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Floor & Decor Holdings, Inc. Announces Second Quarter Fiscal 2023 Financial Results

Net sales of $1,135.9 million increased 4.2% from the second quarter of fiscal 2022

Comparable store sales decreased 6.0%

Diluted earnings per share of $0.66

Opened nine new warehouse stores

Floor & Decor Holdings, Inc. (NYSE: FND) (“We,” “Our,” the “Company,” or “Floor & Decor”) announces its financial results for the second quarter of fiscal 2023, which ended June 29, 2023.

Tom Taylor, Chief Executive Officer, stated, “Amidst the economic challenges of rising mortgage interest rates and near-record-low existing home sales, we are pleased to deliver second-quarter diluted earnings per share of $0.66, which was above our expectations. We are focused on what we can control by executing our growth and customer service strategies at a high level and effectively managing our profitability during this challenging period where sales are modestly below our expectations. As consumers prioritize value and savings, we intend to continue to grow our market share by capitalizing on our everyday low prices and value options, trend-forward broad assortments, in-stock job lot quantities, and the exceptional customer service provided by our store associates.”

Mr. Taylor continued, “In the second quarter of 2023, we achieved our plan of opening nine new warehouse stores and intend to open 32 warehouse stores in fiscal 2023. We ended the second quarter operating 203 warehouse stores and five design studios across 36 states.”

Please see “Comparable Store Sales” below for information on how the Company calculates period-over-period changes in comparable store sales.

For the Thirteen Weeks Ended June 29, 2023

  • Net sales increased 4.2% to $1,135.9 million from $1,089.8 million in the second quarter of fiscal 2022.
  • Comparable store sales decreased 6.0%.
  • We opened nine new warehouse stores, ending the quarter with 203 warehouse stores and five design studios.
  • Operating income of $95.0 million decreased 10.7% from $106.4 million in the second quarter of fiscal 2022. Operating margin of 8.4% decreased 140 basis points from the second quarter of fiscal 2022.
  • Net income of $71.5 million decreased 12.7% from $81.8 million in the second quarter of fiscal 2022. Diluted earnings per share ("EPS") of $0.66 decreased 13.2% from $0.76 in the second quarter of fiscal 2022.
  • Adjusted EBITDA* increased 1.7% to $152.8 million from $150.3 million in the second quarter of fiscal 2022.

For the Twenty-six Weeks Ended June 29, 2023

  • Net sales increased 6.6% to $2,258.0 million from $2,118.6 million in the same period of fiscal 2022.
  • Comparable store sales decreased 4.7%.
  • We opened 12 new warehouse stores.
  • Operating income of $190.5 million decreased 4.9% from $200.4 million in the same period of fiscal 2022. Operating margin of 8.4% decreased 110 basis points from the same period of fiscal 2022.
  • Net income of $143.0 million decreased 6.4% from $152.8 million in the same period of fiscal 2022. Diluted EPS of $1.33 decreased 6.3% from $1.42 in the same period of fiscal 2022.
  • Adjusted EBITDA* increased 5.7% to $302.4 million from $286.1 million in the same period of fiscal 2022.

*Non-GAAP financial measure. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.

Outlook for the Fiscal Year Ending December 28, 2023:

  • Net sales of approximately $4,460 million to $4,530 million
  • Comparable store sales of approximately (7.0)% to (5.5)%
  • Diluted EPS of approximately $2.30 to $2.50
  • Adjusted EBITDA* of approximately $570 million to $595 million
  • Depreciation and amortization expense of approximately $200 million
  • Interest expense, net of approximately $16 million to $17 million
  • Tax rate of approximately 22%
  • Diluted weighted average shares outstanding of approximately 108 million shares
  • Open 32 new warehouse stores
  • Capital expenditures of approximately $590 million to $630 million

*Non-GAAP financial measure. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.

Conference Call Details

A conference call to discuss the second quarter fiscal 2023 financial results is scheduled for today, August 3, 2023, at 5:00 p.m. Eastern Time. A live audio webcast of the conference call, together with related materials, will be available online at ir.flooranddecor.com.

