TTSH - Earnings call transcript Q2 2021 | Tile Shop Holdings, Inc.

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Operator

Good day, and thank you for standing by, and welcome to the Q2 2021 Tile Shop Holdings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Mark Davis. Thank you. ahead. go Please

Mark Davis

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

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

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

Cabby Lolmaugh

headlined financial The and We today from you an our revenue quarter quarter which increase us of in $XX.X quarter had quarter Thanks, our quarter on prior XX% in from of to second Mark. Good sequential an the XXXX, morning morning, million the the everyone, of setting X.X% an results. of was second a for quarterly first a review that this second X.X% thank pandemic. from by all-time our represents increase increase update for reported sales XXXX and is XXXX, revenue joining of revenue business a excellent an and record. the

frontline execution warehouse of our corporate not employees. in sales like a team would tailwind, say not to possible you to organization. Shop without possible our force, our nice strong been achieve I'd our distribution center strength have this improvement entire been you. sector warriors, to to our the results be current without the would able The we've success the Tile incredible While thank and home take provides a moment

Our and success. assortment; the our doing things are digital formula service. is success for in-store to X with well: people our built displays Ultimately, providing incredibly and an our on content; curating customers inspiring amazing it's exceptional who key

exceptional retail having These to our within our execution individuals the team. performed Our and promoted first Shop navigate the our our to critical divisions. momentum an includes, an will goals that in design is rooted going. we invest and our XXXX, within are first, and ability through create keep knowledgeable help sales we're manage assortment, several day-to-day excited help in and the sales achieving engaged, drive positions pro team This to our our teams. sales strategy, monitor spaces activities level a high to team experience customers of passionate at has and beautiful half Tile The

X. the sales regional Second, to we increased from number X of leaders

our between in will stores. our leadership stores, Our training The regional and visits. frequency on-site talent, points expansion are the attracting regional more regional leaders instrumental ensuring our followed increase leaders best are including field and team practices throughout our touch of their of teams retaining help in

that seen accelerate into of leadership can execution this up-and-coming we've that expect retail talent future. store develop help investment to improvements with the our We roles move our in and the will goals bench respect

pandemic. due hours, making to which COVID Third, we we to added expand stores, the store headcount in possible it reduced our our

the second stores during of we the XX first additional as at stores end the plan XX quarter. We Sundays open end the on stores quarter, open quarter quarter. the of the third to from on to During increased XX of number of an Sundays stores the

perform exciting expenses. the a within make openings in These hours to further they this these are the time, changes to store by of the business we additional expected grow tests store results do extending anticipate results future and not show that incremental evaluate investment support store are as base store XXXX. help adjustments supports in continue hours, generated overhead additional and existing to to At our provide will any store sales foundation We tests, as our test store growth.

to on respect and to We like XXXX. initiatives for evaluating other we've drive top our growth store I'd an growth well options currently internal beyond. progress XXXX update X priorities the as as are line in provide now to with top made for

We've priority is in execution. key retail continued focusing metrics first see our in on this to area. improvements Our

Our inventory field XXX product teams first margin discounting, a the and a doing in point during months our that job our to gross months basis compared deliver detail and rate keeping when first shrinkage to nice of X attention controlling XXXX. losses the increase we customers rates are us collection improving achieve XXXX to in this check. when It's X helped of damage

increase sales. managers Our year, year-to-date with our pro XX% eclipsed to cultivating pro do seasoned great a pros job and mix pro sales of program. sharing total this seen our a benefits relationships We've has pro continue loyalty in our and of nice the market

second customers' online Our enhance to experience. is our priority

sell year pandemic. X just was COVID-XX products the ago response that in it we to really ramped Now our online efforts to

We our in-store about at and digital how in to with experience performance of feel we're consistent our experience. complements to Our and contribute web sales are direction track XXXX overall our good headed getting top the are stores, orders our one a we level on just started.

select an customer products. inspire In experience improved been visualizer addition, to our help and has delivering

recommendations complete our project. provide of it and second During the online, changes tiling our of way will our on XXXX, to the needed the products browse refine to half complementary we're assortment to enhance we're of the website. on our making The make planning easier we products images quality website merchandise a

processes to refine distribution challenge. and priority has Our remained a purchasing our third

We elevated through our from back to of see continue orders resulting COVID-XX. work challenges suppliers levels as production

to international delivery product. with suppliers Our network team back-order is secure actively working of of our

