P&F Industries, Inc. (Nasdaq:PFIN) today announced its results
of operations for the three and six-month periods ended June 30,
2012.
P&F Industries, Inc. is reporting revenue from continuing
operations of $15,241,000 and $29,558,000, respectively, for the
three and six-month periods ended June 30, 2012, compared to
$14,164,000 and $27,617,000, respectively, for the same periods in
2011. For the three and six-month periods ended June 30, 2012 the
Company is reporting income from continuing operations before
income taxes of $839,000 and $1,577,000, respectively, compared to
$828,000 and $1,307,000, respectively, for the same periods in
2011. Additionally, for the three and six-month periods ended June
30, 2012 the Company is reporting after-tax income from continuing
operations of $812,000 and $1,527,000, respectively, compared to
after-tax income from continuing operations of $828,000 and
$1,307,000, respectively, for the same periods in 2011.
The Company reported basic and diluted earnings (loss) per
common share of:
|
For the three month
period |
For the six month period
ended |
|
ended June 30 |
June 30 |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
Basic earnings (loss) per common share |
|
|
|
|
Continuing operations |
$0.23 |
$0.23 |
$0.43 |
$0.36 |
Discontinued operations |
(0.01) |
-- |
(0.01) |
(0.01) |
Net earnings per common share |
$0.22 |
$0.23 |
$0.42 |
$0.35 |
|
|
|
|
|
Diluted earnings (loss) per common share |
|
|
|
|
Continuing operations |
$0.23 |
$0.22 |
$0.42 |
$0.35 |
Discontinued operations |
(0.01) |
-- |
(0.01) |
(0.01) |
Net earnings per common share |
$0.22 |
$0.22 |
$0.41 |
$0.34 |
Richard Horowitz, the Company's Chairman of the Board, Chief
Executive Officer and President commented, "During the second
quarter of 2012, despite the sluggish economic environment, we
continued the positive momentum generated in the first quarter, as
highlighted by the increase in revenue at both our Tools and
Hardware segments. Most notable was the 18.3% increase in
revenue at Nationwide Industries. Our management teams
throughout our subsidiaries remain focused on successfully
expanding their presence in their respective markets, without
sacrificing quality or customer service."
The Company is reporting that revenue at its Tools segment
during the second quarter of 2012, and first six months of 2012,
reflect a slight improvement when compared to the same periods in
the prior year. Specifically, second quarter of 2012 revenue
at the Tools segment was $9,673,000, compared to $9,459,000 for the
second quarter of 2011. During the first six months of 2012 the
Tools segment revenue was $19,345,000, compared to $19,179,000 in
the same period in the prior year.
During the second quarter of 2012, Florida Pneumatic continued
its growth in the higher gross margin industrial/catalog sector. As
such, it was able to increase revenue generated within this sector
by $214,000, when compared to the second quarter of 2011. The
Company intends to continue to expand its marketing efforts in the
industrial/catalog market going forward. Revenue from Florida
Pneumatic's major retail customer improved $114,000, when compared
to the same three-month period in 2011. This net increase is due
primarily to greater sales of pneumatic tool accessories, specialty
and promotional items, offset by a slight decline in basic stock
products. Berkley pipe threading products, as well as a line
of air filters and other OEM parts ("other revenue"), in the
aggregate, increased $1,000, when comparing the second quarter of
2012 to the same three-month period in 2011, and automotive product
sales declined $40,000, partially offsetting the above-mentioned
improvements.
During the first six months of 2012, revenue at Florida
Pneumatic increased $132,000 when compared to the same period in
2011. Industrial/catalog revenue during the first six months of
2012 improved $677,000, increasing its percentage of Florida
Pneumatics total revenue to 36.7%, which is 5.9 percentage points
higher than the first six months of 2011. This increase is due in
large part to Florida Pneumatic's on-going expansion and success of
its marketing efforts in this sector. Additionally,
other revenue improved an aggregate of $98,000 during the first six
months of 2012, when compared to the same period in the prior
year. However, when comparing the first six months of
2012 and 2011, revenue from its major retail customer decreased
$636,000. This decline is due primarily to reduced levels
during 2012 of orders for basic stock items, partially offset
by increased orders of promotional and specialty items and
pneumatic tool accessories.
