TransAct Technologies Inc (TACT) 2006 Q1 法說會逐字稿

Greetings, ladies and gentlemen. Thank you for holding. Welcome to the TransAct Technologies first-quarter 2006 earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded. A replay of this conference will be available until May 5 by calling 877-660-6853 with account number 3055 and conference number 199274. It is now my pleasure to introduce your host, Ms. Denise Roche. Thank you ma'am; you may begin.

Thank you. Good afternoon and welcome to TransAct's first-quarter 2006 results conference call. Joining us from the Company are Bart Shuldman, Chairman, President and Chief Executive Officer, and Steve DeMartino, Chief Financial Officer. The format of the call will be a brief business overview by Bart, followed by Steve providing details on the financials. We will then have time for any questions. If you have not yet received a copy of today's results release, please call Joseph [Bialta] at 646-536-7003 or go to TransAct's Web site.

Before we begin the formal remarks, the Company's attorneys advised this conference call contains statements about future events and expectations, which are forward-looking statements. Any statement in this call that is not a statement of historical fact may be deemed to be a forward-looking statement. Actual results may differ materially depending on a number of risk factors. For a full list of risks inherent in the business of the Company, please refer to the Company's SEC filings included in the Company's most recent Annual Report on Form 10-K. The Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the day of this call.

At this time, I would now like to turn the call over to Mr. Bart Shuldman.

Thanks, Denise, and good afternoon, everyone. Thank you for joining us on today's call. I'm pleased to tell you that TransAct had a very strong first quarter. We achieved record quarterly sales, which led to significantly-improved profitability. Specifically, revenues in the first quarter of 2006 were 16.4 million, a strong 37% growth from Q1 2005. And, we are extremely pleased to report that our earnings per share in Q1 2006 was $0.11 per share, an increase of more than 450 from the $0.02 we reported in the first quarter of last year. Importantly, we reported double-digit revenue growth in all three of our sales units. Our strong financial performance in the first quarter was a direct result of the investments we made in the business last year and also of the work we have been doing to grow sales in all three of our sales units. In addition, we have also focused a lot of attention on cost controls, which is evidenced by our strong and significant growth in profit.

Our success this quarter validates the decisions we made to invest in our organization, products and business relationships that we did last year. We understand the depth and breadth of the markets we serve and strongly believed, even through the difficult quarters in 2005, that investing in the business and concentrate on not only gaining market share but also growing our business in new markets and territories would be beneficial to shareholders in the longer term.

I will now go into some commentary about each sales unit and then turn the call over to Steve DeMartino, who will take you through the financials in more detail. First, I will start with our gaming and lottery sales unit, which experienced significant revenue growth. We grew by 58% compared to Q1 2005. All aspects of this business -- domestic casino sales, international casino sales, and lottery sales grew in Q1 2006 -- even despite the soft domestic casino market in which we are still operating. We attribute the domestic casino sales growth to our new sales relationship with JCM, which I have spoken about many times.

In addition, I am pleased with the growth we're seeing in our international markets and our latest initiative, off-premise gaming, a market for which we launched two printers in late 2005 and that is still in its infancy. While we don't expect sales for off-premise gaming printers to begin to ramp up until late 2006 or early 2007, we are anticipating this to be a significant opportunity for growth for TransAct.

That said, we see opportunity for growth in the gaming market overall. The market we address today has more than doubled since we entered the business three years ago. The growing number of slot machines and gaming devices provides a very attractive market for TransAct, and we believe it will continue to grow. Adding in Macao, China, Singapore and the rest of Asia, Latin America, Europe, adding in the expected growth here in the US from new states and expansions of existing casinos and the new off-premise market, we believe will give us a market opportunity that is three times larger than it was when we first started. This does not account for the potential new upgrade cycle coming at the end of this year for server-based gaming or downloadable games.

I want to reiterate that while we were able to increase our domestic casino sales this quarter and the market did show signs of improvement, it has not completely rebounded. Our ability to grow revenue in this business segment during this time of [volatility] is a testament to the initiatives we undertook last year to strengthen our relationship with key partners and add JCM as a partner.

Turning to our POS and banking sales unit, we grew revenues by 18% compared to the first quarter of 2005 to approximately 4.7 million. This was attributable to the great success we have had in penetrating the banking market. Adoption of our BANKjet 1500 continues. And this quarter, we continued shipments to many existing customers. As we have said in the past, this segment of the business tends to be lumpy, as the sales processed to large financial institutions is longer than it is for our other products. This is also a project-based business.