A recorded replay of the conference call is expected to be available within two hours of the conclusion of the call and can be accessed both online at ir.flooranddecor.com and by dialing 844-512-2921 (international callers please dial 412-317-6671). The pin number to access the telephone replay is 13739336. The replay will be available until August 10, 2023.

About Floor & Decor Holdings, Inc.

Floor & Decor is a multi-channel specialty retailer and commercial flooring distributor operating 203 warehouse-format stores and five design studios across 36 states as of June 29, 2023. The Company offers a broad assortment of in-stock hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile, installation materials, and adjacent categories at everyday low prices. The Company was founded in 2000 and is headquartered in Atlanta, Georgia.

Comparable Store Sales

Comparable store sales refer to period-over-period comparisons of our net sales among the comparable store base and are based on when the customer obtains control of the product, which is typically at the time of sale. A store is included in the comparable store sales calculation on the first day of the thirteenth full fiscal month following a store’s opening, which is when we believe comparability has been achieved. Changes in our comparable store sales between two periods are based on net sales for stores that were in operation during both of the two periods. Any change in the square footage of an existing comparable store, including for remodels and relocations within the same primary trade area of the existing store being relocated, does not eliminate that store from inclusion in the calculation of comparable store sales. Stores that are closed for a full fiscal month or longer are excluded from the comparable store sales calculation for each full fiscal month that they are closed. Since our e-commerce, regional account manager, and design studio sales are fulfilled by individual stores, they are included in comparable store sales only to the extent the fulfilling store meets the above mentioned store criteria. Sales through our Spartan Surfaces, LLC ("Spartan") subsidiary do not involve our stores and are therefore excluded from the comparable store sales calculation.

Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA (which are shown in the reconciliation below) are presented as supplemental measures of financial performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States ("GAAP"). We define EBITDA as net income before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted to eliminate the impact of non-cash stock-based compensation expense and certain items that we do not consider indicative of our core operating performance. Reconciliations of these measures to the most directly comparable GAAP financial measure are set forth in the table below.

EBITDA and Adjusted EBITDA are key metrics used by management and our board of directors to assess our financial performance and enterprise value. We believe that EBITDA and Adjusted EBITDA are useful measures, as they eliminate certain items that are not indicative of our core operating performance and facilitate a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine covenant compliance with respect to our credit facilities, to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties as performance measures to evaluate companies in our industry.

EBITDA and Adjusted EBITDA are non-GAAP measures of our financial performance and should not be considered as alternatives to net income as a measure of financial performance, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of liquidity or free cash flow for management's discretionary use. In addition, these non-GAAP measures exclude certain non-recurring and other charges. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine EBITDA and Adjusted EBITDA, such as stock-based compensation expense, distribution center relocation expenses, fair value adjustments related to contingent earn-out liabilities, and other adjustments. Our presentation of EBITDA and Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of EBITDA and Adjusted EBITDA differ among companies in the retail industry, and therefore EBITDA and Adjusted EBITDA disclosed by us may not be comparable to the metrics disclosed by other companies.

Please see “Reconciliation of GAAP to Non-GAAP Financial Measures” below for reconciliations of non-GAAP financial measures used in this release to their most directly comparable GAAP financial measures.

Floor & Decor Holdings, Inc.

Consolidated Statements of Income

(In thousands, except for per share data)

(Unaudited)

   

 

Thirteen Weeks Ended

 

 

 

June 29, 2023

 

June 30, 2022

 

% Increase

(Decrease)

 

Amount

 

% of Net Sales

 

Amount

 

% of Net Sales

 

Net sales

$

1,135,899

 

 

100.0

%

 

$

1,089,846

 

 

100.0

%

 

4.2

%

Cost of sales

 

656,266

 

 

57.8

 

 

 

653,564

 

 

60.0

 

 

0.4

%

Gross profit

 

479,633

 

 

42.2

 

 

 

436,282

 

 

