Tile Shop (TTSH) Q2 Earnings Decline Y/Y, Gross Margin Expands

Core Insights - Tile Shop Holdings, Inc. reported a significant decline in earnings per share, dropping 75% to 3 cents in Q2 2024 from 12 cents in the same quarter last year [1] - The company experienced a 7.3% year-over-year decrease in revenues, totaling $91.4 million in Q2 2024 [2] - Comparable store sales fell by 6.9% year-over-year, attributed to reduced traffic due to ongoing softness in existing home sales [2] Revenue Analysis - Tile Shop's gross profit decreased by 4.7% to $60.3 million, while the gross margin improved to 66% from 64.2% year-over-year, reflecting a 179 basis points expansion due to lower product costs [3] - Selling, general and administrative expenses rose by 5.2% to $3.5 million [4] Profitability Metrics - Operating income fell 76.1% to $1.9 million, with the operating margin contracting by 582 basis points to 2% [5] - Net income for the quarter was $1.2 million, down 75.9% from the previous year [5] - Adjusted EBITDA decreased by 50.4% to $6.7 million compared to the same quarter last year [5] Liquidity and Cash Flow - At the end of Q2 2024, Tile Shop had cash and cash equivalents of $25.3 million, an increase from $24 million at the end of Q1 2024 [6] - Cumulative net cash provided by operating activities was $23.5 million, down from $41.4 million a year ago [6] Overall Assessment - The company faced disappointing top-line and bottom-line results, with a concerning decline in comparable store sales and operating margin contraction [7] - However, there was a sequential improvement in comparable store sales, and gross margin expansion is viewed positively [8] - Early results from initiatives to enhance the Superior line of installation products and expand tile product offerings for smaller projects are encouraging [8]