FORT WORTH, Texas, May 11, 2016 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the first quarter of 2016. Net income for the quarter ended March 31, 2016 was $1.5 million, up 5% from net income in the first quarter of 2015 of $1.4 million. Fully-diluted earnings per share for the quarter were $0.16 in the current quarter, compared to $0.14 in last year’s first quarter, up 14%. Total sales for the first quarter were $20.7 million, a decrease of 0.6% compared to 2015’s first quarter sales of $20.8 million.
Sales from the Retail Leathercraft division, consisting of the Tandy Leather store chain, increased $133,000 in the first quarter, up 1% from last year's first quarter sales. The store chain consisted of eighty two stores as of March 31, 2016 and 2015. First quarter sales for the Wholesale Leathercraft division decreased $228,000 or 3% from the same quarter last year. International Leathercraft, consisting of four stores outside of North America, added sales of $933,000 for the quarter, a 2% decrease from last year’s first quarter sales of $954,000.
Consolidated gross profit margin increased from 60.5% in the first quarter of 2015 to 61.2% in the first quarter of 2016. Operating expenses increased $96,000 in the first quarter of 2016 to $10.3 million compared to $10.2 million in the first quarter of 2015, increasing as a percentage of sales from 49.0% in 2015 to 49.8% in 2016. Compared to the first quarter of 2015, employee benefits, legal and professional fees, rent and licenses and fees were the primary contributors to the operating expense increase, offset somewhat by decreases in freight out and store personnel bonuses.
Shannon L Greene, interim Chief Executive Officer, commented, “We are fairly pleased with our results in the first quarter. Sales are soft and we expect that to continue all year. We know the lackluster retail environment can impact our sales because of cautious consumer spending, but we also know it is our job to manage the business through periods like this. As a result, we are defining success in 2016 as protecting gross profit margins and controlling expenses.”
Mark Angus, interim President, added, “Although we are off to a respectable start in 2016, we recognize the importance of continued focus on solid margins. We have instituted several initiatives that should contribute to supporting and strengthening margins but we suspect it will take several quarters before we begin to see the effects.”
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 27 Leather Factory stores, located in 17 states and 3 Canadian provinces, 81 Tandy Leather retail stores, located in 37 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 03/31/16 | Quarter Ended 03/31/15 | |||||||||||||||
| Sales | Income from Operations | Sales | Income from Operations | |||||||||||||
| Wholesale Leathercraft | $ | 6,496,908 | $ | 1,126,259 | $ | 6,725,304 | $ | 951,855 | ||||||||
| Retail Leathercraft | 13,242,583 | 1,214,950 | 13,109,413 | 1,403,452 | ||||||||||||
| International Leathercraft | 932,736 | 21,581 | 954,047 | 33,574 | ||||||||||||
| Total Operations | $ | 20,672,227 | $ | 2,362,790 | $ | 20,788,764 | $ | 2,388,881 | ||||||||
| Wholesale Leathercraft | Quarter Ended 03/31/16 | Quarter Ended 03/31/15 | ||||||||
| # of stores | Sales | # of stores | Sales | |||||||
| Same store sales | 28 | $ | 6,496,907 | 28 | $ | 6,725,304 | ||||
| Total Sales – Wholesale Leathercraft | $ | 6,496,907 | $ | 6,725,304 | ||||||
| Retail Leathercraft | Quarter Ended 03/31/16 | Quarter Ended 03/31/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 82 | $ | 13,059,658 | 82 | $ | 13,019,613 | |||
| New store sales | 1 | 79,654 | - | ||||||
| Closed store sales | 1 | 103,271 | 1 | 89,800 | |||||
| Total Sales – Retail Leathercraft | $ | 13,242,583 | $ | 13,109,413 | |||||
| International Leathercraft | Quarter Ended 03/31/16 | Quarter Ended 03/31/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 3 | $ | 792,379 | 3 | $ | 954,047 | |||
| New store sales | 1 | 140,357 | - | - | |||||
| Total Sales – International Leathercraft | 3 | $ | 932,736 | 3 | $ | 954,047 | |||
| TANDY LEATHER FACTORY, INC. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| March 31, 2016 (unaudited) | December 31, 2015 (audited) | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash | $ | 11,444,262 | $ | 10,962,615 | |||||||
| Accounts receivable-trade, net of allowance for doubtful accounts | |||||||||||
| of $1,677 and $1,746 in 2016 and 2015, respectively | 682,580 | 553,206 | |||||||||
| Inventory | 33,632,302 | 33,584,539 | |||||||||
| Prepaid income taxes | 188,430 | 549,277 | |||||||||
| Deferred income taxes | 328,048 | 326,830 | |||||||||
| Prepaid expenses | 1,627,169 | 1,514,887 | |||||||||
| Other current assets | 146,273 | 70,197 | |||||||||
| Total current assets | 48,049,064 | 47,561,551 | |||||||||
| PROPERTY AND EQUIPMENT, at cost | 24,548,702 | 23,992,208 | |||||||||
| Less accumulated depreciation and amortization | (8,650,964 | ) | (8,297,155 | ) | |||||||
| 15,897,738 | 15,695,053 | ||||||||||
