MELVILLE, N.Y., Nov. 9, 2023
/PRNewswire/ -- P&F Industries, Inc. (NASDAQ: PFIN) today
announced its results from operations for the three and nine-month
periods ended September 30, 2023. The
Company is reporting net revenue of $14,404,000 and $46,309,000, respectively, for the three and
nine-month periods ended September 30,
2023, compared to $14,516,000
and $46,347,000, respectively, for
same periods in 2022. For the three-month period ended
September 30, 2023, the Company is
reporting a net loss before income taxes of $979,000, compared to a net loss before income
taxes of $346,000, for the
three-month period ended September
30, 2022. For the nine-month period ended September 30, 2023, the Company is reporting a
net loss before income taxes of $128,000, compared to a net loss before income
taxes of $1,005,000 for the
nine-month period ended September 30,
2022. For the three-and nine-month periods ended September 30, 2023, the Company is reporting a
net loss after taxes of $721,000 and
$146,000, respectively, compared to
net losses after taxes of $237,000
and $876,000, respectively, for the
same periods in 2022. The Company's basic and diluted loss
per share for the three and nine-month periods ended September 30, 2023, were $0.23 and $0.05,
respectively, compared to basic and diluted loss per share of
$0.08 and $0.28, respectively, for the same three and
nine-month periods in 2022.
The Company noted that, during the three and nine-month periods
ended September 30, 2023. it incurred
approximately $515,000 and
$729,000, respectively, of
professional fees in connection with it entering into an agreement
and plan of merger, which was announced on October 13, 2023. These expenses were a
significant factor that contributed to the net losses for such
periods.
As was previously announced, the Company decided not to hold an
earnings call that it normally would hold on the day of an earnings
release, in light of the recent announcement that it has entered
into the agreement and plan of merger mentioned above.
The Company will be reporting the following:
RESULTS OF OPERATIONS
REVENUE
The tables below provide an analysis of our net revenue for the
three-month periods ended September 30,
2023, and 2022:
Consolidated
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|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September
30,
|
|
|
|
|
|
|
|
Increase
(decrease)
|
|
|
|
2023
|
|
2022
|
|
$
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
9,682,000
|
|
$
|
9,906,000
|
|
$
|
(224,000)
|
|
(2.3)
|
%
|
Hy-Tech
|
|
|
4,722,000
|
|
|
4,610,000
|
|
|
112,000
|
|
2.4
|
|
Consolidated
|
|
$
|
14,404,000
|
|
$
|
14,516,000
|
|
$
|
(112,000)
|
|
(0.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September
30,
|
|
|
|
|
|
|
|
Increase
(decrease)
|
|
|
|
2023
|
|
2022
|
|
$
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
30,451,000
|
|
$
|
32,853,000
|
|
$
|
(2,402,000)
|
|
(7.3)
|
%
|
Hy-Tech
|
|
|
15,858,000
|
|
|
13,494,000
|
|
|
2,364,000
|
|
17.5
|
|
Consolidated
|
|
$
|
46,309,000
|
|
$
|
46,347,000
|
|
$
|
(38,000)
|
|
(0.1)
|
%
|
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").
