Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 23, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | BROADWIND ENERGY, INC. | |
Entity Central Index Key | 0001120370 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 15,985,705 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 37 | $ 1,177 |
Accounts receivable, net | 22,509 | 17,455 |
Inventories, net | 32,944 | 22,670 |
Prepaid expenses and other current assets | 1,706 | 1,776 |
Total current assets | 57,196 | 43,078 |
LONG-TERM ASSETS: | ||
Property and equipment, net | 48,472 | 49,087 |
Operating lease right-of-use assets | 17,155 | |
Other intangible assets, net | 6,399 | 6,602 |
Other assets | 357 | 398 |
TOTAL ASSETS | 129,579 | 99,165 |
CURRENT LIABILITIES: | ||
Line of credit and other notes payable | 23,199 | 11,930 |
Current portion of finance lease obligations | 894 | 967 |
Current portion of operating lease obligations | 1,726 | |
Accounts payable | 20,091 | 11,618 |
Accrued liabilities | 4,127 | 3,806 |
Customer deposits | 17,755 | 23,507 |
Current liabilities held for sale | 26 | 27 |
Total current liabilities | 67,818 | 51,855 |
LONG-TERM LIABILITIES: | ||
Long-term debt, net of current maturities | 1,185 | 1,408 |
Long-term finance lease obligations, net of current portion | 408 | 571 |
Long-term operating lease obligations, net of current portion | 17,341 | |
Other | 65 | 1,969 |
Total long-term liabilities | 18,999 | 3,948 |
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; 16,259,642 and 15,982,622 shares issued as of March 31, 2019, and December 31, 2018, respectively | 16 | 16 |
Treasury stock, at cost, 273,937 shares as of March 31, 2019 and December 31, 2018 | (1,842) | (1,842) |
Additional paid-in capital | 381,883 | 381,441 |
Accumulated deficit | (337,295) | (336,253) |
Total stockholders’ equity | 42,762 | 43,362 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 129,579 | $ 99,165 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
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 | 16,259,642 | 15,982,622 |
Treasury stock, common shares | 273,937 | 273,937 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenues | $ 41,660 | $ 29,967 |
Cost of sales | 38,111 | 29,984 |
Restructuring | 12 | 115 |
Gross profit | 3,537 | (132) |
OPERATING EXPENSES: | ||
Selling, general and administrative | 3,828 | 3,898 |
Intangible amortization | 203 | 471 |
Restructuring | 36 | |
Total operating expenses | 4,031 | 4,405 |
Operating loss | (494) | (4,537) |
OTHER (EXPENSE) INCOME, net: | ||
Interest expense, net | (536) | (298) |
Other, net | (2) | (3) |
Total other income (expense), net | (538) | (301) |
Net loss before provision (benefit) for income taxes | (1,032) | (4,838) |
Provision (benefit) for income taxes | 11 | (27) |
LOSS FROM CONTINUING OPERATIONS | (1,043) | (4,811) |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | 1 | (27) |
NET LOSS | $ (1,042) | $ (4,838) |
NET LOSS PER COMMON SHARE—BASIC: | ||
Loss from continuing operations (in dollars per share) | $ (0.07) | $ (0.32) |
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 |
Net loss (in dollars per share) | $ (0.07) | $ (0.32) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC (in shares) | 15,785,954 | 15,257,234 |
NET LOSS PER COMMON SHARE—DILUTED: | ||
Loss from continuing operations (in dollars per share) | $ (0.07) | $ (0.32) |
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 |
Net loss (in dollars per share) | $ (0.07) | $ (0.32) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED (in shares) | 15,785,954 | 15,257,234 |
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, 2017 | $ 15 | $ (1,842) | $ 380,005 | $ (312,107) | $ 66,071 |
Balance (in shares) at Dec. 31, 2017 | 15,480,299 | (273,937) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Stock issued for restricted stock | $ 1 | 1 | |||
Stock issued for restricted stock (in shares) | 96,534 | ||||
Stock issued under defined contribution 401(k) retirement savings plan | 167 | 167 | |||
Stock issued under defined contribution 401(k) retirement savings plan (in shares) | 74,123 | ||||
Share-based compensation | 262 | 262 | |||
Net loss | (4,838) | (4,838) | |||
Balance at Mar. 31, 2018 | $ 16 | $ (1,842) | 380,434 | (316,945) | 61,663 |
Balance (in shares) at Mar. 31, 2018 | 15,650,956 | (273,937) | |||
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) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Sale of common stock, net of expenses (shares) | 15,112 | ||||
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 | ||
Increase (Decrease) in Stockholders' Equity | |||||
Stock issued for restricted stock (in shares) | 141,384 | ||||
Stock issued under defined contribution 401(k) retirement savings plan | 187 | $ 187 | |||
Stock issued under defined contribution 401(k) retirement savings plan (in shares) | 135,636 | ||||
Share-based compensation | 255 | 255 | |||
Net loss | (1,042) | (1,042) | |||
Balance at Mar. 31, 2019 | $ 16 | $ (1,842) | $ 381,883 | $ (337,295) | $ 42,762 |
Balance (in shares) at Mar. 31, 2019 | 16,259,642 | (273,937) | 16,259,642 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,042) | $ (4,838) |
Income (loss) from discontinued operations | 1 | (27) |
Loss from continuing operations | (1,043) | (4,811) |
Adjustments to reconcile net cash used in operating activities: | ||
Depreciation and amortization expense | 1,761 | 2,357 |
Deferred income taxes | (9) | (27) |
Stock-based compensation | 255 | 262 |
Allowance for doubtful accounts | (14) | (15) |
Common stock issued under defined contribution 401(k) plan | 187 | 167 |
Gain on disposal of assets | (1) | |
Changes in operating assets and liabilities, net of acquisition: | ||
Accounts receivable | (5,040) | (2,266) |
Inventories | (10,274) | (2,577) |
Prepaid expenses and other current assets | 70 | 21 |
Accounts payable | 8,132 | 2,956 |
Accrued liabilities | 321 | 1,653 |
Customer deposits | (5,752) | 197 |
Other non-current assets and liabilities | 57 | (1,210) |
Net cash used in operating activities of continuing operations | (11,350) | (3,293) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (577) | (229) |
Proceeds from disposals of property and equipment | 1 | |
Net cash used in investing activities of continuing operations | (576) | (229) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit | 42,440 | 32,886 |
Payments on line of credit | (31,191) | (29,202) |
Payments on long-term debt | (228) | |
Principal payments on finance leases | (236) | (187) |
Net cash provided by financing activities of continuing operations | 10,785 | 3,497 |
DISCONTINUED OPERATIONS: | ||
Operating cash flows | 1 | (27) |
Net cash provided by (used in) discontinued operations | 1 | (27) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,140) | (52) |
CASH AND CASH EQUIVALENTS beginning of the period | 1,177 | 78 |
CASH AND CASH EQUIVALENTS end of the period | 37 | 26 |
Supplemental cash flow information: | ||
Interest paid | 274 | 233 |
Non-cash activities: | ||
