EXHIBIT 99.1
FOR IMMEDIATE RELEASE NOVEMBER 9, 2009
TANDY LEATHER FACTORY REPORTS Q3 2009 EARNINGS UP 31%
ON HIGHER SALES AND MARGINS
FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the third quarter of 2009. Consolidated net income for the quarter ended September 30, 2009 was $553,000 compared to consolidated net income of $421,000 for the third quarter of 2008, an increase of 31%. Fully diluted earnings per share for the quarter were $0.05, compared to $0.04 in the third quarter of last year. Total sales for the quarter ended September 30, 2009 were $12.8 million, up 4% from $12.3 million in the third quarter last year.
Consolidated sales for the nine months ended September 30, 2009 were $39.4 million, matching that of the 2008 first nine months. Consolidated net income for the first three quarters of 2009 was up 21% to $2.0 million or $0.19 per fully-diluted share versus $1.7 million or $0.15 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $718,000 in the third quarter, a 13% improvement over last year's third quarter. Seventy-five stores comprised Tandy Leather's retail operations on September 30, 2009, compared to seventy-three retail stores a year ago. For the first nine months of 2009, Retail Leathercraft’s sales increased $1.4 million, or 8%, over the first nine months of 2008. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale stores and national account group, were down 2% or $120,000 from the same quarter last year. For the first nine months of 2009, Wholesale Leathercraft’s sales were down $1.7 million, or 8%, from the same period in 2008. International Leathercraft, consisting of one combination wholesale and retail store located in the United Kingdom, reported a sales increase of 6%, or $18,000, compared to the third quarter of 2008. For the year, International Leathercraft’s sales were up 68%, or $383,000, over the same period last year. This store was opened in February 2008.
Consolidated gross profit margin for the current quarter was 59.4%, improving from 58.3% for the third quarter of 2008. For the first three quarters, consolidated gross profit margin for the current year was 58.8%, increasing slightly from last year's gross profit margin of 58.2%. Consolidated operating expenses increased approximately 5% for the quarter or $348,000, but decreased approximately 1%, or $212,000, for the year compared to the same periods a year ago. For the third quarter, the significant increases in expenses occurred in employee benefits and compensation, advertising, and utilities. For the year, the largest expense cuts were in professional/consulting fees, rent and utilities, moving expenses, and freight costs. Consolidated operating margin improved for the quarter to 6.8% compared to 6.3% last year. On a year-to-date basis, consolidated operating margin improved from 6.6% last year to 7.8% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, “The strength in our third quarter retail sales pulled our current year sales up to match that of sales last year at this time. Our goal at the beginning of the year was to match last year’s sales so we are on pace as of the end of the quarter. It has been a year-long struggle and unfortunately, I do not expect the fourth quarter to be any different.”
Chief Financial Officer, Shannon Greene, added, “We are fairly pleased with our results through the end of the third quarter, but we must continue our efforts to keep expenses in check. Our cash is down slightly at the end of September because we purchased a large block of our stock during the quarter. I expect cash to grow in the fourth quarter, barring some unforeseen circumstances, and our inventory in is in good shape to begin the Christmas shopping season.”
