Financial Performance - Net sales for the first quarter of 2024 were $91.7 million, a decrease of $10.3 million, or 10.1%, compared to the first quarter of 2023 [79]. - Net income for Q1 2024 was $1.7 million, representing 1.8% of sales, down from $2.5 million (2.5% of sales) in Q1 2023 [88]. - Adjusted EBITDA for Q1 2024 was $7.4 million (8.1% of sales), compared to $10.3 million (10.1% of sales) in Q1 2023 [88]. - Comparable store sales decreased by 10.2% during the three months ended March 31, 2024, attributed to lower traffic levels [69]. Profitability and Margins - Gross profit decreased by $5.2 million, or 8.0%, in the first quarter of 2024, with a gross margin rate of 65.8% compared to 64.2% in the first quarter of 2023 [80]. - Gross margin rate improved by 160 basis points from the first quarter of 2023 to 65.8% for the three months ended March 31, 2024 [71]. - Pretax return on capital employed decreased to 11.3% in Q1 2024 from 15.2% in Q1 2023 [89]. Expenses and Cash Flow - Selling, general and administrative expenses decreased by $3.4 million, or 5.5%, from $61.4 million in the first quarter of 2023 to $58.0 million in the first quarter of 2024 [81]. - Operating cash flow generated during the three months ended March 31, 2024, was $18.6 million, with cash and cash equivalents increasing to $24.0 million [73]. - Net cash provided by operating activities was $18.6 million in Q1 2024, a decrease from $25.8 million in Q1 2023, mainly due to a prior year tax refund [99]. Assets and Capital Expenditures - Total assets as of March 31, 2024, were $322.7 million, down from $346.7 million in 2023 [89]. - Capital expenditures for Q1 2024 were $2.7 million, down from $3.4 million in Q1 2023, primarily for new stores and technology investments [96]. - Working capital increased to $39.0 million as of March 31, 2024, compared to $35.8 million at December 31, 2023 [102]. Debt and Liquidity - The company had no borrowings outstanding on its line of credit as of March 31, 2024 [73]. - The company had no borrowings outstanding on its line of credit as of March 31, 2024, with $73.6 million available for borrowing [94]. - The company expects to use its liquidity for maintaining existing stores and purchasing additional merchandise inventory [90]. Tax and Interest - Interest expense decreased from $0.8 million in the first quarter of 2023 to $0.2 million in the first quarter of 2024 [82]. - The effective tax rate decreased to 20.2% in the first quarter of 2024 from 24.5% in the first quarter of 2023 [83]. Store Operations - The company operated 142 stores across 31 states and the District of Columbia as of March 31, 2024 [67].

