MELVILLE, N.Y., May 13, 2021 /PRNewswire/ -- P&F
Industries, Inc. (NASDAQ: PFIN) today announced its results from
operations for the three-month period ended March 31, 2021. The Company is reporting net
revenue of $13,945,000, compared to
$13,350,000 reported in the same
period in 2020. Additionally, the Company is reporting a loss
before income taxes of $377,000,
compared to a loss of $1,263,000, for
the same period in 2020. After giving effect to income taxes,
the Company is reporting a loss of $307,000, compared to $758,000 for the first quarter of 2020.
Richard Horowitz, the Company's
Chairman of the Board, Chief Executive Officer and President
commented, "In the first quarter of 2021, the world was still in
the throes of this horrific, global COVID-19 pandemic. It is
therefore somewhat difficult to compare to the first quarter of
2020, when for the most part, the harsh effects of pandemic had not
yet begun to be felt. Despite the aforementioned, our results
this quarter improved, compared to a year ago. That being said,
during the first quarter of 2021, we began to see indications in
several markets we serve that the COVID-19 pandemic might be behind
us. Specifically, Florida Pneumatic's total first quarter
2021 revenue improved $871,000, or
8.7% over the same three-month period in 2020, even though most of
the prior period did not include the full effects of the pandemic.
Revenue increases ranged between 27% and 28% in Automotive, Retail,
and Industrial products sales, which were partially offset by a
decrease in Aerospace revenue of 41%. This decline was driven
primarily by weak demand from Boeing and other commercial and
military aircraft manufacturers. Improvement at Hy-Tech is
occurring slower, with first quarter 2021 revenue declining
$276,000 or 8.3%, compared to same
period in 2020. However, Hy-Tech's first quarter 2021, is 57%
greater than its fourth quarter 2020 revenue and its gross margin
also significantly improved, this quarter, compared to the fourth
quarter of 2020. Further, we are encouraged by the increase
in customer orders being received at Hy-Tech, and its current level
of open orders. This strong demand should prove beneficial
for the balance of 2021 and beyond. Our selling, general and
administrative expenses declined approximately $700,000, driven by lower compensation costs and
costs incurred in 2020 related to the relocation of the gear
manufacturing businesses not recurring. Lastly, again considering
the impact of the pandemic, our consolidated gross margin was down
only 0.4 percentage points, with a slight decline in Hy-Tech gross
margin, partially offset by improved gross margin at Florida
Pneumatic."
Mr. Horowitz added, "We are cautiously optimistic about future
growth; however, COVID-19 remains a global issue. We intend to do
our utmost to continue to serve our customers, while ensuring the
health and safety of our employees. Through persistence by
all of our employees, as well as the loyalty of our customers, we
made it through very difficult times, and firmly believe that when
this pandemic truly is behind us, we will be well positioned to
take advantage of an economic recovery.
Mr. Horowitz concluded his remarks by stating, "Primarily due to
the COVID-19 pandemic and its effect on our results, our Board
of Directors has determined to continue its suspension of our
quarterly cash dividend for the time being. The Board intends to
evaluate the dividend policy going forward based on all of the
relevant facts, and we look forward to resuming dividends as soon
as possible."
The Company will be reporting the following.
OVERVIEW
During the first quarter of 2021, significant factors that
impacted our results of operations were the:
- Ongoing negative impact of the COVID-19 pandemic on revenue and
income;
- Ongoing production slow-down by Boeing of its 737 MAX aircraft,
as well as significant reductions in activity at other commercial
and military aerospace manufacturing facilities; and
- Continued weakness in oil and gas exploration and
drilling.
TRENDS AND UNCERTAINTIES
COVID-19 PANDEMIC
On March 11, 2020, the World Health Organization designated
the recent novel coronavirus, or COVID-19, as a global
pandemic. COVID-19 was first detected in Wuhan City, Hubei
Province, China and
continued to spread, significantly impacting various markets around
the world, including the United
States. Various policies and initiatives have been
implemented to reduce the global transmission of COVID-19.
The impact of the COVID-19 virus and the resultant global
economic down-turn has had a material impact on our results in the
first quarter of 2021. There are delays in receiving containers
from Asia due to a significant
increase in international shipping traffic, which has caused
intermittent shortages of inventory. In addition, the COVID-19
pandemic has caused many of our customers and potential customers
to refuse on-site visits which is critical to generating revenue.
