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): October 18, 2018 

 

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)

 

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))



 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b—2 of the Securities Exchange Act of 1934 (§ 240.12b—2 of this chapter).

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

 




 



 

 

Item 2.02

Results of Operations and Financial Condition.



 

On October 18, 2018, Tile Shop Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended September 30, 2018. 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.



Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and in this Item 2.02 have been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing regardless of any general incorporation language.





 

Item 7.01

Regulation FD Disclosure



 

On October 18, 2018, the Company issued a press release announcing its declaration of a cash dividend of $0.05 per share to stockholders of record as of October 29, 2018. The dividend will be paid on November 9, 2018. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference. 



Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and in this Item 7.01 have been furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing regardless of any general incorporation language.



Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits.

 



 

99.1

Press Release of Tile Shop Holdings, Inc., dated October 18, 2018.



 



 

 


 

 

 

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: October 18, 2018

Name: Kirk L. Geadelmann 

 

 

Title: Chief Financial Officer

   



 

 




Exhibit 991

Exhibit 99.1

Picture 1



THE TILE SHOP REPORTS third QUARTER 2018 RESULTS

DECLARES CASH DIVIDEND



MINNEAPOLIS – October 18, 2018Tile Shop Holdings, Inc. (Nasdaq: TTS) (the “Company”), a specialty retailer of natural stone and man-made tiles, setting and maintenance materials, and related accessories, today announced results for its third quarter ended September 30, 2018.    



Third Quarter Summary



Net Sales Increased 5.7%

Comparable Store Sales Increased 2.1% 

Gross Margin of 70.6%

Diluted Earnings per Share of $0.05

Net Income of $2.6 million; Adjusted EBITDA of $11.9 million

Completed 3 store remodels in Q3;  Completed 10 store remodels year-to-date in 2018



Management Commentary

“We made good progress in the third quarter on our strategy to deliver the best product, the best presentation and the best service in our industry,” said Robert Rucker, interim CEO.  We are nearly complete with our year-long product assortment initiative and we continue to attract pros who share in our focus on serving a higher-end demographic.  With the improvement we are now beginning to see in our sales execution, we continued to make additional investments in inventory, store merchandising, and service during the third quarter.  We are extremely focused on improving our key metrics as we fully restore and further enhance the model which has proven successful for over 30 years.”



  



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended

 

(unaudited, amounts in thousands, except per

 

September 30,

 

September 30,

 

share data)

 

2018

 

2017

 

2018

 

2017

 

Net sales

 

$

89,259 

 

$

84,421 

 

$

273,307 

 

$

266,020 

 

Net sales growth(1)

 

 

5.7 

%

 

7.5 

%

 

2.7 

%

 

7.5 

%

Comparable store sales growth (decline)(2)

 

 

2.1 

%

 

1.1 

%

 

(2.3)

%

 

2.2 

%

Gross margin rate

 

 

70.6 

%

 

67.1 

%

 

70.4 

%

 

69.1 

%

Income from operations as a % of net sales

 

 

4.3 

%

 

5.2 

%

 

6.4 

%

 

11.1 

%

Net income

 

$

2,553 

 

$

2,438 

 

$

11,522 

 

$

18,170 

 

Net income per diluted share

 

$

0.05 

 

$

0.05 

 

$

0.22 

 

$

0.35 

 

Adjusted EBITDA

 

$

11,857 

 

$

12,203 

 

$

40,675 

 

$

51,796 

 

Adjusted EBITDA as a % of net sales

 

 

13.3 

%

 

14.5 

%

 

14.9 

%

 

19.5 

%

Number of stores open at the end of period

 

 

140 

 

 

134 

 

 

140 

 

 

134 

 



(1)

As compared to the prior year period.

(2)

Comparable store sales growth (decline) 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 growth calculation. Comparable store sales growth (decline) amounts include total charges to customers less any actual returns. Comparable store sales data reported by other companies may be prepared on a different basis and therefore may not be useful for purposes of comparing the Company’s results to those of other businesses.


