Tile Shop(US:TTSH)2019-02-19 18:18Financial Data and Key Metrics Changes - Net sales for Q4 2018 were $83.9 million, representing a 6.8% year-over-year increase [28] - Comparable store sales increased by 5% in Q4, driven by a strong increase in average ticket [28] - Gross profit was $59 million, an increase of 12.4% year-over-year, with a gross margin of 70.3% [29][30] - Adjusted EBITDA was $8.7 million, with an adjusted EBITDA margin of 10.3%, a 570 basis point improvement compared to the previous year [34] - The net loss for Q4 was $1.1 million, resulting in an earnings per share loss of $0.02 [34] Business Line Data and Key Metrics Changes - The introduction of new products, particularly in the stone category, contributed positively to sales growth [26][29] - The average stone SKU has a price per square foot approximately twice that of manmade SKUs, leading to higher gross profit dollars per square foot [29] Market Data and Key Metrics Changes - Each store vintage delivered positive comparable store sales growth during the quarter, with nearly all markets showing positive growth [28] - The company experienced a significant improvement in sales growth for the stone category, which is expected to continue [29] Company Strategy and Development Direction - The company aims to focus on delivering the best product assortment, presentation, and service in the industry [11][20] - Plans for 2019 include completing product sourcing work, shifting some products from China to suppliers in other regions [14] - The company is optimistic about sustaining better top-line performance and plans to resume store unit growth, with a careful approach to new store openings [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to improve traffic and sales growth, despite some challenges faced in January [40][41] - The company anticipates low single-digit comparable sales growth for Q1, with expectations for improvement in subsequent quarters [40] - Management believes that the investments made in 2018 will yield returns in 2019, focusing on leveraging new tools and resources [39] Other Important Information - The company ended Q4 with 140 stores and plans to open five to seven new stores in 2019, primarily in existing markets [33] - Capital expenditures for Q4 were approximately $12 million, with a total of $35 million for the year, primarily supporting strategic initiatives [37][38] Q&A Session Summary Question: Comparable sales trends and bounce back in February - Management noted a good bounce back in February after overcoming early January hurdles [46] Question: Guidance on gross margins and potential impacts - Management indicated that the guidance reflects historical ranges and is not primarily influenced by tariffs or product mix [48][49] Question: Traffic driving initiatives and pro market managers - Management highlighted the importance of pro relationships and the implementation of the pro rewards program to drive traffic [56] Question: EPS guidance and long-term targets - Management stated that the focus is on long-term targets rather than specific EPS guidance [66][68] Question: Store growth expectations and traffic driving strategies - Management expressed confidence in increasing store openings in the future, contingent on business performance [76][77] Question: Impact of sourcing from other countries - Management does not anticipate any impact on gross margins from sourcing changes [87] Question: Messaging value to consumers and traffic initiatives - Management emphasized that inspiration and product assortment drive traffic more than price [91] Question: Pro loyalty program metrics and progress - Management reported positive progress in pro sales growth and retention metrics [95] Question: Housing turnover trends and business impact - Management noted that despite mixed housing turnover trends, remodeling remains strong and is expected to grow [97]