Vishay Precision Group Inc (VPG) 2020 Q4 法說會逐字稿

Good day, and welcome to the VPG 2020 Fourth Quarter and Fiscal Year Earnings Conference Call. (Operator Instructions) Please note this event is being recorded. I would like now to turn the conference over to Steve Cantor, Senior Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to VPG's 2020 Fourth Quarter Earnings Conference Call. Our Q4 press release and accompanying slides have been posted on our website. An audio recording of today's call will be available on the Internet for a limited time and can also be accessed on our website.

Today's remarks are governed by the safe harbor provisions of the 1995 Private Securities Litigation Reform Act. Our actual results may vary from forward-looking statements. For a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2019 and our other recent SEC filings.

On the call today are Ziv Shoshani, CEO and President; and Bill Clancy, CFO. And now I'll turn the call to Ziv for some prepared remarks. Please refer to Slide 3 of the quarterly presentation. Ziv?

Thank you, Steve. I will begin with some commentary on VPG's consolidated financial results and sales trends for the year and for Q4. Bill will provide financial details and our outlook for the first quarter of 2021. On Slide 3, we ended the year on a solid note. Before discussing the fourth quarter in detail, I want to summarize some of the key highlights of 2020 for VPG.

Looking back to the beginning of last year, it is difficult to image the human, social and economic impact from a global pandemic that has touched every part of the world. Despite the challenges, I'm proud of how VPG's team responded and the resilience we demonstrated and continue to demonstrate through this global crisis. I want to list a few of our accomplishments.

First, we responded quickly and decisively to the challenges of the pandemic as we put in place measures to protect our employees and our customers. These measures included workplace distancing and enabling employees to work remotely if their job permits it, restricting travel as well as cost control, such as salary freezes.

Second, with the exception of our Force Sensors operation, we continue to operate through the crisis, and we're able to seamlessly serve our customers around the world. Third, when government imposed a lockdown in India, significantly impacted our operation, resulting in $10 million of revenue shortfall for the year. We overcame numerous challenges to return to full production by the end of the third quarter.

And fourth, we continue to implement our long-term strategies and investments, which included growing our advanced sensors business by 41% to an annualized run rate of more than $35 million and moving forward with adding additional manufacturing capacity to support future advanced sensors growth with the new facility. And most importantly, I would like to thank the VPG employees around the world for their dedication and customer focus during a turbulent and challenging 2020.

Moving to Slide 4. Looking at the fourth quarter, we achieved fourth quarter sales of $75.4 million, which was 11.7% higher than the third quarter and 9.1% higher than a year ago. Sales grew across our portfolio of businesses and across our end markets, with double-digit sequential growth in the test and measurement, transportation and avionics, military and space markets and continued strength in some of our other markets such as consumer, medical and precision agriculture.

Orders grew 9.4% from the third quarter of 2020, although trends across our end markets continued to be mixed. The majority of our markets continued to rebound, reflecting the improving economic outlook. On the positive side, we had stronger sequential orders in the test and measurement, transportation, industrial weighing and general industrial. Although these markets remained below pre-pandemic levels, demand in consumer, precision agriculture and medical also continued at high sustained levels.

Our project-driven orders in the steel market and in avionics, military and space market remained soft. While demand for the majority of our products is generally driven by economic and industrial activity and our customers' product cycle, our higher average selling price systems like our KELK, DSI and Pacific Instruments products are generally driven by specific customer capital projects in the steel and avionics, military and space markets.

The quarter-to-quarter variability of orders for these products is due to the project-driven nature, which is what we have experienced in the fourth quarter. The net results of these trends was a book-to-bill of 0.93 for the fourth quarter. Our adjusted gross margin in the quarter was 38.0%, included headwinds due to unfavorable product mix as well as temporary effects of inventory reductions and certain manufacturing inefficiencies as compared to the third quarter of 2020.

However, in these items, we were -- if these items were at normal levels, adjusted gross margin would have been in the 40% range, similar to the level we reported in the third quarter of 2020. We achieved an adjusted operating margin of 10.7% and an adjusted earnings per share of $0.43 in the fourth quarter, which were in line with our quarterly target model.

Moving to Slide 5. Turning to the results by segment. We achieved sequential growth in the fourth quarter across all these -- all 3 business segments. Foil Technology Products fourth quarter sales of $36.5 million grew 10.9% sequentially and 23.1% from a year ago driven by a strong performance in the precision foil resistors, advanced sensors product line and Pacific Instruments product lines.

