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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________

FORM 10-Q

_____________________________

(Mark One)


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from – to –

Commission file number: 001-35629

_____________________________

TILE SHOP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_____________________________


Delaware	45-5538095
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


14000 Carlson Parkway
Plymouth, Minnesota	55441
(Address of principal executive offices)	(Zip Code)

(763) 852-2950

(Registrant’s telephone number, including area code)

_____________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	x
		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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of August 3, 2020, there were 51,673,420 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

Table of Contents

TILE SHOP HOLDINGS, INC.

Table of Contents


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statements of Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		32

‎

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

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



	June 30,		December 31,
	2020		2019
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	7,936	$	9,104
Restricted cash		815		815
Receivables, net		3,225		3,370
Inventories		79,053		97,620
Income tax receivable		9,641		3,090
Other current assets, net		21,940		8,180
Total Current Assets		122,610		122,179
Property, plant and equipment, net		113,209		130,461
Right of use asset		130,397		137,737
Deferred tax assets		4,139		7,196
Other assets		1,728		2,241
Total Assets	$	372,083	$	399,814

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	13,239	$	18,181
Income tax payable		193		87
Current portion of lease liability		32,270		26,993
Other accrued liabilities		42,720		24,589
Total Current Liabilities		88,422		69,850
Long-term debt		22,000		63,000
Long-term lease liability, net		122,682		131,451
Financing lease obligation, net		184		274
Other long-term liabilities		4,157		4,340
Total Liabilities		237,445		268,915

Stockholders’ Equity:
Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 51,370,167 and 50,806,674 shares, respectively		5		5
Preferred stock, par value $0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares		-		-
Additional paid-in-capital		157,493		156,482
Accumulated deficit		(22,776)		(25,518)
Accumulated other comprehensive loss		(84)		(70)
Total Stockholders' Equity		134,638		130,899
Total Liabilities and Stockholders' Equity	$	372,083	$	399,814

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(unaudited)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net sales	$	67,730	$	88,903	$	162,009	$	175,811
Cost of sales		22,316		27,543		51,640		52,609
Gross profit		45,414		61,360		110,369		123,202
Selling, general and administrative expenses		47,208		60,562		109,569		119,510
(Loss) income from operations		(1,794)		798		800		3,692
Interest expense		(559)		(943)		(1,407)		(1,921)
Other income		-		2		-		17
(Loss) income before income taxes		(2,353)		(143)		(607)		1,788
Benefit (provision) for income taxes		1,593		(11)		3,349		(622)
Net (loss) income	$	(760)	$	(154)	$	2,742	$	1,166

(Loss) income per common share:
Basic	$	(0.02)	$	(0.00)	$	0.05	$	0.02
Diluted	$	(0.02)	$	(0.00)	$	0.05	$	0.02

Weighted average shares outstanding:
Basic		49,926,267		50,999,341		49,884,169		51,476,442
Diluted		49,926,267		50,999,341		50,052,990		51,573,410

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net (loss) income	$	(760)	$	(154)	$	2,742	$	1,166
Currency translation adjustment		2		(25)		(14)		2
Other comprehensive (loss) income		2		(25)		(14)		2
Comprehensive (loss) income	$	(758)	$	(179)	$	2,728	$	1,168

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

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

(unaudited)



	Common stock
	Shares	Amount		Additional ‎paid-in ‎capital		Retained ‎earnings ‎(deficit)		Accumulated ‎other ‎comprehensive ‎income (loss)		Total
Balance at March 31, 2019	52,901,733	$	5	$	170,306	$	(17,997)	$	(29)	$	152,285
Adoption of lease standard	-		-		-		(1,738)		-		(1,738)
Balance at March 31, 2019	52,901,733	$	5	$	170,306	$	(19,735)	$	(29)	$	150,547
Issuance of restricted shares	76,275		-		-		-		-		-
Cancellation of restricted shares	(55,496)		-		-		-		-		-
Repurchase of common stock	(2,307,023)		-		(10,455)		-		-		(10,455)
Stock based compensation	-		-		770		-		-		770
Tax withholdings related to net share settlements of stock based compensation awards	-		-		(54)		-		-		(54)
Dividends paid ($0.05 per share)	-		-		(2,606)		-		-		(2,606)
Foreign currency translation adjustments	-		-		-		-		(25)		(25)
Net loss	-		-		-		(154)		-		(154)
Balance at June 30, 2019	50,615,489	$	5	$	157,961	$	(19,889)	$	(54)	$	138,023

Balance at March 31, 2020	51,396,986	$	5	$	156,969	$	(22,016)	$	(86)	$	134,872
Issuance of restricted shares	28,494		-		-		-		-		-
Cancellation of restricted shares	(55,313)		-		-		-		-		-
Stock based compensation	-		-		538		-		-		538
Tax withholdings related to net share settlements of stock based compensation awards	-		-		(14)		-		-		(14)
Foreign currency translation adjustments	-		-		-		-		2		2
Net loss	-		-		-		(760)		-		(760)
Balance at June 30, 2020	51,370,167	$	5	$	157,493	$	(22,776)	$	(84)	$	134,638

Table of Contents

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

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

(unaudited)



	Common stock
	Shares	Amount		Additional ‎paid-in ‎capital		Retained ‎earnings ‎(deficit)		Accumulated ‎other ‎comprehensive ‎income (loss)		Total
Balance at December 31, 2018	52,707,879	$	5	$	172,255	$	(25,857)	$	(56)	$	146,347
Adoption of lease standard	-		-		-		4,802		-		4,802
Balance at January 1, 2019	52,707,879	$	5	$	172,255	$	(21,055)	$	(56)	$