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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): February 25, 2025
TILE SHOP HOLDINGS, INC.
(Exact name of Registrant as Specified in
its Charter)
| Delaware |
|
001-35629 |
|
45-5538095 |
(State or other jurisdiction of
incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
14000 Carlson Parkway, Plymouth, Minnesota 55441
(Address of principal executive offices,
including ZIP code)
(763) 852-2950
(Registrant’s telephone number, including
area code)
Not Applicable
(Former Name or Former Address, if Changed
Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| ¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
| Common Stock, $0.0001 par value |
|
TTSH |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ¨
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
| Item 2.02 | Results of Operations and Financial Condition |
On February 27, 2025, Tile Shop Holdings, Inc.
(the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31,
2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form
8-K and is incorporated herein by reference.
Pursuant to the rules and regulations of the Securities
and Exchange Commission, such exhibit and the information set forth therein and in this Item 2.02 have been furnished and shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to liability under that section nor shall they be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing regardless of
any general incorporation language.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers |
On February 25, 2025, the Company’s Board
of Directors approved increased annual base salaries for the Company’s executive officers: (1) Cabell H. Lolmaugh, Chief Executive
Officer of the Company, $437,000 (an increase from $424,360) and (2) Mark B. Davis, Senior Vice President, Chief Financial Officer & Secretary
of the Company, $309,000 (an increase from $300,000), in each case effective as of January 1, 2025.
On February 25, 2025, the Company promoted Joseph
Kinder, the Company’s current Senior Vice President of Supply Chain & Distribution, to the position of Senior Vice President,
Chief Merchant Officer. The Company and Mr. Kinder entered into an employment agreement, effective as of February 25, 2025 (the “Employment
Agreement”), which supersedes in its entirety the prior employment agreement between the Company and Mr. Kinder dated October 16,
2020. The Employment Agreement documents the agreed terms and conditions of Mr. Kinder’s employment with the Company as Senior Vice
President, Chief Merchant Officer, as well as his expected subsequent transition, effective January 1, 2027, to non-executive employment
as a Purchasing Advisor.
Pursuant to the Employment Agreement, effective
on February 25, 2025 and continuing through December 31, 2026 or such earlier date as his employment may be terminated for any reason
(such period, the “Officer Employment Period”), the Company will employ Mr. Kinder as Senior Vice President, Chief Merchant
Officer, which is an executive officer position, reporting directly to the President & CEO. During the Officer Employment Period,
Mr. Kinder will receive an annual salary of $350,000 (effective as of January 1, 2025), will be eligible to participate in the Company's
corporate bonus program, with a target bonus opportunity of 50% of his annual salary, will be eligible to participate in the Company’s
annual equity award program for executive officers, with an aggregate target annual equity award value of $200,000, and will be eligible
for other employee benefits in accordance with the Company’s policies and plans.
In the event of a change of control of the Company
during the Officer Employment Period, Mr. Kinder generally will be entitled to accelerated vesting and exercisability of unvested restricted
stock award grants if he is not offered employment or continued employment by the successor entity, or if his employment terminates within
one year after the change of control as a result of his termination by the successor entity without severance cause or his resignation
in a constructive termination. Further, if Mr. Kinder’s employment terminates during the Officer Employment Period due to a change
of control and as a result of his termination by the successor entity without severance cause or his resignation for good reason, he will
be entitled to receive cash severance in an amount equal to his then-current base salary for a six-month period, conditioned upon his
provision of an effective release of claims against the Company.
Pursuant to the Employment Agreement, if Mr. Kinder
remains employed by the Company as Senior Vice President, Chief Merchant Officer through December 31, 2026, then effective on January
1, 2027 and continuing through December 31, 2028 or such earlier date as his employment may be terminated for any reason (such period,
the “Transition Period”), the Company will employ him as a Purchasing Advisor, which is a non-officer employee position. During
the Transition Period, Mr. Kinder will receive an annual salary of $75,000 and will be eligible for other employee benefits in accordance
with the Company’s policies and plans.
In the event of a change of control of the Company
during the Transition Period, Mr. Kinder generally will be entitled to accelerated vesting and exercisability of unvested restricted stock
award grants if he is not offered employment or continued employment by the successor entity, or if his employment terminates within one
year after the change of control as a result of his termination by the successor entity without severance cause or his resignation in
a constructive termination.
Pursuant to the Employment Agreement, if Mr. Kinder’s
employment as Purchasing Advisor is terminated by the Company for any reason prior to December 31, 2028, he will be entitled to (i) continued
payment of his then-current base salary through December 31, 2028, (ii) continued participation in the standard benefits program in effect
for employees, including medical, dental, life, and accident insurance, through December 31, 2028, and (iii) accelerated vesting of all
of his unvested restricted stock award grants, conditioned upon his provision of an effective release of claims against the Company.
The Employment Agreement includes customary confidentiality
and assignment of inventions provisions, as well as non-competition and non-solicitation restrictions during the term of Mr. Kinder’s
employment with the Company and for one year following termination of his employment with the Company for any reason.
The description of the Employment Agreement contained
herein does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Employment
Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
* Management compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
TILE SHOP HOLDINGS, INC. |
| |
|
|
| Date: February 27, 2025 |
By: |
/s/ Mark B. Davis |
| |
Name: |
Mark B. Davis |
| |
Title: |
Senior Vice President, Chief Financial Officer & Secretary |
Exhibit 10.1
 |
Jamie Elliott
Vice President of Talent Management
The Tile Shop
Phone: [***]
E-mail: [***] |
Joe Kinder
Watertown, MN
Dear Joe,
This letter documents the agreed terms and conditions
of your employment with Tile Shop Holdings, Inc. the “Company”) in a new position as Senior Vice President, Chief
Merchant Officer, and your expected subsequent transition to non-executive employment as a Purchasing Advisor, all as set forth in more
detail herein. This letter serves as an employment agreement and supersedes in its entirety your prior employment letter agreement dated
October 16, 2020.
