P&F Industries Reports Results For The Three-Month Period Ended March 31, 2013

P&F Industries Reports Results For The Three-Month Period Ended March 31, 2013

PR Newswire

MELVILLE, N.Y., May 9, 2013

MELVILLE, N.Y., May 9, 2013 /PRNewswire/ -- P&F Industries, Inc. (NASDAQ:
PFIN)  today announced its results of operations for the three-month period
ended March 31, 2013.

P&F Industries, Inc. is reporting revenue of $20,709,000 for the three-month
period ended March 31, 2013, compared to $14,317,000 for the same period in
2012. Additionally, the Company is reporting income before income taxes of
$993,000 compared to $729,000 for the three-month periods ended March 31, 2013
and 2012, respectively. Lastly, the Company is reporting income after taxes
of $621,000 compared to $706,000 for the three-month periods ended March 31,
2013 and 2012, respectively.

Richard Horowitz, the Company's Chairman of the Board, Chief Executive Officer
and President commented, "I am pleased to report that, driven primarily by
Florida Pneumatic's continued roll-out of its pneumatic tools to The Home
Depot, P&F's first quarter of 2013 consolidated revenue increased nearly $6.4
million, or 44.6%, compared to the same period in the prior year. We did,
however, absorb one-time expenses of $700,000 in connection with this
roll-out, which negatively impacted our first quarter results. Our tax expense
for the first quarter of 2013 was $372,000, compared to only $23,000 in the
first quarter in 2012. It should be noted that during the third quarter of
2012 we eliminated the valuation allowance on our federal deferred tax assets,
which resulted in an effective tax rate of 37.5% in the first quarter 2013
compared to 3.1% in the first quarter of 2012. Prior to this elimination, in
lieu of recording a tax expense, we adjusted the then in place valuation
allowance, thus creating minimal effective tax rates that would have been
applied to our pretax income. With the valuation allowance removed, current
and future tax provisions will more significantly impact our after-tax
earnings, as well as our earnings per share."

                                  For the three month period ended March 31,
                                  2013                          2012
Basic earnings per common share   $     0.17               $         0.20
Diluted earnings per common       $     0.16               $         0.19
share



A summary of P&F's results of operations for the three month periods ended
March 31, 2013 and 2012 follows.

REVENUE            Three monthsendedMarch 31,
                                                 Increase (decrease)
                   2013           2012           $               %
Tools
Florida Pneumatic  $ 11,462,000   $ 5,417,000    $  6,045,000     111.6  %
Hy-Tech              4,167,000      4,255,000       (88,000)      (2.1)
Tools Total          15,629,000     9,672,000       5,957,000     61.6
Hardware
Hardware Total       5,080,000      4,645,000       435,000       9.4
Consolidated       $ 20,709,000   $ 14,317,000   $  6,392,000     44.6   %

Tools

Florida Pneumatic markets its air tool products to two primary sectors within
the pneumatic tool industry; retail and industrial/catalog. Additionally,
Florida Pneumatic also markets, to a much lesser degree, air tools to the
automotive market. It also generates revenue from its Berkley pipe cutting
product line, as well as from a line of air filters and other OEM parts
("Other").



                    Three months ended March 31,
                    2013                         2012                        Increase (decrease)
                                   Percentof                  Percentof
                    Revenue                      Revenue                     $              %
                                   revenue                     revenue
Retail customers    $ 8,878,000    77.5       %  $ 2,460,000   45.4       %  $ 6,418,000    260.9   %
Industrial/catalog    1,919,000    16.7            2,009,000   37.1            (90,000)     (4.5)
Automotive            267,000      2.3             305,000     5.6             (38,000)     (12.5)
Other                 398,000      3.5             643,000     11.9            (245,000)    (38.1)
Total               $ 11,462,000   100.0      %  $ 5,417,000   100.0      %  $ 6,045,000)   111.6   %



