☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New York | 11-2153962 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2929 California Street, Torrance, California | 90503 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | MPAA | The Nasdaq Global Select Market |
Large accelerated filer ☐ | Accelerated filer ☑ |
Non-accelerated filer ☐ | Smaller reporting company ☐ |
Emerging growth company ☐ |
PART I — FINANCIAL INFORMATION | ||
4 | ||
4 | ||
5 | ||
6 | ||
7 | ||
8 | ||
PART II — OTHER INFORMATION | ||
December 31, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | |||||||||||||
ASSETS | (Unaudited) | (As Adjusted) | (Unaudited) | |||||||||||||
Current assets: | (Note 4) | |||||||||||||||
Cash and cash equivalents | $ | 8,591,000 | $ | 13,049,000 | $ | 6,455,000 | $ | 9,911,000 | ||||||||
Short-term investments | 2,868,000 | 2,828,000 | 2,192,000 | 3,273,000 | ||||||||||||
Accounts receivable — net | 54,761,000 | 63,174,000 | 69,914,000 | 56,015,000 | ||||||||||||
Inventory— net | 205,075,000 | 161,210,000 | ||||||||||||||
Inventory — net | 250,667,000 | 233,726,000 | ||||||||||||||
Inventory unreturned | 10,746,000 | 7,508,000 | 8,684,000 | 8,469,000 | ||||||||||||
Contract assets (see Note 9) | 26,965,000 | 23,206,000 | ||||||||||||||
Contract assets (see Note 5) | 19,471,000 | 22,183,000 | ||||||||||||||
Income tax receivable | 12,887,000 | 7,972,000 | 10,205,000 | 10,009,000 | ||||||||||||
Prepaid expenses and other current assets | 7,946,000 | 8,608,000 | 8,846,000 | 9,296,000 | ||||||||||||
Total current assets | 329,839,000 | 287,555,000 | 376,434,000 | 352,882,000 | ||||||||||||
Plant and equipment — net | 32,349,000 | 28,322,000 | 40,723,000 | 35,151,000 | ||||||||||||
Operating lease assets (see Note 9) | 49,262,000 | - | ||||||||||||||
Long-term deferred income taxes | 7,607,000 | 6,698,000 | 10,237,000 | 9,746,000 | ||||||||||||
Long-term contract assets (see Note 9) | 222,999,000 | 222,731,000 | ||||||||||||||
Long-term contract assets (see Note 5) | 224,329,000 | 221,876,000 | ||||||||||||||
Goodwill | 3,402,000 | 2,551,000 | 3,205,000 | 3,205,000 | ||||||||||||
Intangible assets — net | 8,762,000 | 3,766,000 | 7,493,000 | 8,431,000 | ||||||||||||
Other assets | 891,000 | 804,000 | 875,000 | 1,071,000 | ||||||||||||
TOTAL ASSETS | $ | 605,849,000 | $ | 552,427,000 | $ | 712,558,000 | $ | 632,362,000 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 101,730,000 | $ | 73,273,000 | $ | 85,307,000 | $ | 92,461,000 | ||||||||
Accrued liabilities | 13,382,000 | 12,048,000 | 14,318,000 | 14,604,000 | ||||||||||||
Customer finished goods returns accrual | 19,236,000 | 17,805,000 | 23,621,000 | 22,615,000 | ||||||||||||
Contract liabilities (see Note 12) | 29,239,000 | 32,603,000 | ||||||||||||||
Contract liabilities (see Note 8) | 24,064,000 | 30,599,000 | ||||||||||||||
Revolving loan | 78,406,000 | 54,000,000 | 144,000,000 | 110,400,000 | ||||||||||||
Other current liabilities | 5,019,000 | 4,471,000 | 4,852,000 | 4,990,000 | ||||||||||||
Operating lease liabilities (see Note 9) | 4,487,000 | - | ||||||||||||||
Current portion of term loan | 3,685,000 | 3,068,000 | 3,678,000 | 3,685,000 | ||||||||||||
Total current liabilities | 250,697,000 | 197,268,000 | 304,327,000 | 279,354,000 | ||||||||||||
Term loan, less current portion | 25,109,000 | 13,913,000 | 22,299,000 | 24,187,000 | ||||||||||||
Long-term contract liabilities (see Note 12) | 42,527,000 | 48,183,000 | ||||||||||||||
Long-term contract liabilities (see Note 8) | 49,327,000 | 40,889,000 | ||||||||||||||
Long-term deferred income taxes | 234,000 | 226,000 | 130,000 | 257,000 | ||||||||||||
Long-term operating lease liabilities (see Note 9) | 47,925,000 | - | ||||||||||||||
Other liabilities | 7,494,000 | 5,957,000 | 7,205,000 | 7,920,000 | ||||||||||||
Total liabilities | 326,061,000 | 265,547,000 | 431,213,000 | 352,607,000 | ||||||||||||
Commitments and contingencies | ||||||||||||||||
Shareholders’ equity: | ||||||||||||||||
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued | - | - | - | - | ||||||||||||
Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued | - | - | - | - | ||||||||||||
Common stock; par value $.01 per share, 50,000,000 shares authorized; 18,812,102 and 18,893,102 shares issued and outstanding at December 31, 2018 and March 31, 2018, respectively | 188,000 | 189,000 | ||||||||||||||
Common stock; par value $.01 per share, 50,000,000 shares authorized; 18,944,886 and 18,817,400 shares issued and outstanding at September 30, 2019 and March 31, 2019, respectively | 189,000 | 188,000 | ||||||||||||||
Additional paid-in capital | 212,621,000 | 213,609,000 | 216,430,000 | 215,047,000 | ||||||||||||
Retained earnings | 74,172,000 | 78,510,000 | 71,445,000 | 71,407,000 | ||||||||||||
Accumulated other comprehensive loss | (7,193,000 | ) | (5,428,000 | ) | (6,719,000 | ) | (6,887,000 | ) | ||||||||
Total shareholders’ equity | 279,788,000 | 286,880,000 | 281,345,000 | 279,755,000 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 605,849,000 | $ | 552,427,000 | $ | 712,558,000 | $ | 632,362,000 |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(As Adjusted) | (As Adjusted) | |||||||||||||||
Net sales | $ | 124,113,000 | $ | 102,878,000 | $ | 343,720,000 | $ | 307,834,000 | ||||||||
Cost of goods sold | 102,952,000 | 76,817,000 | 280,496,000 | 229,894,000 | ||||||||||||
Gross profit | 21,161,000 | 26,061,000 | 63,224,000 | 77,940,000 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 12,331,000 | 11,915,000 | 33,419,000 | 26,418,000 | ||||||||||||
Sales and marketing | 5,149,000 | 4,048,000 | 14,078,000 | 10,899,000 | ||||||||||||
Research and development | 2,054,000 | 1,678,000 | 5,574,000 | 3,920,000 | ||||||||||||
Total operating expenses | 19,534,000 | 17,641,000 | 53,071,000 | 41,237,000 | ||||||||||||
Operating income | 1,627,000 | 8,420,000 | 10,153,000 | 36,703,000 | ||||||||||||
Interest expense, net | 5,764,000 | 3,953,000 | 16,538,000 | 10,789,000 | ||||||||||||
(Loss) income before income tax (benefit) expense | (4,137,000 | ) | 4,467,000 | (6,385,000 | ) | 25,914,000 | ||||||||||
Income tax (benefit) expense | (1,035,000 | ) | 6,994,000 | (1,301,000 | ) | 15,026,000 | ||||||||||
Net (loss) income | $ | (3,102,000 | ) | $ | (2,527,000 | ) | $ | (5,084,000 | ) | $ | 10,888,000 | |||||
Basic net (loss) income per share | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.27 | ) | $ | 0.58 | |||||
Diluted net (loss) income per share | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.27 | ) | $ | 0.56 | |||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 18,810,702 | 19,069,152 | 18,861,617 | 18,814,967 | ||||||||||||
Diluted | 18,810,702 | 19,069,152 | 18,861,617 | 19,400,744 |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(As Adjusted) | (As Adjusted) | |||||||||||||||
Net (loss) income | $ | (3,102,000 | ) | $ | (2,527,000 | ) | $ | (5,084,000 | ) | $ | 10,888,000 | |||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Unrealized gain on short-term investments (net of tax of $0, $55,000, $0 and $133,000) | - | 83,000 | - | 199,000 | ||||||||||||
Foreign currency translation (loss) gain | (302,000 | ) | 247,000 | (1,019,000 | ) | 1,084,000 | ||||||||||
Total other comprehensive (loss) gain, net of tax | (302,000 | ) | 330,000 | (1,019,000 | ) | 1,283,000 | ||||||||||
Comprehensive (loss) income | $ | (3,404,000 | ) | $ | (2,197,000 | ) | $ | (6,103,000 | ) | $ | 12,171,000 |
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net sales | $ | 150,374,000 | $ | 127,939,000 | $ | 259,522,000 | $ | 219,607,000 | ||||||||
Cost of goods sold | 113,801,000 | 102,228,000 | 205,366,000 | 177,544,000 | ||||||||||||
Gross profit | 36,573,000 | 25,711,000 | 54,156,000 | 42,063,000 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 14,285,000 | 8,997,000 | 26,285,000 | 21,088,000 | ||||||||||||
Sales and marketing | 5,448,000 | 4,537,000 | 10,367,000 | 8,929,000 | ||||||||||||
Research and development | 2,148,000 | 1,784,000 | 4,520,000 | 3,520,000 | ||||||||||||
Total operating expenses | 21,881,000 | 15,318,000 | 41,172,000 | 33,537,000 | ||||||||||||
Operating income | 14,692,000 | 10,393,000 | 12,984,000 | 8,526,000 | ||||||||||||
