Tandy Leather Factory Reports 3rd Quarter EPS Up 400%

FORT WORTH, Texas, Nov. 7, 2013 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the third quarter of 2013. Consolidated net income for the quarter ended September 30, 2013 was $1.6 million compared to consolidated net income of $281,000 for the third quarter of 2012, an increase of 456%. Fully diluted earnings per share for the quarter were $0.15, compared to $0.03 in the third quarter of last year. Total sales for the quarter ended September 30, 2013 were $18.5 million, up 9% from $17.0 million in the third quarter last year.

Consolidated sales for the nine months ended September 30, 2013 were $56.7 million, up 9% from 2012's first three quarters' sales of $52.1 million. Consolidated net income for the first nine months of 2013 was up 41% to $4.8 million or $0.47 per fully-diluted share versus $3.4 million or $0.33 per fully-diluted share in the comparable period last year.      

Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $1.2 million in the third quarter, a 12% improvement over last year's third quarter. Seventy-eight stores comprised Tandy Leather's operations on September 30, 2013. For the first nine months of 2013, Retail Leathercraft's sales increased $3.8 million, or 13%, over the first nine months of 2012. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were up 4%, or $234,000, from the same quarter last year. For the first nine months of 2013, Wholesale Leathercraft's sales were up $257,000, or 1%, compared to the same period in 2012. International Leathercraft, consisting of three stores located outside of North America, reported a sales increase of 13%, or $109,000, compared to the third quarter of 2012. For the year, International Leathercraft's sales were up 24%, or $560,000, over the same period last year. 

Consolidated gross profit margin for the current quarter was 63.2%, up from 61.2% for the third quarter of 2012. For the year to date, consolidated gross profit margin was 62.7%, decreasing minimally from last year's gross profit margin of 62.8%. Compared to the comparable periods in 2012, consolidated operating expenses decreased approximately 5%, or $464,000, for the third quarter, but rose 4%, or $1.1 million, for the nine months.  For the third quarter, the significant increases in expenses occurred in employee compensation and legal fees. Those increases were more than offset by the legal settlement incurred in last year's third quarter than was not repeated this year. For the year, expenses increases occurred in advertising and marketing, employee compensation, freight out, credit card fees, and legal fees. As a percentage of sales, consolidated operating margin improved for the quarter to 12.9% compared to 3.8% last year. On a year-to-date basis, consolidated operating margin improved from 10.9% last year to 13.0% in the current year.

Jon Thompson, Chief Executive Officer and President, commented, "One of our measurements of success is higher sales and earnings compared to the prior year's same period and we comfortably achieved that in the third quarter. Further, all three segments contributed to the higher sales and earnings and our gross profit margins remain strong. Overall, it was a very successful quarter."

Chief Financial Officer and Treasurer, Shannon Greene, added, "Third quarter operating expenses dropped considerably compared to last year's third quarter because of last year's legal settlement expense. However, if we adjust for that, operating expense still trended well below that of sales. As is the case with most retailers, our investment in inventory is up at the end of the quarter, but we continue to maintain a very solid cash position. We are on schedule to meet our 2013 sales and earnings guidance as we move through the remainder of 2013." 

Tandy Leather Factory, Inc., ( 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, 79 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 09/30/13 Quarter Ended 09/30/12
    Sales Operating Income   Sales Operating Income
Wholesale Leathercraft $6,476,676 $956,721 $6,242,602 $(297,897)
Retail Leathercraft 11,128,646 1,351,062 9,947,911 987,704
International Leathercraft 919,282 97,570 810,215 (44,951)
Total Operations $18,524,604 $2,405,353 $17,000,728 $644,856
     
  Nine Months Ended 09/30/13 Nine Months Ended 09/30/12
    Sales Operating Income   Sales Operating Income
Wholesale Leathercraft $19,934,996 $2,853,219 $19,678,009 $2,038,267
Retail Leathercraft 33,930,587 4,243,006 30,093,864 3,655,932
International Leathercraft 2,869,861 276,052 2,310,188 (30,395)
Total Operations $56,735,444 $7,372,277 $52,082,061 $5,663,804
     
