EXHIBIT 99.1
FOR IMMEDIATE RELEASE | NOVEMBER 2, 2005 |
TANDY LEATHER FACTORY REPORTS 3RD QUARTER EPS UP 50%
FORT WORTH, TEXAS - Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the third quarter of 2005. Consolidated net income for the quarter ended September 30, 2005 was $696,000 compared to consolidated net income of $427,000 for the third quarter of 2004. Fully diluted earnings per share for the quarter was $0.06, compared to $0.04 in the same quarter of last year. Total sales for the quarter ended September 30, 2005 increased 11.3% to $11.8 million from $10.6 million for the same quarter last year.
Consolidated sales for the nine months ended September 30, 2005 were $36.7 million, an increase of 8.7% over $33.7 million, total sales for the first nine months of 2004. Consolidated net income for the first nine months of 2005 was $2.5 million or $0.23 per fully-diluted share versus $1.9 million or $0.17 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $1.1 million in the third quarter, a 37% improvement over last year's third quarter. Forty-eight stores comprised the Tandy Leather's retail operations on September 30, 2005, compared to thirty-six retail stores a year ago. Two stores were added in the third quarter of 2005 bringing the total number of new stores added in 2005 to six as of the end of the quarter. For the first nine months of 2005, Retail Leathercraft’s sales increased $3.4 million, or 37%, over the first nine months of 2004. Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale centers and national account group, increased $190,000 over the same quarter last year, a 2.7% increase. The wholesale centers contributed $166,000 to the increase while the national account group contributed $24,000. For the first nine months of 2005, Wholesale Leathercraft’s sales were down $97,000 over the same period in 2004. The decrease is due predominantly to the national account group sales, which were down $560,000 for the year, versus the sales increase at the wholesale centers of $463,000.
Consolidated gross profit margin for the current quarter was 57.4%, improving from 56.1% for the third quarter of 2004. For the first three quarters, consolidated gross profit margin for the current year was 56.8%, an improvement over last year's gross profit margin of 55.3%. Consolidated operating expenses rose $714,000 in the current quarter and $1.4 million for the first nine months over the same periods a year ago. Costs associated with the new retail stores (personnel, rents, utilities, etc.), marketing and advertising costs account for the majority of the increase.
Wray Thompson, Chairman and Chief Executive Officer, commented, “We performed well in the third quarter, given that it is always one of our weakest quarters of the year. Our Retail Leathercraft segment reported a 37% sales gain for the quarter and same store sales, consisting of 36 Tandy Leather stores, were up 11%. The Leather Factory wholesale centers, part of the Wholesale Leathercraft segment, reported a 2.8% sales gain for the quarter, and our national account group ended the quarter with a modest sales increase of 2%, the first quarterly sales gain in two years. Both segments contributed strongly to the increase in operating income of 14% and 23% for the third quarter and year, respectively. As a result, we are re-iterating our 2005 guidance of $48-51 million in revenue and EPS of 30-34 cents.”
Financial Outlook:
The following statements are based on TLF's current expectations as of November 2, 2005. These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.
The Company plans to open 12 Tandy Leather retail stores in 2006 and estimates consolidated net sales for 2006 will be in the range of $50 to $54 million. Diluted EPS for 2006 is expected to be in the range of $0.35 to $0.38. Average diluted shares outstanding in 2006 are estimated to be approximately 11 million shares. The Company assumes an effective tax rate for the year between 35% and 37%.
Tandy Leather Factory, Inc., (http://www.leatherfactory.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 as The Leather Factory through its wholesale centers and as Tandy Leather Company through its retail stores (http://www.tandyleather.com). Its common stock trades on the American Stock Exchange with the symbol "TLF".
Contact: | Wray Thompson, CEO, Tandy Leather Factory, Inc. | (817) 496-4414 |
Shannon L. Greene, CFO, Tandy Leather Factory, Inc. | sgreene@leatherfactory.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.
