Net Income up 29% over 2005
FORT WORTH, Texas--(BUSINESS WIRE)--March 6, 2007--Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the fourth quarter and year ended December 31, 2006. Consolidated net income for the quarter was $1.4 million compared to consolidated net income of $1.2 million for the fourth quarter of 2005. Fully diluted earnings per share for the quarter were $0.13, compared to $0.11 for the same quarter of the previous year. Total sales for the quarter ended December 31, 2006 increased 5.5% to $14.8 million from $14.0 million for the fourth quarter of 2005. Consolidated sales for the year ended December 31, 2006 were $55.2 million, an increase of 8.8% over total sales of $50.7 million for 2005. Consolidated net income for 2006 was $4.8 million or $0.43 per fully-diluted share versus $3.7 million or $0.34 per fully-diluted share for 2005.
Sales in the Retail Leathercraft division for the fourth quarter of 2006 increased $1.2 million over the previous year's fourth quarter, representing a 22.3% improvement. Sixty-two Tandy Leather retail stores comprised Retail Leathercraft's operations on December 31, 2006, compared to fifty retail stores a year earlier. Twelve new stores were opened in 2006 between January and July. For 2006, Retail Leathercraft's sales increased $4.5 million, or 25.0%, over 2005.
Fourth quarter sales for the Wholesale Leathercraft division, which includes the twenty-nine Leather Factory stores and the national accounts group, decreased $392,000 over the same quarter of 2005, a 4.8% reduction. The stores' sales decreased $37,000, or 0.5%, and national account sales were down $214,000, or 19.1%. For the year, Wholesale Leathercraft's sales were up $21,000, or 0.1%. Sales in the stores increased $633,000, or 2.5%, while sales to national accounts were down $214,000, or 4.4%, for the year.
Consolidated gross profit margin for the fourth quarter was 58.8%, an improvement from 56.5% for the fourth quarter of 2005. For 2006, consolidated gross profit margin was 57.3%, an improvement over the previous year's gross profit margin of 56.7%. Consolidated operating expenses for the fourth quarter of 2006 were 44.9% of sales, increasing from 43.8% for the same quarter of 2005. Operating expenses totaled 44.5% of sales for 2006, an improvement from 45.7% for 2005.
Ron Morgan, Chief Executive Officer and President, commented, "Our 2006 sales grew by 9%, but more importantly, our operating profit was up by 29%, which indicates a continued improvement in operating efficiency. Our goal for 2007 will be the same: sales growth with greater earnings growth. We are on track with our planned retail store openings for 2007, having opened three new stores so far this year. Our sales in the first two months of 2007 fell short of our internal expectations. Weaker sales translate into tougher expense control. So while we are devoting substantial efforts toward strengthening sales, we will also be monitoring expenses closely as the year progresses."
Tandy Leather Factory, Inc., (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, 64 Tandy Leather retail stores, located in 31 states, and Mid-Continent Leather Sales, one store located in Oklahoma. 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 12/31/06 Quarter Ended 12/31/05
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $7,817,851 $1,138,582 $8,209,725 $1,039,005
Retail Leathercraft 6,661,625 986,967 5,445,594 723,009
Other 353,221 (62,347) 397,906 22,109
------------ ----------- ------------ -----------
Total Operations $14,832,697 $2,063,202 $14,053,225 $1,784,123
============ =========== ============ ===========
Year Ended 12/31/06 Year Ended 12/31/05
-------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $31,068,188 $4,814,239 $31,046,268 $3,721,890
Retail Leathercraft 22,520,461 2,310,073 18,023,214 1,766,960
Other 1,610,372 (56,598) 1,650,092 84,560
------------ ----------- ------------ -----------
Total Operations $55,199,021 $7,067,714 $50,719,574 $5,573,410
============ =========== ============ ===========
Wholesale Leathercraft Quarter Ended 12/31/06 Quarter Ended 12/31/05
---------------------- -----------------------
Sales Sales
------------------ -------------------
Leather Factory stores 29 $6,909,305 29 $6,946,077
Converted to a retail
store 1 - 1 140,691
National account group 908,546 1,122,957
------------------ -------------------
Total Sales - Wholesale
Leathercraft $7,817,851 $8,209,725
================== ===================
Wholesale Leathercraft Year Ended 12/31/06 Year Ended 12/31/05
------------------- -------------------
Sales Sales
--------------- ---------------
Leather Factory stores 29 $26,402,492 29 $25,769,349
Converted to retail store 1 28,641 1 425,599
National account group 4,637,055 4,851,320
--------------- ---------------
Total Sales - Wholesale
Leathercraft $31,068,188 $31,046,268
=============== ===============
Retail Leathercraft Quarter Ended 12/31/06 Quarter Ended 12/31/05
---------------------- -----------------------
# of stores Sales # of stores Sales
----------------------------------------------
Same store sales 48 $5,667,875 48 $5,357,651
Converted from
wholesale store 1 151,806 - -
New store sales 13 841,944 2 87,943
----------- -----------
Total Sales - Retail
Leathercraft 62 $6,661,625 50 $5,445,594
=========== ===========
Retail Leathercraft Year Ended 12/31/06 Year Ended 12/31/05
----------------------- -----------------------
