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The Tile Shop Reports First Quarter 2016 RESULTS; RAISES FULL YEAR OUTLOOK

The following excerpt is from the company's SEC filing.

% Comparable Store Sales Growth

% Gross Margin

% Operating Income Growth

% Adjusted EBITDA Margin and

% Adjusted EBITDA Growth

Diluted Earnings per Share of $0.

, growth of

Non-GAAP Dil

uted Earnings per Share of $0.14

MINNEAPOLIS – April 19, 2016 – Tile Shop Holdings, Inc. (NASDAQ: TTS) (the “Company”), a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories, today announced results for its first quarter ended March 31, 2016.

Net sales grew 16.1% to $84.7 million for the first quarter ended March 31, 2016 compared with $73.0 million for the first quarter ended March 31, 2015. The $11.7 million increase in net sales was due to a comparable store sales increase of 13.2%, or $9.6 million in the quarter and incremental net sales of $2.1 million from stores not included in the comparable store base.

“We are very pleased to report a tremendous start to 2016” said Chris Homeister, CEO. “Our continued efforts against our key initiatives concluded with another quarter of very strong results and significant momentum for our business. The continuing strength of our business has led us to increase our full year outlook for 2016. We are eager to build upon our first quarter accomplishments as we seek to deliver significant growth in sales, operating margins and earnings per share throughout the remainder of 2016 and beyond.”

Gross margin for the first quarter of 2016 was 70.5% compared with 69.9% for the first quarter of 2015. The increased gross margin rate was driven primarily by improved margin on customer delivery revenue and inventory control process improvements.

Selling, general and administrative costs for the first quarter of 2016 were $47.9 million compared with $43.8 million for the first quarter of 2015. The $4.1 million increase was primarily driven by variable expenses associated with revenue growth and the costs associated with opening and operating new stores.

The Company opened one new store in the first quarter of 2016 in Buford, GA, the Company’s third store in the Atlanta, GA market. The Company noted it also opened its sixth store in the greater Philadelphia, PA market in Deptford, NJ on April 16, 2016. As of today, the Company operates 116 stores in 31 states.

Non-GAAP Information

The Company presents non-GAAP net income and Adjusted EBITDA to provide useful information to investors regarding the Company’s normalized operating performance.

On a non-GAAP basis, net income for the first quarter of 2016 was $7.2 million compared with $4.0 million for the first quarter of 2015. Non-GAAP diluted earnings per share for the first quarter of 2016 were $0.14 compared with $0.08 for the first quarter of 2015, representing 75.0% growth. See the “Non-GAAP Income Reconciliation” table and the “Non-GAAP Financial Measures” section below for a reconciliation of GAAP to non-GAAP income.

Three Months Ended

($ in thousands, except share and per share data)

Pretax

Net of Tax

Per Share Amounts

GAAP income

11,217

6,758

6,421

3,659

Special charges:

Litigation and investigation costs

Non-GAAP income

11,914

7,178

6,935

3,951

Adjusted EBITDA for the first quarter of 2016 was $19.3 million compared with $14.7 million for the first quarter of 2015, representing 31.3% growth. See the “Adjusted EBITDA Reconciliation” table and the “Non-GAAP Financial Measures” section below for a reconciliation of GAAP net income to Adjusted EBITDA.

($ in thousands)

(Unaudited)

Three months ended

Interest expense

Income taxes

Depreciation and amortization

Stock-based compensation

19,284

14,692

Financial Guidance

The Company is providing updated expectations for full year 2016 based on past performance, anticipated new store openings and current economic conditions.

For the full year ending December 31, 2016 the Company expects:

($ in millions...


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