P&F INDUSTRIES, INC. Forward Looking Statement
The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a safe harbor for forward-looking statements made by or on behalf ofP&F Industries, Inc. and subsidiaries ("P&F", or the "Company"). P&F and its representatives may, from time-to-time, make written or verbal forward-looking statements, including statements contained in the Company's filings with theSecurities and Exchange Commission and in its reports to shareholders. Generally, the inclusion of the words "believe," "expect," "intend," "estimate," "anticipate," "will," "may," "would," "could," "should," and their opposites and similar expressions identify statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. Any forward-looking statements contained herein, including those related to the Company's future performance, are based upon the Company's historical performance and on current plans, estimates and expectations. All forward-looking statements involve risks and uncertainties. These risks and uncertainties could cause the Company's actual results for all or part the 2022 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company for a number of reasons including, but not limited to:
? Risks related to the global outbreak of COVID-19 and other public health
crises;
? Risks associated with sourcing from overseas;
? Disruption in the global capital and credit markets;
? Importation delays; ? Customer concentration;
? Unforeseen inventory adjustments or changes in purchasing patterns;
? Market acceptance of products;
? Competition; ? Price reductions;
? Exposure to fluctuations in energy prices;
? The strength of the retail economy in
? Risks associated with Brexit;
? Adverse changes in currency exchange rates;
? Interest rates;
? Debt and debt service requirements;
? Borrowing and compliance with covenants under our credit facility;
? Impairment of long-lived assets and goodwill;
? Retention of key personnel;
? Acquisition of businesses;
? Regulatory environment;
? Litigation and insurance;
? The threat of terrorism and related political instability and economic
uncertainty; and
? Business disruptions or other costs associated with information technology,
cyber-attacks, system implementations, data privacy or catastrophic losses,
and those other risks and uncertainties described in its Annual Report on Form 10-K for the year endedDecember 31, 2021 ("2021 Form 10-K"), its Quarterly Reports on Form 10-Q, and its other reports and statements filed by the Company with theSecurities and Exchange Commission . Forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. The Company cautions you against relying on any of these forward-looking statements. 19
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
OVERVIEW
During the first quarter of 2022, significant factors that impacted our results of operations were the:
? Ongoing negative impact of the COVID-19 pandemic on revenue, income, and supply
chain;
Ongoing production slow-down by Boeing of its 737 MAX aircraft, as well as
? significant reductions in activity at other commercial and military aerospace
manufacturing facilities; and
? The acquisition of the
OUR BUSINESS Florida Pneumatic Florida Pneumatic directly, and through its wholly-owned subsidiariesExhaust Technologies Inc. ("ETI"),Universal Air Tool Company Limited ("UAT"), andJiffy Air Tool, Inc. ("Jiffy") imports, manufactures, and markets pneumatic hand tools of its own design, primarily to the retail, industrial, automotive, and aerospace markets. Its products include sanders, grinders, drills, saws, and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or a battery. Air tools, as they are more commonly referred to, generally offer better performance, and weigh less than their electrical counterparts.Florida Pneumatic imports and/or manufactures approximately 75 types of pneumatic hand tools, most of which are sold at prices ranging from$50 to$1,000 , under the names "Florida Pneumatic," "Universal Tool", "Jiffy Air Tool", AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers' representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market ("automotive market"). Users of Florida Pneumatic's hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers.
Hy-Tech
Hy-Tech designs, manufactures, and markets industrial tools, systems, gearing, accessories and a wide variety of replacement parts under various brands including ATP, NUMATX, and Thaxton. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from$300 to$42,000 .
Hy-Tech's "Engineered Solutions" products are sold directly to Original Equipment Manufacturers ("OEM's"), and industrial branded products are sold through a broad network of specialized industrial distributors serving the power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals industries. Hy-Tech works directly with its industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names.
