Form 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

 

FORM 8-K 

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

 

Date of Report (Date of earliest event reported): April 18, 2017 

 

TILE SHOP HOLDINGS, INC.

(Exact name of Registrant as Specified in its Charter)

 



 

 

Delaware

001-35629

45-5538095

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)



14000 Carlson Parkway, Plymouth, Minnesota 55441

(Address of principal executive offices, including ZIP code)



(763) 852-2950

(Registrant’s telephone number, including area code)



Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 



 

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   

   

   

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   

   

   

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   

   

   

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 

 


 



 

Item 2.02

Results of Operations and Financial Condition.



On April 18, 2017, Tile Shop Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months March 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.



8

 

Item 8.01

Other Events.



On April 18, 2017, the Company issued a press release announcing its declaration of a cash dividend of $0.05 per share to stockholders of record as of May 2, 2017. The dividend will be paid on May 16, 2017. A copy of the press release is attached as Exhibit 99.2 hereto and is incorporated herein by reference. 



Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits.

 



 

99.1

Press Release of Tile Shop Holdings, Inc., dated April  18, 2017.



 

99.2

Press Release of Tile Shop Holdings, Inc., dated April 18, 2017.



 

 


 

 

 

SIGNATURES

 

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 



 

 

 

 

 

 

 

 

 

 

TILE SHOP HOLDINGS, INC.
 

 

 

By /s/ Kirk L. Geadelmann

 

Date: April 18, 2017

Name: Kirk L. Geadelmann 

 

 

Title: Chief Financial Officer

   



 

 


 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

TILE SHOP HOLDINGS, INC.

EXHIBIT INDEX TO FORM 8-K

 



 

 

   

   

   

Date of Report:

  

Commission File No.:

April 18, 2017

  

001-35629



 



 

 

Exhibit No.

Item



 

99.1

Press Release of Tile Shop Holdings, Inc., dated April  18, 2017.



 

99.2

Press Release of Tile Shop Holdings, Inc., dated April  18, 2017.



 



 


Exhibit 991

Exhibit 99.1

Picture 1



THE TILE SHOP REPORTS FIRST QUARTER 2017 RESULTS



4.9% Comparable Store Sales Growth

70.3% Gross Margin

15.1% Operating Income Growth

22.9% Adjusted EBITDA Margin and 9.4% Adjusted EBITDA Growth

Diluted Earnings per Share of $0.15, growth of 15.4%

Non-GAAP Diluted Earnings per Share of $0.16, growth of 14.3%



MINNEAPOLIS – April 18, 2017 – Tile Shop Holdings, Inc. (NASDAQ: TTS) (the “Company”), a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories, today announced results for its first quarter ended March 31, 2017. 



Net sales grew 8.8% to $92.1 million for the first quarter ended March 31, 2017 compared with $84.7 million for the first quarter ended March 31, 2016. The $7.4 million increase in net sales was due to a comparable store sales increase of 4.9%, or $4.0 million, and incremental net sales of $3.4 million from stores not included in the comparable store base. Comparable store sales growth for the first quarter of 2016 was 13.2%.



“We are very pleased to report a strong start to 2017,” said Chris Homeister, CEO.  “The continued effort and dedication from our teams to provide exceptional service to homeowners and professionals on their home improvement projects led to a successful quarter for our business across all key metrics. We are excited to build upon our first quarter accomplishments as we seek to deliver significant growth in sales, operating margins and earnings per share throughout 2017.”



Gross margin for the first quarter of 2017 was 70.3% compared with 70.5% for the first quarter of 2016.

 

Selling, general and administrative costs for the first quarter of 2017 were $51.2 million compared with $47.9 million for the first quarter of 2016. The $3.3 million increase was primarily driven by the costs associated with opening and operating new stores and variable expenses associated with revenue growth.



The Company opened 3 new retail stores in the first quarter of 2017, consisting of its 7th New Jersey location in Oakhurst, NJ, its 3rd location in the Phoenix, AZ metro area and its 5th location in Maryland in Bel Air, MD.  As of March 31, 2017 the Company operates 126 stores in 31 states and the District of Columbia.



