FORT WORTH, Texas, Nov. 10, 2014 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the third quarter of 2014. Consolidated net income for the quarter ended September 30, 2014 was $1.6 million compared to consolidated net income of $1.5 million for the third quarter of 2013, an increase of 4%. Fully diluted earnings per share for the quarter were $0.16, compared to $0.15 in the third quarter of last year. Total sales for the quarter ended September 30, 2014 were $19.4 million, up 5% from $18.5 million in the third quarter last year.
Consolidated sales for the nine months ended September 30, 2014 were $58.9 million, up 4% from 2013's comparable period sales of $56.7 million. Consolidated net income for the first three quarters of 2014 was up 10% to $5.2 million or $0.51 per fully-diluted share versus $4.8 million or $0.47 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $940,000 in the third quarter, an 8% improvement over last year's third quarter. Eighty stores comprised Tandy Leather's operations on September 30, 2014. For the first nine months of 2014, Retail Leathercraft's sales increased $2.3 million, or 7%, over the first nine months of 2013. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores, were down 3%, or $182,000, from the same quarter last year. For the first nine months of 2014, Wholesale Leathercraft's sales were down $359,000, or 2%, compared to the same period in 2013. For both the quarter and the year, the sales decline for this segment was due to the elimination of sales to the National Account customer group in early 2014. International Leathercraft, consisting of three stores located in the United Kingdom, Spain and Australia, reported a sales increase of 15%, or $134,000, compared to the third quarter of 2013. For the year, International Leathercraft's sales were up 10%, or $286,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 62.7%, down from 63.2% for the third quarter of 2013. For the first three quarters of this year, consolidated gross profit margin was 63.9%, increasing from last year's gross profit margin of 62.7%. Consolidated operating expenses rose approximately 5% for both the quarter and the year, or $422,000 in the current quarter and $1.4 million for the first nine months over the same periods a year ago. For the third quarter, the significant increases in expenses occurred in employee compensation, advertising and marketing, and store rent and utilities. For the year, expenses increases occurred in employee compensation, depreciation, advertising and marketing, and store rent and utilities. As a percentage of sales, consolidated operating margin declined slightly for the quarter to 12.7% compared to 13.0% last year's third quarter. On a year-to-date basis, consolidated operating margin increased from 13% last year to 13.7% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, "Overall, we are fairly pleased with our third quarter results, although our earnings were not quite as strong as we wanted. Gross profit margins remain strong, even though they pulled back slightly in the third quarter. It is possible the same will occur in the fourth quarter as we hope to sell a lot of leather during the quarter. The fluctuation in our gross profit margins from quarter to quarter is a good indication of the sales mix of leather versus non-leather."
Chief Financial Officer and Treasurer, Shannon Greene, added, "The increase in operating expenses is still trending slightly above the increase in sales for the year, although we were able to correct that for the third quarter, albeit minimally. As has been the case all year, the three expense categories contributing the majority of the increase are employee compensation, advertising and marketing, and store rents and utilities. Employee compensation is up due to an increase in employee headcount at the stores and higher store manager pay. We did some extra marketing campaigns to advertise some of our new product that arrived throughout the summer, rather than wait until the fall to advertise, and we're attending a number of new trade shows this year in order to reach new customers. The increase in rent and utilities is the result of the increase in store size. Employees, advertising and store operations are crucial to our success, so we will continue to look for other areas to trim expenses."
