TANDY LEATHER FACTORY INC - FORM 8-K - EX-99.1 - PRESS RELEASE DATED AUGUST 9, 2012 - August 9, 2012

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8-K - FORM 8-K DATED AUGUST 9, 2012 - TANDY LEATHER FACTORY INCform8-k.htm


EXHIBIT 99.1

FOR IMMEDIATE RELEASE                                                                                                                                 AUGUST 9, 2012


TANDY LEATHER FACTORY REPORTS Q2 2012 FINANCIAL RESULTS
NET INCOME UP 43%, OPERATING INCOME UP 39%

FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (NASDAQ: TLF) today reported financial results for the second quarter of 2012.  Consolidated net income for the quarter ended June 30, 2012 was $1,540,000 compared to consolidated net income of $1,076,000 for the second quarter of 2011, an increase of 43%.  Fully diluted earnings per share for the quarter were $0.15, compared to $0.11 in the second quarter of last year.  Total sales for the quarter ended June 30, 2012 were $16.9 million, up 6% from $15.9 million in the second quarter last year.

Consolidated sales for the six months ended June 30, 2012 were $35.1 million, up 10% from the 2011 first half sales of $31.8 million.  Consolidated net income for the first half of 2012 was up 40% to $3.1 million or $0.30 per fully-diluted share versus $2.2 million or $0.22 per fully-diluted share in the comparable period last year.

Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $929,000 in the second quarter, a 10% improvement over last year's second quarter.  Seventy-seven stores comprised Tandy Leather's operations on June 30, 2012.  For the first six months of 2012, Retail Leathercraft’s sales increased $2.6 million, or 14%, over the first six months of 2011.  Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were down 3% or $188,000 from the same quarter last year.  For the first six months of 2012, Wholesale Leathercraft’s sales were up $244,000, or 2%, from the same period in 2011.  International Leathercraft, consisting of three stores located in the United Kingdom, Spain and Australia, reported a sales increase of 43%, or $229,000, compared to the second quarter of 2011.  For the year, International Leathercraft’s sales were up 44%, or $462,000, over the same period last year.
 
 
Consolidated gross profit margin for the current quarter was 64.7%, improving from 61.8% for the second quarter of 2011.  For the first two quarters of this year, consolidated gross profit margin was 63.6%, increasing from last year's gross profit margin of 60.9%.  Consolidated operating expenses rose approximately 5% and 10% for the quarter and the year, respectively, $399,000 in the current quarter and $1.6 million for the first six months over the same periods a year ago.  For the second quarter, the significant increases in expenses occurred in employee compensation and benefits, travel, and rent.  For the year, expenses increases mirrored that of the second quarter.  Consolidated operating margin improved for the quarter to 14.6% compared to 11.1% last year.  On a year-to-date basis, consolidated operating margin improved from 11.6% last year to 14.3% in the current year.
 
 
Jon Thompson, Chief Executive Officer and President, commented, “Our second quarter results were solid, achieving higher sales and higher earnings compared to last year’s second quarter.  All three segments contributed to the increase in profits.  We are confident that the intentional increase in our stores’ inventory levels is having a positive impact on our sales.  Gross profit margins as a percentage of sales were extremely strong this quarter as we continue to take advantage of special buying opportunities.  Balancing sales, gross profit margins, inventory and cash can be tricky at times, but we believe the strategy is working as evidenced by our financial results.”

Chief Financial Officer and Treasurer, Shannon Greene, added, “We have significantly increased our investment in inventory this year, although it is not as severe as it first appears.  Our stores’ inventories are up approximately 30% from the end of last year in order to eliminate lost sales due to a lack of product availability.  Our central warehouse inventory is up 80% during that same time.  However, we ended 2011 with our warehouse being out of most leathers, so the increase this year is simply to get it back up to a reasonable level to support the stores.  Further, with the positive sales trends at the stores, it is important that we have sufficient stock to carry us through the rest of the year.”


