Floor & Decor Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Nature of Business

Floor & Decor Holdings, Inc., together with its subsidiaries (“Floor & Decor,” the “Company,” “we,” “our,” or “us”) is a high-growth, differentiated, multi-channel specialty retailer of hard surface flooring and related accessories and seller of commercial surfaces. The Company offers a broad in-stock assortment of laminate and vinyl, tile, wood, and natural stone flooring and installation materials and decorative accessories, as well as adjacent categories, at everyday low prices. Our stores appeal to a variety of customers, including professional installers and commercial businesses (“Pro”) and homeowners, which are comprised of do-it-yourself customers (“DIY”) and buy-it-yourself customers, who buy our products for professional installation (“BIY”).

As of June 25, 2026, the Company, through its wholly owned subsidiary, Floor and Decor Outlets of America, Inc. (“Outlets”), operates 281 warehouse-format stores, which average 75,000 square feet, andfive small-format standalone design studios in 39 states, as well asfive distribution centers, a website, FloorandDecor.com, and a commercial surfaces business through its subsidiary, Spartan Surfaces, LLC (“Spartan”). Substantially all of the Company’s operating assets and liabilities are held by Outlets.

Fiscal Year

The Company’s fiscal year is the 52- or 53-week period ending on the Thursday on or preceding December 31st. The fiscal year ending December 31, 2026 (“fiscal 2026”) includes 53 weeks and the fiscal year ended December 25, 2025 (“fiscal 2025”) included 52 weeks. 52-week fiscal years consist of thirteen-week periods in each quarter of the fiscal year. When a 53-week fiscal year occurs, the Company reports the additional week at the end of the fiscal fourth quarter.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The Condensed Consolidated Balance Sheet as of December 25, 2025 has been derived from the audited Consolidated Balance Sheet for the fiscal year then ended. The interim condensed consolidated financial statements should be read together with the audited consolidated financial statements and related footnote disclosures included in the Company’s Annual Report on Form 10-K for fiscal 2025, filed with the SEC on February 19, 2026 (the “Annual Report”). Certain prior period amounts have been reclassified to conform with the current period presentation. Management believes the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of results for the interim periods presented. Results of operations for the thirteen and twenty-six weeks ended June 25, 2026 are not necessarily indicative of the results to be expected for the full year.

Summary of Significant Accounting Policies

There were no significant changes to our Significant Accounting Policies as disclosed in the Annual Report. For more information regarding our Significant Accounting Policies and Estimates, see Note 1, “Summary of Significant Accounting Policies” in Part II, Item 8, “Financial Statements and Supplementary Data” of our Annual Report.

Recently Adopted Accounting Pronouncements

The Company did not adopt any new accounting pronouncements during the twenty-six weeks ended June 25, 2026 that had a material impact on the Company’s financial position, results of operations, or cash flows.

Recently Issued Accounting Pronouncements

There were no significant changes in the recently issued accounting pronouncements from those disclosed in Note 1, “Summary of Significant Accounting Policies” in Part II, Item 8, “Financial Statements and Supplementary Data” of our Annual Report. Recently issued accounting pronouncements not disclosed in this Quarterly Report or in the Annual Report are either not applicable to the Company or are not expected to have a material impact to the Company.

2. Revenue

Net sales consist of revenue associated with contracts with customers for the sale of goods and services in amounts that reflect the consideration the Company is entitled to receive in exchange for those goods and services.

Deferred Revenue & Contract Liabilities

In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when the customer obtains control of the inventory. Amounts in deferred revenue at period-end reflect orders for which the inventory was not yet ready for physical transfer to customers.

Contract liabilities within the Condensed Consolidated Balance Sheets primarily consisted of deferred revenue as well as amounts in accrued expenses and other current liabilities related to our Pro Premier Rewards loyalty program and unredeemed gift cards. As of June 25, 2026, contract liabilities totaled $82.9 million and included $59.5 million of loyalty program liabilities, $13.4 million of deferred revenue, and $10.0 million of unredeemed gift cards. As of December 25, 2025, contract liabilities totaled $77.9 million and included $57.9 million of loyalty program liabilities, $10.7 million of deferred revenue, and $9.3 million of unredeemed gift cards. Of the contract liabilities outstanding as of December 25, 2025, approximately $14.8 million was recognized in revenue during the twenty-six weeks ended June 25, 2026.

