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Edited Transcript of QEPC earnings conference call or presentation 25-Jul-18 2:00pm GMT

Q1 2019 QEP Co Inc Earnings Call

Boca Raton Jul 30, 2018 (Thomson StreetEvents) -- Edited Transcript of QEP Co Inc earnings conference call or presentation Wednesday, July 25, 2018 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Harry D. Schulman

Q.E.P. Co., Inc. - Director

* Lewis Gould

Q.E.P. Co., Inc. - Chairman and CEO

* Stan Berger

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Conference Call Participants

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* Clifford F. Ransom

Ransom Research, Inc. - Founder and President

* James R. Wilen

Wilen Investment Management Corp. - President and Chief Compliance Officer

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Presentation

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Operator [1]

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Good day, and welcome to the Q.E.P. Company's Fiscal 2019 First Quarter Investor Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Stanley Berger. Please go ahead, sir.

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Stan Berger, [2]

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Thank you, [Kerry]. On behalf of the management of Q.E.P. Incorporated, we are extremely pleased to have you participate on our call, and thank you for joining us today to discuss the company's fiscal 2019 First Quarter Financial Results.

Before I introduce management, I would like to remind everyone that some of the information provided during the course of this conference call may consist of forward-looking statements that involve risk and uncertainties, including but not limited to those regarding sales and sales growth, pricing and cost pressures, future market position and profitability, opportunities and benefits associated with potential and completed acquisitions, integration of acquisitions, cost and product mix changes, success of product development and marketing endeavors, capital availability and current fluctuations. The company assumes no obligation to update any forward-looking statements or information. It is important to remember that actual results and circumstances could differ materially from current company expectations. The company's news release announcing the fiscal 2019 First Quarter Financial Results was issued on Monday, July 23rd. If you do not have a copy, it is posted along with the Fiscal 2018 audited financial statement on the Investor Relations section of the company's website at www.qepcorporate.com. Alternatively, please call [Paula Siegel] at (561) 994-5550, and she will e-mail or mail a copy to you. Hosting the call today are Lewis Gould, Q.E.P.'s Executive Chairman; to be effective August 1, Harry Schulman, Chief Executive Officer; Leonard Gould, President; and Mark Walter, Q.E.P.'s Senior Vice President and Chief Financial Officer. At this time, I will turn the call over to Lewis Gould. Lewis?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [3]

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Stanley, thank you, and thank the investors for joining us. We've had a lot of moving parts this quarter, and I want to review some of the things that happened. But first I want to tell you that I am healthy, I'm alive, I'm kicking, et cetera. [There were] no health issues or anything else. I had gotten a letter from our Chinese supplier saying people my age go behind the curtain to help run the business, and I think that's a good answer to that.

Our first quarter results were more difficult than we thought. Last year's comparison might have been very difficult because there were hurricanes last year, and it was a completely different environment. We're faced with cost pressures. We're faced with a lot of moving parts, such as tariffs, et cetera, which I'll discuss in better detail very shortly.

But in the quarter, several things happened that affected our G&A line, and some of the things you should be aware of. We completed the acquisition in Australia of PR Floors, which I'm pleased to say the integration is going well and we're happy with it. We completed the acquisition of Naturally Aged Flooring in California, which has been a real star and we appreciate the hard work of all the folks that are working there. We also moved and [expensed] and closed 2 facilities in the West Coast and moved into our new facility in Phoenix, Arizona. And we're currently shipping right now and we've made the transition successfully. There'll be a little bit more capital investment as we add more equipment to Phoenix so we become prime in a variety of new areas.

As we look generally at our own cost structure, we're investing very heavily, time, and -- which is the highest cost that we have, into looking at acquisitions. A lot of the shareholders have called and asked where we are with the acquisitions and where we are with the future. Because I had made a comment in the previous conference call, we were looking. We worked very diligently at purchasing a large distributor. It didn't happen at the time. It may happen sometime in the future. However, we're still looking and that's one of the ways our go-forward plan, which I'll mention in just a little bit. We spent a lot of time on the financial part of our business, our operational part of the business, et cetera, looking very, very deeply for the right acquisitions to head-start what we have. We've been very fortunate to have a very long and good relationship with our bank. Our banker is on the conference call also, we want to thank him for working with us. And if you look at our balance sheet, you know it's extremely impressive and we have the ability to borrow quite a bit of money besides what we have. We pay cash for acquisitions, and -- et cetera. We used the money that we had. Our future depends a lot on what we do. One of the strategies that we're employing is our overseas businesses are immune right now from the tariff issues. In Australia and England, they don't have the same tariff issues that we have in the United States. So almost 1/3 of our business fully will be not touched by the tariffs.

