Tile Shop Holdings, Inc. (Nasdaq: TTSH) (the “Company”), a
specialty retailer of natural stone, man-made and luxury vinyl
tiles today announced results for its first quarter ended March 31,
2024.
First Quarter 2024 Summary
Net Sales Decreased
10.1%Comparable Store Sales Decreased
10.2% Gross Margin of 65.8%Net
Income of $1.7 Million and Adjusted EBITDA of $7.4
MillionDiluted Earnings per Share of
$0.04Cash Provided by Operating Activities of
$18.6 MillionEnding Cash Balance of $24.0 Million
and No Long-Term Debt
Management Commentary – Cabell Lolmaugh,
CEO
“Continued softness in existing home sales contributed to lower
levels of traffic in our stores and had an adverse impact on our
comparable store sales during the first quarter of 2024. Despite
these challenges, we saw an improvement in our gross margin rate
and were able to generate strong operating cash flow. Additionally,
we were able to make significant inroads executing our key
strategies and controlling costs.”
|
|
Three Months Ended |
|
(unaudited, dollars in thousands, except per |
|
March 31, |
|
share data) |
|
2024 |
|
2023 |
|
Net sales |
|
$ |
91,728 |
|
|
$ |
102,019 |
|
|
Net sales decline(1) |
|
|
(10.1 |
) |
% |
|
(0.4 |
) |
% |
Comparable store sales (decline) growth(2) |
|
|
(10.2 |
) |
% |
|
0.1 |
|
% |
Gross margin rate |
|
|
65.8 |
|
% |
|
64.2 |
|
% |
Income from operations as a % of net sales |
|
|
2.5 |
|
% |
|
4.0 |
|
% |
Net income |
|
$ |
1,689 |
|
|
$ |
2,512 |
|
|
Net income per diluted share |
|
$ |
0.04 |
|
|
$ |
0.06 |
|
|
Adjusted EBITDA |
|
$ |
7,417 |
|
|
$ |
10,313 |
|
|
Adjusted EBITDA as a % of net sales |
|
|
8.1 |
|
% |
|
10.1 |
|
% |
Number of stores open at the end of period |
|
|
142 |
|
|
|
142 |
|
|
(1) As compared to the prior year
period.
(2) The comparable store sales operating
metric is the percentage change in sales of comparable stores
period over period. A store is considered comparable on the first
day of the 13th full month of operation. When a store is relocated,
it is excluded from the comparable store sales calculation.
Comparable store sales includes total charges to customers less any
actual returns. The Company includes the change in allowance for
anticipated sales returns applicable to comparable stores in the
comparable store sales calculation.
FIRST QUARTER 2024
Net SalesNet sales for the
first quarter of 2024 decreased $10.3 million, or 10.1%,
compared to the first quarter of 2023. Sales decreased at
comparable stores by 10.2% during the first quarter of 2024
compared to the first quarter of 2023 principally due to a decrease
in traffic.
Gross ProfitGross profit
decreased $5.2 million, or 8.0%, in the first quarter of 2024
compared to the first quarter of 2023. The gross margin rate was
65.8% for the first quarter of 2024, which represents a 160 basis
point increase compared to the gross margin rate of 64.2% during
the first quarter of 2023. The improvement in gross margin rate was
primarily due to lower levels of international freight and
decreases in product costs.
Selling, General and Administrative
ExpensesSelling, general and administrative expenses
decreased $3.4 million, or 5.5%, from $61.4 million in
the first quarter of 2023 to $58.0 million in the first
quarter of 2024. The decrease was due to a $2.9 million decrease in
variable costs and a $1.0 million decrease in depreciation expense,
which were partially offset by a $0.6 million increase in rent
expense.
Provision for Income TaxesThe
provision for income taxes for the first quarter of 2024 and 2023
was $0.4 million and $0.8 million respectively. The decrease in the
provision for income tax was due to a decrease in pretax income.
