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Tandy Leather Factory Reports 2015 Financial Results

FORT WORTH, Texas, March 11, 2016 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the fourth quarter and year ended December 31, 2015. A conference call will be conducted by senior management at 10:00 a.m. Eastern Time on March 11, 2016. Dial-in details have been provided previously.

Consolidated net income for the quarter was $2.3 million, decreasing 5% from consolidated net income for the fourth quarter of 2014. Fully diluted earnings per share for the quarter were $0.24, the same as that for the same quarter of the previous year. Total sales for the quarter ended December 31 2015 decreased 1% to $24.2 million from $24.5 million for the fourth quarter of 2014. Consolidated sales for the year ended December 31, 2015 were $84.2 million, up 1% from 2014 sales of $83.4 million. Consolidated net income for 2015 was $6.4 million or $0.63 per fully-diluted share versus $7.7 million or $0.75 per fully-diluted share for 2014.

Sales in the Retail Leathercraft division for the fourth quarter of 2015 increased $165,000 over the previous year's fourth quarter, a 1% improvement. Same store sales in the fourth quarter of 2015 matched that of the same period in the prior year. Eighty-two Tandy Leather retail stores comprised Retail Leathercraft’s operations on December 31, 2015 and 2014. For the year, Retail Leathercraft’s sales increased $1.9 million, or 4%, over 2014. Same store sales for the year increased 1% compared to 2014.

Fourth quarter sales for the Wholesale Leathercraft division decreased $190,000 over the same quarter of 2014, a 2% decline. Same store sales decreased 2%. There were twenty-eight stores in the segment at December 31, 2015, compared to twenty-nine stores at December 31, 2014. For the year, Wholesale Leathercraft’s sales were down $532,000, or 2%. 2015 same store sales increased 1%.

International Leathercraft’s fourth quarter sales decreased $204,000 over the same quarter of 2014, a 17% decline. Same stores sales in the fourth quarter of 2015 decreased 28%. The one new store, opened in October 2015, added fourth quarter sales of $127,000. There were four stores in the segment at December 31, 2015, compared to three stores at December 31, 2014. For the year, International Leathercraft’s sales decreased 15% to $3.7 million from $4.3 million in 2014. 2015 same store sales decreased 17%.

Consolidated gross profit margin for the fourth quarter was 61.2%, improving from 59.1% in 2014’s fourth quarter. For 2015, consolidated gross profit margin was 61.9%, declining slightly from the previous year's gross profit margin of 62.5%. Consolidated operating expenses for the fourth quarter of 2015 were 45.2% of sales, increasing $372,000 or 3.5% over the same quarter of 2014. Operating expenses totaled 49.4% of sales for 2015, increasing $1.4 million, or 3.5% over 2014.

Shannon L. Greene, interim Chief Executive Officer, commented, "2015 was a challenging year on many fronts. Despite those challenges, we beat our revenue and earnings guidance, albeit minimally. We have some work to do in 2016 to achieve our standing goal of top line and bottom line growth against the prior year. Growing the top line has its challenges as we can’t force our customers to make purchases. What we can do is offer quality product and exceptional customer service. Operating expenses are more within our control. We are analyzing many of those expenses, focusing on more efficient and deliberate spending without negatively impacting our stores.”

Mark Angus, interim President, added, “Our consolidated gross profit margin in the fourth quarter was much better than our 2014 fourth quarter margin, improving by more than two percentage points. For the year, our gross profit margin decreased approximately one-half percent. We have talked previously about how the customer and product mix dictates margin results. Our focus in 2016 is to tweak our product offerings to our customer groups in such a way to maximize margins.”

Financial Outlook:

The following statements are based on TLF's current expectations as of March 11, 2016. These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.

