Motorcar Parts of America, Inc. (MPAA) Q4 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Motorcar Parts of America's Fiscal 2013 Year End Results Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to your host, Mr. Gary Maier, Investor Relations. Please go ahead.

Thank you, and thank you, Allie, and thanks, everyone, for joining us. Before we begin and I turn the call over to Selwyn Joffe, Chairman, President and Chief Executive Officer; and David Lee, the company's Chief Financial Officer, I'd like to remind everyone of the Safe Harbor statement included in today's press release. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during the course of today's conference call. Such forward-looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by Motorcar Parts of America. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties, some of which are beyond control of the company and subject to change based upon various factors. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the various filings with the Securities and Exchange Commission. I would now like to begin the call and turn it over to Selwyn Joffe.

Thank you, Gary. I appreciate everyone joining us today for our fiscal 2013 year end conference call. Well, to say the least, this has been a challenging time. We knew from the beginning of the Fenco acquisition, that there were hurdles to overcome, but we were encouraged by the potential opportunities and believe that it was worth pursuing. Unfortunately, despite tremendous efforts and success on a number of fronts in our turnaround strategy, the resulting economic structure wasn't adequate to justify any further investment. As you will see, our fiscal 2013 10-K will include an emphasis paragraph relating to the fact that the consolidated entity that includes Fenco no longer exists. This is due to Fenco's liquidation and the separate reporting of MPA going forward. Footnote 1 in the 10-K, and specifically management's discussion and analysis, will address the ongoing separate MPA entity. Most importantly going forward, we will be reporting on a de-consolidated basis for MPA. The fiscal 2014 first quarter, which we will report in August, will still have -- however, have a line item for the Fenco results through approximately mid-May of 2013, which will be labeled as "Results from Discontinued Operations." Moving forward, our management team will be focused on MPA and capitalizing on our strengths. We remain excited about the rotating electrical products segment and our future growth. The liquidity of MPA is strong. As noted in the release this morning, in addition to our current liquidity, we expect to realize tax benefits of approximately $30 million as a result of the Fenco losses. We expect this fiscal year will be positive for the aftermarket hard parts sector, as we experience growth in the age of the car population. In conjunction with this, we are seeing lower unemployment rates combined with softness in the economy. It is our belief the easing unemployment, along with a soft economy, enhances our consumer base for our products. Fortunately, our rotating electrical business remains stable, and we expect continued growth supported by strong liquidity. In a moment, David will provide more detail. As we announced this morning, we posted record sales for the year of $213 million for rotating electrical, representing an 18.2% increase from the same period a year ago. Adjusted EBITDA for the increase -- the year increased approximately 28% to a record $42.2 million. This includes the adjustment for noncash down [ph] at the inventory write-downs, reflecting lower manufacturing costs, compared with $32.1 million of adjusted EBITDA a year ago. This is surpassing our previous guidance of last quarter. We are encouraged by these results and expect to grow even stronger from here. We expect enhanced cash flows and a strong 2014 fiscal year. David will now discuss our financials and then we'll come back for questions and answers.

