Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2018shares | |
Document And Entity Information | |
Entity Registrant Name | Omega Flex, Inc. |
Entity Central Index Key | 1,317,945 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 10,091,822 |
Trading symbol | OFLX |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and Cash Equivalents | $ 38,504 | $ 37,938 |
Accounts Receivable - less allowances of $933 and $920, respectively | 15,532 | 15,636 |
Inventories-Net | 8,271 | 8,007 |
Other Current Assets | 963 | 1,895 |
Total Current Assets | 63,270 | 63,476 |
Property and Equipment-Net | 7,463 | 6,998 |
Goodwill-Net | 3,526 | 3,526 |
Deferred Taxes | 12 | 12 |
Other Long Term Assets | 1,332 | 3,079 |
Total Assets | 75,603 | 77,091 |
Current Liabilities: | ||
Accounts Payable | 1,454 | 2,598 |
Accrued Compensation | 2,466 | 4,851 |
Accrued Commissions and Sales Incentives | 3,177 | 4,284 |
Dividends Payable | 2,422 | 2,220 |
Taxes Payable | 909 | 568 |
Other Liabilities | 3,474 | 3,583 |
Total Current Liabilities | 13,902 | 18,104 |
Deferred Taxes | 37 | 209 |
Long Term Taxes Payable | 761 | |
Other Long Term Liabilities | 1,646 | 1,948 |
Total Liabilities | 15,585 | 21,022 |
Commitments and Contingencies (Note 5) | ||
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 June 30, 2018 and December 31, 2017 | 102 | 102 |
Treasury Stock | (1) | (1) |
Paid-in Capital | 10,808 | 10,808 |
Retained Earnings | 49,754 | 45,457 |
Accumulated Other Comprehensive Loss | (843) | (908) |
Total Omega Flex, Inc. Shareholders' Equity | 59,820 | 55,458 |
Noncontrolling Interest | 198 | 611 |
Total Shareholders' Equity | 60,018 | 56,069 |
Total Liabilities and Shareholders' Equity | $ 75,603 | $ 77,091 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 933 | $ 920 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 10,153,633 | 10,153,633 |
Common stock, shares outstanding | 10,091,822 | 10,091,822 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Net Sales | $ 26,847 | $ 23,805 | $ 52,244 | $ 49,412 |
Cost of Goods Sold | 10,633 | 9,663 | 20,997 | 19,934 |
Gross Profit | 16,214 | 14,142 | 31,247 | 29,478 |
Selling Expense | 4,281 | 4,046 | 8,695 | 8,352 |
General and Administrative Expense | 4,465 | 4,799 | 8,554 | 8,817 |
Engineering Expense | 1,110 | 862 | 2,140 | 1,670 |
Operating Profit | 6,358 | 4,435 | 11,858 | 10,639 |
Interest Income | 94 | 25 | 145 | 49 |
Other Income (Expense) | (76) | 18 | (40) | (22) |
Income Before Income Taxes | 6,376 | 4,478 | 11,963 | 10,666 |
Income Tax Expense | 1,564 | 1,394 | 2,948 | 3,399 |
Net Income | 4,812 | 3,084 | 9,015 | 7,267 |
Less: Net Income attributable to the Noncontrolling Interest | (36) | (50) | (76) | (95) |
Net Income attributable to Omega Flex, Inc. | $ 4,776 | $ 3,034 | $ 8,939 | $ 7,172 |
Basic and Diluted Earnings per Common Share | $ 0.47 | $ 0.30 | $ 0.89 | $ 0.71 |
Cash Dividends Declared per Common Share | $ 0.46 | $ 0.22 | $ 0.46 | $ 0.22 |
Basic and Diluted Weighted-Average Shares Outstanding | 10,092 | 10,092 | 10,092 | 10,092 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net Income | $ 4,812 | $ 3,084 | $ 9,015 | $ 7,267 |
Other Comprehensive Income (Loss): | ||||
Foreign Currency Translation Adjustment | (363) | 290 | 67 | 425 |
Other Comprehensive Income (Loss) | (363) | 290 | 67 | 425 |
Comprehensive Income | 4,449 | 3,374 | 9,082 | 7,692 |
Less: Comprehensive Income Attributable to the Noncontrolling Interest | (15) | (66) | (78) | (118) |
Total Comprehensive Income | $ 4,434 | $ 3,308 | $ 9,004 | $ 7,574 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Shareholders' Equity - 6 months ended Jun. 30, 2018 - 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, 2017 | $ 102 | $ (1) | $ 10,808 | $ 45,457 | $ (908) | $ 611 | $ 56,069 |
Balance, shares at Dec. 31, 2017 | 10,091,822 | ||||||
Net Income | 8,939 | 76 | 9,015 | ||||
Cumulative Translation Adjustment | 65 | 2 | 67 | ||||
Dividends Declared | (4,642) | (491) | (5,133) | ||||
Balance at Jun. 30, 2018 | $ 102 | $ (1) | $ 10,808 | $ 49,754 | $ (843) | $ 198 | $ 60,018 |
Balance, shares at Jun. 30, 2018 | 10,091,822 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net Income | $ 9,015 | $ 7,267 |
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: | ||
Non-Cash Compensation Expense | 444 | 468 |
Depreciation and Amortization | 241 | 230 |
Provision for Losses on Accounts Receivable | 2 | (87) |
Provision for Inventory Reserves | (154) | 66 |
Deferred Taxes | (172) | (486) |
Changes in Assets and Liabilities: | ||
Accounts Receivable | 52 | 79 |
Inventories | (142) | (1,104) |
Other Assets | 2,683 | 556 |
Accounts Payable | (1,140) | (225) |
Accrued Compensation | (2,380) | (2,105) |
Accrued Commissions and Sales Incentives | (1,104) | (265) |
Other Liabilities | (1,258) | (39) |
Net Cash Provided by Operating Activities | 6,087 | 4,355 |
Cash Flows from Investing Activities: | ||
Capital Expenditures | (708) | (2,862) |
Net Cash Used in Investing Activities | (708) | (2,862) |
Cash Flows from Financing Activities: | ||
Dividends Paid | (4,931) | (8,578) |
Net Cash Used in Financing Activities | (4,931) | (8,578) |
Net Increase (Decrease) in Cash and Cash Equivalents | 448 | (7,085) |
Translation effect on cash | 118 | 335 |
