P&F Industries Inc (PFIN) 2021 Q4 法說會逐字稿

Good day, and welcome to the P&F Industries, Inc. 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Richard Goodman, the company's General Counsel. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to P&F Industries Full Year 2021 Conference Call. With us today from management are Richard Horowitz, Chairman, President and Chief Executive Officer; and Joseph Molino, Chief Operating Officer and Chief Financial Officer.

Before we get started, I'd like to remind you that any forward-looking statements discussed on today's call by our management, including those related to the company's future performance and outlook, 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, risks related to the global outbreak of COVID-19 and other public health crises, risks associated with sourcing from overseas, disruption in the global capital and credit markets, importation delays, customer concentration, unforeseen inventory adjustments or changes in purchasing patterns, market acceptance of products, competition, price reductions, exposure to fluctuations in enterprises, the strength of the retail economy in the U.S. and abroad, risk associated with Brexit, adverse changes in currency exchange rates, interest rates, debt and debt service requirements, borrowing and compliance with all -- sorry, with covenants under our credit facility, impairment of long-lived assets and goodwill, retention of key personnel, acquisition of businesses, regulatory environment, litigation and insurance, the threat of terrorism and related political instability and economic uncertainty; and business disruptions or other costs associated with information technology, cyber attacks, system implementations, data privacy or catastrophic losses and as other risks and uncertainties described in the reports and statements filed by the company with the SEC, including, among others, as described in our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q and our other filings.

These risks could cause the company's actual results for future periods to differ materially from those expressed in any forward-looking statements 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 all so much for being on the call with us today and joining us for P&F's results for the full year of 2021. Hope all of you are doing well as the country and the world are trying to exit the ill effects of the global pandemic. Our thoughts and prayers go out to those who have lost loved ones due to this deadly disease. Further, our thoughts and prayers go out to the victims of the current crisis occurring in Ukraine. May it soon come to a peaceful solution.

During 2021, P&F continued to encounter the ill effects of the COVID-19 global pandemic. The areas in 2021 most affected were the inability or extreme limitation of our sales force, which was -- when they encountered their efforts to gain on-site product presentations, which in particular hampered the growth of our PTG or our gears business. The supply chain disruptions which caused major delays in receipt of much needed inventories as we all see every day in the newspapers. And lastly, the excessive cost incurred in connection with the supply chain delays.

I would like to direct you to -- your attention to the company's press release that was released earlier today, which includes the company's December 31, 2021 balance sheet, statement of operations, statements of cash flows and discussion related to the company's results for full year 2021 and how they compare to the full year 2020.

In order to make better use of everyone's time today yet be mindful of the purpose of this conference call, I would like to remind all of you of the following procedures that have been in place for quite some time now. First, as we have done for several previous conference calls, and has become our standard practice, we will move directly to a question-and-answer session and not restate what is already in this morning's release.

Secondly, and please be aware that we will only be answering questions directly related to the company's results of operations and financial condition. We must insist that you adhere to this procedure. Management will not be entertaining any questions that go beyond the scope of this call. And then with that, we would be happy to answer any pertinent questions anybody may have.

Operator, you can open up the question line.

(Operator Instructions) And we'll go to our first question from Andrew Shapiro with Lawndale Capital Management.

Can you hear me okay?

Yes, we hear you fine.

Awesome. So I have to -- it's unfortunate, but every fourth quarter I kind of have to ask this. Your Board of Directors, I'm sure you guys prepare for them, the results for the fourth quarter ended December in addition to the annual. But your press release repeatedly each fourth quarter doesn't include that breakout, and I don't understand why you can't provide that to shareholders as well in your press release. And I respectfully ask you guys do that going forward. But of course, we'll wait 3 more quarters to get the same thing. Is there a reason you can't or you don't provide the fourth quarter numbers?

Andrew, it's not required. It's certainly a lot of extra work. And by the way, we don't prepare something like that for the Board of Directors, to my knowledge.

Your Board does not want to look at how the quarter's performance is when they have their quarterly meeting?

We look at the whole year and they can do math if they'd like.

So you make them do the same reverse engineering that we have to do as shareholders. Is that correct?

