FORT WORTH, Texas, March 09, 2017 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the fourth quarter and year ended December 31, 2016.  A conference call will be conducted by senior management at 10:00 a.m. Eastern Time on March 10, 2017.  Dial-in details have been provided previously.

Consolidated net income for the quarter was $2.1 million, decreasing 12% from the fourth quarter of 2015.  Fully diluted earnings per share for the quarter were $0.23, down $0.01 compared to the same quarter of the previous year.  Total sales for the quarter ended December 31, 2016 decreased 1% to $24.1 million from $24.2 million for same quarter of 2015.  Consolidated sales for the year ended December 31, 2016 were $82.9 million, down 1% from 2015 sales of $84.2 million.  Consolidated net income for 2016 was $6.4 million or $0.69 per fully-diluted share versus $6.4 million or $0.63 per fully-diluted share for 2015.       

Sales in the Retail Leathercraft division for the fourth quarter of 2016 increased $70,000 over the previous year's fourth quarter, a 0.5% improvement.  Same store sales in the fourth quarter of 2016 increased 1% over the same period in the prior year. Eighty-four Tandy Leather retail stores comprised Retail Leathercraft's operations at December 31, 2016, compared to eighty-two at December 31, 2015.  For the year, Retail Leathercraft's sales decreased slightly, or $44,000, over 2015.  The 80 comparable stores' 2016 sales improved slightly, or 0.1%, over sales reported for 2015.

Fourth quarter sales for the Wholesale Leathercraft division decreased $336,000 over the same quarter of 2015, a 4% decline.  Same store sales decreased 2%.  There were twenty-seven stores in the segment at December 31, 2016, compared to twenty-eight stores at December 31, 2015.  For the year, Wholesale Leathercraft's sales were down $1.4 million, or 5%.   2016 same store sales decreased 3%.

International Leathercraft's fourth quarter sales increased $123,000 over the same quarter of 2015, a 13% improvement.  Same stores sales in the fourth quarter of 2016 increased 13%.  There were four stores in the segment at both December 31, 2016 and 2015.  For the year, International Leathercraft's sales increased 5% to $3.9 million from $3.7 million in 2015.  2016 same store sales decreased 3%. 

Consolidated gross profit margin for the fourth quarter was 60.2%, decreasing from 61.2% in 2015's fourth quarter.  For 2016, consolidated gross profit margin was 62.4%, improving from the previous year's gross profit margin of 61.9%.  Consolidated operating expenses for the fourth quarter of 2016 were 45.5% of sales, increasing $12,000 or 0.1% over the same quarter of 2015.  Operating expenses totaled 49.9% of sales for 2016, decreasing $0.2 million, or 0.4% over 2015. 

Shannon L. Greene, Chief Executive Officer, commented, "While we were pleased that our 2016 sales were at the top end of our guidance range, our EPS came in at the lower end.  Our bottom line was impacted by a better than expected response to our holiday promotions which drove higher sales, but the overall product mix compressed our gross profit.  In addition, at the beginning of December, we increased  our store managers' base compensation by nearly 40%  to comply with the expected FLSA overtime rules that have since been delayed.  However, we believe that investing in our people is the right thing to do and will ultimately deliver long-term value.  Further, as we look to 2017, our priorities remain on improving our customer experience, increasing our brand awareness and strengthening our financial performance.  To that end, we are in the process of restructuring our store management, adding a level of middle management in the field while reducing several store operation positions at our corporate office.  We believe this investment, while negatively impacting our short-term outlook, will position us for future growth.  Each of our new district managers have a proven track record of successful top-line and bottom-line growth while being a leader in product and leathercraft knowledge and in support of our store associates."    

Tina Castillo, Chief Financial Officer, added, "While we faced tough headwinds on the revenue side all year, as reflected in the 1% decrease in sales, our net income did not suffer.  This was the result of both an improvement in our gross profit which our team worked all year to maximize and a decrease in our operating expenses from lower overall spend.  For 2017, we will continue to focus on protecting our gross profit margins and controlling expenses.  However, with the investment in our district restructuring plan and the effect of the FLSA wage increases, we expect to see an increase in our operating expenses.  We believe 2017 will be a year of investment to lay a foundation for profitable growth."     

Financial Outlook:

The following statements are based on TLF's current expectations as of March 9, 2017.  These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.

Estimated consolidated net sales for 2017 will be in the range of $84-85 million.  EPS for 2017 are expected to be in the range of $0.56 to $0.58.  Average shares outstanding, both basic and diluted, in 2017 are estimated to be approximately 9.2 million.  The Company assumes an effective tax rate for the year between 36% and 37%.