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
Increase
(decrease)
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
Revenue
|
|
revenue
|
|
Revenue
|
|
revenue
|
|
$
|
|
%
|
|
Automotive
|
|
$
|
2,613,000
|
|
27.0
|
%
|
$
|
3,110,000
|
|
31.4
|
%
|
$
|
(497,000)
|
|
(16.0)
|
%
|
Retail
|
|
|
2,825,000
|
|
29.2
|
|
|
2,779,000
|
|
28.0
|
|
|
46,000
|
|
1.7
|
|
Industrial
|
|
|
1,261,000
|
|
13.0
|
|
|
1,305,000
|
|
13.2
|
|
|
(44,000)
|
|
(3.4)
|
|
Aerospace
|
|
|
2,864,000
|
|
29.6
|
|
|
2,538,000
|
|
25.6
|
|
|
326,000
|
|
12.8
|
|
Other
|
|
|
119,000
|
|
1.2
|
|
|
174,000
|
|
1.8
|
|
|
(55,000)
|
|
(31.6)
|
|
Total
|
|
$
|
9,682,000
|
|
100.0
|
%
|
$
|
9,906,000
|
|
100.0
|
%
|
$
|
(224,000)
|
|
(2.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
Increase
(decrease)
|
|
|
|
|
|
|
Percent
of
|
|
|
|
|
Percent
of
|
|
|
|
|
|
|
|
Revenue
|
|
revenue
|
|
Revenue
|
|
revenue
|
|
$
|
|
%
|
|
Automotive
|
|
$
|
9,375,000
|
|
30.8
|
%
|
$
|
10,845,000
|
|
33.0
|
%
|
$
|
(1,470,000)
|
|
(13.6)
|
%
|
Retail
|
|
|
8,295,000
|
|
27.2
|
|
|
10,625,000
|
|
32.3
|
|
|
(2,330,000)
|
|
(21.9)
|
|
Industrial
|
|
|
4,175,000
|
|
13.7
|
|
|
4,416,000
|
|
13.5
|
|
|
(241,000)
|
|
(5.5)
|
|
Aerospace
|
|
|
8,238,000
|
|
27.1
|
|
|
6,531,000
|
|
19.9
|
|
|
1,707,000
|
|
26.1
|
|
Other
|
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|
368,000
|
|
1.2
|
|
|
436,000
|
|
1.3
|
|
|
(68,000)
|
|
(15.6)
|
|
Total
|
|
$
|
30,451,000
|
|
100.0
|
%
|
$
|
32,853,000
|
|
100.0
|
%
|
$
|
(2,402,000)
|
|
(7.3)
|
%
|
Automotive revenue declined this quarter, compared to the same
period in 2022, due primarily to an across-the-board price increase
in all distribution channels in order to address rising input
costs. This change in pricing strategy led to a decline in the
number of unit sales and thus overall revenue in this category.
However, Automotive gross margin improved as a result of this
change. Florida Pneumatic's third quarter 2023 Retail revenue
improved a modest 1.7%, when compared to the same period in the
prior year, despite The Home Depot's continued efforts that began
earlier this year of reducing the number of individual stock
keeping units offered, as well as the quantity of each, and
reducing the display area of their pneumatic tools. We believe
that THD is facing increased pressure from on-line
distributors, as well as other "brick and mortar" retailers that
are expanding their presence in this product line. Aerospace
revenue improved 12.8% when comparing the third quarter of 2023 to
the same period in 2022. This improvement was driven by, among
other factors, increased demand for new consumable parts, that
Jiffy had begun to market earlier this year, and improved market
conditions in both the commercial and military aviation. In
addition, Jiffy has increased its sales in Europe significantly and is also seeing
initial sales of recently introduced products. Lastly, the slight
decline in Industrial revenue was due primarily to supply chain
issues and by economic uncertainty in the sector.
Florida Pneumatic's nine-month revenue analysis is quite similar
to that of its third quarter 2023 results. When compared to the
nine-month period ended September 30,
2022, Florida Pneumatic's third quarter 2023 Automotive
revenue declined due primarily to our revised pricing and marketing
changes put into effect mid-2022. However, as will be discussed
later in this discussion and analysis, this change contributed to
an overall improvement in Florida Pneumatic's gross margin. The
significant factors causing the decline in our Retail revenue for
the nine-month periods ended September 30,
2023, compared to the same period in 2022 was the product
rollout that occurred in the second quarter of 2022 with no such
event occurring during 2023. This year-over-year decline was also
driven by THD's decision to lower its inventory of floor display
space this year. During the nine-month period ended September 30, 2023, Aerospace revenue increased
26.1%, when compared to the same period in the prior year. The
improvement was driven by resurgence in both the commercial and
military components of the Aerospace sector, and increased demand
for the new, consumable parts that Jiffy has begun to market. In
addition, Jiffy has increased its sales in Europe and is also seeing initial sales of
recently introduced products.
Hy-Tech
Hy-Tech designs, manufactures, and sells a wide range of
industrial products 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.
