Q2 2021 P&F Industries Inc Earnings Call
Okay.
[music].
Good day and welcome to the PNM Industries, Inc. Q2, 'twenty 'twenty One earnings Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Mr. Goodman, The company's General Counsel. Please go ahead.
Thank you operator.
Good morning, and welcome to <unk> Industries second quarter 2021 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.
Those related to the company's future performance and outlook are based upon the company's historical performance and current plans estimates and expectations, which are subject to various risks and uncertainties.
But not limited to risk related to the global outbreak of Covid 19, and other public health crises exposure to fluctuations in energy prices debt and debt service requirements borrowing and compliance with covenants under our credit facility disruption.
Disruption in the global capital and credit markets the strength of the retail economy in the United States and abroad risks associated with sourcing from overseas importation delays customer concentration impairment of long lived assets and goodwill unforeseen inventory adjustments or changes in purchasing patterns market acceptance of products acquisition of businesses.
Regulatory environment, and information technology system failures and attacks and those other risks and uncertainties described in the reports and statements filed by the company with the SEC, including among others as described in our most recent annual report on form 10-K, our quarterly reports on form 10-Q, and our other filings these risks could cause the.
Company's actual results for future periods to differ materially from those expressed in any forward looking statement made by or on behalf of the company.
Looking statements speak only as of the date on which they are made and the company undertakes no obligation.
<unk> publicly or revise any forward looking statements, whether as a result of new information future developments or otherwise and with that I would now like to turn the call over to Richard Horowitz Good morning, Richard.
Good morning. Thank you so much and good morning, everybody. Thank you all for joining US. This morning on our Q2 conference call I Hope, you're all doing well.
These incredibly continuing continually difficult times, the vaccine rollout, which we all believe is helping to control. This deadly disease is underway and I hope those who have not yet received one to do so and your loved ones as well and there's a delta there it doesn't.
This more than it is already we are still working and paying off we are still working hard to get past. These harsh effects of this global pandemic several current and potential customers have yet still to open their doors to visitors.
But you.
You know, we've seen a little cracks and the like with that so hopefully that will get better as time goes on.
And finally, our thoughts and prayers are with all during this time and is there still say please say aye.
I'd like to I'd like to direct your attention to the company's press release that was released earlier today, which includes the company's June 30, 'twenty, one 'twenty 'twenty, one balance sheet statement of operations cash flows and discussions related to the company's three and six months fiscal 'twenty 'twenty one results.
And how it is compared to the same period last year do you believe this release should answer many of your questions.
In order to make better use of everyones time, yet to be mindful of the purpose of this conference call I would like to note. The following two items as usual.
First as we have done for several previous conference calls and it has and this has become a standard practice we.
We'll move directly to a question and answer session and not be staying where it is already in this morning's press release.
Secondly, please be aware that we only will be answering questions relating directly to the company's results of operations and financial condition.
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 he would be happy to answer any questions anybody may have at this time.
Later.
Thank you would you like to ask a question. Please signal by pressing star one on your telephone keypad.
Using a speaker phone. Please make sure your mute function is turned off to allow yourself to reach our equipment.
Again, you May press Star one to ask a question. Our first question comes from Andrew Shapiro with Longbow capital.
I have several questions I'll ask a few and back out into the acute allow others and.
Test their questions, but then come back to US. Please so for what part of the second quarter.
If any are we.
Were you able was the company able to conduct.
Onsite visits with current or prospective customers and additionally, since the end of the second quarter until currently has the company been able to conduct further on site visits to start.
Helping work forward for example, in Europe, OEM and P. T G areas and in particular also in aerospace where he had said onsite visits.
Our pretty essential to move things forward.
Yeah, well, we can't give you an exact date when we visited people, but we were visiting visiting some customers during the during the second quarter and I would say nothing has really changed in that regard even as we speak now a month into the months close into the second into the.
Third quarter.
Actually where we're hearing we're hearing rumblings, though it hasn't happened yet, but we're hearing rumblings of.
Some of our caution was closing down again.
In terms of visit visitation that business, but visitation, but.
