Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 01, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | Houston Wire & Cable CO | ||
Entity Central Index Key | 1,356,949 | ||
Document Type | 10-K | ||
Trading Symbol | HWCC | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 85,365,877 | ||
Entity Common Stock, Shares Outstanding | 16,506,525 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Accounts receivable, net | $ 44,677 | $ 46,250 |
Inventories, net | 79,783 | 75,777 |
Income taxes | 1,948 | 932 |
Prepaids | 570 | 648 |
Total current assets | 126,978 | 123,607 |
Property and equipment, net | 11,261 | 10,899 |
Intangible assets, net | 13,378 | 5,984 |
Goodwill | 22,770 | 14,866 |
Deferred income taxes | 892 | 3,338 |
Other assets | 591 | 419 |
Total assets | 175,870 | 159,113 |
Current liabilities: | ||
Book overdraft | 3,181 | 3,701 |
Trade accounts payable | 8,406 | 6,380 |
Accrued and other current liabilities | 13,248 | 9,568 |
Total current liabilities | 24,835 | 19,649 |
Debt | 60,388 | 39,188 |
Other long-term obligations | 516 | 275 |
Total liabilities | 85,739 | 59,112 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding | ||
Common stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952 shares issued: 16,457,525 and 16,712,626 shares outstanding at December 31, 2016 and 2015, respectively | 21 | 21 |
Additional paid-in capital | 53,824 | 54,621 |
Retained earnings | 97,550 | 106,048 |
Treasury stock | (61,264) | (60,689) |
Total stockholders' equity | 90,131 | 100,001 |
Total liabilities and stockholders' equity | $ 175,870 | $ 159,113 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 20,988,952 | 20,988,952 |
Common stock, outstanding | 16,457,525 | 16,712,626 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Sales | $ 261,644 | $ 308,133 | $ 390,011 |
Cost of sales | 208,694 | 242,223 | 304,073 |
Gross profit | 52,950 | 65,910 | 85,938 |
Operating expenses: | |||
Salaries and commissions | 29,369 | 28,537 | 31,196 |
Other operating expenses | 24,714 | 25,023 | 26,400 |
Depreciation and amortization | 3,018 | 2,915 | 2,919 |
Impairment charge | 2,384 | 3,417 | |
Total operating expenses | 59,485 | 59,892 | 60,515 |
Operating income (loss) | (6,535) | 6,018 | 25,423 |
Interest expense | 845 | 901 | 1,168 |
Income (loss) before income taxes | (7,380) | 5,117 | 24,255 |
Income tax expense (benefit) | (1,374) | 3,073 | 9,283 |
Net income (loss) | $ (6,006) | $ 2,044 | $ 14,972 |
Earnings (loss) per share: | |||
Basic (in dollars per share) | $ (0.37) | $ 0.12 | $ 0.85 |
Diluted (in dollars per share) | $ (0.37) | $ 0.12 | $ 0.85 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 16,345,679 | 17,012,560 | 17,605,290 |
Diluted (in shares) | 16,345,679 | 17,067,593 | 17,683,931 |
Dividend declared per share (in dollars per share) | $ 0.15 | $ 0.42 | $ 0.47 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | RetainedEarnings [Member] | Treasury Stock [Member] | Total |
Balance at beginning at Dec. 31, 2013 | $ 21 | $ 55,642 | $ 104,607 | $ (49,576) | $ 110,694 |
Balance at beginning (in shares) at Dec. 31, 2013 | 20,988,952 | (3,034,920) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | 14,972 | 14,972 | |||
Exercise of stock options, net | (116) | $ 297 | 181 | ||
Exercise of stock options, net (in shares) | 18,500 | ||||
Excess tax benefit (deficiency) | (10) | (10) | |||
Repurchase of treasury shares | $ (6,980) | (6,980) | |||
Repurchase of treasury shares (in shares) | (555,008) | ||||
Amortization of unearned stock compensation | 868 | 868 | |||
Impact of forfeited restricted stock awards | 114 | $ (186) | (72) | ||
Impact of forfeited restricted stock awards (in shares) | (11,666) | ||||
Issuance of restricted stock awards | (172) | $ 172 | |||
Issuance of restricted stock awards (in shares) | 10,709 | ||||
Impact of surrendered equity awards to satisfy taxes | (1,455) | $ 1,455 | |||
Impact of surrendered equity awards to satisfy taxes (in shares) | 91,448 | ||||
Dividends on common stock | (8,346) | (8,346) | |||
Balance at end at Dec. 31, 2014 | $ 21 | 54,871 | 111,233 | $ (54,818) | 111,307 |
Balance at end (in shares) at Dec. 31, 2014 | 20,988,952 | (3,480,937) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | 2,044 | 2,044 | |||
Exercise of stock options, net | (48) | $ 59 | 11 | ||
Exercise of stock options, net (in shares) | 4,125 | ||||
Excess tax benefit (deficiency) | (40) | (40) | |||
Repurchase of treasury shares | $ (6,858) | (6,858) | |||
Repurchase of treasury shares (in shares) | (865,922) | ||||
Amortization of unearned stock compensation | 886 | 886 | |||
Impact of forfeited restricted stock awards | 664 | $ (784) | (120) | ||
Impact of forfeited restricted stock awards (in shares) | (52,128) | ||||
Impact of released vested restricted stock units | 224 | $ 224 | |||
Impact of released vested restricted stock units (in shares) | 14,946 | ||||
Issuance of restricted stock awards | (1,488) | $ 1,488 | |||
Issuance of restricted stock awards (in shares) | 103,590 | ||||
Dividends on common stock | (7,229) | (7,229) | |||
Balance at end at Dec. 31, 2015 | $ 21 | 54,621 | 106,048 | $ (60,689) | 100,001 |
Balance at end (in shares) at Dec. 31, 2015 | 20,988,952 | (4,276,326) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (6,006) | (6,006) | |||
Repurchase of treasury shares | $ (2,228) | (2,228) | |||
Repurchase of treasury shares (in shares) | (376,860) | ||||
Amortization of unearned stock compensation | 856 | 856 | |||
Impact of forfeited restricted stock awards | 387 | $ (387) | |||
Impact of forfeited restricted stock awards (in shares) | (28,295) | ||||
Impact of released vested restricted stock units | (284) | $ 284 | |||
Impact of released vested restricted stock units (in shares) | 20,416 | ||||
Issuance of restricted stock awards | (1,756) | $ (1,756) | |||
Issuance of restricted stock awards (in shares) | 129,638 | ||||
Dividends on common stock | (2,492) | (2,492) | |||
Balance at end at Dec. 31, 2016 | $ 21 | $ 53,824 | $ 97,550 | $ (61,264) | $ 90,131 |
Balance at end (in shares) at Dec. 31, 2016 | 20,988,952 | (4,531,427) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net income (loss) | $ (6,006) | $ 2,044 | $ 14,972 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Impairment charge | 2,384 | 3,417 | |
Depreciation and amortization | 3,018 | 2,915 | 2,919 |
Amortization of unearned stock compensation | 856 | 886 | 868 |
Provision for doubtful accounts | 285 | 97 | 50 |
Provision for inventory obsolescence | 93 | 397 | 1,002 |
Deferred income taxes | 6 | (485) | (923) |
Other non-cash items | (116) | (59) | (93) |
Changes in operating assets and liabilities: | |||
Accounts receivable | 4,019 | 15,352 | (1,144) |
Inventories | 10,483 | 12,784 | 6,147 |
Book overdraft | (517) | 588 | (1,481) |
Trade accounts payable | 896 | (1,613) | (5,644) |
Accrued and other current liabilities | 2,587 | (3,557) | (5,794) |
Income taxes | (1,016) | (713) | 184 |
Other operating activities | 271 | (224) | 206 |
Net cash provided by operating activities | 17,243 | 31,829 | 11,269 |
Investing activities | |||
Expenditures for property and equipment | (1,319) | (3,123) | (2,177) |
Proceeds from disposals of property and equipment | 5 | 8 | 25 |
Cash paid for acquisition | (32,370) | ||
Net cash used in investing activities | (33,684) | (3,115) | (2,152) |
Financing activities | |||
Borrowings on revolver | 302,898 | 310,366 | 405,884 |
Payments on revolver | (281,698) | (325,025) | (399,989) |
Proceeds from exercise of stock options | 11 | 181 | |
Payment of dividends | (2,495) | (7,172) | (8,293) |
Excess tax benefit for options | 7 | ||
Purchase of treasury stock | (2,264) | (6,894) | (6,907) |
Net cash provided by (used in) financing activities | 16,441 | (28,714) | (9,117) |
Net change in cash | |||
Cash at beginning of year | |||
Cash at end of year | |||
Supplemental disclosures | |||
Cash paid during the year for interest | 728 | 900 | 1,160 |
Cash paid during the year for income taxes | $ 233 | $ 4,278 | $ 10,029 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Description of Business Houston Wire & Cable Company (the “Company”), through its wholly owned subsidiaries, HWC Wire & Cable Company, Advantage Wire & Cable and Cable Management Services Inc., provides industrial products to the U.S. market through twenty-two locations in fourteen states throughout the United States. In 2010, the Company purchased Southwest Wire Rope LP (“Southwest”), its general partner Southwest Wire Rope GP LLC and its wholly owned subsidiary, Southern Wire (“Southern”) and subsequently merged them into the Company’s operating subsidiary. On October 3, 2016, the Company purchased Vertex Corporate Holdings, Inc. and its subsidiaries (“Vertex”). The Company has no other business activity. Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared following accounting principles generally accepted in the United States (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of the Company’s financial position and operating results. All significant inter-company balances and transactions have been eliminated. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates are those relating to the allowance for doubtful accounts, the reserve for returns and allowances, the inventory obsolescence reserve, vendor rebates, and asset impairments. Actual results could differ materially from the estimates and assumptions used for the preparation of the financial statements. Earnings (loss) per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share include the dilutive effects of option and unvested restricted stock awards and units. The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Year Ended December 31, 2016 2015 2014 Denominator: Weighted average common shares for basic earnings per share 16,345,679 17,012,560 17,605,290 Effect of dilutive securities — 55,033 78,641 Denominator for diluted earnings per share 16,345,679 17,067,593 17,683,931 Stock awards to purchase 685,054, 643,738 and 476,473 shares of common stock were not included in the diluted net income (loss) per share calculation for 2016, 2015 and 2014, respectively, as their inclusion would have been anti-dilutive. Accounts Receivable Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $0.2 million and $0.1 million, and a reserve for returns and allowances of $0.2 million and $0.3 million at December 31, 2016 and 2015, respectively. The Company has no contractual repurchase arrangements with its customers. Credit losses have been within management’s expectations. The following table summarizes the changes in the allowance for doubtful accounts for the past three years: 2016 2015 2014 (In thousands) Balance at beginning of year $ 132 $ 139 $ 148 Bad debt expense 285 97 50 ) Write-offs, net of recoveries (266 ) (104 ) (59 ) Balance at end of year $ 151 $ 132 $ 139 Inventories Inventories are carried at the lower of cost, using the average cost method, or market and consist primarily of goods purchased for resale, less a reserve for obsolescence and unusable items and unamortized vendor rebates. The reserve for inventory is based upon a number of factors, including the experience of the purchasing and sales departments, age of the inventory, new product offerings, and other factors. The reserve for inventory may periodically require adjustment as the factors identified above change. The inventory reserve was $4.4 million and $4.8 million at December 31, 2016 and 2015, respectively. Vendor Rebates Under many of the Company’s arrangements with its vendors, the Company receives a rebate of a specified amount of consideration, payable when the Company achieves any of a number of measures, generally related to the volume level of purchases from the vendors. The Company accounts for such rebates as a reduction of the prices of the vendors’ products and therefore as a reduction of inventory until it sells the products, at which time such rebates reduce cost of sales in the accompanying consolidated statements of operations. Throughout the year, the Company estimates the amount of the rebates earned based on purchases to date relative to the total purchase levels expected to be achieved during the rebate period. The Company continually revises these estimates to reflect rebates expected to be earned based on actual purchase levels and forecasted purchase volumes for the remainder of the rebate period. Property and Equipment The Company provides for depreciation on a straight-line method over the following estimated useful lives: Buildings 25 to 30 years Machinery and equipment 3 to 10 years Leasehold improvements are depreciated over their estimated life or the term of the lease, whichever is shorter. Total depreciation expense was approximately $1.3 million for the year ended December 31, 2016 and $1.2 million for each of the years ended December 31, 2015 and 2014. Goodwill Goodwill represents the excess of the amount paid to acquire businesses over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. At December 31, 2016, the goodwill balance was $22.8 million, representing 12.9% of the Company’s total assets. The Company reviews goodwill for impairment annually, or more frequently if indications of possible impairment exist, using a three-step process. The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of the reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative assessment. If the Company is unable to conclude that the goodwill associated with any reporting unit is not impaired, a second step is performed for that reporting unit. This second step, used to quantitatively screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The third step, employed for any reporting unit that fails the second step, is used to measure the amount of any potential impairment and compares the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. Intangibles Intangible assets, from the acquisition of Southwest and Southern in 2010 and the recent acquisition of Vertex in October 2016, consist of customer relationships and tradenames. The customer relationships are amortized over 6 to 9 year useful lives. If events or circumstances were to indicate that any of the Company’s definite-lived intangible assets might be impaired, the Company would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable intangible asset. If the undiscounted cash flows were less than the carrying value, then the intangible assets would be written down to their fair value. Tradenames have an indefinite life and are not being amortized and are tested for impairment on an annual basis. Self Insurance The Company retains certain self-insurance risks for both health benefits and property and casualty insurance programs. The Company limits its exposure to these self-insurance risks by maintaining excess and aggregate liability coverage. Self-insurance reserves are established based on claims filed and estimates of claims incurred but not reported. The estimates are based on information provided to the Company by its claims administrators. Segment Reporting The Company operates in a single operating and reporting segment, sales of industrial products, including electrical and mechanical wire and cable, industrial fasteners, hardware and related services to the U.S. market. Revenue Recognition, Returns & Allowances The Company recognizes revenue when the following four basic criteria have been met: 1. Persuasive evidence of an arrangement exists; 2. Delivery has occurred or services have been rendered; 3. The seller’s price to the buyer is fixed or determinable; and 4. Collectability is reasonably assured. The Company records revenue when customers take delivery of products. Customers may pick up products at any distribution center location, or products may be delivered via third party carriers. Products shipped via third party carriers are considered delivered based on the shipping terms, which are generally FOB shipping point. Customers are permitted to return product only on a case-by-case basis. Product exchanges are handled as a credit, with any replacement item being re-invoiced to the customer. Customer returns are recorded as an adjustment to sales. In the past, customer returns have not been material. The Company has no installation obligations. The Company may offer sales incentives, which are accrued monthly as an adjustment to sales. Shipping and Handling The Company incurs shipping and handling costs in the normal course of business. Freight amounts invoiced to customers are included as sales and freight charges and are included as a component of cost of sales. Credit Risk No single customer accounted for 10% or more of the Company’s sales in 2016, 2015 or 2014. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Advertising Costs Advertising costs are expensed when incurred. Advertising expenses were $0.4 million for each of the years ended December 31, 2016 and 2015 and $0.3 million for the year ended December 31, 2014. Financial Instruments The carrying values of accounts receivable, trade accounts payable and accrued and other current liabilities approximate fair value, due to the short maturity of these instruments. The carrying amount of long term debt approximates fair value as it bears interest at variable rates. Recent Accounting Pronouncements The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The amendment in this ASU provides final guidance that simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under ASC 350. ASU No. 2017-04 is effective for annual and interim impairment test performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting as well as the timing of when it will adopt this ASU. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The amendments in this ASU address eight cash flow issues with the intention of reducing current diversity in practice among business entities. The Company will evaluate the eight issues in the amendment and determine if any changes are necessary for compliance. ASU No. 2016-15 is effective for annual and interim periods beginning after December 15, 2017; early adoption is permitted and should be applied retrospectively where practical. The Company will determine the date of adoption, once the Company has evaluated the impact of this ASU. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The new guidance addresses several aspects of the accounting for share-based payment award transactions, including: (a) the recognition of the income tax effects of awards in the income statement when the awards vest, forfeit, or are settled, thus eliminating additional paid-in-capital pools, (b) classification of awards as either equity or liabilities, and (c) classification on the statement of cash flows. This update is effective for public companies for fiscal years beginning after December 15, 2016 with early adoption permitted. The Company is currently evaluating the elections the Company may make and therefore the full effects of the adoption of the standard are not yet known. However, as the Company does not have an APIC pool, upon adoption, the change in the recognition of income tax effects will not have an impact on the Company. Additionally, the awards the Company currently has outstanding will remain classified in equity. The Company will adopt this ASU in the first quarter of 2017. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases greater than 1 year, both capital and operating leases. This update is effective for public companies for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impacts of adopting as well as the timing of when it will adopt this ASU. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) — Balance Sheet Classification of Deferred Taxes.” ASU No. 2015-17 eliminates the requirement to classify deferred tax assets and liabilities as current or long-term based on how the related assets or liabilities are classified. All deferred taxes are now required to be classified as long-term including any associated valuation allowances. The Company adopted this guidance in the third quarter of 2016 and has applied it retrospectively. It did not have a material impact on the consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (Topic 330), which changes guidance for subsequent measurement of inventory within the scope of the update from the lower of cost or market to the lower of cost and net realizable value. This update is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. The Company does not believe there will be any material impact upon the adoption of this guidance on the Company’s consolidated financial statements and will adopt this ASU in the first quarter of 2017. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30).” The amendments in this ASU require debt issuance costs to be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. However, the guidance in this ASU did not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. As a result, in August 2015 the FASB issued ASU No. 2015-15 “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Agreements,” to clarify that, with respect to a line-of-credit agreement, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. The Company adopted this guidance in the first quarter of 2016 and is continuing to treat debt issuance costs associated with its revolving credit facility as a deferred asset and amortizing the deferred asset over the term of the credit agreement. Therefore, the adoption did not have any impact on the Company’s financial position or results of operations. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using one of two retrospective methods and are effective for annual and interim periods beginning after December 15, 2017. As the Company recognizes revenue only once product has shipped, it does not believe this ASU will have a significant impact on its revenue recognition policy. The Company will adopt this ASU effective January 1, 2018 and is still evaluating its impact on its financial position and results of operations and which implementation method the Company will use. Stock-Based Compensation Stock options issued under the Company’s stock plan have an exercise price equal to the fair value of the Company’s stock on the grant date. Restricted stock awards and units are valued at the closing price of the Company’s stock on the grant date. The Company recognizes compensation expense ratably over the vesting period. The Company’s compensation expense is included in salaries and commissions expense in the accompanying consolidated statements of operations. The Company receives a tax deduction for certain stock option exercises in the period in which the options are exercised, generally for the excess of the market price on the date of exercise over the exercise price of the options. The Company reports excess tax benefits from the award of equity instruments as financing cash flows. Excess tax benefits result when a deduction reported for tax return purposes for an award of equity instruments exceeds the cumulative compensation cost for the instruments recognized for financial reporting purposes. Income Taxes Deferred tax assets and liabilities are determined based on differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2016 | |
Business Combination, Description [Abstract] | |
Business Combination | 2. Business Combination On October 3, 2016, the Company completed the acquisition of Vertex from DXP Enterprises. The acquisition has been accounted for in accordance with ASC Topic 805, Business Combinations. Accordingly, the total purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as of the acquisition date. Vertex is a master distributor of industrial fasteners, specializing in corrosion resistant and specialty alloy inch and metric threaded fasteners, rivets, and hose clamps, to the industrial market. Under the terms of the acquisition agreement, the purchase price was $32.3 million, subject to an adjustment based on the net working capital of Vertex as of the date of closing. The current working capital adjustment (which is still subject to change) is $0.1 million, making the total purchase price $32.4 million. The Company has elected to treat the acquisition as a stock purchase for tax purposes. The amount of goodwill deductible for tax purposes is $1.0 million. The acquisition was funded by borrowing under the Company’s loan agreement. This acquisition expands the Company’s product offerings to the industrial marketplace that purchases its wire and cable products. The following table summarizes the current estimated fair value of the acquired assets and assumed liabilities recorded as of the date of acquisition. The fair value of all assets acquired and liabilities assumed are preliminary and subject to the completion of incremental analysis of the fair values of the assets acquired and liabilities assumed: At October 3, 2016 (In thousands) Cash $ 3 Accounts receivable 2,626 Inventories 14,582 Prepaids 46 Property and equipment 59 Intangibles 9,161 Goodwill 10,266 Other assets 116 Total assets acquired 36,859 Trade accounts payable 1,130 Accrued and other current liabilities 919 Deferred income taxes 2,440 Total liabilities assumed 4,489 Net assets purchased $ 32,370 The preliminary fair values of the assets acquired and liabilities assumed were determined using the market, income and cost approaches. The market approach used by the Company included prices at which comparable assets were purchased under similar circumstances. The income approach indicated value for the subject net assets based on the present value of cash flows projected to be generated by the net assets over their useful life. Projected cash flows were discounted at a market rate of return that reflects the relative risk associated with the asset and the time value of money. The cost approach estimated value by determining the current cost of replacing the asset with another of equivalent economic utility. The cost to replace a given asset reflected the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation Intangible asset acquired, consist of customer relationships - $7.0 million and trade names - $2.1 million. Trade names are not being amortized, while customer relationships are being amortized over a 9 year useful life. As of December 31, 2016, accumulated amortization and amortization expense recognized on the acquired intangible assets was $0.2 million. Amortization expense to be recognized on the acquired intangible assets is expected to be $0.8 million per year in 2017 through 2024 and $0.6 million in 2025. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the acquisition consists primarily of sales and operational synergies that will be achieved by consolidating certain of Vertex’s locations into existing Company locations and expanding Vertex’s product offerings throughout the balance of the Company’s national platform. Under ASC Topic 805-10, acquisition-related costs (e.g. legal, valuation and advisory) are not included as a component of consideration paid, but are accounted for as operating expenses in the periods in which the costs are incurred. For the year ended December 31, 2016, the Company incurred $0.9 million of acquisition-related costs, which were recorded in other operating expenses on the statement of operations. The amount of revenue and net income of Vertex included in the Company’s consolidated statement of operations from October 3, 2016 through December 31, 2016 was $7.0 million and $0.2 million, respectively. The results of operations of Vertex are included in the consolidated statement of operations from October 3, 2016 through December 31, 2016. The unaudited pro forma combined historical results of the Company, giving effect to the acquisition assuming the transaction was consummated on January 1, 2015, are as follows: Year ended December 31, 2016 2015 (unaudited) (In thousands) Sales $ 284,310 $ 342,129 Net income (loss) (5,466 ) 3,560 Basic earnings (loss) per share (0.33 ) 0.21 Diluted earnings (loss) per share (0.33 ) 0.21 The unaudited pro forma combined historical results do not reflect any cost savings or other synergies that might result from the transaction. They are provided for informational purposes only and are not necessarily indicative of the results of operations for future periods or the results that actually would have been realized had the acquisition occurred as of January 1, 2015. |
