P&F Industries Reports Results For The Three-Month Period Ended March 31, 2014

P&F Industries Reports Results For The Three-Month Period Ended March 31, 2014

PR Newswire

MELVILLE, N.Y., May 13, 2014

MELVILLE, N.Y., May 13, 2014 /PRNewswire/ --P&F Industries, Inc. (NASDAQ:
PFIN)  today announced its results of operations for the three-month period
ended March 31, 2014.

P&F Industries, Inc. is reporting revenue of $15,932,000 for the three-month
period ended March 31, 2014, compared to $20,709,000, for the same period in
2013. The Company is reporting income before income taxes of $719,000 and
$993,000 for the three-month periods ended March 31, 2014 and 2013. Further,
for the three-month period ended March 31, 2014, the Company is reporting
income after taxes of $462,000 compared to $621,000 in the same period in the
prior year. Lastly, the Company's basic and diluted earnings per share were
$0.13 and $0.12, respectively for the three-month period ended March 31, 2014,
compared to $0.17 and $0.16, respectively, for the same period in 2013.

Richard Horowitz, the Company's Chairman of the Board, Chief Executive Officer
and President commented, "The added revenue during the first quarter of 2013
from the initial roll-out of air tools to The Home Depot, not being repeated
this year is the primary factor for the difference in year-over-year revenue
and profits. Having said that, now The Home Depot business is more
normalized. Additionally, our decision to sell the Kitchen and Bath product
line in November 2013 also contributed to the decline in revenue. Further, we
believe the sluggish economy and extremely harsh weather encountered across
the country during the first quarter of this year negatively impacted our
revenue at all our companies."

The table below provides an analysis of our net revenue for the three-month
periods ended March 31, 2014 and 2013:

Revenue

                   Three months ended March 31,
                                               Increase (decrease)
                   2014          2013          $              %
Tools
Florida Pneumatic  $ 7,475,000   $ 11,462,000  $ (3,987,000)   (34.8)  %
Hy-Tech              3,716,000     4,167,000     (451,000)     (10.8)
Tools Total          11,191,000    15,629,000    (4,438,000)   (28.4)
Hardware
Hardware Total       4,741,000     5,080,000     (339,000)     (6.7)
Consolidated       $ 15,932,000  $ 20,709,000  $ (4,777,000)   (23.1)  %

Tools

Florida Pneumatic markets its air tool products to two primary sectors within
the pneumatic tool market; 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 product line, as
well as a line of air filters and other OEM parts ("Other").

                    ThreemonthsendedMarch31,
                    2014                        2013                        Increase(decrease)
                                 Percentof                  Percentof
                    Revenue                     Revenue                     $              %
                                 revenue                      revenue
Retail customers    $ 5,291,000  70.8        %  $ 8,878,000   77.5       %  $ (3,587,000)  (40.4)  %
Industrial/catalog    1,505,000  20.1             1,919,000   16.7            (414,000)    (21.6)
Automotive            296,000    4.0              267,000     2.3             29,000       10.9
Other                 383,000    5.1              398,000     3.5             (15,000)     (3.8)
Total               $ 7,475,000  100.0       %  $ 11,462,000  100.0      %  $ (3,987,000)  (34.8)  %

The primary cause of the decline in Retail revenue at Florida Pneumatic is due
to the initial roll-out to The Home Depot ("THD") occurring in the first
quarter of 2013, compared to first quarter of 2014 shipments to THD, which
were at normal/expected replenishment levels. Additionally, there was a slight
decline in its Sears Holdings Corporation revenue further impacting our
quarterly results. The decline in the Industrial/catalog revenue was due in
part to an on-going reduction of orders from our catalog customers. We
believe certain catalog customers have added additional air tool suppliers,
thus reducing our revenue from these customers. Industrial revenue remains
sluggish, most notably in the aerospace market. We believe this weakness may
continue at least through the first half of 2014. First quarter of 2014
Automotive product revenue improved when compared to the same period in 2013.
Florida Pneumatic's Other revenue, which includes its Berkley product line,
air filters and other OEM products, declined modestly when compared to the
same period in 2013, primarily due to Florida Pneumatic's decision to place
greater emphasis on expanding its other product lines.

