Park Aerospace Corp (PKE) 2014 Q1 法說會逐字稿

Good morning, ladies and gentlemen. My name is Derek, and I will be your conference operator today. At this time I would like to welcome everyone to the Park Electrochemical Corp. first-quarter fiscal year 2014 earnings release conference call. (Operator Instructions). Thank you.

At this time I will turn today's call over to Mr. Brian Shore, President and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, operator. Hello, everybody. Good morning. This is Brian. I have with me Matt Farabaugh, our VP and CFO, as usual. So we'll start with some introductory remarks, and then we'll go to our questions.

We'll start with Matt. And so we've changed our approach to the conference calls a little bit as of the last quarter. Matt's comments are really going to deal with only things which are not included directly in the news release, which went over the wires this morning.

And also want to remind you that a transcript of Matt's comments were posted on our website earlier today. So if you want to go take a look at some of the detailed items that Matt has covered, you can go ahead and do that. After Matt's comments, financial comments, I will offer a few comments of my own, and then we'll go to the questions. Go ahead, Matt.

Thanks, Brian. Certain statements we may make during the course of this discussion 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 recent annual report on Form 10-K for the fiscal year ended March 3, 2013 the risk 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 like to briefly review some of the items in our first quarter ended June 2, 2013, P&L which are not specifically addressed in the earnings release. It is important to note for any discussions during this conference call that the first quarter ended June 2, 2013, and the first quarter of last fiscal year were 13-week periods. The fourth quarter ended March 3, 2013, was a 14-week period.

During the fiscal year 2014 first quarter, North American sales were 48% of total sales, European sales were 9% of total sales, and Asian sales were 43% of total sales; compared to 47%, 11%, and 42% respectively for the first quarter of the prior fiscal year and 49%, 9%, and 42% respectively for the 2013 fiscal year fourth quarter.

Sales of Park's high performance non-FR4 printed circuit materials were 86% of total laminate and prepreg material sales in the first quarter of fiscal year 2014, 81% in the first quarter of the prior fiscal year, and 82% in the fourth quarter of fiscal year 2013. Sales of Park's aerospace materials and parts were $6.7 million in the first quarter of the 2014 fiscal year, compared to $7.6 million in the first quarter of the prior fiscal year, and compared to $7 million in the fourth quarter, a 14-week period of the 2013 fiscal year. Investment income net of interest expense for the first quarter of the 2014 fiscal year was negative $103,000 compared to $198,000 in the first quarter of the prior fiscal year and $113,000 in the fourth quarter of the 2013 fiscal year.

Copper had a $106,000 unfavorable impact on pretax earnings in the first quarter of fiscal year 2014 compared to the first quarter of the prior fiscal year, but a favorable impact of $74,000 compared to the fourth quarter of fiscal year 2013. The effective tax rate before special items was 19.0% in the first quarter of the 2014 fiscal year, compared to 19.3% in the first quarter of the prior fiscal year, and compared to 15.7% in the fourth quarter of the 2013 fiscal year.

During the first quarter of the 2014 fiscal year, the Company had one customer that was more than 10% of total sales, which was TTM. The four remaining customers rounding out the top five were ISU Petasys, Sanmina, Shennan Circuits, and WUS, in alphabetical order. The top five customers totaled approximately 48% of total sales. Our top 10 customers totaled approximately 64% of total sales, and the top 20 customers totaled approximately 75% of total sales.

Okay. Thanks a lot, Matt. Short and sweet. This is Brian again.

Let me add a little perspective. I think my comments will be shorter than usual. Of course, we spoke just about six weeks ago, so this is one of those unusual time frames between quarters — between our fourth-quarter and first-quarter call.

So let me just add or develop a couple of points that Matt already made. Our tax provision is higher in Q1 versus Q4, about the same as the prior Q1. And the reason for that is in part that our business is more profitable in the US, where the tax rates are higher.

