Art's-Way Manufacturing Co., Inc. (ARTW) Q3 2016 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Today is Thursday, October 6 and welcome to the Art's Way Manufacturing Quarterly Investor Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Your call leaders for today's call are Marc McConnell, Chairman of the Board of Directors of Art's Way Manufacturing; Carrie Gunnerson, CEO and President of Art's Way Manufacturing. I'll now turn the call over to Ms. Gunnerson. You may begin.

Thank you. I'm going to start by reading the forward-looking statement. You should note that some of the statements made during this call may be considered forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to our market position, strategies for growth and future results of operation. Forward-looking statements are inherently subject to risks and uncertainties such as competitive factors, difficulties and delays in development, manufacturing, marketing and sales of Art's Way products, general economic conditions, and other risks and uncertainties described in Art's Way's periodic reports on file with the Securities and Exchange Commission. Actual results may differ materially from anticipated results and Art's Way does not undertake to update its forward-looking statements. With that, Marc, will you go ahead and start the call.

Sure. I'd like to thank all of you for calling in and for your interest and for your investment. Obviously, you've had a chance to review the results that we released and there are a number of bright spots we'll be talking about as well as challenges that we're still working on in the industries that we're in, some are still difficult, we'll be talking about that, and I'll let Carrie go through the numbers and we look forward to talking more in detail about where we're going after the quarter. Thank you.

