AstroNova Inc (ALOT) 2012 Q4 法說會逐字稿

Welcome to the Astro-Med fiscal 2012 fourth-quarter and full-year results on the 21of March, 2012.

Throughout today's presentation, all participants will be in a listen-only mode.

After the presentation, there will be an opportunity to ask questions.

(Operator Instructions).

I will now hand the conference over to Mr.

Stan Berger.

Please go ahead, sir.

Thank you, Danny.

On behalf of the management of Astro-Med, we are extremely pleased that you have taken the time to participate in our conference call.

Thank you for joining us to discuss the Company's fiscal 2012 fourth-quarter and full-year's financial results and business outlook.

Before I introduce Management I would like to remind everyone that certain statements made during the course of this conference call, especially those that state Management's intentions, hopes, beliefs, expectations or predictions for the future are forward-looking statements.

During this conference call we make forward-looking statements within the meaning of the Securities Exchange Act of 1934.

These statements are based on the Company's present expectations and beliefs concerning future events and are necessarily based on certain assumptions which are subject to risk and uncertainties.

Actual results may differ materially from those discussed here.

More information on these risks is included in the Company's filings with the Securities and Exchange Commission.

By now you should have received a copy of the news release which was issued yesterday.

If you have not received a copy, please go to our website at www.astro-medinc.com where a copy of the press release can be downloaded from the Investing section of our home page.

Hosting the call today are Everett Pizzuti, President and Chief Executive Officer, and Joe O'Connell, Senior Vice President, Treasurer, and Chief Financial Officer.

At this time, I will turn the call over to Mr.

Pizzuti.

Everett?

Thank you, Stan, and good morning, everyone, and thank you for joining our conference call.

With me this morning, as mentioned, is Joseph of O'Connell, our CFO and Senior Vice President.

As we announced in our press release yesterday afternoon, we're happy to report that we achieved both a record quarter and a record year.

The guidance that we had given you for the year was revenues of $78 million to $79.5 million, and earnings of $0.37 to $0.39 per share.

Our actuals were on the higher side of the guidance for revenues and exceeded the guidance on both a GAAP and a non-GAAP basis for earnings.

All of these numbers, of course, are detailed in yesterday's press release.

And for the quarter, $20.4 million in revenues is an all-time record for Astro-Med and represents a 14.4% increase over the prior year's quarter.

One of the many bright spots of the year is the fact that Test & Measurement, QuickLabel Systems, and Grass Technologies were all up by double digits.

Sales were strong from our international markets as well as domestic channels.

Everything was in sync.

One of the driving forces behind our increases for the year is the great performance from our Ruggedized product group.

Many of our contracts are kicking in at an accelerated pace as the new model aircraft production continues to ramp up.

Meanwhile, we are being awarded new contracts which will layer upon the existing ones in the years ahead.

Our newly introduced PW5 ToughWriter is one of the main reasons for customers selecting Astro-Med for both new aircraft as well as for fleet modernization upgrades.

Our QuickLabel System color printers and consumables did very well in the quarter and in the year.

As we mentioned in our last conference call, our third quarter, from our international branches, was impacted by the usual August shutdowns and the European economy.

We're happy to report a nice comeback in Q4 and good overall increases for the year in our color printers and labels, inks, toners and other consumables.

We also experienced growth in our monochrome printers for both end users as well as OEM applications.

And of course, we're very pleased with the performance of Grass Technologies as we grew the business by 10.7%, with especially strong performance from our international markets.

We had a very good increase in EEG as we take market share from competition and enter new markets with new leading edge products.

One of the newer products is our portable video EEG system, which is designed for ambulatory home market, as well as for in the hospital.

In our consumables product, especially the Grass Gold Cup Electrodes, are in high demand from not only our customers, but also from many of our competitors.

We will be introducing new products during the year for all of our product groups including QuickLabel Systems, Ruggedized, and Grass Technologies.

For QuickLabel it will be another advanced, high speed color printer.

For Grass, an innovative wireless amplifier as well as new disposable products.