Hy-Tech manufactures quality replacement parts for pneumatic
tools, markets its own value/added line of air tools and
distributes a complementary line of sockets ("ATP"). Additionally,
Hy-Tech also manufactures and markets a line of products that
primarily focuses on mining, construction and industrial
manufacturing markets ("Hy-Tech Machine").
Second quarter of 2012 total revenue at Hy-Tech was $4,267,000,
compared to $4,342,000 for the same period in 2011. This
slight decrease is due to a reduction in revenue of Hy-Tech Machine
products of $9,000, and a decline in revenue of $137,000 from its
major customer. Compared to last year, the shortfall in
revenue is primarily due to the fact that much of the sales to this
customer during the second quarter of 2011 were from then existing
manufactured inventory on hand, whereas a higher percentage of
sales to this customer during the second quarter of 2012 was from
inventory that was manufactured in 2012. Partially offsetting the
above declines were increases in revenue at its ATP and other
product lines of $20,000 and $51,000, respectively.
Hy-Tech's revenue for the six-month period ended June 30, 2012
was $8,522,000 compared to $8,488,000 in the same period in
2011. Specifically, revenue during the first six months of
2012 from its major customer improved to $1,903,000 compared to
$1,538,000 during the same period a year ago. This improvement is
due in part to an increase in product demand in this customer's
global business. ATP revenue during the first six months
of 2012 was $5,539,000 compared to $5,815,000 in the same period in
2011. This decline was due in part to an unusually large order in
2011, which did not repeat in 2012. Revenue during the six
month period ended June 30, 2012 of Hy-Tech Machine products was
$834,000, compared to $960,000 for the same period in the prior
year. This change is due in large part to their decision to
allocate labor and overhead to manufacturing for, and servicing, of
its major customer. Other revenue during the first six
months of 2012 was $246,000, compared to $175,000 during the same
period in 2011.
P&F's Hardware segment, which consists exclusively of
Nationwide Industries Inc., is reporting second quarter of 2012
revenue of $5,568,000, compared to $4,705,000 for the same period
in 2011. The most significant portion of Nationwide's growth
has been in its fence and gate hardware line, where second quarter
2012 revenue improved to $4,121,000 from $3,324,000. This
improvement is due primarily to the introduction of new products,
as well as to expanded marketing efforts, which effectively has
increased the size of its customer base. When comparing
the second quarter of 2012 to 2011, Nationwide increased its
kitchen and bath product line revenue to $696,000, compared to
$611,000. The Company believes contributing factors to this growth
include an enhanced product line, which consists of a newer, higher
quality suite of products, and a slight improvement within the
manufactured housing market. Additionally, when comparing the
second quarter of 2012 to 2011, revenue generated from its patio
products line improved to $344,000, from $263,000. The
increase in patio revenue is due in part to increased activity in
the sale of foreclosed housing. Lastly, second quarter 2012
OEM revenue was $407,000, down from $507,000 reported during the
same period in 2011. As the result of significant pricing pressure
along with a dwindling market, the Company has placed less emphasis
on this product line.
Nationwide's revenue for the six-month period ended June 30,
2012 increased to $10,213,000 from $8,438,000 in the same six-month
period in 2011. Nearly 83% of this increase was generated from
the fence and gate hardware product line, which has, during the
first six months of 2012, increased to $7,199,000, compared to
$5,726,000 in the same period the prior year. This improvement is
due primarily to the introduction of new products, as well as to
expanded marketing efforts, which effectively has increased the
size of its customer base. As the result of slightly
improved conditions in the manufactured housing market and an
updated product offering, Nationwide also increased its kitchen and
bath product line revenue to $1,542,000 in the first half of 2012,
compared to $1,371,000 in the same period in 2011. With
respect to its OEM product line, Nationwide has year-to-date
revenue of $839,000, compared to $874,000 in the same six-month
period a year ago. Patio revenue for the first six
months of 2012 increased to $633,000 from $467,000 during the
six-month period ended June 30, 2011, due primarily to an increase
in the sale of foreclosed units, which tend to require repair /
replacement of patio enclosures.
