Park Aerospace Corp (PKE) 2011 Q3 法說會逐字稿

Good morning. My name is Eric and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Electrochemical third-quarter 2011 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. At this time, I will turn the call over to Mr. Brian Shore, President and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, operator. This is Brian Shore. Good morning, everybody. Happy holidays. I have with me, remotely, anyway Dave Dahlquist, and Dave is the Vice President and CFO of Park.

I just want to give you a little heads-up. Dave and I are not in the same location, which is a little unusual, so bear with us if it takes a little, couple extra seconds to coordinate our comments every now and then.

So why don't we get started with Dave's financial commentary. After Dave does his financial commentary, I'll offer a few comments as well and then we will go right into the questions. Go ahead, Dave.

Good morning, everyone. Happy holidays.

Certain statements we make during the course of this conversation, which do not relate to historical financial information, may be deemed to constitute forward-looking statements. Any forward-looking statements are subject to various factors that could cause actual results to differ materially from our expectations. We have set forth in our most annual report on Form 10-K for the fiscal year ended February 28, 2010, various factors that could affect future results. Those factors are found in Item 1A and after Item 7 of that Form 10-K. Any forward-looking statements we may make are subject to those factors.

I would first like to summarize the financial information included in the news release for the third quarter ended November 28, 2010. Net sales for the 2011 fiscal year third quarter ended November 28, 2010 were $46.9 million compared to net sales of $46.1 million for the prior-year fiscal third quarter. Park's sales for the first nine months were $160.4 million compared to sales of $125.3 million for the prior fiscal year's first nine months.

Net earnings before special items for the 2010 fiscal year third quarter were $6.3 million compared to net earnings of $7.2 million for the prior fiscal year's third quarter. In the third quarter ended November 28, 2010, the Company recorded an additional charge of $1.3 million in connection with the closure in January of 2009 of its Neltec Europe SAS business unit in Mirebeau, France. Accordingly, net earnings were $5 million for the third quarter ended November 28, 2010.

Park's net earnings before special items for the first nine months were $25.6 million compared to net earnings of $15 million for the prior fiscal year's first nine months. During the fiscal year 2011 first nine months, the Company recorded the charge of $1.3 million for the closure mentioned above. Accordingly, net earnings were $24.3 million for the current fiscal year's first nine-month period.

Park's basic and diluted earnings per share before special items were $0.31 and $1.24, respectively, for the third quarter and nine-month period ended November 28, 2010, compared to basic and diluted earnings per of $0.35 and $0.73, respectively, for the third quarter and nine-month period ended November 29, 2009.

The basic and diluted earnings per share after special items were $0.24 and $1.18, respectively, for the third quarter and nine-month period ended November 28, 2010.

Park's earnings before income taxes and before special items were $8.2 million for the 2011 fiscal-year third quarter compared to $7.7 million for the prior fiscal year's third quarter. The effective tax rate before special items was 23.1% for the 2011 fiscal-year third quarter compared to an effective tax rate of 7.4% for the prior fiscal year's third quarter.

The effective tax rate in the third quarter of the 2010 fiscal year was impacted by the benefit associated with the Company's qualification for certain tax incentives in Singapore.

Now I'd like to briefly review some of the other significant items in our third-quarter P&L. During the fiscal year 2011 third quarter, North American sales were 49% of total sales. European sales were 10% of total sales. And Asian sales were 41% of total sales compared to 47%, 10%, and 43%, respectively, for the third quarter of the prior fiscal year.

Sales of high-temperature laminate and prepreg materials comprised 100% of total laminate and prepreg material sales during the third quarter of both fiscal year 2011 and fiscal year 2010.

Sales of Park's high-performance non-FR-4 printed circuit materials, which were a subset of high-temperature printed circuit materials, were 72% of total laminate and prepreg material sales in the third quarter of fiscal year 2011, 69% in the third quarter of the prior year and 76% in the second quarter of fiscal year 2011.

Sales of Park's advanced composite materials and parts were $5.5 million in the third quarter of the 2011 fiscal year compared to $4.8 million in the third quarter of the prior fiscal year and compared to $5.8 million in the second quarter of the 2011 fiscal year. Sales of advanced composite materials and parts were $17.9 million in the first nine months of the current fiscal year compared to $17.8 million in the prior year's comparable period.

