LL Flooring Holdings Inc (LL) 2023 Q3 法說會逐字稿

Good morning or good afternoon, and welcome to the LL Flooring 3Q '23 earnings call. My name is Adam, and I'll be your operator for today. (Operator Instructions)

早安或下午好，歡迎參加 LL Flooring 23 年第三季財報電話會議。我叫 Adam，今天我將擔任您的接線生。 （操作員說明）

I would now hand the floor to Bruce Williams of ICR to begin. So Bruce, please go ahead when you're ready.

我現在請 ICR 的布魯斯威廉斯 (Bruce Williams) 開始發言。所以布魯斯，請在你準備好後繼續。

Thank you, operator. Good morning, everyone, and thank you for joining us. Today, I'm joined by Charles Tyson, our President and Chief Executive Officer; Bob Madore, Chief Financial Officer; and Andrew Wadhams, Senior Vice President, Retail and Commercial Sales.

謝謝你，接線生。大家早安，感謝您加入我們。今天，我們的總裁兼執行長查爾斯泰森 (Charles Tyson) 也加入了我的行列。鮑伯‧馬多雷，財務長；以及零售和商業銷售資深副總裁 Andrew Wadhams。

As we begin, let me reference the safe harbor provision of the US 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, we can give no assurance that such expectations of any of its forward-looking statements will prove to be correct. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in LL Flooring's filings with the SEC.

首先，讓我參考美國證券法中有關前瞻性聲明的安全港條款。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 的未來營運和財務表現。儘管 LL Flooring 認為其前瞻性聲明中反映的預期是合理的，但我們不能保證其任何前瞻性聲明中的此類預期將被證明是正確的。 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有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 in our explanation of why the non-GAAP financial measures may be useful are discussed in today's earnings. The information contained in this call is accurate only as of the date discussed.

在今天的電話會議上，管理階層將討論調整後的結果，非公認會計原則財務指標與最直接可比較的公認會計原則財務指標的調節，在我們解釋為什麼非公認會計原則財務指標可能有用的解釋中，我們將在今天的收益中討論。本次電話會議所包含的資訊僅截至討論日期準確。

Now, I would like to turn the call over to Charles. Charles?

現在，我想把電話轉給查爾斯。查爾斯？

Thank you, Bruce. Good morning, everyone. Joining me today are Bob Madore, our Executive Vice President and Chief Financial Officer; and Andrew Wadhams, our Senior Vice President of Retail and Commercial sales. During today's call, we will review our third-quarter results and discuss progress on our key strategic initiatives as we work to position ourselves for long-term sustainable growth.

謝謝你，布魯斯。大家，早安。今天加入我的是我們的執行副總裁兼財務長 Bob Madore；以及我們零售和商業銷售資深副總裁 Andrew Wadhams。在今天的電話會議中，我們將回顧第三季業績，並討論關鍵策略措施的進展，努力為長期可持續成長做好準備。

Turning now to the quarter, we're disappointed in our third-quarter results, which continues to be negatively impacted by the macro-economic environment as well as internal challenges that we're focused on as we execute against our strategic initiatives. We've made progress on these initiatives and we believe each initiative will improve sales productivity and profitability long term. We reported comparable store sales down 20.5% year over year for the quarter. Our decline in comparable store sales was due to continued slow traffic, but we believe consumers are pressured by elevated interest rates, inflation, and weakened existing home sales.

現在轉向本季度，我們對第三季度業績感到失望，該業績繼續受到宏觀經濟環境以及我們在執行戰略舉措時關注的內部挑戰的負面影響。我們在這些舉措上取得了進展，我們相信每項舉措都將長期提高銷售效率和盈利能力。我們報告本季可比商店銷售額年減 20.5%。我們的可比較商店銷售額下降是由於客流量持續緩慢，但我們認為消費者面臨利率上升、通貨膨脹和現有房屋銷售疲軟的壓力。

In addition, we saw less spending for flooring project by both consumers and pros as the average square footage project size continued to decline. We're still working through our brand awareness challenges from our transition to LL Flooring as well as inconsistent performance across our store portfolio. I'm really excited by the recent additions to our leadership team where we're targeting these areas, which we will discuss in more detail shortly.

此外，隨著平均平方英尺專案規模持續下降，我們發現消費者和專業人士在地板專案上的支出都減少了。我們仍在努力解決因過渡到 LL 地板而帶來的品牌知名度挑戰以及我們商店產品組合表現不一致的問題。我對最近增加的領導團隊感到非常興奮，我們的目標是這些領域，我們很快就會更詳細地討論這些領域。

We've already begun to see improvement in our net promoter score quarter over quarter, which Andrew will expand upon further. For the quarter, we reported an adjusted operating loss of $17.1 million or 7.9%, primarily reflecting lower sales volumes, partially offset by efficiencies created by our new Dallas distribution center and restructuring cost savings.

我們已經開始看到我們的淨推薦值逐季度有所提高，安德魯將進一步擴大這一點。本季度，我們報告調整後營運虧損為 1,710 萬美元，即 7.9%，主要反映銷售下降，但部分被我們新的達拉斯配送中心創造的效率和重組成本節省所抵消。

In August, the Board announced that they will be evaluating strategic alternatives to maximize shareholder value. The strategic review is underway, and I will not be providing an update or taking questions on it today. My priority and our management team's priority remains focused on executing against our long-term strategic initiatives and providing a differentiated flooring experience to our customers to significantly improve our performance.

八月，董事會宣布他們將評估策略替代方案，以實現股東價值最大化。戰略審查正在進行中，我今天不會提供最新消息或回答相關問題。我和我們管理團隊的首要任務仍然是執行我們的長期策略計劃，並為我們的客戶提供差異化的地板體驗，以顯著提高我們的業績。

We remain committed to and continue to execute on our brand transformation and our five strategic initiatives, which are focus investments on a top growth priorities, grow brand awareness, drive product innovation, and ensure a consistent customer experience, and improve operating efficiencies.

