FORT WORTH, Texas, Aug. 1, 2005 (PRIMEZONE) -- Tandy Leather Factory, Inc. (AMEX:TLF) today reported financial results for the second quarter of 2005. Consolidated net income for the quarter ended June 30, 2005, was $787,000 compared to consolidated net income of $516,000 for the second quarter of 2004. Fully diluted earnings per share for the quarter was $0.07, compared to $0.05 in the second quarter of last year. Total sales for the quarter ended June 30, 2005, increased 11.2 percent to $12.2 million from $10.9 million for the same quarter last year.
Consolidated sales for the six months ended June 30, 2005, were $24.9 million, an increase of 7.6 percent over 2004 first half total sales of $23.1 million. Consolidated net income for the first half of 2005 was $1.8 million or $0.17 per fully diluted share versus $1.5 million or $0.14 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $1.1 million in the second quarter, a 38 percent improvement over last year's second quarter. Forty-six stores comprised the Tandy Leather's retail operations on June 30, 2005, compared to thirty-two retail stores a year ago. Two stores were added in the second quarter of 2005, bringing the total number of new stores added in 2005 to four as of the end of the quarter. For the first six months of 2005, Tandy Leather sales increased $2.2 million, or 36 percent, over the first six months of 2004. Second-quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale centers and national account group, increased $241,000 over the same quarter last year, a 3.3 percent increase. The sales increase is the result of an increase of $388,000 at the wholesale centers that was partially offset by a sales decline in our national account group of $147,000. For the first six months of 2005, Wholesale Leathercraft's sales were down $288,000 over the same period in 2004. The national account group sales were down $584,000 for the year, offset somewhat by a sales increase at the wholesale centers of $296,000.
Consolidated gross profit margin for the current quarter was 56.6 percent, improving from 54.6 percent for the second quarter of 2004. For the first two quarters, consolidated gross profit margin for the current year was 56.5 percent, an improvement over last year's gross profit margin of 54.9 percent. Consolidated operating expenses rose $451,000 in the current quarter and $761,000 for the first six months over the same periods a year ago. Costs associated with the new retail stores (personnel, rents, utilities, etc.), marketing and advertising costs account for the majority of the increase.
Wray Thompson, Chairman and Chief Executive Officer, commented, "Overall, we had a strong second quarter. Our Retail Leathercraft segment reported a 38 percent sales gain for the quarter and same store sales, consisting of 32 Tandy Leather stores, were up 8 percent. The Leather Factory wholesale centers, part of the Wholesale Leathercraft segment, reported a 6.5 percent sales gain for the quarter, while our national account group ended the quarter with a 10 percent sales decline compared to the second quarter of 2004. This group did achieve a sales gain for the month of June, however, a sign that we are making some progress in our efforts to get them back on a positive track. All segments contributed to the increase in operating income of 55 percent and 25 percent for the second quarter and year, respectively. Based on our results for the first half of the year, we're raising our 2005 earnings guidance to 30 cents to 34 cents."
Tandy Leather Factory, Inc., (http://www.leatherfactory.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 as The Leather Factory through its wholesale centers and as Tandy Leather Company through its retail stores (http://www.tandyleather.com). Its common stock trades on the American Stock Exchange with the symbol "TLF".
This news release may contain forward-looking statements. All forward-looking statements made here or in other news releases issued by Tandy Leather Factory, Inc. are based on current expectations as of the date of the release. These forward-looking statements involve risks and uncertainties that could cause the results of Tandy Leather Factory, Inc. to differ materially from management's current expectations. Many of these risks and uncertainties are detailed from time to time in TLF's reports filed with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and the most recent quarterly report on Form 10-Q. Investors are reminded that past performance may not be predictive of future results.
Selected financial data:
Quarter Ended 06/30/05 Quarter Ended 06/30/04
------------------------ ------------------------
Operating Operating
Sales Income Sales Income
----------- ----------- ----------- -----------
Wholesale
Leathercraft $ 7,665,067 $ 861,178 $ 7,423,795 $ 645,145
Retail
Leathercraft 4,094,303 414,733 2,972,746 190,756
Other 422,329 45,704 563,272 17,935
----------- ----------- ----------- -----------
Total Operations $12,181,699 $ 1,321,615 $10,959,813 $ 853,836
=========== =========== =========== ===========
Six Months Ended 06/30/05 Six Months Ended 06/30/04
------------------------ ------------------------
Operating Operating
Sales Income Sales Income
----------- ----------- ----------- -----------
Wholesale
Leathercraft $15,578,959 $ 2,030,159 $15,866,885 $ 1,718,178
Retail
Leathercraft 8,379,909 801,452 6,139,484 492,322
Other 930,347 59,551 1,134,320 90,470
----------- ----------- ----------- -----------
Total Operations $24,889,215 $ 2,891,162 $23,140,689 $ 2,300,970
=========== =========== =========== ===========
Wholesale Leathercraft Quarter Quarter
Ended Ended
06/30/05 06/30/04
----------- -----------
Sales Sales
----------- -----------
Distribution centers $ 6,381,865 $ 5,993,624
National account group 1,283,202 1,430,171
----------- -----------
