Financial Performance - Net sales for Q3 2024 were $17,351,000, a decrease of 1.1% from $17,542,000 in Q3 2023[9] - Gross profit for Q3 2024 was $10,022,000, down 8.4% from $10,938,000 in Q3 2023[9] - The company reported a net loss of $132,000 in Q3 2024, compared to a net income of $636,000 in Q3 2023[9] - For the nine months ended September 30, 2024, net income was $495,000, down from $1,831,000 in the same period of 2023[11] - Consolidated net sales for the quarter ended September 30, 2024, decreased by $0.2 million, or 1.1%, compared to the same period in 2023, attributed to temporary store closures and weak consumer demand[78] - Gross profit for the quarter decreased by $0.9 million, or 8.4%, with a gross margin percentage of 57.8%, down 460 basis points year-over-year[81] - Consolidated net sales for the nine months ended September 30, 2024, decreased by $1.5 million, or 2.7%, compared to the same period in 2023, attributed to temporary store closures and weak consumer demand[88] - Gross profit decreased by $2.7 million, or 8.1%, with gross margin percentage declining to 57.4% from 60.8% year over year[87] - Income from operations fell to $445,000, down 83.3% from $2.65 million in the same period last year[87] Operating Expenses - Operating expenses increased to $10,289,000 in Q3 2024, compared to $10,058,000 in Q3 2023, reflecting a rise of 2.3%[9] - Operating expenses for the quarter increased by $231,000, or 2.3%, compared to the same period in 2023[82] - Operating expenses for the quarter increased by $0.2 million or 2.3% compared to the prior year, with operating expenses as a percentage of sales rising to 59.3% from 57.3%[85] - Operating expenses include all selling, general and administrative costs, which are essential for maintaining operations[27] Cash and Liquidity - Cash and cash equivalents at the end of Q3 2024 were $10,055,000, compared to $8,623,000 at the end of Q3 2023, representing an increase of 16.6%[11] - As of September 30, 2024, the company had cash balances totaling $10.1 million[95] - Cash from operations generated $0.1 million for the nine months ended September 30, 2024, compared to $1.2 million in the same period in 2023[101] - The company has a credit facility of up to $5,000,000 with JPMorgan Chase Bank, with no funds borrowed as of the filing date, maintaining compliance with all covenants[55] - The company has a credit facility of up to $5 million with JPMorgan Chase Bank, with no funds borrowed as of the reporting date[98] - The company approved a new stock repurchase program allowing for the repurchase of up to $5 million of common stock until September 30, 2026[100] Inventory and Store Operations - The company operates 100 retail stores, with 90 in the U.S., nine in Canada, and one in Spain, as of September 30, 2024[18] - The company closed 5 stores and opened 2 new stores, resulting in a net decrease of 3 stores, with a total of 100 stores as of September 30, 2024[89] - As of September 30, 2024, total inventory on hand was $38,149,000, an increase from $37,993,000 on December 31, 2023, representing a 0.4% growth[34] Tax and Interest Income - The effective tax rate for the three months ended September 30, 2024, was 27.7%, compared to 24.0% for the same period in 2023, indicating an increase of 3.7 percentage points[56] - The effective tax rate for the nine months ended September 30, 2024, was 26.5%, compared to 28.8% for the same period in 2023[94] - Interest income for the nine months ended September 30, 2024, was $266,000, compared to no interest income in the same period of 2023[9] Stock-Based Compensation - The company reported stock-based compensation expenses of $180,000 for the three months ended September 30, 2024[14] - Stock-based compensation expense for the three months ended September 30, 2024, was $0.2 million, consistent with the same period in 2023[59] - The balance of non-vested restricted stock and RSU awards as of September 30, 2024, was 714,000 shares, with a weighted average price of $4.38[59] - As of September 30, 2024, there was unrecognized compensation cost related to non-vested, service-based RSU awards of $1.2 million, to be recognized over the next five years[62] - The company granted a total of 276,000 service-based RSUs to the CEO in October 2023, which will vest over the next three years[58] - The company’s stock-based compensation plan reserves up to 800,000 shares for restricted stock and RSU awards, with a minimum vesting period of four years[57] Other Financial Metrics - The company experienced a decrease in comprehensive income, reporting a loss of $98,000 in Q3 2024 compared to a gain of $451,000 in Q3 2023[9] - The company recognized $0.3 million in gift card revenue for the nine months ended September 30, 2024, compared to $0.4 million in 2023[24] - As of September 30, 2024, the gift card liability was $0.1 million, down from $0.3 million at the end of 2023[24] - Foreign currency translation adjustments for the nine months ended September 30, 2024, resulted in a net gain of $170,000[14] - Total adjustments to reconcile net income to net cash provided by operating activities were $(458,000) for the nine months ended September 30, 2024[11] - The company’s other international net sales were less than 2.0% of consolidated net sales for the three and nine months ended September 30, 2024[25] Asset Management - The company evaluates long-lived assets quarterly for impairment, with triggering events potentially including declines in operational performance or planned asset use changes[40] - The carrying values of financial instruments approximated their fair values as of September 30, 2024, with no transfers between fair value hierarchy levels during the reporting period[42] - The company’s inventory valuation includes provisions to reduce carrying amounts when costs exceed net realizable value, ensuring accurate financial reporting[29] - The weighted average amortization period for trademarks and copyrights is 15 years, with expected annual amortization expense of less than $0.01 million over the next five years[53] - Amortization expense related to other intangible assets was less than $0.01 million during each of the nine months ended September 30, 2024, and 2023, reflecting minimal impact on financials[53] - The allowance for expected credit losses for trade receivables was less than $0.1 million as of September 30, 2024, December 31, 2023, and January 1, 2023, indicating stable credit risk management[52]
Tandy Leather Factory(TLF) - 2024 Q3 - Quarterly Report