Please note, this conference is being recorded. At this time, I'll now turn the conference over to Wayne Hood, Vice President of Investor Relations. Mr. Hood, you may begin. Thank you, operator, and good afternoon, everyone. Welcome to Floor & Decor's Fiscal 2023 Q3 Earnings Conference Call. Joining me on our call today are Tom Taylor, Chief Executive Officer, Trevor Lang, President, and Bryan Langley, Executive Vice President and Chief Financial Officer. Before we start, I want 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, included in 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 and related materials will be available on our investor relations website. Let me now turn the call over to Tom. Thank you, Wayne, and everyone for joining us on our fiscal 2023 Q3 Earnings Conference Call. During today's call, Trevor and I will discuss some of our fiscal 2023 Q3 Earnings highlights. Then Bryan will provide a more in-depth review of our Q3 financial performance and share our thoughts about some of our financial projections for the remainder of fiscal 2023. We are proud to deliver Q3 diluted earnings per share of $0.61, especially amidst the continuing economic challenges posed by 30-year mortgage interest rates that are now at about 8%, near record low existing home sales of 3.96 million units annualized in September, the ongoing pressures on housing affordability, and the slowing sales of large-ticket discretionary products. Our fiscal 2023 Q3 financial results are a testament to our company's agility and commitment to executing our key growth and customer engagement strategies, which we believe will continue to widen our competitive moat. As many of you know, our industry and company have been affected by the Federal Reserve's current interest rate policies aimed at curbing economic growth and moderating inflation to 2% over time. The lagged effect of these policies is exerting greater than expected pressure on existing home sales and, in turn, our sales than we previously expected. We were expecting that existing home sales would approximate 4.1-4.3 million units annualized as we moved into the second half of 2023. But regrettably, this has not materialized to date. As Bryan will discuss in more detail, we have experienced an unexpected, accelerated decline in comparable store sales from the lagged effect of these policies in the early part of the Q4 of 2023, and have begun to tighten expenses further in November to align with the recent accelerated decline. We believe the ongoing impact of these monetary policies will continue to suppress home remodeling into fiscal 2024, which could lead to a decline in our comparable store sales for the year. Therefore, we believe it is prudent to approach fiscal 2024 with more rigor in our expense management and added discipline in our growth investments and capital spending. Additionally, we think it is important to add a level of flexibility and optionality to our operating and store opening plans in 2024, given the current macroeconomic environment. I am proud of how our teams have stepped up to this short-term challenge. We are not standing still and see evidence that our strategies to grow our market share in this challenging period are working, even when industry sales are contracting. We are fortunate that the strength of our business model, balance sheet, and cash flow allow us to continue in investing in the new stores and merchandising growth initiatives in the face of these near-term headwinds. For example, we intend to test an outdoor department within our stone department in 10-12 stores early next year, including full outdoor-focused vignettes and select design centers to better show our assortment. kI believe that our demonstrated history of strong and agile execution, coupled with the investments we continue to make in new warehouse stores and merchandising, will position us for accelerating sales, market share, and strong earnings growth when the industry growth returns. Let me now turn the call over to Trevor. Thanks, Tom. I also want to express my appreciation to all of our associates for their dedication to serving our customers and executing our key growth initiatives towards operating at least 500 stores in the US. It is important to note that we view ourselves as a young, disruptive growth company with only 207 warehouse stores in the US at the end of the Q3 of fiscal 2023. We continue to make important long-term investments, as we have conviction that over the long term, we can achieve returns above our weighted average cost of capital, just as similar investments have allowed us to be approximately 20 times the size we were just over a decade ago when Tom and I arrived at Floor & Decor. ... we have demonstrated that we can manage a growth business focused on long-term profitability and return on capital during difficult periods, such as, as in 2018, when existing home sales declined, in 2019 when the U.S. government imposed tariffs as well as anti-dumping and countervailing duties on many of our products from China, and in 2020 and 2021, during the COVID-19 shutdown and the related supply chain disruptions. As Tom mentioned, we are not standing still as we navigate this challenging period of contracting industry sales. Our growth and profit have never been a straight line, but when measured over the long term, we believe we are well positioned. We intend to continue growing through this cyclical housing downturn by capitalizing on our everyday low prices, value-driven options, trend-right product assortments, in-stock job log quantities, and exceptional customer service provided by our store associates. Turning to our fiscal 2023 Q3 sales, total sales increased by 0.9% to $1.1 billion from the same period last year. Our fiscal 2023 Q3 comparable store sales fell 9.3% from last year. Comparable store sales declined 8.2% in July, 10.1% in August, and 9.7% in September. As a reminder, our fiscal 2022 Q3 comparable store sales increased 11.6% due to a 19.5% growth in our average ticket. Our fiscal 2023 Q3 comparable transactions declined 6.8%, and our comparable store average ticket declined by 2.8%. While we are encouraged that the sequential decline in transactions improved from the peak declines of 10.4% in the Q4 of fiscal 2022 and 9.9% in the Q1 of fiscal 2023, our average ticket remains under pressure. The pressure reflects cycling past retail increases last year, customers continuing to purchase less square footage, and the impact of strategic decisions to lower retail pricing selectively on specific SKUs. We continue to see homeowners and pros engaging in fewer and smaller scale flooring projects, and they are very intentional in their purchase decisions. For example, they are choosing a single bathroom project rather than a bathroom and a kitchen project, or a two-room project rather than a three-room project. Additionally, the cost of financing projects has risen due to increased interest rates, fewer subsidized financing programs, and tighter lending standards. Collectively, we believe these factors are contributing to us selling less square footage when compared to last year. That said, when consumers are considering a flooring purchase, we continue to see ongoing customer preferences towards our better and best product, price point products, where we offer industry-leading innovation, trends, and styles at everyday low prices. From a regional perspective, comparable store sales in our Western and Southern divisions were the weakest