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

Thank you, operator. Good morning, and welcome to P&F Industries Full Year 2020 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, but 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 crises, 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 states and abroad, risks associated with sourcing from overseas, importation delays, customer concentration, impairment of long-lived assets and goodwill, unforeseen inventory adjustments or changes in purchasing patterns, market acceptance of products, acquisition of businesses, regulatory environment and information technology system 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 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, and thank you all -- everybody here on the call today for joining us this morning on our full year 2020 results. I hope and pray that all of you are doing well under these continuingly difficult circumstances with COVID-19. Although the vaccine rollout, which will certainly help control the spread of disease, is underway, we are still working to get past the harsh effects of this global pandemic. Lastly, our thoughts and prayers are with all of those affected by COVID-19 in your family or friends or anybody else around. I would like to direct you -- on the business matter, I'd like to direct your attention to the company's press release that was released earlier today, which includes the company's December 31, 2020, balance sheets and statements of operations and statements of cash flows, and discussions related to the company's 2020 results of operations. This release should answer most of your questions. In order to make a make a better use of everyone's time here this morning and be mindful of the purpose of this conference call, I would like to note the following 2 items, as I've said in the past. Firstly, as we have done for the prior 2 conference calls, and what will become our standard practice from this point forward, we will move directly to a question-and-answer session, and not restate what is already in this morning's release. And secondly, please be aware that we will only be answering questions directly relating to the company's results of operations and financial condition. We must insist that you adhere to this procedure, and management will not be entertaining any questions that go beyond the scope of this call. And with that, in what I said, we'd be happy to answer any pertinent questions anybody may have at this time. Orlando, please open up the line.

[Operator Instructions] And we'll go to our first question from Andrew Shapiro with Lawndale Capital Management.

Can you hear me?

Yes, we can hear you fine.

Great. Several questions, I'll ask a few and then back out into the queue in case there's others. First and foremost, I wanted to find out or ask if you guys -- is there a particular reason, or why is it in your fourth quarter release you only provide fiscal year-end, and we can't easily determine and calculate here the fourth quarter results without having to go to the year-to-date 9 months and try to back things out and reverse engineer it than most companies break out their fourth quarter? Is there a particular problem or a reason that P&F chooses not to do that?

Yes. Andrew, we reregulated this morning, and we've gone through this with you and we've gone through this with our lawyers and our accountants. And we believe the information contained in our press release is totally appropriate for a company of our size, and our lawyers and our accountants have told us without question that they are. So that being said, happy to answer any other questions, but that's -- we've been advised if that's the way that it's done, just a company of our size, or with much bigger companies are actually even. So that's why we do it.

Well, maybe they should widen your scope of research on it. Other companies, due to the fourth quarter, and they break it out. I just don't understand if there was a particular problem for people to do so.

Yes. So on [indiscernible] Andrew. I'm giving you the answer. Let's go on with your questions because that's the way -- that's what we've been advised to do, and that's how we proceed.

Okay. I'm just wondering why they had bind that. Anyway, [indiscernible]. Can you -- things have evolved in on this. I'd like to get a feel for where operations currently stand. These are questions with respect to the impacts of COVID-19. And it sounds like in the background, you're still working from home, and the dog is there. I want to understand where do operations currently stand for the company, both at its headquarters, which sounds like you guys might be working remotely, and in each manufacturing facility. And what is the return to normal plans and expectations of timing you guys have, or what is the normal for the company headquarters as well as the -- your few manufacturing facilities?

Yes. Go ahead, Joe. You can answer that, I guess.

