Q3 2021 P&F Industries Inc Earnings Call
Andy just joined good day and welcome to the TNF Industries, Inc. Q3, 2021 earnings Conference call Today's conference is being recorded.
At this time I'd like to turn the conference over to Mr. Richard Goodman General Counsel. Please go ahead Sir.
Thank you operator.
And welcome to Peanuts industries third 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.
Get started I'd like to remind you that any forward looking statements discussed on today's call by our management, including 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, including but not limited to risk related to global outbreak of Covid.
18, and other public health crises exposure to fluctuations in energy prices debt and debt service requirements borrowing and compliance covenants under our credit facility disruption in the global capital and credit markets. The strength of the retail economy in the 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 Securities and Exchange Commission, 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.
Differ materially from those expressed in any forward looking statement made by or on behalf of the company forward looking statements speak only as of the date on which they are made and the company undertakes no obligation to update 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, Rich and thank you so much and good morning, everybody. Thank you all for joining US this morning for our third quarter 'twenty, one 2021 results.
I hope you all are doing well.
Countries in the World are trying their very best exit the Olympics.
Covid Global Pandemics.
Like everybody else and most of the companies T N F N F E. N S. We continue to Battle pass these harsh effects of the COVID-19.
Mobile pandemic the areas within our business still affect at all of course scenarios with both current and potential customers here have yet to permit onsite meetings presentations for the most part there are exceptions, but for the very most part that's what it is in particular at sampling our growth at the P. T G or.
He is known as the gear business.
And the supply chain disruption, which we all see on the news every single day, which has caused major delays in receipt of much needed inventories not to mentioned at dramatically higher prices.
We all hope that this pandemic may soon be under control as our thoughts and prayers are with all those affected by COVID-19.
I would like to direct your attention today to the Companys press release that was released earlier. This morning, which includes the company's September 32021 balance sheet statement of operations statements of cash flows and discussion related to the company's three and nine months of fiscal 2021 results of operations and how they compare to the same peer.
He is in 'twenty 'twenty.
We believe this really should've answered most of your questions in order to make better use of everyones time here. This morning, you have to be mindful of the purpose of this conference call.
Again like to remind you all of the following procedures that have been in place for quite some time now.
Firstly as we have done for several previous conference calls has become a standard practice, we will move directly to a question and answer session. After I have my brief speech here and not be so let me state what is already in the mornings press release secondly, please be aware that we will only be answering questions relate directly related to the company's results of operations and financial condition.
We must insist that you adhere to this procedure.
Imagine will not be entertaining any questions that go beyond the scope of this call.
And with that we will.
I'd be happy to answer any pertinent questions anybody may have operator please.
Do you have any questions for us.
Thank you absolutely. Thank you.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure that your mute function is turned off to lay your signal to reach our equipment.
Once again that is star one if you would like to ask a question and we'll pause for just a moment.
We want an opportunity to signal.
And once again, that's star one if you'd like to ask a question.
And we'll take our first question from Andrew Shapiro with Lawndale capital management.
Hi, good morning.
Think I'll go straight into some of the subsidiaries of the segments are if you wouldn't mind.
Regarding aerospace this is both jiffy in Florida, pneumatic and also pneumatics inside of.
Yes.
Hi Tech, albeit four it was only for a small amount this quarter in Q3 Aerospace has now improved from Q2 continued which was a decent sequential trend that also began in Q1.
Are you seeing a ramp up in orders that supports this sales rebound trend to continue or is there like a substantial lumpiness or a larger order that influences things.
Andrew I don't I don't want to I think we should be clear Rick.
Comparing.
And increased this quarter to an abysmal.
Last year actually of no I'm.
I know Richard you Misunderstand me when I say, okay Crenshaw, maybe its Q3 from Q2 I'm, saying it was only a small increase from the last quarter, but it was an increase in Q2 was an increase from Q1, three straight quarters, where things are improving and I'm I'm trying to get a handle on it heavily troughs.
And are are we on a albeit slow or or or ramp here on sales rebound in and are your orders that you have in hand, somewhat reinforcing or are reflecting that or was there.
Some lumpiness or a larger order that's influenced things in here.
And in the current quarter that we're in frankly, the current quarter that we're almost done with since holidays are kicking in.
Is this something there.
We're gonna have lumpiness in or do you have like orders in hand that.
This business segment this sector.
The business has stabilized and the slow ramp up of production for example from Boeing in your other aerospace customers.
Supports a view and belief that that you know we've trough and we're on a steady, albeit slow ramp unless there's something more exciting that that'll be great to hear but.