The tariff effect that we have right now, there have been selective tariffs on the 10% first tariff, which goes into effect August 22, I believe. That affects our wood import business, and it affects a small selection of tools that we have. We've gotten the tool price increases, and we're in the process of doing that with the balance of the miscellaneous things right now and I don't think that will be a material effect on the company. There will be an effect.

Regarding the wood imports, our margins are quite heavy on the West Coast, and the suppliers have indicated that they are going to help us. Also if you've noticed recently, the Chinese currency has declined almost 10% in the last 3 weeks alone, so there will be a benefit. I don't think there'll be a long-term hit to the company. We've been able to look very carefully at where it is, and we've made moves to make sure that, that doesn't affect us. However, freight issue is a national issue for all companies that ship domestically in the United States. There is a shortage of drivers. The prices have gone up. We're going up in price just generally to recapture a lot of the cost that we have. But I want to tell you, in retrospect, when you look at the difficulties that may happen with the tariffs, et cetera, in North America, we still make about half of what we sell, so the effect on us will not be dramatic, et cetera, et cetera, et cetera.

Well, let's get to the other item that I mentioned, my particular role, what am I going to be doing? Well, I haven't sold a share of stock. I believe in the future of the company. And as I said, I'm not ready to go out to pasture. So we thought -- Leonard and I put our heads together, and if we want to grow $100 million or more than that, what we've been doing in the past is not going to be adequate for what we're going to be doing in the future. So we searched with the help of the board to find the right candidate. In fact, Stanley, the gentleman who's helping us host this session, knows Harry for quite a few years. And Harry is very successful, but I'll let him speak for himself very shortly, and it's the right management team to happen. I'm going to concentrate on M&A, our foreign subs, et cetera, and generally use the knowledge that I've gained over the past number of years. But I'm not giving up my shares, I think that Q.E.P. has [a lot] going forward.

As a side issue, we're looking at cost reductions. We're closing our plant in Indiana that makes veneers, and we'll be buying that domestically. We've added on and almost have it ready, I'm sure Gary is going to ask the question. We're going to be in the cartridge-filling business. Right now, we outsource a couple of million cartridges and that's just the beginning. Hopefully, besides the $2 million that we outside sell, we're going to start adding new items to it. As a side also, we opened the new German subsidiary, which I had mentioned on our last conference call. Thank God, we got our first order for EUR 35,000, which was the first guy to begin with, but we have big plans for going forward in Germany. Germany is the second largest home improvement center in the world.

Well in addition to that, on the M&A side, we are continuing to look for acquisitions. I want you to know I'm not able at this point to give you any identifications or any information except that that's one of the ways that we're going to grow no matter what. I'm pleased to say that our shareholder equity is now almost $81.5 million, our book value is almost $26, it's $25.49, and our debt is about a measly $15 million compared to the assets that we have. I also want to make a comment that this year, the tax benefit for us will be about $1.25 million as we go forward.

So if you look at our go-forward plan, we're operating in a whole bunch of areas that I want you to feel comfortable with. Our management team will have an addition of a new Senior Vice President on the HR side, who'll be joining us very shortly. Our go-forward plan includes a major push in the export area. Harry will be working, which he'll mention, on cost containment and restructuring our management team, et cetera. And most importantly, we look at the strategy where the gross margins are, we have several businesses that sell on the Internet and several businesses that sell direct to the dealers. We're a middleman. We recognize that, and we provide a lot of value to our customers. But the customers may in the future not think the value is there. So we're looking to restructure and head a lot towards the almost direct customer, the dealer himself as opposed to being highly structured in distribution. Distribution has a very, very important part on the sundry types of our business, because a lot of the people can't buy full pallets of glue, et cetera, et cetera. So distribution will always be there. But on the consumer side of life, we have to have a more active role and we'll be able to define that certainly next quarter as we go forward. So I'm very pleased, I'm going turn the conference over to Harry for a few words, and then we'll go to Q&A and have answers to specific questions. Harry?

