Floor & Decor Holdings, Inc. · NYSE:FND
Floor & Decor — Investor Day (March 2022)
150 slides from Floor & Decor's investor day presentation, Mar 16, 2022
Slide 1: Investor Day 2022
Floor & Decor Investor Day 2022 1 Investor Day 2022
Slide 2: Wayne Hood, Vice President Investor Relations
Floor & Decor Investor Day 2022 Wayne Hood Vice President Investor Relations 2 Investor Day 2022
Slide 3: Cautionary statement concerning forward-looking statements, Part 1
Cautionary statement concerning forward-looking statements, Part 1 This presentation and the associated webcast contain information that includes or is based upon forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
Slide 4: Cautionary statement concerning forward-looking statements, Part 2
Cautionary statement concerning forward-looking statements, Part 2 Statement relating to non-U.S. financial GAAP measures While the Company reports its financial results in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), during the course of this presenta
Slide 5: Agenda
Agenda Welcoming Comments Wayne Hood, VP Investor Relations Strategic Overview Tom Taylor, Chief Executive Officer Customer Segmentation and Insights Lisa Laube, President Strong Merchandising Capabilities Ersan Sayman, EVP Merchandising 10-Minute Break New Store Opportunity Bryan Dodge, SVP Real Es
Slide 6: Floor & Decor
Floor & Decor Investor Day 2022 6 Investor Day 2022
Slide 7: An Exciting Journey Ahead
Floor & Decor Investor Day An Exciting Journey Ahead Tom Taylor 7 Investor Day 2022
Slide 8: Five Key Takeaways
Five Key Takeaways Disruptive High-growth Specialty Retailer 1 with a Unique Business Model 2 Strong Execution of Strategic Plan 3 Strategy for Continued Growth 4 Large and Growing TAM 5 Disciplined Capital Allocation 8 Investor Day 2022
Slide 9: Disruptive High-Growth Specialty Retailer with a Unique Business Model
DISRUPTIVE HIGH-GROWTH SPECIALTY RETAILER WITH A UNIQUE BUSINESS MODEL 9 Investor Day 2022
Slide 10: We Are Successful as a Disruptive High Growth Specialty Retailer
We Are Successful as a Disruptive High Growth Specialty Retailer of Hard Surface Flooring and Related Accessories Because… Large, Visually Inspiring Everyday Low Price Experienced Connected Customer Unique Direct Stores, and Website Promise Creates Trust Management Team Experience Sourcing Supply Ch
Slide 11: Large Store Size Positions Us as a Destination For All Flooring Needs
Large Store Size Positions Us as a Destination For All Flooring Needs HOME SPECIALTY TILE IMPROVEMENT FLOORING 78,000 3,000 to 5,000 SQ FT 20,000 SQ FT SQ FT TOTAL SPECIALTY FLOORING 5,000 to 20,000 SQ FT 11 Investor Day 2022
Slide 12: More Square Footage Dedicated to Hard-Surface Flooring than Anyone
More Square Footage Dedicated to Hard-Surface Flooring than Anyone 2021 2024 Stores & Design Studios 12.6M Stores & Design Studios 21.6M Distribution Centers 5.6M Distribution Centers 8.3M Total 18.2M Total 29.9M 12 Investor Day 2022
Slide 13: Visually Inspiring Stores Running the Gamut of Trend Forward Design and Innovation
Visually Inspiring Stores Running the Gamut of Trend Forward Design and Innovation Oversized Displays that Best Visualize Products and Drive Inspiration Trend Right Vignettes Drive Store Traffic and Importantly Drive Design Ideas Average 32 Vignettes Per Store Over 2,300 Sq Ft Per Store Dedicated to
Slide 14: One Stop Shopping Experience Catering to Distinct Customer Segments
One Stop Shopping Experience Catering to Distinct Customer Segments Homeowners PROs Commercial >2.9M Leveraging Our Strengths with Commercial Customers Active Homeowner & PRO Customers 14 Investor Day 2022
Slide 15: Dedicated PRO Team and Tailored Services
Dedicated PRO Team and Tailored Services Dedicated PRO PRO Premier Commercial Desk Rewards Loyalty Credit Options Program Free Storage PRO PRO Education and Return Premier App Events Option 15 Investor Day 2022
Slide 16: Free Design Services Offered by Flooring Experts
Free Design Services Offered by Flooring Experts Expert Designers In Store or Virtual Recommendations to Bring Vision Appointments Made to Suit Budget to Reality From Possible and Lifestyle with Start to Expert Budgeting Completion and Planning Advice 16 Investor Day 2022
Slide 17: Unique Direct Sourcing Model and Agile Supply Chain
Unique Direct Sourcing Model and Agile Supply Chain Typical Hard-Surface Flooring Manufacturer Agent/Broker Importer Distributor Retailer Supply Chain Floor & Decor’s Direct Sourcing of Products Hard-Surface >240 Simplify the Process Improves Collaboration Suppliers in by Eliminating and Creates Eff
Slide 18: Everyday Low Prices A Distinct Value Proposition for Our Customers
Everyday Low Prices A Distinct Value Proposition for Our Customers Hard-Surface Flooring Large Direct Global Supply Chain Merchandising Expertise Purchasing Power Prowess and Capability 18 Investor Day 2022
