Good day, and welcome to the P&F Industries 2019 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Richard Goodman. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to P&F Industries 2019 Earnings Conference Call. With us today from management are Richard Horowitz, Chairman, President and Chief Executive Officer; and Joseph Molino, Chief Operating Officer and Chief Financial Officer. Before we get started, I'd like to remind you that any forward-looking statements discussed on today's call by our management, including those related to the Company's future performance and outlook, are based upon the Company's historical performance and current plans, estimates and expectations, which are subject to various risks and uncertainties, including, but not limited to, risks associated with health crisis, including epidemics and pandemics, 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, risks associated with sourcing from overseas, importation delays, risks associated with Brexit, customer concentration, adverse changes in currency exchange rates, impairment along with 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 in terms of terrorism and related political instability and economic uncertainty; and information technology systems, values and attacks and the 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. And with that, I would now like to turn the call over to Richard Horowitz. Good morning, Richard.

Thank you so much, Rich, and good morning, everybody, and thank you for joining us today under these incredibly challenging and once-in-a-lifetime conditions that we're all facing right now. I wish you all well and continued good health. Thank you all for joining us this morning, and I just hope everyone is safe. I will begin today's call with a brief summary of our 2019 results and how this data compares to 2018. However, I direct you to our press release from earlier today for more information. This morning's release presented P&F's balance sheet statement of income per share data, along with most of what will be our management's discussion and analysis. I wish to emphasize that the purpose of today's call, as always, is intended to discuss and review only the Company's results for the year ended December 31, 2019, and how we are currently approaching the COVID-19 pandemic. As such, I ask that you please confine your questions to those topics at hand. After my brief summary, I will ask Joe Molino to briefly review his cash flow information and provide an update on the 2 key events affecting the Company. After which, we will move to our usual Q&A session. The Company's 2019 consolidated revenue was $58,674,000 compared to $64,995,000 in 2018. As discussed in the Company's press release published earlier today, the most significant factor to the revenue decline was the reduction in retail revenue, which is primarily due to our shipping in the third quarter of 2018, the relevant inventory of the then new and refreshed line of pneumatic air tools to the Home Depot with no similar capabilities repeating in 2019. I should point out that it has been our experience that the Home Depot we've licensed product difference once every several years, and that's what happened in 2018. The release earlier today discussed the fluctuation of Florida Pneumatic's other lines of business. Revenues at Hy-Tech increased slightly more than $1 million or 7.3% this year over the corresponding year in 2018. This improvement occurred in its OEM business being partially offset by a decline in our ATP sales. The Company's 2019 gross margin was 35.7%, the same as reported in 2018. Comparing this year to the prior year, Florida Pneumatic's gross margin increased 2.7 percentage points to 39.3%. This net increase was due primarily to a change in marketing strategy for our aircraft brand and stronger gross margins at Jiffy. However, Hy-Techs' gross margin reflects a decline from 32.5% to 25.5% or 7 percentage points. This decline was driven by under absorption of manufacturing overhead, higher direct labor and material costs, weaker mix of products and customers and a slight increase in charges for obsolete slow-moving inventory, among other factors. I wish to point out that we have taken a number of strategic moves that we believe will adjust these issues going forward, such as sourcing several component parts on overseas, raw material cost reductions, improved manufacturing and price increases. Our selling and G&A expenses for 2019 and 2018 were $21,869,000 and $21,705,000, respectively. The net increase was driven primarily by increases in professional fees due in part to the acquisition of our 2 gear businesses in October of last year, and expansion of internal controls and noncash impairment charges, most of which was due to the write-down of right of use assets resulting from vacating a facility in Punxsutawney, Pennsylvania to move into our newer, larger manufacturing facility in the same town. These increases were partially offset by decreases in compensation, both cash and noncash and variable expenses. Our interest expense during 2019 was $198,000 compared to $223,000 incurred in 2018. This decline was due to lower amortization of debt issue costs, partially offset by increased interest resulting from increased short-term borrowings. And lastly, in June of 2019, we completed the sale to an unrelated third party of real property located in Jupiter, Florida in which Florida Pneumatic conducts its principal business. The gross selling price was $9.2 million. After broker fees and other expenses related to the sale, we received approximately $8.7 million and recorded a gain of approximately $7.8 million. Taking all the above into consideration, we are reporting full year income before income tax of $6,708,000 compared to $1,109,000 in 2018. On an after-tax basis, we are reporting net income of $4,911,000 compared to $856,000 in the prior year. We are reporting 2019 basic earnings per share of $1.53 compared to $0.24 in 2018. 20 -- diluted earnings per share for 2019 is $1.51 compared to $0.23. As of March 2020, there were 3,143,810 common shares outstanding. As again, as a reminder, I refer you to this morning's press release for additional information. Now Joe, I'll give you the rest of the call. Go ahead.

Thank you, Richard. Capital expenditures during 2019 were $1,524,000 compared to $1,878,000 during 2018. Significant noncash items affecting 2019 cash flows were depreciation and amortization of $1,566,000, amortization of other intangible assets of $703,000, amortization of operating lease assets of $582,000, amortization consideration payable to a customer of $270,000, stock-based and restricted stock-based compensation of $158,000 and deferred income taxes of $409,000. Additionally, significant components and impacted cash used in operating activities during 2019 were increase in net inventories of $1,714,000, increase of $339,000 in prepaid and other current assets, a decrease in accounts receivable of $529,000, a decrease of $318,000 in accrued compensation and benefits. Accounts payable accrued other liabilities in aggregate decreased by $1,035,000 and operating lease liabilities decreased by $597,000. With that, I'd like to turn the call back over to Richard. Richard?

Thank you, Joe. At this time, we'd better -- I'd like to briefly discuss how P&F is addressing the COVID-19 pandemic. As you know, during 2019, driven by skyrocketing tariffs, we began sourcing many of the tools and parts that were being manufactured in China to other quality manufacturing facilities in other countries. Despite this beneficial action, the coronavirus will have some impact on our supply chain. At this time, we cannot reasonably estimate the duration of this potential business disruption and the related financial impact on our company and [stuff] related to that. We take the health and well-being of our employees, customers and vendors very seriously in all locations. We follow CDC and WHO guidelines. I'm sure you are aware, several states, including New York, the location of P&F's corporate headquarters have directed all nonessential businesses to close. Additionally, Pennsylvania and Nevada have severely restricted business activities. However, our businesses in those states are considered essential, and therefore, we are remaining open as of now. Currently, the state of Florida has not imposed business restrictions as of yet. So as such, many of P&F's employees across the country have been working remotely. I remain hopeful this pandemic will soon be controlled. But we heard just this morning that President Trump is now extending the stay at home until April 30. I'm going to just mention one of the things under our report today. We are all working remotely, so we are on this call. So every question that's answered will start with me, and I will either answer it or I will hand it over to Joe. So you'll have to just [pause] and [indiscernible] this and the time involved here. So I appreciate your understanding. That's the end of our report today, and we'll be happy to answer any questions anybody may have. Operator?

[Operator Instructions] We'll now take our first question from [Henry Debra] from -- who's a private investor.

The first thing I'd like to say is I appreciate the constructive comment that you have in your press release regarding the COVID-19. I thought it was quite constructive. I have 3 questions, if the time allows me. One relates to Home Depot. What was the product that was sold to them in '18 that significantly did not repeat in '19?

I mean, that's some -- there's nothing specific like that. It's -- in '18, they started from a 0 inventory base. When they changed their line, they gathered a broader rolled inventory and now, we had to replenish the whole inventory base with new tools, new and improved tools. So there's no one specific tool that caused any decline. It's just that, that was an opening order in 2018 for the new product line. And in 2019, there's no redoing of that. It's already there. So that's -- we went into an empty channel, and that's why you had the onetime big increase in 2018. Joe, do you want to add anything to add?

No, I think that's exactly -- I couldn't be -- nothing to add. That's exactly what went on.

Can I continue with Home Depot first? It's a series of SKUs that you sell?

Is it a lot? I'm sorry?

Is it multiple stock keeping units?

Oh, sure. Of course, we have several SKUs, yes. I'm sorry, I'm not quite sure how many. More than [indiscernible].

What were your sales to Home Depot in '19?

Joe?

I'm going to say around $12 million, and I just say.

And it was around, if I'm not correct -- if I'm correct, it was about $60 million the year before. And as I said, it's the onetime replenishment of starting over with a new product, new and improved product. And more to that.

How are those products selling in the most recent period?

They're selling as predicted, without any issue.

Okay. I'm going to go to my next question. Did you -- do you and have you sold directly to Boeing?

Joe? The answer is yes. But Joe, you can fill in more directly.

Yes, we sell both directly to Boeing and indirectly going through consolidators. So we do it both ways.

And for the sale of those products, is there any problem with outstanding receivables?

Not at this time.

No, not at this time.

Okay. And my last question relates to internal control relating to what you said in your press release and the recent amendments to -- for small companies, to SOX 404(b). I think you said in your press release, you spent somewhere of about $100,000 for governance relating to internal controls. Could you expand upon what had to be done?

Yes. Joe, go ahead.

Sure. Just so you're aware, we have a -- we have worked with them every year. Several times a year, we work with an outside firm to do an internal control evaluation. Some years, we do more than others. What we do is we take -- we identify particular areas that we have -- the reason we dig in a little deeper, we want to understand it a little better because it's not something you typically do. The auditors don't do that work. So periodically, whether it be related to changes in personnel, changes in procedures last year, changes in the ERP system, we may do a deeper dive. And that's what we did, that's what we did last year. We did a deeper dive. And that's not something that should continue. But periodically, we go a little deeper. It's not that we never do it. We always do it. But last year, we did it much, much [about] than usual.

Okay. My last part of the internal control question here. I believe, earlier this month, the SEC for small companies, as they define it, relaxed the requirement for auditor attestation of internal controls. You're aware of such, right?

Yes, I'm -- go ahead.

I'm not aware of that actually. Joe?

I'm not aware of specifically what you're talking about. I don't know of a change in attestation that I may be aware of.

4(b).

I'm sorry...

I don't believe that affects our self.

Yes, it does not affect us. Yes, on the new guidance for the business, that does.

The revenue -- my reading of 404(b) is that the threshold for revenue, it seems to me that you are a low revenue company. But I will read it...

Yes. Our lawyers tell us that 404(b) does not affect our company.

We will now take our next question from Andrew Shapiro from Lawndale Capital Management.

I think you guys and [Henry] should talk offline because like the new SEC rules might beneficially impact the Company costs, although potentially reduce some of the internal control requirements that our shareholders often like to see. But moving to a question. Taking your fiscal year-end disclosure from the press release, as there isn't yet a 10-K that preceded this conference call, and comparing with what we have for your 9 months ended September, can you explain the sizable increase in SG&A from Q3 and I guess somewhat from prior year's Q4 levels? This is the quarterly SG&A comparisons. In particular, would you quantify and explain what items you feel are nonrecurring charges like the costs expensed in the Blaz-Man acquisition?

Sure. Joe, go ahead.

All right. So this is SG&A you're talking about. So there'd be a number of things. We would have some follow-on costs related to the acquisition we would -- and obviously, that's not recurring. The prior caller's question regarding internal controls, the bulk of that expense fell into Q4. In addition to that, we had transition expenses related to closing down the facilities in the Chicago area. We acquired the 2 Chicago businesses they were working out of 7 facilities. Our plan has been to contract that to one and then eventually 0. We accelerated that program in Q4 and actually a little bit into Q1. So that's in there. And then finally, there was a fairly material write-down of some equipment that we decided to -- well, it was obsoleted by coming up with better approaches to manufacturing some products. So that was also a business. Four items in there, I would say, just about all of them are nonrecurring items.

And what -- quantifying those altogether or...

I don't have that. I mean, I don't have that in front of me. I can get back to you with that. I can put that together. But off the top of my head, I don't have that information.

Right. Well, the number that you mentioned for the Blaz-Man acquisition was a sizable number, almost $400,000, but that was like an October acquisition. So was most of that in Q3 or most of that in Q4?

It was both. I was both. I couldn't say -- I think it's probably about even in both.

All right. I'd just like to know this, I'd like to understand the recurring SG&A. Like it didn't increase all that much. It maybe even potentially declined. And then you mentioned in your answer, a sizable write-off of some equipment in...

Write-off, just so we're clear. It's a high-tech. It's an equipment that we have, which we still have, it still functions, but we have other equipment that is more efficient, and we've gotten other equipment that's more efficient. So while the equipment still has value, we decided to reduce its value on the books, not to 0, but to reduce it to something that's more in line with the actual value.

And it went through SG&A?

Yes, it did.

Okay. And then you accelerated some of the location consolidation of Blaz-Man. Is Blaz-Man now -- I want to say now, as of the end of December, how many facilities were you down to?

At the end of December, I believe we were down to 2.

Okay. And where are you now?

We are now down to -- we're actually down -- as of today, we are down to 0 in Chicago. We still -- we still are leasing the facility, but we are no longer operating out of it. And that lease runs through September. We're negotiating with the landlord to possibly get a little break on the remaining rent as we plan to be completely out of there, being all cleaned up, remaining inventory or some stragglers on equipment, pull that out. But effectively, production is now all in Punxsutawney in Pennsylvania.

Okay. Well, that's excellent. The -- I guess, if you could have leased -- if the landlord could lease it quicker, absent the COVID thing, probably you'd get [indiscernible].

Yes, that was our...

And Andrew, I'll just mention one other thing. The moving of the facilities from -- over several plants in Chicago into one in Punxsutawney was scheduled to be done over the, as you say, over a period of time, over the next 6 months. So we basically are finished now. So all those expenses that are going to be -- Joe, you can correct me if I'm mistaken, but all those expenses that are going to be spread out over the next couple of months, several months while we were moving in, are all going to be basically loaded into January, a little bit of February because we moved in. We get all this constantly, [indiscernible] ahead of time. So that's the bad news. But the good news is we're all in one place now and everything, and we should be moving forward in a good way.

It sounds like the acquisition then will be accretive earlier than you had projected then as well.

Yes, I would think that would be correct. Wouldn't that be correct, Joe?

Yes. Absolutely, yes.

While we're on Blaz-Man, and then I'll back out into the queue, I do have more questions. But while we're on Blaz-Man, a few questions, if I could. Can you elaborate a bit on the strategic benefits of the acquisition? In particular, in your press release, you said the acquisition opens you up to broader ranges of industries. What are some of those new industries and what sort of add-on selling might you be able to do with P&F's previous tool offerings into these new industries and new customers? And in particular, in light of the current circumstances, are any of these industry ones that are essential in the current pandemics such as health care?

Yes. Joe, go ahead, you can answer this. It's easier for you.

Yes, certainly, we are active in health care. We're active in transportation. We're active in food production. We're active in power generation, in addition to just sort of oil and gas exploration. So all of those are considered essential businesses. We don't say it in the press release, but we have confirmed that our Pennsylvania and Nevada operations in Florida. Well, Florida doesn't have any strict regulations at the moment, but some manufacturing business have been closed in Pennsylvania and Nevada. We may open if we qualify as essential or critical. Going back to your original comment about a question about gears, we -- now -- that is now rebranded our power transmission group, and power transmission would essentially be anything with a motor and a gear set in it, which really is almost any industry you could think, just depending on what you're talking about. So I guess my point is that while we had a pretty good set of industries we're looking at before with our gear business, now it's even a broader set.

With gears and motors, things that Blaz-Man could help reverse engineer, and that was one of the expertise that you acquired. Would those be mechanisms that one would find in ventilators?

I'm not specific -- I'm not that familiar with the ventilator. My guess is it's probably got some plastic gears in it, which isn't something we really do. But we have not really looked into that.

Okay. Just because it seems like everyone's trying to reverse engineer and do whatever they can to...

Yes. Well, I would say -- yes, I agree. I would say that our gear-making ability is not one that's conducive to high volume. It's just not our business. Most high-volume gears come out of Asia.

Right. The press release didn't make any mention now and in the past here, how multiple paid for Blaz-Man in terms of revenue or net income or cash flows or gross profit. Is there any sort of detail you can give us information on the revenues, earnings, again, cash flows of the businesses that -- what they were generating to have a better idea what we purchased for the $3.5 million?

I mean, I was -- yes, I'm sorry. Without getting into the specifics, we probably play slightly more than market for the actual cash flows that the companies are generating, but our effective multiple is probably half of what you would expect to pay depending on the industry. And so we think the return is going to be tremendous on the dollar spend.

And it actually accelerated because you put everything into Pennsylvania already.

Correct.

Yes. What happens -- Joe, just so you're clear, with moving -- getting it started, it is -- there's learning curve. So it's going to be better than we expect it to be for this year if all goes well under current conditions. But next year, we would expect it to be much better than that because we'll be -- already have momentum moving forward. And we're moving from a standstill in our new facility and getting started. So there was some learning curves with patents. Still are some, but not much. And -- but we would expect that it would be very good this year, better than we anticipated if all things being equal, that the corona and everything else in the world. And next year, 2021 would be that much better. So just [indiscernible].

[Operator Instructions] There is no other questions, so we're going to take Andrew Shapiro.

So I'm assuming, again, once the dust settles, which is going to be a while, there may be some readjustments to valuation opportunities in terms of acquisitions. I wanted to ask a few questions, if I could, about the Company's balance sheet shifts. Again, there isn't a 10-K that preceded this call. So a few questions about the shift in your balance sheet liabilities, if you can, just so I can understand our purchasing power for acquisitions, as I think they may have on the radar. There was an elimination of contingent consideration owed. Is that off of Jiffy or something else? And is it temporary or permanent final measurement?

Joe, go ahead.

It's Jiffy.

And is that temporary? Or is that the permanent final measurement?

That's it. It's done. We made the final payment -- actually final and only payment last July 1, I believe.

Okay. And then there was noticeably a sizable drop in the accounts payable and the accrued expenses. I think your 10-K may break out the detail but again, it's not available. But is there anything in particular to call out or explain on this because it didn't seem necessarily seasonal.

What period are you comparing?

I'm comparing the December balance sheet to the September 1. So it's just the Q4 cash flows that went and have paid down a bunch of these things.

Yes. I would say a couple of things. The accounts payable on foreign availables for Florida Pneumatic tend to be kind of chunky. And that can easily move by $1 million, depending on what day in the month it is. And second, if you're comparing other crude expenses, depending on the tax position at the end of December and the tax position at the end of September, that could be [indiscernible] it'd be a difference between where bonuses are being accrued between those 2 periods. So those 3 things significantly around. But I don't -- there's no trend. There's no operational reason why those numbers would move.

Okay. And it looks like you drew on the long-term line of credit in addition to your seasonal increase in your -- well, your short-term borrowing increase was Blaz-Man and then you drew on the long-term line. Is that a seasonal draw or anything in particular?

I'm not sure what you mean by drew on the long-term line.

Well, it looks like the long-term debt line went up from 0, which would get paid off with the sale leaseback and all to a $3 million draw during the fourth quarter?

On the long term? In order of a long term draw, we did -- just to be clear, in 2019, the new sale -- excuse me, the new lease guidance went into effect. So if you're just looking at December 31, of '18, beginning January of '19, the 8 42, which is the new lease guidance meaning is that where we would have put an asset on the balance sheet and liabilities on the -- to an asset in the asset section and you would...

Right. Right. No, it would be rematching. And maybe that's what it is. Again, I don't have the 10-K detail and we'll follow-up with you off-line on that. Let's move into some questions I got on Hy-Tech, if I could. So with the sizable gains in the OEM and engineered solutions, are there any particular areas, industries or products worthy of any call out and elaboration at this time?

Go ahead, Joe.

Anything -- yes, I wouldn't say anything other than what we've discussed in prior calls. Nothing new yet. I think we -- as we get into the power transmissions market in much more detail and depth, and our salespeople start getting out there and making calls that will probably change to probably not -- I don't think we'll have much to say for a couple of quarters.

Yes, as long as he said.

You previously announced a new line of ATP Magnum Force industrial air impact tools. Can you give a little bit more information now as to the success you've had so far? And can you kind of reconcile this product line and the cost from your press release of overall marketplace declines for pneumatic tools and replacement parts in the ATP area?

Yes. Well, Magnum is -- it is getting good response in the marketplace, but it's a small part of the overall, and the real essential thing, I'll let Joe clarify it further, but the real issue is that oil is now in the $25 range. And so there's no billing and all ATP tools essentially go to that market. So it's that market, as you've read, I'm sure, everywhere, it's basically shut down at this point. So we're getting orders, but not anywhere near where we would hope to get. So, Joe, you can answer that?

Yes, I would agree completely. It's -- we greased up the line, we updated the tech in our tools, but it isn't going to change the long-term trend, that business being a, one, that we don't emphasize anymore.

Not as much anymore.

Not as much because we've got much better opportunities elsewhere; and two, with oil and gas in a low to mid-20s, there's just not a lot of production. And these tools definitely are used a great deal in oil and gas exploration.

Okay. So in the event oil and gas sort of came back, it's not that pneumatic technology or pneumatic tools are being replaced themselves by anything else that's in the industry?

That's correct. That's correct.

Okay. I just want to -- that's going to clear it up. Now taking your limited fiscal year-end segment disclosure, and again, unfortunately, having to compare it with what we have for your 9 months ended September. And we have asked in the past if you guys in your fourth quarter and your fiscal year-end, could also provide a fourth quarter breakout, it would be helpful. But comparing to what we have for your 9 months, we can come up with some figures for your fourth quarter performance. And I'd like to get a better hand on your sizable decline in gross margin in Hy-Tech from the third quarter and even prior year's fourth quarter performance levels? And if you could quantify and explain what items you feel are nonrecurring charges that went through that calculation on gross profit margin for us, that would be helpful.

Joe?

Yes. So I would say 3 main areas are driving the drop in margin in Hy-Tech in Q4. We had a sizable increase in the inventory reserve, again, relating to these inventories in the what I'll call the old oil and gas legacy business. We did have a lot of inventory built up over the years. And as that business has fallen off -- while we'd still have movement on that product, gearing the way we create inventory reserves as it -- as the movements slow, the reserves go up. Second, it was just not a very good mix in Q4 at Hy-Tech, particularly lousy mix there. And then lastly, a tremendous drop in hours in November and December, just not a lot of production required, well, we had backlog, a lot of that product wasn't dealership until Q1. So without hours, we don't absorb the overhead, it's just arithmetic. So I would say in terms of the mix and the hours. But really, all 3 of these were kind of -- I don't expect Q1 to share some of these -- all of these trends, but the coronavirus is a bit of a wildcard, but I would say Q4 is a bit of an outlier for those 3 things.

So Hy-Tech prior to this, though, had been -- had been humming back -- had been back humming along where overhead absorption was, I guess, some of it full tilt again.

Yes.

And then the fourth quarter dropped off?

Yes. So what's happening is we have lots of blanket orders from key customers, large customers. And then we get orders every day for things that we can build relatively quickly and get out the door. Those orders dried up in November and December. And that chews up a lot of hours in the plant. So without those, we did our best to pull in some orders and satisfy some larger customers early but what I'll call some of the bread and butter basic orders and again, mostly the legacy business dried up dramatically. So that reduced a lot of hours.

Okay. And then in terms of the inventory reserve amount, can you quantify that? Because arguably that's somewhat nonrecurring.

Yes. I mean, I would -- I mean, this is a complete guess, not a complete guess. But I'm going to say it's certainly low 6 figures. Certainly, it's over $100,000. I don't think it's $200,000.

Okay. All right. That's a lot of margin points. So that's--

Yes, for the fourth quarter, it is. It definitely is.

Yes. Okay. Now there's a reference to vacating a facility in Pennsylvania. Was there more than 1 facility or it's a move of the only facility?

Yes, it was a move of the only facility. The gear business was in 1 facility in Punxsutawney, something like 12,000, 13,000 square feet, and with the -- simultaneously with the acquisition of the 2 gear businesses, we've signed a lease for a larger facility on the other side of town and then initially moved our original gear business into there. And then, as we said, accelerated the transition of the Chicago businesses into there in November, December, January, February.

So then is Hy-Tech in 2 facilities in Punxsutawney then because everything --

No, no, no. We've vacated the other Punxsutawney facility. We still have a lease and again, we're working with that NIM, we'd try to do something there, but we're out of that facility. So we've got the main facility in Cranberry, which is every nut but gears. And then you have all the gears stuff in Punxsutawney, 1 location now.

Okay. Moving into Florida Pneumatic, it's my understanding that Home Depots are considered essential and they're up and running and you're then selling through and doing whatever you're doing through them. Is that right?

Yes, yes, yes.

Okay. And has your visibility improved in terms of their sell-through and stocking needs at all? Or are you still kind of running blind as to their order rates and things like that in the sell through?

We generally never get a vision there. We just never get that from them or from Amazon or from anybody like that. And especially in these times now, they're looking to keep their head above water, but even before this, they didn't ever give us visibility. But I can tell you that so far this year, surprisingly, Home Depot is meeting our budgets as of now.

Okay. And has your business via Amazon stepped up as a result of people or businesses more homeward bound?

No, because Amazon, if you read the newspapers, Amazon made a policy decision, I guess, 2 weeks ago now, that they are not ordering or really putting priority on anything other than essential items that they sell. So they are holding back presently right now, but continuing -- I believe, Joe, they said it was going to start-up again in 3 weeks. Is that what they had originally?

For some reason -- yes. I remember, April 6, there's something around that date, is where they would begin to -- begin accepting orders again for us?

Right. Right.

Or may placing orders, I guess, I should say.

Placing orders. Placing orders, you mean. And that's been on the news, Andrew.

Yes. And how long has been the -- how long have they have been on hold? Is it a few weeks?

This has been 2 weeks, yes. It's been -- this is not [compared to a week.] Who knows. So, a few weeks dollars.

You'll have some in April.

Hopefully, if we keep to their plan. Yes, right. And presumably that they've taken their inventory down as a result, and so we'll have some inventory--

That would be correct.

Okay. That's what we would be thinking, that's what we've been thinking. But of course, you never know, but that's what we are thinking with respect to that.

Okay. And you answered Henry's questions about how the new product lines performed and all of that. And so moving on to the aerospace side. We talked about this from the last quarter, how many of your tools are, we'll call it just like general tools and part of either Boeing's or Boeing suppliers' general inventory levels. And for everyone to get their working capital down to levels they found appropriate because of their lower rate of business, they we're adjusting their inventory, which means they weren't ordering from us. Have you seen the order rates pick up and start kind of having flow through, so to speak, in terms of like the supply chain is now running through and they need some replenishment of whatever their inventory is as they use or lose tools?

Go ahead, Joe. You can answer that.

I'm not sure I'm following the question. I mean, in terms of aerospace in general, the Boeing orders are very light. And that is our largest aerospace customer. We're doing okay in military, but we have very weak order flow from Boeing right now.

And especially now that they closed their Washington facility last week. You know that, right?

Right, Andrew.

They had to close it. Totally clean in there, do whatever, and things -- and when the 737 Max line reopens and comes up, do you anticipate then there would be a need and a surge in replenishing the tool supplies?

That's our hope. And that's our anticipation, but--

You have no visibility, you have no CTO visibility of their inventory levels on the tools side?

No. They're another 1 of those companies that doesn't really ever give a vendor that information, unfortunately.

Okay. And then on the last couple of calls, you spoke of concrete initiatives beginning to marry up Florida Pneumatic, Jiffy, and Hy-Tech's resources such as Pneumatic, to go after the aerospace market in a bigger way, but with the long lead times in aerospace, it could be several quarters before you saw on your results. I mean, this is a question I've of asked throughout all of 2019. So here in March, I'm thinking there may use to be -- there's a COVID cloud perhaps. Certainly, the airlines are not utilizing aircraft as much. Could you -- is there any further development on your initiatives and any signs of traction or success yet either that had occurred this last quarter precoded? Or your thoughts on the upcoming year with your efforts?