The Company’s effective tax rate was 20.2% and 24.5% in the first
quarter of 2024 and 2023, respectively. The decrease in the
effective tax rate was largely due to an increase in the tax
benefit associated with employee equity award vestings that
occurred during the first quarter of 2024.
Capital Structure and LiquidityAs of March 31,
2024 the Company had no borrowings outstanding on its $75.0 million
line of credit. Cash and cash equivalents increased $15.4 million
from $8.6 million on December 31, 2023 to $24.0 million on March
31, 2024.
NON-GAAP INFORMATION
Adjusted EBITDA
Adjusted EBITDA for the first quarter of 2024
was $7.4 million compared with $10.3 million for the first quarter
of 2023. See the table below for a reconciliation of GAAP net
income to Adjusted EBITDA.
|
Three Months Ended |
($ in thousands, unaudited) |
March 31, |
|
2024 |
|
% of net sales |
|
2023 |
|
% of net sales(1) |
GAAP net income |
$ |
1,689 |
|
1.8 |
% |
|
$ |
2,512 |
|
2.5 |
% |
Interest expense |
|
166 |
|
0.2 |
|
|
|
798 |
|
0.8 |
|
Provision for income taxes |
|
428 |
|
0.5 |
|
|
|
815 |
|
0.8 |
|
Depreciation and amortization |
|
4,742 |
|
5.2 |
|
|
|
5,783 |
|
5.7 |
|
Stock-based compensation |
|
392 |
|
0.4 |
|
|
|
405 |
|
0.4 |
|
Adjusted EBITDA |
$ |
7,417 |
|
8.1 |
% |
|
$ |
10,313 |
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts do not foot due to
rounding.Pretax Return on Capital Employed
Pretax Return on Capital Employed was 11.3% for
the trailing twelve months as of the end of the first quarter in
2024 compared to 15.2% for the trailing twelve months as of the end
of the first quarter in 2023. See the Pretax Return on Capital
Employed calculation in the table below.
($ in thousands, unaudited) |
|
March 31, |
|
|
|
2024(1) |
|
2023(1) |
|
Income from Operations (trailing twelve months) |
|
$ |
14,316 |
|
|
$ |
21,998 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
322,685 |
|
|
|
346,695 |
|
|
Less: Accounts payable |
|
|
(24,560 |
) |
|
|
(28,002 |
) |
|
Less: Income tax payable |
|
|
(652 |
) |
|
|
(850 |
) |
|
Less: Other accrued liabilities |
|
|
(31,865 |
) |
|
|
(37,696 |
) |
|
Less: Lease liability |
|
|
(134,303 |
) |
|
|
(130,385 |
) |
|
Less: Other long-term liabilities |
|
|
(4,720 |
) |
|
|
(4,623 |
) |
|
Capital Employed |
|
$ |
126,585 |
|
|
$ |
145,139 |
|
|
|
|
|
|
|
|
|
|
Pretax Return on Capital Employed |
|
|
11.3 |
|
% |
15.2 |
|
% |
|
|
|
|
|
|
|
|
|
(1) Income statement accounts represent the
activity for the trailing twelve months ended as of each of the
balance sheet dates. Balance sheet accounts represent the average
account balance for the four quarters ended as of each of the
balance sheet dates.
Non-GAAP Financial Measures
The Company calculates Adjusted EBITDA by taking
net income calculated in accordance with GAAP, and adjusting for
interest expense, income taxes, depreciation and amortization, and
stock-based compensation expense. Adjusted EBITDA margin is equal
to Adjusted EBITDA divided by net sales. The Company calculates
Pretax Return on Capital Employed by taking income (loss) from
operations divided by capital employed. Capital employed equals
total assets less accounts payable, income taxes payable, other
accrued liabilities, lease liability and other long-term
liabilities. Other companies may calculate both Adjusted EBITDA and
Pretax Return on Capital Employed differently, limiting the
usefulness of these measures for comparative purposes.
