SOURCE: Talon International

Talon International

November 12, 2015 16:01 ET

Talon International, Inc. Reports 2015 Third Quarter and Nine Months Financial Results

LOS ANGELES, CA--(Marketwired - Nov 12, 2015) - Talon International, Inc. (OTCQB: TALN), a leading global supplier of zippers, apparel fasteners, trim and stretch technology products, reported financial results for the third quarter and nine months ended September 30, 2015.

Highlights

  • Sales in Q3 2015 were $10.0 million, a 15.0% decrease versus Q3 2014
  • Talon Tekfit stretch technology posted sales gains of $425,000 over Q3 2014
  • New financing was secured and Credit Agreement amended with the Company's bank, adding financial flexibility

Financial Results

Sales for the quarter ended September 30, 2015 were $10.0 million, reflecting a decline of $1.8 million or 15.0% as compared to the same period in 2014. Talon Zipper sales for the quarter were $4.0 million or $2.0 million lower than the same period in 2014, decreasing by $1.1 million within our mass merchandising brand customers and by $913,000 in sales to our specialty retail brands customers as compared to 2014. Talon Trim revenues declined by $153,000 compared to the same period in 2014 to $5.5 million. Substantially all Talon Trim sales are to the Company's specialty retail branded customers. Talon Tekfit sales increased by $425,000 compared to the same period in 2014, mainly due to new Talon Tekfit programs and customers. Sales for the nine months ended September 30, 2015 were $36.6 million, a decrease of 6.3% from the same period in 2014.

"Lower sales this quarter principally reflected continued weakness within the mass merchandising customers with our Talon Zipper product sales and selected specialty retail brand customers, including specialty teen retailers we serve with our Talon Zipper and Talon Trim product sales," stated Larry Dyne, Talon's Chief Executive Officer. "This marks a continuation of the general weakness in apparel retail trends which began in the second quarter of 2014 and which have continued throughout much of 2015. While Talon Zipper sales were lower than expected, we're encouraged by stable Trim product sales and solid growth in our Tekfit stretch technology products. We also continue to execute on our plans to grow and expand our geographic footprint in key regions that will allow us to streamline deliveries to our customers and their respective manufacturing partners. In addition, we were able to maintain cost controls and lower our operating expenses versus the third quarter of 2014 and, due to the shift in product mix during the third quarter of 2015, were able to improve our gross margins as a percentage of sales."

Gross profit for the three months ended September 30, 2015 was $3.4 million, or 33.8% of sales, reflecting a reduction of $345,000 as compared to the same period in 2014. The reduction in gross profit for the quarter, as compared to the prior year, was principally attributable to lower overall sales volumes offset by lower freight, duty and manufacturing support costs and improved product mix. Gross profit for the first nine months of 2015 was $12.0 million, or 32.7% of sales, as compared to $12.9 million, or 32.9% of sales for the same period in 2014.

Operating expenses for the three months ended September 30, 2015 were $3.2 million, reflecting a decrease of $193,000 as compared to the same period in 2014, driven by decreases in both sales and marketing and general and administrative expenses.

Sales and marketing expenses for the three months ended September 30, 2015 totaled $1.5 million, a decrease of $142,000 as compared to the same period in 2014.

General and administrative expenses for the three months ended September 30, 2015 totaled $1.7 million or 17.2% as a percentage of sales, as compared to the prior year of $1.8. million or 15.0% as a percentage of sales. General and administrative expenses were lower by $51,000 during the three months ended September 30, 2015, as compared to the same period in 2014, mainly due to a reduction in facilities and related expenses. Operating expenses for the nine months ended September 30, 2015 were $11.2 million or 30.6% of sales, as compared to $10.9 million, or 28.0% of sales, in the first nine months of 2014. Sales and marketing expenses for the nine months ended September 30, 2015 totaled $4.8 million, an increase of $24,000 as compared to the same period in 2014. General and administrative expenses for the nine months ended September 30, 2015 totaled $6.4 million or 17.5% as a percentage of sales, compared to the prior year of $6.2 million or 15.8% as a percentage of sales.

Operating income for the third quarter ended September 30, 2015 was $163,000, or 1.6% of sales, as compared to $315,000, or 2.7% of sales, for the same period in 2014. Operating income for the nine months ended September 30, 2015 was $790,000 as compared to $1.9 million for the same period in 2014. Net loss for the quarter ended September 30, 2015 was $90,000 as compared to net income of $57,000 for the same quarter in 2014. Net income for the nine months ended September 30, 2015 was $199,000, a decrease from $889,000 in the same period in 2014.

As previously announced, in the third quarter the Company signed an amendment to its credit agreement with Union Bank and secured a new $3 million loan facility from Princess Investment Holdings. The amendment to the Union Bank credit agreement required Talon to pay off the $1.4 million existing term loan due to Union Bank and eliminated the financial covenants for the remaining term of the agreement. The Company received an initial advance from Princess Investment Holdings under the new loan agreement in the amount of $1.5 million, and issued warrants to Princess Investment Holdings to purchase 1 million shares of common stock, exercisable immediately upon issuance for a five-year period at an exercise price of $0.18 per share on a cashless basis. The Company believes these changes will allow more financial flexibility in the course of business and the ability to take advantage of opportunities that arise.

Conference Call

Talon International will hold a conference call on Thursday, November 12, 2015, to discuss its third quarter and nine months financial results for 2015. Talon's CEO, Larry Dyne, will host the call starting at 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time). A question and answer session will follow the presentation. To participate, dial the appropriate number 5-10 minutes prior to the start time, request the Talon International conference call and provide the conference ID.

