Tile Shop Holdings Inc (TTSH) 2023 Q1 法說會逐字稿

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

美好的一天，謝謝你的支持。歡迎來到 Q1 Tile Shop Holdings, Inc. 收益電話會議。此時，所有參與者都處於只聽模式。演講者演講結束後，將進行問答環節。 （操作員說明）請注意今天的電話會議正在錄製中。我現在想將電話會議轉交給今天的發言人，投資者關係副總裁兼首席會計官馬克戴維斯。馬克，請繼續。

Thank you. Good morning to everyone, and welcome to the Tile Shop's First Quarter Earnings Call. Joining me today are Cab Lolmaugh, our Chief Executive Officer; and Karla Lunan, our Chief Financial Officer. Certain statements made during the call today constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued earlier and in our filings with the SEC.

謝謝。大家早上好，歡迎來到瓷磚店的第一季度收益電話會議。今天加入我的是我們的首席執行官 Cab Lolmaugh；和我們的首席財務官 Karla Lunan。今天電話會議期間所作的某些陳述構成前瞻性陳述，這些陳述是根據經修訂的 1995 年《私人證券訴訟改革法案》的安全港條款並在其含義內作出的。此類前瞻性陳述受到已知和未知的風險和不確定性的影響，這些風險和不確定性可能導致實際結果與此類陳述存在重大差異。這些風險和不確定性在我們早些時候發布的收益新聞稿和我們向美國證券交易委員會提交的文件中有所描述。

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

今天作出的前瞻性陳述截至本次電話會議之日，我們不承擔更新這些前瞻性陳述的任何義務。今天的電話會議還將包括某些非 GAAP 衡量標準。請參閱我們的收益發布，了解已發佈在我們公司網站上的這些非 GAAP 財務措施的對賬情況。有了這個，現在讓我把電話轉給出租車。

Thanks, Mark. Good morning, everyone, and thank you for joining us today for an update on our business and our first quarter results. Comparable store sales during the first quarter of 2023 were flat with 2022. During the quarter, macro headwinds continue to persist. Rising interest rates and slowing housing turnover created challenges across our industry. However, we continue to see steady demand for remodeling projects. Feedback received from our customers indicates that some homeowners are choosing to remodel their homes as opposed to moving. Many of our pros indicate they still have a healthy backlog of work.

謝謝，馬克。大家早上好，感謝您今天加入我們，了解我們的業務和第一季度業績的最新情況。 2023 年第一季度的可比店面銷售額與 2022 年持平。本季度，宏觀逆風繼續存在。利率上升和房屋周轉率放緩給我們整個行業帶來了挑戰。然而，我們繼續看到對改造項目的穩定需求。從我們的客戶那裡收到的反饋表明，一些房主選擇改造他們的房屋而不是搬家。我們的許多專業人士表示他們仍然有大量積壓的工作。

Nevertheless, we anticipate macro conditions will remain challenging over the next several quarters. Store teams continue to make progress against the retail excellence goals. Our Pro sales mix, which includes sales to Pros and Pro referrals, was over 70% of our total sales during the first quarter. Additionally, we've made progress on improving adoption of best practices at a number of our stores that have underperformed in the past. While we're making progress in this area, we still have more work in front of us. Given the challenging macro environment, I've made the decision to delay opening a second new store in 2023. We're still on track -- our assortment, we continue to execute our initiatives during the first quarter.

儘管如此，我們預計宏觀環境在未來幾個季度仍將充滿挑戰。商店團隊繼續朝著卓越零售目標取得進展。我們的專業銷售組合，包括對專業人士的銷售和專業推薦，在第一季度占我們總銷售額的 70% 以上。此外，我們在改善過去表現不佳的許多商店採用最佳實踐方面取得了進展。雖然我們在這方面取得了進展，但我們面前還有更多工作要做。鑑於充滿挑戰的宏觀環境，我決定推遲在 2023 年開設第二家新店。我們仍在軌道上——我們的產品種類，我們在第一季度繼續執行我們的計劃。

We have identified a number of high-quality products that we can source for lower price points from suppliers across the world. We believe that this effort, combined with recent decreases in international freight rates will help offset some of the inflationary price increases we have experienced over the last year. Additionally, we've seen an increase in clearance item sales following steps taken to improve visibility to clearance items on our website over the last quarter. Sales of our LVT products are gaining momentum. We formally launched our expanded line of LVT products across all of our stores during the fourth quarter. We're excited about this addition to our assortment and believe it could become a meaningful part of our overall sales mix over time.

