EX-99.1 3 exhibit99-1.htm EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Press Release
EXHIBIT 99.1

FOR IMMEDIATE RELEASE                         May 1, 2007

TANDY LEATHER FACTORY REPORTS 1ST QUARTER 2007 FINANCIAL RESULTS

FORT WORTH, TEXAS - Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the first quarter of 2007. Net income for the quarter ended March 31, 2007 was $1.3 million, equal to that of the first quarter of 2006. Fully-diluted earnings per share for the quarter was $0.12 in the current quarter, the same as last year’s first quarter. Total sales for the first quarter were $14.5 million, up slightly from $14.4 million in the same quarter last year.

Sales from the Retail Leathercraft operation, consisting of the Tandy Leather retail store chain, increased $713,000 in the first quarter, a 13% improvement over last year's first quarter. The chain consists of sixty-five stores as of March 31, 2007, compared to fifty-six retail stores a year ago. Three new stores were opened in the first quarter of 2007. First quarter sales for the Wholesale Leathercraft operation, consisting of the Leather Factory wholesale centers and the National Account group, decreased $280,000 or 3% over the same quarter last year.
 
Consolidated gross profit margins improved from 56.3% in the first quarter of 2006 to 59.3% in the first quarter of 2007. Operating expenses increased from $6.1 million in the first quarter of 2006 to $6.6 million in the first quarter of 2007, increasing as a percentage of revenue from 42.1% in 2006 to 45.8% in 2007. Expenses associated with new retail stores (rent, personnel, utilities, etc.), increased advertising and marketing, and employee benefits were the primary contributors to the additional expense.
 
Ron Morgan, Chief Executive Officer and President, commented, “It’s been a tough first quarter. A 1% sales gain for the quarter was well below our expectations coming into the year or what we’ve been used to. With the expenses associated with the twelve new stores since the first quarter of 2006, frankly, I am pleased that our earnings matched that of last year’s first quarter. Those new expenses coupled with flat sales could have pushed us the other way. As expected, our gross profit margin improved significantly due to product mix. When we sell less leather and more hardware, tools, conchos, etc., sales tend to be softer, but gross margin improves. I expect we’ll see some improvement in sales for the second quarter, although April won’t show much. The motivation level in our managers is very high right now as they’re all disappointed with their first quarter results.”


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, 67 Tandy Leather retail stores, located in 31 states and 4 Canadian provinces, and Mid-Continent Leather Sales, one store located in Oklahoma. Its common stock trades on the American Stock Exchange with the symbol "TLF".
 
Contact:         Ron Morgan, Tandy Leather Factory, Inc.       (817) 496-4414  
       Shannon L. Greene, Tandy Leather Factory, Inc.      sgreene@tandyleather.com

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

 
3/31/07
(unaudited)
12/31/06
Cash
$6,001,607
$6,739,891
Accounts receivable, net of allowance for doubtful accounts
2,894,793
2,599,279
Inventory
18,344,527
17,169,358
Deferred income taxes
276,212
266,018
Other current assets
1,469,749
1,089,258
Total current assets
28,986,888
27,863,804
     
Property and equipment, net
1,963,253
1,876,605
     
Goodwill and other intangibles, net
1,398,330
1,106,815
Other assets
1,150,474
1,069,411
 
$33,498,945
$31,916,635
     
     
Accounts payable
$2,551,457
$1,776,646
Accrued expenses and other liabilities
2,484,623
3,424,010
Income taxes payable
427,810
59,392
Current maturities of capital lease obligations and long-term debt
78,206
111,723
Total current liabilities
5,542,096
5,371,771
     
Deferred income taxes
216,534
221,621
Capital lease obligations and long-term debt, net of current maturities
-
-
Total Liabilities
5,758,630
5,593,392
     
Common stock
26,207
26,124
Paid-in capital
5,351,044
5,292,591
Retained earnings
22,295,896
20,949,540
Treasury stock
(25,487)
(25,487)
Accumulated other comprehensive loss
92,655
80,475
Total Stockholders' Equity
27,740,315
26,323,243
 
$33,498,945
$31,916,635



TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

 
Three Months
 
2007
2006
NET SALES
$14,507,805
$14,413,649
COST OF SALES
5,909,852
6,299,515
Gross Profit
8,597,953
8,114,134
     
