Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 01, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Houston Wire & Cable CO | |
Entity Central Index Key | 0001356949 | |
Document Type | 10-Q | |
Trading Symbol | HWCC | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 16,612,396 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 256 | $ 1,393 |
Accounts receivable, net: | ||
Trade | 58,350 | 52,946 |
Other | 1,585 | 6,847 |
Inventories, net | 95,325 | 94,325 |
Income taxes | 435 | |
Prepaids | 1,742 | 737 |
Other current assets | 490 | |
Total current assets | 157,748 | 156,683 |
Property and equipment, net | 11,377 | 11,456 |
Intangible assets, net | 10,984 | 11,179 |
Goodwill | 22,353 | 22,353 |
Operating lease right-of-use assets, net | 11,954 | |
Deferred income taxes | 747 | 930 |
Other assets | 503 | 456 |
Total assets | 215,666 | 203,057 |
Current liabilities: | ||
Trade accounts payable | 7,829 | 11,253 |
Accrued and other current liabilities | 12,583 | 19,232 |
Operating lease liabilities | 3,082 | |
Income taxes | 99 | |
Total current liabilities | 23,593 | 30,485 |
Debt | 78,940 | 71,316 |
Operating lease long term liabilities | 9,280 | |
Other long term liabilities | 440 | 578 |
Total liabilities | 112,253 | 102,379 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding | ||
Common stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952 shares issued: 16,612,396 and 16,611,651 outstanding at March 31, 2019 and December 31, 2018, respectively | 21 | 21 |
Additional paid-in-capital | 53,856 | 53,514 |
Retained earnings | 108,360 | 105,975 |
Treasury stock | (58,824) | (58,832) |
Total stockholders' equity | 103,413 | 100,678 |
Total liabilities and stockholders' equity | $ 215,666 | $ 203,057 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 20,988,952 | 20,988,952 |
Common stock, outstanding | 16,612,396 | 16,611,651 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Sales | $ 85,270 | $ 85,026 |
Cost of sales | 64,011 | 64,537 |
Gross profit | 21,259 | 20,489 |
Operating expenses: | ||
Salaries and commissions | 9,180 | 9,194 |
Other operating expenses | 7,663 | 7,480 |
Depreciation and amortization | 553 | 545 |
Total operating expenses | 17,396 | 17,219 |
Operating income | 3,863 | 3,270 |
Interest expense | 741 | 644 |
Income before income taxes | 3,122 | 2,626 |
Income tax expense | 838 | 679 |
Net income | $ 2,284 | $ 1,947 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.14 | $ 0.12 |
Diluted (in dollars per share) | $ 0.14 | $ 0.12 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 16,477,855 | 16,349,902 |
Diluted (in shares) | 16,577,126 | 16,422,961 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Balance at Beginning at Dec. 31, 2017 | $ 21 | $ 54,006 | $ 97,336 | $ (60,619) | $ 90,744 |
Balance at Beginning (in shares) at Dec. 31, 2017 | 20,988,952 | (4,497,771) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,947 | 1,947 | |||
Repurchase of treasury shares | $ (63) | (63) | |||
Repurchase of treasury shares (in shares) | (8,798) | ||||
Amortization of unearned stock compensation | 158 | 158 | |||
Balance at Ending at Mar. 31, 2018 | $ 21 | 54,164 | 99,283 | $ (60,682) | 92,786 |
Balance at Ending (in shares) at Mar. 31, 2018 | 20,988,952 | (4,506,569) | |||
Balance at Beginning at Dec. 31, 2018 | $ 21 | 53,514 | 105,975 | $ (58,832) | 100,678 |
Balance at Beginning (in shares) at Dec. 31, 2018 | 20,988,952 | (4,377,301) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 2,284 | 2,284 | |||
Repurchase of treasury shares | $ (8) | (8) | |||
Repurchase of treasury shares (in shares) | (1,506) | ||||
Amortization of unearned stock compensation | 342 | 342 | |||
Impact of released deferred restricted stock units | $ 16 | $ 16 | |||
Impact of released deferred restricted stock units (in shares) | 2,251 | ||||
Impact of adoption of ASU 2016-02 (Note 7) (Impact of adoption of ASU 2016-02 [Member]) at Mar. 31, 2019 | $ 101 | $ 101 | |||
Balance at Ending at Mar. 31, 2019 | $ 21 | $ 53,856 | $ 108,360 | $ (58,824) | $ 103,413 |
Balance at Ending (in shares) at Mar. 31, 2019 | 20,988,952 | (4,376,556) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net income | $ 2,284 | $ 1,947 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 553 | 545 |
Amortization of unearned stock compensation | 342 | 313 |
Non-cash lease expense | 986 | |
Provision for refund liability | 559 | 50 |
Provision for inventory obsolescence | 170 | 224 |
Deferred income taxes | 284 | (137) |
Other non-cash items | 34 | 11 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (723) | 2,749 |
Inventories | (1,170) | (5,511) |
Prepaids | (1,005) | (1,435) |
Other assets | (549) | |
Lease payments | (982) | |
Book overdraft | 149 | |
Trade accounts payable | (3,424) | 297 |
Accrued and other current liabilities | (6,460) | (6,204) |
Income taxes | 534 | 809 |
Other operating activities | 93 | 109 |
Net cash used in operating activities | (8,474) | (6,084) |
Investing activities | ||
Expenditures for property and equipment | (278) | (452) |
Net cash used in investing activities | (278) | (452) |
Financing activities | ||
Borrowings on revolver | 94,333 | 91,514 |
