Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 01, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Omega Flex, Inc. | ||
Entity Central Index Key | 1,317,945 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 185,753,621 | ||
Entity Common Stock, Shares Outstanding | 10,091,822 | ||
Trading symbol | OFLX | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and Cash Equivalents | $ 37,938 | $ 35,318 |
Accounts Receivable - less allowances of $920 and $926, respectively | 15,636 | 15,005 |
Inventories-Net | 8,007 | 7,372 |
Other Current Assets | 1,895 | 1,981 |
Total Current Assets | 63,476 | 59,676 |
Property and Equipment - Net | 6,998 | 4,402 |
Goodwill-Net | 3,526 | 3,526 |
Deferred Taxes | 12 | 19 |
Other Long Term Assets | 3,079 | 2,939 |
Total Assets | 77,091 | 70,562 |
Current Liabilities: | ||
Accounts Payable | 2,598 | 2,311 |
Accrued Compensation | 4,851 | 4,319 |
Accrued Commissions and Sales Incentives | 4,284 | 3,700 |
Dividends Payable | 2,220 | 8,578 |
Taxes Payable | 568 | 487 |
Other Liabilities | 3,583 | 3,340 |
Total Current Liabilities | 18,104 | 22,735 |
Deferred Taxes | 209 | 145 |
Long Term Taxes Payable | 761 | |
Other Long Term Liabilities | 1,948 | 1,621 |
Total Liabilities | 21,022 | 24,501 |
Commitments and Contingencies (Note 10) | ||
Omega Flex, Inc. Shareholders' Equity: | ||
Common Stock - par value $0.01 Shares: authorized 20,000,000, issued 10,153,633 and outstanding 10,091,822 at both December 31, 2017 and 2016 | 102 | 102 |
Treasury Stock | (1) | (1) |
Paid-in Capital | 10,808 | 10,808 |
Retained Earnings | 45,457 | 36,455 |
Accumulated Other Comprehensive Loss | (908) | (1,685) |
Total Omega Flex, Inc. Shareholders' Equity | 55,458 | 45,679 |
Noncontrolling Interest | 611 | 382 |
Total Shareholders' Equity | 56,069 | 46,061 |
Total Liabilities and Shareholders' Equity | $ 77,091 | $ 70,562 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | |||
Allowance for doubtful accounts receivable | $ 920 | $ 926 | |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Common stock, shares issued | 10,153,633 | 10,153,633 | 10,153,633 |
Common stock, shares outstanding | 10,091,822 | 10,091,822 | 10,091,822 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Net Sales | $ 101,799 | $ 94,051 | $ 93,278 |
Cost of Goods Sold | 40,033 | 36,167 | 36,132 |
Gross Profit | 61,766 | 57,884 | 57,146 |
Selling Expense | 16,359 | 15,694 | 15,252 |
General and Administrative Expense | 17,897 | 17,108 | 15,707 |
Engineering Expense | 3,293 | 3,185 | 2,684 |
Operating Profit | 24,217 | 21,897 | 23,503 |
Interest Income | 117 | 98 | 73 |
Other Expense | (38) | (474) | (12) |
Income Before Income Taxes | 24,296 | 21,521 | 23,564 |
Income Tax Expense | 8,450 | 6,975 | 7,603 |
Net Income | 15,846 | 14,546 | 15,961 |
Less: Net Income – Noncontrolling Interest | (184) | (169) | (173) |
Net Income attributable to Omega Flex, Inc. | $ 15,662 | $ 14,377 | $ 15,788 |
Basic and Diluted Earnings per Common Share | $ 1.55 | $ 1.42 | $ 1.56 |
Cash Dividends Declared per Common Share | $ 0.66 | $ 0.85 | $ 0.85 |
Basic and Diluted Weighted Average Shares Outstanding | 10,092 | 10,092 | 10,092 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Net Income | $ 15,846 | $ 14,546 | $ 15,961 |
Other Comprehensive Income (Loss): | |||
Foreign Currency Translation Adjustment | 822 | (1,061) | (198) |
Other Comprehensive Income | 822 | (1,061) | (198) |
Comprehensive Income | 16,668 | 13,485 | 15,763 |
Less: Comprehensive Income Attributable to the Noncontrolling Interest | (229) | (110) | (161) |
Total Other Comprehensive Income | $ 16,439 | $ 13,375 | $ 15,602 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Treasury Stock [Member] | Paid In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2014 | $ 102 | $ (1) | $ 10,808 | $ 23,446 | $ (497) | $ 111 | $ 33,969 |
Balance, shares at Dec. 31, 2014 | 10,091,822 | ||||||
Net Income | 15,788 | 173 | 15,961 | ||||
Cumulative Translation Adjustment | (186) | (12) | (198) | ||||
Dividends Declared | (8,578) | (8,578) | |||||
Balance at Dec. 31, 2015 | $ 102 | (1) | 10,808 | 30,656 | (683) | 272 | 41,154 |
Balance, shares at Dec. 31, 2015 | 10,091,822 | ||||||
Net Income | 14,377 | 169 | 14,546 | ||||
Cumulative Translation Adjustment | (1,002) | (59) | (1,061) | ||||
Dividends Declared | (8,578) | (8,578) | |||||
Balance at Dec. 31, 2016 | $ 102 | (1) | 10,808 | 36,455 | (1,685) | 382 | 46,061 |
Balance, shares at Dec. 31, 2016 | 10,091,822 | ||||||
Net Income | 15,662 | 184 | 15,846 | ||||
Cumulative Translation Adjustment | 777 | 45 | 822 | ||||
Dividends Declared | (6,660) | (6,660) | |||||
Balance at Dec. 31, 2017 | $ 102 | $ (1) | $ 10,808 | $ 45,457 | $ (908) | $ 611 | $ 56,069 |
Balance, shares at Dec. 31, 2017 | 10,091,822 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows from Operating Activities: | |||
Net Income | $ 15,846 | $ 14,546 | $ 15,961 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||
Non-Cash Compensation Expense | 1,042 | 996 | 177 |
Depreciation and Amortization | 502 | 459 | 460 |
Provision for Losses on Accounts Receivable, net of write-offs and recoveries | 6 | 45 | 169 |
Deferred Taxes | 72 | (139) | (638) |
Provision for Inventory Reserves | 171 | 130 | 58 |
Changes in Assets and Liabilities: | |||
Accounts Receivable | (463) | 1,217 | (3,167) |
Inventories | (699) | 585 | (1,036) |
Other Assets | (40) | (1,987) | (119) |
Accounts Payable | 251 | (108) | 158 |
Accrued Compensation | 490 | (272) | 502 |
Accrued Commissions and Sales Incentives | 574 | (614) | 1,590 |
Other Liabilities | 296 | (100) | (865) |
Net Cash Provided by Operating Activities | 18,048 | 14,758 | 13,250 |
Cash Flows from Investing Activities: | |||
Capital Expenditures | (3,093) | (233) | (620) |
Net Cash Used In Investing Activities | (3,093) | (233) | (620) |
Cash Flows from Financing Activities: | |||
Dividends Paid | (13,018) | (8,578) | (4,945) |
Net Cash Used In Financing Activities | (13,018) | (8,578) | (4,945) |
Net Increase in Cash and Cash Equivalents | 1,937 | 5,947 | 7,685 |
Translation effect on cash | 683 | (781) | (118) |
Cash and Cash Equivalents - Beginning of Year | 35,318 | 30,152 | 22,585 |
Cash and Cash Equivalents - End of Year | 37,938 | 35,318 | 30,152 |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid for Income Taxes | 7,608 | 7,060 | 8,442 |
Declared Dividend | $ 6,660 | $ 8,578 | $ 8,578 |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | 1. BASIS OF PRESENTATION AND CONSOLIDATION Description of Business The accompanying consolidated financial statements include the accounts of Omega Flex, Inc. (Omega) and its subsidiaries (collectively the “Company”). The Company’s audited consolidated financial statements for the years ended December 31, 2017, 2016 and 2015 have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (FASB), and with the instructions of Form 10-K and Article 8 of Regulation S-X. All material inter-company accounts and transactions have been eliminated in consolidation. The Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within their particular applications. The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose and accessories. These applications include carrying liquefied gases in certain processing applications, fuel gases within residential and commercial buildings and vibration absorbers in high vibration applications. The Company’s flexible metal piping is also used to carry other types of gases and fluids in a number of industrial applications where the customer requires the piping to have both a degree of flexibility and/or an ability to carry corrosive compounds or mixtures, or to carry at both very high and very low (cryogenic) temperatures. The Company manufactures flexible metal hose at its facilities in Exton, Pennsylvania, in the United States, and in Banbury, Oxfordshire in the United Kingdom, and sells its products through distributors, wholesalers and to original equipment manufacturers (“OEMs”) throughout North America, and in certain European markets. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition, accounts receivable allowances, inventory valuations, goodwill valuation, product liability costs, phantom stock and accounting for income taxes. Actual amounts could differ significantly from these estimates. Revenue Recognition The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe. Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues. The following criteria represent preconditions to the recognition of revenue: ● Persuasive evidence of an arrangement for the sale of product or services must exist. ● Delivery has occurred or services rendered. ● The sales price to the customer is fixed or determinable. ● Collection is reasonably assured. The Company recognizes revenue upon shipment in accordance with the above principles. Gross sales are reduced for all consideration paid to customers for which no identifiable benefit is received by the Company. This includes promotional incentives, which includes various programs including year-end rebates, and payment term discounts. The amounts of certain incentives are known with reasonable certainty at the time of sale, while others are projected based upon the most reliable information available at the reporting date. Commissions are accounted for as a selling expense. Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations. Carrying value approximates fair value. Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits. The Company monitors the viability of the banking institutions carrying its assets on a regular basis, and has the ability to transfer cash to various institutions during times of risk. The Company has not experienced any losses related to these cash balances, and believes its credit risk to be minimal. Accounts Receivable and Provision for Doubtful Accounts Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The estimated allowance for uncollectible amounts is based primarily on specific analysis of accounts in the receivable portfolio and historical write-off experience. While management believes the allowance to be adequate, if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make payments, additional allowances may be required. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on any known collection issues, historical experience, and other currently available evidence. The reserve for future credits, discounts, and doubtful accounts was $920,000 and $926,000 as of December 31, 2017 and 2016, respectively. In regards to identifying uncollectible accounts, the Company reviews an aging report on a consistent basis to determine past due accounts, and utilizes a well-established credit rating agency. The Company charges off those accounts that are deemed uncollectible once all collection efforts have been exhausted. Inventories Inventories are valued at the lower of cost or market. The cost of inventories is determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two years of non-usage, measured on a historical usage basis, to be excess inventory and reduces the carrying value of inventory accordingly. Property and Equipment Property and equipment are carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized. Goodwill In accordance with Financial Accounting Standards Board (FASB) ASC Topic 350, Intangibles – Goodwill and Other, the Company performed an annual impairment test in accordance with this guidance as of December 31, 2017 and also at December 31, 2016. These analyses did not indicate any impairment of goodwill at the end of either period. Stock-Based Compensation Plans In 2006, the Company adopted a Phantom Stock Plan (the “Plan”), which allows the Company to grant phantom stock units (Units) to certain key employees, officers or directors. The Units each represent a contractual right to payment of compensation in the future based upon the market value of the Company’s common stock. The Units follow a vesting schedule of three years from the grant date, and are then paid upon maturity. In accordance with FASB ASC Topic 718, Stock Compensation, the Company uses the Black-Scholes option pricing model as its method for determining the fair value of the Units. Further details of the Plan are provided in Note 11. Product Liability Reserves Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully under Note 10, Commitments and Contingencies, for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense and settlement costs within its deductible or self-insured retention limits, ranging primarily from $25,000 to $1,000,000 per claim, depending on the terms of the policy in the applicable policy year, up to an aggregate amount. The Company is vigorously defending against all known claims. Fair Value of Financial and Nonfinancial Instruments The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other. Advertising Expense Advertising costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated Statement of Operations. Such charges aggregated $1,075,000, $1,047,000 and $1,062,000, for the years ended December 31, 2017, 2016, and 2015, respectively. Research and Development Expense Research and development expenses are charged to operations as incurred. Such charges totaled $923,000, $788,000, and $876,000 for the years ended December 31, 2017, 2016 and 2015, respectively and are included in engineering expense in the accompanying consolidated statements of operations. Shipping Costs Shipping costs are included in selling expense on the consolidated statements of operations. The expense relating to shipping was $2,562,000, $2,339,000 and $2,429,000 for the years ended December 31, 2017, 2016 and 2015, respectively. Earnings per Common Share Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same. Currency Translation Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates. The Statements of Operations are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions are included in the Statements of Operations (other income (expense)) in the period in which they occur. Income Taxes The Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company recorded tax expense, related deferred taxes and tax benefits, and uncertainties in tax positions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The FASB ASC Topic 740, Income Taxes, clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. This guidance prescribes a recognition threshold of more-likely than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. The Company follows the provisions of ASC 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. For additional information regarding ASC 740-10, see Note 7. Other Comprehensive Income For the years ended December 31, 2017, 2016 and 2015, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments. Significant Concentrations One customer accounted for approximately 15% of sales in 2017, 13% in 2016 and 16% in 2015. That same customer accounted for 19% and 20% of Accounts Receivable at December 31, 2017 and 2016, respectively. No other customer represented more that 10% of Accounts Receivable or Sales. Geographically, North America accounted for approximately 89% of the Company’s sales during the last three years. The remaining portion of sales for each respective year was scattered among other countries, with the United Kingdom being the Company’s most dominant market outside North America. Subsequent Events The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its consolidated financial statements. Refer to Note 13 of the consolidated financial statements. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. INVENTORIES Inventories, net of reserves of $479,000 and $1,062,000, respectively, consisted of the following at December 31: 2017 2016 (in thousands) Finished Goods $ 5,461 $ 5,254 Raw Materials 2,546 2,118 Total Inventories - Net $ 8,007 $ 7,372 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31: 2017 2016 Depreciation and Amortization Est. Useful Lives (in thousands) Land $ 1,205 $ 538 Buildings 6,293 4,407 39 Years Leasehold Improvements 411 399 3-10 Years (Lesser of Life or Lease) Equipment 10,242 9,629 3-10 Years 18,151 14,973 Accumulated Depreciation (11,153 ) (10,571 ) Property and Equipment - Net $ 6,998 $ 4,402 The above amounts include capital related items of $0 and $34,000 at December 31, 2017 and December 31, 2016 respectively that had not yet been placed in service by the Company, and therefore no depreciation was recorded in the related periods for those assets. Depreciation and amortization expense was approximately $502,000, $459,000 and $460,000 for the years ended December 31, 2017, 2016 and 2015, respectively. |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Line of Credit | 5. LINE OF CREDIT On December 1, 2017, the Company agreed to a new Amended and Restated Revolving Line of Credit Note and Third Amendment to the Loan Agreement with Santander Bank, N.A. (the “Bank”). The Company established a line of credit facility in the maximum amount of $15,000,000, maturing on December 1, 2022, with funds available for working capital purposes and other cash needs. The loan is unsecured. The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime Rate up to Prime Rate plus 0.50% (for borrowings with no fixed term other than the December 1, 2022 maturity date), depending upon the Company’s then existing financial ratios. Currently, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of 2.4%. The Company is also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance of the note. The Company may terminate the line at any time during the five year term, as long as there are no amounts outstanding. Prior to this, the Company had been operating in adherence with the December 29, 2014 agreement, as discussed below. On December 29, 2014, the Company entered into an Amended and Restated Committed Revolving Line of Credit Note (the “Line”) and a Second Amendment to the Loan Agreement with the Bank. The Line facility in the maximum amount of $15,000,000, had a five year term maturing on December 31, 2019, with funds available for working capital purposes and to fund dividends, and was unsecured. The Line provided for the payment of any borrowings at an interest rate of either LIBOR plus 1.00% to plus 1.35% (for borrowings with a fixed term of 30, 60, or 90 days), or Prime from 0.00% to plus 0.10%, depending upon the Company’s then existing financial ratios. Under the terms of the agreement, the Company was required to pay on a quarterly basis an unused facility fee equal to 10 basis points of the average unused balance of the total Line commitment. As of December 31, 2017 and 2016, the Company had no outstanding borrowings on its line of credit, and was in compliance with all debt covenants. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Shareholders' Equity: | |
Shareholders' Equity | 6. SHAREHOLDERS’ EQUITY For the periods ending December 31, 2017, 2016 and 2015, the Company had authorized 20,000,000 common stock shares with par value of $0.01 per share. At these dates, the number of shares issued was 10,153,633, and the total number of outstanding shares was 10,091,822, with the 61,811 variance representing shares held in Treasury. During 2017, the Board of Directors (Board) revised its dividend policy to allow for and establish a record of paying regular quarterly dividends. In furtherance of this policy, the Company announced on June 9, 2017, September 11, 2017, and December 13, 2017 that the Board had approved a quarterly dividend in the amount of $0.22 per share to all Shareholders of record, amounting to payments of $2,220,000 in July 2017, October 2017, and January 2018. On December 14, 2016, the Board declared a special dividend of $0.85 per share to all Shareholders of record as of December 26, 2016, payable on or before January 6, 2017. The total payment to shareholders made in January 2017 was $8,578,000. On December 10, 2015, the Board declared a special dividend of $0.85 per share to all Shareholders of record as of December 21, 2015, and payable on or before January 6, 2016. The total payment made in January 2016 was $8,578,000. On April 4, 2014, the Company’s Board of Directors authorized an extension of its stock repurchase program without expiration, up to a maximum amount of $1,000,000. The original program established in December 2007 authorized the purchase of up to $5,000,000 of its common stock. The purchases may be made from time-to-time in the open market or in privately negotiated transactions, depending on market and business conditions. The Board retained the right to cancel, extend, or expand the share buyback program, at any time and from time-to-time. Since inception, the Company has purchased a total of 61,811 shares for approximately $932,000, or approximately $15 per share. The Company did not make any stock repurchases during the years ended December 31, 2017, 2016 or 2015. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. INCOME TAXES New Tax Legislation On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (The Act). This legislation makes significant changes in U.S. tax law including a reduction in the corporate tax rate to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. The legislation reduced the U.S. corporate tax rate from the current rate of 35% to 21% for tax years beginning after December 31, 2017. As a result of the enacted law, the Company was required to revalue deferred tax assets and liabilities existing as of December 22, 2017 from the 35% federal rate in effect through the end of 2017, to the new 21% rate. As a result of the change in law, the Company recorded a current period tax benefit of $118,000 in continuing operations and a corresponding reduction in the deferred tax liability. Because of the complexities involved in determining the previously unremitted earnings and profits of our foreign subsidiaries, the Company is still in the process of obtaining, preparing, and analyzing the required information. The Company has recorded an initial estimate of the tax on unremitted earnings. The amount, net of related foreign tax credits, is a tax of approximately $827,000. The rate of tax paid, after foreign tax credits, is 7% of the foreign earnings. This amount will be paid over 8 years. As of December 31, 2017, the Company is indefinitely invested in amounts in the foreign subsidiary in excess of the amounts that have been previously taxed. Income tax expense consisted of the following: December 31, 2017 2016 2015 (in thousands) Federal Income Tax: Current $ 6,848 $ 5,788 $ 6,155 Deferred 48 (311 ) 31 State Income Tax: Current 667 652 601 Deferred 16 (23 ) 2 Foreign Income Tax: Current 863 791 797 Deferred 8 78 17 Income Tax Expense $ 8,450 $ 6,975 $ 7,603 Pre-tax income included foreign income of $4,528,000, $3,944,000 and $4,117,000 in 2017, 2016 and 2015, respectively. During 2017, the Company was deemed to have paid a dividend out of its U.K. subsidiary of all of its unremitted earnings, resulting in incremental U.S. taxes of $827,000. Total income tax expense differed from statutory income tax expense, computed by applying the U.S. federal income tax rate of 35% to earnings before income tax, as follows: December 31, 2017 2016 2015 (in thousands) Computed Statutory Income Tax Expense $ 8,440 $ 7,475 $ 8,193 State Income Tax, Net of Federal Tax Benefit 447 386 360 Foreign Tax Rate Differential (713 ) (592 ) (607 ) Impact of Deemed Repatriation due to Tax Reform 827 — — Manufacturing Deduction (401 ) (385 ) (423 ) Impact of Federal Tax Rate Reduction on Deferred Taxes (118 ) — — Increase/(Reduction) in Tax Uncertainties — (70 ) 3 Valuation Allowance for Foreign Loss Carryover — 70 — Other - Net (32 ) 91 77 Income Tax Expense $ 8,450 $ 6,975 $ 7,603 A deferred income tax (expense) benefit results from temporary timing differences in the recognition of income and expense for income tax and financial reporting purposes. The components of and changes in the net deferred tax assets (liabilities) which give rise to this deferred income tax (expense) benefit for the years ended December 31, 2017 and 2016 are as follows: December 31, 2017 2016 (in thousands) Deferred Tax Assets: Compensation Assets $ 98 $ 151 Inventory Valuation 195 482 Accounts Receivable Valuation 215 344 Deferred Litigation Costs 24 37 Foreign Net Operating Losses 70 70 Valuation Allowance for Loss Carryover (70 ) (70 ) Other 78 265 Compensation Liabilities 648 796 Total Deferred Assets $ 1,258 $ 2,075 Deferred Tax Liabilities: Prepaid Expenses (417 ) (655 ) Depreciation and Amortization (1,038 ) (1,546 ) Total Deferred Liabilities $ (1,455 ) $ (2,201 ) Total Deferred Tax Liability $ (197 ) $ (126 ) Management believes it is more likely than not that the Company will have sufficient taxable income when these timing differences reverse and that the deferred tax assets will be realized with the exception of a carryover of foreign operating losses. Due to the uncertainty of future income in the foreign subsidiary, the Company has recognized a valuation allowance related to the foreign operating losses carrying forward. The Company is currently subject to audit by the Internal Revenue Service for the calendar years ended 2014 through 2016. The Company and its Subsidiaries’ state income tax returns are subject to audit for the calendar years ended 2013 through 2016. As of December 31, 2017, the Company had no liability for unrecognized tax benefits related to various federal and state income tax matters. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the current and previous year: December 31, 2017 2016 Beginning Unrecognized Tax Benefits – $ — $ 110 Current Year – Increases — — Current Year – Decreases — — Current Year – Interest/Penalties — 4 Expired Statutes — (114 ) Ending Unrecognized Tax Benefits – $ — $ — |
Leases
Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Leases | 8. LEASES In the United States, the Company owns its main operating facility located at 451 Creamery Way in Exton, PA, and in early 2017 consummated an agreement to purchase another facility at 427 Creamery Way in Exton, which was previously under lease through January 2018. Both facilities provide manufacturing, warehousing and distribution space. During 2014, the Company obtained a new five year lease on a warehousing and distribution center in Houston, Texas, which currently provides manufacturing, stocking and sales operations. Additionally, the Company leases its corporate office space in Middletown, CT, with the lease term expiring in 2022. In the United Kingdom, the Company leases a facility in Banbury, England, which serves sales, warehousing and operational functions. The lease in Banbury was effective April 1, 2006 and has a 15-year term ending in March 2021. In addition to property rentals, the Company also leases several automobiles, which are included in the rent expense and in the operating lease details below. Rent expense for operating leases was approximately $393,000, $486,000 and $504,000 for the years ended December 31, 2017, 2016, and 2015, respectively. The decrease in rent expense between 2017 and 2016 largely relates to the purchase of the facility at 427 Creamery Way during February 2017, which was previously rented. Future minimum lease payments under non-cancelable leases as of December 31, 2017 is as follows: Year Ending December 31, Operating Leases (in thousands) 2018 $ 469 2019 416 2020 321 2021 169 2022 61 Thereafter — Total Minimum Lease Payments $ 1,436 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | 9. EMPLOYEE BENEFIT PLANS Defined Contribution and 401(K) Plans The Company maintains a qualified non-contributory profit-sharing plan (the “Plan”) covering all eligible employees. There were $338,000, $323,000 and $307,000 of contributions accrued for the Plan in 2017, 2016 and 2015 respectively, which were charged to expense in those respective years. Contributions to the Plan are defined as three percent (3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under the Employee Retirement Income Security Act (ERISA). Participants vest over six years. The Company also maintains a savings and retirement plan qualified under Internal Revenue Code Section 401(k) for all employees. Employees are eligible to participate in the Plan the first day of the month following date of hire. Participants may elect to have up to fifty percent (50%) of their compensation withheld, up to the maximum allowed by the Internal Revenue Code. Effective January 1, 2016, after completing one year of service, the Company contributed an additional amount equal to 50% of all employee contributions, up to a maximum of 6% of an employee’s gross wages. Prior to 2016, the Company contributed an additional amount equal to 25% of all employee contributions, up to a maximum of 6% of an employee’s gross wages. Contributions are funded on a current basis. Contributions to the Plan charged to expense for the years ended December 31, 2017, 2016 and 2015 were $227,000, $196,000 and $93,000, respectively. The participant’s Company contribution vests ratably over six years. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. COMMITMENTS AND CONTINGENCIES Commitments: Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements. Under the terms of the Agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors. The Company has obtained directors’ and officers’ insurance policies to fund certain obligations under the indemnity agreements. The Company has salary continuation agreements with one current employee, and one former employee who retired at the end of 2010. These agreements provide for monthly payments to each of the employees or their designated beneficiary upon the employee’s retirement or death. The payment benefits range from $1,000 per month to $3,000 per month with the term of such payments limited to 15 years after the employee’s retirement. The agreements also provide for survivorship benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount of which is dependent on the length of company service at the date of termination. The net present value of the retirement payments associated with these agreements is $496,000 at December 31, 2017, of which $484,000 is included in Other Long Term Liabilities, and the remaining current portion of $12,000 is included in Other Liabilities, associated with the retired employee previously noted who is now receiving benefit payments. The December 31, 2016 liability of $515,000, had $503,000 reported in Other Long Term Liabilities, and a current portion of $12,000 in Other Liabilities. The Company has obtained and is the beneficiary of three whole life insurance policies with respect to the two employees discussed above, and one other employee policy. The cash surrender value of such policies (included in Other Long Term Assets) amounts to $1,281,000 at December 31, 2017 and $1,169,000 at December 31, 2016. As disclosed in detail in Note 8, under the caption “Leases”, the Company has several lease obligations in place that will be paid out over time. Most notably, the Company leases a facility in Banbury, England that serves the manufacturing, warehousing and distribution functions. Additionally, the Company purchased the operating facility at 427 Creamery Way in Exton, PA in February 2017, which was previously under lease through January 2018. Contingencies: In the ordinary and normal conduct of the Company’s business, it is subject to periodic lawsuits, investigations and claims (collectively, the “Claims”). Most of the Claims, including a putative class-action claim, relate to potential lightning damage to our flexible gas piping products, which impact legal and product liability related expenses. The Company does not believe the Claims have legal merit, and therefore has commenced a vigorous defense in response to the Claims. It is possible that the Company may incur increased litigation costs in the future due to a variety of factors, including a higher numbers of Claims, higher legal costs, and higher insurance deductibles or retentions. In 2010, the Company took its first Claim to trial in Pennsylvania, and the jury returned a verdict that the Company was not negligent in designing and selling the TracPipe ® In February 2012, the Company was made aware of a fraud perpetrated by a third party broker involving insurance related premiums that the Company had prepaid for umbrella coverage. Upon discovery of the fraud, the Company replaced the aforementioned insurance coverage. The stolen assets were seized by a governmental agency investigating the case, and in the second quarter of 2016, the Company received restitution from the United States Department of Justice in the amount of $282,000. Of the amount received, $213,000 relieved the value of the assets on the books and the remaining $69,000 was recorded as a reduction of operating expenses. The Company also filed suit against a third party advisor arising from the transaction, alleging failure to exercise due diligence into the qualifications of the broker. In December 2016, the Company settled its suit with the advisor and its insurer for $132,500, which was included in Other Current Assets at December 31, 2016, and the case was dismissed, thus reducing insurance costs. These settlement proceeds were collected in January 2017. In March 2017, a putative class action case was re-filed against the Company and other parties in Missouri state court after the predecessor case was dismissed without prejudice by the federal court. The Company is currently vigorously defending the case. The Company has in place commercial general liability insurance policies that cover the Claims, which are subject to deductibles or retentions, ranging primarily from $25,000 to $1,000,000 per claim (depending on the terms of the policy and the applicable policy year), up to an aggregate amount. Litigation is subject to many uncertainties and management is unable to predict the outcome of the pending suits and claims. The potential liability for a given claim could range from zero to a maximum of $1,000,000, depending upon the circumstances, and insurance deductible or retention in place for the respective claim year. The aggregate maximum exposure for all current open Claims is estimated to not exceed approximately $2,700,000, which represents the potential costs that may be incurred over time for the Claims within the applicable insurance policy deductibles or retentions. From time to time, depending upon the nature of a particular case, the Company may decide to spend in excess of a deductible or retention to enable more discretion regarding the defense, although this is not common. It is possible that the results of operations or liquidity of the Company, as well as the Company’s ability to procure reasonably priced insurance, could be adversely affected by the pending litigation, potentially materially. The Company is currently unable to estimate the ultimate liability, if any, that may result from the pending litigation, or potential litigation from future claims or claims that have not yet come to our attention, and accordingly, the liability in the consolidated financial statements primarily represents an accrual for legal costs for services previously rendered and outstanding settlements for existing claims. The liabilities recorded on the Company’s books at December 31, 2017 and December 31, 2016 were $175,000 and $273,000, respectively, and are included in Other Liabilities. |