Cash and Cash Equivalents - Beginning of Period | 37,938 | 35,318 |
Cash and Cash Equivalents - End of Period | 38,504 | 28,568 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for Income Taxes | 3,517 | 4,457 |
Cash paid for Interest | ||
Declared Dividends | $ 5,133 | $ 2,220 |
Basis of Presentation and Descr
Basis of Presentation and Description of Business | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Description of Business | 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Omega Flex, Inc. (Omega) and its subsidiaries (collectively the “Company”). The Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP), and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest shareholders’ annual report (Form 10-K). All material inter-company accounts and transactions have been eliminated in consolidation. It is Management’s opinion that all adjustments necessary for a fair statement of the results for the interim periods have been made, and that all adjustments are of a normal recurring nature or a description is provided for any adjustments that are not of a normal recurring nature. Description of Business The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose (also described as corrugated tubing), as well as the sale of the Company’s related proprietary fittings and a vast array of accessories. The Company is a leading manufacturer of flexible metal hose, which is used in a variety of ways to carry gases and liquids within their particular applications. Some of the more prominent uses include carrying fuel gases within residential and commercial buildings, the transfer of liquefied gases in certain processing applications, vibration absorbers in high vibration applications, 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, and the Company’s corrugated tubing can also be used in the healthcare industry to carry various medical related gases. 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 primarily sells its products through distributors, wholesalers and to original equipment manufacturers (“OEMs”) throughout North America and Europe, and to a lesser extent other global markets. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with 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 as of 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 and related sales incentives, accounts receivable allowances, inventory valuations, goodwill valuation, product liability reserve, stock-based compensation valuations and accounting for income taxes. Actual amounts could differ significantly from these estimates. Revenue Recognition Effective January 1, 2018, the Company adopted the requirements of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective approach). The Company selected the modified retrospective approach however there was no material impact which required a cumulative effect adjustment. The principle of Topic 606 was achieved through applying the following five-step approach: ● Identification of the contract, or contracts, with a customer — ● Identification of the performance obligations in the contract — ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation ● The Company has a present right to payment ● The customer has legal title to the goods ● The Company has transferred physical possession of the goods ● The customer has the significant risks and rewards of ownership of the goods ● The customer has accepted the goods It is important to note that the indicators are not a set of conditions that must be met before the Company can conclude that control of the goods has transferred to the customer. The indicators are a list of factors that are often present if a customer has control of the goods. The Company has typical, unmodified FOB shipping point terms. As the seller, the Company can determine that the shipped goods meet the agreed-upon specifications in the contract or customer purchase order (e.g. items, quantities, and prices) with the buyer, so customer acceptance would be deemed a formality, as noted in ASC 606-10-55-86. As a result, the Company has a legal right to payment upon shipment of the goods. Based upon the above, the Company has concluded that transfer of control substantively transfers to the customer upon shipment. Other considerations of Topic 606 include the following: ● Contract Costs - ● Warranties ● Returned Goods ● Volume Rebates (Promotional Incentives) ● The amount of consideration is highly susceptible to factors outside the company’s influence. ● The uncertainty about the amount of consideration is not expected to be resolved for a long period of time. ● The Company’s experience with similar types of contracts is limited. ● The contract has a large number and broad range of possible consideration amounts. If it was concluded that the above factors were in place for the Company, it would support the probability of a significant reversal of revenue. However, as none of the four factors apply to the Company, promotional incentives are recorded as a reduction of revenue based upon estimates of the products expected to be sold. Regarding disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose. Most of the Company’s transactions are very similar in nature, contract, terms, timing, and transfer of control of goods. As indicated within Note 2, under the caption “Significant Concentration”, the majority of the Company’s sales were geographically contained within North America, with the remainder scattered internationally. All performance assessments and resource allocations are generally based upon the review of the results of the Company as a whole. 