Tile Shop Holdings Inc (TTSH) 2024 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Q3 2024 Tile Shop Holdings, Inc., Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加 Tile Shop Holdings, Inc. 2024 年第三季財報電話會議。（操作員指示）請注意，今天的會議正在錄製中。

I would now like to hand the conference over to your first speaker today, Ken Cooper with Investor Relations. Please go ahead.

現在我想將會議交給今天的第一位發言人，投資者關係部的肯‧庫柏 (Ken Cooper)。請繼續。

Thank you, and good morning to everyone. Welcome to the Tile Shop's Third Quarter Earnings Call. Joining me today are Cab Lolmaugh, our Chief Executive Officer; and Mark Davis, our Chief Financial Officer.

謝謝大家，祝大家早安。歡迎參加磁磚店第三季財報電話會議。今天加入我的是我們的執行長 Cab Lolmaugh；和我們的財務長馬克戴維斯。

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.

今天電話會議期間所做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範圍內做出的。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，可能導致實際結果與此類陳述有重大差異。這些風險和不確定性在我們之前發布的收益新聞稿以及我們向 SEC 提交的文件中進行了描述。

The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update those 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 also posted on our company website.

今天所做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公認會計準則衡量標準。請參閱我們的收益報告，以了解這些非公認會計準則財務指標的對賬，該報告也已發佈在我們公司的網站上。

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

現在讓我把電話轉給計程車。

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

謝謝你，肯。大家早安，感謝您今天加入我們，了解我們的業務最新情況。

Macro headwinds affecting the home improvement industry continued to persist throughout the third quarter. Despite these challenges, we have continued to be proactive, driving connections with our professional customers, expanding our assortment, enhancing our e-commerce capabilities and maintaining our unwavering commitment to provide exceptional service. Together with our strong balance sheet, we're in a great position to serve our customers in our stores and online.

影響家居裝修行業的宏觀不利因素在整個第三季度持續存在。儘管面臨這些挑戰，我們仍然積極主動，推動與專業客戶的聯繫，擴大我們的產品種類，增強我們的電子商務能力，並堅定不移地致力於提供卓越的服務。加上我們強大的資產負債表，我們處於有利地位，可以為我們的商店和網路客戶提供服務。

I was encouraged by the recent actions taken by the Federal Reserve to cut interest rates and signal further cuts in future periods. We believe that an easing interest rate environment could potentially lead to an improvement in existing home sales trends, which we see as a leading indicator for home improvement demand.

我對聯準會最近採取的降息行動感到鼓舞，並暗示未來將進一步降息。我們認為，寬鬆的利率環境可能會導致現有房屋銷售趨勢的改善，我們將其視為房屋裝修需求的領先指標。

However, the most recent existing home sales report from September shows housing turnover at the lowest level we've seen since 2010. During the third quarter, sales at our comparable stores decreased by 7.9%, which reflects the challenges of the current environment.

然而，9 月最新的成屋銷售報告顯示，房屋成交量處於 2010 年以來的最低水準。第三季度，我們可比商店的銷售額下降了 7.9%，這反映了當前環境的挑戰。

Over the next few minutes, I'll provide an update on our key business initiatives, and Mark will review our financial results in more detail as well as several actions we're taking to manage expenses given the headwinds facing our business. The first initiative I'd like to touch on relates to the relaunch of our enhanced line of private label installation products sold under the Superior brand name. We relaunched Superior line in June, seeking to, one, generate more opportunities to sell tile to professional customers who develop a preference for using our high-quality, cost-efficient Superior products; and two, support ticket averages by improving attachment rates of installation products.

在接下來的幾分鐘內，我將提供有關我們關鍵業務計劃的最新信息，馬克將更詳細地審查我們的財務業績，以及考慮到我們業務面臨的不利因素，我們正在採取的一些管理費用的行動。我想談的第一個舉措涉及重新推出以 Superior 品牌名稱銷售的增強型自有品牌安裝產品系列。我們於六月重新推出了Superior系列，其目的是，第一，創造更多機會向專業客戶銷售瓷磚，這些客戶偏愛使用我們高品質、具有成本效益的Superior產品；二是透過提高安裝產品的附著率來支援平均票數。

So far, we're off to a nice start. The Superior launch is just one of the many changes we're making to refine our assortment. We've also been focusing on an initiative to expand our selection of entry-level competitively priced products. Demand for these products is tracking in line with our expectations. We believe this expansion of our assortment will help strengthen our value proposition with customers seeking to complete a smaller remodel project on a budget.