Hy-Tech'sPower Transmission Group , or PTG, is a custom gear, gearbox and power transmission system manufacturer located inPunxsutawney, PA. In addition to manufacturing a broad range of standard and custom gears for manufacturers in a wide variety of industries, PTG reverse engineers existing gears as well as designs new gears, utilizing state-of-the-art technologies, including 3D imaging andGleason Gear modeling software. EffectiveJanuary 15, 2022 , through a wholly-owned subsidiary of Hy-Tech, we acquired substantially all the non-real estate assets comprising the business ofJackson Gear Company ("JGC"), aPennsylvania -based corporation that manufactures and distributes custom gears and power transmission gear products. (See Note -2 for additional information). This business was consolidated into PTG. We believe this acquisition will provide added market exposure into the larger gears market. 20 Table of Contents
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
ECONOMIC MEASURES
Much of our business is driven by the ebbs and flows of the general economic conditions in boththe United States and, to a lesser extent, abroad. We focus on a wide array of customer types including, but not limited to, large retailers, aerospace manufacturers, large and small resellers of pneumatic tools and parts, and automotive related customers. We tend to track the general economic conditions ofthe United States , industrial production, and general retail sales. A key economic measure relevant to us is the cost of the raw materials in our products. Key materials include metals, especially various types of steel and aluminum. Also important is the value of the United States Dollar ("USD") in relation to the Taiwanese dollar ("TWD"), as we purchase a significant portion of our products fromTaiwan . Purchases from Chinese sources are made in USD; however, if the Chinese currency, the Renminbi ("RMB"), were to be revalued against the USD, there could be a negative impact on the cost of our products. Additionally, we closely monitor the fluctuation in the Great British Pound ("GBP") to the USD, and the GBP to TWD, both of which can have an impact on the consolidated results. We consider tariffs a key economic measure, as a significant portion of products imported by Florida Pneumatic and to a lesser degree, Hy-Tech, are subject to these tariffs. Further, we monitor transportation costs, specifically ocean freight rates, which since early 2021 have become a key area. Lastly, the cost and availability of a quality labor pool in the countries where products and components are manufactured, both overseas as well as inthe United States , could materially affect our overall results.
OPERATING MEASURES
Key operating measures we use to manage our operations are orders; shipments; development of new products; customer retention; inventory levels and productivity. These measures are recorded and monitored at various intervals, including daily, weekly and monthly. To the extent these measures are relevant, they are discussed in the detailed sections below.
FINANCIAL MEASURES
Key financial measures we use to evaluate the results of our business include
various revenue metrics; gross margin; selling, general and administrative
expenses; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; operating cash flows and capital expenditures;
return on sales; return on assets; days' sales outstanding and inventory turns.
These measures are reviewed at monthly, quarterly and annual intervals and
compared to historical periods as well as to established objectives. To the
extent that these measures are relevant, they are discussed in detail below.
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our consolidated financial statements in accordance with accounting principles generally accepted inthe United States of America ("US GAAP"). Descriptions of these policies are discussed in the 2021 Form 10-K, and in the notes to these consolidated financial statements. Certain of these accounting policies require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities, revenues and expenses. On an ongoing basis, we evaluate estimates, including, but not limited to those related to bad debts, inventory reserves, goodwill and intangible assets, warranty reserves, taxes and deferred taxes. We base our estimates on historical data and experience, when available, and on various other assumptions that are believed to be reasonable under the circumstances, the combined results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. TRENDS AND UNCERTAINTIES COVID-19 PANDEMIC OnMarch 11, 2020 , theWorld Health Organization designated the recent novel coronavirus, or COVID-19, as a global pandemic. COVID-19 was first detected inWuhan City,Hubei Province ,China and continued to spread, significantly impacting various markets around the world, includingthe United States . Various policies and initiatives have been implemented to reduce the global transmission of COVID-19. The COVID-19 virus and the resultant global economic down-turn had a negative impact on our fiscal 2021 results and continues to negatively impact the Company during the first