Tile Shop(US:TTSH)2022-05-06 15:35Financial Data and Key Metrics Changes - The company reported revenues exceeding $100 million for the first time in its history, setting a fourth consecutive quarterly sales record [5] - Comparable store sales increased by 10.7% in Q1 2022, primarily driven by an increase in average ticket prices due to recent pricing actions [17] - Gross margin was 65.2% during Q1 2022, with expectations of further pressure on gross margin in the near term [18] - Net income for Q1 2022 was $3.5 million, and adjusted EBITDA was $11.7 million, with an adjusted EBITDA margin of 11.4%, down 460 basis points from the previous year [24] Business Line Data and Key Metrics Changes - The professional customer channel accounted for over 60% of overall sales during the quarter, reflecting strong relationships cultivated by Pro Market Managers [8] - Online orders increased by over 30% year-over-year, although they still represent less than 5% of overall orders [11] Market Data and Key Metrics Changes - The company has seen improvements in supply chain levels, approaching pre-COVID levels, despite ongoing global supply chain disruptions [12] - Inflationary cost pressures remain a challenge, particularly in Europe, where natural gas prices have surged following geopolitical events [13] Company Strategy and Development Direction - The company is focused on enhancing in-store execution, improving digital commerce capabilities, and strengthening the professional customer channel [6][10][8] - Investments are being made in technology and inventory to navigate inflationary pressures and secure better pricing [15][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in the current environment and expects inflationary pressures to persist [14][26] - The company remains confident in its ability to manage challenges and is optimistic about future growth opportunities [27] Other Important Information - SG&A expenses increased by $4.8 million compared to Q1 2021, primarily due to staffing and marketing investments [19] - The company is actively pulling forward inventory purchases to mitigate anticipated price increases [25] Q&A Session Summary Question: Can you break down inflationary pressures from direct costs versus transportation costs? - Management indicated that inflation is more pronounced on the product side than transportation, but quantifying the exact split is challenging due to variability across suppliers [30][32] Question: What is the expected growth for e-commerce sales? - Management expressed optimism for e-commerce growth, aiming to exceed 5% of overall sales, with the Visualizer tool available for both online and in-store use [34] Question: What percentage of sales comes from professional customers? - Professional sales exceeded 60%, up from the 50s a year ago, with continued investment in this segment [35][38] Question: How is store traffic performing? - Store traffic has been declining, but ticket sizes are increasing due to pricing and unit increases [44] Question: What are the capital allocation priorities? - The focus is on enhancing store execution, inventory management, and technology investments, with new store openings likely postponed until 2023 [46][47]