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Harry D. Schulman, Q.E.P. Co., Inc. - Director [4]

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Thank you, Lewis, and good morning, everyone. First of all, I have to say that I'm really thrilled to be here and looking forward to becoming part of the QEP team. I have been involved with Q.E.P. now since the beginning of March. I've spent the last -- almost 5 months working closely with Lewis and focusing attention in the areas of strategy. I became a member of the Board of Directors in April, have spent a lot of time with the board members, which I find to be a very strong board with lots of great insight and, in many cases, of lot of years of experience understanding QEP. Also, Lewis asked me to do some non-board consulting in the area of acquisitions, and as he mentioned earlier, we have looked at a couple of acquisitions. And the time spent has been a learning experience. I've been -- was able to meet management, work a bit with the team and this led to an agreement with the board and with Lewis to become CEO as of August 1. So I'm looking forward to it, this is something that I have done before in my past. It's very similar to the types of experiences I have had. I have over 25 years' experience working with China, both as a manufacturer and as a sourcing -- part. Working with mass, merchants and in the area of marketing, product development. It feels like a very comfortable shoe, coming in here. Certainly lots to learn with the industry, but the best news here is that, with my coming on board, it allows the team to focus. And Lewis and the team have done a great job building this company to this point. But it's an inflection point for Q.E.P. now to take the next step and to change in order to grow and to create shareholder value, not as a company growing to a $400 million revenue number, but a company growing beyond that. And that's why I'm here. I'm going to be depending a lot on Lewis, on Leonard, on the team to take the company to the next step. And increase shareholder value with a keen focus in a business such as this, in consumer products and industrial solutions to focusing on our costs, understanding the commoditization of the business, understanding the brand opportunities and understanding the assets that this company has and how we take those assets and multiply the value that we can drive through them.

So actions speak louder than words. I really don't have any more words, and I'm just thrilled to be here and looking forward to a long tenure with Lewis, who is healthy. And I can attest for his ability to run fast, get things done and I look forward to doing that with him and the whole Q.E.P. team. Thank you.

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [5]

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Thank you, Harry. I just want to acknowledge we have several people on the call who I just want to mention. Paul Boyce is our Managing Director in Europe. Paul managed, even though the pound has taken a hell of a beating, to continue to be profitable, and we're looking at growth in the future on the European sector. Mr. Hicks, who makes sure that -- the question of healthy. Richard Hicks is one of our major shareholders. He sends me vitamins. And I want you to know, Rich, I've been taking the vitamins to make sure that I'm healthy. And I also want to thank several people, Gary and several others who have written personal notes to make sure that we're on the right side. But I'd like very much to open this up for questions and we'll see if we can give the answers that are satisfying. So operator, let's open this up now.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Jamie Wilen in Wilen Management.

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James R. Wilen, Wilen Investment Management Corp. - President and Chief Compliance Officer [2]

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Welcome aboard, Harry. First a question on the Phoenix facility, we moved it during the quarter. Did it cost us anything to do that? And then, if you can talk about the economics of what we're doing there? We were outsourcing cartridges. I don't know what it costs or -- to what we're spending or how much we're saving on those things, but just the whole ball of wax as far as not just cartridge manufacturing, but shipping, expediencies and what have you from the new facility.

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [3]

