0001552800 false 0001552800 2022-05-06 2022-05-06 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

  

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): May 6, 2022

 

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)
   
¨ 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))

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.0001 par value   TTSH   The Nasdaq Stock Market LLC

   

Indicate by check mark whether the registrant is an emerging growth company 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 2.02Results of Operations and Financial Condition

 

On May 6, 2022, Tile Shop Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2022. 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 9.01Financial Statements and Exhibits
(d)Exhibits.

 

99.1Press Release of Tile Shop Holdings, Inc., dated May 6, 2022.
  
104Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

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/ Karla Lunan
Date: May 6, 2022 Name: Karla Lunan
  Title: Chief Financial Officer

 

 

Exhibit 99.1

 

 

THE TILE SHOP REPORTS First Quarter 2022 RESULTS

 

MINNEAPOLIS – May 6, 2022 – Tile Shop Holdings, Inc. (Nasdaq: TTSH) (the “Company”), a specialty retailer of natural stone and man-made tiles, today announced results for its first quarter ended March 31, 2022.

 

First Quarter Summary

 

Net Sales Increased 11.3%

Comparable Store Sales Increased 10.7%

Gross Margin of 65.2%

Net income of $3.5 Million; Adjusted EBITDA of $11.7 Million

Diluted Earnings per Share of $0.07

 

Management Commentary – Cabell Lolmaugh, CEO

 

“We are pleased with our continued strong topline performance. We eclipsed $100 million of sales in a quarter for the first time in our history and this marks our fourth consecutive quarterly sales record,” stated Cabell Lolmaugh, CEO. “While our store sales productivity continues to improve, inflationary cost pressures had an adverse impact on our gross margin rate during the quarter. While we are encouraged that the rate of margin decline has slowed from the prior quarter, the economic environment remains volatile. We have taken and plan to continue to take pricing actions in response to the inflationary cost pressure.”

 

   Three Months Ended 
(unaudited, dollars in thousands, except per  March 31, 
share data)  2022   2021 
Net sales  $102,471   $92,084 
Net sales (decline) growth(1)   11.3%   (2.3)%
Comparable store sales (decline) growth(2)   10.7%   (2.3)%
Gross margin rate   65.2%   69.7%
Income from operations as a % of net sales   4.6%   7.5%
Net income  $3,513   $5,297 
Net income per diluted share  $0.07   $0.10 
Adjusted EBITDA  $11,667   $14,694 
Adjusted EBITDA as a % of net sales   11.4%   16.0%
Number of stores open at the end of period   143    143 

 

(1)As compared to the prior year period.
(2)The comparable store sales operating metric 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 calculation. Comparable store sales includes total charges to customers less any actual returns. The Company includes the change in allowance for anticipated sales returns applicable to comparable stores in the comparable store sales calculation.

 

FIRST QUARTER 2022

 

Net Sales

 

Net sales for the first quarter of 2022 increased $10.4 million, or 11.3%, over the first quarter of 2021. Sales increased at comparable stores by 10.7% during the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in average ticket driven by higher prices.

 

Gross Profit

 

Gross profit increased $2.7 million, or 4.1%, in the first quarter of 2022 compared to the first quarter of 2021. The gross margin rate was 65.2% and 69.7% during the first quarter of 2022 and 2021, respectively. The decrease in the gross margin rate was primarily due to vendor price increases in response to increases in the cost of energy, labor and other inflationary cost pressures as well as higher international freight rates. These cost increases were partially offset by an increase in our selling prices.

 

 

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses increased $4.8 million, or 8.4%, from $57.3 million in the first quarter of 2021 to $62.1 million in the first quarter of 2022, primarily due to a $3.9 million increase in payroll and benefits expenses associated with headcount additions made over the last year. Additionally, marketing expenses increased by $0.7 million and distribution costs increased by $0.5 million, which were partially offset by a $0.8 million decrease in depreciation expense.