Interest expense, net | 6,523,000 | 5,699,000 | 12,696,000 | 10,774,000 | ||||||||||||
Income (loss) before income tax expense (benefit) | 8,169,000 | 4,694,000 | 288,000 | (2,248,000 | ) | |||||||||||
Income tax expense (benefit) | 1,980,000 | 1,181,000 | 250,000 | (266,000 | ) | |||||||||||
Net income (loss) | $ | 6,189,000 | $ | 3,513,000 | $ | 38,000 | $ | (1,982,000 | ) | |||||||
Basic net income (loss) per share | $ | 0.33 | $ | 0.19 | $ | 0.00 | $ | (0.10 | ) | |||||||
Diluted net income (loss) per share | $ | 0.32 | $ | 0.18 | $ | 0.00 | $ | (0.10 | ) | |||||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 18,903,182 | 18,878,674 | 18,862,901 | 18,887,214 | ||||||||||||
Diluted | 19,217,327 | 19,319,465 | 19,246,599 | 18,887,214 |
Nine Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | (As Adjusted) | |||||||
Net (loss) income | $ | (5,084,000 | ) | $ | 10,888,000 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Depreciation | 4,313,000 | 2,805,000 | ||||||
Amortization of intangible assets | 620,000 | 517,000 | ||||||
Amortization and write-off of debt issuance costs | 798,000 | 864,000 | ||||||
Amortization of interest on contract liabilities, net | 725,000 | 378,000 | ||||||
Gain due to change in fair value of the warrant liability | - | (2,313,000 | ) | |||||
Loss on short-term investments | 240,000 | - | ||||||
Net provision for inventory reserves | 6,997,000 | 4,954,000 | ||||||
Net provision for customer payment discrepancies | 602,000 | 1,194,000 | ||||||
Net provision for doubtful accounts | 221,000 | 17,000 | ||||||
Deferred income taxes | (962,000 | ) | (2,430,000 | ) | ||||
Share-based compensation expense | 3,151,000 | 2,658,000 | ||||||
Loss on disposal of plant and equipment | 24,000 | 9,000 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||
Accounts receivable | 8,432,000 | (4,240,000 | ) | |||||
Inventory | (49,431,000 | ) | (34,643,000 | ) | ||||
Inventory unreturned | (3,238,000 | ) | 332,000 | |||||
Income tax receivable | (4,921,000 | ) | (69,000 | ) | ||||
Prepaid expenses and other current assets | 1,398,000 | (33,000 | ) | |||||
Other assets | (129,000 | ) | (153,000 | ) | ||||
Accounts payable and accrued liabilities | 27,968,000 | (15,946,000 | ) | |||||
Customer finished goods returns accrual | 1,431,000 | (1,705,000 | ) | |||||
Contract assets, net | (4,027,000 | ) | (16,208,000 | ) | ||||
Contract liabilities, net | (10,794,000 | ) | 41,175,000 | |||||
Other liabilities | 1,338,000 | 2,146,000 | ||||||
Net cash used in operating activities | (20,328,000 | ) | (9,803,000 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of plant and equipment | (8,548,000 | ) | (4,765,000 | ) | ||||
Purchase of business, net of cash acquired | (4,417,000 | ) | (4,993,000 | ) | ||||
Change in short-term investments | (279,000 | ) | (287,000 | ) | ||||
Net cash used in investing activities | (13,244,000 | ) | (10,045,000 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under revolving loan | 64,900,000 | 62,000,000 | ||||||
Repayments of revolving loan | (40,494,000 | ) | (37,000,000 | ) | ||||
Borrowings under term loan | 13,594,000 | - | ||||||
Repayments of term loan | (1,719,000 | ) | (2,344,000 | ) | ||||
Payments for debt issuance costs | (1,780,000 | ) | (462,000 | ) | ||||
Payments on capital lease obligations | (1,071,000 | ) | (612,000 | ) | ||||
Exercise of stock options | 244,000 | 295,000 | ||||||
Cash used to net share settle equity awards | (322,000 | ) | (596,000 | ) | ||||
Settlement of warrant | - | 4,000,000 | ||||||
Repurchase of common stock, including fees | (4,062,000 | ) | (4,476,000 | ) | ||||
Net cash provided by financing activities | 29,290,000 | 20,805,000 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (176,000 | ) | 46,000 | |||||
Net (decrease) increase in cash and cash equivalents | (4,458,000 | ) | 1,003,000 | |||||
Cash and cash equivalents — Beginning of period | 13,049,000 | 9,029,000 | ||||||
Cash and cash equivalents — End of period | $ | 8,591,000 | $ | 10,032,000 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest, net | $ | 14,846,000 | $ | 9,508,000 | ||||
Income taxes, net of refunds | 3,263,000 | 16,598,000 | ||||||
Non-cash investing and financing activities: | ||||||||
Plant and equipment acquired under capital lease | $ | 207,000 | $ | 582,000 | ||||
Contingent consideration | 3,560,000 | - |
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) | $ | 6,189,000 | $ | 3,513,000 | $ | 38,000 | $ | (1,982,000 | ) | |||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Foreign currency translation (loss) gain | (431,000 | ) | (2,000 | ) | 168,000 | (717,000 | ) | |||||||||
Total other comprehensive (loss) income, net of tax | (431,000 | ) | (2,000 | ) | 168,000 | (717,000 | ) | |||||||||
Comprehensive income (loss) | $ | 5,758,000 | $ | 3,511,000 | $ | 206,000 | $ | (2,699,000 | ) |
Common Stock | ||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balance at March 31, 2019 | 18,817,400 | $ | 188,000 | $ | 215,047,000 | $ | 71,407,000 | $ | (6,887,000 | ) | $ | 279,755,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 988,000 | - | - | 988,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 36,872 | 1,000 | (363,000 | ) | - | - | (362,000 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | 599,000 | 599,000 | ||||||||||||||||||
Net loss | - | - | - | (6,151,000 | ) | - | (6,151,000 | ) | ||||||||||||||||
Balance at June 30, 2019 | 18,854,272 | $ | 189,000 | $ | 215,672,000 | $ | 65,256,000 | $ | (6,288,000 | ) | $ | 274,829,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 1,053,000 | - | - | 1,053,000 | ||||||||||||||||||
Exercise of stock options | 52,800 | - | 405,000 | - | - | 405,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 37,814 | - | (700,000 | ) | - | - | (700,000 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | (431,000 | ) | (431,000 | ) | ||||||||||||||||
Net income | - | - | - | 6,189,000 | - | 6,189,000 | ||||||||||||||||||
Balance at September 30, 2019 | 18,944,886 | $ | 189,000 | $ | 216,430,000 | $ | 71,445,000 | $ | (6,719,000 | ) | $ | 281,345,000 |
Common Stock | ||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balance at March 31, 2018 | 18,893,102 | $ | 189,000 | $ | 213,609,000 | $ | 78,510,000 | $ | (5,428,000 | ) | $ | 286,880,000 | ||||||||||||
Cumulative-effect adjustment for the adoption of ASU 2016-01 | - | - | - | 746,000 | (746,000 | ) | - | |||||||||||||||||
Balance at April 1, 2018 | 18,893,102 | $ | 189,000 | $ | 213,609,000 | $ | 79,256,000 | $ | (6,174,000 | ) | $ | 286,880,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 941,000 | - | - | 941,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 23,006 | - | (192,000 | ) | - | - | (192,000 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | (715,000 | ) | (715,000 | ) | ||||||||||||||||
Net loss | - | - | - | (5,495,000 | ) | - | (5,495,000 | ) | ||||||||||||||||
Balance at June 30, 2018 | 18,916,108 | $ | 189,000 | $ | 214,358,000 | $ | 73,761,000 | $ | (6,889,000 | ) | $ | 281,419,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 1,180,000 | - | - | 1,180,000 | ||||||||||||||||||
Exercise of stock options | 39,032 | 1,000 | 243,000 | - | - | 244,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 8,152 | - | (128,000 | ) | - | - | (128,000 | ) | ||||||||||||||||
Repurchase and cancellation of treasury stock, including fees | (163,815 | ) | (2,000 | ) | (4,060,000 | ) | - | - | (4,062,000 | ) | ||||||||||||||
Foreign currency translation | - | - | - | - | (2,000 | ) | (2,000 | ) | ||||||||||||||||
Net income | - | - | - | 3,513,000 | - | 3,513,000 | ||||||||||||||||||
Balance at September 30, 2018 | 18,799,477 | $ | 188,000 | $ | 211,593,000 | $ | 77,274,000 | $ | (6,891,000 | ) | $ | 282,164,000 |
Six Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 38,000 | $ | (1,982,000 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation and amortization | 3,631,000 | 2,834,000 | ||||||
Amortization of intangible assets | 988,000 | 384,000 | ||||||
Amortization and write-off of debt issuance costs | 383,000 | 647,000 | ||||||
Amortization of interest on contract liabilities, net | 478,000 | 513,000 | ||||||