With our expanded sales team, we have made significant inroads in the industry and continue to grow our sales pipeline. But, the good news with the success we have had so far, we are now seeing this business turn into repeatable sales, banks adding new branches and buying our printers for those additions. Our investments in sales and products for this banking market are now turning into everyday sales for TransAct. And the best part, these printers use our inkjet technology. So the more printers we sell, the more inkjet cartridges sales we will see every year after.

Looking at our POS revenue for the quarter, I am very pleased with the growth in unit sales for all the printers we have launched over the last five to six years. All our new products sold well in the first quarter, including our new line of POS printers just for our distributors. The increase was across all four of our new products, including the KITCHENjet, iTherm thermal product, POSjet 1000 and 1500. We're seeing strong adoption of these new products and believe they will continue to contribute to our growth this year and beyond.

Now, turning to our TransAct Services Group, or TSG, which includes sales of our repair services, spare parts and consumables. TSG has become a significant part of TransAct business, as it truly complements our business and allows us to offer services to our customers that also further enhance our relationships with them. If you remember, we added an additional sales and service center last year in Las Vegas. We believe that the addition of the West Coast sales and service center and our expanded dedicated sales force will allow us to continue to grow this important segment of the business and has already had a meaningful impact on our revenues and profits in 2006.

TSG revenues grew by almost 20% in Q1 2006 compared to Q1 2005. A major contributor to that growth was our inkjet cartridge sales, which is one of the razor blades in our business model. We added a significant amount of resources to the sales unit in 2005, and the results are starting to pay off. This is a sales unit we will continue to invest in, as it is high margins and the opportunity for growth comes with the more printers we sell every day and the new customers we are winning.

2005 was a building year for TransAct, and 2006 is shaping up to be a year of delivery. TransAct is delivering the growth and financial results our shareholders come to expect. We have increased our industry-leading product line, strengthened our partner relationships and expanded the geographies from which we can grow our business. We believe that the business momentum we experienced in the first quarter will continue throughout 2006. More specifically, growth in our POS and banking business will be driven by our innovative product offerings and expanded sales team. Growth in TSG will be led by our three service centers that are fully operational and from a team focused solely on ramping up sales of products and services for that business.

We remain excited about the international gaining market. We're also optimistic that the domestic casino market will eventually rebound, and we are well-positioned to capitalize as it returns to normalized levels. In the meantime, we continue to gain market share and benefit from our relationship with JCM.

Based on the momentum in our business, we are raising earnings per share guidance for the full year 2006 to $0.42 to $0.46 per diluted share, up from our previous guidance of $0.38 to $0.40 per diluted share on revenues of approximately 65 to $67 million. We anticipate revenues for the second quarter to between 16 and 17 million with net income in the range of $0.09 to $0.12 per diluted share, which compares to $0.03 per diluted share in the second quarter of last year.

Let me make a comment about our earnings guidance for the second quarter. We have some expenses that will occur in Q2 that are important but did not incur in Q1 and will probably not repeat after Q2. First, we are filing many -- and I mean many -- patents in the international markets, as we continue to get excited about the gaming prospects in the many international markets I spoke about. The expense to file those patents will be felt in Q2, and for all practical purposes are non-recurring. You only have to file once in each country. I am sure you agree with me that protecting our intellectual property is extremely important and something we must and should do. This is just a timing effect when the filings are ready to go and the expense is incurred.

In addition, we have many more tradeshows in our second quarter than we have in our first quarter. This extra expense was planned for, but it does happen in Q2. I felt it important to highlight these two items. So you can judge accurately the results for both Q1 and Q2 2006.

As we look out into the coming quarters, we are excited about the potential for growth for TransAct. We still have many things to do and remain committed to growing the business and delivering growth to our shareholders. With that, I will turn to call over to Steve DeMartino for our financial summary. Steve?

Thanks, Bart. I will begin with a quick review of our financial results for the first quarter. Net sales for the first quarter '06 were 16.4 million, which I'm happy to say is our highest quarterly revenue ever recorded since we went public in 1996. This represents a 37% increase over our first-quarter '05 sales of $12 million. As Bart said earlier, we saw double-digit, year-over-year revenue growth across all three of our sales units this quarter -- 58% in gaming and lottery, 18% in POS and banking, and 20% in our TransAct Services Group. In addition, we saw double-digit sequential sales growth across all three sales units over the fourth quarter '05 as well.