Total Sales -- Wholesale Leathercraft $ 7,665,067 $ 7,423,795
=========== ===========
Wholesale Leathercraft Six Months Six Months
Ended Ended
06/30/05 06/30/04
----------- -----------
Sales Sales
----------- -----------
Distribution centers $13,030,817 $12,734,918
National account group 2,548,142 3,131,967
----------- -----------
Total Sales -- Wholesale Leathercraft $15,578,959 $15,866,885
=========== ===========
Retail Leathercraft Quarter Quarter
Ended 06/30/05 Ended 06/30/04
------------------------ -----------------------
# of stores Sales # of stores Sales
------------------------ -----------------------
Same store sales 32 $3,203,196 32 $2,972,746
New store sales 14 891,107 -- --
---------- ----------
Total Sales --
Retail Leathercraft $4,094,303 $2,972,746
========== ==========
Retail Leathercraft Six Months Six Months
Ended 06/30/05 Ended 06/30/04
------------------------ -----------------------
# of stores Sales # of stores Sales
------------------------ -----------------------
Same store sales 29 $6,191,872 29 $6,011,473
New store sales 17 2,188,037 3 128,011
---------- ----------
Total Sales --
Retail Leathercraft $8,379,909 $6,139,484
========== ==========
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
THREE MONTHS SIX MONTHS
------------ ----------
2005 2004 2005 2004
------------------------ ------------------------
NET SALES $12,181,699 $10,959,813 $24,889,215 $23,140,689
COST OF SALES 5,281,828 4,978,754 10,832,061 10,434,717
----------- ----------- ----------- -----------
Gross Profit 6,899,871 5,981,059 14,057,154 12,705,972
OPERATING EXPENSES 5,578,256 5,127,223 11,165,992 10,405,002
----------- ----------- ----------- -----------
INCOME FROM
OPERATIONS 1,321,615 853,836 2,891,162 2,300,970
Interest expense -- 12,471 3,188 26,109
Other, net (39,684) 25,353 (24,219) 27,089
----------- ----------- ----------- -----------
Total other
expense (39,684) 37,824 (21,031) 53,198
----------- ----------- ----------- -----------
INCOME BEFORE
INCOME TAXES 1,361,299 816,012 2,912,193 2,247,772
PROVISION FOR
INCOME TAXES 573,630 299,799 1,075,301 760,594
----------- ----------- ----------- -----------
NET INCOME $ 787,669 $ 516,213 $ 1,836,892 $ 1,487,178
=========== =========== =========== ===========
NET INCOME
PER COMMON
SHARE -- BASIC $ 0.07 $ 0.05 $ 0.17 $ 0.14
=========== =========== =========== ===========
NET INCOME
PER COMMON
SHARE
-- DILUTED $ 0.07 $ 0.05 $ 0.17 $ 0.14
=========== =========== =========== ===========
Weighted Average
Number of
Shares
Outstanding:
Basic 10,615,711 10,553,243 10,600,065 10,530,119
Diluted 10,955,191 11,006,638 10,933,342 11,011,525
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
06/30/05 12/31/04
(unaudited)
------------ ------------
Cash $ 2,815,421 $ 2,560,202
Accounts receivable,
net of allowance for
doubtful accounts 2,520,900 2,032,289
Inventory 14,956,985 12,749,709
Income tax receivable 44,440 -
Deferred income taxes 222,564 199,308
Other current assets 946,644 629,723
------------ ------------
Total current assets 21,506,954 18,171,231
Property and equipment, net 1,771,648 1,904,565
Goodwill and other intangibles, net 1,158,825 1,180,618
Other assets 1,049,474 910,749
------------ ------------
$ 25,486,901 $ 22,167,163
============ ============
Accounts payable $ 2,010,616 $ 1,954,146
Accrued expenses and
other liabilities 3,410,518 1,682,003
Income taxes payable 262,248 22,764
Current maturities of
capital lease obligations
and long-term debt 134,067 134,067
------------ ------------
Total current liabilities 5,817,449 3,792,980
Deferred income taxes 227,216 313,006
Capital lease obligations and
long-term debt, net of
current maturities 178,756 750,944
------------ ------------
Total Liabilities 6,223,421 4,856,930
------------ ------------
Common stock 25,576 25,345
Paid-in capital 4,912,931 4,796,999
Retained earnings 14,295,651 12,458,760
Treasury stock (25,487) (25,487)
Accumulated other comprehensive loss 54,809 54,616
------------ ------------
Total Stockholders' Equity 19,263,480 17,310,233
------------ ------------
$ 25,486,901 $ 22,167,163
============ ============
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
2005 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,836,892 $ 1,487,178
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation & amortization 235,678 252,701
Gain on disposal of assets (7,703) --
Deferred income taxes (109,046) (66,398)
Other 2,341 (19,240)
Net changes in assets and
liabilities:
Accounts receivable-trade, net (488,612) (867,259)
Inventory (2,207,276) (1,064,766)
Income taxes 195,044 201,635
Other current assets (316,922) (106,548)
Accounts payable 56,470 342,974
Accrued expenses and other
liabilities 1,728,515 102,301
---------- ----------
Total adjustments (911,510) (1,224,599)
---------- ----------
Net cash provided by
operating activities 925,381 262,578
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (83,115) (131,050)
Payments in connection with
businesses acquired - (125,452)
Proceeds from sale of assets 7,703 -
Increase in other assets (138,724) 12,287
----------- -----------
Net cash used in
investing activities (214,137) (244,215)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving
credit loans (505,154) (692,984)
Payments on notes payable and
long-term debt (67,034) (1,134)
Payments received on notes secured by
common stock - 5,000
Repurchase of common stock
(treasury stock) - -
Proceeds from issuance of common stock 116,163 124,015
---------- ----------
Net cash used in
financing activities (456,025) (565,103)
---------- ----------
NET CHANGE IN CASH 255,219 (546,740)
CASH, beginning of period 2,560,202 1,728,344
---------- ----------
CASH, end of period $ 2,815,421 $ 1,181,604
=========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid during the period $ 3,188 $ 29,639
Income taxes paid during the period,
net of (refunds) 972,205 577,678