FORT WORTH, Texas, Aug. 7, 2014 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq: TLF ) today reported financial results for the second quarter of 2014. Consolidated net income for the quarter ended June 30, 2014 was $1.8 million compared to consolidated net income of $1.6 million for the second quarter of 2013, an increase of 8%. Fully diluted earnings per share for the quarter were $0.17, compared to $0.16 in the second quarter of last year. Total sales for the quarter ended June 30, 2014 were $19.7 million, up 4% from $19.0 million in the second quarter last year.
Consolidated sales for the six months ended June 30, 2014 were $39.5 million, up 3% from 2013's first half sales of $38.2 million. Consolidated net income for the first half of 2014 was up 13% to $3.6 million or $0.35 per fully-diluted share versus $3.2 million or $0.32 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $959,000 in the second quarter, a 9% improvement over last year's second quarter. Eighty stores comprised Tandy Leather's operations on June 30, 2014. For the first six months of 2014, Retail Leathercraft's sales increased $1.4 million, or 6%, over the first six months of 2013. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were down 4%, or $271,000, from the same quarter last year. For the first six months of 2014, Wholesale Leathercraft's sales were down $177,000, or 1%, compared to the same period in 2013. International Leathercraft, consisting of three stores located in the United Kingdom, Spain and Australia, reported a sales increase of 4%, or $42,000, compared to the second quarter of 2013. For the year, International Leathercraft's sales were up 8%, or $152,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 64.9%, up from 62.8% for the second quarter of 2013. For the first two quarters of this year, consolidated gross profit margin was 64.5%, increasing from last year's gross profit margin of 62.4%. Consolidated operating expenses rose approximately 6% and 5% for the quarter and the year, respectively, or $549,000 in the current quarter and $988,000 for the first six months over the same periods a year ago. For the second quarter, the significant increases in expenses occurred in employee compensation, advertising and marketing, depreciation, and store rent and utilities. For the year, expenses increases occurred in employee compensation, travel, depreciation, advertising and marketing, and store rent. As a percentage of sales, consolidated operating margin improved for the quarter to 13.5% compared to 12.4% last year's second quarter. On a year-to-date basis, consolidated operating margin increased from 13% last year to 14.2% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, "We are pleased with our second quarter results overall. Our gross profit margins for the quarter and the year are the highest in our history. That is the result of customer mix (retail versus wholesale) and product mix (sales of leather versus non-leather products). Our inventory investment is higher than normal for this time of the year. That is because we began the build-up for the fourth quarter earlier this year and we have had the opportunity to make some unexpected purchases of some of our stock leathers at very aggressive pricing. That will continue to support our strong gross profit margins as we move through the rest of the year."
Chief Financial Officer and Treasurer, Shannon Greene, added, "Operating expenses have increased slightly faster than sales so far this year – primarily in three areas: employee compensation, advertising and marketing, and store rents and utilities. Employee compensation is up due to an increase in employee headcount at the stores and higher store manager pay based on store profit. Our advertising and marketing expenses historically tend to be higher in the first half of the year and the increase in rent and utilities is the result of the store relocations into larger space, rather than an increase in rental rates themselves. We will continue to monitor expenses closely, always looking for ways to reduce costs where we can without affecting the customer experience."
Tandy Leather Factory, Inc., ( http://www.tandyleatherfactory.com ), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 80 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and three combination wholesale/retail stores located in the United Kingdom, Australia, and Spain. Its common stock trades on the Nasdaq with the symbol "TLF". To be included on Tandy Leather Factory's email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0 .