Thank you, Selwyn. As Selwyn just mentioned, our rotating electrical business remains strong. Net sales for the fourth quarter was $58 million, representing a $6.1 million or 11.8% increase compared with the prior year fourth quarter, and adjusted EBITDA was approximately $10.7 million. Net sales for fiscal year 2013 were $213.2 million, representing a $32.7 million or 18.2% increase compared with the prior fiscal year 2012, and adjusted EBITDA was approximately $42.2 million for fiscal year 2013. Based on the pending liquidation of Fenco, our financial review will be focused on MPA and its rotating electrical business. However, to briefly recap the consolidated results, for the fourth quarter, net sales were $89.3 million and net loss was $73.7 million, which was impacted by Fenco's impairment of goodwill and intangible assets. For fiscal year 2013, consolidated net sales were $406.3 million and net loss was $91.5 million, once again impacted by Fenco's impairment of goodwill and intangible assets. I would like to now review the financial results for the rotating electrical business for the quarter and fiscal year. The net sales in our rotating electrical product line segment increased by $6.1 million, or 11.8%, to $58 million for the fiscal fourth quarter compared with net sales of $51.9 million for the prior period a year earlier. The increase in net sales in our rotating electrical product line segment was due primarily to increased sales to our existing customers. The gross profit percentage in our rotating electrical product line slightly decreased to 31.6% from 32.2% during the 3 months ended March 31, 2013, with both periods adjusted for standard inventory revaluation due to less overhead absorption related to inventory management. Rotating electrical G&A expenses includes: the establishment of an $81.8 million specific charge-off accrual for the investment in Fenco, and was also impacted by $650,000 of accrual established related to severance; approximately $500,000 in professional fees incurred in connection with restructuring of Fenco; higher legal fees related to Fenco; and higher audit and Sarbanes-Oxley consulting fees. Rotating electrical business sales and marketing expenses decreased $59,000 compared to the prior year fourth quarter. Operating income for the rotating electrical segment for the fiscal 2013 fourth quarter increased to $10 million, adjusted to exclude the specific charge-off accrual for the investment in Fenco; accrual established related to severance; professional fees incurred in connection with the restructuring of Fenco; mark-to-market items recorded due to the change in the fair value of warrant liability; FAS 123(R) share-based compensation expense; undercar segment Sarbanes-Oxley implementation costs; private placement; liquidation damages; damages expenses; and Fenco-related professional and consulting fees, compared with $9.3 million a year ago. EBITDA for the fourth quarter for the rotating electrical segment was $10.7 million, adjusted for various items as previously explained and $256,000 noncash standard inventory revaluation write-down. Rotating electrical interest expense was $4 million for the fourth quarter, compared with $2.6 million for the prior year fourth quarter. This increase in net interest expense was attributable to increased outstanding loan balances and higher interest rates and interest expense in connection with the purchase of consignment inventory from the supplier of Fenco and other Fenco-related items. In the future, we expect to reduce interest expenses with lower interest rates. Rotating electrical net income for the fourth quarter, adjusted for the items explained above and Fenco adjustments, was $3.6 million, or $0.26 per share, compared with $3.7 million, or $0.30 per share, for the comparable period a year earlier. For the 12 months ended March 31, 2013, for the rotating electrical segment, net sales were $213.2 million, gross margins increased to 32.5% in fiscal year 2013 from 31.8% for the prior fiscal year and adjusted EBITDA was $42.2 million, including adjusting for $1 million of noncash standard inventory revaluation write-downs as a result of lower manufacturing costs. At March 31, 2013, the rotating electrical segment had an $84.5 million term loan, an undrawn revolver credit facility of $20 million and approximately $19.3 million cash as of March 31, 2013, resulting in net debt of approximately $65 million. In the earnings press release from this morning, a consolidating balance sheet and consolidating income statement are presented, separately showing MPA's rotating electrical segment and Fenco's undercar segment. At March 31, 2013, MPA's rotating electrical segment had $277.1 million in total assets. Current assets were $102 million and current liabilities were $68.7 million. To recap cash flows from operations, during the 12 months ended March 31, 2013, the rotating electrical segment used $5 million from operations, which was impacted by a onetime payment during the first quarter of fiscal 2013 of approximately $16 million to an undercar segment vendor in connection with a prior consignment arrangement. Going forward, we expect to realize tax benefits of cash and credits of approximately $30 million as a result of the losses incurred through Fenco, which should further enhance liquidity. I will now walk you through the income statement exhibits in our press release distributed this morning, which we believe will make it far easier to understand the various expenses and adjustments for the fourth quarter ended March 31, 2013, for the rotating electrical business. If you can take a moment to turn to the income statement exhibits in the press release starting with Exhibit 5, we can begin. The income statement in Exhibit 5 of the earnings press release presents the 3 months ended March 31, 2013, fourth quarter results of operations for the rotating electrical business. So when you eliminate the effect of financing-related costs, severance and other fees, FAS 123(R) share-based compensation, noncash mark-to-market items recorded due to the change in the fair value of warrant liability and forward foreign exchange contracts and intersegment interest income, diluted earnings per share was $0.26 for the 3 months ended March 31, 2013, for the rotating electrical segment, despite the impact of higher interest expenses. It's calculated by taking the reported net loss of $48,702,000 and adjusting for the specific charge-off accrual for the investment in Fenco of $81.8 million; financing, severance and other fees of $1.4 million; FAS 123(R) share-based compensation expense of $93,000; and noncash mark-to-market gain of net $878,000 related to the changes in the fair value of warrants and forward foreign currency exchange contracts; intersegment interest income of $1,531,000; onetime bank interest charges of $1,683,000 and 39% tax rate. So by subtracting the above-mentioned items from the reported net loss of $48,702,000, adjusted net income was $3,635,000 or $0.26 per diluted share for the 3 months ended March 31, 2013, for the rotating electrical segment. Additionally, at the bottom of the exhibit for the rotating electrical business, there was a calculation for EBITDA for the 3 months ended March 31, 2013. Starting with reported operating loss of $72,747,000 and adjusting for the impact of the specific charge-off accrual for the investment in Fenco, financing, severance and other fees and noncash items as previously mentioned and depreciation and amortization expense of $712,000, rotating electrical adjusted EBITDA is $10,452,000. In addition, adjusted further for the noncash standard inventory revaluation write-down of approximately $256,000, rotating electrical EBITDA for the 3 months ended March 31, 2013, was approximately $10.7 million. Exhibits 5 through 8 represent the income statement for the 3 and 12 months ended March 31, 2013, and prior year March 31, 2012, for the rotating electrical segment. Now please turn to Exhibit 6 on the next page. To recap, for the 12 months ended March 31, 2013, in Exhibit 6, rotating electrical net sales was $213.2 million, and adjusted EBITDA was $41,218,000 and after further adjusting for standard inventory revaluation write-downs of $1,015,000, EBITDA for fiscal year 2013 was approximately $42.2 million. We will now open the call to questions.