Payments on revolver | (86,709) | (84,886) |
Payment of dividends | (29) | |
Release (purchase) of treasury stock/stock surrendered on vested awards | 8 | (63) |
Lease payments | (17) | |
Net cash provided by financing activities | 7,615 | 6,536 |
Net change in cash | (1,137) | |
Cash at beginning of year | 1,393 | |
Cash at end of year | $ 256 |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | 1. Basis of Presentation and Principles of Consolidation Houston Wire & Cable Company (the “Company”), through its wholly owned subsidiaries, provides industrial products to the U.S. market through twenty-one locations in fourteen states throughout the United States. The Company has no other business activity. The consolidated financial statements as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 have been prepared following accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. All significant intercompany balances and transactions have been eliminated. The Company has evaluated subsequent events through the time these financial statements in this Form 10-Q were filed with the Securities and Exchange Commission (the “SEC”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates are those relating to the allowance for doubtful accounts, the refund liability, the inventory obsolescence reserve, vendor rebates, the realization of deferred tax assets and the valuation of goodwill and indefinite-lived assets. Actual results could differ materially from the estimates and assumptions used for the preparation of the financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC. Recently Adopted Accounting Standards The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are ASUs that were recently adopted by the Company. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance as amended, a lessee is required to recognize a right-of-use asset and a lease liability for leases greater than 1 year, both finance and operating leases. This update was effective for public companies for fiscal years beginning after December 15, 2018 with early adoption permitted. Under the transition rules, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption and the comparative periods presented in the financial statements continue to be in accordance with previously-existing GAAP. The Company has adopted this ASU effective January 1, 2019. See Note 7 for detailed information. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which simplifies the accounting for share-based payment arrangements with nonemployees for goods and services. Under the ASU, the guidance on such payments to nonemployees is aligned with the accounting for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The ASU superseded Subtopic 505-50, “Equity - Equity-Based Payments to Non-Employees,” and was effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this ASU in the first quarter of 2019 and the adoption did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update eliminate, add and modify certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” The amendments in this update eliminate, add and modify certain disclosure requirements for defined benefit pension plans. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update amend the guidance of the impairment of financial instruments and add an impairment model, known as the current expected credit loss (CECL) model. The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be presented as an offset to the amortized cost basis of the related financial asset. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 2. Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share include the dilutive effects of options and unvested restricted stock awards and units. The following reconciles the denominator used in the calculation of diluted earnings per share: Three Months Ended March 31, 2019 2018 Denominator: Weighted average common shares for basic earnings per share 16,477,855 16,349,902 Effect of dilutive securities 99,271 73,059 Weighted average common shares for diluted earnings per share 16,577,126 16,422,961 Stock awards to purchase 356,890 shares and 422,947 shares of common stock were not included in the diluted net income per share calculation for the three months ended March 31, 2019 and 2018, respectively, as their inclusion would have been anti-dilutive. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 3. Debt On March 12, 2019, the Company, as guarantor, HWC Wire & Cable Company and Vertex, as borrowers, and Bank of America, N.A., as agent and lender, entered into a Second Amendment to the Fourth Amended and Restated Loan and Security Agreement (such agreement, as so amended, the “Loan Agreement”). The Second Amendment extends the expiration date of the Company’s $100 million revolving credit facility until March 12, 2024. Under certain circumstances the Company may request an increase in the commitment by an additional $50 million. Portions of the loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 100 to 150 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. The unused commitment fee is 25 basis points. Availability under the Loan Agreement is limited