Good day, and welcome to the P&F Industries Inc. Quarter One 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Mr. Richard Goodman, P&F Industries General Counsel. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to P&F Industries first quarter 2020 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'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 related to the global outbreak of COVID-19 and other public health crisis; 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; 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; the threat of terrorism and related political instability and economic uncertainty; and information technology systems failures and attacks; 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, our current reports in 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 turn the call over to Richard Horowitz. Good morning, Richard.

Good morning, Rich, thank you so much. And good morning, everybody, thank you all for joining us this morning. We're hoping that everyone is safe in this unprecedented incredible time and in our country and in the world, and we just pray for everyone's safety and wellbeing. I will begin today's call with a brief summary of our first quarter of 2020 results and how they took the state of comparison the same period a year ago. I direct you to our release from earlier today for more information. This morning's release presented P&F’s balance sheet statement of operations per share data along with most of what will be our management's discussion and analysis. And wish to emphasize of course, as I always do, that the purpose of today's call is intended to discuss and review only the company's results for the three month period ended March 31, 2020 and also at this point how the current pandemic is affecting our businesses. As such, I ask that you please do your best to confine your questions to these topics. After that, after my speech, my brief ramble, I will ask Joe Molino to briefly review key cash flow information and provide an update on any key points affecting the company, which of course we will move to the Q&A after that. The company's first quarter of 2020 consolidated revenue was $13,350,00 compared to $14,322,000 for the same period a year ago. As discussed in the company's press release published earlier today, the most significant factors causing the net decline in our consolidated first quarter revenue was the novel coronavirus or COVID-19, the negative effects of which were felt on the our lines of business and to a lesser degree, the significant decline in the global price of crude oil, which compounded with the COVID-19 effect negatively impacted Hy-Tech’s ATP revenue. The company’s consolidated first quarter 2020 gross margin was 33.6% compared to 36.9% in the same period a year ago. Florida Pneumatic's gross margin was 37.6% compared to 38.4% in the first quarter of 2019. This slight decline was due primarily to product mix and COVID-19 related business efficiencies. Hy-Tech’s gross margin this quarter was 21.3% compared to 32.8% in the first quarter of 2019. The decline was due to among other things a less favorable mix of products sold during this first quarter of the year compared to the same period a year ago, weakened manufacture and overhead absorption and lower gross margins and our new power transmission group or what we call PTG in turn due to start up efficiencies, which have subsequently been addressed. Our first quarter 2020 selling, general and administrative expenses were $5,690,000 compared to $5,263,000, by far the most significant items driving the increase was the $420,000 of costs incurred as a result of our decision to accelerate the relocation and set up of our gear businesses acquired in late 2019 into our Punxsutawney Pennsylvania new facility. We determined that it would be more efficient to complete this project in a shorter period of time than originally planned, and as a result of this potentially this quarter was greater than expected. However, this decision will result in greater efficiencies earlier than planned for our PTG power transmission group. Our interest expense during the first quarter of 2020 was $55,000 compared to $63,000 in the same period in 2019. This decline was due to lower amortization of debt issue costs, partially offset by increased short term borrowings. This quarter we reported a tax benefit of $505,000 compared to $25,000 for the same period last year. Taking all the above into consideration on an after tax basis, we are for the first quarter of 2020 reporting a net loss of $758,000 compared to a net after tax loss in the first quarter of last year of $26,000. We are reporting first quarter 2020 basic and diluted loss per common share of $0.24 per share compared to $0.01 basic and diluted loss per common share in the same period a year ago. Again, as a reminder, I refer you to this morning's press release for much more additional information. At this time, Joe, please take the call and discuss cash flows.

Thank you, Richard. Capital expenditures during the first quarter of 2020 were $658,000 compared to $485,000 in the first quarter of 2019. Significant non-cash items affecting first quarter of 2020 cash flows were depreciation and amortization of $433,000, amortization of other intangible assets of $195,000, amortization or operating lease assets of $234,000, amortization of consideration payable to customer of $67,000 and stock based and restricted stock based compensation of $29,000. Additionally, significant [indiscernible] and cash used in operating activities during the first quarter of 2020 were a decrease in inventories of $524,000 and increase of $528,000 in prepaid and other current assets, the decrease in accounts receivable of $720,000, a decrease of $894,000 in accrued compensation and benefits, accounts payable accrued other liabilities and the aggregate decreased $80,000 and finally, operating lease liabilities decreased by $230,000. With that, I'd like to turn the call back over to Richard. Richard?

Thank you, Richard. And before we get to the Q&A, at this time, I'd just like to briefly discuss how we're addressing the COVID-19 pandemic. As we all know, during 2019 we began to source many of the tools and parts that were being manufactured in China to other quality manufacturing facilities elsewhere. And despite this beneficial action, the coronavirus had impact on our supply chain although not really material at this point in time. We continue to practice the guidelines issued by the CDC and other governmental bodies, such as social distancing, enhanced cleaning and disinfection protocols, allowing many workers to telecommute and splitting the work shifts. Currently, except for our corporate offices in New York, which is closed on our government's orders, governor's orders, all of our facilities remain open. No one knows how this economy or in particular our business will fare post this pandemic, or how long it will be felt, but rest assured, our management teams and board of directors are working diligently to ensure that this does pass and we will be well positioned to take advantage of the recovering global economy. Additionally, in April, we applied for and received approximately $2.9 million in the form of payroll protection plan loan. This will allow us to maintain at least for the eight week period as outlined in the CARES Act, our full workforce. We are very grateful for these funds that the government has provided us. And lastly the board of directors decided not to issue a quarterly dividend at this time. They will evaluate, we will all evaluate the relevant facts and circumstances when deciding future current dividend payments. That's the end of our report right now. Operator, we'll be happy to answer any questions anybody may have.

Thank you [Operator Instructions]. We will take our first question from Andrew Shapiro with Lawndale Capital Management. Please go ahead.

Hi guys. Several questions, I'll ask a few and get back out into the question queue and hopefully there's others there. First off, if I'm correct I just want to understand, other than the headquarters where you are doing telecommuting working from home, much of the rest of the business is manufacturing. And I just want to clarify in each of the states you manufacturer, first off what are the states now? Is it just Pennsylvania, Florida and Nevada?

Yes, we manufacture in Pennsylvania. Two factors in Pennsylvania, Florida and Nevada. And all of our factories are open. All of our -- mostly offices are open and in our office, people are coming in sporadically as needed, but we are basically working from home at this point.

And were all of these manufacturing operations deemed essential by the various states during the time…

Yes, I should have mentioned that…

Should they lock down again, the odds are they get to remain open. During this period of operating is the manner in which things are manufactured in our facilities such that employees are able to be fairly spaced out and protected and have the company encountered any occurrence within its staff of any outbreaks of COVID?

We've had good success with that thus far. Joe, am I right about that?

We actually, to this date, don't believe anybody has contracted COVID inside of any of our facilities.

And then getting to some of the, we'll call, it non-recurring, albeit maybe cash expenses with the acceleration of the SG&A costs of consolidating your gear acquisitions into Q1. What remains left for Q2 and will that be the remainder of the costs?

I'll let Joe give you more specifics, Andrew. But predominantly, the majority, the vast majority are in Q1 but the remaining little stuff here and there, but the vast majority we are moved in and operating it really full capacity. But Joe, you can add more color if you'd like.

There's not much more to add, Richard is right. There's just an immaterial amount of expense after Q1, it’s a non-noticeable figure.

And then you referred to in your press release start up issues in the new facility. What were those issues and when were they or are to be resolved?

We did a run in things, meaning we didn't stop production at all. So we had machines being rigged in next to machines that were running, we had employees that were on machines having to come off those machines, while other machines were being installed, electric was being installed. And then it's a new layout, we're also incorporating three sets of build plans into one building. As you can imagine, a fair amount of confusion maybe isn’t the right word, but a lot of activity in a very short amount of time, a lot of things going on. So not as productive as you would be if everything was where it should be in the plan had been placed in, the production plan had been placed for a month or two. So nothing unusual it's just -- we did an incredible amount of time, I would say even it was Q1, I would say it was probably scrunched into more like 45 days to be honest where we got all this activity done. So we thought it was a great effort to be honest.

So were they resolved then by the end of Q1, or how far into Q2 or are they still to be resolved?

All machines of any consequence were up and running and producing parts by the end of March. Having said that, as with any new layout and consolidation, it will get a little better with each quarter. And I'm just guessing but I would say it will probably take us another quarter or two to be at where I consider the full efficiency but we're very efficient after Q1, a huge improvement from one to two.

Now in Q4 your run rate included operating in basically separate locations. Q1 you are doing the accelerated consolidation. You've had these start up issues you referred to and you will get better and better over time, et cetera. Can you quantify what you feel the expected savings, if any? It seems like there would be some. Your expected savings on a run rate would be from Q4’s run rate, which we assume was normalized pre-COVID and everything else but deconsolidated. So at the end of the day if we're comparing to, I guess Q4, I don't think there was a full Q3, because you called in October. What should we hope to achieve or see on I guess we'll call it the cost savings side of this acquisition? I know there's other revenue benefits, but on the cost savings side, what should we see compared to Q4?

I'll let the Joe discuss that. But just remind you, Andrew, that I believe we had six factories, six places in Chicago in the two businesses when we started and now we have zero places there. And there's one small office with two people with de minimis amount of rent just to have a place to go salesman and sales person and another guy an engineering person, outside the original owners of the company. So just by definition, we're in one place now but we moved to new facilities a much bigger facility. But Joe, you can give them the specifics.

So Andrew, it's unclear when you say savings compared to what Q1…

No, Q1 you were in the middle of the running consolidation. But we bought it in October and Q4 presumably was a normalized double SG&A or whatever the run-rate was pre-consolidation. And now that it's all done, it's still evolving in terms of start up issues but improving, but you said most of it's been done by the end of March. What in a sense is the expected savings that we could see from the SG&A that would be expected from this whole consolidation effort, this is, on the cost side…

Yes on the SG&A side in Q1, we certainly have hundreds of thousands of dollars of transition costs that were direct. In addition to that, our margin is probably half of what it should have been in the gear business. So, I can't give you exact figures. I can't tell you exactly what the savings are going to be. Other than I would say, beginning with Q2, the margin on the gear business should look a lot like the rest of the company, if not a little better on average. So I don't know if that answered your question.

I would also mentioned there that we used manufacturing labor, obviously to move little things in and out, so they were not making products during that time obviously. And Q4 had much less SG&A because of that.

Well I guess I'm trying to get the end of the day that you guys you know justify the acquisition, you present things to the board, the board approves the acquisition, et cetera. Trying to just get a feel for what is the scope of revenue and gross profit impact. You think the relocations and set up costs to PTG segment within Hy-Tech to get an understanding about basically Q2 normalized run-rate and Q3 normalized run-rate for that segment of Hy-Tech.

I think there are a lot of moving parts whenever you move a new company, and I don't know if you've ever done that. But if you had you know and you'd realize that there's a lot of moving parts when we move to a place and that certainly will be a lot there will certainly be a good statement. I don't know if we can really pin point yet exactly what it is that we did a couple of months ago under our belt and see what it all is. But I mean certainly as Joe is saying the margins are going to be back up to what you would expect or perhaps even better. And everything thus far is exactly as we had projected and forecast when we, before we bought the company and when we brought the company…

So when you say margins, so PTG I don't think do you provide the margins of the sub segments is like PTG margin available?

No.

So is it the margins of all the Hy-Tech overall you're saying that will run up at or…

As I said to you, it went down this quarter because of the direct labor being used to move…

I totally understand -- so I understand that. I'm trying to project here, I'm trying to be perspective to understand earnings power that this company can generate?

One of the issues is whatever we would have expected about two or three months ago is now, I'm not sure that's the proper expectation given this environment. While I will say that I believe our power transmission group is probably among the best divisions of all of our product lines because in many cases we're dealing with supplying essential businesses. In addition to that, much of the work is breakdown work, meaning somebody who's got a gear, it breaks down, they need a fix right away. So there's a lot of regular business that's unaffected by the virus. So it's a little hard to say. And I'll go back to what we said when we made the acquisition that we paid a little more than a full multiple on these businesses as they stood, but once inside of our operation and combined with the old quality gear business we were paying a fraction, we ultimately pay a fraction of that. And that is if all of the transition costs, which I would imagine are easily half of million dollars of hard costs and soft costs, like I said, inefficiencies that went on for six or seven months, hundreds of thousands of dollars. So I can't give you a better answer, because I think it's really apples and oranges but I think I'll agree with Richard that everything that's happened has been pretty much the expectation at this point.

You know the costs cutting or the cost consolidation savings are kind of what they are. I realized COVID has changed the near term revenue picture. So [Multiple Speakers] really projecting, but you understand [Multiple Speakers] but it's all good. I can tell you that.

I have more questions. Please come back to me. I’ll get back in queue…

[Operator Instructions] And our next question is Henry Debrow, A Private Investor. Please go ahead.

I noticed that there was 8-K recently filed that said you needed more time to file the first quarter Q, and one of the reasons was to evaluate assets for any impairment. And releasing the first quarter results this morning, is that a valuation complete and is there any imperilment as of that date March 31st?

I'll let Joe answer this question, Henry. But the delay, the answer I believe is no. And the delay was at least from certain requirements that every public company had to go through now through their quarterly numbers, but Joe you can expand them.

Yes, the analysis that was completed regarding the assets was done prior to release of the earnings. These numbers reflect that and there is no impairment for the first quarter.

And I'm just reading something from the 8-K that was dated May 15th. Okay. Let's move on. What was the total payroll incurred in the first quarter.

For the entire company?

Correct.

Joe, do you have that?

No, I do not know the answer to that off the top of my head, but we can probably have somebody take a crack at that while we're on the call and try to get that answer to you.

I'm just trying to [Multiple Speakers] to the amount that you've got to your PPP loan of $2.9?

Okay. Well, that ballpark, so the PPP loan was based on two and a half months of the approved payroll number and that payroll number includes [Multiple Speakers] yes, that's correct and of course capped at anyone making over $100,000 that would not be included.

So I don't know what you're trying to get to this. It's a strip population based upon our actual average letter.

Yes, and that just also includes, let me just finish that number includes also payment for [Multiple Speakers] the rent is, that's part of the forgiveness. The calculation of the borrowing, the amount we could borrow includes payroll and that also include in addition to hourly pay capped at 100,000 annualized would include our contribution for employee health insurance and also our contribution for the 401(k) pension plan. And I believe that is the average. It took two and a half months of average for 2019 to come up with that figure, which is 2.9 million. Does that answer your question?

Would it be fair to say quarter two's P&L expense for payroll will be substantially less?

Well, I’d give you an perfect answer, as we've stated we have not -- we have held off on terminations that might have been made as a result of getting the PPP loan, which is exactly what the loan was designed to accomplish. I can't tell you where we're going to be at the end of June and whether you know who knows what's going to happen. Is there going to be you know further legislation, I don't know. I can't tell you what our Q2 payroll is going to be. I just I can't see that far into the future.

My question was for a number of weeks, eight weeks, someone else is paying the payroll?

That's correct. That’s what the PPP is, that’s what the whole CARES Act is…

Maybe Henry is your question the following. Will our eight weeks of pay be consistent with what approximately eight weeks of pay was in 2019? Is that your question?

No, I think it's eight weeks subsequent to when you receive the loan. I presume your expense for salary expense will be diminished by that amount that you received.

No, it doesn't really work that way. The loan is separate from our expense structure. Our expense structure is what it is, it's unchanged, relatively speaking unchanged certainly on the personnel side. At some point in the future, there will be complete guidance on how the loan gets forgiven. I think what you're possibly conflating is the forgiveness of the loan and how that affects the profit and loss of the company. Those are two separate things while related one doesn't go in and work. In other words our payroll doesn't go down because we got the loan, it doesn't fill that bucket so to speak. We have our payroll, whatever it is. If we satisfy requirements of the forgiveness calculation, then there will be a separate gain somewhere else when the loan gets forgiven. But our P& L will look, if you extract the loan our P&L will look quite similar to what it looked like in Q1 in terms of, on the payroll. Does that answer your question?

Other gain is going to be in some future period?

Whenever the loan is forgiven, yes and it will be [Multiple Speakers]…

Henry, I don't know how familiar you are with this PPP, the requirements and all that. But all of us have spent an awful lot of time on this before we submitted. And we've had to compare it to all the rules and the guidance about how well the PPP funds can be used. And we're hopeful that a large portion of the $2.9 million will be forgiven but we're not able to predict right now how much that will be, or if a loan will be forgiven at all. You know the government will audit and that stuff if we choose to or not. We’re following rules strictly of course as we always do it. For many reasons, including all these guidance things that keep evolving, this PPP loan forgiveness application just released by the SBA and the treasury on Friday. And so we can't make any predictions as to the time or the amount or stuff, because it's kind of like in here, we don't know about. But we know that the government will be scrutinizing the eligibility of all companies such as us that have received more than $2 million in loans and that we know.