Selected financial data:
Quarter Ended 09/30/05 | Quarter Ended 09/30/04 | ||||||||||||
Sales | Operating Income | Sales | Operating Income | ||||||||||
Wholesale Leathercraft | $ | 7,257,584 | $ | 652,726 | $ | 7,067,483 | $ | 583,253 | |||||
Retail Leathercraft | 4,197,711 | 242,499 | 3,053,712 | 168,459 | |||||||||
Other | 321,838 | 2,901 | 458,879 | 23,531 | |||||||||
Total Operations | $ | 11,777,133 | $ | 898,126 | $ | 10,580,074 | $ | 775,243 |
Nine Months Ended 09/30/05 | Nine Months Ended 09/30/04 | ||||||||||||
Sales | Operating Income | Sales | Operating Income | ||||||||||
Wholesale Leathercraft | $ | 22,836,543 | $ | 2,682,885 | $ | 22,934,369 | $ | 2,306,807 | |||||
Retail Leathercraft | 12,577,621 | 1,043,952 | 9,193,196 | 660,782 | |||||||||
Other | 1,252,185 | 62,451 | 1,593,199 | 108,625 | |||||||||
Total Operations | $ | 36,666,349 | $ | 3,789,288 | $ | 33,720,764 | $ | 3,076,214 |
Wholesale Leathercraft | Quarter Ended 09/30/05 | Quarter Ended 09/30/04 | |||||||||||
Sales | Sales | ||||||||||||
Distribution centers | $ | 6,077,364 | $ | 5,910,887 | |||||||||
National account group | 1,180,220 | 1,156,596 | |||||||||||
Total Sales - Wholesale Leathercraft | $ | 7,257,584 | $ | 7,067,483 |
Wholesale Leathercraft | Nine Months Ended 09/30/05 | Nine Months Ended 09/30/04 | |||||||||||
Sales | Sales | ||||||||||||
Distribution centers | $ | 19,108,181 | $ | 18,645,805 | |||||||||
National account group | 3,728,363 | 4,288,564 | |||||||||||
Total Sales - Wholesale Leathercraft | $ | 22,836,544 | $ | 22,934,369 |
Retail Leathercraft | Quarter Ended 09/30/05 | Quarter Ended 09/30/04 | |||||||||||
# of stores | Sales | # of stores | Sales | ||||||||||
Same store sales | 36 | $ | 3,393,999 | 36 | $ | 3,053,712 | |||||||
New store sales | 12 | 803,712 | - | - | |||||||||
Total Sales - Retail Leathercraft | $ | 4,197,711 | $ | 3,053,712 |
Retail Leathercraft | Nine Months Ended 9/30/05 | Nine Months Ended 09/30/04 | |||||||||||
# of stores | Sales | # of stores | Sales | ||||||||||
Same store sales | 32 | $ | 9,758,809 | 32 | $ | 9,024,854 | |||||||
New store sales | 16 | 2,818,812 | 4 | 168,342 | |||||||||
Total Sales - Retail Leathercraft | $ | 12,577,621 | $ | 9,193,196 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
THREE MONTHS | NINE MONTHS | ||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||
NET SALES | $ | 11,777,133 | $ | 10,580,074 | $ | 36,666,349 | $ | 33,720,764 | |||||
COST OF SALES | 5,013,331 | 4,640,641 | 15,845,392 | 15,075,359 | |||||||||
Gross Profit | 6,763,802 | 5,939,433 | 20,820,957 | 18,645,405 | |||||||||
OPERATING EXPENSES | 5,865,676 | 5,164,190 | 17,031,669 | 15,569,191 | |||||||||
INCOME FROM OPERATIONS | 898,126 | 775,243 | 3,789,288 | 3,076,214 | |||||||||
Interest expense | - | 14,910 | 3,188 | 41,019 | |||||||||
Other, net | (80,185 | ) | (30,600 | ) | (104,404 | ) | (3,509 | ) | |||||
Total other (income) expense | (80,185 | ) | (15,690 | ) | (101,216 | ) | 37,510 | ||||||
INCOME BEFORE INCOME TAXES | 978,311 | 790,933 | 3,890,504 | 3,038,704 | |||||||||
PROVISION FOR INCOME TAXES | 282,221 | 363,548 | 1,357,522 | 1,124,141 | |||||||||
NET INCOME | $ | 696,090 | $ | 427,385 | $ | 2,532,982 | $ | 1,914,563 | |||||
NET INCOME PER COMMON SHARE - BASIC | $ | 0.07 | $ | 0.04 | $ | 0.24 | $ | 0.18 | |||||
NET INCOME PER COMMON SHARE - DILUTED | $ | 0.06 | $ | 0.04 | $ | 0.23 | $ | 0.17 | |||||
Weighted Average Number of Shares Outstanding: | |||||||||||||
Basic | 10,679,389 | 10,560,661 | 10,626,857 | 10,540,374 | |||||||||
Diluted | 11,029,840 | 10,931,940 | 10,965,922 | 10,986,541 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