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 US 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 $933,000 and $920,000 as of June 30, 2018 and December 31, 2017, 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 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. This analysis did not indicate any impairment of goodwill. There were no circumstances that indicate that Goodwill might be impaired at June 30, 2018. 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 6. 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 5, 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. 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, most of which relate to our foreign subsidiary whose functional currency is British pound sterling, are translated into US dollars at exchange rates prevailing on the balance sheet dates. The statements of income are translated into US 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 income (other 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. The Company reflected the effects of the Tax Cuts and Jobs Act (the “Act”), in its 2017 financial statements. This included the effects of the change in the US corporate tax rate from 35% to 21% on deferred tax assets and liabilities, and a provision related to previously deferred taxes on earnings of the Company’s foreign subsidiary. The Company’s tax expense for the period ended June 30, 2018 includes the continuing effect of the reduction in the US corporate tax rate from 35% to 21%, effective for the Company’s 2018 tax year. The Company’s tax provision also reflects other changes as a result of the Act, including the impact of the Global Intangible Low Taxed Income (“GILTI”) provisions, and changes affecting the deductibility of certain executive compensation. Other Comprehensive Income For the quarters ended June 30, 2018 and 2017, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments. Significant Concentration The Company has one significant customer who represents more than 10% of the Company’s Net Sales for the three and six months ended June 30, 2018 and 2017, and more than 10% of the Company’s Accounts Receivable balance at June 30, 2018 and December 31, 2017. Geographically, the Company has a significant amount of sales in the United States versus internationally. These concentrations are consistent with those discussed in detail in the Company’s December 31, 2017 Form 10-K. Subsequent Events The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its condensed consolidated financial statements. Refer to Note 9 of the condensed consolidated financial statements. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. INVENTORIES Inventories, net of reserves consisted of the following: June 30, 2018 December 31, 2017 (dollars in thousands) Finished Goods $ 5,150 $ 5,461 Raw Materials 3,121 2,546 Inventories-Net $ 8,271 $ 8,007 |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Line of Credit | 4. 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 3.09%. 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 outlined in the December 31, 2017 Form 10-K, and filed as an Exhibit to the Current Report on Form 8-K on December 29, 2014. As of June 30, 2018 and December 31, 2017, the Company had no outstanding borrowings on its line of credit, and was in compliance with all debt covenants. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 5. 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 $474,000 at June 30, 2018, of which $462,000 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, 2017 liability of $496,000, had $484,000 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 $1,316,000 at June 30, 2018 and $1,281,000 at December 31, 2017. As disclosed in detail in Note 8 of the Company’s December 31, 2017 Form 10-K, 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 number 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 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 successfully removed the case to federal court and is currently vigorously defending the case. The Company has in place commercial general liability insurance policies that cover most 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 $3,800,000, 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 or anticipated settlements for Claims. The liabilities recorded on the Company’s books at June 30, 2018 and December 31, 2017 were $160,000 and $175,000, respectively, and are included in Other Liabilities. |
Stock Based Plans