| GOODWILL | 959,784 | 953,356 | |||||||||
| OTHER INTANGIBLES, net of accumulated amortization of approximately | |||||||||||
| $706,000 and $702,000 in 2016 and 2015, respectively | 23,421 | 27,282 | |||||||||
| OTHER assets | 329,838 | 329,684 | |||||||||
| TOTAL ASSETS | $ | 65,259,845 | $ | 64,566,926 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable-trade | $ | 1,920,311 | $ | 1,983,376 | |||||||
| Accrued expenses and other liabilities | 4,573,776 | 6,045,552 | |||||||||
| Current maturities of capital lease obligations | 72,686 | 72,686 | |||||||||
| Current maturities of long-term debt | 822,653 | 231,952 | |||||||||
| Total current liabilities | 7,389,426 | 8,333,566 | |||||||||
| DEFERRED INCOME TAXES | 1,735,450 | 1,702,515 | |||||||||
| LONG-TERM DEBT, net of current maturities | 5,758,571 | 3,479,273 | |||||||||
| CAPITAL LEASE OBLIGATIONS, net of current maturities | 72,688 | 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; | |||||||||||
| 9,382,555 and 9,753,293 shares outstanding at 2016 and 2015 | 27,142 | 27,062 | |||||||||
| Paid-in capital | 6,212,171 | 6,168,489 | |||||||||
| Retained earnings | 54,588,231 | 53,067,234 | |||||||||
| Treasury stock at cost (1,926,771 and 1,522,348 shares at 2016 and 2015) | (9,473,670 | ) | (6,602,930 | ) | |||||||
| Accumulated other comprehensive income | (1,050,164 | ) | (1,687,679 | ) | |||||||
| Total stockholders’ equity | 50,303,710 | 50,972,176 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 65,259,845 | $ | 64,566,926 | |||||||
| TANDY LEATHER FACTORY, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (UNAUDITED) | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2016 and 2015 | ||||||||
| 2016 | 2015 | |||||||
| NET SALES | $ | 20,672,227 | $ | 20,788,764 | ||||
| COST OF SALES | 8,019,481 | 8,205,836 | ||||||
| Gross profit | 12,652,746 | 12,582,928 | ||||||
| OPERATING EXPENSES | 10,289,956 | 10,194,047 | ||||||
| INCOME FROM OPERATIONS | 2,362,790 | 2,388,881 | ||||||
| OTHER (INCOME) EXPENSE: | ||||||||
| Interest expense | 23,429 | 44,163 | ||||||
| Other, net | 39 | (19,873 | ) | |||||
| Total other (income) expense | 23,468 | 24,290 | ||||||
| INCOME BEFORE INCOME TAXES | 2,339,322 | 2,364,591 | ||||||
| PROVISION FOR INCOME TAXES | 818,325 | 920,184 | ||||||
| NET INCOME | $ | 1,520,997 | $ | 1,444,407 | ||||
| NET INCOME PER COMMON SHARE: | ||||||||
| BASIC | $ | 0.16 | $ | 0.14 | ||||
| DILUTED | $ | 0.16 | $ | 0.14 | ||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||||||||
| BASIC | 9,698,951 | 10,211,333 | ||||||
| DILUTED | 9,718,453 | 10,241,096 | ||||||
| TANDY LEATHER FACTORY, INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (UNAUDITED) | |||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015 | |||||||||||
| 2016 | 2015 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 1,520,997 | $ | 1,444,407 | |||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 414,228 | 383,936 | |||||||||
| (Gain) / loss on disposal or abandonment of assets | (12,023 | ) | 5,804 | ||||||||
| Non-cash stock-based compensation | 43,762 | 29,064 | |||||||||
| Deferred income taxes | 31,717 | 67,831 | |||||||||
| Foreign currency translation | 614,366 | (585,107 | ) | ||||||||
| Net changes in assets and liabilities: | |||||||||||
| Accounts receivable-trade, net | (129,374 | ) | (39,095 | ) | |||||||
| Inventory | (47,763 | ) | 2,467,610 | ||||||||
| Prepaid expenses | (112,282 | ) | (123,481 | ) | |||||||
| Other current assets | (76,076 | ) | 43,888 | ||||||||
| Accounts payable-trade | (63,065 | ) | 486,852 | ||||||||
| Accrued expenses and other liabilities | (1,471,776 | ) | (1,097,188 | ) | |||||||
| Income taxes payable | 360,847 | 423,403 | |||||||||
| Total adjustments | (447,439 | ) | 2,063,517 | ||||||||
| Net cash provided by operating activities | 1,073,558 | 3,507,924 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (606,932 | ) | (677,444 | ) | |||||||
| Proceeds from sale of assets | 22,625 | - | |||||||||
| Increase (decrease) in other assets | (154 | ) | 2,344 | ||||||||
| Net cash used in investing activities | (584,461 | ) | (675,100 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net decrease in revolving credit loans | - | (3,500,000 | ) | ||||||||
| Proceeds from notes payable and long term debt | 2,870,000 | - | |||||||||
| Payments on notes payable and long-term debt | - | (50,625 | ) | ||||||||
| Payments on capital lease obligations | (6,710 | ) | - | ||||||||
| Repurchase of common stock (treasury stock) | (2,870,740 | ) | |||||||||
| Proceeds from issuance of common stock | - | 9,920 | |||||||||
| Net cash used in financing activities | (7,450 | ) | (3,540,705 | ) | |||||||
| NET INCREASE (DECREASE) IN CASH | 481,647 | (707,881 | ) | ||||||||
| CASH, beginning of period | 10,962,615 | 10,636,530 | |||||||||
| CASH, end of period | $ | 11,444,262 | $ | 9,928,649 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
| Interest paid during the period | $ | 23,429 | $ | 44,163 | |||||||
| Income tax paid during the period, net of (refunds) | $ | 457,478 | $ | 379,690 | |||||||