to a borrowing base equal to 85% of the value of eligible accounts receivable, plus the lesser of 70% of the value of eligible inventory or 90% of the net orderly liquidation value percentage of the value of eligible inventory, in each case less certain reserves. The Loan Agreement is secured by substantially all of the property of the Company, other than real estate. The Loan Agreement includes, among other things, covenants that require the Company to maintain a specified minimum fixed charge coverage ratio, unless certain availability levels exist. Additionally, the Loan Agreement allows for the unlimited payment of dividends and repurchases of stock, subject to the absence of events of default and maintenance of a fixed charge coverage ratio and minimum level of availability. The Loan Agreement contains certain provisions that may cause the debt to be classified as a current liability, in accordance with GAAP, if availability falls below certain thresholds, even though the ultimate maturity date under the Loan Agreement remains March 12, 2024. At March 31, 2019, the Company was in compliance with the availability-based covenants governing its indebtedness. The carrying amount of long-term debt approximates fair value as it bears interest at variable rates. The fair value is a Level 2 measurement as defined in ASC Topic 820, “Fair Value Measurement.” |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 4. Income Taxes The Company calculates its provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period. |
Incentive Plans
Incentive Plans | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Incentive Plans | 5. Incentive Plans Stock Option Awards There were no stock option awards granted during the first three months of 2019 or 2018. Restricted Stock Awards and Restricted Stock Units On March 12, 2019, the Board of Directors granted 52,910 performance stock units to the Company’s President and CEO and 13,228 performance stock units to the CFO. Each grant of performance stock units vests on December 31, 2021, based on and subject to the Company’s achievement of cumulative EBITDA and stock price performance goals over a three-year period, as long as the grantee is then employed by the Company, and upon vesting will be settled in shares of our common stock. Any dividends declared will be accrued and paid to the grantee if and when the related shares vest. Total stock-based compensation cost was $0.3 million for each of the three months ended March 31, 2019 and 2018, respectively, and is included in salaries and commissions for employees, and in other operating expenses for non-employee directors. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies As a result of unfavorable lease terms relative to market for one of the leases acquired as part of the Vertex acquisition in 2016, there is a remaining additional liability of $0.2 million that is being amortized over the remaining term of the lease, which was 51 months at March 31, 2019. The Company had outstanding under the Loan Agreement, letters of credit totaling $0.5 million to certain vendors as of March 31, 2019. There are no legal proceedings pending against or involving the Company that, in management’s opinion, based on the current known facts and circumstances, are expected to have a material adverse effect on the Company’s consolidated financial position, cash flows, or results of operations. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 7. Leases Effective January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842)” and the series of related Accounting Standards Updates that followed (collectively referred to as “Topic 842”). The most significant changes under the new guidance include clarification of the definition of a lease, and the requirements for lessees to recognize a right-of-use (ROU) asset and a lease liability for all qualifying leases with terms longer than twelve months in the consolidated balance sheet. In addition, under Topic 842, additional disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The Company elected the practical expedient available under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the Company’s financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. The Company also elected all other available practical expedients except the hindsight practical expedient. In electing the practical expedients, the Company utilized the transition practical expedient package whereby the Company did not reassess (i) whether any of the Company’s expired or existing contracts contain a lease, (ii) the classification for any expired or existing leases and (iii) initial direct costs for any existing leases. The impact of Topic 842 on the Company’s consolidated balance sheet as of January 1, 2019 was the recognition of ROU assets and lease liabilities for operating leases, while the Company’s accounting for finance leases remained substantially unchanged. The Company’s finance leases were immaterial prior to the adoption of Topic 842, and no change was made to the classification for these leases. As a result of the adoption of Topic 842, beginning retained earnings was impacted by $0.1 million and there was no impact to the income statement. The Company leases property including warehouse space, offices, vehicles and office equipment. The Company determines if an arrangement is a lease at inception. As part of the transition to the new standard, the Company reviewed agreements with suppliers, vendors, customers, and other outside parties to determine if any agreements met the definition of an embedded lease. Based on the nature of the contracts reviewed, and various factors, including identified assets included in the agreement to which the Company has exclusive rights of control as described by Topic 842, were considered. The Company concluded that these are not material agreements with parties that would constitute an embedded lease. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Beginning January 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining lease payments over the remaining lease term as of January 1, 2019. The Company is required to determine a discount rate in order to calculate the present value of lease payments. If the rate is not included in the lease or cannot be readily determined, the Company uses its incremental secured borrowing rate based on lease term information available at the commencement date of the lease in determining the present value of lease payments. The Company recognizes lease components and non-lease components together and not as separate parts of a lease for all leases. The Company will exercise this practical expedient in the future by asset class. The expenses generated by the lease activity of the Company as lessee for the three months ended March 31, 2019 were as follows: Lease Type Income Statement Classification Amount (Dollars in thousands) Consolidated operating lease expense Operating expenses $ 986 Consolidated financing lease amortization Operating expenses 17 Consolidated financing lease interest Interest expense 2 Consolidating financing lease expense 19 Net lease cost Operating expenses $ 1,005 The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of March 31, 2019 were as follows: Lease Type Balance Sheet Classification Amount (Dollars in thousands) Total ROU operating lease assets (1) Operating lease right-of-use assets, net $ 11,954 Total ROU financing lease assets (2) Property and equipment, net 220 Total lease assets $ 12,174 Total current operating lease obligation Operating lease liabilities $ 3,082 Total current financing lease obligation Accrued and other current liabilities 70 Total current lease obligation $ 3,152 Total long term operating lease obligation Operating lease long term liabilities $ 9,280 Total long term financing lease obligation Other long term liabilities 159 Total long term lease obligation $ 9,439 (1) (2) The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of March 31, 2019 were as follows: Maturity Date of Lease Liabilities Operating Leases Financing Leases Total (Dollars in thousands) Year one $ 3,665 $ 77 $ 3,742 Year two 2,831 72 2,903 Year three 2,680 61 2,741 Year four 2,322 32 2,354 Year five 1,081 1 1,082 Subsequent years 1,462 — 1,462 Total lease payments 14,041 243 14,284 Less: Interest 1,679 14 1,693 Present value of lease liabilities $ 12,362 $ 229 $ 12,591 The weighted average remaining lease terms and discount rates of the leases held by the Company as of March 31, 2019 were as follows: Lease Type Weighted Average Term in Years Weighted Average Interest Rate Operating leases 4.7 5.5 Financing leases 3.3 3.6 The cash outflows of the leasing activity of the Company as lessee for the three months ended March 31, 2019 were as follows: Cash Flow Source Classification Amount (Dollars in thousands) Operating cash outflows from operating leases Operating activities $ 980 Operating cash outflows from financing leases Operating activities 2 Financing cash outflows from financing leases Financing activities 17 Any leases, new or modified, for the three months ended March 31, 2019 are not material. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 8. Subsequent Events Following the Annual Meeting of Stockholders on May 7, 2019, the Company approved the award of restricted stock units with a grant date value of $60,000 to each non-employee director who was elected and re-elected, for an aggregate of 58,920 restricted stock units. Each award of restricted stock units vests at the date of the 2020 Annual Meeting of Stockholders. Each non-employee director is entitled to receive a number of shares of the Company’s common stock equal to the number of vested restricted stock units, together with dividend equivalents from the date of grant, at such time as the director’s service on the board terminates for any reason. |
Basis of Presentation and Pri_2