Sequentially, the increase in precision foil resistors reflected growth in the test and measurement market, particularly for semiconductor test equipment. Advanced sensors had another great quarter, growing 5% sequentially and 71% year-over-year driven by strong demand for consumer-related applications. Our Pacific Instruments product line grew sequentially and year-over-year in avionics, military and space market.

Adjusted gross margin for FTP was 38.9% in the fourth quarter of 2020, declining from 41.6% in the third quarter of 2020, but improving from 34.9% in the fourth quarter of 2019. The sequential decline in adjusted gross margin primarily related to unfavorable product mix, manufacturing inefficiencies and inventory reductions, which was partially offset by higher volume.

The book-to-bill for FTP was 0.84 in the fourth quarter, which reflected a sequential decline of $2.5 million in orders, a portion of the decline related to lower orders for Pacific Instruments' data acquisition systems. Orders for these systems are driven by specific defense projects, which can have longer order cycle.

In addition, orders for advanced sensors declined from an exceptionally strong booking quarter in the third quarter of 2020, but remained at high level, given strong demand in its end markets. Orders for our precision foil resistors increased, reflecting demand in the test and measurement end markets. The pipeline of opportunities for advanced sensors continues to be robust, which underscores our confidence in the investments we have made in this initiative.

We are continuing to operate at a maximum manufacturing capacity for advanced sensors, while we move forward with the installation and qualification of the equipment that will give us the needed additional manufacturing capability at our new facility. We are on track to complete the transition to the new facility in the third quarter of '21.

For the Force Sensors segment, it was a quarter of continued recovery. Fourth quarter sales of $16.3 million improved 17.2% from the third quarter of 2020. Driven by orders and backlog, we are operating at a pre-pandemic level at our India facility. In terms of OEM-specific Force Sensors products, which is one of our key growth initiatives, sales grew 27% sequentially.

Financially, Force Sensors adjusted gross margin of 29.6% in the fourth quarter declined from 31.2% in the third quarter, but grew from 24.2% in the fourth quarter of 2019. The sequential decline in adjusted gross margin was primarily due to a reduction of inventory, partially offset by an increase in volume. Book-to-bill for Force Sensors was 1.18 as orders for both industrial weighing applications and OEM products for precision agriculture, medical and construction applications were higher.

Sales of Weighing and Control Systems in the fourth quarter of $22.7 million increased 9.4% sequentially, but declined 7.1% from a year ago. Sequentially, we had higher sales of our on-board weighing solutions and process weighing solutions in Europe, while steel-related sales were flat. Sales of our TruckWeigh, VanWeigh rebounded by 46% from the third quarter, and we see the potential for the EU regulation-driven aftermarket opportunities for these products to accelerate in the second half of this year.

Adjusted gross margin in the fourth quarter for WCS was 42.5%, adjusted for COVID impacts, and declined from 44.9% in the third quarter, mainly due to unfavorable product mix and inventory reductions, partially offset by higher volume. In terms of sequential trends in WCS segment, orders for on-board weighing and process weighing products were higher. KELK and DSI orders were soft. Demand for KELK products typically have a 2-quarter lag relative to inflections in the steel market. The result of these WCS orders trends in the third quarter was a book-to-bill of 0.88.

As we think about 2021, we are encouraged by the progress being made around the world regarding vaccinations and bringing the rate of COVID infections down. While there is much more to do, and there are many risks still remaining before the pandemic is fully under control, we believe that as the world and our market returns to normal, we have the foundation and the ongoing customer opportunities to achieve a year of growth and execution across our businesses.

Many of those opportunities are a result of initiatives we have put in place and executed over the past several years such as our advanced sensors initiative and the move to optimize the manufacturing footprint for Force Sensors. As part of these long-term strategic initiatives, we expect to continue to implement further organic growth and cost savings projects.

We are also continuing to look for attractive acquisition opportunities to add additional high-quality strategic businesses to the VPG platform that will further accelerate our growth and profitability. I will now turn it over to Bill Clancy for additional financial details. Bill?

Thanks, Steve. Referring to Page 6 of the slide deck. In the fourth quarter of 2020, we achieved revenues of $75.4 million, gross profit of $28.7 million with 38.1% of sales, operating income of $5.9 million or 7.8% of revenues and net earnings per diluted share of $0.01.

