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8-K - FORM 8-K - TALON INTERNATIONAL, INC.taln20151110_8k.htm

Exhibit 99.1

 

 

Talon International, Inc. Reports 2015

Third Quarter and Nine Months Financial Results

 

LOS ANGELES, CA -  November 12, 2015 - Talon International, Inc. (OTCQB: TALN), a leading global supplier of zippers, apparel fasteners, trim and stretch technology products, reported financial results for the third quarter and nine months ended September 30, 2015.

 

Highlights

 

 

Sales in Q3 2015 were $10.0 million, a 15.0% decrease versus Q3 2014

 

Talon Tekfit stretch technology posted sales gains of $425,000 over Q3 2014

 

New financing was secured and Credit Agreement amended with the Company’s bank, adding financial flexibility

 

Financial Results

 

Sales for the quarter ended September 30, 2015 were $10.0 million, reflecting a decline of $1.8 million or 15.0% as compared to the same period in 2014. Talon Zipper sales for the quarter were $4.0 million or $2.0 million lower than the same period in 2014, decreasing by $1.1 million within our mass merchandising brand customers and by $913,000 in sales to our specialty retail brands customers as compared to 2014. Talon Trim revenues declined by $153,000 compared to the same period in 2014 to $5.5 million. Substantially all Talon Trim sales are to the Company’s specialty retail branded customers. Talon Tekfit sales increased by $425,000 compared to the same period in 2014, mainly due to new Talon Tekfit programs and customers. Sales for the nine months ended September 30, 2015 were $36.6 million, a decrease of 6.3% from the same period in 2014.

 

“Lower sales this quarter principally reflected continued weakness within the mass merchandising customers with our Talon Zipper product sales and selected specialty retail brand customers, including specialty teen retailers we serve with our Talon Zipper and Talon Trim product sales,” stated Larry Dyne, Talon's Chief Executive Officer. “This marks a continuation of the general weakness in apparel retail trends which began in the second quarter of 2014 and which have continued throughout much of 2015. While Talon Zipper sales were lower than expected, we’re encouraged by stable Trim product sales and solid growth in our Tekfit stretch technology products. We also continue to execute on our plans to grow and expand our geographic footprint in key regions that will allow us to streamline deliveries to our customers and their respective manufacturing partners.  In addition, we were able to maintain cost controls and lower our operating expenses versus the third quarter of 2014 and, due to the shift in product mix during the third quarter of 2015, were able to improve our gross margins as a percentage of sales.”

 

 
 

 

 

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Gross profit for the three months ended September 30, 2015 was $3.4 million, or 33.8% of sales, reflecting a reduction of $345,000 as compared to the same period in 2014. The reduction in gross profit for the quarter, as compared to the prior year, was principally attributable to lower overall sales volumes offset by lower freight, duty and manufacturing support costs and improved product mix. Gross profit for the first nine months of 2015 was $12.0 million, or 32.7% of sales, as compared to $12.9 million, or 32.9% of sales for the same period in 2014. 

 

Operating expenses for the three months ended September 30, 2015 were $3.2 million, reflecting a decrease of $193,000 as compared to the same period in 2014, driven by decreases in both sales and marketing and general and administrative expenses. 

 

Sales and marketing expenses for the three months ended September 30, 2015 totaled $1.5 million, a decrease of $142,000 as compared to the same period in 2014.

 

General and administrative expenses for the three months ended September 30, 2015 totaled $1.7 million or 17.2% as a percentage of sales, as compared to the prior year of $1.8. million or 15.0% as a percentage of sales. General and administrative expenses were lower by $51,000 during the three months ended September 30, 2015, as compared to the same period in 2014, mainly due to a reduction in facilities and related expenses. Operating expenses for the nine months ended September 30, 2015 were $11.2 million or 30.6% of sales, as compared to $10.9 million, or 28.0% of sales, in the first nine months of 2014. Sales and marketing expenses for the nine months ended September 30, 2015 totaled $4.8 million, an increase of $24,000 as compared to the same period in 2014. General and administrative expenses for the nine months ended September 30, 2015 totaled $6.4 million or 17.5% as a percentage of sales, compared to the prior year of $6.2 million or 15.8% as a percentage of sales.

