8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

Form 8-K

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported:) May 8, 2019

Tandy Leather Factory, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation

1-12368	75-2543540
(Commission File Number)	(IRS Employer Identification Number)

1900 Southeast Loop 820, Fort Worth, Texas, 76140

(Address of Principal Executive Offices, including zip code)

(817) 872-3200

(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see  General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.  Results of Operations and Financial Condition

     Tandy Leather Factory, Inc. on May 8, 2019 issued a press release regarding its financial results for the three months ended March 31, 2019.  A copy of the press release is attached as Exhibit 99.1.

     The information in this report and the exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.  Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

Not applicable.

(b) Pro forma financial information.

Not applicable.

(c) Exhibits.

No.Exhibit

99.1Press release dated May 8, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TANDY LEATHER FACTORY, INC.
Date:  May 9, 2019	By: /s/ Tina Castillo
	Tina Castillo, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated May 8, 2019

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASEMay 8, 2019

TANDY LEATHER FACTORY REPORTS 1^ST QUARTER RESULTS

Sales grew 2.4% over Prior Year, while Income from Operations was down 33.9%,

and Cash from Operations was $3.0 million;

Strategic initiatives are on track

FORT WORTH, TEXAS – Tandy Leather Factory, Inc. (NASDAQ: TLF) today reported financial results for the first quarter ended March 31, 2019.  A conference call will be conducted by senior management at 10:00 am Eastern Time on May 9, 2019.  Dial-in details are referenced below.

· Net sales increased 2.4% to $20.8 million, compared to prior year's $20.3 million (consolidated same store sales increased 2.8%, while new stores added $0.2 million of sales and closed stores accounted for decline of $0.3 million).  The overall improvement in sales was primarily attributable to the launch of a new sewing machine.

· Gross profit declined 3.1% or $0.4 million to $12.4 million, compared to prior year's $12.8 million.  This decline was due to product mix, as well as promotions and clearance activities related to our Australia store closure at the end of February 2019.

· Operating costs increased $0.2 million compared to prior year, primarily due to $0.4 million of non-recurring store closure cost related to the three stores closed during the first quarter of 2019 and $0.2 million of higher non-cash share-based compensation expense.  These increases were offset by cost savings from our UK store that closed in the third quarter of 2018, lower print and postage costs, as well as the pause in store relocations.

· Operating income declined $0.6 million or 33.9% compared to prior year due to the $0.4 million decrease in gross profit and $0.2 million increase in operating expenses.

· Diluted EPS was $0.10 compared to prior year's $0.14.

· At March 31, 2019, cash totaled $12.7 million, a decrease of $11.4 million from year-end 2018.  During the first quarter of 2019, cash provided by operations equaled $3.0 million, and we paid off $9.0 million of debt, purchased $5.0 million of US Securities with maturities less than one year, and bought back $0.7 million of treasury stock.

· At March 31, 2019, inventory totaled $30.6 million, a decrease of $3.3 million from the beginning of the year.

· We plan to close our remaining store in the UK by mid-June 2019, leaving our Spain store as the only store based outside of North America.  We are now fulfilling sales orders from our UK and Australia customer base from our Texas distribution center.

Commenting on the results, Janet Carr, Chief Executive Officer, said, "As we've said over the last 6 months, we're focused on strategic initiatives to reinvigorate the brand and develop a new operating model to transform the business for long-term growth.  To that end, in Q1, we made progress against improving our inventory position and shuttering unproductive stores.  While an operating income decline of 33.9% versus last year is significant, it reflects the start of our investment in rebuilding for growth.  There's still a lot of work to be done, but we fully expect this investment to deliver longer-term earnings growth."

Consolidated Reporting

As of January 1, 2019, we operate as a single segment and report on a consolidated basis.  Prior to January 1, 2019, we operated and reported in two segments:  North America and International.   In early 2019, we announced several strategic initiatives to drive future sales growth and long-term profitability.  Key actions include developing a new operating model to better serve our retail and commercial customers, as well as reducing our store management structure from eleven districts reporting to two regional mangers into eight zones reporting to a single vice president.  As a result of these changes in the management of our retail stores and our decision to substantially close all of our international stores, with only one international store expected to remain open in Spain, we have concluded that there is currently only one reportable segment.  All prior year data discussed throughout this press release has been restated to conform to the new reporting structure.  There is no change to our consolidated financial position or results.

Conference Call Information

A conference call will be conducted by senior management at 10:00 a.m. Eastern Time on May 9, 2019, 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 14, 2019 and can be accessed by calling 855-859-2056 or 404-537-3406.  For both, reference conference ID number 2183438.  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 two International stores located in the United Kingdom 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

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 (UNAUDITED):

	Qtr ended 3/31/19			Qtr ended 3/31/18			$ Change			% Change
Sales	$	20,784,652		$	20,288,918		$	495,734			2.4	%
Gross profit		12,450,805			12,842,962			(392,157	)		(3.1	)%
Gross margin		59.9	%		63.3	%
Operating expenses		11,281,377			11,074,001			207,376			1.9	%
Income from operations	$	1,169,428		$	1,768,961			(599,533	)		(33.9	)%

	Quarter Ended 3/31/19				Quarter Ended 3/31/18
	# of stores		Net Sales		# of stores		Net Sales		$ Change			% Change
Same stores*		115	$	20,223,007		115	$	19,679,491		543,516			2.8	%
New stores		2		211,782		-		-		211,782			100	%
Closed stores		4		349,863		4		609,427		(259,564	)		(42.6	%)
Total Sales		117	$	20,784,652		115	$	20,288,918		495,734			2.4	%

*Same store sales are defined as sales from existing stores that were opened during the same comparable fiscal period

TANDY LEATHER FACTORY, INC.