| 1. | Promotion to Senior Vice President, Chief Merchant
Officer. |
| (a) | Position
and Term. Effective on February 25, 2025 and continuing through December 31,
2026 or such earlier date as your employment may be terminated for any reason (such period,
the “Officer Employment Period”), the Company will employ you as Senior
Vice President, Chief Merchant Officer. This position is an executive officer of the Company,
reporting directly to the President & CEO. |
| (b) | Compensation
and Benefits. During the Officer Employment Period, your compensation and benefits as
Senior Vice President, Chief Merchant Officer shall include the following: |
| (i) | You
will be paid an annual salary of $350,000, effective as of January 1, 2025. |
| (ii) | You
will be eligible to participate in the Company’s corporate bonus program. Under this
plan, you will have a target bonus opportunity of 50% of your annual salary based on the
Company’s performance. |
| (iii) | Subject
to approval by the Company’s Board of Directors (or the applicable committee thereof),
you will participate in the Company’s annual equity award program for executive officers,
with an aggregate target annual equity award value of $200,000. |
| (iv) | You
will receive paid time off per the applicable Company Policy, along with 7 paid holidays. |
| (v) | You
will be eligible to participate in the standard benefits program in effect for employees,
including medical, dental, life, and accident insurance. |
| (vi) | You
will be eligible to participate in the Company’s 401(k) Retirement Savings Plan. |
| (i) | In
the event of a Change of Control (as defined in the Company’s 2021 Omnibus Equity Compensation
Plan) of the Company, if (A) you are not offered employment or continued employment
by the Successor Entity upon consummation of such Change of Control during the Officer Employment
Period, or (B) prior to the first anniversary of such Change of Control and during the
Officer Employment Period, (I) you are discharged by the Successor Entity other than
for Severance Cause or (II) you resign from employment with the Successor Entity as
a result of a Constructive Termination (as defined below), all of your unvested restricted
stock award grants will vest and become exercisable immediately prior to such Change of Control
or cessation of employment, as applicable. |
| (ii) | “Constructive
Termination” will occur if you resign from your employment with the Successor Entity
within 30 days following (A) a material reduction in your annual base salary or job
responsibility or (B) the relocation of your principal office location to a facility
or location located more than 50 miles from your principal office location on the date of
the Change of Control. |
| (iii) | If
you are terminated during the Officer Employment Period without Severance Cause (as defined
below) or resign for Good Reason (as defined below) due to a Change of Control, you will
be entitled to receive an amount equal to your then-current base salary for a six-month period
commencing with the effective date of your termination of employment with the Company (the
“Severance Period”). The foregoing amount will be payable pro rata over
the Severance Period in accordance with the Company’s normal payroll practices; provided,
however, that the Company will not pay any severance payments unless and until (A) you
execute and deliver to the Company a general release of claims on a form provided by the
Company (“Release”) (B) such Release is executed and delivered to
the Company within 21 days after your termination date and (C) all time periods for
revoking the Release have lapsed. If you are terminated during the month of December of
any calendar year and are owed severance hereunder, no severance payments will be made prior
to January 1st of the next calendar year and any amount that would have otherwise been
payable to you in December of the preceding calendar year will be paid to you on the
first date in January on which you would otherwise be entitled to any payment. Following
your termination date, all benefits offered by the Company, including health insurance benefits,
will cease. From and after such date, you may elect to continue your participation in the
Company’s health insurance benefits at your expense pursuant to COBRA by notifying
the Company in the time specified in the COBRA notice you will be provided and paying the
monthly premium yourself. |
| (iv) | “Severance
Cause” means (A) willful misconduct in connection with your employment or
willful failure to perform your responsibilities in the best interests of the Company, as
determined by the CFO; (B) conviction of, or plea of nolo contendere or guilty to, a
felony other than an act involving a traffic related infraction; (C) any act of fraud,
theft, embezzlement or other material dishonesty by you that harmed the Company; (D) intentional
violation of a federal or state law or regulation applicable to the Company’s business,
which violation was or is reasonably likely to be injurious to the Company; or (E) repeated
failure to perform your duties and obligations of your position with the Company, which failure
is not cured within 30 days after notice of such failure from the CFO to you. |
| (v) | “Good
Reason” for your resignation will exist if you resign from your employment with
the Company as a result of (A) a material reduction in your annual base salary or job
responsibility or (B) the relocation of your principal office location to a facility
or location located more than 50 miles from your current principal office location. |
| 2. | Transition
to Purchasing Advisor. |
| (a) | Position
and Term. Provided that you remain employed by the Company as Senior Vice President,
Chief Merchant Officer through December 31, 2026, then effective on January 1,
2027 and continuing through December 31, 2028 or such earlier date as your employment
may be terminated for any reason (such period, the “Transition Period”),
the Company will employ you as a Purchasing Advisor. The Purchasing Advisor position is a
non-officer employee position, and you hereby agree that you will resign all officer positions
with the Company and its affiliates, effective as of the end of the Officer Employment Period. |
| (b) | Compensation
and Benefits. During the Transition Period, your compensation and benefits as Purchasing
Advisor shall include the following: |
| (i) | You
will be paid an annual salary of $75,000. |
| (ii) | You
will receive paid time off per the applicable Company policy, along with 7 paid holidays. |
| (iii) | You will be eligible to participate in the standard benefits program
in effect for employees, including medical, dental, life, and accident insurance. |
| (iv) | You will be eligible to participate in the Company’s 401(k) Retirement
Savings Plan. |
| (c) | Severance Benefits. If your employment
as Purchasing Advisor is terminated by the Company for any reason prior to December 31,
2028, you will be entitled to (i) continued payment of your then-current base salary
through December 31, 2028, (ii) continued participation in the standard benefits
program in effect for employees, including medical, dental, life, and accident insurance,
through December 31, 2028, and (iii) accelerated vesting of all of your unvested
restricted stock award grants, effective immediately prior to such termination of employment;
in each case, provided that (x) you execute and deliver to the Company a Release, (y) such
Release is executed and delivered to the Company within 21 days after your termination date
and (z) all time periods for revoking the Release have lapsed. |
| (d) | Change
of Control. In the event of a Change of Control of the Company, if (i) you are not
offered employment or continued employment by the Successor Entity upon consummation of such
Change of Control during the Transition Period, or (ii) prior to the first anniversary
of such Change of Control and during the Transition Period, (A) you are discharged by
the Successor Entity other than for Severance Cause or (B) you resign from employment
with the Successor Entity as a result of a Constructive Termination (as defined above), all
of your unvested restricted stock award grants will vest and become exercisable immediately
prior to such Change of Control or cessation of employment, as applicable. |
| 3. | Non-Competition
and Non-Disclosure Agreement. In consideration of your continued employment and the benefits
to be provided pursuant to this letter agreement, you acknowledge and agree that the Nondisclosure,
Confidentiality, Assignment and Noncompetition Agreement between you and the Company dated
July 22, 2024, a conformed copy of which is attached hereto as Exhibit A (the “Non-Competition
and Non-Disclosure Agreement”) shall remain in full force and effect during the
Officer Employment Period and the Transition Period and thereafter in accordance with its
terms. You further agree that, during the term of your employment with the Company, you will
not engage in any other employment, occupation, consulting or other business activity directly
related to the business in which the Company is now involved or becomes involved during the
term of your employment, nor will you engage in any other activities that conflict with your
obligations to the Company. |
| (a) | Reservation of Rights. The Company reserves the right to
make changes to the corporate bonus plan and other benefits outlined in the letter above. |
| (b) | At-Will
Employment. We recognize that you retain the option, as does the Company, of ending your
employment at any time, with or without notice and with or without cause. As such, your employment
with the Company is at-will. |
| (c) | Tax
Matters. The Company may withhold from any amounts payable under this letter agreement
all federal, state, local and other taxes that are required to be withheld by applicable
laws or regulations. The parties intend that payments and benefits provided under this letter
agreement will either be exempt from, or comply with, Section 409A of the Internal Revenue
Code of 1986, as amended (“Section 409A”), and this letter agreement
shall be interpreted and administered in accordance with such intent. Each amount or installment
payment provided under this letter agreement shall be considered as a separate payment for
purposes of Section 409A, and notwithstanding anything contained herein to the contrary,
to the extent required in order to comply with Section 409A, any payments or benefits
that otherwise would be provided during the six-month period immediately following your “separation
from service” (within the meaning of Section 409A) shall instead be paid on the
first business day after the date that is six months following your separation from service.