Disaggregated Revenue

The Company hasone reportable segment. The following tables present the net sales of each major product category:

(1)Other includes delivery, sample, and other product revenue and adjustments for deferred revenue, sales returns reserves, and other revenue related adjustments that are not allocated on a product-category basis.

3. Debt

On June 24, 2026, the Company refinanced its senior secured term loan credit facility due February 14, 2027 (“2016 Term Loan Facility”) by entering into a new $200.0 million senior secured term loan credit facility due June 24, 2033 (“2026 Term Loan Facility”). Proceeds from the 2026 Term Loan Facility were used to repay the remaining $197.1 million outstanding under the 2016 Term Loan Facility. The 2026 Term Loan Facility includes an incremental facility feature that allows the Company, under certain circumstances, to increase the size of the facility by an amount up to the sum of (i) the greater of (x) $530.0 million or (y)100% of Consolidated EBITDA (as defined in the 2026 Term Loan Facility), plus (ii) an additional amount based on certain leverage incurrence conditions, in each case, subject to certain additional adjustments.

In connection with the refinancing of the 2016 Term Loan Facility, the Company recognized a $1.1 million loss on extinguishment of debt during the thirteen weeks ended June 25, 2026. The Company incurred $4.7 million of debt issuance costs and original issue discounts related to the 2026 Term Loan Facility.

On June 24, 2026, the Company refinanced its senior secured asset-based loan (“ABL”) facility maturing on August 4, 2027 (“2016 ABL Facility”) by entering into a new senior secured ABL facility maturing on June 24, 2031 (“2026 ABL Facility”). The aggregate revolving commitments under the 2026 ABL Facility remain the same as under the 2016 ABL Facility at $800.0 million. The 2026 ABL Facility allows the Company, under certain circumstances, to increase the size of the facility by an amount up to $200.0 million.

In connection with the refinancing of the 2016 ABL Facility, the Company recognized a $0.2 million loss on extinguishment of debt during the thirteen weeks ended June 25, 2026. The Company incurred $2.8 million of deferred financing costs related to the 2026 ABL Facility.

The following table summarizes the Company’s long-term debt as of June 25, 2026 and December 25, 2025:

The following table summarizes scheduled maturities of the Company’s debt as of June 25, 2026:

Components of interest expense are as follows for the periods presented:

(1)For the thirteen and twenty-six weeks ended June 25, 2026, the amount includes interest income related to the Company’s cash on hand and statutory interest on International Emergency Economic Powers Act (“IEEPA”) tariff refunds. For the thirteen and twenty-six weeks ended June 26, 2025, the amount includes interest income related to the Company’s cash on hand.

Term Loan Facility

The 2026 Term Loan Facility bears interest, at the Company’s option, at an annual rate equal to Adjusted Term Secured Overnight Financing Rate (“SOFR”) or the Alternate Base Rate (“ABR”) (each as defined in the 2026 Term Loan Facility), in each case, plus an applicable margin. The applicable margin equals (i) with respect to SOFR Loans (as defined in the 2026 Term Loan Facility),2.00% per annum and (ii) with respect to ABR Loans (as defined in the 2026 Term Loan Facility),1.00% per annum.

All obligations under the 2026 Term Loan Facility are secured by (1) a first-priority security interest in substantially all of the property and assets of Outlets and the other guarantors under the 2026 Term Loan Facility (other than the collateral that secures the 2026 ABL Facility on a first-priority basis), with certain exceptions, and (2) a second-priority security interest in the collateral securing the 2026 ABL Facility on a first-priority basis.

ABL Facility

Borrowings under the 2026 ABL Facility bear interest, at the Company’s option, at a rate equal to Term SOFR, Daily SOFR, or the Base Rate (each as defined in the 2026 ABL Facility), in each case plus an applicable margin. The applicable margin equals (i) with respect to Term SOFR Loans, Daily SOFR Loans and Letter of Credit Fees for Standby Letters of Credit (each as defined in the 2026 ABL Facility),1.125% per annum, (ii) with respect to Base Rate Loans (as defined in the 2026 ABL Facility),0.125% per annum and (iii) with respect to Letter of Credit Fees for Commercial Letters of Credit (as defined in the 2026 ABL Facility),0.75%.