Gross profit in the first quarter '06 was 5.7 million compared to 3.7 million in the same quarter of '05. Our gross margin substantially improved to 34.6% from 30.6% in the first quarter '05 and 24.7% in the fourth quarter last year. Our return to a more historical level of gross margin in the first quarter of '06 was the result of higher sales volumes and a more favorable sales mix as well as our continued focus on inventory component cost savings.

Operating expenses for the first quarter of '06 were 4.4 million -- I'm sorry -- 4.1 million compared to 3.4 million in the first quarter '05. The increased level of expenditure for the first quarter was in line with our expectations and reflects the full quarter effect of initiatives and staff additions we made to our organization throughout '05. These included the establishment and staffing of our three strategic sales units, doubling the size of our sales force companywide, opening our Las Vegas service center and launching seven new products. Looking forward, we do expect operating expenses for the second quarter of '06 to be somewhat higher than the first quarter, primarily for two reasons. First, as planned, we will attend more tradeshows in the second quarter than the first, so our tradeshow and promotional marketing expenses will be higher. Second, as Bart mentioned, we plan to significantly expand our patent coverage into key international markets, resulting in higher legal expenses in the second quarter compared to the first. We do not expect these legal expenses to repeat beyond the second quarter.

Our operating income in the first quarter of '06 increased to approximately 1.6 million from only $200,000 a year ago. Our operating margin also improved to 10% in the first quarter '06 from 1.9% in the first quarter '05, demonstrating the operating leverage we expect to experience in our business as our sales volume increases. We earned 14,000 of net interest income in the first quarter of this year compared to 20,000 of net interest income in the first quarter of '05. It is important to note that because we bought back $700,000 of our stock during the first quarter, our average cash balance was less, which led to lower-reported interest income. We recorded an income tax provision at an effective rate of 35.5% in the first quarter '06 compared to 35.3% in the first quarter of '05.

Net income for the first quarter '06 was 1.1 million compared to 200,000 in the first quarter '05. We posted much-improved EPS for the first quarter at $0.11 per diluted share compared to $0.02 per diluted share in '05.

Now, looking at our cash flow. During the first quarter, we generated approximately 2.2 million of cash from operations. We used approximately $700,000 of our cash generated from operations during the quarter to repurchase our common stock. I will talk a little more about the details of our stock buyback program shortly. We also spent approximately $1 million in capital expenditures during the quarter, largely for the ongoing implementation of Oracle software and the purchase and implementation of a new companywide phone system. Both of these projects should lead to long-term efficiencies within our organization as well as improved service to our customers. So, even after spending 700,000 on our stock repurchase program and $1 million in capital expenditures, we still grew our cash balance by $700,000 during the quarter and we still have no debt outstanding.

Our working capital increased slightly to 15.5 million at the end of the first quarter '06 from 15.4 million at the end of '05. However, our current ratio declined to 2.5 to 1 at the end of the first quarter from 3.2 to 1 at the end of December '05. Both metrics remain strong but are being impacted by the uptick in our business. Remember, 2005 was a difficult year from a financial perspective. As a result, we significantly reduced inventory levels and inventory purchases during 2005 accordingly. Now that we see our business picking up again in '06, we are increasing our inventory purchases and our inventory levels to keep pace with demand. This increase in inventory purchases has led to a sizable increase in accounts payable. In addition, with the business picking up, we are reporting increasing levels of pre-tax income in '06 compared to '05, which has led to an increase in income taxes payable. These factors have impacted our current ratio during the first quarter.

Our EBITDA for the first quarter rose to 2.2 million compared to only 700,000 in the first quarter of '05. Depreciation and amortization for the first quarter '06 totaled a little under $400,000. And non-cash compensation expense, which now includes the expensing of stock options for the first time, was $150,000. Non-cash compensation expense from stock options, which we are now required to expense under FAS 123R, was approximately 21,000 in the first quarter. As you can see, we do not expect stock option expenses to have a significant impact on 2006 earnings. We have included the expected impact in our guidance.

Let's now take a look at our balance sheet at the end of the first quarter. Our total assets were 33.6 million compared to 29.3 million at the end of December. We ended the quarter with approximately 5.3 million of cash and cash equivalents compared to 4.6 million at the end of December. Our cash balance increased by $700,000, even after repurchasing 700,000 of common stock and incurring almost $1 million of capital expenditures during the quarter.

