Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | ALLIED MOTION TECHNOLOGIES INC | |
Entity Central Index Key | 0000046129 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 9,599,920 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 8,578 | $ 8,673 |
Trade receivables, net of allowance for doubtful accounts of $576 and $530 at September 30, 2019 and December 31, 2018, respectively | 56,004 | 43,247 |
Inventories | 51,376 | 54,971 |
Prepaid expenses and other assets | 4,082 | 4,003 |
Total current assets | 120,040 | 110,894 |
Property, plant and equipment, net | 49,471 | 48,035 |
Deferred income taxes | 456 | 341 |
Intangible assets, net | 63,762 | 68,354 |
Goodwill | 52,523 | 52,639 |
Right of use asset | 17,358 | |
Other long-term assets | 4,632 | 5,038 |
Total Assets | 308,242 | 285,301 |
Current liabilities: | ||
Accounts payable | 24,677 | 25,867 |
Accrued liabilities | 23,571 | 18,722 |
Total current liabilities | 48,248 | 44,589 |
Long-term debt | 116,486 | 122,516 |
Deferred income taxes | 3,317 | 3,860 |
Pension and post-retirement obligations | 4,279 | 4,293 |
Right of use liability | 14,107 | |
Other long-term liabilities | 8,009 | 8,230 |
Total liabilities | 194,446 | 183,488 |
Stockholders' Equity: | ||
Common stock, no par value, authorized 50,000 shares; 9,600 and 9,485 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 36,437 | 33,613 |
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding | ||
Retained earnings | 89,388 | 76,718 |
Accumulated other comprehensive loss | (12,029) | (8,518) |
Total stockholders' equity | 113,796 | 101,813 |
Total Liabilities and Stockholders' Equity | $ 308,242 | $ 285,301 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, allowance for doubtful accounts (in dollars) | $ 576 | $ 530 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares | 50,000 | 50,000 |
Common stock, shares issued | 9,600 | 9,485 |
Common stock, shares outstanding | 9,600 | 9,485 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
Revenues | $ 96,633 | $ 80,092 | $ 283,159 | $ 236,649 |
Cost of goods sold | 66,603 | 56,330 | 197,045 | 166,816 |
Gross profit | 30,030 | 23,762 | 86,114 | 69,833 |
Operating costs and expenses: | ||||
Selling | 4,144 | 2,762 | 12,373 | 8,402 |
General and administrative | 9,932 | 8,177 | 28,451 | 23,969 |
Engineering and development | 5,705 | 4,692 | 17,188 | 14,610 |
Business development | 8 | 33 | 64 | 349 |
Amortization of intangible assets | 1,429 | 872 | 4,291 | 2,634 |
Total operating costs and expenses | 21,218 | 16,536 | 62,367 | 49,964 |
Operating income | 8,812 | 7,226 | 23,747 | 19,869 |
Other expense (income): | ||||
Interest expense | 1,359 | 623 | 3,974 | 1,839 |
Other expense (income), net | 140 | (24) | 121 | (118) |
Total other expense, net | 1,499 | 599 | 4,095 | 1,721 |
Income before income taxes | 7,313 | 6,627 | 19,652 | 18,148 |
Provision for income taxes | (2,695) | (1,767) | (6,119) | (4,859) |
Net income | $ 4,618 | $ 4,860 | $ 13,533 | $ 13,289 |
Basic earnings per share: | ||||
Earnings per share (in dollars per share) | $ 0.49 | $ 0.52 | $ 1.44 | $ 1.44 |
Basic weighted average common shares (in shares) | 9,414 | 9,273 | 9,390 | 9,251 |
Diluted earnings per share: | ||||
Earnings per share (in dollars per share) | $ 0.49 | $ 0.52 | $ 1.43 | $ 1.42 |
Diluted weighted average common shares (in shares) | 9,464 | 9,371 | 9,435 | 9,337 |
Net income | $ 4,618 | $ 4,860 | $ 13,533 | $ 13,289 |
Other comprehensive income: | ||||
Foreign currency translation adjustment | (2,369) | (307) | (2,708) | (2,152) |
(Loss) income on derivatives | (105) | 137 | (803) | 988 |
Comprehensive income | $ 2,144 | $ 4,690 | $ 10,022 | $ 12,125 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock and Paid-in Capital | Common Stock | Unamortized Cost of Equity Awards | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balances at Dec. 31, 2017 | $ 31,051 | $ 34,473 | $ (3,422) | $ 61,882 | $ (5,586) | $ 87,347 |
Balances (in shares) at Dec. 31, 2017 | 9,427 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock transactions under employee benefit stock plans | 849 | $ 849 | 849 | |||
Stock transactions under employee benefit stock plans (in shares) | 26 | |||||
Issuance of restricted stock, net of forfeitures | 2 | $ 1,535 | (1,533) | 2 | ||
Issuance of restricted stock, net of forfeitures (in shares) | 40 | |||||
Stock-based compensation expense | 1,555 | 1,555 | 1,555 | |||
Shares withheld for payment of employee payroll taxes | (590) | $ (590) | (590) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (17) | |||||
Foreign currency translation adjustments | (2,152) | (2,152) | ||||
Accumulated loss on derivatives | 988 | 988 | ||||
Net income | 13,289 | 13,289 | ||||
Dividends to stockholders | (805) | (805) | ||||
Balances at Sep. 30, 2018 | 32,867 | $ 36,267 | (3,400) | 74,366 | (6,750) | 100,483 |
Balances (in shares) at Sep. 30, 2018 | 9,476 | |||||
Balances at Jun. 30, 2018 | 32,315 | $ 36,628 | (4,313) | 69,790 | (6,580) | 95,525 |
Balances (in shares) at Jun. 30, 2018 | 9,475 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of restricted stock, net of forfeitures | $ (361) | 361 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 1 | |||||
Stock-based compensation expense | 552 | 552 | 552 | |||
Foreign currency translation adjustments | (307) | (307) | ||||
Accumulated loss on derivatives | 137 | 137 | ||||
Net income | 4,860 | 4,860 | ||||
Dividends to stockholders | (284) | (284) | ||||
Balances at Sep. 30, 2018 | 32,867 | $ 36,267 | (3,400) | 74,366 | (6,750) | 100,483 |
Balances (in shares) at Sep. 30, 2018 | 9,476 | |||||
Balances at Dec. 31, 2018 | 33,613 | $ 36,779 | (3,166) | 76,718 | (8,518) | $ 101,813 |
Balances (in shares) at Dec. 31, 2018 | 9,485 | 9,485 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock transactions under employee benefit stock plans | 1,088 | $ 1,088 | $ 1,088 | |||
Stock transactions under employee benefit stock plans (in shares) | 27 | |||||
Issuance of restricted stock, net of forfeitures | 329 | $ 4,475 | (4,146) | 329 | ||
Issuance of restricted stock, net of forfeitures (in shares) | 107 | |||||
Stock-based compensation expense | 2,117 | 2,117 | 2,117 | |||
Shares withheld for payment of employee payroll taxes | (710) | $ (710) | (710) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (19) | |||||
Foreign currency translation adjustments | (2,708) | (2,708) | ||||
Accumulated loss on derivatives | (1,042) | (1,042) | ||||
Tax effect of derivative transactions | 239 | 239 | ||||
Net income | 13,533 | 13,533 | ||||
Dividends to stockholders | (863) | (863) | ||||
Balances at Sep. 30, 2019 | 36,437 | $ 41,632 | (5,195) | 89,388 | (12,029) | $ 113,796 |
Balances (in shares) at Sep. 30, 2019 | 9,600 | 9,600 | ||||
Balances at Jun. 30, 2019 | 35,697 | $ 41,632 | (5,935) | 85,058 | (9,555) | $ 111,200 |
Balances (in shares) at Jun. 30, 2019 | 9,600 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 740 | 740 | 740 | |||
Foreign currency translation adjustments | (2,369) | (2,369) | ||||
Accumulated loss on derivatives | (135) | (135) | ||||
Tax effect of derivative transactions | 30 | 30 | ||||
Net income | 4,618 | 4,618 | ||||
Dividends to stockholders | (288) | (288) | ||||
Balances at Sep. 30, 2019 | $ 36,437 | $ 41,632 | $ (5,195) | $ 89,388 | $ (12,029) | $ 113,796 |
Balances (in shares) at Sep. 30, 2019 | 9,600 | 9,600 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Dividends declared (in dollars per share) | $ 0.030 | $ 0.030 | $ 0.030 | $ 0.030 | $ 0.030 | $ 0.025 | $ 0.03 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows From Operating Activities: | ||
Net income | $ 13,533 | $ 13,289 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 11,071 | 8,454 |
Deferred income taxes | (563) | (484) |
Stock compensation expense | 2,374 | 1,787 |
Debt issue cost amortization recorded in interest expense | 131 | 113 |
Other | 581 | 521 |
Changes in operating assets and liabilities, net of acquisition: | ||
Trade receivables | (13,643) | (11,727) |
Inventories | 1,664 | (11,067) |
Prepaid expenses and other assets | (232) | (1,610) |
Accounts payable | (727) | 8,093 |
Accrued liabilities | 2,815 | 3,917 |
Net cash provided by operating activities | 17,004 | 11,286 |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (9,280) | (10,581) |
Cash paid for acquisition, net of cash acquired | (13,312) | |
Net cash used in investing activities | (9,280) | (23,893) |
Cash Flows From Financing Activities: | ||
Borrowings on long-term debt | 9,091 | 17,658 |
Principal payments of long-term debt | (15,000) | (8,350) |
Dividends paid to stockholders | (887) | (800) |
Stock transactions under employee benefit stock plans | (717) | 262 |
Net cash (used in) provided by financing activities | (7,513) | 8,770 |
Effect of foreign exchange rate changes on cash | (306) | (396) |
Net decrease in cash and cash equivalents | (95) | (4,233) |
Cash and cash equivalents at beginning of period | 8,673 | 15,590 |
Cash and cash equivalents at end of period | $ 8,578 | $ 11,357 |
