MELVILLE, N.Y., Nov. 9, 2016 /PRNewswire/ -- P&F
Industries, Inc. (NASDAQ: PFIN) today announced its results
from continuing operations for the three and nine-month periods
ended September 30, 2016.
P&F Industries, Inc. is reporting third quarter 2016 revenue
from continuing operations of $14,633,000, compared to $15,924,000, for the third quarter of 2015.
For the nine-month period ended September
30, 2016, the Company's revenue from continuing operations
was $44,769,000, compared to
$46,541,000, during the same period a
year ago. The Company is reporting a loss from continuing
operations before taxes of $393,000
and $8,462,000, for the three and
nine-month periods ended September
30, 2016. Its year to date loss is resulting primarily
from the non-cash impairment charge to goodwill and other
intangible assets of $8,311,000,
recorded during the second quarter of 2016. Income from
continuing operations before income taxes were $776,000 and $2,274,000, respectively, for the same three and
nine month periods in 2015. The Company is reporting a net
loss from continuing operations for the three and nine-month
periods ended September 30, 2016 of
$286,000, and $5,590,000, respectively, compared to net income
from continuing operations during the same periods in 2015 of
$505,000 and $1,510,000.
Richard Horowitz, the Company's
Chairman of the Board, Chief Executive Officer and President
commented, "While the overall results for the company are
disappointing and show a loss, primarily due to certain factors
impacting Hy-Tech's results, I wish to give further insight into
the numbers, and point out several details that provide a more
encouraging outlook and why we are optimistic about our
future. First, in the third quarter we increased our
allowance for slow moving inventory at Hy-Tech by $427,000. This adjustment will reverse, to
the extent these products are consumed in the manufacturing
process, or sold separately. Second, in September, we began
shipping new products that utilize our extensive air tool motor
manufacturing knowledge to new OEM markets and customers. We
have additional multiple customer sponsored projects currently
underway in areas we have not traditionally marketed to, that we
believe could replace a portion of the revenue lost due to the
energy industry downturn. These projects are targeted to
evolve over the next several quarters, and we remain confident that
they should strengthen and diversify our revenue base going
forward. Third, we believe the downturn we have seen in the
energy industry, based on the indices we monitor, appears to be
stabilizing. As such, as the new sources of revenue we are
developing begin to gain momentum, Hy-Tech's total revenue should
begin to improve."
Mr. Horowitz continued, "Florida Pneumatic continued its strong
performance, due primarily to the growth of its AIRCAT product
line. We intend to continue to release additional AIRCAT
products later this year and next. Further, our strategic plan is
to move into other sectors of the automotive market, leveraging off
of our strategic relationships with the industry's major
distributors. Florida Pneumatic's retail business is steady,
and while its industrial/catalog sector has been impacted by the
energy activity fall-off, this is not significant enough to
dramatically slow its overall trajectory, as this sector represents
a relatively small percentage of their revenue."
Mr. Horowitz added, "On November, 1st, we closed on
the sale of the Tampa building
that was the headquarters of our former Nationwide
subsidiary. After fees and expenses, we received
approximately $3.5 million, which was
used to eliminate substantially all of our bank debt. As the
result of the execution of our business strategy, and our projected
continuing positive cash flows, P&F is not expected to be a
significant borrower until such time as when we have a need due to
possible expansion through acquisition or otherwise, or for other
strategic needs. Notwithstanding the non-cash charges
we incurred during the three and nine month period, we believe that
our financial position, cash flow and continuing implementation of
our business strategy, should enable us to continue to pay our
regular quarterly dividend for the reasonably foreseeable
future."
He concluded his remarks by stating, "We believe this is a time
of positive transition for P&F. While selling Nationwide has
reduced the size of our comapny, as part of our stratigetic plan,
we are focused on expanding our position in the power tool and
accessories market, and intend to grow the company from its current
level both organically and opportunistically through attractive and
synergistic acquisitions."
