FORT WORTH, Texas, Nov. 11, 2015 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ: TLF ) today reported financial results for the third quarter of 2015. Consolidated net income for the quarter ended September 30, 2015 was $1.1 million compared to consolidated net income of $1.6 million for the third quarter of 2014, a decrease of 32%. Fully diluted earnings per share for the quarter were $0.11, compared to $0.16 in the third quarter of last year. Total sales for the quarter ended September 30, 2015 were $19.4 million, down $61,000 or 0.3% from $19.4 million in the third quarter last year.
Consolidated sales for the nine months ended September 30, 2015 were $59.9 million, up 2% from 2014’s comparable period sales of $58.9 million. Consolidated net income for the first three quarters of 2015 was down 23% to $4.1 million or $0.40 per fully-diluted share versus $5.2 million or $0.51 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $260,000 in the third quarter, a 2% improvement over last year's third quarter. Eighty-two stores comprised Tandy Leather's operations on September 30, 2015. For the first nine months of 2015, Retail Leathercraft’s sales increased $1.7 million, or 5%, over the first nine months of 2014. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores, were down 3%, or $180,000, from the same quarter last year. For the first nine months of 2015, Wholesale Leathercraft’s sales were down $342,000, or 2%, compared to the same period in 2014. For both the quarter and the year, the sales decline for this segment was due to the closing of one store and the elimination of sales to the National Account customer group in 2014. International Leathercraft, consisting of three stores located in the United Kingdom, Spain and Australia, reported a sales decrease of 13%, or $141,000, compared to the third quarter of 2014. For the year, International Leathercraft’s sales were down 14%, or $443,000, over the same period last year. For both the quarter and the year, the sales decline for this segment was due to the negative impact of the change in currency exchange rates in 2015 compared to 2014.
Consolidated gross profit margin for the current quarter was 61.1%, down from 62.7% for the third quarter of 2014. For the first three quarters of this year, consolidated gross profit margin was 62.1%, decreasing from last year's gross profit margin of 63.9%. Consolidated operating expenses rose approximately 3% for both the quarter and the year, or $255,000 in the current quarter and $1.1 million for the first nine months over the same periods a year ago. For the third quarter, the significant increases in expenses occurred in employee benefits, advertising and marketing, and other outside services. For the year, expenses increases occurred in advertising and marketing, store rent and utilities, and employee benefits, and depreciation. As a percentage of sales, consolidated operating margin declined for the quarter to 9.6% compared to 12.7% last year’s third quarter. On a year-to-date basis, consolidated operating margin decreased from 13.7% last year to 11% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, “Even though earnings were down significantly compared to last year’s third quarter, our results were in line with our internal targets. Our significant investment in inventory last year had a positive effect on sales. Further, our gross profit margin was supported by a number of special leather purchases last year. This year, our lower inventory level and the lack of those special purchases are having a negative impact on our sales and gross margin by comparison. However, we were not taken by surprise by our results.”
Chief Financial Officer and Treasurer, Shannon Greene, added, “In addition to our specific issues related to inventory and the impact they have had on our sales and gross margins this year, our assessment of business in general seems to suggest that things are getting tougher overall. Many of our small business customers are losing confidence to maintain their normal purchase levels because they are sensing a slowdown is coming in their businesses. We have talked all year about the negative impact of currency exchange rates on our foreign operations which is adding to the negative trends in our results. Our expenses are not too far out of line but we will continue to look for areas that can be trimmed without sacrificing the customer experience in our stores.”