Sure. With respect to the subsidiaries, the -- we're fully staffed at the operational level. We are fortunate that we can socially distance and compartmentalize people fairly easily at each of our locations. So there really, at this point, is next to no impact on our production capabilities. People in offices, where things are a little tighter, alternate shifts, and there's a certain schedule that we follow to try to maintain social distance, and have a few people in tight quarters as possible. The same goes for New York. We do not -- we're probably -- we're in the office 60% of the time, but again, we try to minimize the -- we never have the full staff in here at once. And that will probably be the -- I mean, I don't want to project too far forward because I can't tell you what the path of the virus is going to be and where we're going to be on vaccinations, but I would imagine that, that will ease back into full -- everyone being in the offices at some point. But for now, it's a little too early to say exactly when that be -- when that will be, but that is certainly the plan. But it's not affecting our ability to do our jobs.

Okay. And do you have an estimate of the percentage of the P&F workforce presently vaccinated with one shot or fully vaccinated? And has the company initiated or considered initiating financial incentives or bonuses for employees who do get vaccinated?

Go ahead, Joe.

No, we have not considered that. As I said, right now, the impact on our ability to generate production and ship products is next to nothing. So I'm not sure what that incentive would do other than make people feel better. And obviously, the more people vaccinated, the better. But the impact on our operations is really nonexistent.

It's fairly minimal. In the corporate office, 3 people have been vaccinated at this time, and the restrictions are the age of the people and the rules in the state. So we can't -- we have to adhere to, like everybody else, like you, not you and everybody else. But as Joe said, in the -- but we will consider it as best we can with what's going on. But -- and as far as the company itself, really very minimal impact thankfully, thankfully. And both -- or all of our companies are really operating fairly uneventfully at this time.

Okay. And my final question on the COVID-19 issues, and then I'll back out into the queue with -- but I have questions for your divisions and product lines. I think you commented in your press release regarding the demand -- product demand perspective and your sales impacts regarding COVID-19. Are you experiencing? And what types of steps are you doing to mitigate any negative experiences from impacts in your supply chain, which we are increasingly reading about impacting manufacturing companies?

Yes. We -- Joe can add on to this also, but we're having -- which I'm sure you read about everyday in the newspapers. We're having the same problems that everyone else is having in terms of the delays in shipments coming from China. Now the latest really winkle is the Suez Canal is shut down and everything was all backed up there. But way before that, within adding, we're adding 6, 8 weeks to deliveries like on a regular standard. And even when they come into the country, be it Miami or be it on the West Coast, they can -- the shipments can sit there for quite a period of time: days, weeks, even 2 weeks, before customs and everybody else let's it go, and that's something that's been going on with us for several months now. And people I know and other businesses are calling exact same thing. And people who don't know when the shipping business, and I know several of those businesses, they're all very, very frustrated about what's going on and how it's happening, and seems to be a very convenient excuse whenever things don't work out, they blame it on COVID. So I mean it may be like in many cases, but I can't imagine why now with China has opened as it is, it's not going any dent, but it is not getting any better than that. So Joe, do you want to add to that?

I mean, I would just add that the impact on the importation is primarily with Florida Pneumatic. Hy-Tech doesn't have a significant portion of inputs coming from Asia. As a result of having a several-tier distribution system, however, ultimately, there isn't really a significant impact on ultimate sales in that. For example, Home Depot, there's distribution centers we ship to, and then there's inventory at the stores. So customers are not showing up at the stores, not being able to get product. Because, again, there are several levels of inventory in the stream.

And are there other steps you're taking to mitigate the effects of this continuing slowdown in some supply?

Well, we thought we're -- go ahead, Rich.

No, go ahead, Joe. I mean, you're going to say the something I am. Go ahead, Joe.

I mean we're projecting ahead as best we can. We're making sure that we're providing additional safety stock, and we're keeping a very tight control over the inventory levels and working with suppliers where we can. There are also alternatives with respect to where ships can land. In the past, we've been able to redirect things, should that become necessary. Right now, it hasn't become necessary, but we have several levers we could pull to move where ships actually land and possibly from there go over land to get to us. So right now, it hasn't really impacted the business in a significant way, but we're obviously keeping an eye on it.

Okay. [indiscernible].

I have several other questions -- yes, go on.

Yes. We've increased our safeties -- as Joe said, our safety bit -- a little bit, but it's a balance. We don't want to be overly -- we don't want to buy too much stuff. It's money and we have to balance it, but we've been doing a fairly good job of staying ahead of it for the most part. Go ahead, I'm sorry.

Okay. I have several other questions, but I'll back out in the queue.

I don't believe there's anybody on the queue right now, Andrew, so you can go.

All right. So moving on and talking a little bit about your Gear Products acquisitions, which were made right before the pandemic kicked in, and you're even literally integrating equipment and consolidated facilities as COVID hit, and it's now kind of becoming, I guess, you call it your Power Transmission Group, PTG. Can you -- is it -- does COVID cloud your ability to elaborate on the strategic benefits of the acquisition, yet? You talked about that the acquisition opened up a broader range of industries for you, and you mentioned specifically actively pursuing opportunities in healthcare, transportation, food production and power generation industries. And your current press release issued this morning said, you've witnessed an increase in orders and sales activity. Can you elaborate a little bit more about this and the impact and benefits of this acquisition towards that? And what has been your success in these particular new industries you were targeting?

I mean, I think, Andrew, we said it pretty well in the press release. But Joe, if you want to add more color to it, you can.

Well, the Power Transmission Group, just talking about Gears specifically, really, anything that's got any kind of drivetrain in it is an opportunity for a gear. So there is an almost limitless number of opportunities for Power Transmission. I don't know that we're -- and all of them have very good margins. It's not about the -- once you get out of this very small gears, I don't want to say it doesn't matter, but we're focused -- what we're doing is focusing on regions at a time and establishing a couple of hundred square mile radius around places where we've got salespeople located and representatives that are working with us closely. So I don't know that we have any particular industry that we have to have. What our salespeople doing -- are doing is reaching out in a particular region, and there may be particular kinds of businesses in that region that predominate. For example, in the Pennsylvania area, there's a lot of mining business, and in the West Virginia area, there's something else. So it's kind of almost regionally specific. So once we've got a salesperson in a region, they go and see what's out there. So I wouldn't say that we're focused on a particular application because there's so many really good ones, but there's a lot of opportunities. I will say this that it's better, but there's still a fair amount of limitation on where we can visit people still don't want. Many potential customers don't want visitors. So we have to conduct the Zoom calls and phone calls and whatnot. But given the -- what you're trying to do here, a visit makes a big difference, getting an engineer to sit down with another engineer with a gearbox in front of them and talk through the details of how they want it made or remade or reverse engineered, there really isn't any replacement for sitting in front of somebody. But having said that, we're actually pretty happy with the results we're getting and the positive feedback we're getting where we do visit.

Yes. It seems like in certain geographic areas, very few but certain geographic areas are more willing to see us and see customers explore us and we see the customers. But for the most part, they're very, very reluctant to do that yet, opening it up. Aerospace in specifics, and that's not PTG, but I'll get you next question now. Aerospace is absolutely not likely to go out of business, for the most part. And then, the main [indiscernible].

All right. Sticking to the PTG, before I move on to aerospace, so when you describe an increase in order and sales activity, what is the typical time horizon from getting an order to the product hitting the revenue stream and the cash flow generation stream? And in terms of your sales activity, when you talk about a sales activity, are you talking about like booked -- these are booked revenues already for the first 2 months compared to 2020?

I don't know. I'm not sure. Go ahead, Joe. I'm not sure.

Yes, I'm not sure I understand the question, Andrew. Maybe you could rephrase it.

Okay. So I honestly go off of what you have in the press release, there is no 10-K, yet. But you -- when you're seeing an increase in order and sales activity -- and when Boeing gets an order, that is like multiple months, if not a year or more before it actually hits the revenue stream because of the production cycle of what they're making, right? You guys are making gears or designing or doing something. So when you get an order and you have order activity and sales activity, I'm just trying to understand the typical time horizon when that "activity" results in and becomes reportable revenues in product shipment.