Gross margin generated by our Tools segment during the second
quarter of 2012 and 2011 were 36.9% and 37.4%,
respectively. As the result of improved revenue, second
quarter of 2012 gross margin was $3,566,000 compared to the second
quarter of 2011 of $3,537,000. Specifically, Florida
Pneumatic's gross margin and gross profit for the second quarter of
2012 was 33.1% and $1,791,000, respectively, compared to 34.9% and
$1,787,000, respectively, during the second quarter of
2011. It should be noted that Florida Pneumatic recorded
a charge of $133,000 in the second quarter of 2012, which had the
effect of negatively impacting its gross margin. This charge
represents the estimated amount of unpaid import duty relating to
certain of its products imported during the period January 1, 2009
through June 19, 2012. The Company addressed the issues that
resulted in such under-payment and has implemented enhanced
processes which it believes will prevent under-payments of import
duty in the future. Hy-Tech's gross margin and gross profit
for the second quarter of 2012 was 41.6% and $1,775,000,
respectively, compared to 40.3% and $1,750,000, respectively, for
the same period in 2011. The improvement in gross margin at
Hy-Tech is the result of product mix, as well as improved cost of
manufacturing.
Gross margin generated by our Tools segment during the first six
months of 2012 and 2011 were 38.2% and 37.8%. Gross profit for
the same periods were $7,398,000 and $7,248,000,
respectively. Florida Pneumatic's gross margin for the first
six months of 2012 was 35.1%, compared to 35.3% in the same period
in the prior year. Despite this decrease in gross margin, as the
result of improved revenue, its gross profit increased to
$3,802,000 during the six-month period ended June 30, 2012 from
$3,769,000 in the same period a year ago. As stated above,
Florida Pneumatic recorded a $133,000 charge during the second
quarter of 2012, which negatively impacted its year-to-date
results. For the six-month period ended June 30, 2012,
Hy-Tech increased its gross margin and gross profit to 42.2%
and $3,596,000, respectively, compared to 41.0% and $3,479,000,
respectively, for the same six-month period in the prior
year. The improvement at Hy-Tech was generated primarily
through product mix, as well as through improved cost of
manufacturing.
Gross margin generated during the second quarter of 2012 by our
Hardware segment was 37.9%, compared to 41.3% in the same period in
2011. Increases in overseas raw material costs, such as
aluminum, copper and magnets, as well as increased labor costs, are
the key factors contributing to Nationwide's increased cost of
sales for the three-month period ended June 30, 2012. Further,
in order to meet customer demand, Nationwide, during the
three-month period ended June 30, 2012, elected to have certain
products shipped via air freight from its overseas suppliers to its
warehouse in Florida, thus increasing its freight-in
costs. Despite the reduction in gross margin, when comparing
the second quarter of 2012 to 2011, Nationwide was able to increase
gross profit to $2,111,000 from $1,943,000, due to the increase in
its revenue.
During the six-month period ended June 30, 2012, gross margin at
our Hardware segment was 38.1% compared to 39.8% in the same period
in 2011. However, as the result of an increase of $1,775,000 in
Nationwide's revenue during the first six months of 2012 compared
to the same period a year ago, its gross profit improved
$535,000. Significant factors contributing to the slight
decline in Nationwide's gross margin were increases in overseas raw
material costs, such as aluminum copper and magnets, as well as
increased labor costs. Additionally, as discussed above,
Nationwide, elected to have certain products shipped via air
freight from its overseas suppliers to its warehouse in Florida,
thus negatively impacting its year-to-date gross margin and gross
profit.
During the second quarter of 2012, the Company's selling,
general and administrative expenses ("SG&A") was $4,705,000,
compared to $4,454,000 for the same three-month period in 2011.