Additionally, global source cost We've seen States. our the to shipping timely also cases, have the ship in from in the the in inventory capacity In seen have some manner. doubled products a freight United past. we've rates compounded to an to challenges increase rates inbound constraints

costs. We have plan pricing prices to to our adjust combat and taken continue steps increase to to rising

we're critical execution Additionally, call generate able now pleased to who to during I'll continue teams the on priorities. our by with to to margin our the over we the progress take diligent turn quarter you through and Overall, maintaining I'm were details. be Nancy? rates. retail the gross strong the results that our will Nancy, very making the financial will

Nancy DiMattia

Thanks, Cabby. Good everyone. morning,

were when when delays the when to stemming historical XX, periods quarter, product secure by also at product by $XX.X customers to of XX.X% the $XX during from in elevated the delivery over quarter million. $XX.X backlog first million, was to line norms were of results Comparable we million was second XXXX result sales. of million an We quarter this the a quarter future up the second second against carry shipping XXXX. deposits the the compared million due XXXX the that which of during our top of was mentioned, by manufacturing with from XXXX. This by record XXXX $XX.X very XX% profit in and at year-over-year, compare of to remain sales the increase COVID-XX. shortages X.X% and Cabby quarter a second increase slightly to on end down performance, quarter in $XX.X of second XXXX, first of part pleased headlined XXXX, of the of we compared due at the Gross continue larger-than-usual end as sales quarter. quarter placed given largely second of Customer the June second especially to X.X% sequentially As store from quarter increased

of Our an gross of in due and customer costs, The costs pricing the to an gross particular, was quarter higher international XX.X%, basis points in delivery period quarter year to in our Sequentially, better product the margin margin from improvement decreased is from to gross rates. was the collection in during in basis The freight decrease second first suppliers. margin in compared increase the XXXX due margin XXXX. improvement XX rate than points inbound XXXX. primarily rate second quarter prior XXX gross XX.X% sequential

Additionally, second the an to in customer increase quarter of the the first during contributed to mix margin delivery XXXX. lower rate compared quarter of XXXX gross

million of of a EBITDA of from of to of increased to of of per consulting by our during cost of and to in in $X.X costs; of Sequentially, $X.X during in $XX.X to $X.XX increase second Net during between to quarter compensation inventory quarter in increase to the quarter Diluted an second expenses; of $X.XX headcount; and million second the second adjusted driven increase XXXX. loss million The quarter $X.X move temporary $X.X $X.X during XXXX. increased during products margin X.X% a of largely second quarter expenses. second quarter and second second $XX.X the XXXX increase in quarter the quarter our $X.X increase XXXX. when general second of centers million increased income our million the the EBITDA basis wages, net million the the in XXXX. during the the was quarter increase second Our increased earnings $X.XX $X.X during distribution SG&A labor million a quarter increase from quarter XXXX and marketing $X.X during a and $X.X million of due $X.X of a selling to The quarter selling, to second rate Adjusted XXX XXXX expenses compared first the $X.X a income increased million expenses from of due higher costs of and transportation between centers the costs share The XXXX and XXXX our from the increase a million to administrative XXXX. from of a earnings was stores. XXXX. in million to majority distribution by improved net during levels of transportation selling, administrative XXXX XX% million million loss variable points general stores; costs move

During relocated second store X the in we Wisconsin. Madison, quarter,

at total XXX end our the As quarter, remained count of the stores. store of

open Cabby to not we plan As indicated, any in additional stores do XXXX.

no X we the cash evidence is of used power over to million. the time same frame and the technology information quarter million flow months and of in finish of XXXX, during enhance has store new the been $XX.X This quarter, model. during strong cash-generating of assets. million our cash the the of with second generated stores, operating balance $X.X ended This X quarter, the expenditures relocate invest merchandising existing debt. $XX to first the capital of opened store first build-out During We remodel fund

XX industry, continue proud down on call all that, we'd launched XX, Felicia, As I've team that Tile the have and executive tenure. I a With an accomplish in on couldn't has company of made to that during decision I topic assist flooring that's confident been orderly ago, After came to touch path. over with working surface little wanted I'm close, years I'm I'll the companies right once the position personal. has the span the transition in so to able company the search the through I a of short much Shop a such June in rest spending to and committed retire. the announced process, Cabby. years hard of turn time, filled. more When a will Cab to to we've X to back the The I'm and my I imagined leadership go we guide

Cabby Lolmaugh

and we done times. awesome, as execute With Nancy, have our growth regarding missed. behalf Nancy be also to she entire of to I Nancy. for Thanks, move intimate Her especially everything has and our during that, comments a our these let's unprecedented few company, of make Nancy's for great me our a knowledge you On Q&A. and strategy. deep us wanted you, been our Board thank has space company, to partner retirement. been will

Operator

Our Jeff from first Instructions] Oak [Operator question Moore of comes Burr Capital.