Detail of Selected Balance Shee
Detail of Selected Balance Sheet Accounts | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of Selected Balance Sheet Accounts | 3. Detail of Selected Balance Sheet Accounts Property and Equipment Property and equipment are stated at cost and consist of: At December 31, 2016 2015 (In thousands) Land $ 2,476 $ 2,476 Buildings 8,105 7,706 Machinery and equipment 12,934 11,885 23,515 22,067 Less accumulated depreciation 12,254 11,168 Total $ 11,261 $ 10,899 Intangible assets Intangible assets consist of: At December 31, 2016 2015 (In thousands) Tradenames $ 5,996 $ 3,846 Customer relationships 18,620 11,630 24,616 15,476 Less accumulated amortization: Tradenames — — Customer relationships 11,238 9,492 11,238 9,492 Total $ 13,378 $ 5,984 Intangible assets include customer relationships which are being amortized over 6 to 9 year useful lives. The weighted average amortization period for intangible assets is 8.8 years. Tradenames are not amortized; however, they are tested annually for impairment. As of December 31, 2016, accumulated amortization on the acquired intangible assets, was $11.2 million and amortization expense was $1.7 million in the year ended December 31, 2016, $1.8 million in the year ended December 31, 2015 and $1.7 million in the year ended December 31, 2014. Future amortization expense to be recognized on the acquired intangible assets is expected to be as follows: Annual (In thousands) 2017 $ 1,362 2018 777 2019 777 2020 777 2021 777 2022 777 2023 777 2024 777 2025 583 Goodwill At December 31, 2016 2015 (In thousands) Goodwill $ 25,082 $ 25,082 Current year acquisitions 10,266 — 35,348 25,082 Less accumulated impairment losses 12,578 10,216 Net balance $ 22,770 $ 14,866 Accrued and Other Current Liabilities Accrued and other current liabilities consist of: At December 31, 2016 2015 (In thousands) Customer advances $ — $ 169 Customer rebates 3,343 3,166 Payroll, commissions, and bonuses 1,783 1,148 Accrued inventory purchases 4,268 1,800 Other 3,854 3,285 Total $ 13,248 $ 9,568 |
Impairment of Goodwill and Inta
Impairment of Goodwill and Intangibles | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment of Goodwill and Intangibles | 4. Impairment of Goodwill and Intangibles The annual goodwill impairment qualitative test was performed as of October 1, 2016 related to the Southern reporting unit, the one reporting unit with goodwill at that date. This qualitative test, which compared current year to date performance to plan, indicated that it was more likely that the goodwill was not impaired. If there are further reductions in our market capitalization and market multiples, or the projected performance is not achieved, this reporting unit could be at risk of failing the second step in the future. During the second quarter of 2016 and prior to the annual impairment test of goodwill in October, the Company concluded that impairment indicators existed at the Houston Wire& Cable (“HWC”) reporting unit, due to a decline in its overall financial performance, decrease in the market capitalization and overall market demand. In the second quarter, the Company also concluded that there were impairment indicators for certain of the Company’s tradenames related to the Southern reporting unit. The Company performed step one of the impairment test and concluded that the fair value of the HWC reporting unit was less than its carrying value. Therefore, the Company performed step two of the impairment analysis. The step one test also indicated that one of the tradenames at Southern was impaired, and the Company recorded a non-cash charge of less than $0.1 million against the tradenames during the quarter ended June 30, 2016. Step two of the impairment analysis measures the impairment charge by allocating the HWC reporting unit’s fair value to all of the assets and liabilities of the reporting unit in a hypothetical analysis that calculates implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination and recording the deferred tax impact. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss. The fair value of the HWC reporting unit was estimated using a discounted cash flow model (income approach) and a guideline public company method, giving 50% weight to each. The material assumptions used included a weighted average cost of capital of 11.0% and a long-term growth rate of 3-7% for the income approach and an adjusted invested capital multiple of 0.2 times revenue and a control premium of 10.0% for the guideline public company method. The carrying value of the HWC reporting unit’s goodwill was $2.4 million and its implied fair value resulting from step two of the impairment test was zero. As a result, the Company recorded a non-cash goodwill impairment charge of $2.4 million during the quarter ended June 30, 2016. The fair value for goodwill and tradenames (indefinite-lived intangible assets) were both determined using a Level 3 measurement approach. The Level 3 value of all of the Company’s tradenames at June 30, 2016 was $4.5 million. During the second quarter of 2015 and prior to the annual impairment test of goodwill in October, the Company concluded that impairment indicators existed at the Southwest reporting unit, due to a decline in the overall financial performance and overall market demand. Impairment indicators also existed for certain of the Company’s tradenames related to the Southwest and Southern reporting units. After performing the necessary analysis the Company recorded, during the quarter ended June 30, 2015, a non-cash charge of $0.8 million against the tradenames and a non-cash goodwill impairment charge of $2.6 million. The Company is still anticipating significant growth in the businesses acquired in 2010 and in 2016, but if this growth is not achieved, further goodwill impairments may result. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt On October 3, 2016, in connection with the Vertex acquisition, HWC Wire & Cable Company, the Company, Vertex, and Bank of America, N.A., as agent and lender, entered into a First Amendment (“the Loan Agreement Amendment”) amending the Fourth Amended and Restated Loan and Security Agreement (the “2015 Loan Agreement”). The Loan Agreement Amendment adds Vertex as borrower (and lien grantor) and provides the terms for inclusion of Vertex’s eligible accounts receivable and eligible inventory in the borrowing base for the 2015 Loan Agreement. The 2015 Loan Agreement was expanded to include incremental availability on eligible accounts receivable and inventory up to $5 million, which will be amortized quarterly, starting April 1, 2017, over two and a half years. The 2015 Loan Agreement provides a $100 million revolving credit facility and expires on September 30, 2020. Under certain circumstances the Company may request an increase in the commitment by an additional $50 million. Portions of the loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 100 to 150 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. The unused commitment fee is 25 basis points. Availability under the 2015 Loan Agreement is limited to a borrowing base equal to 85% of the value of eligible accounts receivable, plus the lesser of 70% of the value of eligible inventory or 90% of the net orderly liquidation value percentage of the value of eligible inventory, in each case less certain reserves. The 2015 Loan Agreement is secured by substantially all of the property of the Company, other than real estate. The 2015 Loan Agreement includes, among other things, covenants that require the Company to maintain a specified minimum fixed charge coverage ratio, unless certain availability levels exist. Additionally, the 2015 Loan Agreement allows for the unlimited payment of dividends and repurchases of stock, subject to the absence of events of default and maintenance of a fixed charge coverage ratio and minimum level of availability. The 2015 Loan Agreement contains certain provisions that may cause the debt to be classified as a current liability, in accordance with GAAP, if availability falls below certain thresholds, even though the ultimate maturity date under the loan agreement remains as September 30, 2020. At December 31, 2016, the Company was in compliance with the availability-based covenants governing its indebtedness. The Company’s borrowings at December 31, 2016 and 2015 were $60.4 million and $39.2 million, respectively. The weighted average interest rates on outstanding borrowings were 2.4% and 1.7% at December 31, 2016 and 2015, respectively. During 2016, the Company had an average available borrowing capacity of approximately $38.7 million. This average was computed from the monthly borrowing base certificates prepared for the lender. At December 31, 2016, the Company had available borrowing capacity of $25.6 million under the terms of the 2015 Loan Agreement. During the years ended December 31, 2016 and 2015, the Company paid $0.2 million each year and for the year ended December 31, 2014, paid $0.1 million, for the unused facility. Principal repayment obligations for succeeding fiscal years are as follows: (In thousands) 2017 $ — 2018 — 2019 — 2020 60,388 Total $ 60,388 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes The provision (benefit) for income taxes consists of: Year Ended December 31, 2016 2015 2014 (In thousands) Current: Federal $ (1,285 ) $ 3,166 $ 9,123 State (95 ) 392 1,083 Total current (1,380 ) 3,558 10,206 Deferred: Federal 13 (436 ) (794 ) State (7 ) (49 ) (129 ) Total deferred 6 (485 ) (923 ) Total $ (1,374 ) $ 3,073 $ 9,283 A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income (loss) before taxes is as follows: Year Ended December 31, 2016 2015 2014 Federal statutory rate 35.0 % 35.0 % 35.0 % State taxes, net of federal benefit 1.7 4.1 2.7 Impairment, non-deductible portion (6.6 ) 20.0 — Share-based compensation deficit (9.0 ) 3.7 — Non-deductible items (3.9 ) 3.0 0.7 Other 1.4 (5.7 ) (0.1 ) Total effective tax rate 18.6 % 60.1 % 38.3 % The share-based compensation deficit resulted in incremental income tax expense, because the grant date fair value of share-based payments exceeded the actual tax deductions realized, either upon exercise or vesting or due to forfeitures. Any future net deficits arising from stock-based compensation transactions will result in incremental income tax expense, and will likely negatively impact the effective tax rate. In 2015, the other credit includes the impact of over accruals of both federal and state taxes in earlier years. Significant components of the Company’s deferred taxes were as follows: Year Ended 2016 2015 (In thousands) Deferred tax assets: Uniform capitalization adjustment $ 1,420 $ 1,240 Inventory valuation 2,496 1,835 Accounts receivable valuation 159 50 Stock compensation expense 1,368 1,900 Property and equipment 145 109 Other 96 77 Total deferred tax assets 5,684 5,211 Deferred tax liabilities Goodwill 393 601 Intangibles 4,211 1,148 Other 188 124 Total deferred tax liabilities 4,792 1,873 Net deferred tax assets $ 892 $ 3,338 The Company recognizes interest on any tax issue as a component of interest expense and any related penalties in other operating expenses. As of December 31, 2016, 2015 and 2014, the Company recorded no provision for interest or penalties related to uncertain tax positions. The tax years 2012 through 2016 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity On March 7, 2014, the Board of Directors adopted a stock repurchase program under which the Company is authorized to purchase up to $25 million of its outstanding shares of common stock from time to time, depending on market conditions, trading activity, business conditions and other factors. Shares of stock purchased under the program are held as treasury shares and may be used to satisfy the exercise of options, issuance of restricted stock, to fund acquisitions or for other uses as authorized by the Board of Directors. In November 2016, the Board of Directors suspended purchases under the stock repurchase program. During 2016, the Company made repurchases under the stock repurchase program of 366,820 shares for a total cost of $2.2 million. During 2015, the Company made repurchases under the stock repurchase program of 858,628 shares for a total cost of $6.8 million. Under the terms of the 2006 Stock Plan, the Company acquired 10,040 shares and 7,294 shares that were surrendered by the holders to pay withholding taxes in 2016 and 2015, respectively. The Company paid a quarterly cash dividend from August 2007 until August 2016, resulting in aggregate dividends in 2016, 2015 and 2014 of $2.5 million, $7.2 million and $8.3 million, respectively. The Company is authorized to issue 5,000,000 shares of preferred stock, par value $.001 per share. The Board of Directors is authorized to fix the particular preferences, rights, qualifications and restrictions of each series of preferred stock. In connection with the adoption of a now terminated stockholder rights plan, the Board of Directors designated 100,000 shares as Series A Junior Participating Preferred Stock. No shares of preferred stock have been issued. |