Stock Based Plans | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Plans | 6. STOCK BASED 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 June 30, 2018. The total Phantom Stock related liability as of June 30, 2018 was $2,036,000 of which $853,000 is included in Other Liabilities, as it is expected to be paid in February 2019, and the balance of $1,183,000 is included in Other Long Term Liabilities. At December 31, 2017, the total Phantom Stock liability was $2,238,000, with $776,000 in Other Liabilities, and $1,462,000 included in Other Long Term Liabilities. Related to the Phantom Stock Plan, in accordance with FASB ASC Topic 718, Stock Compensation, the Company recorded compensation expense of approximately $444,000 and $468,000 for the six months ended June 30, 2018 and 2017, respectively. Compensation income or expense for a given period largely depends upon fluctuations in the Company’s stock price. The following table summarizes information about the Company’s nonvested phantom stock Units at June 30, 2018: Units Weighted Average Grant Date Fair Value Number of Phantom Stock Unit Awards: Nonvested at December 31, 2017 21,296 $ 34.74 Granted 6,450 $ 53.04 Vested (9,558 ) $ 32.96 Forfeited — — Canceled — — Nonvested at June 30, 2018 18,188 $ 43.53 Phantom Stock Unit Awards Expected to Vest 18,188 $ 43.53 The total unrecognized compensation costs calculated at June 30, 2018 are $1,077,000 which will be recognized through February of 2021. The Company will recognize the related expense over the weighted average period of 1.4 years. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | 7. SHAREHOLDERS’ EQUITY For the periods ending June 30, 2018 and December 31, 2017, 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 2018, the Board of Directors (the “Board”) announced regular quarter dividends in April and June of $0.22 and $0.24 per share, respectively, to all Shareholders of record. The respective dividend payments amounting to $2,220,000 and $2,422,000 were made in April and July of 2018. Additionally, there was a dividend that was paid in April by the Company’s foreign subsidiary, which amounted to an outlay of cash of $491,000 to the foreign subsidiary’s noncontrolling interest. During 2017, the Board revised its dividend policy to allow for and establish a record of paying regular quarterly dividends. In furtherance of this policy, during 2017 the Company announced in June, September, and December that the Board had approved a quarterly dividend in the amount of $0.22 per share to all Shareholders of record, amounting to the respective dividend payments of $2,220,000 in July, October, and January of 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 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 has not made any stock repurchases since 2014. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. RELATED PARTY TRANSACTIONS From time to time the Company may have related party transactions (“RPTs”). In short, RPTs 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 RPTs exist. Through this investigation, the Company is currently not aware of any RPTs 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 $5,000 and $147,000 at June 30, 2018 and December 31, 2017, respectively, which are contractually secured by the Company. In April 2018, a majority of the amounts due from related parties was collected. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred through the date of this filing. During this period, the Company did not have any material subsequent events that impacted its condensed consolidated financial statements. |
Significant Accounting Polici17
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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 as of 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 and related sales incentives, accounts receivable allowances, inventory valuations, goodwill valuation, product liability reserve, stock-based compensation valuations and accounting for income taxes. Actual amounts could differ significantly from these estimates. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted the requirements of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective approach). The Company selected the modified retrospective approach however there was no material impact which required a cumulative effect adjustment. The principle of Topic 606 was achieved through applying the following five-step approach: ● Identification of the contract, or contracts, with a customer — ● Identification of the performance obligations in the contract — ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation ● The Company has a present right to payment ● The customer has legal title to the goods ● The Company has transferred physical possession of the goods ● The customer has the significant risks and rewards of ownership of the goods ● The customer has accepted the goods It is important to note that the indicators are not a set of conditions that must be met before the Company can conclude that control of the goods has transferred to the customer. The indicators are a list of factors that are often present if a customer has control of the goods. The Company has typical, unmodified FOB shipping point terms. As the seller, the Company can determine that the shipped goods meet the agreed-upon specifications in the contract or customer purchase order (e.g. items, quantities, and prices) with the buyer, so customer acceptance would be deemed a formality, as noted in ASC 606-10-55-86. As a result, the Company has a legal right to payment upon shipment of the goods. Based upon the above, the Company has concluded that transfer of control substantively transfers to the customer upon shipment. Other considerations of Topic 