Tandy Leather Factory Inc (TLF) 2006 Q4 法說會逐字稿

Good afternoon. Welcome to the Tandy Leather Factory fourth quarter 2006 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [OPERATOR INSTRUCTIONS] Before I turn the call over to Shannon Greene, I want to call your attention to the fact that these conversations will contain forward-looking statements to the extent Tandy Leather Factory management speaks today of any future events or makes other forward-looking statements. You are reminded of the inherent uncertainties of looking into the future that there are risks to Tandy Leather Factory that could prevent these events from occuring in the manner foreseen. Please see Tandy Leather Factory's Form 10-K for 2005 for a discussion of some of these risks. Copies of these documents are available through the SEC Edgar system or from the Company's Investor Relations office.

Also, statements made today by management of Tandy Leather Factory are made as of this moment and Tandy Leather Factory and its management disclaim any duty to the update of those statements. I would now like to turn the floor over to your host, Shannon Greene. Ma'am, you may begin your conference.

Thank you for joining us for our 2006 earnings conference call. I'm Shannon Greene, Chief Financial Officer. Ron Morgan, our CEO, will be joining me in a few moments. We will be discussing our fourth quarter and year-end 2006 results, as well as our expectations for 2007. Simply stated, we are fairly pleased with our performance in 2006. Before getting into the details I want to quickly highlight a few items. Our 2006 sales grew by almost 9% over 2005. 2006 was our eighth year of consecutive sales gains and we set another quarterly sales record in the fourth quarter. Our consolidated gross profit margin improved for the 10th year in a row. Our consolidated operating profit grew three times faster than our sales for the year and we opened 12 new Tandy Leather retail stores in 2006, bringing the store total to 62. Our internal cash flow provided 100% of the capital needed to open these stores.

In our Wholesale Leathercraft division, the 29 wholesale centers, operating under the name The Leather Factory, reported sales gains of 2.5% for the year, which is right in line with our internal targets of 2% to 4% sales growth annually. Sales in our national account customer group, however, were down 4.4%, resulting in flat sales for the division compared to 2005. Gross margin improved by 2% this year and operating margin improved by 29%. Our Retail Leathercraft division ended the year with a 25% sales increase over 2005. 12 new stores were added in 2006. Gross margin dropped a percentage point while operating margin increased 30%. While there will always be room for improvement, I believe we performed well in 2006. We are on pace with our growth plan, having just completed our fifth year of expansion of the Tandy Leather retail store chain. I'll run through the fourth quarter results first and then go through the annual information. So I don't have to keep referencing it, remember that the comparison here is the fourth quarter '06 to the fourth quarter '05.

Quarterly results are as follows -- Consolidated sales increased 5.5%; Sales were $14.8 million this year, compared to $14.1 million in the prior year; Wholesale Leathercraft sales were $7.8 million this quarter compared to $8.2 million a year ago, a decrease of 4.8%. Within the Wholesale Leathercraft division the wholesale stores reported quarterly sales of $6.9 million in 2006, the same as in 2005. Our national account group reported quarterly sales of $908,000 compared to $1.1 million in the prior year, a decrease of 19%. Retail Leathercraft sales were $6.7 million for the quarter compared to the prior year of $5.4 million, an increase of 22%. Consolidated gross profit margin for the quarter was 58.8%, a nice improvement over the prior year's gross profit margin of 56.5%. Wholesale Leathercraft gross profit margin improved to 57.9% currently, versus 54.6% last year, while Retail Leathercraft's gross profit margin fell from 61.6% to 60.9%. Consolidating and operating expenses were $6.7 million, or 44.9% of sales, compared to $6.1 million or 43.8% of sales last year.