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A pleasure. First, we have -- prior to this, we had 2 locations in the People's Republic. We were in Ontario, California, where we had our Halex facility where we manufactured tack strip and other items. And as you know, we were in Adelanto, California, where we made a little bit of adhesives and we used that as a distribution center. Well, we sold the facility in Adelanto, which you're aware of, in the prior year, and we had to move both of those facilities into Phoenix. We chose Phoenix for a variety of reasons because it got too expensive in Nevada to move, because Tesla with the battery business in Reno made it very, very difficult. And in the Las Vegas area, it was just impossible to find decent rentals. Also in California, we're faced with, as you know, mandatory proposition 65 notice on everything and then the effect of the wage increases that are automatic in California. So we had to find something within 400 miles of where we are. We found this magnificent location in Tolleson, which is in Phoenix, one of the suburbs, 150,000 feet. And what we're going to do is we have brought in the product, the inventory. We're waiting for a final permit for our silos to go in. So we'll be manufacturing tack strip, glue, a portion of what we make on our tool line, a portion of the Nupla, et cetera. And as a result of all of that, we're looking towards the goal of having a one-stop shop. It cost a lot of money, I didn't want to quantify it, to move all the locations and get them, but the charges are in SG in the first quarter. And you'll see the charges still continuing as we put racks in and do the things that normally occur. We're doing our own IT wiring in the building, and we have a lot of expertise and a lot of the double shipments and double people that we have will certainly disappear this quarter. As a result, we'll be making tack strip. We'll be making glue. We'll be making tools. We'll be making a variety of other small items. Our goal is to take the pressure off our East Coast operations and move as much as we can to Phoenix. The employment market is tight all over the country. It's not quite as tight in Phoenix as it would be in California. However, that facility is going to be our major West Coast facility for incoming inventory from the Orient and outgoing shipment for the West Coast for the 14 states that are located there. Hope that gives you some indication.

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James R. Wilen, Wilen Investment Management Corp. - President and Chief Compliance Officer [4]

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Can you talk about the cost savings we can enjoy on a couple million cartridges?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [5]

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On the couple million cartridges, initially it will be small because we're not going to be perfect as we go forward. But what will happen is we're looking at hundreds of thousands of dollars savings as we go forward in the future, mainly because we're not shipping to ourselves all over. So the freight will be confined to one area, and also it will be consolidated treatments. I think freight is going to be a major concern for everybody in the United States soon.

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James R. Wilen, Wilen Investment Management Corp. - President and Chief Compliance Officer [6]

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And because we're making our own cartridges, does this enable us to go into other product lines that we're not currently doing right now?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [7]

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Absolutely. We've started to look at construction adhesives, a variety of those. We're unable to make silicone type [fill], because that's almost a monopoly with Dow and GE. Maybe they'll be outsourced, but we're looking, obviously, at expanding the line under the ROBERTS brand.

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James R. Wilen, Wilen Investment Management Corp. - President and Chief Compliance Officer [8]

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Okay. On the flooring side, could you talk about Harris Wood, how they're doing there? And then you mentioned that Naturally Aged is doing well. Could you talk about -- a little bit more about what that business is? And if you're integrating it into what we do, are there any synergies there that are going to help to grow that business?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [9]

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Absolutely. Naturally Aged Floor is brand-new, as you know. It's a small -- well -- they've had a record sales month since we bought them. I hate to give the figures out because we have competitors on the line, but it's been rather significant for us. Their model is quite different. With Harris Wood, we sell the wood direct to the mass merchants and we sell it through distribution to the dealer, which is good. Not a problem. But there are several markups along the way: we make a markup, Harris makes a markup, the distributor makes a markup, the retailer makes a markup. We all make a little bit on it. That's one model that we have, which has been good and steady for us, because we need distributors in many markets that we're unable to handle ourselves. The model that Naturally Aged Flooring uses is to bring in imports, which it has in the past, and sell those direct to the dealer, but not sell commoditized product, not sell low-end or medium grade, only the top high-end type product, which is sawn-faced, very deeply etched, actually beautiful stuff. And in the last 30 days alone, we've started to add a second line to that, which is called Luxury Vinyl Tile, LTV (sic) [LVT]. We can't get enough of it right now. And we started initially and we invested $0.5 million in buying this stuff. We're sold out already. We're waiting, we're hanging by our fingernails, container to container. So that's on that business. Now on the Harris business specifically, Harry is -- one of the tasks that we have, Harry, Jamie, Leonard, et cetera, will be integrating a lot of the Harris product into this model and feed him as another vendor that he has. Except that this particular vendor will be USA-based. Now we have to move a little bit slower on that because our manufacturing machinery was dedicated to what they call rotary peeling, which you take a log and you, like an old pencil sharpener, you peel the veneer off and then you put it on plywood and you've got the wood. The popularity has changed now, where the planks have become wider and longer and you now saw across the face of the veneer and you make a different product. So we have a big schedule conference about mid-August when we catch our breath, and we're going to come out with a new line that will be available for everybody based on the fact that it will be partially American, part import, and we'll have our acts together. Right now, I wish things [were clearer], but you don't want to touch something that works well. But we're going to touch it very lightly as we go forward in August, and then be full-operational [on plan] sometime in December.

