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">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 |