Tandy Leather Factory Reports Second Quarter 2022 Results; Announces Resignation of CFO

Rhea-AI Summary

Tandy Leather Factory, Inc. (TLFA) reported second quarter financial results for 2022, revealing net sales of $18.4 million, slightly down from $18.6 million in 2021. The gross profit was $10.5 million with a gross margin of 57.0%. However, the company experienced an operating loss of $0.7 million and a net loss of $0.6 million or $0.07 per diluted share. Cash and cash equivalents decreased to $5.6 million, and inventory was at $40.1 million. CFO Michael Galvan plans to resign effective August 31, 2022, as the company seeks a replacement.

Positive

• Net sales decline of less than 1% indicates improved demand responsiveness.
• CFO's departure may provide an opportunity for new leadership.

Negative

• Operating loss of $0.7 million suggests ongoing financial struggles.
• Net loss of $0.6 million compared to net income of $0.06 in the previous year raises concerns.

FORT WORTH, Texas, Aug. 15, 2022 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Pink: TLFA) today announced the Company’s financial results for the second quarter ended June 30, 2022.

Second Quarter Highlights:

• Net sales of $18.4 million
• Gross profit of $10.5 million and a gross margin of 57.0%
• Operating loss of $0.7 million
• Net loss of $0.6 million, or $0.07 per diluted share
• Adjusted EBITDA* of ($0.1 million)
• Ended the quarter with $5.6 million in cash and cash equivalents

Janet Carr, Chief Executive Officer of the Company, said, “Our second quarter net sales were down less than 1%, better than the trend we saw during the first quarter, largely as a result of adjustments we made in response to the continued lower consumer demand driven by inflation and uncertainty related to ongoing global political, economic and public health concerns.”

“The continued weaker consumer demand environment coupled with rising labor and other costs we saw during the second quarter are likely here to stay for some time to come. We’re responding by managing our costs and conserving our cash to drive the business. We continue to make steady progress on our growth initiatives.”

Tandy Leather Factory’s second quarter sales were $18.4 million in 2022, down from $18.6 million in 2021. 2022 second quarter gross profit was $10.5 million versus $11.3 million in 2021. As of June 30, 2022, the Company held $5.6 million of cash and cash equivalents, down from $10.2 million at year end but in line with the Company’s June 30, 2021, balance of $5.7 million. The Company held inventory of $40.1 million, versus $43.7 million as of June 30, 2021. The Company had net basic and diluted net losses in the quarter of $0.07 per diluted share, which was down from net basic and diluted income of $0.06 in the prior year. Additional details regarding the Company’s second quarter 2022 results can be found in its Quarterly Report on Form 10-Q, filed with the SEC on August 15, 2022.

The Company also announced today that its Chief Financial Officer, Michael Galvan, has notified the Company of his intention to resign from his position, effective August 31, 2022. The Company has retained the consulting firm SeatonHill Partners, LP, to provide interim assistance while the Company conducts a search for a new full-time CFO.

Ms. Carr said, “We are so grateful to Mike for all his contributions to Tandy. Mike joined us during our difficult financial restatement period and guided our finance and reporting functions through the process and back to regular financial reporting status, while implementing dramatic upgrades in our systems and controls. We wish him all the best in his next endeavor and beyond.”

As previously announced, the Company will host an investor presentation online (via Zoom) and by phone on August 17, 2022, at 10:00 am CT to discuss the Company’s second quarter operating results and longer-term strategies. Investors and other interested participants may attend the presentation on the web or by phone as follows:

Join Zoom Meeting online: https://us02web.zoom.us/j/88653960913
Meeting ID: 886 5396 0913

By phone using one tap mobile
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Or Dial by your location and when prompted enter Meeting ID: 886 5396 0913
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Meeting ID: 886 5396 0913

Find your local number: https://us02web.zoom.us/u/keCOQxxC9X

The Company’s common stock currently trades on the OTC “Pink Current Information” Market. The Company submitted its application to re-list its stock on Nasdaq and is working to obtain Nasdaq’s final approval.

* Adjusted EBITDA is a non-GAAP financial measure that excludes depreciation and amortization, interest expense, income tax provision (benefit), non-routine items, and stock-based compensation expense (which does not require settlement in cash) in order to provide helpful information to investors to facilitate a comparison of the Company’s operating performance to that of other companies. Non-routine items are primarily legal and accounting costs associated with the restatement. The following is a reconciliation of the Company’s net loss to Adjusted EBITDA (in thousands):

Reconciliation of Net loss to Adjusted EBITDA
		Three Months Ended June 30, 2022
Net loss		$	(589	)
Add back:
Depreciation and amortization		295
Interest expense		8
Income tax benefit		(178		)
Stock-based compensation		225
Non-routine items related to restatement		169
Adjusted EBITDA		(70		)

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 104 North American stores located in 40 US states and six Canadian provinces, and one store located in Spain. Its common stock currently trades over the counter with the symbol “TLFA”. 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:
Janet Carr
Tandy Leather Factory, Inc.
(817) 872-3200
janet.carr@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.

FAQ

What were Tandy Leather Factory's financial results for Q2 2022?

Tandy Leather Factory reported Q2 2022 net sales of $18.4 million, a gross profit of $10.5 million, and a net loss of $0.6 million.

What impact did inflation have on Tandy Leather's sales?

Inflation and economic uncertainty led to continued lower consumer demand, which affected Tandy Leather's sales.

What significant management change occurred at Tandy Leather?

CFO Michael Galvan announced his resignation effective August 31, 2022, prompting a search for a new CFO.

What is Tandy Leather's current cash position?

As of June 30, 2022, Tandy Leather held $5.6 million in cash and cash equivalents.

How does Tandy Leather's Q2 2022 performance compare to the previous year?

Net sales decreased from $18.6 million in Q2 2021 to $18.4 million in Q2 2022, with gross profit down from $11.3 million.