Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 22, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | BROADWIND ENERGY, INC. | ||
Entity Central Index Key | 1,120,370 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 28,651,000 | ||
Entity Common Stock, Shares Outstanding | 15,708,685 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 1,177 | $ 78 |
Accounts receivable, net | 17,455 | 13,644 |
Inventories, net | 22,670 | 19,279 |
Prepaid expenses and other current assets | 1,776 | 1,798 |
Current assets held for sale | 580 | |
Total current assets | 43,078 | 35,379 |
LONG-TERM ASSETS: | ||
Property and equipment, net | 49,087 | 55,693 |
Goodwill | 4,993 | 4,993 |
Other intangible assets, net | 6,602 | 16,078 |
Other assets | 398 | 207 |
TOTAL ASSETS | 99,165 | 112,350 |
CURRENT LIABILITIES: | ||
Line of credit, NMTC and other notes payable | 11,930 | 14,138 |
Current maturities of long-term debt | 114 | |
Current portions of capital lease obligations | 967 | 762 |
Accounts payable | 11,618 | 11,756 |
Accrued liabilities | 3,806 | 4,393 |
Customer deposits | 23,507 | 9,791 |
Current liabilities held for sale | 27 | 30 |
Total current liabilities | 51,855 | 40,984 |
LONG-TERM LIABILITIES: | ||
Long-term debt, net of current maturities | 1,408 | 797 |
Long-term capital lease obligations, net of current portions | 571 | 941 |
Other | 1,969 | 3,557 |
Total long-term liabilities | 3,948 | 5,295 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS’ EQUITY: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value; 30,000,000 shares authorized; 15,982,622 and 15,480,299 shares issued as of December 31, 2018, and December 31, 2017, respectively | 16 | 15 |
Treasury stock, at cost, 273,937 shares as of December 31, 2018 and December 31, 2017 | (1,842) | (1,842) |
Additional paid-in capital | 381,441 | 380,005 |
Accumulated deficit | (336,253) | (312,107) |
Total stockholders’ equity | 43,362 | 66,071 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 99,165 | $ 112,350 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 15,982,622 | 15,480,299 |
Treasury stock, common shares | 273,937 | 273,937 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenues | $ 125,380 | $ 146,785 |
Cost of sales | 121,684 | 138,626 |
Restructuring | 631 | |
Gross profit | 3,065 | 8,159 |
OPERATING EXPENSES: | ||
Selling, general and administrative | 13,625 | 13,828 |
Impairment charges | 12,585 | |
Intangible amortization | 1,884 | 1,764 |
Restructuring | 37 | |
Total operating expenses | 28,131 | 15,592 |
Operating loss | (25,066) | (7,433) |
OTHER (EXPENSE) INCOME, net: | ||
Interest expense, net | (1,496) | (798) |
Other, net | 2,355 | 3 |
Total other income (expense), net | 859 | (795) |
Net loss before benefit for income taxes | (24,207) | (8,228) |
Benefit for income taxes | (205) | (5,045) |
LOSS FROM CONTINUING OPERATIONS | (24,002) | (3,183) |
LOSS FROM DISCONTINUED OPERATIONS | (144) | (458) |
NET LOSS | $ (24,146) | $ (3,641) |
NET LOSS PER COMMON SHARE—BASIC: | ||
Loss from continuing operations (in dollars per share) | $ (1.55) | $ (0.21) |
Loss from discontinued operations (in dollars per share) | (0.01) | (0.03) |
Net loss (in dollars per share) | $ (1.56) | $ (0.24) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC (in shares) | 15,468,975 | 15,053,049 |
NET LOSS PER COMMON SHARE—DILUTED: | ||
Loss from continuing operations (in dollars per share) | $ (1.55) | $ (0.21) |
Loss from discontinued operations (in dollars per share) | (0.01) | (0.03) |
Net loss (in dollars per share) | $ (1.56) | $ (0.24) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED (in shares) | 15,468,975 | 15,053,049 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2016 | $ 15 | $ (1,842) | $ 378,876 | $ (308,466) | $ 68,583 |
Balance (in shares) at Dec. 31, 2016 | 15,175,767 | (273,937) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Stock issued for restricted stock (in shares) | 190,482 | ||||
Stock issued under defined contribution 401(k) retirement savings plan | 316 | 316 | |||
Stock issued under defined contribution 401(k) retirement savings plan (in shares) | 114,050 | ||||
Share-based compensation | 813 | 813 | |||
Net loss | (3,641) | (3,641) | |||
Balance at Dec. 31, 2017 | $ 15 | $ (1,842) | 380,005 | (312,107) | $ 66,071 |
Balance (in shares) at Dec. 31, 2017 | 15,480,299 | (273,937) | 15,480,299 | ||
Increase (Decrease) in Stockholders' Equity | |||||
Stock issued for restricted stock | $ 1 | $ 1 | |||
Stock issued for restricted stock (in shares) | 156,472 | ||||
Stock issued under defined contribution 401(k) retirement savings plan | 685 | 685 | |||
Stock issued under defined contribution 401(k) retirement savings plan (in shares) | 330,739 | ||||
Share-based compensation | 803 | 803 | |||
Sale of common stock, net of expenses | (52) | $ (52) | |||
Sale of common stock, net of expenses (shares) | 15,112 | 15,112 | |||
Net loss | (24,146) | $ (24,146) | |||
Balance at Dec. 31, 2018 | $ 16 | $ (1,842) | $ 381,441 | $ (336,253) | $ 43,362 |
Balance (in shares) at Dec. 31, 2018 | 15,982,622 | (273,937) | 15,982,622 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (24,146) | $ (3,641) |
Loss from discontinued operations | (144) | (458) |
Loss from continuing operations | (24,002) | (3,183) |
Adjustments to reconcile net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 9,183 | 8,999 |
Deferred income taxes | (307) | (5,045) |
Impairment charges | 12,585 | 80 |
Remeasurement of contingent consideration | (1,140) | (1,394) |
Stock-based compensation | 803 | 813 |
Extinguishment of New Markets Tax Credits obligation | (2,249) | |
Allowance for doubtful accounts | (35) | 37 |
Common stock issued under defined contribution 401(k) plan | 685 | 316 |
Gain on disposal of assets | (116) | (12) |
Changes in operating assets and liabilities, net of acquisition: | ||
Accounts receivable | (3,776) | 884 |
Inventories | (2,944) | 7,057 |
Prepaid expenses and other current assets | 22 | 651 |
Accounts payable | 801 | (5,287) |
Accrued liabilities | 553 | (4,921) |
Customer deposits | 13,716 | (8,219) |
Other non-current assets and liabilities | (1,734) | (126) |
Net cash provided by (used in) operating activities of continuing operations | 2,045 | (9,350) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid in acquisition | (16,449) | |
Sales of available for sale securities | 2,221 | |
Maturities of available for sale securities | 950 | |
Purchases of property and equipment | (2,324) | (6,688) |
Proceeds from disposals of property and equipment | 676 | 72 |
Net cash used in investing activities of continuing operations | (1,648) | (19,894) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit | 141,414 | 158,856 |
Payments on line of credit | (141,040) | (148,009) |
Proceeds from long-term debt | 2,060 | 457 |
Payments on long-term debt | (761) | |
Principal payments on capital leases | (814) | (644) |
Proceeds from sale of common stock, net of expenses | (52) | |
Net cash provided by financing activities of continuing operations | 807 | 10,660 |
DISCONTINUED OPERATIONS: | ||
Operating cash flows | (105) | (78) |
Net cash used in discontinued operations | (105) | (78) |
Add: Cash balance of discontinued operations, beginning of period | 2 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,099 | (18,660) |
CASH AND CASH EQUIVALENTS beginning of the period | 78 | 18,738 |
CASH AND CASH EQUIVALENTS end of the period | 1,177 | 78 |
Supplemental cash flow information: | ||
Interest paid | 1,168 | 585 |
Income taxes paid | 116 | 44 |
Non-cash activities: | ||
Issuance of restricted stock grants | 803 | 813 |
Equipment additions via capital lease | 650 | 844 |
Non-cash purchases of property and equipment | $ 64 | 1,003 |
Contingent consideration related to business acquisition | 2,534 | |
Red Wolf acquisition: | ||
Assets acquired | 26,602 | |
Liabilities assumed | $ 7,619 |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. DESCRIPTION OF BUSINESS Description of Business Broadwind Energy, Inc. (the “Company”) provides technologically advanced high‑value products to energy, mining and infrastructure sector customers, primarily in the United States of America (the “U.S.”). The Company’s most significant presence is within the U.S. wind energy industry, although the Company has increasingly diversified into other industrial markets. Within the U.S. wind energy industry, the Company provides products primarily to turbine manufacturers. The Company also provides precision gearing and heavy fabrications to a broad range of industrial customers for oil and gas (“O&G”), mining, steel and other industrial applications. With the acquisition of Red Wolf Company, LLC (“Red Wolf”), a Sanford, North Carolina-based, privately held fabricator, kitter and assembler of industrial systems primarily supporting the global natural gas turbine (“NGT”) market in February 2017, the Company further diversified into the business of supplying components for natural gas turbines. The Company has three reportable operating segments: Towers and Heavy Fabrications, Gearing, and Process Systems. Towers and Heavy Fabrications The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for multiple megawatt (“MW”) wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 towers sections), sufficient to support turbines generating more than 1,100 MW of power. This product segment also encompasses the manufacture of other heavy fabrications for mining and other industrial customers. In the fourth quarter 2017, the segment changed its name from “Towers and Weldments” to “Towers and Heavy Fabrications” to more accurately reflect the nature of the segment’s activities. Gearing The Company engineers, builds and remanufactures precision gears and gearboxes for O&G, wind energy, mining, steel and other industrial applications. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania. Process Systems On February 1, 2017, the Company acquired Red Wolf and as a result, aggregated its Abilene TX based fabrication business with Red Wolf to form the Process Systems reportable segment. This segment provides contract manufacturing services that include build-to-spec, kitting, fabrication and inventory management for customers throughout the U.S. and in foreign countries, primarily supporting the natural gas turbine power generation market. Liquidity The Company meets its short term liquidity needs through cash generated from operations, through its available cash balances and through the Company’s Credit Facility (as defined below), first established in October 2016, additional equipment financing and access to the public and private debt equity markets, including the option to raise capital under the Company’s registration statement on Form S-3 (as discussed below). The Company uses the Credit Facility to fund working capital requirements. Under the terms of the Credit Facility, CIBC agreed to advance funds against a borrowing base consisting of up to 85% of the face value of the Company’s eligible accounts receivable (“A/R”), up to 50% of the book value of the Company’s eligible inventory and up to 50% of the appraised value of the Company’s eligible machinery, equipment and certain real property up to $10,000. Under the Credit Facility, borrowings are continuous and all cash receipts are usually applied to the outstanding borrowed balance. As of December 31, 2018, cash and cash equivalents and short-term investments totaled $1,177, an increase of $1,099 from December 31, 2017, and $11,000 was outstanding under the Credit Facility. The Company had the ability to borrow up to $10,319 under the Credit Facility as of December 31, 2018. The Credit Facility has been periodically amended since the original transaction closed in 2016 to address changes in business conditions. On January 29, 2018, the Company executed the Third Amendment to Loan and Security Agreement (the “Third Amendment”), which waived the Fixed Charge Coverage Ratio Covenant as of December 31, 2017 and added new minimum EBITDA and capital expenditure covenants through June 30, 2018. Among other changes, the Third Amendment also revised the Fixed Charge Coverage Ratio Covenant to be recalculated for future periods commencing with the quarter ending June 30, 2018. On May 3, 2018, the Company executed the Fourth Amendment to Loan and Security Agreement (the “Fourth Amendment”), waiving the Company’s non-compliance with the minimum EBITDA covenant through March 31, 2018. The Fourth Amendment, among other changes, amended the minimum EBITDA thresholds for the period ending June 30, 2018 and adjusted the definition of EBITDA to add back certain restructuring expenses. On October 26, 2018, the Company executed the Fifth Amendment to Loan and Security Agreement which, among other things, removed the Fixed Charge Coverage Ratio and capital expenditure covenants as of the period ending December 31, 2018 and added minimum EBITDA covenants through June 30, 2019. On January 16, 2019, the Company executed the Sixth Amendment to Loan and Security Agreement which increased the Company’s capability to issue letters of credit. On February 25, 2019, the Company executed an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), which expanded the Credit Facility to $35,000 and extended the term to February 25, 2022. The Amended and Restated Loan Agreement includes minimum EBITDA covenants through September 30, 2019 and introduces a Fixed Charge Coverage Ratio thereafter. For a more detailed description of the Amended and Restated Loan Agreement refer to Item 9B of this Form 10-K. Debt and capital lease obligations at December 31, 2018 totaled $14,876, which includes current outstanding debt and capital lease obligations totaling $12,897, over the next twelve months. The current outstanding debt includes $11,000 outstanding under the Credit Facility. On August 11, 2017, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the SEC on October 10, 2017 (the “Broadwind Form S-3”). This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the Company’s base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes. On July 31, 2018, the Company entered into an At Market Issuance Sales Agreement (the "ATM Agreement") with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through the Agent shares of the Company's common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Agent of 3% of the gross proceeds of the sale of the shares sold under the ATM Agreement and reimburse the Agent for the expenses of their counsel. During the year ended December 31, 2018, the Company issued 15,112 shares of the Company’s common stock under the ATM Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $33 after deducting commissions paid of approximately $1. As of December 31, 2018, the Company’s common stock having a value of approximately $9,967 remained available for issuance with respect to the ATM Agreement. The Company anticipates that current cash resources, amounts available under the Credit Facility, cash to be generated from operations, additional equipment financing, and any potential proceeds from access to the public or private debt or equity markets, including the option to raise capital under the Broadwind Form S-3, will be adequate to meet the Company’s liquidity needs for at least the next twelve months. If assumptions regarding the Company’s production, sales and subsequent collections from several of the Company’s large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues, which could have a material adverse effect on the Company’s business, financial condition and results of operations. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company’s operational flexibility or require a delay in making planned investments. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, for at least the next 12 months, there can be no assurances that its operations will generate sufficient cash, or that credit facilities or other resources will be available in an amount sufficient to enable the Company to meet these financial obligations. Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation These consolidated financial statements include the accounts of the Company and entities in which it has a controlling financial interest. All significant intercompany transactions and balances have been eliminated in consolidation. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”). When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a VIE, and if the Company is deemed to be the primary beneficiary, in accordance with the accounting standard for the consolidation of VIE’s. The accounting standard for the consolidation of VIE’s requires the Company to qualitatively assess if the Company was the primary beneficiary of the VIE based on whether the Company had (i) the power to direct those matters that most significantly impacted the activities of the VIE and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant. Refer to Note 18, “New Markets Tax Credit Transaction” of these consolidated financial statements for a description of two VIE’s that were included in the Company’s consolidated financial statements. Management’s Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future tax rates, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, workers’ compensation reserves, health insurance reserves, and environmental reserves. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates. Cash and Cash Equivalents and Short‑Term Investments Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short‑term government bonds, Treasury bills, marketable securities and commercial paper. Marketable investments with original maturities between three and twelve months are recorded as short‑term investments. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short‑term duration based upon operating requirements. Income earned on these investments is recorded to interest income in the Company’s consolidated statements of operations. As of December 31, 2018 and December 31, 2017, cash and cash equivalents totaled $1,177 and $78, respectively. For the years ended December 31, 2018 and 2017, interest income was $5. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are presumed to be classified as reductions of revenue in the Company’s statement of operations. In many instances within the Company’s Towers and Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when the buyer requests the arrangement, the ordered goods are segregated from inventory and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance. The Company adopted the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, for the fiscal year beginning January 1, 2018 and elected the modified retrospective approach. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606 while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 605. Based on the Company’s contract evaluation, the Company determined there was no need to record any changes to the opening retained earnings due to the impact of adopting Topic 606. The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements. Cost of Sales Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. These costs include operation, repair and maintenance of equipment, materials, direct and indirect labor and benefit costs, rent and utilities, maintenance, insurance, equipment rentals, freight in and depreciation. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses include all corporate and administrative functions such as sales and marketing, legal, human resource management, finance, investor and public relations, information technology and senior management. These functions serve to support the Company’s current and future operations and provide an infrastructure to support future growth. Major expense items in this category include management and staff wages and benefits, share‑based compensation and professional services. Accounts Receivable (A/R) The Company generally grants uncollateralized credit to customers on an individual basis based upon the customer’s financial condition and credit history. Credit is typically on net 30 day terms and customer deposits are frequently required at various stages of the production process to finance customized products and minimize credit risk. Historically, the Company’s A/R is highly concentrated with a select number of customers. During the year ended December 31, 2018, the Company’s five largest customers accounted for 78% of its consolidated revenues and 54% of outstanding A/R balances, compared to the year ended December 31, 2017 when the Company’s five largest customers accounted for 85% of its consolidated revenues and 57% of its outstanding A/R balances. Allowance for Doubtful Accounts Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to A/R. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its A/R. These factors include individual customer circumstances, history with the Company and other relevant criteria. A/R balances that remain outstanding after the Company has exhausted reasonable collection efforts are written off through a charge to the valuation allowance and a credit to A/R. The Company monitors its collections and write‑off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the realizability of its A/R, as noted above, or modifications to the Company’s credit standards, collection practices and other related policies may impact its allowance for doubtful accounts and its financial results. Bad debt (recoveries) expense for the years ended December 31, 2018 and 2017 was $(34) and $80, respectively. Inventories Inventories are stated at the lower of cost or market and net realizable value. Cost is determined either based on the first‑in, first‑out (“FIFO”) method, or on a standard cost basis that approximates the FIFO method. Market is determined based on net realizable value. Any excess of cost over net realizable value is included in the Company’s inventory allowance. Net realizable value of inventory, and management’s judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period, contract terms and usefulness. Inventories consist of raw materials, work‑in‑process and finished goods. Raw materials consist of components and parts for general production use. Work‑in‑process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. Finished goods consist of components purchased from third parties as well as components manufactured by the Company that will be used to produce final customer products. Long-Lived Assets Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is recognized using the straight‑line method over the estimated useful lives of the related assets for financial reporting purposes, and generally using an accelerated method for income tax reporting purposes. Depreciation expense related to property and equipment for the years ended December 31, 2018 and 2017 was $7,299 and $7,235, respectively. Expenditures for additions and improvements are capitalized, while replacements, maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred. The Company has in the past capitalized interest costs incurred on indebtedness used to construct property and equipment. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. There was no interest cost capitalized during the years ended December 31, 2018 or 2017. Property or equipment sold or disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded within operating income (loss) in the Company’s consolidated statement of operations. The Company reviews property and equipment and other long‑lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. In evaluating the recoverability of long-lived assets, the Company utilizes a fair value technique accepted by ASC 820, Fair Value Measurement, which is the asset accumulation approach. If the fair value of the asset group is less than the carrying amount, the Company recognizes an impairment loss. In evaluating the recoverability of long‑lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If the Company’s fair value estimates or related assumptions change in the future, the Company may be required to record impairment charges related to property and equipment and other long‑lived assets. Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value. To the extent the assumptions used in the Company’s analysis are not achieved, there may be a negative effect on the valuation of these assets. Warranty Liability The Company provides warranty terms that generally range from one to five years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery from third parties for amounts paid to customers under warranty provisions. Warranty liability is recorded in accrued liabilities within the consolidated balance sheet. The Company estimates the warranty accrual based on various factors, including historical warranty costs, current trends, product mix and sales. The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2018 and 2017 were as follows, excluding activity related to the discontinued Services segment: As of December 31, 2018 2017 Balance, beginning of period $ 581 $ 671 Addition to (reduction of) warranty reserve (350) (28) Warranty claims (5) (62) Balance, end of period $ 226 $ 581 Income Taxes The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. In connection with the preparation of its consolidated financial statements, the Company is required to estimate its income tax liability for each of the tax jurisdictions in which the Company operates. This process involves estimating the Company’s actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax reporting and financial reporting purposes. The Company also recognizes as deferred income tax assets the expected future income tax benefits of net operating loss (“NOL”) carryforwards. In evaluating the realizability of deferred income tax assets associated with NOL carryforwards, the Company considers, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things, income tax legislation, statutory income tax rates or future taxable income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause its income tax provision to vary significantly among financial reporting periods. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate; (2) eliminating the corporate alternative minimum tax; (3) creating a new limitation on deductible interest expense; and (4) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. In connection with the Tax Act, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information, prepared or analyzed in reasonable detail to complete its accounting for the change in tax law. The Company also accounts for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. The Company follows the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition related to the uncertainty in these income tax positions. Share‑Based Compensation The Company grants incentive stock options, restricted stock units (“RSUs”) and/or performance awards (“PSUs”) to certain officers, directors, and employees. The Company accounts for share‑based compensation related to these awards based on the estimated fair value of the equity award and recognizes expense ratably over the required vesting term of the award. The expense associated with PSUs is also based on the probability of achieving embedded targets. See Note 15 “Share‑Based Compensation” of these consolidated financial statements for further discussion of the Company’s share‑based compensation plans, the nature of share‑based awards issued and the Company’s accounting for share‑based compensation. Net Income (Loss) Per Share The Company presents both basic and diluted net income (loss) per share. Basic net income (loss) per share is based solely upon the weighted average number of common shares outstanding and excludes any dilutive effects of options, warrants and convertible securities. Diluted net income (loss) per share is based upon the weighted average number of common shares and common‑share equivalents outstanding during the year excluding those common‑share equivalents where the impact to basic net income (loss) per share would be anti‑dilutive. |
REVENUES
REVENUES | 12 Months Ended |
Dec. 31, 2018 | |
REVENUES | |
REVENUES | 2. REVENUES On January 1, 2018, the Company adopted ASU 2014-09 and 2015-14, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606 while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 605. Based on the Company’s contract evaluation, the Company determined there was no need to record any changes to the opening retained earnings due to the impact of adopting Topic 606. The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements. Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The following table presents the Company’s revenues disaggregated by revenue source for years ended December 31, 2018 and 2017: For the Years Ended December 31, 2018 2017 (1) Towers and Heavy Fabrications $ 68,815 $ 103,389 Gearing 38,376 26,006 Process Systems 18,319 17,390 Eliminations (130) - Consolidated $ 125,380 $ 146,785 (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. Revenue within the Company’s Gearing and Process Systems segments is recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. For many transactions within the Company’s Towers and Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the arrangement, the ordered goods are segregated from inventory and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance. The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations. The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 3. EARNINGS PER SHARE The following table presents a reconciliation of basic and diluted earnings per share for the years ended December 31, 2018 and 2017 as follows: For the Years Ended December 31, 2018 2017 Basic earnings per share calculation: Net loss $ (24,146) $ (3,641) Weighted average number of common shares outstanding 15,468,975 15,053,049 Basic net (loss) income per share $ (1.56) $ (0.24) Diluted earnings per share calculation: Net loss $ (24,146) $ (3,641) Weighted average number of common shares outstanding 15,468,975 15,053,049 Common stock equivalents: Stock options and non-vested stock awards (1) — — Weighted average number of common shares outstanding 15,468,975 15,053,049 Diluted net loss per share $ (1.56) $ (0.24) (1) Stock options and restricted stock units granted and outstanding of 862,706 and 579,330 are excluded from the computation of diluted earnings for the years ended December 31, 2018 and 2017 due to the anti‑dilutive effect as a result of the Company’s net loss for those respective periods. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2018 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | 4. DISCONTINUED OPERATIONS The Company’s former Services segment had substantial continued operating losses for several years, due to low capacity utilization in our gearbox remanufacturing facility and an increasingly competitive environment for field services due in part to increased in-sourcing of service functions by customers. In July, 2015 the Company’s Board of Directors (the “Board”) directed management to evaluate potential strategic alternatives with respect to the Services segment. In September 2015 the Board authorized management to sell substantially all of the assets of the Services segment to one or more third-party purchasers, and thereafter to liquidate or otherwise dispose of any such assets remaining unsold. The Company began negotiations to sell substantially all the assets of the Services segment in the third quarter of 2015. The exit of this business was a strategic shift that had a major effect on the Company; therefore, the Company reclassified the related assets and liabilities of the Services segment as held for sale, which the divestiture was substantially completed in December 2015. Results of Discontinued Operations Results of operations associated with the Services segment, which are reflected as discontinued operations in the Company’s consolidated statements of income for the twelve months ended December 31, 2018 and 2017, were as follows: Year Ended December 31, 2018 2017 Revenues $ 3 $ 151 Cost of sales (132) (391) Selling, general and administrative (15) (57) Impairment of held for sale assets and liabilities and gain on sale of assets — (161) Loss from discontinued operations $ (144) $ (458) Assets and Liabilities Held for Sale Assets and liabilities classified as held for sale in the Company’s consolidated balance sheets as of December 31, 2018 and 2017 include the following: December 31, December 31, 2018 2017 Assets: Accounts receivable, net $ — $ 11 Inventories, net — 9 Total Assets Held For Sale Related To Discontinued Operations $ — $ 20 Liabilities: Accrued liabilities $ 26 $ 27 Customer deposits and other current obligations 1 3 Total Liabilities Held For Sale Related To Discontinued Operations $ 27 $ 30 |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 5. RECENT ACCOUNTING PRONOUNCEMENTS The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its consolidated financial statements, except as discussed below. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is intended to improve financial reporting about leasing transactions. This ASU will require organizations (“lessees”) that lease assets with lease terms of more than twelve months to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Organizations that own the assets leased by lessees (“lessors”) will remain largely unchanged from current guidance. In addition, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. This ASU became effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The Company expects to adopt this guidance for leases existing at the date of adoption and expects to recognize a liability and corresponding asset associated with in-scope leases. The Company has commenced identifying its lease population, but is still in the process of determining those amounts to be recognized as liabilities and right of use assets. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business. The amendments in this ASU provide a screen to determine when a set (group of assets and activities) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. This ASU became effective for annual reporting periods beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of this ASU had no material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the test for goodwill impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2, which compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill, from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This ASU will be effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this ASU during the second quarter of 2018 and recorded a $4,993 impairment charge as discussed in Note 8 “Long-Lived Assets” of these consolidated financial statements. |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 12 Months Ended |
Dec. 31, 2018 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 6. ALLOWANCE FOR DOUBTFUL ACCOUNTS The activity in the A/R allowance from operations for the years ended December 31, 2018 and 2017 consists of the following: For the Years Ended December 31, 2018 2017 Balance at beginning of period $ 225 $ 145 (Recoveries) bad debt expense (34) 80 Write-offs (1) — Balance at end of period $ 190 $ 225 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2018 | |
INVENTORIES | |
INVENTORIES | 7. INVENTORIES The components of inventories from operations as of December 31, 2018 and 2017 are summarized as follows: As of December 31, 2018 2017 Raw materials $ 16,394 $ 11,945 Work-in-process 5,426 6,305 Finished goods 2,958 3,538 24,778 21,788 Less: Reserve for excess and obsolete inventory (2,108) (2,509) Net inventories $ 22,670 $ 19,279 |
LONG-LIVED ASSETS
LONG-LIVED ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
LONG-LIVED ASSETS | |
LONG-LIVED ASSETS | 8. LONG-LIVED ASSETS The cost basis and estimated lives of property and equipment from continuing operations as of December 31, 2018 and 2017 are as follows: As of December 31, 2018 2017 Life Land $ 1,423 $ 1,423 Buildings 20,747 22,998 39 years Machinery and equipment 107,469 103,878 2 - 10 years Office furniture and equipment 4,387 4,202 3 - 7 years Leasehold improvements 8,974 9,095 Asset life or life of lease Construction in progress 172 4,138 143,172 145,734 Less accumulated depreciation and amortization (94,085) (90,041) Total property and equipment $ 49,087 $ 55,693 As of December 31, 2018 and December 31, 2017, the Company had commitments of $80 and $132, respectively, related to the completion of projects within construction in progress. As a result of the Red Wolf acquisition, the Company added $4,993 of goodwill, which was included in the Process Systems segment. See Note 16, “Segment Reporting” of these consolidated financial statements for further discussion of the Company’s segments. The goodwill represented the excess of the purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities as part of the Company’s acquisition of Red Wolf. During the second quarter of 2018, the Company identified triggering events associated with the release of Red Wolf’s final earn-out reserve, Red Wolf’s recent operating results, a reduction in Red Wolf’s major customer’s performance and the delay of new initiatives being implemented. As a result, the Company evaluated the recoverability of the Red Wolf asset group. In accordance with GAAP, the Company compared the carrying value of the Red Wolf asset group to the forecast undiscounted cash flows associated with this asset group. Based on the analysis performed, the forecast undiscounted cash flows exceeded the carrying value and no impairment of this group was indicated or recorded. The Company next compared the carrying value of the Red Wolf reporting unit to the fair value of the Red Wolf reporting unit. The fair value was determined using significant unobservable inputs, or level 3 in the fair value hierarchy. The two main assumptions utilized in the forecast discounted cash flow analysis were the cash flows from operations and the weighted average cost of capital of 18.6%. Based on the analysis performed, the Company determined that the carrying amount of the reporting unit exceeded the fair value and recorded a $4,993 goodwill impairment charge in the second quarter of 2018. The Company utilized a third-party appraisal to validate the results of the analysis. During the fourth quarter of 2018, the Company identified triggering events associated with Red Wolf’s recent operating results, a reduction in Red Wolf’s major customer’s performance and the delay of new initiatives being implemented. As a result, the Company tested the long‑lived assets associated with Red Wolf for impairment. The carrying value of the asset group was found to exceed both its undiscounted cash flows and its fair value determined using the asset accumulation approach. The Company relied upon a third-party valuation and determined that the customer relationship intangible asset was impaired, and recorded a corresponding $7,592 impairment charge during the fourth quarter of 2018. The two main assumptions utilized in the valuation were the cash flows from operations and the weighted average cost of capital of 18.5%. During 2018 and 2017, the Company continued to experience triggering events associated with the Gearing segment’s history of operating losses. As a result, the Company evaluated the recoverability of certain of its long‑lived assets associated with the Gearing segment. The Company relied upon a third-party appraisal and determined that there were no significant changes to the inputs or assumptions used previously. The Company concluded that no impairment to this asset group was indicated as of December 31, 2018 or 2017. Other intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf. See Note 21, “Business Combinations” of these consolidated financial statements for further discussion of the Red Wolf acquisition. Other intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 4 to 10 years. As of December 31, 2018 and 2017, the cost basis, accumulated amortization and net book value of intangible assets were as follows: December 31, 2018 December 31, 2017 Remaining Remaining Weighted Weighted Net Average Net Average Accumulated Impairment Book Amortization Accumulated Book Amortization Cost Amortization Charge Value Period Cost Amortization Value Period Goodwill and other intangible assets: Goodwill $ 4,993 $ — $ (4,993) $ - $ 4,993 $ — $ 4,993 Noncompete agreements (54) — 116 (26) 144 Customer relationships 15,979 (6,369) (7,592) 2,018 6.8 15,979 (4,992) 10,987 8.0 Trade names 9,099 (4,631) — 4,468 9.5 9,099 (4,152) 4,947 10.5 Other intangible assets $ 25,248 $ (11,054) $ (7,592) $ 6,602 6.5 $ 25,248 $ (9,170) $ 16,078 8.8 Intangible assets are amortized on a straight‑line basis over their estimated useful lives, which range from 6 to 20 years. Amortization expense was $1,884 and $1,764 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, estimated future amortization expense is as follows: 2019 $ 812 2020 812 2021 812 2022 812 2023 786 2024 and thereafter 2,568 Total $ 6,602 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 9. ACCRUED LIABILITIES Accrued liabilities as of December 31, 2018 and 2017 consisted of the following: December 31, 2018 2017 Accrued payroll and benefits $ 2,126 $ 1,797 Accrued property taxes — 144 Income taxes payable 66 77 Accrued professional fees 101 40 Accrued warranty liability 226 581 Accrued self-insurance reserve 374 812 Accrued other 913 942 Total accrued liabilities $ 3,806 $ 4,393 |
