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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, 2023

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

Common Stock, $0.0001 par value

TTSH

The Nasdaq Stock Market LLC

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 1, 2023, there were 44,561,554 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 Income

4

Consolidated Statements of Comprehensive Income

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

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

21

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

22

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

22

Item 3.

Defaults Upon Senior Securities

22

Item 4.

Mine Safety Disclosures

22

Item 5.

Other Information

23

Item 6.

Exhibits

25

Signatures

26

 

2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

  

Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except per share data)

June 30,

December 31,

2023

2022

(unaudited)

(audited)

Assets

Current assets:

Cash and cash equivalents

$

14,592

$

5,948

Restricted cash

655

1,811

Receivables, net

3,871

3,411

Inventories

106,862

120,952

Income tax receivable

875

3,859

Other current assets, net

9,007

10,422

Total Current Assets

135,862

146,403

Property, plant and equipment, net

66,938

71,095

Right of use asset

114,616

118,501

Deferred tax assets

4,530

6,536

Other assets

3,493

3,287

Total Assets

$

325,439

$

345,822

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

24,385

$

23,506

Income tax payable

85

3

Current portion of lease liability

27,411

27,866

Other accrued liabilities

33,645

31,916

Total Current Liabilities

85,526

83,291

Long-term debt

20,000

45,400

Long-term lease liability, net

98,845

103,353

Other long-term liabilities

4,479

5,009

Total Liabilities

208,850

237,053

Stockholders’ Equity:

Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 44,567,055 and 44,377,445 shares, respectively

4

4

Preferred stock, par value $0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares

-

-

Additional paid-in capital

128,257

127,997

Accumulated deficit

(11,589)

(19,180)

Accumulated other comprehensive loss

(83)

(52)

Total Stockholders' Equity

116,589

108,769

Total Liabilities and Stockholders' Equity

$

325,439

$

345,822

See accompanying Notes to Consolidated Financial Statements.

3


Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Net sales

$

98,557

$

107,604

$

200,576

$

210,075

Cost of sales

35,255

36,586

71,736

72,212

Gross profit

63,302

71,018

128,840

137,863

Selling, general and administrative expenses

55,568

61,240

116,981

123,349

Income from operations

7,734

9,778

11,859

14,514

Interest expense

(668)

(201)

(1,466)

(467)

Income before income taxes

7,066

9,577

10,393

14,047

Provision for income taxes

(1,987)

(2,663)

(2,802)

(3,620)

Net income

$

5,079

$

6,914

$

7,591

$

10,427

Income per common share:

Basic

$

0.12

$

0.14

$

0.18

$

0.21

Diluted

$

0.12

$

0.13

$

0.17

$

0.20

Weighted average shares outstanding:

Basic

43,363,374

50,890,063

43,300,962

50,802,423

Diluted

43,508,221

51,253,543

43,465,235

51,214,607

See accompanying Notes to Consolidated Financial Statements.

 

4


Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Net income

$

5,079

$

6,914

$

7,591

$

10,427

Currency translation adjustment

(36)

(43)

(31)

(41)

Other comprehensive income

(36)

(43)

(31)

(41)

Comprehensive income

$

5,043

$

6,871

$

7,560

$

10,386

See accompanying Notes to Consolidated Financial Statements.


5


Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(dollars in thousands)

(unaudited)

 

Common stock

Shares

Amount

Additional
paid-in
capital

Accumulated
deficit

Accumulated
other
comprehensive
income (loss)

Total

Balance at March 31, 2022

52,112,567

$

5

$

126,805

$

(1,200)

$

14

$

125,624

Issuance of restricted shares

172,429

-

-

-

-

-

Cancellation of restricted shares

(2,918)

-

-

-

-

-

Stock based compensation

-

-

562

-

-

562

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

(11,156)

-

(69)

-

-

(69)

Foreign currency translation adjustments

-

-

-

-

(43)

(43)

Net income

-

-

-

6,914

-

6,914

Balance at June 30, 2022

52,270,922

$

5

$

127,298

$

5,714

$

(29)

$

132,988

Balance at March 31, 2023

44,608,983

$

4

$

127,975

$

(16,668)

$

(47)

$

111,264

Issuance of restricted shares

115,752

-

-

-

-

-

Cancellation of restricted shares

(153,752)

-

-

-

-

-

Stock based compensation

-

-

301

-

-

301

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

(3,928)

-

(19)

-

-

(19)

Foreign currency translation adjustments

-

-

-

-

(36)

(36)

Net income

-

-

-

5,079

-

5,079

Balance at June 30, 2023

44,567,055

$

4

$

128,257

$

(11,589)

$

(83)

$

116,589

See accompanying Notes to Consolidated Financial Statements.


6


Tile Shop Holdings, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(dollars in thousands)

(unaudited)

 

Common stock

Shares

Amount

Additional
paid-in
capital

Accumulated
deficit

Accumulated
other
comprehensive
income (loss)

Total

Balance at December 31, 2021

51,963,377

$

5

$

126,920

$

(4,713)

$

12

$

122,224

Issuance of restricted shares

592,396

-

-

-

-

-

Cancellation of restricted shares

(180,746)

-

-

-

-

-

Stock based compensation

-

-

1,054

-

-

1,054

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

(104,105)

-

(676)

-

-

(676)

Foreign currency translation adjustments

-

-

-

-

(41)

(41)

Net income

-

-

-

10,427

-

10,427

Balance at June 30, 2022

52,270,922

$

5

$

127,298

$

5,714

$

(29)

$

132,988

Balance at December 31, 2022

44,377,445

$

4

$

127,997

$

(19,180)

$

(52)

$

108,769

Issuance of restricted shares

611,154

-

-

-

-

-

Cancellation of restricted shares

(329,536)

-

-

-