P&F Industries' (PFIN) CEO Richard Horowitz on Q3 2017 Results - Earnings Call Transcript

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P&F Industries, Inc. (NASDAQ:PFIN) Q3 2017 Earnings Conference Call March 28, 2018 11:00 AM ET

Executives

Richard Goodman - General Counsel

Richard Horowitz - Chairman, President & CEO

Joseph Molino - COO & CFO

Analysts

Andrew Shapiro - Lawndale Capital Management

Operator

Good day and welcome to the 2017 Earnings Call. Today's conference is being recorded. Today after management's remarks there will be an opportunity to ask questions. [Operator Instructions] At this time, I turn the conference over to Richard Goodman. Please go ahead, sir.

Richard Goodman

Thank you, operator. Good morning and welcome to P&F Industries' 2017 Conference Call. With us today is our management Richard Horowitz, Chairman, President and Chief Executive Officer and Joseph Molino, Chief Operating Officer and Chief Financial Officer.

Before we get started, I would 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, 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 - assets and goodwill; unforeseen inventory adjustments or change in the 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 Securities and Exchange Commission, including among others, as described in our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q 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.

With that, I would now like to now turn the call over to Rich Horowitz. Good morning, Richard.

Richard Horowitz

Thank you, so much Rich and good morning everybody. Thank you all for joining us this morning for our 2017 year-ending conference call. I will begin today's call with a brief summary of the company's 2017 results and how this data compared to the prior year.

However, I direct you to our release earlier today for more information. The release presented P&F balance sheet, statement of operations, per share data along with most of our management's discussion and analysis. I wish to remind you all that the purpose of this call is to discuss and review the company's 2017 results only.

As such, I kindly request that you please confine your questions and comments to the topic at hand. I will then ask Joe Molino to briefly review key cash flow information and provide an update on any key events affecting the company after which we will move to our Q&A session. The company's consolidated financial revenue for 2017 was $58.974 million compared to $57.276 million in 2016. Florida Pneumatics' 2017 revenue was $46.471 million compared to $45.282 million during 2016.

The net improvement over the prior year was due to a $6.2 million increase in aerospace revenue driven by the Jiffy acquisition in April of 2017 and that was partially offset by a $5 million decline in our retail business. As previously disclosed, we elected not to renew our sales service agreement with Sears which expired September 30 last year.

This decision was the primary factor for $4.3 million of year-over-year decline in Sears revenue. Also, industrial catalog revenue improved 14.9% in 2017 compared to the prior year with automotive revenue down 4.6%. Hy-Tech's revenue for 2017 was $12.503 million compared to $11.994 million to prior year.

The most significant component is that increase was a growth of the engineered solutions initiative, which now accounts for more than 8.5% of our total revenue in Hy-Tech's up from 2.3% a year ago. The company's consolidated gross margin for 2017 was 35.8% compared to 33.1% for 2016. An improvement in Hy-Tech's gross margin was a driving force in this improvement. Key factors contributing to Hy-Tech's yield improved year-over-year gross margin or firstly better product mix, secondly greater overhead absorption and lastly reduction in charges relating to computation of their allowance for slow moving inventory.

These changes during 2017 contributed to Hy-Tech's overall gross margin enabling it to rise to 29.2% from 18.8% in 2016. Florida Pneumatic 2017 gross margin improved to 37.5% from 36.8% due mostly the customer and product mix.

Our selling general and administrative expenses for 2017 was $21.034 million compared to $19.610 million in the prior year. The most significant factor causing this increase was the addition of Jiffy's operating expenses of approximately $1.673 million. Further during 2017, we incurred approximately $503,000 from M&A activity related expenses most of which related to the acquisition of the Jiffy business assets.

Additionally, in 2017 we recorded a charge of $158,000 relating to an increase of the fair value of the contingent consideration able to sale of Jiffy which of course is good news for our company.

Lastly, the company's interest expense during 2017 was $168,000 down from 2016 total interest cost of $181,000. Taking the data above into consideration of 2017, we are reporting a pretax loss of $249,000 from continuing operations compared to a pretax loss from continuing operations of $8.638 million in 2016. On an after tax basis for 2017, we were reporting a net loss continuing operations of $884,000 compared to a net loss of $5.683 million in 2016.

