FORT WORTH, Texas, Aug. 10, 2016 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the second quarter of 2016. Consolidated net income for the quarter ended June 30, 2016 was $1.8 million compared to $1.5 million for the second quarter of 2015, an increase of 20.8%. Fully diluted earnings per share for the quarter were $0.19, compared to $0.15 in last year’s second quarter. Total sales for the quarter ended June 30, 2016 were $19.5 million, down 1% from $19.8 million in the second quarter last year.
Consolidated sales for the six months ended June 30, 2016 were $40.2 million, down 1% from 2015’s first half sales of $40.6 million. Consolidated net income for the first half of 2016 increased 13% to $3.3 million or $0.35 per fully-diluted share versus $3.0 million or $0.29 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, decreased $38,000 in the second quarter, a 0.3% decline from last year's second quarter. Eighty-one stores comprised Tandy Leather's operations at June 30, 2016 compared to eighty-two stores at June 30, 2015. For the first six months of 2016, Retail Leathercraft’s sales increased $95,000 or 0.4% over the first six months of 2015. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores, decreased 5%, or $329,000, from the same quarter last year. For the first six months of 2016, Wholesale Leathercraft’s sales were down $558,000, or 4%, compared to the same period in 2015. International Leathercraft, consisting of four stores located in the United Kingdom, Spain and Australia, reported a sales increase of 14%, or $117,000, compared to the second quarter of 2015. For the first half of 2016, International Leathercraft’s sales were up 5%, or $96,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 66.1%, compared to 64.8% for the second quarter of 2015. For the first half of 2016, consolidated gross profit margin was 63.6%, improving from last year's gross profit margin of 62.6%. Consolidated operating expenses decreased approximately 4% or $424,000 for the quarter and 2% or $328,000 for the year, compared to the same periods in 2015. For the second quarter, significant decreases occurred in advertising and marketing, store relocation expenses, legal and professional fees, outside services, and employee benefits. For the year, decreases occurred in employee compensation and advertising and marketing expenses. As a percentage of sales, consolidated operating margin increased for the quarter to 14.5% compared to 11.8% in last year’s second quarter. On a year-to-date basis, consolidated operating margin increased from 11.6% last year to 12.9% in the current year.
Shannon L. Greene, Chief Executive Officer, commented, “Sales have been tough this year – and our second quarter was no different. While we are working hard to grow or maintain sales, our real success this quarter was in our gross profit and operating margins. Specifically, we improved our gross profit margin even though sales declined and we reduced our operating expenses at a faster rate than that of sales. Our work is not done, however, as managing effectively through difficult periods such as this is crucial.”
Mark Angus, President, added, “Compared to last year’s second quarter, we sold a little less leather but improved our gross profit margin on those leather sales so that is a win. Further, we cut operating expenses in the second quarter which contributed significantly to the earnings increase. At the half way mark of 2016, we are succeeding at protecting gross profit margins and controlling expenses despite weak sales.”
Tandy Leather Factory, Inc., (http://www.tandyleather.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 27 Leather Factory stores, located in 18 states and 3 Canadian provinces, 81 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and four 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 06/30/16 | Quarter Ended 06/30/15 | |||||||||||||||
Sales | Operating Income | Sales | Operating Income | |||||||||||||
| Wholesale Leathercraft | $ | 6,064,995 | $ | 1,548,303 | $ | 6,394,278 | $ | 968,552 | ||||||||
| Retail Leathercraft | 12,493,943 | 1,166,009 | 12,532,411 | 1,336,669 | ||||||||||||
| International Leathercraft | 963,967 | 124,579 | 846,839 | 28,621 | ||||||||||||
| Total Operations | $ | 19,522,905 | $ | 2,838,891 | $ | 19,773,528 | $ | 2,333,842 | ||||||||
| Six Months Ended 06/30/16 | Six Months Ended 06/30/15 | |||||||||||||||
| Sales | Operating Income | Sales | Operating Income | |||||||||||||
| Wholesale Leathercraft | $ | 12,561,902 | $ | 2,674,562 | $ | 13,119,582 | $ | 1,920,407 | ||||||||