Wholesale Leathercraft Quarter Ended 09/30/13 Quarter Ended 09/30/12
  # of stores Sales # of stores Sales
Same store sales 29 $6,105,137 29 $5,821,208
National account group n/a 371,539 n/a 421,394
Total Sales – Wholesale Leathercraft 29 $6,476,676 29 $6,242,602
     
Wholesale Leathercraft Nine Months Ended 09/30/13 Nine Months Ended 09/30/12
  # of stores Sales # of stores Sales
Same store sales 29 $18,897,124 29 $18,232,337
National account group n/a 1,037,872 n/a 1,445,672
Total Sales – Wholesale Leathercraft 29 $19,934,996 29 $19,678,009
     
Retail Leathercraft Quarter Ended 09/30/13 Quarter Ended 09/30/12
   # of stores Sales # of stores Sales
Same store sales 77 $11,004,898 77 $9,947,911
New store sales 1 123,748 -- --
Total Sales – Retail Leathercraft 78 $11,128,646 77 $9,947,911
     
Retail Leathercraft Nine Months Ended 09/30/13 Nine Months Ended 09/30/12
  # of stores Sales # of stores Sales
Same store sales 77 $33,563,875 77 $30,093,864
New store sales 1 366,712 -- --
Total Sales – Retail Leathercraft 78 $33,930,587 77 $30,093,864
     
International Leathercraft Quarter Ended 09/30/13 Quarter Ended 09/30/12
  # of stores Sales # of stores Sales
Same store sales 3 $919,282 3 $810,215
New store sales -- -- -- --
Total Sales – Intl Leathercraft 3 $919,282 3 $810,215
     
International Leathercraft Nine Months Ended 09/30/13 Nine Months Ended 09/30/12
  # of stores Sales # of stores Sales
Same store sales 3 $2,869,861 3 $2,310,188
New store sales -- -- -- --
Total Sales – Intl Leathercraft 3 $2,869,861 3 $2,310,188
 
Tandy Leather Factory, Inc.
Consolidated Balance Sheets
     
  September 30, December 31,
  2013 2012
  (unaudited) (audited)
ASSETS    
CURRENT ASSETS:    
Cash $6,289,550 $7,705,182
Accounts receivable-trade, net of allowance for doubtful accounts of $30,000 and $112,000 in 2013 and 2012, respectively 945,725 822,772
Inventory 29,492,488 25,862,784
Prepaid income taxes 6,106  --
Deferred income taxes 340,426 349,478
Prepaid expenses 1,845,862 776,463
Other current assets 429,522 153,450
Total current assets 39,349,679 35,670,129
     
PROPERTY AND EQUIPMENT, at cost 19,042,844 17,574,895
Less accumulated depreciation and amortization  (5,645,113)  (5,630,305)
  13,397,731 11,944,590
     
GOODWILL 986,153 990,725
OTHER INTANGIBLES, net of accumulated amortization of $612,000 and $582,000 in 2013 and 2012, respectively 114,643 145,533
Other assets 337,115 336,695
  $54,185,321 $49,087,672
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Accounts payable-trade $2,299,450 $1,612,627
Accrued expenses and other liabilities 5,913,564 5,928,798
Income taxes payable -- 113,705
Current maturities of long-term debt 202,500 202,500
Total current liabilities 8,415,514 7,857,630
     
DEFERRED INCOME TAXES 987,617 806,525
     
LONG-TERM DEBT, net of current maturities 2,446,875 2,902,500
     
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; 11,192,356 and 11,156,065 shares issued at 2013 and 2012; 10,198,733 and 10,162,442 shares outstanding at 2013 and 2012 26,862 26,775
Paid-in capital 5,892,907 5,767,508
Retained earnings 39,019,381 34,241,875
Treasury stock at cost (993,623 shares at 2013 and 2012)  (2,894,068)  (2,894,068)
Accumulated other comprehensive income 290,233 378,927
Total stockholders' equity 42,335,315 37,521,017
  $54,185,321 $49,087,672
     