With respect to any amounts or benefits that are conditioned on the receipt and non-revocation
of a release of claims, if the period during which the Participant may execute such release
of claims commences in one calendar year and ends in a subsequent calendar year, such amounts
or benefits shall be paid or provided in the subsequent calendar year to the extent required
to comply with Section 409A. |
| (d) | Assignment;
Successors and Assigns. This letter agreement may not be assigned by either party except
that the Company may assign this letter agreement to any affiliate or in connection with
the merger, consolidation or sale of all or substantially all of its business or assets.
This letter agreement will be binding upon and will inure to the benefit of the parties hereto
and their respective successors and other legal representatives and, to the extent that any
assignment hereof is permitted hereunder, their assignees. |
| (e) | Amendments
and Waivers. No modification of or amendment to this letter agreement, nor any waiver
of any rights under this letter agreement, will be effective unless in writing and signed
by the party to be charged. No delay or omission by the Company in exercising any right under
this letter agreement will operate as a waiver of that or any other right. A waiver or consent
given by the Company on any occasion if effective only in that instance and will not be construed
as a bar to or waiver of any right on any other occasion. |
| (f) | Governing Law. This letter agreement
will be construed as a sealed instrument and will in all events and for all purposes be governed
by, and construed in accordance with, the laws of the State of Delaware without regard to
any choice of law principle that would dictate the application of the laws of another jurisdiction.
Any action, suit or other legal proceeding that may be commenced to resolve any matter arising
under or relating to any provision of this letter agreement will be commenced only in a court
of the State of Delaware (or, if appropriate, a federal court located within the State of
Delaware), and you hereby consent to the jurisdiction of such court with respect to any action,
suit or proceeding commenced in such court by the Company. |
If you agree with the terms and conditions of this letter agreement,
please sign below. If you have any questions, please do not hesitate to contact Jamie Elliott at [***].
Sincerely,
| /s/ Cabell Lolmaugh | |
| Cabell Lolmaugh | |
| President & CEO | |
| Tile Shop Holdings, Inc. | |
| | |
| | |
I accept the offer of employment under the terms and conditions listed
above.
| /s/
Joseph Kinder |
| February 25, 2025 |
| Joseph Kinder |
| Date |
EXHIBIT A
TILE SHOP HOLDINGS, INC.
NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT
AND
NONCOMPETITION AGREEMENT
THIS NONDISCLOSURE, CONFIDENTIALITY,
ASSIGNMENT AND NONCOMPETITION AGREEMENT (this “Agreement”) is made this 22nd day of July, 2024, by and
between Tile Shop Holdings, Inc., a Delaware corporation (collectively with any predecessors, successors, and assignees, the “Company”),
and Joe Kinder (“I” or “me”), to be effective on July 22, 2024. This Agreement replaces and
supersedes in its entirety that certain Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement between me and the Company
that was previously entered into effective as of July 31, 2020. This Agreement hereby is incorporated into the employment agreement
between me and the Company as Exhibit A thereto, replacing and superseding in its entirety any such prior Exhibit A.
In consideration of my engagement
or continued engagement as an officer, employee, director, advisor, partner, independent contractor or consultant of the Company (an
“Associate”), and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, I
hereby agree as follows:
1. DEFINITIONS.
1.1. “Affiliate”
means any direct or indirect subsidiary of the Company.
1.2. “Confidential
Information” means any and all confidential and/or proprietary knowledge, data or information concerning the business, business
relationships and financial affairs of the Company or its Affiliates whether or not in writing and whether or not labeled or identified
as confidential or proprietary. By way of illustration, but not limitation, Confidential Information includes (a) Inventions and
(b) research and development activities of the Company or its Affiliates, services and marketing plans, business plans, budgets
and unpublished financial statements, licenses, prices and costs, customer and supplier information and information disclosed to the
Company or its Affiliates or to me by third parties of a proprietary or confidential nature or under an obligation of confidence. Confidential
Information is contained in various media, including without limitation, patent applications, computer programs in object and/or source
code, flow charts and other program documentation, manuals, plans, drawings, designs, technical specifications, laboratory notebooks,
supplier and customer lists, internal financial data and other documents and records of the Company or its Affiliates. Notwithstanding
the foregoing, nothing in this Agreement is intended to or will be used in any way to prevent disclosure of Confidential Information
in accordance with the immunity provisions set forth in the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), meaning the
disclosure is (1) in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected
legal violation; or (2) under seal in connection with a lawsuit or other proceeding (including an anti-retaliation lawsuit) .
1.3. “Inventions”
means all ideas, concepts, discoveries, inventions, developments, improvements, formulations, products, processes, know-how, designs,
formulas, methods, developmental or experimental work, clinical data, original works of authorship, software programs, software and systems
documentation, trade secrets, technical data, or licenses to use (whether or not patentable or registrable under copyright or similar
statutes), that are or were made, conceived, devised, invented, developed or reduced to practice or tangible medium by me, either alone
or jointly with others (a) during any period that I am an Associate of the Company, whether or not during normal working hours or
on the premises of the Company, that relate, directly or indirectly, to the business of the Company or its Affiliates, (b) at the
request of or for the benefit of the Company during any period prior to my engagement as an Associate of the Company that relate, directly
or indirectly, to the business of the Company or its Affiliates, or (c) that arise out of, or are incidental to, my engagement as
an Associate of the Company.
1.4. “Prior
Inventions” means any inventions made, conceived, devised, invented, developed or first reduced to practice by me, under my
direction or jointly with others prior to the date of this Agreement and that do not constitute Inventions within the meaning of Section 1.3
above. Prior Inventions also means an invention for which no equipment, supplies, facility or trade secret information of the Company
was used and which was developed entirely on my own time, and (1) which does not relate (a) directly to the business of the
Company or (b) to the Company’s actual or demonstrably anticipated research or development, or (2) which does not result
from any work performed by the me for the Company.
1.5. “Third
Party Information” means any confidential or proprietary information received by the Company or its Affiliates from third parties.
2. CONFIDENTIALITY.
2.1. Recognition
of the Company’s Rights. I understand that the Company continually obtains and develops valuable Confidential Information that
may or has become known to me in connection with my engagement as an Associate of the Company. I acknowledge that all Confidential Information
is and will remain the exclusive property of the Company or the third party providing such Confidential Information to myself, the Company,
or the Company’s Affiliates.
2.2. Nondisclosure
of Confidential Information. I agree that during the term of my engagement as an Associate of the Company and thereafter, I
will hold in strictest confidence and will not disclose, use, lecture upon, publish or otherwise make available to any third party (other
than personnel of the Company or its Affiliates who need to know such information in connection with their work for the Company), any
Confidential Information of the Company, except as such disclosure, use or publication may be required in connection with my work for
the Company, or as expressly authorized in writing by an executive officer of the Company. I agree that I will use such Confidential
Information only in the performance of my duties for the Company and in accordance with any Company policies with respect to the protection
of Confidential Information. I agree not to use such Confidential Information for my own benefit or for the benefit of any other person
or business entity.