During the quarter, however, we had the following adjustments to our P&L, a noncash charge of $2.4 million related to the impairment of goodwill and indefinite-lived intangible assets for Pacific Instruments, $0.5 million of net credit mainly related to a COVID-related subsidy from the Canadian government and $200,000 of restructuring charge. In addition, because we maintain operations in Israel and certain locations in Asia, changes in exchange rates may be a meaningful factor in understanding period-to-period comparisons.

Beginning this quarter, we are adjusting our adjusted net earnings and adjusted net earnings per diluted share for the impact of foreign currency exchange rates on our remeasurements of assets and liabilities. These adjustments are reflected on a comparable basis in the non-GAAP reconciliation tables in our press release. Consequently, we recorded a foreign exchange loss of $2.1 million in the fourth quarter, mainly reflecting the strengthening of the shekel relative to the dollar in the fourth quarter, which impacted our balance sheet items, including our lease liabilities.

Considering these adjustments, our adjusted gross profit was $28.7 million or 38% of sales. Adjusted operating income was $8.1 million or 10.7% of sales. And our adjusted net earnings per diluted share was $0.43. Our fourth quarter 2020 revenues increased 11.7% compared to $67.5 million in the third quarter and increased 9.1% from the fourth quarter a year ago. Foreign exchange for the fourth quarter of 2020 had a positive effect on revenues, up by $1.4 million compared to a year ago and $700,000 as compared to the third quarter of 2020.

Our gross margin decreased in the fourth quarter at 38.1% from 40.5% in the third quarter. On an adjusted basis, the fourth quarter gross margin of 38% decreased from 40.5% in the third quarter of 2020. Our operating margin was 7.8% for the fourth quarter of 2020. Excluding the above-mentioned charges and COVID-19 subsidy, our fourth quarter adjusted operating margin was 10.7%, which decreased from the 11.7% we recorded in the third quarter of 2020.

Selling, general and administrative expenses for the fourth quarter of 2020 were $20.2 million or 26.7% of revenues compared to $20.2 million or 29.2% of revenues for the fourth quarter of 2019 and compared to $19.1 million or 28.4% of revenues in the third quarter of 2020. Of the $1 million sequential increase in SG&A, approximately $400,000 related to the impact of foreign exchange.

The adjusted net earnings for the fourth quarter of 2020 were $5.8 million or $0.43 per diluted share compared to $5.3 million or $0.39 per diluted share in the third quarter of 2020. We generated adjusted free cash flow of $5.9 million for the fourth quarter of 2020 as compared to $1.4 million for the third quarter of 2020. We define our adjusted free cash flow as cash from operating activities, less capital expenditures, plus any sale of fixed assets.

Our capital expenditures for the fourth quarter were $7.1 million, which relate primarily to the purchases of equipment and related infrastructure for the new advanced sensor facility. For the full year of 2020, we invested $22.9 million of capital expenditures. As part of our long-term capital allocation strategy, in 2021, we expect CapEx to be in the range of $24 million to $28 million, of which approximately 2/3 relate to expansion and cost reduction projects primarily in the FTP segment for advanced sensors and precision foil resistors.

We recorded a tax expense of $1.7 million in the fourth quarter of 2020 related to the acquisition of DSI, to utilize deferred tax liabilities against deferred tax assets. We are assuming an operational tax rate in the range of 27% to 29% for the 2021 planning purposes.

On Slide 7, we ended the fourth quarter with $98.4 million of cash and cash equivalents, an increase of $8.6 million from the third quarter. Our total long-term debt was $40.6 million. We believe that we have a strong balance sheet and ample liquidity to support our business requirements and to fund additional M&A opportunities.

The outlook. Given the improving business environment, our strong cash flows, financial positions and strategic investments, gives us confidence that we can achieve growth in 2021 as the global economy and our markets continue to recover from the pandemic. For the first fiscal quarter of 2021, at constant fourth fiscal quarter 2020 exchange rates, we expect net revenues to be in the range of $63 million to $70 million.

In summary, we were pleased with our fourth quarter top line performance. Despite the impacts to our gross margin, we achieved an adjusted operating margin in line with our targeted model. Our advanced sensor business continues to perform well and the transition to the new advanced sensors facility is proceeding on track. And finally, we expect our business trends to improve through the year as the global economy and our markets continue to recover.