And for Ruggedized, some unique capabilities will be added to the ToughWriters.

In addition to this organic growth, we have a number of targeted acquisitions that we are studying.

As we have mentioned previously, the targets must fit within our present fields of expertise and of course must be immediately accretive to earnings.

When I assumed the role of CEO last August, I announced that the Company would be open to challenge and change, as necessary, to continue the growth of Astro-Med.

We have since undertaken a number of new initiatives, some of which are in process, some of which are in review, and some of which we have made.

For example, last fall we hired a leading consulting firm to work with one of our groups on a strategic business plan.

This culminated in an OGSM that we have approved and will implement going forward.

And last week, we publicly announced a number of staff changes within our Company.

We feel these are very positive steps towards improving the growth of Astro-Med.

Based upon all of this, we are looking forward to another strong year and will give our guidance at the end of the first quarter.

And that's my report.

Joe, can we hear the financials?

Thank you, Everett.

Good morning, everyone.

I'm very pleased to present to you and add a little more color to Everett's comments on Astro-Med's fourth quarter and annual financial results for fiscal 2012.

As profiled yesterday, and as you heard from Everett profiled in our press release, the Company did achieve a record quarter in sales.

Revenues, as you heard, reached the $20.429 million, representing a 14.4% increase over the prior year's sales of the fourth quarter.

Sales through our domestic channels were $14.029 million, representing a 12.2% increase over the previous year's fourth-quarter domestic sales, while our international shipments at $6.4 million in the quarter, represent an increase of 19.5% from the prior year.

If we detail the quarterly sales by product group, our QuickLabel Systems line of color and monochrome printers and the related consumables were at $11.222 million, reflecting a 19.5% increase from the prior year.

The Test and Measurement product group which includes both the data acquisition products as well as the Ruggedized product lines reported sales of $4.588 million in the quarter, an increment of 18.5% over the previous year.

And lastly, the Grass Technologies product group of neurophysiological recording instruments and consumables had sales of $4.619 million in the quarter, which is slightly up over the prior year's fourth-quarter sales.

The Company achieved gross profit margins in the quarter of $8.367 million.

That's a 13.4% improvement from the prior year and reflects a margin of 41%.

That's some 30 basis points below the prior-year's margin in the fourth quarter of 41.3%.

The Company's secondary expenses in the quarter were $6.737 million.

That's a 2.1% increase in spending from last year with most of the increment related to research and development projects.

Astro-Med's operating income in the fourth quarter, prior to the loss related to the divestiture of the Company's label manufacturing operations in North Carolina, was $1.630 million, which is more than double last year's fourth quarter operating income of $779,000.

The improvement allowed the Company to reach an operating margin of 8%.

That's up from the prior year's operating margin of 4.4%.

During the fourth quarter, the Company sold its North Carolina label manufacturing business and reported a loss related to that divestiture of $681,000.

Other income and expense in the quarter had a charge of $63,000, related to the loss on some foreign currency transactions.

The Company's provision for federal, state and foreign taxes was $31,000 in the quarter, lower in the quarter as a result of our true-up of certain state tax balances resulting in an effective tax rate of 4%.

This is down from last year's effective tax rate of 33% in the fourth quarter.

Astro-Med earned $854,000 in GAAP net income during the fourth quarter, representing an earnings per diluted share of $0.11.

In the previous year's fourth quarter, the Company earned $517,000 in a GAAP net income or $0.07 per diluted share.

Prior to discussing the status of the Company's balance sheet and cash flow at year-end, a review of the financial results for fiscal year 2012 is as follows.

Our net sales reached a new level of annual revenues at $79.193 million, an 11.5% improvement over the prior year's sales of $71.016 million.

Favorable foreign exchange contributed $705,000 to this year's sales growth.

Sales in our domestic markets was $55.004 million, an increase of 8.7% over the previous year.

International shipments contributed $24.189 million in sales for fiscal 2012, representing 31% of total revenues and reflecting a growth rate of 18.6% from last year.