[Operator Instructions] Our first question comes from Joe Bess of Roth Capital.

When we look at the rotating electrical business, can you help us understand some of the dynamics that are going on in the do-it-for-me versus do-it-yourself markets, I guess, on a year-over-year basis?

Well, I think there are 2 factors that play predominantly into the differential performance of both of those sectors is, number one, to the extent that you have a very poor economy and you have people who are experiencing some unemployment and actually have less disposable income, they look for the absolute cheapest way to repair their vehicle. And from that perspective, the do-it-yourself market actually benefits from that. Having said that, the do-it-for-me market is really the more affluent and people who've got more late-model applications migrate to the professional installer market, the do-it-for-me market, and you see growth there. And really for MPA, the way it all fits together is our customers in the do-it-yourself market have now got a fairly substantial presence in the professional installer market and are selling more and more product into that professional installer market. And so while their market share cumulatively are very high double digits, I'm not sure exactly what it is offhand, but certainly in the 40%, 50%, 60% range. On the do-it-yourself side, these customers are now selling into the professional installer market and the enhancing market share there. And so to the extent our concentration in do-it-yourself is very strong, we are experiencing some benefit from our customers' growth into the professional installer market. But I think fundamentally for this year, my outlook is that both sectors should remain strong, and we should benefit from the dynamics in both sectors.

Okay. And then thinking about gross margins in the quarter, can you talk a little bit more about some of the dynamics there? I know you touched on it a little bit.

