Richard Goodman - General Counsel Richard Horowitz - Chairman, President and CEO Joseph Molino - COO and CFO

Andrew Shapiro - Lawndale Capital Management

Good day and welcome to the P&F Industries’ Incorporated Q1 2016 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Richard Goodman. Please go ahead.

Thank you, operator. Good morning and welcome to P&F Industries first quarter 2016 earnings conference call. With us today from management are Richard Horowitz, Chairman, President and CEO; and Joseph Molino, Chief Operating Officer and CFO. 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, 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 the strength of the markets in which we operate, the impact of competition, product demand, supply chain pricing, our debt and debt service requirements and those 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 subsequent 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 would now like to turn the call over to Rich Horowitz. Good morning, Richard.

Good morning, Rich and good morning everybody. Thank you all for joining us this morning for our first quarter earnings call. There were a number of significant events that occurred during the first quarter of 2016 for P&F. But before we discuss those events I would like to present the brief summary of the company’s first quarter 2016 results from continuing operations and earnings per share from continuing operations and how they compare to the same period of a year ago. After that I will ask Joe Molino to briefly review key cash flow information and discuss discontinued operations and provide an update on key events affecting the company. After which we will move to our Q&A session. I wish to point out that unless otherwise noted the financial information discussed on today’s call refers to our continuing operations. Thus, excluding nationwide industries which were sold in February of this year and is being accounted for as a discontinued operation. The company’s consolidated revenue for the three months ended March 31, 2016 and 2015 were $14.499 million and $14.559 million respectively. Florida Pneumatic first quarter 2016 revenue of $10.830 million reflects an improvement of $576,000 or 5.6% compared to the same period in 2015. This increase was driven by a $626,000 increase in its automotive sales. I’m pleased to report that Florida Pneumatic had it's test automotive revenue quarter ever since we’ve owned it, which speaks to our acquisition of AIRCAT almost two years ago. Retail revenue at Florida Pneumatic also improved this quarter compared to the same three month period in 2015 by $271,000. However, partially offsetting this growth were quarter-over-quarter declines in both the industrial catalog sector of $224,000 and other product sales of $97,000. We believe these declines are due primarily to the ongoing oil and gas exploration and extraction crisis globally. But in particular here in United States noteworthy is that the price of crude oil continues to negatively impact Hy­Tech’s performance. With low crude oil pricing many rotary rigs have closed or have been temporarily kept. According to Baker Hughes Incorporated the rotary rig count in North America is down 632 to 478 at March 2016 from 1,110 one year ago today. These actions limit the need for much of Hy­Tech’s parts and tools. Further we’ve been informed that one of Hy­Tech’s largest customers has decided to manufacture several of the tools and parts they formally acquired from Hy­Tech internally. As a result Hy­Tech’s first quarter 2016 revenue was $3.669 million compared to $4.305 million in the same period last year. Because the company’s consolidated gross margin for the three months period ended March 31, 2016, and 2015 were 36% and 37.8% respectively. Florida Pneumatics' gross margin improved 0.8 percentage points mostly due to product mix aided by the slightly higher margin automotive sales. Hy-Tech’s gross margin declined 9.1 percentage points primarily due to lower manufacturing activity levels, driven by the ongoing slowdown in the oil and gas sector and its decision to manufacture and sell a very low gross margin suite of products to the customer acquired in the ATSCO acquisition. Moving forward, we will need to seize the marketing into this product or develop alternative method to improve its contribution margins. But we chose to satisfy these orders because we sell this customer other products. Our selling and general and administrative expenses for the three month period ended March 31, 2016 and 2015 were $5.056 million and $4.932 million respectively. Significant factors contributing to a quarter-over-quarter change were increased incremental variable expenses incurred in connection with higher automotive retail revenue, and compensation and benefits offset by lower professional fees. As we now have a new lease on a Tampa property, we will be reporting rental income. As such the first quarter of 2016 and 2015 include rents payable by Nationwide of $51,000 and $50,000 respectively. Our interest expense during the first quarter of 2016 increased over the same period a year ago due primarily to the write down of deferred financing cost that were attributable to the debt that was repaid this past February. Further, 2015 interest was reduced to accounting requirements to remove and include in discontinued operations certain interest expense. Taking all the above into consideration, our pretax income from continuing operations for the three month period ended March 31, 2016 was $109,000 compared to $588,000 for the same period a year ago. Our income from continuing operations at the taxes for the 2016 fiscal first quarter was $66,000 compared to $373,000 for same three months period in 2015. Our EBITDA for the three months period ended March 31, 2016 was $928,000 compared to $1.301 million for the same period a year ago. Our basic and diluted earnings per share from continuing operations for the quarter ended March 31, 2016 was $0.02 per share compared to $0.11 and $0.10 respectively for the first quarter of 2015. As I have mentioned earlier at the beginning of this call, there are other matters I wish to highlight today first in February as we all alluded to earlier we sold Nationwide to an investment banking from. The sale price being approximately $22.2 million, this is generating a pretax booking of more than $12 million. For income tax purposes, our basis was greater than proceeds resulting in a tax loss, which in turn generated a capital tax benefit to the company of approximately $141,000. The cash proceeds net of in escrow, our working capital adjustment and closing cost of approximately $18.7 million was admitted to our bank and paid down all of our debt for roughly $100,000. Second at the same time as the closing, we and our bank entered into an amendment to our existing credit agreement and adjusted this agreement to better meet the needs of our business going forward. And thirdly, during the first quarter of this year, we announced a special dividend of $0.50 per share per common share. And additionally, our Board of Directors authorized us to begin a quarterly dividend of $0.05 per common share. Both of these dividends of course were paid in April. At this time, I’m going to hand the call over to Joe. Go ahead Joe.