We believe that until this pandemic subsides, these two issues will
continue to affect our operations.
BOEING/AEROSPACE
The Federal Aviation Administration ("FAA") and the European
Union Aviation Safety Agency ("EASA") have lifted the grounding of
the 737 MAX. However, production is still very limited due to the
inventory at Boeing and the reluctance of airlines to accept
deliveries due to weak air travel demand. This will likely continue
to have an adverse effect on our revenue. In addition, production
of military and other commercial aircraft throughout the industry
has slowed as well due to the ongoing global COVID-19 pandemic.
However, we believe when all other commercial and military
production lines throughout the United
States come back online, an increase in our revenue should
follow.
OIL AND GAS
We believe the primary factor contributing to the significant
decline occurring in our oil and gas revenue is due to a decline in
the price for oil and gas that began in 2020 related to the COVD-19
pandemic. The profitability of crude oil production generally
declines as prices fall. As a result, as prices dropped in 2020,
production slowed worldwide. This activity is most easily
measured by analyzing the number of active rotary rigs, which is
discussed further below. Until these counts return to
pre-pandemic levels, we will continue to be impacted
negatively.
TECHNOLOGIES
We believe that over time, several newer technologies, and
features will have a greater impact on the market for our
traditional pneumatic tool offerings. The impact of this evolution
has been felt initially by the advent of advanced cordless operated
hand tools in the automotive aftermarket. For certain
non-automotive applications, we have begun to develop cordless
models of tools and expect to introduce these products in the near
future.
OTHER MATTERS
Other than the aforementioned, or matters that may be discussed
below, there are no major trends or uncertainties that had, or we
could have reasonably expected to have a material impact on our
revenue, nor was there any unusual or infrequent event, transaction
or any significant economic change that materially affected our
results of operations.
We believe that our relationships with our key customers and
suppliers remain satisfactory.
RESULTS OF OPERATIONS
REVENUE
During the first quarter of 2021, many of our product lines were
adversely affected by the global COVID-19 pandemic, which continues
to result in greatly reduced orders and revenue for the three-month
period ended March 31, 2021.
The tables below provide an analysis of our net revenue for the
three-month periods ended March 31,
2021 and 2020:
Consolidated
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
|
|
|
|
|
Increase
(decrease)
|
|
|
|
2021
|
|
|
2020
|
|
|
$
|
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
10,901,000
|
|
|
$
|
10,030,000
|
|
|
$
|
871,000
|
|
|
|
8.7
|
%
|
Hy-Tech
|
|
|
3,044,000
|
|
|
|
3,320,000
|
|
|
|
(276,000)
|
|
|
|
(8.3)
|
|
Consolidated
|
|
$
|
13,945,000
|
|
|
$
|
13,350,000
|
|
|
$
|
595,000
|
|
|
|
4.5
|
%
|
Florida Pneumatic
Florida Pneumatic markets its air tool products to four primary
sectors within the pneumatic tool market; Automotive, Retail,
Aerospace and Industrial. It also generates revenue from its
Berkley products line, as well as a line of air filters and other
OEM parts ("Other").
|
|
Three months ended March
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
Increase
(decrease)
|
|
|
|
Revenue
|
|
|
Percent of
revenue
|
|
|
Revenue
|
|
|
Percent of
revenue
|
|
|
$
|
|
|
%
|
|
Automotive
|
|
$
|
4,102,000
|
|
|
|
37.6
|
%
|
|
$
|
3,232,000
|
|
|
|
32.2
|
%
|
|
$
|
870,000
|
|
|
|
26.9
|
%
|
Retail
|
|
|
3,790,000
|
|
|
|
34.8
|
|
|
|
2,990,000
|
|
|
|
29.8
|
|
|
|
800,000
|
|
|
|
26.8
|
|
Industrial
|
|
|
1,359,000
|
|
|
|
12.5
|
|
|
|
1,062,000
|
|
|
|
10.6
|
|
|
|
297,000
|
|
|
|
28.0
|
|
Aerospace
|
|
|
1,528,000
|
|
|
|
14.0
|
|
|
|
2,599,000
|
|
|
|
25.9
|
|
|
|
(1,071,000)
|
|
|
|
(41.2)
|
|
Other
|
|
|
122,000
|
|
|
|
1.1
|
|
|
|
147,000
|
|
|
|
1.5
|
|
|
|
(25,000)
|
|
|
|
(17.0)
|
|
Total
|
|
$
|
10,901,000
|
|
|
|
100.0
|
%
|
|
$
|
10,030,000
|
|
|
|
100.0
|
%
|
|
$
|
871,000
|
|
|
|
8.7
|
%
|
Despite the ongoing negative effects on the US and global
economies, total fiscal first quarter 2021 revenue at Florida
Pneumatic increased 8.7% over the same three-month period in
2020. This improvement was driven by revenue gains in its
Automotive, Retail and Industrials sectors. A decline in
Aerospace revenue partially offset the above improvements. Stronger
consumer demand for its AIRCAT products and, to a lesser degree,
modest increased sales at our United
Kingdom ("U.K.") operations, were the primary factors for
the increase in Automotive revenue. We believe that as the
result of the ongoing battle to disinfect and sanitize homes and
businesses alike, Florida Pneumatic encountered an increase in
demand, compared to the first quarter of 2020, for various "spray
gun" tools and accessories which are sold into the retail channel.
