Tile Shop(US:TTSH)2025-02-27 21:10Financial Performance - For the year ended December 31, 2024, net sales decreased to $347.1 million, down 8% from $377.1 million in 2023 and 12% from $394.7 million in 2022[145] - Comparable store sales decreased by 7.8% in 2024 due to lower traffic, partially offset by an increase in average ticket value[145] - Net sales decreased by $30.1 million, or 8.0%, in 2024 compared to 2023, with comparable store sales declining by 7.8%[163] - Gross profit decreased by $15.2 million, or 6.2%, in 2024, with a gross margin rate of 65.7% compared to 64.4% in 2023[164] - The company reported a net income of $2.3 million in 2024, down from $10.1 million in 2023[162] - Adjusted EBITDA for 2024 was $22.6 million, with an adjusted EBITDA margin of 6.5%[162] - Adjusted EBITDA for 2024 is $22.6 million, a decrease from $38.8 million in 2023, representing 6.5% of net sales[172] - Net income for 2024 is $2.3 million, down from $10.1 million in 2023, with a net income margin of 0.7%[172] Expenses and Cost Management - Selling, general and administrative expenses decreased by $2.5 million or 1.1% to $224.4 million in 2024 compared to 2023[147] - The anticipated annualized benefit from cost-reduction actions is expected to reduce selling, general and administrative expenses by $2.8 million to $4.1 million[148] - Selling, general and administrative expenses decreased by $2.5 million, or 1.1%, in 2024, primarily due to a reduction in depreciation and variable compensation expenses[165] - Interest expense decreased by $1.9 million in 2024, attributed to lower average debt levels compared to 2023[166] Cash Flow and Liquidity - Cash balances increased by $12.4 million from $8.6 million on December 31, 2023, to $21.0 million on December 31, 2024, primarily due to $27.1 million of operating cash flow[149] - Cash and cash equivalents increased to $20.96 million in 2024 from $8.62 million in 2023[162] - Cash and cash equivalents at December 31, 2024, total $21.0 million, with $73.8 million available for borrowing under the revolving line of credit[174][177] - Net cash provided by operating activities increased to $62.1 million in 2024 from $27.1 million in 2023[184][185] - The company has no outstanding borrowings on its line of credit as of December 31, 2024[177] - The company expects to maintain liquidity for ongoing operations and capital expenditures over the next twelve months[179] Store Operations and Strategy - The company plans to close two unprofitable stores in 2025 and does not intend to open any new stores during the year[148] - The company operated 142 stores across 31 states and the District of Columbia as of December 31, 2024[142] - The company maintained 142 stores open at the end of the period, consistent with the previous year[162] - Capital expenditures for 2024 amount to $14.5 million, slightly down from $15.3 million in 2023, focusing on store remodels and IT infrastructure[181] Market Conditions and Risks - The decrease in existing home sales by nearly 35% from 2021 to 2024 has adversely impacted demand for remodeling projects[145] - The company is exposed to inflationary pressures affecting the cost of sales, which may impact gross profit and selling, general and administrative expenses as a percentage of revenues[200] - A one percentage point increase in interest rates for the next 12-month period would not affect pre-tax earnings or cash flow, as the company had paid off its debt balance as of December 31, 2024[201] - The company does not engage in any interest rate hedging activity and does not intend to trade derivative securities for profit[202] - Cash balances are maintained at financial institutions with strong credit ratings, but amounts may exceed FDIC insurance limits, exposing the company to credit concentration risk[203] Asset Management - Total assets as of December 31, 2024, were $319.6 million, a slight increase from $316.7 million in 2023[162] - Total assets as of December 31, 2024, are $322.1 million, with capital employed at $122.6 million[173] - The company recorded asset impairment charges of $0.9 million, $1.0 million, and $0.4 million for the fiscal years ended December 31, 2024, 2023, and 2022, respectively[197] - The pretax return on capital employed for 2024 is 2.9%, significantly lower than 12.4% in 2023[173]