The Company will be reporting the following:
|
|
Three months ended
September 30,
|
|
|
|
|
|
|
|
Increase
(decrease)
|
|
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
Tools
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
Pneumatic
|
|
$
|
11,702,000
|
|
$
|
11,729,000
|
|
$
|
(27,000)
|
|
|
(0.2)
|
%
|
Hy-Tech
|
|
|
2,931,000
|
|
|
4,195,000
|
|
|
(1,264,000)
|
|
|
(30.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
14,633,000
|
|
$
|
15,924,000
|
|
$
|
(1,291,000)
|
|
|
(8.1)
|
%
|
|
|
|
Nine months ended September 30,
|
|
|
|
|
|
|
|
Increase
(decrease)
|
|
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
Tools
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
Pneumatic
|
|
$
|
35,270,000
|
|
$
|
33,986,000
|
|
$
|
1,284,000
|
|
|
3.8
|
%
|
Hy-Tech
|
|
|
9,499,000
|
|
|
12,555,000
|
|
|
(3,056,000)
|
|
|
(24.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
44,769,000
|
|
$
|
46,541,000
|
|
$
|
(1,772,000)
|
|
|
(3.8)
|
%
|
Florida Pneumatic
Florida Pneumatic markets its air tool products to three primary
sectors within the pneumatic tool market; retail,
industrial/catalog and 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").
|
|
Three months ended September
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
Increase (decrease)
|
|
|
|
Revenue
|
|
Percent of
revenue
|
|
|
Revenue
|
|
Percent of
revenue
|
|
|
$
|
|
%
|
|
Retail
customers
|
|
$
|
6,631,000
|
|
|
56.7
|
%
|
|
$
|
7,035,000
|
|
|
60.0
|
%
|
|
$
|
(404,000)
|
|
|
(5.7)
|
%
|
Automotive
|
|
|
3,723,000
|
|
|
31.8
|
|
|
|
2,982,000
|
|
|
25.4
|
|
|
|
741,000
|
|
|
24.8
|
|
Industrial/catalog
|
|
|
1,115,000
|
|
|
9.5
|
|
|
|
1,412,000
|
|
|
12.0
|
|
|
|
(297,000)
|
|
|
(21.0)
|
|
Other
|
|
|
233,000
|
|
|
2.0
|
|
|
|
300,000
|
|
|
2.6
|
|
|
|
(67,000)
|
|
|
(22.3)
|
|
Total
|
|
$
|
11,702,000
|
|
|
100.0
|
%
|
|
$
|
11,729,000
|
|
|
100.0
|
%
|
|
$
|
(27,000)
|
|
|
(0.2)
|
%
|
|
|
|
Nine months ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
Increase (decrease)
|
|
|
|
|
|
Percent of
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
Revenue
|
|
revenue
|
|
|
Revenue
|
|
revenue
|
|
|
$
|
|
%
|
|
Retail
customers
|
|
$
|
19,411,000
|
|
|
55.1
|
%
|
|
$
|
19,352,000
|
|
|
56.9
|
%
|
|
$
|
59,000
|
|
|
0.3
|
%
|
Automotive
|
|
|
11,336,000
|
|
|
32.1
|
|
|
|
9,122,000
|
|
|
26.8
|
|
|
|
2,214,000
|
|
|
24.3
|
|
Industrial/catalog
|
|
|
3,843,000
|
|
|
10.9
|
|
|
|
4,679,000
|
|
|
13.8
|
|
|
|
(836,000)
|
|
|
(17.9)
|
|
Other
|
|
|
680,000
|
|
|
1.9
|
|
|
|
833,000
|
|
|
2.5
|
|
|
|
(153,000)
|
|
|
(18.4)
|
|
Total
|
|
$
|
35,270,000
|
|
|
100.0
|
%
|
|
$
|
33,986,000
|
|
|
100.0
|
%
|
|
$
|
1,284,000
|
|
|
3.8
|
%
|
Primary factors contributing to the 24.8% growth in Florida
Pneumatic's automotive revenue this quarter, compared to the same
period in 2015, are the ongoing efforts to upgrade the lines with
new innovative products, as well as expanding its marketing efforts
both in the United States and in
Europe. Additionally, UAT's revenue is included in the
Automotive sector. A portion of UAT's revenue is derived from the
sale of pneumatic air tools to customers that are located and
operate in the North Sea region of Scotland, and whose businesses are in the oil
and gas sector. This sector continues to feel the effects of
the ongoing weakness in global oil and gas exploration. Further
impacting our consolidated revenue this quarter was the negative
effects of the "Brexit", the portmanteau of "British" "Exit" from
the European Union. We believe that Brexit was the key factor
in the recent decline in the Great British Pound in the world
currency. As a result, the average exchange rate that was
applied when converting UAT's local currency revenue into U.S.