 

Operating income for the third quarter ended September 30, 2015 was $163,000, or 1.6% of sales, as compared to $315,000, or 2.7% of sales, for the same period in 2014. Operating income for the nine months ended September 30, 2015 was $790,000 as compared to $1.9 million for the same period in 2014. Net loss for the quarter ended September 30, 2015 was $90,000 as compared to net income of $57,000 for the same quarter in 2014.  Net income for the nine months ended September 30, 2015 was $199,000, a decrease from $889,000 in the same period in 2014.

 

As previously announced, in the third quarter the Company signed an amendment to its credit agreement with Union Bank and secured a new $3 million loan facility from Princess Investment Holdings. The amendment to the Union Bank credit agreement required Talon to pay off the $1.4 million existing term loan due to Union Bank and eliminated the financial covenants for the remaining term of the agreement. The Company received an initial advance from Princess Investment Holdings under the new loan agreement in the amount of $1.5 million, and issued warrants to Princess Investment Holdings to purchase 1 million shares of common stock, exercisable immediately upon issuance for a five-year period at an exercise price of $0.18 per share on a cashless basis. The Company believes these changes will allow more financial flexibility in the course of business and the ability to take advantage of opportunities that arise.

 

 
 

 

 

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Conference Call

 

Talon International will hold a conference call on Thursday, November 12, 2015, to discuss its third quarter and nine months financial results for 2015. Talon's CEO, Larry Dyne, will host the call starting at 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time). A question and answer session will follow the presentation. To participate, dial the appropriate number 5-10 minutes prior to the start time, request the Talon International conference call and provide the conference ID.

 

Date: Thursday, November 12, 2015

 

Time: 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time)

 

Domestic callers: 1-888-349-0091

 

International callers: 1-412-902-4297

 

Conference ID#: TALON

 

A replay of the call will be available after 7:30 P.M. Eastern Time on the same day until December 12, 2015. The toll-free replay call-in number is 1-877-870-5176 for domestic callers and 1-858-384-5517 for international. Pin number 10075488.

 

About Talon International, Inc.

 

Talon International, Inc. is a major supplier of custom zippers, complete trim solutions and Tekfit stretch technology products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers worldwide. Talon develops, manufactures and distributes custom zippers exclusively under its Talon® brand (“The World’s Original Zipper Since 1893”); designs, develops, manufactures, and distributes complete apparel trim solutions and products; and provides stretch technology for specialty waistbands, shirt collars, and other items all under its trademark and world renowned brands, Talon®, and TekFit® to major apparel brands and retailers. Leading retailers worldwide recognize and use Talon products including VF Corporation, American Eagle, Abercrombie and Fitch, Polo Ralph Lauren, Kohl’s, JC Penney, FatFace, Victoria’s Secret, Wal-Mart, Phillips-Van Heusen, Levi Strauss & Co., Express and many others. The company is headquartered in the greater Los Angeles area, and has offices and facilities throughout the United States, United Kingdom, Hong Kong, China, Taiwan, Vietnam, India, Indonesia and Bangladesh.

 

 
 

 

 

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Forward Looking Statements

 

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, the Company's views on market growth, changing trends in apparel retailing, new product introductions, expansion into new geographic markets, and the Company's ability to execute on its sales strategies, and are generally identified by phrases such as "thinks," "anticipates," "believes," "estimates," "expects," "intends," "plans," and similar words. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statement. These statements are based upon, among other things, assumptions made by, and information currently available to, management, including management's own knowledge and assessment of the Company's industry, competition and capital requirements. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission including the Company's most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which should be read in conjunction herewith for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

 

Contact:

Talon International, Inc.
Rayna Hernandez
Tel (818) 444-4128
raynah@talonzippers.com

 

 
 

 

 

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TALON INTERNATIONAL, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2015

   

2014

   

2015

   

2014

 