The Company believes that these non-GAAP
measures of financial results provide useful information to
management and investors regarding certain financial and business
trends relating to the Company’s financial condition and results of
operations. Company management uses these non-GAAP measures to
compare Company performance to that of prior periods for trend
analyses, for purposes of determining management incentive
compensation, for budgeting and planning purposes and for assessing
the effectiveness of capital allocation over time. These measures
are used in monthly financial reports prepared for management and
the Board of Directors. The Company believes that the use of these
non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing the Company’s financial measures with other
specialty retailers, many of which present similar non-GAAP
financial measures to investors.
Company management does not consider these
non-GAAP measures in isolation or as an alternative to financial
measures determined in accordance with GAAP. The principal
limitations of these non-GAAP financial measures are that they
exclude significant expenses and income that are required by GAAP
to be recognized in the Company’s consolidated financial
statements. In addition, they are subject to inherent limitations
as they reflect the exercise of judgments by management about which
expenses and income are excluded or included in determining these
non-GAAP financial measures. In order to compensate for these
limitations, management presents non-GAAP financial measures in
connection with GAAP results. The Company urges investors to review
the reconciliation of these non-GAAP financial measures to the
comparable GAAP financial measures and not to rely on any single
financial measure to evaluate the business.
WEBCAST AND CONFERENCE CALL
As announced on May 2, 2024, the Company will
host a conference call via webcast for investors and other
interested parties beginning at 9:00 a.m. Eastern Time on Thursday,
May 9, 2024. The call will be hosted by Cabell Lolmaugh, CEO, Mark
Davis, CFO, and Ken Cooper, Investor Relations.
To participate in the live call, please pre-register here. All
registrants will receive dial-in information and a unique PIN. A
webcast of the call can be accessed by visiting the Company’s
Investor Relations page at www.tileshop.com. A webcast replay of
the call will be available on the Company’s Investor Relations page
at www.tileshop.com.
The Company intends to use its website,
investors.tileshop.com, as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD. Such disclosures will be included
on the Company’s website under the heading News and Events.
Accordingly, investors should monitor such portions of the
Company’s website, in addition to following its press releases,
Securities and Exchange Commission filings and public conference
calls and webcasts.
Contact:Investors and
Media:Mark DavisChief Financial
Officerinvestorrelations@tileshop.com
ABOUT THE TILE SHOP
Tile Shop Holdings, Inc. (Nasdaq: TTSH) is a
leading specialty retailer of natural stone, man-made and luxury
vinyl tiles, setting and maintenance materials, and related
accessories in the United States. The Tile Shop offers a wide
selection of high-quality products, exclusive designs,
knowledgeable staff and exceptional customer service in an
extensive showroom environment. The Tile Shop currently operates
142 stores in 31 states and the District of Columbia.
The Tile Shop is a proud member of the American
Society of Interior Designers (ASID), National Association of
Homebuilders (NAHB), National Kitchen and Bath Association (NKBA),
and the National Tile Contractors Association (NTCA). Visit
www.tileshop.com. Join The Tile Shop (#thetileshop) on Facebook,
Instagram, Pinterest and Twitter.
FORWARD LOOKING STATEMENTS
This press release includes “forward looking
statements” within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995.
Forward looking statements may be identified by the use of words
such as “anticipate”, “believe”, “expect”, “estimate”, “plan”,
“outlook”, and “project” and other similar expressions that predict
or indicate future events or trends or that are not statements of
historical matters. These forward looking statements include any
statements regarding the Company’s strategic and operational plan
and expected financial performance. Forward looking statements
should not be read as a guarantee of future performance or results,
and will not necessarily be accurate indications of the times at,
or by, which such performance or results will be achieved. Forward
looking statements are based on information available at the time
such statements are made and/or management’s good faith belief as
of that time with respect to future events, and are subject to
risks and uncertainties that could cause actual performance or
results to differ materially from those expressed in or suggested
by the forward looking statements, including but not limited to
unforeseen events that may affect the retail market or the
performance of the Company’s stores. The Company does not intend,
and undertakes no duty, to update this information to reflect
future events or circumstances. Investors are referred to the most
recent reports filed with the Securities and Exchange Commission by
the Company.
