AstroNova Inc (ALOT) 2014 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by.

Welcome to the Astro-Med, Inc.

third-quarter fiscal year 2014 financial results conference call.

At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session, and instructions will be given at that time.

(Operator Instructions).

I would like to remind everyone that this conference call is being recorded today, Wednesday, November 27th, 2013 at 11 a.m.

Eastern Time.

I will now turn the conference over to Mr. Stan Berger.

Please go ahead, sir.

Thank you, Ron.

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

Thank you for joining us to discuss the Company's fiscal 2014 third-quarter 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 may make forward-looking statements within the meaning of the Securities and 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 risk factors 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 after the market closed.

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 homepage.

Hosting the call today are Everett Pizzuti, President and Chief Executive Officer; Gregory Woods, President and Chief Operating 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, especially on this snowy/rainy day before a holiday.

I will make some brief opening remarks, and then Joe O'Connell will provide detailed financial results; Greg Woods will provide a recap of operations, and then we'll take your questions.

As you read in the press release we issued yesterday, our third quarter was very strong with healthy revenue increases compared to the third quarter of last year.

Additionally, the third quarter reflects a continuation of the progress we have been making all year from quarter-to-quarter, with improvements in revenues, profit margins, and operating margins.

And while we had double-digit growth in both domestic and international channels, we are particularly pleased with the 19.2% growth in international, especially in light of the typical August shutdown in Europe.

Our third quarter, as you know, embraces August.

Our color label printers and consumables sold extremely well in the quarter and beat last year's third quarter by over 17%.

Driving the improvement are the Kiaro!

color label printers and the associated consumables, which include label materials and ink cartridges.

The Kiaro!

is truly a salesman's dream, as it is full of advanced features, it's easy to demonstrate, and it's exceedingly reliable.

Now at the end of the quarter, we made our very first shipments of the new Kiaro!

200 color printer, which can print labels up to eight-inches wide, compared to the Kiaro!

which print labels up to four inches in width.

The Kiaro!

200 is targeted especially for labeling of products sold in large containers, such as chemicals, janitorial supplies, paint, and the like.

This model sells for approximately $24,000 compared to the Kiaro!, which has a price of $99.95.

On the Test and Measurement front, we experienced solid growth in both ruggedized products as well as our data acquisition systems.

The latter had been somewhat affected by sequestration, as many of our data acquisition applications are defense or aerospace-related.

But now there seems to have been some return to spending.

During the quarter, we continued with the Lean initiatives that we started earlier in the year, with one of the primary benefits being a continuous program to drive costs down to improve profitability.

The Lean program is positively embraced by all in our workforce.

Spending was up somewhat in the quarter, as we invested especially in selling and marketing to assure high double-digit growth going forward.

Spending on R&D was also up over last year's third quarter, to support our strategy to introduce several leading-edge new products every year.

The pipeline of new products includes data acquisition, color printers, and Ruggedized Products.

We are also making progress to add growth by acquisition, as we have been mentioning on these calls several times.

We have identified and met with several targets, and are being extremely selective to ensure not only the proper fit, but also accretive financial results right from the start.

Of the targets currently in our sights, there is one that we hope to close this fiscal year.

As of today, we are one month into the final quarter of our fiscal year, and we are optimistic that the positive results that we have experienced so far this year will continue.

Greg will present more color on the operations, but first, Joe will present the financials.

Joe?

Thank you, Everett.

Good morning, everyone.

I'm very pleased to report on Astro-Med's third-quarter financial results for the fiscal year 2014.

As you have heard from Everett and also possibly read in yesterday's press release, the Company had another strong quarter in revenue growth and improved margins.

Net sales in the quarter were $18,179,000, representing a 13.3% increase over the prior year's third-quarter sales, and a 5.7% higher than this year's second-quarter sales revenue.

We experienced double-digit growth from both the Company's domestic customers at $13,198,000, being up 11.3% over the prior-year, as well as from international customers at $4,981,000, over the previous year's third-quarter sales by some 19.2%.

Relative to the business segments, the Company's QuickLabel Systems product group of color and monochrome printer systems reported sales of $12,509,000, achieving a new record in quarterly revenue, and exceeded the prior year's sales volume by 17.1%.

Our Test and Measurement product group of Ruggedized Products and data acquisition systems had sales in the quarter of $5,670,000, a 5.8% increase from the previous year.

