FORT WORTH, Texas--(BUSINESS WIRE)--March 8, 2006--Tandy Leather Factory, Inc. (AMEX:TLF) today reported financial results for the year and fourth quarter ended December 31, 2005. Consolidated net income for the quarter was $1.2 million compared to consolidated net income of $739,000 for the fourth quarter of 2004. Fully diluted earnings per share for the quarter were $0.11, compared to $0.06 for the same quarter of the previous year. Total sales for the quarter ended December 31, 2005 increased 13.1% to $14.0 million from $12.4 million for the fourth quarter of 2004. Consolidated sales for the year ended December 31, 2005 were $50.7 million, an increase of 9.9% over total sales of $46.1 million for 2004. Consolidated net income for 2005 was $3.7 million or $0.34 per fully-diluted share versus $2.6 million or $0.24 per fully-diluted share for 2004.
Sales in the Retail Leathercraft division for the fourth quarter of 2005 increased $1.1 million over the previous year's fourth quarter, representing a 26% improvement. Fifty Tandy Leather retail stores comprised Retail Leathercraft's operations on December 31, 2005, compared to forty-two retail stores a year earlier. Two stores were added in the fourth quarter of 2005, bringing the total number of new stores added in 2005 to eight. For 2005, Retail Leathercraft's sales increased $4.5 million, or 33%, over 2004.
Fourth quarter sales for the Wholesale Leathercraft division, which includes the thirty Leather Factory wholesale centers and national accounts group, increased $514,000 over the same quarter of 2004, a 6.7% improvement. The wholesale centers' sales increased $416,000, or 6.3%, and national account sales were up $97,000, or 9.5%. For the year, Wholesale Leathercraft's sales were up $414,000, or 1.4%. Sales in the wholesale centers increased $877,000, or 3.5%, while sales to national accounts were down $463,000, or 8.7%, for the year.
Consolidated gross profit margin for the fourth quarter was 56.5%, an improvement from 54.7% for the fourth quarter of 2004. For 2005, consolidated gross profit margin was 56.7%, an improvement over the previous year's gross profit margin of 55.1%. Consolidated operating expenses for the fourth quarter of 2005 were 43.8% of sales, improving from 45.2% for the same quarter of 2004. Operating expenses totaled 45.7% of sales for 2005, a slight improvement from 45.9% for 2004.
Wray Thompson, Chairman and Chief Executive Officer, commented, "We are very pleased with our results for 2005. Our sales grew by 10%, but more importantly, our operating profit was up by 30%, which tells me that we're gaining operating efficiency. We expect to carry that momentum into 2006 with the Tandy Leather store chain driving sales growth. Our goal for 2006 will be continued sales growth with greater earnings growth. As a result, while we're not changing our 2006 revenue guidance at this point, we are raising our 2006 earnings guidance."
Financial Outlook:
The following statements are based on TLF's current expectations as of March 8, 2006. These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.
The Company estimates consolidated net sales for 2006 will be in the range of $53 to $56 million and diluted EPS is expected to be in the range of $0.40 to $0.44. Average diluted shares outstanding in 2006 are estimated to be approximately 11 million shares. The Company assumes an effective tax rate annually between 35% and 37%.
Tandy Leather Factory, Inc., headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, belt buckles and adornments, 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 distribution centers and as Tandy Leather Company through its retail stores. 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 12/31/05 Quarter Ended 12/31/04
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $8,209,725 $1,039,005 $7,695,753 $706,509
Retail Leathercraft 5,445,594 723,009 4,322,466 549,784
Other 397,906 22,109 407,301 (74,060)
------------ ----------- ------------ -----------
Total Operations $14,053,225 $1,784,123 $12,425,520 $1,182,233
============ =========== ============ ===========
Twelve Months Ended Twelve Months Ended
12/31/05 12/31/04
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $31,046,268 $3,721,890 $30,630,121 $3,013,316
Retail Leathercraft 18,023,214 1,766,960 13,515,662 1,210,566
Other 1,650,092 84,560 2,000,501 34,565
------------ ----------- ------------ -----------
Total Operations $50,719,574 $5,573,410 $46,146,284 $4,258,447
============ =========== ============ ===========
Tandy Leather Retail Stores Quarter Quarter
Ended Ended
12/31/05 12/31/04
# of ----------- # of -----------
stores Sales stores Sales
------- ----------- ------- -----------
Stores opened prior to
10/01/04 39 $4,671,016 39 $4,219,535
Stores opened after 10/01/04 11 774,578 3 102,931
----------- -----------
Total Sales - Tandy Leather $5,445,594 $4,322,466
=========== ===========
Tandy Leather Retail Stores Year Ended Year Ended
12/31/05 12/31/04
# of ------------ # of ------------
stores Sales stores Sales
------- ------------ ------- ------------
Stores opened prior to
07/01/04 32 $13,695,434 32 $12,687,566
Stores opened after 07/01/04 18 4,327,780 10 828,096