Issuance of restricted stock grants | $ 255 | $ 262 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2019 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 — BASIS OF PRESENTATION The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind Energy, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Towers, Inc. (“Broadwind Towers”), Brad Foote Gear Works, Inc. (“Brad Foote”), and Red Wolf Company, LLC (“Red Wolf”). All intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2019. The December 31, 2018 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. During the first quarter of 2019, the Company assessed its segment reporting by evaluating various qualitative and quantitative measures for each business and product line. Following the execution of the Company’s 2018 restructuring plan and the resulting exit of the leased Abilene facility at the end of 2018, the Company revised its segment presentation by moving its Abilene compressed natural gas and heavy fabrication business from the Process Systems segment to the Towers and Heavy Fabrications segment. The Company made this determination because, post-restructuring, the residual heavy fabrications business activities previously carried out in the now vacated space were transferred to the nearby tower plant under the supervision of Towers and Heavy Fabrications segment management. The Company has restated prior periods presented to reflect this change. See Note 14, “Segment Reporting” of these condensed consolidated financial statements for further discussion of reportable segments. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2019 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, other than the adoption of Accounting Standards Updates (“ASU”) 2016-02 described in Note 8 “Leases” of these condensed consolidated financial statements. Company Description Through its subsidiaries, 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, which accounted for 64% of the Company’s revenue during the first three months of 2019. The Company has increasingly diversified its operations to provide precision gearing and gearboxes, heavy fabrications, kitting and assemblies of industrial systems to a broad range of industrial customers for oil and gas (“O&G”), mining, steel, and other industrial applications. Please refer to Note 16, “Restructuring” of these condensed consolidated financial statements for the discussion of the restructuring plan which the Company initiated in the first quarter of 2018. The Company has incurred a total of approximately $12 and $151 of net costs in the first three months of 2019 and 2018, respectively, to implement this restructuring plan. Liquidity The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, the Credit Facility (as defined below), additional equipment financing, and access to the public or private debt equity markets, including the option to raise capital under the Company’s Form S-3 (as discussed below). See Note 7, “Debt and Credit Agreements” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt. Total debt and finance lease obligations at March 31, 2019 totaled $25,686, which includes current outstanding debt and finance leases totaling $24,093. The current outstanding debt includes $22,249 outstanding under the Company’s revolving line of credit. On August 11, 2017, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 10, 2017 (the “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 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 March 31, 2019, 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, and any potential proceeds from the sale of further Company securities under the 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 certain 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. 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, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. 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, there can be no assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations. Management’s Use of Estimates The preparation of financial statements in conformity with 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, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, workers’ compensation reserves, and health insurance 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. |
REVENUES
REVENUES | 3 Months Ended |
Mar. 31, 2019 | |
REVENUES | |
REVENUES | NOTE 2 — REVENUES 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 the three months ended March 31, 2019 and 2018: For the Three Ended March 31, 2019 2018 Towers and Heavy Fabrications $ 28,294 $ 18,196 Gearing 10,027 8,805 Process Systems 3,339 2,966 Consolidated $ 41,660 $ 29,967 Revenue within the Company’s Gearing and Process Systems segments, as well as heavy fabrication revenues within the Towers and Heavy Fabrications segment, 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 agreement, the ordered goods are identified separately as belonging to the customer 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. 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 | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 3 — EARNINGS PER SHARE The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2019 and 2018, as follows: Three Months Ended March 31, 2019 2018 Basic earnings per share calculation: Net loss $ (1,042) $ (4,838) Weighted average number of common shares outstanding 15,785,954 15,257,234 Basic net loss per share $ (0.07) $ (0.32) Diluted earnings per share calculation: Net loss $ (1,042) $ (4,838) Weighted average number of common shares outstanding 15,785,954 15,257,234 Common stock equivalents: Stock options and non-vested stock awards (1) — — Weighted average number of common shares outstanding 15,785,954 15,257,234 Diluted net loss per share $ (0.07) $ (0.32) (1) Stock options and restricted stock units granted and outstanding of 683,019 and 893,004 are excluded from the computation of diluted earnings for the three months ended March 31, 2019 and 2018 due to the anti dilutive effect as a result of the Company’s net loss for those respective periods. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES | |
INVENTORIES | NOTE 4 — INVENTORIES The components of inventories as of March 31, 2019 and December 31, 2018 are summarized as follows: March 31, December 31, 2019 2018 Raw materials $ 25,385 $ 16,394 Work-in-process 6,437 5,426 Finished goods 2,793 2,958 34,615 24,778 Less: Reserve for excess and obsolete inventory (1,671) (2,108) Net inventories $ 32,944 $ 22,670 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 5 — GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill represents the excess of the purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities. Goodwill is not amortized but is tested at least annually for impairment or more frequently whenever events or circumstances occur indicating that those assets might be impaired. 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 in 2017. Other intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 4 to 9 years. The Company tests other intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. The Company added $4,993 of goodwill and $13,270 of other intangible assets, as a result of the Red Wolf acquisition, which was included in the Process Systems segment. See Note 14, “Segment Reporting” of these condensed consolidated financial statements for further discussion of the Company’s segments. During the second quarter of 2018, the Company determined that the carrying amount of the Red Wolf reporting unit exceeded the fair value and recorded a $4,993 goodwill impairment charge. In addition, during the fourth quarter of 2018, the Company determined that its customer relationship intangible asset was impaired, and recorded a corresponding $7,592 impairment charge. During the first quarter of 2019, the Company also identified a further triggering event associated with Red Wolf’s recent operating losses. The Company relied upon an undiscounted cash flow analysis performed in the prior quarter and determined that no significant changes to the previously used inputs or assumptions were needed. As a result, the Company concluded that no impairment to this asset group was indicated as of March 31, 2019. As of March 31, 2019 and December 31, 2018, the cost basis, accumulated amortization and net book value of intangible assets were as follows: March 31, 2019 December 31, 2018 Remaining Remaining Weighted Weighted Accumulated Net Average Accumulated Net Average Cost Accumulated Impairment Book Amortization Accumulated Impairment Book Amortization Basis Amortization Charges Value Period Cost Amortization Charges Value Period Goodwill and other intangible assets: Goodwill $ 4,993 — (4,993) $ — $ 4,993 $ — (4,993) $ - Noncompete agreements 170 (62) — 108 3.8 (54) — 116 Customer relationships 15,979 (6,445) (7,592) 1,942 6.6 15,979 (6,369) (7,592) 2,018 6.8 Trade names 9,099 (4,750) — 4,349 9.3 9,099 (4,631) — 4,468 9.5 Other intangible assets $ 25,248 $ (11,257) $ (7,592) $ 6,399 6.3 $ 25,248 $ (11,054) $ (7,592) $ 6,602 6.5 As of March 31, 2019, estimated future amortization expense is as follows: 2019 $ 602 2020 803 2021 803 2022 803 2023 777 2024 and thereafter 2,611 Total $ 6,399 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2019 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | NOTE 6 — ACCRUED LIABILITIES Accrued liabilities as of March 31, 2019 and December 31, 2018 consisted of the following: March 31, December 31, 2019 2018 Accrued payroll and benefits $ 2,593 $ 2,126 Accrued property taxes 158 — Income taxes payable 86 66 Accrued professional fees 102 101 Accrued warranty liability 218 226 Accrued self-insurance reserve 292 374 Accrued other 678 913 Total accrued liabilities $ 4,127 $ 3,806 |