Thank you, Marc. We're going to start today by again talking about our corporate initiatives that we set forth at the beginning of the year. We have five corporate initiatives, the first one being profitability. It has been extremely difficult given the severe decrease in sales due to the overall ag economy. We continue to push sales and reduce inventory levels, looking for cost savings and reductions in all aspects of our businesses. We believe that we have taken the necessary steps to strengthen our businesses and to maximize profitability as the markets start to improve. Our second initiative is reduction in our gross inventory levels. Our goal is to reduce these levels by $2 million or 10%. As of the end of our third quarter, we have attained our goal and we have reduced our inventory by $2,124,000 or 11%. We do still have one sector that has not decreased its inventory level, but they have increased, and that's Art's Way International. Again, their primary product is the snow blowers and they are highly, highly cyclical, and we do typically start delivering our snow blowers in the fourth quarter. So we definitely have an opportunity to bring down our inventory level specifically at that segment in the fourth quarter. Our next initiative was reduction of debt. At November 30, our total bank borrowing was $9,908,000. We had bank borrowings on August 31, at the end of our third quarter, of $7,557,000. That was a reduction in our debt of $2,351,000 or 24% from our year-end. Our next corporate initiative is customer service. This was an area that we really wanted to tackle this year. In the past, we've maybe been a little bit more difficult to deal with in terms of our customer service and our response time. In order to improve this dramatically, we've added a customer service manager this year and we've had an intense focus on customer feedback and customer experience. We are working more closely with our dealers. Both Marc and I and our top level management teams are getting out to visit our dealers and hearing straight from the horse's mouth so to speak. We've also launched a customer loyalty program and a new dealer program in the third quarter as well as launching our traditional early order program for the fall. So, all of those programs are currently running. We've also invested in technology to provide the data and the metrics needed to measure the progress in this customer service area. We really had kind of an antiquated system in the past and now we are able to log the phone calls, do training on the phone calls, measure wait times and all of those types of things. And we're also surveying our dealers to get feedback from them regarding our customer service and overall quality of their dealings with us and in our products. The final corporate initiative that we had was business development, overall business development, specifically for Art's Way Scientific, but we've also been working on that for Art's Way Manufacturing as well. For Art's Way Scientific, we've been focusing on the food safety industry. That's becoming kind of a hot area as standards and requirements for food safety are increasing. And right along with that, we're looking at mobile labs. We have traditionally always offered modular labs and now we are also offering a mobile lab for whether it would be food safety or any other type of lab requirement. We've increased our stocking level on our ag buildings and we've also developed a relationship with a leasing company to offer leases, and we are now marketing our own brand of stall to go in our buildings and into traditional barns for calf care. I'm now going to be moving on to discussing our Agricultural Product lines. We've noted in previous calls that we anticipated the sales in the first and second quarter of 2016 to be down on a year on year comparison, but the demand in the second half of 2016 should be far more comparable to the second half of 2015, and that did correlate with our actual results. Our sales for the quarter were up 2% compared to last year's quarter, and year to date we were down 23% or $3,853,000. So last year in 2015, our first half of the year was really far more normal for us I guess and we really didn't see the severe decline in sales until the second half of 2015. So we really don't anticipate to have large decreases in sales now for the remainder of the year. Our largest decline came in our product offerings for the forage box line, our OEM silage blowers and our grinders. We'd also like to point out that this 23% decrease in sales year-to-date is very comparable to what other manufacturers are seeing out in our industry. Cat was off 22%, Titan is off 24%, AGCO is off 12%, and AGCO's numbers are a little bit better but they also include an acquisition this last summer for them. Our efficiency rates are improving in Armstrong. We have consolidated our overall footprint for the ag side. We closed the UHC facility and we moved manufacturing from West Union back to Armstrong, and we really struggled in the first half of the year with all of those moves and retraining our staff in Armstrong. So I'm very pleased that our efficiency rates have recovered now and we anticipate that to continue to be the case as we move forward. Our gross margins year-on-year decreased by 0.2% or 200 basis points due to large reductions in high-margin categories of our grinders and our service parts. Gross margins for the quarter were 19% compared to 18% in 2015. In both 2015 and 2016, we delivered self-propelled beet harvesters in the third quarter. These are high dollar items that we purchase overseas and bring into the U.S. and are resold. They are pass-through item for us with low margins. This pulls our total margin percentage down significantly. However, it does still add to our revenues and it does increase our overall operating [profitability] [ph]. Year-to-date our income on the ag side before tax is at $23,000, compared to a loss of $83,000 in 2015. This is an improvement of $106,000. We are pleased to announce in the third quarter that we have three new product offerings that we are now selling. We are now offering a commercial grade forage box. We've always been in the forage box industry but the markets are moving more and more to large units using commercial applications and we now have an offering for that and we're seeing a lot of excitement from our dealer base regarding this new forage box that will be ready for spring delivery and we are taking orders at this point. We also introduced a hammer blower and this really kind of combines two products that we already had, our hammermill and our silage blower, and any time that you can consolidate the activities that the farmers are doing, that's certainly viewed as a benefit and that product is also available for sale now. The third product that we introduced was a high dump cart, specifically for the