Tile Shop Holdings, Inc. (NASDAQ:TTSH) Q2 2023 Results Earnings Conference Call August 7, 2023 9:00 AM ET Company Participants Mark Davis - Vice President, Investor Relations and Chief Accounting Officer Cabell Lolmaugh - President and Chief Executive Officer Karla Lunan - Senior Vice President and Chief Financial Officer Conference Call Participants Mark Smith - Lake Street Capital Markets Operator Good day. And thank you for standing by. Welcome to the Second Quarter 2023 Tile Shop Holdings, Inc. Earnings ...

PART I. FINANCIAL INFORMATION This part presents the company's financial statements, management's discussion, market risk disclosures, and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited consolidated financial statements for H1 2023 show decreased assets and net income, but significantly improved operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$325.4 million** by June 30, 2023, driven by reduced inventories and debt, while equity increased to **$116.6 million** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (unaudited) | December 31, 2022 (audited) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $14,592 | $5,948 | | Inventories | $106,862 | $120,952 | | Total Current Assets | $135,862 | $146,403 | | Total Assets | $325,439 | $345,822 | | **Liabilities & Equity** | | | | Total Current Liabilities | $85,526 | $83,291 | | Long-term debt | $20,000 | $45,400 | | Total Liabilities | $208,850 | $237,053 | | Total Stockholders' Equity | $116,589 | $108,769 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net sales and net income declined in Q2 and H1 2023 compared to the prior year, with Q2 net income at **$5.1 million** Income Statement Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $98,557 | $107,604 | $200,576 | $210,075 | | Gross profit | $63,302 | $71,018 | $128,840 | $137,863 | | Income from operations | $7,734 | $9,778 | $11,859 | $14,514 | | Net income | $5,079 | $6,914 | $7,591 | $10,427 | | Diluted EPS | $0.12 | $0.13 | $0.17 | $0.20 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q2 and H1 2023 decreased to **$5.0 million** and **$7.6 million** respectively, mirroring net income trends Comprehensive Income (in thousands) | Period | 2023 | 2022 | | :--- | :--- | :--- | | **Three Months Ended June 30** | | | | Net income | $5,079 | $6,914 | | Comprehensive income | $5,043 | $6,871 | | **Six Months Ended June 30** | | | | Net income | $7,591 | $10,427 | | Comprehensive income | $7,560 | $10,386 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased to **$116.6 million** by June 30, 2023, primarily due to net income and stock-based compensation - Total stockholders' equity rose to **$116,589 thousand** at June 30, 2023, up from **$108,769 thousand** at December 31, 2022[21](index=21&type=chunk) - The increase in equity during the first six months of 2023 was mainly due to **$7,591 thousand** in net income and **$706 thousand** in stock-based compensation[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased to **$41.4 million** in H1 2023, primarily due to improved inventory management, supporting debt repayment Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,438 | $9,223 | | Net cash used in investing activities | ($8,076) | ($7,361) | | Net cash used in financing activities | ($25,846) | ($676) | | **Net change in cash** | **$7,488** | **$1,148** | - The significant increase in operating cash flow was largely driven by a **$14.1 million** decrease in inventory, compared to a **$12.9 million** increase in the prior year period[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue by product (man-made tiles **52%**), inventory levels, and the **$75.0 million** revolving credit facility - The company is a specialty retailer with **143 stores** in **31 states** and D.C. as of June 30, 2023, primarily serving consumers, contractors, designers, and home builders[28](index=28&type=chunk) Revenue by Product Category (Six Months Ended June 30) | Product Category | 2023 | 2022 | | :--- | :--- | :--- | | Man-made tiles | 52% | 50% | | Natural stone tiles | 23% | 25% | | Setting and maintenance materials | 15% | 16% | | Accessories | 8% | 7% | | Delivery service | 2% | 2% | - The company has a **$75.0 million** revolving line of credit, with **$20.0 million** outstanding and **$53.3 million** available for borrowing as of June 30, 2023[44](index=44&type=chunk)[48](index=48&type=chunk) The SOFR-based interest rate was **6.67%**[48](index=48&type=chunk) - During Q2 2023, the company recorded **$0.5 million** of impairment charges related to property, plant and equipment and right of use assets[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 sales decline due to macroeconomic factors, reduced gross margin, lower SG&A, and strong operating cash flow [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Q2 2023 net sales fell **8.4%** with comparable store sales down **8.0%**, while gross margin contracted to **64.2%** and SG&A decreased **9.3%** - Comparable store sales decreased by **8.0%** in Q2 2023 and **4.0%** in the first six months of 2023, primarily due to lower store traffic, partially offset by higher average ticket value[82](index=82&type=chunk)[93](index=93&type=chunk)[98](index=98&type=chunk) - The gross margin rate decreased to **64.2%** in Q2 2023 from **66.0%** in Q2 2022, mainly due to inflationary cost pressures on products, which were partially offset by increased selling prices[94](index=94&type=chunk)[99](index=99&type=chunk) - Q2 