8-K
TILE SHOP HOLDINGS, INC. (TTSH)
UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest eventreported): November 5, 2020
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 |
|---|---|---|
| None | N/A | N/A |
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 2.02 | Results of Operations and Financial Condition |
|---|
On November 5, 2020, Tile Shop Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended September 30, 2020. 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 9.01 | Financial Statements andExhibits |
|---|
| (d) | Exhibits. |
|---|
| 99.1 | Press<br> Release of Tile Shop Holdings, Inc., dated November 5, 2020. |
|---|---|
| 104 | Cover<br> 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/ Nancy DiMattia | |
| Date: November 5, 2020 | Name: Nancy DiMattia |
| Title: Chief Financial Officer |
Exhibit 99.1
THETILE SHOP REPORTS Third QUARTER 2020 RESULTS
MINNEAPOLIS – November 5, 2020 – Tile Shop Holdings, Inc. (OTC Pink: TTSH) (the “Company”), a specialty retailer of natural stone and man-made tiles, setting and maintenance materials, and related accessories, today announced results for its third quarter ended September 30, 2020.
ThirdQuarter Summary
Net SalesDecreased 5.2%
ComparableStore Sales Decreased 6.5%
GrossMargin of 67.9%
SG&AExpenses Decreased $7.4 Million
Net incomeof $1.9 Million; Adjusted EBITDA of $11.1 Million
ManagementCommentary – Cabell Lolmaugh, CEO
“During the quarter, we continued to experience weak sales, though the rate of decline was much less than in the second quarter. Customer traffic continued to decline, at least partially due to our decision to maintain reduced store hours, both for employee and customer health and safety, in response to COVID-19, and to tightly control our expenses. The result was a meaningful reduction in SG&A spending year over year.” stated Cabell Lolmaugh, CEO. “This disciplined approach made it possible for us to generate the highest levels of Adjusted EBITDA margin we have reported in over two years and reduce our long-term debt to $7.0 million. As of the end of the third quarter of 2020, we have no net debt.”
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, amounts in thousands, except per | September 30, | September 30, | ||||||||||
| share data) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Net sales | $ | 81,492 | $ | 85,944 | $ | 243,501 | $ | 261,755 | ||||
| Net sales decline^(1)^ | (5.2 | )% | (3.7 | )% | (7.0 | )% | (4.2 | )% | ||||
| Comparable store sales decline^(2)^ | (6.5 | )% | (3.5 | )% | (8.3 | )% | (4.0 | )% | ||||
| Gross margin rate | 67.9 | % | 68.8 | % | 68.0 | % | 69.7 | % | ||||
| Income (loss) from operations as a % of net sales | 3.6 | % | (0.7 | )% | 1.5 | % | 1.2 | % | ||||
| Net income (loss) | $ | 1,914 | $ | (1,383 | ) | $ | 4,656 | $ | (217 | ) | ||
| Net income (loss) per diluted share | $ | 0.04 | $ | (0.03 | ) | $ | 0.09 | $ | - | |||
| Adjusted EBITDA | $ | 11,124 | $ | 8,338 | $ | 29,110 | $ | 29,756 | ||||
| Adjusted EBITDA as a % of net sales | 13.7 | % | 9.7 | % | 12.0 | % | 11.4 | % | ||||
| Number of stores open at the end of period | 142 | 140 | 142 | 140 | ||||||||
| ^(1)^ | As<br> compared to the prior year period. | |||||||||||
| --- | --- | |||||||||||
| ^(2)^ | The<br> comparable store sales operating metric is the percentage change in sales of comparable<br> stores period over period. A store is considered comparable on the first day of the 13th<br> full month of operation. When a store is relocated, it is excluded from the comparable<br> store sales calculation. Comparable store sales includes total charges to customers less<br> any actual returns. The Company includes the change in allowance for anticipated sales<br> returns applicable to comparable stores in the comparable store sales calculation. Comparable<br> store sales data reported by other companies may be prepared on a different basis and<br> therefore may not be useful for purposes of comparing the Company’s results to<br> those of other businesses. Company management believes the comparable store sales operating<br> metric provides useful information to both management and investors to evaluate the Company’s<br> performance, the effectiveness of its strategy and its competitive position. | |||||||||||
| --- | --- |
THIRDQUARTER 2020
NetSales
Net sales decreased by $4.5 million, or 5.2%, from $85.9 million in the third quarter of 2019 to $81.5 million in the third quarter of 2020. Comparable store sales decreased $5.5 million, or 6.5%, for the third quarter of 2020 compared to the third quarter of 2019, due to lower traffic. The decrease in traffic was partially attributable to a reduction in store hours during the third quarter of 2020 when compared to the third quarter of 2019. Additionally, elevated levels of in stock outages also contributed to the lower level of sales during the third quarter of 2020. Net sales generated by stores not included in the comparable store base increased $1.0 million.