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|
|
|
|
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|
|
Three months ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
Increase
(decrease)
|
|
|
|
|
|
Percent of
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
Revenue
|
|
revenue
|
|
Revenue
|
|
revenue
|
|
$
|
|
%
|
|
OEM
|
|
$
|
2,616,000
|
|
55.4
|
%
|
$
|
2,187,000
|
|
47.4
|
%
|
$
|
429,000
|
|
19.6
|
%
|
ATP
|
|
|
671,000
|
|
14.2
|
|
|
490,000
|
|
10.6
|
|
|
181,000
|
|
36.9
|
|
PTG
|
|
|
1,296,000
|
|
27.5
|
|
|
1,693,000
|
|
36.8
|
|
|
(397,000)
|
|
(23.4)
|
|
Other
|
|
|
139,000
|
|
2.9
|
|
|
240,000
|
|
5.2
|
|
|
(101,000)
|
|
(42.1)
|
|
Total
|
|
$
|
4,722,000
|
|
100.0
|
%
|
$
|
4,610,000
|
|
100.0
|
%
|
$
|
112,000
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
Increase
(decrease)
|
|
|
|
|
|
|
Percent
of
|
|
|
|
|
Percent
of
|
|
|
|
|
|
|
|
Revenue
|
|
revenue
|
|
Revenue
|
|
revenue
|
|
$
|
|
%
|
|
OEM
|
|
$
|
8,364,000
|
|
52.8
|
%
|
$
|
6,693,000
|
|
49.6
|
%
|
$
|
1,671,000
|
|
25.0
|
%
|
ATP
|
|
|
2,176,000
|
|
13.7
|
|
|
2,178,000
|
|
16.1
|
|
|
(2,000)
|
|
(0.1)
|
|
PTG
|
|
|
4,970,000
|
|
31.3
|
|
|
4,216,000
|
|
31.3
|
|
|
754,000
|
|
17.9
|
|
Other
|
|
|
348,000
|
|
2.2
|
|
|
407,000
|
|
3.0
|
|
|
(59,000)
|
|
(14.5)
|
|
Total
|
|
$
|
15,858,000
|
|
100.0
|
%
|
$
|
13,494,000
|
|
100.0
|
%
|
$
|
2,364,000
|
|
17.5
|
%
|
The net improvement in Hy-Tech's revenue this quarter, compared
to the same three-month period in 2022, was driven by the 19.6%
growth of OEM revenue. It should be noted that Hy-Tech's revenue by
product line fluctuates throughout the year. This fluctuation is
caused by, among other factors, timing of orders, production
scheduling and reliance on outside vendors and suppliers. The
improvement this quarter, compared to the same period in 2022 is
due primarily to an increase in orders during 2023, from a major
OEM customer, along with an overall market improvement in this
sector. The 36.9% increase in Hy-Tech's ATP revenue is
primarily due to weak third quarter 2022 orders and
shipments. The above increases were partially offset by a
decline in PTG revenue. This decline was due to i)
product/customer mix, ii) the implementation of new planning and
production processes and procedures, which in turn caused delays in
the manufacturing process, iii) associated training related
thereto, and iv) delays in receipt of product being returned from
third-party vendors. The decline in Hy-Tech's Other revenue, which
is driven by general machining, was due to Hy-Tech's decision to
focus on OEM and ATP product lines. Thaxton revenue was
softer this quarter, compared to the same three-month period in
2022.
The 17.5% year-over-year increase in Hy-Tech's total revenue was
primarily driven by its ongoing growth in OEM and to a lesser
degree PTG revenue. The increase in OEM revenue was driven by
growth in certain markets that are served by a number of Hy-Tech's
OEM customers. The markets served by our customers include multiple
industrial applications, as well as the tool rental market. PTG
revenue for the nine-month period ended September 30, 2023, increased 17.9% when compared
to the same period in the prior year. This improvement was driven
by the acquisition of the Jackson Gear Company business in
January 2022. The decrease in
Hy-Tech's Other revenue as discussed above, was due to weaker
NUMATX and general machining revenue during the third quarter 2023.
The modest year to date decline in ATP revenue is attributable to
our decision to focus our marketing efforts on OEM and PTG product
offerings.
GROSS MARGIN/PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September
30,
|
|
Increase
(decrease)
|
|
|
|
2023
|
|
2022
|
|
Amount
|
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
4,051,000
|
|
$
|
4,113,000
|
|
$
|
(62,000)
|
|
|
(1.5)
|
%
|
As percent of
respective revenue
|
|
|
41.8
|
%
|
|
41.5
|
%
|
|
0.3
|
%
|
pts
|
|
|
Hy-Tech
|
|
$
|
842,000
|
|
$
|
734,000
|
|
$
|
108,000
|
|
|
14.7
|
|
As percent of
respective revenue
|
|
|
17.8
|
%
|
|
15.9
|
%
|
|
1.9
|
%
|
pts
|
|
|
Total
|
|
$
|
4,893,000
|
|
$
|
4,847,000
|
|
$
|
46,000
|
|
|
0.9
|
%
|
As percent of
respective revenue
|
|
|
34.0
|
%
|
|
33.4
|
%
|
|
0.6
|
%
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September
30,
|
|
Increase
(decrease)
|
|
|
|
2023
|
|
2022
|
|
Amount
|
|
|
%
|
|
Florida
Pneumatic
|
|
$
|
12,837,000
|
|
$
|
12,834,000
|
|
$
|
3,000
|
|
|
---
|
%
|
As percent of
respective revenue
|
|
|
42.2
|
%
|
|
39.1
|
%
|
|
3.1
|
%
|
pts
|
|
|
Hy-Tech
|
|
$
|
3,633,000
|
|
$
|
2,160,000
|
|
$
|
1,473,000
|
|
|
68.2
|
|
As percent of
respective revenue
|
|
|
22.9
|
%
|
|
16.0
|
%
|
|
6.9
|
%
|
pts
|
|
|
Total
|
|
$
|
16,470,000
|
|
$
|
14,994,000
|
|
$
|
1,476,000
|
|
|
9.8
|
%
|
As percent of
respective revenue
|
|
|
35.6
|
%
|
|
32.4
|
%
|
|
3.2
|
%
|
pts
|
|
|
Florida Pneumatic's gross margin for the three-month period
ended September 30, 2023, improved by
0.3 percentage points compared to the same period in the prior year
principally due to a shift away from their lower margin Retail and
Automotive product lines to the higher margin, Industrial and
Aerospace categories. During the third quarter of
2023 Hy-Tech's gross margin increased 1.9 percentage points,
when compared to the same period in 2022. This improvement was due
primarily to product/customer mix. Hy-Tech continued to
pursue cost and expense reductions, and coupled with revisions in
pricing structure, it has been able to improve its blended gross
margin, thus contributing to the overall gross margin improvement.
Partially offsetting the above improvements, during the third
quarter Hy-Tech recorded an additional charge to its Obsolete and
Slow-Moving Inventory of $80,000.
Lastly, during the third quarter of 2023, Hy-Tech's PTG product
line's gross margin was negatively affected due primarily to the
implementation of new planning and production procedures and
processes and delays caused by outside vendors, both of which
negatively impacted its overhead absorption.
Florida Pneumatic's gross margin for the nine-month period ended
September 30, 2023, improved compared
to the same period in the prior year principally due to a shift
away from their lower margin product lines to the higher margin
categories. Further, during the latter half of 2022, we raised
prices in all product categories, which contributed to the improved
gross margin. This change in marketing strategy and pricing
adjustments led to a 3.1 percentage point year-to-date improvement
over the same period in the prior year.
The improvement in Hy-Tech's nine-month gross margin is due
primarily to product/customer mix. Further, during the nine-month
period ended September 30, 2023,
Hy-Tech was able to reduce manufacturing costs and expenses,
primarily at its Cranberry PA
facility. Also as noted above, beginning in 2022, Hy-Tech
modified its pricing structure, which effectively improved its
overall gross margin. Hy-Tech continues to focus on improving
manufacturing overhead absorption, particularly at its PTG facility
in Punxsutawney PA.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A")
include salaries and related costs, commissions, travel,
administrative facilities costs, 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 2023, our SG&A was $5,785,000 compared to $5,084,000 incurred during the same three-month
period in 2022. Significant components to the net increase
include:
- Compensation expenses increased $215,000. Compensation expenses are comprised of
base salaries and wages, accrued performance-based bonus incentives
and associated payroll taxes and employee benefits.