 
Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Nine Months Ended September 30, 2013 and 2012
 
  THREE MONTHS NINE MONTHS
  2013 2012 2013 2012
         
NET SALES $18,524,604 $17,000,728 $56,735,444 $52,082,061
         
COST OF SALES 6,823,661 6,595,958 21,183,551 19,371,456
         
 Gross profit 11,700,943 10,404,770 35,551,893 32,710,605
         
OPERATING EXPENSES 9,295,590 9,759,914 28,179,616 27,046,801
         
INCOME FROM OPERATIONS 2,405,353 644,856 7,372,277 5,663,804
         
OTHER INCOME (EXPENSE):        
Interest expense (51,021) (59,623) (158,659) (176,251)
Other, net 13,777 (2,787) 138,800 59,786
Total other income (expense) (37,244) (62,410) (19,859) (116,465)
         
INCOME BEFORE INCOME TAXES 2,368,109 582,446 7,352,418 5,547,339
         
PROVISION FOR INCOME TAXES 806,277 301,676 2,574,912 2,152,825
         
NET INCOME $1,561,832 $280,770 $4,777,506 $3,394,514
         
         
NET INCOME PER COMMON SHARE:        
Basic $0.15 $0.03 $0.47 $0.33
Diluted $0.15 $0.03 $0.47 $0.33
         
Weighted Average Number of Shares Outstanding:        
Basic 10,176,744 10,156,790 10,163,490 10,156,559
Diluted 10,221,512 10,177,466 10,197,667 10,179,569
 
Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 2013 and 2012
     
  2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $4,777,506 $3,394,514
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization  889,395  794,122
Loss on disposal or abandonment of assets  89,531  16,977
Non-cash stock-based compensation  11,686  10,000
Deferred income taxes  190,144  (180,237)
Other  (70,330)  63,559
Net changes in assets and liabilities, net of effect of business acquisitions:    
Accounts receivable-trade, net  (122,953)  253,702
Inventory  (3,629,704)  (9,754,553)
     
Income taxes  (119,811)  (1,183,816)
Prepaid expenses  (1,069,399)  1,624,011
     
Other current assets  (276,072)  (1,765,227)
Accounts payable-trade  686,823  929,847
Accrued expenses and other liabilities  (15,234)  1,097,165
Total adjustments  (3,435,924)  (8,094,450)
     
Net cash provided by (used in) operating activities  1,341,582  (4,699,936)
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment  (2,415,484)  (1,294,050)
Proceeds from maturities of certificates of deposit  --   423,893
Proceeds from sale of assets  515  1,150
Decrease (increase) in other assets  (420)  6,675
     
Net cash used in investing activities  (2,415,389)  (862,332)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from notes payable and long-term debt  --   1,000,000
Payments on notes payable and long-term debt  (455,625)  (151,875)
Proceeds from issuance of common stock  113,800  5,440
Payment of cash dividend  --   (2,536,131)
     
Net cash used in financing activities  (341,825)  (1,682,566)
     
NET DECREASE IN CASH  (1,415,632)  (7,244,834)
     
CASH, beginning of period  7,705,182  10,765,591
     
CASH, end of period $6,289,550 $3,520,757
     
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Interest paid during the period $158,659 $176,251
Income tax paid during the period, net of (refunds) $2,507,842 $3,524,962
     
CONTACT: Shannon L. Greene, Tandy Leather Factory, Inc.         (817) 872-3200 or sgreene@tandyleather.com                  Mark Gilbert, Magellan Fin, LLC         (317) 867-2839 or MGilbert@MagellanFin.com

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