EXHIBIT 99.1
FOR IMMEDIATE RELEASE FEBRUARY 25, 2009
TANDY LEATHER FACTORY REPORTS 24 CENTS EPS FOR 2008, BEATS GUIDANCE
SOLID FINANCIAL POSITION AND STRONG CASH FLOW
FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the fourth quarter and year ended December 31, 2008. A conference call will be conducted by Ron Morgan, CEO, Shannon Greene, CFO, and Jon Thompson, President, at 3:00 p.m. Eastern Time today. Dial-in details have been provided previously.
Consolidated net income for the quarter was $943,000 compared to consolidated net income of $1.2 million for the fourth quarter of 2007. Fully diluted earnings per share for the quarter were $0.09, compared to $0.11 for the same quarter of the previous year. Total sales for the quarter ended December 31, 2008 decreased 5% to $13.8 million from $14.6 million for the fourth quarter of 2007. Consolidated sales for the year ended December 31, 2008 were $53.2 million, down 4% from 2007 sales of $55.3 million. Consolidated net income for 2008 was $2.6 million or $0.24 per fully-diluted share versus $3.1 million or $0.28 per fully-diluted share for 2007.
Sales in the Retail Leathercraft division for the fourth quarter of 2008 increased $89,000 over the previous year's fourth quarter, representing a 1% improvement. Seventy-three Tandy Leather retail stores comprised Retail Leathercraft’s operations on December 31, 2008, compared to seventy-two retail stores a year earlier. One new store was opened in September 2008. For 2008, Retail Leathercraft’s sales increased $567,000, or 2%, over 2007.
Fourth quarter sales for the Wholesale Leathercraft division decreased $1 million over the same quarter of 2007, a 14% reduction. Same store sales decreased $747,000, or 11%, while national account sales were down $282,000, or 30%. For the year, Wholesale Leathercraft’s sales were down $3.1 million, or 11%. Same store sales decreased $2.7 million, or 10%, while sales to national accounts were down $452,000, or 12%, for the year.
International Leathercraft, which represents the UK store opened in February 2008, posted sales of $277,000 in the fourth quarter and $836,000 for the year.
Consolidated gross profit margin for the fourth quarter was 61.1%, an improvement from 57.8% for the fourth quarter of 2007. For 2008, consolidated gross profit margin was 58.9%, improving from the previous year's gross profit margin of 57.3%. Consolidated operating expenses for the fourth quarter of 2008 were 49.6% of sales, increasing $182,000 or 2.7% over the same quarter of 2007. Operating expenses totaled 51.1% of sales for 2008, increasing $38,000 or 0.1% from 2007.
Ron Morgan, Chief Executive Officer, commented, "We are fairly pleased with our 2008 earnings as we did slightly better than we anticipated internally, although only by a penny on EPS. In this environment though, that is quite an accomplishment. We certainly wish sales were stronger, but as we have said throughout the year, success has to be measured on expense control, not sales gains. For 2008, we were able to hold our operating expenses flat compared to 2007. Considering we have the new UK store this year plus the expenses associated with our new building, we did better in cutting operating expenses than it shows on our financial reports.”
Shannon Greene, Chief Financial Officer and Treasurer, added, “While 2008 was disappointing in some ways, there are several positives worth mentioning: We beat our 2008 earnings guidance despite a sales decline of 4%. 2008 was our twelfth consecutive year of operating profitability. We opened our first store outside of North America and it generated an operating profit in its first year of existence. We ended the year holding the most cash in our history. Except for our weak sales, we almost don’t know we’re supposed to be in a recession.”