Noncash lease expense | 2,431,000 | - | ||||||
Loss due to the change in the fair value of the contingent consideration | 123,000 | - | ||||||
Loss due to the remeasurement of lease liabilities | 637,000 | - | ||||||
Gain on short-term investments | (136,000 | ) | (180,000 | ) | ||||
Net provision for inventory reserves | 6,656,000 | 5,285,000 | ||||||
Net provision for customer payment discrepancies | 721,000 | 274,000 | ||||||
Net provision for doubtful accounts | 106,000 | 206,000 | ||||||
Deferred income taxes | (638,000 | ) | (667,000 | ) | ||||
Share-based compensation expense | 2,041,000 | 2,121,000 | ||||||
Loss on disposal of plant and equipment | 3,000 | 11,000 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||
Accounts receivable | (14,672,000 | ) | 6,598,000 | |||||
Inventory | (23,254,000 | ) | (32,380,000 | ) | ||||
Inventory unreturned | (215,000 | ) | (1,592,000 | ) | ||||
Income tax receivable | (200,000 | ) | (3,595,000 | ) | ||||
Prepaid expenses and other current assets | 506,000 | (658,000 | ) | |||||
Other assets | 182,000 | (79,000 | ) | |||||
Accounts payable and accrued liabilities | (6,600,000 | ) | 17,840,000 | |||||
Customer finished goods returns accrual | 1,005,000 | 2,156,000 | ||||||
Contract assets, net | 261,000 | (8,773,000 | ) | |||||
Contract liabilities, net | 1,405,000 | 2,724,000 | ||||||
Operating lease liabilities | (2,107,000 | ) | - | |||||
Other liabilities | (509,000 | ) | 1,904,000 | |||||
Net cash used in operating activities | (26,736,000 | ) | (6,409,000 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of plant and equipment | (6,943,000 | ) | (5,259,000 | ) | ||||
Proceeds from sale of plant and equipment | 26,000 | - | ||||||
Change in short-term investments | 1,216,000 | (222,000 | ) | |||||
Net cash used in investing activities | (5,701,000 | ) | (5,481,000 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under revolving loan | 42,000,000 | 35,200,000 | ||||||
Repayments of revolving loan | (8,400,000 | ) | (36,294,000 | ) | ||||
Borrowings under term loan | - | 13,594,000 | ||||||
Repayments of term loan | (1,875,000 | ) | (782,000 | ) | ||||
Payments for debt issuance costs | (901,000 | ) | (1,757,000 | ) | ||||
Payments on finance lease obligations | (1,108,000 | ) | (711,000 | ) | ||||
Exercise of stock options | 405,000 | 244,000 | ||||||
Cash used to net share settle equity awards | (1,062,000 | ) | (320,000 | ) | ||||
Repurchase of common stock, including fees | - | (4,062,000 | ) | |||||
Net cash provided by financing activities | 29,059,000 | 5,112,000 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (78,000 | ) | (96,000 | ) | ||||
Net decrease in cash and cash equivalents | (3,456,000 | ) | (6,874,000 | ) | ||||
Cash and cash equivalents — Beginning of period | 9,911,000 | 13,049,000 | ||||||
Cash and cash equivalents — End of period | $ | 6,455,000 | $ | 6,175,000 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest, net | $ | 11,859,000 | $ | 9,534,000 | ||||
Cash paid for income taxes, net of refunds | - | 3,263,000 | ||||||
Cash paid for operating leases | 3,538,000 | - | ||||||
Cash paid for finance leases | 1,249,000 | - | ||||||
Plant and equipment acquired under finance leases | 2,308,000 | $ | - | |||||
Assets acquired under operating leases | 1,497,000 | - |
1. | Company Background and Organization |
2. | Basis of Presentation and New Accounting Pronouncements |
Year Ended March 31, 2018 | ||||||||||||
Revised Consolidated Statement of Operations Amounts: | As Previously Reported | Adjustment | As Revised | |||||||||
Net sales | $ | 428,072,000 | $ | (1,081,000 | ) | $ | 426,991,000 | |||||
Cost of goods sold | 322,199,000 | (1,750,000 | ) | 320,449,000 | ||||||||
Gross profit | 105,873,000 | 669,000 | 106,542,000 | |||||||||
Operating expenses: | ||||||||||||
General and administrative | 35,527,000 | (50,000 | ) | 35,477,000 | ||||||||
Sales and marketing | 15,030,000 | - | 15,030,000 | |||||||||
Research and development | 5,692,000 | - | 5,692,000 | |||||||||
Total operating expenses | 56,249,000 | (50,000 | ) | 56,199,000 | ||||||||
Operating income | 49,624,000 | 719,000 | 50,343,000 | |||||||||
Interest expense, net | 15,445,000 | - | 15,445,000 | |||||||||
Income before income tax expense (benefit) | 34,179,000 | 719,000 | 34,898,000 | |||||||||
Income tax expense (benefit) | 17,863,000 | (1,791,000 | ) | 16,072,000 | ||||||||
Net income | $ | 16,316,000 | $ | 2,510,000 | $ | 18,826,000 | ||||||
Basic net income per share | $ | 0.87 | $ | 0.13 | $ | 1.00 | ||||||
Diluted net income per share | $ | 0.84 | $ | 0.13 | $ | 0.96 |
Year Ended March 31, 2018 | ||||||||||||
Revised Consolidated Statement of Comprehensive Income Amounts: | As Previously Reported | Adjustment | As Revised | |||||||||
Net income | $ | 16,316,000 | $ | 2,510,000 | $ | 18,826,000 | ||||||
Comprehensive income | $ | 18,329,000 | $ | 2,510,000 | $ | 20,839,000 |
March 31, 2018 | ||||||||||||
Revised Consolidated Balance Sheet Amounts: | As Previously Reported | Adjustment | As Revised | |||||||||
ASSETS | ||||||||||||
Income tax receivable | $ | 7,796,000 | $ | 176,000 | $ | 7,972,000 | ||||||
Prepaid expenses and other current assets | 11,491,000 | 3,613,000 | 15,104,000 | |||||||||
Long-term core inventory — net | 301,656,000 | (3,362,000 | ) | 298,294,000 | ||||||||
Long-term deferred income taxes | 10,556,000 | (3,619,000 | ) | 6,937,000 | ||||||||
Other assets | 7,392,000 | 14,603,000 | 21,995,000 | |||||||||
TOTAL ASSETS | $ | 494,497,000 | $ | 11,411,000 | $ | 505,908,000 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Accrued liabilities | $ | 11,799,000 | $ | 249,000 | $ | 12,048,000 | ||||||
TOTAL LIABILITIES | $ | 219,521,000 | $ | 249,000 | $ | 219,770,000 | ||||||
Retained earnings | $ | 66,606,000 | $ | 11,162,000 | $ | 77,768,000 | ||||||
TOTAL SHAREHOLDERS’ EQUITY | $ | 274,976,000 | $ | 11,162,000 | $ | 286,138,000 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 494,497,000 | $ | 11,411,000 | $ | 505,908,000 |
Year Ended March 31, 2018 | ||||||||||||
Revised Consolidated Statement of Shareholders’ Equity Amounts: | As Previously Reported | Adjustment | As Revised | |||||||||
Retained earnings at March 31, 2017 | $ | 50,290,000 | $ | 8,652,000 | $ | 58,942,000 | ||||||
Net income | 16,316,000 | 2,510,000 | 18,826,000 | |||||||||
Retained earnings at March 31, 2018 | $ | 66,606,000 | $ | 11,162,000 | $ | 77,768,000 |
Year Ended March 31, 2018 | ||||||||||||
Revised Consolidated Statement of Cash Flow from Operating Activities Amounts: | As Previously Reported | Adjustment | As Revised | |||||||||
Net income | $ | 16,316,000 | $ | 2,510,000 | $ | 18,826,000 | ||||||
Deferred income taxes | 3,055,000 | (1,560,000 | ) | 1,495,000 | ||||||||
Income tax receivable | (6,081,000 | ) | (231,000 | ) | (6,312,000 | ) | ||||||
Prepaid expenses and other current assets | (2,507,000 | ) | (318,000 | ) | (2,825,000 | ) | ||||||
Other assets | (384,000 | ) | 788,000 | 404,000 | ||||||||
Accounts payable and accrued liabilities | (11,621,000 | ) | (50,000 | ) | (11,671,000 | ) | ||||||
Long-term core inventory | (45,839,000 | ) | (1,139,000 | ) | (46,978,000 | ) | ||||||
Net cash used in operating activities | $ | (13,944,000 | ) | $ | - | $ | (13,944,000 | ) |
Three Months Ended December 31, 2017 | Nine Months Ended December 31, 2017 | |||||||||||||||||||||||
Revised Consolidated Statement of Operations Amounts: | As Previously Reported | Adjustment | As Revised | As Previously Reported | Adjustment | As Revised | ||||||||||||||||||
Net sales | $ | 100,127,000 | $ | 1,586,000 | $ | 101,713,000 | $ | 306,964,000 | $ | (159,000 | ) | $ | 306,805,000 | |||||||||||
Cost of goods sold | 77,583,000 | (1,750,000 | ) | 75,833,000 | 231,419,000 | (1,750,000 | ) | 229,669,000 | ||||||||||||||||
Gross profit | 22,544,000 | 3,336,000 | 25,880,000 | 75,545,000 | 1,591,000 | 77,136,000 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
General and administrative | 11,915,000 | - | 11,915,000 | 26,717,000 | (299,000 | ) | 26,418,000 | |||||||||||||||||
Sales and marketing | 4,048,000 | - | 4,048,000 | 10,899,000 | - | 10,899,000 | ||||||||||||||||||