Thank you, Richard. Capital expenditures during the first quarter of 2016 and 2015 were $242,000 and $151,000 respectively. Significant non-cash items affecting our cash flows during the first quarter of 2016 were depreciation and amortization of $409,000, amortization of other intangible assets of $308,000, amortization and debt issue cost of $98,000, and total stock-based compensation of $25,000. Additionally, there was a non-cash credit attributable to deferred income taxes of $127,000. Other significant components impacted our cash using operating activities of continued operations of $2.876 million were increases of $1.639 million in other current assets, $719,000 in accounts receivable, $456,000 in prepaid expenses and other current assets, and $230,000 in inventory. There were also decreases of $609,000 in total accounts payable and accrued expenses payable. In accordance with current accounting guidance we required to report Nationwide result of operations for both the three months period ended March 31, 2015 and for the period January 1, 2016 through the date of the sale February 11, 2016 as in discontinued operations. Further with respect to the balance sheet the transaction should is to be accounted for as it had occurred on January 1, 2016. As a result included in the December 31 balance sheet our Nationwide assets and liabilities aggregated in either current assets or current liabilities of discontinued operations. The net booking on the sale of Nationwide is included as part of discontinued operations. With that I’d like to turn the call back over to Richard. Richard?

Thank you, Joe. I would like to acknowledge as always all of our employees and management for doing such an outstanding job during these sluggish economic times. All of us always believed in our companies, and our products and our customers and with hard working and perseverance P&F will continue to improve. That’s the end of our call today, now we’d be happy to answer any questions anybody may have. Operator?

Thank you [Operator Instructions]. We’ll go first to Brian Wagman [ph].

Hi guys. I just wanted to ask few questions regarding some key events and trends affecting the business any additional details or update that you could give. So first of all on the mix shift trying to move away from oil and gas in the concentration with regards to Hy-Tech I mean do you have any update there and then additionally is there any sort of a rough estimate of a timeline you might have in sort of when that might start to become material?

I’ll let Joe answer that question, but we’re not moving away from oil and gas we’re just doing other things. We’re looking into other areas and pursuing other avenues while oil and gas is in a depress state. Once that comes back we would expect to fully be expecting to be a beneficiary of that. Joe go ahead.

Yeah we’ve actually identified three different end user opportunities, I guess, I’ll call them markets for RK [ph] facilities not quite ready to disclose what they are, but we’re working on them. We actually have development projects and some customers identified, some customers already working with. Having said that we’ll see some impact in Q3 and Q4 on a material basis really not till 2017, as Richard said if oil and gas comes back certainly we will be responsive to our customers in those markets we’re not going to pull out of those markets it’s just that we can’t count on them we don’t know when the market is going to come back and we have - we’re optimistic about these other opportunities that we’ve got, but it will take a little bit of time.

