EXHIBIT 99.1
FOR IMMEDIATE RELEASE 60; May 11, 2010
TANDY LEATHER FACTORY REPORTS 1ST QUARTER 2010 EARNINGS UP 36%
FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the first quarter of 2010. Net income for the quarter ended March 31, 2010 was $948,000, up from net income of $698,000 in the first quarter of 2009, an increase of 36%. Fully-diluted earnings per share for the quarter were $0.09 in the current quarter, compared to $0.06 in last year’s first quarter. Total sales for the first quarter were $14.6 million, an increase of 10.7% compared to 2009’s first quarter sales of $13.2 million.
Sales from the Retail Leathercraft division, consisting of the Tandy Leather retail store chain, increased $1 million in the first quarter, up 15% from last year's first quarter sales. The store chain consisted of seventy-six stores as of March 31, 2010, compared to seventy-four retail stores a year ago. First quarter sales for the Wholesale Leathercraft division, consisting of the Leather Factory wholesale stores and the National Account group, increased $301,000, or 5% from the same quarter last year. International Leathercraft, consisting of one store located in the United Kingdom, added sales of $384,000 for the quarter, a 31% increase over last year’s first quarter sales of $293,000.
Consolidated gross profit margin increased from 58.7% in the first quarter of 2009 to 61.5% in the first quarter of 2010, a significant improvement. Operating expenses increased $697,000 in the first quarter of 2010 to $7.4 million compared to $6.8 million in the first quarter of 2009, decreasing slightly as a percentage of revenue from 51.2% in 2009 to 51.0% in 2010.
Jon Thompson, Chief Executive Officer and President, commented, “Overall, it was a good quarter. I am especially pleased with the improvement in our gross profit margin. All three divisions achieved sales gains and were solidly profitable. Our goal as we move through the year is to continue our solid sales growth and keep our expenses under control.”
Shannon L. Greene, Chief Financial Officer, added, “This quarter makes our fifth consecutive quarter of higher earnings than in the prior year’s comparable quarter. We have maintained a good trend there as we have worked our way through the economic turmoil of this past year. While I don’t think profitability is in question for the year, we will continue to watch our operating expenses in order to maximize our earnings.”
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, 76 Tandy Leather retail stores, located in 36 states and 6 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.
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
| | 03/31/2010 (unaudited) | | 12/31/2009 (audited) |
| ASSETS | | | |
| CURRENT ASSETS: | | | |
| | Cash | $5,976,396 | | $7,891,962 |
| | Short-term investments, including certificates of deposit | 6,995,598 | | 5,017,000 |
| | Accounts receivable-trade, net of allowance for doubtful accounts | | | |
| | | | of $174,000 and $136,000 in 2010 and 2009, respectively | 1,459,075 | | 1,202,811 |
| | Inventory | 17,538,853 | | 16,865,826 |
| | Deferred income taxes | 289,556 | | 271,481 |
| | Other current assets | 1,499,080 | | 791,884 |
| | | | | Total current assets | 33,758,558 | | 32,040,964 |
| | | | |
| PROPERTY AND EQUIPMENT, at cost | 14,513,146 | | 15,111,497 |
| Less accumulated depreciation and amortization | (4,953,970) | | (5,431,776) |
| | 9,559,176 | | 9,679,721 |
| | | | |
| GOODWILL | 987,812 | | 983,823 |
| OTHER INTANGIBLES, net of accumulated amortization of | | | |
| | $433,000 and $418,000 in 2010 and 2009, respectively | 293,401 | | 307,802 |
| OTHER assets | 318,218 | | 314,921 |
| | $44,917,165 | | $43,327,231 |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| CURRENT LIABILITIES: | | | |
| | Accounts payable-trade | $1,613,639 | | $1,185,032 |
| | Accrued expenses and other liabilities | 4,116,620 | | 3,988,144 |
| | Income taxes payable | 434,827 | | 399,536 |
| | Current maturities of long-term debt | 202,500 | | 202,500 |
| | | | | Total current liabilities | 6,367,586 | | 5,775,212 |
| | | | |
| DEFERRED INCOME TAXES | 706,222 | | 682,364 |
| | | | |
| LONG-TERM DEBT, net of current maturities | 3,459,375 | | 3,510,000 |
| | | | |
| 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; | | | |
| | | 11,034,845 and 11,021,951 shares issued at 2010 and 2009; | | | |
| | | 10,141,222 and 10,130,628 shares outstanding at 2010 and 2009 | 26,484 | | 26,453 |
| | Paid-in capital | 5,491,705 | | 5,491,736 |
| | Retained earnings | 30,908,023 | | 29,959,910 |
| | Treasury stock (893,623 shares at cost) | (2,461,068) | | (2,452,649) |
| | Accumulated other comprehensive income | 418,838 | | 334,205 |
| | | | | Total stockholders' equity | 34,383,982 | | 33,359,655 |
| | $44,917,165 | | $43,327,231 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 and 2009
| | 2010 | | 2009 |
| NET SALES | $14,588,538 | | $13,183,095 |