Retirement-related Benefits
Retirement-related Benefits | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement-related Benefits | 8. Retirement-related Benefits Defined Contribution Plan The Company maintains a combination profit-sharing plan and salary deferral plan for the benefit of its employees-not covered by a collective bargaining agreement. Employees who are eligible to participate in the plan can contribute a percentage of their base compensation, up to the maximum percentage allowable not to exceed the limits of Internal Revenue Code (“Code”) Sections 401(k), 404, and 415, subject to the IRS-imposed dollar limit. Employee contributions are invested in certain equity and fixed-income securities, based on employee elections. The Company matches 100% of the first 1% of the employee’s contribution. The Company’s match for the years ended December 31, 2016, 2015 and 2014 was $0.2 million each year. Defined Benefit Plan The Company’s Vertex reporting unit has a non-contributory defined benefit pension plan for those current and former employees at its Attleboro, Massachusetts location who are subject to a collective bargaining agreement under the PFI Union. At this time there are fourteen active employees, fourteen retired and eight terminated employees, covered by the plan. The benefit provisions to participants of the defined benefit plan are calculated based on the number of years of service and an annual negotiated plan benefit per year of service. Annual compensation (or future compensation increases) is not used in calculating the benefit or future plan contributions. It is the Company’s policy to fund amounts for pensions sufficient to meet the minimum funding requirements set forth in applicable employee benefit laws, which currently approximates the benefit payments made each year. A total contribution of approximately $6,000 was made subsequent to the acquisition. The acquired projected benefit obligation on the date of the acquisition was $1.0 million. At that time, the fair value of the plan assets was $0.9 million resulting in an acquired liability of $0.1 million, which was recorded in accrued and other liabilities. The discount rate used to determine the projected benefit obligation was 3.62%. During the fourth quarter of 2016, these balances did not materially change. The Company’s investment policy is to maximize the expected return for an acceptable level of risk. Our expected long-term rate of return on plan assets, which was 5%, is based on a target allocation of assets, which is based on the goal of earning the highest rate of return while maintaining risk at acceptable levels. As of December 31, 2016, the target asset allocations for the defined benefit plan were 67% equity securities and 33% debt securities. The fair value of the assets of the defined benefit plan as of December 31, 2016 was $0.9 million, which consisted of $0.6 million of equity mutual funds and $0.3 million of fixed income – corporate bonds. The plan assets are all classified as Level 1 and as such have readily observable prices and therefore a reliable fair market value. The Company expects to contribute approximately $0.1 million to the defined benefit plan in 2017 and expects the annual benefit payments to be less than $0.3 million per year. |
Incentive Plans
Incentive Plans | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Incentive Plans | 9. Incentive Plans On March 23, 2006, the Company adopted and on May 1, 2007, the stockholders approved the 2006 Stock Plan (the “2006 Plan”) to provide incentives for certain key employees and directors through awards of stock options and restricted stock awards and units. The 2006 Plan provides for incentives to be granted at the fair market value of the Company’s common stock at the date of grant and options may be either nonqualified stock options or incentive stock options as defined by Section 422 of the Code. Under the 2006 Plan a maximum of 1,800,000 shares may be granted to designated participants. No single participant may receive, in any calendar year, stock options with respect to more than 500,000 shares or performance-based stock awards and units with respect to more than 150,000 shares. Stock Option Awards The Company has granted options to purchase its common stock to employees and directors of the Company under the 2006 Plan at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding ten years and may be forfeited in the event the employee or director terminates his or her employment or relationship with the Company. Options granted to employees generally vest over three to five years, and options granted to directors generally vest one year after the date of grant. Shares issued to satisfy the exercise of options may be newly issued shares or treasury shares. The plan contains anti-dilutive provisions that permit an adjustment of the number of shares of the Company’s common stock represented by each option for any change in capitalization. Compensation cost for options granted is charged to expense on a straight line basis over the term of the option. The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model. Expected volatilities are based on historical volatility of the Company’s stock and other factors. The expected life of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. There were no options granted in 2016 or 2015. The remaining unvested option grant will vest on December 31, 2017, with an expiration date of December 20, 2021. The following summarizes stock option activity and related information: 2016 Options Weighted Aggregate Weighted Outstanding—Beginning of year 493 15.60 $ — 3.26 Granted — — Exercised — — Forfeited (54 ) 16.31 Expired (125 ) 19.66 Outstanding—End of year 314 13.85 $ — 3.28 Exercisable—End of year 282 13.83 $ — 3.08 Weighted average fair value of options granted during 2016 $ — Weighted average fair value of options granted during 2015 $ — Weighted average fair value of options granted during 2014 $ — There was no excess tax benefit for the years ended December 31, 2016 and 2015. During the years ended December 31, 2014, excess tax benefits of less than $0.1 million was reflected in financing cash flows. There were no options exercised in the year ended December 31, 2016. The total intrinsic value of options exercised during the years ended December 31, 2015 and 2014 was less than $0.1 million in each year. There is no intrinsic value of options outstanding and exercisable as of December 31, 2016 as the closing stock price at the end of 2016 creates a negative intrinsic value. The total grant-date fair value of options vested during the years ended December 31, 2016, 2015 and 2014 was $0.3 million, $0.1 million and $0.2 million, respectively. Restricted Stock Awards and Restricted Stock Units On November 4, 2016 and December 19, 2016, the Company granted 30,000 and 22,388, respectively, voting shares of restricted stock to the Company’s President and CEO. The shares granted in November vest on December 31, 2017, and the shares granted in December vest in one third increments on the first, second and third anniversaries of the date of grant as long as the recipient is then employed by the Company. Any dividends declared will be accrued and paid to the recipient when the related shares vest. The Company also granted 49,250 voting shares of restricted stock under the 2006 Plan to members of management on December 12, 2016. Of the 49,250 shares granted, 5,000 shares vest in one third increments, on the first, second and third anniversaries of the date of grant and the remaining 44,250 shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant, in each case as long as the recipient is then employed by the Company. Any dividends declared will be accrued and paid to the recipient if and when the related shares vest. On October 3, 2016, the Company granted 21,000 voting shares of restricted stock to new members of the management team, who joined the Company as part of the Vertex acquisition. Of the 21,000 shares granted, 4,000 shares vest, on the third anniversary of the date of grant and the remaining 17,000 shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant in each case, as long as the recipient is then employed by the Company. Any dividends declared will be accrued and paid to the recipient if and when the related shares vest. On August 4, 2016, the Company granted 7,000 shares of restricted stock to a new member of the management team. These shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant as long as the recipient is then employed by the Company. Any dividends declared will be accrued and paid to the recipient if and when the related shares vest. Following the Annual Meeting of Stockholders on May 3, 2016, the Company awarded restricted stock units with a value of $50,000 to each non-employee director who was elected or re-elected, for an aggregate of 35,515 restricted stock units. Each award of restricted stock units vests at the date of the 2017 Annual Meeting of Stockholders. Each non-employee director is entitled to receive a number of shares of the Company's common stock equal to the number of vested restricted stock units, together with dividend equivalents from the date of grant, at such time as the director’s service on the board terminates for any reason. Restricted common shares are measured at fair value on the date of grant based on the quoted price of the common stock. Such value is recognized as compensation expense over the corresponding vesting period which ranges from one to five years, based on the number of awards that vest. The following summarizes restricted stock activity for the year ended December 31, 2016: 2016 Awards Units Shares Weighted Shares Weighted Non-vested —Beginning of year 234 $ 9.57 33 $ 9.14 Granted 129 6.35 36 7.04 Vested (36 ) 10.86 (33 ) 9.14 Cancelled/Forfeited (17 ) 9.50 — — Expired (11 ) 13.23 — — Non-vested —End of year 299 $ 7.88 36 $ 7.04 Total stock-based compensation cost was $0.9 million for each of the years ended December 31, 2016, 2015 and 2014. Total income tax benefit recognized for stock-based compensation arrangements was $0.3 million for each of the years ended December 31, 2016, 2015 and 2014. As of December 31, 2016, there was $1.6 million of total unrecognized compensation cost related to non-vested, share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 33 months. There were 807,326 shares available for future grants under the 2006 Plan at December 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies The Company has entered into operating leases, primarily for distribution centers and office facilities. These operating leases frequently include renewal options at the fair rental value at the time of renewal. For leases with step rent provisions, whereby the rental payments increase incrementally over the life of the lease, the Company recognizes the total minimum lease payments on a straight line basis over the minimum lease term. Facility rent expense was approximately $2.6 million in 2016, $2.5 million in 2015 and $2.9 million in 2014. Future minimum lease payments under non-cancelable operating leases with initial terms of one year or more consisted of the following at December 31, 2016: (In thousands) 2017 $ 3,567 2018 2,821 2019 2,104 2020 1,536 2021 1,305 Thereafter 1,645 Total minimum lease payments $ 12,978 The Company had aggregate purchase commitments for fixed inventory quantities of approximately $34.0 million at December 31, 2016. As part of the acquisition of Southwest and Southern in 2010, the Company assumed the liability for the post-remediation monitoring of the water quality at one of the acquired facilities in Louisiana. The expected liability of $0.1 million at December 31, 2016 relates to the cost of the monitoring, which the Company estimates will be incurred in the next year and also the cost to plug the wells. Remediation work was completed prior to the acquisition in accordance with the requirements of the Louisiana Department of Environmental Quality. The Company, along with many other defendants, has been named in a number of lawsuits in the state courts of Minnesota, North Dakota, and South Dakota alleging that certain wire and cable which may have contained asbestos caused injury to the plaintiffs who were exposed to this wire and cable. These lawsuits are individual personal injury suits that seek unspecified amounts of money damages as the sole remedy. It is not clear whether the alleged injuries occurred as a result of the wire and cable in question or whether the Company, in fact, distributed the wire and cable alleged to have caused any injuries. The Company maintains general liability insurance that, to date, has covered the defense of and all costs associated with these claims. In addition, the Company did not manufacture any of the wire and cable at issue, and the Company would rely on any warranties from the manufacturers of such cable if it were determined that any of the wire or cable that the Company distributed contained asbestos which caused injury to any of these plaintiffs. In connection with ALLTEL's sale of the Company in 1997, ALLTEL provided indemnities with respect to costs and damages associated with these claims that the Company believes it could enforce if its insurance coverage proves inadequate. There are no legal proceedings pending against or involving the Company that, in management’s opinion, based on the current known facts and circumstances, are expected to have a material adverse effect on the Company’s consolidated financial position, cash flows, or results from operations. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events On January 30, 2017, the Board of Directors granted to the Company’s President and CEO 60,000 voting shares of restricted stock and performance stock units with respect to an additional 40,000 shares of common stock. Of the 60,000 shares of restricted stock, 20,000 shares vest on December 19, 2017 and 40,000 vest in one-third increments on January 30, 2018, December 31, 2018 and December 31, 2019, the first, second and third anniversaries of the date of grant, in each case as long as Mr. Pokluda is then employed by the Company. The performance stock units vest on December 31, 2019 based on and subject to the Company’s achievement of cumulative EBITDA and stock price performance goals over a three-year period, as long as Mr. Pokluda is then employed by the Company, and upon vesting will be settled in shares of our common stock. Any dividends declared will be accrued and paid to Mr. Pokluda if and when the related shares vest. |