Stock - Based Compensation Plan
Stock - Based Compensation Plans | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock - Based Compensation Plans | 11. STOCK – BASED COMPENSATION PLANS Phantom Stock Plan Plan Description. does not ● ownership interest in the Company ● shareholder voting rights ● other incidents of ownership to the Company’s common stock The Units are granted to participants upon the recommendation of the Company’s CEO, and the approval of the Compensation Committee. Each of the Units that are granted to a participant will be initially valued by the Compensation Committee, at an amount equal to the closing price of the Company’s common stock on the grant date, but are recorded at fair value using the Black-Sholes method as described below. The Units follow a vesting schedule, with a maximum vesting of three years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment. The amount to be paid to the participant on the maturity date is dependent on the type of Unit granted to the participant. The Units may be Full Value, Appreciation Only minus On December 9, 2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared by the Company on its common stock to be accrued to the phantom stock units outstanding as of the record date of the common stock dividend. The dividend equivalent will be paid at the same time the underlying phantom stock units are paid to the participant. In certain circumstances, the Units may be immediately vested upon the participant’s death or disability. All Units granted to a participant are forfeited if the participant is terminated from his relationship with the Company or its subsidiary for “cause,” which is defined under the Plan. If a participant’s employment or relationship with the Company is terminated for reasons other than for “cause,” then any vested Units will be paid to the participant upon termination. However, Units granted to certain “specified employees” as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination. Grants of Phantom Stock Units. Full Value Full Value The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award. The FASB ASC Topic 718, Stock Compensation, requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately to vest. Forfeitures represent only the unvested portion of a surrendered Unit and are typically estimated based on historical experience. Based on an analysis of the Company’s historical data, which has limited experience related to any stock-based plan forfeitures, the Company applied a 0% forfeiture rate to Plan Units outstanding in determining its Plan Unit compensation expense as of December 31, 2017. The total Phantom Stock related liability as of December 31, 2017 was $2,238,000 of which $776,000 is included in Other Liabilities, as it is expected to be paid in February 2018, and the balance of $1,462,000 is included in Other Long Term Liabilities. At December 31, 2016, there was a Phantom Stock liability of $1,624,000, of which $506,000 was classified in Other Liabilities, and $1,118,000 in Other Long Term Liabilities. In accordance with FASB ASC Topic 718, Stock Compensation, the Company recorded compensation expense of approximately $1,042,000, $996,000 and $177,000 related to the Phantom Stock Plan for the years ended December 31, 2017, 2016 and 2015, respectively. The following table summarizes information about the Company’s nonvested phantom stock Units at December 31, 2017: Units Weighted Average Grant Date Fair Value Number of Phantom Stock Unit Awards: Nonvested at December 31, 2016 23,671 $ 27.87 Granted 9,000 $ 41.68 Vested (11,375 ) $ 26.26 Forfeited — — Canceled — — Nonvested at December 31, 2017 21,296 $ 34.74 Phantom Stock Unit Awards Expected to Vest 21,296 $ 34.74 The total unrecognized compensation costs calculated at December 31, 2017 are $789,000 which will be recognized through 2020. The Company will recognize the related expense over the weighted average period of 1.0 years. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. RELATED PARTY TRANSACTIONS From time to time the Company may have related party transactions (RPT’s). In short, RPT’s represent any transaction between the Company and any Company employee, director or officer, or any related entity, or relative, etc. The Company performs a review of transactions each year to determine if any RPT’s exist. Through this investigation, the Company is currently not aware of any related party transactions between the Company and any of its current directors or officers outside the scope of their normal business functions or expected contractual duties. The Company does on occasion share a small amount of services with its former parent Mestek, Inc., mostly related to board meeting expenses. Additionally, the Company is aware of transactions between a few service providers which employ individuals indirectly associated to Omega Flex employees, but these have been determined to be independent transactions with no indication that they are influenced by the related relationships. The Company currently also has note agreement assets with related parties amounting to approximately $147,000, which are contractually secured by the Company. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. SUBSEQUENT EVENTS The Company is not currently aware of any other subsequent events that would require disclosure or any adjustment to the consolidated financial statements as stated at December 31, 2017. |
Quarterly Consolidated Financia
Quarterly Consolidated Financial Statements (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Consolidated Financial Statements (Unaudited) | 14. QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The table below sets forth selected quarterly information for each full quarter of 2017 and 2016. For the Year-Ended December 31, 2017 First Second Third Fourth Year (dollars in thousands except per share data) Net Sales $ 25,607 $ 23,805 $ 24,923 $ 27,464 $ 101,799 Gross Profit $ 15,336 $ 14,142 $ 15,207 $ 17,081 $ 61,766 Net Income attributable to Omega Flex, Inc. $ 4,138 $ 3,034 $ 4,014 $ 4,476 $ 15,662 Basic and Diluted Earnings per common share $ 0.41 $ 0.30 $ 0.40 $ 0.44 $ 1.55 For the Year-Ended December 31, 2016 First Second Third Fourth Year (dollars in thousands except per share data) Net Sales $ 20,626 $ 23,840 $ 23,942 $ 25,643 $ 94,051 Gross Profit $ 12,492 $ 14,689 $ 14,777 $ 15,926 $ 57,884 Net Income attributable to Omega Flex, Inc. $ 2,643 $ 3,713 $ 3,888 $ 4,133 $ 14,377 Basic and Diluted Earnings per common share $ 0.26 $ 0.37 $ 0.39 $ 0.41 $ 1.42 |
Significant Accounting Polici22
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition, accounts receivable allowances, inventory valuations, goodwill valuation, product liability costs, phantom stock and accounting for income taxes. Actual amounts could differ significantly from these estimates. |
Revenue Recognition | Revenue Recognition The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe. Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues. The following criteria represent preconditions to the recognition of revenue: ● Persuasive evidence of an arrangement for the sale of product or services must exist. ● Delivery has occurred or services rendered. ● The sales price to the customer is fixed or determinable. ● Collection is reasonably assured. The Company recognizes revenue upon shipment in accordance with the above principles. Gross sales are reduced for all consideration paid to customers for which no identifiable benefit is received by the Company. This includes promotional incentives, which includes various programs including year-end rebates, and payment term discounts. The amounts of certain incentives are known with reasonable certainty at the time of sale, while others are projected based upon the most reliable information available at the reporting date. Commissions are accounted for as a selling expense. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations. Carrying value approximates fair value. Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits. The Company monitors the viability of the banking institutions carrying its assets on a regular basis, and has the ability to transfer cash to various institutions during times of risk. The Company has not experienced any losses related to these cash balances, and believes its credit risk to be minimal. |
