Document And Entity Information
Document And Entity Information | 6 Months Ended |
Jul. 01, 2018shares | |
Document Information [Line Items] | |
Entity Registrant Name | SMTC CORP |
Entity Central Index Key | 1,108,320 |
Trading Symbol | smtx |
Current Fiscal Year End Date | --12-30 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Entity Common Stock, Shares Outstanding (in shares) | 17,303,510 |
Document Type | 10-Q |
Document Period End Date | Jul. 1, 2018 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Interim Consolidated Balance Sh
Interim Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 1,953 | $ 5,536 |
Accounts receivable — net (note 4) | 32,125 | 29,110 |
Unbilled contract assets (notes 2 and 4) | 6,808 | |
Inventories (note 4) | 25,214 | 22,363 |
Prepaid expenses and other assets | 3,579 | 2,142 |
Derivative assets (note 10) | 0 | 37 |
Total current assets | 69,679 | 59,188 |
Property, plant and equipment — net (note 4) | 11,732 | 10,269 |
Deferred income taxes — net | 351 | 305 |
Deferred financing costs — net | 121 | 94 |
Total assets | 81,883 | 69,856 |
Current liabilities: | ||
Accounts payable | 34,047 | 25,028 |
Accrued liabilities (note 4) | 6,188 | 4,877 |
Derivative liabilities (note 10) | 108 | 375 |
Income taxes payable | 48 | |
Current portion of long-term debt (note 5) | 2,000 | 2,000 |
Current portion of capital lease obligations | 346 | 174 |
Total current liabilities | 55,267 | 44,693 |
Equipment facility (note 5) | 1,297 | |
Long-term debt (note 5) | 5,000 | 6,000 |
Capital lease obligations | 450 | 89 |
Total liabilities | 62,014 | 50,782 |
Shareholders’ equity: | ||
Capital stock (note 6) | 399 | 396 |
Additional paid-in capital | 265,916 | 265,355 |
Deficit | (246,446) | (246,677) |
19,869 | 19,074 | |
Total liabilities and shareholders’ equity | 81,883 | 69,856 |
Revolving Credit Facility [Member] | ||
Current liabilities: | ||
Lines of credit, current | 11,981 | 12,191 |
Equipment Facility [Member] | ||
Current liabilities: | ||
Lines of credit, current | $ 597 |
Interim Consolidated Statements
Interim Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | |
Revenue | $ 44,479 | $ 32,995 | $ 81,599 | $ 66,173 |
Cost of sales (note 10) | 40,196 | 31,575 | 73,466 | 61,196 |
Gross profit | 4,283 | 1,420 | 8,133 | 4,977 |
Selling, general and administrative expenses | 3,647 | 4,110 | 7,156 | 7,872 |
Impairment of property, plant and equipment | 1,601 | 1,601 | ||
Restructuring charges | 96 | 1,351 | 96 | 1,351 |
Operating earnings (loss) | 540 | (5,642) | 881 | (5,847) |
Interest expense (notes 4) | 403 | 217 | 710 | 396 |
Earnings (loss) before income tax expense | 137 | (5,859) | 171 | (6,243) |
Income tax expense (recovery) (note 7): | ||||
Current | 196 | 168 | 306 | 295 |
Deferred | 38 | (14) | (46) | (148) |
234 | 154 | 260 | 147 | |
Net loss and comprehensive loss | $ (97) | $ (6,013) | $ (89) | $ (6,390) |
Loss per share of common stock: | ||||
Basic (in dollars per share) | $ (0.01) | $ (0.36) | $ (0.01) | $ (0.38) |
Diluted (in dollars per share) | $ (0.01) | $ (0.36) | $ (0.01) | $ (0.38) |
Weighted average number of shares outstanding (note 8): | ||||
Basic (in shares) | 17,222,439 | 16,807,333 | 17,131,971 | 16,734,117 |
Diluted (in shares) | 17,222,439 | 16,807,333 | 17,131,971 | 16,734,117 |
Interim Consolidated Statement4
Interim Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - 6 months ended Jul. 01, 2018 - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance (in shares) at Dec. 31, 2017 | 16,992,627 | |||
Balance at Dec. 31, 2017 | $ 396 | $ 265,355 | $ (246,677) | $ 19,074 |
Impact of adoption of ASC 606 (note 2) at Dec. 31, 2017 | 320 | 320 | ||
RSU vested and stock options exercised (in shares) | 310,883 | |||
RSU vested and stock options exercised | $ 3 | 358 | 361 | |
Stock-based compensation | 203 | 203 | ||
Net loss | (89) | (89) | ||
Balance (in shares) at Jul. 01, 2018 | 17,303,510 | |||
Balance at Jul. 01, 2018 | $ 399 | $ 265,916 | $ (246,446) | $ 19,869 |
Interim Consolidated Statement5
Interim Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2018 | Jul. 02, 2017 | |
Operations: | ||
Net loss | $ (89) | $ (6,390) |
Items not involving cash: | ||
Depreciation | 1,543 | 1,950 |
Unrealized foreign exchange gain on unsettled forward exchange contracts | (230) | (1,556) |
Impairment of property, plant and equipment | 1,601 | |
Deferred income taxes | (46) | (148) |
Amortization of deferred financing fees | 21 | 11 |
Stock-based compensation | 203 | 196 |
Change in non-cash operating working capital: | ||
Accounts receivable | (3,016) | 1,084 |
Unbilled contract assets | (6,488) | |
Inventories | (2,851) | (4,421) |
Prepaid expenses and other assets | (1,437) | 436 |
Income taxes payable | (48) | (151) |
Accounts payable | 8,995 | 1,687 |
Accrued liabilities | 1,361 | 821 |
(2,082) | (4,880) | |
Financing: | ||
Net advances (repayment) of revolving credit facility | (209) | 2,757 |
Repayment of long-term debt | (1,000) | (1,000) |
Advance of equipment facility | 1,894 | |
Principal payment of capital lease obligations | (94) | (308) |
Proceeds from issuance of common stock | 361 | |
Deferred financing fees | (48) | (51) |
904 | 1,398 | |
Investing: | ||
Purchase of property, plant and equipment | (2,405) | (914) |
Decrease in cash | (3,583) | (4,396) |
Cash, beginning of period | 5,536 | 8,503 |
Cash, end of the period | 1,953 | 4,107 |
Supplemental Information | ||
Property, plant and equipment acquired that was included in accounts payable and accrued liabilities | 43 | 21 |
Property, plant and equipment acquired through capital lease | $ 533 |
Note 1 - Nature of the Business
Note 1 - Nature of the Business | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Business Description and Basis of Presentation [Text Block] | 1. Nature of the business SMTC Corporation (the “Company” or “SMTC”) is a provider of end-to-end electronics manufacturing services, or EMS, including product design and sustaining engineering services, printed circuit board assembly, or PCBA, production, enclosure fabrication, cable assembly, systems integration and comprehensive testing services, configuration to order, build to order and direct order fulfilment. SMTC facilities span a broad footprint in the United States, Mexico, and China. SMTC’s services extend over the entire electronic product life cycle from the development and introduction of new products through to growth, maturity and end of life phases. SMTC offers fully integrated contract manufacturing services to global original equipment manufacturers, or OEMs, and technology companies primarily within the industrial, computing and communications, power and energy and medical market segments. In addition, the Company operates an international sourcing and procurement office in Hong Kong and maintains its corporate headquarters in Markham, Canada. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with the accounting principles and methods of application disclosed in the audited consolidated financial statements within the Company’s Form 10 December 31, 2017, ( 10 March 8, 2018, 2. 10 December 31, 2017 not Unless otherwise specified or the context requires otherwise, all statements in these notes to the interim consolidated financial statements regarding financial figures are expressed in thousands of U.S. dollars. |