The gross profit percentage for the third quarter of fiscal 2011 was 30.9% compared to 29.9% for the prior-year third quarter.

Selling, general and administrative expenses were 13.6% of net sales for the 2011 fiscal-year third quarter compared to 13.3% for the prior year's comparable period.

Investment income for the third quarter was $123,000 compared to $112,000 for the third quarter of fiscal year 2010. As a result, pretax operating profit was 17.3% of net sales for the 2011 fiscal-year third quarter compared to 16.6% for the prior year's third quarter.

Turning to Park's balance sheet, cash and marketable securities were $262.9 million at November 28, 2010, compared to $237.8 million at the end of the prior fiscal year. Working capital was $283.1 million at the end of the 2011 third quarter compared to $261 million at the end of the prior fiscal year.

During the current year's first nine months, the Company had capital expenditures of $2.6 million and depreciation expense of $5.2 million compared to capital expenditures of $1.7 million and depreciation expense of $5.2 million for the prior year's first nine-month period.

Stockholders' equity was $337.9 million at November 28, 2010, compared to $316.1 million at the end of the prior fiscal year. Finally, stockholders' equity per share at November 28, 2010, was $16.41 compared to $15.40 per share at the end of the prior fiscal year.

Okay, thanks, a lot, Dave, for your comments. And by the way, a transcript of today's comments are already posted on our website. Probably good to take a look at that because there's a lot of detailed information in Dave's comments, of course.

Alright, this is Brian again, and let me give you a few comments about some miscellaneous items, and then we will talk about the third quarter top and bottom line. First of all, our Kansas situation, the bad news I guess you want to call it that is that another $1 million pretax loss in the third quarter.

The good news is that about a month ago, we decided that we had a robust enough process and a repeatable enough process for the treaters that we can start the process of moving and transferring the work over from Waterbury to Kansas. This is something that we've had to delay for a long, long time due to some problems that we've have with these treaters.

I mentioned in the last call that we actually have litigation with the -- maybe it was two calls ago -- with the treater supplier. But obviously that's not the main issue. The main issue is we got the plant up and running. So the good news is we are starting that process now. That's just about a month ago. And we're looking to be pretty aggressive with moving the qualifications and the work over from Waterbury. It's a lot of work for aerospace to do a site qualification, actually quite a bit more than it would be with electronics. But we have things in motion at this point, so that's the good news.

And over the next few quarters, we should start to see those numbers change dramatically, and it should go into the black within a -- certainly within a year, because all the qualifications are supposed to have moved over within a year.

And on the PAT's expansion or the Kansas expansion for the manufacturing of composite parts, that's in progress. It's a little delayed but we're expecting it to be completed at the end of the first calendar quarter of 2011, so let's say by March of next year. So that's the story with Kansas.

Let's talk about copper. You're probably interested. An interesting article that came out this morning about the LME market in London. But surprisingly, not really a big impact for us in Q3 versus Q2, and we're not expecting, based on what we know now, a big impact Q4 versus Q3. That's not because our prices haven't gone up. It's because of all the different considerations and things that move back and forth quarter to quarter.

Remember our policy is that when our raw material costs go up, we do pass those costs onto our customers, so we have -- customers are not very happy right now, but that's been our long-standing policy. We do that transparently and openly, and it's a well-known policy.

Let's talk about legal expenses. I touched on that. Another $300,000 above the normal expense during the quarter; that's not an annualized rate. That's $300,000 during the third quarter, over and above what we'd consider the baseline rate, which we normally would incur which is significant in its own right.

Dave mentioned the SAS restructuring charge, the additional $1.3 million. This plant was closed two years ago, and it's very exasperating because we certainly thought that we paid a lot to close that plant, and that we were very generous, but there was litigation and this is the result.

I should say, because I wanted to be clear, that this has nothing at all to do with our existing operation down in southern France, Lannemezan, France. That's what we call Neltec SA. The plant that was closed, the business unit which was closed, was called Neltec Europe SAS, so it can be confusing. But I want to be clear that this has no impact on our current activities in Europe, but there is an additional $1.3 million charge which we reported, I don't know, about a week or two ago, and it's included in our third-quarter results.