- Professional fees and expenses (i.e., accounting, legal,
consulting, etc.) increased $471,000
primarily due to $515,000 of legal
and consulting costs incurred in connection to the transaction
announced on October 13, 2023.
- Expenses of $110,000 incurred in
connection with the relocation of Florida Pneumatic's warehouse and
administrative offices.
- Variable expenses declined $58,000. Variable expenses include among other
items, commissions, freight out, travel, advertising, shipping
supplies and warranty costs.
- A reduction in bank fees of $30,000.
Our SG&A for the nine-month period
ended September 30, 2023, was
$16,327,000, compared to $15,736,000 for the same nine-month period in the
prior year. Key components of this net increase
include:
- Increased compensation expenses of $327,000.
- Professional fees and expenses increased $571,000 primarily due to $729,000 of legal and consulting costs incurred
in connection to the transaction announced on October 13, 2023.
- Expenses of $110,000 incurred in
connection with the relocation of Florida Pneumatic's warehouse and
administrative offices.
- Variable expenses declined $368,000 Driving this decline was lower
advertising and shipping costs at Florida Pneumatic, caused
primarily by lower Retail revenue this quarter and a reduction in
discretionary Automotive advertising expenses, compared to the same
period a year ago.
- Stock-based compensation and bank fees declined $39,000 and $40,000, respectively.
OTHER (INCOME) EXPENSE- net
During the three-month period ended September 30, 2023, we recognized a gain on sale
of equipment of $23,000.
During the nine-month period ended September 30, 2023, Other Income included the
gain on sale of equipment during the current quarter discussed
above. Additionally, during the second quarter of 2023 we incurred
a loss of $9,000, and a gain of
$5,000 on transactions involving the
sale of equipment. During the three-month period ended March 31, 2023, we recognized a gain of
$21,000 from the sale of equipment.
Lastly, as a result of the final resolution of our Employee
Retention Tax Credit ("ERTC") filings, we recorded an additional
$15,000 as Other Income. The ERTC
income is subject to federal and local tax.
INTEREST – NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September
30,
|
|
(Increase)
decrease
|
|
|
|
2023
|
|
2022
|
|
Amount
|
|
%
|
|
Interest expense
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
98,000
|
|
$
|
102,000
|
|
$
|
4,000
|
|
3.9
|
%
|
Amortization expense of
debt issue costs
|
|
|
12,000
|
|
|
4,000
|
|
|
(8,000)
|
|
(200.0)
|
|
Total
|
|
$
|
110,000
|
|
$
|
106,000
|
|
$
|
(4,000)
|
|
(3.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September
30,
|
|
(Increase)
decrease
|
|
|
|
2023
|
|
2022
|
|
Amount
|
|
%
|
|
Interest expense
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
334,000
|
|
$
|
239,000
|
|
$
|
(95,000)
|
|
(39.7)
|
%
|
|
Amortization expense of
debt issue costs
|
|
|
34,000
|
|
|
12,000
|
|
|
(22,000)
|
|
(183.3)
|
|
|
Other
|
|
|
(42,000)
|
|
|
(7,000)
|
|
|
35,000
|
|
500.0
|
|
|
Total
|
|
$
|
326,000
|
|
$
|
244,000
|
|
$
|
(82,000)
|
|
(33.6)
|
%
|
|
Most of our borrowings are Secured Overnight Financing Rate,
("SOFR") plus Applicable Margin. The Applicable Margin, as defined
in our Credit Agreement, during the three-month period ended
September 30, 2023, was 2.10% applied
to all SOFR borrowings and 1.10% applied to Base Rate (Prime Rate)
borrowings. The Applicable Margins that were added to SOFR and Base
Rate borrowings during the three-month period ended September 30, 2022, were 1.50% and 0.50%,
respectively. During the three-month period ended
September 30, 2023, SOFR ranged from
7.17% to 7.44%, compared to 3.15% to 4.91% during the third quarter
of 2022. The Base Rate during the three-month period ended
September 30, 2023, ranged from 8.25%
to 8.50%, compared to a range of 4.75% to 6.25%, during the same
period a year ago.
