Q4 2020 Tile Shop Holdings Inc Earnings Call
Ladies and gentlemen, thank you for standing by and walk on to the fourth quarter 'twenty 'twenty Total shop Holdings, Inc. Earnings Conference call at this time, all participants on and listen on.
The mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press. The Star then the one key on you touched on telephone.
Please be advised that today's conference maybe recorded if you look on offer assistance. Please press Star then zero.
I would now like to turn the conference over to your Speaker today Mark Davis. Please go ahead Sir.
Thank you Olivia.
Good morning, everyone and welcome to the tile shop fourth quarter earnings calls and joining.
Joining me today are Kabi Lama, our Chief Executive Officer, and Nancy Day, Mattia, our Chief Financial Officer.
Statements made during our call today constitute forward looking statements made pursuant to and within the meaning of the safe Harbor provision and private Securities Litigation Reform Act from 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.
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 measurement. Please see our earnings release for a reconciliation of those non-GAAP financial measures, which has also been posted to our company website with that let me now turn the call over to Kathy Kathy.
Kathy.
Thanks Mark.
Everyone and thank you for joining us today and for an update on our business and a review of our financial results.
We ended 2020 on a positive note our fourth quarter results continued to show progress. However, we still have room to improve.
Our sales increased three eight per cent to $81 6 million during the fourth quarter of 2020.
Sales at comparable stores increased three 3%, primarily due to an improvement in customer conversion.
Well, the overall sales growth and comparable store sales growth improved sequentially from the third quarter.
The improvement is largely tied to and improving traffic trend we've seen over the last quarter, but our traffic numbers are still down year over year.
And in some regards this isn't a surprise because we believe that many of our customers are limiting the number of store trips during the pandemic.
In addition, there and certain decisions, we have made to reduce our expense structure, both from a tactical perspective and in light of the pandemic that have had a negative impact on our traffic. For example, we have been operating most of our stores that reduced hours since April of 'twenty, and 'twenty, including all of our stores being closed on Sundays.
This decision was made for a number of different reasons, including the ability to optimize staffing levels at our stores.
It has been a key catalysts that contributed to a $12 4 million reduction and our SG&A expenses collectively for the second half of 2020 when compared to 2019.
During this period, our net income increased by $8 9 million from a net loss of $5 6 million. During the second half of 2019 to net income of $3 3 million during the second half of 2020.
Additionally, our adjusted EBITDA increased by $8 5 million or 64% to $22 million during the second half of 2020.
We are pleased with the dramatic improvement and profitability. Despite the headwinds this presented to growing traffic and sales.
During the fourth quarter, we performed a test and wanted to evening hours back to select stores, we were very deliberate with these changes and intentionally stagger. These days our stores remained open during the evening across the market.
This helped to ensure our customers always had an option to visit a store and the evening that is nearby in those markets.
The test proved to be beneficial change and we were able to and corporate evening hours and many of our stores by the end of the fourth quarter.
And we're able to make these adjustments with minimal changes and our staffing levels, thereby keeping our costs down.
During the first quarter of 'twenty 'twenty, one we are starting to open select stores on Sunday, we are increasing our staffing levels. When we decided to open a store on a Sunday.
Now like many other retailers and our supply chain has been affected by COVID-19 during.
During the third quarter of 2020, we started experiencing elevated levels of back orders stemming from delays and replenishment from certain international tile suppliers do.
During the fourth quarter, we continued to experience similar challenges and this did have an adverse impact on our sales.
And we're working closely with our network of suppliers to secure delivery of backward and product.
At the beginning of 2020, we had three key priorities.
Focus retail execution growing sales with our professional customers and disciplined expense management.
While COVID-19 had a significant impact on our business, we were able to achieve many of these goals underlying our priorities that ultimately generated the requisite cash for us to fully pay off our debt during the fourth quarter.
We now have significant flexibility as a debt free retailer with a financial model that and our view is built to generate substantial operating cash flow.
As we move into 2020, one we plan to focus on initiatives that are aimed at driving revenue growth and leveraging our expense structure.