 

third QUARTER 2018



Net Sales

Net sales increased $4.8 million, or 5.7%, from $84.4 million in the third quarter of 2017 to $89.3 million in the third quarter of 2018.  The increase was due to $3.0 million in net sales generated by stores not included in the comparable store base and an increase of $1.8 million in net sales generated by comparable store sales. Comparable store sales growth was 2.1% for the third quarter of 2018 versus 1.1% for the third quarter of 2017.



Gross Profit

Gross profit increased $6.3 million, or 11.2%, from $56.7 million in the third quarter of 2017 to $63.0 million in the third quarter of 2018.  The gross margin rate was 70.6% for the third quarter of 2018 and 67.1% for the third quarter of 2017. The improvement in the gross margin rate was primarily due to decreased promotional activity.



Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $6.8 million, or 13.1%, from $52.3 million in the third quarter of 2017 to $59.1 million in the third quarter of 2018.  The $6.8 million increase was due to $2.0 million of costs associated with opening and operating six new stores over the past twelve months and $1.9 million of planned strategic investments in store and distribution center compensation, regional sales leadership and pro market managers. Additionally, the Company incurred approximately $1.0 million of incremental legal expense during the quarter to resolve its derivative securities litigation.



Inventory

Inventory increased to $106.3 million from $100.4 million at the end of the  second quarter of 2018, or 5.9%, as the Company continued to expand its product assortment.  The increase was attributable to the continued investment in new products added to the Company’s assortment during the quarter.



Long-Term Debt

Long-term debt increased $16.5 million from $29.5 million in the second quarter of 2018 to $46.0 million in the third quarter of 2018. The increase was attributable to the continued expansion of the Company’s product assortment resulting in an increase in inventory and capital investments associated with store remodels and merchandising fixtures.



As disclosed in a Form 8-K filed on September 19, 2018, the Company entered into a new credit facility to provide greater financial flexibility, increase the line of credit to $100 million,  and extend the term to September 18, 2023.



Store Investment

As of September 30, 2018, the Company operated 140 stores in 31 states and the District of Columbia. The Company remodeled three stores during the third quarter of 2018.



DIVIDEND

The Board of Directors has declared a quarterly dividend of $0.05 per common share. The dividend is payable November 9, 2018 to shareholders of record at the close of business on October 29, 2018. 



OUTLOOK

The Company is updating its previously communicated 2018 annual outlook as follows:



·

Capital investment of approximately $35 million, including investments for 12 store remodels, and merchandising and fixture investments for all 140 stores. 

·

Inventory at year-end of approximately $106 million to $110 million, reflecting the Company’s year-long product assortment initiative.  

·

Selling, general and administrative (“SG&A”) expense increase of approximately $7 million to support the Company’s service strategy, including increased expenses for (1) the addition of regional sales leader positions, (2) sales and warehouse associate compensation, (3) customer relationship management and content management capabilities, and (4) the addition of approximately 20 professional market managers.  The approximate $7 million increase in SG&A expense is incremental to the expected SG&A expense increases associated with a full year of operations for the fifteen stores opened in 2017 and the two new stores opened in 2018.

   

Longer term, the Company remains committed to achieving both Adjusted EBITDA margin and pretax return on capital employed of greater than 20%.



2

 


 

NON-GAAP INFORMATION



Adjusted EBITDA





Adjusted EBITDA for the third quarter of 2018 was $11.9 million compared with $12.2 million for the third quarter of 2017.  See the table below for a reconciliation of GAAP net income to Adjusted EBITDA.