我們仍致力於並持續執行我們的品牌轉型和五項策略舉措，這些舉措將投資重點放在首要成長優先事項上，提高品牌知名度，推動產品創新，確保一致的客戶體驗，並提高營運效率。

I believe that we're seeing promising signs that our strategic initiatives are starting to improve our capabilities, and this gives us confidence that we will return to growth as the economic environment improves and in the long term, regain share and what we believe will be a growing industry that's driven by long-term tailwinds from hard surface flooring and remodels, driven by aging housing stock, increased household formation, and rising home values.

我相信，我們看到了有希望的跡象，表明我們的戰略舉措正在開始提高我們的能力，這讓我們有信心，隨著經濟環境的改善，我們將恢復增長，從長遠來看，我們將重新獲得市場份額和我們所相信的目標這是一個不斷發展的行業，受到硬表面地板和改造的長期推動，以及住房存量老化、家庭形成增加和房價上漲的推動。

First, we're focusing investments on our top growth priorities to drive sales, including further harnessing the capabilities of our customer relationship management, CRM system, to generate more opportunities; expanding our carpet offering across our store portfolio; and delivering exceptional service to the pro customer. A national rollout of CRM to all stores for pro customers was successfully completed in the third quarter. CRM is designed to create visibility to pro buying preferences, enabling us to communicate messages that customers value and ultimately deepen our relationship with pro partners and improve the ease of doing business with LL Flooring.

首先，我們將投資重點放在我們的首要成長任務上，以推動銷售，包括進一步利用我們的客戶關係管理、CRM系統的能力來創造更多機會；擴大我們商店產品組合中的地毯產品；並為專業客戶提供卓越的服務。第三季成功完成了專業客戶的全國所有商店 CRM 的推廣。 CRM 旨在創建專業購買偏好的可見性，使我們能夠傳達客戶重視的訊息，並最終加深我們與專業合作夥伴的關係，並提高與 LL Flooring 開展業務的便利性。

While early in its implementation, we've seen encouraging user generated leads and conversion from those leads, indicating the right conversations taking place between the associates and pros. And we can now track and drive conversion much more effectively. We remain on track to roll out CRM capabilities for our non-pro customers by the end of the year.

在實施初期，我們已經看到了鼓勵用戶產生的潛在客戶以及這些潛在客戶的轉化，這表明員工和專業人士之間正在進行正確的對話。我們現在可以更有效地追蹤和推動轉換。我們仍有望在今年底前為非專業客戶推出 CRM 功能。

We expect that will gain greater visibility into the sales cycle, and we'll engage with our customers earlier in the buying process, a more consistently to have a higher probability of converting those customers. During the quarter, we extended our carpet pilot to 61 stores and we expect to have copied at 84 stores by the end of the year.

我們預計這將提高銷售週期的可見性，並且我們將在購買過程中更早與客戶互動，從而更一致地提高轉換這些客戶的可能性。本季度，我們將地毯試點範圍擴大到了 61 家商店，預計到年底將在 84 家商店進行複製。

We're pleased with the other results we're seeing in these stores as our goal to be a one-stop destination for complete flooring solutions is resonating with both pros and consumers with a strong percentage of carpet transactions, including both the hard and soft surface purchase. We expect to improve our carpet trajectory as stores mature as we learn more about how to optimize carpet sales, and as we turn on the marketing of carpet as carpet becomes more widely available in our system.

我們對在這些商店中看到的其他結果感到滿意，因為我們的目標是成為完整地板解決方案的一站式目的地，這引起了專業人士和消費者的共鳴，地毯交易比例很高，包括硬地毯和軟地毯表面購買。隨著商店的成熟，隨著我們更多地了解如何優化地毯銷售，隨著地毯在我們的系統中變得更廣泛，我們打開地毯行銷，我們希望改善我們的地毯軌跡。

Carpet is now fully supported on our website for those regions carrying it. We are not yet benefiting from the broad advertising for that carpet edition and we're awaiting greater geographic coverage before doing so. Through the growth of our carpet pilot, we're further expanding our addressable market without requiring inventory investments by having the products shipped directly from the manufacturer to the installer.

我們的網站現在完全支援使用地毯的地區。我們還沒有從該地毯版本的廣泛廣告中受益，我們正在等待更大的地理覆蓋範圍，然後再這樣做。透過地毯試點的發展，我們透過將產品直接從製造商運送到安裝商，進一步擴大了我們的潛在市場，而無需庫存投資。

We started our journey in the first half of the year in three major metro markets, and are now in seven major metro markets. As we expand the additional markets, we're generating learnings with each new market openings stronger than the initial markets. We intend to continue our carpet expansion throughout 2024 targeting 52 additional stores in Q1 of 2024.

我們上半年在三個主要地鐵市場開始了我們的旅程，現在已經進入七個主要地鐵市場。當我們拓展其他市場時，我們會從每個新市場開放中學到比最初市場更強大的經驗教訓。我們打算在 2024 年繼續進行地毯擴張，目標是在 2024 年第一季新增 52 家商店。

While we saw a sequential deceleration in our pro sales due to the market headwinds in renovation and remodel activity, we believe that implementation of our CRM system will equip our associates to drive our pro business differently as market conditions normalize. CRM enables structured substitute of pro business that focuses on proactive communication to our customers, driving more opportunities for our store and sales teams to serve.

雖然由於翻新和改建活動的市場逆風，我們的專業銷售連續減速，但我們相信，隨著市場狀況正常化，CRM 系統的實施將使我們的員工能夠以不同的方式推動我們的專業業務。 CRM 實現了專業業務的結構化替代，專注於與客戶的主動溝通，為我們的商店和銷售團隊帶來更多服務機會。

This new process allows us to offer a higher level of service to our pros by better understanding that project lead times and requirements and being able to work with them on a real-time basis to plan that future projects. We recently launched CRM outreach campaigns to a targeted segments of high potential pros and have seen encouraging results.