I would say, it could be as short as 4 weeks, could be as long as 3 months. It depends on the complexity of what's being ordered. If it's a reorder from a current customer, that just goes right into the production queue. There's not a lot of engineering involved. But if we've got to do some engineering and depending on the complexity we could go back and forth with the customer a few times where that could lead to 3 months between an order and delivery. But if it's a current account, I would say, it's just as fast as we can get it into the production queue, which could be as 2 to 4 weeks.

Okay. And for the activity, you have warranted inclusion in your press release to talk about. We got increased order and sales activity. Are these mostly reorders or are these a mix, which includes engineering and design type of activities?

Yes. It's all of the above. It's not.

It's a little of everything. It's a little of everything.

Okay. Okay. And you also described, it's not really an industry issue. It's more of what's in the region of where your sales force or independent reps, et cetera, are. If you consider the United States as a full white map, how much of the country is there really white space where you're not regionally represented, and about what portion? Or are there particular geographies where you're well represented to get a feel for the regions you're in and the regions you could expand to?

Go ahead, Joe.

We're very strong east of the Mississippi. We're very strong in the Northeast. We're strong in the Midwest. We're strong in the Southeast. We are building representation in the Southwest. And I would say the Northwest and the Far West is where we don't really have a whole lot going on, yet.

And there -- it's not like you're shipping cement. There are really no major barriers for you to eventually grow into the West Coast.

That's correct.

That's correct.

All right. Just trying to understand the nature of this new acquisition and business that's evolving to become kind of a reportable subsegment there. All right. Now moving on to Aerospace, which impacts both Hy-Tech as well as Florida Pneumatic, but shift to do inside of Florida Pneumatic, I want to kind of focus maybe on the Aerospace there. Boeing got the 737 reapproved. They are talking about a very slow re-ramp. We are beginning to see some orders, literally, new orders for 737s. And of course, it's being well-publicized how -- there are crowds at the airport already, and airlines are experiencing increased bookings and, of course, have gotten some serious financial bailout. What are -- what -- can you give us an update a little bit more or a little more clarity, obviously, than the -- 1 or 2 sentences in the press release as to, I guess, visibility on and timing of your order activity in the aerospace side, which obviously is going to be a lag? And are we talking about a few months lag? Is it a multiple quarters lag, years lag, or are you already seeing green shoots?

Yes. Andrew, we read this stuff pretty much all the time. But we read everything that you read. It's not like Boeing calls us and gives us updates. It's not like we can get that. I'm just going to point out to you that the 737 orders have started to increase for them. But mind you, they have over 200 -- I think it's -- the low 500s, there was 230, built planes in an employ, built planes and employ. So they've got to sell a very large portion of that 230 planes that are built and sitting in the desert somewhere. I've seen pictures of it. I don't know exactly where it is. Joe can maybe tell you, and he may remember. But.

In Arizona.

Arizona. Okay. So they're there. And until that gets way depleted, we're not going to see any orders really to speak of on anything to do with 737 or for that matter the 787. And we do get orders from Boeing for their other factories or other things. But it's a drop in the bucket compared to what we would get if they were doing their normal business on the 737 or [indiscernible]. We're optimistic that it's a great plane. And then now that it's gotten over, it's been pressed within a year plus later, we are optimistic that being in such a good product that over time, it will get better. We're thinking more like the second half of the year at best. And, maybe more towards the fourth quarter of the year at best. But mind you, we could be very wrong. I mean, they can get a whole lot of orders from some airlines, American, Delta or something like that, and things could change. With the information we have right now, that's not good in my take. Joe, do you have anything different to say to that?

No. I mean, right now, what we're hearing, and if you follow the analysts, I don't see Boeing ramping up production until towards the back half of the year and into next year. So I wouldn't imagine, on the commercial side, we're going to see much until Q3 or Q4.