Dollars, for the three-month periods ended September 30, 2016 and 2015, declined, resulting
in reduced UAT revenue reported in U.S. Dollars of approximately
$118,000. As a result, UAT's
overall revenue declined this quarter compared to the same three
months in 2015. We are currently developing a marketing strategy
that is intended to enable UAT to expand its presence into other
Western European countries; however, no specific timetable has been
established for this expansion. The decline in Florida Pneumatic's
third quarter 2016 Retail revenue, compared to the third quarter of
2015, was due primarily to the timing of shipments to Sears, that
occurred in the third quarter of 2015, that we believe could occur
during the fourth quarter of 2016. This decline was partially
offset by increased shipments to The Home Depot. We continue to
encounter weaknesses in the Industrial/catalog market, with the
decline this quarter compared to the same period a year ago,
occurring most notably in the aerospace and oil and gas
exploration/production channels. Additionally, contributing to the
decline in our Industrial/catalog revenue was the fact that during
the third quarter of 2015, we shipped special orders aggregating
approximately $220,000, which did not
reoccur this year.
When comparing the nine-month periods ended September 30, 2016 and 2015, the growth in the
Automotive sector is the most significant component of Florida
Pneumatic's overall revenue improvement. This growth continues to
be driven by the release of new, improved and enhanced products,
broadening the product line offering, as well as expanded marketing
efforts. Florida Pneumatic's Industrial/catalog revenue remains
sluggish, as the oil and gas sector, which is a component of this
category remains, in our opinion, extremely constricted. Further,
special order shipments declined $458,000, when comparing the nine-month periods
ended September 30, 2016 and 2015,
which also contributed to the decline in revenue.
Hy-Tech
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, including the
ATSCO product line, as well as distributes a complementary line of
sockets, which in the aggregate are referred to as "ATP". Hy-Tech
Machine also manufactures products primarily marketed to the
mining, construction and industrial manufacturing sectors. These
products along with gears, sprockets, splines, and hydraulic
stoppers are aggregated as "Other".
|
|
Three months ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
Decrease
|
|
|
|
Revenue
|
|
Percent of
revenue
|
|
|
Revenue
|
|
Percent of
revenue
|
|
|
$
|
|
%
|
|
ATP
|
|
$
|
2,515,000
|
|
85.8
|
%
|
|
$
|
3,551,000
|
|
84.6
|
%
|
|
$
|
(1,036,000)
|
|
(29.2)
|
%
|
Other
|
|
|
416,000
|
|
14.2
|
|
|
|
644,000
|
|
15.4
|
|
|
|
(228,000)
|
|
(35.4)
|
|
Total
|
|
$
|
2,931,000
|
|
100.0
|
%
|
|
$
|
4,195,000
|
|
100.0
|
%
|
|
$
|
(1,264,000)
|
|
(30.1)
|
%
|
|
|
|
Nine months ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
Decrease
|
|
|
|
|
|
Percent of
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
Revenue
|
|
revenue
|
|
|
Revenue
|
|
revenue
|
|
|
$
|
|
%
|
|
ATP
|
|
$
|
8,411,000
|
|
88.5
|
%
|
|
$
|
10,681,000
|
|
85.1
|
%
|
|
$
|
(2,270,000)
|
|
(21.3)
|
%
|
Other
|
|
|
1,088,000
|
|
11.5
|
|
|
|
1,874,000
|
|
14.9
|
|
|
|
(786,000)
|
|
(41.9)
|
|
Total
|
|
$
|
9,499,000
|
|
100.0
|
%
|
|
$
|
12,555,000
|
|
100.0
|
%
|
|
$
|
(3,056,000)
|
|
(24.3)
|
%
|
The on-going weakness in the oil and gas exploration and
extraction sector continues to be the primary factor contributing
to the decline in Hy-Tech's ATP third quarter of 2016 revenue, when
compared to the same period in the prior year. This weakness
continues to be a significant factor in the decline in demand of
Hy-Tech's pneumatic tools, spare/replacement parts and drilling
motors. Evidencing this decline is the fact that according to
information published by Baker Hughes Incorporated: (a) The average
U.S. rig count for September 2016 was
509, down 339 from the 848 in September
2015; (b) The average Canadian rig count for September 2016 was 141, down 42 from the 183
counted in September 2015 and (c) The
worldwide rig count for September 2016 was 1,584, down 587 from the
2,171 counted in September 2015. Further contributing to the
decline in revenue is the fact that a former major customer of
Hy-Tech is currently sourcing internally, certain impact wrenches
and other products that it had formerly purchased from Hy-Tech.
