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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Tandy Leather Factory Reports 1st Quarter Results

May 8, 2019

FORT WORTH, Texas, May 08, 2019 (GLOBE NEWSWIRE) -- 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 Qtr ended 3/31/19 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 Quarter Ended 3/31/19 3/31/18 ------------------- ------------------- ---------- -------- # of Net Sales # of Net Sales $ % stores stores 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