Welcome to the Floor & Decor Holdings, Inc. first quarter 2021 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press one followed by four on your telephone. If at any time during the conference you need to reach an operator, please press star and zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to Wayne Hood, Vice President of Investor Relations. Please go ahead. Thank you, operator, and good afternoon, everyone. Joining me on our earnings conference call today are Tom Taylor, Chief Executive Officer, Lisa Laube, President, and Trevor Lang, Executive Vice President and Chief Financial Officer. Before we get started, I would like to remind everyone of the company's safe harbor language. Comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risk and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement. The Company's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. Floor & Decor assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results. During this conference call, the company will discuss non-GAAP financial measures as defined by SEC Regulation G. We believe non-GAAP disclosures enable investors to better understand our core operating performance on a comparable basis between periods. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measure can be found in the earnings press release, which is available on our investor relations website at ir.flooranddecor.com. A recorded replay of this call, together with related materials, will be available on our investor relations website. Let me now turn the call over to Tom. Thank you, Wayne, and thanks to everyone for joining us on our fiscal 2021 first quarter earnings conference call. On today's call, I will discuss some of the highlights of our strong fiscal 2021 first quarter earnings results. Trevor will then review our financial performance and discuss how we are thinking about the remainder of fiscal 2021, and then we will open the call for your questions. We could not be more pleased with our fiscal 2021 first quarter earnings results, which are supported by the favorable macroeconomic environment and our excellent execution amidst strong comparable store sales growth. Our first quarter 2021 total sales exceeded our expectations, increasing 41% or $227.6 million - $782.5 million from $554.9 million in the first quarter of 2020. We are particularly proud that our fiscal 2021 first quarter total sales are equivalent to our full year 2015 annual sales, which is a testament to the execution of our business plan and our resulting growth. Our first quarter 2021 comparable store sales increased 31.1% and represented the strongest quarterly comparable store sales growth in our company's history. It is also notable that our customer service scores improved during this period of strong growth as we continue to focus on serving our customers with on-trend products. Our fiscal 2021 first quarter adjusted EBITDA also exceeded our expectations, increasing 74% to $127.1 million from $73.1 million in the first quarter of fiscal 2020 as our adjusted EBITDA margin increased 300 basis points to 16.2%. Our fiscal 2021 adjusted first quarter diluted earnings per share increased 100% to $0.68 from $0.34 in the first quarter of fiscal 2020. Let me now provide an update on each of our five strategic pillars of growth, beginning with new store growth. We successfully opened a first quarter record seven new warehouse stores in the first quarter of fiscal 2021, more than double the three new warehouse stores we opened in the first quarter of fiscal 2020. Recall that last year, we delayed two of our store openings in late March due to state and local construction restrictions caused by the COVID-19 pandemic. In fiscal 2021, we opened two new warehouse stores in each of January and February and three new warehouse stores in March, including new market openings in Pleasant Hill, California, and Danbury, Connecticut. As we look to the second quarter of fiscal 2021, we expect to open eight new warehouse stores with most of the openings occurring in late June. We continue to believe that the timing of our 2021 store openings will allow us to achieve our long-desired objective of balanced quarterly store openings. For the full year, we still expect to open 27 new warehouse stores, an increase of 20.3% from 2020. We are also continuing to move forward with opening two more Design Studio in the fourth quarter of fiscal 2021, with openings in Miami and Houston. Finally, we remain very pleased with the sales performance among all of our store vintages. We were particularly pleased with some of our most mature stores. Based on the early strong results, we continue to believe that the new store classes of 2020 and 2021 will represent the strongest classes in our history from both a top-line and profit perspective. Moving on to the second pillar of growth, growing our comparable store sales. We are very pleased with our comparable store sales growth momentum and the broad-based strength we continue to see across all of our merchandising categories and nine geographic regions. The 31.1% growth in our first quarter comparable store sales was driven by strong 29.2% growth in comparable store customer transactions and 1.5% growth in our comparable store average ticket. There was a favorable shift towards our better and best price points in the first quarter when compared with last year. This shift is the direct result of being able to offer our homeowners and pros clear and compelling trade-up options. The recent launch of our Optimax Eco Resilient Flooring and our large format tile offerings are just a couple of examples where we believe we have widened the gap with our competition with better and best products. On a monthly basis, our comparable store sales increased 30.1% in January, 19.2% in February, and 41.3% in March. There are a couple of events that influenced our monthly sales that we wanna highlight. First, the shift in timing caused by the 53rd week in fiscal 2020, historically a low volume week, benefited our January comparable store sales by an estimated 560 basis points and 170 basis points for the first quarter of 2021. Adjusting for this timing, we estimate our comparable store sales would have increased approximately 24.5% in January. Second, in February 2021, about 20% of our stores were impacted by severe weather over multiple days in multiple states that slowed our sales in weeks seven and eight. We estimate this adversely impacted our February comparable store sales by 500 basis points, but benefited our March comparable store sales by 300 basis points. That said, the net impact from the severe weather on our 2021 first quarter comparable store sales was not material. Third, the final six days of the first quarter of fiscal 2020, we limited our stores to curbside pickup, which resulted in a 46% decline in our comparable store sales during that period. This created an easy sales comparison and was a significant contributing factor to the strong sales increase in fiscal March 2021. We estimate our first quarter comparable store sales would have increased approximately 26.5% after adjusting for the benefit of the 53rd week shift and adjusting for the benefit of the decline in March 2020 sales when we were limited to curbside pickup. As we look at our second quarter sales results to date, our comparable store sales increased 170%, but that is comparing against the -50% last year due to our stores being closed to the public due to COVID-19. We believe using one- and two-year comparable store sales growth rates are less meaningful right now due to the store closures from last year. We believe a better way to evaluate our sales trends is to compare our total sales growth to 2019, as 2019 was more of a normal year. By doing so, our first quarter 2021 net sales grew at a 28% compounded annual growth rate, and our second quarter 2021 date net sales have grown at a similar compound annual growth rate so far. We expect our comparable store sales growth to be elevated in the second quarter, but moderate through the quarter as our stores began to reopen in early May last year and most stores opened by early June. Recall last year, our comparable store sales declined 26.1% in May and increased 7.7% in June. We are excited about our sales momentum and the prospects of achieving our 13th consecutive year of comparable store sales growth in fiscal 2021. From a merchandising perspective, all of our product categories experienced double-digit first quarter 2021 comparable store sales growth. Comparable store sales in laminate and luxury vinyl plank, decorative accessories, and adjacent categories were above the company average. The broad-based strength in our merchandising categories is a continuation of trends from the second half of 2020, and further validates our position as the one-stop solution for all our customers' hard surface flooring needs. We are continuing to consistently deliver on our strategy of offering our homeowners and pros the broadest, most differentiated, and trend forward assortment in every category. Our large stores enable us to provide unmatched visual inspiration of all of our categories using larger displays, side caps, end caps, and vignettes when compared with our competition. We complement this with in-stock job lot quantities at the widest range of everyday low price points. Let me turn my comments to our supply chain. We, like many companies, have been challenged by the constraints in the global supply and transportation chains that were brought on by the COVID-19 pandemic and unexpectedly strong demand. We are navigating these challenges amidst our exceptionally strong growth by focusing on securing international container capacity as well as North American logistics capacity. Between the first and second quarters of fiscal 2021, we have added significantly more capacity to our ocean and North American logistics to align with our strong growth. We are fortunate to have agreements with our dedicated fleet, one-way asset-based carriers, and ocean carriers to secure additional capacity and minimize costs. That said, we can pay premiums on surge capacity when necessary to maintain product flow. These strategies and our broad assortments have enabled us to offer our homeowners and pros alternative products where there are specific product availability challenges. Our third strategic pillar of growth is expanding our connected customer experience. Our first quarter 2021 e-commerce sales remained strong, increasing 66.3% from the first quarter of fiscal 2020, and accounting for a meaningful 16.6% of our sales compared with 14.2% during the same period last year. We continue to see strong double-digit growth from paid and organic searches, as well as direct traffic to our website as our customers are choosing to engage with our brand as they begin their flooring purchase journey. We are continuing to make investments towards delivering an unmatched personalized customer experience. For example, in the first quarter of 2021, we enabled customers to upload their room photos into our visualizer rather than using one of our stock room photos. This now permits them to view our products in their home setting. We are also taking additional actions to further optimize the speed of our website and the mobile experience, which in turn, we believe, will lead to further improvement in conversion and the customer experience. In the first quarter of 2021, we completed another large site upgrade and redesign, which further enhances search in our site pages. We believe these continuing investments will lead to further strong e-commerce performance metrics and growth for the years to come. Our fourth pillar of growth rests on the successful investments we are making in our pro and commercial customers to grow our market share. We continue to be pleased with the accelerating growth trends in our award-winning Pro Premier Rewards, PPR program, which drives engagement and loyalty with new and existing pros. Today, about 80% of our pro sales come from our PPR members. Year to date, enrollment in the PPR program has increased 50% from last year and was up 76% in March. Year- to- date, points earned and redeemed increased 50% and 77% respectively, validating the value of the program. As we look to the remainder of fiscal 2021 and 2022, we are exploring opportunities that will further drive pro engagement and increase awareness of our value proposition. We see opportunities to grow our market share through the introduction of PPR tiers, SKU-based bonus points programs, and pro credit card incentives that will further drive engagement. From a product standpoint, we are continuing to make investments to grow our pro brand equity as a supply house and are excited about adding LATICRETE, a leading installations material brand, to our assortment in 2021. We are now able to offer pros multiple leading brands and complete assortments, which will allow us to more easily cross over into their wholesale distribution channel. We continue to be very pleased with the strong growth in commercial sales, particularly those sales that are originated by our regional account managers or RAMs, which are now in most of our major markets. While sales from our regional account managers are small relative to the size of our retail business, we are excited about the growth opportunity and plan to add approximately 14 regional account managers in fiscal 2021. Over time, we expect commercial sales to become a material part of our growth as we leverage Floor & Decor's core strengths in merchandising and direct sourcing. Let me now discuss the progress we are making with our free design services, the fifth pillar of our growth. We continue to be pleased with the momentum in design services and have strategies in place that we believe will sustain strong growth for years to come. First quarter 2021 design appointments increased 100% from the first quarter of 2020, and design service sales penetration increased 290 basis points year-over-year. Importantly, our customer experience and social reputation scores are strong. We are continuing to build on our success by further elevating the talent in the design services and exploring ways to create career paths to attract and retain high-caliber designers. As we have discussed in the past, we are focused on building a consistent, high-touch, best-in-class, and seamless design service experience for our homeowner and pro customers. To do so, we are further building out and updating key performance metrics and management dashboards to enhance productivity. We believe we are in the early stages of developing long-term competitive advantage through our free design services. Let me close by saying that our strong fiscal 2021 first quarter earnings reflect the unwavering efforts by