I have two other questions if time permits. In the press release it he says that you had a loss of a large customer. I want to make sure I'm reading it correct. Is it a reduction in sales to a customer or you lost the customer?

We lost the customer but we picked up many of that customers’ customers, if you get what I'm saying, but we did lose the customer.

And a decision of yours due to credit, the customer wasn't happy, price differences. What was the reason?

Price differences, essentially price differences.

And how much was that customer in the first quarter of '19.

We don't really give you that information but Joe, maybe you could speak to it a little bit that.

The customer's annual revenue in prior years is low seven figures for the year, low seven figures customer.

But having said that we picked up many of those customers along the way now without the customers, do you understand what I'm saying. The sales to that customer as a branded product, there are many other channels available to end users who would like to purchase that product. And if that is the product they want, they don't have to go to that customer. So while certainly while that customer is unloading the last of our inventory, there was absolutely an impact. But once they were out of our product, people weren't just going to buy the replacement product at that customer, they're going to find another avenue to buy ours and there are a number of ways to get our product and everybody's well aware -- those people purchasing that product are well aware of where to get the product.

And whatever you were selling this prior customer. Was it anything that you still have inventory that was made only for them, or there's…

No, it was our regular branded product, there's nothing special about it.

I'm going to leave reserve of my right to come back. Thank you.

[Operator Instructions] And our next question is Andrew Shapiro with Lawndale Capital Management. Please go ahead.

I have a few follow ups on Henry's questions just get to a little bit more clarity and then I have a few more. Regarding the last automotive distributor customer and the sale of it was a branded product. Can you give a little more color as to what line in from automotive product or products this…

It was AIRCAT…

And this was a U.S. distributor not the -- something over in Europe?

It was both…

They have a affiliated entity in Europe as well that does out there de minimis.

And when you said low seven figures that was annual that was not Q1 last year?

Annual, correct.

And then going back to Henry's questions just on the PPP and perspective loan forgiveness stuff, which I'm very familiar with, and you have over $2 million the SBA and it's more SBA not Congress, but they keep on shifting and changing to their whims and rules based on the political winds and criticisms. So who knows what is and isn't forgiven in a few more weeks. So I think you'd probably agree that this is still an uncertain things. But when you do the forgiveness, it'll be a separate line item. It sounds like it won't be a reduction of the various income statement items, that's correct either whether it's forgiven or not it's not coming through your normal gross margin line items. Is that correct?

Correct.

When were the bonuses paid in March that you referred to bonuses in the press release?

March 10th I believe…

And then during the period of COVID constrained business, or at least the period which the PPP loan is outstanding has and we have, you guys make cuts across the board here in variety of ways, including cutting the dividend temporarily, but during the period of the COVID constrained business or at least the period which the PPP loan is outstanding. Has the board implemented any reductions to a portion of the senior executive salaries that are in excess of the $100,000 annual rate cap limit in the PPP program?

Andrew, I don't know if I understand your question, but we're not discussing executive compensation on this call. But if you want to explain the question a little bit more, I'll see if I can answer it for you.

So in the PPP program, you have your -- it's your average annual -- it's your average monthly payroll, and that worked out 2.5x plus the various health and other penny that were covered in it that worked out to the 2.x million dollar, the PPP loan. Okay. Dividends have been suspended, so that's on the shareholder side. So there's things that are going on and what's involved in the PPP is with yours, Joe's and other senior executive salaries, so a $100 million annual rate is included in the PPP. But the other portions of your guys’ compensation are above and beyond that, and that's not part of the PPP. So I'm asking has the board implemented any reductions to the portion of senior executive salary in excess of the rate caps? [Multiple Speakers] They have not yet [Multiple Speakers].

Not at this time.

Regarding the credit disability, your release said there will be detailed discussion in the 10-Q, which unfortunately has not yet been filed. Are you able to -- I don't know if that's standard language. But are you able to summarize any of these changes so that we may ask any pertinent questions prior to waiting until this current quarter’s earnings call that won't be held until August?

Again, I don't know if I understand the question. Joe, do you understand what he’s asking…

You kind of implied there's changes, I don't know if there's changes to the credit facility that will be detailed in the 10-Q but the 10-Q's not out. So I can't read it and I can't ask questions now. And it's just a shame not to be able to ask questions until next August. So I was just asking if you could summarize any changes in the credit facility that might be detailed in the 10-Q to be come out, to come out…

To my knowledge, there are no changes but Joe you can add onto it.