| COST OF SALES | 5,611,942 | | 5,442,649 |
| | Gross profit | 8,976,596 | | 7,740,446 |
| | | | |
| OPERATING EXPENSES | 7,440,228 | | 6,742,915 |
| INCOME FROM OPERATIONS | 1,536,368 | | 997,531 |
| | | | |
| OTHER (INCOME) EXPENSE: | | | |
| Interest expense | 65,604 | | 77,409 |
| Other, net | (1,467) | | (77,272) |
| | Total other (income) expense | 64,137 | | 137 |
| | | | |
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 1,472,231 | | 997,394 |
| | | | |
| PROVISION FOR INCOME TAXES | 524,654 | | 324,336 |
| | | | |
| NET INCOME FROM CONTINUING OPERATIONS | 947,577 | | 673,058 |
| | | | |
| INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | 536 | | 24,859 |
| | | | |
| NET INCOME | $948,113 | | $697,917 |
| | | | |
| NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE: | | | |
| BASIC | $0.09 | | $0.06 |
| DILUTED | $0.09 | | $0.06 |
| | | | |
| INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX PER COMMON SHARE: | | | |
| BASIC | $0.00 | | $0.00 |
| DILUTED | $0.00 | | $0.00 |
| | | | |
| NET INCOME PER COMMON SHARE: | | | |
| BASIC | $0.09 | | $0.06 |
| DILUTED | $0.09 | | $0.06 |
| | | | |
| Weighted Average Number of Shares Outstanding: | | | |
| Basic | 10,137,715 | | 10,670,111 |
| Diluted | 10,213,677 | | 10,721,954 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
| | 2010 | | 2009 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| | Net income | $948,113 | | $697,917 |
| | Income from discontinued operations | 536 | | 24,859 |
| | | 947,577 | | 673,058 |
| | | | | |
| | Adjustments to reconcile net income to net cash provided by operating activities- | | | |
| | | Depreciation and amortization | 234,026 | | 279,290 |
| | | (Gain) loss on disposal or abandonment of assets | 246 | | - |
| | | Non-cash stock-based compensation | - | | 2,540 |
| | | Deferred income taxes | 5,113 | | 40,555 |
| | | Other | 80,343 | | (70,127) |
| | | Net changes in assets and liabilities, net of effect of business acquisitions: | | | |
| | | | Accounts receivable-trade, net | (262,172) | | (344,850) |
| | | | Inventory | (513,681) | | 388,805 |
| | | | Income taxes | 35,575 | | (382,586) |
| | | | Other current assets | (707,195) | | (672,852) |
| | | | Accounts payable-trade | 428,607 | | 1,188,804 |
| | | | Accrued expenses and other liabilities | (30,870) | | 30,609 |
| | Total adjustments | (730,008) | | 460,188 |
| | | | | Net cash provided by continuing operating activities | 217,569 | | 1,133,246 |
| | | | | Cash provided from discontinued operations | 6,831 | | 35,540 |
| | | | | Net cash provided by operating activities | 224,400 | | 1,168,786 |
| | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| | Purchase of property and equipment | (99,117) | | (278,224) |
| | Purchases of certificates of deposit | (2,572,598) | | (4,048,000) |
| | Proceeds from maturities of certificates of deposit | 594,000 | | 1,081,000 |
| | Proceeds from sale of assets | 90 | | - |
| | Decrease (increase) in other assets | (3,297) | | 1,198 |
| | | | | Net cash used in investing activities | (2,080,922) | | (3,244,026) |
| | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| | Payments on capital lease obligations | - | | (64,880) |
| | Payments on notes payable and long-term debt | (50,625) | | (50,625) |
| | Repurchase of common stock ( treasury stock) | (8,419) | | - |
| | Proceeds from exercise of stock options | - | | 23,437 |
| | | | | Net cash provided by financing activities | (59,044) | | (92,068) |
| | | | |
| NET INCREASE (DECREASE) IN CASH | (1,915,566) | | (2,167,308) |
| | | | |
| CASH, beginning of period | 7,891,962 | | 7,810,298 |
| | | | |
| CASH, end of period | $5,976,396 | | $5,642,990 |
| | | | |
| | | | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
| Interest paid during the period | $65,604 | | $77,409 |
| Income tax paid during the period, net of (refunds) | 477,177 | | 369,180 |
| | | | |
Selected financial data:
| | Quarter Ended 03/31/10 | | Quarter Ended 03/31/09 |
| | Sales | | Operating Income | | Sales | | Operating Income |
| Wholesale Leathercraft | $6,587,804 | | $534,196 | | $6,286,701 | | $366,247 |
| Retail Leathercraft | 7,616,296 | | 922,738 | | 6,603,522 | | 550,168 |
| International | 384,438 | | 79,434 | | 292,872 | | 81,116 |
| Total Operations | $14,588,538 | | $1,536,368 | | $13,183,095 | | $997,531 |
| Wholesale Leathercraft | Quarter Ended 03/31/10 | | Quarter Ended 03/31/09 |
| | # of stores | Sales | | # of stores | Sales |
| Distribution centers | 30 | $5,783,176 | | 30 | $5,414,997 |
| National account group | | 804,628 | | | 871,704 |
| Total Sales – Wholesale Leathercraft | 30 | $6,587,804 | | 30 | $6,286,701 |
| Retail Leathercraft | Quarter Ended 03/31/10 | | Quarter Ended 03/31/09 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 74 | $7,527,635 | | 74 | $6,603,522 |
| New store sales | 2 | 88,661 | | - | - |
Total Sales – Retail Leathercraft | 76 | $7,616,296 | | 74 | $6,603,522 |
