FORT WORTH, Texas, Aug. 7, 2014 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the second quarter of 2014. Consolidated net income for the quarter ended June 30, 2014 was $1.8 million compared to consolidated net income of $1.6 million for the second quarter of 2013, an increase of 8%. Fully diluted earnings per share for the quarter were $0.17, compared to $0.16 in the second quarter of last year. Total sales for the quarter ended June 30, 2014 were $19.7 million, up 4% from $19.0 million in the second quarter last year.
Consolidated sales for the six months ended June 30, 2014 were $39.5 million, up 3% from 2013's first half sales of $38.2 million. Consolidated net income for the first half of 2014 was up 13% to $3.6 million or $0.35 per fully-diluted share versus $3.2 million or $0.32 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $959,000 in the second quarter, a 9% improvement over last year's second quarter. Eighty stores comprised Tandy Leather's operations on June 30, 2014. For the first six months of 2014, Retail Leathercraft's sales increased $1.4 million, or 6%, over the first six months of 2013. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were down 4%, or $271,000, from the same quarter last year. For the first six months of 2014, Wholesale Leathercraft's sales were down $177,000, or 1%, compared to the same period in 2013. International Leathercraft, consisting of three stores located in the United Kingdom, Spain and Australia, reported a sales increase of 4%, or $42,000, compared to the second quarter of 2013. For the year, International Leathercraft's sales were up 8%, or $152,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 64.9%, up from 62.8% for the second quarter of 2013. For the first two quarters of this year, consolidated gross profit margin was 64.5%, increasing from last year's gross profit margin of 62.4%. Consolidated operating expenses rose approximately 6% and 5% for the quarter and the year, respectively, or $549,000 in the current quarter and $988,000 for the first six months over the same periods a year ago. For the second quarter, the significant increases in expenses occurred in employee compensation, advertising and marketing, depreciation, and store rent and utilities. For the year, expenses increases occurred in employee compensation, travel, depreciation, advertising and marketing, and store rent. As a percentage of sales, consolidated operating margin improved for the quarter to 13.5% compared to 12.4% last year's second quarter. On a year-to-date basis, consolidated operating margin increased from 13% last year to 14.2% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, "We are pleased with our second quarter results overall. Our gross profit margins for the quarter and the year are the highest in our history. That is the result of customer mix (retail versus wholesale) and product mix (sales of leather versus non-leather products). Our inventory investment is higher than normal for this time of the year. That is because we began the build-up for the fourth quarter earlier this year and we have had the opportunity to make some unexpected purchases of some of our stock leathers at very aggressive pricing. That will continue to support our strong gross profit margins as we move through the rest of the year."
Chief Financial Officer and Treasurer, Shannon Greene, added, "Operating expenses have increased slightly faster than sales so far this year – primarily in three areas: employee compensation, advertising and marketing, and store rents and utilities. Employee compensation is up due to an increase in employee headcount at the stores and higher store manager pay based on store profit. Our advertising and marketing expenses historically tend to be higher in the first half of the year and the increase in rent and utilities is the result of the store relocations into larger space, rather than an increase in rental rates themselves. We will continue to monitor expenses closely, always looking for ways to reduce costs where we can without affecting the customer experience."
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 and 3 Canadian provinces, 80 Tandy Leather retail stores, located in 36 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 06/30/14
Quarter Ended 06/30/13
Sales
Operating
Income
Sales
Operating
Income
Wholesale Leathercraft
$6,457,467
$1,106,942
$6,728,586
$883,533
Retail Leathercraft
12,201,624
1,427,913
11,242,080
1,377,105
International Leathercraft
1,044,516
121,422
1,002,347
85,426
Total Operations
$19,703,607
$2,656,277
$18,973,013
$2,346,064
Six Months Ended 06/30/14
Six Months Ended 06/30/13
Sales
Operating
Income
Sales
Operating
Income
Wholesale Leathercraft
$13,281,435
$2,479,579
$13,458,320
$1,896,498
Retail Leathercraft
24,157,978
2,900,616
22,801,941
2,891,944
International Leathercraft
2,102,660
242,745
1,950,579
178,482
Total Operations
$39,542,073
$5,622,940
$38,210,840
$4,966,924
Wholesale Leathercraft
Quarter Ended 06/30/14
Quarter Ended 06/30/13
# of stores
Sales
# of stores
Sales
Same store sales
29
$6,451,664
29
$6,347,666
National account group
n/a
5,803
n/a
380,920
Total Sales – Wholesale Leathercraft
29
$6,457,467
29
$6,728,586
Wholesale Leathercraft
Six Months Ended 06/30/14
Six Months Ended 06/30/13
# of stores
Sales
# of stores
Sales
Same store sales
29
$12,932,785
29
$12,791,987
National account group
n/a
348,650
n/a
666,333
Total Sales – Wholesale Leathercraft
29
$13,281,435
29
$13,458,320
Retail Leathercraft
Quarter Ended 06/30/14
Quarter Ended 06/30/13
# of stores
Sales
# of stores
Sales
Same store sales
76
$11,811,841
76
$11,077,281
New store sales
4
389,783
--
--
Closed store sales
2
--
2
164,799
Total Sales – Retail Leathercraft
80
$12,201,624
78
$11,242,080
Retail Leathercraft
Six Months Ended 06/30/14
Six Months Ended 06/30/13
# of stores
Sales
# of stores
Sales
Same store sales
76
$23,421,926
76
$22,471,947
New store sales
4
736,052
--
--
Closed store sales
2
--
2
329,994
Total Sales – Retail Leathercraft
80
$24,157,978
78
$22,801,941
International Leathercraft
Quarter Ended 06/30/14
Quarter Ended 06/30/13
# of stores
Sales
# of stores
Sales
Same store sales
3
$1,044,516
3
$1,002,347
New store sales
--
--
--
--
Total Sales – Intl Leathercraft
3
$1,044,516
3
$1,002,347
International Leathercraft
Six Months Ended 06/30/14
Six Months Ended 06/30/13
# of stores
Sales
# of stores
Sales
Same store sales
3
$2,102,660
3
$1,950,579
New store sales
--
--
--
--
Total Sales – Intl Leathercraft
3
$2,102,660
3
$1,950,579
Tandy Leather Factory, Inc.