Additionally, a large customer that was acquired in the ATSCO
acquisition has dramatically reduced purchases, which we believe is
also the result of the weakness in the oil and gas exploration
sector. We believe that purchases from this customer may not
recover until the oil and gas exploration and extraction market
recovers, if at all. The decline in Hy-Tech's Other revenue was
driven primarily due to weakness this quarter in specialty
manufacturing for the mining, mine safety and railroad markets.
ATP's revenue for the nine-month period ended September 30, 2016, declined, compared to the
same period in 2015, due primarily to: i) on-going weakness in the
oil and gas exploration and extraction and related services sector;
ii) loss of revenue due to a customer's decision to source certain
products internally; iii) a major downturn in orders from a large
customer, and iv) weakness in the other sectors in which Hy-Tech
markets its products, such as mining, and railroad. We believe that
should the oil and gas sector remain at or near current levels of
exploration and extraction, it is likely that future periods may
not reflect an increase over comparable prior periods for some
time, even if trending upwards, chronologically. Significant
factors contributing to the decline in Hy-Tech's Other year to date
revenue is a $240,000 order
that shipped in the first quarter of 2015, not recurring thus far
in 2016, and overall weakness in the specialty manufacturing for
the mining, mine safety and railroad markets. To mitigate this
sluggishness, Hy-Tech is continuing to pursue alternate markets and
applications of its air tools and motors, as well as to utilize and
emphasize its manufacturing expertise. We believe this course of
action should generate new sources of revenue in late 2016 or early
2017; however, no assurance can be given that these efforts will be
successful.
Gross margins /
profits
|
|
|
|
Three months ended
September 30,
|
|
|
Increase
(decrease)
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
Amount
|
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
4,219,000
|
|
|
|
|
$
|
4,007,000
|
|
|
|
|
$
|
212,000
|
|
|
5.3
|
%
|
As percent of
respective revenue
|
|
|
|
|
36.1
|
%
|
|
|
|
|
34.2
|
%
|
|
|
1.9
|
%pts
|
|
|
|
Hy-Tech
|
|
$
|
286,000
|
|
|
|
|
$
|
1,623,000
|
|
|
|
|
$
|
(1,337,000)
|
|
|
(82.4)
|
|
As percent of
respective revenue
|
|
|
|
|
9.8
|
%
|
|
|
|
|
38.7
|
%
|
|
|
(28.9)
|
%pts
|
|
|
|
Total
|
|
$
|
4,505,000
|
|
|
|
|
$
|
5,630,000
|
|
|
|
|
$
|
(1,125,000)
|
|
|
(20.0)
|
%
|
As percent of
respective revenue
|
|
|
|
|
30.8
|
%
|
|
|
|
|
35.4
|
%
|
|
|
(4.6)
|
%pts
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
Increase
(decrease)
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
Amount
|
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
13,070,000
|
|
|
|
|
$
|
12,059,000
|
|
|
|
|
$
|
1,011,000
|
|
|
8.4
|
%
|
As percent of
respective revenue
|
|
|
|
|
37.1
|
%
|
|
|
|
|
35.5
|
%
|
|
|
1.6
|
%pts
|
|
|
|
Hy-Tech
|
|
$
|
1,956,000
|
|
|
|
|
$
|
4,902,000
|
|
|
|
|
$
|
(2,946,000)
|
|
|
(60.1)
|
|
As percent of
respective revenue
|
|
|
|
|
20.6
|
%
|
|
|
|
|
39.0
|
%
|
|
|
(18.4)
|
%pts
|
|
|
|
Total
|
|
$
|
15,026,000
|
|
|
|
|
$
|
16,961,000
|
|
|
|
|
$
|
(1,935,000)
|
|
|
(11.4)
|
%
|
As percent of
respective revenue
|
|
|
|
|
33.6
|
%
|
|
|
|
|
36.4
|
%
|
|
|
(2.8)
|
%pts
|
|
|
|
Florida Pneumatic's third quarter of 2016 gross margin
improvement over the same period a year ago was driven primarily by
improved product mix emanating from the growth of its Automotive
revenue. Additionally, the foreign exchange rate of the U.S.
