P&F Industries, Inc. :PFIN-US: Earnings Analysis: Q2, 2016 By the Numbers : August 16, 2016

P&F Industries, Inc. reports financial results for the quarter ended June 30, 2016.

We analyze the earnings along side the following peers of P&F Industries, Inc. – Actuant Corporation Class A, Stanley Black & Decker, Inc., Eastern Company and Snap-on Incorporated (ATU-US, SWK-US, EML-US and SNA-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 15.64 million, Net Earnings of USD -5.37 million.
  • Gross margins narrowed from 37.32% to 33.93% compared to the same period last year, operating (EBITDA) margins now 5.55% from 12.00%.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-06-30 2015-09-30 2015-12-31 2016-03-31 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 22.56 21.68 17.64 14.5 15.64
Revenue Growth (%YOY) 23.49 -5.47 -1.48 -26.87 -30.69
Earnings (mil) 1.31 1.05 0.4 0.07 -5.37
Earnings Growth (%YOY) 129.37 28.68 74.35 -91.55 -509.3
Net Margin (%) 5.82 4.84 2.27 0.46 -34.34
EPS 0.35 0.28 0.1 0.04 -1.49
Return on Equity (%) 12.65 9.82 3.69 0.54 -42.19
Return on Assets (%) 6.88 5.62 2.21 0.39 -35.64

Access our Ratings and Scores for P&F Industries, Inc.

Market Share Versus Profits

Revenues History
Earnings History

PFIN-US‘s change in revenue this period compared to the same period last year of -30.69% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that PFIN-US is holding onto its market share. Also, for comparison purposes, revenues changed by 7.85% and earnings by -8,236.36% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 37.32% to 33.93%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 12.00% to 5.55% in this time frame. For comparison, gross margins were 35.97% and EBITDA margins were 6.38% in the previous period.

Gross Margin Versus EBITDA Margin

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

PFIN-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 140.33 days, compared to last year’s level of 65.08 days.

Gross Margin Versus Working Capital Days

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 8.72% to 0.97% and (2) one-time items that contributed to a decrease in pretax margins from 8.72% to -52.30%

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for P&F Industries, Inc.

Company Profile

P&F Industries, Inc. manufactures and imports air-powered tools and residential hardware. It operates through the Tools and Hardware segments. The Tools and Other Products segment engages in the importation and sale of pneumatic hand tools and compressor air filters. The Hardware segment imports and manufactures door, window and fencing hardware, and accessories including rollers, hinges, window operators, sash locks, custom zinc castings and door closers. The company was founded on April 19, 1963 and is headquartered in Melville, NY.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of PFIN-US.