Investor Relations| P&F INDUSTRIES REPORTS IMPROVED FIRST QUARTER RESULTS
P&F INDUSTRIES REPORTS IMPROVED FIRST QUARTER RESULTS
FIRST QUARTER RESULTS
Revenues for the first quarter of 2003 increased 14.0% to $19.5 million, compared to $17.1 million for the first quarter of 2002. Net income for the first quarter of 2003 was $546,228, or $0.15 per share on a diluted basis. Income before cumulative effect of change in accounting principle for the first quarter of 2002, which excludes a one-time after-tax charge to earnings of $3.2 million, was $553,662, or $0.15 per share on a diluted basis. This charge to earnings, recorded as of January 1, 2002, resulted from a change in accounting principle regarding goodwill associated with the 1998 acquisition of Green Manufacturing, Inc. After giving effect to the charge for the goodwill write-down, the net loss for the first quarter of 2002 was $2.7 million, or $0.75 per share on a diluted basis.
P&F Chairman of the Board, President and Chief Executive Officer Richard Horowitz commented, ?Increased sales for the first quarter resulted primarily from our acquisition of Nationwide Industries, Inc. Our hardware group, now known as Countrywide Hardware, Inc., was formed during 2002 through the acquisition of Nationwide Industries, Inc. and the combination of Countrywide with Embassy?s Franklin Manufacturing division. Decreased sales at Embassy and Green were more than offset by the inclusion of Nationwide sales in our first quarter results as well as increased sales at Florida Pneumatic. Nonetheless, excluding the one-time charge mentioned above, income before taxes for the first quarter of 2003 was slightly higher than in 2002, but a higher effective tax rate, which resulted from the non-deductibility of amortization of intangible assets associated with the acquisition of Nationwide, caused net income to be slightly lower in 2003.?
Florida Pneumatic?s revenues for the first quarter of 2003 increased 3.3% to $10.3 million, compared to $10.0 million for the first quarter of 2002, due primarily to a major Spring promotion at one of our largest customers, the effect of which was partially offset by price concessions to a major customer. Gross profit margin at Florida Pneumatic was unchanged at 36.9%.
Mr. Horowitz stated, ?Considering the continued uncertain economic environment and the price concessions we made, we are pleased with Florida Pneumatic?s first quarter results. In addition to the revenue growth, we continue to expand our lean manufacturing initiative and general cost improvement program.?
At Countrywide Hardware, revenues for the first quarter of 2003 increased 190% to $4.3 million, compared to $1.5 million for the first quarter of 2002, due primarily to the acquisition of Nationwide. Revenues at Franklin decreased 8.3% compared to the first quarter of 2002 due primarily to a significant customer declaring bankruptcy during the first quarter of 2003. Countrywide Hardware?s margins increased from 25.2% to 32.1% due primarily to the inclusion of Nationwide?s higher-margin OEM business.
Mr. Horowitz commented, ?We continue to be pleased with the Nationwide acquisition. Countrywide continues to benefit from the Southeast?s strong housing market. During the next two quarters we expect to launch several new products in our fencing and patio lines, which should contribute to further growth.?
Green Manufacturing?s revenues for the first quarter of 2003 decreased 14.4% to $2.9 million, compared to $3.3 million for the first quarter of 2002, due primarily to the loss of a major wrecker customer in 2002 and, to a lesser extent, to weaker sales to refuse customers. The loss in volume contributed to a decrease in gross margin from 9.1% to 7.4%, as fixed expenses could not be reduced in line with volume decreases.
?Sales from Green?s access product line increased 24.6%, due primarily to the acquisition of the Benko product line in the first quarter of 2002,? Mr. Horowitz added. ?At the same time, we are continuing our concentrated hydraulic cylinder sales effort.?
Embassy?s revenues for the first quarter of 2003 decreased 11.0% to $2.0 million, compared to $2.3 million for the first quarter of 2002, due primarily to weakness in baseboard heating demand, which continues to suffer from poor housing starts in the Northeast. Gross margins for the first quarter of 2003 decreased from 32.0% to 29.9%, due primarily to increased material costs, changes in product mix and a weakening of the U.S. dollar versus the euro, which increased the cost of imported products.
Mr. Horowitz commented, ?The heating market remains highly competitive. At the same time, we remain optimistic about growing our commercial product line, radiant panels and boiler products due to the more fragmented markets for these products.?
Concerning anticipated performance, Mr. Horowitz stated, ?For the second quarter of 2003, we expect overall results to improve primarily as a result of having Nationwide?s results included for the full three months as compared to only two months in the second quarter of 2002. Revenues at Florida Pneumatic are expected to increase less than 5% as price concessions initiated in the fourth quarter of 2002 are partially offset by increased sales to non-retail accounts. Countrywide?s revenues are expected to increase 35%-45% due to Nationwide results being included for the full three months. Revenues at Green are expected to increase 5%-10% due to the addition of new cylinder accounts, including log splitter manufacturers. Revenues at Embassy are expected to increase 5%-10% due to increases in our commercial business, as well as to increased sales of radiant heating and boiler products.?
Mr. Horowitz continued, ?We expect gross profits for the second quarter to be between 31% and 33%, consistent with the second quarter of 2002. Price concessions at Florida Pneumatic will be offset by improvements at Countrywide and Green. Selling, general and administrative expenses and interest expense as a percentage of revenues are expected to be in line with the second quarter of 2002. As a result, we anticipate overall profits to increase 5%-10%.?
P&F Industries has scheduled a conference call for today 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 706-634-0167 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 webcast will be archived on P&F?s Web site and a telephone replay of the call will be available through May 15 beginning at 2 p.m. Eastern time on May 13, at 800-642-1687 or 706-645-9291, conference ID # 130008.
P&F Industries, Inc., through its four wholly owned subsidiaries, Florida Pneumatic Manufacturing Corporation, Countrywide Hardware Inc., Green Manufacturing Inc., and Embassy Industries 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, which 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 2003 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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