P&F Industries, Inc. (NASDAQ:PFIN) Q4 2022 Earnings Call Transcript

P&F Industries, Inc. (NASDAQ:PFIN) Q4 2022 Earnings Call Transcript March 28, 2023

Operator: Good day, everyone, and welcome to P&F Industries’ 2022 Earnings Call. Today’s call is being recorded. And now, at this time, I’d like to turn the call over to Richard Goodman, General Counsel. Please go ahead.

Richard Goodman : Thank you, operator. Good morning and welcome to P&F Industries’ 2022 year-end conference call. With us today from management, are Richard Horowitz, Chairman, President and Chief Executive Officer; and Joseph Molino, Chief Operating Officer and Chief Financial Officer. Before we get started, I’d like to remind you that any forward-looking statements discussed on today’s call by our management, including those related to the company’s future performance and outlook, are based upon the company’s historical performance, current plans, estimates and expectations, which are subject to various risks and uncertainties that could cause the company’s actual results for future periods to differ materially from those expressed in any forward-looking statements made by or on behalf of the company.

These risk factors and uncertainties are described in today’s press release under forward-looking statements, as well as in our most recent SEC filings, which you can find on the company’s website, including our 2021 Annual Report on Form 10-K, our quarterly reports Form 10-Q and other reports that we file. 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 statements, whether as a result of new information, future developments or otherwise. I would also like to remind all participants on this call, that as we have been doing for the past several conference calls, with respect to the question-and-answer portion of today’s conference call, the length of the questions from any particular stockholder or other caller, together with management’s responses are limited to 20 minutes.

Additionally, please be aware that during the question-and-answer session, management will only answer questions directly related to the company’s 2022 results of operations and financial condition, which such information disclosed in the press release published earlier today. We must insist that you adhere to this procedure. Management will not be entertaining any questions that go beyond the scope of this call. And with that, I would now like to turn the call over to Richard Horowitz. Good morning, Richard.

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Richard Horowitz : Good morning, Rich, and good morning, everybody. Thank you all for joining us this morning to discuss P&F’s results for the 12-month period ended December 31, 2022. I hope all of you are doing well, as this country and the world continues to face the ongoing economic pressures and geopolitical crisis in Ukraine. We pray for a peaceful end to that conflict and a soft landing for the economy. I would like to direct your attention to the company’s press release that was released earlier today, which includes the company’s December 31, ’22 balance sheet, statement of operations, statement of cash flows and a discussion related to the company’s results for the year ended December 31, 2022 and how these results compared to 2021.

Further, I wish to highlight a number of key factors that impacted our 2022 results. The Jackson Gear business acquisition completed during the first quarter was one. Number two was the weaker customer mix, and an increase of obsolete and slow moving inventory charges at Hy-Tech, which negatively impacted our gross margin at Hy-Tech. Economic uncertainty, which we believe is causing and is likely to continue to cause a reduction in consumer spending going forward. And lastly, persistent supply chains delays amid and as well dollar depressed pricing. Finally, in order to make better use of everyone’s time, yet be mindful of the purpose of this conference call, I would like to remind you all the following. First, as has become a standard practice, we will move directly to question-and-answer session and not restate what is already in our morning’s press release.

Secondly, please be aware that we will only be answering questions directly related to the company’s full year ’22 results of operations and financial condition. We must insist that you adhere to this procedure as Rich Goodman stated earlier. And finally, please be mindful the 20-minute time limit as previously noted by Rich Goodman as well. And with that, we will be happy to answer pertinent questions that you may all have. Operator, I hand the call back to you.

Operator: Thank you. We’ll first hear from Andrew Shapiro of Lawndale Capital Management.

Andrew Shapiro : Hi, good morning. Can you hear me okay?

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Q&A Session

Richard Horowitz : Yeah, we hear you fine. Thanks.

Andrew Shapiro : Great. Thank you. So first off, you would have been — with all the things that flowed through this fiscal year, of all the fourth quarters that you’ve had, and I’ve sat through have been really helpful had you guys broken out the fourth quarter. Don’t you do that for the Board, at your quarterly Board meeting?

Richard Horowitz : No, we don’t do that, Andrew. If we did, we would be happy to present it out as well. It’s not required by the SEC for any company whatsoever. And it requires a lot of work on our part. And we have a lean, excuse me, a lean staff. And we appreciate your comments. And we note it but we just haven’t found — been able to do it. I apologize.

Andrew Shapiro : And internally you don’t analyze, like how the quarter was versus the prior quarter, internally?

Richard Horowitz : Joe, you want to want to continue to answer this.

Joseph Molino : Andrew, I’m looking at all the numbers every day all the time. So obviously, Richard and I have a feel for the business as do the subsidiary financial people. It just — as we’ve said, it’s an additional burden. Not that many companies do it. We have a lean staff and we just really just don’t have the time to do it.

Andrew Shapiro : Okay, well. I’ll move on. But I differ on the view that not many companies do it. Most do breakout the fourth quarter. I know it’s not required.

Joseph Molino : Large companies certainly, but companies of our size, I would say no.

Andrew Shapiro : There aren’t so many companies your size that are public. So that’s —

Richard Horowitz : Right. And your next question, Andrew please?

Andrew Shapiro : Yeah. So with the pricing — let’s talk about Florida Pneumatic first, with the price increases you implemented in the middle of ’22, do you feel you have been able to maintain market share? Or did you have to give up some customers, because I do note that in the automotive and retail space fourth quarter, which I was able to back out, the fourth quarter revenue numbers were down from prior year. And I’m wondering what you might attribute that to? If it isn’t a lost market share, or anything going on those price increases?

Richard Horowitz : It’s not a lost market share for the most part. It’s really, it’s just pricing and the economy and all that good stuff. It’s nothing really more than that, unless Joe wants to add more to that. But I will say that the first quarter, we’ve noticed an increase in that business.

Joseph Molino : Yeah, Richard is right

Andrew Shapiro : Which one?

Richard Horowitz : The Automotive. The Automotive.

Andrew Shapiro : Yeah. Okay, got it.

Richard Horowitz : Go ahead, Joe.