our associates to serve our customers. Our entire executive leadership team would like to thank them for all of their hard work and dedication. I will now turn the call over to Trevor to discuss in more detail our fiscal 2021 first quarter results. Thank you, Tom. We are extremely pleased with our fiscal 2021 first quarter sales and earnings results, which are supported by the favorable macroeconomic environment and excellent execution of our store strategies by our associates. Their execution led to exceptionally strong sales and earnings flow through in the first quarter of fiscal 2021. Let me discuss some of the changes among the major line items in our first quarter income statement, balance sheet, and statement of cash flow, then I will discuss how we're thinking about the remainder of fiscal 2021. Our first quarter 2021 gross profit increased $100.9 million Or 42.7% compared to the corresponding prior year period. The increase in gross profit was driven by a 41% increase in total sales and an increase in gross margins of 43.1%, up approximately 60 basis points from 42.5% in the same period a year ago. The increase in our gross margin was primarily due to improved leverage of our distribution center and supply chain infrastructure on higher sales. Turning to our fiscal 2021 expenses, selling and store operating expenses increased $36.9 million or 24.1% from the same period last year. The increase was primarily attributable to 17 new warehouse stores opened since March 26, 2020, as well as additional staffing and operating expenses to align with our strong sales growth. As a percentage of the net sales, selling and store operating expenses decreased approximately 330 basis points to 24.3% from 27.6% in the corresponding prior year period. This decrease was primarily driven by leveraging our cost across an increase in comparable store sales. Comparable store selling and store operating expenses as a percentage of comparable store sales decreased approximately 390 basis points as we leveraged payroll and occupancy costs from strong sales. First quarter General and Administrative expenses increased $13.2 million or 42.7% from the same period last year, primarily due to higher incentive compensation expense and costs to support our store growth, including increased store support staff and higher depreciation related to technology and other store support center investments. On a rate basis, our general and administrative expenses as a percentage of net sales remained flat at approximately 5.6% during the 13 weeks ended April 1st, 2021, and March 26th, 2020. Our first quarter pre-opening expenses increased $1.6 million or 28.8% from the same period last year. This increase is primarily the result of an increase in the number of stores that we either opened or were preparing to open compared to the prior year period. First quarter net interest expense decreased $400,000 or 23.2% from the same period last year. The decrease in interest expense was primarily due to an increase in interest capitalized during the construction period of certain capital assets during the first quarter of 2021 compared to the corresponding prior year period. Our first quarter effective tax rate was 19.8% compared to 17.4% in the same period last year. The increase in our effective tax rate was primarily due to higher earnings without a proportional increase in available tax credits and the recognition of lower excess tax benefits related to stock option exercises during the current quarter compared to the same period last year. Moving on to our profitability. While our first quarter total sales increased 41%, our adjusted EBITDA increased 73.8% to $127.1 million from $73.1 million during the same period last year. The improvement in our gross margin rate and expense leverage led to a 300 basis point increase in our EBITDA margin to 16.2% from 13.2% last year. We are proud that our first quarter 2021 adjusted EBITDA in isolation now exceeds our annual 2016 adjusted EBITDA of $108.4 million. Our first quarter GAAP net income increased 104.5% to $75.8 million from $37.1 million last year. Our first quarter adjusted net income increased 100% to $72.7 million or $0.68 per diluted share from $36.3 million or $0.34 per diluted share last year. We ended the first quarter with 107.1 million diluted weighted average shares outstanding compared with 105.5 million last year. Moving on to our first quarter fiscal 2021 balance sheet and cash flow. As of April 1st, 2021, there was $207.7 million in term loan debt outstanding on our balance sheet, compared with $419.6 million of term and ABL debt outstanding during the same period last year. Last year, as a precautionary and proactive measure as uncertainty in the credit markets escalated, we drew down $275 million or approximately 80% of what was available on our ABL facility. We subsequently paid down $275 million in the ABL in second quarter 2020 as we had better visibility into the business and our liquidity needs. When considering our first quarter 2021 cash on hand of $354.1 million, we had no net debt outstanding at the end of the first quarter 2021 due to our strong earnings growth and favorable working capital. This led to our first quarter operating cash flow increasing fourfold to $101 million from $24.7 million during the same period last year. Our strong earnings growth, cash flow, and balance sheet enable us to consider taking on more ownership of stores rather than leasing them and accelerating store and customer-facing technology investments to further enhance the shopping experience across all of our channels. We believe these investments will place us in an even stronger position competitively, lead to longer-term EBITDA margin expansion, while also helping us in the event of another cyclical decline in the economic activity. Let me now turn my comments as to how we're thinking about fiscal 2021. From a macroeconomic perspective, we have seen fiscal and monetary policies be very accommodative, which we believe will continue to provide tailwinds to the existing and new home sales. The secular demand for homes continues to exceed available supply, which we believe will continue to lead growth in home price appreciation and growth in home equity. The personal savings rate has declined from its peak, it remains historically elevated, giving homeowners dollars to reinvest into their home. We believe the reinvestment is being driven by views such as, "My home no longer meets my needs of me and my family. I wanna take advantage of the current market. I want a house that is less work, and I wanna live closer to friends and family." We see these factors as continuing to support reinvestment projects and our business. We are optimistic about the prospects of sustained economic recovery in 2021 and the momentum in our business, we recognize that business risks remain elevated, albeit lessening from the COVID-19 pandemic. For that reason, in the interim, we are continuing our practice of not providing specific annual sales and earnings guidance that was established in the second quarter of fiscal 2020. As business risks improve, we expect to return to annual sales and earnings guidance. As we discussed on our fourth quarter fiscal 2020 earnings conference call, as we look beyond 2021, our goal is still to achieve $329 million in adjusted EBIT in 2022, as described in our 2020 annual proxy statement. Doubling