With that, let's open the line for questions. Thank you.

(Operator Instructions)

And the first question comes from John Franzreb with Sidoti & Company.

I guess I want to start on the advanced sensors. Ziv, you said that the order bookings was down in Q4 versus Q3, but Q2 is extremely strong. Could you just elaborate, a, a little bit more about that? And b, how did the January bookings play out?

Okay. So regarding advanced sensors, as we indicated, there is another record quarter in terms of revenue, and we did report the run rate. If we annualize that, now we are over $35 million.

As we stated already, a quarter ago, John, we are running at 100% capacity. The fact that we were running at full capacity, in addition to the fact that we had already received very, very high order levels, I have to say that if we look just -- if we are looking at just reconciling the orders, quarter-over-quarter, the complete gap is a semiannual order that has been placed in Q3, that has not been placed in Q4 and are expected to continue going forward.

So the environment is, for advanced sensors, is strong, is strong based on our consumer product. It continues to be strong with the expectation of other end markets to continue and rebound further along the year. And the fact that we are adding more capacity and transitioning to the new facility only indicates that we would continue to see strength for this product line in 2021.

And Ziv, would that facility be completed by the second quarter of 2021? Or has the time line changed in any way?

As we indicated, the transition will be as of now is expected to be completed end of Q3.

Q3. Okay. And I guess, regarding the currency, and so along the currency impact a little bit, could you talk a little bit how it's impacted the gross margin line and the operating expenses in the quarter, and we should be thinking about that on a go-forward basis? I know these steps really hurt you, probably at a 10-year high at this point.

Okay. So John, good question. Yes. So John, so if we look at the currency impact sequentially, the total impact on the operating margin was $200,000 negative. And year-over-year, fourth quarter to fourth quarter, down to the operating margin, the impact was 0 on the operating results.

All right. Then -- I was just actually looking at the sequential impact on the cost of goods sold. I'm curious what would be the step-up be then?

All right. So on a sequential basis, I mean, the impact of the exchange rate was a positive $200,000, sequentially.

So John, if you are looking just to reconcile the adjusted gross margin quarter-over-quarter, as we indicated, the biggest impact is -- or the main effect is not coming from X rate. The main effect -- and I would like to state that, as you know, Q3 was an extremely, exceptionally very, very high adjusted gross margin.

But nevertheless, to reconcile that the impact came from close to, I would say, well, it's $900,000, a temporary $900,000 came from inventory reduction and the year-end physical, then we had an additional unfavorable product mix of $500,000.

We had around 200 -- $200,000 of additional logistics costs due to the fact that the freight forwarders and the capacity constraint of logistics from Asia to the U.S. and to Europe is not back on track. While as the year moves along, we expect those freight and logistics cost will go down and manufacturing inefficiencies of around $300,000, mainly coming in the advanced sensors due to the fact that as we are running at 100% capacity, every small hiccup can generate a larger effect, which is a temporary one.

So all in all, I think that, by far, most of the effects, over $1.5 million, is -- those are temporary effects that should not continue along the year. But that's really the gap between the adjusted gross margin, Q3, in respect to Q4.

The next question comes from Sarkis Sherbetchyan with B. Riley Securities.

I just want to touch on the 2021 CapEx guide. I think you mentioned $24 million to $28 million on the year, 2/3 of that relating to the expansion and then cost reduction initiatives at FTP. Can you maybe help us understand the cadence of spend? Is that going to be more loaded towards -- to the first half of the year? Or is that going to be pretty ratable as the year goes by?

Okay. Generally speaking, if we take a typical or a normalized year given the capital equipment lead time, we would always see higher spending to Q3. And generally speaking, Q4 would be the highest. This 2021 is kind of a carryover in respect to COVID and in -- in respect to COVID, therefore, we have been placing orders for equipment that were -- that to some extent, I would say, around 25% of that were not -- our suppliers were not able to ship us in 2020. And the expectation is to get it in 2021.

So I would say that we may see still the second half of the year slightly higher than the first half, but not such a -- not -- the gap would not be as high as we would expect in a normalized year. And maybe the other thing, it's important to state that, that last year, the focus was more on the infrastructure with the new facility.

And this year, most of the capital investments would be in equipment around FTP, and we are going also to invest much more in precision resistors for expansion and cost reduction in order to enhance and support organic growth.