Select Quarterly Financial Data
Select Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Select Quarterly Financial Data (unaudited) | 12. Select Quarterly Financial Data (unaudited) The following table presents the Company’s unaudited quarterly results of operations for each of the last eight quarters in the period ended December 31, 2016. The unaudited information has been prepared on the same basis as the audited consolidated financial statements. Year Ended December 31, 2016 Fourth Third Second First (in thousands, except per share data) Sales $ 69,257 $ 65,222 $ 62,454 $ 64,711 Gross profit $ 15,076 $ 12,045 $ 12,430 $ 13,399 Operating income (loss) $ (1,630 ) (1) $ (1,804 ) $ (3,062 ) (2) $ (39 ) Net income (loss) $ (1,826 ) (1) $ (1,439 ) $ (2,557 ) (2) $ (184 ) Earnings (loss) per share: Basic $ (0.11 ) (1) $ (0.09 ) $ (0.16 ) (2) $ (0.01 ) Diluted $ (0.11 ) (1) $ (0.09 ) $ (0.16 ) (2) $ (0.01 ) Year Ended December 31, 2015 Fourth Third Second First (in thousands, except per share data) Sales $ 70,314 $ 78,260 $ 77,959 $ 81,600 Gross profit $ 15,120 $ 16,131 $ 16,935 $ 17,724 Operating income (loss) $ 743 (3) $ 1,783 $ (234 ) (4) $ 3,726 Net income (loss) $ (199 ) (3) $ 676 $ (619 ) (4) $ 2,186 Earnings (loss) per share: Basic $ (0.01 ) (3) $ 0.04 $ (0.04 ) (4) $ 0.13 Diluted $ (0.01 ) (3) $ 0.04 $ (0.04 ) (4) $ 0.13 (1) During the fourth quarter of 2016, the Company recorded a charge of $483 of additional cost of sales expense that related to the first three quarters of 2016 and was immaterial to each quarter. (2) During the second quarter of 2016, the Company recorded a non-cash impairment charge of $2,384. See Note 4 for additional information. (3) During the fourth quarter of 2015, the Company recorded a non-cash impairment charge of $423. See Note 4 for additional information. (4) During the second quarter of 2015, the Company recorded a non-cash impairment charge of $2,994. See Note 4 for additional information. |
Organization and Summary of S19
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Houston Wire & Cable Company (the “Company”), through its wholly owned subsidiaries, HWC Wire & Cable Company, Advantage Wire & Cable and Cable Management Services Inc., provides industrial products to the U.S. market through twenty-two locations in fourteen states throughout the United States. In 2010, the Company purchased Southwest Wire Rope LP (“Southwest”), its general partner Southwest Wire Rope GP LLC and its wholly owned subsidiary, Southern Wire (“Southern”) and subsequently, merged them into the Company’s operating subsidiary. On October 3, 2016, the Company purchased Vertex Corporate Holdings, Inc. and its subsidiaries (“Vertex”). The Company has no other business activity. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared following accounting principles generally accepted in the United States (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of the Company’s financial position and operating results. All significant inter-company balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates are those relating to the allowance for doubtful accounts, the reserve for returns and allowances, the inventory obsolescence reserve, vendor rebates, and asset impairments. Actual results could differ materially from the estimates and assumptions used for the preparation of the financial statements. |
Earnings (loss) per Share | Earnings (loss) per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share include the dilutive effects of option and unvested restricted stock awards and units. The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Year Ended December 31, 2016 2015 2014 Denominator: Weighted average common shares for basic earnings per share 16,345,679 17,012,560 17,605,290 Effect of dilutive securities — 55,033 78,641 Denominator for diluted earnings per share 16,345,679 17,067,593 17,683,931 Stock awards to purchase 685,054, 643,738 and 476,473 shares of common stock were not included in the diluted net income (loss) per share calculation for 2016, 2015 and 2014, respectively, as their inclusion would have been anti-dilutive. |
Accounts Receivable | Accounts Receivable Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $0.2 million and $0.1 million, and a reserve for returns and allowances of $0.2 million and $0.3 million at December 31, 2016 and 2015, respectively. The Company has no contractual repurchase arrangements with its customers. Credit losses have been within management’s expectations. The following table summarizes the changes in the allowance for doubtful accounts for the past three years: 2016 2015 2014 (In thousands) Balance at beginning of year $ 132 $ 139 $ 148 Bad debt expense 285 97 50 ) Write-offs, net of recoveries (266 ) (104 ) (59 ) Balance at end of year $ 151 $ 132 $ 139 |
Inventories | Inventories Inventories are carried at the lower of cost, using the average cost method, or market and consist primarily of goods purchased for resale, less a reserve for obsolescence and unusable items and unamortized vendor rebates. The reserve for inventory is based upon a number of factors, including the experience of the purchasing and sales departments, age of the inventory, new product offerings, and other factors. The reserve for inventory may periodically require adjustment as the factors identified above change. The inventory reserve was $4.4 million and $4.8 million at December 31, 2016 and 2015, respectively. |
Vendor Rebates | Vendor Rebates Under many of the Company’s arrangements with its vendors, the Company receives a rebate of a specified amount of consideration, payable when the Company achieves any of a number of measures, generally related to the volume level of purchases from the vendors. The Company accounts for such rebates as a reduction of the prices of the vendors’ products and therefore as a reduction of inventory until it sells the products, at which time such rebates reduce cost of sales in the accompanying consolidated statements of operations. Throughout the year, the Company estimates the amount of the rebates earned based on purchases to date relative to the total purchase levels expected to be achieved during the rebate period. The Company continually revises these estimates to reflect rebates expected to be earned based on actual purchase levels and forecasted purchase volumes for the remainder of the rebate period. |
Property and Equipment | Property and Equipment The Company provides for depreciation on a straight-line method over the following estimated useful lives: Buildings 25 to 30 years Machinery and equipment 3 to 10 years Leasehold improvements are depreciated over their estimated life or the term of the lease, whichever is shorter. Total depreciation expense was approximately $1.3 million for the year ended December 31, 2016 and $1.2 million for each of the years ended December 31, 2015 and 2014. |
Goodwill | Goodwill Goodwill represents the excess of the amount paid to acquire businesses over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. At December 31, 2016, the goodwill balance was $22.8 million, representing 12.9% of the Company’s total assets. The Company reviews goodwill for impairment annually, or more frequently if indications of possible impairment exist, using a three-step process. The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of the reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative assessment. If the Company is unable to conclude that the goodwill associated with any reporting unit is not impaired, a second step is performed for that reporting unit. This second step, used to quantitatively screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The third step, employed for any reporting unit that fails the second step, is used to measure the amount of any potential impairment and compares the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. |
Intangibles | Intangibles Intangible assets, from the acquisition of Southwest and Southern in 2010 and the recent acquisition of Vertex in October 2016, consist of customer relationships and tradenames. The customer relationships are amortized over 6 to 9 year useful lives. If events or circumstances were to indicate that any of the Company’s definite-lived intangible assets might be impaired, the Company would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable intangible asset. If the undiscounted cash flows were less than the carrying value, then the intangible assets would be written down to their fair value. Tradenames have an indefinite life and are not being amortized and are tested for impairment on an annual basis. |
Self Insurance | Self Insurance The Company retains certain self-insurance risks for both health benefits and property and casualty insurance programs. The Company limits its exposure to these self-insurance risks by maintaining excess and aggregate liability coverage. Self-insurance reserves are established based on claims filed and estimates of claims incurred but not reported. The estimates are based on information provided to the Company by its claims administrators. |
Segment Reporting | Segment Reporting The Company operates in a single operating and reporting segment, sales of industrial products, including electrical and mechanical wire and cable, industrial fasteners, hardware and related services to the U.S. market. |
Revenue Recognition, Returns & Allowances | Revenue Recognition, Returns & Allowances The Company recognizes revenue when the following four basic criteria have been met: 1. Persuasive evidence of an arrangement exists; 2. Delivery has occurred or services have been rendered; 3. The seller’s price to the buyer is fixed or determinable; and 4. Collectability is reasonably assured. The Company records revenue when customers take delivery of products. Customers may pick up products at any distribution center location, or products may be delivered via third party carriers. Products shipped via third party carriers are considered delivered based on the shipping terms, which are generally FOB shipping point. Customers are permitted to return product only on a case-by-case basis. Product exchanges are handled as a credit, with any replacement item being re-invoiced to the customer. Customer returns are recorded as an adjustment to sales. In the past, customer returns have not been material. The Company has no installation obligations. The Company may offer sales incentives, which are accrued monthly as an adjustment to sales. |
Shipping and Handling | Shipping and Handling The Company incurs shipping and handling costs in the normal course of business. Freight amounts invoiced to customers are included as sales and freight charges and are included as a component of cost of sales. |
Credit Risk | Credit Risk No single customer accounted for 10% or more of the Company’s sales in 2016, 2015 or 2014. The Company performs periodic credit evaluations of its customers and generally does not require collateral. |
Advertising Costs | Advertising Costs Advertising costs are expensed when incurred. Advertising expenses were $0.4 million for each of the years ended December 31, 2016 and 2015 and $0.3 million for the year ended December 31, 2014. |