beet fields. It has the proper row facing so that you're not running over the beet rows, which is important to the customers, and it has a pretty high capacity that they were looking for. We had two of those units out in the field prototyping. Both of those have been retailed and we are now taking orders for our fall programs and delivery into next year. Next I'm going to move on to Vessels. We did make a decision that we were going to discontinue the operations of our Vessels segment and we are in the process of shutting operations down there. Our last sold order should be completed and shipped by mid-October. We are currently working on liquidating our inventory and our fixed assets. We have engaged a realtor and we were working on either selling or leasing that facility in Dubuque. Dubuque is a pretty hot market for real estate, so we are pretty optimistic that we can have some relatively quick move on that facility. While this was a difficult decision for us to make, we believe that it was the right one for our organization as a whole. We are pleased that this segment will no longer be detracting from our core business or from our bottom line. Next I'm going to move on to Art's Way Scientific. Sales for Art's Way Scientific for the quarter are lower than last year at $910,000, compared to $1,103,000, a decrease of 17%. Year-to-date, our sales are still at an increased level, up from $2,162,000 to $3,102,000, or 43%. Sales of our ag buildings have increased in the last couple of years. The primary driver here is our calf care facilities. Traditionally calves have been housed outside as their respiratory systems were not able to handle the poor air quality in the barn, and we've been able to work on developing a barn that moves the air through there to create a barn that calves not only tolerate but they thrive in. This is a new market for us over the last couple of years and our buildings have now been tested and there's a lot of excitement and interest in that. This has also led to another new market for us. We've always sold the ag consignment buildings and research facilities and we are now moving into ag research buildings as well. This combines our animal housing with a very minimal research, minimal testing, minimal monitoring equipment and we're getting more and more interest in this area as well. Other new products, food safety continues to be an area of interest. I hit on this a little bit earlier in our corporate initiatives. This is a new area based off of new regulations and interest from the – requirements from the FDA. We've invested pretty heavily in this area over the last year. There is two major food safety shows. We attended both of those this year. And there is lots of interest, lots of leads in this area. And as this market is expanding for us, it's pointing us in the direction of not only modular but also mobile and we are now offering a mobile food safety option as well. Along with our ag buildings and our increased sales in the ag buildings, we have worked on a new design for calf stalls to really work on not only the end user's benefits with the calf stall in being able to care for the animals conveniently, but also to ensure the comfort of the animals. So we have this new stall that we are putting into our buildings and we're also showing that at our dairy shows that we go to. We're not only selling that into our barns but we're also selling that through a distribution network and those stalls can now be purchased to retrofit older buildings or be moved into site-built buildings. September was a strong month for us in terms of lead generation. We had 25 new leads in September and 21 of those leads were for ag facilities, four were for research ag facilities. We're very pleased with the level of leads, and we're also glad that the breakdown I guess at what it is, we know that we can take leads on the ag side to fulfill the orders in a short-term period in comparison to the research facilities that can take two months to go from lead generation to actual sale of orders. So we are optimistic about Scientific's outlook as we head to the fourth quarter and next year. Next I'm going to move on to Ohio Metal. Sales increased here from – sales increased by 6% from $500,000 to $530,000 for the quarter. Year-to-date, our sales are down 14% from $1,851,000 to $1,583,000. At this entity, we continue to focus our efforts on the specialty side with CBN and PCDs. We've increased our advertising and we're starting to see new customers testing our tools and they are starting to place small orders. A lot of the customers that we are going after are large customers and we are building a specialty tool for their specific application. So it does take a little time to really test those tools out so that they can gain assurances, so that they know that it's going to work for them in the long term, and we're now working on the commitments for those contracts going into 2017. We've also hired a new Director of Sales. His name is Travis Horton and he started with us on September 26. He is extremely well known in this industry and he has an extensive history, not only in sales in the U.S. but also in Mexico and South America. These are areas that we have not focused on in the past and these are areas that would lend themselves more to our standard products offering, the [stick] [ph] tools, and this is the area that's really been hurt by the decline in the oil industry. So this is an opportunity for us to increase sales in Mexico and South America and increase our customer base. Operating expenses at Ohio Metal are down 17% for both the quarter and year-to-date. So, we are working extremely hard here to bring them to profitability as well. In conclusion, while we continue to operate in difficult economic times in both ag and oil and gas, we are being extremely proactive. We are not just waiting for the markets to come to us, but we are going out there and trying to win over market share. We are looking to grow revenue with new product introductions and improve our profitability by reducing costs in our core businesses. We continued to strengthen our balance sheet over the last year by decreasing our inventories and bank borrowings. We have right-sized our manufacturing footprint, consolidating Universal Harvester and West Union into our Armstrong location. We are adding to our product offerings across all entities. And we are in the process of discontinuing business at Art's Way Vessels, freeing up resources to focus on our core business efforts. Our executive management team is stronger than it has ever been and we are successfully implementing key strategic changes. We are seeing the results of these initiatives in day to day operations and we are confident that as we move forward that this will lead to long-term profitability. And with that, Marc, I'll hand the call back over to you.