Dollar to the Taiwan Dollar was more favorable than during the
third quarter of 2015. Lastly, material costs are down
slightly this quarter, compared to the same period a year
ago. With respect to Hy-Tech's third quarter gross margin,
during the three-month period ended September 30, 2016, we increased Hy-Tech's
allowance for obsolete / slow moving inventory ("OSMI"). The
primary reason for the additional OSMI reserve this quarter was due
to the notification by a Hy-Tech vendor that it would not re-stock
certain inventory items. In addition, the ongoing sluggish
conditions in power generation and manufacturing caused a severe
slowdown in Hy-Tech's inventory turnover. The
adjustment to OSMI was the key contributing factor in this
quarter's poor gross margin at Hy-Tech. Further, Hy-Tech's gross
margin this quarter is lower compared to the same period in 2015,
due in part to lower overhead absorption, which in turn is due
primarily to lower manufacturing activity, being driven by the
ongoing weakness in the oil and gas sector and key customer
declines.
The primary factors contributing to the increase in Florida
Pneumatic's gross margin for the nine months ended September 30, 2016, compared to the same period
in the prior year include more favorable product mix, favorable
foreign exchange and slightly lower cost of product.
Hy-Tech's gross margin during the nine-month period ended
September 30, 2016, has been
adversely affected by the effects of the ongoing downturn in the
oil and gas sector, along with weakness in power generation and
manufacturing sectors, important contributors to Hy-Tech's revenue.
This has caused Hy-Tech to further increase its OSMI.
Additionally, Hy-Tech manufactures and sells a very low gross
margin product line to a key ATSCO customer. We do not intend to
continue to manufacture and market this product line after Hy-Tech
has sold its remaining related inventory. It is possible that this
decision may have an effect on Hy-Tech's 2017 revenue; however it
should improve its future overall gross margin.
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 third quarter of 2016, our SG&A was $4,915,000, or 33.6% of revenue, compared to
$4,787,000, or 30.1% of revenue
during the same three-month period in 2015. The increase was due in
large part to the increase in Automotive revenue, which drives
variable expenses. As such, variable expenses increased this
quarter $82,000 compared to the same
period in 2015. Our compensation expense, which is comprised of
base salaries and wages, accrued performance-based bonus
incentives, associated payroll taxes and employee benefits
increased $74,000, and professional
fees and related expenses increased $111,000 this quarter, compared to the same
three-month period in 2015, due primarily to the Company's mergers
and acquisitions initiatives. Depreciation and amortization
expenses declined $97,000, when
comparing the third quarter of 2016 to the same period in 2015, due
primarily to the reduction of intangible assets associated with the
impairment of intangible assets during the second quarter of
2016.
During the nine months ended September
30, 2016, our SG&A was $15,088,000, or 33.7% of revenue, compared to
$14,834,000, or 31.9% of revenue
during the same nine-month period in 2015. A significant component
of this change is due to an increase in incremental variable costs
and expenses, which increased by $377,000, compared to the same period in the
prior year. This increase is due in large part to the increase in
the Automotive revenue of $2.2
million. Additionally, when comparing the nine-month
periods ended September 30, 2016 and
2015, total compensation, increased $80,000. Partially offsetting the above
increases were reductions in professional fees and related expenses
of $75,000, depreciation and
amortization expenses of $119,000,
and lower stock-based compensation of $45,000.
Impairment of goodwill and other intangible assets
During the second quarter of 2016, we determined that an interim
impairment analysis of the goodwill recorded in connection with
Hy-Tech and ATSCO was necessary based upon consideration of a
number of factors, which included: i) continued weakness in oil and
gas exploration and extraction; ii) the recent loss of a major
portion of revenue from one of its larger customers; and iii)
recent significant reductions/guidance of forecasted purchases from
the largest customer acquired in the ATSCO acquisition. As a result
of the aforementioned, it was determined that Hy-Tech's short and
long-term projections indicated an inability to generate sufficient
discounted future cash flows to support the recorded amounts of
goodwill, other intangible assets and other long-lived assets
necessitating the impairment charge. As a result, in accordance
with current accounting literature, we recorded an impairment
charge of $8,311,000 relating to
goodwill and other intangible assets during the second quarter of
2016. Should market conditions in the sectors in which Hy-Tech
operates worsen, we could incur additional impairment charges in
future periods.