Receivables were up this quarter to 10.1 million from 8.4 million at the end of December, reflecting our record quarterly sales volume during the quarter and more specifically our record sales month in the month of March. Even with the record level of sales, we once again improved our average day sales outstanding, and overall collection experience continues to be excellent. Our inventories were up to 7.2 million compared to 6 million at the end of December '05. You'll note that although our sales increased 31% over the fourth quarter '05 and we reached record unit production levels in the month of March, our inventories only increased 20% as we continued to effectively manage our inventory level and increase inventory turnover.

Shareholders' equity was 22 million at quarter-end compared to 21.3 million at the end of December '05. The increase was largely the result of our net income of 1.1 million for the quarter and proceeds from stock option exercises of $200,000, offset by stock repurchases of 700,000.

Lastly, as I mentioned earlier, as part of the stock repurchase program authorized by our Board at the end of March '05, to date, we have repurchased almost 580,000 shares for a total purchase price of 4.6 million, including an additional 74,800 shares purchased in the first quarter '06 for $700,000 at an average price of $9.33 per share. So, to date, we bought back approximately 6% of our total shares outstanding, which now stands below 10 million shares at approximately 9.7 million shares. Just as a reminder, under our current buyback program, we are authorized to repurchase up to $10 million of our common stock through March 2008.

That concludes the financial portion of the discussion. With that, I will turn it back to Bart.

Okay, operator -- thanks, Steve -- at this time, we will open up the calls to questions.

(Operator Instructions). Jeff Martin, Roth Capital Partners.

It looks like you had a great quarter there. Could you -- Bart, could you give us an idea of how you expect the three different business units to trend throughout the year without getting into too much granularity. It looks like you are expecting at least 16 million a quarter from here on out. Should we expect quite a pickup in point-of-sale? I know you suggested that was a good growth opportunity -- or a good growth avenue last quarter. Maybe start there and then go to gaming lottery and then the TSG as well.

Yes, I think the nice thing about what we experienced in the first quarter was how well POS and banking did in the first quarter. Because, normally, after the fourth quarter, which is kind of a slow quarter, that business ramps up Q1, then Q2. And then Q3 is our biggest quarter, and then of course with the seasonality, comes down in Q4. If you look at Q1, it was just a strong quarter across the board. We are expecting to see that grow each quarter going out. The nice thing about what we are seeing in POS and banking -- one, repeatable banking business. We've won a bunch of banks. Now they are coming back and buying more printers from us for either expansions or additional teller stations they are putting in. So, that's becoming now repeatable business, not just project by project. The other thing is, all the new products -- our inkjet products and thermal products that we brought to market the last couple years -- have all increased in sales year to year. So, all the new products that we are bringing out are selling.

All of this is being done with our new distributor products, our new distributor relationships and the international growth. But, we are looking for in POS and banking in the second half of the year -- and we really haven't factored much of that in yet -- is our new [wireless] label printer, which is getting a lot of attention. I will be able to talk a little more about that as we get into the second half of the year. But, that could have a meaningful impact on sales in the second half of the year.

TSG will continue to grow just because every day, we are selling more printers. Jim is out selling services. He's selling the spare parts; he's selling the consumables and all that. So, we should see that grow each quarter.

Then, gaming and lottery is really -- what we've seen right now is clearly the international markets. We picked up some growth there. The domestic market is still pretty soft, as you'd probably heard from other customers. But, we believe we grew some nice market share, so we are able to actually grow that business this quarter, even though we are in pretty much a difficult time. When we start looking at what's coming online -- Pennsylvania, New York, Florida -- we did some work in Macao with some printers. We did some very special things for the Macao market, which we're very about. That should hit in the second quarter, third quarter. Then, we've got potentially the upgrade cycle coming for this so-called downloadable games or server-based games at the end of the year.

So, we are -- we're looking at the back half of the year as a gaming business picking up. We're looking at the new jurisdictions coming online. We've got some expansions coming online. You've got the new casino with [win]; you've got the new markets opening up. So we should see that -- we're optimistic -- cautiously optimistic that we will see that domestic market come up in the second half of the year, if not towards the end of the year. And then, of course, into '07, then we're going to see some pretty significant growth in '07. So, what we are really pleased about is even in the difficult domestic market, we are able to grow our business nicely.

Okay and maybe you could do the same for margins in general companywide and how you expect that to play out throughout the year? Should we see expansion or should we see maybe a return to the 35, 36% level and hold that level?