When they come up and we can do it we will do it I mean, I mean, we've touched.
Touch work with our customers all over the place.
<unk> and where we can go we do.
Specifically in Chicago, and our P. C. G area, we have been able to see some customers.
And the P. T G, but the P. P. P. T G people customers are really not.
<unk> seen us so much the new the good thing is we're keeping our regular customers. That's not the issue. So are new customers that we want to we want to keep going in that we have not had much success with yet.
George I know you wanted to.
Cause that Joe Yeah, No Richard I would agree completely and and and that not only goes for P. T G and OEM and gears, but aerospace as well most of the aerospace companies are still.
Either not taking visitors or the engineers, who are the people you work with a great deal on on you know new opportunities are just not in the building either so it's certainly still hampering us I don't know that it's improved a whole lot since the last conference call to be honest.
Yeah, we didn't hear it did hit Rancho that that both Boeing and a few of our other customers. We're gonna start right around now.
We hear that it's been delayed.
Right, Okay, but internally at P. N F. You don't have any policies or procedures that are prohibiting your people to go out if the customers will take the meeting that right absolutely correct.
Okay and have you have you been able to make any headway at all in terms of visitation in Europe or is that completely shut down.
It's it's worse in America.
Great.
It's actually much worse.
Okay and do you have an estimate was just starting last quarter, but do you have an estimate of the percent of the pea enough workforce presently vaccinated with the first shot or fully vaccinated and have you initiated or considered initiating fit.
The annual incentive bonuses for employees to get vaccinated or even moved to the point.
They're larger companies have done making mandates for vaccination.
Did we did we have offered in the past maybe.
Even up to two months ago or something like that.
Incentives for people and we didn't really get much but right now in the middle of.
Gathering actually the count our subs of who is not vaccinate at this point.
At PNM corporate everybody is vaccinated, but that's still that's the tail wag the dog.
Revenue in the dog and we're in the middle of that right now and I would say within the next couple of days, we will have that that totally in and then we are exploring legally what we can and cannot do.
Dealing with different states, so different states different rules, but.
That's all that's on the forefront of our of our agenda of things to do.
Well, we're considering all those options.
No.
And in Florida in particular, there's a state has had a huge spike up.
And is that have you experienced within the Florida pneumatic.
A workforce there are greater absenteeism, and an incidence of people getting covid or impacting your operations down there at all.
As I said, we're in the middle of putting together the group of people now we just really started focusing on a couple of weeks ago, but I can tell you that we've been to my knowledge. We've been very lucky that we really have not had more than random cases of employees with covid at this point.
Okay, and where does the operation stand with respect to supply chain disruptions.
And have the inner minute shortages of inventory that you referred to in your press release.
Cause sales to be lost to another customer or simply deferred and what are you doing to mitigate the effects in your estimate of the cost to do so.
Yeah, I'll, let I'll, let Joe go into more detail, but it's not it's not a it's not a problem in pnm's to problem in this country and I'm sure you read enough.
Three articles everyday to know what's going on with freight and of course, the freight the timeliness of free even when when freight comes into the ports here. They can they can be detained a week 10 days, even two weeks after received before it comes out and the cost to get them out is dramatically higher than it was.
Was even six months ago.
And.
So getting product obviously from overseas.
Is it a tremendous challenge and but the short answer is we do not believe that anything that we're short.
We get it within a reasonable time, and we haven't lost any shelf, but definitely if I wasn't yourself when you have a customer that's not even that's not even an issue.
Because everybody's in the same boat, but but we you know sometimes it's deferred.
We doubled up a trickle up two weeks later or three weeks later or whatever you want to give more color to that.
Yeah, I mean, the the areas where.
The just the the disturbances in overseas receipts.
Our our would be impacting mostly the the home depot business, the Amazon business ear cat business and in those cases.
We're working through two step a couple of levels of distribution. So you know, we're selling to people who aren't holding inventory a great deal of inventory in many cases so.
No we don't get the sale one week or one month, we'll get at the next month and you know people are holding more than a few weeks' worth of inventory so well our.