Other (income) expense – net
The table below provides an analysis of our Other (income)
expense-net from continuing operations for the three and nine-month
periods ended September 30, 2016 and
2015:
|
|
Three months ended
September 30,
|
|
Nine
months ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Lease
income-net
|
|
$
|
(43,000)
|
|
$
|
(37,000)
|
|
$
|
(75,000)
|
|
$
|
(108,000)
|
|
Fair value adjustment
to contingent consideration -UAT
|
|
|
—
|
|
|
75,000
|
|
|
—
|
|
|
(126,000)
|
|
Total
|
|
$
|
(43,000)
|
|
$
|
38,000
|
|
$
|
(75,000)
|
|
$
|
(234,000)
|
|
Lease income-net is income and related expenses incurred in
connection with the lease discussed in Consolidated Financial
Statements. The Fair value adjustment to contingent consideration –
UAT reflect the adjustments relating to the carrying value of the
additional consideration due to the sellers of UAT settled in
2015.
Interest
|
|
|
|
Three months ended
September 30,
|
|
Increase
(decrease)
|
|
|
|
2016
|
|
2015
|
|
Amount
|
|
%
|
|
Interest expense
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
15,000
|
|
$
|
—
|
|
$
|
15,000
|
|
NA
|
%
|
Term loans, including
Capital Expenditure Term Loans
|
|
|
1,000
|
|
|
3,000
|
|
|
(2,000)
|
|
(66.7)
|
|
Amortization expense
of debt financing costs
|
|
|
10,000
|
|
|
26,000
|
|
|
(16,000)
|
|
(61.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
26,000
|
|
$
|
29,000
|
|
$
|
(3,000)
|
|
(10.3)
|
%
|
|
|
|
Nine months ended
September 30,
|
|
Increase
(decrease)
|
|
|
|
2016
|
|
2015
|
|
Amount
|
|
%
|
|
Interest expense
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
41,000
|
|
$
|
—
|
|
$
|
41,000
|
|
NA
|
%
|
Term loans, including
Capital Expenditure Term Loans
|
|
|
5,000
|
|
|
4,000
|
|
|
1,000
|
|
25.0
|
%
|
Amortization expense
of debt financing costs
|
|
|
118,000
|
|
|
83,000
|
|
|
35,000
|
|
42.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
164,000
|
|
$
|
87,000
|
|
$
|
77,000
|
|
88.5
|
%
|
In accordance with current accounting guidance we have reported
our short-term and term loan interest expense incurred during the
three and nine-month periods ended September
30, 2015 of $144,000 and
$479,000, respectively, and for the
period January 1, 2016 through the
Closing Date of $60,000, which was
the effective date of sale of Nationwide, in Discontinued
operations. Additionally, the $18.7
million cash received from the sale of Nationwide,
significantly reduced or eliminated the term loans that were
included in the Credit Agreement. As a result, we wrote down
the deferred financing costs associated with the repayment of those
term loans. As such, $80,000 is
included in amortization expense of debt financing costs in our
interest expense for the nine-month period ended September 30, 2016.
Primarily the result of the cash received from the sale of
Nationwide, our average balance of short-term borrowings during the
three-month period ended September 30,
2016, was $2,585,000, compared
to $13,550,000 during the three-month
period ended September 30, 2015. The
average balance of our short-term borrowings during the nine-month
period ended September 30, 2016, was
$3,593,000, compared to $14,807,000 during the nine-month period ended
September 30, 2015.
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 or benefit applicable to continuing operations, on a
year-to-date basis, and may change in subsequent interim periods.
As a result, our effective tax rate applicable to continuing
operations for the three and nine-months ended September 30, 2016 was 27.2% and 33.9%,
respectively. For the same periods in 2015 our effective tax rate
applicable to continuing operations were 34.9% and 33.6%,
respectively. The Company's effective tax rates for both periods
were affected primarily by state taxes and non-deductible
expenses.
Discontinued operations
We recognized a gain of $12,185,000, on the sale of Nationwide during the
three-month period ended March 31,
2016, which represents the difference between the adjusted
net purchase price and the carrying book value of Nationwide.
During the three-month period ended June 30,
2016 we incurred an additional $14,000 in expenses related to the sale. For
income tax purposes, our tax basis in Nationwide was greater than
the net proceeds, thus resulting in a tax loss. This tax loss may
only be applied against future capital gain transactions.
