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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, 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 October 30, 2023, there were 44,530,888 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

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

22

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

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

24

Item 3.

Defaults Upon Senior Securities

24

Item 4.

Mine Safety Disclosures

24

Item 5.

Other Information

24

Item 6.

Exhibits

27

Signatures

28

 

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)

September 30,

December 31,

2023

2022

(unaudited)

(audited)

Assets

Current assets:

Cash and cash equivalents

$

16,371

$

5,948

Restricted cash

655

1,811

Receivables, net

3,501

3,411

Inventories

98,710

120,952

Income tax receivable

435

3,859

Other current assets, net

10,352

10,422

Total Current Assets

130,024

146,403

Property, plant and equipment, net

65,133

71,095

Right of use asset

119,619

118,501

Deferred tax assets

4,470

6,536

Other assets

3,461

3,287

Total Assets

$

322,707

$

345,822

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

26,247

$

23,506

Income tax payable

113

3

Current portion of lease liability

27,214

27,866

Other accrued liabilities

32,756

31,916

Total Current Liabilities

86,330

83,291

Long-term debt

10,000

45,400

Long-term lease liability, net

103,786

103,353

Other long-term liabilities

3,836

5,009

Total Liabilities

203,952

237,053

Stockholders’ Equity:

Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 44,561,554 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

128,582

127,997

Accumulated deficit

(9,745)

(19,180)

Accumulated other comprehensive loss

(86)

(52)

Total Stockholders' Equity

118,755

108,769

Total Liabilities and Stockholders' Equity

$

322,707

$

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

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Net sales

$

92,112

$

97,154

$

292,688

$

307,230

Cost of sales

32,549

32,542

104,285

104,754

Gross profit

59,563

64,612

188,403

202,476

Selling, general and administrative expenses

56,734

59,109

173,715

182,459

Income from operations

2,829

5,503

14,688

20,017

Interest expense

(453)

(319)

(1,920)

(786)

Income before income taxes

2,376

5,184

12,768

19,231

Provision for income taxes

(532)

(1,361)

(3,333)

(4,981)

Net income

$

1,844

$

3,823

$

9,435

$

14,250

Income per common share:

Basic

$

0.04

$

0.08

$

0.22

$

0.28

Diluted

$

0.04

$

0.08

$

0.22

$

0.28

Weighted average shares outstanding:

Basic

43,522,768

50,423,923

43,385,316

50,674,870

Diluted

43,733,706

50,717,426

43,555,988

51,080,404

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

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Net income

$

1,844

$

3,823

$

9,435

$

14,250

Currency translation adjustment

(3)

(46)

(34)

(87)

Other comprehensive income

(3)

(46)

(34)

(87)

Comprehensive income

$

1,841

$

3,777

$

9,401

$

14,163

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 June 30, 2022

52,270,922

$

5

$

127,298

$

5,714

$

(29)

$

132,988

Cancellation of restricted shares

(77,292)

-

-

-

-

-

Stock based compensation

-

-

563

-

-

563

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

(14,678)

-

(48)

-

-

(48)

Repurchases of common stock

(4,094,592)

-

-

(15,545)

-

(15,545)

Foreign currency translation adjustments

-

-

-

-

(46)

(46)

Net income

-

-

-

3,823

-

3,823

Balance at September 30, 2022

48,084,360

$

5

$

127,813

$

(6,008)

$

(75)

$

121,735

Balance at June 30, 2023

44,567,055

$

4

$

128,257

$

(11,589)

$

(83)

$

116,589

Issuance of common stock upon exercise of options

1,790

-

4

-

-

4

Stock based compensation

-

-

366

-

-

366

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

(7,291)

-

(45)

-

-

(45)

Foreign currency translation adjustments

-

-

-

-

(3)

(3)

Net income

-

-

-

1,844

-

1,844

Balance at September 30, 2023

44,561,554

$

4

$

128,582

$

(9,745)

$

(86)

$

118,755

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

(258,038)

-

-

-

-

-

Stock based compensation

-

-

1,617

-

-

1,617

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

(118,783)

-

(724)

-

-

(724)

Repurchases of common stock

(4,094,592)

-

-

(15,545)

-

(15,545)

Foreign currency translation adjustments

-

-

-

-

(87)

(87)

Net income

-

-

-

14,250

-

14,250

Balance at September 30, 2022

48,084,360

$

5

$

127,813

$

(6,008)

$

(75)

$

121,735