Consolidated Balance Sheets
June 30, 2014
December 31, 2013
(unaudited)
(audited)
ASSETS
CURRENT ASSETS:
Cash
$7,402,534
$11,082,679
Accounts receivable-trade, net of allowance for doubtful accounts of $0 and $1,000 in 2014 and 2013, respectively
796,106
762,405
Inventory
36,001,590
26,300,830
Prepaid income taxes
468,307
--
Deferred income taxes
369,978
309,533
Prepaid expenses
1,277,871
1,609,644
Other current assets
350,232
478,593
Total current assets
46,666,618
40,543,684
PROPERTY AND EQUIPMENT, at cost
21,156,669
20,290,990
Less accumulated depreciation and amortization
(6,484,259)
(5,863,280)
14,672,410
14,427,710
GOODWILL
981,527
981,985
OTHER INTANGIBLES, net of accumulated amortization of $645,000 and $622,000 in 2014 and 2013, respectively
80,582
103,228
Other assets
336,975
341,959
$62,738,112
$56,398,566
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade
$2,055,912
$1,884,637
Accrued expenses and other liabilities
6,697,117
5,808,882
Dividend payable
2,549,684
--
Income taxes payable
--
272,198
Current maturities of long-term debt
2,452,500
202,500
Total current liabilities
13,755,213
8,168,217
DEFERRED INCOME TAXES
1,129,589
1,212,557
LONG-TERM DEBT, net of current maturities
2,041,875
2,396,250
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; 11,226,957 and 11,192,356 shares issued at 2014 and 2013; 10,233,334 and 10,198,733 shares outstanding at 2014 and 2013
26,945
26,862
Paid-in capital
5,921,889
5,892,907
Retained earnings
42,577,805
41,507,592
Treasury stock at cost (993,623 shares at 2014 and 2013)
(2,894,068)
(2,894,068)
Accumulated other comprehensive income
178,864
88,249
Total stockholders' equity
45,811,435
44,621,542
$62,738,112
$56,398,566
Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Six Months Ended June 30, 2014 and 2013
THREE MONTHS
SIX MONTHS
2014
2013
2014
2013
NET SALES
$19,703,607
$18,973,013
$39,542,073
$38,210,840
COST OF SALES
6,924,001
7,052,892
14,046,744
14,359,890
Gross profit
12,779,606
11,920,121
25,495,329
23,850,950
OPERATING EXPENSES
10,123,329
9,574,057
19,872,389
18,884,026
INCOME FROM OPERATIONS
2,656,277
2,346,064
5,622,940
4,966,924
OTHER INCOME (EXPENSE):
Interest expense
(44,855)
(51,544)
(90,683)
(107,638)
Other, net
5,334
98,284
6,678
125,023
Total other income (expense)
(39,521)
46,740
(84,005)
17,385
INCOME BEFORE INCOME TAXES
2,616,756
2,392,804
5,538,935
4,984,309
PROVISION FOR INCOME TAXES
851,271
763,451
1,919,038
1,768,635
NET INCOME
$1,765,485
$1,629,353
$3,619,897
$3,215,674
NET INCOME PER COMMON SHARE:
Basic
$0.17
$0.16
$0.35
$0.32
Diluted
$0.17
$0.16
$0.35
$0.32
Weighted Average Number of Shares Outstanding:
Basic
10,198,733
10,167,649
10,198,733
10,165,060
Diluted
10,239,823
10,216,535
10,239,447
10,205,439
Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30, 2014 and 2013
2014
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$3,619,897
$3,215,674
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
715,920
562,710
(Gain) Loss on disposal or abandonment of assets
(1,409)
85,458
Non-cash stock-based compensation
29,065
11,686
Deferred income taxes
(143,413)
157,099
Other
84,854
(328,000)
Net changes in assets and liabilities, net of effect of business acquisitions:
Accounts receivable-trade, net
(33,701)
(315,451)
Inventory
(9,700,760)
(1,635,238)
Income taxes
(740,505)
24,484
Prepaid expenses
331,773
(365,277)
Other current assets
128,361
(611,980)
Accounts payable-trade
171,275
1,270,216
Accrued expenses and other liabilities
888,235
163,184
Total adjustments
(8,270,305)
(981,109)
Net cash provided by (used in) operating activities
(4,650,408)
2,234,565
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(949,082)
(1,962,700)
Proceeds from sale of assets
18,736
515
Decrease (increase) in other assets
4,984
91
Net cash used in investing activities
(925,362)
(1,962,094)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in revolving credit loan
2,250,000
--
Payments on notes payable and long-term debt
(354,375)
(405,000)
Net cash provided by (used in) financing activities
1,895,625
(405,000)
NET DECREASE IN CASH
(3,680,145)
(132,529)
CASH, beginning of period
11,082,679
7,705,182
CASH, end of period
$7,402,534
$7,572,653
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period
$90,683
$107,638
Income tax paid during the period, net of (refunds)
$2,567,257
$1,584,223
CONTACT: Shannon L. Greene, Tandy Leather Factory, Inc.
(817) 872-3200 or shannon.greene@tandyleather.com
Mark Gilbert, Magellan Fin, LLC
(317) 867-2839 or MGilbert@MagellanFin.com