Tile Shop(US:TTSH)2024-11-07 21:16Financial Performance - Comparable store sales decreased by 7.9% and 8.4% for the three and nine months ended September 30, 2024, respectively, due to lower traffic levels [76]. - Net sales for Q3 2024 decreased by $7.6 million, or 8.3%, compared to Q3 2023, with comparable store sales down by 7.9% [86]. - Net income for Q3 2024 was $41, a decrease from $1,844 in Q3 2023, reflecting a significant decline in pretax income [86]. - Total revenues for the nine months ended September 30, 2024, were $267.6 million, down from $292.7 million in the same period of 2023 [91]. - Net sales for the nine months ended September 30, 2024, decreased by $25.1 million, or 8.6%, compared to the same period in 2023, with comparable store sales down 8.4% due to reduced store traffic [92]. Cost Management - Gross margin rate improved by 180 basis points to 66.5% in Q3 2024, primarily due to decreases in product costs [77]. - The company anticipates annualized benefits from recent cost-cutting measures to reduce SG&A expenses by $2.8 million to $4.1 million [80]. - Selling, general and administrative expenses decreased by $0.7 million, or 1.2%, from $56.7 million in Q3 2023 to $56.0 million in Q3 2024 [78]. - Selling, general, and administrative expenses decreased by $1.2 million, or 0.7%, primarily due to a reduction in depreciation and variable compensation costs, despite increases in occupancy and IT expenses [94]. Taxation - The effective tax rate increased to 77.0% in Q3 2024 from 22.4% in Q3 2023, primarily due to a decrease in pretax income [90]. - The provision for income taxes decreased by $2.2 million due to lower taxable income, with the effective tax rate rising to 27.9% from 26.1% in the previous year [95]. Cash Flow and Liquidity - Operating cash flow generated during the nine months ended September 30, 2024, was $28.5 million, funding $11.8 million in capital expenditures [81]. - Net cash provided by operating activities was $28.5 million for the nine months ended September 30, 2024, a decrease from $56.2 million in the same period of 2023 [111]. - Cash and cash equivalents increased by $16.4 million from $8.6 million on December 31, 2023, to $25.1 million on September 30, 2024 [81]. - Cash and cash equivalents totaled $25.1 million at September 30, 2024, up from $8.6 million at December 31, 2023, with working capital increasing to $42.1 million [114]. - The company had no borrowings outstanding on its line of credit as of September 30, 2024, with $73.8 million available for borrowing [106]. - The company expects its cash flow from operations, along with existing cash and credit availability, to be sufficient for operations and capital expenditures over the next twelve months [107]. Capital Expenditures - Capital expenditures increased to $11.8 million for the nine months ended September 30, 2024, compared to $11.0 million in 2023, focusing on store remodels and IT assets [108]. Profitability Metrics - Adjusted EBITDA for the nine months ended September 30, 2024, was $19.2 million, or 7.2% of sales, down from $32.2 million, or 11.0% of sales, in 2023 [101]. - Gross profit for the nine months ended September 30, 2024, decreased by $11.5 million, or 6.1%, while the gross margin rate improved to 66.1% from 64.4% in 2023, attributed to lower product costs and stabilizing international freight costs [93].