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

($ in thousands)

 

September 30,



 

2018

 

% of net sales

 

2017

 

% of net sales(1)

Net income

 

$

2,553 

 

2.9 

%

 

$

2,438 

 

2.9 

%

Interest expense

 

 

715 

 

0.8 

%

 

 

505 

 

0.6 

%

Income taxes

 

 

652 

 

0.7 

%

 

 

1,468 

 

1.7 

%

Depreciation & amortization

 

 

7,202 

 

8.1 

%

 

 

6,803 

 

8.1 

%

Stock based compensation

 

 

735 

 

0.8 

%

 

 

989 

 

1.2 

%

Adjusted EBITDA

 

$

11,857 

 

13.3 

%

 

$

12,203 

 

14.5 

%



 

 

 

 

 

 

 

 

 

 

 

 



 

Nine Months Ended

($ in thousands)

 

September 30,



 

2018

 

% of net sales

 

 

2017

% of net sales(1)(2)

 

Net income

 

$

11,522 

 

4.2 

%

 

$

18,170 

 

6.8 

%

Interest expense

 

 

1,866 

 

0.7 

%

 

 

1,438 

 

0.5 

%

Income taxes

 

 

4,157 

 

1.5 

%

 

 

10,034 

 

3.8 

%

Depreciation & amortization

 

 

21,180 

 

7.7 

%

 

 

19,395 

 

7.3 

%

Stock based compensation

 

 

1,950 

 

0.7 

%

 

 

2,759 

 

1.0 

%

Adjusted EBITDA

 

$

40,675 

 

14.9 

%

 

$

51,796 

 

19.5 

%



(1) In prior periods, the Company also adjusted for special charges, including shareholder and other litigation costs. The Company has recast the Adjusted EBITDA presentation for the three and nine months ended September 30, 2017 to conform to the current presentation.

(2) Amounts do not foot due to rounding.



Pretax Return on Capital Employed



Pretax Return on Capital Employed was calculated based on GAAP information. The Company believes this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate Pretax Return on Capital Employed differently, limiting the usefulness of the measure for comparative purposes.



Pretax Return on Capital Employed was 7.7% for the trailing twelve months as of the end of the third quarter 2018 compared to 18.3% for the trailing twelve months as of the end of the third quarter 2017. See the Pretax Return on Capital Employed calculation in the table below.







 

 

 

 

 

 

 



 

 

 

 

 

 

 

($ in thousands)

 

September 30,

 



 

2018(1)

 

2017(1)

 

Income from operations (trailing twelve months)

 

$

13,769 

 

$

31,160 

 



 

 

 

 

 

 

 

Total Assets

 

 

281,996 

 

 

263,140 

 

Less: Accounts payable

 

 

(29,015)

 

 

(21,669)

 

Less: Income tax payable

 

 

(71)

 

 

(844)

 

Less: Other accrued liabilities

 

 

(26,751)

 

 

(26,482)

 

Less: Deferred rent

 

 

(42,401)

 

 

(38,815)

 

Less: Other long-term liabilities

 

 

(4,346)

 

 

(5,409)

 

Capital Employed

 

 

179,412 

 

 

169,921 

 



 

 

 

 

 

 

 

Pretax Return on Capital Employed

 

 

7.7 

%

 

18.3 

%



 (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.

3

 


 

Webcast and Conference Call 



As announced on October 3, 2018, 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 Thursday,  October 18, 2018.  The call will be hosted by Bob Rucker, interim CEO, Kirk Geadelmann, CFO, Cabell Lolmaugh, Senior Vice President and COO, and Ken Cooper, Investor Relations. 



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.  



Contacts:

Investors and Media:

Ken Cooper

763-852-2950

ken.cooper@tileshop.com

4

 


 

About The Tile Shop



The Tile Shop is a leading specialty retailer of man-made and natural stone 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 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 140 stores in 31 states and the District of Columbia, with an average size of 20,200 square feet. For more information, visit www.tileshop.com.



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.

