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Edited Transcript of PFIN earnings conference call or presentation 11-May-17 3:00pm GMT

Thomson Reuters StreetEvents

Q1 2017 P&F Industries Inc Earnings Call

Melville May 18, 2017 (Thomson StreetEvents) -- Edited Transcript of P&F Industries Inc earnings conference call or presentation Thursday, May 11, 2017 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joseph A. Molino

P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary

* Richard A. Horowitz

P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer

* Richard B. Goodman

P&F Industries, Inc. - General Counsel

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Conference Call Participants

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* Andrew Evan Shapiro

Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q1 2017 Earnings Conference Call. Please note, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Richard Goodman. Please go ahead, sir.

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Richard B. Goodman, P&F Industries, Inc. - General Counsel [2]

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Thank you, operator. Good morning, and welcome to P&F Industry's First Quarter 2017 Conference call. With us today from management are Richard Horowitz, Chairman, President and Chief Executive Officer; and Joseph Molino, Chief Operating Officer and Chief Financial Officer.

Before we get started, I'd like to remind you that any forward-looking statements discussed on today's call by our management, including those related to the company's future performance and outlook, are based upon the company's historical performance and current plans, estimates and expectations which are subject to various risks and uncertainties, including but not limited to, exposure to fluctuations in energy prices; debt and debt service requirements; borrowing and compliance with covenants under our credit facility; disruption in the global capital and credit markets; the strength of the retail economy in The United States and abroad; supply chain disruptions; customer concentration; adverse changes in currency exchange rates; impairment of long-lived assets and goodwill; unforeseen inventory adjustments or changes in purchasing patterns; market acceptance of products; competition; price reductions; interest rates; litigation and insurance; retention of key personnel; acquisition of businesses; regulatory environment; threat of terrorism and related political instability and economic uncertainty; and information technology systems failures and attacks; and as other risks and uncertainties described in the reports and statements filed by the company with the SEC, including among others, as described in our most recent annual report on Form 10-K, our current reports on Form 8-K and our other filings. These risks could cause the company's actual results for future periods to differ materially from those expressed in any forward-looking statements made by or on behalf of the company. Forward-looking statements speak only as of the date on which they are made, and the company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

And with that, I'd like to now turn the call over to Richard Horowitz. Good morning, Richard.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [3]

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Thank you so much, Rich. And good morning, everybody. Thank you all for joining us this morning on our call. I will begin today's call with a brief summary of the company's results from continuing operations and per share data for the first quarter of 2017 and how this data compared to the first quarter of 2016. However, I direct you to our release earlier today for more information. The release this morning present the P&F's balance sheet, statement of operations, per share data, along with most of our management's discussion and analysis. I also wish to remind you that the purpose of this call this morning is to discuss and review the company's first quarter 2017 results only. As such, you must insist that you can find your questions and comments to the company's first quarter 2017 results. I will then ask Joe Molino to briefly review key cash flow information and provide an update on key events affecting the company, after which, we will move to the Q&A session.

The company's consolidated revenue for the 3-month periods ended March 31, 2017 and 2016, were $13,216,000 and $14,499,000, respectively. Florida Pneumatic's first quarter 2017 revenue was $10,509,000 compared to $10,830,000 during the first quarter of 2016. A decline in its retail revenue accounted for slightly more than 60% of their $321,000 decline. Hy-Tech's revenue was $2,707,000 compared to $3,669,000 in 2016. More than 70% of this decline is due to a major customer reducing their orders during the first quarter of 2017 compared to the first quarter of 2016. However, I am pleased to report that this customer has once again begun to place new orders and as of this morning, Hy-Tech has approximately $680,000 in orders from this customer.

Further, Hy-Tech's total open orders have increased more than 75% since December of 2016 and more than 90% over the open order level at April 30, 2016. The company's consolidated gross margin for the 3-month periods ended March 31, 2017 and 2016, were 37.6% and 36%, respectively. The key items of note pertaining to our gross margin is the improvement in overall product mix, as both -- at both Florida Pneumatic and Hy-Tech.

Our selling and general administrative expenses for the 3-month periods ended March 31 of this year and last year, were $5,047,000 and $5,019,000, respectively.

Significant items of note include an increase of $201,000 of professional fees and other related expenses incurred as a result of the Jiffy acquisition as well as our ongoing M&A efforts, particularly -- partially offset, excuse me, by lower depreciation and amortization. Our interest expense during the first quarter of 2017 and 2016 was $10,000 and $102,000, respectively. Of these amounts, $9,000 in 2017 and $98,000 in 2016 is amortization expense of debt issue costs.