Date: Thursday, November 12, 2015

Time: 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time)

Domestic callers: 1-888-349-0091

International callers: 1-412-902-4297

Conference ID#: TALON

A replay of the call will be available after 7:30 P.M. Eastern Time on the same day until December 12, 2015. The toll-free replay call-in number is 1-877-870-5176 for domestic callers and 1-858-384-5517 for international. Pin number 10075488.

About Talon International, Inc.

Talon International, Inc. is a major supplier of custom zippers, complete trim solutions and Tekfit stretch technology products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers worldwide. Talon develops, manufactures and distributes custom zippers exclusively under its Talon® brand ("The World's Original Zipper Since 1893"); designs, develops, manufactures, and distributes complete apparel trim solutions and products; and provides stretch technology for specialty waistbands, shirt collars, and other items all under its trademark and world renowned brands, Talon®, and TekFit® to major apparel brands and retailers. Leading retailers worldwide recognize and use Talon products including VF Corporation, American Eagle, Abercrombie and Fitch, Polo Ralph Lauren, Kohl's, JC Penney, FatFace, Victoria's Secret, Wal-Mart, Phillips-Van Heusen, Levi Strauss & Co., Express and many others. The company is headquartered in the greater Los Angeles area, and has offices and facilities throughout the United States, United Kingdom, Hong Kong, China, Taiwan, Vietnam, India, Indonesia and Bangladesh.

Forward Looking Statements

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, the Company's views on market growth, changing trends in apparel retailing, new product introductions, expansion into new geographic markets, and the Company's ability to execute on its sales strategies, and are generally identified by phrases such as "thinks," "anticipates," "believes," "estimates," "expects," "intends," "plans," and similar words. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statement. These statements are based upon, among other things, assumptions made by, and information currently available to, management, including management's own knowledge and assessment of the Company's industry, competition and capital requirements. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission including the Company's most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which should be read in conjunction herewith for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 
TALON INTERNATIONAL, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
           
           
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
    2015     2014     2015     2014
Net sales   $ 9,992,091     $ 11,749,970     $ 36,587,791     $ 39,052,257
Cost of goods sold     6,618,550       8,031,238       24,617,384       26,193,109
  Gross profit     3,373,541       3,718,732       11,970,407       12,859,148
Sales and marketing expenses     1,494,693       1,636,759       4,778,754       4,754,723
General and administrative expenses     1,715,617       1,766,851       6,401,400       6,165,544
  Total operating expenses     3,210,310       3,403,610       11,180,154       10,920,267
                               
Income from operations     163,231       315,122       790,253       1,938,881
Interest expense, net     127,966       96,871       328,527       317,756
Loss on extinguishment of debt     134,049       -       134,049       -
Income (loss) before provision for income taxes.     (98,784 )     218,251       327,677       1,621,125
Provision for (benefit from) income taxes, net     (8,431 )     161,165       128,746       732,299
                               
Net income (loss)   $ (90,353 )   $ 57,086     $ 198,931     $ 888,826
                               
Basic and diluted net income (loss) per share.   $ (0.00 )   $ 0.00     $ 0.00     $ 0.01
Weighted average number of common shares outstanding - Basic     92,267,831       92,267,831       92,267,831       92,115,167
Weighted average number of common shares outstanding - Diluted     92,267,831       94,431,171       93,519,892       94,411,036
Net income (loss)   $ (90,353 )   $ 57,086     $ 198,931     $ 888,826
Other comprehensive income (loss) from foreign currency translation     (10,220 )     (1,141 )     (9,630 )     716
Total comprehensive income (loss)   $ (100,573 )   $ 55,945     $ 189,301     $ 889,542
                               
                               
                               
TALON INTERNATIONAL, INC.  
   
CONSOLIDATED BALANCE SHEETS  
   
    September 30,
2015
    December 31,
2014
 
    (Unaudited)        
Assets                
Current assets:                
  Cash and cash equivalents   $ 2,565,626     $ 2,603,138  
  Accounts receivable, net     3,449,269       3,019,749  
  Inventories, net     563,728       506,272  
  Current deferred income tax assets, net     894,282       746,370  
  Prepaid expenses and other current assets     581,563       551,775  
Total current assets     8,054,468       7,427,304  
                 
Property and equipment, net     747,420       584,586  
Intangible assets, net     4,313,169       4,300,084  
Deferred income tax assets, net     5,248,912       5,374,468  
Other assets     415,717       416,035  
Total assets   $ 18,779,686     $ 18,102,477  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
  Accounts payable   $ 6,275,647     $ 6,191,954  
  Accrued severance payments     704,588       -  
  Other accrued expenses     2,473,231       2,403,563  
  Revolving credit loan     1,600,000       1,500,000  
  Current portion of revolving term loan from related party     83,333       -  
  Current portion of term loan payable     -       1,816,667  
  Current portion of capital lease obligations     21,509       -  
Total current liabilities     11,158,308       11,912,184  
                 
Revolving term loan from related party, net of discounts and current portion     1,805,218       -  
Term loan payable, net of current portion     -       1,016,667  
Capital lease obligations, net of current portion     66,433       -  
Deferred income tax liabilities     7,318       13,961  
Other liabilities     207,080       26,077  
Total liabilities     13,244,357       12,968,889  
                 
Stockholders' Equity:                
  Common Stock, $0.001 par value, 300,000,000 shares authorized; 92,267,831 shares issued and outstanding at September 30, 2015 and December 31, 2014     92,268       92,268  
  Additional paid-in capital     64,387,694       64,175,254  
  Accumulated deficit     (59,051,178 )     (59,250,109 )
  Accumulated other comprehensive income     106,545       116,175  
Total stockholders' equity     5,535,329       5,133,588  
Total liabilities and stockholders' equity   $ 18,779,686     $ 18,102,477  
                 

Contact Information

  • Contact:
    Talon International, Inc.
    Rayna Hernandez
    Tel (818) 444-4128
    Email Contact