BASIS OF PREPARATION AND PRESEN
BASIS OF PREPARATION AND PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PREPARATION AND PRESENTATION | |
BASIS OF PREPARATION AND PRESENTATION | 1. BASIS OF PREPARATION AND PRESENTATION Allied Motion Technologies Inc. (Allied Motion or the Company) is engaged in the business of designing, manufacturing and selling motion control solutions, which include integrated system solutions as well as individual motion control products, to a broad spectrum of customers throughout the world primarily for the commercial motor, industrial motion, automotive control, medical, and aerospace and defense markets. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive income, a component of stockholders’ equity in the accompanying condensed consolidated balance sheets. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each Technology Unit (“TU”) are included in the results of operations as incurred. The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and include all adjustments which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in condensed consolidated financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures herein are adequate to make the information presented not misleading. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year. The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the consolidated financial statements and related Notes to such statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 that was previously filed by the Company. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2019 | |
ACQUISITIONS | |
ACQUISITIONS | 2. ACQUISITIONS TCI On December 6, 2018, the Company entered into a Unit Purchase Agreement (the “Purchase Agreement”) with TCI, LLC, a Wisconsin limited liability company (“TCI”), and the members of TCI (“Sellers”), pursuant to which Allied Motion acquired 100% of the issued and outstanding common units of TCI from Sellers (the “Acquisition”) in a transaction valued at $64,100. The Acquisition consideration is subject to adjustments based on a determination of closing net working capital, cash, indebtedness and other TCI liabilities.A portion of the Acquisition consideration was placed in escrow to secure payment of any post-closing adjustments to the purchase price and to secure the Sellers’ indemnification obligations to Allied Motion. Cash consideration was funded from borrowings on the Company’s existing credit facilities. The TCI acquisition broadens and strengthens the Company’s position as a leading global diversified solutions provider in the controlled motion market. TCI has adjacent technologies and capabilities that enable more efficient and longer life solutions for motion devices in a wide variety of demanding applications. TCI’s technology and products are expected to be a valuable addition to the Company’s expanding suite of solution offerings. The Company incurred $413 of transaction costs related to the acquisition of TCI. Transaction costs are included in business development expenses on the consolidated statements of income and comprehensive income. The Company accounted for the acquisition pursuant to ASC 805, “Business Combinations.” The preliminary allocation of the purchase price paid for TCI is based on estimated fair values of the assets acquired and liabilities assumed of TCI as of December 6, 2018 (in thousands): Inventory $ 3,718 Accounts receivable 5,822 Other assets, net 303 Property, plant and equipment 3,464 Amortizable intangible assets 36,400 Goodwill 18,457 Current liabilities (4,029) Net purchase price $ 64,135 The purchase price excluded any cash on hand and any debt of TCI. The allocation of the purchase price is preliminary as the valuation of both the tangible and identifiable intangible assets is being finalized. During the second quarter 2019, the purchase price allocation was revised to reflect an updated valuation of inventory. The intangible assets acquired consist of customer lists, technology and a trade name, which are being amortized over 16, 15 and 19 years, respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other TUs and TCI that are expected to occur as a result of the combined engineering knowledge, the ability of each of the TUs to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize TCI’s management knowledge in providing complementary product offerings to the Company’s customers. The goodwill resulting from the TCI acquisition is tax deductible. Pro forma Condensed Combined Financial Information The following presents the Company’s unaudited pro forma financial information for the three months ended September 30, 2018 giving effect to the acquisition of TCI as if it had occurred at January 1, 2018. Included in the pro forma information is: the additional depreciation and amortization resulting from the valuation of amortizable tangible and intangible assets; interest on borrowings made by the Company; amortization of deferred finance costs incurred to issue the borrowings; and removal of acquisition related transaction costs. Three months ended Nine months ended September 30, 2018 September 30, 2018 Revenues $ 91,436 $ 270,261 Net income $ 5,348 $ 14,889 Diluted earnings per share $ 0.57 $ 1.59 The pro forma adjustments do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would actually have been had these transactions actually occurred on the date presented or to project the combined company’s results of operations or financial position for any future period. Maval OE Steering On January 19, 2018, the Company purchased substantially all of the operating assets associated with the original equipment steering business of Maval Industries, LLC (“Maval”) for $13,312 in cash. Consistent with the Company’s strategy to provide higher level system solutions, the addition of the Maval OE steering (“Maval OE Steering”) product line enables Allied to provide a fully integrated steering system solution to its customers. The following table represents the purchase price allocation and summarizes the aggregate estimated fair value of the assets acquired (in thousands): January 19, 2018 Intangible assets $ 3,870 Goodwill 6,001 Assets acquired (net of liabilities assumed) 3,441 Fair value of net assets acquired $ 13,312 Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. The purchase price allocation was completed during the fourth quarter 2018. The goodwill resulting from the Maval OE Steering acquisition is tax deductible. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION Performance Obligations Performance Obligations Satisfied at a Point in Time The Company’s standard delivery method is “free on board” shipping point. Consequently, the Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product. The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Nature of Goods and Services The Company sells component and integrated controlled motion solutions to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brush and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, and other controlled motion-related products. The Company’s target markets include Vehicle, Medical, Aerospace & Defense and Industrial. Determining the Transaction Price The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. The Company does not have any contracts that include a significant financing component as of September 30, 2019. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in the Segment Information footnote, the Company’s business consists of one reportable segment. A reconciliation of disaggregated revenue to market revenue as well as revenue by geographical regions is provided in Note 18, Segment Information . Three months ended Nine months ended September 30, September 30, Target Market 2019 2018 2019 2018 Vehicle $ 33,001 $ 31,717 $ 97,375 $ 95,071 Industrial 30,572 24,668 94,076 76,633 Medical 14,550 10,732 39,180 31,214 Aerospace & Defense 12,621 10,332 36,018 26,701 Other 5,889 2,643 16,510 7,030 Total $ 96,633 $ 80,092 $ 283,159 $ 236,649 Three months ended Nine months ended September 30, September 30, Geography 2019 2018 2019 2018 United States $ 64,739 $ 49,375 $ 186,697 $ 140,031 Europe 31,448 29,975 95,010 94,754 Asia 446 742 1,452 1,864 Total $ 96,633 $ 80,092 $ 283,159 $ 236,649 Contract Balances When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists. The opening and closing balances of the Company’s receivables, contract asset, and contract liability are as follows (in thousands): Receivables Contract Asset Contract Liability Opening balance at July 1, 2019 $ — $ — $ 388 Closing balance at September 30, 2019 — — 323 Increase/(decrease) $ — $ — $ (65) Receivables Contract Asset Contract Liability Opening balance at July 1, 2018 $ — $ — $ 623 Closing balance at September 30, 2018 — — 579 Increase/(decrease) $ — $ — $ (44) The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. Significant Payment Terms The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration. Returns, Refunds, and Warranties In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications. Practical Expedients Incremental costs of obtaining a contract - the Company elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have been one year or less. Remaining performance obligations - the Company elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. The time value of money - the Company elected not to adjust the promised amount of consideration for the effects of the time value of money for contracts in which the anticipated period between when the Company transfers the goods or services to the customer and when the customer pays is equal to one year or less. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2019 | |