606 include the following: ● Contract Costs - ● Warranties ● Returned Goods ● Volume Rebates (Promotional Incentives) ● The amount of consideration is highly susceptible to factors outside the company’s influence. ● The uncertainty about the amount of consideration is not expected to be resolved for a long period of time. ● The Company’s experience with similar types of contracts is limited. ● The contract has a large number and broad range of possible consideration amounts. If it was concluded that the above factors were in place for the Company, it would support the probability of a significant reversal of revenue. However, as none of the four factors apply to the Company, promotional incentives are recorded as a reduction of revenue based upon estimates of the products expected to be sold. Regarding disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose. Most of the Company’s transactions are very similar in nature, contract, terms, timing, and transfer of control of goods. As indicated within Note 2, under the caption “Significant Concentration”, the majority of the Company’s sales were geographically contained within North America, with the remainder scattered internationally. All performance assessments and resource allocations are generally based upon the review of the results of the Company as a whole. |
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 US 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 $933,000 and $920,000 as of June 30, 2018 and December 31, 2017, 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 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. This analysis did not indicate any impairment of goodwill. There were no circumstances that indicate that Goodwill might be impaired at June 30, 2018. |
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 6. |
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 5, 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. |
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, most of which relate to our foreign subsidiary whose functional currency is British pound sterling, are translated into US dollars at exchange rates prevailing on the balance sheet dates. The statements of income are translated into US 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 income (other 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. The Company reflected the effects of the Tax Cuts and Jobs Act (the “Act”), in its 2017 financial statements. This included the effects of the change in the US corporate tax rate from 35% to 21% on deferred tax assets and liabilities, and a provision related to previously deferred taxes on earnings of the Company’s foreign subsidiary. The Company’s tax expense for the period ended June 30, 2018 includes the continuing effect of the reduction in the US corporate tax rate from 35% to 21%, effective for the Company’s 2018 tax year. The Company’s tax provision also reflects other changes as a result of the Act, including the impact of the Global Intangible Low Taxed Income (“GILTI”) provisions, and changes affecting the deductibility of certain executive compensation. |
Other Comprehensive Income | Other Comprehensive Income For the quarters ended June 30, 2018 and 2017, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments. |
Significant Concentration | Significant Concentration The Company has one significant customer who represents more than 10% of the Company’s Net Sales for the three and six months ended June 30, 2018 and 2017, and more than 10% of the Company’s Accounts Receivable balance at June 30, 2018 and December 31, 2017. Geographically, the Company has a significant amount of sales in the United States versus internationally. These concentrations are consistent with those discussed in detail in the Company’s December 31, 2017 Form 10-K. |
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 condensed consolidated financial statements. Refer to Note 9 of the condensed 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net of Reserves | Inventories, net of reserves consisted of the following: June 30, 2018 December 31, 2017 (dollars in thousands) Finished Goods $ 5,150 $ 5,461 Raw Materials 3,121 2,546 Inventories-Net $ 8,271 $ 8,007 |
Stock Based Plans (Tables)
Stock Based Plans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018: Units Weighted Average Grant Date Fair Value Number of Phantom Stock Unit Awards: Nonvested at December 31, 2017 21,296 $ 34.74 Granted 6,450 $ 53.04 Vested (9,558 ) $ 32.96 Forfeited — — Canceled — — Nonvested at June 30, 2018 18,188 $ 43.53 Phantom Stock Unit Awards Expected to Vest 18,188 $ 43.53 |
Significant Accounting Polici20
Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Allowance for doubtful accounts receivable | $ 933 | $ 933 | $ 920 | ||
Corporate tax rate percentage | 21.00% | ||||
Income tax rate examination description | The Company reflected the effects of the Tax Cuts and Jobs Act (the "Act"), in its 2017 financial statements. This included the effects of the change in the US corporate tax rate from 35% to 21% on deferred tax assets and liabilities, and a provision related to previously deferred taxes on earnings of the Company's foreign subsidiary. The Company's tax expense for the period ended June 30, 2018 includes the continuing effect of the reduction in the US corporate tax rate from 35% to 21%, effective for the Company's 2018 tax year. | ||||