Alright, So let me just tell you first of all we don't have much insight into what.
What's goes on you know we talk about it we ask them but.
They don't really they really don't give us that Boeing is.
Still nowhere to be found for the most part we're getting we're getting orders but.
Very very few and far between sclerotic.
We were getting more things from a lockheed or are the customers like that.
Boeing as you know has still the issues with the 737 with the Chinese and I think that's.
What were told.
In the world and all that stuff is that if the Chinese except the 737 Max going forward that'll help.
Boeing tremendously Okay. Now, we're getting we're getting lots of little bits and pieces, which is better than it was before but it's not really anything to get excited about it.
It's it's it's it's it starts and stops it's like sporadic.
And it's of course, the supply chain issue you know going.
Going forward, Joe I don't know if you were going to hit any color to that whole comment.
You know how Boeing has stated publicly and in spirit, which is the big suppliers to Boeing has stated publicly that.
The number of 737, Max is being produced per month.
It's certainly higher than it was I think it was.
Zero or for a month there are you know throughout the pandemic and I think earlier.
Earlier this year.
Reading the reports we had read that.
Something like 15, or 20, and I think they're now looking at Q1 of like 30, a month. So obviously that's way better than four but I think they were at like 52, a month before the pandemic.
Plus we all we also don't really even know how much inventory of our tools are sitting at Boeing we don't really have any idea. So there could also be a delay.
And getting more orders until they work through what inventory they have but having said all of that.
30, 30 planes a month as big improvement from where we were and hopefully that will continue and lead to more orders eventually right right.
Right in there and their order business with you actually didn't drop off at the start of the pandemic and actually dropped off even earlier.
When the 737 was ground grounded and they which was was actually well before the pandemic began.
And they had to scale back production lines because there is their inventory of completed plains was backing up.
That's correct yes.
Okay.
On our previous call maybe you just got out of it.
And they've stated publicly that they have.
A tremendous inventory of claims so I think.
I may not have the exact number but it's over I think I believe it's over 200 planes with a state.
Yes, they have a ton of planes. They also have been shipping planes now I think faster than they're producing but that inventory is still high of planes.
They're making 30 a month ago, they were making 50 15 a month.
Theyre arguably losing.
And using your <unk>.
Bearing down and using your tools because your tools have a certain amount of like lifespan in use and they lose them. That's I mean, it's somewhat of a replacement business right in terms of your products your or your legacy products you provide them.
Right.
Okay on a previous call you discussed how you have a.
But you've had the full suite of all the all of all your.
Aerospace tools, including the including some new ones I don't know if it was impact wrenches or theres. Some specially designed tools that could serve aerospace that you were excited about youre ready to present to both Boeing and Airbus once youre able to get into their facilities again.
I think on the last call you talked about you've been able to get into Boeing.
Two to meet or to to pitch and talk about your existing legacy lines, but they haven't been able to and they weren't no one was focusing on.
Adapting adopting approving new tools.
And you haven't been able to get into Airbus what are the status of things being able to get into either the Boeing universe echo versus or into the Airbus area to introduce and pitch on these new tools.
Yeah.
Airbus is so the same situation.
And we've been we've had some appointments I believe we had an appointment, but they're really not there much in the same thing is really a Boeing admittedly there are some people that Boeing now more than ever before but still very slow go very very very slow go now we're hearing early January I believe I announced in the paper.
So last week or the week before that Theyre looking to thinking about them, but now the mandate with the vaccine maybe slowing that down.
But.
Just in general I would say, we could we could pick apart.
The Airbus Boeing or for that matter any other company, but for the very very most part where human far between that we get to see people in public and we're not we're not selling.
A paper clip with somebody and engineered product and the need we need to see people they need to touch and feel the need to be able to.
Tested and all that stuff. So it's very very slow gusto gears.
Yeah, that's the PTT side, not the aerospace so right you seek years yeah.
Oh I suppose.
Yeah, Yeah, no I understand.
And.
With respect to the new product development.
You had said on prior calls that the.
That that was still ongoing right because that's all that's all within in your area.
You do you have other new products that are on the on the we'll call. It front burner to introduce once these doors open for you to get in front of them or you have enough of the new ones already designed and developed that that's not a major area of focus for you at the company.
It's always a focus but the latter is more the.
For now.
Would you said July one.
Yeah, it's yeah, I mean, we have to.
Under development continuously but.
You know regardless of what we've got we can't seem to get in front of the people we need to get in front of it.
The way, we'd like so at all.
It almost doesn't matter how much we've gotten her development until we get more meeting set up.