All right. Thank you, Carrie. I'd like to just build on what Carrie has said that emphasizing our focus on proactivity. We talk about this a lot and there's a lot of focus on positioning ourselves for strength going forward. We are making decisions looking further down the road to position ourselves well for particularly when the market is better and to earn a better position to gain business when it does come back. So a lot of this will be repetitive with what Carrie has said but our balance sheet is something we have been laser focused on and some of these things haven't happened as fast as we'd like, even though we have met our inventory reduction goal, we'd like to make further progress and reduce our debt that much further. The fact that we're selling the Vessels assets will be very impactful to that effort of improving the balance sheet. And ultimately we are looking at converting nonperforming assets into cash and thus eliminating debt, and I think that we can foresee not too distant future possibly getting to a point of having no debt, which I think for a company that is in businesses that are fairly cyclical and seasonal, that ultimately that makes you the most bulletproof, and I think that that would be a good place for us to be and we're working towards that. So, in the meantime, we really had a great emphasis on competing in the marketplace and doing a better job in a lot of respects, and we've talked about this on numerous calls and already today, but focusing on the customer experience is very important to us. It's a key part of how we see ourselves succeeding in the years ahead and this is the type of thing that may not have immediate benefit and cause immediate additional orders and things like that, but on a long-term basis, we are focusing on improving our reputation, what people think and expect from us and we think that will help us long-term. And similarly, the quality of our products, we need to seek to be the best in the industry, and historically we've had a great reputation for quality and I think it requires extra focus on that to maintain and even improve. So we talk about this a great deal. That's another key part of how we are going to succeed in the future, also timely deliveries and fulfilling our promises in every respect to the customer. Along these lines of becoming more competitive in the marketplace, for some products we've actually taken a look at our margins and seeing if our pricing has served us well, and in some cases it's been the case that we should probably be a bit more competitive and we'd benefit more from that. We have also improved our sales force. We are building our dealer network slowly. That doesn't happen as fast as we'd like. But overall, we are giving ourselves higher expectations in terms of who works for us and who is representing us selling our product. Carrie maybe touched on it a little bit, but developing new products is a significant part of how we think that we will succeed going forward and that is long-term but it's also near-term. We feel that 2017, we should see the benefit of fairly significant new products that we are bringing to market and we are very excited about that. Our sales force is very positive, our dealer network is very positive about the products that we are bringing out and the fact that we are doing it at a time that we are placing more emphasis than ever on the customer experience and quality. We think that all of this goes together towards us having much more successful near future as well. She talked about in Scientific, our product development is important and gaining the tools to market ourselves well has been a key decision this year that even though financially we've been under I guess you could say more strain than we were a couple of years ago, we're maintaining the long-term focus and making the investments to market ourselves well, to show well at the food safety shows and to really be an active player in this emerging market. We are being very proactive now that we see this good opportunity, particularly with food safety. And we are working with some corporate clients that while it hasn't impacting our financials yet, we've got some serious opportunities that we feel will be very impactful to us and they don't happen as fast as we want them to, but we are on track to see good meaningful activity before long. With Ohio Metal, Carrie mentioned that we built our sales team and we are increasing our product offering, but we're very focused on increasing our business in the precision side of the business as well as the standard side, and we really have some very good opportunities that could be very impactful to us in 2017 if they come to fruition, and we have high hopes that they will. It's been nice to see in the third quarter that Ohio Metal is up 6% versus last year. We've seen obviously a stabilizing effect and now we see some improvement after the earlier parts of the year being down. This is all good and I feel that the team at Ohio Metal is more enthused than ever. We built the team. We've got more sales effort than what they've probably ever had at this point, and new products and some real traction with some new customers. So, we expect that to be quite a contributing force here before long. So we are very, very happy about that. Overall, it's very important for us, and this is back to the balance sheet conversation, but it's very imported for us to stay in a position of strength by managing our costs and our balance sheet, and we view this as a strategic advantage. To have a strong balance sheet is a strategic advantage for us that allows us to continue to make long-term decisions and to continue to be opportunistic, and it's kind of been what's allowed us to succeed at points in the past and we've very focused on not allowing ourselves to get into positions of vulnerability. It's also allowed us to hire and retain the best talent we can even during slow demand periods like we've experienced. Knock on wood, we have not suffered from a loss of talent in key areas during this time. We've in fact built the bench strength and key members of the team during that time and all that I think positions us very well to see an improvement in the business here in the near term but also to really be in an excellent position to be very profitable, particularly when the ag market improves, and we hope that we could be quite profitable even before then by virtue of our new products that are coming out which historically that could give us better activity than what the norm would be. So going forward, we realize we are still in a period of headwinds here in ag in particular, but we continue our progress on these key initiatives that we've been talking about and proactively dealing with the issues that may be problems or opportunities in the future. We are trying to look further out and take action sooner and we feel that that will benefit us greatly. Our September, we don't know the results yet, it's too early in the month, but actually September was a little better than we expected in many respects, but particularly in the ag business with dealers not carrying much inventory, and we're also not having strong backlog to give us the visibility of what our upcoming business will be, we've been having to react more quickly to needs by our customers because they are not carrying inventory. We can't exactly know how our revenue is going to be the next couple of months. Activity has been fairly steady but not overwhelmingly robust. But we feel like we could have a fairly decent rest of the year but we actually, it would be too much to guess exactly how we would do for the rest of the year just because of what the circumstances are in the industry right now. So we have cautious optimism at this point, but I think that our new products should cause some activity. Whether it's in the last couple of months of this year or it carries over into the beginning of next year, we don't know. But we do know that the market overall is going to take a while to recover. And I mentioned that in the comments that I gave in our earnings release, we are prepared for the recovery in ag business to take a while, and fortunately we are in a fairly strong position balance sheet-wise and an ever-improving situation in that regard and we feel like we'll be able to weather the storm and prosper as we continue to improve our business and convert non-performing assets to cash and reduce debt and all of these things that we've been talking about. So overall, we see a lot of bright spots to see – actually our ag business is up in the third quarter, it's great to see P&L improving versus last year as we get later in the year. That is good. The bleeding from Art's Way Vessels soon coming to an end and converting those assets to cash, that's great and that helps us dedicate the resources towards the more or I guess the better parts of the business that have more future. To have Ohio Metal improving and soon to be contributing I think a great deal more, and not losing the key talent that we've developed along the way and in fact building on it and having the ability to develop new product to bring to market and improve efficiencies, all these things are very important, particularly at a time when we are shifting our culture to being more customer focused. I believe that all these things really position us very well to succeed in the not too distant future and to be a lot more profitable. I know we feel like we've been improving our business every day and I feel like everyone within the Company can feel that, and unfortunately the market doesn't provide the revenue to really make it show just yet, but we are certainly making a great deal of progress and we're very enthused and excited about how things could be here before long, but we don't know how long it will be before demand really changes and a lot does depend on that. So with that, I'll open it up to questions and welcome anything you'd like to ask.

[Operator Instructions] Our first question comes from Roger Miller. Please state your question.

That was quick. I missed the last conference call and unfortunately I had other demands that exceeded, which is hard to believe but it happened. First I want to talk about Scientific. You're proceeding along and this quarter business was down 17%, is that right?

It was down. Is that the percent, Carrie?

I believe that's correct.

Yes.

And for the year?

For the year, it's up 43%.

Yes.

And do you have any vision going forward, where you see it going into for the final year-end or is it too soon?

It's kind of hard to predict. They do have some backlog and I feel like we have a good bit of work through – our quarter end is November 30. I don't think we have backlog that goes that far, but nearly that far and I know that we're at the World Dairy Expo which historically causes a fair bit of business for us on ag buildings, and particularly this year being there with the new stalls, that should catch some attention. We feel like that's kind of a well-timed show for us and we should be adding to our backlog after this week's show. So they've been fairly steady and busy, but as for the shortfall in the third quarter here, I guess we didn't perform enough work. We never purely ran out of work, but we didn't wrap-up enough of it to bill.

These stalls that you have, you completely redesigned them, is that correct?

We, I guess you could say, co-designed them with somebody that's already specifically in the stall business.

And are you manufacturing them or they manufacturing them, you are buying them?

We will buy them.

And it's profitable to do that?

Yes.

Are these things unique or other companies may have them?

This particular design we feel is pretty unique.

So Scientific is moving more and more into food safety, correct?

We are aiming in that direction, yes.

And how is the competition there at the moment do you feel?

Much of our intent has been to be early in food safety as far as our industry is concerned, and we have been. I don't believe that our primary competitor is there yet, but they probably will be at some point, but we certainly want to have a bit of a head-start. And early on, we were fairly quiet about the food safety business because of that, but as we got into shows that we wanted to do to present that, as we did this year, it was not going to be something that could be a secret really any longer. So they don't appear to be there yet but we guess at some point they may be.

I know we talked on conference calls about food safety in the past.

Yes, we have.

And when I think about food safety, the first thing I think about other than who's in food safety is China, and China has purchased American companies in the U.S., specifically in pork, and now they have opened up a new office in Des Moines, Iowa for seed and biotech. Are you aware of that? It just opened this week. That's Origin Agritech.

I hadn't read that this week, no.

The symbol is SEED and I'm wondering if you could do any business with them in some cross-venture, which would lead you ultimately into China, which you probably have no plans at the moment, but with this office right in Iowa, in Des Moines, I would think you could go welcome on them and see what they are doing. Obviously, they are here to sell and they recently sold part of their business for $60 million. They have debt of $44 million. So they have money to spend.

We should look into that, yes.

That's something new as far as I know for the Chinese to be moving into this country and they must be looking for product and for sales. And then you mentioned going into South America with the sales rep that have experience there.

Are you talking about when we referred to Ohio Metal?

Right. So have you thought about taking Ohio Metal, and this would cost money obviously, which is maybe a difficult thing right now, and merging it with another company that was similar to them? Have you looked into any of that?

We've looked into it.

Because I know some of these companies are doing extremely well, that are manufacturing in the automobile industry, and they are listed on the stock market and they are extremely low P/Es at the moment.

Is there someone specific you are referring to?

I do have someone specific but I'm going to probably have to get back with you as the exact name of the company. I was looking at it this week and I was shocked to see how well they were doing. So I can get back with you on that. If you want me to, I can e-mail. Who would you suggest?

Carrie, is your e-mail on the Web-site?

Yes, my e-mail is on the Web-site, and if you look I think on the earnings release, that typically will have our Investor Relations e-mail on that and that will come to me as well.

Okay. I'd want to e-mail you and we'll leave it at that. Going forward, obviously the most important thing is to become profitable in all the divisions. So, for next year, what are your plans for profitability other than what you've mentioned? Is there anything that stands out that you think you can extract more profit out of including Scientific, which I know that's a very competitive business, but at one point the competition was real strong there?

Yes, it has been strong particularly in certain areas. In food safety, it's early. So I don't see competition being an obstacle right now. It's a matter of getting the early adopters because modular is sort of a new concept to that business. But overall, I mean there are a lot of moving parts of course, but having Vessels not drag anymore is the key part of the equation. Having new products for the ag business historically has been something that causes sales to happen. That's good. Our whole beet industry offering is something that we're making more competitive. That should increase business there we feel. Scientific, we expect a lot of the food safety stuff to come to fruition during 2017, and the shows that we've talked about were only here recently. I mean they were like May and August. It's been this year that that industry really got to see what we have, and so we've been following leads and there is a ton of interest and it needs some time, and I think 2017 is when you see more of that convert to business. And in the meantime, we've made the leasing part of our offering which should help ease that I think. And Ohio Metal, we've talked about seeing the improvement there and now just increasing our sales staff and having a specific opportunity that appears like it may well come to fruition for us next year. Those things I've mentioned there should all be impactful I think.

How much were you losing from Vessels a year per share approximately?

Per share it would be around probably $0.08 or $0.09, I don't know, $0.07 to $0.09 probably.

Plus the amount of time it took and research and cost in just sending people trying to examine how to make it profitable.

We put a lot of resources into it, from Carrie and people from her management team spending time there and just having a hard time getting the team that was based there together in a way to get the progress going. So, yes, there was a lot of resource going that direction, and frankly I'm excited to have that going in a better direction towards something more fruitful. So that is a factor. [Indiscernible]

And obviously now you can concentrate on new ventures and everything it seems like you are doing is going forward. So just real quick, give me an idea what a forage box cost, what you sell it for not what it cost you?

Okay, like the new product in particular?

Yes.

That product will be approximately I think around $50,000.

That's substantial. How about these hammer blowers that you are combining?

Carrie, is that about $14,000 or $15,000?

Yes, that's right, Marc.

Now is that going to take away from existing sales because you are combining them or is that going to just be something innovative that farmers want?

We don't feel like it's going to cannibalize. Frankly, our blower business has been a bit like the last couple of years and to come out with a new product that combines hammermill with a blower, maybe that stirs up activity that had gone away. But no, we don't feel like it's cannibalizing or that it's going to anyway.

Okay. So I know you're researching the marketplace for new products but do you feel there is anything out there between one of the large companies that they may want to sell because there's just not enough business for them, that would then enhance you? In the past you've bought everything from augers to whatever.

So, you mean a small piece of Case New Holland or AGCO or Deere or something like that?

Right, right, something that they just don't want to manufacture anymore but would enhance you.

There have been a couple of things that I thought that maybe they would not be interested in and tried to pursue that a little bit and haven't found that they wanted to give up anything that gave revenue at this point in time. So there have been a couple of things. So there's not – I wouldn't say there's some product that we're dying to buy off of one of the majors, but at times I've thought there might have been a little opportunity where something was under their radar but [indiscernible] and I mean we know how to get a hold of these people and have had some of those conversations, but they haven't led to anything.

So I presume none of them are trying to get a hold of you?

No, they have not been as of late.

Okay. Is there any new interest in doing business with Titan, anything you can do with them?

I think in some specific areas that are beet, sugar beet heavy, that there is potentially opportunity there, but as far as something that goes across a whole lot of stores of theirs, I don't really see that because a lot of what we sell is fairly specific to the region. But we are talking to them on something fairly specific and fairly specific locations too.

Okay. That's all I have today but I'm glad I'm back on the conference call and hope it is important to you too and I hope you do take that one lead I gave you on SEED just to look at it and think about if there's any cross-business, maybe even in food safety, and I'll give you the other company, I'll e-mail that to you.

Okay, very good. Thank you. Good to have you back.

[Operator Instructions] There are no further questions at this time.

Okay. Thank you all for calling in and being part of our call and having interest in our Company. We thank you for your investment and obviously we've gone over a lot of this in great detail but we feel like we have a lot of good opportunities in front of us and we feel like we are putting ourselves in a good position to take advantage of it, and we hope that you'll continue to be interested and be with us going forward. So, thank you very much and we look forward to talking to you next quarter. Thank you.

This concludes today's conference call. Thank you for attending.