Accounts Receivable and Provision for Doubtful Accounts | Accounts Receivable and Provision for Doubtful Accounts Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The estimated allowance for uncollectible amounts is based primarily on specific analysis of accounts in the receivable portfolio and historical write-off experience. While management believes the allowance to be adequate, if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make payments, additional allowances may be required. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on any known collection issues, historical experience, and other currently available evidence. The reserve for future credits, discounts, and doubtful accounts was $920,000 and $926,000 as of December 31, 2017 and 2016, respectively. In regards to identifying uncollectible accounts, the Company reviews an aging report on a consistent basis to determine past due accounts, and utilizes a well-established credit rating agency. The Company charges off those accounts that are deemed uncollectible once all collection efforts have been exhausted. |
Inventories | Inventories Inventories are valued at the lower of cost or market. The cost of inventories is determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two years of non-usage, measured on a historical usage basis, to be excess inventory and reduces the carrying value of inventory accordingly. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized. |
Goodwill | Goodwill In accordance with Financial Accounting Standards Board (FASB) ASC Topic 350, Intangibles – Goodwill and Other, the Company performed an annual impairment test in accordance with this guidance as of December 31, 2017 and also at December 31, 2016. These analyses did not indicate any impairment of goodwill at the end of either period. |
Stock-Based Compensation Plans | Stock-Based Compensation Plans In 2006, the Company adopted a Phantom Stock Plan (the “Plan”), which allows the Company to grant phantom stock units (Units) to certain key employees, officers or directors. The Units each represent a contractual right to payment of compensation in the future based upon the market value of the Company’s common stock. The Units follow a vesting schedule of three years from the grant date, and are then paid upon maturity. In accordance with FASB ASC Topic 718, Stock Compensation, the Company uses the Black-Scholes option pricing model as its method for determining the fair value of the Units. Further details of the Plan are provided in Note 11. |
Product Liability Reserves | Product Liability Reserves Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully under Note 10, Commitments and Contingencies, for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense and settlement costs within its deductible or self-insured retention limits, ranging primarily from $25,000 to $1,000,000 per claim, depending on the terms of the policy in the applicable policy year, up to an aggregate amount. The Company is vigorously defending against all known claims. |
Fair Value of Financial and Nonfinancial Instruments | Fair Value of Financial and Nonfinancial Instruments The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other. |
Advertising Expense | Advertising Expense Advertising costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated Statement of Operations. Such charges aggregated $1,075,000, $1,047,000 and $1,062,000, for the years ended December 31, 2017, 2016, and 2015, respectively. |
Research and Development Expense | Research and Development Expense Research and development expenses are charged to operations as incurred. Such charges totaled $923,000, $788,000, and $876,000 for the years ended December 31, 2017, 2016 and 2015, respectively and are included in engineering expense in the accompanying consolidated statements of operations. |
Shipping Costs | Shipping Costs Shipping costs are included in selling expense on the consolidated statements of operations. The expense relating to shipping was $2,562,000, $2,339,000 and $2,429,000 for the years ended December 31, 2017, 2016 and 2015, respectively. |
Earnings Per Common Share | Earnings per Common Share Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same. |
Currency Translation | Currency Translation Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates. The Statements of Operations are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions are included in the Statements of Operations (other income (expense)) in the period in which they occur. |
Income Taxes | Income Taxes The Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company recorded tax expense, related deferred taxes and tax benefits, and uncertainties in tax positions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The FASB ASC Topic 740, Income Taxes, clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. This guidance prescribes a recognition threshold of more-likely than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. The Company follows the provisions of ASC 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. For additional information regarding ASC 740-10, see Note 7. |
Other Comprehensive Income | Other Comprehensive Income For the years ended December 31, 2017, 2016 and 2015, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments. |
Significant Concentrations | Significant Concentrations One customer accounted for approximately 15% of sales in 2017, 13% in 2016 and 16% in 2015. That same customer accounted for 19% and 20% of Accounts Receivable at December 31, 2017 and 2016, respectively. No other customer represented more that 10% of Accounts Receivable or Sales. Geographically, North America accounted for approximately 89% of the Company’s sales during the last three years. The remaining portion of sales for each respective year was scattered among other countries, with the United Kingdom being the Company’s most dominant market outside North America. |
Subsequent Events | Subsequent Events The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its consolidated financial statements. Refer to Note 13 of the consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net of Reserves | Inventories, net of reserves of $479,000 and $1,062,000, respectively, consisted of the following at December 31: 2017 2016 (in thousands) Finished Goods $ 5,461 $ 5,254 Raw Materials 2,546 2,118 Total Inventories - Net $ 8,007 $ 7,372 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following at December 31: 2017 2016 Depreciation and Amortization Est. Useful Lives (in thousands) Land $ 1,205 $ 538 Buildings 6,293 4,407 39 Years Leasehold Improvements 411 399 3-10 Years (Lesser of Life or Lease) Equipment 10,242 9,629 3-10 Years 18,151 14,973 Accumulated Depreciation (11,153 ) (10,571 ) Property and Equipment - Net $ 6,998 $ 4,402 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense consisted of the following: December 31, 2017 2016 2015 (in thousands) Federal Income Tax: Current $ 6,848 $ 5,788 $ 6,155 Deferred 48 (311 ) 31 State Income Tax: Current 667 652 601 Deferred 16 (23 ) 2 Foreign Income Tax: Current 863 791 797 Deferred 8 78 17 Income Tax Expense $ 8,450 $ 6,975 $ 7,603 |
Schedule of Effective Income Tax Rate Reconciliation | Total income tax expense differed from statutory income tax expense, computed by applying the U.S. federal income tax rate of 35% to earnings before income tax, as follows: December 31, 2017 2016 2015 (in thousands) Computed Statutory Income Tax Expense $ 8,440 $ 7,475 $ 8,193 State Income Tax, Net of Federal Tax Benefit 447 386 360 Foreign Tax Rate Differential (713 ) (592 ) (607 ) Impact of Deemed Repatriation due to Tax Reform 827 — — Manufacturing Deduction (401 ) (385 ) (423 ) Impact of Federal Tax Rate Reduction on Deferred Taxes (118 ) — — Increase/(Reduction) in Tax Uncertainties — (70 ) 3 Valuation Allowance for Foreign Loss Carryover — 70 — Other - Net (32 ) 91 77 Income Tax Expense $ 8,450 $ 6,975 $ 7,603 |
Schedule of Deferred Tax Assets and Liabilities | The components of and changes in the net deferred tax assets (liabilities) which give rise to this deferred income tax (expense) benefit for the years ended December 31, 2017 and 2016 are as follows: December 31, 2017 2016 (in thousands) Deferred Tax Assets: Compensation Assets $ 98 $ 151 Inventory Valuation 195 482 Accounts Receivable Valuation 215 344 Deferred Litigation Costs 24 37 Foreign Net Operating Losses 70 70 Valuation Allowance for Loss Carryover (70 ) (70 ) Other 78 265 Compensation Liabilities 648 796 Total Deferred Assets $ 1,258 $ 2,075 Deferred Tax Liabilities: Prepaid Expenses (417 ) (655 ) Depreciation and Amortization (1,038 ) (1,546 ) Total Deferred Liabilities $ (1,455 ) $ (2,201 ) Total Deferred Tax Liability $ (197 ) $ (126 ) |