our EBIT over three years in the throes of the worst pandemic in a century would be quite an accomplishment. As we look to the next three years, we believe our long-term growth algorithm of 20% unit growth, mid to high single-digit comparable store sales growth, along with modest gross margin improvement should lead to net income growth of at least 25% on a compounded annual growth rate basis. Due to the COVID-19 pandemic, the growth path will not be a straight line, but over the long term, we believe these goals are achievable. In closing, I would like to say that our entire leadership team is encouraged by the continuing momentum in our business, and we are very excited about the growth that still lies in front of us. We would like to personally thank all of our associates for the great work that they are doing every day to serve our customers. Operator, we will now turn it over to questions. Thank you. If you would like to register a question please press the one followed by the four on your telephone. You will hear a free tone prompt to acknowledge your request. If you question has been answered, and you would like to withdraw your registration, please press the one followed by the three. Again to register for a question that is one, four. One moment please for the first question. Our first question comes from the line of Zachary Fadem with Wells Fargo. Please proceed. Your line is open. Hey, good afternoon, guys. Can you talk a little more about the step up from January to March, and if there were any particular drivers across DIY versus pro or just broader changes in consumer behavior? As we look to Q2, it looks like extending the Q1 growth rate versus 2019 would suggest a comp of at least 60%. Just given the moving parts around new stores and just the wonky year-over-year compares, is this the right way to think about the business as we think about, you know, sequentially into Q2? Trevor. Hey, this is Tom, Zach. Trevor will take the first part, talk about the monthly cadence, and then I'll talk a little bit about the consumer and what we're seeing. Hey, Zach. You're right. We had some unique things happen this quarter that make the comparisons a little odd. When you back out the benefit of that 53rd week, everything shifted out a week. The week of New Year's and Christmas is a low volume week, so that's part of the reason the comp was so high in January. If you back that out, we're sort of in the 24.5%. February was a pretty close number if you back out the impact of the storms. We did see an acceleration a little bit in March, even if you back out the fact that we were closed for the last six days last year. We exited the quarter at a 26.5, sort of on a pro forma basis, excluding the 53rd week and excluding those six days when we were closed last year. We did see a little bit of an improvement in March relative to the first two months. Not a lot, maybe, you know, a couple, 200 basis points. One other thing that Tom touched on in his prepared comments that you sort of touched on and I think is also worth repeating is because we had the big negative comps last year, right, we were up 170% so far, we do think the right way to think about the business is on a two-year basis. You know, we exited Q1 at a compound annual growth rate of 28% versus 2019. We're at a similar rate in Q2. We're not giving guidance, but what I would say is, the run rate of our business has been fairly consistent this year if you back out the holidays and some of the shifts. We don't have a seasonal business. We don't have a promotional business. Q2 is a little bit higher volume. Q1 and Q3 are about average for the company, Q4 is usually a little bit lower because people aren't working on their floors during the holidays. I think that one of the reasons we're not giving guidance, it's just very hard to know what's gonna happen. Depending on your perspective on the macro, you know, you can model out some of those numbers. If you think things are gonna be really robust, again, the weekly cadence has not been that different. If you think, you know, if the macro is gonna slow a little bit, then you could bring those numbers down. Regardless of that, either of those, you know, you'll come out to Looks like we're gonna have a really strong year this year. Yeah. The other thing I'd add, just from a consumer standpoint, you know, when you're seeing strength like this, you see strength in both, you know, both homeowners and professionals. We're seeing nice increases in both. Our pros continue to tell us that their backlog is long, and the amount of time to get the jobs is a while. The company that we, you know, that we work with on installations, they had their best March ever. Both consumers are strong for us. Then a longer-term question. Maybe talk about your expectations for multi-year EBIT margin progression. You know, with your store level margins in, at a high teens rate, do you think a mid-teens EBIT margin is a fair long-term landing spot for the business over time? This is Trevor. I mean, I would have said no historically. You know, this last quarter, if you back out pre-opening expenses, because we won't have that when we're done opening stores a long time from now. You know, we've been 17.5% EBITDA margins, right? Back off call it 300-ish basis points for depreciation, and you're getting pretty close to that mid-teen operating margin. Obviously, when we're multiple billions dollars bigger than we are today, we're gonna run the business more efficiently. Yeah You know, we've just had a lot of things go our way. You know, obviously, we're in a very good macro environment, that's possible. That feels rich to me, again, we're close to that today. We're obviously in a heightened sales environment. Possible. Very possible. Thank you for your question. Our next question comes from the line of Michael Lasser with UBS. Your line is open. Please proceed. Good evening. Thanks a lot for taking my question. You mentioned that your pro customers and 85% of your sales are in some way, shape, or form levered to a pro customer have long backlogs. Presumably, when a customer gets a windfall of additional money, they can't just go that same day and spend it on something like a flooring project. It's a considered purchase. Between those two factors, how long are you expecting the robust sales that you're experiencing now to last? Is it reasonable to expect that this could extend well into the fall and winter? I mean, that's a good question, Michael. I think that's what Trevor said earlier. It's hard to predict. We're seeing strong strength now. Our strength has been consistent. The backlog has remained pretty consistent too. While the pros are backlogged, that's not a new event. That's been going on as we started to come out of COVID. You know, I think, you know, the reason we're not giving guidance is it's kind of hard to predict exactly what's gonna happen. As I look at the macro existing home sales still are strong. Last month we were up 12.3% over last year. Household values continue to go up. You've got an aging household stock, millennials entering the housing market. I mean, there's a lot of good things in the macro, and then lastly, aging houses. I mean, there's just a lot of good things in the macro that support the category. You know, we'll see. My follow-up question is, there's a lot of well-documented pressures on many of the key inputs