Lumber Liquidators Investor Presentation May 2018 Safe Harbor The - PowerPoint PPT Presentation

Lumber Liquidators Investor Presentation May 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 Act; the inability to open new stores; capital expenditures; managing growth; increased transportation costs; damage to our assets; operating stores in Canada and an office in China; managing third-party installers; renewing leases; having sufficient 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 antidumping and countervailing duties, as well as other governmental measures aimed at balancing trade; availability of suitable hardwood; changes in economic conditions, both domestic and abroad; sufficient insurance coverage; access to capital; 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 SG&A; (ii) Adjusted SG&A as a percentage of sales; and (iii) Adjusted Operating Income (Loss). 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 46 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 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 – 398 Store Network Characteristics at 3/31/2018 400 • Small stores that can become profitable quickly 300 • Expedited new store openings Opened 400 th store in Q2 2018 • 200 • Store opening strategy of 20 to 25 new 100 stores per year 2010 2011 2012 2013 2014 2015 2016 2017 • 6 Targeting 500+ stores by 2022

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 $46.6 Retail Sales Dollar Estimate CAGR: 5.8% $44.6 $42.8 $39.3 $36.3 Hard- Surface Mix $34.1 $33.3 Hard-Surface Mix 52.9% Hard- Surface Mix 50.7% Hard-Surface Mix 50.0% CAGR: 8.2% Hard-Surface Mix 49.2% 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 47.1% 49.3% 50.0% 50.8% 52.7% 53.8% 53.1% CAGR: 3.5% 2010 2011 2012 2013 2014 2015 2016 Soft-Surface Flooring $ Sales Hard-Surface Flooring $ Sales $ billions Source: Floor Covering Weekly Statistical Report, 2014, 2015, 2016 Report *MSRP $ is based on an estimate using the MSP $ data 7

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 • National scale, advertising and sourcing leverage 1.4% Big Box • Small stores, showing wide selection in convenient, 14.9% FND accessible format 1.0% • Personnel with specific flooring expertise that TTS Other customers value 0.5% 9.3% Floor Covering • Installation services offered nationally, creating Stores seamless project management capability Internet 47.8% • Developing Pro business leveraging local relationships, service offerings, tailored products and prices Contractor • 21.9% Pricing advantages through volume sales and promotional opportunities Source: Floor Covering Weekly 2016 Statistical Report, July 24, 2017 Big Box includes Home Depot, Lowe’s and Menards stores 8 Other includes other specialty, home décor, furniture, department, discount stores

Sales: resilient and growing • Net sales impacted by product quality concerns in 2015, adjustments in sourcing, and SKU optimization • 2017 marked the first year of revenue growth since 2014 +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

Product diversification enhances competitive position • Supplemented our core hardwood business with strong bamboo and vinyl plank businesses • Opportunity to grow our wood-look tile • Installation now offered nationally as part of strategy to expand customer base among do-it-for-me shoppers and provide seamless experience 2014 2017 Solid & Engineered Hardwood, Bamboo 3% and Cork 9% Manufactured 20% Products* 19% 42% 53% Moldings & 24% Accessories 30% Installation and Delivery Services *Manufactured Products includes laminate, vinyl, engineered vinyl plank and wood-look ceramic tile. 10