FORT WORTH, Texas, May 03, 2017 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ: TLF ) today reported financial results for the first quarter of 2017. Net income for the quarter ended March 31, 2017 was $1.2 million, down 19% from net income in the first quarter of 2016 of $1.5 million. Fully-diluted earnings per share for the quarter were $0.13 in the current quarter, compared to $0.16 in last year’s first quarter. Total sales for the first quarter were $20.1 million, a decrease of 2.5% compared to 2016’s first quarter sales of $20.7 million.
Sales from the North America division, consisting of all stores in the US and Canada, decreased $508,000 in the first quarter, down 2.6% from last year's first quarter sales. International, consisting of four stores outside of North America, added sales of $918,000 for the quarter, a 1.6% decrease from last year’s first quarter sales of $933,000.
Consolidated gross profit margin decreased minimally from 61.2% in the first quarter of 2016 to 61.0% in the first quarter of 2017. Operating expenses increased $259,000 in the first quarter of 2017 to $10.5 million compared to $10.3 million in the first quarter of 2016, increasing as a percentage of sales from 49.8% in 2016 to 52.4% in 2017. Compared to the first quarter of 2016, personnel costs, occupancy and selling costs were the primary contributors to the operating expense increase.
Shannon L Greene, Chief Executive Officer, commented, “Our results this quarter reflect not only soft sales, but the investment we are making in our personnel, including our new district manager program. On the sales front, similar to what other retailers are reporting, we’re seeing a pattern where consumer spending starts weak, but is expected to pick up as we move through the year. While it is still early, we are pleased with the performance of our new district managers and the active role they are taking in helping their local stores aggressively build our customer base and strengthen our brand. I am confident that, while the first year investment is painful, it will pay off in the long run. Further, despite the retail headwinds, we are moving forward with our new store openings. Our Allen, TX store opened a few weeks ago, and we will be announcing the opening of several more new stores in the very near future.”
Tina Castillo, Chief Financial Officer added, “While our results this quarter were lower than comparable, we expected a slow start to the year so the results are actually in line with our guidance. However, that is not to say that we aren’t laser focused on protecting our gross margin and controlling our expenses, particularly in this challenging retail environment. Rather, our mission is very clear, to profitably grow the business and increase shareholder value.”
Tandy Leather Factory, Inc., ( http://www.tandyleather.com ), headquartered in Fort Worth, Texas, is a specialty retailer 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 113 North American stores located in 42 US states and 7 Canadian provinces, and four International 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 03/31/17 | Quarter Ended 03/31/16 | |||||||||||
| Sales | Income from Operations | Sales | Income from Operations | |||||||||
| North America* | $19,231,714 | $1,811,563 | $19,739,491 | $2,341,209 | ||||||||
| International | 918,131 | (74,072) | 932,736 | 21,581 | ||||||||
| Total Operations | $20,149,845 | $1,737,491 | $20,672,227 | $2,362,790 | ||||||||
| North America* | Quarter Ended 03/31/17 | Quarter Ended 03/31/16 | |||||
| # of stores | Sales | # of stores | Sales | ||||
| Same store sales | 108 | $18,737,881 | 108 | $19,175,528 | |||
| New store sales(a) | 4 | 407,655 | 1 | 79,654 | |||
| Closed store sales(b) | 3 | 86,178 | 3 | 484,309 | |||
| Total Sales – North America | 112 | $19,231,714 | 110 | $19,739,491 | |||
(a) Nyack, NY opened March 2016; Philadelphia, PA opened October 2016; Lyndhurst, NJ opened November 2016; and Johnston, RI opened December 2016. Allen, TX opened April 17,2017 and is not included in these results.
(b) Harrisburg, PA temporarily closed from April 2016 to December 2016; Tucson, AZ closed March 2016; and Allentown, PA closed April 2016.
| International | Quarter Ended 03/31/17 | Quarter Ended 03/31/16 | |||||
| # of stores | Sales | # of stores | Sales | ||||
| Same store sales | 4 | $918,131 | 4 | $932,736 | |||
| New store sales | - | - | - | ||||
| Total Sales – International | 4 | $918,131 | 4 | $932,736 | |||
* We operate in two segments: North America and International. Prior to January 1, 2017, we operated in three segments: Wholesale, Retail and International. To better reflect how management analyzes the business and allocates resources, we combined Wholesale and Retail into North America effective January 1, 2017, while International remains the same. All prior year data discussed throughout this press release has been restated to conform to the new reporting segment structure. There is no change to our consolidated financial position or results.