They're more concerned about the full year results.

Okay. Moving on to the questions from what I could see. So a few questions regarding the kind of the COVID-19 impacts to know where things stand this last quarter as well as where we stand now here in at the end of March, so another full 3 months after. For what part of the quarter, if any, were you able finally to conduct on-site visits with current or prospective customers for Hy-Tech PTG as well as your existing North American aerospace like Boeing and its suppliers as well as prospective overseas aerospace customers like Airbus? I know you cited here that there's still difficulties, but to any extent of the fourth quarter, were you able to conduct any on-site visits in either of those 2, I guess, industry groups and customer groups?

It was very, very sporadic, very sporadic, and it depended on the area that the company was in, the geographic location of it and what their COVID case load was like at that time. Boeing, specifically, really did not and still really does not take customers -- vendors too much. Sporadically, we can. And Airbus has not opened up yet, but they momentarily claim they're going to be.

Okay. And then on PTG, were you able to get into some or not?

Yes. We got into some customers and other customers we couldn't get into. It was very sporadic. Nothing...

Okay. And then from the end of the year, fourth quarter, and basically until this week, basically, much of the first quarter, have things improved further?

They've improved, I would say, slightly, but not -- if you're referring to Boeing and Airbus, the answer is no, really. But the others, we're seeing customers are now with the new Omicron variant that, that seems to be gaining a lot of steam in Europe and other places, it's becoming -- it's on everybody's mind again, sorry to say.

Right. Okay. Because it's been pretty highly publicized how -- while Boeing is nowhere near the production rate they were at before the 737 grounding, that the production rates have greatly scaled up and are scaling up and that there has been publicity about how Boeing needs its suppliers and others to step up, and there's concerns whether they can. So with that kind of sentiment, are you (technical difficulty) get its vendors, and we're pretty much like a supplier to vendors. You're supplying tools. You're not really supplying the airframes themselves. But are they giving indications of opening up or wanting you to start focusing on being ready to supply them?

First of all, our people who are on the ground there in such -- or in the factory are saying that the numbers that are being released publicly, we just heard this last week, are not even close to what they actually are at Boeing, not even close is what they're telling us. I don't know where those numbers come from. I can't tell you that. I read the same numbers you do, and we all kind of thought it was going to get better. But that's -- it's not to those levels yet. Am I right, Joe?

Yes. It's unclear. No, but you can't really get a straight answer about what the actual production level is per month, but we do feel it's below what's been publicly stated.

Okay. And where do operations with respect to any supply chain disruptions currently stand? Are you seeing any improvement in the situation?

Not at all. Not even a little bit.

No. And again, the issue is not much production at the plants overseas. It's getting it from the plant by truck to the port, getting it on a port, a boat, finding a boat, the boat leaving on time and then the boat not being delayed at the 3 or 4 other stops along the way between Shanghai and Miami. So no, it's not better.

I mean we're dealing with it as best as we can, like every other company. And let's not even -- let's not forget talking about inflation, the pricing and all that stuff that goes with it, from the shipping to the product itself. It's an enormous challenge every day between getting the product and -- getting the product and getting the right price for it, which is impossible actually.

Right. And a related question here on the inventory you built up to increase your safety stocks. Am I correct that this is mostly finished goods at Florida Pneumatic against regularly stocked items?

That is correct.

And do you feel the company is now at desirable levels? And have the out-of-stock problems been addressed?

Again, there are several items that are out of stock, and there are others that we have an abundance of product. Joe, anything you want to add to that?

I would say we're at least a month or two away to the point where I feel like we're fully stocked.

Okay. And regarding the large late 2021 order you also built the inventory for, am I correct to assume it's in Florida Pneumatic as well?

Yes. It's -- the bulk of the buildup is Florida Pneumatic.

Yes. And can you clarify the timing of when you book revenues and the receivable for that order? And it's the end of March. Has this late 2021 order shipped out? Or what is its status now?

It has not shipped yet.

Okay. And when you book revenues in the receivable, it's not booked until you ship. Is that correct?

Correct.

We'll go to our next question from Timothy Stabosz.

