P&F Industries, Inc.

P&F Industries, Inc.

$13
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NASDAQ Global Market
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Manufacturing - Tools & Accessories

P&F Industries, Inc. (PFIN) Q2 2021 Earnings Call Transcript

Published at 2021-08-13 15:57:13
Operator
Good day, and welcome to the P&F Industries Inc Q2 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Goodman, the company's General Counsel. Please go ahead.
Richard Goodman
Thank you, operator. Good morning, and welcome to P&F Industries Second Quarter 2021 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 related to the global outbreak of COVID-19 and other public health prices, 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 credit markets, the strength of the retail economy in the United States and abroad; risks associated with sourcing from overseas, implication delays, customer concentration, impairment of long-lived assets and goodwill, unforeseen inventory adjustments or changes in the 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 SEC, 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 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.
Richard Horowitz
Good morning. Thank you so much, and good morning, everybody. Thank you all for joining us this morning on our Q2 conference call. I hope you're all doing well under these incredibly continually difficult times. The vaccine rollout, which we all believe is helping control the severe disease is underway, and I hope those who have not yet received one, do so and your loved ones as well. And the delta variant doesn't affect us more than it is already. At P&F, we're still working hard to get past these harsh effects of this global pandemic. Several current and potential customers have yet still to open their doors to visitors. But we've seen a little cracks in the light with that. So hopefully, that will get better as time goes on. And finally, our thoughts and prayers are with all during this time and just all stay safe. I'd like to direct your attention to the company's press release that was released earlier today, which includes the company's June 30, 2021 balance sheet, statement of operations, cash flows, and discussions related to the company's 3 and 6 months fiscal 2021 results and how it compared to the same period last year. We believe this release should answer many of your questions. In order to make better use of everyone's time yet to be mindful of the purpose of this conference call, I would like to note the following 2 items, as usual. First, as we have done from several previous conference calls, and this has become our standard practice, we will move directly to a question-and-answer session and not restate what is already in this morning's press release. Secondly, please be aware that we only will be answering questions relating directly to the company's results of operations and financial condition. We must insist that you adhere to this procedure. Management will not be entertaining any questions that go beyond the scope of this call. And with that, we would be happy to answer any pertinent questions anybody may have at this time. Operator?
Operator
[Operator Instructions] Our first question comes from Andrew Shapiro with Lawndale Capital.
Andrew Shapiro
I have several questions. I'll ask a few and then back out into the queue to allow others in to ask their questions, but then come back to us, please. So for what part of the second quarter, if any, was the company able to conduct on-site visits with current or prospective customers? And additionally, since the end of the second quarter until currently, has the company been able to conduct further on-site visits to start helping work forward, for example, in your OEMs, consumer areas and, in particular, also in aerospace, where you have said on-site visits are pretty essential to move things forward.
Richard Horowitz
Yes. Well, Andrew, we can't give you an exact date when we visited people, but we were visiting some customers during the second quarter. And I would say nothing has really changed in that regard even as we speak, now a month into the -- month plus into the second -- into the third quarter. Actually, we're hearing rumbling. So it hasn't happened yet but we're hearing rumbling. So some of our customers closing down again in terms of visitation, not business, but visitation. When they come up and we can do it, we will do it. I mean, we're on constant touch with our customers all over the place telephonically. And where we can go, we do, specifically in Chicago, in our PTG area, we have been able to see some customers. And the PTG is -- but the PTG people -- customers are really not seeing us so much. The big thing is we're keeping our regular customers. That's not the issue. So new customers that we want to keep going and that we have not had much success with yet. Joe, I don't know if you want to add anything to that.
Joseph Molino
No, Richard, I would agree completely. And that not only goes for PTG and OEM and gears, but aerospace as well. Most of the aerospace companies are still either not taking visitors or the engineers who are the people you work with a great deal on new opportunities are just not in the building either. So it's certainly still hampering us. I don't know that it's improved a whole lot since the last conference call, to be honest.
