Tile Shop Holdings, Inc 10-Q for FY2020 Q2

Tile Shop Holdings, Inc. (TTSH)

10-Q 2020-08-06 For: 2020-06-30

Added on April 07, 2026

About this 10-Q

Tile Shop Holdings, Inc filed this 10-Q on August 6, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $67.73M; down 23.8% from $88.9M a year earlier
Net loss: $760K; compared with a net loss of $154K a year earlier
Diluted EPS: -$0.02; compared with $0.00 a year earlier

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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)


Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	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	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		32



	June 30,		December 31,
	2020		2019
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	7,936	$	9,104
Restricted cash		815		815
Receivables, net		3,225		3,370
Inventories		79,053		97,620
Income tax receivable		9,641		3,090
Other current assets, net		21,940		8,180
Total Current Assets		122,610		122,179
Property, plant and equipment, net		113,209		130,461
Right of use asset		130,397		137,737
Deferred tax assets		4,139		7,196
Other assets		1,728		2,241
Total Assets	$	372,083	$	399,814

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	13,239	$	18,181
Income tax payable		193		87
Current portion of lease liability		32,270		26,993
Other accrued liabilities		42,720		24,589
Total Current Liabilities		88,422		69,850
Long-term debt		22,000		63,000
Long-term lease liability, net		122,682		131,451
Financing lease obligation, net		184		274
Other long-term liabilities		4,157		4,340
Total Liabilities		237,445		268,915

Stockholders’ Equity:
Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 51,370,167 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		157,493		156,482
Accumulated deficit		(22,776)		(25,518)
Accumulated other comprehensive loss		(84)		(70)
Total Stockholders' Equity		134,638		130,899
Total Liabilities and Stockholders' Equity	$	372,083	$	399,814


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net sales	$	67,730	$	88,903	$	162,009	$	175,811
Cost of sales		22,316		27,543		51,640		52,609
Gross profit		45,414		61,360		110,369		123,202
Selling, general and administrative expenses		47,208		60,562		109,569		119,510
(Loss) income from operations		(1,794)		798		800		3,692
Interest expense		(559)		(943)		(1,407)		(1,921)
Other income		-		2		-		17
(Loss) income before income taxes		(2,353)		(143)		(607)		1,788
Benefit (provision) for income taxes		1,593		(11)		3,349		(622)
Net (loss) income	$	(760)	$	(154)	$	2,742	$	1,166

(Loss) income per common share:
Basic	$	(0.02)	$	(0.00)	$	0.05	$	0.02
Diluted	$	(0.02)	$	(0.00)	$	0.05	$	0.02

Weighted average shares outstanding:
Basic		49,926,267		50,999,341		49,884,169		51,476,442
Diluted		49,926,267		50,999,341		50,052,990		51,573,410



	Common stock
	Shares	Amount		Additional ‎paid-in ‎capital		Retained ‎earnings ‎(deficit)		Accumulated ‎other ‎comprehensive ‎income (loss)		Total
Balance at March 31, 2019	52,901,733	$	5	$	170,306	$	(17,997)	$	(29)	$	152,285
Adoption of lease standard	-		-		-		(1,738)		-		(1,738)
Balance at March 31, 2019	52,901,733	$	5	$	170,306	$	(19,735)	$	(29)	$	150,547
Issuance of restricted shares	76,275		-		-		-		-		-
Cancellation of restricted shares	(55,496)		-		-		-		-		-
Repurchase of common stock	(2,307,023)		-		(10,455)		-		-		(10,455)
Stock based compensation	-		-		770		-		-		770
Tax withholdings related to net share settlements of stock based compensation awards	-		-		(54)		-		-		(54)
Dividends paid ($0.05 per share)	-		-		(2,606)		-		-		(2,606)
Foreign currency translation adjustments	-		-		-		-		(25)		(25)
Net loss	-		-		-		(154)		-		(154)
Balance at June 30, 2019	50,615,489	$	5	$	157,961	$	(19,889)	$	(54)	$	138,023

Balance at March 31, 2020	51,396,986	$	5	$	156,969	$	(22,016)	$	(86)	$	134,872
Issuance of restricted shares	28,494		-		-		-		-		-
Cancellation of restricted shares	(55,313)		-		-		-		-		-
Stock based compensation	-		-		538		-		-		538
Tax withholdings related to net share settlements of stock based compensation awards	-		-		(14)		-		-		(14)
Foreign currency translation adjustments	-		-		-		-		2		2
Net loss	-		-		-		(760)		-		(760)
Balance at June 30, 2020	51,370,167	$	5	$	157,493	$	(22,776)	$	(84)	$	134,638



	For the three months ended				For the six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Man-made tiles	47	%	47	%	46	%	47	%
Natural stone tiles	28		29		29		29
Setting and maintenance materials	14		13		14		13
Accessories	9		10		9		10
Delivery service	2		1		2		1
Total	100	%	100	%	100	%	100	%


	(in thousands)
	June 30,		December 31,
	2020		2019
Other current (accrued) liabilities	$	4,989	$	5,434
Other current assets		1,471		1,659
Sales returns reserve, net	$	3,518	$	3,775



