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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

OR

 

¨ 

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

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.

 

 


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

 

2


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.

3


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.

 

4


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.

5


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

6


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