Tile Shop Holdings, Inc. (NASDAQ:TTS) Q1 2019 Earnings Conference Call Transcript

Apr 30, 2019 • 09:00 am ET

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Tile Shop Holdings, Inc. (NASDAQ:TTS) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to the First Quarter 2019 Tile Shop Holdings Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call will be recorded.

I would now like to introduce your host for today's conference Mr. Ken Cooper with Investor Relations. You may begin.

Executive
Ken Cooper

Thank you, Catherine. Good morning to everyone on the call and welcome to the Tile Shop's first quarter earnings call. Joining me on today's call are Cabby Lolmaugh, our Chief Executive Officer; and Kirk Geadelmann, our Chief Financial Officer. Following our prepared remarks, the call will be opened for analyst questions.

Certain statements made during the call today constitute forward-looking statements made pursuant 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 a reconciliation of those non-GAAP financial measures.

With that, let me turn the call over to Cabby. Cabby?

Executive
Cabell Lolmaugh

Thanks, Ken, and good morning, everyone. While we continue to make good progress during the first quarter on many of our strategic initiatives, this progress was overshadowed by continued weakness in traffic trends in the quarter. During the quarter, we were able to complete all of the unfinished work outstanding for our 2018 strategic initiatives.

We also went live with two new systems in January, including our new ERP system on January 1 and our new website platform in mid-January. We believe this ERP upgrade gives us the ability to expand our business nationwide over the next 10 years and target 400 stores as our long-term opportunity. I can not be more proud of our store teams, our distribution center teams and our team here in the Plymouth, Minnesota office for how they handle these significant system upgrades.

New systems do typically present some unique challenges and, in our case, this had a negative impact on our traffic, customer experience and sales during the quarter. Initially, we experienced issues with our POS system functionality immediately after conversion on January 1. While most of these issues were fixed in January, we began to encounter some additional problems particularly with system speed and performance as our business picked up seasonally. This impacted our customer checkout times in certain cases by a factor of up to 2 times longer.

Our pro customers, many of whom frequent to our stores multiple times per week, are generally accustomed to a