Taking all of the above into consideration, for the first quarter of 2017, we are reporting a pretax loss from continuing operations of $84,000 compared to pretax income from continuing operations of $109,000 from the same period a year ago.

On an after-tax basis, for the first quarter of 2017, we are reporting a net loss from continuing operations of $60,000 compared to first quarter 2016 income from continuing operations after taxes of $66,000.

Our earnings before interest, taxes, depreciation and amortization was for the 3-month period ended March 31, 2017, of $451,000 compared to $928,000 for the same period a year ago. And lastly, as during the first quarter of 2017, our Board of Directors approved a $0.05 per share quarterly dividend, which was paid in this April and yesterday, there was a press release stating that we have approved the second quarter $0.05 per share dividend as well.

At this time, Joe Molino will discuss our cash flow and discontinued operations. Joe?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [4]

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Thank you, Richard. Capital expenditures during the first quarter of 2017 was $231,000 compared to $242,000 during the same period in 2016. Significant noncash items affecting our cash flows during the first quarter of 2017 were depreciation and amortization of $319,000; amortization of other intangible assets of $206,000; amortization of debt issue cost of $9,000; and total stock-based compensation of $12,000.

Additionally, there was a noncash credit attributable to deferred income tax of $71,000 during the quarter.

Other significant components, which impacted our cash used in operating activities with continuing operations this quarter of $1,874,000 were increases of $716,000 in accounts receivable, $331,000 in inventories and $166,000 in prepaid expenses and other current assets.

There were also decreases of $1,090,000 in total accounts payable and accrued expenses payable.

With that, I would like to turn the call back over to Richard. Richard?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [5]

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Thank you, Joe. That's the end of our report today. And now, of course, we'll be happy to answer any questions anybody may have. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question will come from Andrew Shapiro with Lawndale Capital Management.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [2]

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Sorry I missed the last call. I was out of the country. I might have a question unless -- I read the transcripts. So I may have a question or 2 that didn't get asked by my team and I might be able to ask. But regarding the tools side, what's the status of your development efforts to open new industry channels for Hy-Tech? And what kind of acquisitions might similarly work for Hy-Tech?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [3]

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Well, as we mentioned, we continue to develop and have had a lot of success in coming up with alternative applications and orders are coming in for those kinds of products almost on a weekly basis now. So we are very far along in that and over the next few quarters, I think, the revenue numbers will be significant enough to talk about and get into a little bit. But we are definitely moving ahead and that is growing. With respect to what types of acquisitions, again, anything that is a product line that we're comfortable, either manufacturing or selling. I don't know that there's anything that I can say specifically. We're now in the aerospace industry, where we weren't really in there in a big way 12 months ago. So obviously, anything related to that would be an additional avenue we might pursue. There are other applications for products that Hy-Tech could make. It's just a wide range of things. I don't know that I could give you specific industries. We just have to see what we uncover as we look into it.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [4]

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But all related to tools, Andrew. I mean, we're not going -- failed to keeping to our strategy.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [5]

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No. I wasn't -- my question was more specific to Hy-Tech, was the new areas you're going into and then as a follow-up on the Hy-Tech question side was, with the rig count rising, you have some discussion in your press release and all. Is your general observation that Hy-Tech is troughed?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [6]

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I would say, that's our opinion at this moment, yes.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [7]

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Okay. All right. And then a question or 2 or 3, on Florida Pneumatic, and then I'll back out into the queue in case others are in line.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [8]

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Sure.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [9]

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So on Florida Pneumatic, can you discuss the decision and your implementation plans of the kind of the separation from serious craftsmen and to what extent the purchase of the brand by Stanley Black & Decker plays into this and even the potential impact it may have on Home Depot, since Stanley Black & Decker is a supplier to Home Depot?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [10]

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All right. Well, let me -- that was a bunch of questions, so let me start at the beginning. With regarding the decision, we had a contract, as we've had since the beginning of time, that expired September 30 of 2017. My analysis -- our internal analysis of their cash flow situation and conversations with fairly upper-level management at Sears led us to conclude that at some point in the near future, my guess is sometime in 2018, and again, this is my guess, they would have a problem. Well, they've got a problem now, but at some point they're going to have to do something dramatic. So we thought that 2019 -- or excuse me, September 2017 was a reasonable point to end things because, unfortunately, given the nature of these contracts, they're very one-sided, as you can imagine, for some -- given our relative size to Sears and we would be obligated to continue to supply them no matter really what happened until there was some sort of filing and we were not comfortable with that situation on a go-forward basis well into 2020, let's say, if we had a new contract or beyond.