Our annual revenues by segment or product group had QuickLabel Systems at $43.586 million.

That's up 10.3% from the prior year.

The Test & Measurement product group, including the Ruggedized products, was $17.139 million for the year, growing 15.5% over the prior year's T&M sales volume.

And lastly, Grass Technologies' sales at $18.469 million rounded out the double-digit growth rates with a sales increment of 10.7% from last year.

Gross profit dollars for the year were $31.783 million, exhibiting a 10.9% improvement over the prior year and reflecting a gross profit margin of 40.1%.

Astro-Med's corresponding gross profit margin in the previous year was 40.4%.

Operating expenses during the year were $27.185 million; that's a 4.5% increase in spending over the last year, with the prime contributors being selling and marketing activities.

Astro-Med achieved an operating income prior to the divestiture of $4.598 million, a 73% improvement in the operating profit over the prior year's operating income of $2.656 million.

Other income for the year was $316,000, of which $300,000 relates to the disposition of certain insurance proceeds in the second quarter.

Our federal, state, foreign income tax provision for the year is $1.101 million representing an effective tax rate of 26%.

This year's rate is comparable to the prior year's effective tax rate of 26%.

The Company earned, on a GAAP basis, $3.132 million in net income during the fiscal year 2012, or $0.42 per diluted common share.

In the previous year, Astro-Med reported net income on a GAAP basis of $2.062 million, or $0.28 per diluted common share.

Relative to Astro-Med's balance sheet at year-end, we have our cash and marketable securities were up 11.7% over the prior year to $23.040 million.

The working capital balances of accounts receivable and inventories were also well positioned at the end of the year.

Accounts receivable dollars rose 6% from the previous year to $11.801 million, representing some 51 days sales outstanding, a three-day improvement in the turnover from the prior year.

Inventory dollars declined slightly to $14.129 million at the end of the year, equivalent to 105 days on hand.

Funding for our capital expenditures reached $1.155 million for the year, and was earmarked related to machinery and equipment, information technology and tools, dyes and fixtures.

The Company's paid cash dividends of $2.055 million during the year at the rate of $0.07 per share per quarter.

The Company's book value per share at year end was $7.51, up nominally from the prior year.

Lastly, the Company's employee population declined at the end of the year to 372 persons at Astro-Med.

On a sales per employee basis, we improved our sales per employee to $189,000 per employee, from last year's reported $168,000 per employee.

That concludes a review of the financials for the quarter and for the year.

Okay.

Thank you, Joe.

And Danny, we're ready to take any questions.

Thank you, sir.

(Operator Instructions).

Thank you.

Mark Lanier, Pegasus Capital.

Gentlemen, congratulations on a fine year across the board.

Those are impressive results.

Thank you.

Please help us understand some of the acceleration on the international side.

Is that improving tone of business, is that better distribution and more representation?

And do you think international will continue to grow at a higher rate than domestic?

Thank you for your comments, Mark.

Yes, we've made a number of changes in a number of areas.

Certainly, we're continuing to work with our dealers and distributors and making changes where there's poor performance, and where there's no dealership, we're adding them.

So that's continuing on an ongoing basis.

Secondly, a number of the products that we've introduced are really products that have international appeal.

Quite often we hear that products we make, they're suitable for the US market but this is not what we use in Europe or in Asia.

And so we've taken some of those things very seriously and, for example, we introduced the new portable Dash MX data acquisition product and our objectives for that was to make a product that would be acceptable in the Asian markets, where size and weight and price is important, as well as in the European and US markets.

And so those are the criteria that we gave our engineers.

We produced that product and now that's suitable for universal sale.

So, in answer to your question, we've done a number of things and we think -- our objective has always been to get international sales up to 50% of the US, and right now they're hanging in at around 30%.

31%.

31%, Joe says, so 31%.

So, we have some growth potential there.

We also had some very strong performance in the branches, particularly, as they did quite well in terms of expanding their footprint in Western Europe.

Certainly Germany and France, I think, were significant contributors to the success we saw in fiscal 2012.