During the three-month period ended March
31, 2016, we recorded a tax benefit of $141,000, net of a valuation allowance against
the gain on sale. Subsequent to September 30, 2016, Countrywide completed the
sale of the Tampa, Florida real
property, which is treated as a capital gain transaction for tax
purposes. As a result, during the three-month period ended
September 30, 2016, we removed the
valuation allowance initially recorded against the tax loss,
resulting in an additional $187,000
tax benefit recorded against the gain on sale.
OTHER INFORMATION
P&F Industries Inc. has scheduled a conference call for
today, November 9, 2016, at
11:00 A.M., Eastern Time, to discuss
its results for three and nine-month periods ended September 30, 2016. Investors and other
interested parties who wish to listen to or participate can call
800-505-9573. It is suggested you call at least 10 minutes prior to
the call commencement. 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 November 10, 2016.
About P&F Industries, Inc.
P&F Industries, Inc., through its wholly owned subsidiaries,
manufactures and/or imports air-powered tools sold principally to
the industrial, retail and automotive markets. P&F's
products are sold under its own trademarks, as well as under the
private labels of major manufacturers and retailers.
Forward Looking Statements. Statements
contained in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Any forward-looking statements contained in
this press release and those contained in the comments of
management, including those related to the Company's future
performance, 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,
those relating to the strength of the markets in which the Company
operates, the impact of competition, product demand, supply chain
pricing, the Company's exposure to fluctuations in energy prices,
the Company's ability to maintain mutually beneficial relationships
with key customers, acquisitions of businesses, and those other
risks and uncertainties described in the Company's most recent
Annual Report on Form 10-K and Quarterly Reports on Form
10-Q, 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 in future periods 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, except as may be required by law.
The Company cautions you against relying on any of these
forward-looking statements.
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(In Thousands
$)
|
September 30,
2016
|
December 31,
2015
|
|
(Unaudited)
|
(Unaudited)
|
Assets
|
|
|
Cash
|
|
$
|
941
|
|
|
$
|
927
|
|
Accounts receivable -
net
|
|
|
10,581
|
|
|
|
8,477
|
|
Inventories
|
|
|
20,322
|
|
|
|
19,783
|
|
Prepaid expenses and
other current assets
|
|
|
2,974
|
|
|
|
1,032
|
|
Assets held for sale
– net of accumulated depreciation
|
|
|
1,780
|
|
|
|
---
|
|
Assets of
discontinued operations
|
|
|
---
|
|
|
|
8,435
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
36,598
|
|
|
|
38,654
|
|
|
|
|
|
|
|
|
|
|
Net property and
equipment
|
|
|
7,312
|
|
|
|
9,472
|
|
Goodwill
|
|
|
4,786
|
|
|
|
10,154
|
|
Other intangible
assets - net
|
|
|
7,239
|
|
|
|
11,098
|
|
Deferred income taxes
- net
|
|
|
1,006
|
|
|
|
---
|
|
Other assets –
net
|
|
|
136
|
|
|
|
234
|
|
Total
assets
|
|
$
|
57,077
|
|
|
$
|
69,612
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
1,449
|
|
|
$
|
9,623
|
|
Accounts
payable
|
|
|
4,064
|
|
|
|
2,791
|
|
Accrued compensation
and benefits
|
|
|
1,502
|
|
|
|
1,718
|
|
Accrued other
liabilities
|
|
|
1,932
|
|
|
|
1,666
|
|
Current maturities of
long-term debt
|
|
|
17
|
|
|
|
491
|
|
Liabilities of
discontinued operations
|
|
|
---
|
|
|
|
1,342
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
8,964
|
|
|
|
17,631
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less
current maturities
|
|
|
87
|
|
|
|
5,936
|
|
Deferred tax
liability - net
|
|
|
---
|
|
|
|
2,175
|
|
Other
liabilities
|
|
|
214
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
9,265
|
|
|
|
25,970
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity
|
|
|
47,812
|
|
|
|
43,642
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
$
|
57,077
|
|
|
$
|
69,612
|
|
|
|
|
|
|
|
|
|
|
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS
OF (LOSS) INCOME (Unaudited)
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
(In Thousand
$)
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Net
revenue
|
$
|
14,633
|
$
|
15,924
|
$
|
44,769
|
$
|
46,541
|
Cost of
sales
|
10,128
|
10,294
|
29,743
|
29,580
|
Gross
profit
|
4,505
|
5,630
|
15,026
|
16,961
|
Selling, general and
administrative
expenses
|
4,915
|
4,787
|
15,088
|
14,834
|
Impairment of
goodwill and other
intangible assets
|
---
|
---
|
8,311
|
---
|
Operating (loss)
income
|
(410)
|
843
|
(8,373)
|
2,127
|
Other (income)
expense -net
|
(43)
|
38
|
(75)
|
(234)
|
Interest
expense
|
26
|
29
|
164
|
87
|
(Loss) income from
continuing
operations before income taxes
|
(393)
|
776
|
(8,462)
|
2,274
|
Income tax (benefit)
expense
|
(107)
|
271
|
(2,872)
|
764
|
(Loss) income from
continuing
operations
|
(286)
|
505
|
(5,590)
|
1,510
|
|
|
|
|
|
Net income from
discontinued
operations, net of tax of $-0- and $38,
for the three and nine-month periods
ended September 30, 2016, and $334
and $946 for the three and nine months
ended September 30, 2015.