The 2026 ABL Facility has actual available borrowings limited to a borrowing base comprised of eligible credit card receivables, inventory, trade receivables, cash on hand, and letter of credit exposure, each subject to specified advance rates, appraisal percentages, or reserves (each as defined in the 2026 ABL Facility). The 2026 ABL Facility is available for issuance of letters of credit and contains a sublimit of $95.0 million for standby letters of credit and commercial letters of credit combined, with available borrowings reduced by the face amount of outstanding letters of credit.

All obligations under the 2026 ABL Facility are secured by (1) a first-priority security interest in the cash and cash equivalents, accounts receivable, inventory, and related current assets of Outlets and the other guarantors under the 2026 ABL Facility, with certain exceptions, and (2) a second-priority security interest in substantially all of the other property and assets of Outlets and the other guarantors that secure the 2026 Term Loan Facility on a first-priority basis.

As of June 25, 2026, net availability under the 2026 ABL Facility was $621.8 million as reduced by letters of credit of $73.2 million.

Covenants

The credit agreements governing the 2026 Term Loan Facility and 2026 ABL Facility contain customary restrictive covenants, which, among other things and with certain exceptions, limit the Company’s ability to (i) incur additional indebtedness and liens in connection with such indebtedness, (ii) pay dividends and make certain other restricted payments, (iii) effect mergers or consolidations, (iv) enter into transactions with affiliates, (v) sell or dispose of property or assets, and (vi) engage in unrelated lines of business. In addition, these credit agreements subject the Company to certain reporting obligations and require that the Company satisfy certain financial covenants, including, among other things, a requirement that if borrowings under the 2026 ABL Facility exceed 90% of availability, the Company will maintain a certain fixed charge coverage ratio (defined as Consolidated EBITDA less non-financed capital expenditures and income taxes paid to consolidated fixed charges, in each case as more fully defined in the 2026 ABL Facility).

The 2026 Term Loan Facility has no financial maintenance covenants. The Company is currently in compliance with all covenants under the credit agreements.

Fair Value of Debt

Market risk associated with the Company’s debt relates to the potential change in fair value and negative impact to future earnings, respectively, from a change in interest rates. The aggregate fair value of debt is based primarily on the Company’s estimates of interest rates, maturities, credit risk, and underlying collateral. The estimated fair value and classification within the fair value hierarchy of the 2026 Term Loan Facility and 2016 Term Loan Facility was as follows as of June 25, 2026 and December 25, 2025, respectively:

The 2026 Term Loan Facility and 2016 Term Loan Facility fair values are classified as Level 3 within the fair value hierarchy due to the use of unobservable inputs significant to the valuation, including indicative pricing from counterparties and discounted cash flow methods. No amounts were outstanding under the 2026 ABL Facility and 2016 ABL Facility as of June 25, 2026 and December 25, 2025, respectively.

4. Income Taxes

Effective tax rates for the thirteen and twenty-six weeks ended June 25, 2026 and June 26, 2025 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within each period. The Company’s effective income tax rate was 23.3% and 21.8% for the thirteen weeks ended June 25, 2026 and June 26, 2025, respectively. The effective tax rate increase during the thirteen weeks ended June 25, 2026 was primarily due to a decrease in federal tax credits.

The Company’s effective income tax rate was 23.1% and 21.9% for the twenty-six weeks ended June 25, 2026 and June 26, 2025, respectively. The effective tax rate increase during the twenty-six weeks ended June 25, 2026 was primarily due to a decrease in excess tax benefits related to stock-based compensation awards.

5. Commitments and Contingencies

Lease Commitments

The Company accounts for leases in accordance with ASC 842, Leases. The majority of the Company’s long-term operating lease agreements are for its retail locations, distribution centers, and corporate office, which expire in various years through 2055. Most of these agreements are retail leases wherein both the land and building are leased. The Company also has ground leases in which only the land is leased. The initial lease terms for the Company’s retail locations, distribution centers, and corporate office typically range from 10-20 years. The majority of the Company’s leases also include options to extend, which are factored into the recognition of their respective assets and liabilities when appropriate based on management’s assessment of the probability that the options will be exercised.

When readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. If the rate implicit in the lease is not readily determinable, the Company uses a third party to assist in the determination of a secured incremental borrowing rate, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. The secured incremental borrowing rate is estimated based on yields obtained from Bloomberg for U.S. consumers with a BB credit rating and is adjusted for collateralization as well as inflation. As of June 25, 2026 and June 26, 2025, the Company’s weighted average discount rate was 6.1% and 6.0%, respectively. As of both June 25, 2026 and June 26, 2025, the weighted average remaining lease term of the Company’s leases was approximately 12 years.

Lease Costs

The table below presents components of lease expense for operating leases within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income:

(1)Includes variable costs for common area maintenance, property taxes, and insurance on leased real estate.

(2)Excludes short-term lease costs, which were immaterial for the thirteen and twenty-six weeks ended June 25, 2026 and June 26, 2025.

Undiscounted Cash Flows

Future minimum lease payments under non-cancelable operating leases as of June 25, 2026 were as follows:

(1)Future lease payments exclude approximately $17.4 million of legally binding minimum lease payments for operating leases signed but not yet commenced.

(2)Operating lease payments include $288.7 million related to options to extend lease terms that are reasonably certain of being exercised.

For the twenty-six weeks ended June 25, 2026 and June 26, 2025, cash paid for amounts included in the measurement of operating lease liabilities was $132.4 million and $121.3 million, respectively.

Litigation

The Company is subject to various legal actions, claims, and proceedings arising in the ordinary course of business, which may include claims related to general liability, workers’ compensation, personal injury, product liability, intellectual property, and employment-related matters resulting from its business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company establishes reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. These various ordinary course proceedings are not expected to have a material impact on the Company’s consolidated financial position, cash flows, or results of operations. Regardless of the outcome, however, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

Tariffs

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under IEEPA. On March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to begin refunding all tariffs imposed under IEEPA. On April 20, 2026, CBP launched a formal process for submitting IEEPA refund claims, through which the Company filed its refund claims.

At the time of the Supreme Court ruling, the Company had paid approximately $87 million of IEEPA tariffs. The Company has concluded that the receipt of the refund of the previously paid IEEPA tariffs is probable and applied the loss recovery model. As of June 25, 2026, the Company had received approximately $7 million in tariff refund payments and recognized approximately $80 million in receivables, net. During the thirteen weeks ended June 25, 2026, the Company recognized a one-time benefit of approximately $56 million of the refund through cost of sales. The remaining amount was recognized as a reduction to inventories, net, related to previously capitalized IEEPA tariffs and will be recognized through cost of sales as the related inventory is sold.

Statutory interest associated with refunded IEEPA tariffs was recognized in interest (income) expense, net during the thirteen weeks ended June 25, 2026.

Subsequent to June 25, 2026, the Company received tariff refund payments of approximately $80 million.

6. Stockholders’ Equity

In accordance with ASC 718, Compensation – Stock Compensation, the Company measures compensation cost for all stock-based awards at fair value on the date of grant and recognizes compensation expense, net of forfeitures, using the straight-line method over the requisite service period of awards expected to vest, which for each of the awards is the service vesting period. Stock-based compensation expense within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income for the twenty-six weeks ended June 25, 2026 and June 26, 2025 was $15.9 million and $15.5 million, respectively.

Stock Options

The table below summarizes stock option activity for the twenty-six weeks ended June 25, 2026:

Restricted Stock Units

The Company periodically grants restricted stock units (“RSUs”), each of which represents an unfunded, unsecured right to receive a share of the Company’s Class A common stock upon vesting. During the twenty-six weeks ended June 25, 2026, the Company granted RSUs to certain employees, executive officers, and non-employee directors comprised of service-based RSUs and performance-based RSUs. Service-based RSUs vest based on the grantee’s continued service through the vesting date. The performance-based RSUs cliff vest based on (i) the Company’s achievement of predetermined financial metrics at the end of athree-year performance period and (ii) the grantee’s continued service through the vesting date. Depending on the extent to which the relevant performance goals are achieved, the number of common shares earned upon vesting may range from 0% to 200% of the award granted. The Company assesses the probability of achieving all performance goals on a quarterly basis. The service period for RSUs granted during the period varies by grantee and isone year from the grant date for non-employee directors andtwo tothree years from the grant date for employees and executive officers. The grant-date fair value of service-based RSUs and performance-based RSUs is based on the closing market price of the Company’s Class A common stock on the date of grant.