  

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.  In prior periods, the Company also adjusted for special charges, including shareholder and other litigation costs. The Company has recast the Adjusted EBITDA presentation for the three and nine months ended September 30, 2017 to conform to the current presentation. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. The Company calculates pretax return on capital employed by taking income from operations divided by capital employed.  Capital employed equals total assets less accounts payable, income taxes payable, other accrued liabilities, deferred rent and other long-term liabilities.



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.







  







5

 


 

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

($ in thousands, except share data)







 

 

 

 

 

 



 

 

 

 

 

 



 

(Unaudited)

 

(Audited)



 

September 30,

 

December 31,



 

2018

 

2017

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,105 

 

$

6,621 

Restricted cash

 

 

835 

 

 

855 

Trade receivables, net

 

 

3,723 

 

 

2,381 

Inventories

 

 

106,310 

 

 

85,259 

Income tax receivable

 

 

3,362 

 

 

5,726 

Other current assets, net

 

 

6,921 

 

 

4,717 

Total Current Assets

 

 

131,256 

 

 

105,559 

Property, plant and equipment, net

 

 

153,453 

 

 

151,405 

Deferred tax assets

 

 

10,239 

 

 

11,654 

Other assets

 

 

1,952 

 

 

2,107 

Total Assets

 

$

296,900 

 

$

270,725 



 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

25,725 

 

$

30,771 

Current portion of long-term debt

 

 

 -

 

 

8,833 

Income tax payable

 

 

172 

 

 

17 

Other accrued liabilities

 

 

27,790 

 

 

22,413 

Total Current Liabilities

 

 

53,687 

 

 

62,034 

Long-term debt, net

 

 

46,000 

 

 

18,182 

Capital lease obligation, net

 

 

473 

 

 

576 

Deferred rent

 

 

43,419 

 

 

41,290 

Other long-term liabilities

 

 

3,931 

 

 

4,769 

Total Liabilities

 

 

147,510 

 

 

126,851 



 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 52,678,584 and 52,156,850 shares, respectively

 

 

 

 

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

 

 

 -

 

 

 -

Additional paid-in-capital

 

 

174,207 

 

 

180,109 

Accumulated deficit

 

 

(24,777)

 

 

(36,239)

Accumulated other comprehensive loss

 

 

(45)

 

 

(1)

Total Stockholders' Equity

 

 

149,390 

 

 

143,874 

Total Liabilities and Stockholders' Equity

 

$

296,900 

 

$

270,725 



6

 


 

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

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

(Unaudited)









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended



 

September 30,

 

September 30,



 

2018

 

2017

 

2018

 

2017

Net sales

 

$

89,259 

 

$

84,421 

 

$

273,307 

 

$

266,020 

Cost of sales

 

 

26,248 

 

 

27,759 

 

 

80,946 

 

 

82,265 

Gross profit

 

 

63,011 

 

 

56,662 

 

 

192,361 

 

 

183,755 

Selling, general and administrative expenses

 

 

59,131 

 

 

52,285 

 

 

174,928 

 

 

154,245 

Income from operations

 

 

3,880 

 

 

4,377 

 

 

17,433 

 

 

29,510 

Interest expense

 

 

(715)

 

 

(505)

 

 

(1,866)

 

 

(1,438)

Other income

 

 

40 

 

 

34 

 

 

112 

 

 

132 

Income before income taxes

 

 

3,205 

 

 

3,906 

 

 

15,679 

 

 

28,204 

Provision for income taxes

 

 

(652)

 

 

(1,468)

 

 

(4,157)

 

 

(10,034)

Net income

 

$

2,553 

 

$

2,438 

 

$

11,522 

 

$

18,170 



 

 

 

 

 

 

 

 

 

 

 

 

Income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05 

 

$

0.05 

 

$

0.22 

 

$

0.35 

Diluted

 

$

0.05 

 

$

0.05 

 

$

0.22 

 

$

0.35 



 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,920,830 

 

 

51,757,248 

 

 

51,896,678 

 

 

51,638,864 

Diluted

 

 

52,303,777 

 

 