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 06/30/12
  
Quarter Ended 06/30/11
 
Sales
  
Operating Income
  
Sales
  
Operating Income
Wholesale Leathercraft
$6,282,990
  
$1,103,311
  
$6,471,072
  
$608,385
Retail Leathercraft
9,863,139
  
1,309,503
  
8,934,306
  
1,038,301
International Leathercraft
758,125
  
51,958
  
528,543
  
122,629
Total Operations
$16,904,254
  
$2,464,772
  
$15,933,921
  
$1,769,315
       
 
Six Months Ended 06/30/12
  
Six Months Ended 06/30/11
 
Sales
  
Operating Income
 
Sales
  
Operating Income
Wholesale Leathercraft
$13,435,407
  
$2,336,163
  
$13,191,781
  
$1,418,439
Retail Leathercraft
20,145,953
  
2,668,228
  
17,583,458
  
2,040,602
International Leathercraft
1,499,972
  
14,556
  
1,037,722
  
222,762
Total Operations
$35,081,332
  
$5,018,947
  
$31,812,961
  
$3,681,803



Wholesale Leathercraft
Quarter Ended 06/30/12
  
Quarter Ended 06/30/11
 
# of stores
  
Sales
  
# of stores
  
Sales
Sales store sales
29
  
$6,070,345
  
29
  
$5,838,551
National account group
n/a
  
212,645
  
n/a
  
632,521
Total Sales – Wholesale Leathercraft
29
  
$6,282,990
  
29
  
$6,471,072
       
Wholesale Leathercraft
Six Months Ended 06/30/12
  
Six Months Ended 06/30/11
 
# of stores
  
Sales
  
# of stores
  
Sales
Sales store sales
29
  
$12,411,129
  
29
  
$11,771,831
National account group
n/a
  
1,024,278
  
n/a
  
1,419,950
Total Sales – Wholesale Leathercraft
29
  
$13,435,407
  
29
  
$13,191,781
       
       
Retail Leathercraft
Quarter Ended 06/30/12
  
Quarter Ended 06/30/11
 
# of stores
  
Sales
  
# of stores
  
Sales
Sales store sales
76
  
$9,768,973
  
76
  
$8,924,874
New store sales
1
  
94,166
  
1
  
9,432
Total Sales – Retail Leathercraft
77
  
$9,863,139
  
77
  
$8,934,306
       
Retail Leathercraft
Six Months Ended 06/30/12
  
Six Months Ended 06/30/11
 
# of stores
  
Sales
  
# of stores
  
Sales
Sales store sales
76
  
$19,946,496
  
76
  
$17,574,026
New store sales
1
  
199,457
  
1
  
9,432
Total Sales – Retail Leathercraft
77
  
$20,145,953
  
77
  
$17,583,458
               
               
International Leathercraft
Quarter Ended 06/30/12
  
Quarter Ended 06/30/11
 
# of stores
  
Sales
  
# of stores
  
Sales
Sales store sales
1
  
$485,350
  
1
  
$528,543
New store sales
2
  
272,775
  
-
  
-
Total Sales – Int’l Leathercraft
3
  
$758,125
  
1
  
$528,543
       
International Leathercraft
Six Months Ended 06/30/12
  
Six Months Ended 06/30/11
 
# of stores
  
Sales
  
# of stores
  
Sales
Sales store sales
1
  
$1,015,206
  
1
  
$1,037,722
New store sales
2
  
484,766
  
-
  
-
Total Sales – Int’l Leathercraft
3
  
$1,499,972
  
1
  
$1,037,722
 
 
 

 
 
 



Tandy Leather Factory, Inc.
Consolidated Balance Sheets


 
June 30,
 2012
(unaudited)
  
December 31,
 2011
(audited)
ASSETS
      
CURRENT ASSETS:
      
 
Cash
$3,816,559
  
$10,765,591
 
Short-term investments, including certificates of deposit
85,533
  
423,893
 
Accounts receivable-trade, net of allowance for doubtful accounts
      
       
of $170,000 and $81,000 in 2012 and 2011, respectively
1,118,871
  
1,328,579
 
Inventory
29,749,811
  
19,940,251
 
Prepaid income taxes
-
  
-
 
Deferred income taxes
392,283
  
281,251
 
Other current assets
1,564,186
  
948,459
           
Total current assets
36,727,243
  
33,688,024
       
PROPERTY AND EQUIPMENT, at cost
15,360,240
  
14,999,826
Less accumulated depreciation and amortization
(5,167,913)
  
(4,700,476)
 
10,192,327
  
10,299,350
       
GOODWILL
987,634
  
987,009
OTHER INTANGIBLES, net of accumulated amortization of
      
 
$562,000 and $539,000 in 2012 and 2011, respectively
165,040
  
187,292
Other assets
338,039
  
341,240
 
$48,410,283
  
$45,502,915
       
LIABILITIES AND STOCKHOLDERS' EQUITY
      
CURRENT LIABILITIES:
      
 
Accounts payable-trade
$3,018,362
  
$1,622,697
 
Accrued expenses and other liabilities
6,078,453
  
4,641,191
 
Income taxes payable
334,240
  
638,897
 
Current maturities of long-term debt
202,500
  
202,500
           
Total current liabilities
9,633,555
  
7,105,285
       
DEFERRED INCOME TAXES
851,931
  
858,829
       
LONG-TERM DEBT, net of current maturities
3,003,750
  
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
5,746,543
  
5,736,543
 
Retained earnings
31,759,549
  
31,181,936
 
Treasury stock at cost (993,623 shares at 2012 and 2011)
(2,894,068)
  