We believe there's significant opportunity to drive sales growth within our existing portfolio of stores and accordingly, our key priorities for 2020 one include.
Focusing on retail execution and.
Enhancing our customers online experience and refining our purchasing and distribution processes.
With respect to our first priority, we believe our ability to grow revenue and profit within our existing stores is dependent on our ability to improve execution at store level.
We have made significant strides over the past year, and many areas, including increasing the number of pros and rolled and our loyalty program, improving our customer delivery collection rates and reducing our discounting.
While this progress is encouraging we continue to see opportunities for meaningful improvement.
For example, we believe we have an opportunity to leverage our technology investments to enhance the way we log customer interactions trigger on follow up calls and monitor activity to ensure we are proactively communicating with our customers.
We have identified several opportunities like this to improve the way, we execute inner stores and I believe continuing to focus on retail execution will be a key catalyst to grow revenue.
Our second priority is to enhance our customers online experience.
We aspire to provide the best service and our industry to every customer who walks through our doors and we have the same high standards for when our customers visit our website.
Now more than ever our customers start their journey online to seek inspiration way options and choose a partner they will work with.
We have identified a number of opportunities to enhance our customers online experience and better integrate their online and in store shopping experience.
For example, we recently launched our tile visualize her that gives our customers the ability to create a room online simulate different tile options and their design save their project and solicit advice from one of our talented design experts.
I believe the steps, we're taking to enhance our website are foundational to driving improvements in traffic and sales and in future periods.
Our final priority for 'twenty, one 'twenty 'twenty, one is to refine our purchasing and distribution processes.
As I discussed earlier, we're currently working with our suppliers to address elevated levels of back orders and.
And we appreciate that much of this was out of the control of our suppliers as they dealt with government shutdowns and reduced hours due to the pandemic, but we have to eliminate out of stocks as quickly as possible.
Additionally, we have identified opportunities to rebalance inventory more efficiently between our distribution centers to reduce the level of stock outages at each location.
We continue to evaluate our assortment and ensure we source products on the leading edge of current design trends, while maintaining targeted gross margin rates across all of our product categories.
Now before I turn the call over to Nancy.
And to reiterate that despite a challenging 2020.
I believe our entire employee base rose to the occasion, particularly our team members and our stores.
Thank you to our entire organization as well as our vendors suppliers and customers.
Now on the theme for 2020, one as focus we expect to increase our sales and our existing portfolio of stores, while maintaining the strong expense management controls.
I'll now turn the call over to Nancy who will take you through some of the financial details and.
Nancy.
Thanks, Kathy and good morning, everyone. As Kathy mentioned, we were pleased with our fourth quarter results net sales increased $3 million from $3 eight per cent from $78 6 million gallons during the fourth quarter of 2000 $19 million to $81.6 million during the fourth quarter, 2020 sales at comparable store.
And from three three per cent to increase and sales at comparable stores was largely driven by an improvement and customer conversion our comparable store sales from from sequentially from the third quarter due to improvement in traffic trends.
However, our traffic numbers and comparable stores are still down year over year due in part shows and reduced store hours. Additionally, product shortages were a headwind during the fourth quarter of 'twenty 'twenty four.
For the full year net sales decreased $15 $3 million on $4 five per cent from $344 million and 2019 to $325 $1 million during 2020.
It sounds like comparable stores decreased by 5.6 per cent decrease and sales was largely due to the onset of COVID-19, and it resulted in a significant decrease in store traffic levels, particularly during the second quarter of 2020.
Well traffic levels and improve throughout the balance on a year the combination of reduced hours and product shortages also had an adverse impact on ourselves plus profit during the fourth quarter of 2020 was $55 $9 million and increased by $2.1 million or three 9% compared to the fourth quarter of <unk>.
And 19, our gross margin was 68.5% 10 basis points higher and the fourth quarter of 2019, and 60 basis points better than our gross margin rate reported during the third quarter of 2020 to.
The improvement on our gross margin rate and the fourth quarter compared to the prior year was primarily due to reduced inventory write downs and better pricing. These factors were partially offset by an increase and customer delivery next.
