Daniel Bernstein - President and Chief Executive Officer Lynn Hutkin - Manager of External Reporting Craig Brosious - Director of Finance.

Sean Hannan - Needham & Company. Hendi Susanto - Gabelli & Company Lenny Dunn - Mutual Trust Company of America.

Good day, everyone, and welcome to the Bel Fuse Inc. Corporated Second Quarter 2017 Results Conference Call. Just a reminder, today's conference is being recorded. I'll now turn the conference over to the Chief Executive Officer and President, Mr. Dan Bernstein. Dan, please go ahead..

Thank you, Debbie. Joining me on the call today will be Craig Brosious, our Vice President of Finance; and Lynn Hutkin, our Director of Financial Reporting. Before we begin the call, I'd like to ask Lynn to go over the Safe Harbor statement..

the market concerns facing our customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; difficulties associated with integrating recently acquired companies; capacity and supply constraints or difficulties; product development, commercialization or technological difficulties; the regulatory and trade environments; risks associated with foreign currencies; uncertainties associated with legal proceedings; the market's acceptance of the company's new products and competitive responses to those new products; and the risk factors detailed from time to time in the company's SEC reports.

In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will, in fact prove to be correct. We undertake no obligation to update or revise any forward-looking statements.

We also may discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our release. I would now like to turn the call back to Dan for a general business update..

Thank you, Lynn. Before going through the financials, I want to provide a brief update on how the business did from an operation standpoint this quarter and what we see going forward. For almost two years now, we have been challenged with year-over-year declines in sales, primarily within our acquired Power Solutions business.

The second quarter 2017 marked the end of that trend as consolidated sale levels were in line with the last year's second quarter.

This was the first step toward our goal of achieving organic sales growth on a long-term basis, and it was encouraging to see that, that increase in backlog and bill -- book-to-bill ratios in the first quarter followed through with a sizable increase in sales in the second quarter.

On the cost side, we were pleased with the margin expansion up to 260 basis points in the second quarter compared to last year. The restructuring efforts from prior periods and other cost saving measures have enabled us to have a higher contribution to the bottom line on sales volume.

In our Connectivity Solutions group with our Cinch business and sales growth of roughly 7% sequentially from the first quarter of this year based on strong sales in our military and industrial segments. We're encouraged by sales in the military segment based upon the sales both in Europe and U.S. across multiple defense programs.

The industrial segment, which has been soft in recent quarters started to rebound in the second quarter with the increased sales in agriculture and trucking applications. Sales into our catalogue distributors increased by $800,000 compared to the second quarter of 2016.

As previously mentioned, an increase in catalogue distribution sales typically translate in decreased broad line sales in later periods, and we saw some of this in the second quarter.

The growth in Cinch revenue was offset by lower sales revenue in our Stewart Connector business, with two of our major customers merged and in-sourced much of the product that we've been manufacturing for them.

Looking forward, we anticipate growth in the aerospace segment in the second half of 2017 as the bill rate of commercial aircraft is due to ramp up. We are generally optimistic going into the third quarter with positive book-to-bill ratios across multiple product areas and expect a healthy second half of the year for our Connectivity Solution group.

Sales in our Magnetic group increased by 7.4% from last year's second quarter and by 24% sequentially from the first quarter of 2017. The interaction of the new variants both among the ICM products and on to street [ph] magnetics had led to higher sales volume in 2017 for both of these products.

A new product introduction of one of our largest OEM customers, which utilized a wide variety of our ICMs, also contributed to the increase in second quarter sales. The second quarter of 2017 sales marked the highest quarterly sales for this group in two years.

For the Magnetic group, we expect the sales volume of the remaining quarter of 2017 to be fairly consistent with the second quarter level. Within our Power Solutions and Protection Group, our engineer teams have been busy on product development side launching products and support Open Compute and core initiatives.

We also have a large project within eMobility space in the second quarter, an added application that is scheduled for production in 2018.

Our Bel Power group in Italy more than doubled their -- our Bel Power group in Europe based in Italy, more than doubled their sales in the second quarter of 2017 compared to the period last year resulting an increase of $1.1 million in AC to DC product sales.

Circuit protection products have also revved up in 2017 as new products have been introduced in the marketplace. From a profitability standpoint, we continue to monitor the Power Solutions business, which we acquired in 2014.

We are currently assessing the cost structure of that business and anticipate it and implementing certain actions to better align this course with the expected level of revenue in order to improve its contribution to our consolidated results.