Financial Instruments | Financial Instruments The carrying values of accounts receivable, trade accounts payable and accrued and other current liabilities approximate fair value, due to the short maturity of these instruments. The carrying amount of long term debt approximates fair value as it bears interest at variable rates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The amendment in this ASU provides final guidance that simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under ASC 350. ASU No. 2017-04 is effective for annual and interim impairment test performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting as well as the timing of when it will adopt this ASU. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The amendments in this ASU address eight cash flow issues with the intention of reducing current diversity in practice among business entities. The Company will evaluate the eight issues in the amendment and determine if any changes are necessary for compliance. ASU No. 2016-15 is effective for annual and interim periods beginning after December 15, 2017; early adoption is permitted and should be applied retrospectively where practical. The Company will determine the date of adoption, once the Company has evaluated the impact of this ASU. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The new guidance addresses several aspects of the accounting for share-based payment award transactions, including: (a) the recognition of the income tax effects of awards in the income statement when the awards vest, forfeit, or are settled, thus eliminating additional paid-in-capital pools, (b) classification of awards as either equity or liabilities, and (c) classification on the statement of cash flows. This update is effective for public companies for fiscal years beginning after December 15, 2016 with early adoption permitted. The Company is currently evaluating the elections the Company may make and therefore the full effects of the adoption of the standard are not yet known. However, as the Company does not have an APIC pool, upon adoption, the change in the recognition of income tax effects will not have an impact on the Company. Additionally, the awards the Company currently has outstanding will remain classified in equity. The Company will adopt this ASU in the first quarter of 2017. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases greater than 1 year, both capital and operating leases. This update is effective for public companies for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impacts of adopting as well as the timing of when it will adopt this ASU. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) — Balance Sheet Classification of Deferred Taxes.” ASU No. 2015-17 eliminates the requirement to classify deferred tax assets and liabilities as current or long-term based on how the related assets or liabilities are classified. All deferred taxes are now required to be classified as long-term including any associated valuation allowances. The Company adopted this guidance in the third quarter of 2016 and has applied it retrospectively. It did not have a material impact on the consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (Topic 330), which changes guidance for subsequent measurement of inventory within the scope of the update from the lower of cost or market to the lower of cost and net realizable value. This update is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. The Company does not believe there will be any material impact upon the adoption of this guidance on the Company’s consolidated financial statements and will adopt this ASU in the first quarter of 2017. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30).” The amendments in this ASU require debt issuance costs to be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. However, the guidance in this ASU did not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. As a result, in August 2015 the FASB issued ASU No. 2015-15 “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Agreements,” to clarify that, with respect to a line-of-credit agreement, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. The Company adopted this guidance in the first quarter of 2016 and is continuing to treat debt issuance costs associated with its revolving credit facility as a deferred asset and amortizing the deferred asset over the term of the credit agreement. Therefore, the adoption did not have any impact on the Company’s financial position or results of operations. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using one of two retrospective methods and are effective for annual and interim periods beginning after December 15, 2017. As the Company recognizes revenue only once product has shipped, it does not believe this ASU will have a significant impact on its revenue recognition policy. The Company will adopt this ASU effective January 1, 2018 and is still evaluating its impact on its financial position and results of operations and which implementation method the Company will use. |
Stock-Based Compensation | Stock-Based Compensation Stock options issued under the Company’s stock plan have an exercise price equal to the fair value of the Company’s stock on the grant date. Restricted stock awards and units are valued at the closing price of the Company’s stock on the grant date. The Company recognizes compensation expense ratably over the vesting period. The Company’s compensation expense is included in salaries and commissions expense in the accompanying consolidated statements of operations. The Company receives a tax deduction for certain stock option exercises in the period in which the options are exercised, generally for the excess of the market price on the date of exercise over the exercise price of the options. The Company reports excess tax benefits from the award of equity instruments as financing cash flows. Excess tax benefits result when a deduction reported for tax return purposes for an award of equity instruments exceeds the cumulative compensation cost for the instruments recognized for financial reporting purposes. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are determined based on differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. |
Organization and Summary of S20
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of diluted earnings per share | The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Year Ended December 31, 2016 2015 2014 Denominator: Weighted average common shares for basic earnings per share 16,345,679 17,012,560 17,605,290 Effect of dilutive securities — 55,033 78,641 Denominator for diluted earnings per share 16,345,679 17,067,593 17,683,931 |
Schedule of changes in the allowance for doubtful accounts | The following table summarizes the changes in the allowance for doubtful accounts for the past three years: 2016 2015 2014 (In thousands) Balance at beginning of year $ 132 $ 139 $ 148 Bad debt expense 285 97 50 ) Write-offs, net of recoveries (266 ) (104 ) (59 ) Balance at end of year $ 151 $ 132 $ 139 |
Schedule of estimated useful lives | The Company provides for depreciation on a straight-line method over the following estimated useful lives: Buildings 25 to 30 years Machinery and equipment 3 to 10 years |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combination, Description [Abstract] | |
Schedule of current estimated fair value of the acquired assets and assumed liabilities | The following table summarizes the current estimated fair value of the acquired assets and assumed liabilities recorded as of the date of acquisition. The fair value of all assets acquired and liabilities assumed are preliminary and subject to the completion of incremental analysis of the fair values of the assets acquired and liabilities assumed: At October 3, 2016 (In thousands) Cash $ 3 Accounts receivable 2,626 Inventories 14,582 Prepaids 46 Property and equipment 59 Intangibles 9,161 Goodwill 10,266 Other assets 116 Total assets acquired 36,859 Trade accounts payable 1,130 Accrued and other current liabilities 919 Deferred income taxes 2,440 Total liabilities assumed 4,489 Net assets purchased $ 32,370 |
Schedule of operations | The results of operations of Vertex are included in the consolidated statement of operations from October 3, 2016 through December 31, 2016. The unaudited pro forma combined historical results of the Company, giving effect to the acquisition assuming the transaction was consummated on January 1, 2015, are as follows: Year ended December 31, 2016 2015 (unaudited) (In thousands) Sales $ 284,310 $ 342,129 Net income (loss) (5,466 ) 3,560 Basic earnings (loss) per share (0.33 ) 0.21 Diluted earnings (loss) per share (0.33 ) 0.21 |
Detail of Selected Balance Sh22
Detail of Selected Balance Sheet Accounts (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of property and equipment | Property and equipment are stated at cost and consist of: At December 31, 2016 2015 (In thousands) Land $ 2,476 $ 2,476 Buildings 8,105 7,706 Machinery and equipment 12,934 11,885 23,515 22,067 Less accumulated depreciation 12,254 11,168 Total $ 11,261 $ 10,899 |
Schedule of intangible assets | Intangible assets consist of: At December 31, 2016 2015 (In thousands) Tradenames $ 5,996 $ 3,846 Customer relationships 18,620 11,630 24,616 15,476 Less accumulated amortization: Tradenames — — Customer relationships 11,238 9,492 11,238 9,492 Total $ 13,378 $ 5,984 |
Schedule of future amortization expense on intangible assets | Future amortization expense to be recognized on the acquired intangible assets is expected to be as follows: Annual (In thousands) 2017 $ 1,362 2018 777 2019 777 2020 777 2021 777 2022 777 2023 777 2024 777 2025 583 |
Schedule of goodwill | At December 31, 2016 2015 (In thousands) Goodwill $ 25,082 $ 25,082 Current year acquisitions 10,266 — 35,348 25,082 Less accumulated impairment losses 12,578 10,216 Net balance $ 22,770 $ 14,866 |
Schedule of accrued and other current liabilities | Accrued and other current liabilities consist of: At December 31, 2016 2015 (In thousands) Customer advances $ — $ 169 Customer rebates 3,343 3,166 Payroll, commissions, and bonuses 1,783 1,148 Accrued inventory purchases 4,268 1,800 Other 3,854 3,285 Total $ 13,248 $ 9,568 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of principal repayment obligations | Principal repayment obligations for succeeding fiscal years are as follows: (In thousands) 2017 $ — 2018 — 2019 — 2020 60,388 Total $ 60,388 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income taxes | The provision (benefit) for income taxes consists of: Year Ended December 31, 2016 2015 2014 (In thousands) Current: Federal $ (1,285 ) $ 3,166 $ 9,123 State (95 ) 392 1,083 Total current (1,380 ) 3,558 10,206 Deferred: Federal 13 (436 ) (794 ) State (7 ) (49 ) (129 ) Total deferred 6 (485 ) (923 ) Total $ (1,374 ) $ 3,073 $ 9,283 |
Schedule of reconciliation effective tax rate | A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income (loss) before taxes is as follows: Year Ended December 31, 2016 2015 2014 Federal statutory rate 35.0 % 35.0 % 35.0 % State taxes, net of federal benefit 1.7 4.1 2.7 Impairment, non-deductible portion (6.6 ) 20.0 — Share-based compensation deficit (9.0 ) 3.7 — Non-deductible items (3.9 ) 3.0 0.7 Other 1.4 (5.7 ) (0.1 ) Total effective tax rate 18.6 % 60.1 % 38.3 % |
Schedule of deferred taxes | Significant components of the Company’s deferred taxes were as follows: Year Ended 2016 2015 (In thousands) Deferred tax assets: Uniform capitalization adjustment $ 1,420 $ 1,240 Inventory valuation 2,496 1,835 Accounts receivable valuation 159 50 Stock compensation expense 1,368 1,900 Property and equipment 145 109 Other 96 77 Total deferred tax assets 5,684 5,211 Deferred tax liabilities Goodwill 393 601 Intangibles 4,211 1,148 Other 188 124 Total deferred tax liabilities 4,792 1,873 Net deferred tax assets $ 892 $ 3,338 |
Incentive Plans (Tables)
Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following summarizes stock option activity and related information: 2016 Options Weighted Aggregate Weighted Outstanding—Beginning of year 493 15.60 $ — 3.26 Granted — — Exercised — — Forfeited (54 ) 16.31 Expired (125 ) 19.66 Outstanding—End of year 314 13.85 $ — 3.28 Exercisable—End of year 282 13.83 $ — 3.08 Weighted average fair value of options granted during 2016 $ — Weighted average fair value of options granted during 2015 $ — Weighted average fair value of options granted during 2014 $ — |
Schedule of restricted stock activity | The following summarizes restricted stock activity for the year ended December 31, 2016: 2016 Awards Units Shares Weighted Shares Weighted Non-vested —Beginning of year 234 $ 9.57 33 $ 9.14 Granted 129 6.35 36 7.04 Vested (36 ) 10.86 (33 ) 9.14 Cancelled/Forfeited (17 ) 9.50 — — Expired (11 ) 13.23 — — Non-vested —End of year 299 $ 7.88 36 $ 7.04 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments on operatin lease | Future minimum lease payments under non-cancelable operating leases with initial terms of one year or more consisted of the following at December 31, 2016: (In thousands) 2017 $ 3,567 2018 2,821 2019 2,104 2020 1,536 2021 1,305 Thereafter 1,645 Total minimum lease payments $ 12,978 |
Select Quarterly Financial Da27
Select Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly results of operations | The following table presents the Company’s unaudited quarterly results of operations for each of the last eight quarters in the period ended December 31, 2016. The unaudited information has been prepared on the same basis as the audited consolidated financial statements. Year Ended December 31, 2016 Fourth Third Second First (in thousands, except per share data) Sales $ 69,257 $ 65,222 $ 62,454 $ 64,711 Gross profit $ 15,076 $ 12,045 $ 12,430 $ 13,399 Operating income (loss) $ (1,630 ) (1) $ (1,804 ) $ (3,062 ) (2) $ (39 ) Net income (loss) $ (1,826 ) (1) $ (1,439 ) $ (2,557 ) (2) $ (184 ) Earnings (loss) per share: Basic $ (0.11 ) (1) $ (0.09 ) $ (0.16 ) (2) $ (0.01 ) Diluted $ (0.11 ) (1) $ (0.09 ) $ (0.16 ) (2) $ (0.01 ) Year Ended December 31, 2015 Fourth Third Second First (in thousands, except per share data) Sales $ 70,314 $ 78,260 $ 77,959 $ 81,600 Gross profit $ 15,120 $ 16,131 $ 16,935 $ 17,724 Operating income (loss) $ 743 (3) $ 1,783 $ (234 ) (4) $ 3,726 Net income (loss) $ (199 ) (3) $ 676 $ (619 ) (4) $ 2,186 Earnings (loss) per share: Basic $ (0.01 ) (3) $ 0.04 $ (0.04 ) (4) $ 0.13 Diluted $ (0.01 ) (3) $ 0.04 $ (0.04 ) (4) $ 0.13 (1) During the fourth quarter of 2016, the Company recorded a charge of $483 of additional cost of sales expense that related to the first three quarters of 2016 and was immaterial to each quarter. (2) During the second quarter of 2016, the Company recorded a non-cash impairment charge of $2,384. See Note 4 for additional information. (3) During the fourth quarter of 2015, the Company recorded a non-cash impairment charge of $423. See Note 4 for additional information. (4) During the second quarter of 2015, the Company recorded a non-cash impairment charge of $2,994. See Note 4 for additional information. |