DEBT AND CREDIT AGREEMENTS
DEBT AND CREDIT AGREEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
DEBT AND CREDIT AGREEMENTS | |
DEBT AND CREDIT AGREEMENTS | 10. DEBT AND CREDIT AGREEMENTS The Company’s outstanding debt balances as of December 31, 2018 and 2017 consisted of the following: December 31, 2018 2017 Line of credit $ 11,000 $ 10,733 NMTC note payable — 2,600 Other notes payable 1,882 1,146 Long-term debt 456 570 Less: Current portion (11,930) (14,252) Long-term debt, net of current maturities $ 1,408 $ 797 As of December 31, 2018, future annual principal payments on the Company’s outstanding debt obligations were as follows: 2019 $ 12,045 2020 913 2021 266 2022 114 Total $ 13,338 Credit Facilities On October 26, 2016, the Company established a $20,000 three-year secured revolving line of credit (the “Credit Facility”) with CIBC Bank USA, formerly known as The PrivateBank and Trust Company (“CIBC”). The Credit Facility was subsequently increased to $25,000 in March of 2017 pursuant to a Second Amendment to Loan and Security Agreement and an Amended and Restated Revolving Note. Under the Credit Facility, CIBC advances funds when requested against a borrowing base consisting of up to 85% of the face value of the Company’s eligible A/R, up to 50% of the book value of eligible inventory and up to 50% of the appraised value of eligible machinery, equipment and certain real property up to $10,000. Borrowings under the Credit Facility bear interest at a per annum rate equal to the applicable LIBOR plus a margin ranging from 2.25% to 3.00%, or the applicable base rate plus a margin ranging from 0.00% to 1.00%, both of which are based on the trailing twelve-month EBITDA. The Company also pays an unused facility fee to CIBC equal to 0.50% per annum on the unused portion of the Credit Facility, along with other standard fees. The Credit Facility contains customary representations and warranties. It also contains a requirement that the Company, on a consolidated basis, maintain a Fixed Charge Coverage Ratio Covenant, along with other customary restrictive covenants. The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower facility. On January 29, 2018, the Company executed the Third Amendment to Loan and Security Agreement (the “Third Amendment”), which waived the Company’s non-compliance with the Fixed Charge Coverage Ratio Covenant as of December 31, 2017 and added new minimum EBITDA and capital expenditure covenants through June 30, 2018. The amendment also revised the Fixed Charge Coverage Ratio Covenant to be recalculated for future periods commencing with the quarter ending June 30, 2018. On May 3, 2018, the Company executed the Fourth Amendment to Loan and Security Agreement (the “Fourth Amendment”), which waived the Company’s non-compliance with the minimum EBITDA covenant through March 31, 2018. The Fourth Amendment, among other changes, amended the minimum EBITDA thresholds for the period ending June 30, 2018 and adjusted the definition of EBITDA to add back certain restructuring expenses. On October 26, 2018, the Company executed the Fifth Amendment to Loan and Security Agreement which, among other changes, removed the Fixed Charge Coverage Ratio and capital expenditure covenants as of the period ending December 31, 2018 and added minimum EBITDA covenants through June 30, 2019. On January 16, 2019, the Company executed the Sixth Amendment to Loan and Security Agreement which increased the Company’s capability to issue letters of credit. On February, 25, 2019, the Company executed an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), which expanded the Credit Facility to $35,000 and extended the term to February 25, 2022. The Amended and Restated Loan Agreement includes minimum EBITDA covenants through September 30, 2019 and introduces a Fixed Charge Coverage Ratio thereafter. For a more detailed description of the Amended and Restated Loan Agreement refer to Item 9B of this Form 10-K. As of December 31, 2018, there was $11,000 outstanding under the Credit Facility. The Company had the ability to borrow up to $10,319 under the Credit Facility as of December 31, 2018. Other The $2,600 liability associated with the NMTC transaction described further in Note 18, “New Markets Tax Credit Transaction” of these consolidated financial statements is included in the “Line of credit, NMTC and other notes payable” line item of the Company’s consolidated financial statements as of December 31, 2017. During the third quarter of 2018, the loan was extinguished and the Company recorded a gain of $2,249 in other income, net of transaction expenses. Separately, in 2016, the Company entered into a $570 loan agreement with the Development Corporation of Abilene which is included in long-term debt, less current maturities. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During 2018, $114 of the loan was forgiven. In addition, the Company has outstanding notes payable for capital expenditures in the amount of $1,882 and $1,146 as of December 31, 2018 and 2017, respectively, with $930 and $804 included in the “Line of credit, NMTC and other notes payable” line item of the Company’s consolidated financial statements as of December 31, 2018 and 2017, respectively. The notes payable have monthly payments that range from $3 to $36 and an interest rate of 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from April 2020 to May 2021. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2018 | |
LEASES | |
LEASES | 11. LEASES The Company leases various property and equipment under operating lease arrangements. Lease terms generally range from 3 to 15 years with renewal options for extended terms. Certain leases contain rent escalation clauses that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight‑line basis over the minimum lease term. Any lease concessions received by the Company are deferred and recognized as an adjustment to rent expense ratably over the minimum lease term. The Company is required to make additional payments under certain property leases for taxes, insurance and other operating expenses incurred during the operating lease period. Rental expense for the years ended December 31, 2018 and 2017 was $3,654 and $3,378, respectively. In addition, the Company has entered into capital lease arrangements to finance property and equipment and assumed capital lease obligations in connection with certain acquisitions. The cost basis and accumulated depreciation of assets recorded under capital leases, which are included in property and equipment, are as follows as of December 31, 2018 and 2017: December 31, 2018 2017 Cost $ 4,354 $ 2,460 Accumulated depreciation (951) (424) Net book value $ 3,403 $ 2,036 Depreciation expense recorded in connection with assets recorded under capital leases was $527 and $295 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, future minimum lease payments under capital leases and operating leases were as follows: Capital Operating Leases Leases Total 2019 $ 1,057 $ 3,524 $ 4,581 2020 376 2,784 3,160 2021 252 2,334 2,586 2022 — 2,333 2,333 2023 — 2,213 2,213 2024 and thereafter — 6,340 6,340 Total $ 1,685 $ 19,528 $ 21,213 Less—portion representing interest at a weighted average annual rate of 5.0% (147) Principal 1,538 Less—current portion (967) Capital lease obligations, noncurrent portion $ 571 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company is subject to legal proceedings or claims that arise in the ordinary course of its business. The Company accrues for costs related to loss contingencies when such costs are probable and reasonably estimable. As of December 31, 2018, the Company is not aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect on the Company’s results of operations, financial condition or cash flows, although no assurance can be given with respect to the ultimate outcome of pending actions. Refer to Note 20, “Legal Proceedings” of these consolidated financial statements for further discussion of legal proceedings. Environmental Compliance and Remediation Liabilities The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Also, certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. In connection with the Company’s restructuring initiatives, during the third quarter of 2012, the Company identified a liability associated with the planned sale of one of the Company’s facilities located in Cicero, Illinois (the “Cicero Avenue Facility”). The liability is associated with environmental remediation costs that were identified while preparing the site for sale. During 2013, the Company applied for and was accepted into the Illinois Environmental Protection Agency (“IEPA”) voluntary site remediation program. In the first quarter of 2014, the Company completed a comprehensive review of remedial options for the Cicero Avenue Facility and selected a preferred remediation technology. In the fourth quarter of 2017, the Company completed the remediation of the Cicero Avenue Facility which was subsequently sold for $583, net of expenses, in the third quarter of 2018. Collateral In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations. Warranty Liability The Company provides warranty terms that generally range from one to five years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery from third parties for amounts paid to customers under warranty provisions. Liquidated Damages In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and dependent on actual losses sustained by the customer. When the damages are determined to be probable and estimable, the damages are recorded as a reduction to revenue. During 2018 and 2017, the Company incurred no liquidated damages and there was no reserve for liquidated damages as of December 31, 2018. Workers’ Compensation Reserves As of December 31, 2018 and 2017, respectively, the Company had $374 and $812 accrued for self‑insured workers’ compensation liabilities. At the beginning of the third quarter of 2013, the Company began to self‑insure for its workers’ compensation liabilities, including reserves for self‑retained losses. The Company entered into a guaranteed workers’ compensation cost program at the beginning of the third quarter of 2016, but still maintains a liability for the trailing claims for the self-insured policy periods. Although the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred, the Company does not believe that any additional potential exposure for such liabilities will have a material adverse effect on the Company’s consolidated financial position or results of operations. Other As of December 31, 2018, approximately 23% of the Company’s employees were covered by two collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations. The current five-year collective bargaining agreement with the Neville Island union is expected to remain in effect through October 2022. During the third quarter of 2018, a new collective bargaining agreement was negotiated and ratified with the Cicero Union. The new four-year collective bargaining agreement with the Cicero union is expected to remain in effect through February 2022. See Note 18, “New Markets Tax Credit Transaction” of these consolidated financial statements for a discussion of a strategic financing transaction (the “NMTC Transaction”) which originally related to the Company’s drivetrain service center in in Abilene, Texas (the “Abilene Gearbox Facility”), and was amended in August 2015 to also include the activities of the Company’s heavy industries business conducted in the same building in Abilene, Texas (the “Abilene Heavy Industries Facility”). The Abilene Heavy Industries Facility focuses on Heavy Fabrications for industries including those related to compressed natural gas distribution. Pursuant to the NMTC Transaction, the gross loan and investment in the Abilene Heavy Industries Facility and the Abilene Gearbox Facility of $10,000 is expected to generate $3,900 in tax credits over a period of seven years, which the NMTC Transaction makes available to Capital One, National Association (“Capital One”). The Abilene Heavy Industries Facility and/or the Abilene Gearbox Facility operated and remained in compliance with the terms and conditions of the NMTC Transaction during the seven year compliance period ending in the third quarter of 2018, allowing Capital One to capture up to $3,900 in tax credits. At the end of the seven year compliance period, Capital One exercised its right to put the investment back to the Company in exchange for $130. The loan was extinguished and the Company recorded a gain of $2,249 in other income, net of transaction expenses. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 13. FAIR VALUE MEASUREMENTS The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows: Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently. Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date. The Company used market negotiations to value the Gearing segments assets. The following tables represent the fair values of the Company’s financial assets measured as of December 31, 2018 and 2017: December 31, 2018 Level 1 Level 2 Level 3 Total Assets measured on a nonrecurring basis: Goodwill $ — $ — $ — $ — Customer relationships 1,852 1,852 Total assets at fair value $ — $ — $ 1,852 $ 1,852 December 31, 2017 Level 1 Level 2 Level 3 Total Assets measured on a nonrecurring basis: Gearing Cicero Ave. facility $ — $ — $ 560 $ 560 Services assets — — 20 20 Total assets at fair value $ — $ — $ 580 $ 580 Fair value of financial instruments The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, A/R, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value. Assets measured at fair value on a nonrecurring basis The fair value measurement approach for long lived assets utilizes a number of significant unobservable inputs or Level 3 assumptions. To the extent assumptions used in the Company’s evaluations are not achieved, there may be a negative effect on the valuation of these assets. The carrying value of the land and building comprising the Cicero Avenue Facility of $560 reflected the expected proceeds associated with selling this facility. During 2017, the Company reclassified the Cicero Avenue Facility as Assets Held for Sale upon completion of general site remediation activities. See Note 12, “Commitments and Contingencies” of these consolidated financial statements for additional detail of the Cicero Avenue Facility. During the third quarter of 2018, the Company sold the Cicero Avenue Facility and recognized a gain of $23 on the sale. The gain is included in operating income in these consolidated financial statements. Following the Board’s approval of a plan to divest the Company’s Services segment, the Company has been able to evaluate the value of the segment’s assets on the open market; therefore, the Company has utilized this measurement to determine the fair value of the Services segment assets. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | 14. INCOME TAXES The provision for income taxes for the years ended December 31, 2018 and 2017 consists of the following: For the Years Ended December 31, 2018 2017 Current provision Federal $ — $ — Foreign — — State 98 5 Total current benefit 98 5 Deferred credit Federal (3,978) 31,614 State (2,963) 468 Total deferred credit (6,941) 32,082 Increase (decrease) in deferred tax valuation allowance 6,638 (37,132) Total benefit for income taxes $ (205) $ (5,045) On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate; (2) eliminating the corporate alternative minimum tax; (3) creating a new limitation on deductible interest expense; and (4) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. With the Tax Act, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information, prepared or analyzed in reasonable detail to complete its accounting for the change in tax law. During the year ended December 31, 2018, the Company recorded a benefit for income taxes of $205, compared to a benefit for income taxes of $5,045 during the year ended December 31, 2017. The income tax benefit during the year ended December 31, 2017 included an income tax benefit of $5,060 from the partial release of the valuation allowance, net of Red Wolf’s current state taxes, resulting from the consolidation of the Company’s deferred tax assets with Red Wolf’s deferred tax liabilities upon acquisition. The total change in the deferred tax valuation allowance was $6,638 and ($37,132) for the years ended December 31, 2018 and 2017, respectively. The changes in the deferred tax valuation allowances in 2018 and 2017 were primarily the result of (decreases) increases to the deferred tax assets pertaining to federal and state NOLs. The tax effects of the temporary differences and NOLs that give rise to significant portions of deferred tax assets and liabilities are as follows: As of December 31, 2018 2017 Noncurrent deferred income tax assets: Net operating loss carryforwards $ 63,906 $ 56,619 Intangible assets 7,261 6,889 Accrual and reserves 2,502 2,402 Other 19 88 Total noncurrent deferred tax assets 73,688 65,998 Valuation allowance (73,129) (66,491) Noncurrent deferred tax assets, net of valuation allowance 559 (493) Noncurrent deferred income tax liabilities: Fixed assets 593 (152) Intangible assets — — Total noncurrent deferred tax liabilities 593 (152) Net deferred income tax liability $ (34) $ (341) Valuation allowances of $73,129 and $66,491 have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2018 and 2017, respectively. A reconciliation of the beginning and ending amounts of the valuation is as follows: Valuation allowance as of December 31, 2017 $ (66,491) Gross increase for current year activity (6,638) Valuation allowance as of December 31, 2018 $ (73,129) As of December 31, 2018, the Company had federal and unapportioned state NOL carryforwards of approximately $248,717 of which $228,787 will begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire. The reconciliation between the statutory U.S. federal income tax rate and the Company’s effective income tax rate is as follows: For the Year Ended December 31, 2018 2017 Statutory U.S. federal income tax rate 21.0 % 34.0 % State and local income taxes, net of federal income tax benefit 3.2 3.4 Permanent differences (4.4) (1.2) Change in valuation allowance (18.7) 446.7 Change in uncertain tax positions 0.0 0.5 Other (0.3) 0.1 Effect of U.S. tax rate change 0.0 (422.6) Effective income tax rate 0.8 % 60.9 % The Company accounts for the uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken, or expected to be taken, in a tax return that is required to be met before being recognized in the financial statements. The changes in the Company’s uncertain income tax positions for the years ended December 31, 2018 and 2017 consisted of the following: For the Year Ended December 31, 2018 2017 Beginning balance $ 1 $ 27 Tax positions related to current year: Additions — — Reductions — — — — Tax positions related to prior years: Additions — — Reductions — — Settlements — — Lapses in statutes of limitations (1) (26) Additions from current year acquisitions — — (1) (26) Ending balance $ — $ 1 The amount of unrecognized tax benefits at December 31, 2018 that would affect the effective tax rate if the tax benefits were recognized was $0. It is the Company’s policy to include interest and penalties in tax expense. During the years ended December 31, 2018 and 2017, the Company recognized and accrued approximately $0 of interest and penalties. The Company files income tax returns in the U.S. federal and state jurisdictions. As of December 31, 2018, open tax years in the federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust NOL carryforwards. The Company’s 2008 and 2009 federal tax returns were examined in 2011 and no material adjustments were identified related to any of the Company’s tax positions. Although these periods have been audited, they continue to remain open until all NOLs generated in those tax years have either been utilized or expire. Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built‑in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built‑in losses may be limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382, the Company has determined that aggregate changes in stock ownership have resulted in an annual limitation of $14,284 on NOLs and built‑in losses available for utilization based on the triggering event in 2010. To the extent the Company’s use of NOL carryforwards and associated built‑in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use NOL carryforwards and built‑in losses without such annual limitation, which could result in lower profits and the loss of the majority of the benefits from these attributes. In February 2013, the Company adopted a Stockholder Rights Plan, which was amended in February 2016 and approved by our stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under IRC Section 382. On February 7, 2019, the Board of Directors (the “Board”) approved an amendment extending the Rights Plan for an additional three years. The amendment is subject to approval by our stockholders at our 2019 Annual Meeting of Stockholders. The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non‑taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one‑thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $4.25 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date. As of December 31, 2018, the Company had $0 of unrecognized tax benefits, which would have a favorable impact on income tax expense. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had accrued interest and penalties of $0 as of December 31, 2018. As of December 31, 2017, the Company had unrecognized tax benefits of $1, of which $1 represented accrued interest and penalties. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 15. SHARE‑BASED COMPENSATION Overview of Share‑Based Compensation Plan 2007 Equity Incentive Plan The Company has granted incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which was approved by the Board in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval. The 2007 EIP reserved 691,051 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates depends to a large degree. As of December 31, 2018, the Company had reserved 22,733 shares for issuance upon the exercise of stock options outstanding and no shares for issuance upon the vesting of RSU awards outstanding. As of December 31, 2018, 253,659 shares of common stock reserved for stock options and RSU awards under the 2007 EIP have been issued in the form of common stock. 2012 Equity Incentive Plan The Company has granted incentive stock options and other equity awards pursuant to the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP”), which was approved by the Board in March 2012 and by the Company’s stockholders in May 2012. The 2012 EIP reserved 1,200,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of December 31, 2018, the Company had reserved 34,129 shares for issuance upon the exercise of stock options outstanding and no shares for issuance upon the vesting of RSU awards outstanding. As of December 31, 2018, 635,089 shares of common stock reserved for stock options and RSU awards under the 2012 EIP have been issued in the form of common stock. 2015 Equity Incentive Plan The Company has granted equity awards pursuant to the Broadwind Energy, Inc. 2015 Equity Incentive Plan (the “2015 EIP;” together with the 2007 EIP and the 2012 EIP, the “Equity Incentive Plans”), which was approved by the Board in February 2015 and by the Company’s stockholders in April 2015. The Company announced on February 8, 2019 that the Board had approved an Amended and Restated 2015 Equity Incentive Plan, which is subject to approval by the Company’s stockholders at the 2019 Annual Meeting of Stockholders. The purposes of the 2015 EIP are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2015 EIP by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2015 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights; (iv) restricted stock and RSUs; and (v) PSUs. The 2015 EIP reserves 1,100,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of December 31, 2018, the Company had reserved 805,844 shares for issuance upon the vesting of RSU awards outstanding. As of December 31, 2018, a total of 343,429 shares of common stock reserved for RSU awards under the 2015 EIP had been issued in the form of common stock. Stock Options. The exercise price of stock options granted under the Equity Incentive Plans is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term. Restricted Stock Units (RSUs). The granting of RSUs is provided for under the Equity Incentive Plans. RSUs generally vest on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award. Performance Awards (PSUs). The granting of PSUs is provided for under the Equity Incentive Plans. PSUs generally vest upon the Company meeting performance measures as of the vesting date over the period of the plan. The fair value of each PSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the term of the PSU award plan. Stock option activity during the year ended December 31, 2018 under the Equity Incentive Plans was as follows: Weighted Average Aggregate Intrinsic Weighted Average Remaining Value Options Exercise Price Contractual Term (in thousands) Outstanding as of December 31, 2017 67,188 $ 24.65 Expired (10,326) 77.47 Outstanding as of December 31, 2018 56,862 $ 15.06 2.72 $ — Exercisable as of December 31, 2018 56,862 $ 15.06 2.72 $ — The following table summarizes information with respect to all outstanding and exercisable stock options under the Equity Incentive Plans as of December 31, 2018: Options Outstanding Options Exercisable Weighted Average Number of options Weighted Average Remaining Number Weighted Average Exercise Price or Range outstanding Exercise Price Contractual Term Exercisable Exercise Price $3.39 - $13.50 49,039 $ 6.47 2.99 years 49,039 $ 6.47 $54.40 - $99.90 7,823 68.94 0.99 years 7,823 68.94 56,862 $ 15.06 2.72 years 56,862 $ 15.06 The fair value of each stock option award is estimated on the date of grant using the Black‑Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. There were no stock options granted during the twelve months ended December 31, 2018. The following table summarizes information with respect to outstanding RSU’s and PSU’s as of December 31, 2018 and 2017: Weighted Average Grant-Date Fair Value Number of Shares Per Share Unvested as of December 31, 2017 512,142 $ 4.57 Granted 565,964 $ 2.42 Vested (202,713) $ 4.41 Forfeited (69,549) $ 3.85 Unvested as of December 31, 2018 805,844 $ 3.16 During the years ended December 31, 2018 and 2017, the Company utilized a forfeiture rate of 25% for estimating the forfeitures of stock compensation granted. The following table summarizes share‑based compensation expense, net of taxes withheld, included in the Company’s consolidated statements of operations for the years ended December 31, 2018 and 2017 as follows: For the Years Ended December 31, 2018 2017 Share-based compensation expense: Cost of sales $ 99 $ 101 Selling, general and administrative 704 712 Net effect of share-based compensation expense on net income $ 803 $ 813 Reduction in earnings per share: Basic earnings per share $ 0.05 $ 0.05 Diluted earnings per share $ 0.05 $ 0.05 (1) Income tax benefit is not illustrated because the Company is currently in a full tax valuation allowance position and an actual income tax benefit was not realized for the years ended December 31, 2018 and 2017. The result of the income (loss) situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance. As of December 31, 2018, the Company estimates that pre‑tax compensation expense for all unvested share‑based awards, including both stock options and RSUs, in the amount of approximately $1,132 will be recognized through the year 2020. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 16. SEGMENT REPORTING The Company is organized into reporting segments based on the nature of the products offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker. On February 1, 2017, the Company acquired Red Wolf, and Red Wolf is being operated as a wholly-owned subsidiary, as more fully described in Note 21, “Business Combinations” of these consolidated financial statements. The Red Wolf acquisition aligns with the Company’s growth strategy approved by our Board in late 2016 to expand and diversify our business through organic growth and strategic bolt-on acquisitions. Red Wolf’s operations is being reported in the “Process Systems” segment. As a result of the 2017 Red Wolf acquisition, the Company revised its segment presentation to include three reportable operating segments: Towers and Weldments, Gearing and Process Systems. All current and prior period financial results have been revised to reflect these changes. In the fourth quarter of 2017, the segment changed its name from “Towers and Weldments” to “Towers and Heavy Fabrications” to more accurately reflect the nature of the segment’s activities. The Company’s segments and their product offerings are summarized below: Towers and Heavy Fabrications The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for multiple MW wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The facilities have a combined annual tower production capacity of up to approximately 550 tower towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power. This product segment also encompasses the fabrication of heavy weldments for mining and other industrial customers. Gearing The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining, steel and other industrial applications. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania. Process Systems The Company acquired Red Wolf on February 1, 2017 and as a result, aggregated its Abilene, TX fabrication business with Red Wolf to form the Process Systems reportable segment. This segment provides contract manufacturing services that include build-to-spec, kitting, fabrication and inventory management for customers throughout the U.S. and in foreign countries, primarily supporting the natural gas turbine market. Corporate and Other “Corporate” includes the assets and SG&A expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results. The accounting policies of the reportable segments are the same as those referenced in Note 1, “Description of Business and Summary of Significant Accounting Policies” of these consolidated financial statements. Summary financial information by reportable segment is as follows: Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Year Ended December 31, 2018 Revenues from external customers $ 68,773 $ 38,376 $ 18,231 $ — $ — $ 125,380 Intersegment revenues 42 — 88 — (130) — Net revenues 68,815 38,376 18,319 — (130) 125,380 Operating (loss) profit (4,346) 51 (16,442) (4,329) — (25,066) Depreciation and amortization 4,986 2,255 1,709 233 — 9,183 Capital expenditures 1,441 706 31 146 — 2,324 Total assets 32,866 37,028 13,731 243,867 (228,327) 99,165 Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Year Ended December 31, 2017 Revenues from external customers $ 103,389 $ 26,006 17,390 $ — $ — $ 146,785 Operating (loss) profit 2,667 (2,632) (2,269) (5,199) — (7,433) Depreciation and amortization 4,638 2,430 1,706 225 — 8,999 Capital expenditures 5,355 726 426 181 — 6,688 Assets held for sale — 560 — 20 — 580 Total assets 27,958 38,016 26,442 249,346 (229,412) 112,350 The Company generates revenues entirely from transactions completed in the U.S. and its long‑lived assets are all located in the U.S. All intercompany revenue is eliminated in consolidation. During 2018, two customers accounted for more than 10% of total net revenues. These two customers accounted for revenues of $72,851 for fiscal year 2018, with one reported within the Towers and Heavy Fabrications segment and one reported within the Gearing segment. During 2017, one customer accounted for more than 10% of total net revenues or $100,413 in revenue for fiscal year 2017, which was reported within the Towers and Heavy Fabrications segment. During the years ended December 31, 2018 and 2017, five customers accounted for 78% and 85%, respectively, of total net revenues. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2018 | |
RETIREMENT SAVINGS AND PROFIT SHARING PLANS | |
EMPLOYEE BENEFIT PLANS | 17. EMPLOYEE BENEFIT PLANS Retirement Savings and Profit Sharing Plans Retirement Savings and Profit Sharing Plans The Company offers a 401(k) retirement savings plan to all eligible employees who may elect to contribute a portion of their salary on a pre‑tax basis, subject to applicable statutory limitations. All participating non‑union employees are eligible to receive safe harbor matching contributions equal to 100% of the first 3% of the participant’s elective deferral contributions and 50% of the next 2% of the participant’s elective deferral contributions. For 2018, in accordance with the collective bargaining agreements in place at its two union locations, the Company’s Illinois‑based union employees were eligible to receive a discretionary match in an amount up to 50% of each participant’s first 4% of elective deferral contributions, and the Company’s Pennsylvania‑based union employees were eligible to receive a discretionary match in an amount up to 100% of each participant’s first 3% and 50% of the next 2% of elective deferral contributions. The safe harbor matching contribution was extended to all union employees, beginning in 2019, following the extension of the Company’s collective bargaining agreements during 2018. The Company has the discretion, subject to applicable statutory requirements, to fund any matching contribution with a contribution to the plan of the Company’s common stock. In the third quarter of 2017, the Company began funding the matching contributions primarily in the form of the Company’s common stock. Under the plan, elective deferrals and basic Company matching is 100% vested at all times. For the years ended December 31, 2018 and 2017, the Company recorded expense under these plans of approximately $812 and $765, respectively. Deferred Compensation Plan The Company maintains a deferred compensation plan for certain key employees and nonemployee directors, whereby certain wages earned, compensation for services rendered, and discretionary company‑matching contributions may be deferred and deemed to be invested in the Company’s common stock. Changes in the fair value of the plan liability are recorded as charges or credits to compensation expense. Compensation expense associated with the deferred compensation plan recorded during the years ended December 31, 2018 and 2017 was $(13) and $(12). The fair value of the plan liability to the Company is included in accrued liabilities in the Company’s consolidated balance sheets. As of December 31, 2018 and 2017, the fair value of plan liability to the Company was $12 and $24, respectively. In addition to the employee benefit plans described above, the Company participates in certain customary employee benefits plans, including those which provide health and life insurance benefits to employees. |
NEW MARKETS TAX CREDIT TRANSACT
NEW MARKETS TAX CREDIT TRANSACTION | 12 Months Ended |
Dec. 31, 2018 | |
NEW MARKETS TAX CREDIT TRANSACTION | |
NEW MARKETS TAX CREDIT TRANSACTION | 18. NEW MARKETS TAX CREDIT TRANSACTION On July 20, 2011, the Company executed the NMTC Transaction, which was amended on August 24, 2015, involving the following third parties: AMCREF Fund VII, LLC (“AMCREF”), a registered community development entity; COCRF Investor VIII, LLC (“COCRF”); and Capital One. The NMTC Transaction allows the Company to receive below market interest rate funds through the federal New Markets Tax Credit (“NMTC”) program. The Company received $2,280 in proceeds via the NMTC Transaction. The NMTC Transaction qualifies under the NMTC program and includes a gross loan from AMCREF to the Company's wholly-owned subsidiary Broadwind Services, LLC, a Delaware limited liability company, in the principal amount of $10,000, with a term of fifteen years and interest payable at the rate of 1.4% per annum, largely offset by a gross loan in the principal amount of $7,720 from the Company to COCRF, with a term of fifteen years and interest payable at the rate of 2.5% per annum. The August 2015 amendment did not change the financial terms of the NMTC Transaction, but did add the activities and assets of the Abilene Heavy Industries Facility to the NMTC Transaction and allow for the sale of the Abilene Gearbox Facility assets provided that the proceeds of such sale be re-invested in the Abilene Heavy Industries Facility. The NMTC regulations permit taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities. The NMTC Transaction could generate $3,900 in tax credits, which the Company has made available under the structure by passing them through to Capital One. The proceeds have been applied to the Company’s investment in the Abilene Gearbox Facility assets and associated operating costs and in the assets of the Abilene Heavy Industries Facility, as permitted under the amended NMTC Transaction. The Abilene Heavy Industries Facility and the Abilene Gearbox Facility must operate and remain in compliance with various regulations and restrictions through September 2018, the end of the seven year compliance period, to comply with the terms of the NMTC Transaction, or the Company may be liable under its indemnification agreement with Capital One for the recapture of tax credits. In the event the Company does not comply with these regulations and restrictions, the NMTC program tax credits may be subject to 100% recapture for a period of seven years as provided in the IRC. The Company does not anticipate that any tax credit recapture events will occur or that it will be required to make any payments to Capital One under the indemnification agreement. The Capital One contribution, including a loan origination payment of $320, has been included as other assets in the Company’s consolidated balance sheet as of December 31, 2017. Capital One exercised its option to put its investment to the Company and receive $130 from the Company at that time. The Capital One contribution other than the amount allocated to the put obligation was recognized as income only after the put/call was exercised and when Capital One had no ongoing interest. The Company has determined that two pass‑through financing entities created under NMTC Transaction structure are VIEs. The ongoing activities of the VIEs—collecting and remitting interest and fees and complying with NMTC program requirements—were considered in the initial design of the NMTC Transaction and are not expected to significantly affect economic performance throughout the life of the VIEs. In making this determination, management also considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees under the NMTC Transaction structure, Capital One’s lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the VIEs. The Company has concluded that it is required to consolidate the VIEs because the Company has both (i) the power to direct those matters that most significantly impact the activities of each VIE, and (ii) the obligation to absorb losses or the right to receive benefits of each VIE. The $262 of issue costs paid to third parties in connection with the NMTC Transaction were recorded as prepaid expenses, and are being amortized over the expected seven-year term of the NMTC arrangement. Capital One’s net contribution of $2,600 was included in “Line of credit, NMTC, and other notes payable” line item of the Company’s consolidated balance sheet at December 31, 2017. Incremental costs to maintain the transaction structure during the compliance period will be recognized as they are incurred. At the end of the seven year compliance period, Capital One exercised its right to put the investment back to the Company in exchange for $130. The loan was extinguished and the Company recorded a gain of $2,249 in other income, net of transaction expenses. As the NMTC loan was extinguished, the VIEs were dissolved. |
QUARTERLY FINANCIAL SUMMARY (UN
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) | |
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) | 19. QUARTERLY FINANCIAL SUMMARY (UNAUDITED) The following table provides a summary of selected financial results of operations by quarter for the years ended December 31, 2018 and 2017 as follows: 2018 First Second Third Fourth Revenues $ 29,967 $ 36,781 $ 31,445 $ 27,187 Gross (loss) profit (132) 2,223 1,486 (512) Operating loss (4,537) (5,736) (2,612) (12,181) Loss from continuing operations, net of tax (4,811) (6,083) (750) (12,358) Net loss (4,838) (6,116) (783) (12,409) Loss from continuing operations per share: Basic $ (0.32) $ (0.40) $ (0.05) $ (0.79) Diluted $ (0.32) $ (0.40) $ (0.05) $ (0.79) Net loss per share: Basic $ (0.32) $ (0.40) $ (0.05) $ (0.79) Diluted $ (0.32) $ (0.40) $ (0.05) $ (0.79) 2017 First Second Third Fourth Revenues $ 56,060 $ 43,362 $ 29,595 $ 17,768 Gross profit (loss) 6,374 3,872 1,014 (3,101) Operating (loss) profit 1,603 (516) (1,831) (6,689) (Loss) income from continuing operations, net of tax 6,482 (688) (2,049) (6,928) Net (loss) income 6,327 (780) (2,207) (6,981) (Loss) income from continuing operations per share: Basic $ 0.43 $ (0.05) $ (0.14) $ (0.45) Diluted $ 0.43 $ (0.05) $ (0.14) $ (0.45) Net (loss) income per share: Basic $ 0.42 $ (0.05) $ (0.15) $ (0.46) Diluted $ 0.42 $ (0.05) $ (0.15) $ (0.46) |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2018 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | 20. LEGAL PROCEEDINGS The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial condition or cash flows. It is possible that if one or more litigation matters were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS COMBINATIONS | |
