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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


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

‎

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)



	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.

Table of Contents

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.

Table of Contents

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.

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 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.

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)	$	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)	-		-		(7,706)		-