Jeff Moore

curious about guys that was the I Yes. have. deposits you

in issues supply get customer much I over think you revenue million to chain How said under does long takes that it was $XX however deposits. resolved? the it represent just

Nancy DiMattia

actually back depending the that in is product that varies mix That order. on

Our whether it's material. stone it's or margins on depending varied

on So a to it's on a difficult changes process little are the that that given in and say, and waiting currently basis for daily orders fulfillment.

Cabby Lolmaugh

deposit have that, or no on based pro of top put On Jeff, Yes. their down, tiers. customers retail XXX% customers where small deposit depending

according level different the does type. it So at to impact customer

So deposit it's the little obviously going to bit more be than a itself.

Jeff Moore

deposit of buying how their So how And balance your would that sheet, the a of be much pro regular much house? in would of it customers? just that that home be for that's terms of on remodeler mix own

Cabby Lolmaugh

it's right listen you our Yes, mean, I I pro a if mean, to business. now, XX% eclipsed we've prepared mix. remarks, is

XX% retail. we have So

think and down, you math. that so you they And to can the XXX% do have put

So higher that, than substantially it not is higher. it's but

Jeff Moore

you I we long-dated curious was what have looked lower any know or And into attractive rates maturity if facility updates things have I I that Okay. asked provide There's that? you And your got Also, more and last or guys call, whatnot. a borrowing other -- and facilities it. nothing you interest like that? terms borrowing on could drawn on But conference it's everything. about

Nancy DiMattia

always with going our shareholders. us time, to options or there's a great But this share. new to nothing best evaluating we're at produce continue for We to our performance the And our for existing what's bank. and and have update relationship

Jeff Moore

investigation then shareholders? returning Okay. And capital what about of to

Nancy DiMattia

that's a up something That's lot. come

This really our to We a we we'll frankly, mind continue having times in I but really been Keep to shareholders rush that only is mind isn't that do evaluate thing. about think these good be debt-free generating. so. keep our options, in cash the cash during certainly, full we need that and for really we've continue on, we're a quarters. do flow cushion unusual feel a And we that in X something pleased as today we're to

Jeff Moore

question. last Okay. one And then

covering of get up of floor of pulse kind whatnot, you valuations and larger companies multiples seeing terms other for into entities? finger companies valuations What guys your kind I'm on M&A. have you and the of folded as for sure they In are

Nancy DiMattia

looking this really companies other We're not time. discuss to M&A at or

Jeff Moore

Any particular reason?

Nancy DiMattia

to again, part discuss And just it a competitive reasons. we're of varies. that prepared It's not strategy for really

Operator

Hollander Jon CAG. from comes of question next Our

Jon Hollander

quarter. Great

process. is remodeled? quick Just I many be many How a have months? expect few you questions. remodeling to stores next the about chat over been wanted how to One do remodeled the store And XX

Cabby Lolmaugh

Yes, to to of enhance. at the list for with stores the certain remodel. question. a the remodel thanks we came and beginning Well, want out We of year

we've customer, the of the a not shipping how Now due the to bit of we're dozen of the constraints so few remodeled stores to around on based we some vignettes XX, the the next year, tenure on going And more, how experiencing, half year. We've analysis this depending do we on of store, inventory remodeling that remodels. we're out months. to much but in a far and and segment dates just little the want the the spend few back some things of these this if here continue remainder throughout a the over shake scaled

Jon Hollander

additional XX? or X to sorry, I'm that XX going was from

Cabby Lolmaugh

Hopefully, we'll through XX come product additional, but going to but in XX% right continues to we're say the ports. now, see multiple as

Jon Hollander

store see remodel? And lift you the what do type returns or of on

Cabby Lolmaugh

the vignettes, we depending larger can smaller store a X this. amount doing we're full if on analysis anywhere quickly. be And the to a we're X the if quite years of If invest, on a investing can scrape depending remodel. a a some return just done remodel, We've amount or we're from we to it on years. take it investing could X how But amount much substantial see

Jon Hollander

the employees the on the what and you of local And impact the remodel? is the after store do manager

Cabby Lolmaugh

the that's years and and and to in or to excited. was They And this being customers the beginning to raises try new fixtures the do get actually a on From during morale. business end, go It the remodels done. We for demo tile around I stores. going you watch manager and when to have get the a of anything exciting. it's product and hours salesman. day. any evening XX grouting The excited setting disruptive in staff's during applying stores,

So it's all, a creates not at disruptive of excitement. it and lot

Jon Hollander

Burnie, Maryland plug shameless the in for Well, put I a Glen will store.

you good. be will there very very If would a remodel do it be -- could

Cabby Lolmaugh

I they're that, hear to too. it. I'm sure appreciate happy

So thank you.