And lastly, our 2017 basic and diluted loss per share from continuing operations was $0.25 compared to $1.58 for 2016 which was driven by the sale of Nationwide. During 2017, there were no earnings per share related discontinued operations whereas in 2016 we earned $3.50 per share. In total, for 2017 we are reporting a loss per share of $0.25 compared to net income per share of $1.92 in 2016.

Again, as a reminder, I refer you to this morning's press release which gives more color to all of these numbers. At this time, Joe Molino will discuss our cash flow.

Joseph Molino

Thank you, Richard. Capital expenditures during 2017 were $910,000 compared to $1.066 million during 2016. Significant non-cash items affecting our cash flows during 2017 were depreciation and amortization of $1.309 million, amortization of other intangible assets of $800,000. Increase in estimated fair value of contingent consideration payable to the seller of business assets of Jiffy of $158,000. Stock-based compensation of $118,000.

Amortization of debt issue cost was $64,000 and deferred income taxes was $912,000 driven primarily from the recent changes in the tax code. Significant components which impacted cash provided by operating activities and continuing operations during 2017 were increases of $1.384 million in accounts receivable, decreases the $1.913 million in inventories and a decrease of $1.857 million in prepaid expenses and other current assets.

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

Richard Horowitz

Thank you, Joe. As always, I would like to acknowledge all of our employees and management for their hard work and devotion and dedication to our company. All of us have always believed in our company's products and customers and the hard work because of which P&F continues to improve.

That's the end of our update today. Now we'll be happy to answer any questions anybody may have. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And we'll take our first question from Andrew Shapiro with Lawndale Capital Management.

Andrew Shapiro

Good morning guys. I got a bunch of questions, I'll ask a few [indiscernible]. If I could just get a few questions in here [indiscernible]

Richard Horowitz

Hi, Andrew could you please speak up a bit, we are having trouble hearing you.

Andrew Shapiro

Hi, I'm sorry. Can you hear me better now?

Richard Horowitz

Yes.

Andrew Shapiro

Okay. I have several questions as you know well to ask a few and I'll back-out into the queue. First off, regarding your two new acquisitions this year. Few questions on Jiffy and Pneumatics. So, after owning Jiffy now for several months, actually a few quarters almost a year, what type of consolidation cost synergies do you see? If any, which really worked on the front burner and more importantly should have a decent amount of visibility now on the main focus which were revenue expansion synergies that you expect to see.

Are you getting any of your legacy P&F products into the customer's acquired by Jiffy, is it going the other way around where some of the Jiffy products are going into your existing customers that Jiffy didn't have can you expand?

Richard Horowitz

Sure. I'll just go in reverse order. At this point, we don't have any of our legacy P&F product that was an aerospace related going into Jiffy. We do have some of the aerospace product we used to produce that was not Jiffy of course that is now being sold in Jiffy. I don't know that it's particular material but it certainly positive and where they are where there are somewhat redundant tools in cases where the lead time is shorter or something that was a legacy in aerospace we can satisfy the customer a little sooner than we can with Jiffy because we tend to have inventory of the imported products.

Secondly, in terms of other revenue expansion opportunities we are working on getting some other product into Jiffy but those require some refinement on the development side but we're pretty optimistic about some of those are some of those opportunities. I don't know if we mentioned prior call, but there is some overlap between the Florida Pneumatic what I'll call their legacy sales force in the Jiffy salesforce we've somewhat integrated those and I would say that's gone incredibly well.

The folks at Florida Pneumatic that have taken on the Jiffy line seem to be doing very well with it and I think we've really increase Jiffy's footprint nationally as a result of that expansion and in terms of the growth of Jiffy we're optimistic and it's exceeding our expectations clearly in terms of our orders and revenue.

Andrew Shapiro

And then with respect to Pneumatics' what type of cross-selling might you be able to do with Pneumatics. I don't know if you acquired clients as much as I know you brought in it was more of an asset purchase and an engineered product. But the across selling, cross synergies regarding legacy at P&F and Jiffy tools with the Pneumatics clientele and vice versa?