Understood. Can you expand on your decision to invest in precision resistors? Is this something that is in conjunction and helpful towards your advanced sensor business? Or is this something that's a little bit more independent? And do you see some clear trends or if there's a business case to be made for that? Can you maybe touch upon this?

Sure. Sure, absolutely. FTPs consist of 2 main platforms: 1 is precision resistors; and the other 1 is so-called strain gage data acquisition platform. So we are speaking about precision resistors, which is kind of a completely different business. We have identified opportunities to develop new, I would say, new products and new platforms in order to reach out to, I would say, to higher volume applications.

Therefore, the intention is to expand infrastructure capacity in our Japanese facility, mainly in order to enhance our longer-term plans to support those higher volume opportunities, which would be mainly around the test and measurement applications.

Okay. Just want to switch over to the outlook here for the first quarter of '21. You mentioned a range of $60 million to million 70 -- $70 million in sales. I think if I take the midpoint of that guidance level, it's down low single-digit year-on-year. I just want to get your sense for the guidance. And as we look towards your expectation for growth for the year, would you expect the growth to layer in by the midpoint of this year or by the end of this year? Just trying to get a sense for reconciling your expectation for growth relative to the guidance we see today.

Sure. Sure, absolutely. So first, it's important to state that orders for the quarter has increased 9.4% in respect to prior quarter, and the backlog is still very strong at $87.6 million. The fact that we have been providing this guidance is due to our shipments' commitments. The backlog is a reflection of our shipments' commitments to our customers, which means we have seen some orders being placed for the second quarter.

In addition to that, we have seen that the backlog is also composed, to a less -- to -- a composite of our backlog reflects also a lower portion of our project-driven orders like KELK and like DSI.

At this point in time, given the environment that we have indicated and the expectation for all our end markets to rebound, except steel, which at this point in time, it is fairly still soft due to the fact that we are -- that our -- as I indicated, it's 2 quarters lagging behind.

I would say that we should expect to see an improved business environment as of the beginning of the year, which means we will not have to wait to the end of the year. Things will start to continue and flow through the year. So the expectation of an improved environment will continue as of Q4, will -- our expectation is will continue gradually as we move along the year, starting in Q1.

The next question comes from Dick Ryan with Colliers.

Ziv, on the advanced sensors, you're running at capacity, expansion coming on in third quarter.

Are you losing any opportunities with customers potentially saying the design phase, waiting for the expansion is too long? Are you losing out on any opportunities?

And then maybe an additional question. I think your building capacity, 40% above the run rate, it wouldn't seem unreasonable to think you're going to be knocking on that door as we get towards the end of the year or the first part of next year. What sort of one-timer's experience or financial resource-wise that you build, the initial capacity, won't you have to go through as you expand that facility further over the next few years?

Okay. Great. So let me start maybe with the first part of your question. So it is, in a way, kind of insinuating that if you're running at 100% with a certain capability, you potentially may lose, let's say, opportunities.

So first, I have to say that we are -- that we understand that at this critical time, those are good problems, but nevertheless, it's still critical times. We have to manage quite well our customer satisfaction, our customer's lead time and to be able to deliver that.

On the -- I have to say that in addition to that, as we have started to put in place new equipment in the new facility, we would be running in parallel, ramping up the new facility while maintaining at 100%. So we will not have to wait until the complete transition in order to get the full additional capacity on board. So we would expect to see, hopefully, I would say, within 2 quarters, much more capacity in place.

In addition to that, the fact that the, I would say, that the capabilities, the design capabilities of advanced sensors are as such that, in many cases, those -- I would say, that the product, the spec, the size, the complexity cannot be replaced by another supplier. We have a unique and proprietary platform. So the fact is that we really have to manage well and to service our customers because, again, it's not that we have planned to be in that position, but we do have a unique value proposition to that sense.

But we are adding capacity as quickly as we can, and we will not -- and we would expect to see more, as I said, definitely before the transition is completed. And as I stated before, it should be at least 40% higher -- well, around 40% higher than the current capacity.

In addition to the -- if you were looking at -- and say, what is the transition cost of the onetime cost because in addition, we are looking at a start-up cost of around $2 million that we are going to incur during the first 3 quarters in order to install, qualify, transition equipment -- install new equipment, transition current equipment, from the current premise to the new premise, mostly will happen in the second and third quarter. But from a reporting standpoint, those will be reported in our non-GAAP. We will exclude it in our non-GAAP measures.

