P&F INDUSTRIES INC [PFIN] Filings

10-Q 1 tmb-20220930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-5332

P&F INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		22-1657413
(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)

445 Broadhollow Road, Suite 100, Melville, New York		11747
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (631) 694-9800

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $1.00 par value	PFIN	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒

			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for the complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 7, 2022, there were 3,194,699 shares of the registrant’s Class A common stock outstanding.

Table of Contents

P&F INDUSTRIES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS


		PAGE
PART I — FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	3

	Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine–month periods ended September 30, 2022 and 2021 (unaudited)	5

	Consolidated Statements of Shareholders’ Equity for the three and nine–month periods ended September 30, 2022 and 2021 (unaudited)	6

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	8

	Notes to Consolidated Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	34

PART II — OTHER INFORMATION		34

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	34

Signature		35

Exhibit Index		36

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30, 2022		December 31, 2021
	(unaudited)		(See Note 1)
ASSETS
CURRENT ASSETS

Cash	$	410,000	$	539,000
Accounts receivable — net		9,458,000		7,550,000
Inventories		24,731,000		24,021,000
Prepaid expenses and other current assets		2,600,000		4,566,000
TOTAL CURRENT ASSETS		37,199,000		36,676,000

PROPERTY AND EQUIPMENT
Land		507,000		507,000
Buildings and improvements		4,087,000		3,605,000
Machinery and equipment		27,224,000		25,675,000
		31,818,000		29,787,000
Less accumulated depreciation and amortization		22,972,000		21,707,000
NET PROPERTY AND EQUIPMENT		8,846,000		8,080,000

GOODWILL		4,808,000		4,447,000

OTHER INTANGIBLE ASSETS — net		5,480,000		5,592,000

DEFERRED INCOME TAXES — net		487,000		349,000

RIGHT-OF-USE ASSETS – OPERATING LEASES		3,189,000		2,969,000

OTHER ASSETS — net		65,000		77,000

TOTAL ASSETS	$	60,074,000	$	58,190,000

See accompanying notes to consolidated financial statements (unaudited).

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P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30, 2022		December 31, 2021
	(unaudited)		(See Note 1)
LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Short-term borrowings	$	8,087,000	$	5,765,000
Accounts payable		3,056,000		2,920,000
Accrued compensation and benefits		1,475,000		1,475,000
Accrued other liabilities		1,630,000		1,078,000
Current lease liabilities – operating leases		826,000		840,000
TOTAL CURRENT LIABILITIES		15,074,000		12,078,000

Noncurrent lease liabilities – operating leases		2,399,000		2,176,000
Other liabilities		76,000		96,000

TOTAL LIABILITIES		17,549,000		14,350,000

SHAREHOLDERS’ EQUITY
Preferred stock - $10 par; authorized - 2,000,000 shares; no shares issued		—		—
Common stock
Class A - $1 par; authorized - 7,000,000 shares; issued – 4,467,000 at September 30, 2022, and 4,453,000 at December 31, 2021		4,467,000		4,453,000
Class B - $1 par; authorized - 2,000,000 shares; no shares issued		—		—
Additional paid-in capital		14,230,000		14,167,000
Retained earnings		35,010,000		36,046,000
Treasury stock, at cost – 1,273,000 shares at September 30, 2022 and December 31, 2021		(10,213,000)		(10,213,000)
Accumulated other comprehensive loss		(969,000)		(613,000)

TOTAL SHAREHOLDERS’ EQUITY		42,525,000		43,840,000

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	60,074,000	$	58,190,000

See accompanying notes to consolidated financial statements (unaudited).

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P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(unaudited)


	Three months				Nine months
	ended September 30,				ended September 30,
	2022		2021		2022		2021
Net revenue	$	14,516,000	$	12,985,000	$	46,347,000	$	40,520,000
Cost of sales		9,669,000		9,011,000		31,353,000		27,062,000
Gross profit		4,847,000		3,974,000		14,994,000		13,458,000
Selling, general and administrative expenses		5,084,000		4,734,000		15,736,000		15,183,000
Operating loss		(237,000)		(760,000)		(742,000)		(1,725,000)
Other (expense) income		(3,000)		—		(24,000)		2,929,000
(Loss) gain on sale of property and equipment		—		(67,000)		5,000		(67,000)
Interest expense		(106,000)		(14,000)		(244,000)		(21,000)
(Loss) income before income taxes		(346,000)		(841,000)		(1,005,000)		1,116,000
Income tax benefit		109,000		108,000		129,000		267,000
Net (loss) income	$	(237,000)	$	(733,000)	$	(876,000)	$	1,383,000

