FORT WORTH, Texas--(BUSINESS WIRE)--May 1, 2007--Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the first quarter of 2007. Net income for the quarter ended March 31, 2007 was $1.3 million, equal to that of the first quarter of 2006. Fully-diluted earnings per share for the quarter was $0.12 in the current quarter, the same as last year's first quarter. Total sales for the first quarter were $14.5 million, up slightly from $14.4 million in the same quarter last year.
Sales from the Retail Leathercraft operation, consisting of the Tandy Leather retail store chain, increased $713,000 in the first quarter, a 13% improvement over last year's first quarter. The chain consists of sixty-five stores as of March 31, 2007, compared to fifty-six retail stores a year ago. Three new stores were opened in the first quarter of 2007. First quarter sales for the Wholesale Leathercraft operation, consisting of the Leather Factory wholesale centers and the National Account group, decreased $280,000 or 3% over the same quarter last year.
Consolidated gross profit margins improved from 56.3% in the first quarter of 2006 to 59.3% in the first quarter of 2007. Operating expenses increased from $6.1 million in the first quarter of 2006 to $6.6 million in the first quarter of 2007, increasing as a percentage of revenue from 42.1% in 2006 to 45.8% in 2007. Expenses associated with new retail stores (rent, personnel, utilities, etc.), increased advertising and marketing, and employee benefits were the primary contributors to the additional expense.
Ron Morgan, Chief Executive Officer and President, commented, "It's been a tough first quarter. A 1% sales gain for the quarter was well below our expectations coming into the year or what we've been used to. With the expenses associated with the twelve new stores since the first quarter of 2006, frankly, I am pleased that our earnings matched that of last year's first quarter. Those new expenses coupled with flat sales could have pushed us the other way. As expected, our gross profit margin improved significantly due to product mix. When we sell less leather and more hardware, tools, conchos, etc., sales tend to be softer, but gross margin improves. I expect we'll see some improvement in sales for the second quarter, although April won't show much. The motivation level in our managers is very high right now as they're all disappointed with their first quarter results."
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, 67 Tandy Leather retail stores, located in 31 states and 4 Canadian provinces, 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.
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
3/31/07 12/31/06
(unaudited)
-------------------------
Cash $6,001,607 $6,739,891
Accounts receivable, net of allowance for
doubtful accounts 2,894,793 2,599,279
Inventory 18,344,527 17,169,358
Deferred income taxes 276,212 266,018
Other current assets 1,469,749 1,089,258
-------------------------
Total current assets 28,986,888 27,863,804
Property and equipment, net 1,963,253 1,876,605
Goodwill and other intangibles, net 1,398,330 1,106,815
Other assets 1,150,474 1,069,411
-------------------------
$33,498,945 $31,916,635
=========================
Accounts payable $2,551,457 $1,776,646
Accrued expenses and other liabilities 2,484,623 3,424,010
Income taxes payable 427,810 59,392
Current maturities of capital lease
obligations and long-term debt 78,206 111,723
-------------------------
Total current liabilities 5,542,096 5,371,771
Deferred income taxes 216,534 221,621
Capital lease obligations and long-term
debt, net of current maturities - -
-------------------------
Total Liabilities 5,758,630 5,593,392
-------------------------
Common stock 26,207 26,124
Paid-in capital 5,351,044 5,292,591
Retained earnings 22,295,896 20,949,540
Treasury stock (25,487) (25,487)
Accumulated other comprehensive loss 92,655 80,475
-------------------------
Total Stockholders' Equity 27,740,315 26,323,243
-------------------------
$33,498,945 $31,916,635
=========================
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
Three Months
2007 2006
-------------------------
NET SALES $14,507,805 $14,413,649
COST OF SALES 5,909,852 6,299,515
-------------------------
Gross Profit 8,597,953 8,114,134
OPERATING EXPENSES 6,643,172 6,072,346
-------------------------
INCOME FROM OPERATIONS 1,954,781 2,041,788
Interest expense - -
Other, net (48,996) (18,110)
-------------------------
Total other expense (48,996) (18,110)
-------------------------
INCOME BEFORE INCOME TAXES 2,003,777 2,059,898
PROVISION FOR INCOME TAXES 657,422 713,635
-------------------------
NET INCOME $1,346,355 $1,346,263
=========================
NET INCOME PER COMMON SHARE - BASIC $0.12 $0.13
=========================
NET INCOME PER COMMON SHARE - DILUTED $0.12 $0.12
=========================
WEIGHTED AVG NUMBER OF SHARES OUTSTANDING:
Basic 10,893,359 10,756,745
Diluted 11,150,246 11,102,906
Selected financial data:
Quarter Ended 03/31/07 Quarter Ended 03/31/06
--------------------------------------------------
Operating Operating
Sales Income Sales Income
------------ ----------- ------------ -----------
Wholesale
Leathercraft $7,940,487 $1,346,203 $8,220,397 $1,519,020
Retail Leathercraft 6,254,219 553,748 5,541,082 495,824
Other 313,099 54,830 652,170 26,944
------------ ----------- ------------ -----------
Total Operations $14,507,805 $1,954,781 $14,413,649 $2,041,788
============ =========== ============ ===========
Quarter Ended Quarter Ended
Wholesale Leathercraft 03/31/07 03/31/06
-------------------- --------------------
# of # of
stores Sales stores Sales
------------------------------------------
Distribution centers 29 $6,624,606 29 $7,112,301
New store-Midcontinent
Leather Sales 1 185,263 - -
National account group 1,130,618 1,108,097
----------- -----------
Total Sales - Wholesale
Leathercraft $7,940,487 $8,220,397
=========== ===========
Retail Leathercraft Quarter Ended Quarter Ended
03/31/07 03/31/06
-------------------- --------------------
# of # of
stores Sales stores Sales
------------------------------------------
Same store sales 53 $5,529,927 53 $5,490,955
New store sales 12 724,292 3 50,127
----------- -----------
Total Sales - Retail
Leathercraft $6,254,219 $5,541,082
=========== ===========
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
2007 2006
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,346,355 $1,346,263
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 105,739 97,185
Gain on disposal of assets - -
Non-cash stock-based compensation 7,625 22,480
Deferred income taxes (15,281) 43,249
Other 11,092 (10,594)
Net changes in assets and liabilities:
Accounts receivable-trade, net (239,162) (806,423)
Inventory (824,948) 625,395
Income taxes 368,418 520,243
Other current assets (396,474) (566,483)
Accounts payable 726,168 1,047,227
Accrued expenses and other liabilities (939,386) (655,252)
----------- -----------
Total adjustments (1,196,209) 317,027
----------- -----------
Net cash provided by operating activities 150,146 1,663,290
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (200,097) (112,792)
Payments in connection with businesses
acquired (650,000) -
Proceeds from sale of assets 25,339 -
Increase in other assets (81,063) 461
----------- -----------
Net cash used in investing activities (905,821) (112,331)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving credit
loans - -
Payments on notes payable and long-term debt (33,517) (33,516)
Proceeds from issuance of common stock 50,910 37,800
----------- -----------
Net cash provided by (used in) financing
activities 17,393 4,284
----------- -----------
NET CHANGE IN CASH (738,284) 1,555,243
CASH, beginning of period 6,739,891 3,215,727
----------- -----------
CASH, end of period $6,001,607 $4,770,970
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid during the period - -
Income taxes paid during the period, net of
(refunds) $304,908 $48,761