Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Houston Wire & Cable CO | |
Entity Central Index Key | 1,356,949 | |
Document Type | 10-Q | |
Trading Symbol | HWCC | |
Document Period End Date | Mar. 31, 2018 | |
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 | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 16,481,246 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets (un
Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, net | ||
Trade | $ 52,829 | $ 51,031 |
Other | 1,768 | 6,365 |
Inventories, net | 93,402 | 88,115 |
Income taxes | 449 | |
Prepaids | 3,373 | 1,938 |
Total current assets | 151,372 | 147,898 |
Property and equipment, net | 11,457 | 11,355 |
Intangible assets, net | 11,821 | 12,015 |
Goodwill | 22,353 | 22,353 |
Other assets | 327 | 418 |
Total assets | 197,330 | 194,039 |
Current liabilities: | ||
Book overdraft | 3,177 | 3,028 |
Trade accounts payable | 8,746 | 8,449 |
Income taxes | 360 | |
Accrued and other current liabilities | 10,590 | 16,823 |
Total current liabilities | 22,873 | 28,300 |
Debt | 80,183 | 73,555 |
Deferred income taxes | 277 | 414 |
Other long term obligations | 1,210 | 1,026 |
Total liabilities | 104,543 | 103,295 |
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: 16,482,383 and 16,491,181 outstanding at March 31, 2018 and December 31, 2017, respectively | 21 | 21 |
Additional paid-in-capital | 54,164 | 54,006 |
Retained earnings | 99,283 | 97,336 |
Treasury stock | (60,681) | (60,619) |
Total stockholders' equity | 92,787 | 90,744 |
Total liabilities and stockholders' equity | $ 197,330 | $ 194,039 |
Consolidated Balance Sheets (u3
Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
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 | ||
Preferred stock, outstanding | ||
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 | 16,482,383 | 16,491,181 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Sales | $ 85,026 | $ 78,709 |
Cost of sales | 64,537 | 61,778 |
Gross profit | 20,489 | 16,931 |
Operating expenses: | ||
Salaries and commissions | 9,194 | 8,844 |
Other operating expenses | 7,480 | 7,477 |
Depreciation and amortization | 545 | 860 |
Total operating expenses | 17,219 | 17,181 |
Operating income (loss) | 3,270 | (250) |
Interest expense | 644 | 450 |
Income (loss) before income taxes | 2,626 | (700) |
Income tax expense (benefit) | 679 | (247) |
Net income (loss) | $ 1,947 | $ (453) |
Earnings (loss) per share: | ||
Basic (in dollars per share) | $ 0.12 | $ (0.03) |
Diluted (in dollars per share) | $ 0.12 | $ (0.03) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 16,349,902 | 16,241,215 |
Diluted (in shares) | 16,422,961 | 16,241,215 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities | ||
Net income (loss) | $ 1,947 | $ (453) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 545 | 860 |
Amortization of unearned stock compensation | 313 | 275 |
Provision for inventory obsolescence | 224 | 27 |
Deferred income taxes | (137) | (16) |
Other non-cash items | 61 | 29 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,749 | (6,810) |
Inventories | (5,511) | (552) |
Book overdraft | 149 | (2,363) |
Trade accounts payable | 297 | 224 |
Accrued and other current liabilities | (6,204) | (981) |
Prepaids | (1,435) | (631) |
Income taxes | 809 | (107) |
Other operating activities | 109 | 21 |
Net cash used in operating activities | (6,084) | (10,477) |
Investing activities | ||
Expenditures for property and equipment | (452) | (930) |
Net cash used in investing activities | (452) | (930) |
Financing activities | ||
Borrowings on revolver | 91,514 | 81,991 |
Payments on revolver | (84,886) | (70,530) |
Payment of dividends | (29) | (30) |
Purchase of treasury stock/stock surrendered on vested awards | (63) | (24) |
Net cash provided by financing activities | 6,536 | 11,407 |
Net change in cash | ||
Cash at beginning of period | ||
Cash at end of period |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | 1. Basis of Presentation and Principles of Consolidation Houston Wire & Cable Company (the “Company”), through its wholly owned subsidiaries, provides industrial products to the U.S. market through twenty-one locations in fourteen states throughout the United States. The Company has no other business activity. The consolidated financial statements as of March 31, 2018 and for the three months ended March 31, 2018, and 2017 have been prepared following accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. All significant intercompany balances and transactions have been eliminated. The Company has evaluated subsequent events through the time these financial statements in this Form 10-Q were filed with the Securities and Exchange Commission (the “SEC”). 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 inventory obsolescence reserve, the reserve for returns and allowances, vendor rebates, the realization of deferred tax assets and the valuation of goodwill and indefinite-lived assets. Actual results could differ materially from the estimates and assumptions used for the preparation of the financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Recently Adopted Accounting Standards 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 recent ASUs that are relevant to the Company. 