Overall, our primary focus will continue to be on the top line growth while also keeping a close eye on profitability level of the Power Solution business. As with that, I turn the call over to Craig to run through the financial updates..

Thanks, Dan. Starting with sales. Our second quarter net sales were $131.6 million, the same level as the second quarter of 2016. On a product basis, sales of our Connectivity Solutions products were $43.8 million in the second quarter of 2017, a decrease of 2.4% as compared with the second quarter of 2016.

Sales of our Power Solution and Protection products were $44.3 million in the second quarter of 2017, a decrease of 4.2% as compared with the second quarter of 2016. Sales of our Magnetics Solutions products were $43.5 million in the second quarter of 2017, an increase of 7.4% as compared with the second quarter of 2016.

On a regional basis, sales in Asia increased $2.3 million or 5.4% in the second quarter of 2017 compared with the same quarter of last year. Sales in Europe were up slightly by $92,000 or 0.4%, and sales in North America were lower by $2.4 million or 3.6%.

Gross profit margin increased to 22.1% in the second quarter of 2017 as compared with 19.5% in the second quarter of 2016 due to several factors. The shift in product mix towards higher margin connected to our magnetic products have favorable impact on our margins during the second quarter of 2017.

Operational enhancements and cost reduction activities we completed in 2016 also contributed to our margin expansion as did lower incentive comp in 2017 compared to the second quarter of 2016. Our selling, general and administrative expenses were $21.9 million or 16.6% of sales as compared with $18 million or 13.6% in the second quarter of 2016.

The second quarter of 2017 was higher than our anticipated run rate due to $1.6 million in foreign currency losses during the quarter. The ERP system implementation costs, which we discussed last quarter, amounted to $600,000 in the second quarter of 2017.

The second quarter of 2016 was lower than usual due to a $2.4 million reversal of certain value added business tax items recorded in connection with the acquisition of the Power Solutions business. We also reported foreign currency gains with $900,000 during the second quarter of 2016.

Excluding the effects of these factors in each period, our SG&A expense was down year-over-year, largely due to lower incentive compensation in 2017 and cost savings from prior restructuring efforts.

On a go-forward basis, we would expect SG&A to run between $20 million and $21 million per quarter in the near term, barring any significant fluctuations in foreign currencies. As a result of these factors, we generated income from operations of $7 million in the second quarter of 2017 as compared to $10 million in the second quarter of 2016.

Income from operations in the second quarter of 2016 included a $2.6 million reduction to our goodwill impairment charge, which had a favorable effect on last year's operating income.

Interest expense was $1.6 million in the second quarter of 2017, slightly higher than the same period last year as there was an acceleration of deferred financing cost amortization in the second quarter of 2017, in connection with the $10 million voluntary debt pay down.

Our effective tax rate for the second quarter of 2017 was a provision of 42.4% compared to a benefit of 163.5% during last year's second quarter. The tax provision in the second quarter of 2017 included $2.3 million of tax expense related to a legal entity restructuring.

The tax benefit in the second quarter of 2016 included a net benefit related to the resolution of certain liabilities for uncertain tax positions of $10.4 million as well as a $2.3 million tax benefit related to the finalization of our goodwill impairment during the second quarter of 2016.

Earnings per share for Class A common shares was $0.24 per share in the second quarter of 2017 as compared with $1.83 per share in the second quarter of 2016. Earnings per share for the Class B common shares was $0.26 per share in the second quarter of 2017 as compared with $1.93 per share in the second quarter of 2016.

On a non-GAAP basis which excludes certain unusual and other nonrecurring items, EPS for Class A shares was $0.48 per share in the second quarter of 2017 as compared with $0.43 per share in the second quarter of 2016.

On a non-GAAP basis, EPS for Class B shares was $0.61 per share in the second quarter of 2017 as compared with $0.46 per share in the second quarter of 2016. And now I'd like to go through some balance sheet and cash flow items.

Our cash and cash equivalents balance at June 30, 2017, was $58.9 million, a decrease of $14.7 million from December 31, 2016. During the quarter, we've made net payments of $11.4 million towards our outstanding debt balance.

We also used cash for capital expenditures of $2.2 million, dividend payments of $1.6 million and interest payments of $2.3 million. Accounts receivable was $89.2 million at June 30, 2017 as compared with $74.4 million at December 31, 2016. Day sales outstanding increased to 62 days at June 30, 2017.