這個新流程使我們能夠更好地了解專案交付時間和要求，並能夠與他們即時合作來規劃未來的項目，從而為我們的專業人士提供更高水準的服務。我們最近針對高潛力專業人士的目標群體發起了 CRM 推廣活動，並取得了令人鼓舞的成果。

We'll continue to deploy tactics connecting our store associates, marketing messages to our customers to drive higher retention. We believe the impact of CRM to build slowly each quarter as our associates learn how to maximize the use of it. We will also continue to expand our focus with national restoration accounts by launching several pilots in Q4, which we expect to drive new pro business as we move into 2024.

我們將繼續部署策略，將我們的商店員工聯繫起來，向客戶發送行銷訊息，以提高保留率。我們相信，隨著我們的員工學習如何最大限度地利用 CRM，每個季度 CRM 的影響都會慢慢增強。我們也將在第四季度啟動多個試點，繼續擴大對國家恢復帳戶的關注，我們預計這些試點將在進入 2024 年時推動新的專業業務。

Second, we're focusing on increasing brand awareness. We remain focused on enhancing our omnichannel brand campaign, but we continue to focus on growing our brand awareness, led by our new Chief Marketing Officer, Laura Massaro. We are making targeted adjustments to our marketing allocations to ensure the most effective deployment of our resources to drive customer acquisition and conversion.

其次，我們注重提高品牌知名度。我們仍然專注於加強我們的全通路品牌活動，但我們將繼續專注於在新任首席行銷長勞拉·馬薩羅（Laura Massaro）的領導下提高我們的品牌知名度。我們正在對行銷分配進行有針對性的調整，以確保最有效地部署我們的資源，以推動客戶獲取和轉換。

At the end of June, we launched a fully integrated campaign to break through the clutter of the category and drive traffic. We believe our marketing initiatives are creating a pipeline for potential future sales by driving high value of actions like free samples and installation of assessments, which have a strong correlation with sales. The marketing team has begun to generate opportunities from our investments in CRM and our customers' data platform to improve media efficiency, personalization, and focused targeting as we shift spend from traditional channels to cost effective digital channels to drive better reach and engagement. CRM will allow us to deploy marketing at the right time and the right place, allowing us to promote products and services that customers may need ready.

六月底，我們發起了一場完全整合的活動，以打破類別的混亂並增加流量。我們相信，我們的行銷舉措正在透過推動免費樣品和安裝評估等與銷售密切相關的高價值行動，為未來潛在的銷售創造管道。隨著我們將支出從傳統管道轉向具有成本效益的數位管道，以提高覆蓋範圍和參與度，行銷團隊已開始從我們對CRM 和客戶數據平台的投資中創造機會，以提高媒體效率、個人化和集中定位。 CRM將使我們能夠在正確的時間和正確的地點部署行銷，使我們能夠推廣客戶可能需要的產品和服務。

Third, we're innovating new products. We believe brands that are innovating and creating new products will win in the long term. And we continuously build on the strength of our merchandising and sourcing teams to enhance our product offerings. Duravana, a waterproof hybrid resilient flooring, has been successful as a premium offering to our pro and consumer customers for this waterproof dent resistant, scratch resistance, and ecofriendly PVC-free features, and will continue to invest in the brand and plan to further expand our product assortment through year end.

第三，我們正在創新新產品。我們相信，從長遠來看，不斷創新和創造新產品的品牌將會獲勝。我們不斷增強我們的銷售和採購團隊的實力，以增強我們的產品供應。 Duravana 是一種防水混合彈性地板，憑藉其防水、防凹、防刮和環保、不含PVC 的特性，已成功成為我們的專業和消費者客戶的優質產品，並將繼續投資該品牌併計劃進一步擴張到年底我們的產品種類。

We're also excited to expand our PVC-free vinyl products offerings through ReNature by CoreLuxe in Q4. ReNature is designed with 25% recycled materials, waterproof protection against everyday spills, realistic looks with up to 30 unique plant patents, and a DIY-friendly click-locking installation. This innovative flooring takes a step towards a brighter future, representing the pinnacle of style, performance, and responsible manufacturing.

我們也很高興在第四季度透過 CoreLuxe 的 ReNature 擴大我們的無 PVC 乙烯基產品系列。 ReNature 採用 25% 的回收材料設計，具有防水功能，可防止日常溢出，具有多達 30 項獨特植物專利的逼真外觀，以及 DIY 友好的點擊鎖定安裝。這種創新地板朝著更光明的未來邁出了一步，代表了風格、性能和負責任製造的巔峰。

Four, to discuss how we're ensuring consistent customer experience across our omnichannel network, I'm joined by one of those key senior leadership additions, Andrew Wadhams, our Senior Vice President of Retail and Commercial Sales. Andrew brings 15 years of perspective and expertise to our team [regarding] defining our brands, offering, aligning, and streamlining practices and deepening connections to customers.

第四，為了討論我們如何確保全通路網路中一致的客戶體驗，我邀請了其中一位重要的高階領導層成員，我們的零售和商業銷售高級副總裁 Andrew Wadhams。 Andrew 為我們的團隊帶來了 15 年的視角和專業知識，涉及定義我們的品牌、提供、調整和簡化實踐以及加深與客戶的聯繫。

Andrew, can you describe why you joined LL Flooring, what you've discovered to date, and what you are most excited about?

Andrew，您能描述一下您加入 LL Flooring 的原因、迄今為止您的發現以及您最興奮的是什麼嗎？

Thanks, Charles. I was initially drawn to LL Flooring because I saw a strong value proposition focused on delivering high-touch service for both pros and consumers. During my due diligence, I was excited by the positive feedback I heard from customers and the passion I felt around our high-quality portfolio of products.

