The following excerpt is from the company's SEC filing.
: TTS) (the “Company”), a specialty retailer of natural stone
tiles, setting and maintenance materials, and related accessories, today announced results for its
omparable Store Sales Declined
70.3% Gross Margin
s per Share of $0.08
GAAP Net Income of $4.0 million;
Adjusted EBITDA of $13.8
stores in Q1 – 140 stores open at
end of Q1
Completed 4 store remodels in Q1
“During the first quarter, we elim inated advertised price promotions which contributed to an increase in our gross margin rate back to the high-end of where we typically expect. This was a great early sign that our key initiatives are taking hold as we return to what Tile Shop is known for,” said Robert Rucker, interim CEO. “Without using the promotional lever in the quarter we did experience the volatility in traffic and sales at comparable stores relative to last year that we expected. However, we are getting our new tile product on the floors of our showrooms fast and I am encouraged by the initial sales results from the new products we’ve recently added to our assortment. We are also making strides with winning back our pros, as pro feedback continues to be positive and pro sales metrics are starting to reflect this fact. In addition, our investments in remodels, store compensation and training are helping us build on our commitment to provide exceptional service to all of our customers. Although much work remains, we are confident we are on the right path.”
Three Months Ended
(unaudited, amounts in thousands, except per
Net sales (decline) growth
Comparable store sales (decline) growth
Gross margin rate
Income from operations as a % of net sales
Net income per diluted share
Adjusted EBITDA as a % of net sales
Number of stores open at the end of period
As compared to the prior year period.
store sales growth is the percentage change in sales of
stores period over period. A store is considered comparable on the first day of the 13th full month of operation. When a store
relocated, it is excluded from the
store sales growth calculation.
store sales growth amounts include total charges to customers less any actual returns.
store sales data reported by other companies may be prepared on a different basis and therefore may not be useful for purposes of comparing
results to those of other businesses.
HIGHLIGHTS FOR THE
decreased $1.0 million, or
from $92.1 million
in the first quarter of 2017 to
in the first quarter of 2018.
was due to
comparable store sales decrease of
%, or $
, offset by net sales of $5.3 million from stores not included in the comparable store base
The decrease in comparable store sales
due in part to the Company’s
elimination of advertised price promotions.
decreased $0.7 million
from $64.7 million in the first quarter of 2017 to $64.0 million in the first quarter of 2018.
The gross margin rate improved sequentially from
the fourth quarter of
2017 primarily due to
decreased promotional activity.
General and Administrative Expenses
Selling, general and administrative expenses
increased $6.7 million, or 13.1%, from $51.2 million in the first quarter of 2017 to $57.9 million in the first quarter of 2018
million increase was driven
costs associated with opening and operating
over the past twelve months
increased $19.0 million, or 27.5%, from $69.3 million at March 31, 2017 to $88.3 million at March 31, 2018. The increase was the result of the Company’s strategy to expand its product assortment and improve its product presentation.
During the quarter, the Company reduced its long-term debt
by approximately $1.9 million.
As part of its ongoing efforts to enhance its capital
, the Company amended its credit agreement to reduce the
fixed charge ratio to 1.35 and to increase the
rent adjusted leverage ratio to 4.0.
Store Expansion and Investment
The Company opened
new retail stores in the
, consisting of
its second Connecticut location in Hartford, CT and its third location in the Austin, TX area in Round Rock, TX
. As of
March 31, 2018
states and the District of Columbia.
The Company also remodeled four stores during the first quarter of 2018.
The Board of Directors
declared a quarterly dividend of $0.0
per common share. The dividend is payable
to shareholders of record at the close of business
The Company reiterates its previous
Capital investment of approximately $27 to $32
million, including remodeling approximately 30 stores to support
product presentation strategy.
Inventory investment of approximately
% year over year, over the next several quarters, to support our product assortment strategy.
Selling, general and administrative (“SG&A”)
expense increase of approximately $5 to $7 million to support
service strategy, including increased expenses for (1)
the addition of
regional sales leader positions, (2) sales and warehouse staff compensation, and (3) customer relationship management and content management capabilities. The $5 to $7 million increase in SG&A expense is incremental to the expected SG&A expense increases associated with a full year of operations for the fifteen stores opened in 2017 and the three new stores opening in 2018.