2.3. Third
Party Information. In addition, I understand that the Company has received and in the future will receive Third Party Information
subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited
purposes. During the term of my engagement as an Associate of the Company and thereafter, I will hold Third Party Information in
the strictest confidence and will not disclose to anyone (other than personnel of the Company or its Affiliates who need to know such
information in connection with the performance of their duties for the Company) or use any Third Party Information, except as such disclosure
or use may be required in connection with the performance of my duties for the Company, or as expressly authorized in writing by an executive
officer of the Company.
2.4. Exceptions.
My obligations under Sections 2.2 and 2.3 hereof will not apply to the extent that certain Confidential Information (a) is or becomes
generally known within the Company’s industry through no fault of mine; (b) was known to me at the time it was disclosed as
evidenced by my written records at the time of disclosure; (c) is lawfully and in good faith made available to me by a third party
who did not derive it from the Company or the Company’ s Affiliates and who imposes no obligation of confidence to me, the Company,
or the Company’s Affiliates; or (d) is required to be disclosed by a governmental authority or by order of a court of competent
jurisdiction, provided that such disclosure is subject to all applicable governmental or judicial protection available for like material
and reasonable advance notice is given to the Company.
2.5. Protection
and Return of Confidential Information. I agree to exercise all reasonable precautions to protect the integrity and confidentiality
of Confidential Information in my possession and not to remove any materials containing Confidential Information from the premises of
the Company, except to the extent necessary in the performance of my duties for the Company or unless expressly authorized in writing
by an executive officer of the Company. Upon the termination of my engagement as an Associate of the Company, or at any time upon the
Company’s request, I will return immediately to the Company any and all notes, memoranda, specifications, devices, formulas
and documents, together with copies thereof, and any other material containing or disclosing any Confidential Information of the Company
or Third Party Information then in my possession or under my control.
2.6 Protected
Activity. Nothing contained in this Agreement, or any other agreement, policy, practice, procedure, directive or instruction maintained
by the Company shall prohibit me from reporting possible violations of federal, state or local laws or regulations to any federal, state
or local governmental agency or from making other disclosures that are protected under the whistleblower provisions of federal, state
or local laws or regulations. I do not need prior authorization of any kind to make any such reports or disclosures to any governmental
agency and I am not required to notify the Company that I have made such reports or disclosures. Nothing in this Agreement limits
any right I may have to receive a whistleblower award or bounty for information provided to any governmental agency.
3. ASSIGNMENT OF INVENTIONS.
3.1. Ownership
of Inventions. I acknowledge that all Inventions already existing at the date of this Agreement or that arise after the date of this
Agreement, belong to and are the absolute property of the Company and will not be used by me for any purpose other than carrying out
my duties as an Associate of the Company.
3.2. Assignment
of Inventions; Enforcement of Rights. Subject to Section 3.6, I hereby assign and agree to assign in the future to the
Company all of my right, title and interest to any and all Inventions and any and all related patent rights, copyrights and applications
and registrations therefore. I also agree to assign all my right, title and interest in and to any particular Inventions to a third party
as directed by the Company. During and after my engagement as an Associate of the Company, I will cooperate with the Company, at
the Company’s expense, in obtaining proprietary protection for the Inventions and I will execute all documents that the Company
reasonably requests in order to perfect the Company’s rights in the Inventions. I hereby appoint the Company my attorney to execute
and deliver any such documents on my behalf in the event I should fail or refuse to do so within a reasonable period following the Company’s
request. I understand that, to the extent this Agreement is construed in accordance with the laws of any country or state that limits
the assignability to the Company of certain inventions, this Agreement will be interpreted not to apply to any such invention that a
court rules or the Company agrees is subject to such limitation.
3.3. Works
for Hire. I acknowledge that all original works of authorship made by me (solely or jointly with others) within the scope of my engagement
as an Associate of the Company or any prior engagement by the Company, that are protectable by copyright are intended to be “works
made for hire”, as that term is defined in Section 101 of the United States Copyright Act of 1976 (the “Act”),
and will be the property of the Company and the Company will be the sole author within the meaning of the Act. If the copyright to any
such copyrightable work is not the property of the Company by operation of law, I will, without further consideration, assign to
the Company all of my right, title and interest in such copyrightable work and will cooperate with the Company and its designees, at
the Company’s expense, to secure, maintain and defend for the Company’s benefit copyrights and any extensions and renewals
thereof on any and all such work. I hereby waive all claims to moral rights in any Inventions.
3.4. Records.
I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Inventions made by me during the period of my engagement as an Associate of the Company or any prior
engagement by the Company, which records will be available to and remain the sole property of the Company at all times.
3.5. Obligation
to Keep Company Informed. During the period of my engagement as an Associate of the Company, and for six months after termination
of my engagement as an Associate of the Company, I agree to promptly disclose to the Company fully and in writing all Inventions
authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, I will promptly disclose to
the Company all patent applications filed by me or on my behalf within one year after termination of my engagement as an Associate of
the Company.
3.6. Prior
Inventions. I further represent that the attached Schedule A contains a complete list of all Prior Inventions. I agree to update
and/or amend Schedule A during my employment as may be necessary and to promptly notify the Company of the same. Such Prior Inventions
are considered to be my property or the property of third parties and are not assigned to the Company hereunder. If there is no such
Schedule A attached hereto, I represent that there are no such Prior Inventions. If I am claiming any Prior Inventions on Schedule
A, I agree that, if in the course of my engagement as an Associate of the Company or any prior engagement by the Company, I
incorporate any Prior Invention into a Company product, process or machine, the Company will automatically be granted and will have a
non-exclusive, royalty-free, irrevocable, transferable, perpetual, world-wide license (with rights to sublicense) to make, have made,
modify, use and sell such Prior Invention as part of, or in connection with, such product, process or machine. Notwithstanding the foregoing, I
agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the Company’
s prior written consent.
4. OTHER AGREEMENTS.
4.1. No
Conflicting Obligations. I hereby represent to the Company that, except as identified on Schedule B, I am not bound by any agreement
or any other previous or existing business relationship that conflicts with or prevents the full performance of my duties and obligations
to the Company (including my duties and obligations under this or any other agreement with the Company) during my engagement as an Associate
of the Company. I agree I will not enter into any agreement, either written or oral, that conflicts with this Agreement.
4.2. No
Improper Use of Information of Prior Employers or Others. I understand that the Company does not desire to acquire from me any trade
secrets, know-how or confidential business information I may have acquired from others. Therefore, I agree during my engagement
as an Associate of the Company, I will not improperly use or disclose any proprietary information or trade secrets of any former
or concurrent employer, or any other person or entity with whom I have an agreement or to whom I owe a duty to keep such information
in confidence. Those persons or entities with whom I have such agreements or to whom I owe such a duty are identified on Schedule B.