Research and development | 1,678,000 | - | 1,678,000 | 3,920,000 | - | 3,920,000 | ||||||||||||||||||
Total operating expenses | 17,641,000 | - | 17,641,000 | 41,536,000 | (299,000 | ) | 41,237,000 | |||||||||||||||||
Operating income | 4,903,000 | 3,336,000 | 8,239,000 | 34,009,000 | 1,890,000 | 35,899,000 | ||||||||||||||||||
Interest expense, net | 3,953,000 | - | 3,953,000 | 10,789,000 | - | 10,789,000 | ||||||||||||||||||
Income before income tax expense (benefit) | 950,000 | 3,336,000 | 4,286,000 | 23,220,000 | 1,890,000 | 25,110,000 | ||||||||||||||||||
Income tax expense (benefit) | 7,756,000 | (820,000 | ) | 6,936,000 | 16,099,000 | (1,357,000 | ) | 14,742,000 | ||||||||||||||||
Net (loss) income | $ | (6,806,000 | ) | $ | 4,156,000 | $ | (2,650,000 | ) | $ | 7,121,000 | $ | 3,247,000 | $ | 10,368,000 | ||||||||||
Basic net (loss) income per share | $ | (0.36 | ) | $ | 0.22 | $ | (0.14 | ) | $ | 0.38 | $ | 0.17 | $ | 0.55 | ||||||||||
Diluted net (loss) income per share | $ | (0.36 | ) | $ | 0.22 | $ | (0.14 | ) | $ | 0.37 | $ | 0.17 | $ | 0.53 |
Three Months Ended December 31, 2017 | Nine Months Ended December 31, 2017 | |||||||||||||||||||||||
Revised Consolidated Statement of Comprehensive (Loss) Income Amounts: | As Previously Reported | Adjustment | As Revised | As Previously Reported | Adjustment | As Revised | ||||||||||||||||||
Net (loss) income | $ | (6,806,000 | ) | $ | 4,156,000 | $ | (2,650,000 | ) | $ | 7,121,000 | $ | 3,247,000 | $ | 10,368,000 | ||||||||||
Comprehensive (loss) income | $ | (6,476,000 | ) | $ | 4,156,000 | $ | (2,320,000 | ) | $ | 8,404,000 | $ | 3,247,000 | $ | 11,651,000 |
Nine Months Ended December 31, 2017 | ||||||||||||
Revised Consolidated Statement of Cash Flow from Operating Activities Amounts: | As Previously Reported | Adjustment | As Revised | |||||||||
Net income | $ | 7,121,000 | $ | 3,247,000 | $ | 10,368,000 | ||||||
Deferred income taxes | (909,000 | ) | (1,805,000 | ) | (2,714,000 | ) | ||||||
Prepaid expenses and other current assets | (2,093,000 | ) | 448,000 | (1,645,000 | ) | |||||||
Other assets | 289,000 | (452,000 | ) | (163,000 | ) | |||||||
Accounts payable and accrued liabilities | (15,647,000 | ) | (299,000 | ) | (15,946,000 | ) | ||||||
Long-term core inventory | (37,222,000 | ) | (1,139,000 | ) | (38,361,000 | ) | ||||||
Net cash used in operating activities | $ | (9,803,000 | ) | $ | - | $ | (9,803,000 | ) |
Three Months Ended December 31, 2017 | Nine Months Ended December 31, 2017 | |||||||||||||||||||||||
As Revised | Adoption of ASC 606 | As Adjusted | As Revised | Adoption of ASC 606 | As Adjusted | |||||||||||||||||||
Net sales | $ | 101,713,000 | $ | 1,165,000 | $ | 102,878,000 | $ | 306,805,000 | $ | 1,029,000 | $ | 307,834,000 | ||||||||||||
Cost of goods sold | 75,833,000 | 984,000 | 76,817,000 | 229,669,000 | 225,000 | 229,894,000 | ||||||||||||||||||
Gross profit | 25,880,000 | 181,000 | 26,061,000 | 77,136,000 | 804,000 | 77,940,000 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
General and administrative | 11,915,000 | - | 11,915,000 | 26,418,000 | - | 26,418,000 | ||||||||||||||||||
Sales and marketing | 4,048,000 | - | 4,048,000 | 10,899,000 | - | 10,899,000 | ||||||||||||||||||
Research and development | 1,678,000 | - | 1,678,000 | 3,920,000 | - | 3,920,000 | ||||||||||||||||||
Total operating expenses | 17,641,000 | - | 17,641,000 | 41,237,000 | - | 41,237,000 | ||||||||||||||||||
Operating income | 8,239,000 | 181,000 | 8,420,000 | 35,899,000 | 804,000 | 36,703,000 | ||||||||||||||||||
Interest expense, net | 3,953,000 | - | 3,953,000 | 10,789,000 | - | 10,789,000 | ||||||||||||||||||
Income before income tax expense | 4,286,000 | 181,000 | 4,467,000 | 25,110,000 | 804,000 | 25,914,000 | ||||||||||||||||||
Income tax expense | 6,936,000 | 58,000 | 6,994,000 | 14,742,000 | 284,000 | 15,026,000 | ||||||||||||||||||
Net (loss) income | $ | (2,650,000 | ) | $ | 123,000 | $ | (2,527,000 | ) | $ | 10,368,000 | $ | 520,000 | $ | 10,888,000 | ||||||||||
Basic net (loss) income per share | $ | (0.14 | ) | $ | 0.01 | $ | (0.13 | ) | $ | 0.55 | $ | 0.03 | $ | 0.58 | ||||||||||
Diluted net (loss) income per share | $ | (0.14 | ) | $ | 0.01 | $ | (0.13 | ) | $ | 0.53 | $ | 0.03 | $ | 0.56 | ||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||
Basic | 19,069,152 | 19,069,152 | 19,069,152 | 18,814,967 | 18,814,967 | 18,814,967 | ||||||||||||||||||
Diluted | 19,069,152 | 19,069,152 | 19,069,152 | 19,400,744 | 19,400,744 | 19,400,744 |
March 31, 2018 | ||||||||||||
As Revised | Adoption of ASC 606 | As Adjusted | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 13,049,000 | $ | - | $ | 13,049,000 | ||||||
Short-term investments | 2,828,000 | - | 2,828,000 | |||||||||
Accounts receivable — net | 15,738,000 | 47,436,000 | 63,174,000 | |||||||||
Inventory— net | 76,275,000 | 84,935,000 | 161,210,000 | |||||||||
Inventory unreturned | 7,508,000 | - | 7,508,000 | |||||||||
Contract assets | - | 23,206,000 | 23,206,000 | |||||||||
Income tax receivable | 7,972,000 | - | 7,972,000 | |||||||||
Prepaid expenses and other current assets | 15,104,000 | (6,496,000 | ) | 8,608,000 | ||||||||
Total current assets | 138,474,000 | 149,081,000 | 287,555,000 | |||||||||
Plant and equipment — net | 28,322,000 | - | 28,322,000 | |||||||||
Long-term core inventory — net | 298,294,000 | (298,294,000 | ) | - | ||||||||
Long-term core inventory deposits | 5,569,000 | (5,569,000 | ) | - | ||||||||
Long-term deferred income taxes | 6,937,000 | (239,000 | ) | 6,698,000 | ||||||||
Long-term contract assets | - | 222,731,000 | 222,731,000 | |||||||||
Goodwill | 2,551,000 | - | 2,551,000 | |||||||||
Intangible assets — net | 3,766,000 | - | 3,766,000 | |||||||||
Other assets | 21,995,000 | (21,191,000 | ) | 804,000 | ||||||||
TOTAL ASSETS | $ | 505,908,000 | $ | 46,519,000 | $ | 552,427,000 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 73,273,000 | $ | - | $ | 73,273,000 | ||||||
Accrued liabilities | 12,048,000 | - | 12,048,000 | |||||||||
Customer finished goods returns accrual | 17,805,000 | - | 17,805,000 | |||||||||
Accrued core payment | 16,536,000 | (16,536,000 | ) | - | ||||||||
Contract liabilities | - | 32,603,000 | 32,603,000 | |||||||||
Revolving loan | 54,000,000 | - | 54,000,000 | |||||||||
Other current liabilities | 4,471,000 | - | 4,471,000 | |||||||||
Current portion of term loan | 3,068,000 | - | 3,068,000 | |||||||||
Total current liabilities | 181,201,000 | 16,067,000 | 197,268,000 | |||||||||
Term loan, less current portion | 13,913,000 | - | 13,913,000 | |||||||||
Long-term accrued core payment | 18,473,000 | (18,473,000 | ) | - | ||||||||
Long-term deferred income taxes | 226,000 | - | 226,000 | |||||||||
Long-term contract liabilities | - | 48,183,000 | 48,183,000 | |||||||||
Other liabilities | 5,957,000 | - | 5,957,000 | |||||||||
Total liabilities | 219,770,000 | 45,777,000 | 265,547,000 | |||||||||
Commitments and contingencies | ||||||||||||
Shareholders’ equity: | ||||||||||||
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued | - | - | - | |||||||||
Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued | - | - | - | |||||||||
Common stock; par value $.01 per share, 50,000,000 shares authorized; 18,893,102 shares issued and outstanding at March 31, 2018 | 189,000 | - | 189,000 | |||||||||
Additional paid-in capital | 213,609,000 | - | 213,609,000 | |||||||||
Retained earnings | 77,768,000 | 742,000 | 78,510,000 | |||||||||
Accumulated other comprehensive loss | (5,428,000 | ) | - | (5,428,000 | ) | |||||||
Total shareholders’ equity | 286,138,000 | 742,000 | 286,880,000 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 505,908,000 | $ | 46,519,000 | $ | 552,427,000 |
Nine Months Ended December 31, 2017 | ||||||||||||
Cash flows from operating activities: | As Revised | Adoption of ASC 606 | As Adjusted | |||||||||
Net income | $ | 10,368,000 | $ | 520,000 | $ | 10,888,000 | ||||||
Deferred income taxes | (2,714,000 | ) | 284,000 | (2,430,000 | ) | |||||||
Accounts receivable | 23,127,000 | (27,367,000 | ) | (4,240,000 | ) | |||||||
Inventory | (11,162,000 | ) | (23,481,000 | ) | (34,643,000 | ) | ||||||
Prepaid expenses and other current assets | (1,576,000 | ) | 1,543,000 | (33,000 | ) | |||||||