INVENTORIES | |
INVENTORIES | 4. INVENTORIES Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): September 30, December 31, 2019 2018 Parts and raw materials $ 33,769 $ 34,449 Work-in-process 7,383 7,557 Finished goods 10,224 12,965 51,376 54,971 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2019 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is classified as follows (in thousands): September 30, December 31, 2019 2018 Land $ 970 $ 981 Building and improvements 13,080 13,054 Machinery, equipment, tools and dies 68,196 60,755 Furniture, fixtures and other 15,515 15,571 97,761 90,361 Less accumulated depreciation (48,290) (42,326) Property, plant and equipment, net $ 49,471 $ 48,035 Depreciation expense was $2,315 and $1,960 for the quarters ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019 and 2018, depreciation expense was $6,780 and $5,820, respectively. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2019 | |
GOODWILL | |
GOODWILL | 6. GOODWILL The change in the carrying amount of goodwill for the nine months ended September 30, 2019 and year ended December 31, 2018 is as follows (in thousands): September 30, December 31, 2019 2018 Beginning balance $ 52,639 $ 29,531 Adjustment to or acquisition of goodwill (Note 2) — 23,844 Effect of foreign currency translation (116) (736) Ending balance $ 52,523 $ 52,639 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 7. INTANGIBLE ASSETS Intangible assets on the Company’s condensed consolidated balance sheets consist of the following (in thousands): September 30, 2019 December 31, 2018 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 8 - 17 years $ 64,151 $ (18,231) $ 45,920 $ 64,439 $ (15,343) $ 49,096 Trade name 10 - 19 years 12,185 (3,899) 8,286 12,249 (3,305) 8,944 Design and technologies 10 - 15 years 12,802 (3,259) 9,543 13,023 (2,723) 10,300 Patents 17 years 24 (11) 13 24 (10) 14 Total $ 89,162 $ (25,400) $ 63,762 $ 89,735 $ (21,381) $ 68,354 Intangible assets resulting from the acquisition of TCI were approximately $36,400 (Note 2). The intangible assets acquired consist of customer lists, a trade name and technology. The valuation and useful life of the purchased intangibles has not been finalized. Intangible assets from the acquisition of the Maval OE Steering business were approximately $3,870 (Note 2). The intangible assets acquired consist of customer lists. Amortization expense for intangible assets was $1,429 and $872 for the quarters ending September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019 and 2018, amortization expense was $4,291 and $2,634, respectively. Estimated future intangible asset amortization expense as of September 30, 2019 is as follows (in thousands): Estimated Amortization Expense Remainder of 2019 $ 1,424 2020 5,698 2021 5,454 2022 5,454 2023 5,374 2024 5,072 Thereafter 35,286 Total estimated amortization expense $ 63,762 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2019 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 8. STOCK-BASED COMPENSATION Stock Incentive Plans The Company’s Stock Incentive Plans provide for the granting of stock awards, including restricted stock, stock options and stock appreciation rights, to employees and non-employees, including directors of the Company. Restricted Stock For the nine months ended September 30, 2019, 108,801 shares of unvested restricted stock were awarded at a weighted average market value of $41.98. Of the restricted shares granted, 76,877 shares have performance based vesting conditions. The value of the shares is amortized to compensation expense over the related service period, which is normally three years, or over the estimated performance period. Shares of unvested restricted stock are generally forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards. The following is a summary of restricted stock activity for the nine months ended September 30, 2019: Number of shares Outstanding at beginning of period 155,742 Awarded 108,801 Vested (70,410) Forfeited (1,989) Outstanding at end of period 192,144 Stock-based compensation expense, net of forfeitures of $834 and $694 was recorded for the quarter ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019 and 2018, stock-based compensation expense, net of forfeitures, of $2,374 and $1,787 was recorded, respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2019 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 9. ACCRUED LIABILITIES Accrued liabilities consist of the following (in thousands): September 30, December 31, 2019 2018 Compensation and fringe benefits $ 11,367 $ 11,642 Warranty reserve 884 971 Income taxes payable 3,044 1,182 Right of use liability 3,261 — Other accrued expenses 5,015 4,927 $ 23,571 $ 18,722 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 9 Months Ended |
Sep. 30, 2019 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 10. DEBT OBLIGATIONS Debt obligations consisted of the following (in thousands): September 30, December 31, 2019 2018 Long-term Debt Revolving Credit Facility, long-term (1) $ 116,849 $ 123,010 Unamortized debt issuance costs (363) (494) Long-term debt $ 116,486 $ 122,516 (1) Credit Agreement On October 28, 2016, the Company entered into a $125,000 revolving credit facility (the “Revolving Credit Facility”), with an initial term of five years. On December 6, 2018, the Company and certain of its subsidiaries entered into a Second Amendment to Credit Agreement to exercise the $50 million accordion feature of its existing senior secured revolving credit facility and to add TCI as an additional guarantor. The Company’s credit facility, which matures in October 2021, increased capacity from $125 million to $175 million with the additional borrowing capacity being provided by the existing lenders. Other terms and conditions under the credit facility remain unchanged. At September 30, 2019 there was approximately $59,608 available under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility bear interest at the LIBOR Rate (as defined in the Credit Agreement) plus a margin of 1.00% to 2.25% or the Prime Rate (as defined in the Credit Agreement) plus a margin of 0% to 1.25%, in each case depending on the Company’s ratio of total funded indebtedness (as defined in the Credit Agreement) to consolidated trailing twelve-month EBITDA (the “Total Leverage Ratio”). At September 30, 2019, the applicable margin for LIBOR Rate borrowings was 1.75% and the applicable margin for Prime Rate borrowings was 0.75%. In addition, the Company is required to pay a commitment fee of between 0.10% and 0.25% quarterly (currently 0.175%) on the unused portion of the Revolving facility, also based on the Company's Total Leverage Ratio. The Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries. The Credit Agreement contains certain financial covenants related to minimum interest coverage and total leverage ratio at the end of each quarter. The Credit Agreement also includes other covenants and restrictions, including limits on the amount of additional indebtedness, and restrictions on the Company’s ability to merge or sell all or substantially all of its assets. The Company was in compliance with all covenants at September 30, 2019. Other The China Credit Facility provides credit of approximately $1,457 (Chinese Renminbi 10,000) (“the China Facility”). The China Facility is used for working capital and capital equipment needs at the Company’s China operations. There have been no borrowings on the China Credit Facility in 2019. The balance of the China Facility was zero as of December 31, 2018. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 11. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In February 2017, the Company entered into three interest rate swaps with a combined notional of $40,000 that mature in February 2022. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income (Loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2019 and 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. There was no hedge ineffectiveness recorded in the Company’s earnings during the quarters ended September 30, 2019 and 2018. The Company estimates that an additional $135 will be reclassified as an increase to interest expense over the next twelve months. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018 (in thousands): Asset Derivatives Liabilty Derivatives Fair value as of: Fair value as of: Derivatives designated as Balance Sheet September 30, December 31, Balance Sheet September 30, December 31, hedging instruments Location 2019 2018 Location 2019 2018 Interest rate products Other long-term assets $ — $ 566 Other long-term liabilities $ 476 $ — The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income (OCI) for the three and nine months ended September 30, 2019 and 2018 (in thousands): Amount of gain (loss) recognized Amount of gain (loss) recognized in OCI on derivative in OCI on derivative Derivatives in cash flow hedging Three months ended September 30, Nine months ended September 30, relationships 2019 2018 2019 2018 Interest rate products $ (78) $ 121 $ (675) $ 936 Amount of gain (loss) reclassified from Amount of gain (loss) reclassified from Location of gain (loss) accumulated OCI into income (effective portion) accumulated OCI into income (effective portion) reclassified from accumulated Three months ended September 30, Nine months ended September 30, OCI into income 2019 2018 2019 2018 Interest expense $ (27) $ 16 $ (128) $ 52 The table below presents the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2019 and 2018: Total amounts of income and expense Total amounts of income and expense line items presented that reflect the line items presented that reflect the effects of cash flow hedges recorded effects of cash flow hedges recorded Derivatives designated as Balance Sheet Three months ended September 30, Nine months ended September 30, hedging instruments Location 2019 2018 2019 2018 Interest rate products Other long-term assets and other long-term liabilities $ 1,359 $ 623 $ 3,974 $ 1,839 The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2019 and December 31, 2018. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the condensed consolidated balance sheets. Gross amounts Net amounts of assets offset in the presented in the Gross amounts not offset in the condensed consolidated Gross amounts condensed condensed balance sheets As of of recognized consolidated consolidated balance Financial Cash collateral September 30, 2019 liabilities balance sheets sheets instruments received Net amount Derivatives $ 476 $ — $ 476 $ — $ — $ 476 Gross amounts Net amounts of assets offset in the presented in the Gross amounts not offset in the condensed consolidated As of Gross amounts condensed condensed balance sheets December 31, of recognized consolidated consolidated balance Financial Cash collateral 2018 assets balance sheets sheets instruments received Net amount Derivatives $ 566 $ — $ 566 $ — $ — $ 566 The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE | |
FAIR VALUE | 12. FAIR VALUE Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments. The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2019 and December 31, 2018, respectively, by level within the fair value hierarchy (in thousands): September 30, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 5,820 $ — $ — Other long-term assets 4,490 — — Interest rate swaps — (476) — December 31, 2018 Level 1 Level 2 Level 3 Assets Pension plan assets $ 5,231 $ — $ — Other long-term assets 3,962 — — Interest rate swaps — 434 — |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | 13. INCOME TAXES The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations. The effective income tax rate as a percentage of income before income taxes was 36.9% and 26.7% in the third quarter 2019 and 2018, respectively. The effective tax rate includes a discrete tax provision of 5.9% for the third quarter of 2019 related to settlement of a tax audit in a foreign jurisdiction and is net of a discrete tax benefit of (0.6%) for the third quarter of 2018 related to the recognition of excess tax benefits for share-based payment awards. For the nine months ended September 30, 2019 and 2018, the effective income tax rate as a percentage of income before income taxes was 31.1% and 26.8%, respectively. For the nine-month period ended September 30, 2019 the effective rate includes a discrete tax provision of 2.2% related to settlement of a tax audit in a foreign jurisdiction and for nine-month periods ended September 30, 2019 and 2018, the effective rate is net of a discrete tax benefit of (0.7%) and (1.1%), respectively, related primarily to the recognition of excess tax benefits for share-based payment awards The effective rate before discrete items varies from the statutory rate primarily due to differences in state taxes, the impact of international tax provisions in the US, the difference in foreign tax rates and the mix of foreign and domestic income. The increase in the effective income tax rate as a percentage of income before income taxes from third quarter 2018 to 2019 is a result of limited deductibility of Executive Compensation and Global Intangible Low-Taxed Income, both of which are on-going provisions of the Tax Cuts and Jobs Act that was enacted on December 22, 2017. In relation to the tax audit settlement in a foreign jurisdiction during the third quarter of 2019, the Company also received a $384 assessment of a non-income-based tax expense that is included in other expense (income) in the condensed consolidated statements of income and comprehensive income for the quarter and nine months ended September 30, 2019. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
LEASES | 14. LEASES Accounting Standards Update ASU No. 2016-02, Leases (Topic 842) , requires the Company to recognize a right of use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months. Refer to Note 19 - Recent Accounting Pronouncements for discussion on the adoption of Topic 842. The Company has operating leases for office space, manufacturing equipment, computer equipment and automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for a long-term period, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for capital area maintenance, utilities, inflation and/or changes in other indexes. For the three and nine months ended September 30, 2019, the components of operating lease expense were as follows (in thousands): Three months ended Nine months ended September 30, 2019 September 30, 2019 Fixed operating lease expense $ 1,018 $ 3,057 Variable operating lease expense 39 118 $ 1,057 $ 3,175 Supplemental cash flow information related to the Company’s operating leases for the nine-month period ended September 30, 2019 was as follows (in thousands): Cash paid for amounts included in the measurement of operating leases $ 3,101 ROU assets obtained in exchange for operating lease obligations $ 20,604 The following table presents the lease balances within the condensed consolidated balance sheet, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of September 30, 2019 (in thousands except for the weighted average remaining lease term and weighted average discount rate): Lease assets and liabilities Classification Amount Assets: Right of use asset Other long-term assets $ 17,358 Liabilities: Current Right of use liability, current Accrued liabilities $ 3,261 Long-term Right of use liability, long-term Other long-term liabilities 14,107 Total ROU lease liabilities $ 17,368 Weighted average remaining lease term 8.35 Weighted average discount rate 2.95 % The following table presents the maturity of the Company’s operating lease liabilities as of September 30, 2019 (in thousands): 2020 $ 3,711 2021 3,004 2022 2,419 2023 2,065 2024 1,682 Thereafter 6,349 Total undiscounted cash flows 19,230 Less: present value discount (1,862) Total lease liabilities $ 17,368 As of September 30, 2019, the Company had no additional significant operating or finance leases that had not yet commenced. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 9 Months Ended |
Sep. 30, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | 15. ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated Other Comprehensive Income (“AOCI”) for the quarter ended September 30, 2019 and 2018 is comprised of the following (in thousands): Foreign Currency Defined Benefit Cash Flow Translation Plan Liability Hedges Adjustment Total At June 30, 2019 $ (1,006) $ (264) $ (8,285) $ (9,555) Unrealized loss on cash flow hedges (78) (78) Amounts reclassified from AOCI (27) (27) Foreign currency translation loss (2,369) (2,369) At September 30, 2019 $ (1,006) $ (369) $ (10,654) $ (12,029) Foreign Currency Defined Benefit Cash Flow Translation Plan Liability Hedges Adjustment Total At June 30, 2018 $ (945) $ 1,047 $ (6,682) (6,580) Unrealized gain on cash flow hedges 121 121 Amounts reclassified from AOCI 16 16 Foreign currency translation loss (307) (307) At September 30, 2018 $ (945) $ 1,184 $ (6,989) $ (6,750) AOCI for the nine months ended September 30, 2019 and 2018 is comprised of the following (in thousands): Foreign Currency Defined Benefit Translation Plan Liability Cash Flow Hedges Adjustment Total At December 31, 2018 $ (1,006) $ 434 $ (7,946) $ (8,518) Unrealized loss on cash flow hedges (675) (675) Amounts reclassified from AOCI (128) (128) Foreign currency translation loss (2,708) (2,708) At September 30, 2019 $ (1,006) $ (369) $ (10,654) $ (12,029) Foreign Currency Defined Benefit Translation Plan Liability Cash Flow Hedges Adjustment Total At December 31, 2017 $ (945) $ 196 $ (4,837) $ (5,586) Unrealized gain on cash flow hedges 936 936 Amounts reclassified from AOCI 52 52 Foreign currency translation loss (2,152) (2,152) At September 30, 2018 $ (945) $ 1,184 $ (6,989) $ (6,750) The realized gains relating to the Company’s interest rate swap hedges were reclassified from accumulated other comprehensive income and included in interest expense in the condensed consolidated statements of income and comprehensive income. |
