FORT WORTH, Texas--(BUSINESS WIRE)--April 25, 2006--Tandy Leather Factory, Inc. (AMEX:TLF) today reported financial results for the first quarter of 2006. Net income for the quarter ended March 31, 2006 was $1.3 million, a 28% increase from $1.0 million for the first quarter of 2005. Fully-diluted earnings per share for the quarter increased to $0.12 from $0.10 in the first quarter of last year. Total sales for the first quarter were $14.4 million, up 13% from $12.7 million in the same quarter last year.
Sales from the Retail Leathercraft operation, consisting of the Tandy Leather retail store chain, increased $1.3 million in the first quarter, a 29% improvement over last year's first quarter. The chain consists of fifty-six stores as of March 31, 2006, compared to forty-four retail stores a year ago. Six new stores were opened in the first quarter of 2006. First quarter sales for the Wholesale Leathercraft operation, consisting of the Leather Factory wholesale centers and the National Account group, increased $474,000 or 6% over the same quarter last year.
Consolidated gross profit margins held steady at 56.3% for the first quarters of 2006 and 2005. Operating expenses increased from $5.6 million in the first quarter of 2005 to $6.1 million in the first quarter of 2006, but decreased as a percentage of revenue from 43.9% in 2005 to 42.1% in 2006. Expenses (rent, personnel, utilities, etc.) associated with new retail stores, increases in bonuses earned by store managers, and higher freight costs were the primary contributors to the additional expense.
Wray Thompson, Chairman and Chief Executive Officer, commented, "I am very pleased with our first quarter results because we accomplished our goal of strong sales growth with greater earnings growth. Our sales grew by 13% this quarter while our operating income grew by 30%. The Retail Leathercraft division, consisting of the expanding Tandy Leather store chain, will continue to be the primary driver of growth. However, the Wholesale Leathercraft division is performing extremely well and beating our internal targets for sales growth. We are optimistic about our momentum generated in the first quarter and are working hard to continue that momentum into the second quarter."
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.
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
3/31/06
(unaudited) 12/31/05
------------ -----------
Cash $ 4,770,970 $ 3,215,727
Accounts receivable, net of allowance for
doubtful accounts 2,985,271 2,178,848
Inventory 15,043,787 15,669,182
Deferred income taxes 240,697 273,872
Other current assets 924,541 358,058
----------- -----------
Total current assets 23,965,266 21,695,687
Property and equipment, net 1,784,657 1,759,477
Goodwill and other intangibles, net 1,135,297 1,145,578
Other assets 1,079,270 1,079,731
----------- -----------
$27,964,490 $25,680,473
=========== ===========
Accounts payable $ 2,267,647 $ 1,220,420
Accrued expenses and other liabilities 1,895,321 2,550,573
Income taxes payable 719,824 199,581
Current maturities of capital lease
obligations and long-term debt 134,067 134,067
----------- -----------
Total current liabilities 5,016,859 4,104,641
Deferred income taxes 216,327 206,253
Capital lease obligations and long-term debt,
net of current maturities 78,206 111,722
----------- -----------
Total Liabilities 5,311,392 4,422,616
----------- -----------
Common stock 25,855 25,780
Paid-in capital 5,048,651 4,988,445
Retained earnings 17,518,738 16,172,475
Treasury stock (25,487) (25,487)
Accumulated other comprehensive loss 85,341 96,644
----------- -----------
Total Stockholders' Equity 22,653,098 21,257,857
----------- -----------
$27,964,490 $25,680,473
=========== ===========
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
Three Months
2006 2005
----------- -----------
NET SALES $14,413,649 $12,707,516
COST OF SALES 6,299,515 5,550,233
----------- -----------
Gross Profit 8,114,134 7,157,283
OPERATING EXPENSES 6,072,346 5,587,736
----------- -----------
INCOME FROM OPERATIONS 2,041,788 1,569,547
Interest expense - 3,188
Other, net (18,110) 15,465
----------- -----------
Total other expense (18,110) 18,653
----------- -----------
INCOME BEFORE INCOME TAXES 2,059,898 1,550,894
PROVISION FOR INCOME TAXES 713,635 501,672
----------- -----------
NET INCOME $ 1,346,263 $ 1,049,222
=========== ===========
NET INCOME PER COMMON SHARE - BASIC $ 0.13 $ 0.10
=========== ===========
NET INCOME PER COMMON SHARE-DILUTED $ 0.12 $ 0.10
=========== ===========
WEIGHTED AVG NUMBER OF SHARES OUTSTANDING:
Basic 10,756,745 10,584,244
Diluted 11,102,906 10,911,103
Selected financial data:
Quarter Ended 03/31/06 Quarter Ended 03/31/05
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $ 8,388,265 $1,519,020 $ 7,913,892 $1,168,982
Retail Leathercraft 5,541,082 495,824 4,285,606 386,718
Other 484,302 26,944 508,018 13,847
----------- ---------- ----------- ----------
Total Operations $14,413,649 $2,041,788 $12,707,516 $1,569,547
=========== ========== =========== ==========
Quarter Ended Quarter Ended
Wholesale Leathercraft 03/31/06 03/31/05
------------------ ------------------
# of # of
stores Sales stores Sales
-------------------------------------
Distribution centers 29 $7,083,659 29 $6,562,790
Center converted to retail store 1 28,642 1 86,162
National account group 1,275,964 1,264,940
----------- -----------
Total Sales - Wholesale
Leathercraft $8,388,265 $7,913,892
=========== ===========
Retail Leathercraft Quarter Ended Quarter Ended
03/31/06 03/31/05
------------------ ------------------
# of # of
stores Sales stores Sales
-------------------------------------
Same store sales 42 $4,724,519 42 4,235,971
Store converted from distr center 1 98,906 - -
New store sales 13 717,657 2 49,635
----------- -----------
Total Sales - Retail Leathercraft $5,541,082 $4,285,606
=========== ===========
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
2006 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,346,263 $1,049,222
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 97,185 118,431
Gain on disposal of assets - (7,703)
Deferred income taxes 43,249 (81,967)
Other (10,592) 24,511
Net changes in assets and liabilities:
Accounts receivable-trade, net (806,423) (512,929)
Inventory 625,395 (377,349)
Income taxes 520,243 510,797
Other current assets (566,483) (245,264)
Accounts payable 1,047,227 (432,652)
Accrued expenses and other liabilities (655,252) 454,942
---------- ----------
Total adjustments 294,549 (549,183)
---------- ----------
Net cash provided by operating
activities 1,640,812 500,039
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (112,793) (29,030)
Proceeds from sale of assets - 7,703
Increase in other assets 461 (88,502)
---------- ----------
Net cash used in investing activities (112,332) (109,829)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving credit
loans - (505,154)
Payments on notes payable and long-term debt (33,517) (33,517)
Excess tax benefits from share-based
compensation expense 22,480 -
Proceeds from issuance of common stock 37,800 55,350
---------- ----------
Net cash provided by (used in) financing
activities 26,763 (483,321)
---------- ----------
NET CHANGE IN CASH 1,555,243 (93,111)
CASH, beginning of period 3,215,727 2,560,202
---------- ----------
CASH, end of period $4,770,970 $2,467,091
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid during the period - $ 3,188
Income taxes paid during the period, net of
(refunds) $ 48,761 72,842
CONTACT: Tandy Leather Factory, Inc.
Wray Thompson, 817-496-4414
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.
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