Executive Summary

Q3 2025 delivered softer results: net sales $83.064M (-1.7% YoY) and comparable store sales -1.4%, with gross margin compressing to 62.9% and a net loss of $1.6M; Adjusted EBITDA fell to $2.0M (2.5% margin) .
Margin pressure stemmed from increased product costs, higher customer delivery expenses, and elevated discounting; unit volumes improved modestly as entry-level assortment expanded, but ASPs declined .
Liquidity remains solid with no debt and $24.1M cash; SG&A fell 3.1% YoY on distribution center closures and corporate cost reductions, partially offset by delisting-related professional fees .
Strategic catalyst: Board approved plan to delist/deregister via reverse/forward split with expected ~$2.4M annual cost savings; no Q3 earnings call was hosted, limiting real-time Q&A context for investors .

What Went Well and What Went Wrong

What Went Well

Entry-level product strategy led to modest unit volume increases, broadening appeal to value-conscious customers: “Unit volumes increased modestly during the quarter driven by the steps we’ve taken to expand our assortment of entry level, competitively priced products” — Cabell Lolmaugh, CEO .
SG&A expense disciplined: -$1.7M YoY, aided by distribution center closures (NJ/WI), corporate staffing reductions, and lower variable compensation; depreciation also trended lower .
Balance sheet resilience: no borrowings outstanding on $75M revolver, cash increased to $24.1M vs $21.0M at year-end 2024 .

What Went Wrong

Margin compression: gross margin down 360 bps YoY to 62.9% due to higher product costs, delivery fees, and discounting; Adjusted EBITDA margin fell to 2.5% from 6.0% YoY .
Demand softness: comps -1.4% as traffic declined; ASP pressure from mix shift to lower-priced products and discounting, despite modest unit volume gains .
Earnings decline: net loss of $1.6M vs $0.0M prior-year quarter; pretax ROCE fell to -2.2% TTM from 4.8% a year ago, reflecting weaker profitability on employed capital .

Financial Results

Consolidated Metrics (Q1–Q3 2025)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue (Net Sales, $USD Millions)	$88.009	$88.260	$83.064
Diluted EPS ($USD)	$0.00	$0.01	$(0.04)
Gross Margin %	66.0%	64.4%	62.9%
SG&A Expense Rate %	65.8%	63.9%	65.3%
Operating Income Margin %	0.2%	0.5%	(2.4%)
Adjusted EBITDA ($USD Millions)	$4.566	$4.937	$2.041
Comparable Store Sales Change %	(4.0%)	(3.5%)	(1.4%)
Net Income ($USD Millions)	$0.172	$0.392	$(1.614)
Store Count (end of period)	142	141	140

Q3 2025 Year-over-Year Highlights

Net Sales: $83.064M vs $84.505M (-1.7%) .
Gross Margin: 62.9% vs 66.5% (-360 bps) .
Adjusted EBITDA: $2.041M vs $5.044M .
Comps: -1.4% .

Sequential (Q3 vs Q2) Highlights

Revenue: $83.064M vs $88.260M (down from prior quarter) .
Gross Margin: 62.9% vs 64.4% (down) .
Adjusted EBITDA: $2.041M vs $4.937M (down) .

KPIs and Liquidity

KPI	Q1 2025	Q2 2025	Q3 2025
Cash & Cash Equivalents ($USD Millions)	$27.059	$27.758	$24.145
Debt Outstanding	$0	$0	$0
Pretax ROCE (TTM)	1.2%	0.0%	(2.2%)

Note: Adjusted EBITDA and ROCE are non-GAAP metrics; reconciliations and methodologies provided in company filings .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operating expense savings from “going dark”	Annual (post-transaction)	N/A	~$2.4M annual savings anticipated from delisting/deregistration plan	New
Capital spending	Near-term	N/A	Management intends to limit capital spending while navigating challenging period	Lowered
Earnings call cadence	Q3 2025	Historically hosted calls	Company did not host a conference call for Q3 2025	Suspended for Q3

No quantitative revenue/EPS guidance ranges were provided in Q3 materials .

Earnings Call Themes & Trends

Note: TTSH did not host a Q3 2025 earnings call . Themes reflect management commentary across Q1–Q3 press releases.