We are -- and, Joe, you can answer, but we were getting very close to getting some good lines from Airbus and all that. But now with everything going on -- add a little shock in the list, 2 weeks, frankly. Joe, do you have anything more on that?

As I was alluding to the aerospace side, on the military customers, they -- it appears that they have accepted our offering in the, I'll call it, the alternate fastening system that is common for building jets. So there are kind of 3 -- if you look at jet production and using intelligent fastening systems, there's really 3 ways to go. There's 2 proprietary ways. One is called a high lock system, which I think we've discussed before where the fastener has this collar that snaps off when the fastener hits torque so that the fastener is exactly at the torque the engineer designed for that, whatever you're putting together there, whether it's the fuselage or something internally. There's an alternative system called an Eddie-Bolt, which was patented, until last April came off patent. We were in development on that and in the fourth quarter and now into Q1. Several major military jet manufacturers have begun accepting that product. They've sound off on our approach, and we're pretty excited about that. And then the last approach is where the intelligence is not in the fastener, but you put the intelligence and you run the tool. So you would have, let's called a torque controlled tool where the tool itself knows exactly how much to tighten the fastener. That is something we have in development. So there's nothing to say about it yet. But eventually, we expect to be a force in all 3 approaches. And when we bought Jiffy, it was just one. So I don't have much more to say, and I hope that answers your question.

Now the progress you had made with Airbus, whether it's certifications or other things, does this give you the view that once things normalize in terms of demand for airframes, et cetera, that it would not be long before you could be having basically a major new customer in the form of Airbus or Airbus suppliers, come on board for us?

Andrew, not to -- I don't think we could possibly answer that question because who knows what the new normal is going to be? But we're hopeful that, that would be the case, but I wouldn't even want to suggest that we could say yes to that at this point.

I'm trying to get at, have you crossed over certain milestones or certification requirements that you were going to have to go through.

We've gone through some, and I -- I would have expected that we would have had another 1 or 2 when they were getting to it now, but we didn't hear back so that will help out loose. Joe, can you answer to that?

Yes. I don't really have much more average -- [it tucks-in right.] We -- they were testing some tools. They were in process. We had other tools on the way to them that literally got to our folks in Europe, and then that's where they are. They aren't even clear of us. So we just have learned part 1. We hit the pause button there. They hit the pause button, I should say.

Right. Right. But if you've gotten certain certifications, presumably, you don't need to give them again?

No, absolutely. No, no, I agree.

No, no, yes. Not what I'm trying to get at. We're expecting that -- we're expecting that we could pick up where we left off when the time comes, yes.

Okay. And with the limited debt, and as we talked about, and you mentioned that that's not drawing on the credit lines and all that, and the stock at enormous discount from the Company's net book value, which is around $15 a share and your net tangible book value is near $11 a share. Now that your quiet period is about to end in all of that, where does the Board and management lean to with respect to future capital allocation, and I guess, specifically, reinstating the ability to be doing stock buybacks?

Again, Andrew, we spoke about this. We had a Board meeting just a few weeks ago, just a few weeks ago now, and the Company spent -- the Board spent a fair amount of time talking about this. And you're, I mean, as I'm sure you're aware, I know you're aware that anybody else on this call will just tell you that we bought back over 700,000 shares over the past 2.5 years, which shows that the board -- obviously, we agree that there's some value on repurchasing shares. However, as you know, there are many other different factors that go into this analysis. Including at this point, now coronavirus and cash flows for the Company and all that other kind of stuff. So in the -- when we convene after our annual meeting, we will examine again, but as of now, so there is no appetite to do anything 'till we see where the Company sits and where we are cash-wise and everything else. So we'll keep you posted on that as always.

That and the current circumstances, I can certainly appreciate, but it's been the Company's practice in the past only to consider such matters at regularly scheduled quarterly visits of the Board rather than having something preauthorized that, of course, you would not or should not exercise discretion on until there is visibility and comfort with the Company's cash flows and the impact of economic headwinds as well as disclosures, let's just call it the virus. Okay. But if you guys restrict your decision-making on this to the quarterly gatherings, it just seems like the opportunities get missed rather than providing pre-authorization to management of the execution for the board to provide the pre-authorization so that when the time is right or you guys establish a process of telephonically convening in order to do that, it just seems like the opportunity is even more compelling absent the impacts from the virus, that the opportunity is more compelling than where you were accretively acquiring shares before.

Well, I don't know where you got the -- on the impression that we only meet quarterly to discuss things, we get together whenever we deem the need to, and we often meet in between meetings and have telephonic calls and talk about anything. Having said that, the annual meeting is 6 weeks away. And with everything going on in the world right now, I don't believe that there's going to be any compelling reason for us to discuss this until that time. Will you understand?

I would agree to. Yes, I don't you -- [indiscernible] I understand that.

Yes, yes. And we certainly share your feelings about it, but there are other things that sometimes come into it that perhaps you're not so involved with or understand, obviously. No big deal. No big pecking things, but we will absolutely examine it, as we always do in between meetings, but this one is in 6 or 8, 7 weeks away. So unless something --

And I hope you and the rest of the Board understand all the different rationale I put in, in terms of trying to clarify things.

Of course. Of course, we do.

13d amendment. Now in light of the circumstances, will your annual meeting this year be conducted with a hybrid and virtual componentry for shareholders to participate?

We're in the process of exploring how we will hold our annual meeting right now. And our proxy statement will provide all that information when it comes out, but we're not even in position to talk about it yet. But we'll let you know as soon as we know. That meeting is generally held the Wednesday before the Memorial Day weekend, as I'm sure you know, of course.

Yes. And it's usually been a -- that would be a travel conflict. Yes, it's usually a travel conflict.

Yes, that would be the play.

It's certainly a travel con -- it's certainly a travel conflict this year.

Right. Yes. For sure, for everybody. So yes, so we'll keep it to -- we'll let you know with that one, with everybody.

Okay. Well, I mean, it's just something a lot of companies have adopted, although I wouldn't want it to be adopted on a permanent basis, to be virtual only. It's better to be hybrid now. Personal attendance along with virtual.

We have another question coming from [Owired Rosencrantz] from VAT.

I'm not that familiar with the story. I didn't exactly understand your EBITDA. Is that -- and I got onto the call late, so my apologies. Is the -- I mean, I see you've been about $9 million in EBITDA. Does that include the gain from the land sale?

It was in the press release. If you read the press release, you'll see that, yes.

I did read the press release. I just didn't know if you excluded it from EBITDA. So that's not an adjusted EBITDA.

Joe, am I right? That's in the EBITDA?

It's in the EBITDA number, yes.

Yes.

Okay. So exiting that out, you did like what, $2 million in EBITDA for the year. Is that sort of right?

Yes. The gain on the sale is about $7.8 million.

And I think it was -- I don't have it in front of me now, but you were about $9 million something for the, I think, if I read that correctly, about $9 million something?

I don't have that in front of me, but you would just subtract the $7.8 million and you get to the adjusted, if you want to call it that, EBITDA. Right.

Okay. And what was the onetime hit from -- what would be the sort of onetime, whatever you want to call it, I mean, onetime, not onetime from the inventory reserves?

I don't know if you were listening in the earlier call, as our legacy business holds, large impact business degrades. The way we calculate our inventory reserves requires us, even if there's some movement, to beef up the reserves and the movement in the fourth quarter was particularly weak and required an additional reserve unless like -- that's something, Andrew earlier, comes to a 6-figure number in the quarter.

And ballpark, what was it for the year with any sort of brand numbers, so we can get a sense.

Probably $0.25 million for the year, roughly, something like that.

So were there any other onetime significant, let's say, $500,000 or $1 million that impacted the -- let's just say, the EBITDA? Was there any other...

Not $0.5 million. As we said earlier, the acquisition expenses are in SG&A. That is not an inconsequential number. The transitional expenses after the acquisitions are in those numbers. We also said that the bulk of the internal control review, the additional internal control review that we did are also ordered up in the fourth lever. So those are all, I would say, nonrecurring.

Okay. You guys did not break out in this release as best I can tell. You guys did not break out the fourth quarter and you did not specifically sort of isolate the operating contributions from the 2 acquisitions. Is that...

Correct. And I don't know that we're going to do that. Having said that, when you get -- if you take a look at the 10-K when it comes out, there is a footnote that's required where we do a pro forma as if the acquisitions took place on January 1, 2018. So the required disclosure and there are certain ways you go about it, but you can glean from that some information around the incremental impact of the --

When do you guys expect to -- the authorities expect to file the 10-K?

Today. Today.

Later today.

Okay. Today is your due date?

Yes, yes, it is.

We have another question from [Kenneth] Fell from Fell Capital Management. .

I just wanted to go back to the acquisition questions. And I was wondering if the Company is still active -- actively looking for tuck-ins or potential major acquisitions out there?

The -- we're at this point, we are not looking because right now, we're focusing on the businesses, and we're focusing on generating the new companies that we just put in -- that we just bought in, but we're always -- we always have our ways open, but we're not actively pursuing other acquisitions. But momentarily as soon as the globe quiets down, and this [RDS] acquisition is running the way we want to, then we will be right back in that market. The answer is yes.

There is no further question at this time.

Okay. Thank you, everybody, for your call today, and we all wish you all and all of us good health and safety, and we look forward to speaking to you at our next conference call next quarter. Thank you all and have a good day. Stay well.

Ladies and gentlemen, that will conclude today's conference call. Thank you very much for your participation. You may now disconnect.