The following table summarizes RSU activity during the twenty-six weeks ended June 25, 2026:

Share Repurchase Program

On April 23, 2026, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $400.0 million of the Company’s common stock. The share repurchase program has no expiration date and does not obligate the Company to repurchase any shares under the program. As of June 25, 2026, the Company had remaining authorization under the share repurchase program of $334.3 million.

The following table summarizes the Company’s share repurchase activity for the periods presented:

(1)Amounts exclude applicable excise tax.

7. Earnings Per Share

Net Income per Common Share

The Company calculates basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effect of share-based awards using the treasury stock method.

The following table shows the computation of basic and diluted earnings per share for the periods presented:

The following potentially dilutive securities were excluded from the computation of diluted earnings per share as a result of their anti-dilutive effect:

8. Fair Value Measurements

As of June 25, 2026 and December 25, 2025, the Company had certain financial assets and liabilities on its Condensed Consolidated Balance Sheets that were required to be measured at fair value on a recurring or non-recurring basis. The estimated fair values of financial assets and liabilities such as cash and cash equivalents, receivables, prepaid expenses and other current assets, other assets, accounts payable, and accrued expenses and other current liabilities approximate their respective carrying values as reported within the Condensed Consolidated Balance Sheets. See Note 3, “Debt” for discussion of the fair value of the Company’s debt.

Contingent Earn-out Liability

As of December 25, 2025, the Company’s remaining contingent earn-out liability was $0.8 million, which was paid during the twenty-six weeks ended June 25, 2026.

Interest Rate Cap Contract

Changes in interest rates impact the Company’s results of operations. From time to time, the Company may enter into derivative contracts to manage exposure to this risk and may adjust its derivative portfolio as market conditions change.

The Company’s interest rate cap contract, which was designated as a cash flow hedge, matured in April 2026. The contract had a notional value of $150.0 million and effectively capped SOFR-based interest payments on a portion of the Company’s 2016 Term Loan Facility at 5.50%. As of December 25, 2025, the fair value of the interest rate cap was less than $0.1 million and was included in prepaid expenses and other current assets within the Condensed Consolidated Balance Sheets.

9. Supply Chain Finance

The Company facilitates supply chain finance programs through financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. When a supplier utilizes one of the supply chain finance programs and receives an early payment from a financial intermediary, the supplier takes a discount on the invoice. The Company then pays the financial intermediary the full amount of the invoice on the original due date. The Company does not reimburse suppliers for any costs they incur for participation in the program. Supplier participation is voluntary, and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the financial intermediaries. As a result, all amounts owed to the financial intermediaries are presented as trade accounts payable in the Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected intrade accounts payable at June 25, 2026 and December 25, 2025 were $152.9 million and $133.2 million, respectively.

10. Segment Reporting

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM, its Chief Executive Officer, reviews financial information about the Company’stwo operating segments, Floor & Decor Retail (“Retail”) and Spartan, for purposes of allocating resources and evaluating financial performance. The Retail segment sells hard surface flooring and related accessories through retail stores located in the United States and through its website. The Spartan segment, which engages in selling commercial surfaces and is entirely comprised of the Company’s Spartan subsidiary, does not meet the materiality criteria of ASC 280, Segment Reporting, and is therefore not disclosed separately as a reportable segment.

The Company does not report capital expenditures or assets at the segment level as that information is not regularly provided to the CODM. The Company does not have intersegment sales.

The following tables show the Company’s segment information for the periods presented:

(1)Represents the Company’s non-reportable operating segment.

(2)Personnel expense is primarily comprised of store and store support center compensation including wages, incentive compensation, and benefits.

(3)Property cost is primarily comprised of rent, common area maintenance, utilities, property taxes, and insurance, as well as depreciation and amortization of leasehold improvements, buildings and improvements, furniture, fixtures, and equipment, and computer software and hardware at stores and the store support center.

(4)Other segment items expense is comprised of advertising costs, credit card fees, information technology costs, and other operating expenses.

(5)Includes depreciation and amortization expense of $61.6 million and $58.1 million for the thirteen weeks ended June 25, 2026 and June 26, 2025, respectively, and $121.0 million and $116.3 million for the twenty-six weeks ended June 25, 2026 and June 26, 2025, respectively, in our Retail segment.