Richard Horowitz
Yes. We did hear Andrew that both Boeing and a few of the other customers were going to start right around now. But now we hear there's being delays.
Andrew Shapiro
But internally, at P&F, you don't have any policies or procedures that are prohibiting your people to go out if the customers will take the meeting. Is that right?
Richard Horowitz
Absolutely correct.
Andrew Shapiro
Okay. And have you been able to make any headway at all in terms of visitation in Europe? Or is that completely shut down? It's worse than America.
Joseph Molino
I would agree. It's actually much worse.
Andrew Shapiro
And do you have an estimate. It was just started last quarter. But do you have an estimate of the percent of the P&F workforce presently vaccinated with the first shot or fully vaccinated? And have you initiated or considered initiating financial incentives or bonuses for employees who get vaccinated? Or even moved to the point that other larger companies have done on making mandates for vaccination?
Richard Horowitz
Yes. We did. We have offered in the past, even up to 2 months ago or something like that, incentives for people, and we didn't really get much. But right now, we're in the middle of gathering, actually, the account and our subs of who is not vaccinated at this point. At P&F corporate, everybody is vaccinated, but that's the tail wagging the dog. And we're in the middle of that right now. And I would say within the next couple of days, we'll have that totally in. And then we are exploring legally what we can and can not do, we’re dealing in different states, so different states may have different rules. But it's not a floor tent of our agenda please to do. We're considering all those options.
Andrew Shapiro
And Florida, in particular as state, has had a huge spike up. Have you experienced within the Florida pneumatic workforce there greater absenteeism and incidents of people getting COVID or it impacting your operations down there at all?
Richard Horowitz
As I said, we're in the middle of putting together the group of people now. We just really started focusing on it a couple of weeks ago. But I can tell you that we've been -- to my knowledge, we've been very lucky that we really have not had more than random cases of employees with COVID at this point.
Andrew Shapiro
And where do the operations stand with respect to supply chain disruptions? And have the intermittent shortages of inventory that you referred to in your press release, caused sales to be lost to another customer or simply deferred? And what are you doing to mitigate the effects and your estimate of the cost to do so?
Richard Horowitz
Yes. I'll let Joe go into more detail, but it's not a problem at P&F, it's a problem in this country. And I'm sure you read enough articles every day to know what's going on with freight and the cost of freight, the timeliness of freight. Even when freight comes into the ports here, they can be detained a week, 10 days, even 2 weeks after received before it comes out. And the cost to get them out is dramatically higher than it was even 6 months ago. And so getting product, obviously, from overseas is a tremendous challenge. But the short answer is that we do not believe that anything that we're short. We get it within a reasonable time, and we haven't lost any sales. We definitely have not lost any sales to any other customer. That's not even an issue because everybody is the same boat. But sometimes it's deferred. We double up or triple up 2 weeks later or 3 weeks later or whatever. Joe, do you want to give more color to that?
Joseph Molino
Yes. I mean, the areas where the disturbances and overseas receipts would be impacting mostly the Home Depot business, the Amazon business, the AIRCAT business. And in those cases, we're working through a couple of levels of distribution. So we're selling to people who are holding inventory, a great deal of inventory in many cases. So if we don't get the sale 1 week or one month, we'll get it to next month, and people are holding a few weeks' worth of inventory. So while our internal sales numbers are bouncing around a little bit, the ultimate customers are not really seeing any obstruction to our knowledge.
Andrew Shapiro
And are you seeing any improvement in this situation today as we speak versus what you saw, let's say, 3 months ago in the beginning of the second quarter?
Richard Horowitz
Absolutely not. I would say worse at this point. We're handling it. We're dealing with it. We're okay, but it is worse than it was. It's more challenging. How is that?
Andrew Shapiro
Have you been forced to reduce any CapEx plans or step back your focus on new products, or as a result of the issue?
Richard Horowitz
No. Joe can attest to it also, but we're in a very strong cash flow position. So that is not an issue but Joe, you can add on, if you want to add?