Right. Right.

[Operator Instructions]

And are you seeing any -- are you gaining access to approval on being speced into any additional or new military programs?

The answer is, yes joe, you can give him some information on that, I guess. [indiscernible].

Yes. We're working with several military manufacturers on products that we've been developing with them. I mean, I wouldn't say they're necessarily by program. These products are something you can use across multiple platforms. So it doesn't have to be the F-35 or whatever. But it's more specific to applications that run across platforms.

And is this, we'll call it like a new line of work or a new product offerings for P&F that had not previously existed?

Yes. We had introduced a -- I'll call it an application tool that was very popular for military applications, kind of just as the pandemic was kicking into full gear. So we haven't really gotten the full benefit of our work there. But I would say, military is probably going to open up faster than commercial production because the demand is already there. You don't have to wait for the demand to come from the people to get in the -- at the airport. So we will see that, and we are seeing that. But again, it's still -- it's also contingent about -- contingent upon these military manufacturers getting into full production, which they're not yet.

Right. Now obviously, Europe is having another wave. Travel to Europe and European sales initiatives you've inferred in your press release are certainly further delayed from a reopening and like what we're experiencing in the United States. You had not been into Airbus before, and it has been an effort. Have you been able to make any progress into the Airbus acceptance or approval process, et cetera, during this period of maintained distance and nonphysical presence, or does it all have to wait until a reopening?

Yes, we really have not. Joe?

Yes. It has to wait. We can't -- we had visits scheduled, we had tools to show them, but they're not ready for anybody in their facility.

They're not meeting people yet, and this is a product that really needs sold with firsthand. Like Joe said earlier, Zoom calls are not really good with this stuff. They got a handle things and talk and see things, and so we have to wait. But they are being -- we were told by our people in Europe, let us see that they're getting to the point that it should be getting better soon. Germany, was going on a lockdown, is still weaken. And then just we -- they retracted that. I guess, you heard that yesterday or the day before. They retracted it now because there was such a pushback from the population. So hopefully, that will help. And the AstraZeneca is reopened, so the more success they have with the vaccine like in America, the quicker it will have the value. But I would say, it's still a couple of months ago at best.

Right. And does this hindrance or impediment of the need for physical presence for aerospace like tools, does it extend to the progress you are developing for AIRCAT tools and distribution opportunities in Europe, or is that something that you have made progress on or could make progress on while things still remain in Zoom like?

Yes, we've made some progress with AIRCAT, but still, it's slow. It's a challenging time for everybody because of the businesses, of course, like the end of COVID.

Okay. I'll back out again. I have questions on Hy-Tech as well as on Florida Pneumatic.

Okay.

[Operator Instructions]

Orlando, any other questions?

Currently, there are no other questions. [Operator Instructions]

Yes. And I believe Andrew Shapiro said he had other questions. So let him come back in if he does it.

[Operator Instructions]

He may have lost his connection. He announced that he had questions. So we'll give it a couple more minutes, if we can, get him, and then we'll just have to complete the call. He may have disconnected. He may have had some problems.

[Operator Instructions]

Joe, we're going to -- we're not going to stay on this call with everybody on the call if there's no -- if he can't get back in, he can't get back in, I guess.

Yes.

We'll give you another 2 minutes, but if we can't, I don't want to inconvenience everybody else on this call.

Yes.

I kept talking, and then, it got disconnected.

We've been waiting 5 minutes -- anyway, there's no other calls here. And we've been on this line because you told us that you had other questions. And we didn't want inconvenience everybody -- so answer -- go, finish what you called so you don't get disconnected again. We'll answer all your questions.

The PPP loan -- I'm trying to get clarified. You applied for forgiveness, and they have a certain time limit to do that. Can you provide the timing of when you submitted the application, and when you believe you will have your loan forgiven?

We applied about a month ago, officially, maybe 5 weeks ago or something on those lines. And we have been told that no public companies over a $2 million threshold had heard any response at all. And all we can do is we got received from them that they received it and in their hands. Anything else you'd say?

No.

Right. But they haven't given any notice that they're going to look at things more closely other than what you've submitted in your application for forgiveness?

No. But nothing -- we've heard nothing since we have received the issue of it.

Okay. So -- and when you are forgiven on some or all of this amount, that forgiveness of the loan needs to hit your GAAP financials in some place. Joe, what do you anticipate to be the -- where you'll be booking this? Would this be considered other income? Is it going to be a reduction of SG&A? How do you effectively begin this?

It's other income, Andrew.

Okay, it will be other income. And does the company have a tax NOL? I would think it has accumulated as a result of this last year's losses that would then be pretty much dropped that entire other income number to the bottom line.

There will be a tax -- yes, we have an NOL. We filed for a refund. We expect -- while we will be filing for a refund, and we would expect to get some sort of refund in -- later in the year.

Right. But with respect to other income to be booked on a loan forgiveness, is the NOL -- what was year-end NOL size? And is it.

Well, I can't speak to the NOL exactly, but I can tell you that we expect a high 6-figure refund.

Okay. And does that mean then the other income number that will come in on the forgiveness of the PPP loan will be -- for GAAP purposes, be taxed and the net effect will be your after tax rate on that other income, or will there be still continued NOL offset, which drops the entire other income line from the forgiveness straight to the bottom line?

Well, the refund will end up as a tax pick up. It doesn't show up as other income. The forgiven is other income. I can't -- I'm not going to get -- we're still not having a great year, so I can't tell you exactly where we're going to end up tax wise. But that -- you're right, there is a tax effect. It's not a tax -- the refund -- the forgiveness is a taxable event. Having said that, we were able to -- let me back up. So forgiveness is not a taxable event. There was talk that the expenses that were going to be associated with calculating the refund, we're going to be not tax deductible, that obviously -- well, not obviously, but that changed. So those were tax deductible. So at the end of the day, it's not -- it's a nontaxable gain. Now I'm -- don't quote, I mean, exactly how we're going to handle that with respect to deferred taxes and all that, but we will get whatever the -- it's a $2.9 million loan and hopefully forgiveness, and that's how much we're going to end up with.

Yes. So it's almost $1 a share that drops to the bottom line, even less.

Yes.

We can -- we don't know because we could be wrong. We could be -- I wouldn't be counting that. It's that we don't have a crystal ball. This is out of our control. We may get $2 million. We don't know, we just don't know if we're going to get it.

If we had payroll expenses, there's certainly a calculation on increased payroll, reduced payroll, yada, yada, yada, all the things. Now when you applied for forgiveness, though, you did -- you've submitted a request for and support for and a forgiveness of the entire loan?

We did everything that was required, and we can't -- Also in the question so we get more scare, it's out of our control. it really is.

No, my question was like when you apply for your forgiveness, you apply for a certain amount based on what you ended up doing in terms of payroll and everything else. In your application for forgiveness, did you apply for forgiveness of the entire amount?

I don't think that's something that we could discuss. But what we have talked about, we're hoping to get. I don't want to be elusive about it, but we can't get into specific statements with all this not to get into any more specifics about -- when it comes up, we'll let you -- you will be like everybody else, exactly wht it is. And we're very hopeful that it's going to be a very sizable part of the number, but we can't guarantee that.

All right, whatever. I don't understand why you think it could be so difficult.

So Andrew, I can't give any more answer than what we can control.