# of stores Sales # of stores Sales
-----------------------------------------------
Same store sales 42 $18,119,627 42 $17,039,858
Store converted from
whsl center 1 484,804 - -
New store sales 19 3,916,030 8 983,356
------------ ------------
Total Sales - Retail
Leathercraft 62 $22,520,461 50 $18,023,214
============ ============
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
Three Months Twelve Months
2006 2005 2006 2005
(unaudited) (unaudited)
------------------------- -------------------------
NET SALES $14,832,697 $14,053,225 $55,199,021 $50,719,574
COST OF SALES 6,107,775 6,119,138 23,566,251 21,964,530
------------------------- -------------------------
Gross Profit 8,724,922 7,934,087 31,632,770 28,755,044
OPERATING EXPENSES 6,661,719 6,149,964 24,565,056 23,181,633
------------------------- -------------------------
INCOME FROM
OPERATIONS 2,063,203 1,784,123 7,067,714 5,573,411
Interest expense - - - 3,188
Other, net (13,440) (33,287) (98,391) (137,690)
------------------------- -------------------------
Total other
expense (13,440) (33,287) (98,391) (134,502)
------------------------- -------------------------
INCOME BEFORE
INCOME TAXES 2,076,643 1,817,410 7,166,105 5,707,913
PROVISION FOR
INCOME TAXES 668,751 636,676 2,389,039 1,994,199
------------------------- -------------------------
NET INCOME $1,407,892 $1,180,734 $4,777,066 $3,713,714
========================= =========================
NET INCOME PER
COMMON SHARE -
BASIC $0.13 $0.11 $0.44 $0.35
========================= =========================
NET INCOME PER
COMMON SHARE -
DILUTED $0.13 $0.11 $0.43 $0.34
========================= =========================
Weighted Average
Number of Shares
Outstanding:
Basic 10,862,496 10,735,702 10,807,316 10,643,004
Diluted 11,137,095 11,047,426 11,113,855 10,976,240
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
12/31/06 12/31/05
(unaudited)
---------------------------
Cash $6,739,891 $3,215,727
Accounts receivable, net of allowance for
doubtful accounts 2,599,279 2,178,848
Inventory 17,169,358 15,669,182
Deferred income taxes 266,018 273,872
Other current assets 1,089,258 358,058
---------------------------
Total current assets 27,863,804 21,695,687
Property and equipment, net 1,876,605 1,759,477
Goodwill and other intangibles, net 1,106,815 1,145,578
Other assets 1,069,411 1,079,731
---------------------------
$31,916,635 $25,680,473
===========================
Accounts payable $1,776,646 $1,220,420
Accrued expenses and other liabilities 3,424,010 2,550,573
Income taxes payable 59,392 199,581
Notes payable and current maturities of
long-term debt 111,723 134,067
---------------------------
Total current liabilities 5,371,771 4,104,641
Deferred income taxes 221,621 206,253
Notes payable and long-term debt, net of
current maturities - 111,722
---------------------------
Total liabilities 5,593,392 4,422,616
---------------------------
Common stock 26,124 25,780
Paid-in capital 5,292,591 4,988,445
Treasury stock (5,859 shares) (25,487) (25,487)
Retained earnings 20,949,540 16,172,475
Accumulated other comprehensive loss 80,475 96,644
---------------------------
Total Stockholders' Equity 26,323,243 21,257,857
---------------------------
$31,916,635 $25,680,473
===========================
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
2006 2005
(unaudited)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,777,066 $3,713,714
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 392,915 456,706
Loss on disposal of assets (3,750) (9,145)
Non-cash stock-based compensation 101,080 -
Deferred income taxes 23,222 (181,317)
Other (15,696) 38,276
Net changes in assets and liabilities:
Accounts receivable-trade, net (420,431) (146,559)
Inventory (1,500,176) (2,919,473)
Income taxes (140,189) 176,817
Other current assets (731,200) 271,664
Accounts payable 556,226 (733,726)
Accrued expenses and other liabilities 873,437 868,570
----------- -----------
Total adjustments (864,562) (2,178,187)
----------- -----------
Net cash provided by operating
activities 3,912,504 1,535,527
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (471,753) (272,826)
Payments in connection with businesses
acquired - -
Proceeds from sale of assets 3,750 9,145
Increase in other assets 10,320 (168,981)
----------- -----------
Net cash used in investing activities (457,683) (432,662)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving credit
loans - (505,154)
Payments on notes payable and long-term debt (134,067) (134,067)
Payments received on notes secured by common
stock - -
Repurchase of common stock (treasury stock) - -
Proceeds from issuance of common stock 203,410 191,881
----------- -----------
Net cash provided by (used in) financing
activities 69,343 (447,340)
----------- -----------
NET CHANGE IN CASH 3,524,164 655,525
CASH, beginning of period 3,215,727 2,560,202
----------- -----------
CASH, end of period $6,739,891 $3,215,727
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid during the period - $3,188
Income taxes paid during the period, net of
(refunds) 2,282,113 1,954,364
NON-CASH INVESTING ACTIVITIES:
Equipment acquired under capital lease
financing arrangements
CONTACT: Tandy Leather Factory, Inc.
Ron Morgan, 817-496-4414
rcmorgan@tandyleather.com
or
Shannon L. Greene, 817-496-4414
sgreene@tandyleather.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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