The increase in accounts receivable balance was largely due to the higher sales volume in the second quarter of 2017 as compared to the fourth quarter of 2016. The increase in DSO was primarily a function of lower sales in April and a ramp up in sales in May and June. As a result, we do expect this heightened level of DSO to be temporary.

Inventories were $103 million at June 30, 2017, up $4.1 million from December 31, 2016. The increase was seen mostly in work in progress and finished goods to accommodate the increase in bookings during the first half of 2017.

Accounts payable was $48.8 million at June 30, 2017, up $1.6 million from December 31, 2016, due to higher purchasing volume of raw materials in the second quarter of 2017. Sales outstanding debt as of June 30, 2017 was $132.4 million excluding deferred financing costs. This represents a net decrease of $11.4 million from our year-end debt level.

Book value per share, which is calculated as stockholder's equity divided by our combined A and B classes of common stock outstanding was $14.08 per share at June 30, 2017, up from $13.17 per share at December 31, 2016. And now I'd like to turn the call back over to Dan and open it up for questions..

Thank you, Craig.

Debbie, can we open up the call for questions, please?.

[Operator Instructions] We'll take our first question today from Sean Hannan with Needham & Company..

Yeah, thanks good morning.

Can you folks hear me?.

Yes, no problem Sean..

Okay, great. Well nice work on the quarter. So a number of questions here. Some of this I may have potentially missed in your prepared remarks.

Did you cite a book-to-bill for the quarter?.

We did not cite a book-to-bill. It is still positive, Sean, in the second quarter, from a [Indiscernible]..

Okay. All right. Very good.

And then so when you look at the business that you had flow through within June, when did you start to see the uptick in the quarter? How are business levels then now continuing now into the -- or through the first four weeks of this September quarter? Just trying to get a sense of the cadence of how some of this has come through.

Because if I remember correctly, entering June, there was kind of a flattish environment for you folks. So again, just trying to understand, how this uptick has materialized and the cadence of that at this point..

I think in the month of June, I think we had a very strong -- from the Power group, Power Solution group. I think they came in with pretty strong sales for the month and the prior two months, they were very soft.

We're hoping that they can maintain their current sales rate, which is running around 32%, 34%, it got to a substantially lower point than that. But I think that's what really kind of helped us out a lot..

Okay. And then, so each one of your segments had some sequential growth.

So just trying to understand is, at least based on the business that you're seeing to date in the September quarter, would you suspect that these segments should, once again demonstrate some sequential growth? Or what perhaps might be moving around with some of the demand flow that you're seeing today?.

I think we see things -- hopefully, our goal again, is to keep it -- we can keep it around this level a little higher, we'll be happy until we really can turn around Power. We don't see any negative sides.

The only problem we do have, again, is with Bel Power Solutions, they have a major customer that we've been on hold for a long time until they get comfortable with our quality level again. And that could go from $2 million a quarter up to $6 million a quarter. So that's a pretty big jump for the Power Solutions.

But everything else seems pretty consistent that we hear out in the field. We don't -- we haven't seen any substantial negative feedback out there.

The only concern that we do have is we know there's a substantially longer lead time for components like semiconductors, capacitors, and we are seeing that some customers have pushed back some orders because they can't get other materials in on time..

Okay. That's very helpful. And you folks certainly have expanded your approach in terms of go-to-market this year with some of your distribution agreements. I think you had called out within the release that you're seeing some positive benefits there.

What is Distribution up to now as a percentage of your revenues? And how do we see that influencing some of the business here going forward in '17?.

I think the key for us again, it runs, I think about 25% of our business in that range. But I think the key area that we are really very pleased with is the growth we're having at Digi-Key and Mouser.

And historically, in the old days when I first started basically, people would -- distribution sales would come into the office and you would -- you have -- and your engineers would deal with them, and that sort of products were sold basically. And from distribution doing the prototyping, sampling small run then we go into production.

Now with Digi-Key and Mouser, they are doing mostly all the demand creation out there for companies. So for example, if an engineer wants to build a boat, he's not going to call up the company, he just goes in Digi-Key and Mouser's website and order what he needs.

So even though like if you take a customer like Cisco, where we have three different rev companies, fixed to rev people calling on Cisco, and we get on the system of Cisco all the time through Digi-Key for some of our products. And at Digi-Key, I think we went from $2.5 million this quarter up to $4 million.