DEBT AND CREDIT AGREEMENTS
DEBT AND CREDIT AGREEMENTS | 3 Months Ended |
Mar. 31, 2019 | |
DEBT AND CREDIT AGREEMENTS | |
DEBT AND CREDIT AGREEMENTS | NOTE 7 — DEBT AND CREDIT AGREEMENTS The Company’s outstanding debt balances as of March 31, 2019 and December 31, 2018 consisted of the following: March 31, December 31, 2019 2018 Line of credit $ 22,249 $ 11,000 Other notes payable 1,679 1,882 Long-term debt 456 456 Less: Current portion (23,199) (11,930) Long-term debt, net of current maturities $ 1,185 $ 1,408 Credit Facility On October 26, 2016, the Company established a $20,000 three-year secured revolving line of credit with CIBC Bank USA (“CIBC”), formerly known as The PrivateBank and Trust Company. On February 25, 2019, the line of credit was expanded and extended for three years. At that time, the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto (the “Lenders”), providing the Company and its subsidiaries with a $35,000 secured credit facility (the “Credit Facility”). 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 and Pittsburgh, Pennsylvania gearing facilities. The Credit Facility is a three-year asset-based revolving credit facility, pursuant to which the Lenders advance funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50% of the lower of cost or market value of eligible inventory of the Company, (ii) 85% of the orderly liquidation value of eligible inventory and (iii) $12.5 million, plus (c) the lesser of (i) the sum of (A) 75% of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50% of the fair market value of the Company’s mortgaged property and (ii) $12 million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the Amended and Restated Loan Agreement is $35 million with a sublimit for letters of credit of $10 million. Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one, two or three-month LIBOR rate or the base rate, plus a margin. The applicable margin is 5.50% for LIBOR rate loans and 3.50% for base rates loans. Upon certain pay downs, a pricing grid based on the Company’s trailing twelve month fixed charge coverage ratio may become effective under which applicable margins would range from 2.25% to 2.75% for LIBOR rate loans and 0.00% to 0.75% for base rate loans. Letter of credit fees are payable on outstanding letters of credit in an amount equal to the applicable LIBOR margin under the pricing grid, plus other customary fees. The Company must also pay an unused facility fee equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees. The initial term of the Amended and Restated Loan Agreement ends on February 25, 2022. The Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans. The Amended and Restated Loan Agreement contains customary representations and warranties applicable to the Company and the subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain minimum quarterly earnings before interest, taxes, depreciation, amortization, share-based payments, restructuring costs, and intangible impairments (“EBITDA”) levels through September 30, 2019 and a minimum quarterly fixed charge coverage ratio thereafter, along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. These restrictive covenants include limitations on the ability of the Company and the subsidiaries to, among other things, form or acquire subsidiaries, incur indebtedness, create liens, enter into a merger, consolidation, reorganization or recapitalization, dispose of assets, pay dividends, cause or permit a change of control, make investments or enter into affiliate transactions. We were in compliance with all covenants as of March 31, 2019. As of March 31, 2019, there was $22,249 of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional $7,528 under the Credit Facility. Other On July 20, 2011, the Company executed a New Markets Tax Credit (“NMTC”) transaction with Capital One as a counter-party. Under the NMTC structure, taxpayers are permitted to claim credits against their federal income taxes for qualified investments in the equity of community development entities. The NMTC transaction generated up to $3,900 in tax credits, which the Company made available under the structure by passing them through to Capital One. The Company used the $2,600 proceeds received from Capital One to fund capital investments and associated operating costs for its manufacturing plant in Abilene, Texas. The loan was extinguished during the third quarter of 2018 and the Company recorded a gain of $2,249 in other income, net of transaction expenses. 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 $1,679 and $1,882 as of March 31, 2019 and December 31, 2018, respectively, with $950 and $930 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, 2019 and December 31, 2018, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 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 August 2022. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
LEASES | |
LEASES | NOTE 8 — LEASES The Company leases certain facilities and equipment. On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) and ASU 2018-11 using the cumulative effect method and has elected to apply each available practical expedient. The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842 while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under legacy accounting. ASU 2018-11 also allows an exception so that companies do not have to make the new required lease disclosures for periods before the effective date. The Company has elected to apply the short-term lease exception to all leases of one year or less. The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of ASC 842 and was offset against the ROU asset balance during the adoption. As of March 31, 2019, the ROU asset had a balance of $17,155 which is included in the “Operating lease right-of-use asset” line item of these condensed consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $1,726 and $17,341, respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these condensed consolidated financial statements. The discount rates used for leases accounted for under ASC 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio. Some of the Company’s facility leases include options to renew. The exercise of the renewal options is at the Company’s discretion therefore, the majority of renewals to extend the lease terms are not included in ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and includes them in the lease term when we are reasonably certain to exercise them. Quantitative information regarding the Company’s leases is as follows: Three Months Ended March 31, 2019 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 136 Interest on finance lease liabilities Total finance lease costs 165 Operating lease cost components: Operating lease cost Short-term lease cost Variable lease cost (1) Sublease income (44) Total operating lease costs 1,066 Total lease cost $ 1,231 Supplemental cash flow