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Operator [10]

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(Operator Instructions) And we'll take our next question from Jamie Wilen with Wilen Management.

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James R. Wilen, Wilen Investment Management Corp. - President and Chief Compliance Officer [11]

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Let me ask 2 other areas of the world. Your -- you have a third of your business in Australia and England. In England, you were talking previously about rollout with, I believe, Homebase, and just wanted to see -- and we've made acquisitions over there. How is that country -- how is that business in England and Europe moving forward right now?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [12]

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It's an interesting question. Historically, Europe has been one of our highest margin and profit companies. Europe consists of what we do in France, on the continent, in England and our new location in Germany. And our business is primarily split into 2 pieces. It's mass merchandising and it's distribution. The big hit that we got last year was the British pound took really a licking. It went from an average of $1.65 to where it is right now, which is $1.315, so that 20% difference really had a tremendous effect. What Paul did at the time is, he had a reduction in force, let several people go. We consolidated our operations. We became thinner. Paul went to China, negotiated better pricing, better discounts. We've looked here in the United States at helping Paul with our freight and distribution policies and were successful. Paul is profitable. What has happened is there was a company in Australia called Bunnings. Bunnings bought Homebase in England and attempted to turn the Homebase stores into Bunnings. It didn't work well enough, and about 30 days ago, they announced that it was closing and they made a sale to a hedge fund called Hilco, which bought it for GBP 1. We were doing quite well with [Homebase]. We were shipping them record amounts of product, and all of a sudden, it stopped for a period of time. Homebase now is up and running under the Homebase name. We're getting paid -- Paul negotiated a new payment schedule, getting paid in 7 days from them now. The product is starting to flow through and very pleased with the results. We're moving forward all of our customers because Brexit in Europe and especially England have had a lot of time on their hands to consider what will happen in the future. But for looking at this from the strategy point of the United States, there are no tariff infringements on their -- on them right now. The currency has turned out to be stable. We need the volume and the product to flow through our Chinese office. And we're pleased generally. Paul tells me that in his future budget, of course he was drinking at the time, he says that there is a major chain that's coming on shortly and we'll make it the way we'd like to have it. But there have been issues that are political and economic in nature that are beyond our control, but the good news is we're profitable. The better news is we're going to be more profitable.

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Clifford F. Ransom, Ransom Research, Inc. - Founder and President [13]

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Okay. And then on the acquisition front, you mentioned that you were looking at distribution companies. Are you more looking at distribution than manufacturing? And are you looking -- historically, you bought some turnarounds that you were able to integrate into your company and make them more profitable. But I assume if you're looking for a major acquisition at this stage in the game, you're looking for a profitable company that will be accretive to earnings right out of the gate?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [14]

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The answer to that is yes. We've reached the point where we've made 17 smaller acquisitions. They're all okay. They all add EBITDA to the bottom line. Now what we want is with our new management team, let them earn their money and we're looking for some sales in the area between 90 million and 150 million sales, because that's the goal. We actually have -- in the view, under the magnifying glass, we have a couple of leads that we're working on, but are looking in that area, and if there's manufacturing involved, that's a different story. But we are looking for people that will follow the new strategy that we outlined a moment or 2 ago with the direction of where we sell. We have to start looking at the value proposition that we have. We want to spread the wealth wherever we can, but want to get to that number for sure sometime this year.

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James R. Wilen, Wilen Investment Management Corp. - President and Chief Compliance Officer [15]

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Okay, and lastly, Harry coming on board, could you tell us if his compensation structure includes stock options as well?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [16]

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Harry is lucky to have a job. Just joking. The answer is sort of. The Board of Directors is working on a long-term incentive program. The Board of Directors will meet sometime, probably the September area, to finalize those. So what will happen is we're going to have a plan, a 5-year plan that will [incentify] the people in the plan with c-a-s-h, not p-a-p-e-r, and the plan will be available after the board votes on it. What we're waiting for is our new senior VP of HR to come do some writing. He's on the conference call right now. His name is [Tim Bolton]. He works -- worked for -- well, something like that. He works for waste management and before that, knew Tim from the Home Depot days when he was a big-time HR guy working with Arthur Blank. So we've [upped the game] quite a bit, but that's how the compensation will be tied. You do -- company does well, everybody is going to make out. The company doesn't do well, hey, that's the way it goes. So that's what it is right now.