Yes, I think you could -- what's going to happen is we're going to continue to see margins come up as sales go up. Now, we do have one or two things hitting in the second quarter, like I told you we've got -- we've filed -- we are in the process of filing many international patents. That's going to have some extra expense in Q2 that won't recur. But, as that volume comes up, we're going to see gross margin expansion. I would say 35, 36% is fine. And then your operating expenses hold, so your bottom-line operating profit margin will continue to expand. That's the leveraged model that we have been -- we've developed over the last couple years. As revenue comes up, EPS expands faster.

Does the -- in the patent submission, does that affect gross margins or does that affect the operating margin?

Operating margins, Jeff. It will affect our operating expenses.

Then, Bart, are you able to quantify the impact of the JCM relationship in any way?

You know, internally, I could. But, we don't really break out those numbers. I mean, clearly, we are pleased. We were quite strong at the OEM level, where we have been dealing with the slot manufacturers since the early '90s when we made impact VLT printers. What JCM brought to us was an existing sales and technical personnel that were dealing with the casinos directly. It's had a profound effect on our relationships with these casinos, the pull-through that's going on. And we are pleased. They're also helping us in other areas -- Macao, Latin America. So we are really pleased with what's going on with that relationship.

Do you care to take a stab at what your domestic casino market share was in the quarter?

You know, I don't have those numbers in front of me. But we are pleased with the growth that we are experiencing.

Any sales to your friends in Illinois there in the quarter?

Some. Especially our new -- Jeff, the Epic 950 has really got a following now. And that is a product that when the customer requires, they have to put in. So, we are getting a lot of attention to the Epic 950.

Brian Bares, Bares Capital Management.

I will echo that sentiment. Good quarter, guys. I know you ramped up staffing and sales and marketing recently. Is that where you want it to be now or are there further additions planned?

For this year, we're done. Basically, we put the expense in '05 and we are done. Quarter by quarter, expenses kind of fluctuate. Like Q2, we've got a pretty significant tradeshow planned, nothing out of the ordinary. There's a bunch of tradeshows that actually happen in POS market in May and June. But, we're done; we've added the people. We've doubled the sales force basically, and you won't see much different expenses going forward.

Then can you talk a little bit about how much big of a market opportunity this off-premise gaming is and maybe give us a little bit more color on how you see that evolving?

I like to think about it as almost the size of the domestic casino market when we first started, which was 500,000, 600,000 machines. When we look at the off-premise market, we start looking at things like amusement with prizes in the UK, fixed-odd betting terminals in places like the UK and Germany. When you start thinking about pachinko machines in Japan, where we've already had some conversations in that market, we're working on some things there. When you start looking at betting parlors, where they have so-called slot machines or roulette machines, we look at it as a potential 500,000 to 600,000 machine market for the Company worldwide, which is basically the size that we saw the domestic casino market to be. So, that's why we think our addressable market now with the printers that we have, the new printers that we launched for this off-premise market probably is approaching 2 million machines.

Then finally, Steve, did you give a CapEx guidance for the year? I think I've got modeled in 2.5 million of what you've spent already. One, does that sound right?

Yes, that should still be a good number.

Yes, you know one of the things by the way is, we are talking on our new phone system, which we went with the IP phone system, the Internet protocol, which not only is saving us money from a standpoint of using the Internet for our phones but has made the -- because we are now in multiple areas of the world. We've got service centers in the UK. We've got service centers here and in Las Vegas. To our customers, it's seamless. Anybody can dial into the Company and reach anybody, and it's all at cheaper prices because it's all the Internet. So, we're actually talking on our new phone system that we just put in.

Well, it sounds great.

Jonathan Tanaka, Wachovia Securities.

Good quarter. In your Annual Report, you reported $8.3 million order backlog, which is up 2.5 times last year's order backlog. Was this caused -- well, first of all, is that a record backlog?

That's a great question.

I don't know.

You know, Jonathan, it's a great question. We will call you with an answer. That's a great question.

Could you give us some character behind this? Was it caused by an unusual event or is it a good reflection of order strength and momentum?

You know, it's really a good reflection of the order strength. When you look at the quarter that we had, I mean clearly, we got some incremental business from GTECH compared to last year and that's based on just getting back to more historical levels, based on kind of the lousy year we had with them last year. But, when you look at the POS and banking market, we had a strong quarter. It was a good, solid quarter. The gaming market with the many more OEMs that we're dealing with, we had a strong backlog. So, it's really kind of across the board. It really reflects the good quarter that we had in Q1.

