Tandy Leather Factory, Inc. (Nasdaq: TLF) disclosed its financial performance for the fourth fiscal quarter and the entire year of 2023 today.
Key Highlights from 2023:
| Metrics | 2023 | 2022 | Change |
|---|---|---|---|
| Revenues (Sales) | $76.2 million | $80.3 million | -5.1% |
| Operating Income | $4.4 million | – | |
| Net Income | $3.8 million | $1.2 million | +216.7% |
| Gross Margins | 59.3% | 57.9% | +1.4% |
| Operating Expenses | $40.8 million | $45.1 million | -9.7% |
| Adjusted EBITDA* | $6.5 million | – | |
| Cash and Cash Equivalents | $12.2 million | – |
The company’s full-year sales amounted to $76.2 million in 2023, experiencing a decline from $80.3 million recorded in 2022. Operating expenses also saw a reduction from $45.1 million in 2022 to $40.8 million in 2023. Gross profit for the full year stood at $45.2 million, resulting in a margin of 59.2%, compared to $46.5 million and a 57.9% margin in 2022. Net income for 2023 surged to $3.8 million, in contrast to $1.2 million in the prior year.
In the fourth quarter of 2023, sales reached $20.8 million, down from $22.4 million in the same period of 2022. The gross profit for the fourth quarter of 2023 amounted to $11.5 million, a decrease from $12.5 million recorded in the fourth quarter of 2022. Operating income for the fourth quarter of 2023 was $1.7 million, a significant increase from $0.3 million in the fourth quarter of 2022.
As of December 31, 2023, the company held $12.2 million in cash and cash equivalents, compared to $8.0 million a year earlier. Additionally, the company’s inventory decreased slightly from $38.2 million as of December 31, 2022, to $38.0 million at the end of 2023.
“In 2023, Tandy focused on growing profits and cash amidst challenging retail conditions and persistent inflation. While our total sales saw a decline of about 5%, including the closure of 6 stores in 2022 and 2023, we managed to increase our operating income by over $3 million compared to 2022. This growth was primarily driven by prudent management of operating expenses and strategic capitalization of costs such as freight. Looking ahead to 2024, we remain committed to cost management while enhancing our sales efforts through selective store openings and continuous improvements in the customer experience.”
Janet Carr, Chief Executive Officer of Tandy Leather Factory
Adjusted EBITDA, a non-GAAP financial metric used by the company to facilitate comparisons with other firms’ operating performance, amounted to $6.5 million for the year ended December 31, 2023. A breakdown of the reconciliation from net income to Adjusted EBITDA is provided below:
| Item | Amount (in millions) |
|---|---|
| Net Income | $3.8 |
| Add back: | |
| Depreciation & Amortization | $1.2 |
| Interest Income | ($0.1) |
| Income Tax Provision | $0.8 |
| Stock-based Compensation | $0.8 |
| Adjusted EBITDA | $6.5 |
With 101 stores across 40 US states, six Canadian provinces, and one store in Spain, the company’s common stock trades on the Nasdaq Capital Market under the symbol “TLF.”
Despite facing challenges in the retail landscape and enduring inflationary pressures, Tandy Leather Factory, Inc. demonstrated resilience in its financial performance for the fourth quarter and full year of 2023. Through effective cost management and strategic initiatives, the company increased its operating income and net income, while also maintaining a healthy level of cash reserves. As Tandy Leather Factory looks forward to 2024, it remains focused on further optimizing its operations and driving sales growth through targeted expansions and enhanced customer experiences.
