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