It's very difficult to isolate margins for the quarter. I think certainly the fourth quarter margins were influenced by starting internally to rationalize some of our inventory levels, so our production ratios were pulled back a little bit in the fourth quarter, and so that negatively affects your overhead absorption. And so your margins get adjusted down. But if you look at it over a 12-month period, that's probably a more accurate way to look at it. And so we've seen a little actually uptick in margins. But we expect our margins to remain fairly consistent, in the 32% range going forward.

Okay. And then thinking about the potential for refinancing your debt, can you talk a little bit about what the potential timing of that could be, and what sort of rates you think you could achieve?

Yes. Well, I think if you look at -- I think David mentioned our net debt position today was $65 million and the EBITDA, $42 million. And I think under a stable environment, certainly, that's a very good ratio to try and refinance our debt. I mean really, we're talking really 1x to 1.5x EBITDA. And so I expect, we certainly are looking at ways to reduce our interest rates now. And it's hard for me to give you an exact date as to when that may happen, but I would expect, conservatively, that to the extent banks see -- the traditional bank market sees stabilized earnings, and certainly, this next first quarter will be stabilized and definitely quarter 2, hopefully, it's not too far out, but I can't give you an exact date.

Okay. And then thinking about your guys operating structure, is this sort of a good run rate that we should be looking at for your general and administrative expenses, or is there any sort of hiring that needs to gone on?

Yes, no, I don't think there's hiring under the current structure. I mean, we've had a lot of professional expenses, very high audit expenses. I think the Fenco costs that have dribbled over, that have caused some excess expenses in G&A, have been pretty high. But I would assume that they're stable for now, but certainly, this gives us an opportunity in time to take a step back and look at the way we are, and make sure we've still got a lean machine going forward in our base business.

Our next question comes from Jimmy Baker of B. Riley & Co.

Just actually a couple follow-ups here. So first on the refi, can you just remind us of the prepayment terms on the service agreement?

Yes, I mean, I think it ratchets down to 3, 2 and 1, depending on the date. I forgot the exact anniversary date...

January is the anniversary date.

January. Yes. So that goes now down to 2% after January?

Yes.

Yes. So after January, it will go down to 2% and then 1% the year after.

Okay, great. And then also just -- I think you were pretty clear about your expectations for margins going forward. But I would say you had, let's say, outsized growth here in fiscal year '13 or certainly better than we've seen out of the rotating electrical business in prior years. Can you give us a sense for kind of what drove that level of growth or level of outperformance compared to the overall aftermarket or overall hard-parts category and then maybe what you'd expect as a more normalized growth rate going forward?

Yes, well, I think the factors are number one, we, MPA has been a very strong force in the import applications market. Import applications are experiencing disproportionate growth in rotating electrical. I think we've talked about that, as these import vehicles start to go into the aging phase and the more aged phase of their lives, you're seeing a growth in import application replacement rates. So that's part of it. And second thing is that there certainly has been a refocus in our category on enhancing inventory levels with our major customers. So I think the inventory level growth has helped us as well. And we've had some good growth levels with our -- we believe that we've contributed to making our customers more effective in the marketplace and they've picked up share. And so it's a multiplicity of all of those. I don't expect the same growth rate this year, although we do expect to grow. So we think that our customers will continue to grow, and we think we're well-positioned in terms of market share.

Okay. And then just a couple of bigger picture questions. So as you think about the reasons why you acquired Fenco, why you wanted to diversify away from rotating electrical, or at least bring on complementary categories, did the way that Fenco unfolded change your longer-term strategic view for the appropriate direction of MPA, or might we kind of revisit those initiatives through a different entity at some point?

Yes, I think that's a great question. I mean, certainly, we believe that MPA has the opportunity to launch additional products in our space, leveraging our channel. Certainly, the Fenco strategy didn't work, mostly based on, quite frankly, we think information systems within Fenco. And we view MPA as far more educated and capable of understanding new product opportunities. And while we certainly are in a time of stabilization right now, we do believe that, that strategy of not only growing our base business in rotating electrical, but adding other categories continues to be a viable strategy.