5. NON-COMPETITION.
I agree that while I am engaged as an Associate of the Company and for a period of one year after termination or cessation of such engagement
for any reason, I will not, without the Company’s prior written consent, directly or indirectly, as a principal, employee,
consultant, partner, or stockholder of, or in any other capacity with, any business enterprise (other than in my capacity as a holder
of not more than 1% of the combined voting power of the outstanding stock of a publicly held company) (a) engage in direct or indirect
competition with the Company or its Affiliates, (b) conduct a business of the type or character engaged in by the Company or its
Affiliates at the time of termination or cessation of my engagement as an Associate of the Company, or (c) develop products or services
competitive with those of the Company or its Affiliates.
6. GENERAL
NON-SOLICITATION. I agree that while I am engaged as an Associate of the Company and for a period of one year after termination or cessation
of such engagement for any reason, I will not solicit, divert or take away, or attempt to divert or take away, the business or patronage
of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company or its Affiliates that were
contacted, solicited or served by me while I was engaged as an Associate of the Company or any Affiliate.
7. NON-SOLICITATION
OF EMPLOYEES AND CONSULTANTS. I agree that while I am engaged as an Associate of the Company and for a period of one year after termination
or cessation of such engagement for any reason, I will not directly or indirectly hire, recruit, or solicit any employee, independent
contractor or consultant of the Company or its Affiliates, or induce or attempt to induce any employee independent contractor or consultant
of the Company or its Affiliates to discontinue his or her relationship with the Company or its Affiliates.
8. NOTICE
OF SUBSEQUENT EMPLOYMENT OR ENGAGEMENT. I will, for a period of one year after the termination or cessation of my engagement as an Associate
of the Company, notify the Company of any change of address, and of any subsequent employment or engagement (stating the name and address
of the employer and the nature of the position) or any other business activity.
9. GENERAL.
9.1. Assignment;
Successors and Assigns. This Agreement may not be assigned by either party except that the Company may assign this Agreement to any
Affiliate or in connection with the merger, consolidation or sale of all or substantially all of its business or assets. This Agreement
will be binding upon and will inure to the benefit of the parties hereto and their respective successors and other legal representatives
and, to the extent that any assignment hereof is permitted hereunder, their assignees.
9.2. Entire
Agreement. The obligations pursuant to Sections 2 and 3 of this Agreement will apply to any time during which I was previously engaged
as an Associate of the Company, or am in the future engaged as an Associate of the Company or any Affiliate if no other agreement governs
nondisclosure and assignment of inventions during such period. This Agreement supersedes all prior agreements, written or oral, with
respect to the subject matter of this Agreement.
9.3. Severability.
In the event that any one or more of the provisions contained herein is, for any reason, held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability will not affect any other provisions of this Agreement, and all other
provisions will remain in full force and effect. If any of the provisions of this Agreement is held to be excessively broad, it will
be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law.
9.4. Amendments
and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective
unless in writing and signed by the party to be charged. No delay or omission by the Company in exercising any right under this Agreement
will operate as a waiver of that or any other right. A waiver or consent given by the Company on any occasion if effective only in that
instance and will not be construed as a bar to or waiver of any right on any other occasion.
9.5. Employment.
I understand that this Agreement does not constitute a contract of employment or create an obligation on the part of the Company to continue
my employment (if any) with the Company. I understand that my employment (if any) is “at will” and that my obligations under
this Agreement will not be affected by any change in my position, title or function with, or compensation, by the Company. Any subsequent
change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.
9.6. Legal
and Equitable Remedies. I acknowledge that (a) the business of the Company and its Affiliates is global in scope and its services
may be marketed and sold throughout the world; (b) the Company and its Affiliates compete with other businesses that are or could
be located in any part of the world; (c) the Company has required that I make the covenants contained in this Agreement as a condition
to my engagement as an Associate of the Company; and (d) the restrictions contained in this Agreement are necessary for the protection
of the business and goodwill of the Company and its Affiliates and are reasonable for such purpose. I agree that any breach of this Agreement
by me will cause irreparable damage to the Company and its Affiliates and that in the event of such breach, the Company will be entitled,
in addition to monetary damages and to any other remedies available to the Company under this Agreement and at law, to equitable relief,
including injunctive relief, and to payment by myself of all costs incurred by the Company in enforcing of the provisions of this Agreement,
including reasonable attorneys’ fees. I agree that should I violate any obligation imposed on me in this Agreement, I will
continue to be bound by the obligation until a period equal to the term of such obligation has expired without violation of such obligation.
9.7. Governing
Law. This Agreement will be construed as a sealed instrument and will in all events and for all purposes be governed by, and construed
in accordance with, the laws of the State of Delaware without regard to any choice of law principle that would dictate the application
of the laws of another jurisdiction. Any action, suit or other legal proceeding that I may commence to resolve any matter arising under
or relating to any provision of this Agreement will be commenced only in a court of the State of Delaware (or, if appropriate, a federal
court located within the State of Delaware), and I hereby consent to the jurisdiction of such court with respect to any action, suit
or proceeding commenced in such court by the Company.
[Next Page is Signature Page]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
| /s/ Joe Kinder |
|
| Joe Kinder |
|
| |
|
| TILE SHOP HOLDINGS, INC. |
|
| |
|
| By: |
/s/ Cabell Lolmaugh |
|
| Name: Cabell Lolmaugh |
|
| Title: Chief Executive Officer |
|
Exhibit 99.1
THE
TILE SHOP REPORTS Fourth Quarter and Full-Year 2024 Results
MINNEAPOLIS – February 27, 2025 –
Tile Shop Holdings, Inc. (Nasdaq: TTSH) (the “Company”), a specialty retailer of natural stone, man-made and luxury vinyl
tiles today announced results for its fourth quarter and full-year ended December 31, 2024.
Fourth Quarter 2024 Summary
Net Sales Decreased 5.9%
Comparable Store Sales Decreased 5.8%
Gross Margin of 64.2%
Net Loss of $0.6 Million and Adjusted EBITDA
of $3.4 Million
Net Loss per Share of $0.01
No Debt Outstanding and $21.0 million of Cash
at Year-End
Full-Year 2024 Summary
Net Sales Decreased 8.0%
Comparable Store Sales Decreased 7.8%
Gross Margin of 65.7%
Net Income of $2.3 Million and Adjusted EBITDA
of $22.6 Million
Diluted Earnings per Share of $0.05
Management Commentary – Cabell Lolmaugh,
CEO
“While the challenges facing the home improvement
sector continued to persist, I’m pleased with the team’s execution during the quarter which contributed to the modest sequential
improvement in our comparable store sales results when compared to the third quarter. We believe steps taken to enhance our Superior line
of installation products, refine our luxury vinyl tile assortment and expand the selection of opening price point tile products over the
last year have us well positioned to capitalize on opportunities to serve our customers in 2025.”