| TANDY LEATHER FACTORY, INC. | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| 3/31/17 (unaudited) | 12/31/16 (audited) | ||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash | $16,407,211 | $16,862,304 | |||||
| Accounts receivable-trade, net of allowance for doubtful accounts | |||||||
| of $3,548 and $2,404 in 2017 and 2016, respectively | 524,692 | 560,984 | |||||
| Inventory | 34,382,003 | 33,177,539 | |||||
| Prepaid income taxes | 474,487 | 964,323 | |||||
| Prepaid expenses | 1,710,217 | 1,608,860 | |||||
| Other current assets | 264,617 | 140,232 | |||||
| Total current assets | 53,763,227 | 53,314,242 | |||||
| PROPERTY AND EQUIPMENT, at cost | 26,156,413 | 25,536,352 | |||||
| Less accumulated depreciation and amortization | (10,350,479) | (9,884,559) | |||||
| 15,805,934 | 15,651,793 | ||||||
| DEFERRED INCOME TAXES | 376,884 | 331,086 | |||||
| GOODWILL | 957,347 | 956,201 | |||||
| OTHER INTANGIBLES, net of accumulated amortization of | |||||||
| $709,000 and $708,000 in 2017 and 2016, respectively | 20,396 | 20,840 | |||||
| OTHER ASSETS | 344,986 | 334,408 | |||||
| $71,268,774 | $70,608,570 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accounts payable-trade | $2,424,445 | $1,621,884 | |||||
| Accrued expenses and other liabilities | 4,219,821 | 5,937,187 | |||||
| Current maturities of capital lease obligation | 72,686 | 72,686 | |||||
| Current maturities of long-term debt | 1,075,044 | 614,311 | |||||
| Total current liabilities | 7,791,996 | 8,246,068 | |||||
| DEFERRED INCOME TAXES | 1,854,493 | 1,911,882 | |||||
| LONG-TERM DEBT, net of current maturities | 6,296,685 | 6,757,419 | |||||
| CAPITAL LEASE OBLIGATION, net of current maturities | - | - | |||||
| COMMITMENTS AND CONTINGENCIES | - | - | |||||
| STOCKHOLDERS' EQUITY: | |||||||
| Preferred stock, $0.10 par value; 20,000,000 shares | |||||||
| authorized, none issued or outstanding | - | - | |||||
| Common stock, $0.0024 par value; 25,000,000 shares | |||||||
| authorized, 11,318,331 and 11,309,326 shares issued at 2016 and 2015, | |||||||
| 9,275,501 and 9,266,496 outstanding at 2016 and 2015, respectively | 27,164 | 27,142 | |||||
| Paid-in capital | 6,413,051 | 6,368,279 | |||||
| Retained earnings | 60,700,758 | 59,469,493 | |||||
| Treasury stock at cost (2,042,830 shares at 2017 and 2016) | (10,278,584) | (10,278,584) | |||||
| Accumulated other comprehensive income | (1,536,789) | (1,893,129) | |||||
| Total stockholders' equity | 55,325,600 | 53,693,201 | |||||
| $71,268,774 | $70,608,570 | ||||||
| TANDY LEATHER FACTORY, INC. | |||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||
| (UNAUDITED) | |||||||
| FOR THE THREE MONTHS ENDED MARCH 31 | |||||||
| 2017 | 2016 | ||||||
| NET SALES | $20,149,845 | $20,672,227 | |||||
| COST OF SALES | 7,863,800 | 8,019,481 | |||||
| Gross profit | 12,286,045 | 12,652,746 | |||||
| OPERATING EXPENSES | 10,548,554 | 10,289,956 | |||||
| INCOME FROM OPERATIONS | 1,737,491 | 2,362,790 | |||||
| OTHER (INCOME) EXPENSE: | |||||||
| Interest expense | 36,344 | 23,429 | |||||
| Other, net | (2,651) | 39 | |||||
| Total other (income) expense | 33,693 | 23,468 | |||||
| INCOME BEFORE INCOME TAXES | 1,703,798 | 2,339,322 | |||||
| PROVISION FOR INCOME TAXES | 472,533 | 818,325 | |||||
| NET INCOME | $1,231,265 | $1,520,997 | |||||
| NET INCOME PER COMMON SHARE: | |||||||
| BASIC | $0.13 | $0.16 | |||||
| DILUTED | $0.13 | $0.16 | |||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | |||||||
| BASIC | 9,309,424 | 9,698,951 | |||||
| DILUTED | 9,330,303 | 9,718,453 | |||||
| TANDY LEATHER FACTORY, INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (UNAUDITED) | |||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31 | |||||||||||
| 2017 | 2016 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $1,231,265 | $1,520,997 | |||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 458,118 | 414,228 | |||||||||
| Loss / (gain) on disposal or abandonment of assets | 335 | (12,023) | |||||||||
| Non-cash stock-based compensation | 44,794 | 43,762 | |||||||||
| Deferred income taxes | (103,187) | 31,717 | |||||||||
| Foreign currency translation | 344,789 | 614,366 | |||||||||
| Net changes in assets and liabilities: | |||||||||||
| Accounts receivable-trade, net | 36,292 | (129,374) | |||||||||
| Inventory | (1,204,464) | (47,763) | |||||||||
| Prepaid expenses | (101,357) | (112,282) | |||||||||
| Other current assets | (126,374) | (76,076) | |||||||||
| Accounts payable-trade | 802,561 | (63,065) | |||||||||
| Accrued expenses and other liabilities | (1,717,366) | (1,471,776) | |||||||||
| Income taxes payable | 489,836 | 360,847 | |||||||||
| Total adjustments | (1,076,023) | (447,439) | |||||||||
| Net cash provided by operating activities | 155,242 | 1,073,558 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (599,757) | (606,932) | |||||||||
| Proceeds from sale of assets | - | 22,625 | |||||||||
| (Decrease) in other assets | (10,578) | (154) | |||||||||
| Net cash used in investing activities | (610,335 ) | (584,461 ) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from notes payable and long term debt | - | 2,870,000 | |||||||||
| Payments on capital lease obligations | - | (6,710) | |||||||||
| Repurchase of common stock (treasury stock) | - | (2,870,740) | |||||||||
| Net cash used in financing activities | - | (7,450 ) | |||||||||
| NET (DECREASE) INCREASE IN CASH | (455,093) | 481,647 | |||||||||
| CASH, beginning of period | 16,862,304 | 10,962,615 | |||||||||
| CASH, end of period | $16,407,211 | $11,444,262 | |||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
| Interest paid during the period | $36,344 | $23,429 | |||||||||
| Income tax paid during the period, net of (refunds) | $17,303 | $457,478 | |||||||||
Contact: Tina Castillo, Tandy Leather Factory, Inc (817) 872-3200 or tcastillo@tandyleather.com Mark Gilbert, Magellan Fin, LLC (317) 867-2839 or MGilbert@MagellanFin.com