Non-GAAP Information



The Company presents non-GAAP net income and Adjusted EBITDA to provide useful information to investors regarding the Company’s normalized operating performance. 



On a non-GAAP basis, net income for the first quarter of 2017 was $8.2 million compared with $7.2 million for the first quarter of 2016.  Non-GAAP diluted earnings per share for the first quarter of 2017 were $0.16 compared with $0.14 for the first quarter of 2016, representing 14.3% growth. See the “Non-GAAP Income Reconciliation” table and the “Non-GAAP Financial Measures” section below for a reconciliation of GAAP to non-GAAP income. 


 

Non-GAAP Income Reconciliation







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended



 

March 31, 2017

 

March 31, 2016

($ in thousands,
except share and per share data)

 

Pretax

 

Net of Tax

 

Per Share
Amounts

 

Pretax

 

Net of Tax

 

Per Share
Amounts

GAAP income

 

$

13,084 

 

$

8,009 

 

$

0.15 

 

$

11,217 

 

$

6,758 

 

$

0.13 

Special charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder and other litigation costs

 

 

351 

 

 

215 

 

 

0.00 

 

 

697 

 

 

420 

 

 

0.01 

Non-GAAP income(1)

 

$

13,435 

 

$

8,224 

 

$

0.16 

 

$

11,914 

 

$

7,178 

 

$

0.14 



(1) Amounts may not foot due to rounding.



Adjusted EBITDA for the first quarter of 2017 was $21.1 million compared with $19.3 million for the first quarter of 2016, representing 9.4% growth. See the “Adjusted EBITDA Reconciliation” table and the “Non-GAAP Financial Measures” section below for a reconciliation of GAAP net income to Adjusted EBITDA.



Adjusted EBITDA Reconciliation







 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended

($ in thousands)

 

March 31,



 

2017

 

2016

GAAP net income

 

$

8,009 

 

$

6,758 

Interest expense

 

 

485 

 

 

570 

Income taxes

 

 

5,075 

 

 

4,459 

Depreciation and amortization

 

 

6,336 

 

 

5,571 

Special charges(1)

 

 

351 

 

 

697 

Stock-based compensation

 

 

842 

 

 

1,229 

Adjusted EBITDA

 

$

21,098 

 

$

19,284 

(1) Shareholder and other litigation costs.

Financial Guidance        

The Company is reaffirming all expectations for full year 2017 based on past performance, anticipated new store openings and current economic conditions.

For the full year ending December 31, 2017 the Company expects:



 

 

 

 



 

 

 

 

($ in millions, except per share data)

 

2017

 

2016

Net Sales

 

$350 - $370

 

$324.2

Comparable Store Sales Change

 

low to mid single digits

 

7.6%

Gross Margin % of Net Sales

 

approx. 70%

 

70.0%

Depreciation & Amortization

 

approx. $27

 

$23.0

Stock Based Compensation

 

approx. $3.5

 

$4.3

Effective Tax Rate

 

approx. 40%

 

41.1%

Special Charges

 

approx. $0.5

 

$7.6

Earnings Per Share (GAAP)

 

$0.49 - $0.56

 

$0.36

Non-GAAP Earnings Per Share

 

$0.50 - $0.57

 

$0.45

Adjusted EBITDA

 

$74 - $80

 

$68.0

Fully Diluted Shares Outstanding

 

approx. 52 million

 

51.9 million

New Stores

 

12 to 15

 

9

Capital Expenditures

 

$30 to $35

 

$27.3



See the “Non-GAAP Income Guidance Reconciliation” table and the “Adjusted EBITDA Guidance Reconciliation” table on the final page of this release for a reconciliation of these Non-GAAP measures to the comparable GAAP measures. 