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, 74 Tandy Leather retail stores, located in 35 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". 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: | Shannon L. Greene, Tandy Leather Factory, Inc. | (817) 8720-3200 or sgreene@tandyleather.com |
| | Mark Gilbert, Magellan Fin, LLC | (317) 867-2839 or MGilbert@MagellanFin.com |
Selected financial data:
| | Quarter Ended 12/31/08 | | Quarter Ended 12/31/07 |
| | Sales | | Operating Income | | Sales | | Operating Income |
| Wholesale Leathercraft | $6,469,900 | | $758,164 | | $7,498,855 | | $1,036,454 |
| Retail Leathercraft | 6,998,780 | | 767,218 | | 6,910,136 | | 665,828 |
| International Leathercraft | 276,895 | | 48,440 | | - | | - |
| Other | 131,405 | | 26,938 | | 216,886 | | 44,311 |
| Total Operations | $13,876,980 | | $1,600,760 | | $14,625,877 | | $1,746,593 |
| | Year Ended 12/31/08 | | Year Ended 12/31/07 |
| | Sales | | Operating Income | | Sales | | Operating Income |
| Wholesale Leathercraft | $26,423,857 | | $1,842,527 | | $29,555,978 | | $2,826,710 |
| Retail Leathercraft | 25,231,145 | | 2,188,282 | | 24,663,750 | | 1,544,320 |
| International Leathercraft | 836,535 | | 54,532 | | - | | - |
| Other | 745,557 | | 93,803 | | 1,097,274 | | 139,971 |
| Total Operations | $53,237,094 | | $4,179,144 | | $55,317,002 | | $4,511,001 |
| Wholesale Leathercraft | Quarter Ended 12/31/08 | | Quarter Ended 12/31/07 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 30 | $5,822,920 | | 30 | $6,569,765 |
| National account group | | 646,980 | | | 929,090 |
| Total Sales – Wholesale Leathercraft | 30 | $6,469,900 | | 30 | $7,498,855 |
| Wholesale Leathercraft | Year Ended 12/31/08 | | Year Ended 12/31/07 |
| | # of stores | Sales | | # of stores | Sales |
| Leather Factory stores | 29 | $22,624,080 | | 29 | $25,133,477 |
| New store sales | 1 | 549,022 | | 1 | 719,641 |
| National account group | | 3,250,755 | | | 3,702,860 |
| Total Sales – Wholesale Leathercraft | 30 | $26,423,857 | | 30 | $29,555,978 |
| Retail Leathercraft | Quarter Ended 12/31/08 | | Quarter Ended 12/31/07 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 72 | $6,910,610 | | 72 | $6,910,136 |
| New store sales | 1 | 88,170 | | - | - |
| Total Sales – Retail Leathercraft | 73 | $6,998,780 | | 72 | $6,910,136 |
| Retail Leathercraft | Year Ended 12/31/08 | | Year Ended 12/31/07 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 65 | $23,703,625 | | 65 | $24,012,327 |
| New store sales | 8 | 1,527,520 | | 7 | 651,423 |
| Total Sales – Retail Leathercraft | 73 | $25,231,145 | | 72 | $24,663,750 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007
| | Three Months | | Twelve Months |
| | 2008 (unaudited) | 2007 | | 2008 (unaudited) | 2007 |
| NET SALES | $13,876,980 | $14,625,877 | | $53,237,094 | $55,317,002 |
| COST OF SALES | 5,393,516 | 6,178,730 | | 21,857,800 | 23,644,599 |
| | Gross Profit | 8,483,464 | 8,447,147 | | 31,379,294 | 31,672,403 |
| | | | | | |
| OPERATING EXPENSES | 6,882,704 | 6,700,554 | | 27,200,150 | 27,161,402 |
| INCOME FROM OPERATIONS | 1,600,760 | 1,746,593 | | 4,179,144 | 4,511,001 |
| | | | | | |
| Interest expense | 82,382 | 71,715 | | 332,107 | 122,209 |
| Other, net | 67,320 | (89,868) | | (265,035) | (439,040) |
| | Total other expense | 149,702 | (18,153) | | 67,072 | (316,831) |
| | | | | | |
| INCOME BEFORE INCOME TAXES | 1,451,058 | 1,764,746 | | 4,112,072 | 4,827,832 |
| PROVISION FOR INCOME TAXES | 507,639 | 591,263 | | 1,507,891 | 1,739,701 |
| NET INCOME | $943,419 | $1,173,483 | | $2,604,181 | $3,088,131 |
| | | | | | |
| NET INCOME PER COMMON SHARE – BASIC | $0.09 | $0.11 | | $0.24 | $0.28 |
| NET INCOME PER COMMON SHARE – DILUTED | $0.09 | $0.11 | | $0.24 | $0.28 |
| | | | | | |
| Weighted Average Number of Shares Outstanding: | | | | | |
| Basic | 10,779,703 | 10,974,222 | | 10,931,306 | 10,951,481 |
| Diluted | 10,845,517 | 11,160,034 | | 11,015,657 | 11,157,775 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