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 28 Leather Factory stores, located in 18 states and 3 Canadian provinces, 80 Tandy Leather retail stores, located in 36 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 09/30/14 | Quarter Ended 09/30/13 | |||||
|
Sales |
Operating Income |
Sales |
Operating Income |
|||
| Wholesale Leathercraft | $6,294,745 | $1,000,329 | $6,476,676 | $956,721 | ||
| Retail Leathercraft | 12,068,832 | 1,270,884 | 11,128,646 | 1,351,062 | ||
| International Leathercraft | 1,053,657 | 185,714 | 919,282 | 97,570 | ||
| Total Operations | $19,417,234 | $2,456,927 | $18,524,604 | $2,405,353 | ||
| Nine Months Ended 09/30/14 | Nine Months Ended 09/30/13 | |||||
|
Sales |
Operating Income |
Sales |
Operating Income |
|||
| Wholesale Leathercraft | $19,576,180 | $3,479,908 | $19,934,996 | $2,853,219 | ||
| Retail Leathercraft | 36,226,810 | 4,171,500 | 33,930,587 | 4,243,006 | ||
| International Leathercraft | 3,156,317 | 428,459 | 2,869,861 | 276,052 | ||
| Total Operations | $58,959,307 | $8,079,867 | $56,735,444 | $7,372,277 | ||
| Wholesale Leathercraft | Quarter Ended 09/30/14 | Quarter Ended 09/30/13 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 29 | $6,294,745 | 29 | $6,105,137 | ||
| National account group | n/a | -- | n/a | 371,539 | ||
| Total Sales – Wholesale Leathercraft | 29 | $6,294,745 | 29 | $6,476,676 | ||
| Wholesale Leathercraft | Nine Months Ended 09/30/14 | Nine Months Ended 09/30/13 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 29 | $19,227,530 | 29 | $18,897,124 | ||
| National account group | n/a | 348,650 | n/a | 1,037,872 | ||
| Total Sales – Wholesale Leathercraft | 29 | $19,576,180 | 29 | $19,934,996 | ||
| Retail Leathercraft | Quarter Ended 09/30/14 | Quarter Ended 09/30/13 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 76 | $11,664,143 | 76 | $10,979,163 | ||
| New store sales | 4 | 404,689 | -- | -- | ||
| Closed store sales | 2 | -- | 2 | 149,483 | ||
| Total Sales – Retail Leathercraft | 80 | $12,068,832 | 76 | $11,128,646 | ||
| Retail Leathercraft | Nine Months Ended 09/30/14 | Nine Months Ended 09/30/13 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 76 | $35,086,069 | 76 | $33,451,109 | ||
| New store sales | 4 | 1,140,741 | -- | -- | ||
| Closed store sales | 2 | -- | 2 | 479,478 | ||
| Total Sales – Retail Leathercraft | 80 | $36,226,810 | 76 | $33,930,587 | ||
| International Leathercraft | Quarter Ended 09/30/14 | Quarter Ended 09/30/13 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 3 | $1,053,657 | 3 | $919,282 | ||
| New store sales | -- | -- | -- | -- | ||
| Total Sales – Intl Leathercraft | 3 | $1,053,657 | 3 | $919,282 | ||
| International Leathercraft | Nine Months Ended 09/30/14 | Nine Months Ended 09/30/13 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 3 | $3,156,317 | 3 | $2,869,861 | ||
| New store sales | -- | -- | -- | -- | ||
| Total Sales – Intl Leathercraft | 3 | $3,156,317 | 3 | $2,869,861 | ||
| Tandy Leather Factory, Inc. | ||
| Consolidated Balance Sheets | ||
|
September 30, 2014 (unaudited) |
December 31, 2013 (audited) |
|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash | $4,866,016 | $11,082,679 |
| Accounts receivable-trade, net of allowance for doubtful accounts of $1,000 at 2014 and 2013 | 702,002 | 762,405 |
| Inventory | 39,365,204 | 26,300,830 |
| Prepaid income taxes | 463,329 | -- |
| Deferred income taxes | 419,824 | 309,533 |
| Prepaid expenses | 1,621,327 | 1,609,644 |
| Other current assets | 98,580 | 478,593 |
| Total current assets | 47,536,282 | 40,543,684 |
| PROPERTY AND EQUIPMENT, at cost | 21,808,785 | 20,290,990 |
| Less accumulated depreciation and amortization | (6,763,514) | (5,863,280) |
| 15,045,271 | 14,427,710 | |
| GOODWILL | 975,657 | 981,985 |
| OTHER INTANGIBLES, net of accumulated amortization of $655,000 and $622,000 in 2014 and 2013, respectively | 69,304 | 103,228 |
| Other assets | 334,991 | 341,959 |
| $63,961,505 | $56,398,566 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable-trade | $1,942,108 | $1,884,637 |
| Accrued expenses and other liabilities | 5,940,106 | 5,808,882 |
| Income taxes payable | -- | 272,198 |