Slide 19: Strong Execution of Strategic Plan
STRONG EXECUTION OF STRATEGIC PLAN 19 Investor Day 2022
Slide 20: Strong Track Record of Execution by Our Management Team
Strong Track Record of Execution by Our Management Team LISA ERSAN BRIAN LAUBE SAYMAN ROBBINS President EVP, Merchandising EVP, Business Development Strategy STEVE BRYAN TREVOR DENNY DODGE LANG EVP, Store Operations SVP, Real Estate EVP & Chief Financial & Construction Officer 20 Investor Day 2022
Slide 21: Rapid Warehouse Store Growth with 160 Stores in 33 States
Rapid Warehouse Store Growth with 160 Stores in 33 States Significant Store Growth Locations Throughout the US CAGR: 160 STORES 17.8% 160 SEATTLE DETROIT BOSTON/NE 133 MILWAUKEE 120 PHILADELPHIA NEW YORK METRO CHICAGO RENO 100 SAN FRANCISCO SALT LAKE WICHITA INDIANAPOLIS COLUMBUS DC METRO 83 SACRAME
Slide 22: Strong Sales Performance Over the Last 5 Years
Strong Sales Performance Over the Last 5 Years Total Sales (in Millions) CAGR: $3,434 25.5% $2,426 $2,045 $1,710 $1,385 2017 2018 2019 2020 2021 13 Consecutive Years of Comp Sales Growth 22 Investor Day 2022
Slide 23: Leading to Attractive Double-Digit Earnings Growth
Leading to Attractive Double-Digit Earnings Growth Adjusted EBITDA (in Millions) Adjusted EPS CAGR: 32.2% $485 CAGR: 37.1% $2.44 $323 $243 $192 $1.50 $159 $1.15 $0.97 $0.69 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 46.5% 20.9% 26.4% 33.1% 50.2% 53.3% 40.6% 18.6% 30.4% 62.7% YoY Growth YoY Gr
Slide 24: Strategy for Continued Growth
STRATEGY FOR CONTINUED GROWTH 24 Investor Day 2022
Slide 25: Pillars to Achieving Our Long-Term Sales and Earnings Growth
Pillars to Achieving Our Long-Term Sales and Earnings Growth Pillars of Growth Open New Expand Connected Invest in PRO Expand Design Grow Warehouse Stores Grow SSS Customer Experience Customers Services Commercial Expand Operating and EBITDA Margins 25 Investor Day 2022
Slide 26: Large and Growing TAM
LARGE AND GROWING TAM 26 Investor Day 2022
Slide 27: Our TAM is Now Larger, Including Adjacent Categories
Our TAM is Now Larger, Including Adjacent Categories HARD-SURFACE TAM ADJACENT FLOORING $49-54B CATEGORIES $8-13B $41B 27 Investor Day 2022
Slide 28: Hard Surface Flooring Captures 13 Points of Market Share From 2012
Hard Surface Flooring Captures 13 Points of Market Share From 2012 MARKET SHARE 7% 6% 6% 44% 2012 42% 2017 52% 37% 2021 57% 49% Hard Surface Soft Surface (Carpet) Other Resilients 28 Investor Day 2022
Slide 29: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION 29 Investor Day 2022
Slide 30: Floor & Decor Capital Allocation Priorities
Floor & Decor Capital Allocation Priorities Framework for Capital Investments 1 Core Business 2 Additional Growth Initiatives 3 Acquisitions 30 Investor Day 2022
Slide 31: Significant U.S. Growth Remains Ahead
Significant U.S. Growth Remains Ahead Summary of Initiatives Warehouse Stores & Design Studios 500 STORES $15B IN SALES $17B Adjacent Categories $500M IN SALES ~33% Hard-Surface Commercial $1.5B IN SALES Market Share *Adjacent categories align with flooring projects like vanities, bathroom accessori
Slide 32: Full Board and Committee Engagement on ESG Issues
Full Board and Committee Engagement on ESG Issues Doing the Right Thing as We Help Our Customers Turn Their Dreams Into Reality Looking Ahead Operations People Product 2022 Materiality Assessment Will 1 Provide Insights on Business Drivers and Stakeholder Priorities Commitment to Increasing 2 Transp
Slide 33: The Floor & Decor Investment Proposition
The Floor & Decor Investment Proposition Unique Business Model with Moats and Strong Unit Economics Significant Large and Market Share Growing TAM Opportunity Industry Leading Industry Product Leading Value Innovation Proposition Experienced Management Team with Proven Track Record of Growth 33 Inve
Slide 34: Floor & Decor
Floor & Decor Investor Day 2022 34 Investor Day 2022
Slide 35: Customer Insights
Floor & Decor Customer Insights Lisa Laube 35 Investor Day 2022
Slide 36: Customer Insights
Customer Insights 1 We Understand Our Customers 2 Awareness and Marketing Strategy 3 Connected Customer and Initiatives 36 Investor Day 2022
Slide 37: We Understand Our Customers
WE UNDERSTAND OUR CUSTOMERS 37 Investor Day 2022
Slide 38: Typical Homeowner Demographics and Profile
Typical Homeowner Demographics and Profile Homeowner Influence Who They Are (45% BIY & 15% DIY) Why They Shop Us Large Selection of In-stock, Trend Year Home Right, High Quality Flooring Household Income Built Median: $96K 51% Built Prior Everyday Low Prices to 1980s One Stop Solution For All Floori
Slide 39: Typical PRO Demographics and Profile