Note 2 - ASC 606 Revenue From C
Note 2 - ASC 606 Revenue From Contracts With Customers | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Revenue from Contract with Customer [Text Block] | 2. ASC 606: General description of the new guidance Effective January 1, 2018, 606: January 1, 2018 not Satisfaction of performance obligation s The Company primarily provides contract manufacturing services to its customers. The customer provides a design, the Company procures materials and manufactures to that design and ships the product to the customer or customer designated location. Revenue is derived primarily from the manufacturing of these electronics components that are built to customer specifications. Revenue is recognized as the customized components are manufactured over time. The Company has an enforceable right to payment for work completed to date and the goods do not In addition, the Company has contractual arrangements with the majority of its customers that provide for customers to purchase any unused inventory that the Company has purchased to fulfill that customer’s forecasted manufacturing demand. Revenue from the sale of any excess inventory to the customer is recognized at a point in time when control transfers, which is typically when title passes to the customer upon shipment. The Company also derives revenue from the sale of procured finished goods, specifically for resale. Revenue from the sales of these goods is recognized when control transfers at a point in time, which is typically when title passes to the customer. The Company also derives revenue from engineering and design services. Service revenue is recognized over time as services are performed. Impact of adoption of ASC 606 The cumulative effect of the changes to our consolidated January 1, 2018 2014 09, Balance at December 31, 2017 Adjustments Due to Balance at January 1, 2018 Assets Inventories $ 22,363 $ (3,414 ) $ 18,949 Unbilled contract assets — 3,734 3,734 Shareholders’ Equity Total shareholders’ equity 19,074 320 19,394 The following table presents the impacted financial statements line items in the consolidated balance sheet as of July 1, 2018: Balances Without Adoption of ASC 606 Effect of Change As Reported Unbilled contract assets $ — $ 6,808 $ 6,808 Inventories 31,578 (6,364 ) 25,214 Total shareholders’ equity 19,425 444 19,869 The following table presents the impacted financial statement line items in the consolidated statements of operations and comprehensive loss for the three July 1, 2018: Without Adoption of ASC 606 Impact of change As reported Revenues Revenue $ 43,140 $ 1,339 $ 44,479 Cost of sales 38,929 1,267 40,196 Gross profit 4,211 72 4,283 Income tax expense 234 — 234 Net loss (169 ) 72 (97 ) The following table presents the impacted financial statement line items in the consolidated statements of operations and comprehensive loss for the six July 1, 2018: Without Adoption of ASC 606 Impact of change As reported Revenues Revenue $ 78,525 $ 3,074 $ 81,599 Cost of sales 70,516 2,950 73,466 Gross profit 8,009 124 8,133 Income tax expense 260 — 260 Net loss (213 ) 124 (89 ) Critical accounting policies and estimates under ASC 606 The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Note 3 10 606 Revenue recognition Revenue is derived primarily from the sale of electronics components that are built to customer specifications. Revenue from the sale of products is recognized as goods are manufactured over time. The Company has an enforceable right to payment for work completed to date and the goods do not In addition, the Company has contractual arrangements with the majority of its customers that provide for customers to purchase any unused inventory that the Company has purchased to fulfill that customer’s forecasted manufacturing demand. Revenue from the sale of excess inventory to the customer is recognized at a point in time, or when title passes to the customer which occurs when the inventory is shipped to the customer. The Company also derives revenue from engineering and design services. Service revenue is recognized as services are performed. Sales taxes collected from customers and remitted to governmental authorities are presented on a net basis. Inventories Inventories are valued, on a first first 606, no may Estimation of the percentage of completion in satisfying its performance obligation The Company records an unbilled contract asset for revenue related to its WIP when the manufacturing process has commenced and there is a non-cancellable customer purchase order. The Company uses direct manufacturing labor inputs to estimate the percentage of completion in satisfying its performance obligation associated with WIP inventory. If assumptions change related to the inputs or outputs utilized to estimate the performance obligation associated with WIP inventory, this could have a material impact on the revenue and corresponding margin recognized. |
Note 3 - Recently Adopted Accou
Note 3 - Recently Adopted Accounting Pronouncements | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | 3. Recently Adopted Accounting Pronouncements In March 2016, 2016 08: 606 April 2016, 2016 10: 606 May 2016, 2016 12: 606 May 2014, 2014 09: 606 605 605 35, not 360, 350, August 2015, 2015 14 606 one December 15, 2017 2 In January 2016, 2016 01: 825 10 December 15, 2017, no In August 2016, 2016 15 230 eight zero December 15, 2017 no In November 2016, 2016 18 230 December 15, 2017 not no no Recent Accounting Pronouncements Not In February 2016, 2016 02: 842 may 12 December 15, 2018, In May 2016, 2016 13 326 December 15, 2019 December 15, 2018. not In June 2018, 2018 07: 718 December 15, 2018, not |
Note 4 - Interim Consolidated F
Note 4 - Interim Consolidated Financial Statement Details | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Condensed Financial Statements [Text Block] | 4. Interim Consolidated financial statement details The following consolidated financial statement details are presented as of the period ended for the consolidated balance sheets and for the periods ended for each of the consolidated statements of operations and comprehensive loss. Consolidated Balance Sheets Accounts receivable – net: July 1 , 201 8 December 3 1, 2017 Trade accounts receivable $ 31,669 $ 28,793 Other receivables 410 317 Allowance for doubtful accounts (46 ) — Total $ 32,125 $ 29,110 Unbilled contract assets: July 1 , 201 8 December 3 1, 2017 Opening – January 1, 2018 $ 3,734 $ — Contract assets addition 12,277 Contract assets invoiced (9,203 ) — Ending $ 6,808 $ — Inventories: July 1 , 201 8 December 3 1, 2017 Raw materials $ 23,808 $ 19,157 Work in process — 1,874 Finished goods (1) 804 1,540 Parts 769 411 Provision for obsolescence (167 ) (619 ) Total $ 25,214 $ 22,363 ( 1 Finished goods represent inventory the Company procured for resale and revenue will be recognized at a point in time the performance obligation has been satisfied and control of the finished goods has transferred to the customer. 