| | |
Three Months Ended | | |
Twelve Months Ended | |
| |
December 31, | | |
December 31, | |
| (unaudited, dollars in thousands, except per share data) | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Net sales | |
$ | 79,454 | | |
$ | 84,458 | | |
$ | 347,071 | | |
$ | 377,146 | |
| Net sales decline (1) | |
| (5.9 | )% | |
| (3.4 | )% | |
| (8.0 | )% | |
| (4.4 | )% |
| Comparable store sales decline (2) | |
| (5.8 | )% | |
| (3.2 | )% | |
| (7.8 | )% | |
| (4.1 | )% |
| Gross margin rate | |
| 64.2 | % | |
| 64.7 | % | |
| 65.7 | % | |
| 64.4 | % |
| (Loss) income from operations as a % of net sales | |
| (1.1 | )% | |
| 1.7 | % | |
| 1.0 | % | |
| 4.3 | % |
| Net (loss) income | |
$ | (628 | ) | |
$ | 636 | | |
$ | 2,321 | | |
$ | 10,071 | |
| Diluted net (loss) income per share | |
$ | (0.01 | ) | |
$ | 0.01 | | |
$ | 0.05 | | |
$ | 0.23 | |
| Adjusted EBITDA | |
$ | 3,420 | | |
$ | 6,625 | | |
$ | 22,614 | | |
$ | 38,779 | |
| Adjusted EBITDA as a % of net sales | |
| 4.3 | % | |
| 7.8 | % | |
| 6.5 | % | |
| 10.3 | % |
| Number of stores open at the end of period | |
| 142 | | |
| 142 | | |
| 142 | | |
| 142 | |
| (1) | As compared to the prior year period. |
| (2) | The comparable store sales operating metric is the percentage change in sales of comparable stores period
over period. A store is considered comparable on the second day of the 13th full month of operation. When a store is relocated, it is
excluded from the comparable store sales calculation. Comparable store sales include total charges to customers less any actual returns.
The Company includes the change in allowance for anticipated sales returns applicable to comparable stores in the comparable store sales
calculation. |
Fourth
QUARTER 2024
Net Sales
Net sales for the fourth quarter of 2024 decreased
$5.0 million, or 5.9%, compared to the fourth quarter of 2023. Sales decreased at comparable stores by 5.8% during the fourth quarter
of 2024 compared to the fourth quarter of 2023. For the year, net sales decreased by $30.1 million, or 8.0%. Sales decreased at comparable
stores by 7.8% during 2024 compared to 2023. The decrease in sales during the fourth quarter and full year of 2024 was primarily due to
a decrease in traffic that was partially offset by a modest increase in average order value.
Gross Profit
Gross profit decreased $3.7 million, or 6.7%,
in the fourth quarter of 2024 compared to the fourth quarter of 2023. The gross margin rate was 64.2% during the fourth quarter of 2024
as compared to 64.7% during the fourth quarter of 2023. The decrease in gross margin was due to an increase in inventory write-offs associated
with assortment transitions that was partially offset by improvements in margin stemming from decreases in product costs. For the year,
gross profit decreased by $15.2 million or 6.2%, The gross margin rate was 65.7% in 2024 and 64.4% in 2023. The 130 basis point increase
in gross margin rate was due to lower international freight rates and steps taken to work with the Company’s suppliers to reduce
prices on the items carried in the Company’s assortment that were partially offset by an increase in inventory write-offs associated
with assortment transitions.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased
$1.3 million, or 2.4%, from $53.2 million in the fourth quarter of 2023 to $51.9 million in the fourth quarter of 2024.
The decrease in the fourth quarter of 2024 was primarily due to a $0.9 million decrease in depreciation expense, a $0.7 million decrease
in variable compensation expenses and a $0.5 million decrease in marketing spend that were partially offset by a $0.8 million increase
in occupancy costs. For the year, selling, general and administrative expenses decreased $2.5 million, or 1.1%, from $226.9 million in
2023 to $224.4 million in 2024. The decrease for the year was due to a $3.5 million decrease in depreciation expenses, a $3.4 million
decrease in variable compensation expenses and a $0.8 million decrease in marketing spend that were partially offset by a $3.2 million
increase in occupancy costs, a $0.9 million increase in IT expenses, a $0.6 million increase in transportation costs and a $0.5 million
increase in audit and accounting expenses.
Provision for Income Taxes
The benefit from income taxes was $0.2 million
during the fourth quarter of 2024 compared to a provision for income taxes of $0.6 million during the fourth quarter of 2023. The change
in income tax expense was primarily due to a decrease in pretax income. The Company’s effective tax rate was 25.9% and 48.1% in
the fourth quarter of 2024 and 2023, respectively. The decrease in the effective tax rate was largely due to a decrease in tax associated
with stock-based compensation. For the year, the provision for income taxes decreased $3.0 million from $3.9 million during 2023 to $0.9
million during 2024. The decrease in the provision for income taxes was primarily due to lower pretax income. The Company’s effective
tax rate was 28.4% in 2024 and 28.0% in 2023. The increase in the effective tax rate was largely due to a decrease in pretax income and
a disproportionate impact of certain permanent items.
Capital Structure and Liquidity
As of December 31, 2024, the Company had no borrowings
outstanding on its $75.0 million line of credit and cash and cash equivalents of $21.0 million.
NON-GAAP INFORMATION
Adjusted EBITDA
Adjusted EBITDA for the fourth quarter of 2024
was $3.4 million compared with $6.6 million for the fourth quarter of 2023. Adjusted EBITDA for the year was $22.6 million in 2024 compared
with $38.8 million in 2023. See the table below for a reconciliation of GAAP net income to Adjusted EBITDA.
| | |
Three Months Ended | |
| |
December 31, | |
| (unaudited, $ in thousands) | |
2024 | | |
% of net sales | | |
2023 | | |
% of net sales(1) | |
| Net (loss) income | |
$ | (628 | ) | |
| (0.8 | )% | |
$ | 636 | | |
| 0.8 | % |
| Interest expense, net | |
| (19 | ) | |
| (0.0 | )% | |
| 245 | | |
| 0.3 | % |
| (Benefit) provision for income taxes | |
| (220 | ) | |
| (0.3 | )% | |
| 589 | | |
| 0.7 | % |
| Depreciation & amortization | |
| 3,957 | | |
| 5.0 | % | |
| 4,835 | | |
| 5.7 | % |
| Stock based compensation | |
| 330 | | |
| 0.4 | % | |
| 320 | | |
| 0.4 | % |
| Adjusted EBITDA | |
$ | 3,420 | | |
| 4.3 | % | |
$ | 6,625 | | |
| 7.8 | % |
| | |
Twelve Months Ended | |
| |
December 31, | |
| (unaudited, $ in thousands) | |
2024 | | |
% of net sales(1) | | |
2023 | | |
% of net sales | |
| Net income | |
$ | 2,321 | | |
| 0.7 | % | |
$ | 10,071 | | |
| 2.7 | % |
| Interest expense, net | |
| 275 | | |
| 0.1 | % | |
| 2,164 | | |
| 0.6 | % |
| Provision for income taxes | |
| 921 | | |
| 0.3 | % | |
| 3,923 | | |
| 1.0 | % |
| Depreciation & amortization | |
| 17,759 | | |
| 5.1 | % | |
| 21,229 | | |
| 5.6 | % |
| Stock based compensation | |
| 1,338 | | |
| 0.4 | % | |
| 1,392 | | |
| 0.4 | % |
| Adjusted EBITDA | |
$ | 22,614 | | |
| 6.5 | % | |
$ | 38,779 | | |
| 10.3 | % |
| (1) | Amounts do not foot due to rounding. |
Pretax Return on Capital Employed
Pretax Return on Capital Employed was 2.9% for
the trailing twelve months as of the end of the fourth quarter in 2024 compared to 12.4% for the trailing twelve months as of the end
of the fourth quarter in 2023. See the Pretax Return on Capital Employed calculation in the table below.