That's helpful.

If I may ask a second question, then I'll get back in queue.

It's really about the QuickLabel business.

It's clear from the divestiture that you are evolving lands with respect to the Label and Printing business and if you could just give us a sort of a second or third order overview of that particular subsidiary, that would be helpful.

Okay.

Well, again, the color printers themselves, we're continuing to make lots of good placements and sometimes it takes three to six months or even longer for some of these printers to get really integrated and into production, and so there's a little gap between placing a printer in the field and then seeing the return in the way of media.

And so lots of the Vivo color printers that we put in place earlier last year are finally beginning to show some very nice increases in labels, toners, inks, and other consumables, and typically as a rule of thumb we like to say for each printer after the first year, we would get in return in consumables at least the value of that printer.

So if a printer sells for $18,000 in the first year, we expect to get at least that and more.

And some of these printers are generating a lot more because they're used in production applications for labeling of products.

We have a lot of capacity.

We added -- I shouldn't say we have a lot -- we added quite a bit of new capacity.

At the same time we increased our label manufacturing in Frankfurt.

We opened a new facility of label manufacturing in Montreal.

We added some additional space to our manufacturing here in West Warwick at the same time that we had acquired that Aspiro facility.

So, because of this capacity, plus some of the products produced in that facility were not conducive to the way we do business and to our methods of distribution, so we felt it best to divest that operation and without any impact on the business for being able to produce labels on a consistent and quality basis.

When you were reviewing new products, you did so and I missed the portion of it that was related to QuickLabel.

Would you repeat what the new product feature or description was with respect to the QuickLabel side of the business?

Yes, Mark.

What I said about QuickLabel is that we would be introducing a new innovative printer later on this year.

It's targeted for introduction around June.

And so, we'll see the fallout from that new product in the second half of the year.

Of course, this is another color printer.

I did mention that when I made the announcement.

Thank you very much.

I'll get back in queue.

Thank you, Mark.

Joe Furst, Furst Associates.

Good morning, gentlemen.

Again, congratulations on a good quarter and a great year, much, much improved.

Appreciate it.

Question.

Joe, this is more for you.

The sales were a record sales of $20.4 million in the quarter.

Was there anything particularly unusual in the quarter or is that -- anything particular?

I know it's a little bit seasonal because of the Europe shutdown earlier.

But anything else particularly unusual about that quarter?

The good news I think, Joe, is actually we saw growth as I mentioned in, really especially in T&M, as well as in QuickLabel Systems.

The Grass was pretty much up slightly but the other two had some double-digit nice profiles.

We just were very pleased.

I think a combination; I think the international folks also had a particularly strong quarter.

So they made a nice contribution.

But I think we're very pleased with the Ruggedized and I think we're also pleased with the color printers that we moved in the fourth quarter.

As I think Everett mentioned earlier in his remarks, a little bit of softness in the third quarter in some of these areas that we started to recover some of that business in the fourth quarter and that's manifest itself in the sales.

Nothing extremely unusual or anything.

No, there wasn't.

(multiple speakers)

So, in general, I think the good part is, it wasn't related to one big contract that we won't see next quarter.

It was increases in virtually all of our product areas.

Sure.

If you make the adjustment for the loss of the sale of the Aspiro plant, and the normalized tax rate, you're still earning, looks like in the rate of $0.15 to $0.16 per share per quarter in that quarter, if you normalize things.

I think you might have seen that on the table we put together.

That's right, Joe.

Thank you.

Thank you, Joe.

Sam Rebotsky, SER Asset Management.

Hopefully we're on the way to sort of make major improvements.

You seem to have started that now.

Your projections of $0.37, $0.38, did that take -- and you achieved $0.42.

Is that considered the write-down at the $0.06 write-off also, or was that -- would you have been significantly higher than your projections?

No, at that time we did not have that in there, Sam, to tell you the truth.

I think we try to put that as a table.

It's actually if you happen to see that in the press release, you'll see that that was an activity that we did not know it was going to take place in the fourth quarter.