 

Provision for Income Taxes

 

The provision for income taxes for the first quarter of 2022 and 2021 was $1.0 million and $1.4 million respectively. The decrease in the provision for income tax was due to a decrease in pretax income. Our effective tax rate was 21.4% in both the first quarter of 2022 and the first quarter of 2021.

 

Capital Structure and Liquidity

 

As of March 31, 2022, our cash balance was $13.5 million and our debt balance was $5.0 million.

 

NON-GAAP INFORMATION

 

Adjusted EBITDA

 

Adjusted EBITDA for the first quarter of 2022 was $11.7 million compared with $14.7 million for the first quarter of 2021. See the table below for a reconciliation of GAAP net income to Adjusted EBITDA.

 

   Three Months Ended 
  March 31, 
($ in thousands, unaudited)  2022   % of net sales   2021   % of net sales 
GAAP net income  $3,513    3.4%  $5,297    5.8%
Interest expense   266    0.3    168    0.2 
Provision (benefit) for income taxes   957    0.9    1,443    1.6 
Depreciation and amortization   6,439    6.3    7,194    7.8 
Stock-based compensation   492    0.5    592    0.6 
Adjusted EBITDA  $11,667    11.4%  $14,694    16.0%

 

Pretax Return on Capital Employed

 

Pretax Return on Capital Employed was 13.1% for the trailing twelve months as of the end of the first quarter in 2022 compared to 7.3% for the trailing twelve months as of the end of the first quarter in 2021. See the Pretax Return on Capital Employed calculation in the table below.

 

   March 31, 
($ in thousands, unaudited)  2022(1)   2021(1) 
Income from Operations (trailing twelve months)  $18,438   $10,691 
           
Total Assets   350,217    358,686 
Less: Accounts payable   (23,724)   (15,255)
Less: Income tax payable   (409)   (141)
Less: Other accrued liabilities   (42,174)   (42,341)
Less: Lease liability   (138,478)   (150,892)
Less: Other long-term liabilities   (5,086)   (3,965)
Capital Employed   140,346    146,092 
           
Pretax Return on Capital Employed   13.1%   7.3%

 

(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.

 

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 expense. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. The Company calculates Pretax Return on Capital Employed by taking income (loss) from operations divided by capital employed. Capital employed equals total assets less accounts payable, income taxes payable, other accrued liabilities, lease liability and other long-term liabilities. Other companies may calculate both Adjusted EBITDA and Pretax Return on Capital Employed differently, limiting the usefulness of these measures for comparative purposes.

 

2

 

 

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, for budgeting and planning purposes and for assessing the effectiveness of capital allocation over time. 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.

 

WEBCAST AND CONFERENCE CALL

 

As announced on April 29, 2022, the Company will host a conference call via webcast for investors and other interested parties beginning at 9:00 a.m. Eastern Time on Friday, May 6, 2022. The call will be hosted by Cabell Lolmaugh, CEO, Karla Lunan, CFO, and Mark Davis, Vice President of Investor Relations and Chief Accounting Officer.

 

Participants may access the 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.

 

The Company intends to use its website, investors.tileshop.com, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Such disclosures will be included on the Company’s website under the heading News and Events. Accordingly, investors should monitor such portions of the Company’s website, in addition to following its press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

 

Contact: 

Investors and Media:

Mark Davis

investorrelations@tileshop.com

 

ABOUT THE TILE SHOP

 

Tile Shop Holdings, Inc. (Nasdaq: TTSH), is a leading specialty retailer of natural stone and man-made 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. The Tile Shop currently operates 143 stores in 31 states and the District of Columbia.

 

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.

 

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. 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 such 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 Securities and Exchange Commission by the Company.

