FORT WORTH, Texas, Nov. 09, 2016 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ: TLF ) today reported financial results for the third quarter of 2016. Consolidated net income for the quarter ended September 30, 2016 was $1.0 million compared to $1.1 million for the third quarter of 2015, a decrease of 10%. Fully diluted earnings per share of $0.11 for the third quarter of 2016 was equal to that reported for last year’s third quarter. Total sales for the quarter ended September 30, 2016 were $18.6 million, down 4% from $19.4 million in the third quarter last year.
Consolidated sales for the nine months ended September 30, 2016 were $58.8 million, down 2% from 2015’s comparable period sales of $59.9 million. Consolidated net income for the first three quarters of 2016 increased 7% to $4.3 million or $0.46 per fully-diluted share versus $4.1 million or $0.40 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, decreased $209,000 in the third quarter, a 2% decline over last year's third quarter. Eighty-one stores comprised Tandy Leather's operations on September 30, 2016 compared to eighty-two stores at September 30, 2015. For the first nine months of 2016, Retail Leathercraft’s sales decreased $114,000, or 0.3%, from the first nine months of 2015. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores, decreased 8% or $489,000, from the same quarter last year. For the first nine months of 2016, Wholesale Leathercraft’s sales were down $1,047,000, or 5%, compared to the same period in 2015. International Leathercraft, consisting of four stores located outside of North America, reported a sales decrease of 3%, or $29,000, compared to the third quarter of 2015. For the year to date, International Leathercraft’s sales were up 3%, or $67,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 62.5%, compared to 61.1% for the third quarter of 2015. For the first three quarters of 2016, consolidated gross profit margin was 63.2%, improving from last year's gross profit margin of 62.1%. Consolidated operating expenses increased approximately 1% or $132,000 for the third quarter of 2016 compared to the comparable quarter in 2015, primarily due to higher employee compensation and benefits, rent and depreciation, offset by lower advertising and store relocation costs. For the year to date, consolidated operating expenses decreased 1% or $196,000, compared to the same period in 2015 with decreases occurring in employee compensation and benefits, advertising, and relocation expenses, offset by higher rent and depreciation. As a percentage of sales, consolidated operating margin decreased for the quarter to 8.3% compared to 9.6% in last year’s third quarter. On a year-to-date basis, consolidated operating margin increased from 11.0% last year to 11.5% in the current year.
Shannon L. Greene, Chief Executive Officer, commented, “While both sales and earnings this quarter were lower than last year’s third quarter, the results were not unexpected. Sales continue to be challenging as we have discussed all year, but our earnings are ahead of internal expectations. Said another way, we are achieving success in growing earnings in spite of weak sales. Despite the economic uncertainty, we are planning several new stores in markets that we believe will contribute favorably to our financial results over time.”
Mark Angus, President, added, “Compared to last year’s third quarter, although our sales were weaker, our gross profit margin improved. So we are doing the right thing to protect margins as we maneuver around the retail headwinds. Further, as we head into the Christmas shopping season, we are closely monitoring expenses to maximize earnings.”
