FORT WORTH, Texas, May 11, 2012 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the first quarter of 2012. Net income for the quarter ended March 31, 2012 was $1.6 million, up from net income of $1.2 million in the first quarter of 2011, an increase of 37%. Fully-diluted earnings per share for the quarter were $0.15 in the current quarter, compared to $0.11 in last year's first quarter. Total sales for the first quarter were $18.2 million, an increase of 14.5% compared to 2011's first quarter sales of $15.9 million.
Sales from the Retail Leathercraft division, consisting of the Tandy Leather store chain, increased $1.6 million in the first quarter, up 19% from last year's first quarter sales. The store chain consisted of seventy-seven stores as of March 31, 2012, with one new store added since March 31, 2011. First quarter sales for the Wholesale Leathercraft division, consisting of the Leather Factory stores and the National Account group, increased $432,000, or 6% from the same quarter last year. International Leathercraft, consisting of stores in the United Kingdom, Australia and Spain, added sales of $742,000 for the quarter, a 46% increase over last year's first quarter sales of $509,000.
Consolidated gross profit margin increased from 60.0% in the first quarter of 2011 to 62.5% in the first quarter of 2012. Operating expenses increased $1.2 million in the first quarter of 2012 to $8.8 million compared to $7.6 million in the first quarter of 2011, increasing slightly as a percentage of sales from 47.9% in 2011 to 48.5% in 2012. Compared to the first quarter of 2011, the operating expenses associated with the new stores in Australia and Spain added $285,000 in operating expense. Other expense increases include employee compensation and benefits, advertising and marketing, rent, and store and office supplies.
Jon Thompson, Chief Executive Officer and President, commented, "We are generally pleased with our first quarter performance as both sales and earnings increased. Gross margin is up nicely, due to our strong retail sales and our ability to negotiate aggressive pricing for our stock leathers when buying large quantities and paying cash. Our new stores in Australia and Spain are developing as expected. We are not expecting the Spain store to be profitable this year, although that could change as the year progresses depending on how quickly the Spain customer base grows. The Australia store is coming along nicely and should be close to break even or slightly profitable by the end of the year."
Shannon L. Greene, Chief Financial Officer, added, "Operating expenses are slightly higher than we would prefer. However, the expenses associated with the new international stores caused the percentage increase in consolidated operating expenses to exceed the percentage increase in sales. That will even out as the sales in those stores ramp up. Our inventory levels are within internal projections, even though they appear high. Our stores are carrying more inventory in order to keep up with customer demand. Further, we made some special purchases late in the first quarter in anticipation of our nationwide Open House event held in April. Despite the various challenges, we met our internal targets for the first quarter and are on track to meet our 2012 guidance."
Tandy Leather Factory, Inc., http:/www.tandyleatherfactory.com">(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 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 77 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">http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.
The Tandy Leather Factory, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7760
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 03/31/12 | Quarter Ended 03/31/11 | ||||||
|
Sales |
Operating Income |
Sales |
Operating Income |
||||
| Wholesale Leathercraft | $7,152,417 | $1,232,852 | $6,720,709 | $808,314 | |||
| Retail Leathercraft | 10,282,814 | 1,358,725 | 8,649,152 | 1,004,042 | |||
| International Leathercraft | 741,847 | (37,402) | 509,179 | 100,132 | |||
| Total Operations | $18,177,078 | $2,554,175 | $15,879,040 | $1,912,488 | |||
| Wholesale Leathercraft | Quarter Ended 03/31/12 | Quarter Ended 03/31/11 | |||
| # of stores | Sales | # of stores | Sales | ||
| Same store sales | 29 | $6,340,785 | 29 | $5,933,280 | |
| National account group | n/a | 811,632 | n/a | 787,429 | |
| Total Sales – Wholesale Leathercraft | 29 | $7,152,417 | 29 | $6,720,709 | |
| Retail Leathercraft | Quarter Ended 03/31/12 | Quarter Ended 03/31/11 | |||
| # of stores | Sales | # of stores | Sales | ||
| Same store sales | 76 | $10,177,523 | 76 | $8,649,152 | |
| New store sales | 1 | 105,291 | -- | -- | |
| Total Sales – Retail Leathercraft | 77 | $10,282,814 | 76 | $8,649,152 | |
| International Leathercraft | Quarter Ended 03/31/12 | Quarter Ended 03/31/11 | |||
| # of stores | Sales | # of stores | Sales | ||
| Same store sales | 1 | $529,856 | 1 | $509,179 | |
