P&F Industries Inc (PFIN) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $0.10 million, or $ 0.03 a share in the quarter, against a net profit of $1.05 million, or $0.28 a share in the last year period.
Revenue during the quarter dropped 8.11 percent to $14.63 million from $15.92 million in the previous year period. Gross margin for the quarter contracted 457 basis points over the previous year period to 30.79 percent. Operating margin for the quarter stood at negative 2.80 percent as compared to a positive 5.29 percent for the previous year period.
Operating loss for the quarter was $0.41 million, compared with an operating income of $0.84 million in the previous year period.
Richard Horowitz, the Company’s chairman of the board, chief executive officer and president commented, “While the overall results for the company are disappointing and show a loss, primarily due to certain factors impacting Hy-Tech’s results, I wish to give further insight into the numbers, and point out several details that provide a more encouraging outlook and why we are optimistic about our future. First, in the third quarter we increased our allowance for slow moving inventory at Hy-Tech by $427,000. This adjustment will be reassessed in future periods, to the extent the related products are consumed in the manufacturing process, or sold separately. Second, in September, we began shipping new products that utilize our extensive air tool motor manufacturing knowledge to new OEM markets and customers. We have additional multiple customer sponsored projects currently underway in areas we have not traditionally marketed to, that we believe could replace a portion of the revenue lost due to the energy industry downturn. These projects are targeted to evolve over the next several quarters, and we remain confident that they should strengthen and diversify our revenue base going forward. Third, we believe the downturn we have seen in the energy industry, based on the indices we monitor, appears to be stabilizing. As such, as the new sources of revenue we are developing begin to gain momentum, Hy-Tech’s total revenue should begin to improve.”
Working capital increases sharply
P&F Industries Inc has recorded an increase in the working capital over the last year. It stood at $27.63 million as at Sep. 30, 2016, up 52.31 percent or $9.49 million from $18.14 million on Sep. 30, 2015. Current ratio was at 4.08 as on Sep. 30, 2016, up from 1.85 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 129 days for the quarter from 252 days for the last year period. Days sales outstanding went up to 73 days for the quarter compared with 68 days for the same period last year.
Days inventory outstanding has decreased to 92 days for the quarter compared with 220 days for the previous year period. At the same time, days payable outstanding was almost stable at 35 days for the quarter, when compared with the previous year period.
Debt comes down significantly
P&F Industries Inc has recorded a decline in total debt over the last one year. It stood at $1.55 million as on Sep. 30, 2016, down 91.41 percent or $16.52 million from $18.08 million on Sep. 30, 2015. Total debt was 2.72 percent of total assets as on Sep. 30, 2016, compared with 24.48 percent on Sep. 30, 2015. Debt to equity ratio was at 0.03 as on Sep. 30, 2016, down from 0.42 as on Sep. 30, 2015.
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