Okay, sure. And then moving on to the commitment that you had with one major ATSCO customer which you’ve been providing the lower margin product to, I was just wondering if you could provide any color in terms of what the - I know you’re still evaluating it, but if you were to drop that program what [indiscernible] both directly in terms of the financials as well as upon that relationship with that customer?

With respect to overall results frankly the impact would be minimal we were literally not making a lot of money on that product line, absorbing a little bit of overhead, but honestly I would believe in some ways creating opportunities for those hours to be applied to other opportunities make sense. So that isn’t an issue, the customers well aware of the situation and understands the difficult position we are in. So we don’t think there is any risk to the overall relationship and we are not at all concerned about that on a going forward basis. But the final decision is not been made. But it will certainly be made in sometime in this quarter.

Yes, and it’s not such a quick easy decision because it’s about customer service in our business and we have a good customer there and we don’t want to lose other parts of the business that are profitable. But we are not going to continue to sell at a loss or breakeven essentially. Any other questions?

Yes, just two more quick ones, maybe like an update on Sears and then like I saw there was another decline in revenue for this quarter, is that still sort of largely driven by that promotional item or any inside you can provide there?

I don’t believe we reported Sears separately with respect to revenue. We show retail as together and I believe retail was slightly up over last year for the same period. Sears is actually performing quite fine for us. They paid our bills, they make their orders and I think we may have mentioned in earlier calls we’ve even developed a couple of new products for them that were going to be launching. So really it’s business as usual there and we are happy to have the business as long as we have the business. There's really not much else to say.

Okay, sure. And then just lastly moving on to aerospace. So on your press release you said that there was a decline this quarter compared to the same period a year ago most notably in aerospace and oil and gas. So I was wondering if you could provide any inside on that decline as well as I believe that on last quarter’s call you said you had some new product releases in the pipeline for that market is there any update there?

Yes, with respect to the decline I don't believe we indicated there was a decline in aerospace individually. Aerospace is part of industrial, which overall did decline, but lumped in there as oil and gas and some other markets we serve. Aerospace again we don’t report that separately to my knowledge we are not down in aerospace and we do have several products that are due to come online later this summer. So we are still pretty optimistic about aerospace.

Alright sure. That’s all my questions. Thanks.

[Operator Instructions] We’ll go next to Andrew Shapiro.

Hi, thank you. Regarding the - on the last call you talked about the major Hy-Tech customer that was going to in-source and you’ve talked about how that has certainly impacted the quarter. Did they in-source like a light switch or is this going to be gradual and the year-over-year decline even expand further in the current or coming quarters?

As I believe it’s as of May 1st. So they are no longer doing business with us and they bought two products from us. One of them is still buying from us. But the bigger product they are not buying from us. But we’ll still be doing business with them, but not at the levels that we’ve been at before.

So Andrew to answer your question, yes when we start comparing Q2, Q3, Q4 they will be down vis-à-vis the prior period because it did not stop, they slowed down towards the end of last year. But again part of that was because they were also in the oil and gas business. But it did turn off like a switch.

Okay. So the current quarter ended March does reflect the decline of that particular product of the two?

It was a decline, it wasn’t turned off totally. It was much less than it had been in the past, historic past. But now - I'd say most of the second quarter it’s - it will be the de minimis. But we’ll have other stuff from them as I mentioned earlier.

Right, the relationship is not gone, but the product line is.

Is, they are making it in-house themselves. I think it’s…

Okay. And then you - and then in terms of the other call out on Hy-Tech is the low margin product line for a large ATSCO customer. Have you guys determined a solution to the issue on whether, I guess either P&F is not going to be involved in that product line for them or you are going to sign lower cost sourcing and get more appropriate margins on it? What’s your thought and kind of their timing guidance on resolving the issue?

As I think I said earlier, it will be resolved this quarter. I believe that unless we find a much better internal solution than some of the things that we were discussing, it’s likely we will just discontinue making that product. There are low cost sources for that product that that customer has access to themselves. They don’t need us for that. So, we’re likely to be just out of that product line.

And is that worth the scenario, how confident are you of the retention of the rest of the customers’ business?

Highly confident.