Profiling the third-quarter sales by products has the Company's Consumable lines at $9,419,000 in sales, a 19% increase from the previous year; whereas as Hardware sales reached $7,762,000 in the quarter, a 7.2% growth rate from last year.

Our Service, Parts, and Repairs contributed another $998,000 in quarterly sales, up some 13.1% over the previous year.

The third-quarter sales generated $7,362,000 in gross profit dollars, representing a 13.6% improvement from the prior year, and earned a margin of 40.5% in the quarter.

That's against the prior-year's 40.4% margin and our second-quarter margin of 40.3%.

As you've heard, the secondary expenses of selling, R&D, and general and administration were $6,180,000 in the quarter, consuming some $0.34 of the third-quarter sales dollar, and increased over the prior year's operating expenses -- the increased spending being traceable to selling and marketing initiatives including personnel, trade shows, and promotion as well as increased R&D spending.

The Company earned $1,184,000 in operating income in the quarter, slightly behind the previous year's operating income of $1,202,000.

Astro-Med earned an operating margin of 6.5%.

That's an improvement over the second quarter's margin of 5.2%; however, still lower than the prior year's operating margin of 7.5%.

With respect to the segment operating profits in the quarter, QuickLabel Systems earned $1,493,000 in segment operating profit with a margin of 11.9%, while the T&M segment earned $912,000 in segment operating profit with a corresponding margin of 16.1% on sales.

The federal state foreign tax provision in the quarter was $347,000, representing an effective tax rate of 24%, the lower rate being traceable to a one-time tax benefit of $187,000 related to the true-up of our tax obligation from filing our prior year's tax return.

Net income in the third quarter was $1,108,000, or $0.14 per diluted share.

This result was lower than the prior year's net income of $1,307,000, or $0.18 per diluted share.

However, net income in the third quarter from continuing operations was $745,000, or $0.10 per diluted share, slightly below the prior year's third-quarter net income from continuing operations of 749,000, but still at $0.10 per diluted share.

Net income from our discontinued operations was $363,000 in the quarter, or $0.04 per diluted share against the previous year's net income from the discontinued operation of $558,000, or $0.08 per diluted share.

Prior to the review of the balance sheet accounts at the end of the fiscal third quarter, I will provide a quick recap of Astro-Med's nine-month results.

Our net sales for the nine-month period was $50,858,000 with nine months ended November 2, 2013.

This volume represents a growth rate of 12.9% over the prior year.

Sales in our domestic channels were $35,965,000, an 8.6% improvement over last year; whereas international shipments, especially strong at $14,893,000, rose 24.9% from the prior-year.

Favorable foreign exchange contributed 1% to this year's international sales growth.

The double-digit sales growth was shared by both the business segments, with QuickLabel Systems sales at $36,101,000 -- that's an increase of 13.3% from last year; whereas the Test & Measurement segment sales were $14,757,000, an increase of 11.9% over the prior year.

Non-GAAP gross profit dollars for the nine months of fiscal 2014 were $20,062,000.

The non-GAAP represents the exclusion of the one-time costs related to the product replacement.

The $20,062,000 gross profit dollars reflects an increase of 14.4% over the prior year's gross profit dollars and a margin of 39.4% versus last year's 38.9%.

The Company earned non-GAAP net income of $1,591,000 for the nine months, representing $0.22 per diluted share.

In the previous year, Astro-Med earned $2,829,000 in non-GAAP net income or $0.38 per diluted share.

Now for quick review of the balance sheet.

Our assets at the end of the third quarter was $77,768,000.

Our equity balance was $64,555,000, representing a book value of $8.60, slightly down from the year-end.

Our cash and marketable securities position was $32,628,000, representing a slight decrease from the year-end balance.

Accounts receivable at $12,743,000 represents some 53 days sales outstanding, up a couple of days from the year-end balance.

Inventory levels were $15,037,000, representing some 99 days on-hand; again, slightly up from the year-end 82 days on-hand.

Our capital expenditures for the first nine months were $910,000 -- most of those dollars traceable to information technology, machinery and equipment, and some building improvements.

Our dividends for the first nine months were $1,569,000, representing a $0.07 per-share per-quarter.

Our employee population at the end of the third quarter was 330 folks, representing a decrease of 11 people from the year-end.

