P&F Industries, Inc. Reports Results For The Three And Nine-Month Periods Ended September 30, 2021

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PR Newswire

MELVILLE, N.Y., Nov. 11, 2021

MELVILLE, N.Y., Nov. 11, 2021 /PRNewswire/ -- P&F Industries, Inc. (NASDAQ: PFIN) today announced its results from operations for the three and nine-month periods ended September 30, 2021. The Company is reporting net revenue of $12,985,000, and $40,520,000, respectively, for the three and nine-month periods ended September 30, 2021, compared to $12,406,000 and $37,276,000, respectively, for the same periods in 2020. For the three and nine-month periods ended September 30, 2021, the Company is reporting a net loss before income taxes of $841,000, and net income before taxes of $1,116,000, respectively, compared to net losses before income taxes of $1,193,000 and $5,651,000, respectively, for the same periods a year ago. Further, for the three-and nine-month periods ended September 30, 2021, the Company is reporting a net loss after-taxes of $733,000 and net income after taxes of $1,383,000, respectively, compared to net losses after-taxes of $857,000 and $3,996,000, respectively, for the three and nine-month periods ended September 30, 2020. The income before income taxes for the nine-months ended September 30, 2021, included the recognition of the forgiveness of a $2,929,200 Paycheck Protection Program loan. The Company's basic and diluted loss per share for the three-month period ended September 30, 2021, was $0.23, while its basic earnings per share for the nine-month period ended September 30, 2021, was $0.44, and diluted earnings per share for the same period was $0.43. For the three and nine-month periods ended September 30, 2020, its basic and diluted loss per share were $0.27 and $1.27, respectively.

Richard Horowitz, the Company's Chairman of the Board, Chief Executive Officer and President commented, "COVID-19 continues to impact our businesses; be it as a limiting factor to our ability to engage with current and future customers or, what we believe is a primary cause for the supply-chain crisis. That said, I am pleased to report that consolidated revenue increased by 4.7% this quarter, compared to the same three-month period in 2020, which was driven primarily by a 91.3% increase in Hy-Tech's OEM line with revenue increasing $796,000. Overall, for the third quarter of 2021, Hy-Tech's revenue increased by $653,000, or 24.7% over the same period in 2020. Although we were beginning to see improved sales opportunities during the third quarter compared to the same three-month period a year ago, we also began to encounter strong headwinds within our supply-chains. Specifically, a significant portion of Asian-sourced items, which are marketed to our retail and automotive sectors have and continue to be adversely affected by the massive congestion at ports of entry. We believe these delays were a major cause of the decline in revenue in both sectors. We are attempting to mitigate this issue by placing larger than normal purchase orders with our overseas vendors and believe the arrival of these orders in early 2022 should help to reduce inventory shortages in 2022. During the third quarter of 2021, Aircat sales relative to the same period in 2020 decreased by $362,000. This was primarily caused by two factors. First, pent up demand for our products that were not generally available through our largest on-line channel during the second quarter of 2020 caused a surge in orders during the third quarter of 2020, which did not repeat in 2021. Second, during the third quarter of 2021, Aircat made a change to its channel distribution strategy which caused a temporary pause in shipments to the channel as customer inventory levels were adjusted. We expect shipments to resume to prior levels in the fourth quarter of 2021. Further, we are glad to report that we are seeing a positive rebound in the aerospace market. As a result, our Aerospace revenue increased 44.5%, when compared to the third quarter of 2020.

Consolidated gross margin for the three-month period ended September 30, 2021, improved 2.2 percentage points over the same period in 2020. This was driven primarily by higher gross margin at Hy-Tech, which was mostly due to improved manufacturing overhead absorption. Additionally, a better mix of product at all locations contributed to the stronger gross margin. However, significant increases in ocean freight costs during the third quarter partially offset these improvements. We have raised our selling prices on most of our products to levels which we believe substantially offset these increased freight costs.

Mr. Horowitz concluded, "We are encouraged by the improved results over the prior year and remain optimistic for the future. However, for now, the global COVID-19 pandemic and its peripheral negative effects remains an issue. We intend to do our utmost to continue to serve our customers, while ensuring the health and safety of our employees."