in the Q3 of fiscal 2023. From a merchandising perspective, our initiatives in tile, installation materials, and adjacent categories led to comparable store sales that were meaningfully above the company average. We are pleased that our total sales through our e-commerce store increased 8.3% year-over-year. As a result, the sales penetration rate increased 160 basis points to 18.9% from 17.3% last year, further reaffirming that our connected customer strategies to drive engagement are working. We are also continuing to invest in design services to drive engagement with homeowners and pros by further expanding our in-home design test in the Q3. We have found that when our designers engage with homeowners in their homes, we increase our ability to become involved with larger projects. Turning to our early fiscal 2023 Q4 sales trends, our Q4 to date, comparable store sales are down 11.9%, below what we expected coming into the quarter, and greater than the Q3's decline of 9.3%. Consequently, we updated our fiscal 2023 earnings guidance in today's press release to take into consideration the slowing sales trends. I will now discuss our new store pillar of growth. In the Q3 of fiscal 2023, we opened 5 new warehouse stores, including two new warehouse store openings in Upstate New York and Buffalo and Rochester, both new markets for us. We ended the Q3 by operating 207 warehouse stores and 5 design studios across 36 states. Since the beginning of this year through today, we have opened 22 new warehouse stores, including 5 new warehouse stores in October, moving us closer towards achieving our 32 new store opening plan for fiscal 2023. In early October, we continued our Upstate New York store building, build out by opening a new warehouse store in Albany. We are excited to continue building our presence and brand awareness in New York and New Jersey in the Q4 of fiscal 2023, with planned openings in five new warehouse stores in these states. These planned openings will include new warehouse stores in Ocean Township, Absecon, Princeton, and Springfield, New Jersey, and Port Chester, New York. We plan to continue building our New York expansion in 2024 with a new warehouse store in Brooklyn, New York. As we continue our growth, we also decided to close an older warehouse store in Houston, Texas due to strategically placing stores in the market surrounding the store in the Q3 as the lease expired. Due to ongoing industry-wide construction delays in the Q3, we had to push some of our late September 2023 warehouse store openings into the Q4. These construction delays are due to general contractors struggling to secure qualified subcontractors and local government municipalities remaining understaffed, particularly in the Northeast. In some cases, municipal government staffing levels are below pre-pandemic levels. Consequently, obtaining all the necessary building inspections and approvals sometimes takes as much as three times longer. Further, we have recently begun experiencing delays with utility companies, missing dates and delaying work due to the constrained capacity of their workforces. As a result, these delays have been outside of our control when connecting power, water and sewer, and gas services to our new stores. Turning my comments to our pros, which accounted for approximately 44% of our Q3 net sales, compared with 43% in the same period last year, and 44% in Q2 of fiscal 2023.... We are leveraging our pro dashboard and CRM tools and celebrating pros with events like our annual Pro Appreciation Month in September. This annual event, which generated 68,000 pro registrations, including year giveaways, in-store prizes, nationwide sweepstakes, free installation materials, and educational webinars. We were pleased with the incremental new pro business generated from this event and its impact on our installation material sales, where we see a significant market share opportunity with our pros. While our overall fiscal 2023 Q3 comparable store sales declined 9.3% from last year, our pro comparable store sales continue to outperform our homeowner sales, and our installation materials grew modestly as we focused on increasing our market share in a contracting market. Additionally, we continue developing our other strategies to deepen our relationship with our pros. For example, we are participating in the National Tile Contractors Association, or the NTCA, with educational events enabling our pros to use their PRO Premier points for NTCA membership. The membership includes a range of benefits, including training and vouchers to be used in our stores. Similarly, we partnered with the National Wood Flooring Association in the Q3 to build on our brand awareness as a destination store for wood. This aligns with our plans to have all of our stores with updated wood inspiration centers by the end of 2023. Providing educational events is increasingly important to pros as the installation in certain large format categories is new and more complex to install. Year to date, we have trained over 2,000 pros by working with the NTCA, and we're on track to hold 128 educational events in 2023, compared with 71 in 2022. Our CRM data affirms that our pro wallet share growth initiatives are working. In the Q3, we saw growth in our returning pro customers and spending growth among our top pros engaged in flooring projects. From an operational standpoint, we have process improvements underway that will make it easier for our top pros to interact with us and build quotes on large projects. To manage our profitability, we continue aligning our store payroll hours with the decline in sales and are rigorously managing our corporate G&A spends. Importantly, we believe we are doing this in a way that does not compromise customer-facing service. In fact, we are very pleased that our customer service scores remain high. Moreover, we continue to manage our total inventory effectively and are glad that our merchandise in-stock level is better than they have been in years. Finally, we are continuing to fortify our strong pricing move by strategically adjusting retail prices on specific SKUs, using a portfolio approach, while at the same time improving our gross margin rate year over year. Turning to our commercial business, our subsidiary, Spartan Surfaces, reported another strong quarter, with fiscal 2023 Q3 total sales increasing by 47.5% from last year. Additionally, the company announced an exciting new line of flooring and wall tiles under the Umore brand name in October. The Umore line exemplifies how Spartan can work with Floor & Decor merchants and supply chain teams to design and curate exclusive flooring and wall tile products for commercial specifiers that are supported by a deep inventory that is available nationally. Tile is a higher-margin business that we believe is mostly incremental business for Spartan, as historically, they have not sold much tile. We are continuing to build out our regional account managers, where our Q3 sales increased 32% from the same period last year. Looking forward, we see growth in new quoted projects and sample requests as remaining healthy but moderating. The moderating growth is consistent with the September ABI index, which saw a 44.8 reading, down from 48.1 last month, moving below the positive territory of above 50. In response, we are rigorously managing our administrative expenses and investment plans in commercial. As discussed in prior earnings calls, we remain excited about the long-term commercial