Tandy Leather Factory, Inc., ( http://www.tandyleather.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 27 Leather Factory stores, located in 18 states and 3 Canadian provinces, 82 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 09/30/16 | Quarter Ended 09/30/15 | ||||||||||||||
| Sales | Operating Income | Sales | Operating Income | ||||||||||||
| Wholesale Leathercraft | $ | 5,625,427 | $ | 468,589 | $ | 6,114,793 | $ | 682,461 | |||||||
| Retail Leathercraft | 12,119,703 | 1,120,482 | 12,328,599 | 1,122,222 | |||||||||||
| International Leathercraft | 883,232 | (49,012 | ) | 912,545 | 55,068 | ||||||||||
| Total Operations | $ | 18,628,362 | $ | 1,540,059 | $ | 19,355,937 | $ | 1,859,751 | |||||||
| Nine Months Ended 09/30/16 | Nine Months Ended 09/30/15 | ||||||||||||||
| Sales | Operating Income | Sales | Operating Income | ||||||||||||
| Wholesale Leathercraft | $ | 18,187,330 | $ | 3,143,151 | $ | 19,234,375 | $ | 2,602,868 | |||||||
| Retail Leathercraft | 37,856,229 | 3,501,441 | 37,970,423 | 3,862,343 | |||||||||||
| International Leathercraft | 2,779,935 | 97,148 | 2,713,431 | 117,263 | |||||||||||
| Total Operations | $ | 58,823,494 | $ | 6,741,740 | $ | 59,918,229 | $ | 6,582,474 | |||||||
| Wholesale Leathercraft | Quarter Ended 09/30/16 | Quarter Ended 09/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 27 | $ | 5,625,427 | 27 | $ | 5,958,309 | |||
| Closed store sales | - | - | 1 | 156,484 | |||||
| Total Sales – Wholesale Leathercraft | 27 | $ | 5,625,427 | 28 | $ | 6,114,793 | |||
| Wholesale Leathercraft | Nine Months Ended 09/30/16 | Nine Months Ended 09/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 27 | $ | 17,998,925 | 27 | $ | 18,739,934 | |||
| Closed store sales | - | 188,405 | 1 | 494,441 | |||||
| Total Sales – Wholesale Leathercraft | 27 | $ | 18,187,330 | 28 | $ | 19,234,375 | |||
| Retail Leathercraft | Quarter Ended 09/30/16 | Quarter Ended 09/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 80 | $ | 11,836,141 | 80 | $ | 1,975,960 | |||
| New store sales | 1 | 283,562 | - | - | |||||
| Closed store sales | 2 | - | 2 | 352,639 | |||||
| Total Sales – Retail Leathercraft | 81 | $ | 12,119,703 | 82 | $ | 12,328,599 | |||
| Retail Leathercraft | Nine Months Ended 09/30/16 | Nine Months Ended 09/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 80 | $ | 36,864,480 | 80 | $ | 36,934,411 | |||
| New store sales | 1 | 622,336 | - | - | |||||
| Closed store sales | 2 | 369,413 | 2 | 1,036,012 | |||||
| Total Sales – Retail Leathercraft | 81 | $ | 37,856,229 | 82 | $ | 37,970,423 | |||
| International Leathercraft | Quarter Ended 09/30/16 | Quarter Ended 09/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 3 | $ | 749,161 | 3 | $ | 912,545 | |||
| New store sales | 1 | 134,071 | - | - | |||||
| Total Sales – Intl Leathercraft | 4 | $ | 883,232 | 3 | $ | 912,545 | |||
| International Leathercraft | Nine Months Ended 09/30/16 | Nine Months Ended 09/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 3 | $ | 2,346,662 | 3 | $ | 2,713,431 | |||
| New store sales | 1 | 433,273 | - | - | |||||
| Total Sales – Intl Leathercraft | 4 | $ | 2,779,935 | 3 | $ | 2,713,431 | |||
| Tandy Leather Factory, Inc. Consolidated Balance Sheets | |||||||||||||
| September 30, 2016 (unaudited) | December 31, 2015 (audited) | ||||||||||||
| ASSETS | |||||||||||||
| CURRENT ASSETS: | |||||||||||||