I own 4% of the company and back in on the conference call here. Happy new year to everyone. I wanted to start by asking an earnings-related question that's kind of a 50,000-foot level question. And that is you guys have done a lot over the last several years to remake the company. You sold divisions, you've acquired things. You've got a vision and a strategy, it seems to me, with regard to the -- who you want to service and what you want to do. And you've been hit by unfortunate headwinds on oil with the insane volatility over a number of years here of yo-yoing cycles and, of course, [AIR MAX.]

My question for you is, how do you feel about -- it's not shown in the numbers, obviously, but how do you feel about what you've been doing to when you look at P&F now versus a decade ago when you were baseboard (inaudible) what we were doing a long time ago, how do you feel about what you've been doing to try to give you a credit for -- I want to hear in your own words, obviously, like where the company is going and these strategies and that they will pay off and you believe in them and where we're going from here. Because you haven't been really credited, obviously, in the numbers, but I kind of want to hear you say that the shareholder base sees presumably the value I see in the stock. Where we're going and what do you think. So it's -- can you speak to that?

Tim, I'll -- this is Joe. I'll try. I would agree that we've had to pivot a little bit. We've been in the tool business for a long time. And for a very long time, at least on the Florida Pneumatic side, there were various distribution channels that were the way that you got the product to market. And what we started to see, especially with respect to the automotive, was that the younger mechanics text, were more and more comfortable with their iPads and their iPhones. And instead of entertaining a van from one of the big distributors like Snap-on, they were getting more and more comfortable with the Internet and ordering products directly. And we've had a big shift in that business. We've had growth overall, but more importantly, a shift away from the traditional channels into more online, both through Amazon and several large distributors who are also very large online.

So we saw that, and I think we were out in front of that, frankly. And don't quote me on this, but I think in 2020, we had the most popular tool, the most popular 0.5-inch impact sold on Amazon. And we're up against some pretty big players. So I feel very good about that move. And where we didn't have the expertise in that marketing, we brought some people in to help us. And I think we did -- they did a great job with that.

And then on the Hy-Tech side, I think the big pivot, which maybe you're alluding to was, historically, the business was built on large impacts targeted towards oil and gas and general construction, and it was a distribution push model. And that was becoming more and more difficult as we were starting to see the encroachment in that business from Asian imports and as well as just kind of a general shift away from the standard model impact wrench that was more popular moving to more torque control tools and hydraulic tools.

So we took a look at what we were good at, which was engineering and reverse engineering and development and in the airspace and said, "Hey, we can use that brain power to try to go after what we call OEM business where we use our understanding of air power and while we're not selling necessarily an air tool, we're selling something that's an air-powered product or gearbox or something inside of a larger product." And then from there, we've seen an opportunity, what I see as a tremendous opportunity in gears in general nationwide.

There's a very fragmented market for years in the U.S., and that market is very, in my opinion, a good chunk of it is very insulated from foreign imports, and we've seen an opportunity to go out and acquire a number of smaller competitors, and there are many others out there, not just in the East but in the South and the Midwest. And without necessarily signaling exactly our intention, we think there's a lot of runway for us to build quite an operation nationally in the gear business.

So we've increased the breadth of products we offer. We've doubled, even tripled the number of engineers involved in that business, and we're starting to see some real -- we're starting to get some head turns from some very large companies that buy gears because they're used to dealing with $1 million and $2 million companies, and now they're dealing with much more sophisticated entity.

So we're very excited about the future there. And again, that's a big pivot. Ten years ago, we were selling 0.5-inch impact, so that was 90% of the business. And that business isn't there anymore for various reasons. So we've had to move on. And we still sell plenty of 0.5-inch impacts and 0.75-inch impacts. But there are other places now to make money.

And I'll make another mention, the Hy-Tech company, we turned the company totally in a different direction. And so now we get these emails from time to time from people about the Baker Hughes Rig Count, et cetera, et cetera. That really has very, very little to do with our business anymore, very little. We still sell it, but it's not the tail wagging the dog. So anybody who's on this call that does that should understand that.

Okay. I'll get back in the queue. Suffice it to say, I really appreciate that color. Suffice it to say, I presume that you still believe that this strategy is something that can earn well into -- not asking for earnings projections, but are well into a double-digit return on equity, right? Is that fair?

