TANDY LEATHER FACTORY INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 PRESS RELEASE - May 2, 2018

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EXHIBIT 99.1

FOR IMMEDIATE RELEASE May 2, 2018

TANDY LEATHER FACTORY REPORTS POSITIVE 1ST QUARTER RESULTS
Sales improved 0.7% and Earnings improved 3.4%

FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (NASDAQ: TLF) today reported financial results for the first quarter ended March 31, 2018.  A conference call will be conducted by senior management at 10:00 am Eastern Time on May 3, 2018.  Dial-in details have been provided previously and are included below for reference.

·
Net sales increased 0.7% to $20.3 million, compared to prior year's $20.2 million (consolidated same store sales decreased 0.9%, while new stores added $0.3 million of sales).
·
Gross profit margin improved to 63.3% compared to prior year's 61.0%.
·
Operating income increased 1.8% to approximately $1.8 million from $1.7 million in the prior year.
·
Diluted EPS was $0.14 compared to prior year's $0.13.

"We were fairly pleased with this quarter's performance, as we achieved both top line and bottom line improvements," commented Shannon Greene, Chief Executive Officer.  "While it's good news, there is still much work to be done to drive sustainable growth in traffic and sales to reach our 2020 financial targets.  We remain focused on sales expansion and cost controls to continue the trend of improvement."

Sales from the North America division, consisting of all stores in the US and Canada, increased $86,000 to $19.3 million in the first quarter, up 0.4% from last year's first quarter sales of $19.2 million.  The sales increase in North America was driven by new stores, offset by a 1.2% decline in same store sales.  International, consisting of four stores outside of North America, added sales of $972,000 for the quarter, a 5.8% increase from last year's first quarter sales of $918,000.  The sales increase in International was primarily due to foreign currency exchange, as sales in local currency were relatively flat.

Consolidated gross profit margin increased from 61.0% in the first quarter of 2017 to 63.3% in the first quarter of 2018, primarily due to customer and product mix.  Operating expenses increased $525,000 in the first quarter of 2018 to $11.1 million compared to $10.5 million in the first quarter of 2017, increasing as a percentage of sales from 52.4% in 2017 to 54.6% in 2018.  Significant increases in operating expenses relate to personnel and occupancy costs for the three new stores that have opened since the first quarter of last year, as well as personnel and travel costs for the twelve district managers, many of whom had not yet been placed until March and April 2017.

Our effective tax rate for the quarter was 27%, which was higher than the estimated 21% in prior guidance.  Changes to the tax rate include the addition of the new global foreign income provision, the loss of the domestic production deduction, and a lower than expected deferred tax benefit.   Additionally, we have not fully completed our accounting for the income tax effects of the Tax Act and during the three months ended March 31, 2018, we have made no adjustments to the provisional amounts recorded at December 31, 2017.  Any adjustments to the provisional amounts recorded at December 31, 2017 will be reflected upon the completion of our accounting for the Tax Act which is expected by the third quarter of 2018.  At this time, our guidance range for full year 2018 EPS remains unchanged.

Consolidated net income for the quarter ended March 31, 2018 was $1.3 million compared to $1.2 million for the first quarter of 2017, an increase of 3.4%.
 
At March 31, 2018, inventory equaled $36.8 million, with an average inventory per store of $187,000 (excluding inventory at our home office manufacturing and distribution center and in-transit inventory), compared to $176,000 per store at December 31, 2017.  Overall, inventory levels decreased $0.5 million since December 31, 2017, mostly at our home office manufacturing and distribution center, while our inventory levels at the stores increased as we stocked up following the holiday season.  Cash on hand totaled $19.3 million, an increase of $0.9 million, over December 31, 2017 cash levels.

Tina Castillo, Chief Financial Officer added, "Our first quarter results reflect a positive start to 2018.  In addition, during this first quarter, we were successful in repurchasing 72,400 TLF shares, at an average price of $7.47.   This buyback was funded with proceeds from our line of credit. We look forward to building on our momentum as we progress through 2018."