With respect to Stanley...

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [11]

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Let me just interject, if I could with that. We hand an enormous amount of phone calls with our people in Florida Pneumatic, with people in the financial world, with people in the retail world, with our own board, an enormous amount of phone calls ad nauseam going over this subject trying to decide if we should continue, what the opportunity course are that we were going to lose, should we discontinue and we even gave thought at one point to breaking the contract and just not going any further earlier this year. And not ship whatsoever. Long story short, we concluded with all of our lawyers and everybody else that we had, that we -- it was in our best interest to honor the contract towards the end and that's where we -- that's where we are, but it was a unanimous decision that it was in our best interest to not continue milking the cow, because we may get stuck holding the bag. And in fact, there is still obviously a risk that we can get stuck holding the bag this year, because nobody has that crystal ball where we hope not ...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [12]

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Well, it's April and September is not that far away.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [13]

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Yes, you're right. You're right, but we got -- we also got to get paid. The April invoices have to be paid, that's the end of the year. So -- I mean, I agree with you. But we're fairly optimistic that we're doing -- that we did a good job of getting in front of this as best as we could, but we collectively decided that it was just not prudent for us in our best interest, especially with the amount of profit that we make on the account to continue moving forward. So I just want to give you that a little bit of a color.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [14]

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Let me go back to what I was saying about Stanley Black & Decker...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [15]

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Well, Joe, before you go down and I do want to hear -- I do want that answered. But could I just circle back here just on the Sears part. So around kind of what level of receivables, because they are a long-term payer, what kind of level of receivables in a sense, what kind of risk level does this company run between now and arguably, not September, but October, November because they are what, like, 90 days or even longer payers?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [16]

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Yes, that's what they are.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [17]

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Okay. (inaudible) level are we running between now and year-end.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [18]

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Okay. See, our terms of net 60 with Sears, they pay a little later than that. It is a 7-figure exposure on AR and a 7-figure exposure on inventory right now. Obviously, as we get closer to September 30, the inventory number comes down first and the AR will not come down until we get paid some time after the last shipment in September.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [19]

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Okay. All right.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [20]

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Low 7 figures, but 7 figures for each.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [21]

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And if you were stuck on inventory, you -- could that be repurposed and relabeled or something?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [22]

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If, if there was a filing, we would have some options, and they -- if they did not want the inventory. Yes, it would -- we would not be able to move it immediately, but we feel like we could move it over some period of time.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [23]

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Right. And then what would mainly happen and we're not leveraged at P&F to maybe a balance sheet issue. The receivable -- as a trade receivable, it would be just hung out there for a long time.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [24]

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If there was a filing?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [25]

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Yes.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [26]

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Yes. Sure. We'd have to go through that whole process. It would -- we'd have a significant reserve against it, if not a writeoff, I mean...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [27]

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It looks like they're lining up not for a filing, of course, in 2017 anyway. But okay. (inaudible) In 2018, we should be good.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [28]

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(inaudible) That's what I thought.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [29]

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Okay. Now, would you -- the question regarding now the sale of the Craftsman brand to Stanley Black & Decker who is also a supplier to Home Depot, can you comment about that and of course, our relationship there?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [30]

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All right. So a couple of aspects to this. One, we were hopeful up until the announcement of the Stanley Black & Decker transaction. We were hopeful that Sears Craftsman would be sold as an entity to some major player in the market, who -- depending on who that was, might consider us as continuing to supply that product. So that was our hope, which is one of the reasons we probably didn't make a decision sooner than we did. It was coincidental that we had the contract come up, but we were holding out hope that it would get sold to somebody who would continue to situate -- continue the business with us. When we found out that all that really happened with Stanley Black & Decker was they bought the rights to the Craftsman name and they really didn't buy anything physically. They didn't take on the Sears infrastructure, the Craftsman infrastructure, none of that. They simply can put Craftsman label on any tool they want, that's the right that they purchased. We've -- we realized that, that opportunity to sell the Craftsman lock, stock and barrel was gone. So we knew that we wouldn't -- there wouldn't be a situation where we would continue in a major way. Stanley Black & Decker's relationship with Sears, you're right, they are a supplier. I don't know that, that really impacts us so much. We actually have a good relationship with Stanley Black & Decker and should they need transitional help, we would be in a position to do that.