During the first quarter of 2013, Florida Pneumatic continued to ship the
initial product delivery, or roll-out, to The Home Depot locations. Revenue
from Sears Holdings Corporation declined slightly, when compared to the same
three month period in 2012. The Industrial/catalog sector, which had reported
quarter over quarter improvement throughout 2012, had a slight decline in
revenue due primarily to a softening within this sector, which we believe is
likely to continue. First quarter of 2013 Automotive product revenue and
Other revenue declined, when compared to the same period in 2012, primarily
due to Florida Pneumatic's decision to place greater emphasis on expanding its
Retail and Industrial/catalog lines, as well as the loss of a large air filter
customer.

Hy-Tech focuses primarily on the industrial sector of the pneumatic tools
market.Hy-Tech manufactures and markets its own value-added line of air
tools and parts, as well as distributes a complementary line of sockets
("ATP").



          Three months ended March 31,
          2013                        2012                        Increase (decrease)
                        Percentof                  Percentof
          Revenue                     Revenue                     $             %
                        revenue                     revenue
ATP       $ 2,860,000   68.6       %  $ 2,624,000   61.7       %  $ 236,000     9.0     %
Hy-Tech     417,000     10.0            403,000     9.5             14,000      3.5
Machine
Major       820,000     19.7            1,095,000   25.7            (275,000)   (25.1)
customer
Other       70,000      1.7             133,000     3.1             (63,000)    (47.4)
Total     $ 4,167,000   100.0      %  $ 4,255,000   100.0      %  $ (88,000)    (2.1)   %



When comparing the first quarter of 2013 to the same period in the prior year,
ATP product revenue improved, due primarily to special orders shipped in the
first quarter of 2013. Additionally, Hy-Tech Machine products, which primarily
focus on the mining, construction and industrial manufacturing markets
("Hy-Tech Machine"), saw its first quarter of 2013 revenue increase slightly,
when compared to the same period in 2012. Finally revenue from its Major
customer declined, as we believe this customer has been reducing its
world-wide inventory levels during the first quarter of 2013.

Hardware

Our Hardware segment, which currently consists of only Nationwide, generates
revenue from the sale of fencing and gate hardware, kitchen and bath
accessories, OEM products and patio hardware.



          Three months ended March 31,
          2013                        2012                        Increase (decrease)
                        Percentof                  Percentof
          Revenue                     Revenue                     $             %
                        revenue                     revenue
Fence
and gate  $ 3,651,000   71.9       %  $ 3,078,000   66.3       %  $ 573,000     18.6    %
hardware
Kitchen     703,000     13.8            846,000     18.2            (143,000)   (16.9)
and Bath
OEM         364,000     7.2             433,000     9.3             (69,000)    (15.9)
Patio       362,000     7.1             288,000     6.2             74,000      25.7
Total     $ 5,080,000   100.0      %  $ 4,645,000   100.0      %  $ 435,000     9.4     %



The increase in Fence and gate hardware revenue is due primarily to an
expanding customer base, as well as from new product releases. The increase in
patio revenue is due primarily to increased activity in the sale of foreclosed
home units occurring primarily in Florida. When comparing the first quarter
of 2013 to the same period in 2012, OEM product line revenue declined,
primarily due to certain orders being delayed by its customers from the fourth
quarter 2011, to the first quarter of 2012. The continued softening of the
Kitchen and Bath market, in addition to Nationwide's largest Kitchen and Bath
customers filing for bankruptcy protection in late 2012, are the key factors
for the decline in the Kitchen and Bath product line revenue.