For the full year, we generated 200 and from $21.5 million of gross profit our gross.
Margin rate decreased 130 basis points on <unk>.
$9 four per cent during 2019 to $68 one per cent in 2020 did decrease and gross margin was primarily driven by an increase and customer delivery mix and <unk> and 'twenty 'twenty. Following the onset of COVID-19, and higher levels of inventory write downs and connection with routine product transition.
Our selling general and administration costs decreased by $5 million from $58 $2 million during the fourth quarter of 2000 $19 million to $53.2 million and the fourth quarter of 2020.
The decrease and SG&A from the fourth quarter of last year. It was due to a reduced hours, which contributed $1.5 million reduction and compensation and benefit expenses.
Additionally, a $1 4 million decrease and depreciation expense and 1.2 million dollar decrease and professional fees contributed to improvement and S T and I expenses year over here.
For the full year, selling general and administrative expenses decreased by $22.3 million to $215 $1 million.
Hey, Chris was largely due to lower levels of compensation and benefits stemming from the head count reduction following the onset of COVID-19 as well.
All of those lower variable expenses and lower advertising expenses.
We ended the year with 142 stores, which is no change from the beginning of the year.
We're pleased with our profitability metrics during the quarter and year net income from the fourth quarter was $1 $4 million and fully diluted earnings per share was 30 cents per.
For the full year and net income was $6 million and fully diluted earnings per share. It was 12 cents adjusted EBITDA increased $5 $7 million and $5 $1 million during the fourth quarter of 2019 to $10 $8 million during the fourth quarter of 2020.
Adjusted EBITDA margin was 13.3 per cent for the fourth quarter of 'twenty, and 'twenty, which was a 680 basis point improvement compared to the fourth quarter of 2019.
Full year, adjusted EBITDA was $40 million and increase of $5 $1 million or <unk> 15 per cent compared to adjusted EBITDA reported in 2019.
The adjusted EBITDA margin for the year was 12, 3%.
210 basis point improvement compared to 2019.
Turning to our balance sheet, we ended the year with $96 million of cash and no debt inventory.
Inventory at the end of the here, a total of $74 $3 million and increased slightly from the third quarter cash.
And I've shared our three priorities and 2021 each of which are focused on improving revenues generated by stores and our current store portfolio. Accordingly, we anticipate capital expenditures of between 12 million to $15 million during 2021.
Oh, and one new store and relocate one store the one store opened in Wayne New Jersey on February 19th.
And all of 15 to 20 stores on.
Information technology projects tied to our strategic objectives.
And as new products and enhance the presentation on training products.
And maintain and distribution centers and are on trial and sleep well.
We also anticipate and increase in inventory during 'twenty 'twenty, one and intend to main event towards the low $90 million.
Before closing I'd like to provide a brief update on our open process to possibly resist our common stock with Nasdaq.
Previously announced on March 1st 'twenty 'twenty, one after receiving the recommendation of the special Committee of our board of directors and evaluating the potential benefits cost burdens and processes associated with re listing the company stock with NASDAQ.
And honestly voted in favor of authorizing us to apply to reverse the company stock with NASDAQ and we have submitted our application and working diligently to respond to any questions posed by representatives from NASDAQ, it's hanging on or.
Minor stockholders and the others are considering trading and our security that there can be no assurance that NASDAQ will approve our listing application.
Due to the ongoing nature of this Oakland process will not be answering any questions about the company's decision to apply to re list with NASDAQ and our call this morning and.
In closing, we have a great foundation, and our 'twenty 'twenty, one priorities head on and with no debt, we have great flexibility and balance sheet strength.
With that let me Kathy and I are happy to take any questions.
Thank you, ladies and gentlemen to ask a question you will need to press. The Star then the one key on your Touchtone telephone to withdraw your question, what's the pound key.
And Bob while we compile the Q&A roster.
Again, the star one to ask a question.
And I was first question coming from the line of David Campbell with Commonwealth Management. Your line is open.
Good morning.
David Cana came in right.
Right.
Thanks for taking my questions. The first one is for the quarter.