Right and this isn't a market share thing right now talking to others are getting meetings no one's getting no right now.
I know Airbus isn't taking meetings.
And frequently it it's.
Yeah, it's not about us.
And Eddie.
You cut out I'm sorry, Richard.
No I said, if we're not getting in nobody else anybody is getting them we'd be getting into.
Okay, and you talked about in terms of vaccination requirements and everything else I've asked on a prior quarters. You were you were assembling that information and also waiting for guidance.
I think you're an entity that has over 100 employees, you're providing products as a subcontractor or to subcontractors.
Of of federal contracts in particular on the defense side do you have an estimate of the percentage of your workforce presently vaccinated with the first shot or fully vaccinated and have you initiated are considered.
Initiating financial incentives or bonuses for employees, who get vaccinated or now given the government's authorization mandates.
Joe go ahead.
We all we don't disclose what percentage of our employees are vaccinated.
We're not a government contractor just say you know technically we do not we're not.
A government contractor, we sell to people who sell to the government.
I will say this.
<unk>.
We have had extremely little interruption, we've had no interruption.
Operations, and very very little loss time.
From personnel due to anything related to Covid or Covid prevention of walk quarantines required very little mhm.
No yeah problems zero, so that go ahead Andrew.
Andrew a federal judge I believe just like in the last hour.
Walter the Biden mandate.
I saw that on the news. This morning, so I don't know what that means but.
Certainly very conscious of it.
Alright, Alright fair enough, but you have also stated that there's problems for everyone to get into.
European or elsewhere and that they're going to.
They may have vaccine vaccination mandates are your sales and engineering force.
The people who have to go out and meet with these or get meetings with these in order for us to you know.
It makes them additional footholds herein and Reinitiate grows.
Is that crew all backstopped.
And if we can discuss that yeah.
Privacy Act in the shoe and like you know, we can't discuss what People's personal things off.
I didn't have it in our our vaccination status of our employees is not inhibiting our ability to grow it and service coverage okay.
Okay, Yeah, and are you encountering pushback or.
Employee turnover.
In light of this.
Evolution towards vaccination, non vaccination et cetera.
No.
No.
I have more questions I'll back out into the queue, but thank you.
Okay.
Thank you and once again Thats star one if you'd like to ask a question. We'll hear next from many chicken salad with a private investor.
Hello, Hi, good morning.
Can you hear me.
Yeah, we hear you.
I'm just curious given the very low trading volume and low market cap have you considered a delisting from the NASDAQ and switching to an OTC listing as a cost saving measure.
Joe you want to take that well I mean, certainly there.
There are there's somebody.
I'm sorry, Richard.
And again.
Yeah look we we don't really have a cup, we can't really comment on our.
Listing status.
Decked out now we followed that as DAC rules.
I don't exactly know what would go into.
I mean, we like Med Tech.
It's not not you made to this call and we can't comment on that.
Sorry.
Yeah.
Any other questions.
Uh huh.
Hum.
And so I don't take this as in.
I don't want us to be south of that but is there any executive succession planning in place or is that just something that part's going to deal with.
As that comes up.
I'm, sorry, I got cut off there could you say that again please.
Is there any plan for a succession of executives.
In place or is that something that the board will deal with as it comes up.
With the board the board deals with Gregory Brett very regularly.
For several years.
The answer to your question is yes.
Okay. Thank you.
Mhm.
Thank you and once again Thats star one if you'd like to ask a question.
And it appears we have no additional questions in the queue at this time.
Like to turn the conference back over to management for any additional or closing remarks.
I would wait for a minute I'm fairly certain that Andrew Shapiro is probably going to have some more yeah. He stepped out for a moment and he said he would be coming back in.
So, let's get a minute, let's give it another minute.
Absolutely Andrea has a re cute Andrew your line is open. Please go ahead.
Yeah, I had actually recouped before I don't understand what the technical issue is but I'm.
I'm here I have several other questions if you don't mind.
While we discussed the potential business opportunities for PNM to pursue with Airbus and the and the large existing share of business you have with Boeing and the tech over.
Do you have aerospace business already selling product into Bombardier and or is that an opportunity to pursued and of course, one not requiring overseas travel, perhaps less of a hindrance to getting in there and winning new business.
Yeah.
Go ahead, Joe I mean, we sell them we call on.
Essentially every.
Aircraft manufacturer in the World.
That we can call on so Bombardier is absolutely one of them I Couldnt tell you right now what we've got going on with them if anything but I know.
They're on the hit list. So we're not precluded from speaking to anybody we talked to everybody in and we've got a solution that works for them, we sell them tools.