| | 12/31/08 (unaudited) | 12/31/07 |
| Cash | $7,810,298 | $6,310,396 |
| Certificates of deposit | 3,011,000 | - |
| Marketable securities | - | 500,000 |
| Accounts receivable, net of allowance for doubtful accounts | 1,180,349 | 2,538,816 |
| Inventory | 16,011,147 | 17,473,352 |
| Deferred income taxes | 229,501 | 256,938 |
| Other current assets | 777,550 | 1,102,836 |
| Total current assets | 29,019,845 | 28,182,338 |
| Property and equipment, net | 10,320,847 | 6,998,812 |
| Goodwill and other intangibles, net | 1,322,147 | 1,374,670 |
| Other assets | 313,074 | 1,095,686 |
| | $40,975,913 | $37,651,506 |
| | | |
| Accounts payable | $1,148,577 | $1,497,564 |
| Accrued expenses and other liabilities | 3,186,809 | 2,072,640 |
| Income taxes payable | 266,508 | 67,150 |
| Current maturities of long-term debt and capital lease obligation | 467,611 | 135,000 |
| Total current liabilities | 5,069,505 | 3,772,354 |
| Deferred income taxes | 600,309 | 148,648 |
| Long-term debt and capital lease obligation, net of current maturities | 4,041,337 | 3,915,000 |
| Total liabilities | 9,711,151 | 7,836,002 |
| | | |
| Common stock | 26,388 | 26,359 |
| Paid-in capital | 5,464,443 | 5,419,477 |
| Treasury stock (330,396 shares at 12/31/08) | (828,385) | (25,487) |
| Retained earnings | 26,641,853 | 24,037,672 |
| Accumulated other comprehensive loss | (39,537) | 357,483 |
| Total Stockholders' Equity | 31,264,762 | 29,815,504 |
| | $40,975,913 | $37,651,506 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007
| | 2008 (unaudited) | | 2007 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| Net income | $2,604,181 | | $3,088,131 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation & amortization | 960,841 | | 634,291 |
| Loss on disposal of assets | 13,385 | | 50,114 |
| Non-cash stock-based compensation | 30,495 | | 19,340 |
| Deferred income taxes | 479,098 | | (63,893) |
| Other | (373,139) | | 241,182 |
| Net changes in assets and liabilities: | | | |
| Accounts receivable-trade, net | 1,358,467 | | 119,293 |
| Inventory | 1,462,205 | | 156,052 |
| Income taxes | 199,358 | | 7,758 |
| Other current assets | 325,286 | | (27,946) |
| Accounts payable | (348,987) | | (327,726) |
| Accrued expenses and other liabilities | 1,114,169 | | (1,351,369) |
| Total adjustments | 5,221,178 | | (542,904) |
| Net cash provided by operating activities | 7,825,359 | | 2,545,227 |
| | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| Purchase of property and equipment | (3,506,020) | | (1,705,367) |
| Payments in connection with businesses acquired | - | | (771,417) |
| Proceeds from sale of assets | 42,114 | | 32,281 |
| (Increase) decrease in other assets | 782,612 | | (26,276) |
| Increase in certificates of deposit | (3,011,000) | | - |
| (Increase) decrease in marketable securities | 500,000 | | (500,000) |
| Net cash used in investing activities | (5,192,294) | | (2,970,779) |
| | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| Payments on capital lease obligation | (209,765) | | (111,723) |
| Payments on notes payable and long-term debt | (135,000) | | - |
| Repurchase of common stock (treasury stock) | (802,898) | | - |
| Proceeds from issuance of common stock and warrants | 14,500 | | 107,780 |
| Net cash used in financing activities | (1,133,163) | | (3,943) |
| | | | |
| NET CHANGE IN CASH | 1,499,902 | | (429,495) |
| CASH, beginning of period | 6,310,396 | | 6,739,891 |
| | | | |
| CASH, end of period | $7,810,298 | | $6,310,396 |
| | | | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
| Interest paid during the period | $332,107 | | $122,209 |
| Income taxes paid during the period, net of (refunds) | 878,110 | | 1,830,688 |
| | | | |
| NON-CASH INVESTING ACTIVITIES: | | | |
| Land and building acquired with long-term debt | - | | 4,050,000 |
| Equipment acquired under capital lease financing arrangements | 803,713 | | - |