Investment income — that's something you should be paying attention to, I think, you analysts. So Q1 versus Q4 — it's $200,000 negative to — let's see. Q1 versus Q1 was a $300,000 negative, and the reason in part is that our interest income in this current Q1 was fairly low; and of course, the other reason is the $52 million loan, which we took out, I think, in January to pay the special dividend maybe in February. And we had about $170,000 of interest expense in the first quarter on that loan.

And we haven't had interest expense in the past. So that's something you're going to be seeing going forward, at least as long as that loan remains outstanding. So let's talk a little bit about profit from operations. If we talk about tax provision, investment income, let's focus on profit from operations and do the comparison work there.

Q1 versus Q1 from last year — so the revenues are actually lower this year's Q1 versus last year's Q1, but the operating profit is better. Why is that? Well, there is a couple of few reasons here that are they key ones, anyway.

The Waterbury facility and the Zhuhai facility were closed — what, October — sorry, September — August, September timeframe of last year. So during last year's Q1 we were still carrying the costs of those two facilities. Obviously, in this year's Q1 we were not.

I did not mention the facility in Washington State because that facility had already been pretty much closed as of last year's Q1. So that would not be a factor in terms of the comparisons. That's one factor.

The second factor in terms of explaining why this year's Q1 was better than last year's even though the revenues were down. Aerospace was better, and high-performance percentage Matt mentioned, it's, I think, 86%. So that spiked up, and that's a good thing. I don't think that's an anomaly, either. That's probably just an ongoing trend. We'll talk about it, go back to that in a minute.

Let's also compare profit from operations Q1 versus Q4, and again, it was better. This was a few different factors here. One is the revenues are better in Q1 — a little off, but Q1 versus Q4. And you've got to remember that Q4 was a 14-week quarter as compared to Q1, a 13-week quarter. So that skews it even more. But every four years, remember, we discussed this the last conference call — we have a 53-week fiscal year, and the convention is the last quarter of that fiscal year will be a 14-week quarter. So that distorts the comparisons, as Matt already pointed out a little bit.

The second reason — again, we are talking about why the operating profit from operations was better Q1 versus Q4. High performance — again, that just — we talked about that. That's a factor. And also, Aerospace is better. So those are the three things that would be the three main things that would explain the improvement of profit from operations Q1 versus Q4.

Talk about some general things. Let's go back to high performance again. Matt mentioned the 86%. It actually spiked up, but as I said, I don't think that's an anomaly. I think just an ongoing trend.

So what's happening here, obviously, with the revenues going up a little bit, is it's not just a loss of market share of the commodity product. It's actually gaining ground with high performance. That's our new products.

And also remember, last time — last conference call I mentioned our signal integrity product line had become quite strong, and that does continue. That's — so we consider that to be a good thing. That product line, which is a real key product line for Park, was badly hurt by the Japanese earthquake and tsunami. It had a bad impact on our Company that lasted longer than we expected it would. But that product line is quite strong right now, and we are happy about that and feel good about that.

And just another comment on Aerospace. Again, I'll just mention; we spoke just six weeks ago, so you're pretty much up to speed. But last time we spoke, I talked to you about a few different things that were going on in Aerospace, I think one of which is that we did sign a three-year agreement with a jet engine company for about $13 million of revenue. And we know that's not huge, but it's significant for us.

What it says is that, okay, we are done with all the transition work, transitioning from Waterbury and Lynnwood, Washington, to Kansas. And now we're into the growth mode.

I mentioned that the performance is a bit better in Kansas this quarter as compared to last quarter. So that is continuing to improve, although we still have a lot of startup things that we are still dealing with. But I think the good news is good. The momentum is good; the direction is good.

We're also looking to grow the top line now. So that contract I just — we mentioned it six weeks ago. The customer has come back to us and indicated they'd like to significantly increase the volume contemplated by that contract, and we are discussing that now. We'll let you know next quarter whether we agree to increase the volume or not with this other customer. But that's just good news, and I think it's indicative of the focus and emphasis we have now, which is, again, beyond the transitions and now growing and improving our Aerospace activities.

