Tile Shop Holdings, Inc 10-Q for FY2023 Q2

Tile Shop Holdings, Inc. (TTSH)

10-Q 2023-08-03 For: 2023-06-30

Added on April 07, 2026

About this 10-Q

Tile Shop Holdings, Inc filed this 10-Q on August 3, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $98.56M; down 8.4% from $107.6M a year earlier
Net income: $5.08M; down 26.5% from net income of $6.91M a year earlier
Diluted EPS: $0.12; down 7.7% from $0.13 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 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	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	23
Item 6.	Exhibits	25
Signatures		26



	June 30,		December 31,
	2023		2022
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	14,592	$	5,948
Restricted cash		655		1,811
Receivables, net		3,871		3,411
Inventories		106,862		120,952
Income tax receivable		875		3,859
Other current assets, net		9,007		10,422
Total Current Assets		135,862		146,403
Property, plant and equipment, net		66,938		71,095
Right of use asset		114,616		118,501
Deferred tax assets		4,530		6,536
Other assets		3,493		3,287
Total Assets	$	325,439	$	345,822

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	24,385	$	23,506
Income tax payable		85		3
Current portion of lease liability		27,411		27,866
Other accrued liabilities		33,645		31,916
Total Current Liabilities		85,526		83,291
Long-term debt		20,000		45,400
Long-term lease liability, net		98,845		103,353
Other long-term liabilities		4,479		5,009
Total Liabilities		208,850		237,053

Stockholders’ Equity:
Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 44,567,055 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		128,257		127,997
Accumulated deficit		(11,589)		(19,180)
Accumulated other comprehensive loss		(83)		(52)
Total Stockholders' Equity		116,589		108,769
Total Liabilities and Stockholders' Equity	$	325,439	$	345,822


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,
	2023		2022		2023		2022
Net sales	$	98,557	$	107,604	$	200,576	$	210,075
Cost of sales		35,255		36,586		71,736		72,212
Gross profit		63,302		71,018		128,840		137,863
Selling, general and administrative expenses		55,568		61,240		116,981		123,349
Income from operations		7,734		9,778		11,859		14,514
Interest expense		(668)		(201)		(1,466)		(467)
Income before income taxes		7,066		9,577		10,393		14,047
Provision for income taxes		(1,987)		(2,663)		(2,802)		(3,620)
Net income	$	5,079	$	6,914	$	7,591	$	10,427

Income per common share:
Basic	$	0.12	$	0.14	$	0.18	$	0.21
Diluted	$	0.12	$	0.13	$	0.17	$	0.20

Weighted average shares outstanding:
Basic		43,363,374		50,890,063		43,300,962		50,802,423
Diluted		43,508,221		51,253,543		43,465,235		51,214,607



	Common stock
	Shares	Amount		Additional ‎paid-in ‎capital		Accumulated ‎deficit		Accumulated ‎other ‎comprehensive ‎income (loss)		Total
Balance at March 31, 2022	52,112,567	$	5	$	126,805	$	(1,200)	$	14	$	125,624
Issuance of restricted shares	172,429		-		-		-		-		-
Cancellation of restricted shares	(2,918)		-		-		-		-		-
Stock based compensation	-		-		562		-		-		562
Tax withholdings related to net share settlements of stock based compensation awards	(11,156)		-		(69)		-		-		(69)
Foreign currency translation adjustments	-		-		-		-		(43)		(43)
Net income	-		-		-		6,914		-		6,914
Balance at June 30, 2022	52,270,922	$	5	$	127,298	$	5,714	$	(29)	$	132,988

Balance at March 31, 2023	44,608,983	$	4	$	127,975	$	(16,668)	$	(47)	$	111,264
Issuance of restricted shares	115,752		-		-		-		-		-
Cancellation of restricted shares	(153,752)		-		-		-		-		-
Stock based compensation	-		-		301		-		-		301
Tax withholdings related to net share settlements of stock based compensation awards	(3,928)		-		(19)		-		-		(19)
Foreign currency translation adjustments	-		-		-		-		(36)		(36)
Net income	-		-		-		5,079		-		5,079
Balance at June 30, 2023	44,567,055	$	4	$	128,257	$	(11,589)	$	(83)	$	116,589



	For the three months ended				For the six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Man-made tiles⁽¹⁾	54	%	50	%	52	%	50	%
Natural stone tiles	22		26		23		25
Setting and maintenance materials	14		15		15		16
Accessories	8		7		8		7
Delivery service	2		2		2		2
Total	100	%	100	%	100	%	100	%


	(in thousands)
	June 30,		December 31,
	2023		2022
Other current accrued liabilities	$	4,589	$	4,993
Other current assets		1,565		1,687
Sales returns reserve, net	$	3,024	$	3,306