Jon Hollander

And In better follow-up to company track hoping you was capital metric your that employed the tracks. press your a return on metric. is I And question. this the why understand release,

Mark Davis

a This is business feel assess as the to to capital metric the good return is the the of we're as we think well on on capital very seeing that over the time. metric able We the as health produce We Mark. is to do us employed that feel in is earnings of return metric quality that's our continued that metric of this important helpful, we business. our but improvement primary capital health on evaluate the most that

Jon Hollander

this at Are to management metric? bonuses tied all

Mark Davis

No.

Jon Hollander

for X.X%. has was metric so dramatically congratulations This increased, Last it that. Okay. quarter,

This about any mean, dramatically and this does adding happens X nearly your higher? quarters I these why Right obvious does at it's -- behavior? this quarters because -- different now, XXXX. modeling, metric from if management the in levels? What the when how quarter how feel doing we're Does out number you're is taking XX.X%. And in management's change in XXXX XX%. goes What powerful

Mark Davis

our the to we doesn't better I progress we do return about move easiest over course way the think we feel That striving better. continually the can made that forward. year, a think get we that really as but question change but to answer behaviors, good we're necessarily of the we've is last

Jon Hollander

all? right delays. what's been delays your of Okay. Could Delta any And the you any Have delays commentary be your qualitative lengthened? of they impact there finally, just these about inventory in suppliers? would Asia Have about at with Just little from comment going on orders now? bit international Has shipping and a current shortened variant helpful.

Cabby Lolmaugh

year now. -- a a over Yes, it's struggle Jon. almost a for Thanks, been year

world. ports. be And though We made. But find The the challenges people back be of product are in than product months. a in you are We they're lot of lines. a once getting to the got produce work the mean, get fires the that product. shortage seeing the X able to are closing we're logistics. sitting have our to ships struggle. what going there's so Montreal. partners vendor still container I to good the longshoreman strikes more the at on all past at is in continuing ships, at receive are over But is, continuing the rail the And So we a Northeast containers But we're ports the news always today are

So We're in of but orders businesses our DCs, get to slightly back able up. also we're things a well. of a lot as our are opening opening lot

we it's So going ones. in as can some X,XXX when everything ports, have to news the When SKUs, ship balancing only what not is is challenges act, but are we're and new arrive, creating at getting we receive the back and orders, trucking better. it going to continually port what who good But at else. what rail, incur it's you a and

Jon Hollander

And not because do customers of I you lose understand cancel? able any just that these are to rolls how to Or through. deposits delays? wanted

Cabby Lolmaugh

whenever Customers waiting I'm customer want. I'm I'm for lenient they myself. We're And our furniture. And think with a cancel on very Yes. certain home. my things I customers. own what -- seeing waiting can on I'm

They're seeing is just They're are and everyone buying buying thing. or buying windows. tile. this. They're not buying customers Our cabinets same the experiencing They're siding, remodeling.

everyone the facing. and heard the talk seen current I've when they're what leadership to understanding field of our is that customers, and from So challenges in I

elevated rates. we're So seeing cancellation any not

could, I'm So now. that seeing but I a they to, not that's think don't right wanted they If concern.

Jon Hollander

And terms then in financials? best that the where to of in the track is deposits, place

Nancy DiMattia

now, of deposits. balance you'll the on deposits that included million part got from in cash cash Right for are our that the we've The sheet. $XX.X see is

Jon Hollander

million the out broken just seeing amount. restricted Because only release, cash the in your the that Q? $XX.XX and like is I'm press And in obviously

Mark Davis

breakdown Mark. Q. actual liabilities is in accrued in we It deferred have and This is the of our have Q. is as broken with a The accrued revenue liability, part that other associated out other of deposits customer we

Operator

Burr comes Capital. next Moore Jeff from question Oak of Our

Jeff Moore

doing going be made sort some the to going about Are of curious that that to public? was XX. on and all Summit guys I Riley XX be August be are presentation B. will attending you Summer you

Mark Davis

this will certainly line Mark. be happy Investor always as made to going Jeff, have making We're open. necessarily that questions is presentation not our that folks there public, Relations but with be to a meet is