(UNAUDITED)

CONSOLIDATED BALANCE SHEETS

	3/31/19			12/31/18
ASSETS
CURRENT ASSETS:
Cash	$	12,679,373		$	24,070,351
Short term investments – US Treasuries		4,999,750			-
Accounts receivable-trade, net of allowance for doubtful accounts
of $12,940 and $15,703 in 2019 and 2018, respectively		456,537			408,170
Inventory		30,564,322			33,867,276
Prepaid income taxes		272,028			383,478
Prepaid expenses		1,537,367			1,244,754
Other current assets		174,043			161,208
Total current assets		50,683,420			60,135,237
PROPERTY AND EQUIPMENT, at cost		27,863,939			28,005,563
Less accumulated depreciation and amortization		(13,921,523	)		(13,606,266	)
		13,942,416			14,399,297
OPERATING LEASE ASSETS		6,389,561			-
GOODWILL		956,945			954,765
OTHER INTANGIBLES, net of accumulated amortization of
$714,000 and $713,000 in 2019 and 2018, respectively		15,833			16,500
OTHER ASSETS		379,661			386,107
	$	72,367,836		$	75,891,906
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade	$	897 196		$	1,215,490
Accrued expenses and other liabilities		3,752,711			4,939,829
Operating lease liabilities		3,340,843			-
Current maturities of long-term debt		-			747,335
Total current liabilities		7,990,750			6,902,654
DEFERRED INCOME TAXES		1,258,721			1,308,265
OPERATING LEASE LIABILITIES, noncurrent		3,427,705			-
LONG-TERM DEBT, net of current maturities		-			8,220,683
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, 11,348,186 and 11,346,773 shares issued at 2019 and 2018,
8,934,024 and 9,060,561 outstanding at 2019 and 2018, respectively		27,234			27,232
Paid-in capital		7,344,644			7,158,821
Retained earnings		66,188,614			65,716,761
Treasury stock at cost (2,414,162 and 2,286,217 shares at 2019 and 2018)		(12,646,467	)		(11,931,850	)
Accumulated other comprehensive (loss)		(1,223,365	)		(1,510,660	)
Total stockholders' equity		59,690,660			59,460,304
	$	72,600,628		$	75,891,906

TANDY LEATHER FACTORY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31,

	2019			2018
NET SALES	$	20,784,652		$	20,288,918
COST OF SALES		8,333,847			7,445,956
Gross profit		12,450,805			12,842,962
OPERATING EXPENSES		11,281,377			11,074,001
INCOME FROM OPERATIONS		1,169,428			1,768,961
OTHER EXPENSE (INCOME):
Interest expense		32,383			64,642
Other (income), net		(33,041	)		(38,872	)
Total other expense		(658	)		25,770
INCOME BEFORE INCOME TAXES		1,170,086			1,743,191
PROVISION FOR INCOME TAXES		301,123			469,572
NET INCOME	$	868,963		$	1,273,619
NETINCOME PER COMMON SHARE:
Basic	$	0.10		$	0.14
Diluted	$	0.10		$	0.14
Weighted Average Number of Shares Outstanding:
Basic		9,009,752			9,264,446
Diluted		9,010,037			9,264,811

TANDY LEATHER FACTORY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31,

	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	868,963		$	1,273,619
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		495,449			465,522
(Gain) / loss on disposal of abandonment of assets		(3,794	)		798
Non-cash stock-based compensation		185,825			28,969
Deferred income taxes		(33,861	)		(49,498	)
Exchange loss		2,154			2,994
Net changes in assets and liabilities:
Accounts receivable-trade, net		(48,367	)		(42,110	)
Inventory		3,302,954			539,337
Prepaid expenses		(292,613	)		(103,058	)
Other current assets		(12,835	)		110,617
Accounts payable-trade		(318,294	)		6,055
Accrued expenses and other liabilities		(1,205,241	)		(1,246,439	)
Income taxes payable		95,767			146,483
Total adjustments		2,167,144			(140,330	)
Net cash provided by operating activities		3,036,107			1,133,289
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(30,893	)		(240,020	)
Purchase of short-term investments – US Treasuries		(4,999,750	)		-
Proceeds from sale of assets / insurance		12,552			-
Decrease in other assets		6,446			957
Net cash used in investing activities		(5,011,645	)		(239,063	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt		-			540,940
Repurchase of common stock (treasury stock)		(714,614	)		(540,940	)
Payments on notes payable and long-term debt		(8,968,018	)		-
Net cash (used in) provided by financing activities		(9,682,635	)		-
Effect of exchange rate changes on cash		267,195			21,394
NET (DECREASE) INCREASE IN CASH		(11,390,978	)		915,620
CASH, beginning of period		24,070,351			18,337,258
CASH, end of period	$	12,679,373		$	19,252,878
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period	$	32,383		$	64,642
Income tax paid during the period, net of (refunds)	$	235,496		$	372,587