Typical PRO Demographics and Profile PRO Influence Who They Are (40% of Sales) Why They Shop Us Large In-stock Selection DEMOGRAPHICS of Trend Right Flooring Age Flooring Installer Median: General Contractor High Quality Products 50 Years Homebuilder One Stop Solution For All Flooring Needs Dedica
Slide 40: Continuing to Invest in the PRO Customer
Continuing to Invest in the PRO Customer PRO Commercial Sales PRO PRO App Desk 59% of Active PROs are Enrolled in PRO Premier Rewards Program and Spend 3x More than Non-PPR PROs PRO Jobsite Credit Delivery 0 Top 10% of PROs Purchased 37 Projects with Us and Increased Average Spend 24% in 2021 PRO PR
Slide 41: Significant Opportunity in Design Services
Significant Opportunity in Design Services Our Design Services Offering Gives Us a Distinct Competitive Advantage FREE DESIGN SERVICES Expert Design Professionals 343,000 Average Ticket 2x Non-design In-Store & Virtual Appointments Customer Appointments Dedicated Help from Start to Finish Product Re
Slide 42: Drive Growth through Customer Relationship Management “CRM”
Drive Growth through Customer Relationship Management “CRM” Growing Our Addressable Creating a Unified Data Targeted Marketing Audience and Positioning Environment for a Strategy Supported by to Improve Customer Cookieless Future Customer Data Acquisition Capabilities 42 Investor Day 2022
Slide 43: Awareness and Marketing Strategy
AWARENESS AND MARKETING STRATEGY 43 Investor Day 2022
Slide 44: Brand Awareness Increasing Among Core Customers
Brand Awareness Increasing Among Core Customers Homeowner PRO Brand Awareness Increased to 70% in Brand Awareness is Higher with the PRO 2021 from 62% in 2020 at 75%, an Increase from 71% in 2020 New Markets Still have Significant Established Markets are Higher than New Opportunity Those Shopping Us
Slide 45: Marketing Drives Awareness & Consideration
Marketing Drives Awareness & Consideration Customer Data-driven Media Plans to Acquire High-value Homeowners and PROs Search & Capture Demand Shopping Broadcast & Digital Video Drive Targeted Awareness Instagram & Inspire Where People Plan Pinterest 45 Investor Day 2022
Slide 46: How Customers Discover Floor & Decor
How Customers Discover Floor & Decor Saw the Store Floor & Decor Social Media Television Google Search Website Homeowner: #1 #2 #3 #4 #5 Top 5 Sources of Awareness Floor & Decor Social Media Television Saw the Store Google Search Website Pro: #1 #2 #3 #4 #5 Top 5 Sources of Awareness 46 Investor Day
Slide 47: Connected Customer & Initiatives
CONNECTED CUSTOMER & INITIATIVES 47 Investor Day 2022 47 Investor Day 2022
Slide 48: Why Omni-channel is Important
Why Omni-channel is Important Interactive and User- eCommerce Physical Stores friendly Interface Allows Customers to Shop Easily Transactions are are Integral to Growing Fulfillment in Store or Online 71% of Customers Who Purchased Online Traffic has Accelerated 80% of Customers Buy Online Online ha
Slide 49: What Customers Expect
What Customers Expect Inform Inspire Install BIY Consumers Seek Deeper Most Consumers Lack the Skills Assistance in Comparing Product Guidance on Installer Selection Necessary to Translate Their Own Characteristics & Better Trained and Broader Understanding on Flooring Tastes into Concrete Sales Ass
Slide 50: The Future Focus for eCommerce
The Future Focus for eCommerce Product Visualization and Mobile Inspiration • Envision Look and Feel • Mobile First • Upload Photos into Visualizer • Complementary App & Web Features • Add Vanities & Adjacent Categories • In-Store Experience • Technology Drives Visualization • Pick-Up & Delivery Ass
Slide 51: Customer Insights Recap
Customer Insights Recap Better Understanding Our Customers Enables Us 1 to Grow and Service Our Addressable Market We are Driving Customer Acquisition and Retention by 2 Leveraging Our Design and PPR Value Propositions Continuing to Enhance Our Omni-channel Capabilities by 3 Focusing on the Connecte
Slide 52: Floor & Decor
Floor & Decor Investor Day 2022 52 Investor Day 2022
Slide 53: Merchandising
Floor & Decor Merchandising Ersan Sayman 53 Investor Day 2022
Slide 54: Key Takeaways
Key Takeaways Broad Assortment of High-quality In-stock 1 Products Meets All Flooring Needs 2 Strong Merchandising Capabilities Direct Sourcing Reduces Costs Enabling 3 "Everyday Low Price Promise" 4 Leading with Innovation, Design, and Trend Incremental Growth Opportunity in Adjacent 5 Categories 5
Slide 55: Merchandising Leadership Team
Merchandising Leadership Team ALEX ERSAN GARY ERSAN GRETCHEN ERSAN MACHADO SAYMAN REMICK SAYMAN SABOL SAYMAN MVP, Installation MVP, Stone & MVP, Deco Materials Adjacent JOHN ERSAN LINDSAY ERSAN STACEY ERSAN MICHAEL ERSAN DECARREAU SAYMAN TILLIE SAYMAN SPILLMAN SAYMAN CHOI SAYMAN MVP, Tile & Wall Til
Slide 56: Broad Assortment of High-Quality In-Stock Products