GrossProfit
Gross profit decreased by $3.9 million, or 6.5%, from $59.2 million in the third quarter of 2019 to $55.3 million in the third quarter of 2020. The gross margin rate was 67.9% for the third quarter of 2020 and 68.8% for the third quarter of 2019. The decrease in gross margin rate was primarily driven by a higher mix of delivery services rendered during the quarter and an increase in inventory write-downs associated with product transitions.
Selling,General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses decreased by $7.4 million, or 12.4%, from $59.8 million in the third quarter of 2019 to $52.4 million in the third quarter of 2020. The decrease in SG&A expense was primarily due to the decrease in store hours, which contributed to a $3.1 million reduction in compensation and benefits. Additionally, decreases in advertising expenses totaling $1.8 million and a $1.1 million reduction in consulting, audit, legal and IT fees contributed to the lower level of SG&A spending during the three months ended September 30, 2020. Legal expenses incurred in connection with shareholder litigation during the three months ended September 30, 2020 totaled $0.6 million.
Inventory
Inventory decreased by $24.6 million from $97.6 million at the end of the fourth quarter of 2019 to $73.0 million at the end of the third quarter of 2020.
Long-TermDebt
Long-term debt decreased by $56.0 million from $63.0 million at the end of the fourth quarter of 2019 to $7.0 million at the end of the third quarter of 2020.
NON-GAAPINFORMATION
AdjustedEBITDA
Adjusted EBITDA for the third quarter of 2020 was $11.1 million compared with $8.3 million for the third quarter of 2019. See the table below for a reconciliation of GAAP net (loss) income to Adjusted EBITDA.
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | September 30, | |||||||||||
| 2020 | % of net sales^(1)^ | 2019 | % of net sales^(1)^ | |||||||||
| GAAP net income (loss) | $ | 1,914 | 2.3 | % | $ | (1,383 | ) | (1.6 | )% | |||
| Interest expense | 239 | 0.3 | 1,027 | 1.2 | ||||||||
| Income taxes | 748 | 0.9 | (274 | ) | (0.3 | ) | ||||||
| Depreciation and amortization | 7,656 | 9.4 | 8,308 | 9.7 | ||||||||
| Stock-based compensation | 567 | 0.7 | 660 | 0.8 | ||||||||
| Adjusted EBITDA | $ | 11,124 | 13.7 | % | $ | 8,338 | 9.7 | % | ||||
| Nine Months Ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ($ in thousands) | September 30, | |||||||||||
| 2020 | % of net sales^(1)^ | 2019 | % of net sales^(1)^ | |||||||||
| GAAP net income (loss) | $ | 4,656 | 1.9 | % | $ | (217 | ) | (0.1 | )% | |||
| Interest expense | 1,646 | 0.7 | 2,948 | 1.1 | ||||||||
| Income taxes | (2,601 | ) | (1.1 | ) | 348 | 0.1 | ||||||
| Depreciation and amortization | 23,738 | 9.7 | 24,508 | 9.4 | ||||||||
| Stock-based compensation | 1,671 | 0.7 | 2,169 | 0.8 | ||||||||
| Adjusted EBITDA | $ | 29,110 | 12.0 | % | $ | 29,756 | 11.4 | % |
^(1)^ Amounts do not foot due to rounding.
PretaxReturn on Capital Employed
Pretax Return on Capital Employed was (0.4%) for the trailing twelve months as of the end of the third quarter of 2020 compared to 1.7% for the trailing twelve months as of the end of the third quarter of 2019. See the Pretax Return on Capital Employed calculation in the table below.