Wholesale Leathercraft reported operating expenses totaling 43.4% of its sales versus 41.9% last year and Retail Leathercraft reported operating expenses totaling 46.1% of its sales compared to 48.3% last year. Income from operation was $2.1 million for the quarter, an increase of $279,000 or 15.6%, compared to the fourth quarter of '05. The 2006 annual results. Consolidated sales were up 8.8% over 2005. Sales were $55.2 million compared to $50.7 million last year. Wholesale Leathercraft sales were $31 million, the same as a year ago. Within the division the wholesale centers reported sales of $26.4 million, an increase of 2.5% over 2005 sales of $25.7 million. The national account group reported sales of $4.6 million compared to $4.9 million in '05, a decrease of 4.4%. Sales to our national accounts comprised 8.4% of our total revenue in 2006 compared to 9.5% of our 2005 sales. This is a continuing and expected trend as we continue to execute our retail expansion plan. Retail Leathercraft sales were $22.5 million compared to last year of $18 million, an increase of 25%.

As I mentioned earlier, we opened 12 new retail stores in 2006. The new stores, which are these 12 plus the eight opened in 2005, contributed sales of $4.4 million in 2006. The 42 comparable stores contributed sales of $18.1 million in 2006, which translates to same-store sales growth of 6.3% over 2005. Consolidated gross profit margin for the year was 57.3%, up from last year's margin of 56.7% Wholesale Leathercraft gross profit margin increased to 56.2% this year compared to 55.3% last year. Retail Leathercraft gross profit margin decreased from 61.8% to 60.8%. Consolidated operating expenses were $24.6 million or 44.5% of sales in the current year, compared to $23.2 million or 45.7% of sales last year. Wholesale Leathercraft reported operating expenses totaling 40.7% of its sales versus 43.3% last year. Retail Leathercraft reported operating expenses totaling 50.5% of its sales currently, compared to 52% last year. Income from operations is $7.1 million this year, a 27% increase over 2005 of $5.6 million. Total assets grew 24% in 2006 compared to the end of '05 and we ended the year with a total -- with total assets of $31.9 million.

We held $6.7 million in cash at year-end, an increase of 110% from the end of '05. Accounts receivable increased $420,000, inventory increased by $1.5 million. Current liabilities increased by $1.2 million. Total liabilities increased by $1.1 million. Our bank debt is zero. Our current ratio is 5.2. EBITDA for 2006 was $7.6 million. Free cash flow, defined as EBITDA less CapEx, was $7.1 million. Some specifics regarding the Tandy stores for 2006. I'll start with fourth quarter and then provide the information on an annual basis. For the fourth quarter the stores open in 2002 reported sales of $2.1 million, gross profit of 61.4%, and operating income of 16.2%. The stores that were open in 2003 reported sales of $1.3 million, gross profit of 61.6%, operating income of 13.7%. For the stores open in 2004, sales were $1.7 million for the quarter, 61% gross profit margin, 12.7% operating margin. The stores open in 2005, sales were $675,000 for the quarter, 58% gross profit margin, 5.5% operating profit. The stores open in 2006 sales were $876,000, gross profit percentage 60.5%, operating income was 1.7%.

On an annual basis the 2002 stores reported sales of $7.2 million, gross profit of 61.2%, operating income of 13.4%. The 2003 stores reported sales of $4.7 million, gross profit of 61.8%, operating income of 11%. The 2004 stores reported sales of $6.3 million, gross profit of 60.2%, operating income of 10.1%. The 2005 stores reported sales of $2.2 million, gross profit of 59%, operating income of 0.1%. Finally the 2006 stores reported sales of $2.2 million, gross profit of 60.8%, and an operating loss of 9.1%. For the fourth quarter of 2006 average monthly sales per store was $31,000. Stores open in 2002 had average monthly sales of $49,000. The 2003 and 2004 stores each averaged $36,000 per store and the 2005 stores averaged $28,000 per store. The 2006 stores averaged $25,000 per store per month. To summarize, I think 2006 was a good year for us overall. Our Retail Leathercraft division continues to drive our sales growth and we are executing our expansion plan exactly as we originally presented it at the end of 2001.