Other assets | (163,000 | ) | 10,000 | (153,000 | ) | |||||||
Long-term core inventory | (38,361,000 | ) | 38,361,000 | - | ||||||||
Contract assets, net | - | (16,208,000 | ) | (16,208,000 | ) | |||||||
Contract liabilities, net | - | 41,175,000 | 41,175,000 | |||||||||
Accrued core payments | 14,837,000 | (14,837,000 | ) | - | ||||||||
Net cash used in operating activities | $ | (9,803,000 | ) | $ | - | $ | (9,803,000 | ) |
Nine Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Balance at beginning of period | $ | 2,551,000 | $ | 2,551,000 | ||||
Goodwill acquired | 851,000 | - | ||||||
Translation adjustment | - | - | ||||||
Impairment | - | - | ||||||
Balance at end of period | $ | 3,402,000 | $ | 2,551,000 |
Weighted Average Amortization Period | December 31, 2018 | March 31, 2018 | ||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Gross Carrying Value | Accumulated Amortization | |||||||||||||||
Intangible assets subject to amortization | ||||||||||||||||||
Trademarks | 9 years | $ | 876,000 | $ | 424,000 | $ | 885,000 | $ | 316,000 | |||||||||
Customer relationships | 11 years | 8,515,000 | 3,333,000 | 5,900,000 | 2,937,000 | |||||||||||||
Order backlog | 6 months | 368,000 | 20,000 | - | - | |||||||||||||
Developed technology | 5 years | 2,929,000 | 149,000 | 301,000 | 67,000 | |||||||||||||
Total | $ | 12,688,000 | $ | 3,926,000 | $ | 7,086,000 | $ | 3,320,000 |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Amortization expense | $ | 236,000 | $ | 192,000 | $ | 620,000 | $ | 517,000 |
Year Ending March 31, | ||||
2019 - remaining three months | $ | 588,000 | ||
2020 | 1,723,000 | |||
2021 | 1,468,000 | |||
2022 | 1,436,000 | |||
2023 | 1,436,000 | |||
Thereafter | 2,111,000 | |||
Total | $ | 8,762,000 |
Accounts Receivable — Net |
March 31, 2018 | ||||||||||||
As Previously Reported | Adoption of ASC 606 | As Adjusted | ||||||||||
Accounts receivable — trade | $ | 83,700,000 | $ | - | $ | 83,700,000 | ||||||
Allowance for bad debts | (4,142,000 | ) | - | (4,142,000 | ) | |||||||
Customer allowances earned | (11,370,000 | ) | 11,370,000 | (1) | - | |||||||
Customer payment discrepancies | (1,110,000 | ) | - | (1,110,000 | ) | |||||||
Customer returns RGA issued | (15,274,000 | ) | - | (15,274,000 | ) | |||||||
Customer core returns accruals | (36,066,000 | ) | 36,066,000 | (2) | - | |||||||
Less: total accounts receivable offset accounts | (67,962,000 | ) | 47,436,000 | (20,526,000 | ) | |||||||
Total accounts receivable — net | $ | 15,738,000 | $ | 47,436,000 | $ | 63,174,000 |
December 31, 2018 | March 31, 2018 | |||||||
Accounts receivable — trade | $ | 82,208,000 | $ | 83,700,000 | ||||
Allowance for bad debts | (4,363,000 | ) | (4,142,000 | ) | ||||
Customer payment discrepancies | (811,000 | ) | (1,110,000 | ) | ||||
Customer returns RGA issued | (22,273,000 | ) | (15,274,000 | ) | ||||
Less: total accounts receivable offset accounts | (27,447,000 | ) | (20,526,000 | ) | ||||
Total accounts receivable — net | $ | 54,761,000 | $ | 63,174,000 |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Balance at beginning of period | $ | 16,410,000 | $ | 14,799,000 | $ | 16,646,000 | $ | 14,286,000 | ||||||||
Charged to expense/additions | 29,655,000 | 38,269,000 | 84,408,000 | 89,834,000 | ||||||||||||
Amounts processed | (26,913,000 | ) | (24,048,000 | ) | (81,902,000 | ) | (75,100,000 | ) | ||||||||
Balance at end of period | $ | 19,152,000 | $ | 29,020,000 | $ | 19,152,000 | $ | 29,020,000 |
September 30, 2019 | March 31, 2019 | |||||||
Accounts receivable — trade | $ | 86,974,000 | $ | 75,847,000 | ||||
Allowance for bad debts | (4,187,000 | ) | (4,100,000 | ) | ||||
Customer payment discrepancies | (1,169,000 | ) | (854,000 | ) | ||||
Customer returns RGA issued | (11,704,000 | ) | (14,878,000 | ) | ||||
Less: total accounts receivable offset accounts | (17,060,000 | ) | (19,832,000 | ) | ||||
Total accounts receivable — net | $ | 69,914,000 | $ | 56,015,000 |
Inventory |
March 31, 2018 | |||||||||||||
As Revised | Adoption of ASC 606 | As Adjusted | |||||||||||
Inventory | |||||||||||||
Raw materials | $ | 25,805,000 | $ | 51,330,000 | (1 | ) | $ | 77,135,000 | |||||
Work-in-process | 635,000 | 1,948,000 | (1 | ) | 2,583,000 | ||||||||
Finished goods | 53,973,000 | 34,201,000 | (2 | ) | 88,174,000 | ||||||||
80,413,000 | 87,479,000 | 167,892,000 | |||||||||||
Less allowance for excess and obsolete inventory | (4,138,000 | ) | (2,544,000 | ) | (3 | ) | (6,682,000 | ) | |||||
Total | $ | 76,275,000 | $ | 84,935,000 | $ | 161,210,000 | |||||||
Inventory unreturned | $ | 7,508,000 | $ | - | $ | 7,508,000 | |||||||
Long-term core inventory | |||||||||||||
Used cores held at the Company’s facilities | $ | 53,278,000 | $ | (53,278,000 | ) | (1 | ) | $ | - | ||||
Used cores expected to be returned by customers | 12,970,000 | (12,970,000 | ) | (4 | ) | - | |||||||
Remanufactured cores held in finished goods | 34,201,000 | (34,201,000 | ) | (2 | ) | - | |||||||
Remanufactured cores held at customers’ locations | 200,389,000 | (200,389,000 | ) | (5 | ) | - | |||||||
300,838,000 | (300,838,000 | ) | - | ||||||||||
Less allowance for excess and obsolete inventory | (2,544,000 | ) | 2,544,000 | (3 | ) | - | |||||||
Total | $ | 298,294,000 | $ | (298,294,000 | ) | $ | - | ||||||
Long-term core inventory deposits | $ | 5,569,000 | $ | (5,569,000 | ) | (6 | ) | $ | - |
December 31, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | |||||||||||||
Inventory - net | ||||||||||||||||
Raw materials | $ | 87,717,000 | $ | 77,135,000 | $ | 104,180,000 | $ | 95,757,000 | ||||||||
Work-in-process | 4,394,000 | 2,583,000 | 4,720,000 | 3,502,000 | ||||||||||||
Finished goods | 122,763,000 | 88,174,000 | 154,901,000 | 146,366,000 | ||||||||||||
214,874,000 | 167,892,000 | 263,801,000 | 245,625,000 | |||||||||||||
Less allowance for excess and obsolete inventory | (9,799,000 | ) | (6,682,000 | ) | (13,134,000 | ) | (11,899,000 | ) | ||||||||
Total inventory - net | $ | 205,075,000 | $ | 161,210,000 | $ | 250,667,000 | $ | 233,726,000 | ||||||||
Inventory unreturned | $ | 10,746,000 | $ | 7,508,000 | $ | 8,684,000 | $ | 8,469,000 |
Contract Assets |
December 31, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | |||||||||||||
Short-term contract assets | Short-term contract assets | (As Adjusted) | Short-term contract assets | |||||||||||||
Cores expected to be returned by customers | $ | 19,585,000 | $ | 15,614,000 | $ | 11,776,000 | $ | 14,671,000 | ||||||||
Upfront payments to customers | 3,228,000 | 3,979,000 | 3,312,000 | 3,101,000 | ||||||||||||
Core premiums paid to customers | 4,152,000 | 3,613,000 | 4,383,000 | 4,411,000 | ||||||||||||
Total short-term contract assets | $ | 19,471,000 | $ | 22,183,000 | ||||||||||||
$ | 26,965,000 | $ | 23,206,000 | |||||||||||||
Long-term contract assets | Long-term contract assets | Long-term contract assets | ||||||||||||||
Remanufactured cores held at customers’ locations | $ | 198,348,000 | $ | 197,067,000 | $ | 203,024,000 | $ | 196,914,000 | ||||||||
Upfront payments to customers | 3,330,000 | 5,492,000 | 1,234,000 | 2,775,000 | ||||||||||||
Core premiums paid to customers | 15,752,000 | 14,603,000 | 14,502,000 | 16,618,000 | ||||||||||||
Long-term core inventory deposits | 5,569,000 | 5,569,000 | 5,569,000 | 5,569,000 | ||||||||||||
$ | 222,999,000 | $ | 222,731,000 | |||||||||||||
Total contract assets | $ | 249,964,000 | $ | 245,937,000 | ||||||||||||
Total long-term contract assets | $ | 224,329,000 | $ | 221,876,000 |
Significant Customer and Other Information |
Three Months Ended December 31, | Nine Months Ended December 31, | Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
Net sales | (As Adjusted) | (As Adjusted) | ||||||||||||||||||||||||||||||
Customer A | 33 | % | 41 | % | 36 | % | 43 | % | 41 | % | 39 | % | 40 | % | 38 | % | ||||||||||||||||
Customer B | 20 | % | 27 | % | 23 | % | 26 | % | 20 | % | 26 | % | 21 | % | 24 | % | ||||||||||||||||
Customer C | 26 | % | 18 | % | 23 | % | 16 | % | 23 | % | 20 | % | 22 | % | 22 | % |
December 31, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | |||||||||||||
Accounts receivable - trade | ||||||||||||||||
Customer A | 29 | % | 36 | % | 33 | % | 34 | % | ||||||||
Customer B | 13 | % | 16 | % | 15 | % | 18 | % | ||||||||
Customer C | 29 | % | 22 | % | 23 | % | 16 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||||||||||
(As Adjusted) | (As Adjusted) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||
Rotating electrical products | 81 | % | 77 | % | 79 | % | 77 | % | 77 | % | 80 | % | 76 | % | 79 | % | ||||||||||||||||
Wheel hub products | 14 | % | 18 | % | 15 | % | 18 | % | 15 | % | 14 | % | 16 | % | 16 | % | ||||||||||||||||
Brake caliper products | 3 | % | - | % | 2 | % | - | % | ||||||||||||||||||||||||
Brake master cylinders products | 1 | % | 2 | % | 2 | % | 3 | % | 1 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||
Other products | 4 | % | 3 | % | 4 | % | 2 | % | 4 | % | 4 | % | 4 | % | 3 | % | ||||||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Debt |
December 31, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | |||||||||||||
Principal amount of term loan | $ | 29,063,000 | $ | 17,188,000 | $ | 26,250,000 | $ | 28,125,000 | ||||||||
Unamortized financing fees | (269,000 | ) | (207,000 | ) | (273,000 | ) | (253,000 | ) | ||||||||
Net carrying amount of term loan | 28,794,000 | 16,981,000 | 25,977,000 | 27,872,000 | ||||||||||||
Less current portion of term loan | (3,685,000 | ) | (3,068,000 | ) | (3,678,000 | ) | (3,685,000 | ) | ||||||||
Long-term portion of term loan | $ | 25,109,000 | $ | 13,913,000 | $ | 22,299,000 | $ | 24,187,000 |
Year Ending March 31, | ||||||||
2019 - remaining three months | 938,000 | |||||||
2020 | 3,750,000 | |||||||
2020 - remaining six months | $ | 1,875,000 | ||||||
2021 | 3,750,000 | 3,750,000 | ||||||
2022 | 3,750,000 | 3,750,000 | ||||||
2023 | 3,750,000 | 3,750,000 | ||||||
Thereafter | 13,125,000 | |||||||
2024 | 13,125,000 | |||||||
Total payments | $ | 29,063,000 | $ | 26,250,000 |
Contract Liabilities |
December 31, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | |||||||||||||
Short-term contract liabilities | Short-term contract liabilities | Short-term contract liabilities | ||||||||||||||
Customer allowances earned | $ | 10,331,000 | $ | 11,370,000 | $ | 10,365,000 | $ | 12,755,000 | ||||||||
Customer core returns accruals | 4,046,000 | 4,697,000 | 3,973,000 | 3,933,000 | ||||||||||||
Customer deposits | 2,720,000 | - | 1,377,000 | 2,674,000 | ||||||||||||
Accrued core payment, net | 12,142,000 | 16,536,000 | 8,349,000 | 11,237,000 | ||||||||||||
Total short-term contract liabilities | $ | 24,064,000 | $ | 30,599,000 | ||||||||||||
$ | 29,239,000 | $ | 32,603,000 | |||||||||||||
Long-term contract liabilities | Long-term contract liabilities | Long-term contract liabilities | ||||||||||||||
Customer core returns accruals | $ | 25,624,000 | $ | 29,710,000 | $ | 38,841,000 | $ | 25,722,000 | ||||||||
Accrued core payment, net | 16,903,000 | 18,473,000 | 10,486,000 | 15,167,000 | ||||||||||||
$ | 42,527,000 | $ | 48,183,000 | |||||||||||||
Total contract liabilities | $ | 71,766,000 | $ | 80,786,000 | ||||||||||||
Total long-term contract liabilities | $ | 49,327,000 | $ | 40,889,000 |
Leases |
September 30, 2019 | ||||||
Leases | Classification | |||||
Assets: | ||||||
Operating | Operating lease assets | $ | 49,262,000 | |||
Finance | Plant and equipment | 7,079,000 | ||||
Total leased assets | $ | 56,341,000 | ||||
Liabilities: | ||||||
Current | ||||||
Operating | Operating lease liabilities | $ | 4,487,000 | |||
Finance | Other current liabilities | 2,036,000 | ||||
Long-term | ||||||
Operating | Long-term operating lease liabilities | 47,925,000 | ||||
Finance | Other liabilities | 4,149,000 | ||||
Total lease liabilities | $ | 58,597,000 |
Three Months Ended September 30, | Six Months Ended September 30, | |||||||
2019 | 2019 | |||||||
Lease cost | ||||||||
Operating lease cost | $ | 1,987,000 | $ | 3,885,000 | ||||
Short-term lease cost | 295,000 | 698,000 | ||||||
Variable lease cost | 157,000 | 287,000 | ||||||
Finance lease cost: | ||||||||
Amortization of finance lease assets | 372,000 | 730,000 | ||||||
Interest on finance lease liabilities | 73,000 | 141,000 | ||||||
Total lease cost | $ | 2,884,000 | $ | 5,741,000 |
Maturity of lease liabilities | Operating Leases | Finance Leases | Total | |||||||||
2020 - remaining six months | $ | 3,799,000 | $ | 1,172,000 | $ | 4,971,000 | ||||||
2021 | 6,957,000 | 2,074,000 | 9,031,000 | |||||||||
2022 | 6,168,000 | 1,740,000 | 7,908,000 | |||||||||
2023 | 4,968,000 | 1,131,000 | 6,099,000 | |||||||||
2024 | 4,866,000 | 472,000 | 5,338,000 | |||||||||
Thereafter | 47,268,000 | 113,000 | 47,381,000 | |||||||||
Total lease payments | 74,026,000 | 6,702,000 | 80,728,000 | |||||||||
Less amount representing interest | (21,614,000 | ) | (517,000 | ) | (22,131,000 | ) | ||||||
Present value of lease liabilities | $ | 52,412,000 | $ | 6,185,000 | $ | 58,597,000 |
Six Months Ended September 30, 2019 | ||||
Lease term and discount rate | ||||
Weighted-average remaining lease term (years): | ||||
Finance leases | 3.4 | |||
Operating leases | 12.0 | |||
Weighted-average discount rate: | ||||
Finance leases | 4.8 | % | ||
Operating leases | 5.6 | % |
10. | Accounts Receivable Discount Programs |
Nine Months Ended December 31, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2019 | 2018 | |||||||||||||
Receivables discounted | $ | 287,206,000 | $ | 263,833,000 | $ | 205,882,000 | $ | 191,849,000 | ||||||||
Weighted average days | 340 | 341 | 346 | 338 | ||||||||||||
Annualized weighted average discount rate | 4.2 | % | 3.2 | % | 3.6 | % | 4.1 | % | ||||||||
Amount of discount as interest expense | $ | 11,377,000 | $ | 7,854,000 | ||||||||||||
Amount of discount recognized as interest expense | $ | 7,196,000 | $ | 7,441,000 |
Net Income (Loss) Per Share |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(As Adjusted) | (As Adjusted) | |||||||||||||||
Net (loss) income | $ | (3,102,000 | ) | $ | (2,527,000 | ) | $ | (5,084,000 | ) | $ | 10,888,000 | |||||
Basic shares | 18,810,702 | 19,069,152 | 18,861,617 | 18,814,967 | ||||||||||||
Effect of potentially dilutive securities | - | - | - | 585,777 | ||||||||||||
Diluted shares | 18,810,702 | 19,069,152 | 18,861,617 | 19,400,744 | ||||||||||||
Net (loss) income per share: | ||||||||||||||||
Basic net (loss) income per share | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.27 | ) | $ | 0.58 | |||||
Diluted net (loss) income per share | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.27 | ) | $ | 0.56 |
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) | $ | 6,189,000 | $ | 3,513,000 | $ | 38,000 | $ | (1,982,000 | ) | |||||||
Basic shares | 18,903,182 | 18,878,674 | 18,862,901 | 18,887,214 | ||||||||||||
Effect of potentially dilutive securities | 314,145 | 440,791 | 383,698 | - | ||||||||||||
Diluted shares | 19,217,327 | 19,319,465 | 19,246,599 | 18,887,214 | ||||||||||||
Net income (loss) per share: | ||||||||||||||||
Basic net income (loss) per share | $ | 0.33 | $ | 0.19 | $ | 0.00 | $ | (0.10 | ) | |||||||
Diluted net income (loss) per share | $ | 0.32 | $ | 0.18 | $ | 0.00 | $ | (0.10 | ) |
Income Taxes |
Financial Risk Management and Derivatives |
Gain (Loss) Recognized within General and Administrative Expenses | ||||||||||||||||
Derivatives Not Designated as | Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
Hedging Instruments | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Forward foreign currency exchange contracts | $ | (860,000 | ) | $ | (1,784,000 | ) | $ | (1,628,000 | ) | $ | (1,062,000 | ) |
Derivatives Not Designated as Hedging Instruments | Gain (Loss) Recognized within General and Administrative Expenses | |||||||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Forward foreign currency exchange contracts | $ | (663,000 | ) | $ | 1,898,000 | $ | (628,000 | ) | $ | (768,000 | ) |
Fair Value Measurements |
December 31, 2018 | March 31, 2018 | |||||||||||||||||||||||||||||||
Fair Value Measurements Using Inputs Considered as | Fair Value Measurements Using Inputs Considered as | |||||||||||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Short-term investments | ||||||||||||||||||||||||||||||||
