TANDY LEATHER FACTORY INC - FORM 8-K - EX-99.1 - PRESS RELEASE DATED MAY 11, 2012 - May 11, 2012

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8-K - FORM 8-K: 1ST QTR 2012 EARNINGS - TANDY LEATHER FACTORY INCform8-k.htm



EXHIBIT 99.1

FOR IMMEDIATE RELEASE                                                                                                                                 May 11, 2012

TANDY LEATHER FACTORY REPORTS 1ST QUARTER 2012 EARNINGS UP 37%
REITERATES 2012 REVENUE AND EARNINGS GUIDANCE

FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (NASDAQ: TLF) today reported financial results for the first quarter of 2012.  Net income for the quarter ended March 31, 2012 was $1.6 million, up from net income of $1.2 million in the first quarter of 2011, an increase of 37%.  Fully-diluted earnings per share for the quarter were $0.15 in the current quarter, compared to $0.11 in last year’s first quarter.  Total sales for the first quarter were $18.2 million, an increase of 14.5% compared to 2011’s first quarter sales of $15.9 million.

Sales from the Retail Leathercraft division, consisting of the Tandy Leather store chain, increased $1.6 million in the first quarter, up 19% from last year's first quarter sales.  The store chain consisted of seventy-seven stores as of March 31, 2012, with one new store added since March 31, 2011.  First quarter sales for the Wholesale Leathercraft division, consisting of the Leather Factory stores and the National Account group, increased $432,000, or 6% from the same quarter last year.  International Leathercraft, consisting of stores in the United Kingdom, Australia and Spain, added sales of $742,000 for the quarter, a 46% increase over last year’s first quarter sales of $509,000.
 
 
Consolidated gross profit margin increased from 60.0% in the first quarter of 2011 to 62.5% in the first quarter of 2012.  Operating expenses increased $1.2 million in the first quarter of 2012 to $8.8 million compared to $7.6 million in the first quarter of 2011, increasing slightly as a percentage of sales from 47.9% in 2011 to 48.5% in 2012.  Compared to the first quarter of 2011, the operating expenses associated with the new stores in Australia and Spain added $285,000 in operating expense.  Other expense increases include employee compensation and benefits, advertising and marketing, rent, and store and office supplies.
 
 
Jon Thompson, Chief Executive Officer and President, commented, “We are generally pleased with our first quarter performance as both sales and earnings increased.  Gross margin is up nicely, due to our strong retail sales and our ability to negotiate aggressive pricing for our stock leathers when buying large quantities and paying cash.  Our new stores in Australia and Spain are developing as expected.  We are not expecting the Spain store to be profitable this year, although that could change as the year progresses depending on how quickly the Spain customer base grows.  The Australia store is coming along nicely and should be close to break even or slightly profitable by the end of the year.”

Shannon L. Greene, Chief Financial Officer, added, “Operating expenses are slightly higher than we would prefer.  However, the expenses associated with the new international stores caused the percentage increase in consolidated operating expenses to exceed the percentage increase in sales.  That will even out as the sales in those stores ramp up.  Our inventory levels are within internal projections, even though they appear high.  Our stores are carrying more inventory in order to keep up with customer demand.  Further, we made some special purchases late in the first quarter in anticipation of our nationwide Open House event held in April.  Despite the various challenges, we met our internal targets for the first quarter and are on track to meet our 2012 guidance.”
 
 
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, 77 Tandy Leather retail stores, located in 36 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 03/31/12
  
Quarter Ended 03/31/11
 
Sales
  
Operating Income
  
Sales
  
Operating Income
Wholesale Leathercraft
$7,152,417
  
$1,232,852
  
$6,720,709
  
$808,314
Retail Leathercraft
10,282,814
  
1,358,725
  
8,649,152
  
1,004,042
International Leathercraft
741,847
  
(37,402)
  
509,179
  
100,132
Total Operations
$18,177,078
  
$2,554,175
  
$15,879,040
  
$1,912,488





Wholesale Leathercraft
Quarter Ended 03/31/12
  
Quarter Ended 03/31/11
 
# of stores
Sales
  
# of stores
Sales
Same store sales
29
$6,340,785
  
29
$5,933,280
National account group
n/a
811,632
  
n/a
787,429
Total Sales – Wholesale Leathercraft
29
$7,152,417
  
29
$6,720,709



Retail Leathercraft
Quarter Ended 03/31/12
  
Quarter Ended 03/31/11
 
# of stores
Sales
  
# of stores
Sales
Same store sales
76
$10,177,523
  
76
$8,649,152
New store sales
1
105,291
  
-
-
Total Sales – Retail Leathercraft
77
$10,282,814
  
76
$8,649,152



International Leathercraft
Quarter Ended 03/31/12
  
Quarter Ended 03/31/11
 
# of stores
Sales
  
# of stores
Sales
Same store sales
1
$529,856
  
1
$509,179
New store sales
2
211,991
  
-
-
Total Sales – Retail Leathercraft
3
$741,847
  
1
$509,179


 
 
 





TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS


 
03/31/2012
(unaudited)
  