The Wholesale Leathercraft division is doing fairly well, although the national account group has struggled. Our gross profit margin improved again this year and our operating income grew faster than our sales. We plan to open 12 new stores in 2007. As of today we have announced the opening of three new Tandy Leather retail stores this year. We already have several more locations selected and we'll make announcements regarding those once we have secured leases and can better estimate opening dates. One of the keys to our continued operational success is our people. Our store managers are pivotal to our ability to produce positive financial results. They are the front line, responsible for promoting the craft through education and customer service. In our business that's crucial in order to be successful. We have 17 trainees currently, of which six could be promoted to manager today, and we are constantly looking for trainees to enroll in our manager training program as we plan for our future store openings.. Overall, I think we did a pretty good job containing operating expenses in 2006, cost containment is a priority for us as we continue to grow.

Our goal in 2007 will be that sales continue to grow faster than operating expense. I think our balance sheet is in good shape and I was fairly pleased with our inventory as we ended the year within 5% of my inventory projections. The cash balance looks pretty good at $6.7 million, 110% increase from this time last year. In reviewing the other balance sheet accounts, I don't see anything out of the ordinary. Payables seem reasonable, given our purchase volume, and I like the position we're in going into 2007 from a balance sheet perspective. As you know, we have got some work to do on sales based on our January and February sales announcement, although I don't want to harp about that too much. We were going up against some really tough gains from last year. I think our focus is good and we will continue to do the things that will eventually create stronger sales. As you know, we adjusted guidance downward slightly with the release of our February revenue numbers. I'm getting mixed signals as to whether that revision was a good thing or a bad thing, but frankly I think it was the right thing to do. Our sales have not been as strong as we would have liked for the past few months.

My goal is to be up-front with you and to provide as much information as quickly as possible. Could we have waited another month or two to see what sales were going to do before revising the guidance? Sure, but I think it's important to set realistic expectations as early in the process as possible. Just a reminder on what our 2007 guidance is, twelve new retail stores this year, revenue of $59 to $61 million, fully diluted earnings per share of $0.53 to $0.56 based on share count of 11.1 million shares. We very much appreciate your time today. We'll be happy to answer whatever questions you have. Operator, we're now ready to take questions.

[OPERATOR INSTRUCTIONS] Our first question comes from Graeme Rein. Your line is live.

Hi, Shannon. Could you talk a little bit more about what's going on with the national account group? I know you guys expected it to decline. Is it declining at the pace you would expect? And can you just talk about -- ?

This is Ron Morgan. How are you today, Graham?

I'm great, Ron. How are you?

Super so far. We really -- we don't really expect it to decline. I know that's what's happening, but we really don't expect it. We believe it will become a smaller percent of our overall business as the retail stores gain strength. And in that business, when you're selling to the retailers that we sell to, the timing of orders often dictates losses so much as they buy one month this year and buy two months later next year, et cetera. And we're -- we don't really know why our sales decreased. What was it, Shannon, for the year?

4.5%.

4.5%, other than a few -- we had a few small ones that had some financial problems, but we really anticipate running a gain or breaking that department even this year.

Okay. Any plans for the cash on the balance sheet? It's starting to -- it's growing at a pretty quick pace. Any talks at the board of directors on what to do with it?

Graham, the discussion with the directors is stock buyback. We did a small acquisition in January. Didn't use much of it. I don't think anybody will even notice. There are a couple of other possibilities in the works. Nothing that is even close enough to discuss, but at least we're kind of discussing some conceptual ideas with some potential acquisitions. I've got it invested in short-term money markets and CDs and that type of thing at this point. But in terms of are we going to spend it all, no. And I guess the most realistic possibility at this point, based on the board discussion, is a potential stock buyback and I think you and I have discussed this before, I have mixed feelings about that but I will go with whatever the board decides is best.