BROAD ASSORTMENT OF HIGH-QUALITY IN- STOCK PRODUCTS MEETS ALL FLOORING NEEDS 56 Investor Day 2022
Slide 57: Broad and Comprehensive Assortment of Flooring and Accessories
Broad and Comprehensive Assortment of Flooring and Accessories Investing in Inventory Combined with Job Lot Quantities Optimized Inventory Management Catering for Project Leading to High Levels of In-stock Completion Availability Across All Categories Specialty Lumber Specialty Tile Home Improvement
Slide 58: Large Stores Allows Us to Flex Our Merchandising Mix With Trends
Large Stores Allows Us to Flex Our Merchandising Mix With Trends Sales Breakdown 2% 9% 6% 23% 12% 31% 26% 2016 2021 8% 16% 14% 18% 16% 19% Tile Decorative Accessories Laminate & Luxury Vinyl Adjacent Categories & Other Wood Installation Materials & Tools Natural Stone 58 Investor Day 2022
Slide 59: Strong Merchandising Capabilities
STRONG MERCHANDISING CAPABILITIES 59 Investor Day 2022
Slide 60: Merchandising Process Delivers Localized Innovative Trend Forward Assortments
Merchandising Process Delivers Localized Innovative Trend Forward Assortments 1 2 3 4 5 6 Identify Work With Present New Visit Each Store to Roll Up Demand New Products Arrive Opportunities Manufacturers & Products in Product Review New Products in Stores and Priced Design Companies Line Review Plac
Slide 61: Advantages of Local Assortment & Micro-Merchandising
Advantages of Local Assortment & Micro-Merchandising XL Porcelain Slabs Extensive Wood in Florida Assortment Tailored to Local Preferences and Trends Selection in Virginia Pompano Beach, Florida Alexandria, Virginia We closely monitor sales 1% 2% and adjust assortments to suit the demand 7% 6% 18% 2
Slide 62: Direct Sourcing Reduces Costs Enabling “Everyday Low Price Promise”
DIRECT SOURCING REDUCES COSTS ENABLING “EVERYDAY LOW PRICE PROMISE” 62 Investor Day 2022
Slide 63: Unique, Direct Product Sourcing Business Model Reduces Costs
Unique, Direct Product Sourcing Business Model Reduces Costs Floor & Decor’s Direct Sourcing of Products Hard-Surface >240 Simplify the Process Improves Collaboration Suppliers in by Eliminating and Creates Efficiency Flooring Manufacturer Agent/Broker Between Manufacturer Supply Chain 24 Importer a
Slide 64: Leading with Innovation, Design, and Trend
LEADING WITH INNOVATION, DESIGN, AND TREND 64 Investor Day 2022
Slide 65: Driving Innovation with Product Selection
Driving Innovation with Product Selection New Technology Enhances the Product Look, Durability, or End Use Partner with Vendors to Apply the Best New Technology to Our Products These Long-Term Partnerships Enable Us to Influence and Steer the Path to New Ideas and Technology (e.g., Optimax) 65 Inves
Slide 66: Setting Trends Through Design
Setting Trends Through Design Working with Design Companies and Vendors, Our Team Identifies Trends Quickly and Brings Them To Market Retaining a Sense of Newness in Our Design Allows Us to Continue to Win Market Share 66 Investor Day 2022
Slide 67: Good-Better-Best Assortments Gaining Momentum
Good-Better-Best Assortments Gaining Momentum OPENING PRICE GOOD BETTER BEST This Mix Continues to Grow Benefitting Sales and Margin Proprietary Brands in Good-Better-Best Assortments 67 Investor Day 2022
Slide 68: Incremental Growth Opportunities in Adjacent Categories
INCREMENTAL GROWTH OPPORTUNITIES IN ADJACENT CATEGORIES 68 Investor Day 2022
Slide 69: Incremental Opportunity in Adjacent Categories
Incremental Opportunity in Adjacent Categories Vanities Shower Doors Custom Countertops DOORS Vanities Shower Doors ADJACENT Custom Countertops CATEGORIES Faucets Bathroom Fixtures Faucets Bathroom Fixtures Bathroom Lighting Bathroom Mirrors Bathroom Lighting Bathroom Mirrors 69 Investor Day 2022
Slide 70: Enhancing the Customer Shopping Experience
Enhancing the Customer Shopping Experience ADJACENT CATEGORIES $8-13B Adjacent Categories Allow Us to Complete the Customer’s Projects 70 Investor Day 2022
Slide 71: Competition
Competition Home Improvement Independents Estimated Market Share Centers of F&D Addressable Market Localized Assortment 9% Good, Better, Best 14% 33% In-stock 14% Low Prices 30% Great Service Independent Home Improvement Centers Designer Services Distributors Specialty Other Retailers PRO Services 7
Slide 72: Floor & Decor
Floor & Decor Investor Day 2022 72 Investor Day 2022
Slide 73: Real Estate & Construction
Floor & Decor Real Estate & Construction Bryan Dodge 73 Investor Day 2022
Slide 74: Key Takeaways
Key Takeaways 1 A Large and Growing Retail Network 2 New Store Development 3 Real Estate Strategy for Future Growth 4 Design Studios 74 Investor Day 2022
Slide 75: A Large and Growing Retail Network
A LARGE AND GROWING RETAIL NETWORK 75 Investor Day 2022
Slide 76: Aggressive Future Growth Plan: Continued 20% New Store Growth