Organization and Summary of S28
Organization and Summary of Significant Accounting Policies (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Denominator: | |||
Weighted average common shares for basic earnings per share | 16,345,679 | 17,012,560 | 17,605,290 |
Effect of dilutive securities | 55,033 | 78,641 | |
Denominator for diluted earnings per share | 16,345,679 | 17,067,593 | 17,683,931 |
Organization and Summary of S29
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | $ 132 | $ 139 | $ 148 |
Bad debt expense | 285 | 97 | 50 |
Write-offs, net of recoveries | (266) | (104) | (59) |
Balance at end of year | $ 151 | $ 132 | $ 139 |
Organization and Summary of S30
Organization and Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2016 | |
Building [Member] | Minimum [Member] | |
Estimated useful lives | 25 years |
Building [Member] | Maximum [Member] | |
Estimated useful lives | 30 years |
Machinery & Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Machinery & Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Organization and Summary of S31
Organization and Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)Segmentshares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($) | |
Options to purchase common stock | shares | 685,054 | 643,738 | 476,473 | |
Allowance for doubtful accounts | $ 151 | $ 132 | $ 139 | $ 148 |
Reserve for returns and allowances | 200 | 300 | ||
Inventory valuation reserves | 4,400 | 4,800 | ||
Depreciation expense | 1,300 | 1,200 | $ 1,200 | |
Goodwill | $ 22,770 | $ 14,866 | ||
Percentage of goodwill | 12.90% | |||
Estimated useful lives, intagible assets | 8 years 9 months 18 days | |||
Number of operating segments | Segment | 1 | |||
Number of reportable segments | Segment | 1 | |||
Description of customer credit risk | No single customer accounted for 10% or more of the Companys sales. | No single customer accounted for 10% or more of the Companys sales. | No single customer accounted for 10% or more of the Companys sales. | |
Advertising expenses | $ 400 | $ 400 | $ 300 | |
Customer Relationships [Member] | Minimum [Member] | ||||
Estimated useful lives, intagible assets | 6 years | |||
Customer Relationships [Member] | Maximum [Member] | ||||
Estimated useful lives, intagible assets | 9 years |
Business Combination (Details)
Business Combination (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Oct. 03, 2016 | Dec. 31, 2015 |
Goodwill | $ 22,770 | $ 14,866 | |
Vertex Acquisition [Member] | |||
Cash | $ 3 | ||
Accounts receivable | 2,626 | ||
Inventories | 14,582 | ||
Prepaids | 46 | ||
Property and equipment | 59 | ||
Intangibles | 9,161 | ||
Goodwill | 10,266 | ||
Other assets | 116 | ||
Total assets acquired | 36,859 | ||
Trade accounts payable | 1,130 | ||
Accrued and other current liabilities | 919 | ||
Deferred income taxes | 2,440 | ||
Total liabilities assumed | 4,489 | ||
Net assets purchased | $ 32,370 |
Business Combination (Details 1
Business Combination (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2016 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||
Sales | $ 69,257 | $ 65,222 | $ 62,454 | $ 64,711 | $ 70,314 | $ 78,260 | $ 77,959 | $ 81,600 | $ 261,644 | $ 308,133 | $ 390,011 | |||||
Net income (loss) | $ (1,826) | [1] | $ (1,439) | $ (2,557) | [2] | $ (184) | $ (199) | [3] | $ 676 | $ (619) | [4] | $ 2,186 | $ (6,006) | $ 2,044 | $ 14,972 | |
Basic earnings (loss) per share | $ (0.11) | [1] | $ (0.09) | $ (0.16) | [2] | $ (0.01) | $ (0.01) | [3] | $ 0.04 | $ (0.04) | [4] | $ 0.13 | $ (0.37) | $ 0.12 | $ 0.85 | |
Diluted earnings (loss) per share | $ (0.11) | [1] | $ (0.09) | $ (0.16) | [2] | $ (0.01) | $ (0.01) | [3] | $ 0.04 | $ (0.04) | [4] | $ 0.13 | $ (0.37) | $ 0.12 | $ 0.85 | |
Vertex Acquisition [Member] | ||||||||||||||||
Sales | $ 7,000 | $ 284,310 | $ 342,129 | |||||||||||||
Net income (loss) | $ 200 | $ (5,466) | $ 3,560 | |||||||||||||
Basic earnings (loss) per share | $ (0.33) | $ 0.21 | ||||||||||||||
Diluted earnings (loss) per share | $ (0.33) | $ 0.21 | ||||||||||||||
[1] | During the fourth quarter of 2016, the Company recorded a charge of $483 of additional cost of sales expense that related to the first three quarters of 2016 and was immaterial to each quarter. | |||||||||||||||
[2] | During the second quarter of 2016, the Company recorded a non-cash impairment charge of $2,384. See Note 4 for additional information. | |||||||||||||||
[3] | During the fourth quarter of 2015, the Company recorded a non-cash impairment charge of $423. See Note 4 for additional information. | |||||||||||||||
[4] | During the second quarter of 2015, the Company recorded a non-cash impairment charge of $2,994. See Note 4 for additional information. |
Business Combination (Details N
Business Combination (Details Narrative) - USD ($) $ in Thousands | Oct. 03, 2016 | Dec. 31, 2016 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Business acquisitions revenue | $ 69,257 | $ 65,222 | $ 62,454 | $ 64,711 | $ 70,314 | $ 78,260 | $ 77,959 | $ 81,600 | $ 261,644 | $ 308,133 | $ 390,011 | ||||||
Business acquisitions net income loss | $ (1,826) | [1] | $ (1,439) | $ (2,557) | [2] | $ (184) | $ (199) | [3] | $ 676 | $ (619) | [4] | $ 2,186 | $ (6,006) | 2,044 | 14,972 | ||
Asset useful life | 8 years 9 months 18 days | ||||||||||||||||
Amortization expense of intangible assets | $ 1,700 | 1,800 | $ 1,700 | ||||||||||||||
Vertex Acquisition [Member] | |||||||||||||||||
Net assets purchased | $ 32,370 | ||||||||||||||||
Current adjustment | 100 | ||||||||||||||||
Total purchase price before adjustment | 32,300 | ||||||||||||||||
Amount of goodwill deductible for tax purposes | $ 1,000 | ||||||||||||||||
Business acquisitions revenue | $ 7,000 | 284,310 | 342,129 | ||||||||||||||
Business acquisitions net income loss | $ 200 | (5,466) | $ 3,560 | ||||||||||||||
Acquisition-related costs | $ 900 | ||||||||||||||||
Business combination unrecognized description | Amortization expense to be recognized on the acquired intangible assets is expected to be $0.8 million per year in 2017 through 2024 and $0.6 million in 2025. | ||||||||||||||||
Vertex Acquisition [Member] | Trade Names [Member] | |||||||||||||||||
Indefinitelived intangible assets acquired | $ 2,100 | ||||||||||||||||
Vertex Acquisition [Member] | Customer Relationships [Member] | |||||||||||||||||
Intangible asset acquired | $ 7,000 | ||||||||||||||||
Asset useful life | 9 years | ||||||||||||||||
Amortization expense of intangible assets | $ 200 | ||||||||||||||||
[1] | During the fourth quarter of 2016, the Company recorded a charge of $483 of additional cost of sales expense that related to the first three quarters of 2016 and was immaterial to each quarter. | ||||||||||||||||
[2] | During the second quarter of 2016, the Company recorded a non-cash impairment charge of $2,384. See Note 4 for additional information. | ||||||||||||||||
[3] | During the fourth quarter of 2015, the Company recorded a non-cash impairment charge of $423. See Note 4 for additional information. | ||||||||||||||||
[4] | During the second quarter of 2015, the Company recorded a non-cash impairment charge of $2,994. See Note 4 for additional information. |
Detail of Selected Balance Sh35
Detail of Selected Balance Sheet Accounts (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Gross | $ 23,515 | $ 22,067 |
Less accumulated depreciation | 12,254 | 11,168 |
Total | 11,261 | 10,899 |
Land [Member] | ||
Gross | 2,476 | 2,476 |
Building [Member] | ||
Gross | 8,105 | 7,706 |
Machinery & Equipment [Member] | ||
Gross | $ 12,934 | $ 11,885 |
Detail of Selected Balance Sh36
Detail of Selected Balance Sheet Accounts (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Finite lived intangible assets | ||
Less accumulated amortization: | $ 11,238 | $ 9,492 |
Intangible assets: | ||
Gross | 24,616 | 15,476 |
Total | 13,378 | 5,984 |
Customer Relationships [Member] | ||
Finite lived intangible assets | ||
Finite lived intangible assets, gross | 18,620 | 11,630 |
Less accumulated amortization: | 11,238 | 9,492 |
Tradenames [Member] | ||
Indefinite lived intangible assets: | ||
Gross | $ 5,996 | $ 3,846 |
Detail of Selected Balance Sh37
Detail of Selected Balance Sheet Accounts (Details 2) $ in Thousands | Dec. 31, 2016USD ($) |
Annual Amortization Expense | |
2,017 | $ 1,362 |
2,018 | 777 |
2,019 | 777 |
2,020 | 777 |
2,021 | 777 |
2,022 | 777 |
2,023 | 777 |
2,024 | 777 |
2,025 | $ 583 |
Detail of Selected Balance Sh38
Detail of Selected Balance Sheet Accounts (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Goodwill | $ 25,082 | $ 25,082 |
Current year acquisitions | 10,266 | |
Goodwill gross | 35,348 | 25,082 |
Less accumulated impairment losses | 12,578 | 10,216 |
Net balance | $ 22,770 | $ 14,866 |
Detail of Selected Balance Sh39
Detail of Selected Balance Sheet Accounts (Details 4) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Customer advances | $ 169 | |
Customer rebates | 3,343 | 3,166 |
Payroll, commissions, and bonuses | 1,783 | 1,148 |
Accrued inventory purchases | 4,268 | 1,800 |
Other | 3,854 | 3,285 |
Total | $ 13,248 | $ 9,568 |
Detail of Selected Balance Sh40
Detail of Selected Balance Sheet Accounts (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Estimated useful lives, intagible assets | 8 years 9 months 18 days | ||
Accumulated amortization, intagible assets | $ 11,238 | $ 9,492 | |
Amortization expense, intagible assets | $ 1,700 | $ 1,800 | $ 1,700 |
Customer Relationships [Member] | Minimum [Member] | |||
Estimated useful lives, intagible assets | 6 years | ||
Customer Relationships [Member] | Maximum [Member] | |||
Estimated useful lives, intagible assets | 9 years |
Impairment of Goodwill and In41
Impairment of Goodwill and Intangibles (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill, impairment loss | $ 2,384 | $ 423 | $ 2,994 | $ 2,384 | $ 3,417 | |
Goodwill carrying value | $ 14,866 | $ 22,770 | $ 14,866 | |||
Houston Wire & Cable (HWC) Reporting Unit [Member] | ||||||
Goodwill, impairment loss | 2,400 | |||||
Goodwill fair value | 0 | |||||
Goodwill carrying value | 2,400 | |||||
Description of valuation assumption | The material assumptions used included a weighted average cost of capital of 11.0% and a long-term growth rate of 3-7% for the income approach and adjusted invested capital multiple of 0.2 times revenue and a control premium of 10.0% for the guideline public company method. | |||||
Houston Wire & Cable (HWC) Reporting Unit [Member] | Income Approach [Member] | ||||||
Weighted average cost of capital | 11.00% | |||||
Houston Wire & Cable (HWC) Reporting Unit [Member] | Income Approach [Member] | Minimum [Member] | ||||||
Long-term growth rate | 3.00% | |||||
Houston Wire & Cable (HWC) Reporting Unit [Member] | Income Approach [Member] | Maximum [Member] | ||||||
Long-term growth rate | 7.00% | |||||
Southern Reporting Unit [Member] | ||||||
Goodwill, impairment loss | 2,600 | |||||
Southern Reporting Unit [Member] | Tradenames [Member] | ||||||
Impairment of intangible assets (excluding goodwill) | 100 | $ 800 | ||||
Southern Reporting Unit [Member] | Tradenames [Member] | Level 3 Measurement Approach [Member] | ||||||
Fair value for tradename | $ 4,500 |
Debt (Details)
Debt (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | |
2,018 | |
2,019 | |
2,020 | 60,388 |
Total | $ 60,388 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | Oct. 03, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Debt | $ 60,388 | $ 39,188 | ||
Weighted average interest rates | 2.40% | 1.70% | ||
Current outstanding amount capacity | $ 25,600 | |||
Fourth Amended and Restated Loan and Security Agreement (the 2015 Loan Agreement) [Member] | Revolving Credit Facility [Member] | ||||
Maximum amount outstanding | $ 100,000 | |||
Expiration date | Sep. 30, 2020 | |||
Additional commitment amount | $ 50,000 | |||
Description of collateral | The 2015 Loan Agreement is secured by substantially all of the property of the Company, other than real estate. | |||
Amount of eligible accounts receivable and inventory | $ 500 | |||
Line of credit facility borrowing period | 2 years 6 months | |||
Percentage of the value of eligible accounts receivable | 85.00% | |||
Percentage of the value of eligible inventory | 70.00% | |||
Percentage of the value of net orderly liquidation | 90.00% | |||
Description of loan converted | Portions of the loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. | |||
Description of interest rate | LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 100 to 150 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. | |||
Percentage of unused capacity commitment fee | 0.25% | |||
Average outstanding amount capacity | $ 38,700 | |||