| Cash | $ | 11,448,638 | $ | 10,962,615 | |||||||||
| Accounts receivable-trade, net of allowance for doubtful accounts | |||||||||||||
| of $75 and $1,746 in 2016 and 2015, respectively | 513,591 | 553,206 | |||||||||||
| Inventory | 37,122,297 | 33,584,539 | |||||||||||
| Prepaid income taxes | 1,237,306 | 549,277 | |||||||||||
| Deferred income taxes | 359,802 | 326,830 | |||||||||||
| Prepaid expenses | 1,852,230 | 1,514,887 | |||||||||||
| Other current assets | 16,261 | 70,197 | |||||||||||
| Total current assets | 52,550,125 | 47,561,551 | |||||||||||
| PROPERTY AND EQUIPMENT, at cost | 25,394,850 | 23,992,208 | |||||||||||
| Less accumulated depreciation and amortization | (9,460,904 | ) | (8,297,155 | ) | |||||||||
| 15,933,946 | 15,695,053 | ||||||||||||
| GOODWILL | 958,630 | 953,356 | |||||||||||
| OTHER INTANGIBLES, net of accumulated amortization of approximately | |||||||||||||
| $708,000 and $702,000 in 2016 and 2015, respectively | 21,284 | 27,282 | |||||||||||
| OTHER assets | 334,778 | 329,684 | |||||||||||
| TOTAL ASSETS | $ | 69,798,763 | $ | 64,566,926 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| CURRENT LIABILITIES: | |||||||||||||
| Accounts payable-trade | $ | 1,981,879 | $ | 1,983,376 | |||||||||
| Accrued expenses and other liabilities | 6,528,527 | 6,045,552 | |||||||||||
| Current maturities of capital lease obligations | 72,686 | 72,686 | |||||||||||
| Current maturities of long-term debt | 153,578 | 231,952 | |||||||||||
| Total current liabilities | 8,736,670 | 8,333,566 | |||||||||||
| DEFERRED INCOME TAXES | 1,753,698 | 1,702,515 | |||||||||||
| LONG-TERM DEBT, net of current maturities | 7,218,151 | 3,479,273 | |||||||||||
| 72,687 | 79,396 | ||||||||||||
| 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; | |||||||||||||
| 11,309,326 and 11,275,641 shares issued at 2016 and 2015, respectively; | |||||||||||||
| 9,266,496 and 9,753,293 shares outstanding at 2016 and 2015, respectively | 27,142 | 27,062 | |||||||||||
| Paid-in capital | 6,324,995 | 6,168,489 | |||||||||||
| Retained earnings | 57,409,496 | 53,067,234 | |||||||||||
| Treasury stock at cost (2,042,830 shares at 2016; 1,522,348 shares at 2015) | (10,278,584 | ) | (6,602,930 | ) | |||||||||
| Accumulated other comprehensive income | (1,465,492 | ) | (1,687,679 | ) | |||||||||
| Total stockholders’ equity | 52,017,557 | 50,972,176 | |||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 69,798,763 | $ | 64,566,926 | |||||||||
| Tandy Leather Factory, Inc. Consolidated Statements of Income (Unaudited) For the Three and Nine Months Ended September 30, 2016 and 2015 | |||||||||||||||
| THREE MONTHS | NINE MONTHS | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| NET SALES | $ | 18,628,362 | $ | 19,355,937 | $ | 58,823,494 | $ | 59,918,229 | |||||||
| COST OF SALES | 6,983,491 | 7,523,240 | 21,630,087 | 22,688,223 | |||||||||||
| Gross profit | 11,644,871 | 11,832,697 | 37,193,407 | 37,230,006 | |||||||||||
| OPERATING EXPENSES | 10,104,812 | 9,972,946 | 30,451,667 | 30,647,532 | |||||||||||
| INCOME FROM OPERATIONS | 1,540,059 | 1,859,751 | 6,741,740 | 6,582,474 | |||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||
| Interest expense | (43,493 | ) | (228,235 | ) | (108,949 | ) | (307,160 | ) | |||||||
| Other, net | 3,570 | 38,320 | 26,965 | 68,070 | |||||||||||