for the products you're selling, like lumber, and how is that impacting both your costs and your ability to secure product at this point? I'll let Lisa talk a little bit about the cost. I mean, securing product, I mean, you know, when you're running this type of comp environment and net sales growth, you're gonna be chasing inventory. You know, as long as I've been here, we've produced some crazy comps during the times. This is a little bit unprecedented, and you're gonna have times where you chase inventory. I think what's impressive in my mind is just we continue to have the ability, because of our broad in-stock assortment, to when we chase inventory on a SKU of tile or a SKU of wood, you know, we've got hundreds of other options in those categories that we can ship the customer to. While we're chasing inventory and we're dealing with that in this environment, It doesn't appear to be affecting our sales. I'll let Lisa address costs and how we're dealing with that. Hi, Michael Lasser. On the cost perspective, yes, we have started to see some increases. We're not going to be affected like lumber is. The wood that we use is a little different, we don't see those kind of increases. We have started to see some. The great news is we have, you know, really terrific partners out there that we've worked with for, you know, years, and in some cases, decades. They keep our costs as low as possible. We have really extensive sourcing options. We have a lot of purchasing power. Where we've had to take increases, we're able to take strategic retail increases. There are not a lot of them, we have had to do that in some cases. We do remain really confident with our price gap. I mean, in the price shops that we do, our gap with the competition is as big, if not bigger than we've ever been. You know, yes, we're facing some of the same cost pressures everyone else is, but we feel very good about our ability to navigate through those. Thank you for your question. Our next question comes from the line of Steven Forbes with Guggenheim Securities. Please proceed. Your line is open. Good evening, Tom, Trevor. I wanted to focus on the adjacent category performance, right? Since you're disclosing in the Qs now, 1.6% of revenue it seems for the quarter. Just curious, you know, sort of your takeaways on what that means for the opportunity there. I know you've talked about getting to one million per store, but the strength here seems especially strong. What does it mean? Any updated thoughts and also about your ability to sort of continue to expand into new categories? I would say a few things about adjacent categories. I have been very pleased with how each one of them have worked. You know, now we've tried multiple adjacent categories, we really try to be thoughtful in what we add that, you know, really to complete a project. We've heard for a lot of my time here that consumers want to be able to buy the total project within the store. We've tried to be thoughtful and say, "Okay, what's gonna be used in a bath remodel? What makes sense that the tile person may be using?" We've tried to be thoughtful as we've added those. I've been very pleased with how that's worked. The benefit of, you know, so one, pleased with how they've worked. And by the way, I think we can do a lot better. We've chased inventory in that too. As we get ourselves in a better program in place, I think we'll continue to improve in the categories that we participate in. We have big stores, and we have big stores on purpose, and we've been good in our whole time here of flexing spaces. As sales decelerate in one category, we can give space to another category. Historically, we've done that within the hard surface flooring categories, but now we're doing that some within hard surface flooring to some adjacent categories. Our average store size has increased every year over the last few years. That store size gives us the ability to do more. We're never satisfied. We're always trying to do more. You know, we're gonna continue to explore other things our customers are expecting us to find, and we like to pilot things and we'll pilot them. If it works, you'll see it in more stores. Then just a quick follow-up on the commercial RAMs. You talked about adding 14, I think, this year. Any update on how the legacy cohorts, I guess, or the classes of RAMs are performing relative to those stated goals, the sales goals that you had in the past? Yeah, this is Trevor. They're off to a banner year, too, right? The commercial industry was expected to be down this year, and I think it may be in total, but, you know, we're so small in that industry. They're doing well. We have some of the RAMs that have now been with us for a couple of years, they're gonna well exceed that, you know, $2.5 million-$3 million goal. Some of those guys are getting close to that, and we're only, you know, whatever, four months into the year. We've As you said, we've hired a lot, right? We hired 12 last year. We're gonna hire 14 this year, we got a lot of new folks in there. You know, the same core tenets that have made the residential business successful are working very well with the RAMs. Really high quality trend on product at a low cost and a supply chain that can get it there fast. We're very pleased. That's why, you know, when we started the year, we said we were gonna have 12, but based on some of the success, we ramped it up to 14. The answer is, yeah, we feel very strong in our commercial goals. I think the only thing that I would add to that is, I've also been surprised at the amount of talent that we've been able to attract. I think people are starting to understand the benefits of working with Floor & Decor on commercial projects, and people in the industry are seeing that, we're being able to attract good talent. A lot of times they bring a book of business with them. Thank you for your question. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed. Your line is open. Hi, everyone. Good afternoon. I have two questions. First on sales. My sales question, I guess, has two parts. First, Trevor Lang, back to the comment around the CAGR for the last, I guess, the weeks, you're saying week to week it's pretty stable and it's a good way to think about your business on a, on a, I guess, two-year basis from 2019 or on a CAGR. Did you also say, though, that the underlying momentum seems to It, it did accelerate in the first quarter, sort of, I don't know if it was week- to- week or month- to- month? That's my first question. Yeah, it does, but just to be fair about that, it should because March is a bigger selling season, and April is one of our biggest volume months relative to January and February. Yes, the answer is our week-to-week volumes, when you look at every week-to - week, we have seen our volumes increase, but they should because March and April are higher volume months for us. The answer is yes, but, you know, they should. Got it. Okay. Then within that, still on sales, do you have a sense of, you know, new transactions or customers you haven't seen versus existing? I don't know that we have that out of our CRM data. I do know that we're all very proud. Again, this is my tenth year at Floor & Decor. As Tom mentioned, you know, the vast majority of our comps is coming from transactions. That's something we probably can pull from our CRM database. Maybe we'll have that next time. I do think that