quarter of 2022. Additionally, we believe the on-going supply-chain crisis is related to a large degree to the pandemic. Beginning in early 2021, and worsening during the latter half of 2021, we encountered severe shipping / receiving delays of inventory / containers from our Asian suppliers, which has caused intermittent shortages of inventory. Further, we believe the COVID-19 global pandemic has been and continues to be the primary factor in the exorbitant increases in the cost of international ocean freight. In addition, the COVID-19 pandemic has caused many of our customers and potential customers to refuse on-site visits, which is critical to generating revenue. We believe that until the above issues subside, our business will likely continue to be adversely affected.BOEING/AEROSPACE
TheFederal Aviation Administration ("FAA") and theEuropean Union Aviation Safety Agency ("EASA") have lifted the grounding of the 737 MAX, however,China , which is a large customer of Boeing, has not lifted the grounding on the 737 MAX aircraft. Boeing is currently holding completed 737 MAX aircraft destined for Chinese carriers. As a result of the aforementioned, and airline companies limiting deliveries of new aircraft, we believe production at Boeing of its 737 MAX aircraft is likely to remain below the production levels that existed prior to the onset of the COVID-19 pandemic and the grounding of certain aircraft. Although the 787 Dreamliner is still in production, albeit at a reduced rate, we believe that Boeing has not been able to deliver a new aircraft to a customer for over 1 year. TheFAA is in process of evaluating the manufacturing flaws and subsequent corrective actions put forth by Boeing, but a firm timeline for customer deliveries of new aircraft has not been announced. Until these issues are fully resolved, we will likely continue to experience an adverse effect on our revenue for the foreseeable future. Additionally, production of military and other commercial aircraft throughout the industry has slowed as well, which we believe much is due to the ongoing global COVID-19 pandemic. However, we believe when all other commercial and military production lines throughoutthe United States come back online, an increase in our revenue should follow. 22 Table of Contents
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
TRENDS AND UNCERTAINTIES - (Continued)
INTERNATIONAL SUPPLY CHAIN
Beginning in 2021, but magnified during the third and fourth quarters, we encountered severe delays in receiving inventory from our Asian suppliers, which led to intermittent shortages of inventory. Further, during this same period and continuing into 2022, ocean freight costs have greatly increased. This trend of higher costs and delayed deliveries has continued into 2022. We believe the major reasons for these issues include the following:
? Increased price of fuel;
? Shortage of shipping containers;
? Congestion at the ports in
? Shortage of truck drivers in
At the present time, we believe the above-mentioned supply chain disruptions, along with increased freight and general domestic transportation costs will likely continue during the remainder of 2022. While we believe that most of these costs have been, or will be, passed on to our customers after the first quarter of 2022, there is no assurance that any additional cost increases can be passed on in the future. INVENTORY GROWTH
Our inventory increased to$27,548,000 atMarch 31, 2022 , from$24,021,000 atDecember 31, 2021 . This increase, most of which took place atFlorida Pneumatic, was due primarily to two factors; to increase safety stock levels, and inventory required to fulfill a large retail order that was received in late 2021 that is scheduled to ship during the second quarter of 2022. We believe it was strategic to bolster our safety stock levels of imported products due to the significant delays we encountered during the latter portion of 2021 and early 2022, which in turn had resulted in "out of stock" positions on several key items. Lastly, it should be noted that inventory levels during fiscal 2020, were suppressed due primarily to supply chain issues and production levels being hampered by the pandemic. As such, a portion of the inventory increase was designed to raise our inventory at all locations to safer, pre-pandemic levels, in order to provide necessary inventory for growth.
TECHNOLOGIES
We believe that over time, several newer technologies and features will have a greater impact on the market for our traditional pneumatic tool offerings. The impact of this evolution has been felt initially by the advent of advanced cordless operated hand tools in the automotive aftermarket. We continue to analyze the practicality of developing or incorporating more advanced technologies in our tool platforms. Other than the aforementioned, or matters that may be discussed below, there are no major trends or uncertainties that had, or we could have reasonably expected to have a material impact on our revenue, nor was there any unusual or infrequent event, transaction or any significant economic change that materially affected our results of operations.