Joseph Molino
Yes. I mean, we have tremendous access to capital and plenty of availability, and we have no impact on our ability to finance anything as a result of those shortages.
Andrew Shapiro
Right. And with respect to new products and then I'll back out, can you provide an update and some more color on your development of cordless models and the types of nonautomotive applications for which our company is developing cordless models of its tools in each of Hy-Tech and Florida Pneumatic, which you referred to on the last conference call.
Richard Horowitz
Joe, I'll let you chime in. But Andrew, you can keep going. There's nobody else in the queue as of now. So you can keep going.
Joseph Molino
Andrew, development continues. On the Florida Pneumatics side, the cordless options are aerospace related. Unfortunately, we have been limited in what we can show people, even though we're moving along on those development programs. On the Hy-Tech side, the development process is a little more complicated, and it's taking a little longer than we had thought as we've had some test units. We've sent to some select customers for testing, and we continue to evaluate and modify our offering there. So they continue, but we don't -- we have not seen any revenue impact yet because we're not really finished with development in the Hy-Tech case. And in the Florida case, unfortunately, as we said, we're having difficulty getting those meetings to share those tools. They will happen, but not as much progress as we'd like in the last 3 months.
Andrew Shapiro
Now, it sounds like these efforts are being done separately in each location. How do you process the sharing of the intellectual knowledge?
Joseph Molino
How do we process?
Andrew Shapiro
How are you doing intellectual knowledge sharing, I guess, between the 2 locations? Only separate development efforts, like battery technology.
Joseph Molino
Where it makes sense, they share knowledge. Where it doesn't, they don't. As you know, we've got -- just an example, we've got some silencing technology that we purchased along with the AIRCAT acquisition years ago. And that information is shared readily among the engineers between the two operations, where it makes sense. And there really isn't any secrets that the technical people and the executives among the companies all know each other and speak regularly to each other. So I don't really get involved in that, but everybody is aware of the tech that we own. And if they feel there's a need, they don't even need to call me. They just call the other executive or the other technical person and the knowledge is freely shared. So there's no impediment to it. And there's no formal way of it being shared. It's just kind of an automatic. It's tribal knowledge within the company and shared that way.
Andrew Shapiro
And what's your perspective time range in which these products might be introduced for sale?
Richard Horowitz
Well, on the Florida side, they're partially introduced, and there's some additional refinement going on. I mean, I would say, in the next 6 months, I'd start to see some sales, I would expect from both ends.
Richard Horowitz
Right. I would agree. Andrew, there are some other people on the call now. So if you want to step off.
Andrew Shapiro
Great. I'll back out.
Richard Horowitz
Let me refresh my list, but please come back.
Operator
Our next question comes from Ken Fell with Fell Capital Management.
Ken Fell
In your release, you talked about on May 13, there was a ransomware attack at one of the company's subsidiaries. How long did that want for? And did you actually end up paying some ransom in relationship to that?
Richard Horowitz
Ken, I don't know what else to add to what was said already in the press release. We told you that -- we told everybody that in the press release, we incurred a $288,000 total expense relating to the attack. And the duration of it was less than two weeks. I'm going to get -- I would say 10 days, 2 weeks, something like that. And at this point, our Florida Pneumatics subsidiary where it occurred, everything is operational. There's no material impact on anything regarding revenue or gross margins at Florida with it. Unfortunately, the cost of it was a little under $300,000, but there's nothing more to add to that story.
Ken Fell
Okay. So I can take from that you didn't pay any ransom?
Richard Horowitz
I'm sorry, we're having trouble hearing you, Ken. I'm sorry.
Ken Fell
I can take from what you're just saying that you didn't pay any ransom in relationship to that?
Richard Horowitz
I didn't say that. I said we gave you all the information that we legally can do. I don't know what the difference is. It cost the company almost $300,000.
Ken Fell
I was just saying, almost $300,000 is -- I consider it pretty material to a company at the time.