52,053,655 

 

 

52,056,136 

 

 

52,011,208 



 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

$

0.05 

 

$

0.05 

 

$

0.15 

 

$

0.15 







Tile Shop Holdings, Inc. and Subsidiaries

Rate Analysis

(Unaudited)



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended



 

September 30,

 

September 30,



 

2018

 

2017

 

2018

 

2017

Gross margin rate

 

70.6 

%

 

67.1 

%

 

70.4 

%

 

69.1 

%

SG&A expense rate

 

66.2 

%

 

61.9 

%

 

64.0 

%

 

58.0 

%

Income from operations margin rate

 

4.3 

%

 

5.2 

%

 

6.4 

%

 

11.1 

%

Adjusted EBITDA margin rate

 

13.3 

%

 

14.5 

%

 

14.9 

%

 

19.5 

%



7

 


 



Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

($ in thousands)

(Unaudited)



 

 

 

 

 

 



 

 

 

 

 

 



 

Nine Months Ended



 

September 30,



 

2018

 

2017

Cash Flows From Operating Activities

 

 

 

 

 

 

Net income

 

$

11,522 

 

$

18,170 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation & amortization

 

 

21,180 

 

 

19,395 

Amortization of debt issuance costs

 

 

607 

 

 

526 

Loss on disposals of property, plant and equipment

 

 

76 

 

 

205 

Impairment charges on property, plant and equipment

 

 

319 

 

 

 -

Deferred rent

 

 

2,345 

 

 

2,911 

Stock based compensation

 

 

1,950 

 

 

2,759 

Deferred income taxes

 

 

1,415 

 

 

3,472 

Changes in operating assets and liabilities:

 

 

 

 

 

 -

Trade receivables

 

 

(1,342)

 

 

(249)

Inventories

 

 

(21,051)

 

 

3,369 

Prepaid expenses and other assets

 

 

(2,374)

 

 

4,163 

Accounts payable

 

 

(6,550)

 

 

5,421 

Income tax receivable / payable

 

 

2,520 

 

 

(1,163)

Accrued expenses and other liabilities

 

 

5,104 

 

 

(9,624)

Net cash provided by operating activities

 

 

15,721 

 

 

49,355 

Cash Flows From Investing Activities

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(22,893)

 

 

(28,031)

Proceeds from the sale of property, plant and equipment

 

 

13 

 

 

 -

Net cash used in investing activities

 

 

(22,880)

 

 

(28,031)

Cash Flows From Financing Activities

 

 

 

 

 

 

Payments of long-term debt and capital lease obligations

 

 

(95,235)

 

 

(44,672)

Advances on line of credit

 

 

114,095 

 

 

30,000 

Dividends paid

 

 

(7,800)

 

 

(7,764)

Proceeds from exercise of stock options

 

 

 -

 

 

1,635 

Employee taxes paid for shares withheld

 

 

(52)

 

 

(217)

Debt issuance costs

 

 

(374)

 

 

 -

Net cash provided by (used in) financing activities

 

 

10,634 

 

 

(21,018)

Effect of exchange rate changes on cash

 

 

(11)

 

 

30 

Net change in cash

 

 

3,464 

 

 

336 

Cash, cash equivalents and restricted cash beginning of period

 

 

7,476 

 

 

12,948 

Cash, cash equivalents and restricted cash end of period

 

$

10,940 

 

$

13,284 



 

 

 

 

 

 

Cash and cash equivalents

 

$

10,105 

 

$

12,429 

Restricted cash

 

 

835 

 

 

855 

Cash, cash equivalents and restricted cash end of period

 

$

10,940 

 

$

13,284 



 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

Purchases of property, plant and equipment included in accounts payable and accrued expenses

 

$

2,229 

 

$

4,935 

Cash paid for interest

 

 

1,846 

 

 

1,453 

Cash paid (received) for income taxes, net

 

 

240 

 

 

7,575 





8