DIVIDENDS PER SHARE
DIVIDENDS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
DIVIDENDS PER SHARE | |
DIVIDENDS PER SHARE | 16. DIVIDENDS PER SHARE The Company declared a quarterly dividend of $0.030 per share for the first three quarters of 2019. Dividends declared in the first quarter of 2018 were $0.025 per share and $0.030 per share in the second and third quarters of 2018. Total dividends declared in the first nine months of 2019 and 2018 were $863 and $805, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 17. EARNINGS PER SHARE Basic and diluted weighted-average shares outstanding are as follows: Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Basic weighted average shares outstanding 9,414 9,273 9,390 9,251 Dilutive effect of equity awards 50 98 45 86 Diluted weighted average shares outstanding 9,464 9,371 9,435 9,337 For the three and nine months ended September 30, 2019, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were immaterial. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2019 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 18. SEGMENT INFORMATION The Company operates in one segment for the manufacture and marketing of controlled motion products for original equipment manufacturers and end user applications. The Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services in which the entity holds material assets and reports revenue. Financial information related to the foreign subsidiaries is summarized below (in thousands): Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Revenues derived from foreign subsidiaries $ 31,894 $ 30,717 $ 96,461 $ 96,618 Identifiable foreign assets were $92,403 and $88,400 as of September 30, 2019 and December 31, 2018, respectively. Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe. Sales to customers outside of the United States by all subsidiaries were $39,534 and $36,216 during the quarters ended September 30, 2019 and 2018, respectively; and $122,020 and $111,073 for the nine months ended September 30, 2019 and 2018, respectively. For third quarter 2019 and 2018, one customer accounted for 17% and 20% of revenues, respectively; and for the year to date 2019 and 2018 for 16% and 20% of revenues, respectively. As of September 30, 2019, and December 31, 2018 this customer represented 17% and 13% of trade receivables, respectively. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 19. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In February 2016, the FASB issued Accounting Standards Update ASU No. 2016-02, Leases (Topic 842) , which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. On January 1, 2019, the Company adopted ASC 842 using the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840, Leases . The standard had a material impact on the Company’s consolidated condensed balance sheet but did not have a significant impact on the Company’s consolidated net income and cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. For leases that commenced before the effective date of ASC 842, the Company elected the permitted practical expedients to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The Company also elected to exclude leases with a term of 12 months or less in the recognized ROU assets and lease liabilities, when the likelihood of renewal is not probable. As a result of the cumulative impact of adopting ASC 842, the Company recorded operating lease ROU assets of $19,728 and operating lease liabilities of $20,350 as of January 1, 2019, primarily related to real estate, equipment and automobile leases, based on the present value of the future lease payments on the date of adoption. Refer to Note 14 - Leases for the additional disclosures required by ASC 842. The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also consists of any prepaid lease payments and deferred rent liabilities. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. The Company has lease agreements which require payments for lease and non-lease components and has elected to account for these as a single lease component. Recently issued accounting pronouncements In August 2018, the FASB issued ASU No. 2018-13, “ Fair Value Measurement (Topic 820)” , which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements. In September 2016, the FASB issued ASU 2016-13, “ Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” . This guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
TCI | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The preliminary allocation of the purchase price paid for TCI is based on estimated fair values of the assets acquired and liabilities assumed of TCI as of December 6, 2018 (in thousands): Inventory $ 3,718 Accounts receivable 5,822 Other assets, net 303 Property, plant and equipment 3,464 Amortizable intangible assets 36,400 Goodwill 18,457 Current liabilities (4,029) Net purchase price $ 64,135 |
Schedule of unaudited pro forma financial information | Three months ended Nine months ended September 30, 2018 September 30, 2018 Revenues $ 91,436 $ 270,261 Net income $ 5,348 $ 14,889 Diluted earnings per share $ 0.57 $ 1.59 |
Maval OE Steering | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The following table represents the purchase price allocation and summarizes the aggregate estimated fair value of the assets acquired (in thousands): January 19, 2018 Intangible assets $ 3,870 Goodwill 6,001 Assets acquired (net of liabilities assumed) 3,441 Fair value of net assets acquired $ 13,312 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE RECOGNITION | |
Schedule of reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | Three months ended Nine months ended September 30, September 30, Target Market 2019 2018 2019 2018 Vehicle $ 33,001 $ 31,717 $ 97,375 $ 95,071 Industrial 30,572 24,668 94,076 76,633 Medical 14,550 10,732 39,180 31,214 Aerospace & Defense 12,621 10,332 36,018 26,701 Other 5,889 2,643 16,510 7,030 Total $ 96,633 $ 80,092 $ 283,159 $ 236,649 Three months ended Nine months ended September 30, September 30, Geography 2019 2018 2019 2018 United States $ 64,739 $ 49,375 $ 186,697 $ 140,031 Europe 31,448 29,975 95,010 94,754 Asia 446 742 1,452 1,864 Total $ 96,633 $ 80,092 $ 283,159 $ 236,649 |
Schedule of opening and closing balances of the Company's receivables, contract asset, and contract liability | The opening and closing balances of the Company’s receivables, contract asset, and contract liability are as follows (in thousands): Receivables Contract Asset Contract Liability Opening balance at July 1, 2019 $ — $ — $ 388 Closing balance at September 30, 2019 — — 323 Increase/(decrease) $ — $ — $ (65) Receivables Contract Asset Contract Liability Opening balance at July 1, 2018 $ — $ — $ 623 Closing balance at September 30, 2018 — — 579 Increase/(decrease) $ — $ — $ (44) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
INVENTORIES | |
Schedule of inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value | Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): September 30, December 31, 2019 2018 Parts and raw materials $ 33,769 $ 34,449 Work-in-process 7,383 7,557 Finished goods 10,224 12,965 51,376 54,971 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of classification of property, plant and equipment | Property, plant and equipment is classified as follows (in thousands): September 30, December 31, 2019 2018 Land $ 970 $ 981 Building and improvements 13,080 13,054 Machinery, equipment, tools and dies 68,196 60,755 Furniture, fixtures and other 15,515 15,571 97,761 90,361 Less accumulated depreciation (48,290) (42,326) Property, plant and equipment, net $ 49,471 $ 48,035 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
GOODWILL | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for the nine months ended September 30, 2019 and year ended December 31, 2018 is as follows (in thousands): September 30, December 31, 2019 2018 Beginning balance $ 52,639 $ 29,531 Adjustment to or acquisition of goodwill (Note 2) — 23,844 Effect of foreign currency translation (116) (736) Ending balance $ 52,523 $ 52,639 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Intangible assets on the Company’s condensed consolidated balance sheets consist of the following (in thousands): September 30, 2019 December 31, 2018 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 8 - 17 years $ 64,151 $ (18,231) $ 45,920 $ 64,439 $ (15,343) $ 49,096 Trade name 10 - 19 years 12,185 (3,899) 8,286 12,249 (3,305) 8,944 Design and technologies 10 - 15 years 12,802 (3,259) 9,543 13,023 (2,723) 10,300 Patents 17 years 24 (11) 13 24 (10) 14 Total $ 89,162 $ (25,400) $ 63,762 $ 89,735 $ (21,381) $ 68,354 |