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 28 Leather Factory stores, located in 18 states and 3 Canadian provinces, 84 Tandy Leather retail stores, located in 38 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 12/31/16   Quarter Ended 12/31/15
  Sales   Oper Inc     Sales   Oper Inc
Wholesale Leathercraft $7,184,250 $2,111,076     $7,519,790 $2,060,722
Retail Leathercraft   15,814,111   1,469,105       15,744,009   1,827,471
International Leathercraft   1,102,137   (21,190)       979,172   4,033
Total Operations $24,100,498   $3,558,991     $24,242,971   $3,892,226
                     
  Year Ended 12/31/16   Year Ended 12/31/15
  Sales   Oper Inc     Sales   Oper Inc
Wholesale Leathercraft $25,371,580 $5,254,228     $26,754,164 $4,663,590
Retail Leathercraft   53,670,340   4,970,545       53,714,432   5,689,814
International Leathercraft   3,882,072   75,958       3,692,604   121,296
Total Operations $82,923,992   $10,300,731     $84,161,200   $10,474,700
                     
Wholesale Leathercraft   Quarter Ended 12/31/16   Quarter Ended 12/31/15
  # of stores Sales   # of stores Sales
Same store sales   27 $7,184,250       27 $7,332,928
Closed store   -   -       1   186,862
National account group   -   -       -   -
Total Sales - Wholesale Leathercraft   27 $7,184,250       28 $7,519,790
                     
  Year Ended 12/31/16   Year Ended 12/31/15
  # of stores Sales   # of stores Sales
Same store sales   27 $25,183,175       27 $26,072,562
Closed store   -   188,405       1   681,602
National account group   -   -       -   -
Total Sales - Wholesale Leathercraft   27 $25,371,580       28 $26,754,164
                     
   
Retail Leathercraft   Quarter Ended 12/31/16   Quarter Ended 12/31/15
  # of stores Sales   # of stores Sales
Same store sales   80 $15,402,304       80 $15,258,408
New store sales   4   411,807       -   -
Closed store sales   2   -       2   485,601
Total Sales - Retail Leathercraft   84 $15,814,111       82 $15,744,009
                     
  Year Ended 12/31/16   Year Ended 12/31/15
  # of stores Sales   # of stores Sales
Same store sales   80 $52,266,784       80 $52,192,819
New store sales   4   1,034,143       -   -
Closed store sales   2   369,413       2   1,521,613
Total Sales - Retail Leathercraft   84 $53,670,340       82 $53,714,432
           
           
International Leathercraft   Quarter Ended 12/31/16   Quarter Ended 12/31/15
  # of stores Sales   # of stores Sales
Same store sales   4 $1,102,137       4 $979,172
New store sales   -   -       -   -
Total Sales - Intl Leathercraft   4 $1,102,137       4 $979,172
                     
  Year Ended 12/31/16   Year Ended 12/31/15
  # of stores Sales   # of stores Sales
Same store sales   3 $3,448,799       3 $3,565,247
New store sales   1   433,273       1   127,357
Total Sales - Intl Leathercraft   4 $3,882,072       4 $3,692,604
                     

TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31
 
  Three Months   Twelve Months
  2016 (unaudited)   2015     2016 (unaudited)   2015  
NET SALES $24,100,498   $24,242,971     $82,923,992   $84,161,200  
           
COST OF SALES   9,580,663     9,401,917       31,210,750     32,090,140  
             
  Gross Profit   14,519,835     14,841,054       51,713,242     52,071,060  
           
OPERATING EXPENSES   10,960,844     10,948,828       41,412,511     41,596,360  
           
INCOME FROM OPERATIONS   3,558,991     3,892,226       10,300,731     10,474,700  
           
  Interest expense   46,240     22,844       155,189     330,004  
  Other, net   (30,322)     (6,287)       (57,287)     (74,357)  
  Total other expense   15,918     16,557       97,902     255,647  
           
INCOME BEFORE INCOME TAXES   3,543,073     3,875,669       10,202,829     10,219,053  
           
PROVISION FOR INCOME TAXES   1,483,076     1,536,911       3,800,570     3,816,648  
           
NET INCOME $2,059,997   $2,338,758     $6,402,259   $6,402,405  
           
NET INCOME PER COMMON SHARE:          
Basic $0.23   $0.24     $0.69   $0.64  
Diluted $0.23   $0.24     $0.69   $0.63  
           
           
Weighted Average Number of Shares Outstanding:          
Basic   9,188,483     9,692,860       9,301,867     10,077,506  
Diluted   9,207,692     9,712,571       9,318,045     10,102,760  

TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
 
  12/31/16 (unaudited)   12/31/15  
ASSETS      
CURRENT ASSETS:      
Cash $16,862,304     $10,962,615  
Accounts receivable-trade, net of allowance for doubtful accounts      
of $2,404 and $1,746 in 2016 and 2015, respectively   560,984       553,206  
Inventory   33,177,539       33,584,539  
Prepaid income taxes   964,323       549,277  
Prepaid expenses   1,608,860       1,514,887  
Other current assets   140,232       70,197  
Total current assets   53,314,242       47,234,721  
       
PROPERTY AND EQUIPMENT, at cost   25,536,352       23,992,208  
Less accumulated depreciation and amortization   (9,884,559)       (8,297,155)  
    15,651,793       15,695,053  
       
DEFERRED INCOME TAXES   331,086       326,830  
GOODWILL   956,201       953,356  
OTHER INTANGIBLES, net of accumulated amortization of      
$708,000 and $702,000 in 2016 and 2015, respectively   20,840       27,282  
OTHER ASSETS   334,408       329,684  
  $ 70,608,570     $ 64,566,926  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable-trade $1,621,884     $1,983,376  
Accrued expenses and other liabilities   5,937,187       6,045,552  
Current maturities of capital lease obligation   72,686       72,686  
Current maturities of long-term debt   614,311       231,952  
Total current liabilities   8,246,068       8,333,566  
       
DEFERRED INCOME TAXES   1,911,882       1,702,515  
       
LONG-TERM DEBT, net of current maturities   6,757,419       3,479,273  
CAPITAL LEASE OBLIGATION, net of current maturities   -       79,396  
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, 11,309,326 and 11,275,641 shares issued at 2016 and 2015,      
9,266,496 and 9,753,293 outstanding at 2016 and 2015, respectively   27,142       27,062  
Paid-in capital   6,368,279       6,168,489  
Retained earnings   59,469,493       53,067,234  
Treasury stock at cost (2,042,830 and 1,522,348 shares at 2016 and 2015, respectively)   (10,278,584)       (6,602,930)  
Accumulated other comprehensive income   (1,893,129)       (1,687,679)  
Total stockholders' equity   53,693,201       50,972,176  
  $ 70,608,570     $ 64,566,926  
               

TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 AND 2015
 
  2016 (unaudited)     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:      
  Net income $6,402,259     $6,402,405  
         
  Adjustments to reconcile net income to net cash      
  provided by operating activities -      
  Depreciation and amortization   1,719,153       1,567,172  
  Loss on disposal or abandonment of assets   16,986       31,064  
  Non-cash stock-based compensation   199,870       145,321  
  Deferred income taxes   205,111       289,171  
  Foreign currency translation   (163,292)       (896,927)  
  Net changes in assets and liabilities      
  Accounts receivable-trade, net   (7,778)       71,848  
  Inventory   407,000       (709,047)  
  Income taxes   (415,046)       (212,449)  
  Prepaid expenses   (284,788)       43,585  
  Other current assets   (70,035)       87,561  
  Accounts payable-trade   (361,492)       728,158  
  Accrued expenses and other liabilities   (108,365)       651,038  
  Total adjustments   1,137,324       1,796,495  
  Net cash provided by (used in) operating activities   7,539,583       8,198,900  
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
  Purchase of property and equipment   (1,697,724)       (2,164,040)  
  Purchase of intangible assets   -       (10,000)  
  Proceeds from sale of assets   26,703       11,662  
  Proceeds from insurance for property damage   126,800       -  
  Decrease (increase) in other assets   (1,127)       295  
  Net cash (used in) provided by investing activities   (1,545,348 )       (2,162,083 )  
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
  Net (decrease) increase in revolving credit loans   -       (3,500,000)  
  Proceeds from notes payable and long-term debt   3,660,505       3,711,225  
  Payments on notes payable and long-term debt   -       (2,143,125)  
  Payments on capital lease obligations   (79,397)       (79,890)  
  Repurchase of common stock (treasury stock)   (3,675,654)       (3,708,862)  
  Proceeds from issuance of common stock   -       9,920  
  Net cash (used in) provided by financing activities   (94,546 )       (5,710,732 )  
       
NET INCREASE IN CASH   5,899,689       326,085  
       
CASH, beginning of period   10,962,615       10,636,530  
       
CASH, end of period $16,862,304     $10,962,615  
       
       
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:      
Interest paid during the period $155,819     $330,004  
Income tax paid during the period, net of refunds   4,215,616       3,743,864  
       
NON-CASH INVESTING ACTIVITIES:      
Equipment purchased via capital lease arrangements $ -     $231,972  
       

 
Contact:Tina Castillo, Tandy Leather Factory, Inc.(817) 872-3200 or tcastillo@tandyleather.comMark Gilbert, Magellan Fin, LLC(317) 867-2839 or MGilbert@MagellanFin.com

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