Tile Shop (TTSH) 4 May 232023 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q1 Tile Shop Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. advised call be being Please Instructions] today's is conference recorded. [Operator Relations the now Davis, over Investor Officer. like would conference Vice Chief to of Mark I today, hand call Accounting speaker to President and your please Mark, ahead. go

Thank the Shop's to First and Tile Call. you. morning Earnings Good everyone, welcome to Quarter

XXXX are meaning statements our and are that known could forward-looking of the during amended. and the Litigation in of today release Executive press constitute Karla described Those within materially and Certain subject Lunan, of uncertainties and results actual me today to Securities statements. to differ our Chief our Officer. made Joining SEC. our made earnings as statements both the Such to pursuant statements the Cab Lolmaugh, earlier provisions Private harbor filings forward-looking with cause from Officer; Chief issued and Financial safe uncertainties unknown in and call the risks Act such are risks Reform

The we do are forward-looking and these any non-GAAP to obligation will include this undertake forward-looking certain as date update of also statements measurements. of Today's not call, call the made statements. today non-GAAP earnings on me our see call now of which financial that, those for posted a has the been Please Cab. our measures, With reconciliation to website. over company release let turn

store an Thanks, flat Mark. Comparable Good the of on during our update joining for XXXX. and morning, you business first with today thank XXXX everyone, results. sales and first us our quarter for were quarter

industry. housing to During the our created interest turnover macro challenges persist. rates Rising across slowing continue headwinds quarter, and

are to opposed indicates Feedback work. see remodeling remodel that their to of Many for backlog have some our to healthy continue indicate of moving. projects. we as pros received they a from However, demand homes our customers choosing still homeowners steady

macro to goals. teams anticipate the next conditions quarters. progress over the make challenging excellence will continue several we remain against Nevertheless, Store retail

of XX% was during first Pros sales our quarter. and the Pro sales over Pro to mix, which includes total Our referrals, sales

our made have best in Additionally, past. improving of the stores that adoption a number we've of underperformed on progress practices at

While have we still we're work of making progress in in this us. front area, more

environment, -- still Given we opening store assortment, first delay the execute continue new track the We're on in initiatives to I've decision challenging to our XXXX. a quarter. during made the macro second our

a can we We across the have high-quality suppliers price help last for the the from believe over international identified year. will rates that of world. that in We have of combined experienced number effort, products we offset points this recent some increases price source decreases freight inflationary with lower

clearance quarter. item quarter. addition Additionally, our expanded we've last during our part over our clearance fourth line across stores an We're seen products LVT products the to Sales are the could gaining momentum. on our overall to our of and improve excited to We over assortment LVT mix about increase taken launched this a formally in of website believe sales meaningful of time. sales steps it items our all of following visibility become

advancements given to I've in core price consumer suggesting our our and sentiment As to received Karla. flooring and over The call we've that, assortment homes. feedback as the have points. hand their a indicates LVT we now great in a customer I'll competitive started alternative test accepting With demographics that we year customer last product in before, LVT started widely mentioned quality stores shifting higher-end

Thanks, morning, Cabby. Good everyone.

ticket average. flat were quarter levels at comparable lower stores with the by We an increase traffic see in sales did XXXX. the during was quarter offset First that of

on hand. increases a is sequential cost at costs. to hold typically average inventory decrease during under in due the was margin inventory XX.X%, quarter. continued gross in XX a to which rate from first the fourth just quarter equates basis We decrease and margin inventory Our point value year of The

and into increasing While our during will way rates products first to work assortment. to come inventory we international initiatives costs quarter, their down our start landed were freight lower-priced average improve have as as costs still start as the expect from receipts resourcing

the and back LVT back will these and lower to of and tile our growth same note margin headwind have it's important a sales the that that gross anticipate to priced margin shelf carry time, rate we rate. overall At gross competitively create We shelf products. our than LVT products continued our products a of acceleration

in of increase our these improve gross sales of However, dollars on we expect products leverage fixed result and profit an the expenses. incremental will SG&A

million first decrease decreased in a decrease and were XXXX, the quarter licenses $XXX,XXX quarter increases, compared income wages expense. expenses, decreases $XXX,XXX a variable of decrease was $XXX,XXX by by depreciation $XX.X increase partially expenses pay was when in general transportation $XXX,XXX These First in attributed expenses in decrease software and million. a and to and compensation due during shipping offset and quarter first XXXX. The increase increase to the adjusted $X.X and in largely to a a selling, of administrative a in operating million Net $X.X headcount was $XXX,XXX EBITDA supplies. $XXX,XXX

Our adjusted EBITDA margin rate was XX.X%.

share per quarter by the $X.XX decreased $X.XX from of during XXXX quarter the XXXX. to during first earnings quarter of first $X.XX First

Turning sheet. the our attention to balance

With at of from $XX.X the cash million quarter, the million to Our of was at used The quarter. inventory and operating I quarter to million decreased of happy end during any to end take flow. quarter. questions. the fourth first cash million by are the the reduce the Also this our generated we $X.X debt, $XXX.X which that, $XX Cabby of majority was

first [Operator Street... a Smith from Thank you. Lake we question At Mark answer. conduct time, Our this from and question comes Instructions] will

on Mark morning. this is Jacob for

give you new year? the update, openings us could details -- store on any this looking any additional Just

push And the I thought of the business. point. on it The second our scheduling. experiencing on Cab. time. focus is We to July, of headwinds is coming just Jacob, here macro yes, some new best we're some this June, store due this in We're delay to at store open this to track depending just at really our profitability this new did on our up

So generate that's to more to relocate another feel yes, much but is it. we're I mean, going better to a income, area we going store that pretty

kind of your solid. cash or you just shareholders capital How thinking buyback are are to returning about Maybe or... balance improvements via sheet Okay. guys

your consideration. At at Karla, you and not we I share this point, dividends mean is planning thank point. question. for a this or are This on it's any always buybacks

do improve results. to such any We SG&A are to as constantly do have time, we our that plans in trying past. any not our major looking and have at like control forecasting and the But we this and events

in going to continue pleased out reduction of, to chip proud we're we're first QX So Jacob, know I our and away let's with figure how my and shareholder we're return we're is Yes. pretty get that then that, to goal debt-free going value. right? our at in debt that's

that's the right So goal now.

just move Let's then forward. generate X and and cash get debt down the to

That's of any inflationary you to talk are Maybe of you is about increases? the price talk different the But maybe I Okay. helpful. maybe mentioned I just the had about could freight sea got able pass pressures. through you it. product And just drivers kind know coming down. costs?

Yes. Sure.

outweighed freight freight costs was cost overall lot some when with comparison So seeing we're we're the in it the a product months. happy large last increase. you to product we've of in product that And cost, been pretty the of few costs cost reduction the The in overall ocean the over at past look -- year.

of that's worth of efforts have lower-cost DCs, we if feel in So track start inventory us margin. that getting and product, our down coming our year's a on some resourcing in to we landing we're our rebounding typically.

on So as this and through starts upswing now margin. we hopefully product this land, go the we're inventory with to

still is more to freight. these in a it's little corporate bit It's battle. expensive So days. the the from everything It's ops to else stores not marketing even a just everything DCs

we the But making strategic best make to down. So focused and have product -- our that come point. has sure to We're company in it's starting cost across land at the decisions yes, to be DCs. we're this

we to going So that feel rebound nicely. we're

like any At over for closing it Mark to to Okay. would I time remarks. turn this

Thank filing in for XX-Q listening earnings nice call. the day. you for you a Shop. interest anticipate your Tile our Thank We Form later Have to our today. conference