UNITES 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): July 30, 2013

 

TILE SHOP HOLDINGS, INC.

(Exact name of Registrant as Specified in its Charter)

 

Delaware (State or other jurisdiction of incorporation)

001-35629 (Commission File Number)

45-5538095 (IRS Employer Identification No.)

 

14000 Carlson Parkway, Plymouth, Minnesota 55441 (Address of principal executive offices, including ZIP code)

 

(763) 852-2901 (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))

  

 

Item 2.02

Results of Operations and Financial Condition.

 

On July 30, 2013, Tile Shop Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2013. 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.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1 Press Release of Tile Shop Holdings, Inc., dated July 30, 2013, announcing its financial results for the three months ended June 30, 2013.

 

 

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 on July 30, 2013.

 

	TILE SHOP HOLDINGS, INC.
	By: /s/ Timothy C. Clayton
	Name: Timothy C. Clayton
	Title: Chief Financial Officer

  

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

TILE SHOP HOLDINGS, INC.

EXHIBIT INDEX TO FORM 8-K

 

Date of Report:		Commission File No.:
May 1, 2013		0001-35629

 

Exhibit No.		ITEM
99.1		Press Release of Tile Shop Holdings, Inc., dated July 30, 2013 announcing its financial results for the three months ended June 30, 2013.

 

 

 

 

 

THE TILE SHOP REPORTS SECOND QUARTER 2013 RESULTS

 

— 14.3% Comparable Store Sales Growth –

 

— Adjusted EBITDA Increases 16.6% to $15.8 Million –

 

— Company Now Expects to Open 20 New Stores in 2013 –

  

July 30, 2013 – Tile Shop Holdings, Inc. (NASDAQ: TTS) (the “Company”), a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories, today announced results for its second quarter ended June 30, 2013.

 

Net sales increased 25.5% to $58.1 million for the quarter ended June 30, 2013 compared with $46.3 million for the second quarter last year. The $11.8 million increase in sales was driven by an increase in comparable store sales of 14.3% or $6.6 million, and incremental net sales of $5.2 million from stores not included in the comparable stores base. For the quarter, Adjusted EBITDA grew 16.6% to $15.8 million, compared to $13.6 million in the same period of the prior year. Adjusted EBITDA as a percentage of sales was 27.2%.

 

Robert Rucker, Chief Executive Officer, stated, “Strong performance at both the Company’s new stores and at its legacy stores contributed to another strong quarter. The 14.3% increase in same store sales, represents both meaningful sequential, as well as year-over year growth.”

 

“The Tile Shop is proving that its model has a strong affinity with the consumer across all of our markets, as demonstrated by our increasing market share”, Mr. Rucker continued. The combination of our broad product assortment, room-sized displays, knowledgeable sales associates and competitive pricing, provide a very satisfying in-store experience for our customers. Because of the success of our retail model, our investments in additional infrastructure to support our growth, and the recent opening of our new distribution center in southern Oklahoma, we are in position to increase our expected new store openings in 2013 from 17 to 20. While this may result in some short term margin pressures, it is an important investment that will provide for increased long-term growth and build additional value for all our stakeholders.”

 

During the second quarter, the Company opened four new stores, which are located in Warwick RI, Glen Burnie MD, Greenville SC, and Plano TX. In July, the Company opened new stores in Dallas, TX and Timonium, MD, bringing the total number of stores that the Company operates to 77 stores in 25 states.

 

The following is a reconciliation of net income to Adjusted EBITDA. See also the “Non-GAAP Financial Measures” section below.

 

 

Adjusted EBITDA (in thousands) (Unaudited)		Three months ended June 30,								Six months ended June 30,
		2013				2012				2013				2012
Net income (loss)		$	3,584			$	10,657			$	(41,133	)		$	20,789
Interest expense			495				85				1,089				176
Income taxes			4,015				175				8,279				424
Change in fair value of warrants			2,374				-				54,219				-
Depreciation and amortization			3,407				2,551				6,451				4,793
Deferred compensation expense			-				113				-				1,273
Non-recurring transaction related costs			785				-				1,025				-
Stock-based compensation			1,172				-				2,264				-
Adjusted EBITDA		$	15,832			$	13,581			$	32,194			$	27,455

 

Pro-Forma Non-GAAP Information

 

The Company presents pro–forma non-GAAP net income to provide useful information to investors regarding the Company’s normal operating performance. Pro-forma non-GAAP net income adds back the non-cash expense related to the change in warrant liability, non-recurring transaction related costs, and includes a pro-forma adjustment for income tax expense as if the Company had been a "C" corporation at the beginning of each period.