Schedule of estimated amortization expense for intangible assets | Estimated future intangible asset amortization expense as of September 30, 2019 is as follows (in thousands): Estimated Amortization Expense Remainder of 2019 $ 1,424 2020 5,698 2021 5,454 2022 5,454 2023 5,374 2024 5,072 Thereafter 35,286 Total estimated amortization expense $ 63,762 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
STOCK-BASED COMPENSATION | |
Summary of restricted stock activity | The following is a summary of restricted stock activity for the nine months ended September 30, 2019: Number of shares Outstanding at beginning of period 155,742 Awarded 108,801 Vested (70,410) Forfeited (1,989) Outstanding at end of period 192,144 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): September 30, December 31, 2019 2018 Compensation and fringe benefits $ 11,367 $ 11,642 Warranty reserve 884 971 Income taxes payable 3,044 1,182 Right of use liability 3,261 — Other accrued expenses 5,015 4,927 $ 23,571 $ 18,722 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations | Debt obligations consisted of the following (in thousands): September 30, December 31, 2019 2018 Long-term Debt Revolving Credit Facility, long-term (1) $ 116,849 $ 123,010 Unamortized debt issuance costs (363) (494) Long-term debt $ 116,486 $ 122,516 (1) |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair value of the Company's derivative financial instruments as well as classification on the condensed consolidated balance sheets | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018 (in thousands): Asset Derivatives Liabilty Derivatives Fair value as of: Fair value as of: Derivatives designated as Balance Sheet September 30, December 31, Balance Sheet September 30, December 31, hedging instruments Location 2019 2018 Location 2019 2018 Interest rate products Other long-term assets $ — $ 566 Other long-term liabilities $ 476 $ — |
Schedule of effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) | The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income (OCI) for the three and nine months ended September 30, 2019 and 2018 (in thousands): Amount of gain (loss) recognized Amount of gain (loss) recognized in OCI on derivative in OCI on derivative Derivatives in cash flow hedging Three months ended September 30, Nine months ended September 30, relationships 2019 2018 2019 2018 Interest rate products $ (78) $ 121 $ (675) $ 936 Amount of gain (loss) reclassified from Amount of gain (loss) reclassified from Location of gain (loss) accumulated OCI into income (effective portion) accumulated OCI into income (effective portion) reclassified from accumulated Three months ended September 30, Nine months ended September 30, OCI into income 2019 2018 2019 2018 Interest expense $ (27) $ 16 $ (128) $ 52 |
Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statements of income and comprehensive income | Total amounts of income and expense Total amounts of income and expense line items presented that reflect the line items presented that reflect the effects of cash flow hedges recorded effects of cash flow hedges recorded Derivatives designated as Balance Sheet Three months ended September 30, Nine months ended September 30, hedging instruments Location 2019 2018 2019 2018 Interest rate products Other long-term assets and other long-term liabilities $ 1,359 $ 623 $ 3,974 $ 1,839 |
Schedule of fair value provides the location that derivative assets and liabilities | Gross amounts Net amounts of assets offset in the presented in the Gross amounts not offset in the condensed consolidated Gross amounts condensed condensed balance sheets As of of recognized consolidated consolidated balance Financial Cash collateral September 30, 2019 liabilities balance sheets sheets instruments received Net amount Derivatives $ 476 $ — $ 476 $ — $ — $ 476 Gross amounts Net amounts of assets offset in the presented in the Gross amounts not offset in the condensed consolidated As of Gross amounts condensed condensed balance sheets December 31, of recognized consolidated consolidated balance Financial Cash collateral 2018 assets balance sheets sheets instruments received Net amount Derivatives $ 566 $ — $ 566 $ — $ — $ 566 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE | |
Schedule of financial assets that are accounted for at fair value on a recurring basis | The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2019 and December 31, 2018, respectively, by level within the fair value hierarchy (in thousands): September 30, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 5,820 $ — $ — Other long-term assets 4,490 — — Interest rate swaps — (476) — December 31, 2018 Level 1 Level 2 Level 3 Assets Pension plan assets $ 5,231 $ — $ — Other long-term assets 3,962 — — Interest rate swaps — 434 — |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
Schedule of components of operating lease expense | For the three and nine months ended September 30, 2019, the components of operating lease expense were as follows (in thousands): Three months ended Nine months ended September 30, 2019 September 30, 2019 Fixed operating lease expense $ 1,018 $ 3,057 Variable operating lease expense 39 118 $ 1,057 $ 3,175 |
Schedule of supplemental cash flow information related to the operating leases | Supplemental cash flow information related to the Company’s operating leases for the nine-month period ended September 30, 2019 was as follows (in thousands): Cash paid for amounts included in the measurement of operating leases $ 3,101 ROU assets obtained in exchange for operating lease obligations $ 20,604 |
Schedule of Lease assets and liabilities and other quantitative information | The following table presents the lease balances within the condensed consolidated balance sheet, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of September 30, 2019 (in thousands except for the weighted average remaining lease term and weighted average discount rate): Lease assets and liabilities Classification Amount Assets: Right of use asset Other long-term assets $ 17,358 Liabilities: Current Right of use liability, current Accrued liabilities $ 3,261 Long-term Right of use liability, long-term Other long-term liabilities 14,107 Total ROU lease liabilities $ 17,368 Weighted average remaining lease term 8.35 Weighted average discount rate 2.95 % |
Schedule of maturity of the operating lease liabilities | The following table presents the maturity of the Company’s operating lease liabilities as of September 30, 2019 (in thousands): 2020 $ 3,711 2021 3,004 2022 2,419 2023 2,065 2024 1,682 Thereafter 6,349 Total undiscounted cash flows 19,230 Less: present value discount (1,862) Total lease liabilities $ 17,368 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
Schedule of accumulated other comprehensive income ("AOCI") | Accumulated Other Comprehensive Income (“AOCI”) for the quarter ended September 30, 2019 and 2018 is comprised of the following (in thousands): Foreign Currency Defined Benefit Cash Flow Translation Plan Liability Hedges Adjustment Total At June 30, 2019 $ (1,006) $ (264) $ (8,285) $ (9,555) Unrealized loss on cash flow hedges (78) (78) Amounts reclassified from AOCI (27) (27) Foreign currency translation loss (2,369) (2,369) At September 30, 2019 $ (1,006) $ (369) $ (10,654) $ (12,029) Foreign Currency Defined Benefit Cash Flow Translation Plan Liability Hedges Adjustment Total At June 30, 2018 $ (945) $ 1,047 $ (6,682) (6,580) Unrealized gain on cash flow hedges 121 121 Amounts reclassified from AOCI 16 16 Foreign currency translation loss (307) (307) At September 30, 2018 $ (945) $ 1,184 $ (6,989) $ (6,750) AOCI for the nine months ended September 30, 2019 and 2018 is comprised of the following (in thousands): Foreign Currency Defined Benefit Translation Plan Liability Cash Flow Hedges Adjustment Total At December 31, 2018 $ (1,006) $ 434 $ (7,946) $ (8,518) Unrealized loss on cash flow hedges (675) (675) Amounts reclassified from AOCI (128) (128) Foreign currency translation loss (2,708) (2,708) At September 30, 2019 $ (1,006) $ (369) $ (10,654) $ (12,029) Foreign Currency Defined Benefit Translation Plan Liability Cash Flow Hedges Adjustment Total At December 31, 2017 $ (945) $ 196 $ (4,837) $ (5,586) Unrealized gain on cash flow hedges 936 936 Amounts reclassified from AOCI 52 52 Foreign currency translation loss (2,152) (2,152) At September 30, 2018 $ (945) $ 1,184 $ (6,989) $ (6,750) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE | |
Schedule of basic and diluted weighted-average shares outstanding | Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Basic weighted average shares outstanding 9,414 9,273 9,390 9,251 Dilutive effect of equity awards 50 98 45 86 Diluted weighted average shares outstanding 9,464 9,371 9,435 9,337 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
SEGMENT INFORMATION | |
Schedule of revenue foreign subsidiaries | Financial information related to the foreign subsidiaries is summarized below (in thousands): Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Revenues derived from foreign subsidiaries $ 31,894 $ 30,717 $ 96,461 $ 96,618 |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 06, 2018 | Jan. 19, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
ACQUISITIONS | |||||||
Goodwill | $ 52,523 | $ 52,639 | $ 29,531 | ||||
TCI | |||||||
ACQUISITIONS | |||||||
Business acquisition percentage of voting interests acquired | 100.00% | ||||||
Acquisition cost | $ 64,100 | ||||||
Transaction costs related to acquisition | 413 | ||||||
Inventory | 3,718 | ||||||
Accounts receivable | 5,822 | ||||||
Other assets, net | 303 | ||||||
Property, plant and equipment | 3,464 | ||||||
Amortizable intangible assets | 36,400 | 36,400 | |||||
Goodwill | 18,457 | ||||||
Current liabilities | (4,029) | ||||||
Fair value of net assets acquired | $ 64,135 | ||||||
Pro forma Condensed Combined Financial Information | |||||||
Revenues | $ 91,436 | $ 270,261 | |||||
Net income | $ 5,348 | $ 14,889 | |||||
Diluted earnings per share (in dollars per share) | $ 0.57 | $ 1.59 | |||||
TCI | Customer lists | |||||||
ACQUISITIONS | |||||||
Amortization period (in years) | 16 years | ||||||
TCI | Technology | |||||||
ACQUISITIONS | |||||||
Amortization period (in years) | 15 years | ||||||
TCI | Trade name | |||||||
ACQUISITIONS | |||||||
Amortization period (in years) | 19 years | ||||||
Maval OE Steering | |||||||
ACQUISITIONS | |||||||
Acquisition cost | $ 13,312 | ||||||
Intangible assets | 3,870 | $ 3,870 | |||||
Goodwill | 6,001 | ||||||
Assets acquired (net of liabilities assumed) | 3,441 | ||||||
Fair value of net assets acquired | $ 13,312 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | |
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Number of reportable segment | segment | 1 | |||
Disaggregation of revenue | $ 96,633 | $ 80,092 | $ 283,159 | $ 236,649 |
United States | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 64,739 | 49,375 | 186,697 | 140,031 |
Europe | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 31,448 | 29,975 | 95,010 | 94,754 |
Asia | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 446 | 742 | 1,452 | 1,864 |
Vehicle | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 33,001 | 31,717 | 97,375 | 95,071 |
Industrial | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 30,572 | 24,668 | 94,076 | 76,633 |
Medical | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 14,550 | 10,732 | 39,180 | 31,214 |
Aerospace & Defense | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | 12,621 | 10,332 | 36,018 | 26,701 |
Other | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Disaggregation of revenue | $ 5,889 | $ 2,643 | $ 16,510 | $ 7,030 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
REVENUE RECOGNITION | ||||
Contract Liability | $ 323 | $ 579 | $ 388 | $ 623 |
Increase/(decrease) in contract liability | $ (65) | $ (44) |
REVENUE RECOGNITION - Practical
REVENUE RECOGNITION - Practical Expedients (Details) | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE RECOGNITION | |
Incremental costs of obtaining a contract | true |
Remaining performance obligations | true |
The time value of money | true |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
INVENTORIES | ||
Parts and raw materials | $ 33,769 | $ 34,449 |
Work-in-process | 7,383 | 7,557 |
Finished goods | 10,224 | 12,965 |
Inventories | $ 51,376 | $ 54,971 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 97,761 | $ 97,761 | $ 90,361 | ||
Less accumulated depreciation | (48,290) | (48,290) | (42,326) | ||
Property, plant and equipment, net | 49,471 | 49,471 | 48,035 | ||
Depreciation expense | 2,315 | $ 1,960 | 6,780 | $ 5,820 | |
Land | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 970 | 970 | 981 | ||
Building and improvements | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 13,080 | 13,080 | 13,054 | ||
Machinery, equipment, tools and dies | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 68,196 | 68,196 | 60,755 | ||
Furniture, fixtures and other | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 15,515 | $ 15,515 | $ 15,571 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Change in goodwill | ||
Beginning balance | $ 52,639 | $ 29,531 |
Adjustment to or acquisition of goodwill (Note 2) | 23,844 | |
Effect of foreign currency translation | (116) | (736) |
Ending balance | $ 52,523 | $ 52,639 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Dec. 06, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jan. 19, 2018 |
Intangible assets subject to amortization | |||||||
Gross Amount | $ 89,162 | $ 89,162 | $ 89,735 | ||||
Accumulated amortization | (25,400) | (25,400) | (21,381) | ||||
Net Book Value | 63,762 | 63,762 | 68,354 | ||||
Amortization expense for intangible assets | 1,429 | $ 872 | 4,291 | $ 2,634 | |||
Estimated amortization expense | |||||||
Remainder of 2019 | 1,424 | 1,424 | |||||
2020 | 5,698 | 5,698 | |||||
2021 | 5,454 | 5,454 | |||||
2022 | 5,454 | 5,454 | |||||
2023 | 5,374 | 5,374 | |||||
2024 | 5,072 | 5,072 | |||||
Thereafter | 35,286 | 35,286 | |||||
Total estimated amortization expense | 63,762 | 63,762 | |||||
TCI | |||||||
Intangible assets subject to amortization | |||||||
Amortizable intangible assets | $ 36,400 | 36,400 | 36,400 | ||||
Maval OE Steering | |||||||
Intangible assets subject to amortization | |||||||
Intangible assets resulting from the acquisition | 3,870 | 3,870 | $ 3,870 | ||||
Customer lists | |||||||
Intangible assets subject to amortization | |||||||
Gross Amount | 64,151 | 64,151 | 64,439 | ||||
Accumulated amortization | (18,231) | (18,231) | (15,343) | ||||
Net Book Value | 45,920 | $ 45,920 | 49,096 | ||||
Customer lists | TCI | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 16 years | ||||||
Customer lists | Minimum | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 8 years | ||||||
Customer lists | Maximum | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 17 years | ||||||
Trade name | |||||||
Intangible assets subject to amortization | |||||||
Gross Amount | 12,185 | $ 12,185 | 12,249 | ||||
Accumulated amortization | (3,899) | (3,899) | (3,305) | ||||
Net Book Value | 8,286 | $ 8,286 | 8,944 | ||||
Trade name | TCI | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 19 years | ||||||
Trade name | Minimum | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 10 years | ||||||
Trade name | Maximum | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 19 years | ||||||
Design and technologies | |||||||
Intangible assets subject to amortization | |||||||
Gross Amount | 12,802 | $ 12,802 | 13,023 | ||||
Accumulated amortization | (3,259) | (3,259) | (2,723) | ||||
Net Book Value | 9,543 | $ 9,543 | 10,300 | ||||
Design and technologies | Minimum | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 10 years | ||||||
Design and technologies | Maximum | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 15 years | ||||||
Patents | |||||||
Intangible assets subject to amortization | |||||||
Estimated Life | 17 years | ||||||
Gross Amount | 24 | $ 24 | 24 | ||||
Accumulated amortization | (11) | (11) | (10) | ||||
Net Book Value | $ 13 | $ 13 | $ 14 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Additional disclosures | ||||
Compensation expense, net of forfeitures | $ 2,374 | $ 1,787 | ||
Restricted Stock | ||||
STOCK-BASED COMPENSATION | ||||
Weighted average market value (in dollars per share) | $ 41.98 | |||
Service period over which value of the shares is amortized to compensation expense | 3 years | |||
Number of Nonvested Restricted Shares | ||||
Outstanding at beginning of period (in shares) | 155,742 | |||
Awarded (in shares) | 108,801 | |||
Vested (in shares) | (70,410) | |||
Forfeited (in shares) | (1,989) | |||
Outstanding at end of period (in shares) | 192,144 | 192,144 | ||
Additional disclosures | ||||
Compensation expense, net of forfeitures | $ 834 | $ 694 | ||
Restricted Stock | Performance-based vesting | ||||
Number of Nonvested Restricted Shares | ||||
Awarded (in shares) | 76,877 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
ACCRUED LIABILITIES | ||
Compensation and fringe benefits | $ 11,367 | $ 11,642 |
Warranty reserve | 884 | 971 |
Income taxes payable | 3,044 | 1,182 |
Right of use liability | 3,261 | |
Other accrued expenses | 5,015 | 4,927 |
Accrued liabilities | $ 23,571 | $ 18,722 |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) ¥ in Thousands, $ in Thousands | Oct. 28, 2016USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2019CNY (¥) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 06, 2018USD ($) |
Debt Obligations | ||||||
Long-term debt | $ 116,486 | $ 122,516 | ||||
Unamortized debt issuance costs | (363) | (494) | ||||
Revolving Credit Facility | ||||||
Debt Obligations | ||||||
Long-term debt | 116,849 | 123,010 | ||||
Maximum borrowing capacity | $ 125,000 | |||||