Jeff Moore

change the -- these the decision kind of has large kind what that of of communications And or in attendance color of company seems kind the to like I made Okay. It conferences. attend guess, what that? a directional

that Just was think a thinking the for what but little you bit thing of that? it's of what's of curious, kind kind prompted ordinary, right? attending, are And some I that? out of was the I personally a all great

Cabby Lolmaugh

excited Jeff, and to really people a this is Tile want our we talk of increase I'm to the to attend meet And Cab. Shop. conference the and shareholders. about bunch transparency

it's relisted some the company where we important going. and that that As and share we've NASDAQ, have on the back Q&As hit the our just and come I do we're conferences I be and think excitement to about going

that's So much pretty it.

Jeff Moore

other presentations Okay. see you and at guys future? doing some the all the of in you kind are have looked Q&As conferences expect we doing might What or of at to

Cabby Lolmaugh

We'll let we're a There's you we let that when but them. there analyzing, know, this Jeff. we'll at time. out None book you few know

Operator

comes from Management. David question next of Kanen Kanen Wealth Our

David Kanen

questions. Congratulations. you my taking I appreciate

-- QX? -- the from out terms That press been they QX, release, customer the call have questions First, or could so me. But if to QX sequentially, deposits, change any, you of would be to I'm WiFi, deposits, covered. may even traveling. in I be may Nancy, some of may helpful have many my don't the in they

Nancy DiMattia

we're my exactly I off was and top $XX.X million It QX, in QX. for million $XX.X QX. the don't at was head know it of in what

Cabby Lolmaugh

David, So believe we're to I going --

Nancy DiMattia

your pardon. I beg

David Kanen

So it's basically flat.

was it with... basically, So flat

Nancy DiMattia

And products what over availability has then depends It and is mentioned back transportation back on what had the product a on will given Cabby quarters. to There's order. X in, the orders, internationally. It And been other slight goes some fluctuating of decrease. some coming it go last for Yes. is we as earlier. fulfill

does it fluctuate So somewhat.

David Kanen

see. I

Okay.

can should you correct? that times product to revenue, way move then and over as customer, to So its the down compress ship work number ultimately as the lead quicker

Nancy DiMattia

Yes. Yes, correct. that's

David Kanen

Okay.

trend to So supply in customers, you're they general, improving, improving? you product are about some are are to resolving not seeing that issues able get chain where the but of

Nancy DiMattia

They while direction. definitely yet. the they're looks it trend we're starting are in But improving, to like resolved right not

David Kanen

that then guys I this, And see versus growth for customer? it, in of of Cabby, if could about Okay. And business spoke growth, you but for How quarter missed on is know general during terms pro growth. comment then in the that I you unfortunately. driving levers the retail to and much you the just in attributable that were effective the

Cabby Lolmaugh

back, things our retail which We impacting enhance anchored Yes. mean, and I business. to All levers this it work impacted customers' those supply our we're our to our chain. when our in avenues growth. all David, year, strategies comes was experience pulling execution, on really online

our yes, with pro that in my So you it. prepared comes can as retail can has your XX% grown. when business grow you pro remarks. business, eclipsed And It grow your hopefully,

we're to think get continue positive I to about numbers, specific to But business the growth talk right we've today, the -- will things do here. going we're the to impact but want started, is all that we manner. and that and doing don't I continue things into So in a these

question. good a it's So

David Kanen

congratulations. Well, Okay.

strategy cash made having this. rather or all it that, on like than like very previous have unless shareholders and that caller good like that no haul. Board leave view sure the a sit a almost probably It is shareholder. I balance I just comment. done the you sheet, asked it. I'm returning you you're that long know would as guess, very pleased my guys high good for management. to a ROI about share cash to very be obviously, you sheet, for are I the and have -- good a You've wise. smart working not doubt -- activity to have you just And with I'd I would the on seems see return on sitting guys comment you I'll I'm that job. balance a just X

the up keep great quarter. just to and hope So work, next chat

Cabby Lolmaugh

Thanks, David.

Operator

back turn I'm no Instructions] I'd closing [Operator questions the Davis to at over this Mark showing further call time. any for to remarks. like

Mark Davis

call. interest listening later the you Thank great day. for forward Tile next update our earnings and Form We We conference in our today. our to Thank in look Shop, filing you XX-Q for to your anticipate have November. a providing

Operator

you. Thank does and conference. for you all gentlemen, Ladies Thank this participating. today's conclude

may You now disconnect.

Tile Shop (TTSH) 7 Aug 212021 Q2 Earnings call transcript