我們已經確定了一些高質量的產品，我們可以從世界各地的供應商那里以更低的價格採購這些產品。我們相信，這一努力，加上最近國際運費的下降，將有助於抵消我們在去年經歷的一些通貨膨脹價格上漲。此外，在上個季度採取措施提高我們網站上清倉商品的可見性後，我們發現清倉商品的銷售額有所增加。我們的 LVT 產品銷售勢頭強勁。第四季度，我們在所有門店正式推出了擴展的 LVT 產品線。我們對這一新品種感到興奮，並相信隨著時間的推移，它會成為我們整體銷售組合中有意義的一部分。

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

正如我之前提到的，考慮到產品質量的提高和消費者情緒的轉變，我們去年開始在我們的商店中測試 LVT，這表明我們的核心高端客戶人口統計數據開始廣泛接受 LVT 作為他們家中的地板替代品。我們收到的客戶反饋表明我們的產品種類繁多且價格具有競爭力。有了這個，我現在將把電話交給 Karla。

Thanks, Cabby. Good morning, everyone. First quarter sales at comparable stores were flat with 2022. We did see lower levels of traffic during the quarter that was offset by an increase in the ticket average. Our gross margin rate during the first quarter was 64.2%, which equates to a 30 basis point decrease from the fourth quarter. The sequential decrease in margin is due to continued increases in inventory costs. We value inventory at average cost and typically hold just under a year of inventory on hand. While average costs were still increasing as inventory receipts landed during the first quarter, we expect costs will start to improve as international freight rates have come down and as lower-priced products from our resourcing initiatives start to work their way into our assortment.

謝謝，卡比。大家，早安。可比商店的第一季度銷售額與 2022 年持平。我們確實看到本季度客流量有所下降，但被平均票價的增加所抵消。我們第一季度的毛利率為 64.2%，比第四季度下降 30 個基點。利潤率環比下降是由於存貨成本持續增加。我們以平均成本對庫存進行估價，手頭通常持有不到一年的庫存。雖然隨著第一季度庫存收據的增加，平均成本仍在增加，但我們預計，隨著國際運費下降，以及我們資源採購計劃中的低價產品開始進入我們的品類，成本將開始改善。

At the same time, it's important to note that we have priced our LVT and back shelf products competitively and that these products carry a lower gross margin rate than our tile products. We anticipate the acceleration of LVT sales and continued growth of back shelf will create a headwind to our overall gross margin rate. However, we expect the incremental sales of these products will result in an increase of gross profit dollars and improve our leverage on fixed SG&A expenses. First quarter selling, general and administrative expenses decreased by $700,000 when compared to the first quarter of 2022.

同時，值得注意的是，我們對 LVT 和背架產品進行了具有競爭力的定價，並且這些產品的毛利率低於我們的瓷磚產品。我們預計 LVT 銷售的加速和後貨架的持續增長將對我們的整體毛利率造成不利影響。然而，我們預計這些產品的增量銷售將導致毛利潤美元的增加並提高我們對固定 SG&A 費用的槓桿作用。與 2022 年第一季度相比，第一季度的銷售、一般和管理費用減少了 700,000 美元。

The decrease was largely attributed to a $1.1 million decrease in variable compensation expenses, a $900,000 decrease in shipping and transportation expenses and a $700,000 decrease in depreciation expense. These decreases were partially offset by a $600,000 increase in wages due to headcount and pay increases, a $600,000 increase in software licenses and a $400,000 increase in operating supplies. Net income was $2.5 million during the first quarter of 2023, and adjusted EBITDA was $10.3 million. Our adjusted EBITDA margin rate was 10.1%. First quarter earnings per share decreased by $0.01 from $0.07 during the first quarter of 2022 to $0.06 during the first quarter of 2023.

減少的主要原因是可變補償費用減少了 110 萬美元，航運和運輸費用減少了 900,000 美元，折舊費用減少了 700,000 美元。這些減少部分被員工人數和薪酬增加導致的 600,000 美元工資增加、軟件許可增加 600,000 美元以及運營用品增加 400,000 美元所抵消。 2023 年第一季度淨收入為 250 萬美元，調整後的 EBITDA 為 1030 萬美元。我們調整後的 EBITDA 利潤率為 10.1%。第一季度每股收益從 2022 年第一季度的 0.07 美元下降 0.01 美元至 2023 年第一季度的 0.06 美元。

Turning our attention to the balance sheet. Our inventory decreased by $5.5 million from the fourth quarter to $115.5 million at the end of the first quarter. Also during the quarter, we generated $25.8 million of operating cash flow. The majority of this cash was used to reduce our debt, which was $25 million at the end of the quarter. With that, Cabby and I are happy to take any questions.

將注意力轉向資產負債表。我們的存貨比第四季度減少了 550 萬美元，至第一季度末的 1.155 億美元。同樣在本季度，我們產生了 2580 萬美元的運營現金流。這些現金的大部分用於減少我們的債務，在本季度末為 2500 萬美元。有了這個，Cabby 和我很樂意回答任何問題。

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

謝謝。這時候，我們將進行問答。 （操作員說明）我們的第一個問題來自 Lake Street 的 Mark Smith……

Jacob is on for Mark this morning. Just looking -- could you give us any update, any additional details on the new store openings this year?

