FORT WORTH, Texas--(BUSINESS WIRE)--Aug. 2, 2006--Tandy Leather Factory, Inc. (AMEX:TLF) today reported financial results for the second quarter of 2006. Consolidated net income for the quarter ended June 30, 2006 was $1,132,000 compared to consolidated net income of $787,000 for the second quarter of 2005. Fully diluted earnings per share for the quarter was $0.10, compared to $0.07 in the second quarter of last year. Total sales for the quarter ended June 30, 2006 increased 10% to $13.4 million from $12.1 million for the same quarter last year.
Consolidated sales for the six months ended June 30, 2006 were $27.8 million, an increase of 12% over 2005 first half total sales of $24.9 million. Consolidated net income for the first half of 2006 was $2.5 million or $0.22 per fully-diluted share versus $1.8 million or $0.17 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 27% improvement over last year's second quarter. Sixty-one stores comprised the Tandy Leather's retail operations on June 30, 2006, compared to forty-six retail stores a year ago. Five stores were added in the second quarter of 2006 bringing the total number of new stores added in 2006 to eleven as of the end of the quarter. For the first six months of 2006, Tandy Leather sales increased $2.3 million, or 28%, over the first six months of 2005. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale centers and national account group, increased $83,000 over the same quarter last year, a 1% increase. For the first six months of 2006, Wholesale Leathercraft's sales were up $558,000, or 4%, over the same period in 2005.
Consolidated gross profit margin for the current quarter was 57.6%, improving from 56.6% for the second quarter of 2005. For the first two quarters, consolidated gross profit margin for the current year was 56.9%, a slight improvement over last year's gross profit margin of 56.5%. Consolidated operating expenses rose $377,000 in the current quarter and $930,000 for the first six months over the same periods a year ago. Costs associated with the new retail stores (personnel, rents, utilities, etc.), are the primary drivers of the increases. Consolidated operating margins improved for the quarter and year to 12.7% and 13.4%, respectively, compared to 10.8% and 11.6% a year ago.
Wray Thompson, Chairman and Chief Executive Officer, commented, "Overall, we are pleased with the quarter. Same store sales in our Retail Leathercraft segment, were up 8% and 9% for the quarter and the year, respectively. In our Wholesale Leathercraft segment, both the wholesale centers and the National Account group reported sales gains of 1-5% for the quarter and the year. We continue to achieve our goal of greater operating efficiency as our consolidated operating margins improved by 28% and 29% for the quarter and the year, respectively, on sales gains of 10% and 11%."
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 06/30/06 Quarter Ended 06/30/05
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $7,7484,892 $1,245,696 $7,665,067 $861,177
Retail Leathercraft 5,196,198 464,538 4,094,303 414,734
Other 447,992 (11,483) 422,329 45,703
------------ ----------- ------------ -----------
Total Operations $13,393,082 $1,698,751 $12,181,699 $1,321,614
============ =========== ============ ===========
Six Months Ended Six Months Ended
06/30/06 06/30/05
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $16,137,156 $2,764,714 $15,578,959 $2,030,159
Retail Leathercraft 10,737,280 960,362 8,379,909 801,452
Other 932,295 15,463 930,347 59,550
------------ ----------- ------------ -----------
Total Operations $27,806,731 $3,740,539 $24,889,215 $2,891,161
============ =========== ============ ===========
Wholesale Leathercraft Quarter Quarter
Ended Ended
06/30/05 06/30/05
------------ ------------
Sales Sales
------------ ------------
Distribution centers $6,441,428 $6,289,667
Center converted to retail store -- 92,197
National account group 1,307,464 1,283,203
------------ ------------
Total Sales - Wholesale Leathercraft $7,748,892 $7,665,067
============ ============
Six Months Six Months
Ended Ended
Wholesale Leathercraft 06/30/06 06/30/05
------------ ------------
Sales Sales
------------ ------------
Distribution centers $13,525,087 $12,852,458
Center converted to retail store 28,641 178,359
National account group 2,583,428 2,548,142
------------ ------------
Total Sales - Wholesale Leathercraft $16,137,156 $15,578,959
============ ============
Retail Leathercraft Quarter Ended Quarter Ended
06/30/06 06/30/05
-------------------- -------------------
# of # of
stores Sales stores Sales
------- -------------------- -----------
Same store sales 44 $4,358,929 44 $4,054,993
Store converted from whsl
center 1 117,771 -- --
New store sales 16 719,498 2 39,310
------------ -----------
Total Sales - Retail
Leathercraft 61 $5,196,198 46 $4,094,303
============ ===========
Retail Leathercraft Six Months Ended Six Months Ended
06/30/06 06/30/05
-------------------- -------------------
