效。

In light of the challenging environment, we are prudently managing expenses and are looking for ways to align our cost structure with our current rate of sales to preserve profitability. To that end, as Charles mentioned, we have engaged consultants to undergo a comprehensive strategic review of our cost structure, and we'll keep you updated on future calls. In terms of capital expenditures, we expect our 2023 spend to be in the $15 million to $20 million range primarily to support our third distribution center, productivity investments, maintenance CapEx and store openings.

鑑於充滿挑戰的環境，我們正在謹慎管理費用，並正在尋找方法使我們的成本結構與當前的銷售率保持一致，以保持盈利能力。為此，正如查爾斯提到的，我們聘請了顧問對我們的成本結構進行全面的戰略審查，我們將在未來的電話會議中隨時向您通報最新情況。在資本支出方面，我們預計 2023 年的支出將在 1500 萬至 2000 萬美元之間，主要用於支持我們的第三個配送中心、生產力投資、維護資本支出和新店開業。

As a reminder, we prudently moderated our store opening plans to only 3 stores for this year. So in summary, the macro environment continues to be challenging, and we expect these headwinds will continue throughout the year. However, we're very proud of our team and how they continue to navigate through the difficult environment.

提醒一下，我們今年謹慎地將開店計劃調整為僅 3 家。總而言之，宏觀環境仍然充滿挑戰，我們預計這些不利因素將在全年持續。然而，我們為我們的團隊以及他們如何繼續度過困難的環境感到非常自豪。

We remain confident in the long-term fundamentals of our business as we focus on executing against our strategic initiatives and delivering long-term sustainable growth. With that, I'll turn the call over to the operator to start the Q&A session.

我們對業務的長期基本面仍然充滿信心，因為我們專注於執行我們的戰略舉措並實現長期可持續增長。這樣，我會將呼叫轉給接線員以開始問答環節。

(Operator Instructions) Our first question comes from the line of Laura Champine with Loop Capital.

（操作員說明）我們的第一個問題來自 Laura Champine 與 Loop Capital 的對話。

The press release seemed to indicate that there's a belief that you guys lost share in the core. What do you think the industry growth rate or decline rate was in Q1?

新聞稿似乎表明，人們相信你們失去了核心份額。您認為第一季度行業增長率或下降率是多少？

Laura, thanks for the question. We're still waiting for that final data to come out. But for sure, we saw sequential decline from Q4 to Q1. So we continue to focus on our longer-term initiatives around Pro and specifically building our brand awareness.

勞拉，謝謝你的提問。我們仍在等待最終數據的公佈。但可以肯定的是，我們看到從第四季度到第一季度的連續下降。因此，我們繼續專注於圍繞 Pro 的長期計劃，特別是建立我們的品牌知名度。

As I said in the quote, we're not happy with our current performance, but we've identified key areas that our teams are driving to help us build long-term growth through both product portfolio, our Pro business and improving our overall customer experience.

正如我在引言中所說，我們對當前的表現並不滿意，但我們已經確定了我們的團隊正在推動的關鍵領域，以幫助我們通過產品組合、專業業務和改善整體客戶來實現長期增長經驗。

You mentioned in the press release that Pro turned negative. Is it your view on the industry that Pro turned negative overall? Or do you think that, that's an LL-specific issue?

您在新聞稿中提到 Pro 轉為負面。 Pro整體轉向負面是不是你對行業的看法？或者您認為這是 LL 特有的問題？

I think what we're seeing, as we talk to our Pros, certainly, if you look a year ago, many Pros had a large book of business and were backlogged. And certainly, we're not hearing the level of backlog. Many customers are coming in with multiple Pro quotes. So I think that you're seeing a normalization.

我認為，當我們與專業人士交談時，我們所看到的，當然，如果你看看一年前，許多專業人士都有大量的業務，並且積壓了。當然，我們沒有聽到積壓的情況。許多客戶帶著多個 Pro 報價而來。所以我認為你正在看到正常化。

We also saw -- as we saw square footage change sequentially, we're seeing lower square footage per project, both in the Pro segment as well as the consumer segment. So our expectation is that while customers are being impacted by inflation and interest, there's a moderation on the -- on Pro projects, particularly in areas like house flipping, where there's just no availability in that segment, and that's a pretty meaningful segment for Pro.

我們還看到，當我們看到面積連續變化時，我們發現每個項目的面積都在下降，無論是在專業領域還是在消費者領域。因此，我們的預期是，雖然客戶受到通貨膨脹和利息的影響，但 Pro 項目的情況會有所緩和，特別是在房屋翻轉等領域，該細分市場中沒有可用的項目，這對 Pro 來說是一個非常有意義的細分市場。

There are other segments of Pro business, small builder remodel that continue to be active. So we're seeing different impacts across segments in Pro. But certainly, whether you look geographically, as we talked in the West, we saw more slowing there than we did in the East and South, particularly Florida that's benefiting from hurricane.

專業業務的其他部分，小型建築商改造，繼續活躍。因此，我們在 Pro 中看到了不同細分市場的不同影響。但當然，無論你從地理位置上看，正如我們在西方所說的那樣，我們看到那裡的經濟放緩比東部和南部更嚴重，特別是受益於颶風的佛羅里達州。

There are currently no questions registered. So I'll now pass the conference back over to Charles Tyson for closing remarks.

目前沒有登記任何問題。現在我將把會議轉回查爾斯·泰森進行閉幕致辭。

Thank you, operator. Thanks, everyone, for joining us today. Before closing, I'd like to recognize the hard work and resilience of the whole team at LL Flooring. Our merchants, our supply chain teams and our teams in the field who are all navigating a challenging macro environment and are dedicated to our customers and the long-term success of our business.

謝謝你，接線員。謝謝大家今天加入我們。在結束之前，我想對 LL Flooring 整個團隊的辛勤工作和堅韌表示認可。我們的商家、我們的供應鏈團隊和我們的現場團隊都在應對充滿挑戰的宏觀環境，並致力於我們的客戶和我們業務的長期成功。

I'm wishing everybody good health and safety, and we look forward to updating you on our performance next quarter. Thank you.

我祝愿大家身體健康、安全，我們期待向您通報我們下季度的最新業績。謝謝。

That concludes the LL Flooring Holdings First Quarter 2023 Earnings Conference Call. Thank you for your participation. I hope you have a wonderful rest of your day.

LL Flooring Holdings 2023 年第一季度收益電話會議至此結束。感謝您的參與。我希望您度過愉快的一天。