We can't say that.

I can't give you a prediction of return on equity, but I can -- I believe it's the best return for the shareholders the direction we're going, given the skills we currently have.

(Operator Instructions) And we'll go next back to Andrew Shapiro.

Okay. A follow-up on getting a little more color here on the gear products. Are there -- right before the pandemic hit, literally the week of, you guys were moving in the equipment from your multiple quality gears entities acquisition. Are there aspects of your strategic goals and expectations for that acquisition that continue to lag as a result of COVID that you foresee still an opportunity for the company? And can you discuss also the integration of the recently announced Jackson Gear acquisition into PTG and discuss some of the strategic benefits and synergies you hope to achieve with that acquisition?

Sure. I'll go first. To your first point, yes, we were moving the equipment as the pandemic hit. And we -- that is a business that is incredibly reliant on engineers sitting around the table, discussing some part in front of them or a gearbox or a system. And while you can maintain business without that face-to-face contact for the most part, there's always some attrition, it is incredibly difficult, if not impossible, to grow the business without that contact.

And it's certainly better than it was for the last 24 months. But I think in 6 months, it will be better than where it is. So we're not quite at the point where we've unfettered access to everybody, but it's absolutely better. And I see no reason why it won't get better. And to your -- alluding to the question, yes, I think there's a lot of opportunity yet that we have not taken advantage of because of the lack of being able to visit.

And then you were asking about the integration of the newly acquired Jackson Gear. All the equipment has moved for the -- I believe all the personnel has been hired to absorb that. The factory is set up in a way that we're comfortable with. There was a fair amount of electrical work that had to be done. We did have to take -- we did need to take a little more square footage. As I mentioned earlier, we beefed up engineering, so we've actually added more space for engineers.

I would say we're still training some people -- the one -- there were several nice things about this action -- acquisition, one that was very nice was that while the gear is being manufactured by Jackson, we're certainly on the larger side than our -- than the highest end of our production capabilities. The skill set and the machines are quite similar and in some cases identical to the ones we were already using.

So the learning curve was pretty small for our experienced machinist. For the newer ones, they're learning gear cutting from the beginning, but -- so that's really helped a lot. In terms of milestones, and this is my opinion, I think it will be a lot more reflective of opportunity in Q2 than Q1. And I think Q3 is probably really when we get the bulk of the benefits, although, frankly, I think with each passing quarter, we'll do a little bit better. But it's -- Q1 is still transition. Q2 is better, and Q3 will be the bulk of the benefit. That's my opinion.

And about how large was Jackson Gear? What was its revenue base that you acquired?

We didn't disclose that. But I would say that it provided a significant increase to the current revenue levels of quality gear in PTG.

In a relative sense.

In a relative sense.

So we'll start seeing that in the March quarter results since you closed this acquisition in middle of January, right?

You couldn't -- you can't annualize March. It's a [prediction,] but you'll absolutely -- you won't miss it.

Okay. And in terms of your capital allocation priorities and such, given the still strong balance sheet and the income the company generated this year and your prospects, I'm just wondering what metrics, what factors has the Board communicated or determined they are waiting for before restarting the company's modest dividend. What's the time line for the company to consider reinstituting the dividend?

Andrew, all I can tell you is -- and it's like a broken record, you talk about this every single time. And I can promise you and assure you that it is on our agenda every single time we meet. We don't need your prodding. We appreciate your concern and your interest, but we don't need your prodding. We've been doing a...

I think my question is pretty specific. What is it the Board is waiting for?

Let me answer the question. Let me answer the question. When we discuss it at the Board, we discuss it with the bank agreements, with our own capital needs, et cetera, et cetera. And I promise you, I'm the biggest stockholder. I would be the biggest beneficiary of it. And when we can do it, we will do it. When we feel it's something that's sustainable, we will be having a dividend and there's nothing more I can really get any more color to it. I can only tell you that we understood the benefit of the dividend way before it was brought to our attention by anybody else, and we instituted it when we did. And we understand very, very well how we would help the price of the stock. And I promise you, as soon as we feel that we can -- that the company is in safe enough position, that we can have a sustained dividend, not a onetime dividend, a sustained dividend going forward, we will be having it when that time comes.