Our internal sales numbers are bouncing around a little bit the ultimate customers are not really seeing any disruption to our knowledge.
And are you seen any improvement in the situation today as we speak versus what you saw let's say three months ago at the beginning of the second quarter.
Absolutely not.
Yeah, I mean, I you could even say actually worse I would say worse at this point, we're handling it with dealing with it and we were okay, but it is worse than it was it's more child, let's face it looks like it's more challenging how's that.
Right have you been forced to reduce any capex plans or step back your focus on new products or.
As a result of the Hum issues.
No no I'm, just joking attached to it also but I can't.
Very strong cash flow position.
So that's not really the issue, but Joe you can add on if you want to that yeah. I mean, well you know we have tremendous access to capital and and plenty of availability and we have no impact on our ability to finance anything as a result of those shortages.
And with respect to new products, and then I'll back out can you provide an update and some more color on your development of cordless models and the types of non automotive applications for which our company is developing cordless models of its tools and each of Hy Tech and Florida, pneumatic, which you referred to on the last conference.
Paul.
Georgia, a job I'll, let you, let you chime in but Angela you can keep calling there's nobody else in the queue wasn't now so you can keep them. Okay. Yeah, I mean, I know Andrew development continues you know on the Florida pneumatic side, the cordless options are aerospace related Unfortunately.
We have been limited in what we can show people.
Even though we're you know we're moving along on on those on those development programs on the high Tech side. The development process is a little more complicated and it's it's taking a little longer than than we had thought as we've had to we've had some test units. We've we've.
To some select customers for testing and we continue to evaluate and modify our our our our offering there. So they continue but we don't we have not seen any revenue impact yet because we're not really finished with development.
In the high Tech case and are in the Florida case. Unfortunately, as we said, we're having difficulty getting those meetings to share those tools when they will happen, but I'm not a lot of probably as much progress as we'd like in the last.
Three months.
Now it sounds like these efforts are being done separately in each location. How do you have how how you process of the sharing of the intellectual knowledge.
How do we process I'm not sure how to eat.
How are you doing internal actual knowledge sharing I guess between the two locations as well.
Well only separate development out there to start like battery technology.
And where it makes sense to share knowledge, where it doesn't you know they don't as you know we've got.
Just as an example, we've got some silencing technology that we purchased along with the Air Cat acquisition years ago, and you know that that information is shared readily among the engineers between the two operations you know where it makes sense.
And there really isn't any secrets.
The the technical people and the executives.
Among the companies all know each other and and you know speak regularly to each other so I don't really get involved in that but everybody is aware of the tech that we own and if they feel there's a need they don't even need to call me. They just called the other executive or the other technical person and the knowledge is freely shared so.
So there's no impediment to it and there's no formal way of it being shared it just kind of an automatic you know with tribal knowledge within the company and shared that way.
And what's your perspective time range in which these products might be introduced for sale.
Oh on the Florida side, there, they're partially introduced and and you know there are some additional refinement going on I mean, I would say in the next six months I'd start to see some some sales I would expect from from both ends right in kind of a degree.
And you're dead right.
There are some of the people on the call Matt. So if you want Oh, great I'll back out and a refreshed my list, but please come back okay. Okay. Thanks.
Operator.
Our next question comes from Kim <unk> with <unk> capital management.
Hey, Good morning, guys conclude call really appreciate it.
Good morning.
In your release you talked about on May 13th there was a ransomware attack.
One of the company's subsidiaries.
How long the deck the one core.
And did you actually end up paying some ransom.
Oh really.
Patients up to that.
Ken I don't know what else to add to what was said already in the in the press release. We told you that we told everybody that the press release, we incurred a $288000 total expense related to the attacks that the duration of it was it was less than two weeks I'm going to get and I would say 10 days two weeks something like that.
And at this point, you know, our Florida, pneumatic subsidiary, where where it occurred.
Everything is operational there's been no material impact on anything we're garnering revenue, but gross margins at Florida.
Unfortunately, the course as it was a little under 300000, but there's nothing more to add to that to that story.
Okay. So I think I can take from that that you didn't see it.