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,
          2014                       2013                         Increase
                                                                  (decrease)
          Revenue      Percentof    Revenue      Percentof    $             %
                       revenue                    revenue
ATP       $ 2,562,000  68.9       %  $ 2,860,000  68.6       %  $ (298,000)   (10.4)   %
Other       451,000    12.2            487,000    11.7            (36,000)    (7.4)
Major       703,000    18.9            820,000    19.7            (117,000)   (14.3)
customer
Total     $ 3,716,000  100.0      %  $ 4,167,000  100.0      %  $ (451,000)   (10.8)   %

Primary factors contributing to the net decline in ATP product line revenue
include, but are not limited to the prolonged harsh winter conditions across
the United States, and to a lesser extent, the placement of purchase orders
from overseas customers that occurred in the first quarter of 2013, which we
anticipate will occur later in 2014. Hy-Tech's Other revenue, which consists
of the sale of gears, sprockets, splines and hydraulic stoppers, as well as
other machine-made parts and tools, declined due primarily to weaker than
expected gear volume. Lastly, revenue from its Major customer declined, as we
believe this customer continues to reduce its world-wide inventory levels.

Hardware

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

                 ThreemonthsendedMarch31,
          2014                      2013                        Increase(decrease)
          Revenue      Percentof    Revenue      Percentof    $             %
                       revenue                    revenue
Fence
and gate  $ 3,932,000  82.9       %  $ 3,639,000  71.6       %  $ 293,000     8.1      %

hardware
OEM         399,000    8.4             349,000    6.9             50,000      14.3
Patio       410,000    8.7             390,000    7.7             20,000      5.1
Kitchen     ---        ---             702,000    13.8            (702,000)   (100.0)
and Bath
Total     $ 4,741,000  100.0      %  $ 5,080,000  100.0      %  $ (339,000)   (6.7)    %

Fence and gate hardware continue to be the driving force at Nationwide. Its
growth is due primarily to an expanding customer base, as well as new product
releases. When comparing the first quarter of 2014 to the same period in
2013, the OEM product line revenue increased due primarily to inventory level
adjustments at a major customer, as well as slight up-tick in new home
construction. The increase in patio revenue is due primarily to increased
activity in the sale of foreclosed home units occurring primarily in Florida.
Lastly, our decision in November 2013 to sell the Kitchen and Bath product
line to an unrelated third party contributed to the decrease in revenue in
this segment, when comparing the three-month periods ended March 31, 2014 and
2013. However, despite the loss of the Kitchen and Bath revenue, Nationwide
was able to improve its operating income by 9.5%

Gross Margins / Profits

                     Threemonthsended            Increase (decrease)
                     March31,
                     2014           2013           Amount             %
Tools                $ 4,149,000    $ 5,819,000    $ (1,670,000)      (28.7) %
As percent of          37.1      %    37.2      %  (0.1)         pts.
respective revenue
Hardware             $ 1,886,000    $ 1,915,000    $ (29,000)         (1.5)  %
As percent of          39.8      %    37.7      %  2.1           pts.
respective revenue
Consolidated         $ 6,035,000    $ 7,734,000    $ (1,699,000)      (22.0) %
As percent of          37.9      %    37.3      %  0.6           pts.
respective revenue

Tools

                    Threemonthsended                    Increase(decrease)
                    March31,
                    2014            2013           Amount             %
Florida Pneumatic   $ 2,626,000   $ 4,046,000    $ (1,420,000)        (35.1) %
As percent of         35.1      %   35.3      %    (0.2)       %pts.
respective revenue
Hy-Tech             $ 1,523,000   $ 1,773,000    $ (250,000)          (14.1) %
As percent of         41.0      %   42.5      %    (1.5)       %pts.
respective revenue
Total Tools         $ 4,149,000   $ 5,819,000    $ (1,670,000)        (28.7) %
As percent of         37.1      %   37.2      %    (0.1)       %pts.
respective revenue

The primary factor contributing to the slight decline in Florida Pneumatic's
gross margin is product mix. However, the primary factor to the reduced gross
profit was the result of lower revenue, as discussed earlier. Hy-Tech's base
gross margin improved slightly; however, lower absorption of manufacturing
overhead due to lower machine hours caused its overall gross margins to be
lower than a year ago. The reduced gross margin on lower revenue resulted in a
14.1% decline in Hy-Tech's gross profit.