market opportunity and our strategies. We are confident that we have the right people, strategies, business model to continue to successfully navigate this challenging macroeconomic environment. I will now turn the call over to Bryan to discuss our fiscal 2023 Q3 financial results in more detail and share our outlook for the remainder of the year. Thanks, Trevor. As Tom mentioned, we are proud to report fiscal 2023 Q3 diluted earnings per share of $0.61, which was at the high end of our expectation, despite Q3 sales that were modestly below our expectations. Like the previous quarters in 2023, we achieved these results by delivering on our commitment to growing our gross margin rate year-over-year, while managing our competitive price gaps and growing our market share. As CFO, I am equally pleased with how we are managing our inventory and merchandise in-stock levels, which enabled us to report a $691.7 million positive swing in year-over-year operating cash flow and a significant increase in free cash flow. Now, let me turn my discussion to some of the changes among the significant line items in our Q3 income statement, balance sheet, and statement of cash flows. In each case, compared to the same period last year, unless otherwise stated. Then I will discuss our outlook for the remainder of the year and provide a framework for how we are thinking about fiscal 2024. Third quarter total sales increased 0.9% from last year. However, gross profit grew 4.5%, due to a 100 basis points increase in our gross margin rate to 42.2% from 40.8% last year. The increase in gross margin rate is primarily due to retail price increases we took last year, coupled with a decrease in supply chain costs starting in late 2022, that continued into the Q3 of 2023. As a reminder, we are on the weighted average cost method of accounting, and as such, the supply chain cost reductions we started to experience late last year and into this year are still working their way through our income statement through the remainder of 2023. Third quarter selling and store operating expenses increased 9.9% to $308.6 million. The growth is primarily attributable to higher occupancy costs related to an increase in the number of warehouse stores operating since September 29, 2022, wage rate increases, and higher credit card transaction processing fees. As a percentage of sales, selling and store operating expenses increased approximately 230 basis points to 27.9% from last year. The increase was primarily due to the deleverage in occupancy and other fixed costs from a decrease in comparable store sales. Third quarter general and administrative expenses increased 9.5% to $59.9 million from last year. The growth is due to investments to support our store growth, including increased store support staff, higher depreciation related to technology and other store support center investments, and operating expenses related to our Spartan subsidiary. As a percentage of sales, general and administrative expenses deleveraged 30 basis points to 5.3% from 5.0% last year, but the expense rate improved from the second and Q1s of 2023. The year-over-year increase in expense rate is primarily due to a decrease in comparable store sales, partially offset by lower incentive compensation pools. Third quarter pre-opening expenses increased by 37.0% to $14.2 million from last year. The increase primarily resulted from an increase in the number of future stores that we were preparing to open compared to the same period a year ago, as well as costs related to delays in new store openings. Third quarter net interest expense decreased to $1.2 million from $3.0 million last year. The $1.8 million decrease in interest expense is better than planned and primarily due to a decrease in average borrowings outstanding under our ABL facility and an increase in interest capitalized, partially offset by interest rate increases on outstanding debt. Third quarter income tax expense was $17.6 million, compared to $22.5 million from last year. The effective tax rate decreased by 170 basis points to 21.1% from 22.8% the previous year, primarily due to increased tax benefits related to stock-based compensation. Excluding the impact of excess tax benefits, our Q3 tax rate was approximately 23.7% compared to 23.9% last year. Third quarter adjusted EBITDA decreased by 4.7% to $140.9 million from last year, primarily from expense deleverage from the 9.3% decline in our comparable store sales. However, EBIT declined by a larger 16.6% from last year due to a 27.1% increase in depreciation and amortization expense. Third quarter net income declined by a more moderate 13.5% from last year due to a lower effective income tax rate and lower interest expense than the previous year. Diluted earnings per share fell 14.1% to $0.61 from $0.71 last year. You can find a complete reconciliation of our GAAP to non-GAAP earnings in today's earnings press release. Moving on to our balance sheet and cash flow. We are continuing to maintain a strong balance sheet during this uncertain period. Our total inventory as of the end of the Q3 decreased by 16.3% to $1.1 billion from the end of the Q3 last year, and decreased by 14.5% from the end of fiscal 2022. The decline in inventory, coupled with an increase in trade accounts payable and other working capital initiatives, enabled us to report a $691.7 million favorable swing in year-over-year operating cash flow and a significant year-over-year increase in free cash flow. The improvement in our cash flow allowed us to reduce borrowings under our ABL facility to zero at the end of the Q3, which enabled us to reduce our debt by $178.5 million to $202.9 million from last year. The strength of our balance sheet will benefit us as we remain committed to making investments that we believe will drive further market share gains during a period of industry contraction. We ended the Q3 with $758.9 million of unrestricted liquidity, consisting of $61.6 million in cash and cash equivalents and $697.3 million available for borrowing under our ABL facility. Let me now turn my comments to how we are thinking about the remainder of the year and how it compares with our previous expectations. During the Q3 of 2023, 30-year mortgage interest rates continued to rise and are touching 8%, up from the prior peak of 7.34% in July. At the same time, the July Federal Reserve Senior Loan Officer Survey reported that lending standards across all categories of residential real estate tightened, and they expect further tightening of loan standards in the second half of 2023. Meanwhile, demand weakened for all residential real estate loan categories. Home prices have moderated, but they remain elevated from previous years. According to the National Association of Realtors, the median price of an existing single-family home in September increased 2.8% to $394,000 from last year, which still represents a 26.3% increase from $312,000 in September of 2020. These increased costs, coupled with increases in property taxes and insurance and falling savings buffers, continue to erode housing affordability for many homeowners, leaving all but the highest income cohorts able to afford homeownership. Consequently, existing home sales reached a near record low of 3.96 million annualized in September, which was below our expectations of 4.1-4.3 million annualized units that supported our prior outlook for the second half of 2023. We are prudently expecting these trends to continue to create headwinds for our sales in