tool name
closeTandy Leather Factory Reports 1st Quarter 2008 Financial Results EPS $0.05
Cash up 26% from Year-End 2007
FORT WORTH, Texas — Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the first quarter of 2008. Net income for the quarter ended March 31, 2008 was $584,000, down from net income of $1.3 million in the first quarter of 2007. Fully-diluted earnings per share for the quarter was $0.05 in the current quarter, compared to $0.12 in last year's first quarter. Total sales for the first quarter were $13.3 million, down 9% from $14.5 million in the same quarter last year.
Sales from the Retail Leathercraft operation, consisting of the Tandy Leather retail store chain, increased $16,000 in the first quarter, virtually the same as last year's first quarter sales of $6.3 million. The chain consists of seventy-two stores as of March 31, 2008, compared to sixty-five retail stores a year ago. First quarter sales for the Wholesale Leathercraft operation, consisting of the Leather Factory wholesale centers and the National Account group, decreased $1.2 million or 15% over the same quarter last year. International Leathercraft, consisting of one combination wholesale and retail store located in the United Kingdom, added sales of $42k for the quarter. This store was opened in February 2008.
Consolidated gross profit margins decreased from 59.3% in the first quarter of 2007 to 58.4% in the first quarter of 2008. Operating expenses increased from $6.6 million in the first quarter of 2007 to $7.0 million in the first quarter of 2008, increasing as a percentage of revenue from 45.8% in 2007 to 52.9% in 2008. Expenses associated with new stores, accelerated depreciation expense on leasehold improvements abandoned during the quarter, and expenses associated with the move of the central warehouse, factory, corporate and support departments to its new facility were the primary contributors to the additional expense.
Ron Morgan, Chief Executive Officer and President, commented, "We knew, and stated publicly, that our earnings this quarter would not be as strong as last year's first quarter. As expected, sales were weak and we had some unusual expenses in the first quarter. The move of our corporate offices at the end of the quarter went better than expected and the UK store is showing good potential. It missed reporting a profit in March by just a few hundred dollars so I expect it to begin adding to our profits in the second quarter."
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, 72 Tandy Leather retail stores, located in 34 states and 5 Canadian provinces, one combination wholesale/retail store located in the United Kingdom, and Mid-Continent Leather Sales, one store located in Oklahoma. Its common stock trades on the American Stock Exchange with the symbol "TLF".
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.
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
03/31/2008 12/31/2007
(unaudited) (audited)
------------ ------------
ASSETS
CURRENT ASSETS:
Cash $ 8,610,331 $ 6,810,396
Accounts receivable-trade, net of
allowance for doubtful accounts of
$137,000 and $104,000 in 2008 and 2007,
respectively 2,044,119 2,538,816
Inventory 16,227,628 17,473,352
Deferred income taxes 251,665 256,938
Other current assets 1,328,639 1,102,836
------------ ------------
Total current assets 28,462,382 28,182,338
------------ ------------
PROPERTY AND EQUIPMENT, at cost 14,220,027 11,793,317
Less accumulated depreciation and
amortization (4,497,550) (4,794,505)
------------ ------------
9,722,477 6,998,812
GOODWILL 986,281 990,536
OTHER INTANGIBLES, net of accumulated
amortization of $328,000 and $313,000 in
2008 and 2007, respectively 368,783 384,134
OTHER assets 323,258 1,095,686
------------ ------------
$39,863,181 $37,651,506
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade $ 1,485,783 $ 1,497,564
Accrued expenses and other liabilities 2,647,416 2,072,640
Income taxes payable 270,712 67,150
Current maturities of long-term debt and
capital lease obligations 419,103 135,000
------------ ------------
Total current liabilities 4,823,014 3,772,354
------------ ------------
DEFERRED INCOME TAXES 293,743 148,648
LONG-TERM DEBT, net of current maturities 3,864,375 3,915,000
CAPITAL LEASE OBLIGATION, net of current
maturities 525,275 -
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; 10,982,951
shares issued at 2008 and 2007;
10,977,092 shares outstanding at 2008
and 2007 26,359 26,359
Paid-in capital 5,427,102 5,419,477
Retained earnings 24,622,170 24,037,672