Okay. And then last thing, the kind of slower than anticipated sales growth in first couple quarters. Has that given you any pause on rolling out stores this year and do you anticipate to get them all out in the first six months like you did last year?

We probably won't get them all out in the first six months like we did last year. I still have mixed feelings whether that was such a good idea, even though we thought it was at the time. But we will open our 12 stores. The slowness in the business is a strange thing. The first two we opened this year are by far exceeding our numbers of the previous 12, 15 stores we have opened. So we're doing a little better job opening them to get them profitable a little faster and a little quicker than we did this past year. We changed up our advertising a little bit, but we will continue to open 12 stores a year until we feel like that they will put any kind of a drain or hurt on our overall operations.

Okay. I'll jump back in the queue. Thanks.

Your next questions come from Will Lyons. Your line is live.

Hi, Ron. Hi, Shannon. Congratulations on a good quarter and good year. Your fourth quarter, I think as everybody on the call would know, is typically your strongest. But in this fourth quarter, at least it looks to us on a quick analysis, your gross profit pretax and net margins were the highest they have been over the past three years. Are these -- I know that's been a target of yours, Shannon, but is there specific room for improvement or you think you're pretty much where you can get?

I think there's always room for improvement.

Specific, anything you can tell us what you think still needs work on?

I think the more of these Tandy stores start maturing, the retail stores, the bigger percent of our business will be done in that fourth quarter, like all retail businesses. And our gross profit margins will always be a little better as they become a bigger percent of our overall sales in that quarter, even though their gross profits may be up and down a point in any given year, their overall volume growing so much compared to the wholesale division will cause us to have a good fourth quarter probably from now on. As long as the retail climate is good.

Sure, that makes sense. What's your thinking now on the number of retail stores you would like to have open, the number you think you could, if you had the money and the management available right now, how many stores would you like to have open?

You're talking about the total?

Total, yes. Is it 100? Is it 150?

The number, Will, the number we're still saying is 100 to 120. I think that's realistic. As I've said numerous times and we keep looking at it, if we get close to 100 or close to 120 and we still think there are profitable markets out there that can support profitable stores, then we'll keep opening stores. But we don't want -- remember the old Tandy had 350 stores. And while that's a heck of a store chain, I don't think, in fact, I'm pretty sure two-thirds of those were not profitable. And I don't want 350 stores if they're not all profitable. So if we can get a good 100 to 120 and they're profitable, but number 125 is not going to be, then we are going to stop at 124. Because we just -- doesn't do us any good to have stores that are not generating profit for us.

No, I think anybody that knows the history of Tandy knows that 350 was probably too big of a number.

Yes.

Shannon, I have a couple of housekeeping questions for you and this is sort of related to asset efficiency as well. Your accounts receivables turns have dropped by about a third, meaning they have improved about a third over the past three years. Is that primarily due to the mix of more retail, meaning more cash business?

Yes. Yes, absolutely. It's still not fast enough for me, but.

I don't think we're doing that great a job.

I don't, either.

I think we can do better.

I think we need to do better. It's a matter of we're not -- the net 30, the open account business is not as big of a -- while it is still growing, of course, as you add all this cash and carry business and the quick turns then, then obviously that helps you.

Lastly, when do you expect to publish your K?

What's today? The 6th? I'm -- don't have a calendar in front of me but I'm thinking like the 23rd, 24th, 26th. What's that Monday?

28th.

I'm hoping worst case Monday the 26th.

Okay, great. Again, congratulations. Good quarter. Thanks, Will.

Our next question is coming from [Ruth Ann Russell]. Your line is live.

Hi Shannon, hi Ron, what a good quarter.

Thank you.

Sure. I had a couple questions. First of all is there any more color that you can give on the reasons behind the flat same-store sales growth in January and February?

Not really. I wish if we had the answer - we were going up pretty good numbers. We do not use ever weather as a reason for poor performances. We've drilled it in our personnel's heads over the years, because there's weather every year.