the short term. Taking this into consideration, let me reframe how we are thinking about the Q4 of 2023 and provide some preliminary guardrails to take into consideration for 2024. As Tom mentioned, we have experienced an unexpected accelerated decline in our comparable store sales from the lagged effect of these policies in the early part of the Q4 of 2023. To take this into account, we have updated our 2023 sales and earnings guidance, which now reflects the potential that the accelerated decline in our comparable store sales could be sustained for the remainder of the Q4. We hope we are wrong, but we now expect 2023 Q4 comparable store sales to decline in a range of 12%-15% from last year. In response, we have already initiated expense tightening measures in November and will further tighten them in December with an eye towards not adversely impacting our customer base. Let me now provide some more details. We now expect fiscal 2023 total sales to approximate $4.345 billion-$4.385 billion, compared with our prior guidance of $4.460 billion-$4.530 billion. Comparable store sales are expected to decline 7.8%-8.5%, compared with our prior guidance of 5.5%-7.0% decline. We expect our 2023 Q4 gross margin to be flat or modestly improve sequentially, leading to an annual and Q4 improvement year-over-year. We expect fiscal 2023 diluted earnings per share to be in the range of $2.14-$2.24, which implies Q4 diluted earnings per share of $0.20-$0.30. The updated 2023 annual earnings guidance compares with our prior guidance of $2.30-$2.50. Fiscal 2023 Adjusted EBITDA is expected to be in the range of $535 million-$550 million, compared with our prior guidance of $570 million-$595 million. Depreciation and amortization expense of approximately $200 million, unchanged from our prior guidance. Net interest expense of approximately $11.5 million, compared with our prior guidance of $16 million-$17 million. Tax rate of approximately 21.5%. Diluted weighted average shares outstanding of approximately 108 million, unchanged from our prior guidance. Opened 32 new warehouse stores, unchanged from our prior guidance, and we reduced our 2023 planned capital expenditures to $550 million-$575 million from our prior guidance of $590 million-$630 million. At this juncture, we believe it is prudent to moderate and add optionality to our 2024 new warehouse store openings with a revised opening plan of 30-35 warehouse stores, compared with our prior expectations of at least 35 stores. It is important to recognize that this still would represent mid-teen store growth. We are still developing our detailed sales plans for 2024, but we expect that if existing home sales remain at the current levels, our comparable store sales could decline next year. In particular, we anticipate our comparable store sales could decline more in the first half versus the second half of the year, given our sales comparisons from 2023. As such, we have action plans to align our expense structure with this potential near-term decline. We continue to expect modest improvement in our gross margin rate next year from our fiscal Q4 exit rate. Let me turn the call back to Tom for some closing remarks. Thanks, Bryan. In the short term, we see opportunity amid the uncertainty. We believe that we have demonstrated that we can manage through uncertainty and seek to use this opportunity to seize more market share as the industry contracts. While the timing of a sustained recovery in existing home sales and growth in our industry continues to be elusive and pushed out by most of the economists, we believe the longer-term outlook for home improvement spending remains bright. That said, we believe we should be prudent when approaching 2024 with more rigor towards managing our controllable expenses and discretionary capital spending. That does not mean we are not making growth investments. We expect to continue to invest in 2024 by opening new warehouse stores, which we believe will further widen our competitive moat and leave us in an even stronger position for significant earnings power when the industry fundamentals improve. Our longer target of operating at least 500 warehouse stores in the U.S. and achieving a mid- to high-teens EBITDA margin is unchanged. Operator, we would now like to take questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your questions. Hey, guys, good afternoon. My question is, in the Q4, some of the expense rationalization that's happening, is that the run rate that we run into 2024, or does it get better? Meaning, you know, if you annualize the earnings from the Q4, and I guess the decremental margins, it paints a pretty tough picture, and I want to kind of see why that's wrong. Yeah, Simeon, this is Trevor. That's a good question. So we're not done with our planning process for 2024. You know, given the current economic headwinds and comparable store sales are likely to be negative next year based on current sales trends, and as Bryan mentioned, probably have larger negative comps in the first part of the year versus the second part of the year. We are focused on continuing to resize our expense structure based on the slower sales trends, and we believe we can have a moderate increase in gross margin next year. ... but we don't believe that you take the Q4 run rate, and extrapolate that to fiscal 2024 annualized EPS. You know, we think we will do better than, than that, and we're working through that as we speak. Obviously, a lot of unknowns out there with mortgage rates and where the consumer is, and, you know, how they're going to invest in renovation today. But we are creating optionality and scenario planning that if things get better or worse, and we'll give you a more detailed update in 2024. Is there anything on the vendor side that's changing? Are they getting more aggressive? Meaning, are they lowering price or getting more aggressive in some of the deals that you're seeing? This is Tom, so I'll take that. So, you know, part of our improvement in gross margin that we're seeing now and that we-- or will continue to see next year, is in our merchants doing a good job of working with our suppliers and getting first cost reductions. So it's when we're moving suppliers, we're getting better, better buys, with our existing suppliers. Business is tougher for them, so they're making concessions, and our merchants do a good job of negotiating. So yeah, we should see some benefit from that. We're seeing it now, and it should continue into next year. Thanks, guys. Good luck. The next question is from the line of Chris Horvers with JP Morgan. Please proceed with your questions. Thanks. Good evening, guys. So thinking about what just happened in the past month in terms of the deceleration in the business, can you deconstruct that a little bit? You know, on a... Is it, is it traffic and ticket, breaking sort of the stacks? You're implying that, you know, the monthlies really deteriorate if you're looking on a monthly, on a multi-year basis. So, you know, what changed in terms of traffic versus ticket? You also mentioned the southern region also was in the worst category, which was not true in Q2. So is there a change in Texas and Florida that you're seeing? I guess, the last part of that question is, as you think about the cadence of the month, was there anything observable around, you know, let's say, you know, the war or any sort of shock that you saw on a sort of weekly basis? So I'll take the first part. This is Bryan, and then Tom will kind of