Tile Shop(US:TTSH)2021-11-05 22:26Financial Data and Key Metrics Changes - The company reported record third-quarter sales of $92.2 million, marking the highest level of sales in its history for this quarter, driven by a 12.8% increase in comparable store sales [6][22] - Gross profit for the third quarter was $62.9 million, with a gross margin of 68.2%, reflecting a 30 basis point improvement year-over-year but a 90 basis point decline sequentially [24][25] - Net income increased to $2.2 million from $1.9 million in the same quarter of the previous year, while adjusted EBITDA decreased to $10.4 million from $11.1 million [29][30] Business Line Data and Key Metrics Changes - The company has seen strong demand for home improvement products, contributing to the increase in sales and average ticket size [22] - Online sales remain below 5% of total orders but are experiencing growth as the e-commerce platform evolves [10][22] Market Data and Key Metrics Changes - Customer deposits for future product deliveries remained elevated at $16.2 million, slightly down from $16.5 million in the previous quarter, indicating strong order bank maintenance [23] Company Strategy and Development Direction - The company is focusing on retail execution, enhancing the online customer experience, and managing supply chain challenges [8][9][11] - Plans for 2022 include no new store openings in the first half, with a focus on improving existing store performance and supply chain visibility [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges and cost pressures but expressed confidence in their ability to manage these issues [14][15] - The company anticipates that sourcing challenges will persist into 2022 but remains optimistic about meeting customer needs [14][19] Other Important Information - The Board of Directors declared a special dividend of $0.65 per share, payable on December 3, reflecting the company's strong cash position [32] - The company ended the quarter with a cash balance of $44.3 million and no debt [31] Q&A Session Summary Question: Inquiry about gross margin recovery timeline - Management indicated that while they aim to return to historical gross margins above 70%, current global supply chain uncertainties make it difficult to provide a specific timeline [36][37] Question: Clarification on SG&A expenses - Management confirmed that the $700,000 asset impairment charge was not added back to adjusted EBITDA, impacting the reported numbers [38][39] Question: Discussion on special dividend versus store investment - Management explained that while they are returning capital to shareholders, they also plan to invest in store remodels and maintain cash for future growth opportunities [58][60] Question: E-commerce revenue contribution and future expectations - E-commerce currently accounts for less than 5% of total sales, but management is optimistic about its growth potential and plans to continue investing in this area [10][93] Question: Performance of luxury vinyl plank sales - Management reported positive sales results for luxury vinyl plank, indicating plans to continue monitoring and expanding this product line [100][101]