謝謝，查爾斯。我最初被 LL Flooring 所吸引，是因為我看到了其強大的價值主張，專注於為專業人士和消費者提供高品質的服務。在盡職調查期間，我對客戶的正面回饋以及對我們高品質產品組合的熱情感到興奮。

Now, I'm excited to add my experience to form and drive our high-touch oriented approach and create a superior customer journey that will further differentiate our brands and enable us to deliver on our vision to become the customer's first choice for hard and soft surface flooring. During my first 120 days here, we've been focused on simplifying processes, developing our teams, and implementing and executing on our key initiatives.

現在，我很高興能夠利用我的經驗來形成和推動我們以高接觸為導向的方法，並創造卓越的客戶旅程，這將進一步使我們的品牌脫穎而出，並使我們能夠實現成為客戶硬軟產品首選的願景表面地板。在我任職的頭 120 天裡，我們一直專注於簡化流程、發展我們的團隊以及實施和執行我們的關鍵計畫。

I want to thank the retail team for welcoming me, providing candidate insights to accelerate my understanding, and their receptiveness to new ideas around transforming our sales processes and business trajectory. During Q3, we saw consistent improvement in our NPS scores over Q2, validating that our work is resonating with our customers.

我要感謝零售團隊對我的歡迎，為我提供候選人見解以加速我的理解，以及他們對圍繞改變我們的銷售流程和業務軌蹟的新想法的接受度。在第三季度，我們的 NPS 分數比第二季度持續提高，這證明我們的工作與客戶產生了共鳴。

While productivity and consistency across all stores continues to be below our expectations, we continue to refine our processes and invest in the activities our customers value most. We're simplifying the customer's e-commerce experience by making it easier to engage with us earlier in the sales cycle. During Q3, we increased our in-home flooring assessment appointments by 25.6% over Q2.

雖然所有商店的生產力和一致性仍然低於我們的預期，但我們繼續完善我們的流程並投資於客戶最重視的活動。我們正在簡化客戶的電子商務體驗，讓他們在銷售週期的早期更容易與我們互動。第三季度，我們的室內地板評估預約比第二季度增加了 25.6%。

The customers need help with their online chats or checkout, our call center agents are here to help them making real-time updates to their order through shared cart functionality, to deliver a seamless experience. We've taken a leader-led approach to our key initiatives around CRM deployment. We elected to stagger our rollout across our stores to leverage key learnings, remove friction, and to list our pilot teams to cross-train their peers stores. While our teams are still learning to leverage this powerful tool, the rate of adoption and demonstrated competency in our CRM system is highly encouraging.

客戶需要線上聊天或結帳方面的協助，我們的呼叫中心代理可以幫助他們透過共享購物車功能即時更新訂單，以提供無縫體驗。我們針對 CRM 部署的關鍵措施採取了領導者主導的方法。我們選擇在各個商店錯開部署，以利用關鍵經驗、消除摩擦，並列出我們的試點團隊來對同行商店進行交叉培訓。雖然我們的團隊仍在學習如何利用這項強大的工具，但我們的 CRM 系統的採用率和所展示的能力非常令人鼓舞。

Through this first-person, leader-to-leader and peer-to-peer approach, we're driving the CRM pipeline behaviors that result in a higher value added customized approach to help us better serve and understand our customers. I expect this impact of CRM to build gradually as it becomes a natural part of our selling process, and we learned to fully leverage CRM.

透過這種第一人稱、領導者對領導者和點對點的方法，我們正在推動 CRM 管道行為，從而產生更高附加價值的客製化方法，幫助我們更好地服務和了解客戶。我預計 CRM 的影響會逐漸形成，因為它成為我們銷售流程的自然組成部分，並且我們學會了充分利用 CRM。

Finally, we continue to make investments to develop, train, and retain our talent in support of our selling model. We're deeply focused on providing comprehensive flooring solutions to pros and consumers, all while delivering an exceptional customer experience. Further, we continue to reinvest in training to maintain a highly consultative and well-educated salesforce across all our stores. 120 days in, I'm happy to confirm that my assessment of the opportunity with LL Flooring was correct.

最後，我們持續投資開發、培訓和留住人才，以支持我們的銷售模式。我們專注於為專業人士和消費者提供全面的地板解決方案，同時提供卓越的客戶體驗。此外，我們繼續對培訓進行再投資，以維持我們所有商店的高度諮詢和受過良好教育的銷售團隊。 120 天過去了，我很高興地確認我對 LL Flooring 機會的評估是正確的。

Thank you, Andrew. Fif, we're driving operational efficiencies through real estate optimization, supply chain improvements, and our focus on working capital initiatives. Since we initiated a strategic review of our cost structure earlier this year, we identified $15 million of annualized savings and have achieved $7.3 million of realized savings year to date, with $3.7 million of those savings realized in the third quarter.

謝謝你，安德魯。第五，我們透過房地產優化、供應鏈改進以及對營運資本計畫的關注來提高營運效率。自從我們今年稍早對成本結構進行策略審查以來，我們確定了年度節省 1,500 萬美元，今年迄今已實現了 730 萬美元的節省，其中 370 萬美元是在第三季度實現的。

We're on track to open three stores for the year and with no current planned new store openings for 2024. We regularly review our store portfolio for profitability and cash flow. In the third quarter, we implemented a new more disciplined approach through which we identified eight underperforming stores, which we will be closing in 2023 and early 2024.

我們預計今年將開設 3 家門市，目前沒有計劃在 2024 年開設新店。我們定期審查我們的門市組合的獲利能力和現金流。在第三季度，我們實施了一種新的、更嚴格的方法，透過該方法，我們確定了 8 家表現不佳的商店，我們將在 2023 年和 2024 年初關閉這些商店。

We have flexibility and the ability to make decisions within our real estate portfolio based on lease tenure with approximately 49% of our store leases becoming available for a new or expiring in the next three years.

