Tandy Leather Factory Reports 3rd Quarter EPS Up 400%
3rd Quarter Net Income $1.6 Million Compared to $281,000 in 3rd Quarter 2012
FORT WORTH, Texas, Nov. 7, 2013 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the third quarter of 2013. Consolidated net income for the quarter ended September 30, 2013 was $1.6 million compared to consolidated net income of $281,000 for the third quarter of 2012, an increase of 456%. Fully diluted earnings per share for the quarter were $0.15, compared to $0.03 in the third quarter of last year. Total sales for the quarter ended September 30, 2013 were $18.5 million, up 9% from $17.0 million in the third quarter last year.
Consolidated sales for the nine months ended September 30, 2013 were $56.7 million, up 9% from 2012's first three quarters' sales of $52.1 million. Consolidated net income for the first nine months of 2013 was up 41% to $4.8 million or $0.47 per fully-diluted share versus $3.4 million or $0.33 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $1.2 million in the third quarter, a 12% improvement over last year's third quarter. Seventy-eight stores comprised Tandy Leather's operations on September 30, 2013. For the first nine months of 2013, Retail Leathercraft's sales increased $3.8 million, or 13%, over the first nine months of 2012. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were up 4%, or $234,000, from the same quarter last year. For the first nine months of 2013, Wholesale Leathercraft's sales were up $257,000, or 1%, compared to the same period in 2012. International Leathercraft, consisting of three stores located outside of North America, reported a sales increase of 13%, or $109,000, compared to the third quarter of 2012. For the year, International Leathercraft's sales were up 24%, or $560,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 63.2%, up from 61.2% for the third quarter of 2012. For the year to date, consolidated gross profit margin was 62.7%, decreasing minimally from last year's gross profit margin of 62.8%. Compared to the comparable periods in 2012, consolidated operating expenses decreased approximately 5%, or $464,000, for the third quarter, but rose 4%, or $1.1 million, for the nine months. For the third quarter, the significant increases in expenses occurred in employee compensation and legal fees. Those increases were more than offset by the legal settlement incurred in last year's third quarter than was not repeated this year. For the year, expenses increases occurred in advertising and marketing, employee compensation, freight out, credit card fees, and legal fees. As a percentage of sales, consolidated operating margin improved for the quarter to 12.9% compared to 3.8% last year. On a year-to-date basis, consolidated operating margin improved from 10.9% last year to 13.0% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, "One of our measurements of success is higher sales and earnings compared to the prior year's same period and we comfortably achieved that in the third quarter. Further, all three segments contributed to the higher sales and earnings and our gross profit margins remain strong. Overall, it was a very successful quarter."
Chief Financial Officer and Treasurer, Shannon Greene, added, "Third quarter operating expenses dropped considerably compared to last year's third quarter because of last year's legal settlement expense. However, if we adjust for that, operating expense still trended well below that of sales. As is the case with most retailers, our investment in inventory is up at the end of the quarter, but we continue to maintain a very solid cash position. We are on schedule to meet our 2013 sales and earnings guidance as we move through the remainder of 2013."
Tandy Leather Factory, Inc., (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, 79 Tandy Leather retail stores, located in 37 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.
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 09/30/13
Quarter Ended 09/30/12
Sales
Operating Income
Sales
Operating Income
Wholesale Leathercraft
$6,476,676
$956,721
$6,242,602
$(297,897)
Retail Leathercraft
11,128,646
1,351,062
9,947,911
987,704
International Leathercraft
919,282
97,570
810,215
(44,951)
Total Operations
$18,524,604
$2,405,353
$17,000,728
$644,856
Nine Months Ended 09/30/13
Nine Months Ended 09/30/12
Sales
Operating Income
Sales
Operating Income
Wholesale Leathercraft
$19,934,996
$2,853,219
$19,678,009
$2,038,267
Retail Leathercraft
33,930,587
4,243,006
30,093,864
3,655,932
International Leathercraft
2,869,861
276,052
2,310,188
(30,395)
Total Operations
$56,735,444
$7,372,277
$52,082,061
$5,663,804
Wholesale Leathercraft
Quarter Ended 09/30/13
Quarter Ended 09/30/12
# of stores
Sales
# of stores
Sales
Same store sales
29
$6,105,137
29
$5,821,208
National account group
n/a
371,539
n/a
421,394
Total Sales – Wholesale Leathercraft
29
$6,476,676
29
$6,242,602
Wholesale Leathercraft
Nine Months Ended 09/30/13
Nine Months Ended 09/30/12
# of stores
Sales
# of stores
Sales
Same store sales
29
$18,897,124
29
$18,232,337
National account group
n/a
1,037,872
n/a
1,445,672
Total Sales – Wholesale Leathercraft
29
$19,934,996
29
$19,678,009
Retail Leathercraft
Quarter Ended 09/30/13
Quarter Ended 09/30/12
# of stores
Sales
# of stores
Sales
Same store sales
77
$11,004,898
77
$9,947,911
New store sales
1
123,748
--
--
Total Sales – Retail Leathercraft
78
$11,128,646
77
$9,947,911
Retail Leathercraft
Nine Months Ended 09/30/13
Nine Months Ended 09/30/12
# of stores
Sales
# of stores
Sales
Same store sales
77
$33,563,875
77
$30,093,864
New store sales
1
366,712
--
--
Total Sales – Retail Leathercraft
78
$33,930,587
77
$30,093,864
International Leathercraft
Quarter Ended 09/30/13
Quarter Ended 09/30/12
# of stores
Sales
# of stores
Sales
Same store sales
3
$919,282
3
$810,215
New store sales
--
--
--
--
Total Sales – Intl Leathercraft
3
$919,282
3
$810,215
International Leathercraft
Nine Months Ended 09/30/13
Nine Months Ended 09/30/12
# of stores
Sales
# of stores
Sales
Same store sales
3
$2,869,861
3
$2,310,188
New store sales
--
--
--
--
Total Sales – Intl Leathercraft
3
$2,869,861
3
$2,310,188
Tandy Leather Factory, Inc.