40.0

 

 

9.9

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling and store operating

 

311,406

 

 

27.4

 

 

 

268,202

 

 

24.5

 

 

16.1

%

General and administrative

 

63,279

 

 

5.5

 

 

 

53,107

 

 

4.9

 

 

19.2

%

Pre-opening

 

9,974

 

 

0.9

 

 

 

8,563

 

 

0.8

 

 

16.5

%

Total operating expenses

 

384,659

 

 

33.8

 

 

 

329,872

 

 

30.2

 

 

16.6

%

Operating income

 

94,974

 

 

8.4

 

 

 

106,410

 

 

9.8

 

 

(10.7

)%

Interest expense, net

 

2,898

 

 

0.3

 

 

 

1,672

 

 

0.2

 

 

73.3

%

Income before income taxes

 

92,076

 

 

8.1

 

 

 

104,738

 

 

9.6

 

 

(12.1

)%

Income tax expense

 

20,624

 

 

1.8

 

 

 

22,906

 

 

2.1

 

 

(10.0

)%

Net income

$

71,452

 

 

6.3

%

 

$

81,832

 

 

7.5

%

 

(12.7

)%

Basic weighted average shares outstanding

 

106,206

 

 

 

 

 

105,545

 

 

 

 

 

Diluted weighted average shares outstanding

 

107,805

 

 

 

 

 

107,300

 

 

 

 

 

Basic earnings per share

$

0.67

 

 

 

 

$

0.78

 

 

 

 

(14.1

)%

Diluted earnings per share

$

0.66

 

 

 

 

$

0.76

 

 

 

 

(13.2

)%

   

 

Twenty-six Weeks Ended

 

 

 

June 29, 2023

 

June 30, 2022

 

% Increase

(Decrease)

 

Amount

 

% of Net Sales

 

Amount

 

% of Net Sales

 

Net sales

$

2,257,951

 

 

100.0

%

 

$

2,118,580

 

 

100.0

%

 

6.6

%

Cost of sales

 

1,309,200

 

 

58.0

 

 

 

1,274,240

 

 

60.1

 

 

2.7

%

Gross profit

 

948,751

 

 

42.0

 

 

 

844,340

 

 

39.9

 

 

12.4

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling and store operating

 

615,077

 

 

27.3

 

 

 

517,702

 

 

24.4

 

 

18.8

%

General and administrative

 

125,190

 

 

5.5

 

 

 

107,752

 

 

5.1

 

 

16.2

%

Pre-opening

 

17,994

 

 

0.8

 

 

 

18,504

 

 

0.9

 

 

(2.8

)%

Total operating expenses

 

758,261

 

 

33.6

 

 

 

643,958

 

 

30.4

 

 

17.8

%

Operating income

 

190,490

 

 

8.4

 

 

 

200,382

 

 

9.5

 

 

(4.9

)%

Interest expense, net

 

7,760

 

 

0.3

 

 

 

2,834

 

 

0.2

 

 

173.8

%

Income before income taxes

 

182,730

 

 

8.1

 

 

 

197,548

 

 

9.3

 

 

(7.5

)%

Income tax expense

 

39,754

 

 

1.8

 

 

 

44,765

 

 

2.1

 

 

(11.2

)%

Net income

$

142,976

 

 

6.3

%

 

$

152,783

 

 

7.2

%

 

(6.4

)%

Basic weighted average shares outstanding

 

106,084

 

 

 

 

 

105,471

 

 

 

 

 

Diluted weighted average shares outstanding

 

107,764

 

 

 

 

 

107,431

 

 

 

 

 

Basic earnings per share

$

1.35

 

 

 

 

$

1.45

 

 

 

 

(6.9

)%

Diluted earnings per share

$

1.33

 

 

 

$

1.42

 

 

 

(6.3

)%

Consolidated Balance Sheets

(In thousands, except for share and per share data)

(Unaudited)

   

 

As of June 29, 2023

 

As of December 29, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

4,171

 

 

$

9,794

 

