FORT WORTH, Texas, Nov. 09, 2016 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the third quarter of 2016.  Consolidated net income for the quarter ended September 30, 2016 was $1.0 million compared to $1.1 million for the third quarter of 2015, a decrease of 10%.  Fully diluted earnings per share of $0.11 for the third quarter of 2016 was equal to that reported for last year’s third quarter.  Total sales for the quarter ended September 30, 2016 were $18.6 million, down 4% from $19.4 million in the third quarter last year.  

Consolidated sales for the nine months ended September 30, 2016 were $58.8 million, down 2% from 2015’s comparable period sales of $59.9 million.  Consolidated net income for the first three quarters of 2016 increased 7% to $4.3 million or $0.46 per fully-diluted share versus $4.1 million or $0.40 per fully-diluted share in the comparable period last year.

Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, decreased $209,000 in the third quarter, a 2% decline over last year's third quarter.  Eighty-one stores comprised Tandy Leather's operations on September 30, 2016 compared to eighty-two stores at September 30, 2015.  For the first nine months of 2016, Retail Leathercraft’s sales decreased $114,000, or 0.3%, from the first nine months of 2015.  Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores, decreased 8% or $489,000, from the same quarter last year.  For the first nine months of 2016, Wholesale Leathercraft’s sales were down $1,047,000, or 5%, compared to the same period in 2015.  International Leathercraft, consisting of four stores located outside of North America, reported a sales decrease of 3%, or $29,000, compared to the third quarter of 2015.  For the year to date, International Leathercraft’s sales were up 3%, or $67,000, over the same period last year.

Consolidated gross profit margin for the current quarter was 62.5%, compared to 61.1% for the third quarter of 2015.  For the first three quarters of 2016, consolidated gross profit margin was 63.2%, improving from last year's gross profit margin of 62.1%.  Consolidated operating expenses increased approximately 1% or $132,000 for the third quarter of 2016 compared to the comparable quarter in 2015, primarily due to higher employee compensation and benefits, rent and depreciation, offset by lower advertising and store relocation costs.  For the year to date, consolidated operating expenses decreased 1% or $196,000, compared to the same period in 2015 with decreases occurring in employee compensation and benefits, advertising, and relocation expenses, offset by higher rent and depreciation.  As a percentage of sales, consolidated operating margin decreased for the quarter to 8.3% compared to 9.6% in last year’s third quarter.  On a year-to-date basis, consolidated operating margin increased from 11.0% last year to 11.5% in the current year.

Shannon L. Greene, Chief Executive Officer, commented, “While both sales and earnings this quarter were lower than last year’s third quarter, the results were not unexpected.  Sales continue to be challenging as we have discussed all year, but our earnings are ahead of internal expectations.  Said another way, we are achieving success in growing earnings in spite of weak sales. Despite the economic uncertainty, we are planning several new stores in markets that we believe will contribute favorably to our financial results over time.”

Mark Angus, President, added, “Compared to last year’s third quarter, although our sales were weaker, our gross profit margin improved.  So we are doing the right thing to protect margins as we maneuver around the retail headwinds.  Further, as we head into the Christmas shopping season, we are closely monitoring expenses to maximize earnings.”

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, 82 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 09/30/16 Quarter Ended 09/30/15
 
 
Sales
 Operating 
Income
 
Sales
 Operating 
Income
Wholesale Leathercraft$5,625,427  $468,589  $6,114,793  $682,461 
Retail Leathercraft 12,119,703   1,120,482   12,328,599   1,122,222 
International Leathercraft             883,232   (49,012)  912,545   55,068 
Total Operations$18,628,362  $1,540,059  $19,355,937  $1,859,751 


 Nine Months Ended 09/30/16 Nine Months Ended 09/30/15
 
Sales
 Operating 
Income
 
Sales
 Operating 
Income
Wholesale Leathercraft$18,187,330  $3,143,151  $19,234,375  $2,602,868 
Retail Leathercraft 37,856,229   3,501,441   37,970,423   3,862,343 
International Leathercraft               2,779,935   97,148   2,713,431   117,263 
Total Operations$58,823,494  $6,741,740  $59,918,229  $6,582,474 