4. Interim Consolidated financial statement details cont’d Property, plant and equipment – net: July 1 , 201 8 December 3 1, 2017 Cost: Land $ 1,648 $ 1,648 Buildings 9,903 9,852 Machinery and equipment (a) (c) 33,074 30,319 Office furniture and equipment 532 534 Computer hardware and software (b) 3,441 3,173 Leasehold improvements 2,140 2,160 50,738 47,686 Less accumulated depreciation: Land — — Buildings (8,874 ) (8,619 ) Machinery and equipment (a) (c) (25,592 ) (24,650 ) Office furniture and equipment (423 ) (413 ) Computer hardware and software (b) (2,846 ) (2,622 ) Leasehold improvements (1,271 ) (1,113 ) (39,006 ) (37,417 ) Property, plant and equipment—net $ 11,732 $ 10,269 (a) Included within machinery and equipment were assets under capital leases with costs of $1,069 $533 $258 $222 July 1, 2018 December 31, 2017, three July 1, 2018 July 2, 2017 $21 $55, six July 1, 2018 July 2, 2017 $36 $133, (b) Included within computer hardware and software are assets under capital leases with costs of $91 $Nil July 1, 2018 December 31, 2017 $5 $Nil July 1, 2018 December 31, 2017, three July 1, 2018 July 2, 2017 $5 $Nil, six July 1, 2018 July 2, 2017 $5 $3, (c) In accordance with ASC 360 10, may not July 1, 2018, not six July 1, 2018, $1,161. $1,112 no 2018. 10%, $775. may 4. Interim Consolidated financial statement details cont’d Accrued liabilities: July 1 , 201 8 December 3 1, 2017 Customer related $ 1,477 $ 936 Payroll 2,724 2,485 Professional services 307 328 Restructuring 137 109 Vendor related 696 493 Other 847 526 Total $ 6,188 $ 4,877 Interim consolidated statements of operations and comprehensive loss Interest expense: Three months ended Six months ended July 1 , 201 8 July 2 , 201 7 July 1 , 201 8 July 2 , 201 7 Revolving credit facility $ 224 $ 87 $ 400 $ 142 Long-term debt 107 117 214 226 Equipment facility 14 — 14 — Amortization of deferred financing fees 11 7 21 11 Obligations under capital leases 47 6 61 17 Interest expense $ 403 $ 217 $ 710 $ 396 |
Note 5 - Debt
Note 5 - Debt | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | 5. Debt (a) Debt Facilities The Company borrows money under a Revolving Credit and Security Agreement with PNC Bank, National Association (“PNC”) which governs the PNC Revolving Credit Facility, PNC Long-Term Debt Facility and the PNC Equipment Facility (“PNC Facilities”). The PNC Facilities have a term ending on January 2, 2021. 0.75%. 1.25%. 5.6% six July 1, 2018 4.6% six July 2, 2017. As at July 1, 2018 $10,463 December 31, 2017 - $5,295 $30,000. On March 28, 2018, September 14, 2011 $3,000 not $2,000 March 28, 2018 December 31, 2018 ( three 3 January 2, 2021 1.75%. January 2, 2021. June 29, 2018, $3,000 The Long-Term Debt Facility of $10,000 January 2, 2021 $500 $1,894 December 31, 2021 $58 three January 1, 2019. At July 1, 2018, $11,981 December 31, 2017 - $12,191 At July 1, 2018, $7,000 December 31, 2017 – $8,000 At July 1, 2018, $1,894 December 31, 2017 – $Nil The PNC Facilities are a joint and several obligations of the Company and its subsidiaries that are borrowers under the facilities and are jointly and severally guaranteed by other subsidiaries of the Company. Repayment under the PNC Facilities is collateralized by the assets of the Company and each of its subsidiaries. (b) Covenants The PNC Facilities agreement contains certain financial and non-financial covenants. The financial covenants require the Company to maintain minimum consolidated fixed charge coverage ratio and limit unfunded capital expenditures (all as defined in the Revolving Credit and Security Agreement governing the PNC Facilities). The Company must maintain a minimum fixed charge coverage ratio in effect for the nine July 1, 2018, twelve September 30, 2018 twelve January 2, 2021. The Company is in compliance with the financial covenants included in the PNC Facilities as of July 1, 2018. |
Note 6 - Capital Stock
Note 6 - Capital Stock | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | 6. Capital stock Common shares Issued and outstanding: The issued and outstanding number of common shares included in shareholders’ equity consisted of the following: Number of shares $ Balance at December 31, 2017 16,992,627 396 Share issuance (1) 310,883 3 Balance at July 1, 2018 17,303,510 399 ( 1 310,883 211,135 99,748 Stock Options For more detailed information regarding the Company’s stock option arrangements, see Note 6 10 December 31, 2017. 335,929 three six July 1, 2018. six July 1, 2018 Number of options Weighted Aggregate Weighted (years) Outstanding at December 31, 2017 1,870,753 $ 1.39 61 8.6 Options granted 335,929 $ 2.07 Exercised (211,135 ) 1.71 Forfeited (316,180 ) $ 1.25 Outstanding at July 1, 2018 1,679,367 $ 1.52 $ 585 8.8 Exercisable at July 1, 2018 480,741 $ 1.60 $ 556 8.1 During the three July 1, 2018 July 2, 2017, $34 $11, six July 1, 2018 July 2, 2017, $59 $23, Certain stock options outstanding have market conditions such that the awards are vested and exercisable only if the Company’s stock exceeds specified targets during the vesting period. If the market conditions are not not Restricted Stock Units For more detailed information regarding the Company’s Restricted Stock Units (“RSUs”) arrangements, see Note 6 10 December 31, 2017. 25,000 six July 1, 2018. six July 1, 2018 Outstanding s Weighted Weighted Outstanding balance at December 31, 2017 576,023 $ 1.13 1.84 RSUs granted 25,000 $ 2.37 RSUs vested and issued in shares (99,748 ) $ 1.40 RSUs forfeited (67,689 ) $ 0.97 Outstanding balance at July 1, 2018 433,586 $ 0.98 1.33 Certain RSUs outstanding have a market condition such that the awards are vested and issuable only if the market price of the Company’s stock meets or exceeds a specified target during the vesting period. If the market condition is not not Stock based compensation expense (recovery) recognized during the three July 1, 2018 July 2, 2017 $43 $18 six July 1, 2018 July 2, 2017 $144 $173, |
Note 7 - Income Taxes
Note 7 - Income Taxes | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | 7. Income taxes During the three July 1, 2018 July 2, 2017, $196 $168, three July 1, 2018 July 2, 2017, $38 $14, six July 1, 2018 July 2, 2017, $306 $295, six July 1, 2018 July 2, 2017 $46 $148, In assessing the realization of deferred tax assets, management considers whether it is more likely than not not 740, 740” not |
Note 8 - Loss Per Common Share
Note 8 - Loss Per Common Share | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | 8. L oss per common share The following table details the weighted average number of common shares outstanding for the purposes of computing basic and diluted earnings per common share for the following periods: Three months ended Six months ended July 1 , 201 8 July 2 , 201 7 July 1 , 201 8 July 2 , 201 7 Basic weighted average shares outstanding 17,222,439 16,807,333 17,131,971 16,734,117 Dilutive stock awards (1) (a) (b) — — — — Diluted weighted average shares outstanding 17,222,439 16,807,333 17,131,971 16,734,117 ( 1 Dilutive stock awards include outstanding restricted stock units and in the money stock options determined using the treasury stock method (a) For the three six July 1, 2018, not 644,503 663,816, three six July 1, 2018 (b) For the three six July 2, 2017, not 668,701 731,961, three six July 2, 2017 |
Note 9 - Segmented Information