Digi-Key probably has over 600 suppliers, and we rank as a -- top 20 supplier to them. So again, and that's basically planning seeds throughout the world today, and a lot of their growth is coming from Europe and China. In addition to that, we've been doing a substantially greater job at Mouser.

Now hopefully, once he's -- once from there, it goes into Arrow and Avnet. Again, Arrow and Avnet has sales were kind of flat or down a little bit for the quarter. However, the activity we see at Arrow and Avnet are substantially greater than we ever saw before.

For example, at Avnet, we have two opportunities for 10 million fuses and another customer for three million fuses. And you would never think those opportunities would go through distribution but they are, and we're addressing those opportunities.

So again, we only see very positive results from both Arrow and Avnet, Mouser and Digi-Key and a lot more in our distribution network..

Okay. Very helpful. And then last question here for the moment is, what should we be thinking about taxes for 2017? That low effective tax rate actually drove about a $0.08 upside versus my prior number.

So -- and I realize this is geography driven but is the cadence of the business and mix similar so far? It sounds like it is that we would sustain this type of tax level or what should we be thinking about here?.

Yes, I think it's probably going to be fairly consistent. Our magnetics business is primarily Asia-based. So that tends to be our lowest tax rate area. So with the increase in revenue there, we'll have a tendency to keep our tax rate relatively low..

Okay. Thanks very much. I’ll hop back in the queue..

Hello..

Hey.

Can you hear me?.

Yes. We can hear you, sorry..

Okay. Hey, I just want to follow up, Dan, on the previous question about taxes because it's a big deal. We're modeling, just so let you know, a 20% tax rate going forward. I want to make sure I hear this correctly.

So you're telling us model around 5% for the rest of the year? Like basically, 4.7% that you put up in June? September, December should be about 5%.

It's that correct?.

It's probably more realistic if higher than that. We've got two areas of business that we're seeing decent -- have seen decent growth and that's the magnetics and the connectivity. Magnetics is, as I mentioned, primarily Asia-based. Connectivity is primarily North American based. So it will be a blended tax rate, probably higher than the 4% to 5%..

Right. And our -- to the extent that Power Solutions starts to grow, that is also more U.S-based. And also in Europe, and that would draw us the tax rate on average basis up higher.

The only other thing to take into account on the taxes is in the third quarter, there tends to be some seasonality when our FIN 48 expires each year, there's usually a batch that expires, that enabler through the -- that provision. So that will be disclosed in the Q..

Understood. Thank you. I know it's really hard to predict, so I appreciate your color. Hey, guys, gross margin then went up very, very nicely. I know you've been at it for, 1.5 years, just cutting costs. So finally, that leverage is coming through.

Should I think guys that as -- if revenue can stay here and from what it sounds like even get better, that at least, we stay here or rise up in the margin, in the upper margins as leverage kicks through?.

I think, again, we do have one more cost-cutting initiative for the balance of the year, I don't think that's going to cost us more than $0.5 million from our understanding. So we might see a slight improvement, I think again, a lot depends on where our sales are. But again, I would say, it should be consistent.

Right, Craig? Would you agree?.

Yes, I would probably tend to be at the 20%, 21%, 22%, I think. Going forward is probably fair..

Okay. Thank you for that color. And then, not just from you but from like a lot of the other companies we cover, we're hearing that defenses on basically, a multiyear start cycle -- start of a multiyear cycle. I know you mentioned in your commentary that defense had a really good uptake.

Is there any commentary that you could -- or color you could provide, gentlemen, on the sustainability of this business in terms of what you're seeing in orders?.

So you tell us what Donald Trump is going to do with the Korean, I'll give you an answer. So again, what's going on with the world today, I think, again, how people view military is substantially different than it was three years ago. So again, I think with the situation with Russia, the situation with Korea, what's happening with Brexit.

I think a lot of factors are coming into play now that make the military a lot more positive than it was four years ago, and I don't think we see that changing over the next two or three years..

Understood. And again, I'd reiterate that that's consistent with what we're hearing in from other companies. Well, Lynn, sorry to go on, but two more questions.

Just on OpEx trends, how we should think about OpEx for the remainder of the year?.

Yes. As we mentioned in our remarks here, we've had some impacts due to foreign exchange in the past quarters. If we exclude that, we think that $20 million to $22 million range of OpEx is probably where we're going to fall..