Basic (loss) earnings per share	$	(0.08)	$	(0.23)	$	(0.28)	$	0.44
Diluted (loss) earnings per share	$	(0.08)	$	(0.23)	$	(0.28)	$	0.43

Weighted average common shares outstanding:

Basic		3,195,000		3,181,000		3,183,000		3,177,000
Diluted		3,195,000		3,181,000		3,183,000		3,191,000

Net (loss) income	$	(237,000)	$	(733,000)	$	(876,000)	$	1,383,000
Other comprehensive loss - foreign currency translation adjustment		(160,000)		(61,000)		(356,000)		(42,000)
Total comprehensive (loss) income	$	(397,000)	$	(794,000)	$	(1,232,000)	$	1,341,000

See accompanying notes to consolidated financial statements (unaudited).

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P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited)

Three months ended September 30, 2022


													Accumulated
			Class A common			Additional							other
			stock, $1 par			paid-in		Retained		Treasury stock			comprehensive
	Total		Shares	Amount		capital		earnings		Shares	Amount		loss
Balance, July 1, 2022	$	43,066,000	4,467,000	$	4,467,000	$	14,214,000	$	35,407,000	(1,273,000)	$	(10,213,000)	$	(809,000)

Net loss		(237,000)	—		—		—		(237,000)	—		—		—

Restricted common stock compensation		16,000	—		—		16,000		—	—		—		—

Stock-based compensation		—	—		—		—		—	—		—		—

Dividends		(160,000)	—		—		—		(160,000)	—		—		—

Foreign currency translation adjustment		(160,000)	—		—		—		—	—		—		(160,000)

Balance, September 30, 2022	$	42,525,000	4,467,000	$	4,467,000	$	14,230,000	$	35,010,000	(1,273,000)	$	(10,213,000)	$	(969,000)

Three months ended September 30, 2021


													Accumulated
			Class A common			Additional							other
			stock, $1 par			paid-in		Retained		Treasury stock			comprehensive
	Total		Shares	Amount		capital		earnings		Shares	Amount		loss
Balance, July 1, 2021	$	43,703,000	4,453,000	$	4,453,000	$	14,149,000	$	35,872,000	(1,273,000)	$	(10,213,000)	$	(558,000)

Net loss		(733,000)	—		—		—		(733,000)	—		—		—

Restricted common stock compensation		8,000	—		—		8,000		—	—		—		—

Stock-based compensation		1,000	—		—		1,000		—	—		—		—

Foreign currency translation adjustment		(61,000)	—		—		—		—	—		—		(61,000)

Balance, September 30, 2021	$	42,918,000	4,453,000	$	4,453,000	$	14,158,000	$	35,139,000	(1,273,000)	$	(10,213,000)	$	(619,000)

See accompanying notes to consolidated financial statements (unaudited).

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P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited)

Nine months ended September 30, 2022


													Accumulated
			Class A common			Additional							other
			stock, $1 par			paid-in		Retained		Treasury stock			comprehensive
	Total		Shares	Amount		capital		earnings		Shares	Amount		loss
Balance, January 1, 2022	$	43,840,000	4,453,000	$	4,453,000	$	14,167,000	$	36,046,000	(1,273,000)	$	(10,213,000)	$	(613,000)

Net loss		(876,000)	—		—		—		(876,000)	—		—		—

Exercise of Stock Options		40,000	7,000		7,000		33,000		—	—		—		—

Restricted common stock compensation		36,000	7,000		7,000		29,000		—	—		—		—

Stock-based compensation		1,000	—		—		1,000		—	—		—		—

Dividends		(160,000)	—		—		—		(160,000)	—		—		—

Foreign currency translation adjustment		(356,000)	—		—		—		—	—		—		(356,000)

Balance, September 30, 2022	$	42,525,000	4,467,000	$	4,467,000	$	14,230,000	$	35,010,000	(1,273,000)	$	(10,213,000)	$	(969,000)

Nine months ended September 30, 2021


													Accumulated
			Class A common			Additional							other
			stock, $1 par			paid-in		Retained		Treasury stock			comprehensive
	Total		Shares	Amount		capital		earnings		Shares	Amount		loss
Balance, January 1, 2021	$	41,538,000	4,428,000	$	4,428,000	$	14,144,000	$	33,756,000	(1,273,000)	$	(10,213,000)	$	(577,000)

Net income		1,383,000	—		—		—		1,383,000	—		—		—

Restricted common stock compensation		35,000	25,000		25,000		10,000		—	—		—		—

Stock-based compensation		4,000	—		—		4,000		—	—		—		—

Foreign currency translation adjustment		(42,000)	—		—		—		—	—		—		(42,000)

Balance, September 30, 2021	$	42,918,000	4,453,000	$	4,453,000	$	14,158,000	$	35,139,000	(1,273,000)	$	(10,213,000)	$	(619,000)

See accompanying notes to consolidated financial statements (unaudited).