Wholesale Leathercraft Quarter Ended 09/30/16 Quarter Ended 09/30/15
 # of storesSales # of storesSales
Same store sales27$5,625,427  27$5,958,309 
Closed store sales- -  1 156,484 
Total Sales – Wholesale Leathercraft            27$5,625,427  28$6,114,793 


Wholesale Leathercraft Nine Months Ended 09/30/16 Nine Months Ended 09/30/15
 # of storesSales # of storesSales
Same store sales27$17,998,925  27$18,739,934 
Closed store sales- 188,405  1 494,441 
Total Sales – Wholesale Leathercraft27$18,187,330  28$19,234,375 


Retail Leathercraft Quarter Ended 09/30/16 Quarter Ended 09/30/15
   # of storesSales # of storesSales
Same store sales80$11,836,141      80   $1,975,960 
New store sales1 283,562  - - 
Closed store sales2 -  2 352,639 
Total Sales – Retail Leathercraft        81$12,119,703  82$12,328,599 


Retail Leathercraft Nine Months Ended 09/30/16 Nine Months Ended 09/30/15
 # of storesSales # of storesSales
Same store sales80$36,864,480  80$36,934,411 
New store sales1 622,336  - - 
Closed store sales2 369,413  2 1,036,012 
Total Sales – Retail Leathercraft        81$37,856,229  82$37,970,423 


International Leathercraft Quarter Ended 09/30/16 Quarter Ended 09/30/15
 # of storesSales         # of storesSales
Same store sales3$749,161  3     $912,545 
New store sales  1 134,071  - - 
Total Sales – Intl Leathercraft                    4$883,232  3$912,545 


International Leathercraft Nine Months Ended 09/30/16 Nine Months Ended 09/30/15
 # of storesSales # of storesSales
Same store sales3$2,346,662  3$2,713,431 
New store sales1 433,273  - - 
Total Sales – Intl Leathercraft                  4$2,779,935  3$2,713,431 



Tandy Leather Factory, Inc.
Consolidated Balance Sheets
 
 September 30, 
2016 
(unaudited)
 December 31, 
2015
(audited)
ASSETS   
CURRENT ASSETS:   
 Cash$11,448,638  $10,962,615 
 Accounts receivable-trade, net of allowance for doubtful accounts   
 of $75 and $1,746 in 2016 and 2015, respectively 513,591   553,206 
 Inventory  37,122,297   33,584,539 
 Prepaid income taxes 1,237,306   549,277 
 Deferred income taxes 359,802   326,830 
 Prepaid expenses 1,852,230   1,514,887 
 Other current assets 16,261   70,197 
 Total current assets 52,550,125   47,561,551 
    
PROPERTY AND EQUIPMENT, at cost 25,394,850   23,992,208 
Less accumulated depreciation and amortization  (9,460,904)  (8,297,155)
  15,933,946   15,695,053 
    
GOODWILL 958,630   953,356 
OTHER INTANGIBLES, net of accumulated amortization of approximately   
 $708,000 and $702,000 in 2016 and 2015, respectively 21,284   27,282 
OTHER assets 334,778   329,684 
                             TOTAL ASSETS$69,798,763  $64,566,926 
    
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY   
CURRENT LIABILITIES:   
 Accounts payable-trade$1,981,879  $1,983,376 
 Accrued expenses and other liabilities 6,528,527   6,045,552 
 Current maturities of capital lease obligations 72,686   72,686 
 Current maturities of long-term debt 153,578   231,952 
 Total current liabilities 8,736,670   8,333,566 
     
DEFERRED INCOME TAXES 1,753,698   1,702,515 
    
LONG-TERM DEBT, net of current maturities 7,218,151   3,479,273 
  72,687   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 6,324,995   6,168,489 
  Retained earnings 57,409,496   53,067,234 
 Treasury stock at cost (2,042,830 shares at 2016; 1,522,348 shares at 2015) (10,278,584)  (6,602,930)
 Accumulated other comprehensive income (1,465,492)  (1,687,679)
 Total stockholders’ equity 52,017,557   50,972,176 
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$69,798,763  $64,566,926 


Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Nine Months Ended September 30, 2016 and 2015
    
 THREE MONTHS NINE MONTHS
  2016   2015   2016   2015 
NET SALES$18,628,362  $19,355,937  $58,823,494  $59,918,229 
        
COST OF SALES 6,983,491   7,523,240   21,630,087   22,688,223 
        
  Gross profit 11,644,871   11,832,697   37,193,407   37,230,006 
        
OPERATING EXPENSES 10,104,812   9,972,946   30,451,667   30,647,532 
        
INCOME FROM OPERATIONS 1,540,059   1,859,751   6,741,740   6,582,474 
        
OTHER INCOME (EXPENSE):       
  Interest expense (43,493)  (228,235)  (108,949)  (307,160)
  Other, net 3,570   38,320   26,965   68,070 
      Total other income (expense) (39,923)  (189,915)  (81,984)  (239,090)
        
INCOME BEFORE INCOME TAXES 1,500,136   1,669,836   6,659,756   6,343,384 
        
PROVISION FOR INCOME TAXES 499,786   558,492   2,317,494   2,279,737 
        
NET INCOME$1,000,350  $1,111,344  $4,342,262  $4,063,647 
        
        
        
NET INCOME PER COMMON SHARE:       
Basic$0.11  $0.11  $0.46  $0.40 
Diluted$0.11  $0.11  $0.46  $0.40 
        
Weighted Average Number of Shares Outstanding:       
  Basic 9,188,483   10,175,650   9,341,364   10,199,841 
  Diluted 9,206,382   10,199,092   9,359,405   10,226,877 


Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 2016 and 2015
 
  2016   2015 
CASH FLOWS FROM OPERATING ACTIVITIES:   
 Net income$4,342,262  $4,063,647 
 Adjustments to reconcile net income to net cash provided by (used in) operating activities:   
     Depreciation and amortization 1,273,078   1,163,116 
     (Gain) loss on disposal or abandonment of assets (6,306)  25,782 
     Non-cash stock-based compensation 156,586   106,569 
     Deferred income taxes 18,211   (67,646)
     Foreign currency translation 236,139   (882,354)
     Net changes in assets and liabilities:   
         Accounts receivable-trade, net 39,615   40,042 
         Inventory (3,537,758)  (2,182,520)
         Prepaid expenses (492,234)  (310,400)
         Other current assets 53,936   (91,331)
         Accounts payable-trade (1,497)  1,242,840 
         Accrued expenses and other liabilities 482,975   1,002,238 
         Income taxes payable (688,029)  (531,754)
 Total adjustments (2,465,284)  (485,418)
                 Net cash provided by operating activities 1,876,978   3,578,229 
    
CASH FLOWS FROM INVESTING ACTIVITIES:   
 Purchase of property and equipment (1,385,431)  (1,339,098)
 Proceeds from sale of assets 26,703   11,372 
 Purchase of intangible assets -   (10,000)
 (Increase) in other assets (10,368)  (2,902)
                 Net cash used in investing activities (1,369,096)  (1,340,628)
    
CASH FLOWS FROM FINANCING ACTIVITIES:   
 Net (decrease) in revolving credit loans -   (3,500,000)
 Proceeds from notes payable and long-term debt 3,660,505   3,711,224 
 Payments on notes payable and long-term debt -   (2,143,125)
 Payments on capital lease obligations (6,710)  - 
 Repurchase of common stock (treasury stock) (3,675,654)  (3,708,862)
 Proceeds from issuance of common stock -   9,920 
                 Net cash used in financing activities (21,859)  (5,630,843)
    
NET CHANGE IN CASH 486,023   (3,393,242)
    
CASH, beginning of period 10,962,615   10,636,530 
    
CASH, end of period$11,448,638  $7,243,288 
    
    
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:   
Interest paid during the period$  108,949  $  307,160 
Income tax paid during the period$3,005,523  $2,883,552 
Shannon L. Greene
Tandy Leather Factory, Inc.
(817) 872-3200
sgreene@tandyleather.com

Mark Gilbert
Magellan Fin, LLC
(317) 867-2839
MGilbert@MagellanFin.com

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