I'm, sorry, we have trouble behemoth accounts sorry.
Okay.
I can take from what you're just saying Richard that you didn't pay any ransom and relationship with it I didn't say that I said, we gave you all the information that we legally can do and I will be very explicit okay. Because I don't know I don't know.
What a difference across the company 288000.
So I was just saying that almost $300000 as I considered pretty material to the company.
Yes question, because most certainly is but it's.
If we're not the only ones doing that having this problem. So it's unfortunate but yes of course it was material yeah.
A lot of them while also.
Why was there no 8-K issued.
Telling us about.
About.
Yeah.
Why there was what.
But there was no 8-K, informing our shareholders and other participants I can't I can't address that yeah go ahead.
The attack and rich good middle jump in if I don't have the facts right. The attack her happened within 24.48 hours of the release of our of our first quarter. Our Q. So we did include in the Q I believe it was in subsequent event footnote that.
Smith, so given the timing and the fact that we were releasing in 48 hours. We chose to include it in the queue and not in a separate K.
K and enrich does that do I have the facts right there.
Yes, the timing is right yes.
Okay. So there was no SKU I did I did not see it in the Q I went back and looked at it looking back you know cause I suppose.
It's fair Ken.
You're going to be okay.
It was both in the MD&A in India, or something like that but okay. I'll take a look at that and Oh I appreciate that no. Richard can you maybe talk about mergers and acquisitions are you guys actively looking at things to Oh to purchase.
Absolutely.
I would say that we always are looking but we've intensified our search.
The six to nine months actually.
We're in the middle of looking for things all the time nothing to report and when there is of course, there's no. We will let you and everybody else know, but but absolutely where we're at.
I mean that pretty much every day.
Great Great Richard I'm interested in your and what Youre seeing out there in regards to our sellers pricing expectations are.
Are these are people still expecting a lot of money for us.
Yeah.
Yeah. So so is that he loves the good old days, there's always there's always companies that you know or you know are on around there.
On the bad side of things and they may be looking to sell to to get out from under and we've seen some of those but we haven't noticed pricing changed in a good way for us at all actually in some cases, it's gotten a little higher.
We found that you just said the bid on it but that's not really so much standing in our way if we feel that the companies who are good fit for our company.
We will we will we do and we will continue to pursue.
Okay, great. Thanks, Richard.
Now a couple of years ago, you guys purchased the gears Cleveland two companies yes.
How are you satisfied with the progress with their performance and maybe even the integration that's going on.
We're satisfied with our progress it's nothing.
Nothing you know Earth shattering, yet because we haven't been able to see new customers and all of that and but when we do and the few that we do have we got.
Good batting average getting them as customers, but you know we expect when it seems a more normal we would've had we live it didn't have a much better.
Return still good still good but not as good as it was.
To add to that.
The only thing I'd add is you know, we really were combining three businesses, we had our own gear business, which existed to satisfy both needs internally as well as external and we moved into a larger facility and then brought the two acquisitions in so we really had the combined three businesses.
<unk>, which while were related.
You know not certainly identical and and as we discussed in last year's first second and even third quarter queue. You know it took a while to get all that but everything's fully integrated and running relatively smoothly and as Richard said the frustration now is.
We would've been farther along if not for the pandemic because there were tremendous.
Sale up you know customer opportunities that we unfortunately have not been able to fully.
Boyd, but you know, they're there they're not going anywhere there'll be there when we can get out into the field.
Great great.
I appreciate that those comments and I will back out and let somebody else have a chance. Thank you.
Thanks for your time.
Thank you again, Mr. I wonder if you'd like to ask a question. Our next question comes from Bonnie Jubail.
Good morning, gentlemen.
Hi, good.
Good morning.
Supplementing the discussion about the ransomware expenses does the company maintain any type of cyber security insurance.
They're not happened we did not have insurance for this.
Okay. Okay. My next question.
<unk> two in the second quarter, you mentioned compensation increased and you said, including.
Crude performance based.
Performance bonuses specific bonuses.