Aggressive Future Growth 160 Stores in 33 States at the End of 2021 Plan Continued 20% New Store Growth 12.6M Sq Ft of Retail Stores 275 230 103% Sq Ft Growth Since 2017 192 160 133 120 100 83 57% of Stores Built Between 2017 & 2021 2017 2018 2019 2020 2021 2022 2023 2024 2.2 Years Avg Store Age Bet
Slide 77: Significant White Space Opportunity
Significant White Space Opportunity Approximately 32 Out % Built White Space 160 Stores 68% of U.S. Population +340 59 is Within Minutes of a Floor & Decor Store Stores 77 Investor Day 2022
Slide 78: New Store Development
NEW STORE DEVELOPMENT 78 Investor Day 2022
Slide 79: Class of 2021 Compared to the Class of 2018
Class of 2021 Compared to the Class of 2018 Per Store Basis Rent Sales EBITDA Sales Months Earlier Grand Openings -$4psf +$2.6M +$1.2M +1.6 52% First half of Grand Opening Year mos. -34% +19% +71% +36% +76% 79 Investor Day 2022
Slide 80: New Store Economics
New Store Economics Net Investment Year One Sales Year 1 & 3 4-Wall EBITDA Average New Store (in Millions) (in Millions) (in Millions) Class Targets $8 - $10 $0.5 $1.3 $14 - $16 >$5.0 ~25% 20 Year ROI $2.9 $6.2-$8.2 $9 >$2.5 ~50% 3RD Year Cash on Cash Return $3.5 $1.0 $0.9 $0.7 $1.8 ~2.5-3.5 Year Pa
Slide 81: Real Estate Strategy for Future Growth
REAL ESTATE STRATEGY FOR FUTURE GROWTH 9 Investor Day 2022 81
Slide 82: The Path to 500 Stores
UPDATE The Path to 500 Stores FND Store Market Average Trade Area Population 355K to 555K Demographics Housing Units 153K to 225K Owner Occupied Homes 50K to 97K Key Drivers of Median Household Income $64K to $79K Increased Store Potential # of Markets ~130 Larger Market # of Existing Stores 160 Cat
Slide 83: Design Studios
DESIGN STUDIOS 83 Investor Day 2022
Slide 84: Design Studio
Design Studio Driving Incremental Market Share Incremental Sales & Market Share Unlock Customer Segment Deployment 7K to 12K Sq Ft Convenient Locations Near Affluent Customers High-population and Income-dense Interior Design Districts Freestanding and In-store 84 Investor Day 2022
Slide 85: Floor & Decor
Floor & Decor Investor Day 2022 85 Investor Day 2022
Slide 86: Store Operations
Floor & Decor Store Operations Steve Denny 86 Investor Day 2022
Slide 87: Store Operations
Store Operations 1 How We Support and Scale Our Growth 2 How We Win with Customer Service 3 Using Technology to Improve the Customer Experience 4 Free Design Service Solutions 5 Building Relationships with Pros 87 Investor Day 2022
Slide 88: How We Support and Scale Our Growth
HOW WE SUPPORT AND SCALE OUR GROWTH 88 Investor Day 2022
Slide 89: Dedicated Regional Hard-Surface Flooring Experts That Are Close to Customers
Dedicated Regional Hard-Surface Flooring Experts That Are Close to Customers Division Vice President 55 Stores New Position Director of Design 55 Stores Senior Director Senior Director Regional PRO Director In Home Design Regional Operations Regional Merchandising 14 Stores 3 Stores 14 Stores 14 Sto
Slide 90: Dedicated Hard-Surface Flooring Experts in Every Store
Dedicated Hard-Surface Flooring Experts in Every Store Store Reporting Structure Chief Executive Merchant 4 Department Design Services Managers OPS Manager PRO Manager Supervisor ADMs Warehouse PRO Team Senior Designer Sales Customer Associates Service Designer Off Hours Design Consultant E-Commerce
Slide 91: Growing Future Leaders
Growing Future Leaders Workforce Leadership CEMIT/OPSIT Management Training Program Talent Develop Diversity Recruiting 91 Investor Day 2022
Slide 92: Leadership Development
Leadership Development Leadership Styles H I G H Introduce CARE Service and Sales Model High Supportive & High Directive & Serving Low Directive High Supportive Updated the CARE Manager Program Behavior Behavior MyCustomer Introduce Positive and Constructive with CARE Feedback Coaching Conversations
Slide 93: How We Win with Customer Service
HOW WE WIN WITH CUSTOMER SERVICE 93 Investor Day 2022
Slide 94: What Customers Expect
What Customers Expect Inform Inspire Install BIY Consumers Seek Deeper Most Consumers Lack the Skills Assistance in Comparing Product Guidance on Installer Selection Necessary to Translate Their Own Characteristics & Better Trained and Broader Understanding on Flooring Tastes into Concrete Sales Ass
Slide 95: “CARE” Pillars Underpins Customer Service
“CARE” Pillars Underpins Customer Service C A R E Connect Ask Recommend Excite Be Proactive with a Ask Specific and Deliver a Tailored Solution Energize the Customer Friendly Greeting Strategic Questions for the Customer and Close the Sale 95 Investor Day 2022
Slide 96: Initiatives Underway to Improve the Customer Experience
Initiatives Underway to Improve the Customer Experience Experience the Difference Design Inspired Emphasis On FIT Team Sales Floor Model Off-Hours Process 96 Investor Day 2022