Conference Call Information
A conference call will be conducted by senior management at 10:00 a.m. Eastern Time on May 3, 2018 and will be accessible to the public by calling 877-312-5524 or 253-237-1144.  Callers should dial in approximately 5 minutes before the call begins. A conference call replay will be available through 1:00 p.m. Eastern Time on May 8, 2018 and can be accessed by calling 855-859-2056 or 404-537-3406.  For both, reference conference ID number 2257189.  This call will be webcast and can be accessed at the company's web site at www.tandyleather.com.
Tandy Leather Factory, Inc., (http://www.tandyleather.com), headquartered in Fort Worth, Texas, is a specialty retailer 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 115 North American stores located in 42 US states and 7 Canadian provinces, and four International 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:
Tina Castillo, Tandy Leather Factory, Inc.
(817) 872-3200 or tcastillo@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 03/31/18
    
Quarter Ended 03/31/17
  
   
Sales
    
Income from Operations
    
Sales
    
Income from Operations
  
North America
  
$
19,317,260
    
$
1,830,659
    
$
19,231,714
    
$
1,811,563
  
International
    
971,658
      
(61,698
)
    
918,131
      
(74,072
)
Total Operations
  
$
20,288,918
    
$
1,768,961
    
$
20,149,845
    
$
1,737,491
  


North America
  
Quarter Ended 03/31/18
    
Quarter Ended 03/31/17
  
   
# of stores
    
Sales
    
# of stores
    
Sales
  
Same store sales
    
112
    
$
18,999,312
      
112
    
$
19,231,714
  
New store sales
    
3
      
317,948
              
-
  
Total Sales – North America
    
115
    
$
19,317,260
      
112
    
$
19,231,714
  


International – there were no new stores or closed stores for the three months ended March 31, 2018 and 2017, so total sales are equal to same store sales.








TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS

   
3/31/18
    
12/31/17
  
ASSETS
            
CURRENT ASSETS:
            
Cash
  
$
19,252,878
    
$
18,337,258
  
Accounts receivable-trade, net of allowance for doubtful accounts
                
    of $16,075 and $10,637 in 2018 and 2017, respectively
    
503,322
      
461,212
  
Inventory
    
36,771,860
      
37,311,197
  
Prepaid income taxes
    
-
      
41,307
  
Prepaid expenses
    
1,576,205
      
1,473,147
  
Other current assets
    
78,412
      
189,029
  
Total current assets
    
58,182,677
      
57,813,150
  
                 
PROPERTY AND EQUIPMENT, at cost
    
27,403,608
      
27,218,481
  
Less accumulated depreciation and amortization
    
(12,162,066
)
    
(11,750,639
)
     
15,241,542
      
15,467,842
  
                 
DEFERRED INCOME TAXES
    
265,456
      
271,738
  
GOODWILL
    
960,353
      
962,949
  
OTHER INTANGIBLES, net of accumulated amortization of
                
    $711,000 and $710,000 in 2018 and 2017, respectively
    
18,667
      
19,222
  
OTHER ASSETS
    
379,292
      
379,695
  
   
$
75,047,987
    
$
74,914,596
  
                 
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
CURRENT LIABILITIES:
                
Accounts payable-trade
  
$
1,419,505
    
$
1,413,450
  
Accrued expenses and other liabilities
    
3,875,349
      
4,953,477
  
Income tax payable
    
105,176
      
-
  
Current maturities of long-term debt
    
1,153,931
      
614,311
  
Total current liabilities
    
6,553,961
      
6,981,238
  
                 
DEFERRED INCOME TAXES
    
1,581,178
      
1,636,958
  
                 
LONG-TERM DEBT, net of current maturities
    
6,758,739
      
6,757,419
  
                 
COMMITMENTS AND CONTINGENCIES
                
                 
STOCKHOLDERS' EQUITY:
                
