P&F Industries (PFIN) 28 Mar 232022 Q4 Earnings call transcript

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.

Thank you, operator. to XXXX welcome conference and morning P&F year-end Industries' call. Good and Richard today Joseph President Officer from us Horowitz, Molino, Financial management, Operating and With Officer; are Chairman, Officer. Executive and Chief Chief Chief

could performance, get outlook, statements on those in that are the forward-looking the to related based differ we that management, company's the historical by or various discussed statements started, company. estimates results the risks future company's made remind upon and of expectations, today's are to for uncertainties actual which Before you materially subject current like future and any from to our call any by plans, including I'd cause performance periods to company's behalf those and on expressed forward-looking

described company's factors which today's XXXX including statements, that most and under forward-looking in are other and the well filings, Annual we recent reports on SEC XX-K, risk reports file. on release website, uncertainties as find our press as quarterly our Form Form our XX-Q Report can in you These

which Forward-looking on of new forward-looking update or whether or any only are made, undertakes as obligation the publicly revise date the information, to result a future statements of as statements, no and developments speak company otherwise. they

also together of the we or to with stockholder respect would to call, question-and-answer from this have to the caller, past minutes. conference on like conference questions are as I length with calls, management's remind of any limited been that other the call, participants all XX several doing for the portion responses particular today's

results call. questions only such the answer this adhere any to the go financial during that to session, the scope you Management in not of We procedure. that questions XXXX that press insist information the published disclosed operations will related directly which of release earlier and must aware will this management entertaining condition, company's be be please today. beyond Additionally, question-and-answer

turn to Horowitz. call the now morning, Richard. that, with like Good Richard over And would I to

country morning Rich, you P&F's XX, good for you XX-month this in Thank this pray peaceful for soft the conflict are to economy. discuss morning, and of and We joining us economic to pressures end hope December the well, doing morning, Good ongoing results all the face ended landing and crisis for as everybody. Ukraine. XXXX. to and a geopolitical I continues all that world a the for period

I company's includes flows discussion statement operations, to of was 'XX attention of results which December related a direct how and for would statement XXXX. the like today, sheet, the compared that and XXXX these cash your December XX, company's to to the year release to earlier press results XX, released balance ended the company's

highlight business during forward. going number results. first as at Number and continue spending increase of was causing Hy-Tech, at Further, lastly, depressed which of a likely gross an obsolete completed delays Hy-Tech. I to is pricing. uncertainty, was supply well our amid one. we believe two a persistent wish chains cause quarter key acquisition Jackson reduction And in that margin slow our negatively and impacted charges dollar Economic and to The weaker moving to which impacted is consumer Gear inventory XXXX factors the the mix, and customer

following. like purpose all order use this of of yet the in time, Finally, mindful you everyone's call, to the to remind make better would be conference of I

we question-and-answer move not First, standard will morning's press directly already session become release. what practice, is has in a our and restate as to

Rich Goodman procedure must Goodman as be finally, adhere be XX-minute directly And by we will that as operations the please well. to insist you financial stated aware company's limit Rich and related to of as only be this please time answering year 'XX Secondly, We mindful full the questions results previously condition. that noted earlier.

And to we to will hand happy have. the call with all you back Operator, you. I pertinent that, that questions answer may be

hear of Instructions] Management. Shapiro [Operator you. first Thank Lawndale from We'll Andrew Capital

Hi, good morning. Can you hear me okay?

we hear you Yeah, fine. Thanks.

you. Thank Great.

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

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

you don't quarter internally the how quarter, like And the versus prior internally? analyze, was

this. Joe, answer to you want to continue want to

Andrew, all the at I'm looking the day every time. numbers all

as as -- So just said, an do do the subsidiary burden. people. obviously, Richard It business and many financial additional Not the that feel a have it's we've I companies for it.

just have to the lean We staff just do have we it. and don't a really time

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

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

many aren't are There public. so that size companies your

-- So that's

next your question, Andrew And please? Right.