Schedule of Reconciliation of Unrecognized Tax Benefits | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the current and previous year: December 31, 2017 2016 Beginning Unrecognized Tax Benefits – $ — $ 110 Current Year – Increases — — Current Year – Decreases — — Current Year – Interest/Penalties — 4 Expired Statutes — (114 ) Ending Unrecognized Tax Benefits – $ — $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under non-cancelable leases as of December 31, 2017 is as follows: Year Ending December 31, Operating Leases (in thousands) 2018 $ 469 2019 416 2020 321 2021 169 2022 61 Thereafter — Total Minimum Lease Payments $ 1,436 |
Stock - Based Compensation Pl27
Stock - Based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Nonvested Phantom Stock Units | The following table summarizes information about the Company’s nonvested phantom stock Units at December 31, 2017: Units Weighted Average Grant Date Fair Value Number of Phantom Stock Unit Awards: Nonvested at December 31, 2016 23,671 $ 27.87 Granted 9,000 $ 41.68 Vested (11,375 ) $ 26.26 Forfeited — — Canceled — — Nonvested at December 31, 2017 21,296 $ 34.74 Phantom Stock Unit Awards Expected to Vest 21,296 $ 34.74 |
Quarterly Consolidated Financ28
Quarterly Consolidated Financial Statements (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The table below sets forth selected quarterly information for each full quarter of 2017 and 2016. For the Year-Ended December 31, 2017 First Second Third Fourth Year (dollars in thousands except per share data) Net Sales $ 25,607 $ 23,805 $ 24,923 $ 27,464 $ 101,799 Gross Profit $ 15,336 $ 14,142 $ 15,207 $ 17,081 $ 61,766 Net Income attributable to Omega Flex, Inc. $ 4,138 $ 3,034 $ 4,014 $ 4,476 $ 15,662 Basic and Diluted Earnings per common share $ 0.41 $ 0.30 $ 0.40 $ 0.44 $ 1.55 For the Year-Ended December 31, 2016 First Second Third Fourth Year (dollars in thousands except per share data) Net Sales $ 20,626 $ 23,840 $ 23,942 $ 25,643 $ 94,051 Gross Profit $ 12,492 $ 14,689 $ 14,777 $ 15,926 $ 57,884 Net Income attributable to Omega Flex, Inc. $ 2,643 $ 3,713 $ 3,888 $ 4,133 $ 14,377 Basic and Diluted Earnings per common share $ 0.26 $ 0.37 $ 0.39 $ 0.41 $ 1.42 |
Significant Accounting Polici29
Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for doubtful accounts receivable | $ 920 | $ 926 | |
Advertising expense | 1,075 | 1,047 | $ 1,062 |
Research and development expense | 923 | 788 | 876 |
Shipping costs | $ 2,562 | $ 2,339 | $ 2,429 |
Sales Revenue [Member] | |||
Concentration risk percentage | 89.00% | 89.00% | 89.00% |
One Customer [Member] | Sales Revenue [Member] | |||
Concentration risk percentage | 15.00% | 13.00% | 16.00% |
One Customer [Member] | Accounts Receivable [Member] | |||
Concentration risk percentage | 19.00% | 20.00% | |
No Customer [Member] | |||
Concentration risk percentage | 10.00% | ||
Minimum [Member] | |||
Defense costs per claim | $ 25 | ||
Maximum [Member] | |||
Defense costs per claim | $ 1,000 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Inventory valuation reserves | $ 479 | $ 1,062 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories, Net of Reserves (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 5,461 | $ 5,254 |
Raw Materials | 2,546 | 2,118 |
Total Inventories-Net | $ 8,007 | $ 7,372 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Construction in progress, gross | $ 0 | $ 34 | |
Depreciation and amortization expense | $ 502 | $ 459 | $ 460 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment - Gross | $ 18,151 | $ 14,973 |
Accumulated depreciation | (11,153) | (10,571) |
Property and Equipment - Net | 6,998 | 4,402 |
Land [Member] | ||
Property and Equipment - Gross | 1,205 | 538 |
Buildings [Member] | ||
Property and Equipment - Gross | $ 6,293 | 4,407 |
Property and Equipment, Useful Lives | 39 years | |
Leasehold Improvements [Member] | ||
Property and Equipment - Gross | $ 411 | 399 |
Leasehold Improvements [Member] | Minimum [Member] | ||
Property and Equipment, Useful Lives | 3 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Property and Equipment, Useful Lives | 10 years | |
Equipment [Member] | ||
Property and Equipment - Gross | $ 10,242 | $ 9,629 |
Equipment [Member] | Minimum [Member] | ||
Property and Equipment, Useful Lives | 3 years | |
Equipment [Member] | Maximum [Member] | ||
Property and Equipment, Useful Lives | 10 years |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) $ in Thousands | Dec. 01, 2017 | Dec. 29, 2014 | Dec. 31, 2017 | Dec. 31, 2016 |
Line of credit facility, fair value of amount outstanding | ||||
Loan Agreement [Member] | ||||
Line of credit facility, maximum borrowing capacity | $ 15,000 | $ 15,000 | ||
Line of credit expiration date | Dec. 1, 2022 | Dec. 31, 2019 | ||
Line of credit facility, interest rate description | The loan is unsecured. The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime Rate up to Prime Rate plus 0.50% (for borrowings with no fixed term other than the December 1, 2022 maturity date), depending upon the Companys then existing financial ratios. Currently, the Companys ratio would allow for the most favorable rate under the agreements range, which would be a rate of 2.4%. | The Line provided for the payment of any borrowings at an interest rate of either LIBOR plus 1.00% to plus 1.35% (for borrowings with a fixed term of 30, 60, or 90 days), or Prime from 0.00% to plus 0.10%, depending upon the Companys then existing financial ratios. | ||
Line of credit facility, commitment fee description | The Company is also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance of the note. The Company may terminate the line at any time during the five year term, as long as there are no amounts outstanding. | Under the terms of the agreement, the Company was required to pay on a quarterly basis an unused facility fee equal to 10 basis points of the average unused balance of the total Line commitment. | ||
Line of credit period | 5 years | 5 years | ||
Line of credit facility, description | On December 1, 2017, the Company agreed to a new Amended and Restated Revolving Line of Credit Note and Third Amendment to the Loan Agreement with Santander Bank, N.A. (the Bank). | On December 29, 2014, the Company entered into an Amended and Restated Committed Revolving Line of Credit Note (the Line) and a Second Amendment to the Loan Agreement with the Bank. |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 06, 2017 | Jan. 06, 2016 | Apr. 04, 2014 | Dec. 31, 2017 | Dec. 13, 2017 | Sep. 11, 2017 | Jun. 09, 2017 | Dec. 31, 2016 | Dec. 14, 2016 | Dec. 31, 2015 | Dec. 10, 2015 |
Common stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||||||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||
Common stock, shares issued | 10,153,633 | 10,153,633 | 10,153,633 | ||||||||
Common stock, shares outstanding | 10,091,822 | 10,091,822 | 10,091,822 | ||||||||
Treasury stock, common, shares | 61,811 | 61,811 | 61,811 | ||||||||
Dividends payable, amount per share | $ 0.22 | $ 0.22 | $ 0.22 | $ 0.85 | $ 0.85 | ||||||
Dividend Paid | $ 8,578 | $ 8,578 | |||||||||
Stock repurchase program, authorized amount | $ 1,000 | ||||||||||
December of 2007 [Member] | |||||||||||
Stock repurchase program, authorized amount | $ 5,000 | ||||||||||
December of 2007 [Member] | Since Inception [Member] | |||||||||||
Stock repurchased during period, shares | 61,811 | ||||||||||
Stock repurchased during period, value | $ 932 | ||||||||||
Stock repurchased during period, value per share | $ 15 | ||||||||||
July 2017 [Member] | |||||||||||
Dividend Paid | $ 2,220 | ||||||||||
October 2017 [Member] | |||||||||||
Dividend Paid | 2,220 | ||||||||||
January 2018 [Member] | |||||||||||
Dividend Paid | $ 2,220 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | Dec. 22, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Federal income tax percentage | 35.00% | 35.00% | ||
Current tax benefit | $ 118 | |||
Taxes on unremitted foreign earnings | $ 827 | |||
Tax rate, net of foreign tax credits | 7.00% | |||
Foreign income included in pre-tax income | $ 4,528 | $ 3,944 | $ 4,117 | |
Payment terms, tax on unremitted foreign earnings | This amount will be paid over 8 years. | |||
Unrecognized tax benefits | $ 110 | |||
Reduced [Member] | ||||
Federal income tax percentage | 21.00% | |||
New Rate [Member] | ||||
Federal income tax percentage | 21.00% | |||
Reduction Corporate Tax [Member] | 2018 [Member] | ||||
Federal income tax percentage | 21.00% |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Federal Income Tax, Current | $ 6,848 | $ 5,788 | $ 6,155 |