Preferred stock, $0.10 par value; 20,000,000 shares
                
    authorized, none issued or outstanding
    
-
      
-
  
Common stock, $0.0024 par value; 25,000,000 shares
                
   authorized, 11,330,340 and 11,313,692 shares issued at 2018 and 2017,
                
   9,215,110 and 9,270,862 outstanding at 2018 and 2017, respectively
    
27,193
      
27,153
  
Paid-in capital
    
6,860,200
      
6,831,271
  
Retained earnings
    
65,026,552
      
63,921,244
  
Treasury stock at cost (2,115,230 and 2,042,830 shares at 2018 and 2017, respectively)
    
(10,819,524
)
    
(10,278,584
)
Accumulated other comprehensive income
    
(940,312
)
    
(962,103
)
Total stockholders' equity
    
60,154,109
      
59,538,981
  
   
$
75,047,987
    
$
74,914,596
  
                 




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


 
2018
  
2017

NET SALES
  
$
20,288,918
    
$
20,149,845
  
COST OF SALES
    
7,445,956
      
7,863,800
  
Gross profit
    
12,842,962
      
12,286,045
  
                 
OPERATING EXPENSES
    
11,074,001
      
10,548,554
  
INCOME FROM OPERATIONS
    
1,768,961
      
1,737,491
  
                 
OTHER (INCOME) EXPENSE:
                
Interest expense
    
64,642
      
36,344
  
Other, net
    
(38,872
)
    
(2,651
)
Total other (income) expense
    
25,770
      
33,693
  
                 
INCOME BEFORE INCOME TAXES
    
1,743,191
      
1,703,798
  
                 
PROVISION FOR INCOME TAXES
    
469,572
      
472,533
  
                 
NET INCOME
  
$
1,273,619
    
$
1,231,265
  
                 
                 
                 
                 
NET INCOME PER COMMON SHARE:
                
BASIC
  
$
0.14
    
$
0.13
  
DILUTED
  
$
0.14
    
$
0.13
  
                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
                
BASIC
    
9,264,446
      
9,308,726
  
DILUTED
    
9,264,811
      
9,330,919
  





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



   
2018
    
2017
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
  
$
1,273,619
    
$
1,231,265
  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
                
Depreciation and amortization
    
465,522
      
458,118
  
Loss on disposal or abandonment of assets
    
798
      
335
  
Non-cash stock-based compensation
    
28,969
      
44,794
  
Deferred income taxes
    
(49,498
)
    
(103,187
)
Foreign currency translation
    
24,388
      
344,789
  
Net changes in assets and liabilities:
                
Accounts receivable-trade, net
    
(42,110
)
    
36,292
  
Inventory
    
539,337
      
(1,204,464
)
Prepaid expenses
    
(103,058
)
    
(101,357
)
Other current assets
    
110,617
      
(126,374
)
Accounts payable-trade
    
6,055
      
802,561
  
Accrued expenses and other liabilities
    
(1,246,439
)
    
(1,717,366
)
Income taxes payable
    
146,483
      
489,836
  
Total adjustments
    
(118,936
)
    
(1,076,023
)
                            Net cash provided by operating activities
    
1,154,683
      
155,242
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchase of property and equipment
    
(240,020
)
    
(599,757
)
Increase (decrease) in other assets
    
957
      
(10,578
)
Net cash used in investing activities
    
(239,063
)
    
(610,335
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from notes payable and long term debt
    
540,940
      
-
  
Repurchase of common stock (treasury stock)
    
(540,940
)
    
-
  
Net cash used in financing activities
    
-
      
-
  
                 
NET INCREASE (DECREASE) IN CASH
    
915,620
      
(455,093
)
                 
CASH, beginning of period
    
18,337,258
      
16,862,304
  
                 
CASH, end of period
  
$
19,252,878
    
$
16,407,211
  
                 
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                
Interest paid during the period
  
$
64,642
    
$
36,344
  
Income tax paid during the period, net of (refunds)
  
$
372,587
    
$
17,303
  




TANDY LEATHER FACTORY INC Reports