2

 


 

Webcast and Conference Call 

The Company will host a conference call via live webcast for investors and other interested parties beginning at 9:00 a.m. Eastern Time on Tuesday, April 18, 2017. Participants may access the live webcast by visiting the Company’s Investor Relations page at www.tileshop.com. The call can also be accessed by dialing (844) 421-0597, or (716) 247-5787 for international participants. A webcast replay of the call will be available on the Company’s Investor Relations page at www.tileshop.com.



Additional details can be located at www.tileshop.com under the Financial Information – SEC Filings section of the Company’s Investor Relations page.  



About The Tile Shop



The Tile Shop is a leading specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States. The Company offers a wide selection of high quality products, exclusive designs, knowledgeable staff and exceptional customer service, in an extensive showroom environment with up to 50 full-room tiled displays which are enhanced by the complimentary Design Studio – a collaborative platform to create customized 3D design renderings to scale, allowing customers to bring their design ideas to life. The Tile Shop currently operates 126 stores in 31 states and the District of Columbia, with an average size of 20,900 square feet and sells products online at www.tileshop.com.



The Tile Shop is a proud member of the American Society of Interior Designers (ASID), National Association of Homebuilders (NAHB), and the National Tile Contractors Association (NTCA). Visit www.tileshop.com. Join The Tile Shop (#thetileshop) on Facebook, Instagram, Pinterest and Twitter.

  

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, stock based compensation and special charges related to litigation, including shareholder and other litigation.  Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. Non-GAAP net income excludes special charges related to litigation costs, including shareholder and other litigation, and is net of tax. 

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, and for budgeting and planning purposes.  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. 

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 (including the financial performance of new stores).  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 those 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 SEC by the Company.







3

 


 

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

($ in thousands, except share data)







 

 

 

 

 

 



 

 

 

 

 

 



 

(Unaudited)

 

(Audited)



 

March 31,

 

December 31,



 

2017

 

2016

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,589 

 

$

6,067 

Restricted cash

 

 

3,000 

 

 

3,000 

Trade receivables, net

 

 

2,973 

 

 

2,414 

Inventories

 

 

69,280 

 

 

74,295 

Income tax receivable

 

 

378 

 

 

1,670 

Other current assets, net

 

 

4,332 

 

 

8,755 

Total Current Assets

 

 

93,552 

 

 

96,201 

Property, plant and equipment, net

 

 

144,945 

 

 

141,037 

Deferred tax assets

 

 

20,168 

 

 

21,391 

Long-term restricted cash

 

 

2,612 

 

 

3,881 

Other assets

 

 

2,452 

 

 

2,763 

Total Assets

 

$

263,729 

 

$

265,273 



 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

18,504 

 

$

20,321 

Current portion of long-term debt

 

 

6,922 

 

 

6,286 

Income tax payable

 

 

2,716 

 

 

120 

Other accrued liabilities

 

 

25,693 

 

 

33,461 

Total Current Liabilities

 

 

53,835 

 

 

60,188 

Long-term debt, net

 

 

20,272 

 

 

22,126 

Capital lease obligation, net

 

 

668 

 

 

697 

Deferred rent

 

 

38,234 

 

 

37,595 

Other long-term liabilities

 

 

5,536 

 

 

5,768 

Total Liabilities

 

 

118,545 

 

 

126,374 



 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 51,629,260 and 51,607,143 shares, respectively

 

 

 

 

Preferred stock, par value $0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares

 

 

 -

 

 

 -

Additional paid-in-capital

 

 

186,850 

 

 

185,998 

Accumulated deficit

 

 

(41,630)

 

 

(47,058)

Accumulated other comprehensive loss

 

 

(41)

 

 

(46)

Total Stockholders' Equity

 

 

145,184 

 

 

138,899 

Total Liabilities and Stockholders' Equity

 

$

263,729 

 

$

265,273 



4

 


 

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

($ in thousands, except share, and per share data)

(Unaudited)













 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2017

 

2016

Net sales

 

$

92,135 

 

$

84,714 

Cost of sales

 

 

27,390 

 

 

25,009 

Gross profit

 

 

64,745 

 

 

59,705 

Selling, general and administrative expenses

 

 

51,212 

 

 

47,949 

Income from operations

 

 