GROSS MARGINS / PROFITS

                           Three months ended
                                                         Increase (decrease)
                           March 31,
                           2013           2012           Amount         %
Tools                      $ 5,819,000    $ 3,832,000    $  1,987,000   51.9 %
As percent of respective     37.2      %    39.6      %  (2.4) pts.
revenue

                           $ 1,915,000    $ 1,779,000    $  136,000     7.6  %
Hardware
As percent of respective     37.7      %    38.3      %  (0.6) pts.
revenue

                           $ 7,734,000    $ 5,611,000    $  2,123,000   37.8 %
Consolidated
As percent of respective     37.3      %    39.2      %  (1.9) pts.
revenue





Tools

                  Threemonthsended
                                                Increase (decrease)
                  March 31,
                  2013           2012           Amount                %
Florida Pneumatic $ 4,046,000    $ 2,011,000    $ 2,035,000           101.2 %
As percentage of
respective          35.3      %    37.1      %    (1.8)      % pts.
revenue
Hy-Tech           $ 1,773,000    $ 1,821,000    $ (48,000)            (2.6)
As percentage of
respective          42.5      %    42.8      %    (0.3)      % pts.
revenue
Total Tools       $ 5,819,000    $ 3,832,000    $ 1,987,000           51.9
As percentage of                                             %
respective          37.2      %    39.6      %    (2.4)      pts.
revenue

The primary factor contributing to the 1.8 percentage point decline in Florida
Pneumatic's gross margin is the additional $6.4 million in Retail revenue,
which tends to generate lower gross margins compared to its other product
lines. However, with this increase in its Retail revenue, its gross profit
improved $2,035,000, or 101.2%, when comparing the first quarter of 2013 to
the same period in 2012. The change in Hy-Tech's gross margin and gross
profit was due largely to product / customer mix, partially offset by improved
cost of manufacturing.

Hardware

Gross margin at our Hardware segment during the first quarter of 2013 declined
0.6 percentage point, when compared to the same period in 2012. This decline
is primarily due to: (i) product / customer mix, and (ii) certain product cost
increases for which Nationwide is unable to pass through to its customers.
However, as the result of increased revenue, gross profit increased $136,000
during the first quarter of 2013, compared to the same period in 2012.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses, ("SG&A") include salaries and
related costs, commissions, travel, administrative facilities, communications
costs and promotional expenses for our direct sales and marketing staff,
administrative and executive salaries and related benefits, legal, accounting
and other professional fees, as well as general corporate overhead and certain
engineering expenses.

During the first quarter of 2013, our SG&A was $6,632,000, or 32.0% as a
percentage of revenue, compared to $4,740,000, or 33.1% of revenue during the
same three-month period in 2012. The most significant items contributing to
the increase are the incremental variable costs associated with the additional
Retail revenue generated at Florida Pneumatic, which includes, among other
things, commissions, warranty costs, freight out and advertising/promotional
fees, aggregating $1,229,000. Additionally, included in our first quarter of
2013 SG&A, is a one-time only marketing fee of $700,000 incurred by Florida
Pneumatic in connection with the initial roll-out to The Home Depot. Further,
our first quarter of 2013 SG&A compensation, which is comprised of base
salaries and wages, accrued performance-based bonus incentives, associated
payroll taxes and employee benefits, increased $176,000, when compared to the
same period in the prior year. The aforementioned increases were partially
offset by, among other things, reductions in professional fees and
depreciation and amortization expenses, which, in the aggregate were
$257,000.

INTEREST

Our net interest expense during the first quarter of 2013 was $109,000,
compared to $142,000 for the same period in the prior year. The most
significant factor affecting interest expense was a reduction in the
applicable loan margins that are added to both our LIBOR (London InterBank
Offered Rate) or Base Rate, as defined in the Credit Agreement borrowings.
The reduction in the interest rate is the result of the amendment to our
credit facility entered into in December 2012. The average balance of
short-term borrowings during the first quarter of 2013 was $7,244,000 compared
to $6,120,000 during the same three-month period in 2012.