	(dollars in thousands, except per share data)
	For the three months ended				For the six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income	$	5,079	$	6,914	$	7,591	$	10,427
Weighted average shares outstanding - basic		43,363,374		50,890,063		43,300,962		50,802,423
Effect of dilutive securities attributable to stock based awards		144,847		363,480		164,273		412,184
Weighted average shares outstanding - diluted		43,508,221		51,253,543		43,465,235		51,214,607
Income per common share:
Basic	$	0.12	$	0.14	$	0.18	$	0.21
Diluted	$	0.12	$	0.13	$	0.17	$	0.20
Anti-dilutive securities excluded from earnings per share calculation		593,178		1,525,521		582,426		1,078,597


Leases (in thousands)	Classification		June 30, 2023		December 31, 2022
Assets
Operating lease assets	Right of use asset	$	114,616	$	118,501
Total leased assets		$	114,616	$	118,501

Liabilities
Current
Operating	Current portion of lease liability	$	27,411	$	27,866
Noncurrent
Operating	Long-term lease liability, net		98,845		103,353
Total lease liabilities		$	126,256	$	131,219


		Three Months Ended
Lease cost (in thousands)	Classification		June 30, 2023		June 30, 2022
Operating lease cost	SG&A expenses	$	8,946	$	8,611
Variable lease cost⁽¹⁾	SG&A expenses		3,822		3,557
Short term lease cost	SG&A expenses		102		110
Net lease cost		$	12,870	$	12,278


	Six Months Ended
Other Information (in thousands)		June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	18,994	$	18,754
Lease right-of-use assets obtained or modified in exchange for lease obligations	$	10,041	$	6,876


	($ in thousands)
		Six Months Ended
		June 30,
		2023		% of sales		2022		% of sales
Net income		$	7,591	3.8	%	$	10,427	5.0	%
Interest expense			1,466	0.7	%		467	0.2	%
Provision for income taxes			2,802	1.4	%		3,620	1.7	%
Depreciation and amortization			11,332	5.6	%		12,854	6.1	%
Stock based compensation			706	0.4	%		1,054	0.5	%
Adjusted EBITDA		$	23,897	11.9	%	$	28,422	13.5	%


	($ in thousands)
	June 30,
	2023⁽¹⁾			2022⁽¹⁾
Income from Operations (trailing twelve months)	$	19,954		$	20,602

Total Assets		341,737			347,424
Less: Accounts payable		(26,566)			(27,257)
Less: Income tax payable		(801)			(447)
Less: Other accrued liabilities		(35,798)			(41,806)
Less: Lease liability		(129,254)			(135,705)
Less: Other long-term liabilities		(4,530)			(4,980)
Capital Employed	$	144,788		$	137,229

Pretax Return on Capital Employed		13.8	%		15.0	%



Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(in thousands) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
April 1, 2023 - April 30, 2023	-		$	-	-	$	-
May 1, 2023 - May 31, 2023	72,583	⁽¹⁾		0.17	-		-
June 1, 2023 - June 30, 2023	85,097	⁽²⁾		0.08	-		-
	157,680		$	0.12	-	$	-



Name of Beneficial Owner	Number of Shares Beneficially Owned	Percent
5% Stockholders:
Peter J. Jacullo III, Director⁽¹⁾	8,412,699	18.9	%
Peter H. Kamin, Chairman of the Board⁽²⁾	6,956,344	15.6	%
Fund 1 Investments, LLC⁽³⁾	3,387,190	7.6	%
Savitr Capital LLC⁽⁴⁾	2,770,535	6.2	%
Monomoy⁽⁵⁾	2,531,462	5.7	%
Cannell Capital LLC⁽⁶⁾	2,453,327	5.5	%



	Pricing	Fair Value at
	Category	June 30, 2023		December 31, 2022
Assets		(in thousands)
Cash and cash equivalents	Level 1	$	14,592	$	5,948
Restricted cash	Level 1		655		1,811


	($ in thousands)
	2023		% of sales⁽¹⁾		2022		% of sales
Net sales	$	98,557	100.0	%	$	107,604	100.0	%
Cost of sales		35,255	35.8	%		36,586	34.0	%
Gross profit		63,302	64.2	%		71,018	66.0	%
Selling, general and administrative expenses		55,568	56.4	%		61,240	56.9	%
Income from operations		7,734	7.8	%		9,778	9.1	%
Interest expense		(668)	(0.7)	%		(201)	(0.2)	%
Income before income taxes		7,066	7.2	%		9,577	8.9	%
Provision for income taxes		(1,987)	(2.0)	%		(2,663)	(2.5)	%
Net income	$	5,079	5.2	%	$	6,914	6.4	%


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	Certificate of Amendment to the Certificate of Incorporation of Tile Shop Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 21, 2021).
3.3	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).
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, 2023 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (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).


	TILE SHOP HOLDINGS, INC.

Dated: August 3, 2023	By:	/s/ CABELL H. LOLMAUGH
		Cabell H. Lolmaugh
		Chief Executive Officer


Dated: August 3, 2023	By:	/s/ KARLA LUNAN
		Karla Lunan
		Chief Financial Officer


Date: August 3, 2023	/s/ CABELL H. LOLMAUGH

	Cabell H. Lolmaugh
	Chief Executive Officer


Date: August 3, 2023	/s/ Karla Lunan

	Karla Lunan,
	Chief Financial Officer