We declared a special dividend which probably some of you are aware of. It's payable before the end of the calendar year. And, so that depletes our US cash. The dividends are all paid out in US cash. You know what our total cash is; Dave reported that.

We also discussed what our US cash is in the last quarter or two, and it's somewhere between $95 million and $100 million. But of course we just depleted it by $20 million once that dividend is paid. So our US cash will now be the $75 million to $80 million once that dividend is paid. And that's where all the future -- that's the source from which all future dividends need to be paid. So we're fine with our regular dividend.

As far as special dividends are concerned for the future, I know that's always the question, so I'll answer the question before it's asked; we will see. But I think repatriation will have something to do with that potentially.

We look at acquisitions all the time. We submitted an indication of interest. It wasn't even a big acquisition. It was like $50 million, $45 million, $50 million, earlier this year, was US acquisitions, so that would have to be all from US cash. And now -- so hopefully, you can understand why we don't feel like we're particularly wealthy with $75 million of cash in the US.

Let's see, just going through the items here, ticking them off. We talked about the expansion. All right, so the Q3, Q3 analysis -- kind of interesting because the top line is almost exactly the same. Did you notice that? That wasn't exactly planned, but it came out that way.

The bottom line is better in the current years, 2011 Q3 as compared to 2010 Q3. And the main reason for that is what Dave already explained, the high-performance percentage or high-performance product, higher-margin product, so that gives us a little bit of a better line on a pretax basis.

And of course we're talking about after tax, quite a different story, but that relates back to the tax provision we recorded in our third quarter of last year. Do you remember we talked about that? We have -- we received approval in last year's third quarter for a special tax incentive out of Singapore, and it was actually a retroactive approval; the approval for the tax incentive was retroactive, so it was -- had a big impact on last year's Q3 tax provision. So, the tax provision last year's third quarter was -- well, it was very low and unsustainable, of course, and we reported it at the time.

So when I say our performance is better in this year's third quarter as compared to last year's, I'm talking about pretax or operating -- pretax profit or operating profit, either way, you will see that it's better this year as compared to last year. And again, the reason is principally just a high performance percentage.

What else here? Okay, so the top line, obviously, that's going to be a big question. And we really don't have much to tell you about that. But let me mention a comment we had made about -- I think it was about three quarters ago during a conference call, we were being congratulated for the strong performance. And I think we said look, we really don't take any credit for it. It's really the outside market and the economy which drives our top line on a quarter-to-quarter basis. I don't know if you remember that comment.

And I'll make the same comment for this year's third quarter as compared to the second quarter. I don't really think there's anything that different with our business, but there's things going on in the market or the economy or maybe just the programs we are on.

I don't know if you noticed, but one of the big electronic OEMs reported a surprise about a month ago. That happens to be one of our big end customers and it wasn't a surprise to us, but it was to a lot of other people. And of course a lot of the big OEMs are -- their quarter ends in December, so we haven't reported the last three months yet; we will see. But we don't think there's anything special going on there.

We really don't have a lot of control on a quarter-to-quarter basis over our top line. We have control, of course, over the long-term prospects for Park based upon all the things we do in terms of building new products, working with the customers to help them succeed, managing our assets, having the right strategy in terms of where we invest. All of those things are very important and we control our destiny. But on a quarter-to-quarter basis, I think it's really going to be driven very much by the economy or the programs which we are on; I'm talking about the electronics programs of course. So that's really it.

I don't really have any other insight into the top line in the third quarter other than what I said.

I know you're going to ask, so you probably should know that we have three weeks in the books in the fourth quarter, the first three weeks of December. That's our fourth quarter of the 2011 fiscal year, right? And the three weeks have come in quite strong. And I don't know what that means, but quite a bit stronger than the third quarter. And actually at the levels of the first and second quarter, these are revenues and bookings. So something is quite a bit different, and we can feel it. We're quite busy right now, and we have really no insight into why that is though. It's not one particular program or something like that. It's not really something we understand.