| Current maturities of long-term debt | 6,202,500 | 202,500 |
| Total current liabilities | 14,084,714 | 8,168,217 |
| DEFERRED INCOME TAXES | 1,095,362 | 1,212,557 |
| LONG-TERM DEBT, net of current maturities | 1,991,250 | 2,396,250 |
| 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; 11,239,157 and 11,192,356 shares issued at 2014 and 2013; 10,245,534 and 10,198,733 shares outstanding at 2014 and 2013 | 26,979 | 26,862 |
| Paid-in capital | 5,993,953 | 5,892,907 |
| Retained earnings | 44,206,367 | 41,507,592 |
| Treasury stock at cost (993,623 shares at 2014 and 2013) | (2,894,068) | (2,894,068) |
| Accumulated other comprehensive income | (543,052) | 88,249 |
| Total stockholders' equity | 46,790,179 | 44,621,542 |
| $63,961,505 | $56,398,566 | |
| Tandy Leather Factory, Inc. | ||||
| Consolidated Statements of Income | ||||
| (Unaudited) | ||||
| For the Three and Nine Months Ended September 30, 2014 and 2013 | ||||
| THREE MONTHS | NINE MONTHS | |||
| 2014 | 2013 | 2014 | 2013 | |
| NET SALES | $19,417,234 | $18,524,604 | $58,959,307 | $56,735,444 |
| COST OF SALES | 7,242,525 | 6,823,661 | 21,289,269 | 21,183,551 |
| Gross profit | 12,174,709 | 11,700,943 | 37,670,038 | 35,551,893 |
| OPERATING EXPENSES | 9,717,782 | 9,295,590 | 29,590,171 | 28,179,616 |
| INCOME FROM OPERATIONS | 2,456,927 | 2,405,353 | 8,079,867 | 7,372,277 |
| OTHER INCOME (EXPENSE): | ||||
| Interest expense | (63,684) | (51,021) | (154,367) | (158,659) |
| Other, net | 37,525 | 13,777 | 44,203 | 138,800 |
| Total other income (expense) | (26,159) | (37,244) | (110,164) | (19,859) |
| INCOME BEFORE INCOME TAXES | 2430,768 | 2,368,109 | 7,969,703 | 7,352,418 |
| PROVISION FOR INCOME TAXES | 802,206 | 806,277 | 2,721,244 | 2,574,912 |
| NET INCOME | $1,628,562 | $1,561,832 | $5,248,459 | $4,777,506 |
| NET INCOME PER COMMON SHARE: | ||||
| Basic | $0.16 | $0.15 | $0.51 | $0.47 |
| Diluted | $0.16 | $0.15 | $0.51 | $0.47 |
| Weighted Average Number of Shares Outstanding: | ||||
| Basic | 10,203,711 | 10,176,744 | 10,200,411 | 10,163,490 |
| Diluted | 10,241,410 | 10,221,512 | 10,240,109 | 10,205,348 |
| Tandy Leather Factory, Inc. | ||
| Consolidated Statements of Cash Flows | ||
| (Unaudited) | ||
| For the Nine Months Ended September 30, 2014 and 2013 | ||
| 2014 | 2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $5,248,459 | $4,777,506 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
| Depreciation and amortization | 1,088,758 | 889,395 |
| Loss on disposal or abandonment of assets | 8,603 | 89,531 |
| Non-cash stock-based compensation | 48,441 | 11,686 |
| Deferred income taxes | (227,486) | 190,144 |
| Other | (606,442) | (70,330) |
| Net changes in assets and liabilities, net of effect of business acquisitions: | ||
| Accounts receivable-trade, net | 60,403 | (122,953) |
| Inventory | (13,064,374) | (3,629,704) |
| Income taxes | (735,527) | (119,811) |
| Prepaid expenses | (11,683) | (1,069,399) |
| Other current assets | 380,013 | (276,072) |
| Accounts payable-trade | 57,471 | 686,823 |
| Accrued expenses and other liabilities | 131,224 | (15,234) |
| Total adjustments | (12,870,599) | (3,435,924) |
| Net cash (used in) provided by operating activities | (7,622,140) | 1,341,582 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (1,719,465) | (2,415,484) |
| Proceeds from sale of assets | 19,935 | 515 |
| Decrease (increase) in other assets | 6,968 | (420) |
| Net cash used in investing activities | (1,692,562) | (2,415,389) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Net increase in revolving credit loan | 6,000,000 | -- |
| Payments on notes payable and long-term debt | (405,000) | (455,625) |
| Proceeds from issuance of common stock | 52,722 | 113,800 |
| Payment of cash dividend | (2,549,683) | -- |
| Net cash provided by (used in) financing activities | 3,098,039 | (341,825) |
| NET DECREASE IN CASH | (6,216,663) | (1,415,632) |
| CASH, beginning of period | 11,082,679 | 7,705,182 |
| CASH, end of period | $4,866,016 | $6,289,550 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
| Interest paid during the period | $154,367 | $158,659 |
| Income tax paid during the period, net of (refunds) | $3,690,817 | $2,507,842 |