Okay, good. And then with respect to these two kind of product lines you have in your breakups for Hy-Tech, you have a line item you call ATP and a line item you call other; the line item you call other of course is the one that has really dropped. Are either of these two product lines or products within the ATP side or in the other side? Could you break that out?

Andrew I’m not sure I’m following your question. If you want to know if in the other category, if it’s not ATP, what is it or why it’s down, I’m not sure I am following your question.

I read in the release why in kind of on the line item others down so large and ATP is not down all that much. What I just wanted to know is that these two particular items, one which is very low margin and the other one which has already been diminished and will seize, if either of those two are in the line item you call either in your Hy-Tech breakout versus ATP side?

Okay, I’m sorry. I understand, yes. They’re both in ATP.

Okay, so then the fall off in other is separate stuff. Can you go on and can you explain on that.

It’s a mishmash of things gear products that go to mining company, certain unique manufacturing companies. It’s really doesn’t have any particular theme to it. To be honest, it’s not a lot of dollars, but there really isn’t a theme I can give you for that, but it’s not, it’s not in any way related to those two other customers.

And Andrew, the other category is not to minimize it, but it’s tail wag in the door. The ATP is 15 times, it’s not more than that, more business than the other category. So our emphasis is on the ATP area.

That I understand except the other category lost almost $500,000 of revenue stream and I’m assuming overhead absorption and your overall ATP side only dropped by $165,000 year-over-year. So, I know it’s bigger chunk. But I’m looking at the degradation and identify. So, would you argue that the other category has a much larger sales mix than into basically commodity end markets, whether it’s oil and gas or mining?

It’s not oil and gas. Yeah, certainly mining. And I can say it’s a hodgepodge of seeing. There is also the regular see - we just sort of - when we do one-off C&C work, somebody will just call off and want some machine shop work. We don’t really do a lot of that, but those orders come and they don’t repeat that sort of stuff is in there. So it’s a little hard to I guess draw a lot of conclusions from that that can bounce back, this as easily as it went away. So, again there is not a lot of conclusions to draw from that.

Okay. Then let’s move over to Pneumatic or actually let me back out and take someone else’s questions, but please come back to me.

[Operator Instructions] And we will take a follow up question from Andrew Shapiro.

Very good let me ask you some on Florida Pneumatic and then few corporate. So in 2016, in prior calls you talked about this and I wondered if you could help spell this out. Because right now we’re obviously seeing stagnation and headwinds in the overall P&F business from oil and gas. So wanted to figure where our focus is and where our growth is going to be? In 2016, what are your plans for the following new AIRCAT products, turning you AIRCAT technology over to your existing Florida Pneumatic and Hy-Tech product lines? And also you talked in the past about opening the incremental channel opportunities, can you expand on any of these three?

Sure, Joe you know better.

Yes we have additional AIRCAT product that will come online later this year. We’ve also got additional geography we’re working on for AIRCAT products primarily in Europe that were in the middle of development right now. We’ve got some distribution opportunities that we’re developing in Europe as well. With respect to I think it was your second point…

Carrying the technology over to Florida Pneumatic and Hy-Tech.

Yeah, on the Hy-tech side, it has been a little more challenging to incorporate that into the larger tools and we anticipate we’re still working on that. Unfortunately some of those were going to be targeted towards what would have ultimately be oil and gas tools. So the opportunity there is great as it might have been. Having said that we're still doing work on that. On the Florida Pneumatic side, again that continues. But I don’t believe that’s going to be particularly material in the long run. I think we’re just going to be - we're going to be better served by just going right after the automotive opportunities with the automotive tools.

Okay. And in terms of your current experience and visibility with respect to your craftsman tools, both for Sears but also for its many affiliated spin-offs. While more likely declining in share of your overall business of course is Sears now a stable or even growing absolute number yet for you?

No it is not growing. It’s still long run in it’s still declining business. The alternative avenues are probably stable and maybe growing even a little bit. But the base Sears business is down and we expect it to continue to slowly go away.

Okay. But you are selling craftsman tools to other channels now or I should say…

Yes we are. And Sears has even indicated publically that they’re working on additional avenues to sell those craftsman tools.

Excellent. And your current experience and visibility with respect to Home Depot. And can you comment on that in terms of either new product rollout? I think you’re in all markets now. And then also separately, you’ve introduced into Home Depot Canada, you’ve called that out and something that’s been a favorable growth factor. Is that something that is now been fully penetrated or there is still a bunch of tailwind in the Home Depot Canada earnout?

