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Tandy Leather Factory Reports 2013 Earnings Up 30% Over 2012

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FORT WORTH, Texas, March 6, 2014 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the fourth quarter and year ended December 31, 2013. A conference call will be conducted by senior management at 12:00 p.m. Eastern Time on March 6, 2014. Dial-in details have been provided previously.

Consolidated net income for the quarter was $2.5 million compared to consolidated net income of $2.2 million for the fourth quarter of 2012. Fully diluted earnings per share for the quarter were $0.24, compared to $0.22 for the same quarter of the previous year. Total sales for the quarter ended December 31, 2013 increased 4% to $21.5 million from $20.6 million for the fourth quarter of 2012. Consolidated sales for the year ended December 31, 2013 were $78.3 million, up 8% from 2012 sales of $72.7 million. Consolidated net income for 2013 was $7.3 million or $0.71 per fully-diluted share versus $5.6 million or $0.55 per fully-diluted share for 2012.

Sales in the Retail Leathercraft division for the fourth quarter of 2013 increased $543,000 over the previous year's fourth quarter, representing a 4% improvement. Same stores sales increased 3% over the fourth quarter of 2012. Seventy-nine Tandy Leather retail stores comprised Retail Leathercraft's operations on December 31, 2013, compared to seventy-eight retail stores a year earlier. For the year, Retail Leathercraft's sales increased $4.4 million, or 10%, over 2012. Same store sales for the year increased 9% compared to 2012.

Fourth quarter sales for the Wholesale Leathercraft division increased $278,000 over the same quarter of 2012, a 4% improvement. Same store sales increased 4% while national account sales were down 4% for the quarter. Twenty-nine Leather Factory wholesale stores comprised Wholesale Leathercraft's operations on December 31, 2013 and 2012. For the year, Wholesale Leathercraft's sales were up $535,000, or 2%. 2013 same store sales increased 4% while sales to national accounts were down 25%. National Account sales represented 5% of the division's sales in 2013, and only 2% of total company sales.

International Leathercraft's fourth quarter sales increased $90,000 over the same quarter of 2012, a 10% improvement. For the year, International Leathercraft's sales increased 20% to $3.9 million from $3.2 million in 2012. All three stores in the segment have been opened for both periods, so same store sales for the quarter and year were the same as the segment's sales. Three stores comprised International Leathercraft's operations on December 31, 2013 and 2012.

Consolidated gross profit margin for the fourth quarter was 63.9%, matching that of the fourth quarter 2012. For 2013, consolidated gross profit margin was 63.0%, declining slightly from the previous year's gross profit margin of 63.1%. Consolidated operating expenses for the fourth quarter of 2013 were 45.9% of sales, increasing $167,000 or 1.7% over the same quarter of 2012. Operating expenses totaled 48.6% of sales for 2013, increasing $1.3 million, or 3.5% over 2012.

Jon Thompson, Chief Executive Officer, commented, "We believed we performed well in 2013, as our sales and operating margin again exceeded that of last year. In 2014, we recently opened a new store in the US and are considering several others later in the year. Further, we will continue to expand the size of our existing stores in the US and Canada as we believe that strategy is working well as evidenced by our sales trend."

Shannon Greene, Chief Financial Officer and Treasurer, added, "We met the upper end of our earnings guidance for 2013, as sales and earnings increased over the prior year and all three segments achieved sales gains. The majority of our stores are performing well. We ended the year with a solid cash balance which is the result of strong sales, successful inventory management and expense control."

Financial Outlook:

The following statements are based on TLF's current expectations as of March 6, 2014. These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.

The Company expects to open 2-3 stores in 2014 in the US. Estimated consolidated net sales for 2014 will be in the range of $82 to $83 million. EPS for 2014 are expected to be in the range of $0.80 to $0.83. Average shares outstanding, both basic and diluted, in 2014 are estimated to be approximately 10.2 million. The Company assumes an effective tax rate for the year between 36% and 37%.

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, 78 Tandy Leather retail stores, located in 37 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.