Richard Horowitz

Yes. I don't know if exactly it's related to having Jiffy, but it certainly didn't hurt where we are talking to a couple of large aerospace customers somewhere Jiffy counts or Jiffy counts and we're working on some of the R&D work in conjunction with these potential accounts and we were pretty confident we're going to have some success with the Pneumatics products in some of the largest aircraft action manufacturers in the world.

Andrew Shapiro

Okay. And can you provide you've done this right now on your last answer but if there's any more color on your experience and opportunity with Pneumatics that gave you comfort to say in your press release that you're excited about its prospects.

Richard Horowitz

Well, and as I said we're in very very detailed discussions, serious discussions with major aircraft manufacturers worldwide regarding Pneumatics product. So, these people don't take these discussions lightly and given the level of work we're doing, I'm optimistic that it will lead to something.

Joseph Molino

But Andrew, I'll just caution you and telling you this is essentially a one product business and it's not going to be not going a revelation it's not going to be a $20 million business it's going to be a very very nice product line for us with a good profitability. It's going to definitely help the company a lot but not like going to change.

Andrew Shapiro

And you didn't pay an arm and a leg for either it's.

Joseph Molino

Paid close to very little.

Andrew Shapiro

Yes. Okay. Let me back out, I do have obviously lots of other questions. But in case there is anybody else.

Richard Horowitz

I know there isn't anybody else on the call Answer to ask a question. We'll just check.

Andrew Shapiro

On the corporate side here and then Hy-Tech and Florida of the 503 I guess the M&A non-recurring expense, what was in Q4?

Joseph Molino

I don't know that there was a great deal in Q4 most of that is as the Jiffy deal closed in April, we would have had most of that expense probably in the front half of the year. I mean there were some as you know we have ongoing M&A activity all the time there were some other things we were working on throughout the year but I would have to say very little of that expense would been Q4.

Andrew Shapiro

Could you know your release is just for the full year and we don't have the 10-K to back out from the queue yet to give the stuff. What was the change in the Jiffy contingent obligation estimates fully a Q4 charge?

Richard Horowitz

Yes, depending on the number we gave you, just to you know how this works. So, at the close of the Jiffy transaction we needed to estimate what we thought the ultimate contingent consideration would be and then beyond that that number gets reduced the I'll call the time value of money although it's a little more complex than that so as the year progressed we were certainly expecting that number to grow simply through what are called time value of money having said that orders have been such and sales have been such an opportunity to such we were. Very comfortable and felt we were obligated to increase that estimate on a go forward basis.

Though the bulk of that different living was 100 talking to change for the year which is 100 58 was in Q4. But we had a little bit of it cues 32 and 3 not much I would say 1020 grand but the rest of it was before okay and then when you say you're evaluating the development of more advanced technologies in P&F tool platforms.

I just want to clarify are you referring to evaluating others development and this is your monitoring what others are doing or the seizure considering P&F doing more development internally versus maybe purchasing it for both it is absolutely both.

Depending on the technology something's were capable of doing internally something were better off working with someone else though we answer your question as well.

Andrew Shapiro

Okay. And then can you update us on the timing of the implementation of the 10-b buyback plan how many shares to-date. I think you've said it had been acquired so far and the average price paid can you provide what you did in the fourth quarter or and is that number through the end of the year that was in the press release or is that through the date of the press release?

Richard Horowitz

Your last question I don't know the answer to, but we can get an answer to in a minute or two just to remind you all that will be in the K tomorrow. We've slated for $25,000 every 90 days beginning at the end of August last year and I can tell you we maxed that out in the first six months. I know we hit our $50,000 target. So, we had to take a little bit of a break. $50,000 share targets and then we needed to take a month break before we could start the third 90-day period which I believe began at the end of February. And we've been out there since then and I don't have it in front of me but we've probably purchased 10,000 shares or something unexpectedly.

Well, we do know, I just don't have that figure. And in tomorrow's K you'll have an exact calculation. But I can't say that we've been out there, we've been aggressive, we didn't max out for the first six months.

Andrew Shapiro

Right. I mean when you say aggressive the price is cheap, and if people want to be foolish enough to do it. What I would then follow up with is as you found that the shares are coming in pretty easy to you when would the board consider perhaps you know replenishing and continuing along the pace you're doing?