there's a lot of new customers coming into the marketplace. I mean, with that type of transaction growth and that you combine that with we're slowly creeping up in awareness. We still have a long ways to go, but as we continue to, you know, we're opening a lot of stores, and we're getting into a lot of markets and those markets are maturing and that tends to bring new customers into the marketplace for us. I mean, to me, you know, when I look at our performance, you know, there's new customers, and I think we're taking share at a faster rate than we have historically. Just the last follow-up. On market share, you mentioned, Tom, mature markets. Do you have a sense, or just remind us what you've told us on in terms of market share in most mature markets? I don't know if there's any updated 2020 data out there. I think, you know, some of our. We look at it more around a catchment area. We have some ability to look at some of that work. Last time I remember seeing that, we have some stores, some of these higher volume stores could have, you know, 35%, 40% market share within their 45 minute drive times. Some even slightly higher than that. I do think where we have some of our bigger volume stores and some of our more mature markets that we've been, you know, we've got very high market share. In total, we still think we have about 9%, right? Because we, you know, we only have 140 stores. In our more mature markets with some of our higher volume stores, that market share is a lot higher. Thank you for your question. Our next question's coming from the line of Karen Short with Barclays. Please proceed. Your line is open. Hi. Thanks very much. Just a couple questions. Wondering if you could talk a little bit more about inventory. Obviously, you know, you had exceptionally strong sales, but inventory increase was pretty lean this quarter relative to 4Q and much more so relative to 3Q. Wondering how you're thinking about that going forward. I did have one or two other questions. Yeah, no, as Tom mentioned, you know, we weren't necessarily planning for this level of sales. We're chasing. We have really good systems. We got a, you know, a strong team of merchants and supply chain individuals that are helping us look into those trends. We're definitely selling more than we would've expected. Also, as Tom mentioned, you know, the benefit of our business is, we've got a lot of SKUs that we can do a good job of selling. We were just in stores today talking about the teams and consumers are excited. You know, we may have 15 shades, 18 shades of gray tile, all a little bit different, and if we may not have the exact SKU that you originally started looking at, we have something close that we can sell through. I do think our team, our merchants do a great job of walking through good, better, best, and our store teams are doing a great job of showing the differences in those SKUs. You know, the other thing was we're working very closely with our supply chain partners and our vendors to try and get those receipts to a level that will, you know, have our in-stocks. To date, our in-stocks aren't that far below where they've been historically, you know, as time goes on, where we're selling a lot, you know, that those in-stocks could come down. As of today, our in-stocks are still in good shape. Okay. Then, my second question is just related to, obviously, you talked about the percent of sales, pro sales from the PPR members. I'm wondering if you could just give an update on tie-in reward programs for pros using the Pro credit card or just a general update on how you're thinking about tying the credit card into the reward program in general. Yeah. We're working with a professional firm that does some of this for a lot of big companies to help us think about prioritizing that. We will have that analysis done in the next month or so. I think you guys have heard us say there's really three things we're trying to do with the PPR program, and it's doing incredibly well, as Tom mentioned so far. We think the next step is a logical tier-type program. A lot of the more mature companies and retailers and consumer businesses with us will put in a tier program so that you're rewarding your best customers the most. That's the thing we're the most excited about. To your point, we're working on exactly what the credit tie-in would be. We think the costs are materially lower on our private label credit card than the external card brands. We're figuring out how do we reward people for using that. Plus, our card currently has the best terms out there with six months, no interest. The final thing is, as we introduce new really cool technology or other SKUs that more so in the installation category, there's ways we can give points for trying some of those new SKUs and working with our vendors to do that. The goal is all of those would be in a position to be rolled out later this year. There's some technology and process and people we have to invest in those, but we'd hopefully have those ready to roll out later this year, to give us a benefit into 2022. Thank you for your question. Our next question comes from the line of Greg Melich with Evercore ISI. Thanks. I had a follow-up on inventory and then on CapEx. If inventory was up 3% year-over-year, and given that costs are going up, is there any inflation in that? Is volume actually down on inventory? There's definitely a little bit of inflation right now. Most of our inflation will come, we think, later in the year. We turn our inventory just over 2 times a year, and the cost increases that we're seeing now, most of those didn't exist with the receipts we have today. There'll be a little bit of inflation in there. Lisa Laube and I often always joke, you know, don't always look at last year's inventory as the best proxy because you don't always have last year's inventory, right? I mean, again, we, you know, just posted a 41% increase in sales. I mean, you know, we'd love to have some more of our best sellers, and we're working aggressively with our partners to do it. You know, that's the benefit of having a big store with lots of inventory. Is there a number like $50 million that you'd like to have, ideally? I don't know if I've had that numbers. Additional. That feels a little high to me, but, you know, that feels a little high to me. Okay. Okay. The second was, you mentioned in the prepared comments about doing more own versus lease. I noticed you kept the CapEx plan at, I think $440 or more, and it was only $46 on the first quarter. Should we just assume that CapEx is going up to $130 a quarter? Is owning over leasing become a new part of the strategy? Yeah. I would say we now own two stores. We have one in Connecticut and one in Texas, and we're very pleased. When we think about that, if you really simplify it, we're spending somewhere between $7 million-$9 million for a new store today. When we own the land, and obviously real estate is different throughout the U.S., we're gonna spend somewhere on the low end of $3.5 million-$4 million for the land, and on the high end, it could be north of $5 million. We do two independent ROIs, what's the store's ROI independently, what's the ROI on the real estate. You know, we're gonna get a return on capital above 10% is our current expectations on those investments. The answer is, we do think we wanna do more. We have a set of rules that we follow, to things like, is