But it was not anticipated in those numbers.

You were really significantly better than you expected, and was there any one-time sales that appeared in here that were supposed to be in the previous quarter or -- ?

No, I think -- no, there wasn't really Sam.

I think we've always said that our challenge has been to get that top line up, because we think there's tremendous efficiencies once the sales level gets up to that $20 million to maybe $21 million quarterly basis.

And I think we've seen that in the fourth quarter and that's certainly the kind of expectation we need to be to be able to generate those kinds of earnings.

Okay.

I didn't hear if you made a projection for the coming year and if you did, when you expect to do that.

Right.

I said, Sam, that we would make our projection for the coming year at the end of the first quarter, which is typically what we normally do, and especially now because we're in this, what we call a year of transition here.

We're making a lot of changes, some of which we've announced, some of which are to be announced, and so we're reserving our guidance for the end of the first quarter.

Well, I guess everybody misses Albert, and everybody thinks about Albert as the leader behind, and everybody is also putting together a plan to make changes and -- because new people who have control do things differently, and Albert was a very strong leader and was clear-cut on where he was going.

Could you sort of give some kind of direction what you want to do and achieve?

You've gotten these higher sales.

Definitely you're going to try to increase sales and profits and presumably there isn't -- are there any acquisitions that you're looking at?

Or what kind of direction are you going in?

Right.

Well, certainly we acknowledge the greatness of the founder of Astro-Med, Albert Ondis.

And he created this Company from scratch, and so we certainly want to continue to build on the great foundation and legacy that he left with us.

And we're going to accomplish that growth by -- I think one of the things we're doing is we're giving more opportunity for the leaders within Astro-Med to propose and make changes or recommendations.

And that's working quite well, all with an objective of course of increasing the revenues and earnings and strategy of Astro-Med.

I think I mentioned in my opening remarks, for example, that we decided just to keep everything on an open basis, to hire an outside consulting firm.

This is a well-known consulting firm, to work on a strategic business strategy for us.

And that was about a four-month project for one of our groups and we're going to be implementing that in the years ahead.

So we're doing some additional things that we hadn't done before, all with the objective of growing the business.

And with regard to potential acquisitions, yes, that's definitely in the cards.

Yes, we have targets that we're looking at and speaking with and, yes, if we find the right one we'll recommend that to our Board.

And one other final thing.

When changes happen like this there is always people that will be more prone to look at a Company like Astro-Med with its pristine balance sheet and great profitability and greater potential profitability to try to acquire Astro-Med.

Has any of that happened?

And even though it appears everybody has gotten greater roles, is there any possibility of something like that happening and being part of a larger Company?

Let me put it this way.

We're not in discussions with anybody right now.

Certainly we'll look at everything, because with the well-being of our shareholders in mind and if something comes to pass, we'll certainly listen.

We won't say no and we'll listen and if it's of value to the shareholders, then we'll set something like that forth.

Okay.

One further quick comment.

Hopefully you will tell your story in front of more investor groups.

Is that in the plans?

Yes, we will continue to do that.

We've done some of that last year and we'll pick that up again in the spring and continue to do that as well, Sam.

Well, good luck to the team.

Everybody, you're doing your job well.

Good luck.

Thank you very much.

Steve Busch, Southpaw Investments.

(multiple speakers) Just a couple follow-up questions and comments.

First, QuickLabel Systems -- was the increase in sales there predominantly an inventory build situation, do you know?

Or was it -- in the past when the economy was kind of bad people were just buying as needed?

Are we seeing now more of a build?

You mean a build on our customers' end.

Yes.

Customers' end.

No.

Typically the people buy the goods from us basically when they need them, and so it's the day-to-day business that's just continuing to pick up.

I think the help obviously was the color printer getting that squared away, Steve.

That's really started to pick up and we started to see some of the consumables associated with that, so that was a contributing factor.

Right.

Okay.

This new printer, color printer you're going to announce with new features, is that going to make people not buy some of the current printers or is it in addition to, type of situation?

It will augment the existing Vivo Touch.