OPERATING EXPENSES
6,643,172
6,072,346
INCOME FROM OPERATIONS
1,954,781
2,041,788
     
Interest expense
-
-
Other, net
(48,996)
(18,110)
Total other expense
(48,996)
(18,110)
     
INCOME BEFORE INCOME TAXES
2,003,777
2,059,898
PROVISION FOR INCOME TAXES
657,422
713,635
NET INCOME
$1,346,355
$1,346,263
     
NET INCOME PER COMMON SHARE - BASIC
$0.12
$0.13
     
NET INCOME PER COMMON SHARE-DILUTED
$0.12
$0.12
     
WEIGHTED AVG NUMBER OF SHARES OUTSTANDING:
    
Basic
10,893,359
10,756,745
Diluted
11,150,246
11,102,906
 


Selected financial data:

 
Quarter Ended 03/31/07
  
Quarter Ended 03/31/06
 
 
Sales
  
Operating
Income
  
 
Sales
  
Operating
Income
Wholesale Leathercraft
$7,940,487
  
$1,346,203
  
$8,220,397
  
$1,519,020
Retail Leathercraft
6,254,219
  
553,748
  
5,541,082
  
495,824
Other
313,099
  
54,830
  
652,170
  
26,944
Total Operations
$14,507,805
  
$1,954,781
  
$14,413,649
  
$2,041,788
 
 
 
Wholesale Leathercraft
Quarter Ended 03/31/07
  
Quarter Ended 03/31/06
 
# of stores
Sales
  
# of stores
Sales
Distribution centers
29
$6,624,606
  
29
$7,112,301
New store-Midcontinent Leather Sales
1
185,263
  
-
-
National account group
  
1,130,618
    
1,108,097
Total Sales - Wholesale Leathercraft
 
$7,940,487
    
$8,220,397
 

 
Retail Leathercraft
Quarter Ended 03/31/07
  
Quarter Ended 03/31/06
 
# of stores
Sales
  
# of stores
Sales
Same store sales
53
$5,529,927
  
53
$5,490,955
New store sales
12
724,292
  
3
50,127
Total Sales - Retail Leathercraft
 
$6,254,219
    
$5,541,082



TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

 
2007
  
2006
CASH FLOWS FROM OPERATING ACTIVITIES:
      
Net income
$1,346,355
  
$1,346,263
Adjustments to reconcile net income to net cash provided by operating activities:
      
Depreciation & amortization
105,739
  
97,185
Gain on disposal of assets
-
  
-
Non-cash stock-based compensation
7,625
  
22,480
Deferred income taxes
(15,281)
  
43,249
Other
11,092
  
(10,594)
Net changes in assets and liabilities:
      
Accounts receivable-trade, net
(239,162)
  
(806,423)
Inventory
(824,948)
  
625,395
Income taxes
368,418
  
520,243
Other current assets
(396,474)
  
(566,483)
Accounts payable
726,168
  
1,047,227
Accrued expenses and other liabilities
(939,386)
  
(655,252)
Total adjustments
(1,196,209)
  
317,027
Net cash provided by operating activities
150,146
  
1,663,290
       
CASH FLOWS FROM INVESTING ACTIVITIES:
      
Purchase of property and equipment
(200,097)
  
(112,792)
Payments in connection with businesses acquired
(650,000)
  
-
Proceeds from sale of assets
25,339
  
-
Increase in other assets
(81,063)
  
461
Net cash used in investing activities
(905,821)
  
(112,331)
       
CASH FLOWS FROM FINANCING ACTIVITIES:
      
Net increase (decrease) in revolving credit loans
-
  
-
Payments on notes payable and long-term debt
(33,517)
  
(33,516)
Proceeds from issuance of common stock
50,910
  
37,800
Net cash provided by (used in) financing activities
17,393
  
4,284
       
NET CHANGE IN CASH
(738,284)
  
1,555,243
CASH, beginning of period
6,739,891
  
3,215,727
       
CASH, end of period
$6,001,607
  
$4,770,970
       
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      
Interest paid during the period
-
  
-
Income taxes paid during the period, net of (refunds)
$304,908
  
$48,761