Stated as a percentage of revenue, SG&A for the three-month
period ended June 30, 2012 was 30.9%, compared to 31.4% during the
same period in the prior year. Significant line items
contributing to the increase include: (i) an increase of $133,000
in compensation, which is comprised of base salaries and wages,
performance-based bonus incentives and associated payroll taxes and
employee benefits; (ii) variable expenses, which include
commissions, freight out and travel and entertainment costs,
increased an aggregate amount of $51,000, and (iii) an increase in
depreciation and amortization expense of $25,000 and (iv) Florida
Pneumatic recorded a charge of $167,000 in the second quarter of
2012 for estimated potential penalties, interest and related fees
and expenses in connection with the unpaid import duty relating to
certain products imported by Florida Pneumatic as discussed above.
The increases noted above were partially offset by reductions in
professional fees of $46,000; rent and utilities of $37,000, due in
part to a new lease agreement covering our corporate offices in New
York, and advertising and promotional costs of $35,000.
Our SG&A for the six-month period ended June 30, 2012 was
$9,436,000, compared to $8,877,000 incurred during the same period
in 2011. Stated as a percentage of revenue, our SG&A
for the first six months of 2012 was 31.9%, compared to 32.1%
during the same period in the prior year. As the result of
increased revenue, our variable expenses, which include
commissions, freight out and travel and entertainment costs
increased an aggregate amount of $104,000. Additionally,
compensation, which includes wages, associated payroll taxes and
employee benefits, as well as performance-based bonus incentives,
which are driven primarily by net earnings, increased $389,000.
Depreciation and amortization costs also increased $53,000. Lastly,
during the second quarter of 2012 the Company recorded a charge of
$167,000 for estimated potential penalties and related fees and
expenses in connection with unpaid import duty relating to certain
products imported by Florida Pneumatic during the period January 1,
2009 through June 19, 2012. The increases were partially
offset by a decrease of $43,000 in rent and utilities, due in part
to a new lease agreement covering our corporate offices in New
York, and a decrease in advertising and promotional costs of
$101,000, due primarily to a new agreement with our major retail
customer.
Interest expense during the second quarter of 2012 was $133,000,
compared to $198,000 for the same period in the prior
year. The most significant item affecting interest expense
this quarter was a reduction in our short-term borrowings during
the comparative three-month periods ending June 30, 2012 and
2011. The average balance of short-term borrowings during the
second quarter of 2012 was $6,645,000, compared to $8,464,000
during the same three-month period in 2011. As a result,
interest expense attributable to short-term borrowing decreased to
$49,000 during the second quarter of 2012, from $84,000, during the
second quarter of 2011. In 2011, the Company repaid the balance
owed to the sellers of Hy-Tech; as a result, there was no interest
expense attributable to this debt during the second quarter of
2012, compared to $12,000 in the second quarter of
2011. Interest expense incurred in connection with our Term
Loan was $79,000 during the second quarter of 2012, compared to
$89,000 incurred during the same period in the prior year. Further,
during 2011, the Company repaid $500,000 of the Subordinated Loans,
which effectively reduced our interest expense during the second
quarter of 2012 to $5,000, compared to $13,000 in the second
quarter of 2011.
Interest expense for the six-month period ended June 30, 2012
was $275,000, compared to $419,000 for the same period in
2011. The most significant item contributing to the
reduction in interest expense was the reduction in our short-term
revolver borrowings during the comparative periods. The
average balance of short-term borrowings during the first six
months of 2012 was $6,383,000, compared to $9,226,000 during the
same period in 2011. As a result, interest expense
attributable to short-term borrowing during the first six months of
2012 was $96,000, compared to $188,000 for the same period in the
prior year. In 2011, the Company repaid the balance owed to
the sellers of Hy-Tech; as a result, there was no interest expense
attributable to this debt during 2012, compared to $23,000 during
the six month period ended June 30, 2011. Interest expense
incurred in connection with our Term Loan was $169,000 during the
first six months of 2012, compared to $180,000 incurred during the
same period in the prior year. Further, during 2011, the Company
repaid $500,000 of the Subordinated Loans, which effectively
reduced our interest expense during the first six months of 2012
Loans to $10,000, compared to $28,000 in the six-month period ended
June 30, 2011.