Stronger Industrial revenue this quarter than in the same period in
the prior year, was driven primarily by increased industrial
production. The Boeing Corporation is a major customer of Jiffy.
The Boeing 737 MAX aircraft was grounded by the FAA and the EASA in
March 2019. Although both agencies
have lifted the "No Fly" ruling it imposed on all Boeing 737 MAX
aircraft, allowing it to begin flights in the United States, we believe it will take
several years for the Boeing Corporation to increase its
manufacturing of its 737 MAX aircraft to a volume that would be
comparable to pre COVID-19 levels, and thus require our Jiffy
tools. Further, the travel restrictions that developed as the
result of the COVID-19 pandemic, caused most commercial airlines to
curtail orders for other aircraft, which also negatively impacted
Florida Pneumatic's Aerospace revenue. Lastly, orders relating to
military aircraft declined, we believe due to COVID-19 constraints
placed in manufacturing facilities.
Hy-Tech
Hy-Tech designs, manufactures, and sells a wide range of
industrial products under the brands ATP and ATSCO which are
categorized as ATP for reporting purposes. In addition to
Engineered Solutions, products and components manufactured for
other companies under their brands are included in the OEM category
in the table below. PTG revenue is comprised of products
manufactured and sold by Hy-tech's gear business. NUMATX,
Thaxton and other peripheral product lines, such as general
machining, are reported as Other.
|
|
Three months ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
Increase
(decrease)
|
|
|
|
Revenue
|
|
|
Percent of
revenue
|
|
|
Revenue
|
|
|
Percent of
revenue
|
|
|
$
|
|
|
%
|
|
OEM
|
|
$
|
1,611,000
|
|
|
|
52.9
|
%
|
|
$
|
1,439,000
|
|
|
|
43.3
|
%
|
|
$
|
172,000
|
|
|
|
12.0
|
%
|
ATP
|
|
|
713,000
|
|
|
|
23.4
|
|
|
|
1,061,000
|
|
|
|
32.0
|
|
|
|
(348,000)
|
|
|
|
(32.8)
|
|
PTG
|
|
|
646,000
|
|
|
|
21.2
|
|
|
|
735,000
|
|
|
|
22.1
|
|
|
|
(89,000)
|
|
|
|
(12.1)
|
|
Other
|
|
|
74,000
|
|
|
|
2.5
|
|
|
|
85,000
|
|
|
|
2.6
|
|
|
|
(11,000)
|
|
|
|
(12.9)
|
|
Total
|
|
$
|
3,044,000
|
|
|
|
100.0
|
%
|
|
$
|
3,320,000
|
|
|
|
100.0
|
%
|
|
$
|
(276,000)
|
|
|
|
(8.3)
|
%
|
The decline in Hy-Tech's fiscal first quarter 2021 total
revenue, compared to the same period in 2020, was primarily due to
the following key factors: i) the ongoing negative effects on the
US economy caused by the global COVID-19 pandemic; and ii) the
severe downturn of the oil and gas market. We believe that
our ATP products offering is likely to continue to struggle due to
among other things, the ongoing sluggishness of the price of oil
and natural gas, which in turn inhibits exploration and
drilling. The oil and gas sector in the US has been hindered
by the downward pricing pressure caused by among other things,
excess supply, and ripple effects from the pandemic. This is
evidenced by the significant decline in drilling rigs, which is a
metric that we monitor. According to Baker Hughes Inc., the average
number of oil rotary rigs in operation during fiscal first quarter
2021 were 302, compared to 671 during the same three-month period
in 2020. Similarly, the average number of active gas rotary
rigs during the three-month period ended March 31, 2021 was 90, compared to 112, during
the same period in the prior year. In the aggregate, the
average rotary rigs in operation during the first quarter of 2021
is down by 392, or 50%, when compared to the same three-month
period in 2020. As such, early in 2020 we made a decision to
focus a greater portion of our product development and marketing
efforts on our OEM and PTG products offering. We believe the
development of these lines of business should provide Hy-Tech an
opportunity to generate new, additional sources of revenue in the
future. Further, we are optimistic that as travel
restrictions and on-site visitation controls begin to ease,
Hy-Tech's revenue could increase.