information related to our operating leases is as follows for the period ended March 31, 2019: Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases Weighted-average remaining lease term-finance leases (in years) Weighted-average remaining lease term-operating leases (in years) Weighted-average discount rate-finance leases Weighted-average discount rate-operating leases (1) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment. As of March 31, 2019, future minimum lease payments under finance leases and operating leases were as follows: Finance Operating Leases Leases Total 2019 $ 793 $ 2,647 $ 3,440 2020 376 2,897 3,273 2021 252 2,760 3,012 2022 — 2,501 2,501 2023 — 2,355 2,355 2024 and thereafter — 18,117 18,117 Total lease payments $ 1,421 $ 31,277 $ 32,698 Less—portion representing interest (119) (12,210) (12,329) Present value of lease obligations 1,302 19,067 20,369 Less—current portion of lease obligations (894) (1,726) (2,620) Long-term portion of lease obligations $ 408 $ 17,341 $ 17,749 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 9 — FAIR VALUE MEASUREMENTS Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, 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. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10 — INCOME TAXES Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of March 31, 2019, the Company has a full valuation allowance recorded against deferred tax assets. During the three months ended March 31, 2019, the Company recorded a provision for income taxes of $11, compared to a benefit for income taxes of $27 during the three months ended March 31, 2018. The Company files income tax returns in U.S. federal and state jurisdictions. As of March 31, 2019, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2018, the Company had net operating loss (“NOL”) carryforwards of $248,717 of which $228,787 will generally begin to expire in 2022. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire. Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, 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 IRC Section 382 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 in 2010 determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of 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 was approved 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, 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 March 31, 2019, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of March 31, 2019. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2019 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | NOTE 11 — SHARE-BASED COMPENSATION Overview of Share-Based Compensation Plans The Company has granted incentive stock options and other equity awards pursuant to previously Board approved Equity Incentive Plans (“2007 and 2012 EIPs”). Most recently, the Company has granted equity awards pursuant to the Broadwind Energy, Inc. 2015 Equity Incentive Plan, which was approved by the Board in February 2015 and by the Company’s stockholders in April 2015. On February 8, 2019, the Board approved an Amended and Restated 2015 Equity Incentive Plan (the “2015 EIP,” and together with the 2007 and 2012 EIPs, the “Equity Incentive Plans”), which, among other things, increased the number of shares of our common stock authorized for issuance under the plan from 1,100,000 to 2,200,000. The 2015 EIP was approved by the Company’s stockholders at the 2019 Annual Meeting of Stockholders. The purposes of the Equity Incentive Plans are to (a) align the interests of the Company’s stockholders and recipients of awards by increasing the proprietary interest of such recipients in the Company’s growth and success; (b) advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors; and (c) 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 restricted stock units (“RSUs”); and (v) performance awards (“PSUs”). 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 contain a vesting period of 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. Vesting of PSUs is conditioned upon the Company meeting applicable performance measures over the performance period. 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. The Equity Incentive Plans reserve 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. The 2007 and 2012 EIPs reserved 1,891,051 shares of the Company’s common stock. As of March 31, 2019, the Company had reserved 56,862 shares for issuance upon the exercise of stock options outstanding and 888,748 shares of common stock reserved for stock options and RSU awards under the 2007 and 2012 EIPs had been issued in the form of common stock. The 2015 EIP reserves 2,200,000 shares of the Company’s common stock. As of March 31, 2019, the Company had reserved 626,157 shares for issuance upon the vesting of RSU awards outstanding under the 2015 EIP. As of March 31, 2019, 484,813 shares of common stock reserved for RSU awards under the 2015 EIP had been issued in the form of common stock. The following table summarizes stock option activity during the three months ended March 31, 2019 under the Equity Incentive Plans, as follows: Weighted Average Options Exercise Price Outstanding as of December 31, 2018 56,862 $ 15.06 Expired — $ — Outstanding as of March 31, 2019 56,862 $ 15.06 Exercisable as of March 31, 2019 56,862 $ 15.06 The following table summarizes RSU’s and PSU’s activity during the three months ended March 31, 2019 under the Equity Incentive Plans, as follows: Weighted Average Grant-Date Fair Value Number of Shares Per Share Unvested as of December 31, 2018 805,844 $ 3.16 Vested (179,687) $ 2.97 Unvested as of March 31, 2019 626,157 $ 3.22 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 expected volatility of the price of the Company’s stock over the expected life of the awards and actual and projected stock option exercise behavior. No stock options were granted during the three months ended March 31, 2019 and 2018. The Company utilized a forfeiture rate of 25% during the three months ended March 31, 2019 and 2018 for estimating the forfeitures of equity compensation granted. The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2019 and 2018, as follows: Three Months Ended March 31, 2019 2018 Share-based compensation expense: Cost of sales $ 30 $ 22 Selling, general and administrative 225 240 Net effect of share-based compensation expense on net income $ 255 $ 262 Reduction in earnings per share: Basic earnings per share $ 0.02 $ 0.02 Diluted earnings per share $ 0.02 $ 0.02 As of March 31, 2019, the Company estimates that pre-tax compensation expense for all unvested share-based RSUs in the amount of approximately $848 will be recognized through 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. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2019 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | NOTE 12 — 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 of such 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. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 13 — 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 condensed consolidated financial statements, except as discussed below. The Company is currently evaluating the impact of the new standards on its condensed consolidated financial statements. The Company adopted the amendments to certain disclosure requirements in Securities Act of 1933, as amended, Release No. 33-10532, “Disclosure Update and Simplification” on November 5, 2018, the effective date of the release. Among the amendments is a requirement to present the changes in shareholders’ equity in the interim financial statements (either in a separate statement or footnote) in quarterly reports on Form 10-Q. See the condensed consolidated statement of stockholders’ equity. |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2019 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 14— 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. During the first quarter of 2019, the Company revised its segment presentation by moving its Abilene compressed natural gas and heavy fabrication business from the Process Systems segment to the Towers and Heavy Fabrications segment. The Company believes that this change more appropriately aligns its businesses in terms of the nature of its products and services, as well as its production processes and customers. The Company has restated prior periods presented to reflect this change. The Company’s segments and their product and service 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 megawatt (“MW”) wind turbines, as well as heavy fabrications for mining and other industrial customers. 