Do I think it's in the foreseeable future? If you ask me my opinion, I would say, yes, but I can't pinpoint a time for you any better than that. So I appreciate your interest and your concern on it, but I don't know how else to answer the question for you. But I promise you, we -- without your questions, we discuss it very, very regularly.

Correct. And my questions are asking for what the factors are that you guys consider, and I don't know -- I don't see that -- you don't need to bark at a shareholder for it and show disdain for your shareholders.

I'm not barking at all. I'm not barking. I'm telling you exactly where it is. And we discussed -- I said -- Joe, you can add any other color that you'd like to it if there is, but we -- when we look at -- we look at everything, we just don't look at our shareholders, we look at our operation, which is more important because without our operation, the shareholders don't have much to do. So as long as we know the company is in good stead, that's when the stockholders, all of us included, will get the benefit of it. Joe, you might add anything to that? Go ahead, Andrew.

Go ahead, Andrew.

With respect to the press release discussing some CapEx, it seems like there's a decent amount of things on your plate for CapEx for the year. Can you give a little bit more color on the big items here that are planned and what the benefits you see come from there?

Andrew, I don't -- I mean I know there's a couple of decent sized pieces of equipment we're looking at, really nothing unusual. And also bear in mind that a lot of our CapEx, don't quote me on the percentage, but it could be as much as half, is

(technical difficulty)

if you're asking me, are we buying 3 big [B&C] machines and that's the bulk of it, it's not, it's nothing like that.

No, but are you adding new capabilities or this is mostly replacement?

(technical difficulty)

Hello, you're cutting out, or are you gone silent? Hello?

Please stand by.

No, I'm here. We can't hear you guys.

You can't hear us? Can you hear us now?

Now we can.

Okay. Not sure what happened.

Where did we cut you -- where did we get cut off, Andrew?

Pretty much on any explanation on if you're enhancing capabilities or this is more maintenance CapEx, to understand maybe if there's payback and enhanced cash flows and earnings to be expected from the CapEx expenditures.

I would say it's 3 things; it's maintenance, it's tooling, which is continuous as we bring online new products; and there are probably a couple of pieces of equipment that would be there to try to increase efficiencies. I think as we start to get our arm around the Jackson customer base, we may see some opportunities that we hadn't identified prior to the acquisition to create some efficiencies.

So I would say it's those 3 things. I don't think it's any new market or anything like that. So it would be those 3 things, just maintenance, tooling and then some pieces of equipment that can help us improve efficiency.

Okay. And also tracking other big things here is what is the size and the status of your Q4 refunds you expected? I'm assuming that is the ERC, the employee retention credit, that sizably hit this quarter. And can you quantify that? And is that the sizable jump that we see in the prepaid expenses? And have you since received the payment? Or when do you expect to receive that payment?

All right. So to answer your question, no, we haven't -- the jump in prepaid is related to that. I mean what you'll see also is if you see what our income for the year, now this is GAAP, not tax, but we're showing very little tax expense in relation to the reported profit. So we have -- we had a number of NOLs that were available to us so that we weren't showing 26% tax expense on that $2 million gain. So there is a refund due on the 2020 filing, which we have not received yet, and we don't know when we're going to receive it.

So that's 2020 income tax coming back from the NOLs.

Yes, refund income tax.

From the NOLs?

Yes.

And then with respect to the employee retention credit, which is a sizable amount that you've listed here, were those taken concurrently? Or is that another check you expect to get in?

There's no other check. It's just a check we aren't paying. As I said -- well, okay. So I'm being reminded that, yes, so we've got -- I'm confusing you. So we've got the NOLs, which is due, hopefully, in the next few months related to the 2020 return. Then we have the tax benefit related to now recording that expense, which we would expect we're going to get that back sometime in '23. But that's what we're being told.

2023 or this calendar year?