take the second and third part. So just I think it's easier if I talk about what was in the prior guidance versus what we're seeing today, kind of unbundle Q4 a little bit and the trends we're seeing. So our comp was obviously negative mid-single digits is what we were thinking. Now that's at a -12% to -15%. To talk about transaction and ticket, we had transactions in Q4 in the prior guidance were going to be about flat. Now we're expecting that to be mid-single digits to high single-digit decline. So you're seeing a bigger drop in transactions from the expectation that we were, that we were at, and then ticket was a low single-digit decline that we had previously guided to. Now that's more like a mid-single-digit decline. You can see the biggest, I guess, deviation from our expectation in Q4 is really around transactions. When you think about that two-year stack or anything else, transactions are really going to see the bigger deviation from Q3 to Q4 on some of that. And the only other thing I'd say, Chris, that, that's probably a bit different than when we were, you know, whatever it was, three months ago, is, you know, mortgage rates have now tipped up and closer to 8%. Existing home sales are now below 4 million, which, you know, hasn't happened that often in the last 40+ years. And so it's just, it's been a bit of a deteriorating environment since we talked last. Yep. No, go ahead. I was going to say, and just on the average ticket, you know, our square foot per project is continuing to go down. So that's what's driving down a lot of that average ticket to go from a low single digit to kind of mid single digit declines. So a lot of it's around that project size. Yeah. Chris, I'll try to hit the last two parts of the question. Because it's, we're going up against easier compares, so you would think that, you know, things would have been better. But as Trevor mentioned, with interest rates, you know, being higher than we thought, existing home sales deteriorating worse than we thought, and then what's happening, you know, with the world, with the conflicts around the globe, you know, they're all probably having an effect on the consumer and hurting their ability to shop. So I don't know exactly, like, I can't pinpoint our deterioration has been, you know, it, it's been all through since the quarter started, so, you know, I'm not sure which one of those is affecting it the most. I'm sure it's a little bit of each. As far as the comment on the South, yeah, South was performing pretty well, and, you know, we started seeing deterioration in the West first, and then the South is just kind of getting to where the West, you know, the challenges that the West was facing. We think we're seeing that a little bit more now than we were at the beginning part of the year. Got it. And then my, my follow-up is, Tommy had mentioned earlier this year that, you know, if existing home sales were flat, you could see a positive outcome on the comp side. You're leaning towards less negative in the back half of the year. So, you know, presumably you'll get to a point of flat existing home sales in the back half. So is the difference now, is it the, the, you have to annualize through the, the project size headwind? I mean, you have a little bit of the project size headwinds. I think that's a fair point. You know, we're still not getting to, you know, existing home sales. When we look out existing home sales, what we're up against is still, we're going to be below that by all anticipation, at 3.9 million annualized in September. We don't, we're not planning for that to get much better, which would still be, we'd still be in a declining home sales environment. I do believe that if we can get to flat existing home sales year-over-year, or we can comp, or existing home sales are comping positive, that's good for our business. May not immediately, but in time. But as we look forward, you know, you look to next... You know, if you look to next year, you know, you got in, in the first half of the year, February, there was 4.6 million homes annualized, March, 4.4 million annualized, April, 4.3, May, 4.3. With what we saw in September, and even though interest rates aren't coming, not going up as of right now, and people are excited about that, we're not anticipating them to go down. And so we think that that's gonna, you know, put, put a challenge onto the business. ... Got it. Thanks very much. The next question comes from the line of Michael Lasser with UBS. Please proceed with your question. Good evening. Thanks a lot for taking my question. Tom, in your remarks, you noted how you have optionality to change your store growth. Under what conditions would Floor & Decor choose to slow down store growth in 2024 and 2025? And then what would you need to see in order to reaccelerate it? And does this have any bearing on the ability to have 500 stores over the long term? I'll take the last part. That's the easy one. No, there's no change in our outlook, as I said in the script. There's no change in our 500 store plans, no, no change in our mid-teen EBITDA margins, EBIT margins. I mean, we don't see much change over the long term. It's just the pace of getting there. What would make me change or reconsider store growth, as we've said historically, and Trevor and Bryan can weigh in, is if the stores, if our liquidity became a challenge and we had to push back capital expenditures, we'd certainly that would give us a moment of pause, or if the returns on the stores, if... You know, right now, to be in this macro environment and still have our new store class at the low end of the pro forma, that's not horrible and considering this macro environment. So if that deteriorated further, then that would give us pause. But as we sit here today, and as we see the world, we're comfortable with giving a range of 30-35. If things deteriorate from here to the next quarter, then we'll let you know. Yeah, Michael, the only thing I was just going to add to that is, you know, if you look at our mature class of stores, you know, our stores doing five—our stores are 5 years or older, they're still doing, you know, $26 million in sales and making $6.1 million in four-wall EBITDA. You know, if you look at our stores that are 10 years older, some of our best classes of stores, you know, they're doing almost $28.6 million in sales and $7 million in four-wall EBITDA. So this is a point in time. It's a rough point in time, right? Arguably, other than the housing recession in 2007 through 2010, you know, this is one of the worst ones. We're very confident that we're going to get well above a 25% cost of capital, return on cost of capital long term, as you think about, because these are obviously, you know, 15-, 20-year investments. So as Tom said, we're going to watch it. We'll be close, but we feel good about where these returns will be long term. My follow-up question is, it's really anyone's guess right, right now, what the comps might be next year, but you have given us a rule of thumb that decremental margins are around 35%. So if you lost $100 million in sales, you'd lose $35 million of profit. Are there any locations or close to any locations where you're running into minimum staffing levels or other constraints such that if you comp down next year at the same rate that you would expect that you are this year, the decremental margins would be worse than your rule of thumb? And does it change at all if more of your comp decline next year is ticket driven rather than