That's true enough.

But in some times it is bad. But we've probably lost more sales days in January and February of the stores were actually closed and we could't get them opened because of the weather then any time that I can remember in the last 10 or 15 years. So I'm sure that influenced it a little bit, but we would never allow our personnel and our troops to ever use that as an excuse for poor performance. I just believe that we didn't work hard enough.

Fair enough. And I also want to know is there anything that you can say about the challenges that have been faced over the last year in sourcing some of the high-end leathers, as tanneries move offshore or as they close here in the U.S. I understand that everybody who is involved with the leather working and leather business needs to be looking to overseas sources for the leathers that previously were made here in the U.S. And some of them, particularly the high end saddle leathers, I understand, are not as easily come by out there as they would have been here with families who have been making that for generations. Is there anything more you can say to that?

Our oldest employee of The Leather Factory, John Thompson, Wray's oldest son, is our primary leather sourcer. And he has been doing it now for 20 years. And he's next, I think, it's this month he's headed to the Hong Kong Leather Show. John visits and travels the world looking for and sourcing leathers. He is very knowledgeable and stays up on the marketplace on it. It's nothing that's not happened -- it's been going on for many, many years. We have been sourcing -- buying a majority of our leather outside of the United States since probably 1980. So it's nothing new to us. And we continue to go to every leather show, the leather show in Italy, the one in Leon, Mexico, Hong Kong, and we're not -- we're really not too concerned. And if you pay your bills, like we always have, you'll always find somebody who's willing to sell you.

I was thinking that in other industries there's been some movement, particularly in things like electronics, where there's a lot of fine work involved, there's been a movement for some companies to take a more active role in overseeing the management of the production of those parts that are produced overseas. Is there anything that you are doing as far as perhaps taking a more active role in helping the tanneries overseas learn to produce leather to the quality and specifications that people need over here?

We have been doing just that for probably 10, 15 years. That's what John -- we go to the tanners, most of the, about a third of the leathers that we have tanned for us are tanned with our formulas and tanned the way we ask them, the size, the selection, the hides that's bought, and the whole mess. We don't leave it to a tanner to put our faith in his hands. We make sure we're in every step of the way of it. We visit the tanners that tan our leather. As far as the saddle leathers you was talking about and the changes in U.S., there's not been any changes in probably five, six, seven years. There are still two major U.S.A. heavy saddle skirting tanners. And it is the same two that were in existence five years ago, and there wasn't any others five years ago. So those two major ones are still players. There's a couple that started making real good leather out of Mexico, about five or six years ago when the last U.S. tanner did close, one of the other -- the third and fourth tanners took their places in Mexico and they do a nice leather, too.

Thanks very much.

Our next question is coming from Robert Straus. Your line is live.

Hi, guys, how are you today?

Hi, Robert. Good, thanks.

Just one number, Shannon, that I missed, or two. Could you just repeat for the fourth quarter the retail and wholesale gross profit percentages again?

I could but you know you'll owe me. Gross profit margins for the quarter consolidated was 58.8%, Wholesale Leathercraft was 57.9%, retail is 60.9%.

As it relates to new stores, Shannon, you sometimes give a certain number of stores that are profitable or not from past openings. Can you do that for us for just '05 and '06?

For the year?

That will be fine.

Yes, I can. I'm sorry I forgot that part. I have got 16 for 2006 that were not profitable as of 12/31/06. 11 of those are the 2006 stores.

Or 12 of them, right?

Yes, 11 of the 12.

Okay.

And I don't have the 2005 numbers in front of me, but I can get it for you, Robert.

Just big picture-wise in terms of those stores turning profitable, I know we used to talk 12 months or less. Is that still kind of your thought process? I know you have been dealing with some weak sales here as well. But, generally on track, a little bit behind, is there anything going on that you guys are implementing in order to kind of ratchet that profitability up or make sure it stays on track?