Mhm.
And then for what part of the third quarter.
If any were you able to conduct on site visits with current or prospective customers for both the you know for your P. T. G area I know I understand why it's needed and you really never had the chance to do it because the pandemic kicked in just as you were giving the equipment into Pennsylvania, but I think on the <unk>.
Last call you talked about.
Some things were starting to open and I'm I'm wondering have you been able to get into.
Still some more current or prospective customers and having done that in those instances have that has that resulted in.
Some new business.
We have we have a <unk>.
A very long list of prosper.
Prospects that we've spoken to a very wellness prospects that we've spoken to mostly telephonic. Lee. There are there are and have been some examples of companies that have let us I'm not going to say that nobody has led us in the door. There are some that have and we've had some reasonably good success on the ones that we had.
Had a pretty good hit rate, but it is not enough to really move the needle right now.
Got it.
So a very long process, Unfortunately, and as an engineered product and it's just taking a long time and we don't we keep hearing that keep kicking it down the road.
Some people are saying right. After Christmas some people were saying at the end of the first quarter.
I don't I think everybody's kind of I can wait and see mode.
But oh, if that's answering your question but.
It's a start.
Yeah, I would just add Andrew to answer the last part of your question. If we can get in front of somebody.
And this is assuming it's not a current customer it's a potential new customer and.
We can we have the means to solve their problem I'd say, we have a pretty good.
Success rate.
We're just candidates we don't have those many of those opportunities says we'd like right now.
Okay and since this was a new business.
The segment focus et cetera, again, as we hit the pandemic I don't know.
And investors three decades here I don't have the experience.
<unk>, yet with this and instead of your own Okay, you get in to the new customer.
You make your pitch you have a good chance of getting the business. If you didn't have the capabilities for it now assuming you have the capabilities and to give you the order.
How long is the time window for that order then to turn into.
On a reportable revenue stream is it a quarter or is it multiple quarters I'm not sure how.
It's an engineered product but.
What's the time window, what's the process here.
I mean, Joe you can chime in also but it's it's it varies on the product and it varies but the need is but I would say, it's somewhere between three and six months generally speaking.
Okay is that correct.
With me on that.
Yeah, I I think that it certainly could be as long as six months, depending on the complexity.
But.
I would say.
More of them are closer to three months from the time well it depends on when you're keeping score from the time I mean, there's always a series of meetings and this is very iterative you go in there you find out what their need is.
Maybe you take a sample back with you we analyze it we come back to them, we talk a little bit more maybe they want to make a change.
So you know it depends on the.
The complexity, if it's not that complex, that's probably less and less than three months, but.
But the more complexity there is the longer cats.
And now you get the order.
You get the order and it sounds like you'd go back and you know you go to your machine shop, and you're doing this stuff to what extent is your ability to fulfill their needs.
Dependent on your supply chains.
It's more it is this more like the bulk of this is all in house and domestic and not.
They are dependent on supply chain problems that are experiencing obviously with your importation.
Well again, it depends on the product and what the what it really is.
You know that scares I mean, it depends on what it is it just depends I don't think we can give you a blanket answer but supply chain issues are affecting everybody everywhere, including just metal.
For metal to grind and grind gears then to gears.
It's all an issue not I'm, not saying that we don't get our get it get our supplies. We do we don't get them as the timing of your fashion and we're not getting them at the prices that we've had in the past, we or anybody else. So I can't I don't think we can give you a straight answer on that Andrew because it really honestly it depends on well I'm not sure.
Trying to get into the micro details of any particular order, but in general. This is a I'm trying to understand this is a different line of business.
Then the manufacturing and importation of tools from Taiwan, right I mean, you're not certain on computer chips. So so your basic raw materials. Your basic supplies to meet the needs of your P. T G customer.
Basically.
Hard metal stock that you're cutting down and machining is that right.
Yeah.
Okay.
And that work in that okay. So in that sense, you're not as supply dependent as you are and the other portion of your your.
Automotive parts and two other tools business, Okay now.
Would you say that PPG and and high Tech.
Or potentially a domestic.
Supply chain solution.
To your customers versus what they otherwise might have been dependent on or looking to.
I'm sure you can answer that way, but.
Not really not really.
Why don't you answer it.
Let me make a couple of them make it let me go back to your finish commenting on your prior question.
Mhm, yes, it for the most part it's all domestic however, we can't do every single process within the four walls in punxsutawney in the four walls and in Cranbury. There was some grinding we can't do depending on towers is theres. Some heat treating we can't do because we don't have a heat treating.