Our lead printer right now is the Vivo Touch.

This new printer will do some things that the Vivo Touch does not do and vice versa.

It should be a very nice complement to expand the Business.

Perfect.

In regards to the Label business, is there a particular industry that seems to be buying more?

Do you have insight into that?

In general, the packaging industry, food and beverage, healthcare, we're in so many industries and fortunately we're not dependent upon one in particular for those color printers.

They're just sold to virtually all walks of life.

Right.

Okay.

(multiple speakers) Didn't know if maybe cars or something was picking up tires.

So in terms of the airplane orders for the cockpit printers, et cetera, do you see more and more orders coming on or are any of these delays of the Boeing deliveries or anything that is always ongoing, does that affect your quarterly run rate or are you pretty much good for a year out?

We're pretty good.

There are no -- the Boeing program is really picking up steam for that Dreamliner 787, so those delays are behind us on that aircraft.

So, that's well-positioned.

The beauty of that is we have those contracts in hand, and the customers are giving us releases on a daily basis for future shipments throughout the year.

So, that's all in-hand and real.

Excellent.

Trying to add more contracts.

Right.

I was going to say Steve, in addition to that, we're very diligent about trying to -- putting out -- responding to RFP opportunities to be able to add additional contracts to the existing ones we have.

That offers great promise for the Company.

That's great.

Perfect.

In terms of the dividend we're kind of stuck at $0.07.

Are we looking at maybe increasing that a penny a share a quarter, or maybe doing some share buyback.

Your stock is just incredibly cheap at these prices.

There's no volume, so we might as well buy back our own shares.

That's typically a topic of discussion at our Board meetings and we had a Board meeting on Monday of this week and it was a topic of discussion.

We certainly have -- we're in the position to buy back.

We have about a half a million or so outstanding.

That's correct.

Authorization.

Approved for buying back.

So, if there's the right time to do it, we'll certainly be in a position to move.

What's the Board's thinking on parameters?

Is there a level where you want to buy back shares or not buy back shares?

Is there a reason you wouldn't?

As opposed to for example an acquisition, our stock is trading well under one-times sales and with $3 a share in cash it's being given away.

Right.

Yes.

No, I think the feeling as they say, as Everett says is, we're -- the buyback, there's always interest in terms of buyback, obviously at the right price.

But a lot of our shareholders like the shares, and there's not a lot of opportunities that seem to surface for us to go ahead and buy a significant number of shares in the buyback program.

But we certainly have our feelers out in terms of opportunities that would present itself and certainly if the right situation presented itself we wouldn't hesitate to do the buyback.

It is difficult to buy your shares, so stock dividend might be nice too.

Anyway, it was a great quarter and a great year.

I look forward to hearing more over this year.

Great job.

Thanks again, Steve.

Mark Lanier, Pegasus Capital.

Two questions.

One is a clarification on the stock buyback.

Is that an authorization for dollars or shares at half a million?

Shares, Mark.

And I echo the sentiments of the last person offering a question, which is if you do an acquisition, make sure it's a lot better than buying back your shares.

And buying back your shares in any quantity appears to be a very good allocation of capital, certainly in respect of what you all have done over the last several years to improve the intrinsic value of this Company.

So, I encourage you to consider that and if you do make an acquisition, make it lots better than buying back your own shares, please.

Sure.

Yes.

Another question has to do with CapEx in the coming year.

Any estimate on that, or should we wait until the end of the first quarter to get an estimate on CapEx for 2012?

Well, Mark, we have a budget there.

I think probably we were a little bit lower this past year.

We spent about $1.5 million.

I'm sorry -- we think we'll probably spend comparable to the depreciation, amortization, which is roughly about $1.5 million a year.

So I would guess that as we look at, again, all of our businesses, I'm sure there would be an interest in making sure that there are capital expenditures that make sense and I would think it would probably be in that range.

That's helpful.

Well, again, congratulations, gentlemen, and good luck going forward.

Thank you, Mark.

Joe Furst, Furst Associates.