[Performance Summary and Management Commentary](index=1&type=section&id=Performance%20Summary%20and%20Management%20Commentary) The Tile Shop reported a 10.1% net sales decline and 10.2% comparable store sales decrease in Q1 2024, while improving gross margin to 65.8% and generating $18.6 million in operating cash flow | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $91.7 million | $102.0 million | | Net Sales Decline | (10.1)% | (0.4)% | | Comparable Store Sales Decline | (10.2)% | 0.1% (growth) | | Gross Margin Rate | 65.8% | 64.2% | | Net Income | $1.7 million | $2.5 million | | Diluted EPS | $0.04 | $0.06 | | Adjusted EBITDA | $7.4 million | $10.3 million | - Management stated that continued softness in existing home sales led to lower store traffic, adversely impacting comparable store sales[4](index=4&type=chunk) - The company highlighted strong operating cash flow generation of **$18.6 million** and an ending cash balance of **$24.0 million** with no long-term debt[3](index=3&type=chunk) [First Quarter 2024 Financial Performance](index=1&type=section&id=First%20Quarter%202024%20Financial%20Performance) The company's financial performance in Q1 2024 was characterized by a significant sales decline due to lower traffic, which was partially mitigated by an improved gross margin rate of 65.8% and a 5.5% reduction in SG&A expenses [Net Sales](index=1&type=section&id=Net%20Sales) Net sales for Q1 2024 decreased by 10.1% to $91.7 million from $102.0 million in Q1 2023, driven by a 10.2% decline in comparable store sales primarily due to decreased customer traffic | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $91.7 million | $102.0 million | | YoY Change | -10.1% | -0.4% | | Comparable Store Sales Change | -10.2% | +0.1% | - The decline in sales at comparable stores was principally due to a decrease in traffic[6](index=6&type=chunk) [Gross Profit](index=1&type=section&id=Gross%20Profit) Gross profit decreased by 8.0% to $60.3 million in Q1 2024, but the gross margin rate improved by 160 basis points to 65.8% due to lower international freight and product costs | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Gross Profit | $60.3 million | $65.5 million | | Gross Margin Rate | 65.8% | 64.2% | - The improvement in the gross margin rate was primarily attributed to lower levels of international freight and decreases in product costs[7](index=7&type=chunk) [Selling, General and Administrative Expenses](index=3&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Selling, general and administrative (SG&A) expenses decreased by 5.5% to $58.0 million in Q1 2024, primarily driven by reductions in variable costs and depreciation expense - SG&A expenses decreased by **$3.4 million (5.5%)** from **$61.4 million** in Q1 2023 to **$58.0 million** in Q1 2024[8](index=8&type=chunk) - The decrease was mainly due to a **$2.9 million** reduction in variable costs and a **$1.0 million** decrease in depreciation expense, partially offset by a **$0.6 million** increase in rent[8](index=8&type=chunk) [Provision for Income Taxes](index=3&type=section&id=Provision%20for%20Income%20Taxes) The provision for income taxes decreased to $0.4 million in Q1 2024 due to lower pretax income, with the effective tax rate falling to 20.2% primarily from increased tax benefits on employee equity awards | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Provision for Income Taxes | $0.4 million | $0.8 million | | Effective Tax Rate | 20.2% | 24.5% | - The decrease in the effective tax rate was largely due to an increase in the tax benefit associated with employee equity award vestings[9](index=9&type=chunk) [Capital Structure and Liquidity](index=3&type=section&id=Capital%20Structure%20and%20Liquidity) As of March 31, 2024, the company maintained a strong liquidity position with no outstanding borrowings on its $75.0 million line of credit and a substantial increase in cash to $24.0 million - The company had no borrowings outstanding on its **$75.0 million** line of credit as of March 31, 2024[10](index=10&type=chunk) - Cash and cash equivalents increased by **$15.4 million**, from **$8.6 million** on December 31, 2023, to **$24.0 million** on March 31, 2024[10](index=10&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=NON-GAAP%20INFORMATION) The company's non-GAAP metrics showed a decline in profitability, with Adjusted EBITDA for Q1 2024 at $7.4 million and Pretax Return on Capital Employed for the trailing twelve months at 11.3% Adjusted EBITDA Reconciliation | ($ in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP net income | $1.7 | $2.5 | | Interest expense | $0.2 | $0.8 | | Provision for income taxes | $0.4 | $0.8 | | Depreciation and amortization | $4.7 | $5.8 | | Stock-based compensation | $0.4 | $0.4 | | **Adjusted EBITDA** | **$7.4** | **$10.3** | Pretax Return on Capital Employed (TTM) | ($ in millions) | As of Mar 31, 2024 | As of Mar 31, 2023 | | :--- | :--- | :--- | | Income from Operations (TTM) | $14.3 | $22.0 | | Capital Employed | $126.6 | $145.1 | | **Pretax Return on Capital Employed** | **11.3%** | **15.2%** | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position and performance, showing total assets of $325.9 million, net income of $1.7 million, and $18.6 million in net cash from operating activities [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets increased to $325.9 million, driven by a rise in cash to $24.0 million, with total liabilities at $204.6 million and stockholders' equity at $121.3 million, and no long-term debt | ($ in millions) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $24.0 | $8.6 | | Total Current Assets | $126.7 | $114.6 | | Total Assets | $325.9 | $316.7 | | Total Current Liabilities | $87.7 | $78.7 | | Long-term debt, net | $0 | $0 | | Total Liabilities | $204.6 | $197.0 | | Total Stockholders' Equity | $121.3 | $119.7 | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2024, net sales were $91.7 million, resulting in income from operations of $2.3 million and net income of $1.7 million, or $0.04 per diluted share, compared to $2.5 million net income in Q1 2023 | ($ in millions, except per share) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net sales | $91.7 | $102.0 | | Gross profit | $60.3 | $65.5 | | Income from operations | $2.3 | $4.1 | | Net income | $1.7 | $2.5 | | Diluted EPS | $0.04 | $0.06 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2024, the company generated $18.6 million in net cash from operating activities, used $2.7 million in investing activities, and $0.5 million in financing activities, leading to a net cash increase of $15.4 million | ($ in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $18.6 | $25.8 | | Net cash used in investing activities | ($2.7) | ($3.4) | | Net cash used in financing activities | ($0.5) | ($20.8) | | **Net change in cash** | **$15.4** | **$1.6** |

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, 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. (Exact name of registrant as specified in its charter) Delaware 45-5538095 (State or other jur ...

Tile Shop Holdings, Inc. (NASDAQ:TTSH) Q4 2023 Earnings Conference Call February 29, 2024 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 Operator Good day, and thank you for standing by. Welcome to the Fourth Quarter 2023 Tile Shop Holdings, Inc. Earnings Conference Call. [Operator Instructions] Plea ...