2
| ($ in thousands) | September 30, | |||||
|---|---|---|---|---|---|---|
| 2020^(1)^ | 2019^(1)^ | |||||
| (Loss) income from operations (trailing twelve months) | $ | (712 | ) | $ | 3,762 | |
| Total Assets | 378,380 | 389,561 | ||||
| Less: Accounts payable | (15,605 | ) | (25,280 | ) | ||
| Less: Income tax payable | (110 | ) | (72 | ) | ||
| Less: Other accrued liabilities | (35,986 | ) | (26,119 | ) | ||
| Less: Lease liability^(2)^ | (154,962 | ) | (114,490 | ) | ||
| Less: Other long-term liabilities | (4,185 | ) | (3,669 | ) | ||
| Capital Employed | 167,532 | 219,931 | ||||
| Pretax Return on Capital Employed | (0.4 | )% | 1.7 | % |
^(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.
^(2)^Represents the average lease liability and deferred rent account balances for the four quarters ended as of each of the balance sheet dates.
Net Debt
Net Debt decreased by $55.9 million from $53.9 million at December 31, 2019 to $(2.0) million at September 30, 2020. See calculation of net debt in the table below.
| (unaudited, $ in thousands) | September 30, <br><br>2020 | December 31, <br><br>2019 | |||
|---|---|---|---|---|---|
| Long-term debt, net | $ | 7,000 | $ | 63,000 | |
| Cash and cash equivalents | 8,961 | 9,104 | |||
| Net Debt | $ | (1,961 | ) | $ | 53,896 |
Non-GAAPFinancial Measures
The Company calculates Adjusted EBITDA by taking net income (loss) 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, deferred rent, lease liability and other long-term liabilities. The Company calculates Net Debt by taking long-term debt, net and subtracting cash and cash equivalents. Other companies may calculate Adjusted EBITDA, Pretax Return on Capital Employed and Net Debt differently, limiting the usefulness of these measures for comparative purposes.
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, for assessing the effectiveness of capital allocation over time and understanding total indebtedness of the Company after consideration of liquidity available from cash balances on-hand. 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.
3
IMPACTOF THE COVID-19 PANDEMIC
The COVID-19 pandemic has impacted, and is likely to continue impacting, the Company’s operations. As previously announced, the Company took steps to reduce SG&A expenses by eliminating a portion of its workforce, curtailing advertising spending, reducing the number of replenishment trucks sent from the Company’s distribution centers to its stores and limiting other SG&A spending when possible. As traffic and sales started to recover toward the end of the second quarter of 2020, the Company took a cautious approach to investing in activities that would increase SG&A expenses. While many retailers elected to expand their hours as state and local restrictions started to ease, the Company maintained a reduced hours schedule throughout the third quarter of 2020. The decision to limit the number of hours that the Company’s stores were open had an adverse impact on customer traffic and sales, which contributed to a 6.5% decrease in sales at comparable stores; however, the SG&A savings realized contributed to a $3.5 million improvement in operating income during the third quarter of 2020 when compared to the third quarter of 2019.
During the third quarter of 2020, the Company continued to follow a practice to close its stores, quarantine affected staff and complete a rigorous cleaning process before reopening the store when a health risk was identified. This process can take 2-3 days to complete and has had an adverse impact on the Company’s sales. The Company is committed to continuing this practice to help protect the health of its employees and customers.
The Company experienced an elevated level of product outages during the third quarter due to vendor production delays. In many instances, vendor plants were forced to close or operate at a reduced capacity pursuant to a government mandate following the onset of COVID-19. While most vendors have been able to resume normal operations, many continue to work through large backlogs. The Company is actively partnering with its vendors to secure delivery of backordered product.
While the Company is cautiously optimistic with the current business trend, the recent escalation of COVID-19 cases across many of the markets that the Company serves could have a negative impact on the Company. Specifically, the Company could be adversely impacted by limitations on the Company’s employees to perform their work due to illness caused by the pandemic or local, state, or federal orders requiring the Company’s stores to close or employees to remain at home; limitation of carriers to deliver the Company’s product to customers; product shortages; limitations on the ability of the Company’s customers to conduct their business and purchase the Company’s products and services; and limitations on the ability of the Company’s customers to pay the Company in a timely manner. These events could have a material, adverse effect on the Company’s results of operations, cash flows and liquidity. In addition, even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of the economic impact of the pandemic, including any recession that has occurred or may occur in the future.