BUSINESS COMBINATIONS | 21. BUSINESS COMBINATIONS Overview On January 30, 2017, the Company announced that it had agreed upon the material terms to acquire Red Wolf, a Sanford, North Carolina-based, privately held fabricator, kitter and assembler of industrial systems primarily supporting the global gas turbine market, for approximately $18,983, subject to certain adjustments. The transaction closed on February 1, 2017, and Red Wolf is being operated as a wholly-owned subsidiary of the Company. Accounting for the Transaction The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired and liabilities assumed to be valued at their fair market values at the acquisition date. The guidance further provides that: (1) in-process research and development will be recorded at fair value as an indefinite-lived intangible asset; (2) acquisition costs will generally be expensed as incurred, (3) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and (4) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. ASC 805 requires that any excess of purchase price over fair value of assets acquired, including identifiable intangibles and liabilities assumed, be recognized as goodwill. Red Wolf’s results are included in the Company’s results from the acquisition date of February 1, 2017. The purchase price of the transaction totaled $18,983, of which $16,449 was paid in cash and $2,534 was the expected value of contingent future earn-out payments. The contingent consideration arrangement requires the Company to pay the former owners of Red Wolf a payout if Red Wolf achieves a targeted profitability benchmark. The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $9,900. Annual earn-out payments may not exceed $4,950. The fair value of the contingent consideration arrangement of $2,534 was estimated by using a Monte Carlo simulation. Key assumptions include a short-term weighted average cost of capital of 15% and historical volatility of public company comparables. During the third quarter of 2017, the Company released $1,394 of this contingency into operating income because management determined that Red Wolf’s full-year financial performance during the first year of ownership by the Company was unlikely to meet the threshold required to pay the first installment of the contingent earn-out. During the second quarter of 2018, the Company released the final contingent earn-out liability of $1,140 into operating income as the Company does not expect Red Wolf to achieve the targeted profitability benchmark for the second year of ownership. The release of the earn-out is reflected in the selling, general, and administrative line item in the consolidated statements of operations. The Company’s allocation of the $18,983 purchase price to Red Wolf’s tangible and identifiable intangible assets acquired and liabilities assumed, based on their fair values as of February 1, 2017, is included in the table below. Goodwill is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and is not deductible for tax purposes. The measurement period adjustments were a result of changes in the fair value of the contingent consideration arrangement and adjustments to working capital accounts. The decrease in goodwill from March 31, 2017 is due to opening balance sheet changes noted in the table below. The purchase price allocation as of March 31, 2017 and December 31, 2017 is as follows (in thousands): Allocation as of 3/31/2017 Measurement Period Adjustments Allocation as of 12/31/2017 Assets acquired and liabilities assumed: Cash and cash equivalents $ 63 $ (63) $ - Receivables 2,796 (96) 2,700 Inventories 4,998 179 5,177 Property and equipment 462 - 462 Noncompete agreements 170 - 170 Customer relationships 12,000 - 12,000 Trade names 1,100 - 1,100 Goodwill 5,568 (575) 4,993 Accounts payable (1,354) 2 (1,352) Accrued expenses (809) (67) (876) Deferred tax liabilities (5,391) - (5,391) Total purchase price $ 19,603 $ (620) $ 18,983 The allocation of the purchase price is based on valuations performed to determine the fair value of such assets and liabilities as of the acquisition date. The acquired noncompete agreements, customer relationships, and trade names have weighted average amortization periods of 6.0 years, 9.0 years, and 14.0 years, respectively and the total weighted average life of the acquired intangible assets is 9.4 years. Goodwill from this transaction has been allocated to the Company’s Process Systems segment and is not deductible for tax purposes. The Company incurred transaction costs of $182 for the year ended December 31, 2017 related to the acquisition. These costs were expensed as incurred and were primarily recorded as selling, general, and administrative expenses on the Company’s consolidated statements of operations. Red Wolf recorded revenues of $15,868 and a net loss of $146 for the period beginning from the acquisition date of February 1, 2017 and ending on December 31, 2017. The Company has not shown the pro forma results of Red Wolf because it is not significant. |
RESTRUCTURING
RESTRUCTURING | 12 Months Ended |
Dec. 31, 2018 | |
RESTRUCTURING | |
RESTRUCTURING | NOTE 22 — RESTRUCTURING During the first quarter of 2018, the Company conducted a review of its business strategies and product plans given the outlook of the industries it serves and its business environment. As a result, the Company began to execute a restructuring plan to rationalize its facility capacity and management structure, and to consolidate and increase the efficiencies of its Abilene operations. The Company exited the CNG and Fabrication Manufacturing location in Abilene, TX in 2018 as soon as it fully complied with the requirements established as part of the NMTC Transaction agreement and consolidate these manufacturing activities into other locations. All remaining costs associated with this facility have been recorded as restructuring expenses. All costs will be incurred solely within the Process Systems segment. The Company expects that any additional costs related to the 2018 restructuring initiative will be immaterial. The Company anticipates annual cost savings going forward of approximately $575 in facility expenses related to the restructuring. The Company’s total net restructuring charges for the year ended December 31, 2018 consist of the following: Year Ended December 31, 2018 Cost of sales: Facility costs $ 249 Moving and remediation 33 Salary and severance 17 Depreciation 332 Total cost of sales 631 Selling, general, and administrative expenses: Salary and severance 37 Total selling, general, and administrative expenses 37 Grand Total $ 668 |
DESCRIPTION OF BUSINESS AND S_2
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation These consolidated financial statements include the accounts of the Company and entities in which it has a controlling financial interest. All significant intercompany transactions and balances have been eliminated in consolidation. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”). When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a VIE, and if the Company is deemed to be the primary beneficiary, in accordance with the accounting standard for the consolidation of VIE’s. The accounting standard for the consolidation of VIE’s requires the Company to qualitatively assess if the Company was the primary beneficiary of the VIE based on whether the Company had (i) the power to direct those matters that most significantly impacted the activities of the VIE and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant. Refer to Note 18, “New Markets Tax Credit Transaction” of these consolidated financial statements for a description of two VIE’s that were included in the Company’s consolidated financial statements. |
Management's Use of Estimates | Management’s Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future tax rates, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, workers’ compensation reserves, health insurance reserves, and environmental reserves. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates. |
Cash and Cash Equivalents and Short-Term Investments | Cash and Cash Equivalents and Short‑Term Investments Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short‑term government bonds, Treasury bills, marketable securities and commercial paper. Marketable investments with original maturities between three and twelve months are recorded as short‑term investments. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short‑term duration based upon operating requirements. Income earned on these investments is recorded to interest income in the Company’s consolidated statements of operations. As of December 31, 2018 and December 31, 2017, cash and cash equivalents totaled $1,177 and $78, respectively. For the years ended December 31, 2018 and 2017, interest income was $5. |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are presumed to be classified as reductions of revenue in the Company’s statement of operations. In many instances within the Company’s Towers and Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when the buyer requests the arrangement, the ordered goods are segregated from inventory and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance. The Company adopted the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, for the fiscal year beginning January 1, 2018 and elected the modified retrospective approach. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606 while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 605. Based on the Company’s contract evaluation, the Company determined there was no need to record any changes to the opening retained earnings due to the impact of adopting Topic 606. The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements. |
Cost of Sales | Cost of Sales Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. These costs include operation, repair and maintenance of equipment, materials, direct and indirect labor and benefit costs, rent and utilities, maintenance, insurance, equipment rentals, freight in and depreciation. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses include all corporate and administrative functions such as sales and marketing, legal, human resource management, finance, investor and public relations, information technology and senior management. These functions serve to support the Company’s current and future operations and provide an infrastructure to support future growth. Major expense items in this category include management and staff wages and benefits, share‑based compensation and professional services. |
Accounts Receivable | Accounts Receivable (A/R) The Company generally grants uncollateralized credit to customers on an individual basis based upon the customer’s financial condition and credit history. Credit is typically on net 30 day terms and customer deposits are frequently required at various stages of the production process to finance customized products and minimize credit risk. Historically, the Company’s A/R is highly concentrated with a select number of customers. During the year ended December 31, 2018, the Company’s five largest customers accounted for 78% of its consolidated revenues and 54% of outstanding A/R balances, compared to the year ended December 31, 2017 when the Company’s five largest customers accounted for 85% of its consolidated revenues and 57% of its outstanding A/R balances. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to A/R. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its A/R. These factors include individual customer circumstances, history with the Company and other relevant criteria. A/R balances that remain outstanding after the Company has exhausted reasonable collection efforts are written off through a charge to the valuation allowance and a credit to A/R. The Company monitors its collections and write‑off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the realizability of its A/R, as noted above, or modifications to the Company’s credit standards, collection practices and other related policies may impact its allowance for doubtful accounts and its financial results. Bad debt (recoveries) expense for the years ended December 31, 2018 and 2017 was $(34) and $80, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or market and net realizable value. Cost is determined either based on the first‑in, first‑out (“FIFO”) method, or on a standard cost basis that approximates the FIFO method. Market is determined based on net realizable value. Any excess of cost over net realizable value is included in the Company’s inventory allowance. Net realizable value of inventory, and management’s judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period, contract terms and usefulness. Inventories consist of raw materials, work‑in‑process and finished goods. Raw materials consist of components and parts for general production use. Work‑in‑process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. Finished goods consist of components purchased from third parties as well as components manufactured by the Company that will be used to produce final customer products. |
Long-Lived Assets | Long-Lived Assets Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is recognized using the straight‑line method over the estimated useful lives of the related assets for financial reporting purposes, and generally using an accelerated method for income tax reporting purposes. Depreciation expense related to property and equipment for the years ended December 31, 2018 and 2017 was $7,299 and $7,235, respectively. Expenditures for additions and improvements are capitalized, while replacements, maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred. The Company has in the past capitalized interest costs incurred on indebtedness used to construct property and equipment. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. There was no interest cost capitalized during the years ended December 31, 2018 or 2017. Property or equipment sold or disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded within operating income (loss) in the Company’s consolidated statement of operations. The Company reviews property and equipment and other long‑lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. In evaluating the recoverability of long-lived assets, the Company utilizes a fair value technique accepted by ASC 820, Fair Value Measurement, which is the asset accumulation approach. If the fair value of the asset group is less than the carrying amount, the Company recognizes an impairment loss. In evaluating the recoverability of long‑lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If the Company’s fair value estimates or related assumptions change in the future, the Company may be required to record impairment charges related to property and equipment and other long‑lived assets. Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value. To the extent the assumptions used in the Company’s analysis are not achieved, there may be a negative effect on the valuation of these assets. |
Property and Equipment | Long-Lived Assets Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is recognized using the straight‑line method over the estimated useful lives of the related assets for financial reporting purposes, and generally using an accelerated method for income tax reporting purposes. Depreciation expense related to property and equipment for the years ended December 31, 2018 and 2017 was $7,299 and $7,235, respectively. Expenditures for additions and improvements are capitalized, while replacements, maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred. The Company has in the past capitalized interest costs incurred on indebtedness used to construct property and equipment. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. There was no interest cost capitalized during the years ended December 31, 2018 or 2017. Property or equipment sold or disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded within operating income (loss) in the Company’s consolidated statement of operations. The Company reviews property and equipment and other long‑lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. In evaluating the recoverability of long-lived assets, the Company utilizes a fair value technique accepted by ASC 820, Fair Value Measurement, which is the asset accumulation approach. If the fair value of the asset group is less than the carrying amount, the Company recognizes an impairment loss. In evaluating the recoverability of long‑lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If the Company’s fair value estimates or related assumptions change in the future, the Company may be required to record impairment charges related to property and equipment and other long‑lived assets. Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value. To the extent the assumptions used in the Company’s analysis are not achieved, there may be a negative effect on the valuation of these assets. |
Warranty Liability | Warranty Liability The Company provides warranty terms that generally range from one to five years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery from third parties for amounts paid to customers under warranty provisions. Warranty liability is recorded in accrued liabilities within the consolidated balance sheet. The Company estimates the warranty accrual based on various factors, including historical warranty costs, current trends, product mix and sales. The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2018 and 2017 were as follows, excluding activity related to the discontinued Services segment: As of December 31, 2018 2017 Balance, beginning of period $ 581 $ 671 Addition to (reduction of) warranty reserve (350) (28) Warranty claims (5) (62) Balance, end of period $ 226 $ 581 |
Income Taxes | As of December 31, 2018 2017 Balance, beginning of period $ 581 $ 671 Addition to (reduction of) warranty reserve (350) (28) Warranty claims (5) (62) Balance, end of period $ 226 $ 581 Income Taxes The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. In connection with the preparation of its consolidated financial statements, the Company is required to estimate its income tax liability for each of the tax jurisdictions in which the Company operates. This process involves estimating the Company’s actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax reporting and financial reporting purposes. The Company also recognizes as deferred income tax assets the expected future income tax benefits of net operating loss (“NOL”) carryforwards. In evaluating the realizability of deferred income tax assets associated with NOL carryforwards, the Company considers, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things, income tax legislation, statutory income tax rates or future taxable income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause its income tax provision to vary significantly among financial reporting periods. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate; (2) eliminating the corporate alternative minimum tax; (3) creating a new limitation on deductible interest expense; and (4) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. In connection with the Tax Act, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information, prepared or analyzed in reasonable detail to complete its accounting for the change in tax law. The Company also accounts for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. The Company follows the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition related to the uncertainty in these income tax positions. |
Share-Based Compensation | Share‑Based Compensation The Company grants incentive stock options, restricted stock units (“RSUs”) and/or performance awards (“PSUs”) to certain officers, directors, and employees. The Company accounts for share‑based compensation related to these awards based on the estimated fair value of the equity award and recognizes expense ratably over the required vesting term of the award. The expense associated with PSUs is also based on the probability of achieving embedded targets. See Note 15 “Share‑Based Compensation” of these consolidated financial statements for further discussion of the Company’s share‑based compensation plans, the nature of share‑based awards issued and the Company’s accounting for share‑based compensation. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company presents both basic and diluted net income (loss) per share. Basic net income (loss) per share is based solely upon the weighted average number of common shares outstanding and excludes any dilutive effects of options, warrants and convertible securities. Diluted net income (loss) per share is based upon the weighted average number of common shares and common‑share equivalents outstanding during the year excluding those common‑share equivalents where the impact to basic net income (loss) per share would be anti‑dilutive. |
DESCRIPTION OF BUSINESS AND S_3
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of changes in the carrying amount of the total product warranty liability | As of December 31, 2018 2017 Balance, beginning of period $ 581 $ 671 Addition to (reduction of) warranty reserve (350) (28) Warranty claims (5) (62) Balance, end of period $ 226 $ 581 |
REVENUES (Tables)
REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
REVENUES | |
Schedule of disaggregation of revenue | For the Years Ended December 31, 2018 2017 (1) Towers and Heavy Fabrications $ 68,815 $ 103,389 Gearing 38,376 26,006 Process Systems 18,319 17,390 Eliminations (130) - Consolidated $ 125,380 $ 146,785 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARE | |
Reconciliation of basic and diluted earnings per share | For the Years Ended December 31, 2018 2017 Basic earnings per share calculation: Net loss $ (24,146) $ (3,641) Weighted average number of common shares outstanding 15,468,975 15,053,049 Basic net (loss) income per share $ (1.56) $ (0.24) Diluted earnings per share calculation: Net loss $ (24,146) $ (3,641) Weighted average number of common shares outstanding 15,468,975 15,053,049 Common stock equivalents: Stock options and non-vested stock awards (1) — — Weighted average number of common shares outstanding 15,468,975 15,053,049 Diluted net loss per share $ (1.56) $ (0.24) (1) Stock options and restricted stock units granted and outstanding of 862,706 and 579,330 are excluded from the computation of diluted earnings for the years ended December 31, 2018 and 2017 due to the anti‑dilutive effect as a result of the Company’s net loss for those respective periods. |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DISCONTINUED OPERATIONS | |
Schedule of assets and liabilities held for sale | Results of operations associated with the Services segment, which are reflected as discontinued operations in the Company’s consolidated statements of income for the twelve months ended December 31, 2018 and 2017, were as follows: Year Ended December 31, 2018 2017 Revenues $ 3 $ 151 Cost of sales (132) (391) Selling, general and administrative (15) (57) Impairment of held for sale assets and liabilities and gain on sale of assets — (161) Loss from discontinued operations $ (144) $ (458) Assets and Liabilities Held for Sale Assets and liabilities classified as held for sale in the Company’s consolidated balance sheets as of December 31, 2018 and 2017 include the following: December 31, December 31, 2018 2017 Assets: Accounts receivable, net $ — $ 11 Inventories, net — 9 Total Assets Held For Sale Related To Discontinued Operations $ — $ 20 Liabilities: Accrued liabilities $ 26 $ 27 Customer deposits and other current obligations 1 3 Total Liabilities Held For Sale Related To Discontinued Operations $ 27 $ 30 |
ALLOWANCE FOR DOUBTFUL ACCOUN_2
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
Schedule of activity in the A/R allowance from continuing operations | For the Years Ended December 31, 2018 2017 Balance at beginning of period $ 225 $ 145 (Recoveries) bad debt expense (34) 80 Write-offs (1) — Balance at end of period $ 190 $ 225 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INVENTORIES | |
Schedule of the components of inventories from operations | As of December 31, 2018 2017 Raw materials $ 16,394 $ 11,945 Work-in-process 5,426 6,305 Finished goods 2,958 3,538 24,778 21,788 Less: Reserve for excess and obsolete inventory (2,108) (2,509) Net inventories $ 22,670 $ 19,279 |
LONG-LIVED ASSETS (Tables)
LONG-LIVED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
LONG-LIVED ASSETS | |
Schedule of cost basis and estimated lives of property and equipment from continuing operations | As of December 31, 2018 2017 Life Land $ 1,423 $ 1,423 Buildings 20,747 22,998 39 years Machinery and equipment 107,469 103,878 2 - 10 years Office furniture and equipment 4,387 4,202 3 - 7 years Leasehold improvements 8,974 9,095 Asset life or life of lease Construction in progress 172 4,138 143,172 145,734 Less accumulated depreciation and amortization (94,085) (90,041) Total property and equipment $ 49,087 $ 55,693 |
Schedule of the cost basis, accumulated amortization and net book value of intangible assets | December 31, 2018 December 31, 2017 Remaining Remaining Weighted Weighted Net Average Net Average Accumulated Impairment Book Amortization Accumulated Book Amortization Cost Amortization Charge Value Period Cost Amortization Value Period Goodwill and other intangible assets: Goodwill $ 4,993 $ — $ (4,993) $ - $ 4,993 $ — $ 4,993 Noncompete agreements (54) — 116 (26) 144 Customer relationships 15,979 (6,369) (7,592) 2,018 6.8 15,979 (4,992) 10,987 8.0 Trade names 9,099 (4,631) — 4,468 9.5 9,099 (4,152) 4,947 10.5 Other intangible assets $ 25,248 $ (11,054) $ (7,592) $ 6,602 6.5 $ 25,248 $ (9,170) $ 16,078 8.8 |
Schedule of estimated future amortization expense | 2019 $ 812 2020 812 2021 812 2022 812 2023 786 2024 and thereafter 2,568 Total $ 6,602 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | December 31, 2018 2017 Accrued payroll and benefits $ 2,126 $ 1,797 Accrued property taxes — 144 Income taxes payable 66 77 Accrued professional fees 101 40 Accrued warranty liability 226 581 Accrued self-insurance reserve 374 812 Accrued other 913 942 Total accrued liabilities $ 3,806 $ 4,393 |
DEBT AND CREDIT AGREEMENTS (Tab
DEBT AND CREDIT AGREEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DEBT AND CREDIT AGREEMENTS | |
Schedule of outstanding debt balances | December 31, 2018 2017 Line of credit $ 11,000 $ 10,733 NMTC note payable — 2,600 Other notes payable 1,882 1,146 Long-term debt 456 570 Less: Current portion (11,930) (14,252) Long-term debt, net of current maturities $ 1,408 $ 797 |
Schedule of future annual principal payments | December 31, 2018 2017 Line of credit $ 11,000 $ 10,733 NMTC note payable — 2,600 Other notes payable 1,882 1,146 Long-term debt 456 570 Less: Current portion (11,930) (14,252) Long-term debt, net of current maturities $ 1,408 $ 797 As of December 31, 2018, future annual principal payments on the Company’s outstanding debt obligations were as follows: 2019 $ 12,045 2020 913 2021 266 2022 114 Total $ 13,338 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
LEASES | |
Schedule of cost basis and accumulated depreciation of assets recorded under capital leases, which are included in property and equipment | December 31, 2018 2017 Cost $ 4,354 $ 2,460 Accumulated depreciation (951) (424) Net book value $ 3,403 $ 2,036 |
Schedule of future minimum annual lease payments under capital leases and operating leases | Capital Operating Leases Leases Total 2019 $ 1,057 $ 3,524 $ 4,581 2020 376 2,784 3,160 2021 252 2,334 2,586 2022 — 2,333 2,333 2023 — 2,213 2,213 2024 and thereafter — 6,340 6,340 Total $ 1,685 $ 19,528 $ 21,213 Less—portion representing interest at a weighted average annual rate of 5.0% (147) Principal 1,538 Less—current portion (967) Capital lease obligations, noncurrent portion $ 571 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of the fair values of the Company's financial assets | December 31, 2018 Level 1 Level 2 Level 3 Total Assets measured on a nonrecurring basis: Goodwill $ — $ — $ — $ — Customer relationships 1,852 1,852 Total assets at fair value $ — $ — $ 1,852 $ 1,852 December 31, 2017 Level 1 Level 2 Level 3 Total Assets measured on a nonrecurring basis: Gearing Cicero Ave. facility $ — $ — $ 560 $ 560 Services assets — — 20 20 Total assets at fair value $ — $ — $ 580 $ 580 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Schedule of components of provision for income taxes | For the Years Ended December 31, 2018 2017 Current provision Federal $ — $ — Foreign — — State 98 5 Total current benefit 98 5 Deferred credit Federal (3,978) 31,614 State (2,963) 468 Total deferred credit (6,941) 32,082 Increase (decrease) in deferred tax valuation allowance 6,638 (37,132) Total benefit for income taxes $ (205) $ (5,045) |
Schedule of tax effects of the temporary differences and NOL's that give rise to significant portions of deferred tax assets and liabilities | As of December 31, 2018 2017 Noncurrent deferred income tax assets: Net operating loss carryforwards $ 63,906 $ 56,619 Intangible assets 7,261 6,889 Accrual and reserves 2,502 2,402 Other 19 88 Total noncurrent deferred tax assets 73,688 65,998 Valuation allowance (73,129) (66,491) Noncurrent deferred tax assets, net of valuation allowance 559 (493) Noncurrent deferred income tax liabilities: Fixed assets 593 (152) Intangible assets — — Total noncurrent deferred tax liabilities 593 (152) Net deferred income tax liability $ (34) $ (341) |
Schedule of reconciliation of the beginning and ending amounts of the valuation | Valuation allowance as of December 31, 2017 $ (66,491) Gross increase for current year activity (6,638) Valuation allowance as of December 31, 2018 $ (73,129) |
Schedule of reconciliation between the statutory U.S. federal income tax rate and the Company's effective income tax rate | For the Year Ended December 31, 2018 2017 Statutory U.S. federal income tax rate 21.0 % 34.0 % State and local income taxes, net of federal income tax benefit 3.2 3.4 Permanent differences (4.4) (1.2) Change in valuation allowance (18.7) 446.7 Change in uncertain tax positions 0.0 0.5 Other (0.3) 0.1 Effect of U.S. tax rate change 0.0 (422.6) Effective income tax rate 0.8 % 60.9 % |
Schedule of changes in the Company's uncertain income tax positions | For the Year Ended December 31, 2018 2017 Beginning balance $ 1 $ 27 Tax positions related to current year: Additions — — Reductions — — — — Tax positions related to prior years: Additions — — Reductions — — Settlements — — Lapses in statutes of limitations (1) (26) Additions from current year acquisitions — — (1) (26) Ending balance $ — $ 1 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SHARE-BASED COMPENSATION | |
Schedule of stock option activity | Weighted Average Aggregate Intrinsic Weighted Average Remaining Value Options Exercise Price Contractual Term (in thousands) Outstanding as of December 31, 2017 67,188 $ 24.65 Expired (10,326) 77.47 Outstanding as of December 31, 2018 56,862 $ 15.06 2.72 $ — Exercisable as of December 31, 2018 56,862 $ 15.06 2.72 $ — |
Summary of information with respect to all outstanding and exercisable stock options | Options Outstanding Options Exercisable Weighted Average Number of options Weighted Average Remaining Number Weighted Average Exercise Price or Range outstanding Exercise Price Contractual Term Exercisable Exercise Price $3.39 - $13.50 49,039 $ 6.47 2.99 years 49,039 $ 6.47 $54.40 - $99.90 7,823 68.94 0.99 years 7,823 68.94 56,862 $ 15.06 2.72 years 56,862 $ 15.06 |
Schedule of RSU activity | Weighted Average Grant-Date Fair Value Number of Shares Per Share Unvested as of December 31, 2017 512,142 $ 4.57 Granted 565,964 $ 2.42 Vested (202,713) $ 4.41 Forfeited (69,549) $ 3.85 Unvested as of December 31, 2018 805,844 $ 3.16 |
Schedule of share-based compensation expense, net of taxes withheld | For the Years Ended December 31, 2018 2017 Share-based compensation expense: Cost of sales $ 99 $ 101 Selling, general and administrative 704 712 Net effect of share-based compensation expense on net income $ 803 $ 813 Reduction in earnings per share: Basic earnings per share $ 0.05 $ 0.05 Diluted earnings per share $ 0.05 $ 0.05 (1) Income tax benefit is not illustrated because the Company is currently in a full tax valuation allowance position and an actual income tax benefit was not realized for the years ended December 31, 2018 and 2017. The result of the income (loss) situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance. |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT REPORTING | |
Schedule of financial information by reportable segment | Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Year Ended December 31, 2018 Revenues from external customers $ 68,773 $ 38,376 $ 18,231 $ — $ — $ 125,380 Intersegment revenues 42 — 88 — (130) — Net revenues 68,815 38,376 18,319 — (130) 125,380 Operating (loss) profit (4,346) 51 (16,442) (4,329) — (25,066) Depreciation and amortization 4,986 2,255 1,709 233 — 9,183 Capital expenditures 1,441 706 31 146 — 2,324 Total assets 32,866 37,028 13,731 243,867 (228,327) 99,165 Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Year Ended December 31, 2017 Revenues from external customers $ 103,389 $ 26,006 17,390 $ — $ — $ 146,785 Operating (loss) profit 2,667 (2,632) (2,269) (5,199) — (7,433) Depreciation and amortization 4,638 2,430 1,706 225 — 8,999 Capital expenditures 5,355 726 426 181 — 6,688 Assets held for sale — 560 — 20 — 580 Total assets 27,958 38,016 26,442 249,346 (229,412) 112,350 |
QUARTERLY FINANCIAL SUMMARY (_2
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) | |
Summary of selected financial results of operations | 2018 First Second Third Fourth Revenues $ 29,967 $ 36,781 $ 31,445 $ 27,187 Gross (loss) profit (132) 2,223 1,486 (512) Operating loss (4,537) (5,736) (2,612) (12,181) Loss from continuing operations, net of tax (4,811) (6,083) (750) (12,358) Net loss (4,838) (6,116) (783) (12,409) Loss from continuing operations per share: Basic $ (0.32) $ (0.40) $ (0.05) $ (0.79) Diluted $ (0.32) $ (0.40) $ (0.05) $ (0.79) Net loss per share: Basic $ (0.32) $ (0.40) $ (0.05) $ (0.79) Diluted $ (0.32) $ (0.40) $ (0.05) $ (0.79) 2017 First Second Third Fourth Revenues $ 56,060 $ 43,362 $ 29,595 $ 17,768 Gross profit (loss) 6,374 3,872 1,014 (3,101) Operating (loss) profit 1,603 (516) (1,831) (6,689) (Loss) income from continuing operations, net of tax 6,482 (688) (2,049) (6,928) Net (loss) income 6,327 (780) (2,207) (6,981) (Loss) income from continuing operations per share: Basic $ 0.43 $ (0.05) $ (0.14) $ (0.45) Diluted $ 0.43 $ (0.05) $ (0.14) $ (0.45) Net (loss) income per share: Basic $ 0.42 $ (0.05) $ (0.15) $ (0.46) Diluted $ 0.42 $ (0.05) $ (0.15) $ (0.46) |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS COMBINATIONS | |
Summary of preliminary purchase price allocation based on estimated fair values of assets acquired and liabilities assumed as of the acquisition date | The purchase price allocation as of March 31, 2017 and December 31, 2017 is as follows (in thousands): Allocation as of 3/31/2017 Measurement Period Adjustments Allocation as of 12/31/2017 Assets acquired and liabilities assumed: Cash and cash equivalents $ 63 $ (63) $ - Receivables 2,796 (96) 2,700 Inventories 4,998 179 5,177 Property and equipment 462 - 462 Noncompete agreements 170 - 170 Customer relationships 12,000 - 12,000 Trade names 1,100 - 1,100 Goodwill 5,568 (575) 4,993 Accounts payable (1,354) 2 (1,352) Accrued expenses (809) (67) (876) Deferred tax liabilities (5,391) - (5,391) Total purchase price $ 19,603 $ (620) $ 18,983 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
RESTRUCTURING | |
Schedule of total restructuring charges incurred to date and the total expected restructuring charges | Year Ended December 31, 2018 Cost of sales: Facility costs $ 249 Moving and remediation 33 Salary and severance 17 Depreciation 332 Total cost of sales 631 Selling, general, and administrative expenses: Salary and severance 37 Total selling, general, and administrative expenses 37 Grand Total $ 668 |
DESCRIPTION OF BUSINESS AND S_4
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Thousands | Jul. 31, 2018USD ($)$ / shares | Oct. 26, 2016USD ($) | Oct. 31, 2016USD ($) | Dec. 31, 2018USD ($)segment$ / shares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesMW | Dec. 31, 2018USD ($)facility$ / shares | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2018USD ($)item$ / shares | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)$ / shares | Feb. 25, 2019USD ($) | Mar. 31, 2017USD ($) |
Description of Business | |||||||||||||
Number of reportable segments | segment | 3 | ||||||||||||
Liquidity | |||||||||||||
Cash and cash equivalents and short-term investments | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | ||||||
Increase (decrease) in Cash and cash equivalents and Short-term investments | $ 1,099 | ||||||||||||
Current borrowing capacity | 10,319 | 10,319 | 10,319 | 10,319 | 10,319 | 10,319 | 10,319 | ||||||
Outstanding indebtedness under the Credit Facility | 11,000 | 11,000 | 11,000 | 11,000 | 11,000 | 11,000 | 11,000 | 10,733 | |||||
Long-term Debt, Current Maturities | 114 | ||||||||||||
Inventories, net | 22,670 | 22,670 | 22,670 | 22,670 | 22,670 | 22,670 | 22,670 | 19,279 | |||||
Increase (Decrease) in inventories | 2,944 | $ (7,057) | |||||||||||
Total debt and capital lease obligations | 14,876 | 14,876 | 14,876 | 14,876 | 14,876 | 14,876 | 14,876 | ||||||
Long-term Debt and Capital Lease Obligations, Repayments of Principal in Next Twelve Months | $ 12,897 | $ 12,897 | $ 12,897 | $ 12,897 | $ 12,897 | $ 12,897 | $ 12,897 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Proceeds from issuance of stock | $ 33 | ||||||||||||
Sales agent commission percentage | 3.00% | ||||||||||||
Sale of common stock, net of expenses (shares) | shares | 15,112 | ||||||||||||
Commission paid to agent | 1 | ||||||||||||
ATM common stock available for issuance | $ 9,967 | $ 9,967 | $ 9,967 | $ 9,967 | $ 9,967 | $ 9,967 | 9,967 | ||||||
NMTC note payable | 13,338 | 13,338 | 13,338 | 13,338 | 13,338 | 13,338 | 13,338 | ||||||
Cash and Cash Equivalents and Short-Term Investments | |||||||||||||
Cash and cash equivalents | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | $ 1,177 | 1,177 | $ 78 | |||||
Interest income | $ 5 | $ 5 | |||||||||||
Credit facility | |||||||||||||
Liquidity | |||||||||||||
Maximum borrowing capacity | $ 20,000 | $ 10,000 | $ 35,000 | $ 25,000 | |||||||||
Maximum borrowing capacity of the face value of eligible A/R (as a percent) | 85.00% | 85.00% | |||||||||||
Maximum percentage of book value of inventories that may be financed | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | |||||
Long-term Line of Credit | $ 11,000 | $ 11,000 | $ 11,000 | $ 11,000 | $ 11,000 | $ 11,000 | $ 11,000 | ||||||
Current borrowing capacity | 10,319 | 10,319 | 10,319 | 10,319 | 10,319 | 10,319 | 10,319 | ||||||
Outstanding indebtedness under the Credit Facility | 0 | 0 | $ 0 | $ 0 | 0 | $ 0 | 0 | ||||||
Maximum borrowing capacity of the face value of machinery, equipment and property that may be financed | 50.00% | 50.00% | |||||||||||
Towers and Heavy Fabrications | |||||||||||||
Description of Business | |||||||||||||
Number of facilities | facility | 2 | ||||||||||||
Number of tower sections | 1,650 | 1,650 | |||||||||||
New Markets Tax Credit Transaction | |||||||||||||
Principles of Consolidation and Basis of Presentation | |||||||||||||
Number of VIE's | item | 2 | ||||||||||||
Minimum | Towers and Heavy Fabrications | |||||||||||||
Description of Business | |||||||||||||
Power generating capacity of turbines that towers produced annually can support (in megawatts) | MW | 1,100 | ||||||||||||
Maximum | |||||||||||||
Liquidity | |||||||||||||
Proceeds from issuance of stock | $ 10,000 | ||||||||||||
Maximum | Credit facility | |||||||||||||
Liquidity | |||||||||||||
Maximum borrowing capacity | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | ||||||
Maximum | Towers and Heavy Fabrications | |||||||||||||
Description of Business | |||||||||||||
Annual tower production capacity (in towers) | item | 550 |
DESCRIPTION OF BUSINESS AND S_5
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - A/R, Allowances of A/R and PPE - (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($)item | |
Accounts Receivable | ||
Number of days for evaluating significant balances for credit risk | 30 days | |
Number of largest customers | item | 5 | 5 |
Allowance for Doubtful Accounts | ||
Bad debt (recoveries) expense | $ (34) | |
Bad debt (recoveries) expense | $ 80 | |
LONG-LIVED ASSETS | ||
Depreciation & amortization expense | 7,299 | 7,235 |
Interest cost capitalized | $ 0 | $ 0 |
Consolidated revenues | Customer concentration | ||
Accounts Receivable | ||
Concentration risk (as a percent) | 78.00% | 85.00% |
Outstanding A/R balances | Customer concentration | ||
Accounts Receivable | ||
Concentration risk (as a percent) | 54.00% | 57.00% |
DESCRIPTION OF BUSINESS AND S_6
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Warranty Liability - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in the carrying amount of the total product warranty liability | ||
Balance, beginning of period | $ 581 | $ 671 |
Addition to (reduction of) warranty reserve | (350) | (28) |
Warranty claims | (5) | (62) |
Balance, end of period | $ 226 | $ 581 |
Minimum | ||
Warranty Liability | ||
Term of warranty | 1 year | |
Maximum | ||
Warranty Liability | ||
Term of warranty | 5 years |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||||||||||
Revenues | $ 27,187 | $ 31,445 | $ 36,781 | $ 29,967 | $ 17,768 | $ 29,595 | $ 43,362 | $ 56,060 | $ 125,380 | $ 146,785 |
Revenue remaining performance obligation, practical expedient | true | |||||||||
Eliminations | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Revenues | $ (130) | |||||||||
Towers and Heavy Fabrications | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Revenues | 68,815 | 103,389 | ||||||||
Gearing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Revenues | 38,376 | 26,006 | ||||||||
Process Systems | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Revenues | $ 18,319 | $ 17,390 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
NET LOSS PER COMMON SHARE—BASIC: | ||||||||||
Net loss | $ (12,409) | $ (783) | $ (6,116) | $ (4,838) | $ (6,981) | $ (2,207) | $ (780) | $ 6,327 | $ (24,146) | $ (3,641) |
Weighted average number of common shares outstanding | 15,468,975 | 15,053,049 | ||||||||
Basic net (loss) income per share | $ (0.79) | $ (0.05) | $ (0.40) | $ (0.32) | $ (0.46) | $ (0.15) | $ (0.05) | $ 0.42 | $ (1.56) | $ (0.24) |
NET LOSS PER COMMON SHARE—DILUTED: | ||||||||||
Net (loss) income | $ (24,146) | $ (3,641) | ||||||||
Weighted average number of common shares outstanding | 15,468,975 | 15,053,049 | ||||||||
Weighted average number of common shares outstanding | 15,468,975 | 15,053,049 | ||||||||
Diluted net (loss) income per share | $ (0.79) | $ (0.05) | $ (0.40) | $ (0.32) | $ (0.46) | $ (0.15) | $ (0.05) | $ 0.42 | $ (1.56) | $ (0.24) |
Stock options and restricted stock units granted and outstanding excluded from the computation of diluted earnings per share, due to the anti-dilutive effect (in shares) | 862,706 | 579,330 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) $ in Thousands | Sep. 30, 2015item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
DISCONTINUED OPERATIONS | |||
Loss from discontinued operations | $ 144 | $ 458 | |
Results of operations, which are reflected as discontinued operations | |||
LOSS FROM DISCONTINUED OPERATIONS | (144) | (458) | |
Minimum | |||
DISCONTINUED OPERATIONS | |||
Number of third-party purchasers | item | 1 | ||
Discontinued Operations, Held-for-sale | |||
Assets: | |||
Accounts receivable, net | 11 | ||
Inventories, net | 9 | ||
Assets Held For Sale Related To Discontinued Operations | 20 | ||
Liabilities: | |||
Accrued liabilities | 26 | 27 | |
Customer deposits and other current obligations | 1 | 3 | |
Total Liabilities Held For Sale Related To Discontinued Operations | 27 | 30 | |
Service Segment | |||
DISCONTINUED OPERATIONS | |||
Loss from discontinued operations | 144 | 458 | |
Results of operations, which are reflected as discontinued operations | |||
Revenues | 3 | 151 | |
Cost of sales | (132) | (391) | |
Selling, general and administrative | (15) | (57) | |
Impairment of held for sale assets and liabilities and gain on sale of assets | (161) | ||
LOSS FROM DISCONTINUED OPERATIONS | $ (144) | $ (458) |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Impairment charges | $ 4,993 |
Accounting Standards Update 2017-04 [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | |
Impairment charges | $ 4,993 |
ALLOWANCE FOR DOUBTFUL ACCOUN_3
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Activity in the accounts receivable allowance from continuing operations | ||
Balance at beginning of period | $ 225 | $ 145 |
(Recoveries) bad debt expense | 80 | |
Bad debt (recoveries) expense | (34) | |
Write-offs | (1) | |
Balance at end of period | $ 190 | $ 225 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
INVENTORIES | ||
Raw materials | $ 16,394 | $ 11,945 |
Work-in-process | 5,426 | 6,305 |
Finished goods | 2,958 | 3,538 |
Gross inventories | 24,778 | 21,788 |
Less: Reserve for excess and obsolete inventory | (2,108) | (2,509) |
Net inventories | $ 22,670 | $ 19,279 |
LONG-LIVED ASSETS (Details)
LONG-LIVED ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 143,172 | $ 145,734 |
Less-accumulated depreciation and amortization | (94,085) | (90,041) |
Property and equipment, net | 49,087 | 55,693 |
Commitments within construction in progress | 80 | 132 |
Land | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 1,423 | 1,423 |
Buildings | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 20,747 | 22,998 |
Life | 39 years | |
Machinery and equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 107,469 | 103,878 |
Machinery and equipment | Minimum | ||
PROPERTY AND EQUIPMENT | ||
Life | 2 years | |
Machinery and equipment | Maximum | ||
PROPERTY AND EQUIPMENT | ||
Life | 10 years | |
Office furniture and equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 4,387 | 4,202 |
Office furniture and equipment | Minimum | ||
PROPERTY AND EQUIPMENT | ||
Life | 3 years | |
Office furniture and equipment | Maximum | ||
PROPERTY AND EQUIPMENT | ||
Life | 7 years | |
Leasehold improvements | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 8,974 | 9,095 |
Construction in progress | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 172 | $ 4,138 |
LONG-LIVED ASSETS - Intangible
LONG-LIVED ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | |
INTANGIBLE ASSETS | |||
Goodwill | $ 4,993 | $ 4,993 | |
Cost Basis | 25,248 | 25,248 | |
Accumulated Amortization | (11,054) | (9,170) | |
Net Book Value | $ 6,602 | $ 16,078 | |
Remaining Weighted Average Amortization Period | 6 years 6 months | 8 years 9 months 18 days | |
Impairment of assets | $ (7,592) | ||
Amortization expense | 1,884 | $ 1,764 | |
Impairment of goodwill | 4,993 | ||
Estimated future amortization expense | |||
2,019 | 812 | ||
2,020 | 812 | ||
2,021 | 812 | ||
2,022 | 812 | ||
2,023 | 786 | ||
2024 and thereafter | 2,568 | ||
Net Book Value | 6,602 | 16,078 | |
Gearing | |||
INTANGIBLE ASSETS | |||
Impairment of assets | $ 0 | 0 | |
Minimum | |||
INTANGIBLE ASSETS | |||
Estimated useful life | 6 years | ||
Maximum | |||
INTANGIBLE ASSETS | |||
Estimated useful life | 20 years | ||
Noncompete agreements | |||
INTANGIBLE ASSETS | |||
Cost Basis | $ 170 | 170 | |
Accumulated Amortization | (54) | (26) | |
Net Book Value | $ 116 | $ 144 | |
Remaining Weighted Average Amortization Period | 4 years 1 month 6 days | 5 years 1 month 6 days | |
Estimated future amortization expense | |||
Net Book Value | $ 116 | $ 144 | |
Customer relationships | |||
INTANGIBLE ASSETS | |||
Cost Basis | 15,979 | 15,979 | |
Accumulated Amortization | (6,369) | (4,992) | |
Net Book Value | $ 2,018 | $ 10,987 | |
Remaining Weighted Average Amortization Period | 6 years 9 months 18 days | 8 years | |
Impairment of assets | $ (7,592) | ||
Estimated future amortization expense | |||
Net Book Value | 2,018 | $ 10,987 | |
Trade names | |||
INTANGIBLE ASSETS | |||
Cost Basis | 9,099 | 9,099 | |
Accumulated Amortization | (4,631) | (4,152) | |
Net Book Value | $ 4,468 | $ 4,947 | |
Remaining Weighted Average Amortization Period | 9 years 6 months | 10 years 6 months | |
Estimated future amortization expense | |||
Net Book Value | $ 4,468 | $ 4,947 | |
Red Wolf | |||
INTANGIBLE ASSETS | |||
Goodwill | $ 4,993 | $ 4,993 | $ 5,568 |
Remaining Weighted Average Amortization Period | 9 years 4 months 24 days | ||
Impairment of assets | $ 0 | ||
Red Wolf | Minimum | |||
INTANGIBLE ASSETS | |||
Estimated useful life | 4 years | ||
Red Wolf | Maximum | |||
INTANGIBLE ASSETS | |||
Estimated useful life | 10 years | ||
Red Wolf | Noncompete agreements | |||
INTANGIBLE ASSETS | |||
Remaining Weighted Average Amortization Period | 6 years | ||
Red Wolf | Customer relationships | |||
INTANGIBLE ASSETS | |||
Remaining Weighted Average Amortization Period | 9 years | ||
Red Wolf | Trade names | |||
INTANGIBLE ASSETS | |||
Remaining Weighted Average Amortization Period | 14 years | ||
Measurement Input, Discount Rate | Red Wolf | |||
INTANGIBLE ASSETS | |||
Weighted average cost of capital | 15.00% | ||
Measurement Input, Discount Rate | Red Wolf | Customer relationships | |||
INTANGIBLE ASSETS | |||
Weighted average cost of capital | 18.50% | ||
Measurement Input, Discount Rate | Red Wolf | Goodwill | |||
INTANGIBLE ASSETS | |||
Weighted average cost of capital | 18.60% |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
ACCRUED LIABILITIES | |||
Accrued payroll and benefits | $ 2,126 | $ 1,797 | |
Accrued property taxes | 144 | ||
Income taxes payable | 66 | 77 | |
Accrued professional fees | 101 | 40 | |
Accrued warranty liability | 226 | 581 | $ 671 |
Accrued self-insurance reserve | 374 | 812 | |
Accrued other | 913 | 942 | |
Total accrued liabilities | $ 3,806 | $ 4,393 |
DEBT AND CREDIT AGREEMENTS (Det
DEBT AND CREDIT AGREEMENTS (Details) - USD ($) $ in Thousands | Oct. 26, 2016 | Oct. 31, 2016 | Sep. 30, 2018 | Dec. 31, 2018 | Feb. 25, 2019 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Credit Facilities | ||||||||
Line of credit | $ 11,000 | $ 10,733 | ||||||
Less: Current portion | (11,930) | (14,252) | ||||||
Long-term debt, net of current maturities | 1,408 | 797 | ||||||
Current borrowing capacity | 10,319 | |||||||
Extinguishment gain | 2,249 | |||||||
Current maturities of long-term debt | 114 | |||||||
Future annual principal payments | ||||||||
2,019 | 12,045 | |||||||
2,020 | 913 | |||||||
2,021 | 266 | |||||||
2,022 | 114 | |||||||
Total | 13,338 | |||||||
New Markets Tax Credit Transaction | ||||||||
Credit Facilities | ||||||||
NMTC note payable | 2,600 | 2,600 | ||||||
Extinguishment gain | $ 2,249 | |||||||
Capital Expenditure loan | ||||||||
Credit Facilities | ||||||||
Long-term debt | 1,882 | 1,146 | ||||||
Current maturities of long-term debt | $ 930 | 804 | ||||||
Interest rate (as a percent) | 5.00% | |||||||
Capital Expenditure loan | Minimum | ||||||||
Credit Facilities | ||||||||
Monthly payments on notes payable | $ 3 | |||||||
Capital Expenditure loan | Maximum | ||||||||
Credit Facilities | ||||||||
Monthly payments on notes payable | 36 | |||||||
Development Corporation of Abilene loan | ||||||||
Credit Facilities | ||||||||
Long-term debt | 456 | 570 | $ 570 | |||||
Loan forgiven | 114 | |||||||
Credit facility | ||||||||
Credit Facilities | ||||||||
Line of credit | $ 0 | |||||||
Maximum borrowing capacity | $ 20,000 | $ 10,000 | $ 35,000 | $ 25,000 | ||||
Line of credit facilities, term of credit agreements | 3 years | |||||||
Maximum borrowing capacity of the face value of eligible A/R (as a percent) | 85.00% | 85.00% | ||||||
Maximum percentage of book value of inventories that may be financed | 50.00% | 50.00% | ||||||
Maximum borrowing capacity of the face value of machinery, equipment and property that may be financed | 50.00% | 50.00% | ||||||
Annual unused line fee (as a percent) | 0.50% | |||||||
Current borrowing capacity | $ 10,319 | |||||||
Credit facility | Minimum | ||||||||
Credit Facilities | ||||||||
Variable rate basis | 2.25% | |||||||
Interest rate margin (as a percent) | 0.00% | |||||||
Credit facility | Maximum | ||||||||
Credit Facilities | ||||||||
Maximum borrowing capacity | $ 10,000 | |||||||
Variable rate basis | 3.00% | |||||||
Interest rate margin (as a percent) | 1.00% | |||||||
Term loans and notes payable | New Markets Tax Credit Transaction | ||||||||
Credit Facilities | ||||||||
NMTC note payable | $ 2,600 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
LEASES | ||
Rental expense | $ 3,654 | $ 3,378 |
Minimum | ||
LEASES | ||
Operating lease term | 3 years | |
Maximum | ||
LEASES | ||
Operating lease term | 15 years |
LEASES - Capital and Operating
LEASES - Capital and Operating Leases - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cost basis and accumulated depreciation of assets recorded under capital leases | ||
Depreciation expense recorded under capital leases | $ 7,299 | $ 7,235 |
Capital Leases | ||
2,019 | 1,057 | |
2,020 | 376 | |
2,021 | 252 | |
Total | 1,685 | |
Less-portion representing interest at a weighted average annual rate of 5.0% | (147) | |
Principal | 1,538 | |
Less-current portion | (967) | (762) |
Capital lease obligations, noncurrent portion | $ 571 | 941 |
Weighted average annual interest rate (as a percent) | 5.00% | |
Operating Leases | ||
2,019 | $ 3,524 | |
2,020 | 2,784 | |
2,021 | 2,334 | |
2,022 | 2,333 | |
2,023 | 2,213 | |
2024 and thereafter | 6,340 | |
Total future minimum lease payments | 19,528 | |
Total | ||
2,019 | 4,581 | |
2,020 | 3,160 | |
2,021 | 2,586 | |
2,022 | 2,333 | |
2,023 | 2,213 | |
2024 and thereafter | 6,340 | |
Future minimum lease payments | 21,213 | |
Capital leases | ||
Cost basis and accumulated depreciation of assets recorded under capital leases | ||
Cost | 4,354 | 2,460 |
Accumulated depreciation | (951) | (424) |
Net book value | 3,403 | 2,036 |
Depreciation expense recorded under capital leases | $ 527 | $ 295 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Environmental Compliance and Remediation Liabilities | |||
Proceeds from sale of Cicero Avenue Facility | $ 583 | $ 676 | $ 72 |
Liquidated Damages | |||
Liquidated damages | 0 | $ 0 | |
Reserve for liquidated damages | $ 0 | ||
Minimum | |||
Warranty Liability | |||
Term of warranty | 1 year | ||
Maximum | |||
Warranty Liability | |||
Term of warranty | 5 years |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Collective Bargaining Agreements (Details) - Total Company Employees - Coverage under collective bargaining agreements | 12 Months Ended |
Dec. 31, 2018agreement | |
Collective bargaining agreements | |
Percentage of company's employees covered | 23.00% |
Number of agreements | 2 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Tax Credit Program and Worker's Compensation Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 20, 2011 | |
New Markets Tax Credit program | ||||
Extinguishment gain | $ 2,249 | |||
Workers' Compensation Reserves | ||||
Amount accrued for self-insured workers' compensation claims | 374 | $ 812 | ||
New Markets Tax Credit Transaction | ||||
New Markets Tax Credit program | ||||
Future tax credit that can be generated | $ 3,900 | $ 3,900 | ||
Tax credit period | 7 years | |||
Period which facility must operate and be in compliance | 7 years | 7 years | ||
Obligation under Put Option | $ 130 | $ 130 | ||
Extinguishment gain | $ 2,249 | |||
New Markets Tax Credit Transaction | Broadwind Services, LLC | ||||
New Markets Tax Credit program | ||||
Gross loan from AMCREF to Broadwind Services | $ 10,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Gearing Cicero Ave. facility | |||
FAIR VALUE MEASUREMENTS | |||
Gain on sale | $ 23 | ||
Nonrecurring | |||
FAIR VALUE MEASUREMENTS | |||
Total assets at fair value | $ 1,852 | $ 580 | |
Nonrecurring | Gearing Cicero Ave. facility | |||
FAIR VALUE MEASUREMENTS | |||
Property plant and equipment at fair value | 560 | 560 | |
Nonrecurring | Services assets | |||
FAIR VALUE MEASUREMENTS | |||
Property plant and equipment at fair value | 20 | ||
Nonrecurring | Level 3 | |||
FAIR VALUE MEASUREMENTS | |||
Total assets at fair value | 1,852 | 580 | |
Nonrecurring | Level 3 | Gearing Cicero Ave. facility | |||
FAIR VALUE MEASUREMENTS | |||
Property plant and equipment at fair value | 560 | ||
Nonrecurring | Level 3 | Services assets | |||
FAIR VALUE MEASUREMENTS | |||
Property plant and equipment at fair value | $ 20 | ||
Customer relationships | |||
FAIR VALUE MEASUREMENTS | |||
Finite lived intangible assets at fair Value | 1,852 | ||
Customer relationships | Level 3 | |||
FAIR VALUE MEASUREMENTS | |||
Finite lived intangible assets at fair Value | $ 1,852 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current provision | ||
State | $ 98 | $ 5 |
Total current (benefit) provision | 98 | 5 |
Deferred credit | ||
Federal | (3,978) | 31,614 |
State | (2,963) | 468 |
Total deferred credit | (6,941) | 32,082 |
Increase (decrease) in deferred tax valuation allowance | 6,638 | (37,132) |
Total benefit for income taxes | (205) | $ (5,045) |
Other tax expense (benefit) | $ 5,060 |
INCOME TAXES - Operating Loss C
INCOME TAXES - Operating Loss Carryforwards, Summary of Deferred Taxes and Temporary Tax Differences (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Noncurrent deferred income tax assets: | ||
Net operating loss carryforwards | $ 63,906 | $ 56,619 |
Intangible assets | 7,261 | 6,889 |
Accrual and reserves | 2,502 | 2,402 |
Other | 19 | 88 |
Total noncurrent deferred tax assets | 73,688 | 65,998 |
Valuation allowance | (73,129) | (66,491) |
Noncurrent deferred tax assets, net of valuation allowance | 559 | |
Noncurrent deferred income tax liabilities: | ||
Noncurrent deferred tax assets, net of valuation allowance | (493) | |
Fixed assets | 593 | |
Fixed assets | (152) | |
Total noncurrent deferred tax liabilities | (152) | |
Total noncurrent deferred tax liabilities | 593 | |
Net deferred income tax liability | (34) | (341) |
Reconciliation of the valuation allowances | ||
Valuation allowance at the beginning of the period | (66,491) | |
Gross increase for current year activity | (6,638) | 37,132 |
Valuation allowance at the end of the period | (73,129) | $ (66,491) |
Federal | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 248,717 | |
State | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | $ 228,787 |
INCOME TAXES - Tax Statutory Ra
INCOME TAXES - Tax Statutory Rate Reconciliation and Changes in Uncertain Income Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the tax (benefit) provision computed at the statutory rate to the effective tax rate | ||
Statutory U.S. federal income tax rate (as a percent) | 21.00% | 34.00% |
State and local income taxes, net of federal income tax benefit (as a percent) | 3.20% | 3.40% |
Permanent differences (as a percent) | (4.40%) | (1.20%) |
Change in valuation allowance (as a percent) | (18.70%) | 446.70% |
Change in uncertain tax positions (as a percent) | 0.00% | 0.50% |
Other (as a percent) | (0.30%) | 0.10% |
Effect of U.S. tax rate change | 0.00% | (422.60%) |
Effective income tax rate (as a percent) | 0.80% | 60.90% |
Changes in the uncertain income tax positions | ||
Beginning balance | $ 1 | $ 27 |
Tax positions related to prior years: | ||
Lapses in statutes of limitations | (1) | (26) |
Total | (1) | (26) |
Ending balance | 1 | |
Amount of unrecognized tax benefits that would affect the effective tax rate if the tax benefits were recognized | 0 | |
Penalties and Interest Accrued | $ 0 | $ 0 |
INCOME TAXES - Tax Summary of S
INCOME TAXES - Tax Summary of Stockholder Rights Plan (Details) $ / shares in Units, $ in Thousands | Feb. 13, 2013item$ / sharesshares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Rights Plan | ||||
Annual limitation on net operating losses | $ 14,284 | |||
Unrecognized tax benefits | $ 1 | $ 27 | ||
Unrecognized tax benefits, including accrued interest and penalties | 1 | |||
Accrued interest or penalties related to uncertain tax positions recognized | 0 | $ 1 | ||
Favorable Tax Impact Member | ||||
Rights Plan | ||||
Unrecognized tax benefits, including accrued interest and penalties | $ 0 | |||
Series A Junior Participating Preferred Stock | ||||
Rights Plan | ||||
Number of rights for each outstanding share of common stock | item | 1 | |||
Number of preferred share purchase rights for each outstanding share of the company's common stock | shares | 0.001 | |||
Exercise price (in dollars per right) | $ / shares | $ 4.25 | |||
Series A Junior Participating Preferred Stock | Minimum | ||||
Rights Plan | ||||
Threshold percentage of beneficial ownership for significant dilution of ownership interest | 4.90% | |||