Tile Shop Holdings, Inc. and
SubsidiariesConsolidated Balance
Sheets($ in thousands, except per share
data)
|
|
(Unaudited) |
|
(Audited) |
|
|
March 31, |
|
December 31, |
|
|
2024 |
|
2023 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
24,027 |
|
|
$ |
8,620 |
|
Receivables, net |
|
|
3,935 |
|
|
|
2,882 |
|
Inventories |
|
|
88,835 |
|
|
|
93,679 |
|
Income tax receivable |
|
|
127 |
|
|
|
129 |
|
Other current assets, net |
|
|
9,744 |
|
|
|
9,248 |
|
Total Current Assets |
|
|
126,668 |
|
|
|
114,558 |
|
Property, plant and equipment, net |
|
|
62,372 |
|
|
|
64,317 |
|
Right of use asset |
|
|
128,976 |
|
|
|
129,092 |
|
Deferred tax assets |
|
|
4,971 |
|
|
|
5,256 |
|
Other assets |
|
|
2,935 |
|
|
|
3,449 |
|
Total Assets |
|
$ |
325,922 |
|
|
$ |
316,672 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
24,263 |
|
|
$ |
23,345 |
|
Income tax payable |
|
|
1,275 |
|
|
|
1,135 |
|
Current portion of lease liability |
|
|
28,084 |
|
|
|
27,265 |
|
Other accrued liabilities |
|
|
34,061 |
|
|
|
27,000 |
|
Total Current Liabilities |
|
|
87,683 |
|
|
|
78,745 |
|
Long-term debt, net |
|
|
- |
|
|
|
- |
|
Long-term lease liability, net |
|
|
111,911 |
|
|
|
112,697 |
|
Other long-term liabilities |
|
|
5,024 |
|
|
|
5,543 |
|
Total Liabilities |
|
|
204,618 |
|
|
|
196,985 |
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
Common stock, par value $0.0001; authorized: 100,000,000 shares;
issued and outstanding: 44,593,602 and 44,510,779 shares,
respectively |
|
|
4 |
|
|
|
4 |
|
Preferred stock, par value $0.0001; authorized: 10,000,000 shares;
issued and outstanding: 0 shares |
|
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
|
128,798 |
|
|
|
128,861 |
|
Accumulated deficit |
|
|
(7,420 |
) |
|
|
(9,109 |
) |
Accumulated other comprehensive loss |
|
|
(78 |
) |
|
|
(69 |
) |
Total Stockholders' Equity |
|
|
121,304 |
|
|
|
119,687 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
325,922 |
|
|
$ |
316,672 |
|
|
|
|
|
|
|
|
Tile Shop Holdings, Inc. and
SubsidiariesConsolidated Statements of
Income($ in thousands, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2024 |
|
2023 |
Net sales |
|
$ |
91,728 |
|
|
$ |
102,019 |
|
Cost of sales |
|
|
31,409 |
|
|
|
36,481 |
|
Gross profit |
|
|
60,319 |
|
|
|
65,538 |
|
Selling, general and administrative expenses |
|
|
58,036 |
|
|
|
61,413 |
|
Income from operations |
|
|
2,283 |
|
|
|
4,125 |
|
Interest expense |
|
|
(166 |
) |
|
|
(798 |
) |
Income before income taxes |
|
|
2,117 |
|
|
|
3,327 |
|
Provision for income taxes |
|
|
(428 |
) |
|
|
(815 |
) |
Net income |
|
$ |
1,689 |
|
|
$ |
2,512 |
|
|
|
|
|
|
|
|
Income per common share: |
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
0.06 |
|
Diluted |
|
$ |
0.04 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
43,570,745 |
|
|
|
43,237,856 |
|
Diluted |
|
|
43,717,347 |
|
|
|
43,509,993 |
|
|
|
|
|
|
|
|
Tile Shop Holdings, Inc. and