 

3

 

 

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

($ in thousands, except per share data)

 

   (Unaudited)   (Audited) 
   March 31,   December 31, 
   2022   2021 
Assets          
Current assets:          
Cash and cash equivalents  $13,455   $9,358 
Restricted cash   655    655 
Receivables, net   3,512    3,202 
Inventories   104,701    97,175 
Income tax receivable   6,238    6,923 
Other current assets, net   8,786    9,769 
Total Current Assets   137,347    127,082 
Property, plant and equipment, net   79,188    82,285 
Right of use asset   117,337    123,101 
Deferred tax assets   6,906    6,953 
Other assets   2,025    1,337 
Total Assets  $342,803   $340,758 
           
Liabilities and Stockholders' Equity          
Current liabilities:          
Accounts payable  $28,561   $30,884 
Income tax payable   616    390 
Current portion of lease liability   28,678    28,190 
Other accrued liabilities   46,531    38,249 
Total Current Liabilities   104,386    97,713 
Long-term debt, net   5,000    5,000 
Long-term lease liability, net   103,331    110,261 
Other long-term liabilities   4,461    5,560 
Total Liabilities   217,178    218,534 
           
Stockholders’ Equity:          
Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 52,112,567 and 51,963,377 shares, respectively   5    5 
Preferred stock, par value $0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares   -    - 
Additional paid-in capital   126,805    126,920 
Accumulated deficit   (1,200)   (4,713)
Accumulated other comprehensive loss   15    12 
Total Stockholders' Equity   125,625    122,224 

 

4

 

 

Tile Shop Holdings, Inc. and Subsidiaries 

Consolidated Statements of Operations

($ in thousands, except per share data)

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2022   2021 
Net sales  $102,471   $92,084 
Cost of sales   35,626    27,898 
Gross profit   66,845    64,186 
Selling, general and administrative expenses   62,109    57,278 
Income from operations   4,736    6,908 
Interest expense   (266)   (168)
Income before income taxes   4,470    6,740 
Provision for income taxes   (957)   (1,443)
Net income  $3,513   $5,297 
           
Income per common share:          
Basic  $0.07   $0.11 
Diluted  $0.07   $0.10 
           
Weighted average shares outstanding:          
Basic   50,713,809    50,105,825 
Diluted   51,162,891    51,056,798 

 

Tile Shop Holdings, Inc. and Subsidiaries

Rate Analysis

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2022   2021 
Gross margin rate   65.2%   69.7%
SG&A expense rate   60.6%   62.2%
Income from operations margin rate   4.6%   7.5%
Adjusted EBITDA margin rate   11.4%   16.0%

 

5

 

 

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

($ in thousands)

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2022   2021 
Cash Flows From Operating Activities          
Net income  $3,513   $5,297 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   6,439    7,194 
Amortization of debt issuance costs   79    76 
Non-cash lease expense   6,437    6,155 
Stock based compensation   492    592 
Deferred income taxes   47    (113)
Changes in operating assets and liabilities:          
Receivables   (310)   (40)
Inventories   (7,526)   3,324 
Other current assets, net   217    1,064 
Accounts payable   (2,845)   1,580 
Income tax receivable / payable   910    1,558 
Accrued expenses and other liabilities   181    3,427 
Net cash provided by operating activities   7,634    30,114 
Cash Flows From Investing Activities          
Purchases of property, plant and equipment   (2,933)   (3,202)
Cash Flows From Financing Activities          
Payments of long-term debt and financing lease obligations   (10,000)   - 
Advances on line of credit   10,000    - 
Employee taxes paid for shares withheld   (607)   (603)
Net cash used in financing activities   (607)   (603)
Effect of exchange rate changes on cash   3    7 
Net change in cash, cash equivalents and restricted cash   4,097    26,316 
Cash, cash equivalents and restricted cash beginning of period   10,013    10,272 
Cash, cash equivalents and restricted cash end of period  $14,110   $36,588 
           
Cash and cash equivalents  $13,455   $35,933 
Restricted cash   655    655 
Cash, cash equivalents and restricted cash end of period  $14,110   $36,588 
           
Supplemental disclosure of cash flow information          
Purchases of property, plant and equipment included in accounts payable and accrued expenses  $566   $161 
Cash paid for interest   339    238 

 

6