Facility Theres, some hardening that might be required that requires some outside processing. So that's not done overseas, but it's not in our building so to the extent those companies have issues of their own whether it be employees are material or whatever you know that could slowest out and has slowed us down.
On occasion.
You know with respect to I think Richard's mostly right about in general we're not a.
Our supplier to replace imported product, but yeah I'm sure there are potential customers out there that are importing product that would like a domestic source so depending on what it is.
That's a viable option, but it's not.
You know, it's not the lion's share of the business or or you know, where we see the biggest potential but certainly I think it is logical that in some cases that might be.
No no your high tech tooling, whether it's into oil and gas ATP or other things.
Florida, pneumatic and a lot of that stuff's imported Taiwan or other elsewhere in Asia. Okay. On the high Tech side is that mostly a U S onshore again potential onshore solution.
To your customers in the high Tech side, and the high Tech tools or you have a a meaningful amount of offshore supply.
Dependence.
Go ahead your I'm not sure.
Are you, saying on the high Tech side can we can we replace.
Can we take the place of another.
Vendor, who is importing is that what you're saying is it's the same question you guys. Yeah. I know there are you are you on exactly where there's less engineered but are your manufacturing and hi Tech, where Florida pneumatic has a decent amount of importation.
Type question go ahead.
Go ahead go ahead.
Hi Tech.
Hi Tech more menu more manufacturing than let's say, Florida pneumatic is and so in that sense is that is the case.
Are you more of an onshoring solution.
Again, where there would be from people who want to do onshoring.
Come to high Tech Park.
No because.
The high Tech tools are very heavy duty in general they.
They don't import well there.
They're small quality of these highly engineered.
It's very expensive to ship something that heavy.
The quantities are small.
You know that's I don't see your competition is already onshore is what you're saying I would say for the most part but not not everywhere certainly we're competing against some.
Internet you know Asian made tools, but we don't have any of those necessarily as our competition.
But.
And on your supply in your supply chain for the high Tech side, where you're doing more of the manufacturing, that's mostly again domestic or getting down to the.
The basic raw metal material.
Yeah for the most parcher okay.
Okay.
You are do you have any opportunities to onshore more of what.
Is going on on the Florida pneumatic and on the automotive tool side that could.
A dresser alleviate some of your supply chain.
Difficulties or you and the rest of the industry have you know everything has to come from offshore on that one.
The greatest the greatest.
Gotcha.
Well remember in aerospace, it's mountain, mostly not offshore.
No no.
Hum.
Is it a jiffy I'm very impressed yeah, so the rest of Florida pneumatic.
You know.
You asked manufacturing I, just don't think.
We can get there now could we get there and some other part of North America I don't know, maybe but it's not really we can't really compete with those numbers. It's just it's too it's a great thought.
But for high volume.
Relatively low your entry level tools, it's just not possible.
Okay.
And thus your competitors are similarly, situated so.
Your decline in the sales side do you feel.
Just it's resulting in Darren shelves and at the distributors and bearing shelves at home depot or that others have been gaining some of that shelf space and share.
Yeah, I think there's enough Nobody's gate in my this is my opinion.
We think there is enough inventory in the channel.
I don't think people who want it are CAD 11, 50 arent getting one.
There's a lot of channel inventory. So I don't think there's any bare shelves at home depot.
To my knowledge I haven't heard anything about that and I don't think anybody's having problems getting one of our air cat tools, if they want one.
So if that's the case, then why would our sales levels be down and our supply chain somewhat sided is on the sales revenue side I know in the closet remember, where we're not selling directly to any one right mhm.
There's all this channel inventory, our customers or the channel distributors.
So there's no news channel distributors.
But those channel distributors.
Are some on this product right, there's there's either demand for it or not and if there's supply chain issues.
It is then that means demand is exceeding supply so the distributors arguably have have the supply.
And they're selling the product that didnt means you're not necessarily selling it I appreciate that but why wouldn't in the face of supply chain fearmongering or fear everywhere why wouldn't the distributors be turned it around and ordering from you to refill their inventory so that they're not caught short.
Okay. So let's be clear are you talking about home depot, you're talking about industrial we're talking about aercap.
I'm wondering if I'm if I'm.
<unk> to the instances you decided how.
Oh the line of questioning is regarding the idea that supply chain issues have impinged on selling units will get to the cost issue and a second okay.
So where where does that exist that would not that doesn't seem to exist in the distribution model, you're referring to where the distributors are clearing out the distributors or are selling into that.
The consumer or the customer, let's now I think this question is best answered in pieces. So let's look at great. Okay.