# of # of
stores Sales stores Sales
------- -------------------- -----------
Same store sales 42 $8,944,653 42 $8,178,808
Store converted from whsl
center 1 216,677 -- --
New store sales 18 1,575,950 4 201,101
------------ -----------
Total Sales - Retail
Leathercraft 61 $10,737,280 46 $8,379,909
============ ===========
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
THREE MONTHS SIX MONTHS
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------------------- ------------
NET SALES $13,393,082 $12,181,699 $27,806,731 $24,889,215
COST OF SALES 5,670,782 5,281,828 11,970,297 10,832,061
------------ ------------ ------------ ------------
Gross Profit 7,722,300 6,899,871 15,836,434 14,057,154
OPERATING EXPENSES 6,023,549 5,578,257 12,095,895 11,165,993
------------ ------------ ------------ ------------
INCOME FROM
OPERATIONS 1,698,751 1,321,614 3,740,539 2,891,161
Interest expense -- -- -- 3,188
Other, net (29,421) (39,684) (47,530) (24,219)
------------ ------------ ------------ ------------
Total other
expense (29,421) (39,684) (47,530) (21,031)
------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES 1,728,172 1,361,298 3,788,069 2,912,192
PROVISION FOR
INCOME TAXES 595,678 573,629 1,309,313 1,075,301
------------ ------------ ------------ ------------
NET INCOME $1,132,494 $787,669 $2,478,756 $1,836,891
============ ============ ============ ============
NET INCOME PER
COMMON SHARE -
BASIC $0.11 $0.07 $0.23 $0.17
============ ============ ============ ============
NET INCOME PER
COMMON SHARE -
DILUTED $0.10 $0.07 $.022 $0.17
============ ============ ============ ============
Weighted Average
Number of Shares
Outstanding:
Basic 10,790,661 10,615,802 10,773,772 10,600,156
Diluted 11,112,475 10,955,282 11,107,692 10,933,433
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
06/30/06 12/31/05
(unaudited)
------------ ------------
Cash $5,522,468 $3,215,727
Accounts receivable, net of allowance for
doubtful accounts 2,733,855 2,178,848
Inventory 16,920,547 15,669,182
Deferred income taxes 264,290 273,872
Other current assets 565,579 358,058
------------ ------------
Total current assets 26,006,739 21,695,687
Property and equipment, net 1,816,917 1,759,477
Goodwill and other intangibles, net 1,130,959 1,145,578
Other assets 1,104,697 1,079,731
------------ ------------
$30,059,312 $25,680,473
============ ============
Accounts payable $2,395,919 $1,220,420
Accrued expenses and other liabilities 3,252,659 2,550,573
Income taxes payable 112,368 199,581
Current maturities of capital lease
obligations and long-term debt 134,067 134,067
------------ ------------
Total current liabilities 5,895,013 4,104,641
Deferred income taxes 223,738 206,253
Capital lease obligations and long-term debt,
net of current maturities 44,689 111,722
------------ ------------
Total Liabilities 6,163,440 4,422,616
------------ ------------
Common stock 25,948 25,780
Paid-in capital 5,105,672 4,988,445
Retained earnings 18,651,231 16,172,475
Treasury stock (25,487) (25,487)
Accumulated other comprehensive loss 138,508 96,644
------------ ------------
Total Stockholders' Equity 23,895,872 21,257,857
------------ ------------
$30,059,312 $25,680,473
============ ============
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
2006 2005
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,478,756 $1,836,891
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 191,481 235,677
Gain on disposal of assets (1,750) (9,144)
Non-cash stock-based compensation 44,960 --
Deferred income taxes 27,067 (109,046)
Other 37,338 2,341
Net changes in assets and liabilities:
Accounts receivable-trade, net (555,007) (488,611)
Inventory (1,251,365) (2,207,276)
Income taxes (87,213) 195,044
Other current assets (207,521) (316,921)
Accounts payable 1,175,499 56,470
Accrued expenses and other liabilities 702,086 1,728,515
----------- -----------
Total adjustments 75,575 (912,951)
----------- -----------
Net cash provided by operating activities 2,554,331 923,940
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (229,775) (83,115)
Proceeds from sale of assets 1,750 9,144
Increase in other assets (24,966) (138,725)
----------- -----------
Net cash used in investing activities (252,991) (212,696)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving credit
loans -- (505,154)
Payments on notes payable and long-term debt (67,034) (67,034)
Proceeds from issuance of common stock 72,435 116,163
----------- -----------
Net cash used in financing activities 5,401 (456,025)
----------- -----------
NET CHANGE IN CASH 2,306,741 255,219
CASH, beginning of period 3,215,727 2,560,202
----------- -----------
CASH, end of period $5,522,468 $2,815,421
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid during the period -- $3,188
Income taxes paid during the period, net of
(refunds) $1,285,653 972,205 CONTACT:
Tandy Leather Factory, Inc., Fort Worth
Wray Thompson, 817-496-4414
or
Shannon L. Greene, 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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