Investor Relations| P & F Industries Reports First Quarter 2002 Results
Harriet Fried/Klea Theoharis
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P & F Industries Reports First Quarter 2002 Results
Florida Pneumatic's revenues for the first quarter of 2002 were $10.0 million, compared to $10.2 million for the comparable period of 2001, due primarily to continued weakness in the industrial and catalog segments, which was partially offset by increased sales in the retail segment. Gross margins increased from 36.1% to 36.9%, due primarily to continuing productivity improvements, expense reductions and a weakening of the Japanese yen. Richard Horowitz, Chairman of the Board, President and Chief Executive Officer of P&F Industries, Inc. stated, "While we continued to experience weakness in certain aspects of Florida Pneumatic's business during the first quarter of 2002, we continued to develop new products and secure new channels of distribution, including retail farm equipment distributors."
Green's revenues for the first quarter of 2002 were $3.3 million, compared to $4.2 million for the comparable period of 2001, due primarily to the loss of a major customer in the wrecker segment and decreased orders from a customer with significant sales to the airline industry. Gross margins decreased from 12.7% to 9.1%, due primarily to the lower absorption of fixed expenses resulting from the decreased manufacturing activity. Embassy's revenues from heating products for the first quarter of 2002 increased 15.7%, from $2.0 million to $2.3 million, the result of increased sales in all of its product lines. However, gross margins decreased from 34.7% to 32.0%, due primarily to a change in product mix. Hardware revenues at Embassy's Franklin division increased 28.3%, to $1.5 million, compared to $1.1 million in the first quarter of 2001. A substantial portion of the increase was derived from three of this division's top five accounts, two of which were recently added. Gross margins from hardware decreased from 26.6% to 25.2%, due primarily to a less favorable product mix.
Mr. Horowitz continued, "Embassy continued to benefit from our aggressive marketing efforts and new product introductions. We expect this division to show continued strength in 2002, bolstered by general economic improvement and additional commercial heating product offerings."
A recently announced development at P&F was the acquisition of Nationwide Industries, Inc., which is part of our newly-formed fourth subsidiary, Countrywide Hardware, Inc. Nationwide had revenues of approximately $10 million in 2001, and we believe that the growth opportunities and operating synergies to be derived from this acquisition will benefit P&F in a meaningful way in 2002 and beyond.
"We expect to see improvement in all of our businesses during 2002," said Mr. Horowitz. "Turning to the second quarter, Florida Pneumatic is expected to experience an increase in revenues of between 3% and 8%, as some of our new products and distribution initiatives begin to favorably affect our business. Revenues at Green are expected to decrease between 5% and 10%, due primarily to the loss of a customer in the wrecker segment of our business mentioned previously. Revenues at Embassy are expected to increase between 5% and 10%, due primarily to increases in our commercial heating business and our plans to expand our boiler product line. We anticipate that revenues at our Franklin division will increase between 10% and 15%, due primarily to the recent addition of two accounts. Lastly, we expect an increase of approximately $2 million in revenues as the result of our acquisition of Nationwide, where we will benefit from sales for approximately two out of the three months in the second quarter."
Mr. Horowitz concluded, "We expect gross profits in the second quarter of 2002 to be between 32% and 34%, compared to last year's figure of 31.6%. Selling, general and administrative expenses will increase consistent with the increase in revenue, but at a slower rate. Interest expense will decrease, even though we incurred approximately $10 million of indebtedness in connection with the acquisition of Nationwide. We expect P&F's second quarter 2002 net income to increase by approximately 750ver the second quarter of 2001."
P&F Industries has scheduled a conference call on Wednesday, May 8, 2002 at 11:00 a.m. Eastern Time to discuss its first quarter 2002 results. Investors and other interested parties can listen to the call by dialing 212-896-6111 or via a live webcast 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 8, 2002, at 1-800-633-8284, reservation # 20545860.
P&F Industries, Inc., through its four wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation, Green Manufacturing, Inc., Embassy Industries, Inc. and Countrywide Hardware, Inc., manufactures and/or imports air-powered tools, hydraulic cylinders, baseboard and radiant heating products and residential and commercial hardware. P&F's 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 future performance, 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 2002 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 & STATEMENTS OF INCOME (PDF)
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