The average balance of short-term borrowings during the three
and nine-month periods ended September 30,
2023, were $4,439,000, and
$6,252,000, respectively, compared to
$9,499,000 and $10,403,000, for the same periods in the prior
year.
In late March 2023, we and the
Bank amended the Credit Agreement, and as a result, we wrote off
the balance of the unamortized debt issue cost as of the date of
Amendment No.11 during the first quarter of 2023. The Debt issue
costs incurred in connection with the above-referenced Amendment
No.11, are being amortized through the expiration date of credit
Agreement, which is February
2027.
Other interest refers to interest or adjustments to ERTC
refunds. Other interest during the nine-month period in the prior
year was interest income recorded in connection with Federal income
tax refunds received during the second quarter of 2022.
INCOME TAXES
At the end of each interim reporting period, we compute an
effective tax rate based upon our estimated full year results. 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, the effective tax rate for the three and
nine-month periods ended September 30,
2023, were approximately 26.3% and 14.1%, respectively, and
for the same periods in 2022, the effective tax rates were an
income tax benefit of 31.5%, and 12.8%, respectively. 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. As we utilize a full lock-box
arrangement with our Bank, our primary source of funds is our
Revolver loan.
We gauge our liquidity and financial stability by various
measurements, some of which are shown in the following table:
|
|
|
|
|
|
|
|
|
September 30,
2023
|
|
December 31, 2022
|
Working
capital
|
|
$
|
20,422,000
|
|
$
|
20,838,000
|
Current
ratio
|
|
|
3.03 to 1
|
|
|
2.44 to 1
|
Shareholders'
equity
|
|
$
|
41,340,000
|
|
$
|
41,956,000
|
Credit Agreement
As discussed above, we and the Bank entered into an amendment to
the Credit Facility that, among other things, extended the
expiration date to February 8,
2027.
At September 30, 2023, there was
approximately $10,580,000 available
to us under the Revolver arrangement.
Cash Flows
For the nine-month period ended September
30, 2023, cash provided by operating activities was
$7,061,000, compared to cash provided
in operating activities for the nine-month period ended
September 30, 2022, of $1,305,000. At September
30, 2023, and December 31,
2022, our consolidated cash balance was $338,000, and $667,000, respectively. We operate under the
terms and conditions of the Credit Agreement. As a result, all
domestic cash receipts are remitted to Capital One lockboxes. Thus,
nearly all cash on hand represents funds to cover checks issued but
not yet presented for payment.
Our total debt to total book capitalization (total debt divided
by total debt plus equity) at September 30,
2023, was 6.1%, compared to 15.3% at December 31, 2022.
During the nine-month period ended September 30, 2023, we used $1,909,000 for capital expenditures, compared to
$1,222,000 during the same period in
the prior year. Capital expenditures currently planned for the
remainder of 2023 are approximately $600,000, which we expect will be financed
through the Credit Facility.
The major portion of these planned capital expenditures will be
for new metal cutting equipment, tooling and information technology
hardware and software.
Our liquidity and capital are primarily sourced from the Credit
Agreement, described in Note 8 – Debt, to our consolidated
financial statements, and cash from operations.
Should the need arise whereby the current Credit Agreement is
insufficient, we believe we could obtain additional funds based on
the value of our real property and believe the borrowing under the
current Agreement could be increased.
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.
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 2023 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 associated with the Company's announced agreement and
plan of merger;
- 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;
- 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;
- Risks related to the global outbreak of COVID-19 and other
public health crises;
- The threat of terrorism and related political instability and
economic uncertainty;
- 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 the 2022 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.
