Tile Shop (TTSH) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 declined 8.3% year-over-year to $84.5 million, with comparable store sales down 7.9% due to lower store traffic and housing turnover.

• Gross margin improved to 66.5% in Q3 2024, up 180 basis points year-over-year, driven by lower product and inventory costs.

• Net income for Q3 2024 was $41,000, down from $1.8 million in Q3 2023; Adjusted EBITDA was $5.0 million, down from $8.3 million.

• Company remains bank debt free with $25.1 million in cash and a $75 million unused credit facility.

• Proactive initiatives included expanding product assortment, enhancing e-commerce, and relaunching private label installation products.

Financial highlights

• Q3 2024 net sales: $84.5 million (down from $92.1 million in Q3 2023); comparable store sales down 7.9%.

• Gross margin rate: 66.5% in Q3 2024, up from 64.7% in Q3 2023.

• SG&A expenses for Q3 were $56 million, down 1.2% year-over-year; year-to-date SG&A down $1.2 million to $172.5 million.

• Adjusted EBITDA margin: 6.0% for Q3 2024, down from 9.0% in Q3 2023.

• Net income per diluted share was $0.00 for Q3 2024, compared to $0.04 in Q3 2023.

Outlook and guidance

• Management expects continued pressure on topline results due to high interest rates and slowing home turnover.

• Easing interest rates by the Federal Reserve are expected to improve existing home sales and remodel demand.

• Cost reduction actions, including closing a distribution center and reducing staffing, are expected to lower SG&A expenses by $2.8–$4.1 million annually.

• Liquidity is expected to be sufficient for at least the next twelve months and for long-term requirements.

• Continued focus on professional customer engagement, expanding lower price point assortments, and enhancing e-commerce.