Much revenue.
I'm sorry.
What what could you quantify the amount of orders that you received.
Deposit score that you were not able to ship because you were out of stocks and I believe I forgot exactly how you categorize that book in Q3. It was a few million Bucks I I count that as contributory to the same store sales number. So if you could help me to understand that I appreciate that.
Hey, David It's cab a great question and yes, it did roll into the fourth quarter and.
You know it is primarily it was about the same when looking at the challenges we had and in our supply chain with our vendors and it's you know it's not unique and are and you just the tile shop and its within our industry and a lot of home improvement I think we can all agree trying to shop for anything. These days is tough, but it was primarily around the same number of couple of million dollars that.
Impacted our our our back orders during the quarter.
Okay. Thank you and then the second part of my question is the investments that you're making.
On the on line.
In regards to the online experience and virtualization can you.
Provide a little more.
Detail on the timeframe for that being rolled out.
Absolutely we've already rolled out some like what the visualize her and we're working on a couple of different enhancements to really increase the ability to identify customers increase and enhance the ability to engage with customers to really see what customers are into and with the tile shop, and our assortment and how we can get them through.
The funnel.
They're ongoing and its monthly we're adding things I mean weekly really if you check on our website youre going to see new enhancements continually through the year.
Okay, and then final question and rigs.
Cards to the tests that you ran with adding hours.
And then sunday's could you could you give us a little more detail.
Let's call it the.
Return on invested labor hour, there's such a thing.
Give us a little bit more color. So you understand kind of what the effect was.
Sure absolutely well, it's a balance as you know when when Covid hit and we had to reduce our headcounts and the field. It was quite the balance to maintain profitability and be open the hours, we needed for our customers and so when we started adding hours back throughout the week evening hours, we wanted to do that with the existing staff and we worked on and unique.
Scheduling through the different markets and we watched traffic counts, we analyze the data for orders during hours placed and closed and we saw the benefit there I I'm not going on you know give you.
On a percentage change in and orders placed or deals closed, but we did see the impact it had to allow retail customers the opportunity to come in after work and as we saw that grow we continued that that test I would say across the chain. So every market and always open later.
During the week with Sunday hours, we're very strategic each.
Store is unique and its community and some stores are going to benefit a lot more being open on Sundays and others. So we had to make sure that we tested it with the existing staff and if we had to add staff. We did now you have to remember when opening hours or opening another day during the week on a Sunday night and when are you having to hire more.
More people more associates and the stores now you're going to have to hire more people and the distribution centers now youre going to have to add more trucks to the fleet or more deliveries using whatever shipping we're using for that market. So it's a quite and quite a bit of added expense and we want and make sure that and aligns with with our strategy and profitability.
And metrics.
Right now we have quite a few stores open on Sunday and we're watching it closely.
Okay.
You know what I'm going to actually go back on my word and I think there was one other thing that I.
And I wanted to know.
And being that you've paid off all of your debt, how does management and the board feel about potentially buying back the stock you know being that you're going to generate quite a bit of free cash flow going forward.
And you know just for the heck of it if you could.
Comment on.
With me alignment of your of your employees have have there been any revisions there.
You know with.
The improved performance.
You know have.
Have you taken a look at.
On a comp plans and making sure that your employees are happy and that there are line based on the company's performance that we've already achieved and future going forward.
Yeah, absolutely I'll take the employee piece and then I'll.
And it over to Nancy to talk about the revenue generation going into 2020, one and so employees, yes, we definitely review comp plans and we have a very strong employee base right now who saw a lot more customers due to the reduction in head count and so it was a it was a good year for our employees and their morale.
Hi.
And they they battled through I'm very proud of them, we were able to add to our leadership team, our CIO and Christopher Davis, who has really brought some.
Some great insight and some refreshing new ideas to our team and so for the leadership ranks. He's new employees are good and comp change yet on retail.
And mission retail, we do evaluate comp every year. So we did it this year and we have a very happy employee base and Nancy I'll, let you take the revenue question there.