But the fact that they're a supplier to Sears, I don't know if that really changed our decision a whole lot.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [31]

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I mean, no, they're a supplier to Home Depot.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [32]

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Correct. I'm sorry, they are a supplier to Home Depot, that didn't really change our calculus any, so.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [33]

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No, no I'm getting that now. So Stanley Black & Decker is going to supply Craftsman to Sears. In other words, when you leave Sears, who is going to supply Sears their Craftsman air tools?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [34]

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We don't really know the answer to that. It's possible that they would work directly with factories in Asia, which they do for some products...

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [35]

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Whatever it is, it is. I mean, we don't know. They are not sharing with us.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [36]

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Yes, I mean -- we have not -- they have not shared those plans with us.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [37]

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Okay. And now -- and then Stanley Black & Decker has the Craftsman label and Stanley Black & Decker is a supplier to Home Depot on variety of SKUs? Are there any risks that Stanley Black & Decker would become a supplier to Home Depot in the air tools and I don't know if that is a threat to our Husky supply to Home Depot or we're just -- we're kind of a different niche and we're the private label player?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [38]

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Yes, I mean, I think it's more of the latter. I mean, Stanley Black & Decker could supply air tools to Home Depot today. Stanley Black & Decker, prior to this transaction, has an air tool line. So if they really wanted to develop a retail air tool line and sell into Home Depot, they've had every opportunity to do that for 20 years. And I don't think the idea of a Sears Craftsman air tool going to Home Depot is really going to fly...

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [39]

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Husky has its own brand -- I mean, Home Depot has its own brand.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [40]

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They're very protective of the Husky brand. And for years, we've always had some concern that Depot wasn't thrilled that we supplied both Sears and Home Depot, but it never ended up becoming an issue. So I don't see that as a realistic threat.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [41]

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All right. And then lastly, on this topic then I will back out. Richard, you're not all that old. I'm not thinking that you're -- you're not thinking of retiring, et cetera, but strategically, is there a fit and a reason for Stanley Black & Decker to ever want to own and buy P&F tool business?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [42]

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I mean, I would think anybody in our industry would have an interest in strategically into buying into our business, I would think. If that's the answer to your question and...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [43]

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I don't know if the Craftsman purchase makes it even more desirable or not?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [44]

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I don't really know if that has any impact on myself. But I do think that we're a good player in that business. Period. We're very -- as I said in our press release, we're very -- we are more and more horizontal now -- now with this aerospace. So yes, we would be an attractive company for anybody in our industry.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [45]

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I mean, I -- we just saw Snap-on make this acquisition of a company somewhat a P&F size and they paid 2x revenue, a little less than 2x revenues.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [46]

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Right, right.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [47]

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And it seems like we'd be a natural for that same kind of thing when the time comes. All right. Let me back out in the queue. I have other questions, so I'll please come back.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [48]

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Okay. Thank you, Andrew.

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Operator [49]

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And next we will hear from Henry [Dubrow].

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Unidentified Analyst, [50]

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I'd like to follow up regarding Sears. When you have this agreement, however, long it is that you've elected to terminate. Are you saying that, as every order comes in, you do not have the right to review the credit approval on that during the course of the agreement?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [51]

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Well, let's -- just a couple of things. First of all, we're not terminating the agreement. The agreement is just expiring in its natural way. We didn't make a unilateral termination. With respect to reviewing their creditworthiness, the frank answer is no. As long as they're paying their bills on time and there is no official announcement from Sears that there is some sort of filing, we are obligated to deliver product.

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Unidentified Analyst, [52]

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So you don't have the sole criteria as an order comes in to approve it or not approve it, for credit purposes. If they are past due on an invoice, you can't not accept a new order?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [53]

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Hold on. If they're past due, we have rights. I think, I said to you that they are paying on time. More or less.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [54]

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The answer to your question, Henry, yes, we have the right to do that, but they are within their terms, so we don't the right to do anything.

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Unidentified Analyst, [55]

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Okay. I want to go back to today's release regarding the category customer concentration. And you made a statement that we believe the loss of Sears' revenue will have a negative impact on our financial condition, but will not affect our ability to remain a going concern. Could you give a range of the dollar amount of this overall impact on the financial statements?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [56]

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Well, Sears' revenue is in the, call it, $6 million or $7 million range on an annual basis. This year, obviously, it won't be that much. Margins are actually quite low on that business among the lowest of any of our product lines, extremely low. Low double digits, but -- and then we've got our AR and inventory exposure, which we've already discussed.

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Unidentified Analyst, [57]

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Right. Is there credit insurance available at a reasonable cost for...

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [58]

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No, there is not.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [59]

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Has not been for the better part of 5 or 6 years. One more.