2023 SG&A expenses decreased by **$5.7 million (9.3%)** due to a **$3.0 million** drop in variable selling expenses, a **$1.1 million** decrease in transportation costs, and a **$0.9 million** reduction in depreciation[95](index=95&type=chunk) - Interest expense increased to **$0.7 million** in Q2 2023 from **$0.2 million** in Q2 2022, due to higher average borrowings and rising interest rates[96](index=96&type=chunk) [Non-GAAP Measures](index=19&type=section&id=Non-GAAP%20Measures) Adjusted EBITDA for Q2 2023 was **$13.6 million**, and the trailing twelve-month pretax return on capital employed was **13.8%** Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income | $5,079 | $6,914 | $7,591 | $10,427 | | Interest expense | 668 | 201 | 1,466 | 467 | | Provision for income taxes | 1,987 | 2,663 | 2,802 | 3,620 | | Depreciation and amortization | 5,549 | 6,415 | 11,332 | 12,854 | | Stock based compensation | 301 | 562 | 706 | 1,054 | | **Adjusted EBITDA** | **$13,584** | **$16,755** | **$23,897** | **$28,422** | - Pretax return on capital employed for the trailing twelve months ended June 30, 2023 was **13.8%**, down from **15.0%** for the period ended June 30, 2022[107](index=107&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$14.6 million** cash and **$53.3 million** available credit, sufficient for future operations - As of June 30, 2023, the company had **$14.6 million** in cash and cash equivalents and **$53.3 million** available for borrowing under its credit facility[108](index=108&type=chunk)[111](index=111&type=chunk) - Capital expenditures totaled **$8.1 million** for the first six months of 2023, primarily for investments in a new store in Colorado, store remodels, and technology assets[113](index=113&type=chunk) - Net cash from operating activities increased to **$41.4 million** in H1 2023 from **$9.2 million** in H1 2022, mainly due to better inventory management[116](index=116&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes have occurred in the company's market risk exposures or management since the 2022 Annual Report on Form 10-K - There have been no material changes in primary risk exposures or management of market risks from those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[120](index=120&type=chunk) [Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[121](index=121&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[122](index=122&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity transactions, and other disclosures, including beneficial ownership [Legal Proceedings](index=21&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine lawsuits, but management anticipates no material adverse effect on its financial condition - The company is party to routine lawsuits and claims, but management believes the outcomes will not have a material adverse effect on its financial condition[123](index=123&type=chunk)[124](index=124&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have occurred from the risk factors disclosed in the 2022 Form 10-K[125](index=125&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company withheld shares for tax obligations on vested restricted stock and did not conduct public share repurchases - The company withheld shares to satisfy tax withholding obligations on vested restricted stock grants and did not repurchase shares as part of a publicly announced plan or program[129](index=129&type=chunk) [Defaults Upon Senior Securities](index=22&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not Applicable - Not Applicable[127](index=127&type=chunk) [Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not Applicable - Not Applicable[128](index=128&type=chunk) [Other Information](index=23&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading plan changes occurred, and the report lists beneficial ownership for major stockholders - No directors or executive officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter ended June 30, 2023[130](index=130&type=chunk) 5% Stockholders as of August 1, 2023 | Name of Beneficial Owner | Percent | | :--- | :--- | | Peter J. Jacullo III, Director | 18.9% | | Peter H. Kamin, Chairman of the Board | 15.6% | | Fund 1 Investments, LLC | 7.6% | | Savitr Capital LLC | 6.2% | | Monomoy | 5.7% | | Cannell Capital LLC | 5.5% | [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists required exhibits, including CEO/CFO certifications and iXBRL financial statements - Key exhibits filed include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and financial statements formatted in iXBRL[138](index=138&type=chunk)

Tile Shop Holdings, Inc. (NASDAQ:TTSH) Q1 2023 Results Conference Call May 4, 2023 9:00 AM ET Company Participants Mark Davis - Vice President of Investor Relations & Chief Accounting Officer Cab Lolmaugh - Chief Executive Officer Karla Lunan - Chief Financial Officer Operator Good day, and thank you for standing by. Welcome to the Q1 Tile Shop Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. [Op ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-Q _____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from – to – Commission file number: 001-35629 _____________________________ TILE SHOP HOLDINGS, INC. (E ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2022 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-35629 TILE SHOP HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 45-5538095 (State or other jur ...

