EXHIBIT 99.1
FOR IMMEDIATE RELEASE May 13, 2013
TANDY LEATHER FACTORY REPORTS 1ST QUARTER 2013 EPS UP 7%
REITERATES 2013 REVENUE AND EARNINGS GUIDANCE
FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (NASDAQ: TLF) today reported financial results for the first quarter of 2013. Net income for the quarter ended March 31, 2013 was $1.59 million, up minimally from net income in the first quarter of 2012 of $1.57 million. Fully-diluted earnings per share for the quarter were $0.16 in the current quarter, compared to $0.15 in last year’s first quarter, up 7%. Total sales for the first quarter were $19.2 million, an increase of 6% compared to 2012’s first quarter sales of $18.2 million.
Sales from the Retail Leathercraft division, consisting of the Tandy Leather store chain, increased $1.3 million in the first quarter, up 12% from last year's first quarter sales. The store chain consisted of seventy-eight stores as of March 31, 2013, with one new store added since March 31, 2012. First quarter sales for the Wholesale Leathercraft division decreased $423,000, or 6% from the same quarter last year. Inside the Wholesale Leathercraft division, the stores’ sales were up 2% while National Account sales were down 65%. International Leathercraft, consisting of stores in the United Kingdom, Australia and Spain, added sales of $948,000 for the quarter, a 28% increase over last year’s first quarter sales of $742,000.
Consolidated gross profit margin decreased slightly from 62.5% in the first quarter of 2012 to 62.0% in the first quarter of 2013. Operating expenses increased $499,000 in the first quarter of 2013 to $9.3 million compared to $8.8 million in the first quarter of 2012, decreasing slightly as a percentage of sales from 48.5% in 2012 to 48.4% in 2013. Compared to the first quarter of 2012, advertising and marketing expenses were the primary contributor to the operating expense increase, followed by employee compensation.
Jon Thompson, Chief Executive Officer and President, commented, “We are generally pleased with our first quarter results as sales were strong and earnings, while not significantly higher, were solid. We are investing heavily in advertising and marketing for our international stores in order to spur faster sales growth and it appears to be working. We are very pleased with the expansion in the customer bases for those stores. The two newest stores are not contributing to earnings yet, but the Australia store is very close to breakeven. We have more work to do to get the Spain store’s sales up to a level to make it profitable, but I am confident that we will get it there.”
Shannon L. Greene, Chief Financial Officer, added, “Earnings were slightly below our internal projections, but we are still on track to meet our 2013 guidance. The decline in National Account sales was expected, but makes up less than 2% of our total sales so the impact continues to lessen. Our advertising and marketing expenses, while up approximately $300,000 this quarter compared to last year’s first quarter, have a significant impact on our sales. So while we closely monitor what we are spending in this area, we also believe it is money well spent. Gross profit margin remains very strong, only decreasing 50 basis points compared to last year’s first quarter. We expect some fluctuation as a result of the mix of product sold, which can impact margin positively or negatively up to 1%.”
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, 78 Tandy Leather retail stores, located in 37 states and 6 Canadian provinces, and three 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.
| 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 03/31/13 | | Quarter Ended 03/31/12 |
| | Sales | | Income from Operations | | Sales | | Income from Operations |
| Wholesale Leathercraft | $6,729,734 | | $1,012,965 | | $7,152,417 | | $1,232,852 |
| Retail Leathercraft | 11,559,861 | | 1,514,839 | | 10,282,814 | | 1,358,725 |
| International Leathercraft | 948,232 | | 93,056 | | 741,847 | | (37,402) |
| Total Operations | $19,237,827 | | $2,620,860 | | $18,177,078 | | $2,554,175 |
| Wholesale Leathercraft | Quarter Ended 03/31/13 | | Quarter Ended 03/31/12 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 29 | $6,444,321 | | 29 | $6,340,785 |
| National account group | n/a | 285,413 | | n/a | 811,632 |
| Total Sales – Wholesale Leathercraft | 29 | $6,729,734 | | 29 | $7,152,417 |
| Retail Leathercraft | Quarter Ended 03/31/13 | | Quarter Ended 03/31/12 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 77 | $11,440,142 | | 77 | $10,282,814 |
| New store sales | 1 | 119,719 | | - | - |
Total Sales – Retail Leathercraft | 78 | $11,559,861 | | 77 | $10,282,814 |
| International Leathercraft | Quarter Ended 03/31/13 | | Quarter Ended 03/31/12 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 3 | $948,232 | | 3 | $741,847 |
| New store sales | - | - | | - | - |
Total Sales – International Leathercraft | 3 | $948,232 | | 1 | $741,847 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
| | 03/31/2013 (unaudited) | | 12/31/2012 (audited) |
| ASSETS | | | |