GROSS
MARGIN/PROFIT
|
|
|
|
Three months ended
March 31,
|
|
|
Increase
(decrease)
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
4,200,000
|
|
|
$
|
3,774,000
|
|
|
$
|
426,000
|
|
|
|
11.3
|
%
|
As percent of
respective revenue
|
|
|
38.5
|
%
|
|
|
37.6
|
%
|
|
|
0.9
|
%pts
|
|
|
|
|
Hy-Tech
|
|
$
|
436,000
|
|
|
$
|
708,000
|
|
|
$
|
(272,000)
|
|
|
|
(38.4)
|
|
As percent of
respective revenue
|
|
|
14.3
|
%
|
|
|
21.3
|
%
|
|
|
(7.0)
|
%pts
|
|
|
|
|
Total
|
|
$
|
4,636,000
|
|
|
$
|
4,482,000
|
|
|
$
|
154,000
|
|
|
|
3.4
|
%
|
As percent of
respective revenue
|
|
|
33.2
|
%
|
|
|
33.6
|
%
|
|
|
(0.4)
|
%pts
|
|
|
|
|
The slight improvement in Florida Pneumatic's gross margin was
due primarily to product mix. The improved Automotive, Industrial
and Retail revenue this quarter, compared to the same three-month
period in 2020, contributed to the overall increase in gross
margin. This improvement was partially offset by reduced
manufacturing at Jiffy, which in turn resulted in under absorption
of its manufacturing overhead. As previously discussed, the
COVID-19 pandemic continued to have an adverse effect on Hy-Tech,
notably reducing revenue causing a reduction in volume through both
manufacturing facilities. The reduced manufacturing volume
resulted in lower absorption of manufacturing costs during the
first quarter of 2021, compared to the same three-month period in
2020. Additionally, Hy-Tech recorded an increase in its
obsolete, slow moving inventory charge during the first quarter of
2021, compared to the same period in 2020. Lastly, Hy-Tech's
overall product/customer mix negatively impacted its gross margin
during the three-month period ended March
31, 2021.
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 2021, our SG&A declined to
$4,991,000, from $5,690,000 incurred during the same three-month
period in 2020. The most significant factor contributing to
the net decrease was a reduction of professional fees of
$493,000. During the first quarter of
2020, we incurred more than $480,000
of expenses related to the relocation and set up the two gear
businesses that were acquired in late 2019. Additionally, we
reduced our compensation expenses by $246,000. Compensation expense is comprised
of base salaries and wages, accrued performance-based bonus
incentives and associated payroll taxes and employee benefits. A
reduction in accrued performance-based bonus incentives was the
bulk of the savings. Further, depreciation expense declined by
$40,000. Partially offsetting the
above reductions of operating expenses was an increase in variable
expenses of $103,000, driven by
improved revenue this quarter in certain sectors, compared to
revenue in the same three-month period in the prior year. Variable
expenses include among other things, commissions, freight out,
travel, advertising, shipping supplies and warranty costs.
INTEREST
|
|
|
|
Three months ended March
31,
|
|
|
Increase
(decrease)
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
Interest expense
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
10,000
|
|
|
$
|
51,000
|
|
|
$
|
(41,000)
|
|
|
|
(80.4)
|
%
|
PPP loan
|
|
|
8,000
|
|
|
|
—
|
|
|
|
8,000
|
|
|
|
100.0
|
|
Amortization expense
of debt issue costs
|
|
|
4,000
|
|
|
|
4,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
22,000
|
|
|
$
|
55,000
|
|
|
$
|
(33,000)
|
|
|
|
(60.0)
|
%
|
The Applicable Margin, as defined in our Credit Agreement was
the same during the three-month periods ended March 31, 2021 and 2020. The average balance of
short-term borrowings during the three-month periods ended
March 31, 2021 and 2020, were
$2,167,000 and $6,281,000, respectively. As the average balance
of our short-term borrowings was significantly lower during the
first three months of 2021, compared to the same three-month period
in 2020, our short-term interest expense (revolver borrowings)
declined.