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Unidentified Analyst, [60]

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Any of the SKUs that you sold to Sears, were they exclusive?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [61]

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They were all exclusive.

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Unidentified Analyst, [62]

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So after September 30, what are you allowed to do with them?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [63]

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Assuming that they don't take them?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [64]

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Yes. I don't understand your question. Are you saying, what are we allowed to do after everything is done?

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Unidentified Analyst, [65]

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After September 30, you could market those SKUs to anyone you want?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [66]

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Well, let's be clear, Sears is committed to taking all of our inventory, assuming they're still in business on September 30. We will not have any Sears inventory on October 1.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [67]

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I think the question is about that.

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Unidentified Analyst, [68]

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No, if you want to market the same SKU to anyone else in October, you're free to do it?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [69]

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Yes, we can. But, obviously, it couldn't be a Sears Craftsman label on it. It'd be because we could, we could buy -- we could sell a product, the generic product, but if there is little things about it that were designed for their product then that's their design, we wouldn't be selling that.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [70]

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I mean, we have lots of different half-inch impact wrenches. We sell them in automotive, we sell them in industrial areas. We sell something similar to Home Depot, but the exact product that we sell to Sears, that's their design. Well, with the design we came up to -- with together, we can't sell that to somebody else.

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Unidentified Analyst, [71]

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You can't sell that to someone else after the agreement terminates?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [72]

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Yes. But I'm not sure, there is no practical effect that we could design another tool tomorrow morning, that's another half-inch impact wrench, if we wanted to sell it.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [73]

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It's not really germane. I suggest that you're focusing on something that really, isn't really germane. Because we have other products that essentially do the same thing, it's just they have a little particular design team but it's not a like a be-all or end-all, it doesn't really matter.

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Unidentified Analyst, [74]

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Okay, okay. I have 1 or 2 other questions. Were there any professional fees in the first quarter relating to your recent acquisition?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [75]

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We just told you that on my report, I said $200,000.

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Unidentified Analyst, [76]

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$200,000, okay. Then I did not hear it. Okay. And I guess, I was not aware, what was the timing of the change in senior management at Hy-Tech, the new President?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [77]

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We didn't make a formal announcement about it, except after the industry, I guess, essentially. But it was in the first quarter.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [78]

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February. 1st week of February.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [79]

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February. Yes, February.

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Unidentified Analyst, [80]

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And what was the cause of that, that was just something internal or voluntary?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [81]

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It was a mutual understanding where we were not happy with the direction of the business, and he was not happy with -- he was just tired. So it's a mutual understanding.

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Unidentified Analyst, [82]

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Okay. And my last question relates to your overall bank indebtedness. Is there any requirement to have a minimum outstanding amount?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [83]

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No.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [84]

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No.

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Unidentified Analyst, [85]

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So with your cash balances, you've elected to have $100,000 at both balance sheet -- recent balance sheet dates the year ended in March 31?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [86]

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We did that just for our own purposes of legal and saving money, if we ever go back into the banking agreement again. It's just a way to keep the lines open. It's just an arbitrary number.

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Unidentified Analyst, [87]

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So in other words, if you repay it to 0, you believe that closes the agreement?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [88]

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No.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [89]

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Maybe I can shed some light on this. That $100,000 relates to a mortgage in the State of Florida. There are some complexities to mortgages in the State of Florida. If we were to pay that down to 0 and then reborrow again, we'd have to pay a substantial fee to remortgage the property. By bidding it at a small nominal amount, we avoid that.

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Unidentified Analyst, [90]

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Okay. I thought it related to a revolving loan.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [91]

--------------------------------------------------------------------------------

No.

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Operator [92]

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And next, we will take a follow-up from Andrew Shapiro.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [93]

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Following up what Henry had asked. So we have about 7 figures -- I mean, we have $6 million or $7 million low single-digit, I mean, low double-digit margins, that -- when that goes away, do you have identify -- do you have costs that are discrete to the Sears relationship that will mitigate the hit to the EBITDA and the gross profit lines?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [94]

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Yes.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [95]

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Okay. And do you feel that you have identified and plans to potentially fully mitigate that or not -- we're going to have some that we're going to have to absorb?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [96]

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No, that's -- that would be impossible.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [97]

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Okay.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [98]

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We're going to absorb the vast majority of that lost EBITDA.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [99]

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Okay. And with respect to Hy-Tech and the company's performance this last year, I was -- again, I missed the year-end call, would you say the company had achieved your expectations for the year or it didn't really achieve your expectations for the year?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [100]

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For 2016?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [101]