The effective tax rate applied to the Company's income from
continuing operations for the three and six-month periods ended
June 30, 2012 was 3.2%. This rate is due to its ability to
utilize net operations loss carry-forwards that can be applied to
current year income. The Company currently believes that this
effective tax rate will be applied for the remainder of 2012, due
to the availability of additional net operating loss
carry-forwards.
OTHER INFORMATION
General. P&F Industries has scheduled a
conference call for today, August 13, 2012, at 11:00 A.M., Eastern
Time to discuss its second quarter of 2012 results and other
developments relating to the Company. 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 August
14, 2012.
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, as
well as various residential hardware such as, fencing hardware,
door and window hardware, and kitchen and bath hardware.
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 reports and
statements filed by the Company with the Securities and Exchange
Commission, including, among others, those described in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2011. These risks could cause the Company's actual
results for the 2012 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 Thousand $) |
June 30, 2012 |
December 31,
2011 |
|
(Unaudited) |
(Audited) |
Assets |
|
|
Cash |
$ 94 |
$ 443 |
Accounts receivable - net |
7,877 |
6,327 |
Inventories - net |
17,991 |
18,588 |
Deferred income taxes - net |
512 |
512 |
Prepaid expenses and other current
assets |
641 |
454 |
Assets of discontinued operations |
23 |
23 |
|
|
|
Total current assets |
27,138 |
26,347 |
|
|
|
Net property and equipment |
10,715 |
10,766 |
Goodwill |
5,150 |
5,150 |
Other intangible assets - net |
1,951 |
1,950 |
Deferred income taxes – net |
1,595 |
1,595 |
Other assets – net |
691 |
778 |
Total assets |
$ 47,240 |
$ 46,586 |
|
|
|
Liabilities and Shareholders'
Equity |
|
|
Short-term borrowings |
$ 5,103 |
$ 5,648 |
Accounts payable |
2,230 |
2,229 |
Accrued liabilities |
3,418 |
3,338 |
Liabilities of discontinued operations |
24 |
24 |
Current maturities of long-term debt |
732 |
1,039 |
|
|
|
Total current
liabilities |
11,507 |
12,278 |
|
|
|
Long-term debt, less current maturities |
4,700 |
4,861 |
Liabilities of discontinued operations |
285 |
292 |
|
|
|
Total liabilities |
16,492 |
17,431 |
|
|
|
Total shareholders'
equity |
30,748 |
29,155 |
|
|
|
Total liabilities and
shareholders' equity |
$ 47,240 |
$ 46,586 |
|
|
|
|
P & F INDUSTRIES,
INC. AND SUBSIDIARIES |
|
|
|
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME |
|
|
Three months
ended June 30, |
Six months ended
June 30, |
(In Thousand $) |
2012 |
2011 |
2012 |
2011 |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
Net revenue |
$15,241 |
$14,164 |
$29,558 |
$27,617 |
Cost of sales |
9,564 |
8,684 |
18,270 |
17,014 |
Gross profit |
5,677 |
5,480 |
11,288 |
10,603 |
Selling, general and admin expenses |
4,705 |
4,454 |
9,436 |
8,877 |
Operating income |
972 |
1,026 |
1,852 |
1,726 |
Interest expense |
133 |
198 |
275 |
419 |
Income from continuing operations before
income taxes |
839 |
828 |
1,577 |
1,307 |
Income tax expense |
27 |
-- |
50 |
-- |
Income from continuing operations |
812 |
828 |
1,527 |
1,307 |
Loss from discontinued operations (net of tax
benefit of $-0- for the three and six- month periods ended June 30,
2012 and 2011) |
(16) |
(11) |
(25) |
(28) |
Net income |
$796 |
$817 |
$1,502 |
$1,279 |
CONTACT: P&F Industries, Inc.
Joseph A. Molino, Jr.
Chief Financial Officer
631-694-9800
www.pfina.com
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