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TS

TILE SHOP HOLDINGS, INC. (TTSH)·Q4 2024 Earnings Summary

Executive Summary

  • TTSH delivered Q4 2024 results consistent with ongoing home improvement softness: net sales fell 5.9% YoY to $79.5M, comps -5.8%, gross margin 64.2%, and a net loss of $0.6M; Adjusted EBITDA was $3.4M .
  • Sequentially, comps improved modestly vs Q3 (-5.8% in Q4 vs -7.9% in Q3) even as gross margin compressed from 66.5% in Q3 to 64.2% in Q4 due to elevated inventory write-offs tied to assortment transitions .
  • Management emphasized balance sheet strength (no debt, $21.0M cash), cost actions (distribution center closure, corporate reductions) and a conservative 2025 footprint plan (no new stores; anticipate closing 2 unprofitable locations) .
  • Consensus estimates from S&P Global for Q4 2024 were unavailable at the time of analysis; as a result, we cannot quantify beat/miss versus Street for revenue or EPS (S&P Global data unavailable).

What Went Well and What Went Wrong

  • What Went Well

    • Sequential comp improvement versus Q3 and growing average order value, helped by entry-level price point expansion; “modest sequential improvement in our comparable store sales” vs Q3 and “ability to grow our average order value” in Q4 .
    • Strategic product progress: continued growth in Superior private label installation products in 2H24; expanded opening price point assortment positioned for spring 2025 .
    • Balance sheet resilience and cash generation: ended 2024 with no bank debt and $21M cash; generated $27.1M operating cash flow in 2024 .

  • What Went Wrong

    • Topline pressure continued: Q4 net sales down 5.9% YoY; comps -5.8% on lower traffic (macro housing turnover weakness) .
    • Margin headwinds in the quarter: gross margin fell 50 bps YoY (64.2% vs 64.7%) and 230 bps sequentially from Q3 (66.5%) due to inventory write-offs from assortment transitions .
    • SG&A deleverage persisted: SG&A rate 65.3% vs 63.0% in Q4’23 (despite absolute SG&A down $1.3M), reflecting weaker sales base and higher occupancy costs .

Financial Results

Quarterly performance (chronological: Q4 2023 → Q3 2024 → Q4 2024)

MetricQ4 2023Q3 2024Q4 2024
Net Sales ($M)$84.458 $84.505 $79.454
Comparable Store Sales YoY-3.2% -7.9% -5.8%
Gross Margin %64.7% 66.5% 64.2%
Operating Margin %1.7% 0.3% -1.1%
Net (Loss) Income ($M)$0.636 $0.041 -$0.628
Diluted EPS ($)$0.01 $0.00 -$0.01
Adjusted EBITDA ($M)$6.625 $5.044 $3.420
Adjusted EBITDA Margin %7.8% 6.0% 4.3%
Cash & Equivalents ($M, end of period)$8.620 $25.058 $20.957
Stores (end of period)142 142 142

KPIs and cost structure

KPI / Expense RateQ4 2023Q3 2024Q4 2024
SG&A Expense ($M)$53.188 $55.978 $51.863
SG&A Rate % of Sales63.0% 66.2% 65.3%
Tax (Benefit)/Provision ($M)$0.589 $0.138 -$0.220

Notes:

  • Q4 margin compression was driven by higher inventory write-offs tied to assortment transitions, partially offset by lower product costs .
  • For FY24, gross margin expanded 130 bps to 65.7% on stabilizing international freight and supplier pricing gains, tempered by inventory write-offs .

Segment breakdown

  • Not provided in Q4 2024 materials; reported results are consolidated company-level metrics -.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New Store OpeningsFY2025Not previously specifiedNo new stores planned in 2025 Lowered/Conservative stance
Store ClosuresFY2025Not previously specifiedPlan to close 2 unprofitable stores in 2025 (to 140 stores YE) New disclosure
Revenue/Margins/OpExFY2025N/ANo quantitative guidance provided in Q4 materials N/A
Capital StructureOngoingN/ANo bank debt outstanding; $21.0M cash at 12/31/24 Informational