What type of departments, where their bonuses accrued for is it at an operating level is it executive management, what type of divisions, where these bonuses recorded for.
Joe you can answer that question.
Are we.
We accrue bonuses really across the board given you know the results and results in relation to expectation. So you know throughout the company, but they're not necessarily everywhere, but to the extent there are ah results that exceed expectations.
You know, we make an accrual if if if we're missing expectations. We don't so I can't really give you a perfect answer other than to say, where you know if things are going well you can anticipate there were some bonus being accrued but I you know I can't you know can't get any more specific than that okay.
The second quarter had a operating loss of approximately 500000 before the forgiveness income.
So when you compute the performance bonus is it based upon the operating income.
Before the P. P P or after this non operational income.
Yeah, the the P. P P.
Is pulled out of every bonus accrual calculation that no one's getting a bonus because we got a P. P. P loan. If that's your question that that was my question.
Okay. Okay.
Thank you for your answers.
You're welcome thank sei whale hunting right.
Right.
Thank you. Our next question comes from Andrew Shapiro with long tail Campbell.
Alright, thank you.
Few follow ups from the ransomware, you referred to remediation being complete with respect to quote all critical.
Florida pneumatic information is their information still locked away from company control.
No.
Okay.
And is the 288000 in SG&A.
All of the costs are something that we can such that we could hope. This is a nonrecurring event or are there expenses occurred so far in this quarter and expected in the present quarter and in the future. For example, we're now going to pay for cyber security insurance going forward.
Word or there are other lingering costs that were involved in the disruption that.
You know third quarter is not been reported but you have incurred already.
I'll, let I'll, let Joe answer that Andrew, but the short answer and the 40000 foot answer is the only the only expenses that we will have going forward are these argue irregular operational expenses in terms of.
Security cyber maintenance and things like that you know checking checking on a regular basis more updated.
More effective controls and all that stuff that I don't think it's it's de Minimis in terms of earnings in the company. If that's what you're asking but Joe you can you can add on to.
You know as you can imagine with with any event such as the attack we had it.
Give you an opportunity to take stock of things everywhere and and you know make sure you the systems and security you've got in places what you think you've got and what you need so I would say that certainly we've we've step things up a little bit and in in in terms of taking a you know a cop.
Hence of look at things, but I would agree with Richard that.
C.
These costs going forward.
From anything we're doing as you know, particularly material to the overall.
Soles.
So the many attack itself. The 288 that that that is the containment cost and there's nothing let's say that was being paid in July.
We got another $50000, Oh, Oh, no I don't I mean, I know I could there be like a random bill.
Bill or somewhere it could be but it couldnt be very much money, we think that number cat should capture the vast majority of it if not okay.
Okay, and then going into the segments here, a little bit in high Tech the OEM and P. T G sub segments of.
Obviously, you know they had the gains from the prior year's etcetera, but they were down sequentially from just last quarter could you give additional color on on this to is it is it seasonality is there something else going on is the trend.
Back up as we move out of the pandemic here.
You know the company is doing dramatically better than it did last year.
I'll, let Joe give you more color, but go ahead you want you want to continue yeah, I mean I think.
Uh huh.
You know in terms of comparing to last year.
We we went into 'twenty 'twenty 'twenty with a lot of backlog.
That we didn't have last year, we went into even beginning of 'twenty 'twenty one.
With a nice backlog and I think the combination of.
The the market not coming back as fast as we'd like and the fact that we can't get everywhere.
Has been a little bit of issue as well as I think the complexity of some of the things were building.
In the second quarter, which utilized a fair amount of outside.
Services as well as complicated our ability to get as much out the door as we'd like but so you know the.
The orders have probably been a little stronger than that maybe the sales are showing for Q2, but I think that.
The opportunities are still there and we're optimistic that we're going to have some sequential growth here you know shortly.
And the margins.
Rone dramatically.
Since last that's good dramatically.
And as I mean, with one month of in.
Did some of those order ship and.
You know you already know that you're booking some of this revenue in here for the current Q3.
Okay.
I'm not sure I understand your question Yeah.
Yeah.
