Tandy Leather Factory, Inc. (NASDAQ:TLF) Q4 2023 Earnings Call Transcript
Tandy Leather Factory, Inc. (NASDAQ:TLF) Q4 2023 Earnings Call Transcript March 26, 2024
Tandy Leather Factory, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Daniel Ross: Good morning, everyone. Thank you for joining us for a discussion of Tandy's Fourth Quarter 2023 Financial Results. I'm Dan Ross, General Counsel and Corporate Secretary for Tandy, and I will be moderating the discussion today. Our CEO, Janet Carr, will give just a brief overview of the quarter, and then we will devote the conference to investors’ questions and discussion. If you wish to ask a question or make a comment, please press the smiley face on the reactions button, which is located at the bottom of your Zoom screen, and then select raise hand. Janet will recognize the questioners and ask you to unmute your line. You'll need to ask your questions out loud yourself through your computer or phone audio. Please be sure to state your name and if applicable, your company when you begin your question.
I will not be reading questions or comments directly from the chat. With that, let's get started. Today's presentation will include statements other than historical results that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended. These statements reflect our expectations or estimates based on the information we have today, but are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause actual results to differ materially from the statements contained in this presentation. You are cautioned not to put undue reliance on these forward-looking statements.
The company assumes no obligation to update or otherwise revise these forward-looking statements, except as required by law. And now here is Janet Carr.
Janet Carr: Thank you, Dan. I want to start today by revisiting the outlook for 2023 that we shared with you at the end of 2022. With some economic signals flashing red, we wanted to position Tandy to weather a challenging consumer demand environment. We focused on growing profit and cash and took a conservative position on investments to drive sales growth. This meant managing both cost of sales and operating expenses, managing CapEx and continuing to optimize the retail fleet, seeking better renewals, moving to lower rent locations, closing stores with negative cash and/or a long-term trend of declining demand. And while our focus was not primarily on sales growth, we did continue to invest in building the foundation of the business.
This is what we said we were going to do, and it's what we did do. The results in snapshot speak for themselves. Sales were down about 5%, which we'll talk about in a minute. But gross margin rate was up, and that, combined with a significant decline in operating expenses, delivered $4.4 million in operating income, up $3 million over last year. Adjusted EBITDA, a non-GAAP metric which we're showing here to provide additional insight, was $6.5 million, up $2.5 million over last year. Turning to the balance sheet. Cash was up $4 million, over $4 million to $12.2 million. Inventory was essentially flat to last year, and we continued to have no debt. Turning to sales, at $76.2 million, sales were down 5.1% over 2022, driven by continued weak consumer demand.
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