This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| Selected financial data: | ||||
| Quarter Ended 06/30/14 | Quarter Ended 06/30/13 | |||
| Sales | Operating Income | Sales | Operating Income | |
| Wholesale Leathercraft | $6,457,467 | $1,106,942 | $6,728,586 | $883,533 |
| Retail Leathercraft | 12,201,624 | 1,427,913 | 11,242,080 | 1,377,105 |
| International Leathercraft | 1,044,516 | 121,422 | 1,002,347 | 85,426 |
| Total Operations | $19,703,607 | $2,656,277 | $18,973,013 | $2,346,064 |
| Six Months Ended 06/30/14 | Six Months Ended 06/30/13 | |||
| Sales | Operating Income | Sales | Operating Income | |
| Wholesale Leathercraft | $13,281,435 | $2,479,579 | $13,458,320 | $1,896,498 |
| Retail Leathercraft | 24,157,978 | 2,900,616 | 22,801,941 | 2,891,944 |
| International Leathercraft | 2,102,660 | 242,745 | 1,950,579 | 178,482 |
| Total Operations | $39,542,073 | $5,622,940 | $38,210,840 | $4,966,924 |
| Wholesale Leathercraft | Quarter Ended 06/30/14 | Quarter Ended 06/30/13 | ||
| # of stores | Sales | # of stores | Sales | |
| Same store sales | 29 | $6,451,664 | 29 | $6,347,666 |
| National account group | n/a | 5,803 | n/a | 380,920 |
| Total Sales – Wholesale Leathercraft | 29 | $6,457,467 | 29 | $6,728,586 |
| Wholesale Leathercraft | Six Months Ended 06/30/14 | Six Months Ended 06/30/13 | ||
| # of stores | Sales | # of stores | Sales | |
| Same store sales | 29 | $12,932,785 | 29 | $12,791,987 |
| National account group | n/a | 348,650 | n/a | 666,333 |
| Total Sales – Wholesale Leathercraft | 29 | $13,281,435 | 29 | $13,458,320 |
| Retail Leathercraft | Quarter Ended 06/30/14 | Quarter Ended 06/30/13 | ||
| # of stores | Sales | # of stores | Sales | |
| Same store sales | 76 | $11,811,841 | 76 | $11,077,281 |
| New store sales | 4 | 389,783 | -- | -- |
| Closed store sales | 2 | -- | 2 | 164,799 |
| Total Sales – Retail Leathercraft | 80 | $12,201,624 | 78 | $11,242,080 |
| Retail Leathercraft | Six Months Ended 06/30/14 | Six Months Ended 06/30/13 | ||
| # of stores | Sales | # of stores | Sales | |
| Same store sales | 76 | $23,421,926 | 76 | $22,471,947 |
| New store sales | 4 | 736,052 | -- | -- |
| Closed store sales | 2 | -- | 2 | 329,994 |
| Total Sales – Retail Leathercraft | 80 | $24,157,978 | 78 | $22,801,941 |
| International Leathercraft | Quarter Ended 06/30/14 | Quarter Ended 06/30/13 | ||
| # of stores | Sales | # of stores | Sales | |
| Same store sales | 3 | $1,044,516 | 3 | $1,002,347 |
| New store sales | -- | -- | -- | -- |
| Total Sales – Intl Leathercraft | 3 | $1,044,516 | 3 | $1,002,347 |
| International Leathercraft | Six Months Ended 06/30/14 | Six Months Ended 06/30/13 | ||
| # of stores | Sales | # of stores | Sales | |
| Same store sales | 3 | $2,102,660 | 3 | $1,950,579 |
| New store sales | -- | -- | -- | -- |
| Total Sales – Intl Leathercraft | 3 | $2,102,660 | 3 | $1,950,579 |
| Tandy Leather Factory, Inc. | ||
| Consolidated Balance Sheets | ||
| June 30, 2014 | December 31, 2013 | |
| (unaudited) | (audited) | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash | $7,402,534 | $11,082,679 |
| Accounts receivable-trade, net of allowance for doubtful accounts of $0 and $1,000 in 2014 and 2013, respectively | 796,106 | 762,405 |
| Inventory | 36,001,590 | 26,300,830 |
| Prepaid income taxes | 468,307 | -- |
| Deferred income taxes | 369,978 | 309,533 |
| Prepaid expenses | 1,277,871 | 1,609,644 |
| Other current assets | 350,232 | 478,593 |
| Total current assets | 46,666,618 | 40,543,684 |
| PROPERTY AND EQUIPMENT, at cost | 21,156,669 | 20,290,990 |
| Less accumulated depreciation and amortization | (6,484,259) | (5,863,280) |
| 14,672,410 | 14,427,710 | |
| GOODWILL | 981,527 | 981,985 |
| OTHER INTANGIBLES, net of accumulated amortization of $645,000 and $622,000 in 2014 and 2013, respectively | 80,582 | 103,228 |
| Other assets | 336,975 | 341,959 |
| $62,738,112 | $56,398,566 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable-trade | $2,055,912 | $1,884,637 |
| Accrued expenses and other liabilities | 6,697,117 | 5,808,882 |
| Dividend payable | 2,549,684 | -- |
| Income taxes payable | -- | 272,198 |
| Current maturities of long-term debt | 2,452,500 | 202,500 |
| Total current liabilities | 13,755,213 | 8,168,217 |