Treasury stock (5,859 shares at cost) (25,487) (25,487)
Accumulated other comprehensive income 306,630 357,483
------------ ------------
Total stockholders' equity 30,356,774 29,815,504
------------ ------------
$39,863,181 $37,651,506
============ ============
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007
2008 2007
------------ ------------
NET SALES $13,260,160 $14,507,805
COST OF SALES 5,519,138 5,909,852
------------ ------------
Gross profit 7,741,022 8,597,953
OPERATING EXPENSES 7,019,638 6,643,172
------------ ------------
INCOME FROM OPERATIONS 721,384 1,954,781
OTHER (INCOME) EXPENSE:
Interest expense 81,741 -
Other, net (280,390) (48,996)
------------ ------------
Total other (income) expense (198,649) (48,996)
------------ ------------
INCOME BEFORE INCOME TAXES 920,033 2,003,777
PROVISION FOR INCOME TAXES 335,535 657,422
------------ ------------
NET INCOME $ 584,498 $ 1,346,355
============ ============
NET INCOME PER COMMON SHARE - BASIC $ 0.05 $ 0.12
============ ============
NET INCOME PER COMMON SHARE - DILUTED $ 0.05 $ 0.12
============ ============
Weighted Average Number of Shares
Outstanding:
Basic 10,977,092 10,893,359
Diluted 11,067,863 11,150,246
Selected financial data:
Quarter Ended 03/31/08 Quarter Ended 03/31/07
---------------------- ----------------------
Operating Operating
Sales Income Sales Income
------------ --------- ----------- ----------
Wholesale Leathercraft $ 6,738,211 $123,955 $ 7,940,487 $1,346,203
Retail Leathercraft 6,270,774 614,452 6,254,219 553,748
International 41,737 (41,460) - -
Other 209,438 24,437 313,099 54,830
------------ --------- ----------- ----------
Total Operations $ 13,260,160 $721,384 $14,507,805 $1,954,781
============ ========= =========== ==========
Quarter Ended Quarter Ended
Wholesale Leathercraft 03/31/08 03/31/07
------------------ ------------------
# of # of
stores Sales stores Sales
------- ---------- ------- ----------
Distribution centers 29 $5,829,014 29 6,624,606
New store-Midcontinent Leather
Sales 1 162,938 1 185,263
National account group 746,259 1,130,618
---------- ----------
Total Sales - Wholesale
Leathercraft $6,738,211 $7,940,487
========== ==========
Retail Leathercraft Quarter Ended Quarter Ended
03/31/08 03/31/07
------------------ ------------------
# of # of
stores Sales stores Sales
------- ---------- ------- ----------
Same store sales 65 $5,889,635 65 $6,254,219
New store sales 7 381,139 - -
---------- ----------
Total Sales - Retail
Leathercraft $6,270,774 $6,254,219
========== ==========
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
2008 2007
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 584,498 $ 1,346,355
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 225,424 105,739
Gain on disposal of assets (12,109) -
Non-cash stock-based compensation 7,625 7,626
Deferred income taxes 150,368 (15,281)
Other (46,598) 11,092
Net changes in assets and liabilities,
net of effect of business acquisitions:
Accounts receivable-trade, net 494,696 (239,162)
Inventory 1,245,723 (824,948)
Income taxes 203,563 368,418
Other current assets (225,803) (396,474)
Accounts payable-trade (11,781) 726,168
Accrued expenses and other liabilities 574,775 (939,387)
------------ ------------
Total adjustments 2,605,883 (1,196,209)
------------ ------------
Net cash provided by operating
activities 3,190,381 150,146
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,136,245) (200,097)
Payments in connection with businesses
acquired - (650,000)
Proceeds from sale of assets - 25,337
Decrease (increase) in other assets 772,430 (81,063)
------------ ------------
Net cash used in investing activities (1,363,815) (905,823)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations (44,960) (33,517)
Proceeds from exercise of stock options and
warrants 18,329 50,910
------------ ------------
Net cash provided by financing
activities (26,631) 17,393
------------ ------------
NET INCREASE (DECREASE) IN CASH 1,799,935 (738,284)
CASH, beginning of period 6,810,396 6,739,891
------------ ------------
CASH, end of period $ 8,610,331 $ 6,001,607
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid during the period $ 81,741 -
Income tax paid during the period, net of
(refunds) $ 60,210 $ 304,908
NON-CASH INVESTING ACTIVITIES:
Equipment acquired under capital lease
financing arrangement $ 803,712 -
Tandy Leather Factory, Inc. Shannon L. Greene, 817-872-3200 sgreene@tandyleather.com or Magellan Fin, LLC Mark Gilbert, 317-867-2839 MGilbert@MagellanFin.com
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