SOURCE: Talon International

Talon International

November 14, 2016 16:15 ET

Talon International, Inc. Reports 2016 Third Quarter and Nine Months Financial Results

LOS ANGELES, CA--(Marketwired - Nov 14, 2016) - 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, 2016.

Third Quarter 2016 Financial Highlights

  • Revenues increased 8.6% over the third quarter of 2015
  • Trim revenues posted a 21% increase versus the prior year
  • Overall gross profit increased 12.7%, or $427,000 from the third quarter of 2015
  • Gross margins improved to 35.0% from 33.8% in third quarter 2015 due to more favorable product mix and operational cost containments
  • Income from operations grew $65,000 over prior year third quarter and $1.5 million for the nine months ended September 30, 2016

Recent News Highlights

  • Received UL Certification of Compliance for select metal zipper products to expand potential customer base to include protective clothing manufacturers

Financial Results

Sales for the quarter ended September 30, 2016 were $10.9 million, reflecting an increase of $864,000, or 8.6%, as compared to the same period in 2015. The increase was driven by an increase of $1.3 million in Talon Trim products, which consist primarily of sales to specialty retail branded customers and further penetration of the Tekfit business into new and existing customers. This was partially offset by a $394,000 decrease in Talon Zipper revenues, resulting from declines in sales to specialty retail branded customers. Sales for the nine months ended September 30, 2016 were $36.6 million, a slight decrease from the same period in 2015.

"Talon continued to produce higher margins, due to a more favorable product mix and operational cost containments," stated Larry Dyne, Talon's Chief Executive Officer. "As our sales focus has become more geared to specialty retail branded customers, we're able to offer customers wider product selections with increased margins. We continue to focus on product innovation, in both the Zipper and Trim segments, and plan to introduce new Fit for Purpose products for specific market segments over the next few quarters. Using proprietary and unique materials, we are focused on providing innovative products to meet our customers' needs." 

"Talon's Trim product segment continued to perform well, growing 21% from the third quarter last year," continued Mr. Dyne. "We added new stretch technology programs and additional customers in the third quarter. In addition, Tekfit's unique stretch technology was launched in men's pants for a major upscale retail department store, as well as another major program to be included in their private label brand. A significant Tekfit customer continues to roll out shirts with Tekfit technology and is expanding the program into their additional brands. We plan to introduce Tekfit products for new customers and specific markets over the next few quarters, and are excited about the opportunities ahead." 

Gross profit for the quarter ended September 30, 2016 was $3.8 million, or 35.0% of sales, compared to $3.4 million, or 33.8% of sales, during the same period in 2015, reflecting an increase of $427,000. The increase is attributable to higher sales volumes and margins for Talon Trim products and a greater mix of higher-margin products in Talon Zippers, offset by higher freight, duty and manufacturing support costs. Gross profit for the nine months ended September 30, 2016 was $13.4 million, or 36.7% of sales, reflecting an increase of $1.4 million as compared to the same period in 2015. 

Operating expenses for the third quarter of 2016 were $3.6 million, which are $362,000 higher than operating expenses during the third quarter of 2015. Sales and marketing expenses for the quarter totaled $1.7 million, an increase of $211,000 as compared to the same period in 2015, mainly due to additional compensation costs and increased efforts in marketing, especially in social media, market research and product development. General and administrative expenses for the quarter totaled $1.9 million or 17.2% of sales, compared to the prior year of $1.7 million or 17.2% of sales. The increase of $151,000 was mainly due to additional compensation costs and sales efforts.

Operating expenses for the nine months ended September 30, 2016 were $11.1 million, or 30.5% of sales, as compared to $11.2 million, or 30.6% of sales, in the first nine months of 2015. Sales and marketing expenses for the nine months ended September 30, 2016 totaled $5.0 million, an increase of $190,000 as compared to the same period in 2015. General and administrative expenses for the nine months ended September 30, 2016 totaled $6.2 million, or 16.9% as a percentage of sales, compared to the prior year of $6.4 million, or 17.5% as a percentage of sales.

For the quarter ended September 30, 2016, income from operations was $228,000 as compared to $163,000 for the same quarter in 2015. Income from operations for the nine months ended September 30, 2016 was $2.3 million as compared to $790,000 for the same period in 2015. 