| New store sales | 2 | 211,991 | -- | -- | |
| Total Sales – Retail Leathercraft | 3 | $741,847 | 1 | $509,179 | |
| TANDY LEATHER FACTORY, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
|
3/31/2012 (unaudited) |
12/31/2011 (audited) |
|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash | $6,431,259 | $10,765,591 |
| Short-term investments, including certificates of deposit | 87,893 | 423,893 |
| Accounts receivable-trade, net of allowance for doubtful accounts of $114,000 and $81,000 in 2012 and 2011, respectively | 1,449,157 | 1,328,579 |
| Inventory | 24,092,025 | 19,940,251 |
| Deferred income taxes | 314,574 | 281,251 |
| Other current assets | 1,402,828 | 948,459 |
| Total current assets | 33,777,736 | 33,688,024 |
| PROPERTY AND EQUIPMENT, at cost | 15,123,033 | 14,999,826 |
| Less accumulated depreciation and amortization | (4,925,845) | (4,700,476) |
| 10,197,188 | 10,299,350 | |
| GOODWILL | 989,945 | 987,009 |
| OTHER INTANGIBLES, net of accumulated amortization of $551,000 and $539,000 in 2012 and 2011, respectively | 176,127 | 187,292 |
| OTHER assets | 334,620 | 341,240 |
| $45,475,616 | $45,502,915 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable-trade | $2,347,811 | $1,622,697 |
| Accrued expenses and other liabilities | 4,669,916 | 4,641,191 |
| Income taxes payable | 796,666 | 638,897 |
| Current maturities of long-term debt | 202,500 | 202,500 |
| Total current liabilities | 8,016,893 | 7,105,285 |
| DEFERRED INCOME TAXES | 835,953 | 858,829 |
| LONG-TERM DEBT, net of current maturities | 3,054,375 | 3,105,000 |
| 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; 11,150,065 shares issued at 2012 and 2011; 10,156,442 shares outstanding at 2012 and 2011 | 26,760 | 26,760 |
| Paid-in capital | 5,741,543 | 5,736,543 |
| Retained earnings | 30,219,910 | 31,181,936 |
| Treasury stock at cost (993,623 shares at 2012 and 2011) | (2,894,068) | (2,894,068) |
| Accumulated other comprehensive income | 474,250 | 382,630 |
| Total stockholders' equity | 33,568,395 | 34,433,801 |
| $45,475,616 | $45,502,915 | |
| TANDY LEATHER FACTORY, INC. | ||
| CONSOLIDATED STATEMENTS OF INCOME | ||
| (UNAUDITED) | ||
| FOR THE THREE MONTHS ENDED MARCH 31, 2012 and 2011 | ||
| 2012 | 2011 | |
| NET SALES | $18,177,078 | $15,879,040 |
| COST OF SALES | 6,811,445 | 6,354,192 |
| Gross profit | 11,365,633 | 9,524,848 |
| OPERATING EXPENSES | 8,811,458 | 7,612,360 |
| INCOME FROM OPERATIONS | 2,554,175 | 1,912,488 |
| OTHER (INCOME) EXPENSE: | ||
| Interest expense | 58,392 | 62,003 |
| Other, net | (19,814) | 48,832 |
| Total other (income) expense | 38,578 | 110,835 |
| INCOME BEFORE INCOME TAXES | 2,515,597 | 1,801,653 |
| PROVISION FOR INCOME TAXES | 941,492 | 651,077 |
| NET INCOME | $1,574,105 | $1,150,576 |
| NET INCOME PER COMMON SHARE: | ||
| BASIC | $0.15 | $0.11 |
| DILUTED | $0.15 | $0.11 |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||
| BASIC | 10,156,442 | 10,156,442 |
| DILUTED | 10,172,950 | 10,169,701 |
| TANDY LEATHER FACTORY, INC. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (UNAUDITED) | ||
| FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 | ||
| 2012 | 2011 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $1,574,105 | $1,150,576 |
| Adjustments to reconcile net income to net cash used in operating activities: | ||
| Depreciation and amortization | 259,536 | 245,004 |
| (Gain) loss on disposal or abandonment of assets | 624 | (2,925) |
| Non-cash stock-based compensation | 5,000 | 18,900 |
| Deferred income taxes | (56,199) | 165,664 |
| Other | 80,297 | 102,119 |
| Net changes in assets and liabilities, net of effect of business acquisitions: | ||
| Accounts receivable-trade, net | (120,578) | (180,478) |
| Inventory | (4,151,774) | 26,173 |
| Income taxes | 157,769 | 1,499 |
| Other current assets | (454,369) | (613,680) |
| Accounts payable-trade | 725,114 | 776,976 |
| Accrued expenses and other liabilities | 28,725 | (2,185,751) |
| Total adjustments | (3,525,855) | (1,646,499) |
| Net cash used in operating activities | (1,951,750) | (495,923) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (139,841) | (169,186) |
| Proceeds from maturities of certificates of deposit | 336,000 | 5,000 |
| Proceeds from sale of assets | 1,395 | 21,513 |
| Decrease (increase) in other assets | 6,620 | 664 |
| Net cash provided by (used in) investing activities | 204,174 | (142,009) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Payments on notes payable and long-term debt | (50,625) | (50,625) |
| Payment of cash dividend | (2,536,131) | -- |
| Net cash used in financing activities | (2,586,756) | (50,625) |
| NET DECREASE IN CASH | (4,334,332) | (688,557) |
| CASH, beginning of period | 10,765,591 | 4,293,746 |
| CASH, end of period | $6,431,259 | $3,605,189 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
| Interest paid during the period | $58,392 | $62,003 |
| Income tax paid during the period, net of (refunds) | 860,843 | 411,721 |