Basis of Presentation and Principles of Consolidation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are ASUs that were recently adopted by the Company. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance as amended, a lessee is required to recognize a right-of-use asset and a lease liability for leases greater than 1 year, both finance and operating leases. This update was effective for public companies for fiscal years beginning after December 15, 2018 with early adoption permitted. Under the transition rules, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption and the comparative periods presented in the financial statements continue to be in accordance with previously-existing GAAP. The Company has adopted this ASU effective January 1, 2019. See Note 7 for detailed information. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which simplifies the accounting for share-based payment arrangements with nonemployees for goods and services. Under the ASU, the guidance on such payments to nonemployees is aligned with the accounting for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The ASU superseded Subtopic 505-50, “Equity - Equity-Based Payments to Non-Employees,” and was effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this ASU in the first quarter of 2019 and the adoption did not have a material impact on the Company’s consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update eliminate, add and modify certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” The amendments in this update eliminate, add and modify certain disclosure requirements for defined benefit pension plans. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update amend the guidance of the impairment of financial instruments and add an impairment model, known as the current expected credit loss (CECL) model. The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be presented as an offset to the amortized cost basis of the related financial asset. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of diluted earnings per share | The following reconciles the denominator used in the calculation of diluted earnings per share: Three Months Ended March 31, 2019 2018 Denominator: Weighted average common shares for basic earnings per share 16,477,855 16,349,902 Effect of dilutive securities 99,271 73,059 Weighted average common shares for diluted earnings per share 16,577,126 16,422,961 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of leasing activity as lessee | The expenses generated by the lease activity of the Company as lessee for the three months ended March 31, 2019 were as follows: Lease Type Income Statement Classification Amount (Dollars in thousands) Consolidated operating lease expense Operating expenses $ 986 Consolidated financing lease amortization Operating expenses 17 Consolidated financing lease interest Interest expense 2 Consolidating financing lease expense 19 Net lease cost Operating expenses $ 1,005 The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of March 31, 2019 were as follows: Lease Type Balance Sheet Classification Amount (Dollars in thousands) Total ROU operating lease assets (1) Operating lease right-of-use assets, net $ 11,954 Total ROU financing lease assets (2) Property and equipment, net 220 Total lease assets $ 12,174 Total current operating lease obligation Operating lease liabilities $ 3,082 Total current financing lease obligation Accrued and other current liabilities 70 Total current lease obligation $ 3,152 Total long term operating lease obligation Operating lease long term liabilities $ 9,280 Total long term financing lease obligation Other long term liabilities 159 Total long term lease obligation $ 9,439 (1) (2) The cash outflows of the leasing activity of the Company as lessee for the three months ended March 31, 2019 were as follows: Cash Flow Source Classification Amount (Dollars in thousands) Operating cash outflows from operating leases Operating activities $ 980 Operating cash outflows from financing leases Operating activities 2 Financing cash outflows from financing leases Financing activities 17 |
Schedule of maturity date of lease liabilities | The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of March 31, 2019 were as follows: Maturity Date of Lease Liabilities Operating Leases Financing Leases Total (Dollars in thousands) Year one $ 3,665 $ 77 $ 3,742 Year two 2,831 72 2,903 Year three 2,680 61 2,741 Year four 2,322 32 2,354 Year five 1,081 1 1,082 Subsequent years 1,462 — 1,462 Total lease payments 14,041 243 14,284 Less: Interest 1,679 14 1,693 Present value of lease liabilities $ 12,362 $ 229 $ 12,591 |
Schedule of weighted average remaining lease terms and discount rates held | The weighted average remaining lease terms and discount rates of the leases held by the Company as of March 31, 2019 were as follows: Lease Type Weighted Average Term in Years Weighted Average Interest Rate Operating leases 4.7 5.5 Financing leases 3.3 3.6 |
Earnings per Share (Details)
Earnings per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Denominator: | ||
Weighted average common shares for basic earnings per share | 16,477,855 | 16,349,902 |
Effect of dilutive securities | 99,271 | 73,059 |
Weighted average common shares for diluted earnings per share | 16,577,126 | 16,422,961 |
Earnings per Share (Details Nar
Earnings per Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Options to purchase stock awards | 356,890 | 422,947 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | Oct. 03, 2016 | Mar. 31, 2019 |