it a great demographic area, is it growing? Do we thought we could make a good buck if we were to ever wanna sell the real estate? When we are triggering through those and we're seeing what it looks like, those real estate investments look like, we wanna do more. There's other benefits when you own the real estate. You can negotiate the taxes better, you can negotiate the CAM, you can manage some of your cost increases as better. That being said, could it possibly be 10%-20% of our new stores that we would own? You know, we're still even a ways away from that. You know, as you think about 20%, you know, we're not talking, you know, we're gonna own 20% of our stores. Where it makes sense in a place like Dallas, Texas, we know it well. It's like we got a really good location. We're gonna try to own more of those stores. As you think about that equation of longer term, yes, as we think about 2022 and 2023, because we're obviously working on those stores now, it's possible that for 10%-20% of that basis, if we can, we'd like to own that real estate. Again, it's gonna cost us, you know, somewhere in the $ 3.5 million- $4 million range on the low end and, you know, $5 million or $6 million on the high end to own that land. Long answer to a simple question, I don't think it'll ever be all that material relative to the total CapEx we spend. Where it makes sense, we're gonna try and take on more ownership. Thank you for your question. Our next question comes from the line of Chris Horvers with JPMorgan. Please proceed. Your line is open. Thanks. Good evening, everybody. A couple of margin questions. Top line's been pretty fully covered here. Can you talk about product margins? You didn't, you didn't call it out as a positive in this quarter, and you had prior. It does sound like you did have trade up to better and best. Then you also talked about, you know, transportation costs and input costs rising and inventory turns. You know, any color commentary about how to think about gross margin over the balance of the year, and could we, you know, flatten out and maybe see some pressure as we get to the fourth quarter? Yeah, I'll hit it at a high level. Lisa and Tom can weigh in. We saw some pretty meaningful gross margin improvements last year across all of our product categories. This quarter, when you look at the totality of it, the majority, as I mentioned in my prepared comments, was driven by the leverage of the supply chain, was the bigger driver of our gross margin this quarter. The way we think about our gross margins for the rest of the year, and obviously a little bit of this is predicated on sales, but assuming, you know, reasonable sales growth that we're planning on, we would expect to have higher gross margins again in Q2. As we get to the back half of the year, our current expectations is that they'll be, you know, flat to down maybe just a little bit, driven by the fact that we are gonna see some of these cost increases. You know, Chris, you've followed us for a long time. You know, when we think about these cost increases, we try to keep our retails as low as possible. We're gonna likely pass on those cost increases to some extent. You know, it's a market-based approach, it's a portfolio-based approach. I do think as we see some of those inflationary pressures come in, the gross margin will not be growing in the back half of the year. As we did when tariffs came in, we don't think that'll affect our ability to get to our gross profit goals and our profit goals. Got it. Can you talk about maybe quantifying how much incentive comp pressured from a dollar perspective and help us out in terms of sort of how you accrue for that? Do you typically say, you know, we beat the first quarter versus our internal plan and, you know, we raise only for that? Or do you typically recast the year and then sort of adjust your accrual rate at that point in time? It's the latter. Fortunately for us, you know, our level on incentive comp is pretty small. The percentage of our sales, it doesn't have a massive impact. As you would expect, we're accruing at the very high end of the range right now based on the performance of the business. There's a piece of that in the G&A, which is our corporate expenses. There's a piece of it up in stores for the store pieces of it. Even with that, as you guys saw, obviously our comps were good, you know, we still got over 300 basis points, almost 400 basis points on our comp stores leverage, including, you know, last year's bonuses were basically 0 because at the time we were heading into COVID, you know, and this year we're accruing at a max rate and you still saw fairly significant leverage in the stores. At the corporate, a little less so. The reason you didn't get leverage in Q1 was basically because of bonus, because again, we were accruing almost zero last year, and this year we're accruing at the high end of the range. To say it another way, it was the comparison year-over-year. It's not like you sort of recast your plan and said, "Okay, now internally we're expecting an even better outcome than, you know, what we had predicated for the year. I would say, we have a plan that the compensation committee approves at the beginning of the year, and then we will accrue based on what do we think we're gonna hit throughout the year. As we're reforecasting the businesses, we'll take that incentive comp up throughout the year. Hopefully that answers your question. Basically we do reforecast the year, and then we accrue based on how we're performing throughout the year. Obviously, as we get close to the end of the year, you know, that true-up becomes pretty immaterial because you're getting close to the end of the year. Thank you for your question. For the remainder of today's Q&A, please keep your questions to one per line. Our next question comes from the line of Kate McShane with Goldman Sachs. Your line is open. Please proceed. Hi, thanks. Good afternoon. A lot of our questions have been answered, this is a little bit more of a detailed one on the cadence of comps that you talked about today. I know you mentioned that February was impacted by about 500 basis points by the storms, but you think 300 basis points of that got pushed into March. Do you think those 200 basis points difference can still come back? Just with regards to commentary around what you achieved in March, I know it's small, but is there a way to know if that was from needing to replace floors because of the storms, or is it from delayed projects? Part of this is just a bit of a math equation. March is a five-week month, February is a four-week month, the March volumes are higher, the February volumes are lower. The combination of those two things is they basically, dollar-wise, wash each other out. Because March is such a higher volume month, both because of the volumes and it's a five-week month, that's why it's only a $300,000 benefit in March. On the storm itself, you guys know, you know, Hurricane Harvey hit us in late 2017, it felt like the rain stopped and the sales went through the roof. We were obviously a smaller company and more concentrated in Houston there. We don't think that happened here. Maybe that will come. Maybe there's gonna be more to come throughout the year. It felt like we kinda lost some of what we would have gotten otherwise. Maybe there's some upside to come as, you know, frozen pipes were burst and things