Understood. Thank you. And then you mentioned, Dan, that there are some actions to be done, some stuff you want to do in the Power group in terms of cost cuts.

Can you provide us some color to the extent that you can talk about it? Is it meaningful -- significantly meaningful? Or just what the intent this year?.

I think the intent is to realign it to the current sales it's at. And again, I think we're looking at probably a savings of probably $1.2 million or $1.5 million, depending on how things go..

Great. And then my last one question, comment, whatever you want to call it, I've seen a lot of companies do ERP implementations and have problems. Could you....

Really? We didn't know that. Are we petrified? No, not at all..

No, no. So congratulations if you've made a lot of headwind to it because I've seen these companies have issues and the last few months..

I think what -- there's no question that we are going to break out in a cold sweat the day before we implement it. But I think what's probably good for us is we're doing it in segments, we're not doing it all at once. So it starts with the Bel Power Solution Group first.

And then hopefully, once that's taken care of, it goes to another group and another group, so it's over a three-year process. So basically, it won't shut down the whole company as we see it other opportunities. And again, it's not SAP. Most of the things we hear bad is, people that try to change the SAP.

So yes, we are all deeply concerned about this and making sure that we don't hopefully have any hiccups..

Got it. That color is helpful. That it's going to be a rolling set up here. Appreciate it. That’s all I have. Thank you..

Craig, what do you want to add? I'm sorry..

No, I was just going to add that we don't have any unofficial deadline to your -- for that. If we're not ready by what our planned date is, we're not going to go. So we're not going to make a huge mistake just because of the time lines..

And can I -- if I can ask one more thing. I think my understanding is that in your current system, you're asked to pay royalty on your entire business, correct, which seems a little bit unfair.

It's that the big reason for moving?.

One of the -- yes, in one of the businesses, the fee structure is based on total company revenue..

Thanks guys. Thank you for the color..

Just on that note, do you understand? I think one of the key problems that we have is that we're using many differences systems for the acquisitions. So putting all our financial day-to-day data is very difficult, very time consuming, very expensive. So we're projecting, one pack of saving, frankly, once it's implemented..

Yes, that's kind of above. It's going to be a multimillion dollar savings, for sure. So yes, we're really excited about the project and what we can achieve from it. But again, it's a three-year project to get everybody on..

Got it, guys. Thank you..

[Operator Instructions]. We'll go next to Hendi Susanto with Gabelli & Company..

Good morning..

Yes, good morning.

How are you today?.

Dan, you mentioned about organic growth.

What will be the major growth drivers and opportunities for your organic growth?.

I think -- because that really is going to help us a lot. We do a -- Boeing is one of our largest customers and as it migrate from, I guess, 42 planes amount up to 52 planes, amount on the 737. We think that's a tremendous opportunity.

As we've been saying, but again, I've been saying this for two years, the real growth engine for Bel should be from the Bel Power solutions that we acquired. Again, we should've turned around a lot sooner than today. So for us, we look at data set of business as a great opportunity.

With people like Google, Amazon, Microsoft, we don't have anything going on with them there. But if we can hook just one of them, it could be anywhere from $20 million to $30 million. So we do think data centers are a great opportunity for us with Open Compute. And then we do a lot with our high efficient vehicles along with battery chargers.

We signed a contract with a company that's working on [Indiscernible] for appropriate valves. And they signed again as a PO for $2.8 million, and they gave us NRE for $200,000. So again, we're still seeing a lot of strength out there.

And again, overall, as military and aerospace grows, we will grow with that because we're pretty diversified in those areas..

Okay, yes.

And are there areas that you feel cautious going into the second half?.

I've always feel cautious. I never, not feel cautious. No, it's -- no, like -- we definitely live in a very uncertain world today..

Okay..

And I'm always very cautious on the political, that people -- as I said, people, I said, what do you think is going to happen with Bel? Or where do you think it's going to go? And I'd tell people, Well, you tell me what Donald Trump is going to do? You tell me what's going to happen with Brexit? Are you going to tell me what's going to happen with Korea, and I can very easily tell you what's going to happen with Bel.

And what's going to happen with interest rates. So again, I think we're well-positioned on a lot of different markets. I think one of the best things we have done over the past three years is really diversify the company from just networking for people like Cisco and HP and going with people like Facebook, Raytheon, Honeywell, Boeing.