Mutual funds | $ | 2,868,000 | $ | 2,868,000 | - | - | $ | 2,828,000 | $ | 2,828,000 | - | - | ||||||||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts | - | - | - | - | 1,179,000 | - | $ | 1,179,000 | - | |||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Accrued liabilities | ||||||||||||||||||||||||||||||||
Short-term contingent consideration | 1,830,000 | - | - | $ | 1,830,000 | - | - | - | - | |||||||||||||||||||||||
Other current liabilities | ||||||||||||||||||||||||||||||||
Deferred compensation | 2,868,000 | 2,868,000 | - | - | 2,828,000 | 2,828,000 | - | - | ||||||||||||||||||||||||
Forward foreign currency exchange contracts | 449,000 | - | $ | 449,000 | - | - | - | - | - | |||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||||||||
Long-term contingent consideration | 1,730,000 | - | - | 1,730,000 | - | - | - | - |
September 30, 2019 | March 31, 2019 | |||||||||||||||||||||||||||||||
Fair Value | Fair Value Measurements Using Inputs Considered as | Fair Value | Fair Value Measurements Using Inputs Considered as | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Short-term investments | ||||||||||||||||||||||||||||||||
Mutual funds | $ | 2,192,000 | $ | 2,192,000 | - | - | $ | 3,273,000 | $ | 3,273,000 | - | - | ||||||||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts | - | - | - | - | 207,000 | - | $ | 207,000 | - | |||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Accrued liabilities | ||||||||||||||||||||||||||||||||
Short-term contingent consideration | 2,721,000 | - | - | $ | 2,721,000 | 2,816,000 | - | - | $ | 2,816,000 | ||||||||||||||||||||||
Other current liabilities | ||||||||||||||||||||||||||||||||
Deferred compensation | 2,192,000 | 2,192,000 | - | - | 3,273,000 | 3,273,000 | - | - | ||||||||||||||||||||||||
Forward foreign currency exchange contracts | 421,000 | - | $ | 421,000 | - | - | - | - | - | |||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||||||||
Long-term contingent consideration | 2,130,000 | - | - | 2,130,000 | 1,905,000 | - | - | 1,905,000 |
September 30, 2019 | ||||
Risk free interest rate | 1.61 | % | ||
Counter party rate | 5.61 | % | ||
Expected volatility | 28.00 | % | ||
Weighted average cost of capital | 15.50 | % |
September 30, 2019 | ||||
Risk free interest rate | 1.72 | % | ||
Counter party rate | 4.00 | % | ||
Revenue volatility | 8.00 | % | ||
Revenue discount rate | 5.00 | % | ||
Weighted average cost of capital | 13.90 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Contingent Consideration | Contingent Consideration | Contingent Consideration | Contingent Consideration | |||||||||||||
Beginning balance | $ | - | $ | - | $ | - | $ | - | ||||||||
Newly issued | 3,560,000 | - | 3,560,000 | - | ||||||||||||
Total (gain) loss included in net income (loss) | - | - | - | - | ||||||||||||
Exercises/settlements | - | - | - | - | ||||||||||||
Net transfers in (out) of Level 3 | - | - | - | - | ||||||||||||
Ending balance | $ | 3,560,000 | $ | - | $ | 3,560,000 | $ | - |
Contingent Consideration | ||||||||
Three Months Ended September 30, 2019 | Six Months Ended September 30, 2019 | |||||||
Beginning balance | $ | 4,970,000 | $ | 4,721,000 | ||||
Changes in revaluations of contingent consideration included in earnings | (119,000 | ) | 130,000 | |||||
Ending balance | $ | 4,851,000 | $ | 4,851,000 |
Share-based Payments |
Nine Months Ended December 31, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2019 | 2018 | |||||||||||||
Weighted average risk free interest rate | 2.83 | % | 1.91 | % | 1.77 | % | 2.82 | % | ||||||||
Weighted average expected holding period (years) | 5.94 | 5.82 | 5.70 | 5.94 | ||||||||||||
Weighted average expected volatility | 43.91 | % | 47.31 | % | 42.51 | % | 43.98 | % | ||||||||
Weighted average expected dividend yield | - | - | - | - | ||||||||||||
Weighted average fair value of options granted | $ | 8.75 | $ | 12.66 | $ | 8.28 | $ | 8.71 |
Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding at March 31, 2018 | 1,143,298 | $ | 16.97 | |||||||||||||
Outstanding at March 31, 2019 | 1,337,165 | $ | 17.58 | |||||||||||||
Granted | 256,236 | $ | 19.12 | 300,039 | $ | 19.75 | ||||||||||
Exercised | (39,032 | ) | $ | 6.24 | (52,800 | ) | $ | 7.67 | ||||||||
Forfeited | (16,666 | ) | $ | 24.82 | (5,171 | ) | $ | 20.62 | ||||||||
Outstanding at December 31, 2018 | 1,343,836 | $ | 17.59 | |||||||||||||
Outstanding at September 30, 2019 | 1,579,233 | $ | 18.31 |
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||
Outstanding at March 31, 2018 | 133,828 | $ | 28.37 | |||||||||||||
Outstanding at March 31, 2019 | 243,134 | $ | 21.75 | |||||||||||||
Granted | 104,725 | $ | 19.81 | 79,851 | $ | 19.93 | ||||||||||
Vested | (58,742 | ) | $ | 28.90 | (133,488 | ) | $ | 21.11 | ||||||||
Forfeited | (4,167 | ) | $ | 24.36 | (1,101 | ) | $ | 21.40 | ||||||||
Outstanding at December 31, 2018 | 175,644 | $ | 23.18 | |||||||||||||
Outstanding at September 30, 2019 | 188,396 | $ | 21.44 |
Accumulated Other Comprehensive |
Three Months Ended December 31, 2018 | Three Months Ended December 31, 2017 | |||||||||||||||||||||||
Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | Unrealized Gain (Loss) on Short-Term Investments | Foreign Currency Translation | Total | |||||||||||||||||||
Balance at September 30, 2018 and 2017 | $ | - | $ | (6,891,000 | ) | $ | (6,891,000 | ) | $ | 644,000 | $ | (7,132,000 | ) | $ | (6,488,000 | ) | ||||||||
Other comprehensive income (loss), net of tax | - | (302,000 | ) | (302,000 | ) | 83,000 | 247,000 | 330,000 | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | - | - | - | - | - | - | ||||||||||||||||||
Balance at December 31, 2018 and 2017 | $ | - | $ | (7,193,000 | ) | $ | (7,193,000 | ) | $ | 727,000 | $ | (6,885,000 | ) | $ | (6,158,000 | ) |
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||||
Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | |||||||||||||||||||
Balance at June 30, 2019 and 2018 | $ | - | $ | (6,288,000 | ) | $ | (6,288,000 | ) | $ | - | $ | (6,889,000 | ) | $ | (6,889,000 | ) | ||||||||
Other comprehensive loss, net of tax | - | (431,000 | ) | (431,000 | ) | - | (2,000 | ) | (2,000 | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | - | - | - | - | - | - | ||||||||||||||||||
Balance at September 30, 2019 and 2018 | $ | - | $ | (6,719,000 | ) | $ | (6,719,000 | ) | $ | - | $ | (6,891,000 | ) | $ | (6,891,000 | ) |
Nine Months Ended December 31, 2018 | Nine Months Ended December 31, 2017 | |||||||||||||||||||||||
Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | |||||||||||||||||||
Balance at March 31, 2018 and 2017 | $ | 746,000 | $ | (6,174,000 | ) | $ | (5,428,000 | ) | $ | 528,000 | $ | (7,969,000 | ) | $ | (7,441,000 | ) | ||||||||
Cumulative-effect adjustment [see Note 3] | (746,000 | ) | - | (746,000 | ) | - | - | - | ||||||||||||||||
Balance at April 1, 2018 and 2017 | $ | - | $ | (6,174,000 | ) | $ | (6,174,000 | ) | $ | 528,000 | $ | (7,969,000 | ) | $ | (7,441,000 | ) | ||||||||
Other comprehensive (loss) income, net of tax | - | (1,019,000 | ) | (1,019,000 | ) | 199,000 | 1,084,000 | 1,283,000 | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | - | - | - | - | - | - | ||||||||||||||||||
Balance at December 31, 2018 and 2017 | $ | - | $ | (7,193,000 | ) | $ | (7,193,000 | ) | $ | 727,000 | $ | (6,885,000 | ) | $ | (6,158,000 | ) |
Six Months Ended September 30, 2019 | Six Months Ended September 30, 2018 | |||||||||||||||||||||||
Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | |||||||||||||||||||
Balance at March 31, 2019 and 2018 | $ | - | $ | (6,887,000 | ) | $ | (6,887,000 | ) | $ | 746,000 | $ | (6,174,000 | ) | $ | (5,428,000 | ) | ||||||||
Cumulative-effect adjustment | - | - | - | (746,000 | ) | - | (746,000 | ) | ||||||||||||||||
Balance at April 1, 2019 and 2018 | - | (6,887,000 | ) | (6,887,000 | ) | - | (6,174,000 | ) | (6,174,000 | ) | ||||||||||||||
Other comprehensive income (loss), net of tax | - | 168,000 | 168,000 | - | (717,000 | ) | (717,000 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | - | - | - | - | - | - | ||||||||||||||||||
Balance at September 30, 2019 and 2018 | $ | - | $ | (6,719,000 | ) | $ | (6,719,000 | ) | $ | - | $ | (6,891,000 | ) | $ | (6,891,000 | ) |