Slide 97: Key Customer Service Metrics
Key Customer Service Metrics Our Customers Value Friendly, Knowledgeable, and Efficient Service Best-in-Class Associate Engagement 0% 10% 20% 30% 40% 50% 60% 70% Checkout 0% 10% 20% 30% 40% 50% 60% 70% Overall Experience 0% 10% 20% 30% 40% 50% 60% 70% Design Services Appointment 0% 10% 20% 30% 40% 5
Slide 98: Using Technology to Improve the Customer Experience
USING TECHNOLOGY TO IMPROVE THE CUSTOMER EXPERIENCE 98 Investor Day 2022
Slide 99: Connected Associate Mobility Solutions
Connected Associate Mobility Solutions ThinkTime: Communications & Task Management MyProject: C.A.R.E Project Selling & Quote Sharing Tool Technology Improves Customer Phone Tree Enhancements: Call Menu & Routing Optimization Experience Mobile Inventory: Inventory Accuracy & Adjustments 99 Investor
Slide 100: Order Fulfillment & Visibility
Order Fulfillment & Visibility Optimizing Customer Interactions Enabling Convenience is the Catalyst for Enhancing the Customer Pickup Experience Current State 2022 Planned Rollouts Scheduled Pickup Curbside Wait Time V.I.E.W Appointments Check-In Estimator Order Visibility Connected Customer Order
Slide 101: Free Design Service Solutions
FREE DESIGN SERVICE SOLUTIONS 101 Investor Day 2022
Slide 102: Design Services Customer Challenges and Solutions
Enables Us to Elevate and Deepen our Relationship with Customers Lack of Design Capability for New Vision of What Can be Achieved Customer Challenges Homeowner and PRO Customer Solutions Design Inaccuracies Additional Ideas Lack of Clarity About What They Want/Might Look Best Expanded Project with N
Slide 103: Elevating the Design Services Experience
Elevating the Design Services Experience Elevate Associate Experience Dedicated Department within Career Trajectory and Growth Corporate Structure Opportunities at All Levels Elevate Customer Experience Access to Dedicated Advanced Design Professionals by In Home Design Technology Appointment What M
Slide 104: Building Relationships with PROs
BUILDING RELATIONSHIPS WITH PROS 104 Investor Day 2022
Slide 105: Our PRO Customer Strategy is Well Embedded
Our PRO Customer Strategy is Well Embedded Build It Keep It Grow It 105 Investor Day 2022
Slide 106: PRO Premier Priorities
PRO Premier Priorities Pro PRO Jobsite PRO Commercial Installation Rewards Delivery App Sales Materials Priorities: One New PRO • The PRO Tour • Follow Up • Speed and Accuracy PRO PRO PRO Trained PRO Desk Education Credit Associates Blueprint 106 Investor Day 2022
Slide 107: Identifying PRO Customers
Identifying PRO Customers Design Scheduler PRO Pickup C to Connect In the Aisles Dashboard Tools "Are You Working with a Customer Provides Website – Contractor to Complete New PRO Through 3rd "Are You a New PRO?" Your Project?" Party Pickup 107 Investor Day 2022
Slide 108: PRO Premier App Enhances Engagement
PRO Premier App Enhances Engagement PRO Premier App Transforms How We Engage with Our PROs Full Inventory Availability/Scan Product Detailed Order Tracking PRO Premier Rewards Scheduled Pickup and Check-in Building and Sharing Quotes Purchasing Product Schedule Design Appointment 108 Investor Day 20
Slide 109: Floor & Decor
Floor & Decor Investor Day 2022 109 Investor Day 2022
Slide 110: Business Development & Supply Chain
Floor & Decor Business Development & Supply Chain Brian Robbins 110 Investor Day 2022
Slide 111: Key Takeaways
Key Takeaways 1 Direct Sourcing Creates Significant Cost Savings 2 Logistics Cost Headwinds and Tailwinds 3 Commercial Market Share Opportunity Spartan Surfaces Represents Unique Value 4 Creation Opportunity in Commercial 111 Investor Day 2022
Slide 112: Direct Sourcing Creates Significant Cost Savings
DIRECT SOURCING CREATES SIGNIFICANT COST SAVINGS 112 Investor Day 2022
Slide 113: Superior Global Supply Chain Capability and Agility
Superior Global Supply Chain Capability and Agility Secure Contracts with Dray Box, Flatbed and Continue LTAs Providers who Have Software for Moffett, and Same with Ocean Carriers Asset Visibility at LA Port Day Delivery International Container US Drayage FND Domestic FND FND Factory Vessel Port Pro
Slide 114: Distribution Centers Strategically Placed to Reduce Total Cost
Distribution Centers Strategically Placed to Reduce Total Cost for Heavy Pallet Distribution Size Savannah Houston Moreno Valley Baltimore Future 1.4M SqFt 1.5M SqFt 1.1M SqFt 1.5M SqFt Distribution new in 2022 Center 2022 #Stores/Capacity Future Savannah Houston Moreno Valley Baltimore Distribution
Slide 115: Logistics Cost Headwinds and Tailwinds
LOGISTICS COST HEADWINDS AND TAILWINDS 115 Investor Day 2022
Slide 116: State of Supply Chain Management Globally and F&D