You you've talked about how the sales levels in Q2 did not really reflect the strength of the orders.
That had been booked in Q2 and that there are.
Some complexity or third party.
Participation needed to complete the projects that.
Basically carry the project over or is it carrying it over into Q4 or is it just hearing it over into our present quarter and you're seeing visibility on that being the stuff I would say, it's carrying it carrying over into late Q3 and into Q4. So you know while I longer run I feel good about it but I think we're not.
We're still working through some of that stuff. Some of these things are pretty long lead.
Lead time.
Okay and can you discuss your new products and experience so far in the new high Tech products that have been introduced I think you had several you you referenced in the press release, but you know in the press release doesn't necessarily give you a chance to provide more color on it is this call Mike So can you expand.
Oh, well that's the big one that we're excited about that we had great results with them in Q2 is our line of new impact wrenches.
That are designed to go after directly after Ingersoll Rand Chicago pneumatic and also we believe are incredibly well positioned for.
<unk> increased our oil and gas activity as well as hopefully.
Some infrastructure work that we would hope would begin you know relatively soon after hopefully this bill gets passed so we've had some nice success with with that product line in Q2, probably I would say our biggest success since the introduction of of the the math.
Impact products. So yeah. We're we're very excited about that so I mean, I would highlight that that's one thing.
Okay.
And in Florida, pneumatic, while the company's Sprague them tools continue to enjoy year over year increases you've decided.
Are these sales running at higher levels than last quarter Q1 or are they.
Kind of leveling off.
Gotcha.
Yeah, I mean, I don't know that I can tell you that they would increase from Q1 are certainly strong and stronger than maybe a year ago.
Yeah, I don't I can't speak to quarter over sequential quarter growth in that other than to say they still been very strong.
Okay, and where are these new products you introduced or they were like sitting on the shelves or in the design you know they were there and they just obviously took off because of the pandemic demand for sand, the taxation and and and such.
Yes, Joe good Yeah. These were not designed freight.
Pandemic World they were.
Really designed for painting, but.
Given there.
Given their specific designs are easily converted or just flat out used for.
The spring are disinfected. So they were not specifically designed now having said that I you know I don't know if the engineers of tweak them, a little bit to to to be a little bit more targeted towards.
Disinfectant.
You know, where we're tweaking those things all the time and while I can't speak specifically I wouldn't be surprised if we haven't made a few blotter vacations.
To better suit them to that application.
Is Europe and have you adapted your marketing and promotion to like step on the gas on this opportunity and to go to market and promote the product.
For this.
Oh my.
Yeah, we.
Well as we I think discussed the only sprague on products we have for.
For the most part are for home depot, and the marketing is up to them not up to us.
Got it well I feel there.
Don't know that we have I could be wrong about this but I don't know that we have a oh spray a suite of spray guns for the industrial market outside of home depot right.
Would it make any sense to slap a label on it like that and market. It as such well we're not allowed to just slap a label on the first product that's theirs.
Yeah.
But what we are buying I'm I'm sure. The engineers are working on something.
I don't know.
Those are very different channels of distribution I don't know what our access is to those kinds of distributing a distribution channel for and industrial spray gone, but it's it's a good one Cynthia are I would say the airlines would want it the movie theaters in Europe.
No no those are already those guys are already buying those through home depot, okay, but Ah Ah you know that's a good question I'm sure. We're doing something it's not really a market where in ever have been in but we're looking at it.
And by the way.
It's almost going hand to mouth with when it comes to spray guns.
Whenever whatever we have basically home depot was ordering that and more.
So awesome and then.
Even though.
I'm sorry.
I'm, assuming they're placing the spray gun now the disinfecting IL not just in the paint aisle.
I Couldnt tell you I'm sure you're right that would be a good guess, yeah I'm sure you're Ok.
Now have you also you've talked in the last quarter and in particular, but in the past as well that you have seen channels the Amazon channel.
Grow very nicely and has that channel growth continued at Amazon Yes.
Yes, yes.
Yes, we're very happy with Amazon growth and and have expectations to do to do even better it's been a real focus for us.