I always have to caution you. I know you're interested in these numbers and we report the facts we have. And we're glad to tell you these things, but I have to caution you that we're not predicting what's going to happen in the fourth quarter or even next week. We don't know. Of course we're also up against the calendar year end, and sometimes emerging out of the new year, it's different than how you close the end of the prior calendar year in terms of the overall markets. So in other words, December is often not that predictive of January and February for that reason.

So, as far as what's going to happen in January and February, well, it's really a function of, in my opinion anyway, what the global economy is doing. And I'll leave it up to you to decide how you feel about the global economy, whether it's accelerating or decelerating or what.

And you know what, I think that's everything on my little list here. So, operator, I think we're ready for questions.

(Operator Instructions). Sean Hannan, Needham & Company.

Yes, good afternoon. I was hoping if we can get perhaps a little bit more color on what it is that you saw through the course of the quarter, at least in terms of the demand trends; sometimes in the past, Brian, you've been able to provide a little commentary of what you've seen in the different months and what was either the strongest or the weakest month.

Yes, so for some reason, October was a little bit better than September and November in terms of the top line. and I'm not sure what to make of that actually. I'm not sure what to make of that. It looks like it was stronger particularly in Asia, so weak in September, a little strong in October; November, down to the levels of October, sorry, of September.

Okay. And then, I know that you tried to touch on this a little bit, but was there anything that you got as feedback from customers in -- that might be more specific to the reasons themselves around where the dip may have been a little bit more pronounced or the end markets may have been -- what end markets may have been bigger candidates. I think you had alluded to a big OEM. I'm assuming that's a big OEM in the communication space. And any more color there in terms of what, perhaps, may have been occurring in the end markets would be helpful.

Yes, so I don't think we can offer too much more in terms of -- that would be helpful. Some of the things are going to be program specific. You know if we're in a program, that program is winding down or slowing down or the OEM feels it has a little excess inventory, it might back off a program.

There is only one major OEM who has reported, though, a surprise, a negative surprise. And I think that might be something to do with the reporting cycles. And I think we just need to wait and see what these guys report; some of the big OEMs report, for the quarter ended December 31. So -- but, I really can't -- for me, I can't attribute it to one OEM or one program. I don't think it's that kind of thing, necessarily.

And I do think it's interesting, but we will have to see what happens. It's interesting that the first three weeks of December seemed to be quite a bit different than the third quarter was, so -- I don't know what that means. There's some talk, but you guys probably know more about it than I do, about the industry getting ahead of itself and being a little concerned about excess inventory. You hear these things, but it's hard to take that, Sean, and tie that to specific revenue patterns or trends at Park.

Okay. Well, let me see if I can ask another demand question. I think the last quarter, you had commented on how -- on the aerospace side, you spent a bit more time with the military and UAVs. Has this changed or has there been any perceivable pause or is there an acceleration perhaps you'd expect when we look at the next quarter or two?

So for aerospace it's quite a bit different. That's really not so much market driven. Of course there's the underlying market factors, right? But for us it's still very much a growth market, and we're not really going to be dependent so much on the overall market in terms of what results we're going to have. And it's going to be based more upon how successful we are with our qualification activities.

The aerospace area for us is flat Q3 versus Q2; we didn't have any growth. It's small though, Sean, so it doesn't have enough scale to really be an indicator because there's so many stories behind the stories of work we're doing with different OEMs to get qualified in their programs. We are qualified in a number of programs. I've said this 100 times, so I'm sure you're getting tired of hearing it. I'm getting tired of hearing myself say it, but the ramp-up time for these programs is quite long. So even though we are working with prototypes in certain programs, it could be years before they're really ramping in their volume.

And the good news is that once you're on a program, what I'm told anyway is that it's very likely you will stay on that program for a very, very long time. But it takes quite a bit of time to get on these programs. But in terms of the overall market, if you are asking that, my sense is that the aerospace market is unchanged and may be even getting a little bit better in the last few months.

Okay. Unchanged, getting a little bit better, in terms of a near-term impact or in the grand scheme of the big picture?