I know you're always interested in kind of more resolution in the quarter, and also what we can tell you about Q2. So we'll do the best we can there. So, interesting first quarter. When we spoke about six weeks ago, we already told you about March and April. So you know that March was a weak month, and it was kind of a follow-on to the fourth quarter, that April was quite a strong month.

It turns out that May was kind of in the middle, right in the middle, and May was also consistent with the average for the quarter. So you've got a low month, a high month, and then May right in the middle. Now, what's interesting about May is the revenues came in the middle, but the bookings were at the level of April in May. So somehow the bookings maintained that strong level in May even though the revenues backed off to somewhere in between March and April.

And then, okay, with that background, let's talk about the first three weeks of Q2. And that's — we have three weeks in the books as of yesterday, so we can talk about revenues and bookings. So think of it this way. March was low, April was high, May was in the middle, and June is somewhere between April and May. So June is better than the average for Q1, but not at the level of April. So somewhere between — May, remember, was kind of the middle month. So somewhere between April and May. So better than May, not as good as April. The first three weeks of June — that would be consistent for the bookings as well as the revenues.

So that's kind of an update on where we are during the first three weeks. I always like to caution you that three weeks does not make a quarter. You know, when we were talking at the end of — regarding our fourth quarter, we had two months in the books, so we could talk more intelligently about Q1. But now we only have three weeks in the books for Q2, so we have a long way to go. It's a 13-week quarter. We've got a long way to go.

The numbers would indicate some optimism, but for us to pay attention a little bit to the news around the world, I'm not sure that's very optimistic. I think there's a lot of concern about central banks, not just in the US — China and elsewhere. And maybe they stretched themselves out, and they played this maybe game, you want to call it, for quite a while; and maybe they are hitting a brick wall. And the days of easy and free money may be coming to an end, or at least may be tapering off.

That probably wouldn't be good for the global economy short term. Maybe be good long term, because then it would be more based upon fundamentals rather than speed injections. But the other way to look at that is for people like Park, companies like Park with very strong balance sheets and a lot of cash, it actually could be a good thing if cash becomes a more valuable commodity, if you will, because the central banks tighten up their cash policies.

Okay. So a lot of you are a lot smarter than I am about those topics, but I just wanted to offer that to you. I don't know what to make of it, but it's a little concerning. And I don't think we have too much more insight into where we're going in the second quarter at this point. I told you what we know. The vibes, if you will, we are getting are fairly positive. And that's reflected in the first three weeks of June numbers. But we don't have any kind of degree of confidence which would be the necessary degree of confidence to give you an indication as to where we think we'll be at the end of the second quarter.

Okay, operator. I think that concludes Matt's introductory comments, and mine as well. Why don't we go to the questions?

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

First question for you, Brian. So was looking to see if you could characterize what you had seen in the quarter in terms of mix. How would you characterize the mix that you sold through versus February? And then was there — it sounds like there was slightly better mix. Just want to make sure that there wasn't any sort of drop, or if there is clarification that at the end of the day, maybe if it was even consistent? Just want to make sure that I understand exactly what that mix flow-through was. And then how much of your gross margin improvement from February was mix related versus the more dramatic revenue leverage, say, from restructuring benefits? Thanks.

Okay, so if you're comparing Q1 to Q4, Sean — the restructuring benefits — there is no leverage. The closures, the plant closures occurred in, like I said, August and September of last year. So when we are talking about improvements in Q1 versus Q4, our revenue was a part of it. And remember, Q4 was a 14 week quarter, so you have to take that into account, because the number itself was a little higher — revenue number in Q1 versus Q4, but that revenue was achieved in 13 weeks versus 14. The other factor, as I mentioned, is Aerospace continues to improve. So that contributes to the bottom line. And mix is important.