Minimum [Member] | |||||
Defense costs per claim | $ 25 | ||||
Minimum [Member] | Customer One [Member] | Sales Revenue Net [Member] | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Minimum [Member] | Customer One [Member] | Accounts Receivable [Member] | |||||
Concentration risk percentage | 10.00% | 10.00% | |||
Maximum [Member] | |||||
Defense costs per claim | $ 1,000 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories, Net of Reserves (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 5,150 | $ 5,461 |
Raw Materials | 3,121 | 2,546 |
Inventories-Net | $ 8,271 | $ 8,007 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) $ in Thousands | Dec. 01, 2017 | Jun. 30, 2018 | Dec. 31, 2017 |
Line of credit facility, fair value of amount outstanding | |||
Loan Agreement [Member] | |||
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"). | ||
Line of credit facility, maximum borrowing capacity | $ 15,000 | ||
Line of credit facility, expiration date | Dec. 1, 2022 | ||
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 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 3.09%. | ||
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. | ||
Line of credit period | 5 years |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
May 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Other compensation liabilities | $ 474 | $ 496 | |
Other compensation liabilities, noncurrent | 462 | 484 | |
Other compensation liabilities, current | 12 | 12 | |
Cash surrender value of life insurance | 1,316 | 1,281 | |
Amount of security to proceed current appeal | $ 1,600 | ||
Maximum aggregate claim amount | 3,800 | ||
Liabilities recorded | 160 | $ 175 | |
Minimum [Member] | |||
Payment benefit to employee's | 1 | ||
Deductibles per claim | 25 | ||
Minimum [Member] | Insurance Claims [Member] | |||
Potential liability per claim | 0 | ||
Maximum [Member] | |||
Payment benefit to employee's | 3 | ||
Deductibles per claim | 1,000 | ||
Maximum [Member] | Insurance Claims [Member] | |||
Potential liability per claim | $ 1,000 |
Stock Based Plans (Details Narr
Stock Based Plans (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Feb. 12, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Share based compensation, description | through February of 2021 | |||
Unvested units outstanding | 18,188 | 21,296 | ||
Share based compensation grants in period | 6,450 | |||
Share based compensation weighted average grant date fair value | $ 53.04 | $ 53.04 | ||
Forfeiture rate of plan | 0.00% | |||
Share based compensation liability | $ 2,036 | $ 2,238 | ||
Share based compensation liability, current | 853 | 776 | ||
Share based compensation liability, non current | 1,183 | $ 1,462 | ||
Compensation expense | 444 | $ 468 | ||
Unrecognized compensation costs | $ 1,077 | |||
Compensation expense, weighted average recognize period | 1 year 4 months 24 days | |||
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 Company's 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 Plans - Summary of
Stock Based Plans - Summary of Nonvested Phantom Stock Units (Details) - $ / shares | Feb. 12, 2018 | Jun. 30, 2018 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Nonvested Units, Beginning balance | 21,296 | |
Nonvested Units, Granted | 6,450 | |
Nonvested Units, Vested | (9,558) | |
Nonvested Units, Forfeited | ||
Nonvested Units, Cancelled | ||
Nonvested Units, Ending Balance | 18,188 | |
Phantom Stock Unit Awards Expected to Vest, Units | 18,188 | |
Nonvested Weighted Average Grant Date Fair Value, Beginning balance | $ 34.74 | |
Nonvested Weighted Average Grant Date Fair Value, Granted | $ 53.04 | 53.04 |
Nonvested Weighted Average Grant Date Fair Value, Vested | 32.96 | |
Nonvested Weighted Average Grant Date Fair Value, Forfeited | ||
Nonvested Weighted Average Grant Date Fair Value, Cancelled | ||
Nonvested Weighted Average Grant Date Fair Value, Ending Balance | 43.53 | |
Phantom Stock Unit Awards Expected to Vest, Weighted Average Grant Date Fair Value | $ 43.53 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 04, 2014 | Jun. 30, 2018 | Apr. 30, 2018 | Jan. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 14, 2016 |
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 | |||||
Dividend Paid | $ 8,578 | ||||||||
Stock repurchase program, authorized amount | $ 1,000 | ||||||||
December 2007 [Member] | |||||||||
Stock repurchase program, authorized amount | $ 5,000 | ||||||||
December 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 | ||||||||
Foreign Subsidiary's [Member] | |||||||||
Dividend Paid | $ 491 | ||||||||
July 2017 [Member] | |||||||||
Dividend Paid | $ 2,220 | ||||||||
October 2017 [Member] | |||||||||
Dividend Paid | 2,220 | ||||||||
January 2018 [Member] | |||||||||
Dividend Paid | $ 2,220 | ||||||||
Board of Directors [Member] | |||||||||
Dividends payable, amount per share | $ 0.24 | $ 0.22 | $ 0.24 | ||||||
Dividend Paid | $ 2,220 | ||||||||
Board of Directors [Member] | July 2018 [Member] | |||||||||
Dividend Paid | $ 2,422 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
Related parties amount secured by company | $ 5 | $ 147 |