Tile Shop Holdings, Inc.

Good day and thank you for standing by. Welcome to the Quarter 3, 2023 Tile Shop Holdings, Inc. Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw a question, please press star 11 again. I would now like to hand the conference over to your first speaker today, Mark Davis, Vice President of Investor Relations and Chief Accounting Officer. Please go ahead.

Thank you. Good morning to everyone and welcome to the Tile Shop's third quarter earnings call. Joining me today are Cab Loma, our Chief Executive Officer, and Carla Lunen, our Chief Financial Officer. Certain statements made during the call today constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued earlier and in our filings with the SEC. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements. Today's call will also include certain non-GAAP measurements. Please see our earnings release or a reconciliation of those non-GAAP financial measures, which has also been posted on our company website. With that, let me now turn the call over to Cab.

Thanks, Mark. Good morning, everyone, and thank you for joining us today for an update on our business. While the macro environment continues to present challenges, we continue to make changes to our assortment, expand services, and invest in e-commerce capabilities to help mitigate the impact on our business. As we have discussed previously, the challenging economic environment, exasperated by significantly higher interest rates, has created headwinds across our industry over the last year. These factors have contributed to lower levels of traffic in our stores, which negatively impacted our sales during the third quarter. Despite these challenges, I am pleased with the progress we have made implementing changes to adapt to the current environment. For example, we took steps to improve our offering to middle market end customers by adding new tile products to our assortment that look great, perform well, and are priced competitively. We also expanded our line of luxury vinyl tile products over the past few quarters that provide options for customers seeking to refresh their homes while making more economical choices. Additionally, we believe the services we offer in our stores are a key point of differentiation. We continue to invest in training and tools to ensure our associates are equipped with the latest design trends and installation techniques to help our customers. By taking these steps and pairing our offering with competitive financing options, we believe we are well positioned to appeal to both higher end and budget conscious customers. We continue to pursue opportunities to enhance our relationship with our professional customers. For example, our expanded assortment of competitively priced tile skews, combined with our luxury vinyl tile offerings, provide budget-friendly options for our pros to present to the homeowners they serve. Our pro market managers play a key role in cultivating relationships with professional customers and hosting in-store trainings with industry experts. The combination of these benefits, paired with our pro loyalty program, Extensive assortment and exceptional service help us strengthen our relationship with this customer segment. I am pleased with our Goal 4 plan and am confident that our value proposition remains as strong as ever to both retail and professional customers. Turning to our assortment, we've made nice progress against our goals in 2023. Around this time last year, we incurred unprecedented cost increases across our supply chain due to a variety of factors. We've worked with both existing and new suppliers to source our tiles at lower costs while maintaining, or in some cases, exceeding our high-quality standards. We believe our vast assortment of over 6,000 tile products is another key point of differentiation when compared to big box, regional, and local players with a more limited tile assortment. Our supplier base is global and diversified, which we believe is a competitive advantage. Our e-commerce initiatives continue to gain traction. The steps we've taken to invest in digital advertising, improving our sampling program, and enhance the online shopping experience helped us grow our e-commerce orders by over 25% during the third quarter when compared to the same quarter in the prior year. I'm encouraged by the results we've seen to date and believe that the investments we're making in our website position us for continued e-commerce order growth. Earlier this summer, we opened a new store in Colorado Springs. The store is off to a nice start, and I'm pleased with the early results. At this time, I do not anticipate any additional new store openings in 2023. We completed a project to relocate one of our stores near Milwaukee, Wisconsin last month. We also made the decision to close one store during the fourth quarter, which will bring the store count to 142 at the end of the year. I remain enthusiastic about the prospects for our business. While we expect macro headwinds to persist in the near term, I believe we have a great team that is doing an excellent job navigating the challenges presented in the current environment. I'd like to thank the entire Tile Shop team for their hard work and dedication. With that, I'll now hand the call over to Carla.