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Balance at beginning of period | $ | 15,818,000 | $ | 14,543,000 | $ | 19,475,000 | $ | 16,646,000 | ||||||||
Charged to expense/additions | 32,531,000 | 30,860,000 | 55,716,000 | 54,753,000 | ||||||||||||
Amounts processed | (31,774,000 | ) | (28,993,000 | ) | (58,616,000 | ) | (54,989,000 | ) | ||||||||
Balance at end of period | $ | 16,575,000 | $ | 16,410,000 | $ | 16,575,000 | $ | 16,410,000 |
Three Months Ended December 31, | ||||||||||||||||
2018 | 2017 | Three Months Ended September 30, | ||||||||||||||
(As Adjusted) | 2019 | 2018 | ||||||||||||||
Gross profit percentage | 17.0 | % | 25.3 | % | 24.3 | % | 20.1 | % | ||||||||
Cash flow used in operations | $ | (13,919,000 | ) | $ | (1,655,000 | ) | $ | (8,357,000 | ) | $ | (5,485,000 | ) | ||||
Finished goods turnover (annualized) (1) | 3.6 | 3.3 | 2.8 | 3.9 |
(1) | Annualized finished goods turnover for the fiscal quarter is calculated by multiplying cost of goods sold for the quarter by 4 and dividing the result by the average between beginning and ending finished goods inventory values, |
Three Months Ended December 31, | ||||||||||||||||
2018 | 2017 | Three Months Ended September 30, | ||||||||||||||
(As Adjusted) | 2019 | 2018 | ||||||||||||||
Net sales | $ | 124,113,000 | $ | 102,878,000 | $ | 150,374,000 | $ | 127,939,000 | ||||||||
Cost of goods sold | 102,952,000 | 76,817,000 | 113,801,000 | 102,228,000 | ||||||||||||
Gross profit | 21,161,000 | 26,061,000 | 36,573,000 | 25,711,000 | ||||||||||||
Gross profit percentage | 17.0 | % | 25.3 | % | 24.3 | % | 20.1 | % |
Three Months Ended December 31, | ||||||||||||||||
2018 | 2017 | Three Months Ended September 30, | ||||||||||||||
(As Adjusted) | 2019 | 2018 | ||||||||||||||
General and administrative | $ | 12,331,000 | $ | 11,915,000 | $ | 14,285,000 | $ | 8,997,000 | ||||||||
Sales and marketing | 5,149,000 | 4,048,000 | 5,448,000 | 4,537,000 | ||||||||||||
Research and development | 2,054,000 | 1,678,000 | 2,148,000 | 1,784,000 | ||||||||||||
Percent of net sales | ||||||||||||||||
General and administrative | 9.9 | % | 11.6 | % | 9.5 | % | 7.0 | % | ||||||||
Sales and marketing | 4.1 | % | 3.9 | % | 3.6 | % | 3.5 | % | ||||||||
Research and development | 1.7 | % | 1.6 | % | 1.4 | % | 1.4 | % |
Nine Months Ended December 31, | ||||||||||||||||
2018 | 2017 | Six Months Ended September 30, | ||||||||||||||
(As Adjusted) | 2019 | 2018 | ||||||||||||||
Gross profit percentage | 18.4 | % | 25.3 | % | 20.9 | % | 19.2 | % | ||||||||
Cash flow used in operations | $ | (20,328,000 | ) | $ | (9,803,000 | ) | $ | (26,736,000 | ) | $ | (6,409,000 | ) | ||||
Finished goods turnover (annualized) (1) | 3.5 | 4.4 | 2.7 | 3.7 |
(1) | Annualized finished goods turnover for the fiscal period is calculated by multiplying cost of goods sold for the period by |
Nine Months Ended December 31, | ||||||||||||||||
2018 | 2017 | Six Months Ended September 30, | ||||||||||||||
(As Adjusted) | 2019 | 2018 | ||||||||||||||
Net sales | $ | 343,720,000 | $ | 307,834,000 | $ | 259,522,000 | $ | 219,607,000 | ||||||||
Cost of goods sold | 280,496,000 | 229,894,000 | 205,366,000 | 177,544,000 | ||||||||||||
Gross profit | 63,224,000 | 77,940,000 | 54,156,000 | 42,063,000 | ||||||||||||
Gross profit percentage | 18.4 | % | 25.3 | % | 20.9 | % | 19.2 | % |
Nine Months Ended December 31, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2019 | 2018 | |||||||||||||
(As Adjusted) | ||||||||||||||||
General and administrative | $ | 33,419,000 | $ | 26,418,000 | $ | 26,285,000 | $ | 21,088,000 | ||||||||
Sales and marketing | 14,078,000 | 10,899,000 | 10,367,000 | 8,929,000 | ||||||||||||
Research and development | 5,574,000 | 3,920,000 | 4,520,000 | 3,520,000 | ||||||||||||
Percent of net sales | ||||||||||||||||
General and administrative | 9.7 | % | 8.6 | % | 10.1 | % | 9.6 | % | ||||||||
Sales and marketing | 4.1 | % | 3.5 | % | 4.0 | % | 4.1 | % | ||||||||
Research and development | 1.6 | % | 1.3 | % | 1.7 | % | 1.6 | % |
Nine Months Ended December 31, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2019 | 2018 | |||||||||||||
Cash provided by (used in): | ||||||||||||||||
Cash flow provided by (used in): | ||||||||||||||||
Operating activities | $ | (20,328,000 | ) | $ | (9,803,000 | ) | $ | (26,736,000 | ) | $ | (6,409,000 | ) | ||||
Investing activities | (13,244,000 | ) | (10,045,000 | ) | (5,701,000 | ) | (5,481,000 | ) | ||||||||
Financing activities | 29,290,000 | 20,805,000 | 29,059,000 | 5,112,000 | ||||||||||||
Effect of exchange rates on cash and cash equivalents | (176,000 | ) | 46,000 | (78,000 | ) | (96,000 | ) | |||||||||
Net decrease in cash and cash equivalents | $ | (4,458,000 | ) | $ | 1,003,000 | $ | (3,456,000 | ) | $ | (6,874,000 | ) | |||||
Additional selected cash flow data: | ||||||||||||||||
Depreciation and amortization | $ | 4,933,000 | $ | 3,322,000 | $ | 4,619,000 | $ | 3,218,000 | ||||||||
Capital expenditures | 8,548,000 | 4,765,000 | 6,943,000 | 5,259,000 |
Calculation as of December 31, 2018 | Financial covenants required under the Amended Credit Facility | Calculation as of September 30, 2019 | Financial covenants required under the Credit Facility | |||||||||||||
Maximum senior leverage ratio | 1.56 | 3.00 | 2.33 | 3.00 | ||||||||||||
Minimum fixed charge coverage ratio | 1.23 | 1.10 | 1.46 | 1.10 |
Nine Months Ended December 31, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2019 | 2018 | |||||||||||||
Receivables discounted | $ | 287,206,000 | $ | 263,833,000 | $ | 205,882,000 | $ | 191,849,000 | ||||||||
Weighted average days | 340 | 341 | 346 | 338 | ||||||||||||
Annualized weighted average discount rate | 4.2 | % | 3.2 | % | 3.6 | % | 4.1 | % | ||||||||
Amount of discount as interest expense | $ | 11,377,000 | $ | 7,854,000 | ||||||||||||
Amount of discount recognized as interest expense | $ | 7,196,000 | $ | 7,441,000 |
Evaluation of Disclosure Controls and Procedures As disclosed in
Management’s Remediation Efforts We have designed and begun to implement several steps, as further described below, to remediate the material weakness described in this Item 4 and enhance our overall control environment.
The actions that we are taking are subject to ongoing review by our management, including our CEO, CFO and CAO, as well as Audit Committee oversight. Management expects the remediation plan to extend over multiple financial reporting periods throughout fiscal year 2020. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal year 2020. While the foregoing measures are intended to effectively remediate the material weakness described in this Item 4, it is possible that additional remediation steps will be necessary. As such, as we continue to evaluate and implement our plan to remediate the material weakness, management may decide to take additional measures to address the material weakness or modify the remediation steps described above. Until the material weakness is remediated, we plan to continue to perform additional analyses and other procedures to help ensure that our consolidated financial statements are prepared in accordance with GAAP. Inherent Limitations on Effectiveness of Controls Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, applying certain estimates and judgments as required. Internal control over financial reporting includes those policies and procedures that: 1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; 2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and 3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 33 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Changes in Internal Control Over Financial Reporting PART II — OTHER INFORMATION There have been no material changes to our litigation matters that are presented in our Annual Report on Form 10-K for the year ended March 31, There have been no material changes in the risk factors set forth in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, Limitation on Payment of Dividends and Share Repurchases The Purchases of Equity Securities by the Issuer Shares repurchased during the three months ended
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|