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Correct, 2016. For the year ended December, the call I missed 2 months ago or a month ago.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [102]

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Not even close to our expectations.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [103]

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Okay. So if it wasn't even close to your expectations, I have a question that it looks like from a proxy that the full performance bonus was awarded. So I'm trying to get a -- I'm trying to focus here on the overhead cost of the company that they should come down and the full performance bonus shouldn't be awarded if the company's not achieving expectations, because the performance thresholds should be some form of a reach performance, do you follow what I mean when it comes to compensation policy?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [104]

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Yes, I understand. But Andrew, and this is not a surprise to you. On this call, we don't discuss compensation matters. Our proxy statement has an email -- I mean mail, excuse me. And filed with the SEC. And we believe that all the required information has been presented to all stockholders. And we are -- we don't give any more information on this call and that's all I can say about that. But there's' more to it and I think it was explained very well in the proxy that it wasn't just -- it's not a one-factor thing being Hy-Tech, they were many other factors. So I don't want to go further. It's not the nature of this call, but that's all I can say about it.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [105]

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All right. Well, I mean, what I'm trying to do is understand how us as shareholders, we can see and address the first quarter and other operating costs, when we know that our results of (inaudible)

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [106]

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Andrew, we're not -- I don't mean to interrupt you, Andrew, but we're not discussing this on the call. It's not the purview of this. There are many opportunities to do that, annual meeting, et cetera, but this is not one of those. And please just respect our wishes in that.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [107]

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Regarding Jiffy. What type of consolidation and cost synergies do you expect to come out of the Jiffy acquisition and when do you expect those to be completed, so that the business looks like what it will going forward, when would we see that?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [108]

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I mean, I think the synergies initially are modest. We're not integrating the facility immediately. Really, we have no plans to integrate the facility. Are there opportunities perhaps to have some parts either built in Pittsburgh now or in the future or supplement with some of our Asian sources? Yes, that's all possible. I wouldn't call them large synergies. It's not like AIRCAT where we closed up shop, folded everything into the operation in Jupiter and you had a massive synergy on Day 1. I mean, there are subtler synergies, their sales staff will be managed from Jupiter. The engineering efforts will be managed from Jupiter. But there's still a functioning entity out there in Carson City and for right now, it's its own entity but consolidated up in the Florida Pneumatic.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [109]

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And I might add that we are very, very excited about having made this acquisition. For us, strategically it's -- it was a very, very good fit. I'm not going to compare the numbers perhaps of AIRCAT to Jiffy, it's a different animal. But what we did was, we took AIRCAT -- we took our automotive business, which was relatively de minimis and we added AIRCAT to it, which made us a real player in that field. And now we -- well, we did the exact same thing in this. We are a de minimis factor in the aerospace and now we are with what's essentially the preeminent tool manufacturer in this space, aerospace business. So we are very excited that we have this put into our fold.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [110]

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Yes. Can you explain what type of customers they have in the aerospace industry and what opportunities this might present for P&F? And your other aerospace product lines that you had already been trying to penetrate with?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [111]

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Yes, go ahead...

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [112]

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They sell to the vast majority of aerospace and military aerospace customers in North America. I mean, it is a well-known brand in that market. They are in many, many, many -- on many assembly lines across North America. In terms of the P&F aerospace line, there are some -- obviously, the products we were selling directly -- we're not going to be competing against ourself. However, there are a number of innovative tools that we sourced from Taiwan, that we will be considering adding to the Jiffy line. So that is an opportunity to get into that customer base that we had a very difficult time getting into even though we had some very good offerings. Does that answer your question?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [113]

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Yes. I mean you had some new aerospace tools you were trying to get qualified for with the acquisition and having Jiffy accelerate that qualification?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [114]

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Actually, the opposite. The tools we were working on we suspended because Jiffy had better ones. So there are different tools we'll be working on as a result of the acquisition. So we kind of -- it sent us in a slightly different direction.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [115]

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And are there any more actions you feel the company needs to take to expand the aerospace business or is this sufficient and it's now just about growing the business organically?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [116]

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That's really our sense of it at this point, yes.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [117]

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Yes. Organically and geographically, we think perhaps -- not perhaps, there are opportunities in both Asia and Europe and now that we've got little more heft, we think we can justify some additional expenditures or investments to exploit those markets. Whereas Jiffy by itself wouldn't do that, and we certainly didn't have the brand to do that.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [118]

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And not to beat a dead horse, but it was a company -- Jiffy was a company that did well despite itself. It didn't have any marketing -- program marketing and it just didn't have a business focus as much as it should. And it did well despite itself. Now with -- we're hoping that with our salespeople and our concentrations and all that stuff, we can take it to the next level. That's our thoughts, and our plans and our hopes.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [119]

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So not to beat a dead horse on our end, is the expectations of Jiffy built into the performance targets for this year's bonus pool?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [120]

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I don't believe so.