Note 9 - Segmented Information | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | 9. Segmented information General description The Company is operated and managed geographically and has production facilities in the United States, Mexico and China. The Company utilizes reportable segment’s site contribution (site revenues minus operating expenses, excluding unrealized foreign exchange gain (loss) on unsettled forward exchange contracts, corporate allocations and restructuring expenses) to monitor reportable segment performance. Site contribution is utilized by the chief operating decision-maker as the indicator of reportable segment performance, as it reflects costs which our operating site management is directly responsible for. Intersegment adjustments reflect intersegment sales that are generally recorded at prices that approximate arm’s-length transactions. In assessing the performance of the reportable segments, management attributes site revenue to the reportable segment that ships the product to the customer, irrespective of the product’s destination. Information about the reportable segments is as follows: Three months ended Six months ended July 1 , 201 8 July 2 , 201 7 July 1 , 201 8 July 2 , 201 7 Revenues Mexico $ 35,581 $ 23,996 $ 64,654 $ 46,487 China 5,786 7,775 11,019 16,097 U.S. 5,331 3,928 10,586 8,910 Total $ 46,698 $ 35,699 $ 86,259 $ 71,494 Intersegment revenue Mexico $ (618 ) $ — $ (738 ) $ (12 ) China (1,552 ) (2,659 ) (3,779 ) (5,170 ) U.S. (49 ) (45 ) (143 ) (139 ) Total $ (2,219 ) $ (2,704 ) $ (4,660 ) $ (5,321 ) Net external revenue Mexico $ 34,963 $ 23,996 $ 63,916 $ 46,475 China 4,234 5,116 7,240 10,927 U.S. 5,282 3,883 10,443 8,771 Total segment revenue (which also equals consolidated revenue) $ 44,479 $ 32,995 $ 81,599 $ 66,173 Site Contribution Mexico $ 3,209 $ 1,338 $ 5,715 $ 2,685 China 314 (1,599 ) 442 (1,174 ) U.S. (62 ) (1,679 ) (39 ) (2,114 ) Total $ 3,461 $ (1,940 ) $ 6,118 $ (603 ) Corporate allocations 2,736 2,635 5,371 5,449 Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts 89 (284 ) (230 ) (1,556 ) Interest 403 217 710 396 Restructuring charges 96 1,351 96 1,351 Earnings (loss) before income taxes $ 137 $ (5,859 ) $ 171 $ (6,243 ) Additions to property, plant and equipment The following table contains additions to property, plant and equipment including those acquired through capital leases for the three six July 1, 2018 July 2, 2017: Three months ended Six months ended July 1 , 2018 July 2 , 2017 July 1 , 2018 July 2 , 2017 Mexico $ 2,288 $ 25 $ 2,376 $ 180 China 8 9 8 75 U.S. 552 234 558 309 Segment total 2,848 268 2,942 564 Corporate and other 107 118 110 124 Total $ 2,955 $ 386 $ 3,052 $ 688 Property, plant and equipment (a) July 1 , 201 8 December 3 1, 2017 Mexico $ 8,810 $ 7,518 China 1,161 1,380 U.S 1,571 1,188 Segment total 11,542 10,086 Corporate and other 190 183 Segment assets $ 11,732 $ 10,269 (a) Property, plant and equipment information is based on the principal location of the asset. Geographic revenues The following table contains geographic revenues based on the product shipment destination, for the three six July 1, 2018 July 2, 2017: Three months ended Six months ended July 1 , 2018 July 2 , 2017 July 1 , 2018 July 2 , 2017 U.S. $ 34,699 $ 24,101 $ 64,829 $ 50,175 Canada 7,857 5,082 13,018 10,504 China 1,923 1,181 3,752 2,356 Africa — 2,631 — 3,138 Total $ 44,479 $ 32,995 $ 81,599 $ 66,173 Significant customers and concentration of credit risk: Sales of the Company’s products are concentrated in certain cases among specific customers in the same industry. The Company is subject to concentrations of credit risk in trade receivables. The Company considers concentrations of credit risk in establishing the allowance for doubtful accounts and believes the recorded allowances are adequate. The Company expects to continue to depend upon a relatively small number of customers for a significant percentage of its revenue. In addition to having a limited number of customers, the Company manufactures a limited number of products for each customer. If the Company loses any of its larger customers or any product line manufactured for one one one As of July 1, 2018, three 10% 14.4%, 10.4%, 10.0% July 2, 2017 – four 13.5%, 11.4%, 11.0% 10.3% second 2017. six July 1, 2018, three 13.9%, 10.4% 10.1% July 2, 2017 – three 12.1%, 10.3% 10.1% As of July 1, 2018, three 19.0%, 13.0% 10.9% December 31, 2017, three 14.0%, 14.0% 12.0% No 10% |
Note 10 - Derivative Financial
Note 10 - Derivative Financial Instruments | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 10. Derivative financial instruments The Company enters into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to a portion of the forecasted Canadian Dollar and Mexican Peso denominated payroll, rent and utility cash flows. These contracts are effective economic hedges but do not 815 not The following table presents a summary of the outstanding foreign currency forward contracts as at July 1, 2018: Currency Buy/Sell Foreign Currency Amount Notional Contract Value in USD Canadian Dollar Buy 440 CAD $ 355 Mexican Peso Buy 22,000 MXN $ 1,188 The unrealized loss recognized in earnings for the three July 1, 2018 $89 July 2, 2017 – $284 six July 1, 2018 $230 July 2, 2017 – $1,556 three July 1, 2018 $140 July 2, 2017 – $14 six July 1, 2018 $92 July 2, 2017 – $450 2 820 July 1 , 201 8 July 2 , 2017 Average USD:CAD contract rate 1.24 1.29 Average USD:CAD mark-to-market rate 1.31 1.26 Average USD:PESO contract rate 18.52 18.69 Average USD:PESO mark-to-market rate 20.00 20.11 The derivative asset as at July 1, 2018 $Nil December 31, 2017 - $37 July 1, 2018 $108 December 31, 2017 - $375 Foreign exchange gains and losses are recorded in cost of sales in the consolidated statement of operations and comprehensive loss pertaining to translation of foreign denominated transactions during the period in addition to foreign denominated monetary assets and liabilities at the end of the reporting period. The total aggregate translated foreign exchange gain of $90 three July 1, 2018 ( July 2, 2017 – $11 $24 six July 1, 2018 ( July 2, 2017 – $80 |
Note 11 - Commitments
Note 11 - Commitments | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | 1 1 . Commitments Purchase obligations not July 1, 2018 $21,715 12 not December 31, 2017 $14,394 12 |
Note 12 - Subsequent Event
Note 12 - Subsequent Event | 6 Months Ended |
Jul. 01, 2018 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | 12 . Subsequent event On July 23, 2018, $13,000. July 23, 2018 ( one three $2.25 August 22, 2018. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 01, 2018 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In March 2016, 2016 08: 606 April 2016, 2016 10: 606 May 2016, 2016 12: 606 May 2014, 2014 09: 606 605 605 35, not 360, 350, August 2015, 2015 14 606 one December 15, 2017 2 In January 2016, 2016 01: 825 10 December 15, 2017, no In August 2016, 2016 15 230 eight zero December 15, 2017 no In November 2016, 2016 18 230 December 15, 2017 not no no Recent Accounting Pronouncements Not In February 2016, 2016 02: 842 may 12 December 15, 2018, In May 2016, 2016 13 326 December 15, 2019 December 15, 2018. not In June 2018, 2018 07: 718 December 15, 2018, not |
Note 2 - ASC 606 Revenue From19
Note 2 - ASC 606 Revenue From Contracts With Customers (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
Notes Tables | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | Balance at December 31, 2017 Adjustments Due to Balance at January 1, 2018 Assets Inventories $ 22,363 $ (3,414 ) $ 18,949 Unbilled contract assets — 3,734 3,734 Shareholders’ Equity Total shareholders’ equity 19,074 320 19,394 Balances Without Adoption of ASC 606 Effect of Change As Reported Unbilled contract assets $ — $ 6,808 $ 6,808 Inventories 31,578 (6,364 ) 25,214 Total shareholders’ equity 19,425 444 19,869 Without Adoption of ASC 606 Impact of change As reported Revenues Revenue $ 43,140 $ 1,339 $ 44,479 Cost of sales 38,929 1,267 40,196 Gross profit 4,211 72 4,283 Income tax expense 234 — 234 Net loss (169 ) 72 (97 ) Without Adoption of ASC 606 Impact of change As reported Revenues Revenue $ 78,525 $ 3,074 $ 81,599 Cost of sales 70,516 2,950 73,466 Gross profit 8,009 124 8,133 Income tax expense 260 — 260 Net loss (213 ) 124 (89 ) |
Note 4 - Interim Consolidated20
Note 4 - Interim Consolidated Financial Statement Details (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
Notes Tables | |
Condensed Balance Sheet [Table Text Block] | July 1 , 201 8 December 3 1, 2017 Trade accounts receivable $ 31,669 $ 28,793 Other receivables 410 317 Allowance for doubtful accounts (46 ) — Total $ 32,125 $ 29,110 July 1 , 201 8 December 3 1, 2017 Opening – January 1, 2018 $ 3,734 $ — Contract assets addition 12,277 Contract assets invoiced (9,203 ) — Ending $ 6,808 $ — July 1 , 201 8 December 3 1, 2017 Raw materials $ 23,808 $ 19,157 Work in process — 1,874 Finished goods (1) 804 1,540 Parts 769 411 Provision for obsolescence (167 ) (619 ) Total $ 25,214 $ 22,363 July 1 , 201 8 December 3 1, 2017 Cost: Land $ 1,648 $ 1,648 Buildings 9,903 9,852 Machinery and equipment (a) (c) 33,074 30,319 Office furniture and equipment 532 534 Computer hardware and software (b) 3,441 3,173 Leasehold improvements 2,140 2,160 50,738 47,686 Less accumulated depreciation: Land — — Buildings (8,874 ) (8,619 ) Machinery and equipment (a) (c) (25,592 ) (24,650 ) Office furniture and equipment (423 ) (413 ) Computer hardware and software (b) (2,846 ) (2,622 ) Leasehold improvements (1,271 ) (1,113 ) (39,006 ) (37,417 ) Property, plant and equipment—net $ 11,732 $ 10,269 July 1 , 201 8 December 3 1, 2017 Customer related $ 1,477 $ 936 Payroll 2,724 2,485 Professional services 307 328 Restructuring 137 109 Vendor related 696 493 Other 847 526 Total $ 6,188 $ 4,877 |
Condensed Income Statement [Table Text Block] | Three months ended Six months ended July 1 , 201 8 July 2 , 201 7 July 1 , 201 8 July 2 , 201 7 Revolving credit facility $ 224 $ 87 $ 400 $ 142 Long-term debt 107 117 214 226 Equipment facility 14 — 14 — Amortization of deferred financing fees 11 7 21 11 Obligations under capital leases 47 6 61 17 Interest expense $ 403 $ 217 $ 710 $ 396 |
Note 6 - Capital Stock (Tables)
Note 6 - Capital Stock (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
Notes Tables | |
Schedule of Common Stock Outstanding Roll Forward [Table Text Block] | Number of shares $ Balance at December 31, 2017 16,992,627 396 Share issuance (1) 310,883 3 Balance at July 1, 2018 17,303,510 399 |
Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of options Weighted Aggregate Weighted (years) Outstanding at December 31, 2017 1,870,753 $ 1.39 61 8.6 Options granted 335,929 $ 2.07 Exercised (211,135 ) 1.71 Forfeited (316,180 ) $ 1.25 Outstanding at July 1, 2018 1,679,367 $ 1.52 $ 585 8.8 Exercisable at July 1, 2018 480,741 $ 1.60 $ 556 8.1 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | Outstanding s Weighted Weighted Outstanding balance at December 31, 2017 576,023 $ 1.13 1.84 RSUs granted 25,000 $ 2.37 RSUs vested and issued in shares (99,748 ) $ 1.40 RSUs forfeited (67,689 ) $ 0.97 Outstanding balance at July 1, 2018 433,586 $ 0.98 1.33 |
Note 8 - Loss Per Common Share
Note 8 - Loss Per Common Share (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
Notes Tables | |
Schedule of Weighted Average Number of Shares [Table Text Block] | Three months ended Six months ended July 1 , 201 8 July 2 , 201 7 July 1 , 201 8 July 2 , 201 7 Basic weighted average shares outstanding 17,222,439 16,807,333 17,131,971 16,734,117 Dilutive stock awards (1) (a) (b) — — — — Diluted weighted average shares outstanding 17,222,439 16,807,333 17,131,971 16,734,117 |
Note 9 - Segmented Information
Note 9 - Segmented Information (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Three months ended Six months ended July 1 , 201 8 July 2 , 201 7 July 1 , 201 8 July 2 , 201 7 Revenues Mexico $ 35,581 $ 23,996 $ 64,654 $ 46,487 China 5,786 7,775 11,019 16,097 U.S. 5,331 3,928 10,586 8,910 Total $ 46,698 $ 35,699 $ 86,259 $ 71,494 Intersegment revenue Mexico $ (618 ) $ — $ (738 ) $ (12 ) China (1,552 ) (2,659 ) (3,779 ) (5,170 ) U.S. (49 ) (45 ) (143 ) (139 ) Total $ (2,219 ) $ (2,704 ) $ (4,660 ) $ (5,321 ) Net external revenue Mexico $ 34,963 $ 23,996 $ 63,916 $ 46,475 China 4,234 5,116 7,240 10,927 U.S. 5,282 3,883 10,443 8,771 Total segment revenue (which also equals consolidated revenue) $ 44,479 $ 32,995 $ 81,599 $ 66,173 Site Contribution Mexico $ 3,209 $ 1,338 $ 5,715 $ 2,685 China 314 (1,599 ) 442 (1,174 ) U.S. (62 ) (1,679 ) (39 ) (2,114 ) Total $ 3,461 $ (1,940 ) $ 6,118 $ (603 ) Corporate allocations 2,736 2,635 5,371 5,449 Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts 89 (284 ) (230 ) (1,556 ) Interest 403 217 710 396 Restructuring charges 96 1,351 96 1,351 Earnings (loss) before income taxes $ 137 $ (5,859 ) $ 171 $ (6,243 ) Three months ended Six months ended July 1 , 2018 July 2 , 2017 July 1 , 2018 July 2 , 2017 Mexico $ 2,288 $ 25 $ 2,376 $ 180 China 8 9 8 75 U.S. 552 234 558 309 Segment total 2,848 268 2,942 564 Corporate and other 107 118 110 124 Total $ 2,955 $ 386 $ 3,052 $ 688 Three months ended Six months ended July 1 , 2018 July 2 , 2017 July 1 , 2018 July 2 , 2017 U.S. $ 34,699 $ 24,101 $ 64,829 $ 50,175 Canada 7,857 5,082 13,018 10,504 China 1,923 1,181 3,752 2,356 Africa — 2,631 — 3,138 Total $ 44,479 $ 32,995 $ 81,599 $ 66,173 |
Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block] | July 1 , 201 8 December 3 1, 2017 Mexico $ 8,810 $ 7,518 China 1,161 1,380 U.S 1,571 1,188 Segment total 11,542 10,086 Corporate and other 190 183 Segment assets $ 11,732 $ 10,269 |
Note 10 - Derivative Financia24
Note 10 - Derivative Financial Instruments (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
Notes Tables | |
Schedule of Derivative Instruments [Table Text Block] | Currency Buy/Sell Foreign Currency Amount Notional Contract Value in USD Canadian Dollar Buy 440 CAD $ 355 Mexican Peso Buy 22,000 MXN $ 1,188 |
Schedule of Derivative Rates at Fair Value [Table Text Block] | July 1 , 201 8 July 2 , 2017 Average USD:CAD contract rate 1.24 1.29 Average USD:CAD mark-to-market rate 1.31 1.26 Average USD:PESO contract rate 18.52 18.69 Average USD:PESO mark-to-market rate 20.00 20.11 |
Note 2 - ASC 606 Revenue from25