traffic driven? Yeah, this is Trevor. About 20% of our stores, maybe just a nudge above that, are on minimum hours today, and our gross margin rate is higher now, you know, than it was then, too. So yeah, I think if things are not at our expectations or if things are worse, I think it's likely you'd see that flow-through rate be a little bit higher. You know, I don't know if it gets to 40%, but I think that is a reasonable expectation. Hey, Michael, this is Bryan. So that, that $0.10 per comp point, 35% flow-through rate, that's usually against the plan, not necessarily year-over-year. To Trevor's point, we do expect modest improvement in gross margin, which will help offset some of that. So when you guys are thinking about your model and you're thinking about the comp, it's really a change in comp against the plan, not necessarily year-over-year, because you always have step investments where you have changes that we can go in and do, but that gross margin is the lever that will help kind of offset some of that. I just want to make one comment on the store labor, that you know, we pay very close attention to our customer service scores and how they feel about their experience within our stores. And as we adjust hours, we're trying to do it where we can take tasks away from the store or where we can change the way we operate, bring things in during the day, do tasking during the day that we've historically done at night, so that we've got good presence on the floor. So as we adjust those hours, we're going to do you know, certainly pay attention to customer experience, because you know, this is... Trevor said, this is a moment in time. We'll get through this, and then when we come out on the other side, we don't want our brand damaged in any way. Thank you very much, and good luck. Thanks, Michael. Our next question is from the line of Chuck Grom with Gordon Haskett. Please proceed with your question. Hey, thanks. Thanks a lot. I'm curious what you're seeing from the competition over the past few months and maybe even in October, particularly independents. Is pricing still rational or have things started to change? I'll start, and I'll let Ersan weigh in, you know, weigh in. I think from you know the big box perspectives, you know, the big box are always, you know, they're always trying to improve, always trying to compete. I wouldn't say that it's much different than it's historically been. So it's just... There are certainly, you know, we have to pay attention, and it's just difficult with the square footage that they dedicate for them to compete with us. On the independents, yeah, I think they're being more aggressive. They're desperate. This is a tough market, and by all indications, you know, if we're struggling on the top line, they're struggling worse. So yeah, I think they're being a little bit more aggressive, but them being aggressive doesn't really bother us because our spread against them is so significant that, you know, we still feel like we compete with them very well. I don't know, Ersan, if you're seeing anything different in the market. No, that's absolutely right. I think the changes that we see are not irrational at all. And then also, in some cases, when there's a promotional activity that we see, there's definitely an inferior quality of the product, not in comparison to what we do, but we're paying close attention to it, nothing irrational. ... Okay, great. And then just holistically, Tom, you know, you talk about holding the 42% gross margin rate, but at what point would you sacrifice that to invest in price and try to induce activity? Or do you feel like the price actions and price reduction efforts that you've made over the past year would tell you that that's not that potentially wouldn't be successful? I guess, how are you thinking about that longer term? Yeah, I would say, you know, we certainly have played around with price in multiple tests, in multiple markets, and we tend to price against ourselves. So our customer comes within the store, and they're trading down to something that we adjust price on. So the only place where we see good traction is in installation materials, which is what the pro buys often. We have been more aggressive on the pricing side on that. We'll continue to be aggressive there because we know that pro's in the store every other week, and we want to make sure that we're getting them taken care of. So, you know, in our ability to grow gross margin, you know, we can still be aggressive within installation materials and be aggressive with price, but because we're getting gross margin from first cost reduction, we're getting it from lower freight expense. Our better and best penetration has really remained unchanged. It's still driving business, so that's growing gross margin and innovation and newness. So this isn't a category where... This is, there's lack of traffic in the marketplace buying the category versus this is a pricing issue. So I feel very comfortable with where our pricing is at, and we'll continue to be aggressive with installation materials, but we'll drive gross margin improvement through our other levers. Okay. Thanks, Tom. Thanks, Bud. Our next question is from the line of Seth Sigman with Barclays. Please proceed with your questions. Hey, everyone. Thanks for taking the question. I wanted to follow up on the slowing performance that you saw in the Q3 and then again into the Q4. What are you seeing in terms of mature stores versus newer stores? And part of it, that is just context around, you know, how you have a lot of new stores that are supposed to come into the comp base here in the Q4. I think they were expected to contribute positively, so I'm curious whether that is part of what's changed here as well. Hey, this is Bryan. So I'll kind of start and let Tom and Trevor jump in if we need to. Yeah, I mean, look, it's. It was kind of broad-based across. We still were positive comps to the class of 2022, so the new stores coming into base were positive in Q3, albeit kind of low single digits, where they were. It's, when you think about it, we comped to -3, still keep that same kind of waterfall that's always there in that 3-4 point range. And so if you think about our most mature stores, they were comping down in that low double-digit range. And so that's kind of held true across the board. So it's, again, just we've seen it across. It's not that our most mature stores are deviating from that trend at all. Got it. Okay. And then just one follow-up question around the Q4, thinking about the margins here. Just trying to go through the math. I mean, you said gross margin should be similar, maybe up sequentially. I mean, does that imply more deleverage than you typically would see? I mean, is there any other reason why you would see that impact? Is that just, you know, weighted store openings in the Q4 or anything else that you would highlight there? Yeah, this is Bryan again, so I'll jump in. So yeah, I mean, look, it's, it's all around the sales decline. So when comps go from 9.3 to down 12, your most mature stores are going to see a little bit more deleverage. That's really what's driving it. So you're right, we should be at, if not modestly above, sequentially in gross margin, so we will delever a little bit more. That's kind of where Tom and Trevor alluded to, is there are things we're going to action. It's just hard to change a business over 30 days, so we're taking a hard look at it. We're taking those actions today in November and into