And our sales per-employee for the trailing 12 months is $217,000 against last year's corresponding $216,000 on the sales per-employee.

That concludes a review of the financials for the third quarter and for the nine months ended.

Thanks, Joe.

And now Greg Woods will present some color on the operations.

Greg?

Thank you, Everett, and good morning, everyone.

Well, as you've heard, it was another strong quarter of revenue and earnings growth for Astro-Med.

The growth was broad-based geographically as well as across our product lines.

And within the product lines, we saw nice growth in nearly all of the market segments where we compete.

The Test & Measurement group had strong bookings of airborne printers throughout the quarter, and we landed several multi-unit orders for our data acquisition recorders within the Ruggedized Products group.

In our QuickLabel Systems group, sales of our new Kiaro!

printer continued to accelerate, driven by a very attractive and active tradeshow season.

Sales were strong both domestically and internationally with our European and Canadian offices, once again, turning in an exceptional quarter.

In addition to increasing revenue, we began to see the benefits of our Lean initiatives positively impact our margins in both business segments.

We continue to drive Lean practices throughout the Company and we have several Lean events in the queue for the coming months.

During Q3, our Lean events were focused on our Consumables production facility, where we manufacture the paper, labels, inks, ribbons, et cetera, that are used in our label and airborne printers.

As we place more and more printers around the world, this drives an ever-increasing demand at our Consumables operation.

Before embarking on our Lean conversion earlier this year, it was beginning to look like we might soon have to expand this facility to handle the increased volume.

However, we are now confident that the Lean improvements we have made to date, together with those that are planned in the coming months, will allow us to handle the increased volume in our existing facilities for at least another year or so.

Last quarter, I mentioned that we had initiated the new stage-gate process to more systematically drive our product development programs.

We are now using that system across the board, and it was put to the test this past quarter as we successfully launched several new products in both business groups.

Backing up those newly launched products is a growing pipeline of future products that are being added to the stage-gate process and being driven by the voice of the customer.

Our channel expansion efforts continued in the third quarter with several new additions.

We added to our direct sales force in North America, Latin America, and Europe, and we added several new dealers in those regions as well as in Asia and Africa.

Now let me give you a little more detail on the individual business segments.

Our QuickLabel Systems business posted nice sales gains on both a year-over-year as well as on a sequential basis.

Demand for our color label printers continues to be strong, especially for the new Kiaro!

inkjet line of printers.

Once again, this quarter, we shipped a record number of these color inkjet printers.

To ensure that we keep up the pace in growing our share of the on-demand digital color label printing business, we continue to invest heavily in both product development and promotion.

During the quarter, we exhibited at 12 major tradeshows around the globe.

This is the busiest tradeshow period for us during the course of the year.

At the shows, we announced and demonstrated five new QLS products, the most notable of which was a new member of the Kiaro!

family, the Kiaro!

200.

This new printer can print labels that are over eight inches wide.

That's double the width of the original Kiaro!

introduced last year.

The Kiaro!

200 was very well-received and we sold several units right off the trade show floors.

Production shipments began at the end of the quarter, and we expect the Kiaro!

200 to make good inroads into the wide prime label market.

Other products introduced during the fall tradeshow season included an automatic cutter attachment for the Kiaro!

and the Lustro-Lam series with the proprietary line of clear label laminators.

The Lustro-Lam process gives our labels a higher gloss finish and also increases their durability for use in harsh environments such as chemical plants.

In addition to supporting the various tradeshows during the quarter, our marketing group created several new testimonial videos that are now posted to our website.

If you haven't already done so, I'd encourage you to visit our QuickLabel sub-website at QuickLabel.com to check out the wide range of customer testimonials in a variety of languages.

While there, you will notice that we have also added a Spanish language version of our website to complement our other foreign language sites.

Moving on now to our Test & Measurement group, we achieved nice growth for both our Data division products and our Ruggedized Products.

In data acquisition, orders for our flagship TMX data recorder were up significantly in the quarter.

Business was especially good in the aerospace and defense segment and the power and utility segment.

The fall is also a busy time for Test & Measurement tradeshows.

Last month, Astro-Med exhibited at the Automotive Test Exposition in Michigan and the International Telemetry Conference in Las Vegas.

We took the opportunity at these shows to introduce a newly enhanced version of our Dash MX data recorder.