State of Supply Chain Management Globally and F&D Global Situation F&D Situation International Logistics International Logistics Major Issue October Today 2022 YE Major Issue October Today 2022 YE Ocean Capacity Constraints Ocean Capacity Constraints Port Congestion Port Congestion Rising Ocean Rate
Slide 117: Proactively Managing our Estimated Freight Costs in 2022
Proactively Managing our Estimated Freight Costs in 2022 International Logistics North American Logistics Ocean Cost per Container Domestic Cost per Truckload Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2021 2020 2022 Budget 2021 2020 Disclaim
Slide 118: Commercial Market Share Opportunity
COMMERCIAL MARKET SHARE OPPORTUNITY 118 Investor Day 2022
Slide 119: Commercial Market Opportunity
Commercial Market Opportunity Size of Commercial Market ~60% Specifier Large Jobs With Hard Specs $11B $41B Commercial A&D Firms General Contractors $4B Building Owners Developers Commercial R&R $16B Accelerated Expansion is Planned by Organic and In-Organic $30B $7B Growth of Spartan Reps and Poten
Slide 120: Spartan Surfaces Represents Unique Value Creation Opportunity in Commercial
SPARTAN SURFACES REPRESENTS UNIQUE VALUE CREATION OPPORTUNITY IN COMMERCIAL 120 Investor Day 2022
Slide 121: Value Creation of Commercial Strategy with Spartan
Value Creation of Commercial Strategy with Spartan 1 2 3 4 Expansion of Organic and Product Cost Savings Revenue Lift Spartan’s Product Inorganic Portfolio Growth 121 Investor Day 2022
Slide 122: Spartan Growth Strategy
Spartan Growth Strategy Enhance Existing Volumes and Gross Margin Move Spartan to FND Ocean and NA Logistic Contracts Move to FND Products and Supply Base Organically Extend Spartan’s Sales Footprint Nationally Open Sales Offices and Reps in Top MSA’s that will Take Advantage of FND’s Distribution C
Slide 123: Spartan Organic Rep Growth
Spartan Organic Rep Growth TOP 25 MSAs POTENTIAL SPARTAN REP GROWTH BALTIMORE DC Total Current # Max. # Top Market Spartan Reps to MORENO VALLEY DC U.S. MSAs Size Reps Support Mkt. SAVANNAH DC DMV ~400M 11 12 (DC/MD/Vir.) HOUSTON DC New York City ~730M 3 22 SPARTAN Los DESIGNATED Angeles ~430M 0 13
Slide 124: Floor & Decor
Floor & Decor Investor Day 2022 124 Investor Day 2022
Slide 125: Our Best Days Are Yet Ahead
Floor & Decor Our Best Days Are Yet Ahead Trevor Lang 125 Investor Day 2022
Slide 126: Key Takeaway Growth Goals FY22-24
Key Takeaway Growth Goals FY22-24 1 Continued 20% Warehouse Format Unit Growth New Stores + Comp Sales + Commercial = 2 Total Sales Growth +20% 3-year +25% Operating Income CAGR and Margin 3 Expansion 4 Maintain Strong Balance Sheet and Low Leverage 5 Disciplined Capital Deployment to Drive Higher R
Slide 127: Strong Track Record Under Current Management
Strong Track Record Under Current Management Sales Adjusted EBITDA CAGR: CAGR: Growth: 29% $3,434 Growth: 35% $485 10x 15x $337 $33 2012 2021 2012 2021 1 2 3 4 5 6 Unique, Successful Strong DIY, BIY, Best In Class Highly Experienced Large and Model with Continued Strong Historical PRO & Commercial M
Slide 128: Macro and Changing Consumer Trends Underpinning Demand
Macro and Changing Consumer Trends Underpinning Demand... Aging Housing Rising Home Record US Wealth: Innovation & Secular Long-Term Inventory Equity Value Cash, Housing & Affordability in Shift Towards Investments Hard Surface Hard Surface Flooring Flooring Millennials Non-traditional Over 1.5M New
Slide 129: Growing Total Addressable Market
Growing Total Addressable Market (in Billions) $8B - $13B $49B - $54B Total Addressable Market Including Installation Materials & Adjacent Categories $11B $41B $49B - $54B Commercial $4B Commercial R&R $5B $16B $2B $30B $7B Commercial Commercial $25B $4B Commercial $23B $0B R&R $12B Commercial R&R $
Slide 130: Continued 20% Warehouse Format Unit Growth
CONTINUED 20% WAREHOUSE FORMAT UNIT GROWTH 130 Investor Day 2022
Slide 131: Our Whitespace Potential is Significant
Our Whitespace Potential is Significant Significant Store Growth Locations Throughout the US 500 160 STORES SEATTLE DETROIT BOSTON/NE 275 MILWAUKEE PHILADELPHIA 230 RENO WICHITA CHICAGO NEW YORK METRO 192 SAN FRANCISCO SALT LAKE INDIANAPOLIS 160 FRESNO CITY DENVER COLUMBUS DC METRO 120 133 SACRAMENT
Slide 132: New Stores + Comp Sales + Commercial = Total Sales Growth +20%
NEW STORES + COMP SALES + COMMERCIAL = TOTAL SALES GROWTH +20% 132 Day 2022 132 Investor 132 Investor Day 2022
Slide 133: Strong Track Record of Growing Comparable Store Sales
Strong Track Record of Growing Comparable Store Sales Favorable Industry Projections ~60% Independent/Smaller Competitor Market Share Opportunity Average Comp10-year Sales comp Maturation of New Store Comparable 14.5% 27.6% Store Sales 22.1% Good/Better/Best, Low Price, Broad, 19.4% Trend-right, In-
Slide 134: 3-Year +25% Operating Income CAGR & Margin Expansion
