PR Newswire
MELVILLE, N.Y., May 12, 2016
MELVILLE, N.Y., May 12, 2016 /PRNewswire/ -- P&F Industries, Inc. (NASDAQ: PFIN) today announced its results of continuing operations for the three-month period ended March 31, 2016. P&F Industries, Inc. is reporting first quarter 2016 revenue from continuing operations of $14,499,000, compared to $14,559,000, for the first quarter of 2015. The Company is also reporting first quarter 2016 income from continuing operations before taxes of $109,000, compared to $588,000 for the same period a year ago. Its net income from continuing operations this quarter was $66,000, versus $373,000 for the same three-month period in 2015.
Effective February 11, 2016, the Company's Countrywide Hardware, Inc. subsidiary sold its wholly-owned subsidiary, Nationwide Industries, Inc. ("Nationwide") for approximately $22.2 million. As such, Nationwide's results of operations for the three-month periods ended March 31, 2016 and 2015 have been removed from the Company's consolidated statement of income, and are accounted for as discontinued operations. Further, Nationwide's assets and liabilities at December 31, 2015, are also classified as discontinued operations.
| | | Discontinued operations | | |||
| | | January 1, 2016 through | | | Three month period | |
| | | | | | | |
Income before income tax | | $ | 110,000 | | $ | 643,000 | |
Income tax expense | | | 38,000 | | | 235,000 | |
Net Income | | | 72,000 | | | 408,000 | |
| | | | | | | |
Gain on Sale of Discontinued Operations net of tax | | | 12,185,000 | | | ---- | |
Discontinued operations net of tax | | $ | 12,257,000 | | $ | 408,000 | |
Richard Horowitz, the Company's Chairman of the Board, Chief Executive Officer and President commented, "This has been an exciting and ever changing time at P&F, starting with the sale of Nationwide in February, 2016. As a result of this transaction, we are reporting a book gain of $12.2 million, net of taxes, and we repaid substantially all of our bank debt with the cash proceeds. Secondly, during the first quarter, we declared a special $0.50 per common share dividend, and declared a $0.05 per common share quarterly dividend, both of which were paid in April. With the divestiture of Nationwide, we seized the opportunity to sell that business for what we believe to be an advantageous price, and embarked on our strategic mission to transition our Company to a more focused tools-centric organization. In doing so, we reduced consolidated top line revenue in the short-term before we could grow it in the most strategic way. Unfortunately, focusing more on tools has increased our relative exposure on the weak oil and natural gas exploration and extraction sectors. This significantly impacted this quarter's results, with the most pronounced effect on sales and margins at Hy-Tech. Our plan is to grow the tool business through both organic growth of the current pneumatic tools and related businesses and through complementary acquisitions, although there can be no assurance that such acquisitions will be completed. The divestiture of Nationwide has created a stronger balance sheet and an attractive capital structure, even after the dividend payments."
Mr. Horowitz continued, "I am pleased to report that Florida Pneumatic had a very successful quarter with sales increasing by approximately 5.6% to approximately $10.8 million. This increase was primarily attributable our automotive line of pneumatic tools and accessories, which had its best quarter in our history, with revenue exceeding $3.7 million, a 20% increase over the prior year. The successful development and marketing of the AIRCAT and NITROCAT lines contributed significantly to this growth. Additionally, our retail revenue improved this quarter by more than 5% over the same three months in 2015. However, we did encounter a slight decline in Florida Pneumatic's industrial and catalog revenue. Offsetting Florida Pneumatic's improved performance was Hy-Tech results, which have been negatively impacted by the ongoing weakness in the oil and natural gas exploration and extraction sectors. This continued weakness in these sectors, adversely impacted Hy-Tech's sales and margins. Additionally, we believe that contributing to Hy-Tech's net decline in its revenue this quarter was a decision by one of its major customers to source internally, most of the pneumatic tools it previously acquired from Hy-Tech. We are pursuing alternate markets for Hy-Tech's products and component manufacturing expertise, and we have initiated cost cutting measures to increase profitability as well. Most importantly, we remain committed to our strategic plan of transitioning P&F into a key provider of pneumatic tools and accessories going forward."
The table below provides an analysis of our net revenue for the three-month periods ended March 31, 2016 and 2015:
| | Three months ended March 31, | |||||||||||||
| | | | | | | | Increase (decrease) | |||||||
| | 2016 | | | 2015 | | | $ | | | % | ||||
| | | | | | | | | | | | | | | |
Florida Pneumatic | | $ | 10,830,000 | | | $ | 10,254,000 | | | $ | 576,000 | | | | 5.6% |
Hy-Tech | | | 3,669,000 | | | | 4,305,000 | | | | (636,000) | | | | (14.8) |
| | | | | | | | | | | | | | | |
Consolidated | | $ | 14,499,000 | | | $ | 14,559,000 | | | $ | (60,000) | | | | (0.4)% |
Florida Pneumatic
Florida Pneumatic markets its air tool products to three primary sectors within the pneumatic tool market: retail, industrial/catalog and automotive. It also generates revenue from its Berkley products line, as well as a line of air filters and other OEM parts ("Other").
| | Three months ended March 31, | | |||||||||||||||||||||
| | 2016 | | | 2015 | | | Increase (decrease) | | |||||||||||||||
| | Revenue | | | Percent of | | | Revenue | | | Percent of | | | $ | | | % | | ||||||
Retail customers | | $ | 5,549,000 | | | | 51.2 | % | | $ | 5,278,000 | | | | 51.5 | % | | $ | 271,000 | | | | 5.1 | % |
Automotive | | | 3,721,000 | | | | 34.4 | | | | 3,095,000 | | | | 30.2 | | | | 626,000 | | | | 20.2 | |
Industrial/catalog | | | 1,357,000 | | | | 12.5 | | | | 1,581,000 | | | | 15.4 | | | | (224,000) | | | | (14.2) | |
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