Current beneficial ownership percentage that will not trigger the preferred share purchase rights unless they acquire additional shares | 4.90% | |||
Series A Junior Participating Preferred Stock | Maximum | ||||
Rights Plan | ||||
Beneficial ownership percentage of any person or group, together with its affiliates and associates | 4.90% |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
2007 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares of common stock reserved for grants | 691,051 | |
Common stock issued under share-based compensation plan | 253,659 | |
2012 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares of common stock reserved for grants | 1,200,000 | |
Common stock issued under share-based compensation plan | 635,089 | |
2015 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares of common stock reserved for grants | 1,100,000 | |
Common stock issued under share-based compensation plan | 343,429 | |
Stock Options | ||
SHARE-BASED COMPENSATION | ||
Expiration term | 10 years | |
Summary of the stock option activity | ||
Outstanding at the beginning of the period (in shares) | 67,188 | |
Granted (in shares) | 0 | |
Expired (in shares) | (10,326) | |
Outstanding at the end of the period (in shares) | 56,862 | 67,188 |
Exercisable (in shares) | 56,862 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 24.65 | |
Expired (in dollars per share) | 77.47 | |
Outstanding at the end of the period (in dollars per share) | 15.06 | $ 24.65 |
Exercisable (in dollars per share) | $ 15.06 | |
Weighted Average Remaining Contractual Term | ||
Outstanding at the end of the period | 2 years 8 months 19 days | 3 years 4 months 21 days |
Exercisable | 2 years 8 months 19 days | |
Stock Options | 2007 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares reserved | 22,733 | |
Stock Options | 2012 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares reserved | 34,129 | |
Stock Options | Minimum | ||
SHARE-BASED COMPENSATION | ||
Vesting term | 1 year | |
Stock Options | Maximum | ||
SHARE-BASED COMPENSATION | ||
Vesting term | 5 years | |
RSU | ||
Summary of the stock option activity | ||
Outstanding at the beginning of the period (in shares) | 512,142 | |
Outstanding at the end of the period (in shares) | 512,142 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 4.57 | |
Outstanding at the end of the period (in dollars per share) | $ 4.57 | |
RSU | 2007 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares reserved | 0 | |
RSU | 2015 EIP | ||
SHARE-BASED COMPENSATION | ||
Number of shares reserved | 805,844 | |
RSU | Minimum | ||
SHARE-BASED COMPENSATION | ||
Vesting term | 1 year | |
RSU | Maximum | ||
SHARE-BASED COMPENSATION | ||
Vesting term | 5 years |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Options Exercise Price Range, Outstanding and Exercisable (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Options Outstanding | |
Number of options outstanding (in shares) | shares | 56,862 |
Weighted Average Exercise Price (in dollars per share) | $ 15.06 |
Weighted Average Remaining Contractual Term | 2 years 8 months 19 days |
Options Exercisable | |
Number Exercisable (in shares) | shares | 56,862 |
Weighted Average Exercise Price (in dollars per share) | $ 15.06 |
$3.39-$13.50 | |
Outstanding and exercisable stock options under the EIP | |
Exercise price, low end of range (in dollars per share) | 3.39 |
Exercise price, high end of range (in dollars per share) | $ 13.50 |
Options Outstanding | |
Number of options outstanding (in shares) | shares | 49,039 |
Weighted Average Exercise Price (in dollars per share) | $ 6.47 |
Weighted Average Remaining Contractual Term | 2 years 11 months 27 days |
Options Exercisable | |
Number Exercisable (in shares) | shares | 49,039 |
Weighted Average Exercise Price (in dollars per share) | $ 6.47 |
$54.40-$99.90 | |
Outstanding and exercisable stock options under the EIP | |
Exercise price, low end of range (in dollars per share) | 54.40 |
Exercise price, high end of range (in dollars per share) | $ 99.90 |
Options Outstanding | |
Number of options outstanding (in shares) | shares | 7,823 |
Weighted Average Exercise Price (in dollars per share) | $ 68.94 |
Weighted Average Remaining Contractual Term | 11 months 27 days |
Options Exercisable | |
Number Exercisable (in shares) | shares | 7,823 |
Weighted Average Exercise Price (in dollars per share) | $ 68.94 |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Restricted Stock Units (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options | ||
Weighted Average Grant-Date Fair Value Per Share | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | |
Forfeiture rate (as percent) | 25.00% | 25.00% |
RSU | ||
Summary of the restricted stock unit activity | ||
Granted (in shares) | 565,964 | |
Vested (in shares) | (202,713) | |
Forfeited (in shares) | (69,549) | |
Unvested at the end of the period (in shares) | 805,844 | |
Weighted Average Grant-Date Fair Value Per Share | ||
Granted (in dollars per share) | $ 2.42 | |
Vested (in dollars per share) | 4.41 | |
Forfeited (in dollars per share) | 3.85 | |
Unvested at the end of the period (in dollars per share) | $ 3.16 |
SHARE-BASED COMPENSATION - Su_2
SHARE-BASED COMPENSATION - Summary of Share-Based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Summary of share-based compensation expense | |||
Benefit for income taxes | $ (205) | $ (5,045) | |
Net effect of share-based compensation expense on net loss | [1] | $ 803 | $ 813 |
Basic earnings per share | $ 0.05 | $ 0.05 | |
Diluted earnings per share | $ 0.05 | $ 0.05 | |
Pre-tax compensation expense for all unvested share-based awards | $ 1,132 | ||
Cost of sales | |||
Summary of share-based compensation expense | |||
Share-based compensation expense | 99 | $ 101 | |
Selling, general and administrative | |||
Summary of share-based compensation expense | |||
Share-based compensation expense | $ 704 | $ 712 | |
[1] | Income tax benefit is not illustrated because the Company is currently in a full tax valuation allowance position and an actual income tax benefit was not realized for the years ended December 31, 2018 and 2017. The result of the income (loss) situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance. |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2018USD ($)MW | Dec. 31, 2018USD ($)facility | Dec. 31, 2018USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
SEGMENT REPORTING | ||||||||||||||
Number of reportable segments | segment | 3 | |||||||||||||
Revenues from external customers | $ 125,380 | $ 146,785 | ||||||||||||
Net revenues | $ 27,187 | $ 31,445 | $ 36,781 | $ 29,967 | $ 17,768 | $ 29,595 | $ 43,362 | $ 56,060 | 125,380 | 146,785 | ||||
Operating (loss) profit | (12,181) | $ (2,612) | $ (5,736) | $ (4,537) | (6,689) | $ (1,831) | $ (516) | $ 1,603 | (25,066) | (7,433) | ||||
Depreciation and amortization | 9,183 | 8,999 | ||||||||||||
Capital expenditures | 2,324 | 6,688 | ||||||||||||
Assets held for sale | 580 | 580 | ||||||||||||
Total Assets | 99,165 | 112,350 | $ 99,165 | $ 99,165 | $ 99,165 | $ 99,165 | 99,165 | 112,350 | ||||||
Eliminations | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Intersegment revenues | (130) | |||||||||||||
Net revenues | (130) | |||||||||||||
Total Assets | (228,327) | (229,412) | (228,327) | (228,327) | $ (228,327) | $ (228,327) | (228,327) | (229,412) | ||||||
Towers and Heavy Fabrications | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Number of facilities | facility | 2 | |||||||||||||
Number of tower sections | 1,650 | 1,650 | ||||||||||||
Revenues from external customers | 68,773 | 103,389 | ||||||||||||
Intersegment revenues | 42 | |||||||||||||
Net revenues | 68,815 | |||||||||||||
Operating (loss) profit | (4,346) | 2,667 | ||||||||||||
Depreciation and amortization | 4,986 | 4,638 | ||||||||||||
Capital expenditures | 1,441 | 5,355 | ||||||||||||
Total Assets | 32,866 | 27,958 | 32,866 | $ 32,866 | $ 32,866 | $ 32,866 | 32,866 | 27,958 | ||||||
Towers and Heavy Fabrications | Minimum | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Power generating capacity of turbines that towers produced annually can support (in megawatts) | MW | 1,100 | |||||||||||||
Towers and Heavy Fabrications | Maximum | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Annual tower production capacity (in towers) | item | 550 | |||||||||||||
Gearing | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Revenues from external customers | 38,376 | 26,006 | ||||||||||||
Net revenues | 38,376 | |||||||||||||
Operating (loss) profit | 51 | (2,632) | ||||||||||||
Depreciation and amortization | 2,255 | 2,430 | ||||||||||||
Capital expenditures | 706 | 726 | ||||||||||||
Assets held for sale | 560 | 560 | ||||||||||||
Total Assets | 37,028 | 38,016 | 37,028 | $ 37,028 | 37,028 | $ 37,028 | 37,028 | 38,016 | ||||||
Process Systems | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Revenues from external customers | 18,231 | 17,390 | ||||||||||||
Intersegment revenues | 88 | |||||||||||||
Net revenues | 18,319 | 17,390 | ||||||||||||
Operating (loss) profit | (16,442) | (2,269) | ||||||||||||
Depreciation and amortization | 1,709 | 1,706 | ||||||||||||
Capital expenditures | 31 | 426 | ||||||||||||
Total Assets | 13,731 | 26,442 | 13,731 | 13,731 | 13,731 | 13,731 | 13,731 | 26,442 | ||||||
Corporate | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Operating (loss) profit | (4,329) | (5,199) | ||||||||||||
Depreciation and amortization | 233 | 225 | ||||||||||||
Capital expenditures | 146 | 181 | ||||||||||||
Assets held for sale | 20 | 20 | ||||||||||||
Total Assets | $ 243,867 | $ 249,346 | $ 243,867 | $ 243,867 | $ 243,867 | $ 243,867 | $ 243,867 | $ 249,346 |
SEGMENT REPORTING - Summary of
SEGMENT REPORTING - Summary of Major Customers (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)customer | Dec. 31, 2017USD ($)customer | |
SEGMENT REPORTING | ||||||||||
Revenues from external customers | $ 27,187 | $ 31,445 | $ 36,781 | $ 29,967 | $ 17,768 | $ 29,595 | $ 43,362 | $ 56,060 | $ 125,380 | $ 146,785 |
Towers and Heavy Fabrications | ||||||||||
SEGMENT REPORTING | ||||||||||
Revenues from external customers | $ 68,815 | |||||||||
Two customers | Customer concentration | Revenues | ||||||||||
SEGMENT REPORTING | ||||||||||
Number of major customers | customer | 2 | |||||||||
Two customers | Customer concentration | Revenues | Minimum | ||||||||||
SEGMENT REPORTING | ||||||||||
Concentration risk (as a percent) | 10.00% | |||||||||
Two customers | Customer concentration | Revenues | Towers and Heavy Fabrications | ||||||||||
SEGMENT REPORTING | ||||||||||
Revenues from external customers | $ 72,851 | |||||||||
Customer One | Customer concentration | Revenues | ||||||||||
SEGMENT REPORTING | ||||||||||
Number of major customers | customer | 1 | |||||||||
Customer One | Customer concentration | Revenues | Minimum | ||||||||||
SEGMENT REPORTING | ||||||||||
Concentration risk (as a percent) | 10.00% | |||||||||
Customer One | Customer concentration | Revenues | Towers and Heavy Fabrications | ||||||||||
SEGMENT REPORTING | ||||||||||
Revenues from external customers | $ 100,413 | |||||||||
Five customers | Customer concentration | Revenues | ||||||||||
SEGMENT REPORTING | ||||||||||
Number of major customers | customer | 5 | 5 | ||||||||
Concentration risk (as a percent) | 78.00% | 85.00% |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Deferred Compensation Arrangements [Abstract] | ||
Deferred Compensation Arrangement with Individual, Compensation Expense | $ (13) | $ (12) |
Deferred Compensation Arrangement with Individual, Recorded Liability | 12 | 24 |
Contribution expense | $ 812 | $ 765 |
Defined Contribution 401K Safe Harbor Plan [Member] | ||
Deferred Compensation Arrangements [Abstract] | ||
Matching contribution of first 3% of eligible employees' contributions (as a percent) | 100.00% | |
Employer match of employee contributions as first eligible compensation (as a percent) | 3.00% | |
Matching contribution of first 2% of eligible employees' contributions (as a percent) | 50.00% | |
Employer match of employee contributions as next eligible compensation (as a percent) | 2.00% | |
Elective deferrals and basic matching contribution vested (as a percent) | 100.00% | |
Collective Bargaining Arrangement [Member] | ||
Deferred Compensation Arrangements [Abstract] | ||
Number of union locations where discretionary match continued | item | 2 | |
Collective Bargaining Arrangement [Member] | Illinois | ||
Deferred Compensation Arrangements [Abstract] | ||
Matching contribution of first 4% of eligible employees' contributions (as a percent) | 50.00% | |
Percentage of eligible employees' contributions matched by the company | 4.00% | |
Collective Bargaining Arrangement [Member] | Pennsylvania | ||
Deferred Compensation Arrangements [Abstract] | ||
Matching contribution of first 3% of eligible employees' contributions (as a percent) | 100.00% | |
Employer match of employee contributions as first eligible compensation (as a percent) | 3.00% | |
Matching contribution of first 2% of eligible employees' contributions (as a percent) | 50.00% | |
Employer match of employee contributions as next eligible compensation (as a percent) | 2.00% |
NEW MARKETS TAX CREDIT TRANSA_2
NEW MARKETS TAX CREDIT TRANSACTION (Details) $ in Thousands | Jul. 20, 2011USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) |
New Markets Tax Credit Transaction | ||||
Extinguishment gain | $ 2,249 | |||
New Markets Tax Credit Transaction | ||||
New Markets Tax Credit Transaction | ||||
Proceeds from transaction | $ 2,280 | |||
Gross loan in the principal amount from the Company to COCRF Investor VIII, LLC | $ 7,720 | |||
Receivable term | 15 years | |||
Interest rate on loan (as a percent) | 2.50% | |||
Maximum percentage of a qualified investment available as credit against federal income taxes | 39.00% | |||
Potential tax credit that can be generated under the NMTC transaction | $ 3,900 | |||
Period which facility must operate and be in compliance | 7 years | 7 years | ||
Percentage of recapture to which the tax credits are subject | 100.00% | |||
Loan origination payment | $ 320 | |||
Company's obligation if Capital One exercises its option to put its investment | $ 130 | $ 130 | ||
Number of pass-through financing entities created under the structure that are deemed variable interest entities | item | 2 | |||
Issue costs paid to third parties recorded as prepaid expenses | 262 | |||
Amortization period for prepaid expenses for the NMTC arrangement | 7 years | |||
NMTC note payable | $ 2,600 | $ 2,600 | ||
Extinguishment gain | $ 2,249 | |||
Broadwind Services, LLC | New Markets Tax Credit Transaction | ||||
New Markets Tax Credit Transaction | ||||
Principal amount | $ 10,000 | |||
Debt instrument maturity term (in years) | 15 years | |||
Interest rate (as a percent) | 1.40% |
QUARTERLY FINANCIAL SUMMARY (_3
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
QUARTERLY FINANCIAL SUMMARY (UNAUDITED) | ||||||||||
Revenues | $ 27,187 | $ 31,445 | $ 36,781 | $ 29,967 | $ 17,768 | $ 29,595 | $ 43,362 | $ 56,060 | $ 125,380 | $ 146,785 |
Gross profit (loss) | (512) | 1,486 | 2,223 | (132) | (3,101) | 1,014 | 3,872 | 6,374 | 3,065 | 8,159 |
Operating (loss) profit | (12,181) | (2,612) | (5,736) | (4,537) | (6,689) | (1,831) | (516) | 1,603 | (25,066) | (7,433) |
(Loss) income from continuing operations, net of tax | (12,358) | (750) | (6,083) | (4,811) | (6,928) | (2,049) | (688) | 6,482 | (24,002) | (3,183) |
Net (loss) income | $ (12,409) | $ (783) | $ (6,116) | $ (4,838) | $ (6,981) | $ (2,207) | $ (780) | $ 6,327 | $ (24,146) | $ (3,641) |
(Loss) income from continuing operations per share: | ||||||||||
Basic | $ (0.79) | $ (0.05) | $ (0.40) | $ (0.32) | $ (0.45) | $ (0.14) | $ (0.05) | $ 0.43 | $ (1.55) | $ (0.21) |
Diluted | (0.79) | (0.05) | (0.40) | (0.32) | (0.45) | (0.14) | (0.05) | 0.43 | (1.55) | (0.21) |
Net (loss) income per share: | ||||||||||
Basic | (0.79) | (0.05) | (0.40) | (0.32) | (0.46) | (0.15) | (0.05) | 0.42 | (1.56) | (0.24) |
Diluted | $ (0.79) | $ (0.05) | $ (0.40) | $ (0.32) | $ (0.46) | $ (0.15) | $ (0.05) | $ 0.42 | $ (1.56) | $ (0.24) |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Feb. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | Sep. 30, 2017 | Mar. 31, 2017 |
Business Acquisition [Line Items] | |||||||
Cash paid in acquisition | $ 16,449 | ||||||
Fair value of the contingent consideration | $ 2,534 | 2,534 | |||||
Assets acquired and liabilities assumed: | |||||||
Goodwill | 4,993 | $ 4,993 | $ 4,993 | ||||
Weighted average amortization period | 6 years 6 months | 8 years 9 months 18 days | |||||
Noncompete agreements | |||||||
Assets acquired and liabilities assumed: | |||||||
Weighted average amortization period | 4 years 1 month 6 days | 5 years 1 month 6 days | |||||
Customer relationships | |||||||
Assets acquired and liabilities assumed: | |||||||
Weighted average amortization period | 6 years 9 months 18 days | 8 years | |||||
Trade names | |||||||
Assets acquired and liabilities assumed: | |||||||
Weighted average amortization period | 9 years 6 months | 10 years 6 months | |||||
Red Wolf | |||||||
Business Acquisition [Line Items] | |||||||
Cash paid in acquisition | $ 16,449 | ||||||
Fair value of the contingent consideration | 2,534 | ||||||
Consideration recorded in accrued liabilities | $ 1,394 | ||||||
Annual earn out payments | $ 4,950 | ||||||
Consideration recorded in other long term liabilities | $ 1,140 | ||||||
Assets acquired and liabilities assumed: | |||||||
Cash and cash equivalents | $ 63 | ||||||
Adjustments-Cash and cash equivalents | (63) | ||||||
Receivables | 2,700 | $ 2,700 | 2,796 | ||||
Adjustments-Receivables | (96) | ||||||
Inventories | 5,177 | 5,177 | 4,998 | ||||
Adjustments-Inventories | 179 | ||||||
Property and equipment | 462 | 462 | 462 | ||||
Goodwill | 4,993 | $ 4,993 | 4,993 | 5,568 | |||
Adjustments-Goodwill | (575) | ||||||
Accounts payable | (1,352) | (1,352) | (1,354) | ||||
Adjustments-Accounts payable | 2 | ||||||
Accrued expenses | (876) | (876) | (809) | ||||
Adjustments-Accrued expenses | (67) | ||||||
Deferred tax liabilities | (5,391) | (5,391) | (5,391) | ||||
Total purchase price | 18,983 | 18,983 | 19,603 | ||||
Adjustments-Total purchase price | (620) | ||||||
Weighted average amortization period | 9 years 4 months 24 days | ||||||
Transaction and integration costs | 182 | 182 | |||||
Revenue | 15,868 | ||||||
Net loss | 146 | ||||||
Red Wolf | Noncompete agreements | |||||||
Assets acquired and liabilities assumed: | |||||||
Intangible assets, net | 170 | 170 | 170 | ||||
Weighted average amortization period | 6 years | ||||||
Red Wolf | Customer relationships | |||||||
Assets acquired and liabilities assumed: | |||||||
Intangible assets, net | 12,000 | 12,000 | 12,000 | ||||
Weighted average amortization period | 9 years | ||||||
Red Wolf | Trade names | |||||||
Assets acquired and liabilities assumed: | |||||||
Intangible assets, net | $ 1,100 | $ 1,100 | $ 1,100 | ||||
Weighted average amortization period | 14 years | ||||||
Red Wolf | Measurement Input, Discount Rate | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average cost of capital | 15.00% | ||||||
Red Wolf | Measurement Input, Discount Rate | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average cost of capital | 18.50% | ||||||
Red Wolf | Minimum | |||||||
Business Acquisition [Line Items] | |||||||
Fair value of the contingent consideration | 0 | ||||||
Red Wolf | Maximum | |||||||
Business Acquisition [Line Items] | |||||||
Fair value of the contingent consideration | $ 9,900 |
RESTRUCTURING (Details)
RESTRUCTURING (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
RESTRUCTURING | |
Restructuring Charges | $ 631 |
CNG and Abilene Heavy Fabrications | |
RESTRUCTURING | |
Annual cost savings | 575 |
Restructuring Charges | 668 |
CNG and Abilene Heavy Fabrications | Selling, general and administrative | |
RESTRUCTURING | |
Restructuring Charges | 37 |
CNG and Abilene Heavy Fabrications | Facility costs | Cost of sales | |
RESTRUCTURING | |
Restructuring Charges | 249 |
CNG and Abilene Heavy Fabrications | Moving and remediation | Cost of sales | |
RESTRUCTURING | |
Restructuring Charges | 33 |
CNG and Abilene Heavy Fabrications | Salary and severance | Cost of sales | |
RESTRUCTURING | |
Restructuring Charges | 17 |
CNG and Abilene Heavy Fabrications | Salary and severance | Selling, general and administrative | |
RESTRUCTURING | |
Restructuring Charges | 37 |
CNG and Abilene Heavy Fabrications | Depreciation | Cost of sales | |
RESTRUCTURING | |
Restructuring Charges | 332 |
Towers and Heavy Fabrications | Cost of sales | |
RESTRUCTURING | |
Restructuring Charges | $ 631 |