Home depot, our retail business.
Three.
Of 2020.
There was a huge surge at home depot for for two reasons. One it was all sorts of pent up demand from Q2, where things were shut down and second when things got turned on.
And we didn't know this.
Our spray guns or suddenly being used to spray disinfect. It there was a tremendous surge in orders in the third quarter at home depot. So that has leveled off so at home depot.
You're talking about are unique situations, so let's take that one off off the table.
So.
Unless you know jiffy, we've already talked about so that leaves us with industrial.
And.
Automotive our industrial.
Industrial I don't have in front of me, but.
I think industrial has had.
And improvement.
From the prior quarter.
Yes, yes, yes.
So you're not asking about industrial so really you're down to asking about automotive.
Alright.
So, let's talk about automotive and we understand we understand retail because that's primarily home depot, where just by the way Amazon fit into all of that is that automotive or retail.
Amazon is considered automotive that's okay.
Yeah, I mean, again and again, where we're not we do not sell on Amazon our product ends up being sold on Amazon, but it gets there through distribution various distribution.
Got it okay. Okay.
Okay.
So on the automotive side.
For the quarter, we were down about 10%.
No.
Multiple things going on there.
Actually I'd say two to two major things going on.
One we've had these tremendous delays it importation.
So even if vendors want some product.
We have had trouble getting it.
In house from overseas.
And second on the automotive side.
During the third quarter.
We made some changes to the way we go to just go into the distribution channel and changed some things up so there was a one time.
Reduction in the inventory levels.
Into the channel.
But again that.
In my opinion has had very little impact in the amount of demand from an individual customer wanting an air cat 11, 50 or whatever they want but the channel has been disrupted.
But remember there's a lot of inventory in the channel and there's lots of people selling air cat tools. So if I cant find it on.
Through why regular distribution I can find it on I might be able to find it and.
Uh huh.
An internet site from a distributor I might be able to find it on Amazon. So there are multiple places a person can get a tool.
So I again that inventory in the channel has absorbed our distributions problem.
Accuse me of our importation problem.
So I don't know if that answered your question, but I just want to tell them when I'm done.
If you don't mind, Andrew and all due respect with 40 minutes since it is cool and then just when when this is not a this is not a drill down into the micro managing of each of our business. So I really would appreciate if you could talk about the results.
The questions you're asking are certainly good questions.
And we appreciate it Richard.
What I don't understand how I do not understand how these questions are not into the meat of the results, especially to the extent you guys cite well you can talk about their supply chains and there's an inconsistency that Joe has finally helped clarify I mean, they're.
Not just because you're impatient about it it's not my problem I didn't take.
I'm not and pay you know you have.
It's Andrew I'm, not going to if there's a if there's others who have questions.
Was that what you were not going to talk over each other I'm just going to tell you that this is a this is a conference call to talk about the quarter and we're happy to spend as much time as you need to to understand the things, we're really happy to do that but but there comes a point that you're drilling down a little too far and its not really germane and respectfully.
You know to try to keep it more in a global sense. That's all I'm asking you to do but I'm happy to answer we're happy to answer your questions. I mean honestly didn't want to answer that you were a stockholder for a long time in your oncology answers than anybody else as well, but please just try to be a little more global if you can.
Well I'm I'm sure and I surely hope there are some members of the board and then maybe Joe offline can chat with you and explain exactly why and how clearly my questioning even the little drill down on this particular area is very very germane, but we'll move on to other questions, but if you ask someone else you would like.
And I'm not sure.
I'll be glad to get out, but it is I'll be glad to get out and ask and let someone else in if you have someone who wants to ask a question, but yeah.
Other.
Yeah.
No.
Good I have other questions. Thanks.
Thank you we'll take our next question from another follow up from me can knit mimicking a select private investor.
Hi, Ken.
I'm curious during the last call. It was briefly mentioned.
About resuming a buyback plan or <unk> or a dividend can you give any update on that.
Yeah.
The update is that we discuss it at every every board meeting.
And as well as in between board meetings, and when there's something when there's something to report we will you'll you'll read about it but we will be announcing to the world.
I can't there's nothing more to say right now what I can tell you is that we discuss it it's on the forefront of all of our agenda. Every every board meeting and in between at the audit Committee meetings et cetera et cetera. So it's definitely something that we talk about and when there's something to talk about more newsworthy fashion, we will absolutely be closing out to you.
Okay.
Oh, Okay. So I'm not really asking roper like for you to give up news right now I'm. Just wondering what is it that goes into that consideration or are you waiting for a.