Yes. Let me throw this at you, too. Of the 12 stores that were open in 2006, only four of those were not profitable in the fourth quarter. If that helps a little bit in terms of these stores are, except for four of them, are generating profits, they just didn't generate enough in '06 to overcome the entire loss for '06. So that helps a little bit. We are in '07, basically the idea that -- the expenses are what they are. The stores run so lean there's not much we can do to cut expenses. It's all a matter of sales generation. Ron can give you some real specifics about what we are doing with new store openings. As he alluded to, when we opened Boston and Allentown, we tried a different kind of advertising program and those two stores are doing just fabulously.

Their sales in January and February, they are not on the bottom of the sales list to be the newest stores on the list. So obviously we need to be more agressive in our advertising efforts up front, get them off to a better start. It doesn't take too many good months of sales to get those stores profitable. So if you want some more specifics, Ron will jump in here and give them to you, but whatever the advertising department did with the grand openings and the announcements and the moving into town kind of thing, obviously is working because Allentown and Boston are just doing great.

Ron, on that point, are you splashing more dollars to a grand opening at this point or are you redesigning booklets or pamphlets that you're sending out at the time of grand opening?

-- more dollars to it. We typically -- this worked fine for the first three or four years, it is not working as well now. We typically didn't do a whole lot other than mail. All of the customers that we had in a particular market -- list of customers we had in a particular market area. As the market area gets smaller that was mailing a smaller list. We now are going in and still doing that program, but we have added a series of newspaper and some radio advertising to it. Instead of spending, oh, $7 - $8,000 on an opening of a new store, we are now spending about double that and it's really paying dividends. There's so many people that have done leathercraft for the years in youth groups or a lot of the baby boomers retiring and stuff, that nowhere in town when we didn't have their name and list it's paying us dividends. We probably should have done that in 2006. But as expense nuts as we are around here, we chose to try to be hard heads and do it the hard way. Now we are just going to spend a little bit more money up-front. If the store loses money, its really the expense is the same, whether you spend it up-front and get the business quicker and not have that loss or you have that loss.

As you have ramped up that advertising grand opening spend, Shannon, what have you seen from the initial grand opening ramp on the sale side if you compared Boston and Allentown to maybe a couple of stores that you opened with the old advertising model in 2006?

The Boston and Allentown stores opened, both months they have hit the $30,000 number. So for a new store, we normally start -- assuming that they open on first day of the month, which both of those stores did, in the normal pace of things, particularly in 2006, in that first month that a store would be open for a full 30 days probably the average was $18 to $20,000, maybe that first month. These two stores hit $30,000 in both stores that first month they were open. So we will -- .

And we're very close to that in the second month.

They did real well, just right under that. So they're very busy and if we can get more stores, I'd be willing to spend, certainly willing to spend the advertising dollars if we can get these stores coming out of the box at the mid 20s and up and anything over $30,000 to me in the first month is fantastic.

And these stores will probably, I'm not going to pop off and say they'll probably be profitable within three to four months, wouldn't you think, Shannon?

If they can run those kind of dollars, absolutely.

-- profitable a lot quicker than we had some last year.

That sounds pretty damn good.

We're always tweaking our programs. We look at it, we analyze it, we see the customers, and we wear out the tweaking and the looking and trying to figure out whys of different things, but I do believe this program is working.

Okay. Just a couple other questions. Are you seeing any other kind of changes in the competitive landscape, particularly on the retail side of your business?

I don't really believe so. There are times that there may be a craze in some other type of craft that we could lose customers to, but right now I don't really see any change in the retail environment out there. In fact, I actually believe it is possible that we could have a better summer than we normally do because I think there's a resurgence in camps interested in leathercraft, summer camps primarily, interested in leathercraft by the initial contacts they are making to our sales department. So it actually looks like it could be -- if there was a change it would be for the positive.