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Operator [17]

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(Operator Instructions) We'll take our next question from [Brendon Scanlon], private investor.

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Unidentified Participant, [18]

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Just a quick question, I think I might have -- it's a point of clarification for me and hopefully others on the call. I thought I heard in the opening statements that you were looking to take the company out of the distribution business? Jamie's last question didn't indicate that -- I mean, maybe you are looking to acquire within the distribution business. I'm just wondering, again, it's a point of clarification, is distribution -- are you looking to get in or to de-emphasize that aspect of QEP currently?

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [19]

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No, we're looking to get in further into distribution, but distribution has a lot of attributes, which way we're going in distribution, what model. But definitely we're not giving it up, that's our ROBERTS business and we want to look very carefully at what is available in the distribution business, for sure.

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Unidentified Participant, [20]

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Got it. Okay, sorry about that. And then just one more thing. It seems like if I understand Harry's role correctly, and I know there is -- it'll be a blurry line based on areas of expertise. But it sounds like Louis, today, you might be increasing the percentage of your time focused on the acquisition side and with sort of allocating some of -- or deemphasizing the operational aspects. And that's what Harry is going to be primarily focused on. Again, I know it's always a [blurry line].

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [21]

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You are correct. I want to make sure that the team succeeds, so I'm always available for comments, but I'm going to back Harry and look at the areas that are M&A, strategic and, temporarily, the foreign subs till we get up to speed. This is our focus, is going to be in North America, making us a lot more profitable.

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Operator [22]

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It appears there are no further questions at this time. Mr. Gould, I'd like to turn the conference back to you for any additional or closing remarks.

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [23]

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First of all, I want to thank certainly everyone for attending the conference call. We have -- I want you to know that the team here doesn't rest. I want to mention the team if I may, folks that are here. Mark, our CFO, has tirelessly put tremendous amount of time into our numbers and looked at the acquisitions and has been a real good guy involved in that. Larry, our Senior Vice President, we call him Larry the lawyer. On his desk is a mountain of pieces of paper, and we do a lot of that internally. As we continue to grow, we find there's more little things biting us because we've become a bigger target. [Eanis] has been with us for how many years?

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Unidentified Company Representative, [24]

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17 .

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Lewis Gould, Q.E.P. Co., Inc. - Chairman and CEO [25]

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Only 17 years, so he's a newbie. And [Eanis] has been in the finance area as our Vice President and Treasurer. And Leonard of course has been here for almost 25 years, and it's like a brand-new day. And this is very difficult, obviously, for Leonard to see his father -- he said go out to pasture. I didn't say it that way, but he thought that. But we have a very, very good team. There are other members of the team who are not here right now. Tim will be joining our team shortly. Herbert, our Ops guy, is traveling all over God's green earth. He is right now in China negotiating better prices and looking for better freight rates. Jamie, actually, went on vacation. I think this is the first time in 12 years unfortunately, and she's our marketing and sales guru. And we have Paul, certainly, in England; and Bruce, certainly, in Australia. We have really a very good, dedicated team. There's been very little turnover. As we go forward, we look to increase the knowledge that these folks have and really make it bigger and help it grow. Again, I want to reiterate I haven't sold any shares. I seem to be healthy, looking at the right things and looking forward to the future that we make the company much larger than it is right now, but certainly more efficient and more money. And I think our customers are going to be delighted because the larger, more stable we get, we're able to offer a lot more things to our customers just generally. But M&A will be a big activity in the company, thanks to Bank of America, et cetera. So those are the closing remarks. I want to thank our shareholders who have been with us for a number of years. Mr. Hicks, Gary, certainly appreciate the comments that you have and taken them to heart. And we look forward to building the company and having a great conference call with you guys in the next quarter. I want you to know we're working harder than we ever did and the government is making us do that. So we're up to the task, certainly. So as you know, Stanley will say if you have any additional questions, call Paula. We'll get you any information on this. The repeat of the conference call will be on our website, et cetera, and we continue to move forward. So thank you, guys and God bless America. Bye-bye.

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Operator [26]

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This concludes today's call. Thank you for your participation. You may now disconnect.