From an overhead standpoint, I think that most of the cost -- well, the lease cost and other additional cost has been already added and is already being reflected in our financials. And we are just expecting some additional overhead to support the new, or I would say, the new facility capacity of around maybe an additional $200,000. But pretty much, most of the cost is already reflected in Q4 results.

Okay. Great. Say, with some of the logistic issues you've cited, are you or are your customers making any changes within the supply chain? Are there issues that you're looking at specifically there that you won't have some logistic issues going forward?

Okay. The logistics issues are mainly around, I would say, transportation of products from Asia to the U.S. and to Europe due to lack of capacity from our freight forwarders mostly. This mostly implies for Force Sensors because our largest manufacturing, and the highest logistics costs come from Force Sensors, where we use sea fare, mostly sea fare and to a smaller extent, airfare because those are very large, heavy metal products.

At this point in time, we are trying to manage the cost the best we can, given the timing. And -- but we do expect -- we don't see any showstoppers. There might be some delays in some -- I would say, to a lower extent, some delays in additional and as I said, some additional higher costs. But as things are -- as the world and the freight forwarders are getting more capacity in place, we see this -- we would expect this phenomenon to go down significantly in the coming quarters.

(Operator Instructions)

And the next question comes from Bill Dezellem with Tieton Capital.

2 questions. First of all, are the inventory reductions that were hurting margins here in this quarter, are those now complete? Or should we anticipate some more to come? And then secondarily, you had referenced that you think you will see some strengthening in the Truck and VanWeigh business in the second half of the year. Would you talk in more detail about what you're seeing that leads to that optimism?

Sure, absolutely. So regarding the first part of the question, yes, we should expect the inventory reduction -- well, it was a significant reduction, in addition to [book -- to physical] not to continue in the coming quarters.

Regarding your other question, TruckWeigh and VanWeigh, as we started -- as Europe was -- much of the businesses were in a lockdown situation, we were running on a very, very low level. I think that Q4 is a reflection that Europe has been opening their businesses, and we see much more business activity. So this is getting more to a normalized level.

I mean getting more to a normalized, despite the fact that we are still way below pre-pandemic level. And the expectation that Europe will continue to recover is one indication why we would -- why we should expect to see an improved environment in TruckWeigh and VanWeigh, in addition to the fact that we have been speaking about the EU regulations that are expected to be in place as of May '21, while we know that -- the recent expectation for the aftermarket demand and we are targeting that.

So given the fact that we should expect to see -- given the regulation, we should expect to see some aftermarket demand in the second half of the year. So those are really the 2 vectors that we are looking -- this is why we are looking for an improved business environment for TruckWeigh and VanWeigh in 2021 and in particular, in the second half of the year.

The next question is again from John Franzreb with Sidoti & Company.

Yes. I just wanted to ask about any kind of additional costs we should be thinking about that we've deferred [from -- might come on board this year]. I know you already touched on [advanced sensors. The] expectation might be high. I assume travel and entertainment will be still weak. Is there anything else that we should be thinking [about to come back in 2021 versus 2020]?

Sure, John. So as you know, we have implemented a few drastic measures in 2020 given the pandemic. One of them, for an example, was a salary freeze that we should expect to go back, to unfreeze it in 2021. So salary freeze as of the beginning of the year should be in place.

Regarding travel, you are absolutely correct. I mean COVID is not completely off, but the expectation is definitely that we should see much more intensive traveling in the second half of the year, hopefully as things are getting more to a normalized level.

And then there were some other, I would say, cost-related, for example, [MarCom] and others due to travel restrictions that the company were not able to do in 2020, which should go back to a more normalized level. But the main effect is the salary freeze and travel cost. And...

Got it. And one other question. Just remind me, Ziv, do you have any exposure to the mining and metal markets besides steel? Any exposure there given [what happened in commodity cost]? Is there any [potential there for a turnaround you could do]?

From a commodity standpoint, I think that, by far, the biggest impact is steel. We are not so -- we are not impacted by, for example, precious metals and those, [not a commodity]. It's predominantly steel.

This concludes our question-and-answer session. I would now like to turn the conference back over to Steve Cantor for any closing remarks.

Before we close, I just want to remind everyone or let everyone know that we will be presenting at the virtual Sidoti Growth Conference in March.

And you can see our website for more details on that. Thank you again for joining the call and have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.