	(all amounts in thousands except share and per share data)
		For the three months ended				For the six months ended
		June 30,				June 30,
		2020		2019		2020		2019
Net (loss) income		$	(760)	$	(154)	$	2,742	$	1,166
Weighted average shares outstanding - basic			49,926,267		50,999,341		49,884,169		51,476,442
Effect of dilutive securities attributable to stock based awards			-		-		168,821		96,968
Weighted average shares outstanding - diluted			49,926,267		50,999,341		50,052,990		51,573,410
(Loss) income per common share:
Basic		$	(0.02)	$	(0.00)	$	0.05	$	0.02
Diluted		$	(0.02)	$	(0.00)	$	0.05	$	0.02
Anti-dilutive securities excluded from earnings per share calculation			2,585,401		2,835,890		1,903,737		2,047,585


Leases (in thousands)	Classification		June 30, 2020		December 31, 2019
Assets
Operating lease assets	Right of use asset	$	130,397	$	137,737
Financing lease assets	Property, plant and equipment, net of accumulated depreciation		89		113
Total leased assets		$	130,486	$	137,850

Liabilities
Current
Operating	Current portion of lease liability	$	32,270	$	26,993
Financing	Other accrued liabilities		174		162
Noncurrent
Operating	Long-term lease liability, net		122,682		131,451
Financing	Financing lease obligation, net		184		274
Total lease liabilities		$	155,310	$	158,880

		Three Months Ended
Lease cost (in thousands)	Classification		June 30, 2020		June 30, 2019
Operating lease cost	SG&A expenses	$	8,236	$	7,998
Financing lease cost
Amortization of leased assets	Depreciation and amortization		12		12
Interest on lease liabilities	Interest expense		14		19
Variable lease cost⁽¹⁾	SG&A expenses		3,507		3,333
Short term lease cost	SG&A expenses		153		218
Net lease cost		$	11,922	$	11,580



	Six Months Ended
Other Information (in thousands)		June 30, 2020		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	13,205	$	17,311
Operating cash flows from financing leases	$	44	$	35
Financing cash flows from financing leases	$	122	$	(102)



	(in thousands)
		Six Months Ended
		June 30,
		2020		% of sales		2019		% of sales⁽¹⁾
Net income		$	2,742	1.7	%	$	1,166	0.7	%
Interest expense			1,407	0.9	%		1,921	1.1	%
Income taxes			(3,349)	(2.1)	%		622	0.4	%
Depreciation and amortization			16,082	9.9	%		16,200	9.2	%
Stock based compensation			1,104	0.7	%		1,509	0.9	%
Adjusted EBITDA		$	17,986	11.1	%	$	21,418	12.2	%



($ in thousands)	June 30,
	2020⁽¹⁾			2019⁽¹⁾
(Loss) income from operations (trailing twelve months)	$	(4,249)		$	8,277

Total Assets		389,968			360,696
Less: Accounts payable		(16,670)			(26,747)
Less: Income tax payable		(85)			(111)
Less: Other accrued liabilities		(30,136)			(26,599)
Less: Lease liability⁽²⁾		(158,018)			(90,722)
Less: Other long-term liabilities		(4,061)			(3,781)
Capital Employed	$	180,998		$	212,736

Pretax Return on Capital Employed		(2.3)	%		3.9	%



	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	Maximum Number of Shares that May Yet be Purchased Under Plans or Programs
April 1, 2020 - April 30, 2020	37,922	⁽¹⁾	$	0.16	-	-
May 1, 2020 - May 31, 2020	17,391	⁽²⁾		0.47	-	-
June 1, 2020 - June 30, 2020	-			-	-	-
	55,313		$	0.25	-	-


	TILE SHOP HOLDINGS, INC.

Dated: August 6, 2020	By:	/s/ CABELL H. LOLMAUGH
		Cabell H. Lolmaugh
		Chief Executive Officer



	Pricing	Fair Value at
	Category	June 30, 2020		December 31, 2019
Assets	(in thousands)
Cash and cash equivalents	Level 1	$	7,936	$	9,104
Restricted cash	Level 1		815		815

Exhibit No.	Description
3.1	Certificate of Incorporation of Tile Shop Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Reg. No. 333-182482) filed with the Securities and Exchange Commission on July 2, 2012).
3.2	By-Laws of Tile Shop Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (Reg. No. 333-182482) filed with the Securities and Exchange Commission on July 2, 2012).
10.1*	Letter Agreement, dated as of April 24, 2020, by and between the Company and Cabell H. Lolmaugh (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 27, 2020).
10.2*	Letter Agreement, dated as of April 24, 2020, by and between the Company and Nancy DiMattia (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 27, 2020).
10.3*	Letter Agreement, dated as of April 24, 2020, by and between the Company and Mark B. Davis (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 27, 2020).
31.1**	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
31.2**	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
32.1***	Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2***	Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101**	The following financial statements from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
104**	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


Dated: August 6, 2020	By:	/s/ NANCY DIMATTIA
		Nancy DiMattia
		Chief Financial Officer