December, but again, we're halfway through the quarter, so that's going to cause a little bit more deleverage. But again, we feel confident that's not the proxy for next year in each quarter. The other just one other thing I would call out is we're opening 15 of our 30-plus stores, and our new stores, SG&A, is materially higher than our mature stores. So we're opening almost, you know, not quite half of our stores in one quarter, and Q4 is a little bit lower volume on a relative basis because of the holidays of Thanksgiving and Christmas. And so it's both what Bryan's saying, plus we have a disproportionate amount of new stores opening in Q4 this year, even though it's the last year. Got it. Okay. Thank you. Our next question is from the line of Steve Forbes with Guggenheim. Please proceed with your question. Good evening, everyone. Tom, maybe just a follow-up on a comment you made about the new class of stores performing at the low end of pro formas, or maybe for Bryan as well. Can you guys just reframe the cost to build year one sales and EBITDA for us, and then comment on how the 2024 class of stores is currently being planned relative to those metrics, given the 4Q to date earnings? Yeah, this is Trevor. I'll jump in, and Bryan and Tom may as well. I mean, and we, we've said for years, that we think new stores do somewhere between $14 million-$16 million in sales and around $3 million in four-wall EBITDA. We're probably going to be slightly below that $14 million in sales, so there's obviously a little bit of profitability, but fortunately, our gross margin rate has gone up, and so our profitability is not going to be down that much, because our gross margin rate is performing nicely. And so overall profitability is not going to be that far off. I think today we're spending, you know, it depends on whether it's a build-to-suit or second use facility, but call it $10 million, $10 million-ish dollars in CapEx. We don't have to spend much on working capital because of our days payable. You know, we put inventory in the stores, but we have pretty long days payable. So it's not much above that $10 million. And, you know, our pro forma is we feel very confident, again, after, you know, opening 200+ stores over the last 12 years we've been here, we're going to get above a 12% return on invested capital when you measure it over, you know, a 20-year period of time. And we've done much better than that in most of our history, but, you know, there's been inflation, and our sales are a little bit lower right now. So hope that answers your question, but, but I think the sales will be lower than that $14 million for a year or so, but the profitability will not be that much off the $3 million because our gross margin rate is higher. What we've seen historically for the stores that open a little bit below that pro forma, for them to get to that $28 million-$30 million, obviously, that's going to be, you know, a comp tailwind, kind of just going to put wind in our sails throughout the next couple of years. You guys think about that, too. So. ... Then just a quick follow-up on the Pro. You mentioned comps for Pro above DIY or the company average. Any specificity there on how the Pro comp is trending in the quarter? It was slightly negative. Thank you. Thank you. Sorry, it's closer to a mid-single digit negative. I apologize. I was looking at a wrong number. Yeah, Q3 from Q2, we did see a little bit more deceleration in our Pro because it was down about—I think we quoted it was down 1% in Q2, and then Q3, it's down roughly about 5.5%. Thank you. In order to allow as many as possible to ask questions, we ask you please limit yourself to one question. Our next question is from the line of Jonathan Matuszewski with Jefferies. Please proceed with your question. Great. Thanks so much. One question with two parts. The first part is on 2024 units. So 2023 has been an odd year in terms of warehouse opening cadence. I think we have around half of them opening in Q4. And I know it's early, but could you give us a ballpark view of the cadence for 2024 and how you're thinking about the split between new and existing? That's the first part. Yeah, this is Trevor. Our cadence will be moderately better. We'll do more in the first half of the year, but we're still probably going to have a decent amount of stores to open in September and December. So the cadence will be better. We'll give you more details on that in the February calls as we finalize up those, but we'll have a little bit more in the back half of the year. What was the second part of the question? Yeah, second part was on the comments about 2024 gross margin being up. And it sounds like supplier concessions may be a primary driver. Just curious whether we need to see, you know, flat behavior from the consumer in terms of, you know, mix. You know, basically, is gross margin expansion possible if we do see a potential trade down from better and best products? I still think so. Yeah, we haven't seen that yet, and we're in... You know, I feel like we're in the worst of it, and we still haven't seen the customer shift down to buying. They're doing smaller projects, but they're not stepping into the opening price point. You know, the good products are still buying more of the better and best. Those continue to lead the way. So and, you know, with all of the things, strategic things that we're doing ourselves between innovation within the category, we'll bring that in to better margin rate, between designer influence on sales. We've got 935 designers in 200 stores. You know, it's that. And they're getting better and better. So their influence on gross margin and selling more additional items to the, you know, to the project that come with higher margin, whether it's trims or drains or whatever. I, I think those things, along with supplier concessions, give us the ability, even if the consumer were to trade, which I don't think would happen, to still grow gross margin. This is Bryan. So just don't forget, too, as I mentioned in the pre-remarks, we're on the weighted average cost. Yeah. All the savings that still continued into this year from supply chain and product costs are going to work their way through into early next year as well. So it's not necessarily you need additional concessions next year to even see that kind of sequential step up a little bit. Thank you. Our next question is from the line of Steven Zaccone with Citi. Please proceed with your question. Yeah, thanks for taking my question. I wanted to follow up on that last point. So the fact that we've seen this better, best side of the business still holding up well, are you concerned that slows into next year? I mean, do you think that we'll likely see trade down? And I guess in that environment, how do you think about your competitive positioning? So, as I've said, and, you know, for this call and a few calls, I don't see it changing. I think that when a consumer, the end user elects to do a project in our category, I think the difference in buying to better and best isn't all that significant. If you think about if they're buying, you know, for a bathroom, to step up to the better and best product isn't all that significant. So, I think the difference is within the looks of the product, the size of the product. I just think I see consumers that elect to do that job to continue to buy the better and best stuff. It just looks that much better within the store. Before Trevor goes, sorry. Just the other thing I was just going to say