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 28 Leather Factory stores, located in 18 states and 3 Canadian provinces, 80 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and four 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 09/30/15 | Quarter Ended 09/30/14 | ||||||||||||||
| Sales | Operating Income | Sales | Operating Income | ||||||||||||
| Wholesale Leathercraft | $ | 6,114,793 | $ | 682,461 | $ | 6,294,745 | $ | 1,000,329 | |||||||
| Retail Leathercraft | 12,328,599 | 1,122,222 | 12,068,832 | 1,270,884 | |||||||||||
| International Leathercraft | 912,545 | 55,068 | 1,053,657 | 185,714 | |||||||||||
| Total Operations | $ | 19,355,937 | $ | 1,859,751 | $ | 19,417,234 | $ | 2,456,927 | |||||||
| Nine Months Ended 09/30/15 | Nine Months Ended 09/30/14 | ||||||||||||||
| Sales | Operating Income | Sales | Operating Income | ||||||||||||
| Wholesale Leathercraft | $ | 19,234,375 | $ | 2,602,868 | $ | 19,576,180 | $ | 3,479,908 | |||||||
| Retail Leathercraft | 37,970,423 | 3,862,343 | 36,226,810 | 4,171,500 | |||||||||||
| International Leathercraft | 2,713,431 | 117,263 | 3,156,317 | 428,459 | |||||||||||
| Total Operations | $ | 59,918,229 | $ | 6,582,474 | $ | 58,959,307 | $ | 8,079,867 | |||||||
| Wholesale Leathercraft | Quarter Ended 09/30/15 | Quarter Ended 09/30/14 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 28 | $ | 6,114,793 | 28 | $ | 6,172,348 | |||
| Closed store sales | n/a | - | 1 | 122,397 | |||||
| Total Sales – Wholesale Leathercraft | 28 | $ | 6,114,793 | 29 | $ | 6,294,745 | |||
| Wholesale Leathercraft | Nine Months Ended 09/30/15 | Nine Months Ended 09/30/14 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 28 | $ | 19,234,375 | 28 | $ | 18,859,252 | |||
| Closed store sales | - | - | 1 | 368,278 | |||||
| National account group | n/a | - | n/a | 348,650 | |||||
| Total Sales – Wholesale Leathercraft | 29 | $ | 19,234,375 | 29 | $ | 19,576,180 | |||
| Retail Leathercraft | Quarter Ended 09/30/15 | Quarter Ended 09/30/14 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 80 | $ | 12,135,174 | 80 | $ | 12,068,832 | |||
| New store sales | 2 | 193,425 | - | - | |||||
| Total Sales – Retail Leathercraft | 82 | $ | 12,328,599 | 80 | $ | 12,068,832 | |||
| Retail Leathercraft | Nine Months Ended 09/30/15 | Nine Months Ended 09/30/14 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 76 | $ | 37,062,412 | 76 | $ | 36,001,323 | |||
| New store sales | 4 | 908,011 | 2 | 225,487 | |||||
| Total Sales – Retail Leathercraft | 80 | $ | 37,970,423 | 76 | $ | 33,930,587 | |||
| International Leathercraft | Quarter Ended 09/30/15 | Quarter Ended 09/30/14 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 3 | $ | 912,545 | 3 | $ | 1,053,657 | |||
| New store sales | - | - | - | - | |||||
| Total Sales – Intl Leathercraft | 3 | $ | 912,545 | 3 | $ | 1,053,657 | |||
| International Leathercraft | Nine Months Ended 09/30/15 | Nine Months Ended 09/30/14 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 3 | $ | 2,713,431 | 3 | $ | 3,156,317 | |||
| New store sales | - | - | - | - | |||||
| Total Sales – Intl Leathercraft | 3 | $ | 2,713,431 | 3 | $ | 3,156,317 | |||
| Tandy Leather Factory, Inc. | |||||||||||||
| Consolidated Balance Sheets | |||||||||||||
| September 30, 2015 (unaudited) | December 31, 2014 (audited) | ||||||||||||
| ASSETS | |||||||||||||
| CURRENT ASSETS: | |||||||||||||