Yeah, Thanks, Cathy and thanks, David for the question. Yeah, we were very focused on paying off our debt and 'twenty 'twenty and we're really pleased that we achieved that goal.
So we think that that's really going to position us extremely well and will provide us a great flexibility and our future as we discussed and are prepared remarks, we've earmarked $12 million to $15 million to invest and store remodel and things.
Like technology.
And one day and our distribution fleet with.
We will continue to monitor our cash flow mission, and we will evaluate our capital allocation strategy and so it was a year and keep in mind that we're still very early and a year and you know there's something.
Something to be said for generating free cash, but we do have to generate the cash so certainly more to come on that but we are continuing to evaluate our capital allocation strategy as we move through the year.
Okay, and now I'm really pushing that going overboard, but could you speak to the momentum that you saw in Q4, turning to a positive same store sales number in fact continued and door accelerated at all with.
The additional hours that you added and the tests in Q1.
To date.
Yeah, David we were excited and Q4 too you know year over year, what we were seeing and our stores and with our customers and I can't really speak to Q1, we don't do that and you'll hear all about it and when we released Q1 and our next call.
Alright, well, thank you for the time and answering my questions and best of.
Block.
You guys execute on your plans for 2021.
Thanks, David.
And our next question coming from the line up.
And like day, one Martin.
And Halfmoon and capital your line is open.
Yes.
Good morning Bill.
Building on David's question about the visualize your you've developed.
Developed for online application how are you applying that we're adopting that and as well in stores and I know, it's become more of a convention and among some of your peers.
I guess the legacy vignettes that are quite costly and.
Also and need to be refreshed as trends evolve, but how you know how is that playing out with those remodels and how are you thinking about if you wouldn't mind addressing.
And that's a great question I wish I had this tool for 15 years, and I worked and the stores and it was always sketching and I had colored pencils and all these things and now I look and I'm like how spoiled or these guys and the stores that they can actually pull up. This this tool and we can change the colors of the cabinets the.
Countertops put and the tile change the different layouts of the tile and we're getting a lot of positive feedback from our from our field. We're seeing increased usage week over week and customers are bringing in their own that they're printing out at home and you're right vignettes are costly and but that's what's really set us apart for many years and.
Having this tool allows us to do a virtual vignette for each customer and we can switch out the tiles and and really give them. The idea of what is going to look like and their homes. So we're really excited about this tool and the adoption rate has taken off so yeah, you hit the nail on the head there.
Gotcha and these chip.
And remodeled you slated for this year.
That would be one vignette overhauls or that the application and the technology, how does that affect growth.
Yeah, when we analyze stores and look at doing Remodels and there's a lot of things that go into the equation and tenure of the store disco material. That's sitting in the vignettes and then we have a.
Certain way of approaching it we can do full remodels, we can do scrapes, we can do where we leave the cabinets and just update the paint and the tile and Theres a lot of different ways. We approach a remodel and we're adding a lot more space and stores now for design tables and for areas, where our customers to actually rollout to blueprint as I say instead of having all of.
And yet so we're opening up the space a little bit more and some stores are refreshing.
Again, we don't have to do full store remodels to add a refreshed look so we look at each store under a microscope look at where we need to.
Invest and well a line on that and sign off and move forward and so theres a few underway as we speak.
And I can't say, one one quick.
Sorry go ahead.
No just just to add to that and are you were asking for some very specific details we're looking to refresh.
Probably 15 to 20 stores this share and Cabot's point it isn't evaluation process right, but typically when we're talking about refreshing and updating some of the older than yet and that really excites us because it allows us to display new design trends and it also allows us to showcase.
Some of that beautiful new product, that's going to be a rising.
Gotcha. Thank you thanks for that color and then quick one you guys are and.
No that balance sheet and as mentioned generating cash flow is there any thought about increasing the store openings and one in new Jersey, but it sounds like now and on further plan to open this year.
Retail lease terms and boxes available.
More attractive pricing terms and perhaps historically that then.
And what is your thought there in terms of expansion store unit count was yeah.