is that from a competitive standpoint, that's the good thing for us, because on the, on the real better and better stuff, we're competing against the independents. And no matter how irrational, you know, if they get aggressive in their price, we're still going to be so much better for them. Our moat against them is just so wide. So, you know, I just think the projects may continue. The size of projects may continue to be a challenge till, until this passes, but I don't think better and best is going to change significantly. So far, it hasn't. The next question is from the line of Seth Basham with Wedbush Securities. Please proceed with your question. Hi, this is Nathan Friedman on for Seth. Thanks for taking my question. Just wanted to ask about 2024. You mentioned the risk for potentially negative comps, based on the broader environment, but can you help us understand how operating margins would look on low single-digit comps, even after all the cost cuts that you are going to take? Yeah, I was just trying. I think we're just too early to talk about that yet. We're still in the planning process. You know, we kind of gave some of the comments around sales and margin, you know, gross margin and stuff. But, I mean, if comps are negative, I would expect our operating margins to be under pressure. Thank you. Our next question is from the line of Keith Hughes with Truist Securities. Please proceed with your question. ... Thank you. I've spent a lot of time talking to the industry on LVT and issues of importing. Was that an issue for you in the quarter? And I noticed that the laminate LVT category well underperformed the average sales. Can you just, just generally where that product's going? It has nothing to do with in-stock. I mean, our in-stock within the store and in that category is at all-time highs. Our in-stock is great. So do you want to talk anything about the category? I mean, on the laminate and vinyl side, I think it could be related to the, also the job sizes as well. Laminate vinyl mainly go to a bigger room. As the, the job sizes get smaller, and laminate vinyl would be the immediate impact category compared to the others. That's, yeah, that's exactly why you see tile, you know, increasing as a percentage as well. More bathrooms and other things like that. That's right. Just to put a bow on it, yeah, we're doing a lot more smaller projects. We know that's going into a bathroom, and in a bathroom, we're usually doing tile. So that's why the tile business... One of the reasons the tile business is performing so much better than the laminate is you're much more likely to put tile in a bathroom than laminate, even though some of our laminate, you could put in the bathroom. That's right. Our next question is from the line of Andrew Carter with Stifel. Please proceed with your question. Hey, thanks. Building upon that, you're not worried about out-of-stocks right now. I think your purchases were down 8%. How much more do you... Could you continue with kind of negative purchases? And then kind of building on that for cash flow, are you still committed to the kind of three-year CapEx targets you laid out at the Investor Day, therefore, big step up next year? Or does next year look kind of similar to this year in terms of CapEx? Thanks. Yeah, the vast majority of our inventory is replenishment-based, so we buy based on what we sell. And, so I don't think there'll be any big changes. As we mentioned earlier, we made some aggressive moves late last year that are benefiting us on the inventory line. As we get to the end of the year, you know, I would expect our inventory levels to be down, kind of in the mid-single-digit range, is what we're thinking about for that. And the second part of the question again was? CapEx. Yeah, so for next year, as we talk about it, just think about our... The only thing that's going to cause a step-up, and if you remember from the Analyst Day, is the two distribution centers that will have to come online. Right now, those are, one's gonna be late 2024, early 2025, and the other one's gonna be kind of more middle of 2025. Those are the only two reasons that you would see a step investment next year. So you'll see a little bit towards the back half in capital expenditures just for that. Our next question comes from the line of Greg Melich with Evercore ISI. Please proceed with your question. Thanks. I want to follow up on the store openings into next year. You said that, you know, giving yourself some optionality, which makes a lot of sense, but there's still more front-end loaded. Is that because there's a natural cadence of where you're already pregnant with a store and it, you're gonna have to do it? And what is that lead time as you think about, you know, flexibility into the back half next year and beyond? Yeah, so what? Say, repeat the question again. I want to make sure I understand it. Well, I just, you were gonna do 35+ stores next year. Now it's 30-35. So I'm wondering, you know, how... If you decide to not open a store, how much in advance do you have to make that decision before the balls are rolling and- So, yeah, like nine months. So, you know, we have the ability to still... We're not, you know, we're working on all of our sites for next year. We have optionality to do up to 35 sites, but we could push those sites into the following year if we had to, towards the back. So we have optionality on a good majority of the sites, but it takes, you know, nine months to make that decision. Yeah, so the ones that are opening earlier, obviously, they're under construction, and we feel good about them. They're in great locations, and so those are the ones that you want to try to pull in as fast as you can, because, again, some sales are better than no sales, so pushing them out. Thank you. Our last question comes from Justin Kleber with Baird. Please proceed with your question. Hey, thanks. Good evening, everyone. Just wanted to follow up on that new store performance question. My math would suggest your recent stores are annualizing at maybe $10 million or so in year one. It sounds like you'd push back against that, given your comments about the stores being at the low end of, of your pro forma. So just want to clarify, where do you think year one sales are gonna land for recent stores? And then what type of AUV do you need in order to break even on a four-wall basis in year one? Thank you. Yeah, so I'll take the first part of that, and then Tom and Trevor can jump in if they want to add any clarity. Right now, we're looking at this year's class is probably gonna average about 13-14. So whenever we say kind of at or below that, that pro forma range. So I would say that this year's class is looking at 13-14, which again, we're still happy with and pleased with, given the macro environment that they're opening in today. And then I would say from a break-even standpoint, it really depends on location, depends on everything. And so, because the cost structure amongst the class can be significantly different. From a break-even standpoint, we haven't really given that, but most of the time, it's around $8 million-$10 million, depending on where the location is from a break-even standpoint, just given the cost structure. That's right. Okay, well, we appreciate the questions and appreciate your interest. We look forward to updating you throughout the quarter, and we'll talk to you on the next call. Thank you, everybody. Thank you. Goodbye. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.