Yeah we think there is still some upside in Home Depot Canada. We are very excited about the initial results as are the folks at Home Depot Canada. So I think the growth there will be greater than the growth in Home Depot U.S. because it appears that the offering is greatly improved from our predecessor and our experience has been that when that happens you do experience some growth. So we’re going to do better than our predecessor did. And again, we just really launched those tools. So yeah I think there is more growth there.

[indiscernible] dramatically lessen them…

Yeah Canada less than 10% of the size of the U.S. opportunity. On the mutual introduction side there are things stated for later on in this year. So while yes we are in every store, there are going to be some additional tools.

Okay and then as Brian had asked you earlier in the call, and you guys clarified that the aerospace happens to be in area that pull overall have been declining but your efforts and your success in the aerospace like wasn’t necessarily a decline can you give greater color and update on the aerospace efforts in that last quarter or two quarters ago you introduced a new product it was nice, it was been accepted well but it was certainly not brought enough product line yet to really open the door in aerospace and you are working on some additional new products before the aerospace markets that’s what I was looking for the update on your development efforts and rollup plans so incremental products that would open up the doors for you in aerospace.

So and these are rough numbers from conversations I’ve had with management. We are at some - right now we’re probably less than 50% of the offering that the major players have in that market and I believe that we’ll be close to about half by the end of the year when we’re done rolling out what we’re working on or certainly into early next year. While that’s nice I don’t think it’s quite passed the critical point to be considered of not that they we’re not a viable option, we are a viable option, but we don’t really have the full suite and I would say and again this is just me, my opinion. When we get to about 75% to 80% of the offering of the more entrenched competitors than I think we may see a turning point. I think we’re doing fine, but we’ve got a ways to go and these are incredibly complex tools to develop, the timeline is long and there is a lot engineering work. So it’s going to take a while but we’ll get there.

And who are those larger broader line tool providers into the aerospace segment?

I mean it’s the usual suspects Ingersoll Rand, Atlas Copco or CP, JP Tools a big player I’m sure I’m probably missing somebody one or two, but they are big companies selling internationally with very well established brand. So we do have way to go although we’re very happy with our quality level vis-à-vis the rest of those guys and we don’t see - we see only going forward and improving the situation. We’re certainly able to sell at a discount to the bigger brands for some - we obviously have to do that to get some attention, but we feel that our costs are extremely competitive vis-à-vis their costs as well. So we’re optimistic in aerospace, I don’t know what the growth rate is in the long run for that, but it’s a very stable business and we’re excited about where we can go with that, but it’s going to take some more time.

Sure, you referenced international segue over into that last call you spoke you’re already gaining distributions in Portugal, Finland, and Sweden I was wondering when did you add them and more importantly how are the things going in those countries in terms of either scope of the tools that you’re placing or the sell through?

It’s a full suite of the AIRCAT product line those are not very populated countries with respect to the rest of the Europe and if you’ll notice the map they’re kind of on the French as well geographically. We have efforts going on in Central Europe right now on a number of fronts so - but we don’t really have any tools placed there yet, but I'm optimistic that we will before the end of the year.

Okay. So no new distributorships in other countries yet that…

That is the goal we’re working very hard at it.

Yeah I know is there - can you prepare us with inside of any extra cost that might be involved in this activity of expanding over there?

Very minimal, very minimal cost, we’re working with some liaisons that are on the ground, but their costs really comes into place should be successful. So very minimal upfront cost for us.

Okay. We have on the Florida Pneumatic and that side up I am willing to back out if you got other in the queue or I’ll keep on asking few more questions.

You can go ahead.

Very good. Okay, and so I wanted to understand you guys called this out in your script, but I wanted to better understand this. So under GAAP with respect to breakout and spin out in sale of Nationwide and the subsequent pay down of the debt in the continuing operating line and continuing EPS you had to recognize the full deferred financing cost right off and you did with interest expense is that right?

Not the full, a great deal it - it’s a little complicated, but given how we changed the structure a portion of what was unamortized was kept and would be amortized over the life of the new arrangement. We wrote-off about half of what was left.

Okay. But the rest…

And what we did… okay, go ahead.