------------ ------------
Total Sales - Tandy Leather $18,023,214 $13,515,662
============ ============
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2005 AND 2004
Three Months Twelve Months
2005 2004 2005 2004
------------ ------------ ------------ ------------
NET SALES $14,053,225 $12,425,520 $50,719,574 $46,146,284
COST OF SALES 6,119,138 5,630,880 21,964,530 20,706,239
------------ ------------ ------------ ------------
Gross Profit 7,934,087 6,794,640 28,755,044 25,440,045
OPERATING EXPENSES 6,149,964 5,612,406 23,181,633 21,181,599
------------ ------------ ------------ ------------
INCOME FROM
OPERATIONS 1,784,123 1,182,234 5,573,411 4,258,446
Interest expense - 12,380 3,188 53,400
Other, net (33,287) (5,090) (137,690) (8,600)
------------ ------------ ------------ ------------
Total other
expense (33,287) 7,290 (134,502) 44,800
------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES 1,817,410 1,174,944 5,707,913 4,213,646
PROVISION FOR
INCOME TAXES 636,676 435,464 1,994,199 1,559,605
------------ ------------ ------------ ------------
NET INCOME $1,180,734 $739,480 $3,713,714 $2,654,041
============ ============ ============ ============
NET INCOME PER
COMMON SHARE -
BASIC $0.11 $0.07 $0.35 $0.25
============ ============ ============ ============
NET INCOME PER
COMMON SHARE -
DILUTED $0.11 $0.06 $0.34 $0.24
============ ============ ============ ============
Weighted Average
Number of Shares
Outstanding:
Basic 10,735,702 10,554,776 10,643,004 10,543,994
Diluted 11,047,426 10,888,883 10,976,240 10,961,993
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
12/31/05 12/31/04
(unaudited)
------------ ------------
Cash $3,215,727 $2,560,202
Accounts receivable, net of allowance for
doubtful accounts 2,178,848 2,032,289
Inventory 15,669,182 12,749,709
Deferred income taxes 273,872 199,308
Other current assets 358,058 629,723
------------ ------------
Total current assets 21,695,687 18,171,231
Property and equipment, net 1,759,477 1,904,565
Goodwill and other intangibles, net 1,145,578 1,180,618
Other assets 1,079,731 910,749
------------ ------------
$25,680,473 $22,167,163
============ ============
Accounts payable $1,220,420 $1,954,146
Accrued expenses and other liabilities 2,550,573 1,682,003
Income taxes payable 199,581 22,764
Notes payable and current maturities of long-
term debt 134,067 134,067
------------ ------------
Total current liabilities 4,104,641 3,792,980
Deferred income taxes 206,253 313,006
Notes payable and long-term debt, net of
current maturities 111,722 750,944
------------ ------------
Total liabilities 4,422,616 4,856,930
------------ ------------
Common stock 25,780 25,345
Paid-in capital 4,988,445 4,796,999
Treasury stock (5,859 shares) (25,487) (25,487)
Retained earnings 16,172,475 12,458,760
Accumulated other comprehensive loss 96,644 54,616
------------ ------------
Total Stockholders' Equity 21,257,857 17,310,233
------------ ------------
$25,680,473 $22,167,163
============ ============
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2005 AND 2004
2005 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,713,714 $2,654,041
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 456,706 452,654
Loss on disposal of assets (9,145) (2,000)
Deferred income taxes (181,317) 38,721
Other 38,276 20,123
Net changes in assets and liabilities:
Accounts receivable-trade, net (146,559) (112,738)
Inventory (2,919,473) (1,303,762)
Income taxes 176,817 228,787
Other current assets 271,665 (102,163)
Accounts payable (733,726) 406,357
Accrued expenses and other liabilities 868,570 658,692
----------- -----------
Total adjustments (2,178,186) 284,670
----------- -----------
Net cash provided by operating activities 1,535,528 2,938,711
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (272,826) (369,559)
Payments in connection with businesses
acquired - (556,794)
Proceeds from sale of assets 9,145 2,000
Increase in other assets (168,982) 10,280
----------- -----------
Net cash used in investing activities (432,663) (914,073)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving credit
loans (505,154) (1,287,830)
Payments on notes payable and long-term debt (134,067) (23,478)
Payments received on notes secured by common
stock - 20,000
Repurchase of common stock (treasury stock) - (25,487)
Proceeds from issuance of common stock 191,881 124,015
----------- -----------
Net cash used in financing activities (447,340) (1,192,780)
----------- -----------
NET CHANGE IN CASH 655,525 831,858
CASH, beginning of period 2,560,202 1,728,344
----------- -----------
CASH, end of period $3,215,727 $2,560,202
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid during the period $3,188 $59,773
Income taxes paid during the period, net of
(refunds) 1,954,364 1,197,347
NON-CASH INVESTING ACTIVITIES:
Equipment acquired under capital lease
financing arrangements - $402,201
CONTACT:
Tandy Leather Factory, Inc., Fort Worth
Wray Thompson, 817-496-4414
or
Shannon L. Greene, 817-496-4414
sgreene@leatherfactory.com
SOURCE: Tandy Leather Factory, Inc.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Tandy Leather Factory, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |