Richard Goodman - General Counsel Richard Horowitz - Chairman, President and Chief Executive Officer Joseph Molino - Chief Operating Officer and Chief Financial Officer

Andrew Shapiro - Lawndale Capital Management

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

Thank you, Operator. Good morning and welcome to P&F Industries’ first quarter 2017 conference call. With us today from management are Richard Horowitz, Chairman, President and Chief Executive Officer and Joseph Molino, Chief Operating Officer and Chief Financial Officer. Before we get started, I 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 of fluctuations in energy prices; debt and debt service requirements; borrowing and compliance with covenants under our credit facility; disruption in the global capital and credit markets; the strength of the retail economy in the United States and abroad; supply chain disruptions; customer concentration; adverse changes in currency exchange rates; impairment of long-lived assets and goodwill; unforeseen inventory adjustments or changes in purchasing patterns; market acceptance of products; competition; price reductions; interest rates; litigation and insurance; retention of key personnel; acquisition of businesses; regulatory environment; threat of terrorism and related political instability and economic uncertainty; and information technology systems failures and attacks. And as other risks and uncertainties described in the reports and statements filed by the Company with the SEC, including among others, as described in our most recent annual report on Form 10-K, our current reports on Form 8-K and our other filings. These risks could cause the Company’s actual results for future periods to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. And with that, I would now like to now turn the call over to Richard Horowitz. Good morning, Richard.

Thank you so much, Rich and good morning everybody. Thank you all for joining us this morning on our call. I will begin today’s call with a brief summary of the Company’s results from continuing operations and per share data for the first quarter of 2017, and how this data compared to the first quarter of 2016. However, I direct you to our release earlier today for more information. The release this morning present P&F balance sheet, statements of operations, per share data along with most of our management's discussion and analysis. I’d also wish to remind you that the purpose of this call this morning is to discuss and review the Company’s first quarter 2017 results only. As such, you must insist that you can find your questions and comments to the Company's first quarter 2017 results. I will then ask Joe Molino to briefly review key cash flow information and provide an update on key events affecting the Company. After which, we’ll move to the Q&A session. The Company's consolidated revenue for the three month period ended March 31, 2017 and 2016 was $13,216,000 and $14,499,000 respectively. Florida Pneumatic's first quarter 2017 revenue was $10,509,000 compared to $10,830,000 during the first quarter of 2016. A decline in its retail revenue accounted for slightly more than 60% of their $321,000 decline. Hy-Tech's revenue was $2,707,000 compared to $3,669,000 in 2016. More than 70% of this decline is due to a major customer reducing their orders during the first quarter of 2017 compared to the first quarter of 2016. However, I'm pleased to report that this customer has once again begun to place new orders. And as of this morning, Hy-Tech has approximately $680,000 in orders from this customer. Further, Hy-Tech's total open orders have increased more than 75% since December of 2016, and more than 90% over the open order level at April 30, 2016. The Company's consolidated gross margin for the three month periods ended March 31, 2017 and 2016 was 37.6% and 36% respectively. The key items of note pertaining to our gross margin, is improvement in overall product mix at both Florida Pneumatic and Hy-Tech. Our selling and general administrative expenses for the three months periods ended March 31 of this year and last year were $5,047,000 and $5,019,000 respectively. Significant items of note include an increase of $201,000 of professional fees and other related expenses incurred as a result of the Jiffy acquisition, as well as our ongoing M&A efforts, particularly by lower depreciation and amortization. Our interest expense during the first quarter of 2017 and 2016 was $10,000 and $102,000 respectively. Of these amounts, $9,000 in 2017 and $98,000 in 2016 is amortization expense of debt issue costs. Taking all of the above into consideration, for the first quarter of 2017, we are reporting a pretax loss from continuing operations of $84,000 compared to pretax income from continuing operations of $109,000 from the same period a year ago. On an after tax basis, for the first quarter of 2017, we're reporting a net loss from continuing operations of $68,000 compared to first quarter 2016 income from continuing operations after taxes of $66,000. Our earnings before interest, taxes, depreciation and amortization was for the three month period ended March 31, 2017 of $451,000 compared to $928,000 for the same period a year ago. And lastly, during the first quarter of 2017, our Board of Directors approved $0.05 per share of quarterly dividend, which was paid in this April. And I would say, there was a press release stating that we've accrued the second quarter $0.05 per share dividend as well. At this time, Joe Molino will discuss our cash flow and discontinued operations. Joe?

Thank you, Richard. Capital expenditures during the first quarter of 2017 was $231,000 compared to $242,000 during the same period in 2016. Significant non-cash items affecting our cash flows during the first quarter of 2017 were depreciation and amortization of $319,000; amortization of other intangible assets of $206,000; amortization of debt issue cost of $9,000 and total stock based compensation of $12,000. Additionally, there was a non-cash credit attributable to deferred income tax of $71,000 during the quarter. Other significant components, which impacted our cash used in operating activities of continuing operations this quarter of $1,874,000, were increases of $716,000 in accounts receivable; $331,000 in inventories; and $166,000 in prepaid expenses and other current assets. There were also decreases of $1,090,000 in total accounts payable and accrued expenses payable. With that, I’d like to turn the call back over to Richard. Richard?

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

Thank you [Operator Instructions]. Our first question will come from Andrew Shapiro with Lawndale Capital Management.

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

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

But all related to tools Andrew and we’re not going or keeping to our strategy.

My question was more specific to Hy-Tech. Was the new areas you were going into and then as a follow-up on the Hy-Tech question side was with the rig count rising, you have some discussion in your press release and all. Is your general observation that Hy-Tech is troughed?

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

Then a question or two or three on Florida Pneumatic and I’m going to back out into Q and K, so those are in line. So on Florida Pneumatic, can you discuss the decision and your implementation plans of the separation from serious craftsmen? And to what extent the purchase of the brand by Stanley Black & Decker plays into this, and even the potential impact it may have on Home Depot since Stanley Black & Decker is a supplier to Home Depot?

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

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

It's April and September it's not that far away?

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

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

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

No, that’s not [multiple speakers]…

…between now and year end?

Here our terms are net 60 with Sears they pay a little later than that. It is a seven figure exposure on AR and a seven figure exposure on inventory, right now. Obviously, as we get closer to September 30, the inventory number comes down first and the AR will not come down, until we get paid sometime after the last shipment in September; so all seven figures, but seven figures for each.

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

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

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

If there was a filing?

Yes.

Yes, sure. We have to go through that whole process. We'd have a really significant reserve against it if not a right offering. I mean, it would be…

It looks like they're lining up not for a filing of course in 2017 anyway but, okay [multiple speakers]. Now, the question regarding now the sale of the Craftsman brand to Stanley Black & Decker, who is also a supplier to Home Depot; can you comment about that and of course our relationship there?

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

No, they are supplier to Home Depot.

They are the supplier to Home Depot, that didn’t really change our calculus anyway…

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

We don’t really know the answer to that. It's possible that they would directly with factories in Asia, which they do for some products. They have not shared those plans with us.

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

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

Husky has its own -- Home Depot has its own brand.

They are very protective of the Husky brand. And for years we've always had some concern that Depot wasn’t thrill that we supply both Sears and Home Depot, but it never ends up with company issues. So I don’t see that as a realistic breadth.

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

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

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

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

We just a Snap-On make this acquisition of a company, somewhat P&F size and they paid 2 times revenue, a little less than 2 times of revenues. And it just seems like that we’d be a natural for that same kind of thing when the time comes. Let me back out in the queue I have other question, I’ll come back to you.

Thank you. And next we will hear from Henry Dubro.

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

Well, there's couple of things; first of all, we're not terminating the agreement; the agreement is just expiring, in is natural way; we didn't make it about termination. With respect to reviewing their credit worthiness, the frank answer is no. As long as they're paying their bills on time and there's no official announcement from Sears, that there's some sort of filing we're obligated to deliver product.

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

If they’re pass-due, we have rights. I said to you that they're paying on time more or less.

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

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

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

Is there credit insurance available at a reasonable cost for…

No, there is not.

There has not been for the better part of five or six years.

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

They were all exclusive.

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

Assuming that they don't take them?

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

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

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

If you want the market the same SKU to anyone else in October, you're free to do it?

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

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

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

Yes, but I'm not sure. There's no practical effect to that. We can design another tool tomorrow morning. That's another half inch impact wrench if we wanted to sell it.

It's not really germane, I suggest if you're focusing on something that really isn't really germane, because we have other products that essentially do the same thing, it's just they have a little particular design theme, but it's not a -- it's not, it doesn't really matter.

I have one or two other questions. Were there any professional fees in the first quarter relating to your recent acquisition?

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

And I guess I was not aware, what was the timing of the change in senior management and Hy-Tech, the new President?

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

February, first week of February…

Yes, February.

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

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

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

No.

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

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

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

Maybe I can shed some light on this. That $100,000 relates to mortgage in the State of Florida. There are some complexities to mortgages in the State of Florida. If we were to pay that down to zero and then re-borrow again, we have to pay a substantial fee to remortgage the property by leading it at a small nominal amount we avoid that.

I thought it related to revolving loan.

No.

Thank you, Henry. And next we’ll take a follow-up from Andrew Shapiro.

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

Yes.

And do you feel that you have identified and plan to potentially fully mitigate that, or we're going to have some that we’re going to have to absorb?

No, that would be impossible.

Okay.

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

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

For 2016?

Correct 2016 for the year-ended December the call I missed two months ago, or a month ago.

Not even close to our expectations.

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

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

Well, I mean what I'm trying to do is understand how us as shareholders we can see and address the first quarter and other operating costs when we know that our…

I don't mean to interrupt you, Andrew. But we're not discussing this on the call. It's not the purview of this, there were many opportunities to do that, Annual Meeting, et cetera. But this is not one of those, and please just respect our wishes in that.

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

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

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

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

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

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

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

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

That's really our sense of it…

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

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

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

I don’t believe so.

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

Will they be adjusted?

The compensation committee has latitude to make those sorts of…

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

You said you had well we can't have it here, I guess we got to have it in some other domain, and I'm filer. So you guys don’t give me much choice. Okay, fair enough, we’ll get the latter going, you said that you would had additional geography, primarily in central Europe, you’re developing for Aircat. I'm assuming that would also now mean also Jiffy?

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

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

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

Okay, I'll back on in the queue. I have a few more questions.

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

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

It is active and ongoing.

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

It's a good question, as all your questions are, and it's a good question. And I can tell you that we talked about it at every single meeting and the sense of the board has been up onto this point. And we have of course a meeting after the Annual Meeting, the couple of weeks. But the sense has been that we want to continue to use our gun powder to make acquisitions, and not buybacks stock. That and it's a fluid situation, it could change tomorrow, it could change when we meet again in a couple of weeks as now we've bought Jiffy. But we feel that we have more opportunities to perhaps buy companies, going forward. So it's always that relative value…

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

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

Oh, thank you for that privilege.

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

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

Andrew, we're talking over…

You're interrupting…

Andrew, you're not making this easier.

You're interrupting. All I'm saying is…

Andrew, you don’t have to say anything. I don’t want to hear [multiple speakers] Ask the questions that you want to ask, but then [multiple speakers]…

As the buyback plan in place..

Andrew, ask the questions that'll go into the quarter. Ask the questions that'll go into the quarter. That's a long way to save you.

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

Andrew, we have a Board -- as I said to you, we've a Board Meeting in two weeks. At that time…

Good, I am educating the idiots to know this, because you guys aren't aware of it…

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

Why don’t you take the [multiple speakers] you have the luxury of being a public company and [multiple speakers]…

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

That is not true [multiple speakers]. You've always gotten disrespect when you've given it out sir.

All right, okay. Any other questions [multiple speakers]. Andrew, any other questions you have about the quarter?

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

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

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

I told you that we're happy to calls willingly and [multiple speakers]. Andrew, I'm telling you what we do and we give all the stockholders a better understanding of our Company as best we can and we do that and we answer the questions willingly and happily, that's what we do. And I'm sorry you don't think so…

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

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

Yes.

Okay, please ask them.

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

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

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

Yes, I'm going to say, yes.

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

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

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

Yes, we are.

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

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

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