Unused borrowing facility | $ 200 | $ 200 | $ 100 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | |||
Federal | $ (1,285) | $ 3,166 | $ 9,123 |
State | (95) | 392 | 1,083 |
Total current | (1,380) | 3,558 | 10,206 |
Deferred: | |||
Federal | 13 | (436) | (794) |
State | (7) | (49) | (129) |
Total deferred | 6 | (485) | (923) |
Total | $ (1,374) | $ 3,073 | $ 9,283 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | 1.70% | 4.10% | 2.70% |
Impairment, non-deductible portion | (6.60%) | 20.00% | |
Share-based compensation deficit | (9.00%) | 3.70% | |
Non-deductible items | (3.90%) | 3.00% | 0.70% |
Other | 1.40% | (5.70%) | (0.10%) |
Total effective tax rate | 18.60% | 60.10% | 38.30% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Uniform capitalization adjustment | $ 1,420 | $ 1,240 |
Inventory valuation | 2,496 | 1,835 |
Accounts receivable valuation | 159 | 50 |
Stock compensation expense | 1,368 | 1,900 |
Property and equipment | 145 | 109 |
Other | 96 | 77 |
Total deferred tax assets | 5,684 | 5,211 |
Deferred tax liabilities | ||
Goodwill | 393 | 601 |
Intangibles | 4,211 | 1,148 |
Other | 188 | 124 |
Total deferred tax liabilities | 4,792 | 1,873 |
Net deferred tax assets | $ 892 | $ 3,338 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 07, 2014 | |
Dividend paid in cash | $ 2,495 | $ 7,172 | $ 8,293 | |
Preferred stock, authorized | 5,000,000 | 5,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Series A Junior Participating Preferred Stock [Member] | ||||
Preferred stock, authorized | 100,000 | |||
2006 Stock Plan [Member] | ||||
Number of shares surrender withholding taxes | 10,040 | 7,294 | ||
Share Repurchase Program [Member] | Common Stock [Member] | ||||
Maximum number of shares authorized | $ 25,000 | |||
Number of shares repurchases | 366,820 | 858,628 | ||
Value of shares repurchases | $ 2,200 | $ 6,800 |
Retirement-related Benefits (De
Retirement-related Benefits (Details Narrative) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)Employee | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Benefit obligation | $ 1,000 | ||
Discount rate | 3.62% | ||
Target allocation of assets | 5.00% | ||
Percentage of employer's contribution | 100.00% | ||
Percentage of employer's matching contribution | 1.00% | ||
Employer's matching contribution, amount | $ 200 | $ 200 | $ 200 |
Number of active employees under defined benefit plan | Employee | 14 | ||
Number of retired employees under defined benefit plan | Employee | 14 | ||
Number of terminated employees under defined benefit plan | Employee | 8 | ||
Cash contribution under plan | $ 900 | ||
Funded status of plan | 100 | ||
Future annual benefit payments | $ 300 | ||
Equity Securities [Member] | |||
Weighted average asset allocations for the defined benefit plan | 67% | ||
Debt Securities [Member] | |||
Weighted average asset allocations for the defined benefit plan | 33% | ||
Equity mutual funds [Member] | |||
Cash contribution under plan | $ 600 | ||
Fixed income - corporate bonds [Member] | |||
Cash contribution under plan | $ 300 |
Incentive Plans (Details)
Incentive Plans (Details) - Stock Option [Member] | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding-Beginning of year | shares | 493,000 |
Exercised | shares | |
Forfeited | shares | (54,000) |
Expired | shares | (125,000) |
Outstanding-End of year | shares | 314,000 |
Exercisable-End of year | shares | 282,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding-Beginning of year | $ / shares | $ 15.60 |
Exercised | $ / shares | |
Forfeited | $ / shares | 16.31 |
Expired | $ / shares | 19.66 |
Outstanding-End of year | $ / shares | 13.85 |
Exercisable-End of year | $ / shares | $ 13.83 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Aggregate Intrinsic Value [Roll Forward] | |
Outstanding-Beginning of year | $ | |
Outstanding-End of year | $ | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Life [Roll Forward] | |
Outstanding-Beginning of year | 3 years 3 months 4 days |
Outstanding-End of year | 3 years 3 months 10 days |
Exercisable - End of year | 3 years 28 days |
Incentive Plans (Details 1)
Incentive Plans (Details 1) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Restricted Stock Units [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested-Beginning of year | shares | 33,000 |
Granted | shares | 36,000 |
Vested | shares | (33,000) |
Cancelled/Forfeited | shares | |
Expired | shares | |
Non-vested-End of year | shares | 36,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Market Value at Grant Date [Roll Forward] | |
Non-vested-Beginning of year | $ / shares | $ 9.14 |
Granted | $ / shares | 7.04 |
Vested | $ / shares | 9.14 |
Cancelled/Forfeited | $ / shares | |
Expired | $ / shares | |
Non-vested-End of year | $ / shares | $ 7.04 |
Restricted Stock Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested-Beginning of year | shares | 234,000 |
Granted | shares | 129,000 |
Vested | shares | (36,000) |
Cancelled/Forfeited | shares | (17,000) |
Expired | shares | (11,000) |
Non-vested-End of year | shares | 299,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Market Value at Grant Date [Roll Forward] | |
Non-vested-Beginning of year | $ / shares | $ 9.57 |
Granted | $ / shares | 6.35 |
Vested | $ / shares | 10.86 |
Cancelled/Forfeited | $ / shares | 9.5 |
Expired | $ / shares | 13.23 |
Non-vested-End of year | $ / shares | $ 7.88 |
Incentive Plans (Details Narrat
Incentive Plans (Details Narrative) - USD ($) $ in Thousands | Dec. 19, 2016 | Dec. 12, 2016 | Nov. 04, 2016 | Oct. 03, 2016 | Aug. 04, 2016 | May 03, 2016 | Mar. 23, 2006 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Excess tax benefits recorded financing cash flows | $ 7 | |||||||||
Stock-based compensation cost | $ 856 | 886 | 868 | |||||||
Restricted Stock Units [Member] | ||||||||||
Number of shares granted | 36,000 | |||||||||
Number of shares forfeited | ||||||||||
Restricted Stock Awards [Member] | ||||||||||
Number of shares granted | 129,000 | |||||||||
Number of shares forfeited | 17,000 | |||||||||
2006 Stock Plan [Member] | ||||||||||
Number of shares granted under plan | 1,800,000 | |||||||||
Excess tax benefits recorded financing cash flows | $ 0 | 100 | 100 | |||||||
Income tax benefit recognized for stock-based compensation arrangements | 300 | 300 | 300 | |||||||
Unrecognized compensation cost related to non-vested | $ 1,600 | |||||||||
Unrecognized compensation cost related to non-vested,period | 33 months | |||||||||
Number of shares available for future grants | 807,326 | |||||||||
2006 Stock Plan [Member] | Stock Option [Member] | ||||||||||
Maximum number of shares available to participant | 500,000 | |||||||||
Total intrinsic value of options exercised | $ 0 | 0 | 100 | |||||||
Total grant-date fair value of options vested | $ 300 | $ 100 | $ 200 | |||||||
2006 Stock Plan [Member] | Stock Option [Member] | Employees [Member] | ||||||||||
Expiration period | 10 years | |||||||||
2006 Stock Plan [Member] | Stock Option [Member] | Employees [Member] | Minimum [Member] | ||||||||||
Vesting period | 3 years | |||||||||
2006 Stock Plan [Member] | Stock Option [Member] | Employees [Member] | Maximum [Member] | ||||||||||
Vesting period | 5 years | |||||||||
2006 Stock Plan [Member] | Stock Option [Member] | Directors [Member] | ||||||||||
Expiration period | 10 years | |||||||||
Vesting period | 1 year | |||||||||
2006 Stock Plan [Member] | Performance Shares [Member] | ||||||||||
Maximum number of shares granted under the plan | 150,000 | |||||||||
2006 Stock Plan [Member] | Restricted Stock Units [Member] | ||||||||||
Maximum number of shares granted under the plan | 150,000 | |||||||||
2006 Stock Plan [Member] | Restricted Stock Units [Member] | Minimum [Member] | ||||||||||
Vesting period | 1 year | |||||||||
2006 Stock Plan [Member] | Restricted Stock Units [Member] | Maximum [Member] | ||||||||||
Vesting period | 5 years | |||||||||
2006 Stock Plan [Member] | Restricted Stock Units [Member] | Non-Employee Director [Member] | ||||||||||
Number of shares granted | 35,515 | |||||||||
Description of vesting rights | Each award of restricted stock units vests at the date of the 2017 Annual Meeting of Stockholders. Each non-employee director is entitled to receive a number of shares of the Company's common stock equal to the number of vested restricted stock units, together with dividend equivalents from the date of grant, at such time as the director’s service on the board terminates for any reason. | |||||||||
Share price (in dollars per share) | $ 50,000 | |||||||||
2006 Stock Plan [Member] | Restricted Stock Awards [Member] | Minimum [Member] | ||||||||||
Number of shares granted | 22,388 | 30,000 | ||||||||
Description of vesting rights | The shares granted in December vest in one third increments on the first, second and third anniversaries of the date of grant as long as the recipient is then employed by the Company. | The shares granted in December vest in one third increments on the first, second and third anniversaries of the date of grant as long as the recipient is then employed by the Company. | ||||||||
2006 Stock Plan [Member] | Restricted Stock Awards [Member] | Maximum [Member] | ||||||||||
Number of shares granted | 49,250 | |||||||||
Number of shares granted in one third increments | 5,000 | |||||||||
Remaining number of shares granted | 44,250 | |||||||||
Description of vesting rights | On December 12, 2016. Of the 49,250 shares granted, 5,000 shares vest in one third increments, on the first, second and third anniversaries of the date of grant and the remaining 44,250 shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant, in each case as long as the recipient is then employed by the Company. | |||||||||
2006 Stock Plan [Member] | Restricted Stock Awards [Member] | New Members Of Management [Member] | ||||||||||
Number of shares granted | 21,000 | 7,000 | ||||||||
Number of shares granted in one third increments | 4,000 | |||||||||
Remaining number of shares granted | 17,000 | |||||||||
Description of vesting rights | The Company as part of the Vertex acquisition. Of the 21,000 shares granted, 4,000 shares vest, on the third anniversary of the date of grant and the remaining 17,000 shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant in each case, as long as the recipient is then employed by the Company. | These shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant as long as the recipient is then employed by the Company. Any dividends declared will be accrued and paid to the recipient if and when the related shares vest. |
Commitments and Contingencies52
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 3,567 |
2,018 | 2,821 |
2,019 | 2,104 |
2,020 | 1,536 |
2,021 | 1,305 |
Thereafter | 1,645 |
Total minimum lease payments | $ 12,978 |
Commitments and Contingencies53
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 2,600 | $ 2,500 | $ 2,900 |
Purchase commitments for fixed inventory | 34,000 | ||
Expected post-remediation liability | $ 100 | ||
Description of post-remediation liability | Estimates will be incurred in the next year and also the cost to plug the wells. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Restricted Stock Awards [Member] - shares | Jan. 30, 2017 | Dec. 31, 2016 |
Number of shares granted | 129,000 | |
Subsequent Event [Member] | President and CEO [Member] | ||
Number of shares granted | 60,000 | |
Number of shares granted under vesting schedule | 20,000 | |
Remaining number of shares granted | 40,000 | |
Description of vesting rights | Of the 60,000 shares of restricted stock, 20,000 shares vest on December 19, 2017 and 40,000 vest in one-third increments on January 30, 2018, December 31, 2018 and December 31, 2019, the first, second and third anniversaries of the date of grant, in each case as long as Mr. Pokluda is then employed by the Company. |
Select Quarterly Financial Da55
Select Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||
Sales | $ 69,257 | $ 65,222 | $ 62,454 | $ 64,711 | $ 70,314 | $ 78,260 | $ 77,959 | $ 81,600 | $ 261,644 | $ 308,133 | $ 390,011 | ||||
Gross profit | 15,076 | 12,045 | 12,430 | 13,399 | 15,120 | 16,131 | 16,935 | 17,724 | 52,950 | 65,910 | 85,938 | ||||
Operating income (loss) | (1,630) | [1] | (1,804) | (3,062) | [2] | (39) | 743 | [3] | 1,783 | (234) | [4] | 3,726 | (6,535) | 6,018 | 25,423 |
Net income (loss) | $ (1,826) | [1] | $ (1,439) | $ (2,557) | [2] | $ (184) | $ (199) | [3] | $ 676 | $ (619) | [4] | $ 2,186 | $ (6,006) | $ 2,044 | $ 14,972 |
Earnings (loss) per share: | |||||||||||||||
Basic (in dollars per share) | $ (0.11) | [1] | $ (0.09) | $ (0.16) | [2] | $ (0.01) | $ (0.01) | [3] | $ 0.04 | $ (0.04) | [4] | $ 0.13 | $ (0.37) | $ 0.12 | $ 0.85 |
Diluted (in dollars per share) | $ (0.11) | [1] | $ (0.09) | $ (0.16) | [2] | $ (0.01) | $ (0.01) | [3] | $ 0.04 | $ (0.04) | [4] | $ 0.13 | $ (0.37) | $ 0.12 | $ 0.85 |
Non-cash impairment charge | $ 2,384 | $ 423 | $ 2,994 | $ 2,384 | $ 3,417 | ||||||||||
[1] | During the fourth quarter of 2016, the Company recorded a charge of $483 of additional cost of sales expense that related to the first three quarters of 2016 and was immaterial to each quarter. | ||||||||||||||
[2] | During the second quarter of 2016, the Company recorded a non-cash impairment charge of $2,384. See Note 4 for additional information. | ||||||||||||||
[3] | During the fourth quarter of 2015, the Company recorded a non-cash impairment charge of $423. See Note 4 for additional information. | ||||||||||||||
[4] | During the second quarter of 2015, the Company recorded a non-cash impairment charge of $2,994. See Note 4 for additional information. |