Richard Horowitz

We'll consider it once it expires. We'll talk about it certainly in our next board meeting.

Joseph Molino

It depends on a number of things as you know what our borrowing level is what our acquisition opportunities are and we bought a company if we thought you know what we're looking at in cash flows of course. Yes, I mean everything still on the same.

Andrew Shapiro

Alright, and when you're considering the increase in CapEx for 2018 is there a general payback or hurdle rate you are budgeting for using?

Richard Horowitz

I generally like to see a 30% internal rate of return that's my rule of thumb, I can't say that every transaction, every expenditure has been over that but I'd say I can't remember one that hasn't been in a very long time.

Andrew Shapiro

Again, I'll give you guys an opportunity if there's someone in the queue I'll back out.

Richard Goodman

Hold on one second. We'll let you know.

Operator

[Operator Instructions] Mr. Shapiro you may proceed.

Andrew Shapiro

Thank you. Let's go into Hy-Tech is we could. The engineered solutions products are now about 8.5% of annual revenue for the year as you said in your release. Is there are mix in Q4 even higher and then indicative of what would be likely a greater share of the mix in 2018?

Richard Horowitz

I'm going to say probably, but I will tell you this we are expecting that number to cross over into double digits in 18. So, I don't know if that answers your questions.

Andrew Shapiro

Yes, it does. When we call it engineered solutions it's a really nice name does it imply higher margin?

Joseph Molino

I don't know if that's, I'm not sure that's why we came up with the name but I would say yes, the margins are generally higher because. There's a lot of engineering time in this and customers like to pay for custom work that is specific to them.

Andrew Shapiro

And through the process are you adding a bunch of new customers since it is somewhat new we'll call it.

Richard Horowitz

Absolutely. This in fact that whole line of product is all new to me every time we get a custom it's somebody new it's not, it's typically not somebody that we were selling a standard impact wrench to that wanted a custom solution it is usually some sort of product driven company that's got some pneumatic system that's part of their product or application and you know we get in there with our expertise and depending on the situation we might make a few components we may make an entire section of a product line or in some cases we might make an entire product for them. It's just you know and obviously depends.

Andrew Shapiro

And through this growth maybe it's too soon, I don't know are there any particular industry sub-segments that are noticeably gaining traction for you in this area?

Richard Horowitz

No, not really. I mean we're doing it in so many different areas and we're open to just about any area where they can use our talent. So, I wouldn't say there's anyone. Yes, it's pretty broad-based thing.

Andrew Shapiro

Now had Hy-Tech had much OEM business in the past and will these OEM products compete with Hy-Tech internal branded tools or it's in the different area?

Richard Horowitz

No, they will not. I mean these engineered solutions products won't compete with anything else we're doing.

Andrew Shapiro

So, the engineered solutions products are what you also separately referred to in the release as their OEM business.

Richard Horowitz

Yes, we use those terms interchangeably in this instance yes it's just so we're clear that I understand why you're there's some confusion because in the past that I think we probably still have a few products that are branded with other companies brand that's not a very big part of our business anymore but here again it's not as simple as that the tool with somebody else name little more complex than that.

Andrew Shapiro

Okay. And then like Jiffy was in aerospace are there small fragmented competitors in these niches that might prove to be good acquisitions for Hy-Tech or are the competitors the big players who one day view P&F as its own niche acquisitions.

Richard Horowitz

I don't know. I think it's possible that it's both or either nothing really did but that's not really. But that's not really on our minds.

Andrew Shapiro

Well, certainly you guys would be again niche acquisition for one of the big boys?

Richard Horowitz

I guess so depending on what the product is.

Andrew Shapiro

Yes, I didn't know if there were other, small fragmented competitor's you would you could.

Richard Horowitz

Yes, there are and we - when those are presented to us we look at them it obviously depends on the opportunity as you said if we're just making an air motor that's part of the big system, I'd say that's probably not going to be an acquisition for us but if we're making something that's either a major part of a tool or something we could push through our distribution channel that might be an opportunity.

So, it's not all of them but they're certainly a few situations where that is the case.