No, let me just -- okay, so the 2020 return generated like $1 million in refund. That's going to be coming in the next few months. We don't know exactly when. The 2021 return, where we filed -- where we got this employee retention credit, would be generating something like a $2 million refund, but that's not to be expected -- so we've been told by our tax people not to expect that in '22. It will be hopefully early '23. We don't know when.

Yes. No, they take a long time on the ERC.

That is cash flow. It is due to us and on the way, hopefully, from the government.

Okay. Well, $3 million approximately from those 2 things. That's a $1 a share in cash.

It is.

Yes. Okay, that's nice to know. And we'll ask about it periodically if -- as you get visibility on the timing of that. Your press release made no mention of any current shares outstanding number or even the one used for EPS calculations. So all we have is the prior 10-Q to go off. So can you provide us with a more current outstanding share -- a fully diluted share count?

It's unchanged, Andrew.

Okay, so we're dealing with about $10.50, frankly, more than $10.50 a share in tangible book value and almost $14 a share in book value of share then, give or take.

Yes. I haven't done that math lately, but yes, that sounds about right.

Okay. And you guys obviously feel our company shares are undervalued. When do you feel it would be appropriate for the company to spend any time in addition to these quarterly calls articulating the company's investment proposition via incremental and they have these virtual things where you wouldn't even have to leave the comfort of your couch to do a little bit of Investor Relations activity.

Well, as we've said before, we've looked at that periodically. Given the trading in the stock, everyone we've spoken to about that said that it's just not a good use of our resources. We always consider it.

Yes. It's a chicken and egg issue. If you don't tell your story and articulate it beyond these wonderful calls, and you...

But Andrew, we can't create shares. We can't create shares.

No, that is true, you cannot create shares. But if you create interest for shares and your stock doesn't appear to be a roach motel where you can get in but can't get out, you will have enhanced trading liquidity and you'll have a higher price, which will generate even more trading liquidity. It's again a chicken and egg issue.

Okay, we understand. Thank you.

We'll go to our next caller, Timothy Stabosz.

You're not going to believe this, but I actually disagree with Andrew on this one. I don't think that -- I mean Investor Relations is a good thing, and P&F has always needed more of it in my opinion. So I agree with him on that. But where I disagree is I don't think there's enough of the story to tell yet. You've got to start getting some traction profit-wise and showing that this is a growth company, the strategies are working. So I agree with the management on this one that more heavy-hitting Investor Relations efforts are probably not quite -- we're not quite there yet.

So that having been said, I appreciate the discussion around the dividend and the willingness to give some color on that, Richard. Obviously, buybacks have been significant. Strangely enough, you bought shares back from this shareholder years ago. I believe you bought it back from Fidelity, and accounts going down from maybe $3.6 million, $3.7 million down to $3.1 million, that's -- with the asset value underlying the company, that's been a way to increase shareholder value.

I do think that -- I did actually, to be honest with you, text Mr. Shapiro this morning saying where are the Q4 numbers because I'm kind of reacquainting myself more deeply with the company as I've bought shares in the last few months. I did want to second the notion that -- and very respectfully, that I am not aware of a public company on NASDAQ that does not like actually release its Q4 numbers. So while I do appreciate and have some level of respect of the desire to perhaps keep costs down or something, from an Investor Relations standpoint and a broadening of the shareholder base, to be a company that doesn't actually release Q4 numbers is very damaging to the ability to broaden the shareholder base.

And I really would encourage the Board as they listen to this call, and management to start releasing those numbers and to spend that money and put that out because you might as well not even be public. It's just -- so I just wanted to put -- make that point out there.

All right. Thank you.

And we will go back to Mr. Shapiro.

Great. On a pre-pandemic call, you said progress was developing for AIR CAT in addition to aerospace tools for distribution opportunities in Europe and, of course, the pandemic hit. But Europe is reopening. Where do those efforts stand? And is the new market share and growth still on the horizon for this company in Europe?

Yes. You mean the AIR CAT? By the way, Europe is shutting down, it's not opening up, from what I've been reading, more and more. But having said that, our people are telling us that they are having the availability of more on-site visits in some of the European countries now. And it's been going on for, I would say, 60 days or something like that, and the numbers are starting to show that improvement in that regard. Is that the question you were asking?

Partially, yes. It was AIR CAT and aerospace. You were going to give...