OTHER INFORMATION

P&F Industries has scheduled a conference call for today, May 9, 2013, at
11:00 A.M., Eastern Time to discuss its first quarter of 2013 results.
Investors and other interested parties can listen to the call by dialing
866-796-3865, or via a live web cast accessible at www.pfina.com. To listen to
the web cast, please register and download audio software at the site at least
15 minutes prior to the call. For those who cannot listen to the live
broadcast, a replay of the call will also be available on the Company's
web-site beginning on or about May 11, 2013.

P&F Industries, Inc., through its two wholly owned operating subsidiaries,
Continental Tool Group, Inc. and Countrywide Hardware, Inc., manufactures
and/or imports air-powered tools sold principally to the industrial, retail
and automotive markets, and various residential hardware such as kitchen and
bath hardware, fencing hardware and door and window hardware primarily to the
housing industry. P&F's products are sold under their own trademarks, as well
as under the private labels of major manufacturers and retailers.

Safe Harbor Statement. This is a Safe-Harbor Statement under the Private
Securities Litigation Reform Act of 1995. Any forward-looking statements
contained herein, including those related to the Company's future performance,
and those contained in the comments of management, are based upon the
Company's historical performance and on current plans, estimates and
expectations, which are subject to various risks and uncertainties, including,
but not limited to, the strength of the retail, industrial, housing and other
markets in which the Company operates, the impact of competition, product
demand, supply chain pricing, the Company's debt and debt service requirements
and those other risks and uncertainties described in the Company's most recent
Annual Report on Form 10-K, and its other reports and statements filed by the
Company with the Securities and Exchange Commission. These risks could cause
the Company's actual results for the 2013 fiscal year and beyond to differ
materially from those expressed in any forward-looking statement made by or on
behalf of the Company. Forward-looking statements speak only as of the date on
which they are made, and the Company undertakes no obligation to update
publicly or revise any forward-looking statement, whether as a result of new
information, future developments or
otherwise.

P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands $)                           March 31, 2013 December 31, 2012
                                           (Unaudited)    (NOTE 1)
Assets
Cash                                       $   582      $     695
Accounts receivable - net                  13,350         6,675
Inventories - net                          23,473         24,073
Deferred income taxes - net                1,139          1,139
Prepaid expenses and other current assets  846            547
Total current assets                       39,390         33,129
Net property and equipment                 10,851         11,102
Goodwill                                   5,150          5,150
Other intangible assets - net              1,676          1,752
Deferred Income taxes – net                2,913          3,211
Other assets – net                         797            813
Total assets                               $    60,777 $   55,157
Liabilities and Shareholders' Equity
Short-term borrowings                      $    10,683 $   2,793
Accounts payable                           3,235          4,843
Other accrued liabilities                  3,121          4,332
Current maturities of long-term debt       460            460
Total current liabilities                  17,499         12,428
Long-term debt, less current maturities    7,248          7,363
Other liabilities                          274            278
Total liabilities                          25,021         20,069
Total shareholders' equity                 35,756         35,088
Total liabilities and shareholders' equity $    60,777 $    55,157

NOTE-1
The unaudited consolidated condensed balance sheet information as of
December31, 2012 was derived from the audited consolidated financial
statements included in the Company's Annual Report on Form10-K for the year
ended December31, 2012.



P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED

STATEMENTS OF EARNINGS
                                             Three months ended March 31,

                                             
(In thousands, except per share data)        2013          2012
                                             (Unaudited)   (Unaudited)
Net revenue                                  $   20,709  $    14,317
Cost of sales                                12,975        8,706
Gross profit                                 7,734         5,611
Selling, general and administrative expenses 6,632         4,740
Operating income                             1,102         871
Interest expense – net                       109           142
Income before income taxes                  993           729
Income tax expense                           372           23
Net income                                   $     621 $      706
Basic earnings per share                     $ 0.17        $     0 .20
Diluted earnings per share                   $ 0.16        $     0.19

SOURCE P&F Industries, Inc.

Website: http://www.pfina.com/
Contact: P&F Industries, Inc., Joseph A. Molino, Jr., Chief Financial Officer,
631-694-9800
 
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