3-YEAR +25% OPERATING INCOME CAGR & MARGIN EXPANSION 134 Investor Day 2022
Slide 135: Historical Sales and Adjusted Operating Income Since Going Public
Historical Sales and Adjusted Operating Income Since Going Public Sales Adjusted Operating Income CAGR: CAGR: 27% $3,434 34% $352 Growth: Growth: 3x 4x $1,051 $80 7.6% 7.6% 10.2% 10.2% of sales of Sales of salesof Sales 2016 2021 2016 2021 69 STORES 160 STORES 135 Investor Day 2022
Slide 136: Building Blocks to 3-Year 25% Operating Income Growth
Building Blocks to 3-Year 25% Operating Income Growth CAGR: 24-26% Growth: 90-100% $670-$700 ($139) – ($154) $232-$255 $225-$247 $352 10.2% 11.0%-11.5% of Sales of Sales Disclaimer - Information is as of 03/16/22 and Does Not Contemplate any Potential Impacts from the War in Ukraine 136 Investor Day
Slide 137: Increase Operating Margin
Increase Operating Margin 11.0% to 11.5% 10.2% Leverage New Store/Owned New Stores Operating Efficiency Stores Economics Merchandising/ Strategic Pricing Product Mix 20% New Investments Store Growth Inflation/Supply Labor Chain Disruption 2021 Adjusted 2024 Operating Operating Margin Margin Goal Dis
Slide 138: Maintain Strong Balance Sheet & Low Leverage
MAINTAIN STRONG BALANCE SHEET & LOW LEVERAGE 138 Investor Day 2022
Slide 139: Low Leverage Allows for Growth Investment
Low Leverage Allows for Growth Investment Keep Leverage Low While Free Cash Flow $500 4.2x Is Used To Support $400 20% UNIT $400 3.7x 3.2x GROWTH $300 2.2x $193 $200 $148 $118 1.2x $100 1.2x $67 0.8x Expect Negative Free 0.5x 0.1x 0.2x $0 Cash Flow In -$100 -0.3x -0.8x 2022 & 2023 ($90) -$200 -1.8x
Slide 140: Disciplined Capital Deployment to Drive Higher ROIC
DISCIPLINED CAPITAL DEPLOYMENT TO DRIVE HIGHER ROIC 140 Investor Day 2022
Slide 141: FY22-24 Capex Support Growth
FY22-24 CAPEX SUPPORT Capital Investments 20% NEW STORE Capital $550- $610- $560- GROWTH Expenditures/M&A (1) $539M $590M $670M $620M 5% 8% 6% 7% 10% 6% 1% 16% 18% Reinvest In 13% 12% Existing Stores 16% 59% Supply Chain 74% 74% 62% 13% IT Capabilities 2021 2022 2023 2024 Spartan Acquisition New Sto
Slide 142: Disciplined Capital Deployment to Drive Higher ROIC
Disciplined Capital Deployment to Drive Higher ROIC CORE BUSINESS New Owned Real Supply Chain, Stores Estate Adjacent Categories, and Infrastructure All Investments Are Planned To INVESTMENT ADDITIONAL GROWTH INITIATIVES Yield A Return On Invested PRIORITIES RAMs Commercial Design Capital In Excess
Slide 143: Key Acquisition Criteria
Disciplined Approach to M&A Key Acquisition Criteria Must Enable/ Clear Path For Accretive To Asset Light Leverage Our Encompass A Profitable Long-term Preference With Strengths Strategic Growth EBIT People And Merchandising Focus Relationships Supply Chain A Priority Scale 143 Investor Day 2022
Slide 144: Long-Term Financial Objectives and Outlook
Long-Term Financial Objectives and Outlook New Store Operating Growth Sales Income Long Term Financial 20% +20% +25% Objectives EBITDA Capex Balance 2022 - 2024 Margins Sheet Mid 10-14% Low Placeholder image Teens of sales Leverage Opportunities Risks Housing Over The Long Term Sales And Associated
Slide 145: Appendix: Reconciliation of GAAP to Non-GAAP Measures
APPENDIX RECONCILIATION OF GAAP TO NON-GAAP MEASURES 145 Investor Day 2022
Slide 146: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted net income, Adjusted diluted EPS, Adjusted Operating Income, EBITDA and Adjusted EBITDA (which are shown in the reconciliations on the following pages) are presented as supplemental measures of financial performance that are not required by, or presented in accor
Slide 147: Reconciliation Adjusted Net Income and Adjusted Diluted EPS
Reconciliation Adjusted Net Income and Adjusted Diluted EPS Fiscal Year Ended 12/29/2016 12/28/2017 12/27/2018 12/26/2019 12/31/2020 12/30/2021 Net Income (GAAP) $ 43.0 $ 102.8 $ 116.2 $ 150.6 $ 195.0 $ 283.2 Acquisition and Integration Expense - - - - - 3.4 Store Support Center and Distribution Cen
Slide 148: Reconciliation Adjusted Operating Income
Reconciliation Adjusted Operating Income Fiscal Year Ended 12/29/2016 12/30/2021 Operating Income (GAAP) $ 69.1 $ 339.0 Acquisition and Integration Expense - 3.4 Store Support Center and Distribution Center Relocations and Closures - 2.8 Tariff Refund Adjustments - 1.7 COVID-19 Costs - 1.2 Contingen
Slide 149: Reconciliation EBITDA and Adjusted EBITDA
Reconciliation EBITDA and Adjusted EBITDA Fiscal Year Ended 12/27/2012 12/29/2016 12/28/2017 12/27/2018 12/26/2019 12/31/2020 12/30/2021 Net Income (GAAP) $ 12.8 $ 43.0 $ 102.8 $ 116.2 $ 150.6 $ 195.0 $ 283.2 Depreciation and Amortization 4.6 25.1 33.5 46.3 73.0 90.5 115.2 Interest Expense, Net 6.5
Slide 150: Floor & Decor
Floor & Decor Investor Day 2022 150 Investor Day 2022