| DEFERRED INCOME TAXES | 1,129,589 | 1,212,557 |
| LONG-TERM DEBT, net of current maturities | 2,041,875 | 2,396,250 |
| COMMITMENTS AND CONTINGENCIES | ||
| STOCKHOLDERS' EQUITY: | ||
| Preferred stock, $0.10 par value; 20,000,000 shares authorized; none issued or outstanding; attributes to be determined on issuance | -- | -- |
| Common stock, $0.0024 par value; 25,000,000 shares authorized; 11,226,957 and 11,192,356 shares issued at 2014 and 2013; 10,233,334 and 10,198,733 shares outstanding at 2014 and 2013 | 26,945 | 26,862 |
| Paid-in capital | 5,921,889 | 5,892,907 |
| Retained earnings | 42,577,805 | 41,507,592 |
| Treasury stock at cost (993,623 shares at 2014 and 2013) | (2,894,068) | (2,894,068) |
| Accumulated other comprehensive income | 178,864 | 88,249 |
| Total stockholders' equity | 45,811,435 | 44,621,542 |
| $62,738,112 | $56,398,566 | |
| Tandy Leather Factory, Inc. | ||||
| Consolidated Statements of Income | ||||
| (Unaudited) | ||||
| For the Three and Six Months Ended June 30, 2014 and 2013 | ||||
| THREE MONTHS | SIX MONTHS | |||
| 2014 | 2013 | 2014 | 2013 | |
| NET SALES | $19,703,607 | $18,973,013 | $39,542,073 | $38,210,840 |
| COST OF SALES | 6,924,001 | 7,052,892 | 14,046,744 | 14,359,890 |
| Gross profit | 12,779,606 | 11,920,121 | 25,495,329 | 23,850,950 |
| OPERATING EXPENSES | 10,123,329 | 9,574,057 | 19,872,389 | 18,884,026 |
| INCOME FROM OPERATIONS | 2,656,277 | 2,346,064 | 5,622,940 | 4,966,924 |
| OTHER INCOME (EXPENSE): | ||||
| Interest expense | (44,855) | (51,544) | (90,683) | (107,638) |
| Other, net | 5,334 | 98,284 | 6,678 | 125,023 |
| Total other income (expense) | (39,521) | 46,740 | (84,005) | 17,385 |
| INCOME BEFORE INCOME TAXES | 2,616,756 | 2,392,804 | 5,538,935 | 4,984,309 |
| PROVISION FOR INCOME TAXES | 851,271 | 763,451 | 1,919,038 | 1,768,635 |
| NET INCOME | $1,765,485 | $1,629,353 | $3,619,897 | $3,215,674 |
| NET INCOME PER COMMON SHARE: | ||||
| Basic | $0.17 | $0.16 | $0.35 | $0.32 |
| Diluted | $0.17 | $0.16 | $0.35 | $0.32 |
| Weighted Average Number of Shares Outstanding: | ||||
| Basic | 10,198,733 | 10,167,649 | 10,198,733 | 10,165,060 |
| Diluted | 10,239,823 | 10,216,535 | 10,239,447 | 10,205,439 |
| Tandy Leather Factory, Inc. | ||
| Consolidated Statements of Cash Flows | ||
| (Unaudited) | ||
| For the Six Months Ended June 30, 2014 and 2013 | ||
| 2014 | 2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $3,619,897 | $3,215,674 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 715,920 | 562,710 |
| (Gain) Loss on disposal or abandonment of assets | (1,409) | 85,458 |
| Non-cash stock-based compensation | 29,065 | 11,686 |
| Deferred income taxes | (143,413) | 157,099 |
| Other | 84,854 | (328,000) |
| Net changes in assets and liabilities, net of effect of business acquisitions: | ||
| Accounts receivable-trade, net | (33,701) | (315,451) |
| Inventory | (9,700,760) | (1,635,238) |
| Income taxes | (740,505) | 24,484 |
| Prepaid expenses | 331,773 | (365,277) |
| Other current assets | 128,361 | (611,980) |
| Accounts payable-trade | 171,275 | 1,270,216 |
| Accrued expenses and other liabilities | 888,235 | 163,184 |
| Total adjustments | (8,270,305) | (981,109) |
| Net cash provided by (used in) operating activities | (4,650,408) | 2,234,565 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (949,082) | (1,962,700) |
| Proceeds from sale of assets | 18,736 | 515 |
| Decrease (increase) in other assets | 4,984 | 91 |
| Net cash used in investing activities | (925,362) | (1,962,094) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Net increase in revolving credit loan | 2,250,000 | -- |
| Payments on notes payable and long-term debt | (354,375) | (405,000) |
| Net cash provided by (used in) financing activities | 1,895,625 | (405,000) |
| NET DECREASE IN CASH | (3,680,145) | (132,529) |
| CASH, beginning of period | 11,082,679 | 7,705,182 |
| CASH, end of period | $7,402,534 | $7,572,653 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
| Interest paid during the period | $90,683 | $107,638 |
| Income tax paid during the period, net of (refunds) | $2,567,257 | $1,584,223 |
Shannon L. Greene, Tandy Leather Factory, Inc. (817) 872-3200 or Mark Gilbert, Magellan Fin, LLC (317) 867-2839 or