SubsidiariesRate
Analysis(Unaudited)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2024 |
|
2023 |
Gross margin rate |
|
65.8 |
% |
|
64.2 |
% |
SG&A expense rate |
|
63.3 |
% |
|
60.2 |
% |
Income from operations margin rate |
|
2.5 |
% |
|
4.0 |
% |
Adjusted EBITDA margin rate |
|
8.1 |
% |
|
10.1 |
% |
Tile Shop Holdings, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows($ in
thousands)(Unaudited)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2024 |
|
2023 |
Cash Flows From Operating Activities |
|
|
|
|
|
|
Net income |
|
$ |
1,689 |
|
|
$ |
2,512 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,742 |
|
|
|
5,783 |
|
Amortization of debt issuance costs |
|
|
18 |
|
|
|
64 |
|
Loss on disposals of property, plant and equipment |
|
|
40 |
|
|
|
7 |
|
Impairment charges |
|
|
- |
|
|
|
112 |
|
Non-cash lease expense |
|
|
6,703 |
|
|
|
6,385 |
|
Stock based compensation |
|
|
392 |
|
|
|
405 |
|
Deferred income taxes |
|
|
285 |
|
|
|
593 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Receivables, net |
|
|
(1,053 |
) |
|
|
(412 |
) |
Inventories |
|
|
4,845 |
|
|
|
5,472 |
|
Other current assets, net |
|
|
(1 |
) |
|
|
89 |
|
Accounts payable |
|
|
800 |
|
|
|
2,125 |
|
Income tax receivable / payable |
|
|
142 |
|
|
|
4,503 |
|
Accrued expenses and other liabilities |
|
|
(13 |
) |
|
|
(1,816 |
) |
Net cash provided by operating activities |
|
|
18,589 |
|
|
|
25,822 |
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(2,719 |
) |
|
|
(3,367 |
) |
Net cash used in investing activities |
|
|
(2,719 |
) |
|
|
(3,367 |
) |
Cash Flows From Financing Activities |
|
|
|
|
|
|
Payments of long-term debt |
|
|
(10,000 |
) |
|
|
(30,400 |
) |
Advances on line of credit |
|
|
10,000 |
|
|
|
10,000 |
|
Employee taxes paid for shares withheld |
|
|
(455 |
) |
|
|
(427 |
) |
Net cash used in financing activities |
|
|
(455 |
) |
|
|
(20,827 |
) |
Effect of exchange rate changes on cash |
|
|
(8 |
) |
|
|
3 |
|
Net change in cash, cash equivalents and restricted cash |
|
|
15,407 |
|
|
|
1,631 |
|
Cash, cash equivalents and restricted cash beginning of period |
|
|
8,620 |
|
|
|
7,759 |
|
Cash, cash equivalents and restricted cash end of
period |
|
$ |
24,027 |
|
|
$ |
9,390 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
24,027 |
|
|
$ |
8,624 |
|
Restricted cash |
|
|
- |
|
|
|
766 |
|
Cash, cash equivalents and restricted cash end of
period |
|
$ |
24,027 |
|
|
$ |
9,390 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information |
|
|
|
|
|
|
Purchases of property, plant and equipment included in accounts
payable and accrued expenses |
|
$ |
548 |
|
|
$ |
646 |
|
Cash paid for interest |
|
|
127 |
|
|
|
958 |
|
Cash paid (received) for income taxes, net |
|
|
- |
|
|
|
(4,280 |
) |
Tile Shop (NASDAQ:TTSH)
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De Abr 2024 a May 2024
Tile Shop (NASDAQ:TTSH)
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