|
---
|
545
|
72
|
1,633
|
Gain on sale of
discontinued operations,
net of tax benefits of $187 and $328 for
the three and nine-month periods ended
September 30, 2016
|
187
|
---
|
12,358
|
---
|
Net income from
discontinued
operations, net of tax
|
187
|
545
|
12,430
|
1,633
|
Net (loss)
income
|
$
|
(99)
|
$
|
1,050
|
$
|
6,840
|
$
|
3,143
|
P&F INDUSTRIES
INC. AND SUBSIDIARIES
|
|
(LOSS) EARNINGS PER
SHARE (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Basic (loss) earnings
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.08)
|
|
$
|
0.14
|
|
$
|
(1.55)
|
|
$
|
0.42
|
|
Discontinued
operations
|
|
|
0.05
|
|
|
0.15
|
|
|
3.45
|
|
|
0.45
|
|
Net (loss)
income
|
|
$
|
(0.03)
|
|
$
|
0.29
|
|
$
|
1.90
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.08)
|
|
$
|
0.13
|
|
$
|
(1.55)
|
|
$
|
0.40
|
|
Discontinued
operations
|
|
|
0.05
|
|
|
0.15
|
|
|
3.45
|
|
|
0.44
|
|
Net (loss)
income
|
|
$
|
(0.03)
|
|
$
|
0.28
|
|
$
|
1.90
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
NON-GAAP FINANCIAL
MEASURE AND RECONCILIATION
|
|
|
|
COMPUTATION
OF (EBITDIA) - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,
IMPAIRMENT CHARGE AND AMORIZATION FROM CONTINUING
OPERATIONS
|
|
(Unaudited)
|
|
|
|
|
|
(In Thousands
$)
|
|
For the three-month
periods
ended September 30,
|
For the nine-month
periods ended September
30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Net (loss) income
from
continuing operations
|
|
$
|
(286)
|
|
$
|
505
|
|
$
|
(5,590)
|
|
$
|
1,510
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
Goodwill
and other intangible
assets
|
|
|
---
|
|
|
---
|
|
|
8,311
|
|
|
---
|
|
|
Depreciation and
amortization
|
|
|
621
|
|
|
696
|
|
|
2,030
|
|
|
2,083
|
|
|
Interest
expense
|
|
|
26
|
|
|
29
|
|
|
164
|
|
|
87
|
|
|
(Benefit) provision
for
income taxes
|
|
|
(107)
|
|
|
271
|
|
|
(2,872)
|
|
|
764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDIA
(1)
|
|
$
|
254
|
|
$
|
1,501
|
|
$
|
2,043
|
|
$
|
4,444
|
|
|
|
|
|
(1)
|
The Company discloses
a tabular comparison of EBITDIA, which is a non-GAAP measure
because it is instrumental in comparing the results from period to
period. The Company's management believes that the comparison
of EBITDIA provides greater insight into the Company's results of
operations for the periods presented. EBITDIA should not be
considered in isolation or as a substitute for operating income as
reported on the face of our statement of operations.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/pf-industries-reports-results-for-the-three-and-nine-month-periods-ended-september-30-2016-300359541.html
SOURCE P&F Industries, Inc.