Okay. Now in the -- in our attempt, because it's not easy, you don't break out the fourth quarter. In our attempt to determining the fourth quarter for your divisions by taking a full fiscal year and taking out the 9-month's 10-Q numbers, which we do have because we don't even have the 10-K, it looks like Hy-Tech had a negative gross margin for the fourth quarter. And I wanted to get a feel for, if you can, as to how much of that number -- or how much of Q4's gross -- on the cost of goods sold is a noncash item, and to determine and understand whether Hy-Tech on a gross profit/gross loss basis, whether it was losing money during the fourth quarter, from just the production and sales of its products?

It's a little complicated. I understand the answer, but Joe, why don't you explain it better, if you can?

I -- to my knowledge, the margin generated in Q4 is substantially related to operations. I don't have it in front of me. But since there could -- there's certainly -- there are always adjustments we make the inventory and the valuations and the reserves. So I'm sure there's plenty of that in there. But it's really it's an issue of the lack of sales and the lack of overhead absorption, that's the primary thing that's going on in Q4.

Right. So overhead absorption really is a noncash item when it comes to gross profit. Clearly, it's a cost item that you're trying to amortize over. But the products are certainly not the -- the products aren't going out the door at some kind of loss to cost of production other than the overhead absorption. Is that right?

Yes, we're not -- there's no fire sales on product to get -- to generate revenue. That's not what's happening here.

Okay. And there was no notable inventory warranty or other kinds of noncash reserves that also impacted cost of goods sold versus prior quarters?

No significant warranty issues, no.

Yes. Your inventory reserve issues relative to prior quarters, I know you do it every quarter, you have stuff, but.

I don't recall specifically what the inventory reserve adjustments from the quarter. I mean, sometimes those are cleaned up every -- at the end of every quarter. So again, the headline is lack of sales and lack of absorption.

Okay. And in terms of lack of sales, again, backing out -- doing our best here, backing out and trying to create fourth quarter so we can compare it to third quarter, it looks like sequentially from September quarter to the December quarter, there was a meaningful reduction in the revenue streams generated from the Power Transmission Group subsector. Can you clarify and discuss a little bit what that's attributable to?

Well, in general, Andrew, Q4, in a several of our sectors, is always worse, it just is. Hy-Tech and investments in Aerospace.

So it's a seasonal issue?

Yes. and, well, on the Florida Pneumatic side, Aerospace, those guys shut down for a couple of weeks, so that's to be expected. On the Hy-Tech side, it is quite common that Q4 is our worst quarter, even in a good year. So I don't know how many -- I don't know that I would draw or conclude a lot of conclusions from Q3 to Q4 revenue change.

Yes. And then Power Transmission Group, which is a new group, there is no prior year comparables for us to see the seasonality swing. All we could see was that last September quarter, the third quarter, you did about $1 million in revenue attributable to PTG. And this quarter, again, reverse engineering year-end, full year minus 9 months, it looks like you did about $550,000 and so that was a sizable drop, but I don't have the prior year to go by. But -- so you're saying that in the Power Transmission Group, we should expect to see going forward is a headwind in every Q4 versus Q3.

Yes. I would say, in general, unless we're able to secure a fair amount of growth to get out in front of that, and we're doing our best to grow it. But yes, that is true.

Right. Okay. Now you did say that Aerospace similarly has that now. Again, I don't have your break out where you provided fourth quarter, I'm doing year annual numbers minus -- not numbers. In the September quarter, you did about $1.3 million in aerospace sector sales inside of Florida Pneumatic, but it looks like you did about $2.3 million or an increase of about $1 million in December in terms of reported revenue in Aerospace. So was there anything in particular that you attribute that to, especially since you feel that fourth quarter is a headwind seasonal quarter for Aerospace normally?

I would say it's not attributable to anything, assuming your math is correct, which I haven't checked. But there was no discernible improvement in our expectations between Q3 and Q4 in Aerospace.

Yes. I mean, yes, [indiscernible] it was down year-over-year, no doubt, but it was -- just sequentially, it was up fairly substantial.

I don't think -- with all due respect, I don't think your numbers are correct, Andrew. We'll check it out, and then we'll somehow get the answer to you. But I don't think that's correct at all, but we'll get back.