12/31/2011
(audited)
ASSETS
      
CURRENT ASSETS:
      
 
Cash
$6,431,259
  
$10,765,591
 
Short-term investments, including certificates of deposit
87,893
  
423,893
 
Accounts receivable-trade, net of allowance for doubtful accounts
      
     
of $114,000 and $81,000 in 2012 and 2011, respectively
1,449,157
  
1,328,579
 
Inventory
24,092,025
  
19,940,251
 
Deferred income taxes
314,574
  
281,251
 
Other current assets
1,402,828
  
948,459
       
Total current assets
33,777,736
  
33,688,024
       
PROPERTY AND EQUIPMENT, at cost
15,123,033
  
14,999,826
Less accumulated depreciation and amortization
(4,925,845)
  
(4,700,476)
 
10,197,188
  
10,299,350
       
GOODWILL
989,945
  
987,009
OTHER INTANGIBLES, net of accumulated amortization of
      
 
$551,000 and $539,000 in 2012 and 2011, respectively
176,127
  
187,292
OTHER assets
334,620
  
341,240
 
$45,475,616
  
$45,502,915
       
LIABILITIES AND STOCKHOLDERS' EQUITY
      
CURRENT LIABILITIES:
      
 
Accounts payable-trade
$2,347,811
  
$1,622,697
 
Accrued expenses and other liabilities
4,669,916
  
4,641,191
 
Income taxes payable
796,666
  
638,897
 
Current maturities of long-term debt
202,500
  
202,500
       
Total current liabilities
8,016,893
  
7,105,285
       
DEFERRED INCOME TAXES
835,953
  
858,829
       
LONG-TERM DEBT, net of current maturities
3,054,375
  
3,105,000
       
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;
      
   
11,150,065 shares issued at 2012 and 2011;
      
   
10,156,442 shares outstanding at 2012 and 2011
26,760
  
26,760
 
Paid-in capital
5,741,543
  
5,736,543
 
Retained earnings
30,219,910
  
31,181,936
 
Treasury stock at cost (993,623 shares at 2012 and 2011)
(2,894,068)
  
(2,894,068)
 
Accumulated other comprehensive income
474,250
  
382,630
       
Total stockholders' equity
33,568,395
  
34,433,801
 
$45,475,616
  
$45,502,915


 
 
 


TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2012 and 2011


 
2012
  
2011
NET SALES
$18,177,078
  
$15,879,040
COST OF SALES
6,811,445
  
6,354,192
 
Gross profit
11,365,633
  
9,524,848
       
OPERATING EXPENSES
8,811,458
  
7,612,360
INCOME FROM OPERATIONS
2,554,175
  
1,912,488
       
OTHER (INCOME) EXPENSE:
      
Interest expense
58,392
  
62,003
Other, net
(19,814)
  
48,832
 
Total other (income) expense
38,578
  
110,835
       
INCOME BEFORE INCOME TAXES
2,515,597
  
1,801,653
       
PROVISION FOR INCOME TAXES
941,492
  
651,077
       
NET INCOME
$1,574,105
  
$1,150,576
       
       
NET INCOME PER COMMON SHARE:
      
BASIC
$0.15
  
$0.11
DILUTED
$0.15
  
$0.11
       
       
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
      
BASIC
10,156,442
  
10,156,442
DILUTED
10,172,950
  
10,169,701



 
 
 

 

TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011


 
2012
  
2011
       
CASH FLOWS FROM OPERATING ACTIVITIES:
      
Net income
$1,574,105
  
$1,150,576
       
Adjustments to reconcile net income to net cash used in operating activities:
      
Depreciation and amortization
259,536
  
245,004
(Gain) loss on disposal or abandonment of assets
624
  
(2,925)
Non-cash stock-based compensation
5,000
  
18,900
Deferred income taxes
(56,199)
  
165,664
Other
80,297
  
102,119
Net changes in assets and liabilities:
      
Accounts receivable-trade, net
(120,578)
  
(180,478)
Inventory
(4,151,774)
  
26,173
Income taxes
157,769
  
1,499
Other current assets
(454,369)
  
(613,680)
Accounts payable-trade
725,114
  
776,976
Accrued expenses and other liabilities
28,725
  
(2,185,751)
Total adjustments
(3,525,855)
  
(1,646,499)
 Net cash used in operating activities
(1,951,750)
  
(495,923)
       
CASH FLOWS FROM INVESTING ACTIVITIES:
      
Purchase of property and equipment
(139,841)
  
(169,186)
Proceeds from maturities of certificates of deposit
336,000
  
5,000
Proceeds from sale of assets
1,395
  
21,513
Decrease (increase) in other assets
6,620
  
664
Net cash provided by (used in) investing activities
204,174
  
(142,009)
       
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
(2,586,756)
  
(50,625)
       
NET DECREASE IN CASH
(4,334,332)
  
(688,557)
       
CASH, beginning of period
10,765,591
  
4,293,746
       
CASH, end of period
$6,431,259
  
$3,605,189
       
       
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      
Interest paid during the period
$58,392
  
$62,003
Income tax paid during the period, net of (refunds)
860,843
  
411,721



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