13,533 

 

 

11,756 

Interest expense

 

 

(485)

 

 

(570)

Other income

 

 

36 

 

 

31 

Income before income taxes

 

 

13,084 

 

 

11,217 

Provision for income taxes

 

 

(5,075)

 

 

(4,459)

Net income

 

$

8,009 

 

$

6,758 



 

 

 

 

 

 

Income per common share:

 

 

 

 

 

 

Basic

 

$

0.16 

 

$

0.13 

Diluted

 

$

0.15 

 

$

0.13 



 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

51,523,627 

 

 

51,359,167 

Diluted

 

 

52,140,945 

 

 

51,666,432 



Tile Shop Holdings, Inc. and Subsidiaries

Rate Analysis

(Unaudited)



 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2017

 

2016

Gross margin rate

 

70.3 

%

 

70.5 

%

SG&A expense rate

 

55.6 

%

 

56.6 

%

Income from operations margin rate

 

14.7 

%

 

13.9 

%

Adjusted EBITDA margin rate

 

22.9 

%

 

22.8 

%









5

 


 

Non-GAAP Income Guidance Reconciliation

(1) Shareholder and other litigation costs.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

2017 Guidance



 

Low End

 

High End

($ in millions,
except share and per share data)

 

Pretax

 

Net of Tax

 

Per Share
Amounts

 

Pretax

 

Net of Tax

 

Per Share
Amounts

GAAP income

 

$

42 

 

$

25 

 

$

0.49 

 

$

49 

 

$

29 

 

$

0.56 

Special charges(1)

 

 

0.5 

 

 

 

 

0.01 

 

 

0.5 

 

 

 

 

0.01 

Non-GAAP income(2)

 

$

43 

 

$

26 

 

$

0.50 

 

$

49 

 

$

29 

 

$

0.57 

(1) Shareholder and other litigation costs.

(2) Amounts may not foot due to rounding.



Adjusted EBITDA Guidance Reconciliation





 

 

 

 

 

 



 

 

 

 

 

 



 

2017 Guidance

($ in millions)

 

Low End

 

High End

GAAP Net Income

 

$

25 

 

$

29 

Interest expense

 

 

 

 

Income taxes

 

 

17 

 

 

19 

Depreciation and amortization

 

 

27 

 

 

27 

Special charges(1)

 

 

0.5 

 

 

0.5 

Stock based compensation

 

 

3.5 

 

 

3.5 

Adjusted EBITDA(2)

 

$

74 

 

$

80 

(1) Shareholder and other litigation costs.

(2) Amounts may not foot due to rounding.







Contacts:

Investors and Media:

Adam Hauser

763-852-2950

investorrelations@tileshop.com































6

 


Exhibit 992

Exhibit 99.2

Picture 1

THE TILE SHOP DECLARES REGULAR QUARTERLY DIVIDEND

MINNEAPOLIS – April 18, 2017 –The Board of Directors of Tile Shop Holdings, Inc (NASDAQ: TTS), a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories, has declared a quarterly dividend of 5 cents per common share. The dividend is payable May 16, 2017 to shareholders of record at the close of business May 2, 2017.



About The Tile Shop

The Tile Shop is a leading specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States. The Company offers a wide selection of high quality products, exclusive designs, knowledgeable staff and exceptional customer service, in an extensive showroom environment with up to 50 full-room tiled displays which are enhanced by the complimentary Design Studio – a collaborative platform to create customized 3D design renderings to scale, allowing customers to bring their design ideas to life. The Tile Shop currently operates 126 stores in 31 states and the District of Columbia, with an average size of 20,900 square feet and sells products online at www.tileshop.com.

The Tile Shop is a proud member of the American Society of Interior Designers (ASID), National Association of Homebuilders (NAHB), and the National Tile Contractors Association (NTCA). Visit www.tileshop.com. Join The Tile Shop (#thetileshop) on Facebook, Instagram, Pinterest and Twitter.



Contacts:

Investors and Media:

Adam Hauser

763-852-2950

investorrelations@tileshop.com