P & F Industries, Inc.

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P & F Industries, Inc.

300 Smith Street
Farmingdale, New York 11735-1114
U.S.A.
Telephone: (631) 694-1800
Toll Free: (800) 457-2037
Fax: (631) 694-1836
Web site: http://www.pfina.com

Public Company
Incorporated: 1961 as Plastics & Fibers Inc.
Employees: 398
Sales: $80.9 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: PFIN
NAIC: 33251 Hardware Manufacturing; 333415 Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing; 333911 Pump and Pumping Equipment Manufacturing; 333995 Fluid Power Cylinder and Actuator Manufacturing; 42171 Hardware Wholesalers; 42173 Warm Air Heating and Air Conditioning Equipment and Supplies Wholesalers

P & F Industries, Inc. conducts business operations through three wholly owned subsidiaries engaged in the manufacture, importation, and sale of machinery and equipment for industrial and retail consumers. Florida Pneumatic Manufacturing Corp. primarily makes a variety of hand tools. Green Manufacturing, Inc. chiefly makes hydraulic cylinders but also produces digging equipment for farming and access equipment for the petrochemical industry. Embassy Industries, Inc. manufactures baseboard heating products and imports radiant heating systems and door and window hardware. Sears, Roebuck and Co. and The Home Depot are P & F’s major customers.

Multifaceted Firm: 1963-75

Plastics P & F ibers Inc., the predecessor to P & F Industries, was incorporated in New Jersey and made its initial public offering of stock in 1961, when, by selling shares at $2 each, it collected $246,000 for expansion and working capital and to repay loans. In 1963 this company was merged into a Delaware corporation that took the name P & F Industries, Inc. It consisted of Horowitz Brothers, Inc. (later Horowitz Bros., Inc.), one of the largest plumbing, heating, and air conditioning contractors in the New York City metropolitan area, and Torrance Specialty Fixtures Inc. Based in Torrance, California, the latter company was producing plastic and steel pipe and nonwoven reinforcing mats made of asbestos fiber. It also was designing and building pipemaking machinery and complete pipe mills. Based in Syosset, Long Island—also the headquarters of Horowitz Brothers— P & F Industries had a net profit of $300,776 on sales of $11.97 million in 1963. Sidney Horowitz, president and treasurer, succeeded Jack Nelson as chairman and chief executive officer in 1968.

P & F Industries acquired, in 1965, Embassy Industries, Inc., a manufacturer and distributor of baseboard heating and other heating and air conditioning elements located in Farmingdale, Long Island. P & F, in 1967, had revenues of $35.71 million and net income of $1.81 million, although Embassy was not yet profitable. Now headquartered in Great Neck, Long Island, P & F was rapidly becoming a conglomerate and, in 1968, acquired seven businesses, including National Fence Manufacturing Co., Inc., which had factories in three states, and a producer of plumbers’ chemicals that was attached to Embassy. It added several more companies in 1969, including Triangle Sheet Metal Works, Inc., another Long Island heating, ventilating, and air conditioning contractor; three graphic arts and printing firms; and Bilnor Corp., a Brooklyn-based builder of swimming pools and accessories. P & F took in $8 million that year by selling more shares of common stock at $14 a share.

At the end of the 1960s P & F Industries held no less than 14 subsidiaries. Hudson Machine & Tool Corp. and Modulaire Corp. were two more Long Island-based subsidiaries that made (and in Modulaire’s case installed) heating and cooling equipment. Four were engaged in printing and graphic arts. The Torrance plant now made pipe and related equipment for two companies. A Chicago-area subsidiary manufactured carwash equipment, and Bilnor made inflatable toys as well as swimming pools. Continental Modules, Inc. produced modular buildings in Whippany, New Jersey.

The conglomerate concept was in vogue in the late 1960s, but by early 1970, when the company’s annual report revealed a net loss on revenues of $58.36 million, the stock market had fallen into a deep slump, and some of P & F’s holdings were in the process of being sold or closed, including Embassy’s chemicals division, Continental Modules, Hudson Machine & Tool, and the majority interest in Torrance. In 1973 P & F liquidated and/or divested all its businesses in the graphic arts sector except a bookbinder that closed four years later. Bilnor closed in 1975. By 1978 only National Fence, Embassy, Horowitz, and Triangle (including Modulaire) remained.