Great question again, you know as we generate the cash flow and what we wanted to his first obtain or 'twenty 'twenty, one objectives and fund all of those and then look at where the market is look at real estate do we want to grow again, yes is it in our immediate plans and 'twenty 'twenty, one and know what we want to do is focus.
And in the prepared remarks focus build the reserve make good decisions going forward, let data really guide us on when and where so not in 2020 one as of right now.
Yeah.
Okay. Thank you.
That's all on it.
Thanks Art.
Now from I listen gentlemen, and to ask a question. Please press star one on <unk>.
Next question coming from the line up can now and that's all with Montana Advisors. Your line is open.
Hey, Cabbie and Nancy Congrats on a good quarter.
Hold on.
Quickly if you guys could give a rough estimate on the.
One time uplift cost to NASDAQ as well as what you've modeled and for China.
Kind of going forward and your cost structure being on a set of larger exchange.
Yeah, I'll kick that over to Nancy.
Yes.
Yeah. So as we stated in our prepared remarks, we're not going to be taking any questions about our listing status today, but certainly some of that information you can find on our prior 8-K filings.
Sure and then kind of tell you on to David's question about you know you guys start to see generating a significant amount of cash and the debts been paid off.
Just a suggestion to the board and management and the stock is obviously, you know undervalued here and assuming everything goes as planned the uplifts.
And my suggestion would be why not consider a large self tender before you guys get you know some of these indexes and and mutual funds to buy it and before you guys uplift so.
Just a suggestion and pass along but a job well done and congratulation and best.
And thank you very much.
Our next question coming from the line on John Hollander, with Chesapeake and Pfizer Your line is open.
Hi, everyone. On this is on holiday I'm, a little bit due to the story. So I just had a few basic questions for you. One is how much does it cost to build a store.
John It's a great question for someone new to the story I absolutely its range over the last 10 years on the footprint and historically way back and the day. It was 1.5 and we got it down to 800, but typically it's right around on a million bucks to build out a store.
Okay and.
For that store.
What type of returns and how do you analyze the return on that.
Again, there is it's really different through each market each store, how they ramp up and through the years that number has changed and I'm not going to speak to current trends are what we're hoping for and Wayne New Jersey at this point.
Okay.
My next question is just to think through it.
Impact.
And then we've had slightly increases and mortgage rates and how your business responds and what percent would you think is renovations versus new construction, you know versus new sales. How do you just think through that calculus of your from your customer demand.
Yeah, John it's great were primarily a remodel business and custom homes.
New construction, we get some of it but it's not our primary customer, which really has benefited the tile shop through tough times and the last 20 years the recession when no one can buy a house, they Stockholm and remodeled their own homes, and we did very well during a very difficult time.
So when when Remodels high the tile shop always has done pretty well and so we are very how do I say.
Where.
We're strong when it comes to expense control and that's our primary objective and when it comes to tough times or interest rates creep up we will be fine through those times.
Okay.
Thank you that's helpful and could you comment just a little bit on just business trends through out 2020.
And what's incredible is that you know your numbers your top line and when you look through it over the book.
A year, you're flat with <unk>.
And last quarter, obviously Q2 was down in the March number was quite high at $94 million and could you just comment on on how business trended over 2020.
Yeah, I mean, what everyone needs to remember, we're a fashion business right people think tile and they don't think fashion, but what we see and the market today with people there and we're looking at their homes a different way, it's not just a utilitarian space to throw hard surface down. They wanted they wanted to make sure that their homes speak about them and and.
And then how it how they want to represent themselves and so its fashion and it's on trend and we invested heavily in this area and we saw that resonate with our customers we did see an.
And increase in almost all segments and when it comes to what customers are actually bigger tiles more patterns more color. It's not so much the the old beige and white anymore. So you have to make sure you get in front of the customer with creative content inspiration. So when you heard and our prepared remarks, we're doing a better job of that in our.
And website content and some of our new advertising initiatives going forward, it's really speaking to the customer and making sure we have what they want but when you're thinking about trends, they're still buying natural stone theres still by and ceramic and porcelain mosaics, it's it's exciting to wear.
And the fashion is going within our industry and it makes it a lot more fun.