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 12/31/13 Quarter Ended 12/31/12
Sales Oper Inc Sales Oper Inc
Wholesale Leathercraft $7,449,618 $1,987,197 $7,171,993 $1,692,410
Retail Leathercraft 13,065,315 1,783,725 12,522,682 1,780,813
International Leathercraft 1,034,208 123,591 943,888 6,978
Total Operations $21,549,141 $3,894,513 $20,638,563 $3,480,201
Year Ended 12/31/13 Year Ended 12/31/12
Sales Oper Inc Sales Oper Inc
Wholesale Leathercraft $27,384,614 $4,840,416 $26,850,002 $3,730,678
Retail Leathercraft 46,995,902 6,026,731 42,616,546 5,436,745
International Leathercraft 3,904,069 399,643 3,254,076 (23,418)
Total Operations $78,284,585 $11,266,790 $72,720,624 $9,144,005
Wholesale Leathercraft Quarter Ended 12/31/13 Quarter Ended 12/31/12
# of stores Sales # of stores Sales
Same store sales 29 $7,227,891 29 $6,941,017
Closed store -- -- -- --
National account group 221,727 230,976
Total Sales – Wholesale Leathercraft 29 $7,449,618 29 $7,171,993
Year Ended 12/31/13 Year Ended 12/31/12
# of stores Sales # of stores Sales
Same store sales 29 $26,125,015 29 $25,173,354
Closed store -- -- -- --
National account group 1,259,599 1,676,648
Total Sales – Wholesale Leathercraft 29 $27,384,614 29 $26,850,002
Retail Leathercraft Quarter Ended 12/31/13 Quarter Ended 12/31/12
# of stores Sales # of stores Sales
Same store sales 75 $12,684,246 75 $12,261,743
New store sales 4 218,098 1 67,075
Closed store sales 2 162,971 2 193,864
Total Sales – Retail Leathercraft 79 $13,065,315 76 $12,522,682
Year Ended 12/31/13 Year Ended 12/31/12
# of stores Sales # of stores Sales
Same store sales 75 $45,768,643 75 $41,888,874
New store sales 4 584,810 1 67,075
Closed store sales 2 642,449 2 660,597
Total Sales – Retail Leathercraft 79 $46,995,902 76 $42,616,546
International Leathercraft Quarter Ended 12/31/13 Quarter Ended 12/31/12
# of stores Sales # of stores Sales
Same store sales 3 $1,034,208 3 $943,888
New store sales -- -- -- --
Total Sales – Intl Leathercraft 3 $1,034,208 3 $943,888
Year Ended 12/31/13 Year Ended 12/31/12
# of stores Sales # of stores Sales
Same store sales 3 $3,904,069 3 $3,254,076
New store sales -- -- -- --
Total Sales – Intl Leathercraft 3 $3,904,069 3 $3,254,076
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012
Three Months Twelve Months
2013 2012 2013 2012
(unaudited) (unaudited)
NET SALES $21,549,141 $20,638,563 $78,284,585 $72,720,624
COST OF SALES 7,773,010 7,443,494 28,956,561 26,814,950
Gross Profit 13,776,131 13,195,069 49,328,024 45,905,674
OPERATING EXPENSES 9,881,618 9,714,868 38,061,234 36,761,669
INCOME FROM OPERATIONS 3,894,513 3,480,201 11,266,790 9,144,005
Interest expense 48,104 64,683 206,763 240,934
Other, net (21,932) 17,212 (160,732) (42,574)
Total other expense 26,172 81,895 46,031 198,360
INCOME BEFORE INCOME TAXES 3,868,341 3,398,306 11,220,759 8,945,645
PROVISION FOR INCOME TAXES 1,380,130 1,196,750 3,955,042 3,349,575
NET INCOME $2,488,211 $2,201,556 $7,265,717 $5,596,070
NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE:
Basic $0.24 $0.22 $0.71 $0.55
Diluted $0.24 $0.22 $0.71 $0.55
NET INCOME PER COMMON SHARE:
Basic $0.24 $0.22 $0.71 $0.55
Diluted $0.24 $0.22 $0.71 $0.55
Weighted Average Number of Shares Outstanding:
Basic 10,198,733 10,159,877 10,176,492 10,157,395
Diluted 10,233,009 10,178,759 10,216,438 10,175,346
TANDY LEATHER FACTORY, INC
CONSOLIDATED BALANCE SHEETS
12/31/13 12/31/12
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $11,082,679 $7,705,182