In late April 2020, we borrowed approximately $2.9 million from BNB Bank as provided under the
Coronavirus Aid, Relief and Economic Security ("CARES") Act. The
PPP Loan accrues interest at a rate of 1.0% per annum. Pursuant to
the Flexibility Act, interest on any unforgiven amount is deferred
until the forgiveness determination is made by the Small Business
Administration ("SBA"). We will continue to accrue interest charges
until a final determination is received from the SBA.
Lastly, we and our bank amended the Credit Agreement in
February 2019. The debt issue costs
are associated with such amendment.
INCOME TAXES
On March 27, 2020, the CARES Act
was signed into law. The CARES Act includes provisions relating to
refundable payroll tax credits, deferment of the employer portion
of certain payroll taxes, net operating loss carryback periods,
alternative minimum tax credit refunds, modifications to the net
interest deduction limitation and technical corrections to tax
depreciation methods for qualified improvement property.
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 on a year-to-date basis and may change in
subsequent interim periods. Accordingly, our effective tax rate for
the three-month period ended March 31,
2021 was a tax benefit of 18.6%, compared to a tax benefit
of 40.0% for the three-month period ended March 31, 2020. Included in the three-month
period ended March 31, 2020 is a
discrete item for net operating loss carrybacks under the CARES
Act. The effective tax rates for all periods presented were
impacted primarily by state taxes, and non-deductible expenses.
LIQUIDITY AND CAPITAL RESOURCES
We monitor such metrics as days' sales outstanding, inventory
requirements, inventory turns, estimated future purchasing
requirements and capital expenditures to project liquidity needs,
as well as evaluate return on assets. Our primary sources of funds
are operating cash flows, existing working capital and our Revolver
Loan ("Revolver") with our Bank.
We gauge our liquidity and financial stability by various
measurements, some of which are shown in the following table:
|
|
March 31,
2021
|
|
|
December 31, 2020
|
|
Working
capital
|
|
$
|
20,773,000
|
|
|
$
|
21,258,000
|
|
Current
ratio
|
|
|
2.90 to 1
|
|
|
|
3.57 to 1
|
|
Shareholders'
equity
|
|
$
|
41,261,000
|
|
|
$
|
41,538,000
|
|
Credit facility
In October 2010, the Company entered into a Loan and
Security Agreement ("Credit Agreement") with an affiliate of
Capital One, National Association ("Capital One" or the "Bank").
The Credit Agreement, as amended and restated in April 2017
and further amended from time-to-time, among other things, provides
the ability to borrow funds under a $16,000,000 revolver line ("Revolver"), subject
to certain borrowing base criteria. Additionally, there is a
$2,000,000 line for capital
expenditures ("Capex Loan"), with $1,600,000 available for future borrowings.
Revolver and Capex Loan borrowings are secured by the Company's
accounts receivable, inventory, equipment, and real property, among
other things. P&F and certain of its subsidiaries are borrowers
under the Credit Agreement, and their obligations are cross
guaranteed by certain other subsidiaries. The Credit Agreement
expires on February 8, 2024.
At the Company's option, Revolver borrowings bear interest at
either London Interbank Offered Rate ("LIBOR") or the Base Rate, as
the term is defined in the Credit Agreement, plus an Applicable
Margin, as defined in the Credit Agreement. The Company is subject
to limitations on the number of LIBOR borrowings.
The Company provides Capital One with monthly borrowing base
certificates, and in certain circumstances, it is required to
deliver monthly financial statements and certificates of compliance
with various financial covenants. Should an event of default occur
the interest rate would increase by two percent per annum during
the period of default, in addition to other remedies provided to
Capital One.
At March 31, 2021, short-term or
Revolver borrowing was $3,481,000,
compared to $1,374,000, at
December 31, 2020. Applicable Margin Rates at March 31, 2021 and December 31, 2020 for
LIBOR and Base Rates were 1.50% and 0.50%, respectively.