WEBCASTAND CONFERENCE CALL
As announced on October 29, 2020, the Company will host a conference call via webcast for investors and other interested parties beginning at 9:00 a.m., Eastern Time, on Thursday, November 5, 2020. The call will be hosted by Cabell Lolmaugh, CEO, Nancy DiMattia, CFO, and Mark Davis, Investor Relations.
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. Management will not be taking questions during the conference call. A webcast replay of the call will be available on the Company’s Investor Relations page at www.tileshop.com.
Additional details can be located at www.tileshop.com under Financial Information – SEC Filings section of the Company’s Investor Relations page.
Contact:
Investors and Media:
Mark Davis
763-852-2978
mark.davis@tileshop.com
ABOUTTHE TILE SHOP
Tile Shop Holdings, Inc. (OTC Pink: 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 142 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.
FORWARDLOOKING 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. Many of the Company’s risks have been, and may further be, exacerbated by the COVID-19 pandemic. 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.
4
TileShop Holdings, Inc. and Subsidiaries
ConsolidatedBalance Sheets
($ inthousands, except share data)
| (Audited) | |||||
|---|---|---|---|---|---|
| December 31, | |||||
| 2019 | |||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 8,961 | $ | 9,104 | ||
| Restricted cash | 735 | 815 | |||
| Receivables, net | 3,300 | 3,370 | |||
| Inventories | 72,954 | 97,620 | |||
| Income tax receivable | 7,691 | 3,090 | |||
| Other current assets, net | 25,396 | 8,180 | |||
| Total Current Assets | 119,037 | 122,179 | |||
| Property, plant and equipment, net | 105,778 | 130,461 | |||
| Right of use asset | 133,256 | 137,737 | |||
| Deferred tax assets | 6,455 | 7,196 | |||
| Other assets | 1,480 | 2,241 | |||
| Total Assets | 366,006 | $ | 399,814 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Accounts payable | 15,596 | $ | 18,181 | ||
| Income tax payable | 112 | 87 | |||
| Current portion of lease liability | 28,239 | 26,993 | |||
| Other accrued liabilities | 49,269 | 24,589 | |||
| Total Current Liabilities | 93,216 | 69,850 | |||
| Long-term debt, net | 7,000 | 63,000 | |||
| Long-term lease liability | 124,678 | 131,451 | |||
| Financing lease obligation, net | - | 274 | |||
| Other long-term liabilities | 3,981 | 4,340 | |||
| Total Liabilities | 228,875 | 268,915 | |||
| Stockholders’ Equity: | |||||
| Common stock, par value 0.0001; authorized: 100,000,000 shares; issued and outstanding: 51,693,455 and 50,806,674 shares, respectively | 5 | 5 | |||
| Preferred stock, par value 0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares | - | - | |||
| Additional paid-in-capital | 158,037 | 156,482 | |||
| Accumulated deficit | (20,862 | ) | (25,518 | ) | |
| Accumulated other comprehensive loss | (49 | ) | (70 | ) | |
| Total Stockholders’ Equity | 137,131 | 130,899 | |||
| Total Liabilities and Stockholders’ Equity | 366,006 | $ | 399,814 |
All values are in US Dollars.