So again, hitting so many different markets, so many large customers, I think has really made me sleep a lot better. So we're now attached to this one company and historically, we intended to be two or three companies would dominate us, and that's not the case any longer..

And then with regard to the organic growth target that you mentioned, may I verify whether that's your long-term aspiration or whether that's specific for the second half of 2017?.

That's actually the long term. We don't -- I don't think we're going to see more than 2% or 3% growth for the balance of this year..

Okay. That's helpful. And then, Dan, you also mentioned that you will monitor power business and a certain action to align cost, maybe pan on the South performance.

How long will you review and monitor power business before making the decision?.

Well, we made one decision, and that's going to be implemented over the next four to six weeks. And then we always monitor it every -- mostly every week to see how things are going..

Got it. Thank you..

We'll go next to Lenny Dunn with Mutual Trust Company of America..

Good morning and definitely improved quarter.

Still restructuring charges, do you think there'll be de minimis in the second half of the year, calendar year?.

Yes. Again, $500,000, I don't think has a much affect on earnings per share. So I don't think there would be anything, I doubt there would be anything over, again, around that $500,000 to $1 million range. Again, so it really shouldn't affect our bottom line growth..

Okay. It looks like finally, barring the various international events that you reiterated that we're headed in the right direction with everything.

Am I misreading?.

No, I think we're hitting on every stone that we have. But the only thing that we're not hitting on is the acquisition of Power-One, which is now Bel Power Solutions. And that group is the only thing that's kind of holding us back a little bit..

Okay. We go back about a year, they had kind of wrecked the reputation there for quality, and you've rehabilitated that, but you're still not seeing enough effect from what you've done? Or....

Yes, I think the problem is -- so for example, you just -- for a customer, we want to use like F5, who's a major customer of ours.

And when we're working on next-generation product, there's -- the people that deal with us since the acquisition, they like us and they approve of us, but guys that haven't dealt with us, they still have a bad taste because they're not dealing with us on a day-to-day basis.

And that's where we're getting -- kind of stumbled a little bit, saying, hey, when people say, Hey, why are you going back to this company? We had all these problems with it. And one management say, Hey, well, they're doing a really good job now. And the other management is saying, Hey, why take the risk? And that kind of hurt us a little bit.

And I think for most larger companies, what Bel Fuse is very strong at, like the Ciscos of the world, the HPs of the world. They were a lot more ready to accept Bel. And some of these companies like in F5, where Bel never had a relationship with them before the acquisition..

Well, you've got to do whatever it takes. You think you'll be....

That's what I tell my people all the time..

Okay. And then the last thing has to do with the A, B stock [ph], which I've kind of nudged you about for a few years here. And I know the Gabelli once that done too, but there was a recent story the last couple of days that these various index funds are no longer....

[Indiscernible]..

Yes..

Yes. So when I got him to speak and standing in front of us, we can make that decision at that time. Just so you know, regarding Mario Gabelli, just to clarify, I think his position is, if you have A shares, you have the ability to change your A shares into B shares. And I think that's what he's proposing, and not the other way around.

Just want to clarify that for you..

Yes. No, I understand that. But at that same time, it would certainly reduce the number of A shares, if you did that. And you were at one point, willing to flatten it out to make an acquisition that's....

No. I think that's -- to be true, there's no -- if we have an acquisition that it's required to do, we'll definitely do it. And like in any major acquisition we look at, and we have looked at major acquisitions, to basically double the size of Bel, we've always said that the A and B is not something to buy, and we still maintain that position today..

Yes. Well, I hate to see even new shares, unless the stock is trading with the three handles, instead a two handle. So I don't want to see stock for an acquisition at different prices. But hopefully, the execution as the year goes on, gets us to the three handle again where in the stock could be a reasonable currency..

And what price would you use the stock for an acquisition?.

Well, it would depend on the price of acquisition, but I think mid-30s would be -- I would definitely use it. And if the acquisition was really at the right price where it could be accretive to earnings and sales and you're confident of the acquisition, then maybe even 30, 31, but the 35 with that -- the caveats I just gave..

Okay. Most helpful. Thank you..

Ladies and gentlemen, that will conclude our question-and-answer session. Lenny, thank you for your questions. Dan, I'll turn it back to you for closing remarks..

Once again, we appreciate everybody being on the call today, and we look forward for better results next quarter, and thanks, again. Have a good day..

Ladies and gentlemen, thank you for your participation. This does conclude today's conference. You may now disconnect..