Additionally, at March 31, 2021 and
December 31, 2020, there was approximately $12,011,000 and $11,971,000, respectively, available to the
Company under its Revolver arrangement.
The average balance of short-term borrowings from our Bank
during the three-month period ended March
31, 2021 was $2,167,000,
compared to $6,281,000, for the same
three-month periods in 2020.
Payroll Protection Program Loan
On April 20, 2020, we received a $2.9 million PPP Loan, as provided pursuant to
the CARES Act. This loan obtained from BNB Bank is unsecured and is
guaranteed by the SBA.
Cash flows
During the three-month period ended March
31, 2021, our net cash increased to $1,047,000 from $904,000 on December 31, 2020. Our total
bank debt, which includes borrowings under the CARES Act, at
March 31, 2021 was $6,410,000 compared to $4,303,000 at December 31, 2020. The total
debt to total book capitalization (total debt divided by total debt
plus equity); at March 31, 2021 was
13.4% compared to 9.4% at December 31, 2020.
During the three-month period ended March
31, 2021, we used $68,000 for
capital expenditures, compared to $658,000 during the same period in the prior
year. Capital expenditures for the balance of 2021 is expected
to be approximately $800,000, some of
which may be financed through our credit facilities with Capital
One Bank or financed through independent third-party financial
institutions. The remaining 2021 capital expenditures will likely
be for machinery and equipment, tooling, and computer hardware and
software.
Customer concentration
At March 31, 2021 and
December 31, 2020, accounts receivable from The Home Depot
("THD") was 36.8% and 38.0%, respectively, of total accounts
receivable. Revenue from THD during the three-month period ended
March 31, 2021 and 2020 were 27.2%
and 22.4% respectively, of total revenue. Additionally,
during the three-month periods ended March
31, 2021 and 2020, revenue attributable to Amazon.Com, Inc
("Amazon") was 12.1% and 8.6%, respectively of the Company's total
net revenue. Accounts receivable attributable to Amazon at
March 31, 2021 and December 31, 2020 was 12.3% and 15.8%,
respectively of total net accounts receivable. There were no other
customers that accounted for more than 10% of consolidated revenue
or accounts receivable during the three-month periods ended
March 31, 2021 or 2020.
ABOUT P&F INDUSTRIES, INC
P&F Industries, Inc., through its wholly owned subsidiaries,
is a leading manufacturer and importer of air-powered tools and
accessories sold principally to the aerospace, industrial,
automotive, and retail markets. P&F's products are sold
under its own trademarks, as well as under the private labels of
major manufacturers and retailers.
OTHER INFORMATION
P&F Industries Inc. has scheduled a conference call for
May 13, 2021, at 11:00 A.M., Eastern Time, to discuss its first
quarter 2021 results and financial condition. Investors and
other interested parties who wish to listen to or participate can
dial 1-800-353-6461. 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 website beginning on or about May 14, 2021.
Forward Looking Statement
The Private Securities Litigation Reform Act of 1995 (the
"Reform Act") provides a safe harbor for forward-looking statements
made by or on behalf of P&F Industries, Inc. and
subsidiaries ("P&F", or the "Company"). P&F and its
representatives may, from time-to-time, make written or verbal
forward-looking statements, including statements contained in the
Company's filings with the Securities and Exchange Commission and
in its reports to shareholders. Generally, the inclusion of the
words "believe," "expect," "intend," "estimate," "anticipate,"
"will," "may," "would," "could," "should," and their opposites and
similar expressions identify statements that constitute
"forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 and that are intended to come
within the safe harbor protection provided by those sections. Any
forward-looking statements contained herein, including those
related to the Company's future performance, are based upon the
Company's historical performance and on current plans, estimates
and expectations. All forward-looking statements involve risks and
uncertainties. These risks and uncertainties could cause the
Company's actual results for all or part the 2021 fiscal year and
beyond to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company for a
number of reasons including, but not limited to:
·
|
Risks related to the
global outbreak of COVID-19 and other public health
crises;
|
·
|
Risks associated with
sourcing from overseas;
|
·
|
Disruption in the
global capital and credit markets;
|
·
|
Importation
delays;
|
·
|
Customer
concentration;
|
·
|
Unforeseen inventory
adjustments or changes in purchasing patterns;
|
·
|
Market acceptance of
products;
|
·
|
Competition;
|
·
|
Price
reductions;
|
·
|
Exposure to
fluctuations in energy prices;
|
·
|
The strength of the
retail economy in the United States and abroad;
|
·
|
Risks associated with
Brexit;
|
·
|
Adverse changes in
currency exchange rates;
|
·
|
Interest
rates;
|
·
|
Debt and debt service
requirements;
|
·
|
Borrowing and
compliance with covenants under our credit facility;
|
·
|
Impairment of
long-lived assets and goodwill;
|
·
|
Retention of key
personnel;
|
·
|
Acquisition of
businesses;
|
·
|
Regulatory
environment;
|
·
|
Litigation and
insurance;
|
·
|
The threat of
terrorism and related political instability and economic
uncertainty; and
|
·
|
Business disruptions
or other costs associated with information technology,
cyber-attacks, system implementations, data privacy or catastrophic
losses,
|
and those other risks and uncertainties described in its Annual
Report on Form 10-K for the year ended December 31, 2020
("2020 Form 10-K"), its Quarterly Reports on Form 10-Q,
and its other reports and statements filed by the Company with the
Securities and Exchange Commission. Forward-looking statements
speak only as of the date on which they are made. 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. The Company cautions you against
relying on any of these forward-looking statements.