我們擁有根據租賃期限在房地產投資組合中做出決策的靈活性和能力，大約 49% 的商店租賃可在未來三年內續約或到期。

Turning to our supply chain. I'd like to congratulate our supply chain teams and distribution, operations, transportation, and logistics for successfully launching a new Dallas distribution center on time in the third quarter, which is now shipping effectively to 20% of our store network. We successfully negotiated all our carrier contracts to cooperate the Dallas distribution center with the initial benefit to reflect in our gross margin improvements this quarter. We're also excited to improve our service levels for providing product to customers in the middle of the country faster while at the same time, making our network more efficient and cost effective.

轉向我們的供應鏈。我要祝賀我們的供應鏈團隊以及分銷、營運、運輸和物流團隊在第三季度按時成功啟動了新的達拉斯分銷中心，該中心目前正在有效地向我們 20% 的商店網絡發貨。我們成功談判了與達拉斯配送中心合作的所有承運人合同，初步收益反映在本季度毛利率的提高中。我們也很高興能夠提高我們的服務水平，以便更快地向中部地區的客戶提供產品，同時使我們的網路更有效率且更具成本效益。

To mitigate disruptions from the impact of the week of Uyghur Forced Labor Prevention Act on vinyl flooring, we diversified our supply chain through the addition of new vendor partners in different geographical locations, while at the same time launching new PVC-free product [to cause] with expanded and enhanced features and benefits.

為了減輕維吾爾族強迫勞動預防法一周對乙烯基地板的影響，我們透過在不同地理位置增加新的供應商合作夥伴來實現供應鏈多元化，同時推出新的不含 PVC 的產品[以引起] 具有擴展和增強的功能和優勢。

While we have leveraged a much more balanced supply chain that will allow flexibility and create long-term benefits as we scale, the benefits will be moderately offset by gross margin headwinds going into 2024. We're pleased with the work we've done and we will continue to strive to provide the best supply chain operations in the industry. We remain focused on maintaining a strong inventory management practice to benefit our overall working capital, which Bob will discuss further. I will now turn the call over to Bob to share our financial details and outlook. Bob?

雖然我們利用了更平衡的供應鏈，隨著我們的規模擴大，這將提供靈活性並創造長期利益，但這些好處將被進入2024 年的毛利率不利因素所抵消。我們對我們所做的工作感到滿意，我們將繼續努力提供業內最好的供應鏈營運。我們仍然專注於維持強大的庫存管理實踐，以有利於我們的整體營運資金，鮑勃將進一步討論這一點。我現在將把電話轉給鮑勃，分享我們的財務細節和前景。鮑伯？

Thanks, Charles, and good morning, everyone. Today, I'll walk through key metrics pertaining to our third-quarter results, and now we'll discuss how we're approaching the final quarter of the year. I will be discussing certain non-GAAP adjusted numbers today, which eliminates certain items that are not indicative of our core business results.

謝謝查爾斯，大家早安。今天，我將介紹與第三季業績相關的關鍵指標，現在我們將討論如何接近今年最後一個季度。今天我將討論某些非公認會計原則調整後的數字，這消除了某些不代表我們核心業務表現的項目。

For full details regarding our financial results, please refer to our earnings press release on the Investor Relations section of our website. For the third quarter, net sales of $215.8 million, decreased 19.7% or $53 million versus the prior-year period, driven by a decline primarily in sales to consumers and to a lesser extent, declines in our pro segment.

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。第三季淨銷售額為 2.158 億美元，與上年同期相比下降 19.7%，即 5,300 萬美元，主要是由於面向消費者的銷售額下降以及我們的專業細分市場的下降所致。

Comparable sales decreased 20.5% year over year, driven by 18.9% decline in transactions and a %1.6 decline in average ticket. Average retail price per merchandise units sold remained flat compared to third quarter in the prior year. During the quarter, we opened one new store, bringing our total store count to 443.

可比銷售額較去年同期下降 20.5%，原因是交易量下降 18.9%，平均票價下降 1.6%。與去年第三季相比，每件商品的平均零售價保持持平。本季度，我們新開了一家門市，使門市總數達到 443 家。

Gross profit of $68.5 million, decreased 28.3% or $27.1 million compared to the third quarter of 2022. And gross margin of 31.7%, decreased 390 basis points compared to the same period last year.

毛利為 6,850 萬美元，較 2022 年第三季下降 28.3%，或 2,710 萬美元。毛利率為 31.7%，較去年同期下降 390 個基點。

The decrease in gross profit and margin was driven by an unfavorable $10.7 million 2012 to 2013 anti-dumping duty rate change and a $1.6 million in incremental cost of goods sold related to customs detentions on certain vinyl flooring products from Asia.

毛利和利潤率下降的原因是 2012 年至 2013 年反傾銷稅率變化 1,070 萬美元，以及因海關扣押來自亞洲的某些乙烯基地板產品而導致銷售商品成本增加 160 萬美元。

In September of 2023, the company received notice from the Department of Commerce that its imports of multilayered hardwood from China for the anti-dumping review period of December 1, 2012, to November 30, 2013, would be assessed at a 49.84% company-specific rate instead of 3.92% weighted average rate published in the Federal Register. The change from the published weighted average rate to the company-specific anti-dumping duty rate was substantial, resulting in a $10.7 million adjustment to cost of sales and an additional $5.5 million in interest. The company tendered $15.7 million in the US Customs and Border Patrol in the third quarter and accrued an additional liability of $500,000.