Description of collateral | The Loan Agreement is secured by substantially all of the property of the Company, other than real estate. | |
Description of loan converted | Portions of the loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. | |
Description of interest rate | LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 100 to 150 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. | |
Percentage of unused capacity commitment fee | 0.25% | |
Fourth Amended and Restated Loan and Security Agreement (the 2015 Loan Agreement) [Member] | Revolving Credit Facility [Member] | ||
Minimum amount outstanding | $ 100,000 | |
Expiration date | Mar. 12, 2024 | |
Additional commitment amount | $ 50,000 | |
Percentage of the value of eligible accounts receivable | 85.00% | |
Percentage of the value of eligible inventory | 70.00% | |
Percentage of the value of net orderly liquidation | 90.00% |
Incentive Plans (Details Narrat
Incentive Plans (Details Narrative) - USD ($) $ in Thousands | Mar. 12, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Stock-based compensation cost | $ 342 | $ 313 | |
President And Chief Executive Officer [Member] | |||
Number of shares granted under plan | 52,910 | ||
Chief Financial Officer [Member] | Performance Stock Units [Member] | |||
Number of shares granted under plan | 13,228 | ||
Expiration date | Dec. 31, 2021 | ||
Term of vesting period | 3 years |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) $ in Thousands | Mar. 31, 2019USD ($) |
Loan Agreement [Member] | Vendors [Member] | |
Outstanding line of credit | $ 500 |
Vertex Acquisition [Member] | |
Remaining additional liability | $ 200 |
Amortized over the remaining term lease | 51 months |
Leases (Details)
Leases (Details) $ in Thousands | Mar. 31, 2019USD ($) | |
Total ROU operating lease assets | $ 11,954 | |
Total lease assets | 12,174 | |
Total current lease obligation | 3,152 | |
Total long term operating lease obligation | 9,280 | |
Total long term lease obligation | 9,439 | |
Operating Lease Right-Of-Use Assets, Net [Member] | ||
Total ROU operating lease assets | 11,954 | [1] |
Property And Equipment, Net [Member] | ||
Total ROU financing lease assets | 220 | [2] |
Operating Lease Liabilities [Member] | ||
Total current operating lease obligation | 3,082 | |
Accrued And Other Current Liabilities [Member] | ||
Total current financing lease obligation | 70 | |
Operating Lease Long Term Liabilities [Member] | ||
Total long term operating lease obligation | 9,280 | |
Other Long Term Liabilities [Member] | ||
Total long term financing lease obligation | $ 159 | |
[1] | Operating lease assets are recorded net of accumulated amortization of $0.8 million as of March 31, 2019 | |
[2] | Financing lease assets are recorded net of accumulated amortization of $0.1 million as of March 31, 2019 |
Leases (Details 1)
Leases (Details 1) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Consolidating financing lease expense | $ 19 |
Operating Expenses [Member] | |
Consolidated operating lease expense | 986 |
Consolidated financing lease amortization | 17 |
Net lease cost | 1,005 |
Interest Expense [Member] | |
Consolidated financing lease interest | $ 2 |
Leases (Details 2)
Leases (Details 2) $ in Thousands | Mar. 31, 2019USD ($) |
Year one | $ 3,742 |
Year two | 2,903 |
Year three | 2,741 |
Year four | 2,354 |
Year five | 1,082 |
Subsequent years | 1,462 |
Total lease payments | 14,284 |
Less: Interest | 1,693 |
Present value of lease liabilities | 12,591 |
Operating Leases [Member] | |
Year one | 3,665 |
Year two | 2,831 |
Year three | 2,680 |
Year four | 2,322 |
Year five | 1,081 |
Subsequent years | 1,462 |
Total lease payments | 14,041 |
Less: Interest | 1,679 |
Present value of lease liabilities | 12,362 |
Financing Leases [Member] | |
Year one | 77 |
Year two | 72 |
Year three | 61 |
Year four | 32 |
Year five | 1 |
Subsequent years | |
Total lease payments | 243 |
Less: Interest | 14 |
Present value of lease liabilities | $ 229 |
Leases (Details 3)
Leases (Details 3) | 3 Months Ended |
Mar. 31, 2019 | |
Operating Leases [Member] | |
Weighted average term in years | 4 years 8 months 12 days |
Weighted average interest rate | 5.50% |
Financing Leases [Member] | |
Weighted average term in years | 3 years 3 months 18 days |
Weighted average interest rate | 3.60% |
Leases (Details 4)
Leases (Details 4) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Operating Activities [Member] | |
Operating cash outflows from operating leases | $ 980 |
Operating cash outflows from financing leases | 2 |
Financing Activities [Member] | |
Financing cash outflows from financing leases | $ 17 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 02, 2019 |
Leases [Abstract] | ||
Impacted on Retained earnings | $ 100 | |
Operating lease assets net of accumulated amortization | $ 800 | |
Financing lease assets net of accumulated amortization | $ 100 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Non Employee Director [Member] - Restricted Stock Units (RSUs) [Member] $ in Thousands | May 07, 2019USD ($)shares |
Subsequent Event [Line Items] | |
Number of units grants | shares | 58,920 |
Number of units grants, value | $ | $ 60 |