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [121]

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No, we -- well, obviously, when those targets were built, there was no Jiffy.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [122]

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There was no Jiffy.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [123]

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Will they be adjusted?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [124]

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The compensation committee has latitude to make those sorts of assumptions.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [125]

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But again, this is not a conversation for this call. Please, Andrew.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [126]

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You said you had -- well, if we can't have it here, I guess we got have it in some other domain. And I'm a filer, so you guys don't give me much choice. So fair enough, we'll get a letter going. You said that you had additional geography primarily in Central Europe you're developing for AIRCAT. I'm assuming that would also now mean also Jiffy?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [127]

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As I said, there is an opportunity for Jiffy in Europe. Yes.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [128]

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Can you give us an update and the details on how things are going in Europe, since we have asked on the last several calls and you said it wouldn't be until Q2 that you probably have something to report for from Europe and we're now in the middle of Q2?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [129]

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Very slowly, unfortunately. We're having a difficult time establishing the beachhead we had hoped. But we're still working on it.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [130]

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Okay. I'll back on into queue. I have a few more questions...

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [131]

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There is nobody else, Andrew. So you can continue, if you don't mind.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [132]

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No one else wants talk about just Q1. Okay. Regarding your acquisition process, is there some absorption, adjustment time regarding Jiffy, since it's not as much of an integration that you had to do with the other items that puts the acquisition process on hold or is that as active and ongoing as it was pre-Jiffy?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [133]

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It is active and ongoing.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [134]

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Okay. So your valuation [multiple] impacts your cost of capital, and your cost of capital is going to decide what's accretive or not accretive when you want to buy things. And in the past you didn't feel investor relations efforts were worthwhile from a financial or time perspective. I appreciate you hold these calls, although you narrow the scope of what we can speak of on the calls. So the only time the stock really moves is on performance and you'll let that speak for itself. But in light of the fact and what should have been treated as good liquidity enhancing items, the stock periodically just sells off. Why not have in place an existing 10b5 buyback program that you established at whatever price levels, but that basically serves as a floor in a highly accretive use of the company's capital?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [135]

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It's a good question. As all of your questions are, that's a good question. And I can tell you that we talk about it at every single meeting and the sense of the board has been, up until this point, and we have of course, a meeting after the annual meeting in a couple of weeks. But the sense has been that we want to continue to use our gunpowder to make acquisitions and not buy back stock. And if -- it's a fluid situation, it could change tomorrow, it could change when we meet again in couple of weeks, as now we bought Jiffy. But we feel that we have more opportunities to perhaps buy companies going forward. So it's always that delicate balance.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [136]

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Are you really going to be spending that much cash to establish and actually buy that many shares other than it establishes a floor, enhances a little bit of liquidity, eliminates what's known as the roach motel problem that you can get in but can't get out. I mean, is it really -- I mean, you're really going to spend that much cash to have something out there and I say this because as we speak today, it is the 11th of May and tomorrow, the 12th of May, is the measurement date for eligibility for the Russell indexes. And unfortunately, due to the performance of the company and its net income and its excessive cost, et cetera, the market value of P&F this year has dropped below the $30 million minimal limit to be eligible. And this company and its stock are going to be dumped from the Russell Microcap Index at the end of or the last week of June. And it is pretty much incompetence and irresponsible for the company not to have in place a buyback.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [137]

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Andrew, Andrew...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [138]

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Let me finish, Richard.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [139]

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Andrew, Andrew, Andrew I'm going to have to stop right here. I'm talking over you. I will not let -- Andrew, Andrew, I'm not going to allow this to continue. If you have your opinions, I can only tell you, you've been our largest shareholder for many years. On these earnings calls, we've always given you the opportunity to ask any questions you want, a long list of questions and we provide to the answers to the best of our ability, and we do that. However, as I told you before and let me be clear about this, the purpose of these calls is to discuss the company's results for the quarter. And we are not obligated to even hold these calls and we do it, willingly and...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [140]

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Oh! Thank you for that privilege.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [141]

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Andrew, I don't interrupt you, so don't you interrupt me.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [142]

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You did interrupt me. All I was saying is to have a buyback plan, you're interrupting me. You're interrupting.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [143]

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Andrew, we're talking over each other. Andrew, you're not making this easier. All right. You don't have to say anything, I don't want to hear it. Ask the questions that you want an answer for the quarter. Andrew, ask the question that are going to the quarter. Ask the question that are going to the quarter, that's what I'm going to say to you.