Yeah.

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

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

is Richard right… Yeah,

Which one?

Automotive. Automotive. The The

Yeah.

it. got Okay,

Joe. ahead, Go

changes saying really difficult was data. to as in share, don't to many little also making retail because ascertain there's so it's were I we And sentiment off. what It's tease because that out just to that were a we sentiment Yeah, access the seeing consumer have hard we -- that players. increases, market price fall

general what [ph]. hard a it's or split share out off fall anything be So really the situation just versus to in economic might

And line leader are In for Well, tighter kind the Depot. OEM progression the or private making seem would think the which provider, products sizable Home the brands. I you promotional Home would cost the be private the the you for brand often you're towards on year-over-year? Depot. rather is that What going do times off drop to than a that on retail the label premium is label had item, feel of priced

Crib. going the the a this a what But don't Well Tool were things on. has were of tools time last But Tool in did couple certainly, displayed fairly -- Depot a and our a probably know number Corral goes I back or in time was call there prominently there's Home years. was. they you when when chosen, they're of Depot

the a Crib most aisle. of the part in moved separate tools Tool For those Depot out has

ours, you're battery are, the operated especially to you're and where looking other all for the tools, if going go one. to you're So tools find not going

negative tools they're that's low things. effect run, Depot's So not in had operated on in general, I on that think than of long And very part decision. pneumatic certainly an And certainly we're the that. end. a issue Home And And battery are faster then growing the tools.

I as in said, change that's retail Amazon, factor. automotive on we So a the saw even And in sentiment also a side.

certainly increase, can't anyone certainly ignored. elasticity there's number really couldn't factors; price there, be my So and particular, the finger a of which at some point in

get And a of So the we et you do still you is what here visibility the a headwind be feel the But know than rest and quarter? other and first you could you're for year? are lot that shipping of of the the feel cetera. do trend I end don't near

have But you that that first clearance. is knows vision. especially these somewhat, we clearance. think We the tell wouldn't wouldn’t quarter all world, we I that is which the would in don't the of -- times Nobody rebounded have have economy. have can that We in

one probably bore line, Richard. guns, Go spray sorry, are comments, One the off. I'm the brunt of -- which other other of Depot ahead. portion the fall other not One an insignificant

As we've And seen demand. those discussed. as time were that being in major heavily used for we've during COVID, passed has bump that

that's of it So as some well. probably

intimated that, anything there? going I is trend side you again Is Richard, up things particular think, There's automotive not back have on the headwind or there. secular picked that on correct? any that And Okay.

ago. -- as than it's that I as I a as as it would it's better. mean, good not I was. it's I Andrew, Yeah, don't definitely that's But know, better correct. was year definitely good think gotten it's say, it

Sure.

issues, discussed you filled hole the was product created production made aerospace was Pneumatic of defense. the Florida MAX now rebounds this when call greatly, Florida new XXX up. that there to slowed kind tools And had favorably last rates line. that Now in XXX this quarter's moving mix revenue some that commercial margin and that demand use by was the And and business Pneumatic's hole. the Boeing both that grounding, and aerospace impacted you and slow was in And was up, guys of aerospace. the the your business, and and for the especially production with in filling

had about pre-grounding, consumption And their on had said the that rate. pre-pandemic recovered last XX% to kind only of of call, you or Boeing

nowhere similarly was approximately given end, was recovered, fully time So for not migrated you lag your them commercial which I near from fiscal business is this said, presume yet your level production ago, Boeing's but months XX% year rate former there's six longer and with almost reporting? with hasn't a levels, the up

the that, to other not about slightly experienced sporadically would goes we've maybe same. a of up generally, lot -- in I defence counteract over aerospace But been that. and basically dramatically. say business, It's but and It but

Right.