Okay. Last question, Shannon. Inventories look pretty good year-over-year and it looks like you are running those tight. They're pretty much in line with what your sales trends are. Accounts receivables to me look like they're a little bit big. It looks like year-over-year they went up about 19% or so. Could you just address that? Is that a timing issue? Or what is going on there?

You want the honest answer, Robert?

Sure, what the hell, go ahead.

We had two very large accounts that we were not paying a whole lot of attention to from a collections standpoint. And basically in the month of January and February collected about $0.5 million on those accounts, but they were -- AR was extremely inflated at the end of '06. That's my fault for not paying more attention to the information crossing my desk. We had some miscommunication between the customers and ourselves regarding our vendor setup in their system and basically got put on payment hold because they needed to verify an address or something like that. We dropped the ball, didn't follow up. So we went about 90 days without getting paid.

And these were companies that operate on EDI payment systems, etc. They have changed some little program in their stuff and we weren't -- we weren't actually invoicing them.

We weren't paying attention and -- but as I said, all of that has been -- once we got the damn problem fixed, obviously that fixed all of the cash problem.

And on of the two was caught up and the other one was on way.

So, yes, AR is too high at the end of '06. hat is attributable to two specific accounts and basically, I just wasn't paying attention and we dropped the ball on something and it stopped payments for us for the last 90 days of the year but all of that has been collected on January and February.

And you are confident that these two large accounts are financially sound?

Absolutely.

Okay. Sounds good. Keep up the good work. Congratulations on the year.

Thanks Robert.

[OPERATOR INSTRUCTIONS] Our next question is from [Evon Zwick]. Your line is live.

Shannon, this is just a comment more or less rather than a question. One person alluded to asking what you were going to do with the cash on the balance sheet and you mentioned possibly stock buyback and in passing mentioned even a dividend. As far as a preference, I would like to not see you do a dividend and only do a stock buyback if it's not at the expense of some opportunistic buyings or possible some type of acquisitions that would enhance the growth and the value of the Company.

So you think the stock buyback would be okay?

I wouldn't want to do that at the expense of you having money to possibly make an acquisition that would be profitable with a lot of growth to it.

Sure. And I think it's reasonable to say that we're not -- even if we do a stock buyback, if that's what the board decides to do, I think it's going to be small. We're certainly not going to commit tens of millions of dollars to a stock, at least that's not what I understand and that's not the impression I'm getting. It will be small, but -- Ron says 10% maybe of the shares. Certainly we'll not leave us in a cash tight position because of opportunities that occasionally come up, kind of like the acquisition we did at end of January. You just never know. If you wind up spending all your money to the point that you're borrowing money to do some sort of stock buyback and jeopardize the opportunity to do something else, like a good acquisition, that's not a smart decision. So we will be, as you know, very careful. If we do a stock buyback it's going to be a small one. Knock on wood, I don't think you're going to see us produce a balance sheet that has no cash on it. So we'll keep kind of along the same lines and the board will decide what they think is reasonable with some of the excess cash and then we will see what everybody does.

Very good. I think we're all on the same plane.

Thank you.

Our next question comes from [Len Fuchs]. Your line is live.

Hi, how are you? Just a question. You referred to last year's January and February being strong. I don't have your same-store sales for those months. Were you releasing them?

Yes. Lennie, I don't have that information -- well, yes, I do. Hang on, I do to. I lied. Let's see. Same store sales gain in January of '06 was 18%. The gain in February was 10%. On a consolidated basis we were looking at a 12% and 13% sales gain for January and February last year.

Okay, and March?

March we had a 15% sales gain overall, 6% same-store sales at the retail level.

Okay, thanks a lot, Shannon.

Ladies and gentlemen, there appear to be no further questions in queue. Are there any closing comments you want to finish up with?

On behalf of Ron Morgan, myself, and the entire management team, thank you, very much, for participating in our earnings conference call today. Look forward to speaking with you again next quarter. Have a good afternoon.

Thank you, ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines, and have a wonderful day.