The high-performance percentage spiked up to 86%, I think Matt said. That's a big spike. That's important. That has a big impact on our bottom line. That signal integrity product line has been quite strong.

I think I mentioned in the last conference call — we always talk about high performance, non-high performance, but all high performance is not created equal. So there's different degrees of high performance, and the general rule of thumb is the higher the high performance, the higher the margins. So the SI product line would be at the higher end of our high-performance product line. So not just the numbers being about at 86%, but what's in the 86%, I think, is driving the bottom line margins, the gross margins as well.

Okay, that's helpful. And then you had made a reference point a little bit earlier in your prepared remarks about strong bookings within May and also generally decent demand in terms of what you're seeing the first three weeks of June. And so with the mix characterization that you just provided for the May quarter in terms of rev generation, is that something that you've seen sustained kind of to current point? And any thoughts around that would be helpful.

You're talking about the mix the first weeks of June?

Yes.

Oh, I see. Well, we don't see any departure in the first three weeks of June. I think the trends are continuing. We normally don't offer resolution of — you know, mix resolution on three weeks, because we think that's a little bit dangerous. But we would say that whatever trends we see in place in Q1 seem to be continuing.

Okay, that's helpful. And then in terms of the original geographies, can you provide a little bit more of a breakdown of what you saw for demand in the May quarter on a regional basis? How the geographies ended the quarter, and kind of how you're seeing some of that performing now into these three weeks as well?

Okay. So again, we don't normally give resolution for a three-week period. We'll talk about total bookings, total revenues sometimes. But I would say that there is no difference or no break in the trend. The trend continues.

Matt did give the breakdown on a regional basis. And I don't think there is any significant change in the first three weeks as compared to the history we had in the first quarter.

Okay. So nothing really stuck out there in terms of regional geographies?

No. I wouldn't think so.

And then last question. From a competitive standpoint, I realize — and we've talked about this a lot in the past — is a very competitive environment you operate in. Was hoping maybe you could discuss whether you sense any change in standing in terms of kind of the higher design in non-FR4 for your share at some of your top customers. I saw Multek was not in your top 10 this quarter — I'm sorry, not within your top five this quarter.

Just trying to get a sense of where your competitive standing might be ebbing and flowing. And are there any competitors, perhaps, that even if you're not seeing share shifts, are there competitors that are perhaps becoming a little bit more prominent from what you're seeing at those top customers? Thanks.

The Multek story — you would probably want to talk to the Flextronics people about that. That's — there's a special circumstance there, but that's not a function of loss of market share. I don't want to say anything more about that.

But there is something — there is news there that it's not our place to share that with you. You'd have to talk to the Flextronics people about that. But it's not a market share story.

I don't think — well, let me back up. We'll have to just say of course the market for electronics is very competitive. And that's not getting less. I've commented, I think, a number of times recently, even in annual report letters, that the competitive landscape is getting more competitive.

The suppliers coming out of Asia, in particular Taiwan, Korea, Japan have become more aggressive, more assertive. And they've also introduced better technology, and that's really a key thing.

But you know, Sean, I don't know. We're not going anywhere. I think we are continuing to fight the fight, and I feel pretty good about how we are doing. So we are not Johnny-come-latelys to the market. We've been doing this a long time.

We continue to upgrade our technology, as you know, and I think we have a pretty good product line right now. We're not going to win on price. So when we win, price is usually not the deciding factor. Maybe I shouldn't say usually. It's going to be never the deciding factor, I don't think, but we still do win.

So there are reasons for that, and it's not price. It's probably technology. It may be — I don't know, maybe confidence in Park as a supplier. You could talk to our customers about that if you'd like to, but that would be my guess, that those are the two factors. Because it's going to almost never be price.