Available borrowing capacity | $ 59,608 | |||||
Commitment fees on unused portion of the Revolving credit facility ( as a percent) | 0.175% | |||||
Revolving Credit Facility | Minimum | ||||||
Debt Obligations | ||||||
Commitment fees on unused portion of the Revolving credit facility ( as a percent) | 0.10% | |||||
Revolving Credit Facility | Maximum | ||||||
Debt Obligations | ||||||
Commitment fees on unused portion of the Revolving credit facility ( as a percent) | 0.25% | |||||
Revolving Credit Facility | LIBOR | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 1.75% | |||||
Revolving Credit Facility | LIBOR | Minimum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 1.00% | |||||
Revolving Credit Facility | LIBOR | Maximum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 2.25% | |||||
Revolving Credit Facility | Prime Rate | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 0.75% | |||||
Revolving Credit Facility | Prime Rate | Minimum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 0.00% | |||||
Revolving Credit Facility | Prime Rate | Maximum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 1.25% | |||||
Term Loan | ||||||
Debt Obligations | ||||||
Effective rate (as a percent) | 3.70% | 3.70% | ||||
Debt instrument term | 5 years | |||||
Second Amendment | ||||||
Debt Obligations | ||||||
Additional borrowing capacity | $ 50,000 | |||||
Maximum borrowing capacity | $ 175,000 | |||||
China Credit Facility | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity | ¥ 10,000 | $ 1,457 | ||||
Available borrowing capacity | $ 0 | |||||
Average outstanding borrowings | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Feb. 28, 2017USD ($)derivative | |
Interest Rate Swaps | ||||||
Derivative financial instruments | ||||||
Number of derivative instruments | derivative | 3 | |||||
Notional amount of interest rate swap derivatives at maturity | $ 40,000 | |||||
Hedge ineffectiveness recorded in earnings | $ 0 | $ 0 | ||||
Estimated amount to be reclassified as an increase to interest expense | $ 135 | |||||
Derivatives in cash flow hedging relationships | Interest rate products | ||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | ||||||
Amount of gain (loss) recognized in OCI on derivative | (78) | 121 | (675) | $ 936 | ||
Amount of (gain) loss reclassified from accumulated OCI into income (effective portion) | (27) | 16 | (128) | 52 | ||
Derivatives designated as hedging instruments | Interest rate products | ||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | ||||||
Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded | 1,359 | $ 623 | 3,974 | $ 1,839 | ||
Derivatives designated as hedging instruments | Interest rate products | Other long-term assets | ||||||
Derivative financial instruments | ||||||
Fair value of derivative Asset | $ 566 | |||||
Derivatives designated as hedging instruments | Interest rate products | Other long-term liabilities | ||||||
Derivative financial instruments | ||||||
Fair value of derivative liability | $ 476 | $ 476 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effects of offsetting (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Gross amounts offset in the consolidated balance sheets | ||
Gross amounts of recognized assets or Gross amounts offset in the condensed consolidated balance sheets | $ 566 | |
Gross amounts of recognized liabilities or Gross amounts offset in the consolidated balance sheets | $ 476 | |
Net amounts of assets presented in the consolidated balance sheets | 476 | 566 |
Gross amounts not offset in the consolidated balance sheets | ||
Net amount | $ 476 | $ 566 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets (liabilities) | ||
Other long-term assets | $ 4,632 | $ 5,038 |
Recurring basis | Level 1 | ||
Assets (liabilities) | ||
Pension plan assets | 5,820 | 5,231 |
Other long-term assets | 4,490 | 3,962 |
Recurring basis | Level 2 | ||
Assets (liabilities) | ||
Interest rate swaps | $ (476) | $ 434 |
INCOME TAXES (Details)
INCOME TAXES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019USD ($) | Sep. 30, 2018 | |
Effective income tax rate | ||||
Effective income tax rate (as a percent) | 36.90% | 26.70% | 31.10% | 26.80% |
Excess discreate tax (benefit) provision on share-based payment awards (as a percent) | 0.60% | 0.60% | 0.70% | 1.10% |
Discrete tax (provision) benefit (as a percent) | 5.9 | 2.2 | ||
Tax audit settlement expense | $ 384 |
LEASES (Details)
LEASES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
LEASES | ||
Options to terminate the leases | true | |
Operating lease option to terminate Period | 30 days | |
Fixed operating lease expense | $ 1,018 | $ 3,057 |
Variable operating lease expense | 39 | 118 |
Total operating lease expense | 1,057 | 3,175 |
Supplemental cash flow information related to the operating leases | ||
Cash paid for amounts included in the measurement of operating leases | 3,101 | |
ROU assets obtained in exchange for operating lease obligations | 20,604 | |
Lease assets and liabilities | ||
Right of use asset | $ 17,358 | $ 17,358 |
Right of use asset, Classification | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Right of use liability, current | $ 3,261 | $ 3,261 |
Right of use liability, current, Classification | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent |
Right of use liability, long-term | $ 14,107 | $ 14,107 |
Right of use liability, long-term, Classification | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Total ROU lease liabilities | $ 17,368 | $ 17,368 |
Weighted average remaining lease term | 8 years 4 months 6 days | 8 years 4 months 6 days |
Weighted average discount rate | 2.95% | 2.95% |
Maturity of the operating lease liabilities | ||
2020 | $ 3,711 | $ 3,711 |
2021 | 3,004 | 3,004 |
2022 | 2,419 | 2,419 |
2023 | 2,065 | 2,065 |
2024 | 1,682 | 1,682 |
Thereafter | 6,349 | 6,349 |
Total undiscounted cash flows | 19,230 | 19,230 |
Less: present value discount | (1,862) | (1,862) |
Total lease liabilities | $ 17,368 | $ 17,368 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss) | ||||
Balances | $ 111,200 | $ 95,525 | $ 101,813 | $ 87,347 |
Balances | 113,796 | 100,483 | 113,796 | 100,483 |
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
Balances | (9,555) | (6,580) | (8,518) | (5,586) |
Unrealized gain (loss) on cash flow hedges | (78) | 121 | (675) | 936 |
Amounts reclassified from AOCI | (27) | 16 | (128) | 52 |
Foreign currency translation loss | (2,369) | (307) | (2,708) | (2,152) |
Balances | (12,029) | (6,750) | (12,029) | (6,750) |
Defined Benefit Plan Liability | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
Balances | (1,006) | (945) | (1,006) | (945) |
Balances | (1,006) | (945) | (1,006) | (945) |
Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
Balances | (264) | 1,047 | 434 | 196 |
Unrealized gain (loss) on cash flow hedges | (78) | 121 | (675) | 936 |
Amounts reclassified from AOCI | (27) | 16 | (128) | 52 |
Balances | (369) | 1,184 | (369) | 1,184 |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
Balances | (8,285) | (6,682) | (7,946) | (4,837) |
Foreign currency translation loss | (2,369) | (307) | (2,708) | (2,152) |
Balances | $ (10,654) | $ (6,989) | $ (10,654) | $ (6,989) |
DIVIDENDS PER SHARE (Details)
DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
DIVIDENDS PER SHARE | ||||||||
Dividends declared (in dollars per share) | $ 0.030 | $ 0.030 | $ 0.030 | $ 0.030 | $ 0.030 | $ 0.025 | $ 0.03 | |
Total dividends declared | $ 863 | $ 805 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic and diluted weighted-average shares outstanding | ||||
Basic weighted average shares outstanding (in shares) | 9,414 | 9,273 | 9,390 | 9,251 |
Dilutive effect of equity awards (in shares) | 50 | 98 | 45 | 86 |
Diluted weighted average shares outstanding (in shares) | 9,464 | 9,371 | 9,435 | 9,337 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Segment information | |||||
Number of operating segments | segment | 1 | ||||
Revenues derived from foreign subsidiaries | $ 122,020,000 | $ 111,073 | |||
Identifiable assets | $ 308,242,000 | $ 308,242,000 | $ 285,301,000 | ||
Total Revenue | |||||
Segment information | |||||
Percentage of concentration risk | 17.00% | 20.00% | 16.00% | 20.00% | |
Trade receivables | |||||
Segment information | |||||
Percentage of concentration risk | 17.00% | 13.00% | |||
Outside the United States | |||||
Segment information | |||||
Revenues derived from foreign subsidiaries | $ 39,534,000 | $ 36,216,000 | |||
Wholly owned foreign subsidiaries | |||||
Segment information | |||||
Revenues derived from foreign subsidiaries | 31,894,000 | $ 30,717,000 | $ 96,461,000 | $ 96,618,000 | |
Identifiable assets | $ 92,403,000 | $ 92,403,000 | $ 88,400,000 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
Recently Adopted Accounting Pronouncements | ||
Operating lease ROU asset | $ 17,358 | |
Total lease liabilities | $ 17,368 | |
ASU 2016-02 | ||
Recently Adopted Accounting Pronouncements | ||
Operating lease ROU asset | $ 19,728 | |
Total lease liabilities | $ 20,350 |