Richard Horowitz
It most certainly is, but we're not the only ones doing that, having this problem. So it's unfortunate. But yes, of course, it was material. Yes.
Ken Fell
Why was there no 8-K issued telling us about the attack?
Richard Horowitz
Why there was what?
Ken Fell
Why there was no 8-K informing shareholders and other participants?
Joseph Molino
I can address that. The attack -- and Rich Goodman will jump in if I don't have the facts right. The attack happened within 24, 48 hours of the release of our first quarter Q. So we did include in the Q, I believe it was in subsequent events footnote that announcement. So given the timing and the fact that we were releasing in 48 hours, we chose to include it in the Q and not in a separate K -- 8-K. And Rich, do I have the facts right there?
Richard Goodman
Yes, the timing is right. Yes.
Ken Fell
I did not see it in the Q. I went back and looked at it, looking because I thought it was [Indiscernible].
Richard Goodman
It was both in the MD&A and in the assumption of [Indiscernible].
Ken Fell
I'll take a look at it that then. Appreciate that. Now, Richard, can you maybe talk about mergers and acquisitions? Are you guys actively looking at things to purchase?
Richard Horowitz
Absolutely. I would say that we always are looking, but we've intensified our search in the last 6 to 9 months, actually. And we're in the middle of looking for things all the time, nothing to report. And when there is, of course, we will let you and everybody else know. But absolutely, we're doing that pretty much every day.
Ken Fell
Richard, I'm interested in what you're seeing out there in regards to sellers' pricing expectations, are people still expecting a lot of money for maybe -- is it a good offer?
Richard Horowitz
There's always companies that are on the bad side of things and then maybe looking to sell to get out from under. And we've seen some of those. But we haven't noticed pricing changes in a good way for us at all. Actually, in some cases, it's gotten a little higher, what we've found.
Ken Fell
Got you. So the bit of
Richard Horowitz
There's not really so much standing in our way. If we feel there's a good company that would be a good fit for our company, we will -- we do, we will and we continue to pursue.
Ken Fell
Now, a couple of years ago, you guys purchased the Urba Gears, I believe it was 2 companies. Are you satisfied with the progress with their performance? And maybe even the integration that's going on?
Richard Horowitz
We're satisfied with their progress. Nothing earthshattering yet because we haven't been able to see new customers and all that. And the few that we do have, we knew have a very, very good batting average getting in those customers. But we expect when -- if things were more normal, we would have had a much better return. Still good. Still good, but not as good as it was. Joe, you want to add to that?
Joseph Molino
Yes. The only thing I'd add is we really were combining 3 businesses. We had our own Gear business, which existed to satisfy both needs internally as well as external. And we moved into a larger facility and then brought the 2 acquisitions in. So we really had to combine 3 businesses, which, while were related, not certainly identical. And as we discussed in last year's first, second, even third quarter Q, it took a while to get all that. But everything is fully integrated and running relatively smoothly. And as Richard said, the frustration now is we would have been farther along, if not for the pandemic because there were tremendous sale -- customer opportunities that we unfortunately, have not been able to fully exploit. But they're not going anywhere. They'll be there we can get out into the field.
Operator
Our next question comes from Henry Tupero.
Unidentified Analyst
Supplementing the discussion about the ransomware expenses. Does the company maintain any type of cybersecurity insurance?
Richard Horowitz
We do not have insurance for this.
Unidentified Analyst
My next question relates to in the second quarter, you mentioned compensation increased. And you said, including accrued performance-based performance bonuses, specific bonuses. What type of departments were their bonuses accrued for? Is it at an operating level? Is it executive management? What type of divisions were these bonuses recorded for?
Richard Horowitz
Joe, you can answer that question.
Joseph Molino
We accrue bonuses really across the board, given the results and results in relation to expectations. So it's throughout the company, but not necessarily everywhere. But to the extent there are results that exceed expectations, we make an accrual. If we're missing expectations, we don't. So I can't really give you a perfect answer to say we're -- if things are going well, you can anticipate there's some bonus being accrued, but I can't get any more specific than that.