like that. It doesn't feel like we're gonna see anything close to what we saw in Houston back when Hurricane Harvey hit. Thank you for your question. Our next question comes from the line of Steven Zaccone with Citi. Please proceed. Your line is open. Great. Thanks for taking my question. Congrats on the strong results. One quick one. Just wanted you to expand a bit more on what's driving the growth of the 2020 and 2021 cohort of stores to be so strong relative to prior cohorts. Do you think the brand awareness is growing? Is it better execution? It seems like you're being more vocal with the grand opening celebrations. Just what's the key drivers of the outperformance when you look at these versus prior cohorts? Thanks. I don't think it's one thing. It's a little bit of everything you said. Certainly our execution, you know, I feel is at a high level. What's encouraging is. The stores, particularly in 2021, we're not opening with the same fanfare that we have historically opened our stores over the last few years. We're seeing really strong results. But our teams are executing. They're out. They're finding new pros. They're getting them into the stores, just not in one big mass party because you can't do that in a COVID world. I'm pleased with that part of it. I think that the 20 stores and 21 stores, I do think our awareness is improving. I think people are knowing where we are. Even in new markets, people are starting to hear of the brand. I think that helps. I think our real estate team has done a phenomenal job in our locations. I keep pulling up to our new stores and I'm like, "This is one of the best locations that we have." It's I might be getting tired of saying it, but I do think that they've done a good job, a better job than we've historically done in getting the right locations and with the right visibility, which is important to us. You know, we're also opening in markets where you'd expect some higher volume. We're getting some more stores up in the Northeast. We're getting some more stores in Texas and, you know, markets that we perform good at, and those stores perform strong historically. Yeah, it's a little bit of everything. There's no one magic bullet, but, you know, certainly we're pleased with the 2020 and 2021 stores. Yeah, I think one of the things, Steven, that we're kind of learning One thing I would say is 60% of our stores are in existing markets this year, so that obviously helps. We, you know, got better brand recognition, more pros. What we're also starting to see a little bit is, our real estate team is obviously getting much better locations for us as we're a bigger company, you know, much better balance sheet. When you open that third or second or that fourth store, you're really getting the leverage that you were hoping for, because you do have better brand recognition. Now you've just made it more convenient for that pro to shop at multiple stores, which is obviously very encouraging with, you know, at least 400 stores we plan to open. We're only at 140. We got a lot of markets left to open that, you know, second, third, fourth, fifth, sixth store. It is that's something that we're learning a lot about here in the last few years as well. Thank you for your question. Our next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed. Your line is open. Hey, thank you. Great quarter. Just a question on geographic performance. Just curious if you're seeing any diversion in performance in some of the markets that are farther along in the reopening process. Also just curious from a consumer perspective if you're seeing shoppers start to engage in larger purchases at this point in time. Geographically, we're pleased across the country. All markets are performing very well, as I said in my prepared remarks. There's not one place that's really driving it. We're fortunate to see strength across all territories. Whether customers are taking on larger projects, it's hard to tell. I mean, I don't think so. I think they're taking on the same You know, a flooring project is a flooring project and that doesn't change so much. The 1 thing we are seeing, you can see our average ticket is a little bit better. Customers continue to step up to our better and best products, which tend to be a little bit more expensive. I think our merchants have done a terrific job in being trend right and I think customers are gravitating that, so that takes the project up a little bit. It's reflective in our average ticket, so feel good about both. Thank you for your question. Our next question comes from the line of Alex Maroccia with Berenberg. Good afternoon. Thanks for taking my question, guys. I might have missed this in the prepared remarks, but can you give us an update on the new California transload facility and if your thoughts around benefits from it have changed given the current freight environment? Yeah. Again, our supply chain team has just been very thoughtful about this. I'm so glad they pulled the trigger to do it. We don't plan on operating it until the fourth quarter. you know, it will take time to work its benefit in because we're on a weighted average cost of inventory method. We'll start to get some modest benefits for that at the end of Q4 and into Q1. With the congestion out there and the cost of dealing with the congestion out there, it's gonna help us. Now, we think some of that's gonna hopefully abate over time as they get caught up. We're on track. We plan to open it, like I said, I think in the fourth quarter, and we'll start to see some of those benefits, really more realistically into 2022. Thank you for your question. Our final question is coming from the line of Justin Kleber with Baird. Please proceed. Your line is open. Hey, guys. Thanks for taking the question. I wanted to ask just about web traffic. I assume you've seen an acceleration in growth during 1Q. I don't know if you have that specific number you can share, but maybe as a part of the question, what's the typical lag time from when you see a homeowner, you know, start to engage with your website and then when they actually make a purchase? Hi, this is Lisa. Yes, we did see pretty consistent web traffic through the first quarter. You know, there were some ups and downs by week as we usually see. I believe the, our total for the first quarter was up 81% web traffic, that was great. April did come down some, it's getting very fuzzy now because we are now going up against stores being closed. If you'll remember last year, the web represented like 65% of our business in the second quarter last year. There was a lot of noise now as we start to compare year-over-year. First quarter we felt very good, still running close to 17% of sales, that's great. I don't know if I know the exact lead or lag time. I think, you know, kind of anecdotally, we've always said somewhere in 30 - 90 day range from the time somebody kind of starts the thought process to do it till the time it actually gets done. I don't think we have any reason to believe that time, that timeline has changed. I think that concludes our question and answer session. We appreciate everyone joining our call today and appreciate your interest in our company and our performance, and we look forward to talking to you on our next quarterly update. That does conclude our conference call for today. We thank you for your participation and ask that you please disconnect your lines.