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
$)
|
September 30,
2023
|
December 31,
2022
|
|
(Unaudited)
|
(Audited)
|
Assets
|
|
|
Cash
|
|
$
|
338
|
|
|
$
|
667
|
|
Accounts receivable -
net
|
|
|
8,734
|
|
|
|
7,370
|
|
Inventories
|
|
|
20,517
|
|
|
|
24,491
|
|
Prepaid expenses and
other current assets
|
|
|
908
|
|
|
|
2,753
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
30,497
|
|
|
|
35,281
|
|
|
|
|
|
|
|
|
|
|
Net property and
equipment
|
|
|
9,779
|
|
|
|
9,363
|
|
Goodwill
|
|
|
4,823
|
|
|
|
4,822
|
|
Other intangible assets
- net
|
|
|
4,809
|
|
|
|
5,326
|
|
Deferred income taxes -
net
|
|
|
639
|
|
|
|
629
|
|
Right-of-use
assets
|
|
|
4,745
|
|
|
|
5,521
|
|
Other assets –
net
|
|
|
161
|
|
|
|
62
|
|
Total
assets
|
|
$
|
55,453
|
|
|
$
|
61,004
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
2,664
|
|
|
$
|
7,570
|
|
Accounts
payable
|
|
|
2,767
|
|
|
|
3,094
|
|
Accrued compensation
and benefits
|
|
|
2,078
|
|
|
|
1,757
|
|
Accrued other
liabilities
|
|
|
1,706
|
|
|
|
1,002
|
|
Current leased
liabilities – operating leases
|
|
|
860
|
|
|
|
1,020
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
10,075
|
|
|
|
14,443
|
|
|
|
|
|
|
|
|
|
|
Noncurrent leased
liabilities – operating leases
|
|
|
3,991
|
|
|
|
4,535
|
|
Other
liabilities
|
|
|
47
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
14,113
|
|
|
|
19,048
|
|
|
|
|
|
|
|
|
|
|
Total shareholders'
equity
|
|
|
41,340
|
|
|
|
41,956
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
$
|
55,453
|
|
|
$
|
61,004
|
|
|
|
|
|
|
|
|
|
|
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
(In Thousand
$)
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
Net revenue
|
$
|
14,404
|
$
|
14,516
|
$
|
46,309
|
$
|
46,347
|
Cost of
sales
|
9,511
|
9,669
|
29,839
|
31,353
|
Gross profit
|
4,893
|
4,847
|
16,470
|
14,994
|
Selling, general &
administrative exp
|
5,785
|
5,084
|
16,327
|
15,736
|
Operating (loss)
income
|
(892)
|
(237)
|
143
|
(742)
|
Other income (expense)
- net
|
23
|
(3)
|
55
|
(19)
|
Interest
expense
|
(110)
|
(106)
|
(326)
|
(244)
|
Loss before income
tax
|
(979)
|
(346)
|
(128)
|
(1,005)
|
Income tax benefit
(expense)
|
258
|
109
|
(18)
|
129
|
Net loss after
tax
|
$
|
(721)
|
$
|
(237)
|
$
|
(146)
|
$
|
(876)
|
P&F
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
Nine
months
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
ended September
30,
|
|
(In Thousands
$)
|
|
2023
|
|
2022
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
|
(146)
|
|
$
|
(876)
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash and other
charges:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
1,476
|
|
|
1,271
|
|
Amortization of other intangible assets
|
|
|
|
519
|
|
|
514
|
|
Amortization of operating lease assets
|
|
|
|
697
|
|
|
710
|
|
Amortization of debt issue costs
|
|
|
|
34
|
|
|
12
|
|
Amortization of consideration payable to a
customer
|
|
|
|
—
|
|
|
157
|
|
Provision for losses on accounts receivable
|
|
|
|
(1)
|
|
|
(33)
|
|
Stock-based compensation
|
|
|
|
24
|
|
|
1
|
|
Stock-based compensation – stock options
exercised
|
|
|
|
—
|
|
|
38
|
|
Restricted stock-based compensation