雅各布今天早上替馬克上場。只是看看 - 你能給我們任何更新，今年新店開業的任何額外細節嗎？

Jacob, yes, this is Cab. We're on track to open our new store here coming up in June, July, depending on some scheduling. We did delay our second new store just due to some of the macro headwinds we're experiencing at this point. The focus really is on the profitability of our business. And I thought it best to just push this at this time. So yes, I mean, we're going to relocate another store to a better area that we feel is going to generate more income, but that's pretty much it.

雅各布，是的，這是出租車。我們有望在 6 月、7 月在這裡開設新店，具體取決於一些日程安排。由於我們目前遇到的一些宏觀逆風，我們確實推遲了我們的第二家新店。重點實際上是我們業務的盈利能力。我認為最好在此時推動它。所以是的，我的意思是，我們將把另一家商店搬遷到一個我們認為會產生更多收入的更好的區域，但僅此而已。

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

好的。也許只是你的資產負債表的改善是可靠的。你們如何考慮通過回購或...向股東返還資本或現金？

This is Karla, and thank you for your question. At this point, we are not planning on any share buybacks or dividends at this point. I mean it's always a consideration. We are constantly looking and forecasting and trying to control our SG&A and improve our results. But at this time, we do not have any plans to do any major events such as that like we have in the past.

我是 Karla，謝謝你的提問。目前，我們不打算進行任何股票回購或派息。我的意思是，這始終是一個考慮因素。我們一直在尋找和預測，並試圖控制我們的 SG&A 並改善我們的結果。但是目前，我們沒有任何計劃像過去那樣舉辦任何重大活動。

Yes. I know Jacob, we're pretty pleased with our reduction in our debt in Q1 that we're proud of, and we're going to continue to chip away at that, right? So that's my first goal is let's get debt-free and then figure out how we're going to return shareholder value. So that's the goal right now. Let's just generate cash and get the debt down to 0 and then move forward.

是的。我知道雅各布，我們對第一季度我們引以為豪的債務減少感到非常高興，我們將繼續努力，對吧？所以我的第一個目標是讓我們擺脫債務，然後弄清楚我們將如何回報股東價值。這就是現在的目標。讓我們只產生現金並將債務降至 0，然後繼續前進。

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

好的。我得到了它。這很有幫助。也許只是談論通脹壓力。我知道你提到過海運費正在下降。但也許你能談談產品成本的不同驅動因素嗎？你能承受任何價格上漲嗎？

Sure. Yes. So we're pretty -- we're happy with the reduction in freight costs overall that we've been seeing in the past few months. And when you look at product cost, it outweighed a lot of the product costs over the last year. The ocean freight cost was large in comparison to some of the overall product cost increase. So if that's coming down and some of our resourcing efforts getting us lower-cost product, landing in our DCs, we feel that we're on track to start rebounding in our margin. we have a year's worth of inventory typically. So as we go through this inventory and this product starts to land, we're now hopefully on the upswing with margin.

當然。是的。所以我們很漂亮 - 我們對過去幾個月我們看到的整體運費下降感到滿意。當您查看產品成本時，它超過了去年的很多產品成本。與部分整體產品成本增加相比，海運成本很高。因此，如果這種情況正在下降，並且我們的一些資源努力讓我們獲得成本更低的產品，登陸我們的 DC，我們覺得我們有望開始反彈我們的利潤率。我們通常有一年的庫存。因此，當我們檢查這個庫存並且這個產品開始落地時，我們現在希望利潤率上升。

So it's still a battle. It's not just freight. It's everything else from the DCs to ops in the stores to even corporate marketing everything is a little bit more expensive these days. So it's -- we have to be strategic and focused to make sure we're making the best decisions across the company at this point. But yes, product cost has come down. We're starting to land that in our DCs. So we feel that we're going to rebound nicely.

所以這仍然是一場戰鬥。這不僅僅是貨運。現在，從配送中心到商店運營，甚至企業營銷，其他一切都變得更加昂貴。所以它 - 我們必須具有戰略性和重點，以確保我們在這一點上做出整個公司的最佳決策。但是，是的，產品成本已經下降。我們開始將其部署到我們的 DC 中。所以我們覺得我們會很好地反彈。

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

好的。現在我想把它交給 Mark 做任何結束語。

Thank you for listening to our earnings conference call. We anticipate filing our Form 10-Q later today. Thank you for your interest in the Tile Shop. Have a nice day.

感謝您收聽我們的收益電話會議。我們預計今天晚些時候提交 10-Q 表格。感謝您對瓷磚店的關注。祝你今天過得愉快。