| CURRENT ASSETS: | | | |
| | Cash | $7,164,181 | | $7,705,182 |
| | Accounts receivable-trade, net of allowance for doubtful accounts | | | |
| | | | of $36,000 and $112,000 in 2013 and 2012, respectively | 934,893 | | 822,772 |
| | Inventory | 25,358,992 | | 25,862,784 |
| | Deferred income taxes | 305,374 | | 349,478 |
| | Prepaid expenses | 1,390,761 | | 776,463 |
| | Other current assets | 416,734 | | 153,450 |
| | | | | Total current assets | 35,570,935 | | 35,670,129 |
| | | | |
| PROPERTY AND EQUIPMENT, at cost | 18,425,394 | | 17,574,895 |
| Less accumulated depreciation and amortization | (5,782,069) | | (5,630,305) |
| | 12,643,325 | | 11,944,590 |
| | | | |
| GOODWILL | 987,539 | | 990,725 |
| OTHER INTANGIBLES, net of accumulated amortization of | | | |
| | $590,000 and $582,000 in 2013 and 2012, respectively | 137,006 | | 145,533 |
| OTHER assets | 339,819 | | 336,695 |
| | $49,678,624 | | $49,087,672 |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| CURRENT LIABILITIES: | | | |
| | Accounts payable-trade | $1,775,892 | | $1,612,627 |
| | Accrued expenses and other liabilities | 4,481,271 | | 5,928,798 |
| | Income taxes payable | 633,962 | | 113,705 |
| | Current maturities of long-term debt | 202,500 | | 202,500 |
| | | | | Total current liabilities | 7,093,625 | | 7,857,630 |
| | | | |
| DEFERRED INCOME TAXES | 808,294 | | 806,525 |
| | | | |
| LONG-TERM DEBT, net of current maturities | 2,851,875 | | 2,902,500 |
| | | | |
| 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; | | | |
| | | 11,156,065 shares issued at 2013 and 2012; | | | |
| | | 10,162,442 shares outstanding at 2013 and 2012 | 26,775 | | 26,775 |
| | Paid-in capital | 5,773,351 | | 5,767,508 |
| | Retained earnings | 35,828,196 | | 34,241,875 |
| | Treasury stock at cost (993,623 shares at 2013 and 2012) | (2,894,068) | | (2,894,068) |
| | Accumulated other comprehensive income | 190,576 | | 378,927 |
| | | | | Total stockholders' equity | 38,924,830 | | 37,521,017 |
| | $49,678,624 | | $49,087,672 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2013 and 2012
| | 2013 | | 2012 |
| NET SALES | $19,237,827 | | $18,177,078 |
| COST OF SALES | 7,306,998 | | 6,811,445 |
| | Gross profit | 11,930,829 | | 11,365,633 |
| | | | |
| OPERATING EXPENSES | 9,309,969 | | 8,811,458 |
| INCOME FROM OPERATIONS | 2,620,860 | | 2,554,175 |
| | | | |
| OTHER (INCOME) EXPENSE: | | | |
| Interest expense | 56,094 | | 58,392 |
| Other, net | (26,739) | | (19,814) |
| | Total other (income) expense | 29,355 | | 38,578 |
| | | | |
| INCOME BEFORE INCOME TAXES | 2,591,505 | | 2,515,597 |
| | | | |
| PROVISION FOR INCOME TAXES | 1,005,184 | | 941,492 |
| | | | |
| NET INCOME | $1,586,321 | | $1,574,105 |
| | | | |
| | | | |
| NET INCOME PER COMMON SHARE: | | | |
| BASIC | $0.16 | | $0.15 |
| DILUTED | $0.16 | | $0.15 |
| | | | |
| | | | |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | | | |
| BASIC | 10,162,442 | | 10,156,442 |
| DILUTED | 10,194,429 | | 10,172,950 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
| | 2013 | | 2012 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| Net income | $1,586,321 | | $1,574,105 |
| | | | |
| Adjustments to reconcile net income to net cash used in operating activities: | | | |
| Depreciation and amortization | 263,102 | | 259,536 |
| (Gain) loss on disposal or abandonment of assets | 21,003 | | 624 |
| Non-cash stock-based compensation | 5,843 | | 5,000 |
| Deferred income taxes | 45,873 | | (56,199) |
| Other | (176,925) | | 80,297 |
| Net changes in assets and liabilities, net of effect of business acquisitions: | | | |
| Accounts receivable-trade, net | (112,121) | | (120,578) |
| Inventory | 503,792 | | (4,151,774) |
| Prepaid expenses | (614,298) | | (522,700) |
| Other current assets | (263,284) | | 68,331 |
| Accounts payable-trade | 163,265 | | 725,114 |
| Accrued expenses and other liabilities | (1,447,527) | | 28,725 |
| Income taxes payable | 520,257 | | 157,769 |
| Total adjustments | (1,091,020) | | (3,525,855) |
| Net cash provided by (used in) operating activities | 495,301 | | (1,951,750) |
| | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| Purchase of property and equipment | (982,553) | | (139,841) |
| Proceeds from maturities of certificates of deposit | - | | 336,000 |
| Proceeds from sale of assets | - | | 1,395 |
| Decrease (increase) in other assets | (3,124) | | 6,620 |
| Net cash provided by (used in) investing activities | (985,677) | | 204,174 |
| | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| Payments on notes payable and long-term debt | (50,625) | | (50,625) |
| Payment of cash dividend | - | | (2,536,131) |
| Net cash used in financing activities | (50,625) | | (2,586,756) |
| | | | |
| NET DECREASE IN CASH | (541,001) | | (4,334,332) |
| | | | |
| CASH, beginning of period | 7,705,182 | | 10,765,591 |
| | | | |
| CASH, end of period | $7,164,181 | | $6,431,259 |
| | | | |
| | | | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
| Interest paid during the period | $56,094 | | $58,392 |
| Income tax paid during the period, net of (refunds) | $384,652 | | $860,843 |