We mentioned that AIR CAT is not open yet. I think we mentioned that earlier in the call. They claim it's going to be momentarily, but we have not been told that -- I mean, Airbus.

You mean Airbus?

Yes.

Andrew, I will share this. We now have a warehouse in the EU in Germany, where we stock some AIR CAT, some UT and actually even some Hy-Tech product. And we did that because what we were seeing after U.K. left the EU, it was becoming cumbersome and difficult for our customers to work with us. So we've opened up a small warehouse that's managed by our German Head of Sales.

Okay. And regarding the tools, can you provide an update and some more color on your developments of the cordless models and the types of automotive and nonautomotive applications for which our company is developing the cordless models in each of Hy-Tech and Florida Pneumatic? I think, on prior calls, you said that in the beginning of this year, there would be more information on that.

With respect to automotive, we currently are not working on any cordless product. We have some development going on in some other areas, which I'm not going to get into a lot of detail, but it's been challenging. There have been some supply chain issues and development has been difficult because as you may or may not know, that technology is tightly controlled by 3 very large companies. So getting into that has been a little more difficult.

We've been more successful at working with other companies that have some battery technology already and seeing what we can do to add on to their system as opposed to just starting from scratch and developing our own cordless tool. But there is some of that still going on, but progress has unfortunately been held up a bit.

Yes. And regarding your new products and experience so far in the Hy-Tech OEM engineered solutions, which you again stated that you are emphasizing versus ATP, are there any particular areas, industries or products worthy of any [collaboration.]

Well, I would say that with the addition of Jackson, we're now into a few other markets that we weren't necessarily into before. We're much bigger into mining than we were. And I don't -- I'm not talking about mining for coal, although there is certainly some of that. It would be mining for other metals, both rare and not so rare. And there are opportunities, both within the tools themselves, the machines that are involved in mining, all sorts of production equipment involved in mining that we're seeing. So mining globally is now a much more important part of our business than it ever was.

Okay. And the spray gun tools had enjoyed substantial year-over-year increases for many quarters. Are such sales beginning to run up against tougher comps? And do you see this business just leveling off or scaling down?

Yes. The answer is yes, it's scaling down and a sort of new level -- new lower level than it was, without a question, without a question.

I think it's higher than it was pre pandemic, but lower than the peak of the pandemic, I think, that's how I would describe it.

I would agree with that.

Okay. And has the Amazon channel, I think you've stated has continued its growth, am I correct? And have you seen channels other than Amazon exhibit increases yet?

Other digital channels, Internet channels? I'm not sure what you mean.

Well, I mean, you have your direct to Home Depot, you have your, I guess, other branded and you go through Amazon. But you've had catalog, Grainger. You've had other channels that were meaningful before. Is your Amazon growth at their expense? Or have you seen these other channels exhibit increases yet from the -- post pandemic?

Again, Amazon is almost exclusively automotive. We do sell a few industrial tools there, but it's automotive. And as I said earlier, it absolutely is at the expense of other channels. So I don't know if that answers your question.

(Operator Instructions) And we'll go again to Timothy Stabosz.

I did note in the earnings release, the concluding statement, Richard, that our goal has always been to serve our customers while improving shareholder value. Interestingly enough, 20 years ago, it was March 29, 2002, the stock was trading at $7. We've gotten about $1-plus worth of dividends, stock's $6 now. Basically, the shareholders have been flat over 20 years. Can you give us reassurance on how the next 20 years may be, and why it would be different than the last 20 years?

Tim, I don't have a crystal ball. I can't possibly answer that question. I'm really sorry. I'd be happy to answer any questions you have that I can have a full -- I can't -- in this world, I can't -- we can't look more than 3 months ahead, how can we look 20 years ahead?

Is there any context to the fact that the shareholders haven't made anything, the fact that you've taken about $25 million out of the company over the last 20 years?

I don't understand your question, Tim.

(Operator Instructions) And it appears there are no further questions at this time.

Okay. Well, thank you all for being on the call today with us. And we look forward to speaking to you in May for our first quarter 2022 results. Have a good day all, and everybody, please stay safe. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.