I know it has just been a couple months, but has the order backlog continued to increase?

You know, I don't have that number in front of me. So, you know what we will have to get you back that answer. But, like you see, we are expecting Q2 to be just as strong.

Do you still break out your GTECH backlog?

No.

Then, the next question I have is regarding the pachislot printer, are you currently the only Company that offers a printer for that market?

Are you talking off-premise?

I guess it's off-premise. I believe you are going to have a printer offered for the pachinko parlor machines.

Right now, in our class of printers, we don't know if there's another competitor right now. What we've been doing is going around the world, talking to customers -- more the manufacturers -- about the use of printers instead of coins. The first area that we -- what we're having success of course is Europe, and that's because of all the off-premise gaming that goes on. I mean I don't know if you've been into a pub lately in the UK, but there are all these amusement with prizes machines. The common term is fruit machines. There's probably 200,000 in the UK alone. They are talking to us about printers. We've done some things with fixed-odds betting terminals already with printers. We are talking to customers in Japan right now about the use of printers.

We've got our two -- what we've done is we've standardized all of our gaming printers under the Epic brand. So, you will hear Epic 950 for our casino customers, and then you will hear the Epic 430 and the Epic 630 for our off-premise. The Epic 630 is also going into the VLT market, which in one way you can almost call that off-premise in places like New Orleans or in the West Coast where they have so-called lottery slot machines that just produce a ticket, do not produce any coins, do not drop any coins. There's no ticket in/ticket out; it's just a receipt. There, we're using the 630 for that market and that used to be our Model 70. We used to sell the Impact Model 70 into that market, and the 630 is now replacing that.

(Operator Instructions). [Grain Ream], Bares Capital Management.

I was wondering if you guys could quickly comment on the future logic legal proceedings if your position has changed on that and if there's any sort of timeframe for resolution.

Yes, we haven't -- we've been advised by our lawyers that we can't say anything. So, at this point, there's nothing I can comment on.

Jeff Meyers, Intrepid Capital.

Nice quarters, guys. So quick question -- I think this might have been alluded to a little bit earlier. But, I know you guys had customer -- a casino customer last year, who had a little too much inventory and that they weren't buying for that reason. Has that situation resolved itself? If not, I guess what sort of timeframe do you expect to see a resolution in?

You know, I wouldn't call it a resolution. It's just they are using up the inventory. It should be over by the second quarter, and that's what we've been telling everybody. The nice thing about the first-quarter results is that it had very little of that customer's sales because they were eating through their inventory. We will probably see Q2 come up a little as they eat through that inventory and then those sales have meaningful impact on the positive side to Q3 and Q4. So, the good thing about Q1 is there was very little sales to that customer as they ate through their inventory.

[Joe Bacho], Pequot Capital.

Bart, just a question for you. You talk a lot about the expenses from tradeshows and also just higher expenses in the second quarter. Just confirm that is factored into your $0.09 to $0.12 guidance?

Yes. What I wanted to do is -- especially with the legal costs of filing all these patents, when you are looking at our numbers, there are in Q2, there's going to be a bit more legal expense in Q1 and it's just for filing these patents. Like I said, it's pretty much non-recurring onetime -- it's not a onetime charge, it's a onetime expense. So, I wanted to give some color to the shareholders of what's going on in Q2 and just the ebb and flow of tradeshows. Q2 is normally a very heavy tradeshow quarter for us and then the end of Q3 into Q4 is also. But, Q1 tends to be light, but that's all factored into our guidance, Joe.

You may have done this earlier, but is there any way to quantify that in terms of just how much we should think is -- call it onetime?

We haven't. We will try to do that. We have not.

Gentlemen, there are no further questions at this time. I would now like to turn the floor back over to Mr. Shuldman for closing comments.

I thank you for joining us today. I appreciate all the questions. Our annual shareholders' meeting is in May. So, we look forward to those that want to come to the annual shareholders' meeting, and I look forward to talking to those investors. We will be at AEA Micro Cap next week. Steve and I will be presenting Monday morning and then Monday afternoon in the breakout sessions. Then I look forward to talking to everybody on our second-quarter conference call. Thanks for attending.

Ladies and gentlemen, this concludes today's conference. Thank you all for your participation. You may disconnect your lines at this time.