EXHIBIT 99.1
FOR IMMEDIATE RELEASE &# 160; May 7, 2008
TANDY LEATHER FACTORY REPORTS 1ST QUARTER 2008 FINANCIAL RESULTS
EPS $0.05; CASH UP 26% FROM YEAR-END 2007
FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the first quarter of 2008. Net income for the quarter ended March 31, 2008 was $584,000, down from net income of $1.3 million in the first quarter of 2007. Fully-diluted earnings per share for the quarter was $0.05 in the current quarter, compared to $0.12 in last year’s first quarter. Total sales for the first quarter were $13.3 million, down 9% from $14.5 million in the same quarter last year.
Sales from the Retail Leathercraft operation, consisting of the Tandy Leather retail store chain, increased $16,000 in the first quarter, virtually the same as last year's first quarter sales of $6.3 million. The chain consists of seventy-two stores as of March 31, 2008, compared to sixty-five retail stores a year ago. First quarter sales for the Wholesale Leathercraft operation, consisting of the Leather Factory wholesale centers and the National Account group, decreased $1.2 million or 15% over the same quarter last year. International Leathercraft, consisting of one combination wholesale and retail store located in the United Kingdom, added sales of $42k for the quarter. This store was opened in February 2008.
Consolidated gross profit margins decreased from 59.3% in the first quarter of 2007 to 58.4% in the first quarter of 2008. Operating expenses increased from $6.6 million in the first quarter of 2007 to $7.0 million in the first quarter of 2008, increasing as a percentage of revenue from 45.8% in 2007 to 52.9% in 2008. Expenses associated with new stores, accelerated depreciation expense on leasehold improvements abandoned during the quarter, and expenses associated with the move of the central warehouse, factory, corporate and support departments to its new facility were the primary contributors to the additional expense.
Ron Morgan, Chief Executive Officer and President, commented, “We knew, and stated publicly, that our earnings this quarter would not be as strong as last year’s first quarter. As expected, sales were weak and we had some unusual expenses in the first quarter. The move of our corporate offices at the end of the quarter went better than expected and the UK store is showing good potential. It missed reporting a profit in March by just a few hundred dollars so I expect it to begin adding to our profits in the second quarter.”
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, 72 Tandy Leather retail stores, located in 34 states and 5 Canadian provinces, one combination wholesale/retail store located in the United Kingdom, and Mid-Continent Leather Sales, one store located in Oklahoma. Its common stock trades on the American Stock Exchange with the symbol "TLF".
| Contact: | Shannon L. Greene, Tandy Leather Factory, Inc. | 817/872-3200 or sgreene@tandyleather.com |
| | Mark Gilbert, Magellan Fin, LLC | 317/867-2839 or Mgilbert@MagellanFin.com |
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
| | 03/31/2008 (unaudited) | | 12/31/2007 (audited) |
| ASSETS | | | |
| CURRENT ASSETS: | | | |
| | Cash | $8,610,331 | | $6,810,396 |
| | Accounts receivable-trade, net of allowance for doubtful accounts | | | |
| | | | of $137,000 and $104,000 in 2008 and 2007, respectively | 2,044,119 | | 2,538,816 |
| | Inventory | 16,227,628 | | 17,473,352 |
| | Deferred income taxes | 251,665 | | 256,938 |
| | Other current assets | 1,328,639 | | 1,102,836 |
| | | | | Total current assets | 28,462,382 | | 28,182,338 |
| | | | |
| PROPERTY AND EQUIPMENT, at cost | 14,220,027 | | 11,793,317 |
| Less accumulated depreciation and amortization | (4,497,550) | | (4,794,505) |
| | 9,722,477 | | 6,998,812 |
| | | | |
| GOODWILL | 986,281 | | 990,536 |
| OTHER INTANGIBLES, net of accumulated amortization of | | | |
| | $328,000 and $313,000 in 2008 and 2007, respectively | 368,783 | | 384,134 |
| OTHER assets | 323,258 | | 1,095,686 |
| | $39,863,181 | | $37,651,506 |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| CURRENT LIABILITIES: | | | |
| | Accounts payable-trade | $1,485,783 | | $1,497,564 |
| | Accrued expenses and other liabilities | 2,647,416 | | 2,072,640 |
| | Income taxes payable | 270,712 | | 67,150 |
| | Current maturities of long-term debt and capital lease obligations | 419,103 | | 135,000 |
| | | | | Total current liabilities | 4,823,014 | | 3,772,354 |
| | | | |
| DEFERRED INCOME TAXES | 293,743 | | 148,648 |
| | | | |
| LONG-TERM DEBT, net of current maturities | 3,864,375 | | 3,915,000 |
| CAPITAL LEASE OBLIGATION, net of current maturities | 525,275 | | - |
| | | | |
| 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; | | | |
| | | 10,982,951 shares issued at 2008 and 2007; | | | |