But the demand is good.
Okay, and just building on that point, who determines what they're buying is that like a contract and the handling of the tile installed or is the actual customer coming into the store.
It's a good question the customers come to the store the customers make that decision. We can do selections sheets quotes and then what we do is we work with the contractor to make sure. The measurements the setting materials everything is is correct and that way the contractor can either pick it up where we can deliver it to the job site, but the customer is the primary driver now.
We also focus very hard on the pros because if a customer is going to be thinking about a project a remodel or new construction first thing and they're gonna do is.
Get inspiration online, but then they have to find that pro what is this going to cost right and that probably is going to direct them to a local shop to do their selections and that's why we really want to be that destination for all pro customers. We've really added a lot of.
Skus to our back shelf and setting materials that enticing that pro customer to make the tile shop their destination and our pro loyalty program has really grown with the promos. This past year, we're pretty excited with the results there as well so the tile shop has to focus more not more but on both segments.
We have to make sure we're aligned with the retail customer we can speak to the retail customer.
Be credible and trustworthy with design knowledge and with fashion knowledge, but then we also have to be able to speak to that pro we have to know current installation guidelines. We have to have the right products industry standard products that meet their standards because they have to warranty the work not us. So we have to make sure we have everything here for every <unk>.
Customer segment.
That's incredibly helpful. And then just my last question on that is there.
Impact at all from a shortage of pilot and contractors and have you seen any impact to that obviously, there is a share that materials and building products and.
We constantly hear in the community about just slow down on permitting and slow down on development.
Yeah, John it's it's industry wide.
And it's all trades, it's not just tile installers, it's electricians plumbers everywhere you look.
It's yeah, there is definitely a shortage and our industry, which drives the installation price higher so again, we focus on installation and videos.
Last as things to educate our customers if they want to get in the DIY market I believe that we will see a resurgence of DIY and the coming years due to virtual learning obviously, the pandemic forced a lot of people to work virtually and.
Theyre looking at projects online and maybe I can do it myself. So we have to be prepared for that and we always have been if you look at tile class. Our mind. It's me when I was a store manager and check out the video you'll learn a lot alright, and so it's a we got to make sure we have the content.
I've just got to talk about what that was.
And that was impressive to that point do you see your customers actually like happier with tile solves and movie doing.
Tyler you expect them to be doing like the people on staff.
I know people, who want tile will get tile, there's definitely a difference and that the customers and I wanted to appeal and stick and the customer that wants to ramic or a nice marble mosaic.
We offered Pal cutting and our starts we have what size setup. If they want a few pieces cut no problem. We we we sell wet sauce. So if they want to purchase the Westside and they can do that as well and we have little do it yourself on what size and someone can buy and bring home and knock on a project obviously, they're not meant for commercial installation, but we offer the tools necessary for <unk>.
Any customer to be able to get their project completed.
Okay. Thanks that was very helpful. I appreciate your time and <unk>.
Congrats on the quarter and just my last question and seasonality in the business I'm just looking at Q1 of 'twenty quarter, where you guys reported $94 million of revenue compare to your summer and I mean.
$70.
Yeah, absolutely theres seasonality.
Q1 is always typically has been strong for us over the last as long as I've been here our people have been stuck in their homes. Its tax return season. Its graduation season, a lot of people are looking to update certain aspects of their home after being stuck in at all here and.
We benefit from that absolutely it's dark.
Dog days of summer I'd call. It July everyone takes on vacations are outside we still you know it.
And as big of a swing as like electronics retailer, you know where its all Christmas week, we just don't see as strong of demand through the summer months, but then when kids go back to school, we that demand picks back up.
Okay. Thank you guys very much weird zone.
And thank you.
Yeah.
I'm showing no further questions.
I'll now turn the call back over to Mark Davis for any closing remarks.
Thank you for listening to our earnings conference call, we anticipate filing our form 10-K later today, we look forward to providing our next update in May and thank you for the interest and the tile shop and have a great day.
Ladies and gentlemen, and that doesn't go conference for today. Thank you for your participation you may now disconnect.
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