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Macro: housing turnover/interest rates	Housing turnover near historic lows pressured traffic	Continued topline pressure; store closures at lease end	Optimism on declining rates as eventual catalyst; existing home sales near historic lows; demand unchanged	Persistent macro headwinds; cautious
Tariffs/trade policy	Evaluating increased tariffs; diversifying suppliers and pricing strategies	—	—	Watch list item; no Q3 update
Product mix/entry-level assortment	—	Expanded entry-level assortment aided unit volumes	Continued expansion; unit volumes improved modestly; ASP pressure	Mix shifting lower; ASP down
Discounting & pricing	—	Higher discounting pressured margins	Elevated discounts; lower average selling prices	Ongoing margin pressure
Supply chain/logistics	—	Closed Spring Valley, WI DC; ~$1.0M annualized benefit	SG&A benefits from NJ/WI DC closures; delivery fees increased	Network rationalization; delivery costs up
Corporate/legal/regulatory	—	—	Board approved plan to delist/deregister via reverse/forward split	Strategic shift; cost focus

Management Commentary

“We remain optimistic that declining interest rates will eventually be a catalyst for our industry, however, we have yet to see a meaningful change in demand for home improvement projects while existing home sales levels remain near historic lows.” — Cabell Lolmaugh, CEO .
“Rising costs, increases in delivery fees and elevated discounts resulted in a lower margin rate during the quarter. We intend to place an emphasis in the near term on continued efforts to reduce expenses and limit capital spending…” — Cabell Lolmaugh, CEO .
On tariffs (Q1): “…in light of recent changes to U.S. trade policy, including increased tariffs on certain imported goods, we are evaluating multiple options to manage the anticipated cost pressures including sourcing adjustments and pricing strategies.” — Cabell Lolmaugh, CEO .

Q&A Highlights

The company did not host a Q3 2025 earnings conference call; therefore, no analyst Q&A or live guidance clarifications are available for the quarter .

Estimates Context

S&P Global consensus estimates for Q3 2025 EPS and revenue were not available for TTSH; accordingly, we cannot quantify beat/miss vs Street this quarter. Values retrieved from S&P Global.*
Actual revenue reported for Q3 2025 was $83.064M from company filings .
Given absent coverage and the delisting process, we expect limited Street estimate visibility going forward .

Key Takeaways for Investors

Mix shift toward entry-level products is improving unit volumes but pressuring ASPs and margins; expect continued gross margin headwinds until discounting moderates and delivery costs normalize .
Expense discipline is tangible (DC closures, corporate cost actions) with more to come; near-term focus is on cost reduction and capex restraint to protect cash and EBITDA .
Strategic “going dark” plan targets ~$2.4M annual savings; though it reduces disclosure cadence and liquidity, it may improve operating cost structure and management focus .
Demand remains soft amid low existing home sales; a rate-driven housing turnover recovery is a potential medium-term catalyst, but timing remains uncertain .
Liquidity is sound (no debt, $24.1M cash), providing flexibility to navigate macro and execute portfolio adjustments .
Near-term trading: limited catalysts absent Street coverage and no call; watch for proxy/special meeting outcomes and any updates on tariffs, delivery cost trajectory, and discounting .
Medium-term thesis: operational efficiencies and cost savings could stabilize margins; upside requires improved traffic/ASPs and normalization of delivery expenses.

Appendix: Additional Details

Q3 2025 SG&A drivers: -$1.0M from NJ/WI DC closures, -$0.6M corporate wage reductions, -$0.3M variable comp; +$0.6M professional services tied to delisting and other legal expenses; depreciation down an additional $0.5M excluding DC closures .
Liquidity: No borrowings on $75M line; cash increased from $21.0M (12/31/24) to $24.1M (9/30/25) .
Non-GAAP reconciliation provided for Adjusted EBITDA; Q3 2025 components include D&A $3.711M, SBC $0.296M, and tax benefit $(0.348)M .
Corporate action timeline: Special Meeting expected December 2025; reverse split ratio proposed between 1-for-2,000 and 1-for-4,000 with cash-out price $6.60 per share for fractional shares; forward split for continuing stockholders; funding via cash and, if needed, revolver .

TILE SHOP HOLDINGS, INC. (TTSH)·Q3 2025 Earnings Summary