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(In Thousands
$)
|
March 31,
2021
|
December 31,
2020
|
|
(Unaudited)
|
(Audited)
|
Assets
|
|
|
Cash
|
|
$
|
1,047
|
|
|
$
|
904
|
|
Accounts receivable -
net
|
|
|
9,538
|
|
|
|
7,468
|
|
Inventories
|
|
|
18,631
|
|
|
|
18,362
|
|
Prepaid expenses and
other current assets
|
|
|
2,471
|
|
|
|
2,806
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
31,687
|
|
|
|
29,540
|
|
|
|
|
|
|
|
|
|
|
Net property and
equipment
|
|
|
9,009
|
|
|
|
9,395
|
|
Goodwill
|
|
|
4,451
|
|
|
|
4,449
|
|
Other intangible
assets - net
|
|
|
6,070
|
|
|
|
6,226
|
|
Deferred income taxes
- net
|
|
|
298
|
|
|
|
226
|
|
Right-of-use assets –
operating leases
|
|
|
3,118
|
|
|
|
3,281
|
|
Other assets –
net
|
|
|
178
|
|
|
|
250
|
|
Total
assets
|
|
$
|
54,811
|
|
|
$
|
53,367
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
3,481
|
|
|
$
|
1,374
|
|
Accounts
payable
|
|
|
1,715
|
|
|
|
2,199
|
|
Accrued compensation
and benefits
|
|
|
897
|
|
|
|
525
|
|
Accrued other
liabilities
|
|
|
1,247
|
|
|
|
1,354
|
|
Current lease
liabilities – operating leases
|
|
|
847
|
|
|
|
847
|
|
Current maturities of
long-term debt (PPP loan)
|
|
|
2,727
|
|
|
|
1,983
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
10,914
|
|
|
|
8,282
|
|
|
|
|
|
|
|
|
|
|
Non-current lease
liabilities – operating leases
|
|
|
2,315
|
|
|
|
2,474
|
|
Long-term debt, less
current maturities (PPP loan)
|
|
|
202
|
|
|
|
946
|
|
Other
liabilities
|
|
|
119
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
13,550
|
|
|
|
11,829
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity
|
|
|
41,261
|
|
|
|
41,538
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
$
|
54,811
|
|
|
$
|
53,367
|
|
|
|
|
|
|
|
|
|
|
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
Three months ended
March 31,
|
|
(In Thousand
$)
|
2021
|
2020
|
|
|
|
|
|
Net
revenue
|
$
|
13,945
|
$
|
13,350
|
|
Cost of
sales
|
9,309
|
8,868
|
|
Gross
profit
|
4,636
|
4,482
|
|
Selling, general and
administrative expenses
|
4,991
|
5,690
|
|
Operating
loss
|
(355)
|
(1,208)
|
|
Interest
expense
|
22
|
55
|
|
Loss before income
taxes
|
(377)
|
(1,263)
|
|
Income tax
benefit
|
70
|
505
|
|
Net loss
|
$
|
(307)
|
$
|
(758)
|
|
P&F
INDUSTRIES, INC.AND SUBSIDIARIES
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
Three
months
|
|
(In Thousand
$)
|
|
ended March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(307)
|
|
|
$
|
(758)
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash and other
charges:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
451
|
|
|
|
433
|
|
Amortization of other
intangible assets
|
|
|
159
|
|
|
|
195
|
|
Amortization of
operating lease assets
|
|
|
224
|
|
|
|
234
|
|
Amortization of debt
issue costs
|
|
|
4
|
|
|
|
4
|
|
Amortization of
consideration payable to a customer
|
|
|
67
|
|
|
|
67
|
|
Provision for losses
on accounts receivable
|
|
|
47
|
|
|
|
15
|
|
Stock-based
compensation
|
|
|
2
|
|
|
|
16
|
|
Restricted
stock-based compensation
|
|
|
13
|
|
|
|
13
|
|
Deferred income
taxes
|
|
|
(70)