Net sales

  $ 9,992,091     $ 11,749,970     $ 36,587,791     $ 39,052,257  

Cost of goods sold

    6,618,550       8,031,238       24,617,384       26,193,109  

Gross profit

    3,373,541       3,718,732       11,970,407       12,859,148  

Sales and marketing expenses

    1,494,693       1,636,759       4,778,754       4,754,723  

General and administrative expenses

    1,715,617       1,766,851       6,401,400       6,165,544  

Total operating expenses

    3,210,310       3,403,610       11,180,154       10,920,267  
                                 

Income from operations

    163,231       315,122       790,253       1,938,881  

Interest expense, net

    127,966       96,871       328,527       317,756  

Loss on extinguishment of debt

    134,049       -       134,049       -  

Income (loss) before provision for income taxes

    (98,784

)

    218,251       327,677       1,621,125  

Provision for (benefit from) income taxes, net

    (8,431

)

    161,165       128,746       732,299  
                                 

Net income (loss)

  $ (90,353

)

  $ 57,086     $ 198,931     $ 888,826  
                                 

Basic and diluted net income (loss) per share

  $ (0.00

)

  $ 0.00     $ 0.00     $ 0.01  
                                 

Weighted average number of common shares outstanding - Basic

    92,267,831       92,267,831       92,267,831       92,115,167  
                                 

Weighted average number of common shares outstanding - Diluted

    92,267,831       94,431,171       93,519,892       94,411,036  
                                 

Net income (loss)

  $ (90,353

)

  $ 57,086     $ 198,931     $ 888,826  

Other comprehensive income (loss) from foreign currency translation

    (10,220

)

    (1,141

)

    (9,630

)

    716  

Total comprehensive income (loss)

  $ (100,573

)

  $ 55,945     $ 189,301     $ 889,542  

 

 
 

 

 

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TALON INTERNATIONAL, INC.

 

CONSOLIDATED BALANCE SHEETS

 

   

September 30,

2015

   

December 31,

2014

 
   

(Unaudited)

         

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 2,565,626     $ 2,603,138  

Accounts receivable, net

    3,449,269       3,019,749  

Inventories, net

    563,728       506,272  

Current deferred income tax assets, net

    894,282       746,370  

Prepaid expenses and other current assets

    581,563       551,775  

Total current assets

    8,054,468       7,427,304  
                 

Property and equipment, net

    747,420       584,586  

Intangible assets, net

    4,313,169       4,300,084  

Deferred income tax assets, net

    5,248,912       5,374,468  

Other assets

    415,717       416,035  

Total assets

  $ 18,779,686     $ 18,102,477  
                 

Liabilities and Stockholders’ Equity

               

Current liabilities:

               

Accounts payable

  $ 6,275,647     $ 6,191,954  

Accrued severance payments

    704,588       -  

Other accrued expenses

    2,473,231       2,403,563  

Revolving credit loan

    1,600,000       1,500,000  

Current portion of revolving term loan from related party

    83,333       -  

Current portion of term loan payable

    -       1,816,667  

Current portion of capital lease obligations

    21,509       -  

Total current liabilities

    11,158,308       11,912,184  
                 

Revolving term loan from related party, net of discounts and current portion

    1,805,218       -  

Term loan payable, net of current portion

    -       1,016,667  

Capital lease obligations, net of current portion

    66,433       -  

Deferred income tax liabilities

    7,318       13,961  

Other liabilities

    207,080       26,077  

Total liabilities

    13,244,357       12,968,889  
                 

Stockholders’ Equity:

               

Common Stock, $0.001 par value, 300,000,000 shares authorized; 92,267,831 shares issued and outstanding at September 30, 2015 and December 31, 2014

    92,268       92,268  

Additional paid-in capital

    64,387,694       64,175,254  

Accumulated deficit

    (59,051,178

)

    (59,250,109

)

Accumulated other comprehensive income

    106,545       116,175  

Total stockholders’ equity

    5,535,329       5,133,588  

Total liabilities and stockholders’ equity

  $ 18,779,686     $ 18,102,477