& F in the 1980s and 1990s

After a small 1975 profit, P & F Industries lost money in 1976 and 1977, and after another small 1978 profit, the company lost money again in 1979 and 1980. National Fence was sold in 1981, and even Horowitz Bros, was discontinued that year. The firm now consisted of only two units. Triangle, based in New Hyde Park, Long Island, was designing, manufacturing, and installing sheet-metal ductwork and related products for warm-air heating, ventilating, air conditioning, industrial exhausts, and air-pollution and temperature-control systems, often for big office buildings in Manhattan. It also completed, in 1980, this kind of work for such clients as the Meadowlands Arena in New Jersey; a Princeton University nuclear reactor facility; hospitals in Manhattan and Bethesda, Maryland; and a prison in Jessup, Maryland. Embassy, in Farmingdale, New York, was manufacturing and distributing baseboard hot-water radiators, portable hot-water electric baseboard heaters, and several other products in the heating field. P & F moved its headquarters to Farmingdale in 1985.

P & F Industries acquired, in 1984, Florida Pneumatic Manufacturing Corporation, Inc., a Boynton Beach, Florida, manufacturer and importer of a broad line of pneumatic tools, parts, and accessories for sale in the automotive-aftermarket and industrial trade. This facility moved to Jupiter, Florida, in 1987. The parent company, in early 1986, added Franklin Manufacturing Corp. of Oceanside, Long Island. Franklin was importing and manufacturing a broad line of hardware, including such items as doorknobs, locks, hinges, clothesline pulleys, and rope tighteners. This company became a division of Embassy and by the 1990s was importing nearly all of its products. Later in 1986, P & F added Summit Industries Inc., a Houston-based importer and distributor of air-powered tools, under the Universal Tool name, that became part of Florida Pneumatic. Solidly profitable by 1985, P & F saw its revenues rise from $22.79 million in 1984 to $63.69 million in 1989.

When the U.S. economy fell into recession in 1990, however, P & F Industries suffered inordinately. Revenues dropped 35 percent that year, almost entirely because of a loss of ductwork contracting sales. The company remained profitable, but only marginally so. A slow recovery ensued, and P & F’s sales volume reached $44.8 million in 1994. That year the company got out of contracting by selling Triangle to an investment group that included senior management for $3.5 million. This business had accounted for about 30 percent of P & F’s sales in 1992 but had lost money in 1993. Meanwhile, however, P & F was beefing up the Florida Pneumatic operation. In 1990 it purchased Berkley Tool Corp., a company with a product line of pipe and bolt dies, pipe taps, pipe and tubing caster wheels, and replacement electrical components for pipe-threading machines. Berkley became a division of Florida Pneumatic, which by this time was importing rather than manufacturing all of its products from the Far East except high-speed rotary and reciprocating pneumatic tools. In 1995, Florida Pneumatic acquired Tradesmen Tool Co. Inc., a company with a product line of Pipemaster heavy-duty wrenches.

Florida Pneumatic was clearly the mainstay of P & F Industries’ business by 1995, when it accounted for 77 percent of company revenues. Embassy introduced a hot-water radiant (rather than baseboard) heating system at the beginning of the year. A strong recovery in P & F’s profits began in 1995 and continued through the rest of the decade. In 1998 P & F Industries purchased Green Manufacturing, Inc., a manufacturer of hydraulic cylinders in Bowling Green, Ohio, for $10.5 million in cash. The company, which reported sales of $18 million the previous year, had been marketing its products to manufacturers of towing equipment, waste/compacting equipment, lifts, and construction equipment for more than 30 years. In 1999 P & F Industries recorded record revenues of $82.7 million and record income of $4.55 million. The firm, in 2000, was named one of the 200 best small companies in the nation by Forbes.