I was talking about as compared to the prior let's say six months. We're talking about electronics in the third quarter being off from their first two quarters, right? My opinion is that aerospace, the overall market has -- did not decelerate during our third quarter, and maybe it's even growing, maybe it's even getting a little stronger.

Okay, that's helpful. And then, Dave, I suppose if you can help us just to identify your 10% customers and how much of your top five, 10, and 20 customers contribute as a percentage?

Sure, Sean. I'd be happy to share that. We had two customers that comprised more than 10% of sales. That was TTM and Sanmina. The other top-five customers were Multek, ISU Petasys and WUS. Cumulatively, top-five customers represented 52.5% of sales. Top 10 customers represented 66.5% of sales, and top 20 customers represented 76.5% of sales.

Terrific. Thanks so much for your help.

Brad Evans, Heartland.

Good morning. Happy holidays to you both. Brian, thank you for considering the shareholders with the special dividend, so just a public thank you for management and the board for returning some capital to shareholders; we do appreciate it.

I just wanted to talk a little bit about the sales trends in the quarter. Do you have any thoughts into -- it looks like on a year-over-year basis, Asia was the one area of softness. Do you have any thoughts there?

So, Asia is where we're going to be supplying into a lot of the big electronic programs. So, let me just go back. We're not -- we don't want to name names of OEMs. We haven't done that at the past. We don't want to start doing that now, but there was a report from a big OEM I think about a month ago, that was a negative surprise. It happens to be one of our top three OEMs, all right? But I don't want to make it a one OEM story. It's not the only OEM which has reported that kind of information.

That kind of work is going to be sourced largely in Asia. The volume work, especially for these big OEM programs, is going to be sourced largely in Asia. That's why you might see more of an Asian story every now and then with these swings.

Okay. And the recent demand trends that you've seen, do you feel like there has been perhaps as a corollary to that comment about the large OEM, do you feel like perhaps in the second, in the third quarter, you saw a bit of an inventory adjustment and then now that that has perhaps cleared, you are now shipping to what end demand might be at this point?

You know what? It's certainly a very logical explanation. I don't really know, but it certainly makes a lot of sense, right? If things are down for a short period of time then they come back up, you would say, geez, it probably wouldn't be driven by long-term fundamentals, so maybe it is something like an inventory adjustment. It certainly occurred to me. I just am not in a position to say factually, Brad, that that's exactly what it is. I mean I don't think any of us are.

Okay. That's helpful. And then just in terms of the gross margin decline on a sequential basis from the second quarter to the third quarter, how much of that is lower volume, lower volumes in terms of fixed cost absorption and how much of it is the affect of the pass-through of copper?

Okay, it's not really going to be copper related if you're talking -- the third quarter compared to the second quarter is going to be very much volume related. And to some extent, you notice that the high-performance percentage actually slid backwards in the third quarter compared to the second quarter. It was up third quarter compared to the prior third quarter, but actually down third quarter compared to second quarter. So the volume factor, which is going to be very significant on gross margins, and also you're going to have the high performance percentage factor. Those are probably the two major factors that would impact gross margins.

But, a lot of our raw material costs are not fixed, but quite a -- much of our other factory costs, cost of goods sold, are fixed on a short-term basis. We're not going to make big adjustments to labor based upon a two- or three-month situation, which would obviously very foolish in light of what I just told you about the last three weeks. So, we have -- especially short-term reduction in volume. That's going to drive gross margins down.

Great. And my last question and I'll cede the floor, in terms of Brian, in terms of just the recent snap-back in the last three weeks, have you seen the higher value mix come back as well in terms of the high-performance materials? Have they been accompanying this more recent recovery in demand?

I think so. It's three weeks. We normally don't get into that kind of resolution in terms of indicating what's gone on in the first few weeks of a quarter; the high-performance percentage, but I think the answer is yes. I think that the story is going to be largely a high-performance story.

Great. Good quarter under the circumstances. Thank you.

Thank you, Brad. Appreciate your comments.

Jiwon Lee, Sidoti & Company.

Thank you. Good morning. A lot of the questions were already answered, but Brian, just wanted to kind of go back on the top line; comments on the current quarter's order trends so far. Can we assume consequently the Asian market has come back better than others in the current quarter?