The Dash MX is a smaller, mid-level data recorder that allows us to address applications that do not need the full set of high performance features offered on our top-of-the-line TMX recorder.

Based on the many positive reviews received on the new Dash MX, we expect sales of this product to grow steadily over the coming quarters.

In the Ruggedized business, our airborne printer products continue to gain share in all three of our aviation market segments -- commercial jets, business jets, and military transport.

Most of our new contracts are for the latest model, the ToughWriter 5. The ToughWriter 5 is based on a new architecture that provides increased performance and lower overall weight -- two critical factors for the avionics market.

The ToughWriter 5 also has the option of being equipped with secure wireless capability, allowing pilots to print from their tablet computers directly to the Astro-Med printer on the flight deck.

This feature is becoming increasingly popular, as more and more airlines are allowing pilots to use tablets on the flight deck for certain routine tasks.

In addition to the work on the product development front, our engineering teams were busy this past quarter working with our aviation customers on the new contract qualification processes.

As you know, we have won quite a few new contracts recently, and most contracts require some type of custom modification to the base ToughWriter model.

This is in order to fit the particular specifications of each customer.

Once this qualification process is completed, the printers can then move on to the regular production process.

And that's it for the operations update.

Thanks, Greg.

Ron, we're now ready for questions.

(Operator Instructions).

Anya Shelekhin, Sidoti & Company.

Thank you for taking the questions.

(multiple speakers) So, my first question is, could you provide some more detail on international sales?

What efforts have you made there?

And detail into expansion in Latin America, Asia, and Europe.

Greg?

Go ahead.

Yes, sure.

So starting in Europe, as I've mentioned, we've added to our direct sales forces as well as our dealer network.

So, we've added people in, I think, all three offices that we have over there.

So we have offices in the UK; France, in the Paris area; and Frankfurt.

We added direct sales people to all of those locations.

And also we added dealers throughout Europe.

So, the dealers in Europe are managed directly by those area offices.

And then in Latin America, we hired a -- our first direct person, actually, that will be based in Mexico.

And he will cover the area -- primarily, Mexico is the main area he focuses on, but it goes all the way down to Colombia.

We already have dealers there, so his task will be to expand that dealer network as well as to do the direct sales force there.

And then in North America, we expanded our direct selling sales force.

In the US, we use reps.

We added roughly a dozen reps.

And in Canada, we have used dealers; we added a couple of dealers up there as well as a new direct sales person.

And then beyond that, the other areas where we don't have direct offices, we manage that through an international dealer network that's run by a team here in West Warwick.

And they've added dealers, as I mentioned, in Asia, Africa, some Eastern block countries -- that pretty much handle the rest of the world.

Okay.

And at the moment, international sales are about 30% of revenue.

Are you planning to keep it around that level?

Or you expect it to grow?

Well, our general -- Anya, our plan is always to -- then to try to get international sales up at least to 50%.

So, we're at 30% and continuing to drive.

Because we think we have lots of opportunities internationally.

Okay, great.

And the increased sales and marketing spending, in that case, so that's kind of a mix of adding employees and also trade shows and conferences?

Exactly right.

Precisely.

It really is -- as Greg mentioned earlier, it's really to support the expansion of the business, both domestically and internationally.

Okay.

And then final question is, the contracts related to discontinued operations of the Grass Tech --

Yes.

-- contract revenue there.

How long do you expect revenues for that to last?

Is that a recurring revenue stream, do you think, or --?

Well, the rights that we have with them is a TSA arrangement which expires on January 31, 2014.

But they have approached us and we have an extended contract with them for next year, for fiscal 2015, which would be our fiscal 2015.

So -- but that's -- it's on a much reduced level.

As you might suspect, these folks have facilities throughout the globe, if you will.

And they're -- but they're -- so they're trying to move some of the operation.

It's actually taken some of our lines that we manufactured for them this year, and it moved that over to one of their European locations.

So, it's a kind of an operation that's moving away from us, and eventually, it will be -- it will not be an operation that we'll have a relationship with these folks.

So we're just helping them to transition into their own manufacturing facilities.

They do a lot of -- they have a facility, for example, in Ireland, where they make a lot of their disposables, such as electrodes.

So they're transferring the electrodes that we used to make for them to that Ireland plant.

And so that will continue next year.

So, we do not expect that part of the business to continue.

