Tandy Leather Factory, Inc. has announced its financial results for the second fiscal quarter of 2024, revealing a slight decline in revenue and profitability compared to the same period in 2023. Despite these challenges, the company managed to maintain a solid cash position, signaling resilience in a tough economic environment.
Highlights from Second Quarter 2024:
- Revenues were $17.3 million, down 1.1% from 2023
- Generated operating income of $63,000
- Net income of $0.1 million, down from $0.5 million in 2023
- Gross margins of 58.0%, down from 62.5% in 2023
- Operating expenses $10.0 million, down 1.7% from 2023
- Adjusted EBITDA* of $0.8 million
- Ended quarter with $11.5 million of cash and cash equivalents
In Q2 2024, Tandy Leather Factory reported revenues of $17.3 million, a 1.1% decrease from the $17.5 million posted in Q2 2023. The company’s gross profit also saw a decline, dropping to $10.0 million from $10.9 million in the previous year.
This reduction in profitability is attributed to a combination of lower sales and a decrease in gross margins, which fell to 58.0% from 62.5% in Q2 2023.
Operating income for the quarter came in at $63,000, down significantly from the $0.8 million recorded in the same period last year.
Net income also experienced a sharp decline, falling to $0.1 million from $0.5 million in Q2 2023. This translated to basic and diluted earnings per share of $0.01, compared to $0.06 in the previous year.
“Our second quarter sales declined by about 1%, an improvement in trend over Q1, but continuing to reflect our customers’ lower discretionary income and sluggish spending overall,”
Janet Carr, CEO
The CEO also highlighted that the company’s gross margin rate was impacted by increased promotional activities and accounting adjustments made in Q2 2023, which had previously bolstered margins.
Despite the decline in sales and profitability, Tandy Leather Factory demonstrated effective cost management, reducing operating expenses by nearly 2% to $10.0 million.
Carr emphasized the importance of this cost discipline, stating, “We managed costs to compensate for a decline in sales and gross margin rate.”
One of the standout points in the company’s Q2 2024 report is its strong cash position. As of June 30, 2024, Tandy Leather Factory held $11.5 million in cash and cash equivalents, up from $10.0 million a year earlier.
This increase in liquidity provides the company with a solid foundation to navigate ongoing economic challenges and invest in future growth opportunities.
The company’s inventory levels also showed a slight decrease, with $37.1 million in inventory as of June 30, 2024, down from $38.0 million at the end of 2023.
This reduction reflects the company’s efforts to manage its inventory more efficiently in response to lower sales volumes.
Tandy Leather Factory also reported an Adjusted EBITDA of $0.8 million for Q2 2024. This non-GAAP financial measure, which the company uses to compare its operating performance to that of other companies, provides a more comprehensive view of its financial health.
The Adjusted EBITDA calculation includes adding back $0.3 million in depreciation and amortization, $0.4 million in stock-based compensation, and $0.1 million in income tax provision, while subtracting $0.1 million in interest income.
In conclusion, Tandy Leather Factory’s Q2 2024 results reflect the ongoing challenges posed by a difficult economic environment, particularly in terms of consumer spending. However, the company’s strong cash position and effective cost management demonstrate its resilience and ability to navigate these challenges. As the company continues to adapt to market conditions, it remains focused on maintaining financial stability and positioning itself for future growth.
Investors and stakeholders are encouraged to direct any questions or inquiries to Tandy Leather Factory’s investor relations hotline at investorrelations@tandyleather.com.