| | | 10,977,092 shares outstanding at 2008 and 2007 | 26,359 | | 26,359 |
| | Paid-in capital | 5,427,102 | | 5,419,477 |
| | Retained earnings | 24,622,170 | | 24,037,672 |
| | Treasury stock (5,859 shares at cost) | (25,487) | | (25,487) |
| | Accumulated other comprehensive income | 306,630 | | 357,483 |
| | | | | Total stockholders' equity | 30,356,774 | | 29,815,504 |
| | $39,863,181 | | $37,651,506 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007
| | 2008 | | 2007 |
| NET SALES | $13,260,160 | | $14,507,805 |
| COST OF SALES | 5,519,138 | | 5,909,852 |
| | Gross profit | 7,741,022 | | 8,597,953 |
| | | | |
| OPERATING EXPENSES | 7,019,638 | | 6,643,172 |
| INCOME FROM OPERATIONS | 721,384 | | 1,954,781 |
| | | | |
| OTHER (INCOME) EXPENSE: | | | |
| Interest expense | 81,741 | | - |
| Other, net | (280,390) | | (48,996) |
| | Total other (income) expense | (198,649) | | (48,996) |
| | | | |
| INCOME BEFORE INCOME TAXES | 920,033 | | 2,003,777 |
| | | | |
| PROVISION FOR INCOME TAXES | 335,535 | | 657,422 |
| | | | |
| NET INCOME | $584,498 | | $1,346,355 |
| | | | |
| | | | |
| NET INCOME PER COMMON SHARE – BASIC | $0.05 | | $0.12 |
| | | | |
| NET INCOME PER COMMON SHARE – DILUTED | $0.05 | | $0.12 |
| | | | |
| Weighted Average Number of Shares Outstanding: | | | |
| Basic | 10,977,092 | | 10,893,359 |
| Diluted | 11,067,863 | | 11,150,246 |
Selected financial data:
| | Quarter Ended 03/31/08 | | Quarter Ended 03/31/07 |
| | Sales | | Operating Income | | Sales | | Operating Income |
| Wholesale Leathercraft | $6,738,211 | | $123,955 | | $7,940,487 | | $1,346,203 |
| Retail Leathercraft | 6,270,774 | | 614,452 | | 6,254,219 | | 553,748 |
| International | 41,737 | | (41,460) | | - | | - |
| Other | 209,438 | | 24,437 | | 313,099 | | 54,830 |
| Total Operations | $13,260,160 | | $721,384 | | $14,507,805 | | $1,954,781 |
| Wholesale Leathercraft | Quarter Ended 03/31/08 | | Quarter Ended 03/31/07 |
| | # of stores | Sales | | # of stores | Sales |
| Distribution centers | 29 | $5,829,014 | | 29 | 6,624,606 |
| New store-Midcontinent Leather Sales | 1 | 162,938 | | 1 | 185,263 |
| National account group | | 746,259 | | | 1,130,618 |
| Total Sales – Wholesale Leathercraft | | $6,738,211 | | | $7,940,487 |
| Retail Leathercraft | Quarter Ended 03/31/08 | | Quarter Ended 03/31/07 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 65 | $5,889,635 | | 65 | $6,254,219 |
| New store sales | 7 | 381,139 | | - | - |
Total Sales – Retail Leathercraft | | $6,270,774 | | | $6,254,219 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
| | 2008 | | 2007 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| | Net income | $584,498 | | $1,346,355 |
| | Adjustments to reconcile net income to net cash | | | |
| | | provided by operating activities - | | | |
| | | | Depreciation and amortization | 225,424 | | 105,739 |
| | | | Gain on disposal of assets | (12,109) | | - |
| | | | Non-cash stock-based compensation | 7,625 | | 7,626 |
| | | | Deferred income taxes | 150,368 | | (15,281) |
| | | | Other | (46,598) | | 11,092 |
| | | | Net changes in assets and liabilities, net of effect of business acquisitions: | | | |
| | | | | Accounts receivable-trade, net | 494,696 | | (239,162) |
| | | | | Inventory | 1,245,723 | | (824,948) |
| | | | | Income taxes | 203,563 | | 368,418 |
| | | | | Other current assets | (225,803) | | (396,474) |
| | | | | Accounts payable-trade | (11,781) | | 726,168 |
| | | | | Accrued expenses and other liabilities | 574,775 | | (939,387) |
| | Total adjustments | 2,605,883 | | (1,196,209) |
| | | | | | Net cash provided by operating activities | 3,190,381 | | 150,146 |
| | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| | Purchase of property and equipment | (2,136,245) | | (200,097) |
| | Payments in connection with businesses acquired | - | | (650,000) |
| | Proceeds from sale of assets | - | | 25,337 |
| | Decrease (increase) in other assets | 772,430 | | (81,063) |
| | | | | | Net cash used in investing activities | (1,363,815) | | (905,823) |
| | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| | Payments on capital lease obligations | (44,960) | | (33,517) |
| | Proceeds from exercise of stock options and warrants | 18,329 | | 50,910 |
| | | | | | Net cash provided by financing activities | (26,631) | | 17,393 |
| | | | |
| NET INCREASE (DECREASE) IN CASH | 1,799,935 | | (738,284) |
| | | | |
| CASH, beginning of period | 6,810,396 | | 6,739,891 |
| | | | |
| CASH, end of period | $8,610,331 | | $6,001,607 |
| | | | |
| | | | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
| Interest paid during the period | $81,741 | | - |
| Income tax paid during the period, net of (refunds) | $60,210 | | $304,908 |
| | | | |
| NON-CASH INVESTING ACTIVITIES: | | | |
| Equipment acquired under capital lease financing arrangement | $803,712 | | - |