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, 75 Tandy Leather retail stores, located in 36 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 NYSE Amex 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)872-3200 or sgreene@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 09/30/09 | Quarter Ended 09/30/08 | ||||||
Sales | Operating Income | Sales | Operating Income | ||||
Wholesale Leathercraft | $5,877,153 | $348,567 | $5,997,550 | $435,790 | |||
Retail Leathercraft | 6,444,179 | 472,653 | 5,726,164 | 234,743 | |||
International Leathercraft | 342,272 | 52,446 | 324,081 | 55,008 | |||
Other | 123,660 | (1,972) | 204,195 | 39,942 | |||
Total Operations | $12,787,264 | $871,694 | $12,251,990 | $765,483 |
Nine Months Ended 09/30/09 | Nine Months Ended 09/30/08 | ||||||
Sales | Operating Income | Sales | Operating Income | ||||
Wholesale Leathercraft | $18,276,276 | $1,243,341 | $19,953,958 | $1,084,364 | |||
Retail Leathercraft | 19,673,925 | 1,669,129 | 18,232,364 | 1,421,064 | |||
International Leathercraft | 942,996 | 106,499 | 559,641 | 6,090 | |||
Other | 469,997 | 32,431 | 614,151 | 66,866 | |||
Total Operations | $39,363,194 | $3,051,400 | $39,360,114 | $2,578,384 |
Wholesale Leathercraft | Quarter Ended 09/30/09 | Quarter Ended 09/30/08 | |||
# of stores | Sales | # of stores | Sales | ||
Same store sales | 30 | $5,056,473 | 30 | $5,289,155 | |
National account group | n/a | 820,680 | n/a | 708,395 | |
Total Sales – Wholesale Leathercraft | 30 | $5,877,153 | 30 | $5,997,550 | |
Wholesale Leathercraft | Nine Months Ended 09/30/09 | Nine Months Ended 09/30/08 | |||
# of stores | Sales | # of stores | Sales | ||
Same store sales | 30 | $15,798,472 | 30 | $17,350,183 | |
National account group | n/a | 2,477,804 | n/a | 2,603,775 | |
Total Sales – Wholesale Leathercraft | 30 | $18,276,276 | 30 | $19,953,958 | |
Retail Leathercraft | Quarter Ended 09/30/09 | Quarter Ended 09/30/08 | |||
# of stores | Sales | # of stores | Sales | ||
Same store sales | 72 | $6,273,553 | 72 | $5,716,139 | |
New store sales | 3 | 170,626 | 1 | 10,025 | |
Total Sales – Retail Leathercraft | 75 | $6,444,179 | 73 | $5,726,164 | |
Retail Leathercraft | Quarter Ended 09/30/09 | Nine Months Ended 09/30/08 | |||
# of stores | Sales | # of stores | Sales | ||
Same store sales | 72 | $19,242,812 | 72 | $18,222,339 | |
New store sales | 3 | 431,113 | 1 | 10,025 | |
Total Sales – Retail Leathercraft | 75 | $19,673,925 | 73 | $18,232,364 |
Tandy Leather Factory, Inc.
Consolidated Balance Sheets
September 30, 2009 (unaudited) | December 31, 2008 (audited) | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash | $4,197,357 | $7,810,298 | |||||
Short-term investments, including certificates of deposit | 5,409,000 | 3,011,000 | |||||
Accounts receivable-trade, net of allowance for doubtful accounts | |||||||
of $51,000 and $43,000 in 2009 and 2008, respectively | 1,694,732 | 1,180,349 | |||||
Inventory | 16,970,065 | 16,011,147 | |||||
Prepaid income taxes | 191,892 | - | |||||
Deferred income taxes | 241,688 | 229,501 | |||||
Other current assets | 1,043,510 | 777,550 | |||||
Total current assets | 29,748,244 | 29,019,845 | |||||
PROPERTY AND EQUIPMENT, at cost | 15,927,686 | 15,340,732 | |||||
Less accumulated depreciation and amortization | (5,704,551) | (5,019,885) | |||||
10,223,135 | 10,320,847 | ||||||
GOODWILL | 981,170 | 966,655 | |||||
OTHER INTANGIBLES, net of accumulated amortization of | |||||||
$405,000 and $367,000 in 2009 and 2008, respectively | 320,069 | 355,492 | |||||
OTHER assets | 312,870 | 313,074 | |||||
$41,585,488 | $40,975,913 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable-trade | $1,614,303 | $1,148,577 | |||||
Accrued expenses and other liabilities | 3,401,695 | 3,182,194 | |||||
Income taxes payable | - | 271,122 | |||||
Current maturities of long-term debt and capital lease obligations | 202,500 | 467,611 | |||||
Total current liabilities | 5,218,498 | 5,069,504 | |||||
DEFERRED INCOME TAXES | 679,571 | 600,309 | |||||
LONG-TERM DEBT, net of current maturities | 3,560,625 | 3,712,500 | |||||
CAPITAL LEASE OBLIGATION, net of current maturities | - | 328,838 | |||||