| Retail Leathercraft | 25,736,527 | 2,380,959 | 25,641,824 | 2,740,121 | ||||||||||||
| International Leathercraft | 1,896,703 | 146,160 | 1,800,886 | 62,195 | ||||||||||||
| Total Operations | $ | 40,195,132 | $ | 5,201,681 | $ | 40,562,292 | $ | 4,722,723 | ||||||||
| Wholesale Leathercraft | Quarter Ended 06/30/16 | Quarter Ended 06/30/15 | ||||||||
| # of stores | Sales | # of stores | Sales | |||||||
| Same store sales | 27 | $ | 6,022,534 | 27 | $ | 6,229,566 | ||||
| Closed store sales | 1 | 42,461 | 1 | 164,712 | ||||||
| Total Sales – Wholesale Leathercraft | 27 | $ | 6,064,995 | 27 | $ | 6,394,278 | ||||
| Wholesale Leathercraft | Six Months Ended 06/30/16 | Six Months Ended 06/30/15 | ||||||||
| # of stores | Sales | # of stores | Sales | |||||||
| Same store sales | 27 | $ | 12,373,497 | 27 | $ | 12,781,625 | ||||
| Closed store sales | 1 | 188,405 | 1 | 337,957 | ||||||
| Total Sales – Wholesale Leathercraft | 27 | $ | 12,561,902 | 27 | $ | 13,119,582 | ||||
| Retail Leathercraft | Quarter Ended 06/30/16 | Quarter Ended 06/30/15 | ||||||||
| # of stores | Sales | # of stores | Sales | |||||||
| Same store sales | 80 | $ | 12,203,775 | 80 | $ | 12,178,185 | ||||
| New store sales | 1 | 259,120 | - | - | ||||||
| Closed store sales | 2 | 31,048 | 2 | 354,226 | ||||||
| Total Sales – Retail Leathercraft | 81 | $ | 12,493,943 | 80 | $ | 12,532,411 | ||||
| Retail Leathercraft | Six Months Ended 06/30/16 | Six Months Ended 06/30/15 | ||||||||
| # of stores | Sales | # of stores | Sales | |||||||
| Same store sales | 80 | $ | 25,028,341 | 80 | $ | 24,958,451 | ||||
| New store sales | 1 | 338,773 | - | - | ||||||
| Closed store sales | 2 | 369,413 | 2 | 683,373 | ||||||
| Total Sales – Retail Leathercraft | 81 | $ | 25,736,527 | 80 | $ | 25,641,824 | ||||
| International Leathercraft | Quarter Ended 06/30/16 | Quarter Ended 06/30/15 | ||||||||
| # of stores | Sales | # of stores | Sales | |||||||
| Same store sales | 3 | $ | 805,123 | 3 | $ | 846,839 | ||||
| New store sales | 1 | 158,844 | - | - | ||||||
| Total Sales – Intl Leathercraft | 4 | $ | 963,967 | 3 | $ | 846,839 | ||||
| International Leathercraft | Six Months Ended 06/30/16 | Six Months Ended 06/30/15 | |||||||
| # of stores | Sales | # of stores | Sales | ||||||
| Same store sales | 3 | $ | 1,597,500 | 3 | $ | 1,800,886 | |||
| New store sales | 1 | 299,203 | - | - | |||||
| Total Sales – Intl Leathercraft | 4 | $ | 1,896,703 | 3 | $ | 1,800,886 | |||
| Tandy Leather Factory, Inc. | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| June 30, 2016 (unaudited) | December 31, 2015 (audited) | |||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash | $ | 9,839,204 | $ | 10,962,615 | ||||||||
| Accounts receivable-trade, net of allowance for doubtful accounts of $0 and $1,746 in 2016 and 2015, respectively | 551,824 | 553,206 | ||||||||||
| Inventory | 36,304,595 | 33,584,539 | ||||||||||
| Prepaid income taxes | 765,605 | 549,277 | ||||||||||
| Deferred income taxes | 350,706 | 326,830 | ||||||||||
| Prepaid expenses | 1,623,858 | 1,514,887 | ||||||||||
| Other current assets | 132,985 | 70,197 | ||||||||||
| Total current assets | 49,568,777 | 47,561,551 | ||||||||||
| PROPERTY AND EQUIPMENT, at cost | 24,764,249 | 23,992,208 | ||||||||||
| Less accumulated depreciation and amortization | (9,026,139 | ) | (8,297,155 | ) | ||||||||
| 15,738,110 | 15,695,053 | |||||||||||
| GOODWILL | 959,868 | 953,356 | ||||||||||
| OTHER INTANGIBLES, net of accumulated amortization of approximately $707,000 and $702,000 in 2016 and 2015, respectively | 22,228 | 27,282 | ||||||||||
| OTHER assets | 329,332 | 329,684 | ||||||||||
| TOTAL ASSETS | $ | 66,618,315 | $ | 64,566,926 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Accounts payable-trade | $ | 1,393,513 | $ | 1,983,376 | ||||||||
| Accrued expenses and other liabilities | 4,979,495 | 6,045,552 | ||||||||||
| Current maturities of capital lease obligations | 72,686 | 72,686 | ||||||||||
| Current maturities of long-term debt | 1,382,199 | 231,952 | ||||||||||
| Total current liabilities | 7,827,893 | 8,333,566 | ||||||||||
| DEFERRED INCOME TAXES | 1,721,715 | 1,702,515 | ||||||||||
| LONG-TERM DEBT, net of current maturities | 5,989,530 | 3,479,273 | ||||||||||
| CAPITAL LEASE OBLIGATIONS, net of current maturities | 72,688 | 79,396 | ||||||||||
| 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; 11,309,326 and 11,275,641 shares issued at 2016 and 2015, respectively; 9,266,496 and 9,753,293 shares outstanding at 2016 and 2015, respectively | 27,142 | 27,062 | ||||||||||