Good and have you seen channels other than Amazon exhibit increases yet.
For example, in the air but Oh.
I understand what it means for Eric go ahead.
Just so unclear is this for air Cat you're talking about.
Well I think that you sell your products through other channels above and beyond Amazon I don't know, if it's catalog or or.
Yeah.
You mean for Aercap.
I guess, yes, yeah, yeah, yes, we have quite a few channels.
We sell the air Cat product through the air Cat at Amazon is by far growing the best there, but the rest of the channels doing reasonably well or some of it is it's not the biggest growth is Amazon I'm sure and are cut you in New York that you introduced some new products to her and how would that how.
Or are they going.
Hmm.
We have I, it's been awhile since we've had a major introduction I think we've had some minor introductions. The the the major change, which he made it has to be going back a year and a half those products are well well established in the channel and doing you know doing quite well there havent been.
There've been some minor tweaks since then but nothing real of a nothing nothing significant.
Yeah.
I have some more questions.
If somebody has a combined so you can keep go alright, I'll go alright, great can you quantify.
Quantifying the size and also the status of the tax refunds you had expected have they arrived in and and what's the size or what do you expect to get in.
Gotcha.
I I know, we're expecting one more I I think we've received the larger one.
But I I don't think the wanted to come is is material.
I think we've gotten the largest one so far but if one of my staff could.
Could you remind me of that before Gander. It gets off I could give them a more specific answer I do know one more coming but I cannot remember the magnitude of it that's the one thing and if you'd ask yourself as the ones that came in it came in in Q2 or if they came in in July are gonna be a Q3 thing.
For Q2.
Okay.
Now on the aerospace.
The second quarter by some respects was considered by many to be the trough of the pandemic.
And it appears to be the case in many of your lines of business, but aerospace was down year over year and I note that it was lower in Q3 last year from Q2 as well can you give some color on if a time lag in this sector exists.
And then Q3 of last year, which was lower than Q2 is what you would consider the trough or is there just substantial lumpiness and larger orders that just influence things.
I'll, let Joe answer for the most part but.
We really don't have the window.
Into what's going on with our aerospace customers for the most part there has been a little bit of a life sporadically, though nothing nothing.
Nothing on a regular basis, but we've had some of our customers, giving us pretty nice orders in the last month.
Month to six weeks, but it comes and goes and.
It's just in general a very depressed industry is about Boeing.
Boeing announced I believe that they're up to making when they were making 447 hundred 30 Sevens a month now theyre starting to ramp up to 14, a month and.
Just sort of a frame of reference.
Before the pandemic hit before the 737 tobacco really hit where they were making 44 planes a month, so I wouldn't get excited with 14.
So it's.
If.
Not a good situation.
Oh, let me just add this we went into 'twenty 'twenty one.
With a very very large backlog in aerospace.
And that backlog carried us obviously in Q1 well into Q2, and then is there as you know everything shut down at the end of Q1.
Q3 was really the bottom in sales not really the bottom in orders the bottom in orders was really Q2.
So yeah, there was a lag there and then we.
And we started to come out of it a little bit.
You know the fourth quarter of last year and that has slowly slowly continued so that that is very good.
But very slowly very slowly mhm.
Okay and.
And I will that be okay. So I guess, you're going to ask a question without losing it we didn't really lose any business or any other customer any of them.
It's just a matter of their their own their own issues.
In that industry.
We are not until they've been choice.
No on on.
The previous call you discussed how you have the full suite of all your tools that could serve aerospace from either Florida pneumatic jiffy.
Or high Tech in Pneumatics.
Really ready to present to both Boeing and Airbus once youre able to get into their facilities again and you had an appointment I think you then said that you had with Airbus and the pandemic like shut that off.
That appointment.
For Airbus like back on the calendar, yet, whether it's a month or two from now or it's still to be calendar.
No.
Not that we have no indication of a goal of getting to Airbus.
Okay.
And in terms of Boeing have you been able to go into any of the facilities or to engage in.
Discussions about your new products that you kind of want to be able to put in front of them.
Yes, sporadically very sporadic okay, hi, Joe.