It's going to decline as the year progresses.

Exactly.

Okay.

And final question is, how many -- could you give me the exact number of how many salespeople you added in the quarter?

We wouldn't release that exactly, but (multiple speakers) it's less than 10 -- but close.

And that's for direct.

The dealers and the reps is a much higher number.

Exactly.

Thanks.

I'll step back into the queue.

[Samuel Koenig], Delta Analytics.

(multiple speakers) Congratulations on a pretty good year growth quarter.

Basically, I wanted to ask you a couple of questions.

You mentioned, first of all, that the target closing within this fiscal year, are you talking about the fiscal year or are you talking about the year end of this year?

And can you elaborate a little bit about that?

Yes, well, we certainly, Sam, don't want to compromise any negotiations that we have in the works right now, but when I mentioned this year, I meant our fiscal year.

So that would be by January 31.

Right.

And is it a sizable or smaller type of a target?

Well, again, since we're in the midst of negotiations, I think it would be -- it's too delicate a question for me to answer publicly like this.

I understand.

The second question I wanted to ask you is -- and then I have a third question -- is that, in regards to a buyback, okay, what have you authorized in terms of a buyback previously?

And what have you accomplished on the buyback so far in the last quarter or the last nine months?

Well, we haven't done any buybacks recently, Sam.

But we have -- the authorization is 392,000 shares that we could buy back.

We have, really, since 1996, we've bought over 1 million shares, but we have not -- more recently, we have not been in the market buying Astro-Med shares.

My final question I wanted to ask you gentlemen is -- besides wishing you all a very happy holiday -- is in regard to the deal with the GT division, that will close in January, correct?

Yes, the final event should take place as of January 31.

Right.

And then what will be the proceeds, approximately, for that to the Company?

Well, the things that are (multiple speakers) --

The inventory, I mean, approximately.

Yes.

Approximately we have about $1.8 million in escrow, so that will come back.

And then at that -- on January 31, the Natus is to buy the inventory for their products that we're now holding for them.

And that inventory is about $3 million, in that range.

So it will be a total of $4 million -- $4 million to $5 million you expect to get for, in total, in January?

That is right, Sam.

And that hasn't been accounted in any of the previous -- have you accounted that previously in the (multiple speakers) --?

No, it has not.

All right.

Gentlemen, thank you very much.

I appreciate it and all the best to you.

All the best to you, Sam.

Steve Busch, Southpaw Investments.

Thanks for taking my call.

(multiple speakers) I hopped on a little bit late, so I apologize if I have some questions that I may have missed, but on the financials -- maybe, Joe, this is for you -- we had sales up about $2 million versus last year same quarter; expenses up about $1 million.

Does the sales number include the Grass?

It doesn't, Steve.

It actually does not.

What we do on a GAAP reporting basis, you've got to take the sales out and actually what you do is report just the net number.

You'll see that on the press release which is discontinued operations.

Well, I saw it on the earnings -- so I guess my question is, so our earnings were about flat even though our sales were up quite a bit?

Right, that is correct.

And in fact, I think you see that right in the EPS where we break out the EPS between discontinued and continued operations, Steve.

Right, exactly.

I just wasn't sure about the sales parts.

So (multiple speakers) --

(multiple speakers) Sales do not include any Grass Technology numbers.

Right.

So $0.10 versus $0.10 on a much higher sales number, do we expect it to be able to generate more earnings from our sales going forward?

Or we had some expenses that were kind of one-off, or --?

It's really the -- it's more the latter than anything else as you heard.

We're due to invest some additional expenses going forward in anticipation of the continued growth.

I think you will see -- on a go-forward basis, you will see a continued improvement in the margins.

I mean, our goal is really to get the operating margins up to 10%.

Obviously, we're still a good distance from there.

But I think the strategic plan we put together and the capabilities we have with product lines, I think are going to allow us to get there in a relatively short period of time.

All right.

So would we expect year-over-year earnings growth going forward?

You should.

Yes, that's correct.

Although I think you will have some -- yes, that's correct, Steve.

You will.

I think, in fact, if you look at -- it's always a little challenging when you have this discontinued operations.

Even on a nine-month basis, when you break out the numbers, the continuing operation is about flat with last year.

Obviously, the Grass Technologies was a significant contributor to the Company's profitability historically and certainly in fiscal 2013.