Also I want to follow up and agree whole-heartedly with the comments of the last two callers.

If you make acquisitions, you've already stated they would be accretive from day one.

Given the amount of cash you have, it would be very helpful if you can make a decent acquisition to do so, because you're probably making next to nothing on your cash and buying back stock is also a great return to shareholder value.

My other question is, what's the backlog now in the Ruggedized printer with all these plans over the next bunch of years?

Well, in terms of contracts in hand, the contracts in hand are over $131 million.

Now, we don't book those contracts so they're not in our backlog.

What we book is the release orders that come throughout the year, and as I mentioned a little while ago, these release orders actually come daily.

They order these daily for all of these aircraft, and so we've got releases going out through next November already in hand and beyond.

And so it's good for us because we're able to plan our production and meet the required dates, as needed.

So I don't have a figure for that that we can give you but I can assure you that it's going to be a nice continuation of what we've done this year, this past year.

Right.

Thank you.

Sam Rebotsky, SER Asset Management.

Thank you.

Everett and Joe, along the backlog and the contracts in hand, I presume the $131 million is the highest?

Has it been higher?

What was it at this point at last year and at the end of the previous quarter?

How did -- ?

I can tell you, last year was around $100 million, this year it's around $131 million.

So, we've certainly added to that.

And we probably have in negotiation right now around $60 million, in negotiation, various sources.

We've gotten a number of contracts during the past year.

We didn't announce them, however, because we're being prohibited by doing that by nondisclosure clauses in these contracts.

So, you're not going to hear that we got such and such a value contract from so and so, because we're not in the position to do that.

But I can give you this cumulative number to give you some idea that these new contracts are indeed coming in.

Would it appear that this is the highest you've ever been with contracts in hand and negotiations and pipeline, et cetera?

Pretty close, Sam.

I think it's probably pretty close.

I think in the past, depending on the opportunities, I think, but this is pretty close to one of the high marks that we've had to the contracts.

And as far as -- you're working how many shifts?

One shift?

Two shifts.

We work one shift in all of our instrument plants but we do work two shifts in our consumable plants for labels.

Do we expect to increase the number of shifts or --?

Well, right now we have a good capacity on the instrument side.

I can say that we do a lot of overtime but then that includes working Saturdays and Sundays, believe it or not, in order to meet these demands.

So we have the capabilities to move quickly to meet demand.

So this is good.

I guess -- I'm sort of very pleased to see how high you're doing in the sales, and it would appear that you could have record sales for the quarters going forward, based on this backlog.

That would appear to be true.

Okay.

But one negative is the cockpit printers.

I mean, the airline seems to be going to iPads and I know you keep selling the printers.

What is your take on what is happening there as they go more and more to iPads and various other computerized -- that doesn't include printing.

Right.

That's good.

That's going to work in our favor, actually, Sam.

One of the new products for Ruggedized that I just made a reference to without naming it is going to be kind of in that direction.

I just can't get specific right now.

It will have to wait until we can make a public disclosure.

But I can just tell you that the iPad will augment the use of the ToughWriters as opposed to replace the use of ToughWriters.

Is there any area -- if you had a manufacturing location or another location that would make you to be able to ship more of your product or can you do everything where you are based on the locations you have?

Yes, we have a pretty good facility here in west Warwick and if we had to, we could go to a second shift on the instrument side.

In fact, we still have a little room for building expansion here, so we could do that.

But in general, we definitely have the capacity to move quickly on additional new business.

Well, it sounds very exciting, and I think your story has to be told more widely, because the fact to be at a highest backlog that you've ever been, and you seem to be making decisions, you're not -- you do not have the inability to make decisions, and everything seems kind of positive, so good luck and tell the story.

Thank you.

Thanks again, Sam.

We do not appear to have any further questions.

Please continue with any points you wish to raise.

If there are no more questions, Danny, I think we'll perhaps end the call.

Danny.

Yes, sir.

Ladies and gentlemen, this concludes today's presentation.

Thank you for your participation and you may now disconnect.