Investor Relations| P & F INDUSTRIES REPORT THIRD QUARTER 2001 RESULTS
Harriet Fried/Klea Theoharis
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P & F INDUSTRIES REPORT THIRD QUARTER 2001 RESULTS
Revenues for the third quarter of 2001 decreased to $16.4 million, from $21.8 million in the comparable period of 2000. Net income for the quarter totaled $488,376, or diluted earnings per share of $0.13, compared to $959,817, or diluted earnings per share of $0.26, for the same period last year.
Revenues for the nine months ended September 30, 2001 decreased to $50.1 million, from $61.6 million in the comparable period of 2000. Net income for the nine months ended September 30, 2001 was $1.3 million, or diluted earnings per share of $0.37, compared to $3.0 million, or diluted earnings per share of $0.83, for the same period last year.
Florida Pneumatic's sales for the third quarter of 2001 decreased to $9.1 million, from $12.5 million for the third quarter of 2000, due primarily to the cancellation of two special fall promotions at a significant customer and a reduction in prices to another large customer. Gross margins increased to 40.0%, from 31.9%, due primarily to an increase in the value of the U.S. dollar versus both the Japanese yen and the New Taiwan dollar, which decreased the cost of imported product.
Green Manufacturing's sales for the third quarter of 2001 decreased to $3.5 million, from $5.0 million for the comparable period of 2000, due primarily to weakness in demand for recycled cardboard and large capital goods, which negatively affected sales to refuse and aerial lift customers, respectively, and to the discontinuance by one major aerial lift customer of a significant portion of its product line. Gross margins decreased to 8.4%, from 15.9%, due primarily to the decrease in sales, which reduced coverage of fixed expenses, and to the production of prototypes and short-run orders for potential new customers, which require significant labor resources while generating minimal profit margins.
Embassy Industries' sales of heating products for the third quarter of 2001 decreased to $2.6 million, from $2.9 million for the third quarter of 2000, due primarily to a decrease in sales of baseboard products, which was partially offset by an increase in sales of radiant products and by sales of the new Ambassador boilers. Gross margins from sales of heating products decreased to 31.1%, from 35.4%, due primarily to the decrease in revenues, which negatively affected Embassy's ability to absorb fixed expenses, as well as to a less favorable product mix. Hardware sales at Embassy's Franklin division decreased to $1.2 million for the third quarter of 2001, from $1.4 million for the comparable period of 2000, due primarily to the loss of two significant customers that declared bankruptcy since the third quarter of 2000. Gross margins from hardware sales decreased to 26.1%, from 26.9%, due to a less favorable product mix.
Richard Horowitz, Chairman of the Board, President and Chief Executive Officer of P&F Industries, Inc. stated, "2001 continues to be an extremely challenging year, as we have experienced some disappointments, most notably the loss of a significant customer at Green. We anticipate little impact from the loss of this customer during the remainder of 2001, but substantial impact for 2002. We have, however, obtained several new customers at Green that will have a positive impact on the business and should greatly mitigate the loss of this other customer, beginning in 2002. Additionally, we have had several other marketing successes during 2001. We obtained two substantial new customers at Franklin Manufacturing. Sales and orders for our Embassy Ambassador line remain strong, and we plan to expand the Embassy Elite radiant marketing program for 2002. At Florida Pneumatic, a major customer has completed testing a new product that is scheduled to begin shipment during the second quarter of 2002."
"In the wake of some of the disappointing sales news, we are stepping up our efforts to reduce costs at all of our facilities. These cost reduction programs have already generated double digit improvements in productivity at Florida Pneumatic and Green and we will continue to emphasize this effort."
Mr. Horowitz added, "For the fourth quarter of 2001, we anticipate continuing softness in demand for most of our product categories. We expect consolidated revenues for the fourth quarter to decline between 15% and 20 0.000000rom the fourth quarter of 2000. We expect Florida Pneumatic's revenues to decline between 17% and 22%, as weakness in both the retail and industrial segments continues. We anticipate a revenue decline of 20% to 25% at Green Manufacturing, which is a slower decline than we have been experiencing, resulting from the receipt of some new customer orders. Heating product sales at Embassy are expected to be flat, as a decrease in baseboard heating sales should be offset by increases in sales of boilers and radiant systems. Lastly, we anticipate revenue at Franklin to decrease approximately 5%, as large customer losses from 2000 have a smaller impact on the business going forward, and a large new customer begins to place orders at an increasing rate."
"In the fourth quarter of 2001, we expect selling, general and administrative expenses to decrease 4% to 8 CONSOLIDATED BALANCE SHEETS & STATEMENTS OF INCOME (PDF)
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