| Total other income (expense) | (39,923 | ) | (189,915 | ) | (81,984 | ) | (239,090 | ) | |||||||
| INCOME BEFORE INCOME TAXES | 1,500,136 | 1,669,836 | 6,659,756 | 6,343,384 | |||||||||||
| PROVISION FOR INCOME TAXES | 499,786 | 558,492 | 2,317,494 | 2,279,737 | |||||||||||
| NET INCOME | $ | 1,000,350 | $ | 1,111,344 | $ | 4,342,262 | $ | 4,063,647 | |||||||
| NET INCOME PER COMMON SHARE: | |||||||||||||||
| Basic | $ | 0.11 | $ | 0.11 | $ | 0.46 | $ | 0.40 | |||||||
| Diluted | $ | 0.11 | $ | 0.11 | $ | 0.46 | $ | 0.40 | |||||||
| Weighted Average Number of Shares Outstanding: | |||||||||||||||
| Basic | 9,188,483 | 10,175,650 | 9,341,364 | 10,199,841 | |||||||||||
| Diluted | 9,206,382 | 10,199,092 | 9,359,405 | 10,226,877 | |||||||||||
| Tandy Leather Factory, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2016 and 2015 | |||||||||||
| 2016 | 2015 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 4,342,262 | $ | 4,063,647 | |||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 1,273,078 | 1,163,116 | |||||||||
| (Gain) loss on disposal or abandonment of assets | (6,306 | ) | 25,782 | ||||||||
| Non-cash stock-based compensation | 156,586 | 106,569 | |||||||||
| Deferred income taxes | 18,211 | (67,646 | ) | ||||||||
| Foreign currency translation | 236,139 | (882,354 | ) | ||||||||
| Net changes in assets and liabilities: | |||||||||||
| Accounts receivable-trade, net | 39,615 | 40,042 | |||||||||
| Inventory | (3,537,758 | ) | (2,182,520 | ) | |||||||
| Prepaid expenses | (492,234 | ) | (310,400 | ) | |||||||
| Other current assets | 53,936 | (91,331 | ) | ||||||||
| Accounts payable-trade | (1,497 | ) | 1,242,840 | ||||||||
| Accrued expenses and other liabilities | 482,975 | 1,002,238 | |||||||||
| Income taxes payable | (688,029 | ) | (531,754 | ) | |||||||
| Total adjustments | (2,465,284 | ) | (485,418 | ) | |||||||
| Net cash provided by operating activities | 1,876,978 | 3,578,229 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (1,385,431 | ) | (1,339,098 | ) | |||||||
| Proceeds from sale of assets | 26,703 | 11,372 | |||||||||
| Purchase of intangible assets | - | (10,000 | ) | ||||||||
| (Increase) in other assets | (10,368 | ) | (2,902 | ) | |||||||
| Net cash used in investing activities | (1,369,096 | ) | (1,340,628 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net (decrease) in revolving credit loans | - | (3,500,000 | ) | ||||||||
| Proceeds from notes payable and long-term debt | 3,660,505 | 3,711,224 | |||||||||
| Payments on notes payable and long-term debt | - | (2,143,125 | ) | ||||||||
| Payments on capital lease obligations | (6,710 | ) | - | ||||||||
| Repurchase of common stock (treasury stock) | (3,675,654 | ) | (3,708,862 | ) | |||||||
| Proceeds from issuance of common stock | - | 9,920 | |||||||||
| Net cash used in financing activities | (21,859 | ) | (5,630,843 | ) | |||||||
| NET CHANGE IN CASH | 486,023 | (3,393,242 | ) | ||||||||
| CASH, beginning of period | 10,962,615 | 10,636,530 | |||||||||
| CASH, end of period | $ | 11,448,638 | $ | 7,243,288 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
| Interest paid during the period | $ | 108,949 | $ | 307,160 | |||||||
| Income tax paid during the period | $ | 3,005,523 | $ | 2,883,552 | |||||||
Shannon L. Greene Tandy Leather Factory, Inc. (817) 872-3200 sgreene@tandyleather.com Mark Gilbert Magellan Fin, LLC (317) 867-2839 MGilbert@MagellanFin.com