Estimated consolidated net sales for 2016 will be in the range of $84-85 million. EPS for 2016 are expected to be in the range of $0.69 to $0.71. Average shares outstanding, both basic and diluted, in 2016 are estimated to be approximately 9.7 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 28 Leather Factory stores, located in 18 states and 3 Canadian provinces, 83 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and four 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 12/31/15 Quarter Ended 12/31/14
Sales Oper Inc Sales Oper Inc
Wholesale Leathercraft$7,519,790 $2,060,722 $7,709,704 $1,720,505
Retail Leathercraft 15,744,009 1,827,471 15,579,134 1,905,845
International Leathercraft 979,172 4,033 1,182,767 151,812
Total Operations$24,242,971 $3,892,226 $24,471,605 $3,778,162


Year Ended 12/31/15 Year Ended 12/31/14
Sales Oper Inc Sales Oper Inc
Wholesale Leathercraft$26,754,164 $4,663,590 $27,285,884 $5,300,413
Retail Leathercraft 53,714,432 5,689,814 51,805,944 6,077,345
International Leathercraft 3,692,604 121,296 4,339,084 580,271
Total Operations$84,161,200 $10,474,700 $83,430,912 $11,958,029


Wholesale Leathercraft Quarter Ended 12/31/15 Quarter Ended 12/31/14
# of storesSales # of storesSales
Same store sales28$7,519,790 28$7,674,739
Closed store- - 1 34,965
National account group- - - -
Total Sales – Wholesale Leathercraft28$7,519,790 28$7,709,704


Year Ended 12/31/15 Year Ended 12/31/14
# of storesSales # of storesSales
Same store sales28$26,754,164 28$26,533,991
Closed store- - 1 403,243
National account group- - - 348,650
Total Sales – Wholesale Leathercraft28$26,754,164 28$27,285,884


Retail Leathercraft Quarter Ended 12/31/15 Quarter Ended 12/31/14
# of storesSales # of storesSales
Same store sales80$15,478,929 80$15,505,922
New store sales2 265,080 2 73,212
Closed store sales- - - -
Total Sales – Retail Leathercraft82$15,744,009 82$15,579,134


Year Ended 12/31/15 Year Ended 12/31/14
# of storesSales # of storesSales
Same store sales79$51,986,010 79$51,355,176
New store sales3 1,728,422 3 450,768
Closed store sales- - - -
Total Sales – Retail Leathercraft82$53,714,432 82$51,805,944
International Leathercraft Quarter Ended 12/31/15 Quarter Ended 12/31/14
# of storesSales # of storesSales
Same store sales3$851,815 3$1,182,767
New store sales1 127,357 - -
Total Sales – Intl Leathercraft4$979,172 3$1,182,767


Year Ended 12/31/15 Year Ended 12/31/14
# of storesSales # of storesSales
Same store sales3$3,565,247 3$4,339,084
New store sales1 127,357 - -
Total Sales – Intl Leathercraft4$3,692,604 3$4,339,084

TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2015 AND 2014
Three Months Twelve Months
2015
(unaudited)
2014 2015
(unaudited)
2014

NET SALES$24,242,971 $24,471,605 $84,161,200 $83,430,912
COST OF SALES 9,401,917 10,016,886 32,090,140 31,306,155
Gross Profit 14,841,054 14,454,719 52,071,060 52,124,757
OPERATING EXPENSES 10,948,828 10,576,557 41,596,360 40,166,728
INCOME FROM OPERATIONS 3,892,226 3,878,162 10,474,700 11,958,029
Interest expense 22,844 71,217 330,004 225,584
Other, net (6,287) (30,962) (74,357) (75,165)
Total other expense 16,557 40,255 255,647 150,419
INCOME BEFORE INCOME TAXES 3,875,669 3,837,907 10,219,053 11,807,610
PROVISION FOR INCOME TAXES 1,536,911 1,379,445 3,816,648 4,100,689
NET INCOME$2,338,758 $2,458,462 $6,402,405 $7,706,921
NET INCOME PER COMMON SHARE:
Basic$0.24 $0.24 $0.64 $0.76
Diluted$0.24 $0.24 $0.63 $0.75
Weighted Average Number of Shares Outstanding:
Basic 9,692,860 10,210,933 10,077,140 10,203,063
Diluted 9,712,571 10,244,127 10,102,394 10,241,121


TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
12/31/15
(unaudited)
12/31/14

ASSETS
CURRENT ASSETS:
Cash$10,962,615 $10,636,530
Accounts receivable-trade, net of allowance for doubtful accounts
of $1,700 and $400 in 2015 and 2014, respectively 553,206 625,054
Inventory 33,584,539 32,875,492
Prepaid income taxes 549,277 336,828
Deferred income taxes 326,830 371,491
Prepaid expenses 1,514,887 1,348,652
Other current assets 70,197 157,758
Total current assets 47,561,551 46,351,805
PROPERTY AND EQUIPMENT, at cost 23,992,208 22,199,943
Less accumulated depreciation and amortization (8,297,155) (7,037,665)
15,695,053 15,162,278
GOODWILL 953,356 971,786
OTHER INTANGIBLES, net of accumulated amortization of
$702,000 and $665,000 in 2015 and 2014, respectively 27,282 58,026
OTHER assets 329,684 329,979
$64,566,926 $62,873,874
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade$1,983,376 $1,255,218
Accrued expenses and other liabilities 6,045,552 5,394,514
Income taxes payable - -
Current maturities of capital lease obligation 72,686 -
Current maturities of long-term debt 231,952 3,702,500
Total current liabilities 8,333,566 10,352,232
DEFERRED INCOME TAXES 1,702,515 1,458,005
LONG-TERM DEBT, net of current maturities 3,479,273 1,940,625
CAPITAL LEASE OBLIGATION, net of current maturities 79,396 -
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, 11,275,641 and 11,239,157 shares issued at 2015 and 2014,
9,753,293 and 10,245,534 outstanding at 2015 and 2014, respectively 27,062 26,984
Paid-in capital 6,168,489 6,013,325
Retained earnings 53,067,234 46,664,829
Treasury stock at cost (1,522,348 shares at 2015 and 2014) (6,602,930) (2,894,068)
Accumulated other comprehensive income (1,687,679) (688,058)
Total stockholders' equity 50,972,176 49,123,012
$64,566,926 $62,873,874


TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2015 AND 2014
2015
(unaudited)
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$6,402,405 $7,706,921
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 1,567,172 1,436,624
Loss on disposal or abandonment of assets 31,064 18,820
Non-cash stock-based compensation 145,321 67,818
Deferred income taxes 289,171 183,490
Foreign currency translation (896,927) (727,664)
Net changes in assets and liabilities, net of effect of
business acquisitions:
Accounts receivable-trade, net 71,848 137,351
Inventory (709,047) (6,574,662)
Income taxes (212,449) (609,026)
Prepaid expenses 43,585 260,992
Other current assets 87,561 320,835
Accounts payable-trade 728,158 (629,419)
Accrued expenses and other liabilities 651,038 (414,368)
Total adjustments 1,796,495 (6,529,209)
Net cash provided by operating activities 8,198,900 1,177,712
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,164,040) (2,204,190)
Purchase of intangible assets (10,000) -
Proceeds from sale of assets 11,662 20,936
Decrease (increase) in other assets 295 11,980
Net cash (used in) provided by investing activities (2,162,083) (2,171,274)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in revolving credit loans (3,500,000) 3,500,000
Proceeds from notes payable and long-term debt 3,711,224 -
Payments on notes payable and long-term debt (2,143,125) (455,625)
Payments on capital lease obligations (79,889) -
Payment of dividend - (2,549,684)
Repurchase of common stock (treasury stock) (3,708,862) -
Proceeds from issuance of common stock 9,920 52,722
Net cash provided by (used in) financing activities (5,710,732) 547,413
NET (DECREASE) INCREASE IN CASH 326,085 (446,149)
CASH, beginning of period 10,636,530 11,082,679
CASH, end of period$10,962,615 $10,636,530
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period$330,004 $225,584
Income tax paid during the period, net of (refunds) 3,743,864 4,804,087
NON-CASH INVESTING ACTIVITIES:
Equipment purchased via capital lease arrangements$231,972 -


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.