The rest you kept in the amortizing it wasn’t able to be allocated down below into discontinued ops, right?

That is correct, because it relates to the ongoing business, correct.

And even though you have no borrowings because the line of credit is still outstanding through the life loan you have to some of the financing cost still amortized?

Yeah, the way it kind of works in really broad terms is you take the facility size and that’s kind of how you go at the write-off and what’s left.

Okay. And your facility size is reduced because you are collateral - the working capital collateral is down.

That’s right, honestly we probably could have. We might have been able to keep the facility of the same size, but that would have some additional cost line with it…

Okay. Why pay the money for unused facility?

Right, especially considering our relationship being what it is the opportunity to ratchet the facility back up if we needed to is absolutely there for us and could be done relatively quickly. So there was really no point to it.

Okay. And then in understanding it year-over-year on the interest, prior interest charges the prior year interest cost looks lower than really it was because some of that does get shut down into discontinued ops, is that right?

Yeah, that is correct. The idea is essentially and again it seems a little odd, but you essentially consider the debt paid down January 1, 2015 so really there isn’t any interest for all intent and purposes because we collected so much from the sale we were borrowing less than that. So essentially there is no interest expense for that real interest expense for January 1, 2015 through to the end of ‘15 and for the first part of Q1 after the sale there is a little bit of real interest.

Okay. So now with the sale of Nationwide, which was generating positive cash flow for you and presumably was absorbing overhead although there was two discreet businesses well I wanted to get a feel for is obviously our ongoing business that we have and if there was any necessary downsizing or what are your fixed cost efforts particularly to address the sizable and I guess over the foreseeable future weakness and a good chunk of Hy-Tech’s business due to the oil and gas and the mining and other extraction factors.

Well certainly a Hy-Tech major cost cuts have been put in place in terms of personnel and various other expenses to right size that business for the level of revenue it currently has. Having said that we have to be a little bit careful in that a number of these - almost all of our machine is highly skilled and not necessarily replaceable quickly. So we may have a little more personnel than we possibly need there we try to reload on the revenue side. So we aren’t going to cut to the bone just to make some profit in the short run and leave ourselves exposed when these other projects come online, which we fully believe that they will. And that’s not even assuming oil and gas would come back. So yes we’ve made some major cuts, but are keeping an eye to the future as well trying to prepare ourselves for needing those operators and those hours on a go forward basis. With respect to P&F overhead…

No, no go ahead.

With respect to P&F overhead as I believe we said in the prior call, the structure that’s here is here to deal with all the things you got to deal with to being public. So whether we have two subsidiaries or three doesn’t really make a whole lot of difference in terms of time spent. The filings of the same size and everything is got to be - all those forms has to be completed in the same manner. So there isn’t a great deal of reduction, there is a little bit of cost savings from the accounting side, and outside accounting side they have got one less subsidiary. But having said that given our size there are certain minimum requirements they’ve got is that there will be sort of a - not there will be a little bit of a diseconomy of scale.

And as I said in my quote today Andrew. On the press release, we’re actively being involved in the strategic exploration of acquisition. So we are looking very diligently and we will find acquisitions, but they’re going to be in our area, the tool area.

Yeah, no, that I understand. So that’s actually the segue into dealing with this economy and to scale. What kind of acquisitions might - you wanted to develop products to open up new industry channels for Hy-Tech, you talked about that in the past. I’m not sure if aerospace is important, Pneumatic side or Hy-Tech. So what are your development efforts to open up new industry channels for Hy-Tech? And similarly, can you give some inside as to what kind of acquisitions might similarly work to open up new industry channels or sectors for Hy-Tech?

Well we’ve got a search going on as we said really for both Hy-Tech and Florida Pneumatic together. There are opportunities that actually would help both. So there are singular opportunities would actually help both companies with a single acquisition. We’ve got targets identified, we’re hearing about things. So I can’t get very specific about the sorts of things we see that we’re looking at or want to look at I should say. But it would be product lines where we’re either already making something just like it and it might be competitor or something that’s close to a competitor. Or it might be a product line that we could easily manufacture given our skill set, but in an industry we don’t generally deal with a lot. It will likely be something where we could partially integrate into one of our facilities. But if it’s sizable enough it could a standalone operation where we would just end up coordinating marketing and engineering and things like that. So it will absolutely look a lot like a business we’ve already got because given some very preliminary searches there were number of opportunities out there that we think would be a fit that are in our lines of business. And I don’t think we’re going to need to leave Air tools or leave some of the categories we’re already in. I mean there are maybe new categories that come online, but I think it may be more likely that we expand categories we’re already in.