The only change to the queue right now, the change in the credit agreement is an change allowing for PPP loan. The credit agreement prior to the issuance of the PPP loan would not allow us to borrow outside of the capital one facility, I think more…

So it's just a covenant change for the incurrence of additional debt?

That's correct, there are no changes [Multiple Speakers] the PPP was filed in an 8-K.

I did see all that and very happy to see that you guys qualified for and got it. And I am hopeful that upon the subsequent audit, because the size of your loan that you'll be able to have most, if not all of it forgiven. The released talked about, I'm not sure if this is, sounds like it's outside of PTG but maybe an ATP of Hy-Tech. What type of functions and costs go into what you called in early in the press release outside finishing. And is that the same as what you referred to later in the press releases outside processing costs?

Outside costs could be things like heat treating, metal prep and then those would be big ones, metal hardening, processing, things we can't do internally. So I would say those are related comments. We’d have to just use different language for each of them.

So same stuff but it's different language in the release. Okay. And then are these outside costs a more permanent change in costs to you, or is there anything Hy-Tech can do to mitigate such increases?

Yes, we certainly can do things to mitigate them and we analyze that stuff all the time. As you know, we're pretty vertically integrated. At this point, we don't have the ability to do in a heat treating and much of our product is heat treated. We have looked at bringing that in house but at this point it doesn't seem that cost efficient to do but that doesn't mean we look at different ways of manufacturing things and depending on the kind of metal you bring in, you might not need it. So yes, we're always looking at that stuff of course.

What, if any, are the big items remaining in the CapEx that you have identified still planned for the rest of this year?

Nothing of any major consequence. We're going to try to -- if the environment -- if the outlook doesn't change for the markets we serve you know CapEx for the rest of the year will be a more modest than it has been in quite a while. Obviously, there will be maintenance CapEx and there's a return on expenditure for new product or something like that, of course we'll spend those kinds of monies. And lastly we just got done finishing a lot of IT expenditures you know around the whole business. So all the IT stuff is now all pretty current so things are going to fall off a little bit here in the next few quarters.

So with you already experiencing, we'll call it, unless there's a really bad resurgence in the fall and there's no visibility on therapies and there's probably not a vaccine, but even therapies would cause the governmental authorities not to close things down as tight as they were with the bulk of the deepest part of the economic closures across the country now beginning to be rolled back. And clearly companies are involved in vaccines are seeing an influx, people who make masks are seeing an influx, et cetera, et cetera. Can you share your views and observations on the effect of the COVID-19 pandemic in terms of basically in the economy there's a reallocation of resources going on. Certain businesses actually are doing well, whereas travel and other types of activities where people are socially gathered have been greatly damaged and potentially you know for the long term. With respect to where the company has been or is projecting or focusing on selling. Can you give some views here on the impact of the pandemic from both a supply point of view and your supply channels as well as a demand point of view?

Joe I will let you answer this. But Andrew, it is virtually impossible for us or anybody else in this country or this world to make predictions and I don’t know who knows…

No, I am not asking for predictions. I am asking -- I mean, are you, you know, look, if you have customers who make masks, you might have seen increases in certain subsectors of your customer base. Are there certain industries that you serve where you are seeing, either no degradation or potential in increase in activity versus obviously certain areas of your business that have encountered serious headwinds until they reopen?

I can't think of any. And Joe, you'll chime in. I can't think of any business, any customers that we have that have not some degradation to a pretty important degree. Having said that, some of them at this moment have had a couple of good weeks of you know orders. But for the most part it's been very, very low before that and who knows what the future brings. But Joe, you want to add to that? I don't know if I mentioned the question Andrew, but to give you what I think you're asking. But Joe, you want to add to that?

As I said earlier, I think PTG is faring the best. I think to the extent the government keeps ordering military equipment and we supply those guys that will fare okay. The rest is going to be very industry specific. So if you could tell me then oil and gas prices are going to be back up to $40 or $50 a barrel, that would be helpful. If you can tell me when planes are going to be back in a air, that would be helpful. If you can tell me when the mobile jobbers can start calling on garages again, it would be helpful. So each business has different drivers. And we certainly don't know when any of those things are going to turn around but they're each going to be affected by a slightly different sort of factor…

And as you moved into some new product development inside of Hy-Tech, for example, food processing got mentioned. You might have something goes into healthcare. And if it's food processing for certain types of food items that are consumed when people are stuck in home more than restaurants or something then that might be areas that would have a tailwind to offset, obviously, or many areas that have headwinds?