| Cash | $ | 7,243,288 | $ | 10,636,530 | |||||||||
| Accounts receivable-trade, net of allowance for doubtful accounts | |||||||||||||
| of $1,492 and $395 in 2015 and 2014, respectively | 585,012 | 625,054 | |||||||||||
| Inventory | 35,058,012 | 32,875,492 | |||||||||||
| Prepaid income taxes | 868,582 | 336,828 | |||||||||||
| Deferred income taxes | 342,763 | 371,491 | |||||||||||
| Prepaid expenses | 1,659,052 | 1,348,652 | |||||||||||
| Other current assets | 249,089 | 157,758 | |||||||||||
| Total current assets | 46,005,798 | 46,351,805 | |||||||||||
| PROPERTY AND EQUIPMENT, at cost | 23,242,846 | 22,199,943 | |||||||||||
| Less accumulated depreciation and amortization | (7,971,654 | ) | (7,037,665 | ) | |||||||||
| 15,271,192 | 15,162,278 | ||||||||||||
| GOODWILL | 956,584 | 971,786 | |||||||||||
| OTHER INTANGIBLES, net of accumulated amortization of approximately | |||||||||||||
| $696,000 and $665,000 in 2015 and 2014, respectively | 34,025 | 58,026 | |||||||||||
| OTHER assets | 332,881 | 329,979 | |||||||||||
| TOTAL ASSETS | $ | 62,600,480 | $ | 62,873,874 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| CURRENT LIABILITIES: | |||||||||||||
| Accounts payable-trade | $ | 2,498,058 | $ | 1,255,218 | |||||||||
| Accrued expenses and other liabilities | 6,396,752 | 5,394,514 | |||||||||||
| Current maturities of long-term debt | - | 3,702,500 | |||||||||||
| Total current liabilities | 8,894,810 | 10,352,232 | |||||||||||
| DEFERRED INCOME TAXES | 1,361,631 | 1,458,005 | |||||||||||
| LONG-TERM DEBT, net of current maturities | 3,711,224 | 1,940,625 | |||||||||||
| 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; | |||||||||||||
| 11,275,641 and 11,239,157 shares issued at 2015 and 2014, respectively; | |||||||||||||
| 9,753,293 and 10,245,534 shares outstanding at 2015 and 2014, respectively | 27,062 | 26,984 | |||||||||||
| Paid-in capital | 6,129,736 | 6,013,325 | |||||||||||
| Retained earnings | 50,728,476 | 46,664,829 | |||||||||||
| Treasury stock at cost (1,522,348 shares at 2015; 993,623 shares at 2014) | (6,602,930 | ) | (2,894,068 | ) | |||||||||
| Accumulated other comprehensive income | (1,649,529 | ) | (688,058 | ) | |||||||||
| Total stockholders’ equity | 48,632,815 | 49,123,012 | |||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 62,600,480 | $ | 62,873,874 | |||||||||
| Tandy Leather Factory, Inc. | |||||||||||||||
| Consolidated Statements of Income | |||||||||||||||
| (Unaudited) | |||||||||||||||
| For the Three and Nine Months Ended September 30, 2015 and 2014 | |||||||||||||||
| THREE MONTHS | NINE MONTHS | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| NET SALES | $ | 19,355,937 | $ | 19,417,234 | $ | 59,918,229 | $ | 58,959,307 | |||||||
| COST OF SALES | 7,523,240 | 7,242,525 | 22,688,223 | 21,289,269 | |||||||||||
| Gross profit | 11,832,697 | 12,174,709 | 37,230,006 | 37,670,038 | |||||||||||
| OPERATING EXPENSES | 9,972,946 | 9,717,782 | 30,647,532 | 29,590,171 | |||||||||||
| INCOME FROM OPERATIONS | 1,859,751 | 2,456,927 | 6,582,474 | 8,079,867 | |||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||
| Interest expense | (228,235 | ) | (63,684 | ) | (307,160 | ) | (154,367 | ) | |||||||
| Other, net | 38,320 | 37,525 | 68,070 | 44,203 | |||||||||||
| Total other income (expense) | (189,915 | ) | (26,159 | ) | (239,090 | ) | (110,164 | ) | |||||||
| INCOME BEFORE INCOME TAXES | 1,669,836 | 2,430,768 | 6,343,384 | 7,969,703 | |||||||||||