Note 2 - ASC 606 Revenue from Contracts with Customers - Impact of Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 01, 2018 | Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Inventories | $ 25,214 | $ 25,214 | $ 25,214 | $ 18,949 | $ 22,363 | ||
Unbilled contract assets | 6,808 | 6,808 | 6,808 | 3,734 | |||
Total shareholders’ equity | 19,869 | 19,869 | 19,869 | 19,394 | 19,074 | ||
Unbilled contract assets | 6,808 | 6,808 | 6,808 | 3,734 | |||
Inventories | 25,214 | 25,214 | 25,214 | 18,949 | 22,363 | ||
Total shareholders’ equity | 19,869 | 19,869 | 19,869 | 19,394 | $ 19,074 | ||
Revenue | 44,479 | 44,479 | $ 32,995 | 81,599 | $ 66,173 | ||
Cost of sales | 40,196 | 40,196 | 31,575 | 73,466 | 61,196 | ||
Gross profit | 4,283 | 4,283 | 1,420 | 8,133 | 4,977 | ||
Income tax expense | 234 | 234 | 154 | 260 | 147 | ||
Net loss | (97) | (97) | $ (6,013) | (89) | $ (6,390) | ||
Accounting Standards Update 2014-09 [Member] | |||||||
Inventories | (3,414) | ||||||
Unbilled contract assets | 3,734 | ||||||
Total shareholders’ equity | 320 | ||||||
Unbilled contract assets | 3,734 | ||||||
Inventories | (3,414) | ||||||
Total shareholders’ equity | $ 320 | ||||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||||||
Inventories | 31,578 | 31,578 | 31,578 | ||||
Unbilled contract assets | |||||||
Total shareholders’ equity | 19,425 | 19,425 | 19,425 | ||||
Unbilled contract assets | |||||||
Inventories | 31,578 | 31,578 | 31,578 | ||||
Total shareholders’ equity | 19,425 | 19,425 | 19,425 | ||||
Revenue | 43,140 | 78,525 | |||||
Cost of sales | 38,929 | 70,516 | |||||
Gross profit | 4,211 | 8,009 | |||||
Income tax expense | 234 | 260 | |||||
Net loss | (169) | (213) | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||||||
Revenue | 1,339 | 3,074 | |||||
Cost of sales | 1,267 | 2,950 | |||||
Gross profit | 72 | 124 | |||||
Income tax expense | |||||||
Net loss | 72 | 124 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
Inventories | (6,364) | (6,364) | (6,364) | ||||
Unbilled contract assets | 6,808 | 6,808 | 6,808 | ||||
Total shareholders’ equity | 444 | 444 | 444 | ||||
Unbilled contract assets | 6,808 | 6,808 | 6,808 | ||||
Inventories | (6,364) | (6,364) | (6,364) | ||||
Total shareholders’ equity | $ 444 | $ 444 | $ 444 |
Note 3 - Recently Adopted Acc26
Note 3 - Recently Adopted Accounting Pronouncements (Details Textual) $ in Thousands | Jul. 01, 2018USD ($) |
Restricted Cash Equivalents, Total | $ 0 |
Note 4 - Interim Consolidated27
Note 4 - Interim Consolidated Financial Statement Details (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | Dec. 31, 2017 | |
Depreciation, Total | $ 1,543 | $ 1,950 | |||
Property, Plant and Equipment, Net, Ending Balance | $ 11,732 | 11,732 | $ 10,269 | ||
Impairment of Long-Lived Assets Held-for-use | $ 1,601 | 1,601 | |||
Machinery and Equipment [Member] | |||||
Capital Leased Assets, Gross, Total | 1,069 | 1,069 | 533 | ||
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | 258 | 258 | 222 | ||
Machinery and Equipment [Member] | CHINA | |||||
Property, Plant and Equipment, Net, Ending Balance | 1,161 | 1,161 | |||
Long-lived Assets, Amount in Excess of Carrying Value | 1,112 | 1,112 | |||
Impairment of Long-Lived Assets Held-for-use | 0 | ||||
Long-lived Assets, Fair Value Assumption, Revenue Projection Decreased by Ten Percent, Recoverable Amount | 775 | 775 | |||
Machinery and Equipment [Member] | Assets Under Capital Lease [Member] | |||||
Depreciation, Total | 21 | 55 | 36 | 133 | |
Computer Equipment [Member] | |||||
Capital Leased Assets, Gross, Total | 91 | 91 | 0 | ||
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | 5 | 5 | $ 0 | ||
Computer Equipment [Member] | Assets Under Capital Lease [Member] | |||||
Depreciation, Total | $ 5 | $ 0 | $ 5 | $ 3 |
Note 4 - Interim Consolidated28
Note 4 - Interim Consolidated Financial Statement Details - Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jul. 01, 2018 | Jul. 02, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | ||
Trade accounts receivable | $ 31,669 | $ 28,793 | |||
Other receivables | 410 | 317 | |||
Allowance for doubtful accounts | (46) | ||||
Total | 32,125 | 29,110 | |||
Opening – January 1, 2018 | 3,734 | ||||
Contract assets addition | 12,277 | ||||
Contract assets invoiced | (9,203) | ||||
Ending | 6,808 | ||||
Raw materials | 23,808 | 19,157 | |||
Work in process | 1,874 | ||||
Finished goods (1) | [1] | 804 | 1,540 | ||
Parts | 769 | 411 | |||
Provision for obsolescence | (167) | (619) | |||
Total | 25,214 | $ 18,949 | 22,363 | ||
Property, plant and equipment | 50,738 | 47,686 | |||
Accumulated depreciation, property, plant and equipment | (39,006) | (37,417) | |||
Property, Plant and Equipment, Net, Ending Balance | 11,732 | 10,269 | |||
Payroll | 2,724 | 2,485 | |||
Professional services | 307 | 328 | |||
Total | 6,188 | 4,877 | |||
Land [Member] | |||||
Property, plant and equipment | 1,648 | 1,648 | |||
Accumulated depreciation, property, plant and equipment | |||||
Building [Member] | |||||
Property, plant and equipment | 9,903 | 9,852 | |||
Accumulated depreciation, property, plant and equipment | (8,874) | (8,619) | |||
Machinery and Equipment [Member] | |||||
Property, plant and equipment | [2],[3] | 33,074 | 30,319 | ||
Accumulated depreciation, property, plant and equipment | [2],[3] | (25,592) | (24,650) | ||
Furniture and Fixtures [Member] | |||||
Property, plant and equipment | 532 | 534 | |||
Accumulated depreciation, property, plant and equipment | (423) | (413) | |||
Computer Equipment [Member] | |||||
Property, plant and equipment | [2] | 3,441 | 3,173 | ||
Accumulated depreciation, property, plant and equipment | [2] | (2,846) | (2,622) | ||
Leasehold Improvements [Member] | |||||
Property, plant and equipment | 2,140 | 2,160 | |||
Accumulated depreciation, property, plant and equipment | (1,271) | (1,113) | |||
Customer Related [Member] | |||||
Other accrued liabilities | 1,477 | 936 | |||
Restructuring [Member] | |||||
Other accrued liabilities | 137 | 109 | |||
Vendor Related [Member] | |||||
Other accrued liabilities | 696 | 493 | |||
Other Accrued Liabilities [Member] | |||||
Other accrued liabilities | $ 847 | $ 526 | |||
[1] | Finished goods represent inventory the Company procured for resale and revenue will be recognized at a point in time when the performance obligation has been satisfied and control of the finished goods has transferred to the customer. | ||||
[2] | In accordance with ASC 360-10, the Company is required to evaluate for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Upon the occurrence of a triggering event, the Company assesses whether the estimated undiscounted cash flows expected from the use of the asset and the residual value from the ultimate disposal of the asset exceeds the carrying value. As at April 1, 2018, the Company identified that operating results for its China segment asset group did not meet forecasted results, which was considered a triggering event related to its China segment asset group. The net carrying amount of the China asset group is $1,262. The Company estimated undiscounted cash flows and determined a recoverable amount of $1,056 in excess of the net carrying value, therefore no impairment loss was recorded in 2018. The key assumptions included in these cash flows are projected revenue based on management's forecast and corresponding margins. The estimate of undiscounted cash flows are sensitive to these key assumptions, for instance, if our revenue projections are lower by 10%, the recoverable amount in excess of the carrying amount would be reduced to $731. As such, the Company continues to monitor for impairment triggers each quarter, which may result in future impairments in this asset group. | ||||