So opening to fair those and XXXX. going going then that need you another are other demand, feel lines positioned line their when which going production Presumably, Jiffy are going are line increased XX,XXX, up when this you're of Do Boeing's their is all and your get get well that the people already They're P&F step rate share? sizably. production to workers, 'XX is MAX have most to hiring they in pretty XXX again production for to publicized tools.

Joe, do do. you how I feel?

of what just addition aerospace market up the have that. a call, can't they're a monthly rate also we've nine were are get We absolutely of level at months line is. startup don't to I you going at of said ago, about. line market a tools in months ago. share ramping remember, And does that is they significant little right installation talking we up, gives in line provide And well. when in of supplying production, going to our piece same We as prior bit fill the But the 'XX a production maybe the know worldwide. they're now, that segment as six

Yeah.

for are hole. prospective Can Okay. up types contributing of commercial and has investors of rebound your the factors that and been for nicely feel that to area aerospace you as each programs so platforms name the defence demands? kind investors in Boeing the and/or influence that And so in might look and company's get aerospace and horizon filling ongoing defense revenue a over the can other few far, and this commercial business a

our us you're is us? asking customers, you to Are that list what asking

few -- platforms For like a they're which if contract program just things got can they you if that? big Boeing's a line example, on, name asking or Apache new I'm types?

Joe, can you answer that?

three European military, that assemble are involved all respect with now military production, all X Our in. and that's tools used get continent. especially tools, helicopters aerospace the stuff. question. a North Tier drilling over to starting some throughout of But there are and there other we're America. middle helicopters, tools. in Airbus, Europe, mean, Apache more if in in planes, little to with those the selling to kind big But of We've control We're four we installation I got of make folks all the suppliers, are granular, their we're your to inroads tools, production that, areas really

that Europe if So hint. production be to want take look a in you a at aerospace might

We're America, military in in general, stuff. production involved in that Just North all everywhere. we're

you're now into Airbus? And so

Airbus. into are we Yes,

Yeah, not we're But would in way you mean…? really in yes. a that but there,

want. before Well, and about it's great we it opportunity And -- all was this pandemic, you the weren't a talking everyone's that company.

there our going about has on to Head we're European operations a right of ground. covers about what's We're excited And of been very do. excited what able now. He yeah, lot

well? as Are drone in your used tools manufacturing

the know to that. don't I answer it. I don't cover

do I. Nor

Excellent.

kind in which okay. a of of was about hit arguably and/or which that you points margin the in how made hit, big a charge On or dollars from and mention also there's occurred? some write-off low the quarter many slow makes you something part like margins Can resulted you products that drop margin non-recurring Can reserve off feel help me inventory? of or Hy-Tech obsolete is moving what -- side, was margin -- this quarter, margins, or a quantify this gross where

I'll let Joe, answer you -- I'll that. let you

What the happened a business towards couple years, of the lines just get several of of sort substantial end coincidentally. of had we of out customers

inventory looking slow market, we line trying we're from with down get things spending hundred is was And There its value. some to as time market resources at was that true to of markets. that and in very wind of different felt thousand we're the lot a necessary that was to usual related a to move dollar And another one charge moving. that emphasizing several reallocating

a Can several be more granular you when thousand? little you hundred say

No, I cannot.

Four, three, two?

That's all was say. substantial going It I'm to

bet amount up of ongoing to the for margin Yeah, for for quarter, that's non-recurring, is come I actual the ongoing company, if recurring the division write-off someone understand the helps knowing run-rate. Okay. the the someone with what wanted

or to tell reserve it's single you part month. can adjust every tool I fine reserves We what's we every non-recurring. Andrew, a say, placed But on. exactly identify I But can't that

you All was be know hundred is several can a typical. I would more number. thousand to a So than it you up tell don't I -- give number making

you Andrew, give I'll very to been know comfort And year. margins have improved this add, it that even Because may just -- our nicely weather

were nice. two for the Well, improved of quarters, [multiple single speakers] sudden yes. then and I They first are very digits. mean, a they very all third

about Yeah, I'm 'XX. talking

to as be. back going or 'XX they're Oh, to where

the event just reserves month. But was at was, not show have anything me. a I -- following call the it future. number I'll We I a every not onetime a looking -- rebound in if I'm And no event. foreseeable in for nice Yeah, margins. I it that, would onetime there's denying But -- can we're think that it will QX can't, like you're

major OEM Year? its to last Okay. And calls increase shipments of to the New the customer prior into referred you've to and level continue in activity

Yes.

