FORT WORTH, Texas, May 02, 2018 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the first quarter ended March 31, 2018.  A conference call will be conducted by senior management at 10:00 am Eastern Time on May 3, 2018.  Dial-in details have been provided previously and are included below for reference.

  • Net sales increased 0.7% to $20.3 million, compared to prior year’s $20.2 million (consolidated same store sales decreased 0.9%, while new stores added $0.3 million of sales). 
  • Gross profit margin improved to 63.3% compared to prior year’s 61.0%.
  • Operating income increased 1.8% to approximately $1.8 million from $1.7 million in the prior year. 
  • Diluted EPS was $0.14 compared to prior year’s $0.13.

“We were fairly pleased with this quarter’s performance, as we achieved both top line and bottom line improvements,” commented Shannon Greene, Chief Executive Officer.  “While it’s good news, there is still much work to be done to drive sustainable growth in traffic and sales to reach our 2020 financial targets.  We remain focused on sales expansion and cost controls to continue the trend of improvement.” 

Sales from the North America division, consisting of all stores in the US and Canada, increased $86,000 to $19.3 million in the first quarter, up 0.4% from last year's first quarter sales of $19.2 million.  The sales increase in North America was driven by new stores, offset by a 1.2% decline in same store sales.  International, consisting of four stores outside of North America, added sales of $972,000 for the quarter, a 5.8% increase from last year’s first quarter sales of $918,000.  The sales increase in International was primarily due to foreign currency exchange, as sales in local currency were relatively flat.

Consolidated gross profit margin increased from 61.0% in the first quarter of 2017 to 63.3% in the first quarter of 2018, primarily due to customer and product mix.  Operating expenses increased $525,000 in the first quarter of 2018 to $11.1 million compared to $10.5 million in the first quarter of 2017, increasing as a percentage of sales from 52.4% in 2017 to 54.6% in 2018.  Significant increases in operating expenses relate to personnel and occupancy costs for the three new stores that have opened since the first quarter of last year, as well as personnel and travel costs for the twelve district managers, many of whom had not yet been placed until March and April 2017.

Our effective tax rate for the quarter was 27%, which was higher than the estimated 21% in prior guidance.  Changes to the tax rate include the addition of the new global foreign income provision, the loss of the domestic production deduction, and a lower than expected deferred tax benefit.   Additionally, we have not fully completed our accounting for the income tax effects of the Tax Act and during the three months ended March 31, 2018, we have made no adjustments to the provisional amounts recorded at December 31, 2017.  Any adjustments to the provisional amounts recorded at December 31, 2017 will be reflected upon the completion of our accounting for the Tax Act which is expected by the third quarter of 2018.  At this time, our guidance range for full year 2018 EPS remains unchanged.         

Consolidated net income for the quarter ended March 31, 2018 was $1.3 million compared to $1.2 million for the first quarter of 2017, an increase of 3.4%.

At March 31, 2018, inventory equaled $36.8 million, with an average inventory per store of $187,000 (excluding inventory at our home office manufacturing and distribution center and in-transit inventory), compared to $176,000 per store at December 31, 2017.  Overall, inventory levels decreased $0.5 million since December 31, 2017, mostly at our home office manufacturing and distribution center, while our inventory levels at the stores increased as we stocked up following the holiday season.  Cash on hand totaled $19.3 million, an increase of $0.9 million, over December 31, 2017 cash levels.

Tina Castillo, Chief Financial Officer added, “Our first quarter results reflect a positive start to 2018.  In addition, during this first quarter, we were successful in repurchasing 72,400 TLF shares, at an average price of $7.47.   This buyback was funded with proceeds from our line of credit. We look forward to building on our momentum as we progress through 2018.”

Conference Call Information

A conference call will be conducted by senior management at 10:00 a.m. Eastern Time on May 3, 2018 and will be accessible to the public by calling 877-312-5524 or 253-237-1144.  Callers should dial in approximately 5 minutes before the call begins. A conference call replay will be available through 1:00 p.m. Eastern Time on May 8, 2018 and can be accessed by calling 855-859-2056 or 404-537-3406.  For both, reference conference ID number 2257189.  This call will be webcast and can be accessed at the company’s web site at www.tandyleather.com.   

Tandy Leather Factory, Inc., (http://www.tandyleather.com), headquartered in Fort Worth, Texas, is a specialty retailer 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 115 North American stores located in 42 US states and 7 Canadian provinces, and four International 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.

Contact:Tina Castillo, Tandy Leather Factory, Inc.(817) 872-3200 or tcastillo@tandyleather.com
 Mark Gilbert, Magellan Fin, LLC(317) 867-2839 or MGilbert@MagellanFin.com

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 03/31/18 Quarter Ended 03/31/17
  

Sales		 Income from
Operations		  

Sales		 Income from
Operations
North America$19,317,260 $1,830,659  $19,231,714 $1,811,563 
International 971,658  (61,698)  918,131  (74,072)
Total Operations$20,288,918 $1,768,961  $20,149,845 $1,737,491 
              


    
North AmericaQuarter Ended 03/31/18 Quarter Ended 03/31/17
 # of
stores		Sales # of
stores		Sales
Same store sales112$18,999,312 112$19,231,714
New store sales3 317,948   -
Total Sales – North America115$19,317,260 112$19,231,714
        

International – there were no new stores or closed stores for the three months ended March 31, 2018 and 2017, so total sales are equal to same store sales.

TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS

 3/31/18 12/31/17
ASSETS   
CURRENT ASSETS:   
Cash$19,252,878  $18,337,258 
Accounts receivable-trade, net of allowance for doubtful accounts   
of $16,075 and $10,637 in 2018 and 2017, respectively 503,322   461,212 
Inventory 36,771,860   37,311,197 
Prepaid income taxes -   41,307 
Prepaid expenses 1,576,205   1,473,147 
Other current assets 78,412   189,029 
Total current assets 58,182,677   57,813,150 
    
PROPERTY AND EQUIPMENT, at cost 27,403,608   27,218,481 
Less accumulated depreciation and amortization (12,162,066)  (11,750,639)
  15,241,542   15,467,842 
    
DEFERRED INCOME TAXES 265,456   271,738 
GOODWILL 960,353   962,949 
OTHER INTANGIBLES, net of accumulated amortization of   
$711,000 and $710,000 in 2018 and 2017, respectively 18,667   19,222 
OTHER ASSETS 379,292   379,695 
 $75,047,987  $74,914,596 
    
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
CURRENT LIABILITIES:   
Accounts payable-trade$1,419,505  $1,413,450 
Accrued expenses and other liabilities 3,875,349   4,953,477 
Income tax payable 105,176   - 
Current maturities of long-term debt 1,153,931   614,311 
Total current liabilities 6,553,961   6,981,238 
    
DEFERRED INCOME TAXES 1,581,178   1,636,958 
    
LONG-TERM DEBT, net of current maturities 6,758,739   6,757,419 
    
COMMITMENTS AND CONTINGENCIES   
    
STOCKHOLDERS' EQUITY:   
Preferred stock, $0.10 par value; 20,000,000 shares   
authorized, none issued or outstanding -   - 
Common stock, $0.0024 par value; 25,000,000 shares   
authorized, 11,330,340 and 11,313,692 shares issued at 2018 and 2017,   
9,215,110 and 9,270,862 outstanding at 2018 and 2017, respectively 27,193   27,153 
Paid-in capital 6,860,200   6,831,271 
Retained earnings 65,026,552   63,921,244 
Treasury stock at cost (2,115,230 and 2,042,830 shares at 2018 and 2017, respectively) (10,819,524)  (10,278,584)
Accumulated other comprehensive income (940,312)  (962,103)
Total stockholders' equity 60,154,109   59,538,981 
 $75,047,987  $74,914,596 
    

TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31

        
 2018 2017
        
NET SALES$20,288,918  $20,149,845 
COST OF SALES 7,445,956   7,863,800 
 Gross profit 12,842,962   12,286,045 
    
OPERATING EXPENSES 11,074,001   10,548,554 
INCOME FROM OPERATIONS 1,768,961   1,737,491 
    
OTHER (INCOME) EXPENSE:   
Interest expense 64,642   36,344 
Other, net (38,872)  (2,651)
 Total other (income) expense 25,770   33,693 
    
INCOME BEFORE INCOME TAXES 1,743,191   1,703,798 
    
PROVISION FOR INCOME TAXES 469,572   472,533 
    
NET INCOME$1,273,619  $1,231,265 
    
    
    
    
NET INCOME PER COMMON SHARE:   
BASIC$0.14  $0.13 
DILUTED$0.14  $0.13 
    
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:   
BASIC 9,264,446   9,308,726 
DILUTED 9,264,811   9,330,919 
        

TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31

        
 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:   
 Net income$1,273,619  $1,231,265 
 Adjustments to reconcile net income to net cash provided by (used in) operating activities:   
 Depreciation and amortization 465,522   458,118 
 Loss on disposal or abandonment of assets 798   335 
 Non-cash stock-based compensation 28,969   44,794 
 Deferred income taxes (49,498)  (103,187)
 Foreign currency translation 24,388   344,789 
 Net changes in assets and liabilities:   
 Accounts receivable-trade, net (42,110)  36,292 
 Inventory 539,337   (1,204,464)
 Prepaid expenses (103,058)  (101,357)
 Other current assets 110,617   (126,374)
 Accounts payable-trade 6,055   802,561 
 Accrued expenses and other liabilities (1,246,439)  (1,717,366)
 Income taxes payable 146,483   489,836 
 Total adjustments (118,936)  (1,076,023)
 Net cash provided by operating activities 1,154,683   155,242 
    
CASH FLOWS FROM INVESTING ACTIVITIES:   
 Purchase of property and equipment (240,020)  (599,757)
 Increase (decrease) in other assets 957   (10,578)
 Net cash used in investing activities (239,063)  (610,335)
    
CASH FLOWS FROM FINANCING ACTIVITIES:   
 Proceeds from notes payable and long term debt 540,940   - 
 Repurchase of common stock (treasury stock) (540,940)  - 
 Net cash used in financing activities -   - 
    
NET INCREASE (DECREASE) IN CASH 915,620   (455,093)
    
CASH, beginning of period 18,337,258   16,862,304 
    
CASH, end of period$19,252,878  $16,407,211 
    
    
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:   
Interest paid during the period$64,642  $36,344 
Income tax paid during the period, net of (refunds)$372,587  $17,303 
        

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