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Macro/Housing turnover & ratesQ2: Ongoing softness in existing home sales; sequential comp improvement but lower traffic . Q3: Fed cuts seen as potential catalyst; existing home sales at lows since 2010; comps -7.9% .Continued difficult housing backdrop; uncertainty around tariffs, consumer sentiment, jobs; optimistic for eventual recovery in turnover/remodel demand .Macro headwinds persist; cautious near term.
Gross margin driversQ2: GM up to 66.0% on lower product costs . Q3: GM 66.5% aided by sourcing and better delivery collections .Q4 GM 64.2% down on inventory write-offs from assortment transitions; FY24 GM +130 bps on freight stabilization and supplier pricing .Near-term mix/transition pressure; structural sourcing tailwinds intact.
Product strategy (Superior/private label; opening price points; LVT)Q2: Enhanced Superior line and expanded smaller-project assortment showing early results . Q3: Superior launch “nice start”; entry-level expansion; new Arbour LVT line .Growth in Superior volumes in 2H24; expanded entry-level priced assortment, AOV growth; additional products landing for spring 2025 .Execution progressing; assortment broadened.
Cost/SG&A actionsQ3: Closed Dayton, NJ DC; corporate reductions; Beijing trading office closed; expected annualized SG&A benefit $2.8–$4.1M .Remain selective on investments; 2025 focus on rightsizing expense structure .Expense discipline continues.
Store footprintQ2/Q3: Operated 142 stores; no expansion highlighted .No new stores in 2025; close 2 unprofitable stores; YE25 target 140 .Consolidation over growth.
Tariffs/regulatoryNot highlighted in Q2/Q3.Cited policy/tariffs as uncertainty factor for demand .Heightened watch item.
E-commerce/digitalQ3: Enhancing e-commerce capabilities .Not a focus in Q4 remarks.Neutral.

Management Commentary

  • CEO (Cabell Lolmaugh): “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.” He highlighted progress in Superior private label products and expansion of opening price point assortment positioning the company for 2025 .
  • CEO footprint/cost stance: “In 2025, we intend to be very selective with any incremental investments… we do not currently plan to open any new stores in 2025. We also anticipate closing 2 unprofitable stores in 2025…” .
  • CFO (Mark Davis): “Our gross margin rate decreased by 50 basis points to 64.2% during the fourth quarter of 2024. The decrease was due to elevated levels of inventory write-offs attributed to product transitions… partially offset by… lower price points” .
  • CFO on liquidity: “As of the end of the year, our cash balance was $21 million, and we had no bank debt outstanding” .

Q&A Highlights

  • The conference call included no analyst Q&A; the operator noted no questions, and management provided closing remarks .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates for Q4 2024 revenue and EPS were unavailable at the time of analysis; as a result, we cannot assess beat/miss versus Street for this quarter (Values retrieved from S&P Global were unavailable).

Key Takeaways for Investors

  • Sequential comp trend improved in Q4 vs Q3, but demand remains constrained by weak housing turnover; watch spring selling season for trajectory inflection .
  • Near-term margin pressure reflects assortment transition write-offs; structural gross margin drivers (freight normalization, supplier pricing) supported FY24 expansion—monitor the cadence of write-offs as new products scale .
  • Cost discipline is firm: prior actions (DC closure, corporate reductions) targeted $2.8–$4.1M annualized SG&A savings; 2025 plan emphasizes rightsizing spend and footprint rationalization .
  • Conservative footprint strategy (no new stores; 2 closures) should support profitability focus and capital preservation amid subdued demand .
  • Balance sheet provides flexibility (no debt; $21.0M cash YE): downside protection while enabling selective investments in product and customer experience .
  • Product initiatives (Superior private label, entry-level priced assortment, LVT) are gaining traction and helped AOV; execution through spring 2025 is a critical catalyst .
  • With Street estimates unavailable for Q4, near-term stock drivers likely center on comp trajectory, gross margin stabilization post-transition, and visible SG&A run-rate benefits (particularly if sublease efforts progress) .

Supporting data extracts

  • Q4 2024 press release and financial statements: net sales $79.5M; comps -5.8%; GM 64.2%; net loss $0.6M; Adj. EBITDA $3.4M; cash $21.0M; no debt .
  • Q3 2024 benchmarks: net sales $84.5M; comps -7.9%; GM 66.5%; Adj. EBITDA $5.0M .
  • Q2 2024 context: net sales $91.4M; GM 66.0%; management highlighted Superior line enhancements and entry-level assortment expansion .
  • Product/design PR during Q4: new Laura Ashley tiles supporting assortment breadth -.