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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 September 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 November 4, 2020, there were 51,714,484 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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

33

Signatures

34

 

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)

September 30,

December 31,

2020

2019

(unaudited)

(audited)

Assets

Current assets:

Cash and cash equivalents

$

8,961

$

9,104

Restricted cash

735

815

Receivables, net

3,300

3,370

Inventories

72,954

97,620

Income tax receivable

7,691

3,090

Other current assets, net

25,396

8,180

Total Current Assets

119,037

122,179

Property, plant and equipment, net

105,778

130,461

Right of use asset

133,256

137,737

Deferred tax assets

6,455

7,196

Other assets

1,480

2,241

Total Assets

$

366,006

$

399,814

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

15,596

$

18,181

Income tax payable

112

87

Current portion of lease liability

28,239

26,993

Other accrued liabilities

49,269

24,589

Total Current Liabilities

93,216

69,850

Long-term debt

7,000

63,000

Long-term lease liability, net

124,678

131,451

Financing lease obligation, net

-

274

Other long-term liabilities

3,981

4,340

Total Liabilities

228,875

268,915

Stockholders’ Equity:

Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 51,693,455 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

158,037

156,482

Accumulated deficit

(20,862)

(25,518)

Accumulated other comprehensive loss

(49)

(70)

Total Stockholders' Equity

137,131

130,899

Total Liabilities and Stockholders' Equity

$

366,006

$

399,814

See accompanying Notes to Consolidated Financial Statements.

3


Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

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

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net sales

$

81,492

$

85,944

$

243,501

$

261,755

Cost of sales

26,188

26,775

77,828

79,384

Gross profit

55,304

59,169

165,673

182,371

Selling, general and administrative expenses

52,403

59,804

161,972

179,314

Income (loss) from operations

2,901

(635)

3,701

3,057

Interest expense

(239)

(1,027)

(1,646)

(2,948)

Other income

-

5

-

22

Income (loss) before income taxes

2,662

(1,657)

2,055

131

(Provision) benefit for income taxes

(748)

274

2,601

(348)

Net income (loss)

$

1,914

$

(1,383)

$

4,656

$

(217)

Income (loss) per common share:

Basic

$

0.04

$

(0.03)

$

0.09

$

(0.00)

Diluted

$

0.04

$

(0.03)

$

0.09

$

(0.00)

Weighted average shares outstanding:

Basic

50,009,000

49,769,739

49,926,083

50,901,289

Diluted

50,687,558

49,769,739

50,321,146

50,901,289

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

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss)

$

1,914

$

(1,383)

$

4,656

$

(217)

Currency translation adjustment

35

(37)

21

(35)

Other comprehensive income (loss)

35

(37)

21

(35)

Comprehensive income (loss)

$

1,949

$

(1,420)

$

4,677

$

(252)

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 June 30, 2019

50,615,489

$

5

$

157,961

$

(19,889)

$

(54)

$

138,023

Issuance of restricted shares

309,305

-

-

-

-

-

Cancellation of restricted shares

(112,740)

-

-

-

-

-

Stock based compensation

-

-

660

-

-

660

Tax withholdings related to net share settlements of stock based compensation awards

-

-

(90)

-

-

(90)

Dividends paid ($0.05 per share)

-

-

(2,494)

-

-

(2,494)

Foreign currency translation adjustments

-

-

-

-

(37)

(37)

Net loss

-

-

-

(1,383)

-

(1,383)

Balance at September 30, 2019

50,812,054

$

5

$

156,037

$

(21,272)

$

(91)

$

134,679

Balance at June 30, 2020

51,370,167

$

5

$

157,493

$

(22,776)

$

(84)

$

134,638

Issuance of restricted shares

359,233

-

-

-

-

-

Cancellation of restricted shares

(35,945)

-

-

-

-

-

Stock based compensation

-

-

567

-

-

567

Tax withholdings related to net share settlements of stock based compensation awards

-

-

(23)

-

-

(23)

Foreign currency translation adjustments

-

-

-

-

35

35

Net income

-

-

-

1,914

-

1,914

Balance at September 30, 2020

51,693,455

$

5

$

158,037

$

(20,862)

$

(49)

$

137,131

See accompanying Notes to Consolidated Financial Statements.

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

$

(21,055)

$

(56)

$

151,149

Issuance of restricted shares

666,753

-

-

-

-

-

Cancellation of restricted shares

(255,555)

-

-

-

-

-

Repurchase of common stock

(2,307,023)

-

(10,455)

-

-

(10,455)

Stock based compensation

-

-

2,169

-

-

2,169

Tax withholdings related to net share settlements of stock based compensation awards

-

-

(226)

-

-

(226)

Dividends paid ($0.15 per share)

-