Tile Shop Holdings, Inc.

Welcome to the Cow Shop Earnings Conference Call. At this time, all participants are in 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ken Cooper, Head of Investor Relations.

Thank you, and good morning to everyone. Welcome to the Tile Shop's first quarter earnings call. Joining me today are Kat Lomal, Chief Executive Officer, and Mark Davis, 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 of 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 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 for a reconciliation of those non-GAAP financial measures, which has also been posted on our company website. With that, let me turn the call over to Cap.

Thank you, Ken. Good morning, everyone, and thank you for joining us today for an update on our business. Our first quarter results showcased the cash flow generating power of our business model despite challenging macro conditions, which had an adverse impact on our top line results. Throughout the first quarter, we observed a weakness in existing home sales, which continues to present headwinds across the home improvement industry. These challenges extend to the hard surface flooring category and contributed to a decrease in traffic in our stores during the first quarter of 2024 when compared to the same period in the prior year. The decrease in traffic and the impact this had on our comparable store sales was tempered in part due to the strong relationships we have with our network of professional customers. Our pro loyalty program, which includes tier discounts for our pros and cash rebates for referred sales, has proven to be a powerful benefit to pros who choose to grow their business with us. We believe we have the most robust discount and rebate program for pros in the industry, and it is a significant differentiator for us. We also carry products that are curated specifically with a professional customer in mind. During the second quarter, we were excited to relaunch our private label superior line of back shelf products. This includes products such as thin sets and levelers that we manufacture in-house. Over the last year, we have enhanced our formulas and made significant improvements in product quality and performance. We believe our new lines perform at levels that are competitive with some of the top brands in the industry, and the best part is that we'll be able to offer these products to our pros at exceptional price points. In addition to the enhancements we're making to our back shelf products, we're also focused on introducing competitively priced tile products to appeal to customers seeking to complete a smaller remodel project on a budget. A number of the tile products we have sourced recently are targeted to this type of middle market customer. These products are just starting to land at our distribution centers and work their way into our showrooms. Additionally, we plan to expand our offering of high-quality competitively priced LVT products. Our e-commerce sales increased by over 25% during the first quarter of 2024 when compared to the same period in 2023. Now, to give some context of size, sales through our e-commerce channel are now about the size of one of our larger stores. We continue to invest in our e-commerce capabilities and believe we have a long runway for growth. In closing... We intend to maintain our focus on executing our strategy to enhance our relationship with professional customers, expand our assortment of products that cater to middle market customers, and invest in our e-commerce capabilities. We believe that this positions us well in the near term to navigate the challenges that affect our industry and for continued growth as macro pressures start to ease. Before carrying it over to Mark, I'd like to thank Carla for all that she did in her tenure with the Pal Shop. She was a great partner to me and our organization on the back end of the pandemic. We wish her and her family well. I'm excited to partner with Mark Davis as he assumes the role of CFO for our company. He has been fantastic to work with over the past decade, but especially over the past five years while I've been CEO. Mark's knowledge of our business, attention to detail, and command of our finance organization have made for a smooth transition. With that, allow me to call over to Mark.