Better cash flow like a stronger balance sheet.
What can you share any thought about that.
Yeah, well all that the answer is yes on all of those questions.
We examine the cash of the business the cash needs of the business.
And.
And.
And that's that's really that's really what we do.
The declaration when we talk about dividends it depends on the company's financial condition and results of the operations one of the things I can think about capital requirements and any other relevant factors that may be that you know at that point, but as of now we haven't as I said, we haven't declared anything yet.
And we will continue to analyze these different these dividend questions and we will talk about when there's something to talk about I promise you that we will be announcing it isn't.
If and when that time comes.
Okay. Thank you.
Can I add one more question.
Sure. Please.
And this is a high level question on why is it that you choose not to sell directly to consumers.
So consumers are.
I'm just curious like you don't have a very strong presence on the home depot site or or or an Amazon and and.
Like it sounds it seems like something to me that the company could take anything like that enhanced tech to grow with revenue.
Joe do you want to answer that one yeah, Let me, let me address that with respect to home depot.
We do not dictate the home depot.
What if any of our tools and up on the home depot site versus what's in the store home depot as a customer they can choose to go to market in any way they'd like so there's nothing we can do about that with respect to Amazon.
And why we don't sell directly on Amazon.
You know, we don't necessarily want it want to pick favorites and that we've got multiple ways to for one of our customers to get to a buy.
Buying one of our tools and while it's great that some of them choose to go to Amazon and many of them choose to buy through a local mobile truck, but either choose to buy on another website many of them choose to buy.
Through through other means so.
I think if we just decided we were going to go to the Amazon directly that would be making a bet, but there would be repercussions to the rest of the channel for that and I'm not sure that's necessarily the best course of action for the most revenue.
Having said that you know we are an Amazon, we do advertising on Amazon and I would disagree that we have no presence on Amazon I think we've done a very good job.
With that Ah.
That channel and that means of selling our tools. It's by no means the only way we go to market, but I guess I would disagree that we have no presence there I in fact, I think we have one of the most highly rated.
Tools in the category.
On Amazon so.
Hopefully I apologize I didn't suggest that you have no frankly.
I was just questioning the.
Lack of direct marketing.
Well you know some of our tools really don't lend themselves to direct marketing. The gear is don't lend themselves to direct marketing the industrial tools.
To a lesser extent don't lend themselves to direct marketing there there.
Require more of a of an engineered sale.
But the depot the tools for home depot and the tools for Amazon are in my view marketed directly although there was a level of distribution between us and them as a customer.
Alright, thank you.
Youre welcome.
Thank you.
He came from Andrew Shapiro Lawndale capital management.
Thanks.
Yeah.
Carrying over the supply chain issues on the cost side.
Everyone is experiencing the same issues and I believe that is the case and you're not losing share.
What is the can.
Can you comment and give more color on the pace of passing through.
Price increases.
That inevitably would reflect the cost increases on freight shipping et cetera that all of your competitors.
<unk> also faced with.
I think Andrew what you're asking is what was I think we related in the press release actually but I'll restate. It. If this is what you are asking not please let me know.
We for the very very most part all of our customers.
Our biggest customer to our smallest customer have been given price increases over the last several months and as recently as last month and we're looking continuing to look because prices are still insanely inflationary as you know.
And so we're we're continuing.
It's a moving target, but everybody has been getting price increases at the time. It was what it was and now we're looking at it again to see if we need to do it again I kind of think we don't I think we're pretty covered at this point our margins are holding up and all that stuff, but we're looking further into that but that's that's that seems that what you're asking me.
Yes, and and the customers have a you know reluctantly absorbed that.
They've accepted it and you're selling your units.
Yeah I mean.
We did have two it's unfortunately life in the way of the World right now everybody everybody, there's nobody who lives in the rock and doesn't see and hear what's going on.
From that.
Venue and everybody understands it and they know it.
If our president can get can get a control onto.
The ports and lots of stuff is there and all the other things with inflation I think I've read this morning.
<unk> is the highest 30 years now for the last months, if I, if I could I, maybe wrong, but I'm pretty sure I read that this morning on Bloomberg.
Although the one the one month print was the highest in you know it goes back to the Ninety's and it includes the energy price and other increases, but yes right.
We're up over time.
You know what what's the size.
Talked about this in the last quarter and you guys didn't have the information as of yet and haven't done the return, but do you have a handle on the size and status.
Of the tax refunds I guess that you expect in Q4.
Joe.
Sure.
I mean, it's you know where.
We're certainly you know we have filed a return I'm not going to go into exactly what we're hoping to get back but.