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 amendments in the ASU are effective for annual and interim periods beginning after December 15, 2017. The Company adopted this ASU effective January 1, 2018, using the modified retrospective method, and it had no material impact on the Company’s consolidated financial statements. The Company’s primary source of revenue is the sale of industrial products based upon purchase orders or contracts with customers. Revenue is recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the product is shipped, or delivered (either by customer pickup or through common carrier to the customer’s location). It is not normal Company practice to grant extended payment terms. Revenue is recognized net of any taxes collected, which are subsequently remitted to the appropriate taxing authorities. The Company treats its transportation costs (shipping and handling) as fulfillment costs and not as a separate performance obligation. These transportation costs are recorded in cost of sales. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for products sold. Revenue is recorded at the transaction price net of estimates of variable consideration, which may include product returns, trade discounts and allowances. The Company accrues for variable consideration using the expected value method. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms and conditions of a share-based payment award, require the application of modification accounting. This update is effective for public companies for annual periods beginning after December 15, 2017. The Company adopted this ASU in the first quarter of 2018 and the adoption did not have a material impact on the Company’s consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The new guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. This update is effective for public companies for annual periods beginning after December 15, 2017. The Company adopted this ASU in the first quarter of 2018 and the adoption did not have a material impact on the Company’s consolidated financial statements. 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 the two-step impairment test under ASC 350. ASU No. 2017-04 is effective for annual and interim impairment tests 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 elected to early adopt this ASU in the first quarter of 2018 and the adoption did not have a material impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraph Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update),” This ASU adds the SEC guidance released on December 22, 2017 regarding the U.S tax reform to the FASB Accounting Standards Codification. At March 31, 2018, the Company has not made a material adjustment to the tax provision recorded under this ASU at December 31, 2017. The Company has not completed its accounting for all of the tax effects of the Tax Cuts and Jobs Act; however, the Company has made reasonable estimates of these effects. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance, a lessee will be required to recognize a right to use asset and a lease liability 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 impact that adopting this ASU will have on the Company’s consolidated financial statements. |
Earnings (loss) per Share
Earnings (loss) per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per Share | 2. 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 options and unvested restricted stock awards and units. The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Three Months Ended March 31, 2018 2017 Denominator: Weighted average common shares for basic earnings per share 16,349,902 16,241,215 Effect of dilutive securities 73,059 — Weighted average common shares for diluted earnings per share 16,422,961 16,241,215 The Company calculates earnings per share using the “two-class” method, whereby unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are “participating securities”, as discussed in Note 5, and therefore, these participating securities are treated as a separate class in computing earnings per share. The dilutive securities for these awards totaled 2,117 shares at March 31, 2018, which had no effect on the diluted earnings per share. Stock awards to purchase 422,947 shares (of which 195,204 were related to the participating securities) and 697,026 shares of common stock were not included in the diluted net income (loss) per share calculation for the three months ended March 31, 2018 and 2017, respectively, as their inclusion would have been anti-dilutive. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 3. Debt On October 3, 2016, in connection with the acquisition of Vertex, 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 a 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 is being 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 March 31, 2018, the Company was in compliance with the availability-based covenants governing its indebtedness. The carrying amount of long term debt approximates fair value as it bears interest at variable rates. The fair value is a Level 2 measurement as defined in ASC Topic 820, “Fair Value Measurement.” |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 4. Income Taxes On December 22, 2017 the Tax Cuts and Jobs Act (the “Act”) was signed into law, making significant changes to the U.S. Internal Revenue Code. The major provisions include a corporate tax rate decrease from 35% to 21%, effective for years beginning after December 31, 2017, and changes in business-related exclusions and deductions. The Company calculates its provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period. A valuation allowance for deferred tax assets is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized. To assess that likelihood, the Company uses its current financial position, results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies, as well as the current and forecasted business economics, to determine whether a valuation allowance is required. The Company has assessed both positive and negative evidence to estimate whether sufficient future taxable income will be generated and concluded that it is more likely than not that the deferred tax assets will not be realized and, as such, has retained the same valuation allowance at December 31, 2017 of $1.0 million as of March 31, 2018. Going forward, management will continue to assess the available evidence to determine whether it is more likely than not that sufficient future taxable income will be generated to realize the deferred tax assets. |
Incentive Plans
Incentive Plans | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Incentive Plans | 5. Incentive Plans Stock Option Awards There were no stock option awards granted during the first three months of 2018 or 2017. Restricted Stock Awards and Restricted Stock Units Until the 2017 Stock Plan (the “2017 Plan”) has been approved by the Company’s stockholders, each restricted stock unit may be settled only in cash. Following stockholder approval of the 2017 Plan, instead of a cash payment, upon vesting of a restricted stock unit, the recipient will be entitled to receive shares of the Company’s common stock. The Company has submitted the 2017 Plan for approval by stockholders at the 2018 Annual Meeting of Stockholders (See Note 7). As long as they can be settled only in cash, the awards granted under the 2017 Plan are liability awards and are required to be fair valued every quarter and any difference accounted for in the statement of operations. The fair value of these awards is $0.3 million as of March 31, 2018. Total stock-based compensation cost was $0.3 million for the three months ended March 31, 2018, of which $0.2 million was for equity awards and $0.1 million was for liability awards, and $0.3 million for the three months ended March 31, 2017, of which all were for equity awards, and is included in salaries and commissions for employees, and in other operating expenses, for non-employee directors. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies As part of the acquisition of Southwest Wire Rope and Southern Wire made 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 March 31, 2018 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. In addition, as a result of unfavorable lease terms relative to market for one of the leases acquired as part of the Vertex acquisition in 2016, there is a remaining additional liability of $0.2 million that is being amortized over the remaining terms of the lease, which was 63 months at March 31, 2018. The Company had outstanding under the 2015 Loan Agreement, letters of credit totaling $1.0 million to certain vendors as of March 31, 2018. 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 of operations |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 7 . Subsequent Events The 2017 Stock Plan was approved by the stockholders at the 2018 Annual Meeting on May 8, 2018. As a result, all awards outstanding under the 2017 Stock Plan will entitle the recipient to receive shares of the Company’s common stock. |
Basis of Presentation and Pri13
Basis of Presentation and Principles of Consolidation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards 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 recent ASUs that are relevant to the Company. 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 amendments in the ASU are effective for annual and interim periods beginning after December 15, 2017. The Company adopted this ASU effective January 1, 2018, using the modified retrospective method, and it had no material impact on the Company’s consolidated financial statements. The Company’s primary source of revenue is the sale of industrial products based upon purchase orders or contracts with customers. Revenue is recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the product is shipped, or delivered (either by customer pickup or through common carrier to the customer’s location). It is not normal Company practice to grant extended payment terms. Revenue is recognized net of any taxes collected, which are subsequently remitted to the appropriate taxing authorities. The Company treats its transportation costs (shipping and handling) as fulfillment costs and not as a separate performance obligation. These transportation costs are recorded in cost of sales. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for products sold. Revenue is recorded at the transaction price net of estimates of variable consideration, which may include product returns, trade discounts and allowances. The Company accrues for variable consideration using the expected value method. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms and conditions of a share-based payment award, require the application of modification accounting. This update is effective for public companies for annual periods beginning after December 15, 2017. The Company adopted this ASU in the first quarter of 2018 and the adoption did not have a material impact on the Company’s consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The new guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. This update is effective for public companies for annual periods beginning after December 15, 2017. The Company adopted this ASU in the first quarter of 2018 and the adoption did not have a material impact on the Company’s consolidated financial statements. 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 the two-step impairment test under ASC 350. ASU No. 2017-04 is effective for annual and interim impairment tests 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 elected to early adopt this ASU in the first quarter of 2018 and the adoption did not have a material impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraph Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update),” This ASU adds the SEC guidance released on December 22, 2017 regarding the U.S tax reform to the FASB Accounting Standards Codification. At March 31, 2018, the Company has not made a material adjustment to the tax provision recorded under this ASU at December 31, 2017. The Company has not completed its accounting for all of the tax effects of the Tax Cuts and Jobs Act; however, the Company has made reasonable estimates of these effects. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance, a lessee will be required to recognize a right to use asset and a lease liability 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 impact that adopting this ASU will have on the Company’s consolidated financial statements. |
Earnings (loss) per Share (Tabl
Earnings (loss) per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of diluted earnings (loss) per share | The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Three Months Ended March 31, 2018 2017 Denominator: Weighted average common shares for basic earnings per share 16,349,902 16,241,215 Effect of dilutive securities 73,059 — Weighted average common shares for diluted earnings per share 16,422,961 16,241,215 |
Earnings (loss) per Share (Deta
Earnings (loss) per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Denominator: | ||
Weighted average common shares for basic earnings per share | 16,349,902 | 16,241,215 |
Effect of dilutive securities | 73,059 | |
Weighted average common shares for diluted earnings per share | 16,422,961 | 16,241,215 |
Earnings (loss) per Share (De16
Earnings (loss) per Share (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Dilutive securities for awards | $ 2,117 | |
Options to purchase stock awards | 422,947 | 697,026 |
Participating securities [Member] | ||
Options to purchase stock awards | 195,204 |
Debt (Details Narrative)
Debt (Details Narrative) - Fourth Amended and Restated Loan and Security Agreement (the 2015 Loan Agreement) [Member] - Revolving Credit Facility [Member] - USD ($) $ in Thousands | Oct. 03, 2016 | Mar. 31, 2018 |
Maximum incremental availability on eligible accounts receivable and inventory | $ 5,000 | |
Line of credit facility borrowing period | 2 years 6 months | |
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. | |
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% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Corporate tax rate (in percent) | 21.00% |
Previous corporate tax rate (in percent) | 35.00% |
Valuation allowance | $ 1,000 |
Incentive Plans (Details Narrat
Incentive Plans (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Total stock-based compensation cost | $ 313 | $ 275 |
Equity Award [Member] | ||
Total stock-based compensation cost | 200 | $ 300 |
Liability Award [Member] | ||
Total stock-based compensation cost | 100 | |
2017 Stock Plan [Member] | ||
Total grant-date fair value of options vested | $ 300 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Southwest Wire Rope Reporting Unit [Member] | |
Expected post-remediation liability | $ 100 |
Description of post-remediation liability | Estimates will be incurred in the next year. |
Southwest Wire Rope Reporting Unit [Member] | Fourth Amended and Restated Loan and Security Agreement (the 2015 Loan Agreement) [Member] | |
Letters of credit issued | $ 1,000 |
Vertex Acquisition [Member] | |
Remaining additional liability | $ 200 |
Amortized over the remaining terms lease | 63 months |