Investor Relations| P & F Industries Reports First Quarter 2001 Results
Harriet Fried/Klea Theoharis
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P & F Industries Reports First Quarter 2001 Results
Florida Pneumatic's sales for the first quarter of 2001 decreased to $10.2 million, from $11.1 million for the first quarter of 2000, due primarily to a slowdown in the retail segment of the business and, to a lesser extent, a slowdown in the industrial catalog segment. Gross margins decreased to 36.1%, from 38.9%, due primarily to the decrease in sales and a less favorable product mix. A weakening of the Japanese yen in the first quarter, which decreased the cost of imported products, helped to offset some of this decrease in gross margins.
Green Manufacturing's sales for the first quarter of 2001 decreased to $4.2 million, from $5.8 million for the first quarter of 2000, due primarily to continued weakness in the wrecker and refuse segments of the business, as well as to the loss of sales to a significant aerial lift customer that exited the business. Gross margins decreased to 12.7%, from 14.8% in 2000, due primarily to the decrease in sales, as well as to higher wage rates in the first quarter of 2001 versus the first quarter of 2000.
Embassy Industries' sales of heating products for the first quarter of 2001 decreased to $2.0 million, from $2.3 million for the first quarter of 2000, due primarily to a decrease in housing starts. Gross margins from sales of heating products increased to 34.7%, from 34.0%, due to a change in the product mix. Hardware sales at Embassy's Franklin division decreased to $1.1 million for the first quarter of 2001, from $1.6 million in the first quarter of 2000, due primarily to the loss of two significant customers that declared bankruptcy since the first quarter of 2000. Gross margin from hardware sales decreased to 26.6%, from 27.9%, due primarily to the decrease in sales, as well as to a less favorable product mix.
Richard Horowitz, Chairman of the Board, President and Chief Executive Officer of P&F Industries, stated: "P&F's performance for the first quarter was impacted by general economic conditions, but it was consistent with our expectations. Although the current environment is a challenging one, we achieved some modest successes during the quarter. Florida Pneumatic developed a new channel for its air tools through a relationship with a national distributor of off-road and farm equipment with several hundred retail locations. We expect to begin shipping product to this new customer late in the second half of 2001. We hope that, in time, this will become a significant account for Florida Pneumatic. Further, we expect that a weakening of the Japanese yen will continue to benefit Florida Pneumatic in the coming months. Finally, our lean manufacturing initiatives continue. We expect additional productivity improvements as we begin implementation in the more machine-intensive areas of the plant."
"The decrease in sales at Green forced us to lay off approximately 20% of its workforce. Although sales and profits are down at Green, we continue to enhance productivity through better use of machinery and personnel. In addition, Green is very active in quoting for new business. We are optimistic that this activity will result in revenue generation later this year and help us take increased advantage of factory productivity improvements."
"At Embassy Industries, we are encouraged by our success in generating orders for our new Ambassador boiler line and our "Embassy Elite" marketing program featuring our radiant heating products. Although Franklin Manufacturing has not been successful thus far this year in securing any significant new accounts, we continue to work with our current customers to quote additional items and are hopeful that this will bear fruit later in the year."
"Overall, we anticipate continuing softness in demand for most of our product categories in the second quarter of 2001. We expect consolidated revenues to decline between 10% and 15% from the second quarter of 2000. We expect Florida Pneumatic's revenues to decline between 2% to 7% as the result of continued slow sales in the retail channel. We anticipate a revenue decline of 30% to 35% at Green Manufacturing, due to decreases in sales of end products that incorporate our cylinders. Heating product sales at Embassy are expected to be flat, and we anticipate a 12% to 17% decline at Franklin, resulting from the loss of the two accounts noted earlier." "In the second quarter of 2001, we expect selling, general and administrative expenses to be comparable to the second quarter of last year, and interest expense to decrease due to lower interest rates and lower net borrowings. We expect gross profits to be between 32% and 34%. As a result of the foregoing, we expect P&F's net income for the second quarter to decrease between 30% and 35% from the previous year."
P&F Industries has scheduled a conference call on Wednesday, May 9th at 11:00 a.m. Eastern Time to discuss its first quarter results. Investors and other interested parties can listen to the call by dialing 212-231-6010 or via live Web cast accessible at www.pfina.com. To listen, please register and download audio software at the site at least 15 minutes prior to the call. The Web cast will be archived on P&F's Web site and a telephone replay of the call will be available for 24 hours beginning at 1:00 p.m. Eastern Time, May 9th, 2001, at 1-800-633-8284, reservation # 18775966.
P&F Industries, Inc., through its three wholly owned subsidiaries, Florida Pneumatic Manufacturing Corporation, Green Manufacturing, Inc. and Embassy Industries, Inc., manufactures and/or imports air-powered tools, hydraulic cylinders and baseboard and radiant heating products. The Company also imports various security hardware items and compressor air filters, markets a line of pipe-cutting and threading tools and makes heavy-duty pipe wrenches. P&F Products are sold under their own trademarks, as well as under the private labels of major manufacturers and retailers.
This is a "Safe-Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including those related to the Company's performance for the second quarter of 2001, are based upon the Company's historical performance and on current plans, estimates and expectations. They are subject to various risks and uncertainties, including, but not limited to, the impact of competition, product demand and pricing. These risks could cause the Company's actual results for the second quarter of the 2001 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. CONSOLIDATED BALANCE SHEETS & SUMMARY OF EARNINGS (PDF)
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