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, sufficient to support turbines generating more than 1,100 MW of power. Gearing The Company engineers, builds and remanufactures precision gears and gearing systems for O&G, 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 processes in Neville Island, Pennsylvania. Process Systems This segment provides contract manufacturing services that include build-to-print, kitting, and inventory management for customers throughout the U.S. and in foreign countries, primarily supporting the natural gas electrical generation market. Corporate “Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results. Summary financial information by reportable segment for the three and three months ended March 31, 2019 and 2018 is as follows: Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Three Months Ended March 31, 2019 Revenues from external customers $ 28,294 $ 10,027 $ 3,339 $ — $ — $ 41,660 Operating (loss) profit (222) 1,387 (285) (1,374) — (494) Depreciation and amortization 1,095 482 122 62 — 1,761 Capital expenditures 201 367 — 9 — 577 Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Three Months Ended March 31, 2018 Revenues from external customers $ 18,196 $ 8,805 2,966 $ — $ — $ 29,967 Operating (loss) profit (2,096) (626) (301) (1,514) — (4,537) Depreciation and amortization 1,320 590 387 60 — 2,357 Capital expenditures — 220 — 9 — 229 Total Assets as of March 31, December 31, Segments: 2019 2018 Towers and Heavy Fabrications $ 54,627 $ 34,839 Gearing 51,389 37,028 Process Systems 9,886 11,758 Corporate 253,345 243,867 Eliminations (239,668) (228,327) $ 129,579 $ 99,165 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 15 — COMMITMENTS AND CONTINGENCIES 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. Certain environmental laws may 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. Warranty Liability The Company provides warranty terms that range from one to five years for various products supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of March 31, 2019 and 2018, estimated product warranty liability was $218 and $583, respectively, and is recorded within accrued liabilities in the Company’s condensed consolidated balance sheets. The changes in the carrying amount of the Company’s total product warranty liability for the three months ended March 31, 2019 and 2018 were as follows: For the Three Months Ended March 31, 2019 2018 Balance, beginning of period $ 226 $ 581 Addition to (reduction of) warranty reserve (19) 5 Warranty claims — (3) Other adjustments - Balance, end of period $ 218 $ 583 Allowance for Doubtful Accounts Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. 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 collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due and other relevant criteria. 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 collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the three months ended March 31, 2019 and 2018 consisted of the following: For the Three Months Ended March 31, 2019 2018 Balance at beginning of period $ 190 $ 225 (Recoveries) bad debt expense — (15) Other adjustments (14) — Balance at end of period $ 176 $ 210 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. 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/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of March 31, 2019 or December 31, 2018. |
RESTRUCTURING
RESTRUCTURING | 3 Months Ended |
Mar. 31, 2019 | |
RESTRUCTURING | |
RESTRUCTURING | NOTE 16 — 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 facility 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 Towers and Heavy Fabrications 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 three months ended March 31, 2019 and 2018 consist of the following: Three Months Ended March 31, 2019 2018 Cost of sales: Facility costs $ 2 $ 82 Moving and remediation 10 — Salary and severance — 17 Depreciation — 16 Total cost of sales 12 115 Selling, general, and administrative expenses: Salary and severance — 36 Total selling, general, and administrative expenses — 36 Grand Total $ 12 $ 151 |
REVENUES (Tables)
REVENUES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
REVENUES | |
Schedule of disaggregation of revenue | For the Three Ended March 31, 2019 2018 Towers and Heavy Fabrications $ 28,294 $ 18,196 Gearing 10,027 8,805 Process Systems 3,339 2,966 Consolidated $ 41,660 $ 29,967 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE | |
Reconciliation of basic and diluted earnings per share | Three Months Ended March 31, 2019 2018 Basic earnings per share calculation: Net loss $ (1,042) $ (4,838) Weighted average number of common shares outstanding 15,785,954 15,257,234 Basic net loss per share $ (0.07) $ (0.32) Diluted earnings per share calculation: Net loss $ (1,042) $ (4,838) Weighted average number of common shares outstanding 15,785,954 15,257,234 Common stock equivalents: Stock options and non-vested stock awards (1) — — Weighted average number of common shares outstanding 15,785,954 15,257,234 Diluted net loss per share $ (0.07) $ (0.32) (1) Stock options and restricted stock units granted and outstanding of 683,019 and 893,004 are excluded from the computation of diluted earnings for the three months ended March 31, 2019 and 2018 due to the anti dilutive effect as a result of the Company’s net loss for those respective periods. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES | |
Schedule of the components of inventories from operations | March 31, December 31, 2019 2018 Raw materials $ 25,385 $ 16,394 Work-in-process 6,437 5,426 Finished goods 2,793 2,958 34,615 24,778 Less: Reserve for excess and obsolete inventory (1,671) (2,108) Net inventories $ 32,944 $ 22,670 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of Goodwill and Intangible assets | March 31, 2019 December 31, 2018 Remaining Remaining Weighted Weighted Accumulated Net Average Accumulated Net Average Cost Accumulated Impairment Book Amortization Accumulated Impairment Book Amortization Basis Amortization Charges Value Period Cost Amortization Charges Value Period Goodwill and other intangible assets: Goodwill $ 4,993 — (4,993) $ — $ 4,993 $ — (4,993) $ - Noncompete agreements 170 (62) — 108 3.8 (54) — 116 Customer relationships 15,979 (6,445) (7,592) 1,942 6.6 15,979 (6,369) (7,592) 2,018 6.8 Trade names 9,099 (4,750) — 4,349 9.3 9,099 (4,631) — 4,468 9.5 Other intangible assets $ 25,248 $ (11,257) $ (7,592) $ 6,399 6.3 $ 25,248 $ (11,054) $ (7,592) $ 6,602 6.5 |
Schedule of estimated future amortization expense | As of March 31, 2019, estimated future amortization expense is as follows: 2019 $ 602 2020 803 2021 803 2022 803 2023 777 2024 and thereafter 2,611 Total $ 6,399 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | March 31, December 31, 2019 2018 Accrued payroll and benefits $ 2,593 $ 2,126 Accrued property taxes 158 — Income taxes payable 86 66 Accrued professional fees 102 101 Accrued warranty liability 218 226 Accrued self-insurance reserve 292 374 Accrued other 678 913 Total accrued liabilities $ 4,127 $ 3,806 |
DEBT AND CREDIT AGREEMENTS (Tab