Okay. Now Industrial/catalog similarly dropped in the fourth quarter versus the September quarter. And historically, that has not seen a sequential seasonality decline from my multiple years of that subsector when you break things out. Was there anything in particular that impacted the industrial/catalog for Florida Pneumatic for the fourth quarter?

It's the ups and downs in the market with COVID and everything else that goes with it. That's all it is.

Things are very, very spotty throughout the year. I don't -- I wouldn't attribute -- there's no systematic reason I can think of that Q4 was worse than Q3 other than, I think, as the fits and starts of being in the middle of this pandemic are going to generate some nonsensical sequential changes in revenue, it's all I can really tell you.

Right. That's correct. That's what I said earlier that there's no -- we're still in the midst of everything. The way this rolled out of the U.S., its not even close. And so you can have days and weeks of change dramatically, just like that. I mean, perfect example is the price of oil, went from $65 a barrel to $59 in a snap of a finger, 3 days. So I mean, it's just the stuff that just happens. And Washington decides they want to do something, it affects everything going down the line. So we [indiscernible]

A big spike in oil or a move in oil doesn't generally move the needle for you guys one way or another that quickly.

Well, if there's longevity to the higher price, our parts and tools will get more business, and we've seen some of that. But we can go that way also. But my point is, you cannot count on anything predictably like in the past how things are. There's just no way to predict what's going on in the world right now. So we look at it every day and talk about it every day. And as we see it is going to relate to it.

Right. And here we are, mid-March, we've had a decent amount of time when there has been a run-up in the NOL, and you mentioned that. Are you seeing increased order activity coming from the oil and gas sector ready as, well, whether it's as a result of the higher prices or things have just bottomed out, and they've lost and need to replace their tools. Are you seeing any increase in stabilization there?

Not stabilization, we've seen an increase, but not enough to really notice. Not genetically something for the overall company. But it's not a bigger part of the business, but we've seen an increase. But it's not life-changing by any means.

Yes.

Okay. And with respect to Home Depot, which has a large retail customer, and you're selling their product, direct consumer-facing and all that, that's generally been a lower-margin product or subsector for you versus, let's say, Aerospace inside of Florida Pneumatic. Seasonally, do you have feedback about how your new products that were introduced, I guess, now a year ago, how they fared in terms of sell-through and results to Home Depot here in their big fourth quarter, which, I think, is your bigger third quarter to know about their need for restocking and reorders, et cetera, for the coming year?

They're -- again, they're up and down as well, and they're unpredictable. And we're basically doing -- they've been better than the customers,, for the most part. So our prior year has been, say, essentially flat slightly up somewhere. Isn't that right, Joe?

Yes. I mean, the only thing that's doing reasonably well there are the spray guns. The other lines or the other SKUs are actually doing a little bit worse.

Okay. And has the spray gun increase offset the headwinds of the other SKUs?

It has. It has.

Yes. And probably, something out of left field, which just speaks to my point, in which I keep saying so you understand that's loss stays clean and to inexplicable reasons along the way to all customers.

Okay. All right. I think that may be the end of my questions, other than, again, to ask that your advisers should tell you -- I understand you don't have to break out the fourth quarter. But your advisers are telling you all these other companies don't break out their fourth quarter, is to perhaps revisit that and research that, and maybe this coming 2021's fourth quarter, you indeed help your shareholders analyze and be able to discern things. You're only a small company, and you're not going to -- this isn't a way to help attract the analysts coverage or attention and investor interest. So I'm not -- it's better to make things easier for your shareholders and prospective investors.

There are no questions in the queue.

Okay. Thank you all for your time today, and we look forward to speaking to you at our Q1 numbers, I believe, it's in May or June. We'll be in touch [indiscernible]. Thank you all, and have a good day.

And this concludes today's call. We thank you for your participation, and you may now disconnect.