Tandy Leather Factory Inc (TLF) has reported a 9.99 percent fall in profit for the quarter ended Sep. 30, 2016. The company has earned $1 million, or $0.11 a share in the quarter, compared with $1.11 million, or $0.11 a share for the same period last year.
Revenue during the quarter dropped 3.76 percent to $18.63 million from $19.36 million in the previous year period. Gross margin for the quarter expanded 138 basis points over the previous year period to 62.51 percent. Total expenses were 91.73 percent of quarterly revenues, up from 90.39 percent for the same period last year. That has resulted in a contraction of 134 basis points in operating margin to 8.27 percent.
Operating income for the quarter was $1.54 million, compared with $1.86 million in the previous year period.
Shannon L. Greene, chief executive officer, commented, “While both sales and earnings this quarter were lower than last year’s third quarter, the results were not unexpected. Sales continue to be challenging as we have discussed all year, but our earnings are ahead of internal expectations. Said another way, we are achieving success in growing earnings in spite of weak sales. Despite the economic uncertainty, we are planning several new stores in markets that we believe will contribute favorably to our financial results over time.”
Operating cash flow drops significantly
Tandy Leather Factory Inc has generated cash of $1.88 million from operating activities during the nine month period, down 47.54 percent or $1.70 million, when compared with the last year period.
The company has spent $1.37 million cash to meet investing activities during the nine month period as against cash outgo of $1.34 million in the last year period. It has incurred net capital expenditure of $1.37 million on net basis during the nine month period, up 2.12 percent or $0.03 million from year ago period.
The company has spent $0.02 million cash to carry out financing activities during the nine month period as against cash outgo of $5.63 million in the last year period.
Cash and cash equivalents stood at $11.45 million as on Sep. 30, 2016, up 58.06 percent or $4.21 million from $7.24 million on Sep. 30, 2015.
Working capital increases
Tandy Leather Factory Inc has recorded an increase in the working capital over the last year. It stood at $43.81 million as at Sep. 30, 2016, up 18.06 percent or $6.70 million from $37.11 million on Sep. 30, 2015. Current ratio was at 6.01 as on Sep. 30, 2016, up from 5.17 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 224 days for the quarter from 393 days for the last year period. Days sales outstanding were almost stable at 3 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 245 days for the quarter compared with 415 days for the previous year period. At the same time, days payable outstanding went down to 24 days for the quarter from 26 for the same period last year.
Debt increases substantially
Tandy Leather Factory Inc has witnessed an increase in total debt over the last one year. It stood at $7.52 million as on Sep. 30, 2016, up 102.55 percent or $3.81 million from $3.71 million on Sep. 30, 2015. Short-term debt stood at $0.23 million as on Sep. 30, 2016. Total debt was 10.77 percent of total assets as on Sep. 30, 2016, compared with 5.93 percent on Sep. 30, 2015. Debt to equity ratio was at 0.14 as on Sep. 30, 2016, up from 0.08 as on Sep. 30, 2015. Interest coverage ratio improved to 35.41 for the quarter from 8.15 for the same period last year.
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