 

On a pro-forma non-GAAP basis, net income for the quarters ended June 30, 2013 and 2012 would have been $6.5 million, and pro-forma non-GAAP earnings per diluted share for both quarters would have been $0.13 per diluted share. See the “Pro-forma Non-GAAP Net Income” table and the “Non-GAAP Financial Measures” section below for a reconciliation of non-GAAP to GAAP earnings.

 

		Three months ended June 30,								Six months ended June 30,
		2013				2012				2013				2012
Reported income (loss) before income taxes		$	7,599			$	10,832			$	(32,854	)		$	21,213
Change in fair value of warrants			2,374				-				54,219				-
Non-recurring transaction related costs			785				-				1,025				-
Pro-forma non-GAAP net income before taxes			10,758				10,832				22,390				21,213
Pro forma provision for income taxes			(4,282	)			(4,311	)			(8,911	)			(8,443	)
Pro-forma non-GAAP net income		$	6,476			$	6,521			$	13,479			$	12,770
Basic shares outstanding			50,852,974				50,852,974				50,852,974				50,852,974
Diluted shares outstanding			51,697,758				51,697,758				51,697,758				51,697,758
Pro forma basic earnings per share		$	0.13			$	0.13			$	0.27			$	0.25
Pro forma diluted earnings per share		$	0.13			$	0.13			$	0.26			$	0.25

  

 

Webcast and Conference Call

 

The Company will host a conference call via live webcast for investors and other interested parties beginning at 5:00 p.m. Eastern Time on Tuesday, July 30, 2013. Participants may access the live webcast by visiting the Company’s investor relations website at www.tileshop.com. The call can also be accessed by dialing (877) 407-3892, or (201) 493-6780 for international participants. The replay of the call will be available from approximately 8:00 p.m. Eastern Time on July 30, 2013 through midnight Eastern Time on August 13, 2013. To access the replay, the domestic dial-in number is (877) 870-5176, the international dial-in number is (858) 384-5517, and the passcode is 417099. The archive of the webcast will be available on the Company’s Web site for a limited time.

 

Additional details can be located in the filing at www.tileshop.com under the Financials – SEC Filings section of its Legal/Investors – Investor Relations page.

 

About Tile Shop Holdings and The Tile Shop

 

The Tile Shop is a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States. The Tile Shop offers a wide selection of products, attractive prices, and exceptional customer service in an extensive showroom setting. The Tile Shop operates 77 stores in 25 states, with an average size of 23,000 square feet. The Tile Shop also sells its products on its website, www.tileshop.com.

 

Non-GAAP Financial Measures

 

We calculate Adjusted EBITDA by taking net income calculated in accordance with GAAP, and adding interest expense, income taxes, depreciation and amortization, non-cash change in warrant liability, deferred compensation expense, stock-based compensation expense and non-recurring transaction related costs (secondary offerings, warrant exercise and redemptions and initial merger transaction). Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. Pro-forma non-GAAP net income is determined by adding back the non-cash change in warrant liability, and non-recurring transaction related costs to income before taxes calculated in accordance with GAAP and subtracting from this an estimate for income taxes as if the Company had been a “C” Corporation for all periods.

 

We believe that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, for purposes of determining management incentive compensation, and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and our board of directors. We believe that the use of these non-GAAP financial measures provide an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other specialty retailers, many of which present similar non-GAAP financial measures to investors.

 

Our 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 recorded in our 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. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures and not to rely on any single financial measure to evaluate our business.

 

 

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 plans, expected financial performance of new stores, and the benefits of the Company’s operating model. 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 those 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 SEC by the Company.

 

Contacts:

 

Investors and Media: Brad Cohen: 763-852-2988 investorrelations@tileshop.com

  

 