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Unidentified Analyst, [144]

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Just before you get dumped out of the index, have the buyback plan in place, that's the only point I was trying to make, but you had to interrupt.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [145]

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As I said to you, we have board meeting in 2 weeks.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [146]

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Good. I'm educating you idiots to know this. Because you guys aren't aware of it.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [147]

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Okay. Andrew, I'm going to have to take you off the call in a minute and you can write any letters you want. We're not going to be called idiots, we're not going to be taken to your name-calling any longer. If you -- I don't know what else to say. If you have a question about the quarter, please ask it. If not, please don't. I mean, I think we hear your comments all the time and it's enough. We take it once...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [148]

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If you're not telling me why don't you take the damn company private? If you don't like being a public company. You have the luxury of being a public company and earning your little lifestyle income.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [149]

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Andrew, no one is listening to you, okay? All right. no one is listening to you. We tried to be as respectful as we can, even though we don't get it back from you, okay?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [150]

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That is not true. You've got plenty of respect. You always gotten disrespect when you've given it out, sir.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [151]

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Okay. All right. Okay. Any other questions about the quarter?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [152]

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Only when you dished it out. You even put a dig in the last conference call and I wasn't even on the call.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [153]

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Andrew, any other questions you have about the quarter?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [154]

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I wasn't even on the last call and you put to dig in, so talk about disrespect, sir.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [155]

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Andrew, any other questions about the quarter, we're more than happy to answer the questions. Do you have any other questions about the quarter?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [156]

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I don't know. Why is it worthwhile to you, like you're doing us a service, but you're not really.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [157]

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I told you that we're happy to talk -- we're happy to close willingly and happy to...

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [158]

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You are not happy, it's clear. It comes off from your tongue, sir.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [159]

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Andrew, what I'm telling what we would do and we give all the stockholders a better understanding of our company as best as we can and we do that. And we answer the questions willingly and happily. That's what we do. And I'm sorry you don't think so.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [160]

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I have always think so, but you have your little disrespectful items when you do the interruption, et cetera. It's just the way you are.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [161]

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Andrew, do you have any other questions about the quarter?

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [162]

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Yes.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [163]

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Okay. Please ask them.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [164]

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So your CapEx plans for 2017, your major projects embarked on or to be embarked on. You said it'd be a pretty light year in CapEx, you've talked about in your press release kind of the amounts that are going out there. What are the major projects that, that money is going to flow to?

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [165]

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The only thing that I would point out that right now is on the radar that's maybe a little unusual, so we are looking at a new ERP system out of Hy-Tech. Other than that, it is business as usual on tooling, and I don't know that we've got any large equipment purchases on [Tech] for this year.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [166]

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And the new CNC machine that was put into Hy-Tech, that's still running below the capacity, right?

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [167]

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Well, yes. I'm going to say, yes.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [168]

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Okay. But are you seeing it ramp up and are we getting the margin benefits of that ramp-up and what you expected from it as...

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Joseph A. Molino, P&F Industries, Inc. - COO, CFO, Principal Accounting Officer, VP, Treasurer and Secretary [169]

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Well, I wouldn't focus on 1 machine, but I would say this: that beginning in the middle of April, we move back to overtime for pretty much the entire group of operators on the Florida Hy-Tech, which is a very good sign that we have orders.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [170]

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All right. Well, I'm looking forward to seeing that rebound.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [171]

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Yes, we are.

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Andrew Evan Shapiro, Lawndale Capital Management - Founder, Chairman, President, Portfolio Manager, and Managing Member [172]

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All right. I think we've covered Jiffy. We've covered the tools side, and we're not allowed to ask questions on the corporate side. So I think we're good. I mean, we're not good, but I have no further questions.

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Richard A. Horowitz, P&F Industries, Inc. - Founder, Chairman, CEO, President and Assistant Treasurer [173]

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Okay. And thank you all for the call today. Andrew, I'm -- we're doing the very best we can, with the stockholders in mind and ourselves in mind every day. And I'm sorry, you just don't understand it or don't want to accept it and there is nothing more I can say about it. So thank you all for your call today and we'll be on to call for the second quarter in August. Thank you all for your time today.

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Operator [174]

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Thank you. And again, ladies and gentlemen, that does conclude our conference for today. We thank you for your participation.