2023年9月，該公司收到商務部通知，在2012年12月1日至2013年11月30日的反傾銷複審期內，其從中國進口的多層硬木將以49.84%的稅率進行評估。具體利率而非聯邦公報公佈的3.92% 加權平均利率。從公佈的加權平均稅率到公司特定反傾銷稅率的變化很大，導致銷售成本調整 1,070 萬美元，並增加 550 萬美元的利息。該公司第三季向美國海關和邊境巡邏隊投標了 1,570 萬美元，並增加了 50 萬美元的負債。

As indicated in our consolidated financial statements, we have seen both favorable and unfavorable rate adjustments for antidumping and countervailing assessments on multilayered hardwood shipments from China throughout the 2011 to 2020 reviews. We use looking at our historical experience, this large of a rate change is highly unusual.

正如我們的綜合財務報表所示，在 2011 年至 2020 年的審查期間，我們發現對來自中國的多層硬木出口的反傾銷和反補貼評估有有利和不利的稅率調整。根據我們的歷史經驗，如此大的利率變化是非常不尋常的。

Further, for the remaining open periods of antidumping and countervailing reviews, we believe there is minimal risk of a rate assessment and material different rate from the finalized weighted average rates accrued.

此外，在反傾銷和反補貼審查的剩餘開放期間，我們認為，稅率評估和與最終確定的加權平均稅率存在重大差異的風險很小。

(technical difficulty) [13], we incurred $1.8 million of incremental expenses related to the Uyghur Forced Labor Prevention Act, which included demurrage, storage, transportation, and legal expenses.

（技術難度）[13]，我們發生了與《維吾爾族強迫勞動預防法》相關的180萬美元增量費用，其中包括滯期費、倉儲費、運輸費和法律費用。

For the nine months ended September 30, 2023, incremental expenses related to the UFLPA were $7 million. As Charles discussed, we are pleased with the work our supply chain team has done to mitigate the disruptions by leveraging our sourcing capabilities. We are rebuilding SKUs in the vinyl categories, and we expect to have normal levels of inventory in that category by year end.

截至 2023 年 9 月 30 日的九個月，與 UFLPA 相關的增量費用為 700 萬美元。正如 Charles 所討論的，我們對供應鏈團隊利用我們的採購能力減輕幹擾所做的工作感到滿意。我們正在重建黑膠唱片類別的 SKU，預計到年底該類別的庫存水準將達到正常水準。

Despite our robust compliance program and mitigation efforts, we continue to see a small number of shipments from additional vinyl vendors being impacted by UFLPA holds. We are unable to predict whether other vinyl flooring shipments will be impacted in the future and whether this issue could have further material impacts on sales and margins as we progress throughout the fourth quarter and into 2024.

儘管我們採取了強有力的合規計劃並採取了緩解措施，但我們仍然看到其他乙烯基供應商的少量發貨受到 UFLPA 扣留的影響。我們無法預測未來其他乙烯基地板的出貨量是否會受到影響，以及隨著我們在整個第四季和 2024 年的進展，這個問題是否會對銷售和利潤產生進一步的重大影響。

Excluding the 2023 charges related to antidumping duties in vinyl delays, adjusted gross profit of $80.9 million, decreased $14.7 million and adjusted gross margin of 37.5%, increased 190 basis points compared to the same period last year. The decrease in adjusted gross profit is driven by a decrease in transaction count, reflecting lower spending by pros and consumers. While the increase in adjusted gross margin primarily reflects freight cost relief and the sourcing team's agility in finding alternative country vendor sourcing strategy.

剔除2023年與乙烯基延遲反傾銷稅相關的費用，調整後毛利為8,090萬美元，減少1,470萬美元，調整後毛利率為37.5%，較去年同期成長190個基點。調整後毛利的下降是由於交易數量減少所致，反映了專業人士和消費者支出的減少。調整後毛利率的成長主要反映了運費成本的降低以及採購團隊在尋找替代國家供應商採購策略的敏捷性。

As we continue to realize the benefits from the Dallas distribution center and leverage our balanced supply chain as we scale, we will continue to work to maximize customer delivered values through reinvestment of a portion of these cost savings into pricing, promotion, and sourcing strategies as well as product innovation.

隨著我們繼續實現達拉斯配送中心的優勢並隨著規模的擴大利用我們平衡的供應鏈，我們將繼續努力透過將部分成本節省再投資到定價、促銷和採購策略來最大化客戶交付的價值。還有產品創新。

SG&A expense of $98.1 million was 45.5% as a percentage of sales compared to $99.7 million or 37.1% of net sales in the third quarter of 2022. The decrease in SG&A and adjusted SG&A expense was due to restructuring cost savings and lower variable costs due to lower sales volumes, partially offset by the investments we're making to generate long-term sales growth such as the Dallas distribution center and store closure costs.

SG&A 費用為9,810 萬美元，佔銷售額的 45.5%，而 2022 年第三季為9,970 萬美元，佔淨銷售額的 37.1%。SG&A 和調整後的SG&A 費用減少是由於重組成本節約和可變成本降低所致銷售量下降，部分被我們為實現長期銷售成長而進行的投資（例如達拉斯配送中心和商店關閉成本）所抵消。

The increases in both SG&A and adjusted SG&A expense as a percentage of net sales were due primarily to expense deleverage from lower sales volumes. Other expense of $6.4 million increased $5.7 million compared to the prior year quarter, reflecting the $5.5 million interest charge related to the anti-dumping adjustments, excluding the interest charge related to the anti-dumping duty rate change, adjusted other expense increased $0.2 million to $0.9 million for the quarter.

SG&A 和調整後的 SG&A 費用佔淨銷售額的百分比的增加主要是由於銷售下降帶來的費用去槓桿化。其他費用為640 萬美元，比去年同期增加了570 萬美元，反映了與反傾銷調整相關的550 萬美元利息費用，不包括與反傾銷稅率變化相關的利息費用，調整後的其他費用增加了20 萬美元，至本季 90 萬美元。

As a result, third-quarter operating loss was $29.6 million compared to an operating loss of $4.1 million in the prior year. Adjusted operating loss, a non-GAAP measure, was $17.1 million compared to $4.3 million last year. And third-quarter net loss per share was $1.25 compared to $0.13 last year. Adjusted loss per share, a non-GAAP measure, was $0.78 compared to $0.14 in the prior year period.