| |
December 31, | |
| (unaudited, $ in thousands) | |
2024(1) | | |
2023(1) | |
| Income from operations (trailing twelve months) | |
$ | 3,517 | | |
$ | 16,158 | |
| | |
| | | |
| | |
| Total Assets | |
| 322,131 | | |
| 324,880 | |
| Less: Accounts payable | |
| (22,842 | ) | |
| (24,885 | ) |
| Less: Income tax payable | |
| (375 | ) | |
| (519 | ) |
| Less: Other accrued liabilities | |
| (30,481 | ) | |
| (32,728 | ) |
| Less: Lease liability | |
| (141,157 | ) | |
| (131,840 | ) |
| Less: Other long-term liabilities | |
| (4,716 | ) | |
| (4,585 | ) |
| Capital Employed | |
$ | 122,560 | | |
$ | 130,323 | |
| | |
| | | |
| | |
| Pretax Return on Capital Employed | |
| 2.9 | % | |
| 12.4 | % |
(1) Income statement accounts represent
the activity for the trailing twelve months ended as of each of the balance sheet dates. Balance sheet accounts represent the average
account balance for the four quarters ended as of each of the balance sheet dates.
Non-GAAP Financial Measures
The Company calculates Adjusted EBITDA by taking
net income calculated in accordance with GAAP, and adjusting for interest expense, income taxes, depreciation and amortization, and stock-based
compensation expense. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. The Company calculates Pretax Return on
Capital Employed by taking income (loss) from operations divided by capital employed. Capital employed equals total assets less accounts
payable, income taxes payable, other accrued liabilities, lease liability and other long-term liabilities. Other companies may calculate
both Adjusted EBITDA and Pretax Return on Capital Employed differently, limiting the usefulness of these measures for comparative purposes.
The Company believes that these non-GAAP measures
of financial results provide useful information to management and investors regarding certain financial and business trends relating to
the Company’s financial condition and results of operations. Company management uses these non-GAAP measures to compare Company
performance to that of prior periods for trend analyses, for purposes of determining management incentive compensation, for budgeting
and planning purposes and for assessing the effectiveness of capital allocation over time. These measures are used in monthly financial
reports prepared for management and the Board of Directors. The Company believes that the use of these non-GAAP financial measures provides
an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial
measures with other specialty retailers, many of which present similar non-GAAP financial measures to investors.
Company management does not consider these non-GAAP
measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitations of these
non-GAAP financial measures are that they exclude significant expenses and income that are required by GAAP to be recognized in the Company’s
consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by
management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate
for these limitations, management presents non-GAAP financial measures in connection with GAAP results. The Company urges investors to
review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures and not to rely on any single
financial measure to evaluate the business.
WEBCAST AND CONFERENCE CALL
As announced on February 20, 2025, the Company
will host a conference call via webcast for investors and other interested parties beginning at 9:00 a.m. Eastern Time on Thursday, February
27, 2025. The call will be hosted by Cabell Lolmaugh, CEO, Mark Davis, CFO, and Ken Cooper, Investor Relations.
Participants may access the webcast by visiting the Investor Relations
page at www.tileshop.com. The call can also be accessed here. A webcast replay of the call will be available on the Company’s
Investor Relations page at www.tileshop.com.
The Company intends to use its website, investors.tileshop.com,
as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Such
disclosures will be included on the Company’s website under the heading News and Events. Accordingly, investors should monitor
such portions of the Company’s website, in addition to following its press releases, Securities and Exchange Commission filings
and public conference calls and webcasts.
Contact:
Investors and Media:
Mark Davis
Chief Financial Officer
investorrelations@tileshop.com
ABOUT THE TILE SHOP
Tile Shop Holdings, Inc. (Nasdaq: TTSH) is a specialty
retailer of natural stone, man-made and luxury vinyl tiles, setting and maintenance materials, and related accessories in the United States.
The Company offers a wide selection of high-quality products, exclusive designs, knowledgeable staff and exceptional customer service
in an extensive showroom environment. As of December 31, 2024, the Company had 142 stores in 31 states and the District of Columbia.
The Tile Shop is a proud member of the American
Society of Interior Designers (ASID), National Association of Homebuilders (NAHB), National Kitchen and Bath Association (NKBA), and the
National Tile Contractors Association (NTCA). Visit www.tileshop.com. Join The Tile Shop (#thetileshop) on Facebook, Instagram,
Pinterest and YouTube.
FORWARD LOOKING STATEMENTS
This press release includes “forward looking
statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform
Act of 1995. Forward looking statements may be identified by the use of words such as “anticipate”, “believe”,
“expect”, “estimate”, “plan”, “outlook”, and “project” and other similar expressions
that predict or indicate future events or trends or that are not statements of historical matters. These forward looking statements include
any statements regarding the Company’s strategic and operational plan and expected financial performance. Forward looking statements
should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at,
or by, which such performance or results will be achieved. Forward looking statements are based on information available at the time such
statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks
and uncertainties, many of which are difficult to predict and are outside of our control, that may cause actual results, performance,
or achievements to differ materially from any expected future results, performance, or achievements expressed or implied by the forward
looking statements, including but not limited to unforeseen events that may affect the retail market or the performance of the Company’s
stores. The Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances, except
as required by law. Investors are referred to the most recent reports filed by the Company with the Securities and Exchange Commission.