| PROVISION FOR INCOME TAXES | 558,492 | 802,206 | 2,279,737 | 2,721,244 | |||||||||||
| NET INCOME | $ | 1,111,344 | $ | 1,628,562 | $ | 4,063,647 | $ | 5,248,459 | |||||||
| NET INCOME PER COMMON SHARE: | |||||||||||||||
| Basic | $ | 0.11 | $ | 0.16 | $ | 0.40 | $ | 0.51 | |||||||
| Diluted | $ | 0.11 | $ | 0.16 | $ | 0.40 | $ | 0.51 | |||||||
| Weighted Average Number of Shares Outstanding: | |||||||||||||||
| Basic | 10,175,650 | 10,203,711 | 10,200,590 | 10,200,411 | |||||||||||
| Diluted | 10,199,092 | 10,241,410 | 10,227,626 | 10,240,109 | |||||||||||
| Tandy Leather Factory, Inc. | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited) | |||||||||||
| For the Nine Months Ended September 30, 2015 and 2014 | |||||||||||
| 2015 | 2014 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 4,063,647 | $ | 5,248,459 | |||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 1,163,116 | 1,088,758 | |||||||||
| (Gain) loss on disposal or abandonment of assets | 25,782 | 8,603 | |||||||||
| Non-cash stock-based compensation | 106,569 | 48,441 | |||||||||
| Deferred income taxes | (67,646 | ) | (227,486 | ) | |||||||
| Foreign currency translation | (882,354 | ) | (606,442 | ) | |||||||
| Net changes in assets and liabilities: | |||||||||||
| Accounts receivable-trade, net | 40,042 | 60,403 | |||||||||
| Inventory | (2,182,520 | ) | (13,064,374 | ) | |||||||
| Prepaid expenses | (310,400 | ) | (11,683 | ) | |||||||
| Other current assets | (91,331 | ) | 380,013 | ||||||||
| Accounts payable-trade | 1,242,840 | 57,471 | |||||||||
| Accrued expenses and other liabilities | 1,002,238 | 131,224 | |||||||||
| Income taxes payable | (531,754 | ) | (735,527 | ) | |||||||
| Total adjustments | (485,418 | ) | (12,870,599 | ) | |||||||
| Net cash provided by (used in) operating activities | 3,578,229 | (7,622,140 | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (1,339,098 | ) | (1,719,465 | ) | |||||||
| Proceeds from sale of assets | 11,372 | 19,935 | |||||||||
| Purchase of intangible assets | (10,000 | ) | - | ||||||||
| (Increase) decrease in other assets | (2,902 | ) | 6,968 | ||||||||
| Net cash used in investing activities | (1,340,628 | ) | (1,692,562 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net (decrease) increase in revolving credit loans | (3,500,000 | ) | 6,000,000 | ||||||||
| Proceeds from notes payable and long-term debt | 3,711,224 | - | |||||||||
| Payment of dividend | - | (2,549,683 | ) | ||||||||
| Payments on notes payable and long-term debt | (2,143,125 | ) | (405,000 | ) | |||||||
| Repurchase of common stock (treasury stock) | (3,708,862 | ) | - | ||||||||
| Proceeds from issuance of common stock | 9,920 | 52,722 | |||||||||
| Net cash (used in) provided by financing activities | (5,630,843 | ) | 3,098,039 | ||||||||
| NET CHANGE IN CASH | (3,393,242 | ) | (6,216,663 | ) | |||||||
| CASH, beginning of period | 10,636,530 | 11,082,679 | |||||||||
| CASH, end of period | $ | 7,243,288 | $ | 4,866,016 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
| Interest paid during the period | $ | 307,160 | $ | 154,367 | |||||||
| Income tax paid during the period, net of (refunds) | $ | 2,883,552 | $ | 3,690,817 | |||||||
Contact: Shannon L. Greene, Tandy Leather Factory, Inc. (817) 872-3200 or shannon.greene@tandyleather.com Mark Gilbert, Magellan Fin, LLC (317) 867-2839 or MGilbert@MagellanFin.com