DEBT AND CREDIT AGREEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
DEBT AND CREDIT AGREEMENTS | |
Schedule of outstanding debt balances | March 31, December 31, 2019 2018 Line of credit $ 22,249 $ 11,000 Other notes payable 1,679 1,882 Long-term debt 456 456 Less: Current portion (23,199) (11,930) Long-term debt, net of current maturities $ 1,185 $ 1,408 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
LEASES | |
Schedule of Quantitative information regarding leases | Three Months Ended March 31, 2019 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 136 Interest on finance lease liabilities Total finance lease costs 165 Operating lease cost components: Operating lease cost Short-term lease cost Variable lease cost (1) Sublease income (44) Total operating lease costs 1,066 Total lease cost $ 1,231 Supplemental cash flow information related to our operating leases is as follows for the period ended March 31, 2019: Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases Weighted-average remaining lease term-finance leases (in years) Weighted-average remaining lease term-operating leases (in years) Weighted-average discount rate-finance leases Weighted-average discount rate-operating leases (1) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment. |
Schedule of future minimum lease payments under finance leases and operating leases | As of March 31, 2019, future minimum lease payments under finance leases and operating leases were as follows: Finance Operating Leases Leases Total 2019 $ 793 $ 2,647 $ 3,440 2020 376 2,897 3,273 2021 252 2,760 3,012 2022 — 2,501 2,501 2023 — 2,355 2,355 2024 and thereafter — 18,117 18,117 Total lease payments $ 1,421 $ 31,277 $ 32,698 Less—portion representing interest (119) (12,210) (12,329) Present value of lease obligations 1,302 19,067 20,369 Less—current portion of lease obligations (894) (1,726) (2,620) Long-term portion of lease obligations $ 408 $ 17,341 $ 17,749 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SHARE-BASED COMPENSATION | |
Schedule of stock option activity | Weighted Average Options Exercise Price Outstanding as of December 31, 2018 56,862 $ 15.06 Expired — $ — Outstanding as of March 31, 2019 56,862 $ 15.06 Exercisable as of March 31, 2019 56,862 $ 15.06 |
Schedule of RSU activity | Weighted Average Grant-Date Fair Value Number of Shares Per Share Unvested as of December 31, 2018 805,844 $ 3.16 Vested (179,687) $ 2.97 Unvested as of March 31, 2019 626,157 $ 3.22 |
Schedule of share-based compensation expense, net of taxes withheld | Three Months Ended March 31, 2019 2018 Share-based compensation expense: Cost of sales $ 30 $ 22 Selling, general and administrative 225 240 Net effect of share-based compensation expense on net income $ 255 $ 262 Reduction in earnings per share: Basic earnings per share $ 0.02 $ 0.02 Diluted earnings per share $ 0.02 $ 0.02 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SEGMENT REPORTING | |
Schedule of financial information by reportable segment | Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Three Months Ended March 31, 2019 Revenues from external customers $ 28,294 $ 10,027 $ 3,339 $ — $ — $ 41,660 Operating (loss) profit (222) 1,387 (285) (1,374) — (494) Depreciation and amortization 1,095 482 122 62 — 1,761 Capital expenditures 201 367 — 9 — 577 Towers and Process Heavy Fabrications Gearing Systems Corporate Eliminations Consolidated For the Three Months Ended March 31, 2018 Revenues from external customers $ 18,196 $ 8,805 2,966 $ — $ — $ 29,967 Operating (loss) profit (2,096) (626) (301) (1,514) — (4,537) Depreciation and amortization 1,320 590 387 60 — 2,357 Capital expenditures — 220 — 9 — 229 Total Assets as of March 31, December 31, Segments: 2019 2018 Towers and Heavy Fabrications $ 54,627 $ 34,839 Gearing 51,389 37,028 Process Systems 9,886 11,758 Corporate 253,345 243,867 Eliminations (239,668) (228,327) $ 129,579 $ 99,165 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of changes in the carrying amount of the total product warranty liability | For the Three Months Ended March 31, 2019 2018 Balance, beginning of period $ 226 $ 581 Addition to (reduction of) warranty reserve (19) 5 Warranty claims — (3) Other adjustments - Balance, end of period $ 218 $ 583 |
Schedule of the activity in the accounts receivable allowance liability | For the Three Months Ended March 31, 2019 2018 Balance at beginning of period $ 190 $ 225 (Recoveries) bad debt expense — (15) Other adjustments (14) — Balance at end of period $ 176 $ 210 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
RESTRUCTURING | |
Schedule of total restructuring charges incurred to date and the total expected restructuring charges | Three Months Ended March 31, 2019 2018 Cost of sales: Facility costs $ 2 $ 82 Moving and remediation 10 — Salary and severance — 17 Depreciation — 16 Total cost of sales 12 115 Selling, general, and administrative expenses: Salary and severance — 36 Total selling, general, and administrative expenses — 36 Grand Total $ 12 $ 151 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Description of Business | ||||
Revenue as a percentage of sales associated with new wind turbine installations | 64.00% | |||
RESTRUCTURING | ||||
Restructuring Costs | $ 12 | $ 151 | ||
Liquidity | ||||
Total debt and capital lease obligations | 25,686 | |||
Obligation to make principal payments on outstanding debt during the next twelve months | 24,093 | |||
Outstanding indebtedness under the Credit Facility | $ 22,249 | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Sales agent commission percentage | 3.00% | |||
Sale of common stock, net of expenses (shares) | 15,112 | |||
Proceeds from issuance of stock | $ 33 | |||
Commission paid to agent | $ 1 | |||
ATM common stock available for issuance | $ 9,967 | |||
Minimum | ||||
Liquidity | ||||
Number of months cash resources adequate to meet Company's liquidity needs | 12 months | |||
Maximum | ||||
Liquidity | ||||
Proceeds from issuance of stock | $ 10,000 |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 41,660 | $ 29,967 |
Revenue remaining performance obligation, practical expedient | true | |
Towers and Heavy Fabrications | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 28,294 | 18,196 |
Gearing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 10,027 | 8,805 |
Process Systems | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 3,339 | $ 2,966 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
NET LOSS PER COMMON SHARE—BASIC: | ||
Net loss | $ (1,042) | $ (4,838) |
Weighted average number of common shares outstanding | 15,785,954 | 15,257,234 |
Basic net (loss) income per share | $ (0.07) | $ (0.32) |
NET LOSS PER COMMON SHARE—DILUTED: | ||
Net (loss) income | $ (1,042) | $ (4,838) |
Weighted average number of common shares outstanding | 15,785,954 | 15,257,234 |
Weighted average number of common shares outstanding | 15,785,954 | 15,257,234 |
Diluted net (loss) income per share | $ (0.07) | $ (0.32) |
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) | 683,019 | 893,004 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
INVENTORIES | ||
Raw materials | $ 25,385 | $ 16,394 |
Work-in-process | 6,437 | 5,426 |
Finished goods | 2,793 | 2,958 |
Gross inventories | 34,615 | 24,778 |
Less: Reserve for excess and obsolete inventory | (1,671) | (2,108) |
Net inventories | $ 32,944 | $ 22,670 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
INTANGIBLE ASSETS | ||
Goodwill | $ 4,993 | |
Impairment charge | $ (4,993) | (4,993) |
Cost Basis | 25,248 | 25,248 |
Accumulated Amortization | (11,257) | (11,054) |
Impairment of assets | 7,592 | (7,592) |
Net Book Value | $ 6,399 | $ 6,602 |
Remaining Weighted Average Amortization Period | 6 years 3 months 18 days | 6 years 6 months |
Estimated future amortization expense | ||
2018 | $ 602 | |
2020 | 803 | |
2021 | 803 | |
2022 | 803 | |
2023 | 777 | |
2024 and thereafter | 2,611 | |