09/30/05 (unaudited) | 12/31/04 | ||||||
Cash | $ | 1,768,175 | $ | 2,560,202 | |||
Accounts receivable, net of allowance for doubtful accounts | 2,407,452 | 2,032,289 | |||||
Inventory | 17,534,039 | 12,749,709 | |||||
Prepaid income taxes | 7,504 | - | |||||
Deferred income taxes | 274,071 | 199,308 | |||||
Other current assets | 860,484 | 629,723 | |||||
Total current assets | 22,851,725 | 18,171,231 | |||||
Property and equipment, net | 1,785,312 | 1,904,565 | |||||
Goodwill and other intangibles, net | 1,155,033 | 1,180,618 | |||||
Other assets | 1,079,316 | 910,749 | |||||
$ | 26,871,386 | $ | 22,167,163 | ||||
Accounts payable | $ | 3,266,147 | $ | 1,954,146 | |||
Accrued expenses and other liabilities | 3,055,525 | 1,682,003 | |||||
Income taxes payable | - | 22,764 | |||||
Current maturities of capital lease obligations and long-term debt | 134,067 | 134,067 | |||||
Total current liabilities | 6,455,739 | 3,792,980 | |||||
Deferred income taxes | 214,025 | 313,006 | |||||
Capital lease obligations and long-term debt, net of current maturities | 145,239 | 750,944 | |||||
Total Liabilities | 6,815,003 | 4,856,930 | |||||
Common stock | 25,729 | 25,345 | |||||
Paid-in capital | 4,971,028 | 4,796,999 | |||||
Retained earnings | 14,991,741 | 12,458,760 | |||||
Treasury stock | (25,487 | ) | (25,487 | ) | |||
Accumulated other comprehensive loss | 93,372 | 54,616 | |||||
Total Stockholders' Equity | 20,056,383 | 17,310,233 | |||||
$ | 26,871,386 | $ | 22,167,163 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTMEBER 30, 2005 AND 2004
2005 | 2004 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 2,532,982 | $ | 1,914,563 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation & amortization | 346,216 | 366,077 | |||||
Gain on disposal of assets | (9,145 | ) | - | ||||
Deferred income taxes | (173,744 | ) | 13,759 | ||||
Other | 35,123 | 3,137 | |||||
Net changes in assets and liabilities: | |||||||
Accounts receivable-trade, net | (375,163 | ) | (413,810 | ) | |||
Inventory | (4,784,330 | ) | (1,739,977 | ) | |||
Income taxes | (30,268 | ) | 191,666 | ||||
Other current assets | (230,761 | ) | 93,380 | ||||
Accounts payable | 1,312,001 | 87,279 | |||||
Accrued expenses and other liabilities | 1,373,522 | 178,494 | |||||
Total adjustments | (2,536,549 | ) | (1,219,995 | ) | |||
Net cash provided by operating activities | (3,567 | ) | 694,568 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of property and equipment | (197,746 | ) | (267,552 | ) | |||
Payments in connection with businesses acquired | - | (156,454 | ) | ||||
Proceeds from sale of assets | 9,145 | - | |||||
Increase in other assets | (168,567 | ) | 11,387 | ||||
Net cash used in investing activities | (357,168 | ) | (412,619 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net increase (decrease) in revolving credit loans | (505,154 | ) | (786,162 | ) | |||
Payments on notes payable and long-term debt | (100,551 | ) | (1,134 | ) | |||
Payments received on notes secured by common stock | - | 5,000 | |||||
Repurchase of common stock (treasury stock) | - | (23,960 | ) | ||||
Proceeds from issuance of common stock | 174,413 | 124,015 | |||||
Net cash used in financing activities | (431,292 | ) | (682,241 | ) | |||
NET CHANGE IN CASH | (792,027 | ) | (400,292 | ) | |||
CASH, beginning of period | 2,560,202 | 1,728,344 | |||||
CASH, end of period | $ | 1,768,175 | $ | 1,328,052 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||
Interest paid during the period | $ | 3,188 | $ | 43,960 | |||
Income taxes paid during the period, net of (refunds) | 1,541,134 | 848,427 |