Tile Shop (TTSH) 9 May 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Tile Shop earnings conference call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Ken Cooper, Head of Investor Relations.

Thank you, and good morning to everyone. Shop's earnings Tile the to first call. quarter Welcome

Lolmaugh, Officer; and me today Davis, Executive Cab are Officer. Joining Mark Chief Chief Financial

statements. Those made actual our of to of such statements statements. and and uncertainties to as uncertainties the issued to amended. today both and call Securities Litigation and in from to known differ meaning are during forward-looking filings results of the statements forward-looking risks could Private the are described this obligation that call, update SEC. statements we XXXX Act of earnings earlier these provisions pursuant the and as and statements constitute materially harbor unknown of safe made Such risks today The Reform release do made forward-looking cause within press date any with Certain forward-looking not the in our the undertake are subject

earnings Today's call a our include measurements. those certain website. reconciliation posted non-GAAP will see also financial which been has release company of on also for non-GAAP measures, our Please

turn call With me the let over to that, Cab.

Thank and Good morning, business. for you us for Ken. an on our thank today update you, joining everyone,

The store the the part, home have was when traffic with despite sales, our we in of same showcased compared top which continues customers. had this and existing first results improvement power quarter hard present a during of business the relationships and Throughout the These decrease XXXX flow-generating due home sales the the across comparable the traffic period surface model in strong on decrease impact stores industry. the to network in results. category line our in our had to the first professional tempered, to contributed prior year. in to quarter Our adverse impact our observed flooring we challenging in weakness of which conditions, challenges our macro cash an on first extend headwinds quarter, to

Our cash in a loyalty their for our sales robust significant pros it have program program, industry, pros and who to pro discounts the benefit We with business be choose is we grow pure believe powerful pros us. referred for rebate for discount proven rebates most the for and to which a us. includes has to differentiator

products We also carry professional curated with that specifically are in our customer mind.

superior quarter, second backshelf the products. excited During as were includes in-house. and relaunch line manufacture products This label to levelers that private our we thinsets we such of

at believe enhanced that product formulas points. is Over lines new the perform top improvements are the exceptional and last competitive to brands with of significant pros some our our we made products year, levels and performance. and to able part our offer at the these have best that We price in quality be industry, in we'll the

centers focused to we're introducing of and These to a tile way our to project products making competitively the we our market In products, just starting number smaller distribution land on we're customers products enhancements recently have targeted seeking to are to the work middle products priced type addition on showrooms. tile this to of customer. on our complete also budget. backshelf A are a sourced their into appeal remodel to

our to LVT offering high-quality, competitively products. of expand plan we priced Additionally,

in during sales of the compared XXXX. by period the e-commerce to when increased same XX% Our over first quarter XXXX

of our Now channel our e-commerce the of now of to larger stores. context give through one size are some about size, sales

capabilities a believe our We continue runway have to long invest for in growth. and e-commerce we

as market on in positions strategy products this macro focus affect intend for navigate the our we to our industry term invest challenges that customers cater the closing, capabilities. believe well with customers, growth and to ease. near We our in executing that to e-commerce our professional relationship continued our that us pressures enhance of to start middle expand our maintain In assortment to and

but did her the her Mark, she organization over all for turning a on the that to thank We to end I'd with with Before her and to of pandemic. to I'm the Tile tenure like back and great family Shop. wish our Mark partner Karla wealth. in me detail partner it of assumes She for Mark's was for X excited a Davis, finance role the with smooth as been organization he our CEO. while attention has the the company. He been past past knowledge work our CFO over business, fantastic years and of has our command I've to to over made transition. decade, of especially

the call to hand over now I'll that, Mark. With

everyone. to morning Good Cab. Thanks,

to be our like Board opportunity I'd the Directors, this of role and for our organization. thank First, to Cab to appointed

not last levels of throughout success. the people, XX work with forward to incredible company. but to finance opportunity our bring Shop only in some to organization, years, helping the Over new I've our this I in Tile fortunate look been

take now me Let highlights. you financial through our

store of First stores to in by quarter traffic. sales due XX.X% levels comparable lower decreased

Easter, extra Given on million we throughout the in same the in XXXX time, first at XXXX. day which fell quarter occurred an in We the the day our leap the first period. At we additional this the the of sales believe offset in XXXX. the was average in during XXXX benefit by year, in approximately day that of of quarter sales and a of during $X was quarter had timing that increase daily estimate resulted the end of this April additional first an based

during to a the compared margin XXX XX.X%, point of was basis quarter rate XXXX. which increase first first represented quarter the gross Our

secure of price at costs. few margin and shipping traffic that rates inventory in through able reduced levels water this As we've quarters, rates which Panama successfully Asia. quarters. our recently points, the period important that It's at have gross inbound freight particularly Canal we extended time, the the freight continues in have hostilities from put been international lines trend for in next lower outlined in helped an recent restricted deterred pressure If offered international Sea on Suez assortment containers Red our rate reduce have using decreased, driven that higher, and to note may Canal has products from have to this flow our

pursuing and backshelf and are rate If sales, LVT sales assortment. lower tile Further, gross of which products, strategy we we our with carry a rate. our outperform profile respect may see to of to than we margin backshelf margin grow goals LVT gross contraction

However, dollars, gross fixed which on profit expenses. it improves would increase our leverage ultimately SG&A

XXXX. increase a were rent in variable depreciation to partially was decrease First lower expenses quarter decrease is of quarter expenses in million our $X than due million expenses $XX in a decrease million expenses $X.X SG&A that costs. in SG&A million a first and The $XXX,XXX offset by $X.X

we of expenses. on management actively number a Looking to initiatives continue pursue ahead, focused expense reducing controllable

and We to attention carry our balance Turning debt. the sheet. no of inventory to the $XX.X million with quarter continue ended

with mentioned and operating balance. the challenging quarter in ended remarks, the results cash Cab generated $XX his top million for million line of quarter, cash flow As the despite first $XX.X a we

that, are With happy questions. and Cab I any to take

questions [Operator I Instructions] the I'm turn to in no to now call Ken. back the like queue. over would showing

Tile filing you Thank today. conference for us you earnings great day. Great. Form in anticipate joining interest a for your Thank today and our have Shop, the our call. later XX-Q for We

does This you today's Thank conference. in participation the conclude for your program.

may You disconnect. now