We expect to get a refund at some point, but honestly.
Our tax advisors are telling us that you know given everybody doing the same thing it's unclear exactly when we do a refund and what that refund will be but it's coming there is a refund of some sort of company.
Is it meaningful.
Yeah, [laughter] Oh, it's.
Okay.
I don't remember what what was that in our.
Filings, but we certainly expect a refund.
You know any any enough any amount as a.
Meaningful you know I don't know what it means.
We can't you know, but it's well when it comes will presumably.
Right I understand.
Understand that.
You have to understand it's not public information that we really can't divulge that.
I don't know how else.
First off here's your public call secondly, I was going to ask it. So it's already been accrued for right. It's just going to be a matter of cash flow.
I actually you don't accrue for a potential receipt of a refund we don't.
Okay.
When you when you take your.
No, but you when you take your GAAP provisions, you've been taking GAAP provisions against your pretax losses in repeat pre taxing gap.
Yes, Okay and do you have your after tax thing and then you get it so what we're dealing with here is it's not gonna be a GAAP reported Idaho as much as it's going to be.
A cash flow item.
Yeah, I mean, Andrew once we know.
What we're what we're getting we'll you know we'll have something to say about it but we don't really know yet.
Okay.
And can you provide you talked a bit about it last quarter can you provide an update and some more color on your development of cordless models and the type of automotive or non automotive applications for which our P&L is developing cordless models.
Of its tools in either the high tech or Florida pneumatic side, Yeah, I don't want to divulge too much about product development for some strategic reasons, okay, but there are certain niches, where we've got cordless tools underdeveloped bid to sit alongside our.
Our non cordless models, but I.
No I.
I can't you know at some point when they're when they're ready to go well, we'll talk about them. They are still under development and I can't even I don't I'm uncomfortable, saying, even where we plan on selling them for strategic reasons.
Okay is there a perspective time range in which.
Is there a prospective time range in which the products might be I would say, yeah I would say in the first half of next year I would I'm I'm, hoping that we'll introduce something.
Okay now.
You had sizable gains in the OEM engineered solutions side that high Tech can you discuss your new products and experience. So far if theres any particular areas or industries and products worthy of a call out and elaboration.
I mean, it's really all over the place as we've as we've said I don't know anyone I would call out.
Some of that is just.
<unk>.
I think a rebound.
You know those are obviously cases, where.
We have been able to visit and I think for the most part it's.
Current customers that are rebounding a bit as opposed to two new customers. So as I think well maybe this is sort of implied given the fact that were struggling to meet new customers.
First source of growth in some cases old customers, who are just doing better.
I'd say that's probably.
More of what's going on in China, Although I think it's both.
And my my last question, which is still.
Still a function of you guys not issuing the 10-Q before the call and we always have it. After the fact is what what's the shares outstanding that's going to be on that cover.
I don't know the answer to that.
Yeah.
But if you have another question and perhaps can you build that into your future and perhaps can you build that into your future scripts.
The number of shares outstanding somebody just stuck in front of me, it's been running in the morning Russell.
Three 181, I don't think it's changed much Andrew no that's unchanged.
No change very good.
Thank you.
You're welcome Thank you Andrew.
Most of your time.
Thank you we'll take our next question from Walid I'll, Ari with a private investor.
Yeah, Hi, everybody.
Thank you you are doing excellent job I have a question for the infrastructure Bill is the company can benefit I think just the industrial.
Oh gosh.
I don't.
C N equals production tools do you think in the future.
Hmm.
You used to get all that everything and get the job.
Yeah.
With Magellan.
Did you understand.
Yeah, I think I understand the question will we benefit from the infrastructure Bill I think the answer to that is yes. Historically, we have sold a lot of tools into.
Bridge repair ridge construction road construction windmill maintenance and construction railroad maintenance and construction are those are all part of the infrastructure Bill So while I couldn't speak Piney point to anything specifically.
I'm pretty comfortable that we're going to we're going to share in some of those those activities because they are very consistent with where we've told sol tools in the past.
Thank you so much and great job. Thank.
Thank you. Thank you. Thank you.
Thank you and that does conclude the questions in the queue. At this time turn the conference back over to management for additional or closing remarks.
Okay, nothing nothing further to say other than thank you all for taking the time today. Thank you for your all your questions. Hopefully gave you more insight than you had beforehand.
And we look forward to speaking with you with our year end call.
I believe that's in March so stay well stay safe and happy holidays everybody.
Thank you and that does conclude today's conference. When you. Thank you all for your participation and you may now disconnect.
Hum.
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