EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 PRESS RELEASE
EXHIBIT 99.1

FOR IMMEDIATE RELEASE May 8, 2019

TANDY LEATHER FACTORY REPORTS 1ST 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