Unidentified Analyst
So the second quarter had an operating loss of approximately $500,000 before the forgiveness income. So when you compute the performance bonus, is it based upon the operating income before the PPP or after this non-operational income?
Joseph Molino
The PPP is pulled out of every bonus accrual calculation. No one's getting a bonus because we got a PPP loan if that's your question.
Unidentified Analyst
That was my question. Thank you for your answers.
Operator
Our next question comes from Andrew Shapiro with Lawndale Capital.
Andrew Shapiro
A few follow-ups on the ransomware. You referred to remediation being complete with respect to, quote, all critical Florida Pneumatic information. Is there information still locked away from company control?
Richard Horowitz
No.
Andrew Shapiro
Okay. And is the $288,000 in SG&A, all of the costs that we -- such that we could hope this is a nonrecurring event? Or are there expenses occurred so far in this quarter and expected in the present quarter and in the future? For example, we're now going to pay for cybersecurity insurance going forward? Or there are other lingering costs that were involved in the disruption that third quarter has not been reported, but you have incurred already.
Richard Horowitz
I'll let Joe answer that, Andrew. But the short answer and the 40,000-foot answer is the only expenses that we will have going forward are the very regular operational expenses in terms of security, cyber, maintenance, and things like that, checking on a regular base, more updated, more effective controls and all that stuff. I don't think -- it's de minimis in terms of earnings in the company, if that's what you're asking. But Joe, you can add on to that.
Joseph Molino
As you can imagine with any events such as the attack we had, it gives you an opportunity to take stock of things everywhere and make sure the systems and security you've got in place is what you think you've got and what you need. So I would say that certainly, we've stepped things up a little bit in terms of taking a comprehensive look at things, but I would agree with Richard, that I don't see these costs going forward from anything we're doing as particularly material to the overall results.
Andrew Shapiro
So the May attack itself, the $288,000, that is the containment cost. And there's nothing you'd say that is being paid in July that we got another $50,000 hit?
Joseph Molino
No. I mean, could there be like a random bill or somewhere? Could be, but it couldn't be very much money. We think we -- that number should capture the vast majority of it, if not, all of it.
Andrew Shapiro
And then going into the segments here a little bit. On Hy-Tech, the OEM and PTG subsegments obviously, they had the gains from prior years, et cetera, but they were down sequentially from just last quarter. Could you give additional color on this to -- is it seasonality? Is there something else going on? Is the trend back up as we move out of the pandemic here?
Richard Horowitz
The company is doing dramatically better than it did last year. I'll let Joe give you more color, but yes Joe you can continue.
Joseph Molino
I mean, I think in terms of comparing to last year, we went into 2020 with a lot of backlog that we didn't have last year. We went into even beginning of 2021 with a nice backlog. And I think the combination of the market not coming back as fast as we'd like and the fact that we can't get everywhere has been a little bit of an issue. As well as, I think, the complexity of some of the things we're building in the second quarter, which utilized a fair amount of outside services as well has complicated our ability to get as much out the door as we'd like. So the orders have probably been a little stronger than maybe the sales are showing for Q2. But I think that the opportunities are still there, and we're optimistic that we're going to have some sequential growth here shortly.
Richard Horowitz
And the margins have kind of grown dramatically since last year.
Andrew Shapiro
With one month in, did some of those orders ship, and you already know that you're booking some of this revenue in here for the current Q3.
Joseph Molino
I'm not sure I understand your question.
Andrew Shapiro
You've talked about how the sales levels in Q2 did not really reflect the strength in the orders that have been booked in Q2 and that there are some complexity or third-party participation needed to complete the projects that basically carry the projects over. Is it carrying it over into Q4? Or is it just carrying over into a present quarter and you're seeing visibility on that be the stuff [Indiscernible]?
Joseph Molino
I would say it's carrying it over into late Q3 and into Q4. So while longer run, I feel good about it, but I think we're not -- we're still working through some of that stuff. Some of these things are pretty long lead-time.