[3] | Included within machinery and equipment were assets under capital leases with costs of $533 and $533 and associated accumulated depreciation of $237 and $222 as of April 1, 2018 and December 31, 2017, respectively. The related depreciation expense for the three months ended April 1, 2018 and April 2, 2017 was $15 and $78, respectively. |
Note 4 - Interim Consolidated29
Note 4 - Interim Consolidated Financial Statement Details - Consolidated Statements of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | |
Long-term debt | $ 107 | $ 117 | $ 214 | $ 226 |
Amortization of deferred financing fees | 11 | 7 | 21 | 11 |
Obligations under capital leases | 47 | 6 | 61 | 17 |
Interest expense | 403 | 217 | 710 | 396 |
Revolving Credit Facility [Member] | ||||
Line of credit facility, periodic payment, interest | 224 | 87 | 400 | 142 |
Equipment Facility [Member] | ||||
Line of credit facility, periodic payment, interest | $ 14 | $ 14 |
Note 5 - Debt (Details Textual)
Note 5 - Debt (Details Textual) - PNC Bank [Member] - USD ($) $ in Thousands | Mar. 28, 2018 | Jul. 01, 2018 | Dec. 31, 2017 | Jul. 02, 2017 |
Debt Instrument, Face Amount | $ 10,000 | |||
Line of Credit Facility, Periodic Payment | 500 | |||
Long-term Line of Credit, Total | $ 7,000 | $ 8,000 | ||
Revolving Credit Facility [Member] | ||||
Debt, Weighted Average Interest Rate | 5.60% | 4.60% | ||
Line of Credit Facility, Remaining Borrowing Capacity | $ 10,463 | 5,295 | ||
Line of Credit Facility, Maximum Borrowing Capacity | 30,000 | |||
Long-term Line of Credit, Total | 11,981 | 12,191 | ||
Equipment Facility [Member] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 3,000 | |||
Maximum Aggregate Loans Advanced for Purchase of Equipment | $ 2,000 | |||
Debt Instrument, Term | 3 years | |||
Line of Credit Facility, Periodic Payment | 58 | |||
Line of Credit Facility, Fair Value of Amount Outstanding | 1,894 | |||
Long-term Line of Credit, Total | $ 1,894 | $ 0 | ||
Base Rate [Member] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | |||
Base Rate [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||
Base Rate [Member] | Equipment Facility [Member] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% |
Note 6 - Capital Stock (Details
Note 6 - Capital Stock (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 211,135 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 335,929 | 335,929 | ||
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 99,748 | |||
Allocated Share-based Compensation Expense, Total | $ 43 | $ (18) | $ 144 | $ 173 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 25,000 | |||
Employee Stock Option [Member] | ||||
Allocated Share-based Compensation Expense, Total | $ 34 | $ 11 | $ 59 | $ 23 |
Common Stock [Member] | ||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 310,883 |
Note 6 - Capital Stock - Common
Note 6 - Capital Stock - Common Shares Issued and Outstanding (Details) $ in Thousands | 6 Months Ended |
Jul. 01, 2018USD ($)shares | |
Shares issued during period, value | $ 361 |
Common Stock [Member] | |
Balance (in shares) | shares | 16,992,627 |
Balance | $ 396 |
Shares issued during period (in shares) | shares | 310,883 |
Shares issued during period, value | $ 3 |
Balance (in shares) | shares | 17,303,510 |
Balance | $ 399 |
Note 6 - Capital Stock - Stock
Note 6 - Capital Stock - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jul. 01, 2018 | Jul. 01, 2018 | Dec. 31, 2017 | |
Balance, options outstanding (in shares) | 1,870,753 | ||
Balance, outstanding weighted average exercise price (in dollars per share) | $ 1.39 | ||
Balance, aggregate intrinsic value | $ 585 | $ 585 | $ 61 |
Balance, outstanding weighted average remaining contractual term (Year) | 8 years 292 days | 8 years 219 days | |
Options granted, number of options (in shares) | 335,929 | 335,929 | |
Options granted, weighted average exercise price (in dollars per share) | $ 2.07 | ||
Exercised (in shares) | (211,135) | ||
Exercised (in dollars per share) | $ 1.71 | ||
Forfeited (in shares) | (316,180) | ||
Forfeited (in dollars per share) | $ 1.25 | ||
Balance, options outstanding (in shares) | 1,679,367 | 1,679,367 | 1,870,753 |
Balance, outstanding weighted average exercise price (in dollars per share) | $ 1.52 | $ 1.52 | $ 1.39 |
Exercisable, number of options (in shares) | 480,741 | 480,741 | |
Exercisable, weighted average exercise price (in dollars per share) | $ 1.60 | $ 1.60 | |
Exercisable, aggregate intrinsic value | $ 556 | $ 556 | |
Exercisable weighted average remaining contractual term (Year) | 8 years 36 days |
Note 6 - Capital Stock - Restri
Note 6 - Capital Stock - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jul. 01, 2018 | Dec. 31, 2017 | |
Balance, outstanding options (in shares) | 576,023 | |
Balance, outstanding weighted average stock price (in dollars per share) | $ 1.13 | |
Balance, outstanding weighted average remaining contractual term (Year) | 1 year 120 days | 1 year 306 days |
RSUs granted (in shares) | 25,000 | |
RSUs granted, weighted average stock price (in dollars per share) | $ 2.37 | |
RSUs vested and issued in shares (in shares) | (99,748) | |
RSUs vested and issued in shares, weighted average stock price (in dollars per share) | $ 1.40 | |
RSUs forfeited (in shares) | (67,689) | |
RSUs forfeited, weighted average stock price (in dollars per share) | $ 0.97 | |
Balance, outstanding options (in shares) | 433,586 | 576,023 |
Balance, outstanding weighted average stock price (in dollars per share) | $ 0.98 | $ 1.13 |
Note 7 - Income Taxes (Details
Note 7 - Income Taxes (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | |
Current Income Tax Expense (Benefit), Total | $ 196 | $ 168 | $ 306 | $ 295 |
Deferred Income Tax Expense (Benefit), Total | $ 38 | $ (14) | $ (46) | $ (148) |
Note 8 - Loss Per Common Shar36
Note 8 - Loss Per Common Share (Details Textual) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 644,503 | 668,701 | 663,816 | 731,961 |
Note 8 - Loss Per Common Shar37
Note 8 - Loss Per Common Share - Common Shares Outstanding for Basic and Diluted Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | ||
Basic weighted average shares outstanding (in shares) | 17,222,439 | 16,807,333 | 17,131,971 | 16,734,117 | |
Dilutive stock awards (1) (a) (b) (in shares) | [1],[2],[3] | ||||
Diluted weighted average shares outstanding (in shares) | 17,222,439 | 16,807,333 | 17,131,971 | 16,734,117 | |
[1] | Dilutive stock awards include outstanding restricted stock units and in the money stock options determined using the treasury stock method. | ||||
[2] | For the three and six months ended July 1, 2018, as a result of net loss for the period, dilutive stock awards are not presented as this would be antidilutive. Had there been net income for the periods, the dilutive stock awards would have been calculated as 644,503 and 663,816, respectively for the three and six months ended July 1, 2018 related to outstanding unvested restricted stock units and incremental in-the-money stock options. | ||||