到目前為止，我們有了一個好的開始。Superior 的推出只是我們為完善產品種類而做出的眾多改變之一。我們也一直致力於擴大我們對具有價格競爭力的入門級產品的選擇範圍。這些產品的需求符合我們的預期。我們相信，我們產品種類的擴大將有助於加強我們對尋求在預算內完成較小改造專案的客戶的價值主張。

We also believe the addition -- selection of entry-level price products strengthens our competitive positions with Pros, especially when they are working on smaller projects for their end customers. While many of the additions to our assortment have started to work their way into our stores, we still have more on the way that should be ready in time for our 2025 spring season.

我們也相信，選擇入門價格產品可以增強我們與專業人士的競爭地位，特別是當他們為最終客戶開發較小的項目時。雖然我們品種中的許多新增產品已開始進入我們的商店，但我們仍有更多產品正在準備中，應該能及時為 2025 年春季做好準備。

One particular line that I'm excited about is our Arbour collection, which is a new line of high-quality LVT products. By direct sourcing this line, we're able to offer this collection to our customers at attractive price points and while maintaining the ability to expand our margins. The new collection is beautiful, and I look forward to hearing the feedback from our customers as the Arbour collection makes its way into our assortment.

令我興奮的一個特別系列是我們的 Arbor 系列，這是一個新的高品質 LVT 產品系列。透過直接採​​購該系列產品，我們能夠以極具吸引力的價格向客戶提供該系列產品，同時保持擴大利潤的能力。新系列很漂亮，隨著 Arbor 系列進入我們的產品系列，我期待聽到客戶的回饋。

We've also been working on new additions with our design partners. Over the years, we've cultivated relationships with popular designers like Annie Selke, Jeffrey Alan Marks, Laura Ashley, and Morris & Co. These design partnerships give us the ability to create unique tile products that appeal to our core customer and more broadly across the design community. During the third quarter, we announced our newest partnership with Nikki Chu. Nikki has been great to work with, and the projects I've seen that use her tile are absolutely stunning.

我們也一直在與設計合作夥伴一起開發新功能。多年來，我們與Annie Selke、Jeffrey Alan Marks、Laura Ashley 和Morris & Co 等流行設計師建立了合作關係。的客戶。第三季度，我們宣布了與 Nikki Chu 的最新合作夥伴關係。Nikki 的合作非常愉快，我見過的使用她的瓷磚的項目絕對令人驚嘆。

In closing, while the headwinds facing our industry still persist, we're focusing on curating the best assortment of tile products in the industry, giving our customers the ability to design a space that differentiates their home and providing exceptional service to all customers who visit our stores. We believe this commitment to excellence will position us for future success.

最後，雖然我們行業面臨的逆風仍然存在，但我們專注於策劃行業中最好的瓷磚產品，讓我們的客戶能夠設計一個讓他們的家與眾不同的空間，並為所有參觀的客戶提供卓越的服務我們的商店。我們相信，這種對卓越的承諾將為我們未來的成功奠定基礎。

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

現在，我將把電話轉給馬克。

Thanks, Cab. Good morning, everyone. Third quarter sales at comparable stores decreased by 7.9% compared to the third quarter of 2023 due to lower levels of store traffic. This result is consistent with the results we've seen throughout the year against the backdrop of lower housing turnover and softer demand for home improvement projects. As Cab noted in his remarks, we believe further rate cuts by the Federal Reserve could accelerate existing home sales turnover, which we see as a catalyst for remodel demand.

謝謝，計程車。大家早安。由於商店客流量減少，可比商店第三季銷售額較 2023 年第三季下降 7.9%。這一結果與我們全年在房屋成交量下降和家居裝修項目需求疲軟的背景下看到的結果一致。正如卡佈在演講中指出的那樣，我們認為聯準會進一步降息可能會加速現有房屋銷售成交量，我們認為這是改造需求的催化劑。

Our gross margin rate during the third quarter increased to 66.5%, which represents a 50 basis point sequential improvement from the second quarter and a 180 basis point improvement when compared to the third quarter of 2023. The improvement in margin was attributed to our efforts to source products at lower price points, which helped reduce our inventory costs.

第三季毛利率增至 66.5%，較第二季季增 50 個基點，較 2023 年第三季提高 180 個基點。利潤率的提高歸因於我們努力以較低的價格採購產品，這有助於降低我們的庫存成本。

Additionally, our field teams have improved customer delivery collection rates, which contributed to the sequential improvement in gross margin over the last quarter. On a year-to-date basis, our gross margin rate improved 170 basis points from 64.4% during 2023 to 66.1% during 2024. The year-to-date improvement in gross margin is attributed to stabilizing international freight rates and the progress we've made lowering our inventory purchasing costs.