Income taxes receivable

 

14,085

 

 

 

7,325

 

Receivables, net

 

88,201

 

 

 

94,732

 

Inventories, net

 

1,172,486

 

 

 

1,292,336

 

Prepaid expenses and other current assets

 

56,590

 

 

 

53,298

 

Total current assets

 

1,335,533

 

 

 

1,457,485

 

Fixed assets, net

 

1,443,504

 

 

 

1,258,056

 

Right-of-use assets

 

1,257,684

 

 

 

1,205,636

 

Intangible assets, net

 

155,733

 

 

 

152,353

 

Goodwill

 

258,861

 

 

 

255,473

 

Deferred income tax assets, net

 

15,658

 

 

 

11,265

 

Other assets

 

8,497

 

 

 

10,974

 

Total long-term assets

 

3,139,937

 

 

 

2,893,757

 

Total assets

$

4,475,470

 

 

$

4,351,242

 

Liabilities and stockholders’ equity

 

 

Current liabilities:

 

 

Current portion of term loan

$

2,103

 

 

$

2,103

 

Current portion of lease liabilities

 

118,960

 

 

 

105,693

 

Trade accounts payable

 

664,679

 

 

 

590,883

 

Accrued expenses and other current liabilities

 

316,057

 

 

 

298,019

 

Deferred revenue

 

14,384

 

 

 

10,060

 

Total current liabilities

 

1,116,183

 

 

 

1,006,758

 

Term loan

 

195,145

 

 

 

195,351

 

Revolving line of credit

 

35,000

 

 

 

210,200

 

Lease liabilities

 

1,276,927

 

 

 

1,227,507

 

Deferred income tax liabilities, net

 

32,093

 

 

 

41,520

 

Other liabilities

 

10,343

 

 

 

12,730

 

Total long-term liabilities

 

1,549,508

 

 

 

1,687,308

 

Total liabilities

 

2,665,691

 

 

 

2,694,066

 

Stockholders’ equity

 

 

Capital stock:

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at June 29, 2023 and December 29, 2022

 

 

 

 

 

Common stock Class A, $0.001 par value; 450,000,000 shares authorized; 106,390,951 shares issued and outstanding at June 29, 2023 and 106,150,661 issued and outstanding at December 29, 2022

 

106

 

 

 

106

 

Common stock Class B, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at June 29, 2023 and December 29, 2022

 

 

 

 

 

Common stock Class C, $0.001 par value; 30,000,000 shares authorized; 0 shares issued and outstanding at June 29, 2023 and December 29, 2022

 

 

 

 

 

Additional paid-in capital

 

492,914

 

 

 

482,312

 

Accumulated other comprehensive income, net

 

3,362

 

 

 

4,337

 

Retained earnings

 

1,313,397

 

 

 

1,170,421

 

Total stockholders’ equity

 

1,809,779

 

 

 

1,657,176

 

Total liabilities and stockholders’ equity

$

4,475,470

 

$

4,351,242

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

   

 

Twenty-six Weeks Ended

 

June 29, 2023

 

June 30, 2022

Operating activities

 

 

 

Net income

$

142,976

 

$

152,783

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation and amortization

 

96,028

 

 

72,566

 

Stock-based compensation expense

 

15,047

 

 

10,869

 

Change in fair value of contingent earn-out liabilities

 

1,787

 

 

 

1,389

 

Deferred income taxes

 

(13,480

)

 

2,475

 

Interest cap derivative contracts

 

57

 

 

57

 

Loss on asset impairments and disposals, net

 

765

 

 

 

 

Changes in operating assets and liabilities, net of effects of acquisitions:

 

Receivables, net

 

12,595

 

 

(15,936

)

Inventories, net

 

128,554

 

 

(335,968

)

Trade accounts payable

 

84,885

 

 

110,923

 

Accrued expenses and other current liabilities

 

6,579

 

 

26,174

 

Income taxes

 

(6,755

)

 

(10,681

)

Deferred revenue

 

4,324

 

 

5,728

 