Net Book Value | $ 6,399 | $ 6,602 |
Minimum | ||
INTANGIBLE ASSETS | ||
Remaining Weighted Average Amortization Period | 4 years | |
Maximum | ||
INTANGIBLE ASSETS | ||
Remaining Weighted Average Amortization Period | 9 years | |
Noncompete agreements | ||
INTANGIBLE ASSETS | ||
Cost Basis | $ 170 | 170 |
Accumulated Amortization | (62) | (54) |
Net Book Value | $ 108 | $ 116 |
Remaining Weighted Average Amortization Period | 3 years 9 months 18 days | 4 years 1 month 6 days |
Estimated future amortization expense | ||
Net Book Value | $ 108 | $ 116 |
Customer relationships | ||
INTANGIBLE ASSETS | ||
Cost Basis | 15,979 | 15,979 |
Accumulated Amortization | (6,445) | (6,369) |
Impairment of assets | 7,592 | (7,592) |
Net Book Value | $ 1,942 | $ 2,018 |
Remaining Weighted Average Amortization Period | 6 years 7 months 6 days | 6 years 9 months 18 days |
Estimated future amortization expense | ||
Net Book Value | $ 1,942 | $ 2,018 |
Trade names | ||
INTANGIBLE ASSETS | ||
Cost Basis | 9,099 | 9,099 |
Accumulated Amortization | (4,750) | (4,631) |
Net Book Value | $ 4,349 | $ 4,468 |
Remaining Weighted Average Amortization Period | 9 years 3 months 18 days | 9 years 6 months |
Estimated future amortization expense | ||
Net Book Value | $ 4,349 | $ 4,468 |
Red Wolf | ||
INTANGIBLE ASSETS | ||
Goodwill | 4,993 | |
Impairment of assets | 0 | |
Net Book Value | 13,270 | |
Estimated future amortization expense | ||
Net Book Value | $ 13,270 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
ACCRUED LIABILITIES | ||||
Accrued payroll and benefits | $ 2,593 | $ 2,126 | ||
Accrued property taxes | 158 | |||
Income taxes payable | 86 | 66 | ||
Accrued professional fees | 102 | 101 | ||
Accrued warranty liability | 218 | 226 | $ 583 | $ 581 |
Accrued self-insurance reserve | 292 | 374 | ||
Accrued other | 678 | 913 | ||
Total accrued liabilities | $ 4,127 | $ 3,806 |
DEBT AND CREDIT AGREEMENTS (Det
DEBT AND CREDIT AGREEMENTS (Details) - USD ($) $ in Thousands | Oct. 26, 2016 | Jul. 20, 2011 | Mar. 31, 2019 | Dec. 31, 2018 | Feb. 25, 2019 | Dec. 31, 2016 |
Credit Facilities | ||||||
Line of credit | $ 22,249 | |||||
Less: Current portion | (23,199) | $ (11,930) | ||||
Long-term debt, net of current maturities | 1,185 | 1,408 | ||||
New Markets Tax Credit Transaction | ||||||
Credit Facilities | ||||||
Tax credits generated | $ 3,900 | |||||
Proceeds received form capital | 2,600 | |||||
Extinguishment gain | $ 2,249 | |||||
Capital Expenditure loan | ||||||
Credit Facilities | ||||||
Long-term debt | $ 1,679 | 1,882 | ||||
Interest rate (as a percent) | 5.00% | |||||
Current maturities of long-term debt | $ 950 | 930 | ||||
Capital Expenditure loan | Minimum | ||||||
Credit Facilities | ||||||
Monthly payments on notes payable | 1 | |||||
Capital Expenditure loan | Maximum | ||||||
Credit Facilities | ||||||
Monthly payments on notes payable | 36 | |||||
Development Corporation of Abilene loan | ||||||
Credit Facilities | ||||||
Long-term debt | 456 | 456 | $ 570 | |||
Loan forgiven | 114 | |||||
Credit facility | ||||||
Credit Facilities | ||||||
Maximum borrowing capacity | $ 20,000 | $ 35,000 | ||||
Line of credit facilities, term of credit agreements | 3 years | |||||
Line of credit, term extended | 3 years | |||||
Maximum borrowing capacity of the face value of eligible receivable (as a percent) | 85.00% | |||||
Maximum percentage of lower of cost or market value of eligible inventories | 50.00% | |||||
Maximum percentage of orderly liquidation value of eligible inventories | 85.00% | |||||
Additional maximum borrowing capacity | $ 12,500 | |||||
Percentage of net orderly liquidation value | 75.00% | |||||
Percentage of fair market value of mortgaged property | 50.00% | |||||
Maximum borrowing restricted value | $ 12,000 | |||||
Interest rate margin (as a percent) | 5.50% | |||||
Interest rate base (as a percent) | 3.50% | |||||
Unused facility fee (as a percent) | 0.50% | |||||
Current borrowing capacity | 7,528 | |||||
Credit facility | Minimum | LIBOR | ||||||
Credit Facilities | ||||||
Interest rate margin (as a percent) | 2.25% | |||||
Interest rate (as a percent) | 0.00% | |||||
Credit facility | Maximum | LIBOR | ||||||
Credit Facilities | ||||||
Interest rate margin (as a percent) | 2.75% | |||||
Interest rate (as a percent) | 0.75% | |||||
Credit facility | Amended and Restated Loan Agreement | ||||||
Credit Facilities | ||||||
Maximum borrowing capacity | $ 35,000 | |||||
Credit facility | Letter of Credit | ||||||
Credit Facilities | ||||||
Maximum borrowing capacity | $ 10,000 | |||||
Line of credit | ||||||
Credit Facilities | ||||||
Line of credit | $ 22,249 | $ 11,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Jan. 01, 2019 | |
LEASES | ||
Short-term lease exception term | 1 year | |
Operating lease liabilities | $ 19,067 | $ 19,508 |
Right-of-use (“ROU”) asset | $ 17,155 | $ 17,613 |
Operating lease right-of-use asset | us-gaap:OperatingLeaseRightOfUseAsset | |
Current lease liabilities | $ 1,726 | |
Operating current lease liabilities | us-gaap:OperatingLeaseLiabilityCurrent | |
Non-current lease liabilities | $ 17,341 | |
Operating non-current lease liabilities | us-gaap:OperatingLeaseLiabilityNoncurrent |
LEASES - Quantitative informati
LEASES - Quantitative information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Finance lease cost components: | |
Amortization of finance lease assets | $ 136 |
Interest on finance lease liabilities | 29 |
Total finance lease costs | 165 |
Operating lease cost components: | |
Operating lease cost | 786 |
Short-term lease cost | 146 |
Variable lease cost | 178 |
Sublease income | (44) |
Total operating lease costs | 1,066 |
Total lease cost | 1,231 |
Supplemental cash flow information related to our operating leases is as follows for the period ended March 31, 2019: | |
Operating cash outflow from operating leases | $ 875 |
Weighted-average remaining lease term-finance leases (in years) | 1 year 7 months 6 days |
Weighted-average remaining lease term-operating leases (in years) | 10 years 10 months 24 days |
Weighted-average discount rate-finance leases | 8.40% |
Weighted-average discount rate-operating leases | 9.00% |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments under finance leases and operating leases - (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Finance leases | |||
2019 | $ 793 | ||
2020 | 376 | ||
2021 | 252 | ||
Total lease payments | 1,421 | ||
Less - portion representing interest | (119) | ||
Present value of lease obligations | 1,302 | ||
Less - Current portion of lease obligations | (894) | $ (967) | |
Long-term portion of lease obligations | 408 | $ 571 | |
Operating Leases | |||
2019 | 2,647 | ||
2020 | 2,897 | ||
2021 | 2,760 | ||
2022 | 2,501 | ||
2023 | 2,355 | ||
2024 | 18,117 | ||
Total lease payments | 31,277 | ||
Less - portion representing interest | (12,210) | ||
Present value of lease obligations | 19,067 | $ 19,508 | |
Less - current portion of lease obligations | (1,726) | ||
Long-term portion of lease obligations | 17,341 | ||
Total | |||
2019 | 3,440 | ||
2020 | 3,273 | ||
2021 | 3,012 | ||
2022 | 2,501 | ||
2023 | 2,355 | ||
2024 and thereafter | 18,117 | ||
Total lease payments | 32,698 | ||
Less - portion representing interest | (12,329) | ||
Present value of lease obligations | 20,369 | ||
Less - current portion of lease obligations | (2,620) | ||
Long-term portion of lease obligations | $ 17,749 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
INCOME TAXES | |||
(Benefit) provision for income taxes | $ (11) | $ 27 | |
Operating Loss Carryforwards | $ 248,717 | ||
Annual NOL usage limit | 14,284 | ||
Tax year 2022 | |||
INCOME TAXES | |||
Operating Loss Carryforwards | $ 228,787 |
INCOME TAXES (Details)_2
INCOME TAXES (Details) $ / shares in Units, $ in Thousands | Feb. 07, 2019 | Feb. 13, 2013item$ / sharesshares | Feb. 13, 2013$ / sharesshares | Feb. 12, 2013 | Mar. 31, 2019USD ($) |