|
|
|
|
14
|
|
|
35
|
|
Deferred income taxes
|
|
|
|
19
|
|
|
(129)
|
|
Gain on disposal of fixed assets
|
|
|
|
(40)
|
|
|
(5)
|
|
Gain on early termination of lease
|
|
|
|
—
|
|
|
(19)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(1,361)
|
|
|
(1,262)
|
|
Inventories
|
|
|
|
3,984
|
|
|
(554)
|
|
Prepaid expenses and other current assets
|
|
|
|
1,844
|
|
|
1,608
|
|
Other assets
|
|
|
|
(50)
|
|
|
—
|
|
Accounts payable
|
|
|
|
(327)
|
|
|
(45)
|
|
Accrued compensation and benefits
|
|
|
|
320
|
|
|
28
|
|
Accrued other liabilities and other current
liabilities
|
|
|
|
701
|
|
|
582
|
|
Operating lease liabilities
|
|
|
|
(625)
|
|
|
(703)
|
|
Other liabilities
|
|
|
|
(21)
|
|
|
(25)
|
|
Total adjustments
|
|
|
|
7,207
|
|
|
2,181
|
|
Net
cash provided by operating activities
|
|
|
|
7,061
|
|
|
1,305
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(1,909)
|
|
|
(1,222)
|
Proceeds from the sale
of fixed assets
|
|
|
57,000
|
|
|
—
|
Purchase of net assets
of the Jackson Gear Company business
|
|
|
—
|
|
|
(2,300)
|
Net cash used in
investing activities
|
|
|
(1,852)
|
|
|
(3,522)
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
Dividend
payments
|
|
|
(480)
|
|
|
(160)
|
Net (repayments on)
proceeds from short-term borrowings
|
|
|
(4,906)
|
|
|
2,323
|
Proceeds from exercise
of stock options
|
|
|
—
|
|
|
2
|
Bank financing
costs
|
|
|
(84)
|
|
|
—
|
Net cash (used in)
provided by financing activities
|
|
|
(5,470)
|
|
|
2,165
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
|
|
(68)
|
|
|
(77)
|
Net decrease in
cash
|
|
|
(329)
|
|
|
(129)
|
Cash at beginning of
period
|
|
|
667
|
|
|
539
|
Cash at end of
period
|
|
$
|
338
|
|
$
|
410
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
Taxes
|
|
$
|
31
|
|
$
|
126
|
Interest
|
|
$
|
331
|
|
$
|
213
|
|
|
|
|
|
|
|
Non-cash
information:
|
|
|
|
|
|
|
Right of Use ("ROU")
assets recognized for new operating lease liabilities
|
|
$
|
—
|
|
$
|
987
|
ROU adjustment due to
early termination
|
|
$
|
160
|
|
$
|
359
|
|
|
|
|
|
|
|
|
|
|
P & F
INDUSTRIES, INC. AND SUBSIDIARIES
|
NON-GAAP FINANCIAL
MEASURE AND RECONCILIATION
|
|
COMPUTATION OF (EBITDA) - EARNINGS
BEFORE INTEREST, TAXES, DEPRECIATION, AND
AMORIZATION
|
(UNAUDITED)
|
|
|
|
(In Thousands
$)
|
|
For the three-month
periods ended
September 30,
|
For the nine-month
periods ended
September
30,
|
|
|
|
2023
|
|
|
|
2022
|
|
|
|
2023
|
|
|
2022
|
|
Net loss
|
|
$
|
(721)
|
|
|
$
|
(237)
|
|
|
$
|
(146)
|
|
$
|
(876)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
629
|
|
|
|
563
|
|
|
|
1,995
|
|
|
1,785
|
|
Interest
expense
|
|
|
110
|
|
|
|
106
|
|
|
|
326
|
|
|
244
|
|
Income tax (benefit)
expense
|
|
|
(258)
|
|
|
|
(109)
|
|
|
|
18
|
|
|
(129)
|
|
|
|
|
481
|
|
|
|
560
|
|
|
|
2,339
|
|
|
1,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
|
$
|
(240)
|
|
|
$
|
323
|
|
|
$
|
2,193
|
|
$
|
1,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 operation.
View original
content:https://www.prnewswire.com/news-releases/pf-industries-inc-reports-results-for-the-three-and-nine-month-periods-ended-september-30-2023-301982723.html
SOURCE P&F Industries, Inc.