Andrew Shapiro
And can you discuss your new products and experience so far in the new Hy-Tech products that have been introduced? I think you had several you referenced in the press release, but the press release doesn't necessarily give you a chance to provide more color on it as this call might. So can you expand?
Joseph Molino
Well, the big one that we're excited about that we had great results with in Q2 is our line of new impact wrenches that are designed to go after -- directly after Ingersoll-Rand and Chicago Pneumatic. And also, we believe, are incredibly well positioned for increased oil and gas activity, as well as hopefully some infrastructure work that we would hope would begin relatively soon after hopefully this bill gets passed. So we've had some nice success with that product line in Q2, probably, I would say, our biggest success since the introduction of the Magnum Impact products. So yes, we're very excited about that. So I mean, I would highlight that as one thing.
Andrew Shapiro
And in Florida Pneumatic, while the company's spray gun tools continued to enjoy year-over-year increases you've cited. Are these sales running at higher levels than last quarter, Q1? Or are they kind of leveling off?
Joseph Molino
Yes. I mean, I don't know that I can tell you that they've increased from Q1. They're certainly strong and stronger than maybe a year ago. Yes, I don't -- I can't speak to quarter -- sequential quarter growth in that other than to say they've still been very strong.
Andrew Shapiro
And were these new products you introduced, they were like sitting on the shelves or in the design, they were there, and they just obviously took off because of the pandemic demand for sanitization and such.
Richard Horowitz
Joe, go ahead.
Joseph Molino
These were not designed for a pandemic world. They were really designed for painting. But given their specific designs are easily converted or just flat out used for the spraying and disinfectant. So they were not specifically designed. Now, having said that, I don't know if the engineers have tweaked them a little bit to be a little bit more targeted towards disinfectant. We're tweaking those things all the time. And while I can't speak specifically, I wouldn't be surprised if we haven't made a few modifications to better suit them to that application.
Andrew Shapiro
And have you adapted your marketing and promotion to like step on the gas on this opportunity and to market and promote the product for this kind of?
Joseph Molino
Well, as we I think discussed, the only spray gun products we have, for the most part, are for Home Depot. And the marketing is up to them, not up to us. I don't know that we have -- and I could be wrong about this, but I don't know that we have a suite of spray guns for the industrial market outside of Home Depot.
Andrew Shapiro
Would it make any sense to slap a label on it like that and market it as such?
Joseph Molino
Well, we're not allowed to just slap a label on the Depot’s product that's theirs. I'm sure the engineers are working on something. I don't know. Those are very different channels of distribution. I don't know what our access is to those kinds of distribution channels for an industrial spray gun. But it's a good question.
Andrew Shapiro
The airlines would want it. The movie theaters. Airlines.
Joseph Molino
Those guys are already buying those through Home Depot. But that's a good question. I'm sure we're doing something. It's not really a market we're in or have been in, but we're looking at it.
Richard Horowitz
And by the way, we're almost going hand to mouth when it comes to spray guns. Whatever we have, basically, Home Depot is ordering that and more.
Andrew Shapiro
I'm assuming they're placing the spray gun now in the disinfecting aisle, not just in the paint aisle.
Richard Horowitz
I couldn't tell you but I'm sure you're right.
Joseph Molino
That would be a good guess.
Andrew Shapiro
Now have you also -- you've talked in the last quarter in particular, but in the past as well that you've seen channels -- the Amazon channel grow very nicely. And has that channel growth continued at Amazon?
Joseph Molino
Yes. We're very happy with Amazon growth and have expectations to do even better. It's been a real focus for us.
Andrew Shapiro
And have you seen channels other than Amazon exhibit increases yet? For example, the AIRCAT.
Joseph Molino
Just so we're clear, is this for AIRCAT you're talking about?
Andrew Shapiro
Well, I think you sell your products to other channels above and beyond Amazon. I don't know if it's catalog or
Joseph Molino
You mean for AIRCAT?
Andrew Shapiro
I guess, yes.