Sales Performance - Fourth quarter 2023 net sales decreased by $3.0 million, or 3.4%, compared to the same quarter in 2022, with comparable store sales down 3.2%[5] - Full-year 2023 net sales decreased by $17.6 million, or 4.4%, with comparable store sales down 4.1%[5] - Net sales for Q4 2023 were $84,458,000, a decrease of 3% from $87,473,000 in Q4 2022[27] Profitability Metrics - Gross margin for the fourth quarter of 2023 was 64.7%, an increase from 64.5% in the fourth quarter of 2022, while the full-year gross margin was 64.4%, down from 65.6% in 2022[6] - Adjusted EBITDA for the fourth quarter of 2023 was $6.6 million, compared to $8.9 million in the fourth quarter of 2022, representing 7.8% of net sales[10] - Full-year adjusted EBITDA was $38.8 million, or 10.3% of net sales, down from $49.6 million, or 12.6% of net sales in 2022[13] - The company reported an adjusted EBITDA margin rate of 10.3% for the twelve months ended December 31, 2023, down from 12.6% in 2022[28] Net Income - Net income for the fourth quarter of 2023 was $0.6 million, down from $1.5 million in the same quarter of 2022, with diluted earnings per share of $0.01[2] - Full-year net income was $10.1 million, compared to $15.7 million in 2022, with diluted earnings per share of $0.23[2] - Net income for the twelve months ended December 31, 2023, was $10,071,000, a decline of 36% from $15,703,000 in 2022[29] Expenses - Selling, general and administrative expenses decreased by $0.7 million, or 1.3%, in the fourth quarter of 2023, and by $9.4 million, or 4.0%, for the full year[7] - Selling, general and administrative expenses for Q4 2023 were $53,188,000, slightly down from $53,870,000 in Q4 2022[27] Financial Position - The company had no debt outstanding at year-end 2023, having repaid $45.4 million of borrowings during the year[9] - Total assets decreased to $316,672,000 as of December 31, 2023, from $345,822,000 in 2022[26] - Cash and cash equivalents increased to $8,620,000 at the end of 2023, up from $5,948,000 at the end of 2022[29] Operational Insights - The pretax return on capital employed was 12.4% for the trailing twelve months as of the end of the fourth quarter of 2023, down from 15.7% for the same period in 2022[14] - The company operated 142 stores across 31 states and the District of Columbia as of the report date[23] - The company plans to continue monitoring market conditions and adjusting its operational strategies accordingly[25] - Tile Shop Holdings, Inc. intends to utilize its website for disclosing material non-public information to comply with regulatory obligations[22]

Tile Shop Holdings, Inc. (NASDAQ:TTSH) Q3 2023 Earnings Conference Call November 2, 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 Maxwell Michaelis - Lake Street Capital Markets Operator Good day. And thank you for standing by. Welcome to the Quarter Three 2023 Tile Shop Holdings, Inc. Earnings ...

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 September 30, 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 ...

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)

Financial Data and Key Metrics Changes - Comparable store sales during Q1 2023 were flat compared to 2022 [4] - Gross margin rate for Q1 2023 was 64.2%, a decrease of 30 basis points from the previous quarter [8] - Net income for Q1 2023 was $2.5 million, with adjusted EBITDA at $10.3 million and an adjusted EBITDA margin rate of 10.1% [10] - Earnings per share decreased by $0.01 from $0.07 in Q1 2022 to $0.06 in Q1 2023 [10] - Inventory decreased by $5.5 million from the previous quarter, totaling $115.5 million at the end of Q1 [11] Business Line Data and Key Metrics Changes - Pro sales mix, which includes sales to professionals and referrals, accounted for over 70% of total sales in Q1 [5] - Sales of LVT (Luxury Vinyl Tile) products are gaining momentum, with an expanded line launched in Q4 2022 [6][7] - Clearance item sales increased due to improved visibility on the website [6] Market Data and Key Metrics Changes - The company faced macro headwinds such as rising interest rates and slowing housing turnover, impacting the overall industry [4][5] - Despite challenges, there is steady demand for remodeling projects as homeowners opt to remodel rather than move [4] Company Strategy and Development Direction - The company has decided to delay the opening of a second new store in 2023 due to the challenging macro environment [5] - Focus on improving retail excellence and adopting best practices in underperforming stores [5] - The company is sourcing high-quality products at lower price points to offset inflationary pressures [6] Management's Comments on Operating Environment and Future Outlook - Management anticipates that macro conditions will remain challenging over the next several quarters [5] - There is optimism regarding the reduction in freight costs and the potential for improved margins as lower-cost products are introduced [15][16] - The company aims to reduce debt and generate cash before considering returning capital to shareholders [13][14] Other Important Information - Selling, general, and administrative expenses decreased by $700,000 compared to Q1 2022, attributed to various cost reductions [9] - The company generated $25.8 million in operating cash flow during the quarter, primarily used to reduce debt [11] Q&A Session Summary Question: Update on new store openings this year - The company is on track to open a new store in June or July but has delayed the second new store due to macro headwinds [12] Question: Thoughts on returning capital to shareholders - Currently, there are no plans for share buybacks or dividends, with a focus on controlling SG&A and improving results [13] Question: Discussion on inflationary pressures and product costs - Management noted a reduction in freight costs and is optimistic about rebounding margins as lower-cost products are introduced [15][16]