Accounts receivable-trade, net of allowance for doubtful accounts of $1,000 and 112,000 in 2013 and 2012, respectively 762,405 822,772
Inventory 26,300,830 25,862,784
Deferred income taxes 309,533 349,478
Other current assets 1,609,644 776,463
478,593 153,450
Total current assets 40,543,684 35,670,129
PROPERTY AND EQUIPMENT, at cost 20,290,990 17,574,895
Less accumulated depreciation and amortization (5,863,280) (5,630,305)
14,427,710 11,944,590
GOODWILL 981,985 990,725
OTHER INTANGIBLES, net of accumulated amortization of $622,000 and $582,000 in 2013 and 2012, respectively 103,228 145,533
OTHER assets 341,959 336,695
$56,398,566 $49,087,672
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade $1,884,637 $1,612,627
Accrued expenses and other liabilities 5,808,882 5,928,798
Income taxes payable 272,198 113,705
Current maturities of long-term debt 202,500 202,500
Total current liabilities 8,168,217 7,857,630
DEFERRED INCOME TAXES 1,212,557 806,525
LONG-TERM DEBT, net of current maturities 2,396,250 2,902,500
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, 11,192,356 and 11,156,065 shares issued at 2013 and 2012, 10,18,733 and 10,162,442 outstanding at 2013 and 2012, respectively 26,862 26,775
Paid-in capital 5,892,907 5,767,508
Retained earnings 41,507,592 34,241,875
Treasury stock at cost (993,623 shares at 2013 and 2012) (2,894,068) (2,894,068)
Accumulated other comprehensive income 88,249 378,927
Total stockholders' equity 44,621,542 37,521,017
$56,398,566 $49,087,672
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012
2013 2012
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,265,717 $5,596,070
Adjustments to reconcile net income to net cash provided by operating activities --
Depreciation and amortization 1,194,612 1,068,226
Loss on disposal or abandonment of assets 109,222 21,092
Non-cash stock-based compensation 11,686 10,000
Deferred income taxes 445,977 (120,531)
Other (261,908) (15,227)
Net changes in assets and liabilities, net of effect of business acquisitions:
Accounts receivable-trade, net 60,367 505,807
Inventory (438,046) (5,922,533)
Income taxes 158,493 (525,192)
Prepaid expenses (833,181) (36,728)
Other current assets (325,143) 55,274
Accounts payable-trade 272,010 (10,070)
Accrued expenses and other liabilities (119,916) 1,287,607
Total adjustments 274,173 (3,682,275)
Net cash provided by operating activities 7,539,890 1,913,795
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,770,022) (2,686,221)
Purchases of certificates of deposit -- --
Proceeds from sales or maturities of certificates of deposit -- 423,893
Proceeds from sale of assets 5,343 1,230
Decrease (increase) in other assets (5,264) 4,545
Net cash (used in) provided by investing activities (3,769,943) (2,256,553)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable and long-term debt (506,250) (202,500)
Payment of dividend -- (2,536,131)
Proceeds from issuance of common stock and warrants 113,800 20,980
Net cash used in financing activities (392,450) (2,717,651)
NET (DECREASE) INCREASE IN CASH 3,377,497 (3,060,409)
CASH, beginning of period 7,705,182 10,765,591
CASH, end of period $11,082,679 $7,705,182
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period $206,763 $240,934
Income tax paid during the period, net of (refunds) 3,348,676 4,004,510

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

Source:Tandy Leather Factory, Inc.

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