5
TileShop Holdings, Inc. and Subsidiaries
ConsolidatedStatements of Operations
($ inthousands, except share and per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net sales | $ | 81,492 | $ | 85,944 | $ | 243,501 | $ | 261,755 | ||||
| Cost of sales | 26,188 | 26,775 | 77,828 | 79,384 | ||||||||
| Gross profit | 55,304 | 59,169 | 165,673 | 182,371 | ||||||||
| Selling, general and administrative expenses | 52,403 | 59,804 | 161,972 | 179,314 | ||||||||
| Income (loss) from operations | 2,901 | (635 | ) | 3,701 | 3,057 | |||||||
| Interest expense | (239 | ) | (1,027 | ) | (1,646 | ) | (2,948 | ) | ||||
| Other income | - | 5 | - | 22 | ||||||||
| Income (loss) before income taxes | 2,662 | (1,657 | ) | 2,055 | 131 | |||||||
| (Provision) benefit for income taxes | (748 | ) | 274 | 2,601 | (348 | ) | ||||||
| Net (loss) income | $ | 1,914 | $ | (1,383 | ) | $ | 4,656 | $ | (217 | ) | ||
| Income (loss) per common share: | ||||||||||||
| Basic | $ | 0.04 | $ | (0.03 | ) | $ | 0.09 | $ | (0.00 | ) | ||
| Diluted | $ | 0.04 | $ | (0.03 | ) | $ | 0.09 | $ | (0.00 | ) | ||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 50,009,000 | 49,769,739 | 49,926,083 | 50,901,289 | ||||||||
| Diluted | 50,687,558 | 49,769,739 | 50,321,146 | 50,901,289 |
TileShop Holdings, Inc. and Subsidiaries
RateAnalysis
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Gross margin rate | 67.9 | % | 68.8 | % | 68.0 | % | 69.7 | % | ||||
| SG&A expense rate | 64.3 | % | 69.6 | % | 66.5 | % | 68.5 | % | ||||
| Income (loss) from operations margin rate | 3.6 | % | (0.7 | )% | 1.5 | % | 1.2 | % | ||||
| Adjusted EBITDA margin rate | 13.7 | % | 9.7 | % | 12.0 | % | 11.4 | % |
6
TileShop Holdings, Inc. and Subsidiaries
ConsolidatedStatements of Cash Flows
($ inthousands)
(Unaudited)
| Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | ||||||
| 2020 | 2019 | |||||
| Cash Flows From Operating Activities | ||||||
| Net income | $ | 4,656 | $ | (217 | ) | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 23,738 | 24,508 | ||||
| Amortization of debt issuance costs | 398 | 446 | ||||
| Loss on disposals of property, plant and equipment | - | 90 | ||||
| Impairment charges | 2,155 | - | ||||
| Non-cash lease expense | 17,895 | 17,178 | ||||
| Stock based compensation | 1,671 | 2,169 | ||||
| Deferred income taxes | 741 | 190 | ||||
| Changes in operating assets and liabilities: | - | - | ||||
| Receivables | 70 | (1,527 | ) | |||
| Inventories | 24,666 | 10,015 | ||||
| Prepaid expenses and other assets | (1,953 | ) | 47 | |||
| Accounts payable | (2,677 | ) | (3,307 | ) | ||
| Income tax receivable / payable | (4,576 | ) | (362 | ) | ||
| Accrued expenses and other liabilities | (9,437 | ) | (15,618 | ) | ||
| Net cash provided by operating activities | 57,347 | 33,612 | ||||
| Cash Flows From Investing Activities | ||||||
| Purchases of property, plant and equipment | (1,315 | ) | (22,839 | ) | ||
| Proceeds from insurance | - | 610 | ||||
| Net cash used in investing activities | (1,315 | ) | (22,229 | ) | ||
| Cash Flows From Financing Activities | ||||||
| Payments of long-term debt and financing lease obligations | (120,262 | ) | (43,153 | ) | ||
| Advances on line of credit | 64,100 | 53,000 | ||||
| Dividends paid | - | (7,706 | ) | |||
| Repurchases of common stock | - | (10,455 | ) | |||
| Employee taxes paid for shares withheld | (116 | ) | (226 | ) | ||
| Net cash used in financing activities | (56,278 | ) | (8,540 | ) | ||
| Effect of exchange rate changes on cash | 23 | (29 | ) | |||
| Net change in cash, cash equivalents and restricted cash | (223 | ) | 2,814 | |||
| Cash, cash equivalents and restricted cash beginning of period | 9,919 | 6,382 | ||||
| Cash, cash equivalents and restricted cash end of period | $ | 9,696 | $ | 9,196 | ||
| Cash and cash equivalents | $ | 8,961 | $ | 8,371 | ||
| Restricted cash | 735 | 825 | ||||
| Cash, cash equivalents and restricted cash end of period | $ | 9,696 | $ | 9,196 | ||
| Supplemental disclosure of cash flow information | ||||||
| Purchases of property, plant and equipment included in accounts payable and accrued expenses | $ | 8 | $ | 1,320 | ||
| Cash paid for interest | 1,797 | 2,853 | ||||
| Cash paid (received) for income taxes, net | 1,208 | 471 |
7