Yes.

Okay. And I just wanted to get a better sense as to how you feel about some of the program involvement with some of your larger OEMs, particularly some of the work that you expect to be transferred to Asia, how do you feel your competitive positioning with the materials lineup that you have, and perhaps some of the new programs that these OEMs are expected to ramp up next year?

Would you repeat that question please? I just want to make sure I understand what you're getting at.

Okay. I just wanted to get a better sense for your key OEM program involvement. As some of these OEMs shift production to Asia, how do you feel about your product lineup with that type of program as well as some of the high-value materials that are going into the new programs?

New programs. As far as the shift to Asia, that is really not a factor. If we didn't have Asian operations, we probably wouldn't really have much of an electronics business at all. That's something that's an ongoing process all the time, but it doesn't really affect the Company as a whole. I think in the four or five years ago, many times programs would be started in the West and move to Asia. Often now they're just started in Asia. They're not even started in the West.

There's still some work in the West; there's military work in the West; there's prototype work in the West. But I don't think -- I think that's kind of invisible as far as we're concerned, because it's -- whenever the OEM wants to move the work to Asia, either right from the beginning or at some point in the program, we are there with the same exact product line.

The key thing for us is the product line has to be transparent, so if they are buying a product or one of their suppliers, the board shops, is buying a product from us in the US, and then a different board shop is buying the product in Asia, it would be the same product.

As far as how we are positioned for the future, with a product line, we're not really feeling that happy about it. I think we have a good product line now, but we feel that it's very critical for us to develop new products for the future, and of course, having said that, you probably will assume that we are putting a major amount of effort into doing just that. I think it would be very foolish to believe that a product line, our current product line, is adequate for the future.

That's helpful, Brian. And lastly, for me, is that -- on the composite side, is that the timing of ramp-up that you could sort of see with some of the new programs that's giving you a little confidence that that side of the business is hopefully picking up?

The ramp-up, okay, I just want to make sure we're -- I understand what you're saying because the ramp-up of Kansas, we're largely talking about the transfer of the work that's in Waterbury to Kansas, right? Now, the new programs, that would be on top of the transfer of the work from Waterbury to Kansas. The new programs are something we've been working on for several years now, and those are starting to lag in a little bit, and the large majority of that work will go to Kansas. Some of it will go to Singapore because if it's an Asian opportunity, which will allow us to supply it from Singapore, we will supply it of Singapore. So, does that answer your question?

Yes, it does. You understood my question. Thank you.

(Operator Instructions). [John Lopez], Saratoga.

Thanks so much. I'm sorry to beat the dead horse a little bit, but just coming back to the order patterns you are seeing more recently, I guess one thing I wonder is, and this may be too granular, but just as you look across the product portfolio, is there a way to parse out what's happening on some of the more consumer-oriented products to which you are selling? I know laptops and PDAs and stuff like that are part of the end product portfolio that you serve versus the infrastructure stuff. Like, I guess I'm just wondering with the Chinese holidays early in 2011, are you seeing a little bit of snap-back in that stuff off obviously two quarters of pretty depressed activity? But beyond that, the visibility isn't great? Or -- I mean those are my words. I'm -- I guess I'm looking for your characterization; or does it feel like something other than that?

So we don't supply into any consumer programs like laptops and cell phones or BlackBerries. All of our -- essentially 100% of our electronic product goes into infrastructure programs. We just don't -- we haven't supplied into those more consumer-oriented markets for many, many years. So it's sometimes confusing, these people here that those kind of things are up or down and they're wondering why we're not affected. We're not affected because we just don't supply into those markets any more. We're not able to because those markets are really very commodity oriented and as far as I'm concerned, it's a market that's really a Chinese supply-chain market; maybe some of the other Asian countries as well, but it's an Asian supply chain for that market. And we don't involve ourselves with that market at all any more.

Got you. I apologize for that. I could've sworn I saw that in like your 10-K or something like that that I was breezing through a couple of days ago.

We'll have to go check our 10-K to make sure it's current.