Yes, I don't -- let's put it this way. Despite the fact that I think PTG is doing the best, it is in no way going to grow in some way to mitigate materially and the other fall off. It's just, first of all, it’s not that day and second all, it's hanging in there, it's not growing dramatically.

And are you seeing your run rate here at the end of May going into June as a result of partial reopenings? Are you seeing the run-rate of orders and things starting to pick up?

No, it’s very inconsistent, very sporadically rolling. We'll have a good day or two of good orders from customers and then week of no orders. And I would not say there's any times yet of anything like that that I've seen.

Can you quantify or provide a range of cash flow impacts and timing related to the provisions of the CARES Act that you referred to? I think it's primarily the tax provisions in terms of either the amount of money -- I've seen other public companies already provided an estimate of the range of cash flows they think that they can call back, a cash they can call back to because of CARES Act changes and tax NOL carryforwards carrybacks, et cetera. Do you have any kind of range of cash impact from that this as of yet?

I would say that and this is a rough estimate. Over the rest of the year, we expect about $0.5 million of call back. It's a combination of stuff that was available to us and then stuff that became available to us. So it's just roughly $0.5 million over the next two quarters.

Well, every little bit helps to pare them and that right. I have a few more questions. I'll back out. Come back to me please.

[Operator Instructions] We have Andrew Shapiro with Lawndale Capital Management. Please go ahead.

Regarding and I think [indiscernible] I think that's all the aerospace is and all that, regarding the military oriented customer. Was the increase limited to Q1 or is there carryover work into the current and/or future quarters?

The military orders are not one off for the most part. These are orders we would expect to continue. Of course, given COVID, I can't tell you exactly how. But they're not one project, these are tools and parts that we expect to develop a regular flow of orders from for the military on an ongoing basis.

And are there any particular aerospace programs to which you can tie as end user customers --creating the end user demand for your tools?

Like a particular type of aircraft…

Is the F-22 Stealth, Is it the F-35, various programs might be specific to the product demand of your aerospace customers, which assuming it's not the military per se. But it may be one of the airframe makers or something else.

Yes, well 737 for sure, so…

Yes, that's not military.

That’s not military, no…

Yes just wondering the military program that created this?

No, there's no single program. These are general military aviation tools that are used across a variety of platforms. Now I will say this, whatever's the hot production is at the moment for that supplier to the military that will obviously take more tools, but these tools are useful across many different kinds of jets.

Is it primarily Boeing or are there other…

No, it’s not primarily Boeing…

And has there been [Multiple Speakers] Lockheed. And as we've talked in prior calls, has there been any more indication of progress at all with the long term plan to crack into Airbus?

Not right now, they wanted to sit visitors, Airbus and [Multiple Speakers] Boeing is just starting to open up a little bit of that. But to announce there is two issues, one with Airbus, they're not accepting visitors and second thing is the country that they’re in doesn’t accept visitors. So we can't even get there right now. It's only zoom sales calls and I don’t know if if they're doing that either.

And again, it's probably hard to do an apples to apples comparison, but you have introduced lots of new products over the last few quarters. Are there any particular products or introductions that you did make that are showing since they're new products, presumably year over year they would actually be revenue enhanced even though it's in the face of a reduced economic activity from COVID. Are there any particular new products introduced over the last few quarters that are worthy of any revenue generation call out from the current quarter?

It was before anything happened with COVID. But Joe, do you recall exactly what [Multiple Speakers] and all that stuff…

We're very excited about the introduction of a new fastening system tool for a new fastening system for military aircraft, and we were just starting to get a little momentum there. And while the people we're talking to are very excited about it, there’s -- the orders are kind of on hold for now. So I'm hopeful that once things get back to something a little more in the way of normal production at the military aircraft providers that we should get some flexible orders there. So the answer is yes, but nothing's happening right now.

It appears to be no further questions at this time. I'd now like to turn the conference back over to our speakers for any additional calls and comments.

We thank you for taking the time to come in our call today. And we wish, of course, we wish everybody well and to be safe and well. And we hope that by the time we get together in August that we have some, the world is in a better place and of course P&F as well. Thank you all. Stay safe and have a good day.

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