Tile Shop Holdings, Inc. (NASDAQ:TTSH) Q4 2022 Earnings Conference Call March 2, 2023 9:00 AM ET Company Participants Mark Davis - Vice President of Investor Relations & Chief Accounting Officer Cab Lolmaugh - Chief Executive Officer Karla Lunan - Chief Financial Officer Conference Call Participants Mark Smith - Lake Street Operator Good day and thank you for standing by. Welcome to the Fourth Quarter 2022 Tile Shop Holdings Earnings Conference Call. [Operator Instructions] Please be advised that today's co ...

Tile Shop Holdings, Inc. (NASDAQ:TTSH) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Mark Davis - Vice President, Investor Relations & Chief Accounting Officer Cab Lolmaugh - Chief Executive Officer Karla Lunan - Chief Financial Officer Conference Call Participants Connor Jensen - Lake Street Dave Kanen - Kanen Wealth Management Operator Good day, and thank you for standing by. Welcome to the Q3 2022 Tile Shop Holdings Inc. Earnings Conference Call. At this time, all part ...

Financial Data and Key Metrics Changes - The company reported a record revenue of $107.6 million for the quarter, with a 12% increase in comparable store sales, primarily driven by an increase in average ticket prices despite a modest decrease in unit volumes [13][14] - Gross margin rate was 66%, down 310 basis points year-over-year but up 80 basis points sequentially from the first quarter, attributed to pricing actions and inflationary cost pressures [14] - Net income for the quarter was $6.9 million, with adjusted EBITDA at $16.8 million, resulting in an adjusted EBITDA margin of 15.6%, a decrease of 40 basis points year-over-year [18] Business Line Data and Key Metrics Changes - The pro sales mix exceeded 65% of total sales, indicating a strong focus on professional customers [10] - In-store execution metrics such as conversion rates and average ticket sizes showed improvement, contributing to overall sales performance [10] Market Data and Key Metrics Changes - The company is observing a slowdown in new orders and consumer traffic, attributed to rising interest rates and changing consumer spending patterns [7][24] - The company expects continued pressure on gross margins due to inflationary cost pressures and a conservative approach to future pricing actions [15] Company Strategy and Development Direction - The company is focused on enhancing employee engagement and training to address labor shortages, with initiatives to improve culture and career paths [8] - Supply chain initiatives have improved, with inventory levels normalized, but the company anticipates ongoing inflationary pressures affecting costs [11][19] - The company is exploring alternative sourcing options to mitigate cost increases and has plans to roll out new technology to improve customer interaction tracking [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the changing macroeconomic environment and its potential impact on home improvement spending, indicating a cautious outlook for the second half of 2022 [7][15] - Despite the challenges, management remains optimistic about the company's positioning for customers looking to remodel rather than purchase new homes [25] Other Important Information - The company has a cash balance of $10.5 million and bank debt of $5 million as of the end of the quarter [19] - The company plans to hold a national sales meeting to reinforce best practices and celebrate milestones, indicating a focus on team cohesion and motivation [9] Q&A Session Summary Question: Update on consumer behavior and spending - Management noted that while ticket averages remain solid, traffic has slowed, indicating a potential impact from the macro environment [23][24] Question: Impact of slowing housing trends - Management indicated that the company typically performs better than existing home sales, but is seeing a slowdown in orders, which aligns with housing market trends [25] Question: Performance of remodeled stores and capital growth plans - Management confirmed ongoing remodeling efforts with positive results and indicated discussions on capital allocation for business investments [26][27] Question: Inflation and gross margin outlook - Management acknowledged that while some costs are decreasing, the benefits will be realized in 2023, and current inventory is cycling through at higher costs [29][30] Question: New product introduction and market opportunity - Management expressed excitement about the introduction of luxury vinyl tile (LVT) and its potential market impact, noting positive early results [31][32] Question: Stock buyback and credit agreements - Management confirmed that the credit agreement allows for share repurchases as long as leverage ratios remain below a certain threshold [33][35]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-Q _____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from – to – Commission file number: 001-35629 _____________________________ TILE SHOP HOLDINGS, INC. (Ex ...

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from – to – UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-Q _____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR Commission file number: 001-35629 _____________________________ TILE SHOP HOLDINGS, INC. (E ...