Right.

So in terms of the airline printers and pilots being able to print to their laptops or whatever device they have with them, is that going to affect, do you think, dramatically our papers sales?

Or just kind of a small thing right now?

Well, we are selling paper for our printers that go into the cockpits and cabins, but we're also selling paper for other brand printers that are currently flying in aircraft.

So we expect the paper business to go up.

Yes, the paper that -- you may have read about that we're moving paper from the cockpit, quote/unquote -- that refers to the flight manual.

I mean, pilots used to carry these big extra kind of rectangular bags that had six, seven, eight manuals in them.

That's what they've put on the iPad now.

(multiple speakers)

(multiple speakers) Oh, I understand that, but you're saying they can print --

(multiple speakers) What they'll tend to do is --

You're saying they can print out the flight plans now onto their iPads?

They could -- it depends on the airline what they allow them to do, but it could be flight plans; it could be technical data; it could be airport diagrams.

So, things that used to be -- they have -- every airport diagram in, let's say, North America takes up four or five volumes of books.

So they can put that all on an iPad and just print the ones they need for a particular flight.

Oh, I see.

Okay.

All right.

No, that's great.

You guys are doing a great job.

So, I'll just say Happy Thanksgiving and have a good weekend.

Thanks, Steve.

(multiple speakers)

(Operator Instructions) Ronald Cohen, private investor.

(multiple speakers) And great job with the quarter.

I'd like to know have you guys had any discussions about raising the dividend currently?

Well, Ron, that comes up regularly at all of our Board meetings.

We always discuss everything that's looking for the shareholders' benefits.

And we're not -- that's not on our agenda right now to do anything with the dividend.

The cash that we have on-hand we're preserving so that we can really grow the business, and continue to grow it at high double-digit rates.

And so we're going to use it for organic growth internally, as well as for these acquisitions that we've been talking about for a year now.

So, we're going to put it to good use to enhance shareholder equity, but we have no plans to -- for any handouts at the time.

My next question is, you say you're in the market to make an acquisition.

Do you know the size -- could you disclose the size of the acquisition, as far as the value of the company, what the gross sales would be of the company that you're currently looking to acquire?

Yes, well, as I mentioned on an earlier -- an answer to someone else that asked a similar question, Ron, since we're in the midst of negotiations now, we really have to remain silent on that area.

We don't want to compromise what we're doing at this point.

So -- again, we're hoping to announce something by January 31, but right now, we're certainly in a quiet mode.

Okay, I understand.

So currently, we have roughly $33 million -- well, let's just round it off -- we have approximately $35 million in the bank.

Is that correct?

A little less than that; we have $32 million.

Okay.

But we also have -- I was listening to the other participant -- he quoted -- he asked how much other funds would Astro-Med get from the sale of Grass, which was another number that we can probably bank on.

So that would bring us up about $5 million.

Is that correct?

That's -- a little less than that, that's right, Ron.

So, don't you think it'd be prudent to do what we did last year, and maybe talk to the Board about paying a special dividend year-end to increase the shareholder value?

Well, again, Ron, as you know, we had our Board meeting on Monday of this week.

And as I say, that is always part of our conversation.

And it was determined that this is not an appropriate time to do anything.

Okay, because of the acquisition negotiations?

Right.

Right.

All right.

I had no further questions.

I appreciate the opportunity to ask questions.

And I think you guys are doing a really good job.

Thanks, Ron, and have a good holiday.

Okay, you, too.

Steve Busch, Southpaw Investments.

Yes, so I may have missed this -- but in regards to the potential upcoming acquisition, is it still the concept of you guys to make sure it's accretive from day one?

Or is it one or two quarters out?

No, we're looking for something to be accretive immediately, something that we can fit right into our plant here without any duplications anywhere.

It's been very (multiple speakers) --.

Can you comment at all on potential earnings add, if it were to complete?

It's too early, Steve, to be honest with you.

I think it would be premature.

As Everett mentioned, we're still in the negotiation stages at this juncture.

Right.

Okay, understood.

Thank you.

And there are no further questions at this time.

Please continue.

Okay.

If there are no further questions, we want to thank you, everyone, for attending.

And we'll see at the next conference call in March.

Ladies and gentlemen, that does conclude our conference call for today.

Thanks for participating.

You may now disconnect your lines.