Longer term, the Company remains committed to achieving
EBITDA margin and
return on capital
employed of greater than 20%
The Company presents Adjusted EBITDA to provide useful information to investors
regarding the Company’s performance.
Adjusted EBITDA for the
million compared with
million for the
See the “Adjusted EBITDA Reconciliation” table
elow for a r
econciliation of GAAP net
income to Adjusted EBITDA.
($ in thousands)
GAAP net income
Depreciation and amortization
In prior periods, the Company also adjusted for special charges,
including shareholder and other litigation costs. The Company has recast the Adjusted EBITDA presentation for the three months ended March 31, 2017 to conform to the current presentation.
Webcast and Conference Call
As announced on
, 2018, the Company will host a conference call via live webcast for investors and other interested parties beginning at 9:00 a.m. Eastern Time on
, 2018. The call will be hosted by Bob Rucker, interim CEO, Kirk Geadelmann, CFO, Cabell Lolmaugh,
Senior Vice President
and COO, and Ken Cooper, Investor Relations.
Participants may access the live 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
Additional details can be located at
under the Financial Information – SEC Filings section of the Company’s Investor Relations page.
Investors and Media:
The Tile Shop (
TTS) is a leading specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States. The
offers a wide selection of high quality products, exclusive designs, knowledgeable staff and exceptional customer service in an extensive showroom environment. Each store is outfitted with up to 50 full-room tiled displays which are enhanced by the complimentary Design Studio, a collaborative platform to create customized 3-D design renderings to scale, allowing customers to bring their design ideas to life. The Tile Shop currently operates 140 stores in 31 states and the District of Columbia, with an average size of 20,
00 square feet and sells products online at
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
. Join The Tile Shop (#thetileshop) on Facebook, Instagram, Pinterest and Twitter.
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. In prior periods, the Company also adjusted for special charges, including shareholder and other litigation costs. The Company has recast the Adjusted EBITDA presentation for the three months ended March 31, 2017 to conform to the current presentation. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales.
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, and for budgeting and planning purposes. 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.
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 (including the financial performance of new stores). 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.
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
($ in thousands, except share data)
Cash and cash equivalents
Trade receivables, net
Income tax receivable
Other current assets, net
Total Current Assets
Property, plant and equipment, net
Deferred tax assets
Liabilities and Stockholders' Equity
Current portion of long-term debt
Income tax payable
Other accrued liabilities
Total Current Liabilities
Long-term debt, net
Capital lease obligation, net
Other long-term liabilities
Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 52,429,157 and 52,156,850 shares, respectively
Preferred stock, par value $0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares
Accumulated other comprehensive loss
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
Consolidated Statements of Operations
($ in thousands, except share, and per share data)
Cost of sales
Income before income taxes
Provision for income taxes
Income per common share:
Weighted average shares outstanding:
SG&A expense rate
Income from operations margin rate
Adjusted EBITDA margin rate
Consolidated Statements of Cash Flows
Cash Flows From Operating Activities
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization
Amortization of debt issuance costs
Loss on disposals of property, plant and equipment
Stock based compensation
Deferred income taxes
Changes in operating assets and liabilities:
Prepaid expenses and other assets
Income tax receivable / payable
Accrued expenses and other liabilities
Net cash provided by operating activities
Cash Flows From Investing Activities
Purchases of property, plant and equipment
Net cash used in investing activities
Cash Flows From Financing Activities
Payments of long-term debt and capital lease obligations
Advances on line of credit
Proceeds from exercise of stock options
Employee taxes paid for shares withheld
Net cash used in financing activities
Effect of exchange rate changes on cash
Net change in cash
Cash, cash equivalents and restricted cash beginning of period
Cash, cash equivalents and restricted cash end of period
Supplemental disclosure of cash flow information
Purchases of property, plant and equipment included in accounts payable and accrued expenses
Cash paid for interest
Cash paid (received) for income taxes, net
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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