272 Capital, LP Issues Letter to Board of Directors of TTSH

272 Capital, LP, a shareholder of Tile Shop Holdings, Inc. (OTCMKTS: TTSH), publicly released a letter it delivered to the Board of Directors of TTSH on October 27, 2020. The full text of the letter is included below.

To Members of the Board of Directors,

272 Capital, LP currently owns 660,306 shares of Tile Shop Holdings, Inc. (“TTSH” or the “Company”) and we are writing because we believe TTSH’s common stock shares (the “Shares”) are significantly undervalued. While we expect the Shares to appreciate as the Company reports improving financial performance during the remainder of 2020 and all of 2021, we believe TTSH’s Board of Directors (the “Board”) can also take action to significantly increase shareholder value in the near-term. Specifically, we urge the Board to immediately relist the Shares of the Company on a major stock exchange.

We strongly believe that up-listing to a major exchange will result in a significantly higher share price for the shareholders and a lower cost of capital for the Company. This will be the case for a multitude of reasons including:

1. The environment for companies that are in the business of providing home building products, remodeling products and home furnishings has improved significantly over the last few months. Not only from a business perspective but from an investor interest perspective, which has resulted in multiple expansion and higher share prices across the board as the COVID driven “nesting” trend has taken hold.
   
   
   
2. Multiples of peer companies have expanded significantly. For example, two publicly traded peers, Floor & Decor Holdings, Inc. (NYSE: FND), and Lumber Liquidators Holdings, Inc. (NYSE: LL) have had their enterprise value, excluding operating leases to EBITDA multiples, expand by over 100% from 2018 levels as demonstrated in the table below. TTSH’s multiple on the other hand has slightly declined over the same time period. We believe this is simply a result of being listed on the OTC versus a major exchange.
   
   
   

   EV/EBITDA
   Company	Ticker	FY18	FY19	FY20E	Multiple Expan
   Floor & Decor Holdings	FND	14.0x	21.5x	34.4x	146%