Yes.

segment major OEM as about particular the Okay. But said any beyond success weren't now or of encountered elaboration? that you yet additional enough you And areas, industries there QX. has call the there products this customer, Engineered Solution worthy out and

is push the mean, call the only we're out for customers several quite of I Andrew, making market success. having a tools bit and significant a through thing industrial I in would rental

it. we're into rental goes Now about I those exactly is where are tell happy pretty general you tools But distribution. can't because it happening. And going, that

subsided, Okay. earlier And it now looks that even the year weakness bouncing. and ATP the like stabilized you has had, the that it's and maybe in of part

specific? you more say be weakness, could not, What you it's

There some QX up. customers but weakness it know like into that's don't And headwinds, things sequentially markets had or And facing ATP. at QX just -- ATP, is have and was looks industrial was I This continued not. gone Well. it in certain if

The only tell an Hy-Tech. ATP is less thing Andrew, is product important increasingly you, I'll becoming of

So not of a a it's and it's impact. about having major kind up it's thing, and -- down but

of Just please be a reminder, just left, so mindful it. minutes two

you're PTG. Gear the on glad products, I'm Yeah, well, stopwatch there.

place. opportunity synergies benefits Okay. was in The for this the QX thought They'd that be tangible most its of Jackson you transition? still with in last quarter the call, Gears progress in and

on For that of I wrong? that I do QX. the it or the entirety plate, what's have Is think was still

Joe. ahead Go

how the for -- exciting working panning we've QX And Yeah, is you wrong. We're we're of no, things have rest it excited some on out. the got I about don't think year.

improvement. I confident. yeah, year-over-year go to nice So And QX from think be going to there. we we're is pretty a expect very

not So no, you're wrong.

not quarter. money And the one fourth got All ERC I of the the right. in Okay. you that January, bunch saw big point, in

pay in Is the be higher on big -- debt that's it down the to an cash. got are and -- plan but a what the it that? quarter, now You slug or is What's of some plans? cash going initially immediate interest fourth on the

Joe?

me excuse -- it's, Richard lockbox. a Andrew, it's

the comes takes don't really debt. have I door, it down money a bank of when the and in So their the choice. pay much

Okay.

to Well, down that's paid fine. It's is high interest, that not get so bad so anyway.

then And going. speakers] is [multiple

Our debt is going down as well.

other Good, equipment the payment levels, Or that still elevated and that coming on, the given place, and getting that for and still delivered? equipment the of kind us gave be money but just get did plans put the spent year - Was that you've you're last this more at CapEx further? that was is to guidance equipment automating for CapEx that as even on. a partial in you're to you guidance quarter

on stuff delivered. was days. Yeah, away productively been about has XX-XX We're our running most that's getting the the delivered plant. and some equipment of more from the next And at well XX days been

to anticipate know Yeah, coming significant just until benefits the And would to see add we I certainly, until benefit I not the we'll real QX. equipment what in see QX. contribution terms don't new I that, that They'll of some be in online would the results QX. but from

in of start going aerospace hitting where finally? your some capacity is Some utilization increased business to that's Jiffy,

Correct.

Great.

All right.

out of think time. I'm I you. Thank

Thank you Andrew. for Thanks, and your interest concern.

presenters call appears there are no this further It closing additional any [Operator back time. at over I'll comments. Instructions] questions to our turn for the

QX for XX speaking the you we today. to call to today. much you on Thank thank look you And so Okay, our time about call being your days. all for forward on in

does conclude you your all Thank call. today's for that And participation.

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