Other, net

 

3,283

 

 

(12,526

)

Net cash provided by operating activities

 

476,645

 

 

7,853

 

Investing activities

 

 

Purchases of fixed assets

 

(279,175

)

 

(214,283

)

Acquisitions, net of cash acquired

 

(17,156

)

 

(1,121

)

Proceeds from sales of property

 

 

 

 

4,773

 

Net cash used in investing activities

 

(296,331

)

 

 

(210,631

)

Financing activities

 

 

Payments on term loans

 

(1,051

)

 

(1,577

)

Borrowings on revolving line of credit

 

384,200

 

 

 

336,800

 

Payments on revolving line of credit

 

(559,400

)

 

 

(268,200

)

Payments of contingent earn-out liabilities

 

(5,241

)

 

 

(2,571

)

Proceeds from exercise of stock options

 

4,858

 

 

5,176

 

Proceeds from employee stock purchase plan

 

2,558

 

 

1,963

 

Tax payments for stock-based compensation awards

 

(11,861

)

 

 

(2,080

)

Net cash (used in) provided by financing activities

 

(185,937

)

 

69,511

 

Net decrease in cash and cash equivalents

 

(5,623

)

 

(133,267

)

Cash and cash equivalents, beginning of the period

 

9,794

 

 

139,444

 

Cash and cash equivalents, end of the period

$

4,171

 

$

6,177

 

Supplemental disclosures of cash flow information

 

Buildings and equipment acquired under operating leases

$

112,554

 

$

133,237

 

Cash paid for interest, net of capitalized interest

$

7,455

 

$

1,862

 

Cash paid for income taxes, net of refunds

$

60,792

 

 

$

52,943

 

Fixed assets accrued at the end of the period

$

116,555

 

$

109,939

 

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

EBITDA and Adjusted EBITDA

   

 

Thirteen Weeks Ended

 

June 29, 2023

 

June 30, 2022

Net income (GAAP):

$

71,452

 

 

$

81,832

 

Depreciation and amortization (a)

 

49,177

 

 

 

37,517

 

Interest expense, net

 

2,898

 

 

 

1,672

 

Income tax expense

 

20,624

 

 

 

22,906

 

EBITDA

 

144,151

 

 

 

143,927

 

Stock-based compensation expense (b)

 

8,306

 

 

 

4,889

 

Other (c)

 

353

 

 

 

1,481

 

Adjusted EBITDA

$

152,810

 

 

$

150,297

 

   

 

Twenty-six Weeks Ended

 

June 29, 2023

 

June 30, 2022

Net income (GAAP):

$

142,976

 

 

$

152,783

 

Depreciation and amortization (a)

 

95,103

 

 

 

71,637

 

Interest expense, net

 

7,760

 

 

 

2,834

 

Income tax expense

 

39,754

 

 

 

44,765

 

EBITDA

 

285,593

 

 

 

272,019

 

Stock-based compensation expense (b)

 

15,047

 

 

 

10,869

 

Other (c)

 

1,787

 

 

 

3,186

 

Adjusted EBITDA

$

302,427

 

$

286,074

(a)

Excludes amortization of deferred financing costs, which is included as part of interest expense, net in the table above.

(b)

Non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards and forfeitures.

(c)

Other adjustments include amounts management does not consider indicative of our core operating performance. Amounts for the thirteen and twenty-six weeks ended June 29, 2023 relate to changes in the fair value of contingent earn-out liabilities. Amounts for the thirteen and twenty-six weeks ended June 30, 2022 primarily relate to relocation expenses for our Houston distribution center and changes in the fair value of contingent earn-out liabilities.