Andrew Shapiro

On a quarter or actually two quarters back, I think you moved back to overtime for pretty much the entire group of operators at the Hy-Tech and which was a very good sign it showed up in your Q2 results. Has the rate of orders continued and are you now moved into a mobile shift operation that you mentioned on the last call you were working towards.

Richard Horowitz

I was going to say the rate of orders has maintained itself and not gotten bigger so that's good news and the I think the issue with going to not shift is getting manpower for the most part. So, we've been staying, we've been talking about perhaps going to modify second shift but people is the issue unemployment.

Andrew Shapiro

So, then are you finding that you got to go with the overtime versus a higher standard rate.

Richard Horowitz

Unfortunately, yes.

Joseph Molino

Yes, but I would also say that we are finding other ways to increase capacity we're very close to being up and running with our new MRP system which was frankly decades overdue and we have other manufacturing support personnel that we're brought on board that have some level of sophistication that are also improving throughput.

So, we're finding other ways to increase capacity without just raw human capital. Having said that, we still I think given the opportunity, if we would be able to find a solid supervisor level person that would work in night shifts I think that would trip us over into bringing on a few people for the night but right now right now we're doing okay without that.

But we see that in the future.

Andrew Shapiro

I guess it's a nice problem to have versus where we were many years ago.

Richard Horowitz

Yes, it's a very nice problem.

Joseph Molino

Many years ago. Actually, in our very very recent memory.

Andrew Shapiro

Now, you also talked about how Hy-Tech was recently developing a new marketing strategy intended to re-energize the gear and hydraulics stopper business. Can you give more color on that strategy now and its success or failure?

Richard Horowitz

Well, I think the strategy was being a little more June with the market and hooking up with some much more sophisticated and well-connected distributors which we have absolutely done and showcasing our capabilities but again that is a very small part of our business and while that's something we're working on, I don't know how much that's really going to move the needle in total.

Andrew Shapiro

You carry high margin.

Richard Horowitz

It's not a million-dollar business, or it will ever be.

Andrew Shapiro

Before I move over to Florida pneumatic questions let me give you an opportunity to check your queue.

Operator

We have none at this time. [Operator Instructions].

Andrew Shapiro

Okay. Well, I hope there are others on the call and even shy. Florida Pneumatic, is the new product line for Home Depot expected to generate similar or higher levels of revenues in the present legacy line of tools?

Joseph Molino

No, we did not think it will be significantly higher. We like the new look and we have been pleasantly surprised in the past when the line has been refreshed that sales have increased beyond the legacy product and the most thing that couldn't happen but we're not anticipating that.

Andrew Shapiro

And how is the phase in and phase out contemplated to work?

Joseph Molino

I don't have a perfect answer, but I can say that we're going to begin shipping.

Richard Horowitz

Into this summer.

Joseph Molino

Yes, Q3 call it July and it's somewhat dependent on their internal schedule and again, I am just guessing, but based on prior line of refreshments, if that's the right word it's taken a couple of months to get all the product out there sometimes they do a running change, sometimes they don't. We don't really know, but I would say a safe answer would be throughout Q3.

Andrew Shapiro

And what was Home Depots decision to reduce the number of SKUs that they want to offer related to -- is it giving share to a competitor or just downsizing of your segment overall or some other reason?

Joseph Molino

I don't think it was downsizing, I think it was bifurcating. I believe I'm not mistaken, they've created a small entry line of tool and that's where couple of the tools came from. Frankly, they were probably some of the smaller revenue tools for us so it wasn't a dramatic impact and we're working with them and it was really that big of a deal, frankly.

Andrew Shapiro

And for the new product you referenced; what lower margin -- is lower margin the result of higher cost inputs or lower ASP?

Joseph Molino

The cost of the inputs hasn't changed dramatically, so it was the later.

Andrew Shapiro

And when -- and how will the co-op marketing expenses flow through the income statement; is it through gross margin, is it SG&A or will they be expensed or capitalized and amortized?

Joseph Molino

We don't know the answer to that yet, the answer is somewhat buried in ASC606 which is the new revenue recognition policy, so we're working with our consultants on how that's going to go but as soon as we have an answer, we'll give it to you.

Andrew Shapiro

And to what do you attribute the increase in industrial catalog revenue and is it a onetime bumper, something more sustainable?