因此，第三季營運虧損為 2,960 萬美元，而上一年營運虧損為 410 萬美元。調整後營運虧損（非公認會計準則衡量標準）為 1,710 萬美元，而去年為 430 萬美元。第三季每股淨虧損為 1.25 美元，去年同期淨虧損為 0.13 美元。調整後每股虧損（非 GAAP 衡量標準）為 0.78 美元，而去年同期為 0.14 美元。

Now turning to our quarter end balance sheet and cash flow. We continue to be focused on identifying further efficiencies and further improving our inventory management practices to yield continued improvements in our overall working capital. In terms of liquidity, we believe that our balance sheet positions us to navigate the challenging macro environment.

現在轉向我們的季末資產負債表和現金流。我們繼續致力於提高效率並進一步改進我們的庫存管理實踐，以持續改善我們的整體營運資金。在流動性方面，我們相信我們的資產負債表使我們能夠應對充滿挑戰的宏觀環境。

We ended the quarter with $120.2 million in liquidity, comprised of $10 million in cash and $110.2 million of availability under our revolving credit facility. The $110.2 million of availability under the credit agreement as of September 30, 2023, represents a decrease of $14.6 million from $124.8 million of availability as of December 31, 2022.

截至本季末，我們的流動資金為 1.202 億美元，其中包括 1,000 萬美元現金和循環信貸額度下的 1.102 億美元可用資金。截至 2023 年 9 月 30 日，信貸協議項下的可用資金為 1.102 億美元，比截至 2022 年 12 月 31 日的可用資金 1.248 億美元減少了 1,460 萬美元。

We are pleased with our working capital management and its contribution to operating cash flow. As of September 30, 2023, there was $77 million outstanding under the revolving credit facility, compared to $72 million as of December 31, 2022.

我們對我們的營運資金管理及其對營運現金流的貢獻感到滿意。截至 2023 年 9 月 30 日，循環信貸安排下的未償餘額為 7,700 萬美元，而截至 2022 年 12 月 31 日為 7,200 萬美元。

Our net cash flow provided from operating activities for the first nine months of the year was $8.4 million, driven by sell-throughs of higher cost merchandise inventories and reduced inventory purchases. Merchandise inventories decreased approximately 14.9% or $49.7 million from December 31, 2022.

今年前 9 個月，我們的營運活動產生的淨現金流量為 840 萬美元，這主要得益於成本較高的商品庫存的銷售和庫存採購的減少。自 2022 年 12 月 31 日起，商品庫存減少約 14.9%，即 4,970 萬美元。

CapEx was $14 million year to date, which primarily reflects our investment and our strategic initiatives, including our carpet expansion and the successful opening of the Dallas distribution center in Q3.

今年迄今的資本支出為 1,400 萬美元，這主要反映了我們的投資和策略舉措，包括地毯擴張和第三季達拉斯配送中心的成功開幕。

As we look to the remainder of the year, we expect to continue to navigate uncertainty in the macro-economic environment and due to low consumer confidence, inflation, and elevated interest and mortgage rate environment, and lower existing home sales.

展望今年剩餘時間，由於消費者信心低迷、通貨膨脹、利率和抵押貸款利率上升以及現有房屋銷售下降，我們預計將繼續應對宏觀經濟環境的不確定性。

As a result, the company is not providing financial guidance at this time. The company expects full-year revenues to continue to be challenged due to macro uncertainty. Despite the cyclical factors, we remain focused on executing against our strategic initiatives, such as the expansion of CRM, carpet, and service of the pro, customer and believe our strategy to increase brand awareness and deliver a more consistent end-to-end customer experience across our omnichannel network will gain traction and drive profitability.

因此，該公司目前不提供財務指導。該公司預計，由於宏觀不確定性，全年收入將繼續面臨挑戰。儘管存在週期性因素，我們仍然專注於執行我們的策略舉措，例如擴大 CRM、地毯和專業客戶服務，並相信我們的策略能夠提高品牌知名度並提供更一致的端到端客戶我們全通路網路的經驗將獲得吸引力並提高盈利能力。

We are encouraged by the work we've done thus far to optimize our store portfolio, simplify our processes using CRM, and leverage supply chain flexibility through alternative sourcing strategies and our new Dallas distribution center. We remain focused on identifying further efficiencies and further improving our inventory management practices to yield continued improvements in our overall working capital and reinvest in activities our customers value most, including pricing and promotion strategies and product innovation.

我們對迄今為止所做的工作感到鼓舞，這些工作優化了我們的商店組合，使用 CRM 簡化了我們的流程，並透過替代採購策略和我們新的達拉斯配送中心利用了供應鏈的靈活性。我們仍然專注於進一步提高效率並進一步改進我們的庫存管理實踐，以持續改善我們的整體營運資金，並重新投資於客戶最重視的活動，包括定價和促銷策略以及產品創新。

Further, we continue to recognize savings from our strategic review of our cost structure, and we will prudently manage expenses and focus on aligning our cost structure with our current rate of sales to preserve profitability. In terms of capital expenditures, we expect to spend approximately $20 million in 2023, primarily to support our strategic investments, including the Dallas distribution center, carpet rollout, and CRM.

此外，我們繼續認識到對成本結構的策略審查帶來的節省，我們將審慎管理費用，並專注於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。在資本支出方面，我們預計 2023 年將支出約 2,000 萬美元，主要用於支援我們的策略投資，包括達拉斯配送中心、地毯鋪設和 CRM。

With that, I'll turn the call back over to Charles.