(2,894,068)
 
Accumulated other comprehensive income
282,263
  
382,630
 
Total stockholders' equity
34,921,047
  
34,433,801
             
$48,410,283
  
$45,502,915

 
 
 

Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Six Months Ended June 30, 2012 and 2011




 
THREE MONTHS
  
SIX MONTHS
 
2012
  
2011
  
2012
  
2011
               
NET SALES
$16,904,254
  
$15,933,921
  
$35,081,332
  
$31,812,961
               
COST OF SALES
5,964,053
  
6,088,667
  
12,775,498
  
12,442,859
               
          Gross profit
10,940,201
  
9,845,254
  
22,305,834
  
19,370,102
               
OPERATING EXPENSES
8,475,429
  
8,075,939
  
17,286,887
  
15,688,299
               
INCOME FROM OPERATIONS
2,464,772
  
1,769,315
  
5,018,947
  
3,681,803
               
OTHER INCOME (EXPENSE):
              
          Interest expense
(58,235)
  
(62,132)
  
(116,627)
  
(124,135)
          Other, net
42,757
  
(45,767)
  
62,571
  
(94,599)
               Total other income (expense)
(15,478)
  
(107,899)
  
(54,056)
  
(218,734)
               
INCOME BEFORE INCOME TAXES
2,449,294
  
1,661,416
  
4,964,891
  
3,463,069
               
PROVISION FOR INCOME TAXES
909,656
  
585,060
  
1,851,147
  
1,236,137
               
NET INCOME
$1,539,638
  
$1,076,356
  
$3,113,744
  
$2,226,932
               
               
NET INCOME PER COMMON SHARE:
              
Basic
$0.15
  
$0.11
  
$0.30
  
$0.22
Diluted
$0.15
  
$0.11
  
$0.30
  
$0.22
               
Weighted Average Number of Shares Outstanding:
              
  Basic
10,156,442
  
10,156,442
  
10,156,442
  
10,156,442
  Diluted
10,172,171
  
10,168,098
  
10,172,561
  
10,175,561





 
 
 

Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30, 2012 and 2011


 
2012
  
2011
CASH FLOWS FROM OPERATING ACTIVITIES:
      
Net income
3,113,744
  
2,226,932
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
      
 
Depreciation and amortization
     524,053
  
     497,351
 
Loss on disposal or abandonment of assets
       6,145
  
       79,035
 
Non-cash stock-based compensation
       10,000
  
       26,030
 
Deferred income taxes
     (117,930)
  
     232,119
 
Other
     (97,094)
  
     117,789
 
Net changes in assets and liabilities, net of effect of business acquisitions:
      
   
Accounts receivable-trade, net
      209,708
  
  (99,985)
   
Inventory
(9,809,560)
  
(24,219)
   
Income taxes
    (304,657)
  
    (611,129)
   
Other current assets
    (615,727)
  
    (298,022)
   
Accounts payable-trade
     1,395,665
  
     250,374
   
Accrued expenses and other liabilities
 1,437,262
  
 (1,867,753)
Total adjustments
 (7,362,135)
  
 (1,698,410)
                            Net cash (used in) provided by operating activities
     (4,248,391)
  
     528,522
       
CASH FLOWS FROM INVESTING ACTIVITIES:
      
Purchase of property and equipment
    (403,611)
  
    (497,485)
Proceeds from maturities of certificates of deposit
     336,000
  
     645,252
Proceeds from sale of assets
       1,150
  
       25,473
Decrease (increase) in other assets
         3,201
  
         2,841
     
Net cash (used in) provided by investing activities
      (63,260)
  
      176,081
       
CASH FLOWS FROM FINANCING ACTIVITIES:
      
Payments on notes payable and long-term debt
    (101,250)
  
    (101,250)
Payment of cash dividend
(2,536,131)
  
-
     
Net cash (used in) provided by financing activities
    (2,637,381)
  
    (101,250)
       
NET (DECREASE) INCREASE IN CASH
     (6,949,032)
  
     603,353
       
CASH, beginning of period
  10,765,591
  
  4,293,746
       
CASH, end of period
  $3,816,559
  
  4,897,099
       
       
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      
Interest paid during the period
$116,627
  
$124,135
Income tax paid during the period, net of (refunds)
$2,273,330
  
$1,471,101




TANDY LEATHER FACTORY INC Reports