[3] | For the three and six months ended July 2, 2017, as a result of net income for the period, dilutive stock awards are not presented as this would be antidilutive. Had there been net income for the periods, the dilutive stock awards have been calculated as 668,701 and 731,961, respectively for the three and six months ended July 2, 2017 related to outstanding unvested restricted stock units and incremental in-the-money stock options. |
Note 9 - Segmented Informatio38
Note 9 - Segmented Information (Details Textual) - Customer Concentration Risk [Member] | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | |
Sales Revenue, Net [Member] | ||||||
Number of Major Customers | 4 | 3 | 3 | |||
Sales Revenue, Net [Member] | Major Customer1 [Member] | ||||||
Concentration Risk, Percentage | 14.40% | 13.50% | 13.90% | 12.10% | ||
Sales Revenue, Net [Member] | Major Customer2 [Member] | ||||||
Concentration Risk, Percentage | 10.40% | 11.40% | 10.40% | 10.30% | ||
Sales Revenue, Net [Member] | Major Customer3 [Member] | ||||||
Concentration Risk, Percentage | 10.00% | 11.00% | 10.10% | 10.10% | ||
Sales Revenue, Net [Member] | Major Customer 4 [Member] | ||||||
Concentration Risk, Percentage | 10.30% | |||||
Accounts Receivable [Member] | ||||||
Number of Major Customers | 3 | 3 | ||||
Accounts Receivable [Member] | Major Customer1 [Member] | ||||||
Concentration Risk, Percentage | 19.00% | 14.00% | ||||
Accounts Receivable [Member] | Major Customer2 [Member] | ||||||
Concentration Risk, Percentage | 13.00% | 14.00% | ||||
Accounts Receivable [Member] | Major Customer3 [Member] | ||||||
Concentration Risk, Percentage | 10.90% | 12.00% |
Note 9 - Segmented Informatio39
Note 9 - Segmented Information - Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2018 | Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | |
Revenue | $ 44,479 | $ 44,479 | $ 32,995 | $ 81,599 | $ 66,173 |
Gross profit | 4,283 | $ 4,283 | 1,420 | 8,133 | 4,977 |
Corporate allocations | 2,736 | 2,635 | 5,371 | 5,449 | |
Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts | 89 | (284) | (230) | (1,556) | |
Interest | 403 | 217 | 710 | 396 | |
Restructuring charges | 96 | 1,351 | 96 | 1,351 | |
Earnings (loss) before income taxes | 137 | (5,859) | 171 | (6,243) | |
Additions to property, plant and equipment | 2,955 | 386 | 3,052 | 688 | |
MEXICO | |||||
Revenue | 34,963 | 23,996 | 63,916 | 46,475 | |
UNITED STATES | |||||
Revenue | 5,282 | 3,883 | 10,443 | 8,771 | |
UNITED STATES | Customers by Invoice Location [Member] | |||||
Revenue | 34,699 | 24,101 | 64,829 | 50,175 | |
CHINA | |||||
Revenue | 4,234 | 5,116 | 7,240 | 10,927 | |
CHINA | Customers by Invoice Location [Member] | |||||
Revenue | 1,923 | 1,181 | 3,752 | 2,356 | |
CANADA | Customers by Invoice Location [Member] | |||||
Revenue | 7,857 | 5,082 | 13,018 | 10,504 | |
Africa [Member] | Customers by Invoice Location [Member] | |||||
Revenue | 2,631 | 3,138 | |||
Reportable Geographical Components [Member] | |||||
Revenue | 46,698 | 35,699 | 86,259 | 71,494 | |
Gross profit | 3,461 | (1,940) | 6,118 | (603) | |
Additions to property, plant and equipment | 2,848 | 268 | 2,942 | 564 | |
Reportable Geographical Components [Member] | MEXICO | |||||
Revenue | 35,581 | 23,996 | 64,654 | 46,487 | |
Gross profit | 3,209 | 1,338 | 5,715 | 2,685 | |
Additions to property, plant and equipment | 2,288 | 25 | 2,376 | 180 | |
Reportable Geographical Components [Member] | UNITED STATES | |||||
Revenue | 5,331 | 3,928 | 10,586 | 8,910 | |
Gross profit | (62) | (1,679) | (39) | (2,114) | |
Additions to property, plant and equipment | 552 | 234 | 558 | 309 | |
Reportable Geographical Components [Member] | CHINA | |||||
Revenue | 5,786 | 7,775 | 11,019 | 16,097 | |
Gross profit | 314 | (1,599) | 442 | (1,174) | |
Additions to property, plant and equipment | 8 | 9 | 8 | 75 | |
Corporate, Non-Segment [Member] | |||||
Additions to property, plant and equipment | 107 | 118 | 110 | 124 | |
Geography Eliminations [Member] | |||||
Revenue | (2,219) | (2,704) | (4,660) | (5,321) | |
Geography Eliminations [Member] | MEXICO | |||||
Revenue | (618) | (738) | (12) | ||
Geography Eliminations [Member] | UNITED STATES | |||||
Revenue | (49) | (45) | (143) | (139) | |
Geography Eliminations [Member] | CHINA | |||||
Revenue | $ (1,552) | $ (2,659) | $ (3,779) | $ (5,170) |
Note 9 - Segmented Informatio40
Note 9 - Segmented Information - Long-lived Assets in Individual Geographic Areas (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 | |
Long-lived assets | [1] | $ 11,732 | $ 10,269 |
Reportable Geographical Components [Member] | |||
Long-lived assets | [1] | 11,542 | 10,086 |
Corporate, Non-Segment [Member] | |||
Long-lived assets | [1] | 190 | 183 |
MEXICO | Reportable Geographical Components [Member] | |||
Long-lived assets | [1] | 8,810 | 7,518 |
CHINA | Reportable Geographical Components [Member] | |||
Long-lived assets | [1] | 1,161 | 1,380 |
UNITED STATES | Reportable Geographical Components [Member] | |||
Long-lived assets | [1] | $ 1,571 | $ 1,188 |
[1] | Property, plant and equipment information is based on the principal location of the asset. |
Note 10 - Derivative Financia41
Note 10 - Derivative Financial Instruments (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2018 | Jul. 02, 2017 | Jul. 01, 2018 | Jul. 02, 2017 | Dec. 31, 2017 | |
Unrealized Gain (Loss) on Derivatives | $ (89) | $ 284 | $ (230) | $ 1,556 | |
Gain (Loss) on Sale of Derivatives | (140) | 14 | (92) | (450) | |
Derivative Asset, Current | 0 | 0 | $ 37 | ||
Derivative Liability, Current | 108 | 108 | $ 375 | ||
Foreign Currency Transaction Gain (Loss), before Tax, Total | $ 90 | $ 11 | $ (24) | $ (80) |
Note 10 - Derivative Financia42
Note 10 - Derivative Financial Instruments - Outstanding Foreign Currency Forward Contracts (Details) - 6 months ended Jul. 01, 2018 $ in Thousands, $ in Thousands, $ in Millions | USD ($) | CAD ($) | MXN ($) |
Buy/Sell | Buy | ||
Foreign Currency Amount | $ 22 | ||
Notional Contract Value in USD | $ 1,188 | ||
Canada, Dollars | |||
Buy/Sell | Buy | ||
Foreign Currency Amount | $ 440 | ||
Notional Contract Value in USD | $ 355 |
Note 10 - Derivative Financia43
Note 10 - Derivative Financial Instruments - Average USD Fair Value Measurements for Contracts Rates (Details) | Jul. 01, 2018 | Dec. 31, 2017 |
Average USD:CAD contract rate | 18.52% | 18.69% |
Average USD:CAD mark-to-market rate | 20.00% | 20.11% |
Canada, Dollars | ||
Average USD:CAD contract rate | 1.24% | 1.29% |
Average USD:CAD mark-to-market rate | 1.31% | 1.26% |
Note 11 - Commitments (Details
Note 11 - Commitments (Details Textual) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 |
Purchase Obligation, Due in Next Twelve Months | $ 21,715 | $ 14,394 |
Note 12 - Subsequent Event (Det
Note 12 - Subsequent Event (Details Textual) - Subsequent Event [Member] $ / shares in Units, $ in Millions | Jul. 23, 2018USD ($)$ / shares |
Common Stock, Value, Subscriptions | $ | $ 13 |
Common Stock, Par or Stated Value Per Share | $ / shares | $ 2.25 |