Unless otherwise discussed elsewhere in the Management's Discussion and Analysis, we believe that our relationships with our key customers and suppliers remain satisfactory.
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS REVENUE
The tables below provide an analysis of our net revenue for the three-month
periods ended
Consolidated
Three months ended March 31,
Increase (decrease)
2022 2021 $ %
Florida Pneumatic $ 10,281,000 $ 10,901,000 $ (620,000) (5.7) %
Hy-Tech 3,740,000 3,044,000 696,000 22.9
Consolidated $ 14,021,000 $ 13,945,000 $ 76,000 0.5 %
Florida Pneumatic
Florida Pneumatic markets its air tool products to four primary sectors within
the pneumatic tool market; Automotive, Retail, Aerospace and Industrial. It also
generates revenue from its Berkley products line, as well as a line of air
filters and other OEM parts ("Other").
Three months ended March 31,
2022 2021 Increase (decrease)
Percent of Percent of
Revenue revenue Revenue revenue $ %
Automotive $ 3,881,000 37.7 % $ 4,102,000 37.6 % $ (221,000) (5.4) %
Retail 3,020,000 29.5 3,790,000 34.8 (770,000) (20.2)
Industrial 1,444,000 14.0 1,359,000 12.5 85,000 6.3
Aerospace 1,777,000 17.3 1,528,000 14.0 249,000 16.3
Other 159,000 1.5 122,000 1.1 37,000 30.3
Total $ 10,281,000 100.0 % $ 10,901,000 100.0 % $ (620,000) (5.7) %
When comparing the three-month periods endedMarch 31, 2022 , and 2021, the most significant change in Florida Pneumatic's revenue occurred within its Retail sector. The fall-off was due primarily to reduced volume in the sale of "spray guns" during the first quarter of 2022, compared to the same period in 2021. We believe that The Home Depot's ("THD"s) purchase level of spray guns during the COVID-19 pandemic (2020 and 2021) were likely used by their customers to sanitize large areas. Accordingly, as the pandemic appears to have subsided somewhat, the need for this tool used to combat the virus has diminished. Additionally, THD discontinued eight items, which contributed to the decline in revenue. It should be noted that many of the discontinued items will be replaced with a "roll-out" scheduled to ship during the second quarter of 2022, consisting of six new items. Further, we believe revenue from the new six items should greatly offset the decline from the discontinued items. Although our Automotive revenue declined this quarter, compared to the same period in 2021, as the result in a change in a distribution channel strategy, the gross margin related to our Automotive revenue has increased. Aerospace revenue improved 16.3%, when comparing the first quarter of 2022 and 2021. This improvement was driven by an overall increase in demand throughout the sector. 24
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - (Continued)
REVENUE - Continued
Hy-Tech
Hy-Tech designs, manufactures, and sells a wide range of industrial products
which are categorized as ATP for reporting purposes. In addition to Engineered
Solutions, products and components manufactured for other companies under their
brands are included in the OEM category in the table below. PTG revenue is
comprised of products manufactured and sold by Hy-Tech's gear business. NUMATX,
Thaxton and other peripheral product lines, such as general machining, are
reported as Other.
Three months ended March 31,
2022 2021 Increase (decrease)
Percent of Percent of
Revenue revenue Revenue revenue $ %
OEM $ 1,965,000 52.6 % $ 1,611,000 52.9 % $ 354,000 22.0 %
PTG 940,000 25.1 646,000 21.2 294,000 45.5
ATP 742,000 19.8 713,000 23.4 29,000 4.1
Other 93,000 2.5 74,000 2.5 19,000 25.7
Total $ 3,740,000 100.0 % $ 3,044,000 100.0 % $ 696,000 22.9 %
During the first quarter of 2022, Hy-Tech continued to see signs that the ill
effects of the pandemic were beginning to ease. Customer orders for all of its
major product lines improved when compared to the same three-month period a year
ago. Its OEM product line growth was due in large part to a general rebound in
the pneumatic tool sector, with increased shipments to two large customers. The
growth in PTG revenue was due to the acquisition of the Jackson Gear Company
business ("JGC"). (See Note - 2 for further discussion). Its added revenue was
partially offset by a decline in orders from a large customer. The increase in
Hy-Tech's Other revenue was due to NUMATX growth.