P&F Industries in 2000-01

P&F Industries did not do quite as well in 2000 as the previous year, recording net income of $3.82 million on revenues of $80.9 million. Florida Pneumatic accounted for 62 percent of company revenues, Green Manufacturing for 25 percent, and Embassy Industries for the remaining 13 percent. In terms of operating profit, Florida Pneumatic accounted for 81 percent, Embassy for 10 percent, and Green for 9 percent. Each division was being run by a manager who oversaw manufacturing, promoted new product development, and identified additional target markets and other opportunities. P & F’s long-term debt was $3.86 million at the end of 2000. P&F Industries said in 2001 that it was currently developing products such as specialized machining tools and commercial-grade hydronic heating systems. It had recently launched a new line of nailers and staplers.

Company Perspectives:

The Company ’s strategy for growth calls for penetrating new markets with its core products, exploiting current distribution channels with additional internally developed and acquired products and pursuing complimentary acquisition candidates outside of its existing businesses.

Florida Pneumatic was importing or manufacturing about 50 types of pneumatic hand tools, mostly at prices ranging from $50 to $1,000, under the names “Florida Pneumatic,” “Universal Tool,” and “Fuji,” as well as under the trade names or trademarks of several private-label customers (including Home Depot). These tools, which included sanders, grinders, drills, saws, and impact wrenches, were similar in appearance and function to electric hand tools but were powered by compressed air rather than directly by electricity. The company promoted air tools as generally less expensive to operate than their electrical counterparts, as well as being lighter in weight and offering better performance. Berkley was continuing to market a product line for a widely used brand of pipe-cutting and -threading machines.

Green was engaged primarily in the manufacture, development, and sale of heavy-duty welded custom-designed hydraulic cylinders as components for a variety of equipment and machinery manufactured by others. These cylinders were being used on tow trucks and car carriers for hoisting and lifting cars and on aerial lifts and cranes to raise platforms and other heavy objects. They also were being used on various types of construction equipment for digging and as steering mechanisms. In addition, they were being installed in compact equipment in order to compress recyclable cardboard or other refuse. Each cylinder was being engineered to the customer’s specifications. The company’s products were being sold directly to original equipment manufacturers at prices ranging from $50 to $1,500, with an average selling price of about $150.

Green also was manufacturing a line of access equipment for the petrochemical and bulk-storage industries. These products consisted of bridges, platforms, walkways, and stairways constructed of steel or aluminum, designed to customer specifications and sold for use in overhead and elevated access to large containers, including rail cars and storage tanks. The company also was marketing a small line of diggers for use primarily as attachments to small tractors for light farm work.

Embassy was manufacturing baseboard heating products sold nationally under its name and also under the Panel-Track and System 6 trademarks for use in hot-water heating systems. It was also importing a line of radiant heating systems, which differed from baseboard heating systems by hot water circulating through plastic tubing generally installed beneath the surface of the floor rather than copper tubing in the baseboard along the perimeter of the space to be heated. The company said that baseboard and radiant heating systems, although generally more expensive to install, were less expensive to operate than electric heating systems and worked better than forced hot-air systems. The Franklin division was importing and packaging about 225 types of hardware products, including locksets, deadbolts, door and window security hardware, rope-related hardware products, and fire-escape ladders, at prices ranging from under $1 to $30. Nearly all of these products were imported from the Far East.

Sidney Horowitz retired as chairman and chief executive officer in 1995. His son Richard served as president of Embassy Industries from 1976 to 1993 and became president of P & F in 1986. He owned nearly one-third of the company’s common stock in 2001.

Principal Subsidiaries

Embassy Industries, Inc.; Florida Pneumatic Manufacturing Corporation; Green Manufacturing, Inc.

Principal Competitors

Airdyne, Inc.; Black and Decker Corp.; Parker Hannifin Corp.; Snap-On Tools Co.; Stanley Works Inc.

Key Dates:

1963:: Newly incorporated P & F Industries consists of a manufacturer and contractor.
1969:: The company now is a conglomerate composed of 14 subsidiaries.
1978:: Financially troubled P & F now has only four subsidiaries; by 1982, only two remain.
1984:: P & F acquires Florida Pneumatic Manufacturing Corp.
1994:: The company abandons contracting by selling Triangle Sheet Metal Works, Inc.
1998:: P & F purchases Green Manufacturing, Inc.