I also mentioned in the last call, I think even the call before that, that we're not done. We are continuing to develop more advanced technology, even though we think that the Meteorwave product line might be a little ahead of the market already. But we really don't know what else to do other than continuing to push the envelope with technology.

And look, we always have to be worried. We always have to be concerned. We always have to be nervous. But having said that, I feel pretty good about where we are in the world. We're never going to be the high-volume, kind of Chinese-oriented circuit board commodity laminate company. That's not us. There's just no future for us in that area, I don't think.

But I think we have carved out the niche we want to be in. And it's not easy, and sometimes it makes you more nervous than others. But when I pull back, you asked me the question; I say I think we feel pretty good about where we are.

Thanks for all the color, Brian.

Morris Ajzenman, Griffin Securities.

Your comment earlier that Aerospace was better than last year — was that referencing operating profit? Because it looks like the top line was down about $1 million. It's just less. Was that referencing operating profit and not the top line?

Exactly. That compares to last year's first quarter and also last year's fourth quarter. Both comparisons. So it's not a top-line thing. It's a bottom-line thing, and that's just because we are performing better. We are getting out of startup mode. We're getting more into a going concern mode. And I mean, I guess we'd have to say things are going according to plan.

We still have — we still make more mistakes than we should, but you could clearly see the trend of improvement, and that affects a lot of things. It affects how we perform with our products, with our customers, and it also affects how we perform financially.

Now, last year's first quarter, when we're comparing to that, then we had the burden of two facilities we were carrying as well, in Connecticut as well as Kansas. And we also had the burden of the extra expense for the re-site qualifications, which were significant. Now, those things are behind us. But when you compare Q4 to Q1 — or Q1 to Q4, in Q4 all those things were behind us in Q4 as well. The improvement between from Q4 to Q1 — not top line, as you noted; it's just that we are getting our act together more and more, which is what we would hope to do, what you would expect. Again, getting out of the startup mode, more into a going concern mode. And now we are also, as I said, because we've calmed things down, we are in a position to go after new business. And we've had some encouraging success in that area, even though you don't see it reflected in the top line of Q1.

So looking out, though, I know you're not in the business of predicting revenues, particularly for any division here. But Aerospace, this three-year agreement — when does that start up? And when — without putting you in a corner, when do you think we will start seeing some top-line improvement?

What was the first question, Morris? When was the startup?

This three-year agreement that you have with the jet engine company. Is that already up and running? Does it take time to get that up and running before we start seeing the revenues? And coupled with that would then be when do you start — when do you believe we'll start seeing some traction in top-line growth for Aerospace?

It's a three-year agreement. And it's less than $1 million in this calendar year, but more than $5 million is the estimate under the agreement and 2014 and 2015. But as I've said, this company has come back to us very recently and asked us to significantly increase those numbers. So we are in discussions with them now.

And I think by the time we report our second quarter, I'll be able to give you the results of how those discussions went. But this came from their side rather than our side, which of course is — that's an encouraging sign.

Okay. Aside from this one contract, which clearly is important; I'm not trying to overshadow that. But on a current book of business, would we be staying at about a $6.5 million, $7 million run rate the next three quarters going out? Is there any reason to believe that that might improve, putting aside this particular three-year agreement?

Okay. You're right. That's where it gets to be more difficult to predict, because we can talk about the agreement, because it's a written agreement, and there are details in the agreement, including revenue estimates. But when we talk about everything else, then there — what are the questions?

The questions are how is the Aerospace economy? That's one factor. And then the other factor is how do we do?

And really, what we need to do here is built more of a base of business so we're not dependent on one large contract, one large opportunity to make us or break us. So that's what we need to be doing, and I would expect that our people are out there hitting the pavement pretty hard looking for new business opportunities with existing customers and new customers.

Again, why is that? Because we feel we've gone through the transition, and we are in a position to grow our business now. We are stable enough we're in a position to grow our top line. So that would be a — let's call it a high-intensity activity for Park right now for the people who work in Kansas, for our salespeople to go out there and hit the streets, beat the bushes, and find more business opportunities for us. And I think those people who are listening know who they are, and it's our responsibility to make that happen.