Federal Income Tax, Deferred | 48 | (311) | 31 |
State Income Tax, Current | 667 | 652 | 601 |
State Income Tax, Deferred | 16 | (23) | 2 |
Foreign Income Tax, Current | 863 | 791 | 797 |
Foreign Income Tax, Deferred | 8 | 78 | 17 |
Income Tax Expense | $ 8,450 | $ 6,975 | $ 7,603 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Computed Statutory Income Tax Expense | $ 8,440 | $ 7,475 | $ 8,193 |
State Income Tax, Net of Federal Tax Benefit | 447 | 386 | 360 |
Foreign Tax Rate Differential | (713) | (592) | (607) |
Impact of Deemed Repatriation due to Tax Reform | 827 | ||
Manufacturing Deduction | (401) | (385) | (423) |
Impact of Federal Tax Rate Reduction on Deferred Taxes | (118) | ||
Increase/(Reduction) in Tax Uncertainties | (70) | 3 | |
Valuation Allowance for Foreign Loss Carryover | 70 | ||
Other - Net | (32) | 91 | 77 |
Income Tax Expense | $ 8,450 | $ 6,975 | $ 7,603 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Compensation Assets | $ 98 | $ 151 |
Inventory Valuation | 195 | 482 |
Accounts Receivable Valuation | 215 | 344 |
Deferred Litigation Costs | 24 | 37 |
Foreign Net Operating Losses | 70 | 70 |
Valuation Allowance for Loss Carryover | (70) | (70) |
Other | 78 | 265 |
Compensation Liabilities | 648 | 796 |
Total Deferred Assets | 1,258 | 2,075 |
Prepaid Expenses | (417) | (655) |
Depreciation and Amortization | (1,038) | (1,546) |
Total Deferred Liabilities | (1,455) | (2,201) |
Total Deferred Tax Liability | $ (197) | $ (126) |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Beginning Unrecognized Tax Benefits | $ 110 | |
Current Year - Increases | ||
Current Year - Decreases | ||
Current Year - Interest/Penalties | 4 | |
Expired Statutes | (114) | |
Ending Unrecognized Tax Benefits |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Leases [Abstract] | ||||
Operating leases term, description | Additionally, the Company leases its corporate office space in Middletown, CT, with the lease term expiring in 2022 | The lease in Banbury was effective April 1, 2006 and has a 15-year term ending in March 2021. | the Company obtained a new five year lease on a warehousing and distribution center in Houston, Texas. | |
Rent expense | $ 393 | $ 486 | $ 504 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Leases [Abstract] | |
2,018 | $ 469 |
2,019 | 416 |
2,020 | 321 |
2,021 | 169 |
2,022 | 61 |
Thereafter | |
Total Minimum Lease Payments | $ 1,436 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Qualified Non-contributory Profit-sharing [Member] | |||
Employee contribution | $ 338 | $ 323 | $ 307 |
Employee Contributions, description | Contributions to the Plan are defined as three percent (3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under the Employee Retirement Income Security Act (ERISA). Participants vest over six years. | ||
Savings and Retirement [Member] | |||
Employee contribution | $ 227 | $ 196 | $ 93 |
Employee Contributions, description | The Company also maintains a savings and retirement plan qualified under Internal Revenue Code Section 401(k) for all employees. Employees are eligible to participate in the Plan the first day of the month following date of hire. Participants may elect to have up to fifty percent (50%) of their compensation withheld, up to the maximum allowed by the Internal Revenue Code. Effective January 1, 2016, after completing one year of service, the Company contributed an additional amount equal to 50% of all employee contributions, up to a maximum of 6% of an employees gross wages. Prior to 2016, the Company contributed an additional amount equal to 25% of all employee contributions, up to a maximum of 6% of an employees gross wages. |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2017 | |
Other compensation liabilities | $ 515,000 | $ 496,000 | |
Other compensation liabilities, noncurrent | 503,000 | 484,000 | |
Other compensation liabilities, current | 12,000 | 12,000 | |
Cash surrender value of life insurance | 1,169,000 | 1,281,000 | |
Amount of security to proceed current appeal | $ 1,600,000 | ||
Proceeds from legal settlements | 132,500 | 282,000 | |
Relieved assets on books after legal settlement | 213,000 | ||
Allocation of proceeds from legal settlements to offset operating expenses | $ 69,000 | ||
Maximum aggregate claim amount | 2,700,000 | ||
Liabilities recorded | $ 273,000 | 175,000 | |
February 16, 2018 [Member] | |||
Amount of security to proceed current appeal | 1,600,000 | ||
Minimum [Member] | |||
Payment benefit to employee's | 1,000 | ||
Deductibles per claim | 25,000 | ||
Minimum [Member] | Insurance Claims [Member] | |||
Potential liability per claim | 0 | ||
Maximum [Member] | |||
Payment benefit to employee's | 3,000 | ||
Deductibles per claim | 1,000,000 | ||
Maximum [Member] | Insurance Claims [Member] | |||
Potential liability per claim | $ 1,000,000 |
Stock - Based Compensation Pl45
Stock - Based Compensation Plans (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share based compensation, description | through 2,020 | |||
Unvested units outstanding | 21,296 | 23,671 | ||
Share based compensation grants in period | 8,690 | 9,000 | ||
Share based compensation weighted average grant date fair value | $ 41.68 | |||
Share based compensation fully vested | $ 428 | |||
Forfeiture rate of plan | 0.00% | |||
Share based compensation liability | $ 2,238 | $ 1,624 | ||
Share based compensation liability, current | 776 | 506 | ||
Share based compensation liability, non current | 1,462 | 1,118 | ||
Compensation expense | 1,042 | |||
Unrecognized compensation costs | $ 789 | |||
Compensation expense, weighted average recognize period | 1 year | |||
Phantom Stock Plan [Member] | ||||
Compensation expense | $ 1,042 | $ 996 | $ 177 | |
Phantom Stock Plan [Member] | ||||
Share based compensation, description | On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the Plan). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers or directors of the Company. The phantom stock units ("Units") each represent a contractual right to payment of compensation in the future based on the market value of the Companys common stock. On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the Plan). The Plan authorizes the grant of up to 1 million units of phantom stock to employees, officers or directors of the Company and of any of its subsidiaries. The phantom stock units ("Units") each represent a contractual right to payment of compensation in the future based on the market value of the Companys common stock. | |||
Share based compensation number of shares authorized | 1,000,000 | |||
Share based compensation vesting rights | The Units follow a vesting schedule, with a maximum vesting of three years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. |
Stock - Based Compensation Pl46
Stock - Based Compensation Plans - Summary of Nonvested Phantom Stock Units (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Nonvested Units, Beginning balance | shares | 23,671 |
Nonvested Units, Granted | shares | 9,000 |
Nonvested Units, Vested | shares | (11,375) |
Nonvested Units, Forfeited | shares | |
Nonvested Units, Canceled | shares | |
Nonvested Units, Ending Balance | shares | 21,296 |
Phantom Stock Unit Awards Expected to Vest, Units | shares | 21,296 |
Nonvested Weighted Average Grant Date Fair Value, Beginning balance | $ / shares | $ 27.87 |
Nonvested Weighted Average Grant Date Fair Value, Granted | $ / shares | 41.68 |
Nonvested Weighted Average Grant Date Fair Value, Vested | $ / shares | 26.26 |
Nonvested Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Nonvested Weighted Average Grant Date Fair Value, Canceled | $ / shares | |
Nonvested Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | 34.74 |
Phantom Stock Unit Awards Expected to Vest, Weighted Average Grant Date Fair Value | $ / shares | $ 34.74 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Related Party Transactions [Abstract] | |
Related parties amount secured by company | $ 147 |
Quarterly Consolidated Financ48
Quarterly Consolidated Financial Statements (Unaudited) - Schedule of Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net Sales | $ 27,464 | $ 24,923 | $ 23,805 | $ 25,607 | $ 25,643 | $ 23,942 | $ 23,840 | $ 20,626 | $ 101,799 | $ 94,051 | $ 93,278 |
Gross Profit | 17,081 | 15,207 | 14,142 | 15,336 | 15,926 | 14,777 | 14,689 | 12,492 | 61,766 | 57,884 | 57,146 |
Net Income attributable to Omega Flex, Inc. | $ 4,476 | $ 4,014 | $ 3,034 | $ 4,138 | $ 4,133 | $ 3,888 | $ 3,713 | $ 2,643 | $ 15,662 | $ 14,377 | $ 15,788 |
Basic and Diluted Earnings per common share | $ 0.44 | $ 0.40 | $ 0.30 | $ 0.41 | $ 0.41 | $ 0.39 | $ 0.37 | $ 0.26 | $ 1.55 | $ 1.42 | $ 1.56 |