Rights Plan | |||||
Unrecognized tax benefits | $ 0 | ||||
Accrued interest or penalties related to uncertain tax positions recognized | $ 0 | ||||
Series A Junior Participating Preferred Stock | |||||
Rights Plan | |||||
Preservation period of tax assets | 3 years | ||||
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 | 0.001 | |||
Exercise price (in dollars per right) | $ / shares | $ 4.25 | $ 4.25 | |||
Series A Junior Participating Preferred Stock | Minimum | |||||
Rights Plan | |||||
Beneficial ownership percentage of any person or group, together with its affiliates and associates | 4.90% | ||||
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% |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - $ / shares | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Feb. 07, 2018 | |
SHARE-BASED COMPENSATION | |||
Number of shares of common stock reserved for grants | 1,891,051 | ||
2015 EIP | |||
SHARE-BASED COMPENSATION | |||
Number of shares of common stock reserved for grants | 2,200,000 | 1,100,000 | |
Number of shares reserved | 2,200,000 | ||
2007 EIP | |||
SHARE-BASED COMPENSATION | |||
Common stock issued under share-based compensation plan | 888,748 | ||
Stock Options | |||
SHARE-BASED COMPENSATION | |||
Expiration term | 10 years | ||
Summary of the stock option activity | |||
Outstanding at the beginning of the period (in shares) | 56,862 | ||
Granted (in shares) | 0 | ||
Outstanding at the end of the period (in shares) | 56,862 | ||
Exercisable (in shares) | 56,862 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 15.06 | ||
Outstanding at the end of the period (in dollars per share) | 15.06 | ||
Exercisable (in dollars per share) | $ 15.06 | ||
Stock Options | 2015 EIP | |||
SHARE-BASED COMPENSATION | |||
Number of shares reserved | 626,157 | ||
Stock Options | 2007 EIP | |||
SHARE-BASED COMPENSATION | |||
Number of shares reserved | 56,862 | ||
Stock Options | Minimum | |||
SHARE-BASED COMPENSATION | |||
Vesting term | 1 year | ||
Stock Options | Maximum | |||
SHARE-BASED COMPENSATION | |||
Vesting term | 5 years | ||
RSU | 2015 EIP | |||
SHARE-BASED COMPENSATION | |||
Common stock issued under share-based compensation plan | 484,813 | ||
RSU | Minimum | |||
SHARE-BASED COMPENSATION | |||
Vesting term | 1 year | ||
RSU | Maximum | |||
SHARE-BASED COMPENSATION | |||
Vesting term | 5 years |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Option Activity (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Weighted Average Grant-Date Fair Value Per RSU | |||
Forfeiture rate (as percent) | 25.00% | 25.00% | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures [Abstract] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | ||
RSU | |||
Summary of the restricted stock unit activity | |||
Unvested at the beginning of the period (in shares) | 805,844 | ||
Vested (in shares) | (179,687) | ||
Unvested at the end of the period (in shares) | 626,157 | ||
Weighted Average Grant-Date Fair Value Per RSU | |||
Unvested at the beginning of the period (in dollars per share) | $ 3.16 | ||
Vested (in dollars per share) | 2.97 | ||
Unvested at the end of the period (in dollars per share) | $ 3.22 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Shares-based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Mar. 31, 2019 | Sep. 30, 2017 | |
Summary of share-based compensation expense | ||
Net effect of share-based compensation expense on net loss | $ 255 | $ 262 |
Reduction in earnings per share: | ||
Basic earnings per share | $ 0.02 | $ 0.02 |
Diluted earnings per share | $ 0.02 | $ 0.02 |
Pre-tax compensation expense for all unvested share-based awards | $ 848 | |
Cost of sales | ||
Summary of share-based compensation expense | ||
Share-based compensation expense | 30 | $ 22 |
Selling, general and administrative | ||
Summary of share-based compensation expense | ||
Share-based compensation expense | $ 225 | $ 240 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($)facilityitemMW | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
SEGMENT REPORTING | |||
Revenues from external customers | $ 41,660 | $ 29,967 | |
Revenues | 41,660 | 29,967 | |
Operating (loss) profit | (494) | (4,537) | |
Depreciation and amortization | 1,761 | 2,357 | |
Capital expenditures | 577 | 229 | |
Total Assets | $ 129,579 | $ 99,165 | |
Towers and Heavy Fabrications | |||
SEGMENT REPORTING | |||
Number of facilities | facility | 2 | ||
Revenues from external customers | $ 28,294 | 18,196 | |
Revenues | 28,294 | 18,196 | |
Operating (loss) profit | (222) | (2,096) | |
Depreciation and amortization | 1,095 | 1,320 | |
Capital expenditures | $ 201 | ||
Towers and Heavy Fabrications | Maximum | |||
SEGMENT REPORTING | |||
Annual tower production capacity (in towers) | item | 550 | ||
Towers and Heavy Fabrications | Minimum | |||
SEGMENT REPORTING | |||
Power generating capacity of turbines that towers produced annually can support (in megawatts) | MW | 1,100 | ||
Gearing | |||
SEGMENT REPORTING | |||
Revenues from external customers | $ 10,027 | 8,805 | |
Revenues | 10,027 | 8,805 | |
Operating (loss) profit | 1,387 | (626) | |
Depreciation and amortization | 482 | 590 | |
Capital expenditures | 367 | 220 | |
Process Systems | |||
SEGMENT REPORTING | |||
Revenues from external customers | 3,339 | 2,966 | |
Revenues | 3,339 | 2,966 | |
Operating (loss) profit | (285) | (301) | |
Depreciation and amortization | 122 | 387 | |
Corporate | |||
SEGMENT REPORTING | |||
Operating (loss) profit | (1,374) | (1,514) | |
Depreciation and amortization | 62 | 60 | |
Capital expenditures | 9 | $ 9 | |
Operating segments | |||
SEGMENT REPORTING | |||
Total Assets | 129,579 | 99,165 | |
Operating segments | Towers and Heavy Fabrications | |||
SEGMENT REPORTING | |||
Total Assets | 54,627 | 34,839 | |
Operating segments | Gearing | |||
SEGMENT REPORTING | |||
Total Assets | 51,389 | 37,028 | |
Operating segments | Process Systems | |||
SEGMENT REPORTING | |||
Total Assets | 9,886 | 11,758 | |
Operating segments | Corporate | |||
SEGMENT REPORTING | |||
Total Assets | 253,345 | 243,867 | |
Eliminations | |||
SEGMENT REPORTING | |||
Total Assets | $ (239,668) | $ (228,327) |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | |
Changes in the carrying amount of the total product warranty liability | ||||
Balance, beginning of period | $ 226 | $ 581 | ||
Addition to (reduction of) warranty reserve | (19) | 5 | ||
Warranty claims | (3) | |||
Other adjustments | 11 | |||
Balance, end of period | 218 | $ 583 | ||
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Balance at beginning of period | 190 | $ 225 | ||
(Recoveries) bad debt expense | (15) | |||
Other adjustments | (14) | |||
Balance at end of period | $ 176 | $ 210 | ||
Liquidated Damages | ||||
Reserve for liquidated damages | $ 0 | |||
Minimum | ||||
Warranty Liability | ||||
Term of warranty | 1 year | |||
Maximum | ||||
Warranty Liability | ||||
Term of warranty | 5 years |
RESTRUCTURING (Details)
RESTRUCTURING (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
RESTRUCTURING | ||
Restructuring Charges | $ 12 | $ 115 |
CNG and Abilene Heavy Fabrications | ||
RESTRUCTURING | ||
Annual cost savings | 575 | |
Restructuring Charges | 12 | 151 |
CNG and Abilene Heavy Fabrications | Cost of sales | ||
RESTRUCTURING | ||
Restructuring Charges | 12 | 115 |
CNG and Abilene Heavy Fabrications | Selling, general and administrative | ||
RESTRUCTURING | ||
Restructuring Charges | 36 | |
CNG and Abilene Heavy Fabrications | Facility costs | Cost of sales | ||
RESTRUCTURING | ||
Restructuring Charges | 2 | 82 |
CNG and Abilene Heavy Fabrications | Moving and remediation | Cost of sales | ||
RESTRUCTURING | ||
Restructuring Charges | $ 10 | |
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 | 36 | |
CNG and Abilene Heavy Fabrications | Depreciation | Cost of sales | ||
RESTRUCTURING | ||
Restructuring Charges | $ 16 |