Richard Horowitz

No, the market is having little bit of resurgence by then, it's not a onetime bumper. We're continuing to enjoy it as of now -- no idea about the future but it's -- everything seems to be a good [indiscernible].

Andrew Shapiro

And has Q1 which is almost over, that you're leasing January and February. Has it already seen the automotive distributors who rebalanced in 2017 either return to move towards more normal levels?

Joseph Molino

Yes.

Andrew Shapiro

On the previous call, you spoke of a suite of tools targeted towards body work and they had just launched; you hadn't got any inventory in, but you didn't really have much feedback on them yet but you had more to talk about on the next call which is this call. Can you give us an update on that progress and what the feedback has been?

Richard Horowitz

I think the feedback has been positive, just to remind you that market is a fraction of the market for maintenance work. So we've got few tolls and I think we were still even getting some of those tools in towards the end of the year. So it's still a little bit early to call that in terms of what's going on. It's been -- it has not been a material event so far.

Andrew Shapiro

And can you update us on universal performance during the fourth quarter and that the customers continued to be strong, the weakness that was seen in Q2 and Q3 you ascribed to be in currency but otherwise that the business was pretty steady. Is that still the case or have we gotten the benefit of both currency and strong business?

Richard Horowitz

The underlying business is I'd say meeting our expectations right now and of course as you've noticed, the pound has strengthened a bit which is of course helping the results as well. I mean we probably have not seen -- I think I checked the other day, it was 1.4 dollars to pound and we haven't seen anything like that in a while. So I'd say the answer is, we're doing fine and the currency is certainly helping.

Andrew Shapiro

And you were said to be developing intercad [ph] and other tools and distribution opportunities for Europe; can you give us an update on those efforts and timing when the inroads might prove a bit more meaningful?

Richard Horowitz

Yes, we're pretty stalled right now in automotive tools on the continent. Having said that, we have some other things we're working on which I can't get into right now but I should have more to say about that, possibly on the next calls, I don't know when that is but we are working on doing something there. But right now, what we have done so far has not been fairly successful but we've got a different approach that we're about to embark on which I'll talk about next time.

Andrew Shapiro

And then that large European aircraft -- airframe manufacturer that was referred -- we referred to in the last call, have you already been able to make some inroads and get -- be able to call on them with the jiffy and other aerospace products?

Richard Horowitz

We are calling on them, we have -- we are having meetings, discussions visits, so that continues, nothing to report yet in terms of results or orders but we're in the middle of it.

Andrew Shapiro

Generally, what is the time horizon or cycle time for prospecting to result in subsequent closing of some business?

Richard Horowitz

In aerospace?

Andrew Shapiro

Yes.

Richard Horowitz

Quarters, if -- minimum two quarters. I would say probably longer. I'd say start to finish 6 months at least, probably more like 12, it's variable on lead time.

Andrew Shapiro

Right.

Richard Horowitz

So, it’s very long lead time.

Andrew Shapiro

Now on the oil and gas side. I understand and you guys provide a greater clarity that our oil and gas business for Hy-Tech is heavily biased to the offshore side versus the tide oil shale environments. And it's the big town hasn't really materially grown there come back from where decline to, but it’s bounced. But moreover, the real issue is after a certain period of time, presumably there should be need for replacements that takes place. Have you started to see stabilization and any type of rebound at all in that area for Hy-Tech?

Joseph Molino

Again, we have been deemphasizing that for Hy-Tech as we spent many more resources in engineered solutions and some of the other areas. But I'd say, it's the business has been pretty solid. And I don't know if I’d call it a rebound, but we’re certainly better off than we were 12 or 18 months ago in the Gulf.

Andrew Shapiro

Okay. You know I think that's all I have. Hopefully someone else raise their hand and join the queue.

Richard Horowitz

Okay. Thank you, Andrew. Have a good time. We're checking.

Operator

And gentlemen we have no further questions that have queued up at this time.

Richard Horowitz

Okay. Thank you. Thank you everybody for listening to the call today. I hope everyone is happy enough and we will hopefully speak soon at our next quarter. Our first quarter results shortly. Thank you for your time today.

Operator

And ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.

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