The whole point of what we did Andrew was to be a tool company, tool-centric company that was what I said. So that’s our plan and that’s going to be our strategy moving forward. And we will find the opportunities when they are there in that regard.

And so I understand but you don’t want to talk about any particular acquisitions. And you’ve now kind of identify the most desirable areas. What are you seeing from the valuation perspective, are you looking at targets that are similarly suffering I am not saying oil and gas and you’re able to get them at a trough point. And obviously you get the synergies from bringing them in-house that wouldn’t otherwise be there or are you looking at expansion outside in terms of the acquisitions?

I don't think we’ve seen anything in terms of degradation of how people evaluating their companies, because I think everybody that we've spoken to thus far they want to talk about what they did when oil and gas was active and it will be active again. So, we’re not going to most likely buy a bargain. I mean it may be, we may assemble across something like that for other reasons, but I don’t think we’re finding any - we’re not bottom-fishing. I mean, we’re not seeing any of that.

And I would also say it’s way too early to tell, I can’t tell you we’ve looked at a dozen companies and I can give you valuations. So, we were nowhere near that. We’re just getting started and I don’t expect any bargains.

Alright. And if you’re just getting started are you - do you feel there is something that is possible to be done before you year-end or this is not because of the time required for due diligence and everything else, based on where you are in your process with candidates, it’s not anything it’s all 2017 of that?

Our goal is to do something this year if we can. I mean that is our goal and we’re hopeful that that will be the case. So we’re going to do it. We’re not going to buy just to buy…

But technically, you’re not passed that point right now. You’ve had - it’s not like this is the first time you’ve made an acquisition, you made three in the last 18 months.

Yeah, it is absolutely possible we can close something in ‘16 without a question. It is absolutely possible.

Yeah, okay. Alright, good. One or two other things, previously you guys were listed as participating in the Marcum MicroCap Conference in New York at the beginning of June. However I don’t see the company listed as a presenter. What will be your outreach if any, at the conference? Is it just one-on-ones and people can sign up for that?

You’re speaking on the Marcum Conference?

Yeah, I thought it was the Marcum MicroCap Conference in New York. You guys were initially listed as participating and now I don’t see you guys listed anymore and…

We were never listed, we were never - I don’t know what they did, but we were never presenting anything. I am going to the conference. I’m - I was invited by the Chairman to come. I know him quite well. And I’m going to a conference as his guest, but just to observe it and see what I can - see how we can network there. But we’re not presenting anything and we never intended to.

No it seems like that conference amongst other MicroCap events would be geographically convenient and properly targeted, why not present? The company’s improving story to help invest our below average valuation? I’m not talking about retaining an Investor Relations firm with monthly charges, because I understand from our past experience, although the market environment has changed quite a bit it may be worthwhile, but that aside, why not I guess selectively identify and participate at one or more of the emerging industry that is these MicroCap Conferences where MicroCap Investors congregate and want to hear the stories.

Yeah, we are - that’s exactly precisely the reason I’m going to the conference. And when it’s there I will - I or we’ll make a determination of what and how and if there is something for us to do. But that’s exactly the reason we’re doing it.

Okay, good. Alright. Because Marcum is partnering with a bunch of other MicroCap events like LD Micro and others and P&F seems to me to be a company that would be the appropriate market cap size, probably the appropriate admission fees not all that great, and as long as you guys can put a PowerPoint and make a presentation event you’ll get a few one-on-ones and probably widen the audience of - I know you’re looking forward to widening the audience or participants on these conference calls.

Right, yeah you got it.

Absolutely.

Alright, that’s all I have for you today. Thank you.

Okay, thanks Andrew for your time.

Operator?

Operator, any other calls?

There no other questions at this time.

Okay. So, thank you all for being on our call today and for your patience and we look forward to speaking to you in a few months in our second quarter results. Thank you so much.

This does conclude today’s conference call. Thank You for your participation. You may now disconnect.