The only we were allowed to Boeing but unfortunately, it's just to deal with current product.
As I said to the engineers and the teams that we normally speak to have engineering or not in the building. So there's there's no point in going to Boeing with a new tool there, there's just nobody to show it to yet.
Yes, okay, but youre ready now where before it was like getting ready.
No we have stuff, we want to show them. We've got a we've got an Airbus tool. We're excited about we've got a Boeing tool that we're excited about but.
Again, we can't get in front of everybody right nobody, Okay and has a military and defense side. The other aerospace side, you talked I think about another Airbus airframe or aircraft manufacturer even on the commercial side.
Have you been making any headway in those or on the defense and military are those are programs that are scaling down or scaling up.
Joe There's no scaling down if anything in the military are you know.
I would say I'm military has probably been a little of that work can sit.
Can you hear me now.
I cant Hello.
Yes.
Okay. He say he was saying that the military is doing slightly better than the regular commercial aerospace and that's correct.
Mhm.
Okay.
And given the strong balance sheet and.
<unk> income in Q2 that didn't decrease much in the green shoots you're seeing.
What's the boards has the board already met for this quarter or when does it set to meet.
Where you have represented you regularly discuss the reinstatement of the dividend now with the PPP loan out of the way.
And a debt free balance sheet.
Wanting to know kind of the status and your thoughts about getting.
Getting that reinstated.
Yeah, we've talked about it we have not met.
And the last since our annual meeting of course, we speak often but we haven't had a formal meeting.
We have one scheduled shortly.
And that would be on the on the agenda as it is every quarter.
And I can relay it depends you know as you know Andrew.
You.
Are you aware of this as much as we are it's a function of a lot of things the financial condition, which which is very good.
Our results of operations on our forecasts and capital requirements et cetera et cetera, as soon as there is anything to say on it.
We will make an announcement, but I can tell you it is on the forefront.
And we realize we realize how important that is though it's not a dramatic number all the time, we realize how important it is to reinstate it and we want to be inserted when that when the time is right for us.
We will notify you and everybody else.
Okay, great. Thank you.
And.
I think.
I think that's it thank you for enhancing the AR space or the descriptions et cetera on the press release. The one final question and I had asked before if it might be included in the press release or if the company's policy might change which would be to put.
The 10-Q out in advance of the call is or what are the what's the total share count that's going to be on that our 10-Q cover there.
Joe May have I don't have that I don't have that.
Well read what looks that up just to clarify it they will come back.
Roughly $3.1 million, we'll get you an exact number I'm just to answer your question about <unk>.
The.
Taxes tax the taxes, we received about 300000.
Refund.
In January.
And we have not we're still working on the return for 2020, but very preliminarily I would certainly expect another refund of some sort I don't know what the government is timing on refund is three funds. This year given the pandemic, but you know maybe in the fourth quarter, we would receive.
Another refund, but I Couldnt give you a number because we haven't finished returned but I'm certainly expecting something in Q4 yeah.
And.
Also for the board meeting as is the possible reauthorization that doesn't mean, you would step into the market immediately but the possible reauthorization of your.
What was very nicely accretive and would be very nicely accretive now at current prices stock repurchase.
Repurchase plan part of the agenda as well.
We always discuss it at our meeting, but I think I think right now I mean, I think we'd go out if we got to walk before we run with everything you have to be a balancing act as to as to if we are if.
If we choose.
Choose to buy stock or choose to do with dividend I don't think at this point, we can do both and I don't want I'm not sure. If you want to be the one but if we do we'll do one it'll be one of the other won't be boats are not right now.
Mhm understand Ah okay.
Okay. Andrew S. You answer your question about the shares its 3 million 181286.
Okay. So no change there.
Issuance really hum.
Excellent. Thank you very much.
Good day, if they say it's Angela.
Thank you you too.
Okay sure.
Operator. Thank you there are no additional questions at this time.
Okay. Thank you all for your time today on the call and everybody to stay safe and well and will be back on a closer to Q3.
In a few months. Thank you everybody for your time.
Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.
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Okay.
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