Net income for the quarter ended September 30, 2016 was $21,000 or $0.00 per share as compared to a net loss of $90,000 or $0.00 per share for the quarter ended September 30, 2015. Net income for the nine months ended September 30, 2016 was $1.0 million, an increase from $199,000 in the same period in 2015.

About Talon International, Inc.

Talon International, Inc. is a major supplier of custom zippers and complete trim solutions including 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 including stretch technology products 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, 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     Nine Months Ended  
September 30,     September 30,  
  2016     2015     2016     2015  
Net sales $ 10,856,283     $ 9,992,091     $ 36,575,804     $ 36,587,791  
Cost of goods sold   7,055,176       6,618,550       23,158,892       24,617,384  
  Gross profit   3,801,107       3,373,541       13,416,912       11,970,407  
Sales and marketing expenses   1,706,173       1,494,693       4,969,179       4,778,754  
General and administrative expenses   1,866,292       1,715,617       6,180,658       6,401,400  
  Total operating expenses   3,572,465       3,210,310       11,149,837       11,180,154  
                               
Income from operations   228,642       163,231       2,267,075       790,253  
Interest expense, net   157,244       127,966       463,652       328,527  
Loss on extinguishment of debt   -       134,049       -       134,049  
Income (loss) before provision for income taxes   71,398       (98,784 )     1,803,423       327,677  
Provision for (benefit from) income taxes   50,703       (8,431 )     775,913       128,746  
Net income (loss) $ 20,695     $ (90,353 )   $ 1,027,510     $ 198,931  
                               
Basic and diluted net income (loss) per share $ 0.00     $ 0.00     $ 0.01     $ 0.00  
Weighted average number of common shares outstanding - Basic   92,274,255       92,267,831       92,271,066       92,267,831  
Weighted average number of common shares outstanding - Diluted   93,220,191       92,267,831       93,405,895       93,519,892  
                               
Net income (loss) $ 20,695     $ (90,353 )   $ 1,027,510     $ 198,931  
                               
Other comprehensive loss from foreign currency translation   (2,276 )     (10,220 )     (13,750 )     (9,630 )
Total comprehensive income (loss) $ 18,419     $ (100,573 )   $ 1,013,760     $ 189,301  
 
 
 
TALON INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
 
  September 30,     December 31,  
2016     2015  
  (Unaudited)        
Assets              
Current assets:              
  Cash and cash equivalents $ 4,190,883     $ 2,852,315  
  Accounts receivable, net   3,917,457       3,796,209  
  Inventories, net   599,792       655,360  
  Current deferred income tax assets, net   963,432       997,067  
  Prepaid expenses and other current assets   618,211       554,389  
Total current assets   10,289,775       8,855,340  
               
Property and equipment, net   846,120       781,893  
Intangible assets, net   4,269,867       4,313,948  
Deferred income tax assets, net   4,498,749       5,046,345  
Other assets   342,420       267,325  
Total assets $ 20,246,931     $ 19,264,851  
               
Liabilities and Stockholders' Equity              
Current liabilities:              
  Accounts payable $ 5,914,445     $ 6,087,561  
  Accrued severance payments   93,333       526,671  
  Accrued commissions   463,208       645,503  
  Other accrued expenses   2,075,190       1,956,130  
  Current portion of capital lease obligations   23,283       21,940  
Total current liabilities   8,569,459       9,237,805  
               
Revolving line of credit from related party, net of discounts and deferred financing costs   3,930,861       3,492,772  
Capital lease obligations, net of current portion   43,150       60,784  
Deferred income tax liabilities   3,413       5,406  
Other liabilities   247,440       257,903  
Total liabilities   12,794,323       13,054,670  
               
               
Stockholders' Equity:              
  Common Stock, $0.001 par value, 300,000,000 shares authorized; 92,274,255 and 92,267,831 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively   92,274       92,268  
Additional paid-in capital   64,982,967       64,754,306  
Accumulated deficit   (57,711,272 )     (58,738,782 )
  Accumulated other comprehensive income   88,639       102,389  
  Total stockholders' equity   7,452,608       6,210,181  
  Total liabilities and stockholders' equity $ 20,246,931     $ 19,264,851  
                 

Contact Information

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