這樣，我會將電話轉回查爾斯。

Thanks, Bob. In conclusion, we continue to navigate uncertainty in the macro-economic environment due to low consumer confidence, inflation, and elevated interest and mortgage rate environment and lower existing home sales. Despite external headwinds, we remain confident in our ability to deliver the high-touch service of an independent flooring retailer, compliant with the value, assortment, and confidence in a national brand.

謝謝，鮑伯。總之，由於消費者信心低迷、通貨膨脹、利率和抵押貸款利率上升以及現有房屋銷售下降，我們將繼續應對宏觀經濟環境的不確定性。儘管面臨外在阻力，我們仍相信自己有能力提供獨立地板零售商的高品質服務，符合國家品牌的價值、品種和信心。

We're confident in our ability to execute on our strategic initiatives, focusing on continuing the implementation process about CRM platform to drive both pro and consumer sales, increasing our brand awareness, enhancing our product offerings by innovating products and executing on our carpet initiatives while continuing to leverage our strategic sourcing efficiencies to deliver value to our customers.

我們對執行策略計劃的能力充滿信心，重點是繼續實施CRM 平台的實施流程，以推動專業人士和消費者銷售，提高我們的品牌知名度，透過創新產品和執行我們的地毯計劃來增強我們的產品供應，同時繼續利用我們的策略採購效率為客戶創造價值。

We are continuously working to improve store performance through simplifying store operations execution, building great teams, and driving at key sales initiatives. We believe our investments in our strategic initiatives will position us for long-term growth and an industry that benefits from both long-term tailwinds due to aging housing stock, increased household formation, and rising home values.

我們不斷努力透過簡化商店營運執行、建立優秀團隊和推動關鍵銷售計劃來提高商店績效。我們相信，我們對策略性舉措的投資將為我們的長期成長奠定基礎，並使產業受益於房屋存量老化、家庭形成增加和房價上漲帶來的長期順風。

With that, I will now turn the call over to the operator for questions.

現在，我將把電話轉給接線員詢問問題。

(Operator Instructions) Laura Champine, Loop Capital.

（操作員指示）Laura Champine，Loop Capital。

Thanks for taking my question. I think you commented that the new Dallas DC is serving 20% of stores. Is that the plan or will there be more stores added to that network?

感謝您提出我的問題。我想您曾評論說，新的達拉斯 DC 正在為 20% 的商店提供服務。這是計劃嗎？還是會在該網路中添加更多商店？

Yeah. Good morning, Laura, thanks for the question. Over time, this is allowing us to realign our network and so Dallas is significantly helping us improve service to particularly Texas, which is a high potential market, but it will allow us to add additional stores based on the capacity we have over time as we align on a longer-term supply chain strategy.

是的。早安，勞拉，謝謝你的提問。隨著時間的推移，這使我們能夠重新調整我們的網絡，因此達拉斯極大地幫助我們改善了對德克薩斯州的服務，特別是德克薩斯州，這是一個潛力巨大的市場，但它將使我們能夠根據我們隨著時間的推移所擁有的容量添加更多商店。調整長期供應鏈策略。

Got it. And then on the -- but for now, it sounds like 20% is correct and that will grow over time. Is that a fair characterization?

知道了。然後 - 但就目前而言，聽起來 20% 是正確的，而且隨著時間的推移，這一比例還會增加。這是一個公平的描述嗎？

That's correct.

這是正確的。

The stores that are closing -- the eight stores that are closing, were those unprofitable stores? What were the hurdles that those stores did not cross?

即將關閉的商店——即將關閉的八家商店，是那些不盈利的商店嗎？這些商店沒有跨越哪些障礙？

Yeah. The majority were unprofitable stores and a small number of the stores were stores that just -- were not fulfilling our strategic priorities and outlived their usefulness, but the majority were unprofitable stores.

是的。大多數商店都是無利可圖的商店，一小部分商店只是 - 沒有實現我們的戰略優先事項並且失去了其用處，但大多數商店都是無利可圖的商店。

So Laura, on a previous call, we said where we're doing a strategic review of our whole real estate portfolio. Since Bob has come in, he has been deep into that work, and that's part of the output of the work that we're doing.

勞拉，在之前的一次電話會議上，我們說過我們正在對整個房地產投資組合進行策略性審查。自從鮑伯進來以來，他一直深入研究這項工作，這也是我們正在做的工作成果的一部分。

I do think it's important, as Bob stated, we have certain stores that just don't meet brand standards. Some of them are just not the locations that are appealing to the focus customers that we're targeting both on the pro and the consumer side. And so that's the reason that we accelerated the closing of these eight stores.

我確實認為這很重要，正如鮑伯所說，我們有某些商店不符合品牌標準。其中一些地點並不是對我們針對專業人士和消費者的重點客戶有吸引力的地點。這就是我們加速關閉這八家商店的原因。

Understood. Thank you.

明白了。謝謝。

We have no further questions, so I'll hand the call back to the management team for any concluding remarks.

我們沒有進一步的問題，因此我會將電話轉交給管理團隊以獲取任何結論性意見。

Thank you, operator. Thanks, everyone, for joining us today. I want to thank all our associates again for their hard work and dedication to executing on our strategic initiatives and navigating our business in a challenging macro environment. We will continue to operate with discipline and believe that the execution of our initiatives will drive long-term sustainable growth as the cycle normalizes. I wish everybody good health and a happy Thanksgiving and we look forward to updating you on our performance next quarter.

謝謝你，接線生。謝謝大家今天加入我們。我要再次感謝我們所有員工的辛勤工作和奉獻精神，以執行我們的策略計劃並在充滿挑戰的宏觀環境中引導我們的業務。我們將繼續遵守紀律，並相信隨著週期正常化，我們舉措的執行將推動長期可持續成長。我祝福大家身體健康，感恩節快樂，我們期待向您通報下個季度的最新業績。

Thank you. This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

謝謝。今天的電話會議到此結束。非常感謝您的出席。現在您可以斷開線路。