But Morris, the problem with that is it's very difficult to predict. That's not a defined contract where I can share with you what the numbers are, what the expectations are. What I can tell you, just to give a little color here, is that we did not build that facility in Kansas for the kind of top line we are showing you now. That's not what we had in mind.

That's good color. Thank you. One last question, and I'll get back in the queue. In the three different regions, North America, Europe, Asia, overall this quarter your top line was down a little less than 6%. Any one of those regions that were materially a greater decline? Anything that stuck out in any of these regions? You gave us percent of sales, so it looks like North America and Asia had declines as a percent of sales. I think that's correct year over year. But any of those regions down more than the corporate average that we might point out to, or anything to discuss there?

You know, Matt gave you the numbers. So the numbers speak for themselves. I would say as a general matter that Asia continues to be our strongest market and where our strongest opportunities are for the future. North America is kind of hanging in there. I mentioned even in the comment regarding our tax provision being a little higher this year, that that's because the expectation is for their bottom line in North America, where tax rates are higher.

Europe is a little bit of an unfortunate story for us that we don't — especially in electronics, Europe doesn't seem to have a lot of upside. Now, maybe a little bit in RF, which is not our main product line. Our main product line being digital in Europe. They're just — the opportunities are just not that great in Europe right now.

And I don't want to give the impression that we are giving up, because that would just not be true at all. But I also want to be realistic with you about how we see Europe. So I would think that Asia would continue to be a growth market for us in the future; North America, maybe/it depends; and Europe, maybe not so much.

Brian, thank you.

Leonard Cooper, Park Electrochemical.

Sounds pretty good to me. In the financial numbers I didn't hear depreciation and amortization. Did I miss that?

No. But Matt, can you help us with that?

Yes. Depreciation and amortization is running just under $1 million a quarter.

Okay. Thank you. In prior talks we spoke about private aviation, and there was a big inventory of used aircraft. How is that situation working out?

Business jets in particular — we don't really do much with the — very small single-engine type airplanes would be more recreational. Business jets — that's always been a target market for us. I think the story is kind of mixed, and I think a lot of the business jet companies are still struggling, not doing too well. You can read the news yourself.

We won't comment on any particular companies, but that's not really the wonderful story that we'd like it to be. Maybe some of the target customers have changed a little bit as the players shift their positions, let's say.

But we think that a lot of our opportunities may not be in the business jet area. It may be jet engines, may be military, it may be UAVs, it may be helicopters. Boeing Airbus, probably not. Except for very special technologies like those patented struts, where it would be Boeing space. It wouldn't really be Boeing commercial.

If they want to do business with us, they are going to have to come to us because they believe we have a technology that they really need to have. But we're not going to get into — we don't want to get into that game of competing against everybody else in the world for a little bit of — for Boeing or Airbus business, at this time, anyway.

But going back to your question, Len, I would think that the news with the business jet industry is still not that wonderful. And as a result, I think the sales and marketing focus has shifted a little bit to other aspects of Aerospace.

Okay. How about drones? They seem to be everywhere.

Yes, and that's UAVs is drones. I mentioned that as one of the markets for us. We have — we are on many, many, many drone programs.

Okay. Last year there was a return of capital situation. Is that still a possibility in this year on the dividends we are receiving every few months?

What's your question about the dividends, Len?

Are they possibly going to be a return of capital, as some of them were last year?

I see. So I think what we are going to do is we're going to have to keep you posted and probably get back to you toward the end of the year. I think it's difficult for us to give you that answer on a quarter-to-quarter basis, or a quarterly dividend to quarterly dividend basis, just because the factors that are moving around — they are hard to really track. But we don't want to give you information that then we have to give you — we have to change the answer for you. So we don't know at this point whether — to what extent the cash dividends will be return of capital.