此外，我們的現場團隊提高了客戶送貨收貨率，這有助於上季毛利率的連續改善。年初至今，我們的毛利率從 2023 年的 64.4% 提高到 2024 年的 66.1%，提高了 170 個基點。今年迄今毛利率的改善歸功於國際運費的穩定以及我們在降低庫存採購成本方面取得的進展。

Third quarter SG&A expenses of $56 million were $700,000 lower when compared to our third quarter in 2023. The decrease in SG&A expense was primarily due to a $700,000 decrease in variable compensation expenses, a $600,000 decrease in depreciation expense and a $600,000 decrease in advertising costs, which were partially offset by a $500,000 increase in occupancy costs, a $200,000 increase in IT-related expenses and a $200,000 increase in shipping and transportation costs.

第三季的 SG&A 支出為 5,600 萬美元，與 2023 年第三季相比減少了 70 萬美元。SG&A 費用減少主要是由於可變補償費用減少 700,000 美元、折舊費用減少 600,000 美元以及廣告費用減少 600,000 美元，但這些費用被入住成本增加 500,000 美元、IT 相關費用增加 200,000 美元部分銷售運輸。成本增加20 萬美元。

For the year, SG&A expenses decreased $1.2 million to $172.5 million as of the end of the third quarter in 2024. This decrease was largely due to a $2.6 million decrease in depreciation costs, a $2.5 million decrease in variable compensation expenses that were partially offset by a $2.6 million increase in occupancy costs, a $900,000 increase in IT expenses and an $800,000 increase in shipping and transportation expenses.

截至 2024 年第三季末，全年銷售、管理及行政費用減少 120 萬美元，至 1.725 億美元。這項減少主要是由於折舊成本減少了260 萬美元，可變補償費用減少了250 萬美元，但部分被佔用成本增加260 萬美元、IT 費用增加90 萬美元以及運輸費用增加80 萬美元所部分抵消。

In response to the continued pressure on our top line results, we've made it our priority to reduce structural SG&A expenses. Over the last 90 days, we made some important decisions, which we believe will deliver long-term value for the company. For instance, we've closed our distribution center located in Dayton, New Jersey, reduced staffing levels at our corporate office and closed our trading company office located in Beijing, China. Asset impairment and severance costs incurred in connection with these actions were not material.

為了因應我們營收業績面臨的持續壓力，我們將減少結構性銷售、一般行政費用作為我們的首要任務。在過去 90 天裡，我們做出了一些重要決定，我們相信這些決定將為公司帶來長期價值。例如，我們關閉了位於新澤西州代頓的配送中心，減少了公司辦公室的人員配備，並關閉了位於中國北京的貿易公司辦公室。與這些行動相關的資產減損和遣散費並不重大。

With regard to our Dayton distribution center, we anticipate exiting this facility during the fourth quarter. The property is currently under lease through the fall of 2026. We are actively working with our landlord and a commercial broker to identify a sublease for our space.

關於我們的代頓配送中心，我們預計在第四季度退出該設施。該房產目前租賃至 2026 年秋季。我們正在積極與房東和商業經紀人合作，為我們的空間尋找轉租機會。

We anticipate that the annualized benefits stemming from the aforementioned actions will range from $2.8 million to $4.1 million, depending on our ability to sublet the distribution space under lease in New Jersey.

我們預計上述行動帶來的年化收益將在 280 萬美元至 410 萬美元之間，具體取決於我們轉租新澤西州租賃分銷空間的能力。

Turning our attention to the balance sheet and cash flow information. We ended the quarter with $25.1 million of cash and no bank debt. Year-to-date, we've generated $28.5 million of operating cash flow. We believe we're well positioned to navigate the challenges of the current environment with a great team, strong balance sheet and the enhancements we're making to serve our customers.

將我們的注意力轉向資產負債表和現金流量資訊。本季末，我們擁有 2,510 萬美元現金，沒有銀行債務。年初至今，我們已產生 2,850 萬美元的營運現金流。我們相信，憑藉優秀的團隊、強大的資產負債表以及我們為客戶服務所做的改進，我們有能力應對當前環境的挑戰。

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

凱文和我很樂意回答任何問題。

(Operator Instructions) I'm showing no additional questions at this time. I would now like to turn it back to Ken for closing remarks.

（操作員說明）我目前沒有提出任何其他問題。現在我想請 Ken 發表結束語。

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, and have a great day.

感謝您收聽我們的財報電話會議。我們預計今天稍後提交 10-Q 表格。感謝您對磁磚店的興趣，祝您有個愉快的一天。

Thank you for your participation today in today's conference call. This concludes our program. You may now disconnect.

感謝您參加今天的電話會議。我們的計劃到此結束。您現在可以斷開連線。