GROSS MARGIN/PROFIT
Three months ended March 31, Increase
2022 2021 Amount %
Florida Pneumatic $ 3,949,000 $ 4,200,000 $ (251,000) (6.0) %As percent of respective revenue 38.4 % 38.5 % (0.1) % pts Hy-Tech$ 562,000 $ 436,000 $ 126,000 28.9 As percent of respective revenue 15.0 % 14.3 % 0.7 % pts Total$ 4,511,000 $ 4,636,000 $ (125,000) (2.7) % As percent of respective revenue 32.2 %
33.2 % (1.0) % pts
The minimal decline in Florida Pneumatic's gross margin this quarter, compared to the same three-month period in the prior year was due primarily to product mix. Ocean freight costs continue to adversely affect our gross margin, particularly at Florida Pneumatic where we are still encountering container costs that are four to five times greater than a year ago. We are attempting to pass through most if not all of these increases; however, we may not be able to fully neutralize the negative effects. The improvement in Hy-Tech's gross margin is due primarily to its overall product/customer mix. However, its manufacturing overhead absorption at PTG suffered during the quarter, as we are in the process of integrating theJackson Gear Company acquisition. We expect that the major integration items should be resolved during the second half of 2022 and thus improve gross margin as well. 25 Table of Contents
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - (Continued)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") include salaries and
related costs, commissions, travel, administrative facilities costs,
communications costs and promotional expenses for our direct sales and marketing
staff, administrative and executive salaries and related benefits, legal,
accounting, and other professional fees as well as general corporate overhead
and certain engineering expenses.
During the first quarter of 2022, our SG&A was $5,173,000 , compared to
$4,991,000 incurred during the same three-month period in 2021. There were three
significant factors contributing to the net increase. First, compensation
expense increased $188,000 . Compensation expense is comprised of base salaries
and wages, accrued performance-based bonus incentives and associated payroll
taxes and employee benefits. Several factors contributed to this increase,
among them the staffing added in connection with the JGC acquisition, increased
wages primarily related to retention incentives and annual wage adjustments and
increases in companywide bonus/incentive/performance accruals. Secondly,
professional fees and expenses increased $233,000 , due primary to legal,
accounting and other fees incurred in connection with the JGC acquisition. Other
expenses that contributed to this $233,000 increase were cyber security related
costs and recruitment fees. Lastly, partially offsetting the above increases was
a reduction of $273,000 in our variable expenses. Variable expenses include
among other items, commissions, freight out, travel, advertising, shipping
supplies and warranty costs. Driving this decline were significantly lower
advertising and shipping costs at Florida Pneumatic, caused by a change in a
distribution channel strategy.
INTEREST
Three months ended March 31, Increase (decrease)
2022 2021 Amount %
Interest expense attributable to:
Short-term borrowings $ 48,000 $ 10,000 $ 38,000 380.0 %
PPP loan - 8,000 (8,000) (100.0)
Amortization expense of debt issue costs 4,000 4,000 - - Total$ 52,000 $ 22,000 $ 30,000 136.4 % Our borrowings increased during the three-month period endedMarch 31, 2022 , compared to the same period in the prior year. This increase was driven primarily by the decision to increase safety stock levels on inventory and the acquisition in 2022 of theJackson Gear Company business.
The average balance of short-term borrowings during the three-month periods
ended
Debt issue costs are associated with an amendment to the Credit Agreement.
There were no amortizable debt issue costs incurred with Amendment No. 9, to the Credit Agreement.