The Company will be reporting the following:

TRENDS AND UNCERTAINTIES

COVID-19 PANDEMIC

ARIVA.DE Börsen-Geflüster

Kurse

P+F INDS INC

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On March 11, 2020, the World Health Organization designated the recent novel coronavirus, or COVID-19, as a global pandemic. COVID-19 was first detected in Wuhan City, Hubei Province, China and continued to spread, significantly impacting various markets around the world, including the United States. Various policies and initiatives have been implemented to reduce the global transmission of COVID-19.

The COVID-19 virus and the resultant global economic down-turn continues to have a negative impact on our three and nine-month 2021 results. Additionally, we believe the supply-chain crisis, which we believe is related to the pandemic. Beginning in early 2021, but magnifying during the third quarter of 2021, we encountered severe shipping / receiving delays of inventory / containers from our Asian suppliers, which has caused intermittent shortages of inventory. Further, the costs of international freight has greatly increased. In addition, the COVID-19 pandemic has caused many of our customers and potential customers to refuse on-site visits, which is critical to generating revenue. We believe that until the above issues subside, our business will likely continue to be adversely affected.

BOEING/AEROSPACE

The Federal Aviation Administration ("FAA") and the European Union Aviation Safety Agency ("EASA") have lifted the grounding of the 737 MAX. Production is still very limited due to the inventory at Boeing and the reluctance of airlines to accept deliveries due to weak air travel demand, as well as the lack of certification by China. This will likely continue to have an adverse effect on our revenue. In addition, production of military and other commercial aircraft throughout the industry has slowed as well, we believe due to the ongoing global COVID-19 pandemic. However, we believe when all other commercial and military production lines throughout the United States come back online, an increase in our revenue should follow.

OIL AND GAS

The profitability of crude oil production generally declines when prices fall. As a result, as prices dropped in 2020, production slowed worldwide. However, the price of crude oil has begun to improve. As such, orders and activity during this quarter have begun to strengthen. In addition to the price of crude oil we monitor the number of active rotary rigs, which is discussed elsewhere. In spite of the return of crude oil prices to pre-pandemic levels, we believe many oil drilling companies have forgone the typical maintenance that would utilize our tools in order to continue cash-flow generating production activities in lieu of shutting down for required maintenance. We cannot say for certain when the typical maintenance activity will resume.

TECHNOLOGIES

We believe that over time, several newer technologies, and features will have a greater impact on the market for our traditional pneumatic tool offerings. The impact of this evolution has been felt initially by the advent of advanced cordless operated hand tools in the automotive aftermarket. For certain non-automotive applications, we have begun to develop cordless models of tools and expect to introduce these products in the near future.

OTHER MATTER

In May 2021, Florida Pneumatic detected a ransomware attack on its information technology systems that caused data to be encrypted. At the present time, all critical Florida Pneumatic information technology systems have been remediated and are operational. We believe that our corporate office and our other subsidiaries, all of which operate on separate, independent networks, were not affected by this incident.

REVENUE

During the three and nine-month period ended September 30, 2021, various product lines were affected to some degree by the global COVID-19 pandemic, which caused orders and revenue for those product lines for the same periods, to be less than pre-pandemic levels.

The tables below provide an analysis of our net revenue for the three and nine-month periods ended September 30, 2021, and 2020:

Consolidated


	Three months ended September 30,
					Increase (decrease)
	2021		2020		$		%
Florida Pneumatic	$	9,607,000	$	9,681,000	$	(74,000)	(0.8)	%
Hy-Tech		3,378,000		2,725,000		653,000	24.0
Consolidated	$	12,985,000	$	12,406,000	$	579,000	4.7	%

	Nine months ended September 30,
					Increase (decrease)
	2021		2020		$		%
Florida Pneumatic	$	31,221,000	$	28,351,000	$	2,870,000	10.1	%
Hy-Tech		9,299,000		8,925,000		374,000	4.2
Consolidated	$	40,520,000	$	37,276,000	$	3,244,000	8.7	%

Florida Pneumatic

Florida Pneumatic markets its air tool products to four primary sectors within the pneumatic tool market; Automotive, Retail, Aerospace and Industrial. 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 September 30,

2021

2020

Increase (decrease)

Percent of

Revenue

revenue

Revenue

revenue

Automotive

3,168,000

33.0

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