Joseph Molino
Yes, we have quite a few channels that we sell the AIRCAT product through. The AIRCAT -- Amazon is by far growing the best there, but the rest of the channel is doing reasonably well also. But it's the biggest growth is Amazon, sure.
Andrew Shapiro
In AIRCAT, you introduced some new products, too, and how are they going?
Joseph Molino
It's been a while since we've had a major introduction. I think we've had some minor introductions. The major change, which we made, is going back 1.5 years. Those products are well established in the channel and doing quite well. There have been some minor tweaks since then, but nothing significant.
Andrew Shapiro
I had some more questions.
Richard Horowitz
There's nobody else on the line so you can keep going.
Andrew Shapiro
I'll go. Can you quantify a bit the size and also the status of the tax refunds you had expected? Have they arrived? And what's the size or what do you expect to get in?
Richard Horowitz
Go ahead, Joe.
Joseph Molino
I know we're expecting one more. I think we've received the larger one but I don't think the one to come is material. I think we've gotten the largest one so far. But if one of my staff could remind me of that before Andrew gets off, I can give them a more specific answer. I do know one more is coming, but I cannot remember the magnitude of it.
Andrew Shapiro
And if you could ask your staff if the ones that came in, came in Q2 or if they came in, in July are going to be a Q3 thing?
Richard Horowitz
It's a Q2 thing.
Andrew Shapiro
On aerospace, the second quarter by some respects, was considered by many to be the trough of the pandemic, and it appears to be the case in many of your lines of business. But aerospace was down year-over-year. And I note that it was lower in Q3 last year from Q2 as well. Can you give some color on if a time lag in this sector exists? And that Q3 of last year, which was lower than Q2, is what you would consider the trough? Or is there just substantial lumpiness in larger orders that just influence things?
Richard Horowitz
I'll let Joe answer for the most part, but we really don't have a window into what's going on with our aerospace customers, for the most part. There has been a little bit of life, sporadically though. Nothing on a regular basis. But we've had some of our customers giving us pretty nice orders in the last month to 6 weeks. But it comes and goes. And it's just in general, a very depressed industry. As of now, Boeing. Boeing announced, I believe, that they're up to making, whether they're making 4 737s a month, now they're starting to ramp up to 14 a month. And just sort of a frame of reference. Before the pandemic hit and before the 737, the backhaul really hit, they were making 44 planes a month. So I wouldn't get excited with 14. So it's not a good situation there.
Joseph Molino
Let me just add this. We went into 2020 with a very, very large backlog in aerospace. And that backlog carried us obviously in Q1, well into Q2. And then as you know, everything shut down at the end of Q1. So Q3 was really the bottom in sales, not really the bottom in orders. The bottom in orders was really Q2. So yes, there was a lag there. And then we started to come out of it a little bit in the fourth quarter of last year, and that has slowly continued.
Richard Horowitz
Very slowly. In case you're going to ask the question, we didn't lose any business of any other vendor. It's just a matter of their own issues in that industry. We are still the event of choice.
Andrew Shapiro
On a previous call, you discussed how you have the full suite of all your tools that could serve aerospace or either Florida Pneumatic and Jiffy or Hy-Tech and Pneumatics, really ready to present to both Boeing and Airbus, once you're able to get into their facilities again. And you had an appointment, I think you even said that you had with Airbus and the pandemic, like, shut that off. Is that appointment for Airbus back on the calendar yet, whether it's a month or 2 from now or it's still to be calendared?
Richard Horowitz
No, it's not -- we have no indication of when we get into Airbus.
Andrew Shapiro
And in terms of Boeing, have you been able to go into any of the facilities or to engage in discussions about your new products that you kind of want to be able to put in front of them?
Richard Horowitz
Yes, sporadically. Very sporadically. Right, Joe?
Joseph Molino
We're allowed into Boeing, but unfortunately, it's just to deal with current product. As I said, the engineers and the teams that we normally speak to of engineering are not in the building. So there's no point in going to Boeing with a new tool. There's just nobody to show it to yet.
