Tile Shop Holdings, Inc. (NASDAQ:TTS) (the “Company”), a specialty
retailer of manufactured and natural stone tiles, setting and
maintenance materials, and related accessories, announced that earlier
today, the Company was made aware of a report which alleges that its
historical financial statements may require restatement along with other
accounting irregularities. The Company adamantly denies these
allegations and believes that the financial statements are properly
stated and its business practices are appropriate.
The Company negotiates all inventory purchases directly with each
vendor. As is common practice, certain vendors utilize an export trading
company, such as Beijing Pingxiu, for sales to U.S. based companies.
Other Chinese vendors maintain their own export licensing authority. The
Company has been made aware of changes of the ownership of Beijing
Pingxiu which were not previously disclosed to the Company. As a result
of this disclosure, The Company has suspended its relationship with this
entity.
The Company intends to thoroughly investigate this relationship. The
Company believes that any issues associated with the ownership of
Beijing Pingxiu, or the utilization of other export trading companies,
have had no material impact on the economics of inventory purchases.
Further, the report alleges that the Company’s vendors are compensated
in some form through stock transfers. The Company can confirm that there
have been no issuances or transfers of stock from the Company or inside
shareholders to any vendors or to Beijing Pingxiu.
The Company also today reaffirmed the guidance of net sales ranging from
$227 million to $237 million, and adjusted EBITDA of $60 million along
with the opening of 20 new stores for the year ending December 31, 2013
provided on October 30, 2013.
About Tile Shop Holdings and The Tile Shop
The Tile Shop is a specialty retailer of manufactured and natural stone
tiles, setting and maintenance materials, and related accessories in the
United States. The Tile Shop offers a wide selection of products,
attractive prices, and exceptional customer service in an extensive
showroom setting. The Tile Shop operates 82 stores in 27 states, with an
average size of 23,000 square feet. The Tile Shop also sells its
products on its website, www.tileshop.com.
Non-GAAP Financial Measures
We calculate Adjusted EBITDA by taking net income calculated in
accordance with GAAP, and adding interest expense, income taxes,
depreciation and amortization, non-cash change in warrant liability,
non-recurring equity related transaction costs, unusual items, deferred
compensation expense, and stock-based compensation expense. Adjusted
EBITDA margin is equal to Adjusted EBITDA divided by net sales.
Pro-forma non-GAAP net income is determined by adding back the non-cash
change in warrant liability, and non-recurring warrant related
transaction costs to income before taxes calculated in accordance with
GAAP and subtracting from this an estimate for income taxes as if the
Company had been a “C” Corporation for all periods.
We believe that these non-GAAP measures of financial results provide
useful information to management and investors regarding certain
financial and business trends relating to our financial condition and
results of operations. Our management uses these non-GAAP measures to
compare our performance to that of prior periods for trend analyses, for
purposes of determining management incentive compensation, and for
budgeting and planning purposes. These measures are used in monthly
financial reports prepared for management and our board of directors. We
believe that the use of these non-GAAP financial measures provide an
additional tool for investors to use in evaluating ongoing operating
results and trends and in comparing our financial measures with other
specialty retailers, many of which present similar non-GAAP financial
measures to investors.
Our management does not consider these non-GAAP measures in isolation or
as an alternative to financial measures determined in accordance with
GAAP. The principal limitations of these non-GAAP financial measures are
that they exclude significant expenses and income that are required by
GAAP to be recorded in our consolidated financial statements. In
addition, they are subject to inherent limitations as they reflect the
exercise of judgments by management about which expenses and income are
excluded or included in determining these non-GAAP financial measures.
In order to compensate for these limitations, management presents
non-GAAP financial measures in connection with GAAP results. We urge
investors to review the reconciliation of our non-GAAP financial
measures to the comparable GAAP financial measures and not to rely on
any single financial measure to evaluate our business.
FORWARD LOOKING STATEMENTS
This press release includes “forward looking statements” within the
meaning of the “safe harbor” provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements may
be identified by the use of words such as “anticipate”, “believe”,
“expect”, “estimate”, “plan”, “outlook”, and “project” and other similar
expressions that predict or indicate future events or trends or that are
not statements of historical matters. These forward looking statements
include any statements regarding the Company’s strategic and operational
plans, expected financial performance of new stores, and the benefits of
the Company’s operating model. Forward looking statements should not be
read as a guarantee of future performance or results, and will not
necessarily be accurate indications of the times at, or by, which such
performance or results will be achieved. Forward looking statements are
based on information available at the time those statements are made
and/or management’s good faith belief as of that time with respect to
future events, and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from those
expressed in or suggested by the forward looking statements, including
but not limited to unforeseen events that may affect the retail market
or the performance of the Company’s stores. The Company does not intend,
and undertakes no duty, to update this information to reflect future
events or circumstances. Investors are referred to the most recent
reports filed with the SEC by the Company.
Copyright Business Wire 2013