Okay. Thank you. One other question. I hear and read articles about quantum computing and cloud computing. Do these affect the interests of Park?

In a very big way, because what they do is they drive the demand for Internet infrastructure in a very, very big way. And when you talk about cloud computing, the need for high-speed, low-loss materials; for lots of bandwidth; for more data processing; more data transmission; more data storage; hub routers' storage, switches.

So it's a good thing for Park?

Oh, yes. It's a good thing for people in high-end electronics. The cloud is, I think, a big deal. I don't know much about the cloud, but when you start talking about cloud computing, it really dramatically spikes the need for Internet bandwidth.

Okay. Well, thank you.

Jiwon Lee, Sidoti & Company.

Good morning. I had some trouble with this line, but can you hear me now?

We can hear you fine, Jiwon, yes.

Let's just try to keep it simple. Brian, just wanted to ask you about that composites business — the growth that you are hoping to achieve. Just kind of going back to the customer that gave you that $13 million three-year contract, is that sort of the worries about the unnecessarily high concentration that prevents you from pursuing the business? Otherwise, why wouldn't you want more business with them?

Oh, did I say we didn't? I don't understand your question. Maybe I didn't? Is that what you're — go ahead, Jiwon.

I'm just wondering; it seems that they are obviously interested in doing more business with you.

And we are delighted about that, and we're very, very interested. But at Park we take customers seriously. We don't jump in without evaluating the situation seriously, because the last thing we want to do is commit to something that we are not prepared to live up to. So we have to evaluate it carefully.

But we are very excited to have the opportunity, but we have responsibilities, too. And I think the worst thing you could do is — what is it — jump in and then figure it out later, and realize that you don't have a plan. You don't have the manufacturing capacity. You don't have the equipment; you don't have the capability.

So we just want to make sure that even though we are excited about the opportunities, that we never disappoint. So we want to evaluate these things carefully and make sure that it's right for us. But yes, we are very pleased, very excited that we have these opportunities.

Okay. And then if we have to sort of kind of compare the margin profiles between the composites, with the mix in mind that you have on the composites side and the PCB side, are there a lot of variables?

You mean comparing electronics and Aerospace or within Aerospace and electronics?

Comparing electronics and Aerospace, please.

Okay, so within electronics and Aerospace, there's a wide array of products with different margin contribution. But as a general matter I think that they're fairly comparable. If you look at incremental contribution, incremental revenue, I would think that in Aerospace there are going to be some products which are very high margin. Probably not — probably wouldn't have too many electronics products at those margins, but you know, it's — what is it, that pyramid analysis, where there would be less volume opportunity for the extreme high-margin products? But I think that if you look at the — kind of the — what do you call it? — the wheelhouse of electronics and Aerospace, that the margins would be similar. And that means that we are talking not in the commodity area in either Aerospace or electronics.

And lastly for me. So far in the quarter how would you characterize the impact of the copper?

Did you talk about that, Matt?

Yes, we actually mentioned — the copper in the first quarter was favorable from the fourth quarter. Not a huge number. $74,000.

And compared to the prior first quarter it was negative, I guess?

It was negative compared to the prior first quarter.

Okay, great. And just one more thing if I can jab in. The geographic colors — to me it seems like the improvement in bookings and revenue activities since April was more attributable to how the Asian side of the PCB activity is. Would you say that is more correct, or would you say —?

Yes, I think that's partly true, that Asia had a significant role in the upside in April and even the bookings in May.

Okay. That's all for me, thank you.

Mr. Shore, I'm showing no further questions in queue.

Okay. Thank you very much, operator, and thank you, everybody, for dialing in today and talking to Matt and me about our first quarter. Matt and I will be in the office for the rest of the day, so if you have any follow-up questions, feel free to give us a call and have a great summer. And we'll talk to you soon. Goodbye.

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.