INCOME TAXES At the end of each interim reporting period, we compute an effective tax rate based upon our estimated full year results. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. Accordingly, the effective tax rate for the three-month periods endedMarch 31, 2022 , and 2021, were approximately a tax benefit of 13.4 %, and 18.6%, respectively. The effective tax rates for all periods presented were impacted primarily by state taxes, and non-deductible expenses. Additionally, impacting 2021's net effective tax benefit was the enactment of the Coronavirus Aid, Relief, and Economic Security Act. 26
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES
We monitor such metrics as days' sales outstanding, inventory requirements,
inventory turns, estimated future purchasing requirements and capital
expenditures to project liquidity needs, as well as evaluate return on assets.
Our primary sources of funds are operating cash flows, existing working capital
and our Revolver Loan ("Revolver") with our Bank.
We gauge our liquidity and financial stability by various measurements, some of which are shown in the following table:
March 31, 2022 December 31, 2021
Working capital $ 22,375,000 $ 24,598,000
Current ratio 2.15 to 1 3.04 to 1
Shareholders' equity $ 43,181,000 $ 43,840,000
Credit facility
Our Credit Facility is discussed in detail in Note 9, to our Consolidated
Financial Statements. Discussed therein, we and the Bank entered into an
amendment that, among other things, increased the Revolver borrowing commitment
by
At
Should the need arise whereby the current Credit Agreement is insufficient; we believe that the current Agreement could be expanded, and/or we could obtain additional funds based on the value of our real property.
Cash flows
For the three-month period endedMarch 31, 2022 , cash used by operating activities was$3,972,000 , compared to cash used by operating activities for the year endedDecember 31, 2021 , of$4,149,000 . AtMarch 31, 2022 , our consolidated cash balance was$642,000 , compared to$539,000 atDecember 31, 2021 . Cash at our UAT subsidiary was$190,000 atMarch 31, 2022 andDecember 31, 2021 , respectively. We operate under the terms and conditions of the Credit Agreement. As a result, all domestic cash receipts are remitted to Capital One lockboxes. Our total debt to total book capitalization (total debt divided by total debt plus equity) onMarch 31, 2022 , was 22.5%, compared to 11.6% onDecember 31, 2021 .
Our working capital needs will increase due to anticipated growth, and a roll-out of a new tools program to our Retail customer. As a result, our Revolver borrowings will likely increase in the first half of 2022 and should then decline throughout the remainder of 2022.
During the three-month period endedMarch 31, 2022 , we completed the JGC acquisition, with a purchase price of$2,300,000 , plus acquisition expenses that included among other things, legal, accounting, and relocation expenses. (See Note 2).
During the three-month period ended
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
LIQUIDITY AND CAPITAL RESOURCES - Continued
Cash Flows- Continued
The major portion of these planned capital expenditures will be for new metal cutting equipment, tooling and information technology hardware and software, and the expansion of ourPunxsutawney, PA facility as a result of the acquisition of Jackson Gear (See Note 2).
Our liquidity and capital is primarily sourced from our credit facility, described in Note 9 - Debt, to our Consolidated Financial Statements, and cash from operations.
Customer concentration
Refer to Note 1 - Business and summary of accounting policies - Customer Concentration for a detailed discussion.
IMPACT OF INFLATION
Increasing prices, most notably in freight/transportation and, to a lesser extent, the cost of raw materials and labor had a material effect on our results of operations during the three-month period endedMarch 31, 2022 . We believe that the current and projected significant increases of inflation, the on-going volatility of freight/transportation costs, and recent geopolitical unrest will have an impact on our results of operations during 2022. At the present time we are unable to reasonably estimate said impact on our results of operations for the remainder of 2022 and beyond.
NEW ACCOUNTING PRONOUNCEMENTS
There were no new accounting standards or pronouncements issued during the
three-month period ended
We do not believe that any recently issued, but not yet effective accounting standard, if adopted, will have a material effect on our consolidated financial statements
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