Tile Shop Holdings Inc and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
		Three months ended June 30,								Six months ended June 30,
		2013				2012				2013				2012
Net sales		$	58,123			$	46,314			$	114,958			$	92,175
Cost of sales			17,257				12,655				33,719				24,828
Gross profit			40,866				33,659				81,239				67,347
Selling, general and administrative expenses			30,390				22,643				58,744				44,707
Deferred compensation expense			-				113				-				1,273
Income from operations			10,476				10,903				22,495				21,367
Interest expense			495				85				1,089				176
Change in value of warrants			2,374				-				54,219				-
Other (expense) income			(8	)			14				(41	)			22
Income (loss) before income taxes			7,599				10,832				(32,854	)			21,213
Provision for income taxes			(4,015	)			(175	)			(8,279	)			(424	)
Net income (loss)		$	3,584			$	10,657			$	(41,133	)		$	20,789
Weighted average basic shares outstanding			51,556,088				32,000,000				48,224,049				32,000,000
Basic income (loss) earnings per share		$	0.07			$	0.33			$	(0.85	)		$	0.65
Weighted average diluted shares outstanding			53,259,250				32,000,000				48,224,049				32,000,000
Diluted income (loss) earnings per share		$	0.07			$	0.33			$	(0.85	)		$	0.65
Pro forma computation related to conversion to C Corporation
for income tax purposes (1)
Historical income before income taxes		$	-			$	10,831			$	-			$	21,213
Pro forma provision for income taxes			-				(4,311	)			-				(8,485	)
Pro forma net income		$	-			$	6,520			$	-			$	12,728

 

(1) Company converted to C Corporation in August, 2012

 

 

Tile Shop Holdings Inc and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
		June 30, 2013				December 31, 2012
		(unaudited)				(audited)
ASSETS
Current assets:
Cash and cash equivalents		$	3,810			$	2,987
Inventories			58,684				46,890
Prepaid inventory			8,659				6,051
Income tax receivable			6,677				2,529
Deferred tax asset			10,522				9,364
Other current assets			3,408				3,992
Total current assets			91,760				71,813
Property, plant and equipment, net			99,945				82,080
Deferred tax asset			19,354				20,865
Other assets			1,248				1,316
TOTAL ASSETS		$	212,307			$	176,074
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	23,044			$	14,968
Current portion of long term debt and capital leases			3,845				4,094
Accrued wages and salaries			3,351				2,912
Other accrued liabilities			8,618				7,734
Deferred compensation			6,168				6,171
Total current liabilities			45,026				35,879
Long-term debt, net			71,370				69,310
Capital lease obligation, net			1,283				1,420
Deferred rent			22,089				18,583
Warrant liability			-				95,645
TOTAL LIABILITIES			139,768				220,837
Commitments and contingencies
Stockholders’ equity:
Common stock, par value 0.0001; authorized: 100,000,000 shares;
issued: 51,147,949 and 43,177,822 shares			5				4
Preferred stock, par value $.0001; authorized: 10,000,000 shares; 0 issued shares			-				-
Additional paid-in-capital			167,867				9,434
Accumulated deficit			(95,333	)			(54,201	)
Total stockholders’ equity			72,539				(44,763	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	212,307			$	176,074

  

 

Tile Shop Holdings Inc and Subsidiaries
Consolidated Statement of Cash Flows
($ in thousands)
(Unaudited)
		Six months ended June 30,
		2013				2012
Cash Flows From Operating Activities
Net (loss) income		$	(41,133	)		$	20,789
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt issuance costs			60				-
Depreciation and amortization			6,451				4,793
Loss on disposals of property, plant and equipment			62				3
Market value adjustment to preferred units			-				23
Change in fair value of warrants			54,219				-
Deferred rent			3,506				2,417
Stock based compensation			2,264				-
Deferred income taxes			353				-
Changes in operating assets and liabilities:
Trade receivables			(528	)			(387	)
Inventories			(11,794	)			1,957
Prepaid expenses and other current assets			(1,479	)			(3,477	)
Accounts payable			5,544				5,309
Accrued interest			149				-
Income tax receivable			(4,148	)			-
Accrued expenses and other liabilities			1,170				1,260
Net cash provided by operating activities			14,696				32,687
Cash Flows From Investing Activities
Purchases of property, plant and equipment			(21,845	)			(12,138	)
Net cash used in investing activities			(21,845	)			(12,138	)
Cash Flows From Financing Activities
Payments of long-term debt and capital lease obligations			(30,326	)			(583	)
Proceeds from long-term debt			32,000				37
Distribution to members			-				(10,274	)
Preferred stock distributions			-				(300	)
Repurchase of warrants			(30,108	)			-
Repurchase of common units			(46,000	)			-
Proceeds from exercise of warrants			82,413				-
Debt issuance costs			(7	)			-
Receipt on note from member			-				1,205
Net cash provided by financing activities			7,972				(9,915	)
Net change in cash			823				10,634
Cash and cash equivalents beginning of period			2,987				6,283
Cash and cash equivalents end of period		$	3,810			$	16,917