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P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine months
	ended September 30,
	2022		2021
Cash Flows from Operating Activities:
Net (loss) income	$	(876,000)	$	1,383,000

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Non-cash and other charges:
Depreciation		1,271,000		1,345,000
Amortization of other intangible assets		514,000		474,000
Amortization of operating lease assets		710,000		670,000
Amortization of debt issue costs		12,000		12,000
Amortization of consideration payable to a customer		157,000		202,000
Recovery of provision for losses on accounts receivable		(33,000)		19,000
Stock-based compensation		1,000		4,000
Stock-based compensation-options exercise		38,000		—
Restricted stock-based compensation		35,000		35,000
Deferred income taxes		(129,000)		(267,000)
(Gain) loss on disposal of fixed assets		(5,000)		33,000
Gain on early termination of lease		(19,000)		—
Forgiveness of Paycheck Protection Program loan		—		(2,929,000)
Fair value adjustment of assets held for sale		—		40,000
Changes in operating assets and liabilities, net of effects of acquisition
Accounts receivable		(1,262,000)		(1,007,000)
Inventories		(554,000)		(3,274,000)
Prepaid expenses and other current assets		1,608,000		248,000
Accounts payable		(45,000)		1,406,000
Accrued compensation and benefits		28,000		711,000
Accrued other liabilities and other current liabilities		582,000		(14,000)
Operating lease liabilities		(703,000)		(665,000)
Other liabilities		(25,000)		(36,000)
Total adjustments		2,181,000		(2,993,000)
Net cash provided by (used in) operating activities		1,305,000		(1,610,000)

See accompanying notes to consolidated financial statements (unaudited).

Table of Contents

P&F INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine months
	ended September 30,
	2022		2021
Cash Flows from Investing Activities:
Capital expenditures	$	(1,222,000)	$	(428,000)
Proceeds from sale of fixed asset		—		28,000
Purchase of net assets of the Jackson Gear Company business		(2,300,000)		—
Net cash used in investing activities		(3,522,000)		(400,000)

Cash Flows from Financing Activities:
Dividend payments		(160,000)		—
Net proceeds from short-term borrowings		2,323,000		1,921,000
Proceeds from exercise of stock options		2,000		—
Net cash provided by financing activities		2,165,000		1,921,000

Effect of exchange rate changes on cash		(77,000)		(26,000)
Net decrease in cash		(129,000)		(115,000)
Cash at beginning of period		539,000		904,000
Cash at end of period	$	410,000	$	789,000

Supplemental disclosures of cash flow information:

Cash paid for:
Interest	$	213,000	$	25,000
Taxes	$	126,000	$	12,000
Cash paid for amounts included in the measurement of operating lease liabilities	$	—	$	6,000

Non-cash information:
Right of Use (“ROU”) assets recognized for new operating lease liabilities	$	987,000	$	320,000
ROU adjustment due to early termination	$	359,000	$	—

See accompanying notes to consolidated financial statements (unaudited).

P&F INDUSTRIES INC [PFIN] Filings
10-Q	[2022-11-14]
10-Q	[2022-08-12]
10-Q	[2022-05-13]
10-K	[2022-03-30]
10-Q	[2021-11-12]
10-Q	[2021-08-12]
10-Q	[2021-05-17]
10-K	[2021-03-26]
10-Q	[2020-11-13]
10-Q	[2020-08-13]
10-Q	[2020-05-18]
10-K	[2020-03-30]
10-Q	[2019-11-13]
10-Q	[2019-08-09]
10-Q	[2019-05-10]
10-K	[2019-03-29]
10-Q	[2018-11-09]
10-Q	[2018-08-10]
10-Q	[2018-05-11]
10-K	[2018-03-29]
10-Q	[2017-11-13]
10-Q	[2017-08-11]
10-Q	[2017-05-12]
10-K	[2017-03-29]
10-Q	[2016-11-14]
10-Q	[2016-08-15]
10-Q	[2016-05-13]
10-K	[2016-03-30]
10-Q	[2015-11-13]
10-Q	[2015-08-14]
10-Q	[2015-05-14]
10-K	[2015-03-31]
10-Q	[2014-11-13]
10-Q	[2014-08-13]
10-Q	[2014-05-14]
10-K	[2014-03-28]
10-Q	[2013-11-13]
10-Q	[2013-08-13]
10-Q	[2013-05-15]
10-K	[2013-03-29]
10-Q	[2012-11-14]
10-Q	[2012-08-14]
10-Q	[2012-05-11]
10-K	[2012-03-30]