Lumber Liquidators Investor Presentation August 2018 Safe Harbor - PowerPoint PPT Presentation

Lumber Liquidators Investor Presentation August 2018

Safe Harbor The following information includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” “potential” and other similar terms and phrases, are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements may include, without limitation, statements regarding: government investigations and related legal proceedings; other current and former legal proceedings; obligations under various settlement agreements and other compliance matters; impact of liquidity in the settlement of legal proceedings; new laws and regulations; impact of the Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”); the maintenance of valuation allowances on deferred tax assets and the impacts thereof; the inability to open new stores; capital expenditures; funding of the remaining portion of the obligation for the multidistrict litigation; managing growth; increased transportation costs; damage to our assets; disruption in our ability to finish and distribute our products; disruptions related to our corporate headquarters relocation; operating stores in Canada and an office in China; managing third-party installers; renewing store and warehouse leases; having sufficient suppliers; disruption in our ability to obtain products from our suppliers; our, and our suppliers’, compliance with complex and evolving rules, regulations, and laws at the federal, state, and local level; product liability claims; obtaining products from abroad, including effects of tariffs, as well as effects of antidumping and countervailing duties; availability of suitable hardwood; changes in economic conditions, both domestic and abroad; sufficient insurance coverage; access to capital; disruption due to cybersecurity threats; handling of confidential customer information; management information systems disruptions; alternative e-commerce offerings; our advertising strategy; anticipating consumer trends; competition; internal controls; impact of changes in accounting guidance; stock price volatility; and anti-takeover provisions. We specifically disclaim any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. Information regarding these and other additional risks and uncertainties is contained in our other reports filed with the Securities and Exchange Commission, including the Item 1A, “Risk Factors,” section of the Form 10-K for the year ended December 31, 2017. Please also refer to the financial statements and notes and management discussion included in our annual report on Form 10-K and our quarterly reports on Form 10-Q for definitions of key terms including comparable store net sales, average sale, comparable store traffic and SG&A expenses. 2

Non-GAAP Financial Measures To supplement the financial measures prepared in accordance with GAAP, we use the following non-GAAP financial measures: (i) Adjusted Gross Margin; (ii) Adjusted SG&A (percentage of sales); (iii) Adjusted Operating Margin; and (iv) Adjusted SG&A. The non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies. The non-GAAP financial measures are presented because management uses these non-GAAP financial measures to evaluate our operating performance and to determine incentive compensation. Therefore, we believe that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. The presented non-GAAP financial measures exclude items that management does not believe reflect our core operating performance, which include regulatory and legal settlements and associated legal and operating costs, and changes in antidumping and countervailing duties, as such items are outside of our control or due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. 3

Lumber Liquidators Leading North American multi-channel specialty retailer providing a complete purchasing solution and broad product selection to the hard surface flooring market • Founded in 1994; IPO in 2007 • NYSE: LL; recent market cap: ~$600M • Over 400 stores in 47 states and Canada • Extensive assortment: solid and engineered hardwoods, laminates, vinyl, bamboo, cork, wood-look tile • Enhanced customer experience enabled by smaller store format and 1:1 engagement with knowledgeable and trained store associates • Bicoastal distribution centers total over 1.5M square feet • Headquartered in Toano, Virginia • Relocating to Richmond, VA in Q4 2019 4

Investment highlights Favorable Growing demand for hard surface flooring driving significant opportunity across price points and materials Industry Dynamics Differentiated Quality products, wide selection, attractive prices, national market coverage with brick and mortar locations, and limited online competition Business Model Improving Improving gross margin profile, scalable cost structure, and sufficient liquidity, combined with disciplined capital allocation to drive shareholder value Financials Strong Strategic team with balance of brick and mortar retail, home improvement, and multi-channel expertise Management Team 5

Large and growing store network Far Reaching National Store Network Total Store Count – 407 Store Network Characteristics at 7/31/2018 400 • Small stores that can become profitable quickly • Expedited new store openings 300 • Opened 400 th store in Q2 2018 200 • Store opening strategy of 20 to 25 new stores per year 100 • Targeting 500+ stores by 2022 2010 2011 2012 2013 2014 2015 2016 2017 2018 6

Growth in hard-surface outpacing soft-surface • Long-term declines in soft flooring have been driven by hygiene, pets and potential trip hazards Floor Covering Product Sales $48.4 Retail Sales Dollar Estimate $46.6 CAGR: 5.5% $44.6 $42.8 $39.3 Hard- Surface Mix $36.3 Hard- Surface Mix 54.6% Hard-Surface Mix $34.1 52.9% Hard- Surface Mix CAGR: 8.0% $33.3 50.7% 50.0% Hard-Surface Mix 49.2% Hard-Surface Mix Hard-Surface Mix Hard-Surface Mix 47.3% 46.9% 46.2% Soft Surface Mix Soft-Surface Mix Soft-Surface Mix Soft Surface Mix Soft Surface Mix Soft Surface Mix Soft Surface Mix Soft Surface Mix 53.8% 53.1% 52.7% 50.8% 50.0% 49.3% 47.1% 45.4% CAGR: 3.0% 2010 2011 2012 2013 2014 2015 2016 2017 Soft-Surface Flooring $ Sales Hard-Surface Flooring $ Sales $ billions Source: Floor Covering Weekly Statistical Report, 2015, 2016, 2017 Report 7 *MSRP $ is based on an estimate using the MSP $ data

Market remains fragmented with significant opportunity • Almost half of the industry consists of local one-store flooring retailers and small regional chains that may specialize in one or two flooring categories Our Unique Business Model Flooring Sales by Seller LL 1.5% • National scale, advertising and sourcing leverage Big Box • Small stores, showing wide selection in convenient, 16.3% FND accessible format 2.1% • Personnel with specific flooring expertise that TTS Other customers value 0.5% 8.6% • Floor Covering Installation services offered nationally, creating Stores Internet seamless project-management capability 46.0% 1.8% • Developing Pro business leveraging local relationships, service offerings, tailored products and prices Contractor 23.2% • Pricing advantages through volume sales and promotional opportunities Source: Floor Covering Weekly 2017 Statistical Report, July 23, 2018 Big Box includes Home Depot and Lowe’s stores Other includes other specialty, home furnishing, direct seller, furniture, department, and discount stores 8

Sales: resilient and growing Revenue rebounded beginning in 2017 after being impacted by issues in 2015 and assortment optimization in 2016 +6 to +8% $1,080 - $1,047 $979 $961 $1,028 $1,100 $1,000 $813 $682 $620 $545 $482 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Guidance Store Count 150 186 223 263 288 318 352 370 383 393 413 - 418 Store 5.1%- 29.3% 24.0% 19.9% 17.9% 9.5% 10.4% 10.7% 5.1% 3.5% 3.1% Growth 6.9% Total % Chg. 19.0% 12.9% 13.9% 9.9% 19.3% 23.0% 4.7% (6.5%) (1.8%) 7.1% 6 - 8% Comp % 1.6% FLAT 2.1% (2.0)% 11.4% 15.8% (4.3)% (11.1%) (4.6%) 5.4% 4 - 6% $ millions 9