No, believe me, between the two of us, I'm sure it's my mistake. So, I'm sorry, so just to come back a second to the recent trends; from your perspective, it's two quarters of reasonably soft activity, and now kind of a spike up toward the end of the year. I guess the other thing I would be wondering is just from your experience, does that seem -- towards the end of the year in general, OEMs, distributors are trying to bring inventory down, not take it up. So what -- as you sort of think about that dynamic, does that have any -- do you have any thoughts about that activity relative to the end of the year approaching?

Okay, so just a couple of comments here. First of all, the first and second quarter were more or less at the same level. The second quarter was a little off from the first quarter, but that may have been kind of the summer factor. The third quarter was considerably off from the level of the first and second quarter. What we're saying is the fourth quarter so far, which is just three weeks, is at the level of the first and second quarter in terms of bookings and revenues. We haven't seen that pattern on a consistent basis in the past, the one you're referring to, the December pattern.

So, I don't -- it's -- I don't believe it's something to do with a consistent pattern where orders normally pick up or don't pick up in December. We haven't seen that over the years. Every December seems to be a little different.

Got you; it makes perfect sense. The last one, in my series of three stupid questions, the -- I sort of wondered, the copper impact. I understand that it's a pass-through to you. I guess I'm wondering from your customers' perspective, the price of copper is up something like 25% in about three months, which is a reasonably sharp move in a relatively short period of time. Do you think anything in your business, do you think there's been any impact of customers waiting to see if perhaps that price was going to level off or even move back a little bit before they placed orders on you? Do you think that's totally independent on how they run their business and they will just swallow that pass-through as they get it regardless of what's going on?

I don't really think that customers are in a position to do that because they're working with the OEMs, and if they want to supply into these OEM programs, they're going to have to be able to respond to the OEMs' needs. And the OEMs aren't going to be very receptive to a discussion about, well, can we just supply you next month rather than this month because we expect copper to go down or level off. I don't think that's going to really play too well.

Sometimes we will notice that when we have an increase, which has been announced to our customers, the last week before the increase, the orders will trend up, and then the first week after, they will trend down. But even that isn't very noticeable anymore because these things have become so common and so dynamic. It's really been a struggle.

And the story behind the story is that every time we change our prices, there's a lot of work that we have to do and our customers to do to adjust our systems to accommodate the price changes. And so we're pretty unhappy and our customers are pretty unhappy. It's just not creating a lot of joy in the supply chain this time of year because this is just a lot of extra work that doesn't end up really delivering any ultimate value to anybody. I'm not saying I don't understand why the copper suppliers are doing this. I'm just saying it's not really a happy situation.

Right; no, that makes sense. And when was the most recent price increase or when is the next scheduled price increase?

Okay, so are you talking about our price increases or --?

Correct. Your price increases to your customers based on the price increase you're receiving from your supplier base.

Yes, it's been so dynamic, and it's been, as I said, really a struggle. We have been in and out. We had a recent price increase. We've announced another increase it hasn't even gone into effect yet. Which normally we give customers our policies at least one month. We never would announce a price increase and give them less than one month to accommodate or adjust. It's not a lot of time, but at least we do that. So we're in the middle of a couple of these things as we speak.

Got you. And I'm sorry, I did have one more. Visibility, what's your typical order visibility? How far out can you generally see orders with some level of confidence?

Three days.

Okay. And it sounds like --

No, seriously. Our book -- lead time is usually three days, five days, one day. But that's how we run our business. Even when things are strong, we're going to be working some extra days over the holidays because we really don't like stretching our customers out on leadtimes. We've always been very dedicated and committed to providing our customers with real short lead times, very good responsiveness. So, that's kind of a company policy. And as a result, our backlog is essentially meaningless. It doesn't really tell us anything about the future at all.

Sure. Okay, hey, thanks so much for the thoughts. I appreciate it.

Sure. Thanks for your questions.

And we are currently showing no more questions at this time. I would like to turn the call over to Mr. Brian Shore.

Okay, thank you very much, operator. And thank you, Dave, and thank you, everybody else, for listening. Thanks for your questions and comments. I want to wish everybody a very happy holiday and all the best next year. You take care. Bye now.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes our presentation. You may now disconnect. Have a good day.