Forward-Looking Statements

This release and the associated webcast/conference call contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this release and the associated webcast/conference call, including statements regarding the Company’s future operating results and financial position, expectations related to our acquisition of Spartan, business strategy and plans, and objectives of management for future operations, are forward-looking statements. These statements are based on our current expectations, assumptions, estimates and projections. These statements involve known and unknown risks, uncertainties and other important factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current expectations and assumptions regarding the Company’s business, the economy, and other future conditions, including the impact of natural disasters on sales.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “seeks,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “budget,” “potential,” “focused on” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements contained in this release are only predictions. Although the Company believes that the expectations reflected in the forward-looking statements in this release and the associated webcast/conference call are reasonable, the Company cannot guarantee future events, results, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements in this release or the associated webcast/conference call, including, without limitation, (1) an overall decline in the health of the economy, the hard surface flooring industry, consumer confidence and spending and the housing market, including as a result of rising inflation or interest rates, (2) demand fluctuations in the housing industry, and demand for our products and services may be adversely affected by unfavorable economic conditions, including rising interest rates, inflation, a decline in disposable income levels and recession fears, (3) an economic recession or depression, (4) global inflationary pressures on raw materials, energy, commodity, transportation, and other costs could cause our vendors to seek further price increases on the products we sell, (5) any disruption in our supply chain, including carrier capacity constraints, port congestion, higher shipping, rail, and trucking prices and other supply chain costs or product shortages, (6) our failure to successfully anticipate consumer preferences and demand, (7), our inability to pass along cost increases at rates consumers are willing to pay, or reduced demand due to pricing increases, (8) our inability to manage our growth, (9) our inability to manage costs and risks relating to new store openings, (10) our inability to find available locations for our stores on terms acceptable to us, (11) demand for our products and services may be adversely affected by unfavorable economic conditions, (12) any disruption in our distribution capabilities, including from difficulties operating our distribution centers, (13) our failure to execute our business strategy effectively and deliver value to our customers, (14) our inability to find, train and retain key personnel, (15) the resignation, incapacitation or death of any key personnel, (16) the inability to staff our stores and distribution centers sufficiently, (17) the effects of weather conditions, natural disasters or other unexpected events, including global health crises, such as the COVID-19 pandemic, may disrupt our operations, (18) our dependence on foreign imports for the products we sell, which may include the impact of tariffs and other duties, (19) geopolitical risks, such as the ongoing war in Ukraine or import restrictions under the Uyghur Forced Labor Prevention Act, that impact our ability to import from foreign suppliers or raise our costs, (20) if the use of “cookie” tracking technologies is further restricted, the amount of internet user information we collect would decrease, which could require additional marketing efforts and harm our business and operating results, (21) violations of laws and regulations applicable to us or our suppliers, (22) our failure to adequately protect against security breaches involving our information technology systems and customer information, (23) suppliers may sell similar or identical products to our competitors, (24) competition from other stores and internet-based competition, (25) impact of acquired companies, including Spartan, (26) our inability to manage our inventory obsolescence, shrinkage and damage, (27) our inability to maintain sufficient levels of cash flow or liquidity to meet growth expectations, (28) our inability to obtain merchandise on a timely basis at prices acceptable to us, (29) restrictions imposed by our indebtedness on our current and future operations, and (30) our variable rate debt subjects us to interest rate risk that could cause our debt service obligations to increase significantly. Additional information concerning these and other factors are described in “Forward-Looking Statements,” Item 1, “Business” and Item 1A, “Risk Factors” of Part I and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 9A, “Controls and Procedures” of Part II of the Company’s Annual Report for fiscal 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (the “Annual Report”) and elsewhere in the Annual Report, and those described in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 1A, “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2023 (the “10-Q”) and elsewhere in the 10-Q, and those described in the Company’s other filings with the SEC.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The forward-looking statements contained in this release or the associated webcast/conference call speak only as of the date hereof. New risks and uncertainties arise over time, and it is not possible for the Company to predict those events or how they may affect the Company. If a change to the events and circumstances reflected in the Company’s forward-looking statements occurs, the Company’s business, financial condition and operating results may vary materially from those expressed in the Company’s forward-looking statements. Except as required by applicable law, the Company does not plan to publicly update or revise any forward-looking statements contained herein or in the associated webcast/conference call, whether as a result of any new information, future events or otherwise.

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