Tile Store Holdings, Inc. (NASDAQ:TTSH) Q2 2024 Earnings Convention Name August 8, 2024 9:00 AM ET
Firm Members
Cabell Lolmaugh – Chief Govt Officer
Mark Davis – Chief Monetary Officer
Ken Cooper – Investor Relations
Convention Name Members
Operator
Thanks for standing by. My identify is Max and I might be your convention operator for immediately. Presently, I want to welcome everybody to the Second Quarter 2024 Tile Store Holdings, Inc. Earnings Convention Name. All strains have been positioned on mute to forestall any background noise. After the speaker’s remarks, there might be a question-and-answer session. [Operator Instructions] Thanks.
Properly, I want to flip the decision over to Ken Cooper, Investor Relations. Please go forward.
Ken Cooper
Thanks and good morning to everybody. Welcome to the Tile Store’s second quarter earnings name. Becoming a member of me immediately are Cabell Lolmaugh, our Chief Govt Officer; and Mark Davis, our Chief Monetary Officer.
Sure statements made through the name immediately represent forward-looking statements made pursuant to and throughout the that means of the Secure Harbor provisions of the Non-public Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are topic to each recognized and unknown dangers and uncertainties that would trigger precise outcomes to vary materially from such statements. These dangers and uncertainties are described in our earnings press launch issued earlier and in our filings with the SEC. The forward-looking statements made immediately are as of the date of this name, and we don’t undertake any obligation to replace these forward-looking statements.
At this time’s name will even embody sure non-GAAP measurements. Please see our earnings launch for a reconciliation of these non-GAAP monetary measures, which has been additionally posted on our firm web site.
With that, let me flip the decision over to Cab.
Cabell Lolmaugh
Thanks, Ken. Good morning, everybody, and thanks for becoming a member of us immediately for an replace on our enterprise. I am pleased with our workforce’s execution through the second quarter, which resulted in sequential enchancment and comparable retailer gross sales. We did this regardless of continued softness in current residence gross sales tendencies, which has created challenges for a lot of throughout the house enchancment business and contributed to decrease ranges of site visitors in our shops.
Whereas exterior headwinds persist, I am inspired by the progress we now have made on a number of key initiatives. First, we rolled out our enhanced line of personal label set up merchandise offered beneath the Superior model identify through the second quarter. This line contains merchandise resembling thinsets and levelers which might be utilized by each professional and retail clients in just about each sort of tile mission. Over the previous 12 months, we now have made important strides advancing the efficiency of the Superior line.
After finishing the steps to enhance the product high quality, we invested time coaching our gross sales groups and holding occasions for our execs to provide everybody the chance to work with our new formulation. It is necessary to notice that our Superior initiative can be a part of our technique to deepen {our relationships} with our skilled clients. As I famous earlier, execs use set up merchandise in just about each tile mission they full. We’re seeking to get a much bigger piece of this enterprise.
We imagine steps we now have taken to enhance product high quality mixed with our capability to supply this line at a aggressive value level has us ready to broaden our penetration into this necessary buyer section because it pertains to tile set up merchandise. Over time, we imagine this may create further cross-selling alternatives from our tile assortment and additional strengthen {our relationships} with our professional clients. We have additionally made important headway constructing our assortment of entry-level, competitively priced merchandise.
We imagine the growth of entry-level priced merchandise will entice extra center market clients looking for to finish smaller tasks on a price range. Moreover, we imagine our expanded assortment strengthens our aggressive place with execs looking for to finish cost-effective tasks for his or her finish clients. To this point, gross sales of entry-level merchandise are monitoring according to our objectives and we anticipate constructing on our success within the second half of the 12 months.
Turning our consideration to our web site, the investments made to-date in our e-commerce capabilities have helped us develop on-line orders by over 25% through the second quarter of 2024 when in comparison with the identical interval in 2023. We have continued to see a rise in each site visitors and conversion charges on our website and imagine we now have a protracted runway for continued development.
With that, I will now hand the decision over to Mark.
Mark Davis
Thanks, Cab. Good morning, everybody. Second quarter gross sales at comparable shops decreased by 6.9% in comparison with the second quarter of 2023 because of decrease ranges of retailer site visitors.
That stated, comparable retailer gross sales when in comparison with final quarter noticed a 330 foundation level enchancment. Whereas we had a better evaluate and benefited from the timing shift of Easter, this end result wouldn’t have been attainable with out the robust execution of our gross sales groups given the headwinds going through our business.
Our gross margin price through the second quarter elevated to 66%, which represents a 20 foundation level enchancment from the primary quarter and a 180-basis level enhance when in comparison with the second quarter of 2023.
As we have outlined in current quarters, worldwide freight charges have fallen and we now have been capable of efficiently safe merchandise supplied in our assortment at cheaper price factors, which helped scale back our stock prices.
Second quarter SG&A bills of $58.5 million had been $2.9 million greater than our second quarter SG&A bills in 2023. The rise in SG&A expense was partially because of a $1.3 million enhance in bonus expense that was primarily attributable to a launch of sure bonus and long-term incentive accruals through the second quarter of 2023 that was not repeated within the second quarter of 2024.
Moreover, occupancy prices elevated by $700,000 because of a rise in hire expense related to leases that had been prolonged over the past 12 months. IT-related bills elevated by $700,000 because of a rise in software program licensing prices and advertising and marketing bills elevated by $400,000 because of a rise in digital promoting bills.
These will increase had been partially offset by a $900,000 lower in depreciation expense and a $700,000 lower in variable compensation bills. In the course of the quarter, we recorded $900,000 of asset impairment costs associated to the write-down of sure retailer belongings.
Turning our consideration to steadiness sheet and money circulate data, we ended the quarter with $25.3 million of money and no financial institution debt. We generated $23.5 million of working money circulate as of June 30, 2024. We imagine we’re effectively positioned to navigate the challenges of the present setting with an awesome workforce, robust steadiness sheet, and the enhancements we’re making to serve our clients.
With that, Cab and I are blissful to take any questions.
Query-and-Reply Session
Operator
Ken Cooper
Thanks for listening to our earnings convention name. We anticipate submitting our Kind 10-Q later immediately. Thanks on your curiosity within the Tile Store and have an awesome day.
Operator
This concludes immediately’s convention name. Chances are you’ll now disconnect.
