Tile Shop Holdings, Inc.

Good day and thank you for standing by. Welcome to the Q4 2024 Tile Shop Holdings, Inc. Earnings Conference Call. At this time, all participants are in a 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 your question, please press star 11 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, Investor Relations. Please go ahead.

Thank you. Good morning to everyone. Welcome to the Tile Shop's fourth quarter and full year earnings call. Joining me today are Kev Loma, our Chief Executive Officer, and Mark Davis, 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 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 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 for 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 Kath.

Thank you, Ken. Good morning, everyone, and thank you for joining us today for an update on our business. Our financial results this quarter reflect the continued challenges facing our industry. While I'm encouraged by the sequential improvement in our comparable store sales from the third quarter, the fact remains that we continue to battle through a particularly difficult housing backdrop throughout the quarter. Leading indicators, such as existing home sales levels, remain near historic lows. Although the near term remains uncertain, given the changing political landscape and how new policies will affect tariffs, consumer sentiment, jobs, and other factors that have an impact on demand for home improvement projects, we remain optimistic that we'll eventually see recovery in housing turnover and an increase in demand for remodeling activities. During 2024, we took decisive actions to respond to challenging market conditions. This included closing one of our distribution centers, reducing staffing levels at our corporate office, and closing our trading company office located in China. We ended the year with no debt and $21 million of cash on the balance sheet. This keeps us in a strong position to navigate the current challenges facing our organization. In 2025, we intend to be very selective with any incremental investments and pursue initiatives to right-size the expense structure for our business. Given this sentiment, we do not currently plan to open any new stores in 2025. We also anticipate closing two unprofitable stores in 2025, which will bring our store count to 140 by the end of the year. During the fourth quarter, we continue to see improvement in sales volumes of our superior product line. As a reminder, we relaunched our own private label superior line of installation products this past June, seeking to, one, generate more opportunities to sell tile to professional customers who develop a preference for using our high-quality, cost-efficient superior products, and, two, support ticket averages by improving attachment rates of installation products. While we continue to battle year-over-year declines in tile volume sold, we saw growth in superior volume sold during the second half of 2024. This provides us with an important tailwind that we will look to build on as we move through 2025. We've also continued to make headway in our initiative to expand our selection of entry-level competitively priced products. We believe this expansion of our assortment will help attract a wider spectrum of customers seeking to complete a remodel project, particularly those customers seeking to complete a smaller remodel project on a budget. We also believe the additional selection of entry-level price products strengthens our competitive position with pros. I was pleased to see the improvement in year-over-year sales of entry-level opening price point products and even more encouraged by our ability to grow our average order value during the quarter given the success we're enjoying in this area. We still have more products landing in the first quarter and believe our assortment is in great position as we head into the 2025 spring selling season. In closing, We recognize the challenges facing our industry and proactively taking measures to respond. We remain committed to curating the best assortment of tile products in the industry, giving our customers the ability to design a space that differentiates their home, and providing exceptional service to all customers who visit our stores. We believe this strategy reinforces our value propositions and positions us well for our customers in 2025. With that, I'll now hand the call over to Mark.