|
|
|
|
(47)
|
|
Loss on disposal of
fixed assets
|
|
|
2
|
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(2,113)
|
|
|
|
720
|
|
Inventories
|
|
|
(263)
|
|
|
|
524
|
|
Prepaid expenses and
other current assets
|
|
|
335
|
|
|
|
(528)
|
|
Accounts
payable
|
|
|
(483)
|
|
|
|
482
|
|
Accrued compensation
and benefits
|
|
|
372
|
|
|
|
(894)
|
|
Accrued other
liabilities and other current liabilities
|
|
|
(97)
|
|
|
|
(556)
|
|
Operating lease
liabilities
|
|
|
(219)
|
|
|
|
(230)
|
|
Other
liabilities
|
|
|
(20)
|
|
|
|
(6)
|
|
Total
adjustments
|
|
|
(1,589)
|
|
|
|
442
|
|
Net cash used in
operating activities
|
|
|
(1,896)
|
|
|
|
(316)
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(68)
|
|
|
$
|
(658)
|
|
Net cash used in
investing activities
|
|
|
(68)
|
|
|
|
(658)
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
Dividend
payments
|
|
|
—
|
|
|
|
(157)
|
|
Proceeds from
exercise of stock options
|
|
|
—
|
|
|
|
3
|
|
Net proceeds from
short-term borrowings
|
|
|
2,107
|
|
|
|
1,284
|
|
Net cash provided by
financing activities
|
|
|
2,107
|
|
|
|
1,130
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
—
|
|
|
|
(5)
|
|
Net increase in
cash
|
|
|
143
|
|
|
|
151
|
|
Cash at beginning of
period
|
|
|
904
|
|
|
|
380
|
|
Cash at end of
period
|
|
$
|
1,047
|
|
|
$
|
531
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
8
|
|
|
$
|
53
|
|
Cash paid for amounts
included in the measurement of operating lease
liabilities
|
|
$
|
2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-cash
information:
|
|
|
|
|
|
|
|
|
Right of Use ("ROU")
assets recognized for new operating lease liabilities
|
|
$
|
23
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
P&F INDUSTRIES
INC. AND SUBSIDIARIES
|
|
LOSS PER SHARE
(UNAUDITED)
|
|
|
Three months ended
March 31,
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted loss per share
|
|
$
|
(0.10)
|
|
|
$
|
(0.24)
|
|
|
|
|
|
|
|
|
|
|
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
NON-GAAP FINANCIAL
MEASURE AND RECONCILIATION
|
|
COMPUTATION OF (EBITDA) - EARNINGS
BEFORE INTEREST, TAXES, DEPRECIATION, AND
AMORTIZATION
|
(UNAUDITED)
|
|
|
|
(In Thousands
$)
|
|
Three months ended
March 31,
|
|
|
|
2021
|
|
|
|
2020
|
|
Net
loss
|
|
$
|
(307)
|
|
|
$
|
(758)
|
|
Add:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
610
|
|
|
|
628
|
|
Interest
expense
|
|
|
22
|
|
|
|
55
|
|
Income tax
benefit
|
|
|
(70)
|
|
|
|
(505)
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
|
$
|
255
|
|
|
$
|
(580)
|
|
|
|
(1)
|
The Company discloses
a tabular comparison of EBITDA, 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 EBITDA provides greater insight into the Company's results of
operations for the periods presented. EBITDA should not be
considered in isolation or as a substitute for operating income as
reported on the face of our statement of operations.
|
View original
content:http://www.prnewswire.com/news-releases/pf-industries-inc-reports-improved-results-for-the-three-month-period-march-31-2021-301290590.html
SOURCE P&F Industries, Inc.