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; | |||||||
11,021,951and 10,994,951 shares issued at 2009 and 2008, respectively; | |||||||
10,166,328 and 10,664,555 shares outstanding at 2008 and 2007, respectively | 26,453 | 26,388 | |||||
Paid-in capital | 5,491,736 | 5,464,443 | |||||
Retained earnings | 28,653,986 | 26,641,853 | |||||
Treasury stock (855,623 and 330,396 shares at cost at 2009 and 2008, respectively) | (2,320,760) | (828,385) | |||||
Accumulated other comprehensive income | 275,379 | (39,537) | |||||
Total stockholders' equity | 32,126,794 | 31,264,762 | |||||
$41,585,488 | $40,975,913 |
Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Nine Months Ended September 30, 2009 and 2008
THREE MONTHS | NINE MONTHS | ||||||
2009 | 2008 | 2009 | 2008 | ||||
NET SALES | $12,787,264 | $12,251,990 | $39,363,194 | $39,360,114 | |||
COST OF SALES | 5,189,674 | 5,108,833 | 16,207,276 | 16,464,284 | |||
Gross profit | 7,597,590 | 7,143,157 | 23,155,918 | 22,895,830 | |||
OPERATING EXPENSES | 6,725,896 | 6,377,674 | 20,104,518 | 20,317,446 | |||
INCOME FROM OPERATIONS | 871,694 | 765,483 | 3,051,400 | 2,578,384 | |||
OTHER INCOME (EXPENSE): | |||||||
Interest expense | (68,895) | (80,072) | (229,879) | (249,725) | |||
Other, net | (48,307) | 25,672 | 171,881 | 332,355 | |||
Total other income (expense) | (117,202) | (54,400) | (57,998) | 82,630 | |||
INCOME BEFORE INCOME TAXES | 754,492 | 711,083 | 2,993,402 | 2,661,014 | |||
PROVISION FOR INCOME TAXES | 201,527 | 290,069 | 981,269 | 1,000,252 | |||
NET INCOME | $552,965 | $421,014 | $2,012,133 | $1,660,762 | |||
NET INCOME PER COMMON SHARE-BASIC | $ 0.05 | $ 0.04 | $ 0.19 | $ 0.15 | |||
NET INCOME PER COMMON SHARE-DILUTED | $ 0.05 | $ 0.04 | $ 0.19 | $ 0.15 | |||
Weighted Average Number of Shares Outstanding: | |||||||
Basic | 10,387,492 | 10,988,092 | 10,575,904 | 10,982,209 | |||
Diluted | 10,457,348 | 11,073,942 | 10,636,090 | 11,072,717 |
Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 2009 and 2008
2009 | 2008 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $2,012,133 | $1,660,762 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities - | |||
Depreciation & amortization | 852,943 | 758,364 | |
Loss on disposal of assets | 26,008 | 13,385 | |
Non-cash stock-based compensation | 2,540 | 22,875 | |
Deferred income taxes | 67,075 | 392,615 | |
Other | 284,258 | (131,157) | |
Net changes in assets and liabilities: | |||
Accounts receivable-trade, net | (514,383) | 579,386 | |
Inventory | (958,918) | 434,531 | |
Income taxes | (463,014) | 760 | |
Other current assets | (265,960) | 128,174 | |
Accounts payable | 465,726 | 1,266,611 | |
Accrued expenses and other liabilities | 219,501 | 1,542,779 | |
Total adjustments | (284,224) | 5,008,323 | |
Net cash provided by operating activities | 1,727,909 | 6,669,085 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (731,763) | (3,272,993) | |
Purchase of certificates of deposit | (7,526,000) | (1,858,000) | |
Proceeds from maturities of certificates of deposit | 5,128,000 | - | |
Decrease in marketable securities | - | 100,000 | |
Proceeds from sale of assets | 2,090 | 39,556 | |
Decrease (increase) in other assets | 204 | 751,200 | |
Net cash used in investing activities | (3,127,469) | (4,240,237) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Payments on long-term debt and notes payable | (151,875) | (84,375) | |
Payments on capital lease obligations | (593,949) | (145,795) | |
Repurchase of common stock (treasury stock) | (1,492,375) | - | - |
Proceeds from issuance of common stock | 24,818 | 14,500 | |
Net cash used in financing activities | (2,213,381) | (215,670) | |
NET CHANGE IN CASH | (3,612,941) | 2,213,178 | |
CASH, beginning of period | 7,810,298 | 6,310,396 | |
CASH, end of period | $4,197,357 | $8,523,574 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Interest paid during the period | $229,879 | $249,725 | |
Income taxes paid during the period, net of (refunds) | 1,304,838 | 634,749 | |
NON-CASH INVESTING ACTIVITIES: | |||
Equipment acquired under capital lease financing arrangements | - | 803,713 |