Okay. And last question for me. I guess kind of 2 parts here. So one, I know Fenco had some customers that were incremental to the legacy MPA business. Were you able to retain many of those as rotating electrical customers? And then separately, do you feel like there were some customers out there that maybe remained on the fence or potential customers, I should say, that remained on the fence during the more distressed time of this acquisition that you might be able to sign up and convert into real customers in the wake of the Fenco exit?

Yes. It's a little early, but I believe that the customers have been positive and positively have responded to the direction we're taking. I think as the customers start to understand, these are -- the numbers have a lot of variables in them still in the fourth quarter, as the customers understand the details of our numbers and certainly the future financial stability opportunities of MPA, I think we'll get more customers, and I think that the separation will make it easier. But we never really skipped a beat on our rotating electrical supply and our rotating electrical business. And I think customers are generally very favorably inclined to the services and the performance of our product in the marketplace. So I'm very -- I remain optimistic on strong growth in that business just because we're executing it very well. And I hope and believe that we'll pick up additional new customers.

Our next question comes from Graham Tanaka of Tanaka Capital.

Just want to make a little -- the earnings estimate, the earnings that you reported per share fully diluted continuing operations, was it $0.29 or $0.26? I saw a $0.29 number in the quarterly report.

$0.26 for the fourth quarter.

So Exhibit 1 that showed $0.29 is not what we should be looking at?

On Exhibit 1, the $0.29 represents the impact of the discontinued product line for Fenco, if you look at Note 8.

That's -- $0.26 is the ongoing per share. And seasonally, how does that -- how do the next 3 quarters look compared to that sort of $0.26 baseline?

I think this quarter, it's hard to tell. I mean, I don't want to comment on a quarterly basis. But certainly on an annual basis, we think that, that rate is certainly accomplishable. So there'll be fluctuations within quarters, but we expect our numbers to grow from here.

Okay, great. And what is the growth that you expect in the rotating electrical business, top line versus GDP? I mean, I'm just wondering if you could kind of help us out there.

Versus GDP, I have no idea. We certainly have not been tracking GDP, maybe I should be. But we expect -- there has been some inventory build in some of our customers. We expect market share gains in our business, and we expect our customers to continue to grow. So we've generally, on a same-customer basis, are expecting 2% to 3% growth. And then we can see what happens -- who knows what happens and in wins, additional wins and hopefully no losses of customers.

Right, okay. And in terms of the additional wins, would these all be in the rotating electrical business new customers or new products that might even include some of the undercar parts?

No, we're looking at this. Some product lines in the undercar that perhaps could be easy to enter with very little capital and very little additional overhead. So we're evaluating that and that would be incremental to everything that I've discussed.

And how would you do the manufacturing sourcing, whatever? Is that going to take 12 to 18, 24 months? Or can you get into some of those new markets, undercar markets in less than 12 months?

At this point in time, we wouldn't be focusing on new manufactured products. I mean, we're looking at mostly new unit opportunities through our joint -- so not joint venture, but certainly through our affiliation with the Chinese company.

Okay. So in a couple of years, what should new products be as a percent of total? Are we talking about 10% or more than that?

Oh, I think significantly more than that. I think new product sales within a couple of years could be close to 50% of revenue.

Okay. And this would be sourced out of China from a partner?

Yes. Out of China or any -- quite frankly, out of any country, but probably most of the product today in automotive aftermarket is Chinese.

And are the margins on new product, I realize it will be hard...

Significantly lower.

Could be lower because of sourcing?

Yes. In other words, we're just the distributor and value-added, so we think that -- the sort of the contribution to operating profits in the 9% to 10% range, so much lower, but certainly big volume opportunities.

Great. How about in the area of cost inflation and pricing on the current line of rotating electricals? How does that look for the next 12 months?