Consolidated Balance Sheets
September 30,
December 31,
2013
2012
(unaudited)
(audited)
ASSETS
CURRENT ASSETS:
Cash
$6,289,550
$7,705,182
Accounts receivable-trade, net of allowance for doubtful accounts of $30,000 and $112,000 in 2013 and 2012, respectively
945,725
822,772
Inventory
29,492,488
25,862,784
Prepaid income taxes
6,106
--
Deferred income taxes
340,426
349,478
Prepaid expenses
1,845,862
776,463
Other current assets
429,522
153,450
Total current assets
39,349,679
35,670,129
PROPERTY AND EQUIPMENT, at cost
19,042,844
17,574,895
Less accumulated depreciation and amortization
(5,645,113)
(5,630,305)
13,397,731
11,944,590
GOODWILL
986,153
990,725
OTHER INTANGIBLES, net of accumulated amortization of $612,000 and $582,000 in 2013 and 2012, respectively
114,643
145,533
Other assets
337,115
336,695
$54,185,321
$49,087,672
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade
$2,299,450
$1,612,627
Accrued expenses and other liabilities
5,913,564
5,928,798
Income taxes payable
--
113,705
Current maturities of long-term debt
202,500
202,500
Total current liabilities
8,415,514
7,857,630
DEFERRED INCOME TAXES
987,617
806,525
LONG-TERM DEBT, net of current maturities
2,446,875
2,902,500
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; 11,192,356 and 11,156,065 shares issued at 2013 and 2012; 10,198,733 and 10,162,442 shares outstanding at 2013 and 2012
26,862
26,775
Paid-in capital
5,892,907
5,767,508
Retained earnings
39,019,381
34,241,875
Treasury stock at cost (993,623 shares at 2013 and 2012)
(2,894,068)
(2,894,068)
Accumulated other comprehensive income
290,233
378,927
Total stockholders' equity
42,335,315
37,521,017
$54,185,321
$49,087,672
Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Nine Months Ended September 30, 2013 and 2012
THREE MONTHS
NINE MONTHS
2013
2012
2013
2012
NET SALES
$18,524,604
$17,000,728
$56,735,444
$52,082,061
COST OF SALES
6,823,661
6,595,958
21,183,551
19,371,456
Gross profit
11,700,943
10,404,770
35,551,893
32,710,605
OPERATING EXPENSES
9,295,590
9,759,914
28,179,616
27,046,801
INCOME FROM OPERATIONS
2,405,353
644,856
7,372,277
5,663,804
OTHER INCOME (EXPENSE):
Interest expense
(51,021)
(59,623)
(158,659)
(176,251)
Other, net
13,777
(2,787)
138,800
59,786
Total other income (expense)
(37,244)
(62,410)
(19,859)
(116,465)
INCOME BEFORE INCOME TAXES
2,368,109
582,446
7,352,418
5,547,339
PROVISION FOR INCOME TAXES
806,277
301,676
2,574,912
2,152,825
NET INCOME
$1,561,832
$280,770
$4,777,506
$3,394,514
NET INCOME PER COMMON SHARE:
Basic
$0.15
$0.03
$0.47
$0.33
Diluted
$0.15
$0.03
$0.47
$0.33
Weighted Average Number of Shares Outstanding:
Basic
10,176,744
10,156,790
10,163,490
10,156,559
Diluted
10,221,512
10,177,466
10,197,667
10,179,569
Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 2013 and 2012
2013
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$4,777,506
$3,394,514
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
889,395
794,122
Loss on disposal or abandonment of assets
89,531
16,977
Non-cash stock-based compensation
11,686
10,000
Deferred income taxes
190,144
(180,237)
Other
(70,330)
63,559
Net changes in assets and liabilities, net of effect of business acquisitions:
Accounts receivable-trade, net
(122,953)
253,702
Inventory
(3,629,704)
(9,754,553)
Income taxes
(119,811)
(1,183,816)
Prepaid expenses
(1,069,399)
1,624,011
Other current assets
(276,072)
(1,765,227)
Accounts payable-trade
686,823
929,847
Accrued expenses and other liabilities
(15,234)
1,097,165
Total adjustments
(3,435,924)
(8,094,450)
Net cash provided by (used in) operating activities
1,341,582
(4,699,936)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(2,415,484)
(1,294,050)
Proceeds from maturities of certificates of deposit
--
423,893
Proceeds from sale of assets
515
1,150
Decrease (increase) in other assets
(420)
6,675
Net cash used in investing activities
(2,415,389)
(862,332)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt
--
1,000,000
Payments on notes payable and long-term debt
(455,625)
(151,875)
Proceeds from issuance of common stock
113,800
5,440
Payment of cash dividend
--
(2,536,131)
Net cash used in financing activities
(341,825)
(1,682,566)
NET DECREASE IN CASH
(1,415,632)
(7,244,834)
CASH, beginning of period
7,705,182
10,765,591
CASH, end of period
$6,289,550
$3,520,757
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period
$158,659
$176,251
Income tax paid during the period, net of (refunds)
$2,507,842
$3,524,962
CONTACT: Shannon L. Greene, Tandy Leather Factory, Inc.
(817) 872-3200 or sgreene@tandyleather.com
Mark Gilbert, Magellan Fin, LLC
(317) 867-2839 or MGilbert@MagellanFin.com