Andrew Shapiro
Yet. Okay. But you're ready now, where before it was like getting ready.
Joseph Molino
We have stuff we want to show them. We've got an Airbus tool we're excited about. We've got a Boeing tool that we're excited about. But again, we can't get in front of them [Indiscernible].
Andrew Shapiro
And has the military and defense side, the other aerospace side, you talked, I think, about another airframe or aircraft manufacturing then on the commercial side. Have you been making any headway in those or on defense and military? Are those on programs that are scaling down or scaling up?
Richard Horowitz
Joe?
Joseph Molino
There's no scaling down of anything in the military. I would say, military has probably been a little bit more consistent. Can you hear me now?
Andrew Shapiro
I can.
Joseph Molino
Hello?
Andrew Shapiro
I can hear you.
Richard Horowitz
He's saying that the military is doing slightly better than the regular commercial aerospace and that's correct.
Andrew Shapiro
Okay. And given the strong balance sheet and income in Q2 that didn't decrease much and the green shoots you're seeing, what's the -- has the Board already met for this quarter? Or when is it set to meet? Where you have represented you regularly discuss the reinstatement of the dividend. Now, with the TPP loan out of the way and a debt-free balance sheet and wanting to know kind of the status and your thoughts about getting that reinstated.
Richard Horowitz
Yes. We've talked about it. We have not met in the last -- since our annual meeting. Of course, we speak often, but we haven't had a formal meeting, and we have on schedule shortly. And that will be on the agenda as it is every quarter. And it depends, as you know, Andrew, I mean I don't have to tell you, you're aware of this as much as we are. It's a function of a lot of things, the financial condition, which is very good with us, results of our operations on our forecast and capital requirements, et cetera, et cetera. But as soon as there is anything to say on it, we will make an announcement. But I can tell you it is on the forefront. And we realize how important it is, though it's not a dramatic number over time, but we realize how important it is to reinstate it. And we want to reinstate it when the time is right for us. We will notify you and everybody else.
Andrew Shapiro
And I think that's it. Thank you for enhancing the space or the descriptions, et cetera, on the press release. The one final question, and I had asked before, if it might be included in the press release or if the company's policy might change, which would be to put the 10-Q out in advance of the call. What's the total share count that's going to be on that 10-Q cover there?
Richard Horowitz
Joe may have that.
Joseph Molino
I don't have that. While Rich looks that up--
Richard Horowitz
It's roughly 3.1 million but we'll get you an exact number. Just to answer your question about the taxes, we received about $300,000 refund in January. And we have not -- we're still working on the return for 2020, but very preliminarily, I would certainly expect another refund of some sort. I don't know what the government's timing on refunds is this year given the pandemic, but maybe in the fourth quarter, we received another refund. But I couldn't give you a number because we haven't finished returns, but I'm certainly expecting something in Q4.
Andrew Shapiro
And also for the Board meeting, is the possible reauthorization. That doesn't mean you would step into the market immediately, but is the possible reauthorization of your -- what was very nicely accretive and would be very nicely accretive now at current prices, stock repurchase plan part of the agenda as well?
Richard Horowitz
We always discuss it at our meeting, but I think right now -- I mean, I think we've got to walk before we run with everything. It's going to be a balancing act as to if we choose to buy stock or choose to do a dividend. I don't think at this point, we would do both. And I'm not sure we would do either one. But if we do one, it'll be one or the other. It won't be both. Not right now, I don't think.
Joseph Molino
Andrew, to answer your questions about the shares, it's 3,181,286. No change there in issuance really. Excellent. Thank you very much.
Richard Horowitz
Operator?
Operator
Thank you. There are no additional questions at this time.
Richard Horowitz
Okay. Thank you all for your time today on the call. And everybody, please stay safe and well, and we'll be back on our call for Q3 in a few months. Thank you, everybody, for your time.
Operator
Thank you, ladies and gentlemen, this concludes today's presentation. You may now disconnect.