Pricing is always challenging in the aftermarket, so we have to make sure that we keep our costs and our production efficiencies on track. As we launch later model applications, pricing goes up, and as you retire old model applications, essentially, you have a net increase in pricing. And so while you may have competitiveness in the middle sectors, you do have opportunities on the fringes. So while pricing and [ph] competitiveness has been in the market significantly over the last 20 years, I mean, certainly, the last 10 years, we see nominal price accretion, despite all the pricing pressure.

And so you're seeing nominal price increases?

Yes. But they're small, very, very small, and that's just based on product mix.

Our next question comes from Jacob Muller of AYM Capital.

A couple of questions about the reworked balance sheet. I see here when you're looking at the accounts payable for Fenco, that's $106 million. How much of that goes away with the bankruptcy?

100% of that.

So is there some kind of pro forma consolidated balance sheet that we could look at on a running basis, as opposed to the one that includes -- I mean, there's a number here where it says $32 million in elimination, so it seem a lot larger number for the payables would go away. So what is the true, I guess, inventory and the receivables and payables that will be associated with the MPA as is today?

So in the earnings press release this morning, on the third page of the financials, there is a consolidating balance sheet as of March 31, 2013. The first column is MPA's rotating electrical segment. Were you able to see that page?

Yes, sure.

So that $32 million that you see in elimination, that's coming out of the Fenco number. So I would focus on that MPA column as the MPA standalone balance sheet excluding Fenco. And the inventory level is the AP levels as it currently is as of fiscal year end.

Right. So that means this huge payable number would basically disappear?

Correct.

Correct.

So if we look at total debt elimination that's happening as a result of the Fenco bankruptcy, and we're talking about the $60 million in debt that's marked here and the liability that's associated with the payables?

Correct.

Yes.

So you're looking at $160 million of eliminations of the liability.

Correct.

Okay. So I guess the question is now, what is the current interest run rate without any refinancing being contemplated?

So there are 2 pieces of interest, we have term loan interest and then we have what is generally in the industry, our customers actually sell their payable and we pay the discount rate for that sale. We call it factoring, but it's really not our factoring. And so on the term loan, the current, which is $85 million, that interest rate is about 10.5%, right?

That's correct, yes.

It's 10.5%, the factoring interest rate.

A little over $5 million annually.

A little over $5 million, it's about 3%, 3.5%.

3% to 3.5%.

So will the factoring come down...

That's not going to change.

Why is that?

[indiscernible]

With the factoring, would that not come down with Fenco going bankrupt, they [ph] obviously -- so the turnover of the company would be a lot lower, right?

Yes, that will come down, but it will be the same amount that MPA's experienced in the past. Yes, you're right, we won't be paying any Fenco factoring, of course not. Yes.

Right. So we're talking around $8 million and $5 million right now, I mean, is $13 million run rate -- for interest, would be around [ph] -- appropriate at the current run rate?

About $14 million.

Okay. And then I guess the -- and what's CapEx for the MPA standalone right now, you think, thereabouts?

$2 million to $3 million, maintenance CapEx.

Right. And cash taxes probably would be nominal for the next couple of years in light of everything that's happened?

Should be -- well, unless we have extraordinary, extraordinary gains, we expect to have nice big gains, but it should be 0, or close to 0, because there's some A&P [ph], and there are some nominal taxes we would still pay.

Right. So the company should be quite -- should have a very high free cash flow, I mean, going forward here. So what -- assuming that we're not doing any large-scale acquisitions any time soon, what's the best uses for that cash flow from management's perspective?

Well, we'd pay down debt, at this point. Pay down debt and perhaps, depending on where the refinancing ends up, if we're able to refinance. And depending on free cash flow, there may be an opportunity to buy back stock again, depending on that market. We still do have an authorization outstanding to buy back stock.

And what's the right size capital structure for the company from management's view?

Well, I think 1x to 1.5x leverage is probably a good operating area to be in. We don't want to be under-leveraged. And so to the extent that we have excess liquidity over and above that, then we can apply it to business opportunity, whether it be dividends, share buybacks, new product launches, whatever it may be.

Right. So we're talking about future business opportunity again, and obviously, this has been a difficult time. What would be an opportunity that becomes -- we'd look at pursuing here? And how do we make sure this kind of -- the experience that we had here with Fenco doesn't happen again?

Yes, we're not looking to make any major acquisitions in the near term, nor to spend that kind of capital near term. So that's not in our plans.

Our next question comes from Brian Fredman [ph] of Ellis Capital.

I think most of my questions have been answered, but I just wanted to be clear on a couple of things. So $85 million at 10.5% is the tranche of debt that arguably we should look to in the next quarter, 2 quarters or so to potentially be able to refinance. Is that correct? Is that about fair?

Correct.

Right, okay. And then to the last caller's question, obviously, you said that on a GAAP reported basis, you shouldn't be reporting any taxes, correct, except some minimal AMT. Is that correct?

No, that's not correct. So on a GAAP basis, you still got to accrue for the taxes. On a cash basis, we won't be paying taxes.

Right. Cash -- okay, so...

In other words, we'll collect in cash and in net operating loss carryforwards, we'll collect $30 million of liquidity. However, when you make your tax provision, you still got to accrue -- your provision will still include a provision for taxes, but from a GAAP perspective.

Okay. Just want to be clear on the bankruptcy accounting, how that all works, okay. So there will be a GAAP tax, okay, that's fair. And then, just the final thing, obviously, for math purposes, let's say we are able to cut our interest expenses by 50% just for math. Obviously, with the new loan, you might not be able to buy back debt for a little period of time, given a new debt structure. So you would have access to, let's call it, $0.30 a share of additional accretion there. Would the thought then be to buy back stock? Just wanted to be clear on that.

I'm a little lost on just on the $0.30 a share of accretion and...

Yes. I mean, you say, let's say, $4.5 million on '14 a share, so that's about $0.30, right? That's sort of the accretive upside to a refinancing in the 5.5 range or so. So you probably wouldn't be able to buy back debt immediately. And so I just wanted to be -- just trying to get a better sense of what's still authorized for the share buyback?

I forget what the authorization is. Do you remember? I mean, there's plenty there, and so we would have to look again. It will all depend on how things will go on, what the new debt relationship was, whether they would allow us to invest in capital. But to the extent that we have excess liquidity and we weren't able to pay down debt, we would look at share buybacks, absolutely. We would also look at dividends. We would look at all sorts of things. I mean, we do expect to be able to generate some nice cash, including the tax refunds.

And then finally, has there been -- I'm sure there's been a provision against this, but are you guys -- is there a window for management to potentially buy back stock themselves, I mean, just to put a little bit on the tape, I know you probably have been precluded from that, but is that availability now open?

Again, now our normal blackout rules would apply, so to the extent we weren't in a blackout period, yes, people would be able to, barring anything unusual, going forward.

Okay. So normal blackout periods apply now going forward?

Correct.

Okay. Well, gentlemen, I mean, I would -- I'm sure that all the investors on here, given the stock price and its discount to its peers, I think the market would be -- would look favorably on you guys purchasing a little stock personally just to kind of reintroduce new MPA, but that's just my opinion.

Our next question comes from Martin Lerda of Debtwire.

Just a quick question on the balance sheet. Do you guys know the outstanding amount under the Fenco credit line?

$60 million.

I'm sorry?

Approximately $60 million.

$60 million? No, I'm talking about the strategic cooperation agreement which you include under the accounts payable. Last quarter, it was $19 million.

Yes, it's $19 million -- about $19 million, $19.5 million.

So not much has changed, so $19 million, $19.5 million?

No.

And with no further questions at this time, I'd like to turn the conference back over to management for any closing remarks.

All right. Well, I appreciate everybody giving us the time and certainly hope that we're off to a new beginning and look forward to future reports. Appreciate everyone's time. Thank you.

Ladies and gentlemen, this does conclude today's conference. You may all disconnect and have a wonderful day.