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
($ in thousands, except per share data)
| | |
(Unaudited) | | |
(Audited) | |
| | |
December 31, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 20,957 | | |
$ | 8,620 | |
| Receivables, net | |
| 3,085 | | |
| 2,882 | |
| Inventories | |
| 86,267 | | |
| 93,679 | |
| Income tax receivable | |
| 850 | | |
| 129 | |
| Other current assets, net | |
| 8,663 | | |
| 9,248 | |
| Total Current Assets | |
| 119,822 | | |
| 114,558 | |
| Property, plant and equipment, net | |
| 59,733 | | |
| 64,317 | |
| Right of use asset | |
| 132,861 | | |
| 129,092 | |
| Deferred tax assets | |
| 4,890 | | |
| 5,256 | |
| Other assets | |
| 2,297 | | |
| 3,449 | |
| Total Assets | |
$ | 319,603 | | |
$ | 316,672 | |
| | |
| | | |
| | |
| Liabilities and Stockholders' Equity | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 23,808 | | |
$ | 23,345 | |
| Income tax payable | |
| 62 | | |
| 1,135 | |
| Current portion of lease liability | |
| 28,880 | | |
| 27,265 | |
| Other accrued liabilities | |
| 25,644 | | |
| 27,000 | |
| Total Current Liabilities | |
| 78,394 | | |
| 78,745 | |
| Long-term debt, net | |
| - | | |
| - | |
| Long-term lease liability, net | |
| 113,700 | | |
| 112,697 | |
| Other long-term liabilities | |
| 4,597 | | |
| 5,543 | |
| Total Liabilities | |
| 196,691 | | |
| 196,985 | |
| | |
| | | |
| | |
| Stockholders’ Equity: | |
| | | |
| | |
| Common stock, par value $0.0001; authorized: 100,000,000 shares; issued and outstanding: 44,657,898 and 44,510,779 shares, respectively | |
| 4 | | |
| 4 | |
| Preferred stock, par value $0.0001; authorized: 10,000,000 shares; issued and outstanding: 0 shares | |
| - | | |
| - | |
| Additional paid-in-capital | |
| 129,696 | | |
| 128,861 | |
| Accumulated deficit | |
| (6,788 | ) | |
| (9,109 | ) |
| Accumulated other comprehensive loss | |
| - | | |
| (69 | ) |
| Total Stockholders' Equity | |
| 122,912 | | |
| 119,687 | |
| Total Liabilities and Stockholders' Equity | |
$ | 319,603 | | |
$ | 316,672 | |
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)
| | |
Three Months Ended | | |
Twelve Months Ended, | |
| | |
December 31, | | |
December 31, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Net sales | |
$ | 79,454 | | |
$ | 84,458 | | |
$ | 347,071 | | |
$ | 377,146 | |
| Cost of sales | |
| 28,458 | | |
| 29,800 | | |
| 119,197 | | |
| 134,085 | |
| Gross profit | |
| 50,996 | | |
| 54,658 | | |
| 227,874 | | |
| 243,061 | |
| Selling, general and administrative expenses | |
| 51,863 | | |
| 53,188 | | |
| 224,357 | | |
| 226,903 | |
| (Loss) income from operations | |
| (867 | ) | |
| 1,470 | | |
| 3,517 | | |
| 16,158 | |
| Interest income (expense), net | |
| 19 | | |
| (245 | ) | |
| (275 | ) | |
| (2,164 | ) |
| (Loss) income before income taxes | |
| (848 | ) | |
| 1,225 | | |
| 3,242 | | |
| 13,994 | |
| Benefit from (provision for) income taxes | |
| 220 | | |
| (589 | ) | |
| (921 | ) | |
| (3,923 | ) |
| Net (loss) income | |
$ | (628 | ) | |
$ | 636 | | |
$ | 2,321 | | |
$ | 10,071 | |
| | |
| | | |
| | | |
| | | |
| | |
| (Loss) earnings per common share: | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | (0.01 | ) | |
$ | 0.01 | | |
$ | 0.05 | | |
$ | 0.23 | |
| Diluted | |
$ | (0.01 | ) | |
$ | 0.01 | | |
$ | 0.05 | | |
$ | 0.23 | |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding: | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 43,800,568 | | |
| 43,526,804 | | |
| 43,714,567 | | |
| 43,424,089 | |
| Diluted | |
| 43,800,568 | | |
| 43,775,573 | | |
| 43,851,653 | | |
| 43,620,790 | |
Tile Shop Holdings, Inc. and Subsidiaries
Rate Analysis
(Unaudited)
| | |
Three Months Ended | | |
Twelve Months Ended | |
| | |
December 31, | | |
December 31, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Gross margin rate | |
| 64.2 | % | |
| 64.7 | % | |
| 65.7 | % | |
| 64.4 | % |
| SG&A expense rate | |
| 65.3 | % | |
| 63.0 | % | |
| 64.6 | % | |
| 60.2 | % |
| (Loss) income from operations margin rate | |
| (1.1 | )% | |
| 1.7 | % | |
| 1.0 | % | |
| 4.3 | % |
| Adjusted EBITDA margin rate | |
| 4.3 | % | |
| 7.8 | % | |
| 6.5 | % | |
| 10.3 | % |
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
| | |
Twelve Months Ended, | |
| | |
December 31, | |
| | |
2024 | | |
2023 | |
| Cash Flows From Operating Activities | |
| | | |
| | |
| Net income | |
$ | 2,321 | | |
$ | 10,071 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
| Depreciation & amortization | |
| 17,759 | | |
| 21,229 | |
| Amortization of debt issuance costs | |
| 72 | | |
| 257 | |
| Gain on disposals of property, plant and equipment | |
| (138 | ) | |
| (13 | ) |
| Impairment charges | |
| 949 | | |
| 1,027 | |
| Non-cash lease expense | |
| 26,950 | | |
| 25,844 | |
| Stock based compensation | |
| 1,338 | | |
| 1,392 | |
| Deferred income taxes | |
| 366 | | |
| 1,280 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Receivables | |
| (203 | ) | |
| 528 | |
| Inventories | |
| 7,413 | | |
| 27,272 | |
| Other current assets, net | |
| 1,723 | | |
| 3,316 | |
| Accounts payable | |
| 826 | | |
| 123 | |
| Income tax receivable / payable | |
| (1,793 | ) | |
| 4,861 | |
| Accrued expenses and other liabilities | |
| (30,476 | ) | |
| (35,127 | ) |
| Net cash provided by operating activities | |
| 27,107 | | |
| 62,060 | |
| Cash Flows Used in Investing Activities | |
| | | |
| | |
| Purchases of property, plant and equipment | |
| (14,538 | ) | |
| (15,313 | ) |
| Proceeds from insurance | |
| 100 | | |
| - | |
| Proceeds from the sale of property, plant and equipment | |
| 102 | | |
| 58 | |
| Net cash used in investing activities | |
| (14,336 | ) | |
| (15,255 | ) |
| Cash Flows From Financing Activities | |
| | | |
| | |
| Payments of long-term debt and financing lease obligations | |
| (10,000 | ) | |
| (65,400 | ) |
| Advances on line of credit | |
| 10,000 | | |
| 20,000 | |
| Proceeds from exercise of stock options | |
| - | | |
| 4 | |
| Employee taxes paid for shares withheld | |
| (503 | ) | |
| (532 | ) |
| Net cash used in financing activities | |
| (503 | ) | |
| (45,928 | ) |
| Effect of exchange rate changes on cash | |
| 69 | | |
| (16 | ) |
| Net change in cash and cash equivalents | |
| 12,337 | | |
| 861 | |
| Cash and cash equivalents beginning of period | |
| 8,620 | | |
| 7,759 | |
| Cash and cash equivalents end of period | |
$ | 20,957 | | |
$ | 8,620 | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information | |
| | | |
| | |
| Purchases of property, plant and equipment included in accounts payable and accrued expenses | |
$ | 59 | | |
$ | 430 | |
| Cash paid for interest | |
| 306 | | |
| 2,082 | |
| Cash paid (received) for income taxes, net of refunds | |
| 2,349 | | |
| (2,218 | ) |
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