Hardware

First quarter 2014 gross margin at Nationwide improved primarily due to the
elimination of the Kitchen & bath product line, which generally provided a
lower gross margin than that of Nationwide's other product lines. As a
result, despite the revenue reduction of $339,000, Nationwide's fiscal first
quarter of 2014 gross profit declined only $29,000, compared to the same
period in 2013.

Selling and 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 2014, our SG&A was $5,227,000, or 32.8% of
revenue, compared to $6,610,000, or 31.9% of revenue during the same
three-month period in 2013. A significant factor contributing to the decrease
in SG&A is the reduction of $552,000 in incremental variable costs associated
with the decline in Retail revenue at Florida Pneumatic, which includes among
other costs, commissions, warranty costs, freight out and
advertising/promotional fees. Additionally, included in our first quarter
2013 SG&A, was a one-timefee of $700,000 incurred by Florida Pneumatic in
connection with the initial roll-out to THD. Further, our first quarter of
2014 SG&A compensation, which is comprised of base salaries and wages, accrued
performance-based bonus incentives, associated payroll taxes and employee
benefits decreased by $68,000, when compared to the same period in the prior
year. Lastly, depreciation and amortization expenses declined an aggregate
$32,000.

Interest

Our interest expense during the first quarter of 2014 was $89,000, compared to
$131,000 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 average balance of short-term
borrowings during the first quarter of 2014 was $1,116,000, compared to
$7,244,000 during the same three-month period in 2013. Included in our
interest expense is amortization expense of debt financing costs of $22,000 in
both the first quarter of 2014 and 2013.

Income Taxes

At the end of each interim reporting period, the Company estimates its
effective tax rate expected to be applied for the full year. This estimate is
used to determine the income tax provision on a year-to-date basis and may
change in subsequent interim periods. Our effective tax rate for the three
months ended March 31, 2014 and March 31, 2013 was 35.7% and 37.5%,
respectively. The Company's effective tax rate for both periods was affected
primarily by state taxes and nondeductible expenses.

OTHER INFORMATION

P&F Industries has scheduled a conference call for today, May 13, 2014, at
11:00 A.M., Eastern Time to discuss its first quarter of 2014 results.
Investors and other interested parties can listen to the call by dialing
866-548-2693, or via a live web cast accessible at
www.800rollcall.com/webpresenter/. To listen to the web cast, please register
at the site at least 15 minutes prior to the call by entering a participant
code, 8741394. 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 14, 2014.

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 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 2014 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 BALANCE SHEET
(In thousands)                             March 31, 2014 December 31, 2013
                                                         

                                           (Unaudited)    (Audited)
Assets
Cash                                       $   583        $      413
Accounts receivable - net                      9,889             8,739
Inventories - net                              22,689            22,974
Deferred income taxes - net                    1,168             1,168
Prepaid expenses and other current assets      878               829
Total current assets                           35,207            34,123
Net property and equipment                     10,037            10,229
Goodwill                                       5,150             5,150
Other intangible assets - net                  1,444             1,502
Deferred Income taxes – net                    1,363             1,594
Other assets – net                             611               643
Total assets                               $   53,812     $      53,241
Liabilities and Shareholders' Equity
Short-term borrowings                      $   2,250      $      360
Accounts payable                               2,495             3,006
Other accrued liabilities                      2,271             3,520
Current maturities of long-term debt           460               460
Total current liabilities                      7,476             7,346
Long-term debt, less current maturities        6,788             6,903
Other liabilities                              258               262
Total liabilities                              14,522            14,511
Total shareholders' equity                     39,290            38,730
Total liabilities and shareholders' equity $   53,812     $      53,241



P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
                                             Three months ended March 31,
(In thousands, except per share data)        2014          2013
                                             (Unaudited)   (Unaudited)
Net revenue                                  $    15,932   $      20,709
Cost of sales                                     9,897           12,975
Gross profit                                      6,035           7,734
Selling, general and administrative expenses      5,227           6,610
Operating income                                  808             1,124
Interest expense – net                            89              131
Income before income taxes                       719             993
Income tax expense                                257             372
Net income                                   $    462      $      621
Basic earnings per share            $             0.13     $      0.17
Diluted earnings per share          $             0.12        $   0.16



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, www.pfina.com
 
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