Tile Shop Holdings Inc (TTSH) Reports 5.2% Decrease in Net Sales for Q3 2023
Tile Shop Holdings Inc (NASDAQ:TTSH) reports a 5.2% decrease in net sales for Q3 2023.
The company's net income stands at $1.8 million with an adjusted EBITDA of $8.3 million.
TTSH managed to reduce its long-term debt by $10.0 million in Q3 and $35.4 million year-to-date.
The company's gross margin rate was 64.7% for the quarter.
Tile Shop Holdings Inc (NASDAQ:TTSH) released its earnings report for the third quarter ended September 30, 2023, on November 2, 2023. The company reported a decrease in net sales by 5.2% and a decrease in comparable store sales by 4.9%. Despite these challenges, the company managed to achieve a gross margin of 64.7% and a net income of $1.8 million. The company's adjusted EBITDA stood at $8.3 million.
Financial Performance
TTSH's net sales for the third quarter of 2023 decreased by $5.0 million, or 5.2%, compared to the third quarter of 2022. The decrease in sales at comparable stores was primarily due to a decrease in traffic, which was partially offset by an increase in average ticket value.
The company's gross profit decreased by $5.0 million, or 7.8%, in the third quarter of 2023 compared to the same period in 2022. The gross margin rate was 64.7% in the third quarter of 2023, which increased sequentially from 64.2% during the second quarter of 2023, but was below the 66.5% margin rate reported during the third quarter of 2022.
Management Commentary
We again displayed the cash flow power of our model as we reduced our debt levels by $10 million during the third quarter of 2023 and by over 75% since the beginning of the year. This was made possible by the steps weve taken to effectively drive our business and reduce inventory levels despite facing tough macro-economic conditions. Rising interest rates and lower housing turnover challenge our industry and we believe these factors contributed to lower levels of traffic and comparable store sales in our business during the third quarter. While we anticipate the macro headwinds will persist in the near term, we remain confident in the steps were taking to position the Company for long-term success. - Cabell Lolmaugh, CEO
Capital Structure and Liquidity
Since the beginning of the year, TTSH has repaid $35.4 million of borrowings on its line of credit, reducing its debt balance to $10.0 million as of September 30, 2023. Cash and cash equivalents increased sequentially from the second quarter of 2023 by $1.8 million and since the beginning of the year by $10.4 million to $16.4 million on September 30, 2023.
Non-GAAP Information
Adjusted EBITDA for the third quarter of 2023 was $8.3 million compared with $12.2 million for the third quarter of 2022. The company's Pretax Return on Capital Employed was 12.4% for the trailing twelve months as of the end of the third quarter of 2023 compared to 16.8% for the trailing twelve months as of the end of the third quarter of 2022.
For more detailed financial information, please refer to the full earnings report.
Explore the complete 8-K earnings release (here) from Tile Shop Holdings Inc for further details.
This article first appeared on GuruFocus.