| Paid-in capital | 6,281,711 | 6,168,489 | ||||||||||
| Retained earnings | 56,409,146 | 53,067,234 | ||||||||||
| Treasury stock at cost (2,042,830 and 1,522,348 shares at 2016 and 2015, respectively) | (10,278,584 | ) | (6,602,930 | ) | ||||||||
| Accumulated other comprehensive income | (1,432,926 | ) | (1,687,679 | ) | ||||||||
| Total stockholders’ equity | 51,006,489 | 50,972,176 | ||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 66,618,315 | $ | 64,566,926 | ||||||||
| Tandy Leather Factory, Inc. | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| For the Three and Six Months Ended June 30, 2016 and 2015 | ||||||||||||||||
| THREE MONTHS | SIX MONTHS | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| NET SALES | $ | 19,522,905 | $ | 19,773,528 | $ | 40,195,132 | $ | 40,562,292 | ||||||||
| COST OF SALES | 6,627,115 | 6,959,147 | 14,646,596 | 15,164,983 | ||||||||||||
| Gross profit | 12,895,790 | 12,814,381 | 25,548,536 | 25,397,309 | ||||||||||||
| OPERATING EXPENSES | 10,056,899 | 10,480,539 | 20,346,855 | 20,674,586 | ||||||||||||
| INCOME FROM OPERATIONS | 2,838,891 | 2,333,842 | 5,201,681 | 4,722,723 | ||||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||
| Interest expense | (42,027 | ) | (34,762 | ) | (65,456 | ) | (78,925 | ) | ||||||||
| Other, net | 23,434 | 9,877 | 23,395 | 29,750 | ||||||||||||
| Total other income (expense) | (18,593 | ) | (24,885 | ) | (42,061 | ) | (49,175 | ) | ||||||||
| INCOME BEFORE INCOME TAXES | 2,820,298 | 2,308,957 | 5,159,620 | 4,673,548 | ||||||||||||
| PROVISION FOR INCOME TAXES | 999,383 | 801,061 | 1,817,708 | 1,721,245 | ||||||||||||
| NET INCOME | $ | 1,820,915 | $ | 1,507,896 | $ | 3,341,912 | $ | 2,952,303 | ||||||||
| NET INCOME PER COMMON SHARE: | ||||||||||||||||
| Basic | $ | 0.19 | $ | 0.15 | $ | 0.35 | $ | 0.29 | ||||||||
| Diluted | $ | 0.19 | $ | 0.15 | $ | 0.35 | $ | 0.29 | ||||||||
| Weighted Average Number of Shares Outstanding: | ||||||||||||||||
| Basic | 9,209,446 | 10,212,933 | 9,418,645 | 10,212,137 | ||||||||||||
| Diluted | 9,227,941 | 10,241,164 | 9,437,620 | 10,241,130 | ||||||||||||
| Tandy Leather Factory, Inc. | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited) | |||||||||||
| For the Six Months Ended June 30, 2016 and 2015 | |||||||||||
| 2016 | 2015 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 3,341,912 | $ | 2,952,303 | |||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | 831,793 | 809,456 | |||||||||
| (Gain) / loss on disposal or abandonment of assets | (6,560 | ) | 25,204 | ||||||||
| Non-cash stock-based compensation | 113,302 | 77,737 | |||||||||
| Deferred income taxes | (4,676 | ) | 8,735 | ||||||||
| Foreign currency translation | 256,309 | (121,909 | ) | ||||||||
| Net changes in assets and liabilities: | |||||||||||
| Accounts receivable-trade, net | 1,382 | (133,840 | ) | ||||||||
| Inventory | (2,720,056 | ) | 65,241 | ||||||||
| Prepaid expenses | (108,971 | ) | 1,261 | ||||||||
| Other current assets | (62,788 | ) | 36,703 | ||||||||
| Accounts payable-trade | (589,863 | ) | 423,794 | ||||||||
| Accrued expenses and other liabilities | (1,066,056 | ) | 1,267,450 | ||||||||
| Income taxes payable | (216,328 | ) | (286,987 | ) | |||||||
| Total adjustments | (3,572,572 | ) | 2,172,845 | ||||||||
| Net cash (used in) provided by operating activities | (230,600 | ) | 5,125,148 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (898,007 | ) | (1,088,231 | ) | |||||||
| Proceeds from sale of assets | 26,703 | 741 | |||||||||
| Increase (decrease) in other assets | 352 | 1,986 | |||||||||
| Net cash used in investing activities | (870,952 | ) | (1,085,504 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from notes payable and long term debt | 3,660,505 | - | |||||||||
| Payments on notes payable and long-term debt | - | (3,808,812 | ) | ||||||||
| Payments on capital lease obligations | (6,710 | ) | - | ||||||||
| Repurchase of common stock (treasury stock) | (3,675,654 | ) | |||||||||
| Net cash used in financing activities | (21,859 | ) | (3,808,812 | ) | |||||||
| NET INCREASE (DECREASE) IN CASH | (1,123,411 | ) | 230,832 | ||||||||
| CASH, beginning of period | 10,962,615 | 10,636,530 | |||||||||
| CASH, end of period | $ | 9,839,204 | $ | 10,867,362 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
| Interest paid during the period | $ | 65,456 | $ | 78,925 | |||||||
| Income tax paid during the period, net of (refunds) | $ | 2,034,036 | $ | 2,003,680 | |||||||